Insights Gree Shoots in Luxury and Office Properties PDF

Singapore Industry Focus
Singapore Developers & REITs

Refer to important disclosures at the end of this report
DBS Group Research . Equity 6 Jan 2017
Rocky Road, Take me home STI : 2,880.76

Analyst
 Luxury residential and office subsectors to bottom Derek TAN +65 6682 3716 Mervin SONG CFA +65 6682 3715
out ahead of other subsectors in 2017 derektan@dbs.com mervinsong@dbs.com
 Diversification remain a key strategy for most real Rachel TAN +65 6682 3713 Singapore Research Team
racheltanlr@dbs.com equityresearch@dbs.com
estate companies, cheap valuations could spark M&A
 Deleveraging trend to kick in from 2017

Luxury residential and office are our sector picks in 2017.
While the Singapore property market is expected to remain on a
declining trend (suburban residential homes, industrial, retail and
hospitality), we see green shoots in the office and luxury residential
subsectors. This is mainly coming from expected higher transaction
volumes and take-up rates for new buildings in 2017. STOCKS
Continued focus on diversification while cheap valuations Price Mkt Cap Target Price Performance (%)
could spark M&A. We see continued interest from S-REITs and S$ US$m S$ 3 mth 12 mth Rating
developers to invest overseas but see fewer completed deals given Developers
higher currency volatility. In Singapore, land-hungry developers are
likely to turn towards the En-bloc market given limited sites in the City Developments 8.39 5,341 9.90 (8.5) 11.8 BUY
public land tenders. S-REITs are likely to seek asset recycling in order UOL Group 6.12 3,448 7.20 7.5 1.2 BUY
to fund growth as cost of equity edge higher. Fueled by strong
capital flows and attractive valuations of listed firms, we also see a REITs
sector consolidation as larger players look to gain access to land Ascendas REIT 2.31 4,597 2.65 (6.1) 3.1 BUY
banks and income-producing properties at attractive prices. Keppel REIT 1.02 2,315 1.23 (8.0) 11.3 BUY
Deleveraging trend in 2017 and beyond. With higher rates on Mapletree (8.0) 10.6
1.42 2,800 1.62 BUY
the horizon, we expect selected developers and REITs to pare down Commercial Trust
debt over time when the opportunity arises. Of focus is close to Frasers Logistics & (5.0) N.A
0.94 925 1.10 BUY
c.S$6.3bn worth of bonds expiring in 2017-2018, where refinancing Industrial Trust
could prove difficult for some given investor risk aversion post Keppel DC REIT 1.20 938 1.33 2.5 20.4 BUY
recent defaults in the oil & gas space. Croesus Retail Trust 0.85 452 0.99 (1.2) 3.9 BUY
Developers – too cheap to ignore. We see a myriad of catalysts Closing price as of 4 Jan 2017
for developers especially from M&A activities which will lift Source: DBS Bank, Bloomberg Finance L.P.
investor sentiment for the sector. Our picks are CDL and UOL. A
wildcard could be a potential unwinding of government policies.
Singapore REITs – capital preservation is key. We prefer those
with good earnings visibility and minimal downside to
our/consensus estimates. Picks are K-REIT, A-REIT and MCT. Small
cap picks are FLT, KDC REIT and Croesus.
ASIAN INSIGHTS VICKERS SECURITIES

ed: TH / sa:JC, PY
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Industry Focus
The DBS Asian Insights SparX report is a deep dive look into thematic angles impacting
the longer-term investment thesis for a sector, country or the region. We view this as an
ongoing conversation rather than a one-off treatise on the topic, and invite feedback
from our readers, and in particular welcome follow-on questions worthy of closer
examination.
Table of Contents
1. Investment Summary 3
2. Peer Comparisons 5
3. Key Charts 7
4. Developers – Catalysts abound to lift valuations from multi-year lows 10

4.1 Attractive valuations with upcoming catalysts.
4.2 Diversification to remain a key strategy for developers.
4.3 Improved transactions in the luxury end of the market to continue.
4.4 Looming ABSD deadlines not a precursor for a significant price cuts.
4.5 Potential land-banking opportunities in Singapore.
4.6 More En-bloc transactions in 2017.
4.7 Merger and Acquisition (M&A) activities could pick up.
4.8 Will Developers need to deleverage?
5. Singapore REITs – Déjà vu 31

5.1 Impact of higher interest rates on prices and distributions
5.2 Modest DPU growth.
5.3 Potential risk to property values in the industrial and hospitality sectors.
5.4 Acquisitions may be difficult to execute with redevelopments an attractive option.
6. Residential Subsector Outlook: Luxury home prices to bottom out in 2017 47

6.1 Trends, demand and supply outlook
6.2 Scenarios where government could relax policy measures
7. Office Subsector Outlook: Grade A office space to bottom by end 2017 55

8. Retail Subsector Outlook: Hampered by weakening retail sales 63
9. Industrial Subsector Outlook: Year of consolidation post supply spikes 67
10. Hospitality Subsector Outlook: No turnaround in sight yet 74
11. Charts: S-REIT yield and P/Bk NAV 83
Charts: Developers P/Bk NAV
Stocks Profiles 102
Note: Prices used as of 04 Jan-2017

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Industry Focus
Investment Summary
2017 remains a tenants' market as heightened supply 2. Developers and REITs to continue seeking overseas
completion poses a risk for most real estate sectors. It will be opportunities; en-bloc deals to pick up in 2017
another year of moderation for the Singapore property
market as we believe that most real estate subsectors will Diversification remains a key strategy but opportunities
continue to see downside in rents and/or prices on the back limited as currency volatility arises. We believe that property
of soft demand given the current economic slowdown. developers and REITs will continue their strategy to diversify
Meanwhile, heightened supply completion in 2017 means overseas for growth but expect the acquisition momentum to
that it will remain a tenants' market. taper on the back of increased currency volatility, coupled
with higher cost of funds. Countries that we believe remain
Key Themes attractive on a currency-adjusted basis are London, Australia
(Melbourne and Sydney) and selected Tier 1 cities of China
1. Luxury-end of residential market and office sectors like Shanghai.
bottoming out
Apart from acquisitions, REITs could also capitalize on the
Luxury residential and office sectors the brighter spot. increased development limits (25% cap vs 10% previously
However, among the real estate sectors, we see brighter subject to conditions) accorded by Monetary Authority of
prospects in the luxury end of the residential market and Singapore (MAS) to take on more asset enhancements to
office subsectors. We believe that luxury residential prices in rejuvenate their portfolios and boost returns.
Singapore are attractive on a relative basis compared to home
prices in the region which we expect higher investment Developers are hungry for land in Singapore, more en-bloc
transaction volumes in 2017. The office sector is projected to deals in 2017. We expect continued increased participation
see slower rental declines of (5-10%) mainly due to better- from developers in the upcoming first half 2017 government
than-projected take-up in upcoming new office buildings and land sales program (GLS) as developers look to replenish
see the sector bottoming out by end of 2017. diminishing land banks which will mean that land prices are
likely to remain firm. In addition, we expect to see more en-
However, the retail, hospitality and industrial sectors are still bloc deals for opportunities, especially in the luxury end of
expected to feel the pressure from projected negative net the market. These activities in our view, likely signal
absorption, given excess supply outlook. expectations that home prices should remain fairly stable in
the coming years.
Singapore Property Clock
3. Privatisations, mergers and acquisitions to pick up
Privatizations, mergers and acquisitions (M&A) in the

developer space to pick up. We believe that more listed
property developers will take the delisting route along with
the wave of privatizations that we saw in recent years. This
puts valuations for property developers again in the spot
light. Developers are trading at an attractive average 0.75x
P/NAV, close to the -1SD of their historical trading range.
Reasons that drive this trend could be (i) sea of capital looking
to deploy in Asian real estate, and (ii) strategic capital
partners or major shareholders looking to recalibrate their
strategies given the lacklustre capital markets and thus
capturing the upside in the medium term.
Source: DBS Bank We believe that such M&A activities highlight the attractive
valuations of listed developers, namely City Developments,
CapitaLand, Global Logistics Properties and UOL which are
trading at close to -1 standard deviation (SD) to their 5-year
historical trading range.

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Industry Focus
4. Deleveraging a focus as interest rate risks loom
Balance sheet deleveraging a major wildcard; spike in bond Our picks are Ascendas REIT (A-REIT), Keppel REIT (K-REIT),
expiry in 2017-2018 a key data-point to watch. In view of the and Mapletree Commercial Trust (MCT). Among the mid-cap
uncertainty of the pace of interest rate hikes in 2017, we space, we like Croesus Retail Trust (CRT) , Keppel DC REIT
believe that the early refinancing and hedging of interest (KDC REIT) and Frasers Logistics Trust (FLT).
rates will be a key focus for developers and REITs going
forward. Of noteworthy is close to S$6.3 worth of bonds Singapore Developers – Catalysts abound to re-rate
(S$4.0bn among developers) expiring over 2017-2018 where
issuers will need to source for refinancing or alternative Potential policy relaxation and M&A could lift sentiment on
means to repay the bonds. developer stocks. Our call on the developers is mainly due to
valuations supported by an improved outlook. Firstly, we view
While we believe that refinancing for REITs are likely to be current trading levels of (P/Bk NAV of 0.75 and 0.65x
more straight forward given that credits are backed by P/RNAV) as attractive given that developers are trading at
consistent recurring cash flows, we believe that certain close to historical -1SD level. We believe that re-rating
developers, especially those in the mid-cap space which have opportunities will come from the following data-points: (i)
been more opportunistic in tapping the bond market in improved sell-through rates for existing developments on the
recent years could face more hurdles. back of improved transaction momentum, (ii) potential
relaxation of selective government policy in 2017 driving
The recent bond defaults in 2016 among the oil & gas firms higher demand for homes and investors’ sentiment, and (iii)
have cooled investors’ interest in bonds and we believe that potential privatization, M&A activities among developers or
investors will be more selective on the credit for future bond value-locking events like asset divestments which will provide
issuances. As such, the inability to refinance these expiring a lift for NAVs and thus share prices for developers. Our picks
bonds could mean that issuers (developers or REITs) might are City Developments and UOL.
seek alternative financing sources such as banks or even
issuance of equity. Risks
Strategies for: 1. Faster-than-projected rise in shorter-term interest rates

which will negatively impact earnings and potentially
Singapore REITs – Capital preservation a key strategy capital values in the medium term.
Projected more hawkish four FED hikes to limit upside 2. External shocks impacting on GDP outlook and
performance. We see increasing road-bumps to further unemployment rates in Singapore which will have an
outperformance for Singapore REITs (S-REITs) going into overhang on demand/supply dynamics.
2017, especially faced with a slowing DPU growth profile of
1.0% amidst a rising interest rate environment. DBS
economist projects four FED rate hikes over the course of the
year and as a result, the Singapore 10-year yield is expected
to increase another 0.7% to a normalized c.3.0%. Forward
FY17F yield spreads of 4.0% are already at historical mean
levels which indicate that valuations for REITs are fair.
Capital preservation is key. In an environment of low growth

and rising interest rates, we believe that investors will look at
stock-specific catalysts to maintain relative outperformance
with the sector. These are S-REITs that provide (i) higher
confidence in earnings sustainability and visibility, (ii) stronger
relative growth, and (iii) lower gearing which limits impact of
rising rates on distributions.

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Industry Focus
2. Peer Comparison
Singapore REITs Peer Comparisons
REIT FYE Price Rec Target Mkt Total DPU (S Cts) CAGR Yield P/NAV
Price Cap Return (%)
(S$) (S$) S$'Bn (%) FY16/ FY17/ FY18F/ FY16/ FY17/ FY18F/ (x)
17F 18F 19F 17F 18F 19F
Office
CCT Dec 1.505 BUY 1.70 4.5 18% 9.0 9.3 9.2 1% 5.9% 6.1% 6.1% 0.87
FCOT Sep 1.270 BUY 1.49 1.0 25% 9.8 9.8 9.8 0% 7.8% 7.8% 7.8% 0.83
KREIT Dec 1.020 BUY 1.23 3.5 26% 6.5 6.5 6.5 0% 6.3% 6.3% 6.3% 0.74
OUECT Dec 0.695 HOLD 0.74 0.9 15% 5.3 5.2 5.0 -3% 7.7% 7.6% 7.3% 0.71
Suntec Dec 1.650 HOLD 1.71 4.3 9% 10.0 10.0 10.0 0% 6.0% 6.0% 6.0% 0.78
Retail - - - - 6.4% 6.3% 6.4% 0.80
CRCT Dec 1.385 BUY 1.60 1.2 22% 10.3 10.5 10.3 0% 7.4% 7.6% 7.4% 0.78
CMT Dec 1.930 BUY 2.25 6.9 21% 11.2 11.2 11.3 0% 5.8% 5.8% 5.8% 1.01
CRT Jun 0.850 BUY 0.99 0.6 26% 7.5 8.2 8.5 7% 8.8% 9.6% 10.0% 0.88
FCT Sep 1.930 BUY 2.29 1.8 23% 11.8 11.8 12.1 2% 6.0% 6.0% 6.2% 1.02
SPH REIT Aug 0.955 HOLD 1.00 2.4 9% 5.5 5.7 5.7 2% 5.8% 5.9% 5.9% 1.00
MCT Mar 1.415 BUY 1.62 4.1 19% 8.7 8.9 9.1 2% 6.0% 6.2% 6.3% 1.11
MAGIC Mar 0.945 BUY 1.11 2.7 24% 7.2 7.3 7.4 1% 7.5% 7.7% 7.8% 0.77
SGREIT Dec 0.755 BUY 0.87 1.6 21% 5.2 5.2 5.4 2% 6.8% 6.8% 7.1% 0.81
Industrial - - - - 6.3% 6.4% 6.5% 0.97
a-itrust Mar 1.010 BUY 1.13 1.0 18% 5.9 6.4 6.2 3% 5.8% 6.3% 6.1% 1.52
A-REIT Mar 2.310 BUY 2.65 6.7 19% 15.7 15.6 15.7 0% 6.7% 6.6% 6.7% 1.14
Cache Dec 0.815 HOLD 0.93 0.7 22% 7.9 7.5 7.5 -2% 9.6% 9.2% 9.2% 0.81
CREIT Dec 0.540 HOLD 0.54 0.7 6% 4.1 4.2 4.2 1% 7.5% 7.6% 7.6% 0.79
FLT Sep 0.940 BUY 1.10 1.3 23% 6.6 6.6 6.8 1% 7.0% 7.0% 7.2% 1.10
MINT Mar 1.645 BUY 1.90 2.9 23% 11.3 11.5 12.0 3% 6.9% 7.0% 7.3% 1.18
MLT Mar 1.020 BUY 1.15 2.5 19% 7.2 7.4 7.6 3% 7.0% 7.2% 7.3% 0.99
SBREIT Dec 0.655 BUY 0.75 0.7 22% 6.1 6.1 6.2 1% 9.2% 9.3% 9.4% 0.80
Hospitality - - - - 7.1% 7.1% 7.2% 1.07
ASCHT Mar 0.700 BUY 0.84 0.8 27% 5.5 5.4 5.6 1% 7.8% 7.6% 8.0% 0.81
ART Dec 1.155 BUY 1.32 1.9 21% 8.2 8.1 8.3 1% 7.1% 7.0% 7.2% 0.81
CDREIT Dec 1.360 BUY 1.59 1.3 23% 9.4 9.0 9.3 0% 6.9% 6.6% 6.8% 0.84
FEHT Dec 0.595 HOLD 0.62 1.1 10% 4.3 4.0 4.2 0% 7.1% 6.6% 7.0% 0.62
FHT Sep 0.645 BUY 0.75 1.2 15% 5.2 5.0 5.3 2% 8.0% 7.7% 8.2% 0.85
OUEHT Dec 0.685 BUY 0.72 1.2 13% 4.3 4.5 4.6 3% 6.4% 6.7% 6.8% 0.78
Healthcare - - - - 7.2% 7.1% 7.4% 0..80
P-Life Dec 2.390 BUY 2.75 1.5 20% 12.1 12.2 12.3 1% 5.1% 5.1% 5.1% 1.47
Others - - - -
IREIT Dec 0.720 HOLD 0.75 0.4 1% 6.3 6.4 6.3 0% 8.7% 8.8% 8.7% 1.16
KDCREIT Dec 1.200 BUY 1.33 1.4 -3% 6.8 7.2 7.5 5% 5.6% 5.8% 6.1% 1.33
Manulife US Jan 0.835 BUY 0.93 0.7 19% 5.6 6.0 6.1 n/a 6.7% 7.2% 7.2% 1.06
REIT
Sector Average 6.8% 6.8% 6.9% 0.95
Source: Bloomberg Finance L.P., DBS Bank

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Industry Focus
Singapore Developers Peer Comparisons

Mkt Price 12-mth
Company FYE Cap 4-Jan-17 RNAV *Assumed Target Price Upside P/RNAV Latest Qtr
(S$m) (S$) (S$) Discount (S$) % Rcmd (x) P/NBV
(%)
Developers
Capitaland Dec 13.0 3.06 4.80 -25% 3.60 17% BUY 0.64 0.77
City Dev Dec 7.5 8.39 11.90 -17% 9.90 19% BUY 0.70 0.84
Frasers Centrepoint Sep 4.4 1.60 2.86 -30% 2.00 31% BUY 0.53 0.67
Ltd
Global Logistics Mar 10.1 2.24 3.53 -30% 2.47 14% BUY 0.61 0.83
Properties
UOL Dec 4.7 6.12 10.23 -30% 7.20 23% BUY 0.57 0.59
Average 0.57 0.75
Non-Covered
Guocoland Dec 10.9 2.40 - - - - - na 0.90
UIC Dec 3.9 2.79 - - - - - na 0.66
Ho Bee Dec 1.4 2.04 - - - - - na 0.50
Wheelock Dec 1.8 1.49 - - - - - na 0.60
Wing Tai Jun 1.3 1.62 - - - - - na 0.40
Bukit Sembawang Dec 1.2 4.48 - - - - - na 0.90
United Engineers Dec 1.6 2.57 - - - - - na 0.90
Tuan Sing Dec 0.4 0.29 - - - - - na 0.39
Hiap Hoe Dec 0.3 0.72 - - - - - na 0.51
Heeton Holdings Dec 0.1 0.39 - - - - - na 0.41
Average na 0.63
Average sector 0.68

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Industry Focus
2. Key Charts
Outlook – Positive (Luxury)

Residential Negative (Suburban)
Luxury end of the residential market bottoming out Price differential across major cities (luxury hoe prices)
Units Units Sold in Core Central Region (LHS) Rolling 4 Quarters Growth (%) US$ psf
1,800 20%
5,000
1,600 15% 4,500
1,400 10% 4,000
1,200 5% 3,500
1,000 0% 3,000
2,500
800 -5%
2,000
600 -10%
1,500
400 -15%
1,000
200 -20% 500
- -25% -
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
Monaco Hong London New York Los Japan Singapore Toronto

Kong Angeles
A tenants' market as vacancy rates spike Home prices in the suburbs to see more downside
10.0% 130.0 180 30%
(2010=100)
(%) Index Value
120.0 160 Af fordability 25%
9.0% Cur bed but
140 spread is closing
110.0 20%
8.0%
100.0 120
15%
7.0%
90.0 100
10%
6.0% 80
80.0
High Demand 5%
5.0% 70.0 60 F r om Upgraders
(P ublic to Private) 0%
4.0% 60.0 40
4Q16
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
20 -5%
0 -10%
Vacancy Rate (Non-Landed) (LHS) Rental Index (Non-Landed) (RHS) 1Q2004 3Q2005 1Q2007 3Q2008 1Q2010 3Q2011 1Q2013 3Q2014 1Q2016
Property Price index (Outside Central Area) Spread vs HDB
Key Assertions Risks

 DBS project prices for luxury residential homes (0% to  Looming from higher mortgage rates, diminishing rental
+1%) to bottom out as transaction volumes and foreigner spreads amidst higher market vacancy rates could worsen
interests pick up within the Core Central region. the holding power for households.
 Prices for homes in suburban region to fall further by as • External shocks causing a downturn in the Singapore
much as -3 to -5% as affordability remain curbed for economy and a loss of jobs, resulting in a significant
upgraders given higher-than-average differential in prices decline in the property market.
between HDB resale prices and prices of suburban homes.
 Potential policy relaxation in 2017 given macro
uncertainties in 2017 coming on the back of the pace of
interest rate increases and its impact on mortgages.
Source: URA, CBRE, DBS Bank

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Industry Focus
Retail Outlook - Neutral

Rental reversions to moderate as RSI declines Upcoming supply are mainly in the fringe
m'sqft
2.50
2.00
1.50
1.00
0.50
-
2016 2017 2018 2019 2020
Downtown Core Fringe Area Rest of Central Area

Orchard Outside Central Region

 Muted retail sales outlook poses a risk to landlords’ • Increased penetration of e-commerce causing decline in
occupancy costs and rental reversions. retail sales.
• Consolidation among retailers to intensify in 2017 amid • Weaker-than-expected economic growth (GDP), affecting
rising labour costs and labour shortage. consumer sentiment and expenditure.
• Better-performing malls with sizeable operational scale, • Weaker-than-expected tourist arrivals which will have an
strong record of recurring traffic which will continue to impact on retail sales performance in Orchard Road malls.
attract retailers.
Source: DBS Bank
Office Outlook - Positive

Supply to fall off from 2018 onwards Two-tier Market with Premium Grade A office leading
2,500 '000 sqft S$ psf pm 20.0
S$ psf / mth
Post GFC 18.0 13.00 12%
2,000
2010‐2014 average: 2015‐2019 average:
12.00 10%
1.10m sqft 16.0
1,500
1.15m sqft 8%
11.00 6%
14.0
1,000 10.00 4%
12.0
9.00 2%
500 10.0 0%
8.00 -2%
8.0
0
7.00 -4%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
6.0
‐500
4.0 Spread between Premium Grade vs Grade A (RHS)
Net supply: Downtown Core (LHS)
‐1,000
Net demand: Downtown Core (LHS) 2.0 Colliers Premium Grade Raffles Place/New Downtown (LHS)
CBRE Grade A office rents (RHS)
‐1,500 ‐ CBRE Grade A Core CBD (LHS)

• Demand outlook remains uncertain with a merry-go- • Earlier completion of new office supply.
round of tenants gravitating towards Grade A office • Shadow space from further contraction in demand from
space. the financial services sector.
• A two-tier market to emerge; with Grade A office space
leading the pack and Grade B office space needing to
drop rents or undergo refurbishments to attract tenants.
• Office rents could bottom by end of 2017 as pre-
commitment rates for key office buildings remain strong.
Source: DBS Bank

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Industry Focus
Outlook – Negative (Factory & Warehouse Space)

Industrial
Positive (Business Parks)
Time to absorb supply that entered the market Rental reversions remain negative
35.0 12% 50%
m' sqft
30.0
10% 40%
25.0
8% 30%
20.0
6% 20%
15.0
4%
10.0
10%
2%
5.0 0%
2009 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F
- 0%
2,007 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2016F 2017F 2018F 2019F 2020F
-10%
Business Park Warehouse Factory

-20%
Demand Supply Vacancy Rate (RHS)

 Market rents to moderate 5% p.a. due to time needed to  Weaker than-expected Singapore economy resulting in
absorb supply completion in 2016-2017. Market vacancy further-than-expected declines in rents.
rates to hit a high of 10%.  Shadow space in the single-user factory/warehouse
 Business Park space to remain stable; given lack of new sectors which result in increased competition for tenants.
supply but downside risk persists if CBD office rents
weaken further.
 Industrial REITs' rental reversions to remain generally
negative over 2017-2018.
Source: DBS Bank
Hospitality Outlook - Negative

Supply to continue outpace demand growth in 2017 RevPAR to remain under pressure in 2017
y-o-y growth
Rooms 9%
10.0%
75,000 7%
2.0%
8.0% 7% 7% 6%
70,000 6.0% 6% 5%
1,355 6.0% 4%
4%
65,000
4.1% 3,857 4%
3% 3.4% 4% 4% 3%
4.0%
61,287 2,520 2%
60,000 2.0% 1%
0.0%
55,000
-2.0% -1%
-1% -2%
50,000 -4.0% -3%
-4% -4%
45,000 -6.0% -5%
2015 2016F 2017F 2018F 2013 2014 2015 2016F 2017F 2018F
Hotel rooms Expected net additions
Visitor Arrivals Visitor Days Room supply RevPAR
 We expect demand in 2017 to grow by 4% y-o-y.  Slower-than-expected rebound in Chinese tourist arrivals
However, as corporate demand is expected to remain and greater level of competition from regional markets
soft, projected demand for accommodation growth would cause RevPAR to drop more than expected.
should remain modest.  Upside risk would come from delays in opening of new
 Persistent supply pressures arising from a 6% increase in hotels.
room stock will pressure room and occupancy rates. We
project RevPAR to fall by 4% in 2017 before rebounding
thereafter.
Source: DBS Bank

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Industry Focus
4. Developers – Catalysts abound to lift valuations from multi-year lows
Key Points subsequent FED hikes over 2017 to mean limited re-rating
 Developers to continue looking for opportunities for the S-REITs.
opportunities overseas, high-end residential
space We see re-rating catalysts for Singapore Developers come
 M&A and potential policy relaxation could lift 2017 on the back of (i) improved investor sentiment on
sentiment for the sector increasing expectations of a government policy easing in
 Top picks: City Developments Limited (CDL), 2017 as property prices fall by as much as 12-15% from the
UOL
peak (currently 11%) (ii) potential merger and acquisition
(M&A) activities, and (iii) improved balance sheets on the back
Range bound in 2016. The Singapore Property Developers of expected asset recycling/deleveraging trend.
(measured by the FSTREH index) has fallen by close to 5%
since the start of 2016 and prices are generally c.9% below The Singapore Developers, which are trading at an average
prices from the start of 2015. The FSTREH lagged the S-REITs P/NAV of 0.7x, close to its -1SD is attractive. Current P/NAV
for the most of 2016 but caught up after the recent spike in valuations are close to multi-year lows. At a 0.7x P/NAV,
bond yields saw S-REIT prices weaken on the back of market valuations for developers are similar during past periods of
expectations of a more hawkish FED rate hike momentum in economic stress in 1997, 2003 and 2009, which we believe
2017. will not be the case going forward, especially with the
Singapore GDP projected to grow by c.1.3% in 2017
4.1 Attractive valuations with upcoming catalysts according to our DBS economists. While we continue to
expect Singapore residential prices to fall marginally in 2017,
Looking forward, we believe that the Singapore developers most negatives are priced in, in our view. We believe that we
(SG Developers) can outperform the S-REITs, especially with are closer to the trough, especially with expectations that the
expected headwinds from the uncertainty in the number of government will likely tweak policy measures to negate a
further fall in prices.
Figure 1: Developers underperformed S-REITs in 2016 but caught up in 4Q16
6% Index Value 900.00
Relative Performance (%)
4%
850.00
2%
800.00
0%
1/1/15 1/4/15 1/7/15 1/10/15 1/1/16 1/4/16 1/7/16 1/10/16
‐2% 750.00
‐4%
700.00
‐6%
650.00
‐8%
Relative Performance Developers
‐10% 600.00

Page 10
Page 10
Industry Focus
Figure 2: Valuations attractive as developers still trade at close to past 3 market down-cycle troughs
2.50
P /N AV (x)
2.00
1.50
+1 SD: 1.30x
2002-2003 Dot Com Crash Me a n: 0.95x

1.00
0.50 -1 SD: 0.60x
2008-2009 Global Financial Crisis 2011 Euro Crisis

- 1997-98 Asian Financial Crisis
Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17
P/NAV (w/o GLP) Mean - 1 SD +1 SD P/NAV (with GLP)
Figure 3: Historical developers Price-to-Bk NAV vs Figure 4: Developers trading at 45% discount to
PPI RNAVs (-1.0 standard deviation)
180.0 (x) 2.50 0%
Property Price Index Developer P/Bk NAV
Index Value 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
160.0
140.0 2.00 -10%
120.0
1.50 -20%
100.0
80.0 -30%
1.00
60.0
-40%
40.0 0.50
20.0
-50%
- -
-60% Discount to RNAV Mean +1 SD - 1 SD
Source: URA, DBS Bank

Page 11 Page 11
Industry Focus
4.2 Diversification to remain a key strategy for developers
Diversification remains a key strategy. Singapore Property properties being the main target asset class. One of the key
Developers have been acquiring and diversifying overseas over reasons was the relative attractive returns when compared to
the past few years, driven mainly by the lack of opportunities Singapore, boosted by a strong exchange rate and low cost of
in Singapore and also the attractive prospects of higher funds as funding rates remain anchored at low levels.
returns overseas. Based on our estimates, out of a sample size
of 22 listed Singapore Property Developers with total assets Figure 5: Developer exposure by geography
amounting to an aggregate S$143bn, only 44% of their
assets are in Singapore with the remaining invested overseas
in China (28%), United States (8%) and Australia (4%) as
shown in Figure 5.
This diversity in exposure has been mainly built over the past
three years post a series of cooling measures that were put in
place on purchasing residential properties in Singapore. Based
on our estimates, we saw close to S$8.1bn of capital invested
overseas, in contrast to S$7.6bn invested in Singapore over
the past few years. The trend was different prior to 2013
when a majority of capital were vested within Singapore and
Asia.
Australia, London and Japan have been the main markets of Source: Companies, DBS Bank
interest in recent years, with commercial (office/hotels)
Figure 6: Investment Destinations for Singapore Developers (2013-YTD)

USA: S$0.3bn
U.K.: S$4.6bn
Europe: S$0.7bn
China: S$1.2bn
Japan: S$0.2bn
Singapore
S$7.6bn Australia: S$1.4bn
Source: Companies, DBS Bank

Page 12 Page 12
Industry Focus
Overseas capital deployment to continue but opportunities DBS economist believes that most major currencies will
limited as currency volatility impact returns. While we believe depreciate against the US dollar over 2017, as the
that developers will continue to seek higher returns overseas, normalization of the US monetary policy and hawkish policies
the yield compression seen for prime assets over the past few from new President Trump might lead to flows from emerging
years will mean that market focus will likely change. markets back to the US. Looking forward, currency volatility
will continue to have a big impact on total returns for
According to JLL, an SGD investor total foreign currency (FX) investors diversifying into real estate outside their home
adjusted total return will diminish over 2016-2018 and is markets, and it is important to closely monitor currency
forecasted to yield in the -3% to 10% range with Shanghai, movements.
Sydney and Melbourne offering the highest returns which will
continue to feature regularly on developers’ horizon over In Singapore, developers could turn to M&A and en-bloc
time. opportunities to land bank. Developers who are looking to
replenish their property land banks in Singapore have turned
We believe that London will remain one of the key investment up in force in the government land sales program (GLS) in
markets, despite Brexit going forward and JLL expecting 2016 and have also ventured into the En-bloc market to gain
returns to moderate, mainly due to weak GBP in the medium access to land banks. Looking ahead, we believe that
term. Developers are likely to be still keen on the UK if it another avenue will be in the listed space, especially with
maintains its financial hub status in Europe. listed developers trading at 0.7x P/NAV and certain mid-cap
developers trading below that.
As developers are expected to continue targeting to grow
their recurring income base, we believe that core assets in the As pressure from additional buyer stamp duties (ABSD) on
commercial space which offer stable cash flows will be key land purchase and Qualifying Charges (QC) increase from
acquisition targets. 2017 onwards, we believe this could spark merger and
acquisition (M&A) activities going forward.
Figure 7: FX adjusted returns over time

20%
2016 2017 2018

15%
10%
5%
0%
Delhi
Delhi
Delhi
Beijing
Beijing
Beijing
Tokyo
Tokyo
Tokyo
Mumbai
Mumbai
Mumbai
Sydney
London
Sydney
London
Sydney
London
Hong Kong
Kuala Lumpur
Hong Kong
Kuala Lumpur
Hong Kong
Kuala Lumpur
Shanghai
Shanghai
Shanghai
Melbourne
Melbourne
Melbourne
Seoul
Seoul
Seoul
New York
New York
New York
Singapore
Singapore
Singapore
-5%
-10%
-15%
FX gain/loss Property Return FX adjusted total return

-20%
Source: JLL, DBS Bank

Page 13 Page 13
Industry Focus
Figure 8: Prime Yields for commercial real estate

8.0%
7.0%
6.0%
5.0%
1Q14
4.0%
2Q15
2Q16
3.0%
2.0%
1.0%
0.0%
Beijing Shanghai Tokyo Singapore Sydney Mebourne Brisbane
Figure 9: Singapore Developers' Exposure (% of RNAV) Remarks

SG SG
Developers Overseas Total
Residential Commercial
SG Developers'
CapitaLand 9% 25% 66% 100% exposure to domestic
City Dev 27% 52% 21% 100% residential sector is
Ho Bee 15% 56% 29% 100%
generally <10% with
the exception of the
Wheelock 30% 39% 32% 100% likes of City Dev, Ho
UOL Limited 7% 85% 8% 100% Bee Wheelock, and
OUE Ltd 9% 56% 35% 100%
Wingtai, which have
exposure in excess of
Wing Tai 19% 20% 60% 100% 15%.
Global Logistics Properties 0% 0% 100% 100%

Page 14 Page 14
Industry Focus
4.3 Improved transactions in the luxury end of the market to continue
Pick-up in transactions in the luxury residential market. We stamp duties recently levied on foreign purchases by other
believe that the luxury end of the market is approaching a popular residential investment destinations such as London,
near-term bottom, judging by the increased number of Melbourne, Sydney which somewhat makes Singapore
transactions seen in the core central region. According to URA- attractive again for international investors looking for real
lodged caveats, YTD 9M16 transactions by Foreigners estate purchases. In addition, we note that (figure 1212)
(excluding Singapore permanent residents) rose by close to Singapore luxury home prices have corrected 11% over the
12% compared to the same period a year ago. We note that past few years and the gap has widened over time, when
the increase in transactions mainly come from buyers in China, compared to other residential investment destinations such as
Malaysia and Indonesia, up more than 15% y-o-y respectively. Hong Kong, London and New York, where prices have
continued to increase over the past few years (figure 13).
If transaction volumes sustain, it will imply investors’
confidence in Singapore’s fundamentals and prospects of long- Therefore, we believe that Singapore luxury home is attractive
term capital gains from current levels. from a relative pricing across countries with potential capital
upside in the medium term once the current over-supply
Attractive relative pricing compared to other popular situation normalizes.
investment destinations. According to JLL, Singapore remains
an attractive investment destination, especially with additional
Figure 10: Transactions in Core Central region growing Figure 11: Core Central Region transactions
outpacing overall total Singapore market
Units Units Sold in Core Central Region (LHS) Rolling 4 Quarters Growth (%) 25% % Change
1,800 20%
20% (Rolling 4 Quarters)
1,600 15%
15%
1,400 10%
1,200 5% 10%
1,000 0% 5%
800 -5% 0%
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
600 -10% -5%
400 -15% -10%
200 -20%
-15%
- -25%
-20%
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
-25%
Overall Transactions Core Central Region
-30%
Figure 12: % Growth in prices Figure 13: Prices of luxury residential homes
230.0
Index Value US$ psf
210.0 5,000
190.0 4,500
170.0 4,000
3,500
150.0
3,000
130.0
2,500
110.0 2,000
90.0 1,500
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q1 2016
Q2 2016
Q3 2016
1,000
500
-
Monaco Hong London New York Los Japan Singapore Toronto
Hong Kong Korea Malaysia Singapore Taiwan Thailand Kong Angeles
Source: URA, MAS, Christie Real Estate, JLL, Knight Frank, DBS Bank

