Industry Focus Malaysia REIT

Refer to important disclosures at the end of this report

DBS Group Research . Equity 10 Jul 2019

Discerning choices; top pick: KLCI : 1,682.87 Sunway REIT Analyst Siti Ruzanna Mohd Faruk +603 2604 3965  Operating environment for retail malls to remain [email protected] challenging

 Focus on REITs with prime assets and resilient NPI STOCKS yields 12-mth Price Mkt Cap Target Price Performance (%)  Lower MGS yields supportive of REITs; spread RM US$m RM 3 mth 12 mth Rating between REIT yields and MGS widened KLCCP Stapled 7.80 3,405 7.90 0.0 2.4 HOLD PavilionGroup REIT 1.88 1,382 1.75 2.2 17.1 HOLD  Reiterate BUY on Sunway REIT; TP increased to Sunway REIT 1.89 1,346 2.10 3.8 10.4 BUY RM2.10 on lower risk-free rate assumptions CapitaLand 1.07 529 1.15 (5.4) (12.5) HOLD MalaysiaAxis REIT Mall Trust 1.75 524 1.73 (5.5) 14.8 HOLD More malls pending completion. We expect the operating MRCB-Quill REIT 1.08 280 1.20 (1.8) (2.7) HOLD environment for retail malls to remain challenging with Source: AllianceDBS, Bloomberg Finance L.P. industry occupancy rates facing pressure from the increasing Closing price as of 9 Jul 2019 retail space. Supply pressure is not abating soon with more malls pending completion. However, average occupancy rates KLREI Index and MGS yields: Negatively correlated for REITs we cover are at 93% compared to industry occupancy rates of below 80%. KLREI Index SREIT MK Equity PREIT MK Equity 10YR MGS Yield (rhs) Prime malls have delivered steady NPI yields. Comparing 20% 4.20 different assets within the specific REITs indicates that 4.10 selected prime malls have delivered steady NPI yields on 15% 4.00 healthy occupancy and relatively stable rental reversions. This 10% includes Suria KLCC (NPI yield: 7.2%), Intermark (10.2%), 3.90 5% Pavilion KL (6.7%), (6.7%) and 3.80

(6.4%). Intermark and East Coast Mall have delivered the best 0% 3.70 improvement in yields. Intermark’s NPI yields improved from -5% 3.60 4.0% in 2016 to 10.2% in 2018 as occupancy increased from 31-Dec 31-Jan 28-Feb 31-Mar 30-Apr 31-May 30-Jun 76% to 94%. Higher NPI yields lead to higher ROEs – which Source: AllianceDBS, Bloomberg Finance L.P. in turn translate to better valuation multiples. Pavilion REIT NPI yield of selected retail malls have stayed resilient: and Sunway REIT trade on higher P/BV multiples backed by Intermark and East Coast Mall have best yields above peer ROEs. NPI Yields % (lhs) Occupancy Rates % (rhs) MGS yields supportive of REIT share prices. The KLREI 20.0% 100.0% index has gained 8% YTD vs the KLCI’s decline of 1%. With 90.0% MGS yields at 3.63%, the spread against dividend yield of our 15.0% 10.2% 80.0% portfolio of REITs have increased to 1.48ppts – making REITs a 10.0% 6.7% 6.9% 7.2%7.4% 5.5% 6.4% 6.7% 6.7% 70.0% more attractive investment option. 4.0% 4.5% 2.8% 5.0% 1.5% 60.0% BUY Sunway REIT; increase TP to RM2.10. We like Sunway 0.0% 50.0% REIT for its prime assets and potential portfolio expansion. The Group intends to increase its asset base to RM10bn by FY20 (from RM7.8bn currently) and diversify its earnings base. We lower our risk-free rate assumption to 4.0% (from 4.2% previously) given the recent downtrend in 10-year MGS yields and relatively more dovish interest rate expectations. As a result, our dividend discount model (DDM)-derived target Source: AllianceDBS Research, Companies price (TP) for Sunway REIT increases to RM2.10.

