26 October 2015 Asia Pacific/Singapore Equity Research REITs (REITs SG (Asia))

Singapore REIT Sector Research Analysts SECTOR REVIEW

Nicholas Teh 603 2723 2085 [email protected] URA 3Q15: Continued softening in rents Daniel Lim 65 6212 3011 Figure 1: URA 3Q15 data summary [email protected] Price index Rental index Vacancy (%) 3Q15 2Q15 % chg 3Q15 2Q15 % chg 3Q15 2Q15 pp chg Office^ 138.8 139.0 -0.1 180.6 186.0 -2.9 10.3 10.5 -0.2 Retail^ 129.7 130.1 -0.3 115.0 117.4 -2.0 7.9 8.2 -0.3 Industrial 106.6 106.9 -0.3 101.7 102.5 -0.8 n.a. n.a. n.a. - Biz parks^ n.a. n.a. n.a. n.a. n.a. n.a. 15.7 13.9 1.8 Private home 142.3 144.2 -1.3 110.3 111.0 -0.6 7.8 7.9 -0.1 HDB resale 134.6 135.0 -0.3 n.a. n.a. n.a. n.a. n.a. n.a. ^ Vacancy for private space. Source: URA ■ Retail rents decline, but retail REIT reversions remain positive. Central region's retail rents dipped 2% QoQ with median rents on Orchard falling 0.9% QoQ, while the rest of the city area and suburban rents declined by -2% and -2.1%, respectively. Retail REIT reversions slowed but still remained positive despite the lower industry rents. We believe the divergence is attributed to the superior quality and location of the malls under the REITs. ■ Strongest rent decline in office. For 3Q15, central region's office rents declined 2.9% QoQ (2Q15: -2.6% QoQ) due to persisting weak demand and concerns over upcoming oversupply. The decline was led by central area's rents declining 3.1% (-2.6% in 2Q15), while fringe rents fell 1.1% (-2.4% in 2Q15). 3Q15 net demand came in at 139,931 sq ft (678,126 sq ft for 9M15), and is likely to miss the annual historical average demand of 1 mn sq ft. Some of the key upcoming office building completions, Guoco Tower (est TOP mid-2016) and Marina One (est TOP 2017) remain fully uncommitted while Duo (est TOP 3Q16) is ~30% committed. ■ Slight softening in industrial prices and rents. 3Q15's industrial rents softened by -0.8% QoQ (2Q: -0.7%) weighed down by the multi-user factory segment, which fell -1.1% QoQ (2Q: -1.2%), warehouse rents softened by -0.6% QoQ (2Q: -0.1%). 3Q15's rent reversions continued to moderate at MINT and MLT, however, AREIT bucked the trend posting reversions of +9.1% (2Q15: +6.6%). Industrial prices and rents softened by -0.3% QoQ and -0.8% QoQ, respectively. ■ Most benign on the retail sector followed by industrial as the stronger asset quality and location of the retail REIT assets will allow them to continue to post positive reversions amidst declining market rents. Our preferred picks are MCT followed by CMT and FCT. Amongst the industrial REITs we like KDC REIT, MINT and AREIT.

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

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26 October 2015 Focus charts and table

Figure 2: Central region retail rent index fell by -2.0% Figure 3: …but retail REIT rent reversions remain positive QoQ…

160 (%) MCT FCT CMT 45 42.8

38.7 140 40 37.4 37.1 37.6

35 33.4 33 33.1 120 30 27.2 100 25

20 17.5 16.2 16.5 80 15.1 14.4 15 13.2 10.1 10.8 10.9 8.9 9.4 9.3 10 7.8 7.7 60 6.4 6.4 6.3 6.3 6.6 6.3 7.1 6.1 5.26 6.2 6.2 6.1 6.1 5.3 Mar-94 Mar-97 Mar-00 Mar-03 Mar-06 Mar-09 Mar-12 Mar-15 3.8 4.6 4.1 5 2.5 Central region Central area Fringe area 0 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Central region = Central Area + Fringer Area. Source: URA Note: CMT and MCT are cumulative reversions while FCT is quarterly Source: URA.