Page 15 Page 15
Industry Focus
4.4 Looming ABSD deadlines not a precursor for a significant price cuts for all developments.
Strong sales in the core central region could mean firmer prices Selected impact of ABSD deadlines as most projects continue
going forward. There were close to 22,502 unsold units (both to enjoy healthy margins. Developers with projects that are
completed and uncompleted) as of 3Q16 of which 24% of subjected to deadlines on the ABSD remission on residential
5,464 units were located in the Core Central region as of sites in 2017-2018 have also done well, in our view. Based on
3Q16. The strong sales seen in recent quarters (especially for our analysis of selected projects with significant unsold
recently re-launched completed projects – Gramercy Park, OUE inventories at the start of 2016 and are likely to be under
Twin Peaks near downtown Orchard) have brought the pressure to clear stock due to looming ABSD deadlines in
number of available units for sale down by 6% q-o-q, which is 2017-2018, most have cleared a substantial portion of their
one of the fastest fall compared to homes in other regions. inventory. This is mainly coming from more aggressive
marketing activities while prices dipped slightly by 4-12%, with
Based on the current run-rate for residential transactions, we some staying steady as shown in Figure 15. This is against
estimate that total transactions in 2016 will likely come in at investors’ initial concern that developers might have to suffer
close to 15,500 (c.8,000 primary sales and 7,500 secondary deep cuts in prices in order to move unsold inventories.
sales), which implies close to 10% growth y-o-y. The increase is
mainly driven from a marked increase in both the primary and The pick-up in sales momentum, in our view, will likely give
secondary transactions. The former is mainly due to generally developers more optimism to continue marketing existing
more aggressive marketing activities and price discounts. The projects while upcoming property launches in the Central
improvement seen in the secondary market mainly came from region could also increase in order to capture the current
i) higher transactions in the Core Central region and ii) improved sentiment in that space. We believe that developers
innovative financing schemes and price discounts offered by are likely to pay the ABSD for most projects come 2017 as
developers for selected de-licensed projects which resulted in margins are expected to remain healthy (figure 16).
fairly good response from buyers (see figure 14).
Figure 14. Pipeline supply of unsold private homes (excluding executive condominiums) as of end of 3rd quarter 2016
Total Units Core Central Rest of Central Outside Remarks
Region Region Central Region
(units) (units) (units) (units)
Units Available for sale (3Q16):
Unsold uncompleted units 20,577 4,711 7,130 8,736
Unsold completed units 1,925 753 543 629
Total unsold units 22,502 5,464 7,673 9,365
% Chg Q-o-Q -3% -6% 1% -5%
Demand :
Primary Sales (YTD 9M16) 5,253 444 1,715 3,094
Secondary Sales 6,337 1568 1792 2977
Total Sales 11,590 2,012 3,507 6,071
Ratios for CCR and RCR

Ratio (Supply/ annualised primary sales) 3.2 9.2 3.4 2.3 regions improved while OCR
ratios declined.
Primary Sales (2015) 7,440 407 1,884 5,147

Secondary Sales (2015) 6,677 1,452 1,944 3,281
14,117 1,859 3,828 8,428
Ratio of Supply/Demand 3.0 13.4 4.1 1.8 Ratios for CCR highest due to
low number of primary sales.
Average Primary Sales (2013-2016) 7,030 530 4,400 2,100

Average Secondary Sales (2013-2016) 7,475 1,572 2,071 3,464
14,505 2,102 6,471 5,564

Page 16
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Industry Focus
Figure 15: ABSD payable for selected projects with high unsold inventory in 2017 / 2018
ABSD Region Project Developer Total Unsold Unsold Unsold Unsold Units Land Estimated
liability Units (Jan’16) (Nov’16) Sold in Cost ABSD
2016
(%) (%) (S$’m) (S$’m)
ABSD Payable for projects from government land sites

Jan’17 OCR The Trilinq IOI Properties 755 528 70% 303 40% 225 408 52.1
Feb’17 RCR Mon Jervois Singapore Land 140 61 44% 45 32% 16 118.9 15.2
Mar’17 OCR Kingsford
Kingsford 512 249 49% 22 4% 227 243.2 31
Hillview Peak
Jun’17 OCR Vue 8
Capital Devt. 463 172 37% 84 18% 88 211 26.9
Residences
Jul’17 CCR Pollen & Bleu Singapore Land 106 94 89% 93 88% 1 113.2 14.4
Jul’17 RCR Sant Ritz Santarli Corp 214 24 11% 10 5% 14 114.8 14.7
Sep’17 CCR The Siena Far East Org. 54 22 41% 12 22% 10 45.8 5.8
Sep’17 RCR The Crest Wingtai,Metro,
469 366 78% 325 69% 41 516 65.9
UE
Oct’17 OCR The Glades Keppel Land 726 343 47% 134 18% 209 434.6 55.5
Dec’17 RCR Alex
Singapore Land 429 173 40% 152 35% 21 332.7 41.6
Residences
Jan’18 OCR The Panorama Wheelock 698 126 18% 28 4% 98 550 70.2
Apr’18 OCR Riverbank @
UOL Group 555 188 34% 64 12% 124 262.1 50.2
Fernvale
Jun’18 RCR Highline
Keppel Land 500 320 64% 215 43% 105 550.3 105.3
Residences
Apr’18 OCR The Santorini MCC Land 597 390 65% 328 55% 62 289.7 55.5
Sep’18 CCR Sophia Hills Hoi Hup 493 437 89% 346 70% 91 442.3 84.7
ABSD Payable for projects from private land sites

Mar’17 CCR Meyer Melodia Cang
16 15 94% 15 94% 0 9.4 1.2
Properties
Mar’17 CCR Robin Suites Robin25 Pte
92 26 28% 6 7% 20 54 6.8
Ltd
Jan’17 RCR Ascent @ 456 Quest Homes 28 13 46% 10 36% 3 24 3.1
Apr’17 OCR The Bently Goodland
48 15 31% 5 10% 10 27 3.4
Residences Group
Jun’17 RCR Neem Tree Aylesbury Pte
84 67 80% 64 76% 3 46 5.9
Ltd
Sep’17 OCR The Creek @ Chiu Teng
260 144 55% 107 41% 37 190 24.5
Bukit Group
Sep’17 OCR Rezi3Two Tee, KSH and
65 22 34% 7 11% 15 22.6 2.8
Heeton
Oct’17 OCR Lotus Ville JVA Venture 11 8 72% 7 64% 1 18 2.3
Nov’17 CCR The Rise @
Hao Yuan 120 51 43% 25 21% 26 130 16.6
Oxley

Page 17
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Industry Focus
Figure 16: Selling prices indicate that most projects will still earn good margins after payment of ABSD
Est. Selling Selling
Est. Average Margins Margins
Project Breakeven Prices prices in % Chg
Breakeven Prices (q/o ABSD) (with ABSD)
with ABSD < 2016 2016
(S$’psf) (S$’psf) (S$’psf) (S$’psf) (%) (S$’psf) (%) (%)
ABSD Payable for projects from government land sites
The Trilinq 920 990 1,405 1,404 0% 1,404 53% 42%
Mon Jervois 1,265 1,400 1,981 1,832 -8% 1,907 51% 36%
Kingsford Hillview Peak 1,010 1,090 1,367 1,286 -6% 1,326 31% 22%
Vue 8 Residences 780 830 983 992 1% 988 27% 19%
Pollen & Bleu 1,450 1,575 1,922 1,801 -6% 1,862 28% 18%
Sant Ritz 1,000 1,080 1,419 1,358 -4% 1,388 39% 29%
The Siena 1,500 1,650 2,067 1,826 -12% 1,947 30% 18%
The Crest 1,350 1,470 1,698 1,718 1% 1,708 27% 16%
The Glades 1,530 1,675 1,454 1,412 -3% 1,433 -6% -14%
Alex Residences 1,350 1,500 1,705 1,943 14% 1,824 35% 22%
The Panorama 1,180 1,300 1,243 1,220 -2% 1,232 4% -5%
Riverbank @ Fernvale 850 940 976 992 2% 984 16% 5%
Highline Residences 1,600 1,800 1,879 1,735 -8% 1,807 13% 0%
The Santorini 950 1,035 1,131 1,082 -4% 1,106 16% 7%
Sophia Hills 1,450 1,650 1,995 1,916 -4% 1,955 35% 19%
ABSD Payable for projects from private land sites
Mayer Melodia 510 530 2,226 - 0% 1,113 >100% >100%
Robin Suites 1,450 1,600 2,496 2,276 -9% 2,386 65% 49%
Ascent @ 456 1,400 1,580 1,506 1,527 1% 1,516 8% -4%
The Bently Residences 1,000 1,050 1,408 1,229 -13% 1,319 32% 26%
Neem Tree 1,180 1,285 1,616 1,756 9% 1,686 43% 31%
The Creek @ Bukit 1,180 1,400 1,589 1,656 4% 1,622 37% 16%
Rezi3Two 1,000 1,050 1,507 1,533 2% 1,520 52% 45%
Lotus Ville 775 830 803 754 -6% 779 0% -6%
The Rise @ Oxley 1,525 1,685 2,335 2,283 -2% 2,309 51% 37%

Page 18
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Industry Focus
4.5 Potential land-banking opportunities in Singapore
Developers could turn towards the en-bloc sites or even M&A tendered out in 2016 has reached its lowest level at
to grow. The government residential land tenders have approximately 4.4m sqft, 75% below the peak in 2012.
remained competitive, driving land bid prices high, following
the dearth of land supply since the property market peaked in Unsold inventory at the lowest since 2001. With the
2013, coupled by developers having pre-sold most of their government moderating the land supply for a few years now,
inventory on their balance sheets on hand. Looking ahead, as unsold inventory of residential properties has reached its
the government continues to maintain a low supply in the lowest levels since 2001. As at 3Q2016, unsold inventory had
upcoming 1H17 land tenders, we believe that developers almost halved since its peak in 2011.
could turn towards the en-bloc market or even look to M&A
to continue land banking and to seek growth. Land prices have remained sticky. While land prices from the
government land tenders have moderated marginally in 2014
Apart from government land sales, developers have turned to to 2015 (highest land prices within the respective year fell
opportunities in the private market as evidenced by the recent c.27% to close to S$900psf ppr levels from a high of S$1,163
pick-up in en-bloc transactions. psf ppr in 2013), we saw land prices in 2016 achieve a record
high of S$1,239 psf ppr.
Smaller developers, some of which on average trade at a
50% discount to book values, could be attractive acquisition Land bids are increasingly more competitive as spreads thin.
or privatisation candidates. The spreads between the winning bid compared to the 2nd
and median bids have also narrowed from 15% back in 2013
Limited government land sales (GLS) to result in sticky (peak of 62% in 2009) to 3% in 2016. The number of bids
land bid prices has increased to an average of 12 in 2016, above the
historical average of eight bids.
Government residential land sales at its lowest level since
GFC. Since the property market peaked in 2013, the
government has been moderating the land supply into the
market. Total GFA of government residential land sales
Figure 17: Shortage of land supply from the Figure 18: Land prices remain steady as competition
government remains high
18,000 800 1,400 1,239
16,000 1,163
G ov ernment Land Sales by GFA (sqft)
700 1,200 1,108

A v erage Land Prices (S$'psf)
14,000
600 1,000 869 849 871
12,000
Pric e (S$psf)
500
800 639 809
10,000 607
400 533 681 724 650 695
600 507
8,000 460
300 350 463 463
6,000 400 285 268 413 436 404
350 310
200
4,000
200 241 256 418 489 438 483 481
350 318 320 291
2,000 100 197 245 228 203 280
-
- -
2002
2003
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
GLS by GFA (sqft) Average Land Price (S$'psf) Min Average Max
Source: Realis, DBS Bank Source: Realis, DBS Bank

Page 19
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Industry Focus
Figure 19: Winning margin and average range of bid Figure 20: Number of bidders has increased
have narrowed
200% 18
180% winning bid margin and
average range of bid has 16
16
160% narrowed
av erage range of bid (%)
140% 14
120% 12
12 12
Av erage no. of bids

100%
A verage no. of bids = 8 10 10
80% 10

60% 8 8 8 8 8
40%
8
6
6 6
20%
0%
4
-20%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Average
2
-
Highest vs Lowest Highest vs Median Highest vs 2nd
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Source: Realis, DBS Bank Source: Realis, DBS Bank
Figure 21: GLS Sites awarded in 2016

Date of Award Location Type of Lease No. of Name of Successful Tenderer Developer Successfu $S$ psf Units
Development (yrs) Bids l Tender per plot
Price ratio
(S$'m)
6-Dec-16 Margaret Drive Residential 99 14 MCL Land (Regency) Pte Ltd SG Listed 238.4 997.8 275
(tender closed)
1-Oct-16 Fernvale Road Residential 99 14 Sing Development (Pte) Ltd and SG Listed 287.1 517.2 575
Wee Hur Development Pte Ltd
5-Sep-16 Anchorvale Executive 99 16 Hoi Hup Realty Pte Ltd and Foreign 240.9 355.2 635
Lane Condominium Sunway Developments Pte Ltd
1-Jul-16 Martin Place Residential 99 13 First Bedok Land Pte Ltd SG Listed 595.1 1,239.4 450
(Guocoland)
30-May-16 Bukit Batok Commercial & 99 11 Qingjian Realty (BBR) Pte Ltd. Foreign 301.2 634.8 425
West Avenue 6 Residential And Qingjian Realty (BBC) Pte
Ltd
13-Apr-16 Jalan Kandis Residential 99 9 Dillenia Land Pte Ltd Foreign 51.1 481.2 110
29-Feb-16 Yio Chu Kang Executive 99 10 Hoi Hup Realty Pte Ltd Foreign 183.8 331.1 520
Road Condominium
26-Feb-16 New Upper Residential 99 8 CEL Residential Development SG Listed 419.4 760.8 570
Changi Road Pte Ltd
(Parcel B)
18-Jan-16 Siglap Road Residential 99 8 FCL Topaz Pte Ltd, Sekisui SG Listed 624.2 858.3 800
House Ltd and KH Capital Pte
Ltd
Total 2,702.8 4,085

Page 20
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Industry Focus
Figure 22: 1H17 Government Land Sales Program

Site area Proposed Est. No. of Est, No. of Estimated Estimated Sales agent
(ha) GPR Housing hotel commercial launch
Units rooms space date
S/N Location
(sqm)
CONFIRMED LIST 2H15
Residential Sites
1 Toh Tuck Road 1.87 1.4 325 - - Feb-17 URA

2 Tampines Avenue 10 (Parcel C) 2.17 2.8 715 - - Mar-17 URA
3 Lorong 1 Realty Park 1.31 Landed 50 - - Apr-17 URA
4 Serangoon North Avenue 1 1.72 2.5 505 - - May-17 URA
4 Woodleigh Lane 1.96 3 735 - - May-17 URA
Total (Confirmed List) 2,330 - -
RESERVE LIST
Residential sites
1 Stirling Road 2.11 4.2 1110 - - Available URA
2 Bartley Road / Jalan Bunga Rampai 0.47 2.1 115 - - Available URA
3 Sumang Walk (EC) 2.71 3 775 - - Available HDB
4 Yishun Avenue 9 2.17 2.8 715 - - May-17 URA
5 Owen Road 1.38 3.5 605 - - Jun-17 URA
6 Jiak Kim Street 1.33 3.8 515 - 1,500 Jun-17 URA
7 Fourth Avenue 2.02 1.8 455 - - Jun-17 URA
8 1.72 3 575 - - Jun-16 URA
Commercial & Residential Sites
9 Holland Road 2.3 2.6 570 - 13,500 Available URA
Commercial Sites
10 Beach Road 2.1 4.2 - - 88,200 Available URA
11 Woodlands Square 2.24 3.5 260 - 60,030 Available URA
Total (Reserve List) 5,135 - 158,080

Total (Confirmed List and Reserve List) 7,465 - 158,080

Page 21
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Industry Focus
4.6 More En-bloc transactions in 2017
Increase in en-bloc transactions in 2016. From 2005-2007, we S$639m (S$557 psf ppr), ii) Raintree Gardens, Potong Pasir
saw a pick-up in en-bloc transactions when there was a second en-bloc sale of privatised former HUDC estate at
shortage of government land supply. Following the S$334m (S$593psf ppr) to UOL / UIC JV, iii) No.3 Cuscaden
implementation of property cooling measures, en-bloc Walk, Orchard at S$103.8m (S$1,826 psf ppr) to SL Capital, a
transactions have dwindled down since 2011 to no consortium led by Sustained Land, iv) No. 120 Grange Road,
transactions in 2014. In 2015, only one successful transaction Orchard at S$48.5m (S$1,841 psf ppr) to Roxy-Pacific Holdings,
(the sale of Thong Sia building) was recorded. and v) No. 8 Hullet Road, Orchard at S$38.2m (S$2,073 psf
ppr) to a consortium led by Patrick Kho of Lian Huat Group.
Nevertheless, we have seen a pick-up of en-bloc transactions in Media / news reported properties for sale including two
2016 with Harbour View Gardens being successfully transacted apartments at The Claymore, Lakeside Towers in Jurong, Villa
in August 2016 at an average price of S$1.3k psf, five en-bloc D’Este on Dalvey Road and Cairnhill Mansion on Orchard Road.
deals announced, and increasing media / news on property
owners engaging property consultants (such as JLL and CBRE) Despite the tighter rules on en-bloc sales and more tedious
to set up collective sales committee. The five en-bloc deals process to complete an en-bloc transaction, developers are
announced (excluding en-bloc sales for asset recycling now willing to undertake these properties, implying that i)
purposes or specifically to be exempted from ABSD or QC developers are hungry for land bank, and ii) developers are
charges) were i) Shunfu Ville, Bishan which was the first en- taking a more positive outlook in the medium term.
bloc sale of privatised former HUDC estate in nine years at
Figure 23: Shortage of land supply from the government Figure 24: Land prices remain high due to competitive
bids

Source: URA, DBS Bank Source: URA, DBS Bank
Figure 25: Pick-up in en-bloc sales during shortage of Figure 26: Total land transactions has fallen from 2013
government land supply onwards, post the implementation of cooling measures

Source: URA, DBS Bank Source: URA, DBS Bank

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Industry Focus
4.7 Merger and Acquisition (M&A) activities could pick up
With the recent proposed privatisation of various property- banking. We reviewed a list of smaller-cap developers with the
related companies and news reports on potential takeovers of key summary of each of the developers below. The smaller-cap
United Engineers (UE) (please refer to our report: Another developers are trading at an average discount to NAV of 29%
Centenarian for Sale) and Global Logistic Properties (GLP), we with most trading at a range of 40-93% discount to NAV.
believe that some of the smaller-cap developers which are Companies that are in deep discounts with attractive assets
trading at deep discounts to NAV could look attractive for includes Bukit Sembawang (93% discount), Wing Tai (60%),
potential M&A as an alternative to acquire assets / land Hiap Hoe (51%), and Hobee (50%).
Figure 27: Sample list of mid-cap developers that could head the M&A route
Bukit Sembawang Wing Tai Hiap Hoe
Bloomberg / Reuters BS SP / BSES.SI WINGT SP / WTHS.SI HIAP SP / HIAP.SI
Market Cap (S$'m) 1,177 1,298 335
Shareholding Structure Lee Family 44% Cheng Family 50% Teo Family 70%
Aberdeen 11% Others 2% Others 1%
Asia Fountain Inv (Guoco 5% Free Float 48% Free float 29%
Grp)
Free float 39%
Disc / (Prem) to NAV 93% 60% 51%
Debt / Equity no debt 0.4 0.7
Net debt / Equity no debt 0.1 0.6
Cash balance (S$'m) 401 966 23
Cash % of Market Cap 34% 74% 7%
Assets by business units Development properties 99.6% Development properties 57.0% Investment properties 45%
Investment properties 0.4% Investment properties 39.0% Hotel 11%
Retail 2.0% Development properties 8%
Others 2.0% Construction 4%
Leisure 0%
Others 31%
Assets by countries n/a SG 47% SG 82%
HK 29% AU 18%
CH 11%
MY 13%
Key assets Paterson Collection, Orchard, SG - The Crest, SG - Resi Signature At Lewis, SG - Resi
Resi
St Thomas Walk, River Valley, SG - Le Nouvel KLCC, MY - Resi HH @ Kallang, SG - Industrial
Resi
Luxus Hill, Seletar, SG - Landed resi Winsland House, SG - comm Zhongshan Park Integrated,
Novena, SG - Mixed
Watercove, Sembawang, SG - Development in Suzhou Industrial
Landed resi Park - Comm
Lanson Place, Shanghai - hospitality
Source: DBS Bank

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Industry Focus
Figure 27: Sample list of mid-cap developers that could head the M&A route (continued)
Hobee Roxy Wheelock
Bloomberg / Reuters HOBEE SP / HBEE.SI ROXY SP / RXYP.SI WP SP / WPSL.SI
Market Cap (S$'m) 1,477 501 1,789
Shareholding Structure Chua Family 76% Teo Family 72% Wheelock and Company 76%
Limited
Others 1% Others 6% Aberdeen 6%
Free float 23% Free float 22% Free Float 18%
Disc / (Prem) to NAV 50% 45% 40%
Debt / Equity 0.5 1.9 0.0
Net debt / Equity 0.5 1.2 (0.4)
Cash balance (S$'m) 77 327 1,319
Cash % of Market Cap 5% 65% 74%
Assets by business units Commercial 63% Development properties 57% Development properties 58%
Residential 35% Hotel 11% Investment properties 35%
Industrial 1% Investment properties 16% Investments 7%
Others 17%
Assets by countries SG 55% SG 42% SG 80%
UK 29% AU 36% Other 20%
CH 12% JP 8%
AU 4% TH 4%
MY 4%
HK 5%
ID 1%
Key assets Turquoise, Seascape & Cape Hotel properties in SG, JP, AU, TH Ardmore Three, Orchard, SG - Resi
Royale, Sentosa Cove, SG & Maldives
Residential projects in Shanghai, Sunnyvale Residences, SG - Resi Scotts Square, Orchard, SG - Resi
Tangshan, Zhuhai
6 commercial buildings in London Trilive, SG - Resi / Retail Fuyang project, Hangzhou, CH
The Metropolis, Buona Vista, SG - New World Towers, South Wheelock Place, SG - Comm /
Comm / Retail Brisbane, AU - Resi Retail
HB Centre 1 & 2, SG - Ind Land banks in SG, AU, ID
Source: DBS Bank

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Industry Focus
Figure 27: Sample list of mid-cap developers that could head the M&A route (continued)
Metro UE Aspial Oxley
Bloomberg / Reuters METRO SP / MTHL.SI UEM SP / UTES.SI ASP SP / ASPA.SI OHL SP / OXHL.SI
Market Cap (S$'m) 844 1,676 525 1,282
Shareholding Structure Ong Family 36% Great Eastern 13% Koh Family 84% Ching Chiat Kwong 43%
Ngee Ann Dev Pte 10% OCBC 10% Others 6% Low See Ching (Liu 29%
Ltd Shijin)
Others 6% Lee Foundation 9% Free float 11% Tee Wee Sien 12%
(Zheng Weixian)
Free float 49% WBL Corp 3% Others 15%
Free float 65% Free float 1%

Disc / (Prem) to NAV 37% 15% -60% -63%
Debt / Equity 0.0 0.6 4.2 3.1
Net debt / Equity (0.3) 0.3 3.9 2.6
Cash balance (S$'m) 418 671 72 367
Cash % of Market 50% 40% 14% 29%
Cap
Assets by business Property 96% Development 22% Real estate 44% Development 68%
units properties properties
Retail 4% Investment 47% Financial service 10% Hotel 13%
properties
Technology & 17% Jewellery 5% Investment 7%
Manufacturing properties
Corporate Services 14% Others 41% Corporate 12%
& Other Assets
Assets by countries CH 79% SG 85% Singapore 99.9% SG 97%
ASEAN 15% CH 10% Malaysia 0.1% MY 2%
Others 7% USA 1% UK 1%
MY 1% Japan 0%
TW 1% Cambodia 0%
ASEAN (ex SG & 0% Others 1%

MY)
HK 0%
Rest of Asia 0%
Others 2%
Key assets Nanchang Fashion Mark, UE Bizhub City, SG - Mixed Kensington Square, SG - The Flow, East Coast, SG -
Jiangxi, CH - Mixed Retail / Resi Comm
The Crest at Prince Charles UE Bizhub West, SG - Ind / City Gate, SG - Retail / Resi The Rise@Oxley, Oxley Rise
Crescent, SG - Resi Comm Rd, SG - Residences / Retail
Sheffield Digital Campus, Mixed Development One Nova City, Cairns, AU - Floraville / Floraview /
Sheffield, UK - Comm North, SG - Mixed Mixed Floravista, Ang Mo Kio, SG -
Mixed
Middlewood Locks, Land banks in Brisbane & Space@Tampines, SG -
Manchester, UK - Resi Penang Industrial
Metro Tower / City, Novotel & Ibis on Stevens,SG
Shanghai - Comm / retail - hospitality
GIE Tower, Guangzhou, CH Development properties in
- Comm Cambodia, Malaysia,
Myanmar, etc
Source: DBS Bank

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Industry Focus
Past transaction multiples imply that 1x P/NAV and 0.8x transacted at an average P/NAV multiple of 1.0x and P/RNAV
P/RNAV are levels at which most deals are struck. Based on of 0.8x as shown in the table below. However, we note that
selected privatisation transactions between 2010 and the there may be differences in terms of size, market
latest practicable date involving property developers listed on capitalisation, financials and portfolios that could change the
the SGX (list may not be exhaustive), the deals were potential valuations for M&A.
Figure 28: Historical Transactions involving listed Property Developers (2010-now)

Announcement Target Acquirer Final Offer Deal Value Premium/ P/NAV P/RNAV
Date Company Price Disc
S$'m 1-mth VWAP (x) (x)
Aug-2016 Sim Lian Coronation 3G 1.08 216 16.8% 0.9x n.a.
Jan-2015 Keppel Land Keppel Corp 4.38 2,749 25.0% 0.88x 0.66x
Apr-2014 Hotel Properties Limited Wheelock 4.05 200 33.8% 1.32x 0.79x
Apr-2014 CapitaMalls Asia CapitaLand Limited 2.35 3,025 35.8% 1.26x 0.89x
Feb-2014 Singapore Land Limited United Industrial 9.40 650 16.9% 0.72x 0.67x
Corporation Limited
Dec-2012 SC Global MYK Holdings Pte Ltd 1.80 318 57.2% 1.15x 0.8x
Developments Limited
May-2012 Wing Tai Ascend Capital Limited 1.39 1,104 14.3% 0.55x 0.62x
May-2011 Allgreen Limited Brookevale Investment 1.60 1,060 40.6% 0.99x 0.81x
Pte Ltd
Sep-2010 Soilbuild Limited Dolphin Acquisitions 0.80 113 15.6% 1.26x 1.07x
Aug-2010 MCL Hong Kong Land 2.45 189 27.3% 0.96x 0.75x
Holdings Limited
Min 14.3% 0.62x 0.62x
Mean 28.3% 0.78x 1.0x
Median 26.1% 0.79x 1.0x
Max 57.2% 1.07 1.32
Source: DBS Bank

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Industry Focus
4.8 Will Developers need to deleverage?
Average indebtedness across developers over time remain capital. Firstly, we expect the land-banking climate to remain
stable; larger-cap developers have been generally more competitive in Singapore given limited land sites available for
conservative. Property developers have generally been tender from the government, which means that most mid-
conservative in their approach towards capital management sized developers could be crowded out by their larger
and over the past few years, kept net gearing in the range of competitors or foreign developers. Secondly, increased
0.4-0.6x. Tracking the average indebtedness across developers currency volatility going forward is expected to be a drag on
over time, we found that mid-sized developers (defined as returns when deploying more capital overseas. As such, given
those with market capitalisation of up to S$2bn) have limited avenues to deploy capital and fairly strong balance
generally taken more debt in recent years and thus average sheets, we believe that a possible avenue where developers
gearing of c.0.8x in the last four years, higher than the could look to deleverage their balance sheet or if not pay
sector’s average of c.0.7x over the same period. higher dividends going forward.
On average, over the same period, the large-cap developers The recent spike in swap-offer rates (SOR) could imply higher
have an average net gearing ratio of c.0.5x. refinancing costs going forward. As such, faced with a
slowing top-line growth and increasing prospects of higher
Developers that stand out in terms of higher gearing than interest obligations, we believe that a viable strategy will be to
their peers as of the latest reported quarter are the likes of utilise proceeds that are recognised from subsequent years’
Guocoland (large-sized developer) at 1.2x and in the mid-sized pre-sales to pare down on debt obligations when they come
developer space - Oxley, Tee Land and Roxy-Pacific which all due in 2017-2018.
have net gearing in excess of 1.0x (Fig. 30). Chip Eng Seng
and Tuan Sing also have high net gearing of above 0.9x. In our interest rate analysis, we estimate impact on PATMI for
the developers from a 1% increase in interest rates result in a
Developers to deleverage as outlook remains subdued. 2017 4-40% impact on PATMI.
will turn out to be a tough year for developers to deploy
Figure 29: Gearing levels of Property Developers over Figure 30: Net gearing of Selected Mid-Cap
time have remained fairly stable Developers (Latest Quarter)
0.50 2.50
2.15
0.45
2.00
0.40
N e t Debt/Equity (x)
1.50
0.35 1.16
1.07
0.94 0.98
0.30 1.00 0.85
0.71
0.25 0.47 0.50 0.54
0.50
0.20
0.00
0.15
Fragrance
Roxy-Pacific
TEE Land
Heeton
Tuan Sing
Oxley
Hobee
Chip Eng Seng

Hiap Hoe
OUE
0.10
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Large cap Mid cap Average

Source: Bloomberg Finance L.P., DBS Bank Source: Bloomberg Finance L.P., DBS Bank

Page 27 Page 27
Industry Focus
Figure 31: Summary of Developers Financial position (As of latest quarter ended Sept-2016)
Developer Type* Market Total Total Total Cash Total Net Total Net EBITDA/I
Cap Assets Debt Equity Debt/ Debt/ Debt/ Debt/ nterest
Equity Equity EBITDA EBITDA expense
(TTM) (TTM)
(S$'bn) (S$'bn) (S$'bn) (S$'bn) (S$'bn) (x) (x) (x) (x) (x)
Capitaland Large 13.56 46.21 15.58 23.88 4.24 0.7 0.5 11 8 3.0
GLP Large 8.77 27.73 6.21 18.30 2.47 0.3 0.2 10 6 3.0
Citydev Large 7.40 19.93 6.35 11.02 3.29 0.6 0.3 5 3 11.8
UOL Large 4.52 11.60 2.57 8.51 0.27 0.3 0.3 8 7 9.8
FCL Large 4.32 24.20 9.80 11.84 2.17 0.8 0.6 12 9 5.1
UIC Large 3.86 8.62 1.31 6.98 0.08 0.2 0.2 4 4 28.9
Guocoland Large 2.21 8.15 4.05 3.47 1.13 1.2 0.8 22 16 3.9
Wheelock Mid 1.78 3.28 0.02 3.02 0.40 0.0 (0.1) 0l0 (7) 55
OUE Mid 1.57 8.09 2.97 4.59 0.21 0.6 0.6 17 14 1.5
Perennial RE Mid 1.49 6.71 2.52 3.64 0.19 0.7 0.6 221 1 1.2
Ho Bee Mid 1.44 4.29 1.39 2.79 0.08 0.5 0.5 9 8 21
Wingtai Mid 1.31 4.71 1.13 3.34 0.97 0.3 0.0 89 13 0.3
Oxley Mid 1.23 4.48 2.43 0.96 0.37 2.5 2.1 8 7 8.4
Bukit Sembawang Mid 1.16 1.42 - 1.27 0.40 - (0.3) 0.0 (4) 0.0
Fragrance Mid 1.09 2.00 0.82 1.06 0.06 0.8 0.7 93 85 1.6
Roxy-Pacific Mid 0.53 1.50 0.89 0.48 0.33 1.8 1.2 12 8 4.8
Chip Eng Seng Small 0.39 2.18 1.17 0.75 0.46 1.6 0.9 12 7 5
Tuan Sing Small 0.35 2.09 1.04 0.89 0.16 1.2 1.0 16 14 2.4
Hiap Hoe Small 0.33 1.30 0.45 0.69 0.02 0.7 0.6 8 6 4.4
SingHaiyi Small 0.30 0.95 0.30 0.47 0.12 0.6 0.4 -29 -17 -1.3
Heeton Small 0.14 0.72 0.31 0.33 0.03 0.9 0.9 -85 -77 -0.2
TEE Land Small 0.09 0.42 0.21 0.17 0.03 1.2 1.1 153 135 0.3
Total Net
Debt/ Debt/
Equity Equity
(x) (x)
Average Sector 0.6 0.4
Average Large Cap 0.6 0.4
Average Mid Cap 0.7 0.5
Average Small Cap 1.1 0.9
*Large Cap denotes Market Cap > S$2.0bn, Mid-Cap Developers refer to those with market cap > S$0.5bn to less than S$2.0bn, Small Cap
<S$0.5bn in market cap

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Industry Focus
Bond markets issuances have increased in recent years. With S$3.4bn worth of bonds from developers due in 2017 that
strong investor demand for yields in recent years amidst the need to be refinanced. Continued access to funding is a key
low interest rate environment, we have seen an increase in enabler to a healthy real estate development and investment
new bond issuances in Singapore. In the real estate space, we market. However, recent bond defaults in the oil & gas space
saw close to S$34bn of new issues over the past five years, has resulted in heightened risk aversion among investors in
which is more than 20% of the total amount of new bond bonds. In addition, the market for future bond issues appears
issuances over the preceding five years. to be shut for most aspiring issuers for now. If the current risk-
off sentiment remains in the medium term, it might be a
In the real estate sector, bond issuances peaked in 2011, and headwind for issuers in the real estate sector who need to
again reached new highs in 2012 and 2015. In 2015, bond refinance upcoming bond expires in 2017-2018 which total
issuances totalled S$8.7bn across the real estate sector. We S$6.3bn, out of which S$4.0bn will be from real estate
also note that mid-sized developers have also been tapping the developers.
bond markets in recent years. A total of S$3.5bn worth of
bonds will be due in 2017. We note that among the bonds due in 2017, developers like
Guocoland and OUE will need to refinance expiring bonds.
Average cost of funds has also been falling over time, hovering Developers such as OUE and Heeton’s existing cash balances
at about 3% since 2008. and receivables may not be sufficient for repayment of bonds.
Additional financing may be required in due time for bond
repayments.
Figure 32: Bond issuances by developers peaked in Figure 33: Bonds Expiry profile
2015
10,000 S $'m 4.5% S$'BN Developers REITs
9,000 4.0%
8,000 3.5%
7,000
3.0%
6,000 3.2
2.5%
5,000
2.0%
4,000
1.5%
3,000 1.3
2,000 1.0%
0.8 1.2
6.0
1,000 0.5%
1.5 1.3 3.6 2.1 1
0 0.0% 2.9 2.6 0.9
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1.4
1.1 1.2 0.9
0.7
Total amount issued (S$m) Average cost of debt
2017 2018 2019 2020 2021 2022 2023 2024 >20 24

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Industry Focus
Figure 34. Selected property developers’ outstanding bonds, 2017-2018 (S$m)
Issuer Maturity Amount Outstanding (S$'m)

SingHaiyi Group Ltd Jan-17 100
Fragrance Group Ltd Jan-17 85
OUE Ltd Feb-17 300
City Developments Ltd Feb-17 250
GLL IHT Pte Ltd (Guocoland) Feb-17 160
UOL Group Ltd May-17 75
Oxley Holdings Ltd May-17 150
Heeton Holdings Ltd Jun-17 60
CapitaLand Treasury Ltd Jul-17 50
GLL IHT Pte Ltd (Guocoland) Aug-17 170
Keppel Land Ltd Aug-17 100
GLL IHT Pte Ltd (Guocoland) Sep-17 105
Chip Eng Seng Corp Ltd Oct-17 150
TEE Land Ltd Oct-17 30
Hongkong Land Dec-17 50
City Developments Ltd Mar-18 100
Perennial Treasury Pte Ltd (Perennial) Mar-18 100
UOL Treasury Services Pte Ltd (UOL) Apr-18 175
Global Logistic Properties Ltd May-18 67
Centurion Corp Ltd Jul-18 65
Roxy-Pacific Holdings Ltd Jul-18 60
GLL IHT Pte Ltd (Guocoland) Sep-18 75
Citydev Nahdah Pte Ltd Sep-18 50
City Developments Ltd Sep-18 50
Perennial Real Estate Holdings Ltd Oct-18 300

