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.
PRELIMINARY PROSPECTUS DATED 10 JANUARY 2014 (Lodged with the Monetary Authority of Singapore on 10 January 2014).
This document is important. If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor,
accountant or other professional adviser.
OUE COMMERCIAL REAL ESTATE INVESTMENT TRUST
(a real estate investment trust constituted on 10 October 2013 under the laws of the Republic of Singapore)
Offering of [208,000,000] Units (subject to the Over-Allotment Option (as defined herein))
Offering Price: S$0.80 per Unit
OUE Commercial REIT Management Pte. Ltd., as manager of OUE Commercial Real Estate Investment Trust (OUE C-REIT, and the manager of OUE
C-REIT, the Manager), is making an offering (the Offering) of [208,000,000] units representing undivided interests in OUE C-REIT (Units) for
subscription at the Offering Price (as defined herein) (the Offering Units). The Offering consists of (i) an international placement of [] Units to investors,
including institutional and other investors in Singapore (the Placement Tranche), and (ii) an offering of [] Units to the public in Singapore (the Public
Offer).
It is currently expected that the issue price of each Unit under the Offering will be S$0.80 per Unit (the Offering Price). Standard Chartered Securities
(Singapore) Pte. Limited is the sole financial adviser for the Offering (the Sole Financial Adviser). The joint global coordinators and issue managers for
the Offering are Standard Chartered Securities (Singapore) Pte. Limited, CIMB Bank Berhad, Singapore Branch and Oversea-Chinese Banking Corporation
Limited (the Joint Global Coordinators and Issue Managers or the Joint Global Coordinators). The Offering is fully underwritten at the Offering Price
by Standard Chartered Securities (Singapore) Pte. Limited, CIMB Securities (Singapore) Pte. Ltd., Oversea-Chinese Banking Corporation Limited, DMG &
Partners Securities Pte Ltd, Citigroup Global Markets Singapore Pte. Ltd. and J.P. Morgan (S.E.A.) Limited (the Joint Bookrunners and Underwriters or
the Joint Bookrunners) on the terms and subject to the conditions of the Underwriting Agreement (as defined herein).
The total number of Units in issue as at the date of this Prospectus is one Unit (the Sponsor Initial Unit). The total number of outstanding Units immediately
after completion of the Offering will be 866,000,000 Units. The exercise of the Over-Allotment Option will not increase the total number of Units in issue.
Separate from the Offering, Clifford Development Pte. Ltd., a wholly-owned subsidiary of OUE Limited (OUE or the Sponsor), will receive an aggregate
of [432,999,999] Units (the Consideration Units, and together with the Sponsor Initial Unit, the Sponsor Units) on the Listing Date (as defined herein)
as part satisfaction of the purchase consideration for the OUE Bayfront Property, which will form part of the IPO Portfolio (as defined herein).
In addition, concurrently with, but separate from the Offering, each of the Cornerstone Investors (as defined herein) has entered into a subscription agreement
to subscribe for an aggregate of [225,000,000] Units (the Cornerstone Units) at the Offering Price conditional upon the Underwriting Agreement having been
entered into, and not having been terminated, pursuant to its terms on or prior to the Settlement Date.
Prior to the Offering, there has been no market for the Units. The offer of Units under this Prospectus will be by way of an initial public offering in Singapore
(IPO). Application has been made to Singapore Exchange Securities Trading Limited (the SGX-ST) for permission to list on the Main Board of the SGX-ST
(i) all Units comprised in the Offering, (ii) the Sponsor Units, (iii) the Cornerstone Units and (iv) all the Units which will be issued to the Manager from time
to time in full or part payment of the Managers fees. Such permission will be granted when OUE C-REIT has been admitted to the Official List of the SGX-ST
(the Listing Date). Acceptance of applications for Units will be conditional upon issue of the Units and upon permission being granted to list the Units. In
the event that such permission is not granted or if the Offering is not completed for any other reason, application monies will be returned in full, at each
investors own risk, without interest or any share of revenue or other benefit arising therefrom, and without any right or claim against any of OUE C-REIT, the
Manager, DBS Trustee Limited, as trustee of OUE C-REIT (the Trustee), the Sponsor, the Sole Financial Adviser, the Joint Global Coordinators or the Joint
Bookrunners.
OUE C-REIT has received a letter of eligibility from the SGX-ST for the listing and quotation of (i) all Units comprised in the Offering, (ii) the Sponsor Units,
(iii) the Cornerstone Units and (iv) all the Units which will be issued to the Manager from time to time in full or part payment of the Managers fees on the
Main Board of the SGX-ST. OUE C-REITs eligibility to list on the Main Board of the SGX-ST does not indicate the merits of the Offering, OUE C-REIT, the
Manager, the Trustee, the Sponsor, the Sole Financial Adviser, the Joint Global Coordinators, the Joint Bookrunners or the Units. The SGX-ST assumes no
responsibility for the correctness of any statements or opinions made or reports contained in this Prospectus. Admission to the Official List of the SGX-ST
is not to be taken as an indication of the merits of the Offering, OUE C-REIT, the Manager, the Trustee, the Sponsor, the Sole Financial Adviser, the Joint
Global Coordinators, the Joint Bookrunners or the Units.
OUE C-REIT is [a scheme pending authorisation] under the Securities and Futures Act, Chapter 289 of Singapore (the Securities and Futures Act
or SFA). A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore (the MAS) on 10 January 2014
and [], respectively. The MAS assumes no responsibility for the contents of the Prospectus. Lodgement with, or registration by, the MAS of the
Prospectus does not imply that the Securities and Futures Act or any other legal or regulatory requirements have been complied with. The MAS
has not, in any way, considered the investment merits of the collective investment scheme. This Prospectus will expire on [] (12 months after the
date of the registration of this Prospectus).
See Risk Factors commencing on page 71 of this Prospectus for a discussion of certain factors to be considered in connection with an
investment in the Units. None of the Manager, the Trustee, the Sponsor, the Sole Financial Adviser, the Joint Global Coordinators or the Joint
Bookrunners guarantees the performance of OUE C-REIT, the repayment of capital or the payment of a particular return on the Units.
Investors who are members of the Central Provident Fund (CPF) in Singapore may use their CPF Ordinary Account savings to purchase Units as an
investment included under the CPF Investment Scheme Ordinary Account. CPF members are allowed to invest up to 35.0% of the Investible Savings (as
defined herein) in their CPF Ordinary Accounts to purchase Units. Investors applying for Units by way of Application Forms (as defined herein) or Electronic
Applications (both as referred to in Appendix G, Terms, Conditions and Procedures for Application for and Acceptance of the Units in Singapore) in the Public
Offer will have to pay the Offering Price on application, subject to a refund of the full amount or, as the case may be, the balance of the application monies
(in each case without interest or any share of revenue or other benefit arising therefrom), where (i) an application is rejected or accepted in part only, or (ii)
if the Offering does not proceed for any reason.
In connection with the Offering, the Joint Bookrunners have been granted an over-allotment option (the Over-Allotment Option) by Clifford Development
Pte. Ltd. (the Unit Lender), exercisable by Standard Chartered Securities (Singapore) Pte. Limited (the Stabilising Manager) (or any of its affiliates or
other persons acting on behalf of the Stabilising Manager), in consultation with the other Joint Bookrunners, in full or in part, on one or more occasions, only
from the Listing Date but no later than the earliest of (i) the date falling 30 days from the Listing Date; or (ii) the date when the Stabilising Manager (or its
affiliates or other persons acting on behalf of the Stabilising Manager) has bought, on the SGX-ST, an aggregate of [] Units, representing up to [20.0]% of
the total number of Units in the Offering, to undertake stabilising actions to purchase up to an aggregate of [] Units (representing up to [20.0]% of the total
number of Units in the Offering), at the Offering Price. The exercise of the Over-Allotment Option will not increase the total number of Units outstanding. In
connection with the Offering, the Stabilising Manager (or its affiliates or other persons acting on behalf of the Stabilising Manager) may, in consultation with
the other Joint Bookrunners and at its discretion, over-allot or effect transactions which stabilise or maintain the market price of the Units at levels that might
not otherwise prevail in the open market. However, there is no assurance that the Stabilising Manager (or its affiliates or other persons acting on behalf of
the Stabilising Manager) will undertake stabilising action. Such transactions may be effected on the SGX-ST and in other jurisdictions where it is permissible
to do so, in each case in compliance with all applicable laws and regulations.
Nothing in this Prospectus constitutes an offer for securities for sale in the United States of America (United States or U.S.) or any other jurisdiction where
it is unlawful to do so. The Units have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the Securities Act)
or the securities law of any state of the U.S. and accordingly, may not be offered or sold within the U.S. except in certain transactions exempt from or not
subject to the registration requirements of the Securities Act. The Units are being offered and sold in offshore transactions as defined in and in reliance on
Regulation S under the Securities Act (Regulation S).
Sponsor
Sole Financial Adviser
Joint Global Coordinators and Issue Managers
Joint Bookrunners and Underwriters
TABLE OF CONTENTS
Page
NOTICE TO INVESTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
CERTAIN DEFINED TERMS AND CONVENTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
MARKET AND INDUSTRY INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
OWNERSHIP OF THE UNITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
EXCHANGE RATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
CAPITALISATION AND INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
UNAUDITED PRO FORMA FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 116
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
PROFIT FORECAST AND PROFIT PROJECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
STRATEGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
BUSINESS AND PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
THE MANAGER AND CORPORATE GOVERNANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
THE SPONSOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
THE FORMATION AND STRUCTURE OF OUE C-REIT. . . . . . . . . . . . . . . . . . . . . . . . . . 240
CERTAIN AGREEMENTS RELATING TO OUE C-REIT AND THE PROPERTIES . . . . . . 252
i
Page
OVERVIEW OF RELEVANT LAWS AND REGULATIONS IN THE PEOPLES REPUBLIC
OF CHINA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282
CLEARANCE AND SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300
APPENDIX A REPORTING AUDITORS REPORT ON THE PROFIT FORECAST
AND PROFIT PROJECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B REPORTING AUDITORS REPORT ON THE UNAUDITED PRO
FORMA FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . B-1
APPENDIX C UNAUDITED PRO FORMA FINANCIAL INFORMATION . . . . . . . C-1
APPENDIX D INDEPENDENT TAXATION REPORT . . . . . . . . . . . . . . . . . . . . . . D-1
APPENDIX E INDEPENDENT PROPERTY VALUATION SUMMARY REPORTS. E-1
APPENDIX F INDEPENDENT MARKET RESEARCH REPORT . . . . . . . . . . . . . F-1
APPENDIX G TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION
FOR AND ACCEPTANCE OF THE UNITS IN SINGAPORE . . . . . G-1
APPENDIX H LIST OF PRESENT AND PAST PRINCIPAL DIRECTORSHIPS OF
DIRECTORS AND EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . H-1
ii
NOTICE TO INVESTORS
No person is authorised to give any information or to make any representation not contained in
this Prospectus and any information or representation not so contained must not be relied upon
as having been authorised by or on behalf of OUE C-REIT, the Manager, the Trustee, the Sponsor,
the Sole Financial Adviser, the Joint Global Coordinators or the Joint Bookrunners. If anyone
provides you with different or inconsistent information, you should not rely upon it. Neither the
delivery of this Prospectus nor any offer, subscription, placement, purchase, sale or transfer made
hereunder shall 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 business affairs,
conditions and prospects of OUE C-REIT, the Manager, the Trustee, the Units or the Sponsor
since the date on the front cover of this Prospectus. Where such changes occur and are material
or required to be disclosed by law, the SGX-ST and/or any other regulatory or supervisory body
or agency, the Manager will make an announcement of the same to the SGX-ST and, if required,
lodge and issue a supplementary document or replacement document pursuant to Section 298 of
the Securities and Futures Act and take immediate steps to comply with the said Section 298.
Investors should take notice of such announcements and documents and upon release of such
announcements and documents shall be deemed to have notice of such changes.
None of OUE C-REIT, the Manager, the Trustee, the Sponsor, the Sole Financial Adviser, the Joint
Global Coordinators and the Joint Bookrunners or any of their respective affiliates, directors,
officers, employees, agents, representatives or advisers is making any representation or
undertaking to any purchaser or subscriber of Units regarding the legality of an investment by
such purchaser or subscriber under appropriate legal, investment or similar laws. In addition,
investors in the Units should not construe the contents of this Prospectus as legal, business,
financial or tax advice. Investors should be aware that they may be required to bear the financial
risks of an investment in the Units for an indefinite period of time. Investors should consult their
own professional advisers as to the legal, tax, business, financial and related aspects of an
investment in the Units.
Copies of this Prospectus and the Application Forms may be obtained on request, subject to
availability, during office hours, from:
Standard Chartered
Securities
(Singapore)
Pte. Limited
CIMB Securities
(Singapore)
Pte. Ltd.
Oversea-Chinese
Banking
Corporation
Limited
Citigroup
Global Markets
Singapore
Pte. Ltd.
J.P. Morgan
(S.E.A.)
Limited
DMG & Partners
Securities
Pte Ltd
8 Marina Boulevard
#19-01 Marina Bay
Financial Centre
Tower 1
Singapore
018981
CIMB Investment
Centre
50 Raffles Place
#01-01 Singapore
Land Tower
Singapore
048623
65 Chulia Street
OCBC Centre
Singapore
049513
8 Marina View
#21-00 Asia
Square Tower 1
Singapore
018960
168 Robinson
Road
17th Floor,
Capital Tower
Singapore 068912
10 Collyer Quay
#09-08 Ocean
Financial Centre
Singapore
049315
and, where applicable, from members of the Association of Banks in Singapore, members of the
SGX-ST and merchant banks in Singapore. A copy of this Prospectus is also available on the
SGX-ST website: http://www.sgx.com.
The Units have not been and will not be registered under the Securities Act and, accordingly, may
not be offered or sold within the U.S. except in certain transactions exempt from, or not subject
to, the registration requirements of the Securities Act. The Units are being offered and sold in
offshore transactions as defined in and in accordance with Regulation S.
iii
The distribution of this Prospectus and the offering, subscription, placement, purchase, sale or
transfer of the Units in certain jurisdictions may be restricted by law. OUE C-REIT, the Manager,
the Trustee, the Sponsor, the Sole Financial Adviser, the Joint Global Coordinators and the Joint
Bookrunners require persons into whose possession this Prospectus comes to inform themselves
about and to observe any such restrictions at their own expense and without liability to OUE
C-REIT, the Manager, the Trustee, the Sponsor, the Sole Financial Adviser, the Joint Global
Coordinators and the Joint Bookrunners. This Prospectus does not constitute, and the Manager,
the Trustee, the Sponsor, the Sole Financial Adviser, the Joint Global Coordinators and the Joint
Bookrunners are not making, an offer of, or an invitation to subscribe for or purchase, any of the
Units in any jurisdiction in which such offer or invitation would be unlawful. Persons to whom a
copy of this Prospectus has been issued shall not circulate to any other person, reproduce or
otherwise distribute this Prospectus or any information herein for any purpose whatsoever nor
permit or cause the same to occur.
In connection with the Offering, the Stabilising Manager (or any of its affiliates or other persons
acting on behalf of the Stabilising Manager) may, in consultation with the other Joint Bookrunners
and at its discretion, over-allot or effect transactions which stabilise or maintain the market price
of the Units at levels that might not otherwise prevail in the open market. However, there is no
assurance that the Stabilising Manager (or any of its affiliates or other persons acting on behalf
of the Stabilising Manager) will undertake stabilising action. Such transactions may be effected on
the SGX-ST and in other jurisdictions where it is permissible to do so, in each case in compliance
with all applicable laws and regulations (including the SFA and any regulations thereunder). Such
transactions may commence on or after the Listing Date, and, if commenced, may be discontinued
at any time and shall not be effected after the earliest of (i) the date falling 30 days from the Listing
Date or (ii) the date when the Stabilising Manager (or any of its affiliates or other persons acting
on behalf of the Stabilising Manager) has bought, on the SGX-ST, an aggregate of [] Units,
representing up to [20.0]% of the total number of Units in the Offering, to undertake stabilising
actions to purchase up to an aggregate of [] Units (representing up to [20.0]% of the total number
of Units in the Offering), at the Offering Price. The exercise of the Over-Allotment Option will not
increase the total number of Units outstanding.
iv
FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus constitute forward-looking statements. This Prospectus
also contains forward-looking financial information in Profit Forecast and Profit Projection. Such
forward-looking statements and financial information involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance or achievements
of OUE C-REIT, the Manager, the Sponsor, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such forward-looking
statements and financial information. Such forward-looking statements and financial information
are based on numerous assumptions regarding the Managers present and future business
strategies and the environment in which OUE C-REIT, the Manager or the Sponsor will operate in
the future. Because these statements and financial information reflect the current views of the
Manager and the Sponsor concerning future events, these statements and financial information
necessarily involve risks, uncertainties and assumptions. Actual future performance could differ
materially from these forward-looking statements and financial information. You should not place
any undue reliance on these forward-looking statements.
Among the important factors that could cause the actual results, performance or achievements of
OUE C-REIT, the Manager or the Sponsor to differ materially from those in the forward-looking
statements and financial information are the conditions of, and changes in, the domestic, regional
and global economies, including, but not limited to, factors such as political, economic and social
conditions in Singapore and the Peoples Republic of China (the PRC), changes in government
laws and regulations affecting OUE C-REIT, competition in the property markets of Singapore and
the PRC in which OUE C-REIT may invest, industry, currency exchange rates, interest rates,
inflation, relations with service providers, relations with lenders, hostilities (including future
terrorist attacks), the performance and reputation of OUE C-REITs properties and/or acquisitions,
difficulties in identifying future acquisitions, difficulty in completing and integrating acquisitions,
changes in the Managers directors and executive officers, risks related to natural disasters,
general volatility of the capital markets, general risks relating to the property market in which OUE
C-REIT may invest and the market price of the Units as well as 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 Risk Factors, Profit Forecast and Profit Projection, and Business and
Properties. These forward-looking statements and financial information speak only as at the date
of this Prospectus. The Manager expressly disclaims any obligation or undertaking to release
publicly any updates of or revisions to any forward-looking statement or financial information
contained herein to reflect any change in the expectations of the Manager or the Sponsor with
regard thereto or any change in events, conditions or circumstances on which any such statement
or information is based, subject to compliance with all applicable laws and regulations and/or the
rules of the SGX-ST and/or any other relevant regulatory or supervisory body or agency.
v
CERTAIN DEFINED TERMS AND CONVENTIONS
OUE C-REIT will publish its financial statements in Singapore dollars. In this Prospectus,
references to S$ or Singapore dollars and cents are to the lawful currency of the Republic of
Singapore, references to HK$ or Hong Kong dollars are to the lawful currency of Hong Kong,
Special Administrative Region of the PRC, references to RMB or Renminbi are to the lawful
currency of the PRC, and references to US$, US dollars or USD are to the lawful currency of
the United States. References to the Peoples Republic of China or the PRC are, for the
purposes of this Prospectus, to mainland China.
For the readers convenience, except where the exchange rate is expressly stated otherwise,
Renminbi, Hong Kong dollar and US dollar amounts in this Prospectus have been translated into
Singapore dollars based on an exchange rate of S$1.00 : RMB4.7830, S$1.00: HK$6.1275 and
US$1.00: S$1.265 as at 31 December 2013 (the Latest Practicable Date), respectively.
However, such translations should not be construed as representations that Renminbi, Hong Kong
dollar and US dollar amounts have been, could have been or could be converted into Singapore
dollars at that or any other rate and vice versa. (See Exchange Rate Information for further
details).
Unless otherwise defined, capitalised terms used in this Prospectus shall have the meanings set
out in the Glossary.
The forecast and projected distribution per Unit (DPU) yields are calculated based on the
Offering Price. Such yields and yield growth will vary accordingly for investors who purchase Units
in the secondary market at a market price different from the Offering Price.
Any discrepancies in the tables, graphs and charts included in this Prospectus between the listed
amounts and totals thereof are due to rounding. Where applicable, figures and percentages are
rounded to one decimal place. Measurements in square metres (sq m) are converted to square
feet (sq ft) and vice versa based on the conversion rate of 1 sq m = 10.7639 sq ft. References
to Appendix or Appendices are to the appendices set out in this Prospectus. All references in
this Prospectus to dates and times shall mean Singapore dates and times unless otherwise
specified.
Unless otherwise specified, all information relating to the Properties (as defined herein) in this
Prospectus are as at 30 September 2013. (See Business and Properties for details regarding the
Properties.)
Reference to:
Acquisition of the Properties for the purposes of this Prospectus means OUE C-REITs
acquisition of the OUE Bayfront Property and the entire issued share capital in the BVI
Company from the Vendors (both as defined herein);
GFA for the purposes of this Prospectus means:
(in relation to properties in Singapore) all covered floor areas of a building, except
otherwise exempted, and uncovered areas for commercial uses. The total area of the
covered floor space is measured between the centre line of party walls, including the
thickness of external walls but excluding voids. Generally, car parks and driveways are
excluded from the computation of GFA; and
(in relation to properties in the PRC) the area specified in the Building Ownership
Certificate for each property; and
Gross Rental Income comprises Base Rent, Service Charge and Turnover Rent (where
applicable) (each as defined herein).
vi
MARKET AND INDUSTRY INFORMATION
This Prospectus includes market and industry data and forecasts that have been obtained from
internal surveys, reports and studies, where appropriate, as well as market research, publicly
available information and industry publications. Industry publications, surveys and forecasts
generally state that the information they contain has been obtained from sources believed to be
reliable, but there can be no assurance as to the accuracy or completeness of such information.
The Manager has commissioned DTZ Debenham Tie Leung (SEA) Pte Ltd (the Independent
Market Research Consultant) to prepare the independent market research report (the
Independent Market Research Report). (See Appendix F, Independent Market Research
Report for further details.) While the Manager has taken reasonable steps to ensure that the
information is extracted accurately and in its proper context, the Manager has not independently
verified any of the data from third-party sources or ascertained the underlying economic
assumptions relied upon therein. Consequently, none of OUE C-REIT, the Manager, the Trustee,
the Sponsor, the Sole Financial Adviser, the Joint Global Coordinators and the Joint Bookrunners
makes any representation as to the accuracy or completeness of such information, and each of
them shall not be held responsible in respect of any such information and shall not be obliged to
provide any updates on the same.
The Trustee has appointed Savills Valuation and Professional Services (S) Pte Ltd (Savills) and
Colliers International Consultancy & Valuation (Singapore) Pte Ltd (Colliers) as the independent
valuers of the Properties (the Independent Valuers). (See Appendix E, Independent Property
Valuation Summary Reports for further details.)
vii
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OVERVIEW
The following section is qualified in its entirety by, and is subject to, the more detailed information
contained or referred to elsewhere in this Prospectus. The meanings of terms not defined in this
section can be found in the Glossary or in the trust deed dated 10 October 2013 entered into
between the Manager and the Trustee constituting OUE C-REIT, as amended and restated by a
first amending and restating deed dated 9 January 2014 (the Trust Deed). A copy of the Trust
Deed can be inspected at the registered office of the Manager, which is located at 50 Collyer Quay
#04-08, OUE Bayfront, Singapore 049321 (prior appointment would be appreciated).
Statements contained in this section that are not historical facts may be forward-looking
statements or are historical statements reconstituted on a pro forma basis. Such statements are
based on certain assumptions and are subject to certain risks and uncertainties which could cause
actual results of OUE C-REIT to differ materially from the forecast or projected results of OUE
C-REIT. (See Forward-Looking Statements for further details.) 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 OUE C-REIT, the Manager, the
Trustee, the Sponsor, the Sole Financial Adviser, the Joint Global Coordinators, the Joint
Bookrunners or any other person or that these results will be achieved or are likely to be achieved.
Investing in the Units involves risks. Prospective investors are advised not to rely solely on this
section, but to read this Prospectus in its entirety and, in particular, the sections from which the
information in this section is extracted and Risk Factors to better understand the Offering and
OUE C-REITs businesses and risks.
OVERVIEW OF OUE C-REIT
OUE C-REIT is a Singapore real estate investment trust (REIT) established with the principal
investment strategy of investing, directly or indirectly, in a portfolio of income-producing real
estate used primarily for commercial purposes (including real estate used primarily for office
and/or retail purposes) in financial and business hubs within and outside of Singapore, as well as
real estate-related assets. (See Strategy for further details.)
Key Objectives
The Managers key financial objectives are to provide unitholders of OUE C-REIT (Unitholders)
with an attractive rate of return on their investment through regular and stable distributions to
Unitholders and to achieve long-term sustainable growth in DPU and net asset value (NAV) per
Unit, while maintaining an appropriate capital structure for OUE C-REIT.
IPO Portfolio
The initial portfolio of OUE C-REIT (the IPO Portfolio) will comprise two commercial properties
strategically located in Singapore and Shanghai, with an aggregate GFA of approximately
105,296.1 sq m and a total appraised value of approximately S$1,623.6
1
million as at 30
September 2013. The IPO Portfolio consists of:
The OUE Bayfront Property. The OUE Bayfront Property is located at Collyer Quay in
Singapores central business district (CBD). It comprises (i) OUE Bayfront, an 18-storey
premium
2
office building with rooftop restaurant premises located at 50 Collyer Quay, which
1 Based on the higher of the two independent appraisal values for the Properties, an exchange rate of S$1.00 :
RMB4.7830 and inclusive of Income Support (as defined herein).
2 The term premium for the purposes of describing commercial properties in Singapore is set out in the Independent
Market Research Report.
1
is complemented by retail facilities at its ancillary properties, namely (ii) OUE Tower, a
conserved tower building located at 60 Collyer Quay with panoramic views of the Marina Bay
landscape which is currently occupied by a fine dining restaurant, and (iii) OUE Link, a link
bridge located at 62 Collyer Quay with retail units (the OUE Bayfront Property); and
The Lippo Plaza Property. Lippo Plaza is located at 222 Huaihai Zhong Road in the
commercial district of Huangpu in central Shanghai, the PRC. It is a 36-storey Grade-A
1
commercial building used for office and retail purposes and also comprises three basement
levels consisting of commercial space and car park lots. The Lippo Plaza Property comprises
Lippo Plaza, excluding (i) Unit 2 on Basement 1, (ii) the 12th, 13th, 15th and 16th Floors and
(iii) four car park lots (the Lippo Plaza Property). Collectively, the Lippo Plaza Property
comprises approximately 90% of Lippo Plaza by GFA,
(together, the Properties). (See Business and Properties for further details.)
KEY INVESTMENT HIGHLIGHTS
The Manager believes that an investment in OUE C-REIT offers the following attractions to
Unitholders:
(1) IPO Portfolio comprises landmark commercial properties strategically located in the
prime commercial districts of Singapore and Shanghai
(a) The OUE Bayfront Property: Premium office building with ancillary retail facilities
located between the new Marina Bay downtown and Raffles Place, within Singapores
CBD
(b) The Lippo Plaza Property: Grade-A commercial building located in the Huangpu district,
one of Shanghais established core commercial districts
(2) Unique opportunity for investment exposure to prime commercial real estate in the key
international financial and business hubs of Singapore and Shanghai
(a) Established and thriving key international financial and business hubs of Singapore and
Shanghai underpin long-term sustainable returns of the IPO Portfolio
(b) Favourable office sector outlook in the respective CBD areas of Singapore and
Shanghai support the further growth in DPU of the IPO Portfolio
(3) Stable and resilient portfolio
(a) Track record of consistent growth
(b) Strong historical occupancy
(c) Diversified and high quality tenant base
(d) Minimal capital expenditure expected after the Listing Date
1 The term Grade-A for the purposes of describing commercial properties in the PRC is set out in the Independent
Market Research Report.
2
(4) Stable and attractive distribution yield with potential organic growth
(a) Potential organic growth via possible rent reversions and balanced lease expiry profile
for the IPO Portfolio
(b) Properties acquired at attractive purchase prices
(c) Downside protection with Income Support Arrangement (as defined herein)
(d) Attractive distribution yield
(5) Strong, reputable and committed Sponsor with proven track record of delivering value
(a) Leading real estate owner, developer and operator with proven abilities in acquiring
quality assets and enhancing their value
(b) Expertise in real estate management
(c) Committed Sponsor and Manager incentivised to maximise distributions to Unitholders
(6) Experienced and professional REIT management and property management teams
(7) Significant potential acquisition pipeline
(a) Sponsor ROFR Properties (as defined herein) offer significant expansion opportunities
(b) Sponsor ROFR Properties in Singapore offer exposure to landmark office real estate in
Singapores key CBD areas
3
Details of these key investment highlights are set out below:
(1) IPO Portfolio comprises landmark commercial properties strategically located in the
prime commercial districts of Singapore and Shanghai
The IPO Portfolio of OUE C-REIT comprises the OUE Bayfront Property in Singapore and the
Lippo Plaza Property in Shanghai, the PRC, as set out in the map below. The IPO Portfolio
is valued at an aggregate of approximately S$1,623.6
1
million as at 30 September 2013 with
a total GFA of approximately 105,296.1 sq m.
Overview of the IPO Portfolio
Singapore
OUE Bayfront Property
Shanghai
LippoPlaza Property
1 Based on the higher of the two independent appraisal values for the Properties, an exchange rate of S$1.00 :
RMB4.7830 and inclusive of Income Support (as defined herein).
4
The following table sets out an initial summary of the IPO Portfolio as at 30 September 2013.
The OUE Bayfront
Property
The Lippo
Plaza Property Total/Average
Usage Office and retail Office and retail Office and retail
GFA (sq m) 46,774.6 58,521.5 105,296.1
Net Lettable
Area
(1)
(sq m)
Overall 37,381.8 39,232.0 76,613.8
Office
component
35,551.7 33,538.6 69,090.3
Retail
component
1,830.1 5,693.4 7,523.5
Committed Occupancy Rate
(2)
as at 30 September 2013 (%)
Overall: 96.1
Office component:
95.9
Retail component:
100.0
Overall: 88.2
Office component:
86.5
Retail component:
97.8
Overall: 92.0
Office component:
91.4
Retail component:
98.3
Number of Tenants as at
30 September 2013
Overall: 45
Office component:
33
Retail component:
12
Overall: 83
Office component:
72
(3)
Retail component:
11
(4)
Overall: 128
Office component:
105
Retail component:
23
Gross Revenue for the Forecast
Year 2014
(5)
(S$ million)
50.4 24.0
(6)
74.4
Net Property Income
(7)
for the
Forecast Year 2014
(5)
(S$ million)
36.9 17.4
(6)
54.3
Independent Appraisal Values
as at 30 September 2013
(S$ million)
Savills: 1,115.0
Colliers: 1,135.0
Savills: 470.4
(6)
Colliers: 488.6
(6)
Savills: 1,585.4
Colliers: 1,623.6
Independent Appraisal Values
(without Income Support
(8)
)
as at 30 September 2013
(S$ million)
Savills: 1,080.0
Colliers: 1,102.0
Savills: 470.4
(6)
Colliers: 488.6
(6)
Savills: 1,550.4
Colliers: 1,590.6
Purchase Consideration
(S$ million)
1,005.0 331.8
(9)
(subject to
adjustment)
(10)
1,336.8
(subject to
adjustment)
(10)
Notes:
(1) Net Lettable Area or NLA refers to the net office or retail area located in Singapore or the PRC, as the
case may be, that is to be leased and for which rent is payable as stipulated in the respective tenancy
agreements, including legally binding letters of offer which have been accepted for vacant area.
(2) Committed Occupancy Rate refers to the occupancy rate based on all current leases in respect of the
Property for the period, including legally binding letters of offer which have been accepted for vacant units,
as a function of total lettable space.
(3) As at 30 September 2013, two office tenants have also entered into letters of offer or lease agreements for
retail spaces.
(4) Excluding the two office tenants which have also entered into letters of offer or lease agreements for retail
spaces.
(5) Forecast Year 2014 refers to the period from 1 January 2014 to 31 December 2014.
(6) Based on an exchange rate of S$1.00 : RMB4.7830.
(7) Net Property Income refers to Gross Revenue less property expenses.
5
(8) Income Support refers to the top-up payments from the Sponsor pursuant to the Deed of Income Support.
(9) The aggregate purchase consideration for the Lippo Plaza Property is based on an exchange rate of S$1.00 :
HK$6.1275 and comprises (i) the purchase consideration of approximately HK$843.5 million (subject to
adjustment) payable to Lippo China Resources Limited (LCR) under the Tecwell Share Purchase Agreement
(as defined herein) for the entire issued share capital in the BVI Company, (ii) the repayment of the principal
amount of HK$776 million of a term loan facility granted by Standard Chartered Bank (Hong Kong) Limited,
The Bank of East Asia, Limited, China CITIC Bank International Limited (formerly known as CITIC Bank
International Limited), Chinatrust Commercial Bank and Chong Hing Bank Limited to the BVI Company as the
borrower (the Existing Offshore Facility), and (iii) the refinancing of the Existing Onshore Facility (as
defined herein).
(10) The purchase consideration for the Lippo Plaza Property may be adjusted upwards or downwards based on
the increase or decrease, as the case may be, in NAV of the BVI Company and its subsidiaries (which is the
aggregate value of the total assets of BVI Company and its subsidiaries less the aggregate amount of the total
liabilities of the BVI Company and its subsidiaries) (excluding any change in valuation of the Lippo Plaza
Property) as at the Listing Date relative to 30 June 2013. The management accounts of the BVI Company and
its subsidiaries will be used to prepare the consolidated accounts of the BVI Company as at the completion
date of the Tecwell Share Purchase Agreement (the Completion Accounts, and the completion date of the
Tecwell Share Purchase Agreement, the Tecwell Completion Date) as well as the statement as at the
Tecwell Completion Date in the format set out in the Tecwell Share Purchase Agreement (the Completion
NAV Statement, and together with the Completion Accounts, the Completion Financial Statements). The
Completion Financial Statements will be prepared by the BVI Holding Company and reviewed by the
Reporting Auditors.
(a) The OUE Bayfront Property: Premium office building with ancillary retail facilities
located between the new Marina Bay downtown and Raffles Place, within Singapores
CBD
Vantage position OUE Bayfront has the advantageous position of being a premium office
building located at Collyer Quay, near the major traffic interchange of Raffles Quay and
Robinson Road/Cecil Street, between the developing Marina Bay area or New Downtown
and the established financial hub of Raffles Place. Strategically situated between these two
key areas of Singapores CBD, the OUE Bayfront Property enjoys prominent status alongside
other notable recent additions of premium office space that include Marina Bay Financial
Centre, One Raffles Quay and Ocean Financial Centre, and is within reach of entertainment
facilities such as Marina Bay Sands and the Esplanade, placing it in the midst of a critical
mass of business and retail activity that affords its tenants ready and immediate access to
the surrounding commercial community, residential and hospitality developments, retail
amenities and entertainment offerings embodying the work-live-play concept.
Excellent connectivity and accessibility The OUE Bayfront Property enjoys easy
connectivity both within and out of Singapores CBD. The OUE Bayfront Property offers
convenient access to the Raffles Place Mass Rapid Transit (MRT) station, the major MRT
interchange within the Singapore CBD that is one of the key points of entry and exit to and
from the Singapore CBD in the daily commute of the office population, and is within walking
distance from the recently opened Downtown MRT station, which serves the new Downtown
line. Both OUE Link and the OUE Bayfront Propertys underpass connection to the Raffles
Place MRT station serve as important connectors for pedestrian traffic within the Singapore
CBD. Direct road frontage to Collyer Quay offers convenient vehicular access to the OUE
Bayfront Property, which is also well-served by diverse bus routes. Collyer Quay is a major
arterial road that leads directly into the other core areas of the Singapore CBD, namely
Marina Bay (via Marina Boulevard) and Tanjong Pagar (via Raffles Quay and Shenton Way).
The roads near the OUE Bayfront Property also offer convenient access to expressways
such as the Ayer Rajah Expressway, the new Marina Coastal Expressway, the Kallang-Paya
Lebar Expressway via the nearby Nicoll Highway and the East Coast Parkway, which
provides swift and direct access to Changi Airport.
6
The map below illustrates the OUE Bayfront Propertys location within the Singapore CBD.

D
T

1
6
C
E

1
B
A
Y
F
R
O
N
T
N
S
2
6
E
W
1
4
R
A
F
F
L
E
S
P
L
A
C
E
Marina Bay
Singapore River
OUE
Bayfront
One Raffles
Place
OUE
Downtown
OUE Tower
OUE Link
Legend
OUE Bayfront Property
ROFR Properties
(U
/C
)
Source: Independent Market Research Report.
Premium office building OUE Bayfront is one of the latest premium office buildings in the
Singapore CBD and has been certified as Green Mark Gold by the Building and Construction
Authority of Singapore (BCA) for its environmentally sustainable design. It has an efficient
floor layout offering column-free floor plates ranging from approximately 2,415 sq m to 2,787
sq m which are easily configurable, allowing for flexibility in its leasing strategy. Certain floors
in OUE Bayfront are designated as trading floors that can cater to tenants in the financial
services sector. These floors include enhanced specifications such as higher floor loading
capacity, 300 mm raised flooring system, increased air-conditioning cooling capacity, high
power provision and emergency electrical supply for air-conditioning and tenants use.
The main entrance of OUE Bayfront comprises a 12-metre high reception lobby and a public
plaza fronting Collyer Quay, enabling easy access and maximum visibility from the street
level. In addition, a significant proportion of OUE Bayfronts office space overlooks the
Marina Bay waterfront, making OUE Bayfront one of the few offices in the area offering
panoramic views of Marina Bay and ensuring a rental premium for certain of its office spaces.
Unique ancillary properties OUE Bayfront is well-complemented by its ancillary
properties, namely OUE Tower and OUE Link.
Accorded heritage conservation status for its historic significance, OUE Tower serves as an
experiential and unique attraction for patrons by being one of only two waterfront revolving
restaurants in Singapore and the only one in the Singapore CBD. OUE Tower offers
panoramic views of the Marina Bay landscape and is currently occupied by Tng L Private
Dining, a fine dining Chinese restaurant operated by the established Tung Lok Group.
OUE Link is the aerial connector between the OUE Bayfront Property and Raffles Place MRT
station and enjoys a high volume of shopper and commuter traffic. All retail units at OUE Link
have double frontages onto the two pedestrian walkways. In addition, OUE Links unique status
7
as the only overhead pedestrian bridge connecting Raffles Place MRT station and the Marina
Bay/Fullerton Heritage areas draws significant shopper traffic which benefits OUE Links retail
tenants.
(b) The Lippo Plaza Property: Grade-A commercial building located in the Huangpu
district, one of Shanghais established core commercial districts
Located within one of Shanghais established core commercial districts The Lippo Plaza
Property is situated near the eastern end of Huaihai Zhong Road in the Huangpu district of
Shanghai, one of the main commercial districts in the Puxi area, which is the traditional
downtown area of Shanghai. The Huangpu district is one of the oldest business districts in
downtown Shanghai, and is home to numerous historical buildings, including the colonial-era
buildings along the Bund. The Lippo Plaza Property is located among other renowned
commercial developments in the district, including the K11 (formerly Hong Kong New World
Tower), Shui On Plaza, Central Plaza, Hong Kong Plaza, Bund Centre, Shanghai Times Square,
Raffles City and Henderson Metropolitan. The main tenants in this area generally comprise
multinational corporations (MNCs), international financial institutions and Chinese state-owned
enterprises (SOEs).
The following map illustrates the location of the Lippo Plaza Property within the Huangpu district.

Huangpu
Huai Hai Zhong Road
Lippo Plaza, Shanghai
K11
Shui On Plaza
Xin Tian Di
Yangpu
Hongkou
Zhabei
Putuo
Jingan
Changning
Xuhui
Source: Independent Market Research Report.
Well-placed within a fast-growing major retail artery The Huaihai Road precinct, where
the Lippo Plaza Property is located, is classified as a prime retail area in Shanghais retail
landscape. The unique and varied architectural styles as well as historical buildings set the
area apart from other retail areas, resulting in the precincts popularity with top-end designer
brands from all over the world as well as renowned and established Chinese brands. Huaihai
Zhong Road has the largest area of prime retail space in the Puxi area, comprising
approximately 30.0% of total prime retail space in the Puxi area.
8
The completion of the second phase of Metro Line 13 in 2014 is expected to bring more
pedestrian traffic to Huaihai Zhong Road, stemming from anticipated upgrading activities to
retail spaces in the vicinity of the upcoming Metro Line 13.
Excellent connectivity and accessibility Lippo Plaza is located within a five minutes
walk from the South Huangpi Road Metro station, which serves the key Metro Line 1 (the
main north-south line of the Shanghai Metro). In addition, the future Huaihai Zhong Road
Station on the upcoming Metro Line 13 (an East-West line on the Shanghai metro network)
will be located within walking distance from the Lippo Plaza Property. This new station will
be the interchange station with the planned Metro Line 14, which will further enhance
accessibility to Huaihai Zhong Road by connecting the Puxi area with the Pudong district,
another of Shanghais core commercial districts across the Huangpu River. Tenants of the
Lippo Plaza Property can also access the Pudong district via nearby underground tunnels
and major bridges such as the Nanpu and Lupu bridges. The Lippo Plaza Property is also
easily accessible by bus, with routes covering major commercial precincts such as West
Nanjing Road, Xujiahui and Peoples Square.
Also located in close proximity are the North-South Elevated Road and Yanan Elevated
Road, two major expressways which connect the Lippo Plaza Property to other major
transportation lines and key commercial areas in Shanghai, such as Peoples Square,
Lujiazui CBD in the Pudong district, railway stations and Hongqiao Transportation Hub. The
Lippo Plaza Property is located approximately 3 km from the Bund and 43 km from Pudong
International Airport.
(2) Unique opportunity for investment exposure to prime commercial real estate in the key
international financial and business hubs of Singapore and Shanghai
Investors in OUE C-REIT would have the unique opportunity to gain exposure to prime
commercial real estate in the thriving key international financial and business hubs of
Singapore and Shanghai through OUE C-REIT. The Manager believes that the IPO Portfolio
will deliver stable and sustainable returns primarily due to the Properties strong
specifications and prime locations, with both Singapore and Shanghais robust office supply
and demand dynamics expected to drive rental and occupancy growth.
(a) Established and thriving key international financial and business hubs of Singapore
and Shanghai underpin long-term sustainable returns of the IPO Portfolio
Singapore and Shanghai to remain at the forefront of Asias growth
Future growth in the global economy is expected to be underpinned by the growth momentum
in Asia. As leading financial centres and established gateway cities, Singapore and Shanghai
are expected to remain at the forefront of Asias growth. Their attractiveness as financial and
business hubs in one of the most important economic regions globally will strengthen the
demand base of their respective commercial real estate markets, particularly those in prime
commercial districts.
9
Singapore
Singapore is a global financial centre and gateway to the ASEAN nations
1
as well as the rest
of the world. In addition to its strategic geographical location and ease of accessibility to
critical investment and economic nodes in the ASEAN nations, Singapore has typically been
rated highly for possessing various key business competitive advantages such as the ease
of doing business, competitiveness, integration to the global economy, and level of human
capital.
Leading global financial centre As stated in the Independent Market Research Report,
Singapore has consistently been ranked as one of the top two financial centres in Asia (the
other being Hong Kong) since 2007, and is ranked just behind London and New York globally.
Singapore is the only country in Asia with a stable AAA credit rating from each of Fitch Inc.,
Moodys Investors Service, Inc (Moodys) and Standard & Poors Ratings Group.
According to the Independent Market Research Consultant, Singapore is home to over 700
financial institutions, offering a broad and integrated suite of financial and business services,
positioning itself as an important regional funding centre, leading insurance services centre
and foreign exchange centre and commodity and financial derivatives trading hub in Asia. In
particular, it is reputed to be Asias centre for wealth and asset management. Singapore is
also a leading listing destination, with the SGX-ST being one of the most international stock
exchanges in Asia, based on its wide range of foreign listings.
In addition, Singapore also has the most extensive network of free trade agreements in Asia,
further supporting its position as a financial centre of choice.
Gateway to the ASEAN nations due to proximity and business and cultural linkages
With its established business and cultural linkages to the ASEAN nations as well as its
pan-Asian business perspective, Singapore is a natural gateway for international firms
looking to access the ASEAN market as well as for ASEAN businesses seeking to gain
access to the global market. As one of the most established financial and business hubs in
the region, Singapore has long led the ASEAN region in terms of foreign direct investment
inflows. In 2012, Singapore accounted for approximately 51% or S$56.7 billion of the foreign
direct investment inflow into the ASEAN nations according to the Independent Market
Research Consultant.
Singapores gateway positioning is augmented by its world-class international airport and
port. Changi Airport is a major aviation hub in Asia and is the sixth busiest airport in the world
in terms of passenger movement as at September 2013. Serving more than 100 international
airlines flying to some 250 cities in about 60 countries and territories worldwide, Changi
Airport handled more than 51.2 million passengers in 2012. Meanwhile, connected to over
600 ports in more than 120 countries, the port of Singapore is one of the busiest container
ports in the world, handling approximately 31.6 million twenty foot equivalent units in 2012,
a 5.7% increase from 2011.
The establishment of the ASEAN Economic Community by 2015 is expected to transform the
ASEAN region into a region with free movement of goods, services, investment and skilled
labour and freer flow of capital. With its established financial and business infrastructure,
Singapore is well-positioned to capitalise on the ASEAN Economic Community.
1 This refers to the countries constituting the Association of Southeast Asian Nations, namely Brunei, Cambodia,
Indonesia, Laos, Malaysia, Myanmar (Burma), the Philippines, Singapore, Thailand and Vietnam.
10
Global business city in the heart of a growing Asia Singapore has also positioned itself
as a choice location for bridging growth opportunities in the PRC, India and the Middle East.
This is evidenced by the fact that more than 7,000 MNCs have chosen to set up offices in
Singapore as a base from which to support their Asian operations, with approximately 60%
of these MNCs having established some form of headquarters function, including finance and
treasury, in Singapore.
Some of Singapores key value propositions which attract MNCs to establish in Singapore
include:
efficient and transparent business and government regulatory frameworks;
diverse financial and business eco-system;
competitive tax system;
comprehensive city planning and infrastructure;
deep talent pool, featuring a highly skilled and bilingual workforce; and
Singapores dynamic and forward-looking economic policies.
Shanghai
Shanghai has historically been and remains the business and financial capital of the PRC,
giving it direct and critical access to the worlds second-largest and fastest-growing major
economy.
Financial capital of the PRC Shanghai has advanced rapidly up the ranks of leading
global financial centres over the years, being ranked fifth globally and third in Asia in
September 2011 as stated in the Independent Market Research Report. Despite the
moderation of growth in the PRC economy in 2012 in tandem with the countrys entry into a
more mature growth phase, Shanghai remains one of the top ten financial centres in Asia as
of March 2013.
Shanghai has a comprehensive array of financial institutions, including commercial banks,
securities firms, insurance companies and fund management firms and futures corporations.
There are currently around 900 financial institutions in Shanghai and the city is home to some
200,000 finance professionals.
For the first half of 2013, Shanghai remained the primary investment destination for foreign
investment in the PRC, attracting 18.4% of the PRCs foreign direct investment inflow.
According to a survey among entrepreneurs and investors by Forbes in 2012, Shanghai
remains among the Best Destinations for Business in the PRC. Shanghai, being part of the
PRC, is an optimal location from which foreign and domestic companies can raise capital in
RMB. The city has emerged as a centre for the domestic financial services sector, with a key
role in interfacing between international and domestic financial institutions.
Gateway into the PRCs growth As stated in the Independent Market Research Report,
Shanghais potential as a leading Asian financial centre is wellrecognised, the city being
ranked consistently since 2009 alongside Singapore and Hong Kong among the top five
global financial centres and which are expected to play more significant global roles over the
next two to three years. These cities were also noted as some of the top five global financial
centres in which organisations may establish new operations in the next two to three years.
11
In line with the 12th FiveYear Plan of Shanghais Social and Economic Development, which
focuses on accelerating the internationalisation of the city with a Four Centres initiative,
namely internationalisation as a global financial, trade, shipping and economic centre,
Shanghai has established a pilot free trade zone featuring interest rate liberalisation and
increased RMB convertibility as well as continuous support from the municipal government,
such as measures aimed at encouraging and supporting MNCs to locate their regional
headquarters in Shanghai.
These measures have in particular helped drive the rapid growth of MNCs setting up their
regional headquarters in the city, from 86 in 2004 to 403 in 2012, as well as the significant
growth of foreign direct investment inflow in 2012 of 20.5% year-on-year. According to the
Shanghai Commission of Commerce, Shanghai expects 35 more MNCs to locate their
regional headquarters to the city by end-2013, while foreign direct investment inflow is
expected to increase by approximately 10.0% year-on-year. This is in line with the PRC
governments long-term target of having over 550 MNCs set up their regional headquarters
in Shanghai by 2020.
Shanghais position as one of the PRCs most important gateways for foreign trade has also
strengthened significantly. Notably, the Shanghai Pudong International Airport, the primary
international airport serving Shanghai, is renowned as a major aviation hub in Asia,
connecting the city to over 200 global destinations. As at end 2012, it is the busiest airport
in the PRC in terms of cargo traffic (third globally) according to the Independent Market
Research Consultant and the third busiest airport in the PRC in terms of passenger
movement. Meanwhile, the port of Shanghai is the PRCs largest and most comprehensive
port, overtaking Singapore as the worlds busiest container port in 2010. The port of
Shanghai has since maintained its pole position, registering the handling of approximately
32.5 million twenty foot equivalent units in 2012.
(b) Favourable office sector outlook in the respective CBD areas of Singapore and
Shanghai support the further growth in DPU of the IPO Portfolio
Singapore
The CBD areas of Singapore have favourable office sector dynamics, with relatively strong
demand for office space and resulting in a high level of average occupancy.
Since falling to a low of 90.7% in 2010 following the global financial crisis in 2009, average
occupancy rates for office space in the Singapore CBD have recovered strongly, with Raffles
Place exhibiting a robust rate of 95.3% as at the third quarter of 2013. Marina Bay, the
relatively new extension of Singapores CBD, has witnessed strong occupancy rates,
increasing to approximately 95.2% in the second quarter of 2013 from 70.3% in 2010. This
strong occupancy rate was recorded amid the gradual build-up of office space supply in the
area in recent years, reflecting the strength and attractiveness of the office rental market in
Marina Bay. As at the third quarter of 2013, Marina Bays average occupancy rate fell to
84.1% largely as a result of the completion of Asia Square Tower 2. According to the
Independent Market Research Consultant, occupancy rates in Marina Bay are expected to
improve over the next few quarters as pre-committed tenants in Asia Square Towers 1 and
2 shift into their premises.
12
The following graph illustrates the average occupancy rates in the Singapore CBD for the
period from 2010 to the third quarter of 2013.
Average Occupancy Rates in the Singapore CBD (%)
65%
70%
75%
80%
85%
90%
95%
100%
Shenton Way/Robinson Rd/Cecil Street Raffles Place Marina Bay
Q3 2013 Q2 2013 Q1 2013 2012 2011 2010
96.8%
94.4%
90.4%
70.3%
83.6%
90.9%
84.1%
(1)
95.3%
97.7%
94.8%
94.3%
95.2%
91.6%
93.3%
93.6%
88.5%
91.2%
93.7%
Note:
(1) Due to the completion of Asia Square Tower 2 in the third quarter of 2013.
Source: Independent Market Research Report.
Average monthly passing rent for office space in the Singapore CBD had eased in 2011 due
to uncertain global economic conditions, but began to recover in the third quarter of 2013,
with rates at Marina Bay and Raffles Place growing 4.8% and 1.3% quarter-on-quarter to
S$11.0 per sq ft per month and S$9.4 per sq ft per month, respectively.
The following graph illustrates the average rental rates in the Singapore CBD for the period
from 2010 to the third quarter of 2013.
Average Rental Rates in the Singapore CBD (S$ per sq ft per month)
0
2
4
6
8
10
12
14
Shenton Way/ Robinson Rd/ Cecil Street Raffles Place Marina Bay
Q3 2013 Q2 2013 Q1 2013 2012 2011 2010
12.0
10.5 10.5 10.5
11.0
9.4
7.5
9.3
7.3
7.3
9.3 9.3
7.3
9.8
7.8
9.0
6.5
S$
Source: Independent Market Research Report.
13
This trend of strength in expected occupancy and rental rates of the Marina Bay office supply
going forward is expected to be supported by the limited pipeline of office supply in the near
term within the Marina Bay/Raffles Place CBD sub-districts. As at the third quarter of 2013,
the pipeline supply of office space in Singapore between 2014 and 2017 stood at
approximately 0.6 million sq m, with approximately 0.3 million sq m or 48.0% of this supply
located within the Singapore CBD. The supply dynamics of office space in the Singapore
CBD are expected to remain resilient to this pipeline supply, owing to the relatively limited
supply coming online between 2014 and 2016 and the evenly staggered spread of
anticipated completions in the Singapore CBD between 2014 and 2017, which will reduce the
intensity of competition.
The following graph illustrates the potential new supply of office space (by NLA) in the
Singapore CBD for the period from 2014 to 2017.
Potential New Supply of Office Space in the Singapore CBD (by NLA)
(sq m)
0
50,000
100,000
150,000
200,000
250,000
Marina Bay Shenton Way/Robinson Road/Cecil Street Fringe CBD Raffles Place
2017F 2016F 2015F 2014F
66,300
55,200
3,100
85,500
54,700
47,600
21,000
166,900
sq m
Source: Independent Market Research Report.
The demand dynamics within the Singapore CBD are expected to be supported by (i)
Singapores positive macroeconomic prospects, (ii) the employment growth in the financial
and business services over the next few years, which form the bulk of demand in the
Singapore CBD office market, (iii) the limited potential office supply in the Singapore CBD,
particularly that for premium and Grade-A
1
office buildings between 2014 and 2016, (iv) the
continued rejuvenation of the Raffles Place area alongside the development of the Marina
Bay area, and (v) the excellent accessibility afforded by the Singapore CBDs comprehensive
transportation network. Consequently, average monthly gross rentals in the Raffles Place
area are expected to increase year-on-year by 3.2% and 3.6% in 2014 and 2015,
respectively.
Shanghai
Given the limited availability of land for development within the Huangpu district, the annual
supply of Grade-A office space has been relatively stable since 2003, averaging
approximately 58,000 sq m over the past decade. Supported by the limited supply as well as
the stability of demand arising largely from the areas excellent accessibility, considerable
presence of MNCs and Chinese SOEs in the Huangpu district and comprehensive retail
1
The term Grade-A for the purposes of describing commercial properties in Singapore is set out in the Independent
Market Research Report.
14
amenities, Grade-A occupancy rates have been relatively stable vis-a` -vis the Shanghai office
market at large and have been maintained above 90.0% since 2004, with an average
occupancy rate of 93.1% in the third quarter of 2013.
The following graph illustrates the average occupancy rates of office properties in the
Huangpu district for the period from 2010 to the third quarter of 2013.
Average Occupancy Rate of Office Properties in the Huangpu District (%)
0%
20%
40%
60%
80%
100%
Q3 2013 Q2 2013 Q1 2013 2012 2011 2010
96.0%
93.8% 93.1% 93.7% 93.4% 93.1%
Source: Independent Market Research Report.
Shanghais Grade-A office rental performance has recorded continued stable growth
following the global financial crisis in 2009. Overall average rental rates have increased by
approximately 24.2% from its low of RMB211.0 per sq m per month in 2010 to RMB262.0 per
sq m per month in the third quarter of 2013. The increase in rental rates has been even more
significant for properties in the Huangpu district with an increase of approximately 29.1%
from RMB220.0 per sq m per month in 2010 to RMB284.0 per sq m per month in the third
quarter of 2013, which was approximately 8.4% higher than that at the city-wide average
level of approximately RMB262.0 per sq m per month, further reflecting the strong value
proposition that the Huangpu district offers to office tenants.
The following graph illustrates the average rental rates in the Huangpu district as compared
to average rental rates in Shanghai overall for the period from 2010 to the third quarter of
2013.
Average Rental Rates in the Huangpu District as compared to Average Rental Rates
in Shanghai Overall (RMB per sq m per month)
10
60
110
160
210
260
310
Huangpu Shanghai
Q3 2013 Q2 2013 Q1 2013 2012 2011 2010
220
211
254
244
282
266
283
266
283
264
284
262
RMB
Source: Independent Market Research Report.
15
In addition, the projected supply of office property in the Huangpu district is expected to be
limited between 2014 and 2016 given the land scarcity in the area, which is expected to
continue to support both occupancy rates and rental rates in the Huangpu district. Office
developments in this area are often seen as long-term investment assets given their
generally high and relatively stable capital values. The total potential office supply for the
Huangpu district is estimated to be a total of approximately 0.7 million sq m for the period
between 2014 and 2017, as compared to a total of approximately 5.9 million sq m of potential
supply over the same period for the overall Shanghai region, implying less direct competition
to the Lippo Plaza Property.
The following graph illustrates the potential new supply of office space (by GFA) in the
Huangpu district and Shanghai overall for the period between 2014 and 2017.
Potential New Supply of Office Space in the Huangpu District and
Shanghai Overall (by GFA) (sq m)
1.5 million
2.6 million
1.2 million
0.6 million
275,000
250,000
155,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
sqm
Shanghai Huangpu
2014 F 2015 F 2016 F 2017 F
Source: Independent Market Research Report.
The Huangpu district is expected to see a limited pipeline supply of approximately 0.7 million
sq m of Grade-A office space coming online between 2014 and 2017. The combination of
favourable supply-demand dynamics is expected to support office rental rates in the
Huangpu district, with growth of approximately 6.8% and 6.0% year-on-year anticipated for
2014 and 2015, respectively, higher than the growth rates of 1.3% and 1.6% anticipated for
Shanghai in general over the same period.
16
(3) Stable and resilient portfolio
(a) Track record of consistent growth
Historical growth in revenue for the IPO Portfolio has been increasing consistently, reflecting
the resilience and stability of the IPO Portfolio. The OUE Bayfront Propertys Gross Revenue
grew significantly from S$14.5 million since it first obtained its temporary occupation permit
(TOP) in 2011 to S$42.6 million in 2012. This corresponded to an increase in office passing
rent from S$8.6 per sq ft per month in 2011 to S$10.4 per sq ft per month in 2012. For the
nine months ended 30 September 2013, Gross Revenue for the OUE Bayfront Property
amounted to S$35.5 million.
Similarly, Gross Revenue for the Lippo Plaza Property has shown consistent growth,
increasing by 3.6% from RMB110.4 million in 2011 to RMB114.4 million in 2012 and
amounted to RMB85.3 million for the nine months ended 30 September 2013. This
corresponded to an increase in office passing rent from RMB7.7 per sq m per day in 2011 to
RMB8.0 per sq m per day in 2012.
The following graphs illustrate the Gross Revenue and passing rents for the OUE Bayfront
Property and the Lippo Plaza Property, respectively.
Gross Revenue and Passing Rents for the OUE Bayfront Property
(1)
14.5
42.6
35.5
8.6
10.4 10.4
17.7
8.8
8.5
0
10
20
30
40
50
60
FY2011 FY2012 9M 2013
Gross Revenue (S$ million) Office Passing Rent (S$ per sq ft per month)
Retail Passing Rent (S$ per sq ft per month)
S$ m
Note:
(1) The decrease in retail rental rate for the OUE Bayfront Property from 2011 to 2012 was largely due to the
entrance of a tenant occupying approximately 60.0% of the retail NLA of the OUE Bayfront Property in 2012.
Excluding this lease, the retail rental rate for the OUE Bayfront Property would have been S$19.2 per sq ft
per month in 2012.
17
Gross Revenue and Passing Rents for the Lippo Plaza Property
110.4 114.4
85.3
7.7
8.0
9.0
16.5
16.3
16.8
0
50
100
150
200
250
300
FY2011 FY2012 9M 2013
Gross Revenue (RMB million)
(1)
Office Passing Rent (RMB per sq m per day)
(2)
Retail Passing Rent (RMB per sq m per day)
RMB m
Notes:
(1) Net of business tax for the Lippo Plaza Property.
(2) Excludes office space occupied by the centre management team of the Lippo Plaza Property and a business
centre.
(b) Strong historical occupancy
The IPO Portfolio has maintained strong occupancy rates historically, with the OUE Bayfront
Propertys committed office and retail occupancy rates increasing from 82.3% and 77.7%,
respectively, as at 31 December 2011 (the year in which it was completed) to 93.2% and
100.0%, respectively, as at 31 December 2012. The occupancy rate of the Lippo Plaza
Property has remained resilient even throughout the global financial crisis, with committed
office and retail occupancy rates of 92.1% and 100.0%, respectively, as at 31 December
2011 and 91.0% and 98.7%, respectively, as at 31 December 2012.
As at 30 September 2013, the committed office and retail occupancy rates for the OUE
Bayfront Property were 95.9% and 100.0%, respectively, while the committed office and retail
occupancy rates for the Lippo Plaza Property were 86.5% and 97.8%, respectively.
The following graphs illustrate the historical committed occupancy rates for the OUE
Bayfront Property and the Lippo Plaza Property, respectively.
Historical Committed Occupancy Rates for the OUE Bayfront Property
(1)
82.3%
93.2%
95.9%
77.7%
100.0%
100.0%
0%
20%
40%
60%
80%
100%
As at 31 Dec 2011 As at 31 Dec 2012 As at 30 Sep 2013
Office Occupancy (%) Retail Occupancy (%)
Note:
(1) As at the Latest Practicable Date, the office occupancy rate for the OUE Bayfront Property was 100.0%.
18
Historical Committed Occupancy Rates for the Lippo Plaza Property
(1)
92.1%
91.0%
86.5%
100.0%
98.7%
97.8%
0%
20%
40%
60%
80%
100%
As at 31 Dec 2011 As at 31 Dec 2012 As at 30 Sep 2013
Office Occupancy (%) Retail Occupancy (%)
Note:
(1) The lower committed occupancy rate of the office component of the Lippo Plaza Property as at 30 September
2013, in comparison to historical occupancy rates, was due to the non-renewal of rented space by office
tenants, which was in the ordinary course of business. As at the Latest Practicable Date, the office occupancy
rate for the Lippo Plaza Property was 90.4%.
In addition, given the longstanding relationship with its quality tenants, there has historically
been a reasonably high retention rate of approximately 66.9% for the Lippo Plaza Property
in FY2012, with average office renewal rents being approximately 15.0% higher than
average office rents in FY2012 and in line with market rents.
(c) Diversified and high quality tenant base
As at 30 September 2013, the Properties together have a large tenant base of 128 tenants,
which covers a wide variety of trade sectors, providing OUE C-REIT with trade
diversification.
In relation to the OUE Bayfront Property, no single trade sector accounted for more than
46.5% of committed NLA (as at 30 September 2013) and 45.2% of OUE Bayfront Propertys
Gross Rental Income (for the month of September 2013).
19
The following graphs illustrate the breakdown of the tenant mix at the OUE Bayfront Property
by trade sectors.
The OUE Bayfront Property
Tenant Mix by Committed NLA
(as at 30 September 2013)
Tenant Mix by Gross Rental Income
(for the month of September 2013)
46.5%
16.7%
8.9%
8.7%
7.4%
6.7%
4.5%
0.4%
0.2%
Financial Services
Legal
Consulting
Real Estate
IT
F&B
Fashion
Retail services
Others
(1)
45.2%
17.8%
9.2%
8.7%
8.5%
6.2%
3.3%
0.3%
Financial Services
Legal
Real Estate
Consulting
IT
F&B
Fashion
Retail services
Others
(1)
0.7%
Note:
(1) Others for the purposes of the breakdown by trade sectors of the tenant mix at the OUE Bayfront Property
by committed NLA and Gross Rental Income includes trading, manufacturing and natural resources.
In relation to the Lippo Plaza Property, no single trade sector accounted for more than 18.6%
of committed NLA (as at 30 September 2013) and 22.7% of the Lippo Plaza Propertys Gross
Rental Income (for the month of September 2013).
The following graphs illustrate the breakdown of the tenant mix at Lippo Plaza Property by
trade sectors.
The Lippo Plaza Property
Tenant Mix by Committed NLA
(as at 30 September 2013)
Tenant Mix by Gross Rental Income
(for the month of September 2013)
18.6%
18.5%
19.3%
12.5%
8.3%
7.0%
5.4%
5.3%
5.1%
Consulting
Trading
Retail
Property
Pharmaceutical
IT
Catering
Financial Services
Others
(1)
22.7%
17.5%
16.1%
16.0%
7.3%
7.0%
5.1%
4.8%
3.5%
Retail
Consulting
Trading
Pharmaceutical
Catering
Property
IT
Financial Services
Others
(1)
Note:
(1) Others for the purposes of the breakdown by trade sectors of the tenant mix at the Lippo Plaza Property by
committed NLA and Gross Rental Income includes manufacturing, beauty, logistics, food processing,
advertising/publishing, biotechnology and representative offices.
20
The following table sets out selected information on the top 10 tenants for the OUE Bayfront
Property by Gross Rental Income for the month of September 2013.
Top 10 Tenants for the OUE Bayfront Property
(by Gross Rental Income for the month of September 2013)
No. Tenant Trade Sector
Lease
Expiry
Date
(1)
Percentage of
Gross Rental
Income (%)
1 Bank of America Merrill Lynch
(2)
Financial and
Professional
Services
(3)
2021 28.7
2 Hogan Lovells International LLP Legal Services 2014 9.9
3 Bain & Company SE Asia, Inc. Financial and
Professional
Services
2015 7.2
4 Allen & Overy LLP Legal Services 2015 6.3
5 Citrix Systems Singapore
Pte Ltd
Information
Technology
2014 and
2015
6.2
6 OUE Limited Real Estate 2014 5.6
7 Skandinaviska Enskilda Banken
AB (PUBL), Singapore Branch
Financial and
Professional
Services
2015 4.8
8 Union Bancaire Privee
(Singapore) Ltd
Financial and
Professional
Services
2014 3.8
9 To ng L Private Dining Pte Ltd F&B 2016 2.0
10 Ma San Group Corporation Others 2014 1.8
Top 10 Tenants 76.4
Other Tenants 23.6
Total 100.0
Notes:
(1) Some of the tenants above have signed more than one tenancy agreement and this has resulted in more than
one tenancy expiry date for such tenants.
(2) Bank of America Merrill Lynch refers to the group of entities which carry on business under the trade name
of Bank of America Merrill Lynch, which is principally engaged in the provision of financial services.
(3) Financial and Professional Services includes trade sectors such as financial services and consulting.
21
These top 10 tenants contributed 76.4% of the OUE Bayfront Propertys Gross Rental
Income for the month of September 2013 and have a weighted average lease term to expiry
(WALE) by committed NLA of 4.0 years as at 30 September 2013.
The following table sets out selected information on the top 10 tenants
(1)
for the Lippo Plaza
Property by Gross Rental Income for the month of September 2013.
Top 10 Tenants
(1)
for the Lippo Plaza Property
(by Gross Rental Income for the month of September 2013)
No. Tenant Trade Sector
Lease
Expiry
Date
(2)
Percentage of
Gross Rental
Income (%)
1 Richmile (Shanghai) Commerce
& Trading Limited
Retail 2014 4.0
2 Shanghai NE.Tiger Fur Fashion
Company Limited
Retail 2015 3.6
3 Bole Associates, Ltd Consulting 2014 3.5
4 IFX Markets Ltd, Shanghai
Representative Office
Others 2015 3.4
5 Techpool Bio-Pharma Co., Ltd Pharmaceutical 2015 2.8
6 Shanghai Xinyi Real Estate
Agent & Consulting Limited
Property 2014 2.6
7 Fu Jiang Fang Catering &
Beverage Limited
Catering 2014 2.6
8 Servier (Tianjin) Pharmaceutical
Company, Limited
Pharmaceutical 2015 2.4
9 Yunsan (Shanghai) Limited Trading 2014 2.4
10 Shanghai Zunya Enterprise
Limited Company
Trading 2015 and
2016
2.2
Top 10 Tenants
(1)
29.6
Other Tenants 70.4
Total 100.0
Notes:
(1) The list of top 10 tenants for the Lippo Plaza Property does not take into account two tenants who would
otherwise be among the top 10 tenants by Gross Rental Income as they have not consented to the disclosure
of their tenancy arrangements in this Prospectus.
(2) Some of the tenants above have signed more than one tenancy agreement and this has resulted in more than
one tenancy expiry date for such tenants.
These top 10 tenants
1
contributed 29.6% of the Lippo Plaza Propertys Gross Rental Income
for the month of September 2013 and have a WALE by committed NLA of 1.3 years as at 30
September 2013.
1 The list of top 10 tenants for the Lippo Plaza Property does not take into account two tenants who would otherwise
be among the top 10 tenants by Gross Rental Income as they have not consented to the disclosure of their tenancy
arrangements in this Prospectus.
22
(d) Minimal capital expenditure expected after the Listing Date
Minimal capital expenditure is expected to be incurred in relation to the IPO Portfolio after the
Listing Date.
The Manager expects the capital expenditure for the IPO Portfolio to be S$6.6 million and
S$0.4 million in the Forecast Year 2014 and the Projection Year 2015, respectively. Such
works are not expected to result in any significant impact to the operations of the Properties.
(4) Stable and attractive distribution yield with potential organic growth
One of OUE C-REITs primary objectives is to provide Unitholders with regular and stable
distributions, with long-term sustainable growth in DPU. OUE C-REIT intends to distribute
100.0% of its Distributable Income (as defined herein) for the Forecast Year 2014 and the
Projection Year 2015. Thereafter, OUE C-REIT intends to distribute at least 90.0% of its
Specified Taxable Income (as defined herein), with the actual level of distribution to be
determined at the discretion of the board of directors of the Manager (the Board) after
having considered OUE C-REITs funding requirements, other capital management
considerations and the overall stability of the distributions.
The Manager believes that OUE C-REIT will be able to deliver an attractive distribution yield
with sustainable organic growth in DPU as a result of the following factors:
(a) Potential organic growth via possible rent reversions and balanced lease expiry
profile for the IPO Portfolio
The Properties display potential for organic growth via possible rent reversions and balanced
lease expiry profile.
For the month of September 2013, passing rent for the office component of the OUE Bayfront
Property was S$10.4 per sq ft per month, which is at the lower end of the current market rent
range of S$10.0 to S$12.0 per sq ft per month for comparable Marina Bay office properties
according to the Independent Market Research Consultant. This passing rent is 15.4% lower
than the high end of the current market range for comparable Marina Bay office properties.
In relation to the Lippo Plaza Property, for the month of September 2013 the committed
passing rent for the office component of the Lippo Plaza Property was RMB271.8
1
per sq m
per month, which is within the current market rent range of RMB183.0 to RMB426.0 per sq
m per month of comparable Grade-A office properties in the Huangpu district according to the
Independent Market Research Consultant. This committed passing rent is 48.5% higher than
the low end of the current market rent range and 56.7% lower than the high end of the current
market range for comparable Grade-A office properties in the Huangpu district.
1 Excludes office space occupied by the centre management team of the Lippo Plaza Property and a business centre.
23
The following graphs illustrate the differences between the passing rents of the respective
office components (for the month of September 2013) and the current respective market rent
ranges for the OUE Bayfront Property and the Lippo Plaza Property, respectively.
Difference between the Office Passing Rent for the
OUE Bayfront Property (for the month of September 2013) and the
Current Market Rent Range for Comparable Properties
10.4
0
2
4
6
8
10
12
14
OUE Bayfront Property Office Passing Rent
(for the month of September 2013)
Current Market Rent Range: S$10.0-S$12.0
+15%
(S$ per sq ft per month)
(1)
Note:
(1) Refers to the current market rent range for office space located in Marina Bay and Raffles Place.
Source: Independent Market Research Report.
Difference between the Office Passing Rent for the
Lippo Plaza Property (for the month of September 2013) and the
Current Market Rent Range for Comparable Properties
272
0
50
100
150
200
250
300
350
400
450
Lippo Plaza Property Office Passing Rent
(for the month of September 2013)
(RMB per sq m per month)
Current Market Rent Range: RMB183-RMB426
(1)
+57%
+49%
Note:
(1) Refers to the current market rent range for office space located in the Huangpu district.
Source: Independent Market Research Report.
24
The balanced lease expiry profile of the IPO portfolio provides stability while positioning OUE
C-REIT to benefit from the organic rental reversions. The following graph illustrates the lease
expiry profile of OUE C-REIT.
Lease Expiry Profile of OUE C-REIT
0.6% 0.9%
37.1%
34.6%
29.0% 28.8%
10.4%
17.2%
0.9% 0.6%
3.1%
2.2%
18.9%
15.9%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2021
(1)
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
(b) Properties acquired at attractive purchase prices
The Properties are acquired at attractive purchase prices relative to their valuations. Based
on the valuations provided by the Independent Valuers, the OUE Bayfront Property has an
appraised value of between S$1,115.0 million to S$1,135.0 million (with Income Support) and
between S$1,080.0 million and S$1,102.0 million (without Income Support). The Lippo Plaza
Property has an appraised value of between RMB2,250.0 million and RMB2,337.0 million (or
between S$470.4 million and S$488.6 million)
1
. The OUE Bayfront Property will be acquired
for the purchase consideration of S$1,005.0 million (or S$2,498.0 per sq ft), and the Lippo
Plaza Property will be acquired for an aggregate purchase consideration equivalent to
approximately S$331.8 million
2
(subject to adjustment)
3
(or RMB27,116.8 per sq m).
According to the Independent Market Research Consultant and the Independent Valuers,
comparable transactions in the same area as the OUE Bayfront Property range from
S$1,686.0 per sq ft to S$2,580.0 per sq ft and comparable transactions in the same area as
the Lippo Plaza Property range from RMB37,738.0 per sq m to RMB75,014.0 per sq m,
respectively, implying attractive acquisition asset values to Unitholders and the potential for
capital appreciation of these assets.
1 Based on an exchange rate of S$1.00 : RMB4.7830.
2 The aggregate purchase consideration for the Lippo Plaza Property is based on an exchange rate of S$1.00 :
HK$6.1275 and comprises (i) the purchase consideration payable to LCR under the Tecwell Share Purchase
Agreement for the entire issued share capital in the BVI Company, (ii) the repayment of the Existing Offshore
Facility, and (iii) the refinancing of the Existing Onshore Facility.
3 The purchase consideration for the Lippo Plaza Property may be adjusted upwards or downwards based on the
increase or decrease, as the case may be, in NAV of the BVI Company and its subsidiaries (which is the aggregate
value of the total assets of the BVI Company and its subsidiaries less the aggregate amount of the total liabilities
of the BVI Company and its subsidiaries) (excluding any change in valuation of the Lippo Plaza Property) as at the
Listing Date relative to 30 June 2013. The management accounts of the BVI Company and its subsidiaries will be
used to prepare the Completion Financial Statements. The Completion Financial Statements will be prepared by the
BVI Holding Company and reviewed by the Reporting Auditors.
25
(c) Downside protection with Income Support Arrangement
The Sponsor will provide Income Support to OUE C-REIT for a period of up to five years from
Listing Date, where the Sponsor will make top-up payments pursuant to the Deed of Income
Support in relation to the OUE Bayfront Property (the Income Support Arrangement)
given that the OUE Bayfront Property only received its TOP in 2011 and a period of time is
required for it to ramp up to market rental rates.
For the Forecast Year 2014, the OUE Bayfront Property is estimated to account for
approximately 72.7% of the forecast Net Property Income of OUE C-REIT (inclusive of
Income Support). The Manager believes that the Income Support will help mitigate income
risk caused by uncertainty and volatility of global economic conditions.
(d) Attractive distribution yield
1
Based on the above factors, the distribution yield of OUE C-REIT is expected to grow as
shown in the following table:
Distribution Yield (%)
Forecast Year
2014
Projection Year
2015
With Income Support [6.80] [6.89]
Without Income Support [5.56] [5.75]
(5) Strong, reputable and committed Sponsor with proven track record of delivering value
(a) Leading real estate owner, developer and operator with proven abilities in acquiring
quality assets and enhancing their value
The Sponsor is a diversified real estate owner, developer and operator with a real estate
portfolio located in prime locations in Singapore, Malaysia and the U.S.. The Sponsor is one
of the leading publicly-listed property companies in Singapore with a market capitalisation of
approximately S$2.3 billion as at the Latest Practicable Date. The Sponsor and its
subsidiaries and related corporations (the Sponsor Group) are focused on the
commercial, retail, residential and hospitality property segments.
Sponsor has an established track record in executing well-placed acquisitions of real
estate
Over the years, the Sponsor has proven its ability to successfully acquire quality assets
in the commercial space. Examples of previous acquisitions include:
OUE Downtown (formerly known as 6 Shenton Way) which consists of OUE
Downtown 1, OUE Downtown 2 and Downtown Gallery, with a GFA of
approximately 116,055.0 sq m; and
U.S. Bank Tower, with a GFA of approximately 173,647.4 sq m.
1 The forecast and projected yields stated above are calculated based on:
the Offering Price; and
the assumption that the Listing Date is 1 January 2014.
Such yields will vary accordingly if the Listing Date is not on 1 January 2014, or for investors who purchase Units
in the secondary market at a market price that differs from the Offering Price.
26
For the avoidance of doubt, OUE Downtown and U.S. Bank Tower will not form part of
the IPO Portfolio but OUE Downtown 2 and Downtown Gallery and U.S. Bank Tower
have been identified as Sponsor ROFR Properties (as defined herein).
Proven ability to enhance value of assets acquired
The Sponsor has a proven track record of enhancing existing assets to create additional
value for its stakeholders. The following sets out the redevelopment works undertaken
by the Sponsor on selected assets:
The OUE Bayfront Property
The redevelopment of the OUE Bayfront Property transformed the former Overseas
Union House into a new 18-storey office tower and the former Change Alley Aerial Plaza
Tower, which has been gazetted for conservation, into OUE Tower. The OUE Bayfront
Property is connected to the Raffles MRT station by an underpass as well as OUE Link,
an aerial mall bridge which provides a quick and sheltered link to the MRT station. The
OUE Bayfront Propertys strategic location offers tenants convenient access to both the
new Marina Bay downtown and the Raffles Place, both within Singapores CBD. The
multi-million dollar redevelopment of the OUE Bayfront Property demonstrates the
Sponsors continued commitment to and focus on the commercial property sector.
The following photos illustrate the results of the redevelopment of the OUE Bayfront
Property.
Redevelopment of the OUE Bayfront Property
Before
After
27
One Raffles Place
1 Raffles Place, Singapore 048616
One Raffles Place encompasses two Grade-A office towers and a retail podium with an
aggregate NLA of approximately 80,000 sq m of office, retail and entertainment space.
The newly-completed One Raffles Place Tower Two, a 38-storey office building, has
drawn keen demand from international companies and professional firms and has been
certified Green Mark Platinum by the BCA for its energy efficiency and environmentally
sustainable design.
The five-storey retail mall at One Raffles Place, which also has a basement level, is
currently under refurbishment. The mall is expected to be completed in the second
quarter of 2014, with an increase in NLA from approximately 8,294 sq m to
approximately 9,156 sq m after refurbishment. There will be a new building faade to
showcase retailing activities and the interior will be refurbished to elevate the shopping
ambience. There will also be a new link connecting Tower Two to the retail mall on the
fourth level for easy access by the office tenants.
The following pictures illustrate the results of the redevelopment undertaken in respect
of One Raffles Place.
Redevelopment of One Raffles Place
Retail Podium
Before After
(1)
Tower Two
Before After
Note:
(1) The picture above is an artists impression of the retail podium of One Raffles Place and may differ from
the actual view of the retail podium of One Raffles Place once the redevelopment is completed.
28
For the avoidance of doubt, One Raffles Place
1
will not form part of the IPO Portfolio but
has been identified as one of the Sponsor ROFR Properties (as defined herein).
OUE Downtown
6 Shenton Way, Singapore 068809
OUE Downtown comprises two tower blocks (namely OUE Downtown 1 and OUE
Downtown 2), a podium and a multi-storey car park.
OUE Downtown 1 and OUE Downtown 2
OUE Downtown 1, completed in 1974, is a 50-storey building and comprises three
vertical zones, while OUE Downtown 2, completed in 1994, is a 37-storey building.
While both towers and the podium were originally used as offices, the low and mid
zones of OUE Downtown 1 will be converted to serviced apartments and the original
podium will be converted to a retail mall. The high zone of OUE Downtown 1 and the
whole of OUE Downtown 2 will remain as offices. This conversion is expected to be
completed in 2016.
Downtown Gallery
The original podium will be converted into a five-storey retail mall named Downtown
Gallery. Downtown Gallery will comprise F&B outlets and retail shops. There will be a
supermarket at the basement level. The existing office lobbies on the first level serving
OUE Downtown 1 and OUE Downtown 2 will be relocated to the fourth level, clearing
the first three levels for an uninterrupted mall stretching the entire length of the building.
The first level and basement of the multi-storey car park, as well as part of the third
level, will be converted into retail space, with a link on the third level connecting
Downtown Gallery to the neighbouring V on Shenton, SGX Building and 78 Robinson
Road.
1 The Sponsor owns an effective interest of approximately 40.8% in One Raffles Place through OUB Centre Limited
(OUBC), which is the trustee and beneficiary of a trust that holds the land and properties that comprise One Raffles
Place. OUBC is the registered owner of One Raffles Place and owns 81.54% of the beneficial interest in One Raffles
Place for itself. The remaining 18.46% of the beneficial interest in One Raffles Place is held by OUBC in trust for
United Overseas Bank Limited. The Sponsor owns a 50.0% interest in OUBC. The Sponsors interest is subject to
pre-emption rights to other shareholders of OUBC, who are third parties not related to the Sponsor, such that should
the Sponsor wish to sell its shares in OUBC, it must first offer to sell its shares to the other shareholders of OUBC
at fair value. In the event that none of the other shareholders of OUBC wish to purchase the Sponsors shares in
OUBC, the Sponsor is then free to dispose of its shares in OUBC to OUE C-REIT.
29
The following photos illustrate the results of the redevelopment undertaken in respect
of OUE Downtown.
Redevelopment of OUE Downtown
Before
After
(1)
Note:
(1) The picture above is an artists impression of OUE Downtown and may differ from the actual view of
OUE Downtown once the redevelopment is completed.
For the avoidance of doubt, OUE Downtown will not form part of the IPO Portfolio but
OUE Downtown 2 and Downtown Gallery have been identified as Sponsor ROFR
Properties.
The Manager believes that OUE C-REIT will be able to leverage on the Sponsors
strong track record and expertise across the full spectrum of the real estate value chain
when considering potential acquisitions as well as existing properties that have asset
enhancement potential. The Sponsor will be able to assist in the design and execution
of development projects that are within the development limit of the Property Funds
30
Appendix. For larger projects that exceed the limit, the Sponsor may be able to
warehouse such projects that can then be part of the Sponsor ROFR pipeline for
potential injection into OUE C-REIT at a later stage.
(b) Expertise in real estate management
The Sponsor has a proven track record of successfully managing and operating investment
properties across key markets in Singapore, Malaysia and the PRC.
The Sponsors expertise in real estate management is further augmented by the Sponsors
track record in real estate asset management, via the successful listing of OUE Hospitality
Trust (OUE H-Trust), a stapled group comprising OUE Hospitality Real Estate Investment
Trust (OUE H-REIT) and OUE Hospitality Business Trust (OUE H-BT), listed on the
SGX-ST and managed by wholly-owned subsidiaries of the Sponsor. As at the date of its
listing in July 2013, OUE H-Trust had a total asset size of approximately S$1.7 billion
comprising Mandarin Orchard Singapore with 1,051 rooms and Mandarin Gallery with a GFA
of 18,240.2 sq m located along the prime shopping belt of Orchard Road in Singapore.
(c) Committed Sponsor and Manager incentivised to maximise distributions to
Unitholders
Substantial Sponsor ownership
The Sponsor is committed to supporting and growing OUE C-REIT. The Sponsor will,
immediately following the completion of the Offering, be the largest Unitholder, holding
an aggregate of [50.0]% of the total number of Units expected to be in issue (assuming
the Over-Allotment Option is not exercised) or [] of the total number of Units expected
to be in issue (assuming the Over-Allotment Option is exercised in full), to demonstrate
the Sponsors commitment to OUE C-REIT.
The Sponsor and Clifford Development Pte. Ltd. have also each agreed to (i) a lock-up
arrangement for such Units during the period from the date of listing of the Units until
the date falling six months after the Listing Date (both dates inclusive) (the First
Lock-up Period) in respect of its direct and/or effective interest in the Sponsor Units
(the Lock-up Units), and (ii) a lock-up arrangement during the period from the day
immediately following the end of the First Lock-up Period until the date falling six
months after the end of the First Lock-up Period (both dates inclusive (the Second
Lock-up Period) in respect of its direct and/or effective interest in 50.0% of the
Lock-up Units, further demonstrating the Sponsors alignment of interest with
Unitholders.
Performance fee structure based on DPU growth to demonstrate the Managers
alignment of interest with Unitholders
The management fees payable to the Manager have a performance-based element
which is designed to align the interest of the Manager with those of the Unitholders. The
performance management fee is based on DPU growth instead of Net Property Income,
which incentivises the Manager to grow DPU.
Under the Trust Deed, the Manager is entitled to (i) a base fee of 0.3% per annum (or
such lower percentage as may be determined by the Manager in its absolute discretion)
of the value of the Deposited Property (as defined herein), and the base fee, the Base
Fee and (ii) a performance fee of 25.0% of the difference in DPU in a full financial year
with the DPU in the preceding full financial year (calculated before accounting for the
31
Performance Fee but after accounting for the Base Fee in each financial year)
multiplied by the weighted average number of Units in issue for such financial year (the
Performance Fee). The Manager may elect to receive the Base Fee and Performance
Fee in cash or Units or a combination of cash and Units. For the Forecast Year 2014 and
the Projection Year 2015, the Manager has elected to receive 100.0% of the Base Fee
and Performance Fee in the form of Units so as to further align the interests of the
Sponsor and the Manager with those of other Unitholders. (See Certain Fees and
Charges for further details.)
Sponsor ROFR granted by the Sponsor to OUE C-REIT
The Sponsors commitment to OUE C-REIT is also demonstrated by the Sponsor
ROFR, which provides OUE C-REIT with access to potential future acquisition
opportunities used primarily for commercial purposes (including real estate used
primarily for office and/or retail purposes)
1
in financial and business hubs within and
outside of Singapore.
(See Significant potential acquisition pipeline below for further details.)
(6) Experienced and professional REIT management and property management teams
The Manager believes that Unitholders will benefit from the experience of key staff members
of the Manager in the commercial property market. The Manager employs experienced
professionals who have prior experience in commercial property management, property
development and investment, capital and risk management, project management, marketing,
leasing and finance.
The Property Manager comprises staff seconded to the Property Manager from the
Sponsors experienced pool of staff, who possess extensive experience in the management
of commercial space.
(7) Significant potential acquisition pipeline
The Sponsor has granted a right of first refusal (ROFR) to OUE C-REIT over income-
producing real estate used primarily for commercial purposes (including real estate used
primarily for office and/or retail purposes)
1
in financial and business hubs within and outside
of Singapore, for so long as (i) the Manager or any of its related corporations (as defined in
the Companies Act, Chapter 50 of Singapore) (the Companies Act) remains the manager
of OUE C-REIT, (ii) the Sponsor and/or any of its related corporations, alone or in aggregate,
remains as a controlling shareholder of the Manager and (iii) OUE and/or any of its related
corporations, alone or in aggregate, remains as a controlling unitholder of OUE C-REIT (the
Sponsor ROFR).
The Manager believes that the Sponsor ROFR provides OUE C-REIT with a strong and
visible pipeline of properties that will greatly enhance OUE C-REITs growth profile and
presence given the estimated size and quality of the Sponsor ROFR Properties.
1 The Sponsor ROFR does not cover retail and/or commercial assets which are either complementary to or adjoining
hospitality assets which are owned by OUE H-REIT or which OUE H-REIT has committed to buy, as these assets
are the subject of a separate right of first refusal which the Sponsor has earlier granted to OUE H-Trust.
32
As at the Latest Practicable Date, the Sponsor has identified three properties which could
potentially be offered to OUE C-REIT (the Sponsor ROFR Properties, and each, a
Sponsor ROFR Property). Selected details of the Sponsor ROFR Properties are set out
in the table below:
Name of Sponsor
ROFR Property
OUE Downtown 2 and
Downtown Gallery
(1)
U.S. Bank Tower One Raffles Place
(2)
End Construction
Year
OUE Downtown 2: 1994
Downtown Gallery: 2016
(expected)
1989 1986
Highlights 37-storey office
building and five-
storey retail mall with
a retail basement
level
Strategically located
along an established
financial artery
between Raffles Place
and Tanjong Pagar
One of the tallest
buildings in the
western U.S.
72-storey Class-A
office building, with
six levels of
underground parking,
along with an
approximately 1.6
acre park above a
separate five-level
subterranean car park
facility
One of Singapores
tallest buildings
Two Grade-A office
towers: 62-storey
Tower One and
38-storey Tower Two
Five-storey retail
podium with a retail
basement level
Location Shenton Way, Singapore Los Angeles, U.S. Raffles Place, Singapore
Effective Interest (%) 100.0 100.0 40.8
(2)
GFA (sq m) 77,900 (estimated) 173,647.4 119,712.8
(3)
NLA (sq m) Office: 41,222.0
(as at 30 September
2013)
Retail: 14,800
(estimated)
133,988.5 80,082.5
(3)
Tenure 99-year leasehold title
commencing 19 July
1967
Freehold Tower One and Retail
Podium: leasehold title of
841 years, three months
and 20 days
commencing 1 November
1985
Retail Podium: 99-year
leasehold title
commencing 1 November
1985
Tower Two: 99-year
leasehold title
commencing 26 May
1983
Tower Two (former
Service Road): 99-year
leasehold title
commencing 26 May
1983
Latest Valuation
(S$ million)
1,400.0
(4)
544.0
(5)
1,608.8
(6)
33
Notes:
(1) OUE Downtown 1 is not presently identified as one of the Sponsor ROFR Properties as the middle and low
zones of OUE Downtown 1 are expected to be converted into serviced apartments. Hence, including the entire
OUE Downtown 1 as a Sponsor ROFR Property would not be appropriate for OUE C-REIT. Where an asset
or any part thereof (including, for example, the high zone of OUE Downtown 1, if applicable) falls within the
scope of the Sponsor ROFR, the asset or any part thereof will, as a matter of course, be subject to the
Sponsor ROFR. Following strata subdivision, the multi-storey car park will be managed by the management
corporation strata title (MCST), and the owners of OUE Downtown 1 will hold shares in the MCST in
proportion to their strata holdings.
(2) The Sponsor owns an effective interest of approximately 40.8% in One Raffles Place through its 50.0%
interest in OUBC. The subject of the Sponsor ROFR is the Sponsors 50.0% interest in OUBC. The Sponsors
interest is subject to pre-emption rights to other shareholders of OUBC, who are third parties not related to
the Sponsor, such that should the Sponsor wish to sell its shares in OUBC, it must first offer to sell its shares
to the other shareholders of OUBC at fair value. In the event that none of the other shareholders of OUBC
wish to purchase the Sponsors shares in OUBC, the Sponsor is then free to dispose of its shares in OUBC
to OUE C-REIT.
(3) These represent the aggregate GFA and NLA, as the case may be, of One Raffles Place Tower One, One
Raffles Place Tower Two and the retail podium.
(4) This represents the latest valuation of the OUE Downtown development as at 31 December 2012.
(5) This represents the latest valuation of the U.S. Bank Tower as at 30 September 2013 of US$430 million,
based on an exchange rate of US$1.00 : S$1.265.
(6) This represents OUBCs 81.54% interest in the trust which holds the land and properties that comprise One
Raffles Place, based on the latest valuation as at 31 December 2012. The remaining 18.46% of the beneficial
interest in One Raffles Place is held by OUBC in trust for United Overseas Bank Limited.
(a) Sponsor ROFR Properties offer significant expansion opportunities
The Sponsor ROFR Properties have a maximum aggregate GFA of approximately 371,260.2
sq m. There is a potential increase to over 4.5 times of OUE C-REITs IPO Portfolio size by
GFA from the current 105,296.1 sq m to 476,556.3 sq m, potentially making OUE C-REIT one
of the largest listed office landlords in Singapore by GFA.
The following chart illustrates the growth opportunities to be provided by the Sponsor ROFR.
Growth Opportunities to be Provided by the Sponsor ROFR
IPO Portfolio
GFA (sq m)
Sponsor ROFR Properties
105,296.1
371,260.2
(1)
476,556.3
Enlarged Potential
Portfolio
Note:
(1) Including the aggregate GFA of One Raffles Place Tower One, One Raffles Place Tower Two and the retail
podium.
34
Furthermore, the Manager believes the Sponsor ROFR pipeline will continue to grow as the
Sponsor participates in more commercial development projects going forward, providing
OUE C-REIT with an expanding pipeline of properties that OUE C-REIT may have the
opportunity to acquire to enhance its distribution growth profile.
(b) Sponsor ROFR Properties in Singapore offer exposure to landmark office real estate
in Singapores key CBD areas
One Raffles Place would provide OUE C-REIT with an anchor position within Singapores
established financial district of Raffles Place. OUE Downtown 2 and Downtown Gallery are
situated along Shenton Way, with commercial skyscrapers flanking both sides of this
thoroughfare. Together with the OUE Bayfront Property, One Raffles Place, OUE Downtown
2 and Downtown Gallery would also provide OUE C-REIT with a strong and diversified
foothold within the Singapore CBD.
KEY STRATEGIES
The Manager plans to achieve its key objectives through the following key strategies:
Active asset management strategy The Manager will actively manage OUE C-REITs
property portfolio and strive to achieve growth in revenue and Net Property Income and
maintain high occupancy levels. The Manager will also look to drive organic growth and build
long-lasting relationships with the tenants of OUE C-REITs properties. Its focus will be on
regular engagement with tenants, effective marketing of vacant units and achieving early
renewal commitments.
Active asset enhancement strategy The Manager will seek property enhancement
opportunities to support and enhance organic growth.
Acquisition growth strategy by leveraging on the Sponsors experience and supported
by the Sponsor ROFR The Manager will achieve portfolio growth through the acquisition
of quality income-producing commercial properties that provide attractive cash flows and
yields and which fit within OUE C-REITs investment strategy to enhance returns to
Unitholders and improve future income and capital growth.
Capital and risk management strategy The Manager will endeavour to employ an
appropriate mix of debt and equity in financing acquisitions and asset enhancements, and
utilise hedging strategies where appropriate to manage interest rate volatility and foreign
exchange exposure for OUE C-REIT while maintaining a strong and robust balance sheet.
35
CERTAIN INFORMATION ON THE PROPERTIES
The table below sets out certain information on the Properties as at 30 September 2013, with
independent valuations by the Independent Valuers (as defined herein) as at 30 September 2013.
The OUE Bayfront
Property The Lippo Plaza Property Total/Average
Usage Office and retail Office and retail Office and retail
GFA (sq m) 46,774.6 58,521.5 105,296.1
NLA (sq m) Overall 37,381.8 39,232.0 76,613.8
Office
component
35,551.7 33,538.6 69,090.3
Retail
component
1,830.1 5,693.4 7,523.5
Committed Occupancy
Rate as at 30 September
2013 (%)
Overall: 96.1
Office component: 95.9
Retail component: 100.0
Overall: 88.2
Office component: 86.5
Retail component: 97.8
Overall: 92.0
Office component: 91.4
Retail component: 98.3
Number of Tenants as at
30 September 2013
Overall: 45
Office component: 33
Retail component: 12
Overall: 83
Office component: 72
(1)
Retail component: 11
(2)
Overall: 128
Office component: 105
Retail component: 23
Number of Leasable
Floors
OUE Bayfront: 15
OUE Tower: 2
OUE Link: 1
Office component: 26
Retail component: 4
N.A.
Number of Car Park Lots 245, including three
handicap lots
168 413, including three
handicap lots
Gross Revenue for the
Forecast Year 2014
(S$ million)
50.4 24.0
(3)
74.4
Net Property Income for
the Forecast Year 2014
(S$ million)
36.9 17.4
(3)
54.3
Independent Appraisal
Values as at 30
September 2013
(S$ million)
Savills: 1,115.0
Colliers: 1,135.0
Savills: 470.4
(3)
Colliers: 488.6
(3)
Savills: 1,585.4
Colliers: 1,623.6
Independent Appraisal
Values (without Income
Support) as at 30
September 2013
(S$ million)
Savills: 1,080.0
Colliers: 1,102.0
Savills: 470.4
(3)
Colliers: 488.6
(3)
Savills: 1,550.4
Colliers: 1,590.6
Independent Appraisal
Values as at 30
September 2013 (local
currency/million)
Savills: S$1,115.0
Colliers: S$1,135.0
Savills: RMB2,250.0
Colliers: RMB2,337.0
N.A.
Independent Appraisal
Values (without Income
Support) as at 30
September 2013 (local
currency/million)
Savills: S$1,080.0
Colliers: S$1,102.0
Savills: RMB2,250.0
Colliers: RMB2,337.0
N.A.
Purchase Consideration
(S$ million)
1,005.0 331.8
(4)
(subject to
adjustment)
(5)
1,336.8 (subject to
adjustment)
(5)
36
The OUE Bayfront
Property The Lippo Plaza Property Total/Average
Office Passing Rent for
the month of September
2013
S$10.4 per sq ft per month RMB271.8
(6)
per sq m
per month

Retail Passing Rent for

the month of September
2013
S$8.8 per sq ft per month RMB515.3 per sq m
per month

Government Lease
Term/Land Use Right
Expiry
OUE Bayfront and OUE
Tower: 99-year leasehold
title commencing
12 November 2007
OUE Link: 15-year
leasehold title commencing
26 March 2010
Underpass: 99-year
leasehold title commencing
7 January 2002
50 years commencing 2
July 1994 to 1 July 2044

