Singapore Industry Focus Singapore Property and REITs Singapore Property & REITs Page 2 S-REITs - Go...

ed-TH / sa- AS, PY

Catalysts abound

Go for cyclicals (Office and Industrial REITs) on

improving economic fundamentals

Potential giant industrial REIT to emerge?

Developers' rally to continue with improving

transaction volumes

Go for cyclical (office and industrial) S-REITs on improving

economic fundamentals. The Federal Reserve's (Fed) guidance in

keeping to a gradual pace of two more hikes in 2017 is in line with

expectations, and we see it as positive for S-REITs. We expect

prices to be supported in the near term given earlier fears that the

Fed would be more hawkish. On the back of better GDP growth

prospects for Singapore, we recommend investors to position

themselves in more cyclical sectors in the office and industrial

REITs, namely in business parks and hi-tech industrials. Our picks

are A-REIT, K-REIT, MCT, KDC REIT, FLT and Croesus REIT.

Potential giant industrial REIT to emerge? We see a potential

mega consolidation of almost all mid-cap industrial REITs with the

emergence of a new significant investor in the space, E-Shang

Redwood (E-Shang), which is backed by Warburg Pincus. E-Shang

recently acquired an 80% stake in the manager of Cambridge

REIT, a 12% stake in the REIT and a 5% stake in Sabana REIT. In

addition, Warburg Pincus has an interest in the manager of Cache

Logistics Trust and is reportedly bidding for Global Logistics

Properties. The catalyst to a merger would emerge if E-Shang and

Warburg Pincus partner Mr Tong Jinquan (a significant shareholder

of Cambridge, Sabana and two other mid-cap industrial REITs) to

consolidate their stakes in all the industrial REITs they own, which

would be the largest consolidation of almost all the mid-cap

industrial REITs.

Developers’ rally to continue with improving transaction

volumes. Despite the rally in developers’ share prices, we believe

that there is still upside and advocate investors to remain vested

and buy on dips, if any. In our view, the recent easing of the seller

stamp duty (SSD) as a start of a multi-year relaxation trend of

current property curbs will mean continued sector-wide re-rating

opportunities. The next catalyst to drive share prices is a healthy

number of transactions, where the first two months’ primary sales

(+61% y-o-y) appear to suggest good positive momentum. If this

trend continues, we see this as a prelude to an eventual basing out

and increase in property prices in the medium term. Developers

like FCL and UOL offer good value.

STI : 3,163.52

Analyst Derek TAN +65 6682 3716 Mervin SONG CFA +65 6682 3715 [email protected] [email protected]

Rachel TAN +65 6682 3713 Singapore Research Team [email protected] [email protected]

DBS Group Research . Equity

17 Mar 2017

Singapore Industry Focus

Singapore Property and REITs

Refer to important disclosures at the end of this report

STOCKS

Price Mkt Cap 12 mth

Target Price

Performance (%)

S$ US$m S$ 3 mth 12 mth Rating

REITs Ascendas REIT 2.50 5,142 2.65 8.2 4.2 BUY Keppel REIT 1.02 2,404 1.23 (0.5) 2.0 BUY Mapletree Commercial Trust

1.49 3,053 1.62 5.7 4.8 BUY Frasers Logistics & Industrial Trust

0.95 965 1.10 2.7 N.A BUY Keppel DC REIT 1.20 961 1.30 (3.6) 14.1 BUY Croesus Retail Trust 0.89 480 0.99 4.7 10.9 BUY Developers

Frasers Centrepoint Ltd

1.74 3,608 2.00 12.3 9.4 BUY

UOL Group 6.98 4,008 7.64 13.5 18.9 BUY

Source: DBS Bank, Bloomberg Finance L.P.

Closing price as of 16 Mar 2017

Industry Focus

Singapore Property & REITs

S-REITs - Go Cyclical as economic fundamentals improve Post the hike in interest rates this year and the guidance by the

Fed of an additional two increases this year which are in line

with market expectations, we believe the S-REIT market will be

well supported near term given earlier fears that the Fed would

be more hawkish.

