Singapore Property & REITs Focus: Developers' Valuations Too Cheap to Ignore

Singapore Industry Focus
Singapore Property & REITs

Refer to important disclosures at the end of this report
DBS Group Research . Equity 8 Jan 2016

STI : 2,729.91
Time for developers to shine Analyst
Derek Tan +65 6682 3716
 Singapore property market remains in correction; derektan@dbs.com
downside risk for cyclical sub-sectors
Mervin Song CFA +65 6682 3715
 Developer top picks: CAPL, CDL and FCL as mervinsong@dbs.com
valuations are too cheap to ignore
Singapore Research Team
 S-REIT top picks: A-REIT, FCT, MAGIC and CRCT for
stable growth amidst attractive yields STOCKS PICKS
Singapore property market remains in correction. We Price Mkt Target Yield P/Bk
expect lower prices and rentals across most major real estate th
(S$) Cap Price (%)
5 Jan 2016 US$m (S$) FY15F FY15F Rating
subsectors on the back of a more modest economic outlook for
Singapore. Cyclical sectors especially office and hotel sectors, will Developers
feel the brunt of the economic slowdown on top of downward
pressure from heightened supply completions over 2016-2017. CapitaLand 3.29 9,803 3.73 2.4% 0.8 BUY
City Developments 7.59 4,884 10.26 1.6% 0.8 BUY
We believe retail sector to remain resilient with preference for
Frasers Centrepoint 1.68 3,407 2.05 5.1% 0.7 BUY
malls with sizable scale in the suburban space.
Ltd
Property Developers – valuations are too cheap to ignore. REITs
We believe that it is time to re-look at property developers, now Ascendas REIT 2.26 4,123 2.52 6.6% 1.1 BUY
trading at an attractive 0.7x P/Bk which is close to cyclical troughs
Frasers Centrepoint 1.85 1,190 2.04 6.4% 1.0 BUY
(vs normalized 0.9x P/bk). While residential prices remain on a
Trust
downward trend, we see limited negative impact for most
developers given exposure to residential sector is at a manageable Mapletree Greater 0.91 1,755 1.11 7.2% 0.8 BUY
c.8% of RNAVs. For property developers’ under our coverage China Trust
who have stayed nimble in trimming their exposure in Singapore CapitaLand Retail 1.49 881 1.69 7.1% 0.9 BUY
residential market, being selective in and diversifying exposures to China Trust
overseas markets (mainly Australia, London and Europe) will see
higher ROEs from 2016 onwards. A wildcard will be potential Source: Bloomberg Finance L.P, DBS Bank
unwinding of government policies, a scenario which we believe
are likely to when prices drop by 13%-15% from the peak (vs Singapore Property Clock
currently 8% from the peak). Our top developer pick is CAPL, City
Dev and FCL for their improving ROEs, diversified earnings base Industrial
Retail
respectively and conservative balance sheets. Residential
S-Aiming for S-REITs with stronger stability and visibility. S- (Mass Market)
REITs currently offer forward yield spreads of 4.0%. While it is
above 10-year historical average, we believe it is fair given the Peaking Falling
Market Market Office
uncertainty stemming from FED rate hike momentum over 2016
(DBS economists expect a more aggressive 4 hikes vs consensus’ 2-
3 hikes in 2016). Moreover, with potential downside risk from a
further slowdown in economic growth outlook, our preference is Rising Bottoming
to position in resilient sectors and selected offshore-focused S-REITs Market Market
Hotel
with continued ability to deliver consistent growth. We like A-REIT,
FCT, MAGIC and CRCT.
Residential
(High End)
Source: DBS Bank
www.dbsvickers.com
ed: TH/JS / sa: JC
Page 1
Industry Focus
Analysts Table of Contents

Derek TAN (65) 6682 3716
derektan@dbs.com 1. Investment Summary Pg 3
Mervin SONG CFA (65) 6682 3715
mervinsong@dbs.com
2. Key Charts Pg 4
Singapore Research Team 3. Peer Comparisons Pg 7
4. Singapore REITs – Rate Hikes casting a shadow Pg 10
5. Developers – Attractive Valuations near multi- Pg 20

year lows
Subsector Outlook Summary:
6. Residential –Accelerating declines Pg 25
7. Retail - Retailers consolidation to continue Pg 39
8. Office – Displacement demand to sustained Pg 47

uplift in rents for 2015
9. Industrial Sector – Business Park space to shine Pg 53
10. Hospitality Sector – Renewed hope Pg 62
11. Charts – S-REIT yield and P/Bk NAV Pg 71
12. Charts – Developers P/Bk NAV Pg 80
Stocks Profiles Pg 84
Appendix Pg 30
Page 2 Page 2
Industry Focus
1. Investment Summary
Singapore Property Clock
Singapore property market remains in correction mode. Year Industrial
Retail
We expect prices across most property sub-sectors to correct Residential
in 2016 on the back of ongoing economic restructuring, (Mass Market)
demand/supply imbalance due to a spike in supply from
Peaking Falling
higher completions in 2015/2016, and weaker than Market Market Office
anticipated GDP growth for Singapore.
Retail remains resilient, but reversions to fall below inflation Rising Bottoming
Market Market
growth rate. We expect retail to continue delivering stable Hotel
returns with a preference towards suburban landlords where
there is limited impact from e-commerce and performance Residential
(High End)
should be able to withstand economic shocks, if any. While
rental reversions expected to turn modest, retail REITs should Source: DBS Bank
remain stable given that they (i) own only c.34% of total
retail space in Singapore, and (ii) actively manage their Strategies for:
properties, which sees high recurring spending and traffic.
Singapore REITs – Higher interest rates on the horizon
Office rents to dip by up to 20% in 2016-2017. With key
tenants in the financial institutions cutting back on space and Macro headwinds over the FED’s rate hike momentum will
firms in the TMT sector moving out to the suburban Business limit re-rating opportunities for most S-REITs while higher
Parks space, office landlords are expected to feel the heat in refinancing rates are expected to eat into distributions in the
2016. Most have indicated willingness to forgo rental medium term. S-REITs are projected to deliver modest DPU
increases in return for retaining tenants but is not likely to be growth of c.2.7% with downside risks in earnings stemming
easy, especially when firms are on a cost reduction mode. We from Singapore’s domestic restructuring impacting margins,
see downside risks from a slew in supply completions in while any downward revision to an already modest Singapore
2016/2017 where pre-commitment rates have been GDP outlook could mean negative surprises on vacancy rates
lackluster. and/or rental reversions (office, industrial and hotels, which
are more cyclical) going forward. With the sector trading at
Hospitality – demand to lag supply growth. We believe that 7.0% FY16F yield, we believe that accretive acquisitions will
the Singapore hospitality sector will see further downside to be tough to come by. Our preferences are S-REITs with the
RevPAR despite an improvement in conference calendars. opportunity to surprise on the upside through acquisitions or
Demand for accommodation is expected to lag supply growth portfolio-specific catalysts. Top picks are A-REIT, MAGIC, FCT,
of c.5% p.a, over 2015-2016, implying that competition will and CRCT.
remain intense.
Singapore Developers – Attractive risk-reward ratio
Supply concerns for industrial but Business Park’s
fundamentals are improving. We remain cautious on We believe that it is time to re-look at property developers,
industrial sector due to increased downside risks on the back now trading at an attractive 0.7x P/Bk which is close to
of heightened supply completion schedule in 2015/2016. This cyclical troughs (vs normalized 0.9x P/bk)). While residential
prices remain on a downward trend, we see limited negative
will spike vacancy rates to >10% and spot rents are projected
impact for most developers given exposure to residential
to dip by c.5% p.a. in 2016. Industrial REITs should see sector is at a manageable c.8% of RNAVs. For property
flattening or potentially negative rental reversion rates over developers’ under our coverage, the past strategy of (i)
the next two years. staying nimble in land-biddings in recent years will mean
minimal pressure to clear unsold inventories, (ii) “go-global”
The residential sector remains on a downcycle with prices strategy in deploying capital to overseas markets (mainly
expected to drop by 7%-10% in 2016. With a reduced Australia, London and Europe) will drive higher ROEs from
2016 onwards. A wildcard will be potential unwinding of
population growth rate contributing to slowing demand, we
government policies, a scenario which we believe are likely to
see increasing risks from (i) a hike in supply completions over when prices drop by 13%-15% from the peak (vs currently
2015-2016, resulting in vacancy rates rising to 9%-10%, 8% from the peak). Our top developer pick is CAPL, City Dev
while (ii) potentially negative rental yield spreads arising from and FCL for their improving ROEs, diversified earnings base
a subdued rental outlook could mean weak holders may be respectively and conservative balance sheets.
forced to offload their properties.
Page 3
Industry Focus
2. Key Charts
Summary of DBS assertions on Major Property Subsectors
Residential Outlook – Negative

Market to see a surplus in housing units in 2016 Vacancy Rates and PPI movement
40,000 Surplus/Deficit 250.0
250.0 12.0%
(units) S urplus Index (%)
30,000 10.0%
200.0
200.0
20,000
8.0%
10,000 150.0
150.0
‐ 6.0%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
100.0
(10,000) 4.0%
100.0
(20,000)
50.0 Property Price Index (LHS) 2.0%
(30,000) Vacancy Rate (RHS)
50.0
(40,000) ‐ 0.0%
Change in Dwellings URA PPI (RHS) 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017
(50,000) ‐
Key Assertions Risks

 Heightened supply completions over 2015-2016 to weigh • Slower than projected decline in prices as interest cost stay
on prices low; delayed relaxation of cooling measures
 Increasing risks from higher mortgage rates, diminishing • External shock causing a downturn in the Singapore
rental spreads amidst higher market vacancy rates economy resulting in a significant decline in the property
 Residential market to fall 7%-10% in 2016, after an market
anticipated 5% dip in 2015
Retail Outlook - Neutral

Rental reversions to moderate as RSI declines Overseas travel causing a slowdown in retail spend
40% Re versions (%)
RS I Growth over 3 RSI ex-motor vehicles (LHS) 16 8.0 'm passengers S $'m 25,000
years ago
CMT portfolio reversions (%) RHS
35% 14 7.0
Re ntal reversions are
20,000
30% f a lling amid a 6.0
12
pe rsistent slump in
25% r etail sales 5.0 15,000
10
20% 4.0
8 10,000
15% 3.0
6
10%
2.0
5,000
5%
4 1.0
2 0.0 0
0%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
May-07
May-12
Feb-06
Oct-07
Feb-11
Oct-12
Mar-08
Mar-13
Apr-05
Sep-05
Apr-10
Sep-10
Apr-15
Jan-04
Jan-09
Jan-14
Aug-08
Aug-13
Dec-06
Dec-11
Jun-04
Jun-09
Jun-14
Nov-04
Jul-06
Nov-09
Jul-11
Nov-14
-5% 0 Resident outbound travel by air Local residents expenditure abroad

 Muted retail sales outlook poses a risk to retailers’ • Increased penetration of e-commerce causing decline in
occupancy costs and rental reversions retail sales
• Consolidation among retailers to intensify in 2016 amid • Weaker than expected economic growth (GDP), affecting
rising labour costs and labour shortage consumer sentiment and expenditure
• Notwithstanding risks, we believe that malls with sizable
operational scale, strong record of recurring traffic and
spent (through rewards program) to do better.
Page 4 Page 4
Industry Focus
Office Outlook - Positive

Historical net supply and absorption rate Business Parks an attractive alternative for office users
2016-18 average:
2010-12 average:
2,500 1.7m sqft 250
1.5m sqft
Business Park vs. Grade A Office rents
'000 sqft
2,000 (S$ psf/mth)
200 20
1,500
18
16
1,000
150 14
12
500
10
100 8
0
6
4
-500
50 2
0
-1,000 Net Supply: Downtown Core (LHS) Net Absorption: Downtown Core
4Q04
2Q05
4Q05
2Q06
4Q06
2Q07
4Q07
2Q08
4Q08
2Q09
4Q09
2Q10
4Q10
2Q11
4Q11
2Q12
4Q12
2Q13
4Q13
2Q14
4Q14
2Q15
Average supply (2011-2015) Average Supply (2016-2018)
-1,500 URA Rental Index - Central (RHS) 0 Grade A Office Business Park ‐ Rest of Island Business Park ‐ Off Central

• Office rents peaked in 1H15; increased supply • Earlier completion of new office supply
completions over 2016-2017 overhang outlook • Shadow space from further contraction in demand from
• Weak demand outlook; financial institutions, historically the financial services sector
the main driver for office demand is returning space
•
Industrial Outlook – Negative

Facing a 16% expansion in industrial supply Rental Reversions to turn negative
50%
3,000 Negative reversion
Sqm
2,500 40%
2 -year average 2 .5 m sqm

2,000 30%
1,500 5 -year average 1 .1m sqm 20%
1,000
10%
500
0%
2009 2010 2011 2012 2013 2014 2015F 2016F 2017F
-
-10%
Business Park Warehouse Factory
Demand Supply -20%

 Market Rents to moderate 5% p.a. due to spike in supply  Weaker than-expected Singapore economy resulting in
completions in 2015-2016; Market vacancy rates to hit a further-than-expected declines in rents
high of 9-10%  Shadow space in the single-user factory space/ warehouse
 Business Park space to remain stable; given lack of new space which result in increased competition for tenants
supply but downside risk persist if CBD office rents
weaken further
 Industrial REITs rental reversions to flatten out or turn
negative over 2015-2016
Source: DBS Bank
Page 5
Industry Focus
Hospitality Outlook - Negative

Demand recovery lead by rebound in Chinese tourists RevPAR to remain under pressure in 2015
y-o-y growth China y-o-y growth
40% 10.0%
Indonesia 7.7%
8.0% 7.4%
30% Total Visitors 6.7% 6.3%
20% 6.0%
20% 13% 3.7%
10% 4.0% 3.0%
10% 7%
3% 4% 2.0%
0% 0.0%
-2% 0% -0.3%
-10% -4% -3% -2.0%
-1.4% -1.1%
-20% -4.0% -3.0%

-6.0% -4.6% -4.4%
-30% 2013 2014 2015F 2016F
2008 2009 2010 2011 2012 2013 2014 2015F 2016F 2017F
Visitor Arrivals Room supply RevPAR
 2016 demand recovery (+3% y-o-y) in 2016 lead by  Slower-than-expected rebound in Chinese tourist arrivals
Chinese tourists and boost from biannual conference and greater level of competition from regional markets
year. Indonesia expected to flat due to economic would cause RevPAR to drop more than expected
slowdown and FX volatility.  Upside risk would come from delays in opening of new
 However, RevPAR expected to remain under pressure hotels
(-4% y-o-y) due to 6% increase in hotel room suppy.
 Hotels in the Singapore River precinct to be most affected
given concentration of new supply there. No new supply
in Orchard Road projected for 2016.
Source: DBS Bank
Page 6 Page 6
Industry Focus
3. Peer Comparisons
Singapore REITs Peer Comparisons (as at 5 January 2016)
REIT FYE Price Rec Target Total Mkt DPU Yield(%) DPU P/Bk
Price Return Cap Growth
FY15 FY16 FY17 FY15 FY16 FY16
(S$) (%) S$'m /16F /17F /18F /16F /17F /17F FY15-17 (x)
Office
CCT Dec 1.37 BUY 1.48 15% 4,031 8.6 8.9 9.3 6.3% 6.5% 6.8% 3.7% 0.79
FCOT Sep 1.27 BUY 1.53 29% 995 9.7 9.9 10.1 7.7% 7.9% 8.0% 2.0% 0.83
KREIT Dec 0.93 BUY 1.12 28% 2,991 6.9 7.1 7.3 7.4% 7.7% 7.8% 2.5% 0.67
OUECT Dec 0.66 HOLD 0.67 9% 849 5.1 4.7 5.0 7.7% 7.2% 7.5% -0.9% 0.73
7.0% 7.1% 7.3% 2.6% 0.74
Retail
CRCT Dec 1.49 BUY 1.69 21% 1,256 10.6 11.0 11.1 7.1% 7.4% 7.5% 2.7% 0.90
CMT Dec 1.94 BUY 2.05 12% 6,870 11.2 11.5 11.7 5.8% 5.9% 6.0% 2.3% 1.06
CRT Jun 0.82 HOLD 0.86 15% 519 7.1 7.4 7.0 8.7% 9.0% 8.6% -0.7% 0.94
FCT Sep 1.85 BUY 2.04 17% 1,697 11.6 11.9 12.2 6.3% 6.4% 6.6% 2.5% 0.99
SPH REIT Aug 0.96 HOLD 0.99 10% 2,420 5.5 5.5 5.7 5.7% 5.8% 5.9% 1.7% 1.02
6.1% 6.2% 6.3% 2.1% 1.03
Commercial
MCT Mar 1.31 BUY 1.40 13% 2,779 8.2 8.5 8.8 6.2% 6.5% 6.7% 3.9% 1.06
MAGIC Mar 0.91 BUY 1.11 31% 2,501 7.2 7.7 7.8 7.9% 8.5% 8.6% 3.7% 0.78
SGREIT Dec 0.76 BUY 0.84 17% 1,658 7.6 5.3 5.5 6.7% 7.0% 7.2% 4.1% 0.83
Suntec Dec 1.58 HOLD 1.58 7% 3,971 9.9 10.0 10.5 6.3% 6.4% 6.7% 3.1% 0.78
6.7% 7.0% 7.2% 3.6% 0.86
Industrial
a-itrust Mar 0.86 HOLD 0.90 12% 796 5.6 5.8 6.6 6.5% 6.8% 7.7% 8.8% 1.28
A-REIT Mar 2.26 BUY 2.52 18% 5,871 14.9 15.3 15.5 6.6% 6.8% 6.8% 1.7% 1.09
Cache Dec 0.91 BUY 1.05 24% 812 8.4 8.5 8.7 9.2% 9.3% 9.5% 1.7% 0.95
CREIT Dec 0.57 HOLD 0.61 16% 740 5.0 5.1 5.1 8.8% 8.9% 9.0% 1.1% 0.84
MINT Mar 1.55 BUY 1.62 12% 2,758 11.0 11.1 11.6 7.1% 7.2% 7.5% 2.9% 1.19
MLT Mar 1.00 BUY 1.15 23% 2,484 7.5 7.8 8.0 7.5% 7.8% 8.0% 3.6% 0.98
SBREIT Dec 0.77 BUY 0.88 24% 715 6.3 6.4 6.6 8.3% 8.4% 8.6% 2.0% 0.96
7.2% 7.4% 7.6% 2.7% 1.07
Hospitality
ASCHT Mar 0.76 BUY 0.77 9% 850 5.6 5.7 5.7 7.4% 7.5% 7.5% 0.6% 1.09
ART Dec 1.175 BUY 1.33 21% 1,820 8.2 8.3 8.3 7.0% 7.1% 7.1% 0.6% 0.89
CDREIT Dec 1.33 BUY 1.54 23% 1,313 9.9 9.6 9.7 7.4% 7.2% 7.3% -1.0% 0.81
FEHT Dec 0.65 HOLD 0.63 4% 1,163 4.6 4.3 4.1 7.1% 6.6% 6.3% -6.2% 0.68
FHT Sep 0.77 BUY 0.83 16% 1,053 6.2 5.9 5.9 8.1% 7.6% 7.6% -2.8% 0.90
OUEHT Dec 0.76 BUY 0.91 28% 1,015 6.5 6.4 6.4 8.6% 8.4% 8.4% -1.2% 0.88
7.5% 7.3% 7.3% -1.5% 0.73
Healthcare
P-Life Dec 2.27 BUY 2.56 18% 1,373 13.1 12.2 12.4 5.8% 5.4% 5.5% -2.7% 1.33
RHT Mar 1.02 HOLD 0.97 4% 806 7.3 8.0 8.7 7.2% 7.9% 8.6% 9.0% 1.10
6.3% 6.3% 6.6% 1.6% 1.25
Others
IREIT Dec 0.69 BUY 0.77 21% 423 5.1 6.3 6.3 7.3% 9.2% 9.2% 4.1% 1.12
KDCREIT Dec 1.03 BUY 1.14 18% 909 6.4 6.8 7.2 6.2% 6.6% 7.0% 12.0% 1.15
Sector Average 6.8% 7.0% 7.1% 3.4% 0.99

Source: Bloomberg Finance L.P, DBS Bank
Page 7
Industry Focus
Singapore Developers Peer Comparisons (as at 5 January 2016)

Mkt Price Target
Company FYE Cap 5-Jan-16 RNAV *Assumed Price Upside P/RNAV
Discount
(S$m) (S$) (S$) (%) (S$) % Rcmd (x) P/NBV
Residential Developers
Capitaland Dec 13,976 3.29 4.97 -25% 3.73 13% BUY 0.66 0.85
City Dev Dec 6,811 7.49 12.82 -20% 10.26 37% BUY 0.58 0.81
Fraser Centrepoint Ltd Sep 4,857 1.68 3.37 -30% 2.36 41% BUY 0.50 0.79
Global Logistics Properties Mar 9,629 2.03 3.52 -20% 2.73 34% BUY 0.58 0.89
UOL Dec 4,857 6.10 11.29 -25% 8.47 39% BUY 0.54 0.72
Ho Bee Dec 1,332 2.00 3.50 - NR - - 0.57 0.58
Perennial Real Estate
Holdings Dec 1,564 0.945 2.16 -39% 1.32 40% BUY 0.44 0.27
Wheelock Dec 1,699 1.42 2.57 - NR - - 0.55 0.53
Wing Tai Dec 1,335 1.71 3.41 -35% 2.22 30% BUY 0.50 0.44
Page 8 Page 8
Industry Focus
Revised target prices and recommendations.
We have largely retained our recommendations and TP’s with

the exception of the hospitality sector where we have trimmed
our TP’s given our downward revision to our SG Hospitality
outlook.
Change in target prices and recommendations for S-REITs under coverage

Previous Updated Previous Updated
REIT FYE Recommendation Recommendation Target Price Target Price
(S$) (S$)
Office
CCT Dec BUY BUY 1.48 1.48
FCOT Sep BUY BUY 1.53 1.53
KREIT Dec BUY BUY 1.12 1.12
OUECT Dec HOLD HOLD 0.67 0.67
Retail
CRCT Dec BUY BUY 1.69 1.69
CMT Dec BUY BUY 2.05 2.05
CRT Jun HOLD HOLD 0.86 0.86
FCT Sep BUY BUY 2.04 2.04
SPH REIT Aug HOLD HOLD 0.99 0.99
Commercial
MCT Mar BUY BUY 1.40 1.40
MAGIC Mar BUY BUY 1.12 1.11
SGREIT Dec BUY BUY 0.84 0.84
Suntec Dec HOLD HOLD 1.58 1.58
Industrial
a-itrust Mar HOLD HOLD 0.90 0.90
A-REIT Mar BUY BUY 2.52 2.52
Cache Dec HOLD BUY 1.11 1.05
CREIT Dec HOLD HOLD 0.61 0.61
MINT Mar HOLD HOLD 1.62 1.62
MLT Mar BUY BUY 1.15 1.15
SBREIT Dec BUY BUY 0.88 0.88
Hospitality
ASCHT Mar BUY BUY 0.74 0.77
ART Dec BUY BUY 1.34 1.33
CDREIT Dec BUY BUY 1.65 1.54
FEHT Dec HOLD HOLD 0.71 0.63
FHT Sep HOLD BUY 0.83 0.83
OUEHT Dec BUY BUY 0.98 0.91
Healthcare
P-Life Dec BUY BUY 2.56 2.56
RHT Mar HOLD HOLD 0.97 0.97
Others
IREIT Dec BUY BUY 0.77 0.77
KDCREIT Dec BUY BUY 1.14 1.14
Source: DBS Bank
Page 9
Industry Focus
4. Singapore REITs: Rates hikes casting a shadow

Key Assertions
 S-REITs' performance to be capped as interest This is due to the office and industrial sectors facing a peak in
rates rise over 2016 new supply. While new supply should moderate for the
 Retail and selected S-REITs with overseas hospitality sector, demand is expected to remain tepid. Finally,
exposure best positioned against interest rate the retail segment will face the challenge of (1) potentially
risk
lower disposal income as mortgage payments rise on the back
 Rising cost of capital to limit acquisitions
of rising interest rates, (2) Singaporeans continuing to travel
 Picks MAGIC, CRCT, FCT and A-REIT overseas, and (3) threat of e-commerce. Thus, rents/income are
expected to remain under pressure in 2016. This can be seen in
Mixed performance of S-REITs in 2015. Over 2015, S-REITs fell expectations of S-REITs to deliver DPU growth of only 2.2% in
10.1% (5.7% dividend plus 10.1% capital loss), 2016 versus 2.7% in 2015.
underperforming the Developers index which delivered a total
return of -2.9% (2.0% dividend plus 4.9% capital loss). Yield spread to remain above historical average spreads.
Nevertheless, S-REITs outpaced the -11.1% decline in the STI (- With a moderating outlook across all property sub-segments
2.7% dividend plus 13.8% capital loss). In addition, the SREIT and belief that the market is underestimating the pace of rate
performance was a tale of two halves. In 1H15, the takeover of hikes by the US Fed, we believe S-REITs will continue to trade
Keppel Land boosted sentiment on developers, causing it to above their historical yield spread to the 10-year bond. Thus, in
outpace S-REITs. In contrast in 2H15, while both developers our view, the current yield spread of 4% compared to a
and S-REITs were sold down due to global growth fears post normalised forward 10-year yield of 3% is fair.
the devaluation of the Renminbi in August, SREITs
outperformed due to their more defensive characteristics and Retail and selected REITs with overseas exposure best
higher yields on offer. positioned to navigate more challenging backdrop. While we
are faced with a more challenging macro backdrop and limited
S-REITs’ performance in 2016 to be capped as interest rates re-rating catalysts for S-REITs as a whole, we believe there are
rise. Going into 2016, we believe the performance for S-REITs selected REITs which still offer decent yields and potential
will be capped by a higher-than-expected increase in interest capital upside. Despite the headwinds in the retail scene, due
rates. Post the first rate hike in December, our DBS economist to the strong positioning of the malls under Frasers
expects the US Federal Reserve to increase interest rates by Centrepoint Trust (FCT) and Ascendas REIT (A-REIT), both these
25bps once every quarter. In comparison, based on the Fed REITs should continue to deliver decent growth in net property
funds futures, the market is anticipating only one to two rate income, supported by resilient tenant sales. In addition, S-
increases in 2016. REITs with overseas assets such as Mapletree Greater China
Trust (MAGIC) and CapitaLand Retail China Trust (CRCT) have
Moderating rental outlook. Beyond the challenge of rising the potential to surprise on the upside due to favourable
interest rates, the headwinds experienced across the office, currency tailwinds.
retail, industrial and hospitality sectors in 2015, in our view, are
unlikely to abate in 2016.
S-REITs underperformed in 1H15, outperform in 2H15 Yield Spread Chart for S-REITs
800 Index Pt Index Pt 3500 12.0%
780 3400
10.0%
760 3300
8.0%
740 3200
720 3100 6.0%
700 3000
4.0%
Singapore REITs
680 2900
Singapore Developers
2.0%
660 Straits Times Index (RHS) 2800
640 2700
0.0%
2/1/2014 2/4/2014 2/7/2014 2/10/2014
Sector Yield spread Mean Yield Spread +1 SD -1 SD

Source: Bloomberg Finance L.P., DBS Bank
Page 10 Page 10
Industry Focus
Key Issues in 2016
Similar to 2015, we believe rising interest rates and slowing Full impact of higher rates will not be felt in 2016. Despite the
growth will remain the predominant themes heading into anticipated rise in interest rates, as the majority of S-REITs have
2016. Beyond this, we believe investors/S-REITs will need to hedged 75-80% of their borrowings, the full impact from
grapple with the funding structures and strategies to support higher costs of borrowings will not be felt in 2016. With a
further growth plans, given higher costs of capital. weighted average debt maturity of two to three years, the
impact should be felt over the next few years. To mitigate
As such, our strategy is to focus on REITs with the following against the higher interest costs, we have also seen REITs that
characteristics: (1) resilient income base, given expected have Japanese or European assets progressively increase the
declines in spot rents in several sectors, (2) FX tailwinds, and (3) proportion of cheaper JPY and EUR debt. In addition, REITs
boost from past acquisitions rather than new acquisitions. with Australian debt may also face lower cost of funds should
the Reserve Bank of Australia (RBA) reduce its benchmark
Key themes in 2016 are as follows: interest rates. To account for rising interest rates, we have
assumed 50bps increase in the costs of debt in our
A. Weighed down by faster-than-expected rise in assumptions.
interest rates
Potential headwind from continued weakness in SGD. Between
US Federal Reserve to increase interest rates four times in 2016. 2008 and 2014, when the US Federal Reserve implemented
Following the largely anticipated rate hike in December, based three rounds of quantitative easing, the SGD strengthened
on the Fed funds futures, consensus is anticipating one to two against the USD. Over the same period, it appears that USD-
rate hikes in 2016. In contrast, our DBS economist anticipates based investors took advantage of the stronger SGD by
four rate hikes, 25bps once a quarter, taking the Fed funds participating in the carry trade and investing in S-REITs. This
rate to 1.25% by end-2016. can be seen by a negative correlation (-0.68x) between the
SGD/USD rate and FSTREI index. The SGD weakened against
While our economists anticipate the US yield curve to flatten, the USD in 2015, and may have caused a significant proportion
absolute interest rates across the term structure are also of the carry trade to be unwound and the majority of
projected to increase. Likewise for Singapore, our economists institutional investors we spoke with to be underweight S-
forecast 3m SIBOR, as well as the 2-year and 10-year bond REITs. Furthermore, our DBS economist is forecasting
yields, to rise to 1.95%, 2.00% and 2.9% respectively. continued weakness in the SGD, and hence there is potential
for further selling pressure.
DBS Group forecasts interest rates to increase steadily
over 2016 Yield spread to remain above historical averages – the new
th
USA 16 Dec’15 4Q15 Changes (%) “normal”. The current FY16F yield spread to the normalised
3m Libor 0.46% 1.65% 1.19% 3% bond yield stands at 4.1%m which is above the historical
2Y 0.95% 1.90% 0.95% average spread of 3.5%. In our view, this yield spread is fair
10Y 2.27% 2.80% 0.53% and is likely to be the “new normal” in the near term. We
10Y-2Y 1.32% 0.90% -0.42%
believe this additional risk premium is warranted, given our
Singapore
th
10 Dec’14 4Q15 Changes (%) DBS house view that the consensus is underestimating the
3m Sibor 1.08% 1.95% 0.87% pace of interest rates rising and potential downside risks to
2Y 1.15% 2.00% 0.85% DPU estimates, taking into account the downturn in the office,
10Y 2.55% 2.90% 0.35% industrial and hospitality sectors.
10Y-2Y 1.40% 0.90% -0.50%
Source: DBS Bank
Page 11
Industry Focus
Flattening yield curve as short rates rise faster FSTREI vs USD/SGD exchange rate
3.5% 1,200 Index Pt USDSGD 1.8
2.90% exchange
3.0% 1.7
1,000
2.5% FS TREI Index 1.6
1.95% 2.00% 2.55% 800
2.0% 1.5
1.5% 1.15% 600 1.4

1.08%
U S DSGD Rate
1.0% 1.3
400
7th Dec’14 1.2
0.5%
4Q16 200
0.0% 1.1
C orrelation of -0.44 C orrelation of -0.68
3m Sibor 2Y 10Y - 1
Historical S-REIT yield and S-REIT yield spread (2005-current)

S-REIT Yield
10 Year bond S-REIT Yields
Period Years Spreads Comments
(%) (%)
(%)
2005 2.9% 4.8% 2.1% 2006-2008 was a period of high growth

for the S-REITs where average distribution
“High Growth” 2006 3.4% 5.0% 1.6%
growth was c.13% over 2006-2008. Key
2007 2.9% 4.1% 1.2% catalysts were acquisitions
“Aberration in 2008 2.8% 7.3% 4.5% Yield spread expanded to >5.1% due to
valuations due to
2009 2.3% 9.6% 7.3% financial crisis
the GFC”
2010 2.4% 6.3% 3.9%

2011 2.2% 6.4% 4.2%
“Liquidity driven Post-global financial crisis period, the
2012 1.5% 6.5% 5.0% sector saw yield compression in 2012-
recovery”
2013 2.0% 5.8% 3.8% 2013 before the Fed hinted of rate hikes
in mid-2013
2014 2.4% 6.2% 3.8%
2015 2.4% 6.3% 3.9%
Periods
2005-cuurent 2.5% 6.2% 3.5%
2006-2008 3.0% 5.4% 2.5%
New normal versus historical spread at
2010-current 2.1% 6.3% 4.1%
3.5%
Forward
Current (FY16F) 2.6% 7.1 % 4.5%
Forward(FY16F) 3.0% 7.1% 4.1%
Page 12 Page 12
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
S-REITs yield spread at a new normal
Sep-11
Nov-11
Jan-12
Source: Bloomberg Finance L.P., companies, DBS Bank

Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Sector Yield spread
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Page 13
- 2 SD
- 1 SD
M ean
+ 1 SD
+ 2 SD
Industry Focus
Industry Focus
B. Slowing growth prospects
Still positive DPU growth but downside risks remain Looking for opportunities in office and hospitality sectors
With headwinds in various property segments predominantly While the office and hospitality REITs are offering compelling
due to new supply, we expect DPU growth to moderate from value with many of them trading below replacement costs and
2.7% in FY15/16 to 2.2% in FY16/17. book values, we believe investor sentiment may improve
sometime in 2016.
One of the strongest performing sectors is the
Office/Commercial sector, which is projected to deliver DPU For the office sector, new supply is expected to peak at end-
growth of 3.1%, down from 3.6% in FY15F. Excluding the 2016/early 2017 with a commensurate low in spot rents. Based
boost from MAGIC which is estimated to grow at 7%, the core on CCT’s historical performance, the share prices for office
Singapore office REITs (CCT, KREIT and Suntec) are estimated REITs typically hit their lows 9-12 months ahead of the
to deliver 2.5% DPU growth although spot Grade A office bottoming of the physical market. Thus, we recommend
rents are expected to fall 20% over 2016-2017. This is largely investors to take a closer look during 2Q-3Q15.
on account of the staggered lease expiry profile.
Meanwhile, the hospitality sector has been struggling for the
In contrast, the hospitality sector is projected to be the weakest last two years due to weak demand and a spurt in supply.
with FY16/17F DPU expected to fall 2.4%, as a consequence of However, with no new land released by the government for
an expected 4% decline in RevPAR for Singapore hotels. Hotels the development of new hotels over the past two years, should
in Singapore face the challenge of a 6-7% increase in supply demand recover from 2017 onwards and new supply ease,
but a tepid 3% growth in tourist arrivals. Nevertheless, the investor interest in the hospitality sector could pick up in late
declines from the Singapore operations for the various REITs 2016 or early 2017.
are expected to be partially offset by (1) increased contribution
from Australia and Japan which are experiencing strong Moderating DPU growth in FY16/17F
international visitor arrivals, and (2) boost from acquisitions
made over the last 12-18 months by REITs such as ART, -1.9% 2015/16 2016/17
-2.4% Hospitality
CDREIT, FHT and OUEHT.
Industrial 2.7%
2.2%
For the industrial sector, as we approach the peak supply
2.7%
period and industrial REITs start to experience negative rental Singapore retail 2.5%
reversions, we expect FY16/17F DPU growth to moderate to 2.8%
Retail 2.7%
2.2% from 2.7% in FY15/16F. However, do not expect overall
DPU for the overall industrial sector to turn negative as (1) Office/Commercial 3.6%
REITs such as MLT are recycling capital by selling lower-yielding 3.1%
properties and redeploying the proceeds to properties with S-REITs 2.7%
2.2%
greater upside potential, and (2) leases will expire over a 3-5
-4.0% -2.0% 0.0% 2.0% 4.0%
year period.
Source: Various REITs, DBS Bank
While the Singapore retail REITs are projected to grow at only
2.5% in FY16/17F, down from 2.7%, risk of downside
earnings surprise is the lowest among all the sectors. We
believe the resiliency is derived from the fact that the majority
of the properties owned by the REITs are either suburban
and/or destination malls which translates into more stable
tenant sales.
Page 14 Page 14
Industry Focus
include AREIT, ART, ASCHT, Cache, KDCREIT, FCOT, FHT, MLT

C. High cost of equity potentially capping growth and SGREIT. Total investments into Singapore assets stood at
options S$2.5bn which comprised only three transactions, Bedok Mall,
One Raffles Place and One@Changi City. There was also a
Pace of acquisitions on the uptrend in 2015 noticeable drop off in interest on Japan, with only S$193m
The growth in M&A activities continued into 2015 with the worth of investments compared to S$734m. This may
total announced acquisitions rising 44% to S$6.8bn. The most potentially be a function of the significant cap rate
active sectors were the Industrial (S$2.7bn), followed by compression that has occurred in Japan, making it difficult to
Office/Commercial (S$1.5bn) and Retail (S$1.3bn). Notable make DPU accretive acquistions. S-REITs via ART also made
transactions include A-REIT’s expansion into Australia for their first foray into the US. Beyond acquisitions made this year,
S$1bn and its acquisition of One@Changi City for S$420m, S-REITs also recycled capital with $359m worth of assets
and OUECT's purchase of One Raffles Place (S$1.1bn), CMT’s disposals.
acquisition of Bedok Mall (S$783m) and MAGIC’s Sandhill
Plaza purchase (S$412m). In 2015, sponsor-related properties and third parties were
equally important sources of acquisition pipeline for S-REITs,
In terms of country allocation, Australia surpassed Singapore as making 50% each of total announced acquisitions.
the most popular investment destination with total investments
of S$2.6bn. REITs which deepened their presence in Australia
Australia a key acquisition target market in 2015
2014 2015
8% Singapore
8% Singapore
3%
China 13% China
2%
Japan 37% Japan
16% Australia
62% Australia
38%
Indonesia Indonesia
4% 6% Others
Others
3%
Increase in M&A activities in the Industrial sector Sponsor continues to be valuable source of acquisition
pipeline
100%
Total
90%
80% 43%
Healthcare 49% 50%
70%
68%
60%
Hospitality
2015 50%
2014 40%
Industrial
2013 30% 57%
51% 50%
20%
Retail 2012 32%
10%
0%
Office/Commercial S$m 2012 2013 2014 2015
0 2,000 4,000 6,000 8,000 Sponsor/Strategic partner 3rd party

Page 15
Industry Focus
Announced acquisitions by S-REITs in 2015

REIT Property Country Sector Value Vendor
(S$m)
Cache Three distribution warehouses in Sydney, Melbourne & Brisbane Australia Industrial 73.4 3rd Party
AIT CyberVale India Industrial 35.2 Sponsor Related
SoilBuild REIT 72 Loyang Way Singapore Industrial 97 3rd Party
PREIT Four nursing homes and one group home Japan Healthcare 67.9 3rd Party
AREIT The Kendall at 50 Science Park Road Singapore Industrial 112 Sponsor Related
SGREIT Myer Centre Adelaide Australia Retail 302.4 3rd Party
FCOT 357 Collins Street Australia Office 232.2 Sponsor Related
FHT Sofitel Sydney Wentworth Australia Hospitality 235.7 Sponsor Related
MLT Mapletree Logistics Park Bac Ninh Phase 1 Vietnam Industrial 20.8 Sponsor
MLT Dakonet Logistics Centre South Korea Industrial 21.4 3rd Party
ART Citadines Bourke Melbourne Australia Hospitality 167 Sponsor Related
ART 40% remaining stake in Citadines Shinjuku Tokyo and Citadines Japan Hospitality 30.2 Sponsor Related
Karasuma-Gojo as well as four rental properties in Osaka
ART Four rental properties in Osaka Japan Hospitality 48.8 3rd Party
KDCREIT Intellicentre 2 (IC2) in Sydney Australia Industrial 45.9 3rd Party
OUECT One Raffles Place Singapore Office 1,091.40 Sponsor Related
MAGIC Sandhill Plaza, Shanghai China Industrial 412.2 3rd Party
LMRT Lippo Plaza Batu and Palembang Icon Indonesia Retail 106.8 Sponsor Related
IREIT Berlin office Germany Office 217.7 3rd Party
MLT Coles Chilled Distribution Centre Australia Industrial 261.5 3rd Party
ART Element New York Times Square West US Hospitality 220.7 3rd Party
CMT Bedok Mall Singapore Retail 783 CapitaLand
CRT Torius Property Japan Retail 95 3rd Party
CDREIT Cambridge City Hotel UK Hospitality 133.2 3rd Party
AREIT Australian logistics portfolio Australia Industrial 1,013.00 3rd Party
FIRT Siloam Hospitals Surabaya - New redeveloped hospital Indonesia Healthcare 90 Sponsor Related
Cache Western Star Trucks, Brisbane Australia Industrial 29.6 3rd Party
KDCREIT mainCubes Data Centre Germany Industrial 130 3rd Party
Cache Metcash Trading, Adelaide Australia Industrial 57.4 3rd Party
Cache Western Star Trucks, Brisbane (30th Nov'15) Australia Industrial 10.5 3rd Party
FIRT Siloam Hospitals Kupang and Lippo Plaza Kupang Indonesia Healthcare 70 Sponsor Related
ASCHT Aurora Melbourne Central Australia Hospitality 123 3rd Party
AREIT One@Changi City Singapore Industrial 420 Sponsor Related
AREIT 6-20 Clunies Ross Street Australia Industrial 76.6 3rd Party
Total 6,831
Industrial 2,816
Retail 1,287
Office 1,541
Hospitality 959
Healthcare 228
Announced disposals by S-REITs in 2015

REIT Property Country Sector Value Buyer
(S$m)
ASCHT 50% stake Pullman Cairns International Australia Hospitality 39.7 3rd Party
MLT 20 Tampines Street Singapore Industrial 20.0 3rd Party
ART Five rental properties in Fukuoka, Sapporo and Hiroshima Japan Hospitality 52.6 3rd Party
CMT Rivervale Mall Singapore Retail 190.5 3rd Party
FIRT Siloam Hospitals Surabaya - Plot A and existing hospital Indonesia Healthcare 35.7 Sponsor Related
ART Salcedo Residences Philippines Hospitality 7.2 3rd Party
Page 16 Page 16
Industry Focus
Higher cost of capital to constrain acquisitions, redevelopment performance of S-REITs be capped due to our higher-than-
and asset recycling to come to the fore expected pace of interest rate hikes, the ability to acquire may
be curtailed due to difficulty in raising equity via placements or
With equity markets currently weak and the cost of debt leveraging up the balance sheet.
expected to climb in 2016, the ability to make DPU accretive
acquisitions, we believe, will become progressively harder. In As a consequence, we anticipate that S-REITs will likely be
addition, the ability to fully debt fund acquisitions with forced to turn to perpetual securities, equity rights issues
resultant gearing rising close to 40% level will be difficult. and/or disposal of lower-yield properties to support their
While REITs should comfortably sustain gearing at such levels, expansion plans. In addition, with the development limit for
investors have become nervous given the newly imposed 45% REITs now raised to 25% from 10%, REITs may also look to
limit by MAS. Thus, heading into 2016, should the maximise value by redeveloping their older properties.
S-REITs' gearing headroom and sponsor pipeline

REIT Gearing end Headroom Sponsor Potential Pipeline Remarks
FY15/16F* 40%
Office
CCT 30% 1,300 Capitaland Remaining stake in Contingent on performance of
CapitaGreen CapitaGreen
FCOT 36% 137 Frasers Valley Point/Alexandra High likelihood for Australand's
Centrepoint Point/Cecil Street Office properties though subject to FCOT
Land property/Australand share price
properties
KREIT 41% n/a Keppel Land N/A Limited near-term pipeline from sponsor
OUECT 42% n/a OUE Limited OUE Downtown Potential in 2017-2018
Retail
CRCT 28% 483 Capitaland Malls in China Subject to valuation and malls being
stabilised
CMT 35% 938 Capitaland Westgate, Star Vista, Possible acquisition of Westgate
Bedok Mall, Ion
Orchard
CRT 47% n/a Croesus Mallage Saga, China No immediate plans to purchase
Group, Daiwa properties Chinese properties
House,
Marubeni
FCT 28% 502 Frasers Waterway Point, Pipeline assets under construction
Centrepoint Northpoint City
Limited
SPH REIT 26% 798 SPH Seletar Mall Seletar Mall yet to be stabilised as it
only opened in Dec-14
Commercial
MCT 36% 305 Mapletree Mapletree Business City MBC 2 under construction
Investments (MBC) 1&2
MAGIC 41% n/a Mapletree Kowloon East Office Kowloon East Office under
Investments construction, MAGIC looking at
opportunities in China
SGREIT 35% 247 YTL - Focused on existing assets at the
Corporation moment
Suntec 35% 703 Cheung kong / - No acquisitions expected
ARA
Page 17
Industry Focus
S-REITs' gearing headroom and sponsor pipeline (cont’d)

REIT Gearing end Headroom Sponsor Potential Pipeline Remarks
FY14/15F 40%
Industrial
a-itrust 29% 256 Ascendas Group Other Ascendas Group Subject to share price
Indian properties performance and stabilisation
of INR
A-REIT 35% 755 Ascendas Group Industrial assets Acquisitions likely to be from
sponsor (business park
properties in Singapore)
Cache 39% 18 CWT/ARA Ramp up warehouses Unlikely to acquire from
from CWT Sponsor
CREIT 36% 81 N/A Exploring opportunities in
Australia, Japan and Malaysia
MINT 32% 458 Mapletree Group Tai Seng development Under development and not
likely to be acquired in the near
term
MLT 39% 121 Mapletree Group Properties in Hong Kong, High likelihood of M&A to
China supplement growth, given
headwinds in Singapore
SBREIT 31% 180 Soilbuild Group Various industrial
Holdings properties
Hospitality
ASCHT 37% 64 Ascendas Asia Pacific properties Potential disposal of Pullman
Group/Accor Cairns to provide additional
financial flexibility
ART 40% n/a Ascott Group Serviced apartments in Subject to ability to recycle
Europe, Quest capital and raise equity
apartments in Australia
CDREIT 35% 214 City Developments St Regis, South Beach Lower gearing provides
project firepower for acquisitions
FEHT 32% 350 Far East Organisation 7 hotels & serviced Assets not ready to be injected
residences
FHT 39% 46 Frasers Centrepoint 17 hotels and serviced Subject to ability to raise equity
Limited and TCC residences
Group
OUEHT 42% n/a OUE Limited OUE Downtown serviced Limited, given proposed
apartments acquisition of Crowne Plaza
Changi and extension
Healthcare
P-Life 36% 101 IHH Hospitals in the region
including Novena Mt
Elizabeth
RHT 11% 539 Fortis Healthcare
Others
KDCREIT 29% 147 Keppel T&T T27 Asset not stablised yet
IREIT 43% n/a Stella Holdings, Low likelihood, given current
Shanghai Summit, Mr share price
Lim Chap Huat
Page 18 Page 18
Industry Focus
S-REITs' with development potential and/or asset recycling potential

REIT Assets with redevelopment potential Potential asset recycling opportunity
Office
CCT n/a n/a
FCOT Alexandra Techno Park if HP/Microsoft moves out n/a
KREIT n/a n/a
OUECT n/a n/a

Retail
CRCT n/a n/a
CMT Funan Mall n/a
CRT n/a n/a
FCT Integration with Northpoint extension n/a
SPH REIT n/a n/a

Commercial
MCT n/a n/a
MAGIC n/a n/a
SGREIT n/a n/a
Suntec Park Mall n/a

Industrial
a-itrust n/a n/a
A-REIT Selected properties with un-utilized GFA Older properties with limited medium upside
Cache n/a n/a
CREIT Selected properties with un-utilized GFA Older properties with limited medium upside
MINT Selected properties with un-utilized GFA Older properties with limited medium upside
MLT Selected properties with un-utilized GFA Older properties with limited medium upside
SBREIT Selected properties with un-utilized GFA n/a

Hospitality
ASCHT n/a
ART n/a Rental properties in Japan / Assets in lower tier cities in Europe
CDREIT n/a n/a
FEHT n/a n/a
FHT n/a n/a
OUEHT n/a n/a

Healthcare
P-Life n/a n/a
RHT n/a n/a

Other
KDCREIT n/a n/a
IREIT n/a n/a
Page 19
Industry Focus
5. Developers – Attractive Valuations near multi-year lows
Key Assertions
Developers trading at mulit-year lows However, going forward in 2016, we believe that the
Developers substantially de-risked residential Singapore developers (SG Developers) will outperform the S-
exposure and sought to diversify and build up REITs given ongoing headwinds from rising interest rates on
recurring income the back of subsequent FED hikes over the year will mean
Top pick: CapitaLand Limited (CAPL), City limited re-rating opportunities for the S-REITs. In addition, we
Developments Limited (CDL) believe that attractive valuations and policy easing
expectations for the Singapore residential market are
Developers outperformed the STI in 2015. The Singapore expected to boost investor sentiment and share prices of
Property Developers (measured by the FSTREH index) fell by- Singapore developers going forward.
2.9% in 2015 (consist of 4.9% price decline, 2.0%
dividends), outperforming the S-REITs (-4% total returns, A. Attractive Valuations
5.77% yield, -10.1% price decline) and the STI which
returned – 11.1% YTD (13.8% decline in index, 2.7% yield). Developers trading near multi-year lows. Post the fall in prices
While the FSTREH started the year brightly, performance YTD, the SG Developers now trade at an attractive P/Bk ratio
fizzled out in the 2H15 given heightened market volatility. of 0.7x (excluding Global Logistics Properties, which listed
Furthermore, a lack of catalysts due to a stagnant property only back in 2010). Current P/Bk valuations are close to multi-
market and a risk-off trade on the back of lower GDP growth year lows. The last time we saw the Property developers
expectations in China saw developers trading sideways till the trading at similar P/Bk levels was during periods of economic
end of the year. stress in 1997, 2003 and 2009, which we believe is not the
case going forward, especially with the Singapore GDP
Given the market uncertainty and volatility, we believe S-REITs projected to grow by c.2.1% in 2016 according to our DBS
remained in favor with some investors due to their strong economists. While we continue to expect Singapore
income stability as well as the high yield and yield spreads (vs residential prices to decline further in 2016, we believe that
10-year bond) of c.7.0% and 4.5% respectively. most of these negative headwinds are already priced in.
Developers to outperform in 2016
Developers currently trade at P/bk that is close to past 3 market down-cycle Remarks
troughs
2.50
P / Bk (x)
 Developers now trade at 0.7x
P/bk (ex GLP) or 0.8x P/bk (with
2.00
GLP).
1.50  We note that developers

traded to between 0.5x-0.7x P/Bk
2002-2003 Dot Com Crash
in times of economic stress back in
1.00
1998 / 2003 / 2008.
0.50  Singapore Economic outlook

while remain modest in 2016 is
1997-98 Asian Financial Crisis 2008-2009 Global Financial Crisis
-
not projected to be in a recession,
Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 thus current valuations are
unwarranted
P/Bk (w/o GLP) Mean - 1 SD +1 SD P/Bk (with GLP)
Source: URA, DBS Bank
Page 20 Page 20
Industry Focus
Developers rebounded quickly; found stability at c0.90-0.93x historical stabilized levels which average c.0.90-0.93x. In fact,
P/Bk over past market corrections. Based on historical price we expect sentiment to improve if the government were to
performance, we note that share price for SG developers’ relax selective prohibitive property curbs which will lift
react quickly to expectations of declines/rises in the physical sentiments for SG developer stock prices going forward.
property price index (PPI). In previous down-cycles in 1996,
2000 and 2009, the PPI declined between 20-45% from its Attractive valuations. In fact, we expect sentiment to improve
respective peaks. Property developers’ prices declined by a if the government were to relax selective prohibitive property
more significant 46-74% from the peak (measured on a P/Bk curbs which will lift sentiments for SG developer stock prices
NAV basis) and bottomed at around c.0.5x P/Bk NAV over the going forward.
past three cycles. Price for property developers typically
stabilized at c.0.90-0.93x P/Bk after the troughs in This, in our view, will likely come post a peak-to-trough fall
4Q98/1Q04 and 3Q09. in prices of close to 15-18% (prices have now only dropped
close to 8% from the peak), estimated by the end of 2016.
However, we note that developer prices are quick to react on Historically, the Singapore government has eased some of
the upside once the property market turns around. While we their property cooling measures once prices have fallen by 13-
do not expect a physical market recovery in 2016, we believe 15%.
that developers are not likely to see further price downside
given that current P/bk of 0.70x is already trading at close to
troughs back in the past 3 cycles and >20% discount to
Singapore property market cycles and developers' performance

Private Residential Property Index
Developers (P/Bk NAV pefromance)
(PPI)
Periods Peak Trough Trough % Chg Average P/Bk
Trough % decline from
(ppt) (ppt) P/Bk NAV post
(x) Peak
NAV declines
4Q83-2Q86 52.5 33.5 11 -36% N/A N/A N/A
2Q96-4Q98 181.4 100 11 -45% 0.45x -69% 0.90x
2Q00-1Q04 140.4 112.4 16 -20% 0.54x -46% 0.93x
2Q08-4Q09 177.5 165.7 5 -25% 0.55x -74% 0.92x
8 and
3Q13- YTD 216.3 N/A -8% YTD 0.70x -45% -
counting
Source: URA, Bloomberg Finance L.P. Finance LLP, DBS Bank
Developers Price-to-Bk NAV vs PPI Developers trading at 45% discount to RNAVs

(-1.0 standard deviation of historical trading range)
40%
180.0 2.50
Property Price Index Developer P/Bk NAV
160.0 20%
140.0 2.00
120.0 0%
1.50
100.0
-20%
80.0
1.00
60.0
-40%
40.0 0.50
20.0
-60%
- -
Disc to RNAV Mean +1 SD -1 SD
-80%
Source: URA, DBS Bank Mar-90 Mar-95 Mar-00 Mar-05 Mar-10 Mar-15
Page 21
Industry Focus
B. Increased focus on Commercial Portfolio

as residential volumes falter
Developers’ substantially de-risked Singapore residential developers given the reduced exposure in residential sector. It
exposure. The Singapore developers that we cover have will however have a sentiment boost to SG developers stock
generally remained cautious in adding more exposure in prices given that most are trading close to historical lows.
Singapore for both residential and commercial segments. In
Singapore, most developers have taken on a de-risking Continued allocating of capital overseas. Looking ahead, we
strategy and focused on clearing existing unsold inventories. see reduced land-banking opportunities in Singapore with the
Ministry of National Development (MND) continue to scale
The total number of unsold inventory remains a small down on total sites available in the latest 1H16 government
proportion of its total exposure in the Singapore residential land sales (GLS) programme, with a total of 4 confirmed sites
market. That said, based on our estimates, Singapore and 12 sites on the reserve list, offering a total of 7,420
residential comprises of 5% -30% of total GAVs. This means residential units (including 1,460 executive condominium
that an expected drop in residential prices is unlikely to dent units).
RNAVs significantly
The government’s stance towards having more sites skewed
Looking ahead, we see developers to be more willing to cut towards the reserve which will only be triggered only if a
prices to move units on the back of looming penalties like the minimum price is achieved is an indication of cautiousness
buyers stamp duty and Qualifying Certificate (QC) charges from the government given the high number of unsold
which will be levied on selected projects that have unsold inventory in the residential market currently.
inventories upon TOP and two years post TOP respectively.
As such, we believe that Singapore developers will likely to
Policy relaxation subject to further data support. We believe continue allocating capital to overseas markets, with key
that expected policy easing measures, such as the easing of investment markets of London, Australia, Japan and China
the Additional Buyer’s stamp duty (ABSD) or loan-to-value likely to continue in 2016.
limits for 2nd property mortgage could galvanize the
residential market but will have limited impact for SG
Singapore Developers Exposure (% of RNAV) Remarks

SG SG
Developers Overseas Total
Residential Commercial
 SG Developers
CapitaLand 9% 25% 66% 100% exposure to domestic
City Dev 27% 52% 21% 100% residential sector is
Frasers Centrepoint Ltd 7% 35% 58% 100%
generally <10% with
the exception of the
Ho Bee 15% 56% 29% 100% likes of City Dev, Ho Bee
Wheelock 30% 39% 32% 100% Wheelock, Wingtai who
UOL Limited 7% 85% 8% 100%
have exposure in excess
of 15%.
OUE Ltd 9% 56% 35% 100%  These developers
Wing Tai 19% 20% 60% 100% generally have exposure
Global Logistics Properties 0% 0% 100% 100%
within the mid-to-high
end segment
Source: Companies, DBS Bank
Page 22 Page 22
Industry Focus
Limited land-banking opportunities as GLS programme continues to tighten Remarks

16,000
U ni ts
14,000  A total of only 4 confirmed sites
Reserve List and 12 sites on the reserve list,
12,000
Confirmed List offering a total of 7,420 residential
10,000
units (including 1,460 executive
8,000 condominium units).
6,000
 Reserve site comprises of a 1.1
4,000
ha white site at Central Boulevard
2,000 which might be of interest to
- selected developers with sizable
balance sheet and warchests
1H04
2H04
1H05
2H05
1H06
2H06
1H07
2H07
1H08
2H08
1H09
2H09
1H10
2H10
1H11
2H11
1H12
2H12
1H13
2H13
1H14
2H14
1H15
2H15
1H16
Source: URA, HDB, DBS Bank
1H16 Government Land Sales Programme

S/N Location Site area Proposed Est. No. of Est, No. of Estimated Estimated Sales
(ha) GPR Housing hotel commercial launch agent
Units rooms space (sqm) date
CONFIRMED LIST 2H15
Residential Sites
1 Jalan Kandis 0.70 1.4 110 - - Feb-16 URA
2 Martin Place 1.59 2.8 445 - - Apr-16 URA
3 Anchorvale Lane (EC) 2.11 3.0 635 - - Jun-16 HDB
Commercial & Residential Sites
4 Bukit Batok West Avenue 6 1.47 3.0 370 - 11,000 Mar-16 URA
Total (Confirmed List) 1,560 - 11,000
RESERVE LIST
Residential sites
1 Stirling Road* 2.11 4.2 1,110 - - Available URA
2 New Upper Changi Road / Bedok 2.44 2.1 570 - - Available URA
South Avenue 3 (Parcel B)*
3 Tampines Avenue 10 (Parcel C)* 2.17 2.8 675 - - Available URA
4 Margaret Drive* 0.48 4.6 275 - - Available URA
5 Bartley Road/ Jalan Bunga Rampai* 0.47 2.1 115 - - Available URA
6 Sumang Walk (EC)* 2.73 3.0 820 - - Dec-15 URA
7 West Coat Vale 1.67 2.8 520 - - May-16 URA
8 Fernvale Road 1.72 3.0 575 - - Jun-16 URA
Commercial & Residential Sites
9 Holland Road* 2.3 2.6 570 - 13,500 Available URA
Commercial Sites
10 Beach Road* 2.1 4.2 - - 88,200 Available URA
11 Woodlands Square* 2.24 3.5 260 - 60,030 Available URA
White Sites
12 Central Boulevard* 0.78 13 - - 105,000 Available URA
Total (Reserve List) 5,855 - 261,580

Total (Confirmed List and Reserve List) 7,415 - 272,580
*Brought forward from 2H15 government land sales list
Page 23
Industry Focus
D.Asset recycling to realize development gains
Asset recycling at work. Developers under our coverage have For CAPL, completed and stabilised properties like Westgate
been net sellers in Singapore real estate (residential and Mall in Singapore and various malls in China may be ripe for
commercial segments) and sold S$4.0bn worth of real estate recycling into its listed REITs.
in 2015 in Singapore, mostly to their REITs. Looking ahead,
we believe that deployment of funds is likely to be a key For GLP, management has previously alluded to potentially
strategy with major developers and we see the following recycling c.US$500m worth of its Japanese logistics properties
opportunities: into GLP J-REIT.
Major Property Transactions by Developers in 2015 *

Developers Transaction Type SG Non-SG Counter-party
S$'m S$'m
CapitaLand Total 983 260
rd
Site In Guangzhou (Plot 1) Invest Residential - (89) 3 Party
rd
Serviced Residences Invests Hospitality - (191) 3 Party
rd
Serviced Residences (by ART) Divest Hospitality - 53 3 Party
Serviced Residences Divest Hospitality - 299 Ascott REIT
Tropicana City Divest Retail - 188 CMMT
Bedok Mall Divest Retail 795 - CMT
Rivervale Mall (by CMT) Divest Retail 188 - AEW
City Developments Limited 646 (647)
Portfolio of 3 office properties Divest Office 1,100 - JV with Alpha
Portfolio of 3 office properties Invest Office (133) - Co-investment in JV
Stag Brewery Site (UK) Invest Mixed Use - (334) 3rd Party
Lorong Liew Luan Site Invest Residential (321) - Government Land Sales
Delta Lloyd Offices (by First Sponsor) Invest Office - (313) AEW (Europe)
Frasers Centrepoint Ltd (147) (472)
Sofitel Wentworth Divest Hospitality - 224 Frasers Hospitality Trust
357 Collins Street Divest Hospitality - 222 Frasers Commercial Trust
rd
Malmaison & Hotel Du Vin Invest Hospitality - (760) 3 party
rd
Serviced Residences (various) Invest Hospitality - (158) 3 party
Capri Changi City Invest Hospitality (102) - Ascendas
China Square Central Invest Hospitality (45) - Frasers Commercial Trust
Ho Bee 66 (610)
Office buildings in UK (610)
Industrial Property in Singapore Divest Industrial 66
UOL Limited 302 -
Clementi Avenue 1 Site Invest Residential 302 - Government Land Sales
OUE Ltd 2,005 -
Stake in One Raffles Place Divest Office 1715 OUE Commercial Trust
Crown Plaza Changi Divest Hospitality 290
Wheelock - - - - -
Wing Tai - - - - -
Source: various developers, DBS Bank. Note that list is not exhaustive.
Page 24 Page 24
Industry Focus
6. Residential – Accelerating declines
Key Assertions hefty buyer and seller stamp duties keep investment off the
 New supply completions spiking in 2016 adds radar for most buyers.
pressure to rentals and vacancy rates
 Further price pressure from rising unsold We expect 2015 to be another year tepid year with total
inventory, disappearing rental spreads primary sales to be roughly similar to the c.7,000 units
brought about by falling rental prospects (excluding ECs) transacted in 2014.
 Residential market remain on a downcycle with
a 7%-10% drop in prices in 2016
Sub-sale volumes dried up but 9M15 secondary market
 Expected policy easing, subject to data- picked up 22% y-o-y. We note a slight uptick in secondary
supporting in 2H16
market YTD 3Q15 to 5,081 units, up 22% y-o-y as price
declines attracted higher buying activity. However, sub-sale
Low volumes to persist; prices declines to volumes continue to remain low as expectations of lower
accelerate in 2016 prices combined with hefty seller stamp duties
(c.16%/12%/8%/4% of selling price if property is resold
Softening prices across all sub-segments; central region was within 1/2/3/4 years of purchase) have kept speculators away
the weakest. The private property market continues to remain while buyers continue to hold on given low cost of funds.
on a steady price decline given the ongoing tight financing
and regulatory environment. The non-landed private property We note that speculative activity (through sub-sale
price index (PPI Non-landed) is down by 3.4% in 9M15 and transaction volumes) remains low at 4% of total residential
by 7.8% from the peak in 3Q13. transactions (vs average of 11% over past 10 years) and 8%
of secondary transactions (vs average of 15% over the past
We note that price drops have been more pronounced in the 10 years). This could lead to potential tinkering of selective
Core Central region (CCR) and Rest of Central Region (RCR), policy measures like the Additional Buyers’ stamp duty (ABSD)
where prices have fallen by 9.0% and 9.6% from their and the Sellers’ stamp duties (SSD) currently in place.
respective peaks in 2Q/3Q2013. As of 3Q15, prices in the
outside central region (OCR) dropped by a smaller c.6.9%, Strong developer balance sheets and low interest rates have
which we expect to see further price pressure come 2016 on kept price decline more gradual. With only a 3.4% drop in
the back of rising market vacancy rates. the PPI (non-landed) in 9M15, prices have been more resilient
than expected (DBS estimates : 7% drop in the PPI (non-
HDB resale market appears to be bottoming out as landed) in 2015) and should end the year with a 5% drop.
transactions pick up (9M15 transaction volumes rose by 13% We believe that this is due to (i) developers' strong balance
y-o-y). The HDB resale market index (public housing index) fell sheets and holding power after locking in strong sales over
by a smaller 1.8% over 9M15 after a steeper 6.2% drop in 2010-2013; and (ii) still low borrowing rates, which allow
2014, brought about by an increase in resale transaction investors and homeowners to prefer holding on to their units
volumes. The HDB resale prices are now down by 9.5% from and not sell, given low opportunity costs. However, with
the peak and index is close to Sept 2011 levels. With the fall in expected rise in interest cost and declining rentals and prices
prices, HDB resale applications also saw an uptick YTD 2015 to going into 2016, we believe that weak holders may be forced
c. 14,400 transactions (+13% y-o-y), which is already close to to sell next year.
2014 levels.
Projecting 7%-10% decline in prices in 2016. With a slew of
Primary transaction volumes remain low. Since the start of new unit completions flooding the market over 2016-2017,
2014, we continue to see property cooling curbs impacting we expect vacancy rates to rise to 9%-10%, implying further
transaction volumes. Primary sales volumes remained low at pressure on rentals and thus prices. We forecast the drop in
5,599 units sold (excluding ECs), 7,814 units including the ECs property prices to accelerate to 7%-10% in 2016. This
as of 9M15, capped by the total debt financing ratio (TDSR) implies a peak to trough price decline of between 18%-20%.
framework which continues to limit buyers’ affordability, while
Page 25
Industry Focus
9M15 primary residential transactions (excluding HDB resale prices decline by 1.8% ( (9M15)
ECs) is 2% lower y-o-y; up 21% with ECs included
30,000
Un its Index
8,000 Units 155
(1Q 09=100)
25,000 7,000 150
145
6,000
20,000
140
5,000
135
15,000 4,000
130
3,000
10,000 125
2,000
120
5,000 1,000 115
- 110
-
Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15
2006 2007 2008 2009 2010 2011 2012 2013 2014 9M14 9M15
Executive Condos Private Residential (New Sales) HDB Resale Transactions (units) (LHS) HDB Resale Index (Pts) (RHS)
Subsale volumes drop to 8% of total secondary With TDSR in place, transaction volumes (primary &
volumes, 4% of total residential volumes secondary) remain almost 50% of pre-TDSR levels
30%
25,000
Units
25% Post TDSR
20,000
20%
15,000
15%
10% 10,000
5%
5,000
0%
1Q06 3Q07 1Q09 3Q10 1Q12 3Q13 1Q15 -
2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 3Q15
Subsales as % of Total Sales Subsales as % of Total Secondary Sales
Rise in mortgage rates will likely be a headwind to Sell-through rate has been coming off to c.85% of total
prices come 2016 units launched for sale
30,000 120.0%
4.0 Units (%)
3.5 25,000 100.0%
3.0
20,000 80.0%
2.5 Est to hit
2% by
2.0 end of 15,000 60.0%
2016
1.5
10,000 40.0%
1.0
0.5 5,000 20.0%
- - 0.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 9M14 9M15
Total Private and EC launched (uncompleted)
Private Residential (New Sales + ECs) (Uncompleted)

Page 26 Page 26
Industry Focus
Residential Price Index is moderating across all PPI Index (non landed) remain on gradual decline
subsegments
200.0
I n dex Value 160 (2010=100) 20.0%
180.0 (2 009 = 100)
140 15.0%
160.0
120 10.0%
140.0
120.0 100 5.0%
100.0 80 0.0%
80.0
60 -5.0%
60.0
Property Price Index -Landed 40 -10.0%
40.0
Property Price Index - Non-Landed
20 -15.0%
20.0
HDB Resale Price Index
- 0 -20.0%
1Q2006 1Q2007 1Q2008 1Q2009 1Q2010 1Q2011 1Q2012 1Q2013 1Q2014 1Q2015
Source: URA, DBS Bank q-o-q % ch (all) Property Price Index - All
Residential Price Indices – A gradual decline in prices for at least 8 quarters for all segments
Period All-Residential Landed Non-Landed Non-Landed Index HDB
Index Index Index Core Rest of Outside
Central Central Central
Region Region Region
2Q13 1.0% 0.3% 1.4% -0.2% 0.2% 3.8% 0.5%
3Q13 0.4% 0.3% 0.6% -0.3% -0.9% 2.2% -0.9%
4Q13 -0.9% -1.0% -0.9% -2.1% 0.4% -0.9% -1.6%
1Q14 -1.2% -0.7% -1.3% -1.0% -3.3% -0.1% -1.6%
2Q14 -1.1% -1.7% -0.8% -1.5% -0.3% -0.9% -1.4%
3Q14 -0.7% -1.8% -0.4% -0.8% -0.4% -0.4% -1.7%
4Q14 -1.1% -1.3% -1.0% -0.9% -1.3% -0.8% -1.5%
1Q15 -1.0% -0.9% -1.1% -0.4% -1.7% -1.1% -1.0%
2Q15 -0.9% -1.0% -0.8% -0.6% -0.6% -1.1% -0.4%
3Q15 -1.3% -0.4% -1.5% -1.2% -2.2% -1.6% -0.3%
% Chg
(YTD -3.2% -2.3% -3.4% -3.3% -4.6% -3.8% -1.8%
3Q15)
% Chg
-8.2% -8.8% -7.8% -9.0% -8.5% -6.9% -9.5%
(Peak)
3Q15
142.3 163.7 137.7 129.0 140.0 159.4 134.6
(index)
Page 27
Industry Focus
Pressure Points
1. New Supply to weigh down on prices in 2016
Flood of supply completions to peak in 2016. According to Looking ahead, on the back of a projected slower population
latest URA data as of 3Q15, total new annual private property growth of 1.3% (due to ongoing tight immigration and
completions over 2015-2019 are estimated to be c.73,000, foreign labour policies) and assuming an average household
implying a CAGR of 5.0% over the coming four years. This is size of c.3.5 persons, we estimate average annual demand to
above the average growth of c.3.5% over the past decade. We be c.18,000 per annum (made up of 8,500 from residents
note that 2016 will see a peak of 27,000 private units and the remaining 9,500 from foreign demand).
completions.
Therefore we believe that the Singapore residential market
In addition, we estimate a further c.95,000 (or 21,000 units will continue to face an oversupply situation, as a
per annum) new built-to-order (BTO) HDB flats are under consequence of (i) slowing population growth at an
construction and will complete progressively over the next estimated c.1.3%; and (ii) a ramp-up in supply completions
three years. These flats mainly cater to self-ownership and from 2015 onwards, which will result in a surplus in
should not be competing with other private residential unit residential units. Based on our estimates, there will be a net
owners who may be looking for tenants. surplus of c.25,000 new per annum in residential units from
2016-2017 which should result in vacancy rates increasing to
Property market to remain in an oversupply situation in 2016. 9%-10%.
Historical household formation, which is largely based on
population growth and marriages, has remained stable in the Vacancy rates to increase to c.9-10%. Assuming that (i) new
past few years. We note that historical demand for housing HDB BTO units are built purely for owner occupation, and (ii)
over 2005-2009 was driven partly by an accelerated growth significant numbers of private residential units are purchased
in total population in Singapore (estimated to average c.3.5% with the intention to rent, we believe that a heightened
over 2005-2009), mainly from an increase in the foreign supply in completions skewed towards 2015-2016 in the
population in Singapore, while marriages have stayed fairly private residential space will put pressure on occupancy levels.
constant at c.25,000/year over the past decade. With vacancy rate rising to 7.8% as of 3Q15 and potentially
9-10% in 2016-2017, this will add further pressure to rental
yields as these units compete for tenants in a slowing market.
Key Population and Housing Data

2010 2014 2015F 2016F 2017F
Total Population ('000) 5,077 5,470 5,541 5,613 5,686
Growth Rate 1.7% 1.3% 1.3% 1.3% 1.3%
Total Supply of housing ('000) 1,167 1,281 1,310 1,355 1,400
Total Resident Households ('000) 1,146 1,202 1,231 1,274 1,317
Est. Foreign Household ('000) 21 79 79 81 83
Housing to Population Ratio (x) 4.3 4.3 4.2 4.1 4.1
(Deficit)/Surplus (0.9) (2.5) 20.6 25.9 25.9
Vacancy Rate 5.0% 7.1% 8.3% 9.1% 9.9%
Page 28 Page 28
Industry Focus
Population Growth (2001-2017F) Population to housing stock ratio

6,000 6.0% 4.80 160.0
5.0% 4.60 140.0

5,000
4.0% 4.40
120.0
4,000 4.20
3.0% 100.0
4.00
3,000 2.0% 80.0
3.80
1.0% 60.0
2,000 3.60
0.0% 40.0
3.40
1,000
-1.0% 20.0
3.20
- -2.0% 3.00 -
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Total Foreign Population ('000) Total Resident Population ('000)
Population to Total Housing Stock (LHS) Average Residents/ unit (LHS)
Growth in Population (%) Average Growth Rates
URA PPI (RHS)
New residential completions over 2015-2018 Total Supply completions (Private) > 2X historical
(Non-landed & HDB) average
60,000 30,000
Un its Units
Average c.25,000 units
50,000 25,000
40,000 20,000
30,000 15,000 Average c.10,000 units
20,000
10,000
10,000
5,000
-
2015 2016 2017 2018 0
Private Residential Executive Condo Public Housing
Market to see a surplus in housing units in 2015 - 2017 Inverse relationship between vacancy rates (non-
landed) and the PPI
40,000 Surplus/Deficit 250.0 250.0 12.0%
(units) S urplus Index (%)
30,000
10.0%
200.0
200.0
20,000
8.0%
10,000 150.0
150.0
‐ 6.0%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
100.0
(10,000)
100.0 4.0%
(20,000)
50.0 Property Price Index (LHS) 2.0%
(30,000)
50.0 Vacancy Rate (RHS)
(40,000) ‐ 0.0%
Change in Dwellings URA PPI (RHS) 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017
(50,000) ‐
Page 29
Industry Focus
2. Rising unsold inventory a risk
Rising unsold inventories are a risk. The low take-up rates in at projects in the Eastern and Northern part of Singapore,
recent sales launches has resulted in close to 6,000 unsold indicating some sort of oversupply situation as buyers are
private residential units, representing close to 14% of total spoilt for choice in terms of units to buy.
private residential units under construction and launched for
sale. In addition, there is another close to 2,500 that is While recent income cap tweaks (qualifying household
currently under construction and not launched for sale. income for EC has been raised to S$14k/mth from
S$12k/mth) will mean a larger portion of Singaporeans are
As such, developers will be hard pressed to sell these units eligible to buy ECs, the slower than expected take-up in new
upon completion given onerous penalties levied by the EC launches could mean that buyers are maintaining a wait-
authorities (ABSD for land price if project is not fully sold and-see attitude before committing to a new property
upon TOP) and extension charges on the Qualifying purchase.
Certificate Scheme for foreign developers on any unsold
properties 2 years after TOP). Moreover, with close to over 1,100 units expected to be
launched in the coming year, we expect further competition
Slow take-up rates for Executive Condominiums (EC) . As of and price pressure from existing EC projects as developers can
3Q15, there are a total of 3,435 unsold EC units which are ill afford to price themselves out of the market.
currently under construction. These units are mainly located
Sell through rate for new launches have been Sell through rate for ECs been declining to c. 80% of
declining in 9M15 new launches
25,000 120.0% 6,000 200.0%
Units (% ) Units (%)
180.0%
100.0% 5,000
20,000 160.0%
140.0%
80.0% 4,000
15,000 120.0%
60.0% 3,000 100.0%
10,000 80.0%
40.0% 2,000
60.0%
5,000 40.0%
20.0% 1,000
20.0%
- 0.0% - 0.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 9M14 9M15 2006 2007 2008 2009 2010 2011 2012 2013 2014 9M14 9M15
Total Direct Sales (new) Total Direct Sales (Uncompleted) % sell-through rate New EC launches New EC Sales (uncompleted) % sell-through rate
(new sales) (new sales)
Unsold inventory by regions; 46% of unsold stock of Rising vacant units in completed ECs could mean that
close 6,000 units located in the OCR demand is drying up
3000 Units
Core Central
Region
22% 2500
Rest of Central
Region
32% 2000
1500
1000
500
0
1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15
Outside Central
Region
46%
Page 30 Page 30
Industry Focus
3. Rising interest rates to impact affordability
While the Total Debt Servicing Ratio (TDSR) framework has Assuming a typical S$1m property price, we estimate that a
reduced the threat of households over-extending themselves, 1% rise in interest on a S$0.8m mortgage loan (based on a
the rising risk of the impact of expected rise interest rates 80% loan quantum for the first home buyer) from 2% to 3%
come 2016 still poses as a threat to buyers' affordability, in with a 25-year tenure will increase monthly mortgage
our view. DBS economists are expecting the 3-month SIBOR payments by c.S$420/mth. This will mean that an increase of
to increase by over 0.9% to 2% by the end of 2016 (from the debt obligations by c.10.6%.
current 1.1%), which we believe will add to further stress on
household balance sheets and affordability.
Mortgage repayment Schedule (Tenure 25 years) Remarks
Monthly Mortgage Payments**

Typical Price Loan 1. For an average private property
2.0% 3.0% 4.0% 5.0% purchase of S$1.0m–
Property Type S$’000 S$’000*
S$1.25m, a 1% increase in
HDB BTO 350 280 $1,187 $1,328 $1,478 $1,637 mortgage rates increase
HDB BTO 500 400 $1,695 $1,897 $2,111 $2,338 monthly mortgage payments
Resale 600 480 $2,035 $2,276 $2,534 $2,806 by S$400-S$500/mth
Resale/EC 800 640 $2,713 $3,035 $3,378 $3,741
2. Every 1% increase will increase
EC / Private 1,000 800 $3,391 $3,794 $4,223 $4,677 mortgage payments by 10.6%,
Private 1,250 1,000 $4,239 $4,742 $5,278 $5,846 ranging from S$140/mth-
Private 1,500 1,200 $5,086 $5,691 $6,334 $7,015 S$1,200/mth for loans of
Private 1,750 1,400 S$280,000 – S$2,400,000.
$5,934 $6,639 $7,390 $8,184
Private 2,000 1,600 $6,782 $7,587 $8,445 $9,353 3. A scenario of a 3% increase in
Private 2,250 1,800 $7,629 $8,536 $9,501 $10,523 mortgage rates for a typical
Private 2,500 2,000 $8,477 $9,484 $10,557 $11,692 S$1.0m – S$1.25m property
Private 2,750 2,200 $9,325 $10,433 $11,612 $12,861 purchase will increase
mortgage rates by
Private 3,000 2,400 $10,173 $11,381 $12,668 $14,030 approximately S$1,200/mth –
S$1,600/mth.
* Based on 80% loan quantum for 1st buyer, tenure of 25 years

** Based on a 25 year loan tenure
Source: DBS Bank
Page 31
Industry Focus
Household with below median income and multiple loans at However, we note that risk will arise from (i) households with
risk from a hike in rates. In addition, we note from a recently below-median household income (<S$7,000/mth) that took
published financial stability review 2015 by the Monetary up loans to purchase private housing will see mortgage
Authority of Singapore (MAS) that most households that took servicing >60% after a 300bps hike in mortgage rates and (ii)
up housing loans from financial institutions had above- households with multiple housing loans for investment
median household incomes and were financing purchases of properties, especially if they are relying on rental income to
private homes and current mortgage rates of 2% remain service their housing loans, which might be tougher given
comfortable for most households. weakening rental markets and rising mortgage rates.
A simulation exercise indicates that most households can still

manage mortgage payments in the event of a 300bps
increase in mortgage rates. This is even so taking into account
an assumed 10% dip in incomes.
Monthly Mortgage Repayment by Income bands Monthly Mortgage Repayment by Income bands
(For Private and Public Housing) (For Private Housing)
Source: MAS, DBS Bank
Page 32 Page 32
Industry Focus
4. Weakening rental yields
Increased supply and weak employment outlook to result in financial institutions and tighter regulations and expatriates’
further pressure in rental yields. Based on latest data, the budget will mean that demand for some of homes, especially
residential rental index (non-landed) for residential homes those in the CCR will remain weak.
(non-landed) has declined by 3.6% over 9M15 and is down
close to 6.6% from the peak back in 4Q13. The fall is evenly Diminishing positive rental spread a risk for households who
spread across the various parts of the island, with rental for are overleveraged. To the make matter worse for
residential homes in the core central region (CCR) and outside investors/landlords, most are expected to set aside more of
central region (OCR) falling at a higher 7.9% from the peak their income to service rising mortgage payments as rates rise,
back in 4Q13 and 2Q13 respectively. eating into their returns. We estimate that rental yields for
residential homes (non-landed) in the CCR, OCR and RCR
The weakness in rental can be attributed to the ramp in range between 2.4%-3.2%, with the lower end of the range
supply completions, resulting in vacancy rates increasing being residential homes in the OCR.
steadily to multi-year high of 7.8% (as of 3Q15). Looking
ahead, with vacancy rates expecting to rise to c.9%-10% Households, especially those who own multiple properties or
level, we expect further downward pressure for rents as the who depend on the rental income to be worst hit as rental
market gets increasing competitive with pricing power with spreads (measured as rental income divided by mortgage
the tenants. rates) diminishes and is expected to turn negative when
mortgage rates reach >2.0% by end of 2016, while rental
rates are expected to decline by 4-5% over the coming year.
In addition, with the employment outlook looking increasing
uncertain, especially ongoing job rationalization at the
Rental Index weakening since 1Q14 Rental Yield decline precludes a drop in prices
150.0 4.0%
15%
% Chg Index Value
140.0 I n dex Value Yield
140.0
130.0 3.5%
120.0
10%
120.0
100.0 3.0%
110.0
5% 100.0
80.0 2.5%
90.0
60.0 80.0 2.0%
0%
70.0
40.0
60.0 1.5%
-5%
20.0
QoQ Chg in Rental Index Rental Index Property Price Index (non-landed) LHS Rental Index (Non-Landed) (RHS)
-10% -
Rentals to weaken as vacancy edge towards 9-10% Rental Spreads to turn negative in 20156
11.0% 130.0
(% ) I n dex Value 2.5%
( %)
10.0% 120.0 2.0%
9.0% 110.0 1.5%
1.0%
8.0% 100.0
0.5%
7.0% 90.0
0.0%
6.0% 80.0 Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13 Sep-14 1Q16
-0.5%
5.0% 70.0 -1.0% Core Central Region

-1.5% Outside Central Region
4.0% 60.0
Jun-04 Dec-05 Jun-07 Dec-08 Jun-10 Dec-11 Jun-13 Dec-14 2Q16 -2.0% Rest of Central Region
Vacancy Rate (Non-Landed) (LHS) Rental Index (Non-Landed) (RHS) -2.5%
Page 33
Industry Focus
Conditions not yet ready for government to tinker policies yet
Government to tinker only if “material stress” is seen in the watchful eye on the health of Singapore’s property market and
system. The various rounds of property curbs introduced by the only react when there is “material stress” in the system.
government in the last few years have helped curb rising
household debt and over-speculation as evidenced by the A drop of 13%-15% historically could mean a first round of
proportion of sub-sale transactions falling to only c.4% of total unwinding. If history is a good indicator, the current PPI,
residential transactions (vs average of c. 9% over the past 10 having fallen close to 9% from the peak, is inching closer to
years). This has also result in a gradual and measured the government’s trigger point of c.13%. Historically (during
correction in the Singapore property market. the Asian Financial Crisis (AFC) in 1998 and the dot com
collapse in 2000), the government has seen to intervene when
While that are calls by developers (represented by REDAS – property prices fell c.13% from the peak over approximately a
Real Estate Developers Association of Singapore) to the period of 1 year. Current mortgage-to-household income ratio
government to relax some of the property anti-speculation stands at 1.5x and 1.8x respectively (mortgage-to-household
curbs given that the aim of minimising hot money and income ratio ranged from 1.4x to 1.9x from 1997 to 2014).
speculation in the property sector has somewhat been The government’s initial responses were: 1) suspend the seller
achieved, we believe that timing remains uncertain. stamp duty during the AFC; and 2) tax exemptions (capital
gains tax and property tax for land under development) were
While we believe that the government’s key focus is still the given and the government opened the market to foreigners
overall health of the Singapore’s economy and its intertwining again by allowing foreigners to obtain loans in SGD during the
relationship with property prices. With property forming close dot com collapse.
to 46% of total household wealth, it is not in the
government’s interest to have a rapidly declining property However, we believe the scenarios that may warrant a re-look
market. at policies will be a marked drop in prices in a certain quarter
or a potential tweak in certain policies on a selective basis. On
In a recent Financial Stability review report by the Monetary that front, we believe that “cyclical measures” such as the
Authority of Singapore (MAS), we note that there is still buyer stamp duties/seller stamp duties which have been
uncertainty from the timing and trajectory of interest rate effective in curbing speculative demand, could be re-looked if
increases by the US Federal Reserve while headwinds in the transaction volumes continue to remain tepid over 2016.
external outlook could mean that the government will retain a
Measures that government tweaked during previous fall in the Singapore Property Price Index
8.00 Jun 98: deferral Feb 00: tax
Sept 02: EC Series of tightening
of buyer stamp exemption on measures
downpayment ‐ 10%
7.00 duty land dev
cash and 10% CPF
removed; DC
Dec 02: 2 yrs
6.00 rates on resi
property tax exempt
land increased
on land under dev; Jul 05: LTV raised from 80% to
30% reduction in 90%; cash payment reduced fr
5.00 May 99: 2nd stamp duty 10% to 5%; relax foreign
CPF housing
1997: Oct 01: CGT lifted; ownership rules; relaxation on
grant cut
4.00 seller foreigners can use non‐related singles joint
stamp duty SGD loans; property purchases
suspended tax exempted for Nov 05: Waived security
3.00
land under dev requirement of developers on
DPS
2.00
Dec 06: buyer Oct 07: DPS
Nov 98: 10%
Jun 00: HDB stamp duty removed
1.00 CPF housing
tightened concession
grant cut
regulations removed
‐
Dec‐95
Dec‐98
Dec‐01
Dec‐04
Dec‐07
Dec‐10
Dec‐13
Sep‐96
Sep‐99
Sep‐02
Sep‐05
Sep‐08
Sep‐11
Sep‐14
Jun‐97
Jun‐00
Jun‐03
Jun‐06
Jun‐09
Jun‐12
Jun‐15
Mar‐95
Mar‐98
Mar‐01
Mar‐04
Mar‐07
Mar‐10
Mar‐13
Blue denotes relaxation measures