End Construction Year 2011 1999

Weighted average lease
term to expiry (WALE)
by NLA as at 30
September 2013 (years)
3.5 1.7 2.7
WALE by Gross Rental
Income as at 30
September 2013 (years)
3.3 1.7 2.8
Notes:
(1) As at 30 September 2013, two office tenants have also entered into letters of offer or lease agreements for retail
spaces.
(2) Excluding the two office tenants which have also entered into letters of offer or lease agreements for retail spaces.
(3) Based on an exchange rate of S$1.00 : RMB4.7830.
(4) The aggregate purchase consideration for the Lippo Plaza Property is based on an exchange rate of S$1.00 :
HK$6.1275 and comprises (i) the purchase consideration payable to LCR under the Tecwell Share Purchase
Agreement for the entire issued share capital in the BVI Company, (ii) the repayment of the Existing Offshore
Facility, and (iii) the refinancing of the Existing Onshore Facility.
(5) The purchase consideration for the Lippo Plaza Property may be adjusted upwards or downwards based on the
increase or decrease, as the case may be, in NAV of the BVI Company and its subsidiaries (which is the aggregate
value of the total assets of BVI Company and its subsidiaries less the aggregate amount of the total liabilities of the
BVI Company and its subsidiaries) (excluding any change in valuation of the Lippo Plaza Property) as at the Listing
Date relative to 30 June 2013. The management accounts of the BVI Company and its subsidiaries will be used to
prepare the Completion Financial Statements. The Completion Financial Statements will be prepared by the BVI
Holding Company and reviewed by the Reporting Auditors.
(6) Excludes office space occupied by the centre management team of the Lippo Plaza Property and a business centre.
37
The following table sets out the assumptions for the valuation of the OUE Bayfront Property.
Item
Valuation
Methodology Savills Colliers Actual
Rental
Rates (per
sq ft per
month)
Income
Capitalisation/
Investment
Method
Without income
support
(1)
Office: S$12.00
Retail: S$8.42
With and without income
support
(3)
Term Income Period (net
of vacancy)
Office: S$10.36
Retail: S$8.47
Reversion income
period
Office: S$11.50
Retail: S$10.01
Passing Rent for
the month of
September 2013:
Office: S$10.4
Retail: S$8.8
With income support
(2)
First 5-Year Period
Office: S$11.00
Retail: S$8.42
After 5-Year Period
Office: S$13.10
Retail: S$9.82
Discounted
Cashflow
Method
With and without income
support
(4)(5)
First year reversion
rental rates
(6)
Office: S$10.33
Retail: S$8.61
Annual growth rates
Office: 3.00% for Year 2
and 5.00% per annum
thereafter
Retail: 3.00% per annum
With and without income
support
(4)(5)
First year reversion
rental rates
(6)
Office: S$11.17
Retail: S$8.50
Annual growth rates
Office: 5.00%
Retail: 3.90%
Occupancy
Rate
Income
Capitalisation/
Investment
Method
Office: 96.5%
Retail: 96.6%
Office: 96.5%
Retail: 96.5%
Committed office
occupancy rate as
at 30 September
2013:
Office: 95.9%
(7)
Retail: 100%
Discounted
Cashflow
Method
Office: 95.0% for Years 1
to 5 and 96.5% thereafter
Retail: 95.7% for Year 1,
95.3% for Years 2 to 5
and 96.6% thereafter
Office: 97.0%
Retail: 97.3%
Notes:
(1) Under Savills without income support income capitalisation/investment method, valuation is derived based on net
rental income assumed using the abovementioned rental rates divided by the appropriate capitalisation rate.
(2) Under Savills with income support income capitalisation/investment method, to derive the valuation, Savills has
discounted the annual net rental income by an appropriate capitalisation rate till the end of the respective
government lease terms and/or expiry of the land use rights. Savills has assumed two time periods in its valuation
assumptions: (i) First 5-Year Period assumes rental rates for first five years assuming no income support; and (ii)
After 5-Year Period assumes rental rate are at expected market rates after five years and also assumes no income
support as the income support is for maximum of five years. To derive the valuation with income support, Savills
have added the present value (PV) of net rental income of the First 5-Year Period and After 5-Year Period to the
PV of the net rental income to be drawn down under the income support.
(3) The Term Income Period is the WALE of the existing leases at OUE Bayfront Property. The Reversion Income Period
is the remaining years until the end of the respective government lease terms and/or expiry of the land use rights.
Valuation under Colliers income capitalisation/investment method assumes that: (a) without income support, the
summation of PV of net rental income under the Term Income Period and Reversion Income Period (which is
discounted by the appropriate capitalisation rate); (b) with income support: the PV of net rental income without
income support plus the PV of net rental income to be drawn down under the income support.
38
(4) Under the discounted cash flows method, the valuation without income support is the PV of annual discounted cash
flows. The present value of cash flow to be drawn down under the income support is added to the valuation without
income support to derive the valuation with income support.
(5) Under the discounted cash flows method, Savills and Colliers have assumed in their calculation: (a) the signed lease
rates will apply to existing tenants until the respective lease expiration date, and (b) reversion rental rates will apply
to any current vacancy (up to the stipulated assumed occupancy levels) and post expiration of existing leases.
(6) First year reversion rental rates is the assumed office and retail rental rate assumed in first year of valuation by
Savills and Colliers for any vacancies (up to the stipulated assumed occupancy levels) and expiring leases.
(7) As at the Latest Practicable Date, the office occupancy rate for the OUE Bayfront Property was 100.0%.
The following table sets out the assumptions for the valuation of the Lippo Plaza Property:
Line Item
Valuation
Methodology Savills Colliers Actual
Rental Rate
(per sq m
per day)
Income
Capitalisation
Method
Office: RMB9.20
Retail: RMB29.10
Did not use income
capitalisation method
Passing Rent for the
month of September
2013:
Office: RMB8.9
Retail and F&B:
RMB16.9
(2)
Discounted
Cashflow
Method
(1)
First year reversion
rental rates
(3)
Office: RMB9.20
Retail: RMB29.10
Annual growth rates
Office: 3%
Retail: 3%
First year reversion
rental rates
(3)
Office: RMB9.50
Retail: RMB23.00
Annual growth rates
Office: 5%
Retail: 8% for Years 1 to 5
and 5% for Year 6
Occupancy
Rate
Income
Capitalisation
Method
Office: 92%
Retail: 98%
Did not use income
capitalisation method
Committed office
occupancy rate as at
30 September 2013:
Office: 86.5%
(4)
Retail: 97.8%
Discounted
Cashflow
Method
Office: 92%
Retail: 98%
Office: 90% for Year 1 and
95% for Year 2 onwards
Retail: 95%
Notes:
(1) Under the discounted cash flows method, Savills and Colliers have assumed in their calculation: (a) the signed lease
rates will apply to existing tenants until the respective lease expiration date, and (b) reversion rental rates will apply
to any current vacancy (up to the stipulated assumed occupancy levels) and post expiration of existing leases.
(2) The weighted average rental rates for leases signed for the period from 1 January 2013 to 30 September 2013 was
RMB36.2 per sq m per day.
(3) First year reversion rental rates is the assumed office and retail rental rate assumed in first year of valuation by
Savills and Colliers for any vacancies (up to the stipulated assumed occupancy levels) and expiring leases.
(4) The lower committed occupancy rate of the office component of the Lippo Plaza Property as at 30 September 2013,
in comparison to historical occupancy rates, was due to the non-renewal of rented space by office tenants, which
was in the ordinary course of business. As at the Latest Practicable Date, the office occupancy rate for the Lippo
Plaza Property was 90.4%.
The following should be noted regarding Savills assumptions for the Lippo Plaza Property, with
references to the Independent Market Research Report:
(a) Reversion rental rates
(i) Office: Savills has made reference to recent office rental comparables in the locality and
has adopted RMB9.20 per sq m per day as the first year office reversion rental rate.
With reference to the Independent Market Research Report, it should be noted that the
39
Independent Market Research Consultant has indicated that rental rates for
comparable office properties in the Huangpu district as at Q32013 is RMB284 per sq m
per month (RMB9.5 per sq m per day);
(ii) Retail: Savills has made reference to recent retail rental comparables in the locality and
adopted RMB29.1 per sq m per day as the first year retail reversion rental rate. With
reference to the Independent Market Research Report, it should be noted that the
Independent Market Research Consultant has indicated that rental rates for
comparable retail properties in the Huangpu district reached RMB1,653 per sq m per
month (RMB55.10 per sq m per day) in Q32013 (represented by the average first floor
asking rental rate of prime shopping centres in the Huangpu district);
(b) Growth rate for reversion rental rates
(i) Office: Savills has assumed a 3% annual growth rate. With reference to the
Independent Market Research Report, it should be noted that the Independent Market
Research Consultant has indicated that annual office rental growth rates in the
Huangpu district for the periods Q42013-2014, Q42014-2015, Q42015-2016 and
Q42016-2017 are 6.8%, 6.0%, 7.8% and 5.6%, respectively, implying a simple average
growth rate of 6.6% from Q42014 to Q42017;
(ii) Retail: Savills has assumed a 3% annual growth rate. With reference to the
Independent Market Research Report, it should be noted that the Independent Market
Research Consultant has indicated that annual retail rental growth rates in the Huangpu
district for the periods Q42013-2014, Q42014-2015, Q42015-2016 and Q42016-2017
are 4.1%, 2.3%, 4.8% and 3.8%, respectively, implying a simple average growth rate of
3.75% from Q42014 to Q42017;
(c) Occupancy rates
(i) Office: The assumed 92% office occupancy rate is the stabilised occupancy rate for
Lippo Plaza Property having taken into account the overall vacancy rates of office
buildings of the same grade in the Huangpu district. Further, while the committed office
occupancy rate as at 30 September 2013 was 86.5%, Savills has taken into account
that this was due to a non-renewal of rented space by an existing office tenant, which
was in the ordinary course of business, and as of 31 December 2011 and 2012, the
office occupancy was 92.1% and 91.0%, respectively. With reference to the
Independent Market Research Report, it should be noted that the Independent Market
Research Consultant has indicated that average occupancy rates for office properties
in the Huangpu district in 2010, 2011, 2012 and Q32013 were 96.0%, 93.8%, 93.1% and
93.1%, respectively; and
(ii) Retail: Savills has assumed a retail occupancy rate of 98% in their valuation, in which
Savills is of the view that it is in-line with the historical retail occupancy rate (i.e. 100%,
98.7% and 97.8% as at 31 December 2011, 31 December 2012 and 30 September
2013, respectively).
40
The following should be noted regarding Colliers assumptions for the Lippo Plaza Property, with
references to the Independent Market Research Report:
(a) Reversion rental rates
(i) Office: Colliers has assumed RMB9.50 per sq m per day as the first year office
reversion rental rate. With reference to the Independent Market Research Report, it
should be noted that the Independent Market Research Consultant has indicated that
rental rates for comparable office properties in the Huangpu district as at Q32013 is
RMB284 per sq m per month (RMB9.5 per sq m per day);
(ii) Retail: Colliers has assumed RMB23.0 per sq m per day as the first year retail reversion
rental rate, in which Colliers is of the view that it is lower than market rental rates at
comparable properties. With reference to the Independent Market Research Report, it
should be noted that the Independent Market Research Consultant has indicated that
for rental rates for comparable retail properties in the Huangpu district reached
RMB1,653 per sq m per month (RMB55.10 per sq m per day) in Q32013 (represented
by the average first floor asking rental rate of prime shopping centres in the Huangpu
district);
(b) Growth rate for reversion rental rates
(i) Office: Colliers has assumed a 5% annual growth rate, taking into account the historical
growth rate of Shanghais office rental rates, and Chinas expected GDP growth rates
over the next several years. With reference to the Independent Market Research
Report, it should be noted that the Independent Market Research Consultant has
indicated that for annual office rental growth rates in the Huangpu district from
Q42013-2014, Q42014-2015, Q42015-2016 and Q42016-2017 is 6.8%, 6.0%, 7.8% and
5.6%, respectively, implying a simple average growth rate of 6.6% from Q42014 to
Q42017;
(ii) Retail: Colliers has assumed an 8% annual growth rate from Year 1 to Year 5, and 5%
from Year 5 onwards. In deriving the 8% annual growth rate from Year 1 to Year 5,
Colliers has taken into account the assumption that the current market rate for Lippo
Plaza Property is lower than the market rental rate for prime retail properties in
Shanghai and is expected to grow at a faster rate over the next five years, before
stabilizing at 5% annually. Both assumptions in Year 1 to Year 5, and from Year 5
onwards, take into account the historical growth rate of retail sales growth in Shanghai
and Chinas expected GDP growth rates over the next several years;
(c) Occupancy rate
(i) Office: Colliers has assumed an occupancy rate of 90% in Year 1 and 95% from Year
2 onwards, in which Colliers is of the view that it is in-line with the historical office
occupancy rate. Colliers is of the view that the property is currently undergoing a tenant
mix adjustment period, therefore Colliers has assumed that 90% occupancy rate will be
achieved in Year 1 and 95% occupancy rate will be achieved in Year 2 onwards after
taking into consideration the current market situation in terms of city-wide vacancy
rates, and the leasing strategy for the property. With reference to the Independent
Market Research Report, it should be noted that the Independent Market Research
Consultant has indicated that average occupancy rates for office properties in the
Huangpu district in 2010, 2011, 2012 and Q32013 are 96.0%, 93.8%, 93.1% and 93.1%,
respectively; and
41
(ii) Retail: Colliers has assumed an occupancy rate of 95%, in which Colliers is of the view
that it is in-line with the historical retail occupancy rate (i.e. 100%, 98.7% and 97.8% as
at 31 December 2011, 31 December 2012 and 30 September 2013, respectively).
INCOME SUPPORT ARRANGEMENT
Terms of the Income Support
On completion of the sale and purchase of the OUE Bayfront Property, Clifford Development Pte.
Ltd. will enter into a deed of income support with the Sponsor and the Trustee (the Deed of
Income Support). Pursuant to the terms of the Deed of Income Support, the Sponsor will agree
to provide Income Support for the period from the date of completion of the property sale and
purchase agreement in respect of the OUE Bayfront Property (the Property Sale and Purchase
Agreement, and the date of completion of the Property Sale and Purchase Agreement, the
Completion Date) to the day immediately preceding the fifth anniversary date of the Completion
Date.
In respect of each quarter, where the Gross Rental Income of the OUE Bayfront Property in the
relevant quarter is less than S$14.25 million, the Sponsor will undertake to pay the difference
between the relevant Gross Rental Income and S$14.25 million, subject to a maximum annual
limit of S$12.0 million. Each payment and the applicable GST payable by the Sponsor to OUE
C-REIT for each quarter will be made by the Sponsor to OUE C-REIT on a semi-annual basis.
For the avoidance of doubt, the aggregate of all the rental top-up payments payable by the
Sponsor to OUE C-REIT under the Deed of Income Support shall not exceed S$50.0 million.
Based on the annualised Gross Rental Income of the OUE Bayfront Property of approximately
S$45.0 million (annualised based on the OUE Bayfront Propertys Gross Rental Income for the
month of September 2013), the amount of Income Support required is estimated to be
approximately S$12.0 million per annum and should Gross Rental Income improve, the amount of
Income Support to be drawn will decrease.
The Income Support payments are not guaranteed payments but are subject to the credit risk of
the Sponsor. The Income Support will rank equally with any other unsecured obligations of the
Sponsor.
Having considered the terms of the Income Support and the financial condition of the Sponsor, the
audit and risk committee of the Board (the Audit and Risk Committee) is of the opinion that the
Sponsor will be able to meet the Income Support payments as and when they become due.
(See Certain Agreements Relating to OUE C-REIT and the Properties Deed of Income Support
for further details.)
42
STRUCTURE OF OUE C-REIT
The following diagram illustrates the relationship between OUE C-REIT, the Manager, the Trustee,
the Property Manager (as defined herein) and the Unitholders as at the Listing Date:
Manager
Ownership of Units Distributions
Trustee
Acts on behalf
of Unitholders
Property Manager
Property Management
Fees
Property
Management
Services
The Lippo Plaza
Property
Net Property
Income
Ownership
of Asset
The OUE Bayfront
Property
Ownership of
Share Capital
Tecwell Limited
(the BVI Company)
(2)
(BVI co)
Lippo Realty (Shanghai) Limited
(the PRC Company)
(3)
(PRC co)
Dividends
OUE Eastern Limited
(the BVI Holding Company)
(1)
(BVI co)
OUE C-REIT
Unitholders
Management Services
Trustee Fees
Management Fees
Notes:
(1) The BVI Holding Company is a wholly-owned subsidiary of OUE C-REIT incorporated in the British Virgin Islands
(BVI) to acquire the entire issued share capital in the BVI Company.
(2) The BVI Holding Company entered into a share purchase agreement with LCR on 16 October 2013, as
supplemented by a supplemental agreement entered into between the BVI Holding Company and LCR on 9 January
2014, to acquire the entire issued share capital in the BVI Company (the Tecwell Share Purchase Agreement).
Following completion of the acquisition, OUE C-REIT will have proper legal and marketable title to the Lippo Plaza
Property.
(3) The PRC Company owns the Lippo Plaza Property and is a wholly-owned subsidiary of the BVI Company.
43
OUE C-REIT
OUE C-REIT was constituted as a private trust by the Trust Deed dated 10 October 2013. It is
principally regulated by the SFA, the Code on Collective Investment Schemes issued by the MAS
(CIS Code), including Appendix 6 of the CIS Code (the Property Funds Appendix), other
relevant regulations as well as the Trust Deed.
The Manager: OUE Commercial REIT Management Pte. Ltd.
OUE Commercial REIT Management Pte. Ltd. is the manager of OUE C-REIT. The Manager was
incorporated in Singapore under the Companies Act on 4 October 2013. It has an issued and
paid-up capital of S$1,000,000 and its registered office is located at 50 Collyer Quay #04-08, OUE
Bayfront, Singapore 049321.
The Manager has been issued a capital markets services licence (CMS Licence) for REIT
management pursuant to the SFA on [] and is regulated by the MAS.
The Manager is a wholly-owned subsidiary of the Sponsor.
The Manager has general powers of management over the assets of OUE C-REIT. The Managers
main responsibility is to manage OUE C-REITs assets and liabilities for the benefit of Unitholders.
The Manager will set the strategic direction of OUE C-REIT and give recommendations to the
Trustee on the acquisition, divestment, development and/or enhancement of assets of OUE
C-REIT in accordance with its stated investment strategy.
(See The Formation and Structure of OUE C-REIT for further details.)
The Trustee: DBS Trustee Limited
The trustee of OUE C-REIT is DBS Trustee Limited. The Trustee is a company incorporated in
Singapore and registered as a trust company under the Trust Companies Act, Chapter 336 of
Singapore (the Trust Companies Act). It is approved to act as a trustee for authorised collective
investment schemes under Section 289(1) of the SFA and is regulated by the MAS. As at the date
of this Prospectus, the Trustee has a paid-up capital of S$2,500,000. The Trustees registered
office is located at 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982.
The Trustee acts as the trustee of OUE C-REIT and, in such capacity, holds the assets of OUE
C-REIT on trust for the benefit of Unitholders, safeguards the rights and interests of the
Unitholders and exercises all the powers of a trustee and the powers accompanying ownership of
the properties in OUE C-REIT.
(See The Formation and Structure of OUE C-REIT for further details.)
The Sponsor: OUE Limited
OUE is a diversified real estate owner, developer and operator with a real estate portfolio located
in prime locations in Singapore, Malaysia and the U.S.. The Sponsor, its subsidiaries and related
corporations (the Sponsor Group) focus their businesses across the commercial, retail,
hospitality and residential property segments. The Sponsor Group develops and holds commercial
properties for investment and rental income purposes, and it develops residential properties for
sale. It operates its hospitality business under the brands Meritus, Mandarin and Meritus
Mandarin.
44
OUE is one of the leading publicly-listed property companies in Singapore with a market
capitalisation of approximately S$2.3 billion as at the Latest Practicable Date. OUE has an
experienced management team and established track record of operations dating back to 1964.
As at 30 September 2013, OUEs commercial and retail businesses include approximately
474,376.4 sq m in GFA of commercial and retail space located in Singapore and the U.S.. OUEs
substantial size is also evidenced by its profitability and balance sheet strength, with OUE
reporting a total net income of S$31.6 million for the nine months ended 30 September 2013 and
total assets of S$6.3 billion and total shareholders equity of S$3.7 billion as at 30 September
2013.
OUE is also the sponsor of OUE H-Trust, a stapled group which comprises OUE H-REIT and OUE
H-BT. OUE H-Trust was listed on the SGX-ST on 25 July 2013 with a total asset size of
approximately S$1.7 billion and an initial portfolio comprising Mandarin Orchard Singapore and
Mandarin Gallery. OUE H-REIT is managed by OUE Hospitality REIT Management Pte. Ltd. (the
OUE H-REIT Manager), which is a wholly-owned subsidiary of the Sponsor, while OUE H-BT is
managed by OUE Hospitality Trust Management Pte. Ltd. (the OUE H-BT Trustee-Manager,
and together with the OUE H-REIT Manager, the OUE H-Trust Managers), another wholly-
owned subsidiary of the Sponsor. (See The Sponsor for further details.)
The Property Manager
The property manager is OUE Commercial Property Management Pte. Ltd. (the Property
Manager).
The Property Manager was incorporated in Singapore on 16 September 2011 under the
Companies Act and is a wholly-owned subsidiary of the Sponsor.
The Property Manager is appointed as the property manager of the OUE Bayfront Property and
any properties located in Singapore or any other jurisdiction
1
which are subsequently acquired by
OUE C-REIT pursuant to the property management agreement entered into between the Trustee,
the Manager and the Property Manager (the Master Property Management Agreement), and
as the property manager of the OUE Bayfront Property pursuant to the individual property
management agreement for the OUE Bayfront Property (the Individual Property Management
Agreement). The Property Manager is subject to the overall management and supervision of the
Manager, responsible for providing property management, lease management, project
management and marketing services for the properties in OUE C-REITs portfolio.
1 On the Listing Date, the Property Manager will be providing its services in respect of the OUE Bayfront Property but
will not be providing its services in respect of the Lippo Plaza Property, as such services will be provided by the
existing local property manager of the Lippo Plaza Property under the Local Property Management Agreement.
45
CERTAIN FEES AND CHARGES
The following is a summary of the amount of certain fees and charges payable by the Unitholders
in connection with the subscription for or trading of 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 Investors in the Placement Tranche may be
required to pay brokerage of up to 1.0% of the
Offering Price. For trading of the Units,
investors will pay prevailing brokerage
commissions (if applicable) and clearing fee
for trading of Units on the SGX-ST at the rate
of 0.04% of the transaction value, subject to a
maximum of S$600.00 per transaction and
Goods and Services Tax (GST) chargeable
thereon. An administration fee is payable for
each application made through automated
teller machines (ATM) and the internet
banking websites of the Participating Banks
(as defined herein).
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 OUE C-REIT in connection
with the establishment and on-going management and operation of OUE C-REIT:
Payable by OUE C-REIT Amount payable
(a) Management Fee (payable to the
Manager)
Base Fee
0.3% per annum (or such lower percentage as
may be determined by the Manager in its
absolute discretion) of the value of the gross
assets of OUE C-REIT, including all the
Authorised Investments (as defined in the
Trust Deed) of OUE C-REIT for the time being
held or deemed to be held by OUE C-REIT
under the Trust Deed (the Deposited
Property).
For the purposes of calculating the Base Fee
only, where OUE C-REIT holds its investments
through one or more special purpose vehicles
(SPVs), the Deposited Property shall include
all the assets of the relevant SPV, pro-rated, if
applicable, to the proportion of OUE C-REITs
interest in the relevant SPV.
46
Payable by OUE C-REIT Amount payable
Performance Fee
25.0% per annum of the difference in DPU in a
financial year with the DPU in the preceding
full financial year (calculated before
accounting for the Performance Fee but after
accounting for the Base Fee in each financial
year) multiplied by the weighted average
number of Units in issue for such financial
year.
The Performance Fee is payable if the DPU in
any financial year exceeds the DPU in the
preceding full financial year, notwithstanding
that the DPU in the financial year in which the
Performance Fee is payable may be less than
the DPU in the financial year prior to the
preceding full financial year.
For the purpose of the computation of the
Performance Fee only, the DPU shall be
calculated based on all income of OUE
C-REIT arising from the operations of OUE
C-REIT, such as, but not limited to, rentals,
interest, dividends, and other similar
payments or income arising from the
Authorised Investments of OUE C-REIT but
shall exclude any one-off income of OUE
C-REIT such as any income arising from any
sale or disposal of (i) any real estate (whether
directly or indirectly through one or more
SPVs) or any part thereof, and (ii) any
investments forming part of the Deposited
Property (as defined herein) or any part
thereof.
(1)
For the Forecast Year 2014, the difference in
DPU shall be the difference in actual
annualised DPU in such financial year with the
forecast annualised DPU for the Forecast Year
2014 as set out in the Profit Forecast and
Profit Projection.
No Performance Fee is payable for the period
from and including the date of establishment
of OUE C-REIT to 31 December 2013.
Management Fee to be paid in cash or Units
The Manager may elect to receive the Base
Fee and Performance Fee in cash or Units or
a combination of cash and Units (as it may in
its sole discretion determine).
47
Payable by OUE C-REIT Amount payable
For the Forecast Year 2014 and the Projection
Year 2015 (both as defined herein), the
Manager has elected to receive 100.0% of the
Base Fee and 100.0% of the Performance Fee
in the form of Units.
Note:
(1) The rationale for computing the DPU in the manner
described above is to ensure that the measure of
the Managers performance is based on the
recurring income of OUE C-REIT arising from the
operations as opposed to one-off income such as a
sale or disposal of assets which may skew the DPU
in a relevant financial year.
(b) Trustees fee The Trustees fee shall not exceed 0.1% per
annum of the value of the Deposited Property,
subject to a minimum of S$15,000 per month,
excluding out-of-pocket expenses and GST in
accordance with the Trust Deed. The Trustees
fee is accrued daily and paid monthly in
arrears in accordance with the Trust Deed.
The actual fee payable will be determined
between the Manager and Trustee from time to
time, and is presently charged on a scaled
basis of up to 0.02% per annum of the value of
the Deposited Property. The Trustee will also
be paid a one-time inception fee as may be
agreed between the Manager and the Trustee,
subject to a maximum of S$60,000.
(c) Any other substantial fee or charge
(i.e. 0.1% or more of OUE C-REITs
asset value)
Payable to the Manager
(i) Acquisition fee 0.75% for acquisitions from Related Parties
(1)
and 1.0% for all other cases (or such lower
percentage as may be determined by the
Manager in its absolute discretion) of each of
the following as is applicable (subject to there
being no double-counting):
the acquisition price of any real estate
purchased by OUE C-REIT, whether
directly or indirectly through one or more
SPVs (plus any other payments
(2)
in
addition to the acquisition price made by
OUE C-REIT or its SPVs to the vendor in
connection with the purchase of the real
estate) (pro-rated if applicable to the
proportion of OUE C-REITs interest);
48
Payable by OUE C-REIT Amount payable
the underlying value
(3)
of any real estate
which is taken into account when
computing the acquisition price payable
for the equity interests of any vehicle
holding directly or indirectly the real
estate purchased by OUE C-REIT,
whether directly or indirectly through one
or more SPVs (plus any additional
payments made by OUE C-REIT or its
SPVs to the vendor in connection with
the purchase of such equity interests)
(pro-rated if applicable to the proportion
of OUE C-REITs interest); or
the acquisition price of any investment
purchased by OUE C-REIT, whether
directly or indirectly through one or more
SPVs, in any debt securities of any
property corporation or other SPV
owning or acquiring real estate or any
debt securities which are secured
whether directly or indirectly by the rental
income from real estate,
(the Acquisition Fee).
For the purpose of this Acquisition Fee, equity
interests include all classes and types of
equity securities relating to real estate which
shall, for the avoidance of doubt, exclude any
investment in debt securities of any property
corporation or other SPV owning or acquiring
real estate.
The Acquisition Fee is payable to the Manager
in the form of cash and/or Units (as the
Manager may elect) in such proportions as
may be determined by the Manager. Under the
Property Funds Appendix, in respect of any
acquisition of real estate assets from Related
Parties, such a fee should be in the form of
Units issued by OUE C-REIT at prevailing
market price(s) instead of cash. Such Units
should not be sold within one year from the
date of their issuance.
No Acquisition Fee is payable for the
acquisition of the Properties.
49
Payable by OUE C-REIT Amount payable
Any payment to third party agents or brokers
in connection with the acquisition of any
assets of OUE C-REIT shall be paid by the
Manager to such persons out of the Deposited
Property of OUE C-REIT or the assets of the
relevant SPV, and not out of the Acquisition
Fee received or to be received by the
Manager.
Notes:
(1) Related Party refers to an interested party
as defined in the Property Funds Appendix
(Interested Party) and/or, as the case may be, an
interested person as defined in the Listing Manual
of the SGX-ST (the Listing Manual, and an
interested person, an Interested Person).
(2) Other payments refer to additional payments to
the vendor of the asset, for example, where the
vendor has already made certain payments for
enhancements to the asset, and the value of the
asset enhancements is not reflected in the
acquisition price as the asset enhancements are
not completed, but do not include stamp duty or
other payments to third party agents and brokers.
(3) For example, if OUE C-REIT acquires a SPV which
holds real estate, such underlying value would be
the value of the real estate derived from the amount
of equity paid by OUE C-REIT as the purchase price
and any debt of the SPV.
(ii) Divestment fee 0.5%
(1)
(or such lower percentage as may be
determined by the Manager in its absolute
discretion) of each of the following as is
applicable (subject to there being no
double-counting):
the sale price of any real estate sold or
divested by OUE C-REIT, whether
directly or indirectly through one or more
SPVs (plus any other payments
(2)
in
addition to the sale price received by
OUE C-REIT or its SPVs from the
purchaser in connection with the sale or
divestment of the real estate) (pro-rated
if applicable to the proportion of OUE
C-REITs interest);
the underlying value
(3)
of any real estate
which is taken into account when
computing the sale price for the equity
interests in any vehicle holding directly or
indirectly the real estate, sold or
divested, whether directly or indirectly
through one or more SPVs, by OUE
C-REIT (plus any additional payments
50
Payable by OUE C-REIT Amount payable
received by OUE C-REIT or its SPVs
from the purchaser in connection with the
sale or divestment of such equity
interests) (pro-rated if applicable to the
proportion of OUE C-REITs interest); or
the sale price of any investment sold or
divested by OUE C-REIT, whether
directly or indirectly through one or more
SPVs, in any debt securities of any
property corporation or other SPV
owning or acquiring real estate or any
debt securities which are secured
whether directly or indirectly by the rental
income from real estate,
(the Divestment Fee).
For the purpose of this Divestment Fee, equity
interests include all classes and types of
equity securities relating to real estate which
shall, for the avoidance of doubt, exclude any
investment in debt securities of any property
corporation or other SPV owning or acquiring
real estate.
The Divestment Fee is payable to the Manager
in the form of cash and/or Units (as the
Manager may elect) provided that in such
proportions as may be determined by the
Manager. Under the Property Funds Appendix,
in respect of any sale or divestment of real
estate assets to Related Parties, such a fee
should be in the form of Units issued by OUE
C-REIT at prevailing market price(s) instead of
cash. Such Units should not be sold within one
year from date of their issuance.
Any payment to third party agents or brokers
in connection with the disposal of any assets
of OUE C-REIT shall be paid by the Manager
to such persons out of the Deposited Property
of OUE C-REIT or the assets of the relevant
SPV, and not out of the Divestment Fee
received or to be received by the Manager.
Notes:
(1) There will not be two tiers of Divestment Fee
payable. The Divestment Fee payable by OUE
C-REIT will be 0.5% regardless of whether the
divestment of assets by OUE C-REIT is to a Related
Party or otherwise.
51
Payable by OUE C-REIT Amount payable
(2) Other payments refer to additional payments to
OUE C-REIT or its SPVs for the sale of the asset,
for example, where OUE C-REIT or its SPVs have
already made certain payments for enhancements
to the asset, and the value of the asset
enhancements is not reflected in the sale price as
the asset enhancements are not completed, but do
not include stamp duty or other payments to third
party agents and brokers.
(3) For example, if OUE C-REIT sells or divests a SPV
which holds real estate, such underlying value
would be the value of the real estate derived from
the amount of equity received by OUE C-REIT as
sale price and any debt of the SPV.
(iii) Development management fee
(1)
The Manager is entitled to receive a
development management fee equivalent to
3.0% of the Total Project Costs incurred in a
Development Project (each as defined herein)
undertaken by the Manager on behalf of OUE
C-REIT (the Development Management
Fee). OUE C-REIT will only undertake
development activities within the limits of the
Property Funds Appendix (which currently
allows a REIT to commit no more than 10.0%
of its deposited property to property
development activities and investments in
uncompleted property developments).
Total Project Costs means the sum of the
following (where applicable):
(i) construction cost based on the project
final account prepared by the project
quantity surveyor;
(ii) principal consultants fees, including
payments to the projects architect, civil
and structural engineer, mechanical and
electrical engineer, quantity surveyor and
project manager;
(iii) the cost of obtaining all approvals for the
project;
(iv) site staff costs;
(v) interest costs on borrowings used to
finance project cash flows that are
capitalised to the project in line with
generally accepted accounting practices
in Singapore; and
52
Payable by OUE C-REIT Amount payable
(vi) any other costs including contingency
expenses which meet the definition of
Total Project Costs and can be
capitalised to the project in accordance
with generally accepted accounting
practices in Singapore.
For the avoidance of doubt, land costs will not
be included in the computation of Total Project
Costs.
Development Project, in relation to OUE
C-REIT, means a project involving the
development of land, or buildings, or part(s)
thereof on land which is acquired, held or
leased by OUE C-REIT, including major
development, redevelopment, refurbishment,
retrofitting, addition and alteration and
renovations works, provided always that the
Property Funds Appendix shall be complied
with for the purposes of such development.
When the estimated Total Project Costs are
greater than S$100.0 million, the Trustee and
the Managers independent directors will first
review and approve the quantum of the
Development Management Fee, whereupon
the Manager may be directed to reduce the
Development Management Fee. Further, in
cases where the market pricing for
comparable services is, in the Managers view,
materially lower than the Development
Management Fee, the Manager will have the
discretion to accept a Development
Management Fee which is less than 3.0% of
the Total Project Costs incurred in a
Development Project undertaken by the
Manager on behalf of OUE C-REIT.
The Development Management Fee is
payable to the Manager in the form of cash
and/or Units (as the Manager may elect)
provided that in such proportions as may be
determined by the Manager.
For the avoidance of doubt, in respect of the
same Development Project, the Manager will
not be entitled to concurrently receive both the
Development Management Fee as well as the
Acquisition Fee. Where project management
fees are payable to the Property Manager,
53
Payable by OUE C-REIT Amount payable
there will not be any Development
Management Fee payable to the Manager and
vice versa.
Note:
(1) The services that the Manager may provide in
relation to the Development Management Fee
would include the provision of services (a) from the
design (pre-construction) phase, such as working
with the relevant consultants in respect of the
design and to finalise the details in respect of the
work to be carried out, (b) to the construction
phase, such as monitoring the performance of the
contractors, consultants and other service
providers in respect of the delivery of the project
and (c) up to the completion phase, such as
supervising and assisting in the finalisation of
accounts with the quantity surveyors and other
consultants.
Payable to the Property Manager
(iv) Property management fee The Property Manager is entitled to the
following fees on each property of OUE
C-REIT under its management (which, as at
the Listing Date, will comprise the OUE
Bayfront Property only):
in respect of property management
services, (a) 2.0% per annum of Gross
Revenue for the relevant property, and
(b) 2.0% per annum of Net Property
Income for the relevant property
(calculated before accounting for the
property management fee in that
financial period); and
in respect of lease management
services, 0.5% per annum of the Net
Property Income of the relevant property
(calculated before accounting for the
property management fee in that
financial period).
(1)
The property management fee is payable to
the Property Manager in the form of cash.
On the Listing Date, the Property Manager will
be providing its services in respect of the OUE
Bayfront Property but will not be providing its
services in respect of the Lippo Plaza
Property, as such services will be provided by
the existing local property manager of the
Lippo Plaza Property under the Local Property
Management Agreement. In the event that the
existing property management agreement in
54
Payable by OUE C-REIT Amount payable
respect of the Lippo Plaza Property is not
renewed or is terminated, the Lippo Plaza
Property may (at the Property Managers
election) come under the management of the
Property Manager.
(2)
Notes:
(1) Where a property of OUE C-REIT is located outside
of Singapore and is under the management of the
Property Manager, the Property Manager may
appoint and engage a local property manager to
provide property management services and pay the
local property manager for the provision of property
management services. Any payment to such local
property managers in connection with such
management services will be paid by the Property
Manager to such persons out of the property
management fee received by the Property
Manager, and not additionally out of the Deposited
Property.
(2) The centre management team of the Lippo Plaza
Property are employed and remunerated by the
PRC Company. In the event that the Lippo Plaza
Property comes under the management of the
Property Manager, the centre management team of
the Lippo Plaza Property will continue to be
remunerated by the PRC Company, with the
payment of such remuneration being in addition to
the fees payable to the property management fees
payable to the Property Manager.
(v) Project management fee For project management services, the
Property Manager is entitled to a project
management fee to be mutually agreed in
writing between the Manager, the Trustee and
the Property Manager in relation to (i) the
development and redevelopment of a property
(if not prohibited by the Property Funds
Appendix or if otherwise permitted by the
MAS), the refurbishment, retrofitting and
renovation works to a property where
submission to the relevant authorities for the
approval of such works is required or (ii)
routine maintenance where the expenses for
the routine maintenance of the property
results in such expenses being classified as
capital expenditure:
a fee of 3.0% of the construction costs
(1)
,
where the construction costs amount to
S$2.0 million or less in Singapore or the
equivalent value in the relevant foreign
currency for any other country;
55
Payable by OUE C-REIT Amount payable
a fee of 2.15% of the construction costs,
where the construction costs exceed
S$2.0 million but do not exceed S$12.0
million in Singapore or the equivalent
value in the relevant foreign currency for
any other country;
a fee of 1.45% of the construction costs,
where the construction costs exceed
S$12.0 million but do not exceed S$40.0
million in Singapore or the equivalent
value in the relevant foreign currency for
any other country;
a fee of 1.40% of the construction costs,
where the construction costs exceed
S$40.0 million but do not exceed S$70.0
million in Singapore or the equivalent
value in the relevant foreign currency for
any other country;
a fee of 1.35% of the construction costs,
where the construction costs exceed
S$70.0 million but do not exceed
S$100.0 million in Singapore or the
equivalent value in the relevant foreign
currency for any other country; and
a fee to be mutually agreed by the
parties, but capped at 1.35% of the
construction costs, where the
construction costs exceed S$100.0
million in Singapore or the equivalent
value in the relevant foreign currency for
any other country.
The project management fee will be paid to the
Property Manager in cash.
For the avoidance of doubt, where
Development Management Fees are payable
to the Manager, there will not be any project
management fees payable to the Property
Manager and vice versa.
Note:
(1) Construction costs for the purpose of calculating
the fees payable to the Property Manager means all
construction costs and expenditure valued by the
quantity surveyor engaged by the Trustee for the
project, excluding development charges,
differential premiums, statutory payments,
consultants professional fees and GST.
56
THE OFFERING
OUE C-REIT OUE Commercial Real Estate Investment Trust, a REIT
established in Singapore and constituted by the Trust Deed.
The Manager OUE Commercial REIT Management Pte. Ltd., in its capacity
as manager of OUE C-REIT.
The Sponsor OUE Limited.
The Trustee DBS Trustee Limited, in its capacity as trustee of OUE
C-REIT.
The Offering [208,000,000] Units offered under the Placement Tranche and
the Public Offer, subject to the Over-Allotment Option.
The Placement Tranche [] Units offered by way of an international placement to
investors, including institutional and other investors in
Singapore other than the Sponsor and the Cornerstone
Investors, pursuant to the Offering.
The Units have not been and will not be registered under the
Securities Act and, accordingly, may not be offered or sold
within the U.S. except in certain transactions exempt from or
not subject to the registration requirements of the Securities
Act. The Units are being offered and sold in offshore
transactions as defined in and in reliance on Regulation S.
The Public Offer The Public Offer Units offered by way of a public offer in
Singapore.
[] Units will be offered under the Public Offer.
Clawback and Re-allocation The Units may be re-allocated between the Placement
Tranche and the Public Offer at the discretion of the Joint
Bookrunners (in consultation with the Manager, subject to the
minimum unitholding and distribution requirements of the
SGX-ST), in the event of an excess of applications in one and
a deficit in the other.
Consideration Units Concurrent but separate from the Offering, Clifford
Development Pte. Ltd. will receive [432,999,999]
Consideration Units at the Offering Price on the Listing Date
in part satisfaction of the purchase price for the OUE Bayfront
Property.
57
Subscription by the
Cornerstone Investors
Concurrently with, but separate from the Offering, each of
Wealthy Fountain Holdings Inc (Summit SPV), Mr Gordon
Tang, Mdm Chen Huaidan, Mr Yang Dehe and RHB Asset
Management Sdn Bhd (the Cornerstone Investors) has
entered into a subscription agreement to subscribe for an
aggregate of [225,000,000] Units at the Offering Price, conditional
upon the Underwriting Agreement having been entered into, and
not having been terminated, pursuant to its terms on or prior to the
date and time on which the Units are issued as settlement under
the Offering (the Settlement Date).
(See Ownership of the Units Information on Cornerstone
Investors for further details.)
Offering Price S$0.80 per Unit.
Subscription for Units in the
Public Offer
Investors applying for Units by way of Application Forms or
Electronic Applications (both as referred to in Appendix G,
Terms, Conditions and Procedures for Application for and
Acceptance of the Units in Singapore) in the Public Offer will
pay the Offering Price on application, subject to a refund of
the full amount or (as the case may be) the balance of the
application monies (in each case, without interest or any
share of revenue or other benefit arising therefrom) where:
(i) an application is rejected or accepted in part only; or
(ii) the Offering does not proceed for any reason.
For the purpose of illustration, an investor who applies for
1,000 Units by way of an Application Form or an Electronic
Application under the Public Offer will have to pay S$[800.00],
which is subject to a refund of the full amount or the balance
thereof (without interest or any share of revenue or other
benefit arising therefrom), as the case may be, upon the
occurrence of any of the foregoing events.
The minimum initial subscription is for 1,000 Units. An
applicant may subscribe for a larger number of Units in
integral multiples of 1,000.
Investors in Singapore must follow the application procedures
set out in Appendix G, Terms, Conditions and Procedures for
Application for and Acceptance of the Units in Singapore.
Investors who are members of the Central Provident
Fund (CPF) in Singapore may use their CPF Ordinary
Account savings to purchase Units as an investment included
under the CPF Investment Scheme Ordinary Account.
Subscriptions under the Public Offer must be paid for in
Singapore dollars. No fee is payable by applicants for the
Units, save for an administration fee for each application
made through ATM and the internet banking websites of the
Participating Banks.
58
Unit Lender Clifford Development Pte. Ltd..
Over-Allotment Option In connection with the Offering, the Joint Bookrunners have
been granted the Over-Allotment Option by the Unit Lender.
The Over-Allotment Option is exercisable by the Stabilising
Manager (or any of its affiliates or other persons acting on
behalf of the Stabilising Manager), in consultation with the
other Joint Bookrunners, in full or in part, on one or more
occasions, only from the Listing Date but no later than the
earliest of (i) the date falling 30 days from the Listing Date; or
(ii) the date when the Stabilising Manager (or any of its
affiliates or other persons acting on behalf of the Stabilising
Manager) has bought, on the SGX-ST, an aggregate of []
Units, representing up to [20.0]% of the total number of Units
in the Offering, to undertake stabilising actions to purchase up
to an aggregate of [] Units (representing up to [20.0]% of the
total number of Units in the Offering), at the Offering Price.
Unless indicated otherwise, all information in this document
assumes that the Over-Allotment Option is not exercised.
(See Plan of Distribution for further details.)
The total number of Units in issue immediately after the close
of the Offering will be 866,000,000 Units. The exercise of the
Over-Allotment Option will not increase this total number of
Units in issue.
Lock-ups The Sponsor and Clifford Development Pte. Ltd. have each
agreed to (i) a lock-up arrangement during the First Lock-up
Period in respect of its direct and/or effective interest in the
Lock-up Units, and (ii) a lock-up arrangement during the
Second Lock-up Period in respect of its direct and/or effective
interest in 50.0% of the Lock-up Units, subject to certain
exceptions.
The Manager has also undertaken not to offer, issue or
contract to issue any Units, and the making of any
announcements in connection with any of the foregoing
transactions, during the First Lock-up Period, subject to
certain exceptions.
(See Plan of Distribution Lock-up Arrangements for further
details.)
Capitalisation S$[1,391.0] million (based on the Offering Price). (See
Capitalisation and Indebtedness for further details.)
Use of Proceeds See Use of Proceeds and Certain Agreements Relating to
OUE C-REIT and the Properties for further details.
59
Listing and Trading Prior to the Offering, there was no market for the Units.
Application has been made to the SGX-ST for permission to
list on the Main Board of the SGX-ST:
all the Units comprised in the Offering;
all the Sponsor Units;
all the Cornerstone Units; and
all the Units which may be issued to the Manager from
time to time in full or part payment of the Managers fees
(See The Manager and Corporate Governance
Management Fee for further details).
Such permission will be granted when OUE C-REIT is
admitted to the Official List of the SGX-ST.
The Units will, upon their issue, be listed and quoted on the
SGX-ST and will be traded in Singapore dollars under the
book-entry (scripless) settlement system of The Central
Depository (Pte) Limited (CDP). The Units will be traded in
board lot sizes of 1,000 Units.
Stabilisation In connection with the Offering, the Stabilising Manager (or
any of its affiliates or other persons acting on behalf of the
Stabilising Manager) may, in consultation with the other Joint
Bookrunners and at its discretion, over-allot or effect
transactions which stabilise or maintain the market price of
the Units at levels which might not otherwise prevail in the
open market. However, there is no assurance that the
Stabilising Manager (or any of its affiliates or other persons
acting on behalf of the Stabilising Manager) will undertake
stabilising action. Such transactions may be effected on the
SGX-ST and in other jurisdictions where it is permissible to do
so, in each case in compliance with all applicable laws and
regulations (including the SFA and any regulations
thereunder).
Such transactions may commence on or after the date of
commencement of trading in the Units on the SGX-ST and, if
commenced, may be discontinued at any time and shall not
be effected after the earliest of (i) the date falling 30 days from
the commencement of trading in the Units on the SGX-ST or
(ii) the date when the Stabilising Manager (or any of its
affiliates or other persons acting on behalf of the Stabilising
Manager) has bought on the SGX-ST an aggregate of []
Units representing not more than [20.0]% of the total number
of Units in the Offering, to undertake stabilising actions. (See
Plan of Distribution Over-Allotment and Stabilisation for
further details.)
60
No Redemption by
Unitholders
Unitholders have no right to request the Manager to redeem
their Units while the Units are listed. Unitholders may only
deal in their listed Units through trading on the SGX-ST.
Listing of the Units on the SGX-ST does not guarantee a
liquid market for the Units.
Distribution Policy Distributions from OUE C-REIT to Unitholders will be computed
based on 100.0% of OUE C-REITs Distributable Income for
the Forecast Year 2014 and the Projection Year 2015.
Thereafter, OUE C-REIT will distribute at least 90.0% of its
Specified Taxable Income (as defined herein) on a semi-annual
basis. The first distribution, which will be in respect of the
period from the Listing Date to 30 June 2014 (First
Distribution), will be paid by the Manager on or before 28
September 2014. (See Distributions for further details.)
Income Support Arrangement Under the Income Support Arrangement, the Sponsor, will
provide Income Support to OUE C-REIT for a period of up to
five years from the Listing Date. Pursuant to the Deed of
Income Support, the Income Support is calculated as the
shortfall between the target Gross Rental Income of the OUE
Bayfront Property in each quarter and the actual Gross Rental
Income received from committed tenancy agreements. (See
Certain Agreements Relating to OUE C-REIT and the
Properties Deed of Income Support for further details.)
Singapore Tax Considerations OUE C-REIT has obtained tax rulings from the Inland
Revenue Authority of Singapore (the IRAS) on the taxation
of certain income (Specified Taxable Income) from the
OUE Bayfront Property (the Tax Transparency Ruling) and
on the Singapore taxation of dividend income received from
the BVI Holding Company (the Foreign-Sourced Income
Tax Exemption Ruling) (collectively, the Tax Rulings).
The Specified Taxable Income includes the following:
(i) property rent and related income from the OUE Bayfront
Property (but not gains from the disposal of the property);
(ii) Singapore-sourced interest income from placement of
surplus cash as deposits with banks; and
(iii) rental top-up payments arising from the Income Support
Arrangement.
Subject to the terms and conditions of the Tax Transparency
Ruling, the Trustee will not be taxed on Specified Taxable
Income distributed to the Unitholders in the year in which the
income was derived. Instead, the Trustee and the Manager
would undertake to deduct income tax at the prevailing
corporate tax rate from distributions made to Unitholders out
of such Specified Taxable Income, unless the Unitholders are
Qualifying Unitholders or Qualifying Foreign Non-Individual
Unitholders (both as defined herein). Qualifying Unitholders
will receive such distributions without tax deduction at source.
61
Distributions made up to 31 March 2015 (unless otherwise
extended) and out of Specified Taxable Income to Unitholders
who are Qualifying Foreign Non-Individual Unitholders will be
subject to Singapore withholding tax at the reduced rate of
10.0%. The withholding tax is generally a final tax.
The Foreign-Sourced Income Tax Exemption Ruling grants
tax exemption to the Trustee on the dividends received from
the BVI Holding Company on or before 31 March 2015 (unless
otherwise extended), subject to certain conditions.
Distributions made out of Tax-Exempt Income (as defined
herein) and return of capital from the BVI Holding Company
will not be subject to Singapore income tax in the hands of the
Unitholders.
(See Taxation for further details.)
Termination of OUE C-REIT OUE C-REIT can be terminated by either an Extraordinary
Resolution at a Unitholders meeting duly convened and held
in accordance with the provisions of the Trust Deed or by the
Manager or the Trustee under certain circumstances
specified in the Trust Deed, for example, if OUE C-REIT is
delisted permanently from the SGX-ST. (See The Formation
and Structure of OUE C-REIT Termination of OUE C-REIT
for further details.)
Governing Law The Trust Deed is governed by Singapore law.
Commission Payable by
OUE C-REIT to the Joint
Bookrunners
See Plan of Distribution Issue Expenses for further details.
Risk Factors Prospective investors should carefully consider certain
risks connected with an investment in the Units, as
discussed under Risk Factors.
62
INDICATIVE TIMETABLE
An indicative timetable for the Offering is set out below for the reference of applicants for the
Units:
Date and time Event
[] : Opening date and time for the Public Offer.
[] : Closing date and time for the Public Offer.
[] : Balloting of applications under the Public Offer, if necessary.
Commence returning or refunding of application monies to
unsuccessful or partially successful applicants and
commence returning or refunding of application monies to
successful applicants for the amount paid in excess of the
Offering Price, if necessary.
[] : Completion of the acquisition of the Properties.
[] : Commence trading on a ready basis.
[] : Settlement date for all trades done on a ready basis on [].
The above timetable is indicative only and is subject to change. It assumes:
that the closing of the list of applicants subscribing for Units which are the subject of the
Public Offer (the Application List) is [];
that the Listing Date is [];
compliance with the SGX-STs unitholding spread requirement; and
that the Units will be issued and fully paid up prior to [] on [].
All dates and times referred to above are Singapore dates and times.
Trading in the Units through the SGX-ST on a ready basis will commence at [] on [] (subject
to the SGX-ST being satisfied that all conditions necessary for the commencement of trading in
the Units through the SGX-ST on a ready basis have been fulfilled). The completion of the
acquisition of the Properties is expected to take place at or before [] on []. (See Certain
Agreements Relating to OUE C-REIT and the Properties for further details.)
If OUE C-REIT is terminated by the Manager or the Trustee under the circumstances specified in
the Trust Deed prior to, or the acquisition of the Properties is not completed by, [] on [] (being
the time and date of commencement of trading in the Units through the SGX-ST), the Offering will
not proceed and the application monies will be returned in full (without interest or any share of
revenue or other benefit arising therefrom and at each applicants own risk and without any right
or claim against OUE C-REIT, the Manager, the Trustee, the Sponsor, the Sole Financial Adviser,
the Joint Global Coordinators or the Joint Bookrunners).
In the event of any early or extended closure of the Application List or the shortening or extension
of the time period during which the Offering is open, the Manager will publicly announce the same:
via SGXNET, with the announcement to be posted on the internet at the SGX-ST website:
http://www.sgx.com; and
in one or more major Singapore newspapers, such as The Straits Times, The Business
Times and Lianhe Zaobao.
63
For the date on which trading on a ready basis will commence, investors should monitor
SGXNET, the major Singapore newspapers, or check with their brokers.
The Manager will provide details and results of the Public Offer through SGXNET and in one or
more major Singapore newspapers, such as The Straits Times, The Business Times and Lianhe
Zaobao.
The Manager reserves the right to reject or accept, in whole or in part, or to scale down or ballot
any application for Units, without assigning any reason, and no enquiry and/or correspondence on
the decision of the Manager will be entertained. In deciding the basis of allotment, due
consideration will be given to the desirability of allotting the Units to a reasonable number of
applicants with a view to establishing an adequate market for the Units.
Where an application is accepted or rejected in part only or if the Offering does not proceed for
any reason, the full amount or the balance of the application monies, as the case may be, will be
refunded (without interest or any share of revenue or other benefit arising therefrom) to the
applicant, at his own risk, and without any right or claim against OUE C-REIT, the Manager, the
Trustee, the Sponsor, the Sole Financial Adviser, the Joint Global Coordinators or the Joint
Bookrunners.
Where an application is not successful, the refund of the full amount of the application monies
(without interest or any share of revenue or other benefit arising therefrom) to the applicant, is
expected to be completed, at his own risk within 24 hours after balloting (provided that such
refunds in relation to applications in Singapore are made in accordance with the procedures set
out in Appendix G, Terms, Conditions and Procedures for Application for and Acceptance of the
Units in Singapore).
Where an application is accepted in full or in part only, any balance of the application monies will
be refunded (without interest or any share of revenue or other benefit arising therefrom) to the
applicant, at his own risk, within 14 Market Days (as defined herein) after the close of the Offering
(provided that such refunds in relation to applications in Singapore are made in accordance with
the procedures set out in Appendix G, Terms, Conditions and Procedures for Application for and
Acceptance of the Units in Singapore).
Where the Offering does not proceed for any reason, the full amount of application monies
(without interest or any share of revenue or other benefit arising therefrom) will, within three
Market Days after the Offering is discontinued, be returned to the applicants at their own risk
(provided that such refunds in relation to applications in Singapore are made in accordance with
the procedures set out in Appendix G, Terms, Conditions and Procedures for Application for and
Acceptance of the Units in Singapore).
64
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following table is only an extract from, and should be read together with the section,
Unaudited Pro Forma Financial Information, and the report set out in Appendix C, Unaudited
Pro Forma Financial Information.
The unaudited historical pro forma financial information of OUE C-REIT and its subsidiaries (the
OUE C-REIT Group, and the unaudited historical pro forma financial information of the OUE
C-REIT Group, the Unaudited Pro Forma Financial Information) for FY2011, FY2012, the nine
months ended 30 September 2012 and the nine months ended 30 September 2013 (collectively,
the Relevant Period), based on the Offering Price of S$0.80 per Unit, is as follows:
Unaudited Pro Forma Statements of Financial Position of the OUE C-REIT Group
(1)
As at
31 December 2012
As at
30 September 2013
S$000 S$000
Non-current assets
Investment properties 1,555,018 1,578,047
Intangible asset
(2)
33,000 33,000
Plant and equipment 108 110
Prepayments 594
1,588,720 1,611,157
Current assets
Trade and other receivables 1,563 1,584
Cash and cash equivalents 36,371 39,662
37,934 41,246
Total assets 1,626,654 1,652,403
Non-current liabilities
Loans and borrowings [681,450] [681,416]
Trade and other payables 11,713 9,398
Deferred tax liabilities
(3)
30,815 36,634
723,978 727,448
Current liabilities
Trade and other payables 14,788 19,300
Current tax payable 2,363 2,671
17,151 21,971
Total liabilities 741,129 749,419
Net assets 885,525 902,984
Represented by:
Unitholders funds 885,525 902,984
Notes:
(1) The Unaudited Pro Forma Statements of Financial Position as at 31 December 2012 and 30 September 2013 have
been prepared assuming issuance of 866,000,000 Units at the Offering Price of S$0.80 per Unit.
(2) Intangible asset represents the unamortised Income Support receivable by the OUE C-REIT Group under the
Income Support Arrangement with the Sponsor in relation to the OUE Bayfront Property.
(3) Deferred tax liabilities relate to the deferred tax recognised on the gain on revaluation of the Lippo Plaza Property
to its fair value.
65
Unaudited Pro Forma Statements of Total Return of the OUE C-REIT Group
(1)(2)
FY2011 FY2012
Nine months ended
30 September 2012
Nine months ended
30 September 2013
S$000 S$000 S$000 S$000
Gross Revenue 36,514 65,453 48,833 52,708
Property operating expenses (11,361) (14,466) (10,673) (12,283)
Net Property Income 25,153 50,987 38,160 40,425
Other income 607 483 340 532
Managers base fee (5,046) (4,880) (3,660) (3,718)
Managers performance fee (6,176) (4,950) (202)
Trustees fee (323) (313) (235) (238)
Other expenses (2,585) (2,573) (1,868) (1,896)
Finance income 164 242 223 183
Finance costs (15,401) (16,074) (12,151) (11,446)
Total return for the
year/period before tax 2,569 21,696 15,859 23,640
Income tax expense (3,178) (4,349) (2,411) (4,586)
Total return for the
year/period (609) 17,347 13,448 19,054
Notes:
(1) The Unaudited Pro Forma Statements of Total Return for the Relevant Period have been prepared assuming
issuance of 866,000,000 Units at the Offering Price of S$0.80 per Unit.
(2) No Income Support has been assumed for the periods presented.
66
Unaudited Pro Forma Statements of Cash Flows of the OUE C-REIT Group
(1)(2)
FY2012
Nine months ended
30 September 2013
S$000 S$000
Cash flows from operating activities
Total return for the year/period 23,523 19,054
Adjustments for:
Managers management fees payable in Units 4,880 3,718
Finance income (80) (126)
Finance costs 16,074 11,446
Depreciation 6 5
Loss on disposal of plant and equipment 9 1
Income tax expense 4,349 4,586
Operating income before working capital changes 48,761 38,684
Changes in working capital:
Trade and other receivables (2,395) 149
Trade and other payables 2,101 4,137
Cash generated from operating activities 48,467 42,970
Tax paid (2,859) (1,261)
Net cash from operating activities 45,608 41,709
Cash flow from investment activities
Acquisition of properties and related assets and liabilities,
including acquisition costs (648,223)
Acquisition of subsidiaries, net of cash acquired (142,200)
Acquisition of plant and equipment (25) (3)
Acquisition of investment properties (1,947)
Interest received 80 126
Net cash used in investing activities (790,368) (1,824)
Cash flows from financing activities
Proceeds from issue of Units 346,400
Payment of transaction costs related to issue of Units (29,214)
Distribution to Unitholders (16,572) (30,128)
Repayments to related corporations
(3)
(218,203) (19)
Interest paid (21,076) (10,238)
Proceeds from borrowings 881,348 3,719
Repayment of borrowings (117,455) (1,070)
Payment of transaction costs related to
loans and borrowings (16,838)
Net cash from/(used in) financing activities 808,390 (37,736)
Net increase in cash and cash equivalents 63,630 2,149
Cash and cash equivalents at beginning of the year/period 63,394
Effect of exchange rate fluctuations on cash held (236) 110
Cash and cash equivalents at end of the year/period 63,394 65,653
Notes:
(1) The Unaudited Pro Forma Statements of Cash Flows for FY2012 and the nine months ended 30 September 2013
have been prepared assuming issuance of 866,000,000 Units at the Offering Price of S$0.80 per Unit.
(2) No Income Support has been assumed for the periods presented.
(3) For FY2012, this is inclusive of S$96.5 million relating to the settlement of balances with related parties of LCR prior
to the Listing Date. These balances comprise (i) approximately S$23.9 million to Frontop Limited (Frontop), an
indirect wholly-owned subsidiary of LCR which, together with Reiley Inc. (Reiley), jointly holds the entire issued
capital of the BVI Company prior to the completion of the Tecwell Share Purchase Agreement, (ii) approximately
S$60.0 million to Reiley, an indirect wholly-owned subsidiary of LCR, (iii) approximately S$6.2 million to Putian Talin
Infrastructure Co., Ltd. (Putian Talin), an indirect subsidiary of LCR, and (iv) approximately S$6.4 million to Zhuhai
Chung Po HPD Co Ltd (Zhuhai Chung Po), an indirect subsidiary of LCR. Repayments to Frontop and Reiley are
for the purposes of settlement of inter-company loans, while repayments to Putian Talin and Zhuhai Chung Po are
for the purposes of settlement of inter-company balances.
67
PROFIT FORECAST AND PROFIT PROJECTION
The following is an extract from Profit Forecast and Profit Projection. Statements contained in
the Profit Forecast and Profit Projection section that are not historical facts may be forward-
looking statements. Such statements are based on the assumptions set forth in Profit Forecast
and Profit Projection and are subject to certain risks and uncertainties which could cause actual
results to differ materially from the forecast or projected results of the OUE C-REIT Group. Under
no circumstances should the inclusion of such information herein be regarded as a representation,
warranty or prediction with respect to the accuracy of the underlying assumptions by any of OUE
C-REIT, the Manager, the Trustee, the Sponsor, the Sole Financial Adviser, the Joint Global
Coordinators, the Joint Bookrunners or any other person, or that these results will be achieved or
are likely to be achieved. (See Forward-looking Statements and Risk Factors for further
details.) Investors in the Units are cautioned not to place undue reliance on these forward-looking
statements.
None of OUE C-REIT, the Manager, the Trustee, the Sponsor, the Sole Financial Adviser, the
Joint Global Coordinators or the Joint Bookrunners guarantees the performance of OUE
C-REIT, the repayment of capital or the payment of any distributions, or any particular
return on the Units. The forecast and projected yields stated in the following table are
calculated based on:
the Offering Price; and
the assumption that the Listing Date is 1 January 2014.
Such yields will vary accordingly if the Listing Date is not on 1 January 2014, or for
investors who purchase Units in the secondary market at a market price that differs from
the Offering Price.
The following table shows the OUE C-REIT Groups Statements of Total Return for the Forecast
Year 2014 and the period from 1 January 2015 to 31 December 2015 (the Projection Year
2015). The financial year end of OUE C-REIT is 31 December. The forecast and projected results
for the Forecast Year 2014 and the Projection Year 2015 (the Profit Forecast and Profit
Projection) may be different to the extent that the actual date of issuance of Units is other than
1 January 2014, being the assumed date of the issuance of Units for the Offering. The Profit
Forecast and Profit Projection are based on the assumptions set out in Profit Forecast and Profit
Projection and have been examined by the Reporting Auditors, being KPMG LLP, and should be
read together with the report set out in Appendix A, Reporting Auditors Report on the Profit
Forecast and Profit Projection, as well as the assumptions and the sensitivity analysis set out in
Profit Forecast and Profit Projection.
68
Forecast and Projected Statements of Total Return for the OUE C-REIT Group
The forecast and projected statements of total return for the OUE C-REIT Group are as follows:
Forecast
Year 2014
Projection
Year 2015
(S$000) (S$000)
Gross Revenue [74,417] [76,533]
Property operating expenses
(1)
[(20,087)] [(20,596)]
Net Property Income [54,330] [55,937]
Other income
(2)
[9,629] [8,921]
Amortisation of intangible asset [(6,600)] [(6,600)]
Managers Base Fee [(5,024)] [(5,017)]
Managers Performance Fee [] [(334)]
Trustees fee [(321)] [(321)]
Other expenses [(2,552)] [(2,554)]
Finance costs
(3)
[(17,767)] [(17,767)]
Net income [31,695] [32,265]
Net change in fair value of investment properties [285,144] []
Total return before income tax [316,839] [32,265]
Income tax expense [(42,172)] [(3,527)]
Total return after income tax but before distribution
adjustments [274,667] [28,738]
Add: Distribution adjustments
(4)
[(227,298)] [19,611]
Income available for distribution to Unitholders [47,369] [48,349]
Unitholders distribution
From operations
(5)
[35,850] [35,541]
From Unitholders contributions
(5)
[11,519] [12,808]
Total Unitholders distribution [47,369] [48,349]
Weighted average number of Units outstanding at end
of year (000)
(6)
[870,710] [877,171]
Distribution rate (%) [100.0] [100.0]
Distribution per Unit (cents)
(7)
[5.44] [5.51]
Distribution per Unit (without Income Support) (cents) [4.45] [4.60]
Offering Price (S$/Unit) [0.80] [0.80]
Distribution yield (%) [6.80] [6.89]
Distribution yield (without Income Support) (%) [5.56] [5.75]
69
Notes:
(1) Includes the property tax in relation to the Lippo Plaza Property which has been provided for based on the Lippo
Plaza Propertys rental income. For the Forecast Year 2014 and the Projection Year 2015, the property tax provided
for amounts to approximately RMB[14.6] million and RMB[15.4] million, respectively.
(2) Other income comprises Income Support relating to the top-up payments from the Sponsor pursuant to the Deed
of Income Support.
(3) Finance costs include interest expense and amortisation of debt-related transaction costs.
(4) Comprises non-tax deductible and other adjustments, including 100.0% of the Managers Base Fee and
Performance Fee payable or to be paid in Units for the Forecast Year 2014 and the Projection Year 2015, net change
in fair value of investment properties, amortisation of debt-related transaction costs, trustee fees, depreciation
expenses, amortisation of intangible asset in relation to the Income Support received and receivable by OUE
C-REIT, and deferred tax expense.
(5) It is assumed that there will be a time lag of nine months in the repatriation of dividends from the BVI Holding
Company due to the time which may be required for tax and regulatory clearance in the PRC. However, the actual
time required may vary on a case-by-case basis. Notwithstanding this, any such time lag would not impact OUE
C-REITs ability to make distributions to Unitholders as OUE C-REIT would be able to draw down on its credit
facilities as an interim measure to cover any difference as a result of the time lag, where required. Such distributions
would be classified as capital distributions for tax purposes.
(6) Includes the increase in number of Units in issue as a result of the assumed payment of 100.0% of the Managers
Base Fee and Performance Fee for the relevant period in the form of Units issued at the Offering Price of S$0.80.
(7) Assuming a Listing Date of 1 January 2014. For the avoidance of doubt, Unitholders who have subscribed for Units
pursuant to the Offering will not be entitled to any distributions made for the period from 10 October 2013 (the date
of constitution of OUE C-REIT) and ending on the day immediately preceding the Listing Date.
70
RISK FACTORS
Prospective investors should consider carefully, together with all other information contained in
this Prospectus, the factors described below before deciding to invest in the Units. The risks
described below are by no means exhaustive or comprehensive, and there may be other risks in
addition to those shown below which are not known to the Manager or which may not be material
now but could turn out to be material in the future. Additional risks, whether known or unknown,
may in the future have a material adverse effect on OUE C-REIT or impair the business operations
of OUE C-REIT. The market price of the Units could decline due to any of these risks and
Unitholders may lose all or part of their investment. In addition, this Prospectus does not
constitute advice to you relating to investing in the Units and investors should make their own
judgment or consult their own investment advisers before making any investment in the Units.
This Prospectus also contains forward-looking statements (including profit forecasts and profit
projections) that involve risks, uncertainties and assumptions. The actual results of OUE C-REIT
could differ materially from those anticipated in these forward-looking statements as a result of
certain factors, including the risks faced by OUE C-REIT as described below and elsewhere in this
Prospectus.
As an investment in a REIT is meant to produce returns over the long-term, investors should not
expect to obtain short-term gains.
Investors should be aware that the price of Units, and the income from them, may fall or rise.
Investors should note that they may not get back their original investment.
Before deciding to invest in the Units, prospective investors should seek professional advice from
their relevant advisers about their particular circumstances.
RISKS RELATING TO THE PROPERTIES
OUE C-REIT may be adversely affected by economic and real estate market conditions, as well
as changes in regulatory, fiscal and other governmental policies in Singapore and the PRC.
The Properties are located in Singapore and Shanghai. Singapore and Shanghai are international
financial centres and are therefore particularly prone to volatility in the banking and financial system.
An economic decline in Singapore and/or the PRC could adversely affect OUE C-REITs results of
operations and future growth. The global credit markets have experienced, and may continue to
experience, volatility and liquidity disruptions, which have resulted in the consolidation, failure or near
failure of a number of institutions in the banking and insurance industries. There remains a concern
that the debt crisis in Europe and the U.S. as well as the uncertainty surrounding the monetary policy
of the U.S. Federal Reserve will impinge upon the health of the global financial system. These events
could adversely affect OUE C-REIT insofar as they result in:
a negative impact on the ability of the tenants to pay their rents in a timely manner or
continue their leases, thus reducing OUE C-REITs cash flow;
an increase in counterparty risk (being the risk of monetary loss which OUE C-REIT may be
exposed to if any of its counterparties encounters difficulty in meeting its obligations under
the terms of its respective transaction); and/or
an increased likelihood that one or more of (i) OUE C-REITs banking syndicates (if any), (ii)
banks or insurers, as the case may be, providing bankers guarantees or performance bonds
for the rental deposits or other types of deposits relating to or in connection with the
Properties or OUE C-REITs operations or (iii) OUE C-REITs insurers, may be unable to
honour their commitments to OUE C-REIT.
71
There is also uncertainty as to the scale of the downturn in the U.S. and the global economy, the
decrease in consumer demand and the impact of the global downturn on the economies of
Singapore and the PRC.
Investments in commercial and commercial-related assets in other countries will expose OUE
C-REIT to additional local real estate market conditions. Other real estate market conditions which
may adversely affect the performance of OUE C-REIT include the attractiveness of competing
commercial-related assets or an oversupply or reduced demand for such commercial-related
assets in the countries in which properties owned by OUE C-REIT are located.
Further, OUE C-REIT will be subject to real estate laws, regulations and policies as a result of its
property investments in Singapore and the PRC. Measures and policies adopted by the Singapore
and PRC governments and regulatory authorities at national, provincial or local levels, such as
government control over property investments or foreign exchange regulations, may negatively
impact OUE C-REITs properties.
OUE C-REIT is reliant on the OUE Bayfront Property for a substantial portion of its Gross
Revenue.
While the IPO Portfolio of OUE C-REIT will comprise two properties, OUE C-REIT will be reliant
on the OUE Bayfront Property for a substantial portion of its Gross Revenue. For the nine months
ended 30 September 2013, the OUE Bayfront Property accounted for 67.4% of the Gross
Revenue of OUE C-REIT. For the Forecast Year 2014, the OUE Bayfront Property is forecast to
account for [67.8]% of the Gross Revenue of OUE C-REIT.
Any circumstance which adversely affects the operations or business of the OUE Bayfront
Property, or its attractiveness to tenants, such as physical damage to the building due to fire or
other causes, may reduce the OUE Bayfront Propertys contribution to the Gross Revenue of OUE
C-REIT. This in turn may adversely affect the financial condition and results of operations of OUE
C-REIT, reducing the ability of OUE C-REIT to make distributions to Unitholders.
A substantial number of the Properties leases are for terms of one to three years, which
exposes the Properties to significant rates of lease expiries each year.
As at 30 September 2013, 37.1% of the leases (by Gross Rental Income) for the Properties will
expire during the Forecast Year 2014 and 66.7% of the leases (by Gross Rental Income) for the
Properties will expire during or before the Projection Year 2015, reflecting lease terms which are
generally reflective of the duration of lease terms in the Singapore and PRC commercial property
markets. As a result, the Properties experience lease cycles in which a substantial number of the
leases expire each year.
Vacancies following the non-renewal of leases may lead to reduced occupancy rates. If a large
number of tenants do not renew their leases in a year in which a substantial number of leases
expire and such tenants are not replaced in a timely manner and on terms acceptable to the
Manager, this could adversely affect the business, financial condition and results of operations of
OUE C-REIT.
There is no assurance that the level of Distributable Income attributable to the OUE
Bayfront Property can be sustained at the forecast and projected levels once the Income
Support entered into with the Sponsor expires or is withdrawn.
The Sponsor has entered into a Deed of Income Support arrangement with the Trustee and
Clifford Development Pte. Ltd., the vendor of the OUE Bayfront Property. The Income Support will
start from the Listing Date and end on the day immediately preceding the fifth anniversary of the
date of the Listing Date. Under the terms of the Deed of Income Support, if the Gross Rental
72
Income of the OUE Bayfront Property for the relevant period is less than the target Gross Rental
Income in respect of the OUE Bayfront Property, the Sponsor will be required to pay to the Trustee
a sum equal to the difference in respect of that period subject to a maximum annual limit.
Following the expiry or withdrawal of the Income Support, there is no assurance that the OUE
Bayfront Property will be able to generate a level of Distributable Income commensurate with the
levels attained with the provision of Income Support. Further, where the difference for the relevant
period exceeds the maximum annual limit, the Distributable Income attributable to the OUE
Bayfront Property may be adversely affected. (See Certain Agreements Relating to OUE C-REIT
and the Properties Deed of Income Support for further details.)
There is no assurance that the Properties will be able to maintain rental rates at prevailing
market rates.
The rental rates of the Properties will depend upon various factors, including but not limited to
prevailing supply and demand conditions as well as the quality and design of the Properties. There
is no assurance that the Manager will be able to procure new leases or renew existing leases at
these prevailing market rates.
OUE C-REIT is subject to the risk of non-renewal, non-replacement or early termination of
leases.
If a large number of tenants in the Properties do not renew their leases at the end of a lease cycle
or a significant number of early terminations occur, and replacement tenants cannot be found in
a timely manner and on terms acceptable to the Manager, there is likely to be a material adverse
effect on the Properties, which could materially and adversely affect the business, financial
condition and results of operations of OUE C-REIT.
The loss of key tenants or a significant number of tenants of any of the Properties or a
downturn in the businesses of key tenants or a significant number of tenants could have
an adverse effect on the business, financial condition and results of operations of OUE
C-REIT.
OUE C-REITs financial condition and results of operations and capital growth may be adversely
affected by the bankruptcy, insolvency or downturn in the businesses of one or more of the key
tenants or a significant number of tenants of any of the Properties, as well as the decision by one
or more of these tenants not to renew its lease or terminate its lease before it expires. If key
tenants or a significant number of tenants terminate their leases or do not renew their leases at
expiry, it may be difficult to secure replacement tenants at short notice. In addition, the amount of
rent and the terms on which lease renewals and new leases are agreed may be less favourable
than the current leases.
Collectively, the top 10 tenants
1
of the Properties by Gross Rental Income accounted for
approximately 50.2% of the Gross Rental Income of the Properties for the month of September
2013. Based on these tenants lease tenures, the leases for a majority of these top 10 tenants
1
will expire between 2014 and 2015. As at 30 September 2013, 26.5% and 33.8% of the OUE
Bayfront Propertys leases and the Lippo Plaza Propertys leases (by Gross Rental Income for the
month of September 2013), respectively, are expected to expire in 2015.
The loss of key tenants or a significant number of tenants in any one of OUE C-REITs Properties
or future acquisitions could result in periods of vacancy, which could adversely affect the revenue
and financial conditions of the relevant Property, consequently impacting the ability of the BVI
1 In this context, OUE C-REITs top 10 tenants for the IPO Portfolio does not take into account two tenants who would
otherwise be among the top 10 tenants by Gross Rental Income as they have not consented to the disclosure of their
tenancy arrangements in this Prospectus. (See Business and Properties Certain Information on the Properties
Top 10 Tenants for further details.)
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Company to make dividends or distributions in respect of the Lippo Plaza Property or the
Distributable Income attributable to the OUE Bayfront Property available for distribution to OUE
C-REIT.
OUE Tower has been gazetted for conservation, which may reduce OUE C-REITs ability to
optimise use of the OUE Bayfront Property.
The OUE Bayfront Property is comprised in part of OUE Tower, which has been gazetted for
conservation and is subject to the conservation guidelines and policies of the Urban
Redevelopment Authority and other relevant governmental authorities. These requirements
restrict OUE C-REITs ability to demolish, alter or add to the building comprising OUE Tower,
which may prevent OUE C-REIT from maximising income derived from the OUE Bayfront Property.
The Independent Valuers have taken the conservation status into consideration in arriving at their
valuations.
There is no assurance that an extension or new leasehold title to OUE Link will be granted.
OUE Link, which is held under a leasehold title of 15 years commencing 26 March 2010, has a
remaining leasehold tenure of approximately 11 years.
OUE C-REIT may have to incur certain costs in order to obtain an extension or grant of a new
leasehold title to OUE Link. If OUE C-REIT is not able to obtain an extension or grant of a new
leasehold title to OUE Link on commercially acceptable terms or at all, OUE C-REIT will have to
surrender OUE Link to the lessor, namely the President of the Republic of Singapore and/or his
successors in office, upon expiration of the lease. This will have an adverse effect on the net
income of OUE C-REIT. The value of the IPO Portfolio, and consequently the underlying asset
value of the Units, will decrease upon such surrender.
The underlying land use right of the Lippo Plaza Property will expire in 2044 and in the
event that an extension to the land use right is sought and obtained (and there can be no
assurance that such extension will be obtained as there are currently no precedents of
such extension), there is uncertainty about the quantum of land grant premium which OUE
C-REIT will have to pay and additional conditions which may be imposed.
The Lippo Plaza Property is directly held under the land use right granted by the PRC government,
which will expire in 2044. According to PRC law, the grantee of the land use right of non-residential
land may apply for renewal at least 12 months prior to the expiry of the land use right, otherwise
the land use right shall revert to the State upon expiry. If an application for extension is granted
(and such grant shall be given by the PRC government unless the land in issue shall be taken back
for the purpose of public interests), the land user will be required to, among other things, pay a
land grant premium for the renewed land use right. If no application is made, or such application
is not granted, the Lippo Plaza Property shall be disposed of in accordance with the land use right
grant contract. As none of the land use rights granted by the PRC government similar to those
granted for the Lippo Plaza Property has, at the Listing Date, run its full term, there is no precedent
of such extension to provide an indication of the quantum of land grant premium which OUE
C-REIT will have to pay and additional conditions which may be imposed in the event that an
extension to the land use rights for the Lippo Plaza Property is sought and obtained. There is no
assurance that OUE C-REIT will be able to obtain an extension to the land use right. In the event
that the extension is not granted, the Lippo Plaza Property would revert to the PRC government
and OUE C-REIT would no longer own or derive income from the Lippo Plaza Property and this,
along with other factors, may affect the business, financial condition and results of operations of
OUE C-REIT.
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Any foreclosure of the security created over the Lippo Plaza Property may result in the PRC
Company breaching its obligations under its lease agreements.
The PRC Company entered into a secured term loan facility of RMB320.0 million on 29 June 2012
with Standard Chartered Bank (China) Limited, Shanghai Branch, The Bank of East Asia (China)
Limited, Shanghai Branch, CITIC Bank International (China) Limited Shanghai Branch and Chong
Hing Bank Limited, Shantou Branch (the Existing Onshore Lenders, and the secured term loan
facility, the Existing Onshore Facility). OUE C-REIT will refinance the Existing Onshore Facility
by entering into a secured three-year term loan facility of RMB320.0 million from OCBC Bank
(China) Limited and Standard Chartered Bank (China) Limited, Shanghai Branch (the New
Onshore Facility) with the New Onshore Facility to be drawn down on the Business Day
1
following the Listing Date.
According to the Property Law of the PRC, where a property is mortgaged and subsequently
leased to a third party, at the point of foreclosure of the mortgage the mortgagee (or a subsequent
purchaser of the property) has the right to terminate any lease agreement entered into following
the creation of the security over the property. The lease agreements entered into by the PRC
Company provide that the PRC Company, as landlord, shall ensure that the respective lease
agreements will remain binding on the landlords successors.
Should foreclosure of the security under the Existing Onshore Facility or the New Onshore Facility
occur, there is no assurance that the mortgagee (or a subsequent purchaser of the Lippo Plaza
Property) will not seek termination of the lease agreements in relation to the Lippo Plaza Property.
In the event that the lease agreements are so terminated, the PRC Company would be in breach
of its obligations under any lease agreements signed after the security is created, and
consequently be liable to pay compensation to the relevant tenants.
Planned amenities and transportation infrastructure near the Properties may not be
implemented as planned, or may be closed, relocated, terminated or delayed.
There is no assurance that amenities, transportation infrastructure and public transport services
near the Properties will be implemented as planned or will not be closed, relocated, terminated or
delayed. If such an event were to occur, it will adversely impact the accessibility of the relevant
Property and the attractiveness and marketability of the relevant Property to tenants. This may
then have an adverse effect on the demand and the rental rates for the relevant Property and
adversely affect the business, financial condition and results of operations of OUE C-REIT.
The Properties and properties to be acquired by OUE C-REIT may require periodic capital
expenditure and OUE C-REIT may not be able to secure financing to fund the necessary
works.
OUE C-REIT may require periodic capital expenditure, refurbishment, renovation for
improvements and development of the Properties or properties to be acquired by OUE C-REIT in
order to remain competitive or be income-producing. OUE C-REIT may not be able to fund capital
expenditure solely from cash provided from its operating activities and may not be able to obtain
additional equity or debt financing on favourable terms or at all. If OUE C-REIT is not able to
obtain such financing, the marketability of such property may be affected.
1 Business Day means any day (other than a Saturday, Sunday or gazetted public holiday) on which commercial
banks are open for business in Singapore and the SGX-ST is open for trading.
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OUE C-REITs assets might be adversely affected if the Manager, the Property Manager, the
local property manager which manages the Lippo Plaza Property and/or any property
manager appointed to manage any other property owned by OUE C-REIT does not provide
adequate management and maintenance.
Should the Manager, the Property Manager, the local property manager which manages the Lippo
Plaza Property and/or any property manager appointed to manage any other property owned by
OUE C-REIT fail to provide adequate management and maintenance, the value of OUE C-REITs
assets might be adversely affected and this may result in a loss of tenants, which will adversely
affect distributions to Unitholders.
Renovation or redevelopment works or physical damage to any of the Properties may
disrupt the operations of the affected Property and collection of rental income or otherwise
result in adverse impact on the financial condition of OUE C-REIT.
The quality and design of the Properties have a direct influence over the demand for space in, and
the rental rates of, the Properties. The Properties may need to undergo renovation or
redevelopment works from time to time to retain their competitiveness and may also require
unforeseen ad hoc maintenance or repairs in respect of faults or problems that may develop or
because of new planning laws or regulations. The costs of maintaining commercial properties and
the risk of unforeseen maintenance or repair requirements tend to increase over time as the
building ages. The business and operations of the Properties may suffer some disruption and it
may not be possible to collect the full or any rental income on space affected by such renovation
or redevelopment works.
In addition, physical damage to any of the Properties resulting from fire or other causes may lead
to a significant disruption to the business and operation of the affected Property and, together with
the foregoing, may impose unbudgeted costs on OUE C-REIT and result in an adverse impact on
the financial condition and results of operations of OUE C-REIT and its ability to make
distributions.
Losses or liabilities from latent property or equipment defects may adversely affect
earnings and cash flow.
Design, construction or other latent property or equipment defects in the Properties may require
additional capital expenditure, special repair, maintenance expenses or the payment of damages
or other obligations to third parties.
Statutory or contractual representations, warranties and indemnities given by any seller of
commercial properties are unlikely to afford satisfactory protection from costs or liabilities arising
from such property or equipment defects.
Costs or liabilities arising from such property or equipment defects may involve significant and
potentially unpredictable patterns and levels of expenditure which may have a material adverse
effect on OUE C-REITs earnings and cash flows.
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The Properties may face increased competition from other properties.
The Properties are located in areas where other competing properties are present and new
properties may be developed which may compete with the Properties.
The income from and the market value of the Properties will be dependent on the ability of the
Properties to compete against other properties for tenants. If, after the Offering, competing
properties are more successful in attracting and retaining tenants, the income from the Properties
could be reduced thereby adversely affecting OUE C-REITs cash flow and the amount of funds
available for distribution to Unitholders will be adversely affected. (See Business and Properties
The OUE Bayfront Property Competition and Business and Properties the Lippo Plaza
Property Competition for further details.)
RISKS RELATING TO OUE C-REITS OPERATIONS
The Sponsor will be a controlling Unitholder, and will be able to exercise influence over
certain activities of OUE C-REIT.
The Sponsor is a diversified real estate owner, developer and owner. Post-listing of OUE C-REIT,
the Sponsors business would continue to be focused across the commercial, retail, hospitality
and residential segments. Concurrent but separate from the Offering, the Sponsors wholly-owned
subsidiary, Clifford Development Pte. Ltd., will receive [432,999,999] Consideration Units in part
satisfaction of the purchase consideration for the OUE Bayfront Property, constituting [50.0]%
(assuming that the Over-Allotment Option is not exercised) of the total number of Units expected
to be in issue after the Listing Date).
The Sponsor will therefore be in a position to exercise influence in matters which require the
approval of Unitholders.
Potential competition may arise in the future between OUE C-REIT and the Sponsor Group.
While the Manager is of the view that there is minimal risk that the properties in OUE C-REIT may
face competition for tenants from the properties in OUE H-Trust which include malls adjacent to
hospitality properties, potential competition may arise in the future between OUE C-REIT and the
Sponsor Group.
The OUE Bayfront Property has a significantly different target tenant base from that of Mandarin
Gallery, the commercial property in OUE H-Trusts portfolio. Mandarin Gallery, which is located in
Orchard Road, is positioned as a high-end fashion mall for premium brands. OUE Link, on the
other hand, primarily serves the Singapore CBDs working population and focuses on offering
popular and convenient retail and F&B options.
In relation to the Lippo Plaza Property, OUE H-Trust does not own any commercial properties
outside of Singapore which may be in competition with the Lippo Plaza Property for tenants.
Nevertheless, the Sponsor is a diversified real estate owner, developer and operator which
focuses its business across the commercial, retail, hospitality and residential property segments.
While the Sponsor has granted the Sponsor ROFR to OUE C-REIT in order to demonstrate the
commitment of the Sponsor, and as a means to mitigate any potential conflict of interests which
may arise in the future, potential competition may arise between OUE C-REIT and the Sponsor
Group in relation to any future acquisition of additional properties or property-related investments
or in relation to competition for tenants. (See Certain Agreements Relating to OUE C-REIT and
the Properties Sponsor ROFR Agreement for further details.)
77
The Sponsor ROFR will be terminated if the Sponsor and/or any of its related corporations
cease to be the controlling shareholder of the Manager.
The Sponsor has granted the Sponsor ROFR to OUE C-REIT, subject to certain conditions. In the
event (i) the Sponsor and/or any of its related corporations, alone or in aggregate, cease to remain
as a controlling shareholder of the Manager or (ii) the Sponsor and/or any of its related
corporations, alone or in aggregate, cease to remain as a controlling unitholder of OUE C-REIT,
the Sponsor ROFR will be terminated. This may adversely affect OUE C-REITs pipeline of future
acquisitions.
If the Managers capital market services licence for REIT management (CMS Licence) is
cancelled or the authorisation of OUE C-REIT as a collective investment scheme under
Section 286 of the SFA is suspended, revoked or withdrawn, the operations of OUE C-REIT
will be adversely affected.
The CMS Licence issued to the Manager is subject to conditions and is valid unless otherwise
cancelled. If the CMS Licence of the Manager is cancelled by the MAS, the operations of OUE
C-REIT will be adversely affected, as the Manager would no longer be able to act as the manager
of OUE C-REIT.
OUE C-REIT was authorised as a collective investment scheme on [] and must comply with the
requirements under the SFA and the Property Funds Appendix. In the event that the authorisation
of OUE C-REIT is suspended, revoked or withdrawn, its operations will also be adversely affected.
Any breach by the major tenants of their obligations under the lease agreements or a
downturn in their businesses may have an adverse effect on OUE C-REIT.
In the event that any major tenants of OUE C-REIT are unable to pay their rent or breach their
obligations under the lease agreements, the level of Distributable Income may be adversely
affected. The performance of the major tenants businesses could also have an impact on their
ability to make rental payments to OUE C-REIT.
Factors that affect the ability of such major tenants to meet their obligations include, but are not
limited to:
their financial position;
the local economies in which they have business operations;
the ability of such major tenants to compete with its competitors;
in the instance where such major tenants have sub-leased the Properties, the failure of the
sub-tenants to pay rent; and
material losses in excess of insurance proceeds.
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The amount OUE C-REIT may borrow is limited, which may affect the operations of OUE
C-REIT.
Under the Property Funds Appendix, OUE C-REIT is permitted to borrow up to 35.0% of the value
of the Deposited Property at the time the borrowing is incurred, taking into account deferred
payments (including deferred payments for assets whether to be settled in cash or in Units).
However, the Property Funds Appendix also allows OUE C-REIT to borrow more than 35.0% (up
to a maximum of 60.0%) of the value of the Deposited Property if a credit rating from Fitch Inc.,
Moodys or Standard & Poors Ratings Group is obtained and disclosed to the public. As at the
Listing Date, OUE C-REIT is expected to have gross borrowings of S$[698.2] million, with its total
borrowings and deferred payments (if any) as a percentage of the Deposited Property (the
Aggregate Leverage) of approximately [42.3]% based on the Offering Price. The Manager has
obtained, in respect of OUE C-REIT, a provisional credit rating of Ba1 from Moodys.
1
(See
Capitalisation and Indebtedness Indebtedness for further details.)
OUE C-REIT may, from time to time, require further debt financing to achieve its investment
strategy. In the event that OUE C-REIT decides to incur additional borrowings in the future, OUE
C-REIT may face adverse business consequences as a result of this limitation on future
borrowings, and these may include:
an inability to fund capital expenditure requirements in relation to OUE C-REITs existing
asset portfolio or in relation to OUE C-REITs acquisitions to expand its portfolio;
a decline in the value of the Deposited Property may cause the borrowing limit to be
exceeded, thus affecting OUE C-REITs ability to make further borrowings; and
cash flow shortages (including with respect to distributions) which OUE C-REIT might
otherwise be able to resolve by borrowing funds.
1 The provisional credit rating assumes the listing of OUE C-REIT on the SGX-ST, the drawdown of debt facilities of
S$[698.2] million and the acquisition of the Properties by OUE C-REIT. The final rating is conditional upon the
successful completion of all the events described in the foregoing sentence. The Manager expects Moodys to
assign its final rating of OUE C-REIT on the Listing Date and will make an announcement on SGXNET of the final
rating when it has been assigned to OUE C-REIT. All ratings are subject to revision or withdrawal at any time.
Moodys has not provided its consent, for the purposes of Section 249 (read with Section 302) of the SFA, to the
inclusion of the credit rating information and is therefore not liable for such information under Sections 253 and 254
(read with Section 302) of the SFA. While the Manager has taken reasonable action to ensure that the information
has been reproduced in its proper form and context, and that it has been extracted fairly and accurately, neither the
Manager nor any other party has conducted an independent review of, nor verified the accuracy of, such information.
The provisional credit rating obtained from Moodys is current and Moodys will be paid by OUE C-REIT to provide
the credit rating. The credit rating is not a recommendation to invest in any securities. Issuer credit ratings express
Moodys opinion of an entitys creditworthiness and ability to meet its senior financial obligations. According to
Moodys, obligations rated Ba are judged to be speculative and are subject to substantial credit risk. Detailed
information regarding Moodys rating definitions, the terms of use of such ratings, the relative rank of the credit
rating, the assumptions, limitations and methodology of the credit rating, and attributes that the credit rating does
not address, may be found on the following website: www.moodys.com.
79
OUE C-REIT may face risks associated with debt financing and the Facilities (as defined
herein) and the debt covenants could limit or affect OUE C-REITs operations.
Upon listing, OUE C-REIT will have in place a financing package comprising two term loan
facilities of an aggregate of S$580.0 million from CIMB Bank Berhad, Singapore Branch,
Oversea-Chinese Banking Corporation Limited, Standard Chartered Bank, Singapore Branch, and
Australian and New Zealand Banking Group Limited, Singapore Branch (the Term Loan
Facilities) and a three-year revolving credit facility of S$100.0 million (the Revolving Credit
Facility) in relation to the OUE Bayfront Property as well as the New Onshore Facility in relation
to the Lippo Plaza Property (the Term Loan Facilities, the Revolving Credit Facility and the New
Onshore Facility, together, the Facilities). OUE C-REIT is subject to risks associated with debt
financing, including the risk that its cash flow will be insufficient to meet the required payments of
principal and interest under such financing, and therefore to make distributions to Unitholders.
OUE C-REIT will distribute 100.0% of its Distributable Income for the Forecast Year 2014 and the
Projection Year 2015 and at least 90.0% of its Specified Taxable Income thereafter. As a result of
this distribution policy, OUE C-REIT may not be able to meet all of its obligations to repay any
future borrowings through its cash flow from operations. OUE C-REIT may be required to repay
maturing debt with funds from additional debt or equity financing or both. There is no assurance
that such financing will be available on acceptable terms or at all.
If OUE C-REIT defaults under the Facilities, the lenders may be able to declare a default and
initiate enforcement proceedings in respect of any security provided, and/or call upon any
guarantees provided.
As OUE C-REITs property will be mortgaged, such property could be foreclosed by the lenders
or the lenders could require a forced sale of the property and utilise the proceeds therefrom to
repay the principal and interest under the debt facilities, which will result in a loss of income and
asset value to OUE C-REIT.
If principal amounts due for repayment at maturity cannot be refinanced, extended or paid with
proceeds of other capital transactions, such as new equity capital, OUE C-REIT will not be able
to pay distributions at expected levels to Unitholders or to repay all maturing debt.
OUE C-REIT may be subject to the risk that the terms of any refinancing undertaken (which may
arise from a change of control provision) will be less favourable than the terms of the original
borrowings. While OUE C-REIT is not subject to covenants that may limit or otherwise adversely
affect its operations and its ability to make distributions to Unitholders as at the Latest Practicable
Date, the terms of any refinancing undertaken in the future may contain such covenants and other
covenants which may also restrict OUE C-REITs ability to acquire properties or undertake other
capital expenditure and may require it to set aside funds for maintenance or repayment of security
deposits or require OUE C-REIT to maintain certain financial ratios (e.g. loan to value ratios). The
triggering of any of such covenants may have an adverse impact on OUE C-REITs financial
condition.
OUE C-REITs 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 fixed income instruments. If prevailing interest rates or other factors at the time of
refinancing (such as the possible reluctance of lenders to make commercial property loans) result
in higher interest rates, the interest expense relating to such refinanced indebtedness would
increase, thereby adversely affecting OUE C-REITs cash flow and the amount of funds available
for distribution to the Unitholders.
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Neither OUE C-REIT nor the Manager has a long established operating history.
OUE C-REIT was constituted as a private trust on 10 October 2013, and the Manager was
incorporated on 4 October 2013. Neither OUE C-REIT (as a REIT) nor the Manager (as the
manager of the REIT) has sufficient operating histories by which their past performance may be
judged. The lack of a long established operating history will make it more difficult for investors to
assess OUE C-REITs future performance. There is no assurance that OUE C-REIT will be able
to generate sufficient revenue from operations to make distributions or that such distributions will
be in line with those set out in Profit Forecast and Profit Projection.
The Manager may not be able to successfully implement its investment strategy for OUE
C-REIT.
There is no assurance that the Manager will be able to implement its investment strategy
successfully or that it will be able to expand OUE C-REITs portfolio at any specified rate or to any
specified size. The Manager may not be able to make acquisitions or investments on favourable
terms or within a desired time frame.
OUE C-REIT faces active competition in acquiring suitable properties. OUE C-REITs ability to
make new property acquisitions under its acquisition growth strategy may be adversely affected.
Even if OUE C-REIT were able to successfully acquire property or investments, there is no
assurance that OUE C-REIT will achieve its intended return on such acquisitions or investments.
Since the amount of borrowings that OUE C-REIT can incur to finance acquisitions is limited by
the Property Funds Appendix, such acquisitions are likely to be largely dependent on OUE
C-REITs ability to raise equity capital. This may result in a dilution of Unitholders holdings.
Potential vendors may view negatively the prolonged time frame and lack of certainty associated
with the raising of equity capital to fund any such purchase. They may instead prefer other
potential purchasers.
There may be significant competition for attractive investment opportunities from other property
investors, including other REITs, commercial property development companies and private
investment funds. There is no assurance that OUE C-REIT will be able to compete effectively
against such entities.
OUE C-REIT may not be able to exercise any influence over the local property manager
which currently manages the Lippo Plaza Property.
The financial performance of OUE C-REIT, including distributions to the Unitholders, is dependent
upon the Net Property Income of OUE C-REITs properties. [32.1]% and [33.4]% of OUE C-REITs
forecast and projected Net Property Income for the Forecast Year 2014 and the Projection Year
2015, respectively, are expected to be derived from the Lippo Plaza Property.
The local property manager of the Lippo Plaza Property is an independent third party company.
There is no assurance that OUE C-REIT will be able to control such entity or exercise any
influence over the operations of such entity. Such entity may develop objectives which are
different from those of OUE C-REIT. The management of such entity may make decisions which
could adversely affect the operations of OUE C-REIT and its ability to make distributions to
Unitholders.
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Possible change of investment strategies may adversely affect Unitholders investments in
OUE C-REIT.
The Managers investment strategy for OUE C-REIT may only be changed within three years from
the Listing Date if an Extraordinary Resolution is passed at a meeting of Unitholders duly
convened and held in accordance with the provisions of the Trust Deed. Upon the expiry of three
years from the Listing Date, the Manager may from time to time amend the investment strategies
of OUE C-REIT if it determines that such change is in the best interest of OUE C-REIT and its
Unitholders without seeking Unitholders approval. In the event of a change of investment
strategies, the Manager may, subject to the relevant laws regulations and rules (including the
Listing Manual), alter such investment strategies, provided that it has given not less than 30 days
prior notice of the change to the Trustee and Unitholders by way of an announcement on the
SGX-ST. The methods of implementing OUE C-REITs investment strategies may vary as new
investment and financing techniques are developed or otherwise used. Such changes may
adversely affect Unitholders investment in OUE C-REIT.
OUE C-REIT may be affected by adverse developments or negative publicity affecting the
OUE and the Lippo brand names.
OUE C-REIT is closely associated with the OUE and the Lippo brand names. Upon completion
of the Tecwell Share Purchase Agreement, the BVI Holding Company will also undertake not to
change the name of the Lippo Plaza Property for so long as the PRC Company is the beneficial
owner of the Lippo Plaza Property, pursuant to a deed of undertakings appended to the Tecwell
Share Purchase Agreement. Any degradation, adverse market developments and/or negative
publicity relating to the OUE and/or Lippo brand names could therefore adversely affect the
results of operations of the IPO Portfolio. Furthermore, any adverse developments, negative
publicity and future financial challenges experienced by the Sponsor Group may indirectly result
in negative perceptions of OUE C-REIT due to OUE C-REITs close association with the Sponsor,
which could have a material adverse effect on OUE C-REITs financial condition and results of
operations and, in turn, its ability to make distributions to Unitholders.
Acquisitions may not yield the returns expected, resulting in disruptions to OUE C-REITs
business and straining of management resources.
OUE C-REITs external growth strategy and its asset selection process may not be successful and
may not provide positive returns to Unitholders.
Acquisitions may cause disruptions to OUE C-REITs operations and divert managements
attention away from day-to-day operations.
The Managers strategy to initiate asset enhancement on some of the Properties from time
to time may not materialise.
The Manager may from time to time initiate asset enhancement on some of the Properties. There
is no assurance that such plans for asset enhancement will materialise, or in the event that they
do materialise, they may not achieve their desired results or may incur significant costs.
OUE C-REIT depends on certain key personnel and the loss of any key personnel may
adversely affect its operations.
OUE C-REITs performance depends, in part, upon the continued service and performance of the
executive officers of the Manager (the Executive Officers, and each an Executive Officer).
(See The Manager and Corporate Governance The Manager of OUE C-REIT Executive
Officers of the Manager for details of the Executive Officers.) These key personnel may leave the
employment of the Manager. If any of the above were to occur, the Manager will need to spend
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time searching for a replacement and the duties which such Executive Officers are responsible for
may be affected. The loss of any of these individuals could have a material adverse effect on the
financial condition and the results of operations of OUE C-REIT.
OUE C-REIT may from time to time be subject to legal proceedings and government
proceedings.
Legal proceedings against OUE C-REIT and/or its subsidiaries relating to property management
and disputes over tenancies may arise from time to time. There can be no assurance that OUE
C-REIT and/or its subsidiaries will not be involved in such proceedings or that the outcome of
these proceedings will not adversely affect the financial condition, results of operation or cash flow
of OUE C-REIT.
OUE C-REITs subsidiaries are regulated by various government authorities and regulations. If
any government authority believes that OUE C-REITs subsidiaries or any of their tenants are not
in compliance with the regulations, it could shut down the relevant non-compliant entity or delay
the approval process, refuse to grant or renew the relevant approvals or licences, institute legal
proceedings to seize the properties, enjoin future action or (in the case of OUE C-REITs
subsidiaries not being in compliance with the regulations), assess civil and/or criminal penalties
against OUE C-REIT, its officers or employees. Any such action by the government authority
would have a material adverse effect on the business, financial condition and results of operations
or cash flow of OUE C-REIT.
OUE C-REIT may engage in hedging transactions, which can limit gains and increase costs.
OUE C-REIT may enter into hedging transactions to protect itself or its portfolio from, among
others, the effects of interest rate and currency exchange fluctuations on floating rate debt and
interest rate and prepayment fluctuations.
These hedging activities may not have the desired beneficial impact on the results of operations
or financial condition of OUE C-REIT. In addition, hedging activities involve risks and transaction
costs, which may reduce overall returns and possibly limit the amount of cash available for
distribution to Unitholders. The Manager will regularly monitor the feasibility of engaging in such
hedging transactions, taking into account the cost of such transactions.
Epidemic diseases in Asia and elsewhere may adversely affect OUE C-REITs operations.
Several countries in Asia, have suffered from outbreaks of communicable diseases such as
severe acute respiratory syndrome (SARS) and avian flu. The outbreak of an infectious disease
such as Influenza A (H1N1-2009), avian influenza or SARS in Asia and elsewhere, together with
any resulting restrictions on travel and/or imposition of quarantines, could have a negative impact
on the economy and business activities in Asia and could thereby adversely impact the revenues
and results of OUE C-REIT.
Occurrence of any acts of God, natural disasters, severe environmental pollution, war and
terrorist attacks may adversely and materially affect the business and operations of the
Properties.
Acts of God, such as natural disasters, and severe environmental pollution (including severe
smog), are beyond the control of OUE C-REIT or the Manager. These may materially and
adversely affect the economy, infrastructure and livelihood of the local population. OUE C-REITs
business and income available for distribution may be adversely affected should such acts of God
occur. There is no assurance that any war, terrorist attack or other hostilities in any part of the
world, potential, threatened or otherwise, will not, directly or indirectly, have an adverse effect on
the operations of the Properties and hence OUE C-REITs income available for distribution.
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In addition, physical damage to the Properties resulting from fire, earthquakes or other acts of God
may lead to a significant disruption to the business and operation of the Properties. This may then
result in an adverse impact on the business, financial condition and results of operations of OUE
C-REIT and its capital growth.
There is no assurance that OUE C-REIT will be able to leverage on the Sponsors
experience in the operation of the Properties or the Sponsors experience in the
management of REITs.
In the event that the Sponsor decides to transfer or dispose of its Units or its shares in the
Manager, OUE C-REIT may no longer be able to leverage on:
the Sponsors experience in the ownership and operation of commercial properties;
the Sponsors financial strength, market reach and network of contacts to further its growth;
or
the Sponsors experience in the management of REITs.
In such an event, OUE C-REIT may not be able to benefit from the range of corporate services
which are available to owners of properties managed by the Sponsor. This may have a material
and adverse impact on OUE C-REITs results of operations and financial condition which may
consequently affect its ability to make distributions to its Unitholders.
The termination or retirement of the Manager and/or the Property Manager could have an
adverse effect on the financial condition and results of operations of OUE C-REIT.
The Manager is responsible for, among other things, formulating and executing OUE C-REITs
investment strategy and making recommendations to the Trustee on the acquisition and disposal
of commercial assets. (See Overview Structure of OUE C-REIT The Manager for further
details.) The Property Manager will be engaged under the Master Property Management
Agreement and (with respect to the OUE Bayfront Property) the Individual Property Management
Agreement, and will provide, among other things, property management, lease management,
project management and marketing and services. (See Overview Structure of OUE C-REIT
The Property Manager for further details.) As such, OUE C-REITs financial condition, results of
operations and ability to make distributions to Unitholders will depend on the performance of the
Manager and the Property Manager.
Under the Trust Deed, the Manager may be removed by the Trustee upon the occurrence of
certain events, including the passing of a resolution by a majority consisting of more than 50.0%
of the total number of votes (with no participants being disenfranchised) at a meeting of
Unitholders duly convened and held. (See The Manager and Corporate Governance Retirement
or Removal of the Manager for further details.) Under the Master Property Agreement, the
Trustee or the Manager may also terminate the appointment of the Property Manager on the
occurrence of certain specified events, including the liquidation or cessation of business of the
Property Manager. (See Certain Agreements Relating to OUE C-REIT and the Properties
Property Management Agreements Master Property Management Agreement for further
details.) Upon the retirement and/or removal of the Manager and/or the Property Manager, the
replacement of the manager of OUE C-REIT and/or the property manager of the properties of OUE
C-REIT generally on satisfactory terms may not occur in a timely manner, and may adversely
affect the financial condition and results of operations of OUE C-REIT.
In addition, resignation or termination of the existing local property manager in relation to the
Lippo Plaza Property without a timely and competent replacement may adversely affect the results
of operations of the Lippo Plaza Property and, in turn, OUE C-REIT.
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OUE C-REITs investment strategy may entail a higher level of risk as compared to other
types of unit trusts that have a more diverse range of investments.
OUE C-REITs principal investment strategy of investing, directly or indirectly, in a portfolio of
income-producing real estate used primarily for commercial purposes (including real estate used
primarily for office and/or retail purposes) in financial and business hubs within and outside of
Singapore, as well as real estate-related assets, will subject OUE C-REIT to risks inherent in
concentrating in real estate. The level of risk could be higher as compared to other types of unit
trusts that have a more diverse range of investments in other sectors.
A concentration of investments in real estate exposes OUE C-REIT to the risk of a downturn in the
commercial property markets in countries where properties held by OUE C-REIT are located,
stemming from an economic slowdown in either or all of these areas, in addition to a broader
global economic slowdown and other non-economic factors. The renewal of leases in OUE
C-REITs properties will depend, in part, upon the success of the tenants. Any economic downturn
may cause higher levels of non-renewals of leases or vacancies as a result of failures or defaults
by tenants or the market pressures exerted by an increase in available commercial space. There
can be no assurance that the tenants of OUE C-REITs properties will renew their leases or that
the new lease terms will be as favourable as the existing leases. In the event that a tenant does
not renew its lease, a replacement tenant or tenants would need to be identified, which could
subject to OUE C-REITs properties to periods of vacancy and/or costly refittings, during which
periods OUE C-REIT could experience reductions in rental income.
Such downturns may lead to a decline in occupancy for properties or real estate-related assets in
OUE C-REITs portfolio. This will affect OUE C-REITs rental income from the Properties, and/or
a decline in the capital value of OUE C-REITs portfolio, which will have an adverse impact on
distributions to Unitholders and/or on the results of operations and the financial condition of OUE
C-REIT.
OUE C-REIT may not be able to exercise active control over entities in which it has minority
interests.
OUE C-REIT may, in the course of acquisitions, acquire minority interests in real estate-related
investment entities. There is no assurance that OUE C-REIT will be able to exercise active control
over such entities and the management of such entities may make decisions which could
adversely affect the operations of OUE C-REIT and its ability to make distributions to Unitholders.
RISKS RELATING TO THE PRC
OUE C-REIT may be exposed to risks associated with exchange rate fluctuations and
changes in foreign exchange regulations.
The revenue received from the Lippo Plaza Property is in Renminbi, which has to be converted
into Singapore dollars for the distribution payments at OUE C-REITs level. Accordingly, OUE
C-REIT is exposed to risks associated with exchange rate fluctuations which may adversely affect
OUE C-REITs results of operations.
The value of Renminbi against foreign currencies fluctuates and is affected by changes in the PRC
and international political and economic conditions and by many other factors. The value of the
distributions received by a Unitholder may be adversely affected by fluctuations in the exchange
rates between Renminbi, the Singapore dollar and any other currencies which may be adopted
from time to time. Significant fluctuations in the exchange rates between such currencies will also,
among others, affect the NAV of the Units, amount of distribution to Unitholders and the foreign
currency value of the proceeds which a Unitholder would receive upon sale of the Units in
Singapore.
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Conversion of Renminbi is subject to strict government regulation in the PRC. Under the existing
foreign exchange regulations in the PRC, following completion of the Offering, the PRC Company
will be able to pay dividends in foreign currencies without prior approval from State Administration
of Foreign Exchange (SAFE) by complying with certain procedural requirements. However, there
is no assurance that the said policies regarding payment of dividends in foreign currencies will
continue in the future. In the event approvals are required in the future or there are delays in
granting or a refusal to grant any such approval, or a revocation or variation of consents granted
prior to the investments being made, or in the event new restrictions are imposed, this may
adversely affect OUE C-REITs investments. (See Distributions, Exchange Rate Information
and Exchange Controls for further details.)
The PRC government has implemented property control measures in relation to the PRC
property market.
Increasing speculation in the PRC property market may result in rapid increases in property
prices. To discourage speculation in the PRC property market, the PRC government has, among
other things, implemented the control measures below.
On 7 January 2010, the PRCs State Council (the State Council) issued the Notice of the State
Council Office Regarding the Promotion of Stable and Healthy Development of the Real Estate
Market () (Guo Ban Fa [2010] No. 4), which
requires the local governments at all levels to strengthen the real estate credit risk management,
to rectify the property market, and to intensify its efforts to promote the healthy development of the
property market through supporting reasonable housing consumption, curbing speculative
investment and increasing effective supply.
On 17 April 2010, the State Council issued the Notice of the State Council Regarding Curtailment
of the Excessively Prompt Increase in Property Prices in Certain Cities (
) (Guo Ban Fa [2010] No. 10), which increased the minimum down-
payment ratio for second homes from 40.0% to 50.0%. The State Council also required mortgage
banks to strictly adhere to the policy of charging mortgage rates for second homes at no less than
110.0% of the corresponding benchmark lending rate. The State Council required banks in cities
with significant property price increases to stop lending to buyers of third properties. Banks can
also suspend mortgage lending to non-local residents who cannot provide tax returns or proof of
social security contributions for more than one year. The State Council also authorised local
governments to restrict the number of properties an individual can buy.
On 26 January 2011, the General Office of the State Council issued the Notice on Issues
Concerning Further Properly Regulating and Controlling the Real Estate Market (
) (Guo Ban Fa [2011] No. 1), which further
increased the minimum down-payment ratio for second homes from 50.0% to 60.0%. The State
Council also authorised branches of the Peoples Bank of China to raise the down-payment ratio
and mortgage rate for second homes in light of objectives and policies of local governments.
On 26 February 2013, the General Office of the State Council issued the Circular on Continuing
the Regulation of Real Estate Market () (Guo
Ban Fa [2013] No. 17), which required the taxation departments levy the individual income taxes
from the selling of self-owned houses in the amount of 20.0% of incomes that are earned through
transfers in accordance with the law.
So far, the PRC government has placed emphasis on regulating investments in the residential
property market given that this relates closely to peoples livelihoods. While these regulations and
policies do not have any material impact on the commercial property market from a legal point of
view, more funds may turn to the commercial property market and cause it to overheat as
investments in residential property are burdened by these regulations and policies. In such cases,
86
there is no assurance that the PRC government will not extend such control measures to regulate
commercial properties. Although various control measures are intended to promote more
balanced property developments in the long-term, these measures could adversely affect the
development and sales of the Properties or any later acquisition of properties in the PRC. In
addition, there is no assurance that the PRC government will not introduce additional measures
from time to time to regulate the growth of the PRC property market. The continuation of the
existing measures and the introduction of any new measures may materially and adversely affect
OUE C-REITs business, financial condition and results of operations.
OUE C-REIT is subject to extensive PRC regulatory control on foreign investment in the real
estate sector.
The PRC government has promulgated a number of regulations and rules regulating foreign
investment in the real estate sector. (See Overview of Relevant Laws and Regulations in the
Peoples Republic of China.)
Pursuant to the Circular on Strengthening Administration of Approval and Filing of Foreign
Investment in Real Estate Industry () (Shang Ban Zi
Han [2010] No. 1542) issued by the General Office of the MOC on 22 November 2010, real estate
enterprises funded by foreign capital are not permitted to purchase and resell real estate
properties in the PRC that are either completed or under construction for arbitrage purposes.
There can be no assurance that the PRC government will not deem any transaction of real
properties or any transfer of equity in real estate companies as arbitrage through transaction of
real estate. The regulation is believed to be aimed at controlling inflow of foreign capital by
curtailing the practices of reselling properties for arbitrage purposes adopted by some foreign
investors, which is an indication that the PRC government has been imposing stricter policies on
foreign investment in the real estate industry.
While OUE C-REIT has obtained all necessary approvals and consents from the PRC authorities
for the acquisition of the Lippo Plaza Property, there is also no assurance that the PRC
government will not implement additional restrictions on foreign investment in the real estate
industry and purchases and sales of real estate properties by foreign investors.
Delay by the PRC tax authorities in assessing taxes could affect the amount of
distributions.
As Renminbi proceeds originating from the Lippo Plaza Property can only be converted into
foreign exchange and be remitted offshore after full payment of applicable taxes evidenced by tax
record forms for remittance issued by the PRC tax authorities, in the event the tax record forms
for remittance cannot be obtained from the PRC tax authorities in a timely manner, OUE C-REITs
ability to make distributions to Unitholders will be adversely affected and OUE C-REIT may be
required to take loan facilities to satisfy the payment of the distributions to Unitholders. If OUE
C-REIT is unable to obtain financing on terms that are acceptable or OUE C-REIT has reached its
Aggregate Leverage limit under the Property Funds Appendix, the amount of distributions could
be adversely affected.
Interpretation of the PRC laws and regulations involves uncertainty.
The taxation and real estate laws and in particular, the laws relevant to the rights of foreign
investors and the entities through which they may invest are often unclear in the PRC where the
assets of OUE C-REIT are located.
The PRC legal system is based on written statutes and prior court decisions can only be cited as
reference. Since 1979, the PRC government has promulgated laws and regulations in relation to
economic matters such as foreign investment, corporate organisation and governance,
87
commerce, taxation and trade, with a view to developing a comprehensive system of commercial
law. However, as these laws and regulations are continually evolving in response to changing
economic and other conditions, and because of the limited volume of published cases and their
non-binding nature, any particular interpretation of PRC laws and regulations may not be
definitive. The PRC may not accord equivalent rights (or protection for such rights) to those rights
investors might expect in countries with more sophisticated real estate laws and regulations.
Furthermore, the PRC is geographically large and divided into various provinces and
municipalities and as such, different laws, rules, regulations and policies apply in different
provinces and they may have different and varying applications and interpretations in different
parts of the PRC. The PRC currently does not have any centralised register or official resources
where legislation enacted by the central and local authorities is made available to the public.
Legislation or regulations, particularly for local applications, may be enacted without prior notice
or announcement to the public. Accordingly, the Manager may not be aware of the existence of
new legislation or regulations. There is at present also no integrated system in the PRC from
which information can be obtained in respect of legal actions, arbitrations or administrative
actions. Even if an individual court-by-court search were performed, each court may refuse to
make the documentation which it holds available for inspection. Accordingly, there is a risk that
entities in the PRC acquired by OUE C-REIT may be subject to proceedings which may not have
been disclosed.
Agreements which are governed under PRC laws may be more difficult to enforce by legal or
arbitral proceedings in the PRC than in countries with more mature legal systems. Even if the
agreements generally provide for arbitral proceedings for disputes arising out of the agreements
to be in another jurisdiction, it may be difficult for OUE C-REIT to obtain effective enforcement in
the PRC of an arbitral award obtained in that jurisdiction.
The building standards applicable and materials employed in the PRC may not be as
stringent as those in other jurisdictions.
The Lippo Plaza Property has passed the examination process and has obtained real estate title
certificates certifying that it can be handed over for occupation or use. However, the building
standards applicable in the PRC when Lippo Plaza was built may not be as stringent as those in
other jurisdictions. For example, the applicable PRC seismic load design requirements may be
less than those required by other international standards. Where a developed property asset is
acquired which was constructed prior to the entry into force of the latest PRC building standards,
the risk that the building is not in conformity with international standards is increased. Compliance
with amended building codes may be required retrospectively, which could entail significant costs
for OUE C-REIT. Furthermore, construction materials employed may not comply with international
standards.
If the Lippo Plaza Property does not meet the most recent requirements for building standards and
materials, it may be less desirable than developments which have been built in accordance with
the latest standards, which may affect the ability to sell or let it and consequently the business,
financial condition and results of operations of OUE C-REIT.
The PRCs political policies and foreign relations could affect the Properties.
Investment in a selection of PRC properties entails risks of a nature and degree not typically
encountered in property investments in developed markets. In the PRC, there is a high risk of
nationalisation, expropriation, confiscation, punitive taxation, currency restriction, political
changes, government regulation, political, economic or social instability or diplomatic
developments which could adversely affect the value of investments made in the PRC, including
the Lippo Plaza Property, and for which OUE C-REIT may not be fairly compensated. Certain
88
national policies may restrict foreigners investing in industries deemed sensitive to the national
interest such as mining of certain kinds of minerals, construction and operation of natural
reserves.
The PRCs economic reforms could affect OUE C-REITs business.
The PRC economy differs from the economies of most developed countries in many respects,
including its structure, its level of development, its growth rate, its control of foreign exchange and
its allocation of resources. The PRC economy is still in the process of being transformed from a
planned economy to a more market-oriented economy. For the past two decades, the PRC
government has implemented economic reform measures emphasising utilisation of market forces
in the development of the PRC economy. Although the Manager believes these reforms will have
a positive effect on its overall and long-term development, it cannot predict whether changes in the
PRCs economic and other policies will or will not have any adverse effect on OUE C-REITs
current or future business, financial condition and results of operations.
RISKS RELATING TO INVESTING IN REAL ESTATE
There are general risks attached to investments in real estate.
Investments in real estate and therefore the income generated from the Properties are subject to
various risks, including but not limited to:
adverse changes in political or economic conditions;
adverse local market conditions (such as over-supply of properties or reduction in demand
for properties in the market in which OUE C-REIT operates);
the financial condition of tenants;
the availability of financing such as changes in availability of debt or equity financing, which
may result in an inability by OUE C-REIT to finance future acquisitions on favourable terms
or at all;
changes in interest rates and other operating expenses;
changes in exchange rates;
changes in environmental laws and regulations, zoning laws and other governmental laws,
regulations and rules and fiscal policies (including tax laws and regulations);
environmental claims in respect of real estate;
changes in market rents;
changes in energy prices;
changes in the relative popularity of property types and locations leading to an oversupply of
space or a reduction in tenant demand for a particular type of property in a given market;
competition among property owners for tenants which may lead to vacancies or an inability
to rent space on favourable terms;
inability to renew leases or re-let space as existing leases expire;
inability to collect rents from tenants on a timely basis or at all due to bankruptcy or
insolvency of the tenants or otherwise;
89
insufficiency of insurance coverage or increases in insurance premiums;
increases in the rate of inflation;
inability of the Property Manager to provide or procure the provision of adequate
maintenance and other services;
defects affecting the Properties which need to be rectified, or other required repair and
maintenance of the Properties, leading to unforeseen capital expenditure;
the relative illiquidity of real estate investments;
considerable dependence on cash flow for the maintenance of, and improvements to, the
Properties;
increased operating costs, including real estate taxes;
any defects or illegal structures that were not uncovered by physical inspection or due
diligence review;
management style and strategy of the Manager;
the attractiveness of OUE C-REITs properties to tenants;
the cost of regulatory compliance;
ability to rent out properties on favourable terms; and
power supply failure, acts of God, wars, terrorist attacks, uninsurable losses and other
factors.
Many of these factors may cause fluctuations in occupancy rates, rental rates or operating
expenses, causing a negative effect on the value of real estate and income derived from real
estate. The annual valuation of the Properties will reflect such factors and as a result may
fluctuate upwards or downwards. The capital value of OUE C-REITs real estate assets may be
significantly diminished in the event of a sudden downturn in real estate market prices or the
economies in Singapore, the PRC or any other country in which OUE C-REIT may own properties,
which may adversely affect the financial condition of OUE C-REIT.
OUE C-REIT may be adversely affected by the illiquidity of real estate investments.
OUE C-REITs principal investment strategy of investing, directly or indirectly, in a portfolio of
income-producing real estate used primarily for commercial purposes (including real estate used
primarily for office and/or retail purposes) in financial and business hubs within and outside of
Singapore, as well as real estate-related assets, involves a higher level of risk as compared to a
portfolio which has a more diverse range of investments. Real estate investments are relatively
illiquid and such illiquidity may affect OUE C-REITs ability to vary its investment portfolio or
liquidate part of its assets in response to changes in economic, property market or other
conditions. OUE C-REIT may be unable to sell its assets on short notice or may be forced to give
a substantial reduction in the price that may otherwise be sought for such assets in order to ensure
a quick sale. OUE C-REIT may face difficulties in securing timely and commercially favourable
financing in asset-based lending transactions secured by real estate due to the illiquid nature of
real estate assets. These factors could have an adverse effect on OUE C-REITs financial
condition and results of operations, with a consequential adverse effect on OUE C-REITs ability
to deliver expected distributions to Unitholders.
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The appraisals of the Properties are based on various assumptions and the price at which
OUE C-REIT is able to sell a Property in future may be lower than the initial acquisition
value of the Property.
There can be no assurance that the assumptions relied on are accurate measures of the market,
and the values of the Properties may be evaluated inaccurately. The Independent Valuers may
have included a subjective determination of certain factors relating to the Properties such as their
relative market positions, financial and competitive strengths, and physical condition and,
accordingly, the valuation of the Properties (which affect the NAV per Unit) may be subjective.
The valuation of any of the Properties does not guarantee a sale price at that value at present or
in the future. The price at which OUE C-REIT may sell a property may be lower than its purchase
price.
OUE C-REIT may suffer material losses in excess of insurance proceeds or OUE C-REIT
may not put in place or maintain adequate insurance in relation to the Properties and its
potential liabilities to third parties.
The Properties face the risk of suffering physical damage caused by fire, terrorism, acts of God
such as natural disasters or other causes, as well as potential public liability claims, including
claims arising from the operations of the Properties.
In addition, certain types of risks (such as war risk and losses caused by the outbreak of
contagious diseases, contamination or other environmental breaches) may be uninsurable or the
cost of insurance may be prohibitive when compared to the risk. Should an uninsured loss or a
loss in excess of insured limits occur, OUE C-REIT could be required to pay compensation and/or
lose capital invested in the affected property as well as anticipated future revenue from that
property as it may not be able to rent out or sell the affected property. OUE C-REIT will also be
liable for any debt or other financial obligations
1
related to that property. No assurance can be
given that material losses in excess of insurance proceeds will not occur.
OUE C-REIT may suffer losses and be liable for the damage suffered by third parties as a
result of contamination or other environmental issues in the event that contaminants are
found on the land on which the Properties or other assets of OUE C-REIT are located.
The Properties and other assets acquired in the future by OUE C-REIT may be affected by
contamination or other environmental issues which may not previously have been identified and/or
rectified at the time of acquisition or which may subsequently occur after acquisition. This gives
rise to a number of risks, including:
the risk of prosecution by environmental authorities;
the requirement for unbudgeted additional expenditure to remedy such issues;
the adverse impact on the operations at the affected property which may in turn adversely
affect the revenue of OUE C-REIT; and
the adverse impact on the value of the affected property.
OUE C-REIT may be liable to bear the costs of remedying or removing such contamination and
there is no guarantee that OUE C-REIT will be able to recover such costs from other parties which
might have contributed to or are responsible for such contamination.
1 Such debt or other financial obligations refers to those which will be taken up at the IPO and will be secured over
the Properties. Such debts or financial obligations may change over time as OUE C-REIT discharges or reduces its
indebtedness or seeks refinancing.
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OUE C-REITs ability to make distributions to Unitholders may be adversely affected by
increases in property expenses and other operating expenses.
OUE C-REITs ability to make distributions to Unitholders apart from the several circumstances
set out below could be adversely affected if property expenses and other operating expenses
increase without a corresponding increase in revenue.
Factors which could lead to an increase in expenses include, but are not limited to, the following:
increases in property tax assessments and other statutory charges;
changes in statutory laws, regulations or government policies which increase the cost of
compliance with such laws, regulations or policies;
changes in direct or indirect tax policies, laws or regulations;
increases in sub-contracted service costs;
increases in labour costs;
increases in repair and maintenance costs;
increases in the rate of inflation;
defects affecting, or environmental pollution in connection with, OUE C-REITs properties
which need to be rectified, leading to unforeseen capital expenditure;
increases in insurance premiums;
increases in cost of utilities; and
increases in the Managers Management Fee, the Property Managers fees, the Trustees fee
and other trust expenses.
There can be no assurance that, if property and other operating expenses increase, such
increases will not have a significant impact on OUE C-REITs financial condition and total returns.
In addition, such increase may adversely affect the ability of OUE C-REIT to make expected
distributions to Unitholders.
The property tax to which OUE C-REIT is subject may increase.
Property expenses for OUE C-REIT include property tax on the Properties. There is no assurance
that the property tax of OUE C-REIT will remain as forecast and projected. (See Profit Forecast
and Profit Projection for further details.)
The property tax expenses of OUE C-REIT may increase due to reasons including, but not limited
to, the following:
an increase in the applicable property tax rate;
changes to the basis of assessment for property tax; and
changes to the relevant property tax legislation or regime.
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In Singapore, OUE C-REIT is liable to pay property tax on the annual value of immovable
properties in Singapore.
In the PRC, certain taxes such as real estate tax are subject to the discretion or practice of local
tax bureaus, and thus the amount of taxes payable may vary. Presently, the PRC Company has
been paying property tax based on the original construction cost of the Lippo Plaza Property as
opposed to its rental income. While the current method of computing property tax in relation to the
Lippo Plaza Property has so far been accepted by the local PRC tax bureau, there is no assurance
that the PRC Company may not be required to pay property tax in relation to the Lippo Plaza
Property as computed based on rental income for the past and/or in the future.
In the event of a disposal of any of OUE C-REITs properties in the PRC, such disposal may also
expose the income and gains derived by OUE C-REIT to various types of taxes in the PRC,
including income tax, business tax, land appreciation tax, stamp duty levied on gross income and
local surcharges applicable at the location of the property.
An increase in property tax expenses may have a significant impact on the total returns, financial
condition and cash flows of OUE C-REIT. In addition, such increase may adversely affect the
ability of OUE C-REIT to make expected distributions to Unitholders.
The properties owned by OUE C-REIT or a part of them may be acquired compulsorily by
the respective governments of Singapore, the PRC or any other country in which OUE
C-REIT may own properties.
Under the laws and regulations of Singapore and the PRC, there are various circumstances under
which the respective governments of Singapore and the PRC are empowered to acquire any of
OUE C-REITs properties in Singapore and the PRC, respectively.
The Land Acquisition Act, Chapter 152 of Singapore gives the Singapore Government the power
to acquire any land in Singapore (i) for any public purpose, (ii) where the acquisition is of public
benefit or of public utility or in the public interest, or (iii) for any residential, commercial or
industrial purposes.
In the event that any of OUE C-REITs properties in Singapore are acquired compulsorily, the
relevant authority will take into consideration, amongst others, the market value of the property (or
part thereof) as assessed on the basis prescribed in the relevant rules and regulations, which may
be less than the price which OUE C-REIT paid for the property and/or the market value of such
property at the relevant time.
Article 20 of the Law on the Administration of the Urban Real Estate of the PRC (
) gives the PRC government the power to acquire the State-Owned Land Use
Right granted to individuals or entities under special circumstances as required by public
interests. In such an event, the PRC government may, in accordance with legal procedures,
acquire the Land Use Right before the expiry of the term of the State-Owned Land Use Right and
provide compensation based on the number of utilised years and the actual development of the
land by the land user.
Article 148 of the Property Law of the PRC () provides that for the acquisition
of the land for public interests before the expiration of the term of the Land Use Right,
compensation for a property and other fixtures on the land shall be paid to the land user, and the
corresponding land premiums paid for the Land Use Right shall be refunded appropriately.
93
Article 8 of the Regulations for Expropriation of and Compensation for Buildings on State-owned
Land () gives the PRC government the power to acquire a property
in the public interest. The PRC government at municipal and county levels shall make the decision
to acquire a property (i) for national defence and diplomacy, (ii) for the construction of energy,
transportation, water resources and other infrastructure implemented by the PRC government, (iii)
for construction of public utilities, (iv) for construction of government-subsidised housing projects
implemented by the PRC government, (v) for the renovation of the old urban district in areas with
dangerous buildings and backward infrastructure facilities as implemented by the PRC
government in accordance with the relevant provisions of the Law on Urban and Rural Planning,
or (vi) for other public interest stipulated by the laws and administrative regulations.
In the event of any compulsory acquisition of property in the PRC, the amount of compensation
to be awarded includes, among others, compensation for the value of the property, which is based
on the open market value of such property and assessed on the basis prescribed in the relevant
ordinances. If any of OUE C-REITs properties in the PRC are acquired compulsorily by the PRC
government, the level of compensation for the property paid to OUE C-REIT pursuant to this basis
of calculation may be less than the price which OUE C-REIT paid for such property and/or the
market value of such property at the relevant time.
In such event, the compulsory acquisition of any of the properties owned by OUE C-REIT or a part
of them by the respective governments of Singapore, the PRC or any other country in which OUE
C-REIT may own properties would therefore have an adverse effect on the Gross Revenue of OUE
C-REIT and the value of OUE C-REITs portfolio.
OUE C-REITs acquisition of the Properties and future acquisitions may be subject to risks
associated with the acquisition of real estate.
The Manager believes that reasonable due diligence investigations with respect to the Properties
have been conducted prior to their acquisitions and to the best of the Managers knowledge, the
Properties are in compliance with all material laws and regulations, have received the necessary
approvals and are in compliance with the conditions of such licenses and permits which are
material for its operations. However, there is no assurance that the Properties will not have
defects or deficiencies requiring repair or maintenance (including design, construction or other
latent property or equipment defects in the Properties which may require additional capital
expenditure, special repair or maintenance expenses) or be affected by breaches of laws and
regulations. Such defects or deficiencies may require significant capital expenditures or
obligations to third parties and involve significant and unpredictable patterns and levels of
expenditure which may have a material adverse effect on OUE C-REITs earnings and cash flows.
In addition, the representations, warranties and indemnities granted in favour of OUE C-REIT by
the Vendors are, or in the case of future acquisitions by the relevant vendor may be, subject to
limitations as to (i) their scope, (ii) the amount and timing of claims which can be made thereunder,
and (iii) the financial strength of a vendor, including the Vendors, after completion of the disposal
of the relevant property to OUE C-REIT. There can be no assurance that OUE C-REIT would be
entitled to be reimbursed or be otherwise successful in recovering monetary compensation under
such representations, warranties and indemnities for all losses or liabilities suffered or incurred by
it as a result of its acquisition of the Properties or future acquisitions.
(See Certain Agreements Relating to OUE C-REIT and the Properties Property Sale and
Purchase Agreement and Certain Agreements Relating to OUE C-REIT and the Properties
Tecwell Share Purchase Agreement for further details.)
94
RISKS RELATING TO AN INVESTMENT IN THE UNITS
The form of payment of the Management Fee will have an impact on DPU.
The amount of distribution available to Unitholders is affected by the form of payment of the
Management Fee. If the Manager elects to receive the payment of the Management Fee in the
form of cash, the amount of distribution available for distribution to Unitholders will be affected.
Similarly, if the Manager elects to receive the payment of the Management Fee in the form of
Units, the distribution will be distributed over a larger number of Units.
(See Profit Forecast and Profit Projection Sensitivity Analysis for further details.)
The sale or possible sale of a substantial number of Units by the Sponsor (following the
lapse of any applicable lock-up arrangements), or the Cornerstone Investors in the public
market could adversely affect the price of the Units.
Following the Offering, OUE C-REIT will have 866,000,000 issued Units, of which [433,000,000]
Units will be held by Clifford Development Pte. Ltd., a wholly-owned subsidiary of the Sponsor,
assuming the Over-allotment Option is not exercised and [225,000,000] Units will be held by the
Cornerstone Investors. If any of the Sponsor and/or any of its transferees of the Units (following
the lapse of the relevant respective lock-up arrangement, or pursuant to any applicable waivers)
or the Cornerstone Investors sells or is perceived as intending to sell a substantial amount of its
Units, or if a secondary offering of the Units is undertaken in connection with an additional listing
on another securities exchange, the market price for the Units could be adversely affected. (See
Plan of Distribution Lock-up Arrangements and Ownership of the Units for further details.)
OUE C-REIT may not be able to make distributions to Unitholders or the level of
distributions may fall.
The Net Property Income earned from real estate investments depends on, among other factors,
the amount of rental income received and the level of property and operating expenses incurred.
If the Properties do not generate sufficient Net Property Income, OUE C-REITs income, cash flow
and ability to make distributions to Unitholders will be adversely affected.
For the Trustee to make distributions from the income of the Properties, OUE C-REIT has to rely
partially on the receipt of dividends from the BVI Company. While the Manager has obtained
appropriate tax and legal advice on potential onshore tax and/or legal liabilities through investing
in the BVI Company and disclosed such potential onshore tax and/or legal liabilities in this
Prospectus accordingly, there can be no assurance that it will have sufficient revenue in any future
period to pay dividends.
Apart from potential onshore tax and/or legal liabilities through investing in the BVI Company, the
level of revenue, distributable profits or reserves of the BVI Company available to pay dividends,
pay interest or make repayments may be affected by a number of factors including, among other
things:
its business and financial positions;
the availability of distributable profits;
sufficiency of cash flows received by the BVI Company from the Lippo Plaza Property;
applicable laws and regulations which may restrict the payment of dividends by the BVI
Company;
95
operating losses incurred by the BVI Company in any financial year;
losses arising from a revaluation of the Lippo Plaza Property. Such losses may become
realised losses which would adversely affect the level of realised profits from which the BVI
Company may distribute dividends;
changes in accounting standards (including standards in respect of depreciation policies
relating to real estate investment properties), taxation laws and regulations, laws and
regulations in respect of foreign exchange and repatriation of funds and corporation laws and
regulations in respect of statutory reserves required to be maintained in Singapore and the
PRC;
fluctuations in the exchange rates between Renminbi and the Singapore dollar;
trapped cash in the PRC Company (as a result of depreciation of real estate being a
mandatory accounting expense under PRC accounting standards) which cannot be
effectively utilised; and
the terms of agreements to which the BVI Company is, or may become, a party to.
No assurance can be given as to OUE C-REITs ability to pay or maintain distributions to
Unitholders. There is also no 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 receipt of
incremental rental income in connection with expansion of the Properties or future acquisitions of
properties will increase OUE C-REITs cash flow available for distribution 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.
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 as compared to
other investments.
OUE C-REITs unaudited pro forma financial statements are not necessarily representative
of what its financial condition, results of operations and changes in liquidity and capital
resources would have been had OUE C-REIT been constituted prior to 10 October 2013.
The Manager has prepared pro forma statements of total return, statements of cash flows and
statements of financial position to show the pro forma historical performance of OUE C-REIT for
the Relevant Period. (See Unaudited Pro Forma Financial Information for further details.)
As a result, there is only limited pro forma financial information by which the past performance of
all or part of the IPO Portfolio may be judged. This will make it more difficult for investors to assess
their likely future performance.
Further, OUE C-REITs unaudited pro forma financial statements, including the notes thereto,
contained in this Prospectus for the Relevant Period, have been prepared for the purposes of the
Offering and may not accurately reflect what OUE C-REITs results of operations or financial
condition would have been had OUE C-REIT been constituted and operated for the periods and
as of the dates presented. These unaudited pro forma financial statements have been prepared
using the procedures and adjustments described in Appendix C, Unaudited Pro Forma Financial
Information. In particular, the unaudited pro forma financial statements have not all been
prepared from audited financial statements. In addition, these unaudited pro forma financial
96
statements are not necessarily indicative of what the financial condition, results of operations and
changes in liquidity and capital resources of OUE C-REIT will be in future years. (See
Managements Discussion and Analysis of Financial Condition and Results of Operations,
Unaudited Pro Forma Financial Information and Appendix B, Reporting Auditors Report on the
Unaudited Pro Forma Financial Information for further details.)
The NAV per Unit may be diluted if further issues are priced below the then current NAV per
Unit.
The Trust Deed contemplates new issues of Units, the offering price for which may be above, at
or below the then current NAV per Unit. The DPU may be diluted if new Units are issued and the
use of proceeds from such issue of Units generates insufficient cash flow to cover the dilution.
Where new Units, including Units which may be issued to the Manager in payment of the
Managers management, acquisition, divestment and/or development management fees, are
issued at less than the NAV per Unit, the then current NAV of each existing Unit may be diluted.
The laws, regulations and accounting standards in Singapore, the PRC and/or the BVI may
change.
OUE C-REIT is a REIT constituted in Singapore, the PRC Company is incorporated in the PRC,
and the BVI Company and the BVI Holding Company are incorporated in the BVI. The laws,
regulations (including tax laws and regulations) and/or accounting standards in Singapore, the
PRC and/or the BVI are subject to change. New laws and regulations may also be introduced in
these jurisdictions. As a result, the financial statements of OUE C-REIT may be affected by these
changes. The extent and timing of these changes in accounting standards are currently unknown
and subject to confirmation by the relevant authorities. The Manager has not quantified the effects
of these proposed changes and there can be no assurance that these changes will not have a
significant impact on the presentation of OUE C-REITs financial statements or on OUE C-REITs
results of operations. In addition, such changes may adversely affect the ability of OUE C-REIT
to make distributions to Unitholders. There can be no assurance that any such changes to laws,
regulations and accounting standards will not materially and adversely affect the business,
financial condition and results of operations of OUE C-REIT.
OUE C-REIT may be affected by the introduction of new or revised legislation, regulations,
guidelines or directives affecting REITs.
OUE C-REIT may be affected by the introduction of new or revised legislation, regulations,
guidelines or directives affecting REITs. There is no assurance that new or revised legislation,
regulations, guidelines or directives will not adversely affect REITs in general or OUE C-REIT
specifically.
OUE C-REIT may be unable to comply with the terms of the Tax Rulings or the Tax Rulings
may be revoked or amended.
OUE C-REIT has obtained the Tax Rulings from the IRAS under which tax transparency in respect
of the Specified Taxable Income and Singapore tax exemption on foreign-sourced dividend
income received from the BVI Holding Company have been granted to OUE C-REIT on stipulated
terms and conditions. These terms and conditions include a requirement for the Trustee and the
Manager to take reasonable steps necessary to safeguard the IRAS against the loss of tax as a
result of the Tax Transparency Ruling and to comply with all administrative requirements to ensure
ease of tax administration, amongst others.
The Tax Rulings are subject to OUE C-REIT satisfying the stipulated conditions. They may also,
either in part or in whole, be revoked or their terms reviewed and amended by the IRAS at any
time. If either or both of the Tax Rulings are revoked or if OUE C-REIT is unable to comply with
97
the stipulated conditions, the tax transparency or exemption may not apply, in which case
distributions to Unitholders will be made after tax. In such event, the actual amount of distributions
made to Unitholders may be less than the amount they would have otherwise received if OUE
C-REIT had been granted tax transparency or a tax exemption in respect of its distributions. The
approvals are also granted based on the facts presented to the IRAS. Where the facts turn out to
be different from those represented to the IRAS, or where there is a subsequent change in the tax
laws or conditions imposed, the tax transparency or exemption under the Tax Rulings may not
apply. (See Taxation Singapore Taxation Specified Taxable Income Receivable by OUE
C-REIT and Tax-Exempt Income Received by OUE C-REIT from the BVI Holding Company and
Appendix D, Independent Taxation Report for further details.)
OUE C-REIT may suffer higher taxes if any of its subsidiaries are treated as having a taxable
presence or permanent establishment outside their place of incorporation and tax
residency.
Currently, OUE C-REIT and its subsidiaries are not regarded as having any taxable presence or
permanent establishment outside their place of incorporation and place of tax residency. If any of
OUE C-REITs subsidiaries is considered as having a taxable presence or permanent
establishment outside its place of incorporation and place of tax residency, income or gains may
be subject to additional taxes which may have an adverse impact on OUE C-REITs financial
condition.
Foreign Unitholders may not be permitted to participate in future rights issues or
entitlements offerings by OUE C-REIT.
The Trust Deed provides that, 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 such price and on such other
terms and conditions as the Manager may determine, subject to such other terms and conditions
as the Trustee may impose. The proceeds of any such sale will be paid to the Unitholders whose
rights or entitlements have been so sold, provided that where such proceeds payable to the
relevant Unitholders are less than S$10.00, the Manager is entitled to retain such proceeds as
part of the Deposited Property. The holding of the relevant holder of the Units may be diluted as
a result of such sale.
OUE C-REITs distribution policy may cause OUE C-REIT to face liquidity constraints.
The Manager intends to distribute 100.0% of OUE C-REITs Distributable Income for the Forecast
Year 2014 and the Projection Year 2015. Thereafter, OUE C-REIT will distribute at least 90.0% of
its Specified Taxable Income, with the actual level of distribution to be determined at the discretion
of the Board. If OUE C-REITs Distributable Income is greater than its cash flow from operations,
there may be liquidity constraints and it may have to borrow to meet on-going cash flow
requirements since it may not have any reserves to draw on. OUE C-REITs ability to borrow is
limited, however, by the Property Funds Appendix and the willingness of lenders to provide debt
financing on favourable terms or at all. Failure to make distributions of at least 90.0% of its
Specified Taxable Income would put OUE C-REIT in breach of the terms of the Tax Transparency
Ruling and OUE C-REIT would be liable to pay income tax on its Specified Taxable Income.
Unitholders may bear the effects of tax adjustments on income distributed in prior periods.
Distributions will be based on OUE C-REITs Distributable Income as computed by the Manager.
OUE C-REITs Distributable Income as computed by the Manager may, however, be subject to
adjustment by the IRAS. The effect of this adjustment would mean that OUE C-REITs actual
Distributable Income might either be higher or lower than what was computed by the Manager. The
difference between OUE C-REITs actual Specified Taxable Income and OUE C-REITs Specified
98
Taxable Income, as computed by the Manager for the purpose of making a distribution to
Unitholders, will be added to or deducted from the Distributable Income computed by the Manager
for the subsequent distribution to Unitholders and thus affect the amount of these subsequent
distributions. (See Taxation Singapore Taxation Specified Taxable Income Receivable by
OUE C-REIT and Tax-Exempt Income Received by OUE C-REIT from the BVI Holding Company
and Appendix D, Independent Taxation Report for further details.)
The actual performance of OUE C-REIT and the Properties could differ materially from the
forward-looking statements in this Prospectus.
This Prospectus contains forward-looking statements regarding, among others, forecast and
projected distribution levels for the period from the Forecast Year 2014 to the Projection Year
2015. These forward-looking statements are based on a number of assumptions which are subject
to uncertainties and contingencies which are outside of the Managers control. (See Profit
Forecast and Profit Projection Assumptions for further details.)
OUE C-REITs revenue is dependent on a number of factors including the receipt of rent from the
Properties. This may adversely affect OUE C-REITs ability to achieve the forecast and projected
distributions as events and circumstances assumed may not occur as expected, or events and
circumstances may arise which are not anticipated.
No assurance is given that the assumptions will be realised and the actual distributions will be as
forecast and projected.
Property yield on real estate to be held by OUE C-REIT is not equivalent to distribution yield
on the Units.
Generally, property yield depends on Net Property Income and is calculated as the amount of
revenue generated by the properties, less the expenses incurred in maintaining, operating,
managing and leasing the properties compared against the current value of the properties.
Distribution yield on the Units, however, depends on the distributions payable on the Units, after
taking into account other expenses including (i) taxes, (ii) interest cost for the debt facilities, (iii)
REIT management fees and trustees fee and (iv) other operating costs including administrative
fees of OUE C-REIT, as compared with the purchase price of the Units.
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. Unitholders may only deal in their listed Units through trading on the SGX-ST.
Accordingly, apart from selling their Units through trading on the SGX-ST, Unitholders may not be
able to realise their investments in Units.
If the Units are de-listed from the SGX-ST and are unlisted on any other recognised stock
exchange, the Manager may, but is not obliged to, repurchase or cause the redemption of Units
more than once a year in accordance with the Property Funds Appendix and a Unitholder has no
right to request for the repurchase or redemption of Units more than once a year.
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.
There is no public market for the Units prior to the Offering and an active public market for the
Units may not develop or be sustained after the Offering. 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.
99
However, listing and quotation does not guarantee that a trading market for the Units will develop
or, if a market does develop, the liquidity of that market for the Units. Prospective Unitholders must
be prepared to hold their Units for an indefinite length of time.
There is no assurance that the Units will remain listed on the SGX-ST.
Although it is intended that the Units will remain listed on the SGX-ST, there is no guarantee of
the continued listing of the Units. Among other factors, OUE C-REIT may not continue to satisfy
the listing requirements. Accordingly, Unitholders will not be able to sell their Units through trading
on the SGX-ST if the Units are no longer listed on the SGX-ST.
Certain provisions of the Singapore Code on Take-overs and Mergers (the Take-over
Code) could have the effect of discouraging, delaying or preventing a merger or
acquisition which could adversely affect the market price of the Units.
Under the Take-over Code, an entity is required to make a mandatory offer for all the Units not
already held by it and/or parties acting in concert with it (as defined by the Take-over Code) in the
event that an increase in the aggregate unitholdings of it and/or parties acting in concert with it
results in the aggregate unitholdings crossing certain specified thresholds.
While the Take-over Code seeks to ensure an equality of treatment among Unitholders, its
provisions could substantially impede the ability of Unitholders to benefit from a change in control
and, as a result, may adversely affect the market price of the Units and the ability to realise any
potential change of control premium.
The price of the Units may decline after the Offering.
The Offering Price of the Units is determined by agreement between the Manager and the Joint
Bookrunners. The Offering Price may not be indicative of the market price for the Units upon
completion of the Offering. The trading price of the Units will depend on many factors, including,
but not limited to:
the perceived prospects of OUE C-REITs business and investments and the market for
commercial properties or real estate-related assets;
differences between OUE C-REITs actual financial and operating results and those
expected by investors and analysts;
changes in analysts recommendations or projections;
changes in general economic or market conditions;
the market value of OUE C-REITs assets;
the perceived attractiveness of the Units against those of other equity or debt securities,
including those not in the real estate sector;
the balance of buyers and sellers of the Units;
the size and liquidity of the Singapore REIT market from time to time;
any changes from time to time to the regulatory system, including the tax system, both
generally and specifically in relation to Singapore REITs;
100
the ability on the Managers part to implement successfully its investment and growth
strategies;
foreign exchange rates; and
broad market fluctuations, including increases in interest rates and weakness of the equity
and debt markets.
Units may trade at prices that are higher or lower than the NAV per Unit. Based on the Offering
Price, the discount to the NAV per Unit will be 23.9%. To the extent that OUE C-REIT retains
operating cash flow for investment purposes, working capital reserves or other purposes, these
retained funds, while increasing the value of OUE C-REITs underlying assets, may not
correspondingly increase the market price of the Units. Any failure to meet market expectations
with regards to future earnings and cash distributions may adversely affect the market price for the
Units.
Where new Units are issued at less than the market price of Units, the value of an investment in
Units may be affected. In addition, Unitholders who do not, or are not able to, participate in the
new issuance of Units may experience a dilution of their interest in OUE C-REIT.
The Units are not capital-safe products. There is no guarantee that Unitholders can regain the
amount invested. If OUE C-REIT is terminated or liquidated, investors may lose a part or all of
their investment in the Units.
Third parties may be unable to recover in claims brought against the Manager as the
Manager is not an entity with significant assets.
Third parties, in particular, Unitholders, may in future have claims against the Manager in
connection with the carrying on of its duties as manager of OUE C-REIT (including in relation to
the Offering and this Prospectus).
Under the terms of the Trust Deed, the Manager is indemnified from the Deposited Property
against any actions, costs, claims, damages, expenses or demands to which it may be put as the
manager of OUE C-REIT unless occasioned by the fraud, gross negligence, wilful default or
breach of the Trust Deed by the Manager. In the event of any such fraud, gross negligence, wilful
default or breach, only the assets of the Manager itself and not the Deposited Property would be
available to satisfy a claim.
The terms of the unit lending agreement may restrict the Stabilising Managers ability to
undertake stabilisation.
Pursuant to the Take-over Code, the Sponsor is required to make a mandatory offer for all the
Units not already held by it and/or parties acting in concert with it (as defined by the Take-over
Code) in the event that an increase in the aggregate unitholdings of it and/or parties acting in
concert with it results in the aggregate unitholdings crossing certain thresholds as specified in the
Take-over Code. In order not to trigger the mandatory offer requirement of the Take-over Code, the
unit lending agreement as described in Plan of Distribution Over-Allotment and Stabilisation
will include a right for the Unit Lender to recall such number of Units which are equivalent to the
Units (if any) lent under such agreement by giving seven days prior written notice to the
Stabilising Manager. Such right of recall means that the Unit Lender would not be deemed to have
disposed of such number of Units when it lends them out, nor will it be deemed to have acquired
those Units when they are returned to it in accordance with the Take-over Code. In the event this
right to recall is exercised by the Unit Lender, it is possible that the Stabilising Manager may not
be able to stabilise the market price of the Units. (See Plan of Distribution Over-Allotment and
Stabilisation for further details.)
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USE OF PROCEEDS
ISSUE PROCEEDS
The Manager intends to raise gross proceeds of S$346.4 million from the Offering and the
Cornerstone Units.
Upon listing, OUE C-REIT will have in place the Term Loan Facilities and the Revolving Credit
Facility in relation to the OUE Bayfront Property as well as the New Onshore Facility in relation
to the Lippo Plaza Property. (See Capitalisation and Indebtedness Indebtedness for further
details.) The Manager intends to draw down from the Facilities an amount of approximately
S$[698.2] million on and immediately after the Listing Date.
The total cash proceeds raised from the Offering and the Cornerstone Units, as well as the amount
drawn down from the Facilities will be used towards the following:
full payment for the purchase price payable to LCR in relation to the acquisition of shares in
the BVI Company;
partial payment for the purchase price payable in relation to the acquisition of the OUE
Bayfront Property to Clifford Development Pte. Ltd. (together with LCR, the Vendors);
repayment in full of the Existing Offshore Facility, which will be discharged simultaneously
with the acquisition of the entire issued share capital of the BVI Company pursuant to the
Tecwell Share Purchase Agreement;
refinancing of the Existing Onshore Facility;
payment of transaction costs incurred in relation to the Offering and the Facilities; and
working capital.
OUE C-REIT will not receive any additional cash proceeds from the exercise of the Over-Allotment
Option.
The following table sets out the intended sources and applications of the total proceeds from the
Offering and the Cornerstone Units as well as the amount drawn down from the Facilities and the
amount attributable to the Consideration Units based on the Offering Price.
Sources (S$000) Applications (S$000)
(1)
Offering [166,400] Acquisition of the Properties
(2)(3)(4)
[1,143,238]
(4)
Cornerstone Units [180,000] Repayment of the Existing
Offshore Facility
[126,642]
Consideration Units [346,400] Refinancing of the Existing
Onshore Facility
(3)(5)
[66,904]
Facilities [698,225] Acquisition costs [2,161]
Transaction costs
(6)
[47,080]
Working capital [5,000]
Total [1,391,025] Total [1,391,025]
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Notes:
(1) Based on the exchange rate of S$1.00 : HK$6.1275 and the exchange rate of S$1.00 : RMB4.7830.
(2) This comprises the purchase price for the OUE Bayfront Property and the entire issued share capital in the BVI
Company.
(3) The aggregate purchase consideration for the Lippo Plaza Property is based on an exchange rate of S$1.00 :
HK$6.1275 and comprises (i) the purchase consideration payable to LCR under the Tecwell Share Purchase
Agreement for the entire issued share capital in the BVI Company, (ii) the repayment of the Existing Offshore
Facility, and (iii) the refinancing of the Existing Onshore Facility.
(4) The purchase consideration for the Lippo Plaza Property may be adjusted upwards or downwards based on the
increase or decrease, as the case may be, in NAV of the BVI Company and its subsidiaries (which is the aggregate
value of the total assets of the BVI Company and its subsidiaries less the aggregate amount of the total liabilities
of the BVI Company and its subsidiaries) (excluding any change in valuation of the Lippo Plaza Property) as at the
Listing Date relative to 30 June 2013. The management accounts of the BVI Company and its subsidiaries will be
used to prepare the Completion Financial Statements. The Completion Financial Statements will be prepared by the
BVI Holding Company and reviewed by the Reporting Auditors.
(5) Assuming fully drawn at RMB320.0 million.
(6) Transaction costs include expenses incurred in relation to the Offering and the Facilities, where applicable.
The amount payable towards the completion of the acquisition of the entire issued share capital
in the BVI Company to the BVI Holding Company is denominated in Hong Kong dollars and has
been derived using a Singapore Dollar/Hong Kong dollar exchange rate of S$1.00 : HK$6.1275.
Should the exchange rate be different on the day these amounts are paid, OUE C-REIT may have
to draw down additional debt under the Revolving Credit Facility to make up for any deficiencies
in the proceeds received by OUE C-REIT arising as a result of exchange rate differences. For the
avoidance of doubt, any surplus in proceeds received by OUE C-REIT as a result of exchange rate
differences will be used for general working capital.
The Manager will make periodic announcements on the utilisation of the net proceeds from the
Offering and the issuance of the Cornerstone Units and the Sponsor Units via SGXNET as and
when such funds are materially utilised. The actual use of such proceeds will be disclosed in the
annual report of OUE C-REIT.
LIQUIDITY
As at the Listing Date, OUE C-REIT will have working capital of approximately S$5.0 million based
on the Offering Price. The Manager believes that this working capital and the undrawn portion of
the Revolving Credit Facility will be sufficient for OUE C-REITs working capital requirements over
the next 12 months following the Listing Date.
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OWNERSHIP OF THE UNITS
EXISTING UNITS
On 10 October 2013, upon the constitution of OUE C-REIT, one Unit was issued and this Unit is
held by Clifford Development Pte. Ltd.. The issue price of the Sponsor Initial Unit was S$1.00. No
other Units have been issued.
UNITS TO BE ISSUED TO CLIFFORD DEVELOPMENT PTE. LTD.
On the Listing Date, separate from the Offering, [432,999,999] Units (representing [50.0]% of the
total number of Units in issue on the Listing Date) will be issued to Clifford Development Pte. Ltd.
as part satisfaction of the purchase consideration for the sale of the OUE Bayfront Property.
PRINCIPAL UNITHOLDERS OF OUE C-REIT AND THEIR UNITHOLDINGS
The total number of Units in issue immediately after completion of the Offering will be 866,000,000
Units.
The following table sets out the principal Unitholders and their unitholdings immediately upon
completion of the Offering and the issuance of the Cornerstone Units and the Sponsor Units:
Units in issue as at the
date of this Prospectus
Units in issue after the
Offering (assuming that the
Over-Allotment Option is
not exercised)
Units in issue after the
Offering (assuming the
Over-Allotment Option is
fully exercised)
(%) (000) (%) (000) (%)
Sponsor
(1)
[1] [100] [433,000] [50.0] [] []
Clifford Development Pte. Ltd.
(1)
[1] [100] [433,000] [50.0] [] []
Cornerstone
Investors
Summit SPV 125,000 14.4 125,000 14.4
Mr Gordon Tang 31,250 3.6 31,250 3.6
Mdm Chen Huaidan 31,250 3.6 31,250 3.6
Mr Yang Dehe 25,000 2.9 25,000 2.9
RHB Asset
Management Sdn Bhd
12,500 1.4 62,500 1.4
Public and institutional investors [208,000] [24.0] [] []
TOTAL [1] [100] 866,000 100 866,000 100
Note:
(1) The Sponsor, being the holding company of Clifford Development Pte. Ltd., is deemed to have an interest in the
Units held by Clifford Development Pte. Ltd.. OUE Realty Pte. Ltd. (OUER) is deemed to be interested in the Units
held by Clifford Development Pte. Ltd. as 55.14% of the issued share capital of the Sponsor is directly held by
OUER. As at the Latest Practicable Date, OUER is a wholly-owned subsidiary of Golden Concord Asia Limited
(GCAL) which also directly holds approximately 12.79% of the issued share capital of the Sponsor. GCAL is
deemed to be interested in the Units held by Clifford Development Pte. Ltd.. OUERs shareholding percentage is
calculated based on 911,367,860 issued shares (excluding treasury shares) of the Sponsor as at the date of the last
notice of change of substantial shareholders interest (Form 3) received by the Sponsor. GCALs shareholding
percentage is calculated based on 909,885,860 issued shares (excluding treasury shares) of the Sponsor as at the
date of the last notice of change of substantial shareholders interest (Form 3) received by the Sponsor. As GCAL
is a wholly-owned subsidiary of Fortune Code Limited (FCL), FCL is deemed to be interested in the Units held by
Clifford Development Pte. Ltd.. As Lippo ASM Asia Property Limited (LAAPL) is a majority shareholder of FCL,
LAAPL is deemed to be interested in the Units through the direct and deemed interests of its indirect subsidiary,
GCAL.
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As LAAPL is jointly held by Admiralty Station Management Limited (Admiralty) and Pacific Landmark Holdings
Limited (PLHL), Admiralty is deemed to be interested in the Units through the direct and deemed interests of
GCAL, the indirect subsidiary of LAAPL. As ASM Asia Recovery (Master) Fund (AARMF) is a majority shareholder
of Admiralty, AARMF is deemed to have an interest in the Units through the deemed interest of Admiralty. As ASM
Asia Recovery Fund (AARF) is a majority shareholder of AARMF, AARF is deemed to be interested in the Units
through the deemed interest of its subsidiary, Admiralty. As Argyle Street Management Limited (ASML) manages
AARF, ASML is deemed to be interested in the Units through the deemed interest of AARFs subsidiary, Admiralty.
As Argyle Street Management Holdings Limited (ASMHL) is the ultimate holding company of ASML, ASMHL is
deemed to be interested in the Units through the deemed interest of Admiralty. As Kin Chan is the beneficial holder
of more than 20% of the issued share capital of ASMHL, Kin Chan Is deemed to be interested in the Units through
the deemed interest of Admiralty. As V-Nee Yeh is the beneficial holder of more than 20% of the issued share capital
of ASMHL, V-Nee Yeh is deemed to be interested in the Units through the deemed interest of Admiralty.
As LAAPL is jointly held by Admiralty and PLHL, PLHL is deemed to be interested in the Units through the direct and
deemed interests of GCAL, the indirect subsidiary of LAAPL. As PLHL is a wholly-owned subsidiary of HKC Property
Investment Holdings Limited (HKC), HKC is deemed to be interested in the Units through the deemed interest of
PLHL. As HKC is a wholly-owned subsidiary of Hongkong Chinese Limited (HCL), HCL is deemed to be interested
in the Units through the deemed interest of PLHL. As HCL is a subsidiary of Hennessy Holdings Limited
(Hennessy), Hennessy is deemed to be interested in the Units through the deemed interest of PLHL. As Hennessy
is a wholly-owned subsidiary of Prime Success Limited (PSL), PSL is deemed to be interested in the Units through
the deemed interest of PLHL. As PSL is a wholly-owned subsidiary of Lippo Limited (LL), LL is deemed to be
interested in the Units through the deemed interest of PLHL. As Lippo Capital Limited (LCL) is a majority
shareholder of LL, LCL is deemed to be interested in the Units through the deemed interest of PLHL. As Lanius
Limited (Lanius) is the holder of the entire issued share capital of LCL, Lanius is deemed to be interested in the
Units through the deemed interest of PLHL.
LOCK-UPS
The Sponsor and Clifford Development Pte. Ltd. have each agreed to (i) a lock-up arrangement
during the First Lock-up Period in respect of its direct and/or effective interest in the Lock-up Units,
and (ii) a lock-up arrangement during the Second Lock-up Period in respect of its direct and/or
effective interest in 50.0% of the Lock-up Units, subject to certain exceptions.
The Manager has also undertaken not to offer, issue, contract to issue any Units, or make any
announcements in connection with any of the foregoing transactions, during the First Lock-up
Period, subject to certain exceptions.
The Cornerstone Investors are not subject to any lock-up restrictions in respect of their
Unitholdings.
(See Plan of Distribution Lock-up Arrangements for further details.)
SUBSCRIPTION BY THE CORNERSTONE INVESTORS
In addition, concurrently with, but separate from the Offering, each of the Cornerstone Investors
has entered into separate subscription agreements with the Manager to subscribe for an
aggregate of [225,000,000] Units at the Offering Price, conditional upon the Underwriting
Agreement having been entered into, and not having been terminated, pursuant to its terms on or
prior to the Settlement Date.
The Cornerstone Investors may subscribe for Units in the Offering.
Information on the Cornerstone Investors
Summit SPV
Summit SPV is a BVI-incorporated investment holding company which is wholly-owned by Mr Tong
Jinquan, the founder of the Summit Group. Mr Tong also wholly-owns Shanghai Summit Pte. Ltd..
Mr Tong has over 20 years of experience in property investment, property development and
property management and he founded the Summit Group in 1994. The Summit Groups areas of
business encompass industrial investment, investment management, trading, property
105
development, hotel management, property management, business consultancy, convention and
exhibition services, goods export and technology import, software services and maintenance of
office equipment. The total assets of the Summit Group as at 31 December 2012 amounted to
RMB22.15 billion.
Mr Gordon Tang
Mr Gordon Tang is a Non-Executive Director of Catalist-listed SingHaiyi Group Limited, which
specialises in property development, real estate investment, real estate co-investing, property
trading and real estate management services. Mr Gordon Tang is the husband of Mdm Chen
Huaidan.
Mr Gordon Tang does not hold such Units in trust for his wife, Mdm Chen Huaidan, and does not
have the power to dispose of, or to exercise control over the disposal of, the Units of his wife, Mdm
Chen Huaidan.
Mdm Chen Huaidan
Mdm Chen Huaidan is the Group Managing Director of Catalist-listed SingHaiyi Group Limited
which specialises in property development and investment. Mdm Chen Huaidan is the wife of Mr
Gordon Tang.
Mdm Chen Huaidan does not hold such Units in trust for her husband, Mr Gordon Tang, and does
not have the power to dispose of, or to exercise control over the disposal of, the Units of her
husband, Mr Gordon Tang.
Mr Yang Dehe
Mr Yang Dehe is the head of the Hai Run Group of companies, which is involved in trading and
investment holding activities, and includes Singapore-based subsidiary Hai Run Pte. Ltd.. He has
also been the general manager and director of Guang Dong Hai Run Development since 1995.
RHB Asset Management Sdn Bhd
RHB Asset Management Sdn Bhd (formerly known as RHB Investment Management Sdn Bhd) is
a Malaysia-incorporated asset management company wholly-owned by RHB Investment Bank
Berhad. RHB Asset Management is Malaysias third largest retail and institutional asset
management company. It is also the largest fund house in Malaysia to carry both an investment
advisor and private retirement scheme licence. The funds under management of RHB Asset
Management as at 1 December 2013 amounted to RM35.50 billion. RHB Investment Bank Berhad
is the controlling shareholder of DMG & Partners Securities Pte Ltd, one of the Joint Bookrunners
for the Offering.
Certain Cornerstone Investors may, if they wish to do so, obtain loan facilities from the Joint
Bookrunners and Underwriters, a portion or all of which may be used by such Cornerstone
Investors to subscribe for Units. The Units subscribed by such Cornerstone Investors may be the
subject of the security provided to obtain the loan facilities.
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SUBSCRIPTION BY THE DIRECTORS
The directors of the Manager (the Directors, and each a Director) may subscribe for Units
under the Public Offer and/or the Placement Tranche. Save for the Managers internal policy which
prohibits the directors of the Manager from dealing in the Units at certain times, there is no
restriction on the Directors disposing of or transferring all or any part of their Unitholdings. (See
The Manager and Corporate Governance Corporate Governance of the Manager Dealings in
Units for further details.)
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DISTRIBUTIONS
DISTRIBUTION POLICY
OUE C-REITs distribution policy is to distribute 100.0% of OUE C-REITs Distributable Income for
the Forecast Year 2014 and the Projection Year 2015. Thereafter, OUE C-REIT will distribute at
least 90.0% of its Specified Taxable Income for each financial year. The actual level of distribution
will be determined at the discretion of the Board. The actual proportion of Distributable Income
distributed to Unitholders beyond 31 December 2015 may be greater than 90.0% to the extent that
the Manager believes it to be appropriate, having regard to OUE C-REITs funding requirements,
other capital management considerations and the overall stability of distributions.
For these purposes, and under the terms of the Trust Deed, the Distributable Income for a
financial year is the amount calculated by the Manager (based on the audited financial statements
of OUE C-REIT for that financial year) as representing the consolidated audited net profit after tax
of OUE C-REIT and its SPVs for the financial year, as adjusted to eliminate the effects of
Adjustments (as defined below). After eliminating the effects of these Adjustments, the
Distributable Income may be different from the net profit recorded for the relevant financial year.
Adjustments means adjustments which are charged or credited to the consolidated statement of
total return of OUE C-REIT for the relevant financial year or the relevant distribution period (as the
case may be), including (i) unrealised income, including property revaluation gains, and reversals
of impairment provisions, (ii) deferred tax charges/credits in respect of building capital allowance
and accelerated tax depreciation, (iii) negative goodwill, (iv) differences between cash and
accounting finance costs, (v) realised gains on the disposal of properties and disposal/settlement of
financial instruments, (vi) the portion of the Management Fee that is paid or payable in the form of
Units, (vii) costs of any public or other offering of Units or Convertible Instruments that are expensed
but are funded by proceeds from the issuance of such Units or Convertible Instruments, (viii)
depreciation and amortisation in respect of the Properties and their ancillary machines, equipment
and other fixed assets, and (ix) other non-cash gains and losses (as deemed appropriate by the
Manager).
The Manager also has the discretion to distribute any additional amounts (including capital). In
determining whether to distribute additional amounts (including capital), the Manager will consider
a range of factors including but not limited to OUE C-REITs funding requirements, its financial
position, its growth strategy, compliance with relevant laws, regulations and covenants, other
capital management considerations, the overall suitability of distributions and prevailing industry
practice.
Distributions, when paid, will be in Singapore dollars.
FREQUENCY OF DISTRIBUTIONS
After OUE C-REIT is admitted to the Main Board of the SGX-ST, it 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. OUE C-REITs First
Distribution will be for the period from the Listing Date to 30 June 2014 and will be paid by the
Manager on or before 28 September 2014. Subsequent distributions will take place on a
semi-annual basis. The Manager will endeavour to pay distributions no later than 90 days after the
end of each distribution period.
OUE C-REITs primary sources of liquidity for the funding of distributions, servicing of debt,
payment of non-property expenses and other recurring capital expenditure will be the receipts of
rental income and borrowings.
108
Under the Property Funds Appendix, if the Manager declares a distribution that is in excess of
profits, the Manager should certify, in consultation with the Trustee, that it is satisfied on
reasonable grounds that, immediately after making the distribution, OUE C-REIT will be able to
fulfil, from the Deposited Property, the liabilities of OUE C-REIT as they fall due. The certification
by the Manager should include a description of the distribution policy and the measures and
assumptions for deriving the amount available to be distributed from the Deposited Property. The
certification should be made at the time the distribution is declared.
PRC DISTRIBUTION MODEL
The distributions from the PRC Company will be derived primarily from profits. It is the intention
of the Manager that the PRC Company will pay the maximum dividend for any one year to the
extent permissible under applicable PRC laws and regulations after taking into account the
short-term operational and liquidity requirements of the PRC Company. In the event that the
amount of Distributable Income exceeds the amount of cash that the Manager is able to repatriate
back to Singapore, the Manager may draw down on borrowings to fund distributions.
FACTORS AFFECTING DISTRIBUTIONS
OUE C-REITs ability to make distributions is dependent on (among other things) the Trustee
having sufficient cash in OUE C-REIT to make the payments required. The amount of profit which
is available for distribution by the PRC Company to the BVI Company as determined pursuant to
the relevant PRC laws and accounting requirements could be less than the amount of any
distribution determined to be paid by OUE C-REIT to Unitholders pursuant to its distribution policy
mentioned above.
Based on PRC accounting standards and relevant PRC tax rules, depreciation of real estate is a
mandatory expense at the project company level when determining the net profits from operations
of a project company that would be available for payment as dividends. This effectively traps cash
in the PRC Company as depreciation is not a cash expense.
It is the intention of the Manager to utilise the Facilities to support OUE C-REITs making of
distributions in any of the circumstances referred to above. It should be noted that these amounts
which are trapped in the PRC Company remain the funds of the PRC Company and may be
utilised for the purposes of the PRC Company in compliance with applicable PRC laws and
regulations, and also that it is common for REITs to pay distributions based on cash flow
generated by their assets.
109
EXCHANGE RATE INFORMATION
The tables below set forth, for the period from 2010 to the Latest Practicable Date, information
concerning the exchange rates between Renminbi and Singapore dollars (in Renminbi per
Singapore dollar), between Hong Kong dollars and Singapore dollars (in Hong Kong dollars per
Singapore dollar) and between Singapore dollars and US dollars (in Singapore dollars per US
dollar). The exchange rates were based on the average between the bid and offer rates of the
currency as obtained from Bloomberg L.P.
(1)
. No representation is made that the Renminbi, Hong
Kong dollar or US dollar amounts actually represent such Singapore dollar amounts or could have
been or could be converted into Singapore dollars at the rates indicated, at any other rate, or at
all. The exchange rates set out below are historical rates for illustrative purposes only and no
representation is made regarding any trends in exchange rates.
Renminbi/Singapore dollar
(1)
Average High Low
2010 4.97 5.20 4.79
2011 5.14 5.36 4.82
2012 5.05 5.18 4.86
June 2013 4.87 4.93 4.81
July 2013 4.84 4.87 4.79
August 2013 4.81 4.87 4.77
September 2013 4.85 4.91 4.78
October 2013 4.91 4.93 4.89
November 2013 4.88 4.91 4.85
December 2013 4.82 4.87 4.78
Hong Kong dollar/Singapore dollar
(1)
Average High Low
2010 5.71 6.05 5.46
2011 6.20 6.49 5.90
2012 6.21 6.37 5.99
June 2013 6.16 6.24 6.08
July 2013 6.12 6.16 6.05
August 2013 6.09 6.17 6.04
September 2013 6.14 6.22 6.05
October 2013 6.24 6.28 6.19
November 2013 6.21 6.24 6.17
December 2013 6.16 6.21 6.11
110
Singapore dollar/US dollar
(1)
Average High Low
2010 1.36 1.42 1.28
2011 1.26 1.32 1.20
2012 1.25 1.30 1.22
June 2013 1.26 1.28 1.24
July 2013 1.27 1.28 1.26
August 2013 1.27 1.28 1.26
September 2013 1.26 1.28 1.25
October 2013 1.24 1.25 1.24
November 2013 1.25 1.26 1.24
December 2013 1.26 1.27 1.25
Note:
(1) Source: Bloomberg L.P.. Bloomberg L.P. has not provided its consent, for the purposes of Section 249 of the SFA
(read with Section 302(1) of the SFA), to the inclusion of the information extracted from the relevant report published
by it and therefore is not liable for such information under Sections 253 and 254 of the SFA (read with Section 302(1)
of the SFA). While the Manager has taken reasonable action to ensure that the information from the relevant report
published by Bloomberg L.P. is reproduced in its proper form and context, and that the information is extracted
accurately and fairly, neither the Manager nor any other party has conducted an independent review of the
information contained in such report or verified the accuracy of the contents of the relevant information.
EXCHANGE CONTROLS
Singapore
There are no exchange controls in Singapore.
The PRC
Restrictions on Conversion of Renminbi into Foreign Currency
The principal regulation governing foreign currency exchange in the PRC is the Foreign Exchange
Administration Rules () which was issued by the State Council in January 1996,
became effective in April 1996 and was amended in January 1997 and August 2008. Under these
rules, Renminbi is freely convertible for payments of current account items, including trade and
service related foreign exchange transactions and dividend payments, but not for capital account
expenses, including direct investment, loan or investment in securities outside the PRC. Renminbi
may only be converted for capital account expenses once the prior approval of the SAFE has been
obtained. Under the Foreign Exchange Administration Rules, foreign-invested enterprises (FIEs)
in the PRC may purchase foreign exchange without the approval of the SAFE for trade and
service-related foreign exchange transactions by providing commercial documents evidencing
such transactions to commercial banks which are allowed to engage in foreign exchange
business.
According to the Regulations on the Administration of Settlement, Sale and Payment of Foreign
Exchange () as issued on 20 June 1996, the Rules for Implementation
of Guideline of Regulations on Service Trade () as issued on 18 July
2013, and the Announcement on Tax Filing of Payment Outside of the PRC Relating to Service
Trade and Other Items (
) issued on 9 July 2013, a FIE may convert Renminbi-denominated profits into foreign
exchange and remit the same offshore by presenting certain documents to commercial banks
111
which are allowed to engage in foreign exchange business, without the prior approval of, or
registration with, the SAFE. Such documents include the (i) Audited Financial Report on relevant
year issued by certified accounting firms, (ii) resolution(s) of the board of directors on profit
distribution, (iii) the latest capital verification report, and (iv) the Tax Filing Form for Payment
Outside of the PRC for Service Trade and Other Items ()
required for a single payment equivalent to or over US$50,000. Save for the foregoing documents,
no other approvals or consents are required to be obtained by the PRC Company for the
conversion of Renminbi-denominated profits arising from the Lippo Plaza Property into foreign
exchange and the remittance of such proceeds for distribution to Unitholders.
While the Manager has conducted the necessary due diligence to ascertain that there is no
significant impediment to the remittance of proceeds arising from the Lippo Plaza Property for
distribution to Unitholders, the relevant PRC government authorities (especially the SAFE), which
have significant administrative discretion in implementing the laws, may restrict or eliminate the
ability of FIEs to purchase and remit foreign currencies in the future.
The BVI
There are no exchange controls in the BVI.
112
CAPITALISATION AND INDEBTEDNESS
The following table sets forth the pro forma capitalisation of OUE C-REIT as at the Listing Date
and after application of the total proceeds from the Offering, the Sponsor Units and the
Cornerstone Units, based on the Offering Price. The information in the table below should be read
in conjunction with Use of Proceeds.
As at the Listing Date
Based on the Offering Price
(S$000)
Borrowings [698,225]
Units in issue [692,800]
TOTAL CAPITALISATION [1,391,025]
INDEBTEDNESS
Prior to the Listing Date, the Properties will be subject to:
(i) The Lippo Plaza Property
the Existing Offshore Facility, which will be discharged simultaneously with the
acquisition of the entire issued share capital of the BVI Company pursuant to the
Tecwell Share Purchase Agreement; and
the Existing Onshore Facility (including the mortgage over the Lippo Plaza Property),
which will be refinanced and discharged on the next Business Day following the Listing
Date, by way of drawing down on the New Onshore Facility.
(ii) The OUE Bayfront Property
the S$460 million (equivalent in US$) term facility granted by CIMB Bank Berhad,
Singapore Branch to Clifford Development Pte. Ltd. as the borrower (including the
mortgage over the OUE Bayfront Property lodged by CIMB Bank Berhad, Singapore
Branch at the Singapore Land Authority), which will be discharged prior to the
completion of the Property Sale and Purchase Agreement.
Upon listing, OUE C-REIT will have in place the Term Loan Facilities and the Revolving Credit
Facility in relation to the OUE Bayfront Property as well as the New Onshore Facility in relation
to the Lippo Plaza Property.
The Term Loan Facilities and the Revolving Credit Facility in relation to the OUE Bayfront Property
will be secured by:
a registered first legal mortgage over OUE Bayfront;
legal assignment of all insurance taken in respect of the OUE Bayfront Property and with the
security agent, Oversea-Chinese Banking Corporation Limited, named as Loss Payee save
in respect of third party liability insurance including workmens compensation. Original cover
notes and certified true copies of the policies shall be lodged with the security agent together
with the premium receipts;
113
assignment of all rights, titles, benefits and interest of the borrower in connection with (i) any
lease or tenancy agreements, (ii) lease or tenancy deposits/proceeds, (iii) sales agreements,
(iv) sales deposits/proceeds, (v) Deed of Income Support, and (vi) property management
agreements in respect of the OUE Bayfront Property; and
a debenture incorporating a fixed charge over book debts, charged accounts, goodwill,
intellectual property and plant and machinery in connection with OUE Bayfront and floating
charge over generally all of the present and future assets of OUE C-REIT in connection with
OUE Bayfront.
The New Onshore Facility in relation to the Lippo Plaza Property will be secured by:
a first priority mortgage over the PRC Companys rights, title and interests in the Lippo Plaza
Property;
the account control (to the extent feasible under relevant laws and regulations) over the bank
accounts (except the basic account) of the PRC Company relating to the Lippo Plaza
Property, which bank accounts shall include cash collection accounts and interest reserve
accounts;
subject to the mutual agreement of the lenders and the PRC Company, an assignment of
rights under the property management agreement, insurance policies save in respect of third
party liability insurance with the security agent, Standard Chartered Bank (China) Limited,
Shanghai Branch, named as First Loss Payee; and
a first priority pledge over receivables from the Lippo Plaza Property including all monetary
rights, title, claims and interest, present and future, actual and contingent arising from any
existing and future tenancy agreements with respect to any part of the Lippo Plaza Property.
The Manager intends to draw down from the Facilities an amount of approximately S$[698.2]
million on and immediately after the Listing Date. The amount payable towards the completion of
the acquisition of the entire issued share capital in the BVI Company to the BVI Holding Company
is denominated in Hong Kong dollars and has been derived using a Singapore Dollar/Hong Kong
dollar exchange rate of S$1.00 : HK$6.1275. Should the exchange rate be different on the day
these amounts are paid, OUE C-REIT may have to draw down additional debt under the Revolving
Credit Facility to make up for any deficiencies in the proceeds received by OUE C-REIT arising
as a result of exchange rate differences. For the avoidance of doubt, any surplus in proceeds
received by OUE C-REIT as a result of exchange rate differences will be used for general working
capital.
The Facilities also contain certain financial covenants which are typical of financing of such
nature. The material covenants include:
for the Term Loan Facilities and the Revolving Credit Facility, the total indebtedness secured
against the OUE Bayfront Property is not more than 65.0% of the fair market value of the
OUE Bayfront Property; and
for the New Onshore Facility, the total indebtedness secured against the Lippo Plaza
Property is not more than 20.0% of the reinstatement value of the Lippo Plaza Property at
drawdown and is not more than 30.0% of the fair market value of the Lippo Plaza Property
thereafter;
for the Term Loan Facilities and the Revolving Credit Facility, the property interest cover ratio
shall not be less than 1.75 times;
for the New Onshore Facility, the interest cover ratio shall not be less than 1.5 times and the
debt service coverage ratio shall not be less than 1.25 times; and
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OUE C-REIT shall at all times adhere to the gearing limit prescribed under the Property
Funds Appendix.
It should be noted that the Facilities also include the following change of control events which will
constitute either (i) events of default under the Facilities or (ii) mandatory prepayment events:
(i) the Sponsor ceases to own (directly or indirectly) at least 20% of the units in OUE C-REIT;
(ii) a sale, transfer or disposal of OUE C-REIT-s interest in the relevant property. All proceeds
from the sale, transfer or disposal of OUE C-REITs interest in the relevant property, in whole
or in part, shall be used to fully prepay and cancel the relevant Facility without fee, premium
or penalty;
(iii) the Sponsor ceases to own (directly or indirectly) at least 51% of the issued and fully paid
ordinary shares in the Manager without the prior agreement of the Facility Agent (acting on
the instructions of the Majority Lenders) (both as defined in the relevant Facility);
(iv) for the New Onshore Facility, the Sponsor ceases to directly or indirectly own the entire
paid-up registered capital of the BVI Company; and
(v) for the New Onshore Facility, the BVI Company ceases to directly or indirectly own the entire
issued share capital of the PRC Company.
For the purposes of Rule 728 of the Listing Manual, the Sponsor has provided an undertaking to
the Manager and the Trustee that, for so long as the Sponsor is a majority shareholder of the
Manager and/or owns no less than 20% of the Units in OUE C-REIT, the Sponsor will notify the
Manager and the Trustee as soon as it becomes aware of:
(a) any pledging arrangement (or other arrangement having similar legal or economic effect)
relating to all or any of their shareholding in the Manager and/or their unitholding in OUE
C-REIT; and
(b) any event which may result in a breach of the terms of the Facilities.
As at the Listing Date, OUE C-REIT is expected to have gross borrowings of S$[698.2] million with
an Aggregate Leverage of [42.3%] based on the Offering Price. The Manager has obtained, in
respect of OUE C-REIT, a provisional credit rating of Ba1 from Moodys.
1
The Existing Onshore Facility is a secured term loan facility from Standard Chartered Bank
(China) Limited, Shanghai Branch, The Bank of East Asia (China) Limited, Shanghai Branch,
CITIC Bank International (China) Limited Shanghai Branch and Chong Hing Bank Limited,
Shantou Branch to the PRC Company for an amount of RMB320.0 million. The Existing Onshore
Facility will be refinanced and discharged on the next Business Day following the Listing Date, by
way of drawing down on the New Onshore Facility.
1 The provisional credit rating assumes the listing of OUE C-REIT on the SGX-ST, the drawdown of debt facilities of
S$[698.2] million and the acquisition of the Properties by OUE C-REIT. The final rating is conditional upon the
successful completion of all the events described in the foregoing sentence. The Manager expects Moodys to
assign its final rating of OUE C-REIT on the Listing Date and will make an announcement on SGXNET of the final
rating when it has been assigned to OUE C-REIT. All ratings are subject to revision or withdrawal at any time.
Moodys has not provided its consent, for the purposes of Section 249 (read with Section 302) of the SFA, to the
inclusion of the credit rating information and is therefore not liable for such information under Sections 253 and 254
(read with Section 302) of the SFA. While the Manager has taken reasonable action to ensure that the information
has been reproduced in its proper form and context, and that it has been extracted fairly and accurately, neither the
Manager nor any other party has conducted an independent review of, nor verified the accuracy of, such information.
The provisional credit rating obtained from Moodys is current and Moodys will be paid by OUE C-REIT to provide
the credit rating. The credit rating is not a recommendation to invest in any securities. Issuer credit ratings express
Moodys opinion of an entitys creditworthiness and ability to meet its senior financial obligations. According to
Moodys, obligations rated Ba are judged to be speculative and are subject to substantial credit risk. Detailed
information regarding Moodys rating definitions, the terms of use of such ratings, the relative rank of the credit
rating, the assumptions, limitations and methodology of the credit rating, and attributes that the credit rating does
not address, may be found on the following website: www.moodys.com.
115
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following tables present the unaudited pro forma financial information of the OUE C-REIT
Group for the Relevant Period.
The Manager is unable to prepare pro forma statements of total return for FY2010 of the OUE
C-REIT Group as:
historical financial information for FY2010 is not available for the OUE Bayfront Property. The
OUE Bayfront Property was still under development in 2010 and the TOP in relation to the
OUE Bayfront Property was only issued in January 2011. No historical financial information
in relation to the OUE Bayfront Property is available prior to the issue of TOP; and
the OUE Bayfront Property is estimated to account for approximately 69.9% of the IPO
Portfolio by valuation
1
and approximately [72.7]% of the forecast Net Property Income of
OUE C-REIT (inclusive of Income Support) in the Forecast Year 2014. While it is still possible
to prepare the pro forma historical financial information of OUE C-REIT for FY2010 with just
the historical financial information relating to the Lippo Plaza Property, such pro forma
historical financial information would not be meaningful given the size of the OUE Bayfront
Property relative to the IPO Portfolio and would not be representative of the historical
financial performance of the IPO Portfolio.
For the reasons stated above, the SGX-ST has granted OUE C-REIT a waiver from the
requirement to prepare historical pro forma statements of total return for the latest three financial
years of the OUE C-REIT Group, subject to the inclusion of the following in this Prospectus:
pro forma statements of total return for the Relevant Period (see Unaudited Pro Forma
Financial Information and Appendix C, Unaudited Pro Forma Financial Information);
pro forma statements of financial position as at 31 December 2012 and as at 30 September
2013 (see Unaudited Pro Forma Financial Information and Appendix C, Unaudited Pro
Forma Financial Information);
pro forma statements of cash flows for FY2012 and the nine months ended 30 September
2013 (see Unaudited Pro Forma Financial Information and Appendix C, Unaudited Pro
Forma Financial Information);
a profit forecast for the Forecast Year 2014 and profit projection for the Projection Year 2015
(see Profit Forecast and Profit Projection); and
full disclosure on the reasons why historical pro forma financial information of the OUE
C-REIT Group for FY2010 cannot be provided and the waivers granted. (See Unaudited Pro
Forma Financial Information).
The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes
only and on the basis of the assumptions and accounting policies set out in Appendix C,
Unaudited Pro Forma Financial Information, and may not give a true picture of the actual
total returns and financial position of the OUE C-REIT Group. The Unaudited Pro Forma
Financial Information should be read together with these assumptions and accounting
policies.
1 Based on the higher of the two independent appraisal values for the Properties, an exchange rate of S$1.00 :
RMB4.7830 and inclusive of Income Support.
116
UNAUDITED PRO FORMA STATEMENTS OF FINANCIAL POSITION OF THE OUE C-REIT
GROUP
(1)
As at
31 December 2012
As at
30 September 2013
S$000 S$000
Non-current assets
Investment properties 1,555,018 1,578,047
Intangible asset
(2)
33,000 33,000
Plant and equipment 108 110
Prepayments 594
1,588,720 1,611,157
Current assets
Trade and other receivables 1,563 1,584
Cash and cash equivalents 36,371 39,662
37,934 41,246
Total assets 1,626,654 1,652,403
Non-current liabilities
Loans and borrowings [681,450] [681,416]
Trade and other payables 11,713 9,398
Deferred tax liabilities
(3)
30,815 36,634
723,978 727,448
Current Liabilities
Trade and other payables 14,788 19,300
Current tax payable 2,363 2,671
17,151 21,971
Total liabilities 741,129 749,419
Net assets 885,525 902,984
Represented by:
Unitholders funds 885,525 902,984
Notes:
(1) The Unaudited Pro Forma Statements of Financial Position as at 31 December 2012 and 30 September 2013 have
been prepared assuming issuance of 866,000,000 Units at the Offering Price of S$0.80 per Unit.
(2) Intangible asset represents the unamortised Income Support receivable by the OUE C-REIT Group under the
Income Support Arrangement with the Sponsor in relation to the OUE Bayfront Property.
(3) Deferred tax liabilities relate to the deferred tax recognised on the gain on revaluation of the Lippo Plaza Property
to its fair value.
117
UNAUDITED PRO FORMA STATEMENTS OF TOTAL RETURN THE OF OUE C-REIT
GROUP
(1)(2)
FY2011 FY2012
Nine months ended
30 September 2012
Nine months ended
30 September 2013
S$000 S$000 S$000 S$000
Gross Revenue 36,514 65,453 48,833 52,708
Property operating expenses (11,361) (14,466) (10,673) (12,283)
Net Property Income 25,153 50,987 38,160 40,425
Other income 607 483 340 532
Managers base fee (5,046) (4,880) (3,660) (3,718)
Managers performance fee (6,176) (4,950) (202)
Trustees fee (323) (313) (235) (238)
Other expenses (2,585) (2,573) (1,868) (1,896)
Finance income 164 242 223 183
Finance costs (15,401) (16,074) (12,151) (11,446)
Total return for the year/period
before tax 2,569 21,696 15,859 23,640
Income tax expense (3,178) (4,349) (2,411) (4,586)
Total return for the year/period (609) 17,347 13,448 19,054
Notes:
(1) The Unaudited Pro Forma Statements of Total Return for the Relevant Period have been prepared assuming
issuance of 866,000,000 Units at the Offering Price of S$0.80 per Unit.
(2) No Income Support has been assumed for the periods presented.
118
UNAUDITED PRO FORMA STATEMENTS OF CASH FLOWS OF THE OUE C-REIT GROUP
(1)(2)
FY2012
Nine months ended
30 September 2013
S$000 S$000
Cash flows from operating activities
Total return for the year/period 23,523 19,054
Adjustments for:
Managers management fees payable in Units 4,880 3,718
Finance income (80) (126)
Finance costs 16,074 11,446
Depreciation 6 5
Loss on disposal of plant and equipment 9 1
Income tax expense 4,349 4,586
Operating income before working capital changes 48,761 38,684
Changes in working capital:
Trade and other receivables (2,395) 149
Trade and other payables 2,101 4,137
Cash generated from operating activities 48,467 42,970
Tax paid (2,859) (1,261)
Net cash from operating activities 45,608 41,709
Cash flow from investment activities
Acquisition of properties and related assets and liabilities,
including acquisition costs (648,223)
Acquisition of subsidiaries, net of cash acquired (142,200)
Acquisition of plant and equipment (25) (3)
Acquisition of investment properties (1,947)
Interest received 80 126
Net cash used in investing activities (790,368) (1,824)
Cash flows from financing activities
Proceeds from issue of Units 346,400
Payment of transaction costs related to issue of Units (29,214)
Distribution to Unitholders (16,572) (30,128)
Repayments to related corporations
(3)
(218,203) (19)
Interest paid (21,076) (10,238)
Proceeds from borrowings 881,348 3,719
Repayment of borrowings (117,455) (1,070)
Payment of transaction costs related to loans and borrowings (16,838)
Net cash from/(used in) financing activities 808,390 (37,736)
Net increase in cash and cash equivalents 63,630 2,149
Cash and cash equivalents at beginning of the year/period 63,394
Effect of exchange rate fluctuations on cash held (236) 110
Cash and cash equivalents at end of the year/period 63,394 65,653
Notes:
(1) The Unaudited Pro Forma Statements of Cash Flows for FY2012 and the nine months ended 30 September 2013 have
been prepared assuming issuance of 866,000,000 Units at the Offering Price of S$0.80 per Unit.
(2) No Income Support has been assumed for the periods presented.
(3) For FY2012, this is inclusive of S$96.5 million relating to the settlement of balances with related parties of LCR prior
to the Listing Date. These balances comprise (i) approximately S$23.9 million to Frontop, (ii) approximately S$60.0
million to Reiley, (iii) approximately S$6.2 million to Putian Talin, and (iv) approximately S$6.4 million to Zhuhai
Chung Po. Repayments to Frontop and Reiley are for the purposes of settlement of inter-company loans, while
repayments to Putian Talin and Zhuhai Chung Po are for the purposes of settlement of inter-company balances.
119
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Unaudited Pro Forma Financial
Information and notes thereto included elsewhere in this Prospectus. Statements contained in this
Managements 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 the
forecast or projected results of OUE C-REIT. 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 for further details.) Recipients of this Prospectus and all prospective investors in the
Units are cautioned not to place undue reliance on these forward-looking statements.
The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only,
and is based on certain assumptions after making certain adjustments to show what:
(i) the Unaudited Pro Forma Statements of Financial Position as at 31 December 2012 and 30
September 2013 would have been if the Offering, the acquisition of the Properties, the
Master Property Management Agreement, the Individual Property Management Agreement
and the existing local property management agreement for the Lippo Plaza Property (the
Local Property Management Agreement, and together, the Property Management
Agreements) and the fee arrangements for the Manager, the Trustee and the Property
Manager as set out in Overview Certain Fees and Charges (the Fee Arrangements)
had occurred on or were effective on 31 December 2012 and 30 September 2013,
respectively;
(ii) the Unaudited Pro Forma Statements of Total Return for the Relevant Period would have
been if the Offering, the acquisition of the Properties, the Property Management Agreements
and the Fee Arrangements had occurred on or were effective on 1 January 2011 under the
same terms as set out in the Prospectus; and
(iii) the Unaudited Pro Forma Statements of Cash Flows for FY2012 and the nine months ended
30 September 2013 would have been if the Offering, the acquisition of the Properties, the
Property Management Agreements and the Fee Arrangements had occurred on or were
effective on 1 January 2012.
The Unaudited Pro Forma Financial Information is not necessarily indicative of the results of the
operations or the financial position that would have been attained had the Offering, the acquisition
of the Properties, the Property Management Agreements and the Fee Arrangements actually
occurred in the relevant periods. The Unaudited Pro Forma Financial Information, because of its
nature, may not give a true or accurate picture of OUE C-REITs actual total returns or financial
position.
The following discussion and analysis of the financial condition and results of operations is based
on and should be read in conjunction with the Unaudited Pro Forma Financial Information and
related notes thereto, which are included elsewhere in this Prospectus.
(See Appendix B, Reporting Auditors Report on the Unaudited Pro Forma Financial Information
and Appendix C, Unaudited Pro Forma Financial Information, for further details.)
The Properties are located in Singapore and the PRC. Correspondingly, OUE C-REITs business
and results of operations are affected by, among other things, the demand for and supply of, real
estate space in Singapore and the PRC which are in turn affected by general economic conditions
120
in Singapore and the PRC, such as local and international market economic conditions, the
financial conditions of tenants, the availability of debt or equity financing, interest rates, other
operating expenses and environmental laws and regulations, zoning laws and other governmental
rules and fiscal policies and competition from other property owners for tenants. The principal
competitive factors for commercial properties comprise, among other things, rental rates, quality
and location of the properties, supply of comparable space and evolving needs of business users,
including those brought about by corporate restructuring and/or technological advances. In
addition, the convenience of transportation accessibility and trade mix within the retail component
of a commercial property are also major factors in attracting shoppers and tenants.
GENERAL BACKGROUND
OUE C-REIT is a Singapore REIT established pursuant to the Trust Deed. As OUE C-REIT was
only constituted as a private trust on 10 October 2013, OUE C-REIT has no historical operating
results and financial information based on which recipients of this Prospectus may evaluate OUE
C-REIT.
OUE C-REIT is established with the principal investment strategy of investing, directly or
indirectly, in a portfolio of income-producing real estate used primarily for commercial purposes
(including real estate used primarily for office and/or retail purposes) in financial and business
hubs within and outside of Singapore, as well as real estate-related assets.
As at the Listing Date, the IPO Portfolio will comprise two commercial properties strategically
located in Singapore and Shanghai, namely the OUE Bayfront Property and the Lippo Plaza
Property, respectively. As at the Listing Date, the Sponsor will provide Income Support to OUE
C-REIT in respect of the OUE Bayfront Property for a period of up to five years from the Listing
Date.
On the Listing Date, the Property Manager will be providing its services in respect of the OUE
Bayfront Property but will not be providing its services in respect of the Lippo Plaza Property, as
such services will be provided by the existing local property manager of the Lippo Plaza Property
under the Local Property Management Agreement. In the event that the existing property
management agreement in respect of the Lippo Plaza Property is not renewed or is terminated,
the Lippo Plaza Property (at the Property Managers election) may come under the management
of the Property Manager.
The IPO Portfolio
The OUE Bayfront Property
The OUE Bayfront Property is located at Collyer Quay in Singapores CBD. It comprises (i) OUE
Bayfront, an 18-storey premium office building with rooftop restaurant premises located at 50
Collyer Quay, which is complemented by retail facilities at its ancillary properties, namely (ii) OUE
Tower, a conserved tower building located at 60 Collyer Quay with panoramic views of the Marina
Bay landscape which is currently occupied by a fine dining restaurant, and (iii) OUE Link, a link
bridge located at 62 Collyer Quay with retail units.
The Lippo Plaza Property
Lippo Plaza is located at 222 Huaihai Zhong Road in the commercial district of Huangpu in central
Shanghai, the PRC. It is a 36-storey Grade-A commercial building used for office and retail
purposes and also comprises three basement levels consisting of commercial space and car park
lots. The Lippo Plaza Property comprises Lippo Plaza, excluding (i) Unit 2 on Basement 1, (ii) the
12th, 13th, 15th and 16th Floors and (iii) four car park lots. Collectively, the Lippo Plaza Property
comprises approximately 90% of Lippo Plaza by GFA.
121
Acquisition of the Properties
As at the date of this Prospectus, the Trustee has entered into the Property Sale and Purchase
Agreement with Clifford Development Pte. Ltd. for the acquisition of the OUE Bayfront Property together
with the plant and equipment therein at a purchase consideration of S$1,005.0 million, and the BVI
Holding Company has entered into the Tecwell Share Purchase Agreement with LCR for the sale of the
entire issued share capital in the BVI Company to the BVI Holding Company for the purchase
consideration of approximately HK$843.5 million (subject to adjustment)
1
. The aggregate purchase
consideration for the Lippo Plaza Property is equivalent to approximately S$331.8 million
2
(subject to
adjustment)
1
.
In connection with the Tecwell Share Purchase Agreement, the BVI Holding Company also
entered into a letter of undertaking with LCR which sets out the agreement between the BVI
Holding Company and LCR regarding the formers undertaking to repay in full the principal amount
of the Existing Offshore Facility.
(See Certain Agreements Relating to OUE C-REIT and the Properties Property Sale and
Purchase Agreement, Certain Agreements Relating to OUE C-REIT and the Properties Tecwell
Share Purchase Agreement and Use of Proceeds for further details.)
FACTORS AFFECTING OUE C-REITS RESULTS OF OPERATIONS
GROSS REVENUE AND NET PROPERTY INCOME OF OUE C-REIT
Gross Revenue
The gross revenue of OUE C-REIT (Gross Revenue) consists of (i) Gross Rental Income
(including rental derived from the office and retail components of the Properties); (ii) other income
earned from the Properties; and (iii) net of business tax for the Lippo Plaza Property
3
.
The Gross Revenue of OUE C-REIT for the Relevant Period is as follows:
FY2011 FY2012
Nine Months Ended
30 September 2012
Nine Months Ended
30 September 2013
S$000 S$000 S$000 S$000
The OUE Bayfront
Property 14,515 42,633 31,593 35,500
The Lippo Plaza
Property 21,999 22,820 17,240 17,208
Gross Revenue 36,514 65,453 48,833 52,708
1 The purchase consideration for the Lippo Plaza Property may be adjusted upwards or downwards based on the
increase or decrease, as the case may be, in NAV of the BVI Company and its subsidiaries (which is the aggregate
value of the total assets of the BVI Company and its subsidiaries less the aggregate amount of the total liabilities
of the BVI Company and its subsidiaries) (excluding any change in valuation of the Lippo Plaza Property) as at the
Listing Date relative to 30 June 2013. The management accounts of the BVI Company and its subsidiaries will be
used to prepare the Completion Financial Statements. The Completion Financial Statements will be prepared by the
BVI Holding Company and reviewed by the Reporting Auditors.
2 The aggregate purchase consideration for the Lippo Plaza Property is based on an exchange rate of S$1.00 :
HK$6.1275 and comprises (i) the purchase consideration payable to LCR under the Tecwell Share Purchase
Agreement for the entire issued share capital in the BVI Company, (ii) the repayment of the Existing Offshore Facility,
and (iii) the refinancing of the Existing Onshore Facility.
3 There is no equivalent business tax in Singapore. For the Lippo Plaza Property, according to the relevant business and
property-related taxes in the PRC, business tax (including other surcharges) is levied on 5.65% of Gross Revenue.
122
Gross Rental Income
Gross Rental Income for each tenant consists of:
Base Rent, being rental income received after taking into account leasing incentives such
as rent rebates and rent-free periods where applicable, but excluding Turnover Rent (as
defined herein), Service Charge and other income, where applicable;
Service Charge, which is a contribution paid by tenants towards covering the operation
and property maintenance expenses of the Properties; and
Turnover Rent, which is generally calculated as a pre-determined percentage of the
tenants gross turnover. In some cases, Turnover Rent may be subject to certain thresholds
before it is payable, and the applicable percentage may vary with the turnover achieved.
For the purposes of this section Managements Discussion and Analysis of Financial Condition
and Results of Operations, Gross Rental Income is adjusted for rent-free incentives amortised
over the lease periods. Turnover Rent are payable by retail tenants only.
Service charge
Service Charge is a contribution paid by tenants towards covering the operation and property
maintenance expenses of the Properties. The amount of Service Charge levied on the tenants at
each Property is dependent on market rates of comparable properties and consideration for actual
operating expenses for the Properties. Under the current lease agreements, any revision in the
Service Charge is subject to notification in writing to the tenants.
For the Lippo Plaza Property, the amount of Service Charge levied on the tenants is paid directly
by the tenants to the local property manager, who is engaged by the PRC Company to provide
property management and operational services.
Other income
Other income comprises car park revenue, and other income attributable to the operation of the
Properties, including items such as additional air-conditioning, chilled water supply and income
from designated space used by tenants.
Business tax for the Lippo Plaza Property
Business tax (including other surcharges) is levied on 5.65% of Gross Revenue with respect to the
Lippo Plaza Property.
(See Taxation PRC Taxation for further details.)
A table highlighting the split of Gross Rental Income between Base Rent, Service Charge and
Turnover Rent for the Relevant Period is as follows:
FY2011 FY2012
Nine Months Ended
30 September 2012
Nine Months Ended
30 September 2013
S$000 S$000 S$000 S$000
Base Rent 32,854 56,898 42,441 45,733
Turnover Rent 2,143 1,659 1,300 962
Service Charge 1,742 5,043 3,742 4,179
Gross Rental
Income 36,739 63,600 47,483 50,874
123
FY2011 FY2012
Nine Months Ended
30 September 2012
Nine Months Ended
30 September 2013
% % % %
Base Rent 89.4 89.5 89.4 89.9
Turnover Rent 5.8 2.6 2.7 1.9
Service Charge 4.8 7.9 7.9 8.2
Gross Rental
Income 100.0 100.0 100.0 100.0
PROPERTY OPERATING EXPENSES
Property operating expenses consist of (i) property-related taxes, (ii) property management fee
and (iii) other property operating expenses.
Property-related taxes
Property-related taxes for the OUE Bayfront Property
Property tax is payable at 10.0% of the total of base rent, turnover rent, car park income and
income from designated space used by tenants.
Property-related taxes for the Lippo Plaza Property
Real estate tax is payable at 12.0% of the total of base rent, turnover rent, car park income and
income from designated space used by tenants.
(See Taxation PRC Taxation for further details.)
Property management fee
Pursuant to the Master Property Management Agreement, the Property Manager is entitled to the
following property management fee for each property of OUE C-REIT under its management
(which, as at the Listing Date, will comprise the OUE Bayfront Property only):
In respect of property management services, (a) 2.0% per annum of Gross Revenue for the
relevant property, and (b) 2.0% per annum of Net Property Income for the relevant property
(calculated before accounting for the property management fee in that financial period); and
In respect of lease management services, 0.5% per annum of the Net Property Income of the
relevant property (calculated before accounting for the property management fee in that
financial period).
(See Overview Certain Fees and Charges for the fees and charges payable by OUE C-REIT
in connection with the establishment and on-going management and operation of OUE C-REIT for
further details.)
Other property operating expenses
Operating and maintenance expenses relate to costs incurred for the upkeep of the Properties,
including cleaning, security, repair and maintenance, reimbursable staff costs, insurance as well
as other general and administrative expenses. For the Lippo Plaza Property, operating and
maintenance expenses are paid out from the service charge received by the local property
manager.
124
Marketing expenses relate to the costs incurred in marketing, advertising and promoting the
Properties.
Other operating expenses incurred for the Lippo Plaza Property include the cost of the centre
management team, contribution of service charge on vacant units to the local property manager
and leasing commission expense applicable to each new tenant leased up.
NET PROPERTY INCOME
The Net Property Income of OUE C-REIT for the Relevant Period is as follows:
FY2011 FY2012
Nine Months Ended
30 September 2012
Nine Months Ended
30 September 2013
S$000 S$000 S$000 S$000
The OUE Bayfront
Property 8,504 34,183 25,273 27,559
The Lippo Plaza
Property 16,649 16,804 12,887 12,866
Net Property
Income 25,153 50,987 38,160 40,425
TRUST EXPENSES
OUE C-REITs trust expenses comprise mainly:
the Managers management fees;
the Trustees fees;
finance costs; and
other expenses.
Managers Management Fee
Under the OUE C-REIT Trust Deed, the Manager is entitled to:
a Base Fee of 0.3% per annum (or such lower percentage as may be determined by the
Manager in its absolute discretion) of the value of the Deposited Property; and
a Performance Fee of 25.0% per annum of the difference in DPU in a financial year with the
DPU in the preceding full financial year (calculated before accounting for the Performance
Fee but after accounting for the Base Fee in each financial year) multiplied by the weighted
average number of Units in issue for such financial year.
The Performance Fee is payable if the DPU in any financial year exceeds the DPU in the preceding
full financial year, notwithstanding that the DPU in the financial year in which the Performance Fee
is payable may be less than the DPU in the financial year prior to any preceding full financial year.
Any increase in the rate or any change in the structure of the Managers management fee must
be approved by an Extraordinary Resolution of Unitholders passed at a Unitholders meeting duly
convened and held in accordance with the provisions of the Trust Deed.
125
For the purposes of the Unaudited Pro Forma Financial Information, it is assumed that 100.0% of
the Managers management fees were paid in the form of Units.
(See The Manager and Corporate Governance OUE C-REIT Fees Payable to the Manager
for further details.)
Trustees Fee
The Trustees fee shall not exceed 0.1% per annum of the value of the Deposited Property, subject
to a minimum of S$15,000 per month, excluding out-of-pocket expenses and GST in accordance
with the Trust Deed, and is presently charged on a scaled basis of up to 0.02% per annum of the
value of the Deposited Property. The Trustees fee is accrued daily and paid monthly in arrears in
accordance with the Trust Deed. The Trustee will also be paid a one-time inception fee as may be
agreed between the Manager and the Trustee, subject to a maximum of S$60,000.
(See The Formation and Structure of OUE C-REIT The Trustee Trustees fee for further
details.)
Finance Costs
Finance costs consist of interest expense, commitment fee, legal fees and upfront debt
arrangement fees incurred in relation to the Facilities. Debt-related transaction costs are
amortised over the term of the Facilities.
Other Expenses
Other expenses of OUE C-REIT include recurring trust expenses such as annual listing fees, legal
fees, registry and depository charges, accounting, audit and tax advisers fees, credit rating
agency fee, postage, printing and stationery costs, costs associated with the preparation of annual
reports, investor communications and marketing costs and other miscellaneous expenses.
TAXES
Taxes comprise:
PRC withholding tax; and
PRC income tax.
(See Taxation PRC Taxation for further details regarding taxes.)
COMPARISON OF OUE C-REITS PERFORMANCE
FY2012 over FY2011
Gross Revenue
The Gross Revenue of the Properties increased by approximately 79.5% or S$29.0 million to
S$65.5 million in FY2012 from S$36.5 million in FY2011. Gross Revenue from the OUE Bayfront
Property and the Lippo Plaza Property contributed 97.2% and 2.8%, respectively, to this increase.
This was primarily due to the OUE Bayfront Property obtaining its TOP in 2011 and revenue only
commencing March 2011. Occupancy had progressively increased between the two years.
(See General Commentary on the Performance of the Properties FY2012 over FY2011 for
further details on the factors contributing to the improvement in performance of the Properties.)
126
Property operating expenses
Property operating expenses increased by 27.2% or S$3.1 million to S$14.5 million in FY2012
from S$11.4 million in FY2011. This was primarily due to higher utility costs, property taxes and
property management fees. As the Gross Revenue and occupancy rate for the OUE Bayfront
Property had increased from March 2011, this led to a corresponding increase in utility costs,
property taxes and property management fees.
Net Property Income
The Net Property Income of the Properties increased significantly by S$25.8 million to S$51.0
million in FY2012 from S$25.2 million in FY2011 as a result of the above factors.
Managers Management Fee
The Management Fee of the Manager increased significantly by S$6.1 million to S$11.1 million in
FY2012 from S$5.0 million in FY2011. This is primarily because no Performance Fee was
assumed for FY2011, whereas the Managers Performance Fee earned for FY2012 was S$6.2
million.
Trustees fee
The Trustees fee remained relatively stable from FY2011 to FY2012 at S$0.3 million as the
underlying value of the Deposited Property remained substantially unchanged.
Finance costs
Finance costs increased slightly by 4.5% or S$0.7 million to S$16.1 million in FY2012 from S$15.4
million in FY2011 primarily due to higher interest rate.
Other expenses
Other expenses remained relatively stable from FY2011 to FY2012 at S$2.6 million.
Total return for the year
Total return for the year increased significantly by S$17.9 million to S$17.3 million in FY2012 from
a loss of S$0.6 million in FY2011 primarily due to the higher income contributed by the OUE
Bayfront Property.
(See General Commentary on the Performance of the Properties FY2012 over FY2011 for
further details on the factors contributing to the improvement in performance of the Properties.)
The nine months ended 30 September 2013 over the nine months ended 30 September 2012
Gross Revenue
The Gross Revenue of the Properties increased by approximately 8.0% or S$3.9 million to S$52.7
million in the nine months ended 30 September 2013 from S$48.8 million in the nine months
ended 30 September 2012. The increase was mainly contributed by the OUE Bayfront Property.
(See General Commentary on the Performance of the Properties The nine months ended 30
September 2013 over the nine months ended 30 September 2012 for further details on the factors
contributing to the improvement in performance of the Properties.)
127
Property Operating Expenses
Property operating expenses increased by 15.0% or S$1.6 million to S$12.3 million in the nine
months ended 30 September 2013 from S$10.7 million in the nine months ended 30 September
2012. This was primarily due to higher property taxes, property maintenance expenses and
property management fees from the OUE Bayfront Property. The higher property maintenance
expenses were due to the commencement of maintenance contracts for various plant and
equipment upon the expiry of the defects liability period under the building construction contract.
Net Property Income
The Net Property Income of the Properties increased by 5.8% or S$2.2 million to S$40.4 million
in the nine months ended 30 September 2013 from S$38.2 million in the nine months ended 30
September 2012 as a result of the above factors.
Managers Management Fee
The Management Fee of the Manager decreased significantly by 54.7% or S$4.7 million to S$3.9
million in the nine months ended 30 September 2013 from S$8.6 million in the nine months ended
30 September 2012. This is primarily due to the higher Performance Fee earned by the Manager
in the nine months ended 30 September 2012. The DPU for the nine months ended 30 September
2012 was significantly higher than the DPU for FY2011 as revenue for the OUE Bayfront Property
only commenced from March 2011.
Trustees fee
The Trustees fee remained relatively stable from the nine months ended 30 September 2012 to
the nine months ended 30 September 2013 as the underlying value of the Deposited Property
remained substantially unchanged.
Finance costs
Finance costs decreased by 6.6% or S$0.8 million to S$11.4 million in the nine months ended 30
September 2013 from S$12.2 million in the nine months ended 30 September 2012 primarily due
to lower interest rates.
Other expenses
Other expenses remained relatively stable from the nine months ended 30 September 2012 to the
nine months ended 30 September 2013 at S$1.9 million.
Total return for the year
Total return for the year increased by 42.5% or S$5.7 million to S$19.1 million in the nine months
ended 30 September 2013 from S$13.4 million in the nine months ended 30 September 2012 as
a result of the above factors.
128
General Commentary on the Performance of the Properties
FY2012 over FY2011
The OUE Bayfront Property
The Gross Revenue and Net Property Income of the OUE Bayfront Property increased
significantly from S$14.5 million in FY2011 to S$42.6 million in FY2012 and from S$8.5 million in
FY2011 to S$34.2 million in FY2012. The building obtained its TOP in 2011 and revenue only
commenced from March 2011. Occupancy had progressively increased between the two years.
The Lippo Plaza Property
The Gross Revenue of the Lippo Plaza Property increased by 3.6% to RMB114.4 million in
FY2012 from RMB110.4 million in FY2011, while the Net Property Income of the Lippo Plaza
Property increased by 0.8% to RMB84.3 million in FY2012 from RMB83.6 million in FY2011.
The key growth for the Lippo Plaza Property was the increase in rental rate between the two years.
Overall average rental rates increased by 2.2% to RMB9.4 per sq m per day in FY2012 as
compared to RMB9.2 per sq m per day in FY2011.
The nine months ended 30 September 2013 over the nine months ended 30 September 2012
The OUE Bayfront Property
The Gross Revenue of the OUE Bayfront Property increased by 12.3% to S$35.5 million in the
nine months ended 30 September 2013 from S$31.6 million in the nine months ended 30
September 2012, while the Net Property Income of the OUE Bayfront Property increased by 9.1%
to S$27.6 million in the nine months ended 30 September 2013 from S$25.3 million in the nine
months ended 30 September 2012.
The key growth for the OUE Bayfront Property was the higher occupancy and rental rates, as the
occupancy rate and rental income continued to increase since the property obtained its TOP in FY2011.
The Lippo Plaza Property
The Gross Revenue of the Lippo Plaza Property decreased marginally by 0.5% to RMB85.3 million
in the nine months ended 30 September 2013 from RMB85.7 million in the nine months ended 30
September 2012, while the Net Property Income of the Lippo Plaza Property decreased by 0.5%
to RMB63.8 million in the nine months ended 30 September 2013 from RMB64.1 million in the nine
months ended 30 September 2012.
The slightly lower Gross Revenue and Net Property Income were partly due to lower occupancy
rate as at 30 September 2013, in comparison to historical occupancy rates. This was due to the
non-renewal of rented space by office tenants, which was in the ordinary course of business.
Liquidity and Capital Resources
Net cash from operations will be OUE C-REITs primary source of liquidity for funding distributions,
servicing of debt, payment of expenses and meeting the working capital and capital expenditure
requirements of OUE C-REIT. Taking into account the Facilities and the rental deposits received, the
Manager is of the opinion that OUE C-REITs working capital is sufficient for its present requirements.
Accounting Policies
For a discussion of the principal accounting policies of OUE C-REIT, see Appendix C, Unaudited
Pro Forma Financial Information for further details.
129
PROFIT FORECAST AND PROFIT PROJECTION
Statements contained in the Profit Forecast and Profit Projection section that are not historical
facts may be forward-looking statements. Such statements are based on the assumptions set forth
in this section of the Prospectus and are subject to certain risks and uncertainties which could
cause actual results to differ materially from the forecast or projected results of the OUE C-REIT
Group. Under no circumstances should the inclusion of such information herein be regarded as a
representation, warranty or prediction with respect to the accuracy of the underlying assumptions
by any of OUE C-REIT, the Manager, the Trustee, the Sponsor, the Sole Financial Adviser, the
Joint Global Coordinators, the Joint Bookrunners or any other person, or that these results will be
achieved or are likely to be achieved. (See Forward-looking Statements and Risk Factors for
further details.) Investors in the Units are cautioned not to place undue reliance on these
forward-looking statements which are made only as of the date of this Prospectus.
None of OUE C-REIT, the Manager, the Trustee, the Sponsor, the Sole Financial Adviser, the
Joint Global Coordinators or the Joint Bookrunners guarantees the performance of OUE
C-REIT, the repayment of capital or the payment of any distributions, or any particular
return on the Units. The forecast and projected yields stated in the following table are
calculated based on:
the Offering Price; and
the assumption that the Listing Date is 1 January 2014.
Such yields will vary accordingly if the Listing Date is not 1 January 2014, or for investors
who purchase Units in the secondary market at a market price that differs from the Offering
Price.
The following table shows the OUE C-REIT Groups Statements of Total Return for the Forecast
Year 2014 and the Projection Year 2015. The financial year end of OUE C-REIT is 31 December.
The Profit Forecast and Profit Projection may be different to the extent that the actual date of
issuance of Units is other than on 1 January 2014, being the assumed date of the issuance of
Units for the Offering. The Profit Forecast and Profit Projection are based on the assumptions set
out below and have been examined by the Reporting Auditors, being KPMG LLP, and should be
read together with the report Reporting Auditors Report on the Profit Forecast and Profit
Projection set out in Appendix A, as well as the assumptions and the sensitivity analysis set out
in this section of the Prospectus.
130
Forecast and Projected Statements of Total Return for the OUE C-REIT Group
The forecast and projected statements of total return for the OUE C-REIT Group are as follows:
Forecast
Year 2014
Projection
Year 2015
(S$000) (S$000)
Gross Revenue [74,417] [76,533]
Property operating expenses
(1)
[(20,087)] [(20,596)]
Net Property Income [54,330] [55,937]
Other income
(2)
[9,629] [8,921]
Amortisation of intangible asset [(6,600)] [(6,600)]
Managers Base Fee [(5,024)] [(5,017)]
Managers Performance Fee [] [(334)]
Trustees fee [(321)] [(321)]
Other expenses [(2,552)] [(2,554)]
Finance costs
(3)
[(17,767)] [(17,767)]
Net income [31,695] [32,265]
Net change in fair value of
investment properties [285,144] []
Total return before income tax [316,839] [32,265]
Income tax expense [(42,172)] [(3,527)]
Total return after income tax but before distribution
adjustments [274,667] [28,738]
Add: Distribution adjustments
(4)
[(227,298)] [19,611]
Income available for distribution
to Unitholders [47,369] [48,349]
Unitholders distribution
From operations
(5)
[35,850] [35,541]
From Unitholders contributions
(5)
[11,519] [12,808]
Total Unitholders distribution [47,369] [48,349]
Weighted average number of Units outstanding at end of
year (000)
(6)
[870,710] [877,171]
Distribution rate (%) [100.0] [100.0]
Distribution per Unit (cents)
(7)
[5.44] [5.51]
Distribution per Unit
(without Income Support) (cents) [4.45] [4.60]
Offering Price (S$/Unit) [0.80] [0.80]
Distribution yield (%) [6.80] [6.89]
Distribution yield
(without Income Support) (%) [5.56] [5.75]
131
Notes:
(1) Includes the property tax in relation to the Lippo Plaza Property which has been provided for based on the Lippo
Plaza Propertys rental income. For the Forecast Year 2014 and the Projection Year 2015, the property tax provided
for amounts to approximately RMB[14.6] million and RMB[15.4] million, respectively.
(2) Other income comprises Income Support relating to the top-up payments from the Sponsor pursuant to the Deed
of Income Support.
(3) Finance costs include interest expense and amortisation of debt-related transaction costs.
(4) Comprises non-tax deductible and other adjustments, including 100.0% of the Managers Base Fee and
Performance Fee payable or to be paid in Units for the Forecast Year 2014 and the Projection Year 2015, net change
in fair value of investment properties, amortisation of debt-related transaction costs, trustee fees, depreciation
expenses, amortisation of intangible asset in relation to the Income Support received and receivable by OUE
C-REIT, and deferred tax expense.
(5) It is assumed that there will be a time lag of nine months in the repatriation of dividends from the BVI Holding
Company due to the time which may be required for tax and regulatory clearance in the PRC. However, the actual
time required may vary on a case-by-case basis. Notwithstanding this, any such time lag would not impact OUE
C-REITs ability to make distributions to Unitholders as OUE C-REIT would be able to draw down on its credit
facilities as an interim measure to cover any difference as a result of the time lag, where required. Such distributions
would be classified as capital distributions for tax purposes.
(6) Includes the increase in number of Units in issue as a result of the payment of 100.0% of the Managers Base Fee
and Performance Fee for the relevant period in the form of Units issued at the Offering Price of S$0.80.
(7) Assuming a Listing Date of 1 January 2014. For the avoidance of doubt, Unitholders who have subscribed for Units
pursuant to the Offering will not be entitled to any distributions made for the period from 10 October 2013 (the date
of constitution of OUE C-REIT) and ending on the day immediately preceding the Listing Date.
ASSUMPTIONS
The Manager has prepared the Profit Forecast and Profit Projection on the following assumptions.
The Manager considers these assumptions to be appropriate and reasonable as at the date of this
Prospectus. However, investors should consider these assumptions as well as the Profit Forecast
and Profit Projection and make their own assessment of the future performance of OUE C-REIT.
Gross Revenue and Net Property Income Contribution of Each Property
The forecast and projected contributions of the OUE Bayfront Property and the Lippo Plaza
Property to Gross Revenue are as follows:
Contribution to Gross Revenue Forecast Year 2014 Projection Year 2015
(S$000) (%) (S$000) (%)
OUE Bayfront Property [50,418] [67.8] [51,260] [67.0]
Lippo Plaza Property [23,999] [32.2] [25,273] [33.0]
Gross Revenue [74,417] [100.0] [76,533] [100.0]
The forecast and projected contributions of the OUE Bayfront Property and the Lippo Plaza
Property to Net Property Income are as follows:
Contribution to Net Property Income Forecast Year 2014 Projection Year 2015
(S$000) (%) (S$000) (%)
OUE Bayfront Property [36,896] [67.9] [37,250] [66.6]
Lippo Plaza Property [17,434] [32.1] [18,687] [33.4]
Net Property Income [54,330] [100.0] [55,937] [100.0]
132
Gross Revenue
Gross Revenue comprises:
Gross Rental Income (includes rental derived from office and retail); and
other income earned from the Properties,
(net of business tax for the Lippo Plaza Property
1
).
The Gross Rental Income and other income attributable to each of the Properties are as follows:
OUE Bayfront Property
Gross Revenue Breakdown Forecast Year 2014 Projection Year 2015
(S$000) (%) (S$000) (%)
Gross Rental Income [47,371] [94.0] [48,080] [93.8]
Other income [3,047] [6.0] [3,180] [6.2]
Gross Revenue [50,418] [100.0] [51,260] [100.0]
Lippo Plaza Property
Gross Revenue Breakdown Forecast Year 2014 Projection Year 2015
(S$000) (%)
2
(S$000) (%)
2
Gross Rental Income [24,997] [98.3] [26,334] [98.3]
Other income [439] [1.7] [453] [1.7]
Less: Business tax [(1,437)] [] [(1,514)] []
Gross Revenue [23,999] [100.0] [25,273] [100.0]
Gross Rental Income
Gross Rental Income consists of:
Base Rent;
Turnover Rent; and
Service Charge (where applicable).
1 There is no equivalent business tax in Singapore. For the Lippo Plaza Property, according to the relevant business
and property-related taxes in the PRC, business tax (including other surcharges) is levied on 5.65% of Gross
Revenue.
2 Displayed as Gross Rental Income or other income as a percentage of the sum of Gross Rental Income and other
income (without adjustment for business tax).
133
The percentage of projected Gross Rental Income attributable to committed leases (including
legally binding letters of offer which have been accepted) for the Properties as at 30 September
2013, are estimated as follows:
Percentage of Gross Rental Income
attributable to committed leases as at
30 September 2013 (%) Forecast Year 2014 Projection Year 2015
OUE Bayfront Property [83.7] [45.9]
Lippo Plaza Property [82.4] [45.6]
The Manager has assumed the following in arriving at the forecast Base Rent for the tenancies of
the Properties for the Forecast Year 2014 and the Projection Year 2015:
Rents payable under committed tenancies for the Forecast Year 2014 and the Projection
Year 2015; and
Expiring leases in the Forecast Year 2014 and the Projection Year 2015 are assumed to be
renewed or recontracted based upon:
Negotiated rates; and
The Managers assumed renewal rates for select leases (new leases or lease renewals)
that have not been negotiated (taking into account comparable leases for tenancies that
have recently been negotiated, the last contracted rate, the location and size of each
lettable area, the effect of competing properties, assumed tenant retention rates on
lease expiry, likely market conditions, inflation levels and tenant demand levels).
Lease renewals, vacancy allowance and occupancy rates
(A) The OUE Bayfront Property
For the OUE Bayfront Property, office leases expiring in the Forecast Year 2014 (32.2% of
committed office NLA) and the Projection Year 2015 (29.0% of committed office NLA), lease
renewals, vacancy allowance and occupancy rates are estimated as follows:
Committed leases (including legally binding letters of offer which have been accepted);
Leases replaced with new tenants assumed that leases representing 4.9% of
committed office NLA (for the Forecast Year 2014) and 0.6% of committed office NLA
(for the Projection Year 2015) of expiring leases will be replaced with new tenants and
subject to two months down-time and an additional two months of fit-out period; and
Renewed leases assumed that all other expiring leases representing 27.3% of
committed office NLA (for the Forecast Year 2014) and 28.4% of committed office NLA
(for the Projection Year 2015) will be renewed with no vacancy period.
For the OUE Bayfront Property, retail leases expiring in the Forecast Year 2014 (2.5% of
committed retail NLA) and the Projection Year 2015 (1.2% of committed retail NLA), lease
renewals, vacancy allowance and occupancy rates are estimated as follows:
Committed leases (including legally binding letters of offer which have been accepted);
134
Leases replaced with new tenants assumed that leases representing 2.5% of
committed retail NLA (for the Forecast Year 2014), subject to one months down-time
and an additional one month of fit-out period, and assumed that there will be no leases
replaced with new tenants (for the Projection Year 2015); and
Renewed leases assumed that there will be no renewed leases (for the Forecast Year
2014), and 1.2% of committed retail NLA (for the Projection Year 2015) will be renewed
with no vacancy period.
(B) The Lippo Plaza Property
For the Lippo Plaza Property, office leases expiring in the Forecast Year 2014 (42.8% of
committed office NLA) and the Projection Year 2015 (30.4% of committed office NLA), lease
renewals, vacancy allowance and occupancy rates are estimated as follows:
Committed leases (including legally binding letters of offer which have been accepted);
Leases replaced with new tenants assumed that leases representing 33.2% of
committed office NLA (for the Forecast Year 2014) and 20.5% of committed office NLA
(for the Projection Year 2015) of expiring leases will be replaced with new tenants and
subject to two months down-time and an additional one month of rent-free period; and
Renewed leases assumed that all other expiring leases representing 9.6% of
committed office NLA (for the Forecast Year 2014) and 9.9% of committed office NLA
(for the Projection Year 2015) will be renewed with no vacancy period.
For the Lippo Plaza Property, retail leases expiring in the Forecast Year 2014 (18.5% of
committed retail NLA) and the Projection Year 2015 (28.1% of committed retail NLA), lease
renewals, vacancy allowance and occupancy rates are estimated as follows:
Committed leases (including legally binding letters of offer which have been accepted);
Leases replaced with new tenants assumed that leases representing 3.5% of
committed retail NLA (for the Forecast Year 2014) and 19.4% of committed retail NLA
(for the Projection Year 2015) of expiring leases will be replaced with new tenants and
subject to three months down-time and an additional one month of rent-free period; and
Renewed leases assumed that all other expiring leases representing 15.0% of
committed retail NLA (for the Forecast Year 2014) and 8.7% of committed retail NLA (for
the Projection Year 2015) will be renewed with no vacancy period.
The occupancy rate as at 30 September 2013 and the average occupancy rates for the Forecast
Year 2014 and the Projection Year 2015 for the Properties are estimated as follows:
Occupancy Rates (%)
Occupancy
Rate as at
30 September
2013
Average
Occupancy
Rate for the
Forecast Year
2014
Average
Occupancy
Rate for the
Projection Year
2015
OUE Bayfront Property [96.1] [95.1] [96.5]
Lippo Plaza Property [88.2] [91.2] [96.7]
IPO Portfolio [92.0] [93.1] [96.6]
135
Other income earned from the Properties
Other income comprises car park revenue, and other income attributable to the operation of the
Properties, including items such as license fees, profit rent, temporary air-conditioning and chilled
water supply. The assessment of other income is based on existing agreements, historical income
collections and the Managers assessment of the Properties.
Relevant business and property-related taxes for the Lippo Plaza Property
According to the relevant business and property-related taxes in the PRC, business tax (including
other surcharges) is levied on 5.65% of Gross Revenue.
Other Income
The Sponsor will provide Income Support to OUE C-REIT for a period of up to five years from the
Listing Date. Under the Deed of Income Support, the Income Support is calculated as the shortfall
between the target Gross Rental Income of the OUE Bayfront Property in each quarter and the
actual Gross Rental Income received from committed tenancy agreements.
The Manager has projected Income Support of S$[9.6] million for the Forecast Year 2014 and
S$[8.9] million for the Projection Year 2015.
Property Operating Expenses
Property operating expenses consist of:
property management fees;
property-related taxes; and
other property operating expenses (including operating and maintenance expenses, energy
and utilities costs and marketing expenses).
A summary of the assumptions which have been used in calculating the property operating
expenses is set out below.
Property management fees
The following property management fee is payable to the Property Manager for each property of
OUE C-REIT under its management (which, as at the Listing Date, will comprise the OUE Bayfront
Property only):
In respect of property management services, (a) 2.0% per annum of Gross Revenue for the
relevant property, and (b) 2.0% per annum of Net Property Income for the relevant property
(calculated before accounting for the property management fee in that financial period); and
In respect of lease management services, 0.5% per annum of the Net Property Income of the
relevant property (calculated before accounting for the property management fee in that
financial period).
The property management fee is effectively equivalent to [2.7]% of Gross Revenue of OUE
C-REIT for each of the Forecast Year 2014 and the Projection Year 2015.
No property management fee has been assumed for the Lippo Plaza Property as such fee is paid
directly to the local property manager by tenants of the Lippo Plaza Property.
(See Certain Agreements Relating to OUE C-REIT and the Properties for further details.)
136
Property-related taxes
In relation to the OUE Bayfront Property, the Manager has assumed that property tax will remain
at 10.0% of the total of base rent, turnover rent, car park income, Income Support and income from
designated space used by tenants, and that no property tax refund is given by the tax authorities
for the Forecast Year 2014 and the Projection Year 2015.
In relation to the Lippo Plaza Property, the Manager has assumed that real estate tax will be
payable at 12.0% of the total of base rent, turnover rent, car park income and income from
designated space used by tenants. Land use tax is levied at the prevailing rate of RMB30.0 per
sq m of occupied urban land area.
Other property operating expenses
Operating and maintenance expenses relate to costs incurred for the upkeep of the Properties,
including cleaning, security, repair and maintenance, staff costs, insurance as well as other
general and administrative expenses. These expenses are estimated after taking into
consideration the actual historical operating and maintenance costs, and expected inflation.
Energy and utilities costs are estimated based on the historical rates, expected rate increments
and expected utilisation.
Marketing expenses relate to the costs incurred in marketing, advertising and promoting the
Properties. Such expenses are estimated after taking into consideration the actual historical
expenses and expected inflation.
For the Lippo Plaza Property, there is an additional leasing commission expense applicable to
each new tenant leased up payable to the respective letting agent, for an amount of up to two
months of contracted rental income.
Finance Costs
Finance costs consist of interest expense and amortisation of debt-related transaction costs.
OUE C-REIT has put in place the Facilities, on a secured basis, comprising (i) the Term Loan
Facilities with loan maturities of three to five years of S$580.0 million, comprising (a) a five-year
term loan facility of S$280.0 million and (b) a three-year term loan facility of S$300.0 million, (ii)
the Revolving Credit Facility, comprising a three-year revolving credit facility of S$100.0 million,
and (iii) the New Onshore Facility, with a loan maturity of three years of RMB320.0 million. The
amount drawn down on the Listing Date will be S$[631.3] million and the New Onshore Facility of
up to RMB320.0 million (approximately S$[66.9] million) will be drawn down on the next Business
Day following the Listing Date (based on the Offering Price). The Manager has assumed the
average effective interest rate for the Forecast Year 2014 and the Projection Year 2015 will be
approximately [2.5]% per annum, including amortisation of debt-related transaction costs and
interest expense.
(See Capitalisation and Indebtedness Indebtedness and Strategy Capital and Risk
Management Strategy for further details.)
137
Income Tax Expense
The following taxes have been taken into account in the Forecast Year 2014 and the Projection
Year 2015:
PRC withholding tax; and
PRC income tax.
(See Taxation PRC Taxation for further details regarding taxes.)
Managers Management Fee
Under the OUE C-REIT Trust Deed, the Manager is entitled to a Base Fee of 0.3% per annum (or
such lower percentage as may be determined by the Manager in its absolute discretion) of the
value of the Deposited Property and a Performance Fee of 25.0% per annum of the difference in
DPU in a financial year with the DPU in the preceding full financial year (calculated before
accounting for the Performance Fee but after accounting for the Base Fee in each financial year)
multiplied by the weighted average number of Units in issue for such financial year. The Income
Support and its related tax effect is excluded in the computation of the DPU for the purposes of
determining the Performance Fee for the Projection Year 2015.
The Performance Fee is payable if the DPU in any financial year exceeds the DPU in the
preceding full financial year, notwithstanding that the DPU in the financial year in which the
Performance Fee is payable may be less than the DPU in the financial year prior to any preceding
full financial year.
No Performance Fee is payable for the period from and including the date of establishment of OUE
C-REIT to 31 December 2013.
For the Forecast Year 2014, the difference in DPU shall be the difference in actual annualised
DPU in such financial year with the forecast annualised DPU for the Forecast Year 2014 as set out
in the Profit Forecast and Profit Projection. No Performance Fee has been assumed in the
Forecast Year 2014.
The Manager has agreed to receive 100.0% of its Management Fee in the form of Units for the
period from the Listing Date to the end of the Forecast Year 2014 and for the Projection Year 2015.
The portion of the Base Fee payable in the form of Units shall be payable quarterly in arrears and
the portion of the Performance Fee payable in the form of Units shall be payable annually in
arrears. The Manager has assumed that such Units are issued at the Offering Price.
(See Management and Corporate Governance OUE C-REIT Fees Payable to the Manager
for further details.)
Trustees Fee
The Trustees fee shall not exceed 0.1% per annum of the value of the Deposited Property, subject
to a minimum of S$15,000 per month, excluding out-of-pocket expenses and GST in accordance
with the Trust Deed, and is presently charged on a scaled basis of up to 0.02% per annum of the
value of the Deposited Property. The Trustees fee is accrued daily and paid monthly in arrears in
accordance with the Trust Deed. The Trustee will also be paid a one-time inception fee as may be
agreed between the Manager and the Trustee, subject to a maximum of S$60,000.
(See The Formation and Structure of OUE C-REIT The Trustee Trustees Fee for further
details.)
138
Amortisation of Intangible Assets
The aggregate Income Support is recorded at cost as an intangible asset and amortised on a
systematic basis for a period of five years from the Listing Date which is the period for which the
Income Support is provided. The amortisation expense does not have impact on the income
available for distribution to Unitholders.
Other Expenses
Other expenses include recurring operating expenses such as annual listing fees, auditing and tax
advisers fees, registry fees, valuation costs, costs associated with the preparation and
distribution of reports to Unitholders, investor communication costs, debt facility agent fees, credit
rating maintenance fees, operating costs for OUE C-REIT and other miscellaneous expenses.
In assessing these amounts, the Manager has considered factors likely to influence the level of
trust fees, charges and costs including the Managers estimates of OUE C-REITs market
capitalisation, gross assets, number of Unitholders, property values and inflation rates.
Foreign Exchange Rates
The Manager has assumed the following exchange rates for the Profit Forecast and Profit
Projection:
Foreign Exchange Rate Forecast Year 2014 Projection Year 2015
Renminbi/Singapore Dollar 4.7830 4.7830
Capital Expenditure
Capital expenditure incurred is expected to be capitalised as part of the Deposited Property. The
following table sets out the forecast and projected capital expenditure:
Capital Expenditure
Forecast Year 2014
(S$000)
Projection Year 2015
(S$000)
OUE Bayfront Property [1,218] [390]
Lippo Plaza Property [5,363] [2]
TOTAL [6,581] [392]
Properties
The aggregate value of the Properties as at 30 September 2013 was approximately S$1,623.6
1
million, based on the higher of the two independent valuations undertaken for each Property
(inclusive of Income Support). For the purposes of the Profit Forecast and Profit Projection, the
Manager has assumed that there is no change in the valuation of the Properties except to the
extent associated with capitalised capital expenditure.
Any subsequent revaluation of the Properties will not affect the forecast and projected DPU for the
Forecast Year 2014 and the Projection Year 2015 as OUE C-REITs distributions are based on
taxable income, which excludes gains or losses upon revaluation of the Properties.
1 Based on the higher of the two independent appraisal values for the Properties, an exchange rate of S$1.00:
RMB4.7830 and inclusive of Income Support.
139
Issue Costs
The costs associated with the Offering will be paid for by OUE C-REIT. These costs are deducted
from net assets attributable to Unitholders and have no impact on the income available for
distribution to Unitholders.
Accounting Standards
The Manager has assumed that there will be no change in the applicable accounting standards or
other financial reporting requirements that may have a material effect on the forecast or projected
net income.
Other Assumptions
The Manager has made the following additional assumptions in preparing the Profit Forecast and
Profit Projection:
the initial property portfolio of OUE C-REIT remains unchanged for the Forecast Year 2014
and the Projection Year 2015;
no further capital will be raised for OUE C-REIT during the Forecast Year 2014 and the
Projection Year 2015;
all the lease agreements in relation to the Properties are enforceable and will be performed
in accordance with their terms during the Forecast Year 2014 and the Projection Year 2015;
the Facilities are available for the Forecast Year 2014 and the Projection Year 2015;
the Tax Rulings remain in force, the Foreign-Sourced Income Tax Exemption Ruling will be
extended to at least 31 December 2015 and the terms and conditions of the Tax Rulings are
complied with;
there will be no changes in the applicable tax legislation for the Forecast Year 2014 and the
Projection Year 2015;
100.0% of OUE C-REITs Distributable Income is distributed for the Forecast Year 2014 and
the Projection Year 2015. For the avoidance of doubt, OUE C-REITs distribution policy is to
distribute 100.0% of its Distributable Income for the period from the Listing Date to 31
December 2015 and thereafter to distribute at least 90.0% of its Specified Taxable Income;
there will be no pre-termination of any committed leases as at the Listing Date;
there will be no development projects undertaken for the Forecast Year 2014 and the
Projection Year 2015;
the GST charged on issue expenses will be recovered in the quarter immediately following
when they are incurred; and
where derivative financial instruments are undertaken to hedge against interest rate and/or
currency movements, there is no change in fair value of such instruments throughout the
Forecast Year 2014 and the Projection Year 2015.
140
SENSITIVITY ANALYSIS
The forecast and projected distributions included in this Prospectus 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 set out in Risk Factors.
Investors should be aware that future events cannot be predicted with any certainty and deviations
from the figures forecast or projected in this Prospectus are to be expected. To assist investors in
assessing the impact of these assumptions on the Forecast and Projections, a series of tables
demonstrating the sensitivity of the distribution yield to changes in the principal assumptions are set
out below.
The sensitivity analysis is intended only as a guide. Variations in actual performance could exceed
the ranges shown. Movements in other variables may offset or compound the effect of a change
in any variable beyond the extent shown.
Gross Rental Income
Changes in the Gross Rental Income will impact the Net Property Income of OUE C-REIT and,
consequently, the distribution yield. The assumptions for Gross Rental Income have been set out
earlier in this section. The effect of variations in the Gross Rental Income on the distribution yield
is set out below:
With Income Support
Distribution yield pursuant to changes in
Gross Rental Income (%)
Based on the Offering Price
Forecast Year 2014 Projection Year 2015
5.0% above base case [6.92%] [7.01%]
Base case [6.80%] [6.89%]
5.0% below base case [6.68%] [6.77%]
Without Income Support
Distribution yield pursuant to changes in
Gross Rental Income (%)
Based on the Offering Price
Forecast Year 2014 Projection Year 2015
5.0% above base case [5.98%] [6.17%]
Base case [5.56%] [5.75%]
5.0% below base case [5.13%] [5.32%]
141
Property Operating Expenses
Changes in property operating expenses will impact the Net Property Income of OUE C-REIT and,
consequently, the distribution yield. The assumptions for property expenses have been set out
earlier in this section. The effect of variations in the property operating expenses on the
distribution yield is set out below:
With Income Support
Distribution yield pursuant to changes in
Property operating expenses (%)
Based on the Offering Price
Forecast Year 2014 Projection Year 2015
5.0% above base case [6.66%] [6.74%]
Base case [6.80%] [6.89%]
5.0% below base case [6.94%] [7.04%]
Without Income Support
Distribution yield pursuant to changes in
Property operating expenses (%)
Based on the Offering Price
Forecast Year 2014 Projection Year 2015
5.0% above base case [5.42%] [5.61%]
Base case [5.56%] [5.75%]
5.0% below base case [5.69%] [5.89%]
Finance Costs
Changes in interest rates will impact the finance costs and net income of OUE C-REIT and,
consequently, the distribution yield. The effect of variations in finance costs on the distribution
yield is set out below:
With Income Support
Distribution yield pursuant to changes in
Finance Costs (%)
Based on the Offering Price
Forecast Year 2014 Projection Year 2015
25 basis points increase in the
applicable interest rate above base
case [6.78%] [6.87%]
Base case [6.80%] [6.89%]
25 basis points decrease in the
applicable interest rate below base
case [6.82%] [6.91%]
142
Without Income Support
Distribution yield pursuant to changes in
Finance Costs (%)
Based on the Offering Price
Forecast Year 2014 Projection Year 2015
25 basis points increase in the
applicable interest rate above base
case [5.54%] [5.73%]
Base case [5.56%] [5.75%]
25 basis points decrease in the
applicable interest rate below base
case [5.57%] [5.76%]
Managers Management Fee
Assuming that the Managers management fees were paid in cash for the Forecast Year 2014 and
the Projection Year 2015, the impact on the distribution yield would be as follows:
With Income Support
Distribution yield pursuant to changes in
Managers Management Fee (%)
Based on the Offering Price
Forecast Year 2014 Projection Year 2015
Base case (100% of Management
Fees payable in Units) [6.80%] [6.89%]
50% of Management Fees
payable in Units [6.46%] [6.55%]
0% of Management Fees
payable in Units [6.11%] [6.19%]
Without Income Support
Distribution yield pursuant to changes in
Managers Management Fee (%)
Based on the Offering Price
Forecast Year 2014 Projection Year 2015
Base case (100% of Management
Fees payable in Units) [5.56%] [5.75%]
50% of Management Fees
payable in Units [5.21%] [5.40%]
0% of Management Fees
payable in Units [4.86%] [5.04%]
143
Foreign Exchange Rates
Changes in the foreign exchange rate for Renminbi to Singapore dollars will impact the
Distributable Income of OUE C-REIT and consequently, the distribution yield, as the distributions
are paid in Singapore dollars. The assumptions for foreign exchange rates have been set out
above in Profit Forecast and Profit Projection Assumptions Foreign Exchange Rates. The
effect of variations in foreign exchange rates on the distribution yield is set out below:
With Income Support
Distribution yield pursuant to changes in
Foreign Exchange Rates (%)
Based on the Offering Price
Forecast Year 2014 Projection Year 2015
5.0% S$ appreciation [6.72%] [6.80%]
Base case [6.80%] [6.89%]
5.0% S$ depreciation [6.89%] [6.99%]
Without Income Support
Distribution yield pursuant to changes in
Foreign Exchange Rates (%)
Based on the Offering Price
Forecast Year 2014 Projection Year 2015
5.0% S$ appreciation [5.47%] [5.65%]
Base case [5.56%] [5.75%]
5.0% S$ depreciation [5.65%] [5.85%]
144
STRATEGY
INVESTMENT STRATEGY
OUE C-REIT is a Singapore REIT established with the principal investment strategy of investing,
directly or indirectly, in a portfolio of income-producing real estate used primarily for commercial
purposes (including real estate used primarily for office and/or retail purposes) in financial and
business hubs within and outside of Singapore, as well as real estate-related assets.
In accordance with the requirements of the Listing Manual, the Managers investment strategy for
OUE C-REIT will be adhered to for at least three years following the Listing Date. The Managers
investment strategy for OUE C-REIT may only be changed within three years from the Listing Date
if an Extraordinary Resolution is passed at a meeting of Unitholders duly convened and held in
accordance with the provisions of the Trust Deed.
KEY OBJECTIVES
The Managers key financial objectives are to provide Unitholders with an attractive rate of return
on their investment through regular and stable distributions to Unitholders and to achieve
long-term growth in DPU and NAV per Unit, while maintaining an appropriate capital structure for
OUE C-REIT.
KEY STRATEGIES
The Manager plans to achieve its key objectives through the following strategies:
Active asset management strategy The Manager will actively manage OUE C-REITs
property portfolio and strive to achieve growth in revenue and Net Property Income and
maintain high occupancy levels. The Manager will also look to drive organic growth and build
long-lasting relationships with the tenants of OUE C-REITs properties. Its focus will be on
regular engagement with tenants, effective marketing of vacant units and achieving early
renewal commitments.
Active asset enhancement strategy The Manager will seek property enhancement
opportunities to support and enhance organic growth.
Acquisition growth strategy by leveraging on the Sponsors experience and supported
by the Sponsor ROFR The Manager will achieve portfolio growth through the acquisition
of quality income-producing commercial properties that provide attractive cash flows and
yields and which fit within OUE C-REITs investment strategy to enhance returns to
Unitholders and improve future income and capital growth.
Capital and risk management strategy The Manager will endeavour to employ an
appropriate mix of debt and equity in financing acquisitions and asset enhancements, and
utilise hedging strategies where appropriate to manage interest rate volatility and foreign
exchange exposure for OUE C-REIT while maintaining a strong and robust balance sheet.
145
ACTIVE ASSET MANAGEMENT STRATEGY
The Managers strategy for organic growth is to actively manage OUE C-REITs properties and
build strong and long-lasting relationships with tenants by providing value-added property-related
services. Through such active asset management, the Manager seeks to maintain high tenant
retention and occupancy levels and achieve stable rental growth, as well as minimise the costs
associated with marketing and leasing space to new tenants. OUE C-REIT will benefit from the
Sponsors experience in asset management and asset enhancement. As such, the Manager and
the Property Manager, being wholly-owned subsidiaries of the Sponsor, will allow execution of a
coordinated strategy to ensure consistently high levels of operational performance.
The Manager will work closely with the Property Manager to implement pro-active policies and
measures to enhance and improve the Properties operational performance, thereby increasing
yields and mitigating re-leasing risks and costs of the Properties. The Manager will focus on, in
particular, regular engagement with tenants, identifying and achieving early renewal commitments
and carrying out asset enhancement projects (where necessary).
Further, the Manager plans to meet its objective of increasing the yields of OUE C-REITs
properties and maximising returns through some of, but not limited to, the following measures:
Improving rentals while maintaining high occupancy rates
While the Properties continue to enjoy high occupancy levels, the Manager will work with the
Property Manager and the local property manager to actively manage tenancy mix, lease
renewals and new leases to maintain high tenant retention levels and minimise vacancy periods,
through:
identifying and rationalising leases that are about to expire with passing rents which are
below market levels;
standardising the lease structure for base and turnover rents to facilitate lease management
in the future;
advancing renewal negotiations with tenants whose tenancies are approaching expiry;
increasing the overall marketability and profile of OUE C-REITs portfolio of properties to
increase the prospective tenant base;
actively marketing current and impending vacancies to minimise vacant periods;
actively monitoring rental arrears to minimise defaults by tenants and other aspects of tenant
performance;
incorporating contractual periodic rental step-up provisions in selected tenancy agreements
to provide an additional source of organic growth;
monitoring and, where necessary, improving diversity of the tenant base so as not to overly
expose revenue to more cyclical businesses in order to maintain stable cash flows;
searching for new tenants from sectors currently under-represented in OUE C-REITs
portfolio of properties to pursue an optimal tenant mix;
146
monitoring and assessing spaces which are sub-optimal or remain vacant for long periods
and working with the Property Manager and the local property manager to conduct asset
enhancement works (for example, sub-dividing larger sub-optimal units into smaller units) to
suit prospective tenants needs and thereby improving the marketability of such spaces;
exploring and facilitating expansion or relocation needs of existing tenants; and
improving responsiveness to tenants feedback and enquiries.
Delivering high quality services to tenants
The Manager will endeavour to work with the Property Manager, local property manager and
tenants to provide high quality services to tenants through:
providing high quality asset management services to maintain high retention rates; and
improving responsiveness to tenants feedback and enquiries.
Improving operational efficiency and reducing operating costs
The Manager will work closely with the Property Manager and the local property manager to
reduce operating costs without compromising the quality of services. Some cost management
initiatives include constant review of workflow process to boost productivity, lower operational cost
and foster close partnership with service providers to control costs and potential escalation. By
reducing operating expenses, the Manager aims to further increase Net Property Income.
ACTIVE ASSET ENHANCEMENT STRATEGY
The Manager believes there are substantial opportunities to improve the Properties and that it will
be able to achieve increases in rental revenue and occupancy rates via proactive retrofitting and
refurbishment works including upgrading of existing facilities and reconfiguring of existing spaces
for other income-generating opportunities, thereby achieving better efficiency or higher rental
potential.
The Manager will undertake asset enhancement initiatives subject to the improvements satisfying
projected levels of feasibility and profitability.
ACQUISITION GROWTH STRATEGY BY LEVERAGING ON THE SPONSORS EXPERIENCE
AND SUPPORTED BY THE SPONSOR ROFR
The Manager, a wholly-owned subsidiary of the Sponsor, will benefit from the Sponsors
experience and track record in pursuing opportunities to undertake acquisitions of assets that will
provide attractive cash flows and yields relative to OUE C-REITs weighted average cost of
capital, and opportunities for future income and capital growth. In evaluating future acquisition
opportunities, the Manager will seek acquisitions that may enhance the diversification of the
portfolio by location and tenant profile, and optimise risk-adjusted returns to the Unitholders. The
Manager believes it is well qualified to pursue its acquisition strategy. The management of the
Manager has extensive experience and a strong track record in sourcing, acquiring and financing
commercial and/or commercial-related real estate assets in Singapore and the PRC. The
managements industry knowledge, relationships and access to market information provide a
competitive advantage with respect to identifying, evaluating and acquiring commercial (office
and/or retail) real estate assets.
147
Investment criteria: Focused on maintaining portfolio quality
In evaluating acquisition opportunities for OUE C-REIT, the Manager will focus primarily on the
following investment criteria:
Location The Manager will assess acquisition opportunities from the perspective of both
the broader market and the location-specific aspects. The Manager will evaluate a range of
location-related criteria including, but not necessarily limited to, ease of access, connectivity
to major transportation hubs such as major expressways and thoroughfares, train stations,
international airports and other public transportation networks, visibility of premises from the
surrounding catchment markets, existing surrounding amenities and immediate presence
and concentration of competitors.
Asset enhancement potential The Manager will seek to acquire properties where there
is potential to add value to the properties by increasing occupancy, through selective capital
expenditure and/or other asset enhancement initiatives.
Building and facilities specification The Manager will endeavour to conduct thorough
property due diligence and adhere strictly to the relevant quality specifications, with due
consideration given to the size and age of the buildings, with respect to potential properties
to be acquired by OUE C-REIT. These specifications will depend on the type of property and
may change over time due to market developments and tenant demands. It will also ensure
that the acquisition properties are in compliance with legal and zoning regulations. The
properties will be assessed by independent experts relating to the structural soundness of
the building, repairs, maintenance and capital expenditure requirements in the short-to
medium-term.
Tenant mix and occupancy characteristics The Manager will seek to acquire properties
with opportunities to increase rental and tenant retention rates relative to competing
properties in the respective micro-property markets. The properties should have a healthy
occupancy with established tenants of good credit standing to minimise rental delinquency
and turnover. A key consideration will be the impact of an acquisition on the entire portfolios
tenant, business sector and lease expiry profiles.
Lease expiry profile The Manager will, where appropriate, focus on properties with longer
leases so as to extend the weighted average lease expiry of the IPO Portfolio and/or provide
diversification to the lease expiry profile.
Land lease maturity The Manager will, where appropriate, focus on properties with longer
underlying land lease terms in order to extend the underlying land lease maturity profile.
In addition, OUE C-REIT will benefit from the Sponsor ROFR which, subject to certain conditions,
provides OUE C-REIT with access to potential future acquisitions and opportunities of income-
producing properties which are used primarily for commercial purposes (including real estate used
primarily for office and/or retail purposes) in financial and business hubs within and outside of
Singapore.
148
As at the Latest Practicable Date, the Sponsor has identified three Sponsor ROFR Properties
which could potentially be offered to OUE C-REIT. Selected details of the Sponsor ROFR
Properties are set out in the table below:
Name of Sponsor
ROFR Property
OUE Downtown 2 and
Downtown Gallery
(1)
U.S. Bank Tower One Raffles Place
(2)
End Construction Year OUE Downtown 2: 1994
Downtown Gallery: 2016
(expected)
1989 1986
Highlights 37-storey office
building and five-
storey retail mall with
a retail basement
level
Strategically located
along an established
financial artery
between Raffles
Place and Tanjong
Pagar
One of the tallest
buildings in the
western U.S.
72-storey Class-A
office building, with
six levels of
underground parking,
along with an
approximately 1.6
acre park above a
separate five-level
subterranean car
park facility
One of Singapores
tallest buildings
Two Grade-A office
towers: 62-storey
Tower One and 38-
storey Tower Two
Five-storey retail
podium with a retail
basement level
Location Shenton Way, Singapore Los Angeles, U.S. Raffles Place, Singapore
Effective Interest (%) 100.0 100.0 40.8
(2)
GFA (sq m) 77,900 (estimated) 173,647.4 119,712.8
(3)
NLA (sq m) Office: 41,222.0
(as at 30 September
2013)
Retail: 14,800
(estimated)
133,988.5 80,082.5
(3)
Tenure 99-year leasehold title
commencing 19 July
1967
Freehold Tower One and Retail
Podium: leasehold title
of 841 years, three
months and 20 days
commencing
1 November 1985
Retail Podium: 99-year
leasehold title
commencing
1 November 1985
Tower Two: 99-year
leasehold title
commencing
26 May 1983
Tower Two (former
Service Road): 99-year
leasehold title
commencing
26 May 1983
Latest Valuation
(S$ million)
1,400.0
(4)
544.0
(5)
1,608.8
(6)
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Notes:
(1) OUE Downtown 1 is not presently identified as one of the Sponsor ROFR Properties as the middle and low zones
of OUE Downtown 1 are expected to be converted into serviced apartments. Hence, including the entire OUE
Downtown 1 as a Sponsor ROFR Property would not be appropriate for OUE C-REIT. Where an asset or any part
thereof (including, for example, the high zone of OUE Downtown 1, if applicable) falls within the scope of the
Sponsor ROFR, the asset or any part thereof will, as a matter of course, be subject to the Sponsor ROFR. Following
strata subdivision, the multi-storey car park will be managed by the MCST, and the owners of OUE Downtown 1 will
hold shares in the MCST in proportion to their strata holdings.
(2) The Sponsor owns an effective interest of approximately 40.8% in One Raffles Place through its 50.0% interest in
OUBC. The subject of the Sponsor ROFR is the Sponsors 50.0% interest in OUBC. The Sponsors interest is
subject to pre-emption rights to other shareholders of OUBC, who are third parties not related to the Sponsor, such
that should the Sponsor wish to sell its shares in OUBC, it must first offer to sell its shares to the other shareholders
of OUBC at fair value. In the event that none of the other shareholders of OUBC wish to purchase the Sponsors
shares in OUBC, the Sponsor is then free to dispose of its shares in OUBC to OUE C-REIT.
(3) These represent the aggregate GFA and NLA, as the case may be, of One Raffles Place Tower One, One Raffles
Place Tower Two and the retail podium.
(4) This represents the latest valuation of the OUE Downtown development as at 31 December 2012.
(5) This represents the latest valuation of the U.S. Bank Tower as at 30 September 2013 of US$430 million, based on
an exchange rate of US$1 : S$1.265.
(6) This represents OUBCs 81.54% interest in the trust which holds the land and properties that comprise One Raffles
Place, based on the latest valuation as at 31 December 2012. The remaining 18.46% of the beneficial interest in One
Raffles Place is held by OUBC in trust for United Overseas Bank Limited.
OUE C-REIT intends to hold the properties it acquires on a long-term basis. However, in the
future, where the Manager considers that any property has reached a stage that offers limited
scope for further growth, OUE C-REIT may consider selling the property to free up or recycle
capital for re-deployment towards higher-yielding growth opportunities as and when appropriate.
CAPITAL AND RISK MANAGEMENT STRATEGY
The Manager will endeavour to:
maintain a strong and robust balance sheet;
employ an appropriate mix of debt and equity in financing acquisitions and asset
enhancement projects;
secure diversified funding sources to access both financial institutions and capital markets;
optimise its cost of debt financing;
adopt appropriate interest rate hedging strategies to minimise exposure to market volatility;
and
utilise currency risk management strategies to minimise exposure to foreign exchange
currency volatility.
The Manager intends to achieve the above by:
Optimal capital structure strategy The Manager aims to optimise the capital structure
and cost of capital, within the borrowing limits set out in the Property Fund Appendix. The
Managers strategy of the management of capital involves adopting and maintaining an
appropriate Aggregate Leverage level to ensure optimal returns to Unitholders, while
maintaining flexibility in respect of future capital expenditures or acquisitions. The Manager
will endeavour to employ an optimal capital structure, comprising an appropriate mix of debt
and equity in financing the acquisition of properties and asset enhancement activities of its
properties.
150
The Manager will, in the event that OUE C-REIT incurs any future borrowings, periodically
review OUE C-REITs capital management policy with respect to its Aggregate Leverage and
modify the policy as its management deems prudent in light of prevailing market conditions.
The Manager will endeavour to match the maturity of OUE C-REITs indebtedness with the
maturity of OUE C-REITs investment assets, and to employ long-term, fixed-rate debt to the
extent practicable in view of market conditions in existence from time to time. As and when
appropriate, the Manager may consider diversifying its sources of debt financing in the future
by way of accessing the public debt capital markets through the issuance of bonds to further
enhance the debt maturity profile of OUE C-REIT.
As at the Listing Date, OUE C-REIT is expected to have borrowings of S$[698.2] million with
an Aggregate Leverage of [42.3]% based on the Offering Price. The Manager has obtained,
in respect of OUE C-REIT, a provisional credit rating of Ba1 from Moodys
1
. (See
Capitalisation and Indebtedness Indebtedness for further details.)
Proactive interest rate management strategy The Manager endeavours to utilise interest
rate hedging strategies where appropriate to optimise risk-adjusted returns to Unitholders.
The Manager will adopt a proactive interest rate management policy to manage the risk
associated with changes in interest rates on the loan facilities while also seeking to ensure
that OUE C-REITs on-going cost of debt capital remains competitive.
Currency risk management strategy The Manager endeavours to utilise currency risk
management strategies where appropriate to minimise the impact of OUE C-REITs
distributable income due to foreign exchange volatility, including the use of foreign currency
denominated borrowings to match the currency of the asset investment as a natural currency
hedge.
Other financing strategy The Manager will, in the future, consider other opportunities to
raise additional equity capital for OUE C-REIT through the issue of new Units, for example
to finance acquisitions of properties. The decision to raise additional equity will also take into
account the stated strategy of maintaining an optimal capital structure.
1 The provisional credit rating assumes the listing of OUE C-REIT on the SGX-ST, the drawdown of debt facilities of
S$[698.2] million and the acquisition of the Properties by OUE C-REIT. The final rating is conditional upon the
successful completion of all the events described in the foregoing sentence. The Manager expects Moodys to
assign its final rating of OUE C-REIT on the Listing Date and will make an announcement on SGXNET of the final
rating when it has been assigned to OUE C-REIT. All ratings are subject to revision or withdrawal at any time.
Moodys has not provided its consent, for the purposes of Section 249 (read with Section 302) of the SFA, to the
inclusion of the credit rating information and is therefore not liable for such information under Sections 253 and 254
(read with Section 302) of the SFA. While the Manager has taken reasonable action to ensure that the information
has been reproduced in its proper form and context, and that it has been extracted fairly and accurately, neither the
Manager nor any other party has conducted an independent review of, nor verified the accuracy of, such information.
The provisional credit rating obtained from Moodys is current and Moodys will be paid by OUE C-REIT to provide
the credit rating. The credit rating is not a recommendation to invest in any securities. Issuer credit ratings express
Moodys opinion of an entitys creditworthiness and ability to meet its senior financial obligations. According to
Moodys, obligations rated Ba are judged to be speculative and are subject to substantial credit risk. Detailed
information regarding Moodys rating definitions, the terms of use of such ratings, the relative rank of the credit
rating, the assumptions, limitations and methodology of the credit rating, and attributes that the credit rating does
not address, may be found on the following website: www.moodys.com.
151
BUSINESS AND PROPERTIES
Unless otherwise specified, all information relating to the Properties in the Prospectus are as at
30 September 2013.
OVERVIEW
OUE C-REIT is a Singapore REIT established with the principal investment strategy of investing,
directly or indirectly, in a portfolio of income-producing real estate used primarily for commercial
purposes (including real estate used primarily for office and/or retail purposes) in financial and
business hubs within and outside of Singapore, as well as real estate-related assets.
OUE C-REITs IPO Portfolio comprises two commercial properties strategically located in
Singapore and Shanghai, with an aggregate GFA of approximately 105,296.1 sq m and a total
appraised value of approximately S$1,623.6
1
million as at 30 September 2013. The IPO Portfolio
consists of:
The OUE Bayfront Property. The OUE Bayfront Property is located at Collyer Quay in
Singapores CBD. It comprises (i) OUE Bayfront, an 18-storey premium office building with
rooftop restaurant premises located at 50 Collyer Quay, which is complemented by retail
facilities at its ancillary properties, namely (ii) OUE Tower, a conserved tower building located
at 60 Collyer Quay with panoramic views of the Marina Bay landscape which is currently
occupied by a fine dining restaurant, and (iii) OUE Link, a link bridge located at 62 Collyer
Quay with retail units; and
The Lippo Plaza Property. Lippo Plaza is located at 222 Huaihai Zhong Road in the
commercial district of Huangpu in central Shanghai, the PRC. It is a 36-storey Grade-A
commercial building used for office and retail purposes and also comprises three basement
levels consisting of commercial space and car park lots. The Lippo Plaza Property comprises
Lippo Plaza, excluding (i) Unit 2 on Basement 1, (ii) the 12th, 13th, 15th and 16th Floors and
(iii) four car park lots. Collectively, the Lippo Plaza Property comprises approximately 90%
of Lippo Plaza by GFA.
OUTLOOK FOR THE COMMERCIAL SECTOR IN SINGAPORE
Office
According to the Independent Market Research Consultant, Singapores CBD has undergone
significant transformation in recent years and now includes the New Downtown area in Marina
Bay, in addition to the traditional CBD that encompassed Raffles Place and the areas surrounding
Shenton Way, Robinson Road and Cecil Street. As Singapores established commercial hub and
with its on-going rejuvenation, Raffles Place continues to account for the majority or
approximately 1.1 million sq m of the existing office space in the Singapore CBD, followed by
approximately 0.6 million sq m in the developing Marina Bay area and approximately 0.5 million
sq m in the Shenton Way, Robinson Road and Cecil Street areas.
1 Based on the higher of the two independent appraisal values for the Properties, an exchange rate of S$1.00 : RMB4.7830
and inclusive of Income Support.
152
The graph below illustrates the spread of the existing office space in the Singapore CBD.
Singapore CBD Office Locations