With consensus expectations for Singapore’s GDP growth to be

revised upwards (according to the latest Monetary Authority of

Singapore Survey, market economists expect GDP growth of

2.3% versus 1.5% previously), we recommend that investors

position themselves in more cyclical sectors, namely the office

and industrial REITs, specifically the business parks and hi-tech

segments. In addition, with the supply for both sectors easing

from next year, we believe the prospects of a recovery in spot

rents next year are increasing, which is supportive of our positive

stance.

For retail REITs, we expect a near-term relief rally. But we believe

the upside will be capped, given cracks in the previous market

assumption that suburban malls are totally resilient, on the back

of expectations of heightened competition from the online

space due to the imminent launch of Amazon in Singapore.

Meanwhile, the hospitality REITs are more of a 2H17 story as

there remains potential downside risk to RevPAR expectations

and investors are likely to focus on the large-cap office and

industrial REITs first.

In terms of overall S-REIT valuation, the average yield spread is

at 4.1%, close to the average yield spread of 4.2% since 2010.

Thus, with the risk of a very hawkish Fed receding, we believe

downside risk to S-REIT share prices are limited near term.

Furthermore, based on the last two interest rate upcycles, there

is another 30-40bps increase in the 10-year bond yield from

current levels, which would take the average yield spread down

to 3.5-3.6%. Should there be a cyclical upswing in the

Singapore economy resulting in an acceleration in rents,

translating to growing DPUs again, a tighter yield spread may be

justified.

Given our positive stance on the office and industrial space, our

top picks include A-REIT and KREIT. We also maintain our

growth and value themes, with our picks being MCT, FLT, KDC

REIT and Croesus.

Upward revision to GDP expectations – MAS survey

Key indicators Dec 2016 Survey (% y-o-y)

March 2017 Survey (% y-o-y)

Overall GDP 1.5 2.3 Manufacturing 1.1 4.5 Finance and Insurance 1.8 2.0 Construction 2.4 0.3 Wholesale and Retail Trade 1.0 1.1 Accommodation and Food Services 1.7 1.3 Private Consumption 1.5 1.1 Non-oil Domestic Exports 0.3 6.1 Unemployment rate (end-period, SA%) 2.4 2.4

Source: Monetary Authority of Singapore, DBS Bank

Industry Focus


Declining supply pressures for office, industrial and hotel sectors

Office

Source: URA, STB, DBS Bank

Industrial

Source: URA, DBS Bank

Hotels

Source: URA, STB, DBS Bank

63,518 3,767 375 1,462

45,000

50,000

55,000

60,000

65,000

70,000

75,000

2016 2017F 2018F 2019F

Rooms

Hotel rooms Expected net additions

6%1% 2%

0

500

1,000

1,500

2,000

2,500

2014

2015

2016

2017

2018

2019

'000 sqft

-

500

1,000

1,500

2,000

2,500

3,000

2013 2014 2015 2016 2017F 2018F 2019F

000'

sqm

Industrial Space

Supply Demand

Fall off in supply due to completion of Marina One in 2017. Pre-commitment of major buildings, Marina One (60%), Duo (estimated 45%) and Guoco Tower (90% taken up) has taken pressures off the new supply.

Drop in supply due to lack of new land release for development hotels in the last three years. RevPAR could turn positive in 2018-2019 given a 1-2% annual increase in supply over the same period. A drop from the 6% increase in 2017.

Industrial Supply to peak in 2017 and fall off significantly in 2018. We estimate that more than 60% of the new incoming space has been pre-committed (majority of it built for end-users).