Page 34 Page 34
Industry Focus
Summary of Property Measures pre-2009

Date Policy Measures
1997  Seller stamp duty suspended
 Removal of SGD30k cap
 HDB owners allowed to buy a new private property after occupying flat for 5 years
 Government sale sites deferred and project completion period (PCP) extended for up to 8 years.
Jun-98  Buyer stamp duty deferred of uncompleted properties until TOP or subsequent sales
 Land sales suspended
 Property tax exemption for land under development reinstated (up to 5 years and will apply from the
Nov-98  10% CPF housing grant cut

nd
May-99 2 CPF housing grant cut
Sep-99  Government to resume land sales in 2000
Feb-00  Tax exemption on land under development withdrawn (for new projects only)
 DC rates revised (average increase of 27% for residential land)
 Property tax rebate extended up to June 2001 at a reduced rate of 25% (previously 55%)
Jun-00  HDB owners required to seek approval before booking private property (including after 5-year of
occupancy)
Oct-01  Capital gains tax was lifted

 Foreigners allowed to use SGD for housing loan
 Property tax was exempted for a period of 2 years for land under development
Jul-02  Changes made to CPF system

o Min sum will be raised to SGD80k on 1 July 2003, of which SGD40k can be in property
o Limit CPF withdrawals for housing to 150% of the value of property and bring the limit down
to 120% in equal steps over 5 years
Sep-02  For purchase of ECs, downpayment has been changed to 10% in cash and 10% from CPF
Dec-02  2 years property tax exemption for all land under development with immediate effect
 30% stamp duty rates reduced
Aug-04  Government invites foreigners to buy land in Sentosa Cove
Jul-05  LTV raised from 80% to 90%

 Cash payment for residential properties reduced from 10% to 5%
 Non-related singles allowed to use their CPF to jointly buy private residential properties
 Phase out of Non-Residential Properties Scheme in July 2006
 Restriction on the use of CPF savings for multiple properties
Dec-06  Stamp duty concession withdrawn
Oct-07  Withdrawal of the deferred payment scheme for the sale of uncompleted private residential and
commercial properties with effect from 26 Oct 2007
Page 35
Industry Focus
Summary of Cooling Measures post-2009

14-Sep-09  Removal of Interest Absorption Scheme and Interest Only Housing Loans for private residential projects
 Resumption of Government Land Sales (GLS) Confirmed List sales
 Non-extension of property measures from Budget 2009
20-Feb-10  Introduce Sellers Stamp Duty (SSD) for private residential property– not applicable to HDB flats
o 1% for the first S$180,000,
o 2% for the next S$180,000 and
o 3% for the balance for property and land bought and sold within one year
 Loan-to-Valuation (LTV)
o Lowered from 90% to 80% for private property, ECs, HUDC, HDB and DBSS flats.
o Loans granted by HDB for HDB flats remain at 90%
5-Mar-10  HDB
o Minimum Occupation Period (MOP) for non-subsidised HDB flats extended to three years from 2.5 years for
flats with HDB concessionary loans and one year for flats with non-HDB concessionary loans
o Introduction of non-Malaysian PR quota in HDB estates
o Restructuring of non-Singaporean HDB housing subsidy
30-Aug-10  SSD
o Increase the holding period for SSD from one to three years with graduated stamp duty over this period
 LTV
o Buyers with more than one housing loan at the time of new housing purchase will have to increase in
minimum cash payment from 5% to 10% of valuation limit
o Lower LTV for multiple mortgage holders from 80% to 70%
 HDB
o For HDB dwellers, households with S$8,000-10,000 monthly income are allowed to buy DBSS with a
S$30,000 grant
o Increase supply of BTO flats to 22,000 units
o Shorten completion of BTO flats to 2.5 years
o Increase MOP for non-subsidised HDB flats from three to five years
o Disallow concurrent ownership of HDB flats and private property within MOP
14-Jan-11  SSD
o Increase SSD period from three to four years,
o Raise SSD rates to 16%, 12%, 8% and 4%
 LTV
o Lower LTV for non-individual purchasers to 50%
o Lower LTV for housing loans for individual buyers from 70% to 60%,
o First-time mortgage holders still enjoy LTV at 80%
15-Aug-11  HDB
o Increase supply of BTO flats to 25,000 in 2012, in addition to 25,000 in 2010
o Raise monthly household income ceiling to $10,000 from S$8,000 for BTO buyers and from s$10,000 to
S$12,000 for EC buyers
o Increase supply of rental housing to low income households
8-Dec-11  Introduction of Additional Buyers Stamp Duty (ABSD)

o 10% for foreigners and non-individual buyers,
o 3% for PRs buying second and subsequent properties, and
o 3% for Singaporeans buying third and subsequent properties
5-Sep-12  URA issued new guidelines on shoebox housing units i.e. those less that 50sm/unit.
o From Nov 4, 2012, the maximum number of units that can be built on a development site for non-landed
private residential developments (including ECs) outside of the Central Areas (suburban areas) will be
capped based on a ratio of maximum allowable GFA (excluding bonus GFA) over the minimum average of
70sm/unit
o For developments located in areas that face more severe infrastructure conditions, such as the Kovan, Joo
Chiat, Jln Eunos and Telok Kurau areas, the maximum number of dwelling units is calculated based on an
average 100sm/unit
Page 36 Page 36
Industry Focus

6-Oct-12  LTV restrictions
o Tighter residential mortgage loan tenures capped at 35 years for individual and non-individual buyers
o LTV for non-individual buyers lowered to 40%
o For borrowers of second and subsequent mortgages, LTV lowered to 40% for loans >30 years or extend
beyond retirement age of 65 years
o LTV of 60% for first-time borrowers beyond retirement age
21-Nov-12  HDB increase supply of BTO flats to 27,084 units in 2012, plans to release another 20k units in 2013
27-Dec-12  Introduction of the Silver Housing Bonus (SHB) and Enhanced Lease Buyback Scheme (LBS) by HDB, to be
implemented from February 1, 2013.
o Under the SHB, the CPF top-up requirement has been lowered to S$60,000 per household (subject to a
S$100,000 cap on cash proceeds for those who have not achieved the prevailing minimum sum
o Furthermore, the S$20,000 bonus will be given fully in cash
o Enhancements to the LBS include lowering CPF top-up requirement as well as relax the eligibility criteria to
allow more elderly to qualify
12-Jan-13  ABSD for private residential purchases by Singaporean buyers

o First purchase: 0%
o Second purchase: 0% to 7%
o Third purchase: 3% to 10%
 ABSD for private residential purchases by Singapore PRs,
o First purchase: 0% to 5%
o Second and subsequent purchases: 3% to 10%
 ABSD for private residential purchases by foreigners and non-individuals
o First and subsequent purchases: 10% to 15%
 LTV for private residential property
o First housing loan at 80% (or 60% if loan tenure is >30 yrs or borrower extends past age of 65)
o Second housing loan, LTV lowered from 60% (or 40% for loan tenures of more than 30 years or borrower
more than 65 years old) to 50% (or 30% if loan tenure is more than 30 years or borrower is older than 65
years old)
o Third and subsequent loans, from 60% (or 40% is loan tenure more than 30 years or borrower more than
65 years old) to 40% (or 20% if loan tenure is more than 30 years or borrower is older than 65 years old)
 Cash down payment for private property purchase
o First property: 5% (for LTV of 80%) to 10% (for LTV of 60%)
o Second and subsequent properties: 10% to 25%
o Non-individual borrowers: 20% to 40%
 HDB
o Mortgage service ratio for housing loans granted by financial institutions to be capped at 30% of
borrowers' gross monthly income or 35% for HDB loans, from 40%
o PRs who own a HDB flat cannot sublet the whole flat
o PRs who own a HDB unit must sell their flat within six months of completion of private residential property
from previous concurrent ownership of minimum occupation of fulfilled, from July 1, 2013
o Tighter terms will apply to HDB loans and use of CPF funds to purchase a HDB flat with less than 60 years
lease remaining
 For ECs
o Maximum strata floor area of new EC units will be capped at 160sm
o Sales of new dual-key ECs will be restricted to multi-generational families
o Developers of future EC sites under the GLS will be allowed to launch units for sale 15 months from the
date of award or after physical completion, whichever is earlier
o Private enclosed space and roof terraces will be included in gross floor area
 Introduction of Sellers Stamp Duty of 15%, 10% and 5% for properties and industrial land sold within three
years from date of purchase
Page 37
Industry Focus

29-Jun-13  MAS introduces new total debt servicing ratio (TDSR)
o Maximum total debt limit of 60% calculated by taking into account monthly repayment for the property
loan as well as monthly repayments of all outstanding property and non-property debt obligations of the
borrower
o MAS requires FIs to apply a specified medium interest rate of 3.5% for housing (4.5% for non-housing)
loans or prevailing market interest rate when calculating TDSR
o FIs are to apply a haircut of 30% to all variable and rental income and amortise the value of eligible
financial assets taken into account when computing TDSR
o MAS requires borrowers' names on a property to be the mortgagors of the residential property for which
the loan is taken, guarantors who are standing guarantee for borrowers who do not meet the TDSR be
brought in as co-borrower and in the case of joint borrowers, use the income weighted average age of the
borrower when applying for a loan
28-Aug-13  HDB policy changes

o Special Housing Grant (SHG) of up to $20,000 for 4-room or smaller flats extended to households earning
up to $6,500 to include middle income families
o Income ceiling for this grant for singles raised to $3,250
o Step Up grant of $15,000 for 2-room flat owners moving to 3-room flats in non-mature estates
o Older set of parents under the Multi Generation Priority Scheme can now opt for 3-room flats
o New and larger three-generation flats of 115sm will be piloted in Yishun starting from the next sales
exercise
o HDB loans reduced from maximum 30 years to 25 years, with repayment capped at 30% of monthly
income
o Bank loans for HDB flats will be brought down from 35 years to 30 years including those under DBSS
o New loans with tenures exceeding 25 years and up to 30 years will be subject to tighter LTV limits
o New PRs will have to wait three years to buy a HDB resale flat
Source: URA, HDB, MND, MAS, DBS Bank
Page 38 Page 38
Industry Focus
7. Retail – Retailers’ consolidation to continue
Key Assertions Recent completions saw good take-up rates (Seletar Mall
 Muted retail sales outlook poses a risk to opened at 100% occupancy1 and One KM saw >90% pre-
retailers’ occupancy costs and rental reversions commitment rates prior to opening2), and upcoming
 Consolidation among retailers to intensify in 2016 developments such as Waterway Point (which is 95%
amid rising labour costs and labour shortage tenanted3) continue to show good demand, an indication that
 New malls pose a risk to tenant sales at existing retailers are keen to tap into suburban demand for goods and
malls, but threat of tenant poaching is minimal services. Another point we note is that recent mall completions
and future supply are largely skewed to the Eastern region, as
they historically lag other regions in terms of retail space per
resident4. More malls in the east and northeast will support
Resilient despite challenges
population growth in the coming years.
Minimal supply until 2018. 2013-2014 saw the largest influx of

The next two years (2016-2017) will see much more limited
retail space since 2006 with more than c.3million square feet
supply, before another spike in completions in 2018, stemming
of space completing. Recent supply has been largely located in
from two key projects: Changi Jewel and Northpoint City.
the suburban areas, an indication that the government’s push
towards a live, work, and play concept in regional hubs is
taking fruit.
Recent years have seen suburban retail stock growing quicker than the Central region Remarks
1. In the Outside Central Region

1300 2400
sqm (OCR), major completions since
2350 2013 include Westgate, JEM,
1250 Orchard Gateway, Sports Hub,
2300 One KM, Seletar Mall, Paya
1200 Lebar Square, Capitol Piazza,
2250 and Big Box.
1150 2200
2. Waterway Point, which is set to
1100 2150 TOP at end-November, will see
another increase in retail stock
1050 2100 of c.370k sqft.
2050
1000
2000
950 1950
900 1900
Shop Space Available: Outside Central (LHS) Shop Space Available: Central (RHS)
Source: URA Realis, CEIC
1. http://women.asiaone.com/women/shopping/seletar-mall-officially-opens-may-21
2. http://www.uol.com.sg/attachments/Announcement/media_release_uol_opens_onekm_final.pdf
3. Based on management’s comments during results briefing on 9 November 2015
4. Based on DBS Research estimates
Page 39
Industry Focus
Chart 2: Upcoming retail developments by postal region Remarks
1. New retail supply will be

heavily skewed to the suburbs,
with c.65% of GFA located in
West the Outside Central Region
9% (OCR).
North 2. This is in line with the

Central government’s strategy of
14% 34% decentralising and creating
regional “work, live, play”
hubs.
Northeast
13% 3. Large proportion of OCR retail
supply will be in the East,
which has lower-than-average
space per resident.
East
30%
Source: URA Realis
Retail supply, broken down into various sectors (2014-2018) Remarks

2.0
m sqm 4. Majority of space completing
1.8 in 2016 will come from (a)
Waterway Point (Punggol)
1.6 which is understood to be
1.4 already occupied, (b)
Downtown Gallery which
1.2 should see strong demand
given lack of retail alternatives
1.0
in Tanjong Pagar area
0.8
5. Beyond 2016, key supply will
0.6 come from (a) Northpoint City
0.4 in Yishun, and (b) Changi
Jewel in Changi. These are
0.2 slated for completion in 2018.
- These malls are catchment
malls which we believe will be
2015 2016 2017 2018 a strong attraction for tenants
to want to be there.
Source: URA, Corporate Locations, CBRE, DBS Bank
Page 40 Page 40
Industry Focus
Upcoming retail developments by project name Remarks

Project Name Street Name Developer Expected Retail space
Year of under 1. Major upcoming projects
Final construction in OCR include
TOP (sqft) Waterway Point, Hillion
2015 Mall, Changi Jewel, and
South Beach Residences Beach Road City Developments 2015 76,000 Northpoint City.
The Promenade@Pelikat Jalan Pelikat Oxley Vibes Pte Ltd 2015 83,000
2. Upcoming projects in the
Waterway Point Punggol Central Frasers Centrepoint 2015 367,000 Central Region are:
Limited Downtown Gallery,
2016 Guoco Tower, and
Downtown Gallery Shenton Way OUE 2016 252,000 Marina One, all located
Ascent Science Park Drive Ascendas Land (S) Pte Ltd 2016 59,000 in the CBD area, and are
part of mixed
Guoco Tower Wallich Street Guocoland 2016 199,000 developments.
Duo Galleria Fraser Street M+S 2016 80,000
Hillion Mall Jelebu Road Sim Lian 2016 221,000
Tampines Town Hub Tampines People's Association 2016 152,000
2017
Downtown East Pasir Ris Close NTUC Club Investments 2017 126,000
JTC Space @ Tuas Tuas Avenue 1 JTC Corporation 2017 52,000
Kampung Admiralty Woodlands Drive Housing & Development 2017 112,000
71 Board
Junction Nine Yishun Avenue 9 CEL 2017 79,000
Robinson Tower Robinson Road Tuan Sing Holdings 2017 80,000
Changi Airport Terminal 4 Airport Boulevard Changi Airport Group 2017 219,000
Royal Square At Novena Irrawaddy Road Hoi Hup 2017 56,000
Vision Exchange Venture Drive Sim Lian JV 2017 70,000
2018
Changi Jewel Airport Boulevard Changi Airport Group 2018 969,000
Macpherson Mall Macpherson Road LVND Investments Pte Ltd 2018 61,000
Marina One Marina Way/Straits M+S 2018 198,000
View
NeWest West Coast Drive Oxley 2018 92,000
Northpoint City Yishun Central 1 Frasers Centrepoint 2018 420,000
Limited
Oxley Tower Robinson Road Oxley 2018 50,000
Misc.
Additions/alterations to Havelock Road Horizon Value na 135,000
existing commercial Investments Sp3 Pte Ltd
building
Retail development Punggol Drive Housing & Development na 96,000
Board
Source: URA Realis
Bold denotes sizable retail supply that will we believe result in increased competition from existing landlords
Page 41
Industry Focus
Demand Drivers to government restrictions on foreign labour, and (c) rising

labour costs from minimum wage policies. Faced with declining
Headwinds in the retail sector. Despite strong take-up rates in revenues and rising costs, retailers have since 2014 begun to
newly completed malls, existing malls in general have been consolidate their operations, cutting down the number of
under occupancy and rental pressure. Based on URA numbers, stores they operate while maintaining presence in better-
shop occupancy rates across the country have fallen to 92.6% performing malls.
as of Sep-2015, from a high of 95.5% in 2013. Looking at the
listed REITs, portfolio occupancy for CapitaLand Mall Trust fell Impact of retail headwinds will not be evenly felt across all
to 96.8% in 3Q15 compared to 98.8% in 4Q14. Reversions for malls. However, we believe that malls which (a) are well
the Trust also dropped to 4.1% as of 9M15, a level located; (b) have a strong track record of recurring footfall and
significantly below their average of 6% over the past few tenant sales; and (c) have active asset management and
years, and the lowest since the GFC in 2009. advertising & promotion (A&P) efforts, are likely to continue to
outperform other malls. Malls which are generally smaller or
Retailers have been hit by several factors: (a) declining sales less accessible will continue to face problems in attracting
efficiency (revenue/sqft) as a result of e-commerce and leakage tenants even though their rents may be cheaper.
from residents travelling abroad, (b) manpower shortage due
Net absorption of retail space have consistently been strong but weakened in recent times Remarks
120 96%
sqm 1. Net absorption of shop
space outpaced net
100 95%
additions of shop space in
2013 and 2014, as retailers
80 94%
took advantage of new
retail spaces in the suburbs
60 93% to be closer to residents.
40 92% 2. We expect net absorption

to fall going forward, as
20 91% retailers are consolidating
their operations amid
0 90% headwinds in the retail
sector.
-20 89%
3. Likewise, occupancy rates
-40 88% should continue to
Net Supply: Shop Space (LHS) Net Absorption: Shop Space (LHS) Occupancy (RHS) moderate in the next 1-2
years.
Source: URA Realis
Retail sales psf vs rents psf (indexed at 2003=100) Remarks
1. While retail sales have grown

at a CAGR of 5.7% over the
past five years (2009-2014),
the increase in shop space
has resulted in minimal sales
efficiency growth.
2. Rents have grown at a

quicker clip than sales psf,
resulting in rising occupancy
costs (rent as a % of
revenue) and declining
profitability.
Source: Singstat, Services Survey Series 2013, DBS Bank estimates
Page 42 Page 42
Industry Focus
Retail sales growth over three years vs. CapitaLand Mall Trust rental reversions Remarks
40% Re versions (%) 16

RS I Growth over 3 RSI ex-motor vehicles (LHS) 1. Since 2012, we find that
years ago retail sales (ex-motor)
CMT portfolio reversions (%) RHS
35% growth, as measured over
14 three years ago (in line with
Re ntal reversions are average three-year leases)
30% f a lling amid a has not been keeping pace
12
pe rsistent slump in with rental reversions.
25% r etail sales
10 2. Using CMT’s historical
rental reversions as an
20% example, retailers faced an
8 average of 2% p.a.
15% increasein rents, while
growth in sales has fallen
6 below 2% p.a. since mid-
10% 2013.
4
5%
0% 2
May-07
May-12
Feb-06
Oct-07
Feb-11
Oct-12
Mar-08
Mar-13
Apr-05
Sep-05
Apr-10
Sep-10
Apr-15
Jan-04
Jan-09
Jan-14
Aug-08
Aug-13
Dec-06
Dec-11
Jun-04
Jun-09
Jun-14
Nov-04
Jul-06
Nov-09
Jul-11
Nov-14
-5% 0
Source: URA Realis
Page 43
Industry Focus
Key industry trends Orchard Road area, moving into suburban shopping malls, in
order to directly cater to residents living in the area.
Based on our observation of the retail scene, we have
identified several trends going forward, as follows: Demand for quality, lifestyle. Second, households are
increasingly consuming better-quality and higher-end products
Moving to the outskirts. First, the retail experience for locals and services. Based on the 2012/13 Household Expenditure
will be an increasingly suburban affair. Majority of shopping Survey (which is conducted once every five years), higher
mall completions in the past year have been located at the expenditure on food compared with 2007/2008 was due to an
suburbs, such as One KM in Tanjong Katong, Big Box in Jurong increased tendency for households to eat out, particularly at
East, Paya Lebar Square in Paya Lebar, and Seletar Mall in restaurants, cafes and pubs, where their share of total
Seletar, for example. spending on food rose to 27% from 22% in 2007/2008.
Looking ahead, new retail space will still be largely focused in More households are choosing to purchase higher-value
the suburbs, with Waterway Point in Punggol (2015), electrical/AV equipment such as LCD/Plasma/LED TV sets. In
Northpoint City in Yishun (2017) and Changi Jewel (2018) addition, the ownership of mobile phones, personal
being the largest suburban developments in the pipeline. Just computers, and air-conditioners has grown strongly among
as we have seen in Jurong East, the government has been lower- and middle-income families, not just in higher-income
actively encouraging the continued development of regional ones. As more and more households opt for higher-quality
centres in decentralised areas, as a means of relieving the goods and services, so too will spending on these goods and
congestion in the CBD and Orchard Road as key working and services, increase.
leisure destinations.
Thus, we believe retailers that are successful in moving up the
As a result, we have seen many retailers (such as Zara, Coach, value chain and adapting to households’ lifestyle changes will
Kate Spade, and Isetan) that were previously only in the be best placed to benefit from the changing consumption
patterns.
Distribution of monthly household expenditure Remarks
1. Residents are spending a larger

Educational proportion of their income on F&B, as
Services Others well as high-value electrical/AV
5% 12% F&B equipment.
21%
Recreation & 2. Overall spending on healthcare is

Culture Clothing & expected to increase due to an ageing
7% Footwear workforce.
3%
Communication
4% 3. There has also been a trend of higher
Housing & Related spending on educational services such
Exp as tuition and enrichment activities.
Transport 30%
14%
Health
4%
Source: Singstat, 2012/2013 Household Expenditure Survey
Page 44 Page 44
Industry Focus
Competition from regional countries with proliferation of This is negative for retailers because consumers are able to
budget air travel; however a weaker economic outlook could arbitrage on currency-driven price differences to purchase
reverse this trend. Third, cheap air travel and a strong currency similar items at better prices overseas. Although controlling
will continue to act as a drag on retail sales growth, as cost base would be a key way to combat lost sales from
consumers choose to spend money outside of Singapore. Over overseas leakage, rising labour costs and high fixed rents
the past decade, local residents’ expenditure abroad has grown however give retailers very little room to price goods and sales
at a CAGR of 6.5% p.a., from S$13bn in 2004 to S$24bn in competitively in a sustainable manner.
2014 (roughly 60% of Singapore’s retail operating receipts).
Strong growth in overseas spending has coincided with the On the contrary, weak economic sentiment could instead boost
proliferation of low cost carriers (LCCs) and a strong SGD, sales for local retailers, as residents scale back on larger-ticket
which has made travelling to nearby countries such as expenses such as travel. This could result in higher domestic
Thailand, Japan and Australia, more affordable and therefore retail spending as overseas spending and imports are reduced.
accessible for the general population.
Residents’ air travel and overseas spending Remarks
8.0 25,000 1. Local residents’ expenditure

'm passengers S $'m abroad has grown at a CAGR
of 6.5% over the past 10-11
7.0
years.
20,000
6.0
2. Outbound expenditure has
grown to c.60% of
5.0 15,000 Singapore’s total retail
operating receipts.
4.0
3.0 10,000 3. Growth in overseas travel and

expenditure, particularly over
the past few years, has been
2.0
5,000 attributed to the proliferation
of low cost carriers (LCCs)
1.0 and relatively cheaper
currencies of Singapore’s
0.0 0 neighbours.
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Resident outbound travel by air Local residents expenditure abroad
Source: Singstat, World Bank, DBS Bank estimates
Page 45
Industry Focus
Rise and rise of e-commerce. Fourth, e-commerce will be a residents, providing excellent customer service, and offering
mainstay in consumers’ shopping habits going forward, as hassle-free warranty and product exchange policies. These
price transparency offered by the internet empowers require a major shift in mindset, but these changes are
consumers to assess the relative value of goods and services. necessary if retailers are to remain relevant in the internet age.
Brick-and-mortar retailers find themselves losing out to online
retailers in terms of price, due to higher manpower and rental Ultimately, in order for Singapore’s retail scene to flourish, all
costs. Furthermore, customers often visit physical stores to test stakeholders must be willing to venture beyond their comfort
out various products before going online to purchase them, zones. On the one hand, retailers must actively embrace
creating an unintentional free-riding effect. technological changes and be more proactive in engaging in
labour productivity and upgrading. On the other hand, we
The impact of e-commerce is mainly felt by the consumer believe that more flexible labour policies will provide retailers
electronics, household appliance, fashion, and publishing relief from rising wages. On that front, Manpower Minister Teo
industries, which we estimate make up some 30% of all retail Ser Luck in early October indicated a willingness to engage
establishments in Singapore. While omni-channel retailing has with various industry representatives to discuss the impact of
been touted as the future of shopping (such as offline-to- foreign worker levies on profitability, and to explore the
online solutions), the high costs incurred in setting up online feasibility of fine-tuning the manpower policies.
platforms can often outweigh the benefits of incremental sales.
Landlords likely to see moderating rental growth, expect
Although Spring Singapore offers financial assistance such as market rents to stay flattish. Finally, we believe that landlords,
the Capability Development Grant (CDG) or Productivity who also face a very different retailing reality, may have to
Innovation Credit (PIC) schemes, many retailers lack the eventually shift their leasing structures away from the
technical expertise to effectively run online platforms and traditional fixed-base rent model, to leases that take into
restructure their procurement supply chains to tap into the account retail sales and retailers’ health. That said, we believe
benefits offered by omni-channel retailing. malls with a large operational scale, a track record of
consistent foot traffic and tenant sales to do better than the
Retailers must adapt to the new reality of how shoppers buy rest. Malls in the suburban area, which is less reliant on fashion
products, and this involves tapping on online platforms to and have a higher contribution from F&B, services will be more
boost sales. More importantly, retailers must double down on resilient (1-2% growth in rents) while those in the Central to
their qualitative advantages, such as close physical proximity to see weakness on the back of a slower uptick in tourists.
Chg in rental indices (vs 3 years ago) Remarks
10.0% 1. Rentals growth (vs 3 years

Rental Growth (Fringe) ago) have fallen from to
<2% since the start of 2015.
8.0% Rental Growth (Central)
However, the fringe area
have remained more resilient
6.0% than the central region.
2. Going forward, we believe

4.0% that the suburban rental
performance to remain
resilient (+1%-2%) while
2.0%
rents in the Central region to
remain soft (-1% to -2%).
0.0%
‐2.0%
‐4.0%
Source: URA, Singstat, CEIC, DBS Bank
Page 46 Page 46
Industry Focus
8. Office – How low will it get?
Key Assertions However, supply is not the only key metric to predicting future
 Heightened competition as looming supply in rental performance as demand for space remains weak. While
Marina Bay, Tanjong Pagar area completes over the quantum and concentration of completions appear
2016-2017 daunting, they are not without precedent: 2010-2012 saw a
 A weak demand outlook exacerbate downside similar spike in office completions amounting to c.4.4m sqft, or
risk to rents as the Shadow space a key 1.5m sqft p.a. over three years. This is only slightly lower than
uncertainty
the average 1.7m sqft expected from 2016-18.
 Office Rents could dip by 20% over 2016
Back then, we note that despite the spate of completions, the
URA Property Rental Index (Central Area) recorded positive
Supply spike a key concern for most landlords growth due to a correspondingly high level of absorption,
driven particularly by financial institutions, which were
2016-18 will see a hefty 15% increase in downtown core expanding their operations, where floor plates of 100-250k
office NLA. Between 2016 and 2018, an estimated c.5.3m sqft were the norm. Rental growth was further bolstered by
of office net lettable area (NLA) will be completed within the continued strong demand for office space, even as supply
downtown core, translating into a 15% increase in existing slowed down in subsequent years.
stock, or 3-year CAGR of 4.6%. Close to c.76% of new office
supply (by GFA) will be concentrated in four main properties: Looking ahead, the converse is true – financial institutions,
(a) DUO Tower located in Bugis; (b) Guoco Tower, located in which are current major occupiers of CBD office space are
Tanjong Pagar, (c) Marina One in Marina Bay, and (d) Frasers cutting back on their operational footprint while demand from
Tower, located at Tanjong Pagar, as shown in the table in the other industries like the insurance, law firms have turn more
following page. The remaining developments are smaller scale moderate. As such, coupled with a low GDP growth outlook,
in nature and will likely be sub-divided and strata sold to end- there is increased uncertainty regarding the level of demand
users. that will take-up space for the completing new buildings come
2016-2018.
Supply implies an average of 1.7m sqft per annum (2016-2018), marginally higher than the 2010-
Remarks
2012 period
20 10-12 average: 2 01 6-18 average: 1. 2016-18 average supply of

2,500 1 . 7m sqft 250
1. 5 m sqft 1.7m sqft p.a. is comparable
' 0 00 sqft to 2010-12’s average of 1.5m
2,000 sqft p.a.
200
1,500 2. Despite large supply in 2010-
12 period, central area office
rents still recorded positive
1,000
150 growth, indicating that
supply is not a good measure
500 of future office rent
performance.
100
0
3. Net absorption has been
steadily declining since 2012,
-500 after major leasing activity by
50 financial institutions.
-1,000 Net Supply: Downtown Core (LHS) Net Absorption: Downtown Core
Average supply (2011-2015) Average Supply (2016-2018)
-1,500 URA Rental Index - Central (RHS) 0
Page 47
Industry Focus
Office supply in the CBD Remarks

Office (CBD) Location Developer Estimated NLA Property
(sqft) Type 1. Estimated 5.3m sqft of
2016 office net lettable area (NLA)
Guoco Tower Peck Seah Street Guocoland 860,000 Leasing is expected to complete
Crown at Robinson Robinson Road Wywy Developments 80,000 Strata Sale within the downtown core
between 2016 and 2018,
Eon Shenton Shenton Way Roxy Pacific Holdings 100,000 Strata Sale representing a 15% total
Von Shenton Shenton Way UIC 270,000 Strata Sale increase in current office
DUO Tower Rochor Road M+S 580,000 Leasing stock.
GSH Plaza Cecil Street GSH/TYJ/Vibrant/DB2 290,000 Strata Sale 2. Close to c.4.0m sqft of NLA
OUE Downtown 1 Shenton Way OUE 50,000 Leasing will be held for leasing
2,230,000 purposes, while the rest will
be strata sold.
2017
Marina One Marina Bay M+S 1,880,000 Leasing 3. Key office projects to watch
SBF Center Robinson Road Far East 240,000 Strata Sale out for are Guoco Tower,
Robinson Tower Robinson Road Tuan Sing Holdings 150,000 Strata Sale DUO Tower (2016), Marina
One (2017) and Frasers
2,270,000
Tower (2018) which will be
2018 main competition for
Frasers Tower Cecil Street Frasers Centrepoint Limited 670,000 Leasing landlords
Oxley Tower Robinson Road Oxley Consortium 110,000 Strata Sale

780,000
Source: URA, Corporate Locations, CBRE, DBS Bank
Page 48 Page 48
Industry Focus
Demand drivers sqft signed in the CBD so far, all of which were expansion
demand – insurance company Lloyd’s Asia, which took up c.75k
strong historical correlation between CBD office rents and sqft of space at CapitaGreen; Facebook, which leased 80k sqft
employment in the financial sector. Since 1998, there has been in South Beach; and Lego, which took up 60k sqft when it
a strong correlation of 85% between changes in the URA rental moved from MBFC Tower 3 to South Beach. Remaining leases
index (central) and changes in employment within the financial of >50k sqft were exits by eligible firms from the CBD to
services sector. Using a more recent metric (2009-2015), we suburban locations or business parks.
find that there is still a 77% correlation between changes in the
URA rental index (central) and changes in financial services Tech, media, and R&D firms are moving their key operations to
employment. business parks to cut down on costs. In recent quarters, we
have observed media, IT, and R&D companies – which qualify to
Since 2012, new sectors such as IT, insurance, legal/consultancy be located in business parks – moving a significant portion of
have taken up the slack following the fall-off in demand from their operations to business parks and suburban locations,
financial institutions. In recent years (i.e. from 2012 onwards), where rental differentials vs. Grade A offices have widened to
the correlation between rental and financial services 50-70%. For example, Google and Covidien are expected to
employment growth dropped further to 55%. move to Mapletree Business City 2 when the business park
completes in 2016. In addition, the likes of Daimler Chrysler and
We believe that this is a reflection of the diversification in Great Eastern Life have opted to move to Westgate, where
demand for CBD office space towards the insurance, IT, and reported rents of S$6.00-6.50 are still at a fairly significant
legal/consultancy sectors, as financial institutions have cut back discount to the CBD. By moving large swaths of operations
on space occupied within the CBD as part of cost optimisation outside the CBD, firms are able to defray high operating costs
and workforce streamlining procedures. Correspondingly, we while maintaining a leaner outfit in the CBD.
note that the correlation between changes in the URA rental
index (central) and the insurance services, IT, and Recent employment data and leasing trends do not point to any
legal/management sectors from 2012 onwards measure fairly sources of new office demand. Over the past half-year, job
significantly at 91%, 68%, and 70% respectively. creation in the financial services and insurance sectors have
grown at a lacklustre pace of 0.6% and 0.3% respectively, far
Lower net absorption in the CBD as firms in new sectors seek short of the 1.4% and 4.9% growth observed in 1H14. Lack of
smaller spaces. From our discussions with various landlords, we job growth in the financial services sector bodes ill for CBD
understand that while leasing enquiries from these new sectors office rental outlook, as the sector is still the largest employer of
remain brisk, the areas leased are for smaller floor plates of workers in the CBD area. Sectors which are still seeing strong
<2,000 sqft. Even larger tenants are typically taking up smaller job growth are either moving out of the CBD to business parks
spaces of <100k sqft, a sharp contrast from the 100-250k sqft and suburban locations, or are not adding sufficient jobs to
sizes seen during 2010-12. This is reflected in the declining net match that of the financial services sector
absorption rates within the downtown core over the past few
years. In 2015, there have only been three major leases of >50k
Growth in CBD rents vs. changes in employment for financial institutions (1998 – present) Remarks
70% 20.0%
1. Between 1998 and 2015, there
60% has been a 85% correlation
between changes in the URA
50% 15.0% rental index (central) and
employment growth in the
40%
financial services sector.
30% 10.0%
2. Lower correlation in rents and
20% financial services employment
10% 5.0% from 2012 onwards (55%)
reflects a diversification in
0% demand for CBD office space
from other sectors such as TMT,
-10% 0.0%
commodities/resources, and
-20% professional services.
-30% -5.0% 3. Employment in the financial

URA rental index (central) growth (LHS) Employment - Financial Institutions Growth (RHS) institutions sector will still have a
large influence on the direction of
rents in the CBD.
Source: URA, Singstat, CEIC, DBS Bank
Page 49
Industry Focus
URA rental index (central) growth vs. changes in employment for financial institutions (1998 – Remarks
present)
180
'000 1. 3-year CAGR (2012-15) for
160 financial services has been
2.3%, far slower than
140 insurance services (4.3%),
legal/accounting/mgmt
120
(6.7%), and IT (5.2%).
100
2. Among the various sectors
80 that typically occupy office
space in the CBD, the
60 financial services sector is
40 still the largest employer.
20
0
Dec-11
Dec-12
Dec-13
Dec-14
Jun-12
Jun-13
Jun-14
Jun-15
Feb-12
Oct-12
Feb-13
Oct-13
Feb-14
Oct-14
Feb-15
Apr-12
Apr-13
Apr-14
Apr-15
Aug-12
Aug-13
Aug-14
IT & Other Information Services Financial Services
Legal, Accounting &Mgmt Services Insurance Services
Source: Singstat, CEIC, DBS Bank
Grade A office rents vs. Business Park rents Remarks
12.00 S $ psf pm 1. Business park rents have

stayed fairly flattish over the
past five years, while Grade
10.00
A rents have grown by
c.20% between 3Q13 and
8.00 2Q15.
2. As of 2Q15, the differential

6.00 between Grade A offices an
off-central business parks
was 51%.
4.00
3. The gap between less
centrally located business
2.00
parks (such as Changi
Business Park or Science
0.00 Park) was 68%.
4. Firms will see significant cost

savings by moving eligible
Grade A Office Business Park Off Central Business Park Rest of Island business divisions to busines
parks, while maintaining a
leaner presence in the CBD.
Source: CBRE, DBS Bank
Page 50 Page 50
Industry Focus
Leasing activity for YTD FY15 Remarks

Organisation Area Moving To Moving From Sector Comments
Leased 1. Recent major occupiers in
Lloyd's Asia 75,000 CapitaGreen Asia Square Insurance Insurance, the CBD include firms from
Tower 1 expanding the TMT sector, financial
Schroder 44,000 CapitaGreen OCBC Centre, Financial Consolidation institutions, and
11 Beach Road Institution commodities/ energy sectors
BHP Billiton 40,000 CapitaGreen MBFC 2 Commodities/ Two floors
2. However, we have also
Mining
noticed that firms which
ACE Insurance 38,000 CapitaGreen Parkview Insurance Two floors qualify to be in business
Square parks have been moving out
Twitter 22,000 CapitaGreen TMT of the CBD to business
Apple 35,000 CapitaGreen 7 AMK Street TMT Option to lease parks.
another 3 floors
3. Financial institutions are
Facebook 80,000 South Beach 158 Cecil TMT
taking a much smaller
Street
footprint compared to
Sanofi Aventis 40,000 South Beach 6 Raffles Quay Pharmaceutical 2011/12, where 100-250k
Lego Singapore 60,000 South Beach MBFC 3 Consumer sqft leases were the norm.
Electrolux 30,000 Galaxis at Jackson Square Appliance
Fusionopolis 5 manufacturer
Obayashi 7,000 79 Anson Road Equity Plaza Construction Vacating Equity
Plaza
BBC Worldwide 6,000 Aperia Shaw Tower Media Central  BP
Prime Partners 9,000 Income@ Raffles Equity Plaza Financial Vacating Equity
Institution Plaza
Equinix Asia Pacific 12,000 China Square Equity Plaza TMT Vacating Equity
Central Plaza
Google 290,000 Mapletree Asia Square TMT CBD  BP
Business City 2 Tower 1
Covidien 56,000 Mapletree Visioncrest Medical CBD  BP
Business City 2 Commercial equipment
manufacturer
Commonwealth 20,000 South Beach Millennia Banking
Bank of Australia Tower
Fragomen 11,000 South Beach Haw Par Glass Legal
Tower Tower
Expedia 26,000 South Beach Hong Kong TMT
Tower Street
Marubeni 30,000 CapitaGreen Hong Leong Consumer
Singapore Building
Nordea Bank 12,000 CapitaGreen Springleaf Financial
Tower Institution
South 32 40,000 CapitaGreen (MBFC Tower Commodities/ Previously BHP
2) Mining Billiton
Beca Carter 24,000 Westgate Anson Centre Consultancy CBD  OCR
Hollings & Ferner
Daimler Chrysler 55,000 Westgate Centennial Automotive CBD  OCR
Tower
Ergo Asia / Ergo 10,000 Suntec City Hub Synergy Insurance
Insurance Point
Great Eastern Life 33,000 Westgate Great Eastern Insurance CBD  OCR
Centre
Chicago 10,000 ORQ North Singapore Land Financial
Mercantile Tower Institution
Exchange
AllianceBernstein 20,000 ORQ North Prudential Financial
Tower Institution
*BP = Business Park; OCR = Outside Central Area; TMT = Tech, Multimedia, Telecommunications
Source: Corporate Locations, Cushman & Wakefield, Colliers, CBRE, DBS Bank
Page 51
Industry Focus
Rents to dip by up to 20% over 2016
All eyes on supply in 2016. As 2016 closes in, we believe that As pre-commitment rates are low, rents to come under pressure
office rents will come under pressure from two fronts: (a) as landlords prioritise occupancy rates. Pre-commitment levels
insufficient incremental demand to fully absorb the large for upcoming offices have been fairly disappointing – the only
incoming office supply, and (b) potential tenants opting to leasee announced at DUO Tower is Abbott Laboratories, which
purchase strata units instead of leasing office space. will take up 100k sqft of space (c.18% of NLA). Meanwhile,
Guoco Tower and Marina One have yet to announce any
Increase in supply of strata offices for sale could tempt tenants anchor tenants. Given that the largest tenants at the recently
to purchase their own office units. From 2016 onwards, we opened CapitaGreen and South Beach Tower occupy <100k
estimate c.1m sqft of new strata office space to enter the sqft apiece, landlords of these new offices will be hard pressed
market. This comes on top of >1.1m sqft of office space to find sources of new demand that could quickly absorb
recently made available for sale at GSH Plaza, AXA Tower, and multiple floors at once. We reckon that demand will mostly be
Prudential Tower, as their new owners have opted to subdivide from firms looking to expand or consolidate their operations but
and sell individual units instead of leasing the whole building. are unable to do so in today’s low-vacancy environment. Given
While newer, well-located, and freehold office units will the sheer volume of office space entering the market, landlords’
continue to command premium pricing, asking prices at older typical practice of offering lower rents or rental incentives in
buildings could come under pressure from other competition, order to fill initial space could spread to other office assets as
and decline to a point where smaller tenants would find it more landlords try to retain larger tenants.
attractive to buy an office unit for their own use as a hedge
against future rental hikes. As it stands, landlords are able to DBS’s base case: Grade A rents to fall 20% to c.S$9 psf pm in
charge a slight premium to tenants occupying smaller spaces 2016-2017. If we assume CBRE’s estimates of S$11.30 psf pm
within their properties – should demand for smaller spaces dry as a benchmark for Grade A office rents, and (b) fit-out costs of
up, landlords could face higher persistent frictional vacancies, as S$2.00-2.50 psf pm, market clearing rents, or the rent level
well as income loss from these incrementally higher rents. which would entice a company to move into a new office, could
fall to S$9 psf pm in our base-case scenario, or S$7.50-8.00 psf
pm in our bear-case scenario. Our base-case forecast implies a
fall of 20% over prevailing levels, or 10% p.a. from 2016 to
2017. Our bear case implies a 30% decline, or 15% over two
years.
Chart 5: DBS Grade A office rental forecasts (2016-2017F) Remarks

2,500 20
S $ psf pm 1. Based on market information on
'000 sqft 18 signed leases, we estimate stable
2,000 market rents of S$11 psf pm.
16
2. Assuming 3-year and 5-year
1,500 14 depreciation timelines, we estimat
fitting out costs of S$3.00-3.50 ps
12 pm, and S$2.00-2.50 psf pm.
1,000
10 3. Based on above-mentioned
500 assumptions, DBS estimates that
8 Grade A office rents will fall by
18% from 2016-17, implying
0 6 c.10% decline p.a.
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
4 4. In our bear-case scenario, rents
-500 could fall to S$7.50-8.00, implying
2 30% decline in rents, or 15% p.a.
Net Supply: Downtown Core (LHS) Net Absorption: Downtown Core
-1,000 0
CBRE Grade A office rents (RHS) DBS Base Case
DBS Bear Case
Source: URA, CBRE, DBS Bank
Page 52 Page 52
Industry Focus
9. Industrial – Business Park space to shine for now
Key Assertions Based on the latest Urban Redevelopment Authority (URA)

Rents remain on a downward trend as statistics, a total of 7.0 million square metres (75.3 million
heightened competition from new industry square feet) of new industrial space is under construction or
supply hits the market over 2015-2016 planning and projected to complete over the next four years
Business Park space to remain resilient for now; from the 2015 second half through 2019.
but upside capped as outlook for CBD office
remains weak.
Of this, 71% will be completed and operational within the next
Shadow space a key concern for warehouse
two years. Over 2015 to 2016, annual completions of 2.5
space landlords
million square metres will account for more than double the
average supply completions over the past five years; before
Tepid Demand expected. The Singapore purchasing managers’ scaling down to a more digestible average of 0.6 million square
index (PMI), a key barometer of the health of Singapore’s metres per year from 2017 to 2019. When completed, total
manufacturing sector, continued to contract in October for the industrial stock is expected to increase by 16%.
fourth month, after having expanded in May to June. The PMI
reading of 48.3 was a 0.3 percentage point rise compared to a Slowing number of Leasing Transactions
month ago but remained weak. 3,000 25.0
Number of
Value S$'m
transactions
Leasing volumes declined in 3Q15, closing at 2% lower on- 2,500
20.0
year and 25% lower on-quarter, to 2,081 leasing deals 2,000
(inclusive of factory, warehouse and business park space) with 15.0
lower transactions seen across all segments. 1,500

10.0
1,000
Pace of supply completions over 2015-2016 to have an impact
on industrial sector performance. The industrial market 500
5.0
continues to face an increasingly competitive operating Leasing Transactions (Number) Value (S$'m)

‐ ‐
environment due to the heightened pace of new industrial
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
space completions over 2015-2016. While the sector is three
years into a period of high supply completion, we believe that Source: URA, DBS Bank
there is more downside to occupancy rates and market rents.
Industrial Sector to see a 16% increase in supply by end 2019; 71% to be completed by 2016 Remarks
3,000
Sqm 1. Supply completions to
spike in 2015, peak in
2,500 2016 with an average of
2 -year average 2 .5 m sqm 2.5 million square metres
2,000 of space over next two
years.
1,500 5 -year average 1 .1m sqm 2. Supply will then fall to a
more digestible 0.6 million
1,000 square metres per year
from 2017-2019.
500
3. Supply completiosn to be
more than double that of
- the past 4 years.
Demand Supply
Source: JTC Corporation, URA, DBS Bank
Page 53
Industry Focus
7.0 million square metres of incoming supply till 2019; majority in the factory space (multi-user Remarks
factory and single-user factory space)
1. The majority of supply to be

Warehouse in the multi-user factory
Multi‐User
23% (33% of supply) and single-
Factory
33% user factory space (38% of
total supply).
Business
2. In terms of % increase, the
Park
industrial sector will see a
6%
16% increase in supply by
2019.
3. Sub-sectors with the highest

% increases are the multi-
user factory sector (22%
increase in supply), followed
Single‐User by the warehouse sector
Factory (19% increase in supply).
38%
Breakdown of supply by various sub-segments

Industrial Segments Current Supply Space under construction % increase
(‘000 sq. m.) (‘000 sq m.)
As of 2Q15 2H15-2019 (%)
Multi-User Factory 10,115 2,239 22%

Single-User Factory 23,004 2,643 11%
Business Park 1,801 408 23%
Warehouse 8,576 1,607 19%
Total Industrial 43,496 6,897 16%
Source: JTC Corporation, Urban Redevelopment Authority, DBS Bank
Page 54 Page 54
Industry Focus
Vacancy rates to increase to 10-11% by 2016. Taking into years, rental reversions for industrial landlords have been
account assumed pre-commitment rates and projected new positive when leases come due (assuming a typical three-year
demand, and faced with an increasing supply outlook, we lease cycle). However, due to the ramp-up in industrial supply
believe that the industry will see vacancy rates head toward 10- over 2014 onward, market rents have remained flattish, given
11% by end of 2016 (2015 June quarter vacancy rate for the increased competitive environment.
factory space registered at 9.7%), as new supply progressively
completes in the coming years. As the influx and pace of The expected declines in spot rents are expected to further
completions are skewed over the 2015/16 fiscal year, we narrow the spread between expiring rent levels. As such, for
believe that, on average, spot rentals are likely to see downside leases that are mainly on a three-yearly rolling basis, we expect
to the tune of around 3% per annum over 2015 to 2016, with most Singapore real estate investment trusts (REIT) to report,
the exception of business park space, which we believe will be on average, negative rental reversions over 2015 to 2016. We
resilient with around 0-3% growth. believe that the business park space will buck this trend, where
we expect positive rental reversions to the tune of around 3%
Rental reversion trends forecast to turn negative in 2015 to over the next two years.
2017. Due to the strong rise in spot rents over the past few
Industrial Sector in a net deficit position in 2015-2017 Remarks

400 11.0%
Sqm (%) 1. Sector to remain in a net
deficit position over 2015-
200
10.0% 2017 as supply
completions outpace
‐ demand for industrial
2009 2010 2011 2012 2013 2014 2015F 2016F 2017F 2018F 2019F 9.0% space.
(200) 2. Vacancy rates to increase
8.0% from current levels (9.7%
(400) as of June quarter) and hit
a peak of 10.7% in 2017
7.0%
(600)
before easing.
6.0%
(800)
Net Surplus/Net Deficit (LHS)
Vacancy Rate (%) (RHS)
(1,000) 5.0%
Industrial Sector in a net deficit position in 2015-2017 Remarks

50%
1. Rental Reversion trends are
expected to turn from
40%
flattish to negative from
2015 onward.
30%
2. The factory and warehouse

20% space is expected to see a
larger drop in rental
10%
reversions.
3. Business park space is

0%
2009 2010 2011 2012 2013 2014 2015F 2016F 2017F
expected to buck the trend,
given expectations of a 3%
-10% per annum rise in market
Business Park Warehouse Factory rents in 2015; flat in 2016.
-20%
Page 55
Industry Focus
9.1 Warehouse subsector – Risk from shadow space
Warehouse space: Vacancy rates to hit 10%; rents to dip 3% that while new warehouse developments are likely to be
per annum. Close to 1.6 million square metres of space will mainly pre-committed, it will be at the expense of rising
complete over 2016 to 2019, representing a 17% increase in shadow space from the industry.
warehouse space when completed. Based on URA estimates,
around 71% of the space under construction or planning is As a result, warehouses with older specifications are likely to
scheduled to be completed by 2016, implying an annual see occupancy pressure. As such, we believe the warehouse
completion rate of around 0.5 million square metres. This is sector is likely to see vacancy levels remaining at c.10% over
nearly 40% higher than the annual supply completion (around the next few years. Spot rents, which have historically shown a
0.35 million square metres per annum) and absorption (0.3 strong correlation to vacancy rates (correlation of close to -
million square metres per annum) observed over the past five 0.94), is forecast to decline by up to 5% per annum.
years.
As such, given the skew in supply completions in 2015 to
Shadow space as firms consolidate into newer developments. 2016, we believe that occupancy rates will dip around 2
Apart from selected developments from industrial REITs and percentage points to 90% (from 92% as of the June quarter)
developers, which may be more speculative in nature, we by the end of 2016. Rents are expected to dip by 3% per year
found that a majority of the warehouse developments are by over the next two years.
end-users, which we believe are for expansion needs or
consolidation of space for efficiency reasons. This will mean
Selected major warehouse space under development

Development Developer Space Expected
(million square meters) Completion
Supply Chain City YCH 0.13 2016
Pandan Road development Poh Tiong Choon Logistics 0.10 2017
Jalan Buroh development CWT Limited 0.22 2017 onwards
Carros Center Kranji Devt Pte Ltd 0.10 2016
Pioneer Road development Ascendas REIT 0.07 2017
Warehouse: Occupancy to dip to 89% (down 2 percentage points) while rental rates are Remarks
expected to dip by 3% per year
800.0 sqm'000 Warehouse 95%
(%) 1. Warehouse rents expected
700.0 94% to decline 3% per year in
2015-2016 and stabilise
600.0 93%
thereafter.
500.0 92%
400.0 91% 2. While new supply appears
to be pre-committed, we
300.0 90% believe that shadow space
200.0 89% will emerge from tenant
consolidation from multiple
100.0 88% locations to single
‐ 87% warehouses for efficiency
purposes.
(100.0) 86%
(200.0) 85% 3. Occupancy rates projected
Annual Demand (sqm) LHS Annul Supply (Sqm) LHS to dip marginally to 90%.
Occupancy Rate (%) RHS
Page 56 Page 56
Industry Focus
9.2 Multi-User Factory subsector – Downside risk
A tenant’s market as new supply completions spike in 2015 to that, we note that 72% of the space will be completed by end-
2016. Factory space makes up 76% of total industrial space in 2016, implying an annual completion rate of close to 0.6
Singapore. However, the majority of space is single-user factory million square metres.
developments, which are mainly built for use by end-users. The
multi-user factory segment contributes 23% of the total In fact, true competitive supply could be close to 29% or 0.15
industrial space, which is the second largest sub-sector within million square metres higher, if we were to account for
the industrial space. possible shadow space from the single-user factory space
segment, assuming that end-users look to sublet out 30% of
Single-user factory space is mainly driven by expansion needs the space to tenants (50% of space prior to 2014), according
by end users and should continue to enjoy occupancy rates of to JTC’s latest subletting guidelines.
close to 95%. While certain developments might include
potential space that is sub-leased out to smaller occupiers, we Multi-User Factor: Occupancy Rates and rental rates to decline.
believe risks going forward are lesser, given JTC’s tighter sub- As such, given the concentration of supply completions over
leasing requirements which limit the total quantum of space the next two years, we note that 2016 will see one of the
available for re-let. highest amounts of new supply completing over the past ten
years, meaning that the operating environment is likely to
Over 2015 to 2019, according to URA, the multi-user and remain highly competitive, given the increased space available
single-user factory space will see close to 4.8 million square for lease. We project rentals to decline 3% per year from 2015
metres of space completing, representing an increase of 17% to 2016 with occupancy declining from 87% to 84% in 2016.
in total industrial space. In terms of the new supply that is
under currently construction, more than 53% (or 2.3 million
square metres of space) will be in the multi-user factory
segment, which will be available for lease when completed. Of
Multi-User Factory: Occupancy and Rental Rates to dip Remarks
800.0 Factory 92% 1. Multi-User Factory rents

sqm'000
expected to decline 3%
700.0 per annum in 2015-
90% 2016 and stabilise
600.0
thereafter.
500.0 88%
2. Occupancy Rates
400.0
86% projected to dip
marginally to less than
300.0
85%.
84%
200.0
3. Further downside
100.0 82% possible if shadow space
is not absorbed in 2016.
‐
80%
(100.0)
(200.0) 78%
Annual Demand (sqm) LHS Annul Supply (Sqm) LHS
Occupancy Rate (%) RHS
Page 57
Industry Focus
Multi-user factory supply: Supply spike in 2016 to be an overhang Remarks

800 18%
Sqm 1. Supply completions to
700 16% spike in 2016; results in
600 vacancy rates to increase
14% to more than 16%.
500
12%
2. However, we see
400 downside from potential
10%
300 “shadow space” arising
8% from the single-user
200 factory segment if end-
6% users decide to sub-lease
100
part of their space
‐ 4% (bottom chart).
(100) 2%
3. Supply completion will
(200) 0% spike to over 1 million
square metres of space in
Demand (sqm) (LHS) Supply (sqm) (LHS) Occupancy Rate (%) (RHS) 2016 before easing.
Source: JTC Corporation, URA, DBS Bank 4. Rentals are expected to

remain under pressure as
Multi-user factory supply: Potential supply could be 29% higher than actual if we include competition heats up. We
“shadow space” from single-user factory space project a 3% per annum
1,200
drop in market rents in
'm sqm
2015-2016 with possible
downside in rentals if
1,000 2016 supply is not
absorbed.
800 5‐year Average Annual Supply: 0.53 sqm 5‐year Average Annual Supply: 0.63 sqm

(2010‐2014) (2015F‐2019F)
600 5‐year Average Annual Supply: 0.33 sqm

(2005‐2009)
400
200
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F 2016F 2017F 2018F 2019F
‐200 Annual Supply (Multi‐User Space)

Supply (Shadow space from Single‐User Factory segment)
Page 58 Page 58
Industry Focus
Selected major private factory space under development

Development Type Developer Space Expected
Mega @ Woodlands Multi-User Wee Hur Devt Pte Ltd 0.10 2018
T99 at Tuas South Avenue 10 Multi-User Soon Hock Tuas Devt Pte Ltd 0.06 2016
The Index at Tuas South Avenue 3 Multi-User Grow-Tech Properties Pte Ltd 0.06 2016
Ace @ Buroh at Buroh Crescent Multi-User OKH Buroh Pte Ltd 0.05 2016
Loyang Enterprise Building at Loyang Way Multi-User OKH Global Ltd 0.05 2016
Multi-user factory at Tuas Avenue 7 Multi-User Beacon Properties Pte Ltd 0.05 >2016
Win 5 at Yishun Industrial Street Multi-User Soon Hock Group Pte Ltd 0.05 2016
Single-User Factory for HP (MINT) Single-User Mapletree Industrial Trust 0.08 2016
Selected major public factory space under development

Development Developer Space Expected
Additions/Alternations to existing factory at Loyang Way KHL Printing Co Pte Ltd 0.01 2016
JTC aerospace (phase 2) @ Seletar Aerospace Park JTC Corporation 0.01 2015
JTC Aviation Two @ Seletar Aerospace Park JTC Corporation 0.02 2016
JTC Chemicals Hub @ Tuas View at Tuas South Avenue 5 JTC Corporation 0.02 2016
JTC Food Hub @ Senoko at Senoko Drive JTC Corporation 0.07 2017
JTC LaunchPad @ one-north (Phase 2) JTC Corporation 0.02 2016
JTC nanoSpace @ Tampines JTC Corporation 0.02 2017
JTC Space @ Gul JTC Corporation 0.02 2016
JTC Space @ Tampines North JTC Corporation 0.03 2016
JTC Space @ Tuas JTC Corporation 0.14 2017
Multi-user Factory at Bedok North Housing & Devt Board 0.11 2018
Sin Ming Autocity Housing & Devt Board 0.05 2016
Total Public factory project 0.51
Page 59
Industry Focus
9.3 Business Park subsector – Strong pre-

commitments to limit downside
Limited new supply given high pre-commitments. Often seen Despite rising office rents over the past year, business park
as “quasi-office” space, business parks offer cheaper rents have remained fairly stagnant due to high vacancy rates,
alternative office space for qualified users who do not need to but they have been declining steadily over the past few
be located in the Central Business District (CBD). quarters, as completed buildings fill up, to 15% as of the June
quarter. This is expected to have a positive impact on rents
As of the Sept quarter, total business park space stood at 1.8 going forward.
million square metres (around 4% of total industrial stock).
Looking ahead, a further 0.3 million square metres of space is Business Park spot rents to increase by 3% in 2015; turn
under construction and slated to be completed over the next flattish in 2016. In addition, the differential in rents between
two years, implying an expansion in space of close to 19%. A business parks (off-central and rest of island) compared to
key project in the pipeline is Mapletree Business City II (MBC II), Grade A offices remains above the historical averages of 50%
a 0.12 million square metres multi-user business park and 60%, respectively. This means that firms will continue to
development, which accounts for close to one-third of find it economical to move operations to business parks. As
upcoming space in the next two years. MBC II is off to a good such, we expect rents to increase by 3% in 2015; turning
start, with media reports citing that Microsoft and Google will flattish in 2016 as the rental outlook for the office sector
be new anchor tenants when the development is completed, softens in 2016.
expected in the 2016 first half. Apart from MBC II, most of the
other developments are anchored by end-users, which mean
limited new competition.
Business Parks: Rental differential currently above historical average Remarks
Business Park vs. Grade A Office rents
1. Business Park rents (off-
(S$ psf/mth) central and rest of Island)
tend to trade at 50% and
20 60% discounts to Grade A
18 offices, respectively.
16 2. Current differential above
14 historical average but
12 softening outlook for CBD
office rents caps further
10 upside.
8
3. Rents forecast to rise 3% in
6
2015; flat in 2016.
4
2
0
4Q04
2Q05
4Q05
2Q06
4Q06
2Q07
4Q07
2Q08
4Q08
2Q09
4Q09
2Q10
4Q10
2Q11
4Q11
2Q12
4Q12
2Q13
4Q13
2Q14
4Q14
2Q15
Grade A Office Business Park ‐ Rest of Island Business Park ‐ Off Central
Page 60 Page 60
Industry Focus
Business Parks: 19% increase in supply but a majority of supply has been pre- Remarks
committed
'm sq ft 1. While the sector is
expected to see a 19%
250 expansion in supply; more
Global Financial Crisis (2008‐2009) than 70% have already
200 been pre-committed as of
the June quarter.
Eurozone Crisis (2012)
150 2. Limited new competition in
space, coupled with
100 attractive rental differential
with CDB offices, to result
in more relocations to
50 business parks in 2015-
2016.
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F 2016F 2017F
‐50
Demand for Private Business Park Supply for Private Business Park
Available Supply
Selected business parks under development

Warehouse Developer Space Expected
development location (million square meters) Completion
MediaCorp campus Mediacorp Pte Ltd 0.08 2015
Mapletree Business City II Mapletree Business City Pte Ltd 0.12 2016
Business Park Devt at Ayer Rajah Crescent SHINE Systems Assets Pte Ltd 0.02 2016
Business Park Devt at Vista Exchange Green BP-Vista LLP 0.01 2016
Page 61
Industry Focus
10. Hospitality – Still on a downward

trend
Key Assertions Indonesia still the largest visitor source market, followed by
 Recovery in visitor arrivals for key source China
markets of Indonesia and China to catalyse US
performance in 2016 Europe 3%
11%
 Supply, however is growing at a faster rate than
Indonesia
demand growth 18%
Others
 RevPAR to be remain on a downtrend; estimated 14%
to dip by up to 4%. China
14%
Japan
5%
2015 another year to forget. 2015 has been weak thus far Vietnam
with 9M15 total tourist arrivals totally 11.4m visitors, down 3% Malaysia
HK 3% 7%
0.3% y-o-y . The decline in arrivals from Indonesia (-11%), Thailand India
Australia 7%
Malaysia (-5%) and Australia (-6%) has been partially offset by 3%
Philippines 7%
a jump in Chinese (+21%) and Indian arrivals (+7%). 4%
Source: Singapore Tourism Board, DBS Bank
Nevertheless, with the addition of 1,914 of net new rooms
which is equivalent to c.3% of 2014 supply, 9M15 RevPAR fell
2016 to remain challenging. Moving into next year, we expect
6% y-o-y to S$209. Going into 4Q15, we expect the market to
weakness from 2015 to flow into 2016. While we expect a
remain soft on the back of another 1,793 new rooms but the
recovery with total visitors rising 3% to 15.5m, largely on the
rate of decline could potentially slow from the large drops
back of continued recovery in Chinese visitors and pick-up
experienced in 1H15. However, the mid-tier/economy space
from the biannual conference year, we remain cautious as the
may experience some volatility in rates upon the opening of
supply outlook remains a concern. Approximately 3,899 rooms
the 1,500-room Hotel Boss. Overall, we expect 2015 tourist
are due to open in 2016, which we forecast will cause RevPAR
arrivals to be flat y-o-y coming in at 15.1m with RevPAR
to drop 4.4% to S$201
dropping 4.6% y-o-y to S$210.
.
Soft RevPAR in 2015 with weakness to flow into 2016 Remarks
y-o-y growth
1. Weak demand in 2015
10.0% due to sluggish
7.4% 7.7% demand and new room
8.0% 6.7% supply
6.3%
6.0%
2. Recovery in demand
3.7% expected in 2016.
4.0% 3.0%
2.0% 3. Room supply to remain

a key issue for hoteliers
0.0%
-0.3%
-2.0% -1.1%
-1.4%
-4.0% -3.0%
-6.0% -4.6% -4.4%
2013 2014 2015F 2016F
Visitor Arrivals Room supply RevPAR
Source: CDL Hospitality Trust, STB, DBS Bank
Page 62 Page 62
Industry Focus
Key Demand Trends
1) Chinese recovery. Chinese visitors have started to September 2015, taking 9M15 Chinese arrivals to 855k (+21%
return to Singapore, following an extremely weak 2014 where y-o-y). Despite the recent devaluation of Chinese Renminbi
Chinese arrivals dropped 24% y-o-y to 1.7m. Chinese tour (RMB) we believe the recovery should continue, primarily off a
groups avoided Southeast Asia over the past year due to the low base. We project a 20% rebound in Chinese arrivals this
MH370 incident and political situation in Thailand. In addition, year. For 2016, with rising income levels and Chinese looking
demand from China was also impacted by the new Chinese to travel overseas, we estimate a 15% bounce in Chinese
tourism laws enacted in October 2013 which banned arrivals in 2016.
“shopping tours” (i.e. tours that forced tourists to specific
retail outlets to purchase goods). Arrivals from China have
since recovered, jumping by 22-58% y-o-y between April and
Chinese visitor arrivals on the recovery path Remarks

80%
1. Downturn in Chinese
Recovery from arrivals starting from Oct-13
60%
weak 2014 due to new tourism laws
Mar14 - MH370 which banned “shopping
40%
tours”
incident
20%
2. Chinese visitors avoided
Singapore/Southeast Asia in
0%
2014 due to MH370 and
the political instability in
-20%
Thailand
Oct13 - New May14 - Thai
-40% Chinese tourism 3. Sustained recovery from
military coup
laws Apr-15
-60%
Nov-13
Nov-14
Jan-15
Jan-13
May-13
Jan-14
May-14
May-15
Sep-13
Sep-14
Sep-15
Jul-14
Mar-15
Mar-13
Jul-13
Mar-14
Jul-15
Source: STB, DBS Bank
Page 63
Industry Focus
2) Headwinds from weakening regional currencies. The slowing economy, we expect zero growth in 2016 following a
volatility in the MYR (-15% since Jun-14) and IDR (-2% since 4% expected fall in 2015. However, the movement in FX over
end Dec-14 or -8% at the recent lows in September) could the past year, at least for the top five source markets, has been
significantly curtail the number of Malaysian and Indonesian net positive primarily due to the strength of the CNY and INR.
visitors to Singapore. This is critical as Indonesia and Malaysia
are the largest and third largest source markets for Singapore
respectively. For Malaysia in particular, given the backdrop of a
Weakening IDR and MYR a risk Remarks

15%
Winners versus SGD - CNY & INR
CNY 1. Despite recent devaluation
10% of the RMB, it continues to
INR be strong versus the SGD
5%
Av g
0%
2. IDR has recently recovered
IDR from lows against SGD in
-5% September but FX volatility
may still curtail arrivals from
-10% Indonesia
AUD
-15% L osers versus SGD - IDR, AUD, & MYR 3. Overall FX impact from the
MYR top five markets is
-20% marginally positive
Dec-14
Nov-14
Feb-15
May-15
Jan-15
Jul-14
Sep-14
Apr-15
Jul-15
Sep-15
Mar-15
Jun-14
Jun-15
Aug-14
Aug-15
Oct-14
Oct-15
AUD CNY INR MYR IDR Top 5 weighted average

3) Potential stabilisation of Indonesian arrivals in 1Q16 over the same corresponding period. While we see headwinds
but still not enough. As expected, Indonesian arrivals were from a weak IDR versus SGD, with our DBS economists
weak in 9M15, falling 11% y-o-y. We believe this was due to projecting SGD/IDR to fall to 10,105 level from 9,658, given
lack of cheap tickets between Indonesia and Singapore to 3% y-o-y increase in overall seat capacity in 1Q16, this may
stimulate demand as 1H15 low cost carrier (LCC) seat capacity point to some stabilisation in demand early next year. Thus, for
was cut by 25% y-o-y. This follows from the 7% decline in 2016, we project no growth in visitor arrivals from Indonesia,
2H14 Indonesian visitors after a 20% cut in LCC seat capacity following a 10% decline for 2015.
Potential pick-up in arrivals in 4Q15 Remarks

y-o-y growth
1. Growth in Indonesian
60%
G rowth P hase Downturn S t ablisation/ arrivals over 4Q12-2Q14 on
50% Re covery? the back of increases in seat
40% capacity between Indonesia
30% despite IDR weakening
20% against the SGD
10%
2. 25% cuts in 1H15 low cost
0% seats trigger falls in
-10% Indonesian arrivals
-20%
-30% 3. 3% y-o-y uplift in 1Q16 seat
capacity pointing to
-40%
potential stabilisation in
Indonesian arrivals
Total ID-SG LCC ID-SG Indonesia total arrivals SGDIDR FX movement
Source: STB, Bloomberg Finance L.P, DBS Bank
Page 64 Page 64
Industry Focus
4) Competition from other markets. Singapore faces an Devaluation of the other regional currencies, potentially
increased level of competition from other tourism markets making its cheaper to visit other countries compared to
through a variety of factors which include (1) Easier access to Singapore, e.g. fall of the KRW and JPY, and (3) Singapore
other markets through the relaxation of visa restrictions, e.g. already having a high market share, e.g. Singapore represents
Multiple entry visas for Chinese visitors into Japan, (2) 38-39% of total Indonesian outbound travel.
Increased competition as seen by 9M15 tourist arrivals from China and Indonesia Remarks
in other competing markets
y-o-y growth
1. Increased competition from
140%
Chinese tourists from
115%
120%
Indonesia China
countries such as Japan and
96% Australia
100%
80% 2. Singapore getting a lower
60% market share compared to
other major Southeast Asian
40% 30% markets, with higher growth
21% 20%
20% in Thailand and Philippines
0% 0% 5% 0%
0% 3. General weakness in
-4% -3% Indonesian outbound travel
-20% -11% -10% -7%
-19% -16% but Japan remains a popular
-40% destination for Indonesians
Singapore Thailand Hong Macau South Taiwan Japan Australia
Kong Korea
Source: CEIC, STB, Bloomberg Finance L.P, DBS Bank
5) Mixed picture from other key source markets. For the remain soft as seen by the 6% decline in 9M15 visitor numbers.
other key source markets, it is a mixed picture. For India, which However, there are signs of potential stabilisation in 4Q15 and
is the fifth largest source market, we project 6% and 5% 1Q16 as overall airline seat capacity between Australia and
growth in Indian visitors over 2015 and 2016 respectively, as Singapore is projected to rise 2% and 6% y-o-y respectively.
Singapore remains alluring to Indian visitors due to a good Overall, we estimate 5.5% and 1% declines in 2015 and 2016
combination of attractions. Meanwhile, given the significant Australian arrivals respectively.
depreciation of the AUD, we believe visitors from Australia will
Continue growth in India expected with declines from Australia moderating Remarks
8.0% 7.1% 6.9%
1. Expect growth in Indian
6.0% 5.0% 5.0% arrivals to continue
4.3%
4.0%
2. Weakness in Australia
2.0% 1.1%
tourists due to impact of
0.0% weaker Australian dollar
2013 2014 7M15 2015F 2016F
-2.0%
-1.0% 3. 4Q15 and 1Q16 seat
-4.0% capacity between Australia
-4.5% and Singapore expected to
-6.0%
-5.5% rise 2% and 6% y-o-y points
-8.0%
-7.4% to some stabilisation
-10.0%
India Australia
Source: STB, Bloomberg Finance L.P, DBS Bank
Page 65
Industry Focus
6) Greater cultural attractions and sporting events to Such yearly events, including the Formula 1 and WTA Women’s
draw new tourists. Following the opening of the Singapore finals, should provide a steady stream of visitors each year. The
Sports Hub in 2014, we believe the variety of sporting push towards a more diversified base of attractions also arises
attractions and music events/concerts on offer will continue to from the opening of cultural attractions such as the Singapore
expand. This is on top of the incremental additions to the National Gallery and Singapore Pinacotheque de Paris.
annual sports calendar such as the Rugby Sevens which will be
added in 2016. With a greater mix of sporting and cultural options adding to
the well-known attractions such as Orchard Road and
Singapore Zoo, Singapore’s competitive position against other
markets should be enhanced.
List of new and recently opened attractions (open Remarks

Opening Attraction Category
date 1. Increased number of cultural
Jun-14 Singapore Sports Hub Sports attractions further
Sep-14 Karting Track @ Singapore Turf Club Sports expanding Singapore’s
2015 Sisters' Island Marine Park Nature attraction to international
visitors
2020 Expansion of Singapore Zoo Nature
2020 Integration of Jurong Bird Park to Mandai Nature 2. Annual sporting events such
area as F1 and WTA women's
Oct-14 Madame Tussauds Singapore Family & Entertainment tennis as well as the Rugby
2H15 KidZania Family & Entertainment Sevens in 2016 are expected
2015 Reopening of Battlestar Galactica at Universal Family & Entertainment to bring in regular streams
Studios Singapore of visitors each year
2019 Redevelopment of 6 precincts in Sentosa Family & Entertainment
Apr-15 Lee Kong ChianNatural History Museum Arts & Culture
May-15 Singapore Pinacothèquede Paris Arts & Culture
Nov-15 National Gallery Singapore Arts & Culture
Date Existing annual sporting events Type

Sep-15 Formula 1 Motorsport
Oct-15 WTA women's final Tennis
Date Sports events Type

Jun-15 SEA games Multiple sports
Sep-15 FINA World Junior Swimming Championships Swimming
Dec-15 ASEAN Para Games Multiple sports
2016 Singapore Sevens Rugby Rugby
Source: CDL Hospitality Trust, DBS Bank
Page 66 Page 66
Industry Focus
Key Supply Trends
1) Pressure from new room supply. Approximately 4,361 S$210. For 2016, supply pressures should ease slightly
net new rooms are expected to be added over 2015 which is although it remains large with 3,899 rooms to be added or
equivalent to 7.6% of existing 2014 room stock. This large equivalent to 6.3% of existing supply. Given only a modest
supply has to date caused both 9M15 ADR and occupancy to recovery in demand in 2016 (+3% expected), we estimate
drop 5.1% and 80bps to S$209 and 85% respectively. Overall, RevPAR to decline 4.4% to S$201 as occupancy should fall
we expect 2015 RevPAR to fall 4.6% to S$210 on the back of 120bps to 83.7% with ADR declining 3% to S$240.
a 50-bp decline in occupancy to 85% and a 4% fall in ADR to
Large increase in room supply over 2015-2016, projected to ease in 2017 Remarks
Rooms
1. 7.6% increase in net room
75,000 supply in 2015 causing drops
in both ADR and occupancy
70,000 2. Supply pressures not expected

2,419 to ease in 2016 with 3,899
3,899
rooms still be added
65,000
4,361
3. New room supply to drop in
60,000 2017, potentially creating a
57,050 more balanced demand and
supply
55,000
50,000
45,000
2014 2015F 2016F 2017F
Hotel rooms Expected net additions
Source: CDL Hospitality Trust, STB, Bloomberg Finance L.P, DBS Bank
2) 2015 new supply concentrated in Bras Basah/Bugis Growth in 2016 new room stock to come from CBD and
and Orchard precinct. For 2015, the largest concentration of Singapore River. In contrast to 2015, where the Orchard area
new hotels being added will occur in the Bras Basah/Bugis faced heightened price competition, there will be no new
region with an estimated addition of 1,500 rooms (equivalent supply in 2016. The major new supply will be concentrated
to 24% of existing supply) from the new Hotel Boss. This is largely in the CBD area with 816 rooms being added from the
followed by Orchard with 752 rooms (equivalent to 7% of following developments: The South Beach, Oasia Downtown
existing supply) following the reopening of Hotel Grand Hotel, Premier Inn and Clermont Hotel. The other major areas
Chancellor and Hotel Grand Central. The year 2015 also sees of concern would be the Singapore River precinct with the
the development of new hotels outside the CBD and major opening of M Social, Intercontinental Singapore Robert Quay
tourist precincts such as Genting Singapore in Jurong, Park (old Gallery Hotel) and The Warehouse Hotel. Combined with
Hotel in Alexendra and Ibis Styles in Aljunied. the completion of refurbishment works at Swissotel Merchant
Court, a total of 705 rooms (estimated 13% of existing supply
in the precinct) will hit the market. Beyond the new supply in
the Singapore River area, the rebranding of Riverview Hotel as
Four Points by Sheraton should also cause competition in this
sub-market to be more keenly felt.
Page 67
Industry Focus
More supply in Singapore River and CBD areas in 2016 Remarks

Number of rooms
1. New supply switching
5,000
from Orchard and Bras
4,000 Basah in 2015 to the
Singapore River and
3,000 CBD areas in 2016
2,000 2. Growth in new supply

also coming outside
1,000
core city centre areas
0
2014 2015 2016 2017
-1,000
Bras Basah/Bugis CBD Orchard Singapore River Total
List of hotels opening over the next three years
Year of opening Hotel Net room addition
2015 Gallery Hotel -223
2015 Swissotel Merchant Court -150
2015 Genting Singapore 557
2015 Park Hotel Alexandra 442
2015 Hotel Grand Chancellor Orchard 488
2015 D'Resort@Downtown East 397
2015 Aqueen Hotel Paya Lebar 162
2015 The South Beach 654
2015 Hotel Vagabond Singapore 41
2015 The Patina Capitol Singapore 157
2015 Villa Samadhi 20
2015 Hotel Grand Central 264
2015 Hotel Clover @ 7 HK St 22
2015 Sofitel Sentosa Resort and Spa 30
2015 Hotel Boss 1500
2016 Mercure Singapore Middle Road 400
2016 Ibis Styles 298
2016 Oasia Downtown Hotel 314
2016 M Social 293
2016 InterContinental Singapore Robertson Quay (Gallery Hotel 225
2016 Crowne Plaza Changi Airport (extension) 243
2016 OASIA West Residences 116
2016 Premier Inn Singapore 300
2016 Park Hotel Farrer Park 300
2016 The Warehouse Hotel 37
2016 Swissôtel Merchant Court 150
2016 Laguna Dusit Thani 200
2016 Clermont Hotel (Tanjong Pagar Centre) 202
2016 Hotel Indigo Singapore Katong 131
2016 Holiday Inn Express Singapore Katong 451
2016 Aqueen Hotel Geylang 100
2016 Aqueen Hotel Little India 70
2016 Aqueen Hotel Lavender (Additional Rooms) 69
2017 Andaz Singapore (DUO Project) 342
2017 Novotel Singapore on Stevens 259
2017 Somerset Grand Cairnhill Singapore Redevelopment 220
2017 The Murray Hotel 160
2017 Ibis Singapore on Stevens 528
2017 Amoy (Phase 2) (Additional Rooms) 60
2017 Courtyard Marriott at Novena 250
2017 YOTEL Orchard Road 600
Source: CDL Hospitality Trust, STB, Bloomberg Finance L.P, DBS Bank
Page 68 Page 68
Industry Focus
3) Expansion in 2015 largely in Mid-Tier category with across all four categories; Economy (22% of 2016 supply),
2016 being more evenly balanced. In 2015, the growth in Mid-Tier (40%), Upscale (27%) and Luxury (11%). Nevertheless,
supply is expected to be driven by the Mid-Tier segment which similar to 2015, we expect Mid-Tier and Economy categories to
represents an estimated 61% of total 2015 net supply and face the greatest pressure on ADR and occupancies.
20% of existing Mid-Tier stock. This resulted in Mid-Tier and
Economy being the worst performing category with their
respective 9M15 RevPAR falling 5.6% and 6% respectively. For
2016, the new supply of 3,899 rooms is more evenly spread
Majority of supply growth coming from the Mid-Tier category Remarks

y-o-y growth 1. Majority of new supply
25% coming from the Mid-Tier
category
20% 2. This should place the

greatest pressure on RevPar
for the Mid-Tier and
15% Economy sectors as the new
hotels seek to build up their
initial occupancy and brand
10% awareness
3. Luxury looks well placed

5% assuming high-end demand
holds
0%
Economy Mid-Tier Upscale Luxury Total
2015 2016 2017
Source: CEIC, STB, Bloomberg Finance L.P, DBS Bank
Risks to our forecasts
1) Significant economic downtown. Should there be a

hard landing in China which causes an economic slowdown in
Asia, the Singapore hospitality market, which derives 77% of
tourist arrivals from Asia, will likely experience a downturn. As
a measure of the potential downside, during the Asian
Financial Crisis, tourist arrivals in 1998 dropped 13% y-o-y to
6.2m, while ADR fell 9% y-o-y to S$137. Meanwhile, during
the Global Financial Crisis, visitor numbers dropped 2% and
4% y-o-y in 2008 and 2009, with ADR dropping 28% y-o-y in
2009.
2) Lack of new land supply. The Singapore government

has not released any new land for the development of new
hotels over the last two years. In the event that no new land is
released over the coming years and there is a significant
recovery in tourist arrivals, this will likely exert upward pressure
on RevPAR.
Page 69
Industry Focus
Valuation Charts
Page 70 Page 70
Industry Focus
11. Charts – S-REIT (Yield and Price to Book)
Ascendas Hospitality Trust Historical Yield Spread Ascendas Hospitality Trust Historical P/BV
12.0%
1.4
10.0% 1.3
1.2
8.0%
1.1
6.0% 1.0
0.9
4.0%
0.8
2.0% 0.7
0.6
0.0%
0.5
2012 2013 2014 2015
2012 2013 2014 2015
ASHT Yield Spread ASHT Yield Mean
ASHT P/BV Mean +1 SD -1 SD
-1 SD +1 SD
Ascendas REIT Historical Yield Spread Ascendas REIT Historical P/BV

14.0% 2.5
12.0%
2.0
10.0%
8.0% 1.5
6.0%
1.0
4.0%
0.5
2.0%
0.0%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0.0
ARE IT Y ie ld S pre a d ARE IT Y ie ld M e a n Y ie ld 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
-1 S D +1 SD AREIT P/BV Mean +1 SD -1 SD
Ascendas India Trust Historical Yield Spread Ascendas India Trust Historical P/BV
18.0% 2.5
16.0%
14.0% 2.0
12.0%
1.5
10.0%
8.0%
1.0
6.0%
4.0% 0.5
2.0%
0.0% 0.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2007 2008 2009 2010 2011 2012 2013 2014 2015
AIT Yield Spread AIT Yield Mean Yield AIT P/BV Mean +1 SD -1 SD
-1 SD +1 SD
Page 71
Industry Focus
Ascott REIT Historical Yield Spread Ascott REIT Historical P/BV

25.0% 1.8
1.6
20.0%
1.4
1.2
15.0%
1.0
10.0% 0.8
0.6
5.0%
0.4
0.2
0.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0.0
Ascott Yield Spread Ascott Yield Mean Yield 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
-1 SD +1 SD Ascott P/BV Mean +1 SD -1 SD
CapitaMall Trust Historical Yield Spread CapitaMall Trust Historical P/BV

14.0%
2.5
12.0%
2.0
10.0%
8.0% 1.5
6.0%
1.0
4.0%
2.0% 0.5
0.0%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0.0
CMT Yield Spread CMT Yield Mean Yield 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
-1 SD +1 SD CMT P/BV Mean +1 SD -1 SD
CapitaCommercial Trust Historical Yield Spread CapitaCommercial Trust Historical P/BV

25.0% 1.8
1.6
20.0%
1.4
1.2
15.0%
1.0
10.0% 0.8
0.6
5.0%
0.4
0.0% 0.2
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
-5.0%
CCT Yield Spread CCT Yield Mean Yield CCT P/BV Mean +1 SD -1 SD
-1 SD +1 SD
Page 72 Page 72
Industry Focus
CapitaRetail China Trust Historical Yield Spread CapitaRetail China Trust Historical P/BV
16.0% 3.5
14.0%
3.0
12.0%
2.5
10.0%
2.0
8.0%
6.0% 1.5
4.0%
1.0
2.0%
0.5
0.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 201
-2.0%
0.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
CRCT Yield Spread CRCT Yield Mean Yield -1 SD +1 SD
CRCT P/BV Mean +1 SD -1 SD
CDL Hospitality Trust Historical Yield Spread CDL Hospitality Trust Historical P/BV
25.0%
3.0
20.0% 2.5
15.0% 2.0
10.0% 1.5
1.0
5.0%
0.5
0.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 0.0
-5.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015
CDREIT Yield Spread CDREIT Yield Mean Yield CDREIT P/BV Mean +1 SD -1 SD
-1 SD +1 SD
Cambridge REIT Historical Yield Spread Cambridge REIT Historical P/BV

35.0% 1.8
30.0% 1.6
1.4
25.0%
1.2
20.0%
1.0
15.0% 0.8
10.0% 0.6
5.0% 0.4
0.2
0.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
CREIT Yield Spread CREIT Yield Mean Yield
-1 SD +1 SD CREIT P/BV Mean +1 SD -1 SD
Page 73
Industry Focus
Cache Historical Yield Spread Cache Historical P/BV

10.0% 1.5
9.0%
1.4
8.0%
1.3
7.0%
6.0% 1.2
5.0%
1.1
4.0%
1.0
3.0%
2.0% 0.9
1.0%
0.8
0.0%
2010 2011 2012 2013 2014 2015 0.7
Cache Yield Spread Cache Yield Mean Yield 2010 2011 2012 2013 2014 2015
-1 SD +1 SD Cache P/BV Mean +1 SD -1 SD
Croesus Retail Trust Historical Yield Spread Croesus Retail Trust Historical P/BV
12.0% 1.20
1.15
10.0% 1.10
1.05
8.0%
1.00
6.0% 0.95
0.90
4.0% 0.85
0.80
2.0%
0.75
0.70
0.0%
2013 2014 2015
Croesus Yield Spread Croesus Yield
Mean Yield -1 SD
Croesus P/BV Mean +1 SD -1 SD
+1 SD
Far East Hospitality Trust Historical Yield Spread Far East Hospitality Trust Historical P/BV
8.0% 1.3
7.0% 1.2
6.0% 1.1
5.0% 1.0
4.0% 0.9
3.0% 0.8
2.0% 0.7
1.0% 0.6
0.0% 0.5
2012 2013 2014 2015 2012 2013 2014 2015
FEHT Yield Spread FEHT Yield Mean -1 SD +1 SD FEHT P/BV Mean +1 SD -1 SD
Page 74 Page 74
Industry Focus
Frasers Commercial Trust Historical Yield Spread Frasers Commercial Trust Historical P/BV
18.0% 1.2
16.0%
1.0
14.0%
12.0% 0.8
10.0%
8.0% 0.6
6.0%
0.4
4.0%
2.0% 0.2
0.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0.0
FCOT Yield Spread FCOT Yield Mean 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
-1 SD +1 SD FCOT P/BV Mean +1 SD -1 SD
Frasers Centrepoint Trust Historical Yield Spread Frasers Centrepoint Trust Historical P/BV
14.0% 2.0
1.8
12.0%
1.6
10.0%
1.4
8.0% 1.2
1.0
6.0%
0.8
4.0%
0.6
2.0% 0.4
0.2
0.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0.0
FCT Yield Spread FCT Yield Mean Yield 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
-1 SD +1 SD FCT P/BV Mean +1 SD -1 SD
K-REIT Historical Yield Spread K-REIT Historical P/BV