ed: KK/ sa: WMT, PY, CS Industry Focus Malaysia REIT

Prime malls to withstand industry pressure Sunway Pyramid and KLCC, expiry should be less of an issue given their prime location. Compared to the industry, occupancy rates for REITS under our coverage are relatively resilient at above 90% levels. Occupancy Portfolio occupancy and lease expiry for our coverage: rates notched down to 93% in 2018 from 94% in 2017 largely Healthy occupancy despite growing retail space in the for down time from asset enhancement activities for Sungei industry Wang as well as movement in tenant reshuffling in Pavilion KL. 100% 70% 98% We expect occupancy to improve back to 94% for FY20/21F. 96% 60% 96% 95% 94% 94% 94% 93% 94% 93% 50% However, the operating environment remains challenging with 92% 36% 40% industry occupancy rates facing pressure from the growing retail 90% 30% 28% 27% space. Occupancy rates have declined from 82% in 1Q17 to 88% 24% 25% 25% 30% 79% in 4Q18. We expect occupancy rates to remain a drag as it 86% 20% may take time for demand to catch up to supply. 84% 10% 82% New completions that have already opened in the Klang Valley 80% 0% FY15 FY16 FY17 FY18 FY19F FY20F FY21F area such as The Linc (127k sq ft), GM (100k sq Lease Expiry of total NLA (%) Occupancy Rate (%) ft), KL Eco City Retail Podium (250k sq ft), Eko Cheras Mall (625k sq ft) and Kiara 163 (300k sq ft) could further pressure Source: AllianceDBS Research, Companies rental rates. The Linc (intersection of and Jalan Tun Razak) is a retail centre offering art installations as well as Retail industry occupancy and total space: Occupancy multiple eateries and home grown shops. GM Bukit Bintang, KL rates pressured by oversupply with rates declining Eco City Retail Podium and Eko Cheras Mall are a part of mixed 17,000 85.0% 81.5% 81.5% 81.2% 81.3% 80.2% developments which include residential and offices. Kiara 163 is 16,500 79.9% 79.1% 79.3% a lifestyle mall in Mont Kiara. Newer malls need more time to 80.0% 16,000 mature, as evidenced by The Linc which opened in November 75.0% 2018 with occupancy of 75%. 15,500 15,000 70.0% Supply pressure is not abating soon with more malls pending 14,500 65.0% completion. Upcoming malls include TRX Financial Quarter 14,000 (126k sq ft), Star Boulevard (Jalan Yap Kwan Seng; 126k sq ft), 13,500 60.0% Queensville (Bandar Sri Permaisuri; 412k sq ft), Pinnacle (Petaling 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Jaya; 140k sq ft) and Central i-City Shopping Centre (Shah Total Existing Space (k sm) Occupancy Rate (%) Alam; 940k sq ft). Source: National Property Information Centre Key risk for portfolio under coverage will come from the high expiry profile for 2020; however with bulk of it coming from

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Industry Focus Malaysia REIT

Retail sector still has a few gems Jumpa as well as the renovation of the major tenant Giant. For DaMen, occupancy remains pressured; however footfall is Comparing different assets within the specific REITs indicates expected to pick up once Prudential moves in to an office that selected prime malls such as Suria KLCC, Intermark, Pavilion nearby. This is expected to be by mid-year. KL, Sunway Pyramid and Gurney Plaza have delivered resilient NPI yields of 6.8%-10.8% on healthy occupancy and relatively Trends of NPI yields among key assets: DaMen and stable rental reversions. Sungei Wang at low end Intermark DaMen Sungei Wang East Coast Mall These malls are key drivers to their respective REITs. On the 12.0% other hand, main drags to the REITs’ portfolios include malls 10.0% such as DaMen, Sunway Putra and Sungei Wang. 8.0% NPI yield of selected retail malls have stayed resilient: Intermark and East Coast Mall have best yields 6.0%

NPI Yields % (lhs) Occupancy Rates % (rhs) 4.0%

20.0% 100.0% 2.0% 15.0% 90.0% 0.0% 10.2% 80.0% 10.0% 6.7% 6.9% 7.2%7.4% CY2016 CY2017 CY2018 CY2019 CY2020 5.5% 6.4% 6.7% 6.7% 70.0% 4.0% 4.5% 2.8% Source: AllianceDBS Research, Companies 5.0% 1.5% 60.0% 0.0% 50.0% Rental rates are not disclosed by REIT managers but from channel checks, Pavilion KL and Suria KLCC command higher rental rates at RM25.00 per sq ft and RM35.00 per sq ft respectively. With this, although positive rental reversions may be mid to low single digits, we opine this is still commendable Source: AllianceDBS Research, Companies given the tough operating environment coupled with the already high base. Outside of the vicinity, Intermark and East Coast Mall have delivered the best rentals are lower at RM14.00 per sq ft for Sunway Pyramid. improvement in yields. This comes from better contribution in Still, this offers better rentals then less favourable malls such NPI as they manage to increase occupancy rates as well as better as DaMen, The Mines and Sungei Wang. As such, pressured rates from asset enhancement works. Intermark’s NPI yields rentals are reflected in lower yields for the weaker assets as improved from 4.0% in 2016 to 10.2% in 2018 as occupancy opposed to prime malls. We also believe discounts and rent increased from 76% to 94%. In contrast, sharp reduction in free period may be offered to sustain occupancy rates amid yields is shown for Sungei Wang and DaMen. This is following tough competition. the downtime for the major asset enhancement works for

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Industry Focus Malaysia REIT

Retail assets of major REIT portfolios

NPI NPI Yield (%) CY2015 CY2016 CY2017 CY2018 CY2019 CY2020 CY2015 CY2016 CY2017 CY2018 CY2019 CY2020 KLCC Stapled Security Suria KLCC 383.3 406.3 372.8 395.4 419.3 444.6 7.2% 7.6% 6.9% 7.2% 7.7% 8.2% Pavilion REIT Pavilion KL 284.9 283.6 286.2 313.4 337.3 350.6 6.4% 6.5% 6.4% 6.7% 7.2% 7.5% Intermark na 6.5 12.0 17.3 18.4 18.4 na 4.0% 7.1% 10.2% 10.8% 10.8% DaMen na 15.8 16.8 8.6 8.9 8.9 na 3.3% 4.0% 2.8% 2.9% 2.9% Sunway REIT Sunway Pyramid 216.8 225.1 233.8 239.1 242.3 247.7 6.8% 6.8% 6.8% 6.7% 6.8% 6.9% Sunway Carnival 27.7 28.9 29.2 28.6 27.7 27.0 8.1% 7.6% 7.0% 6.9% 6.7% 6.5% SunCity Ipoh Hypermarket 4.7 4.7 4.4 4.1 4.2 4.3 7.8% 7.6% 7.1% 6.7% 6.8% 7.0% 4.1 21.0 26.0 26.5 27.5 27.8 0.7% 3.5% 4.4% 4.5% 4.6% 4.7% CapitaMall Malaysia Trust Sungei Wang 37.2 27.3 16.5 8.2 8.1 10.5 4.8% 4.4% 2.8% 1.5% 1.5% 1.9% Gurney Plaza 83.3 96.9 104.6 104.7 111.9 112.7 6.1% 6.4% 6.6% 6.4% 6.8% 6.9% East Coast Mall 35.0 36.6 39.4 41.0 43.1 46.0 7.5% 7.4% 7.7% 7.4% 7.8% 8.3% The Mines 51.6 51.7 47.7 40.0 33.4 34.4 7.4% 7.2% 6.6% 5.5% 4.6% 4.7% 3 Damansara and Office 30.9 30.0 29.1 22.2 20.7 20.5 5.5% 5.1% 5.1% 4.0% 3.7% 3.7% *CY19/20 NPI yield based on end CY18 market value Source: AllianceDBS Research, Companies Key movement in KLREI supported by SREIT and PREIT