CBD
Marina Bay:
0.6 million sq m
Raes Place:
1.1 million sq m
Shenton Way/
Robinson Road/
Cecil Street:
0.5 million sq m
Marina Centre
Beach Road/
North Bridge Road
Bras Brasah/
Selegie Road
River Valley/
Singapore River
Anson Road/
Tanjong Pagar
OUE Bayfront,
OUE Tower
and OUE Link
Legend:
- Raes Place (CBD)
- Marina Bay (CBD)
- ShentonWay/Robinson Road/ Cecil Street (CBD)
- Fringe CBD Locaons
Source: Independent Market Research Report.
Since falling to a low of 90.7% in 2010 following the global financial crisis in 2009, average
occupancy rates for office space in the Singapore CBD have recovered strongly, with Raffles
Place exhibiting a robust rate of 95.3% as at the third quarter of 2013. Marina Bay, the relatively
new extension of Singapores CBD, has witnessed strong occupancy rates, increasing to
approximately 95.2% in the second quarter of 2013 from 70.3% in 2010. This strong occupancy
rate was recorded amid the gradual build-up of office space supply in the area in recent years,
reflecting the strength and attractiveness of the office rental market in Marina Bay. As at the third
quarter of 2013, Marina Bays average occupancy rate fell to 84.1% largely as a result of the
completion of Asia Square Tower 2. According to the Independent Market Research Consultant,
occupancy rates in Marina Bay are expected to improve over the next few quarters as
pre-committed tenants in Asia Square Towers 1 and 2 shift into their premises.
Average monthly passing rent for office space in the Singapore CBD had eased in 2011 due to
uncertain global economic conditions, but began to recover in the third quarter of 2013, with rates
at Marina Bay and Raffles Place growing 4.8% and 1.3% quarter-on-quarter to S$11.0 per sq ft per
month and S$9.4 per sq ft per month, respectively.
153
The following graph illustrates the average rental rates in the Singapore CBD for the period from
2010 to the third quarter of 2013.
Average Rental Rates in the Singapore CBD (S$ per sq ft per month)
12.0
10.5 10.5 10.5
11.0
9.0
9.8
9.3 9.3 9.3
9.4
6.5
7.8
7.3 7.3
7.3
7.5
0
2
4
6
8
10
12
14
2010 2011 2012 Q1 2013 Q2 2013 Q3 2013
Marina Bay Raffles Place Shenton Way/ Robinson Rd/ Cecil Street
S$
Source: Independent Market Research Report.
As at the third quarter of 2013, the pipeline supply of office space in Singapore between 2014 and
2017 stood at approximately 0.6 million sq m, with approximately 0.3 million sq m or 48.0% of this
supply located within the Singapore CBD. The supply dynamics of office space in the Singapore
CBD are expected to remain resilient to this pipeline supply, owing to the relatively limited supply
coming online between 2014 and 2016 and the evenly staggered spread of anticipated
completions in the Singapore CBD between 2014 and 2017, which will reduce the intensity of
competition.
The following graph illustrates the potential new supply of office space (by NLA) in the Singapore
CBD for the period from 2014 to 2017 and beyond.
Potential New Supply of Office Space in the Singapore CBD (by NLA)
166,900
3,100
54,700
21,000
55,200
85,500
47,600
66,300
0
50,000
100,000
150,000
200,000
250,000
2014F 2015F 2016F 2017F
sq m
Raffles Place Fringe CBD Shenton Way/Robinson Road/Cecil Street Marina Bay
Source: Independent Market Research Report.
154
The demand dynamics within the Singapore CBD are expected to be supported by (i) Singapores
positive macroeconomic prospects, (ii) the employment growth in the financial and business
services over the next few years, which form the bulk of demand in the Singapore CBD office
market, (iii) the limited potential office supply in the Singapore CBD, particularly that for premium
and Grade-A office buildings between 2014 and 2016, (iv) the continued rejuvenation of the
Raffles Place area alongside the development of the Marina Bay area, and (v) the excellent
accessibility afforded by the Singapore CBDs comprehensive transportation network.
Consequently, average monthly gross rentals in the Raffles Place area are expected to increase
year-on-year by 3.2% and 3.6% in 2014 and 2015, respectively.
Retail
The retail sector within the Singapore CBD has traditionally played a complementary role to the
working population in the area by providing F&B and ancillary retail amenities. However, the
Singapore CBD retail scene has been rejuvenated in recent years, driven by (i) the increasing
density of the Singapore CBDs working population, (ii) the increased incorporation of live-in
residential population within the Singapore CBD, and (iii) the growth in tourism and entertainment
destinations within the Singapore CBD, such as the Marina Bay Sands integrated resort and
Gardens by the Bay.
Despite the anticipated supply of several new retail and F&B developments within the Singapore
CBD in the near term, such as the redeveloped retail podium of One Raffles Place scheduled to
open in 2014 and the redevelopment of OUE Downtown at Shenton Way, retail rental rates in the
Singapore CBD are expected to remain firm in tandem with the expected growth in the working
and live-in populations in the Singapore CBD. In particular, convenience retail offerings, F&B
outlets, ancillary retail services and unique retail destinations, such as those lining the Marina Bay
waterfront, will be key beneficiaries of retail demand.
OUTLOOK FOR THE COMMERCIAL SECTOR IN SHANGHAI
Office
Within Shanghai, four of the nine major office precincts, namely Lujiazui, Huangpu, Jingan and
Xuhui, collectively account for approximately 78% of Shanghais Grade-A office space by GFA, of
which approximately 1.1 million sq m of Grade-A office space may be found in the Huangpu
district. The Huangpu districts Grade-A office stock is generally concentrated along Huaihai
Zhong Road and East Nanjing Road, and attracts a diverse tenant base that includes an
established cluster of MNCs and significant Chinese SOEs. Huaihai Zhong Road accounts for
approximately 39% of the Grade-A office stock in the Huangpu district, while the rest may be found
in the other major office sub-markets within the Huangpu district such as Peoples Square and the
Bund.
155
The map below sets out the major office locations in Shanghai.
Major Office Locations in Shanghai

Source: Independent Market Research Report.
Given the limited availability of land for development within the Huangpu district, the annual
supply of Grade-A office space has been relatively stable since 2003, averaging approximately
58,000 sq m over the past decade. Supported by the limited supply as well as the stability of
demand arising largely from the areas excellent accessibility, considerable presence of MNCs
and Chinese SOE tenants in the Huangpu district and comprehensive retail amenities, Grade-A
occupancy rates have been relatively stable v `s-a` -v `s the Shanghai office market at large and
have been maintained above 90% since 2004, with an average occupancy rate of 93.1% in the
third quarter of 2013. As at the third quarter of 2013, the average monthly rental rate in the
Huangpu district was approximately RMB284.0 per sq m per month, approximately 8.4% higher
than that at the city-wide level of approximately RMB262.0 per sq m per month.
156
The following graph illustrates the average rental rates in the Huangpu district as compared to
average rental rates in Shanghai overall for the period from 2010 to the third quarter of 2013.
Average Rental Rates in the Huangpu District as compared to Average Rental Rates in
Shanghai Overall (RMB per sq m per month)
211
244
266 266 264 262
220
254
282 283 283 284
10
60
110
160
210
260
310
2010 2011 2012 Q1 2013 Q2 2013 Q3 2013
Shanghai Huangpu
RMB
Source: Independent Market Research Report.
The Huangpu districts office market is expected to benefit from Shanghais continued status as
the commercial centre and financial capital of the PRC as well as the overall stability of the
macroeconomic environment in the PRC in the near-to-medium term. Overall office rentals in
Shanghai declined by 1.6% from the first quarter of 2013 to the third quarter of 2013, primarily due
to tenant demand being weighed down by weak global economic conditions. On the other hand,
office rentals in the Huangpu district continued to rise over the same period by 0.2%, further
reflecting the strong value proportion the Huangpu district offers to office tenants.
The following graph illustrates the potential new supply of office space (by GFA) in the Huangpu
district and Shanghai overall for the period from 2014 to 2017.
Potential New Supply of Office Space in the Huangpu District and
Shanghai Overall (by GFA) (sq m)
1.5 million
2.6 million
1.2 million
0.6 million
275,000
250,000
155,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
2014F 2015F 2016F 2017F
sq m
Shanghai Huangpu
Source: Independent Market Research Report.
157
In addition, the total potential office supply for the Huangpu district is estimated to be limited to
a total of approximately 0.7 million sq m for the period between 2014 and 2017. The combination
of favourable supply-demand dynamics is expected to support office rental rates in the Huangpu
district, with growth of approximately 6.8% and 6.0% year-on-year anticipated for 2014 and 2015,
respectively, which are higher than the growth rates of 1.3% and 1.6% anticipated for Shanghai
in general over the same period.
The Independent Market Research Consultant is of the view that the relatively sizeable pipeline
supply of Grade-A office space in Shanghai overall will not adversely affect rental rates in the
Huangpu district.
This is due in part to the fact that (i) while there is a relative sizeable pipeline of Grade-A office
space in Shanghai, there is limited pipeline supply within the Huangpu district; and (ii) the
Shanghais pipeline supply of Grade-A office space will mainly be located in non-prime suburban
districts, which are deemed to be less competitive in terms of location than the Central CBD
districts of Huangpu, Jingan and Pudong.
The Independent Market Research Report indicates that the average annual year-on-year rental
value growth is as follows:
Year-on-Year percentage change (%) Shanghai Huangpu
Q42013 F 2.8 4.5
Q42014 F 1.3 6.8
Q42015 F 1.6 6.0
Q42016 F 2.1 7.8
Q42017 F 1.3 5.6
Even following the expected spike in overall office supply in 2015, there is expected to be healthy
growth in rental values of between 5.6% and 7.8% between 2015 and 2017 in the Huangpu
district. With the limited potential supply in the Huangpu district and anticipated increase in
demand stemming from major occupiers with requirement of office extension in the central area
of Shanghai, office rentals in the Huangpu district are likely to grow at a faster pace compared with
that of the overall city.
While the Lippo Plaza Property may be affected by the upcoming new supply, asset enhancement
work has been carried out to the retail component of the Lippo Plaza Property in 2009 and 2010
and the office component of the Lippo Plaza Property is currently undergoing asset enhancement
work to keep up with such new supply.
Retail
Huaihai Zhong Road and East Nanjing Road are two of several recognised prime retail precincts
within Shanghai.
Huaihai Zhong Road Originally known as Xiafei Road, the precinct is located in the
geographical centre of Shanghai. The unique and varied architectural styles as well as
historic buildings set the area apart from other retail areas, resulting in the precincts
popularity with top-end designer brands from all over the world as well as renowned and
established Chinese brands. Huaihai Zhong Road has the largest area of prime retail space
in the Puxi area, comprising approximately 30.0% of total prime retail space in the Puxi area.
158
East Nanjing Road A dedicated commercial zone with its eastern end at the central section
of the Bund, East Nanjing Road has a concentration of refurbished traditional European-style
buildings which are now used as high-end restaurants, bars and retail outlets. East Nanjing
Road is a popular attraction to visitors to Shanghai.
There has been a limited supply of retail property in the Huangpu district in recent years, with the
annual average new supply of GFA of retail space being approximately 87,630 sq m between 2009
and 2012. As at the third quarter of 2013, there is a total of 782,920 sq m retail GFA in the
Huangpu district. Due to this limited supply, take-up has been strong, with demand exceeding
supply since 2011.
Combined with planned improvements to accessibility following the completion of the Huaihai
Zhong Road station along the planned Metro Lines 13 and 14, the established reputations and
favourable dynamics of the Huangpu districts retail destinations are expected to support
year-on-year rental growth rates of 4.1% and 2.3% for 2014 and 2015, respectively.
CERTAIN INFORMATION ON THE PROPERTIES
Key Information on the Properties
The table below sets out certain information on the Properties as at 30 September 2013, with
independent valuations by the Independent Valuers as at 30 September 2013.
The OUE Bayfront
Property
The Lippo Plaza
Property Total/Average
Usage Office and retail Office and retail Office and retail
GFA (sq m) 46,774.6 58,521.5 105,296.1
NLA
(sq m)
Overall 37,381.8 39,232.0 76,613.8
Office
component
35,551.7 33,538.6 69,090.3
Retail
component
1,830.1 5,693.4 7,523.5
Committed
Occupancy Rate as
at 30 September 2013
(%)
Overall: 96.1
Office component: 95.9
Retail component: 100.0
Overall: 88.2
Office component: 86.5
Retail component: 97.8
Overall: 92.0
Office component: 91.4
Retail component: 98.3
Number of Tenants
as at 30 September
2013
Overall: 45
Office component: 33
Retail component: 12
Overall: 83
Office component: 72
(1)
Retail component: 11
(2)
Overall: 128
Office component: 105
Retail component: 23
Number of Leasable
Floors
OUE Bayfront: 15
OUE Tower: 2
OUE Link: 1
Office component: 26
Retail component: 4
N.A.
Number of Car
Park Lots
245, including three
handicap lots
168 413, including three
handicap lots
Gross Revenue for
Forecast Year 2014
(3)
(S$ million)
50.4 24.0
(3)
74.4
Net Property Income
for the Forecast Year
2014
(3)
(S$ million)
36.9 17.4
(3)
54.3
Independent
Appraisal Values as
at 30 September 2013
(S$ million)
Savills: 1,115.0
Colliers: 1,135.0
Savills: 470.4
(3)
Colliers: 488.6
(3)
Savills: 1,585.4
Colliers: 1,623.6
159
The OUE Bayfront
Property
The Lippo Plaza
Property Total/Average
Independent
Appraisal Values
(without Income
Support) as at
30 September 2013
(S$ million)
Savills: 1,080.0
Colliers: 1,102.0
Savills: 470.4
(3)
Colliers: 488.6
(3)
Savills: 1,550.4
Colliers: 1,590.6
Independent
Appraisal Values as
at 30 September 2013
(local currency/
million)
Savills: S$1,115.0
Colliers: S$1,135.0
Savills: RMB2,250.0
Colliers: RMB2,337.0
N.A.
Independent
Appraisal Values
(without Income
Support) as at 30
September 2013
(local currency/
million)
Savills: S$1,080.0
Colliers: S$1,102.0
Savills: RMB2,250.0
Colliers: RMB2,337.0
N.A.
Purchase
Consideration
(S$ million)
1,005.0 331.8
(4)
(subject to
adjustment)
(5)
1,336.8 (subject to
adjustment)
(5)
Office Passing Rent
for the month of
September 2013
S$10.4 per sq ft
per month
RMB271.8
(6)
per sq m
per month
N.A.
Retail Passing Rent
for the month of
September 2013
S$8.8 per sq ft per
month
RMB515.3 per sq m
per month
N.A.
Government Lease
Term/Land Use
Right Expiry
OUE Bayfront and
OUE Tower: 99-year
leasehold title
commencing
12 November 2007
OUE Link: 15-year
leasehold title
commencing
26 March 2010
Underpass: 99-year
leasehold title
commencing
7 January 2002
50 years right
commencing 2 July
1994 to 1 July 2044
N.A.
End Construction
Year
2011 1999 N.A.
WALE by committed
NLA as at
30 September 2013
(years)
3.5 1.7 2.7
WALE by committed
Gross Rental Income
as at 30 September
2013 (years)
3.3 1.7 2.8
160
Notes:
(1) As at 30 September 2013, two office tenants have also entered into letters of offer or lease agreements for retail
spaces.
(2) Excluding the two office tenants which have also entered into letters of offer or lease agreements for retail spaces.
(3) Based on an exchange rate of S$1.00 : RMB4.7830.
(4) The aggregate purchase consideration for the Lippo Plaza Property is based on an exchange rate of S$1.00 :
HK$6.1275 and comprises (i) the purchase consideration payable to LCR under the Tecwell Share Purchase
Agreement for the entire issued share capital in the BVI Company, (ii) the repayment of the Existing Offshore Facility,
and (iii) the refinancing of the Existing Onshore Facility.
(5) The purchase consideration for the Lippo Plaza Property may be adjusted upwards or downwards based on the
increase or decrease, as the case may be, in NAV of the BVI Company and its subsidiaries (which is the aggregate
value of the total assets of BVI Company and its subsidiaries less the aggregate amount of the total liabilities of the
BVI Company and its subsidiaries) (excluding any change in valuation of the Lippo Plaza Property) as at the Listing
Date relative to 30 June 2013. The management accounts of the BVI Company and its subsidiaries will be used to
prepare the Completion Financial Statements. The Completion Financial Statements will be prepared by the BVI
Holding Company and reviewed by the Reporting Auditors.
(6) Excludes office space occupied by the centre management team of the Lippo Plaza Property and a business centre.
The following table sets out the assumptions for the valuation of the OUE Bayfront Property.
Item
Valuation
Methodology Savills Colliers Actual
Rental Rates
(per sq ft per
month)
Income
Capitalisation/
Investment Method
Without income
support
(1)
Office: S$12.00
Retail: S$8.42
With and without
income support
(3)
Term Income
Period (net of
vacancy)
Office: S$10.36
Retail: S$8.47
Reversion
income period
Office: S$11.50
Retail: S$10.01
Passing Rent for
the month of
September 2013:
Office: S$10.4
Retail: S$8.8
With income
support
(2)
First 5-Year
Period
Office: S$11.00
Retail: S$8.42
After 5-Year
Period
Office: S$13.10
Retail: S$9.82
Discounted
Cashflow Method
With and without
income
support
(4)(5)
First year
reversion rental
rates
(6)
Office: S$10.33
Retail: S$8.61
Annual growth
rates
Office: 3.00% for
Year 2 and 5.00%
per annum
thereafter
Retail: 3.00% per
annum
With and without
income
support
(4)(5)
First year
reversion rental
rates
(6)
Office: S$11.17
Retail: S$8.50
Annual growth
rates
Office: 5.00%
Retail: 3.90%
161
Item
Valuation
Methodology Savills Colliers Actual
Occupancy Rate Income
Capitalisation/
Investment Method
Office: 96.5%
Retail: 96.6%
Office: 96.5%
Retail: 96.5%
Committed
office occupancy
rate as at
30 September
2013:
Office: 95.9%
(7)
Retail: 100%
Discounted
Cashflow Method
Office: 95.0% for
Years 1 to 5 and
96.5% thereafter
Retail: 95.7% for
Year 1, 95.3% for
Years 2 to 5 and
96.6% thereafter
Office: 97.0%
Retail: 97.3%
Notes:
(1) Under Savills without income support income capitalisation/investment method, valuation is derived based on net
rental income assumed using the abovementioned rental rates divided by the appropriate capitalisation rate.
(2) Under Savills with income support income capitalisation/investment method, to derive the valuation, Savills has
discounted the annual net rental income by an appropriate capitalisation rate till the end of the respective
government lease terms and/or expiry of the land use rights. Savills has assumed two time periods in its valuation
assumptions: (i) First 5-Year Period assumes rental rates for first five years assuming no income support; and (ii)
After 5-Year Period assumes rental rate are at expected market rates after five years and also assumes no income
support as the income support is for maximum of five years. To derive the valuation with income support, Savills
have added the PV of net rental income of the First 5-Year Period and After 5-Year Period to the PV of the net rental
income to be drawn down under the income support.
(3) The Term Income Period is the WALE of the existing leases at OUE Bayfront Property. The Reversion Income Period
is the remaining years until the end of the respective government lease terms and/or expiry of the land use rights.
Valuation under Colliers income capitalisation/investment method assumes that: (a) without income support, the
summation of PV of net rental income under the Term Income Period and Reversion Income Period (which is
discounted by the appropriate capitalisation rate); (b) with income support: the PV of net rental income without
income support plus the PV of net rental income to be drawn down under the income support.
(4) Under the discounted cash flows method, the valuation without income support is the PV of annual discounted cash
flows. The present value of cash flow to be drawn down under the income support is added to the valuation without
income support to derive the valuation with income support.
(5) Under the discounted cash flows method, Savills and Colliers have assumed in their calculation: (a) the signed lease
rates will apply to existing tenants until the respective lease expiration date, and (b) reversion rental rates will apply
to any current vacancy (up to the stipulated assumed occupancy levels) and post expiration of existing leases.
(6) First year reversion rental rates is the assumed office and retail rental rate assumed in first year of valuation by
Savills and Colliers for any vacancies (up to the stipulated assumed occupancy levels) and expiring leases.
(7) As at the Latest Practicable Date, the office occupancy rate for the OUE Bayfront Property was 100.0%.
162
The following table sets out the assumptions for the valuation of the Lippo Plaza Property:
Line Item
Valuation
Methodology Savills Colliers Actual
Rental Rate
(per sq m per day)
Income
Capitalisation
Method
Office: RMB9.20
Retail: RMB29.10
Did not use income
capitalisation
method
Passing Rent for
the month of
September 2013:
Office: RMB8.9
Retail: RMB16.9
(2)
Discounted
Cashflow Method
(1)
First year
reversion rental
rates
(3)
Office: RMB9.20
Retail: RMB29.10
Annual growth
rates
Office: 3%
Retail: 3%
First year
reversion rental
rates
(3)
Office: RMB9.50
Retail: RMB23.00
Annual growth
rates
Office: 5%
Retail: 8% for
Years 1 to 5 and
5% for Year 6
Occupancy Rate Income
Capitalisation
Method
Office: 92%
Retail: 98%
Did not use income
capitalisation
method
Committed
office occupancy
rate as at
30 September
2013:
Office: 86.5%
(4)
Retail: 97.8%
Discounted
Cashflow Method
Office: 92%
Retail: 98%
Office: 90% for
Year 1 and 95% for
Year 2 onwards
Retail: 95%
Notes:
(1) Under the discounted cash flows method, Savills and Colliers have assumed in their calculation: (a) the signed lease
rates will apply to existing tenants until the respective lease expiration date, and (b) reversion rental rates will apply
to any current vacancy (up to the stipulated assumed occupancy levels) and post expiration of existing leases.
(2) The weighted average rental rates for leases signed for the period from 1 January 2013 to 30 September 2013 was
RMB36.2 per sq m per day.
(3) First year reversion rental rates is the assumed office and retail rental rate assumed in first year of valuation by
Savills and Colliers for any vacancies (up to the stipulated assumed occupancy levels) and expiring leases.
(4) The lower committed occupancy rate of the office component of the Lippo Plaza Property as at 30 September 2013,
in comparison to historical occupancy rates, was due to the non-renewal of rented space by office tenants, which
was in the ordinary course of business. As at the Latest Practicable Date, the office occupancy rate for the Lippo
Plaza Property was 90.4%.
The following should be noted regarding Savills assumptions for the Lippo Plaza Property, with
references to the Independent Market Research Report:
(a) Reversion rental rates
(i) Office: Savills has made reference to recent office rental comparables in the locality and
has adopted RMB9.20 per sq m per day as the first year office reversion rental rate.
With reference to the Independent Market Research Report, it should be noted that the
Independent Market Research Consultant has indicated that rental rates for
comparable office properties in the Huangpu district as at Q32013 is RMB284 per sq m
per month (RMB9.5 per sq m per day);
(ii) Retail: Savills has made reference to recent retail rental comparables in the locality and
adopted RMB29.1 per sq m per day as the first year retail reversion rental rate. With
reference to the Independent Market Research Report, it should be noted that the
Independent Market Research Consultant has indicated that rental rates for
163
comparable retail properties in the Huangpu district reached RMB1,653 per sq m per
month (RMB55.10 per sq m per day) in Q32013 (represented by the average first floor
asking rental rate of prime shopping centres in the Huangpu district);
(b) Growth rate for reversion rental rates
(i) Office: Savills has assumed a 3% annual growth rate. With reference to the
Independent Market Research Report, it should be noted that the Independent Market
Research Consultant has indicated that annual office rental growth rates in the
Huangpu district for the periods Q42013-2014, Q42014-2015, Q42015-2016 and
Q42016-2017 are 6.8%, 6.0%, 7.8% and 5.6%, respectively, implying a simple average
growth rate of 6.6% from Q42014 to Q42017;
(ii) Retail: Savills has assumed a 3% annual growth rate. With reference to the
Independent Market Research Report, it should be noted that the Independent Market
Research Consultant has indicated that annual retail rental growth rates in the Huangpu
district for the periods Q42013-2014, Q42014-2015, Q42015-2016 and Q42016-2017
are 4.1%, 2.3%, 4.8% and 3.8%, respectively, implying a simple average growth rate of
3.75% from Q42014 to Q42017;
(c) Occupancy rates
(i) Office: The assumed 92% office occupancy rate is the stabilised occupancy rate for Lippo
Plaza Property having taken into account the overall vacancy rates of office buildings of
the same grade in the Huangpu district. Further, while the committed office occupancy
rate as at 30 September 2013 was 86.5%, Savills has taken into account that this was due
to a non-renewal of rented space by an existing office tenant, which was in the ordinary
course of business, and as of 31 December 2011 and 2012, the office occupancy was
92.1% and 91.0%, respectively. With reference to the Independent Market Research
Report, it should be noted that the Independent Market Research Consultant has
indicated that average occupancy rates for office properties in the Huangpu district in
2010, 2011, 2012 and Q32013 were 96.0%, 93.8%, 93.1% and 93.1%, respectively; and
(ii) Retail: Savills has assumed a retail occupancy rate of 98% in their valuation, in which
Savills is of the view that it is in-line with the historical retail occupancy rate (i.e. 100%,
98.7% and 97.8% as at 31 December 2011, 31 December 2012 and 30 September
2013, respectively).
The following should be noted regarding Colliers assumptions for the Lippo Plaza Property, with
references to the Independent Market Research Report:
(a) Reversion rental rates
(i) Office: Colliers has assumed RMB9.50 per sq m per day as the first year office
reversion rental rate. With reference to the Independent Market Research Report, it
should be noted that the Independent Market Research Consultant has indicated that
rental rates for comparable office properties in the Huangpu district as at Q32013 is
RMB284 per sq m per month (RMB9.5 per sq m per day);
(ii) Retail: Colliers has assumed RMB23.0 per sq m per day as the first year retail reversion
rental rate, in which Colliers is of the view that it is lower than market rental rates at
comparable properties. With reference to the Independent Market Research Report, it
should be noted that the Independent Market Research Consultant has indicated that
rental rates for comparable retail properties in the Huangpu district reached RMB1,653
per sq m per month (RMB55.10 per sq m per day) in Q32013 (represented by the average
first floor asking rental rate of prime shopping centres in the Huangpu district);
164
(b) Growth rate for reversion rental rates
(i) Office: Colliers has assumed a 5% annual growth rate, taking into account the historical
growth rate of Shanghais office rental rates, and Chinas expected GDP growth rates
over the next several years. With reference to the Independent Market Research Report,
it should be noted that the Independent Market Research Consultant has indicated that
for annual office rental growth rates in the Huangpu district from Q42013-2014,
Q42014-2015, Q42015-2016 and Q42016-2017 is 6.8%, 6.0%, 7.8% and 5.6%,
respectively, implying a simple average growth rate of 6.6% from Q42014 to Q42017;
(ii) Retail: Colliers has assumed an 8% annual growth rate from Year 1 to Year 5, and 5%
from Year 5 onwards. In deriving the 8% annual growth rate from Year 1 to Year 5,
Colliers has taken into account the assumption that the current market rate for Lippo
Plaza Property is lower than the market rental rate for prime retail properties in
Shanghai and is expected to grow at a faster rate over the next five years, before
stabilizing at 5% annually. Both assumptions in Year 1 to Year 5, and from Year 5
onwards, take into account the historical growth rate of retail sales growth in Shanghai
and Chinas expected GDP growth rates over the next several years;
(c) Occupancy rate
(i) Office: Colliers has assumed an occupancy rate of 90% in Year 1 and 95% from Year 2
onwards, in which Colliers is of the view that it is in-line with the historical office
occupancy rate. Colliers is of the view that the property is currently undergoing a tenant
mix adjustment period, therefore Colliers has assumed that 90% occupancy rate will be
achieved in Year 1 and 95% occupancy rate will be achieved in Year 2 onwards after
taking into consideration the current market situation in terms of city-wide vacancy rates,
and the leasing strategy for the property. With reference to the Independent Market
Research Report, it should be noted that the Independent Market Research Consultant
has indicated that average occupancy rates for office properties in the Huangpu district
in 2010, 2011, 2012 and Q32013 are 96.0%, 93.8%, 93.1% and 93.1%, respectively; and
(ii) Retail: Colliers has assumed an occupancy rate of 95%, in which Colliers is of the view
that it is in-line with the historical retail occupancy rate (i.e. 100%, 98.7% and 97.8% as
at 31 December 2011, 31 December 2012 and 30 September 2013, respectively).
165
Property Sector Analysis
The charts below provide a breakdown of Gross Rental Income for the month of September 2013
and valuation of the IPO Portfolio by Property as at 30 September 2013
(1)
.
Breakdown of Gross Rental Income by Property
65.6%
34.4%
OUE Bayfront Property Lippo Plaza Property
Breakdown of Valuation by Property
69.9%
30.1%
OUE Bayfront Property Lippo Plaza Property
Note:
(1) Based on the higher of the two independent appraisal values for the Properties and inclusive of Income Support.
166
The charts below provide a breakdown of Gross Rental Income for the month of September 2013
and committed NLA of the IPO Portfolio by sector as at 30 September 2013.
Breakdown of Gross Rental Income by Sector
87.1%
12.9%
Office Retail
Breakdown of NLA by Sector
Retail Office
10.5%
89.5%
The Gross Revenue and average occupancy rates of the Properties for the Forecast Year 2014
and the Projection Year 2015 are presented below.
Average Occupancy Rate Gross Revenue
74.4
76.5
0
10
20
30
40
50
60
70
80
90
FY2014 PY2015
S$m
93.1% 96.6%
0%
20%
40%
60%
80%
100%
FY2014 PY2015
167
Trade Sector Analysis
IPO Portfolio
The chart below provides a breakdown of Gross Rental Income by trade sectors represented in
the IPO Portfolio for the month of September 2013.
Breakdown of Gross Rental Income by Trade Sector
30.9%
17.1%
11.7%
11.6%
8.3%
7.5%
5.7%
4.6%
2.5%
0.2%
Financial Services
Others
Legal Consulting Retail Real Estate
IT F&B Pharmaceutical Retail Services
(1)
Note:
(1) Others for the purposes of the breakdown of Gross Rental Income by trade sectors represented in the IPO Portfolio
includes trading, manufacturing, natural resources, beauty, logistics, food processing, advertising/publishing,
biotechnology and representative offices.
The chart below provides a breakdown of committed NLA by trade sectors represented in the IPO
Portfolio as at 30 September 2013.
Breakdown of NLA by Trade Sector
26.2%
22.3%
13.7%
8.5%
8.5%
6.3%
6.1%
4.9%
3.4%
0.1%
Financial Services Consulting Real Estate Legal Retail
IT F&B Pharmaceutical Retail Services
Others
(1)
Note:
(1) Others for the purposes of the breakdown of committed NLA by trade sectors represented in the IPO Portfolio
includes trading, manufacturing, natural resources, beauty, logistics, food processing, advertising/publishing,
biotechnology and representative offices.
168
Office Component
The chart below provides a breakdown of Gross Rental Income of the office component by trade
sectors in the Properties for the month of September 2013.
Breakdown of Gross Rental Income by Trade Sector
35.4%
13.4% 13.3%
19.8%
8.6%
6.6%
2.9%
Financial Services Legal Consulting Others
(1)
Real Estate IT Pharmaceutical
Note:
(1) Others for the purposes of the breakdown of Gross Rental Income of the office component by trade sectors in the
Properties includes trading, manufacturing, natural resources, beauty, logistics, food processing,
advertising/publishing, biotechnology and representative offices.
The chart below provides a breakdown of committed NLA of the office component by trade sectors
in the Properties as at 30 September 2013.
Breakdown of NLA by Trade Sector
29.3%
25.8%
15.3%
9.5%
9.5%
6.8%
3.8%
Financial Services Others
(1)
Consulting Legal Real Estate IT Pharmaceutical
Note:
(1) Others for the purposes of the breakdown of committed NLA of the office component by trade sectors in the
Properties includes trading, manufacturing, natural resources, beauty, logistics, food processing,
advertising/publishing, biotechnology and representative offices.
169
Retail Component
The chart below provides a breakdown of Gross Rental Income of the retail component by trade
sectors in the Properties for the month of September 2013.
Breakdown of Gross Rental Income by Trade Sector
Retail F&B Beauty Retail Services
58.0%
35.4%
1.8% 4.8%
Notes:
(1) Retail for the purposes of the breakdown of Gross Rental Income by trade sectors for the retail component
represented in the IPO Portfolio includes fashion.
(2) F&B for the purposes of the breakdown of Gross Rental Income by trade sectors for the retail component
represented in the IPO Portfolio includes catering.
The chart below provides a breakdown of committed NLA of the retail component by trade sectors
in the Properties as at 30 September 2013.
Breakdown of NLA by Trade Sector
Retail F&B Beauty Retail Services
47.7% 46.6%
4.9%
0.9%
170
Top 10 Tenants
1
The top 10 tenants
1
contributed 50.2% of the IPO Portfolios Gross Rental Income for the month
of September 2013.
Certain key tenants are also contracted on long-term leases which ensure the long-term stability
of the IPO Portfolio.
The following table sets out selected information on the top 10 tenants
(1)
for the IPO Portfolio by
Gross Rental Income for the month of September 2013.
No. Tenant Trade Sector
Lease
Expiry
Date
(2)
Percentage of
Gross Rental
Income (%)
1 Bank of America Merrill Lynch Financial and
Professional
Services
2021 18.9
2 Hogan Lovells International LLP Legal Services 2014 6.5
3 Bain & Company SE Asia, Inc. Financial and
Professional
Services
2015 4.7
4 Allen & Overy LLP Legal Services 2015 4.1
5 Citrix Systems Singapore Pte Ltd Information
Technology
2014 and
2015
4.1
6 OUE Limited Real Estate 2014 3.7
7 Skandinaviska Enskilda Banken AB
(PUBL), Singapore Branch
Financial and
Professional
Services
2015 3.2
8 Union Bancaire Privee (Singapore) Ltd Financial and
Professional
Services
2014 2.5
9 Richmile (Shanghai) Commerce &
Trading Limited
Retail 2014 1.4
10 Shanghai NE.Tiger Fur Fashion
Company Limited
Retail 2015 1.2
Top 10 Tenants
(1)
50.2
Other Tenants 49.8
Total 100.0
Notes:
(1) The list of top 10 tenants for the IPO Portfolio does not take into account two tenants who would otherwise be among
the top 10 tenants by Gross Rental Income as they have not consented to the disclosure of their tenancy
arrangements in this Prospectus.
(2) Some of the tenants above have signed more than one tenancy agreement and this has resulted in more than one
tenancy expiry date for such tenants.
(3) Financial and Professional Services includes trade sectors such as financial services and consulting.
1 In this context, the list of top 10 tenants for the IPO Portfolio does not take into account two tenants who would
otherwise be among the top 10 tenants by Gross Rental Income as they have not consented to the disclosure of their
tenancy arrangements in this Prospectus.
171
The tenancy profile of the IPO Portfolio is reasonably diversified, with no single tenant accounting
for more than 18.9% of the Gross Rental Income.
Lease Expiry Profile
The WALE by committed NLA of the IPO Portfolio as at 30 September 2013 is 2.7 years, and the
WALE by Gross Rental Income for the month of September 2013 is 2.8 years.
The leases at the Properties are generally for terms of one to three years. However, certain
tenants have longer lease periods that expire between 2018 and 2021. Such long-term lease
periods provide income stability to the IPO Portfolio whilst ensuring a favourable tenant mix.
Certain leases have renewal options for further terms and, in line with normal commercial practice,
such renewals are generally on like covenants as the original leases except for the determination
of the renewal rental rate, which will be determined according to prevailing market rents. As at 30
September 2013, approximately 37.1% of leases (by Gross Rental Income) are expected to expire
in the Forecast Year 2014 and this represents rental reversion potential for the IPO Portfolio.
The graph below illustrates the lease expiry profile of the Properties by Gross Rental Income and
committed NLA as at 30 September 2013.
0.6% 0.9%
37.1%
34.6%
29.0% 28.8%
10.4%
17.2%
0.9% 0.6%
3.1%
2.2%
18.9%
15.9%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2021
(1)
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
The table below sets out the number of leases expiring in the Properties for FY2013, the Forecast
Year 2014, the Projection Year 2015 and FY2016 and beyond (based on the leases as at 30
September 2013).
FY2013
(1)
Forecast
Year 2014
Projection
Year 2015 FY2016 FY2017 FY2018 FY2021
No. of leases expiring as
at 30 September 2013
2 63 42 34 5 2 1
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
172
Marketing and Leasing Activities
The Property Manager provides leasing, management and marketing services to the OUE
Bayfront Property and the centre management team of the Lippo Plaza Property provides leasing,
management and marketing services to Lippo Plaza Property. This enables OUE C-REIT to
maximise rental returns, achieve long term capital appreciation, market leadership in the
respective asset classes and maintain its brand position. The Property Manager may engage third
party service providers to perform certain property management services, provided that the
Property Manager will be responsible for the payment of fees to such third party service providers.
(See Certain Agreements Relating to OUE C-REIT and the Properties for further details.)
Lease Agreements and Lease Management
The lease agreements entered into for the Properties contain terms and conditions, including
those relating to the duration of the lease, provision of security deposit, as well as alteration and
improvement works, generally found in most office and retail lease agreements in Singapore and
the PRC. The Manager believes that the terms are in line with generally accepted market practice
and procedures.
When a prospective tenant has committed to a lease, a security deposit in the form of cash or
bankers guarantee equal to between three and six months gross rent (inclusive of service
charge) is typically payable. The tenant will take possession of the premises after it has made the
requisite payments and has formally executed the letter of offer. Rent and service charge is
typically payable in advance on a monthly basis. Turnover rent is payable on the retail leases.
The Property Manager will maintain close communication and good working relationships with
existing tenants and will meet with them regularly to address their needs. Lease renewal
negotiations will be held with tenants ahead of their lease expiries.
Arrears management procedures will also be enforced to ensure timely payment of rent and
service charge. The Manager believes that these proactive steps to retain tenants and reduce
rental in arrears will help maintain a stable income stream for OUE C-REIT.
The Property Manager also operates a comprehensive tenancy retention program to ensure,
where possible, certainty of long-term occupancy. In addition, the Property Manager will ensure
a good tenant mix for the Properties by attracting new brands to set up operations in the retail mall
where appropriate.
173
THE OUE BAYFRONT PROPERTY
50 Collyer Quay, OUE Bayfront, Singapore 049321
60 Collyer Quay, OUE Tower, Singapore 049322
62 Collyer Quay, OUE Link, Singapore 049325