25.0% 1.8
1.6
20.0%
1.4
15.0% 1.2
1.0
10.0% 0.8
0.6
5.0%
0.4
0.0% 0.2
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0.0
-5.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
KREIT Yield Spread KREIT Yield Mean Yield KREIT P/BV Mean +1 SD -1 SD
-1 SD +1 SD
Page 75
Industry Focus
Mapletree Industrial Trust Historical Yield Spread Mapletree Industrial Trust Historical P/BV
8.0% 1.5
7.0%
1.4
6.0%
1.3
5.0%
4.0% 1.2
3.0%
1.1
2.0%
1.0% 1.0
0.0%
2011 2012 2013 2014 2015 0.9
MINT Yield Spread MCT Yield Mean Yield 2010 2011 2012 2013 2014 2015
-1 SD +1 SD MINT P/BV Mean +1 SD -1 SD
Mapletree Logistic Trust Historical Yield Spread Mapletree Logistic Trust Historical P/BV
18.0% 2.5
16.0%
2.0
14.0%
12.0%
1.5
10.0%
8.0%
1.0
6.0%
4.0% 0.5
2.0%
0.0% 0.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
MLT Yield Spread MLT Yield Mean Yield MLT P/BV Mean +1 SD -1 SD
-1 SD +1 SD
Mapletree Commercial Trust Historical Yield Spread Mapletree Commercial Trust Historical P/BV
8.0% 1.5
7.0% 1.4
6.0% 1.3
1.2
5.0%
1.1
4.0%
1.0
3.0% 0.9
2.0% 0.8
0.7
1.0%
0.6
0.0% 2011 2012 2013 2014 2015
2011 2012 2013 2014 2015
MCT Yield Spread MCT Yield Mean Yield MCT P/BV Mean +1 SD -1 SD
-1 SD +1 SD
Page 76 Page 76
Industry Focus
Mapletree Greater China Commercial Trust Historical Mapletree Greater China Commercial Trust Historical
Yield Spread P/BV
9.0% 1.3
8.0%
1.2
7.0%
1.1
6.0%
1.0
5.0%
4.0% 0.9
3.0%
0.8
2.0%
0.7
MAGIC Yield Spread MAGIC Yield Mean

-1 SD +1 SD MAGIC P/BV Mean +1 SD -1 SD
OUE Hospitality Trust Historical Yield Spread OUE Hospitality TrustHistorical P/BV
9.0% 1.10
8.0%
7.0% 1.05
6.0%
1.00
5.0%
4.0%
0.95
3.0%
2.0%
0.90
1.0%
0.0% 0.85
2013 2014 2015 2013 2014 2015
OUEHT Yield Spread OUEHT Yield Mean Yield OUEHT P/BV Mean +1 SD -1 SD
-1 SD +1 SD
Parkway Life REIT Historical Yield Spread Parkway Life REIT Historical P/BV
12.0% 1.8
1.6
10.0%
1.4
8.0% 1.2
1.0
6.0%
0.8
4.0%
0.6
2.0% 0.4
0.2
0.0%
2008 2009 2010 2011 2012 2013 2014 2015 0.0
2008 2009 2010 2011 2012 2013 2014 2015
PREIT Yield Spread PREIT Yield Mean
-1 SD +1 SD PREIT P/BV Mean +1 SD -1 SD
Page 77
Industry Focus
Religare Health Trust Historical Yield Spread Religare Health Trust Historical P/BV
12.0%
1.3
10.0% 1.3
1.2
8.0% 1.2
1.1
6.0%
1.1
4.0% 1.0
1.0
2.0% 0.9
0.9
0.0%
Mar-13
Mar-14
Mar-15
Sep-13
Sep-14
Sep-15
Jan-13
Jan-14
Jan-15
0.8
May-13
May-14
May-15
Nov-12
Jul-13
Nov-13
Jul-14
Nov-14
Jul-15
Nov-15
2012 2013 2014 2015
RHT Yield Spread RHT Yield Mean Yield RHT P/BV Mean +1 SD -1 SD
-1 SD +1 SD
Soilbuild Business Space REIT Historical Yield Spread Soilbuild Business Space REIT Historical P/BV
10.0% 1.30
9.0%
8.0% 1.20
7.0%
6.0% 1.10
5.0%
1.00
4.0%
3.0% 0.90
2.0%
1.0% 0.80
0.0%
0.70
SBREIT Yield Spread SBREIT Yield Mean Yield

-1 SD +1 SD SBREIT P/BV Mean +1 SD -1 SD
SPH REIT Historical Yield Spread SPH REIT Historical P/BV

7.0%
1.20
6.0%
1.15
5.0%
1.10
4.0%
1.05
3.0%
1.00
2.0%
0.95
1.0%
0.90
0.0% 2013 2014 2015
2013 2014 2015
SPH REIT Yield Spread SPH REIT Yield SPH REIT P/BV Mean +1 SD -1 SD
Mean Yield -1 SD
Page 78 Page 78
Industry Focus
Starhill Global REIT Historical Yield Spread Starhill Global REIT Historical P/BV
18.0%
1.2
16.0%
1.0
14.0%
12.0% 0.8
10.0%
0.6
8.0%
6.0% 0.4
4.0% 0.2
2.0%
0.0
0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015
2007 2008 2009 2010 2011 2012 2013 2014 2015
SGREIT Yield Spread SGREIT Yield Mean Yield SGREIT P/BV Mean +1 SD -1 SD
-1 SD +1 SD
Suntec REIT Historical Yield Spread Suntec REIT Historical P/BV

25.0% 1.6
1.4
20.0%
1.2
15.0% 1.0
0.8
10.0%
0.6
0.4
5.0%
0.2
0.0% 0.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 201 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 201
Suntec Yield Spread Suntec Yield Mean Suntec P/BV Mean +1 SD -1 SD
-1 SD +1 SD
12. Source: Bloomberg Finance L.P, DBS Bank
Page 79
Industry Focus
13. Charts – Developers (Price to Book and Price to RNAV )
CapitaLand P/RNAV CapitaLand P/Bk NAV

3.5
80%
60% 3.0
40%
2.5
20%
0% 2.0
-20%
1.5
-40%
-60% 1.0
-80%
0.5
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
CAPL Disc to RNAV Mean +1 SD -1 SD
P/BV Mean ‐1 SD +1 SD
City Developments P/RNAV City Developments P/NAV

4.0
80%
60% 3.5
40% 3.0
20% 2.5
0% 2.0
-20%
1.5
-40%
1.0
-60%
0.5
-80%
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 0.0
CIT Disc to RNAV Mean +1 SD -1 SD

Wingtai P/RNAV Wingtai P/NAV

40% 2.5
20%
2.0
0%
-20% 1.5
-40%
1.0
-60%
-80% 0.5
-100%
1997
1998
1999
2000
2002
2003
2004
2005
2007
2008
2009
2010
2012
2013
2014
0.0
Disc to RNAV Mean +1 SD -1 SD P/BV Mean ‐1 SD +1 SD
Page 80 Page 80
Industry Focus
UOL P/RNAV UOL P/NAV

1.6
10%
0% 1.4
-10%
-20% 1.2
-30% 1.0
-40%
-50% 0.8
-60%
0.6
-70%
-80% 0.4
-90%
0.2
-100%
1997
1998
1999
2000
2002
2003
2004
2005
2007
2008
2009
2010
2012
2013
2014
0.0

GLP P/RNAV GLP P/NAV

20% 5.1
10% 4.6
4.1
0%
3.6
-10%
3.1
-20% 2.6
-30% 2.1
1.6
-40%
1.1
-50%
2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 0.6
2010 2011 2012 2013 2014 2015
Page 81
Industry Focus
Property Developers P/RNAV Property Developers P/NAV

40.0% 3.0
20.0% 2.5
2.0
0.0%
1.5
-20.0%
1.0
-40.0%
0.5
-60.0%
0.0
Sep 08
Sep 11
Sep 02
Sep 05
Sep 14
Mar 07
Mar 10
Mar 13
Mar 01
Mar 04
Jun 09
Jun 12
Jun 03
Jun 06
Jun 15
Dec 13
Dec 07
Dec 10
Dec 01
Dec 04
-80.0%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Disc to RNAV Mean +1 SD -1 SD P/BV P/BV (ex-GLP) Mean -1 SD +1 SD
Page 82 Page 82
Industry Focus
14. Charts – Implied price per key
CDL Hospitality Trust Implied price per key CDL Hospitality Trust Implied price per key

1,200,000 230 1,200,000 260
250
1,000,000 210 1,150,000
240
800,000 190 1,100,000
230
600,000 170 1,050,000
220
400,000 150 1,000,000

Price per key (S$) (LHS) Price per key (S$) (LHS) 210
200,000 Quarterly RevPAR (S$) (RHS) 130 950,000

RevPAR MOS (S$) (LHS) 200
0 110 900,000 190
Far East Hospitality Trust Implied price per key Frasers Hospitality Trust Implied price per key
1,000,000 240 1,500,000 270
950,000 220 1,400,000 260
900,000
200
1,300,000 250
850,000
180
1,200,000 240
800,000
160
750,000 1,100,000 230
Price per key (S$) (LHS) Price per key (S$) (LHS)
140
700,000
Hotel RevPAR (S$) (RHS) 1,000,000 RevPAR (S$) (RHS) 220
650,000 120
RevPAU Serviced Residence (S$) (RHS)
900,000 210
600,000 100
Page 83
Industry Focus
Property Stock Profiles
Page 84 Page 84
Singapore Company Guide
CapitaLand
Edition 1 Version 1 | Bloomberg: CAPL SP | Reuters: CATL.SI Refer to important disclosures at the end of this report
BUY Towards An Optimal Mix

Last Traded Price: S$3.29 (STI : 2,834.23) Driven by an improved outlook in China. We maintain our
Price Target : S$3.73 (13% upside) BUY call with a target price of S$3.73 based on a 25% discount
to our RNAV. We believe that CAPL offers value, trading at an
Potential Catalyst: Asset Recycling, strong operating results attractive 0.8x P/Bk and 0.6x P/RNAV. We expect the group’s
Where we differ: Different estimates of % completion strategy to focus on growing its commercial portfolio, and
Analyst coupled with opportunistic asset recycling of mature assets into
Derek Tan +65 6682 3716 derektan@dbs.com its listed REITs/funds will present upside to our earnings.
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com
Growing recurring revenues from its retail malls portfolio
and Ascott. Its current property portfolio has up to 75% of its
Price Relative assets in retail malls, and commercial integrated developments,
S$ Relative Index including Ascott Group, which offer strong income visibility in
4.0
210 the medium term. We see improved operating performance for
190
its malls, as the properties reach maturity, boosted by the
3.5 170
150
completion of four Raffles City mega developments in China in
3.0
130 the medium term.
2.5
110
2.0
Jan-12 Jan-13 Jan-14 Jan-15
90
Jan-16 Launch of new PE funds to boost returns. Leveraging on its
CapitaLand (LHS) Relative STI INDEX (RHS) fund management expertise, CAPL aims to launch 5-6 private
equity funds with funds under management of S$8bn-10bn by
Forecasts and Valuation
FY Dec (S$m) 2014A 2015F 2016F 2017F 2020. We think that by tapping on third party capital, CAPL
Revenue 3,925 3,728 4,187 5,363 would be able to leverage on its larger scale to achieve better
EBITDA 2,444 1,662 1,763 2,044 economies of scale, capitalise on market opportunities and at
Pre-tax Profit 1,997 1,161 1,238 1,498 the same time de-risk its property level exposure.
Net Profit 1,161 714 762 921
Net Pft (Pre Ex.) 1,161 714 762 921
EPS (S cts) 27.3 16.8 17.9 21.6
Valuation:
EPS Pre Ex. (S cts) 27.3 16.8 17.9 21.6 Our target price of S$3.73 is based on a 25% discount to our
EPS Gth (%) 33 (38) 7 21 RNAV of S$4.97/share. Our RNAV is based on our estimates of
EPS Gth Pre Ex (%) 33 (38) 7 21 the market valuation of its various property developments and
Diluted EPS (S cts) 36.9 16.8 17.9 21.6
Net DPS (S cts) 9.00 8.00 8.00 8.00 investment property assets across its various divisions.
BV Per Share (S cts) 394 401 411 425
PE (X) 12.1 19.6 18.4 15.2 Key Risks to Our View:
PE Pre Ex. (X) 12.1 19.6 18.4 15.2 Slowdown in Asian economies. The risk to our view is if
P/Cash Flow (X) 14.0 28.8 32.8 9.1
EV/EBITDA (X) 13.7 20.7 20.0 17.2 there is a slowdown in Asian economies, especially China,
Net Div Yield (%) 2.7 2.4 2.4 2.4 which could dampen demand for housing and private
P/Book Value (X) 0.8 0.8 0.8 0.8 consumption expenditure and retail sales.
Net Debt/Equity (X) 0.6 0.6 0.6 0.6
ROAE (%) 7.1 4.2 4.4 5.2 At A Glance
Earnings Rev (%): - - - Issued Capital (m shrs) 4,248
Consensus EPS (S cts): 16.3 17.7 19.5 Mkt. Cap (S$m/US$m) 13,976 / 9,803
Other Broker Recs: B: 17 S: 0 H: 4 Major Shareholders
Source of all data: Company, DBS Bank, Bloomberg Finance L.P Temasek Holdings Pte Ltd (%) 39.6
Blackrock (%) 6.0
Free Float (%) 54.4
3m Avg. Daily Val (US$m) 24.4
ICB Industry : Real Estate / Real Estate
ASIAN INSIGHTS VICKERS SECURITIES

Page 85
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Company Guide
CapitaLand
Revenue growth
CRITICAL DATA POINTS TO WATCH
6,000.0
S $'m
Earnings Drivers: 5,000.0
Growing recurring revenues from its retail malls

4,000.0
portfolio and Ascott. While trading properties (residential
development and strata offices) comprise 25% of assets, we 3,000.0
see continued strength from CAPL’s retail malls division
(CapitaMalls Asia) and commercial integrated developments, 2,000.0
including Ascott Group and its successful serviced residence

1,000.0
brand, which forms a significant 75% of total assets and is
expected to contribute to growing recurring income for the -
group. 13A 14A 15F 16F 17F
Looking ahead, CapitaMalls Asia continues to perform % Breakdown of assets by segments
steadily. There are 88 operating properties across Asia (54 of Others, 1%

it in China). As of Sep-15, the group’s shopping malls Serviced
Residences ,
continue to see healthy sales and occupancy. Shopper traffic 16% Residential &
Strata Sales,
at its malls in Singapore and China rose 4.1% and 9.2% y-o-y 25%
in 9M15 respectively. Looking ahead, CAPL is expected to
open another 17 properties (10 in China) in the coming years.
In addition, Raffles City integrated developments in China will Shopping Malls,

continue to offer stable returns (7-8% for stabilised 23%
Commercial &
properties in Shanghai and Beijing, c.3% for stabilising Integrated Devt,
35%
properties in Chengdu and Ningbo). Looking ahead, the
group will be opening 4 more Raffles City developments in
2015-2018, which will boost the group’s returns and Breakdown of Mall portfolio (% by country)
profitability when completed. Japan, 1% India, 2%
Malaysia, 4%
The Ascott Limited remains on the fast track to achieve its
80,000 units target by year 2020. Ascott recently invested
Singapore, 41%
over S$120m in China’s largest and fastest growing online
apartment sharing platform, Tujia which we believe enables
the group to extract synergies and leverage on Tujia’s
platform to reach out to a wider addressable market. The
China, 52%
group also recently launched a US$600m joint venture fund
with Qatar Investment Authority to invest in value-added
opportunities globally. This fund, when fully vested, will offer
its REIT, Ascott Residence Trust (ART) a viable acquisition
pipeline in the medium term. RNAV breakdown
Segments S$’m
Launch of new PE funds. Leveraging on its fund Value of CapitaLand Singapore 7,141.1
management expertise, CAPL aims to launch 5-6 private Value of CapitaLand China 10,871.3
equity funds with funds under management of S$8-10bn by CapitaMalls Asia 17,303.4
2020. We think that by tapping on third party capital, CAPL Ascott 4,222.9
would be able to leverage on larger economies of scale,
Others 846.8
better capitalise on market opportunities and at the same
GDV of CAPL Group 40,385.5
time de-risk its property level exposure. This strategy will be
Less: Net Debt (11,552.3)
able to deliver medium term shareholder ROE of 8-12%.
Less: devt capex (7,775.8)
RNAV of CAPL 21,177.5
Total Shares 4,247.6
RNAV per share 4.97
Discount to RNAV 25%
Target price 3.73
Source: Company, DBS Bank

Page 42 Page 86
Company Guide
CapitaLand
Leverage & Asset Turnover (x)

Balance Sheet: 0.2
0.80
Balance sheet remains strong. We forecast debt/equity 0.2
0.70 0.2
ratio to remain stable at c.0.6x over the coming years (0.51x 0.60 0.1
as of end-3Q15). Debt maturity profile remains long at 3.3 0.50 0.1
years (as of 3Q15) with an average cost of 3.5%. 0.40

0.1
Approximately 70% of the interest cost is hedged into fixed 0.30

0.1
0.1
rate debt. 0.20
0.0
0.10 0.0
0.00 0.0
Share Price Drivers: 2013A 2014A 2015F 2016F 2017F
De-risking its Singapore residential exposure/ Gross Debt to Equity (LHS) Asset Turnover (RHS)
replenishing landbank. CAPL has been actively de-risking

Capital Expenditure
its Singapore residential exposure through active marketing of S$m
its unsold units, which as of 3Q15, stands at S$2.7bn in 1,000.0
900.0
value. This is only c. 3% of its total asset value, and is not 800.0
likely to have a major impact on earnings. Looking ahead, 700.0

600.0
while the group has not been an active investor in 500.0
Singapore’s residential market, winning any new land tenders 400.0

300.0
will imply improved confidence in the outlook for Singapore’s 200.0
residential market in the medium term. 100.0

0.0
2013A 2014A 2015F 2016F 2017F
Relaxation of government policies. Expectations of policy Capital Expenditure (-)
relaxation (especially cyclical measures like the Buyers’ and ROE (%)
Sellers’ stamp duties) may improve buyers’ market sentiment 7.0%
and spark a revival in transactional volumes in the Singapore 6.0%
residential market. This is also expected to lift sentiment on 5.0%

property stocks, which we believe will enable CAPL to close
4.0%
the gap between stock price and its NAV.
3.0%
Asset recycling into listed S-REITs CAPL will continue to 2.0%
demonstrate its ability to crystallise value through strategic 1.0%
divestments of mature assets to its listed REITs, which are 0.0%

2013A 2014A 2015F 2016F 2017F
market leaders in their respective subsectors of retail, office
and hospitality. The ability to recycle capital efficiently will Forward PE Band (x)
enable the group to free up capital, improve its balance sheet (x)
position and deploy capital to projects with higher returns. 23.0
+2sd: 21.7x
21.0
Key Risks: 19.0 +1sd: 18.8x

Slowdown in Asian economies. The risk to our view is a 17.0
Avg: 15.9x
slowdown in Asian economies which could dampen demand 15.0
for housing and private consumption expenditure and retail 13.0 ‐1sd: 13x
sales. This in turn could result in slower-than-expected 11.0
‐2sd: 10.1x
projections. 9.0
Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Company Background PB Band (x)

CapitaLand is one of Asia’s largest real estate companies 1.3
(x)
headquartered and listed in Singapore. Its two core markets 1.2
are Singapore and China, while Indonesia, Malaysia and 1.1
Vietnam have been identified as new growth markets. 1.0

+2sd: 1.04x
+1sd: 0.94x
0.9
Avg: 0.85x
0.8
‐1sd: 0.76x
0.7
‐2sd: 0.67x
0.6
0.5

Page 87Page 43
Company Guide
CapitaLand
Segmental Breakdown
FY Dec 2013A 2014A 2015F 2016F 2017F
Revenues (S$m)
CapitaLand Singapore 1,237 1,242 1,002 1,021 1,213 Driven by locked-in sales
CapitaLand China 899 638 1,140 1,452 2,227 from China and
CMA 641 1,178 761 842 999
Ascott 635 683 681 725 775
Retail Malls, Ascott to
Others 99.0 185 144 147 149 deliver consistent returns
Total 3,511 3,925 3,728 4,187 5,363
Income Statement (S$m)

FY Dec 2013A 2014A 2015F 2016F 2017F
Revenue 3,511 3,925 3,728 4,187 5,363
Cost of Goods Sold (2,274) (2,543) (1,761) (2,093) (2,962)
Gross Profit 1,237 1,382 1,967 2,095 2,401
Other Opng (Exp)/Inc 72.5 27.7 (539) (566) (594)
Operating Profit 1,310 1,410 1,428 1,529 1,807
Other Non Opg (Exp)/Inc 0.0 0.0 0.48 0.48 0.48
Associates & JV Inc 903 970 168 169 171
Net Interest (Exp)/Inc (402) (382) (436) (460) (481)
Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0
Pre-tax Profit 1,811 1,997 1,161 1,238 1,498
Tax (205) (238) (209) (223) (270)
Minority Interest (731) (599) (238) (254) (307)
Preference Dividend 0.0 0.0 0.0 0.0 0.0
Net Profit 875 1,161 714 762 921
Net Profit before Except. 875 1,161 714 762 921
EBITDA 2,275 2,444 1,662 1,763 2,044
Growth
Revenue Gth (%) 6.4 11.8 (5.0) 12.3 28.1
EBITDA Gth (%) 25.3 7.4 (32.0) 6.1 15.9
Opg Profit Gth (%) 40.3 7.6 1.3 7.0 18.2
Net Profit Gth (Pre-ex) (%) 12.8 32.7 (38.5) 6.6 21.0
Margins & Ratio
Gross Margins (%) 35.2 35.2 52.8 50.0 44.8
Opg Profit Margin (%) 37.3 35.9 38.3 36.5 33.7
Net Profit Margin (%) 24.9 29.6 19.2 18.2 17.2
ROAE (%) 5.6 7.1 4.2 4.4 5.2
ROA (%) 2.1 2.6 1.6 1.7 2.1
ROCE (%) 3.0 3.0 2.9 3.0 3.4
Div Payout Ratio (%) 39.0 33.0 47.7 44.7 37.0
Net Interest Cover (x) 3.3 3.7 3.3 3.3 3.8

Page 44 Page 88
Company Guide
CapitaLand
Quarterly / Interim Income Statement (S$m)

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Revenue 919 1,518 915 1,031 1,076

Cost of Goods Sold (610) (1,080) (553) (637) (738)
Gross Profit 309 438 362 394 338
Other Oper. (Exp)/Inc (91.6) (173) (116) (88.0) (30.2)
Operating Profit 218 265 245 306 308
Net Interest (Exp)/Inc (96.5) (97.6) (107) (112) (105)
Exceptional Gain/(Loss) 0.0 248 0.0 322 0.0
Pre-tax Profit 245 747 263 753 343
Tax (47.5) (104) (50.6) (144) (64.4)
Minority Interest (67.6) (227) (51.6) (146) (85.6)
Net Profit 130 416 161 464 193
Net profit bef Except. 130 168 161 142 193
EBITDA 342 596 371 543 448
Growth
Revenue Gth (%) 5.0 65.2 (39.7) 12.7 4.3
EBITDA Gth (%) (40.8) 74.6 (37.8) 46.3 (17.4)
Opg Profit Gth (%) 7.5 21.9 (7.6) 24.9 0.5
Net Profit Gth (Pre-ex) (%) (43.6) 29.1 (3.9) (12.2) 36.1
Margins
Gross Margins (%) 33.7 28.9 39.5 38.2 31.4
Opg Profit Margins (%) 23.7 17.5 26.8 29.7 28.6
Net Profit Margins (%) 14.1 27.4 17.6 45.0 17.9
Balance Sheet (S$m)

FY Dec 2013A 2014A 2015F 2016F 2017F
Net Fixed Assets 666 1,047 1,922 2,021 2,121

Invts in Associates & JVs 12,673 12,781 13,040 13,300 13,561
Other LT Assets 16,583 18,705 18,430 18,930 19,430
Cash & ST Invts 6,393 2,941 2,489 2,201 3,017
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 1,167 963 909 1,021 1,308
Other Current Assets 7,579 7,676 7,043 6,830 6,093
Total Assets 45,063 44,113 43,833 44,304 45,529
ST Debt 1,280 3,469 3,469 3,469 3,469

Creditor 2,889 3,070 1,956 1,292 1,130
Other Current Liab 478 463 527 606 733
LT Debt 14,656 12,517 13,017 13,517 14,017
Other LT Liabilities 1,305 1,386 1,386 1,386 1,386
Shareholder’s Equity 16,109 16,758 17,089 17,510 18,090
Minority Interests 8,346 6,451 6,389 6,524 6,704
Total Cap. & Liab. 45,063 44,113 43,833 44,304 45,529
Non-Cash Wkg. Capital 5,379 5,107 5,469 5,954 5,538

Net Cash/(Debt) (9,543) (13,045) (13,997) (14,785) (14,469)
Debtors Turn (avg days) 137.9 99.1 91.7 84.1 79.3
Creditors Turn (avg days) 433.2 438.9 541.0 292.3 152.6
Inventory Turn (avg days) N/A N/A N/A N/A N/A
Asset Turnover (x) 0.1 0.1 0.1 0.1 0.1 Gearing to remain
Current Ratio (x) 3.3 1.7 1.8 1.9 2.0 stable
Quick Ratio (x) 1.6 0.6 0.6 0.6 0.8
Net Debt/Equity (X) 0.4 0.6 0.6 0.6 0.6
Net Debt/Equity ex MI (X) 0.6 0.8 0.8 0.8 0.8
Capex to Debt (%) 0.5 0.8 5.7 1.0 0.9
Z-Score (X) 1.2 1.1 1.1 1.1 1.1

Page 89Page 45
Company Guide
CapitaLand
Cash Flow Statement (S$m)

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Profit 1,811 1,997 1,161 1,238 1,498

Dep. & Amort. 62.8 64.6 65.0 65.0 65.0
Tax Paid (223) (256) (145) (144) (143)
Assoc. & JV Inc/(loss) (903) (970) (168) (169) (171)
Chg in Wkg.Cap. (53.7) 51.9 (427) (564) 289
Other Operating CF 262 111 0.0 0.0 0.0
Net Operating CF 956 999 487 427 1,538
Capital Exp.(net) (76.6) (127) (939) (164) (164)
Other Invts.(net) (190) (1,357) 275 (500) (500)
Invts in Assoc. & JV 57.0 841 (150) (150) (150)
Div from Assoc & JV 439 406 58.9 59.0 59.9
Other Investing CF 141 (102) 0.0 0.0 0.0
Net Investing CF 370 (339) (756) (755) (755)
Div Paid (688) (705) (683) (460) (468)
Chg in Gross Debt 280 177 500 500 500
Capital Issues 1.64 1.38 0.0 0.0 0.0
Other Financing CF (464) (3,746) 0.0 0.0 0.0
Net Financing CF (869) (4,272) (183) 40.3 32.4
Currency Adjustments 352 55.0 0.0 0.0 0.0
Chg in Cash 809 (3,557) (452) (288) 816
Opg CFPS (S cts) 23.8 22.2 21.4 23.3 29.3
Free CFPS (S cts) 20.7 20.5 (10.6) 6.17 32.3
Target Price & Ratings History
3.94 S$
4 Closing T arget
S.No. Dat e Rat ing
2 Pric e Price
3.74
1: 26 J an 15 3.53 3.84 BUY
2: 18 F eb 15 3.68 3.88 BUY
3.54 5
6 3: 17 Mar 15 3.50 3.88 BUY
1 3 4: 04 May 15 3.76 4.11 BUY
3.34 8
7 5: 25 J un 15 3.46 4.11 BUY
10 12 6: 14 J ul 15 3.38 4.11 BUY
3.14 13
11 7: 15 J ul 15 3.40 4.11 BUY
8: 10 Aug 15 3.22 4.11 BUY
2.94 9: 31 Aug 15 2.82 3.73 BUY
10: 12 Oct 15 3.13 3.73 BUY
2.74 9 11: 05 Nov 15 3.20 3.73 BUY
12: 23 Nov 15 3.10 3.73 BUY
2.54 13: 17 Dec 15 3.26 3.73 BUY
Jan-15 May-15 Sep-15 Jan-16
Not e : Share price and Target price are adjusted for corporate actions.
Source: DBS Bank

Page 46 Page 90
City Developments
Edition 1 Version 1 | Bloomberg: CIT SP | Reuters: CTDM.SI Refer to important disclosures at the end of this report
DBS Group Research . Equity 21 Dec 2015
BUY Diversification to pay dividends

Last Traded Price: S$7.59 (STI : 2,852.84) Attractive valuations with stock trading below GFC low. With
Price Target : S$10.26 (35% upside) the residential transaction market still slow in Singapore,
topline drivers will mainly come from the completion of the
Potential Catalyst: Better than expected operational updates South Beach integrated development in Singapore and
Where we differ: Forecasts driven mainly by higher income from hotel consistent and regular cashflows from its commercial and hotel
segment segments. Despite the soft sentiment in the residential market,
we believe that most negative news have been priced in and
Analyst we see attractive valuations at 0.7x P/Bk which is below the
Derek Tan +65 6682 3716 derektan@dbs.com
GFC low of 0.83x.
Singapore Research Team
Hotel operations offer cashflow stability. City Developments
(CDL) derives close to 63%-69% of topline from its hotel and
Price Relative commercial portfolio, which deliver stable cashflows. Its hotel
S$ Relative Index
division, together with M&C is expected to perform strongly
14.3
13.3
207
from 2015 onwards. This will mainly come from contribution
187
12.3
167
from acquisitions and completed refurbishments across its
properties, which are expected to result in a 3% rise in
11.3
147
10.3
portfolio RevPAR going forward.

127
9.3
8.3 107
7.3 87
6.3 67
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Recycling capital through seeding new investment
City Developments (LHS) Relative STI INDEX (RHS)
platforms. The group has successfully seeded and launched
two investment platforms through a Profit Participation
Forecasts and Valuation Structure (PPS), tapping on 3rd party capital to extract value on
FY Dec (S$m) 2014A 2015F 2016F 2017F
its balance sheet. The group has monetized close to S$2.5bn in
Revenue 3,764 3,194 3,636 3,847
EBITDA 1,294 1,042 1,083 1,116 value and could form new PPS structures, given a stable of
Pre-tax Profit 1,004 749 793 826 commercial properties on its balance sheet.
Net Profit 757 581 616 642
Net Pft (Pre Ex.) 757 581 616 642 Valuation:
EPS (S cts) 83.2 63.9 67.8 70.6
We maintain our BUY call and TP of S$10.26 pegged to 20%
EPS Pre Ex. (S cts) 83.2 63.9 67.8 70.6
EPS Gth (%) 12 (23) 6 4 discount to our RNAV of S$12.82. Supported by a strong
EPS Gth Pre Ex (%) 12 (23) 6 4 balance sheet and diversified earnings base, CDL should be
Diluted EPS (S cts) 79.3 60.9 64.6 67.3 able to weather the current uncertain market conditions well.
Net DPS (S cts) 16.0 12.3 13.0 13.6
BV Per Share (S cts) 925 973 1,028 1,086
PE Pre Ex. (X) 9.1 11.9 11.2 10.8 Decline in residential prices in Singapore. As a proxy to
P/Cash Flow (X) 23.6 14.1 16.2 10.1 Singapore’s residential market, a deteriorating operating
EV/EBITDA (X) 9.3 11.8 11.6 11.3
Net Div Yield (%) 2.1 1.6 1.7 1.8
environment will cap share price performance.
P/Book Value (X) 0.8 0.8 0.7 0.7
Net Debt/Equity (X) 0.3 0.3 0.3 0.3 At A Glance
ROAE (%) 9.4 6.7 6.8 6.7 Issued Capital (m shrs) 909
Earnings Rev (%): - - - Mkt. Cap (S$m/US$m) 6,902 / 4,884
Consensus EPS (S cts): 61.4 67.0 70.1 Major Shareholders
Other Broker Recs: B: 16 S: 2 H: 5 Aberdeen Asset Management (%) 19.0
Hong Leong Holdings (%) 16.4
Source of all data: Company, DBS Bank, Bloomberg Finance L.P Hong Leong Investment (%) 15.4
Free Float (%) 49.2

Page 91
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Company Guide
City Developments
Revenue Growth (%)

CRITICAL DATA POINTS TO WATCH 4,500.0 S$ 'm
4,000.0
South Beach integrated development to drive revenues 3,000.0
in 2016. The progressive completion of the South Beach 2,500.0
integrated development is a key milestone for CDL and 2,000.0
contributor to increased profitability going forward. The 1,500.0
group has secured strong leasing commitments for the office 1,000.0
tower (close to 100%) while the retail podium, 654-room 500.0
hotel (5-star) is on track to open by the end of 2015. CDL will 0.0
2013A 2014A 2015F 2016F 2017F
launch the 190-unit South Beach Residences in 1H16.
Singapore residential outlook still muted. The ongoing

% Contribution to topline (by segments)
tight government measures have taken a toll on the group’s
100%
residential business segment, with group staying selective on 90%
landbanking activities. However, CDL has been active in the 80%
Executive Condos (ECs) segment; The Brownstone EC and 70%
The Criteron saw brisk sales when launched. 60%
50%
40%
Boost in Hotel revenues to provide steady cashflows.
30%
M&C’s revenue and profits (c. 46-52% of topline in FY15-
20%
16F) are expected to perform strongly completed acquisitions
10%
in 2014 while completed refurbishments across its properties 0%
are expected to give a boost to RevPAR. Looking ahead, 2013A 2014A 2015F 2016F 2017F
overall RevPAR is expected to increase by 3%-5% y-o-y with Hotel operations Rental income Property devt
hotels in Europe and the US moving ahead in terms of

Hotel Segment growing strongly
performance. In addition, there is an additional c.6,445
1,850.0 S$'m 54%
rooms in the pipeline (mainly management contracts) which 1,800.0
52%
will boost total rooms under management by 18%. 1,750.0
1,700.0 50%
The group’s investment property division (office and retail 1,650.0 48%
1,600.0
malls mainly in Singapore) is projected to offer steady returns. 46%
1,550.0
In total, the hotel and investment property divisions 1,500.0 44%
contribute c. 63-69% of revenues. 1,450.0
42%
1,400.0
Looking overseas to sustain growth. The ongoing tight 1,350.0 40%

2013A 2014A 2015F 2016F 2017F
government measures have taken a toll on transaction Revenue % of topline
volumes for its residential business segment in Singapore.CDL
has in recent years deployed capital to China and UK to boost RNAV
returns. CDL has invested close to GBP 441m (as of 4Q15) in RNAV S$'m
eight projects in the UK, which are in various stages of Investment Portfolio (office) 3,528.3
obtaining government approvals to be re-launched from Investment Portfolio (mixed Development ) 1,447.6
2016 onwards. In China, there are various residential projects Investment Portfolio (hotels) 1,071.5
that are already ready for launch and should perform well Investment Portfolio (retail) 884.1
given improved buyers’ sentiment. Investment Portfolio (industrial and others) 137.4
GDV of residential portfolio 4,889.0
Recycling capital through seeding new investment Listed Stakes in :
platforms. The group has successfully seeded and launched M&C 2,358.9
two investment platforms through a Profit Participation CDL HT 331.9
Structure (PPS), tapping on 3rd party capital to extract value on Others 56.8
its balance sheet. The group has monetized close to S$2.5bn Gross Asset Value 14,705.6
in value and could form new structures, given a stable of Less: pref conversion / debt (2,462.4)
commercial properties on its balance sheet. RNAV of CDL 12,242.2
No of shares 954.3
RNAV/share 12.8
Discount -20%
TP 10.26

Page 48 Page 92
Company Guide
City Developments

Balance Sheet: 0.3
0.80
Undervalued Net Asset Value (NAV). As at end-3Q15,
0.70
NAV per unit rose to S$9.53. As the group has chosen to 0.60
0.3
account for investment properties on a historical cost basis, its 0.50

NAV is conservative as we estimate that current fair values of 0.40
0.2
CDL’s properties are much higher than carrying values. 0.30
0.20 0.2
Low gearing of 27%. CDL’s gearing is estimated to remain 0.10
low at < 30% (and closer to mid-teens assuming that its 0.00
2013A 2014A 2015F 2016F 2017F
0.1
investment property values are marked-to-market) which is Gross Debt to Equity (LHS) Asset Turnover (RHS)
within the management’s comfortable range. This provides

Capital Expenditure
greater financial flexibility and debt headroom for the group S$m
to acquire opportunistically. 1,000.0
900.0
800.0
Share Price Drivers: 700.0

600.0
Replenishing land bank key to income sustainability. 500.0
Currently the group has 2.6 sq ft of development space in 400.0

300.0
local and overseas (China and UK) markets. The group is 200.0
actively looking to replenish its land bank especially in 100.0

0.0
Singapore and has been selective given the sustained high 2013A 2014A 2015F 2016F 2017F
land prices seen in recent government land tenders. The Capital Expenditure (-)
ability to secure additional land bank at lower prices will ROE (%)
mean upside to RNAVs and could re-rate the stock. 9.0%
8.0%
Relaxation of property cooling measures in Singapore. 7.0%
Expectations of policy relaxation (especially cyclical measures 6.0%
like the Buyers’ and Sellers’ stamp duties) may improve 5.0%
4.0%
sentiment and spark a revival in transaction volumes in the
3.0%
Singapore residential market. This would also lift sentiment 2.0%
on property stocks, which we believe will enable CDL to close 1.0%
the gap between stock price and its NAV. 0.0%

2013A 2014A 2015F 2016F 2017F
Key Risks: Forward PE Band (x)

Decline in residential prices in Singapore. Seen as a proxy to (x)
Singapore’s residential market, a worsening of the operating 19.3
environment is expected to cap any upside potential for the 17.3

+2sd: 18.2x
stock. +1sd: 16.4x
15.3
Avg: 14.5x
Interest rate risk. A rise in interest rates will have a negative 13.3
‐1sd: 12.7x
impact on property transactions, given lower affordability
11.3
and thus could adversely affect the group’s outlook. ‐2sd: 10.8x
9.3
Dec-11 Dec-12 Dec-13 Dec-14
Company Background
City Developments Limited is one of the pioneers in PB Band (x)
Singapore's property sector. It is a property and hotel (x)
conglomerate involved in real estate development and 1.8
investment, hotel ownership and management, and facilities 1.6 +2sd: 1.59x

management. 1.4 +1sd: 1.4x
1.2 Avg: 1.21x
1.0 ‐1sd: 1.02x
0.8 ‐2sd: 0.83x
0.6
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15

Page 93Page 49
Company Guide
City Developments
Segmental Breakdown
FY Dec 2013A 2014A 2015F 2016F 2017F
Revenues (S$m)
Property devt 1,198 1,581 997 1,294 1,436
Rental income 379 385 402 449 477
Hotel operations 1,529 1,678 1,675 1,773 1,814
Others 107 120 120 120 120
Total 3,213 3,764 3,194 3,636 3,847

Pre-tax Profit (S$m)
Property devt 388 487 370 338 378
Rental income 300 149 116 166 159 Stable returns from
Hotel operations 163 317 313 332 339 hotel and commercial
Others 97 50 (50) (43) (50) portfolio.
Total 948 1,004 749 793 826
Pre-tax Profit Margins
Property devt 32.4 30.8 37.1 26.1 26.3
Rental income 79.1 38.9 29.0 37.0 33.4
Hotel operations 10.7 18.9 18.7 18.7 18.7
Others 38.3 41.7 13.3 19.2 13.3
Total 27.8 26.7 25.5 23.6 23.2

FY Dec 2013A 2014A 2015F 2016F 2017F
Revenue 3,213 3,764 3,194 3,636 3,847
Gross Profit 1,661 1,632 1,627 1,771 1,865
Other Opng (Exp)/Inc (877) (593) (805) (916) (969)
Operating Profit 784 1,039 822 855 895
Associates & JV Inc 41.4 54.8 20.5 28.1 20.6
Net Interest (Exp)/Inc 123 (90.5) (93.5) (90.5) (90.4)
Pre-tax Profit 948 1,004 749 793 826
Tax (69.6) (95.1) (69.0) (72.4) (76.3)
Minority Interest (192) (139) (85.9) (91.0) (94.7)
Preference Dividend (12.9) (12.9) (12.9) (12.9) (12.9)
Net Profit 673 757 581 616 642
Net Profit before Except. 673 757 581 616 642
EBITDA 1,014 1,294 1,042 1,083 1,116 Growth mainly from
Growth locked-in residential sales,
Revenue Gth (%) (4.2) 17.1 (15.2) 13.8 5.8 recurring income from
EBITDA Gth (%) (0.2) 27.7 (19.5) 3.9 3.1 investment portfolio
Opg Profit Gth (%) 0.4 32.6 (20.9) 4.0 4.7
Margins & Ratio
Gross Margins (%) 51.7 43.4 50.9 48.7 48.5
ROAE (%) 9.0 9.4 6.7 6.8 6.7
ROA (%) 4.1 4.1 2.9 3.1 3.1
ROCE (%) 4.8 5.5 4.1 4.1 4.2
Div Payout Ratio (%) 21.6 19.2 19.2 19.2 19.2
Net Interest Cover (x) NM 11.5 8.8 9.4 9.9

Page 50 Page 94
Company Guide
City Developments

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Revenue 1,322 847 815 825 809

Cost of Goods Sold (862) (450) (444) (416) (396)
Gross Profit 459 397 371 409 413
Other Oper. (Exp)/Inc (234) 57.1 (221) (219) (258)
Net Interest (Exp)/Inc (26.7) (30.9) (19.1) (14.1) (22.0)
Pre-tax Profit 214 437 169 191 155
Tax (37.2) (24.0) (24.6) (26.2) (24.4)
Minority Interest (49.4) (28.2) (21.0) (31.2) (23.7)
Net Profit 127 385 123 133 106
EBITDA 287 523 242 257 234
Growth
Revenue Gth (%) 53.5 (35.9) (3.8) 1.2 (1.9)
EBITDA Gth (%) 11.7 82.2 (53.6) 5.9 (8.9)
Opg Profit Gth (%) 13.7 101.5 (67.1) 27.4 (18.0)
Net Profit Gth (Pre-ex) (%) (7.7) 202.6 (68.0) 8.5 (20.3)
Margins
Gross Margins (%) 34.8 46.8 45.5 49.6 51.1
Balance Sheet (S$m)

FY Dec 2013A 2014A 2015F 2016F 2017F
Net Fixed Assets 4,399 4,918 5,018 5,118 5,218

Other LT Assets 3,381 3,324 3,324 3,324 3,324
Cash & ST Invts 2,756 3,933 3,784 3,604 3,675
Inventory 8.42 11.2 8.22 9.78 10.4
Debtors 1,642 1,589 1,348 1,534 1,623
Total Assets 17,554 19,701 19,710 20,513 21,215
ST Debt 894 2,233 2,233 2,233 2,233

Creditor 1,327 1,463 1,075 1,280 1,360
LT Debt 4,401 4,466 4,466 4,466 4,466
Other LT Liabilities 493 501 501 501 501
Total Cap. & Liab. 17,554 19,701 19,710 20,513 21,215

Net Cash/(Debt) (2,538) (2,766) (2,915) (3,095) (3,024)
Inventory Turn (avg days) 2.3 1.9 2.6 2.0 2.1
Asset Turnover (x) 0.2 0.2 0.2 0.2 0.2 Balance sheet remains
Current Ratio (x) 3.6 2.6 2.9 2.9 2.9 well capitalised
Quick Ratio (x) 1.8 1.4 1.5 1.4 1.4
Net Debt/Equity (X) 0.3 0.3 0.3 0.3 0.3
Capex to Debt (%) 2.4 14.0 4.5 4.5 4.5
Z-Score (X) 1.8 1.7 1.7 1.7 1.7

Page 95Page 51
Company Guide
City Developments

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Profit 948 1,004 749 793 826

Dep. & Amort. 188 200 200 200 200
Tax Paid (221) (188) (194) (69.0) (72.4)
Assoc. & JV Inc/(loss) (41.4) (54.8) (20.5) (28.1) (20.6)
Chg in Wkg.Cap. (177) (482) (244) (469) (248)
Other Operating CF (19.4) (187) 0.0 0.0 0.0
Net Operating CF 677 292 490 427 684
Capital Exp.(net) (125) (936) (300) (300) (300)
Other Invts.(net) 0.0 0.0 0.0 0.0 0.0
Invts in Assoc. & JV 14.1 828 (200) (200) (200)
Div from Assoc & JV 88.0 17.9 17.9 17.9 17.9 Estimated capex for
Other Investing CF 12.0 47.6 0.0 0.0 0.0 development projects,
Net Investing CF (11.1) (41.8) (482) (482) (482) AEIs
Div Paid (320) (275) (158) (125) (131)
Chg in Gross Debt 397 172 0.0 0.0 0.0
Capital Issues 0.0 0.0 0.0 0.0 0.0
Other Financing CF (243) 842 0.0 0.0 0.0
Net Financing CF (166) 739 (158) (125) (131)
Currency Adjustments 17.5 189 0.0 0.0 0.0
Chg in Cash 517 1,178 (150) (180) 70.9
Opg CFPS (S cts) 93.9 85.1 80.8 98.5 103
Free CFPS (S cts) 60.7 (70.7) 20.9 13.9 42.3

11.17 S$
10.67
10.17 Cl o s i n g Ta rg e t
S.No . Da te R a ti n g
1 Pri c e Pri c e
9.67 2 3
1 17 Feb 15 10.23 11.54 BUY
9.17 2 17 Mar 15 10.05 11.54 BUY
4 3 14 May 15 10.16 11.54 BUY
8.67
4 14 Aug 15 9.16 11.54 BUY
5
8.17 5 31 Aug 15 8.79 10.26 BUY
6 13 Nov 15 7.63 10.25 BUY
7.67
7 16 Dec 15 7.68 10.26 BUY
6 7
7.17 8 8 17 Dec 15 7.54 10.26 BUY
6.67
Dec-14 Apr-15 Aug-15 Dec-15
Source: DBS Bank

Page 52 Page 96
Frasers Centrepoint Ltd
Edition 1 Version 1 | Bloomberg: FCL SP | Reuters: FRCT.SI Refer to important disclosures at the end of this report
BUY An Emerging Contender

Last Traded Price: S$1.68 (STI : 2,834.23) Strong income visibility from locked-in residential sales.
Price Target: S$2.05 (22% upside) Frasers Centrepoint Limited (FCL) continues to offer strong
earnings visibility by having locked-in c.S$3.1bn sales across its
Potential Catalyst: Better-than-expected results/acquisitions various major markets of Singapore, China and Australia. The
Where we differ: We have assumed higher % completion of projects group has executed well which enables it to substantially de-
sold in the initial years risk its exposures in the slowing residential market in
Singapore, while its development projects in Australia are
Analyst
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com mainly in the mass- to mid-end segments which continue to
deliver consistent sales.
Growing recurring revenues from its commercial and

Price Relative hospitality divisions. The group has a long target to grow
S$
2.2
Relative Index
recurring revenues to 60% of total revenues in the medium
2.1 208
term. To reach this target, FCL will be (i) completing a number
2.0 188
1.9
168
of retail and office projects in Singapore by 2018, and (ii)
1.8
1.7 148 Frasers Hospitality is also expected to see its footprint expand
1.6
1.5
128 to 30,000 managed units by 2019. In addition, the recent
1.4
108
acquisition of the Malmaison Hotel du vin Group (MHDV),
1.3 88
Jan-14 Jul-14 Jan-15 Jul-15
which has a portfolio of 29 boutique lifestyle hotels and 2,082
Frasers Centrepoint Ltd (LHS) Relative STI INDEX (RHS) keys within 25 regional cities in the UK, will further deepen its
Forecasts and Valuation presence and clientele reach in Europe.
FY Sep (S$ m) 2014A 2015A 2016F 2017F
Revenue 2,203 3,562 3,105 3,472
Tapping on existing capital-recycling platforms. FCL currently
EBITDA 778 1,146 1,257 1,305 performs capital recycling through its listed REITs which the
Pre-tax Profit 807 1,197 1,022 1,060 group can opportunistically divest mature yield properties to
Net Profit 501 724 597 622
free up capital and reinvest in other higher-ROE projects.
Net Pft (Pre Ex.) 415 483 597 622
EPS (S cts) 17.3 25.0 20.6 21.5
Valuation:
EPS Pre Ex. (S cts) 14.3 16.7 20.6 21.5
EPS Gth (%) (82) 44 (18) 4 We have a BUY recommendation on FCL, with a target price of
EPS Gth Pre Ex (%) (73) 16 24 4 S$2.05 based on a 30% discount to RNAV. We think that FCL
Diluted EPS (S cts) 17.3 25.0 20.6 21.5 is attractive at 0.7x P/Bk NAV and believe that the stock is
Net DPS (S cts) 6.2 8.6 8.6 8.6
BV Per Share (S cts) 222.0 224.9 236.9 249.8
trading at this level largely due to its tight liquidity constraints.
PE (X) 9.7 6.7 8.1 7.8
PE Pre Ex. (X) 11.7 10.0 8.1 7.8
Key Risks to Our View:
P/Cash Flow (X) nm 7.1 41.6 40.1 Dependent on the outlook of Australia's real estate
EV/EBITDA (X) 21.2 15.6 14.7 14.5 market, currency outlook. The group derives an estimated
Net Div Yield (%) 3.7 5.1 5.1 5.1 30% of PBIT and 35% from Australia which is dependent on
P/Book Value (X) 0.8 0.7 0.7 0.7
Net Debt/Equity (X) 0.9 0.8 0.8 0.8 the real estate market and whose returns could be impacted
ROAE (%) 8.4 11.2 8.9 8.8 by the weakening AUD/SGD exchange rate.
Earnings Rev (%): - -
Consensus EPS (S cts): 21.1 20.7 At A Glance
Other Broker Recs: B: 8 S: 0 H: 0 Issued Capital (m shrs) 2,900
Mkt. Cap (S$m/US$m) 4,857 / 3,407
Source of all data: Company, DBS Bank, Bloomberg Finance L.P Major Shareholders
TCC Asets Ltd (%) 59.3
Interbev Investment Ltd (%) 28.5
Free Float (%) 12.2
ICB Industry : Real Estate / Real Estate Investment & Services

Page 97
ed: TH / sa: YM
Company Guide
Revenue Trends
4,000.0
Earnings Drivers: S$'m
3,500.0
Earnings supported by unrecognised revenue. Frasers
Centrepoint Limited (FCL) has locked in S$3.5bn in 3,000.0
development sales across its major markets of Singapore, 2,500.0

China and Australia, which are expected to be recognised
2,000.0
over the coming years. These are from its development
1,500.0
projects in Singapore (S$1.3bn), China (S$0.6bn) and
S$1.6bn from its residential development pipeline in 1,000.0
Australia, underpinning strong income visibility in the medium 500.0

term. ‐
12 13 14 15F 16F 17F
Growing recurring revenues from its commercial and
hospitality divisions. While property development remains FY16F Revenue Breakdown (%)
Others Investment
one of the key drivers to top line, we see continued strength 2% Property
14%
from Frasers Centerpoint Limited's (FCL) investment property
division, including its Frasers Hospitality business. The group Frasers
has a long-term target to grow recurring revenues to 60% of Australand
35%
revenues.
Looking ahead, the investment property division will gain

incremental income from the completions of Punggol Point
Development
(retail), Northpoint City (retail) and Frasers Towers Property
38%
(commercial), which will boost its earnings further while
Hospitality
Centrepoint Mall is expected to undergo a S$50m makeover 11%
to boost traffic and revenues post completion in 2H16.
Contribution from Hospitality & Investment Property
Frasers Hospitality is also expected to see its footprint expand Segments
1,000.00 30%
to 30,000 managed units by 2019. In addition, the recent S$'m
900.00
acquisition of the Malmaison Hotel du vin Group (MHDV), 25%
800.00
which has a portfolio of 29 boutique lifestyle hotels and 700.00
20%
2,082 keys within 25 regional cities in the UK, will further 600.00
deepen its presence and clientele reach. We see cross-selling 500.00 15%
opportunities and synergies between MHDV and the Frasers 400.00
10%
brand, propelling the division’s performance to greater 300.00
heights. 200.00
5%
100.00
‐ 0%
Asset recycling into its listed S-REITs FCL will continue to FY14 FY15F FY16F FY17F
demonstrate its ability to capitalise value by strategically Income (Hospitality & Investment Property) % of topline
divesting matured assets to its listed REITs. The group is thus
able to free up capital, improve its balance sheet position and Pretax Margin Trend (%)
recycle capital to projects with higher returns. 60.0
( %)
50.0
40.0
30.0
20.0
10.0
0.0
12 13 14 15F 16F 17F

Page 98Page 61
Company Guide

Balance Sheet: 0.2
1.00
Balance sheet remains strong. Debt/equity ratio is 0.2
0.2
expected to remain fairly stable at between 0.85-0.9x over 0.80
0.2
FY15F-17F which is within management's comfortable range. 0.60
0.2
Debt maturity profile remains long at 3.3 years with an 0.2
average cost of debt of 3.3%. Fixed rate percentage of its 0.40 0.1
0.1
loans remains high at 73%. 0.20 0.1
0.1
0.00 0.1
Share Price Drivers: 2013A 2014A 2015A 2016F 2017F
Replenishing land bank key to income sustainability. Gross Debt to Equity (LHS) Asset Turnover (RHS)
The group currently has 9.3m sq ft of development space,

Capital Expenditure
mainly in Australia. It is actively looking for efficient means to S$m
replenish its land bank especially in Singapore but remains 1,200.0
selective, given the sustained high land prices seen in recent 1,000.0
government land tenders. The ability to secure additional land 800.0
banks at lower prices will mean upside to RNAVs and could 600.0
re-rate the stock. 400.0
200.0
Relaxation of property cooling measures in Singapore.
0.0
Expectations of policy relaxation (especially cyclical measures 2013A 2014A 2015A 2016F 2017F
like the Buyers’ and Sellers’ stamp duties) might improve Capital Expenditure (-)
buyers’ market sentiment and spark a revival in transactional ROE (%)

volumes in the Singapore residential market. This is also 14.0%
expected to lift sentiment on property stocks, which we 12.0%
believe will enable FCL to close the gap between stock price 10.0%
and its NAV. 8.0%
6.0%
Gains from asset recycling into its listed S-REITs to
boost share prices. Recycling activities are perceived 4.0%
positively by investors as FCL is able to free up capital by 2.0%
selling its matured assets to its listed REITs, which will improve 0.0%
2013A 2014A 2015A 2016F 2017F
the group’s balance sheet position and recycle capital to
projects with higher returns. Forward PE Band (x)
(x)
13.4
12.4
Key Risks: +2sd: 11.8x
11.4
Small free float. The stock has a low free float with 87.9%
10.4
+1sd: 10.7x
of the company held by major shareholders TCC Group and
Avg: 9.5x
Thai Beverage, thus leading to low liquidity. 9.4
8.4 ‐1sd: 8.4x
Dependent on the outlook of Australia's real estate market, 7.4

‐2sd: 7.2x
currency outlook. The group derives an estimated 30% of 6.4

PBIT and 35% from Australia which is dependent on the real
estate market and whose returns could be impacted by the PB Band (x)
weakening AUD/SGD exchange rate. 1.1
(x)
1.0 +2sd: 0.99x
0.9
Company Background
0.8 +1sd: 0.82x
FCL is a one of Singapore’s main real estate companies with
0.7
assets exceeding S$23bn as of Jun-15. The group has four 0.6
Avg: 0.64x
key core businesses focused on residential, commercial, 0.5

‐1sd: 0.47x
hospitality and industrial sectors spanning 77 cities across 0.4
Asia, Australasia, Europe and the Middle East. 0.3 ‐2sd: 0.3x

0.2

Page 62 Page 99
Company Guide
Income Statement (S$ m)

FY Sep 2013A 2014A 2015A 2016F 2017F
Revenue 2,053 2,203 3,562 3,105 3,472
Gross Profit 812 771 1,082 1,366 1,363
Operating Profit 512 620 825 1,153 1,125
Other Non Opg (Exp)/Inc 0 0 0 0 0
Exceptional Gain/(Loss) 322 86 241 0 0
Top line driven by (i) steady
Pre-tax Profit 832 807 1,197 1,022 1,060
growth of investment
Tax (97) (128) (184) (153) (159) property division, new
Minority Interest (13) (179) (241) (207) (215) income from expanded
Preference Dividend 0 0 (47) (64) (64) portfolio from Fraser
Net Profit 722 501 724 597 622 Hospitality and revenue
Net Profit before Except. 400 415 483 597 622 recognition from its
EBITDA 579 778 1,146 1,257 1,305 development projects
Growth
Revenue Gth (%) 45.4 7.3 61.7 (12.8) 11.8
EBITDA Gth (%) 45.6 34.3 47.2 9.7 3.8
Opg Profit Gth (%) 45.4 21.3 33.0 39.6 (2.4)
Net Profit Gth (Pre-ex) (%) 58.6 3.6 16.6 23.6 4.1
Margins & Ratio
Gross Margins (%) 39.5 35.0 30.4 44.0 39.3
ROAE (%) 13.9 8.4 11.2 8.9 8.8
ROA (%) 6.9 3.2 3.3 2.5 2.4
ROCE (%) 5.3 3.7 3.4 4.4 4.1
Div Payout Ratio (%) 20.8 35.8 34.4 41.7 40.0

Page 100Page 63
Company Guide
Quarterly / Interim Income Statement (S$ m)

FY Sep 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015
Revenue 815 1,072 442 1,010 1,037

Cost of Goods Sold (723) (631) (126) (547) (1,176)
Gross Profit 91 441 316 464 (138)
Other Oper. (Exp)/Inc 103 (161) (143) (202) 249
Other Non Opg (Exp)/Inc (1) 0 0 0 0
Pre-tax Profit 320 294 195 292 416
Tax (58) (48) (20) (54) (63)
Net Profit 183 187 143 182 213
EBITDA 241 337 214 333 292
Boosted by gains from
Growth property development
Revenue Gth (%) 107.6 31.6 (58.8) 128.8 2.7 segment in the quarter
EBITDA Gth (%) 49.2 40.0 (36.4) 55.3 (12.3)
Opg Profit Gth (%) 58.7 44.1 (38.1) 51.1 (57.9)
Net Profit Gth (Pre-ex) (%) (9.3) 93.1 (41.2) 82.2 (81.9)
Margins
Gross Margins (%) 11.2 41.1 71.5 45.9 (13.3)
Balance Sheet (S$ m)

FY Sep 2013A 2014A 2015A 2016F 2017F
Net Fixed Assets 32 1,415 1,991 1,951 1,911

Invts in Associates & JVs 1,056 806 585 649 788
Other LT Assets 3,396 12,652 14,150 14,299 14,449
Cash & ST Invts 507 904 1,393 1,547 1,704
Inventory 4 4 7 8 10
Debtors 303 812 844 1,035 496
Total Assets 10,445 21,291 23,067 25,599 27,307
ST Debt 629 1,538 1,020 1,020 1,020

Creditor 1,725 1,594 1,315 2,832 3,447
LT Debt 1,175 7,824 9,255 9,755 10,255
Other LT Liabilities 1,321 555 608 608 608
Minority Interests 27 2,612 2,848 3,055 3,270
Total Cap. & Liab. 10,445 21,291 23,067 25,599 27,307

Net Cash/(Debt) (1,298) (8,458) (8,882) (9,229) (9,571)
Asset Turnover (x) 0.2 0.1 0.2 0.1 0.1 Gearing remains steady
Current Ratio (x) 2.4 2.0 2.5 2.2 2.2 at 0.8x
Quick Ratio (x) 0.3 0.5 0.9 0.6 0.5
Net Debt/Equity (X) 0.2 0.9 0.8 0.8 0.8
Capex to Debt (%) 0.3 10.8 0.4 0.0 0.0
Z-Score (X) 1.5 1.0 1.1 1.0 1.0

Page 64 Page 101
Company Guide
Cash Flow Statement (S$ m)

FY Sep 2013A 2014A 2015A 2016F 2017F
Pre-Tax Profit 786 721 955 1,022 1,060

Dep. & Amort. 8 13 781 41 41
Tax Paid (87) (128) (184) (193) (153)
Assoc. & JV Inc/(loss) (60) (145) (279) (63) (139)
Chg in Wkg.Cap. (164) 126 302 (689) (687)
Other Operating CF (786) (1,080) (891) 0 0
Net Operating CF (303) (491) 684 117 121
Capital Exp.(net) (5) (1,007) (45) 0 0
Other Invts.(net) (36) (1,017) (1,501) (150) (150)
Invts in Assoc. & JV (34) 164 (58) 0 0
Div from Assoc & JV 61 70 350 0 0
Other Investing CF 234 (3,103) 0 0 0
Net Investing CF 220 (4,892) (1,254) (150) (150)
Div Paid (151) (119) (249) (249) (249)
Chg in Gross Debt (462) 5,090 936 500 500
Capital Issues 0 1,598 649 0 0
Other Financing CF (1) (787) (111) (64) (64)
Net Financing CF (613) 5,781 1,225 187 187
Currency Adjustments (3) (3) (3) 0 0
Chg in Cash (700) 394 651 153 158
Opg CFPS (S cts) (18.4) (21.4) 13.2 27.8 27.9
Free CFPS (S cts) (40.9) (51.8) 22.1 4.0 4.2
1.97 S$
2 Closing T arget
S.No. Dat e Rat ing
Pric e Price
1.87 1: 16 F eb 15 1.69 2.02 BUY
2: 28 Apr 15 1.90 2.36 BUY
3 3: 11 May 15 1.83 2.36 BUY
1.77
4: 11 Aug 15 1.65 2.36 BUY
6 5: 04 Nov 15 1.61 2.36 BUY
4
1.67 6: 17 Dec 15 1.67 2.05 BUY
1
1.57 5
1.47
1.37
Source: DBS Bank

Page 102Page 65
Global Logistic Properties
Edition 1 Version 1 | Bloomberg: GLP SP | Reuters: GLPL.SI Refer to important disclosures at the end of this report
BUY A leader in its field

Last Traded Price: S$2.03 (STI : 2,834.23)
Price Target : S$2.73 (34% upside) Leverage into China’s rapidly growing e-commerce sector. We
maintain BUY on Global logistics Properties (GLP) with TP of
Potential Catalyst: Commencement of new developments /new funds S$2.73, pegged at 20% discount to RNAV. With the largest
Where we differ: More conserative assumptions; no gains factored in portfolio of modern logistics warehouses in China, GLP
our numbers remains on the front seat to benefit from China’s rising
consumerism and thriving e-commerce outlook.
Analyst
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com Robust development pipeline in FY16 and beyond
The group is targeting US$3.4bn in development starts in
2016, which is 30% higher y-o-y. The group is also expecting
Price Relative
S$ Relative Index
US$2.3bn of development completions, which is almost 92%
3.4 higher y-o-y. For development starts, c.64% will be in be
3.2 210
3.0 190 China, 28% in Japan and the remainder in Brazil. In total, the
2.8
2.6
170 group has a development pipeline of US$6.5bn (GLP’s share:
2.4
2.2
150
US$2.9bn) to drive earnings over the next 3 years.
130
2.0
110
1.8
1.6 90 AUM of fund management platform rose to S$20bn
As of end Mar-15, total AUM rose to US$20bn, and the group
has another US$3.5bn of uncalled capital to be deployed.
Global Logistic Properties (LHS) Relative STI INDEX (RHS)
Forecasts and Valuation Given that this business is a highly scalable and ROE enhancing
FY Mar (US$ m) 2015A 2016F 2017F 2018F business arm of the group, management is focusing on driving
Revenue 708 711 768 862 returns and operational scale through establishing new funds.
EBITDA 479 476 530 602
Pre-tax Profit 862 738 402 464 In the immediate term, GLP has recently launched a new
Net Profit 453 574 216 253 US$7bn China development fund (CLF II) primarily looking at
Net Pft (Pre Ex.) 201 198 216 253 development opportunities in China. This will further entrench
EPS (S cts) 13.4 17.3 6.5 7.6
EPS Pre Ex. (S cts) 5.9 6.0 6.5 7.6 its market leader position within the logistics warehouse space
EPS Gth (%) (35) 29 (62) 18 in China.
EPS Gth Pre Ex (%) (20) 1 9 18
Diluted EPS (S cts) 13.4 17.3 6.5 7.6 Valuation:
Net DPS (S cts) 5.9 3.0 3.2 3.8 We maintain our BUY call, with target price maintained at
BV Per Share (S cts) 241.1 251.7 256.3 261.7
PE (X) 15.2 11.8 31.3 26.7 S$2.73, based on a 20% discount to RNAV.
PE Pre Ex. (X) 34.3 34.1 31.3 26.7
P/Cash Flow (X) 15.5 17.5 17.2 14.7 Key Risks to Our View:
EV/EBITDA (X) 26.9 28.3 26.2 23.7 A faster than expected ramp up in competing supply on the
Net Div Yield (%) 2.9 1.5 1.6 1.9
P/Book Value (X) 0.8 0.8 0.8 0.8 back of a slowdown retail sector in China, impacting on
Net Debt/Equity (X) 0.1 0.2 0.2 0.2 demand for logistics warehouses.
ROAE (%) 5.5 6.9 2.6 2.9
Earnings Rev (%): - - At A Glance
Consensus EPS (S cts): 9.0 10.6 Issued Capital (m shrs) 4,744
Other Broker Recs: B: 15 S: 1 H: 2 Mkt. Cap (S$m/US$m) 9,639 / 6,761
Major Shareholders
Source of all data: Company, DBS Bank, Bloomberg Finance L.P Govt of Singapore (%) 36.5
Hillhouse Capital (%) 8.1
Blackrock (%) 7.0
Free Float (%) 43.4

Page 103
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Company Guide
Topline and EBIT (US’m)

CRITICAL DATA POINTS TO WATCH 900.0
US$'m Revenues Operating Profit (before revals)
800.0
Earnings Drivers: 700.0
Riding on the growing demand from e-commerce 600.0
players for logistics space. Riding on the tailwinds of 500.0
China’s rising consumerism and thriving e-commerce sector,
400.0
Global Logistics Properties (GLP) remains on the front seat to
300.0
take advantage of China’s rapidly changing retail landscape.
200.0
With an extensive portfolio of warehouses (11.8m sqm of
space) in 35 cities in China, the group is one of the leading 100.0
providers of modern logistics solutions to end users. GLP’s 0.0

14A 15A 16F 17F
network of warehouses enables customers to expand; this
has been positively received by JD.com which has scaled up Revenue Breakdown by segment (US$’m)
900.0
over the past four years at an annual rate of 137%, from US $'m Others Japan China
800.0
27,000 sqm in one city in FY12 to 358,000 sqm in ten cities.
Going forward, we expect an increasing number of new 700.0
leases to come from existing tenants as they ramp up 600.0

operations (currently 61% of new leases are from existing 500.0
customers). 400.0
300.0
Strong operational momentum across markets to
200.0
continue. FY15 ended strongly and we expect the strong
leasing momentum to continue ahead. In China, we expect 100.0
the group to deliver strong growth on the back of (i) high -

2014A 2015A 2016F 2017F
lease ratios in excess of 91% with same-property rents rising
EBIT Margins (%)
by 5-6%. In addition, we expect firm occupancies for GLP’s
62.0
properties in Japan (99%) and Brazil (97%) to continue with
61.0
rental increases remaining stable at 1-3%. The US portfolio’s
60.0
occupancy is likely to hit 94% in FY15 with projected positive
59.0
rental reversions.
58.0
57.0
Fund management platform delivers superior returns at
56.0
lower risk. Management fees increased 50% to US$150m in
55.0
FY15 and and this segment is expected to potentially earn
54.0
US$400m in the medium term. As of end Mar-15, total AUM
53.0 EBIT Margins (%)
rose to US$20bn, excluding another US$3.5bn of uncalled
52.0
capital to be deployed. We expect the fund management 14A 15A 16F 17F
business to continue growing through new funds due to its
RNAV
scalable nature, boosting returns and ROEs for the group.
Valuation of GLP S$'m
Going forward, the group is looking to potentially launch a
Japan Logistics Business (Stabalized) 2,174
new China fund with equity capital of c.US$3bn to increase
China Logistics Business (Stabalized) 4,921
its reach in China.
China Landbank (NPB of future devt) 3,815
Development completions worth US$8bn over FY16- Other Assets

18F; a boost to earnings in the medium term. We expect GLP J-REIT 413.5
US$8bn in development completions to be spread over FY16- Others 58.1
18F,in line with what management anticipates. Of the total, Brazil 523.1
GLP’s share is expected to amount to US$3.6bn (45% of USA 337.0
US$8bn). The group has the option to fund the growth in this Fee income business (15x P/E) 1,054.4
area either through cash on the balance sheet (US$1.5bn as Gross Asset Value 13,296
at end Mar-15), asset recycling initiatives, debt and potentially Less: Estimated net debt (1,160.6)
tapping on third party equity from new GLP-led funds under RNAV 12,136
its fund management platform. RNAV/ share (US$) 2.51
RNAV/ share (S$) 3.42
Discount 20%
Target Price 2.73

Page 2 Page 104
Company Guide

Balance Sheet: 0.35 0.1
Low leverage ratio. Total debt to asset ratio recorded in 0.30

0.1
1Q2016 was low at 16.3%. As such, this provides GLP with 0.25
0.1
0.1
additional debt headroom for future debt funded 0.1
0.20
acquisitions. Currently, the group has 63% of its debt on a 0.1
0.15
fixed rate with a weighted average cost of debt of 3.4% and 0.0
0.10 0.0
a long debt maturity of 3.8 years. 0.0
0.05
0.0
0.00 0.0
2014A 2015A 2016F 2017F 2018F
Share Price Drivers: Gross Debt to Equity (LHS) Asset Turnover (RHS)
Robust outlook for e-commerce in China. GLP has a large Capital Expenditure
(11.8m sqm in completed properties) portfolio in China that is US$
1,600.0
positioned strategically to benefit from growth in e- 1,400.0
commerce through its modern logistics space, and it has 1,200.0
another US$5.3bn slated for completion in FY16-19. We 1,000.0

800.0
expect the group’s assets to hit higher occupancies and
600.0
pricier leases, if e-commerce increases in scale (growing at 8- 400.0
year CAGR of 80%) on the back of strong consumer demand 200.0
(11-year CAGR of 63%, expected to double over the next 3 0.0

2014A 2015A 2016F 2017F 2018F
years). Incremental earnings contribution from China would
Capital Expenditure (-)
be a share price catalyst. ROE (%)
8.0%
Deployment of new CLF II. GLP recently launched China
7.0%
Logistics Fund (CLF II), a US$7bn fund aimed at development
6.0%
opportunities in China. GLP has a 56% stake in CLF II and will 5.0%
be the manager of the fund. We are positive on this 4.0%
development as it will enable the group to leverage on 3rd 3.0%
party capital and scale up its operations over a shorter span of 2.0%
time. At the same time, GLP is expected to extract higher 1.0%
ROEs through additional fees ( management and 0.0%

2014A 2015A 2016F 2017F 2018F
performance fees) once the fund exits in the medium term.
Forward PE Band (x)
(x)
Key Risks: 523.2
Slowdown in Chinese economy
423.2
If a slowdown in the Chinese economy leads to a reduced
appetite for logistics warehouse space, there could be 323.2
slower-than-projected revenue growth. 223.2

+2sd: 244.7x
+1sd: 162.2x
123.2
Avg: 79.7x
Foreign currency risks 23.2
‐1sd: ‐2.9x
Exposure to various currencies (CNY, JPY, BRL) could lead to Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
-76.8
volatility in the group's USD earnings.
PB Band (x)
Company background 1.7
(x)
Global Logistics Properties (GLP) is a leading provider of 1.6
+2sd: 1.52x
modern logistics facilities in China, Japan, Brazil and the 1.5
1.4
USA. The group develops, owns and manages c.41m sqm 1.3
+1sd: 1.36x
GFA, of logistics properties, catering to growing domestic 1.2 Avg: 1.2x

consumption. 1.1
1.0
‐1sd: 1.04x
0.9
‐2sd: 0.88x
0.8
0.7

Page 105 Page 3
Company Guide
Key Assumptions
FY Mar 2017F 2018F
China Occupancy (%) 93% 93%
China Rental Growth (%) 3% 3%
Japan Occupancy (%) 98% 98%
Japan Rental Growth (%) 2% 2%
Income Statement (US$ m)

FY Mar 2014A 2015A 2016F 2017F 2018F
Revenue 625 708 711 768 862
Gross Profit 511 569 595 625 683
Topline driven mainly from
development completions
in China, supported by
Pre-tax Profit 867 862 738 402 464 stable occupancy rates in
Tax (142) (194) (39) (45) (51) Japan.
Preference Dividend 0 (33) (33) (33) (33) In addition, topline is driven
Net Profit 685 453 574 216 253 from increased fund
Net Profit before Except. 247 201 198 216 253 management fees in Brazil
EBITDA 510 479 476 530 602 and USA.
Growth
Revenue Gth (%) (2.7) 13.3 0.5 8.0 12.3
EBITDA Gth (%) (23.6) (6.1) (0.7) 11.3 13.7
Opg Profit Gth (%) (21.6) 6.0 (1.3) 6.7 12.6
Net Profit Gth (Pre-ex) (%) (27.7) (18.6) (1.3) 8.7 17.5
Margins & Ratio
Gross Margins (%) 81.7 80.4 83.6 81.4 79.2
ROAE (%) 8.6 5.5 6.9 2.6 2.9
ROA (%) 5.0 2.9 3.2 1.2 1.3
ROCE (%) 2.4 2.1 2.2 2.2 2.4
Div Payout Ratio (%) 25.5 44.1 17.3 50.0 50.0

Page 4 Page 106
Company Guide
Quarterly / Interim Income Statement (US$ m)

FY Mar 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016
Revenue 193 179 167 190 189

Gross Profit 157 144 130 153 150
Other Oper. (Exp)/Inc (98) (42) (47) (53) (46)
Net Interest (Exp)/Inc (26) (10) 14 (14) (21)
Pre-tax Profit 174 213 228 436 229
Tax (52) (47) (53) (80) (53)
Net Profit 89 112 105 268 114
Net profit bef Except. (31) 16 (25) 37 4
EBITDA 62 105 86 103 108
Growth
Revenue Gth (%) 14.0 (7.2) (6.9) 14.0 (0.4)
EBITDA Gth (%) (37.7) 68.2 (17.9) 19.1 4.7
Opg Profit Gth (%) (38.8) 71.2 (18.4) 19.8 4.8
Net Profit Gth (Pre-ex) (%) (180.4) (150.8) (260.7) (248.7) (89.8)
Margins
Gross Margins (%) 81.5 80.4 78.0 80.2 79.5
Balance Sheet (US$ m)

FY Mar 2014A 2015A 2016F 2017F 2018F
Net Fixed Assets 58 52 52 52 52

Invt & Devt Properties 10,165 11,332 11,568 11,772 11,972
Other LT Assets 1,045 1,147 1,147 1,147 1,147
Cash & ST Invts 1,501 1,446 1,122 1,086 1,114
Dev Props held for sale 0 1,467 1,467 1,467 1,467
Inventory 0 0 0 0 0
Debtors 406 475 593 640 719
Other Current Assets 3 0 0 0 0
Total Assets 14,341 17,462 17,905 18,623 19,448
ST Debt 158 371 371 371 371

Creditor 645 811 658 809 1,019
LT Debt 2,504 2,476 2,776 3,076 3,376
Other LT Liabilities 890 1,019 1,019 1,019 1,019
Total Cap. & Liab. 14,341 17,462 17,905 18,623 19,448
Non-Cash Wkg. Capital (257) 1,109 1,360 1,251 1,113

Gearing (D/E) to
Net Cash/(Debt) (1,161) (1,402) (2,026) (2,362) (2,634)
remain conservative at
Debtors Turn (avg days) 207.4 227.0 273.9 292.9 287.6 0.2x
Creditors Turn (avg days) 1,919.6 1,959.7 2,354.6 1,911.7 1,891.2
Inventory Turn (avg days) N/A N/A N/A N/A N/A
Asset Turnover (x) 0.0 0.0 0.0 0.0 0.0
Current Ratio (x) 2.3 2.8 3.0 2.6 2.3
Quick Ratio (x) 2.3 1.6 1.6 1.4 1.3
Net Debt/Equity (X) 0.1 0.1 0.2 0.2 0.2
Capex to Debt (%) 27.8 53.5 7.5 5.9 5.3
Z-Score (X) 1.5 1.4 1.4 1.3 1.2

Page 107 Page 5
Company Guide
Cash Flow Statement (US$ m)

FY Mar 2014A 2015A 2016F 2017F 2018F
Pre-Tax Profit 867 862 738 402 464

Dep. & Amort. 3 3 3 3 3
Tax Paid (14) (28) (20) (39) (45)
Assoc. & JV Inc/(loss) (126) (71) (63) (77) (94)
Chg in Wkg.Cap. (95) 46 (271) 104 132
Other Operating CF (343) (366) 0 0 0
Net Operating CF 291 444 387 392 461
Capital Exp.(net) (741) (1,523) (237) (204) (200)
Other Invts.(net) 0 (1,467) 0 0 0
Invts in Assoc. & JV (83) (422) (350) (425) (425)
Div from Assoc & JV 32 13 0 0 0
Other Investing CF (32) (10) 0 0 0
Net Investing CF (824) (3,409) (587) (629) (625)
Div Paid (153) (174) (200) (99) (108)
Chg in Gross Debt (167) 687 300 300 300
Capital Issues 0 159 (224) 0 0
Other Financing CF 403 2,246 0 0 0
Net Financing CF 83 2,918 (124) 201 192
Currency Adjustments 0 0 0 0 0
Chg in Cash (450) (47) (324) (36) 28
Opg CFPS (US cts.) 8.1 8.2 13.9 6.1 6.9
Free CFPS (US cts.) (9.5) (22.3) 3.2 4.0 5.5
S$
Closing T arget
2.87 S.No. Dat e Rat ing
Pric e Price
2 1: 06 F eb 15 2.49 2.98 BUY
2.67 2: 15 May 15 2.69 3.17 BUY
3: 10 Aug 15 2.37 3.00 BUY
4: 31 Aug 15 2.22 3.00 BUY
2.47 5: 30 Oct 15 2.24 2.73 BUY
1
2.27 3 4
5
2.07
1.87
Source: DBS Bank

Page 6 Page 108
Perennial Real Estate Holdings
Edition 1 Version 1 | Bloomberg: PREH SP | Reuters: PERE.SI Refer to important disclosures at the end of this report
BUY Superior land bank

Trading at 50% discount to RNAV. Maintain BUY
Price Target : 12-Month S$ 1.32 (40% upside) We have a BUY recommendation, with TP of S$1.32 pegged to
a 40% discount to our RNAV estimates of S$2.16. The stock is
Potential Catalyst: Execution of property development projects currently trading at a 50% discount to RNAV, which in our view
Where we differ: Our project completion timeline assumptions are more would have priced in most uncertainties regarding the group’s
conservative ambitious plans to grow its business, especially in China.
Analyst Development projects offer huge value unlocking potential

Derek Tan +65 6682 3716 derektan@dbs.com PREH’s value lies in its global land bank located in China,
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com Malaysia, and Ghana, where it has an attributable development
pipeline of c.5m sqft of commercial, retail, hotel, and residential
Price Relative GFA which will be progressively completed from 2016 onwards.
S$ Relative Index Earnings are underpinned by a stable portfolio of operational
4.8 218
investment properties in Singapore and China, and recurring
4.3
3.8 168 property management fees.
3.3
2.8 118
S$4.3bn of value embedded in land bank. The current
2.3
1.8 68 attributable value of PREH’s development properties on the
1.3
0.8 18
books stands at S$1.7bn, excluding Ghana. In terms of
geographical breakdown, China accounts for c.78% of this
Perennial Real Estate Holdings (LHS) Relative STI INDEX (RHS)
value, while Singapore accounts for the remaining 22%.When
Forecasts and Valuation fully completed, we estimate gross development values of
FY Dec (S$ m) 2014A 2015A 2016F 2017F S$3.7bn in China, and S$0.6bn in Malaysia.
Revenue 19 88 163 180 Valuation:
EBITDA (4) 97 154 138
Pre-tax Profit (6) 57 87 18 We estimate PREH's RNAV at S$2.21 per share, which includes
Net Profit (6) 33 73 3 the Penang development. Our TP of S$1.32 is based on a 40%
Net Pft (Pre Ex.) (6) 33 73 3 discount to factor in the Group's exposure in China, given its
EPS (S cts) (1.0) 5.4 9.7 0.3
limited operating track record there. Note that we have not
EPS Pre Ex. (S cts) (1.0) 5.4 9.7 0.3
EPS Gth (%) nm nm 80 (96) imputed the Ghana development into our numbers given
EPS Gth Pre Ex (%) nm nm 80 (96) uncertainty in terms of costs estimates.
Diluted EPS (S cts) (0.9) 5.1 9.7 0.3 Key Risks to Our View:
Net DPS (S cts) 0.0 0.0 1.1 0.0
Upside to estimates upon more details from Ghana project.
BV Per Share (S cts) 0.1 173.7 177.1 177.2
PE (X) nm 16.5 9.2 260.4 In April, PREH announced a 55/45 JV with Shangri-La to
PE Pre Ex. (X) nm 16.5 9.2 260.4 develop a 1.7m-sqft GFA integrated project in the airport
P/Cash Flow (X) 3370.6 84.1 nm nm district of Accra, capital of Ghana. Total completion of this
EV/EBITDA (X) nm 32.7 30.2 35.0
Net Div Yield (%) 0.0 0.0 1.3 0.0 acquisition, which is pending master planning approval, could
P/Book Value (X) 1320.1 0.5 0.5 0.5 add an additional S$0.06-0.08 to our RNAV estimates.
Net Debt/Equity (X) CASH 0.4 0.7 0.8
ROAE (%) (0.6) 2.4 2.6 0.1 At A Glance
Earnings Rev (%): (18) (92) Issued Capital (m shrs) 1,655
Consensus EPS (S cts): 6.9 4.2 Mkt. Cap (S$m/US$m) 1,465 / 1,020
Khoon Hong Kuok (%) 59.1
Source of all data: Company, DBS Bank, Bloomberg Finance L.P
Chye Hock Sim (%) 15.4
Free Float (%) 25.5

Page 109
ed: TH / sa: JC
Company Guide
Revenue Growth (%)

200.0 S $' m
Earnings Drivers: 180.0
Global portfolio of attractively located assets. The value in 160.0

140.0
PREH’s land bank lies in its attractive locations. In China, the
120.0
Group has stakes in integrated projects located at major
100.0
transport hubs in Tier 1 cities and Tier 2 provincial capitals
80.0
such as Beijing, Chengdu, Hengqin and Xi’an. In Malaysia, 60.0
PREH has entered into a 50/50 JV with IJM Land Berhad to 40.0
acquire and develop a 4m-sqft GFA freehold prime 20.0
waterfront site into a large-scale integrated mixed-use 0.0
2013 2014 2015 2016F 2017F
development in Penang. The Group has also acquired a prime
site in the airport district of Accra, capital of Ghana, to
Net Property Inc Growth (%)
develop a mixed-use integrated project.
120.0 S $' m 80.0
( %)
Robust growth prospects from well-timed investments. In the 70.0
100.0
near term, we expect the Group's investment portfolio in 60.0
China (five income-producing properties) and Singapore 80.0
50.0
(stakes in seven office/retail properties) to continue delivering 60.0 40.0
consistent cashflow and NAV growth with upside from 30.0
40.0
strategic asset enhancement initiatives at AXA Tower and 20.0
TripleOne Somerset in the coming two years. The Group's 20.0
10.0
large-scale development projects in China, when completed 0.0 0.0
from FY16 onwards, will underpin further NAV growth in the 2013 2014 2015 2016F 2017F
longer term. Net Property Inc (LHS) NPI Margin (RHS) (%)
Strategic partnership with Boai Medical Group will PBT Growth (%)
complement existing development business. PREH announced 200 S $' m
that it has formed a 40/60 JV with Guangdong Boai Medical 180
Group to acquire, develop and manage hospital and medical 160
140
services businesses in China. By leveraging on the expertise
120
and network of doctors of Boai Medical Group, one of the
100
largest private hospital/medical services operators in China, 80
PREH will be able to benefit from the still nascent but rising 60
demand for private healthcare in China, and incorporate 40
20
medical facilities into its integrated development projects. In
0
this vein, the Group has repositioned Dongzhan Mall as 2013 2014 2015 2016F 2017F
(20)
Perennial International Health and Medical Group, with IHH
Healthcare Berhad taking on an anchor lease to operate a
350-bed hospital. The hub has already received expressions of
interest for >90% of healthcare NLA.
Strong support from Sponsor avails opportunities

PREH's sponsors are Mr. Kuok Khoon Hong (CEO of Wilmar
International), Mr. Ron Sim (CEO of OSIM), Wilmar
International, and Mr. Pua Seck Guan (CEO of PREH). They
have shown their strong commitment in the Group by
steadily accumulating shares in the market since listing.
Together, the sponsors hold 73.7% in PREH. PREH is able to
leverage on the network and relationships that its Sponsors
have internationally.