KLREI Index SREIT MK Equity PREIT MK Equity REITs offer attractive yields 20% REIT share prices have been supported following the recent 15% 13% downtrend in 10-year Malaysian Government Securities 10% (MGS) yields. With MGS yields at 3.63% (as of 9 July), the 10% spread against dividend yield of our portfolio of REITs have 8% increased to 1.48ppts. When compared to the KLCI index, the 5% REIT index KLREI has increased by 8% YTD while the KLCI 0% index has declined by 1% YTD. The KLREI index performance was largely driven by SREIT and PREIT. -5% Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19

YTD Index Performance: KLREI outperformed KLCI index Source: AllianceDBS, Bloomberg Finance L.P.

KLREI Index KLCI Index The negative correlation between 10-year MGS yields and 12% REITs are particularly strong during periods of rising or 10% 8% 8% declining bond yields. 6% 4% KLREI Index and MGS Yields: Negatively correlated 2% -1% KLREI Index 10YR MGS Yield (rhs) 0% -2% 1100 4.50 4.40 -4% 1050 4.30 -6% 1000 4.20 -8% 4.10 31-Dec 31-Jan 28-Feb 31-Mar 30-Apr 31-May 30-Jun 950 4.00

3.90 900 3.80 Source: AllianceDBS, Bloomberg Finance L.P. 850 3.70 3.60

800 3.50 Jul-18

Jul-19

Jan-18

Jan-19

Jun-18

Jun-19

Oct-17

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Apr-18

Apr-19

Feb-18

Sep-18

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Dec-17

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Mar-18

Mar-19 May-18 May-19 Source: AllianceDBS, Bloomberg Finance L.P.

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Industry Focus Malaysia REIT

We lower our risk-free rate assumption to 4.0% (from 4.2% The debt profile for REITs under coverage is skewed towards previously) given the recent downtrend in 10-year MGS yields fixed rate borrowings with Pavilion REIT having the highest and relatively more dovish interest rate expectations. proportion of free float debt among REITs. We estimate a 25bps cut in borrowing rate increases FY19 earnings by c.1%. Sensitivity of target prices to risk-free rates Risk-free rate assumptions (%) Gearing levels of REITs remain healthy with some headroom for potential acquisitions. SREIT has the highest gearing at 3.7 3.8 3.9 4.0 4.1 4.2 38.6%. SunREIT 2.22 2.18 2.14 2.10 2.07 2.05

MQ-REIT 1.24 1.22 1.21 1.20 1.17 1.15 Portfolio gearing and borrowings: Gearing levels Axis REIT 1.83 1.80 1.76 1.73 1.70 1.65 healthy with manageable portion of borrowings under free float PavREIT 1.84 1.80 1.77 1.75 1.72 1.70 % of free float 1QCY19 Gearing (%) CMMT 1.20 1.19 1.17 1.15 1.14 1.12 borrowings SunREIT 38.4% 52% KLCCSS 8.35 8.20 8.05 7.90 7.75 7.65 MQ-REIT 37.5% 24% Source: AllianceDBS Research Axis REIT 38.3% 48%

PavREIT 33.8% 54% CMMT 33.8% 18% KLCCSS 17.3% 16% Source: AllianceDBS Research, Companies

Portfolio yield vs 10-yr MGS spread growing: Portfolio yield increasingly more attractive than 10-yr MGS yields % % 6.00 2.00 1.80 5.50 1.60 5.00 1.40 4.50 1.20 1.00 4.00 0.80 3.50 0.60 0.40 3.00 0.20

2.50 -

Jul-14

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Jul-17

Jul-18

Jul-19

Jan-14

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Jan-16

Jan-17

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Oct-13

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Apr-14

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Apr-18 Apr-19 10YR MGS Yield (lhs) Weighted Portfolio Yield (lhs) Portfolio vs MGS Spread (rhs)

Source: AllianceDBS, Bloomberg Finance L.P

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Industry Focus Malaysia REIT

Selected REITs offer attractive value We also like Pavilion REIT for its prime assets Pavilion KL and Looking at the REITs, the main factor for the difference in ROEs Intermark. While DaMen has been a drag on earnings, the NPI stem from NPI yields: higher NPI yields lead to higher ROEs – base of DaMen is relatively small. We expect DaMen NPI yields which in turn translate to higher P/BV multiples. This is seen to improve once occupancy increase post improvement of with Pavilion REIT and Sunway REIT whereby higher P/BV footfall in the mall. Nonetheless, any yield accretive acquisition multiples are backed by higher ROEs. should be able to rerate the stock further.

