THE ART EDGE Ascott Residence Trustinvestor.ascottreit.com/newsroom/010507o.pdf · requirements as...

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THE ART EDGEAscott Residence Trust

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Disclaimer

IMPORTANT NOTICE

The value of units in ART and the income derived from them may fall as well as rise. Units in ART are not obligations of, deposits in, or guaranteed by the Manager or any of its affiliates. An investment in the units in ART is subject to investment risks, include the possible loss of the principal amount invested. The past performance of ART is not necessarily indicative of its future performance.

This presentation may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from similar developments, shifts in expected levels of property rental income, changes in operating expenses, including employee wages, benefits and training, property expenses and governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on the current view of the Manager on future events.

Investors have no right to request the Manager to redeem their units in ART while the units in ART are listed. It is intended that unitholders may only deal in their units in ART through trading on the SGX-ST. Listing of the units in ART on the SGX-ST does not guarantee a liquid market for the units in ART.

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Agenda

Introduction

Financial Highlights

Management StrategiesGrowth by AcquisitionActive Asset ManagementCapital and Risk Management

Conclusion

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World’s First Pan-Asian Serviced Residence REIT

China• 4 properties in Beijing, Shanghai

and Tianjin

Vietnam• 3 properties in Hanoi and

Ho Chi Minh City

Singapore• 2 properties

Japan• 2 properties in Tokyo

The Philippines• 3 properties in Makati

City, Manila

Indonesia• 3 properties in Jakarta

S$1.2 billion portfolio value1

2,904 apartment units in 18 properties10 Pan-Asian cities in 7 countries

Australia• 1 property

in Melbourne

1. Includes the acquisition of Somerset Gordon Heights, Melbourne, which is expected to completed in 2Q 2007.

4

ART’s Portfolio in Vietnam

Ho Chi Minh City

Hanoi

S$103.1mAppraised Value

185Number of Units

Somerset Grand HanoiHai Ba Trung Street

76%Effective Interest



172Number of Units

Somerset Chancellor CourtDistrict 1, Ho Chi Minh City



165Number of Units

Somerset Ho Chi Minh City District 1, Ho Chi Minh City

Vietnam portfolio valued at S$241.7 million* (US$161 million), with a total of 522 units in 3 properties

* Includes share of minority interests.

5

Serviced Residences — An Attractive Asset Class

More intensive staffingrequirements due to need to cater complete range of servicesHigh maintenance due to significant wear and tear

Less intensive staffingrequirements as only limited services are providedLower maintenance costs as average length of stay is longer

Minimal staff cost and low maintenance costs

Cost Structure

Full range of hospitality serviceRole and involvement of property manager most intensive

Limited services providedRole and involvement of property manager less intensive compared to hotels

No service providedRange of

Services

Seasonal nature of hotel industryHighly correlated with the tourism industry

Some seasonality of hospitality industry, though longer lease terms provide certain level of rental support

Dependent on general property sector conditions

Seasonality

Short-term accommodationHybrid between hotels and apartments/condominiumsVariable lease terms from one week to one year or longer

Long-term leasesLease Structure & Terms

HotelsServiced ResidencesApartments for Rent

61. 2007 figures. FDI refers to inward foreign direct investment. Source: Economist Intelligence Unit.

Business environment in the Asia-Pacific region remains positiveCountries where ART has a presence are expected to register real GDP growth1 of between 2 - 10% in 2007Increasing trend in business travel into Asia

VietnamUS$3.1 bn FDI

7.1% real GDP growth

SingaporeUS$21.8 bn FDI


IndonesiaUS$5.0 bn FDI


JapanUS$4.8 bn FDI


ChinaUS$81.2 bn FDI


The PhilippinesUS$2.0 bn FDI


AustraliaUS$12.1 bn FDI


Tap Growth of Pan-Asian Economies

Growing popularity and demand for serviced residences

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Highlights of the ART-TAG Model

Business focus

Leading international serviced residence owner-operator with a presence in key cities of Asia Pacific, Europe and the Gulf region

Injection of yield accretive Pan-Asian assets

ART granted right of first refusal by Ascott

Portfolio exposure

World’s first and only serviced residence real estate investment trust

Owner of Pan-Asian portfolio of quality serviced residence assets

Manages about 19,000 serviced residence units

70% in Asia Pacific, 28% in Europe and 2% in the Gulf Region

Total portfolio value of S$1.2 billion

Owns 2,904 serviced residence units in 18 properties across 10 key Pan-Asian cities in 7 countries

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ART’s Compelling Growth Story

Demand for serviced residences underpinned by FDI inflows and GDP growth

Strong international brand name

Positive rates reversion with upside momentum

Exposure to high-growth serviced residence/ hospitality asset class

TAG/ART model+ right of first refusal

Ability to leverage on strategic relationship with CapitaLand GroupStrong sponsorship