Figure 4: Pace of office rent decline increased to -2.9% Figure 5: Industrial prices and rents decreased by -0.3% QoQ from -2.6% QoQ in 2Q15 and -0.8% QoQ respectively (sq ft) Index 1,200,000 30% 110 1,000,000 25% 100 800,000 20% 14.8% 90 600,000 15% 80 400,000 6.0% 10% 70 200,000 2.8% 5% 0 0% 60 -200,000 -2.9%-5% 50 -400,000 -10% 40 -10.7% -600,000 -15% Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 Industrial price index Industrial rental index Net office demand Office rent growth (RHS) Note: Data reflects private office demand. Source: URA *A new Industrial price index was introduced in 1Q15. Source: URA

Figure 6: CS Singapore property universe—developers’ and REITs’ valuation summary Price (S$) Mkt cap RNAV % prem / Up/dn DPU growth (%) P/E (x) Div. yield (%) ROE (%) P/B (x) (disc) Company Ticker Rating Local Target S$ mn S$ to RNAV % T+1 T+2 T+1 T+2 T+1 T+1 T CCT CCT SP U 1.41 1.43 4,160 1.43 -1 1 0.2 3.0 18.0 17.1 6.0 4.5 0.81 K-REIT KREIT SP N 0.99 1.11 3,152 1.11 -11 13 -5.3 -0.5 19.0 18.4 7.0 3.7 0.70 Suntec SUN SP U 1.68 1.54 4,214 1.54 9 -8 2.6 1.7 15.7 14.9 5.8 5.0 0.79 CMT CT SP O 2.05 2.36 7,249 2.36 -13 15 3.0 5.3 17.5 16.6 5.4 6.3 1.14 MCT MCT SP O 1.40 1.62 2,954 1.62 -14 16 2.4 0.2 18.3 18.2 5.9 6.1 1.13 FCT FCT SP O 2.01 2.24 1,843 2.24 -10 11 3.2 1.2 17.5 17.3 6.0 5.8 1.05 SPHREIT SPHREIT SP N 0.95 1.10 2,403 1.10 -14 16 1.3 1.3 20.2 19.9 5.8 4.9 1.00 AREIT AREIT SP O 2.50 2.60 6,020 2.60 -4 4 6.5 5.2 16.3 15.4 6.2 6.5 1.20 MLT MLT SP N 1.02 1.08 2,516 1.08 -6 6 -0.5 -0.7 11.2 11.2 7.2 8.7 0.99 MINT MINT SP O 1.54 1.74 2,726 1.74 -11 13 2.6 5.0 14.6 13.9 6.9 7.7 1.16 Ascott ART SP N 1.21 1.37 1,870 1.37 -12 13 -4.0 4.3 19.7 17.3 6.5 4.4 0.88 CDLT HT CDREIT SP N 1.40 1.66 1,374 1.66 -16 19 -3.6 3.8 13.1 12.6 7.6 6.4 0.85 OUE HT OUEHT SP N 0.82 0.95 1,092 0.95 -14 16 -0.2 -0.2 14.3 7.8 8.2 6.4 0.91 KepDC KDCREIT SP O 1.06 1.16 931 1.16 -9 10 7.7 6.3 15.6 14.8 6.3 7.7 1.22 Note: Priced as of 23 October 2015. O = OUTPERFORM, N = NEUTRAL, U= UNDERPERFORM. Source: Company data, Credit Suisse estimates.

Singapore REIT Sector 2 26 October 2015 Continued decline in rents across the board Rents continued to decline across the board in 3Q15 with all sectors facing issues on weak demand and elevated levels of supply. The rent declines were led by the office sector at -2.9% QoQ (2Q15: -2.6% QoQ) as central region's rents declined -3.1% and fringe fell -1.1%. Rents down across the Similarly, retail rents declined 2.0% QoQ (2Q15: -0.5% QoQ). Industrial rent declines were board as all sectors relatively more moderate at -0.8% QoQ with factory rents falling -1.1% and warehouses continued to face headwinds -0.6%. on weak demand and strong Prices were also slightly lower, -0.1% QoQ (2Q15: +0.3% QoQ) for office while retail supply prices moderated by -0.3% QoQ (2Q15: -0.8%) and industrial prices dipped -0.3% QoQ (2Q15: -0.7%).