Despite the competitive REIT landscape, selected REITs still offer value. Our top pick is SREIT with steady ROE and decent dividend yields. The Group intends to increase its asset size to RM10bn by FY20 and RM13-15bn by FY2025. Management has plans to increase contribution from other segments to diversify its earnings base.

Peer table CY2019/2020 P/E EPS Growth (YoY) Dividend Yield Price/ BVPS ROAE Market Recomm Current Target Price Cap (RM CY2019 CY2020 CY2019 CY2020 CY2019 CY2020 CY2019 CY2020 CY2019 CY2020 endation Price m) REIT KLCC Stapled HOLD 7.90 7.80 14,081.6 19.0x 18.6x 5% 2% 4.9% 5.1% 1.1x 1.1x 15% 15% Pavilion REIT HOLD 1.75 1.88 5,713.4 21.0x 20.0x 6% 5% 4.9% 5.1% 1.4x 1.4x 7% 7% Sunway REIT BUY 2.10 1.89 5,566.2 18.2x 17.5x (16%) 4% 5.5% 5.7% 1.3x 1.3x 7% 7% CapitaMall Malaysia Trust HOLD 1.15 1.07 2,187.3 16.5x 15.8x (2%) 4% 6.5% 6.8% 0.8x 0.8x 5% 5% Axis REIT HOLD 1.73 1.75 2,165.2 18.9x 18.5x (26%) 2% 5.4% 5.5% 1.3x 1.3x 7% 7% MRCB-Quill REIT HOLD 1.20 1.08 1,157.5 14.7x 14.7x 8% 0% 6.6% 6.6% 0.8x 0.8x 6% 6% Total / weighted avg 37,815.4 19.0x 14.9x 0% 3% 5.2% 4.4% 1.3x 1.0x 10% 9% Source: AllianceDBS Research

Page 6

Malaysia Company Guide Sunway REIT

Version 11 | Bloomberg: SREIT MK | Reuters: SUNW.KL Refer to important disclosures at the end of this report

DBS Group Research . Equity 10 Jul 2019

BUY Ever-growing assets Last Traded Price ( 9 Jul 2019): RM1.89 (KLCI : 1,682.87) Price Target 12-mth: RM2.10 (11% upside) (Prev RM2.05) Solid footing to grow asset base. We reiterate our BUY call on Sunway REIT (SunREIT) with a TP of RM2.10. This is post Analyst adjusting our risk-free rate assumption from 4.2% to 4.0% Siti Ruzanna Mohd Faruk +603 2604 3965 following the recent downtrend which has pushed the MGS [email protected] yield down to 3.6%. We like SunREIT for its prime assets and acquisition pipeline from its sponsor. The group intends to increase its asset base to RM10bn by FY20 (from RM7.8bn currently). Management plans to boost contribution from assets Price Relative apart from retail and offices to diversify its earnings base. This is RM Relative Index 2.1 221 in the wake of its new mandate to increase the Others segment 2.0 201 1.9 181 1.8 to make up 25% of total asset value from 15% previously. The 161 1.7 141 1.6 stock currently provides a decent 5.3% dividend yield. 121 1.5 1.4 101 1.3 81 Jul-15 Jul-16 Jul-17 Jul-18 Jul-19 Where we differ: Better rental rates. Our numbers are higher Sunway REIT (LHS) Relative KLCI (RHS) than consensus as we factor in higher rental reversions for Sunway Pyramid at 2-3%. Forecasts and Valuation FY Jun (RMm) 2018A 2019F 2020F 2021F Gross Revenue 560 603 645 664 Potential catalysts: Value-enhancing asset acquisitions. We are Net Property Inc 420 452 488 499 optimistic about potential injections from sponsor Sunway Bhd Total Return 428 298 314 324 to meet SunREIT’s RM10bn asset target. SunREIT’s sponsor and Distribution Inc 282 298 314 324 major shareholder (37% stake) Sunway Bhd has a large pipeline EPU (sen) 14.5 10.1 10.7 11.0 EPU Gth (%) 6 (30) 5 3 of potential assets for injection under its “build-own-operate” DPU (sen) 9.57 10.1 10.7 11.0 model. Future injections could include Monash University, The DPU Gth (%) 4 6 5 3 Pinnacle office tower, Sunway Giza Mall and Sunway VeloCity NAV per shr (sen) 148 148 148 148 PE (X) 13.0 18.7 17.7 17.2 Mall. These underpin an attractive growth pipeline for SunREIT. Distribution Yield (%) 5.1 5.4 5.6 5.8 Valuation: P/NAV (x) 1.3 1.3 1.3 1.3 Our DDM-derived TP is increased to RM2.10, with 7.5% cost Aggregate Leverage (%) 38.6 41.3 45.0 45.2 of equity and 2.0% terminal growth. ROAE (%) 10.0 6.8 7.2 7.4 Key Risks to Our View: Distn. Inc Chng (%): 0 0 0 Soft rental reversions. Weak consumer sentiment in the retail Consensus DPU (sen): 9.80 10.3 10.9 sector could result in soft rental reversions. We have factored Other Broker Recs: B: 5 S: 1 H: 8 in rental reversions of 2% for FY19F-20F for the overall Source of all data on this page: Company, AllianceDBS, Bloomberg portfolio. Finance L.P At A Glance Issued Capital (m shrs) 2,945 Mkt. Cap (RMm/US$m) 5,566 / 1,344 Major Shareholders (%) Sunway Berhad 37.3 Employees Provident Fund 12.04 Skim Amanah Saham 9.88 Free Float (%) 39.7 3m Avg. Daily Val (US$m) 1.3 ICB Industry : Financials / Real Estate Investment Trust