Achieved total return of more than 195% since listing

Organic – Strong 12% Portfolio RevPAU Growth in 1Q 2007

Ability to acquire assets from The Ascott Group and third party owner

Target S$2 billion portfolio value by end-2008

Growth

Consistently high occupancy rates

Diversified income across 7 Pan-Asian countries

Sustainability of cashflow

Asia-focused investment mandate

FDI/ GDP growth relatively high in Asia compared to other countries

Exposure to Asia’s growth

Financial Highlights

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ART Achieved Capital Growth

Strong Trading PerformanceStrong Trading Performance

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

Mar

-06

Apr-

06

May

-06

Jun-

06

Jul-

06

Aug-

06

Sep-

06

Oct

-06

Nov

-06

Dec

-06

Jan-

07

Feb-

07

Mar

-07

Apr-

07

181 % appreciation1

1. Based on ART’s preferential offering price at listing of S$0.68/Unit and closing price of S$1.91/Unit on 24 April 2007.

S$/U

nit

Announced acquisition of Shoan Heights Serviced

Apartment, Melbourne and 26.8% effective interest in Somerset Chancellor Court,

Ho Chi Minh City

Completed acquisitions of Somerset Olympic Tower Property, Tianjin and 40% effective

interest in Somerset Roppongi, Tokyo

Announced acquisition of Oakwood Premier Ayala Center, The Philippines

Announced acquisitions of Somerset AzabuEast, Tokyo, remaining 60% effective

interest in Somerset Roppongi, Tokyo and 40.2% effective interest in Somerset Chancellor Court, Ho Chi Minh City

Announced ART’s 1Q 2007 financial results

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Total Return Close to 200%

At listing At present

Accumulated DPU since listing

Capital appreciation based on unit price

Preferential offering price at initial listing

190% total

return

1

S$1.23/Unit

6.41 cents/Unit

S$0.68/Unit

S$0.68/Unit

1. Based on closing price of S$1.91/Unit on 24 April 2007.

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Net Distributable Income Higher Than Forecast

Net Distributable Income of S$8.0 million 10% Above Forecast

+ 10 %

7.3

1.59

8.0

1.59

Distribution (S$million) DPU (cents)

1Q 2007 Forecast1Q 2007 Actual

13

152 146

8360

119 112

188

146

68

108132 125

0

50

100

150

200

Singapore China Indonesia ThePhilippines

Vietnam Overall

March 2006 Actual March 2007 Actual

Strong 12% Portfolio RevPAU Growth

+ 24 %

+ 12 %

Indonesia:- Drop in occupancy for Ascott Jakarta due to massive construction activities surrounding the residence and recent flood in the city

+ 80 %+ 11 %

S$

Management Strategies

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Strategy 1 — Growth Through Acquisitions

Acquisition Growth Strategies Acquisition Growth Strategies

1 Focus on Pan-Asian Region

ART granted right of first refusal by AscottEstimated S$1.1 billion Pan-Asian portfolio with about 3,800 Apartment Units owned by The Ascott Group

Acquire properties from third party owners Estimated S$2 billion Pan-Asian portfolio with about 4,600 Apartment Units managed/leased by The Ascott Group

Strategic relationship with CapitaLand Group

2

3

4

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Owned and managed by The Ascott Group prior to acquisition

Owned and managed by third parties prior to acquisitionOwned by third parties and managed by The Ascott Group prior to acquisition

Somerset Chancellor Court, Ho Chi Minh City

(Vietnam)40.2% effective interest

Ascott Makati (Manila, The Philippines)

100% effective interest

Somerset Gordon Heights, Melbourne1

(Australia)100% effective interest

Somerset Roppongi, Tokyo (Japan)


Somerset Azabu East, Tokyo (Japan)


26.8% effective interest

Remaining 60% effective interest

Somerset Olympic Tower, Tianjin (China)100% effective interest

Strong Acquisition Pipeline

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Details of Acquisitions

24 Jan 200726.8> 8% [2]

72.0172Somerset Chancellor Court, Ho Chi Minh City, Vietnam

24 Jan 200760.04.3% [2,3]

8.1% [2]

Around 11% [2]

4.3% [2,3]

5% [1]

7% [1]

6.9 [2]

PropertyYield (%)

30 Mar 200740.2

22 Mar 2007100.087.9306Oakwood Premier Ayala Center, The Philippines (re-branded Ascott Makati)

24 Jan 2007100.079.879Somerset Azabu East, Tokyo, Japan

3 Oct 200640.060.264Somerset Roppongi, Tokyo,

Japan

3 Oct 20061 Feb 2007

90.010.0

76.2172Somerset Olympic Tower, Tianjin, China

2Q 2007100.013.943

Shoan Heights Serviced Apartment, Australia (to be re-branded Somerset Gordon Heights, Melbourne)

