REIT Financial News - K-REIT Asia Investor Meetings December 2009

For the full presentation slides of the K-REIT Asia Investor Meetings December 2009, see report.

Key points:

Property Portfolio
- Four prime grade A commercial office properties – Prudential Tower, Keppel Towers and GE Tower, Bugis Junction Towers and a one-third interest in One Raffles Quay (“ORQ”)
- Valuation of S$2.0bn as at 29 Sep 2009


Recent Activities
- 1 Sep 2009 – announced acquisition of six additional strata floors in Prudential Tower
- Purchase price of S$106.3mm – 14.7% discount to appraised value of S$124.5mm
- Guaranteed net property income yield of 5.2% for 5 years – income support of up to S$5.0mm per annum
- Gained majority control of the asset – strata ownership increased from approx. 44.4% to approx. 73.4%


Key Strengths
* Prime assets with blue-chip tenants
- Portfolio of four prime grade-A commercial office properties
- Strategically located in and around Singapore’s CBD
- Diverse blue-chip tenant base with long term leases

* Stable and growing income    
- Above-market portfolio occupancy of 94.9% as at 30 Sep 2009
- Stable income underpinned by long term leases (WALE of 5.3 years)
- Steady growth of average portfolio rent
- Income support protects against negative rental reversions – ORQ income support until end of 2011 and Prudential Tower’s net property income guarantee until end of 2014

* Strong capital position 
- Minimum refinancing risks – S$190.1mm maturing in May 2011
- Undrawn S$1.0bn MTN Programme               
- Low aggregate leverage of 9.1% post-rights issue
- Additional funding capacity of up to S$648mm post-rights issue

* Strong sponsorship
- One of Asia’s premier property companies with sizeable commercial asset base and projects under development in Singapore and across Asia
- Strong pan-Asian platform with extensive network and proven track record

* Robust financial performance
- YTD Sep 2009 distributable income up 25.4% y-o-y
- YTD Sep 2009 net property income up 27.3% y-o-y
- Latest portfolio valuation slightly down 6.3% from Dec 2008 vs. market expectations

Successful Completion the Rights Issue
* Offer Structure
- Underwritten renounceable 1-for 1 Rights Issue
- Approx. 666.7m Rights Units issued at S$0.93 per Rights Unit
- Raised gross proceeds of approximately S$620 million
- 110.6% subscribed

* Use of Proceeds
- Strengthen balance sheet
- Provide headroom for strategic acquisitions
- Finance asset enhancement initiative

Singapore Office Sector Outlook
* General consensus that recovery should kick in earlier in 2010 instead of 2011 as previously expected

* Singapore economy emerged from recession   
- 2nd consecutive quarter-on-quarter expansion in GDP
- Government forecast of 3 – 5% GDP growth in 2010
- 2009 GDP growth forecast of negative 2.0% to 2.5%

* Improving office sector fundamentals    
- Demand for office space has turned positive in 3Q09 after three quarters of negative growth
- Increase in leasing activities and requests for proposals
- Pick-up in office asset transactions

* Reduction in office supply
- Delays in construction of office projects have reduced supply
- New office supply from 4Q 2009-2016 of about 5.8mm sf (or 0.8mm sf per annum)
-- No new supply of office space in 2013 – 2015
- Trend of conversion of office space in central area to other uses such as residential, hotel may further trim supply



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