Industry Focus


Yield spread chart

Source: Bloomberg Finance L.P., DBS Bank

Movements in 10-year bond yield during previous interest rate upcycles

Previous episodes of rising interest rates

1 2 3 4 5 6

Start of interest rate upcycle May-83 Dec-86 Feb-94 Jun-99 Jun-04 Dec-15

End of interest rate upcycle Aug-84 Feb-89 Feb-95 May-00 Jun-06 Mar-17

Length (months) 15 27 13 12 25 16 Interest in Fed Funds target rate (%) 3.25 3.87 3.00 1.75 4.25 0.75

Increase in 10-year bond yield ahead of first rate hike (%) 0.58 0.30 0.96 1.62 0.90 0.91 Increase in 10-year bond yield post first rate hike (%) 1.97 2.07 1.07 0.49 0.56 0.18


0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Sector Yield Mean Yield +1 SD -1 SD

Industry Focus


Increase in interest rates versus GDP growth, CPI and Core PCE

Year Increase in Fed Funds target rate (%)

GDP growth (%)

CPI (%)

Core PCE (%)

1983 1.00 4.6 3.8 4.5

1984 2.25 7.3 3.9 3.9

1986 0.12 3.5 1.1 3.3

1987 0.88 3.5 4.4 3.5

1988 1.87 4.2 4.4 4.5

1989 1.00 3.7 4.6 3.6

1994 2.50 4.0 2.7 2.2

1995 0.50 2.7 2.5 2.1

1999 0.75 4.7 2.7 1.4

2000 1.00 4.1 3.4 1.8

2004 1.25 3.8 3.3 2.1

2005 2.00 3.3 3.4 2.3

2006 1.00 2.7 2.5 2.2

2015 0.25 2.4 0.7 1.6

2016 0.25 1.6 1.7 1.7

2017 0.25 2.7 2.3 2.1


Industry Focus


Potential giant industrial REIT to emerge?

We maintain a watchful eye on the industrial REITs as we see

potential merger & acquisition (M&A) activities occurring in

the near-term horizon. This is on the back of the recent

emergence of a new investor in the space, E-Shang Redwood.

A new sponsor in the industrial REIT space. E-Shang Redwood

is a leading logistics warehousing and infrastructure and

facilities developer and total solutions provider for e-

commerce, retail and cold chain operators. One of the key

investors in E-Shang Redwood is Warburg Pincus, which is

also rumoured in media articles to be one of the few bidders

for Global Logistics Properties (GLP). E-Shang Redwood

reportedly owns and manages a portfolio of logistics

properties in China, South Korea and Japan worth over

US$5bn.

Entities related to Warburg Pincus have taken an

interest in various REIT managers and REITs.

E-Shang has made the first moves. E-Shang Redwood has

recently acquired a strategic stake in the manager of

Cambridge REIT and a 10.25% stake in the REIT. We also note

that E-Shang recently emerged as a substantial shareholder

(>5%) of Sabana REIT, where the embattled REIT manager is

facing an unhappy group of unitholders who requested an

EGM to remove the manager or unwind the REIT. Warburg

Pincus is also part of a consortium that is taking private the

sponsor of Cache Logistics Trust (Cache).

Winning over Mr. Tong could be a catalyst. One of the major

unitholders of industrial REITs is also Mr. Tong Jinquan, who

have over the years amassed sizeable stakes in the various

industrial REITs. While Mr. Tong is understood to be a fairly

passive investor, we believe that if E-Shang Redwood

collaborates with Mr. Tong, this could spark a consolidation

within REITs that they have a collective interest in.

A consolidation in the REITs could re-rate share prices.

Struggling with scale and growth, the mid-cap industrial REITs

(with an average market cap of S$0.9bn) have seen poor

liquidity and generally trade at a discount to NAVs. Therefore,

high cost of capital has inhibited the ability to grow through

acquisitions. We believe that a consolidation in industrial

REITs, with an aim to build operational scale, will be a catalyst

for better valuations.