D
T

1
6
C
E

1
B
A
Y
F
R
O
N
T
N
S
2
6
E
W
1
4
R
A
F
F
L
E
S
P
L
A
C
E
Marina Bay
Singapore River
OUE
Bayfront
One Raffles
Place
OUE
Downtown
OUE Tower
OUE Link
Legend
OUE Bayfront Property
ROFR Properties
(U
/C
)
Source: Independent Market Research Report.
174
Description of the OUE Bayfront Property
The OUE Bayfront Property is located at Collyer Quay in Singapores CBD. It comprises (i) OUE
Bayfront, an 18-storey premium office building with rooftop restaurant premises located at 50
Collyer Quay, which is complemented by retail facilities at its ancillary properties, namely (ii) OUE
Tower, a conserved tower building located at 60 Collyer Quay with panoramic views of the Marina
Bay landscape which is currently occupied by a fine dining restaurant, and (iii) OUE Link, a link
bridge located at 62 Collyer Quay with retail units.
Owing to its location between the new Marina Bay downtown and the Raffles Place financial hub,
OUE Bayfront has drawn a tenant base comprising multinational companies such as Bank of
America Merrill Lynch, Hogan Lovells International LLP, Allen & Overy LLP, Citrix Systems
Singapore Pte Ltd and Skandinaviska Enskilda Banken AB (PUBL), Singapore Branch, among
others.
Adjoining OUE Bayfront, OUE Tower has a NLA of 1,096.0 sq m spread over two levels. It is
currently occupied by Tng L Private Dining, a fine dining Chinese restaurant operated by the
established Tung Lok Group.
OUE Link serves as an important connector between Raffles Place and the OUE Bayfront
Property, providing the office population with enhanced connectivity to the new Marina Bay
financial district. The aerial mall linkway, with a NLA of approximately 250.0 sq m, is fully leased
to a line-up of retail and F&B options including The Dress Bar, mybagspa, Whitedivine,
Coffeesmith and Delifrance.
The table below sets out a summary of selected information on the OUE Bayfront Property.
Address OUE Bayfront: 50 Collyer Quay, OUE Bayfront,
Singapore 049321
OUE Tower: 60 Collyer Quay, OUE Tower,
Singapore 049322
OUE Link: 62 Collyer Quay, OUE Link,
Singapore 049325
Lot No. OUE Bayfront and OUE Tower: Lot 404K
OUE Link: Lot 70012W
Underpass: Lot 80020K
End Construction Year 2011
Committed Occupancy Rate as at
30 September 2013 (%)
Overall: 96.1
Office component: 95.9
Retail component: 100.0
Number of car park lots 245, including three handicap lots
Number of leasable floors OUE Bayfront: 15
OUE Tower: 2
OUE Link: 1
GFA (sq m) 46,774.6
NLA (sq m) Overall: 37,381.8
Office component: 35,551.7
Retail component: 1,830.1
Land Area (sq m) 6,447.5
(1)
Gross Revenue for the Forecast Year
2014 (S$ million)
50.4
175
Net Property Income for the Forecast
Year 2014 (S$ million)
36.9
Office Passing Rent for the month of
September 2013
S$10.4 per sq ft per month
Retail Passing Rent for the month of
September 2013
S$8.8 per sq ft per month
Independent Appraisal Values (as at
30 September 2013) (S$ million)
Savills: 1,115.0
Colliers: 1,135.0
Independent Appraisal Values
(without Income Support) (as at
30 September 2013) (S$ million)
Savills: 1,080.0
Colliers: 1,102.0
Number of tenants as at
30 September 2013
Overall: 45
Office component: 33
Retail component: 12
Government Lease Term OUE Bayfront and OUE Tower: 99-year leasehold
title commencing 12 November 2007
OUE Link: 15-year leasehold title commencing
26 March 2010
Underpass: 99-year leasehold title commencing
7 January 2002
WALE by committed NLA as at
30 September 2013 (years)
3.5
WALE by Gross Rental Income as at
30 September 2013 (years)
3.3
Note:
(1) Refers to the land area of OUE Bayfront and OUE Tower. In addition, the land area of OUE Link is 589.6 sq m, while
the land area of subterranean Lot 80020K is 60.8 sq m.
Trade Sector Analysis
The OUE Bayfront Property is predominantly an office property with the office component
contributing 95.6% of Gross Rental Income and 94.9% of NLA of the OUE Bayfront Property in the
month of September 2013 and as at 30 September 2013, respectively.
The charts below provide a breakdown of Gross Rental Income and committed NLA of the OUE
Bayfront Property by sector for the month of September 2013.
Breakdown of Gross Rental Income by Sector
Retail Office
95.6%
4.4%
176
Breakdown of NLA by Sector
Retail Office
94.9%
5.1%
The chart below provides a breakdown of Gross Rental Income by trade sectors represented in
the OUE Bayfront Property for the month of September 2013.
Breakdown of Gross Rental Income by Trade Sector
45.2%
17.8%
9.2%
8.7%
8.5%
6.2%
3.3% 0.7%
0.3%
Financial Services Legal Others Real Estate Consulting IT F&B Fashion Retail services
(1)
Note:
(1) Others for the purposes of the breakdown of Gross Rental Income by trade sectors represented in the OUE
Bayfront Property includes trading, manufacturing and natural resources.
177
The chart below provides a breakdown of committed NLA by trade sectors represented in the OUE
Bayfront Property as at 30 September 2013.
Breakdown of NLA by Trade Sector
46.5%
16.7%
8.9%
8.7%
7.4%
6.7%
4.5%
0.4%
0.2%
Financial Services Legal Consulting Real Estate Others IT F&B Fashion Retail services
(1)
Note:
(1) Others for the purposes of the breakdown of committed NLA by trade sectors represented in the OUE Bayfront
Property includes trading, manufacturing and natural resources.
Office Component
The chart below provides a breakdown of Gross Rental Income of the office component by trade
sectors in the OUE Bayfront Property for the month of September 2013.
Breakdown of Gross Rental Income by Trade Sector

47.3%
18.6%
9.7%
9.1%
8.9%
6.5%
Financial Services Legal Others Real Estate Consulting IT
(1)
Note:
(1) Others for the purposes of the breakdown of Gross Rental Income of the office component by trade sectors
represented in the OUE Bayfront Property includes trading, manufacturing and natural resources.
178
The chart below provides a breakdown of committed NLA of the office component by trade sectors
in the OUE Bayfront Property as at 30 September 2013.
Breakdown of NLA by Trade Sector
49.0%
17.6%
9.4%
9.2%
7.8%
7.1%
Financial Services Legal Consulting Real Estate Others IT
(1)
Note:
(1) Others for the purposes of the breakdown of committed NLA of the office component by trade sectors represented
in the OUE Bayfront Property includes trading, manufacturing and natural resources.
Retail Component
The chart below provides a breakdown of Gross Rental Income of the retail component by trade
sectors in the OUE Bayfront Property for the month of September 2013.
Breakdown of Gross Rental Income by Trade Sector
75.1%
17.0%
7.9%
F&B Fashion Retail services
179
The chart below provides a breakdown of committed NLA of the retail component by trade sectors
in the OUE Bayfront Property as at 30 September 2013.
Breakdown of NLA by Trade Sector
88.0%
8.4%
3.6%
F&B Fashion Retail services
Top 10 Tenants
The OUE Bayfront Propertys top 10 tenants contributed 76.4% of the OUE Bayfront Propertys
Gross Rental Income for the month of September 2013 and have a WALE by committed NLA of
4.0 years as at 30 September 2013.
The following table sets out selected information on the top 10 tenants for the OUE Bayfront
Property by Gross Rental Income for the month of September 2013.
No. Tenant Trade Sector
Lease
Expiry
Date
(1)
Percentage of
Gross Rental
Income (%)
1 Bank of America Merrill Lynch Financial and
Professional Services
2021 28.7
2 Hogan Lovells International LLP Legal Services 2014 9.9
3 Bain & Company SE Asia, Inc. Financial and
Professional Services
2015 7.2
4 Allen & Overy LLP Legal Services 2015 6.3
5 Citrix Systems Singapore
Pte Ltd
Information
Technology
2014 and
2015
6.2
6 OUE Limited Real Estate 2014 5.6
7 Skandinaviska Enskilda Banken
AB (PUBL), Singapore Branch
Financial and
Professional Services
2015 4.8
8 Union Bancaire Privee
(Singapore) Ltd
Financial and
Professional Services
2014 3.8
9 Tng L Private Dining Pte Ltd F&B 2016 2.0
10 Ma San Group Corporation Others 2014 1.8
180
No. Tenant Trade Sector
Lease
Expiry
Date
(1)
Percentage of
Gross Rental
Income (%)
Top 10 Tenants 76.4
Other Tenants 23.6
Total 100.0
Note:
(1) Some of the tenants above have signed more than one tenancy agreement and this has resulted in more than one
tenancy expiry date for such tenants.
(2) Financial and Professional Services includes trade sectors such as financial services and consulting.
Lease Expiry Profile
The graph below illustrates the lease expiry profile of the OUE Bayfront Property by Gross Rental
Income and committed NLA as at 30 September 2013.
0.0% 0.0%
35.5%
30.7%
26.5%
27.6%
6.7%
8.6%
1.4% 1.1% 1.1% 1.3%
28.7%
30.7%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Gross
Rental
Income
Gross
Rental
Income
Gross
Rental
Income
Gross
Rental
Income
Gross
Rental
Income
Gross
Rental
Income
Gross
Rental
Income
NLA
(1)
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2021
NLA NLA NLA NLA NLA NLA
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
The table below sets out the number of leases expiring in the OUE Bayfront Property for FY2013,
the Forecast Year 2014, the Projection Year 2015 and FY2016 and beyond (based on the leases
as at 30 September 2013).
FY2013
(1)
Forecast
Year 2014
Projection
Year 2015 FY2016 FY2017 FY2018 FY2021
No. of leases expiring as
at 30 September 2013
Nil 17 12 12 5 1 1
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
181
Office Component
The graph below illustrates the lease expiry profile of the office component of the OUE Bayfront
Property by Gross Rental Income and committed NLA as at 30 September 2013.
0.0% 0.0%
36.9%
32.2%
27.6%
29.0%
4.4%
5.6%
1.0% 0.9%
0.0% 0.0%
30.0%
32.3%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2021
(1)
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
The table below sets out the number of leases expiring in the office component of the OUE
Bayfront Property for FY2013, the Forecast Year 2014, the Projection Year 2015 and FY2016 and
beyond (based on the leases as at 30 September 2013).
FY2013
(1)
Forecast
Year 2014
Projection
Year 2015 FY2016 FY2017 FY2018 FY2021
No. of leases expiring as
at 30 September 2013
Nil 15 11 7 1 Nil 1
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
Retail Component
The graph below illustrates the lease expiry profile of the retail component of the OUE Bayfront
Property by Gross Rental Income and committed NLA as at 30 September 2013.
0.0% 0.0%
4.9%
2.5% 2.2%
1.2%
56.7%
65.9%
11.5%
4.8%
24.6%
25.6%
0.0% 0.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2021
(1)
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
182
The table below sets out the number of leases expiring in the retail component of the OUE
Bayfront Property for FY2013, the Forecast Year 2014, the Projection Year 2015 and FY2016 and
beyond (based on the leases as at 30 September 2013).
FY2013
(1)
Forecast
Year 2014
Projection
Year 2015 FY2016 FY2017 FY2018 FY2021
No. of leases expiring as
at 30 September 2013
Nil 2 1 5 4 1 Nil
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
Competition
Office
The OUE Bayfront Property is strategically situated between the Marina Bay and Raffles Place
areas, which together account for approximately 1.7 million sq m of office NLA space available
within the Singapore CBD out of a total of 2.2 million sq m. While several significant office
developments are expected in the pipeline supply, the combination of the OUE Bayfront Propertys
strategic location and accessibility, as well as the continued expansion and rejuvenation of
Singapores CBD, is expected to support growth in rental and capital values.
The OUE Bayfront Propertys office component has 10 comparables which are either premium or
Grade-A office properties within the Marina Bay and Raffles Place areas.
The table below sets out the details of the existing and future competitors of the OUE Bayfront
Property in the office space.
Development Location
Year of
Completion
Estimated
NLA (sq m)
Existing Premium or Grade-A Office Developments Within Marina Bay and Raffles
Place
Asia Square Tower 2 Marina Bay 2013 72,800
Marina Bay Financial Centre Tower 3 Marina Bay 2012 121,200
Asia Square Tower 1 Marina Bay 2011 114,200
Marina Bay Financial Centre Tower 2 Marina Bay 2010 96,200
Marina Bay Financial Centre Tower 1 Marina Bay 2010 58,600
One Raffles Place Tower Two Raffles Place 2012 31,700
Ocean Financial Centre Raffles Place 2011 80,600
Straits Trading Building Raffles Place 2009 14,700
One George Street Raffles Place 2004 41,300
One Marina Boulevard Raffles Place 2003 35,000
TOTAL 666,300
Future Supply of Grade-A Office Space in the Singapore CBD
CapitaGreen Market Street 2014 65,000
Robinson Square Robinson Road 2015 32,800
V on Shenton Shenton Way 2016 26,700
183
Development Location
Year of
Completion
Estimated
NLA (sq m)
Oxley Tower Robinson Road 2016 9,800
Office/Shopping development (previously
known as International Factors Building,
Robinson Towers and the Annex Building)
Robinson Road 2016 18,200
Marina One Marina Bay 2017 166,900
SBF Center Robinson Road 2017 21,000
TOTAL 340,400
Source: Independent Market Research Report.
Information Regarding the Title of the OUE Bayfront Property
The table below sets out some particulars of the lease for the OUE Bayfront Property.
Lot No. OUE Bayfront and OUE Tower: Lot 404K
OUE Link: Lot 70012W
Underpass: Lot 80020K
Grantor The President of the Republic of Singapore
Issue Date OUE Bayfront and OUE Tower: 25 January 2010
OUE Link: 28 September 2010
Underpass: 24 July 2009
Grantee Clifford Development Pte. Ltd.
Address OUE Bayfront: 50 Collyer Quay, OUE Bayfront,
Singapore 049321
OUE Tower: 60 Collyer Quay, OUE Bayfront,
Singapore 049322
OUE Link: 62 Collyer Quay, OUE Bayfront,
Singapore 049325
Land Area (sq m) 6,447.5
(1)
Permitted Use Lot 404K: Commercial
Lot 70012W: Overhead pedestrian bridge
Lot 80020K: Pedestrian underpass
Government Lease Term OUE Bayfront and OUE Tower: 99-year leasehold
title commencing 12 November 2007
OUE Link: 15-year leasehold title commencing
26 March 2010
Underpass: 99-year leasehold title commencing
7 January 2002
Note:
(1) Refers to the land area of OUE Bayfront and OUE Tower. In addition, the land area of OUE Link is 589.6 sq m, while
the land area of subterranean Lot 80020K is 60.8 sq m.
184
THE LIPPO PLAZA PROPERTY
222 Huaihai Zhong Road, Huangpu District, Shanghai, the PRC