Page 2 Page 110
Company Guide

0.1
Balance Sheet: 0.80
0.1
Gearing could exceed 0.6x due to AEI works at TripleOne 0.70 0.1
0.60
Orchard and AXA Tower While gearing stood at 0.4x as of 0.1
0.50 0.1
2Q15, we expect it to creep further upwards to >0.7x due to 0.1
0.40
the acquisition of AXA Tower, and when AEI works at 0.30
0.0
TripleOne Orchard and AXA Tower are announced. As the 0.20

0.0
0.0
Group has made no definite announcement regarding the 0.10 0.0
timing of the works, we have not factored any new AEI works 0.00 0.0
2014A 2015A 2016F 2017F
into our numbers. Gross Debt to Equity (LHS) Asset Turnover (RHS)
Share Price Drivers: Capital Expenditure

S$m
Execution of plans. We are excited about the group’s outlook 0.9
and believe that the successful execution of projected launch 0.8
of its Chengdu plot D project in 2016,together with planned 0.7

0.6
sale of strata office unis at AXA Tower and TripleOne Orchard 0.5
will lift investors confidence in the stock and result in a re- 0.4
rating for the counter. 0.3

0.2
Key Risks: 0.1
0.0
2014A 2015A 2016F 2017F
Significant cashflow requirements over the next three
Capital Expenditure (-)
years. Over the next three years, we estimate that the Group
will require close to S$2bn in cash to fund its various project ROE (%)
commitments in Chengdu, Beijing, Penang, Ghana, as well as 2.5%
at AXA Tower and TripleOne Orchard. Should PREH be 2.0%

unable to generate sufficient cashflow (through investment
properties, asset management fees or strata sales), it may be 1.5%
required to fund its developments via bank loans, which

1.0%
would significantly increase interest expense on borrowings,
thereby reducing its interest cover and funding flexibility. 0.5%
0.0%
Company background 2014A 2015A 2016F 2017F
Perennial Real Estate Holdings (PREH) is an integrated real Source: Company, DBS Bank
estate developer, owner and manager focusing on two key
markets, Singapore and China. PREH owns interests in and/or
manages a diversified portfolio measuring about 39.7m sqft
and over 3.2m sqft of gross floor area (GFA) in the PRC and
Singapore respectively.

Page 111 Page 3
Company Guide

FY Dec 2014A 2015A 2016F 2017F
Revenue 19 88 163 180
Cost of Goods Sold (6) (39) (61) (68)
Gross Profit 13 49 101 112
Other Opng (Exp)/Inc (19) (26) (27) (28)
Operating Profit (9) 23 48 56 We have assumed that
Other Non Opg (Exp)/Inc 3 58 0 0 40% of residential
Associates & JV Inc 0 14 107 82 properties at Chengdu Plot
Net Interest (Exp)/Inc 0 (38) (67) (120) D will be sold in 2016.
Exceptional Gain/(Loss) 0 0 0 0
Pre-tax Profit (6) 57 87 18
Tax 0 (5) (3) (1)
Minority Interest 0 (19) (12) (15)
Preference Dividend 0 0 0 0
Net Profit (6) 33 73 3
Net Profit before Except. (6) 33 73 3
EBITDA (4) 97 154 138
Growth
Revenue Gth (%) N/A 356.2 84.6 10.4
EBITDA Gth (%) nm nm 58.7 (10.3)
Opg Profit Gth (%) nm nm 111.6 17.8
Net Profit Gth (Pre-ex) (%) nm (648.6) 119.4 (96.3)
Margins & Ratio
Gross Margins (%) 67.2 55.2 62.4 62.1
Opg Profit Margin (%) (46.1) 25.6 29.3 31.2
Net Profit Margin (%) (31.3) 37.6 44.7 1.5
ROAE (%) (0.6) 2.4 2.6 0.1
ROA (%) (0.4) 1.1 1.1 0.0
ROCE (%) (0.5) 0.7 0.7 0.7
Div Payout Ratio (%) N/A 0.0 25.0 25.0
Net Interest Cover (x) (106.0) 0.6 0.7 0.5

Page 4 Page 112
Company Guide

FY Dec 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015
Revenue 5 0 22 27 39
Cost of Goods Sold (2) 0 (12) (12) (15)
Gross Profit 3 0 9 15 25
Other Oper. (Exp)/Inc (5) 0 35 0 (3)
Net Interest (Exp)/Inc 0 0 (10) (13) (14)
Pre-tax Profit 0 0 42 4 11
Tax 0 0 (3) (1) (2)
Minority Interest 0 0 (19) 0 0
Net Profit 0 0 21 3 9
EBITDA 0 0 52 18 26
Growth
Revenue Gth (%) 12.7 N/A N/A 24.3 45.3
EBITDA Gth (%) nm nm nm (65.2) 42.6
Opg Profit Gth (%) 93.1 nm nm (65.6) 45.9
Net Profit Gth (Pre-ex) (%) (92.9) (100.0) nm (83.7) 156.6
Margins
Gross Margins (%) 67.7 N/A 42.7 54.5 62.7
Opg Profit Margins (%) (4.9) N/A 201.5 55.8 56.0
Net Profit Margins (%) (5.3) N/A 96.3 12.6 22.3

FY Dec 2014A 2015A 2016F 2017F
Net Fixed Assets 2 2 2 2

Invts in Associates & JVs 0 1,956 2,030 2,030
Invt & Devt Properties 0 2,206 3,533 3,594
Other LT Assets 2 20 20 20
Cash & ST Invts 3 94 79 46
Dev Props held for sale 0 1,713 1,389 1,480
Inventory 1 0 0 0
Debtors 2 122 224 248
Other Current Assets 0 0 0 0
Total Assets 9 6,202 7,367 7,509
ST Debt 0 237 237 237

Creditor 5 389 163 180
Other Current Liab 0 5 3 1
LT Debt 0 1,441 2,769 2,879
Other LT Liabilities 2 276 276 276
Shareholder’s Equity 1 2,801 2,856 2,858
Minority Interests 0 1,052 1,064 1,079
Total Cap. & Liab. 9 6,202 7,367 7,509
Non-Cash Wkg. Capital (3) 1,440 1,448 1,548

Net Cash/(Debt) 3 (1,584) (2,927) (3,071)
Debtors Turn (avg days) 125.9 255.0 388.1 479.6
Creditors Turn (avg days) 3,151.5 1,949.2 1,646.3 917.4
Inventory Turn (avg days) 36.8 4.4 N/A N/A We estimate that the
Asset Turnover (x) 0.0 0.0 0.0 0.0 Group’s net
Current Ratio (x) 1.0 3.1 4.2 4.2 debt/equity ratio will
Quick Ratio (x) 0.8 0.3 0.8 0.7 increase to 0.8x,
Net Debt/Equity (X) CASH 0.4 0.7 0.8 excluding sales of
strata units at AXA
Net Debt/Equity ex MI (X) CASH 0.6 1.0 1.1
Tower and TripleOne
Capex to Debt (%) N/A 0.0 0.0 0.0
Orchard
Z-Score (X) 44.8 0.5 0.4 0.4

Page 113 Page 5
Company Guide

FY Dec 2014A 2015A 2016F 2017F
Pre-Tax Profit (6) 57 87 18

Dep. & Amort. 2 3 0 0
Tax Paid 0 (2) (5) (3)
Assoc. & JV Inc/(loss) 0 (14) (107) (82)
Chg in Wkg.Cap. 1 (29) (6) (98)
Other Operating CF 3 (8) 0 0
Net Operating CF 0 6 (30) (164)
Capital Exp.(net) 0 (1) 0 0
Other Invts.(net) 0 (55) (1,327) (61)
Invts in Assoc. & JV 0 (6) (74) 0
Div from Assoc & JV 0 0 107 82
Other Investing CF 0 0 0 0
Net Investing CF 0 (62) (1,295) 22
Div Paid 0 (11) (18) (1)
Chg in Gross Debt (1) 193 1,327 111
Capital Issues 0 0 0 0
Other Financing CF 0 (36) 0 0
Net Financing CF (2) 147 1,309 110
Currency Adjustments 0 0 0 0
Chg in Cash (1) 91 (16) (33)
Opg CFPS (S cts) (0.1) 5.8 (3.3) (8.4)
Free CFPS (S cts) 0.0 0.9 (4.0) (20.7)
S$
Closing T arget
Pric e Pric e
2 1: 17 Apr 15 1.07 1.29 BUY
1.11 2: 22 Apr 15 1.11 1.29 BUY
4 3: 11 May 15 1.08 1.30 BUY
1.06 4: 06 J ul 15 1.07 1.30 BUY
3
1 5: 10 Aug 15 1.06 1.32 BUY
5
1.01
0.96
0.91
0.86
Source: DBS Bank

Page 6 Page 114
UOL Group
Edition 1 Version 1 | Bloomberg: UOL SP | Reuters: UTOS.SI Refer to important disclosures at the end of this report
BUY Deep Value Within

Last Traded Price: S$6.10 (STI : 2,834.23) Deep value play. Trading at 0.6x P/Bk NAV and 0.5x P/RNAV,
Price Target : S$8.47 (39% upside) UOL Group (UOL) is an attractive deep value play, supported
by a portfolio of quality commercial properties and hotels,
Potential Catalyst: Better than expected operational performance serviced residences which are located near or within the
Where we differ: Our estimates are more conservative Central Business District (CBD) of Singapore.
Analyst
Derek Tan +65 6682 3716 derektan@dbs.com Commercial portfolio to remain resilient. UOL derives a
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com significant 47%-58% of revenues from its retail, office and
hotel segments which should continue delivering stable
cashflows. We expect its portfolio of commercial properties
Price Relative
S$
(office & retail) to be resilient in the face of incoming
Relative Index
8.7
headwinds for both the office and retail sectors. For offices,
this is mainly due to their location along the fringes of the CBD
206
7.7
186
6.7 166 where rental volatility is lesser, while its retail assets have a
5.7
146 unique niche in the children and education sectors which has
4.7
126
relatively inelastic tenant demand.
106
3.7 86
Deep value from its hotel business. We believe that deep value
UOL Group (LHS) Relative STI INDEX (RHS)

lies in the group’s portfolio of well located hotels and serviced
Forecasts and Valuation residences in Singapore, Malaysia and Australia. These hotels
FY Dec (S$m) 2014A 2015F 2016F 2017F are held on a historical cost basis, which we believe to be
Revenue 1,361 1,155 1,384 1,731 conservative compared to potential market realizable value.
EBITDA 604 693 721 789
Pre-tax Profit 837 542 559 617 We estimate potential upside of more than S$1bn if these
Net Profit 686 438 447 486 properties’ valuations are marked-to-market.
Net Pft (Pre Ex.) 364 438 447 486
EPS (S cts) 87.1 55.6 56.8 61.8 Valuation:
EPS Pre Ex. (S cts) 46.3 55.6 56.8 61.8
Our revalued NAV (RNAV) of UOL is S$11.29, of which the
EPS Gth (%) (15) (36) 2 9
EPS Gth Pre Ex (%) 37 20 2 9 main bulk of the upside came from its hotel properties. Our TP
Diluted EPS (S cts) 87.1 55.6 56.8 61.8 of S$8.47 is pegged to a 25% discount to RNAV. BUY!
Net DPS (S cts) 15.0 15.0 15.0 15.0
BV Per Share (S cts) 971 1,011 1,053 1,100
PE (X) 7.0 11.0 10.7 9.9
PE Pre Ex. (X) 13.2 11.0 10.7 9.9 Economic slowdown. The downside risk to our projections is if
P/Cash Flow (X) nm nm nm nm residential sales are slower than our projections or if
EV/EBITDA (X) 12.2 11.3 11.4 10.9 commercial properties and hotels operations are impacted by
Net Div Yield (%) 2.5 2.5 2.5 2.5
P/Book Value (X) 0.6 0.6 0.6 0.6
slower-than-projected growth in rental/room rates.
Net Debt/Equity (X) 0.3 0.3 0.3 0.4
ROAE (%) 9.5 5.6 5.5 5.7 At A Glance
Issued Capital (m shrs) 796
Earnings Rev (%): - - -
Consensus EPS (S cts): 52.1 56.2 57.3 Mkt. Cap (S$m/US$m) 4,857 / 3,407
CY Wee & Co Pte Ltd (%) 14.1
Source of all data: Company, DBS Bank, Bloomberg Finance L.P Wee Investment Pte Ltd (%) 13.0
United Overseas Bank (%) 7.8
Free Float (%) 53.8

Page 115
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Company Guide
UOL Group
Revenue Breakdown by segments

CRITICAL DATA POINTS TO WATCH 2,000.0 S $'m
1,800.0
Retail and office sub-segments to offer stable returns. 1,400.0
UOL Group Limited (UOL) derives a significant 47%-58% of 1,200.0

1,000.0
its revenues from its retail, office and hotel segments which
800.0
should continue delivering stable cashflows in the coming
600.0
years. 400.0
200.0
While we see headwinds in both the retail and office -
2013 2014A 2015F 2016F 2017F
segments going forward well, we believe that UOL’s portfolio
Management Services Investments Hotel Operations
positioning and location of commercial properties mainly
Property Investment Property Development
along the fringe areas of the CBD, will see lower volatility in
rents. Thus operational performance is likely to remain stable Contribution from Commercial and Hotel Segments
going forward. (% of revenues)
740.0 % 70%
Its retail malls - United Square and Novena Square - are 720.0 60%
located in the Novena area, close to an emerging medical
700.0 50%
hub. The malls have formed a niche, which should result in
high tenant stickiness. This is especially so for United Square, 680.0 40%
which houses tenants well known for providing various
660.0 30%
children’s education programs. On the other hand, Novena
Square’s tenant mix mainly caters to necessity shopping and 640.0 20%
the needs of the vicinity’s growth as a medical hub.
620.0 10%
Hotel performance to remain stable. Growth will be 600.0 0%

2013 2014A 2015F 2016F 2017F
driven by a projected 19% growth in total rooms under
management over FY14-17. Performance from hotels and Total rooms (owned and management) in Group’s hotels
serviced residences are expected to remain mixed. We expect portfolio to increase steadily
the operational performance for the group’s hotels & 12,000
R ooms
residences in Singapore and Malaysia to be weak, but 10,000
partially offset by a better performance from its hotels in
Australia. We project portfolio RevPAR to remain fairly stable. 8,000
6,000
Pre-sales for the group’s residential projects doing well
amid muted residential outlook. Despite tepid residential 4,000
transactions YTD, UOL’s projects have continued to do fairly

2,000
well. As of 2Q15, the group has substantially sold most of its
projects currently under development (The Esplanade Tianjin 0
FY13 FY14 FY15F FY16F FY17F
(91%), Archipelago (99.1%), Katong Regency (100%),
Managed Owned
Thomson Three (98%), Seventy Saint Patric’s (88%)).
Recent launches such as the 555-unit Riverbank @ Fervalue Breakdown of Hotel revenues by country (FY16F)
(55% sold as of 2Q15) and 797-unit Botanique at Bartley Others
12%
(43% sell-through rate) saw decent take-ups and continue to
sell. The recent launch of Principal Garden at Prince Charles China
Crescent also saw good response on launch day. We view this 8%
as a testament to the group’s ability to design residential Singapore

projects that are well liked and attractively priced. 44%
Australia
30%
Malaysia
6%

Page 2 Page 116
Company Guide
UOL Group

Balance Sheet: 0.2
Balance sheet remains strong. Looking ahead, we do not 0.50 0.2

0.2
anticipate higher leverage aggressively given the limited 0.40 0.1
amount of capex required. This leaves UOL with the ability to 0.1
0.30
acquire projects / new land when such opportunities come 0.1
by. Debt to equity ratio is expected to remain stable at 0.35x 0.20

0.1
0.1
to 0.40x from FY16E-FY17E. 0.10 0.0
0.0
0.00 0.0
Share Price Drivers: 2013A 2014A 2015F 2016F 2017F
Replenishing land bank key to income sustainability.. Gross Debt to Equity (LHS) Asset Turnover (RHS)
The group turns around its projects quickly and has little
Capital Expenditure
landbank on its balance sheet. UOL has always been active in S$m
land tenders to replenish its land bank especially in Singapore 250.0
but remains selective given the sustained high land prices 200.0
seen in recent government land tenders. The ability to secure

150.0
additional land-bank at lower prices will mean upside to
RNAVs and could re-rate the stock. 100.0
50.0
Relaxation of property cooling measures in Singapore.

0.0
Expectations of policy relaxation (especially cyclical measures 2013A 2014A 2015F 2016F 2017F
like the buyers’ and sellers’ stamp duties) may improve Capital Expenditure (-)
market sentiment and spark a revival in transacted volumes in ROE (%)

the Singapore residential market. This would also lift 12.0%
sentiment on property stocks, which we believe will enable

10.0%
UOL to close the gap between stock price and its NAV.
8.0%
Deep value from its hotel business. We believe that deep 6.0%
values lies in the group’s portfolio of well located hotels and 4.0%
serviced residences in Singapore, Malaysia and Australia.
These hotels are held on a historical cost basis, which we 2.0%
believe to be conservative compared to potential market 0.0%

2013A 2014A 2015F 2016F 2017F
realizable value. We estimate potential upside of more than
S$1bn if these properties are valued on marked-to-market Forward PE Band (x)
basis. (x)
20.4
Key Risks: 18.4 +2sd: 18.3x

Economic slowdown. The downside risk to our 16.4
+1sd: 16.1x
projections is if residential sales are slower than projected or
14.4
if its hotel operations are impacted by slower-than-projected Avg: 13.9x
12.4
Revpar performance. The upside risks to our view and target ‐1sd: 11.7x
price would be posed by higher-than-expected selling prices 10.4
‐2sd: 9.4x
or upgrades to the target prices of its listed investment 8.4
holdings.
PB Band (x)
Company Background 1.0
(x)
With a track record of nearly 50 years, UOL Group's 1.0
impressive list of property development projects includes 0.9

0.9 +2sd: 0.84x
best-selling residential units, office towers, shopping centres, 0.8
+1sd: 0.78x
hotels and serviced suites. 0.8
0.7 Avg: 0.71x
0.7 ‐1sd: 0.65x
0.6
‐2sd: 0.58x
0.6
0.5

Page 117 Page 3
Company Guide
UOL Group
Segmental Breakdown
FY Dec 2013A 2014A 2015F 2016F 2017F
Revenues (S$m)
Property Development 410 676 484 695 1,020
Property Investment 180 198 200 200 204
Hotel Operations 420 438 421 438 455
Investments 27.5 20.3 20.3 20.3 20.3
Others 20.5 28.8 29.7 30.6 31.5
Total 1,059 1,361 1,155 1,384 1,731

FY Dec 2013A 2014A 2015F 2016F 2017F Income driven mainly
from revenue recognition
Revenue 1,059 1,361 1,155 1,384 1,731 from its development
Cost of Goods Sold (537) (780) (652) (791) (998) projects, and stable
Gross Profit 522 581 503 594 733 returns from its
Other Opng (Exp)/Inc (184) (209) (178) (213) (266) commercial and hotel
Operating Profit 338 372 326 381 467 portfolio
Net Interest (Exp)/Inc (38.3) (28.5) (91.4) (101) (113)
Exceptional Gain/(Loss) 525 322 0.0 0.0 0.0
Pre-tax Profit 952 837 542 559 617
Tax (70.5) (76.7) (80.7) (83.3) (91.8)
Preference Dividend 0.0 0.0 0.0 0.0 0.0
Net Profit 786 686 438 447 486
Net Profit before Except. 261 364 438 447 486
EBITDA 524 604 693 721 789
Growth
Revenue Gth (%) (7.6) 28.5 (15.1) 19.9 25.0
EBITDA Gth (%) 1.7 15.1 14.8 3.9 9.6
Opg Profit Gth (%) 0.8 10.1 (12.4) 16.9 22.6
Net Profit Gth (Pre-ex) (%) (7.7) 39.5 20.2 2.2 8.7
Margins & Ratio
Gross Margins (%) 49.3 42.7 43.6 42.9 42.3
ROAE (%) 12.2 9.5 5.6 5.5 5.7
ROA (%) 7.9 6.2 3.6 3.5 3.6
ROCE (%) 3.3 3.2 2.4 2.6 3.0
Div Payout Ratio (%) 19.6 17.2 27.0 26.4 24.3

Page 4 Page 118
Company Guide
UOL Group

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Revenue 434 305 238 342 354

Gross Profit 132 130 106 138 137
Other Oper. (Exp)/Inc (48.3) (86.6) (50.8) (44.0) (61.4)
Operating Profit 81.7 242 55.1 94.0 75.3
Other Non Opg (Exp)/Inc 6.84 (2.4) 5.01 (9.5) 6.84
Net Interest (Exp)/Inc (4.0) (6.5) (10.1) (4.5) (11.3)
Pre-tax Profit 124 279 89.6 176 118
Tax (15.8) (13.2) (11.8) (11.3) (13.7)
Net Profit 103 251 74.2 153 101
Net profit bef Except. 103 251 73.5 92.2 97.9
EBITDA 143 302 113 134 144
Growth
Revenue Gth (%) 103.0 (29.7) (21.8) 43.6 3.4
EBITDA Gth (%) 12.2 111.6 (62.5) 18.5 7.2
Opg Profit Gth (%) (0.8) 196.4 (77.2) 70.6 (19.9)
Margins
Gross Margins (%) 30.4 42.5 44.4 40.3 38.6
Balance Sheet (S$m)

FY Dec 2013A 2014A 2015F 2016F 2017F
Net Fixed Assets 1,169 1,241 1,381 1,421 1,461

Other LT Assets 4,278 4,528 4,528 4,528 4,528
Cash & ST Invts 875 935 701 672 665
Inventory 0.70 0.80 0.68 0.82 1.02
Debtors 378 248 210 252 315
Other Current Assets 936 1,735 2,128 2,579 3,069
Total Assets 10,421 11,848 12,404 13,172 14,004
ST Debt 1,131 1,292 1,292 1,292 1,292

Creditor 447 282 289 346 433
Other Current Liab 99.8 75.2 80.7 83.3 91.8
LT Debt 1,184 1,737 1,937 2,287 2,617
Minority Interests 467 488 512 541 579
Total Cap. & Liab. 10,421 11,848 12,404 13,172 14,004
Non-Cash Wkg. Capital 768 1,626 1,970 2,402 2,860

Net Cash/(Debt) (1,440) (2,094) (2,527) (2,906) (3,243)
Asset Turnover (x) 0.1 0.1 0.1 0.1 0.1 Gearing to remain
Current Ratio (x) 1.3 1.8 1.8 2.0 2.2 fairly stable at 0.3x
Quick Ratio (x) 0.7 0.7 0.5 0.5 0.5
Net Debt/Equity (X) 0.2 0.3 0.3 0.3 0.4
Capex to Debt (%) 6.7 5.2 6.2 2.8 2.6
Z-Score (X) 2.0 1.9 1.9 1.8 1.8

Page 119 Page 5
Company Guide
UOL Group

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Profit 881 760 542 559 617

Dep. & Amort. 58.8 60.1 60.1 60.1 60.1
Tax Paid (46.5) (96.5) (75.2) (80.7) (83.3)
Assoc. & JV Inc/(loss) (115) (158) (293) (264) (246)
Chg in Wkg.Cap. 80.3 (726) (349) (435) (466)
Other Operating CF (442) (250) 0.0 0.0 0.0
Net Operating CF 417 (411) (116) (161) (119)
Capital Exp.(net) (154) (157) (200) (100.0) (100.0)
Other Invts.(net) (282) (0.8) 0.0 0.0 0.0
Invts in Assoc. & JV 0.0 (1.6) 0.0 0.0 0.0
Div from Assoc & JV 99.1 18.7 0.0 0.0 0.0 Projected capex for
Other Investing CF (16.0) 8.89 0.0 0.0 0.0 hotels / residential
Net Investing CF (353) (132) (200) (100.0) (100.0) projects
Div Paid (115) (57.1) (118) (118) (118)
Chg in Gross Debt 156 690 200 350 330
Capital Issues 3.94 3.58 0.0 0.0 0.0
Other Financing CF (76.1) (103) 0.0 0.0 0.0
Net Financing CF (31.7) 534 81.9 232 212
Currency Adjustments 1.20 2.42 0.0 0.0 0.0
Chg in Cash 33.3 (6.9) (234) (28.9) (7.2)
Opg CFPS (S cts) 43.7 40.1 29.7 34.8 44.1
Free CFPS (S cts) 34.1 (72.2) (40.1) (33.1) (27.8)
S$
Closing T arget
S.No. Dat e Rat ing
8.09 Pric e Price
1: 27 F eb 15 7.85 9.31 BUY
2 2: 17 Mar 15 7.49 9.31 BUY
7.59 1
3: 13 May 15 7.49 9.31 BUY
3 4: 13 Aug 15 6.54 8.47 BUY
7.09 5: 02 Nov 15 6.59 8.47 BUY
6: 12 Nov 15 6.38 8.47 BUY
4
6.59 6
5
6.09
5.59
Source: DBS Bank

Page 6 Page 120
Industry Focus
REITs Stock Profiles
Page 121
Ascendas Hospitality Trust
Edition 1 Version 1 | Bloomberg: ASCHT SP | Reuters: ASHP.SI Refer to important disclosures at the end of this report
BUY Under takeover threat

Unsolicited approach underpins value. We reiterate our BUY
Price Target : S$0.77 (1% upside and 7.4% yield) recommendation and revised S$0.77 TP. We believe the recent
(Prev S$0.74) receipt of an unsolicited takeover offer, highlights to investors
the inherent value of ACSHT’s portfolio in Australia and Japan,
Potential Catalyst: Earnings recovery/further acquisitions/potential two hospitality markets which have drawn significant investor
takeover offer realised interest over the past few years. While the offer price is still
Where we differ: DBS is the sole broker covering the REIT unknown, in our view it is likely to be at a premium to ASCHT’s
NAV per unit of S$0.72 (as at Sep-15) given upside from
Analyst renegotiated base rents at its Osaka Namba Washington hotel,
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com continued strength in the Australian and Japanese markets, and
from the recent announcement, an option to acquire Aurora
Melbourne Central serviced apartments in 2H19.
Australian hotels to sustain performance. We believe the

Price Relative
S$
Australian portfolio (58% of FY15 NPI), especially Sydney and
Relative Index
1.2 220
Melbourne hotels, will underpin ASCHT’s growth outlook. This
1.1 200 is due to increasing tourist arrivals into Australia and modest
1.0 180
supply of new hotels in Sydney and Melbourne. We have
160
0.9
140 assumed a 3% increase in FY16F Australian RevPAR compared
to 4.2% and 4.5% growth for the Sydney and Melbourne
0.8
120
0.7
0.6
100
80
markets respectively in the prior year.
0.5 60
Jul-12 Jul-13 Jul-14 Jul-15 More sustainable DPU ahead. Beyond the growth from its core
Ascendas Hospitality Trust (LHS) Relative STI INDEX (RHS) Australian properties, going forward, ASCHT will also no longer
be hampered by costs of unwinding cross-currency swaps
Forecasts and Valuation (c.12% of FY15 distributable income) which occurred last year.
FY Mar (S$ m) 2014A 2015A 2016F 2017F
Combined with an expected improvement in ASCHT’s Japanese
Gross Revenue 214 227 222 227 portfolio which should benefit from the growth in international
Net Property Inc 84 93 90 92
Total Return 17 29 34 36 visitors on the back of a weaker JPY, we expect a more
Distribution Inc 55 56 66 67 sustainable DPU going forward after a disappointing 1.5 years.
EPU (S cts) 0.7 1.7 3.1 3.2
EPU Gth (%) (67) 137 80 3 Valuation:
DPU (S cts) 5.5 5.1 5.6 5.7 Rebound in DPU. We believe a recovery in DPU in FY16F after a
DPU Gth (%) 28 (8) 11 1 weak FY15 will boost confidence in ASCHT and act as catalyst
NAV per shr (S cts) 76.9 74.2 71.8 69.5 to close the discount to our TP of S$0.77. We lifted our DCF
PE (X) 104.9 44.2 24.6 23.9 valuation to S$0.77 from S$0.74 as we rolled forward to FY17.
Distribution Yield (%) 7.3 6.7 7.4 7.5
P/NAV (x) 1.0 1.0 1.1 1.1 Key Risks to Our View:
Aggregate Leverage (%) 35.5 37.2 37.3 37.9
Significant drop in AUD/JPY and demand/supply imbalance.
ROAE (%) 0.9 2.3 4.2 4.5
Should the AUD/JPY drop significantly from current levels and
there is excess supply in ASCHT’s respective markets, there will
Distn. Inc Chng (%): - -
be downside risks to our DPU estimates and ASCHT will
Consensus DPU (S cts): 6.3 6.3
continue to trade at a discount to book value.
Other Broker Recs: B: 1 S: 0 H: 0
Source of all data: Company, DBS Bank, Bloomberg Finance L.P At A Glance
Issued Capital (m shrs) 1,118
Mkt. Cap (S$m/US$m) 850 / 596
Major Shareholders
Ascendas Pte Ltd (%) 26.6
Jingquan Tong (%) 5.7
Aberdeen (%) 5.0
Free Float (%) 62.7
ICB Industry : Real Estate / Real Estate Investment Trusts

Page 122
ed: JS / sa: JC
Company Guide
CRITICAL DATA POINTS TO WATCH Net Property Income and Margins (%)
S$ m
Earnings Drivers: 100

90
Receives takeover offer. ASCHT recently announced that it had 80 43.2%
received an unsolicitated expression of interest relating to the 70 41.2%

60
possible acquisition of all the stapled securities issued by 50 39.2%
ASCHT. ASCHT in the meantime will conduct a strategic review 40
37.2%
and has initiated discussions with various parties. While this 30
20 35.2%
potential takeover is unexpected, it highlights the attractiveness 10
of ASCHT's Australian portfolio (c.60% of FY15 NPI), which 0

2013A 2014A 2015A 2016F 2017F
33.2%
continues to be a beneficiary of the growing inbound tourism

on the back of a weaker AUD. We would expect ASCHT to Net Property Income Net Property Income Margin %
entertain an approach only if the takeover price was at a

premium to ASCHT's NAV per unit as at 30Sep15 of S$0.72. A Net Property Income and Margins (%)
premium would be justified to account for (1) upside from the 50%
45%
25
13% higher base rents at Osaka Namba Washington Hotel post 40%
the appointment of Sunroute as a new operator, (2) 23 35%
30%
understated earnings for its Singapore property given the 21 25%
current depressed state of the Singapore hospitality market, (3) 20%
19
earnings upside to its Australian portfolio given continued 15%
10%
strength in tourist arrivals into Australia which grew 7.4% y-o-y 17
5%
for 10M15 and (4) an option from the recent deal to acquire 15 0%
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
Aurora Melbourne Central serviced apartments in 2H19.
Australia - the largest contributor. ASCHT’s Australian portfolio Net Property Income Net Property Income Margin %
contributed 58% of FY15 NPI. With a positive outlook for the

Australian hospitality market, driven by a combination of Distribution Paid / Net Operating CF
continued growth tourist arrivals (+7% y-o-y for 10M15 (x)
following 7.6% growth in CY14) and modest new hotel supply 0.9
in Sydney and Melbourne near term, we expect ASCHT’s 0.7
Australian operations to drive the REIT’s performance going
0.5
forward. We have pencilled in a 3% growth in RevPAR versus
0.3
4.2% and 4.5% growth for the Sydney and Melbourne markets
respectively in CY14. Contribution from Australia should also 0.1
rise in 2019 as ASCHT recently inked an agreement to acquire -0.1 2013A 2014A 2015A 2016F 2017F
the serviced apartment component at Aurora Melbourne -0.3
Central for A$120m, on an NPI yield of 7.6%. Construction of
Aurora Melbourne Central is due to be completed in 2H19.
Japan another growth driver. Similar to the Australian Interest Cover (x)
operations, ASCHT’s Japanese properties (18% of FY15 NPI) (x)
should benefit from the rising number of tourist arrivals on the 4.00
back of the recent depreciation in the JPY. For 10M15, overall 3.50
tourist arrivals climbed 48% y-o-y. This continues on from the 3.00
strong 28.2% uplift in 2014 arrivals which translated into 10% 2.50
and 17% y-o-y increases in RevPAR for Tokyo and Osaka hotels 2.00
respectively. Going forward, we have conservatively assumed a 1.50
3-5% rise in RevPAR for ASCHT’s Japanese hotels. 1.00
0.50
New operator for Osaka Namba hotel. Another incremental
0.00
boost for ASCHT in FY17 is the 13% uplift in annual fixed rents 2013A 2014A 2015A 2016F 2017F
for its Osaka Namba Washington Hotel as ASCHT recently

appointed a new operator, Sunroute Co Ltd. As part of the new
10-year agreement, the hotel will undergo a refurbishment and
will be rebranded under the “Sunroute” name.
Modest contribution from Singapore and China. Going into
FY16, we see modest contributions from ASCHT’s Singapore
(17% of FY15 NPI) and China (7%) properties due to
challenging operating conditions induced by new hotel supply.
For Singapore, we have estimated a 3% decline in RevPAR for
FY16F. However, downside from Singapore is limited given
annual fixed rent of c.S$12m with a 3% annual escalation.
Meanwhile, weakness from China is partially mitigated by a
stronger CNY.

Page 2 Page 123
Company Guide
Balance Sheet:
Gearing post acquisition of Aurora Melbourne Central. Post the Aggregate Leverage (%)
acquisition of Aurora Melbourne Central in 2019, assuming
25% equity and 75% debt funding mix, ASCHT’s gearing will 35.0%
rise to 40% from 37.5% currently. In contrast, if the transaction
30.0%
is fully debt funded, gearing would rise to 42.5%. While the
25.0%
gearing could rise above 40% under both scenarios, we believe
20.0%
this is not cast in stone given potential for capital appreciation
15.0%
of ASCHT’s other properties in four years' time and/or any other
changes to ASCHT’s portfolio. 10.0%
2013A 2014A 2015A 2016F 2017F
Share Price Drivers:

Rebuilding confidence. ASCHT’s share price underperformed
ROE (%)
over 2014 as the trust was hit by costs associated with the 4.5%
unwinding of its cross currency swaps (CSS). With the CSS no 4.0%
longer a headwind, the expected rebound in FY16F DPU (+12% 3.5%
y-o-y) on the back of an improvement in ASCHT’s underlying 3.0%
operations should rebuild confidence in the long-term outlook 2.5%
for the stock. Combined with the recent unsolicited potential 2.0%
1.5%
takeover approach, which we believe highlights the inherent
1.0%
value in ASCHT’s portfolio, in our view, should act as catalysts
0.5%
to close the discount to our revised DCF-based TP of S$0.77. 0.0%
2014A 2015A 2016F 2017F
Inorganic drivers. While ASCHT's ability to raise equity in the

short term is constrained by the fact the trust is trading on a Distribution Yield (%)
relative high distribution yield (above 7%) we believe that as the (%)
12.4
share price re-rates on the back of improving earnings, DPU- +2sd: 11.7%
accretive acquisitions in the medium/long term will be an 10.4
additional share price driver. 8.4 +1sd: 8.3%

6.4
Avg: 4.9%
Key Risks: 4.4
Interest rate risk. As the US Fed is expected to raise interest 2.4

‐1sd: 1.5%
rates, ASCHT faces the challenge of higher interest costs. 0.4
Nevertheless, with c.89% of the group’s debt on fixed rates, -1.6

2012 2013 2014 2015 2016
ASCHT is partially insulated over the near term.
FX risks. Significant volatility in AUD and JPY would negatively PB Band (x)
impact our DPU estimates. However, this risk is tempered by 1.4
(x)
ASCHT entering into 15-month rolling hedges. In addition, we 1.3
believe a large portion of the FX risk has already been priced in 1.2
as we have already imputed AUD/SGD and SGD/JPY rates of 1.0 +2sd: 1.12x
1.1
and 90 respectively which are below current spot FX rates. +1sd: 1.04x
1.0
Avg: 0.96x
Supply risk. Any significant increase in the number of hotel 0.9

‐1sd: 0.88x
rooms without a commensurate growth in demand could limit 0.8 ‐2sd: 0.8x
income growth for the REIT, as hotels may have to lower their 0.7
Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15
room rates in order to remain competitive and maintain high
occupancies.
Company Background
A-HTRUST is a stapled group comprising Ascendas Hospitality
Business Trust (A-HBT) and Ascendas Hospitality REIT (A-HREIT),
established to invest in a diversified portfolio of hotel assets in
Asia, Australia and New Zealand.

Page 124 Page 3
Company Guide
Price per key of ASCHT’s hotels versus properties in other hospitality REITs
REIT City Property Type Number LCC Valuation Price per Title
of keys (LLC m) key (LLC)
Australia
ASCHT Sydney Pullman Sydney Hyde Hotel 241 AUD 116.5 483,402 Freehold
Park
ASCHT Sydney Novotel Sydney Central Hotel 255 AUD 102.5 401,961 Freehold
ASCHT Sydney Novotel Sydney Hotel 194 AUD 50.0 257,732 Freehold
Parramatta
ASCHT Sydney Courtyard by Marriott Hotel 196 AUD 46.0 234,694 Freehold
North Ryde
FHT Sydney Sofitel Sydney Hotel 436 AUD 227.0 520,642 75 year leasehold expiring
Wentworth in 2090
FHT Sydney Novotel Rockford Hotel 230 AUD 73.0 317,391 84 year leasehold expiring
Darling Harbour in 2098
FHT Sydney Frasers Suites Sydney Serviced 201 AUD 109.6 545,274 75 year leasehold expiring
Residence in 2089
YTLREIT Sydney Sydney Harbour Hotel 563 AUD 347.0 616,341 Freehold
Marriott
ART Sydney Quest Campbelltown Serviced 81 AUD 20.0 246,914 Freehold
Residence
ART Sydney Quest Mascot Serviced 91 AUD 25.0 274,725 Freehold
Residence
ART Sydney Quest Sydney Olympic Serviced 140 AUD 41.5 296,429 99 year leasehold expiring
Park Residence in 2111
ASCHT Melbourne Pullman and Mercure Hotel 378 AUD 119.0 314,815 Freehold
Melbourne Albert Park
ART Melbourne Citadines on Bourke Serviced 380 AUD 158.0 415,789 Freehold
Melbourne Residence
YTLREIT Melbourne Melbourne Marriott Hotel 186 AUD 74.4 400,000 Freehold
ASCHT Brisbane Pullman and Mercure Hotel 438 AUD 133.5 304,795 Freehold
Brisbane King George
Square
YTLREIT Brisbane Brisbane Marriott Hotel 267 AUD 98.5 368,914 Freehold
CDREIT Brisbane Novotel Brisbane Hotel 296 AUD 71.3 240,878 Freehold
CDREIT Brisbane Mercure Brisbane & Ibis Hotel 412 AUD 62.5 151,699 Freehold
Brisbane
CDREIT Perth Mercure Perth Hotel 239 AUD 45.6 190,795 Freehold
CDREIT Perth Ibis Perth Hotel 192 AUD 30.0 156,250 Freehold
ART Perth Citadines St Georges Serviced 85 AUD 26.0 305,882 Freehold
Terrace Perth Residence
Recent Australian transactions

Private Sydney Four Seasons Hotel Hotel 531 AUD 335 630,885 Leasehold (63 years
Sydney - transacted in remaining)
2013
Private Sydney Sheraton on the Park Hotel 557 AUD 463 831,239 Freehold
Sydney - transacted in
2014
Private Sydney Sofitel Sydney Hotel 436 AUD 201 461,009 Freehold
Wentworth -
transacted in 2014
Private Melbourne Park Hyatt Melbourne Hotel 240 AUD 100 416,667 n/a
excluding car park -
transacted in 2014
Private Sydney Holiday Inn Sydney Hotel 250 AUD 53.0 212,000 n/a
Airport - transacted in
2014
Private Noosa Sheraton Noosa - Hotel 176 AUD 110.0 625,000 n/a
transacted in 2014
Private Wollongong Novotel Wollongong - Hotel 168 AUD 22.1 131,548 n/a
transacted in 2014
Private Sydney Sydney Hilton Hotel - Hotel 579 AUD 442 763,385 n/a
transacted in 2015
Private Sydney Westin Sydney Hotel - Hotel 416 AUD 445.3 1,070,433 n/a
transacted in 2015
Private Sydney Sofitel Hotel Darling Hotel 600 AUD 360 600,000 n/a
Park - to be completed
in 2017
Private Cairns Pullman Cairns - Hotel 321 AUD 75.1 233,894 Freehold
transacted in 2015
Private Brisbane Adina Brisbane - Hotel 162 AUD 48.0 296,296 n/a
transacted in 2015
Source: Various REITs, JLL, DBS Bank

Page 4 Page 125
Company Guide
Price per key of ASCHT’s hotels versus properties in other hospitality REITs (cont’d)
China
ASCHT Beijing Novotel Beijing Hotel 306 RMB 245.0 800,654 Land use term expirying in
Sanyuan August 2044
ASCHT Beijing Ibis Beijing Sanyuan Hotel 397 RMB 289.0 727,960 Land use term expirying in
August 2044
ART Dalian Somerset Grand Serviced 195 RMB 550.0 2,820,513 43 year leasehold expiring
Central Residence on 2056
ART Guangzhou Ascott Guangzhou Serviced 207 RMB 495.0 2,391,304 70 year leasehold expiring
Residence on 26 December 2074
ART Shanghai Citadines Biyun Serviced 180 RMB 330.0 1,833,333 70 year leasehold expiring
Residence on 30 November 2064
ART Shanghai Somerset Xu Hui Serviced 168 RMB 325.0 1,934,524 70 year leasehold expiring
Residence on 22 June 2066
ART Shenyang Somerset Heping Serviced 270 RMB 420.0 1,555,556 40 year leasehold expiring
Residence on 30 October 2046
ART Suzhou Citadines Xinghai Serviced 167 RMB 135.0 808,383 70 year leasehold expiring
ART Tianjin Somerset Olympic Serviced 185 RMB 330.0 1,783,784 70 year leasehold expiring
Tower Residence on 19 November 2062
ART Wuhan Citadines Zhuankou Serviced 249 RMB 245.0 983,936 40 year leasehold expiring
ART Xi’an Citadines Gaoxin Serviced 251 RMB 270.0 1,075,697 50 year leasehold expiring
Residence 3 January 2056
Japan
ASCHT Tokyo Hotel Sunroute Ariake Hotel 912 JPY 17,400.0 19,078,947 Freehold
& Oakwood /Serviced
Apartments Ariake Residence
Tokyo
ASCHT Osaka Osaka Namba Hotel 698 JPY 9,320.0 13,352,436 Freehold
Washington Hotel Plaza
FHT Kobe ANA Crowne Plaza Hotel 593 JPY 14,000.0 23,608,769 Freehold
Kobe
YTLREIT Hokkaido Hilton Niseko Village Hotel 506 JPY 7,250.0 14,328,063 Freehold
CDREIT Tokyo Hotel MyStays Hotel 138 JPY 3,400.0 24,637,681 Freehold
Asakusabashi
CDREIT Tokyo Hotel MyStays Kamata Hotel 116 JPY 2,660.0 22,931,034 Freehold
ART Tokyo Citadines Central Serviced 206 JPY 8,700.0 42,233,010 Freehold
Shinjuku Residence
ART Tokyo Citadines Shinjuku Serviced 160 JPY 7,600.0 47,500,000 Freehold
Residence
ART Tokyo Somerset Azabu East Serviced 79 JPY 3,550.0 44,936,709 Freehold
Residence
ART Kyoto Citadines Karasuma- Serviced 121 JPY 3,600.0 29,752,066 Freehold
Gojo Residence
Source: Various REITs, JLL, DBS Bank

Page 126 Page 5
Company Guide
Price per key of ASCHT’s hotels versus properties in other hospitality REITs (cont’d)
Singapore
ASCHT Singapore Park Hotel Clarke Quay Hotel 336 SGD 312.0 928,571 99 year leasehold expiring
in Nov 2105
FHT Singapore InterContinental Hotel 403 SGD 535.0 1,327,543 75 year leasehold expiring
Singapore in 2089
FHT Singapore Frasers Suites Serviced 255 SGD 310.0 1,215,686 75 year leasehold expiring
Singapore Residence in 2089
CDREIT Singapore Grand Copthorne Hotel 574 SGD 363.0 632,404 75 year leasehold from 19
Waterfront Hotel July 2006
CDREIT Singapore M Hotel Hotel 413 SGD 235.0 569,007 75 year leasehold from 19
July 2006
CDREIT Singapore Copthorne King's Hotel Hotel 310 SGD 122.0 393,548 99 year leasehold from 1
Februrary 1968
CDREIT Singapore Novotel Singapore Hotel 403 SGD 319.0 791,563 97 years and 30 days
Clarke Quay Hotel leasehold from 2 April
1980
CDREIT Singapore Studio M Hotel Hotel 360 SGD 164.0 455,556 99 year leasehold from 26
Februrary 2007
CDREIT Singapore Orchard Hotel Hotel 656 SGD 460.0 701,220 75 year leasehold from 19
July 2006
OUEHT Singapore Mandarin Orchard Hotel 1077 SGD 1,220.0 1,132,776 99 year leasehold from 1
Singapore July 1957
OUEHT Singapore Crowne Plaza Changi Hotel 320 SGD 290.0 906,250 77 years expiring August
Airport 2083
FEHT Singapore Village Hotel Albert Hotel 210 SGD 128.3 610,952 75 year leasehold from 27
Court August 2012
FEHT Singapore Village Hotel Changi Hotel 380 SGD 244.4 643,158 65 year leasehold from 27
August 2012
FEHT Singapore The Elizabeth Hotel Hotel 256 SGD 187.5 732,422 75 year leasehold from 27
August 2012
FEHT Singapore Village Hotel Bugis Hotel 393 SGD 230.0 585,242 66 year leasehold from 27
August 2012
FEHT Singapore Oasia Hotel Hotel 428 SGD 339.0 792,056 92 year leasehold from 27
August 2012
FEHT Singapore Orchard Parade Hotel Hotel 388 SGD 423.4 1,091,237 50 year leasehold from 27
August 2012
FEHT Singapore The Quincy Hotel Hotel 108 SGD 84.7 784,259 75 year leasehold from 27
August 2012
FEHT Singapore Rendezvous Hotel & Hotel 298 SGD 282.3 947,315 70 year leasehold from 1
Gallery August 2013
FEHT Singapore Village Residence Serviced 128 SGD 205.8 1,607,813 80 year leasehold from 27
Clarke Quay Residence August 2012
FEHT Singapore Village Residence Serviced 78 SGD 70.0 897,436 81 year leasehold from 27
Hougang Residence August 2012
FEHT Singapore Village Residence Serviced 72 SGD 117.3 1,629,167 81 year leasehold from 27
Robertson Quay Residence August 2012
FEHT Singapore Regency House Serviced 90 SGD 163.4 1,815,556 78 year leasehold from 27
Residence August 2012
ART Singapore Ascott Raffles Place Serviced 146 SGD 224.0 1,534,247 999 year leasehold
Residence
ART Singapore Citadines Mount Serviced 154 SGD 134.0 870,130 93 years and 3 months
Sophia Residence and 3 days leasehold
expiring on 19 February
2105
ART Singapore Somerset Liang Court Serviced 197 SGD 210.0 1,065,990 97 years and 30 days
Residence leasehold expiring on 1
May 2077
Source: Various S-REITs, DBS Bank

Page 6 Page 127
Company Guide

FY Mar 2013A 2014A 2015A 2016F 2017F
Gross revenue 138 214 227 222 227
Property expenses (90) (131) (134) (131) (135)
Net Property Income 48 84 93 90 92
Other Operating expenses (25) (41) (36) (35) (35)
Other Non Opg (Exp)/Inc 5 (14) (15) 0 0
Exceptional Gain/(Loss) (16) 0 0 0 0
Net Income 11 14 28 38 39
Tax (2) (8) (10) (3) (4)
Minority Interest 0 0 0 0 0
Preference Dividend 0 0 0 0 0
Net Income After Tax 9 7 18 34 36
Total Return 9 17 29 34 36
Non-tax deductible Items 26 38 38 32 32
Net Inc available for Dist. 35 55 56 66 67 Rebound in FY16 earnings
Growth & Ratio due to combination of
Revenue Gth (%) N/A 55.5 6.0 (2.5) 2.4 higher contribution from
N Property Inc Gth (%) nm 73.4 11.8 (3.2) 1.6 the Australian and Japanese
Net Inc Gth (%) nm (25.3) 177.5 86.6 3.4 hotels as well as no further
Dist. Payout Ratio (%) 100.0 100.0 100.0 95.0 95.0 costs associated with the
Net Prop Inc Margins (%) 35.0 39.0 41.1 40.8 40.5 unwinding of ASCHT’s
Net Income Margins (%) 6.5 3.1 8.1 15.6 15.7 cross currency swaps
Dist to revenue (%) 25.2 25.5 24.8 29.9 29.7
Managers & Trustee’s fees
18.3 19.0 15.8 16.0 15.5
to sales %)
ROAE (%) N/A 0.9 2.3 4.2 4.5
ROA (%) N/A 0.5 1.3 2.4 2.5
ROCE (%) N/A 1.8 3.0 4.0 4.2
Int. Cover (x) 2.3 2.9 3.3 3.2 3.2

Page 128 Page 7
Company Guide

FY Mar 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016
Gross revenue 58 60 55 53 55
Net Income 3 5 12 11 7
Tax (1) (2) (5) (1) (1)
Net Income after Tax 2 3 6 10 5
Net Inc available for Dist. 14 14 14 15 16
Growth & Ratio
Revenue Gth (%) 7 3 (8) (3) 3
N Property Inc Gth (%) 8 10 (11) (5) 6
Net Inc Gth (%) (69) 11 147 60 (47)
Net Prop Inc Margin (%) 40.1 42.9 41.5 40.6 41.5
Dist. Payout Ratio (%) 100.0 100.0 100.0 95.0 95.2

FY Mar 2013A 2014A 2015A 2016F 2017F
Investment Properties 211 516 618 632 635

Other LT Assets 815 763 734 686 660
Cash & ST Invts 62 72 91 94 94
Inventory 1 1 0 0 0
Debtors 22 8 10 9 10
Total Assets 1,112 1,366 1,460 1,428 1,406
ST Debt 1 0 72 72 72
Creditor 37 31 32 31 32
LT Debt 391 485 472 461 461
Unit holders’ funds 661 795 826 803 781
Total Funds & Liabilities 1,112 1,366 1,460 1,428 1,406
Non-Cash Wkg. Capital (24) (26) (21) (23) (24)

Net Cash/(Debt) (331) (413) (452) (439) (439) Gearing expected to
Ratio remain stable going
Current Ratio (x) 1.7 2.2 1.0 1.0 1.0 forward
Quick Ratio (x) 1.7 2.1 1.0 1.0 1.0
Aggregate Leverage (%) 35.3 35.5 37.2 37.3 37.9
Z-Score (X) 0.7 1.0 0.9 1.0 1.0

Page 8 Page 129
Company Guide

FY Mar 2013A 2014A 2015A 2016F 2017F
Pre-Tax Income 11 14 28 38 39
Dep. & Amort. 21 27 28 26 26
Tax Paid 0 (3) (7) (1) (3)
Associates &JV Inc/(Loss) (8) 0 (3) 0 0
Chg in Wkg.Cap. (10) 12 7 0 1
Other Operating CF (24) 17 2 6 6
Net Operating CF (11) 68 56 68 68
Net Invt in Properties (729) (300) (110) (14) (4)
Other Invts (net) 0 0 0 21 0
Invts in Assoc. & JV 0 0 0 0 0
Div from Assoc. & JVs 0 1 1 0 0
Other Investing CF 0 (24) (10) 0 0
Net Investing CF (729) (323) (119) 8 (4)
Distribution Paid (9) (52) (57) (63) (64)
Chg in Gross Debt 114 120 86 (11) 0
New units issued 694 198 49 0 0
Other Financing CF 0 0 0 0 0
Net Financing CF 799 266 78 (74) (64)
Chg in Cash 59 13 16 2 1
Operating CFPS (S cts) (0.1) 6.1 4.5 6.1 6.0

Free CFPS (S cts) (184.3) (25.3) (5.1) 4.9 5.8
0.80
S$
Closing T arget
S.No. Dat e Rat ing
Pric e Price
0.75 1: 09 F eb 15 0.69 0.70 HOLD
2: 11 May 15 0.71 0.76 BUY
2 3: 18 May 15 0.70 0.76 BUY
0.70 4
4: 16 J ul 15 0.69 0.76 BUY
5: 11 Aug 15 0.68 0.74 BUY
3
1
0.65
5
0.60
0.55
Source: DBS Bank

Page 130 Page 9
Ascendas India Trust
Edition 1 Version 1 | Bloomberg: AIT SP | Reuters: AINT.SI Refer to important disclosures at the end of this report
HOLD Strong outlook priced in for now

Price Target : S$0.90 (5% upside) Positive outlook priced in for now. We maintain our HOLD
recommendation and S$0.90. While a-iTrust as expected
Potential Catalyst: Acquistions and/or further redevelopments delivered another strong set of results with 2Q16 DPU up 8% y-
Where we differ: In line with consensus with exception of FY16 on o-y to 1.37 Scts and its long term outlook remains bright, we
higher sales believe this has largely been priced in given limited upside to our
TP.
Analyst
Derek Tan +65 6682 3716 derektan@dbs.com Near-term growth drivers. Over the past year, a-iTrust has
announced several developments including the construction of
The V, a new 408k-sqft IT building, as well as the acquisitions of
Price Relative CyberVale, aVance3 and BlueRidge Phase II. Coupled with
S$ Relative Index continued growth in the trust’s existing portfolio and relatively
1.0
1.0 208 stable SGD/INR exchange rate (46-47), we project a healthy
0.9
0.9
188
11% DPU CAGR over the next three years.
168
0.8
0.8 148
0.7
0.7
128 Untapped land bank and acquisition pipeline. Through its
108
0.6
0.6 88
untapped land bank and sponsor pipeline, a-iTrust has access to
0.5
68
Jan-16
potential c.5.9m sqft of floor area. This provides the trust with a
Ascendas India Trust (LHS) Relative STI INDEX (RHS)
visible and sustainable source of growth over the long term. The
ability to execute on these growth opportunities is supported by
Forecasts and Valuation a healthy balance sheet (current low gearing of 27% rising to an
FY Mar (S$ m) 2014A 2015A 2016F 2017F
estimated 35% with planned developments/acquistions in the
Gross Revenue 121 129 160 169
Net Property Inc 72 78 98 102 next couple of years).
Total Return 50 66 53 54
Distribution Inc 46 50 58 60 Valuation:
EPU (S cts) 1.9 3.0 5.7 5.8 We maintain our HOLD recommendation given limited upside
EPU Gth (%) (31) 59 91 3
to our DDM-based TP of S$0.90.
DPU (S cts) 4.6 4.9 5.6 5.8
DPU Gth (%) (1) 7 15 4
NAV per shr (S cts) 60.0 66.2 65.9 65.5 Key Risks to Our View:
PE (X) 46.0 28.9 15.1 14.7 We maintain our HOLD recommendation given limited upside
Distribution Yield (%) 5.3 5.7 6.5 6.8 to our DDM-based TP of S$0.90. With yield spread over the
P/NAV (x) 1.4 1.3 1.3 1.3
10-year SGD bond of 3.4%-3.6%, which is close to its average
ROAE (%) 2.9 4.6 8.4 8.6 spread of 5%, we believe this supports our neutral stance.
At A Glance
Consensus DPU (S cts): 5.5 5.9 Issued Capital (m shrs) 925
Other Broker Recs: B: 2 S: 0 H: 2 Mkt. Cap (S$m/US$m) 796 / 558
Major Shareholders
Source of all data: Company, DBS Bank, Bloomberg Finance L.P Ascendas Pte Ltd (%) 23.6
Massachusetts Financial Services (%) 13.4
JP Morgan Chase (%) 9.1
Free Float (%) 39.0
ICB Industry : Real Estate / Real Estate Investment Trust

Page 131
ed: TH / sa: JC
Company Guide
Net Property Income and Margins (%)

CRITICAL DATA POINTS TO WATCH S$ m
200
66.3%
180
160
64.3%
Leveraged on offshoring trends. a-iTrust provides exposure to 120 62.3%
India, which remains a leading IT and offshoring hub. The 100 60.3%
80
growing demand for offshoring services is underpinned by 60 58.3%
the country's low-cost environment. According to PayScale, 40

56.3%
20
the average salary for IT/software, developers or programmers 0 54.3%
in India stands at US$5,682 p.a. which is below that of other 2013A 2014A 2015A 2016F 2017F
competing and/or developed countries such as US Net Property Income Net Property Income Margin %
(US$71,529), Australia (US$52,408), Hong Kong (US$22,081) Net Property Income and Margins (%)
and Malaysia (US$10,692). Combined with an abundant 25 66%
skilled labour force and qualified English-speaking talent pool, 24 64%
based on NASSCOM (National Association of Software and 23

62%
22
Services Companies) estimates, IT-BPM (business process 21
60%
management) revenues are forecast to grow by 13-15% in 20 58%
FY15/16 to US$165-168bn. 19
56%
18
54%
17
Balanced lease expiry to capture upside in rents. a-iTrust 16 52%
WALE stands at 3.5 years with 4%, 18% and 31% of leases
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
up for renewal over FY16, FY17 and FY18. Given the
favourable demand backdrop and limited supply in certain Net Property Income Net Property Income Margin %
Distribution Paid / Net Operating CF
markets such as Chennai, we believe a-iTrust’s lease expiry (x)
profile provides the trust with ample opportunities to capture 0.9
the upside in rents. 0.8
0.7
Boost from recent acquisitions and developments. Over the 0.6
past year, a-iTrust announced the construction of The V, a 0.5
new 408k-sqft IT building as well as the acquisitions of
0.4
CyberVale, aVance 3 and BlueRidge Phase II. These organic
0.3
and inorganic developments should boost a-iTrust’s DPU,
contributing to a healthy 11% DPU CAGR over the next three 0.2
2013A 2014A 2015A 2016F 2017F
years.
Interest Cover (x)
(x)
Potential one-third increase in floor area. a-iTrust currently 30.00
has a portfolio of properties with 8.07m sqft of space. This
could potentially increase by a third over the long term, as a- 25.00
iTrust has an undeveloped land bank that could be converted 20.00

into c.3.6m sqft of space. In addition, through its sponsors
15.00
and assuming a-iTrust exercises its ROFR, it could access
c.2.3m sqft worth of properties. Beyond this, we understand 10.00
the trust is also open to the acquisition of third-party 5.00

properties. Currently, it is exploring acquisition opportunities
in Mumbai, Delhi and Gurgaon, thereby expanding its 0.00
2013A 2014A 2015A 2016F 2017F
presence beyond its current core markets of Bangalore, Source: Company, DBS Bank
Chennai, Hyderabad and Pune.
2Q16 results inline. a-iTrust reported a healthy set of results

with 2Q16 DPU coming in at 1.37 Scts (+8% y-o-y). The
results were underpinned by 19% y-o-y increase in INR NPI
(+23% in SGD terms). This was partially mitigated by a 46%
jump in interest expenses on account of higher borrowings
on the back of acquisitions/developments made over the past
year. Overall occupancy was healthy up slightly to 97% from
96% in 2Q15.

Page 2 Page 132
Company Guide
Aggregate Leverage (%)

Balance Sheet:
Flexible balance sheet. a-iTrust’s current gearing remains low
<30%, within the management’s comfortable range. 35.0%
However, we expect gearing to rise to c.35% by end-FY17 30.0%
after including the trust’s existing development projects. 25.0%
20.0%
100% of debt fixed. As at end-Sep-15, 100% of the trust’s
debt was fixed with all-in cost of debt of 7%. This minimises 15.0%
the trust’s exposure to short-term volatility in interest rates. 10.0%

2013A 2014A 2015A 2016F 2017F

Stronger INR. Since a-iTrust’s IPO in 2008, its NPI in INR terms
has grown at a CAGR of 12%. However, due to the ROE (%)
weakness in the INR, a-iTrust’s share price has been capped 8.0%
and NPI in SGD terms has only grown at a 5% CAGR. Should 7.0%
the INR appreciate significantly, this will provide a major 6.0%
tailwind for a-iTrust’s share price. Crystallisation of 5.0%
development and sponsor pipeline. The trust has a 4.0%
development and sponsor pipeline of c.3.6m sqft and 2.3m 3.0%
sqft respectively. The delivery of the development pipeline 2.0%
and acquisition of its sponsor’s properties with resultant 1.0%
increase in earnings/DPU should drive the stock higher over
0.0%
the medium term. 2013A 2014A 2015A 2016F 2017F
Key Risks: Distribution Yield (%)

Currency risk. a-iTrust’s distributions are generated in INR but
18.0%
paid in SGD. While the trust hedges each half-yearly
16.0%
distribution, DPU from the trust will be negatively impacted
14.0%
on a lagged basis if the INR depreciates. In addition, as 75%
12.0%
and 25% of the trust’s borrowings are in INR and SGD
10.0%
respectively, while all its assets are in India, a depreciation of
the INR would also be negative to its NAV per share. 8.0%
6.0%
Economic risk. Deterioration in the Indian economic outlook 4.0%
and/or companies outsourcing their operations to India may 2.0%
negatively impact demand for space and rents at a-iTrust’s 0.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015
properties.
AIT Yield Mean Yield -1 SD +1 SD
Interest rate risk. Increases in interest rates will result in PB Band (x)
higher interest payments which would reduce income 2.5
available for distribution. This risk is partially mitigated by
the fact that 100% of the trust’s debt is fixed. 2.0
Stronger INR. Since a-iTrust’s IPO in 2008, its NPI in INR

terms has grown at a CAGR of 12%. However, due to the 1.0
weakness in the INR, a-iTrust’s share price has been capped
and NPI in SGD terms has only grown at a 5% CAGR. 0.5
Should the INR appreciate significantly, this will provide a
major tailwind for a-iTrust’s share price. 0.0
2007 2008 2009 2010 2011 2012 2013 2014 2015
AIT P/BV Mean +1 SD -1 SD
Crystallisation of development and sponsor pipeline. The
trust has a development and sponsor pipeline of c.3.6m sqft Source: Company, DBS Bank
and 2.3m sqft respectively. The delivery of the development
pipeline and acquisition of its sponsor’s properties with
resultant increase in earnings/DPU should drive the stock
higher over the medium term.

Page 133 Page 3
Company Guide

FY Mar 2013A 2014A 2015A 2016F 2017F
Gross revenue 126 121 129 160 169
Exceptional Gain/(Loss) (12) (8) 4 0 0
Net Income 42 52 71 74 77
Tax (15) (30) (38) (19) (19)
Non-tax deductible Items 2 (13) (16) 5 6
Net Inc available for Dist. 43 46 50 58 60 Improvement in earnings
Growth & Ratio on the back of a more
Revenue Gth (%) (1.0) (4.4) 6.7 24.4 5.5 stable SGD/INR FX rate,
N Property Inc Gth (%) (1.2) (0.1) 7.6 25.7 4.9 positive rental reversions
Net Inc Gth (%) 14.5 (25.4) 59.8 92.5 3.3 and contributions from new
Dist. Payout Ratio (%) 90.0 90.0 90.0 90.0 90.0 properties
Net Prop Inc Margins (%) 57.1 59.7 60.3 60.9 60.5
Net Income Margins (%) 18.1 14.2 21.2 32.8 32.1
Dist to revenue (%) 34.3 38.2 38.7 35.9 35.6
6.3 6.5 6.5 6.1 5.9
to sales %)
ROAE (%) 4.0 2.9 4.6 8.4 8.6
ROA (%) 2.2 1.6 2.4 4.1 4.1
ROCE (%) 4.0 2.6 2.8 5.3 5.4
Int. Cover (x) 6.6 16.3 24.4 6.5 5.9

Page 4 Page 134
Company Guide

FY Mar 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016
Other Operating expenses (7) (3) (3) (2) 0
Net Interest (Exp)/Inc 0 (1) (1) (1) (3)
Exceptional Gain/(Loss) 5 0 6 (3) 0
Net Income 17 15 23 16 21
Tax (4) (3) (27) (7) (6)
Net Income after Tax 12 11 (7) 8 14
Non-tax deductible Items 1 (3) 20 6 (5)
Growth & Ratio
The improvement in
Revenue Gth (%) 1 (1) 4 3 7 earnings was due to
N Property Inc Gth (%) 2 (1) 9 7 8 the contribution from
Net Inc Gth (%) 4 (10) nm nm 75 the acquisition of
Net Prop Inc Margin (%) 59.8 59.6 62.4 64.5 65.0 CyberVale and aVance
Dist. Payout Ratio (%) 90.0 90.0 90.0 90.0 90.0 3 as well as positive
rental reversions for a-
Balance Sheet (S$ m) iTrust’s existing
FY Mar 2013A 2014A 2015A 2016F 2017F portfolio
Other LT Assets 960 953 1,150 1,244 1,260
Cash & ST Invts 70 74 70 50 39
Inventory 1 1 1 1 1
Debtors 19 20 23 28 30
Total Assets 1,065 1,063 1,257 1,337 1,343
ST Debt 0 50 90 90 90
Creditor 38 39 43 53 56
LT Debt 205 184 225 291 291

Net Cash/(Debt) (135) (160) (246) (331) (342)
Increase in gearing due
Ratio
to new properties
Current Ratio (x) 2.7 1.2 0.8 0.6 0.6
Quick Ratio (x) 2.3 1.0 0.7 0.5 0.5
Z-Score (X) 1.4 1.3 1.0 1.0 1.0

Page 135 Page 5
Company Guide

FY Mar 2013A 2014A 2015A 2016F 2017F
Dep. & Amort. 0 0 0 0 0
Tax Paid 0 (11) (12) (19) (19)
Associates &JV Inc/(Loss) 0 0 0 0 0
Chg in Wkg.Cap. (3) 14 4 5 1
Other Operating CF 30 22 17 0 0
Net Operating CF 68 77 80 60 59
Other Invts (net) 0 (9) (92) (27) 0
Other Investing CF 0 0 0 0 0
Net Investing CF (56) (44) (109) (94) (16)
Chg in Gross Debt (45) 18 80 66 0
Investment in Non-
Other Financing CF (15) 0 (16) 0 0
convertible Debentures
Net Financing CF (3) (23) 21 14 (54) related to the
Currency Adjustments (5) (6) 4 0 0 BlueRidge Phase II
Chg in Cash 5 5 (5) (19) (11) property
Operating CFPS (S cts) 8.5 6.9 8.3 6.0 6.2

Free CFPS (S cts) 1.5 4.6 6.7 (0.7) 4.6

S$
0.98
Pri c e Pri c e
6 1 28 Oct 14 0.79 0.81 HOLD
0.88 7 2 02 Jan 15 0.84 0.87 BUY
3 4 5 3 27 Jan 15 0.88 0.95 BUY
4 11 Feb 15 0.88 0.96 BUY
0.83
2 5 30 Apr 15 0.90 0.96 BUY
6 05 May 15 0.93 0.96 BUY
0.78 7 19 Aug 15 0.91 0.90 HOLD
1
0.73
Oct-14 Feb-15 Jun-15 Oct-15
Source: DBS Bank

Page 6 Page 136
Ascendas REIT
Edition 1 Version 1 | Bloomberg: AREIT SP | Reuters: AEMN.SI Refer to important disclosures at the end of this report
BUY Diversifying out of hometown

Price Target : S$2.52 (11% upside) Rebounding occupancies a potential upside to earnings.
Portfolio occupancy rates continue to bottom out in 3Q15,
Potential Catalyst: Better than expected increasing marginally to 88.9% (vs 88.6% in Jun-15). Looking
Where we differ: In line ahead, with vacancy rates standing at c.11%, we believe that
A-REIT can deliver upside to earnings if the manager is able to
Analyst
Derek Tan +65 6682 3716 derektan@dbs.com backfill these space, which we have not priced in yet.
Modest rental growth but still expected to remain
positive. A-REIT recorded reversions in 2Q16 results of 9.1%,
Price Relative
S$
boosted by a 13.2% rise in rents achieved for its Business
Relative Index
3.1 222 Parks/Science Parks. Looking ahead, we expect rental reversion
2.9 202
momentum to slow but still positive given the positive spread
2.7 182
2.5 162
between market and passing rent levels over 2H16 – FY17.
2.3 142
2.1 122
Acquisitions to drive earnings. Given limited opportunities
1.9 102
1.7 82 in Singapore and the fragmented market in China, the

manager has looked overseas for higher returns. Most recently,
Ascendas REIT (LHS) Relative STI INDEX (RHS)

A-REIT announced its c.A$1,013m acquisition of a logistics
Forecasts and Valuation portfolio in Australia which will propel the REIT as one of the
FY Mar (S$ m) 2015A 2016F 2017F 2018F largest landlord there. The medium-term strategy is to have
Gross Revenue 673 739 813 830 overseas exposure form c.30% of the trust’s exposure. In
Total Return 398 347 398 402 addition, A-REIT has a visible pipeline of over S$1bn worth of
Distribution Inc 351 370 412 417 business park assets under the sponsor’s balance sheet which
EPU (S cts) 14.6 13.6 14.8 14.9 can be acquired in the medium term.
EPU Gth (%) 0 (7) 8 1
DPU (S cts) 14.6 14.9 15.3 15.5
Valuation:
DPU Gth (%) 3 2 2 1
NAV per shr (S cts) 208.3 208.5 207.6 206.8 Maintain BUY, with our DCF-based TP of S$2.52, as given total
PE (X) 15.5 16.6 15.3 15.1 returns of >10%.
P/NAV (x) 1.1 1.1 1.1 1.1
ROAE (%) 7.1 6.5 7.1 7.2 Interest rate risk. An increase in lending rates will negatively
impact distributions. However, A-REIT's strategy has been to
Distn. Inc Chng (%): - - - actively manage its exposure and currently has c.70% of its
Consensus DPU (S cts): 15.3 16.1 16.5 interest cost hedged into fixed rates.
At A Glance
Mkt. Cap (S$m/US$m) 5,877 / 4,123
Major Shareholders
Ascendas Pte Ltd (%) 17.1
Blackrock (%) 5.7
Matthews International Capital 4.6
Free Float (%) 72.3

Page 137
www.dbsvickers.com
ed: TH / sa: JC
Company Guide
Ascendas REIT

600
77.3%
75.3%
Rebounding occupancy rates. A-REIT’s occupancy rates 400
73.3%
continue to bottom out with portfolio occupancy rates 300
71.3%
increasing marginally to 88.9% (vs 88.6% in Jun-15). For 200
69.3%
multi-tenanted properties (84.9% in 3Q15, vs 84.7% in 100 67.3%
2Q15). On average, occupancy rates are higher than 0 65.3%
industrial average reported by JTC. Looking ahead, with 2014A 2015A 2016F 2017F 2018F
vacancy rates standing at c.11%, we believe that A-REIT can Net Property Income Net Property Income Margin %
deliver upside to earnings if the manager is able to backfill Net Property Income and Margins (%)
130 73%
these spaces, which we have not priced into our estimates. 72%
125
71%
120
70%
Modest rental growth but still expected to remain
115 69%
positive. A-REIT recorded reversions in 2Q16 results of 110 68%
9.1%, boosted by a 13.2% rise in rents achieved for its 105
67%
Business/Science Parks. Looking ahead, we see rental 100

66%
65%
reversion momentum slowing down, but expect A-REIT to still 95 64%
achieve higher rents given the still positive spread between
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
market and passing rent levels over 2H16 – FY17. That said,
Net Property Income Net Property Income Margin %
we expect rental reversions to moderate to c.5% in the Distribution Paid / Net Operating CF
coming financial year, in view of the high supply completion 1.1 (x)
rate and competition expected in the coming year. 1.0
0.9
Inorganic growth to drive growth. A-REIT has regularly 0.8
embarked on acquisitions and development projects which 0.7
helped the trust to deliver sustained growth in distributions 0.6
over time. Given limited opportunities in Singapore and the 0.5
fragmented market in China, the manager has looked 0.4
0.3
overseas for higher returns. Most recently, A-REIT announced 2014A 2015A 2016F 2017F 2018F
its c.A$1,013m acquisition of a logistics portfolio in Australia
which will propel the REIT as one of the largest landlords Source: Company, DBS Bank
there. The medium-term strategy is to have overseas exposure
form c.30% of the trust’s exposure.
2Q16 results in line. 2Q16 distributable income of

SS$100.2m (DPU of 4.16 Scts) was boosted by a one-off
distribution of taxable income from ops of S$6.5m ( or
S$0.271 Scts/unit). Stripping one-offs, distributable income
would have been S$93.6m (+6.6% y-o-y) or a DPU of 3.889
Scts (+6.3% y-o-y) which will be in line with expectations.
Revenues and net property income rose by 10.8% and 8.0%
respectively. This is mainly on the back of acquisitions (The
Kendall), offsetting the income vacuum from divestment of
BBR Building. Rental reversions remained a positive 9.1%
(ranging from 4.1-13.2%), with the highest being the
Business & Science Park segment, which surprised on the
upside.

Page 2 Page 138
Company Guide
Ascendas REIT

Balance Sheet:
Optimal gearing level of c.35%. Post the recent placement
35.0%
exercise of S$408m and S$210m in consideration units for
the purchase of 8@Changi, A-REIT’s gearing is estimated to 30.0%
remain at the lower end of management’s comfortable range 25.0%
of 35%. We believe that there is still capacity for 20.0%
management to utilize its debt headroom for further 15.0%

acquisition.
10.0%
2014A 2015A 2016F 2017F 2018F
Well-staggered debt maturity profile. The manager

adopts a prudent interest rate risk management strategy with
an weighted average cost of debt of 2.7% with 72% ROE (%)
hedged. The debt tenure remains long at 3.4 years. 7.0%
6.0%
5.0%
Direction of 10-year long bonds impact share price. Seen
4.0%
by investors as a key S-REIT proxy, share price has typically
3.0%
been closely linked to investors’ perception of how the
benchmark 10-year bonds is expected to move. A fall in 10- 2.0%
year yields on the back of a delay in Fed hikes is likely to 1.0%
mean higher share prices. 0.0%

2014A 2015A 2016F 2017F 2018F
Capital recycling strategy. With limited acquisition

opportunities in Singapore, A-REIT regularly looks to divest Distribution Yield (%)
(%)
older, lower-yielding properties and re-cycle the capital into 7.8
asset enhancement exercises (AEI), development projects or 7.3

acquisitions. The aim is to optimise the portfolio returns and 6.8
+2sd: 7%
distributions which have a positive impact on share prices. 6.3

+1sd: 6.6%
Avg: 6.1%
5.8
‐1sd: 5.7%
Key Risks:
5.3 ‐2sd: 5.2%
Interest rate risk. Any increase in interest rates will result in
4.8
higher interest payments, which will reduce income available
4.3
for distribution and result in lower distribution per unit (DPU) 2012 2013 2014 2015 2016
to unitholders.
PB Band (x)
Economic risk. A deterioration in the economic outlook 1.7
(x)
could have a negative impact on industrial rents and 1.6
occupancies as companies cut back production and require 1.5
less space; industrial rents have a strong correlation with 1.4

+2sd: 1.33x
GDP growth. 1.3
+1sd: 1.25x
1.2
Avg: 1.16x
1.1
Company background ‐1sd: 1.08x
1.0 ‐2sd: 0.99x
Ascendas Real Estate Investment Trust (A-REIT) is one of the 0.9
leading industrial S-REITs listed on the SGX. A-REIT owns 0.8
and invests in a diverse, income-producing portfolio of
business parks (including science parks), light industrial, hi-
tech industrial and logistic properties in Singapore. Source: Company, DBS Bank

Page 139 Page 3
Company Guide
Ascendas REIT

FY Mar 2014A 2015A 2016F 2017F 2018F
Gross revenue 614 673 739 813 830
Net Income 374 357 355 417 422
Tax (23) (7) 0 (4) (5)
Preference Dividend 0 0 (8) (15) (15)
Total Return 482 398 347 398 402
Non-tax deductible Items (9) 1 23 14 15
Driven mainly by
Growth & Ratio acquisitions
Revenue Gth (%) 6.6 9.8 9.7 10.1 2.0
N Property Inc Gth (%) 6.6 6.1 13.8 10.6 2.3
Net Inc Gth (%) 32.8 0.0 (1.0) 14.5 1.2
Dist to revenue (%) 55.7 52.1 50.1 50.7 50.2
6.6 6.5 12.0 7.1 6.9
to sales %)
ROAE (%) 7.4 7.1 6.5 7.1 7.2
ROA (%) 4.9 4.5 3.9 4.0 4.1
ROCE (%) 5.3 5.5 5.0 5.4 5.5
Int. Cover (x) 11.0 4.0 5.3 4.9 4.6

Page 4 Page 140
Company Guide
Ascendas REIT

FY Mar 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016
Gross revenue 163 165 172 174 181

Other Non Opg (Exp)/Inc 3 14 14 22 (13)
Exceptional Gain/(Loss) 2 (12) 0 0 0
Net Income 87 86 93 91 88
Tax (1) (1) (1) (4) 0
Total Return 86 113 92 106 92
Non-tax deductible Items 2 (26) (6) (17) 0
Growth & Ratio
Revenue Gth (%) 4 1 4 1 4
N Property Inc Gth (%) 4 (1) 0 2 6 Results continue to firm on
Net Inc Gth (%) 116 (1) 9 (5) 0 the back of new acquisitions
Net Prop Inc Margin (%) 71.3 69.6 66.7 67.4 68.8 and positive rental reversions

FY Mar 2014A 2015A 2016F 2017F 2018F
Investment Properties 6,923 7,868 9,481 9,496 9,511

Other LT Assets 290 135 135 135 135
Cash & ST Invts 67 42 82 88 82
Inventory 0 0 0 0 0
Debtors 65 90 99 109 111
Total Assets 7,358 8,160 9,822 9,853 9,864
ST Debt 893 286 246 251 256

Creditor 128 189 207 228 232
LT Debt 1,231 2,442 3,230 3,240 3,250 Gearing to rise to c.
Other LT Liabilities 171 198 203 209 214 38% and remain
Unit holders’ funds 4,849 5,014 5,907 5,893 5,878 steady

Net Cash/(Debt) (2,057) (2,686) (3,394) (3,403) (3,424)
Ratio
Current Ratio (x) 0.1 0.3 0.4 0.4 0.4
Quick Ratio (x) 0.1 0.3 0.4 0.4 0.4
Z-Score (X) 1.4 1.3 1.1 1.2 1.2

Page 141 Page 5
Company Guide
Ascendas REIT

FY Mar 2014A 2015A 2016F 2017F 2018F
Pre-Tax Income 374 357 355 417 422

Dep. & Amort. 1 0 0 0 0
Tax Paid (1) (2) (4) 0 (4)
Chg in Wkg.Cap. (1) (10) 10 11 2
Other Operating CF 29 17 (8) (15) (15)
Net Operating CF 401 362 353 412 405
Net Invt in Properties 0 0 0 0 0
Other Invts (net) (95) (643) (1,613) (15) (15)
Other Investing CF (40) 6 6 6 6
Net Investing CF (135) (638) (1,607) (9) (9)
Chg in Gross Debt 170 577 748 15 15
Other Financing CF (71) (68) 300 0 0
Net Financing CF (227) 249 1,294 (397) (402)
Chg in Cash 48 (26) 40 6 (6)

Free CFPS (S cts) 16.7 15.1 13.9 15.3 15.0
S$
2.74 Closing T arget
S.No. Dat e Rat ing
Pric e Price
2 1: 09 J an 15 2.43 2.49 BUY
2.64 4
5 2: 26 J an 15 2.60 2.62 BUY
2.54 3: 24 F eb 15 2.48 2.62 BUY
3
4: 31 Mar 15 2.59 2.65 BUY
2.44 5: 24 Apr 15 2.67 2.64 HOLD
6: 31 Aug 15 2.23 2.29 HOLD
1
2.34 7: 23 Sep 15 2.24 2.45 BUY
8
7 8: 10 Dec 15 2.28 2.57 BUY
6
2.24 9: 14 Dec 15 2.23 2.52 BUY
9
2.14
2.04
Source: DBS Bank

Page 6 Page 142
Ascott Residence Trust
Edition 1 Version 1 | Bloomberg: ART SP | Reuters: ASRT.SI Refer to important disclosures at the end of this report
BUY Diversification breeds strength

Diversified portfolio underpins resilence. We maintain our BUY
Price Target : S$1.33 (14% upside and 7.2% yield) (Previous
recommendation on ART with S$1.33 TP. Amid the volatility in
S$1.11)
the Singapore hospitality market, we believe ART’s diversified
portfolio with serviced residences and rental housing located
Potential Catalyst: Further acquisitions and asset recycling to address
across 14 countries in the Asia Pacific, Europe and US, provides
gearing concerns
investors with a more resilient DPU. ART’s resiliency and
Where we differ: Below consensus on lower sales.
cashflow visibility also comes from having 40-50% of its income
Analyst sourced from master leases and management contracts with
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com minimum guaranteed income.
Crystallising value from recent acquisitions and AEIs. ART has
announced c.S$984m worth of acquisitions over the last 18
months, increasing total AUM by c.30% to S$4.6bn. Combined
Price Relative with completed and ongoing AEIs worth c.S$95m, ART should
start to fully realise the benefits from these expansion plans over
S$ Relative Index
1.7
1.6 204 the next few years. This should also offset the impact from a
1.5 184 projected increase in borrowing costs.
1.4
164
1.3
1.2
144
Assets divestments to strengthen balance sheet. While ART’s
1.1
124
headline gearing of c.40% is comfortable, we are mindful of
104
ART’s adjusted gearing (treating 50% of perpetual securities as
1.0
0.9 84
debt) which stands at 43-44%. However, we understand this is
Ascott Residence Trust (LHS) Relative STI INDEX (RHS) temporary, as ART is reviewing its portfolio mix and looking to
divest some of its lower yielding properties.
FY Dec (S$ m) 2014A 2015F 2016F 2017F
Valuation:
Consistent delivery to close the valuation gap. Following the
Total Return 121 91 97 98 disappointment over the impact of the rights issue in 2013 and
Distribution Inc 126 127 129 130 difficulties faced by some of ART’s Chinese properties on its DPU
EPU (S cts) 4.8 5.9 6.3 6.3 over the past two years, we believe delivery of a more consistent
EPU Gth (%) (5) 22 6 0 DPU over the coming year will help close the discount to our
DPU (S cts) 8.2 8.2 8.3 8.4 revised TP of S$1.33. We have lowered our DCF-based TP to
DPU Gth (%) (2) 0 1 0
NAV per shr (S cts) 137.2 134.2 131.5 128.8
S$1.33 from S$1.34 after cutting our FY15-17F DPU by 6-9% as
PE (X) 24.3 19.9 18.7 18.7 we account for weaker-than-expected 3Q15 results. We also roll
Distribution Yield (%) 7.0 7.0 7.1 7.1 forward our valuation to FY16.
P/NAV (x) 0.9 0.9 0.9 0.9
Aggregate Leverage (%) 37.6 39.3 39.5 39.8 Key Risks to Our View:
ROAE (%) 3.5 4.4 4.7 4.8 Oversupply and FX volatility. The key risk to our call is potential
oversupply in ART’s key markets as well as impact from FX
Distn. Inc Chng (%): (6) (9) - volatility. These risks are mitigated by ART’s diversified portfolio
Consensus DPU (S cts): 8.4 8.7 9.0 with no country contributing more than 20% of group NPI. In
Other Broker Recs: B: 6 S: 1 H: 4 addition, ART has already hedged the majority of its EUR and
Source of all data: Company, DBS Bank, Bloomberg Finance L.P JPY income this year at above 1.60 and below 88 respectively.
At A Glance
Mkt. Cap (S$m/US$m) 1,820 / 1,276
Major Shareholders
Ascott Limited (%) 46.2
Free Float (%) 53.8

Page 143
ed: TH / sa: JC
Company Guide

S$ m
300
CRITICAL DATA POINTS TO WATCH 54.6%
250
52.6%
200
Earnings Drivers:
50.6%
Accretive acquisitions. ART has had an active 18 months, 150
marking its maiden entries into Malaysia and the US. In 100 48.6%
addition, ART has deepened its presence in Australia, China and 50 46.6%
Japan. All in, ART has acquired c.S$984m worth of properties 0 44.6%
2013A 2014A 2015F 2016F 2017F
on an average yield of 5-8%. We estimate that these
acquisitions should enable ART to offset the projected 50-bp Net Property Income Net Property Income Margin %
increase in borrowing costs. We project ART to deliver a 3-year

DPU CAGR of 1%. Net Property Income and Margins (%)
54%
57
53%
Asset enhancements to drive earnings. Beyond the announced 52

52%
51%
acquisitions, another growth driver for ART is the asset 50%
enhancement initiatives it has undertaken or is in the process of 47 49%

48%
completing. Refurbishments which are initiated every 7-10 years 47%
42
are designed to enhance the market position of ART’s various 46%
45%
properties, which should translate to higher occupancies and 37 44%
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
room rates. It has announced c.S95m worth of renovations over
the last 18 months in various cities including Barcelona, Dalian,
Ho Chi Minh City, London, Manila, Singapore, Shanghai and
Tianjin.
(x)
Australia, Japan, UK and US - the key growth markets. With a 0.9
timely expansion into Australia and Japan, ART is well 0.8
positioned to take advantage of the growing Australian and 0.7
Japanese hospitality markets which are benefiting from a 7% 0.6

(10M15) and 48% (10M15) y-o-y jump in tourist arrivals
0.5
respectively. According to industry consultants, this should
0.4
translate to 4-7% growth in RevPAR in 2015. In addition, ART’s
entry to the New York market provides exposure to the 0.3
2013A 2014A 2015F 2016F 2017F
recovering US economy and rising New York market (3-4%
RevPAR growth in 2015). Meanwhile, ART’s UK properties
should benefit from the recent renovations and healthy Interest Cover (x)
corporate demand which have already led to the properties (x)
4.00
delivering double digit y-o-y increases in NPI over the last three 3.90
quarters. The abovementioned markets, representing c.38% of 3.80
ART’s assets should offset the potential weakness from ART’s 3.70
Chinese properties (c.9% of group NPI) which are facing an 3.60
economic slowdown. 3.50
3.40
Steady income base from Europe and Japan rental properties. 3.30
Approximately 35% of ART’s NPI is sourced from properties 3.20
2013A 2014A 2015F 2016F 2017F
under master leases in France, Germany, Singapore and Japan
(rental properties). With the prudent use of FX hedges, and
having properties under management contracts with minimum Source: Company, DBS Bank
guaranteed income (c.13% of group NPI) in Belgium, Spain and
UK, ART also provides investors with a solid income base.
Ambitions to grow portfolio size to S$6bn. ART has ambitions

to grow its portfolio from S$4.6bn currently to S$6bn by 2017.
The properties will be sourced from its Sponsor and third party
assets.