Key shareholders across the Industrial REITs

Code Sponsor Sponsor Stake (%)

E-Shang Redwood (%)

Mr. Tong Jinquan (%)

Credit Suisse (%)

Ascendas REIT A-REIT Ascendas-Singbridge 19.9% - - -

Mapletree Logistics Trust MLT Mapletree Investments 39.4% - - -

Mapletree Industrial Trust MINT Mapletree Investments 34.2% - - -

AIMS AMP REIT AIMSAMP AIMS and AMP Group 37.9% - - 4.4%

Frasers Logistics & Industrial Trust

FLT Frasers Centrepoint Limited

20.4% - - -

Cambridge Industrial Trust CREIT E-Shang Redwood (shown in right)

12.0% 18.5% 5.0%

Cache Logistics Trust Cache Sponsor of Cache Logistics Trust

4.3% - - -

Viva Industrial REIT Viva Ho Lee Group & Kim Seng Holdings

11.8%% - 48.8% -

Sabana REIT Sabana Vibrant Group 9.7% 5.0% 6.2% -

Soilbuild Business Space REIT SBREIT Soilbuild Group 25.7% - 6.6% -

Source: DBS Bank, Bloomberg Finance L.P.

Industry Focus


Summary of Industrial REITs' valuations

Code Annualised NPI (S$'m)

Total Assets (S$'bn)

Total Debt (S$'bn)

Mkt Cap (S$'m)

Enterprise Value (S$'m)

Book Yield (%)

Implied Yield (%)

Ascendas REIT A-REIT 619.9 9.7 3.1 7.2 10.59 6.4% 5.9%

Mapletree Logistics Trust MLT 319.6 5.6 2.5 2.7 5.2 5.7% 6.2%

Mapletree Industrial Trust MINT 253.7 3.7 1.2 3.0 4.2 6.9% 6.0%

AIMS AMP REIT AIMSAMP 80.0 1.5 0.6 0.8 1.4 5.3% 5.9%

Cambridge Industrial Trust CREIT 78.8 1.3 0.5 0.7 1.2 6.1% 6.5%

Cache Logistics Trust Cache 85.4 1.3 0.6 0.7 1.3 6.6% 6.8%

Viva Industrial REIT Viva 72.3 1.3 0.5 0.7 1.2 5.6% 6.0%

Sabana REIT Sabana 55.6 1.0 0.5 0.5 1.0 5.6% 5.8%

Soilbuild Business Space REIT SBREIT 74.0 1.3 0.5 0.7 1.2 5.7% 6.0%

Source: DBS, URA, Companies’ presentation slides

Price Differential between large-cap and mid-cap industrial REITs (Yield)


Price Differential between large-cap and mid-cap industrial REITs (P/NAV)


-0.2

-0.1

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

(X)P/B differential Mean -1 SD +1 SD

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Yield Differential (Large vs Mid Caps) Mean - 1 SD + 1 SD

Industry Focus


Developers - BUY on dips as rally has legs

With guidance by the Fed of an additional two increases in

interest rates this year (which is in line with market

expectations), we believe that the fact that Fed did not signal

any plans to accelerate the pace of monetary tightening relieves

some fears of faster-than-expected rate hikes in the coming

years. With funding costs not expected to spike and banks clamouring for market share in the new loan space, we believe that the environment remains supportive of transactions in the immediate term.

Therefore, although property developers outperformed the REITs

by 20% YTD, partially led by the recent property relaxation, we

believe that there will still be legs to higher prices going

forward, notwithstanding a near-term profit-taking trend. We

advocate investors to buy on dips. In prior rallies, developers

have outperformed REITs by up to 50%.

The recent property relaxation is a clear message from the

government that they stand ready to support the property

market and prevent an unintended crash in prices, if the market

outlook turns. As such, we believe that we are at the start of a

multi-year relaxation trend of the current property curbs, which

will mean continued sector-wide re-rating opportunities,

resulting in investors remaining positively disposed to the

developers (Singapore Property : Sentiment lift on relaxation –

13 Mar 17 ).

The next critical factor that we are tracking is transactions. The

first two months’ primary sales (pre-property relaxation) were

61% higher y-o-y, suggesting good positive momentum, which

bodes well for the sector in general. Now with the ‘implied

support’ from the government, we believe that a sustained

transaction momentum will be a prelude to an eventual basing

out and increase in prices in the medium term.