Figure 7: URA 3Q15—QoQ and YoY data summary Prices Rents Vacancy rates (%) % % pp chg pp chg 3Q15 2Q15 QoQ 3Q14 % YoY 3Q15 2Q15 QoQ 3Q14 % YoY 3Q15 2Q15 QoQ 3Q14 YoY Office All areas* 138.8 139.0 -0.1 135.6 2.4 180.6 186.0 -2.9 186.6 -3.2 10.3 10.5 -0.2 9.1 1.2 Central* 143.0 142.9 0.1 138.5 3.2 187.0 192.9 -3.1 192.3 -2.8 9.9 10.1 -0.2 8.5 1.4 Fringe 122.1 123.3 -1.0 125.5 -2.7 147.8 149.5 -1.1 152.8 -3.3 13.3 13.3 0.0 9.2 4.1 Retail All areas* 129.7 130.1 -0.3 128.8 0.7 115.0 117.4 -2.0 117.8 -2.4 7.9 8.2 -0.3 7.4 0.5 Central* 122.5 121.4 0.9 121.5 0.8 117.2 119.5 -1.9 119.8 -2.2 8.5 8.9 -0.4 8.2 0.3 Fringe 135.6 136.4 -0.6 134.7 0.7 109.1 111.4 -2.1 111.8 -2.4 7.7 7.9 -0.2 9.5 -1.8 Orchard* n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 8.0 8.0 0.0 7.8 0.2 Downtown core* n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10.9 13.0 -2.1 9.8 1.1 Outside Central Region n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5.9 5.9 0.0 4.8 1.1 Industrial property All industrial property 106.6 106.9 -0.3 106.9 -0.3 101.7 102.5 -0.8 103.4 -1.6 n.a. n.a. n.a. n.a. n.a. Warehouse* ^ n.a. n.a. n.a. 196.5 n.a 98.7 99.3 -0.6 100.6 -1.9 7.5 8.4 -0.9 9.6 -2.1 Factory* 107.0 107.4 -0.4 107.9 -0.8 100.6 101.7 -1.1 102.6 -1.9 13.8 13.6 0.2 14.6 -0.8 Business parks* n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 15.7 13.9 1.8 14.6 1.1 ^ Data no longer provided (last given data was in 3Q14); * Private vacancies. Source: URA, HDB

Singapore REIT Sector 3 26 October 2015 Retail rents decline but retail REIT reversions remain positive 3Q15 island-wide rents Retail rents in the central region dipped by -2.0% QoQ, central's rents decreased by 1.9% decline -2% QoQ QoQ, while fringe rents declined by a similar -2.0%. Median rents on Orchard fell 0.9% QoQ, while the rest of the city area saw rents decline 2.0%. Outside the central area, median rents also declined 2.1%. Figure 8: Central region retail rent index fell by -2.0% Figure 9: …but retail REIT rent reversions remain positive QoQ…

160 (%) MCT FCT CMT 45 42.8

38.7 140 40 37.4 37.1 37.6 35 33.4 33 33.1 120 30 27.2 100 25 20 17.5 16.2 16.5 15.1 14.4 80 15 13.2 10.1 10.8 10.9 8.9 9.4 9.3 10 7.8 7.7 6.4 6.4 6.3 6.3 6.6 6.3 7.1 60 6.1 5.26 6.2 6.2 6.1 6.1 5.3 3.8 4.6 4.1 Mar-94 Mar-97 Mar-00 Mar-03 Mar-06 Mar-09 Mar-12 Mar-15 5 2.5

Central region Central area Fringe area 0 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Central region = Central Area + Fringer Area. Source: URA Note: CMT and MCT are cumulative reversions while FCT is quarterly Source: URA Despite the continued decline in rents, the retail REITs continued to record positive but Retail REITs reversions slower rent reversions. continued to be positive ■ CMT recorded 9M15 reversions of +4.1%, dragged down by JCube -14.1%, while larger malls such as Tampines Mall (+6.5%), Junction 8 (+8.1%), Plaza Singapura (+3.6%) and Bugis Junction (+6.3%) continued to record healthy reversions.