Page 2 Page 144
Company Guide

Balance Sheet:
Temporary increase in gearing. Post ART’s recent acquisition of
40.0%
properties in Australia, Japan and US, ART’s headline gearing is
35.0%
expected to settle at around the 40% level. However, on an
30.0%
adjusted basis treating 50% of the perpetual securities as debt
(in line with Moody’s treatment), gearing is expected to increase 25.0%
to 43-44% from 42%. While cognizant of this higher gearing 20.0%
near term, we understand ART will look to pare down its debt 15.0%
by disposing some of its lower-yielding properties. 10.0%

2013A 2014A 2015F 2016F 2017F

Overcoming past disappointments. ART’s share price has been ROE (%)
range bound over the last year due to inconsistent DPU over the 4.5%
last two years on account of the dilution impact from the rights 4.0%
issue in late 2013. However, we believe a re-rating is imminent, 3.5%
as ART delivers a more consistent DPU over the coming year 3.0%
following c.S$1bn worth of acquisitions and refurbishment 2.5%

2.0%
activities over the past 18 months. 1.5%
1.0%
Market to differentiate between growth markets. The 0.5%
hospitality REITs have been hit by negative sentiment 0.0%

2013A 2014A 2015F 2016F 2017F
surrounding a weak Singapore hospitality market. While we
acknowledge that c.11% of ART’s NPI comes from Singapore,
as ART delivers its results, we believe investors will appreciate Distribution Yield (%)
(%)
the fact that majority of ART’s markets such as Australia, Japan 9.6
9.1
and UK are growing or have stable outlooks. This should see
8.6
ART’s share price outperforming other Singapore-focused 8.1
+2sd: 8%
hospitality REITs. 7.6
+1sd: 7.4%
7.1
Avg: 6.9%
Key Risks: 6.6
‐1sd: 6.3%
Interest rate risks. Any increase in interest rates will result in 6.1
‐2sd: 5.7%
higher interest payments and reduce the income available for 5.6
5.1
distribution, which will result in lower distribution per unit 2012 2013 2014 2015 2016
(DPU) for unitholders. As at 30 September 2015, 76% of ART’s

debt was on fixed rates. PB Band (x)
1.3
(x)
Currency risk. As ART earns rental income in various
1.2
currencies, a depreciation of any foreign currency against the
1.1
SGD could negatively impact DPU. Nevertheless, through the +2sd: 1.04x
use of currency hedges for EUR, JPY and GBP sourced income, 1.0
+1sd: 0.97x
as well as the benefits from having a diversified portfolio, FX 0.9 Avg: 0.91x

‐1sd: 0.84x
volatility has had a minimal impact on ART’s earnings 0.8
‐2sd: 0.77x
historically. In FY13 and FY14, changes in ART’s basket of 0.7
currencies had only a net 0.8-1.5% negative impact on 0.6

earnings.
Company Background Source: Company, DBS Bank

Ascott REIT's Investment portfolio primarily comprises real
estate used mainly as serviced residences or rental housing
properties (including investments in real estate-related assets
and/or other related value-enhancing assets or instruments).

Page 145 Page 3
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Gross revenue 317 357 422 471 481
Net Income 112 120 139 147 148
Tax (36) (37) (22) (25) (25)
Preference Dividend 0 (1) (13) (19) (19)
Total Return 209 121 91 97 98
Net Inc available for Dist. 115 126 127 129 130 Growth driven by
Growth & Ratio acquisitions in China,
Revenue Gth (%) 4.2 12.8 18.1 11.7 2.0 Malaysia, Australia, US and
N Property Inc Gth (%) 1.3 11.8 13.4 8.3 2.3 Japan over the past 18
months
Net Inc Gth (%) 11.2 6.9 22.8 6.5 0.8
Dist to revenue (%) 36.3 35.2 30.0 27.4 27.0
4.1 5.6 6.3 4.9 4.9
to sales %)
ROAE (%) 3.8 3.5 4.4 4.7 4.8
ROA (%) 2.1 1.9 2.1 2.1 2.1
ROCE (%) 3.2 3.0 3.5 3.7 3.8
Int. Cover (x) 3.5 3.9 3.8 3.9 3.7

Page 4 Page 146
Company Guide

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015

Other Operating expenses (11) 1 (9) (6) (6)
Other Non Opg (Exp)/Inc 1 0 1 (1) 10
Exceptional Gain/(Loss) 0 0 0 (5) 0
Net Income 28 35 25 26 47
Tax (6) (12) (6) (4) (10)
Non-tax deductible Items 18 1 12 0 (9)
Growth & Ratio
Revenue Gth (%) 6 1 (5) 10 15
N Property Inc Gth (%) 5 (6) (6) 15 12
Net Inc Gth (%) 74 2 (17) (25) 174

FY Dec 2013A 2014A 2015F 2016F 2017F

Other LT Assets 81 81 72 64 56
Cash & ST Invts 205 193 270 244 216
Inventory 0 0 0 0 0
Debtors 12 13 16 17 18
Total Assets 3,582 4,122 4,633 4,611 4,585
ST Debt 50 249 249 249 249

Creditor 4 8 6 6 7
LT Debt 1,147 1,302 1,574 1,574 1,574
Unit holders’ funds 2,093 2,255 2,470 2,438 2,406
Non-Cash Wkg. Capital 1 (2) (12) (13) (13)

Net Cash/(Debt) (993) (1,358) (1,553) (1,579) (1,607)
Increase in gearing on
Ratio
the back of announced
Current Ratio (x) 1.9 0.8 1.0 1.0 0.9
acquisitions
Quick Ratio (x) 1.3 0.5 0.7 0.7 0.6
Z-Score (X) 1.1 0.9 0.8 0.8 0.8

Page 147 Page 5
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Income 112 120 139 147 148

Dep. & Amort. 14 16 22 22 22
Tax Paid (13) (5) (8) (22) (25)
Chg in Wkg.Cap. 2 (26) (5) (1) 0
Net Operating CF 152 153 148 146 145
Other Invts (net) (180) (428) (440) (10) (10)
Net Investing CF (220) (461) (453) (24) (24)
New units issued 398 0 0 0 0 Acquisition of
Other Financing CF (52) 100 237 (19) (19) properties in Australia,
Net Financing CF 149 298 382 (148) (149) Japan and US partially
Currency Adjustments (1) (2) 0 0 0 offset by assets
disposals in Japan and
Chg in Cash 79 (12) 78 (26) (28)
Philippines
Free CFPS (S cts) 8.0 7.3 8.8 8.5 8.4
1.39
S$
1.34
Closing Target
S.No. Date Rating
1.29 6 Price Price
4 5 1 23 Jan 15 1.29 1.37 BUY
1 3
2 26 Mar 15 1.25 1.34 BUY
1.24
3 26 Jun 15 1.29 1.34 BUY
2 7
4 03 Jul 15 1.31 1.38 BUY
1.19 5 16 Jul 15 1.31 1.38 BUY
6 23 Jul 15 1.32 1.38 BUY
1.14 7 19 Aug 15 1.25 1.33 BUY
1.09
Note : Share price and Target price are adjusted for corporate actions.
Source: DBS Bank

Page 6 Page 148
Cache Logistics Trust
Edition 1 Version 1 | Bloomberg: CACHE SP | Reuters: CALT.SI Refer to important disclosures at the end of this report
BUY (Upgrade from HOLD) Driven by recent acquisitions

Price Target : S$1.05 (15% upside) (Previous S$1.11) Upgrade to BUY, TP S$1.05. We are seeing value emerging
after recent price declines. Yields of >9.0% are attractive in
Potential Catalyst: Acquisitions/developments our view and will have priced in most negatives in our view. As
Where we differ: We are more conservative in our forecasts as we have such, we upgrade the stock to a BUY, with a revised TP S$1.05
assumed vacancies for S’pore properties in our estimates as we priced in the recent equity fund raising exercise and
acquisitions.
Analyst
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com Recent acquisitions to drive earnings . Cache’s Singapore
portfolio is expected to see rental pressure from (i) conversions
of single-user properties to multi-tenanted properties, (ii)
Price Relative
S$ Relative Index
heightened competition due to new supply. As such, growth
1.6 218 will mainly be driven from its recent acquisitions such as the
1.5
1.4
198
four properties in Australia. We believe Australia is an
178
1.3
158
attractive target market given its long leases and the weak
1.2
1.1
138 AUD-SGD exchange rate, which could present upside if the
1.0 118
98
AUD strengthens in the medium term.
0.9
0.8 78
Limited acquisition capacity as gearing nears 40%
Gearing is expected remain at c. 36% post recent equity fund
Cache Logistics Trust (LHS) Relative STI INDEX (RHS)
Forecasts and Valuation raising exercise. While there is still headroom for acquisitions,
FY Dec (S$ m) 2014A 2015F 2016F 2017F we believe that the manager is likely to turn selective, in view
Gross Revenue 83 91 122 127 that rising interest rates could eat into distributions if gearing is
Total Return 66 55 69 71 elevated.
Distribution Inc 67 66 76 78
EPU (S cts) 7.3 7.0 7.7 7.9 Valuation:
EPU Gth (%) (6) (4) 11 3 Our target price at S$1.05 has included the latest acquisition in
DPU (S cts) 8.5 8.4 8.5 8.7
DPU Gth (%) (1) (2) 1 3
Australia. Our upgraded BUY call is premised on limited upside
NAV per shr (S cts) 98.1 96.8 95.9 95.3 to our target price. A yield of >9.0% is likely to limit downside
PE (X) 12.5 13.1 11.8 11.5 to current share price.
P/NAV (x) 0.9 0.9 0.9 1.0
ROAE (%) 7.4 7.2 8.5 8.3 Interest rate risk. Higher interest cost is expected to eat into
distributions. We note that the Manager has locked in close to
Distn. Inc Chng (%): - - - 67% of its debt into fixed-rates.
Consensus DPU (S cts): 8.1 8.7 8.8
Other Broker Recs: B: 5 S: 0 H: 4 At A Glance
Mkt. Cap (S$m/US$m) 812 / 569
Major Shareholders
CWT Ltd (%) 4.4
Bank of New Mellon Corp (%) 4.4
Capital Research Global Investor 4.3
Free Float (%) 86.9

Page 149
ed: JS / sa: JC
Company Guide

S$ m
200
CRITICAL DATA POINTS TO WATCH 180 101.0%
160
140 96.0%
120
Earnings Drivers: 100 91.0%
Well spread lease profile offering strong income visibility. 80
86.0%
60
Cache Logistics Trust (Cache) offers investors strong income 40 81.0%
visibility supported by a weighted average lease to expiry (WALE) 20
0 76.0%
of 4.6 years by GFA which is staggered across the years. The 2013A 2014A 2015F 2016F 2017F
Trust has secured approximately 70% of leases expiring in Net Property Income Net Property Income Margin %
FY2015 with more than 40% of GFA committed from 2019 and
beyond. In addition, Cache has a much healthier average
occupancy rate of 99.1% as compared to similar S-REITs. This 21 100%
provides strong earnings stability and visibility in both the near 20 95%
and medium term. 90%

20
19 85%
Strong and diverse tenancy mix. MNCs make up the majority
19 80%
of the type of tenants that lease Cache’s space by GFA at 79%,
75%
followed by Small Medium Enterprises at 21%. The trade sectors 18
that tenants are from are relatively diverse, from industries such 18 70%
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
as Industrial & Consumer Goods, Commodity & Chemical,
Healthcare and Food & Cold Storage. Demand from a large and Net Property Income Net Property Income Margin %
diverse tenant mix has resulted in higher underlying occupancy

rates which bode well for the Trust’s earning capability. Distribution Paid / Net Operating CF
1.4 (x)
Deepening its presence in Australia to diversify and grow

1.2
earnings stream. Following the maiden purchase of three
warehouses in Australia in 1Q15, Cache announced the 1.0
acquisition of a warehouse in Brisbane for A$27.0m (S$S$27.1),

0.8
deepening its presence in Australia to four properties. The target
asset is a modern one-storey warehouse with an ancillary two- 0.6
story office and is leased to Western Star Trucks Australia Pty Ltd
0.4
(WSTA) with average lease tenure of 7.9 years. WSTA is a wholly- 2013A 2014A 2015F 2016F 2017F
owned subsidiary of Penske Automotive Group (PAG) which is

listed on the New York Stock Exchange, and is the exclusive
importer and distributor of trucks and other commercial vehicles
in Australia.
The deal is accretive to distributions. Initial yield is estimated to

be c. 7.0% and the purchase will be fully funded by debt at an
assumed cost of 4.5%. The lease comes with annual rental
escalation of 4% per annum, until August 2023, offering stability
in returns.
DHL project to underpin growth from FY16 onwards. A

strategic partnership with its Sponsor, CWT Ltd, to embark on a
build-to-suit development of the DSC ARC for DHL Supply Chain
Singapore Pte Ltd achieved completion in Jul-15. Contribution
from DHL is expected to start from FY16 onwards and is
expected to be a key driver of growth.
.

Page 2 Page 150
Company Guide

Balance Sheet:
Gearing rises to 39.2%; limited capacity to acquire further.
40.0%
Upon completion of the acquisition of the warehouse in
35.0%
Australia, Cache’s gearing will increase to 39.2%. We note that
30.0%
this is at the higher end of management’s comfortable range of
25.0%
35%-40%, and will likely mean that further acquisition capacity
20.0%
will be limited. However, given more acquisition opportunities
15.0%
on the horizon, we believe that new deals will be partly funded
10.0%
by raising new equity. 2013A 2014A 2015F 2016F 2017F
No refinancing required for 2 years. Cache has a weighted

average debt to maturity of 3.5 years with no refinancing ROE (%)
requirements till 2017. 67% of its borrowings are hedged into 8.0%
fixed rates. 7.0%
6.0%
Share Price Drivers: 5.0%
Acquisitions of assets in its ROFR. Cache has been granted 4.0%
the Rights of First Refusal (‘ROFR’) to 15 properties by its Sponsor 3.0%
(CWT) and C&P in the Asia Pacific. These 15 properties can 2.0%
approximately contribute 5.7m sq ft in GFA which when 1.0%
acquired, is expected to significantly increase its portfolio size, 0.0%

2013A 2014A 2015F 2016F 2017F
earnings and thus providing uplift to share price.
Beating market outlook. While the warehouse market is Distribution Yield (%)
(%)
expected to see a deluge of new supply completing over 2015- 10.3
2016, a majority of Cache’s leases are MNCs and 3PLs, and
hence we believe occupancy rates should remain steady. Higher 9.3
+2sd: 8.8%
rents achieved given its quality portfolio could beat market 8.3
+1sd: 8.1%
expectations that rents would moderate.
7.3 Avg: 7.5%
‐1sd: 6.8%
Key Risks: 6.3
‐2sd: 6.1%
Interest rate risk
5.3
Any increase in interest rates will result in higher interest 2012 2013 2014 2015 2016
payments for the REIT, hence reducing the income available for
distribution, which will result in lower distribution per unit (DPU) PB Band (x)
for unitholders. 1.7
(x)
1.6
Economic risk 1.5
A weaker economic outlook could have a negative impact on 1.4 +2sd: 1.39x

industrial rents and occupancies as companies cut back on 1.3 +1sd: 1.29x
production and require less space. Industrial rents have a strong 1.2 Avg: 1.18x
1.1
historical correlation with GDP growth. ‐1sd: 1.08x
1.0
‐2sd: 0.97x
0.9
Cache is a REIT investment mandate is to invest primarily in
logistics properties located in the Pan Pacific region.

Page 151 Page 3
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Exceptional Gain/(Loss) 0 0 0 0 0 Growth in topline and net
Net Income 57 57 55 70 72 property income is driven
Tax 0 0 (1) (1) (1) by Cache’s acquisition of
Minority Interest 0 0 0 0 0 four warehouses in
Preference Dividend 0 0 0 0 0 Australia and completion of
Net Income After Tax 57 57 55 69 71 DHL development project
Total Return 64 66 55 69 71 in2H15.
Growth & Ratio
Revenue Gth (%) 11.4 2.3 9.5 34.6 3.9
Net Inc Gth (%) 39.8 (0.4) (3.6) 26.3 2.8
Dist to revenue (%) 81.0 80.6 72.7 62.1 61.5
10.6 10.3 12.8 8.2 8.2
to sales %)
ROAE (%) 7.9 7.4 7.2 8.5 8.3
ROA (%) 5.5 5.1 4.6 5.3 5.2
ROCE (%) 6.6 6.3 6.0 6.7 6.7
Int. Cover (x) 6.3 5.7 4.4 4.9 4.7

Page 4 Page 152
Company Guide

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Net Income 14 13 15 14 13
Tax 0 0 0 0 0
Non-tax deductible Items 2 (5) 2 3 4
Growth & Ratio
Revenue Gth (%) 0 (1) 2 3 7
N Property Inc Gth (%) 0 (1) 2 (6) 2
Net Inc Gth (%) (2) (10) 17 (11) (8)

FY Dec 2013A 2014A 2015F 2016F 2017F

Cash & ST Invts 41 11 13 9 10
Inventory 0 0 0 0 0
Debtors 1 3 1 2 2
Total Assets 1,077 1,137 1,262 1,356 1,358
ST Debt 0 7 7 7 7
Creditor 5 21 6 8 9
LT Debt 310 343 487 480 482

Net Cash/(Debt) (269) (338) (480) (477) (478)
Ratio Gearing is estimated to
Current Ratio (x) 9.0 0.5 1.1 0.7 0.8 increase to c.40%
Quick Ratio (x) 9.0 0.5 1.1 0.7 0.8
Z-Score (X) 1.9 1.7 1.3 1.5 1.5

Page 153 Page 5
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Dep. & Amort. 0 0 0 0 0
Tax Paid 0 0 0 (1) (1)
Chg in Wkg.Cap. (1) 13 (12) 2 0
Div from Assoc. & JVs 0 0 0 0 0 FY15F : acquisition of 3
Other Investing CF 0 0 0 0 0 Australian properties
Net Investing CF (56) (63) (125) (98) (1) FY16F: assumed
Distribution Paid (64) (67) (66) (76) (78) completion of
Chg in Gross Debt 0 42 144 (7) 2 acquisition of the latest
New units issued 85 0 0 100 0 Australian property.
Net Financing CF 11 (40) 78 17 (76)
Chg in Cash 27 (29) 2 (4) 1

Free CFPS (S cts) 2.2 1.3 (9.7) (2.3) 8.6
S$
1.22 Closing Target
S.No. Date Rating
Price Price
2
1.17 1 1: 28 Jan 15 1.20 1.28 BUY
2: 10 Feb 15 1.16 1.29 BUY
1.12 3
3: 03 Jun 15 1.16 1.28 BUY
1.07
4 4: 19 Aug 15 1.06 1.09 HOLD
5: 12 Oct 15 1.03 1.11 HOLD
1.02
5
0.97
0.92
0.87
0.82
Dec-14 Apr-15 Aug-15
Note : Share price and Target price are adjusted for corporate actions.
Source: DBS Bank

Page 6 Page 154
Cambridge Industrial Trust
Edition 1 Version 1 | Bloomberg: CREIT SP | Reuters: CMIT.SI Refer to important disclosures at the end of this report
HOLD Brewing headwinds

Price Target : S$0.61 (7% upside) Property conversions to cause headwinds to occupancy
rates. Property conversions (from single-tenanted properties to
Potential Catalyst: Better-than-expected results multi-tenanted ones when the leases expire over FY15-16F
Where we differ: We have forecasted more modest reversionary account for c.18.6% of revenues. This may mean downside to
assumptions top line in the near term, given the expected loss of property
efficiency and higher vacancy rates when these conversions take
Analyst
Derek Tan +65 6682 3716 derektan@dbs.com place. As such, we forecast CREIT to deliver c.1% CAGR in DPU
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com over FY15-17F.
Optimal gearing caps upside from acquisitions. CREIT has

Price Relative
S$ Relative Index
been active in acquisitions and has been focusing on
0.9 optimising its portfolio performance through strategic AEIs
0.9 208
0.8
188
across various properties which will aid growth in revenues in
0.8
0.7 168 the coming quarters. With gearing at 37.2%, we believe its
0.7
0.6
148
capacity for further acquisitions is likely to be capped and thus
0.6 128
0.5
108
we have not priced in any further acquisitions in our forecast.
0.5
0.4 88
Oct-11 Oct-12 Oct-13 Oct-14 Oct-15
Pro-active capital management. CREIT has refinanced most
Cambridge Industrial Trust (LHS) Relative STI INDEX (RHS)
of its loans expiring in 2015-2016, diversifying its debt funding
Forecasts and Valuation sources as a result. As of 30-Sep-15, CREIT had a weighted
FY Dec (S$ m) 2014A 2015F 2016F 2017F average debt maturity of 3.6 years at an estimated cost of
Gross Revenue 99 106 108 110 c.3.6%. The manager has fixed 96.5% of its interest rates over
Total Return 45 61 62 63 the next 3.5 years.
EPU Gth (%) 3 14 1 2 Our DCF-backed TP is maintained at S$0.61. The stock is
DPU (S cts) 5.0 5.0 5.1 5.1
DPU Gth (%) 1 0 1 1
trading at a c.>8.0%, which we believe will cap further
NAV per shr (S cts) 68.8 68.0 67.8 67.6 downside to share price. Maintain HOLD.
PE (X) 13.6 11.9 11.7 11.5
Distribution Yield (%) 8.8 8.8 8.9 9.0 Key Risks to Our View:
P/NAV (x) 0.8 0.8 0.8 0.8
ROAE (%) 6.0 7.0 7.2 7.3 higher interest payments which will reduce income available
for distribution and result in lower distribution per unit (DPU)
Distn. Inc Chng (%): - - - to unitholders. That said, CREIT has substantially hedged their
Consensus DPU (S cts): 5.0 5.0 5.1 interest rate exposure.
At A Glance
Mkt. Cap (S$m/US$m) 740 / 519
Major Shareholders
Jinquan Tong (%) 16.3
Credit Suisse Grp Ag (%) 5.4
Chan Wai Kheong (%) 5.0
Free Float (%) 73.3

Page 155
ed: TH / sa: JC
Company Guide

S$ m
90 86.4%
80
Earnings Drivers: 84.4%
70
Property conversions to cause headwinds to occupancy 60 82.4%
rates. While we note that Cambridge REIT (CREIT) offers 50
80.4%
40
strong income visibility with a long weighted average lease 30 78.4%
expiry of 3.9 years, property conversions (from single- 20
76.4%
tenanted properties to multi-tenanted ones when the leases 10
0 74.4%
expire) which account for 5.5% and 13.0% of revenues over 2013A 2014A 2015F 2016F 2017F
FY15-16F may mean near-term pressure to topline. This is Net Property Income Net Property Income Margin %
due to the loss of property efficiency and higher vacancy rates

when these conversions take place.
In view of the competitive environment, the manager is 88%
22 86%
focusing on maintaining occupancy rates and thus rental 22 84%
reversionary rates are likely to turn more modest to between 21 82%

80%
0-5% (vs 6.3% in 1H15). 21
78%
20
76%
20
74%
Completed acquisitions and completion of various asset 19 72%
enhancement projects to complement declining organic 19 70%
18 68%
growth potential. Completed acquisitions in 1H15 (160A
4Q2012
1Q2013
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
Gul Circle and remaining 40% interest in Cambridge SPV1LLP
which holds 3 Tuas South Avenue 4), coupled with completed Net Property Income Net Property Income Margin %
asset enhancement initiatives (AEIs) at its various properties,

will continue to drive earnings inorganically, complementing a
slowing portfolio organic growth profile. (x)
1.3
Gearing level of 37.2% is within management's comfortable 1.1
range of 35-40% and is optimal in our view. This is likely to

0.9
mean that while the manager remains keen to grow the
portfolio via acquisitions and is looking to venture overseas 0.7
for potential opportunities, they are capped by the number of

0.5
deals they can look at.
0.3
2013A 2014A 2015F 2016F 2017F
3Q15 results in line. CREIT reported a 13.8% and 10.5%
rise in revenues and net property income to S$28.5m and Source: Company, DBS Bank
S$21.m respectively. This was mainly due to the contribution
from acquisitions, which offset the higher vacancy rates
(occupancy rates dipped slightly to 95.4%). Rental reversions
remain healthy at 8.5% but are expected to moderate further
due as the operating environment remain competitive.
Distributable income fell by 1.6% to S$15.6m on higher

interest expenses due to an enlarged loan base from
acquisition activities. DPU fell by a larger 3.7% mainly due to
dilution from additional units issued as management fees and
from its dividend reinvestment programme (DRP).

Page 2 Page 156
Company Guide

Balance Sheet:
Gearing remains stable Looking ahead, there is limited
capacity for them to pursue acquisition opportunities at 35.0%
gearing levels c.37%. 30.0%
25.0%
Pro-active capital management. CREIT has refinanced most 20.0%
of its loans expiring in 2015-2016, diversifying its debt 15.0%
funding sources as a result. In addition, the manager has
10.0%
fixed 96.5% of its interest rates over the next 3.5 years. 2013A 2014A 2015F 2016F 2017F

Pick-up in occupancy rate. We believe that expected ROE (%)
vacancies and earnings weakness arising from property 7.0%
conversions from single-tenanted to multi-tenanted could be 6.0%

an overhang on the stock. The ability to retain tenants will 5.0%
alleviate such risks and may result in higher prices.
4.0%
3.0%
Not likely to see acquisitions given gearing of 37.2%.
The manager remains keen to grow the portfolio through 2.0%
acquisitions. Given limited accretive deals in Singapore, CREIT 1.0%
has broadened their investment focus to Australia, Japan and 0.0%

2013A 2014A 2015F 2016F 2017F
Malaysia where the manager impliedly views these countries
as having similar sovereign risks and transparency
characteristics with Singapore. Distribution Yield (%)
(%)
10.0
Key Risks:
Interest rate risk. Any increase in interest rates will result in 9.0
+2sd: 8.8%
higher interest payments which will reduce income available
8.0 +1sd: 8.1%
for distribution and result in lower distribution per unit (DPU)
Avg: 7.3%
to unitholders. That said, CREIT has substantially hedged 7.0
‐1sd: 6.6%
their interest rate exposure. 6.0
‐2sd: 5.9%
5.0
Economic risk. A deterioration in the economic outlook 2011 2012 2013 2014
could have a negative impact on industrial rents and

occupancies as companies cut back production and require PB Band (x)
less space. Industrial rents have a strong correlation with 1.5
(x)
GDP growth. 1.4
1.3
Company background 1.2 +2sd: 1.21x
Cambridge Industrial Trust is a real estate investment trust 1.1 +1sd: 1.1x
which invests primarily in income-producing industrial assets 1.0 Avg: 0.99x

0.9
located in Singapore. 0.8
‐1sd: 0.88x
‐2sd: 0.77x
0.7
0.6
Oct-11 Oct-12 Oct-13 Oct-14

Page 157 Page 3
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Gross revenue 96 99 106 108 110
Net Income 50 52 61 62 63
Tax 0 0 0 0 0
Total Return 119 45 61 62 63
Net Inc available for Dist. 61 63 63 64 65 Growth from completed
Growth & Ratio acquisitions to complement
Revenue Gth (%) 8.4 3.0 6.3 2.8 1.5 expected operational
N Property Inc Gth (%) 5.5 (3.2) 12.6 2.8 1.5 headwinds
Net Inc Gth (%) 4.7 4.2 16.7 1.4 1.8
Dist to revenue (%) 63.5 63.5 59.8 59.2 58.9
23.6 9.7 7.1 7.0 6.9
to sales %)
ROAE (%) 6.1 6.0 7.0 7.2 7.3
ROA (%) 3.9 3.9 4.4 4.4 4.5
ROCE (%) 4.6 5.3 5.9 6.0 6.0
Int. Cover (x) 2.4 3.9 4.0 3.8 3.8

Page 4 Page 158
Company Guide

FY Dec 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015
Net Income 14 12 14 13 15
Tax 0 0 0 0 0
Growth & Ratio
N Property Inc Gth (%) 0 4 0 (1) 9 Growth from acquisitions
Net Inc Gth (%) 9 (19) 22 (5) 9

FY Dec 2013A 2014A 2015F 2016F 2017F

Cash & ST Invts 74 6 1 0 0
Inventory 0 0 0 0 0
Debtors 7 11 2 2 2
Total Assets 1,261 1,380 1,391 1,393 1,396
ST Debt 0 50 50 50 50
Creditor 31 26 7 7 8
Other Current Liab 1 0 0 0 0 Gearing to remain
LT Debt 355 425 457 462 467 steady at c.37%
Non-Cash Wkg. Capital (18) (4) 6 6 6

Net Cash/(Debt) (281) (469) (507) (512) (517)
Ratio
Current Ratio (x) 2.7 0.4 0.2 0.2 0.2
Quick Ratio (x) 2.5 0.2 0.0 0.0 0.0
Z-Score (X) 1.4 1.0 1.1 1.1 1.1

Page 159 Page 5
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Dep. & Amort. 0 0 0 0 0
Tax Paid 0 0 0 0 0
Associates &JV Inc/(Loss) (14) 0 (1) (1) (1)
Chg in Wkg.Cap. 11 (4) (10) 0 0
Net Invt in Properties 129 (195) (24) (2) (2)
Other Investing CF 0 1 0 0 0 Forecasted acquisitions
and AEIs
Net Investing CF 129 (194) (24) (2) (2)
Net Financing CF (207) 59 (31) (59) (60)
Chg in Cash (16) (67) (5) (1) 0

Free CFPS (S cts) 15.5 (10.3) 2.1 4.6 4.7
0.76 S$
Pri c e Pri c e
3 1 19 Jan 15 0.68 0.73 HOLD
0.66 1 2
2 23 Feb 15 0.68 0.73 HOLD
3 24 Mar 15 0.70 0.73 HOLD
0.61 4 4 23 Oct 15 0.64 0.61 HOLD
0.56
0.51
Source: DBS Bank

Page 6 Page 160
CapitaLand Commercial Trust
Edition 1 Version 1 | Bloomberg: CCT SP | Reuters: CACT.SI Refer to important disclosures at the end of this report
BUY Shoots of growth at capitagreen

Price Target : 12-Month S$ 1.48 (9% upside plus 6.5% yield) CapitaGreen boosts earnings visibility amid uncertain market.
Despite an uncertain office market outlook in 2016, CCT offers
Potential Catalyst: Acquisition of the remaining 60% stake in investors earnings certainty in the form of additional
CapitaGreen contribution from CapitaGreen. This should more than offset
Where we differ: We are in line with peers the risk of negative rental reversions and lower occupancies for
the rest of the portfolio in the next few years. Upside will come
Analyst from acquisitions given its low gearing of 30%.
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com Defensive portfolio with >70% of leases expiring in FY18 and
beyond. CCT has maintained a defensive leasing posture amid
stiff competition for larger tenants by locking in longer term
Price Relative leases for most of its top 10 tenants.With >70% of office leases
S$ Relative Index expiring in FY18 and beyond, the Trust offers investors a
2.0
205
measure of earnings stability and certainty amid record office
1.8 185 completions over the next two years.
165
1.6
1.4
145 3.7% DPU CAGR for FY15-17. Looking ahead, we expect CCT
1.2
125
to deliver 2-year DPU CAGR of 3.7%, driven by new
contribution from CapitaGreen, which was opened in Dec-2014,
105
1.0 85
and has a committed occupancy rate of 87.7% as of 3Q15. In
CapitaLand Commercial Trust (LHS) Relative STI INDEX (RHS) addition, the REIT has a call option to acquire the remaining
60% of the asset in FY15-17 at the higher of valuation or
FY Dec (S$ m) 2014A 2015F 2016F 2017F development cost compounded at 6.3% p.a.
Gross Revenue 263 270 269 272 Valuation:
Net Property Inc 205 213 211 214 We have a DCF-backed TP of S$1.48. We believe that dividend
Total Return 449 238 246 259 yield of 6.6-6.9% is attractive given its large market cap and
EPU (S cts) 12.6 8.1 8.3 8.7 trading liquidity. We have a BUY call premised on cheap
EPU Gth (%) 38 (36) 3 5 valuations (stock is trading at 0.8x P/Bk) and total return of
DPU (S cts) 8.5 8.6 8.9 9.3 >10% However, we note that in the near term, share price
DPU Gth (%) 3 2 3 5 could be more newsflow driven.
NAV per shr (S cts) 174.8 174.3 173.6 173.0
PE (X) 10.8 16.9 16.4 15.6
Distribution Yield (%) 6.2 6.3 6.5 6.8 Risk of higher vacancies and negative rental reversions for
P/NAV (x) 0.8 0.8 0.8 0.8 FY16. In FY16-17, close to 30% of CCT’s office leases will be
Aggregate Leverage (%) 30.4 30.0 30.0 30.0 due for expiry, the majority of which stems from One George
ROAE (%) 7.3 4.6 4.8 5.0
Street (7%) and Six Battery Road (10%), where expiring rents
are close to or slightly higher than market rents. As the
Distn. Inc Chng (%): - (4) (4)
Manager has prioritized tenant retention, there is a possibility
of negative rental reversions, which would impede earnings
growth.
Mkt. Cap (S$m/US$m) 4,031 / 2,827
Major Shareholders
Capitaland Ltd (%) 31.5
Blackrock (%) 6.5
CBRE Clarion (%) 5.0
Free Float (%) 57.0

Page 161
ed: TH / sa: JC
Company Guide

S$ m
300 86.3%
200 82.3%
Renewal of GIC lease to drive earnings growth for FY15. GIC, 100 78.3%
which occupies c.40% of NLA at Capital Tower, recently 50 76.3%
renewed its lease at what we understand to be a 25% uplift
0 74.3%
in rents. We estimate this lease renewal to contribute to 2013A 2014A 2015F 2016F 2017F
c.3% growth in CCT’s topline, and will be the significant Net Property Income Net Property Income Margin %
driver of income and DPU growth in FY15. However, this will

be partially mitigated by the vacation of Mizuho, which
occupies c8% of NLA.
Quarterly Net Property Income and Margins (%)
80%
80%
Moderate 3% uplift in FY16 DPU from CapitaGreen, FY17 to 55
79%
see full impact. CCT’s FY16 earnings will be driven by fresh 53 79%
78%
contribution from CapitaGreen, which has achieved 51 78%
77%
commitments for 87.7% of NLA as of 3Q15. Majority of 49 77%
leases secured at the asset expires beyond 2018, thereby 76%
47 76%
protecting the asset from the anticipated spike in office 75%
supply from 2016-2018. While leases signed in 2014 have 45 75%
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
begun operations, we note that most tenants who signed
their leases in 2015 will likely begin to contribute gradually Net Property Income Net Property Income Margin %
from 1Q16 onwards. Full year contribution from FY17 will

add another visible boost to DPU in the medium term.
ROE (%)
Staggered weighted lease expiry profile will mitigate negative 7.0%
rental reversions. We have factored in lower occupancies and 6.0%
negative reversions at Capital Tower, Six Battery Road, and 5.0%

One George Street for FY16 and FY17. CCT’s defensive 4.0%
WALE of 7.7 years (by NLA) should ensure that the negative
3.0%
impact from an anticipated decline in rents over the next two
2.0%
years will be gradual rather than immediate.
1.0%
3Q15 DPU of 2.14Scts (+2.4% y-o-y) was in line with our 0.0%
2013A 2014A 2015F 2016F 2017F
estimates. Earnings were driven by higher rental income from
Capital Tower (post renewal of GIC lease), Six Battery Road,
and Raffles City, mitigated by slight losses at Capitagreen,
Interest Cover (x)
where most tenants are still in the process of fitting out. (x)
Portfolio occupancy fell to 96.4%, largely due to low 7.00
occupancies at Capital Tower (92.2%), where the Manager 6.00
has yet to backfill space vacated by Mizuho, which previously 5.00
occupied 9.5% of NLA. 4.00
3.00
2.00
1.00
0.00
2013A 2014A 2015F 2016F 2017F

Page 2 Page 162
Company Guide

Balance Sheet:
32.0%
Low gearing of 29.5% allows for opportunistic acquisitions.
CCT has a healthy aggregate gearing ratio of 30%, which 27.0%
gives it ample headroom to make opportunistic acquisitions.
83% of borrowings are fixed at an average cost of 2.4%, 22.0%
which provides a measure of protection against near term
fluctuations in interest rate. 17.0%

2013A 2014A 2015F 2016F 2017F
Obvious acquisition pipeline CCT has a call option to acquire
the remaining 60% interest in CapitaGreen within 3 years
after completion (from 2015-2017), at market value or
development cost compounded at 6.3% p.a. Based on Jun- Distribution Paid / Net Operating CF
15 valuation of S$1.57bn, we estimate acquisition price to be (x)
in the range of c.S$950m-S$1bn, which would bring gearing 1.5
to c.37%. Given historical gearing levels of 30-35% however, 1.3

any acquisition could be accompanied by an equity fund
1.1
raising exercise.
0.9
Key Risks: 0.7

Risk of higher vacancies and negative rental reversions for
0.5
FY16. In FY16-17, close to 30% of CCT’s office leases will be 2013A 2014A 2015F 2016F 2017F
due for expiry, the majority of which stems from One George
Street (7%) and Six Battery Road (10%), where expiring rents
are close to or slightly higher than market rents. As the
Manager has prioritized tenant retention, there is a possibility Distribution Yield (%)
(%)
of negative rental reversions, which would impede earnings 7.8
growth. 7.3
6.8
+2sd: 6.7%
Competition from other landlords. Between 2016 and 2018, 6.3
+1sd: 6.1%
c.5.3m sqft of office net lettable area (NLA) will be completed 5.8
Avg: 5.5%
within the downtown core, translating to a 15% increase in 5.3
‐1sd: 4.9%
existing stock, or 3-year CAGR of 4.6%. Due to weaker net 4.8
absorption rates of <1m sqft in recent years, CCT could face 4.3 ‐2sd: 4.3%
higher competition for large tenants from landlords of newer 3.8

2012 2013 2014 2015 2016
buildings, which have large floor plates of 30-40k sqft.
Pressure on rents from shadow space. We see some

P/Bk NAV (x)
downsizing activity from banks and financial institutions, and (x)
1.3
these shadow space particularly in the Marina Bay area could
1.2
put some pressure on rents for CCT’s portfolio, which is
1.1
located primarily in the Raffles Place/Tanjong Pagar area. +2sd: 1.07x
1.0
+1sd: 0.98x
0.9 Avg: 0.88x
Company background 0.8 ‐1sd: 0.79x
CapitaCommercial Trust (CCT) is a real investment trust 0.7 ‐2sd: 0.7x
investing exclusively in commercial properties in 0.6
Singapore. 0.5

Page 163 Page 3
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Gross revenue 251 263 270 269 272
Other Non Opg (Exp)/Inc (5) (4) 0 0 0
Net Income 261 368 238 246 259
Tax 0 0 0 0 0
Total Return 367 449 238 246 259
Non-tax deductible Items (139) (200) 16 16 16
Growth & Ratio Earnings growth will be
Revenue Gth (%) (33.1) 4.4 2.9 (0.5) 1.1 driven by contribution from
N Property Inc Gth (%) (33.3) 4.1 3.7 (0.8) 1.3 CapitaGreen, which should
Net Inc Gth (%) 26.9 40.9 (35.2) 3.5 5.2 offset income loss from
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 100.0 lower occupancies and
negative rental reversions at
existing office assets such
as Capital Tower, 6 Battery
Dist to revenue (%) 93.1 94.9 94.0 97.6 101.2 Road and One George
Operating expenses (%) 6.0 6.2 7.0 7.0 7.0 Street
ROAE (%) 5.4 7.3 4.6 4.8 5.0
ROA (%) 3.9 5.8 3.6 3.8 4.0
ROCE (%) 2.8 3.0 3.0 3.0 3.0
Int. Cover (x) 3.9 5.8 5.6 5.3 5.0

Page 4 Page 164
Company Guide

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Exceptional Gain/(Loss) (1) 0 (19) 0 0
Net Income 58 157 39 77 57
Tax 0 0 0 0 0
Growth & Ratio
Revenue Gth (%) 1 0 3 1 (1)
N Property Inc Gth (%) 0 (2) 7 0 (2)
Net Inc Gth (%) (40) 172 (75) 96 (26)

FY Dec 2013A 2014A 2015F 2016F 2017F

Other LT Assets 1,359 1,499 1,499 1,499 1,499
Cash & ST Invts 84 101 142 145 149
Inventory 0 0 0 0 0
Debtors 34 38 17 17 17
Total Assets 6,245 6,521 6,547 6,555 6,564
ST Debt 0 270 270 270 270

Creditor 51 47 63 62 63
LT Debt 1,218 970 981 989 997

Net Cash/(Debt) (1,134) (1,139) (1,110) (1,114) (1,118)
Ratio Assuming acquisition of
Current Ratio (x) 1.9 0.4 0.5 0.5 0.5 the remaining 60% of
Quick Ratio (x) 1.9 0.4 0.5 0.5 0.5 CapitaGreen, gearing
30.3 30.4 30.0 30.0 30.0 would rise to slightly less
than 40%.
Z-Score (X) 1.9 1.9 1.9 1.9 1.9

Page 165 Page 5
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Income 261 368 238 246 259

Dep. & Amort. 1 4 4 4 4
Tax Paid 0 0 0 0 0
Associates &JV Inc/(Loss) (127) (217) (79) (90) (103)
Chg in Wkg.Cap. 8 (5) 37 0 1
Net Operating CF 195 189 216 175 176
Other Invts (net) (1) 0 0 0 0
Invts in Assoc. & JV (526) (397) 0 0 0
Net Investing CF 61 52 68 82 95
Net Financing CF (290) (223) (243) (254) (267)
Chg in Cash (34) 17 40 3 4

Free CFPS (S cts) 6.1 5.5 6.9 5.7 5.7

2.00 S$
1.90
1 Cl o s i n g Ta rg e t
1.80 S.No . Da te R a ti n g
Pri c e Pri c e
1.70 1 22 Jan 15 1.91 1.81 HOLD
2 2 16 Mar 15 1.72 1.81 HOLD
1.60 3 19 Aug 15 1.33 1.48 BUY
1.50
1.40
1.30
3
1.20
Source: DBS Bank

Page 6 Page 166
CapitaLand Mall Trust
Edition 1 Version 1 | Bloomberg: CT SP | Reuters: CMLT.SI Refer to important disclosures at the end of this report
BUY Retail landlord of choice

Last Traded Price: S$1.94 (STI : 2,834.23) Portfolio resilience priced in. Maintain BUY. We have a BUY
Price Target : S$2.05 (6% upside plus 5.9% yield) recommendation on the stock, with TP of S$2.05. We believe
that expectations of weak reversions given retail headwinds
Potential Catalyst: Acquisitions have already been priced into the stock. In addition, the Trust’s
Where we differ: More subdued rental assumptions earnings will be further bolstered by the recent acquisition of
Bedok Mall, which we estimate will be 1-2% DPU accretive for
Analyst FY16-17F.
Reversions to fall to 4-5% over the next few years . As retailers’

profitability continue to be squeezed by high labour costs and
middling retail sales, we believe that rental reversions are likely
Price Relative to fall within the 4-5% range in the next 1-2 years. That said,
S$ Relative Index
we do not believe that there is a risk of negative portfolio
222
2.5
202
reversions due to the resilience of CMT’s malls, which boast
2.3 182 good accessibility, strong management track record, and
2.1 162 proactive customer retention efforts (through the CapitaStar
1.9
142
rewards programme).
122
1.7
102
1.5 82 Gearing to remain stable; upside from potential

developments and acquisitions. CMT’s gearing ratio is
CapitaLand Mall Trust (LHS) Relative STI INDEX (RHS)

forecasted to remain fairly stable at c.35% over FY15-17F which
Forecasts and Valuation is in line with management's comfortable range of <40%. Given
FY Dec (S$ m) 2014A 2015F 2016F 2017F its sizeable portfolio, we believe that returns can be enhanced if
Gross Revenue 659 661 708 718 the group undertake more AEIs or brownfield developments to
Net Property Inc 448 460 494 499 boost returns in the medium term.
Total Return 619 394 421 427
EPU (S cts) 13.2 11.3 11.9 12.1
EPU Gth (%) 12 (15) 6 2 We have a DCF-backed TP of S$2.05, adjusted due to a slight
DPU (S cts) 10.8 11.2 11.5 11.7 tweak in earnings. At current price, the stock offers investors a
DPU Gth (%) 6 3 3 2 DPU yield of 5.9% for FY16, and offers a total return of 11%.
NAV per shr (S cts) 181.5 184.6 182.2 182.6 We maintain our BUY call.
PE (X) 14.7 17.2 16.3 16.0
P/NAV (x) 1.1 1.1 1.1 1.1
Aggregate Leverage (%) 33.0 35.4 35.4 35.4 Upside risk from further interest savings . The Trust has been
ROAE (%) 7.4 6.2 6.5 6.6 proactive in extending its debt profile, locking in long-tenure
MTNs at lower rates than previously achieved. Further interest
Distn. Inc Chng (%): - - - savings from refinancing associate debt would offer upside to
Consensus DPU (S cts): 11.0 11.7 11.8 our estimates.
At A Glance
Source of all data: Company, DBS Bank, Bloomberg Finance L.P Issued Capital (m shrs) 3,541
Mkt. Cap (S$m/US$m) 6,870 / 4,819
Major Shareholders
CapitaLand Ltd (%) 29.2
NUTC Enterprises (%) 5.6
Blackrock (%) 5.0
Free Float (%) 60.2

Page 167
ed: TH / sa: JC
Company Guide

500 76.6%
450
400 74.6%
72.6%
The mall owner of choice despite retail headwinds. CMT’s 300
250
portfolio of malls stands out in Singapore’s retail landscape due 200
70.6%
to its (a) accessibility, (b) excellent asset management track 150 68.6%
100
record, and (c) strong rewards/marketing programme. Despite 50
66.6%
recent retail headwinds, we believe that CMT’s malls will 0

2013A 2014A 2015F 2016F 2017F
64.6%
continue to see good demand as retailers look to consolidate

their footprints within CMT’s malls.
Contribution from completion of asset enhancements. Net Property Income and Margins (%)
71%
With operations at Clarke Quay commencing in 2Q2015, we 131
70%
will see more food and beverage (F&B) and entertainment 126 69%
68%
concepts which are expected to increase shopper traffic in the 121 67%
medium term. This should help to improve occupancy rates in 116

66%
65%
Clarke Quay, which recorded high rental reversions of 33% but 111 64%
lower occupancy of 77.6% as compared to 95.9% in 4Q2014. 106

63%
62%
101 61%
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
Also, the completion of phase two works in Bugis junction has
seen its revenue contribution grow by 11%. Ongoing AEIs in Net Property Income Net Property Income Margin %
Tampines mall, Bukit Panjang and IMM building are on track
and should help to further differentiate the mall in the midst of Distribution Paid / Net Operating CF
upcoming supply. (x)
1.2
1.1
Expect rental reversions to underperform historical levels. 1.0
CMT’s rental reversion trends have been moderating and as 0.9

0.8
retailers’ profitability continue to be squeezed by high labour
0.7
costs and middling retail sales, we believe that rental reversions 0.6
are likely to fall within the 4-5% range in the next 1-2 years, 0.5
given compounded pressure from escalating labour costs and 0.4
labour shortage. 0.3

2013A 2014A 2015F 2016F 2017F
NPI margins could decline as the manager expands

marketing efforts. The manager is looking to ramp up Interest Cover (x)
(x)
marketing efforts to attract a younger audience by deploying 4.50
various digital and social media initiatives and the rollout of the 4.40
enhanced CapitaStar reward programme to attract and retain 4.30
shoppers. In addition, the manager intends to step up the 4.20

4.10
installation and adoption of mobile and internet-enabled
4.00
infrastructure within its mall to allow for the establishment of 3.90
complementary e-commerce activities (J Avenue website for 3.80
shoppers to buy online and collect in store). While the 3.70
immediate benefits are not obvious and are likely to drive up 3.60
2013A 2014A 2015F 2016F 2017F
operating expenses in the medium term, we laud the efforts of
the management in embracing changes in shoppers'
expectations. Source: Company, DBS Bank

Page 2 Page 168
Company Guide

Balance Sheet:
Gearing to remain stable. CMT’s gearing ratio is forecasted to
35.0%
remain fairly stable at c.35% over FY15-17F. This is after
placement of new units in consideration for the purchase of 30.0%
Bedok Mall in 3Q15. Gearing level is within management's 25.0%
comfortable level of between 35% and 40%. 20.0%
15.0%
Cost of debt to remain stable. The average debt cost is 3.3%, 10.0%
which we forecast to remain stable in the immediate term. With 2013A 2014A 2015F 2016F 2017F
interest rates on the rise, we have priced in a 25-bp increase in

average interest cost once hedges are rolled over in the coming
two years. ROE (%)
7.0%
Acquisitions to drive her earnings. CMT has the rights of first
5.0%
refusal to acquire its Sponsor’s retail assets in Singapore.
4.0%
CapitaLand has several retail assets in its portfolio which could
3.0%
be injected into the REIT, including Star Vista, Bedok Mall, and
the remaining 70% stake in Westgate. 2.0%
1.0%
Better-than-expected operational results. We believe that CMT’s 0.0%

2013A 2014A 2015F 2016F 2017F
portfolio will continue to remain resilient despite headwinds.
The Trust's ability to maintain a steady growth in top line while
holding occupancies will be a strong testament of the Distribution Yield (%)
(%)
manager's capability to stand out amongst its peers. 6.6
6.1
+2sd: 6%
Key Risks:
5.6 +1sd: 5.5%
Economic risk . A deterioration in the economic outlook could
have a negative impact on retail sales and thus cap landlords' 5.1 Avg: 5.1%
ability to raise rents. 4.6

‐1sd: 4.7%
‐2sd: 4.3%
4.1
Upside risk from further interest savings
3.6
The Trust has been proactive in extending its debt profile, 2012 2013 2014 2015 2016
locking in long-tenure MTNs at lower rates than previously

achieved. Further interest savings from refinancing associate PB Band (x)
debt would offer upsides to our estimates. 1.6
(x)
1.5
Company Background 1.4
CapitaMall Trust is a real estate investment trust which owns 1.3 +2sd: 1.32x
and invests in retail properties in the suburban areas and 1.2
+1sd: 1.23x
downtown core of Singapore. 1.1

Avg: 1.15x
‐1sd: 1.07x
1.0
‐2sd: 0.98x
0.9
0.8

Page 169 Page 3
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Gross revenue 638 659 661 708 718
Net Income 407 457 394 421 427
Tax (1) 0 0 0 0
Total Return 576 619 394 421 427
Non-tax deductible Items (39) (45) 8 0 0 Growth driven by Bedok
Net Inc available for Dist. 367 412 402 421 427 mall, positive rental
reversions
Growth & Ratio
Revenue Gth (%) (3.6) 3.3 0.3 7.0 1.5
N Property Inc Gth (%) (1.5) 2.2 2.6 7.3 1.1
Net Inc Gth (%) 9.8 12.3 (13.7) 6.6 1.6
Dist to revenue (%) 57.6 62.6 60.9 59.4 59.5
6.4 7.0 7.1 7.0 6.9
to sales %)
ROAE (%) 6.9 7.4 6.2 6.5 6.6
ROA (%) 4.3 4.8 3.9 4.0 4.0
ROCE (%) 4.3 4.3 4.2 4.3 4.4
Int. Cover (x) 3.9 4.1 4.4 4.4 4.4

Page 4 Page 170
Company Guide

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Gross revenue 165 165 167 160 162

Net Income 101 145 102 89 101
Tax 0 0 0 0 0
Total Return 101 174 102 142 101 Stable earnings performance
Non-tax deductible Items 23 (3) 5 2 (1)
Growth & Ratio
Revenue Gth (%) 0 0 1 (5) 1
N Property Inc Gth (%) 0 (7) 11 (7) 3
Net Inc Gth (%) (11) 43 (29) (13) 14

FY Dec 2013A 2014A 2015F 2016F 2017F

Other LT Assets 1,093 1,194 1,194 1,194 1,194
Cash & ST Invts 830 1,130 934 1,136 1,154
Inventory 0 0 0 0 0
Debtors 22 25 31 33 34
Total Assets 9,220 9,858 10,523 10,565 10,593
ST Debt 498 762 574 574 574

Creditor 183 217 267 286 291
Other Current Liab 6 36 36 36 36 Gearing to remain
LT Debt 2,307 2,407 3,067 3,077 3,087 stable at 35% post
Other LT Liabilities 218 153 153 153 153 issuance of new shares
Unit holders’ funds 6,009 6,282 6,425 6,438 6,452 to CAPL in
Minority Interests 0 0 0 0 0 consideration for
Bedok Mall

Net Cash/(Debt) (1,975) (2,040) (2,707) (2,515) (2,507)
Ratio
Current Ratio (x) 1.2 1.1 1.1 1.3 1.3
Quick Ratio (x) 1.2 1.1 1.1 1.3 1.3
Z-Score (X) 6.2 5.8 5.3 5.4 5.4

Page 171 Page 5
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Income 407 457 394 421 427

Dep. & Amort. 0 0 0 0 0
Tax Paid 0 0 0 0 0
Chg in Wkg.Cap. 18 5 44 17 4
Net Operating CF 415 409 363 359 352
Net Invt in Properties (99) (65) (853) 162 (10)
Invts in Assoc. & JV (31) 12 0 0 0
Net Investing CF (67) 51 (778) 240 69
Chg in Gross Debt (183) 315 472 10 10
Net Financing CF (627) (160) 220 (397) (404)
Chg in Cash (278) 300 (195) 202 18

Free CFPS (S cts) 9.1 9.9 (14.0) 14.7 9.7
2.36 S$
Closing T arget
S.No. Dat e Rat ing
Pric e Price
2.26 1: 26 J an 15 2.21 2.19 HOLD
2: 15 J ul 15 2.15 2.20 HOLD
2 3: 23 J ul 15 2.13 2.25 HOLD
2.16 1
4: 31 Aug 15 1.92 2.07 BUY
3 5: 12 Nov 15 1.89 2.05 BUY
2.06 6: 11 Dec 15 1.88 2.05 BUY
1.96 4
6
1.86
5
1.76
Source: DBS Bank

Page 6 Page 172
CapitaLand Retail China Trust
Edition 1 Version 1 | Bloomberg: CRCT SP | Reuters: CRCT.SI Refer to important disclosures at the end of this report
BUY Allaying growth fears

Last Traded Price: S$1.49 (STI : 2,834.23) Over-reaction to China slowdown. CRCT has corrected since
Price Target : S$1.69 (13% upside plus 7.4% yield) end-Jun-15 on the back of Chinese growth fears. We believe
this is an over-reaction as CRCT continues to perform with
Potential Catalyst: Further acquisitions and delivery of positive rental 3Q15 DPU rising 12.3% y-o-y to 2.64 Scts. In addition, during
reversions 3Q15, CRCT’s malls continue to deliver healthy tenants sales
Where we differ: Below concensus due to lower top line (+12.7%) and positive rental reversions (+8.9%). With CRCT
trading at 0.9x book and offering an attractive FY16-17F DPU
Analyst
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com of 7.4-7.5% yield, we maintain our BUY recommendation and
Derek Tan +65 6682 3716 derektan@dbs.com S$1.69 TP.
Investment opportunity during earnings lull. With several of

CRCT’s malls still ramping up or in a transition phase, CRCT
Price Relative offers an opportunity to invest during an earnings lull before
S$ Relative Index an uptick in growth. For example, Grand Canyon (acquired in
2.0
204
2014) is generating a 9M15 annualised NPI yield of only c.5%
1.8 184 (based on the original acquisition price) versus target range of
1.6
164 7-8%. Meanwhile, Minzhongleyuan and Wuhu are incurring
1.4
144
losses due to nearby road closures and reposition works
respectively. Upon stabilisation of these three malls, we
124
1.2
104
1.0 84
estimate 14% upside from our FY15F NPI. This is on top of the
expected 4% CAGR in NPI for CRCT’s other multi-tenanted
CapitaLand Retail China Trust (LHS) Relative STI INDEX (RHS) malls over the next three years. Additional upside to earnings
could also come from the strengthening of the CNY.
FY Dec (S$ m) 2014A 2015F 2016F 2017F
Low gearing provides upside from acquisitions. CRCT’s gearing
Net Property Inc 132 138 148 155 of only 28.5% (as at end Sep15) versus the new 45% limit
Total Return 145 81 86 90 imposed by MAS, places CRCT in a strong position to pursue
Distribution Inc 81 90 95 99 DPU-accretive acquisitions.
EPU (S cts) 4.9 9.7 10.1 10.2
EPU Gth (%) 12 98 4 2 Valuation:
DPU (S cts) 9.8 10.6 11.0 11.1
DPU Gth (%) 9 8 4 2
With a 21% 12-month total return (13% capital upside and
NAV per shr (S cts) 163.0 168.7 164.8 161.0 7.4% yield), we maintain BUY and TP of S$1.69. We expect
PE (X) 30.6 15.4 14.8 14.6 the delivery of DPU growth in the coming year should allay
Distribution Yield (%) 6.6 7.1 7.4 7.5 investors' fears over possible negative rental reversions and
P/NAV (x) 0.9 0.9 0.9 0.9 trigger a re-rating from the current depressed levels.
ROAE (%) 3.1 5.8 6.0 6.3
Significant downturn in China. The key risk to our positive view
Distn. Inc Chng (%): - - -
is if China experiences a hard landing which would result in
lower-than-expected or negative growth in retail sales. This in
turn would translate into lower rents and DPU for CRCT.
At A Glance
Mkt. Cap (S$m/US$m) 1,256 / 881
Major Shareholders
Retail Crown Pte Ltd (%) 19.2
Capitamall Trust (%) 14.4
Mathews International (%) 6.87
Free Float (%) 54.3

Page 173
ed: TH / sa: JC
Company Guide

200
Momentum from past positive rental reversions to still 160
140 69.1%
flow through. CRCT’s malls on average have achieved 120
tenant sales of 14% (between 9.5-21.3%) over the last 2.5 100 67.1%
80
years, resulting in underlying positive rental reversions of 60
65.1%
10.0-24.9% each. We believe the momentum from the rental 40 63.1%

uplifts delivered over the last 11 quarters should continue to 20
0 61.1%
flow through especially as Grand Canyon (which was 2013A 2014A 2015F 2016F 2017F
acquired in 2014) has yet to stabilise. Grand Canyon’s 9M15 Net Property Income Net Property Income Margin %
annualised NPI yield stood at c.5% versus CRCT’s long-term Net Property Income and Margins (%)
target of 7-8%. Going forward, with continued growth in 38 69%
retail sales (China retail sales were up 10.8% in Aug-15) on 36

68%
67%
the back of urbanisation trend and shift towards a 34 66%
consumption-based economy, we estimate that CRCT’s multi- 32
65%
tenanted malls (excluding Minzhongleyuan and Wuhu) should 30

64%
63%
deliver NPI CAGR of 4.5% over the next three years. 28 62%
61%
26
60%
Couple of malls yet to make meaningful contribution. Two of 24 59%
CRCT’s malls, Minzhongleyuan (MZLY) and Wuhu are
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
currently making small losses. MZLY is impacted by road
closures to facilitate the construction work of a new subway Net Property Income Net Property Income Margin %
line which is due to be completed at end-2016. Meanwhile, Distribution Paid / Net Operating CF
(x)
the Wuhu mall is being repositioned given a softer operating 1.0
environment in Wuhu (impact of change in catchment area 0.9
and heightened completion). We estimate that the increased 0.8
accessibility at MZLY from 2017 and successful repositioning 0.7
of Wuhu could potentially result in a 9% uplift in CRCT’s 0.6
FY15F NPI over the next 3-5 years. 0.5
0.4
AEI and strategic initiatives to strengthen long-term 0.3
positioning. To strengthen the competitive positioning of 0.2

2013A 2014A 2015F 2016F 2017F
CRCT’s portfolio and provide incremental earnings, CRCT is
planning to undertake AEI at Wangjing. This will involve the CRCT’s tenants sales as well as China and Beijing retail sales
construction of a link way to the new MRT station and still growing despite growth fears
rejuvenation of the mall façade. We believe this, combined y-o-y growth
with the recent decision to introduce popular international 35%
brands at Wangjing and Grand Canyon despite the short- 30%
term hit to rents (positive rental reversions dipped to 4.6% in 25%
2Q15 from 12.8% in 1Q15), should ensure that CRCT’s malls 20%
are well positioned and can generated sustainable NPI growth 15%
in the long term. 10%
5%
Income stability from master leased properties. CRCT’s three
0%
master leased properties, Anzhen, Erqi and Shuangjing had a
Oct-11
Oct-12
Oct-13
Oct-14
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Apr-11
Apr-12
Apr-13
Apr-14
Apr-15
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
WALE (by GRI) of 10.6, 11.9 and 9 years respectively at end-

Mar-15. Contributing an estimated c.22% of FY15F NPI, the
Beijing retail sales China retail sales CRCT tenant sales
three malls provide significant cashflow visibility and income
Positive rental reversions
stability for the REIT.
y-o-y growth 10.8% rental reversion excluding strategic
35% initiatives to entice popular retailers
3Q15 results inline. CRCT delivered another good set of
30%
results despite the challenges at its MZLY and Wuhu malls 24.9%
25% 23.0% 22.6% 23.6%
with 3Q15 DPU increasing 12.3% y-o-y to 2.64 Scts. The 20.6%
results were underpinned by a stronger CNY versus SGD, as 20% 17.0%
18.2% 17.3% 17.5%
15.2% 14.9%
well as NPI in CNY terms for CRCT’s core operating malls 15% 11.9% 13.0% 12.8% 10.9%
rising 7% (+8.7% excluding the master leased properties). 10% 8.0%
9.5% 10.0% 10.8%
Including MZLY and Wuhu, total group 3Q15 NPI in CNY 4.6%
5%
terms was up 0.6% and up 9.1% in SGD terms.
0%
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
Source: Beijing Bureau of Statistics, Bloomberg Finance L.P.,

Company, DBS Bank

Page 2 Page 174
Company Guide

Balance Sheet:
Low gearing. CRCT’s gearing is expected to remain low at
30.0%
<30%. This provides the REIT with the financial flexibility to
pursue further acquisitions, especially in light of MAS's new 25.0%
45% gearing limit. Previously, CRCT could only increase its 20.0%
gearing to 35% as it did not have a credit rating.
15.0%
Moderate exposure to interest rates. With 77.5% of CRCT’s 10.0%

debt fixed, the REIT has a moderate exposure to rising interest 2013A 2014A 2015F 2016F 2017F
rates. Nevertheless, we have imputed a 50-bp increase in

CRCT’s current all-in cost of debt from the current 2.98%
level over the next two years. ROE (%)
6.0%
Strengthening CNY versus SGD. With all of CRCT’s assets and 5.0%
earnings sourced from China, the strengthening CNY versus 4.0%

SGD should provide a tailwind to distributions paid in SGD as
3.0%
CRCT does not hedge its income exposure. In addition, the
appreciation of CNY should also boost CRCT’s NAV per share 2.0%
which now stands at S$1.68 (net of distribution). 1.0%
Positive rental revisions. Despite the concerns over the 0.0%

2013A 2014A 2015F 2016F 2017F
economic outlook for China weighing on CRCT, we believe
delivery of positive rental reversions and DPU growth should
allay such concerns. In our view, uplift in rents will be Distribution Yield (%)
underpinned by continued tenant sales growth which was up (%)
8.5
12.7% y-o-y in 3Q15. Furthermore, continued DPU growth
8.0
should also be boosted by increased contribution from
7.5 +2sd: 7.5%
CapitaMall Grand Canyon as the full benefits from tenant
7.0
remixing have yet to be realised. +1sd: 6.9%
6.5
Avg: 6.4%
6.0
Key Risks: ‐1sd: 5.8%
5.5
Threat from e-commerce. As consumers are now purchasing 5.0
‐2sd: 5.3%
more goods online, sales at shopping malls may decline, 4.5

causing rents at CRCT’s properties to be negatively 2012 2013 2014 2015 2016
impacted. This threat is partially mitigated by the fact that

c.42% of CRCT’s GRI is sourced from tenants in the F&B PB Band (x)
(23% of GRI), supermarket (10%), leisure & entertainment (x)
1.6
(3%), education (3%) and beauty & healthcare (3%) sectors 1.5
which are more immune to the e-commerce threat. 1.4
1.3
+2sd: 1.27x
New mall supply in Beijing. According to Savills, the supply 1.2
+1sd: 1.15x
of mid- to high-end malls in Beijing is expected to increase 1.1
1.0 Avg: 1.02x
by 10% in 2015. This may pressurise the rents at CRCT’s
0.9 ‐1sd: 0.89x
malls. This risk is partially mitigated by the fact that c.80% 0.8
‐2sd: 0.76x
of the new supply is located out of the core retail areas 0.7
where CRCT’s malls are situated. In addition, approximately 0.6

19% of CRCT’s Beijing NPI is underpinned by master leases.
Currency risk. As 100% of CRCT's income is derived in CNY Source: Company, DBS Bank
and it does not hedge its income, depreciation of the CNY
against the SGD would result in lower DPU to unitholders.
Company background
CapitaLand Retail China Trust (CRCT) is a real estate
investment trust which invests in income-producing retail
properties located mainly in China, Hong Kong and Macau.

Page 175 Page 3
Company Guide
Appendix - Overview of CapitaLand Retail China Trust
Valuation by mall (30 June 2015) 9M15 NPI by mall
CapitaMall
CapitaMall CapitaMall CapitaMall Shuangjing,
Erqi, 5.6% Shuangjing, Erqi, 6.3% 5.7%
5.2%
CapitaMall CapitaMall
Anzhen, 9.2% Anzhen,
CapitaMall 10.4% CapitaMall
Xizhimen, Xizhimen,
Wuhu, 2.3% Wuhu, -1.5% 30.2%
26.2%
Saihan, 3.8% Saihan, 4.8%
CapitaMall CapitaMall CapitaMall
Qibao, 4.6% Qibao, 7.1% CapitaMall
Wangjing,
CapitaMall Wangjing,
CapitaMall 19.7%
Grand Canyon, CapitaMall 24.3%
Minzhongleyuan
, 5.1% 18.4% Mingzhongley CapitaMall
uan, -1.4%
Grand Canyon,
14.2%
Source: CRCT, DBS Bank Source: CRCT, DBS Bank
Valuation by city as at 30 June 2015 9M15 NPI by city

Zhengzhou, Wuhu, -1.5% Zhengzhou,
Wuhu, 2.3%
5.6% 6.3%
Huhhot, 3.8% Huhhot, 4.8%
Shanghai, Shanghai,
4.6% 7.1%
Wuhan, -1.4%
Wuhan, 5.1%
Beijing, 78.6% Beijing, 84.8%
Valuation by multi-tenant/master leased (30 June 2015) 9M15 NPI by multi-tenanted/master leased
Master-Leased,
20% Master-Leased,
22%
Multi- Multi-
tenanted, 80% tenanted, 78%

Page 4 Page 176
Company Guide
Location of CRCT’s malls in China
Beijing (5)
Huhhot (1) CapitaMall Xizhimen
CapitaMall Saihan CapitaMall Wanjing
CapitaMall Grand Canyon
Heilongjiang
CapitaMall Anzhen
CapitaMall Shuangjing
Jilin
Liaoning
Zhengzhou (1)
Xinjiang CapitaMall Erqi
Tianjin
Gansu
Inner Mongolia Beijing
Hebei
Shanxi Shandong
Ningxia
Qinghai Shanghai (1)
Henan CapitaMall Qibao
Shaanxi Jiangsu
Xizang Anhui Shanghai

(Tibet)
Hubei
Sichuan Chongqing Zhejiang
Wuhu (1)
Jiangxi CapitaMall Wuhu
Hunan
Guizhou Fujian
Multi-tenanted
Wuhan (1)
Master-leased CapitaMall
Yunnan Guangdong
Guangxi Minzhongleyuan
Hainan
Source: CRCT, DBS Bank
Location of CRCT’s malls in Beijing

Beijing Capital
Core Retail Hubs International Airport
Non-core Retail Hubs
Wangjing
CRCT Mall
Zhongguancun Ya Ao
CapitaMall Wanjing
5th ring road
Chaowai
CapitaMall Anzhen
4th ring road
Lufthansa
CapitaMall Xizhimen
3rd ring road
Sanlitun
2nd ring road
CBD
CapitaMall Shuangjing
Xidan
Wangfujing
CapitaMall Grand Canyon
* Not to scale and approximate locations

Source: CRCT, DBS Bank

Page 177 Page 5
Company Guide
Majority of new mall supply in Beijing are outside the core retail regions
Opening Retail GFA
Project (EN) Project (CN) Location Retail type Comments
date (sq m)
Jinbao Place II 金宝汇二期 1Q15 12,000 Wangfujing Shopping Mall n/a
FUNMIX Funmix 半岛广场 2Q15 130,000 Others-Fangshan Shopping Mall n/a

Carrefour Siyuan 家乐福四元广场购 3Q15 70,000 Wangjing Shopping Mall In CapitaMall Wanjing’s
Shopping Mall 物中心 district but we understand
the mall has a lower market
positioning
Xanadu Plaza 禧瑞汇 3Q15 38,000 CBD Shopping Mall n/a
Topwin Centre 通盈商业中心 4Q15 45,000 Sanlitun Shopping Mall n/a
Hualian Shopping 北京华联平谷购物 4Q15 59,000 Others-Pinggu Shopping Mall n/a
Centre (Pinggu) 中心
Zhuzong Vanke Plaza 住总万科广场 4Q15 61,000 Others-Daxing Shopping Mall n/a
Hualian Shopping 北京华联大屯购物 4Q15 79,000 Others-Datun Shopping Mall n/a
Centre (Datun) 中心
BaoYuan International 宝苑国际购物中心 4Q15 160,000 Others-Fengtai Shopping Mall 30 minutes drive from
Shopping Centre CapitaMall Grand Canyon so
not in direct competition
Longfor Time Walk 龙湖时代天街 4Q15 300,000 Others-Daxing Shopping Mall n/a
Source: Savills, DBS Bank

Page 6 Page 178
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Gross revenue 160 203 215 227 235
Net Income 85 99 103 110 115
Tax (49) (57) (21) (22) (23)
Total Return 133 145 81 86 90
Net Inc available for Dist. 70 81 90 95 99 Improvement in earnings
Growth & Ratio on the back of positive
Revenue Gth (%) 4.9 27.0 5.7 5.4 3.8 rental reversion and ramp-
N Property Inc Gth (%) 3.4 28.5 4.4 6.9 4.9 up of Grand Canyon Mall
Net Inc Gth (%) 4.6 17.8 103.8 6.5 4.0
Dist to revenue (%) 43.8 39.8 41.7 42.0 42.1
6.1 6.9 7.1 6.9 6.8
to sales %)
ROAE (%) 3.1 3.1 5.8 6.0 6.3
ROA (%) 1.8 1.8 3.4 3.5 3.6
ROCE (%) 2.6 2.6 4.9 5.1 5.4
Int. Cover (x) 9.1 5.6 6.3 6.0 5.7

Page 179 Page 7
Company Guide

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Net Income 24 26 26 28 27
Tax (7) (19) (8) (16) (8)
Total Return 16 44 19 43 19 Improvement in earnings due
Non-tax deductible Items 3 (24) 3 (20) 3 to strengthening of CNY
Net Inc available for Dist. 19 21 22 23 22 versus SGD and improvement
Growth & Ratio in CRCT’s core multi-
Revenue Gth (%) 1 2 4 (1) 2 tenanted properties.
N Property Inc Gth (%) (6) 4 3 4 (2)
Net Inc Gth (%) nm (55) 155 (30) 42

FY Dec 2013A 2014A 2015F 2016F 2017F

Cash & ST Invts 105 87 101 115 128
Inventory 0 0 0 0 0
Debtors 11 11 12 13 13
Total Assets 2,184 2,358 2,469 2,500 2,521
ST Debt 0 0 0 0 0
Creditor 58 51 54 57 59
LT Debt 712 672 698 724 741 Low gearing provides
Other LT Liabilities 35 41 41 41 41 debt headroom for
Unit holders’ funds 1,187 1,350 1,430 1,430 1,430 acquisitions

Net Cash/(Debt) (607) (585) (597) (610) (613)
Ratio
Current Ratio (x) 0.5 0.4 0.4 0.5 0.5
Quick Ratio (x) 0.5 0.4 0.4 0.5 0.5
Z-Score (X) 1.1 1.1 1.1 1.1 1.1

Page 8 Page 180
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Income 85 99 103 110 115

Dep. & Amort. 2 3 2 2 2
Tax Paid (20) (18) (21) (22) (23)
Chg in Wkg.Cap. (11) 2 2 2 2
Other Investing CF (1) (2) 0 0 0
Net Investing CF (143) (17) (16) (16) (7)
Chg in Gross Debt 29 (44) 26 26 17
Net Financing CF 45 (110) (63) (69) (82)
Currency Adjustments (5) (4) 0 0 0
Chg in Cash (35) (19) 14 14 14

Free CFPS (S cts) (9.5) 11.9 9.2 9.7 10.9
1.84 S$
Closing T arget
S.No. Dat e Rat ing
Pric e Price
1.74 1: 30 J an 15 1.72 1.64 HOLD
2: 10 Aug 15 1.56 1.80 BUY
1
1.64 3: 07 Oct 15 1.44 1.69 BUY
4: 26 Oct 15 1.56 1.69 BUY
2 4
1.54
1.44
3
1.34
1.24
Source: DBS Bank

Page 181 Page 9
CDL Hospitality Trusts
Edition 1 Version 1 | Bloomberg: CDREIT SP | Reuters: CDLT.SI Refer to important disclosures at the end of this report
BUY Cheap as chips

Last Traded Price: S$1.33 (STI : 2,834.23) Negatives largely priced in. We maintain our BUY call with a
Price Target : S$1.54 (16% upside plus 7.2% yield) (Prev
revised TP of S$1.54. While CDREIT faces several challenges in
S$1.65)
2016 including: (1) excess new room supply in Singapore and (2)
Potential Catalyst: Recovery of the Singapore hospitality market and potential impact on its Maldives operations due to the recent
acquisitions imposiiton of a state of emergency, we believe this has largely
Where we differ: Below due to assumption of excess supply of new been priced in. The implied price per key for CDREIT’s Singapore
rooms in Singapore portfolio stands at c.S$440k which is below replacement cost of
c.S$700k, and recent market transactions at above S$650k.
Analyst Cheapest REIT to ride the eventual upturn. CDREIT’s implied

price per key of S$455k is below that of other hospitality REITs
(S$650k-1m). Thus, CDREIT offers the cheapest exposure to the
eventual upturn in the Singapore hospitality market. With no
new land released for new hotels over the past two years,
Price Relative supply pressures should ease from 2017 onwards.
S$ Relative Index
2.3
2.1
207 Optimising portfolio. We expect additional upside to CDREIT’s
earnings as it optimises its portfolio. At the end FY16, the initial
187
1.9 167
1.7 147 10-year lease at Rendezvous Grand Hotel Auckland (c.7% of

9M15 NPI) ends, which presents an opportunity to appoint
127
1.5
107
1.3
87 another operator or renegotiate better lease terms. This is on
top AEI’s being undertaken at Grand Copthorne Waterfront
1.1 67
CDL Hospitality Trusts (LHS) Relative STI INDEX (RHS) Hotel and M Hotel in Singapore.
Forecasts and Valuation Valuation:

FY Dec (S$ m) 2014A 2015F 2016F 2017F Given weaker than expected 3Q15 performance, concentration
Gross Revenue 167 172 184 188 of new supply in Singapore near CDREIT’s properties in 2016
Total Return 122 96 94 95 and potential impact on its Maldives operations due to the
Distribution Inc 120 108 106 108 recent declaration of a state of emergency, we cut our FY15-
EPU (S cts) 10.7 9.8 9.5 9.5 17F DPU by 11-15% and lowered our DCF based TP to S$1.54
EPU Gth (%) 0 (9) (3) 1
DPU (S cts) 11.0 9.9 9.6 9.7 from S$1.65.
DPU Gth (%) 0 (10) (3) 1
PE (X) 12.4 13.6 14.1 14.0 Weaker-than-expected demand supply outlook in Singapore.
Distribution Yield (%) 8.3 7.4 7.2 7.3 The key risk to our view is a weaker than expected demand-
P/NAV (x) 0.8 0.8 0.8 0.8 supply outlook for the Singapore hospitality market, resulting
ROAE (%) 6.5 5.9 5.7 5.8 in a lower RevPAR performance compared to our estimates.
This may be due to a decline in tourist arrivals into Singapore.
Distn. Inc Chng (%): (11) (15) (15)
Consensus DPU (S cts): 10.3 10.6 10.8 At A Glance
Other Broker Recs: B: 11 S: 3 H: 3 Issued Capital (m shrs) 987
Mkt. Cap (S$m/US$m) 1,313 / 921
Hospitality Holdings Pte Ltd (%) 31.8
Aberdeen Asset Management 5.0
M & C Reit Management (%) 4.5
Free Float (%) 54.6

Page 182
ed: TH / sa: JC
Company Guide

S$ m
200
160
140 94.1%
89.1%
Challenging operating conditions in Singapore near term. 100
80
84.1%
CDREIT’s profitability is largely dependent on earnings from its 60
Singapore hotels. Near term, we see headwinds to the group’s 40

20
79.1%
core operations due to the growth in new hotel room supply in 0 74.1%
2013A 2014A 2015F 2016F 2017F
Singapore (6-7% of existing supply). The more competitive
landscape is likely to lead to pressure on ADR (average room Net Property Income Net Property Income Margin %
rates) and occupancies, which we estimate will result in a 4-5%

p.a. decline in RevPAR in 2015 and 2016. Nevertheless, over the Net Property Income and Margins (%)
94%
medium term, as the Singapore government has not released 40 92%
any land for hotel development over the past two years, supply 38
90%
88%
pressures should ease from 2017 onwards. 86%
36
84%
82%
Softness from Maldives. The significant depreciation of the 34
80%
Russian Rubble has resulted in a decline in the high-yielding 32 78%
76%
Russian guests into the Maldives. Combined with a recent 30 74%
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
slowdown in Chinese visitors, we expect softness in CDREIT’s
Maldives operations. Additional downward pressure could also
arise due to the negative publicity from the recent imposition of
the state of emergency. Nevertheless, this should be partially
offset by a weakening of the SGD versus USD, as forecast by (x)
0.9
our DBS economists. CDREIT’s income from the Maldives is
0.8
generated in USD.
0.7
Boost from Japanese and UK acquisition as well as reopening of 0.6

Claymore Link mall. The timely acquisitions of two Japanese 0.5
business hotels, Hotels MyStays Asakusabashi and Hotel
0.4
MyStays Kamata in December 2014 worth c.S$64m, should
help CDREIT buffer against the slowdown in its core Singapore 0.3
2013A 2014A 2015F 2016F 2017F
operations. The expected growth in tourist arrivals into Japan
should translate into higher room rates and occupancies for
CDREIT’s properties. Furthermore, CDREIT should benefit from Interest Cover (x)
the acquisition of Cambridge City Hotel and recent (x)
8.00
appointment of Hilton as the operator of the hotel. Moreover, 7.00
the recent reopening of the Claymore Link, a retail mall in the 6.00
heart of Orchard Road after a 1.5-year renovation is another 5.00
positive for CDREIT’s earnings. 4.00
3.00
Asset optimisation. In the medium term, believe CDREIT can 2.00
further maximise the returns of its portfolio by undertaking AEI’s 1.00
such as those being conducted at at Grand Copthorne 0.00
2013A 2014A 2015F 2016F 2017F
Waterfront Hotel and M Hotel in Singapore. In addition, at end
of FY16, CDREIT could receive an earnings boost, should it
appoint another operator or renegotiate better lease terms Source: Company, DBS Bank
when the initial 10 year lease at Rendezvous Grand Hotel
Auckland (c.7% of 9M15 NPI) ends.

Page 2 Page 183
Company Guide

Balance Sheet:
Gearing within optimal range. CDREIT’s gearing at end
35.0%
September 2015 stood at 36.5%. While within its optimal
gearing range of 35-40%, we believe CDREIT still has some 30.0%
balance sheet capacity to pursue acquisitions. 25.0%
20.0%
Moderate exposure to rising interest rates. Approximately 60% 15.0%

of CDREIT’s borrowings are on fixed interest rates. Thus, CDREIT 10.0%
has moderate exposure to rising interest rates. 2013A 2014A 2015F 2016F 2017F

Near terms earnings risk priced in. While CDREIT’s earnings are Implied price per key for CDREIT’s Singapore portfolio
expected to be under pressure near term due to projected 1,200,000
supply and demand imbalance in Singapore, we believe this has 1,000,000

200
largely been priced in. The implied price per key for CDREIT’s
Singapore portfolio stands at c.S$440k which is below 800,000 150
replacement cost of c.S$700k and recent market transactions of 600,000
above S$650k. 100
400,000
Price per key (S$) (LHS)
Quarterly RevPAR (S$) (RHS) 50
Unjustified discount to other hospitality REITs. Compared to 200,000
12 month rolling RevPAR (S$) (RHS)
other hospitality S-REITs, CDREIT offers the cheapest exposure
0 0
to the eventual upturn in the Singapore market. The implied
price per key for other S-REITs stands at between S$650k-S$1m
versus S$436k for CDREIT. Given the mid-tier to luxury category Distribution Yield (%)
(%)
of CDREIT’s room inventory and its successful track record, we 9.1
believe this valuation discount is unjustified. 8.6
8.1
7.6 +2sd: 7.6%
Key Risks: 7.1
+1sd: 7%
Avg: 6.4%
higher interest payments, which could result in lower 6.1
‐1sd: 5.8%
distribution per unit (DPU) for unitholders. 5.6
5.1 ‐2sd: 5.2%
4.6
Currency risk. As CDREIT earns rental income in various 2012 2013 2014 2015 2016
currencies, a depreciation of any foreign currency against the

SGD could negatively impact distribution income, which is PB Band (x)
distributed in SGD. 1.5
(x)
1.4
Company Background 1.3 +2sd: 1.31x
CDL Hospitality Trusts is a stapled group comprising H-REIT and 1.2 +1sd: 1.19x
HBT. H-REIT is a real estate investment trust that invests in a 1.1
Avg: 1.06x
portfolio of income-producing hospitality related properties 1.0
‐1sd: 0.94x
0.9
and HBT is a business trust. ‐2sd: 0.81x
0.8
0.7
0.6

Page 184 Page 3
Company Guide
Recent hotel transactions in Singapore

Year Hotel Sale Price Rooms Implied price per key
S$’m S$’000
2013 The Westin Singapore 468 305 1,534
2013 Park Avenue Changi Hotel & Suites 138 251 550
2013 Park Regis 165 203 813
2013 Grand Park Orchard (with retail podium) 1,140 308 1,500
2013 Hotel 1929 35 32 1,094
2013 The Sentosa Resort & Spa 211 215 981
2013 Gallery Hotel 233 222 1,047
2013 Park Hotel Clarke Quay 300 336 893
2013 Berjay Hotel 50 49 1,020
2013 Hotel Windsor 163 225 724
2013 Ibis Novena 150 241 622
2013 Mandarin Orchard 1,180 1,051 1,123
2014 Hotel Grand Chancellor 248 328 756
2014 Crown Plaza Changi Airport 290 320 906
2014 Crown Plaza Changi Airport extension 205 243 844
2015 BIG Hotel 203 308 659
Source: Various press reports, DBS Bank

Page 4 Page 185
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Gross revenue 149 167 172 184 188
Net Income 106 106 99 97 99
Tax (3) (1) (3) (3) (4)
Total Return 140 122 96 94 95
Growth & Ratio
Revenue Gth (%) (0.5) 12.1 3.2 6.7 2.5
Net Inc Gth (%) (3.2) 1.0 (8.3) (2.4) 1.3
Potential recovery in 2017
onwards as supply
pressures in Singapore ease
Dist to revenue (%) 79.7 71.6 62.9 57.8 57.1
9.6 10.7 12.3 12.2 12.0
to sales %)
ROAE (%) 6.6 6.5 5.9 5.7 5.8
ROA (%) 4.7 4.4 3.8 3.6 3.6
ROCE (%) 5.4 5.1 4.7 4.6 4.7
Int. Cover (x) 7.4 7.5 5.9 5.1 4.8

Page 186 Page 5
Company Guide

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Net Income 22 31 26 20 22
Tax 0 0 0 (2) 0
Growth & Ratio
Revenue Gth (%) 6 12 (6) (8) 5
Net Inc Gth (%) (3) 42 (17) (26) 14

FY Dec 2013A 2014A 2015F 2016F 2017F

Other LT Assets 77 146 146 146 146
Cash & ST Invts 69 76 86 96 105
Inventory 0 0 0 0 0
Debtors 15 20 21 22 23
Total Assets 2,323 2,450 2,603 2,620 2,636
ST Debt 146 317 317 317 317

Creditor 22 40 41 44 45
LT Debt 542 458 595 595 595

Gearing within optimal
Net Cash/(Debt) (620) (698) (827) (817) (808) 35-40% range
Ratio
Current Ratio (x) 0.5 0.3 0.3 0.3 0.3
Quick Ratio (x) 0.5 0.3 0.3 0.3 0.3
Z-Score (X) 1.5 1.3 1.1 1.1 1.1

Page 6 Page 187
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Income 106 106 99 97 99

Dep. & Amort. 0 0 0 0 0
Tax Paid 0 0 0 0 0
Chg in Wkg.Cap. (2) 4 1 1 1
Net Operating CF 131 139 112 111 112
Net Investing CF (181) (93) (143) (6) (6)
Distribution Paid (107) (106) (98) (96) (97) Acquisition of Cambridge
Chg in Gross Debt 167 83 138 0 0 City Hotel
Net Financing CF 43 (39) 40 (96) (97)
Chg in Cash (7) 8 10 10 9

Free CFPS (S cts) (5.2) 4.7 (3.1) 10.6 10.6
1.89
S$
Closing T arget
2 4 S.No. Dat e Rat ing
1.79 Pric e Price
1 1: 29 J an 15 1.80 1.86 BUY
1.69 3 2: 24 F eb 15 1.77 1.86 BUY
3: 10 Mar 15 1.74 1.86 BUY
4: 26 Mar 15 1.76 1.77 HOLD
1.59 5 5: 16 J ul 15 1.63 1.66 HOLD
6
6: 10 Aug 15 1.50 1.66 HOLD
1.49
7: 10 Sep 15 1.37 1.65 BUY
1.39
7
1.29
1.19
Source: DBS Bank

Page 188 Page 7
Croesus Retail Trust
Edition 1 Version 1 | Bloomberg: CRT SP | Reuters: CROE.SI Refer to important disclosures at the end of this report
HOLD In a holding pattern for now

Last Traded Price: S$0.82 (STI : 2,834.23) Weighed by investor concerns. We maintain our HOLD
Price Target: S$0.86 (6% upside) recommendation with a TP of S$0.86. While CRT offers an
attractive 8.9% FY16F yield, we believe a re-rating faces
Potential Catalyst: Further DPU accretive acquisitions and strengthening several headwinds including (1) Singapore-based investors'
of the JPY versus SGD unwillingness to accept CRT’s higher-than-average gearing of
Where we differ: Lower DPU due to impact of expected DRP 46-47% despite its structure as a business trust and the ability
of the properties to support higher gearing limits, and (2) the
Analyst
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com overhang from weaker JPY on DPU (estimated FY15 SGD/JPY
Derek Tan +65 6682 3716 derektan@dbs.com hedge rate of 81 vs c.85 in FY16F) and potential further
devaluation of the JPY should the Bank of Japan (BOJ) initiate a
new round of quantitative easing to counter the slowing GDP
growth and inflation in Japan.
Price Relative
S$ Relative Index
1.2 Boost from renewal of Mallage Shobu and acquisition of Torius
1.2 208
1.1
188
property. Over the coming year, CRT should benefit from (1) the
1.1
1.0 168 renewal of Mallage Shobu which resulted in double-digit rental
reversions, (2) the full-year contribution of the One’s Mall
1.0
148
0.9
0.9
0.8
128
acquisition in late 2014, and (3) the recent JPY8bn (c.S$95.2m)
108
0.8
0.7 88
acquisition of Torius property in Fukuoka on a 7.8% NPI yield.
May-13 Nov-13 May-14 Nov-14 May-15 Nov-15

Croesus Retail Trust (LHS) Relative STI INDEX (RHS) Medium-term upside potential from AEI. Over the medium
Forecasts and Valuation term, CRT should also receive a boost from potential AEI and/or
FY Jun (JPY m) 2014A* 2015A 2016F 2017F tenant remixing at One’s Mall and Torius Mall. This is in addition
Gross Revenue 6,261 7,635 9,336 9,996 to any further potential acquisitions.
Net Property Inc 4,029 4,681 5,398 5,734
Total Return 4,793 7,579 2,856 3,152 Valuation:
Distribution Inc 3,180 3,358 3,905 4,147
EPU (S cts) 4.5 3.1 5.9 5.7
After incorporating the Torius property acquisition and the 22
EPU Gth (%) nm (31) 87 (2) for 100 rights issue at S$0.61 per unit, we recently cut our
DPU (S cts) 8.5 7.7 7.1 7.4 FY16-17F DPU by 3-7% and lowered our DCF-based TP to
DPU Gth (%) nm (10) (7) 4 S$0.86 from S$0.92. With limited upside to our revised TP, we
NAV per shr (S cts) 89.9 100.5 90.0 86.5
maintain our HOLD recommendation.
PE (X) 17.9 26.0 13.9 14.2
Aggregate Leverage (%) 51.7 47.3 46.8 46.9 The key risk to our neutral view include: (1) stronger JPY versus
ROAE (%) 6.0 3.3 6.2 6.5 SGD, (2) lower-than-expected take-up of its DRP (we have
assumed 25% take-up), (3) better-than-expected uplift in rents,
DPU. Inc Chng (%): (7) (3) and (4) further DPU-accretive acquisitions.
Consensus DPU (S cts): 7.3 7.4
*From 10May13-30Jun14. Note DPU estimates adjusted for rights issue Mkt. Cap (S$m/US$m) 519 / 364
Target Asset Management (%) 6.1
DBS Bank (%) 5.3
Free Float (%) 88.6

Page 189
ed: TH / sa: JC
Company Guide

CRITICAL DATA POINTS TO WATCH JPY m
70.5%
5,000 68.5%
Earnings Drivers:
66.5%
Strong cashflow visibility. CRT has a WALE by NLA of 8.6 4,000
64.5%
years. This long WALE is among the longest in the S-REIT 3,000 62.5%
market and its occupancy which is close to 100% provides 2,000 60.5%
investors with significant cashflow visibility. In addition, with 1,000

58.5%
56.5%
pure fixed rents constituting c.90% of the total gross rental 0 54.5%
income, CRT offers a stable income stream. This, combined 2014A 2015A 2016F 2017F
with a decent lease expiry profile over 5.2%, 3.1% and 6.9% Net Property Income Net Property Income Margin %
of leases (by NLA) up for renewal in FY16, FY17 and FY18 Net Property Income and Margins (%)
respectively, gives CRT the opportunity to change the tenant 68%
mix and/or drive higher rentals. This in turn provides 1,266 66%
incremental upside to the trust’s earnings/DPU going forward. 1,166 64%
62%
1,066
Full benefits from renewed Mallage Shobu yet to be 966
60%
realised. CRT’s Mallage Shobu property which contributes 58%
c.31% of the trust’s FY15 NPI recently undertook a major 866

56%
renewal which consisted of (1) AEI works including family- 766 54%
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
friendly improvement works to restrooms, nursing rooms and
rest areas, as well as improved LED lightning facilities, (2) Net Property Income Net Property Income Margin %
introduction of 69 new brands/tenants such as Toys R Us, Distribution Paid / Net Operating CF
Kurashiki Coffee and Majestic Legon (women’s apparel and 2.0
(x)
fashion), (3) tenant renewal exercise for 155 out of 242 1.8
leases, and (4) positive rental reversions in the double digits. 1.6
As this renewal programme was only completed in March 1.4
2015, we believe CRT’s earnings have yet to fully benefit 1.2
from it. 1.0

0.8
Favourable lease structures. Approximately 60% of the CRT’s 0.6
leases are under fixed term leases. Under this lease structure, 0.4
2014A 2015A 2016F 2017F
which are typically shorter in tenure (between 3-5 years), CRT
has flexibility to adjust rents and tenant composition upon Source: Company, DBS Bank
expiry of leases. This compares to the standard lease, which is
more favourable to tenants as upon expiry of the lease the
tenants can opt to stay and renew the lease at market rates.
Medium-term upside at One’s Mall and Torius property.