Developers with a pipeline of launches in 2017/2018 include

Frasers Centrepoint Limited (FCL) and UOL Group (UOL) where

positive sell-through rates for upcoming new launches could be

positive drivers to share prices.

Developers still trading at below historical average of 1x P/NAV


Mean: 1.0x

-1 SD: 0.6x

+1 SD: 1.3x

-

0.50

1.00

1.50

2.00

2.50

Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17

P/NAV (x)

P/NAV (w/o GLP) Mean - 1 SD +1 SD P/NAV (with GLP)

https://researchwise.dbsvresearch.com/ResearchManager/DownloadResearch.aspx?E=cgadckhea

https://researchwise.dbsvresearch.com/ResearchManager/DownloadResearch.aspx?E=cgadckhea

Industry Focus


List of expected property launches in 2017/2018 (non-exhaustive)

Project Name Location No. of units Expected launch

2017 Launches

Clement Canopy Clementi Av 1 505 12-Feb-17

Grandeur Park Residences Tanah Merah 720 18-Feb-17

INZ Residences (EC) Choa Chu Kang Av 5 497 24-Feb-17

Park Place Residences at PLQ Paya Lebar Central 429 11-Mar-17

Artra Alexandra View (Parcel A) 400 Mar/Apr 17

Seaside Residences Siglap Road 843 Early 2Q17

Yio Chu Kang EC Yio Chu Kang Rd 520 2Q17

1H17 total 3,914

Jalan Kandis Sembawang 110 TBA

Bukit Batok West Avenue 6 Bukit Batok West Avenue 6 425 TBA

Martin Place River Valley 450 TBA

Anchorvale Land (EC) Sengkang 635 End-2017/2018

Fernvale Rd Sengkang 575 TBA

Gramercy Park (South Tower) Orchard 87 1H2017

New Futura Leonie Hill Road 124 2H2017

South Beach Residences South Beach 190 2017/2018

Shunfu Ville Bishan 1,150 2H2017

2H17 total 3,746

2017 total 7,660

Future Launches

Raintree Gardens Potong Pasir 750 2018

Amber Road East Coast 165 2018

Central Boulevard Marina Bay 365 TBA

Margaret Drive Queenstown 275 TBA

Perumal Road Kallang 200 TBA

West Coast vale Clementi 520 TBA

Total for future launches 2,275


Industry Focus


Four major periods when developers outperformed S-REITs


Outperformance during 2005-2006 – Increase in residential property prices and S-REITs impacted by increase in interest rates late in the cycle


0

200

400

600

800

1,000

1,200

Developers SREIT Interest rate upcycle

Period whendevelopers outperform

80

90

100

110

120

130

140

150

Developers SREITs

Outperformance

by 44%

Industry Focus


Four major periods when developers outperformed S-REITs (cont’d)

Outperformance during 2009 – Cyclical stocks doing better at the start of the recovery post the GFC

Outperformance during 2015 – Rally in developers due to Keppel Land takeover

Outperformance during 2017 – Developers boosted by the potential takeover of GLP and some relaxation of property cooling measures


95

100

105

110

115

120

125

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15

Developer SREIT

Outperforms

by 17%

80

100

120

140

160

180

200

220

09-Mar-09 09-Apr-09 09-May-09 09-Jun-09 09-Jul-09

Developers SREITs

Outperforms

by 50%

90

95

100

105

110

115

120

125

17-Nov-2016 17-Dec-2016 17-Jan-2017 17-Feb-2017

Developer SREIT

Outperforms by

20%

Industry Focus


S-REIT peer comparison table

REIT FYE Price Rec

12 mth Target Price Mkt Cap Yield @ Current Price P/Bk (x)