■ FCT recorded 4Q FY15 reversions of +7.1% with Anchor Point registering reversions of +14.7%, while larger malls such as Causeway Point and Northpoint recorded +7.2% and +2.0% reversions.

■ MCT's VivoCity continued to record above industry reversions at +13.2% for 2Q FY16.

■ SPH REIT's Paragon reversions remained healthy at +9.8% for FY15, while reversions improved at Clementi at -5.6% (9M15: -11.4%). We believe the divergence is attributed to the superior asset quality and location of the malls owned by the retail REITs. Stable occupancy in 3Q15 Island-wide vacancy rates for private retail assets decreased marginally by -0.3 pp to 7.0% Occupancy improved -0.3% in 3Q15. The improvement was led by lower vacancies in downtown core (-1.7 pp QoQ) to QoQ as tenants 10.9% as more tenants commenced operations at Suntec City Mall and Marina Square. commenced operations Fringe vacancies decreased by -0.3 pp to 7.7%, while Suburban and Orchard vacancies downtown remained flat QoQ at 5.9% and 8.0%, respectively. Occupancy rates for private retail are still the highest for suburban (OCR) at 94.1% and the lowest in Downtown at 89.1%.

Singapore REIT Sector 4 26 October 2015

Figure 10: Overall Grade A retail rents edging lower the Figure 11: Occupancies still highest for suburban, past three quarters weakest for downtown (%) 100% 96 98% 96% 94 94.10% 94% 92.10% 92.00% 91.70% 92.30% 92 92% 89.10% 91.3 90% 90 88% 88 86% 84% 86 82% Mar-90 Mar-93 Mar-96 Mar-99 Mar-02 Mar-05 Mar-08 Mar-11 Mar-14 80% Islandwide private retail occupancy Total Downtown Orchard RCR Fringe OCR

Source: JLL as at 1Q15, Credit Suisse research Source: URA, Credit Suisse research Good quarter for tenant sales Tenant sales benefitted from the improvement in tourist arrivals (+7.0% YoY in July- 3Q15 tenant sales August), more public holidays and slight positive in haze as shoppers stayed indoors. benefitted from tourist VivoCity's tenant sales grew +5.5% YoY (2Q15: -2.0%, 1Q15: -0.2%), CMT tenant sales arrivals, public holidays and growth continued to improve (9M15: +4.4%, 1H15: +2.9%, 1Q15: +2.5%), while FCT's the haze tenant sales growth remained stable (3Q15: +2.1%, 2Q15: +2.2%, 1Q15: +3.0%). Retail sales (excl-motor sales) across Singapore also showed positive growth of +0.9% and +1.9% YoY in July and August, respectively. The stronger sales were led by watches and jewellery (+8.7-11.9%), medical goods (+9.9-10.9%) and department stores (+3.0- 5.1%). Figure 12: Singapore retail sales growth (excl-motor sales)

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

-2.0%

-4.0%

Jul-12 Jul-10 Jul-11 Jul-13 Jul-14 Jul-15

Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15

Jan-12 Jan-11 Jan-13 Jan-14 Jan-15 Jan-10 Source: Company data, Credit Suisse estimates

Singapore REIT Sector 5 26 October 2015 Strongest rent decline in office For 3Q15, central region's (central area and fringe) office rents declined 2.9% QoQ as weak demand and upcoming oversupply concerns continue. 3Q15 net demand came in at 139,931 sq ft (678,126 sq ft for 9M15), and is likely to miss annual historical average Pace of office rent decline demand of 1 mn sq ft. The decline was led by central rents declining 3.1% (+2.6% in accelerated to -2.9% QoQ. 2Q15), while fringe rents fell 1.1% (-2.4% in 2Q15). Pre-leasing activities of large incoming (2Q15: -2.6% QoQ) office buildings such as Guoco Tower, Marina One and Duo have started, however, office space is yet to be pre-committed at Guoco Tower and Marina One while Duo is about ~30% committed. Central area's office prices remained stable at +0.1% QoQ. The decline in prices was mainly in the fringe offices, which fell 1.0% QoQ.