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Industry Focus
5. Singapore REITs: Déjà vu
Key Assertions impacted by the uncertain economic environment. Meanwhile,

 Back to square one with REITs facing the retail sector was affected by Singaporeans spending their
expectations of rising interest rates disposable income overseas and shopping online. Going into
 Some buffer with yield spreads at average levels 2017, we believe these negative trends are likely to continue,
even after accounting for 3% 10-year bond yield resulting in a modest 1.1% growth in DPU for the sector.
 Combination of growth and/or large discount to
book best positioned to ride out 2017
Current forward yields offer some buffer with yield spread at
 Large-cap picks: A-REIT, KREIT, MCT, average levels assuming a normalised 10-year yield of 3.0%.
Mid-cap picks: CRT, FLT, KDCREIT While S-REITs are likely to face headwinds in the form of falling
rents and rising interest rates, we believe the recent correction
Negative 2016 outlook for S-REITs fails to materialise until has provided some downside buffer. The current FY17F yield
towards later half of the year. At the end of 2015 after the first spread to a normalised 3% bond yield stands at 4.0% which is
rate hike by the US Federal Reserve in December 2015, the slightly above the historical average spread of 3.8% and close
market was pricing in three rate hikes. These expectations to the 4.1% average since 2010.
resulted in S-REITs correcting in January 2016. However, as the
year progressed, the impact of (1) negative interest rates in Full impact on DPU from rise in interest rates will not be felt
Europe and Japan, (2) further correction in oil prices, (3) immediately. While investors are rightfully concerned about the
disappointing nonfarm payroll data in May, and (4) uncertainty impact of an increase in interest rates on DPU, based on our
caused by Brexit, caused expectations for rate hikes to be analysis, the full impact will only be felt over the course of the
dialed back significantly. next two to three years. This is because S-REITs in general have
hedged 75-85% of their debt into fixed rates and have only
Consequently, the S-REIT index (excluding dividends) rallied by 9%, 21% and 20% of total debt up for refinancing over 2017,
11% till early September, outperforming the 0.4% rise in the 2018 and 2019 respectively. We estimate that a 1% rise in
STI and 2% fall in the property developers index. However, interest rates will have a 2.9% and 4.9% impact on
with an improving US economy causing interest expectations distributions in 2017 and 2018 respectively.
to rise, further accelerated by the victory by President-Elect
Trump on 8 November 2016, the S-REIT index fell by 8%, Sector preferences – (1) Office, (2) Retail, (3) Industrial, and (4)
underperforming the 0.4% and 0.3%% drop in both the STI Hospitality. In terms of sectors, our preference is for the office
and developers index. REITs despite the expected decline in office rents given that the
sector trades at 20% discount to book value and 10-30%
DBS more hawkish on interest rates means S-REITs discount to recent market transactions. In addition, we think
performance to be capped. Going into 2017, consensus the sector remains under-owned relative to other sectors.
expectations are for three rate hikes with our DBS economists
being more hawkish, forecasting the US Federal Reserve to Our second preference is the retail sector for its resilient
increase the Fed Funds rate by 25bps once every quarter next income stream (i.e. exposure to suburban necessity shopping
with the US 10-year bond yield rising to 3.25% versus current malls) and the fact that it now trades close to 1x P/BV versus
spot rate of 2.3% and consensus forecasts of 2.5%. The the sector’s typically 10-20% premium to book value. The
Singapore 10-year bond yield is also expected to increase in industrial sector's third ranking is mainly attributed to our
tandem to 3.05%. Should our DBS house view come to positive view on the larger REITs such as Ascendas REIT which
fruition, we believe the performance of S-REITs will likely be offer a combination of strong balance sheets, decent yields and
capped. growth options.
Deteriorating rental outlook for most real estate subsectors. While we see long-term value in the hospitality sector given
Revenues across the office, retail, industrial and hospitality that the sectors trades at 20-40% discount to book, we believe
sectors were under pressure in 2016 due to a combination of there is limited re-rating catalyst at least for 1H17 as RevPAR is
sluggish demand as well as increase in physical completions expected to remain under pressure. However, we recommend
and anticipated supply. Demand for the more cyclical sectors that investors look for opportunities to re-enter in 2H17 on the
office, hotel and industrial sectors were also negatively

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Industry Focus
back of a potential recovery in 2018 as the oversupply situation In the mid-cap space, Frasers Logistics and Industrial Trust (FLT)
in Singapore normalises. and Keppel DC REIT (KDCREIT), with inbuilt annual rental
escalations and the ability to deploy their lowly geared balance
Stocks with growth and/or trading at a discount to recent sheets, offer visible growth in DPU.
market transactions/book to outperform. With a challenging
2017 to come, we believe REITs with a clear and visible growth Growth in DPU is also evident at Croesus Retail Trust (CRT)
driver will do well. On that front in the large-cap space, which will benefit from favorable hedges, with additional
Mapletree Commercial Trust (MCT) stands out given its DPU- upside should it be taken over.
accretive acquisition of Mapletree Business City Phase I which is
under-rented as well as continued growth at its core asset Finally, our top pick for stocks that trade at a discount relative
Vivocity. to book and recent market transactions is Keppel REIT (KREIT).
The implied value for KREIT’s Singapore portfolio on a per sqft
We also believe the risk reward for Ascendas REIT (AREIT) is basis stands at S$2,250 versus recent market transactions of
favorable given its exposure to the business park space which is S$2,700 and above, and it trades at 0.76x P/BV.
supply constrained. Moreover, AREIT will be under geared
balance sheet post conversion of the outstanding convertible
bonds next year which will allow AREIT to further deepen its
presence in Australia through acquisitions.
Figure 35: Price performance of Singapore REITs vs Figure 36: S-REIT yields and yield spread chart
Singapore Developers and STI Index
1.15 +12% 14%
Sector Yield spread
1.10
12%
1.05 Sector Yield
1.00 10% MAS 10 Year

0.95
8%
0.90
0.85 6%
0.80
0.75 4%
2%
0%
FSTREI (ex dividend) STI Index Developers


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Industry Focus
Key Issues in 2017
With a sense of déjà vu, as we approach 2017, we are faced But expectations could be dialled back again. While the market
with the similar issues confronting investors at the start of remains focused on rate hikes, there is a possibility that 2016
2016 and 2015. These include risk of rising interest rates, could repeat again, with interest rate expectations being
slowing growth, higher cost of capital potentially constraining reduced. This could arise from the European Central Bank
the ability to raise capital to fund growth plans, and (ECB) and Bank of Japan’s (BOJ) decision to push interest rates
heightened risk of write-downs of property values given falling further into negative territory and concerns over the potential
rents. breakup of the Euro on the back of victories by nationalist
parties in several European elections next year. Furthermore,
With economic outlook now softer than at the start of 2015 the policies actually implemented by President-elect Trump may
and 2016, we believe that S-REITs with stronger relative not be as inflationary as first thought and/or concerns over
growth will command an increasing premium. In addition, S- impact on curtailment of global trade/economies weigh more
REITs which offered resiliency in the past and trade at a on long-term bond yields.
premium but are now only able to offer flattish DPU growth
might be vulnerable, given rising risks of earnings Potential return of capital to the US a headwind (Figure 38).
disappointment. Key themes in 2017 are as follows: The SGD strengthened against the USD between 2009 and
2013, when the US Federal Reserve implemented three rounds
5.1 Impact of an increase in interest rates on of quantitative easing. During this period, the carry trade was
share price, distributions prevalent with USD-based investors taking advantage of the
stronger SGD by taking positions in yield instruments including
DBS economists project interest rates to rise faster than S-REITs. This resulted in the FSTREI Index rallying c.44% to its
consensus. We believe investors’ attention is now focused on peak in May 2013. However, with the end of the quantitative
the pace of interest rates in 2017. Thus far, consensus is easing by the US Federal Reserve and the interest rate up cycle
expecting three rate hikes with the US 10-year bond yield commencing from December 2015, the FSTREI Index has
forecast to rise to 2.5-2.6%. With share prices for S-REITs become more volatile, moving in sync with changes in interest
having already corrected in anticipation of this outcome, we rate expectations and movements in the USD. Going forward,
believe S-REITs will likely deliver steady returns. In contrast, the should US interest rates continue on an aggressive path
more hawkish forecasts by our DBS economists, who anticipate upwards, in line with our DBS economists view, capital from
four rate hikes (25bps once a quarter), would take the Fed Asia would likely return back to the US, presenting a headwind
funds rate to 1.5% by end-2017, the US 10-year bond yield to to the performance of S-REITs.
3.25% and the Singapore 10-year bond yield to 3.05%. Under
our house view, the overall performance of S-REITs will likely to
capped.
Figure 37: DBS Interest Rates Forecasts Figure 38: Singapore REITs vs currency
Current 1,200 We a ker 1.80
1Q17F 2Q17F 3Q17F 4Q17F P e riod when
(8 Dec'16) S GD a
stre ngthening 1.70
1,000 pote ntial
US 10- S GD a tailwind he a dwind 1.60
2.35% 2.65% 2.85% 3.05% 3.25%
Year Bond 800
1.50
US 2-year 1.10% 1.50% 1.70% 1.90% 2.10%
bond 600 1.40
US yield 1.30
1.25% 1.15% 1.15% 1.15% 1.15% 400
Curve 1.20
SG 10 year 200
2.34% 2.65% 2.75% 2.85% 3.05% 1.10
bond
- 1.00
SG 2-year 1.17% 1.50% 1.65% 1.80% 1.95%
bond
SG Yield 1.17% 1.15% 1.10% 1.05% 1.10% FSTREI Index (LHS) USDSGD Rate (RHS)
Curve

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Yield spread below historical averages assuming normalised REITs in general may face some volatility. However, we believe
3.05% yield. The current FY17F yield spread to the spot 10- S-REITs with clear visible growth drivers have the potential to
year bond yield stands at 4.7% which is above the historical experience a compression in yield spread, with absolute yields
average spread of 3.8% and 4.1% average since 2010. stable or even compressing. This would be similar to the
However, assuming a normalised 3.05% bond yield, the yield experience during the last interest rate up-cycle. Using Capital
spread will drop to 4.0% which will be in line with its historical Mall Trust (CMT) as an example, from 2004-2007, CMT’s yield
mean. This implies that current share prices have priced in rates spread fell from over 4% to 0.4% in mid-2007, while the US
inching back to normalised levels. Federal Reserve raised the Fed Funds Rate from 1% to a peak
of 5.25%, and CMT generated annual DPU growth in excess of
7%.
Potential for yield spreads for REITs with growth to compress
during rising interest rate environment. Assuming the long
bond yield spikes to 3.05% by end-2017, share prices of S-
Figure 39: CMT experienced a compression in interest rates during an up-cycle in interest rates
6.0% 20.0%
Increase in
interest rates 18.0%
5.0% 16.0%
4.0% 14.0%
12.0%
3.0% 10.0%
8.0%
2.0% 6.0%
1.0% 4.0%
Fall in yield
2.0%
spread
0.0% 0.0%
CMT yield spread (LHS) SG 10 year bond yield (LHS)

US Fed Funds Rate (LHS) y-o-y DPU growth (RHS)
Source: Bloomberg Finance L.P., Thomson Reuters, DBS Bank
Figure 40: Forward S-REIT yield spread at a new normal

6.0%
Sector Yield spread
5.5%
+ 2 SD

5.0%

+ 1 SD
4.5%

M ean
4.0%

- 1 SD
3.5%

3.0% - 2 SD

2.5%


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Industry Focus
Figure 41. Historical S-REIT yield and S-REIT yield spread (2005-current)
S-REIT Yield
10 Year bond S-REIT Yields
Period Years Spreads Comments
(%) (%)
(%)

2005 2.9% 4.8% 2.1% 2006-2008 was a period of high growth
for the S-REITs where average distribution
“High Growth” 2006 3.4% 5.0% 1.6%
growth was c.13% over 2006-2008. Key
2007 2.9% 4.1% 1.2% catalysts were acquisitions

“Aberration in 2008 2.8% 7.3% 4.5% Yield spread expanded to >5.1% due to
valuations due to
2009 2.3% 9.6% 7.3% financial crisis
the GFC”

2010 2.4% 6.3% 3.9%
2011 2.2% 6.4% 4.2%
“Liquidity driven Post-global financial crisis period, the
2012 1.5% 6.5% 5.0% sector saw yield compression in 2012-
recovery”
2013 2.0% 5.8% 3.8% 2013 before the Fed hinted of rate hikes
in mid-2013
2014 2.4% 6.2% 3.8%
2015 2.4% 6.3% 3.9%

Periods
2005-cuurent 2.5% 6.2% 3.8%
2006-2008 3.0% 5.4% 2.4%
2010-current 2.1% 6.3% 4.1%
Forward
Current (FY17F) 2.3% 7.0 % 4.7%
Forward(FY17F) 3.0% 7.0% 4.0%
Source: Bloomberg Finance L.P. Finance L.P, DBS Bank

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Industry Focus
Figure 42. Implied share price based on average yield spread and normalised 3.05% 10-year bond yield
Implied Yield Upside /
Avg Forward Current Current (Average Implied downside from
Yield Avg Yield Yield DPU Price Forward Yield Spread Share Price current share
Spread Yield (+1SD) (-1SD) (Scts) (S$) Yield + 3.05%) (S$) price
Office
KREIT 4.1% 6.3% 7.2% 5.4% 6.5 1.020 6.1% 7.1% 0.92 -11%
CCT 3.7% 5.8% 6.5% 5.1% 9.3 1.505 6.1% 6.7% 1.39 -9%
OUECT 5.1% 7.4% 8.1% 6.7% 5.2 0.695 7.7% 8.1% 0.64 -7%
FCOT 4.9% 7.0% 7.8% 6.2% 9.8 1.270 7.7% 7.9% 1.24 -2%
Retail
CRCT 4.6% 6.8% 7.4% 6.1% 10.5 1.385 7.6% 7.6% 1.38 -1%
CMT 3.2% 5.3% 5.7% 4.9% 11.2 1.930 5.7% 6.2% 1.81 -7%
CRT 7.1% 9.4% 10.1% 8.7% 7.5 0.850 9.0% 10.1% 0.74 -13%
FCT 3.8% 5.3% 5.7% 4.9% 11.8 1.930 6.0% 6.8% 1.74 -11%
SPH REIT 3.3% 5.6% 5.9% 5.3% 5.7 0.955 5.9% 6.3% 0.90 -7%
Commercial
MCT 3.8% 5.8% 6.4% 5.3% 8.7 1.415 6.0% 6.8% 1.28 -12%
MAGIC 4.8% 7.1% 7.7% 6.4% 7.2 0.945 7.4% 7.8% 0.92 -3%
SGREIT 4.4% 6.6% 7.1% 6.0% 5.2 0.755 6.9% 7.4% 0.70 -8%
Suntec 4.2% 6.3% 7.3% 5.3% 10 1.650 5.9% 7.2% 1.39 -16%
Hospitality
ART 5.1% 7.2% 7.9% 6.5% 8.1 1.155 7.1% 8.1% 1.00 -14%
ASCHT 5.4% 7.5% 8.4% 6.6% 5.5 0.700 7.9% 8.4% 0.65 -8%
CDREIT 4.8% 6.9% 7.8% 6.0% 8.9 1.360 6.8% 7.8% 1.14 -17%
FEHT 4.0% 6.2% 6.9% 5.5% 4 0.595 6.8% 7.0% 0.57 -5%
FHT 5.2% 7.5% 7.8% 7.1% 5 0.645 9.6% 8.2% 0.61 -6%
OUEHT 4.9% 7.2% 7.8% 6.5% 4.5 0.685 6.9% 7.9% 0.57 -16%
Industrial
AIMS 6.3% 8.5% 9.8% 7.1% 11.3 1.310 8.7% 9.3% 1.22 -7%
a-itrust 4.7% 6.8% 7.4% 6.2% 5.9 1.010 5.6% 7.7% 0.77 -25%
A-REIT 4.2% 6.3% 6.8% 5.9% 15.7 2.310 6.7% 7.2% 2.18 -7%
Cache 5.9% 8.0% 8.9% 7.2% 7.5 0.815 9.2% 8.9% 0.84 3%
CREIT 5.9% 8.0% 9.3% 6.8% 4.2 0.540 7.8% 8.9% 0.47 -14%
FLT 5.0% 6.9% 7.2% 6.7% 6.6 0.940 7.2% 8.0% 0.83 -13%
MINT 5.1% 7.2% 7.7% 6.7% 11.3 1.645 6.9% 8.1% 1.40 -15%
MLT 5.0% 7.1% 8.2% 6.0% 7.2 1.020 7.1% 8.0% 0.90 -13%
SBREIT 5.8% 8.1% 8.8% 7.5% 6.1 0.655 9.5% 8.8% 0.69 5%
Healthcare
P-Life 3.3% 5.4% 6.0% 4.9% 12.2 2.390 5.0% 6.3% 1.94 -19%
Others
IREIT 6.3% 8.6% 9.2% 7.9% 6.3 0.720 8.8% 9.3% 0.68 -6%
KDCREIT 3.9% 6.1% 6.7% 5.5% 7.2 1.200 5.8% 6.5% 1.11 -10%
MUST 4.9% 6.9% 7.2% 6.6% 6 0.835 7.3% 7.9% 0.80 -5%
Green boxes denote downside limited to <5%

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Industry Focus
Impact of interest rates on distributions increase in borrowing costs as they refinancing their debt.
This is due to current interest rates in Europe, Japan and
Still some breathing room as impact of interest rates will be Australia being lower than when the REITS first borrowed in
felt over time. While interest rates are anticipated to rise the respective local currencies.
next year, the majority of S-REITs have hedged 75-85% of
their borrowings and with a weighted average debt maturity Assuming a 1% lift in the cost of borrowing above our
of 2-3 years. For FY17, on average about 9% of debt is due current estimates (we have already assumed up to a 25-bp
to be refinanced, thus the full impact from higher costs of increase in cost of debt compared to FY16) and the impact
borrowings will not be felt in 2017 but over the next few only occurs when the various S-REITs refinance 9% and
years. In addition, the impact from a rise in interest rates is 21% of all loans outstanding in 2017 and 2018 respectively,
likely to be felt by the REITs which predominantly borrow in as well as only impacting the current outstanding floating
SGD. In contrast, REITs with exposure to European, Japanese rate debt, we estimate up to 2.9% and 4.9% impact on
and Australia assets with commensurate debt in EUR, JPY FY17F and FY18F overall S-REIT DPU respectively.
and Australia, may even report declining or face a slower
Figure 43. Potential impact on DPU with 1% increase in interest rates

Percentage Percentage of debt
Percentage Fixed
REIT floating rate debt ue for refinancing Change in DPU
rate debt (%)
(%) (%)
2017 2018 FY17F FY18F
Ascendas Hospitality Trust 97 3 31 37 -2.8% -5.6%
Ascendas India Trust 100 - 11 12 -0.6% -1.4%
Ascendas REIT 78 22 6 22 -2.2% -3.8%
Ascott Residence Trust 80 20 13 11 -4.9% -6.4%
Cache Logistics Trust 64 36 14 43 -3.9% -7.2%
Cambridge Industrial Trust 88 12 0 29 -1.1% -4.0%
CapitaLand Commercial Trust* 80 20 5 16 -3.0% -4.7%
CapitaLand Mall Trust* 90 10 7 16 -1.5% -2.9%
CapitaLand Retail China Trust 53 47 43 10 -9.6% -10.7%
CDL Hospitality Trust 60 40 0 35 -3.7% -6.6%
Croesus Retail Trust 100 - 14 41 -1.8% -6.3%
Far East Hospitality Trust 71 29 30 28 -6.6% -9.1%
Frasers Centrepoint Trust 59 41 30 8 -4.8% -5.2%
Frasers Commercial Trust 85 15 24 24 -3.7% -6.0%
Frasers Hospitality Trust 86 14 14 15 -2.7% -4.0%
Frasers Logistics & Industrial Trust 84 16 0 0 -0.9% -0.8%
IREIT Global 88 12 12 0 -1.8% -1.8%
Keppel REIT* 74 26 0 14 -4.0% -6.1%
Keppel DC REIT 86 14 1 44 -0.6% -2.4%
Manulife US REIT 100 - 0 0 0.0% 0.0%
Mapletree Commercial Trust 74 26 2 2 -2.5% -2.6%
Mapletree Greater China Commercial
85 15 9 29 -2.8% -6.1%
Trust
Mapletree Industrial Trust 69 31 1 9 -3.3% -4.0%
Mapletree Logistics Trust 81 19 1 15 -2.2% -3.8%
OUE Commercial REIT 78 22 27 49 -9.1% -18.9%
OUE Hospitality Trust 68 32 0 34 -3.4% -6.8%
Parkway Life REIT 98 2 0 14 -0.2% -1.4%
Soilbuild Business Space REIT 88 12 0 33 -0.9% -3.2%
SPH REIT 86 14 0 38 -0.8% -3.0%
Suntec REIT* 60 40 3 37 -5.0% -9.2%
YTL Starhill Global REIT 96 4 35 28 -3.8% -6.2%
Total S-REIT Debt 77 23 9 21 -2.9% -4.9%

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Industry Focus
S-REIT debt maturity profile
Figure 44. Debt Expiry Profile Figure 45. S-REIT debt by sector
Healthcare
S$bn 3%
14.0 29.7% 35.0%
Industrial
12.0 30.0% Retail 27%
24%
10.0 21.3% 20.4% 25.0%
18.6%
8.0 20.0%
6.0 15.0%
8.8%
4.0 10.0%
2.0 5.0%
1.1% Office
0.0 0.0% 33%
Hospitality
2016 2017 2018 2019 2020 >2020 13%
Source: Bloomberg Finance LLP, DBS Bank Source: Bloomberg Finance LLP, DBS Bank
Figure 46. Debt maturity profile for individual S-REITs (%)

REIT Total Debt (S$bn) 2016 2017 2018 2019 2020 >2020
AIMS AMP Capital Industrial REIT 0.61 0% 0% 31% 40% 13% 16%
Ascendas Hospitality Trust 0.54 4% 31% 37% 0% 28% 0%
Ascendas India Trust 0.40 0% 11% 12% 21% 20% 36%
Ascendas REIT 3.37 10% 6% 22% 15% 16% 31%
Ascott Residence Trust 1.98 0% 13% 11% 8% 15% 53%
Cache Logistics Trust 0.53 0% 14% 43% 34% 10% 0%
Cambridge Industrial Trust 0.53 0% 0% 29% 19% 30% 21%
CapitaLand Commercial Trust* 3.28 0% 5% 16% 21% 37% 20%
CapitaLand Mall Trust* 3.84 0% 7% 16% 13% 12% 53%
CapitaLand Retail China Trust 1.00 4% 43% 10% 18% 10% 15%
CDL Hospitality Trust 0.93 0% 0% 35% 24% 20% 22%
Croesus Retail Trust 0.78 0% 14% 41% 14% 17% 14%
Far East Hospitality Trust 0.82 5% 30% 28% 12% 0% 24%
First REIT 0.46 0% 31% 34% 26% 9% 0%
Frasers Centrepoint Trust 0.73 0% 30% 8% 16% 10% 36%
Frasers Commercial Trust 0.75 0% 24% 24% 28% 10% 13%
Frasers Hospitality Trust 0.80 0% 14% 15% 70% 0% 0%
Frasers Logistics Trust 0.52 0% 0% 0% 34% 32% 34%
IREIT Global 0.30 0% 12% 0% 49% 39% 0%
Keppel REIT* 3.32 0% 0% 14% 28% 23% 36%
Kepple DC REIT 0.34 9% 1% 44% 38% 8% 0%
Manulife US REIT 0.30 0% 0% 0% 36% 23% 41%
Mapletree Commercial Trust 2.34 0% 2% 2% 12% 19% 65%
Mapletree Greater China Commercial Trust 2.42 0% 9% 29% 16% 16% 30%
Mapletree Industrial Trust 2.11 0% 1% 9% 26% 30% 34%
Mapletree Logistics Trust 2.05 0% 1% 15% 16% 14% 54%
OUE Commercial REIT 1.28 0% 27% 49% 22% 0% 2%
OUE Hospitality Trust 0.86 0% 0% 34% 31% 34% 0%
Parkway Life REIT 0.68 2% 0% 14% 31% 27% 27%
Religare Health Trust 0.18 0% 5% 54% 35% 7% 0%
Soilbuild Business Space REIT 0.47 0% 0% 33% 6% 39% 21%
SPH REIT 0.85 0% 0% 38% 15% 33% 15%
Suntec REIT* 2.99 0% 3% 37% 27% 10% 22%
YTL Starhill Global REIT 1.14 1% 35% 28% 9% 15% 12%
Total S-REIT Debt 44.37 1.1% 8.8% 21.3% 20.4% 18.6% 29.7%
Source: Various REITs, DBS Bank

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Industry Focus
5.2 Moderating DPU performance

Meanwhile, the slowdown for the retail sector is largely due to
CMT and FCT being in a transition as they embark on the
Grinding out DPU growth in 2017. On the back of an redevelopment of Funan and Northpoint respectively. For the
increasingly uncertain economic environment, supply pressures office/commercial sector, DPU growth is expected to moderate
across various property segments and an uptick in borrowing on the back of the decline in office rents.
costs, delivery of DPU growth will increasingly become more
challenging in 2017. Nevertheless, we still expect S-REITs in However, the office/commercial sector provides the strongest
general to grind out a 1.1% y-o-y growth in DPU. This is DPU growth in 2017. This is largely due to stronger
marginally higher than 0.4% DPU growth in FY16, which was performances from CCT and MCT which will benefit from the
partially impacted by several rights issues, predominantly in the full-year contribution from the acquisitions of CapitaGreen and
hospitality sector. The slightly higher growth in 2017 is also a Mapletree Business City respectively.
function of a low-base effect from a fairly challenging 2016
This came from several industrial REITs facing lower rents on Despite the headwinds in 2017, there are several REITS with
the renewal of master leases and/or loss of income from the attractive growth prospects next year. These include CCT,
conversions of single-tenanted buildings to multi-tenanted MCT, AIT, CRT, OUEHT and KDCREIT.
buildings.
Figure 47: Office/Commercial REITs forecasted to Figure 48: DBSV forecasts vs consensus estimates
deliver strongest growth in DPUs
-1.3%
Hospitality
-6.7% -0.7%Hospitality
-1.3%
Industrial 0.8% 2.5%

0.0% Industrial 0.8%
Singapore Retail 0.5% Singapore Retail 1.2%

1.2% 0.5%
1.1% Retail 2.3%

Retail 1.2% 1.1%
-0.2%
Office/ Commercial
Office/ Commercial 1.3% 1.3%
2.5% Consensus
FY17/18 1.5%
1.1% S-REITs 1.1% FY17/18
FY16/17 S-REITs 0.4%
-2.0% -1.0% 0.0% 1.0% 2.0% 3.0%
-8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0%
Source: Bloomberg Finance LLP, DBS Bank Source: Bloomberg Finance LLP, DBS Bank
Figure 49: Selected S-REITs offer strong growth profiles

REIT Sector Sector Growth FY16-17F Growth driver
DPU growth
CCT Office 1.3% 3.7% Acquisition of 60% remaining interest in CapitaGreen
MCT Office/ Commercial 1.3% 2.5% Acquisition of Mapletree Business City
AIT Industrial 0.8% 8.1% New developments and acquisition of BlueRidge Phase II
CRT Retail (Japan) 1.1% 8.7% Improved SGD/JPY hedge rate
Acquisition of Crown Plaza Changi Airport Extension,
OUEHT Hospitality -1.3% 5.0% opening of Michael Kors and Victoria Secret store and low-
base effect
KDCREIT Data-centre (industrial) 0.8% 5.0% Acquisition of data centres in Milan and Singapore
MUST Office (USA) 1.3% 7.8% Improvement in US office market

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Industry Focus
5.3 Potential risk to property values in the For retail space, CityVibe at Clementi was sold at a net yield of
industrial and hospitality sectors slightly above 4% while vendors for Jurong Point is seeking to
sell the mall for over S$2bn at a sub-4% net yield. The values
Capital values most resilient for office and retail sector. Cap ascribed to these transactions are in line or above the
rates have generally been compressing over the past few years valuations of the properties of the various office and retail
due to low interest rates and ample liquidity boosting REITs.
transactions velocity and value. Looking ahead, with projected
decline in rents and RevPAR for the industrial and hotels in Figure 50: Implied price per sqft of NLA for Singapore
2016, there is potential downside to the capital values for portfolio on completed basis
some industrial and hospitality REITs. REIT Price Total Implied psf
(S$) attributable SG (S$)
NLA (m sqft)
While rents for the office and retail sector are under pressure
CCT 1.505 3.1 1,850
near term, we expect capital values to remain steady, given
KREIT 1.020 2.6 2,250
abundant liquidity chasing both these asset classes. This can be
OUECT 0.695 1.0 2,320
seen by recent office transactions such as the sale of Asia
Suntec 1.650 2.4 2,050
Square Tower 1 and Straits Trading Building for approximately
*Calculated as EV less value of non Grade A office properties divided
S$2,700 and S$3,500 per sqft respectively. In addition, the
by attributed property
implied price for the Central Boulevard land tender made by IOI
Properties was over S$3,000 per sqft.
Figure 51: Recent office transactions

Date Property Location Land tenure Net Lettable Price ($) Price per NLA (S$)
Area (sq ft)
Aug-14 Equity Plaza Raffles Place 74 years remaining 252,135 550,000,000 2,181
Jul-14 Anson House Tanjong Pagar 82 years remaining 76,362 172,000,000 2,252
Area
Sep-14 MBFC Tower 3 Marina Bay 92 447,327 1,248,000,000 2,790
Jan-15 AXA Tower Tanjong Pagar 66.5 remaining (2015) 675,000 1,170,000,000 1,733
Jun-15 One Raffles Place Raffles Place 99/FH 600,000 1,429,166,667 2,382
Nov-15 CPF Building 79 Robinson Road 99 LH (2067) 324,000 550,000,000 1,698
May-16 Remaining 60% interest Raffles Place 57 remaining expiring 703,122 1,600,500,000* 2,276 (2,700
in CapitaGreen 31Mar2073 assuming 99 year
leasehold)
May-16 Straits Trading Building 9 Battery Road 999 LH 158,897 560,000,000 3,524
Jun-16 Asia Square Tower 1 Marina Bay 99 LH from 2007 1,200,000 3,400,000,000 2,668
sqft office &
40,000 sqft
retail
*Based on 100% equity interest
Source: Various press reports, DBS Bank

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Industry Focus
Figure 52: Cap rates for office Remarks
4.2%
(%) 4.1% Transaction cap rates have compressed
4.0% down to low-3.0% level as demand for
3.9%
quality offices remain high due to
3.8% foreign investors willing to price in a
3.6% 3.8%
3.6% recovery of the sector in the medium
3.6% term.
3.4% More transactions in the pipeline could

3.3% mean that cap rates in the interim will
3.2%
likely remain stable.
3.0%
Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16
Figure 53: Cap rates for retail sector Remarks

6.4%
(%) 6.1%
6.2% Cap rates have also been compressing
over time and is now close to 70bps
6.0%
below the peak of 6.1% back in 2009.
5.8% 5.7% 5.7% Transactions in the retail sector is mainly
5.8%
driven by related party deals – Sponsors
5.6%
divesting the malls to their REITs.
5.4%
5.4%
5.4% Cap rates expected to remain steady or
5.2% 5.3%
even compress depending on the
5.0% potential sale of Jurong Point Mall in
2017.
4.8%
Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16
Figure 54: Cap rates for industrial sector Remarks

7.6% (%) 7.5%
7.4%
Cap rates for factory and warehouse
7.3% space have compressed over time to a
7.2% 7.1% peak back in 2013. Since then, it has
7.0% 6.9%
expanded slightly but remained fairly
6.8% stable since.
6.8% 6.7%
6.5%
6.6% Any downside to valuations are likely
due to unforeseen increase in vacancy
6.4%
rates from property conversions (single-
6.4% Factory
6.2% user to multi-user) properties.
Warehouse
6.0%
Mar-2009 Mar-2010 Mar-2011 Mar-2012 Mar-2013 Mar-2014 Mar-2015 Mar-2016

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Industry Focus
5.4 Acquisitions may be difficult to execute with acquisitions worth S$861m as industrial REITs such as AREIT,
redevelopments an attractive option FLT and MLT sought freehold properties with annual rental
escalations. Suntec and FHT also bought a 25% interest in
Slowdown in acquisitions in 2016.At the end of 2015, we Southgate, Melbourne (S$289m) and Novotel Melbourne
expected the high cost of equity to potentially constrain the (S$246m) respectively. In 2016, the S-REIT sector made its
ability of S-REITs to raise equity to fund acquisitions. This maiden acquisition in Italy with KDCREIT’s purchase of a data
partially came to fruition with total announced acquisitions centre in Milan.
dropping 16% y-o-y to S$6.2bn. The most active sectors were
the Industrial (S$3.0bn), followed by Office/Commercial S-REITs increased the number of assets sold from S$306m in
(S$1.9bn) and Hospitality (S$0.8bn). Notable transactions 2015 to S$555m in 2016 as AREIT exited China and
include MCT’s purchase of Mapletree Business City Phase I redeployed its capital to Australia, while RHT sold its 51%
(S$1.8bn), CCT’s acquisition of the remaining 60% interest in economic interest in its Gurgaon property given the inability of
CapitaGreen (S$1.6bn) and CRCT’s purchase of Galleria Mall the trust to obtain the necessary regulatory approval to buy a
(S$0.3bn). direct 51% equity interest in the hospital.
In terms of country allocation, Singapore returned as the Meanwhile, the share of properties acquired from the S-REITs'
primary market (66% of total acquisitions worth S$3.8bn) for sponsors jumped to 72% in 2016 from 49% in 2015 as MCT
acquisitions. This was mainly driven by the purchase of and CCT bought from their respective sponsors. Stripping out
Mapletree Business City Phase I and 60% interest in these two transactions, the majority of acquisitions were made
CapitaGreen. Australia remains a popular destination with total from third parties.
Figure 55: Acquisition value marginally down Figure 56: Acquisitions were mainly Singapore-centric
8,000
S $' m
7,000
2015 2016
6,000 8%
Others Singapore 3% Singapore
5,000 Indonesia 3% 14%
4,000 Australia China China
Japan 36% Japan Japan
3,000 15%
China
2,000
Singapore Australia 2% Australia
38% 66%
1,000
Indonesia 5% Indonesia
0
2012 2013 2014 2015 2016 6% Others Others
3%
Source: Various S-REITs, DBS Bank
Figure 57: Industrial REITs remain most active Figure 58: Sponsor remains key source of acquisitions
in 2016
100%
Total 90%
28%
80% 43%
Healthcare 49% 51%
70%
68%
Hospitality 60%
2016 50%
Industrial 2015 40%
72%
2014 30%
51% 57%
Retail 2013
49%
20%
32%
2012 10%
Office/Commercial S$m 0%
0 2,000 4,000 6,000 8,000
2012 2013 2014 2015 2016
Source: Various REITs, DBS Bank Sponsor/Strategic partner 3rd party

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Industry Focus
Figure 59: Announced acquisitions by S-REITs in 2016