Huangpu
Huai Hai Zhong Road
Lippo Plaza, Shanghai
K11
Shui On Plaza
Xin Tian Di
Yangpu
Hongkou
Zhabei
Putuo
Jingan
Changning
Xuhui
Source: Independent Market Research Report.
185
Description of the Lippo Plaza Property
Lippo Plaza is located at 222 Huaihai Zhong Road in the commercial district of Huangpu in central
Shanghai, the PRC. It is a 36-storey Grade-A commercial building used for office and retail
purposes and also comprises three basement levels consisting of commercial space and car park
lots. The Lippo Plaza Property comprises Lippo Plaza, excluding (i) Unit 2 on Basement 1, (ii) the
12th, 13th, 15th and 16th Floors, and (iii) four car park lots. Collectively, the Lippo Plaza Property
comprises approximately 90% of Lippo Plaza by GFA.
The table below sets out a summary of selected information on the Lippo Plaza Property.
Address 222 Huaihai Zhong Road, Huangpu District,
Shanghai, the PRC
State-owned Land Use Certificate No. Hu Fang Di Lu Zi (2011) No. 001727
((2011) 001727 )
End Construction Year 1999
Committed Occupancy Rate as at
30 September 2013 (%)
Overall: 88.2
Office component: 86.5
Retail component: 97.8
Number of car park lots 168
Number of leasable floors Office component: 26
Retail component: 4
GFA (sq m) Overall: 58,521.5
Office component: 37,773.3
Retail component: 9,217.1
Car parking and other components: 11,531.1
NLA (sq m) Overall: 39,232.0
Office component: 33,538.6
Retail component: 5,693.4
Land Area (sq m) 7,457.0
Gross Revenue for the Forecast Year
2014 (S$ million)
(1)
24.0
Net Property Income for the Forecast
Year 2014 (S$ million)
17.4
Office Passing Rent for the month of
September 2013
RMB271.8
(2)
per sq m per month
Retail Passing Rent for the month of
September 2013
RMB515.3 per sq m per month
Independent Appraisal Values (as at
30 September 2013) (S$ million)
Savills: 470.4
Colliers: 488.6
Independent Appraisal Values (as at
30 September 2013)
(local currency/million)
Savills: RMB2,250.0
Colliers: RMB2,337.0
Number of tenants as at
30 September 2013
Overall: 83
Office component: 72
(3)
Retail component: 11
(4)
Land use right expiry 50 years commencing 2 July 1994 to
1 July 2044
WALE by committed NLA as at
30 September 2013 (years)
1.7
WALE by Gross Rental Income as at
30 September 2013 (years)
1.7
186
Notes:
(1) Based on an exchange rate of S$1.00 : RMB4.7830.
(2) Excludes office space occupied by the centre management team of the Lippo Plaza Property and a business centre.
(3) As at 30 September 2013, two office tenants have also entered into letters of offer or lease agreements for retail
spaces.
(4) Excluding the two office tenants which have also entered into letters of offer or lease agreements for retail spaces.
Trade Sector Analysis
The Lippo Plaza Property is predominantly an office property with the office component
contributing 70.8% of Gross Rental Income and 83.9% of committed NLA of the Lippo Plaza
Property in the month of September 2013 and as at 30 September 2013, respectively.
The charts below provide a breakdown of Gross Rental Income and NLA of the Lippo Plaza
Property by sector as at 30 September 2013.
Breakdown of Gross Rental Income by Sector
70.8%
29.2%
Office Retail
Breakdown of NLA by Sector
83.9%
16.1%
Office Retail
187
The chart below provides a breakdown of Gross Rental Income by trade sectors represented in
the Lippo Plaza Property as at 30 September 2013.
Breakdown of Gross Rental Income by Trade Sector
22.7%
17.5%
16.1%
16.0%
7.3%
7.0%
5.1%
4.8%
3.5%
Retail Consulting Trading Pharmaceutical Catering
Property IT Financial Services
Others
(1)
Note:
(1) Others for the purposes of the breakdown of Gross Rental Income by trade sectors represented in the Lippo Plaza
Property includes manufacturing, beauty, logistics, food processing, advertising/publishing, biotechnology and
representative offices.
The chart below provides a breakdown of committed NLA by trade sectors represented in the
Lippo Plaza Property as at 30 September 2013.
Breakdown of NLA by Trade Sector
18.6%
18.5%
19.3%
12.5%
8.3%
7.0%
5.4%
5.3%
5.1%
Consulting
Others
Trading Retail Property Pharmaceutical
IT Catering Financial Services
(1)
Note:
(1) Others for the purposes of the breakdown of committed NLA by trade sectors represented in the Lippo Plaza
Property includes manufacturing, beauty, logistics, food processing, advertising/publishing, biotechnology and
representative offices.
188
Office Component
The chart below provides a breakdown of Gross Rental Income of the office component by trade
sectors in the Lippo Plaza Property as at 30 September 2013.
Breakdown of Gross Rental Income by Trade Sector
23.3%
24.8%
22.8%
10.2%
7.2%
6.8%
5.0%
Consulting Trading Pharmaceutical Property IT Financial Services Others
(1)
Note:
(1) Others for the purposes of the breakdown of Gross Rental Income of the office component by trade sectors
represented in the Lippo Plaza Property includes manufacturing, beauty, logistics, food processing,
advertising/publishing, biotechnology and representative offices.
The chart below provides a breakdown of committed NLA of the office component by trade sectors
in the Lippo Plaza Property as at 30 September 2013.
Breakdown of NLA by Trade Sector
24.1%
22.2%
23.0%
9.9%
8.4%
6.4%
6.1%
Others Consulting Trading Property Pharmaceutical IT Financial Services
Note:
(1) Others for the purposes of the breakdown of committed NLA of the office component by trade sectors represented
in the Lippo Plaza Property includes manufacturing, beauty, logistics, food processing, advertising/publishing,
biotechnology and representative offices.
189
Retail Component
The chart below provides a breakdown of Gross Rental Income of the retail component by trade
sectors in the Lippo Plaza Property as at 30 September 2013.
Breakdown of Gross Rental Income by Trade Sector
69.8%
24.0%
6.2%
Retail Catering Beauty
The chart below provides a breakdown of committed NLA of the retail component by trade sectors
in the Lippo Plaza Property as at 30 September 2013.
Breakdown of NLA by Trade Sector
60.6%
33.0%
6.5%
Retail Catering Beauty
190
Top 10 Tenants
1
The Lippo Plaza Propertys top 10 tenants
1
contributed 29.6% of the Lippo Plaza Propertys Gross
Rental Income for the month of September 2013 and have a WALE by committed NLA of 1.3 years
as at 30 September 2013.
The following table sets out selected information on the top 10 tenants
(1)
for the Lippo Plaza
Property by Gross Rental Income for the month of September 2013.
No. Tenant Trade Sector
Lease
Expiry
Date
(2)
Percentage of
Gross Rental
Income (%)
1 Richmile (Shanghai) Commerce &
Trading Limited
Retail 2014 4.0
2 Shanghai NE.Tiger Fur Fashion
Company Limited
Retail 2015 3.6
3 Bole Associates, Ltd Consulting 2014 3.5
4 IFX Markets Ltd, Shanghai
Representative Office
Others 2015 3.4
5 Techpool Bio-Pharma Co., Ltd Pharmaceutical 2015 2.8
6 Shanghai Xinyi Real Estate Agent &
Consulting Limited
Property 2014 2.6
7 Fu Jiang Fang Catering &
Beverage Limited
Catering 2014 2.6
8 Servier (Tianjin) Pharmaceutical
Company, Limited
Pharmaceutical 2015 2.4
9 Yunsan (Shanghai) Limited Trading 2014 2.4
10 Shanghai Zunya Enterprise
Limited Company
Trading 2015 and
2016
2.2
Top 10 Tenants
(1)
29.6
Other Tenants 70.4
Total 100.0
Notes:
(1) The list of top 10 tenants of the Lippo Plaza Property does not take into account two tenants who would otherwise
be among the top 10 tenants by Gross Rental Income as they have not consented to the disclosure of their tenancy
arrangements in this Prospectus.
(2) Some of the tenants above have signed more than one tenancy agreement and this has resulted in more than one
tenancy expiry date for such tenants.
The tenancy profile of the Lippo Plaza Property is reasonably diversified, with no single tenant
accounting for more than 4.0%, of the Gross Rental Income of the Lippo Plaza Property.
1 In this context, the list of top 10 tenants for the Lippo Plaza Property does not take into account two tenants who
would otherwise be among the top 10 tenants by Gross Rental Income as they have not consented to the disclosure
of their tenancy arrangements in this Prospectus.
191
Lease Expiry Profile
The graph below illustrates the lease expiry profile of the Lippo Plaza Property by Gross Rental
Income and committed NLA as at 30 September 2013.
1.8% 1.8%
40.1%
38.8%
33.8%
30.0%
17.3%
26.3%
0.0% 0.0%
6.9%
3.1%
0.0% 0.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2021
(1)
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
The table below sets out the number of leases expiring in the Lippo Plaza Property for FY2013,
the Forecast Year 2014, the Projection Year 2015 and FY2016 and beyond (based on the leases
as at 30 September 2013).
FY2013
(1)
Forecast
Year 2014
Projection
Year 2015 FY2016 FY2017 FY2018 FY2021
No. of leases expiring as
at 30 September 2013
2 46 30 22 Nil 1 Nil
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
Office Component
The graph below illustrates the lease expiry profile of the office component of the Lippo Plaza
Property by Gross Rental Income and committed NLA as at 30 September 2013.
1.7% 2.0%
47.4%
42.8%
33.7%
30.4%
17.2%
24.8%
0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2021
(1)
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
192
The table below sets out the number of leases expiring in the office component of the Lippo Plaza
Property for FY2013, the Forecast Year 2014, the Projection Year 2015 and FY2016 and beyond
(based on the leases as at 30 September 2013).
FY2013
(1)
Forecast
Year 2014
Projection
Year 2015 FY2016 FY2017 FY2018 FY2021
No. of leases expiring as
at 30 September 2013
1 43 23 20 Nil Nil Nil
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
Retail Component
The graph below illustrates the lease expiry profile of the retail component of the Lippo Plaza
Property by Gross Rental Income and NLA as at 30 September 2013.
2.0%
0.7%
22.5%
18.5%
34.0%
28.1%
17.6%
33.9%
0.0% 0.0%
23.8%
18.8%
0.0% 0.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA Gross
Rental
Income
NLA
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2021
(1)
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
The table below sets out the number of leases expiring in the retail component of the Lippo Plaza
Property for FY2013, the Forecast Year 2014, the Projection Year 2015 and FY2016 and beyond
(based on the leases as at 30 September 2013).
FY2013
(1)
Forecast
Year 2014
Projection
Year 2015 FY2016 FY2017 FY2018 FY2021
No. of leases expiring as
at 30 September 2013
1 3 7 2 Nil 1 Nil
Note:
(1) This refers to the period from 1 October 2013 to 31 December 2013.
Competition
Office
Given the limited availability of land for development within the Huangpu district and consequently
limited pipeline supply, as well as the concentration of the Huangpu districts Grade-A office stock
along Huaihai Zhong Road, the Lippo Plaza Property is in prime position to capitalise on the
favourable office market dynamics within the Huangpu district to benefit from growth in rental and
capital values.
193
The Lippo Plaza Propertys office component has nine comparables which are Grade-A office
developments within the Huangpu district.
The table below sets out the details of the existing competitors of the Lippo Plaza Property in the
office space.
Development
Year of
Completion
Estimated
GFA (sq m)
Existing Grade-A Office Developments within the Huangpu District
Sun Hung Kai Central Plaza 2011 56,755
Shui On Plaza 2011 20,000
Plaza 336 2010 36,610
Hongyi Centre 2009 15,790
Raffles City 2008 38,000
Ocean Towers 2007 23,370
Headquarters Plaza 2007 47,000
Corporate Avenue Phase I 2004 15,470
Corporate Avenue Phase II 2002 74,020
TOTAL 327,015
Future Supply of Grade-A Office Space within the Huangpu District
Zhongshan South Road Project (Plot 4) 2014 44,980
Bund Plot 204 2014 79,970
Bund International Finance Service Centre (Plot 8-1) 2015 189,930
TOTAL 314,880
Source: Independent Market Research Report.
Retail
The Lippo Plaza Propertys retail component has 11 comparables which are located within the
Huangpu district.
The table below sets out the details of the existing competitors of the Lippo Plaza Property in the
retail space.
Development
Year of
Completion
Estimated
NLA (sq m)
Existing Retail Developments within the Huangpu district
Shanghai International Commerce Centre 2013 109,346
Hong Kong New World Plaza 2013 40,000
Agile International Plaza 2012 22,000
Hongyi Plaza 2010 25,000
Xintiandi Fashion 2010 40,000
Bailian Shimao International Plaza 2004 30,000
Raffles City 2003 40,000
Xintiandi 2002 60,000
Shanghai Times Square 2000 40,000
Central Plaza 1999 12,000
Hong Kong Plaza 1998 38,000
Total 456,346
Source: Independent Market Research Report.
194
Information Regarding the Title of the Lippo Plaza Property
The table below sets out some particulars of the Real Estate Title Certificate, including the
State-owned Land Use Right and Building Ownership.
Shanghai City Real Estate
Ownership Certificate
()
Hu Fang Di Lu Zi (2011) No. 001727
( (2011) 001727 )
Issuer Shanghai Housing Security and Administration
Bureau ()
Shanghai Planning and Land Resource
Administration Bureau ()
Issue Date 23 August 2011
User Lippo Realty (Shanghai) Limited ( ()
)
Location 222 Huaihai Zhong Road, Huangpu District,
Shanghai, the PRC
Type of Use Right Granted
Land Area (sq m) 7,457.0
Land Use Comprehensive (commercial, entertainment
and office)
Construction Floor Area (sq m) 58,521.5 (inclusive of (i) 4,234.7 sq m of refuge
area and area for mechanical use, and
(ii) 892.9 sq m of roof area)
Term of Land Use Right Land use right commencing 2 July 1994 to
1 July 2044
195
SPONSOR ROFR PROPERTIES
The Sponsor ROFR Properties include OUE Downtown 2, Downtown Gallery, U.S. Bank Tower
and One Raffles Place
1
, which the Sponsor would be obliged to offer to OUE C-REIT should the
Sponsor decide to divest.
OUE Downtown
6 Shenton Way, Singapore 068809
OUE Downtown comprises two tower blocks (namely OUE Downtown 1 and OUE Downtown 2),
a podium and a multi-storey car park.
OUE Downtown 1
2
and OUE Downtown 2
OUE Downtown 1, completed in 1974, is a 50-storey building and comprises three vertical zones,
while OUE Downtown 2, completed in 1994, is a 37-storey building. While both towers and the
podium were originally used as offices, the low and mid zones of OUE Downtown 1 will be
converted to serviced apartments and the original podium will be converted to a retail mall. The
high zone of OUE Downtown 1 and the whole of OUE Downtown 2 will remain as offices. This
conversion is expected to be completed in 2016.
Downtown Gallery
The original podium will be converted into a five-storey retail mall named Downtown Gallery.
Downtown Gallery will comprise F&B outlets and retail shops. There will be a supermarket at the
basement level. The existing office lobbies on the first level serving OUE Downtown 1 and OUE
Downtown 2 will be relocated to the fourth level, clearing the first three levels for an uninterrupted
mall stretching the entire length of the building. The first level and basement of the multi-storey
car park, as well as part of the third level, will be converted into retail space, with a link on the third
level connecting Downtown Gallery to the neighbouring V on Shenton, SGX Building and 78
Robinson Road.
OUE Downtown 2 and Downtown Gallery will have an estimated total GFA of approximately
77,900 sq m and retail NLA of approximately 14,800 sq m upon completion of the conversion
works, along with an office NLA of approximately 41,222.0 sq m as at 30 September 2013.
U.S. Bank Tower
633 West Fifth Street, Los Angeles, California, CA 90071
U.S. Bank Tower is one of the tallest buildings in the western U.S. and is located in downtown Los
Angeles. It comprises a 72-storey Class-A office building with six levels of underground parking,
along with an approximately 1.6 acre park above a separate five-level subterranean car park
facility, and has a NLA of approximately 133,988.5 sq m. It includes retail space and other
amenities, including a fitness centre and full-service restaurant.
1 The Sponsor owns an effective interest of approximately 40.8% in One Raffles Place through its 50.0% interest in
OUBC. The subject of the Sponsor ROFR is the Sponsors 50.0% interest in OUBC.
2 OUE Downtown 1 is not presently identified as one of the Sponsor ROFR Properties as the middle and low zones
of OUE Downtown 1 are expected to be converted into serviced apartments. Hence, including the entire OUE
Downtown 1 as a Sponsor ROFR Property would not be appropriate for OUE C-REIT. Where an asset or any part
thereof (including, for example, the high zone of OUE Downtown 1, if applicable) falls within the scope of the
Sponsor ROFR, the asset or any part thereof will, as a matter of course, be subject to the Sponsor ROFR. Following
strata subdivision, the multi-storey car park will be managed by the MCST, and the owners of OUE Downtown 1 will
hold shares in the MCST in proportion to their strata holdings.
196
One Raffles Place
1 Raffles Place, Singapore 048616
One Raffles Place is located in Singapores main financial district, above the Raffles Place MRT
station. It was previously known as OUB Centre. The development comprises One Raffles Place
Tower One, One Raffles Place Tower Two and the retail podium. One Raffles Place Tower One and
One Raffles Place Tower Two have an aggregate NLA of over 80,000 sq m of office, retail and
entertainment space. One Raffles Place Tower One currently comprises a 62-storey office tower
and a five-storey retail podium with a retail basement level. The newly-completed One Raffles
Place Tower Two, a 38-storey office building, has drawn keen demand from international
companies and professional firms, following the success of One Raffles Place Tower One. It has
also attracted tenants such as Virgin Active, a health club chain, Mubadala Petroleum (SE Asia)
Limited and Pramerica Real Estate Investors (Asia) Pte Ltd. One Raffles Place Tower Two has a
BCA Green Mark Platinum certification for its energy efficiency and environmentally sustainable
design.
The Sponsor owns an effective interest of approximately 40.8% in One Raffles Place through its
50.0% interest in OUBC, with the remaining interest in One Raffles Place being held by unrelated
third parties. OUBC is the registered owner of One Raffles Place and owns 81.54% of the
beneficial interest in One Raffles Place for itself. The remaining 18.46% of the beneficial interest
in One Raffles Place is held by OUBC in trust for United Overseas Bank Limited. The subject of
the Sponsor ROFR is the Sponsors 50.0% interest in OUBC. The Sponsors interest is subject to
pre-emption rights to other shareholders of OUBC, who are third parties not related to the
Sponsor, such that should the Sponsor wish to sell its shares in OUBC, it must first offer to sell
its shares to the other shareholders of OUBC at fair value. In the event that none of the other
shareholders of OUBC wish to purchase the Sponsors shares in OUBC, the Sponsor is then free
to dispose of its shares in OUBC to OUE C-REIT.
In relation to the Sponsor ROFR Properties, save for the Sponsors interest in One Raffles Place
which is subject to pre-emption rights to third parties, there are no prior overriding contractual
obligations in relation to the Sponsor ROFR which oblige the Sponsor to dispose of its interest in
such Sponsor ROFR Properties to a third party in preference to OUE C-REIT.
OTHER GENERAL INFORMATION ABOUT THE PROPERTIES
Capital Expenditure
Minimal capital expenditure is expected for the Properties for the Forecast Year 2014 and the
Projection Year 2015 due to the quality of the Properties.
(See Profit Forecast and Profit Projection Assumptions Capital Expenditure for further
details.)
Insurance
OUE C-REIT has in place insurance for the Properties that the Manager believes is adequate in
relation to the Properties and consistent with industry practice in Singapore and the PRC.
Insurance coverage for the OUE Bayfront Property includes fire accident, property damage,
terrorism, business interruption and public liability (including personal injury), while insurance
coverage for the Lippo Plaza Property includes public liability, business interruption, property all
risks (excluding terrorism), machinery breakdown and loss of profit. There are no significant or
unusual excess or deductible payments required under such policies. All insurance contracts
undergo a competitive bid process and insurance brokers are retained to identify requirements,
create specifications and evaluate bids with a view to determining the most appropriate coverage
and pricing.
197
There are, however, certain types of risks that are not covered by such insurance policies,
including acts of war. (See Risk Factors Risks Relating to Investing in Real Estate OUE
C-REIT may suffer material losses in excess of insurance proceeds or OUE C-REIT may not put
in place or maintain adequate insurance in relation to the Properties and its potential liabilities to
third parties for further details.)
Legal Proceedings
None of OUE C-REIT, the Manager, the Property Manager and/or the PRC Company is currently
involved in any material litigation nor, to the best of the Managers knowledge, is in any material
litigation or arbitration proceedings currently contemplated or threatened against OUE C-REIT, the
Manager, the Property Manager or the PRC Company.
Planning Requirement regarding OUE Link
In relation to the OUE Bayfront Property, it is a requirement that the link bridge comprising OUE
Link must be open at all times for public use as part of the public pedestrian network and directly
accessible via an escalator and/or staircases from the public area on the first storey.
Encumbrances
Prior to the Listing Date, the Properties will be subject to:
(i) The Lippo Plaza Property
the Existing Offshore Facility, which will be discharged simultaneously with the
acquisition of the entire issued share capital of the BVI Company pursuant to the
Tecwell Share Purchase Agreement; and
the Existing Onshore Facility (including the mortgage over the Lippo Plaza Property),
which will be refinanced and discharged on the next Business Day following the Listing
Date, by way of drawing down on the New Onshore Facility.
(ii) The OUE Bayfront Property
the S$460 million (equivalent in US$) term facility granted by CIMB Bank Berhad,
Singapore Branch to Clifford Development Pte. Ltd. as the borrower (including the
mortgage over the OUE Bayfront Property lodged by CIMB Bank Berhad, Singapore
Branch at the Singapore Land Authority), which will be discharged prior to the
completion of the Property Sale and Purchase Agreement.
Upon listing, OUE C-REIT will have in place the Term Loan Facilities and the Revolving Credit
Facility in relation to the OUE Bayfront Property as well as the New Onshore Facility in relation
to the Lippo Plaza Property.
The Term Loan Facilities and the Revolving Credit Facility in relation to the OUE Bayfront Property
will be secured by:
a registered first legal mortgage over OUE Bayfront;
legal assignment of all insurance taken in respect of the OUE Bayfront Property and with the
security agent, Oversea-Chinese Banking Corporation Limited, named as Loss Payee save
in respect of third party liability insurance including workmens compensation. Original cover
notes and certified true copies of the policies shall be lodged with the security agent together
with the premium receipts; and
198
assignment of all rights, titles, benefits and interest of the borrower in connection with (i) any
lease or tenancy agreements, (ii) lease or tenancy deposits/proceeds, (iii) sales agreements,
(iv) sales deposits/proceeds, (v) Deed of Income Support, and (vi) property management
agreements in respect of the OUE Bayfront Property; and
a debenture incorporating a fixed charge over book debts, charged accounts, goodwill,
intellectual property and plant and machinery in connection with OUE Bayfront and floating
charge over generally all of the present and future assets of OUE C-REIT in connection with
OUE Bayfront.
The New Onshore Facility in relation to the Lippo Plaza Property will be secured by:
a first priority mortgage over the PRC Companys rights, title and interests in the Lippo Plaza
Property;
the account control (to the extent feasible under relevant laws and regulations) over the bank
accounts (except the basic account) of the PRC Company relating to the Lippo Plaza
Property, which bank accounts shall include cash collection accounts and interest reserve
accounts;
subject to the mutual agreement of the lenders and the PRC Company, an assignment of
rights under the property management agreement, insurance policies save in respect of third
party liability insurance with the security agent, Standard Chartered Bank (China) Limited,
Shanghai Branch, named as First Loss Payee; and
first priority pledge over receivables from the Lippo Plaza Property including all monetary
rights, title, claims and interest, present and future, actual and contingent arising from any
existing and future tenancy agreements with respect to any part of the Lippo Plaza Property.
199
THE MANAGER AND CORPORATE GOVERNANCE
OUE C-REIT
The Manager
The Manager, OUE Commercial REIT Management Pte. Ltd., was incorporated in Singapore
under the Companies Act on 4 October 2013. It has a paid-up capital of S$1,000,000. Its
registered office is located at 50 Collyer Quay #04-08, OUE Bayfront, Singapore 049321, and its
telephone number and fax number are +65 6809 8700 and +65 6809 8701, respectively. The
Manager is a wholly-owned subsidiary of the Sponsor.
The Manager has been issued a CMS Licence pursuant to the SFA on [] and is regulated by the
MAS.
The Trustee
The trustee of OUE C-REIT is DBS Trustee Limited. The Trustee is a company incorporated in
Singapore and registered as a trust company under the Trust Companies Act. It is approved to act
as a trustee for authorised collective investment schemes under Section 289(1) of the SFA and is
regulated by the MAS. As at the date of this Prospectus, the Trustee has a paid-up capital of
S$2,500,000. The Trustees registered office is located at 12 Marina Boulevard, Marina Bay
Financial Centre Tower 3, Singapore 018982.
THE MANAGER OF OUE C-REIT
Management Reporting Structure
Board of Directors
Mr Christopher James Williams (Chairman and Non-Executive Non-Independent Director)
Mr Ng Lak Chuan (Audit and Risk Committee Chairman and Independent Director)
Mr Loh Lian Huat (Independent Director)
Mr Carl Gabriel Florian Stubbe (Independent Director)
Mr Jonathan Miles Foxall (Non-Executive Non-Independent Director)
Ms Tan Shu Lin (Chief Executive Officer and Executive Director)
Chief Executive Officer
Ms Tan Shu Lin (Chief Executive Officer
and Executive Director)
Chief Financial Officer
Ms Tan Bee Lian
Finance Manager
Ms Lim Mei Chin
Head of Asset and
Investment Management
Mr Yeo Kuang Hsing Rodney
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Board of Directors of the Manager
The Board is entrusted with the responsibility for the overall management of the Manager. The
following table sets forth certain information regarding the Directors:
Name Age Address Position
Mr Christopher James
Williams
54 c/o 50 Collyer Quay #04-08,
OUE Bayfront, Singapore 049321
Chairman and
Non-Executive
Non-Independent Director
Mr Ng Lak Chuan 50 c/o 50 Collyer Quay #04-08,
OUE Bayfront, Singapore 049321
Audit and Risk Committee
Chairman and
Independent Director
Mr Loh Lian Huat 50 c/o 50 Collyer Quay #04-08,
OUE Bayfront, Singapore 049321
Independent Director
Mr Carl Gabriel Florian
Stubbe
37 c/o 50 Collyer Quay #04-08,
OUE Bayfront, Singapore 049321
Independent Director
Mr Jonathan Miles Foxall 60 c/o 50 Collyer Quay #04-08,
OUE Bayfront, Singapore 049321
Non-Executive
Non-Independent Director
Ms Tan Shu Lin 40 c/o 50 Collyer Quay #04-08,
OUE Bayfront, Singapore 049321
Chief Executive Officer
and Executive Director
As evidenced by their respective business and working experience as set out below, the Board
collectively has the appropriate experience to act as the directors of the Manager and is familiar
with the rules and responsibilities of a director of a public-listed company and/or manager of a
public-listed REIT. In accordance with the requirements under the Listing Manual, save for Mr
Christopher James Williams, Mr Ng Lak Chuan and Mr Jonathan Miles Foxall, who have
previously served as directors of a public-listed company and/or managers of a public-listed REIT,
appropriate arrangements have been made to orientate the Directors in acting as a director of a
manager of a public listed REIT.
None of the Directors are related to one another, any substantial shareholder of the Manager or
any Substantial Unitholder (as defined herein).
None of the Independent Directors of the Manager sits on the boards of the principal subsidiaries
of OUE C-REIT that are based in jurisdictions other than in Singapore.
Each of the Independent Directors of the Manager confirms that they are able to devote sufficient
time to discharge their duties as an Independent Director of the Manager.
Experience and Expertise of the Board of Directors
Information on the business and working experience of the Directors is set out below:
Mr Christopher James Williams is the Chairman and a Non-Executive Non-Independent Director
of the Board.
Mr Williams is a founding partner of Howse Williams Bowers, Hong Kong and was previously a
partner of Richards Butler, Hong Kong from May 1994 to December 2007, a partner of Richards
Butler in Association with Reed Smith from January 2008 to December 2010 and a partner of Reed
Smith Richards Butler from January 2011 to December 2011. He is the Deputy Chairman of the
Sponsor and the Chairman of the OUE H-REIT Manager and the OUE H-BT Trustee-Manager. Mr
Williams was formerly the non-executive chairman of Food Junction Holdings Limited which was
previously listed on the SGX-ST.
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Mr Williams specialises in corporate finance, mergers and acquisitions, direct investment and
corporate restructurings and reorganisations. He also advises on corporate governance and
compliance. His practice encompasses Hong Kong and the Asia Pacific region, particularly
Indonesia and Singapore. He has been named in the Guide to the Worlds Leading Mergers and
Acquisitions Lawyers as well as the International Whos Who of Merger and Acquisition Lawyers
as one of the worlds top mergers and acquisitions lawyers.
Mr Williams qualified as a solicitor in England and Wales in 1986 and was admitted as a solicitor
in Hong Kong in 1991. He holds a Bachelor of Arts (Honours) in International Relations and
Economics from the University of Reading, United Kingdom.
Mr Ng Lak Chuan is the Audit and Risk Committee Chairman and an Independent Director of the
Board.
Mr Ng is currently a private investor and was previously the founding partner of Affinity Equity
Partners (HK) Limited, with overall responsibility for its investment activities in the PRC, Taiwan
and Hong Kong from 2004 to 2011. He has previously held directorships in AcrossAsia Multimedia
Limited (now known as AcrossAsia Limited) (a company listed on the Hong Kong Exchanges and
Clearing Limited) and MK Electron Co., Ltd (a company listed on the Korea Exchange).
Prior to founding Affinity Equity Partners (HK) Limited, he was with UBS Capital (Hong Kong) from
2001 to 2004, where his last held position was Partner and Head of Portfolio Management Group,
Asia Pacific. He was responsible for the review of new investment proposals, risk management of
investment portfolios and active restructuring of investee companies.
From 2000 to 2001, Mr Ng was Chief Financial Officer/Executive Director of AcrossAsia
Multimedia Limited (Hong Kong) and was with UBS Warburg in Singapore from 1996 to 2000,
where his last held position was Executive Director, Corporate Finance. From 1990 to 1996, he
was with Baring Brothers Limited, and from 1987 to 1990 he was with the Singapore
Administrative Service, with postings to the Ministry of Education and the Ministry of Home Affairs.
Mr Ng holds a Bachelor of Arts in Politics, Philosophy and Economics from the University of
Oxford, United Kingdom, and has completed the Corporate Finance course with the London
Business School, United Kingdom.
Mr Loh Lian Huat is an Independent Director of the Board.
Mr Loh Lian Huat is presently CEO of Silkrouteasia Capital Partners Pte Ltd, an investment
advisory, asset management and direct real estate investments firm. Prior to joining Silkrouteasia
Capital Partners Pte Ltd in 2011, Mr Loh was with MEAG Pacific Star Asset Management Pte Ltd,
where his last held position was Senior Vice President, Asset Management. From 2000 to 2005,
Mr Loh was with GIC Real Estate Pte Ltd, where his last held position was Vice President, Asset
Management.
Mr Loh holds a Bachelor of Science degree in Mechanical Engineering from the National Defense
Academy, Japan, and a Master of Science degree in defence technology from the Royal Military
College of Science, United Kingdom.
Mr Carl Gabriel Florian Stubbe is an Independent Director of the Board.
Mr Stubbe is currently the Chief Executive Officer of Peredigm Private Limited, a company
involved in packaging and marketing excess capacity for asset-heavy businesses. He founded the
company in April 2013 and is responsible for the overall strategic direction of the company.
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Prior to founding Peredigm Private Limited, Mr Stubbe was with Bank Julius Baer Singapore,
where his last held position was Director. From 2009 to 2010, he was Chief Executive Officer of
the Gaia Hotels Private Ltd., and from 2006 to 2008 he was with Grove International Partners LLP,
a global real estate private equity firm, where his last held position was Vice President. In 2006,
Mr Stubbe was with Colony Capital Asia, Ltd., a private international investment firm focusing
primarily on real estate-related assets and operating companies, and from 2003 to 2005 he was
with Global Hyatt Corporation in Chicago, U.S., where his last held position was Manager of
Acquisitions and Development.
Mr Stubbe graduated from the University of Massachusetts, U.S. with a Bachelor of Arts degree in
English, and holds a Master of Business Administration from Johnson and Wales University, U.S..
Mr Jonathan Miles Foxall is a Non-Executive Non-Independent Director of the Board.
Mr Foxall is currently the General Manager (Properties) of LCR and a director of Lippo Realty
Limited. Since Mr Foxall joined the Lippo group in 1991, he has completed numerous major
property acquisitions and disposals for the Lippo group and has been managing its property
portfolio outside of Indonesia. Mr Foxall has held various senior executive appointments and
directorships with the Lippo group. He has previously held directorships in Lippo China Resources
Limited, The Hong Kong Building Loan Agency Limited and Asia Securities International Limited
(now known as Dan Form Holdings Company Limited), which are companies which are listed on
the Hong Kong Exchanges and Clearing Limited.
Mr Foxall spearheaded the Lippo groups venture into the Singapore property market, during
which he firmly established the Lippo group as a major foreign property developer and investor in
Singapore.
Mr Foxall began his career in Hong Kong with the Sales and Leasing Department of Vigers Hong
Kong in 1984 and rose to become an Associate Partner in 1985. Between 1988 and 1991, he was
a Director of First Pacific Davies HK (now known as Savills Hong Kong) where he led a team of
real estate professionals in its Investment Department which successfully completed a prolific
number of both investment and development site sales to both local and international investors
and developers.
He has more than 37 years of experience in property investment and development, sales and
leasing, valuation and the structuring of property transactions in the Asia-Pacific region including
Australia, Hong Kong, Singapore, Korea, Macau, Thailand and Malaysia, as well as in the United
Kingdom.
Mr Foxall graduated with a Bachelor of Arts in Geography from Liverpool University, United
Kingdom, and he is both a Fellow of the Royal Institution of Chartered Surveyors of the United
Kingdom and the Hong Kong Institute of Surveyors.
Ms Tan Shu Lin is the Chief Executive Officer of the Manager and an Executive Director of the
Board.
Ms Tan has extensive experience in corporate finance, investments, mergers and acquisitions,
financial management and investors relations, with more than 11 years of experience in direct real
estate investments and fund management.
Prior to joining the Manager, Ms Tan was with Ascendas Funds Management Pte Ltd, the manager
of Ascendas REIT (A-REIT), currently the largest business space and industrial REIT listed on
the SGX-ST, from 2008 to 2013. Ms Tans designation was Head, Singapore Portfolio and Head,
Capital Markets and Transactions, where she had overall strategic direction, operational and
capital structure responsibilities for A-REITs portfolio. She led and managed a team of portfolio
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managers and assets managers to achieve A-REITs operational and organisation goals and
objectives. She was also responsible for formulating and executing appropriate strategies and
plans to meet all the funding requirements of A-REIT, as well as investors relations.
From 2007 to 2008, Ms Tan was with the wealth management segment of UBS as Director, Real
Estate Investment Management. From 2005 to 2007, Ms Tan was with Ascendas Funds
Management Pte Ltd and from 2001 to 2005, she was with Ascendas Pte Ltd, the sponsor of
A-REIT, where she held various positions within its Real Estate Fund Management and Real
Estate Development and Investment departments. Her responsibilities and duties included,
among others, sourcing, evaluating and structuring potential acquisition and development
opportunities, as well as exploring and evaluating property fund management opportunities.
From 1998 to 2001, Ms Tan was with PrimePartners Asset Management Pte Ltd, where her
responsibilities included analysing, evaluating and executing potential private equity investment
opportunities. Between 1995 and 1998, Ms Tan was with various banks where her responsibilities
included advising companies on capital market transactions and other fund-raising exercises,
including capital and equity restructuring and initial public offerings.
Ms Tan holds a Bachelor of Arts (First Class Honours) in Economics from the University of
Portsmouth, United Kingdom, and is also a Chartered Financial Analyst.
List of Present and Past Principal Directorships of Directors
A list of the present and past directorships of each Director over the last five years preceding the
Latest Practicable Date is set out in Appendix H, List of Present and Past Principal Directorships
of Directors and Executive Officers.
Roles of the Board
The key roles of the Board are to:
guide the corporate strategy and directions of the Manager;
ensure that senior management discharges business leadership and demonstrates the
highest quality of management skills with integrity and enterprise;
ensure that measures relating to corporate governance, financial regulations and other
required policies are in place and enforced; and
oversee the proper conduct of the Manager.
The Board comprises six directors. The Audit and Risk Committee comprises Mr Ng Lak Chuan,
Mr Loh Lian Huat and Mr Carl Gabriel Florian Stubbe. Mr Ng Lak Chuan will assume the position
of Chairman of the Audit and Risk Committee.
The Board shall meet to review the key activities and business strategies of the Manager. The Board
intends to meet regularly, at least once every quarter, to deliberate the strategies of OUE C-REIT,
including acquisitions and divestments, funding and hedging activities, approval of the annual budget
and review of the performance of OUE C-REIT. The Board or the relevant board committee will also
review OUE C-REITs key financial risk areas and the outcome of such reviews will be disclosed in the
annual report or where the findings are material, immediately announced via SGXNET.
Each Director has been appointed on the basis of his professional experience and ability to
contribute to the proper guidance of OUE C-REIT.
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The Board will have in place a set of internal controls which sets out approval limits for operational
and capital expenditures, investments and divestments, bank borrowings and cheque signatory
arrangements. In addition, sub-limits are also delegated to various management levels to facilitate
operational efficiency.
Taking into account the fact that OUE C-REIT was constituted as a private trust only on 10 October
2013 and will only acquire the IPO Portfolio on the Listing Date, the Board, in concurrence with
the Audit and Risk Committee, and taking into consideration the Sponsors internal group controls
and risk management framework, are of the opinion that the internal controls as are further
described in:
The Manager and Corporate Governance The Manager of OUE C-REIT Board of
Directors of the Manager Roles of the Board;
The Manager and Corporate Governance Corporate Governance of the Manager Board
of Directors of the Manager;
The Manager and Corporate Governance Corporate Governance of the Manager Audit
and Risk Committee;
The Manager and Corporate Governance Corporate Governance of the Manager
Compliance Officer;
The Manager and Corporate Governance Corporate Governance of the Manager
Dealings in Units;
The Manager and Corporate Governance Corporate Governance of the Manager
Management of Business Risk;
The Manager and Corporate Governance Corporate Governance of the Manager
Potential Conflicts of Interest;
The Manager and Corporate Governance Related Party Transactions The Managers
Internal Control System;
The Manager and Corporate Governance Related Party Transactions Role of the Audit
and Risk Committee for Related Party Transactions;
The Manager and Corporate Governance Related Party Transactions Related Party
Transactions in Connection with the Setting Up of OUE C-REIT and the Offering;
The Manager and Corporate Governance Related Party Transactions Exempted
Agreements; and
The Manager and Corporate Governance Related Party Transactions Future Related
Party Transactions,
will be adequate in addressing financial, operational and compliance risks faced by OUE C-REIT.
The members of the Audit and Risk Committee will monitor changes to regulations and accounting
standards closely. To keep pace with regulatory changes, where these changes have an important
bearing on the Managers or the Directors disclosure obligations, the Directors will be briefed
either during Board meetings or at specially convened sessions involving relevant professionals.
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Management will also provide the Board with complete and adequate information in a timely
manner through regular updates on financial results, market trends and business developments.
The positions of Chairman of the Board and Chief Executive Officer are separately held by two
persons in order to maintain an effective check and balance. The Chairman of the Board is Mr
Christopher James Williams, while the Chief Executive Officer is Ms Tan Shu Lin.
There is a clear separation of the roles and responsibilities between the Chairman and the Chief
Executive Officer of the Manager. The Chairman is responsible for the overall management of the
Board as well as ensuring that the members of the Board and the management work together with
integrity and competency, and that the Board engages the management in constructive debate on
strategy, business operations, enterprise risk and other plans. The Chief Executive Officer has full
executive responsibilities over the business directions and operational decisions in the day-to-day
management of the Manager.
At least half of the Directors are non-executive and independent. This enables the management
to benefit from their external, diverse and objective perspective on issues that are brought before
the Board. It would also enable the Board to interact and work with the management through a
robust exchange of ideas and views to help shape the strategic process. This, together with a
clear separation of the roles of the Chairman and the Chief Executive Officer, provide a healthy
professional relationship between the Board and the management, with clarity of roles and robust
oversight as they deliberate on the business activities of the Manager.
The Board has separate and independent access to senior management and the company
secretary(s) at all times. The company secretary(s) attends to corporate secretarial administration
matters and attends all Board meetings. The Board also has access to independent professional
advice where appropriate and when requested.
Executive Officers of the Manager
The Executive Officers are entrusted with the responsibility for the daily operations of the
Manager. The following table sets forth information regarding the Executive Officers:
Name Age Address Position
Ms Tan Shu Lin 40 c/o 50 Collyer Quay #04-08,
OUE Bayfront, Singapore 049321
Chief Executive Officer
and Executive Director
Ms Tan Bee Lian 43 c/o 50 Collyer Quay #04-08,
OUE Bayfront, Singapore 049321
Chief Financial Officer
Mr Yeo Kuang Hsing
Rodney
42 c/o 50 Collyer Quay #04-08,
OUE Bayfront, Singapore 049321
Head of Asset and
Investment Management
Ms Lim Mei Chin 31 c/o 50 Collyer Quay #04-08,
OUE Bayfront, Singapore 049321
Finance Manager
Experience and Expertise of the Executive Officers of the Manager
Information on the working experience of the Executive Officers is set out below:
Ms Tan Shu Lin is the Chief Executive Officer of the Manager and an Executive Director of the
Board.
Details of her working experience are set out in the section The Manager and Corporate
Governance The Manager of OUE C-REIT Board of Directors of the Manager Experience
and Expertise of the Board of the Manager.
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Ms Tan Bee Lian is the Chief Financial Officer of the Manager.
Ms Tan has over 20 years of finance and accounting experience in the real estate industry.
Ms Tan was formerly the Deputy CFO of Perennial China Retail Trust Management Pte Ltd, which
is the trustee-manager of Perennial China Retail Trust (PCRT), from September 2011 to March
2013 where she oversaw all aspects of financial matters relating to PCRT, including the
acquisition by PCRT of real estate located in the PRC.
From March 2008 to August 2011, Ms Tan was with LaSalle Investment Management, where she
was initially Associate Director, Finance and subsequently, National Director, Finance,
responsible for overall financial reporting, financing, cash management, tax and other finance-
related matters in respect of the investments by the core fund managed by LaSalle Investment
Management across five Asian countries.
Prior to joining LaSalle, Ms Tan worked with CapitaCommercial Trust Management Limited (which
is the manager of CapitaCommercial Trust) from November 2005 to March 2008 where her last
held position was Senior Manager, Finance, during which she was responsible for the finance and
accounting activities of CapitaCommercial Trust.
From March 2004 to November 2005, Ms Tan was Manager, Finance at Ascendas-MGM Funds
Management Ltd (as it was then known) which was the manager of A-REIT, where she was
responsible for the finance and accounting activities of A-REIT. From December 1998 to October
2003, Ms Tan was with Ascendas Land (Singapore) Pte Ltd, where her last held position was
Manager, Finance, during which she worked on, among other things, the initial public offering of
A-REIT. From April 1991 to May 1992, Ms Tan was with the Trading Division of Ho Bee Investment
Pte Ltd and from May 1992 to June 1998, Ms Tan was with the Property Division of Ho Bee
Investment Pte Ltd where her last held position was Assistant Manager, Finance & Administration.
Ms Tan has obtained a diploma in accountancy from Ngee Ann Polytechnic and an Association of
Chartered Certified Accountants qualification. Ms Tan is a non-practising member of the Institute
of Singapore Chartered Accountants.
Ms Tan considers herself to be adequately familiar with the business and operations, accounting
and policies of OUE C-REIT despite having being employed with the Manager for less than six
months. After making all reasonable enquiries, and to the best of their knowledge and belief,
nothing has come to the attention of the members of the Audit and Risk Committee to cause them
to believe that Ms Tan does not have the competence, character and integrity expected of a Chief
Financial Officer of the Manager. The Audit and Risk Committee considers that Ms Tans chartered
accountant qualification coupled with her extensive experience of over 20 years of experience in
the real estate industry makes her a suitable candidate to be the Chief Financial Officer of the
Manager. On this basis, the Audit and Risk Committee is of the opinion that Ms Tan is suitable as
the Chief Financial Officer on the basis of her qualifications and relevant past experience.
Mr Yeo Kuang Hsing Rodney is the Head of Asset and Investment Management of the Manager.
Mr Yeo has over 10 years of experience in the real estate and finance industries of the U.S., the
PRC and Singapore.
Prior to joining the Sponsor, Mr Yeo was a self-employed consultant from March 2013 to
November 2013, where he engaged in real estate investment analysis and execution work. From
March 2011 to September 2012, Mr Yeo was with KOP Properties Pte Ltd, a real estate developer,
where his last held position was Director, Investments. He was responsible for investment
sourcing and screening, as well as acquisition and management of real estate assets (including
commercial, residential and hospitality real estate assets).
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From July 2007 to January 2010, Mr Yeo was with Wachovia Banks Real Estate Asia team in
Singapore, where his last held position was Vice President, Investment and Asset Management.
From 2006 to 2007, he was with Kailong REI in Shanghai, where he was responsible for sourcing
new investments and management of existing commercial assets. His last held position there was
Vice President, Investment and Asset Management.
From 2005 to 2006, Mr Yeo was with Goldman Sachs Commercial Mortgage Capital in Los
Angeles, U.S., where his last held position was Senior Associate. He was responsible for sourcing
and closing of commercial mortgage backed securities loans, financial analysis and client
relationship management. From 1999 to 2004, Mr Yeo was with McCarthy Cook & Co., a Los
Angeles-based real estate investment company, where his last held position was Associate. He
was responsible for financial analysis, market studies, conducting due diligence, investment
screening, asset and property management.
Mr Yeo graduated from the University of Southern California, U.S., with a Bachelor of Science
degree in Business Administration.
Ms Lim Mei Chin is the Finance Manager of the Manager.
Ms Lim was formerly the Finance Manager of the Sponsor, where she was responsible for the
management of the full spectrum of finance-related matters for assigned companies within the
Sponsor Group. Prior to joining the Sponsor in 2010, she was a Senior Auditor with the Defence
Science Technology, where she performed internal audit functions and reviewed internal
processes and controls.
Prior to that, Ms Lim was Internal Audit Manager with MediaCorp Pte Ltd from 2009 to 2010. From
2004 to February 2007 and from December 2007 to December 2008, she was with KPMG LLP
Singapore, where her last held position was Assistant Manager (Audit). At KPMG LLP Singapore,
she performed the full scope of audit procedures and some review procedures, such as internal
control testing, audit of individual financial statement captions and analytical review of financial
results. From February 2007 to August 2007, Ms Lim was with Banyan Tree Holdings Limited,
where she last held the position of an accountant, and from August 2007 to December 2007, she
was Assistant Manager at Daiwa Securities SMBC Singapore Limited (as it was then known),
where she was in charge of risk management duties.
Ms Lim holds a Bachelor of Accountancy degree from Nanyang Technological University, Singapore
and is also a non-practising member of the Institute of Singapore Chartered Accountants.
List of Present and Past Principal Directorships of Executive Officers
A list of the present and past directorships of each Executive Officer over the last five years
preceding the Latest Practicable Date is set out in Appendix H, List of Present and Past Principal
Directorships of Directors and Executive Officers.
Roles of the Executive Officers of the Manager
The Chief Executive Officer of the Manager will work with the Board to determine the strategy
for OUE C-REIT. The Chief Executive Officer will also work with the other members of the
management team to ensure that OUE C-REIT operates in accordance with the Managers stated
investment strategy. Additionally, the Chief Executive Officer will be responsible for planning the
future strategic development of OUE C-REIT. The Chief Executive Officer is also responsible for
strategic planning, the overall day-to-day management and operations of OUE C-REIT and
working with the Managers investment, asset management, financial and legal and compliance
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personnel in meeting the strategic, investment and operational objectives of OUE C-REIT. In the
area of investor relations, the Chief Executive Officer will be responsible for facilitating
communications and liaising with Unitholders.
The Chief Financial Officer of the Manager will work with the Chief Executive Officer and the
other members of the management team to formulate strategic plans for OUE C-REIT in
accordance with the Managers stated investment strategy. The Chief Financial Officer will be
responsible for applying the appropriate capital management strategy, including tax and treasury
matters, as well as finance and accounting matters, overseeing implementation of OUE C-REITs
short and medium-term business plans, fund management activities and financial condition.
The Head of Asset and Investment Management of the Manager is responsible for two integrated
functions investments and asset management. With respect to investments, he is responsible for
identifying, researching and evaluating potential acquisitions and related investments with a view to
enhancing OUE C-REITs portfolio and is concurrently responsible for divestments where a property
is no longer strategic or if it fails to enhance the value of OUE C-REITs portfolio or fails to be yield
accretive. He will also recommend and analyse potential asset enhancement initiatives. To support
these various initiatives, he will develop financial models to test the financial impact of different
courses of action. These findings will be research-driven to help develop and implement the
proposed initiatives.
With respect to asset management, the Head of Asset and Investment Management is responsible
for formulating the business plans in relation to OUE C-REITs properties with short, medium and
long term objectives, and with a view to maximising the rental income of OUE C-REIT via proactive
asset management. He will work closely with the Property Manager and the local property
manager for the Lippo Plaza Property to implement OUE C-REITs strategies so as to ensure that
the IPO Portfolio maximise their income generation potential and minimise their expense base
without compromising their marketability. He will also focus on the operations of OUE C-REITs
properties and the implementation of the short to medium term objectives of OUE C-REITs
portfolio.
The Finance Manager will work closely with the Chief Financial Officer in providing support to
C-REITs investment and asset management strategies through finance-related functions. These
include finance and accounting, budgeting, treasury and taxation matters.
Roles and Responsibilities of the Manager
The Manager has general powers of management over the assets of OUE C-REIT. The Managers
main responsibility is to manage OUE C-REITs assets and liabilities for the benefit of Unitholders.
The Manager will set the strategic direction of OUE C-REIT and give recommendations to the
Trustee on the acquisition, divestment and/or enhancement of assets of OUE C-REIT 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 efficient manner;
ensure that OUE C-REITs operations are carried on and conducted in a proper and efficient
manner; and
ensure that its Related Parties will conduct all transactions with or for OUE C-REIT on an
arms length basis and on normal commercial terms.
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The Manager will prepare property plans on a regular basis, which may contain proposals and
forecasts on Gross Revenue, 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 OUE C-REITs properties.
The Manager will also be responsible for ensuring compliance with the applicable provisions of the
SFA and all other relevant legislation, the Listing Manual, the Property Funds Appendix, the
Take-over Code, the Trust Deed, the CMS Licence, any 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 OUE C-REIT (upon such terms and
conditions as the Manager deems fit, including the charging or mortgaging of all or any part of the
Deposited Property) whenever the Manager considers, among others, that such borrowings are
necessary or desirable to enable OUE C-REIT to meet any liabilities or to finance the acquisition
of any property. However, the Manager must not direct the Trustee to incur a borrowing if to do so
would mean that OUE C-REITs total borrowings and deferred payments will exceed the limit
stipulated by the MAS based on the value of its Deposited Property at the time the borrowing is
incurred, taking into account deferred payments (including deferred payments for assets whether
to be settled in cash or in Units).
In the absence of fraud, gross 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 to be done 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, gross negligence, wilful default or breach of the Trust Deed
by the Manager.
The Manager may, in managing OUE C-REIT and in carrying out and performing its duties and
obligations under the Trust Deed, with the written consent of the Trustee, appoint such person to
exercise any or all of its powers and discretions and to perform all or any of its obligations under
the Trust Deed, provided always that the Manager shall be liable for all acts and omissions of such
persons as if such acts and omissions were its own.
The Manager has currently outsourced the legal, compliance, corporate secretariat, internal audit,
risk management and corporate communications functions to the Sponsor. The information
technology and systems management function will also be outsourced to the Sponsor or a third
party service provider.
Fees Payable to the Manager
Management Fee
The Manager is entitled under the Trust Deed to the following management fee:
a Base Fee at the rate of 0.3% per annum (or such lower percentage as may be determined
by the Manager in its absolute discretion) of the value of the Deposited Property; and
a Performance Fee at the rate of 25.0% per annum of the difference in DPU in a financial
year with the DPU in the preceding full financial year (calculated before accounting for the
Performance Fee but after accounting for the Base Fee in each financial year) multiplied by
the weighted average number of Units in issue for such financial year.
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For the purposes of calculating the Base Fee only, where OUE C-REIT holds its investments
through one or more SPVs, the Deposited Property shall include all the assets of the relevant SPV,
pro-rated, if applicable, to the proportion of OUE C-REITs interest in the relevant SPV.
The Performance Fee is payable if the DPU in any financial year exceeds the DPU in the
preceding financial year, notwithstanding that the DPU in the financial year in which the
Performance Fee is payable may be less than the DPU in the financial year prior to any preceding
financial year.
For the purpose of the computation of the Performance Fee only, the DPU shall be calculated
based on all income of OUE C-REIT arising from the operations of OUE C-REIT, such as, but not
limited to, rentals, interest, dividends, and other similar payments or income arising from the
Authorised Investments of OUE C-REIT but shall exclude any one-off income of OUE C-REIT such
as any income arising from any sale or disposal of (i) any real estate (whether directly or indirectly
through one or more SPVs) or any part thereof, and (ii) any investments forming part of the
Deposited Property or any part thereof.
For the Forecast Year 2014, the difference in DPU shall be the difference in actual annualised
DPU in such financial year with the forecast annualised DPU for the Forecast Year 2014 as set out
in the Profit Forecast and Profit Projection.
The Manager may elect to receive the Base Fee and Performance Fee in cash or Units or a
combination of cash and Units (as it may in its sole discretion determine). For the Forecast Year
2014 and the Projection Year 2015 (as defined herein), the Manager has elected to receive
100.0% of the Base Fee and 100.0% of the Performance Fee in the form of Units.
Any increase in the rate or any change in the structure of the Managers management fee must
be approved by an Extraordinary Resolution of Unitholders passed at a Unitholders meeting duly
convened and held in accordance with the provisions of the Trust Deed. For the avoidance of
doubt, the Managers change in its election to receive cash or Units or a combination of cash and
Units is not considered as a change in structure of the Managers Management Fee.
Acquisition Fee and Divestment Fee
The Manager is also entitled to:
an Acquisition Fee equivalent to 0.75% for acquisitions from Related Parties
1
and 1.0% for all
other cases (or such lower percentage as may be determined by the Manager in its absolute
discretion) of any of the following as is applicable (subject to there being no double-counting):
the acquisition price of any real estate purchased by OUE C-REIT, whether directly or
indirectly through one or more SPVs (plus any other payments
2
in connection with the
purchase of the real estate) (pro-rated if applicable to the proportion of OUE C-REITs
interest);
the underlying value
3
of any real estate which is taken into account when computing the
acquisition price payable for the equity interests of any vehicle holding directly or
indirectly the real estate purchased by OUE C-REIT, whether directly or indirectly
1 Related Party refers to an Interested Party and/or, as the case may be, an Interested Person.
2 Other payments refer to additional payments to the vendor of the real estate, for example, where the vendor has
already made certain payments for enhancements to the asset, and the value of the asset enhancements is not
reflected in the acquisition price as the asset enhancements are not completed, but do not include stamp duty or
other payments to third party agents and brokers.
3 For example, if OUE C-REIT acquires a SPV which holds real estate, such underlying value would be the value of the
real estate derived from the amount of equity paid by OUE C-REIT as the purchase price and any debt of the SPV.
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through one or more SPVs (plus any additional payments made by OUE C-REIT or its
SPVs to the vendor in connection with the purchase of such equity interests) (pro-rated
if applicable to the proportion of OUE C-REITs interest); or
the acquisition price of any investment purchased by OUE C-REIT, whether directly or
indirectly through one or more SPVs, in any debt securities of any property corporation
or other SPV owning or acquiring real estate or any debt securities which are secured
whether directly or indirectly by the rental income from real estate; and
a Divestment Fee equivalent to 0.5%
1
(or such lower percentage as may be determined by
the Manager in its absolute discretion) of each of the following as is applicable (subject to
there being no double-counting):
the sale price of any real estate sold or divested by OUE C-REIT, whether directly or
indirectly through one or more SPVs (plus any other payments
2
in addition to the sale
price received by OUE C-REIT or its SPVs from the purchaser connection with the sale
or divestment of the real estate) (pro-rated if applicable to the proportion of OUE
C-REITs interest);
the underlying value
3
of any real estate which is taken into account when computing the
sale price for the equity interests in any vehicle holding directly or indirectly the real
estate, sold or divested, whether directly or indirectly through one or more SPVs, by
OUE C-REIT (plus any additional payments received by OUE C-REIT or its SPVs from
the purchaser in connection with the sale or divestment of such equity interests)
(pro-rated if applicable to the proportion of OUE C-REITs interest); or
the sale price of any investment sold or divested by OUE C-REIT, whether directly or
indirectly through one or more SPVs, in any debt securities of any property corporation
or other SPV owning or acquiring real estate or any debt securities which are secured
whether directly or indirectly by the rental income from real estate.
In accordance with the Property Funds Appendix, where the Manager receives a percentage-
based fee when OUE C-REIT acquires real estate from an Related Party, or disposes of real
estate to an Related Party, the Acquisition Fee or, as the case may be, the Divestment Fee should
be in the form of Units issued by OUE C-REIT at prevailing market price(s) instead of cash, such
Units not to be sold within one year from the date of their issuance.
No Acquisition Fee is payable for the acquisition of the Properties.
Any payment to third party agents or brokers in connection with the acquisition or divestment of
any assets of OUE C-REIT shall be paid by the Manager to such persons out of the Deposited
Property of OUE C-REIT or the assets of the relevant SPV, and not out of the Acquisition Fee or
the Divestment Fee received or to be received by the Manager.
The Acquisition Fee and Divestment Fee are payable to the Manager in the form of cash and/or
Units (as the Manager may elect) at the then prevailing market price(s) provided that in respect
of any acquisition and sale or divestment of real estate assets from/to Related Parties, such a fee
should be in the form of Units issued by OUE C-REIT at prevailing market price(s).
1 There will not be two tiers of Divestment Fee payable. The divestment fees payable by OUE C-REIT will be 0.5%
regardless of whether the divestment of assets by OUE C-REIT is to a Related Party or otherwise.
2 Other payments refer to additional payments to OUE C-REIT or its SPVs for the sale of the asset, for example,
where OUE C-REIT or its SPVs have already made certain payments for enhancements to the asset, and the value
of the asset enhancements is not reflected in the sale price as the asset enhancements are not completed, but do
not include stamp duty or other payments to third party agents and brokers.
3 For example, if OUE C-REIT sells or divests a SPV which holds real estate, such underlying value would be the value
of the real estate derived from the amount of equity received by OUE C-REIT as sale price and any debt of the SPV.
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Any increase in the maximum permitted level of the Managers Acquisition Fee or Divestment Fee
must be approved by an Extraordinary Resolution passed at a Unitholders meeting duly convened
and held in accordance with the provisions of the Trust Deed. For the avoidance of doubt, the
rates in relation to the Acquisition Fee and Divestment Fee payable to the Manager as stated
above are at the maximum permitted level under the Trust Deed.
Development Management Fee
1
The Manager is also entitled to receive a Development Management Fee equivalent to 3.0% of the
Total Project Costs incurred in a Development Project undertaken by the Manager on behalf of
OUE C-REIT. OUE C-REIT will only undertake development activities within the limits of the
Property Funds Appendix (which currently allows a REIT to commit no more than 10.0% of its
deposited property to property development activities and investments in uncompleted property
developments).
Total Project Costs means the sum of the following (where applicable):
(i) construction cost based on the project final account prepared by the project quantity
surveyor;
(ii) principal consultants fees, including payments to the projects architect, civil and structural
engineer, mechanical and electrical engineer, quantity surveyor and project manager;
(iii) the cost of obtaining all approvals for the project;
(iv) site staff costs;
(v) interest costs on borrowings used to finance project cash flows that are capitalised to the
project in line with generally accepted accounting practices in Singapore; and
(vi) any other costs including contingency expenses which meet the definition of Total Project
Costs and can be capitalised to the project in accordance with generally accepted accounting
practices in Singapore.
For the avoidance of doubt, land costs will not be included in the computation of Total Project
Costs.
When the estimated Total Project Costs are greater than S$100.0 million, the Trustee and the
Managers independent directors will first review and approve the quantum of the Development
Management Fee, whereupon the Manager may be directed to reduce the Development
Management Fee. Further, in cases where the market pricing for comparable services is, in the
Managers view, materially lower than the Development Management Fee, the Manager will have
the discretion to accept a Development Management Fee which is less than 3.0% of the Total
Project Costs incurred in a Development Project undertaken by the Manager on behalf of OUE
C-REIT.
The Development Management Fee is payable to the Manager in the form of cash and/or Units (as
the Manager may elect) provided that in such proportions as may be determined by the Manager.
1 The services that the Manager may provide in relation to the Development Management Fee would include the
provision of services (a) from the design (pre-construction) phase, such as working with the relevant consultants in
respect of the design and to finalise the details in respect of the work to be carried out, (b) to the construction phase,
such as monitoring the performance of the contractors, consultants and other service providers in respect of the
delivery of the project and (c) up to the completion phase, such as supervising and assisting in the finalisation of
accounts with the quantity surveyors and other consultants.
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For the avoidance of doubt, in respect of the same Development Project, the Manager will not be
entitled to concurrently receive both the Development Management Fee as well as the Acquisition
Fee. Where project management fees are payable to the Property Manager, there will not be any
Development Management Fees payable to the Manager and vice versa.
Any increase in the percentage of the Development Management Fee or any change in the
structure of the Development Management Fee must be approved by an Extraordinary Resolution
passed at a meeting of Unitholders duly convened and held in accordance with the provisions of
the Trust Deed.
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 OUE C-REIT.
Also, the Manager may be removed by notice given in writing by the Trustee if:
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;
the Manager ceases to carry on business;
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;
the Unitholders by an Ordinary Resolution (as defined herein) duly proposed and passed by
Unitholders present and voting at a meeting of Unitholders convened in accordance with the
Trust Deed, with no Unitholder (including the Manager and its Related Parties) being
disenfranchised, vote to remove the Manager;
for good and sufficient 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 provided that where the
Manager is removed on the basis that a change of the Manager is desirable in the interests
of the Unitholders, 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; or
the MAS directs the Trustee to remove the Manager.
THE PROPERTY MANAGER OF THE PROPERTIES
The Property Manager
OUE Commercial Property Management Pte. Ltd. has been appointed as property manager of the
OUE Bayfront Property and any properties located in Singapore or any other jurisdiction
1
which
are subsequently acquired by OUE C-REIT pursuant to the Master Property Management
Agreement, and as property manager of the OUE Bayfront Property pursuant to the Master
Property Management Agreement and the Individual Property Management Agreement. The
1 On the Listing Date, the Property Manager will be providing its services in respect of the OUE Bayfront Property but
will not be providing its services in respect of the Lippo Plaza Property, as such services will be provided by the
existing local property manager of the Lippo Plaza Property under the Local Property Management Agreement.
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Property Manager is a wholly-owned subsidiary of the Sponsor, and was incorporated in
Singapore on 16 September 2011. Its registered office is located at 50 Collyer Quay, #18-01/02
OUE Bayfront, Singapore 049321.
The Property Manager has not been appointed as property manager of any other properties or
property funds as at the Latest Practicable Date.
Under the Master Property Management Agreement, the Property Manager is responsible for:
providing property management, lease management, project management and marketing
services for properties of OUE C-REIT, save for the Lippo Plaza Property where property
management services will be provided by the existing local property manager under the
existing property management agreement with lease management and project management
and marketing services will be provided by the centre management team of the Lippo Plaza
Property; and
providing property management, lease management, project management and marketing
services for the Lippo Plaza Property in the event that the property management agreement
in respect of the Lippo Plaza Property is not renewed or is terminated.
The Property Manager will work with the Manager to formulate strategic plans for OUE C-REIT in
accordance with the Managers stated investment strategy. The Property Manager will be
responsible for implementing best practices with regard to portfolio management across the IPO
Portfolio.
Ms Emily Teo is the General Manager of the Property Manager and is responsible for supervising
the staff of the Property Manager. Save for Ms Emily Teo, staff within the Property Manager
involved in property management matters in respect of any property in OUE C-REITs portfolio will
not manage any other commercial properties other than those in OUE C-REITs portfolio. The key
members of this team comprise Ms Indra Fanta, who is the Senior Marketing Manager of the
Property Manager, and Ms Sharon Lee, who is the Operations Manager of the Property Manager.
Experience and Expertise of the Executive Officers of the Property Manager
Information on the working experience of each executive officer of the Property Manager is set out
below:
Ms Emily Teo is the General Manager of the Property Manager.
Ms Emily Teo has over 20 years of experience in the real estate industry.
Ms Teo is currently the Vice President, Commercial Leasing of the Sponsor where she pioneered
and heads its Commercial Department, overseeing the marketing, leasing, lease management
and property management of the commercial space at OUE Bayfront and OUE Downtown.
Prior to joining the Sponsor in November 2009, Ms Teo was the Senior Marketing Manager,
(Office) of Suntec City Development Pte Ltd (SCD) from 2001 to 2009. SCD was the property
manager of Suntec Real Estate Investment Trust (Suntec REIT). There, she headed the
marketing, leasing and lease management functions of Suntec REITs office portfolio of 1.3 million
sq ft at Suntec City and oversaw the operational transition following the IPO of Suntec REIT.
Ms Teo began her real estate career with PSA Corporation Limited (PSA), Properties Division
(now Mapletree Investments Pte Ltd) in 1991 and handled the marketing, leasing and lease
administration of office and retail space at the former World Trade Centre (now HarbourFront
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Centre), the former Cable Car Tower (now HarbourFront Tower Two), and the former SPI Building
(now Mapletree Lighthouse), including the conceptualisation phase of HarbourFront Tower One.
She was with PSA from 1991 to 2001.
Ms Teo holds a Bachelor of Business Administration from the National University of Singapore.
Ms Indra Fanta is the Senior Marketing Manager of the Property Manager.
Ms Fanta has more than 13 years of experience in the commercial and retail marketing and
leasing industry.
Ms Fanta is currently the Senior Marketing Manager, Commercial Leasing at the Sponsor where
she handles the office leasing activities at OUE Bayfront and OUE Downtown.
Prior to joining the Sponsor in 2010, Ms Fanta was with CapitaLand Retail Limited from 2008 to
2010, where her last held position was Leasing Manager. She was responsible for conceptualising
and leading the leasing activities at JCube as well as providing leasing support at IMM Mall. Prior
to that, Ms Fanta was with Singapore Post Limited as a Leasing Manager from 2006 to 2008,
leading the leasing activities at Singapore Post Centre and all other assets owned by the
company. She spearheaded the projects of unlocking asset value by transforming Killiney Post
Office, Tanglin Post Office and Alexandra Post Office to KPO, Friven & Co and Pats School
House, respectively, in 2007.
From 2002 to 2006, Ms Fanta was with supermarket chain Shop N Save Pte Ltd and subsequently
joined Delhaize Group Limited (one of the former shareholders of Shop N Save Pte Ltd) after the
acquisition of Shop N Save Pte Ltd by the Dairy Farm Group in 2004. There, she was involved in
the acquisition of S-On Supermarket at Jurong East, Fajar Road and Bangkit Road and also
assisted in the expansion of the supermarket chain from 20 to 35 branches.
Ms Fanta began her career in estate and property management in 2000 with PREMAS
International Limited, where she was in charge of residential properties, including Rivervale
Condominium, Portofino, Princeton, Avalon and Minton Rise.
Ms Fanta holds a Bachelor of Science (Banking & Finance) degree from the University of London,
United Kingdom, and a Diploma in Building & Real Estate Management from Ngee Ann
Polytechnic, Singapore.
Ms Sharon Lee is the Operations Manager of the Property Manager.
Ms Lee has 20 years of experience in the estate and property management field.
Ms Lee is currently the Operations Manager, Commercial Leasing of the Sponsor where she is in
charge of leading the operations team on the day-to-day operations of OUE Bayfront and OUE
Downtown.
Prior to joining the Sponsor in 2012, Ms Lee spent 10 years with SavillsCKH Pte Ltd as a Building
Manager, managing a Grade-A office building in the Singapore CBD area. As Building Manager,
she led a team of 25 in-house personnel and provided various property management services to
the development. She also oversaw the undertaking of major M&E system upgrading works and
lobby addition and alteration works during her tenure there.
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From 1997 to 2002, Ms Lee was with Colliers Jardine (S) Pte Ltd (now renamed Colliers
International (Singapore) Pte Ltd), where her last held position was Senior Property Executive.
During this period, she was in charge of a team managing a fair mix of commercial, residential and
industrial properties and was also involved in providing asset management services, including
leasing and tenancy management services, to a local property owner.
Ms Lee began her career in estate and property management in 1993 with DBS Land (now known
as the CapitaLand group). During her four years there, she was put in charge of a few commercial
properties and was also involved in managing DBS Banks branch facility operations.
Ms Lee holds a Diploma in Building Management from Ngee Ann Polytechnic, a Fire Safety
Manager Certificate from Singapore Civil Defence Force and a Green Mark Facilities Manager
Certificate from the BCA.
The Manager is of the view that the Property Manager will be able to perform its duties
satisfactorily as the staff seconded to the Property Manager will be from the Sponsors
experienced pool of staff. Whilst seconded to the Property Manager, there will be appropriate
Chinese walls in place from the leasing teams of the Sponsor.
The Centre Management Team and the Local Property Manager for the Lippo Plaza Property
On the Listing Date, OUE C-REIT will take over the centre management team of the Lippo Plaza
Property and retain the existing local property manager of the Lippo Plaza Property, Jones Lang
LaSalle Surveyors (Shanghai) Co., Ltd., to provide property management services to the Lippo
Plaza Property pursuant to the Local Property Management Agreement.
The Centre Management Team of the Lippo Plaza Property
The centre management team of the Lippo Plaza Property is responsible for providing day-to-day
operational services in relation to the Lippo Plaza Property, which include:
lease management services, such as tenancy mix planning and negotiation of leases,
licenses and concessions, lease administration, planning and coordination of marketing and
promotional programmes;
administration and finance services, such as bookkeeping and accounting, supervision and
control of all collections and receipts, payments and expenditure, tax filing, liaising with
government authorities and legal compliance; and
directing the local property manager to fulfil property management and administration and
finance services.
The centre management team currently comprises 21 employees. The PRC Company will
continue to hold the 21 employees following the acquisition of the PRC Company by OUE C-REIT
on the Listing Date.
For the Forecast Year 2014 and the Projection Year 2015, the annual staff-related costs of
employing the centre management team is expected to amount to approximately 4.0% of the
Gross Revenue from the Lippo Plaza Property and will be paid by the PRC Company. For the
avoidance of doubt, the property management fee payable out of the Deposited Property, which
is in respect of the OUE Bayfront Property, does not include annual staff-related costs of
employing the centre management team.
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The Local Property Manager for the Lippo Plaza Property
The local property manager for the Lippo Plaza Property shall be responsible for day-to-day
operational services in relation to the Lippo Plaza Property. These services include:
property management services, such as insurance procurement, general cleanliness, repair
and maintenance, security, tenant compliance, legal compliance, emergency response,
implementation of building management plans; and
administration and finance services such as annual financial budgeting, management fee
calculation and collection, payment of operating expenses and capital expenditure.
The fees payable to the local property manager for the Lippo Plaza Property is 4.2% of the total
service charge collected for the Lippo Plaza Property and is collected from all tenants of the Lippo
Plaza Property.
ANNUAL REPORTS
An annual report will be issued by the Manager to Unitholders within the timeframe as set out in
the Listing Manual and the CIS Code, and at least 14 days before the annual general meeting of
the Unitholders, containing, among others, the following key items:
(i) if applicable, with respect to investments other than real property:
(a) a brief description of the business;
(b) proportion of share capital owned;
(c) cost;
(d) (if relevant) Directors valuation and in the case of listed investments, market value;
(e) dividends received during the year (indicating any interim dividends);
(f) dividend cover or underlying earnings; and
(g) net assets attributable to investments;
(ii) amount of distributable income held pending distribution;
(iii) the aggregate value of all transactions entered into by the Trustee (for and on behalf of OUE
C-REIT) with an Interested Party or with an Interested Person during the financial year under
review;
(iv) total amount of fees paid to the Trustee;
(v) name of the manager of OUE C-REIT, together with an indication of the terms and duration
of its appointment and the basis of its remuneration;
(vi) total amount of fees paid to the Manager and the price(s) of the Units at which they were
issued in part payment thereof;
(vii) total amount of fees paid to the Property Manager;
(viii) the NAV of OUE C-REIT at the beginning and end of the financial year under review;
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(ix) the following items which are required to be disclosed pursuant to the Property Funds
Appendix (as may be amended from time to time and subject to any waiver from compliance
as may be granted by the MAS) for annual reports:
(a) details of all real estate transactions entered into during the year, including the identity
of the buyers or sellers, purchase or sale prices, and their valuations (including the
methods used to value the assets);
(b) details of all of OUE C-REITs real estate assets, including the location of such assets,
their purchase prices and latest valuations, rentals received and occupancy rates, or
the remaining terms of OUE C-REITs leasehold properties, where applicable;
(c) the tenant profile of OUE C-REITs real estate assets, including the:
(A) total number of tenants;
(B) top 10 tenants, and the percentage of the total gross rental income attributable to
each of these top 10 tenants;
(C) trade sector mix of tenants, in terms of the percentage of total gross rental income
attributable to major trade sectors; and
(D) lease maturity profile, in terms of the percentage of total gross rental income, for
each of the next five years;
(d) in respect of the other assets of OUE C-REIT, details of the:
(A) 10 most significant holdings (including the amount and percentage of fund size at
market valuation); and
(B) 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.);
(e) details of OUE C-REITs 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;
(f) details of OUE C-REITs investments in other property funds, including the amount and
percentage of total fund size invested in;
(g) details of borrowings of OUE C-REIT;
(h) details of deferred payment arrangements entered into by OUE C-REIT, if applicable;
(i) the total operating expenses of OUE C-REIT, including all fees and charges paid to the
manager, adviser and interested parties, if any, and taxation incurred in relation to OUE
C-REITs real estate assets;
(j) the performance of OUE C-REIT in a consistent format, covering various periods of time
(e.g. 1-year, 3-year, 5-year or 10-year) whereby:
(A) in the case where OUE C-REIT is unlisted, such performance is calculated on an
offer to bid basis over the period; or
219
(B) in the case where OUE C-REIT is listed, such performance is calculated on the
change in the unit price transacted on the stock exchange over the period;
(k) its NAV per unit at the beginning and end of the financial year; and
(l) where OUE C-REIT is listed, the Unit price quoted on the SGX-ST at the beginning and
end of the financial year, the highest and lowest Unit price and the volume traded during
the financial year; and
(x) such other items which may be required to be disclosed under the prevailing applicable laws,
regulations and rules.
The first report will cover the period from the Listing Date to 31 December 2014.
Additionally, OUE C-REIT will announce its NAV on a quarterly basis. Such announcements will
be based on the latest available valuation of OUE C-REITs real estate and real estate-related
assets, which will be conducted at least once a year (as required under the Property Funds
Appendix).
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 OUE C-REIT. All
Board members participate in matters relating to corporate governance, business operations and
risks, financial performance, and the nomination and review of the Directors.
The Board will have in place a framework for the management of the Manager and OUE C-REIT,
including a system of internal audit and control and a business risk management process. The
Board consists of six members, three of whom are independent directors. None of the Directors
has entered into any service contract with OUE C-REIT.
The composition of the Board is determined using the following principles:
the Chairman of the Board should be a non-executive director of the Manager;
the Board should comprise directors with a broad range of commercial experience including
expertise in funds management, legal matters, audit and accounting and the property
industry; and
at least half of the Board should comprise independent directors.
According to Guideline 2.2 of the Code of Corporate Governance 2012, at least half of the Board
should comprise independent directors where:
the Chairman and the Chief Executive Officer is the same person;
the Chairman and the Chief Executive Officer are immediate family members;
the Chairman is part of the management team; or
the Chairman is not an independent director.
220
The composition will be reviewed regularly to ensure that the Board has the appropriate mix of
expertise and experience.
Audit and Risk Committee
The Audit and Risk Committee is appointed by the Board from among the Directors and is
composed of three members, a majority of whom (including the Chairman of the Audit and Risk
Committee) are required to be independent directors. As at the date of this Prospectus, the
members of the Audit and Risk Committee are Mr Ng Lak Chuan, Mr Loh Lian Huat and Mr Carl
Gabriel Florian Stubbe. Mr Ng Lak Chuan has been appointed as the Chairman of the Audit and
Risk Committee. All of the members of the Audit and Risk Committee are independent directors
and all of them are resident in Singapore.
The role of the Audit and Risk Committee is to monitor and evaluate the effectiveness of the
Managers internal controls. The Audit and Risk Committee also reviews the quality and reliability
of information prepared for inclusion in financial reports, and is responsible for the nomination of
external auditors and reviewing the adequacy of external audits in respect of cost, scope and
performance.
The Audit and Risk Committees responsibilities also include:
monitoring the procedures established to regulate Related Party Transactions, including
ensuring compliance with the provisions of the Listing Manual relating to interested person
transactions (Interested Person Transactions) and the provisions of the Property Funds
Appendix relating to interested party transactions (Interested Party Transactions, and
together with Interested Person Transactions, Related Party Transactions);
reviewing transactions constituting Related Party Transactions;
deliberating on resolutions relating to conflicts of interest situations involving OUE C-REIT;
reviewing external audit reports to ensure that where deficiencies in internal controls have
been identified, appropriate and prompt remedial action is taken by the management;
reviewing arrangements by which staff and external parties may, in confidence, raise
probable improprieties in matters of financial reporting or other matters, with the objective
that arrangements are in place for the independent investigation of such matters and for
appropriate follow up action;
reviewing internal audit reports at least twice a year to ascertain that the guidelines and
procedures established to monitor Related Party Transactions have been complied with;
ensuring that the internal audit and accounting function is adequately resourced and has
appropriate standing with OUE C-REIT;
reviewing, on an annual basis, the adequacy and effectiveness of the internal audit function;
the appointment, re-appointment or removal of internal auditors (including the review of their
fees and scope of work);
monitoring the procedures in place to ensure compliance with applicable legislation, the
Listing Manual and the Property Funds Appendix;
reviewing the appointment, re-appointment or removal of external auditors;
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reviewing the nature and extent of non-audit services performed by external auditors;
reviewing, on an annual basis, the independence and objectivity of the external auditors;
meeting with external and internal auditors, without the presence of the Executive Officers,
at least on an annual basis;
reviewing the system of internal controls including financial, operational, compliance controls
and risk management processes;
reviewing the financial statements and the internal audit report;
reviewing and providing their views on all hedging policies and instruments to be
implemented by OUE C-REIT to the Board;
reviewing and approving the procedures for the entry into of any foreign exchange hedging
transactions and monitoring the implementation of such policy, including reviewing the
instruments, processes and practices in accordance with the policy for entering into foreign
exchange hedging transactions;
investigating any matters within the Audit and Risk Committees terms of reference,
whenever it deems necessary; and
reporting to the Board on material matters, findings and recommendations.
Compliance Officer
The Manager has outsourced the role of the compliance officer to the Sponsor
1
. The compliance
officer is Mr Ng Ngai, the Chief Corporate Officer of the Sponsor, who oversees the Sponsors
human resources, corporate secretarial and legal matters. He will report to the Chief Executive
Officer and the Board, and his duties include:
updating employees of the Manager on compliance requirements under the SFA, the CIS
Code (including the Property Funds Appendix), the Listing Manual and all applicable laws,
regulations and guidelines;
highlighting any deficiencies or making recommendations with respect to the Managers
compliance processes;
assisting in the application process for the appointment of new directors to the Board; and
assisting in any other matters concerning compliance with the SFA, the CIS Code (including
the Property Funds Appendix), the Listing Manual and all applicable laws, regulations and
guidelines.
Mr Ng is supported by his legal and corporate secretarial team at the Sponsor, and he also has
access to external legal and other advisers where necessary. He will assist the Manager in putting
in place suitable compliance processes to ensure that the Manager meets its compliance
obligations. As for Related Party Transactions, these would be under the review of the Audit and
Risk Committee, whose responsibilities include, among other things, monitoring the procedures
established to regulate Related Party Transactions, including ensuring compliance with the
1 The cost of such outsourcing of the role of compliance officer will be borne by the Manager out of its own funds and
not out of Unitholders funds.
222
provisions of the Listing Manual and the Property Funds Appendix relating to Related Party
Transactions. (See The Manager and Corporate Governance Corporate Governance of the
Manager Audit and Risk Committee for further details.)
Prior to joining the Sponsor in August 2006, Mr Ng served as Group Company Secretary to various
public listed and private limited companies in Singapore for more than 20 years, of which 10 years
have been in legal commercial and corporate acquisition matters. He is a member of the
Singapore Corporate Counsel Association and the Singapore Institute of Directors. He is also a
Fellow of the Institute of Chartered Secretaries and Administrators, UK and Singapore.
Mr Ng holds a Master of Laws (Commercial Law) degree from the University of Queensland and
a Bachelor of Laws (Honours) degree from the University of London.
Notwithstanding the outsourcing of the role of compliance officer to the Sponsor, the Manager is
responsible for ensuring compliance with all applicable laws, regulations and guidelines.
Legal Representatives
The current legal representative of the PRC Company will be changed following the completion of
the acquisition of the Properties. Ms Tan Shu Lin will be appointed as the new legal representative
of the PRC Company following the completion of the acquisition of the Properties. The Manager
will take the following factors into consideration when appointing the new legal representative:
the qualifications and experience of the person; and
the persons knowledge of the property market.
The legal representative is authorised to perform all acts regarding the general administration of the
PRC Company. He can also execute powers of attorney on behalf of the PRC Company and execute
any legal transactions that are within the nature and the scope of business of the PRC Company.
There is a risk that the PRC Company will be held liable should its legal representative perform
any unauthorised actions on its behalf. In this regard, the following measures will be implemented
to mitigate such a risk:
an internal control system to ensure that there is proper authorisation as to disbursements
and delegation of authority;
safeguarding controls over all the company seals and cheque books; and
ensuring segregation of duties in the cash management process including receipts and
disbursements.
The Board is of the opinion that the processes and procedures to be put in place will be adequate
to mitigate the risks in relation to the appointment of the legal representative of the PRC Company.
Dealings in Units
Each Director and the Chief Executive Officer of the Manager is to give notice to the Manager of
his acquisition of Units or of changes in the number of Units which he holds or in which he has 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 he holds or in which he has an interest. (See The
Formation and Structure of OUE C-REIT Directors Declaration of Unitholdings for further
details.)
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All dealings in Units by the Directors will be announced via SGXNET, with the announcement to
be posted on the internet at the SGX-ST website http://www.sgx.com.
The Directors and employees of the Manager are encouraged, as a matter of internal policy, to
hold Units but are prohibited from dealing in the Units:
in the period commencing one month before the public announcement of OUE C-REITs
annual results and property valuations, and two weeks before the public announcement of
OUE C-REITs quarterly results and ending on the date of announcement of the relevant
results or, as the case may be, property valuations; and
at any time while in possession of price sensitive information.
The Directors and employees of the Manager are also prohibited from communicating price
sensitive information to any person.
Pursuant to Section 137ZC of the SFA, the Manager is required to, inter alia, announce to the
SGX-ST the particulars of any acquisition or disposal of interest in Units by the Manager as soon
as practicable, and in any case no later than the end of the Business Day following the day on
which the Manager became aware of the acquisition or disposal. In addition, all dealings in Units
by the Chief Executive Officer will also need to be announced by the Manager via SGXNET, with
the announcement to be posted on the internet at the SGX-ST website http://www.sgx.com and in
such form and manner as the Authority may prescribe.
Management of Business Risk
The Board will meet quarterly, or more often if necessary, and will review the financial
performance of the Manager and OUE C-REIT against a previously approved budget. The Board
will also review the business risks of OUE C-REIT, examine liability management and act upon any
comments from the auditors of OUE C-REIT.
The Manager has appointed experienced and well-qualified management personnel to handle the
day-to-day operations of the Manager and OUE C-REIT. 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 investment projects prior to approving
major transactions. The management meets regularly to review the operations of the Manager and
OUE C-REIT and discuss any disclosure issues.
The Manager has also provided an undertaking to the SGX-ST that:
(i) regular reviews will be carried out by the Board or the relevant committee of the REITs key
financial operational and compliance risk areas and the outcome of these reviews must be
disclosed in the Annual Report or where the findings are material, immediately announced
via SGXNET; and
(ii) the Manager will make periodic announcements on the use of the IPO proceeds as and when
the funds from the IPO are materially disbursed and provide a status report on the use of the
IPO proceeds in the annual report.
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Potential Conflicts of Interest
The Manager has also instituted the following procedures to deal with potential conflicts of interest
issues:
The Manager will not manage any other REIT which invests in the same type of properties
as OUE C-REIT.
All key executive officers will be working exclusively for the Manager and will not hold other
executive positions in other entities.
All resolutions in writing of the Directors in relation to matters concerning OUE C-REIT must
be approved by at least a majority of the Directors (excluding any interested Director),
including at least one independent director.
In respect of matters in which a Director or his associates (as defined in the Listing Manual)
has an interest, direct or indirect, such interested director will abstain from voting. In such
matters, the quorum must comprise a majority of the Directors and must exclude such
interested director.
In respect of matters in which the Sponsor and/or its subsidiaries have an interest, direct or
indirect, any nominees appointed by the Sponsor and/or its subsidiaries to the Board to
represent their interests will abstain from deliberation and voting on such matters. For such
matters, the quorum must comprise a majority of the independent directors and must exclude
nominee directors of the Sponsor and/or its subsidiaries. The Manager and the Property
Manager are wholly-owned subsidiaries of the Sponsor.
Save as to resolutions relating to the removal of the Manager, the Manager and its
associates are prohibited from voting or being counted as part of a quorum for any meeting
of the Unitholders convened to approve any matter in which the Manager and/or any of its
associates has an interest.
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 OUE C-REIT with a Related Party of the Manager, the
Manager shall be obliged to consult with a reputable law firm (acceptable to the Trustee)
which shall provide legal advice on the matter. If the said law firm is of the opinion that the
Trustee, on behalf of OUE C-REIT, 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 (including the independent directors) 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 OUE C-REIT 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
Trustees right to take such action as it deems fit against such Related Party.
225
The Manager will ensure that the Property Manager puts in place the necessary procedures
to prevent the unauthorised disclosure or use of confidential information relating to OUE
C-REIT to the Sponsor.
RELATED PARTY TRANSACTIONS
The Managers 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 OUE C-REIT and the Unitholders.
As a general rule, the Manager must demonstrate to its Audit and Risk Committee that such
transactions satisfy the foregoing criteria. This may entail:
obtaining (where practicable) quotations from parties unrelated to the Manager; or
obtaining two or more valuations from independent professional valuers (in compliance with
the Property Funds Appendix).
The Manager will maintain a register to record all Related Party Transactions which are entered
into by OUE C-REIT and the bases, including any quotations from unrelated parties and
independent valuations, 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 OUE C-REIT. The Audit and Risk Committee shall review the internal
audit reports at least twice a year to ascertain that the guidelines and procedures established to
monitor Related Party Transactions have been complied with. The Trustee will also have the right
to review such audit reports to ascertain that the Property Funds Appendix has been complied
with. 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 financial year) equal to or exceeding
S$100,000 in value but below 3.0% of the value of OUE C-REITs net tangible assets will be
subject to review by the Audit and Risk 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 financial year) equal to or exceeding 3.0%
but below 5.0% of the value of OUE C-REITs net tangible assets will be subject to the review
and prior approval of the Audit and Risk Committee. Such approval shall only be given if the
transactions are on normal commercial terms and not prejudicial to the interests of OUE
C-REIT and its Unitholders 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 financial year) equal to or exceeding 5.0%
of the value of OUE C-REITs net tangible assets will be reviewed and approved prior to such
transactions being entered into, on the basis described in the preceding paragraph, by the
Audit and Risk Committee which may, as it deems fit, request advice on the transaction from
independent sources or advisers, including the obtaining of valuations from independent
226
professional valuers. Furthermore, under the Listing Manual and the Property Funds
Appendix, such transactions would have to be approved by the Unitholders at a meeting of
Unitholders duly convened and held in accordance with the provisions of the Trust Deed.
Where matters concerning OUE C-REIT relate to transactions entered into or to be entered into
by the Trustee for and on behalf of OUE C-REIT with a Related Party of the Manager (which would
include relevant Associates (as defined in the Listing Manual) thereof) or OUE C-REIT, 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 OUE C-REIT and the Unitholders; and
are in accordance with all applicable requirements of the Property Funds Appendix and/or
the Listing Manual relating to the transaction in question.
The Trustee has the discretion under the Trust Deed to decide whether or not to enter into a
transaction involving a Related Party of the Manager or OUE C-REIT. If the Trustee is to sign any
contract with a Related Party of the Manager or OUE C-REIT, the Trustee will review the contract
to ensure that it complies with the requirements relating to Interested Party Transactions in the
Property Funds Appendix (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 REITs.
Save for the transactions described under Related Party Transactions in Connection with the
Setting Up of OUE C-REIT and Exempted Agreements, OUE C-REIT will comply with Rule 905
of the Listing Manual by announcing any interested person transaction in accordance with the
Listing Manual if such transaction, by itself or when aggregated with other interested person
transactions entered into with the same interested person during the same financial year, is 3.0%
or more of OUE C-REITs 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 financial year will be disclosed in OUE C-REITs annual report
for that financial year.
Role of the Audit and Risk Committee for Related Party Transactions
The Audit and Risk Committee will periodically review all Related Party Transactions to ensure
compliance with the Managers internal control system, the relevant provisions of the Listing
Manual, and the Property Funds Appendix. The review will include the examination of the nature
of the transaction and its supporting documents or such other data deemed necessary by the Audit
and Risk Committee.
If a member of the Audit and Risk Committee has an interest in a transaction, he is to abstain from
participating in the review and approval process in relation to that transaction.
227
Related Party Transactions in Connection with the Setting Up of OUE C-REIT and the
Offering
Existing Agreements
The Trustee, on behalf of OUE C-REIT, has entered into a number of transactions with the
Manager and certain related parties of the Manager in connection with the setting up of OUE
C-REIT. These Related Party Transactions are as follows:
The Trustee has on 10 October 2013 entered into the Trust Deed with the Manager. The
terms of the Trust Deed are generally described in The Formation and Structure of OUE
C-REIT.
The Sponsor has on 9 January 2014 granted to the Trustee the Sponsor ROFR which is
subject to certain conditions. The Sponsor ROFR is more particularly described in Certain
Agreements Relating to OUE C-REIT and the Properties Sponsor ROFR Agreement.
The Trustee has on 9 January 2014 entered into the Property Sale and Purchase Agreement
with the Sponsor in respect of the OUE Bayfront Property. The terms of the Property Sale and
Purchase Agreement are generally described in Certain Agreements Relating to OUE
C-REIT and the Properties Property Sale and Purchase Agreement.
OUE Eastern Limited, a company incorporated in the BVI which is a wholly-owned subsidiary
of OUE C-REIT, has on 16 October 2013 entered into the Tecwell Share Purchase Agreement
with LCR in respect of the entire issued share capital in the BVI Company, an indirect
wholly-owned subsidiary of LCR which holds the entire registered capital of the PRC
Company. The terms of the Tecwell Share Purchase Agreement are more particularly
described in Certain Agreements Relating to OUE C-REIT and the Properties Tecwell
Share Purchase Agreement.
The Trustee has on 9 January 2014 entered into the Deed of Income Support with the
Sponsor and Clifford Development Pte. Ltd. for the provision of Income Support by the
Sponsor in relation to the OUE Bayfront Property for the period from the Completion Date to
the day immediately preceding the fifth anniversary date of the Completion Date. The terms
of the Deed of Income Support are generally described in Certain Agreements Relating to
OUE C-REIT and the Properties Deed of Income Support.
The Trustee, the Manager and the Property Manager have on 9 January 2014 entered into
the Master Property Management Agreement for the operation, maintenance, management
and marketing of the OUE Bayfront Property and, as the case may be, properties of OUE
C-REIT by the Property Manager from time to time. The terms of the Master Property
Agreement are more particularly described in Certain Agreements Relating to OUE C-REIT
and the Properties Master Property Management Agreement.
The Trustee, the Manager and the Property Manager will enter into the Individual Property
Management Agreement for the operation, maintenance, management and marketing of the
OUE Bayfront Property by the Property Manager from time to time. The terms of the
Individual Property Agreement are more particularly described in Certain Agreements
Relating to OUE C-REIT and the Properties Individual Property Management Agreement.
The staff seconded to the Property Manager will be from the Sponsors experienced pool of
staff. The Manager therefore considers that the Property Manager has the necessary
expertise and resources to perform the property management, lease management, project
management and marketing services for the Properties.
228
The Manager believes that the Sponsor ROFR, the Property Sale and Purchase Agreement, the
Tecwell Share Purchase Agreement, the Deed of Income Support and the Master Property
Management Agreement and the Individual Property Management Agreement are made on normal
commercial terms and are not prejudicial to the interests of OUE C-REIT and the Unitholders.
Save as disclosed in this Prospectus, the Trustee has not entered into any other transactions with
(i) the Manager or any Related Party of the Manager or (ii) the Property Manager in connection
with the setting up of OUE C-REIT.
Master Property Management Agreement
In respect of property and lease management services, marketing services and project
management services to be provided by the Property Manager for each property under its
management (which, as at the Listing Date, will comprise the OUE Bayfront Property only but will
include each subsequently acquired property which is managed by the Property Manager), the
Property Manager shall be entitled to receive from the Trustee in respect of each property of OUE
C-REIT under its management:
In respect of property management services, (a) 2.0% per annum of Gross Revenue for the
relevant property, and (b) 2.0% per annum of Net Property Income for the relevant property
(calculated before accounting for the property management fee in that financial period); and
In respect of lease management services, 0.5% per annum of the Net Property Income of the
relevant property (calculated before accounting for the property management fee in that
financial period).
The property management fee will be paid to the Property Manager in cash.
On the Listing Date, the Property Manager will be providing its services in respect of the OUE
Bayfront Property but will not be providing its services in respect of the Lippo Plaza Property, as
property management services will be provided by the existing local property manager of the
Lippo Plaza Property under the Local Property Management Agreement while lease management
and project management and marketing services will be provided by the centre management team
of the Lippo Plaza Property. In the event that the existing property management agreement in
respect of the Lippo Plaza Property is not renewed or is terminated, the Lippo Plaza Property may
(at the Property Managers election) come under the management of the Property Manager.
Where a property of OUE C-REIT is located outside of Singapore and is under the management
of the Property Manager, the Property Manager may appoint and engage a local property manager
to provide property management services and pay the local property manager for the provision of
property management services. Any payment to such local property managers in connection with
such management services will be paid by the Property Manager to such persons out of the
property management fee received by the Property Manager, and not additionally out of the
Deposited Property.
The centre management team of the Lippo Plaza Property are employed and remunerated by the
PRC Company. In the event that the Lippo Plaza Property comes under the management of the
Property Manager, the centre management team of the Lippo Plaza Property will continue to be
remunerated by the PRC Company, with the payment of such remuneration being in addition to the
fees payable to the property management fees payable to the Property Manager.
Project Management Fee
For project management services, the Property Manager is entitled to a project management fee
to be mutually agreed in writing between the Manager, the Trustee and the Property Manager in
relation to (i) the development and redevelopment of a property (if not prohibited by the Property
Funds Appendix or if otherwise permitted by the MAS), the refurbishment, retrofitting and
229
renovation works to a property where submission to the relevant authorities for the approval of
such works is required or (ii) routine maintenance where the expenses for the routine maintenance
of the property results in such expenses being classified as capital expenditure:
a fee of 3.0% of the construction costs, where the construction costs amount to S$2.0 million
or less in Singapore or the equivalent value in the relevant foreign currency for any other
country;
a fee of 2.15% of the construction costs, where the construction costs exceed S$2.0 million
but do not exceed S$12.0 million in Singapore or the equivalent value in the relevant foreign
currency for any other country;
a fee of 1.45% of the construction costs, where the construction costs exceed S$12.0 million
but do not exceed S$40.0 million in Singapore or the equivalent value in the relevant foreign
currency for any other country;
a fee of 1.40% of the construction costs, where the construction costs exceed S$40.0 million
but do not exceed S$70.0 million in Singapore or the equivalent value in the relevant foreign
currency for any other country;
a fee of 1.35% of the construction costs, where the construction costs exceed S$70.0 million
but do not exceed S$100.0 million in Singapore or the equivalent value in the relevant foreign
currency for any other country; and
a fee to be mutually agreed by the parties, but capped at 1.35% of the construction costs, where
the construction costs exceed S$100.0 million in Singapore or the equivalent value in the
relevant foreign currency for any other country.
For the purposes of calculating the fees payable to the Property Manager, construction costs
means all construction costs and expenditure valued by the quantity surveyor engaged by the
Trustee for the project, excluding development charges, differential premiums, statutory
payments, consultants professional fees and GST.
The project management fee will be paid to the Property Manager in cash.
For the avoidance of doubt, where development management fees are payable to the Manager,
there will not be any project management fees payable to the Property Manager and vice versa.
In addition to its fees, the Property Manager will be fully reimbursed for certain costs. (See
Certain Agreements Relating to OUE C-REIT and the Properties Master Property Management
Agreement Expenses for further details.)
Other Related Party Transactions
In line with the rules set out in Chapter 9 of the Listing Manual, a transaction the value of which
is less than S$100,000 is not considered material in the context of the Offering and is not set out
as a Related Party Transaction in this section.
230
Related Party Leases
As at the Latest Practicable Date, certain related corporations of the Manager have entered into
the following lease agreements (the Related Party Leases) in relation to the lease of premises
at the OUE Bayfront Property and the Lippo Plaza Property:
Related Party Unit
Gross Rent (for
the month of
September 2013) Lease Expiry Date
OUE
Bayfront
Property
Auric Pacific Group Limited #06-03 OUE
Bayfront
S$46,057.0 14 July 2016
Bowsprit Capital
Corporation Limited
#06-01 OUE
Bayfront
S$26,994.0 30 June 2014
Delifrance Singapore
Pte Ltd
#02-12 OUE Link S$3,224.0 31 March 2014
LMIRT Management Ltd. #06-07 OUE
Bayfront
S$40,260.0 4 June 2014
Lippo Realty (Singapore)
Pte Limited
#06-06 OUE
Bayfront
S$50,435.0 31 May 2014
OUE Commercial REIT
Management Pte. Ltd.
#04-08 OUE
Bayfront
Nil
(1)
31 December 2019
OUE #05-02 OUE
Bayfront
S$35,288.0 30 April 2014
OUE #18-01/02 OUE
Bayfront
S$185,741.2 30 April 2014
OUE Restaurants
Pte Ltd
#18-03 OUE
Bayfront
S$46,448.6 15 February 2018
Lippo
Plaza
Property
Shanghai Delifrance
Foodstuff Co., Limited
Shop 303A RMB66,065.0 17 March 2016
Food Junction Beijing
Co., Limited
Shops 303B,
304-5
RMB253,553.0 31 January 2014
Note:
(1) The lease of OUE Commercial REIT Management Pte. Ltd. will commence on 1 January 2014.
231
As the existing Related Party Leases in respect of the OUE Bayfront Property were entered into
with Clifford Development Pte. Ltd., these will be assigned to the Trustee, in its capacity as trustee
of OUE C-REIT, on completion of the Property Sale and Purchase Agreement.
The Related Party Leases are at market rate and in line with those signed with other third party
tenants. The Manager accordingly believes that the Related Party Leases were each made on
normal commercial terms, negotiated on an arms length basis, in line with leases signed with
other third party tenants and not prejudicial to the interests of OUE C-REIT and Unitholders.
Exempted Agreements
The entry into and the fees and charges payable by OUE C-REIT under the Trust Deed, the
Property Sale and Purchase Agreement, the Tecwell Share Purchase Agreement, the Deed
of Income Support, the Master Property Management Agreement, the Individual Property
Management Agreement, the Licence Agreements (as defined herein) and the leases set out
in the section Other Related Party Transactions, to the extent that details of these have
been specifically disclosed (collectively, the Exempted Agreements), each of which
constitutes or will, when entered into, constitute a Interested Person Transaction, are
deemed to have been specifically approved by the Unitholders upon subscription for the
Units and are therefore not subject to Rules 905 and 906 of the Listing Manual to the extent
that specific information on these agreements have been disclosed in the Prospectus and
there is no subsequent change to the rates and/or bases of the fees charged thereunder
which will adversely affect OUE C-REIT.
(See Overview Certain Fees and Charges for the fees and charges payable by OUE C-REIT
in connection with the establishment and on-going management and operation of OUE C-REIT for
further details.)
Any renewal of the Master Property Management Agreement will be subject to Rules 905 and 906
of the Listing Manual.
(See The Manager and Corporate Governance Related Party Transactions The Managers
Internal Control System for further details.)
Future Related Party Transactions
As a REIT listed on the SGX-ST, OUE C-REIT is regulated by the Property Funds Appendix and
the Listing Manual. The Property Funds Appendix regulates, among others, transactions entered
into by the Trustee (for and on behalf of OUE C-REIT) with an Interested Party relating to OUE
C-REITs acquisition of assets from or sale of assets to an Interested Party and OUE C-REITs
investment in securities of or issued by an Interested Party.
Depending on the materiality of transactions entered into by OUE C-REIT 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 Appendix 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, including transactions already
governed by the Property Funds Appendix. Depending on the materiality of the transaction, OUE
C-REIT 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 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 REITs.
232
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 leases and/or licence agreements to be entered into with Interested Persons, and all
transactions conducted under such general mandate for the relevant financial year will not be
subject to the requirements under Rules 905 and 906 of the Listing Manual. In seeking such a
general annual mandate, the Trustee will appoint an independent financial 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 sufficient to ensure that such
transactions will be carried out on normal commercial terms and will not be prejudicial to the
interests of OUE C-REIT and the Unitholders.
Both the Property Funds Appendix and the Listing Manual requirements would have to be
complied with in respect to a proposed transaction which is prima facie governed by both sets of
rules. Where matters concerning OUE C-REIT relate to transactions entered or to be entered into
by the Trustee for and on behalf of OUE C-REIT with a Related Party of the Manager or OUE
C-REIT, the Trustee is required to ensure that such transactions are conducted in accordance with
applicable requirements of the Property Funds Appendix and/or the Listing Manual relating to the
transaction in question.
The Manager is not prohibited by either the Property Funds Appendix or the Listing Manual from
contracting or entering into any financial, banking or any other type of transaction with the Trustee
(when acting other than in its capacity as trustee of OUE C-REIT) 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 OUE C-REIT and the Unitholders. The Manager
shall not be liable to account to the Trustee or to the Unitholders for any profits or benefits 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 profits or benefits or other
commission made or derived from or in connection with any such transaction.
Generally, under the Listing Manual, the Manager, its connected persons (as defined in the
Listing Manual) and any director of the Manager are prohibited from voting their respective own
Units at, or being part of a quorum for, any meeting to approve any matter in which it has a material
interest.
CORPORATE SOCIAL RESPONSIBILITY STATEMENT
The Manager believes in being a responsible corporate citizen and will align its business
operations and strategy with the Sponsors corporate social responsibility framework which strives
to support the welfare of underprivileged children and the elderly, especially in the areas of health
and education and ecological sustainability programmes.
As the Manager was recently incorporated on 4 October 2013 and OUE C-REIT recently
established as a private trust in October 2013, there have been no specific activities undertaken
by the Manager thus far.
Going forward, the Manager will work with the Sponsor on corporate social responsibility
initiatives under the framework, leveraging on the Sponsors corporate social responsibility
platform, to continue to grow and evolve, and to become more dedicated in caring for other
members of the society and bring about sustainable improvement.
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THE SPONSOR
THE SPONSOR
OUE was incorporated in Singapore on 8 February 1964 under the Companies Ordinance,
Chapter 174 as a limited liability company. OUE is listed on the Main Board of the SGX-ST.
OUE is a diversified real estate owner, developer and operator with a real estate portfolio located
in prime locations in Singapore, Malaysia and the U.S.. The Sponsor Group focuses its business
across the commercial, retail, hospitality and residential property segments. The Sponsor Group
develops and holds commercial and retail properties for investment and rental income purposes,
and it develops residential properties for sale. It operates its hospitality business under the brands
Meritus, Mandarin and Meritus Mandarin. The Sponsor Group developed, and had been
managing through a third party managing agent, the OUE Bayfront Property prior to it being
transferred to OUE C-REIT.
OUE is one of the leading publicly-listed property companies in Singapore with a market
capitalisation of S$2.3 billion as at the Latest Practicable Date. OUE has an experienced
management team and established track record of operations dating back to 1964. As at 30
September 2013, OUEs commercial and retail businesses include approximately 474,376.4 sq m
in GFA of commercial and retail space located in Singapore and the U.S.. OUEs substantial size
is also evidenced by its profitability and balance sheet strength, with OUE reporting a total net
income of S$31.6 million for the nine months ended 30 September 2013 and total assets of S$6.3
billion and total shareholders equity of S$3.7 billion as at 30 September 2013.
OUE is also the sponsor of OUE H-Trust, a stapled group which comprises OUE H-REIT and OUE
H-BT. OUE H-Trust was listed on the SGX-ST on 25 July 2013 with a total asset size of
approximately S$1.7 billion and an initial portfolio comprising Mandarin Orchard Singapore and
Mandarin Gallery. OUE H-REIT is managed by the OUE H-REIT Manager, a wholly-owned
subsidiary of the Sponsor. OUE H-BT is managed by the OUE H-BT Trustee-Manager, another
wholly-owned subsidiary of the Sponsor.
Background of the Sponsor Group
Business Operations of the Sponsor Group
The Sponsor Group has five key businesses, namely (i) the development, management,
ownership and operation of commercial properties, (ii) the development, management, ownership
and operation of retail properties, (iii) hospitality, (iv) the development and sale of residential
properties and (v) real estate and fund management. The properties within its diversified portfolio
include commercial, retail, hospitality and residential properties primarily located in Singapore.
The Sponsor Group also operates hotels in Singapore and Malaysia.
The Sponsor Group aims to build a strong cash flow position from its commercial, retail, hospitality
and residential segments.
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The following table sets out some highlights of the Sponsor Groups properties as at the Listing
Date (excluding the IPO Portfolio and properties held directly by OUE H-Trust).
Fair Value
(S$ million) Description
Ownership
(%) Car park Lots
Subject of
ROFR
OUE
Downtown 1
1,400.0
(1)
A 50-storey commercial tower
located in the Singapore CBD
100.0 355 (including
three handicap
lots) (sharing
with OUE
Downtown 2 and
Downtown
Gallery)
(2)
N.A.
(3)
OUE
Downtown 2
and
Downtown
Gallery
Please see
the fair
value in the
row above
A 37-storey commercial tower
and a five-storey retail podium
with a retail basement level (part
of which is under redevelopment)
100.0 Sharing with
OUE
Downtown 1
Sponsor
ROFR
U.S. Bank
Tower
544.0
(4)
A 72-storey Class-A office
building with six levels of
underground parking, along with
an approximately 1.6 acre park
above a separate five-level
subterranean car park facility,
located in downtown Los
Angeles, U.S.
100.0 1,396 Sponsor
ROFR
Crowne
Plaza
Changi
Airport
(5)
291.0
(1)
A 9-storey hotel with 320 rooms,
including 27 suites, directly
connected to Changi Airport
Terminal 3 and within short
distance to Changi Business
Park and Singapore Expo
100.0 N.A. OUE
H-Trust
ROFR
One Raffles
Place Tower
One and
retail
podium
1,608.8
(6)
A 282 metre-tall office tower
comprising 62 storeys of prime
office space and a five-storey
retail podium equipped with one
level of basement, located in
Singapores CBD
40.8
(7)
326 (sharing with
Tower Two)
Sponsor
ROFR
One Raffles
Place Tower
Two
Please see
the fair
value in the
row above
A 38-storey commercial building
equipped with one level of
basement adjacent to Tower One
40.8
(7)
Sharing with
Tower One
Sponsor
ROFR
Marina
Mandarin
N.A.
(8)
A 21-storey hotel which is
located directly opposite the
Suntec Singapore International
Convention and Exhibition Centre
30.0 N.A. N.A.
(10)
Twin Peaks 679.0
(9)
A residential development
comprising two identical 35-
storey blocks situated close to
the heart of Orchard Road
100.0 467 N.A.
(10)
Notes:
(1) Latest valuation as at 31 December 2012.
(2) This represents the number of car park lots following the conversion of the podium into a five-storey retail mall.
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(3) OUE Downtown 1 is not presently identified as one of the Sponsor ROFR Properties as the middle and low zones
of OUE Downtown 1 are expected to be converted into serviced apartments. Hence, including the entire OUE
Downtown 1 as a Sponsor ROFR Property would not be appropriate for OUE C-REIT. Where an asset or any part
thereof (including, for example, the high zone of OUE Downtown 1, if applicable) falls within the scope of the
Sponsor ROFR, the asset or any part thereof will, as a matter of course, be subject to the Sponsor ROFR. Following
strata subdivision, the multi-storey car park will be managed by the MCST, and the owners of OUE Downtown 1 will
hold shares in the MCST in proportion to their strata holdings.
(4) This represents the latest valuation of the U.S. Bank Tower as at 30 September 2013 of US$430 million based on
an exchange rate of US$1.00 : S$1.265.
(5) Excluding the additional 200 rooms expected to be developed on the plot of land adjacent to Crowne Plaza Changi
Airport. The proposed additional 200 rooms are expected to be completed by end-2015.
(6) This represents OUBCs 81.54% interest in the trust which holds the land and properties that comprise One Raffles
Place, based on the latest valuation as at 31 December 2012. The remaining 18.46% of the beneficial interest in One
Raffles Place is held by OUBC in trust for United Overseas Bank Limited.
(7) The Sponsor owns a 50.0% interest in OUBC, which is a beneficiary and the trustee of the assets comprising One
Raffles Place. OUBC is the beneficiary of 81.54% of the trust as of the date it was declared. The Sponsors interest
is subject to pre-emption rights to other shareholders of OUBC, who are third parties not related to the Sponsor, such
that should the Sponsor wish to sell its shares in OUBC, it must first offer to sell its shares to the other shareholders
of OUBC at fair value. In the event that none of the other shareholders of OUBC wish to purchase the Sponsors
shares in OUBC, the Sponsor is then free to dispose of its shares in OUBC to OUE C-REIT.
(8) The valuation of Marina Mandarin is not public information as it is owned by a private company and the Sponsor
Group only holds an effective 30.0% interest in Marina Mandarin.
(9) Latest valuation as at 31 March 2013.
(10) Marina Mandarin and Twin Peaks are hospitality and residential properties, respectively, and therefore do not fall
within the scope of the Sponsor ROFR, which covers income-producing real estate used primarily for commercial
purposes (including real estate used primarily for office and/or retail purposes) in financial and business hubs within
and outside of Singapore.
Commercial
The Sponsor Groups commercial property portfolio currently consists of One Raffles Place, OUE
Downtown and U.S. Bank Tower. The Sponsor Group focuses on identifying prime commercial
properties for development or redevelopment.
Below is a description of the Sponsor Groups commercial properties:
OUE Downtown 1 and OUE Downtown 2
OUE Downtown comprises two tower blocks (namely OUE Downtown 1 and OUE Downtown
2), a podium and a multi-storey car park. OUE Downtown 1, completed in 1974, is a
50-storey building and comprises three vertical zones, while OUE Downtown 2, completed in
1994, is a 37-storey building. While both towers and the podium were originally used as
offices, the low and mid zones of OUE Downtown 1 will be converted to serviced apartments
and the original podium will be converted to a retail mall. The high zone of OUE Downtown
1 and the whole of OUE Downtown 2 will remain as offices. This conversion is expected to
be completed in 2016.
U.S. Bank Tower
U.S. Bank Tower is one of the tallest buildings in the western U.S. and is located in downtown
Los Angeles. It comprises a 72-storey Class-A office building with six levels of underground
parking, along with an approximately 1.6 acre park above a separate five-level subterranean
car park facility, and has a NLA of approximately 133,988.5 sq m. It includes retail space and
other amenities, including a fitness centre and full-service restaurant.
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One Raffles Place
One Raffles Place is located in Singapores CBD, above the Raffles Place MRT station. It
was previously known as OUB Centre. The development comprises One Raffles Place Tower
One, One Raffles Place Tower Two and the retail podium. OUE owns an effective 40.8%
interest in One Raffles Place, with the remaining interest in One Raffles Place being held by
unrelated third parties.
One Raffles Place Tower One and One Raffles Place Tower Two have an aggregate NLA of
over 80,000 sq m of office, retail and entertainment space. One Raffles Place Tower One
currently comprises a 62-storey office tower and a five-storey retail podium with a retail
basement level. The newly-completed One Raffles Place Tower Two, a 38-storey office
building, has drawn keen demand from international companies and professional firms,
following the success of One Raffles Place Tower One. It has also attracted tenants such as
Virgin Active, a health club chain, Mubadala Petroleum (SE Asia) Limited and Pramerica Real
Estate Investors (Asia) Pte Ltd. One Raffles Place Tower Two has a BCA Green Mark
Platinum certification for its energy efficiency and environmentally sustainable design.
The following table contains certain information about the Sponsor Groups key commercial
properties in Singapore and the U.S.:
OUE Downtown U.S. Bank Tower One Raffles Place
Ownership (%) 100.0 100.0 40.8
(1)
GFA (sq m) 116,055.0 173,647.4 119,712.8
(2)
NLA (sq m) 79,627.4
(3)
133,988.5 80,082.5
(2)
Appraised value (S$ million) 1,400.0
(4)
544.0
(5)
1,608.8
(6)
Notes:
(1) The Sponsor owns a 50.0% interest in OUBC, which is a beneficiary and the trustee of the assets comprising One
Raffles Place. OUBC is the beneficiary of 81.54% of the trust as of the date it was declared. The Sponsors interest
is subject to pre-emption rights to other shareholders of OUBC, who are third parties not related to the Sponsor, such
that should the Sponsor wish to sell its shares in OUBC, it must first offer to sell its shares to the other shareholders
of OUBC at fair value. In the event that none of the other shareholders of OUBC wish to purchase the Sponsors
shares in OUBC, the Sponsor is then free to dispose of its shares in OUBC to OUE C-REIT.
(2) These represent the aggregate GFA and NLA, as the case may be, of One Raffles Place Tower One, One Raffles
Place Tower Two and the retail podium.
(3) This represents the NLA figure before redevelopment of OUE Downtown.
(4) This represents the latest valuation of the OUE Downtown development as at 31 December 2012.
(5) This represents the latest valuation of the U.S. Bank Tower as at 30 September 2013 of US$430 million based on
an exchange rate of US$1.00 : S$1.265.
(6) This represents OUBCs 81.54% interest in the trust which holds the land and properties that comprise One Raffles
Place, based on the latest valuation as at 31 December 2012. The remaining 18.46% of the beneficial interest in One
Raffles Place is held by OUBC in trust for United Overseas Bank Limited. The Sponsor owns a 50.0% interest in
OUBC.
Retail
The Sponsor Group has a tailored approach to marketing retail space under its management
and/or ownership. Its marketing teams goal is to maintain and enhance the appeal of these
properties, namely (i) Mandarin Gallery (which is owned by OUE H-REIT and currently managed
by OUE Property Management Pte. Ltd., a wholly-owned subsidiary of the Sponsor) and (ii)
Downtown Gallery, the proposed retail mall at OUE Downtown, and that of any future retail
property managed by the Sponsor Group. The Sponsor Group seeks to maintain a given retail
237
propertys focus on its respective target audience, making adjustments to suit changes in
economic and retail trends by introducing targeted changes maintaining the propertys overall
image in the eyes of relevant consumers.
Below is a description of retail properties under the management and/or ownership of the Sponsor
Group.
Mandarin Gallery
Mandarin Gallery is a four-storey prime retail landmark in the heart of Orchard Road
featuring six duplexes and six street front units. Positioned as a high-end fashion mall, it is
a choice location for flagship stores of international brands.
Downtown Gallery
Downtown Gallery is the new retail mall under redevelopment at OUE Downtown on Shenton
Way. It will have a GFA of approximately 22,700 sq m and an expected NLA of approximately
14,800 sq m upon completion. The five-storey retail mall will comprise F&B outlets and retail
shops. It will have a supermarket at the basement level.
Hospitality
The hotels and resort are located in Singapore and Malaysia. As at 30 September 2013, these
hospitality properties have a total of 3,244 guest rooms and 28 F&B establishments.
The Sponsor Group operates its hotels and resort through management agreements between the
Sponsor Group and each hotel and resort. The terms of these management agreements range
from 10 to 30 years. One of the agreements contains an option to extend for a further 30-year
period, one contains an option to extend for two further 10-year periods and one contains an
option to extend for two further five-year periods.
Below is a description of the hospitality properties in which the Sponsor Group owns a significant
interest.
Crowne Plaza Changi Airport
Crowne Plaza Changi Airport is a business hotel located at 75 Airport Boulevard, Singapore
819664. The global brand name hotel is the first and only hotel situated within the immediate
vicinity of the passenger terminals of Singapore Changi Airport. The hotel was voted one of
the Worlds Best Airport Hotels at the Skytrax World Airport Awards 2011, and one of the Best
Airport Hotels in Asia Pacific at the Business Traveller Asia-Pacific Awards 2010.
Crowne Plaza Changi Airport is held by Imperial Development Pte. Ltd., a wholly-owned
subsidiary of the Sponsor.
Marina Mandarin
Marina Mandarin is located at 6 Raffles Boulevard within the Marina Square commercial
complex in Singapore. It is directly opposite the Suntec Singapore International Convention
and Exhibition Centre. Construction commenced in 1984 and the hotel officially opened in
1987. The 21-storey hotel has 575 luxury rooms and its facilities include the Meritus Club,
three restaurants, a lounge, a caf, a spa, a 24-hour fitness centre and an executive centre.
Extensive banquet facilities can accommodate up to 700 guests.
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Aquamarina Hotel Private Limited owns the Marina Mandarin. The Sponsor Group has an
effective 30% ownership interest in the Marina Mandarin through its wholly-owned
subsidiary, Hotel Investment (Marina) Private Limited and its shareholding interest in Marina
Centre Holdings Private Limited. The Marina Mandarin is managed by the Sponsor Group.
Serviced apartments
OUE Downtown
There are plans to convert the low and mid zones of OUE Downtown 1, with an estimated
GFA of approximately 24,600 sq m, from offices to serviced apartments.
Residential
The Sponsor Group is also engaged in residential property development and is currently
developing Twin Peaks. The Sponsor Group outsources the construction and marketing functions
of its residential segment to third parties.
Twin Peaks
The project known as Twin Peaks is located near Orchard Road in Singapore at 33 Leonie
Hill Road and comprises two identical 35-storey blocks with a total of 462 residential units.
The elevated site of the property has views of the Orchard Road shopping belt and the city.
It is the first condominium project to be sold fully-furnished in Singapore. The development
is being undertaken by Cove Development Pte. Ltd., a wholly-owned subsidiary of OUE. The
Sponsor Group acquired the property in 2008 and commenced sales of residential units in
September 2010, with the TOP expected to be obtained by early 2015.
Real Estate and Fund Management
OUE is the sponsor of OUE H-Trust, a stapled group which comprises OUE H-REIT and OUE
H-BT. OUE H-Trust was listed on the SGX-ST on 25 July 2013 with a total asset size of
approximately S$1.7 billion and an initial portfolio comprising Mandarin Orchard Singapore and
Mandarin Gallery. OUE H-REIT is managed by the OUE H-REIT Manager, a wholly-owned
subsidiary of the Sponsor. OUE H-BT is managed by the OUE H-BT Trustee-Manager, another
wholly-owned subsidiary of the Sponsor.
OUE H-REIT is a Singapore-based REIT established with the principal investment strategy of
investing, directly or indirectly, in a portfolio of income-producing real estate which is used
primarily for hospitality and/or hospitality-related purposes, whether wholly or partially, as well as
real estate-related assets. OUE H-Trusts initial asset portfolio is strategically located in the heart
of Singapores Orchard Road and comprises Mandarin Orchard Singapore and Mandarin Gallery.
The OUE H-REIT Manager receives management fees for the provision of overall management of
OUE H-REIT. In addition, the OUE H-REIT Manager earns an acquisition fee and a divestment fee
for any successful acquisition and divestment of properties, respectively, on behalf of OUE
H-REIT.
OUE Property Management Pte. Ltd., the property manager of OUE H-Trust and a wholly-owned
subsidiary of the Sponsor, also receives property management fees providing an additional source
of income for the Sponsor.
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THE FORMATION AND STRUCTURE OF OUE C-REIT
The Trust Deed is a complex document and the following is a summary only and is qualified in its
entirety by, and is subject to, the contents of the Trust Deed. Investors should refer to the Trust
Deed itself to confirm specific information or for a detailed understanding of OUE C-REIT. The
Trust Deed is available for inspection at the registered office of the Manager at 50 Collyer Quay
#04-08, OUE Bayfront, Singapore 049321 (prior appointment would be appreciated).
THE TRUST DEED
OUE C-REIT was constituted as a private trust by the Trust Deed on 10 October 2013. OUE
C-REIT is principally regulated by the SFA and the CIS Code (including the Property Funds
Appendix). OUE C-REIT was authorised as a collective investment scheme by the MAS on [].
The provisions of the SFA and the CIS Code (including the Property Funds Appendix) prescribe
certain terms of the Trust Deed and certain rights, duties and obligations of the Manager, the
Trustee and Unitholders under the Trust Deed. The Property Funds Appendix also imposes certain
restrictions on REITs in Singapore, including a restriction on the types of investments which REITs
in Singapore may hold, a general limit on their level of borrowings and certain restrictions with
respect to Interested Party Transactions.
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.
Operational Structure
OUE C-REIT is established to invest in real estate and real estate-related assets. The Manager
must manage OUE C-REIT so that the principal investments of OUE C-REIT are real estate and
real estate-related assets (including ownership of companies or other legal entities whose primary
purpose is to hold or own real estate and real estate-related assets). OUE C-REIT is a Singapore
REIT established with the principal investment strategy of investing, directly or indirectly, in a
portfolio of income-producing real estate used primarily for commercial purposes (including real
estate used primarily for office and/or retail purposes) in financial and business hubs within and
outside of Singapore, as well as real estate-related assets.
OUE C-REIT aims to generate returns for its Unitholders by owning, buying and actively managing
such properties in line with its investment strategy (including the selling of any property that has
reached a stage that offers only limited scope for growth).
Subject to the restrictions and requirements in the Property Funds Appendix and the Listing
Manual, the Manager is also authorised under the Trust Deed to invest in investments which need
not be real estate.
The Manager may use certain financial derivative instruments for hedging purposes or efficient
portfolio management, provided that (i) such financial derivative instruments are not used to gear
OUE C-REITs overall portfolio or are intended to be borrowings of OUE C-REIT and (ii) the
policies regarding such use of financial derivative instruments have been approved by the Board.
Although the Manager may use certain financial derivative instruments to the extent permitted by
such laws, rules and regulations as may be applicable including, but not limited, to the CIS Code
(including the Property Funds Appendix) and the Listing Manual, the Manager presently does not
have any intention for OUE C-REIT to invest in options, warrants, commodities, futures contracts
and precious metals.
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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.
Each Unit represents an undivided interest in OUE C-REIT. A Unitholder has no equitable or
proprietary interest in the Deposited Property. A Unitholder is not entitled to the transfer to him of
the Deposited Property or any part of the Deposited Property or of any estate or interest in the
Deposited Property or in any part of the Deposited Property. A Unitholders right is limited to the
right to require due administration of OUE C-REIT 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 he will not commence or
pursue any action against the Trustee or the Manager seeking an order for specific performance
or for injunctive relief in respect of the Deposited Property (or any part thereof) 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 a Unitholder under the Trust Deed, the Unitholders 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.
Unless otherwise expressly provided in the Trust Deed, a Unitholder may not interfere with the
rights, powers, authority or discretion of the Manager or the Trustee, exercise any right in respect
of the Deposited Property or any part thereof or lodge any caveat or other notice affecting the
Deposited Property (or any part thereof), or require that any part of the Deposited Property be
transferred to such Unitholder.
No certificate shall be issued to Unitholders by either the Manager or the Trustee in respect of
Units issued to Unitholders. For so long as OUE C-REIT is listed, quoted and traded on the
SGX-ST, the Manager shall pursuant to the Depository Services Terms and Conditions (as defined
herein) appoint CDP as the Unit depository for OUE C-REIT, and all Units issued will be
represented by entries in the register of Unitholders kept by the Trustee or the agent appointed
by the Trustee in the name of, and deposited with, CDP as the registered holder of such Units.
The Manager or the agent appointed by the Manager shall issue to CDP not more than 10
Business Days after the issue of Units a confirmation note confirming the date of issue and the
number of Units so issued and, if applicable, also stating that the Units are issued under a
moratorium and the expiry date of such moratorium and for the purposes of the Trust Deed, such
confirmation note shall be deemed to be a certificate evidencing title to the Units issued.
There are no restrictions under the Trust Deed or Singapore law on a persons right to purchase
(or subscribe for) Units and to own Units, except in the case of a rights issue or, as the case may
be, any preferential offering, where the Manager has the right under the Trust Deed to elect not
to extend an offer of Units under the rights issue or, as the case may be, any preferential offering
to Unitholders whose addresses are outside Singapore. The Take-over Code applies to REITs. As
a result, acquisitions of Units which may result in a change in effective control of OUE C-REIT and
the aggregate Unitholdings of an entity and its concert parties crossing certain thresholds will be
subject to the mandatory provisions of the Take-over Code, such as a requirement to make a
mandatory general offer for Units.
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Issue of Units
The following is a summary of the provisions of the Trust Deed relating to the issue of Units.
Subject to the following sub-paragraphs (1), (2) and (3) below and to such laws, rules and
regulations as may be applicable, for so long as OUE C-REIT is listed, the Manager may issue
Units on any Business Day at an issue price equal to the market price, without the prior approval
of the Unitholders. For this purpose, market price shall mean:
(i) the volume weighted average price for a Unit for all trades on the SGX-ST, or such other
Recognised Stock Exchange on which OUE C-REIT is listed, in the ordinary course of trading
on the SGX-ST or, as the case may be, such other Recognised Stock Exchange, for the
period of 10 Business Days (or such other period as may be prescribed by the SGX-ST or
relevant Recognised Stock Exchange) immediately preceding the relevant Business Day; or
(ii) if the Manager believes that the calculation in paragraph (i) above does not provide a fair
reflection of the market price of a Unit (which may include, among others, instances where
the trades on the Units are very low or where there is disorderly trading activity in the Units),
an 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 a Unit.
(1) The Manager shall comply with the Listing Rules in determining the issue price, including the
issue price for a rights issue on a pro rata basis to all existing Unitholders, 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 and the issue price for any reinvestment or distribution arrangement.
(2) Where Units are issued as full or partial consideration for the acquisition of an Authorised
Investment by OUE C-REIT in conjunction with an issue of Units to raise cash for the balance
of the consideration for the said Authorised Investment (or part thereof) or to acquire other
Authorised Investments in conjunction with the said Authorised Investment, the Manager
shall have the discretion to determine that the issue price of a Unit so issued as full or partial
consideration shall be the same as the issue price for the Units issued in conjunction with an
issue of Units to raise cash for the aforesaid purposes.
(3) The scope of the general mandate to be given in a general meeting of the Unitholders is
limited to the issue of an aggregate number of additional Units which must not exceed 50.0%
of the total number of Units in issue, of which the aggregate number of additional Units to be
issued other than on a pro rata basis to the existing Unitholders must not exceed 20.0% of
the total number of Units in issue as at the date of the approval.
Where the Base Fee and the Performance Fee are payable in the form of Units, the Manager or
any person to which the Manager may designate or nominate (including but not limited to the
Managers subsidiaries) shall be entitled to receive such number of Units as may be purchased
with the Base Fee and/or the Performance Fee (as the case may be) attributable to the relevant
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, or such other
Recognised Stock Exchange on which OUE C-REIT is listed, in the ordinary course of trading on
the SGX-ST or, as the case may be, such other Recognised Stock Exchange, for the last 10
Business Days immediately preceding:
(a) (in relation to the Base Fee) the end of the relevant financial quarter for which such Base Fee
relates to; and/or
242
(b) (in relation to the Performance Fee) the end of the relevant financial year for which such
Performance Fee relates to,
or if the Manager believes that the foregoing calculation does not provide a fair reflection of the
market price of a Unit (which may include, among others, instances where the trades on the Units
are very low or where there is disorderly trading activity in the Units), 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.
Unit Issue Mandate
By subscribing for the Units under the Offering, investors are (A) deemed to have approved the
issuance of all Units comprised in the Offering, the Sponsor Units and the Cornerstone Units and
(B) deemed to have given the authority (the Unit Issue Mandate) to the Manager to:
(i) (a) issue Units whether by way of rights, bonus or otherwise; and/or
(b) make or grant offers, agreements or options (collectively, Instruments) that might or
would require Units to be issued, including but not limited to the creation and issue of
(as well as adjustments to) securities, warrants, debentures or other instruments
convertible into Units,
at any time and upon such terms and conditions and for such purposes and to such persons
as the Manager may in its absolute discretion deem fit; and
(ii) issue Units in pursuance of any Instrument made or granted by the Manager while the Unit
Issue Mandate was in force (notwithstanding that the authority conferred by the Unit Issue
Mandate may have ceased to be in force at the time such Units are issued),
provided that:
(A) the aggregate number of Units to be issued pursuant to the Unit Issue Mandate (including
Units to be issued in pursuance of Instruments made or granted pursuant to the Unit Issue
Mandate) must not exceed 50.0% of the total number of issued Units (excluding treasury
Units, if any) (as calculated in accordance with sub-paragraph (B) below), of which the
aggregate number of Units to be issued other than on a pro rata basis to Unitholders must
not exceed 20.0% of the total number of issued Units (excluding treasury Units, if any) (as
calculated in accordance with sub-paragraph (B) below);
(B) subject to such manner of calculation as may be prescribed by the SGX-ST for the purpose
of determining the aggregate number of Units that may be issued under sub-paragraph (A)
above, the total number of issued Units (excluding treasury Units, if any) shall be based on
the number of issued Units (excluding treasury Units, if any) after completion of the Offering,
after adjusting for any subsequent bonus issue, consolidation or subdivision of Units;
(C) in exercising the Unit Issue Mandate, the Manager shall comply with the provisions of the
Listing Manual for the time being in force (unless such compliance has been waived by the
SGX-ST) and the Trust Deed for the time being in force (unless otherwise exempted or
waived by the MAS);
(D) (unless revoked or varied by the Unitholders in a general meeting) the authority conferred by
the Unit Issue Mandate shall continue in force until (i) the conclusion of the first annual
general meeting of OUE C-REIT or (ii) the date by which first annual general meeting of OUE
C-REIT is required by applicable regulations to be held, whichever is earlier;
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(E) where the terms of the issue of the Instruments provide for adjustment to the number of
Instruments or Units into which the Instruments may be converted, in the event of rights,
bonus or other capitalisation issues or any other events, the Manager is authorised to issue
additional Instruments or Units pursuant to such adjustment notwithstanding that the
authority conferred by the Unit Issue Mandate may have ceased to be in force at the time the
Instruments or Units are issued; and
(F) the Manager and the Trustee be and are hereby severally authorised to complete and do all
such acts and things (including executing all such documents as may be required) as the
Manager or, as the case may be, the Trustee may consider expedient or necessary or in the
interest of OUE C-REIT to give effect to the authority conferred by the Unit Issue Mandate.
Suspension of Issue of Units
The Manager or the Trustee may, with the prior written approval of the other and subject to the
Listing Manual or the listing rules of such other Recognised Stock Exchange, if applicable,
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, as the case may
be, the Trustee, 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 OUE C-REIT 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
OUE C-REIT cannot be promptly and accurately ascertained;
any period when remittance of money which will or may be involved in the realisation of any
asset of OUE C-REIT or in the payment for such asset of OUE C-REIT cannot, in the opinion
of the Manager, be carried out at normal rates of exchange;
any period where the issuance of Units is suspended pursuant to any order or direction
issued by the MAS or any other relevant regulatory authority;
in relation to any general meeting of Unitholders, the 48-hour period before such general
meeting or any adjournment thereof; or
when the business operations of the Manager or the Trustee in relation to OUE C-REIT are
substantially interrupted or closed as a result of, or arising from nationalism, expropriation,
currency restriction, pestilence, acts of war, terrorism, insurrection, revolution, civil unrest,
riots, strikes, nuclear fusion or fission or acts of God.
Such suspension shall take effect forthwith upon the declaration in writing thereof by the Manager
or, as the case may be, the Trustee and shall terminate on the day following the first Business Day
on which the condition giving rise to the suspension ceases to exist and no other conditions under
which suspension is authorised (as set out above) exists, upon the declaration in writing thereof
by the Manager or, as the case may be, the Trustee.
In the event of any suspension while OUE C-REIT is listed, the Manager shall ensure that
immediate announcement of such suspension is made through the SGX-ST or the relevant
Recognised Stock Exchange.
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Redemption of Units
The Trust Deed provides that any redemption of Units will be carried out in accordance with the
Property Funds Appendix, the rules of the Listing Manual (if applicable) and all other applicable
laws and regulations. With respect to any terms which are necessary to carry out such redemption
but are not prescribed by the Property Funds Appendix, the rules in the Listing Manual and any
laws and regulations, these terms shall be determined by mutual agreement between the Manager
and the Trustee.
For so long as the Units are listed on the SGX-ST, the Unitholders have no right to request the
Manager to repurchase or redeem their Units while the Units are listed on the SGX-ST and/or any
other Recognised Stock Exchange. It is intended that the Unitholders may only deal in their listed
Units through trading on the SGX-ST and/or any other Recognised Stock Exchange.
Rights and Liabilities of Unitholders
The key rights of Unitholders include rights to:
receive income and other distributions attributable to the Units held;
receive audited accounts and the annual reports of OUE C-REIT; and
participate in the termination of OUE C-REIT by receiving a share of all net cash proceeds
derived from the realisation of the assets of OUE C-REIT less any liabilities, in accordance
with their proportionate interests in OUE C-REIT.
No Unitholder has a right to require that any asset of OUE C-REIT be transferred to him.
Further, Unitholders cannot give any directions to the Trustee or the Manager (whether at a
meeting of Unitholders duly convened and held in accordance with the provisions of the Trust
Deed or otherwise) if it would require the Trustee or the Manager to do or omit doing anything
which may result in:
OUE C-REIT ceasing to comply with applicable laws and regulations; or
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 (i) the Trustee, (ii) the Manager, or (iii) both the Trustee and the Manager,
provided that this shall not limit the right of a Unitholder to require the due administration of OUE
C-REIT in accordance with the Trust Deed.
The Trust Deed contains provisions that are designed to limit the liability of a Unitholder to the
amount paid or payable for any Unit. The provisions 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 OUE C-REIT in the event that the
liabilities of OUE C-REIT exceed its assets.
Under the Trust Deed, every Unit carries the same voting rights.
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Amendments of the Trust Deed
Approval of Unitholders by an Extraordinary Resolution will be obtained for any amendment of the
Trust Deed unless the Trustee certifies, in its opinion, that such amendment:
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;
is necessary in order to comply with applicable fiscal, statutory or official requirements
(whether or not having the force of law); or
is made to remove obsolete provisions or 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 the Trust Deed relating to the use of
derivatives.
Meeting of Unitholders
Under applicable law and the provisions of the Trust Deed, OUE C-REIT will not hold any meetings
for Unitholders unless the Trustee or the Manager convenes a meeting or unless not less than 50
Unitholders or Unitholders representing not less than 10.0% of the total Units issue written
requests for a meeting to be convened. In addition, OUE C-REIT is required to hold an annual
general meeting once in every calendar year and not more than 15 months after the holding of the
last preceding annual general meeting, but so long as OUE C-REIT holds its first annual general
meeting within 18 months of its constitution, it need not hold it in the year of its constitution or the
following year. Furthermore, the Trust Deed shall comply with paragraph 4 of the Property Funds
Appendix.
A meeting of Unitholders when convened may, by Extraordinary Resolution and in accordance
with the provisions of 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;
sanction a supplemental deed increasing the maximum permitted limit or any change in the
structure of fees payable to the Manager and the Trustee;
remove the auditors and appoint other auditors in their place;
remove the Trustee;
direct the Trustee to take any action pursuant to Section 295 of the SFA (relating to the
winding-up of the Trust); and
delist OUE C-REIT after it has been listed.
A meeting of Unitholders may, also by an Ordinary Resolution of Unitholders present and voting
at a meeting of Unitholders convened in accordance with the Trust Deed, vote to remove the
Manager (with the Manager and its related parties being permitted to vote).
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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, and save for extraordinary resolutions (which
requires at least 21 days notice) (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), at least 14 days notice (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. Each notice shall specify the place, day and hour of the meeting, and the terms of the
resolutions to be proposed. 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.
The quorum at a meeting shall be not less than two Unitholders (whether present in person or by
proxy) together holding or representing one-tenth in value of all the Units for the time being in
issue.
Subject to the prevailing Listing Rules by the SGX-ST, voting at a meeting shall be by a show of
hands unless a poll is (before or on the declaration of the result of the show of hands) demanded
by the chairman of the meeting, or by five 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 votes 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 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 Associates shall be entitled to vote or be counted as part of a
quorum at a meeting convened to consider a matter in respect of which the Manager or any of its
Associates has a material interest save for an Ordinary Resolution duly proposed to remove the
Manager, in which case, no Unitholder shall be disenfranchised.
For so long as the Manager is the manager of OUE C-REIT, the controlling shareholders of the
Manager and of any of its Associates are prohibited from voting or being counted as part of a
quorum for any meeting of Unitholders convened to consider a matter in respect of which the
relevant controlling shareholders of the Manager and/or of any of its Associates have a material
interest.
DECLARATION OF UNITHOLDINGS
Duty of Manager to Make Disclosure
Pursuant to Section 137ZC of the SFA, where the Manager acquires or disposes of interests in
Units or debentures or units of debentures of OUE C-REIT, or the Manager has been notified in
writing by, inter alia, a Substantial Unitholder or Director or Chief Executive Officer of the Manager
pursuant to the unitholdings disclosure requirements of the SFA as set out below, the Manager
shall announce such information via the SGXNET and in such form and manner as the Authority
may prescribe as soon as practicable and in any case no later than the end of the Business Day
following the day on which the Manager became aware of the acquisition or disposal or received
the notice.
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Substantial Unitholdings
Pursuant to Sections 135 to 137B of the SFA (read with Section 137U of the SFA), Substantial
Unitholders are required to notify the Manager and the Trustee within two Business Days after
becoming aware of their becoming a Substantial Unitholder, any subsequent change in the
percentage level of their interest(s) in Units (rounded down to the next whole number) or their
ceasing to be a Substantial Unitholder.
Directors and Chief Executive Officer of the Manager
Pursuant to Section 137Y of the SFA, Directors and the Chief Executive Officer of the Manager are
required to, within two Business Days, notify the Manager of their acquisition of interest in Units
or of changes to the number of Units which they hold or in which they have an interest.
A Director or the Chief Executive Officer of the Manager is deemed to have an interest in Units in
the following circumstances:
Where the Director or Chief Executive Officer is the beneficial owner of a Unit (whether
directly through a direct Securities Account (as defined herein) or indirectly through a
depository agent or otherwise).
Where a body corporate is the beneficial owner of a Unit and the Director or Chief Executive
Officer 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.
Where the Directors or Chief Executive Officers (i) spouse or (ii) son, adopted son, stepson,
daughter, adopted daughter or step-daughter below the age of 21 years has any interest in
a Unit.
Where the Director or Chief Executive Officer, his (i) spouse or (ii) son, adopted son,
stepson, daughter, adopted daughter or step-daughter below the age of 21 years:
has entered into a contract to purchase a Unit;
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;
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
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.
Where the property subject to a trust consists of or includes a Unit and the Director or Chief
Executive Officer 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.
THE TRUSTEE
The trustee of OUE C-REIT is DBS Trustee 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 SFA and is regulated by the MAS. As at the date of this Prospectus, the Trustee has a paid-up
capital of S$2,500,000. The Trustees registered office is located at 12 Marina Boulevard, Marina
Bay Financial Centre Tower 3, Singapore 018982.
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The Trustee is independent of the Manager.
Powers, Duties and Obligations of the Trustee
The Trustees powers, duties and obligations are set out in the Trust Deed. The powers and duties
of the Trustee include:
acting as trustee of OUE C-REIT 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 OUE C-REIT with a Related Party of the Manager or OUE C-REIT are conducted
on normal commercial terms, are not prejudicial to the interests of OUE C-REIT and the
Unitholders, and in accordance with all applicable requirements under the Property Funds
Appendix and/or the Listing Manual relating to the transaction in question;
holding the assets of OUE C-REIT on trust for the benefit of the Unitholders in accordance
with the Trust Deed; and
exercising all the powers of a trustee and the powers that are incidental to the ownership of
the assets of OUE C-REIT.
The Trustee has covenanted in the Trust Deed that it will exercise all due care, 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:
a person or entity to exercise any of its powers or perform its obligations; and
any real estate agents or managers, including a Related Party of the Manager, in relation to
the management, development, leasing, lease management, marketing, property
management, purchase or sale of any of real estate assets and real estate-related assets.
Subject to the Trust Deed and the Property Funds Appendix, the Manager may direct the Trustee
to borrow or raise money or obtain other financial accommodation for the purposes of OUE
C-REIT, both on a secured and unsecured basis.
The Trustee must carry out its functions and duties and comply with all the obligations imposed
on it as set out in the Trust Deed, the Listing Manual, the SFA, the CIS Code (including the
Property Funds Appendix), the Take-over Code, any tax ruling and all other relevant laws. It must
retain OUE C-REITs assets, or cause OUE C-REITs assets to be retained, in safe custody and
cause OUE C-REITs accounts to be audited. Pursuant to the Trust Deed, it can appoint any
custodian, joint-custodian or sub-custodian (including, without limitation, any Related Party of the
Trustee) in relation to the whole or any part of OUE C-REITs assets. It can appoint valuers to
value the real estate assets and real estate-related assets of OUE C-REIT.
The Trustee is not personally liable to a Unitholder in connection with the office of the Trustee
except in respect of its own fraud, gross negligence, wilful default, breach of the Trust Deed or
breach of trust. Any liability incurred and any indemnity to be given by the Trustee shall be limited
to the assets of OUE C-REIT over which the Trustee has recourse, provided that the Trustee has
acted without fraud, gross negligence, wilful default or breach of the Trust Deed. The Trust Deed
contains certain indemnities in favour of the Trustee under which it will be indemnified out of the
assets of OUE C-REIT for liability arising in connection with certain acts or omissions. These
indemnities are subject to any applicable laws.
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Retirement and Replacement
The Trustee may retire or be replaced under the following circumstances:
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).
The Trustee may be removed by notice in writing to the Trustee by the Manager:
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;
if the Trustee ceases to carry on business;
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;
if an Extraordinary Resolution is passed at a Unitholders meeting duly convened and
held in accordance with the provisions of the Trust Deed, and of which not less than 21
days notice has been given to the Trustee and the Manager, so decide; or
if the MAS directs that the Trustee be removed.
Trustees Fee
Under the Trust Deed, the Trustees fee shall not exceed 0.1% per annum of the value of the
Deposited Property, subject to a minimum of S$15,000 per month, excluding out-of-pocket
expenses and GST in accordance with the Trust Deed. The Trustees fee is accrued daily and paid
monthly in arrears in accordance with the Trust Deed.
The actual fee payable will be determined between the Manager and Trustee from time to time,
and is presently charged on a scaled basis of up to 0.02% per annum of the value of the Deposited
Property. The Trustee will also be paid a one-time inception fee as may be agreed between the
Manager and the Trustee, subject to a maximum of S$60,000.
Any increase in the Trustees fee beyond the current scaled basis of up to 0.02% per annum of
the value of the Deposited Property will be subject to agreement between the Manager and the
Trustee.
TERMINATION OF OUE C-REIT
Under the provisions of the Trust Deed, the duration of OUE C-REIT shall end on the earliest of:
such date as may be provided under written law;
the date on which OUE C-REIT is terminated by the Manager in such circumstances as set
out under the provisions of the Trust Deed as described below; or
the date on which OUE C-REIT is terminated by the Trustee in such circumstances as set out
under the provisions of the Trust Deed as described below.
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The Manager may in its absolute discretion terminate OUE C-REIT by giving notice in writing to
all Unitholders or, as the case may be, the Depository, 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:
if any law shall be passed which renders it illegal or in the opinion of the Manager
impracticable or inadvisable for OUE C-REIT to exist;
if the NAV of the Deposited Property shall be less than S$50.0 million after the end of the first
anniversary of the date of the Trust Deed or any time thereafter; and
if at any time OUE C-REIT becomes unlisted after it has been listed.
Subject to the SFA and any other applicable law or regulation, OUE C-REIT may be terminated by
the Trustee by notice in writing in any of the following circumstances:
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 OUE C-REIT; 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 specified above shall be final and binding upon
all the parties concerned but the Trustee shall be under no liability on account of any failure to
terminate OUE C-REIT 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 and hold it harmless from
any claims whatsoever on its part for damages or for any other relief.
Generally, upon the termination of OUE C-REIT, 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 OUE C-REIT 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 OUE C-REIT before distributing the balance of the Deposited
Property to the Unitholders in accordance with their proportionate interests in OUE C-REIT.
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CERTAIN AGREEMENTS RELATING TO
OUE C-REIT AND THE PROPERTIES
The agreements discussed in this section are complex documents and the following is a summary
only. Investors should refer to the agreements themselves to confirm specific information or for a
detailed understanding of OUE C-REIT. The agreements are available for inspection at the
registered office of the Manager at 50 Collyer Quay #04-08, OUE Bayfront, Singapore 049321
(prior appointment would be appreciated).
SPONSOR ROFR AGREEMENT
The Sponsor has granted a right of first refusal dated 9 January 2014 to the Trustee for so long
as:
OUE Commercial REIT Management Pte. Ltd. or any of its related corporations (as defined
in the Companies Act) remains the manager of OUE C-REIT;
the Sponsor and/or any of its related corporations, alone or in aggregate, remains as a
controlling shareholder
1
of the manager of OUE C-REIT; and
the Sponsor and/or any of its related corporations, alone or in aggregate, remains as a
controlling unitholder
2
of OUE C-REIT.
For the purposes of the Sponsor ROFR:
a Relevant Entity means the Sponsor or any of its existing or future subsidiaries or existing
or future private funds managed by the Sponsor (Sponsor Private Funds); and
a Relevant Asset refers to income-producing real estate used primarily for commercial
purposes (including real estate used primarily for office and/or retail purposes) in financial
and business hubs within and outside of Singapore
3
. Where such real estate is held by a
Relevant Entity through a SPV established solely to own such real estate, the term Relevant
Asset shall refer to the shares or equity interests, as the case may be, in that SPV. Where
such real estate is co-owned by a Relevant Entity as a tenant-in-common, the term
Relevant Asset shall refer to the ownership share of the Relevant Entity in such real
estate.
The Sponsor ROFR shall cover any proposed offer by a Relevant Entity to dispose of any interest
subject to certain exceptions in any Relevant Asset which is owned by the Relevant Entity
(Proposed Disposal). If the Relevant Asset (i) is owned jointly by a Relevant Entity together with
one or more third parties and if consent of any of such third parties to offer the Relevant Asset to
OUE C-REIT is required or (ii) is owned by the Sponsors subsidiaries or Sponsor Private Funds
which are not wholly-owned by the Sponsor and whose other shareholder(s) or private fund
investor(s) is/are third parties, and if consent from such shareholder(s) or private fund investor(s)
1 A controlling shareholder as defined in the Listing Manual, means a person who:
(i) holds directly or indirectly 15.0% or more of the total number of issued shares (excluding treasury shares) in
a company; or
(ii) in fact exercises control over a company, where control refers to the capacity to dominate decision-making,
directly or indirectly, in relation to the financial and operating policies of a company.
2 A controlling unitholder in relation to a REIT means a person who:
(i) holds directly or indirectly 15.0% or more of the nominal amount of all voting units in the REIT; or
(ii) in fact exercises control over the REIT.
3 The Sponsor ROFR does not cover retail and/or commercial assets which are either complementary to or adjoining
hospitality assets which are owned by OUE H-REIT or which OUE H-REIT has committed to buy, as these assets
are the subject of a separate right of first refusal which the Sponsor has earlier granted to OUE H-Trust.
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to offer the Relevant Asset to OUE C-REIT is required, the Sponsor shall use its best endeavours
to obtain the consent of the relevant third party(ies), other shareholder(s) or private fund
investor(s), failing which the Sponsor ROFR will exclude the disposal of such Relevant Asset. For
the avoidance of doubt, the grant by any Relevant Entity of a lease (including a long-term lease)
over any such Relevant Asset (or any part thereof) for a rent or other service income shall not
constitute or be deemed to constitute a Proposed Disposal for the purposes of this paragraph.
The Sponsor ROFR shall:
be subject to any prior overriding contractual obligations which the Relevant Entity may have
in relation to the Relevant Assets and/or the third parties that hold these Relevant Assets;
exclude the disposal of any interest in the Relevant Assets by a Relevant Entity to a related
corporation of such Relevant Entity pursuant to a reconstruction, amalgamation,
restructuring, merger and/or any analogous event or transfer of shares of the Relevant Entity
between the shareholders as may be provided in any shareholders agreement; and
be subject to the applicable laws, regulations and government policies and the listing rules
of the SGX-ST.
In the event that the Trustee fails or does not wish to exercise the Sponsor ROFR, the Relevant
Entity shall be entitled to dispose of its interest in the Relevant Asset to a third party on terms and
conditions no more favourable to the third party than those offered by the Relevant Entity to the
Trustee.
However, if the completion of the disposal of the Relevant Assets by the Relevant Entity to the
third party does not occur within 12 months from the date of the written notice of the Proposed
Disposal, any proposal to dispose of such Relevant Asset after the aforesaid 12-month period
shall then remain subject to the Sponsor ROFR.
HEAD LEASE
The OUE Bayfront Property is held by Clifford Development Pte. Ltd. as lessee under three State
Leases granted by the President of the Republic of Singapore as lessor. State Lease No. 27426,
with a leasehold term of 99 years commencing 12 November 2007, is in respect of OUE Bayfront
and OUE Tower, State Lease No. 27655, with a leasehold term of 15 years commencing 26 March
2010, is in respect of OUE Link and State Lease No. 27280, with a leasehold term of 99 years
commencing 7 January 2002, is in respect of the underpass.
State Lease No. 27426 stipulates that the land must be used for commercial use only with a total
GFA not exceeding 46,500 sq m and must not be used otherwise save with the prior written
consent of the lessor, and such consent may be given on such conditions as the lessor thinks fit,
including the payment of a differential premium for a change of use or increase in gross plot ratio
or change of density or floor area.
State Lease No. 27655 stipulates that the airspace must be used for overhead pedestrian bridge
use only (which includes commercial GFA of approximately 276.5 sq m) and must not be used
otherwise save with the prior written consent of the lessor, and such consent may be given on
such conditions as the lessor thinks fit including the payment of a differential premium in respect
of any increase in plot ratio or density or floor area or change of use which will result in an
enhanced value.
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State Lease No. 27280 stipulates that the land must be used for pedestrian underpass use only
and must not be used otherwise save with the prior written consent of the lessor, and such consent
may be given on such conditions as the lessor thinks fit, including the payment of a differential
premium for a change of use or increase in gross plot ratio or change of density or floor area.
Under each of the State Leases, the lessee shall not demise, mortgage, charge, assign, sublet,
underlet or part with possession of the property in whole or in part without the prior written consent
of the lessor, except that the consent of the lessor is not required for a mortgage or charge to any
bank licensed under the Banking Act, Chapter 19 of Singapore, or to any finance company
licensed under the Finance Companies Act, Chapter 108 of Singapore.
The lessor under each of the State Leases is entitled to exercise the right of re-entry if the lessee
fails to perform or observe any of the terms and conditions of the State Lease. Upon re-entry, the
term of the State Lease will cease but without prejudice to any right of action or remedy that the
lessor may have.
PROPERTY SALE AND PURCHASE AGREEMENT
On 9 January 2014, the Trustee entered into the Property Sale and Purchase Agreement with
Clifford Development Pte. Ltd. for the acquisition of the OUE Bayfront Property together with the
plant and equipment therein at a purchase consideration of S$1,005.0 million.
Under the Property Sale and Purchase Agreement, it is provided, inter alia, that:
the purchase consideration will be paid by way of a combination of cash and issue of
[432,999,999] Consideration Units at the Offering Price;
the completion of the sale and purchase is subject to and conditional upon the approval of
Clifford Development Pte. Ltd.s shareholders being obtained by, and the listing and
commencement of trading of the Units on the SGX-ST on, the Listing Date;
Clifford Development Pte. Ltd. is required, at its own cost, to carry out and complete certain
works to upgrade the property by the Listing Date or as soon as practicable thereafter;
OUE C-REIT undertakes that (a) for so long as it is the owner of the property or any part
thereof it shall not take any action to apply or approve the application for any change of name
of any of OUE Bayfront, OUE Tower and OUE Link without the prior written consent of the
Sponsor, and that (b) in the event it sells the property or any part thereof to a third party, OUE
C-REIT will on or before completion of such sale or transfer, deliver to the Sponsor an
undertaking under seal from such third party to the Sponsor in respect of the matters in (a)
and (b);
if, at any time prior to completion, the Singapore government acquires or gives notice of the
compulsory acquisition or intended compulsory acquisition affecting the property, the Trustee
shall be entitled to rescind the sale and purchase, without prejudice to its other rights
(including the right to claim damages); and
on completion, all the tenancies (including licences) at the property will be assigned to the
Trustee. Concurrently with the assignment of such tenancies, the tenancy security deposits
held by Clifford Development Pte. Ltd. in relation thereto will be transferred and all
guarantees covering such tenancy security deposits will be assigned to OUE C-REIT.
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In addition, under the Property Sale and Purchase Agreement, certain limited representations and
warranties are made by Clifford Development Pte. Ltd. relating to the OUE Bayfront Property.
Claims for breach of warranties are subject to an aggregate maximum limit and must be made
within 18 months after the completion of the sale and purchase. The maximum aggregate liability
of Clifford Development Pte. Ltd. in respect of the claims shall not exceed the purchase
consideration. If, prior to completion, it is found that there is a material breach of warranty by
Clifford Development Pte. Ltd., the Trustee shall be entitled to rescind the sale and purchase,
without prejudice to its other rights including the right to claim damages.
TECWELL SHARE PURCHASE AGREEMENT
The BVI Holding Company entered into the share purchase with LCR on 16 October 2013, as
supplemented by a supplemental agreement entered into between the BVI Holding Company and
LCR on 9 January 2014, pursuant to which LCR conditionally agreed to procure the sale of, and
the BVI Holding Company conditionally agreed to acquire, all the shares of the BVI Company from
LCR on the Listing Date.
The BVI Holding Company and LCR agreed that the consideration for the acquisition (the
Consideration) shall be approximately HK$843.5 million (subject to adjustment), which shall be
payable in cash by the BVI Holding Company to LCR on the Listing Date. The Consideration may
be adjusted upwards or downwards based on the increase or decrease, as the case may be, in
NAV of the BVI Company and its subsidiaries (which is the aggregate value of the total assets of
BVI Company and its subsidiaries less the aggregate amount of the total liabilities of the BVI
Company and its subsidiaries) (excluding any change in valuation of the Lippo Plaza Property) as
at the Listing Date relative to 30 June 2013. The management accounts of the BVI Company and
its subsidiaries will be used to prepare the Completion Financial Statements. The Completion
Financial Statements will be prepared by the BVI Holding Company and reviewed by the Reporting
Auditors.
Any upward or downward adjustment in the Consideration post-completion of the Tecwell Share
Purchase Agreement shall be settled by the BVI Holding Company or LCR, as the case may be,
in cash within five Business Days after agreement of such adjustment.
The Tecwell Share Purchase Agreement provided, inter alia, for:
certain conditions precedent prior to completion, which include all necessary consents and
approvals as required by the BVI Holding Company, LCR and/or their respective holding
companies (as defined under the Companies Ordinance, Chapter 32 of the laws of Hong
Kong) to complete the Tecwell Share Purchase Agreement and the transactions envisaged
thereunder; and
certain representations and warranties made by LCR as seller in respect of the shares in the
BVI Company and the PRC Company as well as the Lippo Plaza Property, with certain
limitations on the liability of LCR, such as the BVI Holding Company being able to claim
against LCR only in a claim (i) where the amount of a claim relating to, in connection with or
arising out of a taxation matter, whether in aggregate or as an individual claim, exceeds
HK$100,000, or (ii) where the amount of a claim other than that relating to, in connection with
or arising out of a taxation matter in aggregate exceeds HK$25 million and each individual
claim exceeds HK$3 million, as well as limitation periods (whereby no proceedings shall be
commenced by or on behalf of the BVI Holding Company in relation to the representations
and warranties relating to taxation after six years (or such period as required under the
applicable legal, regulatory, tax or other requirements, whichever period is longer), and in
relation to the representations and warranties other than relating to taxation after 18 months,
from the date of completion of the transaction). The HK$25 million and HK$3 million
thresholds were commercially agreed between LCR and the BVI Holding Company with the
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Manager having taken into account and considered that (i) the Lippo Plaza Property will be
acquired at an attractive valuation, given that the Lippo Plaza Property will be acquired at an
aggregate purchase consideration equivalent to approximately S$331.8 million
1
(subject to
adjustment)
2
(which is at a discount to the appraised valuation) and that the appraised value
of the Lippo Plaza Property is between RMB2,250.0 million and RMB2,337.0 million (or
between S$470.4 million and S$488.6 million)
3
and (ii) the Tecwell Share Purchase
Agreement is an arms length transaction entered into with an entity which is separately listed
on the Hong Kong Stock Exchange and which is not the sponsor of OUE C-REIT or otherwise
participating in the Offering.
LCRs liability under the Tecwell Share Purchase Agreement is limited to approximately HK$1.6
billion. This was commercially agreed between LCR and the BVI Holding Company with the
Manager having taken into account and considered (i) the value of an aggregate purchase
consideration equivalent to approximately S$331.8 million
4
(subject to adjustment)
2
, (ii) the
Managers due diligence findings on the BVI Company, the PRC Company and the Lippo Plaza
Property, (iii) OUE C-REIT will be acquiring the Lippo Plaza Property at an attractive valuation, (iv)
the same group of personnel currently managing the PRC Company and the Lippo Plaza Property
will continue to manage the companies and the Lippo Plaza Property after the Listing Date, and
(v) the Tecwell Share Purchase Agreement is an arms length transaction entered into with an
entity which is separately listed on the Hong Kong Stock Exchange and which is not the sponsor
of OUE C-REIT or otherwise participating in the Offering.
Upon completion of the Tecwell Share Purchase Agreement, the BVI Holding Company will
undertake not to change the name of the Lippo Plaza Property for so long as the PRC Company
is the beneficial owner of the Lippo Plaza Property, pursuant to a deed of undertakings appended
to the Tecwell Share Purchase Agreement. Pacific Asia Holdings Limited, the BVI Holding
Company (for itself and its subsidiaries), the Trustee and the Manager have on 9 January 2014
entered into a licence agreement for the grant of a non-exclusive, non-transferable licence to use
the Lippo name and any additional trade mark(s) which may be agreed to by the parties in writing
from time to time for use in connection with the Lippo Plaza Property (the Lippo Licence
Agreement).
In connection with the Tecwell Share Purchase Agreement, the BVI Holding Company also
entered into a letter of undertaking with LCR which sets out the agreement between the BVI
Holding Company and LCR regarding the formers undertaking to repay in full the principal amount
of the Existing Offshore Facility.
1 The aggregate purchase consideration for the Lippo Plaza Property is based on an exchange rate of S$1.00 :
HK$6.1275 and comprises (i) the purchase consideration payable to LCR under the Tecwell Share Purchase
Agreement for the entire issued share capital in the BVI Company, (ii) the repayment of the Existing Offshore Facility
as well as (iii) the refinancing of the Existing Onshore Facility.
2 The purchase consideration for the Lippo Plaza Property may be adjusted upwards or downwards based on the
increase or decrease, as the case may be, in NAV of the BVI Company and its subsidiaries (which is the aggregate
value of the total assets of the BVI Company and its subsidiaries less the aggregate amount of the total liabilities
of the BVI Company and its subsidiaries) (excluding any change in valuation of the Lippo Plaza Property) as at the
Listing Date relative to 30 June 2013. The management accounts of the BVI Company and its subsidiaries will be
used to prepare the Completion Financial Statements. The Completion Financial Statements will be prepared by the
BVI Holding Company and reviewed by the Reporting Auditors.
3 Based on an exchange rate of S$1.00 : RMB4.7830.
4 The aggregate purchase consideration for the Lippo Plaza Property is based on an exchange rate of S$1.00 :
HK$6.1275 and comprises (i) the purchase consideration payable to LCR under the Tecwell Share Purchase
Agreement for the entire issued share capital in the BVI Company, (ii) the repayment of the Existing Offshore Facility
as well as (iii) the refinancing of the Existing Onshore Facility.
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PROPERTY MANAGEMENT AGREEMENTS
Master Property Management Agreement
The OUE Bayfront Property which comprises part of the IPO Portfolio of OUE C-REIT and any
properties located in Singapore or any other jurisdiction, which are subsequently acquired by OUE
C-REIT whether such properties are directly or indirectly held by OUE C-REIT, or are wholly or
partly owned by OUE C-REIT, will be managed by the Property Manager
1
, a subsidiary of the
Sponsor, or a property manager of reputable standing (where the Property Manager has elected
not to take over the management of such property), in accordance with the terms of the Master
Property Management Agreement and the individual property management agreements entered
into.
The Property Manager is jointly appointed by the Trustee and the Manager pursuant to the Master
Property Management Agreement. The Master Property Management Agreement was entered into
on 9 January 2014 by the Trustee, the Manager and the Property Manager pursuant to which the
Property Manager and/or its subsidiaries was appointed to operate, maintain, manage and market
the properties of OUE C-REIT. The Property Manager and/or the relevant subsidiary so appointed
will be subjected to the overall management and supervision of the Manager and subject to the
terms and conditions of the Master Property Management Agreement and each individual property
management agreement.
The Master Property Management Agreement provides that in respect of each new property which
is subsequently acquired by the Trustee (whether directly or indirectly), the Trustee, the Manager
and the owner of the new property will enter into a separate individual property management
agreement with the Property Manager or a property manager of reputable standing (where the
Property Manager has elected not to take over the management of such property), in the form and
on terms substantially similar to those set out in the Annexure to the Master Property Management
Agreement, which sets out the form of the individual property management agreement. The
Master Property Management Agreement also provides that in respect of the non-renewal or early
termination of any property management agreement relating to any of the properties of OUE
C-REIT which are not managed by the Property Manager, the Trustee, the Manager and the owner
of the relevant property (where applicable) will enter into a separate individual property
management agreement with the Property Manager or a property manager of reputable standing
(where the Property Manager has elected not to take over the management of such property), in
the form and on terms substantially similar to those set out in the Annexure to the Master Property
Management Agreement. The termination of the Master Property Management Agreement will not
affect any individual property management agreements entered into pursuant to the Master
Property Management Agreement.
Six months before the expiry of the initial term of the Master Property Management Agreement,
the initial term of the Master Property Management Agreement is 10 years from the Listing Date.
The Property Manager may give written request to the Trustee and the Manager to extend its
appointment as the property manager for a further term of 10 years on the same terms and
conditions except that such extension shall be subject to the approval of the Unitholders if such
approval is required pursuant to the Trust Deed or any applicable legislation or regulations
(including regulatory requirements relating to interested person/party transactions relating to
REITs and the provisions of the Listing Manual).
1 On the Listing Date, the Property Manager will be providing its services in respect of the OUE Bayfront Property but
will not be providing its services in respect of the Lippo Plaza Property as such services will be provided by the
existing local property manager of the Lippo Plaza Property under the Local Property Management Agreement.
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Individual Property Management Agreement
The Individual Property Management Agreement will be entered into by the Trustee, the Manager
and the Property Manager on the Listing Date, pursuant to which the Property Manager is
appointed to operate, maintain, manage and market the OUE Bayfront Property. The Property
Manager will be subject to the overall management and supervision of the Manager.
The initial term of the Individual Property Management Agreement is 10 years from the Listing
Date.
Six months before the expiry of the initial term of the Individual Property Management Agreement,
the Property Manager may give written request to the Trustee and the Manager to extend its
appointment for a further term of 10 years on the same terms and conditions, save for revision of
all fees payable to the Property Manager to revised fees determined by the Trustee based on the
recommendation of the Manager, having regard to prevailing market rates. If the Property
Manager does not accept the Trustees proposal on the revised rates for the extension term, the
dispute shall be referred for determination by an expert in accordance with the terms of the
Individual Property Management Agreement.
The Trustee shall, based on the recommendation of the Manager, agree to extend the
appointment of the Property Manager for the extension term, on the revised fees determined as
aforesaid, subject to the approval of the Unitholders if such approval is required pursuant to the
Trust Deed or any applicable legislation or regulations (including regulatory requirements relating
to interested person/party transactions relating to REITs and the provisions of the Listing Manual).
The Trustee shall not be obliged to extend the appointment of the Property Manager if the above
conditions are not fulfilled.
Property Managers Services
The services provided by the Property Manager for the OUE Bayfront Property include the
following:
property management services, recommending award of third party contracts for provision of
property maintenance services, reviewing all ongoing maintenance contractors and ensuring
compliance with building and safety regulations;
lease management services, including coordinating tenants fitting-out requirements,
administration of rental collection, management of rental arrears, and administration of all
property tax matters and arranging for adequate insurances; and
marketing and marketing coordination services, including managing public relations,
initiating lease renewals and negotiation of terms.
Where a property of OUE C-REIT is located outside of Singapore and is under the management
of the Property Manager, the Property Manager may appoint and engage a local property manager
to provide property management services and pay the local property manager for the provision of
property management services. Any payment to such local property managers in connection with
such management services will be paid by the Property Manager to such persons out of the
property management fee received by the Property Manager, and not additionally out of the
Deposited Property.
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Fees
Under the Individual Property Management Agreement, the Property Manager is entitled to the
property and lease management and marketing services fees set out below, to be borne out of the
Deposited Property.
Property management and marketing services fees
For the OUE Bayfront Property, the Property Manager is entitled to a fee comprising the following:
in respect of property management services, (a) 2.0% per annum of Gross Revenue for the
OUE Bayfront Property and (b) 2.0% per annum of the Net Property Income for the OUE
Bayfront Property (calculated before accounting for the property management fee in that
financial period); and
in respect of the lease management services, 0.5% per annum of the Net Property Income
for the OUE Bayfront Property (calculated before accounting for the property management
fee in that financial period).
Project management fee
For project management services, the Property Manager is entitled to a project management fee
to be mutually agreed in writing between the Manager, the Trustee and the Property Manager in
relation to (i) the development and redevelopment of a property (if not prohibited by the Property
Funds Appendix or if otherwise permitted by the MAS), the refurbishment, retrofitting and
renovation works to a property where submission to the relevant authorities for the approval of
such works is required or:
a fee of 3.0% of the construction costs
1
, where the construction costs amount to S$2.0
million or less in Singapore or the equivalent value in the relevant foreign currency for any
other country;
a fee of 2.15% of the construction costs, where the construction costs exceed S$2.0 million
but do not exceed S$12.0 million in Singapore or the equivalent value in the relevant foreign
currency for any other country;
a fee of 1.45% of the construction costs, where the construction costs exceed S$12.0 million
but do not exceed S$40.0 million in Singapore or the equivalent value in the relevant foreign
currency for any other country;
a fee of 1.40% of the construction costs, where the construction costs exceed S$40.0 million
but do not exceed S$70.0 million in Singapore or the equivalent value in the relevant foreign
currency for any other country;
a fee of 1.35% of the construction costs, where the construction costs exceed S$70.0 million
but do not exceed S$100.0 million in Singapore or the equivalent value in the relevant foreign
currency for any other country; and
1 Construction costs for the purpose of calculating the fees payable to the Property Manager means all
construction costs and expenditure valued by the quantity surveyor engaged by the Trustee for the project,
excluding development charges, differential premiums, statutory payments, consultants professional fees and GST.
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a fee to be mutually agreed by the parties, but capped at 1.35% of the construction costs,
where the construction costs exceed S$100.0 million in Singapore or the equivalent value in
the relevant foreign currency for any other country.
The project management fee will be paid to the Property Manager in cash.
For the avoidance of doubt, where Development Management Fees are payable to the Manager,
there will not be any project management fees payable to the Property Manager and vice versa.
Expenses
The Property Manager is authorised to utilise funds deposited in an operating account maintained
in the name of the Trustee to make payment for all costs and expenses incurred in the operation,
maintenance, management and marketing of the OUE Bayfront Property, within the annual budget
approved by the Trustee and the Manager.
Provision of Office Space
Where applicable, the Trustee or the Manager shall permit the staff members of the Property
Manager to occupy suitable office space at the OUE Bayfront Property (as approved by the
Trustee based on the recommendation of the Manager) without the Property Manager being
required to pay any rent, service charge, utility charges or other sums in respect thereof.
Termination
The Trustee or the Manager may terminate the appointment of the Property Manager under the
Master Property Management Agreement and/or Individual Property Management Agreement on
the occurrence of certain specified events, which include: if the Property Manager is voluntarily or
involuntarily dissolved or declared bankrupt, insolvent or commits an act of bankruptcy or if an
order is made or resolution is passed or a notice is issued convening a meeting for the purpose
of passing a resolution or any analogous proceedings are taken for the appointment of an
administrator or judicial manager of or the winding up of the Property Manager, other than a
members voluntary liquidation solely for the purpose of a bona fide amalgamation or
reconstruction, or the Property Manager compounds with its creditors or has a receiver appointed
over all or any part of its assets or a judicial manager is appointed in respect of the Property
Manager or the Property Manager ceases to carry on business.
In the event of a sale of the OUE Bayfront Property, the Trustee or the Manager may terminate the
Individual Property Management Agreement by giving not less than 30 days prior written notice
to the Property Manager. Under the Master Property Management Agreement, in the event of a
sale of a property, the Master Property Management Agreement will continue to apply with respect
to the remaining properties managed by the Property Manager under the terms of the relevant
Individual Property Management Agreements.
In addition, if the Property Manager, the Trustee or the Manager, as the case may be, within 90
days of receipt of written notice, fails to remedy any breach (which is capable of remedy) of its
obligations, the party who is not in breach may terminate the appointment of the Property Manager
upon giving 30 days written notice to the party in breach.
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 OUE Bayfront
Property.
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Assignability
The Trustee and the Manager are entitled to novate their respective rights, benefits and
obligations under the Master Property Management Agreement and the Individual Property
Management Agreement to a new trustee of OUE C-REIT or a new manager of OUE C-REIT
appointed in accordance with the terms of the Trust Deed. The Property Manager is also entitled
to novate its respective rights, benefits and obligations under the Master Property Management
Agreement and the Individual Property Management Agreement to a related company (as defined
in the Companies Act) of the Sponsor.
Exclusion of Liability
In the absence of fraud, negligence, default or breach of the Master Property Management
Agreement and/or the Individual 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 Master Property Management Agreement and/or
the Individual Property Management Agreement, as the case may be.
In addition, the Trustee shall indemnify the Property Manager against any actions, costs, claims,
damages, expenses or demands to which it may suffer or incur as Property Manager, save where
such action, cost, claim, damage, expense or demand is occasioned by the fraud, negligence,
default or breach of the Master Property Management Agreement and/or the Individual Property
Management Agreement by the Property Manager, its employees or agents.
No Restriction on Property Manager
The Property Manager may provide services similar to those contemplated under the Master
Property Management Agreement and the Individual Property Management Agreement to other
parties operating in the same or similar business as OUE C-REIT, or in other businesses, save
that it shall take all reasonable or necessary steps to minimise or resolve any conflicts of interests
which may arise thereto.
Local Property Management Agreement for the Lippo Plaza Property
The Local Property Management Agreement for the Lippo Plaza Property was entered into
between the PRC Company and Jones Lang LaSalle Surveyors (Shanghai) Co., Ltd., the existing
local property manager for the Lippo Plaza Property, on 27 June 2012, pursuant to which the local
property manager was appointed to carry out duties of Plaza Management (as defined in the Local
Property Management Agreement) subject to the terms and conditions of the Local Property
Management Agreement.
The initial term of the Local Property Management Agreement is two years, commencing 20 July
2012.
Local Property Managers Services
The services provided by the local property manager for the Lippo Plaza Property include certain
property management services as set out in the Local Property Management Agreement.
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Local Property Management Fees
The fees payable to the local property manager for the Lippo Plaza Property are as set out in the
Local Property Management Agreement. However, their scope is purely limited to property
management and excludes leasing and marketing services. The fees payable to the local property
manager for the Lippo Plaza Property is 4.2% of the total service charge collected for the Lippo
Plaza Property. The management fee is collected from all tenants of the Lippo Plaza Property.
Save as disclosed, there are no other fees payable to the local property manager.
Provision of Office Space
Where applicable, the PRC Company shall designate a furnished and renovated office in the Lippo
Plaza Property for the local property manager to perform its property management duties, without
the local property manager being required to pay any rent in respect thereof.
Termination
The PRC Company may terminate the appointment of the local property manager in relation to the
Lippo Plaza Property on the occurrence of certain specified events, which include the bankruptcy
or liquidation of the local property manager.
Either party may terminate the Local Property Management Agreement without cause if
agreement is reached between the parties or by giving three months written notice to the other
party.
In addition, if the local property manager breaches any provisions of the Local Property
Management Agreement or any laws and regulations, or has any improper activities, negligence,
dishonest behaviours, breach of its duties or is involved in any civil liability, the local property
manager shall rectify as soon as possible, and in any event no later than 30 days after the delivery
of written notice by the PRC Company, failing which the PRC Company shall have the right to
terminate the Local Property Management Agreement. In addition, the PRC Company shall have
the right to terminate the Local Property Management Agreement at any time if the local property
manager incurs any criminal liabilities by violating any related laws and regulations.
On the termination of the appointment of the local property manager, the Property Manager may
elect to assume the management of the Lippo Plaza Property or procure the appointment of a
replacement local property manager for the Lippo Plaza Property as soon as practicable.
Assignability
The PRC Company is entitled to novate its rights and obligations under the Local Property
Management Agreement to any party without the local property managers consent, whereas the
local property manager is not entitled to do so without prior written consent by the PRC Company.
Exclusion of Liability
The local property manager shall take no responsibility for any third party claim for compensation
provided that the local property manager (including its employees and any company or person
engaged by the local property manager) has not displayed any improper activities, negligence,
dishonest behaviours, breach of its duties or breach of the Local Property Management
Agreement, the Lippo Plaza Propertys management convention or any laws and regulations in its
property management work.
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DEED OF INCOME SUPPORT
On completion of the sale and purchase of the OUE Bayfront Property, Clifford Development Pte.
Ltd. entered into a Deed of Income Support with the Sponsor and the Trustee on 9 January 2014.
Pursuant to the terms of the Deed of Income Support, the Sponsor agrees to provide Income
Support for the period from the Completion Date to the day immediately preceding the fifth
anniversary date of the Completion Date.
Pursuant to the foregoing, in the event that:
(i) (in relation to the period from the Completion Date to 31 March 2014 (both dates inclusive))
the Gross Rental Income of the OUE Bayfront Property is less than S$14.25 million X
(number of days between the Completion Date and 31 March 2014 (both dates inclusive))/90
(the FP1Q2014 Threshold), the Sponsor will undertake to pay the difference between the
relevant Gross Rental Income and the FP1Q2014 Threshold, subject to a maximum limit of
S$12.0 million for the period from the Completion Date to 31 December 2014 (both dates
inclusive) (the FP2014);
(ii) (in relation to each quarter of FP2014 save for the quarter commencing on the Completion
Date and ending on 31 March 2014 (both dates inclusive)) the Gross Rental Income of the
OUE Bayfront Property in the relevant quarter is less than S$14.25 million, the Sponsor will
undertake to pay the difference between the relevant Gross Rental Income and S$14.25
million, subject to a maximum limit of S$12.0 million for FP2014;
(iii) (in relation to each quarter of FY2015, FY2016, FY2017 and FY2018) the Gross Rental
Income of the OUE Bayfront Property in the relevant quarter is less than S$14.25 million, the
Sponsor will undertake to pay the difference between the relevant Gross Rental Income and
S$14.25 million, subject to a maximum annual limit of S$12.0 million; and
(iv) (in relation to the quarter commencing on 1 January 2019 and ending on the day immediately
preceding the fifth anniversary date of the Completion Date (both dates inclusive)
(FP2019)) the Gross Rental Income of the OUE Bayfront Property is less than S$14.25
million X (number of days between 1 January 2019 and the day immediately preceding the
fifth anniversary date of the Completion Date (both dates inclusive))/90 (the FP1Q2019
Threshold), the Sponsor will undertake to pay the difference between the Gross Rental
Income and the FP1Q2019 Threshold, subject to a maximum annual limit of S$12.0 million.
Each payment and the applicable GST payable by the Sponsor to OUE C-REIT for each quarter
will be made by the Sponsor to OUE C-REIT on a semi-annual basis.
For the purposes of determining the amount payable by the Sponsor to OUE C-REIT under the
Deed of Income Support, the Gross Rental Income of the OUE Bayfront Property will be based on
the audited accounts of OUE C-REIT for the relevant financial year.
For the avoidance of doubt, the aggregate of all the rental top-up payments payable by the
Sponsor to OUE C-REIT under the Deed of Income Support for all of FP2014, FY2015, FY2016,
FY2017, FY2018 and FP2019 shall not exceed S$50.0 million.
Under the Deed of Income Support, only in the event that the Gross Rental Income of the OUE
Bayfront Property in a quarter is less than S$14.25 million, the Sponsor will undertake to pay the
difference between the relevant Gross Rental Income (per quarter) and S$14.25 million.
The S$12.0 million is an annual limit that applies to the total amounts payable under the Deed of
Income Support for the four quarters of the year.
263
Currently, the annual projected amount of Income Support payable for the Forecast Year 2014 and
Projection Year 2015 is S$9.6 million and S$8.9 million respectively.
The Income Support payments are not guaranteed payments but are subject to the credit risk of
the Sponsor. The Income Support will rank equally with any other unsecured obligations of the
Sponsor.
Having considered the terms of the Income Support and the financial condition of the Sponsor, the
Audit and Risk Committee is of the opinion that the Sponsor will be able to meet the Income
Support payments as and when they become due.
LICENCE AGREEMENTS
OUE Licence Agreement
Pursuant to a licence agreement entered into between the Sponsor and the Trustee on 9 January
2014 (the OUE Licence Agreement, and together with the Lippo Licence Agreement, the
Licence Agreements), in consideration for the payment of a nominal sum of S$1.00, the
Sponsor has granted a non-exclusive, non-transferable licence to the Trustee, in its capacity as
trustee of OUE C-REIT, to use the OUE name and any additional trade mark(s) which may be
agreed to by the parties in writing from time to time for use in connection with the business of OUE
C-REIT.
The licence became effective from the date of the OUE Licence Agreement and may be terminated
by the Sponsor by giving at least three months notice in writing to the Trustee without cause or
in the event that the Manager or any of its related corporations ceases to be the manager of OUE
C-REIT.
Under the OUE Licence Agreement, the Trustee as licensee shall use its endeavours at all times
during the term of the OUE Licence Agreement to create, promote and retain goodwill in the
business utilising the trade marks.
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OVERVIEW OF RELEVANT LAWS AND REGULATIONS
IN THE PEOPLES REPUBLIC OF CHINA
THE LAND SYSTEM
In the PRC, there are two kinds of land ownership, namely, state ownership and collective
ownership. The urban lands are owned by the State and the rural and suburban lands, unless
stipulated by laws to be owned by the State, are owned by collectives.
PRC law distinguishes between the ownership of land and the right to use land. Under such
system, companies set up by local or foreign investors in the PRC can acquire the right to use the
land owned by the State for their business purposes.
Lands in the PRC are also categorised by usage. A system of land usage control is implemented
under PRC law. According to the Land Administration Law of the PRC ()
(the Land Administration Law) (revised in 2004), the State formulates overall planning of land
utilisation, whereby lands are categorised as land for agriculture purpose, land for construction
purpose (including but not limited to industrial, commercial, tourism, entertainment, commodity
housing development) and unexploited land. Land users shall use lands in accordance with
approved usage.
According to the Property Law of the PRC () (the Property Law), effective
from 1 October 2007, users of granted state-owned land for construction purposes have the rights
to, in accordance with the laws, occupy, use, benefit from and mortgage the land owned by the
State and to use such land to construct buildings, structure and facilities.
State-owned land for construction purpose can be further divided into two categories in terms of
ways by which the land use right is obtained, that is, granted state-owned land for construction
purpose and allocated state-owned land for construction purpose.
Under the Provisional Regulations of the PRC Concerning the Grant and Assignment of the Right
to Use State-owned Land in Urban Areas ()
(the Urban Land Regulations), the grant of a State-owned land use right refers to the grant of
a land use right by the State to a land user for a definite period subject to the payment of a land
premium by the land user. Grant of land use right is further discussed in the paragraph titled
Grant of Land Use Right below.
As defined in the Provisional Rules on Administration of Allocated Land Use Right (
), effective from 8 March 1992, allocated land use right refers to land use right
obtained by any other ways than grant of land use right. Usually the holder of allocated land use
right is free from payments of land premium. However, according to the Land Administration Law
and the Law of Administration of Urban Real Estate of the PRC ()
(the Urban Real Estate Law), which was passed on 5 July 1994 and revised on 30 August 2007,
allocation of land use right, subject to approval by the government, applies only when necessary
and only to land use for the following purposes:
land used for government offices and military site;
land used for urban infrastructures and public welfare;
land used for power generation, transportation, water resources and other projects which are
vigorously supported by the State; and
land used for other purposes specified by laws and regulations.
265
In addition to acquisition of land use right, either granted or allocated, directly from competent land
authorities, entities may also acquire land use right by means of transfer of land use right by
current land users who have obtained land use right. For details please refer to the paragraphs
titled Transfer of Land Use Right and Transfer of Properties below.
GRANT OF LAND USE RIGHT
According to the Urban Real Estate Law, grant of land use right shall be in line with overall
planning of land utilisation, urban planning and annual plan on land for construction purpose. Land
use right may be granted by agreement, public auction, tender or bidding.
Grant by Public Auction, Tender or Bidding ()
According to the Regulations on the Grant of State-owned Land Use Rights through Competitive
Bidding, Public Auction and Public Tender (), which was
passed by the Ministry of Land and Resources of the PRC on 3 April 2002 and revised on 21
September 2007 and effective from 1 November 2007, grant of lands for operational use (including
industrial, commercial, tourism, entertainment and commodity housing development) or a plot of
land with two or more prospective purchasers shall be subject to competitive bidding, public
auction or public tender.
Under public auction, the buyer that offers the highest price is the winner. Under public tender, the
tenderer who could maximally meets the comprehensive evaluation standard, or the tender
meeting the material requirement of the tender and offering the highest price is the winner. Under
competitive bidding, the buyer who offers the highest price is the winner, and if there is more than
one buyer offering the same price, the buyer first offering that price shall be the winner. The winner
will sign the land use right grant contract with the competent land authority.
Upon signing of the land use right grant contract for the grant of land use right, the grantee is
required to pay the land grant premium in accordance with the terms of the land use right grant
contract. Once the land grant premium is paid in full, the grantee may apply for issuance of a
State-owned Land Use Right Certificate from the land authority evidencing the grant of land use
right.
Grant by Bilateral Agreement ()
Pursuant to the Regulation on the Grant of Land Use Right Through Bilateral Agreement (
) promulgated by the Ministry of Land Resources, which became effective on
1 August 2003, land use right may be granted by way of a bilateral agreement between the
relevant land authority and a grantee only if it is not required by laws, regulations or rules to be
granted by means of competitive bidding, public auction or public tender. It is further provided that,
if there is only one prospective land user on the plot of land which has been publicly announced
to be granted, the land authority may grant the land use rights through a bilateral agreement at
a price not less than the minimum evaluated price approved by the authorised government
authority with the exception of lands for operational use (including but not limited to commercial,
tourism, entertainment and commodity housing development). Upon full payment of the land
premium, the grantee may apply for registration with the local authority and obtain a State-owned
Land Use Certificate evidencing the grant of land use right.
TRANSFER OF LAND USE RIGHT
According to the Property Law and the Provisions on the Administration of Urban Real Estate
Transfer () promulgated by the Ministry of Construction on 7 August 1995,
as amended on 15 August 2001 (Provisions of Real Estate Transfer), user of land for
266
construction purpose has the right to transfer, exchange, contribute, donate or mortgage the land
use right, unless otherwise provided by PRC law. In case of transfer of land use right, buildings
and other fixtures on the land shall be transferred all together.
The term of land use right for the transferred land is the original term granted under the land use
right grant contract less the term which has been used by the original grantee/transferor.
A transfer of land use right must be evidenced by a written contract. Upon such transfer, all rights
and obligations of the transferor contained in the original contract for the grant of land use right
by the State shall be simultaneously transferred to the transferee. The transfer must be duly
registered with the relevant local land authority and a new certificate of land use right will be
issued and the original land use certificate of land use right will be surrendered.
Under the Urban Real Estate Law, transfer of land use right acquired by way of grant shall by
subject to the following pre-conditions:
the land grant premium must have been paid in full in accordance with the land use right
grant contract and a certificate of land use right must have been obtained; and
the investment in or development of such land must have been carried out in accordance with
the land use right grant contract, evidenced by completion of 25.0% or more of total
development amount in case of construction of building or by satisfaction of industrial or
other use conditions in case of development of large parcel of land.
TERMINATION OF LAND USE RIGHT
A land use right will terminate upon the expiration of the term of the grant specified in the relevant
land use right grant contract. Land use rights may also terminate upon reclamation of the land use
right by the State or by loss of the land, etc.
Under the Urban Land Regulations, the maximum term of the grant depends on the type of use
of the land. Such term is generally as follows:
up to 70 years for residential use;
up to 50 years for industrial use;
up to 50 years for education, science, culture, public health or physical education uses;
up to 40 years for commercial, tourism and entertainment uses; and
up to 50 years for mixed or other uses.
Generally the State shall not reclaim the granted land use right prior to expiration of the term of
land use under the land use right grant contract. In exceptional circumstances, and if it is in the
public interest, the State has the right to reclaim the land use right of land for construction purpose
in accordance with law, meanwhile the State will offer compensation to the land user for the
buildings and other fixtures on the land and refund part of the land grant premium accordingly
pursuant to the Property Law.
According to the Property Law, upon expiry of land use term, (i) the term of residential land use
shall be automatically renewed; and (ii) the term of non-residential land use shall be handled in
accordance with the laws and the ownership of buildings and other properties on such land shall
be determined according to the contractual agreement; if there is no contractual agreement or it
is not expressly agreed upon, the laws and administrative laws shall be applied.
267
According to the Urban Real Estate Law, upon expiry of the term of grant under the land use right
grant contract, the user of non-residential land may apply for renewal of land use term by
submitting an application at least 12 months in advance. Such application will be granted unless
for public interest the land needs to be taken back by the state. If the application is granted, the
land user is required to enter into a new land use right grant contract, pay a land use right grant
premium and effect the necessary registration of the renewed right. If no application is made, or
such application is not granted, the land use right shall revert to the State and the buildings and
fixtures on the land shall be handled in accordance with the agreements set forth in the land use
right grant contract.
DOCUMENTATION OF TITLE
According to the Property Law, the creation, change, transfer or extinguishment of real property
rights shall come into effect upon and at the time of registration and shall not have effect without
registration unless otherwise provided by law. Nevertheless, the contracts between the parties
regarding creation, change, transfer or extinguishment of real property rights shall come into
effect upon offer and acceptance, and the effectiveness of the said contracts is not subject to
registration of real property rights.
There are two types of title registrations in the PRC, namely land registration and building
registration. According to the Measures on Land Registration () promulgated by
Ministry of Land Resources of the PRC on 30 December 2007, effective from 1 February 2008,
land registration refers to the registration of land use right of state-owned land, land use right of
collectively-owned land, mortgage right and easement and any other land rights onto a land
register which is publicly disclosed. However, in practice, public searches on land registration may
not be available without the cooperation of the land user. According to the Measures on Building
Registration () promulgated by the Ministry of Construction of the PRC on 15
February 2008, effective from 1 July 2008, building registration refers to registration of rights to
the building and any other requisite matters by building registration authorities onto a building
register.
The two different systems are commonly maintained separately in many cities in the PRC
including Beijing, where a Land Use Right Certificate and a Building Ownership Certificate will be
issued separately. However, in Shenzhen, Guangzhou, Shanghai and some other major cities, the
two systems have been consolidated and a single composite Building and Land Use Right
Certificate will be issued. Whether the two systems are separate or combined does not have any
legal impact on the property rights. Besides, pursuant to the Property Law, the registers kept by
the registration authorities shall be the basis of the real property rights and the certificates issued
to the owner or right holder are evidentiary documents of the real property rights; in case of any
discrepancy between a register and a certificate, the register shall prevail unless it has been
proven by evidence that the register does have an error.
TRANSFER OF PROPERTY
Pursuant to the Provisions of Real Estate Transfer, a real property owner may transfer, exchange,
contribute, donate or mortgage the real property owned by it. Where a building is transferred, the
ownership of the building and underlying land use right shall be transferred simultaneously.
Transfer of ownership of the building shall also be subject to the conditions precedent as set forth
in the paragraph titled Transfer of Land Use Right. The following real property may not be
transferred:
real property for which the underlying land use right was acquired by way of grant but the
pre-conditions for transfer of the granted land use right are not met;
268
real property which was seized or the rights to which were restricted in any other form by a
ruling or decision of judicial or administrative authorities in accordance with the law;
jointly owned real property, if other joint owners have not given their consent;
the title of the real property is disputable;
real property which has not been registered and a title certificate of which has not been
obtained; and
other circumstances in which transfer is prohibited under laws and administrative
regulations.
LEASING OF PROPERTY
Leasing of urban real properties is governed by the Contract Law of the PRC, the Urban Real
Estate Law, the Measures on Administration of Lease of Commodity Buildings (
) and other related laws. Under these laws and regulations, owners of buildings in the PRC
are entitled to lease their buildings unless otherwise provided by law. The lease shall be filed with
the real property administration authority at the municipal or county level within 30 days after the
lease contract is entered into. The failure to file the lease timely may subject the parties to
administrative penalties. The legal effect of the lease contracts are not subject to such filling;
provided, however, absent such filing, the lease does not have any effect against third parties
although it is still binding upon the parties to the lease. The term of lease may not be longer than
20 years, otherwise the excess part will be void and invalid. If the lessor intends to sell out a
leased property, it shall, within a reasonable time limit before the sale, notify the lessee and the
lessee shall have a right of first refusal to buy the leased property on equal terms and conditions,
unless such priority right is waived by the lessee in the lease. A lessee may, subject to written
consent of the lessor, sub-lease the property to a third party. The building shall not be leased in
the following circumstances:
the building is constructed illegally;
the building does not meet the mandatory standards on safety and disaster prevention;
the usage of the buildings is changed in violation of the provisions; or
other situations in which leasing is prohibited by the provisions of the laws and regulations.
MANAGEMENT OF PROPERTY
The State Council promulgated the Property Management Rules () (Property
Management Rules) on 8 June 2003 and revised it on 26 August 2007. The Property
Management Rules stipulate that owners in a common property management region shall
organise the Owners Meeting and elect and establish the Owners Committee. However, owners
will jointly exercise the duties of the Owners Meeting and the Owners Committee if there is only
one owner or there are only a few owners who have unanimously agreed not to organise the
Owners Meeting.
269
Pursuant to the Property Management Rules, the quorum for an Owners Meeting requires owners
representing more than 50.0% of owners (one independent unit represents one owner) with their
floor areas accounting for more than 50.0% of the GFA within the common property management
region. The following matters shall only be passed by two-third of owners with their floor areas
accounting for two-third of the GFA in respect of the property:
collecting and utilising special maintenance fund;
alteration, reconstruction of building and its facilities.
Under the Measures on Administration of Qualifications of Property Service Enterprises (
) revised by the Ministry of Construction of the PRC on 26 November 2007, a
property service enterprise shall apply for qualification with the competent authority according to
the measures. A qualified property service enterprise will be issued with qualification certificate
evidencing the qualification classification by the relevant authority. No enterprise may conduct
property service without such qualification.
Service charges comprise the property service cost and the property service enterprises
remuneration. The exact amount of service charges payable to a property service enterprise as
remuneration may be agreed by the parties by reference to the two methods. According to the
Rules on Property Service Fees () jointly promulgated by the National
Development and Reform Commission (the NDRC) and the Ministry of Construction of the PRC
on 13 November 2003, the extra amount of service charges payable to property service enterprise
as remuneration may be entered into between the owners and property management enterprises
by reference to a fixed management fee () or a percentage based management fee (
).
FOREIGN INVESTMENT IN REAL ESTATE IN THE PRC
Under the Provisions on the Administration of Qualification for Real Estate Development
Companies () promulgated by the Ministry of Construction of the PRC
on 29 March 2000, a company engaged in the development and operation of real property
business shall obtain a Qualification Certificate for Real Estate Development Enterprise in the
PRC.
According to the Opinions on Regulating the Access and Administration of Foreign Investment in
the Real Estate Market () promulgated jointly by the
Ministry of Construction of the PRC, the MOC, the NDRC, the Peoples Bank of China, the State
Administration for Industry and Commerce and the SAFE on 11 July 2006, (i) foreign entities and
individuals shall follow the principle of commercial existence and are allowed to invest and
purchase non-self-resided real estate in the PRC via their FIEs incorporated in the PRC; (ii) if the
total investment amount of a foreign-invested real estate development company is US$10.0
million or more, the amount of its registered capital shall not be less than 50.0% of the total
investment; (iii) foreign investors shall pay off all the transfer price in a lump sum with their own
funds if they acquire domestic real estate companies in the PRC; and (iv) no offshore or onshore
loan is allowed if the registered capital of foreign-invested real estate company has not been fully
paid in, or the foreign-invested real estate company has not obtained the State-owned land use
right certificate, or their capital for a property development project is less than 35% of the total
investment.
According to the Notice on Implementing the Opinions on Regulating the Access and
Administration of Foreign Capital in the Real Estate Market (
) promulgated by the MOC on 14 August 2006, (i) if the total
investment amount of a foreign-invested real estate development company is more than US$3.0
million, the amount of its registered capital shall not be less than 50.0% of the total investment;
270
and (ii) if the total investment amount of a foreign-invested real estate development company is
US$3.0 million or less, the amount of its registered capital shall not be less than 70.0% of the total
investment.
The MOC and the SAFE jointly issued a Notice on Further Strengthening and Regulating the
Approval and Administration regarding Foreign Direct Investment in the Real Estate Industry (
) (the No. 50 Notice) on 23 May 2007.
Under the No. 50 Notice, local commercial authorities should reinforce the approval and
supervision process over foreign-invested real estate enterprises, and strictly control foreign fund
from investing in high-end real estate development projects. In order to incorporate a foreign-
invested real property company, the land use right and/or building ownership should have been
obtained in advance, or at least a pre-transfer/purchase contract has been entered into with the
relevant land administrative authorities, land developers, or the owner of the building or other
constructions, otherwise the proposed incorporation of foreign-invested real estate company will
not be approved by the authorities.
According to the Notice of Issuing First Batch of Foreign-Invested Real Estate Development
Projects Completing Recording with the MOC (
) issued by the SAFE on 10 July 2007 (the Notice of First Batch), in respect of
foreign-invested real estate companies (including new set-up and capital increase) obtaining
approval certificates from authorities of commerce and passing recording with the MOC on and
after 1 June 2007, all SAFE branches shall not handle foreign debt registration and foreign debt
conversion matters with such companies, namely, such companies are prohibited from borrowing
foreign debts, including shareholder loans and offshore commercial loans. However, such
restriction does not apply to the remaining quorum of foreign debts which has not been used by
such companies prior to 1 June 2007. Besides, all SAFE branches shall not handle foreign
exchange registration (or change of registration) and capital conversion matters with foreign-
invested real estate companies obtaining approval certificate from local authorities of commerce
on and after 1 June 2007 but failing to secure recording with the MOC. While the Notice of First
Batch was abolished in accordance with the Notice on promulgating the Foreign Exchange
Administration Rules on Foreign Direct Investment in the PRC and other Supporting Documents
() issued by
SAFE on 10 May 2013, the foregoing restrictions on foreign-invested real estate companies are
still applicable in practice.
According to the Notice of the MOC on Implementing Recording Work of Foreign Investment in
Real Estate Sector (), effective from 1 July 2008,
after approving the issues of foreign investment in the real estate by law, the local competent
commerce authorities submit the materials which are originally reported to the MOC for record to
the provincial competent commerce authorities for checking. Under the Notice of the MOC on
Simplifying Recording of Foreign-invested Real Estate Companies (
) promulgated by the MOC on 22 December 2008, the recording process has
been simplified.
According to the Notice of SAFE on Improving Practice of Administration on Capital Conversion
of Foreign-invested Companies (
) promulgated by SAFE on 29 August 2008, any foreign-invested companies
other than those having been approved to engage in real property business shall not use its
Renminbi funds converted from capital contribution in foreign exchange to purchase non-self-use
real property in the PRC. Further, according to the Notice of SAFE on Further Clarifying and
Regulating Administration of Foreign Exchange under Capital Accounts (
) promulgated by SAFE on 9 November 2011, any foreign-
invested companies other than those having been approved to engage in real property business
shall not use its Renminbi funds converted from capital contribution in foreign exchange to pay
costs and expenses in relation to purchase of non-self-use real property in the PRC.
271
In December 2010, the Administrative Office of the MOC promulgated the Notice on Strengthening
Administration of the Approval and Recording of Foreign Investment into Real Estate Industry (
), whereby it is emphasised that speculative
investments shall be restrained. Among other things, a foreign-invested real property company shall
be prohibited from purchasing and selling real estate properties completed or under construction
within the PRC for arbitrage purposes.
Under the Catalogue for the Guidance of Foreign Investment Industries (2011 version) (
(2011)) promulgated by the MOC and the NDRC in December 2011, (i) the
development of a whole land lot (limited to joint developments with PRC partners) and the
construction and operation of high-end hotels, premium office buildings and international
conference centres fall within the category of industries in which foreign investment is subject to
restrictions; (ii) the construction and operation of golf courses and villas fall within the category of
industries in which foreign investment is prohibited; and (iii) other real estate development falls
within the category of industries in which foreign investment is permitted.
COMPANY LAW
The Company Law of the PRC (Company Law), which came into effect on 29 December 1993
and was revised on 25 December 1999, 28 August 2004 and 27 October 2005 respectively,
governs two types of companies, namely companies incorporated in the PRC with limited liability
and companies incorporated in the PRC as joint stock limited companies. Both types of companies
have the status of an enterprise legal person. The liability of shareholders of a limited liability
company is limited to the extent of the amount of capital subscribed by them and the company is
liable to its creditors to the full amount of the assets owned by it. The liability of shareholders of
joint stock limited companies is limited to the extent of the amount of shares subscribed by them
and the company is liable to its creditors to the full amount of the assets owned by it. The
Company Law applies to FIEs, including Sino-foreign equity joint venture (EJV), Sino-foreign
contractual joint venture and wholly foreign-owned enterprise (WFOE) unless expressly
otherwise provided by the Law of the PRC on Sino-Foreign Equity Joint Venture (
), the Law of the PRC on Sino-Foreign Contractual Joint Venture (
) and the Law of the PRC on Wholly Foreign-owned Enterprises (
) (hereinafter collectively Laws on FIE).
Pursuant to the Company Law, the Laws on FIE and their respective implementation regulations
or rules, the after-tax profit of a FIE for a given year shall be allocated according to the following
sequences:
if the statutory common reserve is insufficient to make up its losses of the previous years,
such losses shall be made up from the profit for the current year firstly;
allocate certain percentage of the after-tax profit to the reserve funds, the employee
incentive and welfare funds and the enterprise development funds. In the case of EJV, the
percentage shall be decided by its board of directors; in the case of WFOE, it shall allocate
10.0% of the after-tax profit to its reserve fund until the aggregate amount of such reserve
exceeds 50.0% of its registered capital while the percentage for the employee incentive and
welfare funds and the enterprise development funds being decided by itself; and
make profit distribution to its shareholder(s).
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TAXATION
The following summary of certain tax consequences in Singapore, BVI and the PRC 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
apply to all categories of investors, some of which may be subject to special rules. Investors
should consult their own tax advisers concerning the application of Singapore, BVI and PRC 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 tax jurisdictions.
OUE C-REIT has obtained the Tax Rulings from the IRAS in respect of the taxation of Specified
Taxable Income from the OUE Bayfront Property and the Singapore taxation of dividend income
received from the BVI Holding Company. In accordance with the Tax Rulings, the Singapore, BVI
and PRC taxation consequences for OUE C-REIT and that of the Unitholders are described below.
SINGAPORE TAXATION
Specified Taxable Income Receivable by OUE C-REIT and Tax-Exempt Income Received by
OUE C-REIT from the BVI Holding Company
Taxable Income receivable by OUE C-REIT
Except as detailed in the paragraphs below, the Trustee will be subject to Singapore income tax
at the prevailing corporate tax rate on taxable income of OUE C-REIT (Taxable Income).
The current Singapore corporate tax rate is 17.0%.
Specified Taxable Income receivable by OUE C-REIT
OUE C-REIT has obtained the Tax Transparency Ruling from the IRAS in respect of the Specified
Taxable Income derived from the OUE Bayfront Property. Such income includes property rent and
related income from the OUE Bayfront Property (but not gains from the disposal of the property)
and Singapore-sourced interest income from placement of surplus cash as deposits with banks
and rental top-up payments arising from the Income Support Arrangement.
Subject to the terms and conditions of the Tax Transparency Ruling, the Trustee will not be taxed
on Specified Taxable Income distributed to the Unitholders in the year in which the income was
derived. Instead, the Trustee and the Manager would undertake to deduct income tax at the
prevailing corporate tax rate from distributions made to Unitholders out of such Specified Taxable
Income. However, to the extent that the beneficial owner is a Qualifying Unitholder (as defined
herein), the Trustee and the Manager will make the distributions without deducting any income
tax. Also, to the extent that the beneficial owner is a Qualifying Foreign Non-Individual
Unitholder (as defined herein), the Trustee and the Manager would undertake to deduct income
tax at the reduced rate of 10.0% for distributions made up to 31 March 2015.
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A Qualifying Unitholder
1
refers to a Unitholder who is:
an individual;
a company incorporated and tax resident in Singapore;
a branch in Singapore of a company incorporated outside Singapore that has obtained IRAS
approval for distributions to be made by OUE C-REIT to it without deduction of tax; or
body of persons (excluding partnerships) incorporated or registered in Singapore, including:
(i) a charity registered under the Charities Act, Chapter 37 of Singapore or established by
an Act of Parliament;
(ii) a town council;
(iii) a statutory board;
(iv) a co-operative society registered under the Co-operative Societies Act, Chapter 62 of
Singapore; and
(v) a trade union registered under the Trade Unions Act, Chapter 333 of Singapore.
A Qualifying Foreign Non-Individual Unitholder is a person other than an individual not resident in
Singapore for Singapore income tax purposes and:
who does not have a permanent establishment in Singapore; or
who carries on an operation in Singapore through a permanent establishment in Singapore,
where the funds used by that person to acquire the Units are not obtained from that operation
in Singapore.
To obtain distributions free of tax deduction at source, or at the reduced rate of 10.0%, Qualifying
Unitholders or Qualifying Foreign Non-Individual Unitholder must disclose their respective tax
status in a prescribed form provided by the Trustee and the Manager.
Where the Units are held in joint names, the Trustee and the Manager will deduct income tax from
the distributions made out of OUE C-REITs Specified Taxable Income at the prevailing corporate
tax rate, unless all the joint owners are individuals.
Where the Units are held through a nominee, the Trustee and the Manager will deduct income tax
from the distributions made out of OUE C-REITs Specified Taxable Income at the prevailing
corporate tax rate unless:
the nominee can demonstrate that the Units are held for beneficial owners who are
Qualifying Unitholders for which the Trustee and the Manager would not deduct any tax from
the distributions. The nominee should make a declaration of the status of the beneficial
owners of the Units and provide certain particulars of the beneficial owners of the Units to the
Trustee and the Manager in a prescribed form provided by the Trustee and the Manager.
Where the Units are held through more than one tier of nominees, the Trustee and the
Manager must obtain confirmation from the ultimate beneficiaries that they are Qualifying
Unitholders. If the ultimate beneficiaries do not provide a confirmation of their status, the
1 A Qualifying Unitholder does not include a person acting in the capacity of a trustee.
274
Trustee and the Manager must withhold tax on the distribution. The nominee should also
maintain adequate and sufficient information and documentation to verify and be satisfied
with the identity of the beneficial owners;
the nominee is an agent bank or Supplementary Retirement Scheme (the SRS) operator
acting for individuals who purchased the Units within the CPF Investment Scheme or SRS
respectively for which the Trustee and the Manager would not deduct any tax from the
distributions; and
the nominee can demonstrate that the Units are held for beneficial owners who are
Qualifying Foreign Non-Individual Unitholders, for which the Trustee and the Manager would
deduct/withhold tax at the reduced tax rate of 10.0% from the distributions made up to 31
March 2015 (unless otherwise extended). The nominee should make a declaration of the
status of the beneficial owners of the Units and provide certain particulars of the beneficial
owners of the Units to the Trustee and the Manager in a prescribed form provided by the
Trustee and the Manager. Where the Units are held through more than one tier of nominees,
the Trustee and the Manager must obtain confirmation from the ultimate beneficiaries that
they are Qualifying Foreign Non-Individual Unitholders. If the ultimate beneficiaries do not
provide a confirmation of their status, the Trustee and the Manager must withhold tax on the
distribution. The nominee should also maintain adequate and sufficient information and
documentation to verify and be satisfied with the identity of the beneficial owners.
OUE C-REIT will distribute 100.0% of its Distributable Income for the Forecast Year 2014 and the
Projection Year 2015. Thereafter, OUE C-REIT will distribute at least 90.0% of its Specified
Taxable Income on a semi-annual basis. Any amount of the Specified Taxable Income not
distributed will be assessed to Singapore income tax at the prevailing corporate tax rate, and the
tax assessed will be collected from the Trustee on such amount. In the event of any subsequent
distribution made out of such after tax Specified Taxable Income retained by OUE C-REIT, the
Trustee and the Manager will not have to make a further deduction of income tax from the
distribution made.
The application of the Tax Transparency Ruling is conditional upon the Trustee and the Manager
fulfilling certain terms and conditions including distribution of at least 90.0% of Specified Taxable
Income by the Trustee to the Unitholders in the year in which the income is derived by the Trustee.
The Trustee and the Manager are required to take all reasonable steps necessary to safeguard
the IRAS against tax leakages and to comply with all administrative requirements to ensure ease
of tax administration.
Notwithstanding the aforesaid, the Specified Taxable Income as computed by the IRAS may be
different from that determined by the Manager for distribution purposes. To ease tax compliance
and governance, in the event that the amount finally agreed with the IRAS is different from the
amount of Specified Taxable Income determined by the Manager for distribution purposes, the
difference will be added to or deducted from the Specified Taxable Income of the Trustee for the
next distribution immediately after the difference has been agreed with the IRAS (Rollover
Income Adjustments). This arrangement is accepted based on the understanding that:
(i) at least 90.0% of the difference has to be distributed to the Unitholders;
(ii) the shortfall in distribution is not material;
(iii) no major issue that would cause undue delay in reaching the agreement with the IRAS is
envisaged; and
(iv) the IRAS reserves the right to review such arrangement as and when needed.
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The IRAS has expressly reserved the rights to review, amend and revoke the Tax Transparency
Ruling either in part or in whole at any time.
(See Risk Factors Risks Relating to an Investment in the Units for further details.)
Tax-Exempt Income received by OUE C-REIT from the BVI Holding Company
OUE C-REIT has obtained the Foreign-Sourced Income Tax Exemption Ruling from the IRAS on
the Singapore taxation of dividend income received from the BVI Holding Company. Pursuant to
the Foreign-Sourced Income Tax Exemption Ruling, the Trustee will be exempt from Singapore
income tax on dividends received from the BVI Holding Company (Tax-Exempt Income). The
Foreign-Sourced Income Tax Exemption is granted subject to certain conditions.
Return of capital from the BVI Holding Company
Any return of capital received by OUE C-REIT from the BVI Holding Company is capital in nature
and hence, is not taxable in the hands of the Trustee.
Gains on disposal of the OUE Bayfront Property or shares in the BVI Holding Company
Singapore does not impose tax on capital gains. In the event that the Trustee disposes of the OUE
Bayfront Property or its shares in the BVI Holding Company, gains arising from the disposal will
not be subject to Singapore income tax unless the gains are considered income of a trade or
business. Gains arising from the sale of the OUE Bayfront Property or shares in the BVI Holding
Company, if considered to be trading gains, will be assessed to corporate tax, currently at 17.0%.
Singapore property tax
OUE C-REIT is liable to pay property tax at the prevailing tax rate of the annual value of the OUE
Bayfront Property. The annual value is the gross amount at which the property can reasonably be
expected to be let from year to year, having regard to the fact that all outgoings and maintenance
are borne by the landlord. The current property tax rate is 10.0%.
Singapore GST
GST Registration of OUE C-REIT
OUE C-REIT could be registered for GST in Singapore on the basis that it would derive rental
income from the leasing of the OUE Bayfront Property, which constitutes a taxable supply for GST
purposes.
Recovery of GST incurred by OUE C-REIT
Once GST-registered, OUE C-REIT would be allowed to claim the GST incurred on its business
expenses (such as offering-related and routine operating expenses) except for certain disallowed
expenses and subject to the normal input tax recovery rules.
In addition, in the Singapore Budget 2008, the Minister for Finance announced an enhanced
concession for Singapore listed REITs to claim the GST incurred:
on the setting up of their various tiers of SPVs that hold non-residential properties; and
by their SPVs on the acquisition and holding of non-residential properties.
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The GST remission has a qualifying period of up to 31 March 2015 and is subject to meeting
certain qualifying conditions. OUE C-REIT could therefore recover the GST incurred on the
acquisition and holding of non-residential properties which it indirectly holds, under the enhanced
concession.
Singapore stamp duty
In the event of a change in the Trustee, any document effecting the appointment of a new trustee
and the transfer of trust assets from the incumbent trustee to the new trustee will not be subject
to stamp duty.
By virtue of the Stamp Duty (Real Estate Investment Trust) (Remission) Rules 2010, stamp duty
on any contract or agreement or instrument executed prior to or on 31 March 2015 relating to the
transfer of Singapore immovable properties would be remitted. As such, stamp duty will be
remitted for the transfer of the OUE Bayfront Property to OUE C-REIT.
Singapore Taxation of the Unitholders
Distributions out of Taxable Income
Unitholders will not be subject to Singapore income tax on distributions made out of OUE
C-REITs income that has been taxed at the Trustee level. Accordingly, distributions made by OUE
C-REIT out of Taxable Income (e.g. distributions made out of after tax Specified Taxable Income
not distributed by OUE C-REIT or out of gains or profits taxed as trading gains to the Unitholders)
will not be subject to any tax deduction at source. No tax credit will be given to any Unitholder on
the tax payable by the Trustee on such Taxable Income.
Distributions out of Specified Taxable Income
Individuals who hold the Units as investment assets
Individuals who hold the Units as investment assets (excluding individuals who hold such Units
through a partnership in Singapore) are exempt from Singapore income tax on the distributions
made by OUE C-REIT, regardless of the individuals nationality or tax residence status.
Individuals who hold the Units as trading assets or through a partnership in Singapore
Individuals who hold the Units as trading assets or through a partnership in Singapore are subject
to Singapore income tax on the gross amount of distributions that are made out of OUE C-REITs
Specified Taxable Income. Such distributions must be declared in the income tax returns of these
individuals and will be taxed in the hands of these individuals at their applicable income tax rates.
Non-individuals other than Qualifying Foreign Non-Individual Unitholders
Non-individual Unitholders are subject to Singapore income tax on the gross amount of
distributions that are made out of OUE C-REITs Specified Taxable Income, unless specifically
exempted, irrespective of whether or not tax has been deducted from the distributions by the
Manager and the Trustee.
Where tax has been deducted at source, the tax deducted is not a final tax. Non-individual
Unitholders can offset tax deducted at source against their Singapore income tax liabilities.
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Qualifying Foreign Non-Individual Unitholders
Qualifying Foreign Non-Individual Unitholders will be subject to final tax at the reduced rate of
10.0% for distributions made out of OUE C-REITs Specified Taxable Income up to 31 March 2015
(unless otherwise extended).
Distributions out of Tax-Exempt Income
Unitholders will not be subject to Singapore income tax on distributions made out of OUE
C-REITs Tax-Exempt Income. No tax will be deducted at source on such distributions.
Distributions out of return of capital from the BVI Holding Company
Unitholders will not be subject to Singapore income tax on distributions made by OUE C-REIT out
of its capital receipts, such as return of capital from the BVI Holding Company. No tax will be
deducted at source on such distributions.
For Unitholders who hold the Units as trading or business assets and are liable to Singapore
income tax on gains arising from the disposal of the Units, the amount of such distributions will be
applied to reduce the cost of the Units for the purpose of calculating the amount of taxable trading
gain when the Units are disposed of. If the amount exceeds the cost of the Units, the excess will
be subject to tax as a trading income of such Unitholders.
Distributions out of gains from the disposal of the OUE Bayfront Property
To the extent that the IRAS confirms that any gain or profit arising from a disposal of the OUE
Bayfront Property is capital in nature, distributions made out of such capital gains are not taxable
in the hands of the Unitholders.
Distributions out of gains from the disposal of shares in the BVI Holding Company
Unitholders will not be subject to Singapore income tax on distributions made by OUE C-REIT out
of capital gains from the disposal of shares in the BVI Holding Company unless the gains are
considered income of a trade or business.
Gains derived by the Trustee from the disposal of shares in the BVI Holding Company if
considered to be trading gains, will be assessed to tax on the Trustee. Distributions made from
such gains will not be subject to further tax in the hands of the Unitholders.
Disposal of the Units
Singapore does not impose tax on capital gains. Any gains on disposal of the Units are not liable
to tax provided the Units are not held as trading assets. Where the Units are held as trading assets
of a trade or business carried on in Singapore, any gains on disposal of the Units are liable to
Singapore income tax at the applicable tax rate.
Singapore GST
Issue and transfer of the Units
The issue or transfer of ownership of a unit under any unit trust in Singapore is exempt from GST.
Hence, Unitholders would not incur any GST on the subscription of the Units. The subsequent
disposal of the Units by a GST-registered Unitholder through the SGX-ST or to another person
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belonging in Singapore is regarded as an exempt supply and not subject to GST. The disposal or
transfer of the Units to another person belonging outside Singapore would constitute zero-rated
supplies for Singapore GST purposes.
Recovery of GST incurred by Unitholders
Generally, services such as legal fee, brokerage, handling and clearing charges rendered by a
GST-registered person to Unitholders belonging in Singapore in connection with their purchase
and sale of the Units would be subject to GST at the prevailing standard-rate of 7.0%. Similar
services rendered to Unitholders belonging outside Singapore could be zero-rated when certain
conditions are met.
For Unitholders belonging in Singapore who are registered for GST, any GST on expenses
incurred in connection with the subscription/acquisition or disposal of the Units is generally not
recoverable as input tax credit from the IRAS unless certain conditions are satisfied. These
GST-registered Unitholders should seek the advice of their tax advisers on these conditions.
Singapore stamp duty
The sale, purchase and transfer of the Units is not subject to stamp duty in Singapore.
BVI TAXATION
There should be no income tax, capital gains tax, stamp duty and withholding tax applicable to the
BVI Holding Company and the BVI Company in the BVI.
PRC TAXATION
PRC Taxation of the PRC Company
PRC Income Tax
The PRC Company will be subject to tax on its taxable income, currently at the rate of 25.0%.
Dividends paid by the PRC Company to the BVI Company will be subject to a 10.0% withholding
tax.
Business Tax
Currently, the PRC Company is liable to business tax at the prevailing rate of 5.0% on gross
revenue (including rental fees, property management fees, other surcharges and service fees)
derived from the Lippo Plaza Property.
Surcharges
The PRC Company is liable to pay Urban Maintenance and Construction Tax, Education
Surcharge, Local Education Surcharge and River Maintenance Fee based on the amount of
Business Tax (or Value-Added Tax in the future where applicable) payable at 7.0%, 3.0%, 2.0%
and 1.0%, respectively.
Real Estate Tax
The PRC Company is liable to Real Estate Tax as the lessor and owner of the Lippo Plaza
Property. Currently, Real Estate Tax is charged at 1.2% on the basis of the residual value of a
building which is the original value of a building less prevailing discount rates (currently at 20.0%
for Shanghai), or 12.0% on the basis of the rental.
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Land Use Tax
The PRC Company is liable to Land Use Tax currently at the prevailing land use tax rate of
RMB30.0 per sq m of occupied urban land area in the downtown area of Shanghai, the PRC.
Stamp Duty
Stamp duty is imposed on chargeable documents at specified rates pursuant to the regulations.
Stamp duty rate on lease contracts is at 0.1% on gross rental, 0.005% on the principal for loan
contracts, 0.03% on consideration for construction contracts, and on transfer of real estate at
0.05% on consideration.
Deed Tax
Deed Tax is chargeable to the purchase of land use rights and/or building ownership within the
PRC. These taxable transfers include grant of state-owned land user rights and sale, gift and
exchange of land use rights or building ownership, other than the transfer of contracting
management rights of rural collective land. The rate of deed tax is 3.0% to 5.0% subject to
determination by local governments at the provincial level in light of the local conditions.
Land Appreciation Tax
All income from the sale or transfer of state-owned land use rights, and buildings and their
attached facilities in the PRC, is subject to Land Appreciation Tax at progressive rates ranging
from 30.0% to 60.0% of the appreciation value as defined by the relevant tax laws.
PRC Tax Reporting Obligations and Consequences for Certain Indirect Transfers of Equity
Interests
Where a foreign investor or effective controlling party transfers the equity interests in a PRC
resident enterprise (excluding the purchase and sale of the shares of PRC resident enterprises on
the public securities markets which were purchased from the public securities markets) indirectly
by way of the sale of equity interests in an overseas holding company, and such overseas holding
company is located in a tax jurisdiction that (i) has an effective tax rate which is less than 12.5%
or (ii) does not levy income tax on foreign-sourced income for its tax resident, the foreign investor
should report such indirect transfer to the competent tax authority of the PRC resident enterprise
within 30 days of the execution of the equity transfer agreement for such indirect transfer. The
PRC tax authority will examine the true nature of the indirect transfer, and if the PRC tax authority
considers that the foreign investor has adopted an abusive arrangement without reasonable
commercial purposes and in order to avoid PRC tax, the PRC tax authority may disregard the
existence of the overseas holding company that is used for tax planning purposes and
re-characterise the transfer as a direct transfer of the PRC Company. As a result, gains derived
from such indirect transfer may be subject to PRC tax currently at the rate of 10.0%.
In the event of the disposal of the shares in the BVI Company or the BVI Holding Company which
results in an indirect transfer of the equity interest in the PRC Company, the transferor may be
required to report such transfers to the PRC tax authority. The gains arising from such indirect
transfers may potentially be subject to tax in the PRC, currently at the rate of 10.0%.
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PRC Taxation of Unitholders
PRC Tax Reporting Obligations and Consequences for Indirect Transfers of the PRC
Company
The PRC tax reporting obligation for indirect transfers of equity interests do not apply to indirect
sales of shares of PRC resident enterprises on the public securities markets which were
purchased from the public securities markets. The relevant notice and announcement issued by
the PRC authorities do not specify whether purchases through initial public offering would
constitute purchases from public securities market. However, a general guideline in the
announcement makes reference to situations where the seller is unable to identify or fix the price,
or where the seller cannot determine who the buyer is or volume of shares bought and sold as
being purchases from the public securities markets. Accordingly, in line with the general
guideline, the initial subscription of units by unitholders would appear to be considered purchases
from public securities market, which is subject to agreement by the PRC tax authorities.
Unitholders should consult their own tax advisers relating to their particular circumstances.
THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX
MATTERS THAT MAY BE OF IMPORTANCE TO A PARTICULAR INVESTOR. EACH
PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISER ABOUT THE TAX
CONSEQUENCES TO IT OF AN INVESTMENT IN THE UNITS IN LIGHT OF THE INVESTORS
OWN CIRCUMSTANCES.
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PLAN OF DISTRIBUTION
The Manager is making an offering of [208,000,000] Units (representing [24.0]% of the total
number of Units in issue after the Offering) for subscription at the Offering Price under the
Placement Tranche and the Public Offer. [] Units will be offered under the Placement Tranche
and [] Units will be offered under the Public Offer. Units may be re-allocated between the
Placement Tranche and the Public Offer at the discretion of the Joint Bookrunners (in consultation
with the Manager, subject to the minimum unitholding and distribution requirements of the
SGX-ST) in the event of an excess of applications in one and a deficit in the other.
The Public Offer is open to members of the public in Singapore. Under the Placement Tranche,
the Manager intends to offer the Units by way of an international placement through the Joint
Bookrunners to investors, including institutional and other investors in Singapore and elsewhere,
in reliance on Regulation S.
Subject to the terms and conditions set forth in the underwriting agreement entered into between
the Joint Bookrunners, the Joint Global Coordinators, the Manager, the Sponsor and the Unit
Lender on [], the Manager is expected to effect for the account of OUE C-REIT the issue of, and
the Joint Bookrunners are expected to severally (and not jointly) procure subscribers, and failing
which to subscribe, for [433,000,000] Units (which includes the Units to be issued pursuant to the
Offering and the Cornerstone Units), in the proportions set forth opposite their respective names
below:
Joint Bookrunners Number of Units
Standard Chartered Securities (Singapore) Pte. Limited []
CIMB Securities (Singapore) Pte. Ltd. []
Oversea-Chinese Banking Corporation Limited []
DMG & Partners Securities Pte Ltd []
Citigroup Global Markets Singapore Pte. Ltd. []
J.P. Morgan (S.E.A.) Limited []
TOTAL [433,000,000]
The Units will initially be offered at the Offering Price. The Offering Price per Unit in the Placement
Tranche and the Public Offer will be identical. The Joint Bookrunners have agreed to severally
(and not jointly) procure subscription, and failing which to subscribe, for [433,000,000] Units at the
Offering Price, less the Underwriting, Selling and Management Commission (as defined herein) to
be borne by OUE C-REIT.
The Manager has agreed in the Underwriting Agreement to indemnify the Joint Bookrunners and
the Joint Global Coordinators (which expression for this purpose includes affiliates and certain
persons who control them) against certain liabilities, to the extent permitted by law. The Sponsor
has also agreed in the Underwriting Agreement to indemnify the Joint Bookrunners and the Joint
Global Coordinators against certain liabilities. The Underwriting Agreement contains a
contribution clause which provides that where the indemnification from the Manager is unavailable
to or is insufficient to hold harmless a Joint Bookrunner or a Joint Global Coordinator in
accordance with the indemnity, then the Manager shall contribute to the amount paid or payable
by the Joint Bookrunners and the Joint Global Coordinators as a result of such losses, claims,
damages, awards, costs, expenses or liabilities (or actions in respect thereof) (hereinafter
referred to as Losses) (a) in such proportion as is appropriate to reflect the relative benefits
received by the Manager on the one hand and the Joint Bookrunners and the Joint Global
Coordinators on the other from the offering of the Units, or (b) if the allocation provided by (a)
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above is not permitted by applicable law, then the Manager shall contribute to such amount paid
or payable by the Joint Bookrunners and the Joint Global Coordinators in such proportion as is
appropriate to reflect not only such relative benefits but also the relative fault of the Manager on
the one hand and the Joint Bookrunners and the Joint Global Coordinators on the other in
connection with the statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations. The relative benefits received by the Manager on the one hand
and the Joint Bookrunners and the Joint Global Coordinators on the other shall be deemed to be
in the same proportion as the total net proceeds received by the Manager (before deducting
expenses) from the offering of the Units subscribed for or purchased under the Underwriting
Agreement bear to the total underwriting discounts and commissions received by the Joint
Bookrunners with respect to the Units subscribed for or purchased under the Underwriting
Agreement. The relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Manager on the one hand and the Joint
Bookrunners and the Joint Global Coordinators on the other and the parties relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or
omission. No Joint Bookrunner or Joint Global Coordinator shall be required to contribute any
amount in excess of the amount by which the total price at which the Units underwritten by it and
distributed to the public were offered to investors exceeds the amount of any damages which such
Joint Bookrunner or Joint Global Coordinator has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
The Underwriting Agreement also provides for the obligations of the Joint Bookrunners to
severally (and not jointly) procure the subscription, and failing which to subscribe, for the Units in
the Offering, subject to certain conditions contained in the Underwriting Agreement.
The Underwriting Agreement may be terminated by the Joint Bookrunners or the Joint Global
Coordinators at any time prior to issue and delivery of the underwritten Units or the sale and
purchase of any Units subject to the Over-Allotment Option, upon the occurrence of certain events
including, among others, certain force majeure events pursuant to the terms of the Underwriting
Agreement.
Subscribers of the Units may be required to pay brokerage (and if so required, such brokerage will
be up to [1.0]% of the Offering Price) and applicable stamp duties, taxes and other similar charges
(if any) in accordance with the laws and practices of the country of subscription, in addition to the
Offering Price. No brokerage fees will be charged by the Joint Bookrunners to OUE C-REIT, the
Manager or the Sponsor.
OTHER RELATIONSHIPS
Each of the Joint Bookrunners, the Joint Global Coordinators and their respective affiliates are full
service financial institutions engaged in various activities, which may include trading, commercial
and investment banking, financial advisory, investment management, investment research, principal
investment, hedging, market making, brokerage and other financial and non financial services.
Accordingly, each of the Joint Bookrunners and their respective affiliates may engage in transactions
with, and perform services for, the Trustee, the Joint Global Coordinators, the Manager, the Sponsor,
OUE C-REIT and substantial Unitholders in the ordinary course of business and have provided, and
may in the future provide, financial advisory, commercial and investment banking and other services
to the Trustee, the Manager, the Sponsor, OUE C-REIT and certain substantial Unitholders, for which
they have received or made payment of, or may in the future receive or make payment of, customary
fees and expenses. In particular, it should be noted that CIMB Bank Berhad, Singapore Branch, OCBC
Bank (China) Limited, Oversea-Chinese Banking Corporation Limited, Standard Chartered Bank,
Singapore Branch and Standard Chartered Bank (China) Limited, Shanghai Branch (affiliates of
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Standard Chartered Securities (Singapore) Pte. Limited), will be providing the Facilities to OUE
C-REIT to, among others, partially finance the acquisition of the IPO Portfolio. (See Capitalisation and
Indebtedness for further details.)
Each of the Joint Bookrunners, the Joint Global Coordinators and their respective affiliates may
make or hold a broad array of investments and actively trade debt and equity securities (or related
derivative securities) and financial instruments (including bank loans) for their own account and
for the accounts of their customers in the ordinary course of business, and such investment
trading and securities activities may involve assets, securities and/or instruments (including Units)
of OUE C-REIT, the Manager and the Sponsor and/or entities with relationship with OUE C-REIT,
the Manager and the Sponsor. The Joint Bookrunners, the Joint Global Coordinators and their
respective affiliates may also make investment recommendations and/or publish or express
independent research views in respect of such assets, securities and/or instruments and may at
any time hold, or recommend to their clients that they acquire, long and/or short positions in such
assets, securities and/or instruments.
OVER-ALLOTMENT AND STABILISATION
The Unit Lender has granted the Over-Allotment Option to the Joint Bookrunners for the purchase
of up to an aggregate of [] Units at the Offering Price representing up to [20.0]% of the total
number of Units in the Offering. The number of Units subject to the Over-Allotment Option will not
be more than [20.0]% of the number of Units under the Placement Tranche and the Public Offer.
The Stabilising Manager (or any of its affiliates or other persons acting on behalf of the Stabilising
Manager) may exercise the Over-Allotment Option in full or in part, on one or more occasions, only
from the Listing Date but no later than the earlier of (i) the date falling 30 days from the Listing
Date; or (ii) the date when the Stabilising Manager (or any of its affiliates or other persons acting
on behalf of the Stabilising Manager) has bought, on the SGX-ST, an aggregate of [] Units,
representing up to [20.0]% of the total number of Units in the Offering, to undertake stabilising
actions to purchase up to an aggregate of [] Units (representing up to [20.0]% of the total number
of Units in the Offering), at the Offering Price. In connection with the Over-Allotment Option, the
Stabilising Manager and the Unit Lender have entered into a unit lending agreement (the Unit
Lending Agreement) dated [] pursuant to which the Stabilising Manager (or any of its affiliates
or other persons acting on behalf of the Stabilising Manager) may borrow up to an aggregate of
[] Units from the Unit Lender for the purpose of facilitating settlement of the over-allotment of
Units in connection with the Offering. The Stabilising Manager (or any of its affiliates or other
persons acting on behalf of the Stabilising Manager) will re-deliver to the Unit Lender such number
of Units which have not been purchased pursuant to the exercise of the Over-Allotment Option.
The Unit Lending Agreement includes a right for the Unit Lender to recall Units lent under such
agreement by giving seven days notice to the Stabilising Manager. In the event that this right is
exercised by the Unit Lender, it is possible that the Stabilising Manager may not be able to
stabilise the market price of the Units. See Risk Factors Risks Relating to an Investment in the
Units The terms of the unit lending agreement may restrict the Stabilising Managers ability to
undertake stabilisation.
In connection with the Offering, the Stabilising Manager (or any of its affiliates or other persons
acting on behalf of the Stabilising Manager) may, in consultation with the other Joint Bookrunners
and at its discretion, over-allot or effect transactions which stabilise or maintain the market price
of the Units at levels which might not otherwise prevail in the open market. However, there is no
assurance that the Stabilising Manager (or any of its affiliates or other persons acting on behalf
of the Stabilising Manager) will undertake stabilising action. Such transactions may be effected on
the SGX-ST and in other jurisdictions where it is permissible to do so, in each case in compliance
with all applicable laws and regulations, including the SFA and any regulations thereunder.
However, there is no assurance that the Stabilising Manager (or any of its affiliates or other
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persons acting on behalf of the Stabilising Manager) will undertake stabilising action. Any profit
after expenses derived, or any loss sustained as a consequence of any stabilising activities
undertaken by the Stabilising Manager shall be for the account of the Joint Bookrunners.
None of the Manager, the Sponsor, the Unit Lender, the Joint Bookrunners, the Joint Global
Coordinators or the Stabilising Manager (or any of its affiliates or other persons acting on behalf
of the Stabilising Manager) makes any representation or prediction as to the magnitude of any
effect that the transactions described above may have on the price of the Units. In addition, none
of the Manager, the Sponsor, the Unit Lender, the Joint Bookrunners, the Joint Global
Coordinators or the Stabilising Manager (or any of its affiliates or other persons acting on behalf
of the Stabilising Manager) makes any representation that the Stabilising Manager (or any of its
affiliates or other persons acting on behalf of the Stabilising Manager) will engage in these
transactions or that these transactions, once commenced, will not be discontinued without notice
(unless such notice is required by law). The Stabilising Manager will be required to make a public
announcement via SGXNET in relation to the total number of Units purchased by the Stabilising
Manager (or any of its affiliates or other persons acting on behalf of the Stabilising Manager), not
later than 12 noon on the next trading day of the SGX-ST after the transactions are effected. The
Stabilising Manager will also be required to make a public announcement through the SGX-ST in
relation to the cessation of stabilising action and the number of Units in respect of which the
Over-Allotment Option has been exercised not later than 8.30 a.m. on the next trading day of the
SGX-ST after the cessation of stabilising action.
LOCK-UP ARRANGEMENTS
The Sponsor
Subject to the exceptions described below, the Sponsor has agreed with the Joint Bookrunners
and the Joint Global Coordinators that it will not, without the prior written consent of all the Joint
Bookrunners and the Joint Global Coordinators (such consent not to be unreasonably withheld or
delayed), directly or indirectly, offer, issue, sell or contract to issue or sell, grant any option to
purchase, grant security over, encumber or otherwise dispose of 100.0% of its effective interest
in the Lock-up Units, enter into any transaction (including a derivative transaction) with a similar
economic effect to the foregoing; deposit any Lock-up Units in any depository receipt facility save
for the Sponsors CDP account; enter into a transaction which is designed or which may
reasonably be expected to result in any of the above or publicly announce any intention to do any
of the above during the First Lock-up Period, and the same restrictions will apply in respect of the
Sponsors direct and/or effective interest in 50.0% of the Lock-up Units during the Second Lock-up
Period.
The restriction described in the preceding paragraph does not apply to:
the creation of a charge over the Lock-up Units or otherwise grant of security over or creation
of any encumbrance over the Lock-up Units, provided that such charge, security or
encumbrance can only be enforced in respect of not more than 50.0% of the Lock-up Units
after the end of the First Lock-up Period, or (as the case may be) in respect of all of the
Lock-up Units after the Second Lock-up Period;
the transfer of any Lock-up Units to and between any wholly-owned subsidiaries of the
Sponsor provided that the Sponsor has procured that such subsidiary has executed and
delivered to the Joint Bookrunners and the Joint Global Coordinators an undertaking to the
effect that it will undertake to comply with the foregoing restrictions, to remain in effect for the
remaining period of the First Lock-up Period or (as the case may be) the Second Lock-up
Period in relation to 50.0% of the Lock-up Units.
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The Unit Lender
Subject to the exceptions described below, the Unit Lender has agreed with the Joint Bookrunners
and the Joint Global Coordinators that it will not, without the prior written consent of all the Joint
Bookrunners and the Joint Global Coordinators (such consent not to be unreasonably withheld or
delayed), directly or indirectly, offer, issue, sell or contract to issue or sell, grant any option to
purchase, grant security over, encumber or otherwise dispose of 100% of its effective interest in
the Lock-up Units, enter into any transaction (including a derivative transaction) with a similar
economic effect to the foregoing; deposit any Lock-up Units in any depository receipt facility save
for the Unit Lenders CDP account; enter into a transaction which is designed or which may
reasonably be expected to result in any of the above or publicly announce any intention to do any
of the above during the First Lock-up Period, and the same restrictions will apply in respect of the
Unit Lenders direct and/or effective interest in 50.0% of the Lock-up Units during the Second
Lock-up Period.
The restriction described in the preceding paragraph does not apply to:
the creation of a charge over the Lock-up Units or otherwise grant of security over or creation
of any encumbrance over the Lock-up Units, provided that such charge, security or
encumbrance can only be enforced in respect of not more than 50.0% of the Lock-up Units
after the end of the First Lock-up Period, or (as the case may be) in respect of all of the
Lock-up Units after the Second Lock-up Period;
any securities lending arrangement with the Stabilising Manager or any sale or transfer of the
Lock-up Units by the Unit Lender pursuant to the exercise of the Over-Allotment Option; or
the transfer of any Lock-up Units to and between any wholly-owned subsidiaries of the Unit
Lender provided that the Unit Lender has procured that such subsidiary has executed and
delivered to the Joint Bookrunners and the Joint Global Coordinators an undertaking to the
effect that it will undertake to comply with the foregoing restrictions, to remain in effect for the
remaining period of the First Lock-up Period or (as the case may be) the Second Lock-up
Period in relation to 50.0% of the Lock-up Units.
For the avoidance of doubt, any Units returned under the Unit Lending Agreement will be subject
to the lock-up arrangements described above.
The Manager
Subject to the exception described below, the Manager has agreed with the Joint Bookrunners and
the Joint Global Coordinators that it will not (and will not cause or permit OUE C-REIT to), for the
First Lock-up Period, directly or indirectly, without the prior written consent of all the Joint Global
Coordinators (such consent not to be unreasonably withheld or delayed), offer, issue, sell,
contract to issue or sell, grant any option to purchase, grant security over, encumber or otherwise
dispose of any Units, enter into any transaction (including a derivative transaction) with a similar
economic effect to the foregoing; deposit any Units in any depository receipt facility save for the
Managers CDP account; enter into a transaction which is designed or which may reasonably be
expected to result in any of the above or publicly announce any intention to do any of the above.
The restrictions described in the preceding paragraph do not apply to the issuance of (i) Units to
be offered under the Offering; (ii) the Sponsor Units; (iii) the Cornerstone Units; and (iv) the Units
to be issued to the Manager in payment of any fees payable to the Manager under the Trust Deed.
286
SGX-ST LISTING
OUE C-REIT 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 Prospectus.
Admission to the Official List of the SGX-ST is not to be taken as an indication of the merits of the
Offering, OUE C-REIT, the Manager, the Trustee or the Units. It is expected that the Units will
commence trading on the SGX-ST on a ready basis on or about [].
Prior to this Offering, there has been no trading market for the Units. There can be no assurance
that an active trading market will develop for the Units, or that the Units will trade in the public
market subsequent to this Offering at or above the Offering Price. (See Risk Factors Risks
Relating to an Investment in the Units 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 for further details.)
ISSUE EXPENSES
The estimated amount of the expenses in relation to the Offering and the issuance of the
Cornerstone Units and the Sponsor Units of S$47.1 million (based on the Offering Price of S$0.80)
includes the Underwriting, Selling and Management Commission, professional and other fees and
all other incidental expenses in relation to the Offering and the issuance of the Cornerstone Units
and the Sponsor Units, which will be borne by OUE C-REIT. A breakdown of these estimated
expenses is as follows
(1)
:
(S$000)
(based on the Offering Price)
Professional and other fees
(2)
[35,918]
Underwriting, Selling and Management Commission
(3)
[10,392]
Miscellaneous Offering expenses
(4)
[770]
TOTAL ESTIMATED EXPENSES OF THE OFFERING AND
THE ISSUANCE OF THE CORNERSTONE UNITS AND
THE SPONSOR UNITS
(5)
[47,080]
Notes:
(1) Amounts exclude GST where applicable.
(2) Includes debt upfront fees, solicitors fees and fees for the Reporting Auditors, KPMG Services Pte. Ltd. (the
Independent Tax Adviser), the Independent Valuers, the Independent Market Research Consultant and other
professionals fees and other expenses.
(3) Such commission represent a maximum of [3.0]% of the total amount of the Offering and the proceeds raised from
the issuance of the Cornerstone Units.
(4) Includes cost of prospectus production, roadshow expenses and certain other expenses incurred or to be incurred
in connection with the Offering and the issuance of the Cornerstone Units and the Sponsor Units.
(5) The total expenses in relation to the Offering will be ultimately borne by the investors subscribing for the Units
pursuant to the Offering.
DISTRIBUTION AND SELLING RESTRICTIONS
None of the Manager, the Sponsor, the Sole Financial Adviser, the Joint Global Coordinators or
the Joint Bookrunners have taken any action, or will take any action, in any jurisdiction other than
Singapore that would permit a public offering of Units, or the possession, circulation or distribution
of this Prospectus or any other material relating to the Offering in any jurisdiction other than
Singapore where action for that purpose is required.
287
Accordingly, each purchaser of the Units may not offer or sell, directly or indirectly, any Units and
may not distribute or publish this Prospectus or any other offering material or advertisements in
connection with the Units in or from any country or jurisdiction except in compliance with any
applicable rules and regulations of such country or jurisdiction.
Each purchaser of the Units is deemed to have represented and agreed that it will comply with the
selling restrictions set out below for each of the following jurisdictions:
Selling Restrictions
Australia
This document and the offer is only made available in Australia to persons to whom a disclosure
document is not required to be given under either Chapter 6D or Chapter 7.9 of the Australian
Corporations Act 2001 (Cth) (Corporations Act). This document is not a prospectus, product
disclosure statement or any other form of formal disclosure document for the purposes of
Australian law, and is not required to, and does not, contain all the information which would be
required in a disclosure document under Australian law. It is made available to you on the basis
that you are a professional investor or sophisticated investor for the purposes of Chapter 6D, and
a wholesale client for the purposes of Chapter 7.9, of the Corporations Act.
If you acquire the Units in Australia then you:
(a) represent and warrant that you are a professional or sophisticated investor;
(b) represent and warrant that you are a wholesale client; and
(c) agree not to sell or offer for sale any Units in Australia within 12 months from the date of their
issue under the Offering, except in circumstances where:
(i) disclosure to investors would not be required under either Chapter 6D or Chapter 7.9
of the Corporations Act; or
(ii) such sale or offer is made pursuant to a disclosure document which complies with either
Chapter 6D or Chapter 7.9 of the Corporations Act.
This document has not been and will not be lodged or registered with the Australian Securities and
Investments Commission or ASX Limited or any other regulatory body or agency in Australia. The
persons referred to in this document may not hold Australian Financial Services licences. No
cooling off regime will apply to an acquisition of any interest in OUE C-REIT.
This document does not take into account the investment objectives, financial situation or needs
of any particular person. Accordingly, before making any investment decision in relation to this
document, you should assess whether the acquisition of any interest in the OUE C-REIT is
appropriate in light of your own financial circumstances or seek professional advice.
Canada
The Units may only be offered or sold, directly or indirectly, in the provinces of Ontario and
Quebec, or to residents thereof and not in, or to the residents of, any other province or territory
of Canada. Such offers or sales will be made pursuant to an exemption from the requirement to
file a prospectus with the regulatory authorities in the provinces of Ontario and Quebec and will
be made only by a dealer duly registered under the applicable securities laws of the province of
Ontario or Quebec, as the case may be, or in accordance with an exemption from the applicable
registered dealer requirements.
288
Dubai International Financial Centre
This Prospectus relates to a fund which is not subject to any form of regulation or approval by the
Dubai Financial Services Authority (the DFSA). The DFSA has no responsibility for reviewing or
verifying this Prospectus or other documents in connection with OUE C-REIT. Accordingly, the
DFSA has not approved this Prospectus or any other associated documents nor taken any steps
to verify the information set out in this Prospectus, and has no responsibility for it.
The Units to which this Prospectus relates may be illiquid and/or subject to restrictions on their
resale. Prospective purchasers should conduct their own due diligence on the Units. If you do not
understand the contents of this document you should consult an authorised financial adviser. This
Prospectus is intended for distribution only to qualified investors and must not, therefore, be
delivered to, or relied on by, a retail investor.
Hong Kong
This document has not been approved by the Securities and Futures Commission in Hong Kong.
Accordingly:
(a) Units may not be offered or sold in Hong Kong, by means of this document or any other
Document other than (i) to professional investors as defined in the Securities and Futures
Ordinance (Cap. 571) of Hong Kong (SFO) and any rules made under the SFO or (ii) in
other circumstances which do not result in the document being a prospectus as defined in
the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the
public within the meaning of that Ordinance; and
(b) no person shall issue or possess for the purpose of issue, whether in Hong Kong or
elsewhere, any advertisement, invitation or document relating to the Units, which is directed
at, or the contents of which are likely to be accessed or read by, the public of Hong Kong
(except if permitted to do so under the securities laws of Hong Kong) other than with respect
to Units which are or are intended to be disposed of only to persons outside Hong Kong or
only to professional investors as defined in the SFO and any rules made under the SFO.
Indonesia
This Prospectus may not be distributed directly or indirectly in Indonesia or to any Indonesian
entity or Indonesian citizen (person), and the Underwriters, may not offer or sell, directly or
indirectly, any Units in Indonesia or to any Indonesian entity or Indonesian citizen (person), in a
manner constituting a public offering on the Units under the Indonesian Capital Market Law and
the applicable regulations of the Otoritas Jasa Keuangan (Financial Services Authority) previously
known as Badan Pengawas Pasar Modal dan Lembaga Keuangan (Capital Market and Financial
Institution Supervisory Agency).
The PRC
The Units may not be offered or sold, and will not be offered or sold to any person in the PRC as
part of the initial distribution of the Units, except pursuant to applicable laws and regulations of the
PRC. This document does not constitute an offer to sell or the solicitation of an offer to buy any
securities in the PRC to any person to whom it is unlawful to make the offer or solicitation in the
PRC.
The Manager makes no representation that this document may be lawfully distributed, or that any
Units may be lawfully offered, in compliance with any applicable registration or other requirements
in the PRC, or pursuant to an exemption available thereunder, or assume any responsibility for
facilitating any such distribution or offering. In particular, no action has been taken by the Manager
289
which would permit a public offering of any Units or distribution of this document in the PRC.
Accordingly, the Units are not being offered or sold within the PRC by means of this document or
any other document. Neither this document nor any advertisement or other offering material may
be distributed or published in the PRC, except under circumstances that will result in compliance
with any applicable laws and regulations.
Qatar
This document is not intended to constitute an offer, sale or delivery of shares, units in a collective
investment scheme, stapled securities or other securities under the laws of the State of Qatar
including the rules and regulations of the Qatar Financial Centre Authority (QFCA) or the Qatar
Financial Centre Regulatory Authority (QFCRA) or equivalent laws of the Qatar Central Bank
(QCB). This document has not been lodged or registered with, or reviewed or approved by the
QFCA, the QFCRA, the QCB or the Qatar Financial Markets Authority (QFMA) and is not
otherwise authorised or licensed for distribution in the State of Qatar or the Qatar Financial Centre
(QFC). The information contained in this document does not, and is not intended to, constitute
a public or general offer or other invitation in respect of shares, Units in a collective investment
scheme, stapled securities, or other securities in the State of Qatar or the QFC. The Units will not
be admitted or traded on the Qatar Exchange.
Saudi Arabia
This document may not be distributed in the Kingdom of Saudi Arabia except to such persons as
are permitted under the Offers of Securities Regulations issued by the Capital Market Authority.
The Capital Market Authority does not make any representation as to the accuracy or
completeness of this document, and expressly disclaims any liability whatsoever for any loss
arising from, or incurred in reliance upon, any part of this document. Prospective purchasers of the
securities offered hereby should conduct their own due diligence on the accuracy of the
information relating to the securities. If you do not understand the contents of this document you
should consult an authorised financial adviser.
Any investor in the Kingdom of Saudi Arabia who acquires the Units pursuant to the offering
should note that the offer of Units is a private placement to sophisticated investors under Article
10 of the Offer of Securities Regulations as issued by the Board of the Capital Market Authority
resolution number 2-11-2004 dated 4 October 2004, as amended by the Board of the Capital
Market Authority resolution number 1-28-2008 dated 18 August 2008 (the KSA Regulations).
The Units to be issued have not and will not be offered or sold in the Kingdom of Saudi Arabia
other than in compliance with the KSA Regulations, through an Authorised Person (as defined in
the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority)
and following a notification to the Capital Market Authority under the KSA Regulations.
Investors should be aware that the offer of the Units is subject to the restrictions on secondary
market activity of offers of privately placed securities as set out in Article 17 of the KSA
Regulations.
Switzerland
The Units may not be publicly offered, distributed or re-distributed on a professional basis in or
from Switzerland and neither this document nor any other solicitation for investments in Trust may
be communicated or distributed in Switzerland in any way that could constitute a public offering
within the meaning of Articles 1156/652a of the Swiss Code of Obligations (CO). This document
may not be copied, reproduced, distributed or passed on to others without the Joint Bookrunners
prior written consent. This document is not a prospectus within the meaning of Articles 1156/652a
290
of the CO and Trust will not be listed on the SIX Swiss Exchange. Therefore, this document may
not comply with the disclosure standards of the CO and/or the listing rules (including any
prospectus schemes) of the SIX Swiss Exchange set forth in art. 27 et seq. of the SIX Listing
Rules. In addition, it cannot be excluded that Trust could qualify as a foreign collective investment
scheme pursuant to Article 119 of the Swiss Federal Act on Collective Investment Schemes, as
amended (CISA). OUE C-REIT will not be licensed for offering to non-qualified investors in and
from Switzerland. The distribution of Units in Switzerland will be exclusively made to, and directed
at, regulated qualified investors (the Regulated Qualified Investors), as defined in Article
10(3)(a) and (b) of the Swiss Collective Investment Schemes Act of 23 June 2006, as amended
(CISA). Accordingly, OUE C-REIT has not been and will not be registered with the Swiss
Financial Market Supervisory Authority (FINMA) and no Swiss representative or paying agent
have been or will be appointed in Switzerland. This Prospectus and/or any other offering materials
relating to the Units may be made available in Switzerland solely to Regulated Qualified Investors.
Taiwan
The offering of the securities has not been and will not be registered with the Financial
Supervisory Commission of Taiwan, the Republic of China pursuant to relevant securities laws and
regulations and may not be offered or sold in Taiwan, the Republic of China through a public
offering or in circumstance which constitutes an offer within the meaning of the Securities and
Exchange Act of Taiwan, the Republic of China that requires a registration or approval of the
Financial Supervisory Commission of Taiwan, the Republic of China. No person or entity in
Taiwan, the Republic of China has been authorized to offer or sell the securities in Taiwan, the
Republic of China.
United Arab Emirates (excluding the Dubai International Financial Centre)
In accordance with the provisions of the UAE Securities and Commodities Authorities (SCA)
Board Decision No. 37 of 2012, the Units to which this Prospectus relates may only be promoted
in the United Arab Emirates (the UAE) with the prior approval of the SCA and by way of (i) private
placement by persons authorised to do so by the UAE Central Bank or the SCA, or (ii) institutional
private placement by licensed representative offices subject to a minimum subscription amount
per individual institutional investor of ten (10) million UAE Dirhams.
Any approval of the SCA to the promotion of the Units in the UAE does not represent a
recommendation to purchase or invest in OUE C-REIT. The SCA has not verified this document
or other documents in connection with OUE C-REIT and the SCA may not be held liable for any
default by any party involved in the operation, management or promotion of OUE C-REIT or in the
performance of their responsibilities and duties, or the accuracy or completeness of the
information in this Prospectus.
The Units to which this Prospectus relates may be illiquid and/or subject to restrictions on their
resale. Prospective investors should conduct their own due diligence on the Units. If you do not
understand the contents of this document you should consult an authorised financial adviser.
United States
The Units have not been and will not be registered under the Securities Act and may not be offered
or sold within the United States except in a transaction that is exempt from, or not subject to, the
registration requirements of the Securities Act. The Units are being offered and sold outside of the
United States in reliance on Regulation S (terms used in this paragraph that are defined in
Regulation S are used herein as defined therein).
291
General
Each applicant for Units in the Offering will be deemed to have represented and agreed that it is
relying on this Prospectus and not on any other information or representation not contained in this
Prospectus and none of OUE C-REIT, the Manager, the Trustee, the Sponsor, the Sole Financial
Adviser, the Joint Global Coordinators, the Joint Bookrunners or any other person responsible for
this Prospectus or any part of it will have any liability for any such other information or
representation.
292
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.
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
account-holders and facilitates the clearance and settlement of securities transactions between
account-holders through electronic book-entry changes in the Securities Accounts maintained by
such accountholders with CDP.
It is expected that the Units will be credited into the Securities Accounts of applicants for the Units
within four Market Days after the closing date for applications for the Units.
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 reflected by the sellers
Securities Account being debited with the number of Units sold and the buyers 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$10.00 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.
CLEARING FEE
A clearing fee for the trading of Units on the SGX-ST is payable at the rate of 0.04% of the
transaction value, subject to a maximum of S$600.00 per transaction. The clearing fee, deposit
fee and unit withdrawal fee may be subject to the prevailing GST.
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.
293
EXPERTS
KPMG LLP, the Reporting Auditors, were responsible for preparing the Reporting Auditors Report
on the Profit Forecast and Profit Projection and the Reporting Auditors Report on the Unaudited
Pro Forma Financial Information found in Appendix A and Appendix B of this Prospectus,
respectively.
KPMG Services Pte. Ltd., the Independent Tax Adviser, was responsible for preparing the
Independent Taxation Report found in Appendix D of this Prospectus.
Savills Valuation and Professional Services (S) Pte Ltd and Colliers International Consultancy &
Valuation (Singapore) Pte Ltd, the Independent Valuers, were responsible for preparing the
Independent Property Valuation Summary Reports found in Appendix E of this Prospectus.
DTZ Debenham Tie Leung (SEA) Pte Ltd, the Independent Market Research Consultant, was
responsible for preparing the Independent Market Research Reports found in Appendix F of this
Prospectus.
The Reporting Auditors, the Independent Tax Adviser, the Independent Valuers and the
Independent Market Research Consultant have each given and have not withdrawn their written
consents to the issue of this Prospectus with the inclusion herein of their names and their
respective write-ups and reports and all references thereto in the form and context in which they
respectively appear in this Prospectus, and to act in such capacity in relation to this Prospectus.
None of Allen & Gledhill LLP, Commerce & Finance Law Offices, Lee & Lee, Freshfields
Bruckhaus Deringer or Rodyk & Davidson LLP, makes, or purports to make, any statement in this
Prospectus and none of them is aware of any statement in this Prospectus 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 Prospectus.
294
GENERAL INFORMATION
RESPONSIBILITY STATEMENT BY THE DIRECTORS
(1) The Directors collectively and individually accept full responsibility for the accuracy of the
information given in this Prospectus and confirm after making all reasonable enquiries that,
to the best of their knowledge and belief, this Prospectus constitutes full and true disclosure
of all material facts about the Offering, OUE C-REIT and its subsidiaries, and the Directors
are not aware of any facts the omission of which would make any statement in this
Prospectus misleading, and the Directors are satisfied that the Profit Forecast and Profit
Projection contained in Profit Forecast and Profit Projection have been stated after due and
careful enquiry. Where information in the Prospectus has been extracted from published or
otherwise publicly available sources or obtained from a named source, the sole responsibility
of the Directors has been to ensure that such information has been accurately and correctly
extracted from those sources and/or reproduced in this Prospectus in its proper form and
context.
MATERIAL BACKGROUND INFORMATION
(2) There are no legal or arbitration proceedings pending or, so far as the Directors are aware,
threatened against the Manager 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 Prospectus, a material
adverse effect on the financial position of the Manager.
(3) There are no legal or arbitration proceedings pending or, so far as the Directors are aware,
threatened against OUE C-REIT 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 Prospectus, a material
adverse effect on the financial position (on a pro forma basis) of OUE C-REIT.
(4) The name, age and address of each of the Directors are set out in The Manager and
Corporate Governance Board of Directors of the Manager. A list of the present and past
directorships of each Director and Executive Officer over the last five years preceding the
Latest Practicable Date is set out in Appendix H, List of Present and Past Principal
Directorships of Directors and Executive Officers.
(5) There is no family relationship among the Directors and Executive Officers.
(6) None of the Directors or Executive Officers is or was involved in any of the following events:
(i) at any time during the last 10 years, an application or a petition under any bankruptcy
laws of any jurisdiction filed against him or against a partnership of which he was a
partner at the time when he was a partner or at any time within two years from the date
he ceased to be a partner;
(ii) at any time during the last 10 years, an application or a petition under any law of any
jurisdiction filed against an entity (not being a partnership) of which he was a director
or an equivalent person or a key executive, at the time when he was a director or an
equivalent person or a key executive of that entity or at any time within two years from
the date he ceased to be a director or an equivalent person or a key executive of that
entity, for the winding up or dissolution of that entity or, where that entity is the trustee
of a business trust, that business trust, on the ground of insolvency;
(iii) any unsatisfied judgment against him;
295
(iv) a conviction of any offence, in Singapore or elsewhere, involving fraud or dishonesty
which is punishable with imprisonment, or has been the subject of any criminal
proceedings (including any pending criminal proceedings of which he is aware) for such
purpose;
(v) a conviction of any offence, in Singapore or elsewhere, involving a breach of any law
or regulatory requirement that relates to the securities or futures industry in Singapore
or elsewhere, or has been the subject of any criminal proceedings (including any
pending criminal proceedings of which he is aware) for such breach;
(vi) at any time during the last 10 years, judgment been entered against him in any civil
proceedings in Singapore or elsewhere involving a breach of any law or regulatory
requirement that relates to the securities or futures industry in Singapore or elsewhere,
or a finding of fraud, misrepresentation or dishonesty on his part, or any civil
proceedings (including any pending civil proceedings of which he is aware) involving an
allegation of fraud, misrepresentation or dishonesty on his part;
(vii) a conviction in Singapore or elsewhere of any offence in connection with the formation
or management of any entity or business trust;
(viii) disqualification from acting as a director or an equivalent person of any entity (including
the trustee of a business trust), or from taking part directly or indirectly in the
management of any entity or business trust;
(ix) any order, judgment or ruling of any court, tribunal or governmental body permanently
or temporarily enjoining him from engaging in any type of business practice or activity;
(x) to his knowledge, been concerned with the management or conduct, in Singapore or
elsewhere, of the affairs of:
(a) any corporation which has been investigated for a breach of any law or regulatory
requirement governing corporations in Singapore or elsewhere;
(b) any entity (not being a corporation) which has been investigated for a breach of
any law or regulatory requirement governing such entities in Singapore or
elsewhere;
(c) any business trust which has been investigated for a breach of any law or
regulatory requirement governing business trusts in Singapore or elsewhere; or
(d) any entity or business trust which has been investigated for a breach of any law
or regulatory requirement that relates to the securities or futures industry in
Singapore or elsewhere,
in connection with any matter occurring or arising during the period when he was so
concerned with the entity or business trust; or
(xi) the subject of any current or past investigation or disciplinary proceedings, or has been
reprimanded or issued any warning, by the Authority or any other regulatory authority,
exchange, professional body or government agency, whether in Singapore or
elsewhere.
296
MATERIAL CONTRACTS
(7) The dates of, parties to, and general nature of every material contract which the Trustee has
entered into within the two years preceding the date of this Prospectus (not being contracts
entered into in the ordinary course of business of OUE C-REIT) are as follows:
(i) the Trust Deed;
(ii) the Sponsor ROFR;
(iii) the Property Sale and Purchase Agreement;
(iv) the Tecwell Share Purchase Agreement and the undertaking letter in connection with
the Tecwell Share Purchase Agreement;
(v) the Master Property Management Agreement;
(vi) the Individual Property Management Agreement;
(vii) the Deed of Income Support; and
(viii) the Licence Agreements.
DOCUMENTS FOR INSPECTION
(8) Copies of the following documents are available for inspection at the registered office of the
Manager at 50 Collyer Quay #04-08, OUE Bayfront, Singapore 049321, for a period of six
months from the date of this Prospectus (prior appointment would be appreciated):
(i) the material contracts referred to in paragraph 7 above, save for the Trust Deed (which
will be available for inspection for so long as OUE C-REIT is in existence);
(ii) the Underwriting Agreement;
(iii) the Reporting Auditors Report on the Profit Forecast and Profit Projection as set out in
Appendix A of this Prospectus;
(iv) the Reporting Auditors Report on the Unaudited Pro Forma Financial Information as set
out in Appendix B of this Prospectus;
(v) the Independent Taxation Report as set out in Appendix D of this Prospectus;
(vi) the Independent Property Valuation Summary Reports as set out in Appendix E of this
Prospectus as well as the full valuation reports for each of the Properties;
(vii) the Independent Market Research Report set out in Appendix F of this Prospectus;
(viii) the written consents of the Reporting Auditors, the Independent Tax Adviser, the
Independent Valuers and the Independent Market Research Consultant (See Experts
for further details);
(ix) the subscription agreements entered into between the Manager and the Cornerstone
Investors to subscribe for the Cornerstone Units (the Cornerstone Subscription
Agreements); and
(x) the CDPs depository services terms and conditions in relation to the Units in CDP (the
Depository Services Terms and Conditions).
297
CONSENTS OF THE SOLE FINANCIAL ADVISER, JOINT GLOBAL COORDINATORS AND THE
JOINT BOOKRUNNERS
(9) Standard Chartered Securities (Singapore) Pte. Limited has given and not withdrawn its
written consent to being named in this Prospectus as the Sole Financial Adviser for the
Offering.
(10) Standard Chartered Securities (Singapore) Pte. Limited, CIMB Bank Berhad, Singapore
Branch and Oversea-Chinese Banking Corporation Limited have each given and not
withdrawn their written consent to being named in this Prospectus as a Joint Global
Coordinator and Issue Manager to the Offering.
(11) Standard Chartered Securities (Singapore) Pte. Limited, CIMB Securities (Singapore) Pte.
Ltd., Oversea-Chinese Banking Corporation Limited, DMG & Partners Securities Pte Ltd,
Citigroup Global Markets Singapore Pte. Ltd. and J.P. Morgan (S.E.A.) Limited have each
given and not withdrawn their written consent to being named in this Prospectus as a Joint
Bookrunner and Underwriter to the Offering.
WAIVERS FROM THE SGX-ST
(12) The Manager has obtained from the SGX-ST waivers from compliance with the following
listing rules under the Listing Manual:
(i) Rule 404(3), which relates to restrictions on investments subject to compliance with
Chapter 9 of the Listing Manual, the CIS Code and the Property Funds Appendix;
(ii) Rule 404(5), which requires the management company to be reputable and have an
established track record in managing investments subject to the management in the
Manager, which are the entities responsible for managing the assets held by OUE
C-REIT, having the relevant experience;
(iii) Rule 407(4), which requires the submission of the financial track record of the
investment manager;
(iv) Rule 409(3), which requires the submission of the annual accounts of OUE C-REIT for
each of the last three financial years; and
(v) Rule 609(b), which requires the disclosure in this Prospectus of the pro forma income
statement or statement of comprehensive income of OUE C-REIT for the latest three
financial years and for the most recent interim period as if OUE C-REIT had been in
existence at the beginning of the period reported on, as well as the pro forma statement
of financial position as at the date to which the most recent pro forma income statement
or statement of comprehensive income has been made up.
WAIVERS FROM THE MAS
(13) The MAS has granted the Manager a waiver from compliance with paragraph 51 of the Third
Schedule to the Securities and Futures (Offers of Investments) (Collective Investment
Schemes) Regulations 2005, to the extent that paragraph 51 of the Third Schedule prohibits
the disclosure of pro forma financial information relating to OUE C-REIT, subject to the
conditions that (a) the pro forma financial information relating to OUE C-REIT is prepared in
compliance with the requirements of paragraphs 23 to 34 in Part IX of the Fifth Schedule to
the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations
2005, as may be applicable, and (b) the Manager and its directors shall ensure that the
exemption and the condition imposed by the MAS as set out in this paragraph are disclosed
in this Prospectus.
298
(14) The MAS has granted OUE C-REIT an exemption from compliance with section 249(1) read
with section 302 of the SFA in respect of the requirement for the credit rating agency to give
its consent to the issue of the prospectus containing the credit rating agencys name and
statements attributed to it, subject to the conditions that (a) the prospectus includes (i) the
name of the credit rating agency, (ii) a statement that the credit rating agency has not
consented to the inclusion of its name and the statements attributed to it in the prospectus,
and is therefore not liable for the attributed statements under sections 253 and 254 (read with
section 302) of the SFA, wherever the credit rating statements may appear in the prospectus,
(iii) a statement that the rating is current, (iv) a statement that the rating is not a
recommendation to invest in any securities, (v) a statement that the rating is subject to
revision or withdrawal at any time, (vi) an explanation of the meaning and significance of the
rating, including the function of a rating, that it is a statement of opinion, the assumptions and
limitations of the rating, and the attributes of the securities that it does not address, and if the
rating is a provisional or expected rating, the status of that designation and its
implications, (vii) a statement as to where information regarding the rating methodology used
by the credit rating agency and relative rank of the rating can be obtained, and (viii) a
statement as to whether payment was or will be made to the credit rating agency to obtain
the rating, and (b) the Manager and its directors shall ensure that the exemption and the
conditions imposed by the MAS as set out above are disclosed in the prospectus.
(15) The MAS has also granted OUE C-REIT an exemption from compliance with paragraph
11.1(c)(i) of the Property Funds Appendix, on the condition that OUE C-REIT discloses in its
future annual reports (a) the top 10 tenants (except for the two tenants of Lippo Plaza whose
tenancy agreements contain a confidentiality provision and who had not consented to the
disclosure of their tenancy agreements), and (b) the percentage of total gross rental income
attributable to each of the top 10 tenants referred to in this paragraph.
MISCELLANEOUS
(16) The financial year end of OUE C-REIT is 31 December. The annual audited financial
statements of OUE C-REIT will be prepared and sent to Unitholders within four months of the
financial year-end and at least 14 days before the annual general meeting of the Unitholders.
(17) A full valuation of each of the real estate assets held by OUE C-REIT will be carried out at
least once a year in accordance with the Property Funds Appendix. Generally, where the
Manager proposes to issue new Units (except in the case where new Units are being issued
in payment of the Managers management fees) or to redeem existing Units, a valuation of
the real properties held by OUE C-REIT must be carried out in accordance with the Property
Funds Appendix. The Manager or the Trustee may at any other time arrange for the valuation
of any of the real properties held by OUE C-REIT if it is of the opinion that it is in the best
interest of Unitholders to do so.
(18) While OUE C-REIT is listed on the SGX-ST, investors may check the SGX-ST website
http://www.sgx.com 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.
(19) The Manager does not intend to receive soft dollars (as defined in the CIS Code) in respect
of OUE C-REIT. Save as disclosed in this Prospectus, unless otherwise permitted under the
Listing Manual, neither the Manager nor any of its Associates will be entitled to receive any
part of any brokerage charged to OUE C-REIT, or any part of any fees, allowances or benefits
received on purchases charged to OUE C-REIT.
299
GLOSSARY
% : Per centum or percentage
Acquisition of the
Properties
: OUE C-REITs acquisition of the OUE Bayfront Property and
the entire issued share capital in the BVI Company from the
Vendors
Acquisition Fee : The acquisition fee of 0.75% for acquisitions from Related
Parties and 1.0% for all other cases (or such lower percentage
as may be determined by the Manager in its absolute
discretion) of each of the following as is applicable (subject to
there being no double-counting):
the acquisition price of any real estate purchased by
OUE C-REIT, whether directly or indirectly through one
or more SPVs (plus any other payments in addition to the
acquisition price made by OUE C-REIT or its SPVs to the
vendor in connection with the purchase of the real
estate) (pro-rated if applicable to the proportion of OUE
C-REITs interest);
the underlying value of any real estate which is taken into
account when computing the acquisition price payable
for the equity interests of any vehicle holding directly or
indirectly the real estate purchased by OUE C-REIT,
whether directly or indirectly through one or more SPVs
(plus any additional payments made by OUE C-REIT or
its SPVs to the vendor in connection with the purchase of
such equity interests) (pro-rated if applicable to the
proportion of OUE C-REITs interest); or
the acquisition price of any investment purchased by
OUE C-REIT, whether directly or indirectly through one
or more SPVs, in any debt securities of any property
corporation or other SPV owning or acquiring real estate
or any debt securities which are secured whether directly
or indirectly by the rental income from real estate
Adjustments : Adjustments which are charged or credited to the
consolidated statement of total return of OUE C-REIT for the
relevant financial year or the relevant distribution period (as
the case may be), including (i) unrealised income, including
property revaluation gains, and reversals of impairment
provisions, (ii) deferred tax charges/credits in respect of
building capital allowance and accelerated tax depreciation;
(iii) negative goodwill, (iv) differences between cash and
accounting finance costs, (v) realised gains on the disposal of
properties and disposal/settlement of financial instruments,
(vi) the portion of the Management Fee that is paid or payable
in the form of Units, (vii) costs of any public or other offering
of Units or Convertible Instruments that are expensed but are
funded by proceeds from the issuance of such Units or
Convertible Instruments, (viii) depreciation and amortisation
in respect of the Properties and their ancillary machines,
equipment and other fixed assets, and (ix) other non-cash
gains and losses (as deemed appropriate by the Manager)
300
Aggregate Leverage : The total borrowings and deferred payments (if any) of OUE
C-REIT as a percentage of the Deposited Property
Application Forms : The printed application forms to be used for the purpose of the
Offering and which form part of this Prospectus
Application List : The list of applicants subscribing for Units which are the
subject of the Public Offer
Associate : Has the meaning ascribed to it in the Listing Manual
ATM : Automated teller machine
Audit and Risk
Committee
: The audit and risk committee of the Board
Authority or MAS : Monetary Authority of Singapore
Base Fee : The base fee of 0.3% per annum (or such lower percentage as
may be determined by the Manager in its absolute discretion)
of the value of the Deposited Property
Base Rent : Rental income received after taking into account leasing
incentives such as rent rebates and rent-free periods where
applicable, but excluding Turnover Rent, Service Charge and
other income, where applicable
BCA : Building and Construction Authority of Singapore
Board : The board of directors of the Manager
Business Day : Any day (other than a Saturday, Sunday or gazetted public
holiday) on which commercial banks are open for business in
Singapore and the SGX-ST is open for trading
BVI : British Virgin Islands
BVI Company : Tecwell Limited, an indirect wholly-owned subsidiary of LCR
which holds the entire registered capital of the PRC Company
BVI Holding Company : OUE Eastern Limited, a wholly-owned subsidiary of OUE
C-REIT incorporated in the BVI
CBD : Central business district
CDP : The Central Depository (Pte) Limited
CIS Code : The Code on Collective Investment Schemes issued by the
MAS
Clifford Development Pte.
Ltd.
: A wholly-owned subsidiary of the Sponsor
CMS Licence : Capital markets services licence for REIT management
Colliers : Colliers International Consultancy & Valuation (Singapore)
Pte Ltd
Committed Occupancy
Rate
: Occupancy rate based on all current leases in respect of the
Property for the period, including legally binding letters of offer
which have been accepted for vacant units, as a function of
total lettable space
301
Companies Act : Companies Act, Chapter 50 of Singapore
Company Law : Company Law of the PRC
Completion Date : Date of completion of the Property Sale and Purchase
Agreement
Completion Accounts : The consolidated accounts of the BVI Company as at the
Tecwell Completion Date
Completion Financial
Statements
: The Completion Accounts and the Completion NAV Statement
Completion NAV
Statement
: The statement as at the Tecwell Completion Date in the format
set out in the Tecwell Share Purchase Agreement
Consideration : The purchase consideration for the acquisition of the entire
issued share capital in the BVI Company under the Tecwell
Share Purchase Agreement
Consideration Units : The [432,999,999] Units to be issued to Clifford Development
Pte. Ltd. in part satisfaction of the purchase consideration for
the OUE Bayfront Property
controlling shareholder : As defined in the Listing Manual, means a person who:
(i) holds directly or indirectly 15.0% or more of the total
number of issued shares (excluding treasury shares) of a
company; or
(ii) in fact exercises control over a company, where control
refers to the capacity to dominate decision-making,
directly or indirectly, in relation to the financial and
operating policies of a company
controlling unitholder : In relation to a REIT means:
(i) a person who holds directly or indirectly 15.0% or more
of the nominal amount of all voting units in the REIT; or
(ii) a person who in fact exercises control over the REIT
Cornerstone Investors : The cornerstone investors being Summit SPV, Mr Gordon
Tang, Mdm Chen Huaidan, Mr Yang Dehe and RHB Asset
Management Sdn Bhd
Cornerstone Subscription
Agreements
: The subscription agreements entered into between the
Manager and the Cornerstone Investors to subscribe for the
Cornerstone Units
Cornerstone Units : The [225,000,000] Units to be issued to the Cornerstone
Investors
CPF : Central Provident Fund
Deed of Income Support : The deed of income support dated 9 January 2014 entered
into between the Trustee, the Sponsor and Clifford
Development Pte. Ltd.
302
Deposited Property : The gross assets of OUE C-REIT, including all the Authorised
Investments (as defined in the Trust Deed) of OUE C-REIT for
the time being held or deemed to be held by OUE C-REIT
under the Trust Deed
Depository Services
Terms and Conditions
: The CDPs depository services terms and conditions in
relation to the deposit of the Units in CDP
Development
Management Fee
: The Development Management Fee of 3.0% of the Total
Project Costs incurred in a Development Project undertaken
by the Manager on behalf of OUE C-REIT
Development Project : In relation to OUE C-REIT for the purposes of the
Development Management Fee, means a project involving the
development of land, or buildings, or part(s) thereof on land
which is acquired, held or leased by OUE C-REIT, including
major development, redevelopment, refurbishment,
retrofitting, addition and alteration and renovations works,
provided always that the Property Funds Appendix shall be
complied with for the purposes of such development
Director : A director of the Manager
Distributable Income : OUE C-REITs distributable income in relation to a financial
year
Divestment Fee : The divestment fee of 0.5% (or such lower percentage as may
be determined by the Manager in its absolute discretion) of
each of the following as is applicable (subject to there being
no double-counting):
the sale price of any real estate sold or divested, whether
directly or indirectly through one or more SPVs, by OUE
C-REIT (plus any other payments in addition to the sale
price received by OUE C-REIT or its SPVs from the
purchaser in connection with the sale or divestment of
the real estate) (pro-rated if applicable to the proportion
of OUE C-REITs interest);
the underlying value of any real estate which is taken into
account when computing the sale price for the equity
interests in any vehicle holding directly or indirectly the
real estate, sold or divested, whether directly or
indirectly through one or more SPVs, by OUE C-REIT
(plus any additional payments received by OUE C-REIT
or its SPVs from the purchaser in connection with the
sale or divestment of such equity interests) (pro-rated if
applicable to the proportion of OUE C-REITs interest);
or
the sale price of any investment sold or divested by OUE
C-REIT, whether directly or indirectly through one or
more SPVs, in any debt securities of any property
corporation or other SPV owning or acquiring real estate
or any debt securities which are secured whether directly
or indirectly by the rental income from real estate
DPU : Distribution per Unit
303
Executive Officer : An executive officer of the Manager
Exempted Agreements : The Trust Deed, the Property Sale and Purchase Agreement,
the Tecwell Share Purchase Agreement and the Master
Property Management Agreement
Existing Offshore Facility : The term loan facility of HK$776 million granted by Standard
Chartered Bank (Hong Kong) Limited, The Bank of East Asia,
Limited, China CITIC Bank International Limited (formerly
known as CITIC Bank International Limited), Chinatrust
Commercial Bank and Chong Hing Bank Limited to the BVI
Company as the borrower
Existing Onshore Facility : The secured term loan facility of RMB320.0 million entered
into between the PRC Company and the Existing Onshore
Lenders on 29 June 2012
Existing Onshore
Lenders
: Standard Chartered Bank (China) Limited, Shanghai Branch,
The Bank of East Asia (China) Limited, Shanghai Branch,
CITIC Bank International (China) Limited Shanghai Branch
and Chong Hing Bank Limited, Shantou Branch
Extraordinary Resolution : A resolution proposed and passed as such by a majority
consisting of 75.0% or more of the total number of votes cast
for and against such resolution at a meeting of Unitholders
duly convened and held in accordance with the provisions of
the Trust Deed
Facilities : The Term Loan Facilities, the Revolving Credit Facility and the
New Onshore Facility
Fee Arrangements : The fee arrangements of the Property Manager, the Manager
and the Trustee
FIE : Foreign-invested enterprise
First Distribution : The first distribution of OUE C-REIT after the Listing Date for
the period from the Listing Date to 30 June 2014
First Lock-up Period : The period from the date of listing of the Units until the date
falling six months after the Listing Date (both dates inclusive)
Forecast Year 2014 : The period from 1 January 2014 to 31 December 2014
Foreign-Sourced Income
Tax Exemption Ruling
: The tax ruling issued by the IRAS on the exemption of
dividend received by OUE C-REIT from the BVI Holding
Company on or before 31 March 2015 (unless otherwise
extended)
FP2014 : For the purposes of the Deed of Income Support, means the
period from the Completion Date to 31 December 2014 (both
dates inclusive)
FP2019 : For the purposes of the Deed of Income Support, means
period from 1 January 2019 to the day immediately preceding
the fifth anniversary date of the Completion Date (both dates
inclusive)
304
FP1Q2014 Threshold : For the purposes of the Deed of Income Support, means
S$14.25 million X (number of days between the Completion
Date and 31 March 2014 (both dates inclusive))/90
FP1Q2019 Threshold : For the purposes of the Deed of Income Support, means
S$14.25 million X (number of days between 1 January 2019
and the day immediately preceding the fifth anniversary date
of the Completion Date (both dates inclusive))/90
Frontop : Frontop Limited, an indirect wholly-owned subsidiary of LCR
which, together with Reiley, jointly holds the entire issued
capital of the BVI Company prior to the completion of the
Tecwell Share Purchase Agreement
FY : Financial year ended or, as the case may be, ending 31
December
F&B : Food and beverage
GDP : Gross domestic product
GFA : Gross floor area, being:
(i) (in relation to properties in Singapore) all covered floor
areas of a building, except otherwise exempted, and
uncovered areas for commercial uses. The total area of
the covered floor space is measured between the centre
line of party walls, including the thickness of external
walls but excluding voids. Generally, car parks and
driveways are excluded from the computation of GFA;
and
(ii) (in relation to properties in the PRC) the area specified in
the Building Ownership Certificate for each property
Gross Rental Income : Comprises Base Rent, Service Charge and Turnover Rent
(where applicable)
Gross Revenue : Consists of Gross Rental Income (after adjusting for rent-free
incentives amortised over the lease periods) and other
income earned from the Properties, including car park
revenue and other income attributable to the operation of the
Properties, and net of business tax for the Lippo Plaza
Property
1
GST : Goods and Services Tax
HK$ or Hong Kong
dollars
: Hong Kong dollars, the lawful currency of Hong Kong, Special
Administrative Region of the PRC
Income Support : The top-up payments from the Sponsor pursuant to the Deed
of Income Support
Income Support
Arrangement
: The provision of Income Support to OUE C-REIT by the
Sponsor in respect of the OUE Bayfront Property for a period
of up to five years from the Listing Date
1 There is no equivalent business tax in Singapore. For the Lippo Plaza Property, according to the relevant business
and property-related taxes in the PRC, business tax (including other surcharges) is levied on 5.65% of Gross
Revenue.
305
Income Tax Act : Income Tax Act, Chapter 134 of Singapore
Independent Market
Research Consultant
: DTZ Debenham Tie Leung (SEA) Pte Ltd
Independent Market
Research Report
: The independent market research report prepared by the
Independent Market Research Consultant
Independent Tax Adviser : KPMG Services Pte. Ltd.
Independent Valuers : Savills and Colliers
Individual Property
Management Agreement
: The individual property management agreement with respect
to the OUE Bayfront Property to be entered into between the
Manager, the Trustee and the Property Manager on the Listing
Date
Instruments : Offers, agreements or options that might or would require
Units to be issued, including but not limited to the creation and
issue of (as well as adjustments to) securities, warrants,
debentures or other instruments convertible into Units
Interested Party : Has the meaning ascribed to it in the Property Funds
Appendix
Interested Party
Transaction
: Has the meaning ascribed to it in the Property Funds
Appendix
Interested Person : Has the meaning ascribed to it in the Listing Manual
Interested Person
Transaction
: Has the meaning ascribed to it in the Listing Manual
IPO : Initial public offering
IPO Portfolio : The initial portfolio held by OUE C-REIT as at the Listing Date,
comprising the Properties
IRAS : Inland Revenue Authority of Singapore
Joint Bookrunners and
Underwriters or
Joint Bookrunners
Standard Chartered Securities (Singapore) Pte. Limited,
CIMB Securities (Singapore) Pte. Ltd., Oversea-Chinese
Banking Corporation Limited, DMG & Partners Securities Pte
Ltd, Citigroup Global Markets Singapore Pte. Ltd. and J.P.
Morgan (S.E.A.) Limited
Joint Global Coordinators
and Issue Managers or
Joint Global Coordinators
: Standard Chartered Securities (Singapore) Pte. Limited,
CIMB Bank Berhad, Singapore Branch and Oversea-Chinese
Banking Corporation Limited
Land Administration Law : The Land Administration Law of the PRC (
)
Latest Practicable Date : 31 December 2013, being the latest practicable date prior to
the lodgement of this Prospectus with the MAS
Laws on FIE : The Law of the PRC on Sino-Foreign Equity Joint Venture (
), the Law of the PRC on
Sino-Foreign Contractual Joint Venture (
) and the Law of the PRC on Wholly Foreign-
owned Enterprises ()
306
LCR : Lippo China Resources Limited, a limited company
incorporated in Hong Kong and listed on the Main Board of the
Stock Exchange of Hong Kong Limited (Stock Code: 00156)
Licence Agreements : The OUE Licence Agreement and the Lippo Licence
Agreement
Lippo Licence Agreement : The licence agreement entered into between the Sponsor and
the Trustee in respect of the Lippo name and any additional
trade mark(s) which may be agreed to by the parties in writing
from time to time for use in connection with the Lippo Plaza
Property
Lippo Plaza Property : Lippo Plaza, which is located at 222 Huaihai Zhong Road in
the commercial district of Huangpu in central Shanghai, the
PRC, excluding (i) Unit 2 on Basement 1, (ii) the 12th, 13th,
15th and 16th Floors and (iii) four car park lots
Listing Date : The date of admission of OUE C-REIT to the Official List of the
SGX-ST
Listing Manual : The Listing Manual of the SGX-ST
Local Property
Management Agreement
: The property management agreement entered into on 27 June
2012 between the PRC Company and
() (Jones Lang LaSalle Surveyors (Shanghai)
Co., Ltd.), the existing local property manager for the Lippo
Plaza Property
Lock-up Period : The First Lock-up Period and the Second Lock-up Period
Lock-up Units : The Units which are held by the Sponsor and any other entity
which is wholly-owned by the Sponsor which are subject to the
lock-up arrangement
Manager : OUE Commercial REIT Management Pte. Ltd., in its capacity
as manager of OUE C-REIT
Management Fee or
Managers Management
Fee
: Base Fee and Performance Fee
Market Day : A day on which the SGX-ST is open for trading in securities
Master Property
Management Agreement
: The master property management agreement dated 9 January
2014 entered into between the Manager, the Trustee and the
Property Manager
MOC : Ministry of Commerce of the PRC
Moodys : Moodys Investors Service, Inc
MNCs : Multinational corporations
MRT : Mass rapid transit
NAV : Net asset value
NDRC : National Development and Reform Commission of the PRC
Net Property Income : Gross Revenue less property expenses
307
Net Lettable Area or NLA : Net office or retail area located in Singapore or the PRC, as
the case may be, that is to be leased and for which rent is
payable as stipulated in the respective tenancy agreements,
including legally binding letters of offer which have been
accepted for vacant area
New Onshore Facility : The secured three-year term loan facility of RMB320.0 million
from OCBC Bank (China) Limited, Shanghai Branch and
Standard Chartered Bank (China) Limited, Shanghai Branch
No. 50 Notice : The Notice on Further Strengthening and Regulating the
Approval and Administration regarding Foreign Direct
Investment in the Real Estate Industry (
)
Offering : The offering of [208,000,000] Units by the Manager for
subscription at the Offering Price under the Placement
Tranche and the Public Offer
Offering Price : The subscription price of each Unit under the Offering,
currently expected to be S$0.80 per Unit
Offering Units : The [208,000,000] Units to be issued pursuant to the Offering
Ordinary Resolution : A resolution proposed and passed as such by a majority being
greater than 50.0% of the total number of votes cast for and
against such resolution at a meeting of Unitholders duly
convened and held in accordance with the provisions of the
Trust Deed
OUBC : OUB Centre Limited
OUE or the Sponsor : OUE Limited
OUE Bayfront : An 18-storey premium office building with rooftop restaurant
premises located at 50 Collyer Quay which partially
constitutes the OUE Bayfront Property
OUE Bayfront Property : OUE Bayfront, OUE Tower and OUE Link, which are located at
Collyer Quay in Singapores CBD
OUE C-REIT : OUE Commercial Real Estate Investment Trust, a REIT
established in Singapore and constituted by the Trust Deed
OUE C-REIT Group : OUE C-REIT and its subsidiaries
OUE H-BT : OUE Hospitality Business Trust
OUE H-BT Trustee-
Manager
: OUE Hospitality Trust Management Pte. Ltd., the trustee-
manager of OUE H-BT
OUE H-REIT : OUE Hospitality Real Estate Investment Trust
OUE H-REIT Manager : OUE Hospitality REIT Management Pte. Ltd., the manager of
OUE H-REIT
OUE H-Trust : OUE Hospitality Trust
OUE H-Trust Managers : The OUE H-REIT Manager and the OUE H-BT Trustee-
Manager
308
OUE Licence Agreement : The licence agreement entered into between the Sponsor and
the Trustee in respect of the OUE name and related logos for
use in connection with the business of OUE C-REIT
OUE Link A link bridge located at 62 Collyer Quay with retail units which
partially constitutes the OUE Bayfront Property
OUE Tower A conserved tower building located at 60 Collyer Quay with
panoramic views of the Marina Bay landscape which is
currently occupied by a fine dining restaurant, which partially
constitutes the OUE Bayfront Property
Over-Allotment Option : An option granted by the Unit Lender to the Joint Bookrunners
to purchase from the Unit Lender up to an aggregate of []
Units at the Offering Price, solely to cover the over-allotment
of Units (if any)
Participating Banks : []
Passing Rent : Rental income generated from current tenancy agreements
Performance Fee : The performance fee of 25.0% per annum of the difference in
DPU in a financial year with the DPU in the preceding full
financial year (calculated before accounting for the
Performance Fee but after accounting for the Base Fee in
each financial year) multiplied by the weighted average
number of Units in issue for such financial year
Placement Tranche : The international placement of [] Units to investors, including
institutional and other investors in Singapore, pursuant to the
Offering
PRC : The Peoples Republic of China, and for the purposes of this
Prospectus, refers to mainland China
PRC Company : () (Lippo Realty (Shanghai) Limited),
which owns the Lippo Plaza Property
Profit Forecast : The forecast results for the Forecast Year 2014
Profit Projection : The projected results for the Projection Year 2015
Projection Year 2015 : The period from 1 January 2015 to 31 December 2015
Properties : The properties comprising the IPO Portfolio, namely the OUE
Bayfront Property and the Lippo Plaza Property
Property Funds Appendix : Appendix 6 of the CIS Code issued by the MAS in relation to
REITs
Property Law : The Property Law of the PRC ()
Property Manager : OUE Commercial Property Management Pte. Ltd., as the
property manager of OUE C-REIT
Property Management
Agreements
: The Master Property Management Agreement, the Individual
Property Management Agreement and the Local Property
Management Agreement
309
Property Management
Rules
: The Property Management Rules of the PRC ()
promulgated by the State Council on 8 June 2003 and revised
on 26 August 2007
Property Sale and
Purchase Agreement
: The property sale and purchase agreement dated 9 January
2014 entered into between the Trustee and Clifford
Development Pte. Ltd. in respect of the OUE Bayfront
Property
Provisions of Real Estate
Transfer
: The Provisions of Administration of Transfer of Urban Real
Property () promulgated in August
1995 and revised on 15 August 2001 by the Ministry of
Construction of the PRC
Public Offer : The offering to the public in Singapore of [] Units
Putian Talin : Putian Talin Infrastructure Co., Ltd., an indirect subsidiary of
LCR
PV : The present value
Q3 : The three months ended 30 September
Q4 : The three months ended 31 December
Qualifying Foreign
Non-Individual
Unitholder
: A person other than an individual not resident in Singapore for
Singapore income tax purposes and who does not have a
permanent establishment in Singapore or who carries on an
operation in Singapore through a permanent establishment in
Singapore, where the funds used by that person to acquire the
Units are not obtained from that operation in Singapore
Qualifying Unitholder : A Unitholder (not including a person acting in the capacity of
a trustee) who is an individual, a company incorporated and
tax resident in Singapore, a branch in Singapore of a company
incorporated outside Singapore that has obtained IRAS
approval for distributions to be made by OUE C-REIT to it
without deduction of tax or body of persons (excluding
partnerships) incorporated or registered in Singapore
Recognised Stock
Exchange
: Any stock exchange of repute in any part of the world
Regulation S : Regulation S under the Securities Act
Reiley : Reiley Inc., an indirect wholly-owned subsidiary of LCR which,
together with Frontop, jointly holds the entire issued capital of
the BVI Company prior to the completion of the Tecwell Share
Purchase Agreement
REIT : Real estate investment trust
Related Party : Refers to an Interested Party and/or, as the case may be, an
Interested Person
Related Party Leases : Certain lease agreements in relation to the lease of premises
at the Properties which were entered into by entities related to
the Manager
Related Party
Transactions
: Interested Party Transactions and/or, as the case may be,
Interested Person Transactions
310
Relevant Asset : In relation to the Sponsor ROFR, means income-producing
real estate used primarily for commercial purposes (including
real estate used primarily for office and/or retail purposes) in
financial and business hubs within and outside of Singapore.
Where such real estate is held by a Relevant Entity through a
SPV established solely to own such real estate, the term
Relevant Asset shall refer to the shares or equity interests,
as the case may be, in that SPV. Where such real estate is
co-owned by a Relevant Entity as a tenant-in-common, the
term Relevant Asset shall refer to the ownership share of
the Relevant Entity in such real estate
Relevant Entity : In relation to the Sponsor ROFR, means the Sponsor or any of
its existing or future subsidiaries or existing or future private
funds managed by the Sponsor
Relevant Period : FY2011, FY2012, the nine months ended 30 September 2012
and the nine months ended 30 September 2013
Reporting Auditors : KPMG LLP
Revolving Credit Facility : The three-year revolving credit facility of S$100.0 million from
CIMB Bank Berhad, Singapore Branch, Oversea-Chinese
Banking Corporation Limited and, Standard Chartered Bank,
Singapore Branch, and Australian and New Zealand Banking
Group Limited, Singapore Branch, entered into by the Trustee
on behalf of OUE C-REIT in relation to the OUE Bayfront
Property
RMB or Renminbi : Renminbi, the lawful currency of the PRC
ROFR : Right of first refusal
Rollover Income
Adjustments
: In relation to the Tax Transparency Ruling, means the addition
or deduction of the difference from the Specified Taxable
Income for the next distribution in the event that the amount
finally agreed with the IRAS is different from the amount of
Specified Taxable Income determined by the Trustee for
distribution purposes
S$ or Singapore dollars
and cents
: Singapore dollars and cents, the lawful currency of the
Republic of Singapore
SAFE : The State Administration of Foreign Exchange of the PRC
SARS : Severe acute respiratory syndrome
Savills : Savills Valuation and Professional Services (S) Pte Ltd
Second Lock-up Period : The period immediately following the First Lock-up Period
until the date falling six months after the First Lock-up Period
(both dates inclusive)
Securities Account : Securities account or sub-account maintained by a Depositor
(as defined in Section 130A of the Companies Act) with CDP
Securities Act : U.S. Securities Act of 1933, as amended
Securities and Futures
Act or SFA
: Securities and Futures Act, Chapter 289 of Singapore
311
Service Charge : Contribution paid by tenants towards covering the operation
and property maintenance expenses of the Properties
Settlement Date : The date and time on which the Units are issued as settlement
under the Offering
SGX-ST : Singapore Exchange Securities Trading Limited
Sole Financial Adviser : Standard Chartered Securities (Singapore) Pte. Limited
SOEs : Chinese State Owned Enterprises
Specified Taxable Income : Taxable Income which has been granted tax transparency
treatment under Section 43(2A) of the Income Tax Act in
accordance with the Tax Transparency Ruling
Sponsor Group : The Sponsor, its subsidiaries and related corporations
Sponsor Initial Unit : The one Unit held by the Sponsor through Clifford
Development Pte. Ltd. on the Listing Date immediately before
the issue of the Offering Units
Sponsor Private Funds : Future private funds to be managed by the Sponsor
Sponsor ROFR : Right of first refusal provided by the Sponsor to OUE C-REIT
Sponsor ROFR Properties : The three properties identified by the Sponsor as at the Latest
Practicable Date which could potentially be offered to OUE
C-REIT
Sponsor Units : The Sponsor Initial Unit and the Consideration Units
SPV : Special purpose vehicle
sq ft : Square feet
sq m : Square metres
SRS : Supplementary Retirement Scheme
Stabilising Manager : Standard Chartered Securities (Singapore) Pte. Limited
State Council : The State Council of the PRC
Substantial Unitholder : Any Unitholder with an interest in one or more Units
constituting not less than 5.0% of all Units in issue
Summit SPV : Wealthy Fountain Holdings Inc
Take-over Code : Singapore Code on Take-overs and Mergers
Tax Rulings : The Tax Transparency Ruling and the Foreign-Sourced
Income Tax Exemption Ruling
Tax Transparency Ruling : The tax ruling issued by the IRAS on the taxation of OUE
C-REIT and its Unitholders in respect of its Specified Taxable
Income
Tax-Exempt Income : Tax-exempt dividends received from the BVI Holding
Company in accordance with the Foreign-Sourced Income
Tax Exemption Ruling under the Income Tax Act
312
Taxable Income : Income ascertained to be chargeable to tax in accordance
with the provisions of the Income Tax Act, after deduction of
allowable expenses and applicable tax allowances
Tecwell Completion Date : The completion date of the Tecwell Share Purchase
Agreement
Tecwell Share Purchase
Agreement
: The share purchase agreement dated 16 October 2013
entered into between the BVI Holding Company and LCR, as
supplemented by a supplemental agreement entered into
between the BVI Holding Company and LCR on 9 January
2014, in respect of the entire issued share capital in the BVI
Company
Term Loan Facilities : The term loan facilities of an aggregate of S$580.0 million
from CIMB Bank Berhad, Singapore Branch, Oversea-
Chinese Banking Corporation Limited, Standard Chartered
Bank, Singapore Branch, and Australian and New Zealand
Banking Group Limited, Singapore Branch, entered into by the
Trustee on behalf of OUE C-REIT in relation to the OUE
Bayfront Property
TOP : Temporary occupation permit
Total Project Costs : In relation to the Development Management Fee, means the
sum of the following (where applicable):
(i) construction cost based on the project final account
prepared by the project quantity surveyor;
(ii) principal consultants fees, including payments to the
projects architect, civil and structural engineer,
mechanical and electrical engineer, quantity surveyor
and project manager;
(iii) the cost of obtaining all approvals for the project;
(iv) site staff costs;
(v) interest costs on borrowings used to finance project cash
flows that are capitalised to the project in line with
generally accepted accounting practices in Singapore;
and
(vi) any other costs including contingency expenses which
meet the definition of Total Project Costs and can be
capitalised to the project in accordance with generally
accepted accounting practices in Singapore.
Trust Companies Act : Trust Companies Act, Chapter 336 of Singapore
Trust Deed : The trust deed dated 10 October 2013 entered into between
OUE Commercial REIT Management Pte. Ltd. and DBS
Trustee Limited constituting OUE C-REIT, as amended and
restated by a first amending and restating deed dated 9
January 2014, and as may be amended, varied or
supplemented from time to time
Trustee : DBS Trustee Limited, in its capacity as trustee of OUE C-REIT
313
Turnover Rent : Generally calculated as a pre-determined percentage of the
tenants gross turnover
Unaudited Pro Forma
Financial Information
: Unaudited historical pro forma financial information of the
OUE C-REIT Group
Underwriting Agreement : The underwriting agreement dated [] entered into between
the Sponsor, the Manager, the Unit Lender, the Joint Global
Coordinators and the Joint Bookrunners
Underwriting, Selling and
Management Commission
: The underwriting, selling and management commission
payable to the Joint Bookrunners for their services in
connection with the Offering
Unit(s) : An undivided interest in OUE C-REIT as provided for in the
Trust Deed
Unit Issue Mandate : The general mandate for the Manager to issue Units within
certain limits until (i) the conclusion of the first annual general
meeting of OUE C-REIT or (ii) the date by which first annual
general meeting of OUE C-REIT is required by applicable
regulations to be held, whichever is earlier
Unit Lender : Clifford Development Pte. Ltd.
Unit Lending Agreement : The unit lending agreement entered into between the
Stabilising Manager (or any of its affiliates or other persons
acting on behalf of the Stabilising Manager) and the Unit
Lender dated [] in connection with the Over-Allotment Option
Unitholder(s) : 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
Unit Registrar : Boardroom Corporate & Advisory Services Pte. Ltd.
United States or U.S. : United States of America
Urban Land Regulations : Provisional Regulations of the PRC Concerning the Grant and
Assignment of the Right to Use State-owned Land in Urban
Areas ()
Urban Real Estate Law : The Land Administration Law and the Law of Administration
of Urban Real Estate of the PRC (
)
US$, US dollars or USD : U.S. dollars and cents, the lawful currency of the United
States
Vendors : Clifford Development Pte. Ltd. and LCR
WALE : Weighted average lease expiry
WFOE : Wholly foreign-owned enterprise
Zhuhai Chung Po : Zhuhai Chung Po HPD Co Ltd, an indirect subsidiary of LCR
314
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 Prospectus to any enactment is a reference to that enactment for the time
being amended or re-enacted.
Any reference to a time of day in this Prospectus is made by reference to Singapore time unless
otherwise stated.
Any discrepancies in the tables, graphs and charts between the listed amounts and totals thereof
are due to rounding.
Information contained in the Managers website and the Sponsors website does not constitute
part of this Prospectus.
315
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APPENDIX A
REPORTING AUDITORS REPORT ON THE PROFIT FORECAST
AND PROFIT PROJECTION
The Board of Directors
OUE Commercial REIT Management Pte. Ltd.
(in its capacity as Manager of OUE Commercial Real Estate Investment Trust)
50 Collyer Quay #04-08
OUE Bayfront
Singapore 049321
DBS Trustee Limited
(in its capacity as Trustee of OUE Commercial Real Estate Investment Trust)
12 Marina Boulevard
Marina Bay Financial Centre Tower 3
Singapore 018982
10 January 2014
Dear Sirs
Letter from the Reporting Auditors on the Profit Forecast for the Year Ending 31 December
2014 and the Profit Projection for the Year Ending 31 December 2015
This letter has been prepared for inclusion in the prospectus (the Prospectus) to be issued in
connection with the offering of units in OUE Commercial Real Estate Investment Trust (OUE
C-REIT) at the offering price of S$0.80 per Unit (the Offering).
The directors of OUE Commercial REIT Management Pte. Ltd. (the Directors) are responsible for
the preparation and presentation of the forecast statement of total return for the year ending 31
December 2014 (the Profit Forecast) and the projected statement of total return for the year
ending 31 December 2015 (the Profit Projection) as set out on pages 131 and 132 of the
Prospectus, which have been prepared on the basis of the assumptions set out on pages 132 to
140 of the Prospectus.
We have examined the Profit Forecast and Profit Projection of OUE C-REIT as set out on pages
131 and 132 of the Prospectus in accordance with Singapore Standard on Assurance
Engagements 3400 The Examination of Prospective Financial Information. The Directors are
solely responsible for the Profit Forecast and Profit Projection including the assumptions set out
on pages 132 to 140 of the Prospectus on which they are based.
Profit Forecast
Based on our examination of the evidence supporting the relevant assumptions, nothing has come
to our attention which causes us to believe that these assumptions do not provide a reasonable
basis for the Profit Forecast. Further, in our opinion the Profit Forecast, 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 C-20 to C-30 of the Prospectus, and is
presented in accordance with the applicable presentation principles of Recommended Accounting
Practice (RAP) 7 Reporting Framework for Unit Trusts (but not all the required disclosures) issued
by the Institute of Singapore Chartered Accountants (ISCA), which is the framework to be adopted
by OUE C-REIT in the preparation of its financial statements.
A-1
Profit Projection
The Profit Projection is intended to show a possible outcome based on the stated assumptions.
As OUE C-REIT is newly established without any history of activities and because the length of
the period covered by the Profit Projection extends beyond the period covered by the Profit
Forecast, the assumptions used in the Profit Projection (which include hypothetical assumptions
about future events which may not necessarily occur) are more subjective than would be
appropriate for a profit forecast. The Profit Projection does not therefore constitute a profit
forecast.
Based on our examination of the evidence supporting the relevant assumptions, nothing has come
to our attention which causes us to believe that these assumptions do not provide a reasonable
basis for the Profit Projection. Further, in our opinion the Profit Projection, 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 C-20 to C-30 of the Prospectus, and is
presented in accordance with the applicable presentation principles of RAP 7 (but not all the
required disclosures), which is the framework to be adopted by OUE C-REIT in the preparation of
its financial statements.
Events and circumstances frequently do not occur as expected. Even if the events anticipated
under the hypothetical assumptions occur, actual results are still likely to be different from the
Profit Forecast and Profit Projection since other anticipated events frequently do not occur as
expected and the variation may be material. The actual results may therefore differ materially from
those forecast and projected. For the reasons set out above, we do not express any opinion as
to the possibility of achievement of the Profit Forecast and Profit Projection.
Attention is drawn, in particular, to the risk factors set out on pages 71 to 101 of the Prospectus
which describe the principal risks associated with the Offering, to which the Profit Forecast and
Profit Projection relate and the sensitivity analysis of the Profit Forecast and Profit Projection set
out on pages 141 to 144 of the Prospectus.
Yours faithfully
KPMG LLP
Public Accountants
and Chartered Accountants
Singapore
(Partner-in-charge: Tan Huay Lim)
A-2
APPENDIX B
REPORTING AUDITORS REPORT ON THE UNAUDITED
PRO FORMA FINANCIAL INFORMATION
OUE Commercial REIT Management Pte. Ltd.
(in its capacity as Manager of OUE Commercial Real Estate Investment Trust)
50 Collyer Quay #04-08
OUE Bayfront
Singapore 049321
DBS Trustee Limited
(in its capacity as Trustee of OUE Commercial Real Estate Investment Trust)
12 Marina Boulevard
Marina Bay Financial Centre Tower 3
Singapore 018982
10 January 2014
We have completed our assurance engagement to report on the compilation of pro forma financial
information of OUE Commercial Real Estate Investment Trust (OUE C-REIT) by OUE Commercial
REIT Management Pte. Ltd. (the Manager). The pro forma financial information of OUE C-REIT
and its subsidiaries (the Pro Forma Group) consists of the pro forma statements of financial
position as at 31 December 2012 and 30 September 2013, the pro forma statements of total return
for the years ended 31 December 2011 and 2012 and the nine months ended 30 September 2012
and 2013, the pro forma statements of cash flows for the year ended 31 December 2012 and the
nine months ended 30 September 2013, and related notes (the Unaudited Pro Forma Financial
Information) as set out on pages C-1 to C-47 of the prospectus (the Prospectus) to be issued
in connection with the offering of units in OUE C-REIT (the Offering). The unaudited pro forma
financial information of OUE C-REIT has been prepared for illustrative purposes only and is based
on certain assumptions, after making certain adjustments. The applicable criteria (the Criteria) on
the basis of which the Manager has compiled the pro forma financial information are described in
Section B of Appendix C.
The pro forma financial information has been compiled by the Manager to illustrate the impact of:
(a) the financial position of Pro Forma Group as at 31 December 2012 and 30 September 2013
had it acquired the entire issued capital of Tecwell Limited (which holds the entire registered
capital of Lippo Realty (Shanghai) Limited), and the OUE Bayfront Property (collectively, the
Transactions), under the same terms as set out in the Prospectus, on 31 December 2012
and 30 September 2013, respectively;
(b) the total return of Pro Forma Group for the years ended 31 December 2011 and 2012 and the
nine months ended 30 September 2012 and 2013, had it been in place and had the
Transactions been undertaken on 1 January 2011, under the same terms set out in the
Prospectus;
(c) the cash flows of the Pro Forma Group for the year ended 31 December 2012 and the nine
months ended 30 September 2013 had it been in place and had the Transactions been
undertaken on 1 January 2012, under the same terms as set out in the Prospectus.
The dates on which the transactions described above are assumed to have been undertaken, are
hereinafter collectively referred to as the Relevant Dates.
B-1
As part of this process, information about the Pro Forma Groups financial position, total return
and cash flows has been extracted by the Manager from the following financial statements:
audited financial statements for the years ended 31 December 2011 and 2012 and the nine
months ended 30 September 2013, and the unaudited financial statements for the nine
months ended 30 September 2012, of Clifford Development Pte. Ltd.; and
audited financial statements for the years ended 31 December 2011 and 2012 and the nine
months ended 30 September 2013, and the unaudited financial statements for the nine
months ended 30 September 2012, of Tecwell Limited and its subsidiary.
The aforementioned financial statements are hereinafter collectively referred to as the Relevant
Financial Statements. The auditors reports on the Relevant Financial Statements have not been
published.
The Managers responsibility for the pro forma financial information
The Manager is responsible for compiling the pro forma financial information on the basis of the
Criteria.
Reporting Auditors responsibility
Our responsibility is to express an opinion about whether the pro forma financial information has
been compiled, in all material respects, by the Manager on the basis of the Criteria.
We conducted our engagement in accordance with Singapore Standard on Assurance
Engagements 3420 Assurance Engagements to Report on the Compilation of Pro Forma Financial
Information Included in a Prospectus, issued by the Institute of Singapore Chartered Accountants
(ISCA). This standard requires that the Reporting Auditors comply with ethical requirements and
plan and perform procedures to obtain reasonable assurance about whether the Manager has
compiled, in all material respects, the pro forma financial information on the basis of the Criteria.
For purposes of this engagement, we are not responsible for updating or reissuing any reports or
opinions on any historical financial information used in compiling the pro forma financial
information, nor have we, in the course of this engagement, performed an audit or review of the
financial information used in compiling the pro forma financial information.
The purpose of pro forma financial information included in a prospectus is solely to illustrate the
impact of a significant event or transaction on unadjusted financial information of the entity as if
the event had occurred or the transaction had been undertaken at an earlier date selected for
purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome
of the event or transaction at the Relevant Dates would have been as presented.
A reasonable assurance engagement to report on whether the pro forma financial information has
been compiled, in all material respects, on the basis of the Criteria involves performing
procedures to assess whether the Criteria used by the Manager in the compilation of the pro forma
financial information provide a reasonable basis for presenting the significant effects directly
attributable to the event or transaction, and to obtain sufficient appropriate evidence about
whether:
the related pro forma adjustments give appropriate effect to those Criteria; and
the pro forma financial information reflects the proper application of those adjustments to the
unadjusted financial information.
B-2
The procedures selected depend on the Reporting Auditors judgement, having regard to his
understanding of the nature of the event or transaction in respect of which the pro forma financial
information has been compiled and other relevant engagement circumstances.
The engagement also involves evaluating the overall presentation of the pro forma financial
information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Opinion
In our opinion:
(a) the Unaudited Pro Forma Financial Information has been compiled:
(i) from the information in the Relevant Financial Statements (which were prepared in
accordance with Singapore Financial Reporting Standards or Hong Kong Financial
Reporting Standards, as the case may be) and is presented in accordance with the
relevant presentation principles of Recommended Accounting Practice 7 Reporting
Framework for Unit Trusts issued by ISCA;
(ii) in a manner consistent with the accounting policies to be adopted by the Pro Forma
Group; and
(iii) on the basis of the Criteria stated in Section B of Appendix C of the Prospectus; and
(b) each material adjustment made to the information used in the preparation of the Unaudited
Pro Forma Financial Information is appropriate for the purpose of preparing such unaudited
financial information.
This letter has been prepared for inclusion in the Prospectus of OUE C-REIT to be issued in
connection with the initial public offering of the units by OUE C-REIT.
KPMG LLP
Public Accountants
and Chartered Accountants
Singapore
(Partner-in-charge: Tan Huay Lim)
B-3
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APPENDIX C
UNAUDITED PRO FORMA FINANCIAL INFORMATION
A INTRODUCTION
The Unaudited Pro Forma Financial Information has been prepared for inclusion in the
prospectus (the Prospectus) to be issued in connection with the proposed listing of OUE
Commercial Real Estate Investment Trust (OUE C-REIT) on the Singapore Exchange
Securities Trading Limited (the SGX-ST).
OUE C-REIT was constituted as a private trust pursuant to a Trust Deed dated 10 October
2013. OUE Commercial REIT Management Pte. Ltd. is the manager of OUE C-REIT (the
Manager) and DBS Trustee Limited is the trustee of OUE C-REIT (the Trustee). OUE
C-REIT is established with the principal investment strategy of investing, directly or
indirectly, in a portfolio of income-producing real estate used primarily for commercial
purposes, as well as real estate-related assets. The Managers key financial objectives are
to provide unitholders of OUE C-REIT (Unitholders) with an attractive rate of return on their
investment through regular and stable distributions to Unitholders and to achieve long-term
sustainable growth in distribution and net asset value per Unit, while maintaining an
appropriate capital structure for OUE C-REIT.
On the date of OUE C-REITs admission to the Official List of the SGX-ST (the Listing
Date), it will acquire the following properties:
The OUE Bayfront Property in Singapore, comprising (i) OUE Bayfront, a 18-storey
prime Grade A office building with a rooftop restaurant, which is complemented by retail
facilities at its ancillary properties, (ii) OUE Tower, a conserved tower building with
360-degree views currently occupied by a fine dining restaurant, and (iii) OUE Link, a
Mass Rapid Transit station link bridge with retail shops; and
The Lippo Plaza Property in Shanghai, comprising Lippo Plaza, a 36-storey commercial
building used for office and retail units, excluding (i) Unit 2 on Basement 1, (ii) the 12th,
13th, 15th and 16th Floors, and (iii) four car park lots, which have previously been sold
to a third party. OUE C-REIT will acquire the Lippo Plaza Property via its wholly owned
subsidiary, OUE Eastern Limited (OUE Eastern), through the acquisition of the entire
issued share capital of Tecwell Limited which indirectly holds the Lippo Plaza Property.
The OUE Bayfront Property and the Lippo Plaza Property are hereinafter collectively referred
to the Properties.
The acquisitions as described above are collectively referred to as the Acquisitions.
In connection with the Acquisitions, OUE C-REIT proposes to issue [208,000,000] new Units
(the Offering) at an offering price of S$0.80 per Unit (the Offering Price). The Offering
consists of (i) an international placement of [] Units to investors, including institutional and
other investors in Singapore, and (ii) an offering of [] Units to the public in Singapore.
Separate from the Offering, Clifford Development Pte. Ltd., a wholly-owned subsidiary of OUE
Limited (the Sponsor), will receive an aggregate of [432,999,999] units (the Consideration
Units, together with the Unit issued on the constitution of OUE C-REIT, the Sponsor Units) on
the Listing Date as part satisfaction of the purchase consideration for the OUE Bayfront Property.
C-1
In addition, concurrently with, but separate from the Offering, cornerstone investors have
entered into a conditional subscription agreement to subscribe for an aggregate of
[225,000,000] Units (the Cornerstone Units) at the Offering Price.
B BASIS OF PREPARATION OF PRO FORMA FINANCIAL INFORMATION
OUE C-REIT was constituted on 10 October 2013 and OUE Eastern was incorporated on 11
October 2013. Accordingly, no financial statements have been prepared for both entities for
the financial years ended 31 December 2011 and 31 December 2012 and the nine months
ended 30 September 2012 and 30 September 2013. These entities will remain dormant until
the Listing Date.
The Unaudited Pro Forma Financial Information set out in this report has been prepared for
illustrative purposes only and based on certain assumptions, after making certain
adjustments, and shows the Unaudited Pro Forma Statements of Financial Position of OUE
C-REIT and its subsidiaries (the Pro Forma Group) as at 31 December 2012 and 30
September 2013, the Unaudited Pro Forma Statements of Total Return of the Pro Forma
Group for the years ended 31 December 2011 and 31 December 2012, and the nine months
ended 30 September 2012 and 30 September 2013, and the Unaudited Pro Forma
Statements of Cash Flows of the Pro Forma Group for the year ended 31 December 2012
and the nine months ended 30 September 2013.
The Unaudited Pro Forma Statements of Financial Position as at 31 December 2012 and 30
September 2013 reflect the financial position of the Pro Forma Group had it been in place
and had the Acquisitions been completed on 31 December 2012 and 30 September 2013
respectively, pursuant to the terms set out in the Prospectus.
The Unaudited Pro Forma Statements of Total Return for the years ended 31 December 2011
and 31 December 2012, and the nine months ended 30 September 2012 and 30 September
2013 reflect the financial performance of the Pro Forma Group had it been in place and had the
Acquisitions been completed on 1 January 2011, pursuant to the terms set out in the Prospectus.
The Unaudited Pro Forma Statements of Cash Flows for the year ended 31 December 2012
and the nine months ended 30 September 2013 reflect the cash flows of the Pro Forma
Group had it been in place and had the Acquisitions been completed on 1 January 2012,
pursuant to the terms set out in the Prospectus.
The Unaudited Pro Forma Statements of Financial Position, Unaudited Pro Forma
Statements of Total Return and Unaudited Pro Forma Statements of Cash Flows (collectively,
the Unaudited Pro Forma Financial Information) have been prepared on the basis of the
accounting policies set out in Section D and is to be read in conjunction with Section E.
The objective of the Unaudited Pro Forma Financial Information is to show what the financial
position, financial performance and cash flows might have been, had the Pro Forma Group
as described above existed at an earlier date. However, the Unaudited Pro Forma Financial
Information is not necessarily indicative of the financial position, financial performance and
cash flows that would have been attained had the Pro Forma Group actually existed earlier.
The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes
only and, because of its nature, may not give a true picture of the Pro Forma Groups actual
financial position, financial performance or cash flows.
C-2
The Unaudited Pro Forma Financial Information of the Pro Forma Group has been compiled
based on:
(a) the audited financial statements for the years ended 31 December 2011, 31 December
2012 and the nine months ended 30 September 2013, and the unaudited financial
statements for nine months ended 30 September 2012, of Clifford Development Pte.
Ltd. (Clifford Development which owns the OUE Bayfront Property prior to its transfer
to OUE C-REIT); and
(b) the audited financial statements for the years ended 31 December 2011, 31 December
2012 and the nine months ended 30 September 2013 and the unaudited financial
statements for the nine months ended 30 September 2012, of Tecwell Limited and its
subsidiary, Lippo Realty (Shanghai) Limited (Lippo Realty Shanghai and collectively,
the Tecwell Group).
The aforementioned financial statements are hereinafter collectively referred to as the
Relevant Financial Statements.
The audited financial statements of the Tecwell Group for the years ended 31 December
2011, 31 December 2012 and the nine months ended 30 September 2013 were prepared in
accordance with Hong Kong Financial Reporting Standards and were audited by Ernst &
Young Hong Kong in accordance with Hong Kong Standards on Auditing. The unaudited
financial statements of Tecwell Group for the nine months ended 30 September 2012 were
prepared in accordance with Hong Kong Financial Reporting Standards and were reviewed
by Ernst & Young Hong Kong in accordance with Hong Kong Standards on Auditing. The
auditors reports on these financial statements were not subjected to any qualifications,
modifications or disclaimers.
The audited financial statements of Clifford Development for the years ended 31 December
2011, 31 December 2012 and the nine months ended 30 September 2013 were prepared in
accordance with Singapore Financial Reporting Standards and were audited by KPMG
Singapore in accordance with Singapore Standards on Auditing. The unaudited financial
statements of Clifford Development Pte. Ltd. for the nine months ended 30 September 2012
was prepared in accordance with Singapore Financial Reporting Standards and were
reviewed by KPMG Singapore in accordance with Singapore Standards on Auditing. The
auditors reports on these financial statements were not subjected to any qualifications,
modifications or disclaimers.
The Unaudited Pro Forma Financial Information has been compiled from the financial
statements disclosed above and is prepared on the basis of the accounting policies set out
in Section D and is to be read in conjunction with Section E.
C-3
Unaudited Pro Forma Statements of Financial Position
The Unaudited Pro Forma Statements of Financial Position as at 31 December 2012 and 30
September 2013 have been prepared to reflect the financial position of the Pro Forma Group
had it been in place and had the Acquisitions been completed on 31 December 2012 and 30
September 2013 respectively, pursuant to the terms set out in the Prospectus.
In arriving at the Unaudited Pro Forma Statement of Financial Position as at 31 December
2012, the following key adjustments were made:
Adjustments to reflect (i) the write-off of unamortised debt upfront cost of S$5.1 million
and prepaid legal cost of S$0.6 million relating to existing borrowings prior to the
Acquisitions; and (ii) the waiver of an amount receivable by the Tecwell Group from a
related party of S$37.3 million existing prior to the Acquisitions;
Adjustments to reflect (i) the proceeds of S$346.4 million arising from the issuance of
[433,000,000] Units at the Offering Price and the related issuance costs of S$29.2
million; (ii) the drawdown of new borrowings by the Pro Forma Group of S$[698.2]
million; and (iii) the debt related transaction costs incurred on the borrowings of S$16.8
million (net of service tax recoverable of S$1.2 million); and
Adjustments to reflect (i) the Acquisitions; (ii) the repayment of existing borrowings
(including interest payable) prior to the Acquisitions of S$177.6 million; (iii) the
termination of interest rate swaps and currency forward contracts entered into prior to
the Acquisitions at a cost of S$4.2 million; (iv) the settlement of related party balances
of S$7.7 million; (v) the reversal of deferred tax liabilities of S$90.4 million; and (vi) the
revaluation of Properties to their fair value of S$1,555.6 million based on the higher of
the valuations of the Properties undertaken by Savills Valuation and Professional
Services (S) Pte Ltd (Savills) and Colliers International Consultancy & Valuation
(Singapore) Pte Ltd (Colliers) and the related tax effect of S$30.8 million.
In arriving at the Unaudited Pro Forma Statement of Financial Position as at 30 September
2013, the following key adjustments were made:
Adjustments to reflect (i) the write-off of unamortised debt upfront cost of S$3.9 million
and prepaid legal costs of S$0.5 million relating to existing borrowings prior to the
Acquisitions; (ii) the waiver of an amount receivable by the Tecwell Group from a related
party of S$33.9 million and settlement of related party balances of S$3.6 million existing
prior to the Acquisitions; and (iii) the termination of interest rate swaps and currency
forward contracts entered prior to the Acquisitions at costs of S$7.7 million;
Adjustments to reflect (i) the proceeds of S$346.4 million arising from the issuance of
[433,000,000] Units at the Offering Price and the related issuance costs of S$29.2
million; (ii) the drawdown of new borrowings by the Pro Forma Group of S$[698.2]
million; and (iii) the debt related transaction costs incurred on the borrowings of S$16.8
million (net of service tax recoverable of S$1.2 million); and
Adjustments to reflect (i) the Acquisitions; (ii) the repayment of existing borrowings
(including interest payable) prior to the Acquisitions of S$186.0 million; (iii) the reversal
of deferred tax liabilities of S$83.2 million; and (iv) the revaluation of Properties to their
fair value of S$1,578.0 million based on the higher of the valuations of the Properties
undertaken by Savills and Colliers and the related tax effect of S$36.6 million.
C-4
In addition, the following key assumptions were made:
On the date of acquisition on 31 December 2012 and 30 September 2013, the
Acquisitions were undertaken at an aggregated purchase consideration (including the
related transaction costs) of S$1,144.2 million and S$1,148.9 million. S$[346.4] million
of the purchase consideration was settled in the form of Units and the remaining
consideration was settled in cash;
On the date of acquisition on 31 December 2012 and 30 September 2013, the
Properties were revalued to S$1,555.6 million and S$1,578.0 million, respectively;
No hedging of interest rate risk has been assumed for the pro forma periods; and
The exchange rates as at 31 December 2012 and 30 September 2013 are assumed to
be as follows:
31 December 2012 30 September 2013
S$ and Renminbi (RMB) S$0.1941 : RMB1.00 S$0.2037 : RMB1.00
Unaudited Pro Forma Statements of Total Return
The Unaudited Pro Forma Statements of Total Return have been prepared to reflect the
financial performance of the Pro Forma Group had it been in place and had the Acquisitions
been completed on 1 January 2011, pursuant to the terms set out in the Prospectus.
In arriving at the Unaudited Pro Forma Statement of Total Return for the year ended 31
December 2011, the following key adjustments were made:
Adjustments to reflect the financial performance of the OUE Bayfront Property based on
the results of Clifford Development after adjusting for income and expenses which are
not relevant to the property after the Acquisition;
Adjustments to reverse the change in fair value of the Lippo Plaza Property of S$16.1
million and the related tax effect of S$5.4 million recorded prior to the Acquisition;
Adjustments to (i) reverse the finance costs (including amortisation of debt upfront
costs) of S$3.9 million and the related tax effect relating to the borrowings that existed
prior to the Acquisitions; and (ii) reflect the finance costs (including commitment fees
and amortisation of debt related transaction costs) of S$15.4 million and the related tax
effect on the new borrowings drawn down by the Pro Forma Group; and
Adjustments to include the Managers management fees, the Trustees fee, the
Property Managers management fees, administrative and other trust expenses, and
withholding tax on the net income of Lippo Realty Shanghai.
C-5
In arriving at the Unaudited Pro Forma Statement of Total Return for the year ended 31
December 2012, the following key adjustments were made:
Adjustments to reflect the financial performance of the OUE Bayfront Property based on
the results of Clifford Development after adjusting for income and expenses which are
not relevant to the property after the Acquisition;
Adjustments to reverse the change in fair value of the Lippo Plaza Property of S$62.7
million and the related tax effect of S$17.4 million recorded prior to the Acquisition;
Adjustments to (i) reverse the change in fair value of the interest rate swaps and
currency forward contracts entered into prior to the Acquisitions of S$4.4 million and the
related tax effect; (ii) reverse the finance costs (including amortisation of debt upfront
costs) of S$6.0 million and the related tax effect relating to the borrowings that existed
prior to the Acquisitions; and (iii) reflect the finance costs (including commitment fees
and amortisation of debt related transaction costs) of S$16.1 million and the related tax
effect on the new borrowings drawn down by the Pro Forma Group; and
Adjustments to include the Managers management fees, the Trustees fee, the
Property Managers management fees, administrative and other trust expenses, and
withholding tax on the net income of Lippo Realty Shanghai.
In arriving at the Unaudited Pro Forma Statement of Total Return for nine months ended 30
September 2012, the following key adjustments were made:
Adjustments to reflect the financial performance of the OUE Bayfront Property based on
the results of Clifford Development after adjusting for income and expenses which are
not relevant to the property after the Acquisition;
Adjustments to reverse the change in fair value of the Lippo Plaza Property of S$68.9
million and the related tax effect of S$18.1 million recorded prior to the Acquisition;
Adjustments to (i) reverse the change in fair value of the interest rate swaps and
currency forward contracts entered into prior to the Acquisitions of S$0.3 million and the
related tax effect; (ii) reverse the finance costs (including amortisation of debt upfront
costs) of S$3.0 million and the related tax effect relating to the borrowings that existed
prior to the Acquisitions; and (iii) reflect the finance costs (including commitment fees
and amortisation of debt related transaction costs) of S$12.2 million and the related tax
effect on the new borrowings drawn down by the Pro Forma Group; and
Adjustments to include the Managers management fees, the Trustees fee, the
Property Managers management fees, administrative and other trust expenses, and
withholding tax on the net income of Lippo Realty Shanghai.
In arriving at the Unaudited Pro Forma Statement of Total Return for nine months ended 30
September 2013, the following key adjustments were made:
Adjustments to reflect the financial performance of the OUE Bayfront Property based on
the results of Clifford Development after adjusting for income and expenses which are
not relevant to the property after the Acquisition;
Adjustments to reverse the change in fair value of the Lippo Plaza Property of S$53.0
million and the related tax effect of S$12.1 million recorded prior to the Acquisition;
C-6
Adjustments to (i) reverse the change in fair value of the interest rate swaps and
currency forward contracts entered into prior to the Acquisitions of S$3.6 million and the
related tax effect; (ii) reverse the finance costs (including amortisation of debt upfront
costs) of S$9.2 million and the related tax effect relating to the borrowings that existed
prior to the Acquisitions; and (iii) reflect the finance costs (including commitment fees
and amortisation of debt related transaction costs) of S$11.4 million and the related tax
effect on the new borrowings drawn down by the Pro Forma Group; and
Adjustments to include the Managers management fees, the Trustees fee, the
Property Managers management fees, administrative and other trust expenses, and
withholding tax on the net income of Lippo Realty Shanghai.
In addition, the following key assumptions were made for each of the periods presented:
No income support is received from the Sponsor;
No performance fee has been assumed in the financial year ended 31 December 2011;
No hedging of interest rate risk has been assumed for the pro forma periods;
The effective interest expense on the borrowings drawn down by the Pro Forma Group
is estimated to be approximately 2.21%, 2.30%, 2.32% and 2.19% per annum (inclusive
all margins, debt upfront fees, legal fees and commitment fees) for the years ended 31
December 2011 and 31 December 2012, and the nine months ended 30 September
2012 and 30 September 2013, respectively;
The Properties are recorded at cost at the acquisition date, being the purchase
consideration paid plus related acquisition costs, and there is no change in the fair
values of the Properties thereafter;
The Managers management fees, the Trustees fee and the Property Managers
management fees were computed based on the formula as set out in Section E; and
The exchange rates are assumed to be as follows:
Year ended
31 December 2011
Year ended
31 December 2012
Nine months ended
30 September 2012
Nine months ended
30 September 2013
S$ and RMB S$0.1992 : RMB1.00 S$0.1994 : RMB1.00 S$0.2012 : RMB1.00 S$0.2017 : RMB1.00
Unaudited Pro Forma Statements of Cash Flows
The Unaudited Pro Forma Statements of Cash Flows for the year ended 31 December 2012
and the nine months ended 30 September 2013 have been prepared to reflect the cash flows
of the Pro Forma Group had it been in place and had the Acquisitions been completed on 1
January 2012, pursuant to the terms set out in the Prospectus.
In arriving at the Unaudited Pro Forma Statement of Cash Flows for the year ended 31
December 2012, the following key adjustments were made:
Adjustments to reflect (i) the proceeds of S$346.4 million arising from the issuance of
[433,000,000] Units at the Offering Price and the related issuance costs of S$29.2
million; and (ii) the drawdown of new borrowings by the Pro Forma Group of S$[698.2]
million and the debt related transaction costs incurred on the borrowings of S$16.8
million (net of service tax recoverable of S$1.2 million);
C-7
Adjustments to reflect (i) the Acquisitions; (ii) the repayment of existing borrowings
(including interest payable) prior to the Acquisitions of S$60.3 million; (iii) the settlement
of related party balances of S$96.5 million; and (iv) the release of the restricted cash
balance of S$5.2 million, following the repayment of the borrowings as described
above;
Adjustments to (i) reflect the relevant income and expenses relating to the OUE
Bayfront Property; (ii) reverse the change in fair value of the Lippo Plaza Property of
S$62.7 million and the related tax effect recorded prior to the Acquisition; (iii) reverse
the change in fair value of the interest rate swaps and currency forward contracts
entered into prior to the Acquisitions of S$4.4 million and the related tax effect; (iv)
reverse the finance costs (including amortisation of debt upfront costs) of S$6.0 million
and the related tax effect relating to the borrowings that existed prior to the Acquisitions;
(v) reflect the finance costs (including commitment fees and amortisation of debt related
transaction costs) of S$16.1 million and the related tax effect on the new borrowings
drawn down by the Pro Forma Group; and (vi) include the Managers management fees,
the Trustees fee, the Property Managers management fees, administrative and other
trust expenses, and withholding tax on the net income of Lippo Realty Shanghai; and
Adjustment to reflect 100% of the taxable income available for distribution to the
Unitholders for the period from 1 January 2012 to 30 June 2012 together with the
distribution from capital which is attributed to the time that may be required for tax and
regulatory clearance in China, giving rise to a delay in the repatriation of dividend from
Lippo Realty Shanghai. Distributions to Unitholders are paid on a half-yearly basis, in
arrears.
In arriving at the Unaudited Pro Forma Statement of Cash Flows for the nine months ended
30 September 2013, the following key adjustments were made:
Adjustments to reflect (i) the cash balance brought forward from the financial year
ended 31 December 2012; and (ii) the release of restricted cash balance of S$0.2
million;
Adjustments to (i) reflect the relevant income and expenses relating to the OUE
Bayfront Property; (ii) reverse the change in fair value of the Lippo Plaza Property of
S$53.0 million and the related tax effect recorded prior to the Acquisition; (iii) reverse
the change in fair value of the interest rate swaps and currency forward contracts
entered into prior to the Acquisitions of S$3.6 million and the related tax effect; (iv)
reverse the finance costs (including amortisation of debt upfront costs) of S$9.2 million
and the related tax effect relating to the borrowings that existed prior to the Acquisitions;
(v) reflect the finance costs (including commitment fees and amortisation of debt related
transaction costs) of S$11.4 million and the related tax effect on the new borrowings
drawn down by the Pro Forma Group; and (vi) include the Managers management fees,
the Trustees fee, the Property Managers management fees, administrative and other
trust expenses, and withholding tax on the net income of Lippo Realty Shanghai; and
Adjustment to reflect 100% of the taxable income available for distribution to the
Unitholders for the period from 1 July 2012 to 30 June 2013 together with the distribution
from capital which is attributed to the time that may be required for tax and regulatory
clearance in China, giving rise to a delay in the repatriation of dividend from Lippo Realty
Shanghai. Distributions to Unitholders are paid on a half-yearly basis, in arrears.
C-8
In addition, the following key assumptions were made:
On 1 January 2012, the Acquisitions were undertaken at an aggregated purchase
consideration (including the related transaction costs) of S$1,155.1 million. S$276.0
million of the purchase consideration was settled in the form of Units to be issued to the
Vendor and the remaining consideration was settled in cash;
No income support is received from the Sponsor;
No performance fee has been assumed in the financial year ended 31 December 2012;
No hedging of interest rate risk has been assumed for the pro forma periods;
The effective interest expense on the borrowings drawn down by the Pro Forma Group
is estimated to be approximately 2.30% and 2.19% per annum (inclusive all margins,
debt upfront fees, legal fees and commitment fees) for the year ended 31 December
2012 and the nine months ended 30 September 2013 respectively, and is fully paid in
cash on the last day of the period presented;
The Properties are recorded at cost at the acquisition date, being the purchase
consideration paid plus related acquisition costs, and there is no change in the fair
values of the Properties thereafter;
The Trustees fee and the Property Managers fees payable in cash are fully settled on
the last day of the period presented. The Managers fees payable in the form of Units
are settled on a quarterly basis, in arrears in the following quarter; and
The exchange rates are assumed to be as follows:
1 January 2012
Year ended 31
December 2012 31 December 2012
S$ and RMB S$0.2118 : RMB1.00 S$0.1994 : RMB1.00 S$0.1941 : RMB1.00
Nine months ended
30 September 2013 30 September 2013
S$ and RMB S$0.2017 : RMB1.00 S$0.2037 : RMB1.00
C-9
C UNAUDITED PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Statements of Financial Position
The Unaudited Pro Forma Statements of Financial Position as at 31 December 2012 and 30
September 2013 have been prepared for inclusion in the Prospectus and are presented
below. Details of the pro forma adjustments and assumptions made are set out in the Basis
of Preparation of Pro Forma Financial Information in Section B of the Prospectus.
As at 31 December 2012 Note
Audited
Statement of
Financial
Position*
Pro Forma Adjustments
Unaudited Pro
Forma
Statement of
Financial
Position Note (a) Note (b) Note (c)
S$000 S$000 S$000 S$000 S$000
Non-current assets
Investment properties 3 442,198 1,112,820 1,555,018
Intangible asset 4 33,000 33,000
Plant and equipment 108 108
Prepayments 594 594
442,900 1,145,820 1,588,720
Current assets
Trade and other receivables 5 38,279 (37,890) 1,174 1,563
Cash and cash equivalents 6 9,774 997,462 (970,865) 36,371
48,053 (37,890) 998,636 (970,865) 37,934
Total assets 490,953 (37,890) 998,636 174,955 1,626,654
Non-current liabilities
Loans and borrowings 7 170,802 5,094 681,450 (175,896) 681,450
Financial derivatives 4,184 (4,184)
Trade and other payables 8 11,713 11,713
Deferred tax liabilities 9 90,392 (59,577) 30,815
265,378 5,094 681,450 (227,944) 723,978
Current liabilities
Loans and borrowings 7 1,359 (1,359)
Trade and other payables 8 22,392 (7,604) 14,788
Current tax payable 2,363 2,363
26,114 (8,963) 17,151
Total liabilities 291,492 5,094 681,450 (236,907) 741,129
Net assets 199,461 (42,984) 317,186 411,862 885,525
Represented by:
Unitholders funds 10 199,461 (42,984) 317,186 411,862 885,525
* Relates to the Tecwell Group
Notes to Pro Forma Adjustments:
(a) Adjustments to reflect (i) the write-off of unamortised debt upfront cost and prepaid legal
cost relating to existing borrowings prior to the Acquisitions; and (ii) the waiver of an
amount receivable by the Tecwell Group from a related party existing prior to the
Acquisitions.
(b) Adjustments to reflect (i) the proceeds arising from the issuance of [433,000,000] Units
at the Offering Price and the related issuance costs; (ii) the drawdown of new
borrowings by the Pro Forma Group; and (iii) the debt related transaction costs incurred
on the borrowings (net of service tax recoverable).
(c) Adjustments to reflect (i) the Acquisitions; (ii) the repayment of existing borrowings
(including interest payable) prior to the Acquisitions; (iii) the termination of interest rate
swaps and currency forward contracts entered into prior to the Acquisitions; (iv) the
settlement of related party balances; (v) the reversal of deferred tax liabilities and
prepayments; and (vi) the revaluation of Properties to their fair value of S$1,555.6
million based on the higher of the valuations of the Properties undertaken by Savills and
Colliers and the related tax effect.
C-10
As at 30 September 2013 Note
Audited
Statement of
Financial
Position*
Pro Forma Adjustments
Unaudited Pro
Forma
Statement of
Financial
Position Note (a) Note (b) Note (c)
S$000 S$000 S$000 S$000 S$000
Non-current assets
Investment properties 3 413,491 1,164,556 1,578,047
Intangible asset 4 33,000 33,000
Plant and equipment 110 110
Financial derivatives 155 (155)
413,756 (155) 1,197,556 1,611,157
Current assets
Trade and other receivables 5 34,810 (34,402) 1,176 1,584
Cash and cash equivalents 6 16,327 (3,565) 997,425 (970,525) 39,662
51,137 (37,967) 998,601 (970,525) 41,246
Total assets 464,893 (38,122) 998,601 227,031 1,652,403
Non-current liabilities
Loans and borrowings 7 180,488 3,888 681,416 (184,376) 681,416
Financial derivatives 7,845 (7,845)
Trade and other payables 8 9,398 9,398
Deferred tax liabilities 9 83,223 (46,589) 36,634
271,556 (3,957) 681,416 (221,567) 727,448
Current liabilities
Loans and borrowings 7 1,426 (1,426)
Trade and other payables 8 19,993 (3,565) 2,872 19,300
Current tax payable 2,671 2,671
24,090 (3,565) 1,446 21,971
Total liabilities 295,646 (7,522) 681,416 (220,121) 749,419
Net assets 169,247 (30,600) 317,185 447,152 902,984
Represented by:
Unitholders funds 10 169,247 (30,600) 317,185 447,152 902,984
* Relates to the Tecwell Group
Notes to Pro Forma Adjustments:
(a) Adjustments to reflect (i) the write-off of unamortised debt upfront cost and prepaid legal
cost relating to existing borrowings prior to the Acquisitions; (ii) the waiver of an amount
receivable by the Tecwell Group from a related party and settlement of related party
balances existing prior to the Acquisitions; and (iii) the termination of interest rate
swaps and currency forward contracts entered prior to the Acquisitions.
(b) Adjustments to reflect (i) the proceeds arising from the issuance of [433,000,000] Units
at the Offering Price and the related issuance costs; (ii) the drawdown of new
borrowings by the Pro Forma Group; and (iii) the debt related transaction costs incurred
on the borrowings (net of service tax recoverable).
(c) Adjustments to reflect (i) the Acquisitions; (ii) the repayment of existing borrowings
(including interest payable) prior to the Acquisitions; (iii) the reversal of deferred tax
liabilities; and (iv) the revaluation of Properties to their fair value of S$1,578.0 million
based on the higher of the valuations of the Properties undertaken by Savills and
Colliers and the related tax effect.
C-11
Unaudited Pro Forma Statement of Total Return
The Unaudited Pro Forma Statements of Total Return of the Pro Forma Group for the years
ended 31 December 2011 and 31 December 2012, and the nine months ended 30 September
2012 and 30 September 2013 have been prepared for inclusion in the Prospectus and are
presented below. Details of the pro forma adjustments and assumptions made are set out in
the Basis of Preparation of Pro Forma Financial Information in Section B.
Year ended
31 December 2011 Note
Audited
Statement
of Total
Return*
Pro Forma Adjustments
Unaudited
Pro Forma
Statement
of Total
Return Note (a) Note (b) Note (c) Note (d)
S$000 S$000 S$000 S$000 S$000 S$000
Gross revenue 11 21,999 14,515 36,514
Property operating
expenses 12 (5,350) (5,495) (516) (11,361)
Net property income 16,649 9,020 (516) 25,153
Other income 607 607
Managers base fee (5,046) (5,046)
Trustees fee (323) (323)
Other expenses (61) (39) (2,485) (2,585)
Finance income 13 164 164
Finance costs 13 (3,870) (11,531) (15,401)
Net income 13,489 8,981 (11,531) (8,370) 2,569
Net change in fair value
of investment properties 16,145 (16,145)
Total return for
the year before tax 29,634 8,981 (16,145) (11,531) (8,370) 2,569
Income tax expense 14 (7,538) 5,431 198 (1,269) (3,178)
Total return for
the year 22,096 8,981 (10,714) (11,333) (9,639) (609)
* Relates to the Tecwell Group
Notes to Pro Forma Adjustments:
(a) Adjustments to reflect the financial performance of the OUE Bayfront Property based on
the results of Clifford Development after adjusting for income and expenses which are
not relevant to the property after the Acquisition.
(b) Adjustments to reverse the change in fair value of the Lippo Plaza Property and the
related tax effect recorded prior to the Acquisition.
(c) Adjustments to (i) reverse the finance costs (including amortisation of debt upfront
costs) and the related tax effect relating to the borrowings that existed prior to the
Acquisitions; and (ii) reflect the finance costs (including commitment fees and
amortisation of debt related transaction costs) and the related tax effect on the new
borrowings drawn down by the Pro Forma Group.
(d) Adjustments to include the Managers management fees, the Trustees fee, the
Property Managers management fees, administrative and other trust expenses, and
withholding tax on the net income of Lippo Realty Shanghai.
C-12
Year ended
31 December 2012 Note
Audited
Statement
of Total
Return*
Pro Forma Adjustments
Unaudited
Pro Forma
Statement
of Total
Return Note (a) Note (b) Note (c) Note (d)
S$000 S$000 S$000 S$000 S$000 S$000
Gross revenue 11 22,820 42,633 65,453
Property operating
expenses 12 (6,016) (6,699) (1,751) (14,466)
Net property income 16,804 35,934 (1,751) 50,987
Other income 423 60 483
Managers base fee (4,880) (4,880)
Managers performance
fee (6,176) (6,176)
Trustees fee (313) (313)
Other expenses (68) (20) (2,485) (2,573)
Finance income 13 242 242
Finance costs 13 (10,394) (5,680) (16,074)
Net income 7,007 35,974 (5,680) (15,605) 21,696
Net change in fair value
of investment properties 62,682 (62,682)
Total return for
the year before tax 69,689 35,974 (62,682) (5,680) (15,605) 21,696
Income tax expense 14 (19,174) 17,414 (1,432) (1,157) (4,349)
Total return for
the year 50,515 35,974 (45,268) (7,112) (16,762) 17,347
* Relates to the Tecwell Group
Notes to Pro Forma Adjustments:
(a) Adjustments to reflect the financial performance of the OUE Bayfront Property based on
the results of Clifford Development after adjusting for income and expenses which are
not relevant to the property after the Acquisition.
(b) Adjustments to reverse the change in fair value of the Lippo Plaza Property and the
related tax effect recorded prior to the Acquisition.
(c) Adjustments to (i) reverse the change in fair value of the interest rate swaps and
currency forward contracts entered into prior to the Acquisitions and the related tax
effect; (ii) reverse the finance costs (including amortisation of debt upfront costs) and
the related tax effect relating to the borrowings that existed prior to the Acquisitions; and
(iii) reflect the finance costs (including commitment fees and amortisation of debt
related transaction costs) and the related tax effect on the new borrowings drawn down
by the Pro Forma Group.
(d) Adjustments to include the Managers management fees, the Trustees fee, the
Property Managers management fees, administrative and other trust expenses, and
withholding tax on the net income of Lippo Realty Shanghai.
C-13
Nine months ended
30 September 2012 Note
Audited
Statement
of Total
Return*
Pro Forma Adjustments
Unaudited
Pro Forma
Statement
of Total
Return Note (a) Note (b) Note (c) Note (d)
S$000 S$000 S$000 S$000 S$000 S$000
Gross revenue 11 17,240 31,593 48,833
Property operating
expenses 12 (4,353) (5,024) (1,296) (10,673)
Net property income 12,887 26,569 (1,296) 38,160
Other income 329 11 340
Managers base fee (3,660) (3,660)
Managers performance
fee (4,950) (4,950)
Trustees fee (235) (235)
Other expenses (29) 25 (1,864) (1,868)
Finance income 13 223 223
Finance costs 13 (3,320) (8,831) (12,151)
Net income 10,090 26,605 (8,831) (12,005) 15,859
Net change in fair value
of investment properties 68,918 (68,918)
Total return for the
period before tax 79,008 26,605 (68,918) (8,831) (12,005) 15,859
Income tax expense 14 (19,572) 18,096 52 (987) (2,411)
Total return for
the period 59,436 26,605 (50,822) (8,779) (12,992) 13,448
* Relates to the Tecwell Group
Notes to Pro Forma Adjustments:
(a) Adjustments to reflect the financial performance of the OUE Bayfront Property based on
the results of Clifford Development after adjusting for income and expenses which are
not relevant to the property after the Acquisition.
(b) Adjustments to reverse the change in fair value of the Lippo Plaza Property and the
related tax effect recorded prior to the Acquisition.
(c) Adjustments to (i) reverse the change in fair value of the interest rate swaps and
currency forward contracts entered into prior to the Acquisitions and the related tax
effect; (ii) reverse the finance costs (including amortisation of debt upfront costs) and
the related tax effect relating to the borrowings that existed prior to the Acquisitions; and
(iii) reflect the finance costs (including commitment fees and amortisation of debt
related transaction costs) and the related tax effect on the new borrowings drawn down
by the Pro Forma Group.
(d) Adjustments to include the Managers management fees, the Trustees fee, the
Property Managers management fees, administrative and other trust expenses, and
withholding tax on the net income of Lippo Realty Shanghai.
C-14
Nine months ended
30 September 2013 Note
Audited
Statement
of Total
Return*
Pro Forma Adjustments
Unaudited
Pro Forma
Statement
of Total
Return Note (a) Note (b) Note (c) Note (d)
S$000 S$000 S$000 S$000 S$000 S$000
Gross revenue 11 17,208 35,500 52,708
Property operating
expenses 12 (4,342) (6,506) (1,435) (12,283)
Net property income 12,866 28,994 (1,435) 40,425
Other income 532 532
Managers base fee (3,718) (3,718)
Managers performance
fee (202) (202)
Trustees fee (238) (238)
Other expenses (31) (1) (1,864) (1,896)
Finance income 13 183 183
Finance costs 13 (12,787) 1,341 (11,446)
Net income 763 28,993 1,341 (7,457) 23,640
Net change in fair value
of investment properties (52,968) 52,968
Total return for
the period before tax (52,205) 28,993 52,968 1,341 (7,457) 23,640
Income tax expense 14 10,616 (12,105) (2,312) (785) (4,586)
Total return for
the period (41,589) 28,993 40,863 (971) (8,242) 19,054
* Relates to the Tecwell Group
Notes to Pro Forma Adjustments:
(a) Adjustments to reflect the financial performance of the OUE Bayfront Property based on
the results of Clifford Development after adjusting for income and expenses which are
not relevant to the property after the Acquisition.
(b) Adjustments to reverse the change in fair value of the Lippo Plaza Property and the
related tax effect recorded prior to the Acquisition.
(c) Adjustments to (i) reverse the change in fair value of the interest rate swaps and
currency forward contracts entered into prior to the Acquisitions and the related tax
effect; (ii) reverse the finance costs (including amortisation of debt upfront costs) and
the related tax effect relating to the borrowings that existed prior to the Acquisitions; and
(iii) reflect the finance costs (including commitment fees and amortisation of debt
related transaction costs) and the related tax effect on the new borrowings drawn down
by the Pro Forma Group.
(d) Adjustments to include the Managers management fees, the Trustees fee, the
Property Managers management fees, administrative and other trust expenses, and
withholding tax on the net income of Lippo Realty Shanghai.
C-15
Unaudited Pro Forma Statements of Cash Flows
The Unaudited Pro Forma Statements of Cash Flows for the year ended 31 December 2012
and the nine months ended 30 September 2013 have been prepared for inclusion in the
Prospectus and are presented below. Details of the pro forma adjustments and assumptions
made are set out in the Basis of Preparation of Pro Forma Financial Information set out in
Section B.
Year ended
31 December 2012
Audited
Statement
of Cash
Flows*
Pro Forma Adjustments
Unaudited
Pro Forma
Statement
of Cash
Flows Note (a) Note (b) Note (c) Note (d)
S$000 S$000 S$000 S$000 S$000 S$000
Cash flow from
operating activities
Total return for the year 50,517 (26,994) 23,523
Adjustments for:
Managers management
fees payable in units 4,880 4,880
Fair value losses on
derivative instruments 4,361 (4,361)
Finance income (80) (80)
Finance costs 6,033 10,041 16,074
Depreciation 6 6
Loss on disposal of plant
and equipment 9 9
Net change in fair value of
investment properties (62,682) 62,682
Income tax expense 19,174 (14,825) 4,349
Operating income before
working capital changes 17,338 31,423 48,761
Changes in working
capital:
Trade and other
receivables (1,216) (1,179) (2,395)
Trade and other payables (488) 2,589 2,101
Cash generated from
operating activities 15,634 (1,179) 34,012 48,467
Tax paid (2,859) (2,859)
Net cash from
operating activities 12,775 (1,179) 34,012 45,608
Cash flows from
investment activities
Acquisition of property and
related assets and
liabilities, including
acquisition costs (648,223) (648,223)
Acquisition of subsidiaries,
net of cash acquired (142,200) (142,200)
Acquisition of plant and
equipment (25) (25)
Interest received 80 80
Net cash used in
investing activities 55 (790,423) (790,368)
Cash flows from
financing activities
Proceeds from issue of
units 346,400 346,400
Payment of transaction
costs related to issue of
units (29,214) (29,214)
Distribution to unitholders (16,572) (16,572)
C-16
Year ended
31 December 2012
Audited
Statement
of Cash
Flows*
Pro Forma Adjustments
Unaudited
Pro Forma
Statement
of Cash
Flows Note (a) Note (b) Note (c) Note (d)
S$000 S$000 S$000 S$000 S$000 S$000
Repayments to related
corporations (121,705) (96,498) (218,203)
Movement in restricted
cash (5,193) 5,193
Interest paid (11,035) (10,041) (21,076)
Proceeds from borrowings 183,123 698,225 881,348
Repayment of borrowings (57,193) (60,262) (117,455)
Payment for transaction
costs related to loans and
borrowings (16,838) (16,838)
Net cash from
financing activities (12,003) 998,573 (151,567) (10,041) (16,572) 808,390
Net increase in cash and
cash equivalents 827 997,394 (941,990) 23,971 (16,572) 63,630
Cash and cash equivalents
at beginning of the year 4,059 (4,059)
Effect of exchange rate
fluctuations on cash held (1) (235) (236)
Cash and cash
equivalents at end of
the year 4,885 997,394 (946,284) 23,971 (16,572) 63,394
* Relates to the Tecwell Group
Notes to Pro Forma Adjustments
(a) Adjustments to reflect (i) the proceeds arising from the issuance of [433,000,000] Units
at the Offering Price and the related issuance costs; and (ii) the drawdown of new
borrowings by the Pro Forma Group and the upfront fee incurred on the borrowings (net
of service tax recoverable).
(b) Adjustments to reflect (i) the Acquisitions; (ii) the repayment of existing borrowings
(including interest payable) prior to the Acquisitions; (iii) the settlement of related party
balances; and (iv) the release of the restricted cash balance, following the repayment
of the borrowings as described above.
(c) Adjustments to (i) reflect the relevant income and expenses relating to the OUE
Bayfront Property; (ii) reverse the change in fair value of the Lippo Plaza Property and
the related tax effect recorded prior to the Acquisition; (iii) reverse the change in fair
value of the interest rate swaps and currency forward contracts entered into prior to the
Acquisitions and the related tax effect; (iv) reverse the finance costs (including
amortisation of debt upfront costs) and the related tax effect relating to the borrowings
that existed prior to the Acquisitions; (v) reflect the finance costs (including commitment
fees and amortisation of debt related transaction costs) and the related tax effect on the
new borrowings drawn down by the Pro Forma Group; and (vi) include the Managers
management fees, the Trustees fee, the Property Managers management fees,
administrative and other trust expenses, and withholding tax on the net income of Lippo
Realty Shanghai.
(d) Adjustment to reflect 100% of the taxable income available for distribution to the
Unitholders for the period from 1 January 2012 to 30 June 2012 together with the
distributions from capital which is attributed to the time that may be required for tax and
regulatory clearance in China, giving rise to a delay in the repatriation of dividend from
Lippo Realty Shanghai.
C-17
Nine months ended
30 September 2013
Audited
Statement
of Cash
Flows*
Pro Forma Adjustments
Unaudited
Pro Forma
Statement
of Cash
Flows Note (a) Note (b) Note (c)
S$000 S$000 S$000 S$000 S$000
Cash flow from
operating activities
Total return for the period (41,589) 60,643 19,054
Adjustments for:
Managers management fees
payable in units 3,718 3,718
Fair value losses on
derivative instruments 3,556 (3,556)
Finance income (126) (126)
Finance costs 9,231 2,215 11,446
Depreciation 5 5
Loss on disposal of
plant and equipment 1 1
Net change in fair value of
investment properties 52,968 (52,968)
Income tax expense (10,616) 15,202 4,586
Operating income before
working capital changes 13,430 25,254 38,684
Changes in working capital:
Trade and other receivables 149 149
Trade and other payables 1,040 3,097 4,137
Cash generated from
operating activities 14,619 28,351 42,970
Tax paid (1,261) (1,261)
Net cash from
operating activities 13,358 28,351 41,709
Cash flows from
investment activities
Acquisition of plant and
equipment (3) (3)
Acquisition of investment
properties (1,947) (1,947)
Interest received 126 126
Net cash used in
investing activities (1,824) (1,824)
Cash flows from
financing activities
Distribution to unitholders (30,128) (30,128)
Repayments to related
corporations (19) (19)
Movement in restricted cash (225) 225
Interest paid (8,023) (2,215) (10,238)
Proceeds from borrowings 3,719 3,719
Repayment of borrowings (1,070) (1,070)
Net cash used in
financing activities (5,618) 225 (2,215) (30,128) (37,736)
C-18
Nine months ended
30 September 2013
Audited
Statement
of Cash
Flows*
Pro Forma Adjustments
Unaudited
Pro Forma
Statement
of Cash
Flows Note (a) Note (b) Note (c)
S$000 S$000 S$000 S$000 S$000
Net increase in cash and
cash equivalents 5,916 225 26,136 (30,128) 2,149
Cash and cash equivalents at
beginning of the period 4,864 58,530 63,394
Effect of exchange rate
fluctuations on cash held 110 110
Cash and cash equivalents
at end of the period 10,890 58,755 26,136 (30,128) 65,653
* Relates to the Tecwell Group
Notes to Pro Forma Adjustments
(a) Adjustments to reflect (i) the cash balance brought forward from the financial year
ended 31 December 2012; and (ii) the release of restricted cash balance.
(b) Adjustments to (i) reflect the relevant income and expenses relating to the OUE
Bayfront Property; (ii) reverse the change in fair value of the Lippo Plaza Property and
the related tax effect recorded prior to the Acquisition; (iii) reverse the change in fair
value of the interest rate swaps and currency forward contracts entered into prior to the
Acquisitions and the related tax effect; (iv) reverse the finance costs (including
amortisation of debt upfront costs) and the related tax effect relating to the borrowings
that existed prior to the Acquisitions; (v) reflect the finance costs (including commitment
fees and amortisation of debt related transaction costs) and the related tax effect on the
new borrowings drawn down by the Pro Forma Group; and (vi) include the Managers
management fees, the Trustees fee, the Property Managers management fees,
administrative and other trust expenses, and withholding tax on the net income of Lippo
Realty Shanghai.
(c) Adjustment to reflect 100% of the taxable income available for distribution to the
Unitholders for the period from 1 July 2012 to 30 June 2013 together with the
distributions from capital which is attributed to the time that may be required for tax and
regulatory clearance in China, giving rise to a delay in the repatriation of dividend from
Lippo Realty Shanghai.
C-19
D NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION
1 Basis of preparation
(a) Statement of compliance
The Unaudited Pro Forma Financial Information is prepared in accordance with the
basis set out in Section B and presented in accordance with Statement of
Recommended Accounting Practice 7 Reporting Framework for Unit Trusts
(RAP 7) issued by the Institute of Singapore Chartered Accountants (ISCA) and
the applicable requirements of the Code of Collective Investment Schemes (CIS
Code) issued by the Monetary Authority of Singapore (MAS) and the provisions
of the OUE C-REIT Trust Deed.
(b) Basis of measurement
The financial information on the Pro Forma Financial Information is prepared on
the historical cost basis except as disclosed in the accounting policies below.
(c) Functional and presentation currency
The financial information is presented in Singapore Dollars (S$) which is OUE
C-REITs functional currency. All Unaudited Pro Forma Financial Information
presented in S$ has been rounded to the nearest thousand, unless otherwise
stated.
(d) Use of estimates and judgements
The preparation of the financial information requires management to make
judgements, estimates and assumptions that affect the application of accounting
policies and reported amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised and any future periods affected.
Information about critical judgments in applying accounting policies that have the
most significant effect on the amounts recognised in the financial information is
included in Note 3 Valuation of investment properties.
2 Significant accounting policies
The accounting policies set out below have been applied consistently throughout the
periods presented in this financial information, and have been applied consistently by
the Pro Forma Group.
(a) Basis of consolidation
(i) Business combinations
Business combinations are accounted for using the acquisition method as at
the acquisition date, which is the date on which control is transferred to the
Pro Forma Group. Control is the power to govern the financial and operating
C-20
policies of an entity so as to obtain benefits from its activities. In assessing
control, the Pro Forma Group takes into consideration potential voting rights
that are currently exercisable.
The consideration transferred does not include amounts related to the
settlement of pre-existing relationships. Such amounts are generally
recognised in the statement of total return.
Any contingent consideration payable is recognised at fair value at the
acquisition date. If the contingent consideration is classified as equity, it is not
remeasured and settlement is accounted for within equity. Otherwise,
subsequent changes to the fair value of the contingent consideration are
recognised in the statement of total return.
Costs related to the acquisition, other than those associated with the issue of
debt or equity securities, that the Pro Forma Group incurs in connection with
a business combination are expensed as incurred.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Pro Forma Group.
The accounting policies of subsidiaries have been changed when necessary
to align them with the policies adopted by the OUE C-REIT. Losses applicable
to the non-controlling interests in a subsidiary are allocated to the non-
controlling interests even if doing so causes the non-controlling interests to
have a deficit balance.
(iii) Loss of control
Upon the loss of control, the Pro Forma Group derecognises the assets and
liabilities of the subsidiary, any non-controlling interests and the other
components of equity related to the subsidiary. Any surplus or deficit arising
on the loss of control is recognised in the statement of total return. If the Pro
Forma Group retains any interest in the previous subsidiary, then such
interest is measured at fair value at the date that control is lost.
Subsequently, it is accounted for as an equity-accounted investee or as an
available-for-sale financial asset depending on the level of influence
retained.
(iv) Transactions eliminated on consolidation
Intra-group balances and any unrealised income or expenses arising from
intra-group transactions, are eliminated in preparing the financial information.
(b) Foreign currency
(i) Foreign currency transactions
Items included in the financial statements of each entity in the Pro Forma
Group are measured using the currency that best reflects the economic
substance of the underlying events and circumstances relevant to that entity
(the functional currency).
C-21
Transactions in foreign currencies are translated to the respective functional
currencies of the Pro Forma Groups entities at exchange rates at the dates
of the transactions. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated to the functional currency at
the exchange rate at that date. The foreign currency gain or loss on monetary
items is the difference between amortised cost in the functional currency at
the beginning of the year, adjusted for effective interest and payments during
the year, and the amortised cost in foreign currency translated at the
exchange rate at the end of the reporting year.
Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value are retranslated to the functional currency at the
exchange rate at the date on which the fair value was determined. Non-
monetary items in a foreign currency that are measured in terms of historical
costs are translated using the exchange rate at the date of the transaction.
Foreign currency differences arising from retranslation are recognised in the
statement of total return, except for differences arising from the retranslation of
a financial liability designated as a hedge of the net investment in a foreign
operation, or qualifying cash flow hedges, which are recognised in unitholders
funds.
(ii) Foreign operations
The assets and liabilities of foreign operations, including fair value
adjustments arising from the acquisition, are translated to Singapore dollars
at exchange rates prevailing at the reporting date. The income and expenses
of foreign operations are translated to Singapore dollars at exchange rates at
the dates of the transactions. Fair value adjustments arising from the
acquisition of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
Foreign currency differences are recognised in other comprehensive income,
and presented in the foreign currency translation reserve (translation
reserve) in equity. However, if the operation is not a wholly-owned
subsidiary, then the relevant proportionate share of the translation difference
is allocated to the non-controlling interests. When a foreign operation is
disposed of such that control, significant influence or joint control is lost, the
cumulative amount in the translation reserve related to that foreign operation
is transferred to the statement of total return as part of the gain or loss on
disposal. When the Pro Forma Group disposes of only part of its interest in
a subsidiary that includes a foreign operation while retaining control, the
relevant proportion of the cumulative amount is reattributed to non-controlling
interests.
When the settlement of a monetary item receivable from or payable to a
foreign operation is neither planned nor likely in the foreseeable future,
foreign exchange gains and losses arising from such a monetary item are
considered to form part of a net investment in a foreign operation. These are
recognised in unitholders funds.
(c) Investment properties
Investment properties are properties held either to earn rental income or for capital
appreciation or both. They are not for sale in the ordinary course of business, used
in the production or supply of goods or services, or for administrative purposes.
C-22
Investment properties are initially recognised at cost, including transaction costs,
and subsequently at fair value with any change therein recognised in the
statement of total return. Cost includes expenditure that is directly attributable to
the acquisition of the investment properties. Fair value is determined in
accordance with the Trust Deed, which requires the investment properties to be
valued by independent registered valuers in such manner and frequency required
under the Property Funds Appendix of the CIS Code issued by the MAS.
Investment properties are subject to renovations or improvements at regular
interval. The costs of major renovations and improvements are capitalised and the
carrying amounts of the replaced components are written off to the statement of
total return.
When an investment property is disposed of, the resulting gain or loss recognised
in the statement of total return is the difference between net disposal proceeds and
the carrying amount of the property.
(d) Intangible asset
Intangible asset acquired by the Pro Forma Group is measured initially at cost.
Following initial recognition, the intangible asset is measured at cost less any
accumulated amortisation and impairment losses.
The intangible asset is amortised in the statement of total return on a systematic
basis over its estimated useful life of 5 years. Intangible asset is tested for
impairment as described in Note 2(f).
(e) Financial instruments
(i) Non-derivative financial assets
The Pro Forma Group initially recognises loans and receivables and deposits
on the date that they are originated. All other financial assets (including
assets designated at fair value through the statement of total return) are
recognised initially on the trade date, which is the date that the Pro Forma
Group becomes a party to the contractual provisions of the instrument.
The Pro Forma Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or it transfers the rights to
receive the contractual cash flows on the financial asset in a transaction in
which substantially all the risks and rewards of ownership of the financial
asset are transferred. Any interest in transferred financial assets that is
created or retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Pro Forma Group
has a legal right to offset the amounts and intends either to settle on a net
basis or to realise the asset and settle the liability simultaneously.
The Pro Forma Group classifies non-derivative financial assets into the loans
and receivables category.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable
payments that are not quoted in an active market. Such assets are
recognised initially at fair value plus any directly attributable transaction
C-23
costs. Subsequent to initial recognition, loans and receivables are measured
at amortised cost using the effective interest method, less any impairment
losses.
Loans and receivables comprise trade and other receivables and cash and
cash equivalents.
Cash and cash equivalents comprise cash balances and bank deposits.
(ii) Non-derivative financial liabilities
The Pro Forma Group initially recognises debt securities issued and
subordinated liabilities on the date that they are originated. All other financial
liabilities are recognised initially on the trade date at which the Group
becomes a party to the contractual provisions of the instrument.
The Pro Forma Group derecognises a financial liability when its contractual
obligations are discharged, cancelled or expired.
Financial assets and liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Pro Forma Group
has a legal right to offset the amounts and intends either to settle on a net
basis or to realise the asset and settle the liability simultaneously.
The Pro Forma Group classifies non-derivative financial liabilities into the
other financial liabilities category. Such financial liabilities are recognised
initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, these financial liabilities are measured at
amortised cost using the effective interest method.
Other financial liabilities comprise trade and other payables, excluding
deferred income, and loans and borrowings.
(iii) Derivative financial instruments
The Pro Forma Group holds derivative financial instruments to hedge its
interest rate risk exposures. Embedded derivatives are separated from the
host contract and accounted for separately if the economic characteristics
and risks of the host contract and the embedded derivative are not closely
related, a separate instrument with the same terms as the embedded
derivative would meet the definition of a derivative, and the combined
instrument is not measured at fair value through the statement of total return.
Derivatives are recognised initially at fair value; attributable transaction costs
are recognised in the statement of total return when incurred. Subsequent to
initial recognition, derivatives are measured at fair value, and changes
therein are recognised in the statement of total return.
Other non-trading derivatives
When a derivative financial instrument is not designated in a hedge
relationship that qualifies for hedge accounting, all changes in its fair value
are recognised immediately in the statement of total return.
C-24
(iv) Unitholders funds
Unitholders funds represent the unitholders residual interest in the Pro
Forma Groups net assets upon termination and are classified as equity.
Issue costs relate to expenses incurred in connection with the issue of units
and are deducted directly against the unitholders funds.
(f) Impairment
(i) Non-derivative financial assets
A financial asset not carried at fair value through statement of total return is
assessed at the end of each reporting period to determine whether there is
objective evidence that it is impaired. A financial asset is impaired if objective
evidence indicates that a loss event has occurred after the initial recognition
of the asset, and that the loss event has a negative effect on the estimated
future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets (including equity securities) are
impaired can include default or delinquency by a debtor, restructuring of an
amount due to the Pro Forma Group on terms that the Pro Forma Group
would not consider otherwise, indications that a debtor or issuer will enter
bankruptcy, adverse changes in the payment status of borrowers or issuers
in the Pro Forma Group, economic conditions that correlate with defaults or
the disappearance of an active market for a security. In addition, for an
investment in an equity security, a significant or prolonged decline in its fair
value below its cost is objective evidence of impairment.
Loans and receivables
The Pro Forma Group considers evidence of impairment for loans and
receivables at both a specific asset and collective level. All individually
significant loans and receivables are assessed for specific impairment. All
individually significant receivables found not to be specifically impaired are
then collectively assessed for any impairment that has been incurred but not
yet identified. Loans and receivables that are not individually significant are
collectively assessed for impairment by grouping together loans and
receivables with similar risk characteristics.
In assessing collective impairment, the Pro Forma Group uses historical
trends of the probability of default, the timing of recoveries and the amount of
loss incurred, adjusted for managements judgement as to whether current
economic and credit conditions are such that the actual losses are likely to be
greater or less than suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is
calculated as the difference between its carrying amount and the present value
of the estimated future cash flows discounted at the assets original effective
interest rate. Losses are recognised in the statement of total return and reflected
in an allowance account against loans and receivables. Interest on the impaired
asset continues to be recognised. When a subsequent event (e.g. repayment by
a debtor) causes the amount of impairment loss to decrease, the decrease in
impairment loss is reversed through the statement of total return.
C-25
(ii) Non financial assets
The carrying amounts of the Pro Forma Groups non-financial assets, other
than investment properties, are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists,
the assets recoverable amounts are estimated. An impairment loss is
recognised if the carrying amount of an asset or its related cash-generating
unit (CGU) exceeds its estimated recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use
and its fair value less costs to sell. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset or CGU. For the purpose of
impairment testing, assets that cannot be tested individually are grouped
together into the smallest group of assets that generate cash inflows from
continuing use that are largely independent of the cash inflows of other
assets or CGU.
Impairment losses are recognised in the statement of total return. Impairment
losses recognised in respect of CGUs are allocated first to reduce the carrying
amount of any goodwill allocated to the units and then to reduce the carrying
amount of the other assets in the unit (group of units) on a pro-rata basis.
Impairment losses recognised in prior periods are assessed at each reporting
date for any indication that the loss has decreased or no longer exists. 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 assets 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.
(g) Employee benefits
(i) Short term employee benefits
All short term employee benefits are recognised in the statement of total
return in the period in which the employees render their services.
A provision is recognised for the amount expected to be paid under variable
bonus if the Pro Forma Group has a present legal or constructive obligation
to pay this amount as a result of past service provided by the employee and
the obligation can be estimated reliably.
(ii) Defined contribution plans
Contributions to post-employment benefits under defined contribution plans
are recognised as an expense in the statement of total return as incurred.
(h) Provision
A provision is recognised if, as a result of a past event, the Pro Forma Group has
a present legal or constructive obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits will be required to settle the
obligation.
C-26
A provision for onerous contract is recognised when the expected benefits to be
derived by the Pro Forma Group from a contract are lower than the unavoidable
cost of meeting its obligations under the contract. The provision is measured at the
present value of the lower of the expected cost of terminating the contract and the
expected net cost of continuing with the contract.
(i) Leases
When entities within the Pro Forma Group are lessees of an operating lease
Where the Pro Forma Group has the use of assets under operating leases,
payments made under the leases are recognised in the statement of total return on
a straight-line basis over the term of the lease. Lease incentives received are
recognised in the statement of total return as an integral part of the total lease
payments made. Contingent rentals are charged to the statement of total return in
the accounting period in which they are incurred.
When entities within the Pro Forma Group are lessors of an operating lease
Assets subject to operating leases are included in investment properties (see Note
2(c)).
(j) Revenue recognition
Rental income
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 benefits to be derived
from the leased asset. Lease incentives granted are recognised as an integral part
of the total rental income to be received. Variable rent is recognised as income in
the accounting period in which it is earned and can be reliably estimated.
Service fee income
Revenue from servicing and maintaining the investment building is recognised
when the services are rendered and collectability is reasonably assured.
Car park income
Car park income consists of seasonal and hourly parking income. Seasonal
parking income is recognised on a straight-line basis over the non-cancellable
lease term. Hourly parking income is recognised on utilisation of car parking
facilities.
(k) Finance income and costs
Finance income comprises interest income which is recognised as it accrues using
the effective interest method.
Finance costs comprise interest expense on borrowings, including amortisation of
transaction costs incurred on the borrowings. Finance costs are recognised in the
statement of total return using the effective interest method.
C-27
Foreign currency gains and losses are reported on a net basis as either finance
income or finance costs depending on whether foreign currency movements are in
a net gain or net loss position.
(l) Taxation
Income tax expense comprises current and deferred tax. Current tax and deferred
tax are recognised in the statement of total return except to the extent that it
relates to items directly related to unitholders funds, in which case it is recognised
in unitholders funds.
Current tax is the expected tax payable on the taxable income for the year, using
tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the statement of financial position method,
providing for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for the temporary differences arising from
the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit, and differences
relating to investments in subsidiaries to the extent that it is probable that they will
not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to the
temporary differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right
to offset current tax liabilities and assets and they relate to income taxes levied by
the same tax authority on the same taxable entity.
A deferred tax asset is recognised only to the extent that it is probable that future
taxable profits will be available against which the unused tax losses and credits
and temporary differences can be utilised. Deferred tax assets are reduced to the
extent that it is no longer probable that the related tax benefit will be realised.
The Inland Revenue Authority of Singapore (IRAS) has issued the Tax
Transparency Ruling and Foreign-Sourced Income Tax Exemption Ruling.
Tax Transparency Ruling
Pursuant to the Tax Transparency Ruling, the IRAS has granted tax transparency
treatment to OUE C-REIT in respect of certain taxable income (Specified Taxable
Income). Subject to meeting the terms and conditions of the Tax Transparency Ruling
which includes a distribution of at least 90% of the Specified Taxable Income of OUE
C-REIT, the Trustee is not subject to tax on the Specified Taxable Income distributed
to the Unitholders in the same year in which the Specified Taxable Income was
derived. Instead, the Trustee and the Manager would undertake to deduct income tax
at the prevailing corporate tax rate (currently at 17.0%) from distributions made to
Unitholders out of such Specified Taxable Income, except:
(i) Where the beneficial owners are Qualifying Unitholders, the Trustee and the
Manager will make the distributions to such Unitholders without deducting
any income tax; or
C-28
(ii) Where the beneficial owners are Qualifying Foreign Non-Individual
Unitholders, the Trustee and the Manager will deduct Singapore income tax
at the reduced rate of 10.0% for distributions made up to 31 March 2015,
unless the concession is extended.
A Qualifying Unitholder is a Unitholder who is:
an individual;
a company incorporated and tax resident in Singapore;
a branch in Singapore of a company incorporated outside Singapore that has
obtained IRAS approval for distributions to be made by OUE C-REIT to it
without deduction of tax; or
body of persons (excluding partnerships) incorporated or registered in
Singapore, including:
(i) a charity registered under the Charities Act, Chapter 37 of Singapore or
established by an Act of Parliament;
(ii) a town council;
(iii) a statutory board;
(iv) a co-operative society registered under the Co-operative Societies Act,
Chapter 62 of Singapore; and
(v) a trade union registered under the Trade Unions Act, Chapter 333 of
Singapore.
A Qualifying Foreign Non-Individual Unitholder is a person other than an individual
not resident in Singapore for Singapore income tax purposes and:
who does not have a permanent establishment in Singapore; or
who carries on an operation in Singapore through a permanent establishment
in Singapore, where the funds used by that person to acquire the Units are
not obtained from that operation in Singapore.
The Tax Transparency Ruling does not apply to gains from the disposal of any
properties such as immovable properties, shares, etc that are determined by the
IRAS to be revenue gains chargeable to tax and income derived by OUE C-REIT
but not distributed to the unit holders in the same year in which the income is
derived. Tax on such gains or profits will be subject to tax in accordance to Section
10(1)(a) of the Income Tax Act (Cap. 134) and collected from the Trustee.
Distribution made out of the after-tax amount will not be subject to any further tax.
Where the disposal gains are regarded as capital in nature, they will not be subject
to tax and the Trustee and the Manager may distribute the capital gains without tax
being deducted at source.
C-29
Foreign-Sourced Income Tax Exemption Ruling
Pursuant to the Foreign-Sourced Income Tax Exemption Ruling, the Trustee will be
exempt from Singapore income tax on dividends received from OUE Eastern
Limited (Tax-Exempt Income). The Foreign-Sourced Income Tax Exemption is
granted subject to certain conditions.
(m) Segment reporting
An operating segment is a component of the Pro Forma Group that engages in
business activities from which it may earn revenue and incur expenses, including
revenue and expenses that relate to transactions with any of the Pro Forma
Groups other components. All operating segments operating results are reviewed
and used by the executive director who is responsible to make decisions about
resources to be allocated to the segment and assess its performance, and is a
component for which discrete financial information is available.
3 Investment properties
As at
31 December 2012
As at
30 September 2013
S$000 S$000
Investment properties 1,555,018 1,578,047
(a) Investment properties comprise retail malls and office space that are leased to
external customers. The lease terms range from 1 to 10 years.
(b) The valuations of the investment properties as at 31 December 2012 and 30
September 2013 are set out below:
Open Market Value
Property
Description
and Location
Tenure
of Land
31 December
2012
30 September
2013
000 000
OUE Bayfront
(and adjoining
properties
comprising
OUE Tower
and OUE Link)
An integrated
commercial
development
comprising an
18 storey office
building and a
retail link
bridge at
Collyer Quay,
Singapore
OUE Bayfront
and OUE
Tower: 99-year
lease from
12 November
2007
OUE Link:
15-year lease
from
26 March 2010
Underpass:
99-year lease
from 7 January
2002
S$1,102,000 S$1,102,000
Lippo Plaza
Property
36 storey
commercial
building
located in
Huaihai Road,
Shanghai
50-year land
use right
commencing
from 2 July
1994 to 1 July
2044
S$453,612
(RMB2,337,000)
S$476,047
(RMB2,337,000)
C-30
The valuations are based on the valuations performed by independent
professional valuers at 30 September 2013. The fair values are based on open
market values, being the estimated amount for which a property could be
exchanged on the date of the valuation between a willing buyer and a willing seller
in an arms length transaction wherein the parties had each acted knowledgeably,
prudently and without compulsion.
The valuers have considered the direct comparison method, discounted cash flow
method and/or capitalisation approach in arriving at the open market value as at
the reporting date. The valuation methods involve certain estimates. The key
assumptions used to determine the fair value of investment properties include
projected rental rates, market-corroborated capitalisation yield, terminal yield and
discount rate. In relying on the valuation reports, the Manager has exercised its
judgment and is satisfied that the valuation methods and estimates are reflective
of current market conditions and that the valuation reports are prepared in
accordance with recognised appraisal and valuation standards.
(c) The investment properties are mortgaged for the credit facilities granted to the Pro
Forma Group (Note 7).
4 Intangible asset
Intangible asset represents the unamortised income support receivable by the Pro
Forma Group under the deed of income support entered into with the Sponsor in
relation to the OUE Bayfront Property (Deed of Income Support).
Pursuant to the terms of the Deed of Income Support, the Sponsor will provide income
support for a period of 5 years from the date of completion of the purchase of the
property by OUE C-REIT.
5 Trade and other receivables
As at
31 December 2012
As at
30 September 2013
S$000 S$000
Trade receivables 140 198
Other receivables 1,423 1,386
1,563 1,584
Other receivables mainly relate to input goods and services tax to be claimed from the
tax authorities.
6 Cash and cash equivalents
As at
31 December 2012
As at
30 September 2013
S$000 S$000
Cash at bank and in hand 36,371 39,662
C-31
7 Loans and borrowings
As at
31 December 2012
As at
30 September 2013
S$000 S$000
Non-current
Secured bank loans 698,225 698,225
Less: Unamortised transaction costs (16,775) (16,809)
681,450 681,416
Maturity of gross interest-bearing
borrowings:
after 1 year but within 5 years 698,225 698,225
As at the listing date, the Pro Forma Group has put in place the facilities on a secured
basis, comprising (i) term loan facilities (TLF) of S$580.0 million with loan maturities
of three to five years comprising (a) a five-year term loan facility of S$280.0 million and
(b) a three-year term loan facility of S$300.0 million, (ii) the revolving credit facility
(RCF), comprising a three-year revolving credit facility of S$100.0 million, and (iii) the
onshore term loan facility (Onshore Facility) of RMB320.0 million, with a loan maturity
of three years. As at 31 December 2012, the Pro Forma Group has drawn down S$636.0
million of the TLF and RCF and RMB320.0 million (equivalent to S$62.0 million) of the
Onshore Facility. As at 30 September 2013, the Pro Forma Group has drawn down
S$633.0 million of the TLF and RCF and RMB320.0 million (equivalent to S$65.0
million) of the Onshore Facility.
The TLF and RCF in relation to the OUE Bayfront Property are secured on:
a registered first legal mortgage over the OUE Bayfront Property;
legal assignment of all insurance taken in respect of the OUE Bayfront Property;
assignment of all rights, titles, benefits and interest of the Sponsor in connection
with (i) any lease or tenancy agreements, (ii) lease or tenancy deposits/proceeds,
(iii) sales agreements, (iv) sales deposits/proceeds, (v) Deed of Income Support,
and (vi) property management agreements in respect of the OUE Bayfront
Property; and
a debenture incorporating a fixed charge over book debts, charged accounts,
goodwill, intellectual property and plant and machinery in connection with the OUE
Bayfront Property and floating charge over generally all of the present and future
assets of OUE C-REIT in connection with the OUE Bayfront Property.
The Onshore Facility in relation to the Lippo Plaza Property is secured on:
first priority mortgages over the Lippo Realty Shanghais (the PRC Companys)
rights, title and interests in the Lippo Plaza Property;
the account control (to the extent feasible under relevant laws and regulation) over
bank accounts (except the basic account) of the PRC Company relating to the
Lippo Plaza Property, which bank accounts shall include cash collection accounts
and interest reserves;
C-32
subject to the mutual agreement of the lenders and PRC Company, an assignment
of rights under the property management agreement, insurance policies save in
respect of third party liability insurance, to lender as first loss payee; and
first priority pledge over receivables from the Lippo Plaza Property including all
monetary rights, title, claims and interest, present and future, actual and
contingent arising from any existing and future tenancy agreements with respect
of any part of the Lippo Plaza Property.
8 Trade and other payables
As at
31 December 2012
As at 30
September 2013
S$000 S$000
Non-current
Security deposits received 11,713 9,398
Current
Security deposits received 8,337 11,371
Other payables and accruals 5,356 6,905
Deferred income 1,095 1,024
14,788 19,300
26,501 28,698
Including in other payables and accruals is property tax payable of S$4.2 million (2013:
S$5.4 million) on a property relating to prior years. Where such amounts are not
required to be paid, they will be refunded to the vendor of the property.
9 Deferred tax liabilities
Deferred tax liabilities are attributable to the investment properties.
10 Unitholders funds
As at
31 December 2012
As at
30 September 2013
S$000 S$000
Units in issue 692,800 692,800
Issue costs (29,215) (29,215)
Gain on revaluation of investment
properties and the related tax effect 221,940 239,399
885,525 902,984
C-33
The following represents the units in issue as at 31 December 2012 and 30 September
2013:
Number of units
000 S$000
Creation of new OUE C-REIT Units
arising from:
Establishment * **
Consideration Units [433,000] 346,400
The Offering [208,000] 166,400
Cornerstone Units [225,000] 180,000
866,000 692,800
* less than 1,000 units
** less than S$1,000
11 Gross revenue
Year ended
31 December
2011
Year ended
31 December
2012
Nine months
ended
30 September
2012
Nine months
ended
30 September
2013
S$000 S$000 S$000 S$000
Rental income 34,997 58,557 43,741 46,695
Service fee
income 1,742 5,043 3,742 4,179
Carpark income 567 1,122 804 1,100
Others 546 2,097 1,571 1,773
Less:
Business and
other taxes (1,338) (1,366) (1,025) (1,039)
36,514 65,453 48,833 52,708
Included in retail rental income is variable rent of S$2,143,000, S$1,659,000,
S$1,300,000, S$962,000 recognised in the statement of total return for each of the
years ended 31 December 2011 and 31 December 2012, and for each of the nine
months ended 30 September 2012 and 30 September 2013 respectively.
C-34
12 Property operating expenses
Year ended
31 December
2011
Year ended
31 December
2012
Nine months
ended
30 September
2012
Nine months
ended
30 September
2013
S$000 S$000 S$000 S$000
Property-related
taxes (6,328) (6,325) (4,822) (5,483)
Insurance (183) (105) (137) (119)
Property
maintenance
expenses (1,654) (2,577) (1,749) (2,376)
Utilities (1,199) (1,898) (1,430) (1,483)
Property
management fees (516) (1,751) (1,296) (1,435)
Staff costs* (748) (728) (508) (552)
Contributions to
defined
contribution plans (50) (52) (39) (47)
Others (683) (1,030) (692) (788)
(11,361) (14,466) (10,673) (12,283)
* Excluding defined contribution plans
13 Finance income and finance costs
Year ended
31 December
2011
Year ended
31 December
2012
Nine months
ended
30 September
2012
Nine months
ended
30 September
2013
S$000 S$000 S$000 S$000
Finance income
Interest income 83 80 56 126
Foreign exchange
gains 81 162 167 57
164 242 223 183
Finance costs
Interest expense
on borrowings (10,676) (10,724) (8,500) (6,590)
Amortisation of
debt related
transaction costs (4,725) (5,350) (3,651) (4,856)
(15,401) (16,074) (12,151) (11,446)
Net finance
costs (15,237) (15,832) (11,928) (11,263)
C-35
14 Income tax expense
Year ended
31 December
2011
Year ended
31 December
2012
Nine months
ended
30 September
2012
Nine months
ended
30 September
2013
S$000 S$000 S$000 S$000
Current tax
Current tax expense 1,862 3,145 1,389 3,765
Deferred tax
Witholding tax expense 1,269 1,157 987 785
Deferred tax expense 47 47 35 36
3,178 4,349 2,411 4,586
Reconciliation of
effective tax rate
Total return before tax 2,569 21,696 15,859 23,640
Income tax using
tax rate of 17% 437 3,688 2,696 4,019
Income not subject
to tax (177) (4,434) (3,189) (3,736)
Expenses not
deductible for tax
purposes 2,006 3,501 1,260 3,194
Effect of tax in foreign
jurisdiction (357) 437 657 324
Witholding tax 1,269 1,157 987 785
3,178 4,349 2,411 4,586
15 Financial risk management
The Pro Forma Groups activities expose it to credit risk, liquidity risk, market risk
(including interest rate risk and currency risk) in the normal course of its business. The
Pro Forma Groups overall risk management strategy seeks to minimise adverse effects
from the unpredictability of financial markets on the Pro Forma Groups financial
performance. The Pro Forma Group may use financial instruments such as currency
forwards, cross currency swaps, interest rate swaps and foreign currency borrowings to
hedge certain financial risk exposures.
The Board of Directors (BOD) of the Manager is responsible for setting the objectives
and underlying principles of financial risk management for the Pro Forma Group. This
is supported by comprehensive internal processes and procedures which are
formalised in the Managers organisational and reporting structure, operating manuals
and delegation of authority guidelines.
C-36
Credit risk
Credit risk is the potential financial loss resulting from the failure of a customer or a
counterparty to settle its financial and contractual obligations to the Pro Forma Group
as and when they fall due.
The Pro Forma Group has a credit policy in place and exposure to credit risk is
monitored on an ongoing basis. Cash and fixed deposits are placed with financial
institutions which are regulated.
At the reporting date, there was no significant concentration of credit risk.
Concentration of credit risk relating to trade receivables is limited due to the Pro Forma
Groups many varied tenants and the credit policy of obtaining security deposits from
tenants for leasing the Pro Forma Groups investment properties. These tenants
comprise retailers engaged in a wide variety of consumer trades and medium to long
term office tenants. The Pro Forma Group believes that there is no credit risk inherent
in the Pro Forma Groups trade receivables, based on historical payment behaviours
and the security deposits held. The maximum exposure to credit risk is represented by
the carrying amount of each financial asset in the statement of financial position.
Allowances for doubtful receivables
The trade receivables at the reporting dates are not past due and no allowance for
doubtful receivables are recognised on the balances.
The majority of the trade receivables are mainly from tenants that have good credit
records with the Pro Forma Group.
Liquidity risk
Liquidity risk is the risk that the Pro Forma Group will encounter difficulty in meeting the
obligations associated with its financial liabilities that are settled by delivering cash or
another financial asset. The Pro Forma Groups approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Pro Forma Groups reputation.
The Pro Forma Group monitors its liquidity risk and maintains a level of cash and cash
equivalents deemed adequate by management to finance the Pro Forma Groups
operations and to mitigate the effects of fluctuations in cash flows. In additions, the
Manager also monitors and observes the Code on Collective Investment Schemes
issued by the MAS concerning limits on total borrowings.
C-37
The following are the contractual maturities of financial liabilities including interest
payments and excluding the impact of netting agreements:
Note
Carrying
amount
Contractual cash flows
Total
Within
1 year
Within
2 to 5
years
S$000 S$000 S$000 S$000
As at 31 December
2012
Trade and other
payables 8 26,501 26,501 14,788 11,713
Loans and borrowings 7 681,450 732,272 11,349 720,923
707,951 758,773 26,137 732,636
As at 30 September
2013
Trade and other
payables 8 28,698 28,698 19,300 9,398
Loans and borrowings 7 681,416 722,654 8,143 714,511
710,114 751,352 27,443 723,909
Interest rate risk
The Pro Forma Groups exposure to changes in interest rates relates primarily to
interest-earning financial assets and interest bearing financial liabilities. The Manager
manages net exposure to interest rate risk by maintaining sufficient lines of credit to
achieve acceptable lending costs and by monitoring the exposure to such risks on an
ongoing basis and entering into hedging instruments, where appropriate.
The Pro Forma Groups interest rate risk arises primarily from its interest-bearing loans
and borrowings which are variable rate instruments. A change of 10 basis points in
interest rates at the reporting date would have increased/(decreased) total return before
tax by the amounts shown below.
Statement of Total Return
10bp increase 10bp decrease
S$000 S$000
31 December 2012
Variable rate
Loans and borrowings (681) 681
30 September 2013
Variable rate
Loans and borrowings (511) 511
C-38
Foreign currency risk
In order to manage the currency risk involved in investing in assets outside Singapore,
the Manager will adopt currency risk management strategies that may include:
the use of foreign currency denominated borrowings to match the currency of the
asset investment as a natural currency hedge;
the use of cross currency swaps to swap a portion of debt in another currency into the
currency of the asset investment to reduce the underlying currency exposure; and
entering into currency forward contracts to hedge the foreign currency income
received from its foreign subsidiaries, back into Singapore Dollars.
The following table details the Pro Forma Groups exposure at the end of the reporting
period to currency risk arising from recognised assets or liabilities denominated in a
currency other than the functional currency of the entity to which they relate. For
presentation purposes, the amounts of the exposure are expressed in SGD, translated
using relevant exchange rate as disclosed in Section B. Differences resulting from the
translation of the financial statements of OUE C-REIT and its subsidiaries into the Pro
Forma Groups presentation currency are excluded.
As at
31 December 2012
As at
30 September 2013
S$000 S$000
Hong Kong Dollars (HKD)
Trade and other payables 4,230 5,479
Sensitivity analysis
A 10% strengthening of the Singapore dollar against the HKD at the reporting date
would have increased total return before tax by the amounts shown below. There is no
impact on unitholders funds. The analysis assumes that all other variables, in particular
interest rates, remain constant.
Increase in
total return
S$000
31 December 2012
HKD (10% strengthening) 423
30 September 2013
HKD (10% strengthening) 548
A 10% weakening of the Singapore dollar against the above currency at the reporting
date would have the equal but opposite effect on the above currency to the amounts
shown above, on the basis that all other variables remain constant.
C-39
Capital management
The Managers objective when managing capital is to optimise OUE C-REITs capital
structure within the borrowing limits set out in the CIS Code by the Monetary Authority
of Singapore to fund future acquisitions and asset enhancement works at OUE
C-REITs properties. To maintain or achieve an optimal capital structure, the Manager
may issue new units or source additional borrowing from both financial institutions and
capital markets.
OUE C-REIT has a policy to maintain a strong capital base so as to maintain investor,
creditor and market confidence and to sustain future development of the business. The
Manager monitors the yield, which is defined as net property income from the property
divided by the latest valuation for the property, on the properties acquired. The Manager
also monitors the level of distributions made to holders of Stapled Securities.
OUE C-REIT seeks to maintain a balance between the higher returns that might be
possible with higher level of borrowings and the advantages and security accorded by
a sound capital position.
Accounting classifications and fair values
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts
shown in the Unaudited Pro Forma Statements of Financial Position as at 31 December
2012 and 30 September 2013 are as follows:
Note
Loans and
receivables
Other
financial
liabilities
Total
carrying
amount Fair value
S$000 S$000 S$000 S$000
31 December 2012
Trade and other
receivables 5 1,563 1,563 1,563
Cash and cash equivalents 6 36,371 36,371 36,371
37,934 37,934 37,934
Trade and other payables^ 8 25,406 25,406 24,885
Loans and borrowings 7 681,450 681,450 681,450
706,856 706,856 706,335
30 September 2013
Trade and other
receivables 5 1,584 1,584 1,584
Cash and cash equivalents 6 39,662 39,662 39,662
41,246 41,246 41,246
Trade and other payables^ 8 27,674 27,674 27,276
Loans and borrowings 7 681,416 681,416 681,416
709,090 709,090 708,692
^ Excluding deferred income
C-40
Estimation of fair values
The carrying amounts of financial assets and liabilities with a maturity of less than one
year (including trade and other receivables, cash and cash equivalents, and trade and
other payables) and variable rate loans and borrowings are assumed to approximately
their fair values because of the short period to maturity or repricing. All other financial
assets and liabilities are discounted in arriving at their fair values.
Interest rates used for determining fair value
The interest rate used to discount estimated cash flows was as follows:
As at
31 December 2012
As at
30 September 2013
% %
Trade and other payables 2.30 2.19
Fair value hierarchy
The table below analyses recurring non-financial assets carried at fair value, by
valuation method. The different levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities that the Group can access at the measurement date;
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly; and
Level 3: Unobservable inputs for the assets or liability.
Level 1 Level 2 Level 3 Total
$000 $000 $000 $000
31 December 2012
Investment properties 1,555,018 1,555,018
30 September 2013
Investment properties 1,578,047 1,578,047
The following table shows the key unobservable inputs used in the valuation models:
Type Valuation techniques Unobservable inputs Range
Investment
properties
Discounted cash flow
method
Rent growth rate
Discount rate
Terminal rate
3.85% 9.0%
7.0% 9.0%
4.0% 7.0%
Capitalisation approach Capitalisation rate 3.5% 6.0%
Direct comparison
method
Price per square foot S$868 S$2,739
C-41
The significant unobservable inputs used in the fair value measurement of investment
properties are rent growth rate, discount rate, terminal rate, capitalisation rate and price
per square foot. Significant increases in rent growth rate and price per square foot
would result in a significantly higher fair value measurement. Conversely, significant
increases in discount rate, terminal rate and capitalisation rate in isolation would result
in a significantly lower fair value measurement.
Valuation process applied by the Pro Forma Group
The fair value of investment properties is determined by external, independent property
valuers, having appropriate recognised professional qualifications and recent
experience in the location and category of property being valued.
16 Segment reporting
Singapore China
Total
reportable
segments
Unallocated
amounts Total
S$000 S$000 S$000 S$000 S$000
Year ended
31 December 2011
Gross revenue 14,515 21,999 36,514 36,514
Property operating
expenses (6,011) (5,350) (11,361) (11,361)
Net property income 8,504 16,649 25,153 25,153
Other income 607 607 607
Managers base fee (5,046) (5,046)
Trustees fee (323) (323)
Other expenses (39) (61) (100) (2,485) (2,585)
Finance income 164 164 164
Finance costs (9,362) (4,661) (14,023) (1,378) (15,401)
Total return for
the year before tax (897) 12,698 11,801 (9,232) 2,569
Income tax expense (3,178) (3,178) (3,178)
Total return for
the year (897) 9,520 8,623 (9,232) (609)
C-42
Singapore China
Total
reportable
segments
Unallocated
amounts Total
S$000 S$000 S$000 S$000 S$000
Year ended
31 December 2012
Gross revenue 42,633 22,820 65,453 65,453
Property operating
expenses (8,450) (6,016) (14,466) (14,466)
Net property income 34,183 16,804 50,987 50,987
Other income 60 423 483 483
Managers base fee (4,880) (4,880)
Managers performance
fee (6,176) (6,176)
Trustees fee (313) (313)
Other expenses (20) (68) (88) (2,485) (2,573)
Finance income 242 242 242
Finance costs (9,939) (4,665) (14,604) (1,470) (16,074)
Total return for
the year before tax 24,284 12,736 37,020 (15,324) 21,696
Income tax expense (4,349) (4,349) (4,349)
Total return for
the year 24,284 8,387 32,671 (15,324) 17,347
As at
31 December 2012
Non-current assets 1,135,000 453,720 1,588,720 1,588,720
Nine months ended
30 September 2012
Gross revenue 31,593 17,240 48,833 48,833
Property operating
expenses (6,320) (4,353) (10,673) (10,673)
Net property income 25,273 12,887 38,160 38,160
Other income 11 329 340 340
Managers base fee (3,660) (3,660)
Managers performance
fee (4,950) (4,950)
Trustees fee (235) (235)
Other expenses 25 (29) (4) (1,864) (1,868)
Finance income 223 223 223
Finance costs (7,510) (3,530) (11,040) (1,111) (12,151)
Total return for
the period before tax 17,799 9,880 27,679 (11,820) 15,859
Income tax expense (2,411) (2,411) (2,411)
Total return for
the period 17,799 7,469 25,268 (11,820) 13,448
C-43
Singapore China
Total
reportable
segments
Unallocated
amounts Total
S$000 S$000 S$000 S$000 S$000
Nine months ended
30 September 2013
Gross revenue 35,500 17,208 52,708 52,708
Property operating
expenses (7,941) (4,342) (12,283) (12,283)
Net property income 27,559 12,866 40,425 40,425
Other income 532 532 532
Managers base fee (3,718) (3,718)
Managers performance
fee (202) (202)
Trustees fee (238) (238)
Other expenses (1) (31) (32) (1,864) (1,896)
Finance income 183 183 183
Finance costs (7,097) (3,539) (10,636) (810) (11,446)
Total return for
the period before tax 20,461 10,011 30,472 (6,832) 23,640
Income tax expense (4,586) (4,586) (4,586)
Total return for
the period 20,461 5,425 25,886 (6,832) 19,054
As at
30 September 2013
Non-current assets 1,135,000 476,157 1,611,157 1,611,157
17 Commitments
(i) Capital commitments:
As at
31 December
2012
As at
30 September
2013
S$000 S$000
Contracted but not provided for 466 4,645
(ii) Non-cancellable rental receivable:
As at
31 December
2012
As at
30 September
2013
S$000 S$000
Within 1 year 63,444 64,415
After 1 year but within 5 years 105,732 101,844
After 5 years 50,379 28,000
219,555 194,259
C-44
18 Related party transactions
During the financial period, other than the transactions disclosed elsewhere in the
financial information, there were the following related party transactions:
Year ended
31 December
2011
Year ended
31 December
2012
Nine months
ended
30 September
2012
Nine months
ended
30 September
2013
S$000 S$000 S$000 S$000
Managers management
fees paid/payable to
related corporation 5,046 11,056 8,610 3,920
Property managers
management fees
paid/payable to related
corporation 516 1,751 1,296 1,435
Rental income
received/receivable from
related corporations of
the Manager 3,042 4,974 3,655 4,224
19 Other information
Details of the subsidiaries of OUE C-REIT are as follows:
Name of
subsidiaries
Country of
incorporation
Principal
activities
Effective equity
interest held by the
Pro Forma Group
2012 2013
% %
Direct
subsidiary
OUE Eastern
Limited
British Virgin
Island
Investment
holding
100 100
Indirect
subsidiaries
Tecwell Limited British Virgin
Island
Investment
holding
100 100
Lippo Realty
(Shanghai)
Limited
China Property owner 100 100
C-45
E MANAGERS MANAGEMENT FEES, TRUSTEES FEE AND PROPERTY MANAGERS
MANAGEMENT FEES
Unless defined in this report, capitalised terms below shall have the meanings set out in the
Glossary to the Prospectus.
(i) Managers management fees
The Manager is entitled under the Trust Deed to management fees comprising the base
fee and performance fee as follows:
(a) A base fee of 0.3% per annum (or such lower percentage as may be determined
by the Manager in its absolute discretion) of the value of the Deposited Property
(as defined in the Trust Deed); and
(b) A performance fee of 25% per annum of the difference in DPU (as defined in the
Prospectus) in a financial year with the DPU in the preceding full financial year
(calculated before accounting for the performance fee but after accounting for the
base fee in each financial year) multiplied by the weighted average number of
Units in issue for such financial year. The performance fee is payable if the DPU
in any financial year exceeds the DPU in the preceding full financial year,
notwithstanding that the DPU in the financial year in which the performance fee is
payable may be less than the DPU in the financial year prior to any preceding full
financial year.
(ii) Trustees fee
The Trustees fee shall not exceed 0.1% per annum of the value of the Deposited
Property, subject to a minimum of S$15,000 per month, excluding out of pocket
expenses and GST, in accordance with the Trust Deed, and is presently charged on a
scaled basis of up to 0.02% per annum of the value of the Deposited Property. The
Trustee fee is accrued daily and paid monthly in arrears in accordance with the Trust
Deed. The Trustee will also be paid a one-time inception fee as may be agreed between
the Manager and the Trustee, subject to a maximum of S$60,000.
(iii) Property Managers management fees
Under the property management agreement in respect of the OUE Bayfront Property,
the property manager will provide property management services, lease management
services and project management services. The property manager is entitled to the
following fees:
Property management fee
(a) A fee of 2% per annum of the gross revenue of the relevant property;
(b) A fee of 2% of the gross revenue less property expenses (Net Property Income)
for the relevant property (calculated before accounting for the property
management fee in that financial period); and
(c) A fee of 0.5% of the Net Property Income for the relevant property (calculated
before accounting for the property management fee in that financial period) in
respect of lease management services.
C-46
The property management fee is payable to the Property Manager in the form of cash.
The Property Manager will not be providing its services in respect of the Lippo Plaza
Property, as such services will be provided by the existing local property manager of the
Lippo Plaza Property under the existing property management agreement. In the event
that the existing property management agreement in respect of the Lippo Plaza
Property is not renewed or is terminated, the Lippo Plaza Property may (at the Property
Managers election) come under the management of the Property Manager. The fees
payable to the local property manager for the Lippo Plaza Property is 4.2% of the total
management fee collected from all tenants of the Lippo Plaza Property.
C-47
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APPENDIX D
INDEPENDENT TAXATION REPORT
The Board of Directors
OUE Commercial REIT Management Pte. Ltd
(in its capacity as Manager of OUE Commercial Real Estate Investment Trust) (the Manager)
50 Collyer Quay #04-08
OUE Bayfront
Singapore 049321
DBS Trustee Limited
(in its capacity as Trustee of OUE Commercial Real Estate Investment Trust) (the Trustee)
12 Marina Boulevard
Marina Bay Financial Centre Tower 3
Singapore 018982
10 January 2014
Dear Sirs
INDEPENDENT TAXATION REPORT
This letter has been prepared at the request of the Manager for inclusion in the prospectus (the
Prospectus) to be issued in relation to the initial public offering of the units (the Units) in OUE
Commercial Real Estate Investment Trust (OUE C-REIT) on the Main Board of Singapore
Exchange Securities Trading Limited.
The purpose of this letter is to provide prospective purchasers of the Units with an overview of the
Singapore, British Virgin Islands (BVI) and the Peoples Republic of China (PRC) income tax
consequences of the acquisition, ownership and disposal of the Units. This letter addresses
principally purchasers who hold the Units as investment assets. Purchasers who acquire the Units
for dealing purposes should consult their own tax advisors concerning the tax consequences of
their particular situations.
This letter is not a tax advice and does not attempt to describe comprehensively all the tax
considerations that may be relevant to a decision to purchase, own or dispose of the Units.
Prospective purchasers of the Units should consult their own tax advisers to take into account the
tax law applicable to their particular situations. In particular, prospective purchasers who are not
Singapore tax residents are advised to consult their own tax advisers to take into account the tax
laws of their respective country of tax residence and the existence of any tax treaty which their
country of tax residence may have with Singapore.
This letter is based on the Singapore, BVI and PRC income tax laws and the relevant
interpretation thereof current as at the date of this letter, all of which are subject to change,
possibly with retroactive effect.
Words and expressions defined in the Prospectus have the same meaning in this letter. In
addition, unless the context requires otherwise, words in the singular include the plural and the
other way around and words of one gender include the other gender.
D-1
GENERAL PRINCIPLES OF TAXATION OF A TRUST
The income of a trust derived from or accrued in Singapore is chargeable to Singapore income
tax. In addition, income earned outside Singapore and received or deemed received in Singapore
is also chargeable to Singapore income tax unless otherwise exempted. There is no capital gains
tax in Singapore. However, gains from the sale of investments (including real properties) are
chargeable to tax if such gains are derived from a trade or business of dealing in investments
(including real properties). Singapore income tax is imposed on all income chargeable to tax after
deduction of the allowable expenses incurred and capital allowances, if any. Such income of the
trust is assessed to tax in the name of the trustee at the prevailing corporate tax rate.
However, where a trust derives tax-exempt income, the beneficiary of the trust is also exempt from
tax on the tax-exempt income of the trust to which he is beneficially entitled.
SINGAPORE TAXATION
Specified Taxable Income Receivable by OUE C-REIT and Tax-Exempt Income Received by
OUE C-REIT from the BVI Holding Company
Taxable Income receivable by OUE C-REIT
Except as detailed in the paragraphs below, the Trustee will be subject to Singapore income tax
at the prevailing corporate tax rate on taxable income of OUE C-REIT (Taxable Income).
The current Singapore corporate tax rate is 17.0%.
Specified Taxable Income receivable by OUE C-REIT
OUE C-REIT has obtained the Tax Transparency Ruling from the IRAS in respect of the Specified
Taxable Income derived from the OUE Bayfront Property. Such income includes rent and related
income from the OUE Bayfront Property (but not gains from the disposal of the property),
Singapore-sourced interest income from placement of surplus cash as deposits with banks and
rental top-up payments arising from the Income Support Arrangement.
Subject to the terms and conditions of the Tax Transparency Ruling, the Trustee will not be taxed
on Specified Taxable Income distributed to the Unitholders in the year in which the income was
derived. Instead, the Trustee and the Manager would undertake to deduct income tax at the
prevailing corporate tax rate from distributions made to Unitholders out of such Specified Taxable
Income. However, to the extent that the beneficial owner is a Qualifying Unitholder (as defined
herein), the Trustee and the Manager will make the distributions without deducting any income
tax. Also, to the extent that the beneficial owner is a Qualifying Foreign Non-Individual
Unitholder (as defined herein), the Trustee and the Manager would undertake to deduct income
tax at the reduced rate of 10.0% for distributions made up to 31 March 2015.
A Qualifying Unitholder
1
refers to a Unitholder who is:
an individual;
a company incorporated and tax resident in Singapore;
a branch in Singapore of a company incorporated outside Singapore that has obtained IRAS
approval for distributions to be made by OUE C-REIT to it without deduction of tax; or
1 A Qualifying Unitholder does not include a person acting in the capacity of a trustee.
D-2
body of persons (excluding partnerships) incorporated or registered in Singapore, including:
(i) a charity registered under the Charities Act, Chapter 37 of Singapore or established by
an Act of Parliament;
(ii) a town council;
(iii) a statutory board;
(iv) a co-operative society registered under the Co-operative Societies Act, Chapter 62 of
Singapore; and
(v) a trade union registered under the Trade Unions Act, Chapter 333 of Singapore.
A Qualifying Foreign Non-Individual Unitholder is a person other than an individual not resident in
Singapore for Singapore income tax purposes and:
who does not have a permanent establishment in Singapore; or
who carries on an operation in Singapore through a permanent establishment in Singapore,
where the funds used by that person to acquire the Units are not obtained from that operation
in Singapore.
To obtain distributions free of tax deduction at source, or at the reduced rate of 10.0%, Qualifying
Unitholders or Qualifying Foreign Non-Individual Unitholder must disclose their respective tax
status in a prescribed form provided by the Trustee and the Manager (see Annexes A and B).
Where the Units are held in joint names, the Trustee and the Manager will deduct income tax from
the distributions made out of OUE C-REITs Specified Taxable Income at the prevailing corporate
tax rate, unless all the joint owners are individuals.
Where the Units are held through a nominee, the Trustee and the Manager will deduct income tax
from the distributions made out of OUE C-REITs Specified Taxable Income at the prevailing
corporate tax rate unless:
the nominee can demonstrate that the Units are held for beneficial owners who are
Qualifying Unitholders for which the Trustee and the Manager would not deduct any tax from
the distributions. The nominee should make a declaration of the status of the beneficial
owners of the Units and provide certain particulars of the beneficial owners of the Units to the
Trustee and the Manager in a prescribed form provided by the Trustee and the Manager.
Where the Units are held through more than one tier of nominees, the Trustee and the
Manager must obtain confirmation from the ultimate beneficiaries that they are Qualifying
Unitholders. If the ultimate beneficiaries do not provide a confirmation of their status, the
Trustee and the Manager must withhold tax on the distribution. The nominee should also
maintain adequate and sufficient information and documentation to verify and be satisfied
with the identity of the beneficial owners;
the nominee is an agent bank or Supplementary Retirement Scheme (the SRS) operator
acting for individuals who purchased the Units within the CPF Investment Scheme or SRS
respectively for which the Trustee and the Manager would not deduct any tax from the
distributions; and
D-3
the nominee can demonstrate that the Units are held for beneficial owners who are
Qualifying Foreign Non-Individual Unitholders, for which the Trustee and the Manager would
deduct/withhold tax at the reduced tax rate of 10.0% from the distributions made up to
31 March 2015 (unless otherwise extended). The nominee should make a declaration of the
status of the beneficial owners of the Units and provide certain particulars of the beneficial
owners of the Units to the Trustee and the Manager in a prescribed form provided by the
Trustee and the Manager. Where the Units are held through more than one tier of nominees,
the Trustee and the Manager must obtain confirmation from the ultimate beneficiaries that
they are Qualifying Foreign Non-Individual Unitholders. If the ultimate beneficiaries do not
provide a confirmation of their status, the Trustee and the Manager must withhold tax on the
distribution. The nominee should also maintain adequate and sufficient information and
documentation to verify and be satisfied with the identity of the beneficial owners.
OUE C-REIT will distribute 100.0% of its Distributable Income for the Forecast Year 2014 and the
Projection Year 2015. Thereafter, OUE C-REIT will distribute at least 90.0% of its Specified
Taxable Income on a semi-annual basis. Any amount of the Specified Taxable Income not
distributed will be assessed to Singapore income tax at the prevailing corporate tax rate, and the
tax assessed will be collected from the Trustee on such amount. In the event of any subsequent
distribution made out of such after tax Specified Taxable Income retained by OUE C-REIT, the
Trustee and the Manager will not have to make a further deduction of income tax from the
distribution made.
The application of the Tax Transparency Ruling is conditional upon the Trustee and the Manager
fulfilling certain terms and conditions including distribution of at least 90.0% of Specified Taxable
Income by the Trustee to the Unitholders in the year in which the income is derived by the Trustee.
The Trustee and the Manager are required to take all reasonable steps necessary to safeguard
the IRAS against tax leakages and to comply with all administrative requirements to ensure ease
of tax administration.
Notwithstanding the aforesaid, the Specified Taxable Income as computed by the IRAS may be
different from that determined by the Manager for distribution purpose. To ease tax compliance
and governance, in the event that the amount finally agreed with the IRAS is different from the
amount of Specified Taxable Income determined by the Manager for distribution purposes, the
difference will be added to or deducted from the Specified Taxable Income of the Trustee for the
next distribution immediately after the difference has been agreed with the IRAS (Rollover
Income Adjustments). This arrangement is accepted based on the understanding that:
(i) at least 90.0% of the difference has to be distributed to the Unitholders;
(ii) the shortfall in distribution is not material;
(iii) no major issue that would cause undue delay in reaching the agreement with the IRAS is
envisaged; and
(iv) the IRAS reserves the right to review such arrangement as and when needed.
The IRAS has expressly reserved the rights to review, amend and revoke the Tax Transparency
Ruling either in part or in whole at any time.
(See Risk Factors Risks Relating to an Investment in the Units for further details.)
D-4
Tax Exempt Income received by OUE C-REIT from the BVI Holding Company
OUE C-REIT has obtained the Foreign-Sourced Income Tax Exemption Ruling from the IRAS on
the Singapore taxation of dividend income received from the BVI Holding Company. Pursuant to
the Foreign-Sourced Income Tax Exemption Ruling, the Trustee will be exempt from Singapore
income tax on dividends received from the BVI Holding Company (Tax-Exempt Income). The
Foreign-Sourced Income Tax Exemption is granted subject to certain conditions.
Return of capital from the BVI Holding Company
Any return of capital received by OUE C-REIT from the BVI Holding Company is capital in nature
and hence, is not taxable in the hands of the Trustee.
Gains on disposal of the OUE Bayfront Property or shares in the BVI Holding Company
Singapore does not impose tax on capital gains. In the event that the Trustee disposes of the OUE
Bayfront Property or its shares in the BVI Holding Company, gains arising from the disposal will
not be subject to Singapore income tax unless the gains are considered income of a trade or
business. Gains arising from the sale of the OUE Bayfront Property or shares in the BVI Holding
Company, if considered to be trading gains, will be assessed to corporate tax, currently at 17.0%.
Singapore property tax
OUE C-REIT is liable to pay property tax at the prevailing tax rate of the annual value of the OUE
Bayfront Property. The annual value is the gross amount at which the property can reasonably be
expected to be let from year to year, having regard to the fact that all outgoings and maintenance
are borne by the landlord. The current property tax rate is 10.0%.
Singapore GST
GST Registration of OUE C-REIT
OUE C-REIT could be registered for GST in Singapore on the basis that it would derive rental
income from the leasing of the OUE Bayfront Property, which constitutes a taxable supply for GST
purposes.
Recovery of GST incurred by OUE C-REIT
Once GST-registered, OUE C-REIT would be allowed to claim the GST incurred on its business
expenses (such as offering-related and routine operating expenses) except for certain disallowed
expenses and subject to the normal input tax recovery rules.
In addition, in the Singapore Budget 2008, the Minister for Finance announced an enhanced
concession for Singapore listed REITs to claim the GST incurred:
on the setting up of their various tiers of SPVs that hold non-residential properties; and
by their SPVs on the acquisition and holding of non-residential properties.
The GST remission has a qualifying period of up to 31 March 2015 and is subject to meeting
certain qualifying conditions. OUE C-REIT could therefore recover the GST incurred on the
acquisition and holding of non-residential properties which it indirectly holds, under the enhanced
concession.
D-5
Singapore stamp duty
In the event of a change in the Trustee, any document effecting the appointment of a new trustee
and the transfer of trust assets from the incumbent trustee to the new trustee will not be subject
to stamp duty.
By virtue of the Stamp Duty (Real Estate Investment Trust) (Remission) Rules 2010, stamp duty
on any contract or agreement or instrument executed prior to or on 31 March 2015 relating to the
transfer of Singapore immovable properties would be remitted. As such, stamp duty will be
remitted for the transfer of the OUE Bayfront Property to OUE C-REIT.
Singapore Taxation of the Unitholders
Distributions out of Taxable Income
Unitholders will not be subject to Singapore income tax on distributions made out of OUE
C-REITs income that has been taxed at the Trustee level. Accordingly, distributions made by OUE
C-REIT out of Taxable Income (e.g. distributions made out of after tax Taxable Income, after tax
Specified Taxable Income not distributed by OUE C-REIT or out of gains or profits taxed as trading
gains) to the Unitholders will not be subject to any tax deduction at source. No tax credit will be
given to any Unitholder on the tax payable by the Trustee on such Taxable Income.
Distributions out of Specified Taxable Income
Individuals who hold the Units as investment assets
Individuals who hold the Units as investment assets (excluding individuals who hold such Units
through a partnership in Singapore) are exempt from Singapore income tax on the distributions
made by OUE C-REIT, regardless of the individuals nationality or tax residence status.
Individuals who hold the Units as trading assets or through a partnership in Singapore
Individuals who hold the Units as trading assets or through a partnership in Singapore are subject
to Singapore income tax on the gross amount of distributions that are made out of OUE C-REITs
Specified Taxable Income. Such distributions must be declared in the income tax returns of these
individuals and will be taxed in the hands of these individuals at their applicable income tax rates.
Non-individuals other than Qualifying Foreign Non-Individual Unitholders
Non-individual Unitholders are subject to Singapore income tax on the gross amount of
distributions that are made out of OUE C-REITs Specified Taxable Income, unless specifically
exempted, irrespective of whether or not tax has been deducted from the distributions by the
Manager and the Trustee.
Where tax has been deducted at source, the tax deducted is not a final tax. Non-individual
Unitholders can offset tax deducted at source against their Singapore income tax liabilities.
Qualifying Foreign Non-Individual Unitholders
Qualifying Foreign Non-Individual Unitholders will be subject to final tax at the reduced rate of
10.0% for distributions made out of OUE C-REITs Specified Taxable Income up to 31 March 2015
(unless otherwise extended).
D-6
Distributions out of Tax-Exempt Income
Unitholders will not be subject to Singapore income tax on distributions made out of OUE
C-REITs Tax-Exempt Income. No tax will be deducted at source on such distributions.
Distributions out of return of capital from the BVI Holding Company
Unitholders will not be subject to Singapore income tax on distributions made by OUE C-REIT out
of its capital receipts, such as return of capital from the BVI Holding Company. No tax will be
deducted at source on such distributions.
For Unitholders who hold the Units as trading or business assets and are liable to Singapore
income tax on gains arising from the disposal of the Units, the amount of such distributions will be
applied to reduce the cost of the Units for the purpose of calculating the amount of taxable trading
gain when the Units are disposed of. If the amount exceeds the cost of the Units, the excess will
be subject to tax as a trading income of such Unitholders.
Distributions out of gains from the disposal of the OUE Bayfront Property
To the extent that the IRAS confirms that any gain or profit arising from a disposal of the OUE
Bayfront Property is capital in nature, distributions made out of such capital gains are not taxable
in the hands of the Unitholders.
Distributions out of gains from the disposal of shares in the BVI Holding Company
Unitholders will not be subject to Singapore income tax on distributions made by OUE C-REIT out
of capital gains from the disposal of shares in the BVI Holding Company unless the gains are
considered income of a trade or business.
Gains derived by the Trustee from the disposal of shares in the BVI Holding Company if
considered to be trading gains, will be assessed to tax on the Trustee. Distributions made from
such gains will not be subject to further tax in the hands of the Unitholders.
Disposal of the Units
Singapore does not impose tax on capital gains. Any gains on disposal of the Units are not liable
to tax provided the Units are not held as trading assets. Where the Units are held as trading assets
of a trade or business carried on in Singapore, any gains on disposal of the Units are liable to
Singapore income tax at the applicable tax rate.
Singapore GST
Issue and transfer of the Units
The issue or transfer of ownership of a unit under any unit trust in Singapore is exempt from GST.
Hence, Unitholders would not incur any GST on the subscription of the Units. The subsequent
disposal of the Units by a GST-registered Unitholder through the SGX-ST or to another person
belonging in Singapore is regarded as an exempt supply and not subject to GST. The disposal or
transfer of the Units to another person belonging outside Singapore would constitute zero-rated
supplies for Singapore GST purposes.
D-7
Recovery of GST incurred by Unitholders
Generally, services such as legal fee, brokerage, handling and clearing charges rendered by a
GST-registered person to Unitholders belonging in Singapore in connection with their purchase
and sale of the Units would be subject to GST at the prevailing standard-rate of 7.0%. Similar
services rendered to Unitholders belonging outside Singapore could be zero-rated when certain
conditions are met.
For Unitholders belonging in Singapore who are registered for GST, any GST on expenses
incurred in connection with the subscription/acquisition or disposal of the Units is generally not
recoverable as input tax credit from the IRAS unless certain conditions are satisfied. These
GST-registered Unitholders should seek the advice of their tax advisers on these conditions.
Singapore stamp duty
The sale, purchase and transfer of the Units is not subject to stamp duty in Singapore.
BVI TAXATION
There should be no income tax, capital gains tax, stamp duty and withholding tax applicable to the
BVI Holding Company and the BVI Company in the BVI.
PRC TAXATION
PRC Taxation of the PRC Company
PRC Income Tax
The PRC Company will be subject to tax on its taxable income, currently at the rate of 25.0%.
Dividends paid by the PRC Company to the BVI Company will be subject to a 10.0% withholding
tax.
Business Tax
Currently, the PRC Company is liable to business tax at the prevailing rate of 5.0% on gross
revenue (including rental fees, property management fees, other surcharges and service fees)
derived from the Lippo Plaza Property.
Surcharges
The PRC Company is liable to pay Urban Maintenance and Construction Tax, Education
Surcharge, Local Education Surcharge and River Maintenance Fee based on the amount of
Business Tax (or Value-Added Tax in the future where applicable) payable at 7.0%, 3.0%, 2.0%
and 1.0%, respectively.
Real Estate Tax
The PRC Company is liable to Real Estate Tax as the lessor and owner of the Lippo Plaza
Property. Currently, Real Estate Tax is charged at 1.2% on the basis of the residual value of a
building which is the original value of a building less prevailing discount rates (currently at 20.0%
for Shanghai), or 12.0% on the basis of the rental.
D-8
Land Use Tax
The PRC Company is liable to Land Use Tax currently at the prevailing land use tax rate of
RMB30.0 per sq m of occupied urban land area in the downtown area of Shanghai, the PRC.
Stamp Duty
Stamp duty is imposed on chargeable documents at specified rates pursuant to the regulations.
Stamp duty rate on lease contracts is at 0.1% on gross rental, 0.005% on the principal for loan
contracts, 0.03% on consideration for construction contracts, and on transfer of real estate at
0.05% on consideration.
Deed Tax
Deed Tax is chargeable to the purchase of land use rights and/or building ownership within the
PRC. These taxable transfers include grant of state-owned land user rights and sale, gift and
exchange of land use rights or building ownership, other than the transfer of contracting
management rights of rural collective land. The rate of deed tax is 3.0% to 5.0% subject to
determination by local governments at the provincial level in light of the local conditions.
Land Appreciation Tax
All income from the sale or transfer of state-owned land use rights, and buildings and their
attached facilities in the PRC, is subject to Land Appreciation Tax at progressive rates ranging
from 30.0% to 60.0% of the appreciation value as defined by the relevant tax laws.
PRC Tax Reporting Obligations and Consequences for Certain Indirect Transfers of Equity
Interests
Where a foreign investor or effective controlling party transfers the equity interests in a PRC
resident enterprise (excluding the purchase and sale of the shares of PRC resident enterprises on
the public securities markets which were purchased from the public securities markets) indirectly
by way of the sale of equity interests in an overseas holding company, and such overseas holding
company is located in a tax jurisdiction that (i) has an effective tax rate which is less than 12.5%
or (ii) does not levy income tax on foreign-sourced income for its tax resident, the foreign investor
should report such indirect transfer to the competent tax authority of the PRC resident enterprise
within 30 days of the execution of the equity transfer agreement for such indirect transfer. The
PRC tax authority will examine the true nature of the indirect transfer, and if the PRC tax authority
considers that the foreign investor has adopted an abusive arrangement without reasonable
commercial purposes and in order to avoid PRC tax, the PRC tax authority may disregard the
existence of the overseas holding company that is used for tax planning purposes and
re-characterise the transfer as a direct transfer of the PRC Company. As a result, gains derived
from such indirect transfer may be subject to PRC tax currently at the rate of 10.0%.
In the event of the disposal of the shares in the BVI Company or the BVI Holding Company which
results in an indirect transfer of the equity interest in the PRC Company, the transferor may be
required to report such transfers to the PRC tax authority. The gains arising from such indirect
transfers may potentially be subject to tax in the PRC, currently at the rate of 10.0%.
D-9
PRC Taxation of Unitholders
PRC Tax Reporting Obligations and Consequences for Indirect Transfers of the PRC
Company
The PRC tax reporting obligation for indirect transfers of equity interests do not apply to indirect
sales of shares of PRC resident enterprises on the public securities markets which were
purchased from the public securities markets. The relevant notice and announcement issued by
the PRC authorities do not specify whether purchases through initial public offering would
constitute purchases from public securities market. However, a general guideline in the
announcement makes reference to situations where the seller is unable to identify or fix the price,
or where the seller cannot determine who the buyer is or volume of shares bought and sold as
being purchases from the public securities markets. Accordingly, in line with the general
guideline, the initial subscription of units by unitholders would appear to be considered purchases
from public securities market, which is subject to agreement by the PRC tax authorities.
Unitholders should consult their own tax advisers relating to their particular circumstances.
Yours faithfully
Leonard Ong
Executive Director, Tax
For and on behalf of
KPMG Services Pte. Ltd.
D-10
E-1
APPENDIX E
INDEPENDENT PROPERTY VALUATION SUMMARY REPORTS
VALUATION CERTIFICATE
Date : 31 December 2013