ed: TH/ sa: WMT, PY, CS Company Guide

Sunway REIT

CRITICAL DATA POINTS TO WATCH Net Property Income and Margins (%) RM m Performance at Sunway Pyramid remains the key earnings 500 82.7% 450 driver. Despite its diversified portfolio of 14 assets, SunREIT 80.7% 400 derives the bulk of its income (c.54% NPI) from its crown jewel 350 78.7% Sunway Pyramid, a retail asset with a NLA of 1.6m square feet. 300 76.7% 250 74.7% 200 Located in the Sunway Resort City township, the Egyptian- 72.7% 150 70.7% themed mall is one of the better-performing properties in its 100 portfolio. This is mainly due to the property’s strong patronage 50 68.7% 0 66.7% by both locals and tourists which enable it to sustain high 2017A 2018A 2019F 2020F 2021F occupancy rates of 98-99%. As a result of the mall’s strong Net Property Income Net Property Income Margin % recurring footfall and connectivity, we expect these trends to continue despite a modest retail market outlook. Net Property Income and Margins (%) 119 79% 78% Sunway Resort City’s performance will accelerate going 114 77% forward. We remain positive on the outlook for the Sunway 109 76% Resort City township. It is already registering a strong 40m visits 75% 104 per annum. Ongoing developments at Sunway Pyramid Phase 3 74% 99 73% – an integrated retail and hotel project by the Sunway Group – 72% 94 will improve the township’s appeal to locals and tourists. 71% SunREIT is expected to benefit from the ongoing rejuvenation of 89 70%

the township. Apart from Sunway Pyramid, the REIT has four

2Q2018 3Q2018 2Q2017 3Q2017 4Q2017 1Q2018 4Q2018 1Q2019 2Q2019 3Q2019 other assets – Sunway Resort Hotel & Spa, Pyramid Tower hotel, Net Property Income Net Property Income Margin % Menara Sunway office tower, and Sunway Medical Centre. All these properties are expected to perform strongly on the back Distribution Paid / Net Operating CF of growing population and better patronage. (x) 0.7

Asset enhancement of Sunway Pyramid to drive top line once 0.6 completed. Sunway Pyramid Hotel (formerly known as Sunway 0.5 Pyramid Hotel East) was closed for refurbishment in April 2016 and has been progressively opening since 2QFY17. In 3QFY19, 0.4 the average occupancy rate for the hotel stood at 67% based 0.3 on total refurbishment of 549 rooms. We expect occupancy 0.2 rates to improve to 80% and contribute positively to the group. 2017A 2018A 2019F 2020F 2021F

Weakness in office segment priced in. We expect the office Interest Cover (x) segment to face challenges in filling up occupancies in the (x) current oversupplied and weak market environment but believe 4.60 that this has been priced in. Moreover, this segment’s overall 4.50 contribution to SunREIT’s total portfolio is small at 3.5%. We 4.40 note that the occupancy rate at Sunway Tower remained weak 4.30 at 20.0% as of end-3QFY19. 4.20 4.10 Yield spread moves share price. SunREIT has a high correlation 4.00 with the differential yield between 10-year Malaysian 3.90 3.80 Government Securities (10Y MGS) yield and SunREIT’s 2017A 2018A 2019F 2020F 2021F distribution yield. This shows that its share price increases as its distribution yield becomes more attractive than the 10Y MGS Source: Company, AllianceDBS yield.

Page 8

Company Guide

Sunway REIT

Appendix 1: Factors driving historical share price performance

Indexed SREIT MK 10Y MGS FBMKLCI Acquisition 165

Announced acquisition of Announced acquisition of Share price Sunway REIT Announced Sunway Clio Announced SPAs performed as 10Y Industrial acquisition of 140 Property for two assets from MGS yield dropped Sunway sponsor – Sunway University Hotel Georgetown & Wisma Sunway

115

90

Source: Company, AllianceDBS, Bloomberg Finance L.P SunREIT’s share price vs forward distribution per share Remarks

RM RM There is a correlation of 0.59 between SunREIT’s 2.00 0.03 share price and trailing distribution per share. The 1.90 0.03 bulk of the distribution income comes from Sunway 1.80 0.03 Pyramid, which contributes c.54% of NPI. 1.70 0.02 Occupancy and rental reversion rates at this property 1.60 should be keenly watched by investors. 0.02 1.50 1.40 0.02 1.30 0.02 1.20 0.02 Jul-12 Jul-17 Jan-15 Jun-15 Oct-13 Oct-18 Apr-16 Feb-12 Sep-16 Feb-17 Dec-12 Dec-17 Aug-14 Nov-15 Mar-14 Mar-19 May-13 SREIT MK (LHS) SREIT Forward DPU (rhs)May-18 SunREIT’s share price vs yield spread Remarks