REIT Property Country Sector Value Vendor
(S$m)
LMRT Lippo Mall Kuta Indonesia Retail 81.6 Sponsor Related
LMRT Lippo Plaza Jogja Indonesia Retail 51.0 Sponsor Related
FIRT Siloam Hospitals Yogyakarta Indonesia Healthcare 40.8 Sponsor Related
ART Sheraton Tribeca New York Hotel US Hospitality 218.0 3rd Party
AIT Building at CyberVale, Chennai India Industrial 13.2 3rd Party
P-Life Silver Heights Hitsujigaoka Ichiban-kan & Niban-kan Japan Healthcare 13.6 3rd Party
CRT Fuji Grand Natalie Japan Retail 40.2 3rd Party
FHT Maritim Hotel Dresden, Germany Germany Hospitality 90.4 3rd Party
CRT Mallage Saga and Feeeal Asahikawa Japan Retail 74.5 3rd Party
CCT Remaining 60% interest in CapitaGreen Singapore Office 960.0 Sponsor Related
MLT Four dry warehouse facilities located in Sydney, NSW, Australia Australia Industrial 84.4 3rd Party
MLT Mapletree Shah Alam Logistics Park Malaysia Industrial 53.2 Sponsor Related
SBREIT Bukit Batok Connection Singapore Industrial 96.3 Sponsor Related
MCT Mapletree Business City (Phase 1) Singapore Industrial/Office 1,780.0 Sponsor Related
OUEHT Crowne Plaza Extension Singapore Hospitality 205.0 Sponsor Related
Suntec Southgate Complex Australia Office/Retail 289.0 3rd Party
KDCREIT Data Centre in Milan, Italy Italy Industrial 57.3 3rd Party
CRCT Galleria China Retail 304.9 3rd Party
FLT 111 Indian Drive, Keysborough, Melbourne & Lot 1 Pearson Australia Industrial 71.2 Sponsor Related
Road, Yatala, Brisbane (Call option properties)
FHT Novotel Melbourne on Collins, Australia Australia Hospitality 245.9 3rd Party
AREIT 197-201 Coward Street, Sydney & Stage 4, Power Park Estate, Australia Industrial 170.8 3rd Party
Dandenong South, Melbourne
MLT Mapletree Logistics Park Phase 2, Vietnam Vietnam Industrial 20.6 Sponsor Related
KDCREIT Keppel DC Singapore 3 Singapore Industrial 141.0 Sponsor Related
FIRT Siloam Hospitals Labuan Bajo Indonesia Healthcare 20.0 Sponsor Related
AREIT 2 Science Park Properties Singapore Business Park 420.0 Sponsor Related
MLT 4 warehouses in Australia Australia Industrial 151.9 3rd Party
Total 5,696
Industrial 3,162
Retail 393
Office 1,277
Hospitality 551
Healthcare 313
Figure 60: Announced disposals by S-REITs in 2016

REIT Property Country Sector Value (S$m) Buyer
RHT 51% economic interest in Gurgaon Clinical Establishment and India Healthcare 299.8 Sponsor Related
Shalimar Bagh Clinical Establishment
CIT 23 Tuas Avenue 10 & 2 Ubi View Singapore Industrial 27.0 3rd Party
AREIT A-REIT City @ Jingqiao China Industrial 228.1 3rd Party
FIRT Siloam Hospitals Surabaya - Plot A and existing hospital Indonesia Healthcare 35.7 Sponsor Related
ART Salcedo Residences Philippines Hospitality 7.2 3rd Party
Cache Changi Districentre 3 Singapore Industrial 25.5 3rd Party
PREIT 4 Nursing Homes Japan Healthcare 48.9 3rd Party
More redevelopments to potentially occur. Given depressed balance sheets in a rising interest rate environment, we
share prices causing difficulty in raising equity to fund believe the pace of acquisitions may slow further in 2017.
acquisitions and potential investor reluctance to gear up

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Industry Focus
existing Golden Shoe property. For 2017, we anticipate that

Nevertheless, redevelopments may come to fore especially with CRT will announce plans to maximise its One’s Mall and Torius
the increase in the development limit from 10% previously to property, while FCOT may redevelop Alexandra Technopark
25%. To date, we have seen CMT redevelop Funan and CCT should the anchor tenant HP move out.
announce plans to building a Grade A office building at its
Figure 61: S-REITs' gearing headroom and sponsor pipeline

REIT Gearing end Headroom Sponsor Potential Pipeline Remarks
FY16/17F* 40%
Office
CCT 38% 316 CapitaLand Remaining stake in Contingent on performance of
CapitaGreen CapitaGreen
FCOT 36% 137 Frasers Valley Point/Alexandra High likelihood for Australand's
Centrepoint Point/Cecil Street Office properties though subject to FCOT
Land property/Australand share price
properties
KREIT 39% 141 Keppel Land N/A Limited near-term pipeline from sponsor
OUECT 38% 91 OUE Limited OUE Downtown Potential in 2017-2018
Retail
CRCT 36% 180 CapitaLand Malls in China Subject to valuation and malls being
stabilised
CMT 35% 831 CapitaLand Westgate, Star Vista, Possible acquisition of Westgate
Bedok Mall, Ion
Orchard
CRT 45% n/a Croesus Mallage Saga, China No immediate plans to purchase
Group, Daiwa properties Chinese properties
House,
Marubeni
FCT 28% 423 Frasers Waterway Point, Pipeline assets under construction
Centrepoint Northpoint City
Limited
SPH REIT 26% 798 SPH Seletar Mall Seletar Mall yet to be stabilised as it
only opened in Dec-14
Commercial
MCT 37% 344 Mapletree Mapletree Business City MBC 2 under construction
Investments (MBC) 1&2
MAGIC 39% 70 Mapletree Kowloon East Office Kowloon East Office under
Investments construction, MAGIC looking at
opportunities in China
SGREIT 35% 277 YTL - Focused on existing assets at the
Corporation moment
Suntec 38% 304 Cheung Kong / - No acquisitions expected
ARA

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Industry Focus
Figure 62: S-REITs' gearing headroom and sponsor pipeline (cont’d)

REIT Gearing end Headroom Sponsor Potential Pipeline Remarks
FY16/17F 40%
Industrial
a-itrust 36% 78 Ascendas Group Other Ascendas Group Subject to share price
Indian properties performance and stabilisation
of INR
A-REIT 34% 921 Ascendas Group Industrial assets Acquisitions likely to be from
sponsor (business park
properties in Singapore)
Cache 41% n/a CWT/ARA Ramp up warehouses Unlikely to acquire from
from CWT sponsor
CREIT 38% 56 N/A Exploring opportunities in
Australia, Japan and Malaysia
MINT 30% 612 Mapletree Group Tai Seng development Under development and not
likely to be acquired in the near
term
MLT 37% 223 Mapletree Group Properties in Hong Kong, High likelihood of M&A to
China supplement growth, given
headwinds in Singapore
SBREIT 33% 152 Soilbuild Group Various industrial
Holdings properties
Hospitality
ASCHT 33% 196 Ascendas Asia Pacific properties Potential disposal of Pullman
Group/Accor Cairns to provide additional
financial flexibility
ART 41% n/a Ascott Group Serviced apartments in Subject to ability to recycle
Europe, Quest capital and raise equity
apartments in Australia
CDREIT 36% 176 City Developments St Regis, South Beach Lower gearing provides
project firepower for acquisitions
FEHT 33% 303 Far East Organisation 7 hotels & serviced Assets not ready to be injected
residences
FHT 34% 46 Frasers Centrepoint 17 hotels and serviced Subject to ability to raise equity
Limited and TCC residences
Group
OUEHT 38% 92 OUE Limited OUE Downtown serviced Limited, given proposed
apartments acquisition of Crowne Plaza
Changi and extension
Healthcare
P-Life 38% 66 IHH Hospitals in the region
including Novena Mt
Elizabeth
Others
KDCREIT 29% 300 Keppel T&T T27 Asset not stabilised yet
IREIT 42% n/a Stella Holdings, Low likelihood, given current
Shanghai Summit, Mr share price
Lim Chap Huat

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Industry Focus
Figure 63: S-REITs with development potential and/or asset recycling potential
REIT Assets with redevelopment potential Potential asset recycling opportunity
Office
CCT Golden Shoe n/a
FCOT Alexandra Techno Park if HP/Microsoft moves out n/a
KREIT n/a n/a
OUECT n/a n/a

Retail
CRCT n/a n/a
CMT Funan n/a
CRT One’s Mall and Torius Mall n/a
FCT Integration with Northpoint extension n/a
SPH REIT n/a n/a

Commercial
MCT n/a n/a
MAGIC n/a n/a
SGREIT n/a n/a
Suntec Park Mall n/a

Industrial
a-itrust n/a n/a
A-REIT Selected properties with unutilised GFA Older properties with limited medium upside
Cache n/a n/a
CREIT Selected properties with unutilised GFA Older properties with limited medium upside
MINT Selected properties with unutilised GFA Older properties with limited medium upside
MLT Selected properties with unutilised GFA Older properties with limited medium upside
SBREIT Selected properties with unutilised GFA n/a

Hospitality
ASCHT n/a
ART n/a Rental properties in Japan / Assets in lower-tier cities in Europe
CDREIT n/a n/a
FEHT n/a n/a
FHT n/a n/a
OUEHT n/a n/a

Healthcare
P-Life n/a n/a
RHT n/a n/a

Other
KDCREIT n/a n/a
IREIT n/a n/a

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Industry Focus
6. Residential Subsector Outlook: Luxury home prices to bottom out
Key Assertions We believe the stabilisation of the market could be led by the
 Luxury residential home prices (CCR) to bottom following:
out on the back of improved transaction velocity
& foreigner buying interest. 1. PPI has declined 11.4% from the peak in September 2013
 Suburban home prices (OCR) to see up to a 3%- (with the inclusion of net prices in 3Q), inching closer to
5% further drop in prices impacted by higher the government’s trigger point for intervention at c.13%
mortgage rates and market vacancy rates. decline from the peak based on historical incidences.
 Government could relax policy given uncertain Potential relaxation of government policies which will be
macro-outlook and pace of interest rate rise. supportive of prices.
2. At these price levels, sales volume has improved (+9.8% in

Prices for luxury residential homes to further stabilise come
9M16) largely led by executive condominium (EC) and
2017; downside for home prices in the suburbs. We believe
secondary sales which may moderate further decline in
that the property market may have stabilised at these low
property prices.
levels in the near term with further downside risk likely to
come only from a deterioration of the economic outlook for
3. Vacancy rate remains high with continued pressure on
Singapore. The bright spots are that luxury and central market
rental rates.
segments have likely bottomed out, while we expect up to a
further 5% drop for property prices in the Outside Central 4. While the 3Q16’s economic data were worse than
Region (OCR). expected, coupled with unemployment concerns, our
economist believes that the downside risk is beginning to
moderate (DBS Economics: Singapore: down but not out).
Figure 64: Residential Market Summary

Key Indicators % Chg 1Q16 2Q16 3Q16
Price Index -1.5% 140.6 140.0 137.9
Rental Index -1.2% 107.5 106.9 105.6
Transactions* -12.2% 1,419 2,256 1,981
Pipeline of supply -7.5% 53,512 47,250 43,693
Vacancy rate -0.2% points 7.5% 8.9% 8.7%
*Excludes Executive condominiums
Source: URA

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Industry Focus
6.1 Trends, demand & supply Outlook
Price Trends Transactions
3Q16 Property Price Index saw the sharpest drop partly due to Total transactions inch up as secondary volumes lead the way
the inclusion of net prices of de-licensed projects (Chart 1). (Charts 2 and 3). Total residential transactions rose by 11% y-
Private property prices saw the largest q-o-q decline of 1.5% in o-y and 1% q-o-q to 4,596 units. This was mainly due to a rise
3Q16 since the streak of falling prices following the September in resale transactions of 53% y-o-y to 2,615 units while
2013 peak. This was partly due to the inclusion of net prices of executive condominiums saw a 15% increase to 1,398 units.
de-licensed projects for the first time which does not present a Primary sales volumes (excluding EC) fell 18% after four
‘clean’ q-o-q price movement for this quarter. The landed quarters of improved y-o-y transactions.
private property price index (PPI landed) recorded the largest
decline of 6.9% y-o-y and a 2.3% q-o-q decrease in 3Q16. The Higher 9M16 transactions lead by EC and secondary sales.
PPI has declined 11.4% since peaking in September 2013 with Total residential transactions rose by 9.8% y-o-y to 12,000
landed PPI and non-landed PPI dropping by 15.9% and 9.8% units led by a 65% increase in EC sales and a 25% increase in
respectively. secondary sales. Primary sales volumes fell 3.1%. We believe
that signs of transactions returning to the market albeit from a
PPI has fallen 11.4% from September 2013 peak (Chart 1). lower base, implies that after a close to 10% drop in price
Following the new inclusion, PPI has declined 11.4% from the index, buyers are seeing value in the current market.
peak in September 2013 with landed properties recording the
largest decline of 15.9%, followed by RCR (-11.0%) and CCR Supply
(10.6%). Based on the past two incidences (AFC in 1998 and
dot com collapse in 2000), the government has been seen to Supply completion to start moderating from 2017 onwards.
intervene when property prices fell c.13% from the peak. If The cut in the number of sites available for tender in the
history is a good indicator, the quantum of the decline is government land sales programme and lack of collective sales
inching closer to the government’s trigger point. in recent years mean that supply growth will peak in 2016 at
51,210 units (25,000 public housing units, 21,650 private units
Central region bottoming out (Chart 1). Property prices fell in and 4,560 ECs) and moderate from 2017 onwards. The total
all three regions in Singapore partially due to the inclusion of supply under construction stands at 155,750 units (88,000
net prices with Core Central Region (CCR) recording the public housing units, 53,150 private units and 14,600 ECs).
highest decline at 1.9% q-o-q. Property prices in Rest of Given the declining completion outlook, we believe that the
Central Region (RCR) and Outside Central Region (OCR) each oversupply situation in the residential market will also start to
recorded a 1% decline q-o-q. With the inclusion of net prices, improve and normalise over the coming years. We expect
property prices in CCR and RCR recorded 10.6% and 11.0% vacancy rates to inch up from 8.9% as of 2Q16 to 9-10% over
declines from their peaks. OCR, which previously held up 2016-2017 before reversing.
better than the central region, is now inching closer at 9.8%.
Nevertheless, we believe the central region is bottoming out as
previously, property prices in the central region saw two
consecutive quarters of marginal increase in PPI of 0.3% q-o-q
in the CCR in both 1Q16 and 2Q16, while RCR saw three
consecutive quarters of flat-to-marginal increase of 0.2% q-o-q
(2Q16: +0.2% q-o-q).

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Industry Focus
Rentals
Increased supply and weak employment outlook to result in Vacancy rates improved marginally by 0.2ppt to 8.7% as at
further pressure on rental yields. The 3Q16 residential rental end of 3Q16, still above the historical average of 6.6%. The
index fell 1.2% q-o-q led by non-landed residential homes weakness in rental can be attributed to the ramp-up in supply
rental (-1.4%) while rental for landed homes was flat. The completions in recent years. Despite the marginal
residential rental index (non-landed) for residential homes improvement, we continue to expect vacancy to rise and
(non-landed) declined by 1.4% compared to a quarter ago and further downward pressure for rents but at a more muted rate.
is now more than 10.7% down from its 3Q13 peak. The q-o-q
fall is evenly spread across the various parts of the island, with The uncertainty in the employment outlook, and the ongoing
rental for residential homes in OCR leading the decline at 2.4% job rationalisation at financial institutions and tighter
followed by CCR's -1.4% and RCR's -0.6%. regulations impacting expatriates’ employment in Singapore
may add pressure on demand for some homes, especially those
in the CCR.
Figure 65: Residential Price Indices – Gradual decline in prices

Period All- Landed Non-Landed Non-Landed Index HDB
Residential
Index Index Index Core Rest of Outside
Central Central Central Region
Region Region
3Q13 0.4% 0.3% 0.6% -0.3% -0.9% 2.2% -0.9%

4Q13 -0.9% -1.0% -0.9% -2.1% 0.4% -0.9% -1.6%
1Q14 -1.2% -0.7% -1.3% -1.0% -3.3% -0.1% -1.6%
2Q14 -1.1% -1.7% -0.8% -1.5% -0.3% -0.9% -1.4%
3Q14 -0.7% -1.8% -0.4% -0.8% -0.4% -0.4% -1.7%
4Q14 -1.1% -1.3% -1.0% -0.9% -1.3% -0.8% -1.5%
1Q15 -1.0% -0.9% -1.1% -0.4% -1.7% -1.1% -1.0%
2Q15 -0.9% -1.0% -0.8% -0.6% -0.6% -1.1% -0.4%
3Q15 -1.3% -0.4% -1.5% -1.2% -2.2% -1.6% -0.3%
4Q15 -0.5% -1.8% -0.2% -0.3% 0.2% 0.0% 0.1%
1Q16 -0.7% -1.1% -0.6% 0.3% 0.0% -1.3% -0.1%
2Q16 -0.4% -1.9% -0.1% 0.3% 0.2% -0.5% 0.0%
3Q16 -1.5% -2.3% -1.2% -1.9% -1.0% -1.0% 0.0%
%yoy Chg
-3.1% -6.9% -2.0% -1.6% -0.6% -2.8% 0.1%
(3Q16)
% Chg
-11.4% -15.9% -9.8% -10.6% -11.0% -9.8% -9.4%
(Peak)
3Q16
137.9 152.4 134.9 126.9 139.2 154.9 134.7
(index)
Source: URA, HDB, DBS Bank

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Industry Focus
Charts on Property Transactions
Figure 66: Developers' Sales by Type Remarks

6,000 120.0%
We note that given
Units increased transactions in
recent months, there has
5,000 100.0%
been an increase in sales
launches.
4,000 80.0%
Developers sold 73% of
3,000 60.0% total new units launched in
3Q16, an improved q-o-q
2,000 40.0% take-up rate led by new
launches.
1,000 20.0%

‐ 0.0%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Private Residential Units Launched (uncompleted)
Total Direct Sales (Uncompleted)
Figure 67: Developers' Sales by Type Remarks
3Q16 was one of the more

9,000 U nits active quarters in recent
Secondary Market (Private) years.
8,000
Primary Sales (Private)
7,000 Executive Condominiums Resale Transactions
(Secondary Market)
6,000 contributed close to 57% of
total transactions in 3Q16,
5,000 one of the highest since
2013.
4,000
3,000
2,000
1,000
-

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Industry Focus
Figure 68: Developers' Sales by Region Remarks

Transactions in the Rest of
9,000 units Central Region (RCR) and
8,000 Core Central Region (CCR)
contributed 27% and 17%
7,000 of total transactions
respectively in 3Q16.
6,000
5,000
4,000
3,000
2,000
1,000
-

CCR RCR OCR
Charts on Residential Supply Outlook
Figure 69: Supply of new residential units by expected year of completion Remarks
Close to 29,000 units were
60,000 completed in 1H16.
Un its
Looking ahead, we are
50,000 looking at a more modest
rate of increase in new units
completing, due to fewer
40,000 units available for sale as a
result of the cuts in land for
tenders from the
30,000 government's land sale
program.
20,000 Public housing supply

remains fairly constant at
10,000 close to 19,000-25,000 new
units completing each year.

-
2H16 2017 2018 2019
Competed Private Residential Executive Condo Public Housing
Source: MND, DBS Bank

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Industry Focus
Charts on Residential Rents
Figure 70: Rental index has been weakening since 4Q13, in line with property Remarks
prices
The residential rental index
15% 180.0 remains in decline, dropping
% Chg Index Value
160.0 further by 1.2% in 3Q16.
10% 140.0
Given the positive
120.0 correlation between rental
5% and prices, we expect prices
100.0
to continue moderating as
80.0 rentals weaken further.
0%
60.0
-5% 40.0
20.0
-10% -

Q0Q Chg in Rental Index PPI Index
`Source: URA, HDB, DBS Bank
Figure 71: Rental index remains weak on high vacancy rates Remarks
With expectations that

10.0% 130.0 the residential vacancy
(%) Index Value rate will continue to inch
9.0% 120.0 up towards the 8-10%
level from the current
110.0 8.7%, we expect rentals
8.0% to remain weak.
100.0
7.0%
90.0
6.0%
80.0
5.0% 70.0
4.0% 60.0
4Q16
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Vacancy Rate (Non-Landed) (LHS) Rental Index (Non-Landed) (RHS)


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Industry Focus
6.2 Scenarios where government could relax policy measures
Government to tinker only if “material stress” is seen in the gains tax and property tax for land under development) were
system. The Singapore property prices have been in a given and the government opened the market to foreigners
controlled and modest decline of approximately c.5% per again by allowing them to obtain loans in SGD during the dot
annum from the peak of 3Q13. With prices now fallen by 11% com collapse.
from the peak in 3Q13 and we expect the market to remain on
a downside bias in 2017. However, we believe the scenarios that may warrant a re-look
at policies will be a marked drop in prices in a certain quarter
The government’s key focus is still the overall health of the or a potential tweak in certain policies on a selective basis. On
Singapore’s economy and its intertwining relationship with that front, we believe that “cyclical measures” such as the
property prices. With property forming close to 45% of total buyer stamp duties/seller stamp duties which have been
household wealth as of 3Q16, it is not in the government’s effective in curbing speculative demand, could be re-looked if
interest to have a rapidly declining property market. Emerging transaction volumes continue to remain tepid over 2017.
risk in the horizon stemming from increased volatility in
interest rates, coupled with a weak rental outlook due to Singapore citizen unemployment rate rising towards 4.0%. The
heightened supply completion outlook, will likely warrant the uncertain employment outlook in Singapore might be a
government to consider tweaking its macro prudential policies. dampener for prospects for price increases in 2017. As of
3Q16, it was reported that unemployment rate among
What are potential scenarios or datapoints that could lead to a Singapore citizens rose by 0.6ppt to 3.0% as of June 2016 but
policy easing? has held steady (fallen marginally to 2.9% as of September
2016) since. While not sounding any alarm bells at this point,
A marked drop in prices in a quarter or a peak-to-trough price we caution that prices tend to weaken in the event that
drop of 13-15% might point to a first round of policy unemployment rate rises to 4.0% and above (figure 74). DBS
unwinding. If history is a good indicator, the current PPI, economist believes that the unemployment outlook is likely to
having fallen close to 11% from the peak, is inching closer to remain fairly stable at the 3.0% level and not expected to
the government’s trigger point of c.13%. Historically (during deteriorate in a big way.
the Asian Financial Crisis (AFC) in 1998 and the dot com
collapse in 2000), the government has been seen to intervene Sharp increase in interest rates. The recent spike in SIBOR
when property prices fell c.13% from the peak over a period rates, which a majority of home loans is a risk for prices in our
of approximately one year. Current mortgage-to-household view given that it will a rise in mortgage payments going
income ratio stands at 1.5x (mortgage-to-household income forward. The pace of increase in base rates are likely to be
ratio ranged from 1.4-1.9x from 1997-2014). closely watched by the government in order to avoid an
unwarranted fallout in property prices which might pose a risk
The government’s initial responses were: 1) suspend the seller to an already weak economic outlook.
stamp duty during the AFC; and 2) tax exemptions (capital
Figure 72: Summary of possible Scenarios that could warrant a potential policy action
Scenario Description Potential Impact on property market What has history taught us?
1. A peak-to-trough fall Usually accompanied with a weakening GDP Government had back in 1998 and 2000
in property price of 13- outlook, this will dampen homebuyer sentiment intervened when property price dropped 13%
15%. as the “loss of wealth” effect on home-owners from the peak.
could cascade to a downward spiral in prices.
2. Unemployment Rate Given the high ownership rate of c.91%, an A rise in unemployment rate to close to 4.0%
rising towards 4.0%. increase in unemployment will impact on and beyond typically results in a fall in property
households’ ability to maintain mortgage prices.
payments.
3. Sharp increase in Impact on affordability as a larger portion of No real correlation historically but likely be one of
interest rates. disposable income is channelled to mortgage the key reasons of assessing household
repayments. affordability.

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Industry Focus
Figure 73: Measures that government tweaked during previous fall in the Singapore Property Price Index
8.00 Jun 98: deferral Feb 00: tax
Sept 02: EC Series of tightening
of buyer stamp exemption on measures
downpayment ‐ 10%
7.00 duty land dev
cash and 10% CPF
removed; DC
Dec 02: 2 yrs
6.00 rates on resi
property tax exempt
land increased
on land under dev; Jul 05: LTV raised from 80% to
30% reduction in 90%; cash payment reduced fr
5.00 May 99: 2nd stamp duty 10% to 5%; relax foreign
CPF housing
1997: Oct 01: CGT lifted; ownership rules; relaxation on
grant cut
4.00 seller foreigners can use non‐related singles joint
stamp duty SGD loans; property purchases
suspended tax exempted for Nov 05: Waived security
3.00
land under dev requirement of developers on
DPS
2.00
Dec 06: buyer Oct 07: DPS
Nov 98: 10%
Jun 00: HDB stamp duty removed
1.00 CPF housing
tightened concession
grant cut
regulations removed
‐
Dec‐95
Dec‐98
Dec‐01
Dec‐04
Dec‐07
Dec‐10
Dec‐13
Sep‐96
Sep‐99
Sep‐02
Sep‐05
Sep‐08
Sep‐11
Sep‐14
Jun‐97
Jun‐00
Jun‐03
Jun‐06
Mar‐95
Jun‐09
Mar‐98
Jun‐12
Mar‐01
Jun‐15
Mar‐04
Mar‐07
Mar‐10
Mar‐13
Blue denotes relaxation measures
Figure 74: Unemployment spikes to close to 4% typically result in a slide in property prices
0.0% 180
Sep’97-Dec’98 Sep’07-Sep’09
( %) Unemployment Rate: 1.9% - 4.7% Unemployment Rate: 2.4% - 4.9% Index Value 160
1.0% Property Price Index: Fell by 36% Property Price Index: Fell by 25%
140
2.0%
120
3.0% 100
4.0% 80
60
5.0%
Property Price Index 40
6.0% Sep’00-Dec’01 Unemployment Rate (Inverse)
Unemployment Rate: 2.6% - 5.2% 20
Property Price Index: Fell by 17%
7.0% 0
Mar-92 Mar-94 Mar-96 Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Mar-16
Figure 75: Sensitivity of interest rates to mortgage payments

Monthly Mortgage Payments**
Typical Price Loan
2.0% 3.0% 4.0% 5.0%
Property Type S$’000 S$’000*
HDB BTO 500 400 $1,695 $1,897 $2,111 $2,338
Resale 600 480 $2,035 $2,276 $2,534 $2,806
Resale/EC 800 640 $2,713 $3,035 $3,378 $3,741
EC / Private 1,000 800 $3,391 $3,794 $4,223 $4,677
Private 1,250 1,000 $4,239 $4,742 $5,278 $5,846
Private 1,500 1,200 $5,086 $5,691 $6,334 $7,015
Private 1,750 1,400 $5,934 $6,639 $7,390 $8,184
Private 2,000 1,600 $6,782 $7,587 $8,445 $9,353
* Assumed 80% loan for a tenure of 25 years


Page 54
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Industry Focus
7. Office Subsector Outlook: Grade A office space to bottom by end 2017

Key Assertions overall Downtown Core area but is also at a market clearing
 Office rents projected to bottom in 2017 as new level to entice a company to move into a new office given fit-
supply sees good pre-commitment. out costs of S$2.00-2.50 psf/mth and office rents of between
 Improving pre-commitment rates for key new S$10.40-11.40 psf/mth over the past year. In our bear case
buildings mainly driven by tenant relocation scenario, we project Grade A office rents to hit a low of
rather than a net office absorption.
S$7.50-8.00 psf/mth, which is 14-19% below current Grade A
 A two-tier market to emerge with Grade A office
office rents of S$9.30 psf/mth.
to emerge out of the downtown first; Business
Park space remain attractive.
Office rents continued to trend down in 3Q16. Office rents

continued on their downward trajectory since peaking in the
7.1 Trends, Demand and Supply outlook first quarter of 2015. According to CB Richard Ellis (CBRE),
Grade A office rents fell 2% q-o-q (-15% y-o-y) to S$9.30
Office rents to bottom in 2017. With Marina One slated to be psf/mth after falling 4% q-o-q in the second quarter of 2016.
completed in the first half of next year, we project office rents Grade B rents also dropped 2% q-o-q to S$7.50 psf/mth.
to bottom in mid or late 2017. Our base scenario assumes Meanwhile, Grade A occupancies improved to 95.9% from
Grade A office rents to hit a trough at c.S$8.50 per square foot 94.8% in the second quarter of 2016 as CBRE reported
per month (psf/mth) from S$9.30 psf/mth currently. Not only is positive net absorption of 820k sqft islandwide which ended
this reflective of the expected spike in vacancy rates in the four consecutive quarters of negative absorption numbers.
Figure 76 Office rents and occupancies

Rents 3Q15 2Q16 3Q16 q-o-q y-o-y
URA Office Rental Index: Central Area 187.0 174.1 172.0 -1% -8%
URA Office Rental Index: Fringe Area 147.8 135.3 135.0 0% -9%
CBRE Grade A Core CBD (psf/mth) 10.90 9.50 9.30 -2% -15%
CBRE Grade B Core CBD (psf/mth) 8.35 7.65 7.50 -2% -10%
Occupancy 3Q15 2Q16 3Q16 q-o-q (bps) y-o-y (bps)
URA occupancy private sector: Central Downtown Core 91.1% 90.9% 88.5% -235 -260
URA occupancy private sector: Central Fringe Area 86.7% 88.8% 89.6% 76 287
CBRE Grade A 94.8% 94.8% 95.9% 110 110
CBRE Core CBD 95.8% 95.1% 95.9% 80 10
Source: URA, Corporate Locations, CBRE, various REITs and corporate, press reports, DBS Bank


Page 55
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Industry Focus
Demand Forecasts
Uncertain outlook for new office demand. Over the past three Spike in vacancy but market moves to two-tier market. On the
years, employment growth in the four key sectors driving office back of sluggish demand and jump in supply, we anticipated
demand were (1) Financial Services, (2) IT and other Private Sector Downtown Core vacancy rate to potentially spike
information services, (3) Legal, Accounting and Management from 11.5% at the end of September 2016 to 17% in 2017
Services, and (4) Insurance Services, and had been healthy. The and 18% in 2018, approaching the levels seen in 2004 and
three-year compound annual growth rate (CAGR) for those surpassing the 14% vacancy level in 2010 and 2011. While the
sectors ranged from 3-9% to end-September 2016. However, headline vacancy rate is high, the figure will be composed of
given a slowing economy, announced job losses in the financial two very different markets. One would consist of the older
services industry and businesses moving out of the CBD to buildings such as those in Shenton Way and Raffles Place
business parks/suburban locations, we believe the demand for where there will be a “structural” or persistent high vacancy
new office space will be sluggish but still positive. This is potentially in excess of 20% as these buildings are unable to
evidenced by c.13,000 sqm of net new space in Downtown compete against the new buildings currently under
Core area during the first nine months of the year. In addition, construction or recently completed due to less efficient
the number of people employed in the services sector floorplates and modern specifications. In contrast, vacancy at
continues to grow, expanding by 2% in the nine months to the newer buildings or those defined as Category 1 office
September compared to the same period last year. buildings by URA will enjoy substantially lower vacancies, closer
to the 10% level, as the “flight to quality” takes place, i.e.
Improving pre-commitment rates for key new buildings. tenants seeking better quality offices to cater to their
Compared to earlier this year where the pace of securing expansion plans or consolidate their various offices into a single
tenants for new offices was muted, the environment has since location. According to URA, Category 1 office buildings are
improved. Guoco Tower, according to press reports, has now defined as those located in core business areas in Downtown
been 80% pre-leased, while pre-commitments level has Core and Orchard Planning Area which are relatively modern
increased to 30-40% for Marina One with Duo Tower stable at or recently refurbished, command relatively high rentals, and
30%. With less urgency for Guoco Tower to secure tenants have large floor plate sizes and gross floor areas.
and Marina One potentially increasing pre-commitment levels
in the coming months, the incremental pressure on Premium Recovery from 2018 onwards. While we expect office vacancy
Grade A rents may start to ease. rates to peak in late 2017 or early 2018, with new office
supply easing from 2018 onwards, we anticipate rents to start
Supply recovering as early as the end of 2017, as both tenants and
landlords anticipate vacancies to drop due to a fall in supply.
16% jump in downtown core office supply. Approximately However, we expect a recovery in rents to largely occur in the
5.4m sqft of office net lettable area (NLA) will be completed premium spectrum of Grade A office space, as the older
within Singapore’s downtown core between 2016 and 2018; buildings at Shenton Way and Raffles Place will unlikely be able
translating into a 16% increase in existing downtown CBD to raise rents due to their still high occupancies and
stock, or at a three-year CAGR of 5%. Approximately 73% of uncompetitive products. On that front, we expect Grade A
new office supply (by NLA) will be concentrated in four assets: office rents to recover from the S$8.50 psf/mth low in 2017
(a) DUO Tower located in Bugis; (b) Guoco Tower, located in towards S$10 psf/mth in 2018, similar to the 14% rise in office
Tanjong Pagar; (c) Marina One in Marina Bay; and (d) Frasers rents experienced between mid-2013 and 2015 as we
Tower, located at Tanjong Pagar (Table 1). Based on press approached a dearth of new supply in 2015 and demand
reports, the majority of the remaining developments will likely normalises to historical average in 2019. The projected
be sub-divided and strata sold to end-users. recovery in Grade A office rents is also partially a result of the
increased proportion of premium quality office stock
commanding higher office rents.