CompletionEffective Interest (%)

Appraised Value (S$m)

No. of UnitsProperty

1. Annualised property yield for year 2006. 2. Annualised property yield for year 2007.3. Blended property yield.

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Estimated S$400 million in Pan-Asian Assets Owned* By The Ascott Group (In Operation)

Malaysia

China Vietnam

Ascott Bangkok Sathorn

Somerset West Lake, Hanoi

Thailand

Ascott Shanghai Pudong

Ascott Kuala Lumpur Somerset Seri Bukit Ceylon, Kuala Lumpur

Somerset Orchard, Singapore

Singapore

Properties In OperationProperties In Operation

Somerset Zhong Guan Cun, Beijing

* Properties either wholly owned, majority or minority stake.

Citadines Bangkok Sukhumvit 16

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Estimated S$700 million in Pan-Asian Assets Owned* By The Ascott Group (Under Development)

China

Thailand

Ascott Guangzhou

Ascott Singapore Raffles Place

Singapore




Somerset Youyi, Tianjin

Citadines Shanghai Biyun

Citadines Hong Kong Ashley

Citadines SuzhouLejia

IndiaSomerset Whitefield, Bangalore

Somerset Greenways, Chennai

JapanCitadines Shinjuku, Tokyo

Citadines Chennai Boulevard

Properties Under DevelopmentProperties Under Development

* Properties either wholly owned, majority or minority stake.

VietnamSomerset Hoa Binh, Hanoi

Citadines SuzhouXinghai

Citadines Xi’anCentral

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Balance of Assets in Stable and EmergingMarkets

Target S$2 billion portfolio value by end-2008

China

Vietnam

Philippines

Singapore

Indonesia

Thailand Japan

Korea

Malaysia

India

Australia

Countries with existing ART-owned propertiesCountries with investment opportunities

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Growth Through Active Acquisition

Listing Mar 2006 April 2007

Singapore33%

China37%

ART has announced the acquisition of 6 yield-accretive assets1 since listing in March 2006

Indonesia12%

Philippines3%

Vietnam15%

Singapore25%

China31%Indonesia

8%

Philippines9%

Vietnam14%

Japan12%

Total S$856 million Total S$1.2 billion

Australia1%

1. The acquisitions of Somerset Olympic Tower Property, Tianjin and an effective 40% interest in Somerset Roppongi, Tokyo were completed in 2006. The remaining acquisitions were completed or will be completed in 2007.

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Equity Fund Raisings

Positive response for ART’s equity fund raising exercises

8 million New Units fully subscribed

First-come, first-served basis to retail investors

65.8 million New Units

More than 15 times subscribed

Placed to about 80 institutional and other investors from Asia, Australia, Europe and the Gulf region

31.5 million New Units allocated

Non-renounceable offering of 1 New Unit for every 10 Existing Units held

ATM Offering

Private Placement

Preferential Offering

September 2006September 2006 March 2007March 2007

Placement of 44 million New Units

Raised S$48.4 million (US$31million)

Increased free float from 23% to 30%

Private Placement

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Free Float Increased

27.7%

29.5%

42.8%

Free Float Ascott CapitaLand

18.8%

27.7%

53.5%

1. Includes CapitaLand’s placement of 100 million ART units to a small group of high quality, long term institutional investors.

499.4 million units in issue

604.7 million units in issue

Free Float Increased to 53.5%

Before March 2007 Equity Fund RaisingBefore March 2007 Equity Fund Raising

After March 2007 Equity Fund Raising1

After March 2007 Equity Fund Raising1

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< 1 month 27%

1 to 6 months

21%

> 12 months

32%

6 to 12 months

20%

Diversified by Length of Stay and Market Segment

Apartment rental income by length of stay1

Apartment rental income by length of stay1

Apartment rental income by market segment1

Apartment rental income by market segment1

1. For the year ended 31 December 2006. 2. Includes training, medical, etc.

Stability in Earnings

2

Business Trip 30%

Relocation 36%

Project 18%

Others 11%

Family/ Leisure 5%

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Diverse Tenant Mix and Quality Clientele

Industrial21%

Real estate/ Lodging

12%

Manufacturing11%

Financial Institutions

9%

Consumers5%

Healthcare5%

Energy & Utilities3%

Others16%

Government & NGOs

7%

IT 6%

Media & Telecomms

5%

Apartment rental income by industry1Apartment rental income by industry1

Earnings not reliant on a single industry or tenant

1. For the year ended 31 December 2006.

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Portfolio Diversification

China 31%Indonesia 8%

Japan 12%

Philippines 9%

Vietnam 14%

Australia1%

Singapore25%

ART’s Share of Gross Profit1ART’s Share of Gross Profit1ART’s Share of Property Values1ART’s Share of Property Values1

Australia 1%

China 29%

The Philippines

13%

Vietnam 20%

Japan 9%

Indonesia 8%

Singapore20%

Total = S$1.2 billion Total = S$48.9m1. For the Forecast Period 2007.