RM % Interestingly, the yield spread vs SunREIT’s share 2.00 2.40 price has a negative correlation of 0.60. This shows 1.90 2.20 that its share price increases when SunREIT’s 2.00 distribution yield is higher than the 10Y MGS yield. 1.80 1.80 Investors tend to shift to REITs as their yields become 1.70 more attractive. 1.60 1.60 1.40 1.50 1.20 1.40 1.00 Jun-17 Jun-18 Oct-16 Oct-17 Oct-18 Apr-17 Apr-18 Apr-19 Feb-17 Feb-18 Feb-19 Dec-16 Dec-17 Dec-18 Aug-16 Aug-17 Aug-18 SREIT MK (LHS) Differential yield (RHS) Source: Company, AllianceDBS, Bloomberg Finance L.P

Page 9 Company Guide

Sunway REIT

Balance Sheet: Aggregate Leverage (%) Sensible gearing levels. Currently, of its RM2.9bn borrowings,

RM1.4bn is under fixed rates and the rest under floating rates. 45.0% We also note that about half of SunREIT’s manager fees are 40.0% paid in units. Post acquisition of Sunway University, we will see 35.0% gearing increase to 38%. Nonetheless, it has established 30.0% 25.0% perpetual notes of RM10bn that it can call upon to fund 20.0% upcoming acquisitions, retain its gearing levels and avoid the 15.0% dilution of its share base. 10.0% 2017A 2018A 2019F 2020F 2021F

Share Price Drivers: ROE (%) Acquisition newsflow. SunREIT’s appeal mainly lies with the 10.0% potential pipeline of asset acquisitions of completed investment properties from sponsor Sunway Bhd. Confirmation of injections 8.0% at accretive yields will be key re-rating signals for the stock. 6.0%

Yield spread. A REIT’s attractiveness depends on its distribution 4.0% yield relative to other fixed-income assets. A common benchmark is the REIT’s yield spread over the indicative 10-year 2.0%

MGS yield, which is currently stabilising near the 4% level. 0.0% 2017A 2018A 2019F 2020F 2021F Key Risks: Distribution Yield (%) (%) Pace of acquisitions. As SunREIT’s yields are on par with its 6.9 larger M-REIT peers, the draw is the potential to secure a steady stream of acquisitions. On this note, any significant 6.4 +2sd: 6.1% delays in acquisitions could cap its share price appreciation, 5.9 +1sd: 5.8% especially as its peers are also looking at asset growth. Avg: 5.6% 5.4 -1sd: 5.3% -2sd: 5.1% Weak general sentiment. A dampened consumer sentiment 4.9 may have a negative effect on the retail and hospitality sectors, 4.4 in the form of lower retail spending, rental reversions and local 2015 2016 2017 2018 2019 tourist visits. PB Band (x) (x) 1.5 Office space oversupply. As the supply overhang of office space persists, it could be challenging to refill vacancies and 1.4 rental rates may see negative growth. 1.3 +2sd: 1.29x +1sd: 1.23x 1.2 Avg: 1.18x Company Background -1sd: 1.12x 1.1 Sunway REIT (SunREIT) is a real estate investment trust with key -2sd: 1.07x assets in Bandar Sunway, , primarily the Sunway 1.0

Pyramid mall. It also has hospitality and office assets, and is 0.9 geographically diversified to and Perak. Jul-15 Jul-16 Jul-17 Jul-18 Jul-19

Source: Company, AllianceDBS

Page 10 Company Guide

Sunway REIT

Key Assumptions FY Jun 2017A 2018A 2019F 2020F 2021F

Lease Expiry Profile (%) of 11.4 27.3 22.6 37.2 18.4 NLA SP Rental Gth (%) 6.00 1.76 2.00 3.00 3.00 SP Annual Step Up Gth 3.00 3.00 2.00 3.00 3.00 (%) Segmental Breakdown FY Jun 2017A 2018A 2019F 2020F 2021F

Revenues (RMm) Retail 405 417 425 435 449 Hotel 64.5 82.6 103 106 108 Office 31.5 33.5 38.9 39.2 39.6 Others 21.9 27.8 35.1 64.8 67.3 Total 523 560 603 645 664 NPI (RMm) Retail 290 297 300 303 310 Hotel 60.6 77.7 96.3 98.6 101 Office 16.5 17.5 20.9 20.9 20.9

Others 0.0 27.8 35.1 64.8 67.3

Total 367 420 452 488 499 Margins (%) Retail 71.6 71.3 70.5 69.7 69.2 Hotel 94.0 94.0 93.3 93.2 93.1 Office 52.4 52.3 53.8 53.3 52.8 Others 0.0 100.0 100.0 100.0 100.0 Total 70.2 74.9 75.0 75.6 75.2