Page 56
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Industry Focus
Key Charts

Figure 78: Office supply in the Central Business District (CBD) Remarks
Office (CBD) Location Developer Estimated Property
NLA Type Estimated 5.4m sqft of office
(sqft) net lettable area (NLA) is
2016 expected to complete within
Guoco Tower Peck Seah Street Guocoland 890,000 Leasing the Downtown Core between
2016 and 2018, representing
EON Shenton Shenton Way Roxy Pacific Holdings 101,045 Strata Sale a 16% total increase in
SBF Center Robinson Road Far East 353,480 Strata Sale current Downtown Core
DUO Tower Rochor Road M+S 570,475 Leasing office stock.
GSH Plaza Cecil Street GSH/TYJ/Vibrant/DB2 282,000 Strata Sale Around 4.0m sqft of NLA will
OUE Downtown 1 Shenton Way OUE 50,000 Leasing be held for leasing purposes,
while the rest will likely be
2,247,000
strata sold.
2017
Marina One Marina Bay M+S 1,876,000 Leasing Key office projects to watch
out for are Guoco Tower
UIC Building Shenton Way UIC 278,000 Strata Sale (2016), DUO Tower (2016),
Oxley Tower Robinson Road Oxley Consortium 112,000 Strata Sale Marina One (2017) and
Crown @ Robinson Robinson Road WyWy Developments 70,000 Strata Sale Frasers Tower (2018).
2,299,000 Following the easing of supply

2018 in 2018 and 2019, a pickup in
new CBD supply will only
Redevelopment Robinson Road Tuan Sing 194,380 Strata Sale
occur in 2020/2021 when CPF
of International
Building, Golden Shoe and
Factors Building
Central Boulevard White site
and Robinson
are scheduled to be
Towers
completed.
Frasers Tower Cecil Street Frasers Centrepoint Limited 645,000 Leasing
858,380
2019
Funan North Bridge CapitaLand Mall Trust 204,000 Leasing
Road
204,000
2020
CPF Building Shenton Way Ascendas-Singbridge, 500,000 Leasing
Mitsui and Tokyo
Tatemono
500,000
2021
Golden Shoe Market Street CapitaLand Commercial 800,000 Leasing
Trust
Central Boulevard Marina Bay In bidding stage 1,070,000 Leasing
White Site
1,870,000


Page 57
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Industry Focus

Figure 79: Decentralised office supply Remarks
Office Location Developer Estimated Property
(Decentralised) NLA Type
(sqft)
2016
M18 Eastern Suburbs Mapletree 56,000 Leasing Over the next few years,
- Paya Lebar supply of decentralised
Havelock II River Valley Guthrie GTS 64,850 Strata office space will be steady.
/ Havelock Sale Given a large majority of
120,850 this new supply is being
sold as strata units
2017
potentially for smaller users
Arc 380 Eastern Suburbs Tong Eng Group 103,500 Strata and owner occupiers, they
- Jalan Besar Sale will compete directly with
Vision Exchange Western Suburbs 500,000 Strata CBD space.
- Jurong Sale
603,500 However, in 2018, Paya
2018 Lebar Central may pose
Paya Lebar Central Eastern Suburbs Lend Lease / ADIA 750,000 Leasing some form of competition
- Paya Lebar to CBD office space if Lend
750,000 Lease/ADIA is able to
2019 position the property as a
viable alternative.
Woods Square Northern Suburbs Far East Organisation 534,500 Strata
- Woodlands Sale
534,500

Figure 80: Average new supply per annum over 2015-2019 in line with average from 2010- Remarks
2014
2,500 '000 sqft S$ psf pm 20.0
While the headline supply is
expected to be large from
Post GFC 18.0
2,000 2015-2019, the average
2010‐2014 average: 2015‐2019 average: supply of 1.15m sqft p.a. is
1.10m sqft 16.0 comparable to 2010-2014’s
1.15m sqft
1,500 average of 1.10m sqft p.a.
14.0
1,000 Despite the large supply in
12.0 2010-2014, central area
office rents still recorded
500 10.0 positive growth.
8.0
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
6.0
‐500
4.0
Net supply: Downtown Core (LHS)
‐1,000
Net demand: Downtown Core (LHS) 2.0
‐1,500 ‐


Page 58
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Industry Focus
Figure 81: URA rental index (central) growth vs. changes in employment for financial Remarks
institutions (1998 – present)
70% Between 1998 and 2015, there
20% was 90% correlation between
changes in the URA rental index
60% (central) and employment growth
in the financial services sector.
50% 15%
Lower correlation in rents and
40%
financial services employment
30% 10% from 2012 onwards (73%)
reflects a diversification in
20% demand for CBD office space
from other sectors such as
10% 5% technology, media and
telecommunications,
0% commodities/resources and
professional services.
‐10% 0%
Employment in the financial
‐20% institution sector will still have a
large influence on the direction
‐30% ‐5% of rents in the CBD.
URA rental inde x ‐ central (LHS) Employment ‐ Financial & Insurance Services (RHS)
Source: URA, Singstat, CEIC, DBS Bank

Figure 82: Business Park rents still cheaper than Grade A but pricing advantage has Remarks
narrowed
20 S$ ps f/mth 50% Business Park rents have stayed
18 45% fairly flattish over the past five
years, and the pricing
16 40% advantage expanded when
14 35% Grade A rents increased by
around 20% from 3Q13 to its
12 30% peak in 1Q15-2Q15.
10 25%
Firms which wanted to achieve
8 20% significant cost savings and
were eligible to be located in
6 15% business parks, had thus
4 10% relocated from the CBD while
maintaining a leaner presence
2 5% in the CBD.
0 0%
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
Grade A and BP rent spread (RHS) Grade A office rent (LHS)

Business Park rent (LHS)
Source: CBRE, DBS Bank

Page 59
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Industry Focus
Figure 83: Uncertain demand outlook for key sectors that drive CBD office demand Remarks

Ke y sectors for CBD office demand Key drivers of CBD office demand
include financial services, legal
and accounting sectors, as well as
Legal, IT and Other IT and other information services.
Accounting information
and Services, 21% Between 2012 and 2015, these
Management key sectors led CBD office
Services, 30% demand, and reported headcount

increases of between 3-9% p.a.

Financial
Insurance Services, 41%
With an uncertain economic
environment ahead, the outlook
Serivces, 8%
across these sectors has turned
more cautious. Nevertheless,
given still positive GDP growth
3‐year headcount CAGR (2012‐2015) ahead as projected by our DBS
Outlook
economists, we expect net
positive demand for space though
Total 5% at a slower pace than the more
buoyant times during 2012-2013.
Legal, Accounting and For 9M16, the amount of
8% occupied space in the Downtown
Management Services
Core area rose by 237k sqft,
according to the latest URA
Insurance Serivces 5% statistics.

Financial Services 3%

IT and Other information
7%
Services

0.0% 5.0% 10.0%

Source: Singstat, CEIC, DBS Bank


Page 60
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Industry Focus
Figure 84: Office vacancies to spike on sluggish demand and increase in supply Remarks
3,000 '000 sqft S$ psf pm 20.0 We expect the soft demand
outlook to result in c.40k sqft of
2,500 18.0
net demand for space in the
Downtown core region for the
16.0
2,000 next three years.
14.0
1,500 Given the large increase in
supply, this will result in
12.0
1,000 Downtown Core vacancy rates
spiking to 17% and 18% in
10.0
2017 and 2018 respectively from
500 11.5% as at the end of
8.0
September 2016.
0
6.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Vacancy rates should start
-500 trending down from 2019
4.0
onwards as demand normalises
-1,000 back up to historical averages,
2.0
and supply eases.
Net Supply: Downtown Core (LHS)
-1,500 -
Net demand: Downtown Core (LHS)
Figure 85: DBS Grade A office rental forecast (2016-2017) Remarks
Based on the projected increase

in vacancies, we expect Grade A
3,000 '000 sqft S$ psf pm 20.0 rents to bottom out at around
S$8.50 in 2017 before
2,500 recovering to c.S$10 by end-
2018.
2,000
15.0 While overall vacancy rates are
likely to remain elevated in 2018,
1,500 we believe Grade A rents will
recover to c.S$10 as the
1,000 proportion of Premium Grade
10.0 buildings (which typically charge
higher rents) become an
500
increasing proportion of the
Grade A category.
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
In our bear-case scenario, rents

5.0
-500 could fall to S$7.50-8.00, from
S$9.30 currently before
-1,000 Net Supply: Downtown Core (LHS) recovering to S$9.00 in 2019.
Net demand: Downtown Core (LHS)
-1,500 CBRE Grade A office rents (RHS)
-
DBS Base case (RHS)
DBS Bear Case (RHS)

Page 61
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Industry Focus
Figure 86: Two-tier Grade A office market to develop Remarks

S$ psf / mth
While we expect overall
13.00 12% Downtown Core vacancy rate to
10% rise to c.18% by 2018, we believe
12.00 a two-tier market will develop.
8%
11.00 The first submarket will be related
6%
to the older buildings in Shenton
10.00 4% Way and Raffles Place where
vacancy levels will be structurally
2% higher given an uncompetitive
9.00
0% product (lower efficiency and older
8.00 specifications) resulting in lower
-2% rents.
7.00 -4%
The other category will be the
premium grade buildings, largely
consisting of new buildings
currently under construction or
Spread between Premium Grade vs Grade A (RHS) built over the past 5-6 years. These
Colliers Premium Grade Raffles Place/New Downtown (LHS) will command higher rents and
achieve lower vacancies. This can
CBRE Grade A Core CBD (LHS) already be evidenced by the
increasing spread between
Premium Grade rents as reported
by Colliers and overall Grade A
core CBD rents as estimated by
CBRE.
Going forward, Premium Grade

offices will continue to command
11% higher rents relative to overall
Grade A offices, and this spread
may widen.

Page 62
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Industry Focus
8. Retail subsector Outlook: Hampered by weakening retail sales
Key Assertions significantly below the 6% average over the past few years,
 Retail sector outlook tempered by impact of e- and the lowest since 2009.
commerce and dampened consumer sentiment. Retailers have been hit by several factors: (a) declining sales
 More demand in the outskirts; Orchard road efficiency (revenue per square foot) as a result of e-commerce
expect to remain weak. and leakage from residents travelling abroad; (b) a manpower
 Rental reversion remain flattish to marginally shortage due to government restrictions on foreign labour; and
negative. (c) rising labour costs from minimum wage policies. Faced with
declining revenues and rising costs, retailers have, since 2014,
begun to consolidate their operations, cutting down on the
8.1 Trends, demand and supply outlook number of stores they operate while maintaining a presence in
better-performing malls. The impact of retail headwinds will
We see the next supply spike in 2018 adding more pressure in
not be felt evenly across all malls, in our view. We believe that
rental and occupancy. The years 2013 and 2014 saw
in order for a mall to outperform, it needs to be well located
Singapore’s largest influx of retail space since 2006. Recent
with a strong track record of recurring footfall and tenant
supply has been largely located outside the central region
sales, and have active asset management and advertising and
(Figure 88), an indication that the government’s push towards
promotion efforts.
a live, work and play concept in regional hubs is bearing fruit.
The recently completed Waterway Point (95% tenanted)
Supply
continues to see good demand, an indication that retailers
remain keen to tap into suburban demand for goods and
Moving to the outskirts. The retail experience for locals will be
services. Much more limited supply is expected in 2016 and
an increasingly suburban affair. The majority of shopping mall
2017, before another spike in completions in 2018, stemming
completions in the past year have been located in the suburbs:
from two key projects: Changi Jewel and Northpoint City
One KM in Tanjong Katong, Big Box in Jurong East, Paya Lebar
(Figure 89-90).
Square in Paya Lebar and Seletar Mall in Seletar, for example.
Looking ahead, new retail space will still be largely focused in
Demand
the suburbs. Waterway Point in Punggol opened in January
2016, and Northpoint City in Yishun (2018) and Changi Jewel
Tempered by retail headwinds. Despite strong take-up rates in
(2018) are largest suburban developments in the pipeline. Just
recently completed malls, net absorption has been negative
as we have seen in Jurong East, the government has been
since 2015 (Figure 92). Existing malls have, in general, been
actively encouraging the continued development of regional
under occupancy and rental pressure. As of 3Q16, shop
centres in decentralised areas as key working and leisure
occupancy rates across the country had fallen to 91.3%, from
destinations, as a means of relieving the congestion in the
a high of 95.5% in 2013. Occupancy for Frasers Centrepoint
central business district and Orchard Road. As a result, we have
Trust fell by 1ppt on-year to 94.9% (adjusted to exclude
seen many retailers that were previously only in the Orchard
Northpoint which is undergoing an asset enhancement
Road area moving into suburban shopping malls in order to
initiative); though occupancy for CapitaLand Mall Trust was
directly cater to residents living in those areas. Examples
more stable, down marginally to 98.6% from 98.8% at the
include Zara, Coach, Kate Spade and Isetan.
end of 2014, its rental reversions dropped to 1.3% for 9M16,
Figure 87: Retail Market Summary

Key Indicators % Chg 2Q16 3Q16
Price Index -0.6% 123.1 122.3
Rental Index -1.5% 107.0 105.4
Pipeline of supply -11.2% 734k sqm GFA 652k sqm (GFA)
Vacancy rate +0.6% points 7.8% 8.4%
Source: URA

Page 63
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Industry Focus
Figure 88: Net Additions to Shop Space Supply - suburban retail stock has been Remarks
growing at a quicker pace than that in the central region
Retail supply additions in recent years
1.40 have been mainly in the Outside Central
m' sqft Region (a.k.a. OCR; dark grey column)
1.20
and Fringe of City Centre (pink column).
1.00
In the OCR, major completions since
0.80 2013 include Westgate, JEM, Sports
0.60 Hub, One KM, Seletar Mall, Paya Lebar
Square, Capitol Piazza and Big Box.
0.40
0.20 Waterway Point, the latest mall to
obtain its temporary occupation permit
- – in 4Q2015 –added around another
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 9M16 30,000 square metres (sqm) of space to
(0.20)
the retail sector.
(0.40)
(0.60)
Downtown Orchard Rest of Central Fringe Outside Central Region
Source: URA, CEIC, DBS Bank
Figure 89: Upcoming retail developments by planning region

Remarks
(478,230 sqm of gross floor area)
New retail supply will be heavily skewed
to the suburbs (OCR) with around 46%
of total gross floor area (GFA).
This is in line with the government’s

strategy of decentralising and creating
regional “work, live, play” hubs.
Rest of Central Area
2.1% East Region Large proportion of OCR retail supply
25.6% will be in the East Region (i.e. Changi
Jewel).
New supply of Downtown Core is

Outside Central Region
46.0% concentrated on Funan Redevelopment
North Region (2019), OUE Downtown (2016) and
14.9% Marina One (2017).
F ringe Area
31.7%
Orchard
5.0%
Orchard West Region
5.0% 9.1%
North East Region

6.6%

Page 64
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Industry Focus
Figure 90: New Retail Space Supply by regions Remarks

m'sqft
2.50 Most of the pure-play retail supply had
already entered the market in 2014 and
2.00 2015.
1.50
Going forward, most of the supply will be
1.00 part of mixed-use developments (including
both office and retail components).
0.50
Key mall supply will come from
- Northpoint City in Yishun, and Changi
2016 2017 2018 2019 2020 Jewel in Changi. These are slated for
completion in 2018.
Downtown Core Fringe Area Rest of Central Area

Orchard Outside Central Region
Figure 91: Net Absorption of retail supply and Occupancy Rate Remarks
150 96%
sqm
Net additions of shop space outpaced net
95% absorption which has turned negative since
100 2015 and has been declining further in
94% 2016 as landlords take more time to fill up
the space in recently completed malls.
50
93%
We expect net absorption to continue to
0 92% fall going forward, as retailers are
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 9M16 consolidating their operations amid
91% headwinds in the sector.
‐50
90% Likewise, occupancy rates should continue

‐100 to moderate in the next 1-2 years.
89%
‐150 88%
Net Supply: Shop Space (LHS) Net Absorption: Shop Space (LHS) Occupancy (RHS)

Figure 92: URA property rental index (shop) Remarks
140
1998=100 Rents in the central region have been
130 weakening at a faster pace than rents in the
fringe area.
120
110 Rentals in the Central Area have fallen c.15%

from the peak in June 2008 and c.11% from
100
December 2014, as retailers’ consolidation
90 efforts accelerate.
80
70
60
Property Rental Index: Shop: Fringe Area Property Rental Index: Shop: Central Area

Page 65
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Industry Focus
Figure 93: Upcoming retail developments by project name

Project Name Street Name Developer Region Total Retail
Space (000'sqft)
2016 548.0
Hillion Mall Jelebu Road Sim Lian JV Outside Central Region 221.1
OUE Downtown 1 Shenton Way Alkas Realty Pte Ltd Downtown Core 237.2
Guoco Tower (retail) Wallich Street GuocoLand Downtown Core 77.0
Others 12.69
2017 1,316.8
DUO Galleria Bencoolen Street Kah Motor Co Sdn Bhd Rest of Central Area 79.8
Marina One Yishun Ring Road Northern Resi Pte Ltd/Northern Outside Central Region 197.9
Retail Pte Ltd
Northshore Plaza Punggol Way Housing & Development Board North East Region 91.2
Oasis Terraces Punggol Drive Housing & Development Board North East Region 96.6
Office/retail development Hoe Chiang Road Fragrance Grandeur Pte Ltd Central Region 120.2
Singapore Post Centre (AEI) Eunos Road 8 Singapore Post Limited Central Region 269.0
Tripleone Somerset (AEI) Somerset Road Perennial (Somerset) Pte Ltd Central Region 122.3
Others 339.7
2018 2,323.7
City Gate Beach Road Bayfront Ventures Pte Ltd Central Region 101.7
Frasers Tower Cecil Street FC Commercial Trustee Pte Ltd Central Region 30.9
Changi Jewel Airport Boulevard Changi Airport Group (S) Pte East Region 968.4
Ltd
IMall Marine Parade Central Marine Parade Central Pte Ltd Central Region 74.5
Mapletree 18 Tai Seng Street Mapletree Trustee Pte Ltd North East Region 63.4
Northpoint City Yishun Central 1 Fraser Centrepoint Limited North Region 420.2
Office/retail development Robinson Road Superluck Properties Pte Ltd Central Region 79.7
Oxley Tower Robinson Road Oxley Consortium Pte Ltd Central Region 49.8
Paya Lebar Quarter Paya Lebar Road/Sims Roma Central Pte Ltd/Milano Central Region 475.5
Avenue Central Pte Ltd/Verona Central
Pte Ltd
Woods Square Woodlands Square Woodlands Square Pte Ltd North Region 59.7
2019 and onwards 957.6
Office/retail development Hoe Chiang Road Mansfield Developments Pte Central Region 100.2
Ltd
Funan (redevelopment) North Bridge Road HSBC Institutional Trust Services Central Region 536.7
(S) Limited
Wisteria Mall Yishun Ring Road Northern Resi Pte Ltd/Northern North Region 83.3
Retail Pte Ltd
Others 237.5
* We have selectively shown retail properties that are over 45,000 sqft in size in this table.

Page 66
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Industry Focus
9. Industrial Sector Summary: Year of consolidation post supply spike
Key Assertions growth in the coming years as firms continue to look to

 Supply absorption remain the key drag on rental consolidate or downsize their space requirements in order to
growth prospects. remain cost efficient. Vacancy rates are expected to remain on
 Demand outlook weak given firms remain on a an uptrend to 11% by end-2018.
consolidation trend; vacancy rates to hike up to
Manufacturing Sector expanded in September 2016 but
11% by end-2018.
outlook remains weak. The Singapore PMI increased to 50.1 in
 Business Park space offers the best visibility.
September 2016 which is an expansion in factory activity for the
first time in 15 months, led by higher new orders, new exports,
and output. It was a first month of expansion in over a year for
9.1 Trends, demand and supply outlook the country with the electronics sector rising to 50.3 (50.2 in
August 2016). However, the outlook is likely to remain
Downside as pre-commitments for new supply remain low. We uncertain with anaemic growth in Singapore’s major industrial
believe that the industrial sector outlook remains soft and is sectors.
projected to remain on a decline with rental rates expected to Industrial leasing volumes inched up in 3Q16, closing 4% higher
edge down by 5-10% per annum over the coming two years, y-o-y and flat q-o-q to 2,172 leasing deals (inclusive of factory,
weighed down by a spike in supply completions over 2016- warehouse and business park space).
2107. Demand for space is expected to lag behind supply
Figure 94: Industrial Market Summary

Key Indicators % Chg 2Q16 3Q16
Price Index
Industrial Property -1.70% 100.0 98.3
Multi-User -0.98% 101.8 100.8
Rental Index
Single-User Factory -1.28% 93.4 92.2
Multi-User Factory -2.12% 104.0 101.8
Warehouse -4.40% 95.4 91.2
Business Park -0.19% 104.4 104.2
Vacancy rate
Industrial Property -0.1% 10.6% 10.5%
Single-User Factory 0.8% 8.6% 9.4%
Multi-User Factory -0.2% 13.1% 12.9%
Warehouse 0.0% 10.9% 10.9%
Business Park -0.1% 19.0% 18.9%
Pipeline under construction
Single-User Factory -14.10% 23.5 20.2
Multi-User Factory -4.29% 18.0 17.3
Warehouse -6.66% 15.2 14.2
Business Park 2.33% 0.5 0.5
Source: JTC

Page 67
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Industry Focus
Demand. 60.0m sqft – of new industrial space are either under

construction or in planning and projected to complete over the
Year-to-date absorption remains negative. As of end-September next four years from 2016-2020. Of this, more than 60% of the
2016, year-to-date take-up for industrial space still lagged space will be completed and operational by the end of 2017.
behind supply growth with net increase in unoccupied space of Among industrial types, warehouse space is expected to see the
close to 6.7m square feet (sqft). This is almost double that when highest growth in supply at 21% or close to 20m sqft. Factory
compared to a year ago, coming mainly from close to 5.0m sqft space, inclusive of both single-user and multi-user space, have
of single-user factory space that was competed but yet to be close to 44m sqft of new space under construction, implying a
occupied. We expect this to be occupied when a majority of the growth rate of 13%. The business park space will add another
space is taken up progressively by end-user occupiers in the 3m sqft of new space, implying a 14% increase in space to
coming quarters. close to 26m sqft. However, most of the space are pre-
committed and thus not an issue for existing landlords.
As one of the key drivers for space in the industrial sector has Forecasts
been the consolidation of operations to achieve operational Industrial sector overall vacancy rates to increase to 10-11% by
efficiency, we expect the increased take-up in the single-user 2017; with a negative bias if economic outlook deteriorates.
factory space to be at the expense of higher vacancy rates Taking into account assumed pre-commitment rates and
emerging from existing multi-user factory space where some of projected new demand, and faced with an increasing supply
the end-users are expected to vacate from. outlook, the average vacancy rate is now 10.5% (as of 3Q16)
and we expect further weakness till the end of 2017 before
Supply bottoming out from 2018 onwards.
Increased competition from a spike in supply completions. The
industrial market is in the midst of a spike in supply completions As the influx and pace of completions are skewed over the
starting from 2014 and peaking in 2017. As such, landlords are 2016-2017 calendar year, we believe that, on average, spot
typically still facing an increasingly competitive operating rentals are likely to see downside to the tune of 7-10% per
environment, and compounded from the weak demand outlook annum over 2016-2017, with the exception of business park
on the back of a slowing economy, we expect downside risks to space, which we believe will be resilient with around 0-3%
occupancy rates and market rents. growth.
Based on the latest Urban Redevelopment Authority (URA)
statistics, a total of 5.9m square metres (sqm) – equivalent to
Figure 95: Industrial Leasing Transactions Remarks
3,000 25.0
Number of
Value S$'m
Leasing volumes in 3Q are flat q-
transactions o-q, while they appear to be
2,500 picking up in recent quarters, we
20.0 believe that it is still early to call
a bottom.
2,000
15.0
1,500
10.0
1,000
5.0
500 Transactions Value
‐ ‐
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
Source: JTC, URA, DBS Bank

Page 68
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Industry Focus
Figure 96: Close to 50m sqft of new space to complete over 2016-2019 Remarks
35.0 12%
m' sqft Supply completions to spike
from 2014 and peak in
30.0
10% 2016-2017 with an average
of 25m sqft of space,
25.0
8%
thereafter it will drop
significantly to 5.3m sqft
20.0 from 2017 onwards.
6%
15.0 Supply completions to be
more than double that of
4%
10.0 the past five years.
2%
5.0
- 0%
2,007 2,008 2,009 2,010 2,011 2,012 2,013 2,014 2,015 2016F 2017F 2018F 2019F 2020F
Demand Supply Vacancy Rate (RHS)
Figure 97: We project net absorption to remain negative over 2016F-2020F with vacancy rates inching up to 11%
6 12%
m'sqft
4
10%
2
8%
‐
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F
(2) 6%
(4)
4%
(6)
2%
(8)
(10) 0%
Net Suplus/(Net deficit) Vacancy Rate (RHS)

Page 69
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Industry Focus
Figure 98: Rental reversion trend to remain negative over 2016-2018 Remarks
50%
Rental reversion trends are
expected to turn from flattish to
40% negative from 2016 onwards.
The factory and warehouse space

30% is expected to see a larger drop
in rental reversions.
20% Business park space is expected

to buck the trend, given
expectations of a 3% per annum
10% rise in market rents in 2016; flat
in 2017.
0%
2009 2010 2011 2012 2013 2014 2015 2016F 2017F
‐10%
Business Park Warehouse Factory

‐20%
Figure 99: Rental trends (forecast) Remarks

Industrial Segments 2015 2016F 2017F 2018F
Rentals for factory and
S$ psf/mth S$ psf/mth S$ psf/mth S$ psf/mth warehouse segments are
Factory 2.09 1.88 1.75 1.70 forecast to decline by 5-10%
over the next two years. We
Warehouse 1.98 1.79 1.66 1.58 forecast warehouse space to
see the largest declines given
Business Park 4.15 4.15 4.24 4.32 supply competition.
Business park segment is

expected to increase by 2%
% Chg % Chg % Chg % Chg in 2017-2018, supported by a
y-o-y y-o-y y-o-y y-o-y lack of supply completions.
Factory -2% -10% -7% -3%
Warehouse -3% -10% -7% -5%
Business Park -1% 0% 2% 2%

Page 70
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Industry Focus
Industrial Sub-sector – Multi-User Factory
Figure 100: Multi-user factory supply: Supply spike in 2016 to be an overhang Remarks
7.0 M illion Sqft 16%
Supply completions to spike in
6.0 14% 2016-2018; resulting in vacancy
rates increasing to more than
12% 14%.
5.0
10%
4.0 However, we see risk emerging
8% from “shadow space” arising
3.0 from the single-user factory
6% segment if end-users decide to
2.0 sub-lease part of their space
4%
(bottom chart).
1.0 2%
Rentals are expected to remain
- 0% under pressure as competition
heats up. We project a 7-10%
drop over 2016-2017 followed
by a more modest 3% fall in
Source: JTC, URA, DBS Bank Demand Supply Vacancy Rate (%) 2018.
Figure 101 Multi-user factory: Occupancy and rental rates to dip
7.0 M illion Sqft 92%
6.0 91%
5.0 90%
4.0 89%
3.0 88%
2.0 87%
1.0 86%
- 85%
(1.0) 84%
Annual Demand (sqm) LHS Annual Supply (Sqm) LHS Occupancy Rate (%) RHS

Page 71
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Industry Focus
Industrial Sub-sector – Warehouse
Figure 102: Warehouse: Oversupply situation to persist till 2018 Remarks

12.0 Million Sqft 12%
Supply under construction
remains one of the highest
10.0 10% among industrial
subsectors, at close to
21%.
8.0 8%
While new supply appears

6.0 6% to be pre-committed, we
believe that shadow space

will emerge from tenant
4.0 4%
consolidation from multiple
locations to single
2.0 2% warehouses for efficiency
purposes.
- 0%

Demand Supply Vacancy (%) RHS

Figure 103: Warehouse: Occupancy to dip below 90% Remarks
Warehouse rents
M illion sqft (%) expected to decline 7-
12.0 95%
10% over 2016-2017.
94%
10.0
93% Occupancy rates
8.0 92% projected to dip below
90% going forward.
91%
6.0
90%
4.0 89%
2.0 88%
87%
-
86%
(2.0) 85%
Annual Demand (m'sqft) LHS Annual Supply (m'sqft) LHS
Occupancy Rate (%) RHS


Page 72
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Industry Focus
Industrial Sub-sector – Business Parks
Figure 104: Majority of Business Park space has been pre-committed Remarks
'000 sqft
While the sector is expected
3.00 Global Financial Crisis (2008‐2009) 100% to see a c.14% increase in
supply, a majority has been
2.50 Eurozone Crisis (2012) 95% pre-committed with minimal
speculative built except for
2.00 certain properties –
90% Mapletree Business City
1.50 which has also seen good
85% take-up rates.
1.00
80%
0.50
- 75%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F
(0.50) 70%
Demand for Private Business Park Supply for Private Business Park
Occupancy (%) RHS

Figure 105: Business parks: Rental differential currently above historical averages Remarks
20 Business Park vs. Grade A Office rents
(S$ ps f/mth) Business park rents (off-
18 central and rest of Island)
tend to be at 50% and 60%
16
discounts to Grade A offices
14 respectively.
12 Current differential above

10 historical average but
softening outlook for CBD
8 office rents caps further
6
upside.
0
4Q04 4Q05 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15
Grade A Office Business Park - Rest of Island Series3

Page 73
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Industry Focus
10. Hospitality Outlook Summary
Key Assertions 2017 will be another challenging year. While we expect tourist
 Supply remains the key drag on RevPAR growth arrivals into Singapore to increase in 2016 by 9% to 16.6
prospects. million, largely led by a 35% jump Chinese visitors (+41% in
 Corporate demand to remain soft; demand for Jan-Sep), we forecast total visitor days to rise by only 4% due to
accommodation to lag supply growth. the shorter average length of stay. In addition, while the
 Hotel sector to bottom only from 2H17-2018 increase in new supply this year is now lower than earlier
onwards. expected due to delays in completion of some hotels (2,520 net
rooms to be added this year versus 3,930 previously), we remain
10.1 Trends, demand and supply outlook cautious on the outlook for revenue per available room
(RevPAR) given soft demand from the corporate sector which
Decline in 3Q16 RevPAR. Following a soft second-quarter typically offers higher yields, and excess supply. Thus, we project
where RevPAR was weak and declined 3% y-o-y to S$191, that RevPAR in 2016 will drop by 4% year-on-year (y-o-y) to
RevPAR in the third-quarter (3Q16) continued to fall, based on S$201. For 2017, we expect tourist arrivals to grow at a more
the Singapore Tourism Board (STB) statistics. The 4% fall in modest rate of 4%, but average length of stay to lengthen,
RevPAR was a result of a decrease in both occupancy (87.2% vs resulting in 5% uplift in total visitor days. However, with
88.3% in 3Q15) and average daily rate (ADR; S$244 versus corporate demand expected to remain soft and persistent
S$249 in 3Q15) as excess supply continued to weigh on the supply pressures arising from a 6% increase in room stock,
market despite an increase in tourists arrivals. However, tourist 2017 RevPAR is projected to fall 4%.
arrivals for 3Q16 was positive, up 4%, driven largely by Chinese
tourists (+20%).

Figure 106: Hospitality sector remained under pressure in 3Q16
3Q15 2Q16 3Q16 q-o-q y-o-y
Industry Occupancy 88.3% 83.2% 87.2% 4.0% -1.2%
Industry average daily rate (S$) 249 229 244 6.6% -1.9%
Industry RevPAR (S$) 220 191 212 11.2% -3.6%
Tourist* arrivals 4,096,271 4,022,046 4,248,079 5.6% 3.7%
Luxury RevPAR (S$)* 409 348 421 21.2% 3.1%
Upscale RevPAR (S$)* 242 215 233 8.4% -3.8%
Mid-Tier RevPAR (S$)* 157 144 151 5.2% -3.8%
Economy RevPAR (S$)* 90 81 84 3.7% -6.9%
Source: Singapore Tourism Board, STR Global, DBS Bank


Page 74
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Industry Focus

Demand share, e.g. Singapore accounts for 38-39% of total Indonesian
outbound travel.
Overall increase in seat capacity to Singapore points to growth
in tourist arrivals offset by decline in average length of stay. Potential headwinds from near-term currency volatility. The
Based on data from Centre for Asia Pacific Aviation (CAPA), seat recent depreciation of regional currencies, especially the IDR
capacity between Singapore and the rest of the world is and MYR, could pose near-term headwinds to tourist arrivals
projected to increase 3% on-year in the fourth quarter of this into Singapore. Nevertheless, the number of Indonesian and
year following an increase of 3% during January-September. Malaysian visitors (third largest source market) to Singapore is
Overall seat capacity is expected to increase by a further 5% y- expected to remain on an upward trajectory as the SGD was
o-y in the first quarter of 2017. We believe this is supportive of weak against the IDR and MYR over the past six months.
a sustained recovery in Singapore arrivals and underpins our
forecast for a 9% and 3% increase in tourist arrivals in 2016 Supply
and 2017 respectively. However, given the lower “quality” of
tourists coming in such as tour groups, which typically only stay Pressure from new room supply. While new room supply in
1-2 days in Singapore, we forecast total visitor days to rise by 2016 is projected to be lower than the 4,237 rooms added in
only 3% in 2016 due to a shorter average length of stay of 3.42 2015, supply pressures should still persist with a net addition of
days, down from 3.61 days in 2015. For 2017, we expect a 2,520 rooms. This is despite a reduction from the 3,930 rooms
slight increase in the average length of stay to 3.46 days as the projected earlier this year, on account of delays in the
proportion of Chinese visitors fall, resulting in total visitor days completion of hotels. As a consequence of hotels such as
rising by 5% y-o-y. Intercontinental Robertson Quay and Sofitel at Tanjong Pagar
Centre which were originally scheduled to open in 2016 being
Recovery in Chinese tourists. Following an extremely weak 2014 shifted to 2017, supply for 2017 now stands at 3,857 rooms,
where Chinese tourist arrivals (Singapore’s second largest source up from 2,727 rooms previously. Thus, the demand and supply
market) dropped 24% on‐year to 1.7 million due to Chinese tour situation in Singapore is likely to become more balanced only in
groups avoiding Southeast Asia as a consequence of the MH370 2018, when supply pressures ease and new room inventory is
incident and the political uncertainty in Thailand, Chinese visitor projected to increase by only 2%.
arrivals recovered in 2015, rising 22% on‐year to 2.1 million. We
expect the recovery to continue in 2016. With visitor arrivals from 2016 supply mainly outside traditional areas with 2017 supply
China growing 41% y‐o‐y during January to September, the growth to come from Central Business District (CBD) and
recovery is on track to hit our 35% growth projection for this year. Orchard. The majority of new supply in 2016 is concentrated
Beyond 2016, we expect Singapore to remain an attractive outside the traditional areas of Bras Basah, CBD, Orchard and
destination for Chinese visitors, and we expect arrivals from China Singapore River, such as Changi, Joo Chiat and East Coast.
will increase by 10% and 7.5% in 2017 and 2018 respectively. These hotels account for 1,413 rooms or 45% of supply in
2016. Meanwhile, the second largest cluster of hotels opening
Recovery in Indonesian visitors. We project Indonesian tourist in 2016 are located in the Singapore River precinct (20% of
arrivals (Singapore’s largest source market) to grow by 6% this year 2016 supply). These include M Social, and The Warehouse
due to a healthy performance during January to September Hotel. Combined with the completion of refurbishment works
(arrivals up by 6%), and low base effect as overall tourist arrivals in at Swissotel Merchant Court, an estimated 507 rooms (9% of
2015 was down 10% y‐o‐y. This is despite a 2% decline in seat existing supply in the precinct) will hit the market. Beyond the
capacity between Indonesia and Singapore in 2016 based on data new supply in the Singapore River area, the rebranding of
from CAPA. For 2017 and 2018, we expect growth to normalise to Riverview Hotel as Four Points by Sheraton would also raise the
3% per annum. level of competition in this sub-market. In 2017, the majority of
supply will switch back to Orchard (1,612 rooms, equivalent to
Competition from other markets. Singapore faces increased 14% of existing Orchard inventory, from Novotel on Stevens
competition from other tourism markets through a variety of and Ascott Orchard) and the CBD area (c.748 rooms from
factors which include easier access to other countries through hotels such as JW Marriot, Sofitel Singapore Tanjong Pagar, The
the relaxation of visa restrictions, e.g. multiple entry visas for Murray Hotel and Grand Park City Hall).
Chinese visitors into Japan; devaluation of the other regional
currencies, potentially making its cheaper to visit other countries More evenly balanced across tiers in 2016 with growth in luxury
compared to Singapore, e.g. a weaker Korean won and in 2017. In 2015, the growth in supply was driven by the Mid-
Japanese yen; and Singapore already having a high market Tier segment, which represented 64% of total net new supply
in 2015 and 20% of existing Mid-Tier stock. For 2016, the new

Page 75
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Industry Focus
supply of 2,520 rooms is more evenly spread across all the hotels this year, supply growth is still projected to increase by
different categories, 25% in Economy, 40% in Mid-Tier and 4%. Combined with continued weak corporate demand, which
25% in Upscale, with no hotels opened in the Luxury segment. is typically higher yielding, we project a 4% decline in RevPAR
Nevertheless, similar to 2015, we expect Mid-Tier and Economy to S$201. This will be led by a decline in ADR (down 4% to
categories to face the greatest pressure on ADR and S$236) with occupancy relatively stable at c.85%.
occupancies. For 2017, the proportion of new room supply to
Economy, Mid-Tier and Upscale hotels is expected to drop to 2017 still weak with recovery only in 2018. With the carryover
21%, 34% and 25% respectively, with Luxury hotels making a of new hotels which were originally scheduled to open in 2016
return with 21% of 2017 supply. With a larger proportion of into 2017, our earlier expectation of a more balanced market in
new rooms being added in the Upscale and Luxury segment in 2017 is likely to be delayed into 2018 where the supply of new
2017, there may be more pricing discipline compared to 2016 hotels drops off. The decline in new room supply in 2018 is due
given constraints by these upper-tier brands to cut room rates to the lack of new land released by the Singapore government
without affecting their brand status. for hotel developments over the past two years. On the back of
a 6% jump in supply in 2017 and still weak corporate demand,
Forecasts we expect ADR to remain under pressure, down 4% with
occupancy stable at 85%. This translates to a 4% decline in
Supply pressures to weigh on RevPAR in 2016. The Singapore RevPAR. Going into 2018, we expect a 3% recovery in RevPAR,
hospitality market is facing the same issues in 2016 as in 2015, as demand (+4% growth in visitor arrivals) exceeds the 2%
i.e. excess supply. While we expect a 9% bounce in tourist growth in new room supply.
arrivals, we believe this will only translate to a 4% increase in
visitor days due to a higher proportion of Chinese tour groups
which typically have a shorter average length of stay. In
addition, while there has been a delay in the opening of some