Our Reference : 2013/156
Valuation Prepared For : OUE Commercial REIT Management Pte. Ltd. (as manager of OUE
Commercial Real Estate Investment Trust), DBS Trustee Limited (in its
capacity as trustee of OUE Commercial Real Estate Investment Trust)
and Oversea-Chinese Banking Corporation Limited
Purpose of Valuation : To determine market value as at 30 September 2013 for Initial Public
Offering purpose
Address of Property : 50, 60 & 62 Collyer Quay
OUE BAYFRONT/TOWER & LINK
Singapore 049321/2/5
Type of Property : An integrated commercial development comprising an 18-storey Grade
A office building with 4 basement car park levels, a conserved 12-
storey restaurant tower and a retail link bridge
Brief Description : An integrated commercial development comprising an 18-storey office
building with 4 basement car park levels (245 lots) known as OUE
Bayfront, a conserved 12-storey OUE Tower currently used as a
restaurant and a pedestrian link bridge comprising 12 retail units known
as OUE Link.
The subject property is located on the eastern side of Collyer Quay, near
the major traffic intersection with Raffles Quay, Marina
Boulevard/Finlayson Green and Robinson Road/Cecil Street, within the
Central Business District of Singapore and between the traditional
financial hub of Raffles Place and the new downtown Marina Bay.
Accessibility to other parts of Singapore can be made via Raffles Place
Interchange MRT Station, the upcoming Downtown MRT Station, East
Coast Parkway, Central Expressway, Nicoll Highway and Kallang-Paya
Lebar Expressway.
OUE Bayfront is an 18-storey office building with 4 basement car park
levels (245 lots), housing Grade A office space from 4
th
to 18
th
storeys
with a panoramic view of Marina Bay. There is a restaurant (currently
known as Me @ OUB) located on the roof level.
OUE Tower is a free-standing 12-storey conserved tower which houses
2-levels of food and beverage space including a revolving level on the
10
th
storey. The tower overlooks Marina Bay thus providing a unique
dining experience.
E-2
50, 60 & 62 Collyer Quay
OUE BAYFRONT/ TOWER & LINK
Singapore 049321/2/5
Our Ref: 2013/156 Page 2
Brief Description
(Contd)
: OUE Link is a pedestrian link bridge comprising 12 retail units flanked
by public walkways spanning over Collyer Quay, providing connectivity
between Marina Bay, Raffles Place District and Raffles Place
Interchange MRT Station. All shops have double frontages onto the
pedestrian walkways.
The subject development is provided with control VAV system,
watercooled centralized chiller air-conditioning system and is equipped
with modern fire-prevention/fighting equipment and security access
systems generally. Male/female/handicap toilets and pantry are provided
on every office floor; 24-hour security service and CCTV are also
provided.
All essential public utilities and tele-communication services are
connected.
Legal Description : Lots 404K, 80020K and 70012W, All of Town Subdivision 30
Tenure :
Lot No. Tenure
Balance Lease Term
(Approx.)
404K
99 yrs commencing
12 November 2007
93.1 yrs
80020K
99 yrs commencing
7 January 2002
87.3 yrs
70012W
15 yrs commencing
26 March 2010
11.5 yrs
Registered Proprietor(s) : Clifford Development Pte. Ltd.
Land Area :
Lot No. Land Area (sm)
Lot 404K 6,447.5
Lot 80020K (Subterranean) 60.8
Lot 70012W (Airspace) 589.6
Total 7,097.9
E-3
50, 60 & 62 Collyer Quay
OUE BAYFRONT/ TOWER & LINK
Singapore 049321/2/5
Our Ref: 2013/156 Page 3
Gross Floor Area : Approximately 46,774.6 sm, as provided and subject to final survey
Lettable Floor Area :
Use Lettable Floor Area (sm)
Office
(No. 50 OUE Bayfront)
35,551.7
(excl Roof restaurant)
Retail
(Nos. 50 & 60 OUE Tower
and Me @ OUE)
1,565.0
Retail
(No. 62 - OUE Link)
265.1
Total 37,381.8