Income Statement (RMm) FY Jun 2017A 2018A 2019F 2020F 2021F

Gross revenue 523 560 603 645 664 Property expenses (156) (140) (150) (157) (165) Net Property Income 367 420 452 488 499 Other Operating expenses 0.0 0.0 0.0 0.0 0.0 Other Non Opg (Exp)/Inc (35.4) (38.6) (50.6) (54.1) (54.3) Net Interest (Exp)/Inc (81.0) (97.4) (103) (120) (121) Exceptional Gain/(Loss) 152 145 0.0 0.0 0.0 Net Income 403 429 298 314 324 Tax 0.0 (1.0) 0.0 0.0 0.0 Minority Interest 0.0 0.0 0.0 0.0 0.0 Preference Dividend 0.0 0.0 0.0 0.0 0.0 Net Income After Tax 403 428 298 314 324 Total Return 403 428 298 314 324 Non-tax deductible Items 0.0 0.0 0.10 0.0 0.0 Net Inc available for Dist. 271 282 298 314 324 Growth & Ratio Revenue Gth (%) 3.1 7.2 7.5 7.1 2.9 N Property Inc Gth (%) (1.9) 14.4 7.7 7.9 2.4 Net Inc Gth (%) 53.4 6.2 (30.3) 5.2 3.2 Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 100.0 Net Prop Inc Margins (%) 70.2 74.9 75.0 75.6 75.2 Net Income Margins (%) 77.0 76.3 49.5 48.6 48.8 Dist to revenue (%) 51.8 50.3 49.5 48.6 48.8 Managers & Trustee’s fees 0.0 0.0 0.0 0.0 0.0 ROto salesAE (%) %) 9.7 10.0 6.8 7.2 7.4 ROA (%) 6.0 6.0 3.9 3.8 3.8 ROCE (%) 5.7 6.0 6.0 6.1 6.0 Int. Cover (x) 4.5 4.3 4.4 4.1 4.1 Source: Company, AllianceDBS

Page 11

Company Guide

Sunway REIT

Quarterly / Interim Income Statement (RMm) FY Jun 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019

Gross revenue 142 136 144 136 152 Property expenses (36.2) (36.0) (33.2) (35.3) (37.7) Net Property Income 105 100 111 101 114 Other Operating expenses (7.6) 135 (7.9) (9.9) (9.2) Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Net Interest (Exp)/Inc (27.4) (29.0) (29.6) (29.3) (28.8) Exceptional Gain/(Loss) (0.5) (143) 0.0 4.93 (0.1) Net Income 69.9 63.3 73.0 66.4 75.8 Tax 0.0 0.0 0.0 0.0 0.0 Minority Interest 0.0 0.0 0.0 0.0 0.0 Net Income after Tax 69.9 63.3 73.0 66.4 75.8 Total Return 69.9 63.3 73.0 66.4 75.8 Non-tax deductible Items 0.50 0.56 0.55 0.50 0.66 Net Inc available for Dist. 70.4 63.9 73.5 66.9 76.4 Growth & Ratio Revenue Gth (%) 0 (4) 5 (5) 11 N Property Inc Gth (%) 2 (5) 10 (9) 13 Net Inc Gth (%) 0 (9) 15 (9) 14 Net Prop Inc Margin (%) 74.4 73.6 76.9 74.1 75.1 Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 100.0

Balance Sheet (RMm) FY Jun 2017A 2018A 2019F 2020F 2021F

Investment Properties 6,689 7,280 7,524 8,055 8,081 Other LT Assets 9.06 13.6 19.9 26.3 32.6 Cash & ST Invts 109 198 317 316 315 Inventory 0.0 0.0 0.0 0.0 0.0 Debtors 33.0 32.1 26.8 28.7 29.5 Other Current Assets 0.0 0.0 0.0 0.0 0.0 Total Assets 6,840 7,524 7,887 8,425 8,458

ST Debt 2,344 2,603 2,914 2,914 2,914 Creditor 3.37 2.10 4.30 4.50 4.71 Other Current Liab 209 182 182 182 182 LT Debt 0.0 300 346 880 910 Other LT Liabilities 72.2 84.4 84.4 84.4 84.4 Unit holders’ funds 4,212 4,353 4,357 4,361 4,364 Minority Interests 0.0 0.0 0.0 0.0 0.0 Total Funds & Liabilities 6,840 7,524 7,887 8,425 8,458

Non-Cash Wkg. Capital (179) (152) (159) (157) (157) Net Cash/(Debt) (2,235) (2,705) (2,943) (3,478) (3,508) Ratio Current Ratio (x) 0.1 0.1 0.1 0.1 0.1 Quick Ratio (x) 0.1 0.1 0.1 0.1 0.1 Aggregate Leverage (%) 34.3 38.6 41.3 45.0 45.2 Z-Score (X) 1.0 0.9 0.9 0.9 0.9 Source: Company, AllianceDBS

Page 12 Company Guide

Sunway REIT

Cash Flow Statement (RMm) FY Jun 2017A 2018A 2019F 2020F 2021F

Pre-Tax Income 403 429 298 314 324 Dep. & Amort. 1.61 1.91 2.39 3.15 3.91 Tax Paid 0.0 (1.0) 0.0 0.0 0.0 Associates &JV Inc/(Loss) 0.0 0.0 0.0 0.0 0.0

Chg in Wkg.Cap. (29.1) (160) 148 (1.7) (0.6)

Other Operating CF (16.1) 110 103 120 121 Net Operating CF 359 380 552 435 448 Net Invt in Properties (123) (464) (252) (541) (36.3) Other Invts (net) 0.0 0.0 0.0 0.0 0.0 Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0 Div from Assoc. & JVs 0.0 0.0 0.0 0.0 0.0 Other Investing CF 3.20 (123) 2.85 9.50 9.47 Net Investing CF (119) (587) (249) (531) (26.9) Distribution Paid (266) (285) (294) (310) (321) Chg in Gross Debt 142 556 357 534 30.0 New units issued 0.0 0.0 0.0 0.0 0.0 Other Financing CF (84.5) (106) (106) (129) (131) Net Financing CF (209) 164 (43.5) 95.0 (422) Currency Adjustments 0.0 0.0 0.0 0.0 0.0 Chg in Cash 30.8 (43.0) 259 (1.0) (0.5)