Figure 13: Pace of office rent decline increased to -2.9% Figure 14: Private office—occupancy inched up 0.2 pp QoQ QoQ from -2.6% QoQ in 2Q15 to 89.7% (sq ft) % 1,200,000 30% 94 93.2 1,000,000 25% 92 91.3 800,000 20% 89.7 14.8% 90 89.5 600,000 15% 88 400,000 6.0% 10% 200,000 2.8% 5% 86 0 0% 84 83.9 -200,000 -2.9%-5% 82 -400,000 -10% 81.4 -10.7% 80 -600,000 -15%

1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15

4Q08 4Q14 4Q95 4Q96 4Q97 4Q98 4Q99 4Q00 4Q01 4Q02 4Q03 4Q04 4Q05 4Q06 4Q07 4Q09 4Q10 4Q11 4Q12 4Q13 Net office demand Office rent growth (RHS) Private occupancy

Note: Data reflects private office demand. Source: URA Source: URA, CEIC, Credit Suisse Occupancy improved (+0.2 pp) to 89.7% Island-wide occupancy in 3Q15 improved by 0.2 pp QoQ (net demand of 333,681 sq ft) as Island-wide occupancy tenants continued to move into South Beach and CapitaGreen (1.5 mn sq ft) which remained stable at 89.7% entered the system in 4Q14. The low current supply (negative net supply of -43,056 sq ft) also helped to improve occupancy. Outside central region occupancy improved 0.9 pp QoQ to 86.9% followed by downtown (+0.5 pp QoQ to 91.0%), Orchard (+0.2 pp to 90.2%), Fringe (+0.1 pp to 90.1%), while rest of central region declined 0.6% QoQ to 91.2%.

Figure 15: Supply pipeline—CBD versus non-CBD Figure 16: Supply pipeline—project list (sq ft NLA) TOP est Proposed Project City Area NLA (sqft) 2015 PS100 (strata titled) Fringe CBD 70,650 3,000,000 2015 Refurbishment of former NOL building Decentralised 200,000 2015 total 270,650 2,500,000 2016 5 Shenton Way Core CBD 277,540 2016 SBF Centre (strata titled) Core CBD 353,480 2,000,000 2016 EON Shenton (strata titled) Fringe CBD 101,045 2016 GSH Building (strata titled) Core CBD 282,000 2016 Duo Fringe CBD 570,475 1,500,000 2016 Guoco Tower Fringe CBD 850,000 2016 Site at Tai Seng Decentralised 56,000 1,000,000 2016 total 2,490,540 2016 Marina One Core CBD 1,875,630 500,000 2017 Redev of Intnl Factors Building and Robinson Towers Core CBD 215,280 2017 Crown @ Robinson Core CBD 70,000 2017 Oxley Tower (strata titled) Core CBD 111,710 0 2017 Arc 380 (strata titled) Decentralised 103,500 4Q15 2016 2017 2018 2017 Vision Exchange (strata titled) Decentralised 500,000 CBD Outside CBD 2017 total 2,876,120 2018 Frasers Tower Core CBD 645,000 Source: CBRE, Credit Suisse estimates Source: CBRE, Credit Suisse estimates

Singapore REIT Sector 6 26 October 2015

CBRE also report Grade A rents -0.8% QoQ, while leasing activity for CBD has been relatively quiet CBRE reported Grade A rents declining by -3.5% QoQ to S$10.90 psf/month (-0.9% in Tenants waiting for the 2Q15 to S$11.30; 1Q15: S$11.40; +1.8% QoQ, 4Q14: S$11.20; +2.3% QoQ). Grade B market to move further in (core CBD) rents also fell 2.3% QoQ to S$8.35 psf/month (2Q15: S$8.55; -0.6%, 1Q15: their favour S$8.60; +0.6%, 4Q14: S$8.55; +0.6%). According to CBRE, some tenants have been holding off premises planning in order to take advantage of more competitive leases as the market moves more in their favour.