Figure 107: Number of visitors rising year-to-date but growth in visitor days still Remarks
modest and RevPAR remains soft on supply pressure
Tourist arrivals jumped 4% in

3Q16, led by China (+20%),
Indonesia (+ 3%) and India
(+6%)
But visitor days were only up

by 1% due to decline in
average length of stay
RevPAR remains weak, down

4% in 3Q16 on excess supply
and weak corporate demand
Source: Singapore Tourism Board, STR Global, DBS Bank


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Industry Focus
Figure 108: Uptick in overall airline capacity points to sustained recovery in tourist Remarks
arrivals
Historically, there is a positive

correlation between seat capacity
growth and inbound tourist
arrivals
Inbound tourist arrivals have

recovered following a reduction
in seat capacity in 2014 second
half and 2015 first half
Airline seat capacity into

Singapore is projected to grow by
3% and 5% y-o-y in fourth
quarter 2016 and first quarter
2017 which underpins growth of
tourist arrivals into Singapore. We
project 9% and 4% growth in
visitor arrivals for 2016 and 2017
Source: Centre for Asia Pacific Aviation, Singapore Tourism Board, Bloomberg Finance L.P., DBS Bank

Figure 109: Chinese visitor arrivals on a recovery path Remarks

100% y-o-y growth Downturn in Chinese arrivals
Recovery from
started from October 2013 due to
80% weak 2014 new tourism laws which banned
“shopping tours”.
60%
Mar14 - MH370 Chinese visitors avoided
40% incident Singapore/Southeast Asia in 2014
due to the MH370 incident and
20% political instability in Thailand.
0% Recovery in Chinese visitors over

2015-2016. Expect growth in
visitors from China to continue
-20% but at a slower rate than in first
Oct13 - New
Chinese tourism half 2016.
-40% May14 - Thai
laws
military coup
-60%
Sep-13
Sep-14
Sep-15
Sep-16
May-13
May-14
May-15
May-16
Mar-13
Jul-13
Mar-14
Jul-14
Mar-15
Jul-15
Mar-16
Jul-16
Jan-13
Jan-14
Jan-15
Jan-16
Nov-13
Nov-14
Nov-15
Source: Singapore Tourism Board, DBS Bank


Page 77
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Industry Focus
Figure 110: Stable 2H16 seat capacity between Indonesia and Singapore with pick-up in Remarks
1Q17

Growth in Indonesian arrivals
from 4Q12 to 2Q14 on the
back of increases in seat
capacity between Indonesia
and Singapore, despite a
weaker rupiah against
Singapore dollar. The trend
reversed from 3Q14 to 4Q15
on the back of declines in
seat capacity especially in the
low cost carrier segment
Healthy start to 2016, with

6% y-o-y growth in tourist
arrivals from Indonesia in Jan
to Sep despite a decline in
overall airline seat capacity
Stable seat capacity between

Indonesia and Singapore in
4Q16; 7% y-o-y pick up in
1Q17 points to continued
growth in Indonesian tourist
arrivals. We project 5.5%
and 3% increases for 2016
and 2017 respectively

Source: Centre for Asia Pacific Aviation, Singapore Tourism Board, Bloomberg Finance L.P., DBS Bank


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Industry Focus
Figure 111: Uptick in arrivals not translating to significant growth in visitor days Remarks
Despite healthy increase in

total visitors arrivals into
Singapore of c.9% for the
first nine months of the year,
visitor days i.e. total length
of time spent in Singapore
only rose 3.1 %
The more modest growth in

visitor days is due to a
decline in the average length
of stay from 3.61 days in
2015 to 3.49 days for 9M16.
The fall in the average

length stay was driven by an
increase in Chinese visitors
who are on tour groups,
typically staying only for 1-2
days
Source: Singapore Tourism Board, Bloomberg Finance L.P., DBS Bank
Figure 112: Increased competition from other tourism markets (9M16 inbound tourist Remarks
arrivals)
Increased competition for

Chinese tourists from countries
such as Japan, Korea and
Australia
Singapore getting a larger

share of Chinese tourists
potentially due to Singapore
Tourism Board’s success in
promoting Singapore as a
single destination, following
weaker growth in the prior
year
General upturn in Indonesian

outbound travel but Singapore
lagging growth of other
market such as South Korea
and Japan
Source: CEIC, Singapore Tourism Board, Bloomberg Finance L.P, DBS Bank

Page 79
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Industry Focus

Figure 113: Recent FX volatility in regional currencies a potential headwind Remarks
15%
Winners versus SGD - IDR, AUD, Avg Recent correction in regional
currencies for Singapore’s top
10% IDR five source markets a potential
headwind.
AUD
5%
However, weakening of SGD
Avg
over the last six months
0% MYR provides some buffer.
INR
-5%
CNY
-10%
Losers versus SGD - INR, CNY
-15%
AUD CNY INR MYR IDR Top 5 weighted average

* Inbound travel statistics for Singapore and Thailand related to 8M16
Source: CEIC, Singapore Tourism Board, Bloomberg Finance L.P., DBS Bank

Figure 114: Opening of some hotels delayed from 2016 to 2017 Remarks
Rooms Despite delays in the
75,000 completion of new hotels
resulting in 2,520 net new
2.0%
70,000 6.0% rooms being added in 2016
1,355 (down from 3,930 previously),
4.1% 3,857 supply pressures are expected
65,000 to persist due to a 4% growth
61,287 2,520 in supply.
60,000
Delay in the demand and
55,000 supply situation in Singapore
being more balanced as hotels
previously expected to open in
50,000 2016 are now shifted to 2017
resulting in a 6% growth in
45,000 room inventory in 2017.
2015 2016F 2017F 2018F
Potential recovery in 2018 only
Hotel rooms Expected net additions
when supply pressures ease.
Source: CDL Hospitality Trust, Singapore Tourism Board, DBS Bank


Page 80
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Industry Focus
Figure 115: More supply in Singapore River and CBD areas in 2016 switching to Remarks
Orchard in 2017
Number of rooms
New supply switching from
4,500 Orchard and Bras Basah in
4,000 2015 to Singapore River and
CBD areas in 2016. For
3,500
2017, the majority of supply
3,000
will come from Orchard and
2,500 CBD areas.
2,000
1,500 Growth in new supply also
1,000 coming from outside core
500 city centre areas.
0
-500 2014 2015 2016 2017 2018
-1,000
Bras Basah/Bugis CBD Orchard Singapore River Others Total

Figure 116: Majority of supply growth in 2016 coming from the Mid-Tier category Remarks
number of rooms
Majority of new supply in 2016
4,500
coming from the Mid-Tier
4,000 category.
3,500
3,000 For 2017, there is greater share
2,500
of new rooms being opened in
the luxury and upscale category
2,000 which may result in more pricing
1,500 discipline in the industry.
1,000
500
0
Economy Mid-Tier Upscale Luxury Total
2015 2016 2017 2018
Source: CEIC, Singapore Tourism Board, DBS Bank
Figure 117: RevPAR to remain weak in 2016 and 2017 with recovery from 2018 Remarks
y-o-y growth 9% growth in visitor arrivals is

10.0% 9% expected for 2016 but this will be
7% partially offset by the shorter
8.0% 7% 7% 6% average length of stay which
6% 5% translates to 3% growth in visitor
6.0% 4%
4% days.
3%4% 3.4% 4% 4% 3%
4.0%
2% However, a 5% increase in room
2.0% 1%
supply remains a key issue for
0.0% hoteliers, with RevPAR expected
to decline by 4% this year.
-2.0% -1%
-1% -2%
-4.0% 2017 to remain a challenging
-3% year due to a 6% growth in
-4% -4%
-6.0% -5% supply with a recovery only
2013 2014 2015 2016F 2017F 2018F occurring in 2018 when supply
pressures ease.
Visitor Arrivals Visitor Days Room supply RevPAR


Page 81
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Industry Focus
Figure 118: Supply of new rooms

Year of opening Hotel Net room addition
2016 The South Beach -654
2016 Hotel Grand Central 46
2016 Ibis Styles 298
2016 Oasia Downtown Hotel 314
2016 Grand Park City Hall -165
2016 Hotel Clover @ 7 HK St 27
2016 Hotel Indigo Singapore Katong 131
2016 Mercure Singapore Middle Road 395
2016 M Social 293
2016 Holiday Inn Express Singapore Katong 451
2016 Crowne Plaza Changi Airport (extension) 243
2016 Premier Inn Singapore 300
2016 JW Marriott Hotel Singapore South Beach (formerly The South Beach) 634
2016 Swissôtel Merchant Court 150
2016 Villa Samadhi 20
2016 The Warehouse Hotel 37
2017 Andaz Singapore (DUO Project) 342
2017 Novotel Singapore on Stevens 254
2017 InterContinental Singapore Robertson Quay (Gallery Hotel after refurbishment) 225
2017 Sofitel Singapore City Centre Hotel (Tanjong Pagar Centre) 222
2017 The Ascott Orchard Singapore 220
2017 The Patina Capitol Singapore 157
2017 Duxton Terrace (formerly Murray House) 138
2017 Duxton House (formerly Blakes) 50
2017 Laguna Dusit Thani 197
2017 Ibis Singapore on Stevens 528
2017 Grand Park City Hall 181
2017 Park Hotel Farrer Park 300
2017 Courtyard Marriott at Novena 250
2017 YOTEL Orchard Road 610
2017 Aqueen Hotel Geylang 100
2017 Aqueen Hotel Little India 83
2018 Frasers @ China Street 306
2018 Yotel Changi Jewel 130
2018 Aqueen Hotel Lavender (Additional rooms) 69
2018 Outpost Hotel Sentosa & Village Hotel Sentosa 850


Page 82
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Industry Focus
11. Charts

Page 83
Page 83
Industry Focus
Singapore REITs
S-REIT Sector Yield Spread
8%
7%
6%
5%
4%
3%
2%
1%
0%
Sector Yield spread Sector Yield MAS 10 Year

Mean Yield +1 SD -1 SD
S-REIT Sector Historical P/BV

1.20
Sector P/BV
P/BV Mean
1.15 +1 SD
-1 SD
1.10
N ov ' 13 (1.04x)
1.05
H i storical Mean : P/NAV at OC t' 16 ( 1.01)

1. 0x
1.00
0.98
0.95 F e b'14 ( 0.94 x) N ov ' 15 (0.94 x)
-1 S ta ndard Deviation : 0.92x

0.90 P / NAV
N ov ' 11 (0.89x) Ja n' 16 (0.90x)
0.85
Ja n' 12 (0.84x)
0.80

Page 84
Page 84
Industry Focus
Office REIT Sector Yield Spread Office REIT Sector Historical P/BV
1.2
9.0%
8.0%
1.1
7.0%
6.0% 1.0
5.0%
0.9
4.0%
3.0% 0.8
2.0%
0.7
1.0%
0.0% 0.6
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017
0.5
Office REITs Yield Spread Office REITs Yield Mean Yield Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-20
-1 SD +1 SD CCT P/BV Mean +1 SD -1 SD
CapitaLand Commercial Trust Historical Yield Spread CapitaLand Commercial Trust Historical P/BV
1.2
9.0%
8.0% 1.1
7.0% 1.0
6.0%
0.9
5.0%
0.8
4.0%
0.7
3.0%
2.0% 0.6
1.0% 0.5
0.0%
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016
CCT Yield Spread CCT Yield Mean Yield Office REITs P/BV Mean +1 SD -1 SD
-1 SD +1 SD
Frasers Commercial Trust Historical Yield Spread Frasers Commercial Trust Historical P/BV
1.2
9.0%
8.0% 1.1
7.0%
1.0
6.0%
0.9
5.0%
4.0% 0.8
3.0%
0.7
2.0%
0.6
1.0%
0.0% 0.5
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2 Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan
FCOT P/BV Mean +1 SD -1 SD
FCOT Yield Spread FCOT Yield Mean -1 SD +1 SD

Page 85
Page 85
Industry Focus
IREIT Global Yield Spread IREIT Global Historical P/BV

10.0% 1.4
9.0%
8.0%
1.3
7.0%
6.0%
1.2
5.0%
4.0%
3.0% 1.1
2.0%
1.0% 1.0
0.0%
Sep-2014 Mar-2015 Sep-2015 Mar-2016 Sep-2016
IREIT Yield Spread IREIT Yield Mean -1 SD +1 SD 0.9
Sep-2014 Mar-2015 Sep-2015 Mar-2016 Sep-2016
Source: Bloomberg Finance L.P., DBS Bank IREIT P/BV Mean +1 SD -1 SD
Keppel REIT Historical Yield Spread Keppel REIT Historical P/BV

1.2
9.0%
1.1
8.0%
7.0% 1.0
6.0% 0.9
5.0%
0.8
4.0%
0.7
3.0%
2.0% 0.6
1.0%
0.5
0.0% Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 KREIT P/BV Mean +1 SD -1 SD
KREIT Yield Spread KREIT Yield Mean Yield -1 SD +1 SD
Manulife US REIT Historical Yield Spread Manulife US REIT Historical P/BV

8.0%
1.05
7.0%
6.0% 1.03
5.0% 1.00
4.0%
0.98
3.0%
0.95
2.0%
1.0% 0.93
0.0%
0.90
Jun-2016 Sep-2016 Dec-2016
Jun-2016 Sep-2016 Dec-2016
MUST Yield Spread MUST Yield Mean -1 SD +1 SD MUST P/BV Mean +1 SD -1 SD

Page 86
Page 86
Industry Focus
OUE Commercial Trust Historical Yield Spread OUE Commercial Trust Historical P/BV
1.2
9.0%
8.0% 1.1
7.0%
1.0
6.0%
5.0% 0.9
4.0% 0.8
3.0%
0.7
2.0%
1.0% 0.6
0.0%
Feb-2014 Aug-2014 Feb-2015 Aug-2015 Feb-2016 Aug-2016 0.5
OUECT Yield Spread OUECT Yield Mean -1 SD +1 Feb-2014 Aug-2014 Feb-2015 Aug-2015 Feb-2016 Aug-2016
OUECT P/BV Mean +1 SD -1 SD

Page 87
Page 87
Industry Focus
Retail REIT Sector Yield Spread Retail REIT Sector Historical P/BV
1.50
8.0%
1.40
7.0%
1.30
6.0%
1.20
5.0%
1.10
4.0%
1.00
3.0%
0.90
2.0%
0.80
1.0%
0.70
0.0% 0.60
Retail REITs Yield Spread Retail REITs Yield Mean Yield
-1 SD +1 SD
Retail REITs P/BV Mean +1 SD -1 SD
CapitaLand Mall Trust Historical Yield Spread CapitaLand Mall Trust Historical P/BV
8.0% 1.5
7.0% 1.4
6.0% 1.3
5.0% 1.2
4.0%
1.1
3.0%
1.0
2.0%
0.9
1.0%
0.8
0.0%
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-20 0.7
CMT Yield Spread CMT Yield Mean Yield
0.6
-1 SD +1 SD
CMT P/BV Mean +1 SD -1 SD
CapitaLand Retail China Trust Historical Yield Spread CapitaLand Retail China Trust Historical P/BV
1.4
8.0%
1.3
7.0%
6.0% 1.2
5.0%
1.1
4.0%
1.0
3.0%
2.0% 0.9
1.0%
0.8
0.0%
CRCT Yield Spread CRCT Yield Mean Yield
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017 CRCT P/BV Mean +1 SD -1 SD
-1 SD +1 SD

Page 88
Page 88
Industry Focus
Croesus Retail Trust Historical Yield Spread Croesus Retail Trust Historical P/BV
11.0% 1.2
10.0%
9.0%
8.0% 1.1
7.0%
6.0%
1.0
5.0%
4.0%
3.0% 0.9
2.0%
1.0%
0.0% 0.8
Jun-2013 Jun-2014 Jun-2015 Jun-2016 Jun-2013 Dec-2013 Jun-2014 Dec-2014 Jun-2015 Dec-2015 Jun-2016 Dec-2016
Croesus Yield Spread Croesus Yield Mean Yield
-1 SD +1 SD Croesus P/BV Mean +1 SD -1 SD
Frasers Centrepoint Trust Historical Yield Spread Frasers Centrepoint Trust Historical P/BV
1.5
8.0%
1.4
7.0%
1.3
6.0%
1.2
5.0%
1.1
4.0%
1.0
3.0%
0.9
2.0%
0.8
1.0% 0.7
0.0% 0.6
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-20 Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-201
FCT Yield Spread FCT Yield Mean Yield FCT P/BV Mean +1 SD -1 SD
-1 SD +1 SD
Mapletree Greater China Commercial Trust Historical Mapletree Greater China Commercial Trust Historical
Yield Spread P/BV
1.3
9.0%
8.0%
1.2
7.0%
6.0% 1.1
5.0%
1.0
4.0%
3.0%
0.9
2.0%
1.0% 0.8
0.0%
2013 2014 2015 2016 0.7
Mar-2013 Mar-2014 Mar-2015 Mar-2016
MAGIC Yield Spread MAGIC Yield Mean MAGIC P/BV Mean +1 SD -1 SD
-1 SD +1 SD

Page 89
Page 89
Industry Focus
[SPH REIT Historical Yield Spread SPH REIT Historical P/BV

8.0%
1.5
7.0% 1.4
6.0% 1.3
1.2
5.0%
1.1
4.0% 1.0
3.0% 0.9
0.8
2.0%
0.7
1.0% 0.6
0.5
0.0%
Jul-2013 Jul-2014 Jul-2015 Jul-2016
Jul-2013 Jul-2014 Jul-2015 Jul-2016
SPH REIT Yield Spread SPH REIT Yield Mean Yield
SPH REIT P/BV Mean +1 SD -1 SD
-1 SD +1 SD
Starhill Global REIT Historical Yield Spread Starhill Global REIT Historical P/BV
8.0%
1.5
7.0% 1.4
1.3
6.0%
1.2
5.0% 1.1
1.0
4.0%
0.9
3.0% 0.8
0.7
2.0%
0.6
1.0% 0.5
0.0%
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan SGREIT P/BV Mean +1 SD -1 SD
SGREIT Yield Spread SGREIT Yield Mean Yield
-1 SD +1 SD

Page 90
Page 90
Industry Focus
Mixed Commercial REIT Sector Yield Spread Mixed Commercial REIT Sector Historical P/BV
9.0% 1.7
8.0%
1.5
7.0%
6.0%
1.3
5.0%
4.0% 1.1
3.0%
0.9
2.0%
1.0% 0.7
0.0%
Mixed Use REITs Yield Spread Mixed Use REITs Yield
Mixed Use REITs P/BV Mean +1 SD -1 SD
Mean Yield -1 SD
Source: Bloomberg+1Finance
SD L.P., DBS Bank
Mapletree Commercial Trust Historical Yield Spread Mapletree Commercial Trust Historical P/BV
9.0% 1.7
8.0%
1.5
7.0%
6.0% 1.3
5.0%
1.1
4.0%
3.0%
0.9
2.0%
1.0% 0.7
0.0%
Apr-2011 Apr-2012 Apr-2013 Apr-2014 Apr-2015 Apr-2016 0.5
MCT Yield Spread MCT Yield Mean Yield Apr-2011 Apr-2012 Apr-2013 Apr-2014 Apr-2015 Apr-2016
-1 SD +1 SD
MCT P/BV Mean +1 SD -1 SD
Suntec REIT Historical Yield Spread Suntec REIT Historical P/BV

1.5
9.0%
1.4
8.0%
1.3
7.0%
1.2
6.0%
1.1
5.0%
1.0
4.0% 0.9
3.0% 0.8
2.0% 0.7
1.0% 0.6
0.0% 0.5
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-20 Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016
Suntec Yield Spread Suntec Yield Mean Suntec P/BV Mean +1 SD -1 SD
-1 SD +1 SD

Page 91
Page 91
Industry Focus
Hospitality REIT Sector Yield Spread Hospitality REIT Sector Historical P/BV
1.6
10.0%
1.5
9.0%
8.0%
1.4
7.0% 1.3
6.0% 1.2
5.0% 1.1
4.0% 1.0
3.0% 0.9
2.0% 0.8
1.0% 0.7
0.0%
0.6
Hospitality REITs Yield Spread Hospitality REITs Yield
Hospitality REITs P/BV Mean +1 SD -1 SD
Mean Yield -1 SD
+1 SD
Ascendas Hospitality Trust Historical Yield Spread Ascendas Hospitality Trust Historical P/BV
10.0%
9.0%
1.6
8.0%
7.0% 1.4
6.0%
1.2
5.0%
4.0% 1.0
3.0%
0.8
2.0%
1.0% 0.6
Jul-2012 Jul-2013 Jul-2014 Jul-2015 Jul-2016
0.0% ASCHT P/BV Mean +1 SD -1 SD
Jul-2012 Jul-2013 Jul-2014 Jul-2015 Jul-2016
ASCHT Yield Spread ASHT Yield Mean -1 SD +1 SD
Ascott Residence Trust Historical Yield Spread Ascott Residence Trust Historical P/BV
10.0% 1.6
9.0%
8.0% 1.4
7.0%
6.0%
1.2
5.0%
4.0%
1.0
3.0%
2.0%
0.8
1.0%
0.0%
Ascott Yield Spread Ascott Yield Mean Yield Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2
-1 SD +1 SD Ascott P/BV Mean +1 SD -1 SD

Page 92
Page 92
Industry Focus
CDL Hospitality Trust Historical Yield Spread CDL Hospitality Trust Historical P/BV
10.0%
1.6
8.0%
1.4
6.0%
1.2
4.0% 1.0
2.0% 0.8
0.0% 0.6
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017
-2.0% CDREIT P/BV Mean +1 SD -1 SD

CDREIT Yield Spread CDREIT Yield Mean Yield
-1 SD +1 SD
Far East Hospitality Trust Historical Yield Spread Far East Hospitality Trust Historical P/BV
10.0%
1.60
9.0%
8.0%
1.40
7.0%
6.0%
1.20
5.0%
4.0%
1.00
3.0%
2.0%
0.80
1.0%
0.0%
Aug-2012 Aug-2013 Aug-2014 Aug-2015 Aug-2016 0.60
FEHT Yield Spread FEHT Yield Mean -1 SD +1 S Aug-2012 Aug-2013 Aug-2014 Aug-2015 Aug-2016
FEHT P/BV Mean +1 SD -1 SD
Frasers Hospitality Trust Historical Yield Spread Frasers Hospitality Trust Historical P/BV
10.0%
1.6
9.0%
8.0%
1.4
7.0%
6.0%
1.2
5.0%
4.0%
1.0
3.0%
2.0%
0.8
1.0%
0.0%
0.6
Aug-2014 Feb-2015 Aug-2015 Feb-2016 Aug-2016
Aug-2014 Feb-2015 Aug-2015 Feb-2016 Aug-2016
FHT Yield Spread FHT Yield Mean -1 SD +1 SD FHT P/BV Mean +1 SD -1 SD

Page 93
Page 93
Industry Focus
OUE Hospitality Trust Historical Yield Spread OUE Hospitality Trust Historical P/BV
10.0% 1.6
9.0% 1.5
8.0% 1.4
7.0% 1.3
6.0% 1.2
5.0%
1.1
4.0%
1.0
3.0%
0.9
2.0%
0.8
1.0%
0.7
0.0%
Jul-2013 Jul-2014 Jul-2015 Jul-2016 0.6
OUEHT Yield Spread OUEHT Yield Mean Yield Jul-2013 Jan-2014 Jul-2014 Jan-2015 Jul-2015 Jan-2016 Jul-2016 Jan-20
-1 SD +1 SD OUEHT P/BV Mean +1 SD -1 SD

Page 94
Page 94
Industry Focus
Industrial REIT Sector Yield Spread Industrial REIT Sector Historical P/BV
1.8
11.0% 1.7
10.0% 1.6
9.0%
1.5
8.0%
1.4
7.0%
6.0% 1.3
5.0% 1.2
4.0% 1.1
3.0% 1.0
2.0%
0.9
1.0%
0.8
0.0%
Industrial REITs Yield Spread Industrial REITs Yield
Mean +1 SD Industrial REITs P/BV Mean +1 SD -1 SD
-1 SD
Ascendas REIT Historical Yield Spread Ascendas REIT Historical P/BV

11.0%
1.7
10.0%
9.0%
8.0% 1.5
7.0%
6.0% 1.3
5.0%
4.0% 1.1
3.0%
2.0% 0.9
1.0%
0.0% 0.7
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan- Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan
AREIT P/BV Mean +1 SD -1 SD

AREIT Yield Spread AREIT Yield Mean Yield -1 SD +1 S
Cambridge Industrial Trust Historical Yield Spread Cambridge Industrial Historical P/BV
1.8
11.0% 1.6
10.0% 1.4
9.0%
1.2
8.0%
7.0% 1.0
6.0%
0.8
5.0%
4.0% 0.6
3.0% 0.4
2.0%
0.2
1.0%
0.0% 0.0
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
CREIT Yield Spread CREIT Yield Mean Yield CREIT P/BV Mean +1 SD -1 SD
-1 SD +1 SD
S

Page 95
Page 95
Industry Focus
Cache Logistics Trust Historical Yield Spread Cache Logistics Trust Historical P/BV
11.0%
1.7
10.0%
9.0%
1.5
8.0%
7.0%
1.3
6.0%
5.0%
1.1
4.0%
3.0%
0.9
2.0%
1.0%
0.7
0.0%
Apr-2010 Apr-2011 Apr-2012 Apr-2013 Apr-2014 Apr-2015 Apr-2016
Apr-2010 Apr-2011 Apr-2012 Apr-2013 Apr-2014 Apr-2015 Apr-2016 Cache P/BV Mean +1 SD -1 SD
Cache Yield Spread Cache Yield Mean Yield
-1 SD +1 SD
Frasers Logistics & Industrial Trust Yield Spread Frasers Logistics & Industrial Trust Historical P/BV
8.0%
1.14
7.0%
6.0%
1.12
5.0% 1.10
4.0%
1.08
3.0%
1.06
2.0%
1.04
1.0%
0.0%
1.02
Jul-2016 Aug-2016 Sep-2016 Oct-2016 Nov-2016 Dec-201 Jul-2016
FLT P/BV Mean +1 SD -1 SD
FLT Yield Spread FLT Yield Mean Yield -1 SD +1 SD
Keppel DC REIT Historical Yield Spread Keppel DC REIT Historical P/BV

10.0% 1.8
9.0% 1.7
8.0% 1.6
7.0% 1.5
6.0% 1.4
5.0% 1.3
4.0% 1.2
3.0% 1.1
2.0% 1.0
1.0% 0.9
0.0% 0.8
Jan-2015 Jul-2015 Jan-2016 Jul-2016 0.7
KDCREIT Yield Spread KDCREIT Yield Mean -1 SD +1 S
Jan-2015 Jul-2015 Jan-2016 Jul-2016
KDCREIT P/BV Mean +1 SD -1 SD

Page 96
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Industry Focus
Mapletree Industrial Trust Historical Yield Spread Mapletree Industrial Trust Historical P/BV
10.0% 1.5
9.0% 1.4
8.0% 1.3
7.0% 1.2
6.0% 1.1
5.0% 1.0
0.9
4.0%
0.8
3.0%
0.7
2.0%
0.6
1.0%
0.5
0.0% Oct-2010 Oct-2011 Oct-2012 Oct-2013 Oct-2014 Oct-2015 Oct-201
Apr-2011 Apr-2012 Apr-2013 Apr-2014 Apr-2015 Apr-2016 MINT P/BV Mean +1 SD -1 SD
MINT Yield Spread MINT Yield Mean Yield
-1 SD +1 SD
Mapletree Logistic Trust Historical Yield Spread Mapletree Logistic Trust Historical P/BV
10.0% 1.5
9.0% 1.4
8.0% 1.3
7.0% 1.2
6.0% 1.1
5.0% 1.0
4.0% 0.9
3.0% 0.8
2.0% 0.7
1.0%
0.6
0.0%
0.5
MLT Yield Spread MLT Yield Mean Yield -1 SD +1
MLT P/BV Mean +1 SD -1 SD
Soilbuild Business Space REIT Historical Yield Spread Soilbuild Business Space REIT Historical P/BV
10.0% 1.50
9.0% 1.40
8.0% 1.30
7.0% 1.20
6.0% 1.10
5.0% 1.00
4.0% 0.90
3.0% 0.80
2.0% 0.70
1.0% 0.60
0.0% 0.50
Aug-2013 Aug-2014 Aug-2015 Aug-2016 Aug-2013 Aug-2014 Aug-2015 Aug-2016
SBREIT Yield Spread SBREIT Yield Mean Yield
-1 SD +1 SD SBREIT P/BV Mean +1 SD -1 SD

Page 97
Page 97
Industry Focus
Ascendas India Trust Historical Yield Spread Ascendas India Trust Historical P/BV
9.0% 1.7
8.0% 1.6
7.0%
1.5
6.0%
1.4
5.0%
4.0% 1.3
3.0% 1.2
2.0% 1.1
1.0%
1.0
0.0%
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan
AIT Yield Spread AIT Yield Mean Yield -1 SD +1 SD
AIT P/BV Mean +1 SD -1 SD

Page 98
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Industry Focus
Healthcare REIT Sector Yield Spread Healthcare REIT Sector Historical P/BV
1.5
8.0%
1.4
7.0%
6.0% 1.3
5.0% 1.2
4.0%
1.1
3.0%
1.0
2.0%
1.0% 0.9
0.0% 0.8
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-20 Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2
Healthcare REITs Yield Spread Healthcare REITs Yield Healthcare REITs P/BV Mean +1 SD -1 SD
Mean -1 SD
+1 SD
Parkway Life REIT Historical Yield Spread Parkway Life REIT Historical P/BV
10.0% 1.7
9.0%
1.5
8.0%
7.0% 1.3
6.0%
1.1
5.0%
4.0%
0.9
3.0%
2.0% 0.7
1.0%
0.5
0.0% Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016
Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 PREIT P/BV Mean +1 SD -1 SD
PREIT Yield Spread PREIT Yield Mean
-1 SD +1 SD
Religare Health Trust Historical Yield Spread Religare Health Trust Historical P/BV
10.0%
1.7
9.0%
8.0% 1.6
7.0% 1.5
6.0%
1.4
5.0%
4.0% 1.3
3.0% 1.2
2.0%
1.1
1.0%
0.0% 1.0
Nov-12 Nov-13 Nov-14 Nov-15 Nov-1
0.9
Nov-2012 Nov-2013 Nov-2014 Nov-2015 Nov-2016
RHT Yield Spread RHT Yield Mean Yield
-1 SD +1 SD RHT P/BV Mean +1 SD -1 SD

Page 99
Page 99
Industry Focus
Singapore Developers
CapitaLand Limited P/NAV City Developments Limited P/NAV

3.5
2.5 (X)
(X)
3.0
2.0
2.5
1.5 2.0
1.5
1.0
1.0
0.5
0.5
0.0 0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
CapitaLand P/NAV Mean -1 SD +1 SD City Dev P/NAV Mean -1 SD +1 SD
Global Logistics Properties Limited P/NAV UOL Limited P/NAV

1.4
1.6 (X)
(X)
1.4 1.2
1.2 1.0
1.0
0.8
0.8
0.6
0.6
0.4
0.4
0.2 0.2
0.0 0.0
2010 2011 2012 2013 2014 2015 2016 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
GLP P/NAV Mean -1 SD +1 SD
UOL P/NAV Mean -1 SD +1 SD
Wheelcok Properties P/NAV Wingtai P/NAV

2.0
2.5 (X)
(X) 1.8
1.6
2.0
1.4
1.2
1.5
1.0
1.0 0.8
0.6
0.5 0.4
0.2
0.0 0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Wheelock P/NAV Mean -1 SD +1 SD Wingtai P/NAV Mean -1 SD +1 SD

Page 100
Page 100
Industry Focus
UIC Limited P/NAV Perennial Real Estate P/NAV

1.4
(X)
1.6
(X)
1.2
1.4
1.2 1.0
1.0 0.8
0.8
0.6
0.6
0.4
0.4
0.2
0.2
0.0 0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2014 2015 2016
UIC P/NAV Mean -1 SD +1 SD Perennial RE P/NAV Mean -1 SD +1 SD
Ho Bee Group Limited P/NAV Bukit Sembawang Limited P/NAV

3.5
(X)
2.5
(X)
3.0
2.0
2.5
1.5 2.0
1.5
1.0
1.0
0.5
0.5
0.0 0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Ho Bee P/NAV Mean -1 SD +1 SD Bukit Sembawang P/NAV Mean -1 SD +1 SD
United Engineers P/NAV Tuan Sing P/NAV

1.4 1.2
(X) (X)
1.2
1.0
1.0
0.8
0.8
0.6
0.6
0.4
0.4
0.2
0.2
0.0 0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Tuan Sing P/NAV Mean -1 SD +1 SD
United Engineers P/NAV Mean -1 SD +1 SD

Page 101
Page 101
Industry Focus
Stock Profiles

Page 102
Page 102
Singapore Company Guide
CapitaLand
Version 6 | Bloomberg: CAPL SP | Reuters: CATL.SI Refer to important disclosures at the end of this report
BUY Strong earnings quality

Last Traded Price (4 Jan 2017): S$3.06 (STI : 2,921.31)
Price Target 12-mth: S$3.60 (18% upside) Improving earnings quality. We believe that CapitaLand Limited
(CAPL) offers good value, trading at an attractive 0.7x P/B and
Potential Catalyst: Stronger than anticipated residential sales 0.6x P/RNAV. The group’s strategy to focus on growing its
Where we differ: Estimates are more conservative than consensus commercial portfolio is bearing fruit, offering better earnings
Analyst visibility. Coupled with opportunistic asset recycling of mature
Derek TAN +65 6682 3716 derektan@dbs.com assets into its listed REITs/funds, there is ample upside potential
Rachel TAN +65 6682 3713 racheltanlr@dbs.com to our earnings estimates. We maintain our BUY call with a
target price of S$3.60.
Growing recurring revenues from retail mall portfolio and

Price Relative
S$
Ascott. Its property portfolio has c. 75% of assets in retail malls,
and commercial integrated developments, including Ascott
Relative Index
4.4
207
3.9 187 Group, which offers strong income visibility in the medium term.
The operating performance of its malls will improve as the
167
3.4 147
2.9
127
107
properties reach maturity, boosted by the completion of four
2.4
87
67
Raffles City mega developments in China in the medium term.
Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
CapitaLand (LHS) Relative STI (RHS)

Robust set of 3Q16 results. CAPL reported a robust 28.4%
Forecasts and Valuation growth in net profit to S$247.5m, on the back of stronger
FY Dec (S$ m) 2015A 2016F 2017F 2018F revenues which was up 27.7% to S$1,373m. The better
Revenue 4,762 4,109 4,959 4,730 performance was seen across its portfolio, but mainly driven by
EBITDA 2,325 1,651 1,851 1,961 development projects in Singapore and China, and higher
Pre-tax Profit 1,839 1,152 1,313 1,357 performance from its Singapore commercial portfolio. Tenant
Net Profit 1,066 661 753 779 sales across its malls in Singapore and China were stable.
Net Pft (Pre Ex.) 1,066 661 753 779
Net Pft Gth (Pre-ex) (%) (8.2) (38.0) 14.0 3.4
Valuation:
EPS (S cts) 25.0 15.5 17.7 18.3
EPS Pre Ex. (S cts) 25.0 15.5 17.7 18.3 Our target price of S$3.60 is based on a 25% discount to our
EPS Gth Pre Ex (%) (8) (38) 14 3 adjusted RNAV of S$4.80/share. Our RNAV is based on our
Diluted EPS (S cts) 25.0 15.5 17.7 18.3 estimates of the market valuations of its various property
Net DPS (S cts) 9.00 9.00 9.00 9.00
BV Per Share (S cts) 420 427 436 445
developments and investment property assets across its various
PE (X) 12.3 19.9 17.5 16.9 divisions.
PE Pre Ex. (X) 12.3 19.9 17.5 16.9
P/Cash Flow (X) 5.3 nm 11.9 17.5 Key Risks to Our View:
EV/EBITDA (X) 13.8 21.0 18.9 18.2
Net Div Yield (%) 2.9 2.9 2.9 2.9
Slowdown in Asian economies. The risk to our view is if there
P/Book Value (X) 0.7 0.7 0.7 0.7 is a slowdown in Asian economies, especially China, which
Net Debt/Equity (X) 0.5 0.6 0.6 0.6 could dampen demand for housing and private consumption
ROAE (%) 6.1 3.7 4.1 4.2 expenditure and retail sales.
Earnings Rev (%): - - -
Consensus EPS (S cts): 17.0 19.0 20.8 At A Glance
Other Broker Recs: B: 18 S: 0 H: 3
Issued Capital (m shrs) 4,237
Source of all data on this page: Company, DBS Bank, Bloomberg Mkt. Cap (S$m/US$m) 12,966 / 9,167
Finance L.P Major Shareholders (%)
Temasek Holdings Pte Ltd 40.1
Blackrock 6.0
Free Float (%) 53.9
3m Avg. Daily Val (US$m) 17.4
ICB Industry : Real Estate / Real Estate

ed: JS / sa:JC, PY
Page 103
Company Guide
CapitaLand
Revenue (S$’m)
CRITICAL DATA POINTS TO WATCH 6,000.0
S $'m
5,000.0
Earnings Drivers:
Growing recurring revenues from retail mall portfolio and 4,000.0
Ascott. While trading properties (residential development and 3,000.0

strata offices) account for 24% of assets, we see continued
strength from CAPL’s retail mall division (CapitaMalls Asia) and 2,000.0
commercial integrated developments, including Ascott Group, 1,000.0
its successful serviced residence brand, which form a significant

-
76% of total assets and is expected to contribute to growing 13A 14A 15A 16F 17F 18F
recurring income for the group.