Operating CFPS (sen) 13.2 18.3 13.7 14.8 15.2 Free CFPS (sen) 8.03 (2.8) 10.2 (3.6) 14.0 Source: Company, AllianceDBS

Target Price & Ratings History

2.03 RM 12-mth Date of Closing S.No. T arget Rating Report Price 6 Price 1.93 1: 10 Aug 18 1.74 1.85 BUY 2: 02 Nov 18 1.68 1.85 BUY 1.83 5 3: 29 Jan 19 1.77 1.90 BUY 4: 15 Feb 19 1.75 1.90 BUY 4 5: 03 May 19 1.87 2.05 BUY 1.73 3 6: 15 May 19 1.92 2.05 BUY 1 2

1.63

1.53 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19

Note : Share price and Target price are adjusted for corporate actions.

Source: AllianceDBS Analyst: Siti Ruzanna Mohd Faruk

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Industry Focus Malaysia REIT

AllianceDBS recommendations are based on 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 share price catalysts within this time frame) *Share price appreciation + dividends

Completed Date: 9 Jul 2019 22:09:23 (MYT) Dissemination Date: 10 Jul 2019 08:18:15 (MYT)

Sources for all charts and tables are AllianceDBS unless otherwise specified.

GENERAL DISCLOSURE/DISCLAIMER This report is prepared by AllianceDBS Research Sdn Bhd (''AllianceDBS''). This report is solely intended for the clients of DBS Bank Ltd, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of AllianceDBS Research Sdn Bhd (''AllianceDBS'').

The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies.

Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to update the information in this report.

This publication has not been reviewed or authorized by any regulatory authority in , Hong Kong or elsewhere. There is no planned schedule or frequency for updating research publication relating to any issuer.

The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:

(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein.

Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.

Page 14 Industry Focus Malaysia REIT

Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report.

DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research 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 compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or 2 his associate does not have financial interests in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the DBS Group.

COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd, DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS'') or their subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of 31 May 2019 2. Neither DBS Bank Ltd nor DBS HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report.

Compensation for investment banking services: 3. 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.

Disclosure of previous investment recommendation produced: 4. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months.

1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst. 2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

Page 15 Industry Focus Malaysia REIT

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Australia This report is being distributed in Australia by DBS Bank Ltd, DBSVS or DBSV HK. DBS Bank Ltd holds Australian Financial Services Licence no. 475946.

DBSVS and DBSV HK are exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS Bank Ltd and DBSVS are regulated by the Monetary Authority of Singapore under the laws of Singapore, and DBSV HK is regulated by the Hong Kong Securities and Futures Commission under the laws of Hong Kong, which differ from Australian laws.

Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

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For any query regarding the materials herein, please contact Carol Wu (Reg No. AH8283) at [email protected]

Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia.

Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

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Page 16 Industry Focus Malaysia REIT

Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd.

United This report is produced by AllianceDBS Research Sdn Bhd which is regulated by the Securities Commission Malaysia. Kingdom This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd, ("DBSVUK"). DBSVUK is authorised and regulated by the Financial Conduct Authority in the United Kingdom.

In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication.

Dubai This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at units 608 - 610, 6th Floor, International Gate Precinct Building 5, PO Box 506538, DIFC, Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated Financial by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the Centre DFSA rulebook) and no other person may act upon it.

United Arab This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as Emirates defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell any financial product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This report or any portion thereof may not be reprinted, sold or redistributed without our written consent.

United States This report was prepared by AllianceDBS Research Sdn Bhd (''AllianceDBS''). DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate.

Other In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, jurisdictions professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

Page 17 Industry Focus Malaysia REIT

DBS Regional Research Offices

HONG KONG MALAYSIA SINGAPORE DBS (Hong Kong) Ltd AllianceDBS Research Sdn Bhd DBS Bank Ltd Contact: Carol Wu Contact: Wong Ming Tek (128540 U) Contact: Janice Chua 13th Floor One Island East, 19th Floor, Menara Multi-Purpose, 12 Marina Boulevard, 18 Westlands Road, , Marina Bay Financial Centre Tower 3 Quarry Bay, Hong Kong 8 Jalan Munshi Abdullah 50100 Singapore 018982 Tel: 852 3668 4181 Kuala Lumpur, Malaysia. Tel: 65 6878 8888 Fax: 852 2521 1812 Tel.: 603 2604 3333 Fax: 65 65353 418 e-mail: [email protected] Fax: 603 2604 3921 e-mail: [email protected] e-mail: [email protected] Company Regn. No. 196800306E

THAILAND INDONESIA DBS Vickers Securities (Thailand) Co Ltd PT DBS Vickers Sekuritas (Indonesia) Contact: Chanpen Sirithanarattanakul Contact: Maynard Priajaya Arif 989 Siam Piwat Tower Building, DBS Bank Tower 9th, 14th-15th Floor Ciputra World 1, 32/F Rama 1 Road, Pathumwan, Jl. Prof. Dr. Satrio Kav. 3-5 Bangkok Thailand 10330 Jakarta 12940, Indonesia Tel. 66 2 857 7831 Tel: 62 21 3003 4900 Fax: 66 2 658 1269 Fax: 6221 3003 4943 e-mail: [email protected] e-mail: [email protected] Company Regn. No 0105539127012 Securities and Exchange Commission, Thailand

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