We understand there are opportunities to drive rents higher
at One’s Mall and Torius property in the medium term. This
will come primarily from the change in tenant mix as some
tenants/anchor tenants are low yielding at the moment. At
this stage, CRT has not shared detailed AEI plans.
1Q16 results in line. 1Q16 DPU came in at 2.08 Scts which

was flat y-o-y. Underlying NPI in JPY terms rose 10.7% y-o-y
to JPY1,232m on the back of (1) the One’s Mall acquisition,
and (2) increased contribution from Mallage Shobu post the
tenant renewal exercise. Nevertheless, this was offset by
higher shares on issue following the share placement to fund
the purchase of One’s Mall and impact of weaker JPY.

Page 2 Page 190
Company Guide

Balance Sheet:
Gearing on downtrend. Post the acquisition of Torius
property, we estimate that CRT’s gearing will settle in the 50.0%
mid-46% level by end-FY16F (before any revaluation gains). 45.0%
This will be down from 47.6% at end-Sep-15. Going forward, 40.0%
through the DRP and property revaluation gains, we 35.0%
understand that CRT intends to reduce its gearing towards 30.0%
the 45% level. While CRT is a business trust and is not 25.0%
required to comply with MAS’s new REIT regulations, we 20.0%

2014A 2015A 2016F 2017F
believe this is a proactive move by CRT’s management to
address investors' concerns over CRT’s higher gearing relative
to other S-REITs/property-related business trusts.
ROE (%)
100% hedged. To manage its interest exposure, CRT has 6.0%
fully hedged all its borrowings, with its all-in cost of debt 5.0%
standing at c.2%.
4.0%
Investor concerns weighing on stock price. We believe the 2.0%

performance of CRT’s share price has been capped over the
1.0%
past year due to the following investor concerns: (1) CRT’s
higher-than-average gearing compared to other REIT’s 0.0%
2014A 2015A 2016F 2017F
despite its structure as a business trust and the ability of its
Japan portfolio to sustain a higher level of gearing, and (2)
fears over a depreciating JPY versus SGD. While Distribution Yield (%)
acknowledging the positive steps taken by management to 11.0%
lower its gearing over time and the use of hedging to

10.5%
manage its FX risks, we believe the share price performance
will be capped, until CRT is at a more sustainable level in the 10.0%
eyes of Singapore-based investors and there is further clarity
9.5%
over Japanese economic outlook and the need for further QE.
9.0%
Inorganic growth through acquisitions. CRT continues to look
8.5%
for acquisition opportunities. Such DPU-accretive transactions
should boost CRT’s DPU and help re-rate its share price. 8.0%
2013 2014 2015
Key Risks: Croesus Yield Mean Yield -1 SD +1 SD
Downturn in Japan economy. The quantitative easing (QE)
PB Band (x)
programme initiated by the BOJ was designed to boost the
(x)
Japanese economy and inflationary expectations. Should the 1.2
QE fail to deliver on its objectives, there is risk that a weaker 1.1

+2sd: 1.07x
economy may negatively impact on rents and the capital +1sd: 1.01x
1.0
values of CRT’s portfolio. Avg: 0.96x
0.9 ‐1sd: 0.9x
FX risks. While CRT has hedged its projected distributable 0.8

‐2sd: 0.84x
income until June 2017, should the JPY depreciate against

0.7
the SGD, going forward, CRT’s DPU would be negatively
impacted. 0.6
Jun-14 Nov-14 Apr-15 Sep-15
Company background
Croesus Retail Trust is a business trust that focuses on Source: Company, DBS Bank
income-generating retail assets in Japan. Its portfolio
comprises seven assets which are close to fully occupied and
backed by a long lease expiry profile.

Page 191 Page 3
Far East Hospitality Trust
Edition 1 Version 1 | Bloomberg: FEHT SP | Reuters: FAEH.SI Refer to important disclosures at the end of this report
HOLD Outlook still uncertain

Price Target : S$0.63 (3% downside plus 6.6% yield) Limited re-rating catalyst. We maintain our HOLD call with a
(Prev S$0.71) revised TP of S$0.63. As a Singapore-focused REIT and with
competitive pressures in the Singapore hospitality market
Potential Catalyst: Recovery of the Singapore hospitality market and expected to persist, we believe there is limited re-rating catalyst
acquisitions for FEHT in the near term.
Where we differ: Below consensus due to expected decline in RevPAR
Competitive pressures to persist. Despite the majority of new
Analyst
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com hotel supply in Singapore being concentrated within the
Derek Tan +65 6682 3716 derektan@dbs.com Singapore River precinct away from FEHT’s hotels, we believe
the 6-7% increase in overall industry room inventory will still
pressurise FEHT’s operations. We have pencilled in a 4% y-o-y
Price Relative decline in RevPAR and combined with higher costs of debt,
S$ Relative Index should translate into a 7% decline in FY16F DPU.
1.3 219
1.2 199
1.1 179 Strong balance sheet. While we are cautious on FEHT’s near-
1.0
term earnings, there is significant upside to our forecast if FEHT
159
0.9 139
0.8 119 deploys its strong balance sheet. FEHT’s gearing as at end-Sep-
0.7 99
0.6 79 15 stood at approximately 31.5%.
0.5 59
Aug-12 Aug-13 Aug-14 Aug-15
Valuation:
Far East Hospitality Trust (LHS) Relative STI INDEX (RHS)
Fairly Valued. To account for our more cautious stance on the
Forecasts and Valuation Singapore hospitality market in 2016, we have lowered our
FY Dec (S$ m) 2014A 2015F 2016F 2017F RevPAR growth estimates from 0% to -4%. Combined with
weaker-than-expected 9M15 results, we cut our FY15-17F
Total Return 71 71 66 65 DPU by 3-11%. We have also lowered our DCF-based TP to
Distribution Inc 98 82 77 76 S$0.63 from S$0.71.
EPU (S cts) 4.4 4.0 3.7 3.6
EPU Gth (%) (20) (9) (8) (2)
DPU (S cts) 5.1 4.6 4.3 4.1
DPU Gth (%) (9) (10) (7) (5) Rebound in demand. Our cautious stance on FEHT is premised
NAV per shr (S cts) 97.0 96.6 95.9 95.3 on a supply imbalance in the Singapore hospitality market.
PE (X) 14.8 16.3 17.7 18.1 However, should we experience a significant rebound in
P/NAV (x) 0.7 0.7 0.7 0.7 demand which absorbs the c.3,900 new rooms being added in
Aggregate Leverage (%) 31.3 31.8 32.2 32.6 2016, there will be upside risks to our DPU estimates and TP.
ROAE (%) 4.5 4.1 3.8 3.8
At A Glance
Distn. Inc Chng (%): (3) (8) (11) Issued Capital (m shrs) 1,789
Consensus DPU (S cts): 4.8 4.6 4.8 Mkt. Cap (S$m/US$m) 1,163 / 816
Golden Development (%) 19.4
Golden Landmark (%) 10.7
Far East Organization (%) 10.2
Free Float (%) 44.2

Page 192
ed: TH / sa: JC
Company Guide

200
99.5%
180
160 97.5%
Downturn in the Singapore hospitality market. The Singapore 120
93.5%
100
hospitality market faces the challenge of navigating a 6-7% 80 91.5%
increase in hotel room supply but at the same time a modest 60 89.5%
40
recovery in tourist arrivals (we estimate a 3% bounce in 2016). 20 87.5%
In such an environment, we believe hotels including those 0

2013A 2014A 2015F 2016F 2017F
85.5%
owned by FEHT will face pressure on occupancy and ADRs. We

estimate that this heightened competition will lead to 4%
declines in FEHT’s FY16F serviced residence and hotel
RevPAR/RevPAU. Net Property Income and Margins (%)
93%
31 92%
Some cushion from asset enhancement initiatives. Partially 30 92%

29 91%
mitigating the effects of a supply imbalance in the Singapore 28 91%
hospitality market are the asset enhancement initiatives (AEI) 27 90%
FEHT is undertaking. The planned refurbishments are expected 26 90%

25 89%
to help maintain FEHT’s relevance in the market place as well as 24 89%
boost occupancy and ADR over the medium term. The following 23 88%
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
are the AEI’s that FEHT is currently undergoing or is in the
process of rolling out across its portfolio: (1) Extension of Net Property Income Net Property Income Margin %
outdoor refreshment area at Village Residence Robertson Quay
(targeted completion in 2Q15), (2) Soft refurbishment of club & Distribution Paid / Net Operating CF
suite rooms and meeting areas at Village Hotel Changi (target (x)
1.0
completion by 4Q15), and (ii) Refurbishment of 2 and 3-
0.9
bedroom units at Regency House (completion by 1Q16).
0.8
0.7
Medium-term outlook remains bright. Despite the short-term
0.6
headwinds, the medium-term outlook for FEHT remains bright.
0.5
With no new hotel land sites being released by the Singapore
government over the last two years, supply could be 0.4
constrained from 2017 onwards. In addition, FEHT should 0.3

2013A 2014A 2015F 2016F 2017F
benefit from the opening of the 850-room Sentosa hotel
development in 2018.
Interest Cover (x)
(x)
Acquisitions yet to be priced in. With gearing at only 31.5%, 7.00
FEHT is well positioned to expand its portfolio through 6.00
acquisitions. Assuming FEHT gears up to the 40% level, we
5.00
estimate the trust to have c.S$350m of debt headroom.
4.00
Through its sponsor, Far East Organization, FEHT has a visible
3.00
acquisition pipeline. In particular, it has right of first refusal over
eight properties with a total of 1,302 rooms. This compares to 2.00
FEHT's existing portfolio of c.2,829 rooms. 1.00
0.00
2013A 2014A 2015F 2016F 2017F

Page 2 Page 193
Company Guide

Balance Sheet:
Gearing unchanged. FEHT’s gearing at end-3Q2015 was stable
at 31.5% which is comfortably below management’s 40% and 30.0%
MAS’s new 45% gearing limit.
25.0%
Moderate exposure to rising interest rates. Currently, 60% of 20.0%
FEHT’s borrowings are under fixed rates, reducing its exposure 15.0%
to volatility in interest rates. 10.0%

2013A 2014A 2015F 2016F 2017F

Negative near-term sentiment. FEHT’s share price has been
weak lately due to a decline in tourist arrivals into Singapore ROE (%)
which has translated into a fall in RevPAR and DPU. While
tourist arrivals are expected to recover in 2016, new hotel 5.0%
supply should continue to outpace demand. Thus, we believe 4.0%
there is limited re-rating catalysts for the stock in the near term.
3.0%
Key Risks: 2.0%

1.0%
higher interest payments that the REIT has to make annually to
service its loans. This reduces the income available for 0.0%
2013A 2014A 2015F 2016F 2017F
distribution, which will result in lower distribution per unit
(DPU) for unitholders.
Distribution Yield (%)
8.0%
Competitive landscape. The Singapore hospitality market has 7.5%
been impacted by a decline in tourist arrivals in 2014 and 2015 7.0%
thus far. With an increase in new hotel supply this year and if 6.5%
6.0%
demand does not recover, FEHT’s earnings may be impacted. 5.5%
5.0%
Company Background 4.5%

4.0%
Far East Hospitality Trust (FEHT) is a hospitality stapled group 3.5%
comprising Far East H-REIT and Far East H-Business Trust. Far 3.0%
2012 2013 2014 2015
East H-REIT is a Singapore-based real estate investment trust,
FEHT Yield Mean -1 SD +1 SD
which invests in hospitality assets. It owns eight hotels and four
serviced residences. PB Band (x)
1.4
(x)
1.3
1.2
+2sd: 1.14x
1.1
1.0 +1sd: 1.01x
0.9
Avg: 0.88x
0.8
‐1sd: 0.74x
0.7
0.6 ‐2sd: 0.61x
0.5

Page 194 Page 3
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Gross revenue 122 122 116 112 113
Net Income 92 78 71 66 65
Tax 0 0 0 0 0
Total Return 138 71 71 66 65
Net Inc available for Dist. 95 98 82 77 76 The decline in earnings is
Growth & Ratio largely a result of a
Revenue Gth (%) 190.1 (0.6) (5.0) (3.3) 0.8 projected 4% decline in
N Property Inc Gth (%) 188.5 (1.7) (5.0) (3.6) 0.7 FEHT’s FY16 serviced
Net Inc Gth (%) 468.8 (15.5) (8.8) (7.5) (1.7) residence and hotel RevPAR
Dist to revenue (%) 77.2 80.7 71.3 68.9 67.4
10.1 11.3 11.4 11.7 11.6
to sales %)
ROAE (%) 5.6 4.5 4.1 3.8 3.8
ROA (%) 3.9 3.1 2.8 2.6 2.5
ROCE (%) 4.3 3.9 3.6 3.5 3.5
Int. Cover (x) 6.6 5.5 4.5 4.0 3.7

Page 4 Page 195
Company Guide

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Other Non Opg (Exp)/Inc 4 (1) 3 (2) 3
Net Income 24 19 19 16 21
Tax 0 0 0 0 0
Growth & Ratio
Revenue Gth (%) 5 (3) (10) 5 3
N Property Inc Gth (%) 6 (2) (11) 6 3
Net Inc Gth (%) 58 (22) 4 (16) 30

FY Dec 2013A 2014A 2015F 2016F 2017F

Cash & ST Invts 29 21 18 16 16
Inventory 0 0 0 0 0
Debtors 22 19 18 18 18
Total Assets 2,532 2,537 2,553 2,570 2,589
ST Debt 0 116 116 116 116

Creditor 4 3 3 3 3
LT Debt 779 680 696 712 729
Non-Cash Wkg. Capital 19 15 14 14 14

Net Cash/(Debt) (750) (774) (793) (812) (829)
Ratio FEHT remains in a
Current Ratio (x) 6.3 0.4 0.3 0.3 0.3 strong financial
Quick Ratio (x) 6.3 0.4 0.3 0.3 0.3 position with gearing
Aggregate Leverage (%) 30.8 31.3 31.8 32.2 32.6 in the low 30s
Z-Score (X) 1.0 0.9 0.9 0.9 0.9

Page 196 Page 5
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Dep. & Amort. 0 0 0 0 0
Tax Paid 0 0 0 0 0
Chg in Wkg.Cap. 2 3 1 1 0
Invts in Assoc. & JV 0 (16) (16) (16) (16)
Net Investing CF (200) (24) (19) (19) (19)
New units issued 68 0 0 0 0 Equity contribution for
Other Financing CF (14) (16) 0 0 0 FEHT’s 30% stake in
Net Financing CF 83 (94) (66) (60) (57) the 850-room Sentosa
Currency Adjustments 0 0 0 0 0 hotel development
Chg in Cash (7) (8) (3) (2) 0

Free CFPS (S cts) (5.3) 5.7 4.5 4.1 4.0
0.89 S$
Closing T arget
S.No. Dat e Rat ing
Pric e Price
0.84 1: 12 F eb 15 0.84 0.80 HOLD
1 2 2: 03 J ul 15 0.79 0.76 HOLD
0.79 3: 16 J ul 15 0.77 0.78 HOLD
4: 11 Aug 15 0.69 0.71 HOLD
0.74 3
4
0.69
0.64
0.59
0.54
Source: DBS Bank

Page 6 Page 197
Frasers Centrepoint Trust
Edition 1 Version 1 | Bloomberg: FCT SP | Reuters: FCRT.SI Refer to important disclosures at the end of this report
BUY Northern lights

Last Traded Price: S$1.85 (STI : 2,834.23) FCT is one of our top picks in the retail sector. We maintain our
Price Target : S$ 2.04 (11% upside plus 6.4% yield) BUY recommendation, with TP of S$2.20. We believe that
Causeway Point, which accounts for 46% of the Trust’s net
Potential Catalyst: Acquisitions profit income, will continue to surprise on the upside and
Where we differ: Our rental growth assumptions are on the more support price performance.
conservative side
Near-monopoly of shopping malls in the north. Northpoint and
Analyst Causeway Point together contribute c.75% of FCT’s NPI. Both
Derek Tan +65 6682 3716 derektan@dbs.com malls have performed well in recent years, delivering strong
tenant sales growth and rental reversions after successful AEI
works. With limited retail supply in the north of Singapore and
Price Relative an increasingly affluent population catchment, we believe that
S$ Relative Index
FCT will be a beneficiary of higher spending power and demand
219
2.5
199
for shop space.
2.3
179
2.1
159
Upside to rental reversions given low occupancy cost. Despite
1.9
139 slower reversions of 3.8% for 2QFY15, we are positive about
1.7
1.5
119
underlying mall performance, and expect to see overall FY15
99
1.3 79 reversions of 6-7%. Occupancy costs dipped below 16% due to

strong tenant sales growth at Causeway Point. On a portfolio
basis, tenant sales rose 3.0% y-o-y while foot traffic recorded
Frasers Centrepoint Trust (LHS) Relative STI INDEX (RHS)
Forecasts and Valuation healthy 2.0% growth.

FY Sep (S$ m) 2014A 2015A 2016F 2017F Valuation:
Gross Revenue 169 189 191 197 We have a DCF-backed TP of S$2.04, based on a WACC of
Total Return 165 171 101 104
6.5%, risk-free rate of 2.8% and terminal growth assumption of
Distribution Inc 95 106 111 114 1.5% p.a. At its current price, FCT offers investors a dividend
EPU (S cts) 11.3 11.7 10.9 11.1 yield of 6.4% and 17% total return.
EPU Gth (%) 1 4 (7) 2 Key Risks to Our View:
DPU (S cts) 11.2 11.6 11.9 12.2
Stronger pick-up in tenant sales Our rental reversion
DPU Gth (%) 2 4 2 3
NAV per shr (S cts) 185.5 191.3 186.8 184.3 assumptions are predicated on the generally weaker retail sales
PE (X) 16.4 15.8 17.0 16.7 outlook in Singapore. We note that tenant sales for FCT’s
Distribution Yield (%) 6.0 6.3 6.4 6.6 portfolio have bucked the retail sales index (RSI) growth trend,
P/NAV (x) 1.0 1.0 1.0 1.0
Aggregate Leverage (%) 29.3 28.2 28.5 28.9 and sustained outperformance could result in further positive
ROAE (%) 6.0 6.2 5.8 6.0 re-rating of our DPU estimates.
Distn. Inc Chng (%): 1 0 At A Glance

Consensus DPU (S cts): 12.1 12.0 Issued Capital (m shrs) 917
Other Broker Recs: B: 12 S: 3 H: 3 Mkt. Cap (S$m/US$m) 1,697 / 1,190
Major Shareholders
Frasers Centrepoint Ltd (%) 41.3
Schroders Plc (%) 6.0
Free Float (%) 52.7

Page 198
ed: TH / sa: JC
Company Guide

200 77.3%
180
Capturing the rising affluence of the north. Majority of 140

120
73.3%
FCT’s leases up for renewal are in Northpoint and Causeway 100 71.3%
80
Point, where the towns of Yishun and Woodlands are seeing 60 69.3%
net population growth due to influx of new condos and 40

67.3%
20
commercial developments under development. Coupled with 0 65.3%
a general lack of competing malls in the northern region and 2013A 2014A 2015F 2016F 2017F
relatively low occupancy costs in the 15-17% range, FCT is in Net Property Income Net Property Income Margin %
a strong negotiating position with tenants that want to set

up shop in the north. These two malls currently account for
c.75% of FCT’s NPI. Quarterly Net Property Income and Margins (%)
72%
35
34 71%
Moderate uplift in rentals from first reversionary cycle 33 70%
at Changi City Point. We expect c.10% uplift in rentals at 32 69%
Changi City Point which is undergoing its first reversionary 31
68%
30
cycle/ tenant remixing exercise, as the Manager looks to cater 29
67%
to the working population needs at Changi Business Park, 28

66%
65%
and increasing student population at the newly opened 27
26 64%
Singapore University of Technology and Design (SUTD).
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
Acquisition growth potential from Sponsor pipeline.
FCT can purchase retail assets from its Sponsor, Frasers
Centrepoint Limited (FCL). We believe a potential target to be
Waterway Point, in which the Sponsor has a 33% stake. The ROE (%)
asset is currently under construction, and expected to open in 6.0%
2H15. Given a one- or two-year stabilisation period, a realistic
5.0%
timeline for this acquisition would be in 2016-2017. An
acquisition value of S$300-400m (given estimated 4.0%
development costs of S$1bn) would allow FCT to grow its 3.0%
portfolio considerably. 2.0%
1.0%
0.0%
2013A 2014A 2015F 2016F 2017F
Interest Cover (x)

(x)
6.10
6.00
5.90
5.80
5.70
5.60
5.50
5.40
5.30
2013A 2014A 2015F 2016F 2017F

Page 2 Page 199
Company Guide

Balance Sheet:
Healthy balance sheet. Gearing to remain <30%, one of 31.0%
the lowest in the S-REIT universe, and well within the

26.0%
Manager’s comfortable level of 35%. The Trust recently
issued a S$60m 4-year MTN at 2.9% interest rate, thereby
21.0%
significantly refinancing its FY15 debt obligations.
16.0%
Debt years stand at 2.1, which is fairly short relative to other
S-REITs. The next major tranche is a S$264m loan (37% of 11.0%
2013A 2014A 2015F 2016F 2017F
borrowings) secured on Northpoint due in July 2016, and we
understand that there will be interest rate savings as some
expensive hedges embedded in the loan roll off.
Share Price Drivers: 1.2 (x)
Keep an eye on the risk-free rate. 1.1

1.0
As a yield play, FCT’s share price is sensitive to fluctuations in
0.9
the risk-free rate. Anticipated hikes in the US Fed Funds rate 0.8
have a negative impact on the stock. Correspondingly, any 0.7
delays in rate hikes would be a positive catalyst for share 0.6
price performance. 0.5

0.4
0.3
Key Risks: 2013A 2014A 2015F 2016F 2017F
Interest rate risks. About 87% of current borrowings have
been hedged into fixed rate debt, however the Manager has
guided that it does not intend to hedge 100% of its
borrowings into fixed rate debt in a relatively benign interest Distribution Yield (%)
(%)
rate environment. Distributions could be impacted by near-
term interest rate volatility. 7.0
6.5 +2sd: 6.6%
Potential disruptions at Northpoint. While a large 6.0

+1sd: 6.2%
proportion of development works at Northpoint 3 is not likely 5.5

Avg: 5.7%
‐1sd: 5.3%
to affect operations of the current Northpoint (which 5.0 ‐2sd: 4.9%
accounts for c.30% of NPI), works to integrate the entire
4.5
retail development could affect performance of the existing
mall. Prolonged disruptions could affect rental income from 4.0
2012 2013 2014 2015 2016
Northpoint in the medium term.
Company background
P/Bk NAV (x)
Frasers Centrepoint Trust is a retail real estate investment (x)
1.6
trust with a portfolio of shopping malls located in suburban 1.5
areas in Singapore. Its two largest assets are Causeway Point 1.4
and Northpoint. 1.3

+2sd: 1.28x
1.2 +1sd: 1.18x
1.1 Avg: 1.08x
1.0 ‐1sd: 0.99x
0.9 ‐2sd: 0.89x
0.8
0.7

Page 200 Page 3
Company Guide

FY Sep 2013A 2014A 2015A 2016F 2017F
Gross revenue 158 169 189 191 197
Net Income 92 96 107 101 104
Tax 0 0 0 0 0
Minority Interest 0 0 0 0 0 Earnings driven by new
Preference Dividend 0 0 0 0 0 contribution from Changi
Net Income After Tax 92 96 107 101 104 City Point
Total Return 288 165 171 101 104
Growth & Ratio
Revenue Gth (%) 7.3 6.8 12.1 0.8 3.4
Net Inc Gth (%) 8.5 3.8 12.4 (6.0) 2.9
Dist to revenue (%) 57.1 56.6 56.2 58.2 57.9
Operating expenses (%) 8.2 8.6 8.3 8.6 8.4
ROAE (%) 6.8 6.0 6.2 5.8 6.0
ROA (%) 4.5 4.1 4.2 4.0 4.1
ROCE (%) 5.0 4.6 4.6 4.6 4.8
Int. Cover (x) 5.6 5.6 6.0 5.8 5.6

Page 4 Page 201
Company Guide

FY Sep 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015
Net Income 25 27 29 26 26
Tax 0 0 0 0 0
Total Return 216 22 26 22 25
Non-tax deductible Items 0 3 (2) 1 (64)
Growth & Ratio
Revenue Gth (%) 13 1 1 (1) 1
N Property Inc Gth (%) 8 5 2 (2) (4)
Net Inc Gth (%) 12 6 9 (12) 1

FY Sep 2013A 2014A 2015A 2016F 2017F

Cash & ST Invts 43 47 22 28 25
Inventory 0 0 0 0 0
Debtors 0 0 0 0 0
Total Assets 2,135 2,522 2,549 2,559 2,560
ST Debt 60 95 278 278 278

Creditor 46 40 32 42 43
LT Debt 529 644 440 450 460
Barring any
Non-Cash Wkg. Capital (61) (58) (50) (60) (61) acquisitions, gearing to
Net Cash/(Debt) (546) (692) (696) (700) (713) remain stable at c.30%
Ratio
Current Ratio (x) 0.4 0.3 0.1 0.1 0.1
Quick Ratio (x) 0.4 0.3 0.1 0.1 0.1
Z-Score (X) 1.6 1.3 1.4 1.3 1.3

Page 202 Page 5
Company Guide

FY Sep 2013A 2014A 2015A 2016F 2017F
Pre-Tax Income 92 96 107 101 104

Dep. & Amort. 0 0 0 0 0
Tax Paid (1) 0 0 0 0
Chg in Wkg.Cap. 12 (6) 2 10 1
Other Investing CF 0 (2) 0 0 0
Net Investing CF (5) (296) (1) 2 2
Chg in Gross Debt (3) 150 (21) 10 10
Other Financing CF 0 (20) (18) 0 0
Net Financing CF (91) 197 (145) (101) (104)
Chg in Cash 17 2 (26) 6 (3)

Free CFPS (S cts) 12.5 (23.4) 12.5 11.1 10.3
S$
S.No. Dat e Rat ing
Pric e Price
1: 23 Apr 15 2.11 2.20 BUY
2.11 2: 30 J un 15 2.06 2.20 BUY
2
1 3: 20 Aug 15 1.92 2.05 BUY
4: 07 Oct 15 1.96 2.05 BUY
2.01
4
1.91
3
1.81
1.71
Source: DBS Bank

Page 6 Page 203
Frasers Commercial Trust
Edition 1 Version 1 | Bloomberg: FCOT SP | Reuters: FRCR.SI Refer to important disclosures at the end of this report
BUY CONSOLIDATING ITS POSITION

Price Target : 12-Month S$ 1.53 (21% upside) Firing on all fronts We maintain a BUY call, TP S$1.53. FCOT
offers an attractive yield of of 7.8-7.9%, which is compelling in
Potential Catalyst: More acquisitions our view, given limited downside risks in the immediate term.
Where we differ: More bullish on the performance of ATP We believe that its portfolio of mainly Grade B office assets,
Analyst business parks will weather the current downturn in CBD rents
Derek Tan +65 6682 3716 derektan@dbs.com over FY16-17F.
FY16F is a year of gestation. After a strong rebound in DPU of
Price Relative
15% in FY15, driven partly by (a) expiring of under-rented
S$ Relative Index master lease at Alexandra Technopark which offered significant
1.7
1.6
upside to revenues and (b) acquisition of 257 Collins Street in
204
1.5
1.4 184 Melbourne. Looking ahead, we believe that FY16F will be a year
1.3
1.2
164 of gestation for the REIT as the manager looks to consolidate its
1.1
1.0
144
position and look to optimize portfolio performance given
124
0.9
104 increasing headwinds in the Singapore office market and
0.8
0.7
84
Dec-15
slowing Australian economy.
Frasers Commercial Trust (LHS) Relative STI INDEX (RHS)
Secure earnings with steady growth. FCOT’s portfolio enjoys a
Forecasts and Valuation high occupancy of 96.5% and a long WALE of 3.9 years. In
FY Sep (S$ m) 2014A 2015A 2016F 2017F
addition, >30% of leases have annual rental escalations of
Net Property Inc 91 102 113 115 c.3%, which provides in-built income growth. With no debt
Total Return 87 75 67 69 expiring until FY17, and close to 80% of interest costs hedged
Distribution Inc 57 68 78 80 into fixed rates, the Trust is well positioned to ride out the
EPU (S cts) 8.9 9.6 8.6 8.7
EPU Gth (%) (1) 8 (11) 2
economic downturn in Australia, as well as near term interest
DPU (S cts) 8.5 9.7 9.9 10.1 rate volatility.
DPU Gth (%) 8 15 2 2
NAV per shr (S cts) 161.3 154.1 153.0 152.0 Valuation:
PE (X) 14.2 13.2 14.8 14.5 We maintain our BUY call and DC-based TP S$1.53. At its
Distribution Yield (%) 6.7 7.7 7.9 8.0 current price, FCOT offers investors a dividend yield of c.7.8-
P/NAV (x) 0.8 0.8 0.8 0.8 7.9% over FY15-16F, which is highest amongst office-focused
S-REITs.
ROAE (%) 5.6 6.1 5.6 5.7

Consensus DPU (S cts): 9.9 9.9 10.2 Unfavourable forex movements. As FCOT derives c.45% of its
Other Broker Recs: B: 7 S: 0 H: 0 NPI in AUD while distributions are based in SGD, foreign
currency fluctuations will have an impact on distributions. The
Manager has hedged its AUD exposure on a rolling basis of 6-
9 months, and given the negative movement of AUD, we have
factored in lower exchange rate assumptions in our forecasts.
At A Glance
Mkt. Cap (S$m/US$m) 995 / 693
Major Shareholders
Free Float (%) 72.8

Page 204
ed: TH / sa: JC
Company Guide

S$ m
CRITICAL DATA POINTS TO WATCH 200
84.0%
180
82.0%
160
80.0%
120 78.0%
Acquisition of 257 Collins Street will boost DPU growth. 100 76.0%
FCOT announced the proposed acquisition of 257 Collins 80
74.0%
60
Street in Melbourne, Australia, from its Sponsor’s Australand 40
72.0%
70.0%
entity, for an all-in consideration of A$237.7m. If completed, 20
0 68.0%
this deal would increase FCOT’s portfolio value by 14.2% to 2013A 2014A 2015F 2016F 2017F
S$2.0bn, and raise AUD contribution to NPI from 40% to Net Property Income Net Property Income Margin %
48%, thereby balancing the Trust’s geographical diversity.

With a WALE of 6.0 years and in-built rental escalation
clauses of 3.75%-4% p.a., we estimate contribution from Quarterly Net Property Income and Margins (%)
this property to be 1.6% DPU accretive in FY16F. 29 78%
28 76%
27
Still more growth at Alexandra Technopark after one- 74%
26
off boost. After the expiry of the Alexandra Technopark 25 72%
(ATP) master lease in Aug-14, we expect NPI for the property 24
70%
to jump 60% in FY15, as a result of (a) the Trust enjoying full 23
68%
underlying income contribution from the asset, which is 22
21 66%
higher than the previous master lease rent, and (b) significant
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
rental reversions as leases with low expiring rents are
renewed at market rates. We estimate the collective impact Net Property Income Net Property Income Margin %
of these two catalysts to contribute to a 25% jump in DPU at

the Trust level for FY15.
ROE (%)
6.0%
Upside potential from annual rental escalations and
positive rental reversions. Post the acquisition of 257 5.0%
Collins Street, FCOT’s weighted average lease expiry (WALE) 4.0%

will increase from 3.5 to 3.9 years, underpinned by long
3.0%
leases for the Australia properties which generally have
annual rental escalations of 3-4% p.a. Shorter term leases of 2.0%
roughly three years in Singapore will allow the Trust to 1.0%

benefit from positive rental reversions, given that average
0.0%
passing rents at China Square Central and Alexandra 2013A 2014A 2015F 2016F 2017F
Technopark are below market rates. On average, 30-35% of

FCOT’s leases have built-in-step-up rents ranging from 2.9%
to 5.3%.
Interest Cover (x)
(x)
4.40
Value creation from CSC hotel development deal;
S$44.8m implies a valuation of close to 4.20
900k/key. We are positive on the sale of the development 4.00

rights and leasehold interest as it crystallizes hidden value
3.80
within the property. Upon completion of a planned hotel
development (300 rooms) in 3-4 years time, we see multifold 3.60
growth in rentals and capital values with renewed vibrancy. 3.40

The S$44.8m received for the remaining 80-year leasehold for
3.20
16k sqm of GFA slated for hotel development implies a 2013A 2014A 2015F 2016F 2017F
valuation of S$970k-1027k/room, which we believe is fair

price. With better asset valuation and earnings expectations, Source: Company, DBS Bank
we expect share price to gain in upward momentum as well.

Page 2 Page 205
Company Guide

Balance Sheet:
Gearing expected to remain steady at c.36%. We project 39.0%
FCOT to maintain a gearing of between 36%, which is within 34.0%

management’s comfortable range of 35%-40%. We do not
29.0%
expect the manager to look to raise gearing beyond current
levels and any future acquisitions is likely to be funded 24.0%
through a combination of debt/equity.

19.0%
Well spread debt maturity profile. The Trust has no 14.0%

2013A 2014A 2015F 2016F 2017F
refinancing needs until FY2017, and has hedged 81% of
gross borrowings, giving it a measure of protection against
short term fluctuations in interest rates. However, we expect
interest rates to climb slowly going forward in line with Distribution Paid / Net Operating CF
market expectations of a rate hike. (x)
1.4
357 Collins to further strengthen FCOT’s income stream. 1.0
We view the acquisition of 357 Collins Street more for its 0.8
attractive yield backed by a long weighted average lease 0.6

expiry of 6 years. Acquired at an estimated initial yield of 0.4
c.6.25%, the deal is expected to be accretive. We have
0.2
assumed S$100m in new equity raised, resulting in gearing 2013A 2014A 2015F 2016F 2017F
settling at 37% and uplift in DPU by c.1.6%. With higher

yields from DPU gains, it reflects share price more attractively.
More acquisitions. In addition to the Australand office Distribution Yield (%)

(%)
portfolio, FCL has several Singapore assets which could be 8.7
injected into the REIT in the medium term, with Alexandra 8.2
Point being the most likely target, and price in the c.S$200m 7.7 +2sd: 7.7%
7.2
range. +1sd: 7%
6.7
6.2 Avg: 6.3%
Key Risks: 5.7
‐1sd: 5.6%
Rising interest rates. Any increase in interest rates will 5.2
‐2sd: 4.9%
result in higher interest payments that FCOT. We note that 4.7
the trust has hedged in close to 80% of its interest into fixed- 4.2
2011 2012 2013 2014 2015
rated debt.
Unfavorable forex movements . As FCOT derives c. 49%

P/Bk NAV (x)
of its income from AUD while distributions are based in SGD, (x)
1.2
foreign currency fluctuations will have an impact on
1.1
distributions. The Manager has hedged out its AUD exposures +2sd: 1.05x
1.0
on a 6-9month rolling basis. +1sd: 0.93x
0.9
0.8 Avg: 0.82x
Company background 0.7 ‐1sd: 0.71x
Frasers Commercial Trust is a real estate investment trust that 0.6 ‐2sd: 0.59x
invests in income-producing commercial office properties in 0.5
Singapore and Australia. As of 30th Sept 2014, FCOT’s 0.4
portfolio is worth an aggregate S$1.8bn. 66% of its assets Dec-11 Dec-12 Dec-13 Dec-14 Dec-15
are derived from its properties in Singapore and the

remainder 34% from Australia. Source: Company, DBS Bank

Page 206 Page 3
Company Guide

FY Sep 2013A 2014A 2015A 2016F 2017F
Gross revenue 118 119 142 155 160
Other Non Opg (Exp)/Inc 19 2 (1) 0 0
Earnings growth to come
Net Income 75 58 65 74 75 from Alexandra Technopark
Tax (8) 2 5 (7) (7)
Preference Dividend (7) 0 0 0 0
Total Return 154 87 75 67 69
Non-tax deductible Items (103) (30) (7) 11 11
Growth & Ratio
Revenue Gth (%) (11.0) 0.5 19.6 9.1 3.4
N Property Inc Gth (%) (11.3) (0.4) 12.5 11.0 1.4
Net Inc Gth (%) (28.1) 1.1 16.8 (3.6) 2.0
Dist to revenue (%) 43.5 48.2 47.7 50.4 49.7
ROAE (%) 5.8 5.6 6.1 5.6 5.7
ROA (%) 2.8 3.2 3.6 3.3 3.4
ROCE (%) 3.3 4.2 4.5 4.4 4.5
Int. Cover (x) 3.6 3.7 4.0 4.3 4.3

Page 4 Page 207
Company Guide

FY Sep 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015
Net Income 15 16 16 15 23
Tax 5 (1) (1) (1) 8
Non-tax deductible Items (34) 1 2 2 (12)
Growth & Ratio
Revenue Gth (%) 7 11 (2) 0 7
Net Inc Gth (%) 51 (22) (6) (3) 124

FY Sep 2013A 2014A 2015A 2016F 2017F

Cash & ST Invts 43 47 62 62 58
Inventory 0 0 0 0 0
Debtors 8 9 9 9 9
Total Assets 1,863 1,882 2,034 2,037 2,037
ST Debt 127 0 0 0 0
Creditor 22 22 30 30 30
LT Debt 572 692 732 735 738

Net Cash/(Debt) (657) (645) (670) (673) (680)
Ratio
Current Ratio (x) 0.3 2.2 2.0 1.8 1.7
Quick Ratio (x) 0.3 2.2 1.8 1.6 1.6
Z-Score (X) 4.3 4.4 4.2 4.2 4.2

Page 208 Page 5
Company Guide

FY Sep 2013A 2014A 2015A 2016F 2017F
Dep. & Amort. 0 0 0 0 0
Tax Paid 0 (2) (1) (3) (7)
Chg in Wkg.Cap. (26) 10 2 0 0
Net Investing CF (31) (3) (197) (3) (3)
Other Financing CF (344) (27) (22) 0 0
Net Financing CF (451) (74) 124 (75) (77)
Currency Adjustments 14 0 (1) 0 0
Chg in Cash (416) 5 15 (1) (4)

Free CFPS (S cts) 3.2 11.7 (14.8) 9.5 9.3
1.64 S$
Closing T arget
S.No. Dat e Rat ing
6 Pric e Pric e
4
1: 09 J an 15 1.43 1.53 BUY
1.54
2 2: 24 F eb 15 1.49 1.53 BUY
5 3: 10 Mar 15 1.48 1.53 BUY
1.44 8 4: 28 Apr 15 1.54 1.74 BUY
3
5: 30 J un 15 1.53 1.79 BUY
1 6: 21 J ul 15 1.55 1.76 BUY
1.34 7: 19 Aug 15 1.35 1.51 BUY
7 8: 26 Oct 15 1.42 1.53 BUY
1.24
1.14
Source: DBS Bank

Page 6 Page 209
Frasers Hospitality Trust
Edition 1 Version 1 | Bloomberg: FHT SP | Reuters: FRHO.SI Refer to important disclosures at the end of this report
BUY (Upgrade from HOLD) Unfairly overlooked

Last Traded Price: S$0.77 (STI : 2,834.23) Misunderstood portfolio. We upgrade our call on FHT to BUY
Price Target : S$0.83 (8% upside plus 7.9% yield) with a TP of S$0.83. While investors should be concerned about
its exposure to the Singapore, we believe investors have
Potential Catalyst: Investors realising FHT provides exposure to other overlooked the fact that the majority of the FHT’s portfolio
growing hospitality markets and not a pure Singapore hospitality (c.60%) is located in markets which are experiencing tailwinds.
play/successful AEI programme at Intercontinental Singapore In addition, FHT’s core Singapore asset, Intercontinental hotel is
Where we differ: Below consensus on higher estimated interest about to complete its extensive renovations (end-Feb-16), which
expenses should allow the property to outperform the overall Singapore
Analyst
market.
Derek Tan +65 6682 3716 derektan@dbs.com Exposure to growing markets. Approximately 60% of FHT’s
FY15 income was sourced from the growing markets of
Australia (18%), Japan (14%) and UK (27%). FHT’s Australian
and Japanese properties are beneficiaries of growing foreign
Price Relative tourists. In fact, FHT's recent purchase of Sofitel Sydney
S$ Relative Index
1.0 222 Wentworth deepens its exposure to the growing Sydney
1.0 202 hospitality market. Meanwhile, FHT’s UK portfolio should
benefit from still healthy tourist arrivals and corporate demand.
0.9
182
0.9
162
0.8
142
0.8
0.7
122
Clear and visible acquisition pipeline. Through the strong
0.7 102 support of its sponsor (Frasers Centrepoint Limited) and strategic
0.6
Jul-14 Dec-14 May-15 Oct-15
82
partner (TCC Group), FHT has a clear and visible acquisition
pipeline. This robust pipeline consists of 17 hotels and serviced
Frasers Hospitality Trust (LHS) Relative STI INDEX (RHS)
residences located across Asia, Australia and Europe.
FY Sep (S$ m) 2014A* 2015A* 2016F 2017F Valuation:
Gross Revenue 102 129 119 122 To account for our more cautious stance towards the
Net Property Inc 83 106 98 100 Singapore hospitality market, we trimmed our FY16-17F DPU
Distribution Inc 71 94 80 81 by 3-5%. However, we have maintained our TP at $0.83 as we
EPU (S cts) 4.7 1.5 4.2 4.3 roll forward our DCF-valuation to FY16. With c.20% total
EPU Gth (%) (54) (69) 189 1 return on offer over the coming 12 months (8% upside plus
DPU (S cts) 5.9 7.6 5.9 5.9 7.9% yield), we upgrade our call to BUY.
DPU Gth (%) (7) 28 (23) 0
NAV per shr (S cts) 81.8 85.7 85.3 84.5
PE (X) 16.3 52.6 18.2 18.0
Distribution Yield (%) 7.7 9.8 7.6 7.6 FX volatility and execution risk at Intercontinental Singapore. A
P/NAV (x) 0.9 0.9 0.9 0.9 key risk to our positive outlook is a significantly weaker AUD,
Aggregate Leverage (%) 39.9 38.6 38.8 38.9 MYR and JPY as Australia, Malaysia and Japan contributes
ROAE (%) 5.5 1.7 4.9 5.0 c.40% of FHT’s NPI. In addition, there will be downside risk to
our earnings estimates, if the renovations at Intercontinental
Distn. Inc Chng (%): (3) (5) Singapore are unsuccessful.
*2014 – Annualised basis, 2015 – 14Jul14-30Sep15 Issued Capital (m shrs) 1,368
Mkt. Cap (S$m/US$m) 1,053 / 739
Major Shareholders
TCC Hospitality Limited (%) 39.2
Free Float (%) 40.2
ICB Industry : Financials / Real Estate Investment Trusts

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IREIT Global
Edition 1 Version 1 | Bloomberg: IREIT SP | Reuters: IREI.SI Refer to important disclosures at the end of this report
BUY Undervalued European play

Last Traded Price: S$0.69 (STI : 2,834.23) Concerns largely priced in. We maintain our BUY call with TP
Price Target : S$0.77 (12% upside and 9.4% yield) of S$0.77. While the market has rightly placed a liquidity
discount over IREIT due to (1) its small free float (c 29.5%) and
Potential Catalyst: Acquisitions/increase in German CPI market cap, and (2) risk of further devaluation of the EUR
Where we differ: In line with expectations versus SGD on the back of potential QE by the ECB, we believe
these risks have largely been discounted. This is because even
Analyst
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com with a further 10% devaluation of the EUR, IREIT’s FY16F yield
Derek Tan +65 6682 3716 derektan@dbs.com is still attractive at 8.5% versus our current forecast of 9.4%.
Boost from recent Berlin acquisition. IREIT recently completed

the acquisition of a property in Berlin for EUR144.2m, which
Price Relative implies 7.1% proforma FY14 NPI yield. Beyond the boost in
S$
0.9
Relative Index
earnings, the property further diversifies IREIT’s portfolio to five
German cities and increases cash flow visibility with weighed
215
0.9 195
0.8 175 average lease expiry (WALE) by gross rental income (GRI) now
0.8
155 at c.7 years, up from c.6 years previously.
135
0.7
115
0.7 95 Exposure to potential cap rate compression in the German real
0.6
Aug-14 Jan-15 Jun-15 Nov-15
75 estate market. With the ECB having embarked on a QE
programme to reflate the European economy, we believe IREIT
provides investors to a potential uplift in property values
IREIT Global (LHS) Relative STI INDEX (RHS)
Forecasts and Valuation through the compression of cap rates.

FY Dec (EUR m) 2014A* 2015F 2016F 2017F
Gross Revenue 8 27 33 33 Valuation:
Net Property Inc 8 24 30 31 We recently lowered our DCF-based TP to S$0.77 from S$0.90
Total Return (6) 17 23 22
after incorporating the 45-for-100 rights issue at S$0.468 per
EPU (S cts) (2.0) 4.5 5.8 5.5 unit and the acquisition of the Berlin property. With an
EPU Gth (%) nm nm 30 (5) attractive 9.4% FY16 yield and 13% upside to our TP of
DPU (S cts) 2.0 5.1 6.3 6.3 S$0.77 we reiterate our BUY recommendation.
DPU Gth (%) nm 146 25 0
PE (X) nm 15.4 11.9 12.6
The key risk to our view is a significant depreciation of EUR
P/NAV (x) 1.1 1.1 1.1 1.1 versus SGD beyond the 1.54 FX rate that our economists have
Aggregate Leverage (%) 31.1 43.4 43.6 43.8 projected. For every 0.10 change in the EURSGD FX rate, our
ROAE (%) (6.2) 7.7 9.5 9.0 DCF valuation changes by 6%. In addition, a weaker than
expected inflation rate would also delay any increase in rents.
Consensus DPU (S cts): 5.2 6.4 6.4 At A Glance
Other Broker Recs: B: 1 S: 0 H: 1 Issued Capital (m shrs) 613
* for period between 13Aug-31Dec14 Mkt. Cap (S$m/US$m) 423 / 297
Major Shareholders
Source of all data: Company, DBS Bank, Bloomberg Finance L.P Jinquan Tong (%) 57.2
Chap Huat Lim (%) 18.9
Free Float (%) 23.9

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IREIT Global

CRITICAL DATA POINTS TO WATCH EUR m
100
99.9%
90
80 97.9%
Stable cash flow profile with inflation protection. IREIT’s 60
93.9%
50
portfolio of five properties has a WALE by GRI of 7.0 years (as 40 91.9%
at end Sep-15), which provides investors with significant 30 89.9%
20
cashflow visibility. The resilience of the portfolio is also 10
87.9%
derived as the majority of leases contain rent adjustment 0

2014A 2015F 2016F 2017F
85.9%
clauses which are subject to the rent indexation to the

German CPI. Rents are adjusted by the rise or a percentage
of the change in CPI, upon the CPI crossing a prescribed 91%
hurdle rate or a prescribed percentage hurdle. Another 7

91%
attractive feature of IREIT’s portfolio is the fact that the 6
90%
5
properties are leased to blue chip tenants such as Allianz,
4 90%
Deustche Telekom, Deutsche Rentenversicherung Bund and 3
89%
ST Microelectronics which mitigates payment/credit risks for 2
the REIT. 1
89%
0 88%
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
Boost from acquisition of Berlin property. IREIT recently
purchased a property in Berlin for EUR144.2m (c.S$217.7m) Net Property Income Net Property Income Margin %
and on a 7.1% proforma FY14 NPI yield. The full benefits Distribution Paid / Net Operating CF
from the acquisition should accrue over the coming year. 1.2
(x)
Located in the district of Lichtenberg, 6km east of the Berlin 1.0

city centre, the freehold property consist of two fully
0.8
connected building sections of 8 and 13 storeys respectively.
0.6
Close to fully occupied (c.99.2%), the property provides
exposure to Berlin, one of the strongest development 0.4
economic regions in Germany. Beyond diversifying IREIT’s 0.2
portfolio to five cities from its initial base of four locations 0.0
(Munster, Bonn, Darmstadt and Munich), the Berlin property 2014A 2015F 2016F 2017F
is expected to extend IREIT’s WALE by GRI from c.6 years to Interest Cover (x)
c.7 years. (x)
7.60
7.40
Supportive strategic partners/major shareholders to drive
7.20
future acquisitions. IREIT has the support of two major
7.00
shareholders - Shanghai Summit Group which is owned by
6.80
founder Mr Tong Jinquan, and Mr Lim Chap Huat (LCH), CEO
6.60
of Soilbuild Group Holdings Limited which owns 57% and
6.40
19% interest in IREIT respectively. Shanghai Summit Group is 6.20
also a strategic partner for the REIT, and has provided a ROFR 6.00
to IREIT over properties in Europe. We believe this stable 2014A 2015F 2016F 2017F
shareholder base provides the REIT with the flexibility to Source: Company, DBS Bank
pursue yield accretive acquisitions. This is evidenced by the
recent rights issue, which was fully supported both
shareholders. In fact, LCH also undertook to make excess
applications for up to 10% of the total number of rights
units.
Hedges in place to mitigate against FX volatility. IREIT

distributes its income in SGD but its rental income is in EUR. Going forward, IREIT may also enter additional hedges in
To mitigate this risk, IREIT has entered into hedges for 2H15 respect to distributions for future periods.
distributable income at an average hedge rate of S$1.54.

Page 2 Page 212
Company Guide
IREIT Global

Balance Sheet:
Naturally hedged portfolio. As at end September 2015, IREIT’s 45.0%
gearing stood at 43.4%. While gearing is higher than other 40.0%
S-REITs, this risk is mitigated by the fact that all of IREIT’s 35.0%
borrowings are in EUR. In addition, interest rate risk is 30.0%
managed by having 88.1% of its borrowings on fixed interest 25.0%

20.0%
rates.
15.0%
10.0%
Share Price Drivers: 2014A 2015F 2016F 2017F
Yield too high to ignore. IREIT has de-rated over the past year
due to a combination of a weak EUR as well as a delay in
raising rents due to deflation in Germany. Nevertheless, with ROE (%)
the recent yield accretive acquisition of a property in Berlin, 9.0%
we believe the delivery of a FY16F yield of 9.3% will make 8.0%
investors reassess an investment in the counter and trigger a 7.0%
re-rating. This is despite fears of potential further weakness of 6.0%
5.0%
the EUR, as even a 10% devaluation from current levels
4.0%
($1.54), IREIT will still offer an attractive 8.5% FY16F yield, 3.0%
down from our current 9.4% yield forecast. 2.0%
1.0%
Key Risks: 0.0%

2014A 2015F 2016F 2017F
Deflation risk. Should Germany experience another bout of
deflation, this may cause a potential rise in rents in the
future to be delayed. This would negatively impact projected Distribution Yield (%)
(%)
distributions going forward.
7.0
+2sd: 6%
Interest rates risks . Any increase in interest rates will result 5.0
in higher interest payments and reduce the income available +1sd: 3.7%

3.0
for distribution, which will result in lower distribution per
Avg: 1.3%
unit (DPU) for unitholders. 1.0
-1.02012 2013 2014 2015 2016

‐1sd: ‐1.1%
Single tenant leases. IREIT is reliant on GMG, a wholly-
-3.0
owned subsidiary of Deutsche Telekom for c. 60% of GRI.
Non performance by GMG will negatively impact
distributions to unitholders. PB Band (x)
1.4
(x)
Changes in tax regime. Any change in the tax regime could
1.3
potentially impact IREIT’s distributions negatively.
+2sd: 1.22x
1.2
+1sd: 1.17x
Company Background 1.1 Avg: 1.11x
IREIT is a Singapore REIT established with the investment ‐1sd: 1.06x
1.0 ‐2sd: 1x
strategy of principally investing, directly or indirectly, in a
portfolio of income-producing real estate in Europe which is 0.9
used primarily for office purposes. 0.8

Dec-14 May-15 Oct-15

Page 213 Page 3
Company Guide
IREIT Global
Income Statement (EUR m)

FY Dec 2014A* 2015F 2016F 2017F
Gross revenue 8 27 33 33
Property expenses (1) (3) (3) (3)
Net Property Income 8 24 30 31
Other Operating expenses (2) (4) (3) (5)
Other Non Opg (Exp)/Inc 0 0 0 0
Net Interest (Exp)/Inc (1) (3) (4) (4)
Exceptional Gain/(Loss) (12) 0 0 0
Net Income (7) 17 23 22
Tax 1 0 0 0
Minority Interest 0 0 0 0
Net Income After Tax (6) 17 23 22
Total Return (6) 17 23 22
Non-tax deductible Items 0 2 2 3
Net Inc available for Dist. 6 19 25 26
Increase in earnings from
Growth & Ratio the acquisition of the Berlin
Revenue Gth (%) N/A 220.0 24.2 1.1 property
N Property Inc Gth (%) nm 220.6 25.4 1.1
Net Inc Gth (%) nm nm 35.2 (4.3)
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0
Net Prop Inc Margins (%) 90.4 90.6 91.4 91.4
Net Income Margins (%) (74.2) 65.1 70.8 67.0
Dist to revenue (%) 77.1 73.0 76.6 76.7
19.6 16.3 9.9 13.7
to sales %)
ROAE (%) (6.2) 7.7 9.5 9.0
ROA (%) (4.0) 4.5 5.1 4.9
ROCE (%) 4.2 5.5 6.2 5.9
Int. Cover (x) 7.4 6.9 6.8 6.5
* for period between 13Aug-31Dec14

Page 4 Page 214
Company Guide
IREIT Global
Quarterly / Interim Income Statement (EUR m)

FY Dec 4Q2014 1Q2015 2Q2015 3Q2015
Other Non Opg (Exp)/Inc 0 0 0 (1)
Net Interest (Exp)/Inc (1) 0 (1) (1)
Exceptional Gain/(Loss) 0 0 0 0
Net Income 5 4 4 4
Tax 1 0 0 1
Minority Interest 0 0 0 0
Net Income after Tax 6 4 3 4
Total Return N/A N/A N/A N/A
Non-tax deductible Items N/A N/A N/A N/A
Growth & Ratio
Revenue Gth (%) N/A (33) (3) 36
N Property Inc Gth (%) nm (34) (2) 34
Net Inc Gth (%) nm (32) (23) 35
Net Prop Inc Margin (%) 90.4 89.1 90.4 89.0
Balance Sheet (EUR m)

FY Dec 2014A 2015F 2016F 2017F
Investment Properties 291 440 442 444

Inventory 0 0 0 0
Debtors 2 4 6 6
Total Assets 307 456 459 461
ST Debt 0 0 0 0
Creditor 5 3 4 4
LT Debt 95 198 200 202
Unit holders’ funds 200 248 248 248
Minority Interests 0 0 0 0
Total Funds & Liabilities 307 456 459 461
Non-Cash Wkg. Capital (9) (5) (5) (5)

Net Cash/(Debt) (83) (188) (190) (192) Increase in gearing due
Ratio to acquisition of the
Current Ratio (x) 1.3 1.5 1.5 1.5 Berlin property
Quick Ratio (x) 1.3 1.5 1.5 1.5

Page 215 Page 5
Company Guide
IREIT Global
Cash Flow Statement (EUR m)

FY Dec 2014A* 2015F 2016F 2017F
Pre-Tax Income 5 17 23 22
Dep. & Amort. 0 1 1 1
Tax Paid 1 0 0 0
Associates &JV Inc/(Loss) 0 0 0 0
Chg in Wkg.Cap. 8 (4) 0 0
Other Operating CF (6) 2 2 3
Net Operating CF 8 16 26 27
Net Invt in Properties (303) (159) (2) (2)
Other Invts (net) 0 0 0 0
Invts in Assoc. & JV 0 0 0 0
Div from Assoc. & JVs 0 0 0 0
Net Investing CF (303) (159) (2) (2)
Distribution Paid 0 (19) (25) (26)
Chg in Gross Debt 95 103 2 2
New units issued 212 58 0 0
Other Financing CF 0 0 0 0
Net Financing CF 307 141 (23) (24)
Chg in Cash 12 (2) 1 1
Operating CFPS (Euro cts.) 0.0 3.4 4.3 4.3

Free CFPS (Euro cts.) (61.2) (24.0) 3.9 3.9
* for period between 13Aug-31Dec14
S$
Closing T arget
S.No. Dat e Rat ing
Pric e Price
0.78
1: 04 Mar 15 0.74 0.90 BUY
2: 18 Nov 15 0.68 0.77 BUY
0.73 1
2
0.68
0.63
0.58
Source: DBS Bank

Page 6 Page 216
Keppel DC REIT
Edition 1 Version 1 | Bloomberg: KDCREIT SP | Reuters: KEPE.SI Refer to important disclosures at the end of this report
BUY Data centre reit with big ambitions

Last Traded Price: S$1.03 (STI : 2,834.23) Riding on the global data boom. Keppel DC REIT offers
Price Target : S$1.14 (11% upside) investors unique exposure into the highly specialised and
resilient data centre market. With close to 70% of NPI derived
Potential Catalyst: Acquisitions from co-location leases, the Trust is poised to ride on rising
Where we differ: In line with consensus global usage of data and demand for data centres. Earnings
are further supported by its master leased properties (30% of
Analyst
Derek Tan +65 6682 3716 derektan@dbs.com NPI) which have average annual escalations of 2-4%.
Visible earnings growth profile underpinned by acquisition

potential. With foreign sourced distributions fully hedged until
Price Relative
S$
1H17, and 90% of borrowings hedged into fixed rate debt,
Relative Index
1.2 Keppel DC REIT stands out for its stable and highly visible
209
1.2
1.1 189
earnings profile. Earnings catalyst will come from the
1.1 169 acquisition of T27, which we believe could occur in 1H16.
While an acquisition of >S$250m is expected to trigger an
1.0
149
1.0
equity fund raising exercise, we believe the acquisition will be

129
0.9
0.9 109
0.8 89 accretive to earnings given that the stock is trading at a low

implied cap rate of 6.3%
Keppel DC REIT (LHS) Relative STI INDEX (RHS)
Imputed S$250m of acquisitions into FY16 numbers. We have

FY Dec (S$ m) 2014A 2015F 2016F 2017F
assumed S$250m of acquisitions in FY16 to account for the
Gross Revenue 80 97 124 129 purchase of T27; we have assumed the equity fundraising will
Net Property Inc 67 80 105 109 bring gearing down to 30%, which is the Manager’s long term
Total Return 48 56 75 79 target level.
EPU (S cts) 5.4 6.4 7.5 7.1
EPU Gth (%) nm 18 18 (5) We currently have a BUY recommendation, with DCF-backed
DPU (S cts) 5.4 6.4 6.8 7.2 TP of S$1.14. The stock offers attractive yields 6.5% for FY16
DPU Gth (%) nm 18 6 6 and upside will hinge on better than expected returns from
NAV per shr (S cts) 87.5 87.5 89.8 89.8
acquisitions, or higher occupancies at co-location properties.
PE (X) 19.0 16.2 13.7 14.4
Aggregate Leverage (%) 31.2 34.3 30.1 30.3 Higher maintenance capex relative to other asset classes.
ROAE (%) 6.1 7.3 8.5 8.0 Keppel DC REIT is responsible for maintenance capex for certain
properties in the portfolio. Due to the shorter lifespan of a data
Distn. Inc Chng (%): - - - centre’s infrastructure, it is possible that the REIT may have to
rely on borrowings to fund these works, which would result in
higher gearing levels, or there could be some pressure on the
Source of all data: Company, DBS Bank, Bloomberg Finance L.P REIT’s cash flow, potentially affecting its ability to pay
distributions.
At A Glance
Mkt. Cap (S$m/US$m) 909 / 633
Major Shareholders
Keppel Telecom & Transport (%) 30.1
Wellington Management (%) 7.3
Free Float (%) 62.6

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Company Guide
Keppel DC REIT

S$ m
180 91.9%
160 89.9%
87.9%
120
Tapping on global data storage and usage growth. As an 100 85.9%
owner of data centres in key data gateways and financial 80 83.9%

60
centres across Asia Pacific and Europe, Keppel DC REIT is 40
81.9%
79.9%
poised to ride the wave of rising global data usage and 20
0 77.9%
demand for data centres. The Trust offers investors a stable 2014A 2015F 2016F 2017F
and visible earnings growth profile, with 30% of NPI derived Net Property Income Net Property Income Margin %
from long-dated master leases with embedded rental step-

ups of 2-4% p.a. With 61% of leases by rental income due Net Property Income and Margins (%)
87%
for renewal between 2015 and 2017, earnings will be further 27
86%
26
driven by positive rental reversions and higher occupancies at 86%
25
its co-location data centres in Singapore (T25, S25), Australia 85%
24
(part of Gore Hill), and Ireland (Citadel 100). As it stands, the 85%
23
Trust has a WALE of 2.6 years for co-location properties, 9.9 22
84%
84%
years for fully fitted properties, and 16 years for shell & core 21 83%
properties. 20 83%
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
Strong ambitions to grow portfolio; pricing in S$250m worth
of acquisitions. We have assumed S$250m of acquisitions in
FY16 to account for the purchase of T27, which will be Distribution Paid / Net Operating CF
funded via a mix of debt and equity. In addition, the Manager 1.1
(x)
remains on a constant lookout for third party acquisitions in 1.0
Europe (Germany, France, Ireland) and the Asia Pacific (China, 0.9
Indonesia, Korea, Japan, Australia) to grow the REIT’s 0.8
portfolio and drive earnings. In addition, the REIT currently 0.7
has the rights of first refusal (ROFR) over three other assets 0.6
0.5
owned by Keppel T&T and/or iSeek Communications in
0.4
Singapore, Netherlands and Australia.
0.3
2014A 2015F 2016F 2017F
Occupancy rate for DC space the key metric to watch. In

3Q15, the Trust signed 2 renewal and expansion leases, as
well as 4 new leases, amounting to a total of c.98k sqft of
NLA. However we note that majority of leasing activity was
for work space (as opposed to DC space), where rents are
much lower compared to DC space. Occupancy at S25
dipped marginally to 85.7%, as one tenant declined to take
up an expansion space allocated to it within the data centre.
Overall, the Manager commented that tenants are a little
more reticent in signing new or renewal leases, due to more
competition from other data centre providers entering the
market. Occupancy at Citadel improved to 80.3%, mostly
due to new leases for work space. We understand that
leasing the remaining 20% of DC space will be more difficult
however, as Dublin (where Citadel 100 is locatedis still
experiencing some overcapacity issues and the leasing
outlook remains challenging.

Page 2 Page 218
Company Guide
Keppel DC REIT
Balance Sheet: Aggregate Leverage (%)

Conservative hedging policies. Major currencies that will
impact earnings - AUD and EUR - have been hedged for 2 35.0%
years at better than current spot rates, minimising any 30.0%

currency fluctuations going forward. While the Manager has
25.0%
hedged majority of its foreign-sourced income until 1H17, we
note that the REIT could face translation losses upon rolling 20.0%
forward these hedges if the AUD and EUR remain at current 15.0%
levels.
10.0%
2014A 2015F 2016F 2017F
Conservative balance sheet. Keppel DC REIT’s gearing stands
at c.30%, with an all-in cost of debt of 2.5% and debt tenure
of 3.4 years. As at end-3Q15, 90% of the Trust’s borrowings
are hedged into fixed rate debt, which will provide earnings ROE (%)
visibility in a volatile interest rate environment. Going 8.0%
forward, the Manager intends to maintain a 30/70% 7.0%
debt/equity for future acquisitions, in order to maintain a long 6.0%
term gearing target of 30%.
5.0%
4.0%
Surprise from acquisitions. Given management’s ambitions to 3.0%
grow the portfolio, expectations remain high that Keppel DC 2.0%
REIT will remain on an acquisition growth path. With the 1.0%
stock trading at an implied cap rate of 6.3%, and coupled 0.0%
with target yields of c.7-8%, we believe the successful 2014A 2015F 2016F 2017F
execution of such growth plans is likely to translate as upside

to distributions and share price. Distribution Yield (%)
(%)
6.9
Potential for earnings upside from higher reversions at co- +2sd: 6.5%
location data centres. We estimate that Keppel DC REIT 4.9

+1sd: 4%
derives close to 70% of its NPI from co-location data centres; 2.9
namely, S25 and T25 in Singapore, Citadel 100 in Ireland,
Avg: 1.5%
and part of Gore Hill in Sydney. Our current earnings 0.9
forecasts impute c.100% occupancy rates for Citadel 100 and -1.1
2012 2013 2014 2015 2016
‐1sd: ‐1%
S25; higher occupancy rates at these properties would
provide a boost to distributions and share price. -3.1
Key Risks:
Higher maintenance capex relative to other asset classes.
Due to the shorter lifespan of a data centre’s infrastructure, PB Band (x)
it is possible that the REIT may have to rely on borrowings to 1.4
(x)
fund maintenance capex at certain properties which could 1.4
impact gearing. 1.3

1.3 +2sd: 1.25x
+1sd: 1.22x
Competition from larger third party data centre players. The 1.2
Avg: 1.18x
1.2 ‐1sd: 1.15x
data centre market is dominated by several large 1.1
‐2sd: 1.12x
international operators which have been aggressively 1.1
expanding into markets where Keppel DC REIT has a 1.0
presence. Keppel DC REIT may face higher barriers to entry 1.0
and stiffer competition to attract and retain tenants. 0.9

Company background
Keppel DC REIT is a Singapore-based real estate investment Source: Company, DBS Bank
trust (REIT), established with the principal investment
strategy of investing, directly or indirectly, in a portfolio of
income producing real estate assets which are used primarily
for data centre purposes, with an initial focus on Asia Pacific
and Europe.

Page 219 Page 3
Company Guide
Keppel DC REIT

FY Dec 2014A 2015F 2016F 2017F
Exceptional Gain/(Loss) 0 0 0 0 Growth to be driven by (a)
Net Income 50 59 80 84 acquisitions, (b) higher
Tax (3) (3) (4) (5) rentals and occupancies
Minority Interest 0 0 0 0 from co-location data
Preference Dividend 0 0 0 0 centres, and (c) annual
Net Income After Tax 48 56 75 79 rental escalations from
Total Return 48 56 75 79 master leased properties.
Non-tax deductible Items 0 0 0 0
Growth & Ratio
Revenue Gth (%) N/A 21.9 27.1 4.4
Net Inc Gth (%) nm 17.7 33.5 5.6
Net Income Margins (%) 59.9 57.8 60.7 61.4
Dist to revenue (%) 59.9 58.1 60.9 61.6
11.3 11.9 11.2 10.9
to sales %)
ROAE (%) 6.1 7.3 8.5 8.0
ROA (%) 4.3 4.9 5.8 5.6
ROCE (%) 5.1 5.8 6.7 6.4
Int. Cover (x) 7.3 7.3 8.1 8.4

Page 4 Page 220
Company Guide
Keppel DC REIT

FY Dec 1Q2015 2Q2015 3Q2015
Gross revenue 31 26 25
Property expenses (5) (4) (4)
Net Property Income 26 22 21
Other Operating expenses (3) (3) (1)
Other Non Opg (Exp)/Inc 0 0 0 Distributable income beat
Net Interest (Exp)/Inc (4) (3) (3) prospectus forecasts by
Exceptional Gain/(Loss) (1) 0 0 2.2% on the back of
Net Income 19 17 18 contribution from the
Tax (1) (1) (1) recently acquired
Minority Interest 0 0 0 Intellicentre 2, mitigated by
Net Income after Tax 17 15 17 translation losses for AUD,
Total Return 17 15 17 EUR and MYR
Non-tax deductible Items 0 (1) (2)
Net Inc available for Dist. 17 14 14
DPU came in at 1.64Scts,
Growth & Ratio
but this will not be paid
Revenue Gth (%) N/A (18) (1) out this quarter as the
N Property Inc Gth (%) nm (16) (3) REIT pays out dividends on
Net Inc Gth (%) nm (10) 10 a half yearly basis.
Net Prop Inc Margin (%) 84.0 85.9 84.7
Dist. Payout Ratio (%) 100.0 100.0 100.0

FY Dec 2014A 2015F 2016F 2017F We have assumed
S$250m worth of
Investment Properties 1,047 1,098 1,352 1,356 acquisitions at 7.5%
Other LT Assets 2 2 2 2 yield, in 2016.
Inventory 0 0 0 0
Debtors 47 32 41 43
Total Assets 1,122 1,164 1,421 1,426
ST Debt 4 4 4 4
Creditor 18 6 8 9
LT Debt 323 373 402 407
Unit holders’ funds 773 773 998 998
Total Funds & Liabilities 1,122 1,164 1,421 1,426
Non-Cash Wkg. Capital 29 23 29 30 Gearing to rise

gradually as
Net Cash/(Debt) (301) (345) (380) (386)
maintenance capex
Ratio
(est. S$4m p.a.) is
Current Ratio (x) 3.4 4.9 4.1 4.0
funded via debt.
Quick Ratio (x) 3.4 4.9 4.1 4.0
Z-Score (X) 0.0 0.0 0.0 0.0

Page 221 Page 5
Company Guide
Keppel DC REIT

FY Dec 2014A 2015F 2016F 2017F
Dep. & Amort. 0 0 0 0
Tax Paid 0 0 (3) (4)
Chg in Wkg.Cap. 0 3 (7) (1)
Other Operating CF (16) 0 0 0
Net Invt in Properties (430) (50) (254) (5)
Other Invts (net) (1) 0 0 0
Other Investing CF (44) 0 0 0
Net Investing CF (475) (50) (254) (5)
Distribution Paid (26) (57) (75) (80)
Chg in Gross Debt 88 50 29 5 We have assumed an
New units issued 507 0 225 0 equity fund raising
Other Financing CF (120) 0 0 0 structure that results in
Net Financing CF 449 (6) 179 (75) final gearing of 30%
Currency Adjustments 0 0 0 0 post acquisition.
Chg in Cash 8 6 (5) (1)
Operating CFPS (S cts) 3.9 6.7 7.7 7.2

Free CFPS (S cts) (44.8) 1.4 (18.5) 6.7
1.16
S$
Closing T arget
S.No. Dat e Rat ing
Pric e Pric e
1.11 1: 21 J an 15 1.00 1.05 BUY
2: 10 Apr 15 1.03 1.10 BUY
4 3: 29 May 15 1.05 1.12 BUY
3 6
1.06 4: 22 J ul 15 1.07 1.12 BUY
2 5: 16 Oct 15 1.05 1.14 BUY
5 6: 29 Oct 15 1.06 1.14 BUY
1.01
1
0.96
0.91
Source: DBS Bank

Page 6 Page 222
Keppel REIT
Edition 1 Version 1 | Bloomberg: KREIT SP | Reuters: KASA.SI Refer to important disclosures at the end of this report
BUY Young, modern, and strategically located

Last Traded Price: S$0.93 (STI : 2,834.23) office portfolio
Price Target : 12-Month S$ 1.12 (20% upside)
BUY on attractive valuations. K-REIT’s share price performance
Potential Catalyst: Better than expected rental reversions and KREIT has lagged other large cap S-REIT peers in recent months, and
addressing concerns over its gearing we believe it is time to play catch-up as fears of a drop in DPU is
Where we differ: Slighter higher FY16-17F DPU compared to consensus already priced in. We have a BUY recommendation on K-REIT,
to account for resiliency in KREIT’s portfolio given long WALE and prime with TP of S$1.12.
location of KREIT’s properties
Analyst Modern portfolio should weather office supply wave well. While
Derek Tan +65 6682 3716 derektan@dbs.com there will be more supply in 2016-2017, we believe that K-
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com REIT’s asset portfolio, which comprises some of the most
sought-after properties in Singapore will be resilient. In addition,
Price Relative earnings should be shielded to an extent by a long lease expiry
S$ Relative Index profile - 70% of its NLA will only be renewed from 2017.
1.8
1.7 204
1.6
1.5 184 MBFC acquisition to mitigate expiry of OFC income support.
1.4
1.3
164 With the expiry of income support at Ocean Financial Centre
(OFC) in 1Q15 and the divestment of Prudential Tower in 3Q14,
144
1.2
1.1 124
1.0
0.9
104 we have forecasted a 9% decline in DPU in FY15 but recent
0.8
84
Jan-16
results seem to be performing better than expectations. The
Keppel REIT (LHS) Relative STI INDEX (RHS)
decline is partly mitigated by contribution from the recently
acquired MBFC Tower 3. Looking ahead, we expect DPUs to
Forecasts and Valuation remain fairly flattish.
FY Dec (S$ m) 2014A 2015F 2016F 2017F
Valuation:
Net Property Inc 151 140 144 149 Our target price of S$1.12 is based on the discounted cash flow
Total Return 372 172 182 188 (DCF) model, as K-REIT generates recurring rental income from
Distribution Inc 206 217 226 232 its tenants. At its current price, K-REIT offers investors a dividend
EPU (S cts) 5.5 5.5 5.8 5.9
EPU Gth (%) 0 1 5 2 yield of 7.7% for FY16F. We have a BUY recommendation.
DPU (S cts) 7.2 6.9 7.1 7.3
DPU Gth (%) (9) (4) 3 2 Key Risks to Our View:
NAV per shr (S cts) 153.9 139.6 137.7 135.9 Shadow space could limit rental growth. Close to 50% of
PE (X) 17.0 16.9 16.0 15.7
KREIT’s leases are from the banking, insurance, and financial
P/NAV (x) 0.6 0.7 0.7 0.7 sectors. As financial institutions are generally shrinking their
Aggregate Leverage (%) 43.3 42.6 42.7 42.8 footprint, shadow space could be a problem if the Manager is
ROAE (%) 3.8 3.9 4.1 4.3 unable to find new tenants to replace them.
Distn. Inc Chng (%): - - - At A Glance

Mkt. Cap (S$m/US$m) 2,991 / 2,098
Keppel Land (%) 44.6
Free Float (%) 55.8

Page 223
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Company Guide
Keppel REIT


89.5%
180
3Q15 results in line. Distributable income rose 4.6% y-o-y as 160 87.5%
cessation of income support at OFC was offset by higher 140
85.5%
120
contribution from MBFC Tower 3, payment of 100% of 100 83.5%
management fees in units, as well as S$6m distribution from 80 81.5%
proceeds from the divestment of Prudential Tower. However 60

40
79.5%
3Q15 DPU fell 6% y-o-y to 1.70 Scts, or -1% q-o-q on the 20 77.5%
back of an enlarged share base following an EFR exercise to 0

2013A 2014A 2015F 2016F 2017F
75.5%
partially fund the acquisition of MBFC Tower 3.

FY15 leases substantially secured, working to backfill

returned space The Manager has leased out almost all spaces
expiring in FY15, with only <1% of its NLA up for renewal or Quarterly Net Property Income and Margins (%)
review till the end of the year. K-REIT has been able to 41
86%
achieve average rental reversions of a decent 16% for the 84%
1.1m sqft of leases that it has already forward renewed/ re- 39

82%
leased YTD. This will ensure stability in earnings and 37
80%
distributions over the next 1-2 years. In addition, of the 35
anticipated c.100k sqft of returned spaces that the REIT is 78%
exposed to for FY15, c.77% has already been leased out, 33 76%
which gives further visibility to earnings. 31 74%
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
Low average expiring rents limits downside to rental
reversions. Of the 16% of NLA due in FY16, we understand
that a substantial portion of leases come from (a) Keppel’s
own expiries at BJT, (b) one large tenant at OFC, and (c)
several first-cycle leases at MBFC Tower 3. The Manager has ROE (%)
already begun to approach these tenants with an eye to 4.0%
extending the leases, and given that many of these tenants 3.5%
are sitting on leases with rents still below market. Thus, 3.0%
downside to rents is fairly limited at this point. 2.5%
2.0%
Long WALE offers income visibility. K-REIT has a long 1.5%
WALE of 6 years, with c.70% of leases due only from FY17F 1.0%
and beyond. Despite the increase in grade A office supply in 0.5%
Singapore by 2016, the Manager remains optimistic on its 0.0%
future outlook as it believes that its assets will continue to be 2013A 2014A 2015F 2016F 2017F
well coveted due to their location in Marina Bay. Coupled

with positive rental reversions of 16% in 3Q15, we expect
organic rental growth to make up for lost income from the
Interest Cover (x)
expiry income support at OFC and the divestment of (x)
Prudential Tower by 2016. 8,000.00
7,000.00
Stable income from Australia 6,000.00

K-REIT's Australian properties have a weighted average lease 5,000.00
expiry profile of c.10 years, with a majority of leases in built 4,000.00
with annual rental escalation clauses, which provides income 3,000.00
stability for the REIT. However, contribution in SGD terms has 2,000.00
been flat and/or declining, as the value of the AUD has 1,000.00
eroded against the SGD. In addition, the currency mismatch 0.00
between the assets (denominated in AUD) and borrowings 2013A 2014A 2015F 2016F 2017F
(denominated in SGD) has resulted in higher interest expense

and gearing ratio. Source: Company, DBS Bank

Page 2 Page 224
Company Guide
Keppel REIT

Balance Sheet:
Gearing fairly high among peers. At c. 42%, K-REIT has 40.0%
one of the highest gearing among peers. Future acquisitions

35.0%
would therefore likely have to be funded by a mixture of debt
and equity. The Manager has implemented a DRP programme 30.0%
as of 2Q15, and will use proceeds to finance its capex 25.0%

requirements, as well as selectively pay down debt.
20.0%
Long debt tenure minimises refinancing risk. KREIT has a 15.0%

2013A 2014A 2015F 2016F 2017F
weighted average debt to expiry of 3.6 years in 3Q15, with
close to 100% of debt termed out until FY17 and beyond,
reducing near term refinancing risk.
Share Price Drivers: 5.2 (x)
Addressing gearing levels. We believe that the recent 4.7
lackluster share price performance could be due to KREIT’s 4.2

3.7
higher gearing versus the S-REIT average of c.34%. Given a 3.2
deteriorating office outlook, investors have been concerned 2.7
that K-REIT may need to raise equity in order to shore up its 2.2
balance sheet in the event of a devaluation in office values 1.7

1.2
results in the REIT breeching the 45% gearing limit. While
0.7
comfortable at current levels, we believe that the Manager 2013A 2014A 2015F 2016F 2017F
could allay some of these concerns through asset sales

(Australia properties) where proceeds can be utilised to repay
debt.
(%)
Key Risks: 8.8
Risks to capital values. Should increase in office supply and a 8.3
persistently weak office market outlook lead to a larger than 7.8 +2sd: 7.8%
expected fall in rents, valuers could downgrade rental and 7.3

+1sd: 7.1%
6.8
growth outlook, and this could trigger a decline in capital 6.3 Avg: 6.4%
values, which would put the REIT’s NAV at risk. 5.8 ‐1sd: 5.8%
5.3
‐2sd: 5.1%
4.3
higher interest payments that the REIT has to make annually 2012 2013 2014 2015 2016
to service its loans. While close to 100% of debt margins

have been locked in until 2017, higher short term rates
would result in higher borrowing costs, given that KREIT has P/Bk NAV (x)
hedged only c.70% of borrowings into fixed-rated debt. (x)
1.3
Currency risk. As K-REIT earns c.15% of its rental income

1.1 +2sd: 1.08x
from its Australian assets in AUD, any depreciation in the
+1sd: 0.93x
AUD would result in relatively lower contributions from 0.9
Avg: 0.79x
Australia to K-REIT's total distributable income. 0.7
‐1sd: 0.64x
0.5 ‐2sd: 0.49x
Company background
K-REIT is a real estate investment trust investing in 0.3
predominantly commercial properties in Singapore and key
gateway cities in Australia. It currently owns 11 commercial
Grade A office assets. Source: Company, DBS Bank

Page 225 Page 3
Company Guide
Keppel REIT

FY Dec 2013A 2014A 2015F 2016F 2017F
Gross revenue 174 184 170 175 181
Net Interest (Exp)/Inc (18) (23) 0 (2) (3)
Net Income 163 171 177 186 192
Tax (17) (12) (4) (4) (4)
Total Return 535 372 172 182 188
Net Inc available for Dist. 214 206 217 226 232 We expect distributions to
Growth & Ratio remain fairly stable going
Revenue Gth (%) 10.9 5.8 (7.5) 2.6 3.3 forward, as KREIT’s
N Property Inc Gth (%) 10.9 9.5 (7.3) 2.7 3.4 portfolio average rents are
Net Inc Gth (%) 25.5 9.4 8.0 5.8 3.2 below market, which limits
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 100.0 downside from negative
Net Prop Inc Margins (%) 79.5 82.3 82.4 82.4 82.5 reversions
Dist to revenue (%) 123.0 112.0 127.4 129.0 128.2
ROAE (%) 4.0 3.8 3.9 4.1 4.3
ROA (%) 2.3 2.3 2.3 2.5 2.5
ROCE (%) 1.3 1.3 1.2 1.3 1.4
Int. Cover (x) 4.9 4.3 7,383.9 46.2 29.0

Page 4 Page 226
Company Guide
Keppel REIT

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Net Property Income 39 34 35 33 33 Growth in distributable income
Other Operating expenses (12) (11) (15) (14) (15) as (a) new contribution from
MBFC Tower 2, (b) payment of
100% of management fees in
units, and (c) a one-off
Exceptional Gain/(Loss) 16 0 0 0 0 distribution from gains
Net Income 50 39 38 39 35 following the sale of Prudential
Tax (4) (3) (2) (2) (4) Tower, mitigated the decline in
Minority Interest 0 0 0 0 0 income due to the cessation of
Net Income after Tax 46 36 37 37 30 income support at OFC, and
Total Return 138 156 37 37 51 higher interest expense
Growth & Ratio
Revenue Gth (%) 1 (11) 0 (4) 3
N Property Inc Gth (%) (2) (11) 1 (6) 3
Net Inc Gth (%) 22 (21) 1 2 (19)

FY Dec 2013A 2014A 2015F 2016F 2017F

Other LT Assets 2,635 3,490 3,533 3,533 3,533
Cash & ST Invts 91 200 244 221 198
Inventory 0 0 0 0 0
Debtors 34 25 28 29 30
Total Assets 6,776 7,329 7,420 7,397 7,375
ST Debt 282 275 295 295 295

Creditor 94 84 100 102 105
LT Debt 2,401 2,390 2,473 2,473 2,473
Gearing should remain
Non-Cash Wkg. Capital (82) (80) (88) (90) (92) fairly stable as capex
requirements are
Net Cash/(Debt) (2,592) (2,466) (2,523) (2,547) (2,569)
funded using proceeds
Ratio
from DRP, minimising
Current Ratio (x) 0.3 0.6 0.7 0.6 0.5 additional debt
Quick Ratio (x) 0.3 0.6 0.7 0.6 0.5 obligations
Z-Score (X) 0.7 0.7 0.7 0.7 0.7

Page 227 Page 5
Company Guide
Keppel REIT

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Income 163 171 177 186 192

Dep. & Amort. 0 0 0 0 0
Tax Paid (15) (14) (8) (4) (4)
Chg in Wkg.Cap. (45) (74) 12 2 2
Net Invt in Properties 504 504 0 0 0
Invts in Assoc. & JV (585) (585) (42) 0 0
Net Investing CF (224) 92 39 91 95
Chg in Gross Debt 258 (21) 102 0 0
Net Financing CF 165 (67) (115) (226) (232)
Currency Adjustments (12) 42 0 0 0
Chg in Cash (11) 109 45 (23) (23)

Free CFPS (S cts) 21.1 18.7 3.9 3.6 3.6
S$
1.32
1.27 1 2
Cl o s i n g Ta rg e t
Pri c e Pri c e
1.17 3 1: 21 Jan 15 1.24 1.29 HOLD
2: 14 Apr 15 1.23 1.32 BUY
1.12
3: 21 Jul 15 1.12 1.32 BUY
1.07 4: 19 Aug 15 1.11 1.12 BUY
4
1.02
0.97
0.92
0.87
Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15
Source: DBS Bank

Page 6 Page 228
Mapletree Commercial Trust
Edition 1 Version 2 | Bloomberg: MCT SP | Reuters: MACT.SI Refer to important disclosures at the end of this report
BUY Upside from vivocity

Best of both worlds
Mapletree Commercial Trust (MCT) offers investors exposure to resilient
Price Target : 12-Month S$ 1.40 (7% upside)
retail and office assets amid industry and economic headwinds. MCT
owns VivoCity (c.65% of NPI), Singapore’s largest mall, which has by
Potential Catalyst: Better occupancy at PSAB
and large bucked Singapore’s overall retail sales slowdown. It is one of
Where we differ: We are in line with consensus
the best performing malls in Singapore by virtue of its popularity with
Analyst families and close proximity to Sentosa. In addition, the low level of
Derek Tan +65 6682 3716 derektan@dbs.com office lease expiries until FY17/18 minimises potential volatility in rents
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com and occupancy when a large supply of office space enters the CBD in
the next 1-2 years.
Price Relative Manager focussing on improving the trading performance of Vivocity.