Singapore REIT Sector 7 26 October 2015 Industrial: Slight softening in prices and rents Industrial prices weakened slightly by -0.3% QoQ (2Q15: -0.7%). Multi-user factory prices Industrial prices and rents were -0.4% QoQ (2Q: -0.4%). Similarly, overall industrial rents softened by -0.8% QoQ both softened by -0.3% QoQ (2Q: -0.7%) weighed by the multi-user factory segment, which fell -1.1% QoQ (2Q: -1.2%), and -0.8% QoQ, whilst warehouse rents softened by -0.6% QoQ (2Q -0.1%). respectively Warehouse vacancies improved by -0.9% QoQ , mainly due to the completion of a single Vacancy rates for user asset, DHL Supply Chain Centre, during the quarter which made up the bulk of new warehouses declined 0.9 pp stock. Conversely, vacancy rates for private business parks and factories increased by 1.8 QoQ to 7.5%, helped by the pp QoQ to 15.7%, and 0.2% QoQ to 13.8%, respectively. The increase in business park completion of a DHL Supply vacancy was mainly due to the completion of 45,400 sq m of business park GFA in Centre science park.

Figure 17: Industrial prices and rents decreased by -0.3% Figure 18: Vacancies for private business parks +1.8pp and -0.8% QoQ respectively QoQ to 15.7% while warehouses -0.9pp QoQ to 7.5% Index % 110 35 100 30 90 25 80 20 70 15 60 10 50 5 40 0 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Industrial price index Industrial rental index Factory Warehouse Business Park

*A new Industrial price index was introduced in 1Q15. Source: URA Source: URA

Figure 19: URA—industrial data summary Price Rental Vacancy 3Q15 2Q15 %QoQ 3Q14 %YoY 3Q15 2Q15 %QoQ 3Q14 %YoY 3Q15 2Q15 pp QoQ 3Q14 pp YoY Industrial property 106.6 106.9 -0.3 106.9 -0.3 101.7 102.5 -0.8 103.4 -1.6 n.a. n.a. n.a. n.a. n.a. Warehouse*^ n.a. n.a. n.a. 196.5 n.a. 98.7 99.3 -0.6 100.6 -1.9 7.5 8.4 -0.9 9.6 -2.1 Factory*~ 107.0 107.4 -0.4 107.9 -0.8 100.6 101.7 -1.1 102.6 -1.9 13.8 13.6 0.2 14.6 -0.8 Business parks* n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 15.7 13.9 1.8 14.6 1.1 ^ No longer provided (last given data was in 3Q14). ~ multi-user factory. * Private vacancies. Source: URA Mild relaxation in anchor tenant specification by JTC In light of the competitive landscape for industrial properties, JTC lowered the specification Mild relaxation in anchor for anchor tenant space to 1,000 sq m (from 1,500 sq m). The mild relaxation is helpful but tenant specification—1,000 feedback from REIT managers suggests that the impact will not be significant. Under our sq m for anchor tenant coverage, AREIT stands to benefit the most from the policy change given that it is most space exposed to the JTC's ruling that 70% of GFA is to be occupied by anchor tenants (by end 2017). Rent reversions continue to moderate for Industrial REITs As at end of September, AREIT’s portfolio occupancy improved by 0.2 pp to 89% led by higher occupancy at Aperia (+6.5 pp QoQ to 90.4%). Similarly, MINT’s occupancy grew 0.3 pp QoQ to 93.8% led by improved occupancy in business parks (+2.8 pp QoQ), and Hi-tech (+1.3 pp QoQ). MLT’s portfolio occupancy also improved 0.3 pp QoQ to 96.9% but still faces pressure from two more expected SUA conversions to MTBs in Singapore (two have been converted and one other is pending sale).