Breakdown of Revenues (FY17)
Others CapitaLand
CapitaMalls Asia continues to perform steadily despite ongoing Ascott
3% Singapore
operational headwinds. There are 87 operating properties 16% 21%
across Asia (56 of it in China). As at Sep-16, the group’s

shopping malls continue to record steady sales and occupancy
rates. Portfolio tenant sales remained healthy at 2.5% for
Singapore and 5.2% in China on the back of improving traffic.
For China, sales performance varies, with malls in Tier 1 cities
performing better (tenant sales +2.8%) while those in Tier 2
CapitaMalls
and Tier 3 cities marginally higher by 2.4% and 1.7% Asia Capitaland
China
respectively. Looking ahead, CAPL is expected to open another 31%
29%
16 properties (nine in China) in the next few years.
In addition, Raffles City integrated developments in China will Operating PATMI (Ex Revaluations)
900.0
continue to offer stable returns (7-8% for stabilised properties S $'m
800.0
in Shanghai and Beijing, c.3% for stabilising properties in
700.0
Chengdu and Ningbo). Looking ahead, the group will be
600.0
opening four more Raffles City developments in 2016-2018, 500.0
which will boost the group’s returns and profitability when 400.0
completed. 300.0
200.0
The Ascott Limited remains on the fast track to achieve its 100.0
80,000-unit target by year 2020 and will add another 770 units -
13A 14A 15A 16F 17F 18F
by 4Q16. Ascott’s investment in China’s largest and fastest-
growing online apartment sharing platform, Tujia has yet to
bear fruit meaningfully but we continue to believe in its longer RNAV of CapitaLand S$'bn
term synergies and ability to leverage on Tujia’s platform to Value of CapitaLand Singapore 7,082.5
reach out to a wider addressable market in the medium term. Value of CapitaLand China 9,818.5
CapitaMalls Asia 17,446.0
Launch of new PE funds. Leveraging on its fund management Ascott 4,237.1
expertise, CAPL aims to launch 5-6 private equity (PE) funds
Others 855.0
with funds under management of S$8-10bn by 2020. We think
GDV of CAPL Group 39,439.2
that by tapping on third-party capital, CAPL would be able to
Less: Net Debt (11,552.3)
leverage on larger economies of scale, better capitalise on
Less: devt capex (7,548.6)
market opportunities and at the same time de-risk its property
level exposure. The group launched the US$1.5bn Raffles City RNAV of CAPL 20,458.3
China Investment Partners III (RCCIP III) aimed at prime Total Shares 4,258.6
integrated developments in gateway cities in China which will RNAV per share 4.80
likely be seeded by their properties. Discount to RNAV 25%
Target price 3.60
Source: Company, DBS Bank

Page 2
Page 104
Company Guide
CapitaLand
Leverage & Asset Turnover (x)

Balance Sheet: 0.2
0.70
Balance sheet remains strong. We forecast debt/equity ratio to 0.2
0.60 0.2
remain stable, at below c.0.6x over the coming years. Debt
0.1
maturity profile remains long at 3.5 years (as of 3Q16) with an 0.50
0.1
average cost of 3.4%. Approximately 70% of the interest cost is 0.40

0.1
hedged into fixed rate debt. 0.30 0.1

0.1
0.20
0.0
0.10
Share Price Drivers: 0.0
De-risking its Singapore residential exposure/replenishing land 0.00

2014A 2015A 2016F 2017F 2018F
0.0
bank. CAPL has been actively de-risking its Singapore residential Gross Debt to Equity (LHS) Asset Turnover (RHS)
exposure through active marketing of its unsold units across its

Capital Expenditure
projects and most completed projects are substantially sold. S$m
Singapore residential is only c.6% of its total asset value, and is 180.0
160.0
not likely to have a major impact on earnings if further risks 140.0
arise. Looking ahead, while the group has not been an active 120.0
investor in Singapore’s residential market, winning any new 100.0

80.0
land tenders will imply improved confidence in the outlook for 60.0
Singapore’s residential market in the medium term. 40.0
20.0
0.0
Relaxation of government policies. Expectations of policy 2014A 2015A 2016F 2017F 2018F
relaxation (especially cyclical measures like the Buyers’ and Capital Expenditure (-)
Sellers’ stamp duties) may improve buyers’ market sentiment ROE (%)
and spark a revival in transactional volumes in the Singapore 7.0%
residential market. This is also expected to lift sentiment on 6.0%
property stocks, which we believe will enable CAPL to close the 5.0%
gap between stock price and its NAV.
4.0%
3.0%
Asset recycling into listed S-REITs. CAPL will continue to
demonstrate its ability to crystallise value through strategic 2.0%
divestments of mature assets to its listed REITs, which are 1.0%
market leaders in their respective subsectors of retail, office and 0.0%

2014A 2015A 2016F 2017F 2018F
hospitality. The ability to recycle capital efficiently will enable
the group to free up capital, improve its balance sheet position Forward PE Band (x)
and deploy capital to projects with higher returns. (x)
22.4
+2sd: 21.2x
Key Risks: 20.4
Slowdown in Asian economies. The risk to our view is a further 18.4 +1sd: 18.3x
slowdown in Asian economies which could dampen demand 16.4
Avg: 15.3x
for housing and private consumption expenditure and retail 14.4
sales. This in turn could result in slower-than-expected 12.4 ‐1sd: 12.4x

projections. 10.4
‐2sd: 9.4x
8.4
Jan-13 Jan-14 Jan-15 Jan-16
Company Background
CapitaLand is one of Asia’s largest real estate companies PB Band (x)
headquartered and listed in Singapore. Its two core markets 1.3
(x)
are Singapore and China; while Indonesia, Malaysia and 1.2
Vietnam have been identified as new growth markets. 1.1
1.0 +2sd: 1.01x
0.9 +1sd: 0.91x
0.8 Avg: 0.82x
0.7 ‐1sd: 0.72x
0.6 ‐2sd: 0.62x
0.5

Page 3
Page 105
Company Guide
CapitaLand
Segmental Breakdown
FY Dec 2014A 2015A 2016F 2017F 2018F
Revenues (S$m)
CapitaLand Singapore 1,242 1,229 890 1,030 1,053
CapitaLand China 638 2,039 1,505 2,005 1,601
CMA 1,178 663 840 997 1,128
Ascott 683 744 725 775 794
Others 185 86.1 148 151 153
Total 3,925 4,761 4,109 4,959 4,730
Income Statement (S$m)

Mainly from residential
FY Dec 2014A 2015A 2016F 2017F 2018F
sales in China and
Revenue 3,925 4,762 4,109 4,959 4,730 Singapore
Cost of Goods Sold (2,543) (3,287) (2,245) (2,851) (2,498)
Gross Profit 1,382 1,475 1,864 2,107 2,232
Other Opng (Exp)/Inc (513) (431) (465) (489) (513)
Operating Profit 869 1,044 1,398 1,619 1,719
Other Non Opg (Exp)/Inc 541 490 0.0 0.0 0.0
Associates & JV Inc 970 726 188 167 177
Net Interest (Exp)/Inc (382) (422) (435) (473) (539)
Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0
Pre-tax Profit 1,997 1,839 1,152 1,313 1,357
Tax (238) (344) (207) (236) (244)
Minority Interest (599) (430) (283) (323) (334)
Preference Dividend 0.0 0.0 0.0 0.0 0.0
Net Profit 1,161 1,066 661 753 779
Net Profit before Except. 1,161 1,066 661 753 779
EBITDA 2,444 2,325 1,651 1,851 1,961
Growth
Revenue Gth (%) 11.8 21.3 (13.7) 20.7 (4.6)
EBITDA Gth (%) 7.4 (4.9) (29.0) 12.1 6.0
Opg Profit Gth (%) 27.8 20.2 33.9 15.8 6.2
Net Profit Gth (Pre-ex) (%) 32.7 (8.2) (38.0) 14.0 3.4
Margins & Ratio
Gross Margins (%) 35.2 31.0 45.4 42.5 47.2
Opg Profit Margin (%) 22.1 21.9 34.0 32.6 36.3
Net Profit Margin (%) 29.6 22.4 16.1 15.2 16.5
ROAE (%) 7.1 6.1 3.7 4.1 4.2
ROA (%) 2.6 2.3 1.4 1.6 1.7
ROCE (%) 1.9 2.0 2.7 3.0 3.1
Div Payout Ratio (%) 33.0 36.0 58.0 50.9 49.2
Net Interest Cover (x) 2.3 2.5 3.2 3.4 3.2

Page 4
Page 106
Company Guide
CapitaLand
Quarterly / Interim Income Statement (S$m)

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Revenue 1,076 1,740 894 1,132 1,374

Cost of Goods Sold (738) (1,359) (615) (828) (950)
Gross Profit 338 381 279 304 423
Other Oper. (Exp)/Inc (30.2) (28.4) 2.70 77.9 (89.3)
Operating Profit 308 352 282 382 334
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0
Net Interest (Exp)/Inc (105) (97.1) (108) (102) (101)
Pre-tax Profit 343 479 339 477 383
Tax (64.4) (84.7) (51.6) (82.1) (61.2)
Minority Interest (85.6) (147) (69.6) (101) (74.1)
Net Profit 193 248 218 294 248
Net profit bef Except. 193 248 218 294 248
EBITDA 448 576 447 580 483
Growth
Revenue Gth (%) 4.3 61.7 (48.6) 26.6 21.4
EBITDA Gth (%) (17.4) 28.6 (22.4) 29.6 (16.6)
Opg Profit Gth (%) 0.5 14.4 (19.9) 35.3 (12.5)
Net Profit Gth (Pre-ex) (%) 36.1 28.5 (11.9) 34.7 (15.8)
Margins
Gross Margins (%) 31.4 21.9 31.2 26.8 30.8
Opg Profit Margins (%) 28.6 20.3 31.5 33.7 24.3
Net Profit Margins (%) 17.9 14.2 24.4 26.0 18.0
Balance Sheet (S$m)

FY Dec 2014A 2015A 2016F 2017F 2018F
Net Fixed Assets 1,047 808 908 1,007 1,107

Invts in Associates & JVs 12,781 12,858 13,130 13,389 13,654
Other LT Assets 18,705 20,760 21,260 21,760 22,260
Cash & ST Invts 2,941 4,257 2,151 2,477 2,431
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 963 1,424 1,027 1,240 1,154
Other Current Assets 7,676 6,945 6,808 6,259 6,299
Total Assets 44,113 47,053 45,285 46,131 46,904
ST Debt 3,469 2,246 2,246 2,246 2,246

Creditor 3,070 4,064 1,386 1,088 690
Other Current Liab 463 620 684 777 879
LT Debt 12,517 13,812 14,312 14,812 15,312
Other LT Liabilities 1,386 1,373 1,373 1,373 1,373
Shareholder’s Equity 16,758 17,905 18,183 18,553 18,949
Minority Interests 6,451 7,032 7,101 7,282 7,455
Total Cap. & Liab. 44,113 47,053 45,285 46,131 46,904
Non-Cash Wkg. Capital 5,107 3,685 5,766 5,633 5,883

Net Cash/(Debt) (13,045) (11,801) (14,407) (14,581) (15,127)
Debtors Turn (avg days) 99.1 91.5 108.9 83.4 92.3
Creditors Turn (avg days) 438.9 404.1 456.1 162.1 133.4
Inventory Turn (avg days) N/A N/A N/A N/A N/A
Asset Turnover (x) 0.1 0.1 0.1 0.1 0.1 Gearing to remain
Current Ratio (x) 1.7 1.8 2.3 2.4 2.6 stable
Quick Ratio (x) 0.6 0.8 0.7 0.9 0.9
Net Debt/Equity (X) 0.6 0.5 0.6 0.6 0.6
Net Debt/Equity ex MI (X) 0.8 0.7 0.8 0.8 0.8
Capex to Debt (%) 0.8 0.4 1.0 1.0 0.9
Z-Score (X) 1.1 1.1 1.1 1.1 1.1

Page 5
Page 107
Company Guide
CapitaLand
Cash Flow Statement (S$m)

FY Dec 2014A 2015A 2016F 2017F 2018F
Pre-Tax Profit 1,997 1,839 1,152 1,313 1,357

Dep. & Amort. 64.6 65.0 65.0 65.0 65.0
Tax Paid (256) (145) (144) (143) (142)
Assoc. & JV Inc/(loss) (970) (726) (188) (167) (177)
Chg in Wkg.Cap. 51.9 1,264 (2,144) 39.3 (352)
Other Operating CF 111 169 0.0 0.0 0.0
Net Operating CF 999 2,466 (1,259) 1,107 751
Capital Exp.(net) (127) (64.0) (164) (164) (164)
Other Invts.(net) (1,357) (718) (500) (500) (500)
Invts in Assoc. & JV 841 509 (150) (150) (150)
Div from Assoc & JV 406 394 65.8 58.5 62.1
Other Investing CF (102) 33.0 0.0 0.0 0.0
Net Investing CF (339) 154 (749) (756) (752) Assumed capex
Div Paid (705) (727) (598) (525) (545)
Chg in Gross Debt 177 (212) 500 500 500
Capital Issues 1.38 0.0 0.0 0.0 0.0
Other Financing CF (3,746) (274) 0.0 0.0 0.0
Net Financing CF (4,272) (1,213) (98.1) (24.9) (44.7)
Currency Adjustments 55.0 16.9 0.0 0.0 0.0
Chg in Cash (3,557) 1,424 (2,106) 326 (45.8)
Opg CFPS (S cts) 22.2 28.2 20.8 25.1 25.9
Free CFPS (S cts) 20.5 56.4 (33.4) 22.1 13.8
Target Price & Ratings History
S$
1 2 - mt h
3.37 Dat e o f Clo sin g
S. No . T arg et R at in g
Repo rt Pric e
Pric e
3.27 12 14 1: 08 J an 16 3.16 3.73 BUY
8 16
6 2: 18 J an 16 3.02 3.73 BUY
3.17
18 3: 16 F eb 16 2.90 3.73 BUY
1 7 4: 18 F eb 16 2.91 3.70 BUY
3.07 2 13 15 22
10
9 20 5: 02 Mar 16 3.07 3.70 BUY
5 11 17 6: 16 Mar 16 3.14 3.70 BUY
2.97 4 1921 7: 18 Apr 16 3.16 3.70 BUY
2.87 8: 20 Apr 16 3.17 3.70 BUY
3 9: 27 May 16 2.98 3.70 BUY
2.77 10: 31 May 16 2.99 3.70 BUY
11: 09 Jun 16 3.05 3.70 BUY
2.67 12: 05 Aug 16 3.22 3.60 BUY
Jan-16 May-16 Sep-16 Jan-17 13: 16 Se p 16 3.12 3.60 BUY
14: 30 Se p 16 3.20 3.60 BUY
No t e : Share price and Target price are adjusted for corporate actions. 15: 18 Oct 16 3.13 3.60 BUY
16: 24 Oct 16 3.17 3.60 BUY
17: 07 Nov 16 3.04 3.60 BUY
18: 10 Nov 16 3.08 3.60 BUY
19: 14 Nov 16 3.00 3.60 BUY
20: 16 Nov 16 2.99 3.60 BUY
21: 21 Nov 16 2.98 3.60 BUY
22: 25 Nov 16 3.02 3.60 BUY
Source: DBS Bank

Analyst: Derek TAN, Rachel TAN

Page 6
Page 108
City Developments
Version 5 | Bloomberg: CIT SP | Reuters: CTDM.SI Refer to important disclosures at the end of this report
BUY Solitaire PPS Club member

Price Target 12-mth: S$9.90 (18% upside) Attractive valuations. We continue to see good value at 0.8x
Potential Catalyst: Further injections into PPS structure FY17F P/NAV, at 1SD below historical average. Key catalysts are:
Where we differ: Below consensus i) potential injection of assets into Profit Participation Securities
Analyst (PPS), ii) improvement in hotel operations, and iii) accretive
Rachel TAN +65 6682 3713 racheltanlr@dbs.com acquisitions/land banking.
Derek TAN +65 6682 3716 derektan@dbs.com
9M16 net profit grew 13% on one-off gains. 9M16 net profit
grew 13% y-o-y to S$409m (68% of consensus’ full-year
Price Relative estimates) driven by revenue growth of 12% y-o-y (largely
contributions from property development), one-off gains from
S$ Relative Index
14.0
216
13.0
12.0
196
176
disposal of 53% stake in City E-Solutions (CES) and insurance
11.0
10.0
156
136
claims. Property development continues to record strong growth
9.0
8.0
116
96
coupled with a 24% y-o-y increase in 9M16 property sales value
7.0 76 (number of units sold was stable y-o-y). Weak performance from
the hotel properties continue to weigh down earnings.
6.0 56
City Developments (LHS) Relative STI (RHS)
Forecasts and Valuation Some light from overseas investments. CDL’s decision to
FY Dec (S$ m) 2015A 2016F 2017F 2018F
diversify into the overseas property market amid a challenging
Revenue 3,304 3,654 3,875 4,437 outlook in the Singapore property market is finally coming to
EBITDA 948 1,092 1,135 1,246
Pre-tax Profit 985 787 830 937
fruition. With most of its Singapore property projects having
Net Profit 760 548 577 653 been completed or are soon-to-be-completed, we expect
Net Pft (Pre Ex.) 436 548 577 653 international properties (UK and China) to drive property
Net Pft Gth (Pre-ex) (%) 8.6 25.7 5.3 13.2 sales/revenue recognition in 2017/2018. We believe this could
EPS (S cts) 83.6 60.2 63.5 71.8 partly offset the impact of a weak property market in Singapore.
EPS Pre Ex. (S cts) 47.9 60.2 63.5 71.8
EPS Gth Pre Ex (%) 9 26 5 13 Valuation:
Diluted EPS (S cts) 79.7 57.4 60.5 68.4
Net DPS (S cts) 16.0 11.5 12.1 13.7
We maintain our BUY call with TP to S$9.90 pegged to a 20%
BV Per Share (S cts) 989 1,034 1,085 1,145 discount to our RNAV of S$11.90. Supported by a strong
PE (X) 10.0 13.9 13.2 11.7 balance sheet and diversified earnings base, CDL should be
PE Pre Ex. (X) 17.5 13.9 13.2 11.7 able to navigate well around the current uncertain market
P/Cash Flow (X) 98.0 8.0 11.3 5.4
EV/EBITDA (X) 13.4 11.4 11.0 9.5 conditions.
Net Div Yield (%) 1.9 1.4 1.4 1.6
P/Book Value (X) 0.8 0.8 0.8 0.7 Key Risks to Our View:
Net Debt/Equity (X) 0.3 0.3 0.3 0.2 Decline in residential prices in Singapore. As a proxy to
ROAE (%) 8.7 6.0 6.0 6.4
Singapore’s residential market, a deteriorating operating
Consensus EPS (S cts): 62.5 63.3 69.2 environment will cap share price performance.
At A Glance
Source of all data on this page: Company, DBS Bank, Bloomberg
Issued Capital (m shrs) 909
Finance L.P
Mkt. Cap (S$m/US$m) 7,629 / 5,341
Major Shareholders (%)
Davos Investments 16.4
Hong Leong Investment 15.4
Aberdeen Asset Management 14.0
Free Float (%) 54.2

ed: TH / sa: JC, PY
Page 109
Company Guide
City Developments
Revenue growth (FY14A-18F)

S $'m
4,500.0
Earnings Drivers: 4,000.0
Aiming for a higher proportion of recurring earnings base. 3,500.0

3,000.0
Weighed down by weak sentiment and depleting land bank for
2,500.0
its development projects, CDL’s focus in 2015-2016 has been to 2,000.0
focus on its commercial portfolio; building up a recurring 1,500.0
income base in order to sustain profitability. In 2015, CDL had 1,000.0
close to 64% of its revenues from recurring and stable 500.0
segments. Hotel operations are the largest revenue contributor 0.0

2014A 2015A 2016F 2017F 2018F
(49%) among all divisions despite showing some signs of
Others Hotel operations Rental income Property devt
weakness, which implies a substantial proportion of stable
income. Potential headwinds in this segment are further Breakdown in revenues (FY16F)
deterioration of RevPAR especially in Asian hotels and further Others
4%
depreciation of GBP.
The group’s investment property division (office and retail malls Property devt
mainly in Singapore) is projected to offer steady returns. In total, 36%
the hotel and investment property divisions contribute c. 64-

67% of revenues.
Hotel
operations
Looking overseas to sustain growth. We continue to see good 49%
progress for the group’s overseas investments. London – CDL
recorded strong sales at its 82-unit Reading project, and is
expected to book in revenues of c. GBP18.4m (S$36m), while its Rental income
11%
other projects will be launched progressively in the coming
quarters. The Teddington Studios and Stag Brewery sites
Revenue growth from hotel segment
(planning approvals expected in 1Q18) are expected to be 1,850.0 52%
S$ 'm
launched in phases in the medium term. CDL has also signed a 1,800.0
contract to purchase 56-64 Leonard Street in Shoreditch for 1,750.0
50%
GBP37.4m (S$73.5m), to be redeveloped into an office tower 1,700.0
48%
block. 1,650.0
1,600.0 46%
In China, CDL has launched some projects in Suzhou (Hong 1,550.0
Leong City Center continues to see steady sales). Phase 1 of the 44%
1,500.0
project (30-storey, 462-unit residential tower and 912-unit Soho 1,450.0
42%
Tower) has seen good sales momentum, selling 995 units to 1,400.0
date, locking in sales proceeds of over RMB2.12bn (S$424m) 1,350.0 40%
2013A 2014A 2015A 2016F 2017F
which will be booked when completed. Tower 2 of the project
Revenue % of topline
was launched and fully sold in an hour. The group’s Hongqiao
Royal Lake project also moved 32 units (out of 85), locking in
sales of RMB634m (S$127m). CDL’s other projects in RNAV breakdown
RNAV S$'m
Chongqing and Suzhou will likely take more time before they
Investment Portfolio (office) 3,122.2
can be launched. Investment Portfolio (mixed Development ) 1,505.1
Investment Portfolio (hotels) 1,071.5
In Australia, the group’s JV residential project in Brisbane is Investment Portfolio (retail) 893.5
93% sold (Ivy and Eve, two 30-storey towers comprising 472 Investment Portfolio (industrial and others) 137.4
apartments), and will be booked in 2018. The group’s GDV of residential portfolio 4,757.6
developments in Tokyo will likely be launched in the medium Listed Stakes in
term. M&C 1,856.7
CDL HT 338.1
Others 86.7
New PPS structure. Post the successful launch of three PPS
Gross Asset Value 13,768.8
structures, management is keen to continue unlocking value Less: pref conversion (211.8)
through fund management and/or new private equity Less: Net debt (1,835.9)
structures. The successful launch will enable the group to book RNAV of CDL 11,721.2
in substantial gains given that assets are recorded at cost. No of shares 954.3
RNAV/share 12.3
Discount -20%
TP 9.90

Page 2
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Company Guide
City Developments

Balance Sheet: 0.3
0.80
Undervalued Net Asset Value (NAV). As the group has chosen
0.70
to account for investment properties on a historical cost basis, 0.60
0.3
its NAV is conservative as we estimate that current fair values of 0.50

CDL’s properties are much higher than carrying values. 0.40
0.2
0.30
Low gearing of 26%. CDL’s gearing is estimated to remain low 0.20 0.2
at <30% (and closer to mid-teens assuming that its investment 0.10
property values are marked-to-market) which is within 0.00

2014A 2015A 2016F 2017F 2018F
0.1
management’s comfortable range. This provides greater Gross Debt to Equity (LHS) Asset Turnover (RHS)
financial flexibility and debt headroom for the group to acquire

Capital Expenditure
opportunistically. S$m
1,000.0
900.0
Replenishing land bank is key to income sustainability. The 700.0

600.0
ongoing tight government measures have taken a toll on the 500.0
group’s residential business segment, with the group staying 400.0

300.0
selective on land banking activities. However, CDL has been 200.0
active in the Executive Condos (ECs) segment; The Brownstone 100.0

0.0
EC and The Criteron saw brisk sales when launched. CDL launch 2014A 2015A 2016F 2017F 2018F
40 units in Gramercy Park, a high-end condominium in May Capital Expenditure (-)
2016 and has achieved 90% sales. The group has been ROE (%)
marketing the project regionally and is understood to have 9.0%
received positive responses from investors. The successful 8.0%
launch of its ongoing project will be positive to investor 7.0%
sentiment on property stocks, which we believe will enable CDL 6.0%
to close the gap between its stock price and NAV. 5.0%
4.0%
3.0%
Key Risks: 2.0%
Decline in residential prices in Singapore. Seen as a proxy to 1.0%
Singapore’s residential market, a worsening of the operating 0.0%
2014A 2015A 2016F 2017F 2018F
environment is expected to cap any upside potential for the
stock. Unsold inventories are mainly in the high-end and Forward PE Band (x)
executive segments whose unsold stock typically take time to (x)
clear. 25.5
+2sd: 24.7x
23.5
Interest rate risk. A rise in interest rates will have a negative 21.5 +1sd: 21.2x
impact on property transactions, given lower affordability and 19.5
17.5 Avg: 17.6x
thus could adversely affect the group’s outlook.
15.5
13.5
‐1sd: 14.1x
Company Background 11.5
‐2sd: 10.6x
City Developments Limited (CDL) is one of the pioneers in 9.5
Singapore's property sector. It is a property and hotel
conglomerate involved in real estate development and PB Band (x)
investment, hotel ownership and management, and facility (x)
management. 1.7
1.5
+2sd: 1.45x
1.3
+1sd: 1.25x
1.1
Avg: 1.05x
0.9
‐1sd: 0.85x
0.7
‐2sd: 0.65x
0.5

Page 3
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Company Guide
City Developments
Segmental Breakdown
FY Dec 2014A 2015A 2016F 2017F 2018F
Revenues (S$m)
Property devt 1,581 1,037 1,324 1,478 1,960
Rental income 385 405 394 420 428
Hotel operations 1,678 1,698 1,773 1,814 1,885
120 163 163 163 163 Recognition of locked-in
Others 0.0 0.0 0.0 0.0 0.0 sales
Total 3,764 3,304 3,654 3,875 4,437

FY Dec 2014A 2015A 2016F 2017F 2018F
Revenue 3,764 3,304 3,654 3,875 4,437
Gross Profit 1,632 1,656 1,766 1,872 2,121
Other Opng (Exp)/Inc (948) (1,030) (926) (982) (1,124)
Associates & JV Inc 54.8 107 37.3 30.1 33.9
Net Interest (Exp)/Inc (90.5) (72.2) (90.8) (90.7) (94.4)
Exceptional Gain/(Loss) 356 325 0.0 0.0 0.0
Pre-tax Profit 1,004 985 787 830 937
Tax (95.1) (119) (135) (144) (163)
Minority Interest (139) (92.7) (91.3) (96.0) (108)
Preference Dividend (12.9) (12.9) (12.9) (12.9) (12.9)
Net Profit 757 760 548 577 653
Net Profit before Except. 401 436 548 577 653
EBITDA 939 948 1,092 1,135 1,246
Growth
Revenue Gth (%) 17.1 (12.2) 10.6 6.1 14.5
EBITDA Gth (%) (7.4) 1.0 15.3 3.9 9.8
Opg Profit Gth (%) (12.8) (8.5) 34.2 6.0 12.0
Net Profit Gth (Pre-ex) (%) (40.4) 8.6 25.7 5.3 13.2
Margins & Ratio
Gross Margins (%) 43.4 50.1 48.3 48.3 47.8
ROAE (%) 9.4 8.7 6.0 6.0 6.4
ROA (%) 4.1 3.8 2.7 2.7 3.0
ROCE (%) 3.6 3.0 3.7 3.8 4.2
Div Payout Ratio (%) 19.2 19.1 19.1 19.1 19.1

Page 4
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Company Guide
City Developments

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Revenue 809 855 723 1,092 923

Cost of Goods Sold (396) (392) (365) (652) (493)
Gross Profit 413 463 358 440 430
Other Oper. (Exp)/Inc (258) (3.9) (82.9) (98.5) (50.6)
Associates & JV Inc 20.6 29.2 10.6 12.5 16.5
Pre-tax Profit 155 471 205 205 239
Tax (24.4) (44.1) (14.5) (37.6) (35.6)
Minority Interest (23.7) (16.8) (18.6) (33.7) (33.1)
Net Profit 106 410 172 134 170
Net profit bef Except. 106 410 172 134 170
EBITDA 234 546 272 280 313
Weaker property
Growth development division, rental
Revenue Gth (%) (1.9) 5.7 (15.4) 51.0 (15.5) and hotel divisions
EBITDA Gth (%) (8.9) 133.5 (50.2) 3.1 12.0
Opg Profit Gth (%) (18.0) 194.5 (54.4) 2.2 14.6
Net Profit Gth (Pre-ex) (%) (20.3) 285.8 (58.1) (22.2) 27.3
Margins
Gross Margins (%) 51.1 54.2 49.5 40.3 46.6
Balance Sheet (S$m)

FY Dec 2014A 2015A 2016F 2017F 2018F
Net Fixed Assets 4,918 5,175 5,260 5,346 5,431

Other LT Assets 3,324 2,949 2,949 2,949 2,949
Cash & ST Invts 3,933 3,597 3,913 3,988 4,799
Inventory 11.2 11.2 12.9 13.7 15.8
Debtors 1,589 1,762 1,948 2,066 2,366
Total Assets 19,701 20,319 20,921 21,610 22,584
ST Debt 2,233 1,911 1,911 1,911 1,911

Creditor 1,463 1,602 1,836 1,948 2,251
LT Debt 4,466 4,572 4,572 4,572 4,572
Other LT Liabilities 501 702 702 702 702
Total Cap. & Liab. 19,701 20,319 20,921 21,610 22,584

Net Cash/(Debt) (2,766) (2,885) (2,569) (2,495) (1,684)
Inventory Turn (avg days) 1.9 2.9 2.6 2.7 2.6
Asset Turnover (x) 0.2 0.2 0.2 0.2 0.2 Conservative gearing
Current Ratio (x) 2.6 2.8 2.8 2.9 2.8
Quick Ratio (x) 1.4 1.4 1.5 1.5 1.6
Net Debt/Equity (X) 0.3 0.3 0.3 0.3 0.2
Capex to Debt (%) 14.0 (13.0) 4.6 4.6 4.6
Z-Score (X) 1.7 1.7 1.7 1.7 1.7

Page 5
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Company Guide
City Developments

FY Dec 2014A 2015A 2016F 2017F 2018F
Pre-Tax Profit 1,004 985 787 830 937

Dep. & Amort. 200 215 215 215 215
Tax Paid (188) (194) (259) (135) (144)
Assoc. & JV Inc/(loss) (54.8) (107) (37.3) (30.1) (33.9)
Chg in Wkg.Cap. (482) (712) 252 (204) 444
Other Operating CF (187) (110) 0.0 0.0 0.0
Net Operating CF 292 77.8 957 675 1,418
Capital Exp.(net) (936) 843 (300) (300) (300)
Other Invts.(net) 0.0 0.0 0.0 0.0 0.0
Invts in Assoc. & JV 828 (227) (200) (200) (200)
Div from Assoc & JV 17.9 16.9 16.9 16.9 16.9
Other Investing CF 47.6 (113) 0.0 0.0 0.0
Net Investing CF (41.8) 520 (483) (483) (483)
Div Paid (275) (271) (158) (118) (123)
Chg in Gross Debt 172 (310) 0.0 0.0 0.0
Capital Issues 0.0 0.0 0.0 0.0 0.0
Other Financing CF 842 (333) 0.0 0.0 0.0
Net Financing CF 739 (914) (158) (118) (123)
Currency Adjustments 189 (16.6) 0.0 0.0 0.0
Chg in Cash 1,178 (333) 316 74.6 811
Opg CFPS (S cts) 85.1 86.8 77.5 96.7 107
Free CFPS (S cts) (70.7) 101 72.3 41.3 123
S$
12- mt h
9.34 Dat e of Closing
12 S. No. T arget Rat ing
Report Pric e
6 10 14 Pric e
8.84 13 16 1: 08 J an 16 7.58 10.26 BUY
8 9 11 15 2: 18 J an 16 7.18 10.26 BUY
8.34 3: 16 F eb 16 6.93 10.26 BUY
17 4: 26 F eb 16 7.20 10.26 BUY
5: 16 Mar 16 7.58 10.26 BUY
7.84
7 6: 18 Apr 16 8.76 10.26 BUY
4 7: 12 May 16 7.97 9.60 BUY
7.34 1 2 5 8: 27 May 16 8.35 9.60 BUY
9: 09 J un 16 8.80 9.60 BUY
6.84 10: 12 Aug 16 8.80 9.90 BUY
3
11: 16 Sep 16 8.86 9.90 BUY
6.34 12: 27 Sep 16 8.99 9.90 BUY
Jan-16 May-16 Sep-16 Jan-17 13: 30 Sep 16 9.07 9.90 BUY
14: 18 Oct 16 8.77 9.90 BUY
Not e : Share price and Target price are adjusted for corporate actions. 15: 24 Oct 16 8.82 9.90 BUY
16: 10 Nov 16 8.60 9.90 BUY
17: 16 Nov 16 8.38 9.90 BUY
Source: DBS Bank