(S$) (S$) S$'m FY16/17F FY17/18F FY16/17F FY17/18F

Office

CCT Dec 1.545 BUY 1.69 4,584 5.9% 6.0% 0.87 0.88

KREIT Dec 1.015 BUY 1.23 3,368 6.3% 6.0% 0.71 0.71

OUECT Dec 0.680 HOLD 0.74 886 7.6% 7.4% 0.73 0.74

9,841 6.4% 6.3% 0.79 0.80

Retail

CRCT Dec 1.45 BUY 1.60 1,263 6.9% 7.0% 0.88 0.90

CRT Jun 0.89 BUY 0.99 673 8.5% 9.2% 1.02 1.04

FCT Sep 2.03 BUY 2.20 1,867 5.8% 5.8% 1.05 1.06

SPH REIT Aug 0.97 BUY 1.03 2,477 5.7% 5.9% 1.04 1.04

13,156 6.0% 6.0% 1.02 1.02

Commercial

MCT Mar 1.49 BUY 1.62 4,278 5.9% 6.0% 0.97 1.12

MAGIC Mar 0.98 BUY 1.11 2,739 7.3% 7.4% 0.80 0.81

SGREIT Jun 0.73 BUY 0.85 1,592 7.1% 7.1% 0.79 0.79

13,113 6.2% 6.3% 0.86 0.92

Industrial

AIMS Mar 1.360 NR 1.57 869 8.3% 8.3% 0.88 0.88

a-itrust Mar 1.080 BUY 1.12 1,005 5.3% 5.7% 1.58 1.59

A-REIT Mar 2.500 BUY 2.65 7,206 6.2% 6.3% 1.21 1.24

Cache Dec 0.820 HOLD 0.77 738 9.4% 8.9% 1.05 1.06

CREIT Dec 0.555 BUY 0.60 724 7.5% 7.2% 0.87 0.88

FLT Sep 0.950 BUY 1.10 1,358 7.0% 7.1% 1.09 1.10

MINT Mar 1.705 BUY 1.90 3,073 6.6% 6.8% 1.25 1.25

MLT Mar 1.080 BUY 1.15 2,700 6.7% 6.9% 1.07 1.07

SBREIT Dec 0.645 BUY 0.70 674 9.4% 8.4% 0.89 0.90

18,346 6.7% 6.8% 1.16 1.17

Hospitality

ASCHT Mar 0.750 BUY 0.84 843 7.4% 7.2% 0.87 0.88

CDREIT Dec 1.400 BUY 1.65 1,390 7.1% 6.8% 0.90 0.90

FEHT Dec 0.590 HOLD 0.63 1,065 7.3% 7.0% 0.65 0.65

FHT Sep 0.685 BUY 0.75 1,258 7.6% 7.4% 0.87 0.91

OUEHT Dec 0.690 BUY 0.75 1,242 6.7% 6.9% 0.90 0.91

7,566 7.3% 7.2% 0.83 0.84

Healthcare

P-Life Dec 2.45 BUY 2.75 1,482 4.9% 5.2% 1.43 1.43

RHT Mar 0.88 HOLD 0.85 706 8.8% 35.4% 0.97 0.99

2,188 6.2% 14.9% 1.28 1.29

Others

IREIT Dec 0.72 HOLD 0.76 448 8.8% 8.9% 1.15 1.15

KDCREIT Dec 1.20 BUY 1.30 1,347 5.6% 5.9% 1.25 1.25

MUST Dec 0.84 BUY 0.95 737 4.3% 7.4% 0.96 0.96

2,532

Sector Average 6.5% 6.8% 0.99 1.00


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

Completed Date: 17 Mar 2017 08:19:13 (SGT) Dissemination Date: 17 Mar 2017 09:11:04 (SGT)

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Industry Focus


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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

his associate does not have financial interests2 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 Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates have a proprietary position in

CapitaLand Commercial Trust, Keppel REIT, CapitaLand Retail China Trust, Croesus Retail Trust, Frasers Centrepoint Trust, SPH REIT,

Mapletree Commercial Trust, Mapletree Greater China Commercial Trust, YTL Starhill Global REIT, Ascendas REIT, Cache Logistics Trust,

Cambridge Industrial Trust, Frasers Logistics & Industrial Trust, Mapletree Industrial Trust, Mapletree Logistics Trust, Soilbuild Business Space

Reit, Ascendas Hospitality Trust, CDL Hospitality Trusts, Far East Hospitality Trust, Frasers Hospitality Trust, OUE Hospitality Trust, Parkway Life

Real Estate Investment Trust, RHT Health Trust, Keppel DC REIT, Manulife US Real Estate Inv, UOL Group recommended in this report as of

28 Feb 2017.

2. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research

Report.

3. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates have a net long position

exceeding 0.5% of the total issued share capital in Keppel REIT, CapitaLand Retail China Trust, Croesus Retail Trust, Mapletree Greater

China Commercial Trust, YTL Starhill Global REIT, Cache Logistics Trust, Frasers Logistics & Industrial Trust, Mapletree Logistics Trust,

Soilbuild Business Space Reit, CDL Hospitality Trusts, Frasers Hospitality Trust, RHT Health Trust, Keppel DC REIT, Manulife US Real Estate Inv

recommended in this report as of 28 Feb 2017

4. 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 Keppel REIT, Croesus Retail Trust, Mapletree Greater China Commercial Trust, YTL Starhill Global REIT, Frasers Logistics &

Industrial Trust, Soilbuild Business Space Reit, Frasers Hospitality Trust, Keppel DC REIT, Manulife US Real Estate Inv as of 28 Feb 2017.

5. 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 28 Feb 2017.

Compensation for investment banking services:

6. 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 CapitaLand Commercial Trust, OUE Commercial REIT, Croesus Retail Trust, Mapletree Commercial Trust,

Mapletree Greater China Commercial Trust, YTL Starhill Global REIT, Ascendas REIT, Frasers Logistics & Industrial Trust, Mapletree Industrial

Trust, Mapletree Logistics Trust, Soilbuild Business Space Reit, Ascendas Hospitality Trust, Frasers Hospitality Trust, OUE Hospitality Trust,

Parkway Life Real Estate Investment Trust, RHT Health Trust, Keppel DC REIT, Manulife US Real Estate Inv as of 28 Feb 2017.

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.

Industry Focus


7. DBS Bank Ltd., DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have managed or co-managed a public offering of securities for

CapitaLand Commercial Trust, Croesus Retail Trust, Mapletree Commercial Trust, Mapletree Greater China Commercial Trust, YTL Starhill

Global REIT, Ascendas REIT, Frasers Logistics & Industrial Trust, Mapletree Industrial Trust, Mapletree Logistics Trust, Soilbuild Business Space

Reit, Ascendas Hospitality Trust, Frasers Hospitality Trust, OUE Hospitality Trust, Parkway Life Real Estate Investment Trust, RHT Health Trust,

Keppel DC REIT, Manulife US Real Estate Inv in the past 12 months as of 28 Feb 2017.

Directorship/trustee interests:

8. Tan Su Shan, a member of DBS Group Executive Committee, is an Independent Non-Executive Director of Mapletree Greater China

Commercial Trust as of 1 Mar 2017

9. 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:

10. 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.

RESTRICTIONS ON DISTRIBUTION

General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

Australia This report is being distributed in Australia by DBS Bank Ltd. (“DBS”) or DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”), both of which 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 and DBSVS are regulated by the Monetary Authority of Singapore under the laws of Singapore, which differ from Australian laws. Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong This report has been prepared by a person(s) who is not licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities in Hong Kong pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Vickers Hong Kong Limited, a licensed corporation licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

For any query regarding the materials herein, please contact Paul Yong (CE. No. ASE988) 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

Industry Focus


Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from, or in connection with the report.

Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are only intended for institutional clients only and no other person may act upon it.

United Kingdom

This report is produced by DBS Bank Ltd which is regulated by the Monetary Authority of Singapore.

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 PO Box 506538, 3rd Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may act upon it.

United States This report was prepared by DBS Bank Limited. 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 jurisdictions

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

DBS Bank Ltd

12 Marina Boulevard, Marina Bay Financial Centre Tower 3 Singapore 018982 Tel. 65-6878 8888

e-mail: [email protected] Company Regn. No. 196800306E

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