Singapore REIT Sector 8 26 October 2015

As a whole, rent reversions continue to moderate. AREIT however bucked the trend and saw strong rent reversions of +9.1% for 2Q FY16 (+6.6% for 1Q FY16) led by business & Rent reversions continue to science parks (+13.2%), followed by light industrial (+5.5%). MLT's rent reversions further moderate for the industrial moderated to 3% in 2Q FY16 from 5% last quarter led from HK and SG. Similarly, MINT’s REITs. AREIT however, saw rent reversions were muted with +1.7% for flatted factories, +0.5% for hi-tech, and -1.5% strong +9.1% reversions. and -2.5% for business parks and stack-up/ramp-up respectively (vs 1Q reversions of -5.7% to +3.6%).

Singapore REIT Sector 9 26 October 2015

Companies Mentioned (Price as of 26-Oct-2015) Ascendas REIT (AEMN.SI, S$2.46) Ascott Residence Trust (ASRT.SI, S$1.22) CDL Hospitality Trusts (CDLT.SI, S$1.39) Capitaland Commercial Trust (CACT.SI, S$1.44) Capitaland Mall Trust (CMLT.SI, S$2.07) Frasers Centrepoint Trust (FCRT.SI, S$2.01) Keppel DC REIT (KEPE.SI, S$1.05) Keppel REIT (KASA.SI, S$0.99) Mapletree Commercial Trust (MACT.SI, S$1.4) Mapletree Industrial Trust (MAPI.SI, S$1.52) Mapletree Logistics Trust (MAPL.SI, S$1.02) OUE Hospitality Trust (OUER.SI, S$0.82) SPH REIT (SPHR.SI, S$0.94) Suntec REIT (SUNT.SI, S$1.7)

Disclosure Appendix

Important Global Disclosures I, Nicholas Teh, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ra tings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

Singapore REIT Sector 10 26 October 2015

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 58% (34% banking clients) Neutral/Hold* 27% (33% banking clients) Underperform/Sell* 13% (23% banking clients) Restricted 2% *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-and- analytics/disclaimer/managing_conflicts_disclaimer.html Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties. See the Companies Mentioned section for full company names The subject company (AEMN.SI, CACT.SI, CMLT.SI, FCRT.SI, KASA.SI, KEPE.SI, MACT.SI, MAPL.SI, SPHR.SI, SUNT.SI, ASRT.SI, OUER.SI) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (AEMN.SI, CACT.SI, CMLT.SI, FCRT.SI, KASA.SI, KEPE.SI, MACT.SI, SPHR.SI, ASRT.SI, OUER.SI) within the past 12 months. Credit Suisse has managed or co-managed a public offering of securities for the subject company (KEPE.SI) within the past 12 months. Credit Suisse has received investment banking related compensation from the subject company (AEMN.SI, CACT.SI, CMLT.SI, FCRT.SI, KASA.SI, KEPE.SI, MACT.SI, SPHR.SI, ASRT.SI, OUER.SI) within the past 12 months Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (AEMN.SI, CACT.SI, CMLT.SI, FCRT.SI, KASA.SI, KEPE.SI, MACT.SI, MAPL.SI, SPHR.SI, SUNT.SI, CDLT.SI, ASRT.SI, OUER.SI) within the next 3 months. As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (AEMN.SI, CACT.SI).

For other important disclosures concerning companies featured in this report, including price charts, please visit the website at https://rave.credit- suisse.com/disclosures or call +1 (877) 291-2683. Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events. Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit- suisse.com/sites/disclaimers-ib/en/canada-research-policy.html. Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (KEPE.SI, SPHR.SI, ASRT.SI, OUER.SI) within the past 3 years. As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report. Principal is not guaranteed in the case of equities because equity prices are variable. Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that. To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Singapore REIT Sector 11 26 October 2015

Credit Suisse AG, Singapore Branch ...... Nicholas Teh ; Daniel Lim

For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.credit- suisse.com/disclosures or call +1 (877) 291-2683.

Singapore REIT Sector 12 26 October 2015

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Singapore REIT Sector 13