S$
1.8
Relative Index
222
Given that rising labour costs have affected retailers’ profitability, the
1.7
202
Manager is focussed on retaining tenants rather than driving rents. Over
1.6
1.5 182 the next 18 months, close to 30% of MCT’s leases will be due for
1.4
1.3
162 renewal, a large proportion of which comes from VivoCity. Rather than
1.2 142
being a risk, we believe that the large number of expiries could result in
1.1 122
1.0
102
positive earnings surprise, as it will give the Manager flexibility in
0.9
0.8 82 reconfiguring the mall and refreshing the tenant mix, in order to
maximise trading performance.
Mapletree Commercial Trust (LHS) Relative STI INDEX (RHS)
Retail reversions of 13.2% outperforms other retail S-REITs.

FY Mar (S$ m) 2014A 2015A 2016F 2017F Retail rental reversions of 13.2% demonstrate the strong retailer
Gross Revenue 267 282 298 312 demand at VivoCity. 2Q16 (FYE Mar) shopper traffic and tenant sales
Net Property Inc 195 212 223 235 grew 3.1% and 5.5% y-o-y respectively, on the back of several long
Total Return 343 312 165 174 weekends during the quarter (National Jubilee, Election Day), as well as
Distribution Inc 153 168 174 184 a full quarter of trading from new tenants post completion of AEI works
EPU (S cts) 6.8 7.4 7.7 8.0 at basement 1. Occupancy costs are in the 18% range, which the
EPU Gth (%) 24 8 4 4 Manager considers comfortable.
DPU (S cts) 7.4 8.0 8.2 8.5
Valuation:
DPU Gth (%) 13 9 2 4
NAV per shr (S cts) 116.5 123.9 123.7 123.4 We maintain our DCF-backed target price to S$1.40 as we roll forward
PE (X) 19.1 17.8 17.0 16.3 our valuations. At current price, the stock offers 6.2-6.3% dividend yield
Distribution Yield (%) 5.6 6.1 6.2 6.5 for FY15/16, which is attractive in our view, and total potential returns
P/NAV (x) 1.1 1.1 1.1 1.1 of 12%. As such, we upgrade our recommendation to BUY.
ROAE (%) 6.2 6.2 6.3 6.6 Vacancy risk
While large lease expiries give the Manager the flexibility in refreshing
Distn. Inc Chng (%): 0 0 the tenant mix and positioning of the mall, changes have to be timed
Consensus DPU (S cts): 8.1 8.3 carefully. Should any of the Manager’s plans involve its anchor tenants,
Other Broker Recs: B: 7 S: 2 H: 3 there could be some disruptions to the trading of the mall as well as
Source of all data: Company, DBS Bank, Bloomberg Finance L.P higher frictional vacancies in the near term.
At A Glance
Mkt. Cap (S$m/US$m) 2,779 / 1,949
Major Shareholders
Temasek Holdings (%) 36.9
Schroders (%) 7.0
AIA Group Ltd (%) 5.8
Free Float (%) 50.2

Page 229
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Company Guide

300
81.5%
79.5%
Cost savings drive earnings growth. MCT’s 2Q16 distributable 200 77.5%
income grew 3.3% to S$43m, as (a) full-quarter contribution 150 75.5%
from completed AEI works at Vivocity and (b) lower utilities 100
73.5%
71.5%
expenses was mitigated by (a) frictional office vacancies at 50
69.5%
PSAB (93.4%) and Mapletree Anson (91.8%) and (b) higher 0 67.5%
interest expenses (which grew 15% y-o-y). DPU grew 2.5% 2013A 2014A 2015A 2016F 2017F
to 2.02Scts, bringing 1H16 DPU to 4.03Scts, which comprises Net Property Income Net Property Income Margin %
c.49% of our full year estimates.
Many opportunities for the Manager to refresh VivoCity. In Quarterly Net Property Income and Margins (%)
FY16/17, we estimate that 35% of Vivocity’s leases by gross 57
79%
78%
rental income will be due for renewal. This will give the 55 77%
Manager ample flexibility to refresh tenant mix, relocate 53

76%
75%
tenants, and reconfigure spaces in order to rejuvenate the 51
74%
mall and optimise trading performance, which will in turn 49

73%
72%
support rental growth over the medium term. Given the 47
71%
Manager’s excellent track record so far, we believe that there 70%

45 69%
remain pockets of opportunity for the Manager to improve
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
the efficiency and performance of the mall.
Minimal office expiries until FY17/FY18. Over the next two

years, only 2% of the Trust’s expiring leases (by gross rent)
come from the office sector. This will help to minimise the ROE (%)
risk of negative office rental reversions, particularly at 6.0%
Mapletree Anson, should CBD office rents start to decline 5.0%

across the market. Amid potential volatility in office rents and
4.0%
vacancies due to (a) lack of strong demand drivers and (b)
large office supply completing over the next two years, MCT 3.0%
offers investors both earnings visibility as well as downside 2.0%
protection. 1.0%
<b
0.0%
>Potential acquisitions unlikely in the near term. Mapletree 2013A 2014A 2015A 2016F 2017F
Investments’ progressive redevelopment of the Harbourfront

and Alexandra precincts ensures a steady pipeline of
refurbished or newly developed assets ready to be injected Interest Cover (x)
into the REIT. At present, the most likely acquisition target for (x)
5.60
MCT would be Mapletree Business City 1 (MBC 1), which was
5.50
completed in 2010. However, we understand that near-term
5.40
acquisition potential is limited due to certain zoning
5.30
restrictions relating to the ongoing development of Mapletree
5.20
Business City 2, which is located next to MBC 1.
5.10
5.00
4.90
4.80
2013A 2014A 2015A 2016F 2017F

Page 2 Page 230
Company Guide

Balance Sheet:
44.0%
Lower gearing provides more headroom for inorganic
growth. We expect MCT’s gearing to remain stable 39.0%
between 35% to 36%, which provides the REIT with 34.0%
flexibility to gear up for debt-funded acquisitions. In addition, 29.0%

the REIT has an ongoing Dividend Reinvestment Plan (DRP),
24.0%
which allows it to fund maintenance capex without having to
take on additional debt. 19.0%
14.0%
2013A 2014A 2015A 2016F 2017F
Average debt maturity extended to 3.9 years. MCT’s cost
of debt increased to 2.42% as the Manager termed out its
borrowings earlier in the year. MCT’s debt tenure stands at
3.9 years, with close to 70% of debt due only from FY19/20 Distribution Paid / Net Operating CF
onwards. The Manager is currently looking to refinance its 0.9 (x)
S$354m debt tranche due Apr 16/Jan 17, and cost of debt is 0.8
expected to further increase as a result. We have assumed
0.7
10bps increase in interest costs p.a. for the next three years.
0.6
Uptick in office performance. While there are minimal 0.4
office expiries in FY16 and FY17, we note that there are 0.3
vacancies at PSAB which could take a while to fill, given 2013A 2014A 2015A 2016F 2017F
softness in the leasing market. An improvement in occupancy

rates at PSAB could result in some earnings surprise.<b >

Key Risks:
(%)
Sustained drop in CBD office rents could impact office
7.1
earnings in the medium term. Although the REIT’s office
6.6 +2sd: 6.6%
portfolio is largely located outside the CBD and therefore less
6.1
exposed to the large office supply completing from 2016 +1sd: 6%
5.6
onwards, any prolonged decline in CBD rents would have a Avg: 5.4%
5.1
negative spillover effect to the city fringe, as narrowing rental ‐1sd: 4.9%
4.6
differentials could entice tenants to relocate to the CBD ‐2sd: 4.3%
4.1
instead.
3.6
2012 2013 2014 2015 2016
Vacancy risk as the Manager looks to refresh VivoCity. While

large lease expiries gives the Manager the flexibility in
refreshing the tenant mix and positioning of the mall, P/Bk NAV (x)
changes have to be timed carefully. Should any of the 1.6
(x)
Manager’s plans involve its anchor tenants, there could be 1.5
some disruptions to the trading of the mall as well as higher 1.4
frictional vacancies in the near term. 1.3
+2sd: 1.34x
+1sd: 1.23x
1.2
Company background 1.1 Avg: 1.12x
Mapletree Commercial Trust is a real estate investment trust 1.0 ‐1sd: 1.01x

that invests in income-producing office and retail properties 0.9 ‐2sd: 0.9x
in Singapore. A majority of its earnings is derived from 0.8
Vivocity, which is the largest retail mall in Singapore, and is
located at the gateway of Sentosa.

Page 231 Page 3
Company Guide

FY Mar 2013A 2014A 2015A 2016F 2017F
Gross revenue 219 267 282 298 312
Exceptional Gain/(Loss) 0 1 0 0 0 Additional income post
Net Income 114 143 156 165 174 completion of AEI at
Tax 0 0 0 0 0 VivoCity will help to
Minority Interest 0 0 0 0 0 compensate for frictional
Preference Dividend 0 0 0 0 0 vacancies at PSAB and
Net Income After Tax 114 143 156 165 174 Mapletree Anson.
Total Return 311 343 312 165 174
We assume that cost of
Growth & Ratio
debt will increase by
Revenue Gth (%) 23.8 21.7 5.7 5.5 4.8
10bps a year, over the
N Property Inc Gth (%) 25.8 25.2 8.4 5.4 5.3 next three years.
Net Inc Gth (%) 30.2 24.7 9.3 5.7 5.8
Dist to revenue (%) 56.5 57.3 59.6 58.5 59.0
ROAE (%) 5.8 6.2 6.2 6.3 6.6
ROA (%) 3.3 3.6 3.7 3.9 4.1
ROCE (%) 4.1 4.5 4.6 4.8 5.1
Int. Cover (x) 5.4 5.1 5.4 5.4 5.5

Page 4 Page 232
Company Guide

FY Mar 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016
Other Non Opg (Exp)/Inc 0 0 0 5 (7)
Exceptional Gain/(Loss) 0 0 (1) (5) 9
Net Income 39 41 38 39 41
Tax 0 0 0 0 0
Total Return 39 41 194 39 41
Non-tax deductible Items 3 3 3 (2) 10
Growth & Ratio
Revenue Gth (%) 2 4 (3) (2) 2
N Property Inc Gth (%) 1 5 (3) 2 1
Net Inc Gth (%) 1 6 (7) 2 7

FY Mar 2013A 2014A 2015A 2016F 2017F

Cash & ST Invts 47 70 55 49 58
Inventory 0 0 0 0 0
Debtors 7 4 3 3 4
Total Assets 3,886 4,110 4,263 4,263 4,278
ST Debt 0 339 189 189 189

Creditor 60 54 62 65 67
LT Debt 1,586 1,249 1,358 1,334 1,313

Net Cash/(Debt) (1,539) (1,517) (1,492) (1,473) (1,444)
Ratio We assume that the Manager
Current Ratio (x) 0.8 0.2 0.2 0.2 0.2 will use proceeds from the
Quick Ratio (x) 0.8 0.2 0.2 0.2 0.2 DRP to pay down debt
Z-Score (X) 1.1 1.1 1.2 1.2 1.3

Page 233 Page 5
Company Guide

FY Mar 2013A 2014A 2015A 2016F 2017F
Pre-Tax Income 114 143 156 165 174

Dep. & Amort. 0 0 0 0 0
Tax Paid (5) 1 0 (5) 0
Net Operating CF 157 189 203 173 186
Net Investing CF (690) (4) (8) (6) (6)
Chg in Gross Debt 462 0 (40) (24) (20)
Net Financing CF 531 (162) (211) (173) (171)
Chg in Cash (3) 23 (16) (6) 9

Free CFPS (S cts) (25.7) 8.9 9.3 7.8 8.3

S$
1.68
3 Pri c e Pri c e
1 22 Jan 15 1.51 1.63 BUY
1.48 2 10 Mar 15 1.52 1.63 BUY
1 2
3 23 Apr 15 1.61 1.63 HOLD
4 22 Oct 15 1.36 1.40 BUY
1.38
4
1.28
1.18
Source: DBS Bank

Page 6 Page 234
Mapletree Greater China Commercial Trust
Edition 1 Version 1 | Bloomberg: MAGIC SP | Reuters: MAPE.SI Refer to important disclosures at the end of this report
BUY Consistent Performer

Last Traded Price: S$0.91 (STI : 2,834.23) Allaying market fears. We maintain our BUY call with a revised
Price Target : S$1.11 (22% upside plus 7.9% yield) TP of S$1.11. While acknowledging the concerns over the
(Prev S$1.12) slowdown in the HK retail market, we believe this is overplayed
near term, given the delivery of a 12.6% y-o-y increase in
Potential Catalyst: Delivery of positive rental reversions despite concerns 2Q16 DPU to 1.808Scts, which was in line with expectations.
over a downturn in the HK retail market Moreover, this risk is accounted for by the 23% discount to
Where we differ: Ahead of consensus due to impact of stronger SGD MAGIC’s NAV per share of S$1.192.
Analyst
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com Currency tailwinds. With 70% and 30% of its assets by
Derek Tan +65 6682 3716 derektan@dbs.com valuation located in HK and China respectively, MAGIC is a
beneficiary of the strengthening HKD and CNY versus SGD We
have conservatively assumed SGD/HKD and SGD/CNY
Price Relative exchange rate (including impact of hedges) of 5.8 and 4.8
S$ Relative Index respectively in FY16F, and 5.6 and 4.6 in the long term. This
compares to the current SGD/HKD and SGD/CNY spot FX rates
1.3 220
1.2 200
1.1
180 of 5.4 and 4.56 respectively.
160
1.0
Full contribution from Sandhill Plaza yet to be realised. With

140
0.9
120
0.8 100 the S$412m acquisition of Sandhill Plaza in Shanghai only
0.7
Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15
80
completed in June15, MAGIC’s earnings should receive a boost
Mapletree Greater China Commercial Trust (LHS)
Relative STI INDEX (RHS)
over the coming year, which should offset any potential
slowdown in HK. Combined with growth in its existing
Forecasts and Valuation portfolio, this should translate to a 6% three year DPU CAGR.
FY Mar (S$ m) 2014A 2015A 2016F 2017F
Net Property Inc 216 229 266 297 Valuation:
Total Return 387 319 146 167 To account for the deceleration in the Hong Kong retail scene,
Distribution Inc 168 178 199 216 we recently trimmed our FY17F DPU by 2% and reduced our
EPU (S cts) 4.4 4.6 5.3 6.0
EPU Gth (%) 112 4 17 13
DCF-based TP to S$1.11 from S$1.12. Notwithstanding, with
DPU (S cts) 6.3 6.5 7.2 7.7 22% capital upside and 7.9% yield, we reiterate our BUY call.
DPU Gth (%) 136 4 11 7
PE (X) 20.8 20.0 17.1 15.1
The key risk to our view is a significant downturn in the HK
P/NAV (x) 0.9 0.8 0.8 0.8 and Chinese economy, causing a decline in rents at Festival
Aggregate Leverage (%) 38.0 36.2 40.6 40.6 Walk, Gateway Plaza and Sandhill Plaza.
ROAE (%) 4.4 4.0 4.5 5.1
At A Glance
Distn. Inc Chng (%): - - Issued Capital (m shrs) 2,749
Consensus DPU (S cts): 7.2 7.3 Mkt. Cap (S$m/US$m) 2,501 / 1,755
Mapletree Investments (%) 31.0
Norges Bank (%) 10.2
Free Float (%) 53.8

Page 235
ed: TH / sa: JC
Company Guide

300
91.6%
250 89.6%
Festival Walk still the star. Investors have raised concerns over 200
85.6%
the slowing retail market in Hong Kong impacting MAGIC’s 150 83.6%
core property Festival Walk. However, we believe Festival 100 81.6%
Walk will continue to deliver, although achieving lower rental 50

79.6%
reversions (estimated at 10-15%) than the 20-21% delivered 77.6%

0 75.6%
over the past two years. We believe, overall rental income will 2013A 2014A 2015A 2016F 2017F
remain on an uptrend and not turn negative due to the Net Property Income Net Property Income Margin %
following factors: (1) the mall’s prime location in Kowloon Net Property Income and Margins (%)
Tong offering tenants exposure to nearby established upscale 83%
70
residential area, students and staff from the nearby City 83%
University of Hong Kong, and high transit crowd as the mall 65 82%
is located next to Kowloon Tong Station which is an 60

82%
81%
interchange between Kwun Tong Line (which serves Kowloon
55 81%
East) and East Rail Line (which connects to the Shenzhen 80%
border) and, (2) the malls strong track record and resiliency. 50
80%
During the SARS epidemic and GFC, tenant sales were flattish 45 79%
while during the current downturn with overall HK sales
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
down 2.3% between April to August, retail sales at the mall
were up 1.7% over April to September. Net Property Income Net Property Income Margin %
(x)
Past rental reversions still supportive of Gateway Plaza’s 1.2
earnings. Gateway Plaza has achieved 25-33% uplift in rents
over the past two years. The benefits from the positive rental 1.0
reversions, we believe will continue to flow through, despite 0.8

potential headwinds in the near term due to increase in
supply within the Lufthansa submarket upon the expected 0.6
completion of the Air China Plaza (c.90,000 sqm according to 0.4

Colliers) in 4Q15. In the medium/long term, Gateway Plaza
0.2
should remain well placed given the recent decision in August 2013A 2014A 2015A 2016F 2017F
2015 by the Beijing Municipal Commission of Development
and Reform to ban new large-scale public developments Interest Cover (x)
(x)
including office buildings within the East Fifth Ring Road, 5.10
West Fifth Ring Road, North Fifth Ring Road and South 5.00
Fourth Ring Road which covers the central area of six urban 4.90
districts of Beijing. 4.80
4.70
Full year contribution from Sandhill Plaza. Going into FY16- 4.60
17F, MAGIC’s earnings should receive a boost from the full 4.50
contribution of the Sandhill Plaza acquisition which was only 4.40

4.30
completed in June 2015. MAGIC should also benefit from
4.20
positive rental reversions as passing rents are approximately 2013A 2014A 2015A 2016F 2017F
10% below market rates. Festival Walk quarterly tenant sales y-o-y growth*
12%
2Q16 results inline. MAGIC delivered another pleasing set of 10%
8%
results with 2Q16 DPU coming in at 1.808 Scts (+12.6% y-o-
6%
y). The results were in line with expectations and represented
4%
25% of our FY16F DPU. Similar to the previous quarters, the 2%
healthy results was attributed to continued improvement NPI 0%
at Festival Walk (+21% y-o-y) and Gateway Plaza (+8.9%). In -2%
addition, MAGIC benefited from the first full quarter -4%
contribution from the recently acquired Sandhill Plaza. This -6%
was despite overall portfolio occupancy dipping marginally to -8%
2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16
98.4% from 99% in Jun15 which was mainly due to a fall in
HK retail sales Festival Walk tenant sales
occupancy at Gateway Plaza (96.3% from 98.6% in 1Q15).
Overall, group NPI rose 26% y-o-y to S$69.5m which was * 2QFY16 HK retail sales only for Jul-Aug15
partially offset by higher interest expenses on the back of the Source: Company, DBS Bank
debt funded acquisition of Sandhill Plaza.

Page 236Page 73
Company Guide

Balance Sheet:
Optimised gearing levels. As at end Sep15, MAGIC’s stood
40.0%
at 41% which is at an optimised level. Nevertheless, given the 35.0%
new 45% gearing limit for S-REITs come Jan’16, MAGIC’s 30.0%
ability to pursue further acquisitions without further equity 25.0%
raisings is constrained. 20.0%

15.0%
10.0%
Moderate exposure to rising interest rates. Currently, 5.0%
86% of the MAGIC’s borrowings are on fixed rates which 0.0%
partially insulates the REIT against rising interest rates in the 2013A 2014A 2015A 2016F 2017F
near term. However, we have imputed 50bps increase in

interest rates over the next couple of years as MAGIC is due
to refinance approximately 30% and 29% of its outstanding ROE (%)
debt in FY17 and FY18. 5.0%
Boost from strengthening HKD/CNY. We believe the

3.0%
strengthening of the HKD and CNY should continue to a
tailwind for MAGIC’s NAV per share and in turn its share 2.0%
price. This has yet to be fully recognized by the market, which
is an opportunity. Since end Dec15, NAV per share has risen 1.0%
12% from S$1.06 to S$1.192 at end Sep15, while MAGIC’s

share price has only fallen 4% from S$0.95 to S$0.91 over 0.0%
2013A 2014A 2015A 2016F 2017F
the same period.
Delivery of growth in DPU despite headwinds. Investors have Distribution Yield (%)
(%)
been concerned over the outlook for retail rents in Hong
+2sd: 10.2%
Kong and risk of negative rental reversions at Festival Walk. 10.0
While acknowledging a moderating outlook, we think these 8.0

+1sd: 7.1%
fears are overplayed given Festival Walk’s suburban location, 6.0
low exposure to tourists (c.10-15% of tenant sales) and lack
4.0 Avg: 3.9%
of exposure to luxury products. Evidence of this can be seen
by the ability to achieve 20% positive rentals reversions in 2.0
‐1sd: 0.8%
1H16. This and continued delivery of DPU growth over the 0.0
coming few quarters should allay the growth fears and -2.0
2011 2012 2013 2014 2015
trigger a re-rating.
Key Risks: PB Band (x)

Foreign exchange risks. While FX is currently a tailwind, the (x)
1.4
depreciation of the HKD and CNY would be a negatively
1.3
impact MAGIC’s DPU and NAV per share on a lagged basis.
MAGIC hedges its income to smooth out the volatility from 1.2
movement in FX rates 1.1

+2sd: 1.07x
1.0
+1sd: 0.97x
Economic risks. A significant economic downturn in Hong 0.9
Avg: 0.87x
Kong and China would cause a decline in rents for retail and 0.8
‐1sd: 0.77x
office properties. This in turn would negatively impact 0.7
‐2sd: 0.67x
MAGIC’s earnings and DPU. 0.6
Company background
MAGIC is a Singapore real estate investment trust (REIT) Source: Company, DBS Bank
established with the investment strategy of principally
investing, directly or indirectly, in a diversified portfolio of
income-producing commercial real estate in the Greater
China region.

Page 74 Page 237
Company Guide

FY Mar 2013A 2014A 2015A 2016F 2017F
Gross revenue 113 268 281 307 336
Net Income 65 148 157 182 207
Tax (10) (30) (34) (37) (41)
Total Return 55 387 319 146 167
Increase in income on the
Growth & Ratio back of positive rental
Revenue Gth (%) N/A 137.0 5.1 9.2 9.5 reversions at Festival Walk
N Property Inc Gth (%) nm 140.7 6.1 16.2 11.5 and Gateway Plaza as well
Net Inc Gth (%) nm 113.4 4.9 18.4 14.4 as contribution from the
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 100.0 recent Gateway Plaza
Net Prop Inc Margins (%) 79.5 80.8 81.6 86.8 88.4 property
Dist to revenue (%) 62.8 62.9 63.3 64.9 64.2
6.0 9.1 8.9 11.1 9.2
to sales %)
ROAE (%) 4.5 4.4 4.0 4.5 5.1
ROA (%) 2.5 2.5 2.4 2.6 2.8
ROCE (%) 3.3 3.5 3.3 3.5 3.9
Int. Cover (x) 4.7 4.6 5.1 4.6 4.5

Page 238Page 75
Company Guide

FY Mar 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016
Net Income 39 38 40 78 46
Tax (7) (7) (14) (7) (7)
Total Return 33 31 223 72 38
Non-tax deductible Items 11 14 21 (25) 11
Improvement in
Net Inc available for Dist. 43 45 47 46 50 earnings on the back
Growth & Ratio of the recent Sandhill
Revenue Gth (%) 6 9 4 0 11 Plaza acquisition and
N Property Inc Gth (%) 5 8 5 0 11 increased contribution
Net Inc Gth (%) 2 (4) (16) 171 (46) from MAGIC’s existing
Net Prop Inc Margin (%) 81.7 80.5 81.7 82.2 82.1 portfolio

FY Mar 2013A 2014A 2015A 2016F 2017F

Cash & ST Invts 125 133 125 134 141
Inventory 1 1 1 1 1
Debtors 3 8 11 12 13
Total Assets 4,472 4,873 5,488 5,918 5,930
ST Debt 0 0 274 274 274

Creditor 38 64 76 83 91
LT Debt 1,911 1,853 1,710 2,131 2,131

Increase in gearing on
Net Cash/(Debt) (1,787) (1,720) (1,859) (2,270) (2,264)
the back of the debt
Ratio funded acquisition of
Current Ratio (x) 2.6 1.4 0.3 0.4 0.4 Sandhill Plaza
Quick Ratio (x) 2.6 1.4 0.3 0.4 0.4
Z-Score (X) 0.7 0.8 0.7 0.6 0.6

Page 76 Page 239
Company Guide

FY Mar 2013A 2014A 2015A 2016F 2017F
Pre-Tax Income 65 148 157 182 207

Dep. & Amort. 0 1 2 3 3
Tax Paid (10) (26) (27) (37) (41)
Chg in Wkg.Cap. 0 (59) (59) 8 11
Net Invt in Properties (2) (2,034) (5) (421) (5)
Net Investing CF (2) (2,034) (5) (421) (5)
Chg in Gross Debt 0 (297) (26) 421 0
New units issued 10 2,403 0 0 0
Other Financing CF 0 (33) (34) 0 0 Acquisition of Sandhill
Plaza
Net Financing CF (61) 1,988 (229) 222 (216)
Chg in Cash (8) 133 (8) 8 6

Free CFPS (S cts) 2.0 (69.4) 8.1 (7.8) 8.0
1.13 S$
1.08
3 Cl o s i n g Ta rg e t
Pri c e Pri c e
1.03
2 1 30 Jan 15 1.02 1.12 BUY
4
1 2 10 Mar 15 1.04 1.12 BUY
0.98 7 3 27 Apr 15 1.09 1.15 BUY
6 4 16 Jun 15 1.04 1.12 BUY
0.93 5 20 Aug 15 0.93 1.12 BUY
5 6 07 Oct 15 0.97 1.12 BUY
8
0.88 7 28 Oct 15 1.00 1.11 BUY
8 17 Dec 15 0.92 1.11 BUY
0.83
Source: DBS Bank

Page 240Page 77
Mapletree Industrial Trust
Edition 1 Version 1 | Bloomberg: MINT SP | Reuters: MAPI.SI Refer to important disclosures at the end of this report
BUY Rock-solid performer

Last Traded Price: S$1.55 (STI : 2,834.23) A more modest growth profile. DPU growth over the coming
Price Target : S$1.62 (5% upside) two years is likely to turn more modest at c.1.5% per annum
for Mapletree Industrial Trust (MINT) as under-rented portfolio
Potential Catalyst: Better-than-expected results gets marked-to-market over time. In this current tough
Where we differ: Our forecasts are more conservative than consensus operating climate, we expect the manager to focus more on
maintaining occupancy rates instead of focusing on pushing
Analyst
Derek Tan +65 6682 3716 derektan@dbs.com rents higher. Therefore, we expect rental reversions to
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com moderate to c.0-3% in the coming years.
Steady operational 2Q16 results. Operational data-points in

Price Relative
S$
2Q16 results remain steady – occupancy rates remain steady at
Relative Index
1.8 93.6%, while average monthly portfolio rentals continue to
inch up to S$1.88psf albeit at a slower rate. DPU of 2.79 Scts
1.7 203
1.6
183
1.5
1.4 163
(+2.2% y-o-y) is slightly ahead of expectations as the manager
1.3 143 continues to keep costs tight. We tweak our numbers up by
1.2
1.1
123
2% to account for better-than-expected margins.
1.0 103
0.9 83
Development projects to drive upside from FY18F
Mapletree Industrial Trust (LHS) Relative STI INDEX (RHS)
onwards. MINT will reap the benefits from the completion of
Forecasts and Valuation development projects from FY17F onwards (built-to-suit
FY Mar (S$ m) 2015A 2016F 2017F 2018F project for Hewett Packard and a new Hi-tech building at
Gross Revenue 314 328 332 359 Kallang Basin 4 cluster). At a total estimated cost of c.S$250m,
Total Return 374 187 188 204 we estimate returns of c.8.5% which will result in a rebound in
Distribution Inc 181 193 196 206 DPU growth in the medium term. Eventual gearing of 34.6%
EPU (S cts) 10.3 10.7 10.6 11.5 will still be within management’s comfortable range of 35-
EPU Gth (%) 5 3 (1) 9
40%.
DPU (S cts) 10.5 11.0 11.1 11.6
DPU Gth (%) 6 5 1 5
NAV per shr (S cts) 132.1 130.2 129.8 129.6 Valuation:
PE (X) 15.0 14.5 14.6 13.4 We see MINT’s resilience as a value trait in this market and
Distribution Yield (%) 6.8 7.1 7.2 7.5 believe yields of 7.1%-7.5% as attractive for a solid name. We
P/NAV (x) 1.2 1.2 1.2 1.2
maintain BUY with TP of S$1.62, offering total return of 12%.
ROAE (%) 8.2 8.1 8.1 8.9
Distn. Inc Chng (%): - - - Rising interest rates An increase in refinancing rates will
Consensus DPU (S cts): 10.9 11.0 12.0 negatively impact distributions. However, we note that MINT
Other Broker Recs: B: 7 S: 1 H: 9 has minimized these risks through having c.80% of its interest
cost hedged into fixed rates.
At A Glance
Mkt. Cap (S$m/US$m) 2,758 / 1,935
Major Shareholders
Mapletree Investment (%) 33.4
Schroder Investment (%) 7.5
American International (%) 4.7
Free Float (%) 54.4

Page 241
ed: TH / sa: JC
Company Guide

300
80.2%
250
200
A more modest organic growth outlook. Mapletree 76.2%
Industrial Trust (MINT) has since its IPO delivered strong DPU 150
74.2%
growth of c.6.5% on the back of strong rental reversion rates 100

72.2%
from an under-rented portfolio. As most of its properties 50 70.2%
have already undergone at least one round of reversions, 0 68.2%

2014A 2015A 2016F 2017F 2018F
most of the leases are now at or near-market levels in our
view.
With the softening of market rents due to a slowing 64 75%
economy, we are forecasting rental reversions to moderate to 62 74%

73%
0-3% growth and expect the manager to be increasingly 60
72%
focused on maintaining occupancies, a strategy which we 58
71%
believe will pay dividends and result in the trust delivering 56
70%
steady dividends in an increasingly competitive environment. 54 69%

52 68%
50 67%
Acquisitions and development projects to support
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
earnings growth. Properties post-asset enhancements at
various properties - Toa Payoh (98% occupied) and Net Property Income Net Property Income Margin %
Woodlands (80% occupied) continue to see improved take- Distribution Paid / Net Operating CF
(x)
up rates and should see higher contribution from 2H16 1.0
onwards. Looking ahead, the completion of The Equinix, will 0.9
be the main earnings driver for the REIT in FY16 while 0.8
underlying portfolio is expected to see more modest organic 0.7

0.6
growth. The redevelopment of Telok Blangah Cluster
0.5
(expected TOP for phase 1 and phase 2 in 2H16 and 1H17 0.4
respectively), will provide further upside to earnings when 0.3
completed. 0.2
2014A 2015A 2016F 2017F 2018F
New development project at Kallang Basin Cluster 4.

MINT is also starting on the development of a new Hi-Tech Interest Cover (x)
building at Kallang Basin cluster 4 at an estimated cost of (x)
9.00
S$77m, returning c.8% when completed in 4Q of 2017. We
believe that the manager will see strong demand given the 8.50
good location in the central part of Singapore. The manager
8.00
has ample headroom to fund this development.
7.50
2Q16 DPU of 2.79 Scts (+2.2% y-o-y) a strong set of results.
MINT continues to see a strong 6.2% y-o-y and 8.6% y-o-y 7.00
growth in revenue and net property income to S$82.7m and 6.50

S$61.0m respectively. This was mainly due to higher rental 2014A 2015A 2016F 2017F 2018F
rates achieved portfolio wide (average rents rose to Source: Company, DBS Bank
S$1.88psf/mth a marginal increase from S$1.86 last
quarter). This was supported by an increase in occupancy
rate to 93.8% as the trust fills up vacant space across its
portfolio. The completion of The Equinix development also
contributed to the rise in revenues. NPI margins remained
stable at 73.8% as the manager kept a tight lid on
operating costs. We tweak our DPU up by 2% as we assume
higher margins.

Page 2 Page 242
Company Guide

Balance Sheet: <!ANCGRAPH_Aggregate Leverage Reits (1.6,3.2)/>
Low gearing allows for opportunistic acquisitions;
developments. Current gearing is conservative; implying
that the Manager has the capability to take on debt-funded
acquisitions when the opportunity arises. The manager will be
utilising its headroom towards higher-yielding development
projects (built-to-suit project for HP and Kallang Basin Cluster
4) which we estimate to yield 8-9%, higher than acquisitions.
Post development, we believe gearing will still be within
management's comfortable level of <35%.
Stable weighted average debt-to-maturity of 3.8 years. ROE (%)

The REIT has a well staggered debt profile with a majority of
8.0%
debt due for repayment only from FY17/18 onwards. With
7.0%
c.80% of its borrowings have fixed interest rates, MINT is well
6.0%
protected against future increase in interest rates. 5.0%
4.0%
3.0%
Better-than-expected rental reversions/ acquisitions will 1.0%
boost earnings and share price. We are forecasting 0.0%

2014A 2015A 2016F 2017F 2018F
modest rental uplifts of between 0-3%. The REIT's ability to
maintain or beat expectations will mean upside to
our/consensus forecasts. In addition, the execution on Distribution Yield (%)
(%)
acquisitions or further development projects which are
accretive to earnings will likely result in upside to TPs and 8.2
share prices. 7.7 +2sd: 7.7%
7.2 +1sd: 7.3%
Avg: 6.9%
Key Risks: 6.7
‐1sd: 6.6%
Rising interest rates. An increase in refinancing rates will 6.2 ‐2sd: 6.2%
negatively impact distributions. However, MINT has
5.7
minimised the impact as c.80% of its interest cost has been
5.2
fixed. 2012 2013 2014 2015 2016
Economic risk. A deterioration of the economic outlook PB Band (x)

could have a negative impact on industrial rents and 1.6
(x)
occupancies as companies cut back on production and
1.5
require less space. Industrial rents have a strong historical
1.4
correlation with GDP growth.
1.3
+2sd: 1.32x
+1sd: 1.25x
Avg: 1.18x
Mapletree Industrial Trust is a real estate investment trust 1.1 ‐1sd: 1.11x

‐2sd: 1.04x
which invests primarily in income-producing industrial assets 1.0
located in Singapore. Its portfolio includes a diverse mix of 0.9

business parks, science parks, ramp-up warehouses and
flatted factories.

Page 243 Page 3
Company Guide

FY Mar 2014A 2015A 2016F 2017F 2018F
Gross revenue 299 314 328 332 359
Net Income 164 178 187 188 204
Tax 0 (1) 0 0 0
Total Return 314 374 187 188 204
Growth driven by rental
Growth & Ratio reversions and contribution
Revenue Gth (%) 8.3 4.9 4.5 1.3 8.0 from Equinix property
Net Inc Gth (%) 13.3 8.2 5.9 0.1 8.7
Dist to revenue (%) 55.5 57.6 59.0 59.0 57.5
8.5 8.6 9.0 9.0 8.7
to sales %)
ROAE (%) 8.5 8.2 8.1 8.1 8.9
ROA (%) 5.2 5.2 5.2 5.1 5.4
ROCE (%) 6.2 6.0 6.0 5.9 6.4
Int. Cover (x) 7.4 8.6 8.8 8.1 7.5

Page 4 Page 244
Company Guide

FY Mar 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016
Net Income 44 46 45 47 47
Tax 0 0 0 0 0
Total Return 44 46 242 47 47 Stable quarterly growth
Non-tax deductible Items 2 0 (195) 2 2 profile
Growth & Ratio
Revenue Gth (%) (1) 0 2 3 1
N Property Inc Gth (%) (1) 3 0 4 1 100% payout ratio
Net Inc Gth (%) 1 5 (2) 4 2

FY Mar 2014A 2015A 2016F 2017F 2018F

Cash & ST Invts 96 72 91 100 65
Inventory 0 0 0 0 0
Debtors 9 16 16 16 17
Total Assets 3,275 3,516 3,648 3,759 3,767
ST Debt 344 125 125 125 125

Creditor 68 70 96 97 105
LT Debt 784 949 1,059 1,174 1,174

Gearing to inch up
Net Cash/(Debt) (1,032) (1,003) (1,093) (1,200) (1,235) marginally as development
Ratio complete
Current Ratio (x) 0.3 0.5 0.5 0.5 0.4
Quick Ratio (x) 0.3 0.5 0.5 0.5 0.4
Z-Score (X) 1.5 1.7 1.6 1.5 1.5

Page 245 Page 5
Company Guide

FY Mar 2014A 2015A 2016F 2017F 2018F
Pre-Tax Income 164 178 187 188 204

Dep. & Amort. 0 0 0 0 0
Tax Paid (5) (1) 0 0 0
Chg in Wkg.Cap. (7) (5) 26 1 7
Net Operating CF 190 205 216 191 213
Net Investing CF (138) (54) (113) (102) (42)
Chg in Gross Debt 103 (54) 110 115 0
Net Financing CF (29) (174) (83) (81) (206)
Chg in Cash 23 (24) 19 9 (35)

Free CFPS (S cts) 3.1 8.8 5.9 5.1 9.7

1.70 S$
1.65
2 Pri c e Pri c e
1.55 1 21 Jan 15 1.57 1.66 BUY
1 2 22 Apr 15 1.62 1.68 BUY
1.50 3 3 22 Oct 15 1.53 1.62 BUY
1.45
1.40
1.35
1.30
Source: DBS Bank

Page 6 Page 246
Mapletree Logistics Trust
Edition 1 Version 2 | Bloomberg: MLT SP | Reuters: MAPL.SI Refer to important disclosures at the end of this report
BUY Acquisitions to drive growth

Last Traded Price: S$1.00 (STI : 2,825.84) Steady growth from acquisitions, maintain BUY. We maintain
Price Target : S$ 1.15 (15% upside) our BUY rating with TP of S$1.15, based on DCF valuation.
Recent acquisitions have placed the Trust back on a growth
Potential Catalyst: Acquisitions path, with more to follow. Yields are attractive at >7.0%,
Where we differ: Our estimates are conservative and 5% below offering total returns of 23%.
consensus
Steady 2Q16 results. 2Q16 revenues and net property income
Analyst rose 7% and 6% respectively, on the back of an expanded
Derek Tan +65 6682 3716 derektan@dbs.com portfolio and higher revenues achieved for Singapore and HK
assets. Portfolio occupancy rose marginally to 96.9% with a
longer WALE of 4.8 years offering income visibility. DPU of 1.86
Scts however dipped 1% y-o-y mainly due to gains distributed in
Price Relative
S$ Relative Index
2Q15; stripping those gains out, and earnings would have been
1.5 flattish. Looking ahead, the manager continues to expect
1.4 204 headwinds for its operations in S’pore/Korea from competition.
1.3 184
Acquisitions and developments to drive growth as rental

1.2 164
1.1 144
1.0 124
outlook falters. We are positive on MLT’s rising acquisition
0.9 104 growth momentum and strategy to optimise yields through
0.8 84 strategic redevelopments to diversify its earnings base. Growth
will come from a visible sponsor pipeline, which is currently
Mapletree Logistics Trust (LHS) Relative STI INDEX (RHS)
under various stages of developments. In addition, the
Forecasts and Valuation completion of various AEIs will underpin medium term growth
FY Mar (S$ m) 2015A 2016F 2017F 2018F for the Trust. These growth drivers are expected to more than
Gross Revenue 330 340 359 370 compensate for the risk of falling rents and vacancy rates
Net Property Inc 277 294 312 322 especially in S’pore given ongoing proprety conversions.
Total Return 241 182 189 195
EPU (S cts) 6.4 7.4 7.7 7.9 We maintain our BUY rating with TP of S$1.15, based on DCF
EPU Gth (%) (17) 15 4 3
valuation. At its current price, MLT offers investors dividend
DPU (S cts) 7.5 7.5 7.8 8.0
DPU Gth (%) 2 0 4 3 yields of 7.5-8.0% for FY16-18F.
NAV per shr (S cts) 102.6 102.5 102.4 102.2
Distribution Yield (%) 7.5 7.5 7.8 8.0 Acquisitions ramp up faster than expected. A faster-than-
P/NAV (x) 1.0 1.0 1.0 1.0 projected acquisition pace or a better-than-expected outlook for
Aggregate Leverage (%) 34.1 38.6 39.5 40.7 the Singapore warehouse market will translate to positive
ROAE (%) 6.4 7.2 7.5 7.7 surprises to earnings estimates, and re-rate the stock higher.

Source of all data: Company, DBS Bank, Bloomberg Finance L.P Mkt. Cap (S$m/US$m) 2,484 / 1,729
Major Shareholders
Temasek Holdings (%) 40.2
Bank of New York Mellon (%) 4.9
Free Float (%) 54.9

Page 247
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Company Guide

400
350 93.8%
300
MLT beats our acquisition estimates for FY16F with new 250 89.8%
Australian foray. MLT continues to deliver on the acquisition 200 87.8%
front. The Trust has acquired six properties in China, Singapore, 150 85.8%
100 83.8%
Malaysia and Korea with projected NPI yields ranging from 50 81.8%
6.5% to 8.4% in 2015, which will contribute positively in FY16. 0 79.8%
The Trust started FY16 strongly, delivering close to S$295m in 2014A 2015A 2016F 2017F 2018F
acquisitions in Vietnam, Korea and most recently, Australia, at a Net Property Income Net Property Income Margin %
weighted average yield of 6.1%.
In the medium term, MLT is expected to complete two Quarterly Net Property Income and Margins (%)
development projects - 5B Toh Guan Road East (S$107m) and 76
87%
76 Pioneer Road (S$117m). When completed in 1HFY17 and 74 86%
4QFY18, these would drive inorganic growth. At this point 72 85%
(Sept-15), there are no pre-commitments for both properties. 70

84%
68
83%
66
We are positive on MLT’s rising acquisition momentum and 82%
64
strategy to optimise yields through strategic redevelopments to
62 81%
diversify its earnings base while scaling up its presence in target
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
growth markets in China, Korea and Australia. These should
compensate for the expected dip in rentals from its Singapore Net Property Income Net Property Income Margin %
operations in the interim.
Sizeable portfolio of assets to be injected from Sponsor in ROE (%)

8.0%
the longer term. In addition, there is a sizeable and growing
7.0%
pipeline of development properties from the Sponsor,
6.0%
Mapletree Investments that is available for MLT to acquire in the
5.0%
medium term. Potential assets for acquisitions are mainly in
4.0%
various development stages across Asia, especially China, Japan,
3.0%
HK and Vietnam, where demand for logistics warehouses
2.0%
remains robust. China remains a key growth area, where the
1.0%
proliferation of e-commerce will drive demand for more logistics
0.0%
space. 2014A 2015A 2016F 2017F 2018F
Lower contributions from conversions of single-user

facilities to multi-tenanted properties in FY16-17F. MLT's Interest Cover (x)
historical performance has been stable, underpinned by a (x)
10.00
balance of positive rental reversions, stable portfolio 9.00
occupancies and acquisitions. The Trust has a weighted average 8.00
lease to expiry (WALE) of 4.8 years (by NLA), which offers strong 7.00
6.00
income visibility. Looking ahead, MLT has 5.4%/16.3% of its
5.00
revenues up for renewal in FY16/17F. A majority of the leases 4.00
are from Singapore, where we expect a number of warehouses 3.00
that are leased to single-users (SUA) to be converted into multi- 2.00

1.00
tenanted properties (MTB). Given underlying vacancies for these 0.00
properties, we expect downside to contributions from these 2014A 2015A 2016F 2017F 2018F
properties in the near term when leases from the SUAs are up
for renewal over the coming two years. Source: Company, DBS Bank

Page 2 Page 248
Company Guide

Balance Sheet:
43.0%
Gearing of c.38.8% is within management's
comfortable range. Gearing rose marginally to 38.8% but 38.0%
this is still within management's comfortable level of 40- 33.0%
45%. In our forecasts, we estimate gearing to increase 28.0%

slightly to c.39% by end- FY16, mainly due to c.S$120m of
23.0%
capex invested towards the new warehouse at Toh Guan,
Singapore. 18.0%
13.0%
2014A 2015A 2016F 2017F 2018F
Well-staggered debt maturity profile; interest costs
remain stable. Interest costs have been stable at 2.3% given
that a majority of its debts are in JPY/HKD and Rmb. To
hedge against currency volatility, the Manager typically takes Distribution Paid / Net Operating CF
on local-denominated loans (pegged to maximum of asset 1.1
(x)
values in each overseas market). 1.0
0.9
MLT has a long debt-to-maturity of 3.4 years at end 2QFY16 0.8
and proactively renews its loans ahead of time. Over the next 0.7
two financial years, only c.22% of its total debt will be rolled 0.6
0.5
over, meaning that interest cost will only see a marginal
0.4
increase.
0.3
2014A 2015A 2016F 2017F 2018F

Ability to drive growth through acquisitions. We remain
optimistic on the ability of the Trust to drive growth through
acquisitions. With its first foray into Australia, we see the Distribution Yield (%)
(%)
Trust further deepening its exposure through strategic 9.6
purchases over the medium term. The Manager is also
looking to divest low yielding assets in Singapore, Japan and 8.6 +2sd: 8.5%
re-cycle the proceeds into higher yielding assets. 7.6 +1sd: 7.7%
Avg: 6.8%
6.6
Key Risks:
Rise in interest rates. The Manager has hedged a majority 5.6
‐1sd: 6%
of its debt into fixed rates but is expected to see increased ‐2sd: 5.1%
cost of funds when these loans are rolled over in the coming 4.6
2012 2013 2014 2015 2016
year.
Company background
P/Bk NAV (x)
MapleTree Logistics is a real estate investment trust which (x)
1.7
invests in logistics warehouses in the Asia Pacific region. It 1.6
currently owns warehouses in Singapore, Japan, China, South 1.5
Korea, Vietnam and Hong Kong. 1.4

+2sd: 1.35x
1.3
+1sd: 1.25x
1.2
Avg: 1.14x
1.1
‐1sd: 1.04x
1.0
0.9
‐2sd: 0.93x
0.8

Page 249 Page 3
Company Guide

FY Mar 2014A 2015A 2016F 2017F 2018F
Gross revenue 311 330 340 359 370
Other Non Opg (Exp)/Inc 3 (15) 0 0 0
Net Income 224 205 215 224 230
Tax (17) (29) (14) (16) (16)
Minority Interest (1) (1) 0 0 0
Preference Dividend (19) (19) (19) (19) (19)
Total Return 293 241 182 189 195
Non-tax deductible Items (113) (56) 3 3 3 Growth mainly driven by
Net Inc available for Dist. 180 185 185 192 198 acquisitions, offsetting
negative drag from
Growth & Ratio
conversion of single
Revenue Gth (%) 0.9 6.2 3.1 5.4 3.2
tenanted properties in
N Property Inc Gth (%) (0.2) 3.7 6.0 6.1 3.1 Singapore
Net Inc Gth (%) 2.7 (16.2) 15.9 4.0 3.3
Dist to revenue (%) 57.8 56.0 54.3 53.6 53.6 Interest cost to remain fairly
Operating expenses (%) 5.9 7.4 12.5 11.7 11.7 stable, given a majority of
ROAE (%) 8.1 6.4 7.2 7.5 7.7 loans are denominated in
ROA (%) 4.3 3.4 3.7 3.7 3.8 JPY where rates are low
ROCE (%) 5.5 4.9 4.9 5.1 5.1
Int. Cover (x) 8.7 7.8 6.9 5.8 5.8

Page 4 Page 250
Company Guide

FY Mar 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016
Other Non Opg (Exp)/Inc 3 0 (10) 4 (1)
Net Income 59 54 43 59 42
Tax (3) (4) (20) (4) (4)
Total Return 51 46 102 51 33 Step-up growth on a q-o-q
basis driven by (i) annual
Non-tax deductible Items (5) (1) (56) (5) 13
escalations for its long leases
and, (ii) contribution from
Growth & Ratio completed acquisitions
Revenue Gth (%) 1 (4) 8 0 3
N Property Inc Gth (%) 0 (2) 4 1 3
Net Inc Gth (%) 36 (11) (61) 185 (35)

FY Mar 2014A 2015A 2016F 2017F 2018F

Cash & ST Invts 114 107 76 80 81
Inventory 0 0 0 0 0
Debtors 16 21 9 9 9
Total Assets 4,397 4,788 5,067 5,155 5,260
ST Debt 149 57 57 57 57
Creditor 140 164 113 120 123
LT Debt 1,307 1,575 1,897 1,981 2,085

Net Cash/(Debt) (1,341) (1,525) (1,878) (1,958) (2,060) Gearing to remain
Ratio stable at 38-39.5%;
Current Ratio (x) 0.5 0.6 0.6 0.6 0.6 increase is mainly due
Quick Ratio (x) 0.4 0.5 0.4 0.4 0.4 to debt-funded
Aggregate Leverage (%) 33.1 34.1 38.6 39.5 40.7 acquisitions and
development projects
Z-Score (X) 1.1 1.0 0.9 0.9 0.8

Page 251 Page 5
Company Guide

FY Mar 2014A 2015A 2016F 2017F 2018F
Pre-Tax Income 224 205 215 224 230

Dep. & Amort. 0 0 0 0 0
Tax Paid (3) (4) (4) (14) (16)
Chg in Wkg.Cap. (25) (1) (39) 6 4
Net Operating CF 210 236 173 215 218
Net Investing CF (100) (246) (322) (84) (104) Mainly for
Distribution Paid (177) (177) (185) (192) (198) development works at
Chg in Gross Debt 74 207 322 84 104 Toh Guan Warehouse
New units issued 0 0 0 0 0 and assumed S$100m
Other Financing CF (27) (30) (19) (19) (19) of acquisitions over
Net Financing CF (130) 0 118 (128) (114) FY16-17F
Chg in Cash (21) (7) (31) 4 1

Free CFPS (S cts) 4.5 (0.5) (6.0) 5.3 4.6

S$
1.31
1.26
3 S.No . Da te R a ti n g
1.21 1 Pri c e Pri c e
2
1 21 Jan 15 1.24 1.27 HOLD
1.16 4 2 02 Apr 15 1.24 1.27 HOLD
1.11 3 22 Apr 15 1.26 1.29 HOLD
5 4 26 May 15 1.20 1.29 HOLD
1.06 5 02 Jul 15 1.13 1.31 BUY
6 20 Oct 15 1.02 1.15 BUY
1.01
6
0.96
0.91
Source: DBS Bank

Page 6 Page 252
OUE Commercial REIT
Edition 1 Version 1 | Bloomberg: OUECT SP | Reuters: OUEC.SI Refer to important disclosures at the end of this report
HOLD One Raffles Place To Drive Earnings

Price Target : S$0.67 (2% upside) Increased diversity from the acquisition of a quality
asset. We believe that OUE CT will achieve a new milestone
Potential Catalyst: Better-than-expected earnings with the acquisition of ORP which will provide the trust with
Where we differ: Our estimates are more conservative significant operational scale (NLA doubled to c.1m sqft) and
operational flexibility as we see the manager being able to
Analyst
Derek Tan +65 6682 3716 derektan@dbs.com market to a wider tenant base, which will result in improved
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com tenant retention rate.
Stable DPU outlook; earnings uplift from One Raffles

Price Relative
Place. With an income support arrangement offering income
S$ Relative Index stability to OUE Bayfront, contributing c.33% of net property
0.9
214 income (NPI) till 2018, we see upside coming from driving
0.9
0.8
194
better performance at One Raffles Place (c.49% of NPI). With
174
0.8
0.7
154 initial yields estimated to be 3.4%, the manager is actively
0.7 134 driving operational performance by pushing occupancy rates
114
0.6
0.6 94
higher to c.95%, actively marketing the vacant spaces and also
0.5
74 raising average rent for the property. We forecast the property
to achieve a yield of 4.0% by the end of 2016.
OUE Commercial REIT (LHS) Relative STI INDEX (RHS)
Forecasts and Valuation 3Q15 operational performance remains on track. Net

FY Dec (S$ m) 2014A* 2015F* 2016F 2017F
property income and revenues rose steadily by 5.7% and 4.7%
Net Property Inc 54 73 118 125 y-o-y respectively. Rental reversions remain healthy for its OUE
Total Return 293 22 43 45 Bayfront (+23.5% YTD) and Lippo Plaza (+10.7% YTD) but we
Distribution Inc 46 54 62 65 expect it to moderate, given increased competition for space.
EPU (S cts) (2.6) 2.0 3.3 3.4
EPU Gth (%) nm nm nm 5
Valuation:
DPU (S cts) 4.7 5.1 4.7 5.0
DPU Gth (%) nm 7 (6) 5 We maintain our HOLD call with TP of S$0.67 based on DCF.
NAV per shr (S cts) 97.8 91.6 89.0 86.4 While valuations are attractive at current levels (0.8x P/NAV
PE (X) nm 33.3 20.2 19.2 and yields of c.7.1-7.4%), we believe that upside will be
P/NAV (x) 0.7 0.7 0.7 0.8
capped by a weak operational outlook, coupled with its larger
Aggregate Leverage (%) 42.0 42.3 42.5 42.7 office peers trading at similar yield levels.
ROAE (%) (4.9) 2.1 3.6 3.9
Distn. Inc Chng (%): - - - Interest rate risk. A rise in interest rate will have a negative
Consensus DPU (S cts): 4.7 5.1 5.2 impact on distributions. However, the manager actively
manages its exposure through forward hedges and has locked
*DPU adjusted for recent rights issue in c.64% of its interest cost into fixed rates.
At A Glance
Mkt. Cap (S$m/US$m) 849 / 595
Major Shareholders
OUE Realty Pte Ltd (%) 46.8
Gordan Tang (%) 13.2
Free Float (%) 40.0

Page 253
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Company Guide
OUE Commercial REIT

S$ m
200
80.9%
160
140 78.9%
Prime office assets in the Central Business District (CBD). 100
74.9%
80
OUE Commercial Trust (OUE CT) comprises three Grade A 60 72.9%
commercial assets – OUE Bayfront Property and One Raffles 40
70.9%
20
Place in downtown Central Business District in Singapore, and 0 68.9%
2014A 2015F 2016F 2017F
Lippo Plaza Property in Shanghai, China. This REIT’s total
asset under management (AUM) is S$3.4bn. Singapore Net Property Income Net Property Income Margin %
contributes close to c.85% of the value.

78%
Achieving improved earnings diversity from the 16
77%
acquisition of a quality asset. The acquisition of ORP 15
76%
(completed in Oct-15) is a significant milestone for OUE CT 14 75%
as the acquisition will more than double OUE CT’s Singapore 13 74%
NLA (to c.1m sqft from c.400k presently) and portfolio size. 12 73%
From an operational standpoint, we see increased flexibility 11 72%
for the property manager to cross-sell its leasing activities 10 71%
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
and expand its addressable tenant base, as ORP is a different
office product when compared to OUE Bayfront and thus Net Property Income Net Property Income Margin %
improve its product offerings to existing and prospective Distribution Paid / Net Operating CF
tenants, as well as result in a higher portfolio retention rate. (x)
1.5
1.3
Immediate earnings uplift from One Raffles Place to
1.1
drive earnings growth through operational
0.9
optimisation. OUE CT's acquisition of the c.68% beneficial
0.7
interest in One Raffles Place at an average valuation of
0.5
S$2,382 psf is attractive in our view. While initial yield is
0.3
estimated to be c.3.4%, we see upside as the property is
0.1
currently under-rented with average rents estimated to be 2014A 2015F 2016F 2017F
close to S$9.50psf pm (vs market transaction levels of closer

to S$10.00psf pm), while occupancy remain below optimal Interest Cover (x)
(x)
occupancy rates of c.85%. As such, we believe that there is 4.00
opportunity for immediate earnings uplift through leasing 3.50
out the vacant spaces. 3.00
2.50
Earnings visibility through Sponsor’s income support 2.00
for OUE Bayfront till 2018. OUE Bayfront is under an 1.50
income support arrangement, which means that the Sponsor 1.00
has undertaken to top up any revenue shortfall below 0.50
S$14.25m per quarter (or S$57m a year) for a period of five 0.00
2014A 2015F 2016F 2017F
years, up to a maximum sum of S$50m. This will provide Source: Company, DBS Bank
visibility in earnings and downside protection amid potential
supply-induced market volatility in 2016-17.
With OUE CT’s outperforming its initial estimates and thus

drawing less than the annual income support amount, we
see the manager being more flexible in its leasing
arrangements in order to maintain a steady earnings profile
going forward.

Page 2 Page 254
Company Guide
OUE Commercial REIT

Balance Sheet:
Gearing remains higher compared to peers. At 40.9%
post acquisition of One Raffles Place, OUE CT will have one of 40.0%
the highest gearing levels among S-REIT peers which average
35.0%
about 34%. Future acquisitions would therefore likely have to
be funded by a mixture of debt and equity. Gearing levels is 30.0%
expected to remain stable in the medium term. 25.0%
20.0%
Long debt tenure minimises refinancing risk. OUE CT has 2014A 2015F 2016F 2017F
a weighted average debt-to-expiry of 2.54 years in 3Q15,

with close to 64% of debt hedged into fixed rates for 3.4
years. The REIT will have no debt expiring until FY17 and ROE (%)
beyond, reducing near-term refinancing risk.
3.5%
3.0%
2.5%
A lower gearing level will offer investors some relief.
We believe that the recent lacklustre share price performance 2.0%
could be due to OUE CT’s higher gearing versus the S-REIT 1.5%
average of c.34%. Given a deteriorating office outlook, 1.0%
investors are concerned that OUE CT may need to raise 0.5%
further equity in order to shore up its balance sheet in the 0.0%

2014A 2015F 2016F 2017F
event of a devaluation in office values, resulting in the REIT
breaching the 45% gearing limit.
(%)
A rebound in operational results. The office market is on a
downtrend, in our view, given looming supply in the midst of 8.1 +2sd: 7.9%
weak demand for space. While OUE CT has still been able to 6.1
+1sd: 4.9%
achieve strong rental reversions YTD, we believe this will 4.1
moderate and turn negative going forward. The acquisition of 2.1

Avg: 1.8%
One Raffles Place, given its specifications, enables the REIT to 0.1
reach out to a larger base of tenants which we believe will be -1.9
2012 2013 2014 2015 2016
‐1sd: ‐1.3%
positive to the Trust’s ability to retain tenants within its
-3.9
portfolio.
Key Risks: PB Band (x)

Income concentration risk. While the acquisition of ORP 1.0
(x)
will diversify asset-specific risks, OUE CT is still heavily 1.0
exposed to Singapore’s CBD office market via ORP and OUE 0.9
Bayfront, which account for >80% of earnings. Any 0.9

0.8 +2sd: 0.8x
downturn or weakness in the Singapore office market could 0.8 +1sd: 0.76x
Avg: 0.73x
have a significant negative impact on the Trust, particularly 0.7 ‐1sd: 0.7x
‐2sd: 0.66x
for ORP. 0.7
0.6
0.6
Interest rate risk. A rise in interest rate will have a negative 0.5
impact on distributions. However, the manager actively
manages its exposure through forward hedges and has
c.64% of its interest cost hedged into fixed rates with a Source: Company, DBS Bank
fairly long duration of 3.40 years.
Company Background
OUE Commercial REIT (OUE CT) is an office REIT with a
portfolio of office assets in located in prime CBD locations in
Singapore and China.

Page 255 Page 3
Company Guide
OUE Commercial REIT

FY Dec 2014A 2015F 2016F 2017F
Other Operating expenses 1 (22) (14) (16)
Exceptional Gain/(Loss) (20) 0 0 0
Net Income 18 29 60 64 Topline driven mainly from
Tax (42) (6) (11) (12) the acquisition of One
Minority Interest 0 (1) (6) (6) Raffles Place
Net Income After Tax (24) 22 43 45
Increase due to higher loan
quantum from ORP
Non-tax deductible Items (247) 33 25 26 acquisition.
Growth & Ratio
Revenue Gth (%) N/A 39.2 63.8 4.9
Net Inc Gth (%) nm nm 90.2 6.3
Net Income Margins (%) (33.0) 22.5 26.1 26.4
Dist to revenue (%) 64.2 53.8 38.1 38.2
(1.0) 21.9 8.8 9.6
to sales %)
ROAE (%) (4.9) 2.1 3.6 3.9
ROA (%) (2.8) 0.9 1.3 1.3
ROCE (%) (8.5) 1.7 2.5 2.6
Int. Cover (x) 3.4 2.3 2.3 2.4

Page 4 Page 256
Company Guide
OUE Commercial REIT

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Other Operating expenses (2) (15) (1) 1 0
Exceptional Gain/(Loss) 0 0 0 0 0 Topline driven mainly from
higher rental reversions
Net Income 9 (5) 11 11 10
achieved for OUE Bayfront
Tax (1) (1) (1) (1) (1)
and Lippo Plaza
Net Income after Tax 8 (6) 9 9 9
Total Return N/A N/A N/A N/A N/A
Growth & Ratio
Revenue Gth (%) 4 0 4 (4) 5
N Property Inc Gth (%) 4 (3) 9 (6) 6 Payout ratio remain at 100%
Net Inc Gth (%) (15) nm nm 1 (3)

FY Dec 2014A 2015F 2016F 2017F
Investment Properties 1,631 3,349 3,353 3,359

Inventory 0 0 0 0
Debtors 5 7 11 12
Total Assets 1,681 3,376 3,427 3,423
ST Debt 0 0 0 0
Creditor 29 38 63 66
Other Current Liab 4 6 11 12 Gearing to remain
LT Debt 633 1,416 1,451 1,456 steady at 42%.
Unit holders’ funds 958 1,746 1,727 1,706
Total Funds & Liabilities 1,681 3,376 3,427 3,423
Non-Cash Wkg. Capital (28) (37) (63) (66)

Net Cash/(Debt) (602) (1,408) (1,401) (1,417)
Ratio
Current Ratio (x) 1.1 0.3 0.8 0.7
Quick Ratio (x) 1.1 0.3 0.8 0.7
Z-Score (X) 0.0 0.0 0.0 0.0

Page 257 Page 5
Company Guide
OUE Commercial REIT

FY Dec 2014A 2015F 2016F 2017F
Dep. & Amort. 6 0 0 0
Tax Paid (2) (4) (6) (11)
Chg in Wkg.Cap. 16 8 20 3
Other Operating CF 15 0 0 0
Net Invt in Properties (780) (1,181) (5) (5)
Other Invts (net) 0 0 0 0
Net Investing CF (780) (1,181) (5) (5)
Distribution Paid (21) (54) (62) (65)
Chg in Gross Debt 437 413 35 5
New units issued 330 215 0 0
Acquisition of One
Other Financing CF (12) 550 0 0 Raffles Place asset
Net Financing CF 734 1,125 (27) (60)
Chg in Cash 31 (23) 42 (10)
Operating CFPS (S cts) 6.4 2.3 4.2 4.0

Free CFPS (S cts) (76.9) (101.6) 5.3 3.8
0.83 S$
Closing T arget
S.No. Dat e Rat ing
Pric e Price
0.78 1: 23 Sep 15 0.64 0.67 HOLD
2: 12 Nov 15 0.69 0.67 HOLD
0.73
2
0.68
1
0.63
0.58
0.53
Source: DBS Bank

Page 6 Page 258
OUE Hospitality Trust
Edition 1 Version 1 | Bloomberg: OUEHT SP | Reuters: OUER.SI Refer to important disclosures at the end of this report
BUY In the right part of town

Last Traded Price: S$0.76 (STI : 2,834.23) Best positioned. We reiterate our BUY call with a revised TP of
Price Target : S$0.91 (20% upside and 8.5% yield) S$0.91. Despite the expected headwinds in the Singapore
(Prev S$0.98) hospitality market, we believe OUEHT is the best-positioned
Singapore-focused hospitality REIT. Its Mandarin Hotel is located
Potential Catalyst: Removal of equity placement overhang in Orchard Road which will not see any new hotel supply in
Where we differ: Below consensus on forecasted dip in RevPAR for 2016. In addition, heading into 2016, OUEHT should benefit
Mandarin Orchard and incorporating an equity raising from the full-year contribution from its recent acquisition of
Crown Plaza (CPCA) Changi Airport and upcoming purchase of
Analyst its extension wing (CPEX). CPCA also has the benefit of being
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com the only hotel within the Changi Airport submarket.
Approaching end of overhang. OUEHT’s share price has
corrected over the past six months due to the overhang from
the potential capital raising to fund the acquisition of CPEX for
Price Relative S$205m. With the acquisition likely to take place in 2Q16, in
S$
line with the expected completion of CPEX, this overhang
Relative Index
1.1
1.1 204 should soon be lifted. Moreover, this risk in our view has largely
1.0 184 been priced in, with our FY16F yield of 8.5% already imputing a
1.0
0.9
164
S$125m equity raising at S$0.70 per share which is at a
0.9
144
discount to the current low share price.
124
0.8
Visible acquisition pipeline. OUEHT has a visible acquisition

0.8 104
0.7 84
Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 pipeline, through its sponsor OUE Limited, which owns the
OUE Hospitality Trust (LHS) Relative STI INDEX (RHS) serviced residences at OUE Downtown and a 30% stake in
Marina Mandarin. Furthermore, the CEO of OUEHT, Mr Chong
Forecasts and Valuation Kee Hiong has demonstrated a strong acquisition track record
FY Dec (S$ m) 2014A 2015F 2016F 2017F
during his time as CEO of Ascott Residence Trust, growing the
Gross Revenue 116 125 134 140 portfolio from S$856m at IPO in 2006 to c.S$3bn by end-2011.
Total Return 79 73 79 84 Valuation:
Given the still weak outlook for the Singapore hospitality
EPU (S cts) 6.0 5.5 5.5 5.4
EPU Gth (%) 165 (8) 1 (2) market, we lowered our FY16F RevPAR growth estimates for
DPU (S cts) 6.7 6.5 6.4 6.4 MOS from +1% to -2%. After incorporating S$125m equity
DPU Gth (%) 132 (3) (2) 0 raising at S$0.70 per share, which is lower than our earlier
NAV per shr (S cts) 90.5 89.4 86.1 85.2 S$0.88 estimate, we have cut our FY15-16F DPU by 3-5%. Our
PE (X) 12.7 13.9 13.7 14.0 DCF valuation is likewise reduced to S$0.91 from S$0.98.
Aggregate Leverage (%) 32.5 42.0 41.9 41.9 Competitive landscape. The key risk to our view is a weaker-
ROAE (%) 6.5 6.1 6.3 6.3 than-expected outlook for the Singapore hospitality market, if
our projected 3% recovery in tourist arrivals in FY16 does not
Distn. Inc Chng (%): 0 (3) (5) eventuate. In addition, we expect the contribution from CPCA
Consensus DPU (S cts): 6.6 6.8 6.6 to offset weakness from Mandarin Orchard. However, if CPCA
Other Broker Recs: B: 3 S: 1 H: 4 underperforms, this will pose a downside risk to our estimates.
Mkt. Cap (S$m/US$m) 1,015 / 712
Major Shareholders
OUE Realty Pte Ltd (%) 41.3
Free Float (%) 58.7

Page 259
ed: TH / sa: JC
Company Guide

200
97.2%
180
140 93.2%
Maiden contribution from Crowne Plaza Changi Airport. The 120
91.2%
main earnings driver for OUEHT over the coming year is the 100
89.2%
80
maiden contribution from the 320-room Crowne Plaza Changi 60 87.2%
Airport (CPCA) acquired on 30 January 2015. By 2Q16, OUEHT 40
20
85.2%
is expected to complete the acquisition of Crown Plaza Changi 0 83.2%

2013A 2014A 2015F 2016F 2017F
Airport’s extension (CPEX) which will add another 243 rooms.
CPCA is strategically located at Singapore’s Changi Airport, Net Property Income Net Property Income Margin %
specifically catering to transit passengers, visitors to the

Singapore Expo and businesses at Changi Business Park. The Net Property Income and Margins (%)
90%
property offers OUEHT exposure to a submarket that has limited 89%
28
competition and diversification away from Mandarin Orchard 89%
which is more focused on the tourism market. 26

88%
24 88%
Stability from fixed rentals and Mandarin Gallery. Besides having 22

87%
87%
a more diversified portfolio following the acquisitions of CPCA 20
86%
and CPEX, OUEHT’s core earnings are stable, as they are derived 18 86%
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
from two sources: (1) minimum S$45m rental from its Sponsor
for Mandarin Orchard, and (ii) fixed rentals from its Mandarin
Gallery Mall. The income from Mandarin Gallery is stable due to
3-year average leases and the property’s prominent 152m wide
frontage along Orchard Road, which is a preferred location for (x)
1.2
flagship stores of international brands. All in, the fixed income
from Mandarin Orchard and Mandarin Gallery contributed 1.0
c.70% of group NPI over the last 12 months. 0.8
0.6
Short-term headwinds at Mandarin Orchard but supply 0.4
constrained in the medium term. OUEHT’s Mandarin Orchard
0.2
(MOS) hotel faces some short-term headwinds due to the 6%
growth in new hotel rooms (equivalent to c.3,900 rooms) in 0.0
2013A 2014A 2015F 2016F 2017F
2016 and tepid recovery in tourist arrivals which is estimated at
3% y-o-y. We estimate this to result in a 4% fall in industry-
wide RevPAR over 2016. Nevertheless, due to MOS’s strong Interest Cover (x)
track record and the fact that the new supply will not be (x)
8.00
located in Orchard Road in 2016, we believe MOS will 7.00
outperform and have assumed a 2% decline in RevPAR. Beyond 6.00
2016, we remain positive on the long-term outlook for the 5.00
property, given constrained supply in the medium term, as the 4.00
Singapore government has not released any hotel sites for 3.00
development over the last two years. In addition, Mandarin 2.00
Orchard is expected to complete the refurbishment of 270 1.00
rooms over the coming year, which should translate into higher 0.00
2013A 2014A 2015F 2016F 2017F
room rates and/or occupancy rates.
Expansion through acquisitions. Over the medium term, we Source: Company, DBS Bank
expect OUEHT to make DPU-accretive acquisitions to expand its
portfolio of properties. Its sponsor, OUE Limited owns service
residences at OUE Downtown and a 30% stake in Marina
Mandarin, which are potential acquisition targets for OUEHT. In
addition, we understand the REIT is exploring acquisition
opportunities in Europe, Japan and the US.

Page 2 Page 260
Company Guide

Balance Sheet:
Equity raising to fund acquisition. Post the acquisition of CPCA,
OUEHT’s gearing now stands at 42.1%. To maintain its gearing 40.0%
level at c.42% and to remain under the new 45% gearing limit 35.0%
imposed by MAS, we have assumed a S$125m equity raising at 30.0%
25.0%
S$0.70 per unit to fund the purchase of CPEX.
20.0%
15.0%
Staggered debt maturity profile. OUEHT has a well-staggered 10.0%
debt maturity profile with no loans due until July 2016. It is 2013A 2014A 2015F 2016F 2017F
currently in the process of refinancing S$300m worth of interest

rate swaps that mature in July 2015. The intention is to extend
the debt maturity profile of the swap to at least 2017. ROE (%)
6.0%
Clearing the overhang on the stock price. OUEHT’s share price 5.0%
has been under pressure by the overhang from the potential 4.0%
capital raising to fund the acquisition of CPEX for S$205m. With 3.0%
the acquisition likely to take place in 2Q16, in line with the 2.0%
expected completion of CPEX, this overhang should soon be
1.0%
lifted. Moreover, this risk in our view has largely been priced in,
with our FY16F yield of 8.5% already imputing a S$125m 0.0%
2014A 2015F 2016F 2017F
equity raising at S$0.70 per share which is at a discount to the
current low share price.
(%)
Influx of tourists and lack of new supply. The performance of 10.9
+2sd: 10.1%
hospitality REITs is correlated to the growth in tourist arrivals 8.9
and hotel supply. Should Singapore receive an influx of tourists, 6.9 +1sd: 6.7%
sentiment towards OUEHT’s stock price will improve. In 4.9
addition, with no hotel sites being released by the government 2.9 Avg: 3.3%
over the last two years, this will constrain supply in the medium 0.9
term which should increase OUEHT’s scarcity value over time. ‐1sd: ‐0.1%
-1.12012 2013 2014 2015 2016
-3.1
Key Risks:
higher interest payments that the REIT has to make annually to PB Band (x)
service its loan. This reduces the income available for 1.3
(x)
distribution, which will result in lower DPU for unitholders. We
1.2
understand over 80% of the group’s borrowings are on fixed
rates. 1.1 +2sd: 1.09x
+1sd: 1.03x
1.0
Avg: 0.98x
Competitive landscape. The Singapore hospitality market has ‐1sd: 0.92x
0.9
been impacted by a decline in tourist arrivals this year. Any ‐2sd: 0.86x
further deterioration in demand would pose a downside risk to 0.8
our earnings estimates. 0.7

Dec-13 Jun-14 Dec-14 Jun-15 Dec-15
Company Background
OUE H-Trust is a Singapore-based REIT established with the Source: Company, DBS Bank
principal investment strategy of investing, directly or indirectly,
in a portfolio of income-producing hospitality assets.

Page 261 Page 3
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Gross revenue 51 116 125 134 140
Net Income 30 79 73 79 84
Tax 0 0 0 0 0
Net Inc available for Dist. 38 89 87 94 98 Growth in earnings largely
Growth & Ratio due to contribution from
Revenue Gth (%) N/A 128.8 7.8 7.6 4.2 recently acquired Crown
N Property Inc Gth (%) nm 130.2 6.1 7.8 4.1 Plaza Changi and its
Net Inc Gth (%) nm 166.5 (7.5) 9.1 5.3 extension in 2016
Dist to revenue (%) 75.3 76.8 69.8 70.2 70.2
10.2 9.6 11.3 10.9 9.6
to sales %)
ROAE (%) N/A 6.5 6.1 6.3 6.3
ROA (%) N/A 4.3 3.7 3.6 3.6
ROCE (%) N/A 5.3 5.0 4.8 4.9
Int. Cover (x) 3.9 6.9 4.2 4.3 4.2

Page 4 Page 262
Company Guide

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Net Income 19 21 18 17 20
Tax 0 0 0 0 0
Growth & Ratio
Revenue Gth (%) 1 7 (3) 1 10
N Property Inc Gth (%) 0 6 (5) 0 12
Net Inc Gth (%) 0 9 (11) (7) 17

FY Dec 2013A 2014A 2015F 2016F 2017F

Cash & ST Invts 61 31 30 27 21
Inventory 0 0 0 0 0
Debtors 17 9 9 9 9
Total Assets 1,834 1,797 2,089 2,296 2,293
ST Debt 0 0 0 0 0
Creditor 8 7 7 7 7
LT Debt 581 583 878 961 961
Non-Cash Wkg. Capital 8 0 0 0 0

Net Cash/(Debt) (521) (552) (848) (935) (941)
Increase in gearing due
Ratio to acquisition of
Current Ratio (x) 8.5 4.2 4.0 3.7 3.1 Crown Plaza Changi
Quick Ratio (x) 8.5 4.2 4.0 3.7 3.1 Airport and its future
Aggregate Leverage (%) 31.7 32.5 42.0 41.9 41.9 extension
Z-Score (X) 0.0 0.0 0.0 0.0 0.0

Page 263 Page 5
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Dep. & Amort. 0 0 0 0 0
Tax Paid 0 0 0 0 0
Chg in Wkg.Cap. 9 (14) 0 0 0
Net Invt in Properties (1,149) 0 (294) (210) (3)
Other Investing CF 0 0 0 0 0 Assuming S$125m
Net Investing CF (1,149) 0 (294) (210) (3) equity raising at S$0.70
Distribution Paid 0 (104) (87) (94) (98) per unit to fund the
Chg in Gross Debt 581 0 295 84 0 acquisition of Crown
New units issued 578 0 0 125 0 Plaza Changi Airport
Other Financing CF (3) (14) 0 0 0 and its future extension
Net Financing CF 1,156 (117) 208 114 (98)
Chg in Cash 61 (30) (1) (3) (6)

Free CFPS (S cts) (83.5) 6.7 (15.7) (8.2) 6.0
S$
Closing T arget
Pric e Price
1: 29 J an 15 0.94 1.02 BUY
0.95 2 4 2: 15 J un 15 0.93 0.98 BUY
3: 03 J ul 15 0.94 0.98 BUY
1 3
0.90 4: 16 J ul 15 0.93 1.01 BUY
5: 14 Aug 15 0.89 0.98 BUY
5
0.85
0.80
0.75
0.70
Source: DBS Bank

Page 6 Page 264
Parkway Life REIT
Edition 1 Version 1 | Bloomberg: PREIT SP | Reuters: PWLR.SI Refer to important disclosures at the end of this report
BUY Steady ship

Price Target : S$2.56 (13% upside) Steady ship in the midst of uncertainty. Parkway Life REIT
(Plife REIT) offers one of the strongest earning visibilities
Potential Catalyst: Acquisitions among S-REITs, with a weighted average lease expiry of close
Where we differ: We have forecasted acquisitions in our numbers to 9.9 years. Its Singapore operations (c.67% of revenues) are
forecasted to grow at CPI + 1%, ensuring that rental income
Analyst
Derek Tan +65 6682 3716 derektan@dbs.com keeps pace with inflation growth. The remaining 40% are
Mervin SONG + 65 6682 3715 mervinsong@dbs.com derived from its nursing homes and healthcare facilities in
Japan which offer long-term certainty given a weighted
average lease expiry of 14 years.
Price Relative
S$ Relative Index Optimism returns from Japan; acquisitions to grow
3.1 219 portfolio. After a portfolio recycling exercise in Japan, we
2.9
continue to see positive growth momentum for Plife REIT in
199
2.7
179
2.5
2.3
159 the country. The manager is aiming to acquire and bulk up its
2.1
139
exposure in Japan. Given a low gearing ratio of c.34.1% as of
119
1.9
1.7 99
3Q15, we see opportunities to grow via debt-funded
1.5
79
Jan-16
acquisitions. We have priced in S$80m of acquisitions @ 6.5%
Parkway Life Real Estate Investment Trust (LHS) yield in our forecast.
Relative STI INDEX (RHS)
Forecasts and Valuation Conservative balance sheet profile. Plife REIT has been
FY Dec (S$ m) 2014F 2015F 2016F 2017F
proactively refinancing its maturing debts in advance to
Net Property Inc 94 100 107 109 prevent any near-term refinancing risks. As a result, the REIT
Total Return 121 72 77 78 has no need for refinancing until 2016, with a weighted
Distribution Inc 73 82 78 79 average debt to maturity of 3.6 years and a low 1.5% cost of
EPU (S cts) 12.6 11.9 12.7 12.9
debt which is fully hedged.
EPU Gth (%) 15 (5) 6 2
DPU (S cts) 11.5 *13.1 12.2 12.4
DPU Gth (%) 7 14 (7) 2 Valuation:
NAV per shr (S cts) 171.1 170.0 170.5 170.9 Our target price is maintained at S$2.56, based on DCF. The
PE (X) 18.1 19.0 17.9 17.6 stock offers attractive yields of >5%.
P/NAV (x) 1.3 1.3 1.3 1.3
ROAE (%) 7.5 7.0 7.4 7.5 Currency risks. Plife REIT derives c.34% of its earnings from
its healthcare assets in Japan. Thus, foreign exchange volatility
Distn. Inc Chng (%): - - - is expected to hit earnings as distributions are based on SGD.
*Inclusive of one-off gains
Mkt. Cap (S$m/US$m) 1,373 / 963
Parkway Holdings (%) 35.7
Bank of New Yorkl (%) 7.0
Britten Holdings (%) 6.4
Free Float (%) 50.9

Page 265
ed: TH / sa: JC
Company Guide
Parkway Life REIT

200
101.9%
180
160 99.9%
Strong income visibility backed by long leases. Plife REIT 120
95.9%
100
offers one of the strongest earning visibilities among S-REITs, 80 93.9%
with a weighted average lease expiry of close to 9.9 years. As 60 91.9%
40
of 2Q16, Plife REIT derived c.67% of its revenues from its 20
89.9%
Singapore hospitals which income is pegged to a revenue 0

2013A 2014F 2015F 2016F 2017F
87.9%
formula where the master-lessee, its sponsor IHH Group, will

pay the REIT the higher of (i) Base Rent + variable rent
pegged to higher performance or (ii) CPI + 1% formula on 94%
26
previous year rent. This structure 94%
allows Plife REIT to grow its rental by at least 1% per annum 25

94%
and to protect its rental income from being eroded due to 24

94%
inflation. 23
93%
22 93%
The remaining 33% of its revenues were from its investments 21 93%
in nursing homes and healthcare-related facilities in Japan, 20 93%
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
where Plife REIT owned 47 properties as of 3Q15. The
average lease term to expiry is 14 years, which offers strong Net Property Income Net Property Income Margin %
income visibility to the REIT. Distribution Paid / Net Operating CF

1.0 (x)
Capital recycling strategy to fund acquisitions. 0.9
The REIT divested seven Japan properties at S$88.3m with an 0.8

exit yield of 5.9% and acquired seven Japan properties at 0.7
S$126.1m with a yield of 6.4%, disposing of its lower- 0.6
performing assets to acquire higher-yielding ones. The 0.5
changes in portfolio are in line with management’s previously 0.4
stated rebalancing strategy to enhance the quality and
0.3
diversify the REIT’s exposure within Japan, and keep its 2013A 2014F 2015F 2016F 2017F
portfolio contemporary. Thus, we expect the REIT to continue

Interest Cover (x)
to accumulate steady earnings going forward. The manager (x)
has also taken a 5-year hedge to lock in cash flows from the 10.20
10.00
new target acquisition. 9.80
9.60
3Q16 results in line. Top-line and net property income 9.40

9.20
grew by 2.5% and 2.4% y-o-y to S$25.9m and S$24.3m 9.00
respectively. This was on the back of higher-yielding 8.80
properties in Japan post asset recycling and higher rents from 8.60
its Singapore properties due to the increase in the variable 8.40

8.20
lease structure. 2013A 2014F 2015F 2016F 2017F
Distributable income rose 15.6% to S$20.3m, inclusive of a
divestment gain of S$2.3m (S$18.0m driven from core
earnings). Thus, DPU rose by 15.6% to 3.36 Scts. DPU would
have grown by 2.5% y-o-y from recurring operations.