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Strategy #2 — Active Asset Management

Responsive yield management to maximise RevPAU

Leverage on the branding and marketing expertise of serviced residence management company to attract quality clientele

Ensure effective cost management by improving operating efficiencies and economies of scale

Implement asset enhancement plans to enhance property yields and maintain quality of portfolio

Key StrategiesKey Strategies

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Asset Enhancements

Ascott Beijing, ChinaPhased reconfiguration of 35 larger units

Creation of 70 smaller one-bedroom units to tap into the higher-yielding short and medium term business segmentsWill complete reconfiguration by June 2007

Somerset Xu Hui, Shanghai, ChinaRenovation and reconfiguration of 15,000 sqf clubhouse

Created 9,600 sqf NLA commercial space for leaseCompleted in September 2006

Somerset Olympic Tower Property, Tianjin, ChinaPhased reconfiguration of 10 penthouse duplex units into 20 smaller two-bedroom units

Target completion in Q2 2007

Ascott Beijing Somerset Xu Hui, Shanghai

Somerset Olympic Tower Property, Tianjin

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Strategy #3 — Capital and Risk Management

Maintain strong balance sheet and optimise gearingGearing of 24.8% Obtained a Baa2 investment grade rating from Moody’s

Greater funding flexibility for future acquisitions

Adopt conservative interest rate management strategy

ART’s proportionate share of asset

value S$1,218.9m

ART Gearing ProfileART Gearing Profile

Fixed/ 5-yearS$262.6m

FloatingS$39.9m

Bank LoansBank Loans

13%

87%

DebtS$302.5m(24.8%)

EquityS$916.4m(75.2%)

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Managing Foreign Exchange Exposure

Capital valuesAdopt natural hedge strategy, as far as possible

Borrowing in the same currency as underlying asset

CashflowsManage volatility of foreign currency cash flow from overseas assets, examples:

In Australia and Japan, revenue and operating expenses are in A$ and Yen respectivelyIn China, majority of revenue and operating expenses are in RMBFor Indonesia, Philippines & Vietnam, majority of revenue in US$ while operating expenses are in local currencies

Monitor foreign exchange risks associated with remitting RMB, US$, A$ and Yen to Singapore for distribution, to the extent feasible, hedge these currency risks

Conclusion

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Conclusion – Key Attractions of ART

Stable and Growing Distributions

Exposure to growing serviced residence industry in the fastest growing region — Asia

Quality Portfolio — Well located and quality assets in key gateway cities

Strong Sponsorship from The Ascott Group

Thank You

Appendices

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Ascott Residence Trust’s Portfolio (1/3)

Ascott Beijing

ChinaSomerset Grand Fortune Garden Property, Beijing

Somerset Xu Hui, Shanghai

Somerset Olympic Tower Property, Tianjin

•Located along Jian Guo Road, in the Chaoyang District

•272 apartment units

•Located along Liangmaqiao Road, in the Chaoyang District


•Located in Shanghai’s prime residential district


•Located in the Heping District, in Tianjin’s business district


Somerset Gordon Heights, Melbourne

Australia

•Located in Melbourne’s Central Business District


Somerset Liang Court Property, Singapore

Singapore

•Located on the fringe of Singapore’s CBD, along River Valley Road


Somerset Grand Cairnhill, Singapore

•Located along Orchard Road, Singapore’s main shopping area


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Somerset Roppongi, Tokyo

Japan

•Located in the heart of Minato-Ku in Tokyo’s Central Business District


Somerset AzabuEast, Tokyo

•Located in the heart of Minato-Ku in Tokyo’s Central Business District


Ascott Jakarta

IndonesiaSomerset Grand Citra, Jakarta

Country Woods, Jakarta

•Located in the Golden Triangle, Jakarta’s business and shopping district


•Located in the Golden Triangle, Jakarta’s business and shopping district


•Located in South Jakarta•251 apartment units

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Somerset Grand Hanoi

Vietnam

•Located within Hanoi’s CBD•185 apartment units

Somerset Ho Chi Minh City

•Located within Ho Chi Minh City’s CBD


Somerset Chancellor Court, Ho Chi Minh City

•Located within Ho Chi Minh City’s CBD


Ascott Makati

The Philippines

•Located in Makati City’s shopping and business district


Somerset Millennium, Makati



Somerset SalcedoProperty, Makati



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