As provided and subject to final survey
Year of Completion : We understand that the Temporary Occupation Permits (TOP) were
obtained on 21 January 2011 and 16 February 2011.
On 31 March 2009, OUE Bayfront was awarded the BCA Green Mark
Award (Gold).
Condition : Good
Tenancy Brief : Based on the Tenancy Schedule as at 30 September 2013, we
understand that the office tower is about 95.9% let whilst the retail
section is fully let. As such, the overall occupancy for the subject
property as at 30 September 2013 is about 96.1%.
The office tenancies are generally on 2- to 10-years term with renewal
options and built-in rent review periods whilst the retail tenancies are
typically on 2- to 5-years term.
E-4
50, 60 & 62 Collyer Quay
OUE BAYFRONT/ TOWER & LINK
Singapore 049321/2/5
Our Ref: 2013/156 Page 4
Rental Income Support : We understand that there will be rental income support based on gross
rental income top up to an aggregate of S$50,000,000/- over a 5 year
period from the listing date of OUE C-REIT with a cap of S$12,000,000/-
per annum provided by the vendor of the OUE Bayfront Property.
We are of the opinion that this rental support is not unreasonable and is
in line with general market practice for similar kind of arrangement where
rental support is given to compensate for lower passing rents as
compared to current market when vacant units and/ or expiring leases
are expected to be renewed or re-let at the prevailing market rents.
Based on Colliers research data, we are of the opinion that the current
market rent for comparable class of property is going in the range of
S$11.50 to S$12.00 psf per month.
Annual Value 2013 : The properties are currently assessed by IRAS as follows:-
Address Annual Value
50 Collyer Quay S$42,850,700/-
60 Collyer Quay S$725,000/-
62 Collyer Quay S$983,600/-
Property Tax is payable at 10.00% of the assessed Annual Value.
Master Plan Zoning
(2008 Edition)
: Commercial with part of the site (on which OUE Tower is sited)
designated as conservation area.
Note: The official Master Plan/Drainage Interpretation Plans and other legal requisitions have not been applied for and/or
made available to us.
Bases of Valuation : (A) As-Is Basis;
(B) As-Is Basis & taken into account rental income support
arrangement
Valuation Approaches : Direct Comparison Method, Investment Method, Replacement Cost
Method and Discounted Cash flow Analysis
E-5
50, 60 & 62 Collyer Quay
OUE BAYFRONT/ TOWER & LINK
Singapore 049321/2/5
Our Ref: 2013/156 Page 5
Valuation : In view of the foregoing and having taken into consideration the
prevailing market conditions as at the material date of valuation, we are
of the opinion that the value of the un-expired leasehold interest in the
subject property, subject to the existing tenancies but free from all other
encumbrances are as follows:-
Material Date Of Valuation 30 September 2013
(A) As-Is Basis S$1,102,000,000/-
(Singapore Dollars One Billion One Hundred And Two Million Only)
(B) As-Is Basis (With Income Support) S$1,135,000,000/-
(Singapore Dollars One Billion One Hundred And Thirty-Five Million
Only)
Prepared By :
Colliers International Consultancy & Valuation (Singapore) Pte Ltd
Cynthia Ng, BSc (Estate Management) FSISV/ FRICS
Licence No. AD041-2003388A
Deputy Managing Director
JT/CN/k
This valuation certificate is subject to the attached Limiting Conditions.
E-6


VALUATION CERTIFICATE


Our Reference : qHKG20701


Valuation Prepared for : OUE Commercial REIT Management Pte. Ltd. (as manager of OUE
Commercial Real Estate Investment Trust), DBS Trustee Limited (in
its capacity as trustee of OUE Commercial Real Estate Investment
Trust) and Standard Chartered Bank (China) Limited


Purpose of Valuation : Initial Public Offering (IPO) Purpose


Valuation Date : 30 September 2013


Date of Inspection : 24 September 2013


Address of Property : No. 222 Huaihai Zhong Road
Huangpu District, Shanghai
PRC


Type of Property : Commercial


Brief Description : The Property, Lippo Plaza, is a 36-storey commercial building with a
three-storey basement for office, retail and car parking use. It is
served by 168 car parking lots. The Property comprises the whole
Lippo Plaza except for Levels 12, 13, 15, 16, Unit 2 on Basement
Level 1 and car parking spaces No. 15, 16, 17 and 26 on Basement
Level 2.


Legal Description : According to the Shanghai Certificate of Real Estate Ownership Hu
Fang Di Lu Zi (2011) Di No.001727 Hao, dated 23 August 2011, the
Property, with a total gross floor area of approximately 58,521.54 sq
m, is vested to Lippo Realty (Shanghai) Limited (]|
[ , ) ) for mixed-use (retail, entertainment, office) purposes
expiring on 1 July 2044.


Tenure : Leasehold


Registered Proprietor(s) : Lippo Realty (Shanghai) Limited ]|[,))


Land Area : 7,457 sq m


Floor Area : 58,521.54 sq m
E-7
Lippo Plaza
No. 222 Huaihai Zhong Road
Huangpu District, Shanghai
PRC
Our Ref: qHKG20701 Page 2


Year of Completion : 1999


Condition : At the time of inspection, the Property is under normal operation. As
at 30 September 2013, the office and retail portion were let under
various tenancies with an occupancy rate of approximately 86.5%
and 97.8% respectively.

(Note: We have not been provided with all copies of lease agreements attached to
the Property)


Permitted Uses : Mixed-use (retail, entertainment, office)


Method of Valuation : Discounted Cash Flow Analysis
Direct Comparison Approach (for reference)


Valuation : In view of the foregoing, and having taken into consideration the
prevailing market conditions as at 30 September 2013, we are of the
opinion that the market value of the Property, free from
encumbrances, is:

MARKET VALUE RMB2,337,000,000
(RENMINBI TWO BILLION THREE HUNDRED THIRTY SEVEN
MILLION ONLY)






Colliers International (Hong Kong) Limited






Zhirong He (Flora He)
MRICS MCOMFIN
Director
Valuation and Advisory Services I China


Date: 31 December 2013








This valuation certificate is subject to the attached Limiting Conditions.
E-8
Savills Valuation and
Professional Services (S) Pte Ltd
Reg No : 200402411G

30 Cecil Street
#20-03 Prudential Tower
Singapore 049712

T: (65) 6836 6888
F: (65) 6536 8611

savills.com



Our Ref : MKT/2013/C-OUE/DE/1001


8 January 2014


OUE Commercial REIT Management Pte. Ltd.
(as manager of OUE Commercial Real Estate Investment Trust)
50 Collyer Quay #04-08
OUE Bayfront
Singapore 049321

DBS Trustee Limited
(in its capacity as trustee of OUE Commercial Real Estate Investment Trust)
12 Marina Boulevard
Marina Bay Financial Centre Tower 3
Singapore 018982

Oversea-Chinese Banking Corporation Limited
65 Chulia Street #07-01
OCBC Centre
Singapore 049513


Dear Sirs

VALUATION OF:
50 COLLYER QUAY (OUE BAYFRONT) SINGAPORE 049321,
60 COLLYER QUAY (OUE TOWER) SINGAPORE 049322 &
62 COLLYER QUAY (OUE LINK) SINGAPORE 049325 (COLLECTIVELY REFERRED TO AS THE PROPERTY)

In accordance with your instructions for us to value the Property for the purpose of initial public offer of
units in the proposed OUE Commercial Real Estate Investment Trust (OUE Commercial REIT), we have
obtained such information from you as we consider necessary for the purpose of providing you with our
opinion of the market value of the leasehold interest in the Property as at 30 September 2013, subject to
existing and proposed tenancies on the following bases:
a) as-is basis
b) with an aggregate income support quantum of up to S$50 million to be provided by the sponsor over a
period of 5 years from the completion date of transaction, subject to a yearly limit of S$12 million.
We have prepared this valuation certificate for the purpose of inclusion in the Prospectus to shareholders to
be issued in connection with a proposed initial public offer of units in the said REIT.
Our valuation is our opinion of the market value of the Property which we would define as intended to
mean the estimated amount for which a property should exchange on the date of valuation between a
willing buyer and a willing seller in an arms length transaction, after proper marketing, wherein the parties
had each acted knowledgeably, prudently and without compulsion.
E-9
Our Ref : MKT/2013/C-OUE/DE/1001

The market value is the best price reasonably obtainable in the market by the seller and the most
advantageous price reasonably obtainable in the market by the buyer. This estimate specifically excludes
an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale
and leaseback arrangements, joint ventures, management agreements, special considerations or
concessions granted by anyone associated with the sale, or any element of special value. The market
value of a property is also estimated without regard to costs of sale and purchase, and without offset for
any associated taxes.
In arriving at our opinion of market value, we have adopted the Income Capitalisation Approach,
Discounted Cash Flow Analysis and Market Comparison Method.
We have relied to a very considerable extent on information given by you and have accepted advice given
to us on such matters as planning approvals or statutory notices, easements, tenure, occupancy status,
floor areas and all other relevant matters. Dimensions, measurements and areas included in the valuation
certificates are based on information contained in the documents provided to us and are therefore only
approximations.
No allowance has been made in our valuation for any charges, mortgages or amounts owing, on the
Property nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise
stated, it is assumed that the Property is free from encumbrances, restrictions, and outgoings of an
onerous nature which could affect its value.
We are pleased to enclose our valuation certificate for your attention.



Yours faithfully,
For and on behalf of
Savills Valuation and Professional Services (S) Pte Ltd



Daniel Ee MSISV
Appraisers Licence No. AD041-2004607E
Senior Director




Jessie Yeo
Appraisers Licence No. AD041-2002061K
Executive Director

encl.



E-10
Our Ref : MKT/2013/C-OUE/DE/1001
VALUATION CERTIFICATE

The Property Brief Description
Market Value as at
30 September 2013
50 Collyer Quay
(OUE Bayfront),
60 Collyer Quay
(OUE Tower) &
62 Collyer Quay
(OUE Link)
Singapore
049321/2/5


Legal Description/
Tenure

Nos 50 & 60:
Town Subdivision 30
Lot 404K
Leasehold - 99 years
commencing from 12
November 2007
Town Subdivision 30
Lot 80020K
(subterranean lot)
Leasehold - 99 years
commencing from 7
January 2002

No 62:
Lot 70012W
(airspace lot)
Leasehold - 15 years
commencing from 26
March 2010
The Property is an integrated commercial development comprising
OUE Bayfront (50 Collyer Quay), an 18-storey office building with 4
basement car park levels with 245 lots (including 3 lots for the
handicapped), the conserved 12-storey OUE Tower (60 Collyer Quay)
housing a restaurant and a retail link bridge named OUE Link (62
Collyer Quay), completed in January 2011.
The Property is strategically situated between Raffles Place, the
traditional financial heart of the CBD and Marina Bay, Singapores new
downtown area adjoining Marina Reservoir.
There is easy access to other parts of Singapore via the ECP, MCE,
AYE and Nicoll Highway. It is within short walking distance from the
Raffles Place MRT interchange station via OUE Link and an
underpass leading to the neighbouring One Marina Boulevard. It is
also situated close to the recently opened Downtown MRT Station.
The Property occupies a land area of 6,447.5 sq metres (69,400 sq
feet), subterranean space of 60.8 sq metres (654 sq feet) and airspace
of 589.6 sq metres (6,346 sq feet).
The Property offers international grade office space with a typical
column-free floor plate of about 2,770 sq metres. OUE Bayfront has
been awarded the Green Mark Gold Award by the Building and
Construction Authority.
The total gross floor area is about 46,774.61 sq metres (503,477 sq
feet) while the net lettable area (NLA) is 37,381.8 sq metres (402,374
sq feet), giving an overall building efficiency of 80%.
The NLA breakdown by usage is as follows:
Use / Location Sq Metres Sq Feet
Office (Levels 4-18 in No 50) 35,551.7 382,675
F&B (Roof level of No 50 &
Revolving Restaurant in No 60)
1,565.0 16,845
Retail (12 units in No 62) 265.1 2,854
1 sq metre = 10.7639 sq feet approximately (some error may arise from rounding off).
As-is basis:
S$1,080,000,000/-
(Singapore Dollars One
Billion And Eighty Million
Only)

With income support:
S$1,115,000,000/-
(Singapore Dollars One
Billion One Hundred And
Fifteen Million Only)


Registered Owner
Clifford Development
Pte Ltd
Based on the tenancy schedule as at 30 September 2013, the
Property enjoys an overall occupancy rate of about 96.1% including
pre-committed tenancies. We have valued the Property subject to
existing and pre-committed tenancies on the following bases:
1) as-is basis
2) with an aggregate income support quantum of up to S$50 million to
be provided by the sponsor over a period of 5 years from the
completion date of transaction, subject to a yearly limit of S$12
million.
The income support is given to compensate for the lower passing rent
as compared to the current market rent. When vacant units are taken
up and when the existing leases expire or are due for renewal, they
are expected to be let or re-let at the prevailing market rates. Based
on our market research and findings, we are of the opinion that the
guaranteed property rental income (taking into account the income
support) is in line with market rentals of comparable properties which
range from S$11 to S$12psf per month.


E-11
Savills Valuation and
Professional Services Limited
23/F Two Exchange Square
Central, Hong Kong
T: (852) 2801 6100
F: (852) 2530 0756
EA LICENCE: C-023750
savills.com

Savills has a network of over 500 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East
Savills Valuation and Professional Services Limited
OUE Commercial REIT Management Pte Ltd.
(as manager of OUE Commercial Real Estate Investment Trust)
and DBS Trustee Limited
(in its capacity as trustee of OUE Commercial Real Estate Investment Trust)

Standard Chartered Bank (China) Limited



8 January 2014
Our Ref: HK/2014/VPS/11066(b)/CC/AL/fc



Dear Sirs,

RE: LIPPO PLAZA, (EXCLUDING LEVELS 12, 13, 15 AND 16, UNIT 2 ON BASEMENT LEVEL 1 AND CAR PARKING
SPACE NOS. 15, 16, 17 AND 26 ON BASEMENT LEVEL 2), NO. 222 HUAIHAI ZHONG ROAD, HUANGPU
DISTRICT, SHANGHAI, THE PEOPLES REPUBLIC OF CHINA (THE PROPERTY)


In accordance with your instructions for us to value the Property situated in the Peoples Republic of China (the
PRC), we confirm that we have carried out an inspection, made relevant enquiries and obtained such further
information as we consider necessary for the purpose of providing you with our opinion of the market value of the
Property as at 30 September 2013 (Valuation Date) for Initial Public Offering purpose.


BASIS OF VALUATION

Our valuation of the Property is our opinion of its market value which we would define as intended to mean the
estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer
and a willing seller in an arms-length transaction after proper marketing and where the parties had each acted
knowledgeably, prudently and without compulsion.

Our valuation is prepared in accordance with The HKIS Valuation Standards (2012 Edition) published by The
Hong Kong Institute of Surveyors.



E-12

Our Ref: HK/2014/VPS/11066(b)/CC/AL/fc Page 2
VALUATION METHODOLOGY

We have valued the Property by the Income Capitalization Approach and Discounted Cash Flow (DCF)
Approach. In addition, the Direct Comparison Approach has also been used as a reference check for the
valuations arrived at from the Income Capitalization Approach and DCF Approach.

The Income Capitalization Approach is a method of valuation whereby the existing rental incomes of all
lettable units of the Property are capitalized for the respective unexpired terms of contractual tenancies whilst
vacant units are assumed to be let at their respective market rents as at the Valuation Date. Upon expiry of the
existing tenancies, each unit is assumed to be let at its market rent as at the Valuation Date, which is in turn
capitalized for the unexpired term of the land use rights under which the Property is held. The summation of
the capitalized value of the term income for the leased portion, the capitalized value of the reversion income
(i.e. market rental income) as appropriately deferred for the leased portion and the capitalized value for the
vacant portion provides the market value of the Property.

The DCF Approach involves discounting future net cash flows of the Property to its present value by an
appropriate discount rate that reflects the rate of return required by an investor for an investment of this type.
In the course of our valuation, we have assumed a holding period of a 5-year investment horizon and the net
income from the 6th year onward to the expiry date of the land use rights is capitalized at a terminal
capitalization rate.

The Direct Comparison Approach is a method of valuation whereby comparable sales transactions around the
Valuation Date are collected and analyzed in terms of a price per sq.m.. The collected comparables are then
adjusted to take account of the discrepancies between the Property and comparables in terms of time, location,
accessibility, age, building quality and condition, facilities and the like.


TITLE INVESTIGATIONS

We have been provided with copies of extracts of title documents relating to the Property in the PRC. However,
we have not searched the original documents to verify ownership or to ascertain the existence of any
amendments that may not appear on the copies handed to us. We are not in a position to comment on the title to
the Property in the PRC, which is more properly the sphere of the Companys legal adviser. For the purpose of
this valuation, we have assumed that the Property is freely transferable in the market and all land premium and
acquisition costs have been fully paid.


VALUATION CONSIDERATION AND ASSUMPTIONS

In undertaking our valuation, we have assumed that, unless otherwise stated, transferable land use rights in
respect of the Property for its specific term at a nominal annual land use fee have been granted and that any
premium payable has already been fully paid. We have also assumed that the owner of the Property has an
enforceable title to the Property and has free and uninterrupted rights to use, occupy or the assign the Property
for the whole of the unexpired term as granted.
E-13

Our Ref: HK/2014/VPS/11066(b)/CC/AL/fc Page 3
In the course of our valuation, we have relied to a considerable extent on information given by the Company and
have accepted advice given to us on such matters as planning approvals or statutory notices, easements,
tenure, particulars of occupancy, site and floor areas and all other relevant matters. Dimensions, measurements
and areas included in the valuation certificate are based on information contained in the documents provided to
us and are therefore only approximations. No on-site measurements have been taken. We have no reason to
doubt the truth and accuracy of the information provided to us by the Company which is material to our valuation.
We have also advised by the Company that no material facts have been omitted from the information supplied.

No allowance has been made in our report for any charges, mortgages or amounts owing on the Property nor for
any expense, which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the Property
is free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value.


SITE INSPECTION

We have inspected the exterior and where possible, the interior of the Property. Site inspection was carried out
by our Mr. Sean Wang who is a Certified Public Valuer, a China Registered Real Estate Appraiser and a China
Registered Land Valuer on 15 October 2013. During the course of our inspection, we did not note any serious
defects. However, no structural survey has been made and we are therefore unable to report that the Property is
free from rot, infestation or any other structural defects. No tests were carried out on any of the services.


REMARKS

Unless otherwise stated, all money amounts stated are in Renminbi (RMB).

We enclose herewith our valuation certificate.


Yours faithfully,
For and on behalf of
Savills Valuation and Professional Services Limited




Charles C K Chan
MSc FRICS FHKIS MCIArb RPS(GP)
Managing Director

Encl.

Note: Mr. Charles C K Chan is a Chartered Estate Surveyor and has about 29 years experience in the valuation of
properties in Hong Kong and 24 years experience in the valuation of properties in the PRC.

E-14

Our Ref: HK/2014/VPS/11066(b)/CC/AL/fc Page 4
V A L U A T I O N C E R T I F I C A T E



Property


Description and tenure

Particulars of
occupancy
Market value in
existing state as at
30 September 2013

Lippo Plaza,
(excluding Levels 12,
13, 15 and 16, Unit 2 on
Basement Level 1 and
Car Parking Space Nos.
15, 16, 17 and 26 on
Basement Level 2),
No. 222 Huaihai Zhong
Road,
Huangpu District,
Shanghai,
PRC
Lippo Plaza (the Development) is erected on
a parcel of land with a site area of
approximately 7,457.00 sq.m.. The
Development comprises a 39-storey
(including 3 basements) commercial building
completed in 1999. Levels 1 to 3 and
Basement Level 1 of the Development are
designated for retail use; Levels 4 to 39 (there
being no Levels 14, 24 and 34) are
designated for office use; and Basement
Levels 2 and 3 are designated for car park
use .

The Property comprises the majority of the
Development excluding four levels of office,
one retail unit on Basement Level 1 and four
car parking lots on Basement Level 2, which
have been sold. The Property has a total
gross floor area of approximately 58,521.54
sq.m., the breakdown of which is as follows:

Usage Approximate Approximate
Gross Gross
Lettable Area Floor Area
(sq.m.) (sq.m.)
Car Parking - 8,552.88
Spaces (B2-B3)
Bicycle Parking - 2,085.32
Spaces
(B1 & mezzanine)
Retail (B1-L3) 5,693.40 9,217.15
Office (L4-L39) 33,538.64 37,773.31
(there being no
Levels 14, 24 and 34)
Amenities (Roof) - 892.88
Total 39,232.04 58,521.54

As advised, the Property accommodates 168
car parking spaces.



According to the
tenancy schedule
supplied by the
Company, portion of
the office units with a
total gross lettable area
of approximately
1,090.03 sq.m. was
owner-occupied and a
total gross lettable area
of approximately
27,928.32 sq.m. was
subject to various
tenancies with the
latest one due to expire
on 31 December 2016
as at the Valuation
Date. The total rental
receivable for the
month of September
2013 was
approximately
RMB6,977,448.

Portion of the retail
units with a total gross
lettable area of
approximately
5,565.90 sq.m. was
subject to various
tenancies with the
latest one due to expire
on 27 April 2018 as at
the Valuation Date.
The total rental
receivable for the
month of September
2013 was
approximately
RMB2,868,239.


RMB2,250,000,000
E-15

Our Ref: HK/2014/VPS/11066(b)/CC/AL/fc Page 5


Property


Description and tenure

Particulars of
occupancy
Market value in
existing state as at
30 September 2013

The land use rights of the Property have been
granted for a term commencing on 16 August
2011 and expiring on 1 July 2044 for
comprehensive uses.



Notes:

(1) Pursuant to the Shanghai Certificate of Real Estate Ownership Hu Fang Di Lu Zi (2011) Di 001727 Hao dated 23
August 2011, the land use rights of a parcel of land with a site area of 7,457.00 sq.m. and the building ownership of
the Property with a total gross floor area of 58,521.54 sq.m. have been granted to Lippo Realty (Shanghai) Limited
(|_____) for comprehensive uses commencing on 16 August 2011 and expiring on 1 July 2044.

(2) We have prepared our valuation based on the following assumptions:

(i) Lippo Realty (Shanghai) Limited is in possession of a proper legal title to the Property and is entitled to
transfer, lease or mortgage the Property with the residual term of its land use rights at no extra land premium
or other onerous charges payable to the government;

(ii) all land grant premium and costs of resettlement and public utilities services have been fully settled;

(iii) the design and construction of the Property are in compliance with the local planning regulations and have
been approved by the relevant authorities; and

(iv) the Property can be freely sold to local and overseas buyers.



* * * * * * *
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APPENDIX F
INDEPENDENT MARKET RESEARCH REPORT
PRIVATE & CONFIDENTIAL
www.dtz.com









Independent Market Research of
the Office and Retail Property Markets in
Singapore and Shanghai

4 October 2013





F-2




100 Beach Road,
Shaw Tower #3500
Singapore 189702

Telephone : +65 6293 3228
Facsimile: +65 6298 9328

www.dtz.com
OUE Commercial REIT Management Pte. Ltd.
(as manager of OUE Commercial Real Estate Investment Trust)
50 Collyer Quay #0408
OUE Bayfront
Singapore 049321

DBS Trustee Limited
(as trustee of OUE Commercial Real Estate Investment Trust)
12 Marina Boulevard
Marina Bay Financial Centre Tower 3
Singapore 018982


9 January 2014


Dear Sirs,

INDEPENDENT MARKET RESEARCH OF THE OFFICE AND RETAIL PROPERTY MARKETS IN
SINGAPORE AND SHANGHAI

Thank you for appointing DTZ to conduct an independent research of the office and retail
property markets in Singapore and Shanghai, in relation to the following properties:
OUE Bayfront, OUE Tower & OUE Link located at 50, 60 & 62 Collyer Quay, Singapore; and
Lippo Plaza located at 222 Huaihai Middle Road, Huangpu District, Shanghai.

The report forms part of the initial public offering of OUE Commercial Real Estate Investment
Trust on the Singapore Exchange Securities Trading Limited. Our terms of reference are:
Overview of the key socioeconomic profiles as well as major government plans, policies and
initiatives of Singapore and Shanghai;
Office and property retail market overviews, which focuses on Singapores CBD and
Shanghais GradeA offices. The overviews include 5year annual rental growth forecasts for
Singapores office market and Shanghais office and retail markets; and
Review of the portfolio properties.





F-3
It has been a pleasure working with you and your team and we look forward to working with you
again in the future.

Yours faithfully,
for and on behalf of
DTZ Debenham Tie Leung (SEA) Pte Ltd





Ho Tian Lam
Director & Chief Executive Officer


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Table of Contents

Terms of Reference

1 Introduction ....................................................................................................................................... 1
2 Singapore ........................................................................................................................................... 8
2.1 Socioeconomic Overview ................................................................................................................... 8
2.1.1 GDP Growth, Unemployment and Inflation .............................................................................. 8
2.1.2 Economic Profile ........................................................................................................................ 9
2.1.3 Key Industries ............................................................................................................................ 9
2.1.4 Exchange Rates ........................................................................................................................ 10
2.1.5 Population ............................................................................................................................... . 11
2.1.6 Personal Disposable Income and Private Consumption Expenditure ..................................... 11
2.1.7 Major Government Plans, Policies and Initiatives ................................................................... 11
2.1.8 Outlook ............................................................................................................................... ..... 12
2.2 Office Property Market Overview ..................................................................................................... 13
2.2.1 Major Office Locations ............................................................................................................. 13
2.2.2 Existing Supply ......................................................................................................................... 14
2.2.3 Demand and Occupancy .......................................................................................................... 17
2.2.4 Potential Supply ....................................................................................................................... 20
2.2.5 Rental Values ........................................................................................................................... 22
2.2.6 Capital Values .......................................................................................................................... 23
2.2.7 Major Investment Transactions ............................................................................................... 24
2.2.8 Outlook ............................................................................................................................... ..... 26
2.3 Retail Property Market Overview ...................................................................................................... 27
3 Shanghai .......................................................................................................................................... 29
3.1 Socioeconomic Overview ................................................................................................................. 29
3.1.1 GDP Growth, Unemployment and Inflation ............................................................................ 29
3.1.2 Population ............................................................................................................................... . 31
3.1.3 Personal Disposable Income and Private Consumption Expenditure ..................................... 31
3.1.4 Major Government Plans, Policies and Initiatives ................................................................... 32
3.1.5 Outlook ............................................................................................................................... ..... 34
3.2 Office Property Market Overview ..................................................................................................... 35
3.2.1 Major Office Locations .............................................................................................................. 35
3.2.2 Supply, Demand and Occupancy ............................................................................................. 37
3.2.3 Potential Supply ....................................................................................................................... 39
3.2.4 Rental Values ........................................................................................................................... 42
3.2.5 Capital Values .......................................................................................................................... 44
3.2.6 Major Office Investment Transactions .................................................................................... 45
3.2.7 Outlook ............................................................................................................................... ..... 46
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3.3 Retail Property Market Overview ...................................................................................................... 47
4 Review of Portfolio .......................................................................................................................... 49
4.1 Location of Subject Properties ........................................................................................................... 49
4.1.1 The OUE Bayfront Property ...................................................................................................... 49
4.1.2 Lippo Plaza ............................................................................................................................... . 52
4.2 Summary of Key Portfolio Information .............................................................................................. 55
4.3 Portfolio Performance ........................................................................................................................ 57
4.3.1 The OUE Bayfront Property ...................................................................................................... 57
4.3.2 The Lippo Plaza Property .......................................................................................................... 57
4.4 SWOT Analysis ............................................................................................................................... ..... 58
5 Conclusion ....................................................................................................................................... 61

Appendix 1: Key Office Grade Criteria
Appendix 2: Downtown Core Planning Area
Appendix 3: Map of Other City Areas


LIMITING CONDITIONS






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Terms of Reference

DTZ was appointed by OUE Commercial REIT Management Pte. Ltd. to conduct an independent research of the office and
retail property markets in Singapore and Shanghai. The report forms part of the initial public offering of OUE Commercial
Real Estate Investment Trust (OUE CREIT) on the Singapore Exchange Securities Trading Limited (SGXST). The portfolio
comprises the following properties:
OUE Bayfront, OUE Tower & OUE Link located at 50, 60 & 62 Collyer Quay, Singapore; and
Lippo Plaza located at 222 Huaihai Middle Road, Huangpu District, Shanghai.

This report is addressed to OUE Commercial REIT Management Pte. Ltd. and DBS Trustee Limited, in its capacity as Trustee of
OUE CREIT.

The forward statements in this report are based on our expectations and forecasts for the future. These statements should
be regarded as our assessment of the future, based on certain assumptions on variables which are subject to changing
conditions. Changes in any of these variables may significantly affect our expectations and forecasts.

1 Introduction
The rise of Asia
Asia is one of the most important economic regions in the world, with its leading share of world GDP
1
increasing from 28% in
2003 to 36% in 2012, reflecting that its growth has outpaced that of Europe and the United States (US) (Figure 1.1).

Figure 1.1
Share of World Real GDP by Region (PPP Exchange Rate, USD)

Source: Oxford Economics, DTZ Consulting & Research, October 2013

According to Oxford Economics, Asias economic importance will continue to strengthen over the next two decades, with the
region expected to account for almost half (47%) of World GDP by 2030.


1
Based on real GDP on a PPP exchange rate (USD).
28%
36%
41%
47%
27%
22%
19%
16%
24%
20%
18%
16%
22%
22% 22% 21%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003 2012 2020 F 2030 F
Asia Europe United States Others
Share of World Real GDP (PPP Exchange Rate, USD)
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ASEAN
2
and Mainland China remain key drivers of global economic growth, though risk factors persist
Recent growth in the advanced economies has been encouraging, with manufacturing in the US, Mainland China
3
and Europe
exhibiting expansionary trends. Core risks have also receded, particularly in the Eurozone. However, the improved world
growth outlook is accompanied by market uncertainties over quantitative easing measures and political stalemate in the US.
There has also been some consolidation in Asian domestic demand, particularly in China, where consumption and investment
growth have moderated. Public spending in some ASEAN countries has also eased.

Notwithstanding, Asias growth story remains compelling, especially since the Global Financial Crisis (GFC) in 2008/09 and the
subsequent Eurozone Crisis which culminated in 2011. While the US and Europe were significantly impacted by these
downturns, growth in most Asian economies remained resilient, underpinned by its longterm industrialisation, urbanisation
and sociodemographic trends. Some of these trends include:
According to the Asian Development Bank (ADB) in March 2012, Asia is moving into an era of unprecedented
urbanisation. It estimated that another 1.1 billion people will live in the regions cities in the next 20 years and that by
2030, more than 55% of the population of Asia will be urban; and
According to EY
4
in April 2013, a surge in the global middle class, defined as people earning between SGD13 and SGD125
(USD10 and USD100) per day, is expected over the next two decades. In particular, it was estimated that about 66% (3.2
billion people) of the global middleclass will be residents of the AsiaPacific region by 2030, up from 28% (0.5 billion
people) in 2009. In addition, a significant proportion of the new Asian middle class is expected to be at the upper end of
the income bracket. Notably, Mainland China is envisaged as one of the powerhouses of middle class consumerism, with
about one billion people expected to be middle class, which is about 70% of its projected population.

Economic growth in Asia is expected to remain positive, trending up at a more sustainable rate. In particular, growth in
Mainland China and ASEAN is expected to exceed world GDP growth, reflecting these regions strong growth prospects
(Figure 1.2).



2
The Association of South East Asia Nations (ASEAN) comprises Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
3
Mainland China refers to the geopolitical area under the direct jurisdiction of the Peoples Republic of China (PRC) and excludes the PRC Special Administrative Regions of Hong Kong and Macau.
4
Source: EY and SKOLKOVO Institute for Emerging Markets Studies. 25 April 2013. Hitting the sweet spot The growth of the middle class in emerging markets.
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Figure 1.2
Real GDP Growth (World, Asia, Mainland China and ASEAN)

Source: Oxford Economics, DTZ Consulting & Research, October 2013
The ADB estimated in 2009 that Asia is likely to require about USD8 (SGD10) trillion for overall national infrastructure
investment and USD287 (SGD366) billion for specific regional projects between 2010 and 2020. This is expected to
significantly spur the financing needs of companies, which in turn will mobilise the large pool of savings in the region and
drive stronger interest and activity in the financial and capital markets in emerging economies in Asia.

While the focus of financial and trading activities is shifting to Asia, the growth transition is uneven, particularly due to the
financial and capital markets of emerging Asian economies remaining underdeveloped and fragmented. As such, significant
emphasis has been placed on Asian cities with advanced economies and established competitive advantages e.g., conducive
business and regulatory environment, comprehensive infrastructure, strong crossborder market accessibility and deep
talent pool.

Singapore is a leading global financial centre and a gateway to ASEAN as well as the rest of the world
Singapore is a global financial centre and a gateway to ASEAN as well as the rest of the world. In addition to its strategic
geographical location and high accessibility to critical investment and economic nodes in ASEAN, Singapore has typically been
rated highly for possessing various key business competitive advantages such as:
Leading global financial centre According to the Global Financial Centre Index (GFCI)
5
by Z/Yen Group, Singapore has
consistently been ranked since 2007 as one of the top two financial centres in Asia (the other Asian city being Hong
Kong), just behind London and New York globally;
Ease of doing business Singapore is ranked as the easiest place in the world to conduct business in the Doing Business
2013 Report by World Bank, one of the key criteria for which is the existence of a conducive regulatory environment for
conducting business;
Competitiveness Singapore is ranked 2
nd
in Asia (5
th
globally) in the IMB World Competitiveness 2013 Yearbook. The
particularly strong areas of competitiveness for Singapore are government and business efficiency;


5
The GFCI is a recognised instrument for gauging the attractiveness both in absolute and in dynamic terms of financial centres. It provides profiles, ratings and rankings for 79 financial centres, drawing
external indices and responses to online surveys. The latest updates are as at March 2013.
4.0
2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 F 2014 F 2015 F 2016 F 2017 F
%
World Asia Mainland China ASEAN
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Integrated into the global economy Singapore is ranked 2
nd
among the worlds 60 largest economies in EYs
Globalisation Index 2012, reflecting its strong degree of global integration;
Human capital Singapore is ranked 3
rd
globally after Switzerland and Finland and leads Asia in the Human Capital
Index
6
in 2013; and
Stability Singapore is the only country in Asia with a stable AAA credit rating
7
from Moodys, Standard & Poors and
Fitch Ratings.

A leading global financial centre, with a panAsian focus
Singapore is a thriving global financial centre and has cultivated a diverse and comprehensive ecosystem of financial and
insurance services including trade, project and corporate finance, treasury, foreign exchange and derivatives trading, asset
and wealth management as well as insurance services. Some of the key characteristics defining Singapore as a global financial
centre includes:
Among the top global financial centres Singapore is consistently ranked among the top four most competitive financial
centres globally, together with London, New York and Hong Kong, with many of the worlds leading banks and financial
institutions having a significant presence in the citystate. As at September 2013, Singapore is home to over 700 financial
institutions
8
offering a wide range of products and services across various asset classes. In addition, a growing number of
international financial institutions have chosen to base their operational headquarters in Singapore;
A regional funding centre driven by the rapidly expanding Asian Dollar Market The Asian Dollar Market
9
, which has
been critical in serving the financing and treasury needs of individuals, corporates and institutions in Singapore and the
region, has been expanding significantly over the past decade, from USD0.5 trillion in 2003 to USD1.1 trillion in 2012
10
;
A regional gateway for the RMB As part of the ChinaSingapore Free Trade Agreement (FTA), the Peoples Bank of
China appointed the Industrial & Commercial Bank of China Limited (ICBC) Singapore branch as the RMB clearing bank in
Singapore on 8 February 2013. This enables financial institutions in Singapore and the region to utilise Singapore as a
platform in intermediating the growing trade and investment flows between Mainland China and the rest of the world.
On 22 October 2013, Singapore and Mainland China agreed on new initiatives to strengthen cooperation on financial
sector development and regulation between the two countries, particularly in the promoting the international use of the
RMB through Singapore. Some of these key initiatives are:
o Mainland China extending its RMB Qualified Foreign Institutional Investor (RQFII) Programme to Singapore,
with an aggregrate quota of RMB50 billion. Apart from allowing qualified Singaporebased institutional
investors to channel offshore RMB from Singapore into Mainland Chinas securities markets, RQFII license
holders are also allowed to issue RMB investment products to investors in Singapore based on the RQFII
quota;
o Alongside Singapore being given consideration as one of the investment destination under the RMB
Qualified Domestic Institutional Investor (RDQII) scheme which allows qualified Mainland Chinese
institutional investors to use RMB to invest in Singapores capital markets, the RFQII and RDQII programmes
are envisaged to help to diversify the base of investors in both countries and promote the adoption of the
RMB for investment;
o Mainland China and Singapore will be introducing direct currency trading between the RMB and SGD,
making Singapore one of the three cities globally to possess this capability (the other two being Hong Kong
and London); and
o Signing of a Memorandum of Understanding (MOU) between the SGXST and Shanghai Futures Exchange to
strengthen collaboration in the joint development of commodity derivatives;
One of the largest foreign exchange trading centres globally According to the Bank for International Settlements
(BIS
11
), Singapore was the worlds 3
rd
largest foreign exchange centre as at April 2013, accounting for 5.7% of global
foreign exchange market turnover, higher than that of Japan (5.6%) and Hong Kong (4.1%);
Asias leading commodity and financial derivatives trading hub The Monetary Authority of Singapore indicated in
March 2013 that some estimates show Singapore accounting for more than half of Asias OverTheCounter (OTC)
commodity derivatives trades. Meanwhile, the BIS ranked Singapore as the 2
nd
largest OTC interest rate derivatives
centre in Asia by turnover, after Japan;
A premier asset management centre in Asia With total assets under management of about SGD1.4 trillion and over
500 institutions in the industry, Singapore is wellrecognised as one of the premier asset management locations globally.
Notably, Singapore is regarded as a fastgrowing asset management centre. According to PricewaterhouseCoopers


6
The Human Capital Index, founded by a collaboration between the World Economic Forum and Mercer, identifies countries that are best positioned to contribute to effective workforce development, growth
potential and economic success. The latest updates are as at 1 October 2013.
7
The credit ratings reflect the long-term foreign currency credit worthiness of sovereign bonds, with AAA indicating the least credit risk.
8
Source: Monetary Authority of Singapore. 5 September 2013. Singapore Financial Centre Types of Institutions. Available: http://www.mas.gov.sg/singapore-financial-centre/types-of-institutions.aspx.
9
A market which was developed in the late 1960s comprising Asian financial institutions that collect deposits and make loans denominated in USD. This is similar to the Eurodollar market, with its main
distinction being mainly geographical. For instance, USD deposited in a bank in an Asian country will be captured under the Asian Dollar Market, while those deposited in a European country will be captured
under the Eurodollar market.
10
Source: Statistical data from the Monetary Authority of Singapore. Total assets, Asian Dollar Market: Assets of Asian Currency Units (ACUs) from 2003 to 2012.
11
Figures from the BIS are preliminary and are as at April 2013.
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Global Private Banking and Wealth Management Survey 2013, Singapore is expected to overtake Switzerland in 2015 to
be the top international financial centre for private client assets;
A leading insurance centre in Asia Singapore currently hosts about 190 insurance institutions, many of which are
major international insurers and reinsurers. Apart from providing the domestic market with a full range of insurance
services, many insurers also use Singapore as a base to write risks from the region. In particular, the offshore insurance
business has become a major driver of industry growth, accounting for more than half of the total general insurance
business written. With a diverse mix of direct insurers, reinsurers and captive insurers, Singapore has cultivated a rich
network of insurance intermediaries and ancillary service providers; and
One of the most wellestablished equity capital markets in Asia The SGXST is one of the most preferred listing
locations in Asia, with 782 listed companies as at end August 2013. The SGXSTs total market capitalisation has grown by
almost 80% over the past decade, from SGD519.1 billion in 2003 to SGD922.9 billion in August 2013. In addition, the SGX
has evolved to encompass a wide range of foreign listings, over diverse sectors including real estate, shipping as well as
offshore marine and infrastructure. Notably, Singapore is the largest Real Estate Investment Trust (REIT) market in Asia,
excluding Japan.

Gateway to ASEAN due to proximity as well as business and cultural linkages
Singapore stands out through its status as a gateway to ASEAN. With its established business and cultural linkages to Asia as
well as a panAsian focus, it is a natural gateway for international firms looking to access the Asian market and for Asian
businesses to access the global market. Being one of the most established financial and business hubs in the region,
Singapore has long led ASEAN in terms of Foreign Direct Investment (FDI) inflows. In 2012, Singapore accounted for about
51% (SGD56.7 billion) of the FDI inflow into ASEAN (SGD111.3 billion
12
).

Singapores gateway positioning is augmented by its worldclass port of call and airport. Connected to over 600 ports in more
than 120 countries, the Port of Singapore is one of the busiest container ports in the world, handling 31.6 million Twenty
Foot Equivalent Units (TEUs) in 2012
13
, a 5.7% increase from that in 2011. Meanwhile, Changi Airport is a major aviation hub
in Asia and is the sixth busiest airport in the world in terms of international passenger movements as at September 2013.
Serving more than 100 international airlines flying to some 250 cities in about 60 countries and territories worldwide, Changi
Airport handled more than 51.2 million passengers in 2012
14
.

The establishment of the ASEAN Economic Community (AEC) by 2015 is expected to transform ASEAN into a region with free
movement of goods, services, investment, skilled labour, and freer flow of capital. In particular, Singapore is wellpositioned
to capitalise on the AEC, which will integrate ASEAN as a:
Single market and production base;
Highly competitive economic region;
Region of equitable economic development; and
Region fully integrated into the global economy.

Global business city plugged into the heart of a growing Asia
Singapore has also positioned itself as an excellent location to bridge growth opportunities in Mainland China, India and the
Middle East. Singapore is best described as a global business city plugged into the heart of a growing Asia
15
. This is
evidenced by the fact that more than 7,000
16
MultiNational Companies (MNCs) have chosen to be based in Singapore to
cover the Asian region, an estimated 60% of which have some form of headquarter function, including finance and treasury.

Some of the key value propositions which attract MNCs to establish themselves in Singapore include:
Efficient and transparent business and government regulatory frameworks
o There are various governmentled incentives for eligible businesses e.g., International/ Regional
Headquarters Award and Finance & Treasury Centre Tax Incentive. There is also frequent consultation
between the government and stakeholders.
Government agencies consistently ensure that companies, notably in the financial industry, meet high prudential
standards, exceeding international norms in several areas. Diverse financial and business ecosystem
o Singapore provides a broad and integrated suite of financial and business services, particularly manifesting
itself as an important regional funding centre, leading insurance centre and established foreign exchange,
commodity derivatives trading hub in Asia. In particular, it is renowned as Asias centre for wealth, asset
and financial management; and


12
Source: United Nations Conference on Trade and Development (UNCTAD). 2013. World Investment Report 2013 Global Value Chains: Investment and Trade for Development.
13
Source: Containerisation International. August 2013. Top 100 Container Ports 2013. Available: http://europe.nxtbook.com/nxteu/informa/ci_top100ports2013.
14
Source: Changi Airport Group. 2013. About Changi Airport. Available: http://www.changiairport.com/our-business/about-changi-airport.
15
Source: Economic Development Board of Singapore. 16 September 2013. Bloomberg interview of EDB Chairman Leo Yip Singapore will benefit from ASEAN growth.
Available: http://www.bloomberg.com/video/singapore-will-benefit-from-asean-growth-edb-says-GzoJmk2MR7qSzIURsX13Ww.html.
16
Source: Ministry of Finance. 24 September 2013. Keynote Address by Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam at the 8
th
Russia-Singapore Business Forum.
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o Singapore has the most extensive network of FTAs in Asia. FTAs have been signed with major economies
such as the US, Mainland China, Japan, Australia, members of the European Free Trade Association and
India. Some of the notable FTAs include the TransPacific Strategic Economic Partnership Agreement and
the TransPacific Partnership FTA, for which Singapore has a leadership role.
Competitive tax system
o The government ensures that Singapores tax regime is competitive to make the city an attractive business
hub, with one of the lowest corporate tax rates globally (17%). Financial incentives as well as tax
exemptions are also offered to eligible businesses with substantive plans to expand in Singapore and the
region. A notable example is the Headquarters Programme, which offers concessionary tax rates for
companies intending to set up their regional and international headquarters in Singapore.
Comprehensive city planning and infrastructure
o Singapore possesses established city planning and infrastructure frameworks that includes its
comprehensive public transportation system as well as its vigorous and forwardlooking urban planning;
and
o A key example is the transformation of Marina Bay as an extension of the existing Central Business District
(CBD). Several future plans such as the proposed Southern Waterfront City at Tanjong Pagar will further
enhance Singapores reputation as an advanced regional and global business hub.
A deep talent pool, which features a highly skilled and bilingual workforce
o Singapore is an attractive location to access, harness, develop and deploy talent; and
o Notably, Singapore was ranked as the most liveable location globally for Asians
17
in 2012.
Singapores dynamic and forward looking economic policies
o The government envisages to anchor Singapore as a globalAsia hub, which includes retaining a globally
competitive manufacturing sector, strengthening its position as a leading globalAsia business and financial
hub, developing Singapore as a leading consumer business centre and establishing Singapore as the
location for futureready urban solutions. Another key tenet of its current economic policy is to build a
vibrant and diverse corporate ecosystem, with a focus of MNCs as key players in the economy while
achieving a deeper base of globallycompetitive Singapore enterprises.

Shanghai is the nexus of Mainland Chinas growth
Shanghai is historically and currently the business centre and financial capital of Mainland China. It has direct critical access
to the worlds second largest and fastestgrowing major economy.

A leading financial centre in Asia
Shanghai has advanced rapidly up the ranks of leading financial centres globally over the years. The city was ranked 5
th

globally and 3
rd
in Asia through the GFCI by Z/Yen Group in September 2011. While Shanghai was affected by the moderation
in growth in Mainland China in 2012 as the country enters a more mature growth phase, it remains as one of the top ten
financial centres in Asia (7
th
)
18
as at March 2013. Shanghai boasts a comprehensive array of financial institutions including
commercial banks, securities, insurance companies as well as fund management firms and futures corporations. There are
currently around 900 financial institutions in Shanghai, and the city is home to some 200,000 finance professionals.

As at H1 2013, Shanghai remained the primary investment destination for foreign investment in Mainland China, contributing
18.4% of Mainland Chinas FDI
19
. According to a survey among entrepreneurs and investors by Forbes
20
in 2012, Shanghai
remains among the Best Destinations for Business in Mainland China. Shanghai is also an optimal location from which
foreign and domestic companies can raise capital in RMB denominations for business expansion. The city has emerged as a
centre for the domestic financial services sector, with an important role in interfacing between international and domestic
financial institutions.

Shanghais fastrising significance as a global financial and business centre
Shanghais potential as a leading Asian financial centre is wellrecognised, as evidenced by the city being regarded
consistently through the Z/Yen Groups GFCI since 2009, alongside Singapore and Hong Kong as among the top five financial
centres globally that may become more significantly important over the next two to three years. On the same account, these
cities are also noted as part of the top five global financial centres where organisations may establish new operations in the
next two to three years.


17
Source: ECA International. 17 April 2012. Singapore is best place to live for Asian expatriates, ECA Internationals research shows.
Available: http://www.eca-international.com/news/press_releases/7647.
18
Based on GFCI by Z/Yen Group.
19
Source: National Bureau of Statistics of China and xinhua08. China Statistical Yearbook. Available: http://dc.xinhua08.com/232/c=&ofcdia=.
20
The survey was conducted globally and evaluated a citys competitiveness in terms of its human capital, urbanization, business cost and sustainability.
Available: http://www.forbes.com/sites/russellflannery/2013/01/13/forbes-chinas-2012-best-cities-for-business-list-full-list.
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In line with the 12
th
FiveYear Plan
21
of Shanghais Social and Economic Development, which focuses on accelerating the
internationalisation of the city with a Four Centres initiative a global financial, trade, shipping and economic centre,
Shanghai has established the potentially gamechanging pilot Shanghai Free Trade Zone (FTZ)
22
that features interest rate
liberalisation and full RMB convertibility as well as continuous support from the municipal government e.g., measures aimed
at encouraging and supporting MNCs to locate their Regional Headquarters (RHQs) in Shanghai
23
.

In particular, these measures have helped drive the rapid growth of MNCs setting up their RHQs in the city, from 86
24
in 2004
to 403
25
in 2012, as well as the significant growth (20.5% YOY) of FDI inflow in 2012. The Shanghai municipal government
expects 35 more MNCs to locate their RHQs to the city by end 2013, while FDI inflow is expected to increase by about 10%
YOY
26
. This is in line with the governments longterm target of having over 550 MNCs set up their RHQs in Shanghai by 2020.

Shanghais position as one of Mainland Chinas most important gateways for foreign trade has also strengthened
significantly, given its significant port and aviation infrastructure. Notably, the Port of Shanghai is Mainland Chinas largest
and most comprehensive port. It overtook Singapore as the busiest container port in 2010. The Port of Shanghai has since
maintained its pole position, registering about 32.5 million TEUs in 2012
27
. Meanwhile, the Shanghai Pudong International
Airport, the primary international airport serving Shanghai, is renowned as a major aviation hub in Asia, connecting the city
to about 200 global destinations. As at end 2012, it is the busiest airport in Mainland China in terms of cargo traffic (3
rd

globally
28
) and the 3
rd
busiest airport in Mainland China in terms of passenger traffic. The city is also served by the Shanghai
Hongqiao International Airport, which is the main domestic airport, with limited international flights.




21
Approved in late 2010, the 12
th
Five-Year Plan was for the period from 2011 to 2015.
22
The 29 sq km free trade zone in Shanghai, known as the Shanghai FTZ, was launched on 29 September 2013. Please refer to Section 3.1.4 for additional details on the Shanghai FTZ.
23
These measures were first passed in 2008 and the latest update was in 2012. Please refer to Section 3.1.4 for additional details of these measures.
24
Source: Benjamin Kroymann. 2005. Regional Headquarters Schemes by Chinas Ministry of Commerce and the Shanghai Municipal Government: Differences, Limitations and Possible Combinations.
25
Source: Shanghai Municipal Commission of Commerce. 2013. 2013 Briefing on Shanghais Commerce and Investment by Zhang Xinsheng, Party Secretary and Vice Chairman of Shanghai Municipal
Commission of Commerce.
26
According to the Shanghai Municipal Commission of Commerce in August 2013, 424 MNCs had established their RHQs in Shanghai as at end H1 2013. The municipal government also highlighted that
Shanghai attracted USD8.29 billion in FDI in H1 2013, which is a 12.5% YOY increase.
27
Source: Containerisation International. August 2013. Top 100 Container Ports 2013. Available: http://europe.nxtbook.com/nxteu/informa/ci_top100ports2013.
28
Source: Airports Council International. 26 March 2013. Media Release Preliminary 2012 World Airport Traffic and Rankings.
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Singapore and Shanghai at the forefront of Asias growth
The future growth and innovation in the global economy is expected to be underpinned by the growth momentum in Asia.
There have also been more promising integration initiatives within Asia and the world, which will further enrich the growth
potential of key Asian business and financial hubs. This includes:
The formation of the AEC by 2015;
Further expansion of FTA network, particularly the European Union (EU)Singapore FTA, which will come into force in
2015. Notably, the removal of nontariff barriers is expected to benefit Singapores servicesproducing industries. The
European Commission estimates the EUSingapore FTA will boost Singapore exports to the EU by SGD5.91 billion over a
tenyear period and EU exports to Singapore will rise by about SGD2.4 billion over the same period; and
Economic and financial liberalisation in Mainland China, amid its structural reforms, particularly in Shanghai which allows
RMB convertibility in its newly established pilot free trade zone.

As leading business and financial hubs within Asia, Singapore and Shanghai are poised to remain at the forefront of Asias
growth, maintaining their strong presence as key Asian cities. This substantial growth potential and attractiveness as business
and financial hubs in one of the most important economic regions globally, will strengthen and sustain the demand base of
their respective commercial real estate markets.

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2 Singapore

2.1 SocioEconomic Overview

2.1.1 GDP Growth, Unemployment and Inflation
Singapores dynamic economy has helped the citystate achieve an average annual GDP growth of 6.1% between 2003 and
2012, which is significant for an advanced and developed economy.

While its open, tradeoriented economy has resulted in Singapore being more exposed to global risks, economic growth has
remained largely resilient, with GDP falling by only 0.8% during the GFC in 2009 and registering a 1.3% growth in 2012, amid
the Eurozone crisis and slowdown in major economies such as the US and Mainland China (Figure 2.1). Although real GDP
growth in Q1 2013 was modest at 0.3% YOY, it rose to 4.2% YOY in Q2 2013 despite ongoing uncertainties in the global
economy. Based on government advance estimates, Singapores economic performance in Q3 2013 was more positive,
registering a real GDP growth of 5.1% YOY. This was attributed to the continued firm growth in the services sectors (5.7% YOY
growth) and fairly strong comeback in the manufacturing sector (4.5% YOY growth).

Figure 2.1
Real GDP Growth, Unemployment Rate and Inflation

Source: Oxford Economics, Department of Statistics of Singapore, DTZ Consulting & Research, October 2013

Singapores resilient economic performance has benefited the labour market, with the unemployment rate declining steadily
from 3.0% in 2009 to 1.9% in 2012. While the unemployment rate increased marginally to 2.1% in Q2 2013 due to business
restructuring and consolidation, the overall labour market remained tight.

Inflation averaged a healthy 2.6% per annum between 2003 and 2012, though inflationary pressures have risen considerably
since 2008, owing to substantial increases in oil, food and accommodation prices. Nonetheless, the government has been
actively implementing fiscal and property measures to ensure that price inflation is kept at a sustainable rate. As at end 2012,
inflation was 4.6%, lower than its peak (6.6%) in 2008 and has since continued to taper to 1.6% YOY in Q2 2013.


2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 F 2014 F 2015 F 2016 F 2017 F
%
Real GDP Growth Unemployment Rate Inflation
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2.1.2 Economic Profile
Singapore has an open economy, supported by the manufacturing (28%), finance & insurance (12%) and business services
(12%) sectors (Figure 2.2). Amid effective and proactive economic planning by the government and a sound regulatory
environment, Singapore has a welldiversified and knowledgebased economy driven by high valueadded activities.

Figure 2.2
Breakdown of Gross Value Added by Sector (2012)

Source: Department of Statistics of Singapore, DTZ Consulting & Research, October 2013

2.1.3 Key Industries
The financial and business services industries have traditionally been the key drivers of demand for office space. In particular,
the financial industry has been a core driver of demand for Central Business District (CBD) office space. In terms of Gross
Value Added (GVA), the financial industry has grown the fastest compared with the other industries, by an average of 9.2%
per annum since 2003.

Following the GFC in 2009, which saw significant consolidation among financial institutions, demand for office space is
increasingly being driven by nonfinancial companies e.g., technology, media and telecommunications and professional
services. This is reflected by the stronger GVA growth of business services (3.9%) as well as transport and communications
(2.7%) in 2012, compared with the financial services industry (0.5%) (Figure 2.3). Going forward, Oxford Economics projects
the financial services industry to grow at a faster rate from 2013 to 2017 (average of 5.2% per annum), compared with the
other industries (average of 2.6% 3.3% per annum).


Manufacturing
SGD81.4 billion
28%
Wholesale & Retail Trade
SGD46.3 billion
16%
Finance & Insurance
SGD36.7 billion
12%
Business Services
SGD34.0 billion
12%
Other Services Industries
SGD28.8 billion
10%
Transportation & Storage
SGD25.8 billion
9%
Construction
SGD12.6 billion
4%
Information &
Communications
SGD11.0 billion
4%
Ownership of Dwellings
SGD6.3 billion
2%
Accommodation &
Food Services
SGD5.8 billion
2%
Utilities
SGD4.1 billion
1%
Other Goods Industries
SGD0.1 billion
0.04%
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Figure 2.3
Sectoral Performance (Gross Value Added by Industry)

Source: Department of Statistics of Singapore, DTZ Consulting & Research, October 2013

The demand for retail space in Singapore has generally been driven by the performance of the retail & distribution industry.
GVA growth in the retail and distribution industry has been relatively firm, averaging at 7.0% per annum between 2003 and
2012. Although GVA for the industry declined marginally by 0.2% in 2012 due to the ongoing labour market structural
initiatives by the government to improve productivity, it is expected to return to growth over time.

The retail & distribution industry is supported by the domestic market (Singapores population is projected to grow at an
average rate of 1.6% per annum till 2030) and tourism (the Singapore Tourism Board (STB) expects to attract 14.8 million
15.5 million visitors to Singapore in 2013 and has set a target for 17 million visitors in 2015).


2.1.4 Exchange Rates
Singapores monetary policy has been centred on the management of the exchange rate since the early 1980s and aims to
promote medium term price stability to aid sustainable economic growth. While the government maintained a modest and
gradual appreciation of the Nominal Effective Exchange Rate (NEER) policy band, it tightened its monetary policy more
stringently over the past few years due to the stronger capital flows to key Asian Financial Centres such as Singapore and
Hong Kong as well as rising inflationary pressures since 2011.

Amid risk aversion concerns, moderating shortterm growth in Asia and receding inflation in JulyAugust 2013, the SGD
weakened from SGD1.22 per USD as at end 2012 to SGD1.28 per USD in endAugust 2013. However, with the US Federal
Reserve announcing that it will delay the tapering of its quantitative easing measures, the SGD has since strengthened to
SGD1.25 per USD in lateSeptember 2013.




10.0
5.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
% Growth
Manufacturing Retail and distribution Transport and communications Financial services Business services
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2.1.5 Population
Singapores population has grown by about 29% since 2003 to 5.3m in 2012. This translates to an annual average growth of
2.5%. Notably, growth was the highest in 2007 (4.3%) and 2008 (5.5%), alongside the economic upturn.

With resident population
29
growth over the past decade (2003 to 2012) being notably slower (average of 1.2% per annum),
Singapores population growth has largely been driven by nonresidents, who are mainly foreigners working, studying or
living in Singapore on a nonpermanent basis. In particular, the nonresident population has grown by an average of 6.7% per
annum over the past decade. The strong growth of the nonresident population has helped supplement the resident
workforce and has also contributed significantly to Singapores position as a cosmopolitan city with a deep talent pool.

As at end 2012, the resident population constitutes about 72% (3.8 million) of the total population in Singapore, while the
remaining 28% (1.5 million) are nonresidents.

2.1.6 Personal Disposable Income and Private Consumption Expenditure
Despite its small domestic market, Singapore is one of the most affluent countries globally, registering a real GDP (PPP) per
capita of USD53,296 in 2012. Notably, the average annual growth of its per capita personal disposable income (1.9%) has
been higher than that for per capita private consumption expenditure (1.3%) over the past decade, implying a relatively high
savings rate for a developed economy.

2.1.7 Major Government Plans, Policies and Initiatives
Economic Strategies Committee
In January 2010, the Economic Strategies Committee (ESC) recommended three broad priorities to boost skills in every job,
deepen corporate capabilities to seize opportunities in Asia and make Singapore a distinctive global city and endearing home.
Some of the key strategies for the services sector include:
Focusing on productivity growth through innovation and new growth opportunities, rather than total workforce growth;
Anchoring Singapore as a globalAsia hub, which includes:
o Retaining a globally competitive manufacturing sector at between 20% 25% of the economy;
o Strengthening its position as a leading globalAsia business and financial hub;
o Developing Singapore as a leading consumer business centre; and
o Establishing Singapore as the location for futureready urban solutions;
Building a vibrant and diverse corporate ecosystem, with a focus of MNCs remaining as key players in the economy while
achieving a deeper base of globallycompetitive Singapore enterprises; and
Enhancing land productivity to secure future growth, which includes accelerating the shift towards higher valueadded
and landefficient activities as well as enhancing the diversity of business locations to support a range of enterprise
needs.

These services sectorfocused strategies are expected to strengthen the drivers of demand for office space.

EDB International Advisory Council
Singapores Economic Development Board (EDB) International Advisory Council (IAC) was set up in January 1995 to advise
EDB on its international and regional strategies. Its latest recommendations in September 2013 emphasised on building
Singapores position as an attractive GlobalAsia business hub, so as to leverage on Asias growth opportunities, which is in
line with the ESC recommendations in 2010. The EDB IAC recommends Singapore to position itself as:
The advanced manufacturing hub of Asia;
A sophisticated digital hub of Asia for cocreation and lead adoption of information and communications technology; and
The strategic location for companies to better access panAsian growth markets by enhancing market connectivity.

These recommendations will enhance Singapores ability to tap demand source markets across industries which have
traditionally not been key drivers of demand for office space.




29
Comprises Singapore citizens and Permanent Residents.
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Population and Land Use White Papers
Dovetailing with the recommendations from the ESC, the government released its Population and Land Use White Papers in
January 2013, which provided a roadmap for Singapores population and land use policies till 2030. The Population Paper
projects Singapores population to increase from 5.3 million in June 2012 to 6.5 million 6.9 million by 2030, which translates
to an average annual growth rate of 1.6%. While overall workforce growth rate till 2030 is expected to slow to 1.0% 2.0%
per annum, there is continued focus on high valueadded sectors and Professional, Managerial, Executive and Technical
(PMET) growth and this is expected to benefit the office market over time.

Meanwhile, strategies earmarked in the Land Use Paper highlight the growth potential of existing and future office clusters
which includes those in the CBD, e.g.:
Continued rejuvenation of the traditional CBD and further development of Marina Bay; and
Development of a Southern Waterfront City which extends from Marina Bay along the waterfront from Keppel Channel.
The redeveloped land will provide new commercial and housing developments.

Incentives for Businesses
Singapores government has put in place frameworks to incentivise businesses with substantive plans to grow through
conducting high value activities in Singapore. This has helped Singapore to strengthen its position as a leading globalAsia
business and financial hub and in turn, a vibrant and dynamic office market.

Apart from the earlier mentioned Headquarters Programme, other tax incentives granted by the government include the
following:
Development and Expansion Incentive Targeted at enterprises involved in projects that bring significant economic
benefit to Singapore in terms of overall business spending and the nature of the activities;
Financial Sector Incentive Scheme Offers concessionary tax rates for qualifying high growth and high valueadded
financial services dependent on factors such as headcount and scope of activities undertaken; and
Global Trader Programme Offers tax incentives to wellestablished Singaporeincorporated companies engaging in
international/ regional trading, procurement, distribution and transportation of approved commodities.

2.1.8 Outlook
The Singapore government raised its economic growth forecast for 2013 from 1.0% 3.0% to 2.5% 3.5% in August 2013. It
also expects the economy to continue expanding in 2014. The inflation forecast for 2013 was also revised downwards from
2.0% 3.0% to 1.5% 2.0% in October 2013. Oxford Economics GDP growth projection for 2013 is in line with that of the
Singapore government, at 3.0%.

The upgrade in 2013s GDP growth forecast was in view that the global macroeconomy is showing signs of improvement. It is
expected that externallyoriented sectors are likely to support growth, in line with the gradual pickup in the global economy.

Based on a targeted 2.0% 3.0% productivity growth per annum and sustaining workforce growth at 1.0% 2.0%, the
government projects an average 3.0% 5.0% GDP growth per annum till 2020.


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2.2 Office Property Market Overview
30


2.2.1 Major Office Locations
The office property market review for Singapore focuses on the private office market, in particular the CBD, where the
portfolio property is located. Singapores CBD comprises the traditional areas of Raffles Place and along Shenton
Way/Robinson Road/Cecil Street as well as the New Downtown at Marina Bay (Figure 2.4). Many established global financial
institutions and headquarters of MNCs are located in Marina Bay and Raffles Place, while Shenton Way/ Robinson Road/Cecil
Street is popular with professional services companies and other Financial, Insurance and Real Estate (FIRE) companies.

Figure 2.4
Raffles Place, Shenton Way/Robinson Road/Cecil Street and Marina Bay
Source: URA, DTZ Consulting & Research, October 2013

Singapores CBD has evolved significantly, becoming more thriving and vibrant. Strategically and comprehensively planned by
the Urban Redevelopment Authority (URA), Marina Bay has been positioned as a New Downtown, which is a seamless
extension of the traditional CBD at Raffles Place and Shenton Way/Robinson Road/Cecil Street. It features a 24/7/365 live
workplay environment and has transformed into a new business and financial district that rivals Londons Canary Wharf and
Hong Kongs Central District. Some of the major office offerings that were recently completed include those at mixeduse
developments such as Marina Bay Financial Centre (MBFC) and Asia Square.

Meanwhile, Raffles Place, which is already an established business and financial hub with bestinclass infrastructure and
comprehensive amenities, is undergoing rejuvenation, with many office buildings being refurbished or redeveloped into
mixeduse developments. As such, the traditional CBD, particularly Raffles Place, continues to play an important role in
Singapores office landscape.

Major office locations outside the CBD include:
Fringe CBD Office locations bordering the CBD. They predominantly serve as supporting nodes to established
companies in the CBD and appeal to companies that require proximity to business and financial clusters in the CBD and
which find rental rates in the CBD relatively costly. Recently, there have been government plans to further develop the
Fringe CBD areas e.g., Southern Waterfront City at Anson Road/ Tanjong Pagar. These plans will further complement the
CBD office market.
Decentralised Areas These locations are outside of the CBD and the Fringe CBD. Decentralised offices have brought
jobs closer to homes and play a complementary role to the CBD as they reduce the peakhour congestion in the CBD.
Often surrounded by amenities and accessible by the Mass Rapid Transit (MRT) network, these offices attract companies
that do not need to be in the CBD as well as corporate support functions of financial institutions and other companies.



30
Some figures in this report have been rounded off and may not add up.
Marina Bay, the New Downtown
Raffles Place and
Shenton Way/Robinson Road/Cecil Street
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2.2.2 Existing Supply
As at end Q3 2013, DTZ estimates that about 36% (2.2 million sq m
31
) Net Lettable Area (NLA) of islandwide office stock is in
the CBD. Office stock in the Fringe CBD
32
accounts for another 37% (2.3 million sq m), while the remaining 27% (1.7 million sq
m) is located in the Decentralised Areas.

Raffles Place accounts for the majority of the office space in the CBD (1.1 million sq m, 49%), followed by Marina Bay (0.6
million sq m, 27%) and Shenton Way/Robinson Road/Cecil Street (0.5 million sq m, 24%) (Map 2.1). Many MNCs continue to
remain in Raffles Place due to its convenience, abundant amenities and excellent accessibility. The CBD is served by the
Raffles Place MRT interchange station, which is one of the three interchange stations that serve the NorthSouth Line and
EastWest Line of the MRT network.

Map 2.1
CBD Office Locations

Source: DTZ Consulting & Research, October 2013

There is a high concentration of premium and GradeA office developments in the CBD (Refer to Appendix 1). Table 2.1
highlights some of these office developments in Raffles Place and Marina Bay.




31
All supply and demand figures relating to Singapores office and retail markets are in terms of NLA, unless stated otherwise.
32
For this report, Fringe CBD includes Orchard Road.
CBD
Marina Bay:
0.6 million sq m
Raffles Place:
1.1 million sq m
Shenton Way/
Robinson Road/
Cecil Street:
0.5 million sq m
Marina Centre
Beach Road/
North Bridge Road
Bras Brasah/
Selegie Road
River Valley/
Singapore River
Anson Road/
Tanjong Pagar
OUE Bayfront,
OUE Tower
and OUE Link
Legend:
Raffles Place (CBD)
Marina Bay (CBD)
ShentonWay/Robinson Road/ Cecil Street (CBD)
Fringe CBD Locations
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Table 2.1
Selected Premium and GradeA Offices in Raffles Place and Marina Bay
Year of Completion Development Location NLA (sq m)
Raffles Place
2012 One Raffles Place Tower Two Raffles Place 31,700
2011 Ocean Financial Centre Raffles Place 80,600
2009 Straits Trading Building Battery Road 14,700
2004 One George Street George Street 41,300
2003 One Marina Boulevard Marina Boulevard 35,000
Marina Bay
2013 Asia Square Tower 2 Marina View 72,800
2012 Marina Bay Financial Centre Tower 3 Marina Boulevard 121,200
2011 Asia Square Tower 1 Marina View 114,200
2010 Marina Bay Financial Centre Tower 2 Marina Boulevard 96,200
2010 Marina Bay Financial Centre Tower 1 Marina Boulevard 58,600
Source: DTZ Consulting & Research, October 2013

Annual net supply
33
of CBD office space averaged 63,900 sq m between 2003 and 2012, while average annual demand over
the period was 67,500 sq m. A prolonged limited supply of office from 2003 to 2007 as well as significant office terminations
in 2006 and 2007 due to redevelopment and refurbishment works further led to an office supply crunch between 2007 and
2009.

Following that, there were substantial office completions in the CBD between 2010 and 2012. In particular, more than 90%
of the islandwide office net supply over the past three years was in the CBD, particularly Marina Bay (Figure 2.5). This reflects
the rapid development of Marina Bay as the New Downtown.



33
Refers to the change in total floor space over a specified period of time, either positive or negative. It excludes floor space that are not available for occupation due to refurbishment or redevelopment, but
includes new supply. New supply refers to total floor space which are ready for occupation.
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Figure 2.5
Net Supply (CBD)

Source: DTZ Consulting & Research, October 2013

In H1 2013, there were a large number of office terminations in Shenton Way/Robinson Road/Cecil Street (35,400 sq m),
followed by Raffles Place (4,500 sq m). The terminations were largely a result of increased redevelopment activity in these
locations. This marks the ongoing efforts to rejuvenate the traditional CBD so as to remain relevant and competitive, amid
new developments at Marina Bay, which comprises mainly integrated mixeduse developments. For example, V on Shenton
(formerly known as UIC Building) is being redeveloped for residential and office uses, while OUE Downtown 1 & 2 at 6
Shenton Way (formerly known as DBS Building Towers One and Two) will undergo refurbishment to offer serviced
apartments and a retail podium, in addition to its current office space.

In Q3 2013, Marina Bay saw the completion of Asia Square Tower 2 (72,800 sq m), which offers premium office space. Major
precommitted tenants of Asia Square Tower 2 include Allianz Group, National Australia Bank and Swiss Reinsurance
Company.

There are currently four REITs listed on the SGX, which have CBD offices in their property portfolio. As at end Q3 2013, total
office NLA in these four REITs accounted for about 20% (0.4 million sq m) of CBD office stock, with Keppel REIT (0.2 million sq
m; 9%) and CapitaCommercial Trust (0.1 million sq m; 5%) having the largest share of CBD office stock among the REITs.
Meanwhile, Suntec REIT owns about 4% (95,400 sq m) of office space in CBD and Frasers Commercial Trust owns about 2%
(40,900 sq m) (Figure 2.6).

100,000
50,000
0
50,000
100,000
150,000
200,000
250,000
300,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 Q2 2013 Q3 2013
Raffles Place Marina Bay Shenton Way/ Robinson Road/ Cecil Street
NLA (sq m)
Average Annual Net Supply between 2003 and 2012: 63,900 sq m
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Figure 2.6
Breakdown of CBD Office Stock by REIT Ownership

Source: Respective REITs, DTZ Consulting & Research, October 2013

2.2.3 Demand and Occupancy
Annual office demand in the CBD, as measured in terms of net absorption
34
, averaged about 67,500 sq m over the past
decade. Demand largely surpassed net supply between 2003 and 2006. Occupancy grew from 83.0% in 2003 to 96.0% in
2006. During the GFC in 2009, demand contracted and occupancy fell considerably from 97.0% in 2007 to 90.7% in 2010 as
companies, particularly financial institutions, were badly affected. As business sentiment and economic fundamentals
improved, the CBD office market recovered and overall demand for CBD office space rebounded. In line with the recovery,
occupancy increased to 91.8% in 2012 (Figure 2.7).


34
The change in the total occupied or let floor space over a specified period of time, either positive or negative.
NonREIT owned
1.8 million sq m
80%
Keppel REIT
0.2 million sq m
9%
CapitaCommercial Trust
0.1 million sq m
5%
Suntec REIT
95,400 sq m
4%
Frasers Commercial
Trust
40,900 sq m
2%
REITowned
0.4 million sq m
20%
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Figure 2.7
Net Supply, Demand and Occupancy (CBD)

Source: DTZ Consulting & Research, October 2013

Although demand for office space in the CBD has generally been more volatile compared with other office locations, the
demand dynamics in the CBD have been generally wellsupported in recent years. The total net absorption from Q1 to Q3
2013 was relatively healthy at about 54,000 sq m. Notably, net absorption in Q3 2013 was relatively strong at 30,100 sq m,
higher than that in Q1 2013 (24,200 sq m) and Q2 2013 (300 sq m
35
). The stronger demand was due to:
Demand for office space in the CBD is increasingly driven by a wider diversity of occupiers;
Tenants in the CBD recognise the importance of being in the city centre, given the high concentration and wide diversity
of commercial activity. This is evidenced by many occupiers in the CBD taking up space vacated by tenants relocating;
and
The rental gap between the CBD and other office locations has narrowed, resulting in less impetus in terms of cost, for
tenants to favor other office locations over the CBD.

A survey by DTZ Research at end 2012, showed that financial & insurance services formed the bulk of the demand for office
space in the CBD. Marina Bay had the highest proportion of financial & insurance services (77%), followed by Raffles Place
(51%) and Shenton Way/Robinson Road/Cecil Street (41%) (Figure 2.8). Apart from the predominance of tenants in the
financial & insurance services, a considerable proportion of the office occupiers at Raffles Place and Shenton Way/Robinson
Road/Cecil Street are in the professional services and wholesale & retail industries, reflecting the more diversified occupier
profile in these areas.




35
Net absorption in the CBD in Q2 2013 was negative as some companies relocating to new premises took the opportunity to streamline their space requirements. Notwithstanding, net absorption in Marina
Bay and Raffles Place was positive in Q2 2013, reflecting that the demand contraction was mainly in Shenton Way/ Robinson Road/ Cecil Street.
207
41,083
152,641
222,993
91,108
39,912
72,845
36,913
54,332
159,434
198,373
111,048
24,158
267
30,082
94.9%
89.5%
90.7%
90.5%
91.8%
92.9%
94.6%
92.9%
75.0%
80.0%
85.0%
90.0%
95.0%
100.0%
100,000
50,000
0
50,000
100,000
150,000
200,000
250,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 Q2 2013 Q3 2013
Net Supply (LHS) Demand(LHS) Occupancy Rate (RHS)
NLA (sq m)
Average Annual Net Supply between 2003 and 2012: 63,900 sq m
Average Annual Demand between 2003 and 2012: 67,500 sq m
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Figure 2.8
Occupier Profile (CBD)
























Source: DTZ Consulting & Research, October 2013

With significant premium office space completing in 2011 and 2012, financial institutions took the opportunity to consolidate
their front office operations in the same building. Apart from expansion of existing tenants, demand was sustained by non
financial companies such as professional services, telecommunications, media & technology, transportation & storage
sectors.

Some companies moved their backoffice operations to newer and more attractively priced business spaces in Decentralised
Areas, including those at business parks. However, this trend is not expected to significantly affect the longterm prospect of
CBD offices, in terms of housing highprofile tenants who require prestigious front offices and globally recognised addresses.


51%
21%
17%
5%
4%
2%
Raffles Place
Marina Bay Shenton Way/
Robinson Road/Cecil Street
Financial & Insurance Services Professional Services
Telecommunications, Media & Technology Transportation & Storage
Wholesale & Retail Others
77%
11%
7%
3%
2% 0.5%
41%
18%
18%
13%
6%
4%
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As at end Q3 2013, occupancy
36
in Raffles Place stood at 95.3%. Meanwhile, occupancy in Shenton Way/Robinson Road/Cecil
Street was 97.7%, due to lack of new supply as well as continued termination of office stock over the last two years. Notably,
occupancy in both areas was close to preGFC levels. Though tenants continued to shift into their new premises in Marina
Bay, the occupancy rate in Marina Bay dropped from 95.2% in Q2 2013 to 84.1% in Q3 2013 due to the completion of Asia
Square Tower 2 (72,800 sq m) in Q3 2013 (Figure 2.9). Notwithstanding, with no new supply in Marina Bay till 2017,
occupancy in Marina Bay is expected to improve to a healthier level over the next few quarters as precommitted tenants at
Asia Square Towers 1 and 2 shift into their premises.

Figure 2.9
Average Occupancy (CBD)

Source: DTZ Consulting & Research, October 2013

2.2.4 Potential Supply
Excluding projects which have not obtained Provisional Permission/Written Permission (PP/WP) and unawarded Government
Land Sales (GLS) commercial/white sites, there is about 0.6 million sq m of islandwide pipeline supply between 2014 and
2017. Majority of the pipeline supply (0.3 million sq m; 48%) is located in the CBD, followed by 0.2 million sq m (29%) in the
Fringe CBD and 0.1 million sq m (22%) in the Decentralised Areas.

Notably, there are several projects with significant office NLA that form the bulk of the islandwide pipeline supply. This
includes CapitaGreen (65,000 sq m) in Raffles Place, a redevelopment of the former Market Street Car Park. Meanwhile in the
Fringe CBD, South Beach in Beach Road/North Bridge Road is expected to complete in 2015, followed by Tanjong Pagar
Centre, a mixeduse integrated development that includes Guoco Tower in 2016. Other key projects include Marina One
(166,900 sq m) at Marina Bay and DUO Tower (47,600 sq m) at Rochor Road (Figure 2.10), both of which are expected to be
completed in 2017.



36
Office occupancy in the Singapore report is based on physical occupation by end-users and does not take into account pre-committed space.
95.2%
90.9%
96.8%
90.9%
93.7%
93.3%
94.3%
95.3%
100.0%
99.7%
70.3%
83.6%
88.5%
93.6%
95.2%
84.1%
93.4%
85.1%
90.4%
94.4%
91.2%
91.6%
94.8%
97.7%
65%
70%
75%
80%
85%
90%
95%
100%
105%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 Q2 2013 Q3 2013
Raffles Place Marina Bay Shenton Way/ Robinson Road/ Cecil Street
F-27

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Figure 2.10
Potential Supply (Islandwide)

Source: DTZ Consulting & Research, October 2013

There are some concerns over an oversupply situation in the office market, particularly with the expected average annual
completions from 2013 to 2017 (159,200 sq m) exceeding the past 10year average annual completions (132,900 sq m) as
well as average annual net demand (133,900 sq m). However, these concerns are mitigated as:
There is relatively limited potential supply from 2014 to 2016, especially in the CBD;
Completions of various largescale premium and GradeA offices are spread evenly across the next four years i.e.,
CapitaGreen in 2014, South Beach in 2015, Guoco Tower in 2016 as well as Marina One and DUO Tower in 2017. The
evenly staggered supply schedule potentially reduces the intensity of competition in securing tenants;
Although Westgate and Paya Lebar Square are expected to provide high quality office space, their decentralised
locations are not expected to pose direct competition for CBD tenants; and
There are considerable office terminations (88,000 sq m) in 2014 and 2015, though they are mainly in the Fringe
CBD.

In the CBD, projects which have not obtained PP/WP and unawarded Government Land Sales (GLS) commercial sites form an
additional 178,790 sq m (GFA
37
). In 19 August 2013, a commercial site in Cecil Street/ Telok Ayer Street was awarded to
Frasers Centrepoint (77,162 sq m; GFA
37
). While a fairly large CBD site in Marina View/Union Street (101,628 sq m; GFA
37
)
remains on the Reserve List, it will only be launched for sale by the government if an interested developer submits a
minimum acceptable price.

Table 2.2 highlight the selected office developments in the pipeline supply from 2014 to 2017.





37
Based on maximum permissible GFA indicated by the URA. Part of the GFA may be allocated to other uses as such the actual number of commercial space could be different from the estimated quantum
depending on the actual plans of the developers in terms of mix of uses and the size of the various real estate components.
66,300 sq m
166,900 sq m
3,100 sq m
54,700 sq m
21,000 sq m
55,200 sq m
85,500 sq m
47,600 sq m
73,100 sq m
58,800 sq m
11,600 sq m
45,400 sq m
16,600 sq m
71,500 sq m
145,000 sq m
100,000
50,000
0
50,000
100,000
150,000
200,000
250,000
300,000
2013 F 2014 F 2015 F 2016 F 2017 F
Raffles Place Marina Bay
Shenton Way/Robinson Road/Cecil Street Fringe CBD
Decentralised Areas Terminations
Completions (Q1 2013 to Q3 2013)
Islandwide Average Annual Completions (2003 to 2012): 132,900 sq m
Islandwide Average Annual Completions (2013 to 2017F): 159,200 sq m
NLA (sq m)
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Table 2.2
Selected Office Developments in the Pipeline Supply (Islandwide)
Estimated
Year of
Completion
Area Location Development
Estimated NLA
(sq m)
2014
CBD Market Street CapitaGreen 65,000
Decentralised Paya Lebar Road Paya Lebar Square 40,100
Decentralised Boon Lay Way Westgate 29,300
2015
CBD Robinson Road Robinson Square 32,800
Fringe CBD Beach Road South Beach 49,000
Fringe CBD Peck Seah Street
PS 100
(linked to Oasia Downtown)
6,200
Decentralised Ayer Rajah Avenue Office/ shopping development 8,400
2016
CBD Shenton Way V On Shenton 26,700
CBD Robinson Road Oxley Tower 9,800
CBD Robinson Road
Office/shopping development
(previously known as International
Factors Building, Robinson Towers and
the Annex Building)
18,200
Fringe CBD Peck Seah Street Guoco Tower 76,500
Fringe CBD Shenton Way EON Shenton 9,000
Decentralised
Jalan Besar/
Lavender Street
Office development 10,000
2017
CBD
Marina Way/
Straits View
Marina One 166,900
CBD Robinson Road SBF Center 21,000
Fringe CBD Rochor Road DUO Tower 47,600
Source: DTZ Consulting & Research, October 2013

2.2.5 Rental Values
The culmination of the supply crunch between 2003 and 2007 pushed the average monthly gross rentals for CBD office space
to historical highs in 2007/08. Average monthly gross rentals for Raffles Place escalated from SGD4.30 per sq ft in Q4 2003 to
SGD16.50 per sq ft in Q4 2007, while that for Shenton Way/Robinson Road/Cecil Street rose from SGD3.50 per sq ft in Q4
2003 to SGD11.10 per sq ft in 2008.

However, the swift decline in business confidence as a result of the GFC in 2009 led to severe tightening of corporate
budgets, particularly in the financial industry. Rentals approximately halved in the wake of bleak economic conditions. The
sharp correction during the downturn stemmed from the dramatic run up in CBD office rentals from 2003 to 2007 and
subsequent pessimistic economic sentiment. In particular, average monthly gross rentals for Raffles Place and Shenton Way/
Robinson Road/ Cecil Street bottomed at SGD7.90 per sq ft and SGD6.00 per sq ft in Q4 2009 respectively.

On the back of the strong economic rebound in Singapore, average monthly gross rentals gradually recovered between 2009
and 2011. Rents in Raffles Place were more volatile during the crisis, due to its high concentration of tenants from the
financial services sector, whereas Shenton Way/Robinson Road/Cecil Street declined less extensively due to its diversified
base of tenants, which makes rental in the area more resilient.





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Average monthly gross rentals eased since 2011 due to the uncertain global economic conditions, but have started to recover
in Q3 2013. Notably, average monthly gross rentals for Raffles Place grew 1.3% QOQ to SGD9.40 per sq ft in Q3 2013, 4.1%
below its previous peak in 2011 (SGD9.80 per sq ft). Meanwhile, average monthly gross rentals in Marina Bay and Shenton
Way/Robinson Road/Cecil Street also rose by 4.8% and 3.4% QOQ to SGD11.00 per sq ft and SGD7.50 per sq ft in Q3 2013
respectively (Figure 2.11).

Figure 2.11
Average Monthly Gross Rental Values (CBD)
38


Source: DTZ Consulting & Research, October 2013

As at Q3 2013, monthly gross rentals in Marina Bay ranged from SGD10.00 to SGD12.00 per sq ft, while that for GradeA and
premium offices in Raffles Place were from SGD9.30 to SGD11.00 per sq ft.

2.2.6 Capital Values
Following the runup in capital values in 2006/07 due to the significant increase in rentals amid the supply crunch as well as
significant capital flows into Asia Pacific, average office capital values fell sharply during the GFC in 2009. Subsequently, the
economy entered into a low interest rate environment, where liquidity became abundant. Office capital values have
generally been trending up since 2009 and investor interest in the office sector started growing in line with that for the other
real estate sectors.

Average freehold capital values in Raffles Place rebounded from SGD2,350 per sq ft in Q4 2010 to SGD2,600 per sq ft in Q4
2011 and held firm thereafter. Nonetheless, capital values were 20% below the previous peak of SGD3,250 per sq ft in Q4
2007 (Figure 2.12). Meanwhile, average freehold capital values in Shenton Way/Robinson Road/Cecil Street recovered in
2011 and slowly picked up thereafter, reaching SGD2,050 per sq ft in Q3 2012.



38
Annual rental values are based on Q4 figures.
16.00
7.90
9.00
9.80
9.35 9.30 9.30
9.40
12.00
10.50 10.50 10.50
11.00
11.10
6.00
6.50
7.75
7.25 7.25 7.25
7.50
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 Q2 2013 Q3 2013
Raffles Place Marina Bay Shenton Way/ Robinson Rd/ Cecil Street
SGD per sq ft permonth
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Figure 2.12
Average Freehold Capital Values (CBD)
39


Source: DTZ Consulting & Research, October 2013

Amid the low interest rate environment, more developers began to offer stratatitled offices, most of which recorded strong
sales performance
40
. Examples of such projects in the CBD include EON Shenton and Oxley Tower, which typically offer
smallersized office units. While these small stratatitled offices had low price quantum (compared with building purchases),
they are priced higher on a per sq ft basis. Assisted by low borrowing cost and lack of investment opportunities, investors
found these offices attractive. Office investments became even more favourable as the government introduced numerous
rounds of cooling measures in the residential market since late 2009. Consequently, investors preferences shifted from the
residential to the nonresidential sectors, including stratatitled offices.

However, the government introduced a Total Debt Servicing Ratio (TDSR) framework in June 2013, which capped the total
debt servicing level a buyer could take on purchasing property to 60% of his or her gross monthly income. This has impacted
stratatitled office sales amongst retail investors.

2.2.7 Major Investment Transactions
The office investment market in Singapore, particularly for that in the CBD, has generally been more sensitive to the
performance of the global economy, given that most of the investors in this market are yielddriven. Notwithstanding the
uncertain economic conditions in 2011/12, there was some investment activity in the office, driven by retail investors and
owneroccupiers as well as developers, some of which are looking to redevelop/ convert to other uses. There was also some
acquisition activity by REITs.

Between 2012 and H1 2013, major office buildings in Raffles Place and Shenton Way/Robinson Road/Cecil Street were
transacted for between SGD182.0 million and SGD348.9 million (SGD1,686 to SGD2,580 per sq ft) (Table 2.3). In Q4 2012, DBS
Group Holdings acquired 30% equity stake in MBFC Tower 3 from Hutchinson Whampoa and Cheung Kong for slightly above
SGD1 billion. DBS Bank, which is the anchor tenant of the MBFC Tower 3, has also exercised its option subsequently to take
up the remaining 3% equity stake in Q3 2013.


39
Annual capital values are based on Q4 figures. There is currently no capital value trend for Marina Bay due to the limited sales transaction activity in the area.
40
Most of the strata-titled offices in the primary market that were launched in 2012/13 were more than 90% to fully sold.
2,700
2,300
2,350
2,600 2,600 2,600 2,600 2,600
2,000
1,700
1,750
1,950
1,990
2,030
2,050 2,050
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 Q2 2013 Q3 2013
Raffles Place (FreeHold) Shenton Way/Robinson Rd/Cecil Street (FreeHold)
SGD per sq ft
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Table 2.3
Major Office Building Transactions in the CBD
Period Development Area Tenure Vendor Buyer NLA
(sq m/
sq ft)
Transacted
Price
(SGD
million)
Unit Price
41
(SGD
per sq m/
SGD
per ft)
2012
Q2 Ocean
Financial
Centre
(12.39%
stake)
Raffles
Place
99 years
leasehold
Avan
Investments
and Ong
Holdings
Keppel REIT 82,400/
887,400
285.7* 27,978/
2,600
Q3 Robinson
Point
Shenton
Way/
Robinson
Road/
Cecil
Street
Freehold AEW Capital
Management
Sun Venture 12,400/
133,200
284.0 22,949/
2,132
Q3 78 Shenton
Way
Shenton
Way/
Robinson
Road/
Cecil
Street
70 years
remaining
Commerz
Grundbesitz
Investment
gesellschaft
(CGI) Group
Alpha
Investments
Partners
16,800/
180,300
303.9 18,148/
1,686
Q4 Marina Bay
Financial
Centre
Tower 3
(30% stake)
Marina
Bay
99 years
leasehold
Hutchison
Whampoa
and Cheung
Kong
DBS Group
Holdings
37,600/
405,000
1,035.0 27,513/
2,556
H1 2013
Q1 16 Collyer
Quay
(51% stake)
Raffles
Place
999 years
leasehold
Goldman
Sachs
NTUC Income 13,200/
142,000
336.6 25,521/
2,371
Q2 135 Cecil
Street
Shenton
Way/
Robinson
Road/
Cecil
Street
Freehold Alpha
Investment
Partners
Indonesian
investor
7,700/
83,100
182.0 23,584/
2,191
Q2 Robinson
Point
Shenton
Way/
Robinson
Road/
Cecil
Street
Freehold Sun Venture Tuan Sing
Holdings
12,600/
135,300
348.9 27,771/
2,580
Source: Respective buyer and vendor websites, DTZ Consulting & Research, October 2013
* includes rental support of up to SGD24,126,000 for the period commencing on the date of completion of acquisition and ending on 31
December 2017.


41
Based on transacted price and NLA. Figures do not add up due to rounding off.
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2.2.8 Outlook
The government has upgraded Singapores GDP growth forecast for 2013 to 2.5% 3.5% in August 2013 as global macro
economic conditions are showing signs of improvement. This growth prospect is further supported by Singapores value
propositions as a global business and financial centre and position as the gateway to ASEAN, with its combined market of
some 600 million people.

The positive economic prospects for Singapore will support the demand for office space, and subsequently office rentals.
Despite the ongoing office decentralisation trend, many companies continue to see the CBD as an attractive location to site
their headquarters, given its bestinclass infrastructure as well as comprehensive amenities. With financial and business
services occupiers forming the bulk of the demand, the CBD office market is wellestablished to meet the growing need for
office space arising from the considerable employment growth in financial and business services over the next few years. This
ties in with Oxford Economics projections that the financial services industry will grow at a faster rate from 2013 to 2017
(average of 5.2% per annum), compared with the other industries (average of 2.6% 3.3% per annum).