Page 2 Page 266
Company Guide
Parkway Life REIT

Balance Sheet: <!ANCGRAPH_Aggregate Leverage Reits (1.6,3.2)/>
Ample debt headroom. At a gearing of c.36%, it provides
the REIT with greater financial flexibility and headroom to
acquire opportunistically and to fund the acquisitions via
debt. At an assumed management’s range of 40-45%, it
gives additional headroom of S$153.2-317.5m for
acquisitions that will boost asset value by 9-19%.
No refinancing needs in the near term. Plife REIT has been

proactively refinancing its maturing debts in advance to
prevent any near-term refinancing risks. As a result, the REIT
has no need for refinancing until 2017, with a weighted ROE (%)
average debt to maturity of 3.7 years and a low 1.5% 7.0%
average cost of debt in 3Q15. Close to 78% of its interest
6.0%
rate exposure has been hedged.
5.0%
4.0%
3.0%
More opportunities for accretive acquisitions. Given that
medical tourism in Singapore is expected to double from 2.0%
S$1bn by 2020, there would be rising demand for medical 1.0%
services. We anticipate Plife REIT to leverage on its 0.0%

2013A 2014F 2015F 2016F 2017F
specialisation in medical care properties as it acquires
opportunistically to meet the growing demand which would
provide higher distributions to buoy its share price. Distribution Yield (%)
(%)
6.3
Safe haven in uncertain times. We expect Plife REIT’s 5.8 +2sd: 5.8%

strong income visibility to be a valued trait in the current
5.3 +1sd: 5.3%
uncertain economic climate. The stock offers attractive yields
Avg: 4.9%
in excess of 5.0% which is attractive in our view. 4.8
‐1sd: 4.4%
4.3
Key Risks: ‐2sd: 4%

3.8
Interest rate risks. Any increase in interest rates will result
3.3
in higher interest payments (if it coincides with a loan 2012 2013 2014 2015 2016
maturity) that the REIT has to make annually to service its

loan. This reduces the income available for distribution, PB Band (x)
which will result in a lower distribution per unit (DPU) for 2.0
(x)
unitholders. 1.9
1.8
Currency risks. Plife REIT derives c.34% of its earnings from 1.7
+2sd: 1.61x
1.6
its healthcare assets in Japan. Thus, foreign exchange 1.5 +1sd: 1.5x
volatility is expected to hit earnings as distributions are 1.4 Avg: 1.39x
based on SGD. However, we note that the trust has 1.3
‐1sd: 1.28x
1.2
conservatively hedged its foreign income exposures on a 1.1
‐2sd: 1.17x
long-term basis. 1.0

Company background
Parkway Life REIT is one of Asia's largest listed healthcare Source: Company, DBS Bank
REITs. It invests in income-producing real estate and real
estate-related assets used primarily for healthcare and
healthcare-related purposes.

Page 267 Page 3
Company Guide
Parkway Life REIT
Key Assumptions
FY Dec 2013A 2014F 2015F 2016F 2017F
CPI yoy (%) 4.60 2.40 1.00 1.00 2.00
Segmental Breakdown
FY Dec 2013A 2014F 2015F 2016F 2017F
Revenues (S$ m)
Singapore 61 63 64 66 68
Japan Nursing homes 32 37 44 49 49
Malaysia 0 0 1 1 1
Total 94 100 108 115 117
NPI (S$m) (S$ m)
Singapore 58 59 61 62 64
Japan Nursing homes 29 34 39 44 44
Malaysia 0 0 0 0 0
Total 88 94 100 107 109
NPI (S$m) Margins (%)
Singapore 94.9 94.7 94.7 94.7 94.7
Japan Nursing homes 91.1 91.6 90.0 90.0 90.0
Malaysia 69.2 69.0 69.0 69.0 69.0
Total 93.5 93.4 92.7 92.6 92.6

FY Dec 2013A 2014F 2015F 2016F 2017F
Gross revenue 94 100 108 115 117
Net Income 73 89 78 83 85
Tax (6) (13) (6) (7) (7) Forecasted acquisitions
Total Return 98 121 72 77 78
Growth & Ratio
Revenue Gth (%) (0.4) 7.1 7.7 6.7 1.7
Net Inc Gth (%) 0.8 14.8 (5.1) 6.2 1.6
Dist to revenue (%) 72.6 72.4 76.0 67.3 67.2
10.8 10.4 11.5 11.3 11.5
to sales %)
ROAE (%) 6.8 7.5 7.0 7.4 7.5
ROA (%) 4.4 4.8 4.3 4.4 4.3
ROCE (%) 4.8 4.5 4.9 5.0 5.0
Int. Cover (x) 9.5 10.1 9.4 8.9 9.1

Page 4 Page 268
Company Guide
Parkway Life REIT

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Exceptional Gain/(Loss) 1 1 (2) 1 (4)
Net Income 20 33 18 21 15
Tax (1) (8) (2) (1) (1)
Minority Interest 0 0 0 0 0 Steady returns from portfolio
Net Income after Tax 18 25 16 19 14 of hospitals in SG and Japan
Growth & Ratio
Revenue Gth (%) 0 (1) (1) 4 5
N Property Inc Gth (%) 0 (1) (1) 4 5 The manager is paying out
Net Inc Gth (%) 8 34 (33) 16 (27) divestment gains in 2015

FY Dec 2013A 2014F 2015F 2016F 2017F

Cash & ST Invts 27 146 144 144 144
Inventory 0 0 0 0 0
Debtors 10 10 11 12 12
Total Assets 1,528 1,669 1,712 1,798 1,801
ST Debt 4 81 81 81 81
Creditor 15 21 26 28 28
LT Debt 497 503 543 623 623
Unit holders’ funds 986 1,035 1,028 1,031 1,034

Net Cash/(Debt) (474) (438) (480) (560) (560)
Ratio Forecasted gearing to
Current Ratio (x) 1.8 1.5 1.4 1.3 1.3 rise to c.39.1%
Quick Ratio (x) 1.8 1.5 1.4 1.3 1.3
Z-Score (X) 1.9 1.7 1.6 1.5 1.5

Page 269 Page 5
Company Guide
Parkway Life REIT

FY Dec 2013A 2014F 2015F 2016F 2017F
Dep. & Amort. 0 0 0 0 0
Tax Paid (4) (4) 0 (6) (7)
Other Operating CF 5 (5) 0 0 0
Net Invt in Properties (90) 5 (45) (85) (3)
Net Investing CF (90) 5 (45) (85) (3)
Net Financing CF 15 39 (39) 6 (75)
Currency Adjustments (4) (4) 0 0 0
Chg in Cash (3) 119 (2) 0 0

Free CFPS (S cts) (2.3) 13.9 6.1 (1.1) 12.4
2.59
S$
S.No. Dat e Rat ing
Pric e Price
2.49 1: 28 J an 15 2.40 2.66 BUY
2: 18 Mar 15 2.31 2.66 BUY
2.44
3 3: 10 Aug 15 2.45 2.69 BUY
2.39 4: 07 Oct 15 2.27 2.56 BUY
1 5: 05 Nov 15 2.33 2.56 BUY
2.34 2
2.29 4 5
2.24
2.19
2.14
2.09
Source: DBS Bank

Page 6 Page 270
Religare Health Trust
Edition 1 Version 1 | Bloomberg: RHT SP | Reuters: RELI.SI Refer to important disclosures at the end of this report
HOLD Fairly priced

Price Target : S$0.97 (4% downside) Strong outlook is priced in. We maintain our HOLD
recommendation with TP of S$0.97. While we are positive on
Potential Catalyst: Acquisitions and strengthening of INR Religare Health Trust (RHT)’s expansion plans and exposure to
Where we differ: In line with consensus the growing demand for healthcare services in India, we
believe these attractive attributes have largely been priced in.
Analyst
Mervin Song CFA CFA +65 6682 3715 mervinsong@dbs.com Development and asset enhancement initiatives to drive future
growth. Looking ahead, we expect RHT to continue to deliver
decent organic growth on the back of a robust outlook in the
Price Relative Indian healthcare sector and steady increase in average
S$ Relative Index revenue per operating bed (ARPOB). Inorganic initiatives
1.2
1.2
212 include (i) ongoing development projects at BG Road and
1.1
1.1
192
Ludhiana will add another 279 beds (investment value of
172
1.0
1.0
152 S$48.2m) by FY17, and (ii) planned asset enhancement
0.9
0.9
132
initiatives at various clinical establishments, adding 292 beds
112
0.8
0.8
92
(investment cost of c.S$20m) over FY16-17.
0.7 72
Low gearing. RHT has significant balance sheet headroom,

Religare Health Trust (LHS) Relative STI INDEX (RHS)
with gearing at only 12.1% as at end-Sept 2015. This is
Forecasts and Valuation among the lowest in the S-REIT/property business trust space.
FY Mar (S$ m) 2014A 2015A 2016F 2017F
This would allow RHT to easily support its expansion plans
Net Property Inc 52 73 78 88 and/or pursue accretive acquisitions.
EPU (S cts) 3.7 4.0 5.9 6.5 We maintain our DDM-based TP of S$0.97. Given limited
EPU Gth (%) nm 9 46 9
upside to our TP, we reiterate our HOLD recommendation.
DPU (S cts) 8.2 7.3 8.0 8.7
DPU Gth (%) 131 (11) 9 9
PE (X) 27.4 25.2 17.2 15.7 The key risk to our neutral stance is stronger than expected
earnings and/or INR. Additional upside could also arise from
P/NAV (x) 1.1 1.1 1.1 1.1
Aggregate Leverage (%) 7.5 12.3 14.7 15.3 acquisitions.
ROAE (%) 4.1 4.3 6.2 6.9
At A Glance
Distn. Inc Chng (%): - - Issued Capital (m shrs) 798
Consensus DPU (S cts): 7.9 8.8 Mkt. Cap (S$m/US$m) 810 / 568
RHC Holding (%) 27.7
Source of all data: Company, DBS Bank, Bloomberg Finance L.P FIL Ltd (%) 4.7
Free Float (%) 67.9

Page 271
ed: JS / sa: JC
Company Guide

CRITICAL DATA POINTS TO WATCH Error 2042
100
62.5%
90
80
60.5%
Leveraged on growing demand for healthcare services in 60

58.5%
50
India. RHT derives its revenue from service fees payable by 40
56.5%
Fortis Healthcare, a leading integrated healthcare services 30 54.5%

20
provider in India, through base and variable fees. Variable 10
52.5%
fees are calculated at 7.5% of operating revenue, rather than 0

2013A 2014A 2015A 2016F 2017F
50.5%
profit. This provides upside potential as Fortis continues its

growth trajectory on the back of rising demand for healthcare
services in India. We project 6-9% growth in underlying 2 70%
hospital revenues over the next 3-5 years. This is on top of 2 60%
the 3% p.a. increase in base fees. 2

50%
2
2 40%
Clear and visible organic growth pipeline. RHT currently has 2 30%
2,644 beds in operation across 18 properties spread through 2

20%
2
India. With installed capacity of 3,590 beds and potential bed 2
10%
capacity of 4,964 beds, RHT offers investors a visible organic 1 0%
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
growth pipeline. Over the next couple of years (FY16-17),
RHT plans to add 292 beds (investment cost of c.S$20m) Net Property Income Net Property Income Margin %
across its facilities which should drive earnings over the Distribution Paid / Net Operating CF
medium term. 1.2
(x)
1.0
Larger developments also on offer. Beyond the visible growth
0.8
plans, RHT has an active development pipeline. These include
(1) Ludhianna greenfield project which consist of 79 beds 0.6
focusing on mother & child programmes; and (2) BG Road 0.4
brownfield project which will add 200 beds with the 0.2
development related primarily to oncology services and 0.0
operating theatres. Both projects are due to be completed in 2013A 2014A 2015A 2016F 2017F
FY17 with estimated costs of INR775.8m (S$16.7m) and Interest Cover (x)
INR1.3bn (S$27.9m) respectively. In addition, RHT has (x)
35.00
ambitions to expand the Mohali property. Preliminary plans
call for an additional 500 beds with a total cost of INR2.1bn 30.00
(S$44.5m). The specialties and completion date have yet to 25.00
be determined. 20.00
15.00
Prudent hedging to mitigate against FX volatility. Given that 10.00

RHT’s distributions are denominated in SGD, to manage its FX 5.00
exposure, RHT hedges its cashflows from India one year 0.00
forward. Thus, for the coming year, the trust has entered into 2013A 2014A 2015A 2016F 2017F
hedges at INR 49.88-50.23 to SGD 1. Source: Company, DBS Bank
Acquisitions lead growth. Beyond the growth drivers

identified above, given RHT’s low gearing of only 12.1%, we
expect RHT to use its balance sheet to pursue attractive
investment opportunities.

Page 2 Page 272
Company Guide

Balance Sheet:
Conservative balance sheet. RHT has a conservative balance 16.0%
sheet with gearing at c.12%. This provides the trust with 14.0%
financial flexibility to pursue further expansion of the bed 12.0%

10.0%
capacity at its hospitals and/or acquisitions. To manage its 8.0%
interest rate exposure, approximately 45.5% of its 6.0%
borrowings are on fixed rates. 4.0%

2.0%
0.0%
Share Price Drivers: 2013A 2014A 2015A 2016F 2017F
Range bound for now. Despite the attractive yield on offer

and decent growth prospects we believe RHT’s share price
will be range bound in the near term due to the following ROE (%)
factors: (1) volatility in the equity markets - due to RHT’s
smaller market cap, institutional investors may gravitate 6.0%
towards more liquid stocks, and (2) limited upside to our TP 5.0%
of S$0.97. 4.0%
3.0%
Faster than expected strengthening of INR. A key driver for
2.0%
RHT’s share price is the change in SGDINR exchange rate.
Should INR strengthen significantly from our assumed long 1.0%
term exchange of 46, there is upside risk to RHT’s target 0.0%

2013A 2014A 2015A 2016F 2017F
price.
Key Risks: Distribution Yield (%)

(%)
Currency risks. As income for RHT is distributed in Singapore
+2sd: 12.7%
dollars, while it is derived in Indian Rupees, an adverse 12.1
movement in INR will impact distributable income. We 10.1

+1sd: 9%
8.1
estimate that every 1% change in SGD/INR rate will impact
6.1
DPU by 1%. Avg: 5.3%
4.1
2.1
Interest rate risks. Any increase in interest rate will result in ‐1sd: 1.6%
0.1
higher interest payments (if it coincides with a loan maturity) 2012 2013 2014 2015 2016
-1.9
that the REIT has to make annually to service its loans. This
reduces the income available for distribution, which will
result in lower distribution per unit (DPU) to unitholders. PB Band (x)
1.3
(x)
Company Background
1.2
Religare Health Trust (RHT) is structured as a business trust, +2sd: 1.16x
comprising healthcare assets in India. Its investment 1.1
+1sd: 1.08x
mandate is to principally invest in medical and healthcare 1.0 Avg: 1x
assets in India, Australasia and emerging markets. ‐1sd: 0.92x
0.9
‐2sd: 0.84x
0.8
0.7

Page 273 Page 3
Company Guide

FY Mar 2013A 2014A 2015A 2016F 2017F
Gross revenue 43 96 131 136 154
Exceptional Gain/(Loss) (14) 0 (5) 0 0
Net Income (6) 44 51 61 67
Tax (6) (15) (19) (14) (15)
Net Income After Tax (12) 29 32 47 52
Total Return (12) 29 32 47 52
Net Inc available for Dist. 20 47 58 64 70 Uplift in earnings due to
Growth & Ratio growth in demand for
Revenue Gth (%) N/A 123.9 36.0 3.9 12.9 healthcare services and
N Property Inc Gth (%) nm 129.5 39.0 7.1 12.3 incremental additions to
Net Inc Gth (%) nm nm 9.4 47.2 9.9 bed capacity.
Net Income Margins (%) (27.6) 30.3 24.4 34.6 33.7
Dist to revenue (%) 46.8 48.5 44.4 46.9 45.3
24.3 6.4 7.7 7.5 6.9
to sales %)
ROAE (%) (1.7) 4.1 4.3 6.2 6.9
ROA (%) (1.2) 3.0 3.1 4.2 4.6
ROCE (%) 1.7 4.3 5.1 6.3 7.1
Int. Cover (x) 11.0 29.5 11.7 10.1 7.9

Page 4 Page 274
Company Guide

FY Mar 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016
Exceptional Gain/(Loss) (1) (1) (5) 5 (2)
Net Income 14 16 16 16 15
Tax (4) (4) (6) (4) (4)
Growth & Ratio
Revenue Gth (%) 0 2 5 (1) 4
N Property Inc Gth (%) 27 5 10 (11) 4
Net Inc Gth (%) 110 11 (10) 18 (11)

FY Mar 2013A 2014A 2015A 2016F 2017F

Other LT Assets 175 182 202 200 199
Cash & ST Invts 100 77 72 72 71
Inventory 0 0 0 0 0
Debtors 20 22 25 26 30
Total Assets 963 958 1,124 1,136 1,126
ST Debt 3 3 62 62 62
Creditor 6 6 7 7 8
LT Debt 62 62 64 90 94
Total Funds & Liabilities 963 958 1,124 1,136 1,126

Net Cash/(Debt) 35 13 (54) (81) (86)
Ratio
Current Ratio (x) 1.2 1.2 0.6 0.6 0.6
Quick Ratio (x) 1.2 1.2 0.6 0.6 0.6
Z-Score (X) 1.7 2.1 1.5 1.4 1.4

Page 275 Page 5
Company Guide

FY Mar 2013A 2014A 2015A 2016F 2017F
Pre-Tax Income (6) 44 51 61 67

Dep. & Amort. 7 13 12 14 15
Tax Paid (2) (19) (20) (14) (15)
Chg in Wkg.Cap. (22) (19) (3) (1) (2)
Other Invts (net) (16) 9 0 0 0
Net Investing CF (18) 4 (63) (26) (3)
Distribution Paid 0 (43) (52) (64) (70)
Chg in Gross Debt (455) (3) 55 27 4
Other Financing CF (1) 0 0 0 0
Net Financing CF 25 (46) 3 (37) (66)
Chg in Cash 15 (7) (4) 0 (1)

Free CFPS (S cts) 0.8 3.9 (1.6) 4.7 8.0
S$
S.No. Dat e Rat ing
Pric e Pric e
1: 16 F eb 15 1.05 1.06 HOLD
1.08 2
2: 28 May 15 1.05 1.04 HOLD
1.03 3: 19 Aug 15 1.02 1.05 HOLD
1 4: 07 Oct 15 0.97 0.97 HOLD
3 4 5: 19 Nov 15 0.96 0.97 HOLD
0.98
0.93 5
0.88
0.83
0.78
Source: DBS Bank

Page 6 Page 276
Soilbuild Business Space REIT
Edition 1 Version 1 | Bloomberg: SBREIT SP | Reuters: SBSR.SI Refer to important disclosures at the end of this report
BUY Niche industrial player

Price Target : S$0.88 (16% upside,9% dividend) BUY for attractive and growing yields. We continue to like
SBREIT's ability to drive steady earnings; supported by a long
Potential Catalyst: Acquisitions WALE of 4.4 years, and having 48% of its income backed by
Where we differ: Our estimates do not include acquisitions long leases. The stock offers attractive FY16-17F yields of
c.8.8%-9.0%.
Analyst
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com Acquisitions to drive earnings; as portfolio undergoes tenant
churn. SBREIT has been active in acquisitions which we believe
are keys to complementing a moderating organic growth
Price Relative
S$
profile, given the current competitive operating landscape.
Relative Index
1.0 Looking ahead, we are forecasting SBREIT to deliver 1-3%
1.0
0.9
203
growth in distributions mainly from rental hikes and
183
0.9
163
contribution from its recent acquisitions. Upside will come
from the execution of asset purchases that is not factored into
0.8
143
0.8
0.7
123
our numbers yet.
0.7 103
0.6 83
Conservative capital management offers comfort that REIT is

Aug-13 Feb-14 Aug-14 Feb-15 Aug-15
Soilbuild Business Space Reit (LHS) Relative STI INDEX (RHS)

shielded substantially from rate hikes in the immediate term.
Forecasts and Valuation The manager has lengthened its debt expiry profile to 4.5 years
FY Dec (S$ m) 2014A 2015F 2016F 2017F with a reduced all-in cost of debt of 3.2%, and hedged in
Gross Revenue 68 82 86 88 close to 98% into fixed rates for the next 2.1 years (as of
Total Return 42 47 52 54 3Q15). This will enable the REIT to weather any interest rate
Distribution Inc 50 57 60 62 uncertainty in the medium term.
EPU (S cts) 5.2 5.3 5.5 5.7
EPU Gth (%) 180 1 6 3 Valuation:
DPU (S cts) 6.2 6.3 6.4 6.6
We have a DCF-backed TP of S$0.88, supported by an
DPU Gth (%) 173 2 1 3
NAV per shr (S cts) 80.0 80.2 80.1 80.0 attractive yield of close to 9%. Maintain BUY.
PE (X) 14.7 14.6 13.8 13.3
Distribution Yield (%) 8.1 8.3 8.4 8.6 Key Risks to Our View:
P/NAV (x) 1.0 1.0 1.0 1.0 Interest rate risks. Rise in interest rates in the medium term will
ROAE (%) 6.5 6.8 6.9 7.2 have a negative impact on distributions but the manager has
substantially hedged out these risks with a high % of fixed rate
Distn. Inc Chng (%): - - - borrowings.
At A Glance
Source of all data: Company, DBS Bank, Bloomberg Finance L.P Mkt. Cap (S$m/US$m) 715 / 501
Major Shareholders
Chap Huat Lim (%) 24.4
Jinquan Tong (%) 7.0
Free Float (%) 59.9

Page 277
ed: TH / sa: JC
Company Guide

100
90 91.6%
80
70
60 87.6%
50
Well-staggered lease expiry profile offering income 40
85.6%
stability. SBREIT had a healthy weighted average lease to 30 83.6%

20
expiry of 4.4 years by NLA as of 3Q15. Embedded in SBREIT’s 10
81.6%
portfolio, 48% of net property income is derived from master 0 79.6%

2013A 2014A 2015F 2016F 2017F
lease agreements that provide long-term leases ranging from
5 to 15 years which contain annual escalations in the range
of 2.0-5.0%, ensuring a steady growth profile.
Steady occupancy rates; manager to focus on tenant 19 87%
86%
retention rate. In view of the increasing supply outlook, the 17
86%
manager of SBREIT has looked to forward renew expiring 15
85%
leases with the aim of maintaining a high level of portfolio 13 85%
occupancy. As of 3Q15, SBREIT had reduced lease expiry to 11

84%
8.5% of NLA and 8.6% of rental income for FY15 and is 84%
9
currently engaging expiries in FY16. 83%
7 83%
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
Outlook remains modest with rental reversions expected to
moderate for its main properties (West Park Biz Central and Net Property Income Net Property Income Margin %
Tuas Connection). Given the competitive industrial landscape,

the manager is targeting to retain tenants rather than
pushing rents higher which are, in our view, a right strategy (x)
that will result in earnings remaining resilient. 1.0
0.9
0.8
Acquisitions to complement a steady growth profile. 0.7
The manager has been one of the more active industrial S- 0.6
REIT managers. SBREIT has rights of first refusal to four assets 0.5
0.4
that measure up to a maximum potential GFA of 2.3m sq ft,
0.3
thus we expect to see more acquisitions in the medium term 0.2
which will further expand the portfolio. 0.1
2013A 2014A 2015F 2016F 2017F
3Q15 results another quarter of stability. 3Q15 revenues and Source: Company, DBS Bank
net property income increased by 22.4% and 25.3%
respectively. The increase came from acquisitions (namely
Technics, KTL Offshore, Speedy Tech) as well as annual rental
uplifts (Solaris). Interest expenses increased mainly due to a
larger portfolio. Distributable income grew 20.8%; DPU up
5.1% due to a larger unit base.

Page 2 Page 278
Company Guide

Balance Sheet:
Gearing remains within management's comfort level.
SBREIT's current gearing remains at the lower end of 35.0%
management’s range of 35-40% which provides sufficient 30.0%
headroom and financial flexibility for the REIT to acquire 25.0%
opportunistically. We understand that the manager is still 20.0%

keen to pursue acquisitions, but remains disciplined in its 15.0%
approach given the competitive environment.
10.0%
2013A 2014A 2015F 2016F 2017F
Prudent capital management; conservative 98% of

interest costs hedged into fixed rates. The manager has
lengthened its debt expiry profile to 4.5 years with a reduced ROE (%)
all-in cost of debt of 3.2%, and hedged in close to 98% into 7.0%
fixed rates for the next 2.1 years (as of 3Q15). 6.0%
5.0%
High yields of 8.8-9.0%; one of the highest among the
3.0%
S-REITs. SBREIT currently offers one of the highest yields
2.0%
among industrial REITs. We believe this is unjustified given the
REIT’s superior portfolio of high quality industrial assets with a 1.0%
niche exposure in the business park segment, performance 0.0%

2013A 2014A 2015F 2016F 2017F
which we believe will be more resilient than peers. In
addition, with 48% of its income pegged to single-tenant
properties, we believe that SBREIT offers one of the strongest Distribution Yield (%)
(%)
income visibilities among industrial REITs.
+2sd: 10.2%
9.4
Better-than-expected operational performance. Better- 7.4

+1sd: 6.9%
than-projected rental reversions from its main assets - namely 5.4
West Park Biz Central and Tuas Connection - will mean 3.4 Avg: 3.6%
upside to our DPU forecasts, implying higher TPs. In addition, 1.4
with investors’ concerns of rising vacancy risks due to ‐1sd: 0.3%
-0.62012 2013 2014 2015 2016
increased competition from new completing supply, the
-2.6
ability to maintain a sustained occupancy profile will lift
investors’ confidence in SBREIT’s ability to deliver consistent
returns over time. PB Band (x)
1.2
(x)
Key Risks:
Higher interest rates. Any increase in refinancing rates will 1.1
+2sd: 1.07x
negatively impact distributions. Thoce manager has put in +1sd: 1.03x
1.0
place interest rate swaps/MTNs of 1-4 years to essentially Avg: 0.98x
‐1sd: 0.94x
convert c.98% of its debt into fixed rates. 0.9 ‐2sd: 0.9x
0.8
Company background
Soilbuild Business Space REIT is a real estate investment trust 0.7
that invests in income-producing real estate used primarily Aug-13 Feb-14 Aug-14 Feb-15 Aug-15
for business space purposes in Singapore. Its flagship asset is

Solaris, located in the one-north business park. Source: Company, DBS Bank

Page 279 Page 3
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Net Income 15 42 47 52 54 Growth mainly driven by
acquisitions and steady
Tax 0 0 0 0 0
rental reversion profile
Growth & Ratio
Revenue Gth (%) (55.3) 177.4 19.6 5.0 2.8
Net Inc Gth (%) (25.7) 180.7 12.6 9.8 3.8
Dist to revenue (%) 74.3 73.6 70.0 70.2 70.4
9.4 9.6 11.2 7.9 7.9
to sales %)
ROAE (%) 2.3 6.5 6.8 6.9 7.2
ROA (%) 1.6 4.2 4.2 4.3 4.4
ROCE (%) 2.0 5.1 5.3 5.4 5.6
Int. Cover (x) 5.5 5.3 5.0 4.9 5.0

Page 4 Page 280
Company Guide

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Net Income 10 11 11 12 13
Tax 0 0 0 0 0
Total Return 10 11 11 12 13 Results show a steady
Non-tax deductible Items 2 2 2 3 3 increase due to acquisitions
Growth & Ratio
N Property Inc Gth (%) 1 5 6 6 6
Net Inc Gth (%) (2) 11 (1) 5 8
NPI margins show a steady
increase mainly due to
contribution from acquisitions
which are on triple-net
FY Dec 2013A 2014A 2015F 2016F 2017F master-lease structures
Investment Properties 935 1,031 1,186 1,188 1,190
Cash & ST Invts 20 21 23 26 29
Inventory 0 0 0 0 0
Debtors 0 1 1 1 1
Total Assets 955 1,054 1,212 1,216 1,221
ST Debt 0 95 95 95 95
Creditor 9 9 8 9 9
LT Debt 275 274 282 282 282
Total Funds & Liabilities 955 1,054 1,212 1,216 1,221

Net Cash/(Debt) (255) (348) (353) (350) (347)
Ratio Gearing remains steady
Current Ratio (x) 2.2 0.2 0.2 0.3 0.3
Quick Ratio (x) 2.2 0.2 0.2 0.3 0.3
Z-Score (X) 1.3 1.1 1.0 1.1 1.1

Page 281 Page 5
Company Guide

FY Dec 2013A 2014A 2015F 2016F 2017F
Dep. & Amort. 0 0 0 0 0
Tax Paid 0 0 0 0 0
Chg in Wkg.Cap. 0 3 (1) 0 0
Net Investing CF (799) (95) (100) (2) (2)
Net Financing CF 797 42 48 (54) (55)
Chg in Cash 20 1 2 3 3

Free CFPS (S cts) (96.3) (5.1) (5.0) 6.0 6.2
S$
Closing T arget
S.No. Dat e Rat ing
Pric e Price
0.88 4
1: 23 J an 15 0.80 0.92 BUY
6 2: 17 Mar 15 0.80 0.92 BUY
3: 30 Apr 15 0.83 0.91 BUY
0.83
4: 22 J ul 15 0.87 0.95 BUY
2 3
5 5: 19 Aug 15 0.82 0.86 BUY
6: 16 Oct 15 0.84 0.88 BUY
0.78 1
0.73
0.68
Source: DBS Bank

Page 6 Page 282
SPH REIT
Edition 1 Version 1 | Bloomberg: SPHREIT SP | Reuters: SPHR.SI Refer to important disclosures at the end of this report
HOLD The paragon of orchard road

Last Traded Price: S$0.96 (STI : 2,834.23) Stock is fairly priced. We currently have a HOLD
Price Target : 12-Month S$ 0.99 (4% upside) recommendation, with TP of S$0.99. SPH REIT's dividend yield
of 5.8% reflects the strength of its assets and stability of
Potential Catalyst: Acquisitions
earnings. However, at this point we believe that comparable
Where we differ: We are more bullish on Orchard Road rentals
retail S-REITs offer more attractive yields.
Analyst
Derek Tan +65 6682 3716 derektan@dbs.com Paragon to continue to drive earnings growth. We believe that
Mervin Song CFA +65 6682 3715 mervinsong@dbs.com Paragon will continue to outperform the rest of Orchard Road
for both retail and office assets, due to the property’s (a)
location and frontage in the prime Orchard Road shopping
Price Relative
S$ Relative Index
district, as well as (b) proximity to the Mount Elizabeth medical
1.2 cluster. As such, we assume reversions of 3.5-4% for Paragon.
209
At Clementi Mall, while income is supported by the Sponsor’s
1.2
1.1 189
1.1 169 income support, upside to rents in the near term appears limited
1.0
1.0
149
due to minimal lease expiries until 2017.
129
0.9
0.9 109 Strong rebound in tenant sales at Clementi Mall. Paragon
achieved healthy reversions of 9.6% despite a 3.2% drop in
0.8 89
Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
SPH REIT (LHS) Relative STI INDEX (RHS) tenant sales, and occupancy costs were 19.0%. Meanwhile at
Clementi Mall, full year reversions were down 5.6% (albeit for
FY Aug (S$ m) 2014A 2015A 2016F 2017F only 5% of NLA). More encouragingly, tenant sales at Clementi
Gross Revenue 202 205 218 226 Mall rebounded 3.6% to S$242m, translating to healthy
Net Property Inc 151 156 158 164 occupancy costs of 14.6%.
Total Return 217 154 122 127
EPU Gth (%) (3) 2 4 4 We currently have a DCF-backed target price of S$0.99,
DPU (S cts) 5.4 5.5 5.5 5.7 implying a dividend yield of 5.8% for FY16. The stock has
DPU Gth (%) (4) 1 1 2
outperformed other retail REITs in recent months, as we believe
NAV per shr (S cts) 93.0 94.3 93.6 93.0
PE (X) 21.1 20.6 19.9 19.2 investors have been drawn to the REIT’s resilient earnings profile
Distribution Yield (%) 5.7 5.7 5.8 5.9 and conservative balance sheet. With limited upside to our TP,
P/NAV (x) 1.0 1.0 1.0 1.0 we maintain our HOLD call.
ROAE (%) 5.0 4.9 5.1 5.3
Rise in interest costs. SPH REIT’s all-in cost of debt stands at
Consensus DPU (S cts): 5.6 5.7 2.55%, with c.85% of borrowings in fixed rates. In a rising
Other Broker Recs: B: 0 S: 1 H: 5 interest rate environment, we see higher-than-expected
interest costs when the Trust refinances its next floating-rate
tranche of S$250m (c.30% of total debt) in 2016.
At A Glance
Mkt. Cap (S$m/US$m) 2,420 / 1,697
Major Shareholders
Singapore Press Holdings (%) 69.1
Free Float (%) 30.9

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SPH REIT

200
82.8%
180
Maximising mall efficiency to generate higher yields. In 140

120
78.8%
Paragon, the additional 7k sqft of NLA generated by the 100

76.8%
80 74.8%
chiller decanting project has completed and fully committed, 60 72.8%
generating a ROI of >7%. With all tenants having 40
70.8%
20
commenced operations by August 2015, the space is 0 68.8%
expected to generate additional revenue of c.S$1m p.a. In 2013A 2014A 2015A 2016F 2017F
addition, the Manager plans to convert some 7k sqft of space Net Property Income Net Property Income Margin %
currently occupied by the Air Handling Units (AHU) into

additional retail NLA. This project will be spread over three
years from Sep-15 to Mar-18, in order to coincide with the Quarterly Net Property Income and Margins (%)
various lease expiries of tenants in the area. When completed, 78%
41 77%
the additional NLA is expected to contribute to incremental 40 76%
revenue for the REIT. 39 75%
38 74%
Stable earnings profile over FY16 and FY17. SPH REIT 37 73%
secured rental reversions 8.6% for FY15 (+9.1% for Paragon; 36 72%
35 71%
-5.6% for Clementi Mall) while maintaining a track record of
34 70%
100% occupancy. The REIT’s portfolio has a weighted
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
average lease expiry (WALE) of 2.3 years and 2.4 years by net
lettable area (NLA) and gross rental income respectively. We Net Property Income Net Property Income Margin %
expect earnings to be stable over the next two years, with

<30% of leases (by gross rental income) due to expire in
FY16 and FY17. The next largest leasing tranche will be in ROE (%)
FY18, when c.86% of Clementi Mall’s leases come up for 5.0%
renewal.
4.0%
Healthy occupancy costs ensure a vibrant medium term 3.0%
outlook for the malls. While Paragon’s occupancy costs

2.0%
rose to 19% on the back of a 3.2% decline in tenant sales,
we note that this is still within the healthy range for a mall in 1.0%
Orchard Road, where tenants are typically willing to count

0.0%
higher rents as part of marketing costs. In addition, we are 2013A 2014A 2015A 2016F 2017F
heartened to note that occupancy costs at Clementi Mall

have fallen to 14.6% as tenant sales (+3.6%) bounced back
to FY13 levels. Low occupancy costs, coupled with minimal Interest Cover (x)
rental expiries at the mall until 2018, should ensure that (x)
7.60
tenants continue to trade well over the next few years. Higher
7.40
sales growth in subsequent years will allow the REIT to 7.20
generate higher rental revenue in a sustainable manner. 7.00
6.80
Revitalise tenant mix. The REIT’s strategy is to continuously 6.60
restructure the tenant mix to keep its investment properties 6.40

6.20
relevant to the respective target shoppers. The aim is to
6.00
enable the REIT to reap better tenant synergies to improve 5.80
traffic going forward and potentially boost the attractiveness 2013A 2014A 2015A 2016F 2017F
of its mall properties which can be converted into higher

rental reversions and renewals. Source: Company, DBS Bank

Page 2 Page 284
Company Guide
SPH REIT

Balance Sheet:
Gearing. SPH REIT has maintained a healthy gearing ratio at 30.0%
25.7% that is well within the Manager’s comfortable range

of up to 40%. This provides the REIT with significantly larger 25.0%
headroom for debt financing should it decide to gear up on

20.0%
acquisitions.
15.0%
Net Asset Value (NAV) per unit. NAV of S$0.95 is
underpinned by stable asset valuations. 10.0%
2013A 2014A 2015A 2016F 2017F

Potential acquisitions. With a healthy gearing at 26% and
cost of debt of 2.55%, SPH REIT is well poised for debt- Distribution Paid / Net Operating CF
funded acquisition activities, given the opportunity in the 1.2
(x)
medium term. The next growth catalyst for the REIT will be 1.1
the acquisition of the Sponsor’s 70% stake in Seletar Mall, 1.0
which was completed in Dec-14, and is valued at S$495m. 0.9

0.8
Howeve,r this acquisition is likely to be a more medium term 0.7
prospect, as the mall is still in its first leasing cycle and has yet 0.6
to stabilise. 0.5
0.4
0.3
2013A 2014A 2015A 2016F 2017F
Key Risks:
Interest rate risk. SPH REIT’s all-in cost of debt stands at
2.55%, with c.85% of borrowings in fixed rates. In a rising
interest rate environment, we see higher-than-expected Distribution Yield (%)
(%)
interest costs when the REIT refinances its next floating-rate 6.1
tranche of S$250m (c.30% of total debt) in 2016. 5.9 +2sd: 5.93
5.7 +1sd: 5.67

Deterioration in retail sales of watches & jewellery. 5.5
Avg: 5.40
Rental reversions at Paragon have been supported by an 5.3
improvement in tenant sales of watches & jewellery products 5.1
-1sd: 5.13
(as measured by the RSI), which accounts for c.30% of gross

4.9 -2sd: 4.87
rentals. While deterioration in sales for this particular trade
4.7
category is unlikely to result in any tenant exit, it could impact
4.5
the level of reversions achieved going forward. 2013 2014 2015
Company background P/Bk NAV (x)

SPH REIT is a real estate investment trust that invests in (x)
1.2
income-producing retail malls in Singapore. It currently owns
+2sd: 1.18x
the Paragon Mall within the Orchard Road district, as well as 1.2
Clementi Mall, located in the west of +1sd: 1.14x
Singapore. 1.1 Avg: 1.11x
‐1sd: 1.07x
1.1
‐2sd: 1.04x
1.0
1.0
0.9
Sep-13 Mar-14 Sep-14 Mar-15 Sep-15

Page 285 Page 3
Company Guide
SPH REIT

FY Aug 2013A 2014A 2015A 2016F 2017F
Gross revenue 217 202 205 218 226
Net Property Income 159 151 156 158 164 Earnings to be largely
Other Operating expenses (19) (17) (18) (17) (17) driven by Paragon, which
Other Non Opg (Exp)/Inc 0 0 0 0 0 accounts for c.80% of the
Net Interest (Exp)/Inc (22) (20) (21) (19) (20) REIT’s NPI
Net Income 118 114 117 122 127
Tax (1) 0 0 0 0
Total Return 117 217 154 122 127
Growth & Ratio
Revenue Gth (%) N/A (6.7) 1.4 6.1 3.7
N Property Inc Gth (%) nm (5.2) 3.3 1.3 3.9
Net Inc Gth (%) nm (2.7) 2.7 4.3 4.2
Dist to revenue (%) 65.6 67.4 67.5 64.8 64.3
ROAE (%) 5.4 5.0 4.9 5.1 5.3
ROA (%) 3.8 3.6 3.6 3.7 3.8
ROCE (%) 4.5 4.2 4.2 4.3 4.5
Int. Cover (x) 6.4 6.8 6.6 7.4 7.4

Page 4 Page 286
Company Guide
SPH REIT

FY Aug 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016
Net Income 29 31 29 65 30
Tax 0 0 0 0 0
Total Return 27 30 28 132 29
Growth & Ratio
Revenue Gth (%) (1) 4 (2) (1) 3
Net Inc Gth (%) (78) 7 (4) 121 (54)

FY Aug 2013A 2014A 2015A 2016F 2017F

Cash & ST Invts 34 91 77 62 66
Inventory 0 0 0 0 0
Debtors 1 6 5 5 5
Total Assets 3,110 3,269 3,310 3,298 3,306
ST Debt 0 0 249 249 249

Creditor 11 35 30 11 12
LT Debt 897 843 596 606 616

Net Cash/(Debt) (863) (752) (768) (793) (799)
Ratio Gearing to remain
Current Ratio (x) 3.0 2.7 0.3 0.3 0.3 stable at c.26%, as
Quick Ratio (x) 3.0 2.7 0.3 0.3 0.3 acquisition prospects in
Aggregate Leverage (%) 28.8 25.8 25.5 25.9 26.2 the near term are
limited
Z-Score (X) 3.5 3.4 3.3 3.4 3.4

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Company Guide
SPH REIT

FY Aug 2013A 2014A 2015A 2016F 2017F
Pre-Tax Income 118 114 117 122 127

Dep. & Amort. 0 0 0 0 0
Tax Paid 0 0 0 0 0
Chg in Wkg.Cap. 2 21 1 (19) 0
Net Operating CF 131 175 158 119 144
Invts in Assoc. & JV 0 0 0 0 0 One-off cost to replace
Div from Assoc. & JVs 0 0 0 0 0 ageing chillers
Net Investing CF (3) (3) (15) (3) (5)
New units issued 0 (9) (19) 0 0
Other Financing CF 0 (18) 0 0 0
Net Financing CF (136) (142) (157) (131) (135)
Chg in Cash (8) 30 (13) (15) 4

Free CFPS (S cts) 5.0 6.8 5.7 4.5 5.4
S$
Closing T arget
Pric e Price
1: 14 Apr 15 1.07 1.03 HOLD
1.06 2: 13 Oct 15 0.98 0.99 HOLD
1
1.01
2
0.96
0.91
0.86
Source: DBS Bank

Page 6 Page 288
Suntec REIT
Edition 1 Version 1 | Bloomberg: SUN SP | Reuters: SUNT.SI Refer to important disclosures at the end of this report
HOLD Headwinds abound

Hemmed in by double headwinds
In the year ahead, the REIT’s earnings will be driven by new
Price Target : S$1.58 (0%)
contribution from recently completed Suntec City Mall
Potential Catalyst: Acquisitions redevelopment. Due to headwinds in the retail sector however,
Where we differ: We are more conservative on our retail rent we believe that earnings upside is capped as the mall’s rents
assumptions have underperformed the Manager’s initial target. In addition,
there could be downside risk for the REIT’s office assets, which
Analyst are expected to see some volatility in rents and occupancies
Derek Tan +65 6682 3716 derektan@dbs.com when new office supply enters the CBD from 2016 onwards.
Weak retail outlook to cap upside from Suntec AEI
Phase 3 of AEI works at Suntec City Mall was completed in Feb-
15, bringing the Mall’s nearly three-year, S$410m
Price Relative
S$ Relative Index
redevelopment to completion. While the Manager has achieved
2.2 220 healthy committed occupancy rates of 96.4%, we note that
2.0 200
average rents of S$12.03 psf pm have fallen short of the
Manager’s initial target of S$12.59 in light of a difficult leasing
180
1.8
160
1.6
140 environment.
1.4
120
1.2 100
Vacancy and rental pressures at MBFC and ORQ. Over the
1.0 80 quarter, contribution from One Raffles Quay (ORQ) fell 21% y-
Oct-11 Oct-12 Oct-13 Oct-14 Oct-15
o-y due to higher leasing commissions attributable to a
Suntec REIT (LHS) Relative STI INDEX (RHS)
significant lease renewal. Marina Bay Financial Centre Tower 1
Forecasts and Valuation & 2 (MBFC’s) earnings also declined by 11% as occupancy fell
FY Dec (S$ m) 2014A 2015F 2016F 2017F 2.3ppts to 97.7%. Looking ahead, we believe that (a) the lack
Gross Revenue 282 335 351 369 of obvious demand drivers for use of office space in the CBD,
and (b) large incoming supply of office in 2016, will put
Total Return 317 200 206 220
Distribution Inc 230 251 257 271 pressure on rents and occupancies at these two assets, resulting
EPU (S cts) 9.2 7.9 8.1 8.5 in some earnings decline.
EPU Gth (%) (8) (14) 2 6
DPU (S cts) 9.4 9.9 10.0 10.5 Valuation:
DPU Gth (%) 1 5 2 5 Maintain HOLD, TP S$1.58
NAV per shr (S cts) 216.4 206.6 202.7 198.9 We have a HOLD recommendation on Suntec REIT, with a TP of
PE (X) 17.1 19.9 19.5 18.5 S$1.58, after factoring in the divestment of Park Mall and
P/NAV (x) 0.7 0.8 0.8 0.8
slightly lower rental assumptions for Phase 3 of Suntec Mall AEI
Aggregate Leverage (%) 35.3 35.4 35.7 36.3 works. While dividend yield of 6.4% for FY16 is fairly attractive,
ROAE (%) 4.3 3.8 3.9 4.2 total returns to our TP is insufficient at <10%.
Consensus DPU (S cts): 9.8 10.0 10.2 Upside risk stemming from distributions from capital
Other Broker Recs: B: 2 S: 8 H: 12 The Manager has indicated a willingness to use proceeds to
mitigate the decline in DPU after the divestment of Park Mall.
Source of all data: Company, DBS Bank, Bloomberg Finance L.P Additional capital distributions to support dividend to
shareholders will present upside to our estimates.
At A Glance
Mkt. Cap (S$m/US$m) 3,971 / 2,785
Major Shareholders
Raffles Investments (%) 9.0
Blackrock (%) 5.9
Free Float (%) 85.1

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Suntec REIT

S$ m
74.3%
Completed Suntec Mall AEI to drive earnings in FY15/16. 72.3%

200
Suntec REIT’s 3Q15 income available for distribution grew 70.3%
3.1% y-o-y to S$59m, as earnings growth from the 150 68.3%
completed Suntec City retail redevelopment was eroded by 100

66.3%
higher interest expenses and weaker contribution from 50

64.3%
62.3%
associates (ORQ and MBFC). Notwithstanding the weaker
0 60.3%
than expected earnings growth, the Manager has announced 2013A 2014A 2015F 2016F 2017F
DPU of 2.52Scts (+8.3% y-o-y), with an additional S$4.6m to Net Property Income Net Property Income Margin %
be distributed using proceeds from the sale of CHIJMES.

Excluding distribution of capital, DPU was 2.34Scts.
Quarterly Net Property Income and Margins (%)
Office portfolio faces some earnings risk. Suntec REIT 72%
70%
currently owns three office assets in Singapore’s CBD – 57
68%
Suntec Office, One Raffles Quay (33%), and MBFC Towers 1 52
66%
and 2 (33%). Suntec Office, which accounts for nearly 30% 47 64%
42 62%
of gross revenue, once again demonstrated its resilience, with 60%
37
signing rents holding steady at S$9.21 psf pm, and 58%
32
occupancies bouncing back to 99.5% after a slight dip in 56%
27 54%
2Q15. However earnings risks remain for ORQ and MBFC, 2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
which saw weaker contributions y-o-y. Looking ahead, we
believe that ORQ and MBFC Tower 2 could face some Net Property Income Net Property Income Margin %
earnings risk, as anticipated office supply coming in 2016 and

stiff competition for quality tenants could put rents and
occupancies under pressure. ROE (%)
4.5%
Risk to reversions from Phase 1 AEI at Suntec. In FY16, 28% 4.0%
3.5%
of retail leases will be due for renewal, with majority coming
3.0%
from Phase 1 of Suntec AEI works. Given that average 2.5%
passing rents of c.S$13 psf pm for Phase 1 are higher than 2.0%
the S$12 achieved for the whole mall, we believe that rental 1.5%
reversions will be flat with a downside bias, as the Manager 1.0%
opts to retain tenants rather than drive rents. 0.5%
0.0%
2013A 2014A 2015F 2016F 2017F
Secure income contribution from Australian asset from FY16

onwards. Suntec’s recent acquisition of 177 Pacific Highway
for A$413m located in North Sydney will provide geographic
Interest Cover (x)
diversification to its portfolio. Upon completion of the office (x)
property in early 2016, Leighton Holdings will take up 76% 10.00

9.00
of NLA for an approximate lease period of 10 years, and has 8.00
stipulated a rental guarantee of 4 years for vacant space. The 7.00
office is expected to complete in early-2016, and this will help 6.00

5.00
to diversify and improve the REIT’s income stream. 4.00
3.00
30% stake in redevelopment of Park Mall offers development 2.00

1.00
upside. Suntec REIT has announced the sale of Park Mall for
0.00
S$412m (expected to complete in 4Q15), and will take a 30% 2013A 2014A 2015F 2016F 2017F
stake in the JV co which will completely redevelop Park Mall into

a commercial development comprising two office towers with an Source: Company, DBS Bank
ancillary retail podium. Suntec REIT will subsequently have the

Page 2 Page 290
Company Guide
Suntec REIT
option to acquire one of the two office towers. While details of Aggregate Leverage (%)
this redevelopment project have yet to be finalised, acquisition of
39.0%
the office tower will be a long term growth driver for the REIT.
34.0%
Balance Sheet: 29.0%

Gearing to remain stable We expect gearing to remain
stable going forward, as the Manager is able to fund the 24.0%
remainder of development at 177 Pacific Highway with 19.0%
proceeds from the divestment of Park Mall. 14.0%

2013A 2014A 2015F 2016F 2017F
Minimal refinancing in FY15-17. Suntec REIT has a debt

tenure of 2.8 years and all-in interest cost of 2.74%. With
75% of borrowings hedged and zero refinancing
requirements for FY15, the REIT is fairly well protected (x)
2.5
against near term interest rate volatility. In FY16, 12% of
borrowings (S$370m) will be due for refinancing, while 2.0
majority will only be due from FY18 onwards.
1.5

Better than expected performance at Suntec City retail. 1.0
Higher occupancy rates at Suntec City retail, as well as better

than expected rental reversions, would present upside to our 0.5
2013A 2014A 2015F 2016F 2017F
earnings estimates.
Acquisitions. The Manager could redeploy net proceeds of

c.S$290m from the divestment of Park Mall into yield Distribution Yield (%)
accretive acquisitions, which would boost DPU growth and (%)
diversify the REIT’s earning base. 9.4
8.4
+2sd: 8.2%
Key Risks: 7.4
+1sd: 7.1%
Retail rental reversion risk. In FY16, 28% of the Trust’s
6.4
retail NLA will be up for renewal, largely stemming from Avg: 6%
5.4
leases at Phase 1 of AEI works. With average Phase 1 rental ‐1sd: 4.9%
of S$13.09 psf pm higher than the mall’s blended average of 4.4
‐2sd: 3.9%
S$12.03 psf pm, there could be risk of flat or mildly negative 3.4
2011 2012 2013 2014
reversions.
Vacancies at Suntec office. While we have flagged out MBFC

P/Bk NAV (x)
and ORQ as key earnings risks in the Trust’s office portfolio,
(x)
we believe that occupancy and rents will continue to remain 1.1
stable at Suntec due to its more differentiated product 1.0

+2sd: 0.96x
offering. Due to Suntec office’s staggered lease expiry profile, 0.9
+1sd: 0.86x
any decline in rents will not be felt immediately. However 0.8
Avg: 0.77x
higher vacancies could present some downside risks to our 0.7
‐1sd: 0.68x
earnings assumptions. 0.6
‐2sd: 0.58x
0.5
Company background
0.4
Suntec REIT has a portfolio of office and retail properties in Oct-11 Oct-12 Oct-13 Oct-14
Singapore and Australia. Its most prominent asset is Suntec

City, which comprises four office towers, a retail mall, and a Source: Company, DBS Bank
convention centre, located close to the city area of Singapore.

Page 291 Page 3
Company Guide
Suntec REIT

FY Dec 2013A 2014A 2015F 2016F 2017F
Gross revenue 234 282 335 351 369
Earnings to be driven by full
Net Income 239 225 216 224 239
year contribution from
Tax 5 (7) (9) (10) (12)
Suntec retail and 177
Minority Interest (18) 2 (7) (7) (8) Pacific Highway.
Total Return 364 317 200 206 220
Growth & Ratio
Revenue Gth (%) (10.6) 20.6 18.5 5.0 5.1
Net Inc Gth (%) (6.7) (2.8) (8.8) 3.0 6.6
Dist to revenue (%) 90.2 81.5 75.0 73.2 73.5
ROAE (%) 4.7 4.3 3.8 3.9 4.2
ROA (%) 2.8 2.6 2.3 2.4 2.6
ROCE (%) 1.1 1.3 2.1 2.3 2.5
Int. Cover (x) 1.6 2.6 9.3 5.6 5.0

Page 4 Page 292
Company Guide
Suntec REIT

FY Dec 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015
Net Income 28 122 50 49 51
Tax (2) (2) (2) (2) (2)
Minority Interest 7 (2) (2) (3) (2)
Total Return 33 216 47 44 47
Growth & Ratio
Revenue Gth (%) 5 7 (3) 9 6
N Property Inc Gth (%) 6 9 (3) 11 3 3Q15 distributions were
Net Inc Gth (%) 2 260 (60) (6) 6 supported by S$4.6m of
Net Prop Inc Margin (%) 68.2 69.0 69.0 69.9 67.9 distributions from capital

FY Dec 2013A 2014A 2015F 2016F 2017F

Other LT Assets 2,370 2,488 2,488 2,488 2,488
Cash & ST Invts 181 150 52 9 16
Inventory 0 0 0 0 0
Debtors 29 17 27 28 30
Total Assets 8,322 8,602 8,520 8,530 8,541
ST Debt 772 0 0 0 0
Creditor 91 107 56 59 61
LT Debt 2,389 2,981 2,986 3,036 3,086
Total Funds & Liabilities 8,322 8,602 8,520 8,530 8,541 Gearing expected to
remain fairly stable as
Non-Cash Wkg. Capital (83) (113) (59) (62) (65) construction works at
Net Cash/(Debt) (2,980) (2,831) (2,934) (3,027) (3,070) 177 Pacific Highway can
Ratio be funded using proceeds
Current Ratio (x) 0.2 1.3 0.9 0.4 0.5 from the divestment of
Quick Ratio (x) 0.2 1.3 0.9 0.4 0.5 Park Mall
Z-Score (X) 0.7 0.9 0.9 0.9 0.9

Page 293 Page 5
Company Guide
Suntec REIT

FY Dec 2013A 2014A 2015F 2016F 2017F
Pre-Tax Income 239 225 216 224 239

Dep. & Amort. 0 0 0 0 0
Tax Paid (4) 0 (2) (9) (10)
Chg in Wkg.Cap. (1) 14 (61) 1 2
Net Operating CF 153 196 103 160 167
Net Investing CF (222) (66) 45 4 62
Net Financing CF 51 (160) (245) (207) (221)
Currency Adjustments 0 (2) 0 0 0
Chg in Cash (19) (32) (98) (43) 7

Free CFPS (S cts) (1.6) 4.2 3.9 4.2 6.4
S$
2.09
1.99
1.89 Pri c e Pri c e
1: 23 Jan 15 2.00 1.84 HOLD
1.79 2: 01 Jul 15 1.73 1.76 HOLD
3: 24 Jul 15 1.73 1.76 HOLD
1.69 4: 23 Oct 15 1.68 1.58 HOLD
1.59
1.49
1.39
Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15
Source: DBS Bank

Page 6 Page 294
YTL Starhill Global REIT
Edition 1 Version 1 | Bloomberg: SGREIT SP | Reuters: STHL.SI Refer to important disclosures at the end of this report
BUY Prime assets with development potential

BUY for attractive acquisition/development angle
Price Target : S$0.84 (10% upside)
Starhill Global REIT (SGREIT) owns a portfolio of prime retail and
Potential Catalyst: Development/ AEI works office assets located in Singapore, Australia, Malaysia, China,
Where we differ: Our assumptions are in line with consensus and Japan. With c.45% of topline derived from master leases or
long leases, the REIT offers investors income stability and
Analyst visibility, as well as upside potential from positive rental
reversions and redevelopment of existing assets in Singapore
and Australia.
Price Relative 2-year DPU CAGR of 3.7% driven by Adelaide acquisition.

S$ Relative Index We are anticipating 2-year DPU CAGR of 3.7% from FY15-17,
1.1
203
driven primarily by contribution from Myer Centre Adelaide,
1.0
0.9
183 which was acquired for A$288m (S$303m) in May 2015. This
0.8
163
acquisition will boost income contribution from Australia to
143
0.7
123
24% from 10%, further diversifying its earnings profile, which is
0.6 103 still concentrated in Ngee Ann City and Wisma Atria in
0.5
83
Oct-15 Singapore.
YTL Starhill Global REIT (LHS) Relative STI INDEX (RHS)
Negative reversions at Wisma, but income impact is minimal
Forecasts and Valuation The REIT recorded negative reversions of 7.3% this quarter, due
FY Jun (S$ m) 2014A 2015A 2016F 2017F to the replacement of one F&B tenant with a new fashion/F&B
concept tenant, whose lease had a lower base rent but higher
Total Return 250 175 121 125 turnover component. As this lease accounts for <3% of the
Distribution Inc 111 172 121 125 REIT’s Singapore retail income, impact on earnings is minimal.
EPU (S cts) 5.5 7.7 5.5 5.7
EPU Gth (%) 0 40 (28) 3
Valuation:
DPU (S cts) 5.0 7.6 5.3 5.5
DPU Gth (%) 14 52 (30) 3
We have a DCF-derived TP of S$0.84, after factoring in the
NAV per shr (S cts) 92.9 91.6 90.6 90.8 acquisition of Myer Centre Adelaide. At its current price, Starhill
PE (X) 13.8 9.9 13.7 13.3 Global REIT offers investors dividend yields of 7.2-7.4% for
FY16-17, and a total return of 20%. We maintain our BUY call.
P/NAV (x) 0.8 0.8 0.8 0.8
ROAE (%) 5.8 8.3 6.1 6.3 Key Risks to Our View:
Upside risk from AUD and MYR currency appreciation. We
Distn. Inc Chng (%): - - estimate that c.32% of NPI is derived from assets in Malaysia and
Consensus DPU (S cts): 5.2 5.5 Australia; an appreciation of any of these currencies against the
Other Broker Recs: B: 7 S: 0 H: 3 SGD would present upside to our estimates.
At A Glance
Mkt. Cap (S$m/US$m) 1,658 / 1,163
Major Shareholders
YTL Corp Bhd (%) 37.1
Free Float (%) 62.9

Page 295
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Company Guide

S$ m
83.3%
1Q16 results in line. SGREIT’s 1Q16 DPU saw a 3.1% uplift to 81.3%
150
1.31Scts on the back of new contribution from the recently 79.3%
acquired Myer Centre Adelaide, as well as positive rental 100

77.3%
reversions at Wisma Atria’s retail and office leases. Tenant
50
sales rose 1.1% y-o-y as recently opened tenants began 75.3%
operations; however foot traffic fell 9.7% y-o-y due to the 0 73.3%
2013A 2014A 2015A 2016F 2017F
closure of Isetan. Looking ahead, we expect traffic to improve
as new tenants such as Mango are progressively starting to
operate from space previously occupied by Isetan.
Strong performance from local assets. SGREIT is primarily ROE (%)

exposed to Ngee Ann City and Wisma Atria in Singapore, 8.0%
which account for c.60% of topline and 68% of asset value. 7.0%
These assets offer a mix of stability from Toshin’s master 6.0%
lease at Ngee Ann City and upside potential from Wisma 5.0%
Atria, whose shorter leases provide exposure to strong retailer 4.0%
demand for prime Orchard space in Singapore. 3.0%
2.0%
Weaker reversions for Wisma Atria on the horizon.
1.0%
That said, we would not be surprised if reversions for
0.0%
upcoming quarters turn negative, as a portion of leases 2013A 2014A 2015A 2016F 2017F
expiring in the year ahead will come from fashion tenants on

the first floor, whose performances have been generally
weak. These tenants are more reticent about committing to
space given (a) lacklustre fashion sales and (b) uncertainty Interest Cover (x)
(x)
over the outcome of Isetan. However, we expect earnings at 4.80
Wisma to still see good growth, driven by stronger reversions
4.60
from tenants on the basement and second floors (selling
watches & jewellery). 4.40
4.20
Growing presence in Australia. The REIT acquired Myer
Centre Adelaide for A$288m, located in Adelaide’s prime 4.00
CBD retail core. The target property comprises almost 620k 3.80
sqft of retail space, three office buildings of 98,000 sqft and
3.60
467 basement carpark lots. It houses Myer’s flagship store, 2013A 2014A 2015A 2016F 2017F
which is the main anchor tenant. The property recently
underwent a major A$35m AEI in 2014 and enjoys high Source: Company, DBS Bank
occupancy rates for both office and retail space. The
purchase price implies an initial yield of 6.6% (pre-tax) and is
supported by a long lease expiry. Myer’s lease, which
contributes c.53% of the property’s rent, expires only in
2032. Growth will come from annual escalations of c.3.5%-
5.0% or CPI (whichever is higher), for the leases. With the
inclusion of the Myer Centre acquisition, rental income
contribution from Australia is expected to double from 10%
to 24%.
Visible earnings growth from rental reviews at master leased

assets. Looking ahead, SGREIT could see income upside from
its master leases in Singapore and Malaysia, where Ngee Ann
City is set to undergo a rent review with master lessee Toshin
in June 2016, and Starhill Gallery and Lot 10 will see c.6.8%
rental step up in June 2016.

Page 2 Page 296
Company Guide

Balance Sheet:
Future acquisitions to be partly funded via equity. Gearing
rose to 35.7% after the acquisition of Myer Centre Adelaide.
Given the Manager’s comfortable range of 35% gearing 35.0%
however, any further acquisitions or developments could 30.0%

trigger an equity fund raising exercise.
25.0%
20.0%
Debt free in 2017/2018. In May 2015, the REIT issued a
S$125m seven-year MTN at 3.40% in May, thereby 15.0%
completing all refinancing requirements for FY15/16. 10.0%

2013A 2014A 2015A 2016F 2017F
Weighted debt tenure has increased to 3.8 years at an
average of 3.13%. With 80% of debt hedged into fixed rates
and only c.12% of total debt needs requiring refinancing Distribution Paid / Net Operating CF
before FY17/18, exposure to volatile short rates is minimised. 1.0 (x)
0.9
Development/ AEI opportunities in Singapore and Australia. 0.7

The Manager has several AEI opportunities to improve 0.6
portfolio performance in the near and medium term. SGREIT 0.5
will be undertaking AEI works in Central Plaza, Perth,
0.4
renovating the shop façade to incorporate anchor tenants, as
0.3
well as converting some of the upper floors from office and 2013A 2014A 2015A 2016F 2017F
storage to retail use. Other potential development/AEI

opportunities include activating 116k sqft of vacant retail
space in the fourth and fifth floors of Myer Centre, Adelaide,
as well as developing the Spanish Steps between Wisma Atria Distribution Yield (%)
(%)
and Ngee Ann City, where the REIT has unutilised GFA of
10.6
c.100k sqft.
9.6
+2sd: 9.1%
8.6
Key Risks:
+1sd: 7.8%
Currency risk. SGREIT’s overseas properties have been 7.6
affected by forex volatility and operational headwinds. In 6.6 Avg: 6.6%
Malaysia and Australia, stable underlying asset performance 5.6

‐1sd: 5.3%
has been masked by the depreciation of the MYR and AUD 4.6
‐2sd: 4.1%
against the SGD, resulting in currency translation losses and 3.6
2011 2012 2013 2014 2015
weaker DPU performance.
Macroeconomic risks in China – retail oversupply and

P/Bk NAV (x)
austerity hits Chengdu asset. Contributions from Chengdu (x)
1.2
have been hit by ongoing austerity measures and oversupply
1.1
of retail space, resulting in steady declining earnings
+2sd: 1.02x
contribution since 2013. Given present outlook, weaker 1.0
+1sd: 0.92x
performance of overseas assets are unlikely to improve in the 0.9
Avg: 0.82x
near term. 0.8
‐1sd: 0.73x
0.7
COMPANY BACKGROUND 0.6

‐2sd: 0.63x
Starhill Global REIT is a real estate investment trust that 0.5

invests in income-producing upscale retail and/or office assets Oct-11 Oct-12 Oct-13 Oct-14 Oct-15
in the Asia Pacific region. In Singapore, it owns portions of

Ngee Ann City and Wisma Atria. It also owns assets in China, Source: Company, DBS Bank
Japan, Malaysia and Australia.

Page 297 Page 3
Company Guide

FY Jun 2013A 2014A 2015A 2016F 2017F
Gross revenue 186 201 295 232 238
Net Interest (Exp)/Inc (32) (30) (45) (37) (38) Sharp jump in earnings due
to the incorporation of six
Exceptional Gain/(Loss) 12 5 (1) 0 0
quarters of results. SGREIT
Net Income 111 115 165 120 124 recently switched to June
Tax (4) (3) 1 0 0 year-end from December.
Total Return 122 250 175 121 125
Non-tax deductible Items (26) (139) (3) 0 0
Growth & Ratio
Revenue Gth (%) 3.3 7.9 46.9 (21.3) 2.5
N Property Inc Gth (%) 3.4 6.3 50.5 (24.7) 2.6
Net Inc Gth (%) 40.7 5.1 47.1 (27.0) 3.4
Dist to revenue (%) 51.7 55.3 58.2 52.1 52.5
ROAE (%) 5.7 5.8 8.3 6.1 6.3
ROA (%) 3.8 3.9 5.4 3.7 3.8
ROCE (%) 4.6 4.8 7.0 5.0 5.1
Int. Cover (x) 4.1 4.7 4.7 4.3 4.3

Page 4 Page 298
Company Guide

FY Jun 3Q2015 4Q2015 5Q2015 6Q2015 1Q2016
Exceptional Gain/(Loss) 2 1 2 (2) (2) Australia NPI grew 113% y-o-
Net Income 29 29 29 26 27 y on the back of full quarter
Tax (1) 1 0 2 (1) contribution from the
Minority Interest 0 0 0 0 0 recently acquired Myer
Net Income after Tax 28 30 28 28 26 Centre Adelaide
Growth & Ratio
Revenue Gth (%) 0 1 (2) 8 10
N Property Inc Gth (%) 1 0 (3) 7 6 The REIT has retained S$1.5m
Net Inc Gth (%) 19 5 (4) (1) (7) for working capital purposes

FY Jun 2013A 2014A 2015A 2016F 2017F

Cash & ST Invts 79 58 52 98 103
Inventory 0 0 0 0 0
Debtors 9 10 5 10 10
Total Assets 2,820 2,943 3,193 3,247 3,254
ST Debt 357 54 146 146 146

Creditor 22 43 37 86 88
LT Debt 492 792 983 983 983
Non-Cash Wkg. Capital (32) (35) (34) (78) (80) Gearing is fairly
Net Cash/(Debt) (770) (788) (1,078) (1,031) (1,026) optimal and within the
Ratio Manager’s comfortable
Current Ratio (x) 0.2 0.7 0.3 0.5 0.5 level of 35%. Future
Quick Ratio (x) 0.2 0.7 0.3 0.5 0.5 acquisitions or
Aggregate Leverage (%) 31.1 29.4 36.0 36.0 35.9 developments will have
Z-Score (X) 0.9 1.1 1.0 0.9 0.9 to be partly financed
by equity.

Page 299 Page 5
Company Guide

FY Jun 2013A 2014A 2015A 2016F 2017F
Pre-Tax Income 111 115 165 120 124

Dep. & Amort. 0 0 0 0 0
Tax Paid (4) (4) (4) 0 0
Chg in Wkg.Cap. (16) 25 52 44 2
Other Operating CF 24 5 (1) 0 0
Net Operating CF 116 141 212 165 127
Other Invts (net) 0 0 (1) 0 0
Net Investing CF (20) (59) (316) (2) (2)
Net Financing CF (121) (102) 100 (116) (120)
Currency Adjustments (3) (2) (3) 0 0
Chg in Cash (29) (21) (6) 47 5

Free CFPS (S cts) 4.9 4.0 (4.8) 7.5 5.7
S$
0.91
3 Pri c e Pri c e
4 1 31 Oct 14 0.82 0.90 BUY
0.81 2 2 29 Jan 15 0.83 0.88 BUY
1 3 21 Apr 15 0.88 0.91 BUY
4 10 Aug 15 0.86 0.91 BUY
0.76
5 21 Aug 15 0.76 0.84 BUY
5
0.71
0.66
Source: DBS Bank

Page 6 Page 300
Industry Focus
Appendix
Page 301
Industry Focus
Singapore Property Developers List

Bloomberg Code Acronyms Company Description
CAPL SP Equity CAPL Capitaland Ltd Capitaland is one of Asia’s largest real estate
companies with a diversified portfolio that
includes homes, offices, shopping malls, serviced
residences and mixed developments, held
through its listed and unlisted subsidiaries and
associates.
CIT SP Equity CDL City Developments Ltd City Developments Limited is one of the
pioneers in Singapore's property sector. It is a
property and hotel conglomerate involved in real
estate development and investment, hotel
ownership and management, facilities
management.
GLP SP Equity GLP Global Logistic Properties Global Logistics Properties (GLP) is a leading
Ltd provider of modern logistics facilities in China,
Japan, Brazil and the USA. The group develops,
owns and manages c.41m sqm GFA, of logistics
properties, catering to growing domestic
consumption.
FCL SP Equity FCL Frasers Centrepoint Ltd FCL is a one of Singapore’s main real estate
companies with assets exceeding S$23bn as of
Jun-15. The group has four key core businesses
focused on residential, commercial, hospitality
and industrial sectors spanning 77 cities across
Asia, Australasia, Europe and the Middle East.
PREH SP equity PREH Perennial Real Estate Perennial Real Estate Holdings (PREH) is an
Holdings Ltd integrated real estate developer, owner and
manager focusing on two key markets,
Singapore and China. PREH owns interests in
and/or manages a diversified portfolio
measuring about 39.7 million square feet and
over 3.2 m sqft in gross floor area (GFA) in the
PRC and Singapore respectively.
UOL SP Equity UOL UOL Group Ltd With a track record of nearly 50 years, UOL
Group's impressive list of property development
projects includes best-selling residential units,
office towers, shopping centres, hotels and
serviced suites.
Source: DBS Bank
Page 88 Page 302

Industry Focus
Singapore REITS List

AIT SP Equity a-iTrust Ascendas India Trust Ascendas India Trust ("a-iTrust") was listed in
August 2007 as the first Indian property trust in
Asia. Its principal objective is to own income-
producing real estate used primarily as business
space in India. a-iTrust may also develop and
acquire land or uncompleted developments to
be used primarily as business space, with the
objective of holding the properties upon
completion. a-iTrust is managed by Ascendas
Property Fund Trustee Pte Ltd, a subsidiary of
the Ascendas Group.
AREIT SP Equity A-REIT Ascendas REIT Ascendas Real Estate Investment Trust (A-REIT) is
a property trust constituted by a trust deed. A-
REIT owns and invests in a diverse, income-
producing portfolio of business park (including
science park), light industrial, hi-tech industrial
and logistic properties in Singapore.
ASCHT SP Equity ASCHT Ascendas Hospitality Trust A-HTRUST is a stapled group comprising
Ascendas Hospitality Business Trust (A-HBT) and
Ascendas Hospitality REIT (A-HREIT), established
to invest in a diversified portfolio of hotel assets
in Asia, Australia and New Zealand.
ART SP Equity ART Ascott Residence Trust Ascott REIT's Investment portfolio primarily
comprises real estate used mainly as serviced
residences or rental housing properties
(including investments in real estate-related
assets and/or other related value-enhancing
assets or instruments).
CACHE SP Equity Cache Cache Logistics Trust Cache is a REIT which invests primarity in
logistics properties located in the Pan Pacific
region. It currently owns 13 assets in Singapore
and China.
CREIT SP Equity CREIT Cambridge Industrial Trust Cambridge Industrial Trust is a real estate
investment trust which invests primarily in
income-producing industrial assets located in
Singapore.
CCT SP Equity CCT CapitaLand Commercial CapitaCommercial Trust (CCT) is a real
Trust investment trust investing exclusively in
commercial properties in Singapore.
CT SP Equity CMT CapitaLand Mall Trust CapitaMall Trust is a real estate investment trust
which owns and invests in retail properties in
the suburban areas and downtown core of
Singapore.
CRCT SP Equity CRCT CapitaLand Retail China CapitaChina Retail Trust is a real estate
Trust investment trust which invests in income-
producing retail properties located mainly in
China, Hong Kong and Macau.
Source: DBS Bank
Page 303
Industry Focus
Singapore REITS List (cont’d)

CDREIT SP Equity CDREIT CDL Hospitality Trusts CDL Hospitality Trusts is a stapled group
comprising H-REIT and HBT. H-REIT is a real
estate investment trust that invests in a portfolio
of income-producing hospitality related
properties and HBT is a business trust.
CRT SP Equity CRT Croesus Retail Trust Croesus Retail Trust is a business trust that
focuses on income-generating retail assets in
Japan. Its portfolio comprises seven assets which
are close to fully occupied and backed by a long
lease expiry profile.
FEHT SP Equity FEHT Far East Hospitality Trust Far East Hospitality Trust is a hospitality stapled
group comprising Far East H-REIT and Far East
H-Business Trust. Far East H-REIT is a Singapore-
based real estate investment trust, which invests
in hospitality assets. It owns 8 hotels and 4
serviced residences.
FCT SP Equity FCT Frasers Centrepoint Trust Frasers Centrepoint Trust is a retail real estate
investment trust with a portfolio of shopping
malls located in suburban areas in Singapore. Its
two largest assets are Causeway Point and
Northpoint.
FCOT SP Equity FCOT Frasers Commercial Trust Frasers Commercial Trust is a real estate
investment trust that invests in income-
producing commercial office properties in
Singapore and Australia. As of 30th Sept 2014,
FCOT’s portfolio is worth an aggregate S$1.8bn.
66% of its assets are derived from its properties
in Singapore and the remainder 34% from
Australia.
FHT SP Equity FHT Frasers Hospitality Trust FHT is a hospitality stapled group comprising FH-
REIT and FH-BT. FH-REIT is a S'pore based REIT
which invests in hospitality assets. FH-BT is a
S'pore based business trust which will be
dormant as of the Listing Date. FHT operates 13
mid and upper scale hotels and serviced
residences in key gateway cities located in
Singapore, Japan, UK, Australia, Malaysia and
Japan.
IREIT SP Equity IREIT IREIT Global IREIT is a Singapore REIT established with the
investment strategy of principally investing,
directly or indirectly, in a portfolio of income-
producing real estate in Europe which is used
primarily for office purposes.
KDCREIT SP Equity Keppel DC REIT Keppel DC Reit Keppel DC REIT is a Singapore-based real estate
investment trust (“REIT”), established with the
principal investment strategy of investing,
directly or indirectly, in a portfolio of
incomeproducing real estate assets which are
used primarily for data centre purposes, with an
initial focus on Asia Pacific and Europe.
Source: DBS Bank
Page 90 Page 304

Industry Focus

KREIT SP Equity K-REIT Keppel REIT K-REIT is a real estate investment trust investing
in predominantly commercial properties in
Singapore and key gateway cities in Australia. It
currently owns 10 commercial Grade A office
assets.
MCT SP Equity MCT Mapletree Commercial Trust Mapletree Commercial Trust is a real estate
investment trust that invests in income-
producing office and retail properties in
Singapore. A majority of its earnings is derived
from Vivocity, which is the largest retail mall in
Singapore, and is located at the gateway of
Sentosa.
MAGIC SP Equity MAGIC Mapletree Greater China MGCCT is a Singapore real estate investment
Commercial Trust trust (REIT) established with the investment
strategy of principally investing, directly or
indirectly, in a diversified portfolio of income-
producing commercial real estate in the Greater
China region.
MINT SP Equity MINT Mapletree Industrial Trust Mapletree Industrial Trust is a real estate
investment trust which invests primarity in
income producing industrial assets located in
Singapore. Its portfolio includes a diverse mix of
business parks, science parks, ramp-up
warehouses and flatted factories.
MLT SP Equity MLT Mapletree Logistics Trust MapleTree Logistics is a real estate investment
trust which invests in logistics warehouses in the
Asia Pacific region. It currently owns warehouses
in Singapore, Japan, China, South Korea,
Vietnam and Hong Kong.
OUECT SP Equity OUE CT OUE Commercial REIT OUE Commercial REIT (OUE CT) is an office REIT
with a portfolio of office assets in located in
prime CBD locations in Singapore and China.
OUEHT SP equity OUEHT OUE Hospitality Trust OUE H-Trust is a Singapore-based REIT
established with the principal investment
strategy of investing, directly or indirectly, in a
portfolio of income-producing hospitality assets.
PREIT SP Equity Plife REIT Parkway Life Reit Parkway Life REIT is one of Asia's largest listed
healthcare REITs. It invests in income-producing
real estate and real estate-related assets used
primarily for healthcare and healthcare-related
purposes. As at 30th Sept 2014, PLife REIT's
total portfolio size stood at 47 properties
totalling in excess of S$1.5 billion.
Source: DBS Bank
Page 305
Industry Focus

RHT SP Equity RHT Religare Health Trust Religare Health Trust (RHT) is structured as a
business trust, comprising healthcare assets in
India. Its investment mandate is to principally
invest in medical and healthcare assets in India,
Australasia and emerging markets. It is backed
by Fortis Healthcare, a leading healthcare
services provider in India and with more than 10
years of operating experience. Its portfolio
valued at S$857m is comprised of 12 clinical
establishments, 4 greenfiled clinical
establishments and 2 operating hospitals
managed by RHT. RHT’s properties are located
across 10 Indian states with total build-up area
of c.3.6m sq ft.
SBREIT SP Equity SBREIT Soilbuild Business Space Soilbuild Business Space REIT is a real estate
REIT investment trust that invests in income-
producing real estate used primarily for business
space purposes in Singapore. Its flagship asset is
Solaris, located in the one-north business park.
The REIT is backed by Soilbuild Group, a
household name in the construction and real
estate business in Singapore.
SPHREIT SP Equity SPH REIT SPH REIT SPH REIT is a real estate investment trust that
invests in income-producing retail malls in
Singapore. It currently owns the Paragon Mall
within the Orchard Road district, as well as
Clementi Mall, located in the west of Singapore.
SGREIT SP Equity SGREIT YTL Starhilll Global REIT Starhill Global REIT is a real estate investment
trust that invests in income-producing upscale
retail and/or office assets in the Asia Pacific
region. In Singapore, it owns portions of Ngee
Ann City and Wisma Atria. It also owns assets in
China, Japan, Malaysia and Australia.
SUN SP Equity Suntec REIT Suntec REIT Suntec REIT is has a portfolio of office and retail
properties in Singapore and Australia. Its most
prominent asset is Suntec City, which comprises
of 5 office towers and a retail mall located close
to the city area of Singapore.
Source: DBS Bank
Page 92 Page 306

Industry Focus
DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
Share price appreciation + dividends
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department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction
in the past twelve months and does not engage in market-making.
ANALYST CERTIFICATION
The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies
and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her
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analyst(s) and his/her spouse and/or relatives who are financially dependent on the analyst(s), do not hold interests in the securities recommended
in this report (“interest” includes direct or indirect ownership of securities).
COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. DBS Bank Ltd., DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”), their subsidiaries and/or other affiliates have a proprietary
position in CapitaLand Commercial Trust, Frasers Commercial Trust, Keppel REIT, CapitaLand Mall Trust, CapitaLand Retail China
Trust, Croesus Retail Trust, Frasers Centrepoint Trust, SPH REIT, Mapletree Commercial Trust, Mapletree Greater China Commercial
Trust, YTL Starhill Global REIT, Suntec REIT, Ascendas REIT, Ascendas India Trust, Cache Logistics Trust, Cambridge Industrial Trust
Mapletree Industrial Trust, Mapletree Logistics Trust, Soilbuild Business Space Reit, Ascendas Hospitality Trust, Ascott Residence Trust,
Page 307
Industry Focus
CDL Hospitality Trusts, Far East Hospitality Trust, Frasers Hospitality Trust, OUE Hospitality Trust, Parkway Life Real Estate Investment
Trust, Keppel DC REIT, CapitaLand, City Development, Global Logistic Properties, UOL Group, Perennial Real Estate Holdings, Wing
Tai, recommended in this report as of 30 Nov 2015.
2. DBS Bank Ltd does not market make in equity securities of the issuer(s) or company(ies) mentioned in this Research Report.
3. DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates beneficially own a total of 1% of any class of common
equity securities of Croesus Retail Trust, YTL Starhill Global REIT, Cache Logistics Trust, Soilbuild Business Space Reit, Ascott Residence
Trust, Far East Hospitality Trust, Frasers Hospitality Trust, Keppel DC REITas of 30 Nov 2015.
4. DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates beneficially own a total of 5% of any class of common
equity securities of Croesus Retail Trust as of 30 Nov 2015.
5. Compensation for investment banking services:

DBS Bank Ltd., DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have received compensation, within the past 12 months
for investment banking services from Frasers Commercial Trust, Keppel REIT, OUE Commercial REIT, Croesus Retail Trust, Ascendas
REIT, Cache Logistics Trust, Soilbuild Business Space Reit, Frasers Hospitality Trust, IREIT Global, Keppel DC REITas of 30 Nov 2015.
DBS Bank Ltd., DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have managed or co-managed a public offering of
securities for Frasers Commercial Trust, Keppel REIT, OUE Commercial REIT, Croesus Retail Trust, Ascendas REIT, Cache Logistics Trust,
Soilbuild Business Space Reit, Frasers Hospitality Trust, IREIT Global, Keppel DC REITin the past 12 months, as of 30 Nov 2015.
DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of
securities as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons
wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any
security discussed in this document should contact DBSVUSA exclusively.
6. Directorship/trustee interests
Peter Seah Lim Huat, Chairman of DBS Group Holdings, is a Deputy Chairman of Capitaland as of 28 Feb 2015. Euleen Goh Yiu
Kiang, a member of DBS Group Holdings Board of Directors, is a Director of Capitaland as of 28 Feb 2015.
Danny Teoh Leong Kay, a member of DBS Group Holdings Board of Directors, is a Director of CapitaMalls Trust Mgmt Ltd as of 28
Feb 2015.
Woo Foong Pheng (Mrs Ow Foong Pheng), a member of DBS Group Holdings Board of Directors, is a Director of Mapletree Greater
China as of 28 Feb 2015.
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Singapore Property & REITs Focus: Developers' Valuations Too Cheap to Ignore

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Singapore Industry Focus

Singapore Property & REITs

DBS Group Research . Equity 8 Jan 2016

Analysts Table of Contents

Singapore Research Team 3. Peer Comparisons Pg 7

4. Singapore REITs – Rate Hikes casting a shadow Pg 10

5. Developers – Attractive Valuations near multi- Pg 20

6. Residential –Accelerating declines Pg 25

7. Retail - Retailers consolidation to continue Pg 39

8. Office – Displacement demand to sustained Pg 47

10. Hospitality Sector – Renewed hope Pg 62

11. Charts – S-REIT yield and P/Bk NAV Pg 71

12. Charts – Developers P/Bk NAV Pg 80

Residential Outlook – Negative

Key Assertions Risks

Retail Outlook - Neutral

-5% 0 Resident outbound travel by air Local residents expenditure abroad

Office Outlook - Positive

Key Assertions Risks

Industrial Outlook – Negative

2 -year average 2 .5 m sqm

1,500 5 -year average 1 .1m sqm 20%

Demand Supply -20%

Key Assertions Risks

Source: DBS Bank

Hospitality Outlook - Negative

-20% -4.0% -3.0%

Source: DBS Bank

Sector Average 6.8% 7.0% 7.1% 3.4% 0.99

Singapore Developers Peer Comparisons (as at 5 January 2016)

Source: Bloomberg Finance L.P, DBS Bank

Revised target prices and recommendations.

We have largely retained our recommendations and TP’s with

Change in target prices and recommendations for S-REITs under coverage

4. Singapore REITs: Rates hikes casting a shadow

720 3100 6.0%

Sector Yield spread Mean Yield Spread +1 SD -1 SD

Key Issues in 2016

1.5% 1.15% 600 1.4

Source: Bloomberg Finance L.P., DBS Bank

Historical S-REIT yield and S-REIT yield spread (2005-current)

2005 2.9% 4.8% 2.1% 2006-2008 was a period of high growth

2010 2.4% 6.3% 3.9%

Source: Bloomberg Finance L.P., companies, DBS Bank

B. Slowing growth prospects

include AREIT, ART, ASCHT, Cache, KDCREIT, FCOT, FHT, MLT

Australia a key acquisition target market in 2015

0 2,000 4,000 6,000 8,000 Sponsor/Strategic partner 3rd party

Announced acquisitions by S-REITs in 2015

Announced disposals by S-REITs in 2015

S-REITs' gearing headroom and sponsor pipeline

S-REITs' gearing headroom and sponsor pipeline (cont’d)

S-REITs' with development potential and/or asset recycling potential

5. Developers – Attractive Valuations near multi-year lows

Developers to outperform in 2016

1.50  We note that developers

0.50  Singapore Economic outlook

Source: URA, DBS Bank

Singapore property market cycles and developers' performance

Developers Price-to-Bk NAV vs PPI Developers trading at 45% discount to RNAVs

B. Increased focus on Commercial Portfolio

Singapore Developers Exposure (% of RNAV) Remarks