With average office rentals in the CBD rising in Q3 2013, annual rental growth in 2013 is expected to be positive. Some of the
key factors that are expected to support office rental growth in the CBD over the next two years include:
There is limited potential office supply in the CBD, particularly that for premium and GradeA office buildings between
2014 and 2015. Most landlords are confident of rental prospects and are holding up their asking rents;
The continued rejuvenation in Raffles Place and Shenton Way/Robinson Road/Cecil Street, alongside the development of
Marina Bay, will likely see a growth of better quality office stock in the CBD; and
Accessibility in the CBD will be further enhanced with the opening of Downtown MRT station on Downtown Line 1 in
December 2013.

Assuming that current risk factors in the global economic environment such as the fiscal uncertainties in the US as well as
instability in the Middle East do not materialise, office rental growth in the CBD is expected pick up in 2014 and 2015. In
particular, average monthly gross rentals in Raffles Place are forecast to increase by 3.2% and 3.6% in 2014 and 2015
respectively. From 2016 onwards, rentals are expected to stabilise, in view of significant supply in 2017 (Table 2.4).
Meanwhile, Marina Bay will continue to achieve premium rentals, given its excellent location and quality buildings.

Table 2.4
Average Annual Gross Rental Growth Forecast
42

YOY % Change Raffles Place
Q4 2013 F 0.8%
Q4 2014 F 3.2%
Q4 2015 F 3.6%
Q4 2016 F 1.5%
Q4 2017 F 0.0%
Source: DTZ Consulting & Research, October 2013





42
Office rental forecasts for Marina Bay are not provided as most developments in the area were recently completed and historical rental information was tracked only since Q1 2011.
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2.3 Retail Property Market Overview
Evolving retail scene in the CBD
Singapore is an established shopping haven with a variety of shopping centres that cater to both residents and visitors. The
retail landscape has historically been anchored by Orchard/Scotts Road, Singapores highstreet shopping destination, while
residents in the suburban areas are supported by largescale regional malls. On the other hand, the retail scene in the CBD
had generally played a more complementary role, comprising mainly ancillary Food and Beverages (F&B) and retail options
catering to the working population in the area.

However, there has been a paradigm shift in the retail scene in the CBD over the recent years, with retail spaces becoming a
core element in the city centres growth as a rich and vibrant destination. The demand for retail space in the CBD has
increased significantly, given the following:
Increase in the working population in the CBD
o The increase is attributed to the completion of major mixeduse and office developments at Marina Bay
e.g., Asia Square Towers 1 & 2 and MBFC Towers 1, 2 and 3 as well as Raffles Place e.g., Ocean Financial
Towers and OUE Bayfront;
o The redevelopment/ refurbishment of older purposebuilt offices in Raffles Place and Shenton Way/
Robinson Road/ Cecil Street also contributed to the increased office stock and subsequently, rise in the
working population in the CBD; and
o Notably, office stock in the CBD has increased by 37% over the past decade.
Increase in the livein residential population in the Downtown Core Planning Area (Refer to Appendix 2)
o This is amid the materialisation of Marina Bay as a 24/7/365 liveworkplay venue and the completion of
various private residential projects in the Downtown Core Planning Area, which are usually part of mixed
use developments. Some of these residential projects were originally office developments, which were
subsequently redeveloped; and
o Prior to the completion of the first and largest residential development at Marina Bay (The Sail@Marina
Bay, 1,111 units) in 2008, there were about 1,100 private residential units
43
in the Downtown Core
Planning Area. This has increased significantly to about 3,700 units as at Q3 2013, which has subsequently
led to a large increase in the livein population in the area.
A more welldiversified transient population in the city centre
o With the addition of various landmark mixeduse developments featuring office, retail, residential, hotel
and Meeting, Incentives, Conventions and Events (MICE) uses e.g., Marina Bay Sands and MBFC, there is a
wider myriad of visitors in the CBD e.g., tourists and business travellers; and
o The increased number of tourist and entertainment attractions in the CBD e.g., Gardens by the Bay as well
as place management by the government and stakeholders, evidenced by the multitude of events held in
Marina Bay and the CBD including the worldrenowned Formula 1 Singapore Grand Prix, have also
contributed to the diversified and significant pool of shoppers/consumers.

More retail offerings in the CBD
Retail offerings, particularly in Marina Bay and its surroundings e.g., Marina Centre/ City Hall, have transformed the CBD into
an attractive retail destination. There is already a cluster of established retail developments in the Fringe CBD areas, such as
Suntec City Mall, Marina Square, Millenia Walk, Raffles City Shopping Centre and The Shoppes at Marina Bay Sands
connected by above and underground pedestrian linkages as well as MRT lines. This has enabled a seamless and integrated
shopping experience in the city. Notably, a vibrant retail and F&B scene has emerged along the distinctive international
waterfront of Marina Bay, and this has had a positive spillover effect on bayfronting offices along Collyer Quay.

Apart from the upscale retail and F&B offerings at The Shoppes at Marina Bay Sands, one of the largest luxury/ upscale
shopping centres featuring a mix of international brands, emerging labels and new concepts, there has also been a significant
increase of convenience retail offerings, as there is stronger interest among retailers to cater to the timestarved working
population in the CBD, who require convenient daytoday access to retail amenities. Retail spaces offering convenience
retail are increasingly larger in scale, featuring more diversified brands and trades. For instance, there are also underground
retail spaces at Marina Bay Link Mall and ancillary retail offerings at the recently completed developments e.g., MBFC and
Asia Square, that offer convenience retail, F&B and services options to cater to the working and livein population.






43
Urban Redevelopment Authority.
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The CBD is set to see several new retail and F&B developments:
The refurbished retail podium of One Raffles Place, slated to open in 2014, is expected to increase in NLA from
approximately 8,294 sq m to 9,156 sq m, and will feature F&B, fashion and lifestyle offerings upon its completion; and
The revamp of OUE Downtown 1 & 2 at 6 Shenton Way (formerly known as DBS Building Towers One and Two) includes
a fivestorey retail podium with one basement (approximately 14,900 sq m) by end 2015.

Other future CBD retail spaces completing in 2016 and 2017 include Oxley Tower at Robinson Road and Marina One at
Marina Bay.

While the catchment in the CBD has grown and become more diversified, convenience retail remain integral
As retail sales are expected to remain stable and Singapore continues to attract new brands/ outlets, the retail market will
remain healthy. Nevertheless, retailers will continue to face the challenge of labour shortage due to the tightened foreign
labour policies and this is affecting the expansion plans of some retailers.

The retail market is relatively resilient and with the economy expected to improve, retail rents are expected to remain
relatively stable. With the working and livein population in the CBD expected to continue to increase, the value proposition
for retailers, particularly those offering convenience retail, F&B and services, is likely to remain strong. Mixeduse and office
developments in the CBD with sizeable retail spaces that cater to the working population are in an advantageous position to
capitalise on the paradigm shift in the retail landscape of the CBD. This is even more so for retail spaces with unique features
e.g., waterfront locations.

While ongoing asset enhancements for malls in the Fringe CBD areas e.g., Suntec City Mall, Marina Square and Bugis Junction
as well as future retail spaces at fringe locations such as Tanjong Pagar and Beach Road may pose some competition, they are
more likely to synergise with the retail in the CBD, given the connectivity and is unlikely to substitute for the convenience
retail offerings in the CBD.

Retail rental values in the Other City Areas
44
have been declining since Q1 2012. Retailer sentiment softened over this period,
amid the ongoing economic uncertainty and the tightening of foreign labour policies by the government since H2 2012. On a
positive note, rentals have stabilised in Q3 2012. As at end Q3 2013, prime
45
firststorey monthly fixed gross
46
retail rent for
Other City Areas was SGD253 per sq m, while that for upperstorey was SGD141 per sq m.

Meanwhile, capital values
47
for prime freehold retail spaces in the Other City Areas continued to edge up in Q3 2013, after its
runup since 2010 as the slew of government cooling measures in the residential sector shifted investors focus to non
residential sectors such as retail. As at Q3 2013, capital value for prime firststorey retail space was SGD47,038 per sq m,
while that for the upperstorey was SGD21,420 per sq m.

While retail rentals in the Other City Areas are expected to remain stagnant in the shortterm due to the considerable
potential supply in 2014 in the area, majority of supply are located in the Fringe CBD locations and there is in fact, limited
potential supply in the CBD. Taking into account the abovementioned factors, rental growth for CBD retail spaces is likely to
outperform that for the overall Other City Areas.


44
Other City Areas covers the CBD as well as Fringe CBD areas. Refer to Appendix 3 for area classification.
45
Prime retail rents refer to only rents of prime specialty retail shops, for example those with good frontage or pedestrian footage.
46
Fixed gross rents are the base rents that tenants pay to landlords, excluding the variable component (e.g. rental accrue to retailers turnover). Average rents are based on contracted rents and do not
reflect any incentives and landlords contribution to fitting out costs.
47
Average capital values are based on a basket of freehold strata-titled properties. Where sales evidence is not available, valuation estimates are used as proxies.
F-35

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3 Shanghai

3.1 SocioEconomic Overview

3.1.1 GDP Growth, Unemployment and Inflation

Mainland China
Mainland China has consistently recorded double digit GDP growth rates for most of the past decade till 2009, when the
economy grew by 9.2% during the GFC in 2009. Notwithstanding, Mainland Chinas economy swiftly rebounded in 2010 to
grow by 10.3%, mainly driven by the governments fiscal stimulus package and investment in fixed assets and infrastructure.
Amid the persistent global economic uncertainties, Mainland Chinas economy is entering a more mature growth phase, and
while there has been a gradual slowdown in the past two years, GDP growth has remained relatively high, maintaining above
the 7% mark in 2012 (Figure 3.1). Meanwhile, the unemployment rate in Mainland China has remained stable at around 4.0%
to 4.3% over the past decade.

Figure 3.1
Real GDP Growth, Unemployment and Inflation (Mainland China)

Source: National Bureau of Statistics of China, Oxford Economics, DTZ Consulting and Research, October 2013

Shanghai
Shanghai has become more integrated with the global economy, and is at the forefront of Chinas emergence as a more
mature and diversified economy. As at H1 2013, Shanghai remained the primary investment destination for foreign
investment in Mainland China, contributing 18.4% of Mainland Chinas FDI. According to a survey among entrepreneurs and
investors by Forbes in 2012, Shanghai remains among the Best Destinations for Business in Mainland China.

The betterthananticipated economic output in 2012 also reflected that the city's efforts to shift towards a more value
added economy are starting to pay off, as evidenced by its improved financial stability, the service sectors growing share in
local GDP (60% in 2012) and the growing impact of domestic consumption in driving the economy.

2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 F 2014 F 2015 F 2016 F 2017 F
%
Real GDP Growth Unemployment Rate Inflation
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Figure 3.2
Real GDP Growth, Unemployment and Inflation (Shanghai)

Source: National Bureau of Statistics of China, Oxford Economics, DTZ Consulting and Research, October 2013

There were strong inflationary pressures in Mainland China from 2010 to 2012, with Shanghai experiencing costpush
inflation of 5.2% in 2011 due to strong growth in the monetary supply over the past few years. Demographic pressures on
labour shortages also emerged in some sectors of the economy. This exerted upward pressure on wages, which subsequently
led to rising labour costs, which in turn impacted domestic and export prices. In addition, export prices have been adversely
affected by the gradual appreciation of the RMB.

As at end 2012, the services (tertiary) industries contributed about 60% of Shanghais GVA which is comparatively higher
than that for Mainland China (45%) (Figure 3.3). Over the recent years, the tertiary sector of Shanghai, being the economic
and cultural centre in Eastern China, has expanded faster than the manufacturing sector.

Figure 3.3
Breakdown of Gross Value Added by Industry (2012)
48


Source: National Bureau of Statistics of China, DTZ Consulting and Research, October 2013


48
Source: Chinese Statistics Bureau.
Primary industry: An industry involved in the extraction and collection of natural resources, such as copper and timber, as well as by activities such as farming and fishing.
Secondary industry: An industry which includes economic sectors that create a finished, tangible product those mainly involved in production and construction.
Tertiary industry: Also known as the service industry. The service sector consists of the "soft" parts of the economy, i.e. activities where people offer their knowledge and time to improve
productivity, performance, potential, and sustainability, what is termed affective labour.
2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 F 2014 F 2015 F 2016 F 2017 F
%
Real GDP Growth Unemployment Rate Inflation
Primary Industry
10%
Secondary
Industry
45%
Tertiary Industry
45%
Mainland China Shanghai
Primary Industry
1%
Secondary
Industry
39%
Tertiary Industry
60%
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3.1.2 Population

Mainland China
With more than 1.3 billion people, China is the world's most populous country, accounting for about 20% of the world's
population. The growth rate of Chinas total population has been relatively stable over the past decade, averaging about 0.5%
per annum (Figure 3.4). With the ongoing ruralurban migration, the urban population has grown at an average growth rate
of 3.5% per annum, faster than total population growth.

Figure 3.4
Population

Source: National Bureau of Statistics of China, DTZ Consulting and Research, October 2013

Shanghai
The total population of Shanghai has been growing at a faster rate than that of Mainland China (CAGR of 2.9% versus 0.4%
respectively from 2008 to 2012), with the bulk of growth coming from nonpermanent residents (Figure 3.4). This reflects
that domestic migration has been the key driver of population growth.

Shanghai continues to draw in professionals, who are attracted by opportunities offered by the financial institutions and
professional/ business services firms in the city, which reflects Shanghais position as the financial centre of China. In addition,
the concentration of reputable universities in the city, such as Fudan University and Shanghai University of Finance and
Economics etc., provides a ready pool of skilled manpower for the citys tertiary industries.

3.1.3 Personal Disposable Income and Private Consumption Expenditure
Shanghais per capita personal disposable income and private consumption expenditure have generally been higher than
those of Mainland China, despite the average growth rate for both indicators at the national and citylevel being similar over
the past decade (Figure 3.5). This reflects an increase in purchasing power of the citys residents, which has increased by
12.6 % since 2008. This increase in purchasing power is expected to help support the continued growth in the retail industry.

Figure 3.5
Per Capita Personal Disposable Income and Private Consumption Expenditure

Source: National Bureau of Statistics of China, DTZ Consulting and Research, October 2013
0
200
400
600
800
1,000
1,200
1,400
1,600
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
millions
Population Urban Population
0
5,000
10,000
15,000
20,000
25,000
30,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
RMB
Per capita Personal Disposable Income Per capita Private Consumption Expenditure
0
5
10
15
20
25
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
million
Population Urban Population
Mainland China Shanghai
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
RMB
Per capita Personal Disposable Income Per capita Private Consumption Expenditure
Mainland China Shanghai
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As at end 2012, Shanghais per capita personal disposable income was SGD8,256 (RMB40,188), while that for Mainland China
was SGD5,047 (RMB24,565). Shanghais per capita expenditure was SGD5,393 (RMB26,253), which was about 65% of per
capita disposable income, the lowest in the past decade, as the aging population, rising housing prices and global economic
uncertainty have led to an increase in household savings ratio.

3.1.4 Major Government Plans, Policies and Initiatives

Shanghai Pilot Free Trade Zone (Shanghai FTZ)
On 27 September 2013, Chinas Central Government released the General Plan for the China (Shanghai) Free Trade Zone
(FTZ), which lists out the reform tasks and liberalising measures for the Shanghai FTZ, such as interest rate liberalisation and
full RMB convertibility. The first of its kind in Mainland China, the Shanghai FTZ covers an area of 28.78 sq km, and consists of
the four subareas: Waigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Pudong Airport Comprehensive Free
Trade Zone and Yangshan Free Trade Port Area (Figure 3.6).

Figure 3.6
Shanghai FTZ and its Four Subareas

Source: Administrative Bureau of China (Shanghai) Free Trade Zone, DTZ Consulting and Research, October 2013

According to the Plan, the Shanghai FTZ will offer easier investment access to both foreign and domestic capital and further
rescind the investment restrictions on 18 service sectors, including financial services, shipping services, professional services
and social services. While the Central and Shanghai Governments are committed to providing preferential policies to
encourage developments in the zone, there is still no clarity on the precise measures that will be implemented. Nevertheless,
there has been a positive response from global businesses, with Citibank and HSBC, among others, already announcing that
they will locate in the zone. This is in turn expected to bolster the demand for office space in Shanghai.

Establishment of special funds for the RHQs of MNCs
With the view to encourage MNCs to set up RHQs in Shanghai, the local Municipal Finance Bureau and Municipal Commission
of Commerce jointly released the Measures on Management of the Special Fund Used for Encouraging the Development of
Regional Headquarters of Multinational Companies on 12 April 2013. According to the measures, the fund aims to
encourage and support MNCs to set up RHQs in Shanghai in the form of investment companies and management companies,
as well as encourage any existing Shanghaibased RHQs of MNCs to bring more substantive business to the city. In the future,
MNCs that establish RHQs in Shanghai will receive a maximum lump sum incentive amount of RMB10 (SGD2) million as well
as rental subsidies amounting to RMB2.6 (SGD0.5) million. Key incentives include:
An MNC that sets up a RHQ in Shanghai in the form of a newly registered or newly movedin investment company shall
be given a startup subsidy of RMB5 (SGD1) million, payable over three years 40%, 30% and 30% respectively per
annum from the year of registration or moving into the municipality;

Puxi
Pudong
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An investment company registered in Shanghai and recognised by the Ministry of Commerce as a statelevel RHQ of an
MNC shall be given a lump sum incentive amount of RMB10 (SGD2) million when its annual turnover exceeds RMB1
(SGD0.2) billion for the first time after recognition is granted. A lump sum incentive amount of RMB5 (SGD1) million shall
be given to the headquarters of a MNC when its annual turnover exceeds RMB500 (SGD100) million for the first time
after recognition is granted. The aforesaid incentive amount are payable in three years at the rate of 40%, 30% and 30%
respectively;
For fund management, Shanghai encourages investment companies to set up finance companies. Such companies
provide centralised financial management services to enterprises in which they then invest within China; and
With regards to the simplification of entryexit procedures, expatriate workers of MNCs with RHQs in Shanghai who need
to travel to China on a regular basis may apply for oneyear multiple entry visas, while senior foreign managers and
technical personnel may apply for two to fiveyear multiple entry visas with each stay not exceeding one year. Legal
representatives of MNCs with RHQs in Shanghai are also eligible for other residence concessions.

With these incentives expected to attract more MNCs to locate their RHQs in Shanghai, the influx of more MNCs will help
strengthen the demand dynamics of the office market in Shanghai.

Development of Hongqiao Transportation Hub and Hongqiao CBD
The Hongqiao Transportation Interchange (HTI), roughly 12 km from Shanghais city centre, is the first transportation hub in
the world to assimilate air, High Speed Rail (HSR), metro and road transportation in one location, all within five to 10 minutes
walking distance of one another (Figure 3.7). Once completed in 2020, the interchange and its means of transportation, most
importantly the HSR, will shorten the time taken to travel between Shanghai and other cities in the Yangtze River Delta to
about an hour. At present, Terminal Two of Shanghai Hongqiao International Airport and Hongqiao Railway Station with two
metro lines (Line 2 and Line 10) are already completed and operational, while Line 17 is under construction. Meanwhile, Line
22 and an extension of Line 5 are currently at the planning stage.

Passenger flow through the interchange is expected to more than double by 2020 to reach over 1.1 million per day.

Figure 3.7
Location of Hongqiao Transportation Hub and Hongqiao CBD

Source: Shanghai Municipal Government, DTZ Consulting and Research, October 2013

Capitalising on the interchanges excellent infrastructure and potential passenger flow, the Shanghai municipal government
earmarked the development of the Hongqiao CBD as a major component of Shanghais 12
th
FiveYear Plan in 2009
49
. The
government envisages this project to be the next engine of growth by creating an intermodal hub which strengthens the
Shanghais role as a centre for modern service industries as well as domestic and international trade.



49
These measures were first passed in 2008 and the latest update was in 2012.
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The Hongqiao CBDs Core Commercial Area will offer a mix of office, retail, exhibition and conference, hotel, culture and
entertainment as well as residential development across a planned GFA of 4.12 million sq m which is expected to generate an
additional GDP of RMB4 (SGD0.8) billion before 2020.

3.1.5 Outlook
Shanghais strategic position in Chinas development plan will continue to strengthen the confidence of investors and
companies in the citys business environment, and maintain its stable longterm prospects.

Looking ahead, Shanghai has entered a mature growth phase. Nevertheless, there are signs that the new leadership in the
Central Government, which came to power in March 2013, will implement several changes to Chinas economic system.
Under President Xi, economic reforms in the near term will likely continue to be measured e.g., fractional percentage point
decreases in bank reserve ratios, slight increases in the controlled value of the renminbi relative to its fixed base rate as well
as incremental liberalisation measures of interest rates. These changes may have a profound impact on Mainland China and
cities such as Shanghai. The new policies issued by the Central Government to create a Shanghai FTZ will promote Shanghais
ambitions to become a global business hub and financial centre, which will in turn benefit the real estate market, particularly
the prime office, retail and residential markets.

Over the medium term till 2017, Mainland Chinas and Shanghais economies are expected to slow from their previous
annual growth rate of close to 10% and the slowdown is likely to be more structural than cyclical in nature. With Mainland
Chinas leadership deemphasising GDP as the primary goal for local governments, coupled with the onset of an aging
population, it is expected that GDP growth in the city will be in mid high single digits over the next decade, in contrast to
the double digit GDP growth witnessed for much of the past 20 years.


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3.2 Office Property Market Overview
With Huangpu River running through the city, Shanghai can be generally divided into two main regions: Puxi (west of
Huangpu River) and Pudong (east of Huangpu River), which are the two main engines driving the continued growth of the city.

Puxi area has been the traditional business and commercial hub since the founding of Shanghai. It is home to many landmark
commercial developments in the city, as well as historical landmarks, such as The Bund. Puxi is a geographical term used by
Shanghainese and visitors alike, but is not an administrative term, and the key/traditional office and commercial districts in
Puxi are concentrated in Jingan, New Huangpu and Xuhui areas, together generally known as the traditional downtown CBD
of Shanghai.

As the city transformed from a manufacturing centre into a servicefocused economy since the mid 1990s generating great
demand for office space, the city government actively planned for space outside the traditional downtown CBD to cater for
this high future office demand. Since 1989, the city government has invested in the planning and development of Pudong
area. This will add weight to Shanghais overall ambition to become an international financial and shipping centre by 2020.

Nevertheless, it is not expected that the traditional downtown CBD in Puxi will lose out as a result of the new developments
in Pudong. In fact, a symbiotic relationship exists between the two areas in terms of the office property market as both
localities largely house different types of businesses. For instance, Puxi will continue to draw international retailers, service
providers and many MNC HQ operations due to good connectivity and excellent amenities while Pudongs Lujiazui will
increasingly cater to financial institutions due to policy and incentive driven agglomeration. Therefore, both locales are not
set to fiercely compete with each other for tenants and will be complementary rather than in competition with each other in
the longer future term.

3.2.1 Major Office Locations
There are currently nine major office precincts in Shanghai, located across the citys urban areas, namely Huangpu (includes
the traditional Huangpu and Luwan districts, which have since been merged in 2011), Jingan, Yangpu, Zhabei, Hongkou,
Changning, Putuo, and Xuhui. The combined GradeA office stock in these nine precincts totals to a GFA
50
of about 6.1 million
sq m, as at Q3 2013. Four of these nine precincts Lujiazui (Pudong) (2.1 million sq m), Huangpu (1.1 million sq m), Jingan
(0.9 million sq m) and Xuhui (0.6 million sq m) are located in the geographical centre of the city and together, account for
about 78% of Shanghais GradeA office stock (Map 3.1). This report focuses on GradeA offices (Refer to Appendix 1).





50
All supply and demand figures relating to Shanghais office and retail markets are in terms of GFA, unless stated otherwise.
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Map 3.1
Major Office Locations

Source: DTZ Consulting & Research, October 2013

There is limited availability of new land in specific boundaries of the urban core
51
of Shanghai, with the majority of the Grade
A office stock in the Huangpu District having been completed in the 1980s and 1990s. Prime offices are generally located
along Huaihai Zhong Road and East Nanjing Road in Huangpu District.

The newly emerging Secondary CBDs" such as Lujiazui (Pudong) and the Hongqiao (Changning) district feature many new
offices, including stateoftheart buildings such as the Shanghai International Financial Centre and Shanghai International
Commerce Centre. The postmodern building design and sense of prestige from these offices are appealing to many
occupiers, despite their decentralised locations.

Nevertheless, the Huangpu district remains attractive to large firms and entrepreneurs, given the areas excellent
accessibility, presence of an established cluster of MNCs and major Chinese State Owned Enterprises (SOEs) and
comprehensive retail amenities. This has helped support GradeA office rentals in the Huangpu district at elevated levels.





51
This includes the seven administrative districts, namely Huangpu, Jingan, Hongkou, Yangpu, Zhabei, Putuo and Xuhui, which are located in the geographical centre of Shanghai.
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Table 3.1 highlights some selected GradeA offices in the Huangpu district.

Table 3.1
Selected GradeA Offices in Huangpu
Year of Completion Development GFA (sq m)
2011 Sun Hung Kai Central Plaza 56,755
2011 Shui On Plaza 20,000
2010 Plaza 336 36,610
2009 Hongyi Centre 15,790
2008 Raffles City 38,000
2007 Ocean Towers 23,370
2007 Headquarters Plaza 47,000
2004 Corporate Avenue Phase I 15,470
2002 Corporate Avenue Phase II 74,020
1999 Shanghai Times Square 30,246
1998 Hong Kong Plaza 25,840
Source: DTZ Consulting & Research, October 2013

3.2.2 Supply, Demand and Occupancy

Shanghai
GradeA office stock in Shanghai has grown substantially over the past decade, alongside the citys expanding role as the
financial capital of Mainland China. Annual net supply in Shanghai averaged at 0.4 million sq m from 2003 to 2012. The
stronger focus on Asia following the GFC in 2009, which led to the significant capital inflows into the region, resulted in the
annual net supply in 2011 (0.8 million sq m) and 2012 (0.7 million sq m) exceeding the 10year historical average. Shanghai
continues to develop as the domestic financial centre for the entire Chinese market, with important global financial
connections. This is creating expectations of long term demand for office space which is encouraging developers to continue
to invest in the market. In addition, in 2011 and 2012, some new supply which had been delayed due to the GFC was released
onto the market.

A total of six GradeA office projects were launched in the first three quarters of 2013, totalling 0.3 million sq m (Figure 3.8).
This includes the China Merchants Bank Tower (owneroccupier) as well as Kerry Towers Two and Three in Jingan.


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Figure 3.8
Net Supply, Demand and Occupancy (Shanghai)
52


Source: DTZ Consulting & Research, October 2013

There has been consistently strong demand for office space in Shanghai, mainly from MNCs seeking to expand their
operations in Mainland China as well as from local companies, which continue to see important strategic reasons for
operating in Shanghai, including access to the China market and the relatively strong services sector labour pool in the city.

Average net absorption over the past decade was 0.4 million sq m per annum, and has generally fluctuated in line with global
economic conditions. Annual net absorption was significant in 2010 (0.5 million sq m) and subsequently peaked in 2011 (0.8
million sq m), as the economy rebounded from the GFC. With Mainland Chinas economy experiencing some growth
moderation in 2012, net absorption did not match that of net supply. Nevertheless, leasing market conditions improved in H1
2013, amid a consensus that national economic recovery was underway. In particular, demand was primarily driven by
relocation and space expansion needs of existing tenants. Privatelyheld domestic companies and MNCs, primarily operating
in the financial, legal, manufacturing and logistics industries, were some of the new demand drivers in 2013.

Occupancy rates for prime office space in Shanghai reflect the Vshaped recovery from the GFC, with occupancy rebounding
from a low point of 83.8% in 2009, rising to 91.9% in Q3 2013.

Huangpu
Annual net supply in Huangpu averaged 58,000 sq m over the past decade (Figure 3.9). Apart from 2003, annual supply
between 2004 and 2012 has been relatively stable. Huangpu, positioned at the geographical centre of Shanghai, has limited
land available for development. Major submarkets in Huangpu with prime office offerings include Renmin Square, The Bund
and Huaihai Zhong Road. Of these submarkets, Huaihai Zhong Road accounts for the majority (39%) of the prime office stock
in Huangpu. The highend offices located in early 20
th
century buildings near The Bund generally do not meet the
requirements of most occupiers such as law firms, consulting firms, trade companies and regional headquarter of toptier
fashion brands, unless extensive modifications are performed.




52
Net supply and demand figures are not cumulative.
901,782
358,549
223,137
748,422
657,490
80,840
289,271
322,019
310,984
303,207
505,780
796,482
481,018
35,443
210,209
255,054
83.8%
85.1%
92.4%
95.1%
92.3%
92.0%
91.7%
91.9%
75%
80%
85%
90%
95%
100%
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 Q2 2013 Q3 2013
sq m
Net Supply Demand Occupancy Rate
Average Annual Net Supply between 2003 and 2012: 448,200 sq m
Average Annual Demand between 2003 and 2012: 353,700 sq m
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Figure 3.9
Net Supply, Demand and Occupancy (Huangpu)

Source: DTZ Consulting & Research, October 2013

Huaihai Zhong Road was one of the earliest office precincts to be established in Shanghai, and most of the GradeA offices
located there were completed before 2003, with the oldest one being Shui On Plaza, completed in 1996. Most of the offices
in Huaihai Zhong Road are owned by Hong Kong and international developers, who were the first to seize the opportunities
made possible by Mainland China's reform and opening policies. Office developments in Huaihai Zhong Road generally have
high and relatively stable capital values, and are often seen as longterm investment assets.

Compared with net supply, demand for prime office space in Huangpu is relatively more volatile. Net absorption in Huangpu
peaked at about 0.1 million sq m in 2004, driven by the economic rebound after the SARS epidemic. During the GFC in 2009,
net absorption turned negative as a result of the weak global economic conditions.

Compared with Hong Kongs CBD, the impact of the global economic environment is not as obvious on Huangpus GradeA
office market because Huangpus effective rental levels remain costeffective for many firms, even during challenging
economic conditions. In contrast, office rental levels in Hong Kongs CBD are more volatile due to the citys open economy
and reliance on the services industries. In addition, a considerable proportion of Chinese SOEs are located in Huangpu,
providing a strong demand base for its office market. As such, the occupancy rate of GradeA office space in the district has
been more stable than that of the overall Shanghai market and has been above 90% since 2004.

3.2.3 Potential Supply
Ten office projects are expected to enter the Shanghai GradeA office market in H2 2013, adding a total GFA of about 1.1
million sq m (Figure 3.10). Assuming no office terminations, the estimated completions in H2 2013 are likely to bring total
annual net supply in 2013 to 1.4 million sq m.


38,000
15,793
36,612
82,076
45,777
11,924
20,542
78,695
57,046
38,426
3,183
19 2,929
95.1%
91.1%
96.0%
93.8%
93.1%
93.7% 93.4% 93.1%
0%
20%
40%
60%
80%
100%
120%
40,000
20,000
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 Q2 2013 Q3 2013
sq m
Net supply Demand Occupancy Rate
Average Annual Net Supply between 2003 and 2012: 58,000 sq m
Average Annual Demand between 2003 and 2012: 46,000 sq m
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Figure 3.10
Potential Supply (Shanghai
53
and Huangpu)

Source: DTZ Consulting & Research, October 2013

Given the limited availability of land for development in Huangpu, the annual supply of GradeA office space has been
relatively stable since 2003, averaging approximately 58,000 sq m over the past decade. Supported by the limited supply as
well as the stability of demand arising largely from the areas excellent accessibility, considerable presence of MNCs and
Chinese SOE tenants in Huangpu and comprehensive retail amenities, GradeA occupancy rates have been relatively stable
visavis the Shanghai office market at large and have been maintained above 90.0% since 2004, with an occupancy rate of
93.1% in Q3 2013.

In addition, the projected supply of office property in the Huangpu district is expected to be limited over the next three years
given the land scarcity in the area, which is expected to continue to support both occupancy rates and rental rates. Office
developments in this area are often seen as longterm investment assets given their generally high and relatively stable
capital values. The total potential office supply between 2014 and 2017 for the Huangpu district is estimated to be 680,000
sq m, as compared to 5.9 million sq m for the overall Shanghai region over the same period, which reflects less direct
competition to the subject property (Lippo Plaza).














53
Includes Huangpu.
1.1 million sq m
1.5 million sq m
2.6 million sq m
1.2 million sq m
0.6 million sq m
91,600 sq m
275,000 sq m
250,000 sq m
155,000 sq m
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
2013 F 2014 F 2015 F 2016 F 2017 F
sq m
Shanghai Huangpu
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Table 3.2 highlights the major potential office developments in Shanghai.

Table 3.2
Major Office Developments in the Pipeline Supply
Estimated Year of
Completion
Area Development Developer
Estimated GFA
(sq m)
2014
Lujiazui
Shanghai Tower
(Golf Range Site)
Shanghai Chengtou Group/
Lujiazui Finance and Trade Zone
Development Group/
Shanghai Construction Group (China)
219,920
Jing'an Da Zhong Li Building HKR (HK)/ Swire (UK) 99,960
Huangpu
Zhongshan South Road Project
(Plot 4)
Jin Waitan (China) 44,980
Huangpu Bund Plot 204 Soho (China), Guoding (Taiwan) 79,970
Luwan Corporate Avenue Phase III Shui On (HK) 106,960
Luwan JP Morgan/China Overseas
JP Morgan (US)/
China Overseas (China)
79,970
Luwan Deluxe Family Block 43 SOHO/ Fuxing (China) 69,980
Changning Hongqiao Tiandi Phase I Shui On (HK) 95,970
Changning Hongqiao Green Valley
Shanghai United Properties
Investment Co., Ltd (China)
199,950
Changning Greentown Square Greentown (China) 36,160
Changning City Centre III Treasury Holdings (UK) 26,990
Hongkou
White Magnolia Plaza (Jingang
Plaza)
APP (Indonesia)/HKC (Holdings)
Limited (HK)
142,620
Hongkou Huishan East and Central Plot
Shanghai International Port (Group)
Co., Ltd (China),Franshion Property
(China)
140,650
Hongkou Huishan West Plot
Shanghai International Port (Group)
Co., Ltd (China)
92,670
Yangpu The Springs Phase 2
Tishman and Speyer Properties
(USA), Shanghai Chengtou Property
(China)
125,560
Xuhui Xujiahui Centre Urban Development Group (China) 329,880
2015

Lujiazui Pudong Financial Plaza Lujiazui Group (China) 89,870
Lujiazui Foxconn Building Foxconn (Taiwan) 69,980
Tangdong Tangdong Headquarter Lujiazui Group (China) 279,900
Zhuyuan Century Avenue Project (Plot 24)
Hutchinson Whampoa Limited (HK)/
Lujiazui Finance and Trade Zone
Development Group/Shanghai
Construction Group (China)
130,060
Century Park Lufa Square Shanghai Zhonglu Group (China) 39,990
Huangpu
Bund International Finance Service
Centre (Plot 81)
Zhengda Group (China) 189,930
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Estimated Year of
Completion
Area Development Developer
Estimated GFA
(sq m)
Luwan CapitaMalls/Yongye Project
CapitaMalls (Singapore)/ Yongye
(China)
60,810
Changning Vantone Project Vantone (China) 49,980
Changning LihPao Project
LihPao (TW), Easy Gain International
LLC (TW)
59,980
Changning Shanghai Sanxiang Project Shanghai Sanxiang Co, Ltd (China) 15,000
Changning Raffles City Changning Phase I CapitaLand (SG) 184,930
Hongkou 108 Plaza
CSCEC/ Shanghai Guangtian Real
Estate (China)
109,960
Yangpu The Springs Phase 3
Tishman and Speyer Properties
(USA), Shanghai Chengtou Property
(China)
149,950
Source: DTZ Consulting & Research, October 2013

3.2.4 Rental Values
Alongside Shanghais ascension as the global financial capital of Mainland China to one of the worlds leading financial
centres, monthly rental values in Shanghai rose steadily from SGD40 (RMB194) per sq m in 2003 to SGD67 (RMB326) per sq
m in 2008, which translated to an average rental growth rate of 13.6% per annum (Figure 3.11). Given its stronger integration
with the global economy, office rentals in Shanghai fell considerably by 27.2% during the GFC in 2009. Office rentals in
Huangpu were also affected during this period, declining by 23.5% from SGD67 (RMB329) per sq m per month to SGD52
(RMB251) per sq m per month. As at Q3 2013, rents in Huangpu were SGD58 (RMB284) per sq m per month. This reflects
that the rental trend for Huangpu is consistent to that of Shanghai from 2003 to Q3 2013 (Figure 3.11).

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Figure 3.11
Average Rental Values (Shanghai and Huangpu)

Source: DTZ Consulting & Research, October 2013

GradeA office rentals in Shanghai only started to recover in H1 2010, and rental growth began to rise again from H2 2011 as
Shanghais economic growth gained momentum following the GFC. The improved net absorption over this period allowed
landlords to secure tenancies at higher rental rates. In particular, many landlords managed to secure highquality tenants.

The Jingan district enjoyed the highest rental rate among all precincts in 2010, while the completion of IFC in Pudong raised
the average monthly rental in the Pudong district to SGD52 (RMB248) per sq m in 2011. Notably, it was after the GFC that
office rentals in Huangpu rose beyond the citywide rental levels, as more companies came to appreciate the value
proposition Huangpu offered for their businesses. This trend was also evident from 2004 to 2006, indicating the positive
sentiment towards Huangpu among office occupiers.

Overall office rentals in Shanghai declined by 1.6% from Q1 2013 to Q3 2013, primarily due to occupier demand being
weighed down by the weak global economic conditions. On the other hand, office rentals in Huangpu continued to rise over
the same period, by 0.2%, further reflecting the strong value proposition Huangpu offers to office occupiers. As at Q3 2013,
average monthly rents in Huangpu were SGD58 (RMB284) per sq m, about 9% higher than that at the citywide level (SGD54
(RMB262) per sq m). In Pudong, strong demand from domestic financial institutions and professional services firms helped
stabilise rental levels.

Another factor contributing to the moderating rental growth was the buildup of supply pressure there were concerns over
the substantial pipeline supply in Shanghai. However, in areas such as Lujiazui and Jingan, prime office buildings continued to
enjoy high occupancy and landlords remained relatively confident, as evidenced by their willingness to increase rents slightly.

As at Q3 2013, average monthly effective rentals for GradeA offices in Shanghai ranged from SGD32 to SGD88 (RMB156 to
RMB426) per sq m, while that for GradeA offices in the Huangpu district was from SGD38 to SGD88 (RMB183 to RMB426)
per sq m.

326
238
211
244
266 266
264
262
329
251
220
254
282
283 283
284
150
170
190
210
230
250
270
290
310
330
350
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 Q2 2013 Q3 2013
RMB per sq m per month
Shanghai Huangpu
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3.2.5 Capital Values
GradeA office capital values in Huangpu have been on a general uptrend since 2007. The sharp decline of capital values for
both Shanghai and Huangpu in 2009 reflected the impact of the GFC, when many international investors withdrew from the
property investment market (Figure 3.12).

Figure 3.12
Average Capital Values (Shanghai and Huangpu)

Source: DTZ Consulting & Research, October 2013

Average GradeA office capital values rose significantly in 2011 due to the increased capital flows into China. With the
ensuing global economic slowdown in 2012, average capital values in Shanghai and Huangpu experienced a gradual
correction from 2012 till early 2013. With some signs of improvement in the global economy, average capital values have
remained relatively stable over the first three quarters of 2013. Notably, average capital values in the Huangpu district rose
by 0.9% QOQ to SGD11,669 (RMB56,800) per sq m in Q3 2013, continuing to be higher than the citywide level of SGD11,488
(RMB55,919) per sq m.


0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 Q2 2013 Q3 2013
RMB per sq m
Shanghai Huangpu
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3.2.6 Major Office Investment Transactions

Table 3.3 highlights the major office investment transactions at key office locations in Shanghai since 2012.

Table 3.3
Major Office Investment Transactions
Period Development Area Buyer
Gross
Leasable
Area
(sq m)
Transacted
Price
(SGD/RMB
million)
Unit Price
54

(SGD/RMB
per sq m)
2012
Q1 Yinhua Building Pudong
77/
376

Q2
Shanghai International Shipping
Service CentreWest site
Hongkou
477/
2,320

Q3
State Energy Smart Grid R&D
Center (Shanghai)
Pudong
State Energy Smart Grid
R&D Center(Shanghai)
4,992
57/
279
11,474/
55,865
1168 Century Avenue, Pudong Pudong Cathay Life Insurance 11,883
140/
680
11,754/
57,221
Guoshun Rd. (E.) Yangpu Huou Fund 21,508
88/
430
4,112/
19,999
Huamin King Tower Jing'an
375/
1,824

Q4
Ocean Tower Huangpu ARA Asset Management 58,001
390/
1,900
7,750/
37,738
Fuyou Road Huangpu PICC 20,530
316/
1,540
15,414/
75,014
Shimen 2nd Rd Jingan Private investor 9,769
53/
260
5,468/
26,619
Lujiazui Pudong China Life 25,000
360/
1,750
14,381/
69,998
Lujiazui Pudong Pangu 15,000
216/
1,050
14,381/
69,998
CITI Shipyard Project (One block) Pudong
360/
1,750

H1 2013
Q1
Baoan Building Pudong Soufun Holdings Ltd 42,000
164/
800
3,918/
19,052
Plot E20 Huangpu Riverside Pudong
303/
1,473

Q2
Shanghai International Shipping
Service CentreTower 6
Hongkou
356/
1,735

Expo Plot A09A02 Pudong
201/
978

Expo Plot A09B02 Pudong
249/
1,212

Source: DTZ Consulting & Research, October 2013


54
Based on transacted price and GLA. Figures do not add up due to rounding off.
F-52

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3.2.7 Outlook
The overall macroeconomic environment in Mainland China is expected to remain stable in the short to medium term, and
Shanghais status as the business hub and financial capital of Mainland China, as well as the establishment of the FTZ are
expected to continue to benefit the citys GradeA office market. While the significant supply pipeline up to 2017 will place
pressure on the overall Shanghai office market, the majority of the potential office projects are located in decentralised/ non
prime areas. As such, the pressure from supply on offices in core CBD areas, e.g. Pudong, Huangpu and Jingan Districts is
likely to be limited, given the new supply will mainly be located in nonprime suburban districts, which are deemed to be less
competitive in terms of location.

In the mid to longterm, Shanghai Industrial Urban Development Group Limited (SIUD)s land swap involving the
development of Xujiahui Centre
55
, coupled with the postponement of other projects, is expected to reduce the amount of
potential supply from now to 2016. As such, given the reduction in potential supply, office rental values in Shanghai are
expected to grow over this period. However, the growth is likely to be moderate, in consideration of increasing competition
particularly from the decentralised markets.

Taking into account the above considerations, Table 3.4 highlights the average annual rental value growth forecast for
Shanghai and Huangpu. Given the limited potential supply in Huangpu and anticipated increase in demand stemming from
major occupiers with requirement of office extension in the central area of Shanghai, office rentals in Huangpu are likely to
grow at a faster pace compared with that for the overall city.

Table 3.4
Average Annual Rental Value Growth Forecast

YOY % Change Shanghai Huangpu
Q4 2013 F 2.8% 4.5%
Q4 2014 F 1.3% 6.8%
Q4 2015 F 1.6% 6.0%
Q4 2016 F 2.1% 7.8%
Q4 2017 F 1.3% 5.6%
Source: DTZ Consulting & Research, October 2013

Meanwhile, the investment market will continue to be active from Q4 2013 to H1 2014, supported by the strong investment
appetite for prime office space in central locations. In addition, there are also some investors who are prepared to explore
opportunities in the decentralised areas, where there may be potential for higher yields.



55
Located in central Xujiahui (Yishan Road/ Hongqiao Road), Xujiahui Centre is situated on the largest and last prime site in the city centre, in the Xuhui District of Shanghai. Sun Hung Kai won the tender for
the project for SGD4.47 (RMB21.77) billion in March 2013. The Xujiahui Centre is envisaged to be developed as an integrated commercial complex with 70% premium offices and 30% retail and hotel uses.
F-53

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3.3 Retail Property Market Overview

Highend retail market in Huangpu primarily covers East Nanjing Road and Huaihai Zhong Road
Prime retail projects are mainly concentrated in several commercial areas in Shanghai, namely West Nanjing Road, East
Nanjing Road, Huaihai Zhong Road, Xujiahui and Lujiazui in Pudong.
East Nanjing Road A dedicated commercial zone with its eastern end at the central section of the Bund. There is a
concentration of refurbished traditional Europeanstyle buildings which are now used as highend restaurants, bars and
retail outlets. East Nanjing Road is a popular attraction for visitors to Shanghai.
Huaihai Zhong Road Originally known as Xiafei Road, the precinct is located in the geographical centre of Shanghai. The
unique and varied architectural styles as well as historic buildings set the area apart and provide it with a sense of
prestige. As such, the precinct is popular with topend designer brands from all over the world as well as renowned and
established Chinese brands. Huaihai Zhong Road has the largest amount of prime retail space in Puxi, comprising
approximately 30% of total prime retail space in Puxi.

Table 3.5 highlights some of the major retail developments in Huangpu.

Table 3.5
Selected Major Retail Developments in Huangpu
Year of Completion Development GFA (sq m)
2013 Shanghai International Commerce Centre 109,346
2013 Hong Kong New World Plaza 40,000
2012 Agile International Plaza 22,000
2010 Hongyi Plaza 25,000
2010 Xintiandi Fashion 40,000
2004 Bailian Shimao International Plaza 30,000
2003 Raffles City 40,000
2002 Xintiandi 60,000
2000 Shanghai Times Square 40,000
1999 Central Plaza 12,000
1998 Hong Kong Plaza 38,000
Source: DTZ Consulting & Research, October 2013

Healthy growth in overall retail market in Huangpu
There has been limited supply of retail property in Huangpu district in recent years, with the annual average net supply of
GFA of retail space being approximately 87,630 sq m between 2009 to 2012. A total of approximately 350,540 sq m (GFA) of
new malls space were launched since 2009. As at Q3 2013, there is a total of 782,920 sq m retail GFA in Huangpu district.
Demand has been strong, exceeding net supply since 2011.

International brands and fashion are some of the key offerings at the prime shopping malls in Huangpu
Located in East Nanjing Road are some of Shanghai's oldest and largest department stores, as well as a variety of domestic
retail outlets, and some traditional eateries with a long history. These include Wing On department store, Youyi department
store and No.1 Department Store of Shanghai, which have garnered strong repute among the older generation of Chinese
and Shanghai locals. New shopping malls completed in the area since the 1990s, have attracted a younger generation of
shoppers and made Huangpu a renowned fashion precinct at recognised destinations such as 353 Plaza and Hongyi
International Plaza.

An increasing number of stores located in Huaihai Zhong Road are attracting visitors from other parts of Mainland China and
abroad. This includes large shopping centres like PCD Stores, Maison Mode and Parkson as well as gourmet restaurants
ranging from Chinese traditional snacks to Western cuisine, and cinemas with oldworld charms like Guotai Cinema. A strong
suite of supporting amenities, including wholesale trade, a mix of hospitality, F&B, transportation, travel and entertainment
offerings have established the retail precinct as one of the foremost retail destinations in North East Asia.


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Along with the completion of the metro station and improvement of accessibility in noncentral area, mega malls in the
decentralised precincts, such as Shanghai Yuexing Commercial Centre, have launched recently, which further reflects the
trend of decentralisation for highend retail. With the completion of the renovation works to the Hong Kong New World Plaza
and its renaming to K11 Shopping Art Centre in Q2 2013, which is fully occupied, as well as Parkson having closed most of its
floors for redecoration and brand repositioning, the prime retail landscape in Huaihai Zhong Road is undergoing the second
round of upgrading, in order to enhance the competitiveness of this traditional prime retail precinct.

With increasing confidence in Mainland Chinas economy and consumer demand for their products, many brands e.g., Bang
& Olufsen, Blancpain, Corneliani and Lane Crawford have announced their plans to open flagship stores in Shanghai.
Blancpain opened its flagship store in Xintiandi (one of the most famous high end retail projects in Huangpu), which includes
a VIP club and a customer service centre.

Rental and capital values are likely to continue to rise in the short to long term, albeit moderately
Average monthly rentals
56
for Shanghai prime retail were relatively stable from 2007 to September 2013, reaching
approximately SGD361 (RMB1,800) per sq m as at end Q3 2013, while that for the Huangpu district reached SGD340
(RMB1,653) per sq m. Average monthly rentals of prime retail in the Huangpu district are expected to grow moderately
considering the positive retail market environment (Table 3.6). Nevertheless, rentals in Huangpu are likely to remain slightly
below the citywide average, as West Nanjing Road and Xujiahui house some of the worlds most sought after retail locations
which will always attract a substantial premium these two areas have propped up the average citywide rental levels.
Although the projected retail rental growth rate for Huangpu is less extensive than that for Shanghai, it is mainly due to
Huangpus matured retail landscape and rentals are likely to trend at a more sustainable rate.

Table 3.6
Average Annual Rental Value Growth Forecast
YOY % Change Shanghai Huangpu
Q4 2013 F 7.0% 5.5%
Q4 2014 F 4.6% 4.1%
Q4 2015 F 4.8% 2.3%
Q4 2016 F 5.3% 4.8%
Q4 2017 F 3.3% 3.8%
Source: DTZ Consulting & Research, October 2013

The average annual growth rate for capital values in Huangpu district from 2007 to 2012 was approximately 6.0%. As at end
H1 2013, average capital values for the overall Shanghai prime retail market were SGD35,898 (RMB174,730) per sq m, while
that for the Huangpu district was SGD64,013 (RMB311,583) per sq m, highlighting the fact that location is a key factor
affecting the capital values of prime retail in Shanghai.

It is anticipated that retail capital values for the overall city and the Huangpu district value will continue to grow over the
next few years on the back of rising demand from new international brands entering the city, e.g. Sutor Mantellassi an
Italian luxury shoe brand opening its first Asian store in Shanghai in Q3 2013, and Swiss outdoor sport brand Odlo also
opening its first store in China in the same period. However, the growth rate will moderate in the longer term due to the
rising rental base as well as the moderation in Mainland Chinas growth rate as the country enters a more mature growth
phase.




56
Rental for Shanghai prime retail is represented by the average first floor asking rental of prime shopping centres.
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4 Review of Portfolio

4.1 Location of Subject Properties

4.1.1 The OUE Bayfront Property
OUE Bayfront, OUE Tower and OUE Link, together form the OUE Bayfront Property, an integrated commercial development
in Singapore comprising mainly office as well as retail and F&B components. Completed in January 2011, the subject property
is strategically located at Collyer Quay and is in between Raffles Place, the traditional prime business and financial district of
Singapore and the New Downtown of Marina Bay (Map 4.1).

Map 4.1
Location of The OUE Bayfront Property (OUE Bayfront, OUE Tower and OUE Link) in Singapore

Source: DTZ Consulting & Research, October 2013

The OUE Bayfront Property enjoys easy connectivity both within and out of Singapores CBD. It has direct access to the
Raffles Place MRT station, a major MRT interchange that is one of the key points of entry and exit to and from the CBD
(Figure 4.1). The OUE Bayfront Property is also within walking distance from the recently completed Downtown MRT station,
which serves the new Downtown Line.



D
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OUE
Bayfront
One Raffles
Place
OUE
Downtown
OUE Tower
OUE Link
Legend
OUE Bayfront Property
ROFR Properties
F-56

www.dtz.com 51

Figure 4.1
Singapores Mass Rapid Transit (MRT) and Light Rail Transit (LRT) Map System

Source: Land Transport Authority, SMRT, DTZ Consulting & Research, October 2013

Via OUE Link and the underpass connection to the Raffles Place MRT station, the OUE Bayfront Property also serves as an
important connector for pedestrian traffic in various areas within the CBD. Direct road frontage to Collyer Quay offers
convenient vehicular access to the OUE Bayfront Property and also lends access to a public bus network that is wellserved by
diverse bus routes. Collyer Quay is a major arterial road that leads directly into the other core areas of the CBD, namely
Marina Bay (via Marina Boulevard) and Tanjong Pagar (via Raffles Quay and Shenton Way).

Notably, the OUE Bayfront Property offers convenient access to major expressways that include the Ayer Rajah Expressway,
the new Marina Coastal Expressway, the KallangPaya Lebar Expressway via the nearby Nicoll Highway and the East Coast
Parkway, which provide swift and direct access to Changi Airport and the city centre.

A unique locational characteristic of the OUE Bayfront Property is that it enjoys direct frontage to the water promenade,
providing it with spectacular views of Marina Bay (Figure 4.2).


The OUE Bayfront Property
(Raffles Place MRT station)
F-57

www.dtz.com 52

Figure 4.22
OUE Bayfront

Source: DP Architects, World Buildings Directory, DTZ Consulting & Research, October 2013

Given its waterfront location, the subject property is adjacent to a Water Taxi Stop at Clifford Pier. The water taxis serve
primarily the Marina Bay and Singapore River areas, with as many as 24 boat landing points, providing commuters an
additional mode of transportation.

OUE Bayfront
OUE Bayfront is an 18storey premium office building, with four basement car park levels (242 car park lots and 3 handicap
lots) located at 50 Collyer Quay and is the result of the redevelopment of the former Overseas Union House. The total office
NLA in OUE Bayfront is 35,551.7 sq m, with columnfree, large floor plates ranging in size from 2,415 sq m 2,787 sq m, some
of which are designated trading floors for tenants in the financial services sector.

It also features a rooftop restaurant and lounge, namely ME@OUE, which is a cobrand project between OUE and Mediacorp.
The restaurant, which enjoys a panoramic view of Marina Bay, offers a variety of culinary options and is often used for
business functions and corporate events. In addition, the rooftop restaurant has a dedicated lift.

Owing to its vantage location between Raffles Place and Marina Bay, OUE Bayfront has a prestigious and established tenant
base comprising financial institutions, legal firms, an IT firm and MNCs such as Merrill Lynch International Bank Limited
(Merchant Bank), Allen & Overy LLP, Citrix Systems Singapore Pte Ltd, Hogan Lovells International LLP, Skandinaviska Enskilda
Banken AB (PUBL), Singapore Branch and Union Bancaire Privee (Singapore) Ltd.

OUE Tower and OUE Link
Adjoining OUE Bayfront is OUE Tower, the former Change Alley Aerial Plaza. It was accorded heritage conservation status by
the URA in 2007. OUE Tower has a retail NLA of 1,096.0 sq m spread across two levels (Levels 4 and 5) (Figure 4.3). It is
currently occupied by Tung Lok Groups Tng L Private Dining, which offers Chinese fine dining. As one of the only two
revolving restaurants in Singapore, OUE Tower is an iconic landmark in the CBD.

F-58

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Figure 4.3
OUE Tower (Left) and OUE Link (Right)

Source: World Buildings Directory, DTZ Consulting & Research, October 2013

OUE Link (Figure 4.3), the aerial retail linkway, directly links OUE Bayfront to the Raffles Place MRT interchange station and
has retail NLA of 250.0 sq m. It is fully leased with a comprehensive range of retail and F&B options, providing convenience
shopping for the timestarved working population in the area.

4.1.2 Lippo Plaza
Lippo Plaza is located at 222 Huaihai Zhong Road in the Huangpu District of Shanghai (Map 4.2). Huaihai Zhong Road has
been one of the most popular commercial precincts in Shanghai since the 1990s and the Huangpu district is now home to
many GradeA office buildings.

Map 4.2
Location of Lippo Plaza in Shanghai

Source: DTZ Consulting & Research, October 2013
Huangpu
Huai Hai Zhong Road
Lippo Plaza, Shanghai
K11
Shui On Plaza
Xin Tian Di
Yangpu
Hongkou
Zhabei
Putuo
Jingan
Changning
Xuhui
F-59

www.dtz.com 54

Lippo Plaza is a 36storey GradeA commercial building, comprising office (33,538.6 sq m; NLA) and retail (5,693.4 sq m; NLA)
spaces (Figure 4.4). The subject property comprises the retail units on Basement Level 1, the entire floors from Levels 1 to 3,
as well as office space on levels 5 to 11, 17 to 23 and 25 to 39. The subject property has 168 car parking spaces located in
Basement Levels 2 and 3.

Figure 4.4
Lippo Plaza

Source: DTZ Consulting & Research, October 2013

Lippo Plaza is located at a popular location for international commerce, with many high quality office and retail
developments located in the district. Professional sectors, such as law firms, architecture firms and trade companies are its
major tenants. Significant tenants include Bo Le Associates and IFX Markets Ltd (Shanghai representative office), which
occupies one entire floor with a GFA of approximately 1,302 sq m.

Lippo Plaza is easily accessible by bus (Routes 167, 320, 42, 911, 920, 926, 932 at Songshan Road station)and the Metro
(Metro Line 1 runs along Huaihai Zhong Road at Huangpi South Road station) (Figure 4.5). In addition, Huaihai Zhong Road
station
57
will be one of the stations along the future Line 13 from Jinyun Road in the Jiading district to Huaxia Middle Road in
the Pudong district, which is anticipated to be operational by 2014
58
. There will be upgrading activities for the retail spaces in
this precinct as a result of the Metro Line 13 construction. In addition, this station will be the interchange station with Metro
Line 14 which connects Puxi with the Pudong district, further enhancing the accessibility to Huaihai Zhong Road.


57
Source: Shanghai Academy of Environmental Sciences. 2 April 2009. Plan for Shanghai Metro (2010 to 2020). Available: http://www.envir.gov.cn/info/2009/2009421347.htm.
58
Source: ShanghaiDaily. 5 August 2013. Line 13 will get a big extension. Available: http://www.shanghaidaily.com/Metro/public-services/Line-13-will-get-a-big-extension-/shdaily.shtml.

F-60

www.dtz.com 55

Figure 4.5
Shanghai Metro Network

Source: Shanghai Shentong Metro Group Co.,Ltd, DTZ Consulting & Research, October 2013
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www.dtz.com 57

4.3 Portfolio Performance

4.3.1 The OUE Bayfront Property
The average office occupancy at OUE Bayfront stands at 95.9% as at Q3 2013, considerably higher compared with the
average CBD occupancy of 92.9%.

The average monthly gross office rents at OUE Bayfront, as at end Q3 2013, were SGD10.36 per sq ft, higher than that in
Raffles Place (SGD9.40 per sq ft) and marginally lower than that in Marina Bay (SGD11.00 per sq ft). OUE Bayfront is currently
one of the few premium offices around Raffles Place and Marina Bay. It is relatively new as it was completed in 2011. The
OUE Bayfront Property enjoys rare and direct frontage to the water promenade, unlike many other offices in Raffles Place. In
addition, it has direct linkage to Raffles Place MRT interchange station.

Another unique selling point at OUE Bayfront is its rooftop restaurant, ME@OUE and its adjacency to OUE Tower. This
provides convenience for occupiers for their business dining and corporate events.

4.3.2 The Lippo Plaza Property
As at Q3 2013, the overall occupancy rate of Lippo Plaza was approximately 88.2%. The lower committed occupancy rate, in
comparison to historical occupancy rates, was due to the nonrenewal of rented space by office tenants, which was in the
ordinary course of business. The centre management team is in the process of engaging potential tenants to fill the vacated
space and the occupancy rate of Lippo Plaza is expected to improve to historical levels after this timing issue.

As at Q3 2013, Lippo Plaza enjoyed an average effective rental of approximately SGD41 (RMB194) per sq m per month, which
is at comparable rental level with GradeA offices completed in similar years e.g., Hong Kong Plaza and Hong Kong New
World Towers. Corporate Avenue of Xintiandi project, a newer development, enjoyed higher rentals, helped drive up average
rentals of the Huangpu District to SGD58 (RMB284) per sq m in Q3 2013.


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2
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3



F-67

www.dtz.com 61

5 Conclusion

Despite economic risks in the US and Europe and moderate world economic growth, Asias growth story remains compelling.
Singapore and Shanghai, where the subject properties are located, are poised to remain at the forefront of this growth,
maintaining their strong presence as key Asian business and financial hubs. The geographical diversification of the portfolio in
these two gateway cities will better capture the various opportunities in the region.

The subject properties in the portfolio, the OUE Bayfront Property and Lippo Plaza, are primarily premium and GradeA
offices respectively and are integrated with supporting retail amenities. They are located in the prime business districts and
enjoy excellent accessibility, a diverse range of complementary amenities as well as comprehensive infrastructure. Due to
their prime locations, the subject properties enjoy established tenant bases.

In order to capitalise on Asias growth, the governments in both Singapore and Shanghai have implemented plans on various
fronts to ensure that the cities remain competitive and relevant. This includes providing business incentives, planning and
developing new business locations/ spaces and supporting infrastructure as well as driving existing and new industries. This
has helped cultivate more opportunities in the office real estate markets.

Against the backdrop of the global economic uncertainties and unique structural challenges faced by both Singapore and
Shanghai, the prospects for the prime business districts remain relatively strong, primarily due to the scarcity of available
land for development. For both Singapores Raffles Place and Shanghais Huangpu, there is limited potential supply over the
next few years. While there is growing competition from offices in the fringe and decentralised areas, the prime office
market remains the ideal locations for most companies.

As such, prime office rentals in Singapore and Shanghai are expected to grow steadily over the next four years. Given their
unique characteristics, OUB Bayfront Properties and Lippo Plaza will be able to capitalise on the expected rental uptrend.

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Appendix 1: Key Office Grade Criteria

Singapore Premium and GradeA Office Criteria
Grade Description
Premium
Landmark, iconic office building; pacesetter in establishing rents
Building size of minimum 27,871 sq m (300,000 sq ft) and large columnfree floor plates of more than
1,394 sq m (15,000 sq ft)
Modern specifications: sense of arrival at lobby, spacious lobbies, raised flooring, floortoceiling height of
at least 2.7 metres, intelligent/automated building management and comprehensive security measures
Environmental accreditation such as the BCA Green Mark award: Gold rating and higher. (For new
buildings: Goldplus rating and higher) or equivalent
Generally less than 10 years old or comprehensively refurbished to new standard
GradeA Building size of minimum 9,290 sq m (100,000 sq ft) and generally large floor plates of 1,115 (12,000 sq ft)
and above
Modern specifications: sense of arrival at lobby, spacious lobbies, raised flooring, floortoceiling height of
at least 2.7 metres, intelligent/automated building management and presence of security measures
Environmental accreditation such as the BCA Green Mark award: Gold rating and higher. (For new
buildings: Gold rating and higher) or equivalent
Generally less than 10 years old or comprehensively refurbished to new standard
Source: DTZ Consulting & Research, October 2013

Shanghai GradeA Office Criteria
Criterion Description
Location
Mature CBD
Planned commercial or peripheral area with easy access to the main commercial areas
Ownership Owned by single entity or major occupier owns several floors within the development
Floor Layout
Typical floor plate, in terms of GFA, is between 1,200 to 1,500 sq m (12,900 to 16,200 sq ft)
concrete or raised floor, low column density and high efficiency rate (65% and above)
Ceiling
2.5 to 2.7 metres
Gypsum board/metallic, ceiling grid, light boxes provided by landlord; sprinklers, smoke
detectors, installed in open plan design
Finishing
Grand/ high lobby decorated with granite/marble/wood
Office ceilings and walls finished in white
Restrooms on each floor
Highgrade double glazed curtain wall finished with metal cladding and granite slab
Airconditioning
System
VAV or twotube fan coil system
Car Parking At least one lot per 150 sq m (1,615 sq ft) GFA
Lift System
Average waiting time between 40 and 60 seconds
Maximum load per lift between 1,350 to 1,600 kg
Average serving area no more than 4,500 sq m (48,438 sq ft) GFA
Telecommunications
System
At least one telephone line per 30 sq m (323 sq ft) GFA
Equipped with DDN/ISDN/ASDL; fiber optics
Electrical
Installations
60 to 80W per sq m has alternate power supply
Building Condition
No older than 10 yrs, or it has professional property management which effectively upholds the
buildings appearance through good maintenance.
Source: DTZ Consulting & Research, October 2013

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Appendix 2: Downtown Core Planning Area

Downtown Core Planning Area

Source: URA, DTZ Consulting & Research, October 2013

Appendix 3: Map of Other City Areas

Other City Areas


Source: DTZ Consulting & Research, October 2013


OUE Bayfront,
OUETower and
OUE Link
Central
Area
Suburban Areas
Orchard/Scotts Road
Other City
Areas
Downtown
Core
OUE Bayfront
Property
OUE Bayfront
Property
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Limiting Conditions

Where it is stated in the report that information has been supplied to us in the preparation of this report by the sources
listed, this information is believed to be reliable and we will accept no responsibility if this should be otherwise. All other
information stated without being attributed directly to another party is obtained from our searches of records, examination
of documents or enquiries with relevant government authorities.

The forward statements in this report are based on our expectations and forecasts for the future. These statements should
be regarded as our assessment of the future, based on certain assumptions on variables which are subject to changing
conditions. Changes in any of these variables may significantly affect our forecasts.

Utmost care and due diligence has been taken in the preparation of this report. We believe that the contents are accurate
and our professional opinion and advice are based on prevailing market conditions as at the date of the report. As market
conditions do change, we reserve the right to update our opinion and forecasts based on the latest market conditions.

DTZ gives no assurance that the forecasts and forward statements in this report will be achieved and undue reliance should
not be placed on them.

APPENDIX G
TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION FOR AND
ACCEPTANCE OF THE UNITS IN SINGAPORE
Applications are invited for the subscription of the Units at the Offering Price on the terms and
conditions set out below and in the printed application forms to be used for the purpose of the
Offering and which forms part of this Prospectus (the Application Forms) or, as the case may
be, the Electronic Applications (as defined below).
Investors applying for the Units in the Offering by way of Application Forms or Electronic
Applications are required to pay in Singapore dollars, the Offering Price, subject to a refund of the
full amount or, as the case may be, the balance of the applications monies (in each case without
interest or any share of revenue or other benefit arising therefrom and without any right or claim
against the Joint Bookrunners) where (i) an application is rejected or accepted in part only, or (ii)
if the Offering does not proceed for any reason.
(1) Your application must be made in lots of 1,000 Units or integral multiples thereof. Your
application for any other number of Units will be rejected.
(2) You may apply for the Units only during the period commencing at 6.00 p.m. on [] and
expiring at 12.00 noon on []. The Public Offer period may be extended or shortened to such
date and/or time as the Manager may agree with the Joint Bookrunners, subject to all
applicable laws and regulations and the rules of the SGX-ST.
(3) Your application for the Units offered in the Public Offer (the Public Offer Units), may be
made by way of the printed WHITE Public Offer Units Application Form or by way of
Automated Teller Machines (ATM) belonging to the Participating Banks (ATM Electronic
Applications), the Internet Banking (IB) website of the Participating Banks (Internet
Electronic Applications), or through the mobile banking platform of DBS Bank Ltd.
(Mobile Banking Application, which, together with ATM Electronic Applications and
Internet Electronic Applications, shall be referred to as Electronic Applications).
Your application for the Units offered in the Placement Tranche (the Placement Units)
may be made by way of the printed BLUE Placement Units Application Form or in such
other manner as the Joint Bookrunners may in their absolute discretion deem appropriate.
(4) You may use up to 35.0 per cent. of your CPF Investible Savings (CPF Funds) to
apply for the Units under the Public Offer. Approval has been obtained from the Central
Provident Fund Board (CPF Board) for the use of such CPF Funds pursuant to the Central
Provident Fund (Investment Schemes) Regulations, as may be amended from time to time,
for the subscription of the Units. You may also use up to 35.0 per cent. of your CPF Funds
for the purchase of the Units in the secondary market.
(5) If you are using CPF Funds to apply for the Units, you must have a CPF Investment Account
maintained with a CPF agent bank (i.e. DBS Bank, Oversea-Chinese Banking Corporation
Limited or United Overseas Bank Limited) (the CPF Agent Bank). You do not need to
instruct the CPF Board to transfer CPF Funds from your CPF Ordinary Account to your CPF
Investment Account. The use of CPF Funds to apply for the Units is further subject to the
terms and conditions set out in the section on Terms and Conditions for Use of CPF Funds
on page G-[24] of this Prospectus.]
You must be in Singapore at the time of making the application for the Units.
G-1
(6) Only one application may be made for the benefit of one person for the Public Offer
Units in his own name. Multiple applications for the Public Offer Units will be
rejected, except in the case of applications by approved nominee companies where
each application is made on behalf of a different beneficiary.
You may not submit multiple applications for the Public Offer Units via the Public
Offer Units Application Form, or Electronic Applications. A person who is submitting
an application for the Public Offer Units by way of the Public Offer Units Application
Form may not submit another application for the Public Offer Units by way of
Electronic Applications and vice versa.
A person, other than an approved nominee company, who is submitting an
application for the Public Offer Units in his own name should not submit any other
applications for the Public Offer Units, whether on a printed Public Offer Units
Application Form or through an ATM Electronic Application, Internet Electronic
Application or Mobile Banking Application, for any other person. Such separate
applications will be deemed to be multiple applications and shall be rejected.
Joint or multiple applications for the Public Offer Units shall be rejected. Persons
submitting or procuring submissions of multiple applications for the Public Offer
Units may be deemed to have committed an offence under the Penal Code, Chapter
224 of Singapore and the SFA, and such applications may be referred to the relevant
authorities for investigation. Multiple applications or those appearing to be or
suspected of being multiple applications (other than as provided herein) will be liable
to be rejected at the discretion of the Manager.
(7) Multiple applications may be made in the case of applications by any person for (i)
the Placement Units only (via Placement Units Application Forms or such other form
of application as the Joint Bookrunners may in their absolute discretion deem
appropriate) or (ii) the Placement Units together with a single application for the
Public Offer Units.
(8) Applications from any person under the age of 18 years, undischarged bankrupts, sole
proprietorships, partnerships, non-corporate bodies, joint Securities Account holders of
CDP will be rejected.
(9) Applications from any person whose addresses (furnished in their printed Application Forms
or, in the case of Electronic Applications, contained in the records of the relevant
Participating Bank, as the case may be) bear post office box numbers will be rejected. No
person acting or purporting to act on behalf of a deceased person is allowed to apply under
the Securities Account with CDP in the deceaseds name at the time of the application.
(10) The existence of a trust will not be recognised. Any application by a trustee or trustees must
be made in his/her or their own name(s) and without qualification or, where the application
is made by way of a printed Application Form by a nominee, in the name(s) of an approved
nominee company or approved nominee companies after complying with paragraph 11
below.
(11) Nominee applications may only be made by approved nominee companies. Approved
nominee companies are defined as banks, merchant banks, finance companies, insurance
companies, licensed securities dealers in Singapore and nominee companies controlled by
them. Applications made by nominees other than approved nominee companies will be
rejected.
G-2
(12) If you are not an approved nominee company, you must maintain a Securities
Account with CDP in your own name at the time of your application. If you do not have
an existing Securities Account with the CDP in your own name at the time of application,
your application will be rejected (if you apply by way of an Application Form) or you will not
be able to complete your application (if you apply by way of an Electronic Application). If you
have an existing Securities Account with CDP but fail to provide your Securities Account
number or provide an incorrect Securities Account number in your Application Form or in
your Electronic Application, as the case may be, your application is liable to be rejected.
(13) Subject to paragraphs 16 and 17 below, your application is liable to be rejected if your
particulars such as name, National Registration Identity Card (NRIC) or passport number
or company registration number, nationality and permanent residence status, and
Securities Account number provided in your Application Form, or in the case of an
Electronic Application, contained in the records of the relevant Participating Bank at the
time of your Electronic Application, as the case may be, differ from those particulars in your
Securities Account as maintained by CDP. If you have more than one individual direct
Securities Account with the CDP, your application shall be rejected.
(14) If your address as stated in the Application Form or, in the case of an Electronic
Application, contained in the records of the relevant Participating Bank, as the case
may be, is different from the address registered with CDP, you must inform CDP of
your updated address promptly, failing which the notification letter on successful
allocation from CDP will be sent to your address last registered with CDP.
(15) This Prospectus and its accompanying documents (including the Application Forms) have
not been registered in any jurisdiction other than in Singapore. The distribution of this
Prospectus and its accompanying documents (including the Application Forms) may be
prohibited or restricted (either absolutely or unless various securities requirements,
whether legal or administrative, are complied with) in certain jurisdictions under the relevant
securities laws of those jurisdictions.
Without limiting the generality of the foregoing, neither this Prospectus (including its
accompanying documents (including the Application Forms)) nor any copy thereof may be
taken, transmitted, published or distributed, whether directly or indirectly, in whole or in part
into the United States or any other jurisdiction (other than Singapore) and they do not
constitute an offer of securities for sale into the United States or any jurisdiction in which
such offer is not authorised or to any person to whom it is unlawful to make such an offer.
The Units have not been and will not be registered under the Securities Act and, may not
be offered or sold within the United States (as defined in Regulation S) except pursuant to
an exemption from or in a transaction subject to, the registration requirements of the
Securities Act and applicable state securities laws. The Units are being offered and sold
outside the United States (including to institutional and other investors in Singapore) in
reliance on Regulation S. There will be no public offer of Units in the United States. Any
failure to comply with this restriction may constitute a violation of securities laws in the
United States and in other jurisdictions.
The Manager reserves the right to reject any application for Units where the Manager
believes or has reason to believe that such applications may violate the securities
laws or any applicable legal or regulatory requirements of any jurisdiction.
No person in any jurisdiction outside Singapore receiving this Prospectus or its
accompanying documents (including the Application Forms) may treat the same as an offer
or invitation to subscribe for any Units unless such an offer or invitation could lawfully be
made without compliance with any regulatory or legal requirements in those jurisdictions.
G-3
(16) The Manager reserves the right to reject any application which does not conform strictly to
the terms and conditions set out in this Prospectus (including the instructions set out in the
accompanying Application Forms, in the ATMs, IB websites of the relevant Participating
Banks and the mobile banking interface of the relevant Participating Banks) or, in the case
of an application by way of an Application Form, the contents of which are illegible,
incomplete, incorrectly completed or which is accompanied by an improperly drawn up or
improper form of remittance.
(17) The Manager further reserves the right to treat as valid any applications not completed or
submitted or effected in all respects in accordance with the terms and conditions set out in
this Prospectus (including the instructions set out in the accompanying Application Forms
and in the ATMs, IB websites of the relevant Participating Banks and the mobile banking
interface of the relevant Participating Banks), and also to present for payment or other
processes all remittances at any time after receipt and to have full access to all information
relating to, or deriving from, such remittances or the processing thereof.
Without prejudice to the rights of the Manager, each of the Joint Bookrunners, as agents of
the Manager, has been authorised to accept, for and on behalf of the Manager, such other
forms of application as the Joint Bookrunners may, in consultation with the Manager, deem
appropriate.
(18) The Manager reserves the right to reject or to accept, in whole or in part, or to scale down
or to ballot, any application, without assigning any reason therefore, and none of the
Manager nor any of the Joint Bookrunners will entertain any enquiry and/or correspondence
on the decision of the Manager. This right applies to applications made by way of
Application Forms and by way of Electronic Applications and by such other forms of
application as the Joint Bookrunners may, in consultation with the Manager, deem
appropriate. In deciding the basis of allocation, the Manager, in consultation with the Joint
Bookrunners, will give due consideration to the desirability of allocating the Units to a
reasonable number of applicants with a view to establishing an adequate market for the
Units.
(19) In the event that the Manager lodges a supplementary or replacement prospectus
(Relevant Document) pursuant to the SFA or any applicable legislation in force from time
to time prior to the close of the Offering, and the Units have not been issued, the Manager
will (as required by law) at the Managers sole and absolute discretion either:
(a) within two days (excluding any Saturday, Sunday or public holiday) from the date of
the lodgement of the Relevant Document, give you notice in writing of how to obtain,
or arrange to receive, a copy of the same and provide you with an option to withdraw
your application and take all reasonable steps to make available within a reasonable
period the Relevant Document to you if you have indicated that you wish to obtain, or
have arranged to receive, a copy of the Relevant Document; or
(b) within seven days of the lodgement of the Relevant Document, give you a copy of the
Relevant Document and provide you with an option to withdraw your application; or
(c) deem your application as withdrawn and cancelled and refund your application monies
(without interest or any share of revenue or other benefit arising therefrom) to you
within seven days from the lodgement of the Relevant Document.
G-4
Any applicant who wishes to exercise his option under paragraphs 19(a) and (b) above to
withdraw his application shall, within 14 days from the date of lodgement of the Relevant
Document, notify the Manager whereupon the Manager shall, within seven days from the
receipt of such notification, return all monies in respect of such application (without interest
or any share of revenue or other benefit arising therefrom and at his own risk).
In the event that the Units have already been issued at the time of the lodgement of the
Relevant Document but trading has not commenced, the Manager will (as required by law)
either:
(i) within two days (excluding any Saturday, Sunday or public holiday) from the date of
the lodgement of the Relevant Document, give you notice in writing of how to obtain,
or arrange to receive, a copy of the same and provide you with an option to return to
the Manager the Units which you do not wish to retain title in and take all reasonable
steps to make available within a reasonable period the Relevant Document to you if
you have indicated that you wish to obtain, or have arranged to receive, a copy of the
Relevant Document; or
(ii) within seven days from the lodgement of the Relevant Document, give you a copy of
the Relevant Document and provide you with an option to return the Units which you
do not wish to retain title in; or
(iii) deem the issue as void and refund your payment for the Units (without interest or any
share of revenue or other benefit arising therefrom) within seven days from the
lodgement of the Relevant Document.
Any applicant who wishes to exercise his option under paragraphs 19(i) and (ii) above to
return the Units issued to him shall, within 14 days from the date of lodgement of the
Relevant Document, notify the Manager of this and return all documents, if any, purporting
to be evidence of title to those Units, whereupon the Manager shall, within seven days from
the receipt of such notification and documents, pay to him all monies paid by him for the
Units without interest or any share of revenue or other benefit arising therefrom and at his
own risk, and the Units issued to him shall be deemed to be void.
Additional terms and instructions applicable upon the lodgement of the Relevant Document,
including instructions on how you can exercise the option to withdraw, may be found in such
Relevant Document.
(20) The Units may be reallocated between the Placement Tranche and the Public Offer for any
reason, including in the event of excess applications in one and a deficit of applications in
the other at the discretion of the Joint Bookrunners, in consultation with the Manager.
(21) There will not be any physical security certificates representing the Units. It is expected that
CDP will send to you, at your own risk, within 15 Market Days after the close of the Offering,
and subject to the submission of valid applications and payment for the Units, a statement
of account stating that your Securities Account has been credited with the number of Units
allocated to you. This will be the only acknowledgement of application monies received and
is not an acknowledgement by the Manager. You irrevocably authorise CDP to complete
and sign on your behalf as transferee or renouncee any instrument of transfer and/or other
documents required for the issue or transfer of the Units allocated to you. This authorisation
applies to applications made both by way of Application Forms and by way of Electronic
Applications.
G-5
(22) You irrevocably authorise CDP to disclose the outcome of your application, including the
number of Units allocated to you pursuant to your application, to the Manager, the Joint
Bookrunners and any other parties so authorised by CDP, the Manager and/or the Joint
Bookrunners.
(23) Any reference to you or the Applicant in this section shall include an individual, a
corporation, an approved nominee company and trustee applying for the Units by way of an
Application Form or by way of Electronic Application or by such other manner as the Joint
Bookrunners may, in their absolute discretion, deem appropriate.
(24) By completing and delivering an Application Form and, in the case of an ATM Electronic
Application, by pressing the Enter or OK or Confirm or Yes key or any other relevant
key on the ATM or, in the case of an Internet Electronic Application or Mobile Banking
Application, by clicking Submit or Continue or Yes or Confirm or any other button on
the IB website screen (as the case may be) in accordance with the provisions herein, you:
(a) irrevocably agree and undertake to purchase the number of Units specified in your
application (or such smaller number for which the application is accepted) at the
Offering Price for each Unit and agree that you will accept such number of Units as
may be allocated to you, in each case on the terms of, and subject to the conditions
set out in, this Prospectus and its accompanying documents (including the Application
Forms) and the Trust Deed;
(b) agree that, in the event of any inconsistency between the terms and conditions for
application set out in this Prospectus and its accompanying documents (including the
Application Forms) and those set out in the IB websites or ATMs or mobile banking
interface of the Participating Banks, the terms and conditions set out in this
Prospectus and its accompanying documents (including the Application Forms) shall
prevail;
(c) agree that the Offering Price for the Units applied for is due and payable to the
Manager upon application;
(d) warrant the truth and accuracy of the information contained, and representations and
declarations made, in your application, and acknowledge and agree that such
information, representations and declarations will be relied on by the Manager in
determining whether to accept your application and/or whether to allocate any Units to
you;
(e) agree and warrant that, if the laws of any jurisdictions outside Singapore are
applicable to your application, you have complied with all such laws and none of the
Manager nor any of the Joint Bookrunners will infringe any such laws as a result of the
acceptance of your applications;
(f) agree and confirm that you are outside the United States (within the meaning of
Regulation S); and
(g) understand that the Units have not been and will not be registered under the Securities
Act or the securities laws of any state of the United States and may not be offered or
sold in the United States except pursuant to an exemption from or in a transaction not
subject to the registration requirements of the Securities Act and applicable state
securities laws. There will be no public offer of the Units in the United States. Any
failure to comply with this restriction may constitute a violation of the United States
securities laws.
G-6
(25) Acceptance of applications will be conditional upon, inter alia, the Manager being satisfied
that:
(a) permission has been granted by the SGX-ST to deal in and for the quotation of (i) all
the Units comprised in the Offering, (ii) all the Sponsor Units, (iii) all the Cornerstone
Units, and (iv) all the Units which will be issued to the Manager from time to time in full
or part payment of the Managers fees (including the Units which may be issued to the
Manager from time to time in full or part payment of the Managers fees) on the Main
Board of the SGX-ST;
(b) the Underwriting Agreement, referred to in the section on Plan of Distribution in this
Prospectus, has become unconditional and has not been terminated; and
(c) the Authority has not served a stop order which directs that no or no further Units to
which this Prospectus relates be allotted or issued (Stop Order).
(26) In the event that a Stop Order in respect of the Units is served by the Authority or other
competent authority, and:
(a) the Units have not been issued (as required by law), all applications shall be deemed
to be withdrawn and cancelled and the Manager shall refund the application monies
(without interest or any share of revenue or other benefit arising therefrom or claim
against the Manager) to you within 14 days of the date of the Stop Order; or
(b) if the Units have already been issued but trading has not commenced, the issue will
(as required by law) be deemed void and the Manager shall refund your payment for
the Units (without interest or any share of revenue or other benefit arising therefrom
or claim against the Manager) to you within 14 days from the date of the Stop Order.
This shall not apply where only an interim Stop Order has been served.
(27) In the event that an interim Stop Order in respect of the Units is served by the Authority or
other competent authority, no Units shall be issued to you until the Authority revokes the
interim Stop Order.
(28) An interim Stop Order may be served by the Authority where the Authority is of the opinion
that any delay in serving a Stop Order pending the holding of a hearing required under
Section 282E(4) or Section 297(3) of the SFA (the Hearing) is not in the interests of the
public. In such event, the Authority may, without giving an opportunity to be heard, serve an
interim Stop Order on the Manager directing that no or no further Units be allotted or issued.
Such interim Stop Order shall, unless revoked by the Authority, be in force (a) until the
Authority makes an order for a Stop Order where (i) the interim Stop Order was served
during a Hearing or (ii) a Hearing was commenced while the Stop Order was in force, and
(b) in any other case, for a period of 14 days from the day on which the interim Stop Order
is served. The Authority is not able to serve a Stop Order in respect of the Units if the Units
have been issued and listed on the SGX-ST and trading in them has commenced.
(29) Additional terms and conditions for applications by way of Application Forms are set out in
the section below Additional Terms and Conditions for Applications using Printed
Application Forms on pages G-[8] to G-[12] of this Prospectus.
G-7
(30) Additional terms and conditions for applications by way of Electronic Applications are set
out in the section below Additional Terms and Conditions for Electronic Applications on
pages G-[14] to G-[23] of this Prospectus.
(31) All payments in respect of any application for Units, and all refunds where (a) an application
is rejected or accepted in part only, or (b) the Offering does not proceed for any reason,
shall be made in Singapore dollars.
(32) No application will be held in reserve.
(33) This Prospectus is dated []. No Units shall be allotted or allocated on the basis of this
Prospectus later than 12 months after the date of this Prospectus.
(34) In the event of any changes in the closing date of the Public Offer or the time period during
which the Public Offer is opened, the Manager will publicly announce the same through a
SGXNET announcement to be posted on the Internet at the SGX-ST website
http://www.sgx.com or through a paid advertisement in one or more major Singapore
newspapers.
G-8
Additional Terms and Conditions for Applications Using Printed Application Forms
Applications by way of an Application Form shall be made on, and subject to the terms and
conditions of this Prospectus, including but not limited to the terms and conditions set out below,
as well as those set out under the section Terms, Conditions and Procedures for Application for
and Acceptance of the Units in Singapore on pages G-[1] to G-[24] of this Prospectus and the
Trust Deed.
(1) Applications for the Public Offer Units must be made using the printed WHITE Public Offer
Units Application Form and printed WHITE official envelopes A and B, accompanying
and forming part of this Prospectus.
Applications for the Placement Units may be made using the printed BLUE Placement Units
Application Form accompanying and forming part of this Prospectus (or in such manner as
the Joint Bookrunners may in their absolute discretion deem appropriate).
Without prejudice to the rights of the Manager and the Joint Bookrunners, the Joint
Bookrunners, as agents of the Manager, have been authorised to accept, for and on behalf
of the Manager, such other forms of application, as the Joint Bookrunners may (in
consultation with the Manager) deem appropriate.
Your attention is drawn to the detailed instructions contained in the Application Forms and
this Prospectus for the completion of the Application Forms, which must be carefully
followed. The Manager reserves the right to reject applications which do not conform
strictly to the instructions set out in the Application Forms and this Prospectus,
which are illegible, incomplete, incorrectly completed or which are accompanied by
improperly drawn remittances or improper form of remittances.
(2) You must complete your Application Forms in English. Please type or write clearly in ink
using BLOCK LETTERS.
(3) You must complete all spaces in your Application Forms except those under the heading
FOR OFFICIAL USE ONLY and you must write the words NOT APPLICABLE or N.A.
in any space that is not applicable.
(4) Individuals, corporations, approved nominee companies and trustees must give their
names in full. If you are an individual, you must make your application using your full name
as it appears on your NRIC (if you have such an identification document) or in your passport
and, in the case of a corporation, in your full name as registered with a competent authority.
If you are not an individual, you must complete the Application Form under the hand of an
official who must state the name and capacity in which he signs the Application Form. If you
are a corporation completing the Application Form, you are required to affix your common
seal (if any) in accordance with your Memorandum and Articles of Association or equivalent
constitutive documents of the corporation. If you are a corporate applicant and your
application is successful, a copy of your Memorandum and Articles of Association or
equivalent constitutive documents must be lodged with the Unit Registrar. The Manager
reserves the right to require you to produce documentary proof of identification for
verification purposes.
(5) (a) You must complete Sections A and B and sign page 1 of the Application Form.
(b) You are required to delete either paragraph 7(c) or 7(d) on page 1 of the Application
Form. Where paragraph 7(c) is deleted, you must also complete Section C of the
Application Form with particulars of the beneficial owner(s).
(c) If you fail to make the required declaration in paragraph 7(c) or 7(d), as the case may
be, on page 1 of the Application Form, your application is liable to be rejected.
G-9
(6) You (whether an individual or corporate applicant, whether incorporated or unincorporated
and wherever incorporated or constituted) will be required to declare whether you are a
citizen or permanent resident of Singapore or a corporation in which citizens or permanent
residents of Singapore or any body corporate constituted under any statute of Singapore
have an interest in the aggregate of more than 50 per cent. of the issued share capital of
or interests in such corporation. If you are an approved nominee company, you are required
to declare whether the beneficial owner of the Units is a citizen or permanent resident of
Singapore or a corporation, whether incorporated or unincorporated and wherever
incorporated or constituted, in which citizens or permanent residents of Singapore or any
body corporate incorporated or constituted under any statute of Singapore have an interest
in the aggregate of more than 50 per cent. of the issued share capital of or interests in such
corporation.
(7) You may apply and make payment for your application for the Units in Singapore currency
in:
(a) Cash Only You may apply for the Units using only cash. Each application must be
accompanied by a cash remittance in Singapore currency for the full amount payable
in Singapore dollars of the Offering Price, in respect of the number of Units applied for.
The remittance must in the form of a BANKERS DRAFT or CASHIERS ORDER
drawn on a bank in Singapore, made out in favour of OUE C-REIT MGT PL OUE
C-REIT OFFER AC crossed A/C PAYEE ONLY with your name, Securities Account
number and address written clearly on the reverse side. Applications not accompanied
by any payment or accompanied by any other form of payment will not be accepted.
No combined Bankers Draft or Cashiers Order for different Securities Accounts shall
be accepted. Remittances bearing NOT TRANSFERABLE or
NON-TRANSFERABLE crossings will be rejected.
(b) CPF Funds only You may apply for the Units using only CPF Funds. Each
application must be accompanied by a remittance in Singapore currency for the full
amount payable at the Offering Price, in respect of the number of Units applied for. The
remittance must be in the form of a CPF CASHIERS ORDER (available for purchase
at the CPF Agent Bank with which you maintain your CPF Investment Account), made
out in favour of OUE C-REIT MGT PL OUE C-REIT OFFER AC with your name,
Securities Account number and address written clearly on the reverse side.
Applications not accompanied by any payment or accompanied by any other form of
payment will not be accepted. For additional terms and conditions governing the use
of CPF Funds, please refer to page G-[24] of this Prospectus.
(c) Cash and CPF Funds You may apply for the Units using a combination of cash and
CPF Funds, PROVIDED THAT the number of Units applied for under each payment
method is in lots of 1,000 Units or integral multiples thereof. Such applications must
comply with the requirements for applications by cash and by CPF Funds as set out
in the preceding paragraphs. In the event that applications for Offer Units are accepted
in part only, the cash portion of the application monies will be used in respect of such
applications before the CPF Funds are used.
An applicant applying for 1,000 Units must use either cash only or CPF Funds only.
No acknowledgement of receipt will be issued for applications and application monies
received.
(8) Monies paid in respect of unsuccessful applications are expected to be returned (without
interest or any share of revenue or other benefit arising therefrom) to you by ordinary post,
in the event of oversubscription for the Units, within 24 hours of the balloting (or such
G-10
shorter period as the SGX-ST may require), at your own risk. Where your application is
rejected or accepted or in part only, the full amount or the balance of the application monies
as the case may be, will be refunded (without interest or any share of revenue or other
benefit arising therefrom) to you by ordinary post at your own risk within 14 Market Days
after the close of the Offering, PROVIDED THAT the remittance accompanying such
application which has been presented for payment or other processes has been honoured
and the application monies received in the designated unit issue account. If the Offering
does not proceed for any reason, the full amount of application monies (without interest or
any share of revenue or other benefit arising therefrom) will be returned to you within three
Market Days after the Offering is discontinued.
(9) Capitalised terms used in the Application Forms and defined in this Prospectus shall bear
the meanings assigned to them in this Prospectus.
(10) By completing and delivering the Application Forms, you agree that:
(a) in consideration of the Manager having distributed the Application Form to you and by
completing and delivering the Application Form before the close of the Offering:
(i) your application is irrevocable;
(ii) your remittance will be honoured on first presentation and that any monies
returnable may be held pending clearance of your payment without interest or
any share of revenue or other benefit arising therefrom; and
(iii) you represent and agree that you are located outside the United States within the
meaning of Regulation S;
(b) all applications, acceptances or contracts resulting therefrom under the Offering shall
be governed by and construed in accordance with the laws of Singapore and that you
irrevocably submit to the non-exclusive jurisdiction of the Singapore courts;
(c) in respect of the Units for which your application has been received and not rejected,
acceptance of your application shall be constituted by written notification by or on
behalf of the Manager and not otherwise, notwithstanding any remittance being
presented for payment by or on behalf of the Manager;
(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at
any time after acceptance of your application;
(e) reliance is placed solely on information contained in this Prospectus and that none of
the Manager, the Sponsor, the Joint Bookrunners or any other person involved in the
Offering shall have any liability for any information not contained therein;
(f) you consent to the disclosure of your name, NRIC/passport number or company
registration number, address, nationality, permanent resident status, CDP Securities
Account number, and Unit application amount to our Unit Registrar, CDP, CPF Board,
Securities Clearing Computer Services (Pte) Ltd (SCCS), the SGX-ST, the Manager
and the Joint Bookrunners (the Relevant Parties); and
(g) you irrevocably agree and undertake to purchase the number of Units applied for as
stated in the Application Form or any smaller number of such Units that may be
allocated to you in respect of your application. In the event that the Manager decides
to allocate any smaller number of Units or not to allocate any Units to you, you agree
to accept such decision as final.
G-11
Procedures Relating to Applications for the Public Offer Units by Way of Printed
Application Forms
(1) Your application for the Public Offer Units by way of printed Application Forms must be
made using the WHITE Public Offer Units Application Forms and WHITE official envelopes
A and B.
(2) You must:
(a) enclose the WHITE Public Offer Units Application Form, duly completed and signed,
together with correct remittance for the full amount payable at the Offering Price in
Singapore currency in accordance with the terms and conditions of this Prospectus
and its accompanying documents, in the WHITE official envelope A provided;
(b) in appropriate spaces on the WHITE official envelope A:
(i) write your name and address;
(ii) state the number of Public Offer Units applied for; and
(iii) tick the relevant box to indicate form of payment;
(c) SEAL THE WHITE OFFICIAL ENVELOPE A;
(d) write, in the special box provided on the larger WHITE official envelope B addressed
to Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles Place, #32-01
Singapore Land Tower, Singapore 048623, the number of Public Offer Units you have
applied for;
(e) insert the WHITE official envelope A into the WHITE official envelope B and seal
the WHITE OFFICIAL ENVELOPE B; and
(f) affix adequate Singapore postage on the WHITE official envelope B (if dispatching
by ordinary post) and thereafter DESPATCH BY ORDINARY POST OR DELIVER BY
HAND the documents at your own risk to Boardroom Corporate & Advisory Services
Pte. Ltd., 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623, so as
to arrive by 12.00 noon on [] or such other date(s) and time(s) as the Manager may
agree with the Joint Bookrunners. Courier services or Registered Post must NOT
be used.
(3) Applications that are illegible, incomplete or incorrectly completed or accompanied by
improperly drawn remittances or which are not honoured upon their first presentation are
liable to be rejected. Except for application for the Placement Units where remittance is
permitted to be submitted separately, applications for the Public Offer Units not
accompanied by any payment or any other form of payment will not be accepted.
(4) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of
receipt will be issued for any application or remittance received.
G-12
Procedures Relating to Applications for the Placement Units by Way of Printed Application
Forms
(1) Your application for the Placement Units by way of printed Application Forms must be made
using the BLUE Placement Units Application Forms.
(2) The completed and signed BLUE Placement Units Application Form and your remittance,
in accordance with the terms and conditions of this Prospectus, for the full amount payable
at the Offering Price, as the case may be, for each Unit in respect of the number of
Placement Units applied for, with your name, Securities Account number and address
clearly written on the reverse side, must be enclosed and sealed in an envelope to be
provided by you. Your application for Placement Units must be delivered to Boardroom
Corporate & Advisory Services Pte. Ltd., 50 Raffles Place, #32-01 Singapore Land Tower,
Singapore 048623, to arrive by 12.00 p.m. on [] or such other date(s) and time(s) as the
Manager may agree with the Joint Bookrunners. Courier services or Registered Post
must NOT be used.
(3) Applications that are illegible, incomplete or incorrectly completed or accompanied by
improperly drawn remittances or which are not honoured upon their first presentation are
liable to be rejected.
(4) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of
receipt will be issued for any application or remittance received.
G-13
Additional Terms and Conditions for Electronic Applications
Electronic Applications shall be made on and subject to the terms and conditions of this
Prospectus, including but not limited to the terms and conditions set out below and those under
the section Terms, Conditions and Procedures for Application for and Acceptance of the Units in
Singapore on pages G-[1] to G-[24] of this Prospectus, as well as the Trust Deed.
(1) The procedures for Electronic Applications are set out on the ATM screens of the relevant
Participating Banks (in the case of ATM Electronic Applications), the IB website screens of
the relevant Participating Banks (in the case of Internet Electronic Applications) and the
mobile banking interface of the relevant Participating Banks (in the case of Mobile Banking
Applications). Currently, DBS Bank Ltd. is the only Participating Bank through which Mobile
Banking Applications may be made.
(2) For illustration purposes, the procedures for Electronic Applications for Public Offer Units
through the ATMs and the IB website of OCBC Bank (together the Steps) are set out in
pages G-[21] to G-[24] of this Prospectus. The Steps set out the actions that you must take
at ATMs and the IB website of OCBC Bank to complete an Electronic Application. The
actions that you must take at the ATMs, the IB websites or the mobile banking interface of
the other Participating Banks are set out on the ATM screens, the IB website screens or the
mobile banking screens of the respective Participating Banks.
Please read carefully the terms and conditions of this Prospectus and its accompanying
documents (including the Application Forms), the Steps and the terms and conditions for
Electronic Applications set out below before making an Electronic Application.
Applicants applying for Public Offer Units by way of Electronic Applications may incur an
administrative fee and/or such related charges as stipulated by the respective Participating
Banks from time to time.
(3) Any reference to you or the Applicant in these Additional Terms and Conditions for
Electronic Applications and the Steps shall refer to you making an application for Public
Offer Units through an ATM of one of the relevant Participating Banks or the IB website of
a relevant Participating Bank or the mobile banking interface of DBS Bank Ltd.
(4) If you are making an ATM Electronic Application:
(a) You must have an existing bank account with and be an ATM cardholder of the relevant
Participating Banks. An ATM card issued by one Participating Bank cannot be used to
apply for Public Offer Units at an ATM belonging to other Participating Banks.
(b) You must ensure that you enter your own Securities Account number when using the
ATM card issued to you in your own name. If you fail to use your own ATM card or do
not key in your own Securities Account number, your application will be rejected. If you
operate a joint bank account with any of the Participating Banks, you must ensure that
you enter your own Securities Account number when using the ATM card issued to you
in your own name. Using your own Securities Account number with an ATM card which
is not issued to you in your own name will render your Electronic Application liable to
be rejected.
(c) Upon the completion of your ATM Electronic Application, you will receive an ATM
transaction slip (Transaction Record), confirming the details of your ATM Electronic
Application. The Transaction Record is for your retention and should not be submitted
with any printed Application Form.
G-14
(5) If you are making an Internet Electronic Application or a Mobile Banking Application:
(a) You must have an existing bank account with, and a User Identification (User ID) as
well as a Personal Identification Number (PIN) given by the relevant Participating
Bank.
(b) You must ensure that the mailing address of your account selected for the application
is in Singapore and you must declare that the application is being made in Singapore.
Otherwise, your application is liable to be rejected. In connection with this, you will be
asked to declare that you are in Singapore at the time you make the application.
(c) Upon the completion of your Internet Electronic Application through the IB website of
the relevant Participating Bank or the mobile banking interface of DBS Bank Ltd., there
will be an on-screen confirmation (Confirmation Screen) of the application which
can be printed out by you for your record. This printed record of the Confirmation
Screen is for your retention and should not be submitted with any printed Application
Form.
(6) In connection with your Electronic Application for Public Offer Units, you are required to
confirm statements to the following effect in the course of activating the Electronic
Application:
(a) that you have received a copy of this Prospectus and its accompanying documents (in
the case of ATM Electronic Applications) and have read, understood and agreed to all
the terms and conditions of application for the Public Offer Units and the Prospectus
prior to effecting the Electronic Application and agree to be bound by the same;
(b) that you consent to the disclosure of your name, NRIC/passport number, address,
nationality, permanent resident status, Securities Account number, CPF Investment
Account number (if applicable) and Public Offer Unit application amount (the
Relevant Particulars) from your account with the relevant Participating Bank to the
Relevant Parties; and
(c) where you are applying for the Public Offer Units, that this is your only application for
the Public Offer Units and it is made in your name and at your own risk.
Your application will not be successfully completed and cannot be recorded as a completed
transaction unless you press the Enter or OK or Confirm or Yes or any other relevant
key in the ATM or click Confirm or OK or Submit or Continue or Yes or any other
relevant button on the website screen or mobile banking interface. By doing so, you shall
be treated as signifying your confirmation of each of the three statements above. In respect
of statement 6(b) above, your confirmation, by pressing the Enter or OK or Confirm or
Yes or any other relevant key in the ATM or clicking Confirm or OK or Submit or
Continue or Yes or any other relevant button on the website screen or mobile banking
interface, shall signify and shall be treated as your written permission, given in accordance
with the relevant laws of Singapore, including Section 47(2) of the Banking Act, Chapter 19
of Singapore, to the disclosure by that Participating Bank of the Relevant Particulars of your
account(s) with that Participating Bank to the Relevant Parties.
By making an Electronic Application you confirm that you are not applying for the Public
Offer Units as a nominee of any other person and that any Electronic Application that you
make is the only application made by you as the beneficial owner. You shall make only one
Electronic Application for the Public Offer Units and shall not make any other application for
the Public Offer Units whether at the ATMs of any Participating Bank, the IB websites of the
relevant Participating Banks or the mobile banking interface of DBS Bank Ltd. or on the
G-15
Application Forms. Where you have made an application for Public Offer Units on an
Application Form, you shall not make an Electronic Application for Public Offer Units and
vice versa.
(7) You must have sufficient funds in your bank account and/or your CPF Investment Account
with your Participating Bank and/or CPF Agent Bank at the time you make your ATM
Electronic Application, Internet Electronic Application or Mobile Banking Application, failing
which such Electronic Application will not be completed. Any ATM Electronic Application,
Internet Electronic Application or Mobile Banking Application which does not conform
strictly to the instructions set out in this Prospectus and its accompanying documents or on
the screens of the ATMs or on the IB website of the relevant Participating Bank or the mobile
banking interface of DBS Bank Ltd., as the case may be, through which your ATM Electronic
Application or Internet Electronic Application or Mobile Banking Application is being made
shall be rejected.
You may apply and make payment for your application for the Public Offer Units in
Singapore currency in:
(a) Cash Only You may apply for the Public Offer Units through any ATM or IB website
of your Participating Bank or the mobile banking interface of DBS Bank Ltd. (as the
case may be) by authorising your Participating Bank to deduct the full amount payable
from your bank account(s) with such Participating Bank.
(b) CPF Funds only You may apply for the Public Offer Units through any ATM or IB
website of your CPF Agent Bank or the mobile banking interface of DBS Bank (as the
case may be) using only CPF Funds by authorising your CPF Agent Bank to deduct the
full amount payable from your CPF Investment Account with the respective CPF Agent
Bank. For additional terms and conditions governing the use of CPF Funds, please
refer to page G-[24] of this Prospectus.
(c) Cash and CPF Funds You may apply for the Public Offer Units through any ATM or
IB website of your Participating Bank and/or CPF Agent Bank or the mobile banking
interface of DBS Bank (as the case may be) using a combination of cash and CPF
Funds, PROVIDED THAT the number of Offer Units applied for under each payment
method is in lots of 1,000 Units or integral multiples thereof. Such applications must
comply with the requirements for applications by cash and by CPF Funds as set out
in the preceding paragraphs. In the event that such applications are accepted in part
only, the cash portion of the application monies will be used in respect of such
applications before the CPF Funds are used.
An applicant applying for 1,000 Offer Units must use either cash only or CPF Funds
only.
(8) You irrevocably agree and undertake to subscribe for and to accept the number of Public
Offer Units applied for as stated on the Transaction Record or the Confirmation Screen or
any lesser number of such Public Offer Units that may be allocated to you in respect of your
Electronic Application. In the event that the Manager decides to allocate any lesser number
of such Public Offer Units or not to allocate any Public Offer Units to you, you agree to
accept such decision as final. If your Electronic Application is successful, your confirmation
(by your action of pressing the Enter or OK or Confirm or Yes or any other relevant
key in the ATM or clicking Confirm or OK or Submit or Continue or Yes or any other
relevant button on the IB website screen or on the mobile banking interface) of the number
of Public Offer Units applied for shall signify and shall be treated as your acceptance of the
number of Public Offer Units that may be allocated to you and your agreement to be bound
by the Trust Deed.
G-16
(9) The Manager will not keep any application in reserve. Where your Electronic Application is
unsuccessful, the full amount of the application monies will be returned (without interest or
any share of revenue or other benefit arising therefrom) to you by being automatically
credited to your account with your Participating Bank or CPF Agent Bank, within 24 hours
of the balloting (or such shorter period as the SGX-ST may require) provided that the
remittance in respect of such application which has been presented for payment or other
processes has been honoured and the application monies received in the designated unit
issue account.
Where your Electronic Application is accepted or rejected in full or in part only, the balance
of the application monies, as the case may be, will be returned (without interest or any
share of revenue or other benefit arising therefrom) to you by being automatically credited
to your account with your Participating Bank or CPF Agent Bank, within 14 Market Days
after the close of the Offering provided that the remittance in respect of such application
which has been presented for payment or other processes has been honoured and the
application monies received in the designated unit issue account.
If the Offering does not proceed for any reason, the full amount of application monies
(without interest or any share of revenue or other benefit arising therefrom) will be returned
to you within three Market Days after the Offering is discontinued.
Responsibility for timely refund of application monies (whether from unsuccessful or partially
successful Electronic Applications or otherwise) lies solely with the respective Participating
Banks and/or CPF Agent Banks. Therefore, you are strongly advised to consult your
Participating Bank and/or CPF Agent Bank as to the status of your Electronic Application
and/or the refund of any money to you from an unsuccessful or partially successful Electronic
Application, to determine the exact number of Public Offer Units, if any, allocated to you
before trading the Units on the SGX-ST. None of the SGX-ST, CDP, CPF Board, SCCS, the
Participating Banks, the CPF Agent Banks, the Manager and the Joint Bookrunners assume
any responsibility for any loss that may be incurred as a result of you having to cover any net
sell positions or from buy-in procedures activated by the SGX-ST.
(10) If your Electronic Application is unsuccessful, no notification will be sent by the relevant
Participating Bank.
(11) Applicants who make ATM Electronic Applications through the ATMs of the following
Participating Banks may check the provisional results of their ATM Electronic Applications
as follows:
Bank Telephone Other Channels
Operating
Hours
Service
Expected from
Oversea-
Chinese Banking
Corporation
Limited
(OCBC Bank)
1800-363 3333 ATM/Phone
Banking/Internet
Banking
www.ocbc.com
(1)
24 hours a day Evening of the
balloting day
DBS Bank Ltd.
(including
POSB)
(DBS Bank)
1800-339 6666
(for POSB
account holders)
1800-111 1111
(for DBS Bank
account holders)
Internet Banking
www.dbs.com
(2)
24 hours a day Evening of the
balloting day
G-17
Bank Telephone Other Channels
Operating
Hours
Service
Expected from
United Overseas
Bank Limited
and its
subsidiary,
Far Eastern
Bank Limited
(UOB Group)
1800-222 2121 ATM (Other
Transactions IPO
Enquiry)/Internet
Banking
www.uobgroup.com
(3)
24 hours a day Evening of the
balloting day
Notes:
(1) Applicants who have made Electronic Applications through the ATMs or the IB website of OCBC Bank may
check the results of their applications through OCBC Personal Internet Banking, OCBCs ATMs or OCBC
Phone Banking services.
(2) Applicants who have made Internet Electronic Applications through the IB website of DBS Bank Ltd. or
Mobile Banking Applications through the mobile banking interface of DBS Bank Ltd. may also check the
results of their applications through the same channels listed in the table above in relation to ATM Electronic
Applications made at the ATMs of DBS Bank Ltd.
(3) Applicants who have made Electronic Applications through the ATMs or the IB website of UOB Group may
check the results of their applications through UOB Personal Internet Banking, UOB Groups ATMs or UOB
Phone Banking services.
(12) Electronic Applications shall close at 12.00 noon on [] or such other date(s) and time(s) as
the Manager may agree with the Joint Bookrunners. All Internet Electronic Applications and
Mobile Banking Applications must be received by 12.00 noon on [c], or such other date(s)
and time(s) as the Manager may agree with the Joint Bookrunners. Internet Electronic
Applications and Mobile Banking Applications are deemed to be received when they enter
the designated information system of the relevant Participating Bank.
(13) You are deemed to have irrevocably requested and authorised the Manager to:
(a) register the Public Offer Units allocated to you in the name of CDP for deposit into your
Securities Account or a nominee of CDP for deposit in the special CPF securities
sub-account of the nominee company of the CPF Agent Bank;
(b) return or refund (without interest or any share of revenue earned or other benefit
arising therefrom) the application monies, should your Electronic Application be
rejected or if the Offering does not proceed for any reason, by automatically crediting
your bank account with your Participating Bank or CPF Agent Bank, with the relevant
amount within 24 hours after balloting (or such shorter period as the SGX-ST may
require), or within three Market Days if the Offering does not proceed for any reason,
after the close or discontinuation (as the case may be) of the Offering, PROVIDED
THAT the remittance in respect of such application which has been presented for
payment or such other processes has been honoured and application monies received
in the designated unit issue account; and
(c) return or refund (without interest or any share of revenue or other benefit arising
therefrom) the balance of the application monies, should your Electronic Application
be rejected or accepted in part only, by automatically crediting your bank account with
your Participating Bank or CPF Agent Bank, at your risk, with the relevant amount
within 14 Market Days after the close of the Offering, PROVIDED THAT the remittance
in respect of such application which has been presented for payment or such other
processes has been honoured and application monies received in the designated unit
issue account.
G-18
(14) You irrevocably agree and acknowledge that your Electronic Application is subject to risks
of electrical, electronic, technical and computer-related faults and breakdown, fires, acts of
God and other events beyond the control of the Participating Banks, the Manager and the
Joint Bookrunners, and if, in any such event the Manager, the Joint Bookrunners, and/or the
relevant Participating Bank do not receive your Electronic Application, or any data relating
to your Electronic Application or the tape or any other devices containing such data is lost,
corrupted or not otherwise accessible, whether wholly or partially for whatever reason, you
shall be deemed not to have made an Electronic Application and you shall have no claim
whatsoever against the Manager, the Joint Bookrunners and/or the relevant Participating
Bank for any Public Offer Units applied for or for any compensation, loss or damage.
(15) The existence of a trust will not be recognised. Any Electronic Application by a trustee must
be made in his own name and without qualification. The Manager shall reject any
application by any person acting as nominee (other than approved nominee companies).
(16) All your particulars in the records of your Participating Bank at the time you make your
Electronic Application shall be deemed to be true and correct and your Participating Bank
and the Relevant Parties shall be entitled to rely on the accuracy thereof. If there has been
any change in your particulars after making your Electronic Application, you must promptly
notify your Participating Bank.
(17) You should ensure that your personal particulars as recorded by both CDP and the relevant
Participating Bank are correct and identical, otherwise, your Electronic Application is liable
to be rejected. You should promptly inform CDP of any change in address, failing which the
notification letter on successful allocation will be sent to your address last registered with
CDP.
(18) By making and completing an Electronic Application, you are deemed to have agreed that:
(a) in consideration of the Manager making available the Electronic Application facility,
through the Participating Banks acting as agents of the Manager, at the ATMs and IB
websites of the relevant Participating Banks and the mobile banking interface of DBS
Bank Ltd.:
(i) your Electronic Application is irrevocable;
(ii) your Electronic Application, the acceptance by the Manager and the contract
resulting therefrom under the Public Offer shall be governed by and construed in
accordance with the laws of Singapore and you irrevocably submit to the
non-exclusive jurisdiction of the Singapore courts; and
(iii) you represent and agree that you are not located in the United States (within the
meaning of Regulation S);
(b) none of CDP, the Manager, the Joint Bookrunners and the Participating Banks and the
CPF Board shall be liable for any delays, failures or inaccuracies in the recording,
storage or in the transmission or delivery of data relating to your Electronic Application
to the Manager, or CDP or the SGX-ST due to breakdowns or failure of transmission,
delivery or communication facilities or any risks referred to in paragraph 15 above or
to any cause beyond their respective controls;
(c) in respect of the Public Offer Units for which your Electronic Application has been
successfully completed and not rejected, acceptance of your Electronic Application
shall be constituted by written notification by or on behalf of the Manager and not
otherwise, notwithstanding any payment received by or on behalf of the Manager;
G-19
(d) you will not be entitled to exercise any remedy for rescission for misrepresentation at
any time after acceptance of your application;
(e) reliance is placed solely on information contained in this Prospectus and that none of
the Manager, the Sponsor, the Joint Bookrunners or any other person involved in the
Offering shall have any liability for any information not contained therein; and
(f) you irrevocably agree and undertake to subscribe for the number of Public Offer Units
applied for as stated in your Electronic Application or any smaller number of such
Public Offer Units that may be allocated to you in respect of your Electronic
Application. In the event the Manager decides to allocate any smaller number of such
Public Offer Units or not to allocate any Public Offer Units to you, you agree to accept
such decision as final.
G-20
Steps for ATM Electronic Applications for Public Offer Units through ATMs of OCBC Bank
Instructions for ATM Electronic Applications will appear on the ATM screens of the respective
Participating Bank. For illustration purposes, the steps for making an ATM Electronic Application
through an OCBC Bank ATM are shown below. Certain words appearing on the screen are in
abbreviated form (a/c, appln, ESA, no. and & refer to account, application, electronic
share application, number and and, respectively). Instructions for ATM Electronic Applications
on the ATM screens of the other Participating Banks, may differ slightly from those represented
below.
Steps for ATM Electronic Applications through ATMs of OCBC Bank
Step 1 Insert your personal OCBC ATM card.
2 Enter your Personal Identification Number.
3 Select More Services.
4 Select Investment Services.
5 Select Electronic Security Appln.
6 Select OUE C-REIT.
7 For an applicant making an Electronic Application at the ATM for the first time:
(a) For non-Singaporean
Press the Yes key if you are a permanent resident of Singapore, otherwise,
press the No key.
(b) Enter your own Securities Account number (12 digits) e.g. 168101234567 and
press Yes key to confirm that the Securities Account number you have entered
is correct.
8 Check your particulars appearing on the screen and press the Correct key to
confirm that your particulars are correct.
9 Press the Confirm key to confirm that you have read the following messages:
Where applicable, a copy of the Prospectus has been lodged with and
registered by the Monetary Authority of Singapore and/or SGX-ST, which
assumes no responsibility for its contents.
Where applicable, the Prospectus is available at various Participating
Banks.
10 Press the Confirm key again to confirm that you have read the following messages:
Anyone who intends to submit an application for these securities should
read the Prospectus before submitting his/her application in the manner
set out in the Prospectus.
Please confirm that you have read, understood and agreed to all terms of
application set out in the Prospectus.
G-21
11 Press the Confirm key again to confirm that you have read the following messages:
You consent to the disclosure of your NRIC/Passport No., address,
nationality, securities a/c no., qty of securities applied for and CPF
investment a/c no. to the Unit Registrar, CDP, CPF, SCCS & Issuer.
This application is made in your own name & at your own risk.
You are not a U.S. Person (as such term is defined in Regulation S under
the United States Securities Act of 1933, as amended).
12 Select the number of Units you wish to apply for
For fixed price ESA, this is the only application submitted.
Price: S$[0.80]
13 Select the type of bank account to debit your application monies.
14 Check the details of your application appearing on the screen and press the
Confirm key to confirm your application.
G-22
Steps for ATM Electronic Applications through the IB website of OCBC Bank
Instructions for Internet Electronic Applications will appear on the IB website screens of the
respective Participating Bank. For illustration purposes, the steps for making an Internet
Electronic Application through the IB website of OCBC Bank are shown below. Certain words
appearing on the screen are in abbreviated form (a/c, appln, ESA, no. and & refer to
account, application, electronic share application, number and and, respectively).
Instructions for Internet Electronic Applications on the IB website screens of the other
Participating Banks, may differ slightly from those represented below.
Step 1 Connect to OCBC Bank website at http://www.ocbc.com.
2 Locate the Personal Banking, Login to Internet Banking link on the right hand side.
3 Enter your Access Code and PIN and click on LOGIN. Thereafter, enter the
One-Time password (OTP) and click Submit.
4 Select the tab Investment & Trading and click on Initial public offering. You will be
directed to the Apply for IPO page.
5 Answer the five questions under the section entitled Fill in Details by selecting Yes
or No and selecting the relevant country of residence (you must be residing in
Singapore to apply).
6 Read the important information on Electronic Security Application (ESA) on the
screen and click on the check box to acknowledge that you have read and
understood the declaration.
7 Under section 1. Select Securities, check the details of the share counter that you
wish to apply for and if there is more than one share counter on the screen, select
the relevant counter by clicking on the appropriate radio button.
8 Upon selection of the share counter, the prospectus and prospectus terms and
conditions will be loaded. Read the important information on the screen and click on
the check box at the bottom of the screen to acknowledge that you have read and
understood the declaration.
Click on Next.
9 Under section 2. Investment Details, click on the checkbox next to Apply using
cash if you are applying for the Units using cash and key in the number of Units you
intend to apply for.
Click on Next.
10 Under Review Application, check your personal details, details of the share counter
you wish to apply for, payment mode and account to debit.
Click on Submit.
11 Print the confirmation screen (optional) for your reference and retention only. You can
also check the application status by clicking Application Status.
G-23
Terms and Conditions for Use of CPF Funds
(1) If you are using CPF Funds to subscribe for the Units, you must have a CPF Investment
Account maintained with a CPF Agent Bank at the time of your application. If you are
applying for the Units through an ATM Electronic Application, you must have an ATM card
with that CPF Agent Bank at the time of your application before you can use the ATMs of
that CPF Agent Bank to apply for the Units. For an Internet Electronic Application or Mobile
Banking Application, you must have an existing bank account with, and a User Identification
(User ID) as well as a Personal Identification Number (PIN) given by, the CPF Agent
Bank. Upon the completion of your Internet Electronic Application through the IB website of
the CPF Agent Bank or Mobile Banking Application through the Mobile Banking interface of
DBS Bank, there will be a Transaction Completed Screen of the application which can be
printed out or screen captured by you for your record. This printed record or screen capture
of the Transaction Completed Screen is for your retention and should not be submitted with
any printed Application Form. The CPF Investment Account is governed by the Central
Provident Fund (Investment Schemes) Regulations, as amended.
(2) CPF Funds may only be withdrawn for applications for the Units in lots of 1,000 Units or
integral multiples thereof.
(3) If you are applying for the Units using a printed Application Form and you are using CPF
Funds to apply for the Units, you must submit a CPF Cashiers Order for the total amount
payable for the number of Units applied for using CPF Funds.
(4) Before you apply for the Units using your CPF Funds, you must first make sure that you
have sufficient funds in your CPF Investment Account to pay for the Units. You need not
instruct the CPF Board to transfer your CPF Funds from your CPF Ordinary Account to your
CPF Investment Account. If the balance in your CPF Investment Account is insufficient and
you have sufficient investible CPF Funds in your CPF Ordinary Account, the CPF Agent
Bank with which you maintain your CPF Investment Account will automatically transfer the
balance of the required amount from your CPF Ordinary Account to your CPF Investment
Account immediately for you to use these funds to buy a CPF Cashiers Order from your
CPF Agent Bank in the case of an application by way of a printed Application Form or submit
your application in the case of an application by way of an Electronic Application. The
automatic transfer facility is available until the close of the Public Offer, and the operating
hours of the facility are between 8.00 a.m. and 10.00 p.m. from Mondays to Saturdays, and
between 8.00 a.m. and 5.00 p.m. on Sundays and public holidays.
(5) The special CPF securities sub-account of the nominee company of the CPF Agent Bank
(with whom you maintain a CPF Investment Account) maintained with CDP will be credited
with the principal amount of the Units you subscribed for, or such number of Units allocated
to you, with CPF Funds.
(6) Where you are using CPF Funds, you cannot apply for the Units as nominee for any other
person.
(7) All instructions or authorisations given by you in a printed Application Form or through an
Electronic Application are irrevocable.
(8) CPF Investment Accounts may be opened with any branch of the CPF Agent Banks.
(9) All information furnished by the CPF Board and the CPF Agent Banks on your authorisation
will be relied on as being true and correct.
G-24
APPENDIX H
LIST OF PRESENT AND PAST PRINCIPAL DIRECTORSHIPS OF
DIRECTORS AND EXECUTIVE OFFICERS
The principal directorships, other than those held in the Manager, and the principal past
directorships in the last five years of each of the directors and executive officers (named in the
Manager and Corporate Governance) of the Manager are as follows:
(A) Directors of the Manager
(1) Mr Christopher James Williams
Current Directorships Past Directorships (for the period of five
years preceding the Latest Practicable
Date)
HWB (Corporate Services) Limited
HWB (Property) Limited
Lusitania Investments Limited
OUE Hospitality REIT Management Pte. Ltd.
OUE Hospitality Trust Management Pte. Ltd.
OUE Limited
Staraward Limited
Africano Holdings Limited
Boatman Limited
Food Junction Holdings Limited
LCR Catering Services Ltd
Pt Siloam International Hospitals
RB Secretariat Limited
Richards Butler Nominees Limited
Richards Butler Secretariat Limited
Seacorp Limited
Shipcorp Limited
Shipman Limited
(2) Mr Ng Lak Chuan
Current Directorships Past Directorships (for the period of five
years preceding the Latest Practicable
Date)
Deep Ocean Development Ltd AA Group Limited
AASL Holdings Limited
AE Investment Holdings
Affini Asia Pacific II Sarl
Affinity Asia Sourcing Limited
Affinity Equity Partners (HK) Ltd
Affinity Equity Partners (International) Limited
Affinity Equity Partners Investment Advisory
Limited
Affinity Equity Partners Limited
Affinity Fund II General Partner Limited
Affinity Fund II Verwaltungs GmbH
Affinity Fund III General Partner Limited
Affinity HJT Holdings
Affinity PPF Limited
Affinity Precision Holdings
Affinity Precision (S) Pte Ltd
ARH Investments Limited
Beijing Leader & Harvest Electric
Technologies Co.
Beijing Oriental Bojie Advertising Co. Ltd
Bojie Oriental Media Holding Co. Ltd
Capital Private Equity Limited
H-1
Current Directorships Past Directorships (for the period of five
years preceding the Latest Practicable
Date)
Capstar Holdings
Caribbean Sands Holdings
Caribbean Sea Holdings
Cayman CE Holdings Limited
Dutch Savings Holdings B.V.
Eastern Pacific Circuits (Canada) Limited
Eastern Pacific Circuits (Cayman) Limited
Eastern Pacific Circuits (Singapore) Pte Ltd
Eastern Pacific Circuits (UK) Limited
Eastern Pacific Circuits (USA) Corporation
Eastern Pacific Circuits Property Ltd
First China Media Holdings
Global A&T Holdings
Global A&T Electronics Ltd
Global A&T Finco Ltd
HJT Investment Management Limited
Korea CE Holdings (Netherlands) B.V.
Korea Cosmetics Holdings Limited
Leader Harvest Power Technologies Holdings
Limited
Loscam Limited
Lux CE S.A.R.L.
Lux Savings S.A.R.L.
Motto Investments Limited
Nautical Offshore Services
Pacific Handling Solutions Pty Limited
PHS Group Holdings Pty Limited
Serra Holdings SARL
Serra Investment Holdings
Shepherd Detachering BV
Silenus Holding B.V.
S.I.H. (Stella Investment Holdings) B.V.
Silenus Holding Cooperatief U.A.
(3) Mr Loh Lian Huat
Current Directorships Past Directorships (for the period of five
years preceding the Latest Practicable
Date)
Silkrouteasia Capital Advisors Inc
Silkrouteasia Capital Partners LLC
Silkrouteasia Capital Partners Pte Ltd
(Singapore)
Silkrouteasia Capital Partners Sdn Bhd
Silkrouteasia Capital Partners Pte Ltd (BVI)
(4) Mr Carl Gabriel Florian Stubbe
Current Directorships Past Directorships (for the period of five
years preceding the Latest Practicable
Date)
Peredigm Private Limited The Gaia Hotels
H-2
(5) Mr Jonathan Miles Foxall
Current Directorships Past Directorships (for the period of five
years preceding the Latest Practicable
Date)
Accon Company Limited
Admiralty Development Limited
Allyield Limited
Bohampton Limited
Bondlink Investment Limited
Bonnetic Holdings Limited
Broadwell Asia Limited
Celestial Fortune Limited
Classic Concord Limited
Dalion Asia Limited
Dorluck Limited
Dragon Leader International Limited
Englosite Limited
Ever Benefits Limited
Everwin Pacific Ltd.
Fetay Company Limited
Fortune Finance Investment Limited
Gabarro Limited
Goldfix Pacific Ltd.
Goldjade Investment Limited
Grand Earth Limited
Grand Peak Investment Limited
Grand Premium Limited
Henwell Limited
Hongkong China (Nominees) Limited
Lippo ASM Investment Management Limited
Lippo Network Limited
Lippo Realty Holdings Limited
Lippo Realty Limited
Lippo-Savills Property Management Limited
Lippo Shanghai Investments Limited
Lippoland Investments Limited
Mastafield Limited
Myddleton Company Limited
Netscope Limited
Porbandar Limited
Salian Investments Limited
Sanfield Limited
Sanfield Australia Pty Ltd
Sinopro Limited
Sinorite Limited
Smart Dragon Limited
Superform Investment Limited
Tamsett Holdings Limited
Turkins Holdings Limited
West Tower Holding Limited
Win Fortune Limited
Win Joyce Limited
Winnar Limited
World Grand Holding Limited
Writring Investments Limited
Writring (Overseas) Limited
Yamoo Bay Project Holdings Limited
Yanser Investments Limited
Yonford Company Limited
Zentris Limited
Alsupreme Limited
Autobreathe Investment Limited
Bonson Investment Limited
Brilliant Star Investment Limited
Cenford Investments Limited
Champ Mark Holdings Limited
Christy Limited
Citivest Asia Limited
City Pioneer Limited
Classic Premium Limited
Cleverland Investment Limited
Dickhill Limited
East Tower Holding Limited
Easy Fame Inc.
Escorte Limited
Fountain Realty Fund (formerly known as
Auric Pacific Real Estate Fund)
Golden Crest Asia Limited
Golden Harmony Limited
Grand Palace Holdings Limited
Hilltop Pacific Inc.
Joinfit Limited
King Success Limited
Kong Wing Limited
Lippo Development Limited
Lippo Global Investments Pte. Limited
Lippo Holding (S) Pte. Limited
Lippo Project Management Limited
Lippo Realty (Shanghai) Limited
(formerly known as Shanghai Lippo Fuxing
Real Estate Limited)
Manson Asia Limited
Masile Limited
MIDAN City Development Co., Ltd.
Million Kingdom Limited
Newmark Investment Limited
No. 1 Dragon Ltd.
Pacific Fast Assets Limited
Planfield Limited
Primacy Limited
Prime Power Investment Limited
Prime Win Limited
Prime Score Investment Limited
Resley Limited
Riddelton Limited
Scenic World Investment Limited
Ultimax Asia Limited
UPM Ltd.
Valiant Star Limited
Welfame Hong Kong Limited
Winnery Limited
Wiselect Limited
Winwell Properties Limited
World Glory Investment Limited
H-3
(6) Ms Tan Shu Lin
Current Directorships Past Directorships (for the period of five
years preceding the Latest Practicable
Date)
Nil Ascendas Asset Management Co., Ltd.
Ascendas Zpark (Singapore) Pte. Ltd.
(B) Executive Officers of the Manager
(1) Ms Tan Bee Lian
Current Directorships Past Directorships (for the period of five
years preceding the Latest Practicable
Date)
OUE Eastern Limited APF Property Investments (BVI) Limited
APF Property Investments (HK) Limited
APF Property Investments (Mauritius) Limited
APF Property Investments (S) Pte. Ltd.
APF 2 Property Investments (S) Pte. Ltd.
Mega Will Investments Limited
Montview Investments Pte. Ltd
Nara Real Property Co., Ltd
OUE Commercial REIT Management Pte. Ltd.
Perennial (China) Retail Management
Pte. Ltd.
Rera (S) Pte. Ltd.
Vesta 388 Investments Limited
(2) Mr Yeo Kuang Hsing Rodney
Current Directorships Past Directorships (for the period of five
years preceding the Latest Practicable
Date)
Dogma Holdings Pte Ltd Nil
(3) Ms Lim Mei Chin
Current Directorships Past Directorships (for the period of five
years preceding the Latest Practicable
Date)
Nil Nil
H-4
OUE COMMERCIAL REAL ESTATE INVESTMENT TRUST
MANAGER
OUE Commercial REIT Management Pte. Ltd.
50 Collyer Quay
#04-08 OUE Bayfront
Singapore 049321
SPONSOR
OUE Limited
50 Collyer Quay
#18-01/02 OUE Bayfront
Singapore 049321
SOLE FINANCIAL ADVISER FOR THE OFFERING
Standard Chartered Securities (Singapore) Pte. Limited
8 Marina Boulevard
#19-01 Marina Bay Financial Centre Tower 1
Singapore 018981
JOINT GLOBAL COORDINATORS AND ISSUE MANAGERS
Standard Chartered Securities
(Singapore) Pte. Limited
8 Marina Boulevard
#19-01 Marina Bay Financial Centre Tower 1
Singapore 018981
CIMB Bank Berhad, Singapore
Branch
50 Raffles Place
#09-01 Singapore Land Tower
Singapore 048623
Oversea-Chinese Banking
Corporation Limited
65 Chulia Street
#09-00 OCBC Centre
Singapore 049513
JOINT BOOKRUNNERS AND UNDERWRITERS
Standard Chartered
Securities
(Singapore)
Pte. Limited
8 Marina Boulevard
#19-01 Marina Bay
Financial Centre
Tower 1
Singapore 018981
CIMB Securities
(Singapore)
Pte. Ltd.
CIMB Investment
Centre
50 Raffles Place
#19-00 Singapore
Land Tower
Singapore 048623
Oversea-Chinese
Banking
Corporation
Limited
65 Chulia Street
#09-00 OCBC
Centre
Singapore 049513
Citigroup
Global Markets
Singapore
Pte. Ltd.
8 Marina View
#21-00 Asia
Square Tower 1
Singapore 018960
J.P. Morgan
(S.E.A.)
Limited
168 Robinson Road
17th Floor
Capital Tower
Singapore 068912
DMG & Partners
Securities
Pte Ltd
10 Collyer Quay
#09-08 Ocean
Financial Centre
Singapore 049315
TRUSTEE
DBS Trustee Limited
12 Marina Boulevard
Marina Bay Financial Centre Tower 3
Singapore 018982
LEGAL ADVISERS
Legal Adviser to the Offering, and to the Manager and the Sponsor
Allen & Gledhill LLP
One Marina Boulevard #28-00
Singapore 018989
Legal Adviser to the Manager
and the Sponsor as to PRC Law
Commerce & Finance Law Offices
6F NCI Tower
A12 Jianguomenwai Avenue
Chaoyang District
Beijing
PRC Postcode:100022
Legal Adviser to the Sole Financial
Adviser, the Joint Global Coordinators
and the Joint Bookrunners as to
Singapore Law
Lee & Lee
50 Raffles Place
#06-00 Singapore Land Tower
Singapore 048623
Legal Adviser to the Sole Financial
Adviser, the Joint Global Coordinators
and the Joint Bookrunners as to
United States Federal Securities Law
Freshfields Bruckhaus Deringer
10 Collyer Quay
#42-01 Ocean Financial Centre
Singapore 049315
Legal Adviser to the Trustee
Rodyk & Davidson LLP
80 Raffles Place
#33-00 UOB Plaza 1
Singapore 048624
REPORTING AUDITORS
KPMG LLP
16 Raffles Quay
#22-00 Hong Leong Building
Singapore 048581
INDEPENDENT TAX ADVISER
KPMG Services Pte. Ltd.
16 Raffles Quay
#22-00 Hong Leong Building
Singapore 048581
UNIT REGISTRAR AND UNIT TRANSFER OFFICE
Boardroom Corporate & Advisory Services Pte. Ltd.
50 Raffles Place
#32-01 Singapore Land Tower
Singapore 048623
INDEPENDENT VALUERS
Savills Valuation and Professional Services (S) Pte Ltd
30 Cecil Street
#20-03 Prudential Tower
Singapore 049712
Colliers International Consultancy & Valuation
(Singapore) Pte Ltd
1 Raffles Place
#45-00 One Raffles Place
Singapore 048616
INDEPENDENT MARKET RESEARCH CONSULTANT
DTZ Debenham Tie Leung (SEA) Pte Ltd
100 Beach Road
Shaw Tower #35-00
Singapore 189702
TOPPAN VITE PTE. LTD. SIP1401001