Analyst: Rachel TAN, Derek TAN

Page 6
Page 114
Frasers Centrepoint Ltd
Version 5 | Bloomberg: FCL SP | Reuters: FRCT.SI Refer to important disclosures at the end of this report
BUY Yielding like a REIT

Last Traded Price ( 4 Jan 2017): S$1.60 (STI : 2,921.31) Growing developer with high dividend yields. We maintain our
Price Target 12-mth: S$2.00 (25% upside) BUY rating on Frasers Centrepoint Ltd (FCL) for its attractive
Potential Catalyst: Better operating results valuations at 0.7x P/NAV and FY17F PE of 11x, and offering one
Where we differ: Our estimates are conservative
of the highest dividend yields among developers at c.5.7%. We
continue to expect re-rating catalysts coming from potential
Analyst asset monetisation from ongoing strategies to crystallise value
Rachel TAN +65 6682 3713 racheltanlr@dbs.com across its portfolio.
FY16 core net profit fell 11% (in line) weighed down by weak
earnings from development properties. FY16 net profit fell 23%
Price Relative
S$
y-o-y to S$597m, mainly due to lower core net profit and lower
fair value gains. FY16 fair value gains was 34% lower at
Relative Index
2.2
S$160m, mainly due to fair value losses in Singapore and

2.1 208
2.0 188
Hospitality units offset by fair value gains in Australia (including

1.9
168
1.8
148
S$77m fair value gain from the injection of properties into

1.7
1.6
128
1.5
1.4
1.3
108
88
Frasers Logistics and Industrial Trust (FLT)). FY16 profit before
Jan-14 Jan-15 Jan-16
interest and tax (PBIT) from development properties fell 29%
Frasers Centrepoint Ltd (LHS) Relative STI (RHS)
while recurring income from investment properties dropped by
Forecasts and Valuation
9% (partly due absence of one-off gains). Property sales were
FY Sep (S$ m) 2016A 2017F 2018F 2019F
lower in FY16, falling 25% to 4.9k units. Management remains
Revenue 3,440 2,412 3,103 2,633
EBITDA 993 1,051 1,153 1,107 cautious and is selective in the residential sector, and continues
Pre-tax Profit 960 830 886 836 to look for opportunities to strengthen its recurring income from
Net Profit 533 387 415 378 commercial properties.
Net Pft (Pre Ex.) 368 387 415 378
Net Pft Gth (Pre-ex) (%) (23.8) 5.0 7.2 (8.8) Asset recycling into its listed S-REITs. FCL will continue to
EPS (S cts) 18.4 13.3 14.3 13.0 demonstrate its ability to crystallise value by strategically
EPS Pre Ex. (S cts) 12.7 13.3 14.3 13.0 divesting matured assets to its listed REITs. The group is thus
EPS Gth Pre Ex (%) (24) 5 7 (9)
able to free up capital, improve its balance sheet position and
Diluted EPS (S cts) 18.4 13.3 14.3 13.0
Net DPS (S cts) 8.61 8.60 8.60 8.60
recycle capital to projects with higher returns.
BV Per Share (S cts) 230 234 240 245
PE (X) 8.7 12.0 11.2 12.2 Valuation:
PE Pre Ex. (X) 12.6 12.0 11.2 12.2 We maintain our BUY rating on FCL, TP maintained at S$2.00
P/Cash Flow (X) 4.2 nm 14.4 nm (30% discount to RNAV).
EV/EBITDA (X) 17.6 18.7 17.4 19.2
Net Div Yield (%) 5.4 5.4 5.4 5.4 Key Risks to Our View:
P/Book Value (X) 0.7 0.7 0.7 0.7
Dependent on the outlook of the Australian real estate market
Net Debt/Equity (X) 0.6 0.8 0.8 0.8
ROAE (%) 8.1 5.7 6.0 5.4
and currency. The group derives an estimated 30% of PBIT
from Australia, and returns could be impacted by the
Earnings Rev (%): 0 0 0 weakening AUD/SGD exchange rate.
Consensus EPS (S cts): 17.0 19.3 19.0
At A Glance
Source of all data on this page: Company, DBS Bank, Bloomberg Issued Capital (m shrs) 2,900
Finance L.P
Mkt. Cap (S$m/US$m) 4,625 / 3,213
TCC Assets Ltd 59.2
Thai Beverage 28.4
Free Float (%) 12.4
ICB Industry : Real Estate / Real Estate Investment & Services

ed: JS / sa: YM, PY
Page 115
Company Guide
Revenue (FY15A-FY19F)
S $' m
3,500.0
Earnings Drivers:
Growing recurring revenues from its commercial and hospitality 3,000.0
divisions. Frasers Centrepoint Limited (FCL) is one of the largest 2,500.0

property developers in Singapore with an asset base of over 2,000.0
S$24bn as of FY16. The group aims to grow recurring revenues
1,500.0
to 60-70% of PBIT in the medium term.
1,000.0
The group’s commercial portfolio will see incremental income 500.0

from the completions of WaterwayPoint (completed in January 0.0
2016), Northpoint City (retail) and Frasers Towers (commercial) 2015 2016 2017F 2018F 2019F
from 2018 onwards, which will boost its earnings further while
PBIT breakdown by divisions (FY16)
The Centrepoint mall’s AEI has completed in Sep16. Frasers
Hospitality is also expected to see its footprint expand to 30,000
managed units by 2019. In addition, the acquisition of the
Malmaison Hotel du vin Group (MHDV), which has a portfolio F r asers
of 29 boutique lifestyle hotels and 2,082 keys within 25 P r operty
Australia De velopment
pr operties
regional cities in the UK, will further deepen its presence and 2 6%
31 %
clientele reach. We see cross-selling opportunities and synergies
between MHDV and the Frasers brand, propelling the division’s Ho spitality
1 3%
performance to greater heights. Commercial
pr operties
30 %
New launches across its portfolio; property development

division has over S$3.6bn in locked-in sales. FCL sold 330 units
in FY16, and launched the 628-unit Parc Life EC project
(80:20% JV with Keong Hong) in Sembawang, selling close to PATMI (FY15A-19F)
119 units (or c.19% of total units), which is below initial 600.0
S $' m
expectations. We believe this could be due to supply fatigue of
500.0
ECs in the vicinity but management remains optimistic that sales
will return over time once competition within the space thins 400.0
out. In China and Australia, FCL achieved sales of 1.7k units and
300.0
2.9k units during FY16. Unrecognised revenues from its
property division, including Frasers Property Australia totalled 200.0
about S$3.1bn.
Sustainable high dividend. FCL has one of the highest ROEs 100.0
among property developers (c.8-11% over FY14A-15A) and

-
dividend yield of close to 6% vs industry average ROE of close 2015 2016 2017F 2018F 2019F
to 6% and dividend yield of c.2-3%. This is mainly due to the
group’s efficient operating model of quick-asset turns for its RNAV
RNAV S$'m
residential development projects and its focus on a portfolio of Surpluses from:
recurring commercial properties (hotels, retail and office) which Commercial Portfolio (Office, retail, hotels) (699)
boosts returns. Stakes in REITs 190
Frasers Australand 519
Fee income : Hotel Mgmt 854
Golden Land acquisition to bear fruit in the medium term. The Fee income : REITs 373
group acquired close to a 35.6% stake in Golden Land Property NPV development projects 346
Development PCL (GOLD) and management believes that this Total Surpluses 1,583
Add:
acquisition offers good synergies to FCL as both companies Book NAV 8,053
share similar investment philosophies with an aim to continue Gross Development Value 9,636
growing its recurring income base. GOLD also offers FCL the less: preference shares (1,392)
less: MI (3,791)
ability to tap into the growing real estate market in Thailand, Add: MI Attributable to REITs 3,827
supported by favourable market fundamentals. RNAV 8,280
RNAV/share ($) 2.86
Discount 30%
TP ($) 2.00

Page 2
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Company Guide

Balance Sheet: 0.2
1.00
Balance sheet remains strong. Debt/equity ratio is expected to 0.2
0.2
remain fairly stable at between 0.8-0.9x over FY15F-17F which 0.80
0.1
is within management's comfortable range. Debt maturity 0.60
0.1
profile remains long at 3.0 years with an average cost of debt of 0.1
3.1%. Fixed rate percentage of its loans remains high at 81%. 0.40 0.1
0.1
0.20 0.0
Replenishing land bank key to income sustainability. The group 0.00

2015A 2016A 2017F 2018F 2019F
0.0
currently has 9.3m sq ft of development space, mainly in Gross Debt to Equity (LHS) Asset Turnover (RHS)
Australia. It is actively looking for efficient means to replenish its

Capital Expenditure
land bank especially in Singapore but remains selective, given S$m
the sustained high land prices seen in recent government land 60.0
tenders. The ability to secure additional land bank at lower 50.0
prices will mean upside to RNAVs and could re-rate the stock. 40.0
30.0
Relaxation of property cooling measures in Singapore. 20.0

Expectations of policy relaxation (especially cyclical measures like 10.0
the Buyers’ and Sellers’ stamp duties) might improve buyers’
0.0
market sentiment and spark a revival in transaction volumes in 2015A 2016A 2017F 2018F 2019F
the Singapore residential market. This is also expected to lift Capital Expenditure (-)
sentiment on property stocks, which we believe will enable FCL ROE (%)
to close the gap between its stock price and NAV.
10.0%
Gains from asset recycling into its listed S-REITs to boost share 8.0%
price. Recycling activities are perceived positively by investors as
FCL is able to free up capital by selling its matured assets to its 6.0%
listed REITs, which will improve the group’s balance sheet 4.0%
position and recycle capital to projects with higher returns.
2.0%
0.0%
2015A 2016A 2017F 2018F 2019F
Key Risks:
Small free float. The stock has a low free float with 87.9% of Forward PE Band (x)
the company held by major shareholders TCC Group and Thai (x)
Beverage, thus leading to low liquidity. 14.2
+2sd: 13.6x
13.2
Dependent on the outlook of Australia's real estate market, +1sd: 12.6x
12.2
currency outlook. The group derives an estimated 30% of Avg: 11.6x
11.2
PBIT from Australia which is dependent on the real estate
‐1sd: 10.5x
market and whose returns could be impacted by the 10.2
‐2sd: 9.5x
weakening AUD/SGD exchange rate. 9.2
8.2
Company Background
Frasers Centrepoint Ltd (FCL) is a one of Singapore’s main real PB Band (x)
estate companies with assets exceeding S$23bn. The group 1.1
(x)
has four key core businesses focused on residential, 1.0
+2sd: 0.94x
commercial, hospitality and industrial sectors spanning 77 cities 0.9
across Asia, Australasia, Europe and the Middle East. 0.8 +1sd: 0.8x
0.7
Avg: 0.66x
0.6
0.5 ‐1sd: 0.52x
0.4
‐2sd: 0.37x
0.3
0.2

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Company Guide

FY Sep 2015A 2016A 2017F 2018F 2019F
Revenue 3,562 3,440 2,412 3,103 2,633
Gross Profit 1,082 1,033 1,075 1,276 1,193
Operating Profit 825 767 882 1,028 1,009
Associates & JV Inc 279 171 114 70.6 44.1
Pre-tax Profit 1,197 960 830 886 836
Tax (184) (194) (141) (151) (142)
Minority Interest (241) (169) (238) (257) (252)
Net Profit 724 533 387 415 378
EBITDA 1,146 993 1,051 1,153 1,107
Growth
Revenue Gth (%) 61.7 (3.4) (29.9) 28.6 (15.1)
EBITDA Gth (%) 47.2 (13.3) 5.9 9.7 (4.0)
Opg Profit Gth (%) 33.0 (7.1) 15.1 16.5 (1.9)
Net Profit Gth (Pre-ex) (%) 16.6 (23.8) 5.0 7.2 (8.8)
Margins & Ratio
Gross Margins (%) 30.4 30.0 44.6 41.1 45.3
ROAE (%) 11.2 8.1 5.7 6.0 5.4
ROA (%) 3.3 2.3 1.6 1.6 1.4
ROCE (%) 3.4 2.8 3.2 3.7 3.5
Div Payout Ratio (%) 34.4 46.9 64.5 60.1 65.9

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Company Guide

FY Sep 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016
Revenue 1,037 672 898 682 1,188

Cost of Goods Sold (1,176) (420) (610) (453) (924)
Gross Profit (138) 252 288 229 264
Other Oper. (Exp)/Inc 249 (73.8) (57.3) (85.6) 210
Associates & JV Inc 162 32.8 4.77 23.8 110
Exceptional Gain/(Loss) 180 (1.3) 9.41 64.0 92.3
Pre-tax Profit 415 177 207 193 643
Tax (62.8) (35.6) (37.2) (29.0) (92.4)
Net Profit 213 98.7 123 154 481
Net profit bef Except. 32.8 100.0 114 90.0 388
EBITDA 292 241 262 192 611
Growth
Revenue Gth (%) 2.7 (35.3) 33.7 (24.0) 74.2
EBITDA Gth (%) (12.3) (17.4) 8.8 (26.7) 218.4
Opg Profit Gth (%) (57.9) 61.6 29.4 (38.0) 231.7
Net Profit Gth (Pre-ex) (%) (81.9) 204.4 13.9 (20.9) 331.4
Margins
Gross Margins (%) (13.3) 37.5 32.1 33.5 22.2
Balance Sheet (S$m)

FY Sep 2015A 2016A 2017F 2018F 2019F
Net Fixed Assets 1,991 1,972 1,919 1,867 1,814

Invts in Associates & JVs 585 793 907 978 1,022
Other LT Assets 14,150 14,467 14,615 14,764 14,912
Cash & ST Invts 1,393 2,169 576 633 455
Inventory 7.47 5.68 2.12 2.93 2.29
Debtors 844 678 345 443 376
Total Assets 23,067 24,204 25,326 26,774 27,302
ST Debt 1,020 1,470 1,470 1,470 1,470

Creditor 1,315 1,695 2,137 2,954 2,310
LT Debt 9,255 8,325 8,725 8,925 9,725
Total Cap. & Liab. 23,067 24,204 25,326 26,774 27,302

Net Cash/(Debt) (8,882) (7,627) (9,620) (9,763) (10,740)
Current Ratio (x) 2.5 2.0 2.1 2.0 2.4 stable at 0.8x
Quick Ratio (x) 0.9 0.8 0.2 0.2 0.2
Net Debt/Equity (X) 0.8 0.6 0.8 0.8 0.8
Capex to Debt (%) 0.4 (0.5) 0.0 0.0 0.0

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Company Guide

FY Sep 2015A 2016A 2017F 2018F 2019F
Pre-Tax Profit 955 766 830 886 836

Dep. & Amort. 781 54.5 54.5 54.5 54.5
Tax Paid (184) (194) (237) (141) (151)
Assoc. & JV Inc/(loss) (279) (171) (114) (70.6) (44.1)
Chg in Wkg.Cap. 302 344 (2,063) (409) (1,210)
Other Operating CF (891) 298 0.0 0.0 0.0
Net Operating CF 684 1,097 (1,529) 320 (514)
Capital Exp.(net) (45.3) 50.6 0.0 0.0 0.0
Other Invts.(net) (1,501) (264) (150) (150) (150)
Invts in Assoc. & JV (57.9) (317) 0.0 0.0 0.0
Div from Assoc & JV 350 197 0.0 0.0 0.0
Other Investing CF (146) (389) 0.0 0.0 0.0
Net Investing CF (1,401) (722) (150) (150) (150)
Div Paid (249) (456) (249) (249) (249)
Chg in Gross Debt 936 (940) 400 200 800
Capital Issues 649 1,000 0.0 0.0 0.0
Other Financing CF (111) 340 (64.3) (64.3) (64.3)
Net Financing CF 1,225 (56.2) 86.3 (114) 486
Currency Adjustments (8.4) 39.1 0.0 0.0 0.0
Chg in Cash 500 358 (1,593) 56.5 (177)
Opg CFPS (S cts) 13.2 26.0 18.4 25.1 24.0
Free CFPS (S cts) 22.1 39.6 (52.7) 11.0 (17.7)
S$
1.74 12- mt h
Dat e of Closing
S.No. T arget Rat ing
Report Pric e
Pric e
1.69 8
6 1: 08 J an 16 1.65 2.05 BUY
7 2: 18 J an 16 1.60 2.05 BUY
1.64
12 3: 04 Feb 16 1.60 2.05 BUY
4 4: 16 Feb 16 1.58 2.05 BUY
1.59
3 5: 16 Mar 16 1.58 2.05 BUY
5 12 6: 05 Apr 16 1.65 2.05 BUY
1.54
10 7: 18 Apr 16 1.69 2.05 BUY
9 8: 11 May 16 1.67 2.05 BUY
1.49
11 9: 08 Aug 16 1.53 1.90 BUY
1.44 10: 30 Sep 16 1.49 1.90 BUY
11: 18 Oct 16 1.50 1.90 BUY
1.39 12: 10 Nov 16 1.53 2.00 BUY
Jan-16 May-16 Sep-16 Jan-17
Not e : Share price and Target price are adjusted for corporate actions.
Source: DBS Bank

Analyst: Rachel TAN
Derek TAN

Page 6
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Global Logistic Properties
Version 7 | Bloomberg: GLP SP | Reuters: GLPL.SI Refer to important disclosures at the end of this report
BUY In pursuit of growth

Last Traded Price ( 4 Jan 2017): S$2.24 (STI : 2,921.31) Value at current prices. We maintain BUY on Global Logistics
Price Target 12-mth: S$2.47 (10% upside) Properties (GLP) with TP of S$2.47, pegged at 30% discount to
RNAV to reflect ongoing uncertainties in the operating
Potential Catalyst: Better-than-expected results environment. Trading at 0.9x P/BV, below the lower end of
Where we differ: More positive than consensus in the medium-term historical range, we believe the cautious outlook is priced in.
Analyst
Rachel TAN +65 6682 3713 racheltanlr@dbs.com
Derek TAN +65 6682 3716 derektan@dbs.com 1H17 results driven by higher rental income, management fees
and development completions; core results in line. Core 1H17
net profit (excluding revaluation gains and one-off items) grew
Price Relative 36% y-o-y to S$137m, in line with street’s FY17 estimates, led
by higher rental income mainly from Japan (+21%) and US
(+67%) and higher management fees from Japan (+47%) and
US (+165%). In 1H17, GLP recorded development profit of
US$128m at 30% margin (vs 27% in FY16), achieving 64%
(ahead) of its full-year target of US$200m. GLP achieved 42%
and 46% of its development starts and completion targets
respectively. Management has turned positive on Brazil, and
cautiously positive on China, while Japan and US continue to
FY Mar (US$ m) 2016A 2017F 2018F 2019F
show strong demand.
Revenue 777 851 946 1,029
EBITDA 735 615 688 746 AUM of fund management platform rose to US$38bn. As at
Pre-tax Profit 1,343 473 540 592 1H17, total AUM had risen to US$38bn, and the group has
Net Profit 690 269 311 341 another US$12bn of uncalled capital, expected to be deployed
Net Pft (Pre Ex.) (30.0) 269 311 341 in the next two years. Given that this business is a highly
Net Pft Gth (Pre-ex) (%) nm nm 15.6 9.6 scalable and an ROE-enhancing business arm of the group,
EPS (S cts) 20.8 8.10 9.36 10.3 management is focusing on driving returns and operational
EPS Pre Ex. (S cts) (0.9) 8.10 9.36 10.3 scale by establishing new funds.
EPS Gth Pre Ex (%) nm nm 16 10
Diluted EPS (S cts) 20.8 8.10 9.36 10.3
Net DPS (S cts) 6.25 6.98 8.07 8.84 Valuation:
BV Per Share (S cts) 250 253 256 260 We maintain our BUY call and target price of S$2.47, pegged
PE (X) 10.7 27.4 23.7 21.6 at a 30% discount to RNAV. Despite a weaker outlook, we
PE Pre Ex. (X) nm 27.4 23.7 21.6
believe the current share price, which is at 0.9x P/BV, below
P/Cash Flow (X) 17.6 nm 14.5 14.1
EV/EBITDA (X) 21.7 27.8 25.5 24.4 the lower end of historical range, is attractive.
Net Div Yield (%) 2.8 3.1 3.6 4.0
P/Book Value (X) 0.9 0.9 0.9 0.9 Key Risks to Our View:
Net Debt/Equity (X) 0.3 0.4 0.4 0.4 Faster-than-expected ramp-up in competing supply on the
ROAE (%) 8.4 3.2 3.7 4.0
back of a slowdown in China's retail sector would impact
Consensus EPS (S cts): 7.4 8.2 9.3 demand for logistics warehouses.
At A Glance
Finance L.P
Mkt. Cap (S$m/US$m) 10,499 / 7,292
GIC Pte Ltd 36.9
Hillhouse Capital 8.2
Blackrock 6.0
Free Float (%) 43.5

ed: TH / sa: YM, PY
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Company Guide
Top line and EIBT (US’m)

1,000.0
CRITICAL DATA POINTS TO WATCH
900.0
800.0
Earnings Drivers: 700.0
Riding on the growing demand from e-commerce players for 600.0
US $'mn
logistics space. Riding on the tailwinds of China’s rising 500.0
consumerism and thriving e-commerce sector, Global Logistics 400.0
Properties (GLP) remains in the front seat to take advantage of 300.0
China’s rapidly changing retail landscape. With an extensive 200.0
portfolio of warehouses (11.8m sqm of space) in 35 cities in 100.0
China, the group is one of the leading providers of modern 0.0

FY15A FY16A FY17F FY18F
logistics solutions to end-users. GLP’s network of warehouses
Revenue Operating profit (ex reval)
enables customers to expand; this has been positively received
by current users of its space. Its strong network of warehouses
Revenue Breakdown by segment (US$’m)
enables management to enjoy recurring demand from existing
1,200.0
clients. Close to 90% of GLP’s portfolio is occupied by
businesses geared towards domestic consumption. 1,000.0
800.0
Strong operational momentum across markets. As expected,
FY16 recorded a strong year largely led by positive effective rent
US $'mn
600.0
growth on renewal and same-property net operating income.
The group’s lease ratio remains relatively stable at 92% with 400.0
WALE of 2.6-5.5 years. While management has turned cautious

200.0
on China and Japan, hence reducing development targets, the
US market appears to have strong growth potential. -
FY15A FY16A FY17F FY18F FY19F
Fund management platform delivers superior returns at lower China Japan US & Brazil
risk. GLP’s fund management platform delivers superior returns

at lower risk. Management fees increased 80% to US$130m in EBIT Margins (%)
FY16 and this segment is expected to potentially earn US$400m 59.0
in the medium term. As of end-March 2016, total AUM had 57.0

risen to US$35bn, with another US$11bn of uncalled capital to
be deployed. We expect the fund management business to 55.0
continue growing through new funds due to its scalable nature,

E BIT Margins (%)
53.0
boosting returns and ROEs for the group. Going forward, the
group is looking to launch a new China fund with equity capital 51.0
of c.US$3bn to increase its reach in China.
49.0
Development starts and completion pipeline. In FY17, GLP has 47.0

set lower targets for development starts and completions of
US$2.1bn (vs US$2.8bn in FY16) and US$1.5bn (vs US$2.1bn in 45.0
FY15A FY16A FY17F FY18F FY19F
FY16) respectively as management turns cautious. Nevertheless,
value creation margin at 27% remains above historical average RNAV
of 25%. Valuation of GLP S$'m
Japan Logistics Business (Stabalized) 2,173.8
Deepening presence in US. We are positive on GLP’s China Logistics Business (Stabalized) 4,953.7
announcement of a US$1.1bn (at valuation) logistics portfolio in China Landbank (NPB of future devt) 3,815.0
the US from Hillwood, a property developer. The acquisition will
Other Assets 58.1
be in various tranches – initial closing of US$700m is fully leased
GLP J-REIT 413.5
and income producing by end of December 2016 and the
remaining US$400m, when the target properties under Brazil 523.1
development complete and achieve pre-agreed lease ratios. GLP USA 337.0
intends to pare down its effective stake in this portfolio to 10% Fee income business (15x P/E) 1,054.4
upon syndication to third-party capital partners. Assets are Gross Asset Value 13,296
located in key markets of Dallas, Chicago and Atlanta, which Less: Estimated net debt -660.57
according to Colliers, have one of the brightest outlooks for RNAV 12,668
absorption and rental growth in the US. RNAV/ share (US$) 2.62
RNAV/ share (S$) 3.53
Discount 30%
Target Price 2.47

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Company Guide

Balance Sheet:
Low leverage ratio. Total debt-to-asset ratio is expected to
remain fairly stable at c.0.40x, which is well within
management's comfortable level. As such, this provides GLP
with additional debt headroom for future debt-funded
acquisitions. Currently, the group has 70% of its debt on fixed
rate with a weighted average cost of debt of 3.0% and a long
debt maturity of 5.2 years.
Share Price Drivers:

Capital Expenditure
Robust outlook for e-commerce in China. GLP has a large
US$m
(11.8m sqm in completed properties) portfolio in China that is 1,600.0
positioned strategically to benefit from growth in e-commerce 1,400.0
through its modern logistics space, and it has another US$5.3bn 1,200.0
1,000.0
slated for completion in FY17-19. We expect the group’s assets 800.0
to hit higher occupancies and pricier leases, if e-commerce 600.0
increases in scale (8-year CAGR was 80%) on the back of strong 400.0
consumer demand (11-year CAGR was 63%, expected to 200.0
double over the next three years). Incremental earnings 0.0

2015A 2016A 2017F 2018F 2019F
contribution from China would be a share price catalyst. Capital Expenditure (-)
ROE (%)
Realisation of value through its fund business. GLP continues to
expand through its fund platform. Looking ahead, the potential
conversion of its development funds in China and Japan into
income funds could unlock performance fees, offering upside to
the earnings that are currently not in our estimates.
Additionally, GLP continues to look for opportunities in the US
and potentially Europe to expand its fund management
business.
Key Risks:
Slowdown in Chinese economy
PB Band (x)
If a slowdown in the Chinese economy leads to a reduced
appetite for logistics warehouse space, there could be slower-
than-projected revenue growth.
Foreign currency risks

Exposure to various currencies (CNY, JPY, BRL) could lead to
volatility in the group's USD earnings.
Company Background
Global Logistics Properties (GLP) is a leading provider of
modern logistics facilities in China, Japan, Brazil and the US. Source: Company, DBS Bank
The group develops, owns and manages c.41m sqm GFA of
logistics properties, catering to growing domestic
consumption.

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Company Guide
Income Statement (US$m)

FY Mar 2015A 2016A 2017F 2018F 2019F
Revenue 708 777 851 946 1,029
Gross Profit 570 620 714 773 825
Associates & JV Inc 71.4 241 107 124 133
Net Interest (Exp)/Inc (47.9) (101) (130) (136) (143)
Pre-tax Profit 862 1,343 473 540 592
Tax (194) (310) (50.3) (56.8) (62.6) Top line driven mainly by
Minority Interest (182) (314) (125) (144) (160) development completions in
China, supported by stable
occupancy rates in Japan.
Net Profit 454 690 269 311 341
Net Profit before Except. 201 (30.0) 269 311 341 In addition, top line is driven
EBITDA 488 735 615 688 746 from increased fund
Growth management fees in US and
Revenue Gth (%) 13.3 9.8 9.4 11.2 8.8 Brazil
EBITDA Gth (%) (4.4) 50.7 (16.3) 11.9 8.4
Opg Profit Gth (%) 6.0 (3.2) 20.8 11.5 9.0
Net Profit Gth (Pre-ex) (%) (18.6) nm nm 15.6 9.6
Margins & Ratio
Gross Margins (%) 80.4 79.8 83.9 81.7 80.2
ROAE (%) 5.6 8.4 3.2 3.7 4.0
ROA (%) 2.9 3.4 1.2 1.3 1.4
ROCE (%) 2.1 1.7 2.2 2.4 2.5
Div Payout Ratio (%) 41.7 30.1 86.2 86.2 86.2

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Company Guide
Quarterly / Interim Income Statement (US$m)

FY Mar 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017
Revenue 189 199 199 207 214

Cost of Goods Sold (38.9) (39.2) (41.3) (38.2) (37.5)
Gross Profit 150 160 158 168 176
Other Oper. (Exp)/Inc (62.1) (57.3) (78.3) (54.3) (56.2)
Operating Profit 88.3 102 79.6 114 120
Other Non Opg (Exp)/Inc 17.1 55.8 (0.4) 7.86 3.03
Exceptional Gain/(Loss) 110 202 214 208 117
Pre-tax Profit 229 364 292 317 281
Tax (52.9) (94.6) (82.7) (67.0) (60.6)
Net Profit 114 184 131 203 173
Net profit bef Except. 3.79 (17.4) (82.2) (5.0) 55.9
EBITDA 91.3 105 82.6 114 120
Growth
Revenue Gth (%) (0.4) 5.1 0.1 3.7 3.4
EBITDA Gth (%) (11.2) 15.2 (21.6) 38.2 5.2
Opg Profit Gth (%) (11.6) 15.9 (22.3) 43.4 5.2
Net Profit Gth (Pre-ex) (%) (89.8) nm (371.6) 93.9 nm
Margins
Gross Margins (%) 79.5 80.3 79.3 81.5 82.4
Balance Sheet (US$m)

FY Mar 2015A 2016A 2017F 2018F 2019F
Net Fixed Assets 52.2 52.9 52.9 52.9 52.9

Other LT Assets 12,479 14,656 14,856 15,053 15,368
Cash & ST Invts 1,446 1,025 350 301 112
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 475 548 709 788 858
Total Assets 17,462 23,129 23,348 24,124 24,878
ST Debt 371 1,021 1,021 1,021 1,021

Creditor 811 1,026 724 933 1,111
Other Current Liab 21.9 2,965 2,962 2,968 2,974
LT Debt 2,476 3,750 4,050 4,350 4,650
Total Cap. & Liab. 17,462 23,129 23,348 24,124 24,878

Net Cash/(Debt) (1,402) (3,746) (4,720) (5,070) (5,558)
Creditors Turn (avg days) 2,092.7 2,307.7 2,547.5 1,872.9 1,939.8
Inventory Turn (avg days) N/A N/A N/A N/A N/A
Asset Turnover (x) 0.0 0.0 0.0 0.0 0.0 Gearing (D/E) to
Current Ratio (x) 2.8 1.3 1.3 1.2 1.1 remain conservative at
Quick Ratio (x) 1.6 0.3 0.2 0.2 0.2 0.4x
Net Debt/Equity (X) 0.1 0.3 0.4 0.4 0.4
Capex to Debt (%) 53.5 0.2 4.0 3.7 5.6
Z-Score (X) 0.0 0.8 0.8 0.8 0.7

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Company Guide
Cash Flow Statement (US$m)

FY Mar 2015A 2016A 2017F 2018F 2019F
Pre-Tax Profit 862 1,343 473 540 592

Dep. & Amort. 11.6 11.8 11.8 11.8 11.8
Tax Paid (28.5) (31.5) (53.5) (50.3) (56.8)
Assoc. & JV Inc/(loss) (71.4) (241) (107) (124) (133)
Chg in Wkg.Cap. 45.5 27.3 (463) 129 109
Other Operating CF (375) (691) 0.0 0.0 0.0
Net Operating CF 444 418 (138) 507 522
Capital Exp.(net) (1,523) (8.0) (204) (200) (318)
Other Invts.(net) (1,467) 212 0.0 0.0 0.0
Invts in Assoc. & JV (422) (472) (425) (425) (425)
Div from Assoc & JV 12.9 2.77 0.0 0.0 0.0
Other Investing CF (10.5) (4,672) 0.0 0.0 0.0
Net Investing CF (3,409) (4,937) (629) (625) (743)
Div Paid (174) (200) (208) (232) (268)
Chg in Gross Debt 687 1,964 300 300 300
Capital Issues 159 0.0 0.0 0.0 0.0
Other Financing CF 2,246 2,525 0.0 0.0 0.0
Net Financing CF 2,918 4,289 92.4 68.3 32.2
Chg in Cash (47.0) (230) (674) (49.6) (188)
Opg CFPS (S cts) 11.8 11.8 9.78 11.4 12.5
Free CFPS (S cts) (31.8) 12.4 (10.3) 9.25 6.16
Source: DBS Bank

Analyst: Rachel TAN, Derek TAN

Page 6
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UOL Group
Version 6 | Bloomberg: UOL SP | Reuters: UTOS.SI Refer to important disclosures at the end of this report
BUY Diversification is key to sustainability

Potential headwinds ahead; but valuations still attractive.
Price Target 12-mth: S$7.20 (18% upside)
Despite the weak operating outlook and potential headwinds,
we maintain our BUY rating on UOL Group (UOL) based on its
Potential Catalyst: Strong pre-sales for residential projects attractive valuations of c.0.6x P/NAV, which is below the low
Where we differ: Earnings generally more conservative vs peers end of its historical range, making it one of the cheapest large
Analyst
cap landlords in Singapore.
Rachel TAN +65 6682 3713 racheltanlr@dbs.com
3Q16 results in line; outlook improves. UOL’s 3Q16 net profit
fell 14% y-o-y to S$87.1m, mainly due to lower contribution
from JVs. However, the Group’s recent purchases in London
Price Relative should add to its recurring income stream and improve earnings
S$ Relative Index
visibility. Key positives from the results are: i) 11% revenue
growth from all divisions, and ii) rental reversions were generally
8.7
209
8.2
189
7.7
7.2 169 positive for its office and retail properties with stable occupancy
6.7
6.2
149
129
rates remained stable. However, RevPAR for most of its hotels in
5.7
5.2 109 all markets were marginally lower except for hotels in Australia.
4.7 89
UOL Group (LHS) Relative STI (RHS) New launches in 2H16/2017. Management saw good take-up
for its recent Park Eleven project in Shangai, selling 131 out of
Forecasts and Valuation 168 units and there will be subsequent launches in phases in
FY Dec (S$ m) 2015A 2016F 2017F 2018F
2017. In addition, UOL is positioning to launch The Clement
Revenue 1,279 1,228 1,324 1,410
EBITDA 514 567 601 618
Canopy (1Q17; 505 units), and Bishopsgate, London (160
Pre-tax Profit 460 424 453 470 units). The purchase of a recent enbloc site at Potong Pasir Ave
Net Profit 391 355 372 386 1 will be finalised soon, the project is planned for launch in
Net Pft (Pre Ex.) 343 355 372 386 2018.
Net Pft Gth (Pre-ex) (%) (5.9) 3.6 4.8 3.6
EPS (S cts) 49.2 44.6 46.7 48.4 Valuation:
EPS Pre Ex. (S cts) 43.0 44.6 46.7 48.4 Maintain BUY on attractive valuations. Our TP of S$7.20 is
EPS Gth Pre Ex (%) (7) 4 5 4
Diluted EPS (S cts) 49.2 44.6 46.7 48.4 pegged to a 30% discount to our RNAV of S$10.23.
Net DPS (S cts) 15.0 15.0 15.0 15.0
BV Per Share (S cts) 991 1,021 1,053 1,086 Key Risks to Our View:
PE (X) 12.5 13.7 13.1 12.6 Economic slowdown. The downside risk to our projections is if
PE Pre Ex. (X) 14.2 13.7 13.1 12.6
P/Cash Flow (X) 9.4 28.7 13.8 13.4 residential sales are slower than our projections or if
EV/EBITDA (X) 14.8 13.9 13.0 12.4 commercial properties and hotels operations are impacted by
Net Div Yield (%) 2.5 2.5 2.5 2.5 slower-than-projected growth in rental/room rates.
P/Book Value (X) 0.6 0.6 0.6 0.6
Net Debt/Equity (X) 0.3 0.3 0.3 0.2 At A Glance
ROAE (%) 5.0 4.4 4.5 4.5
Earnings Rev (%): 0 0 0 Mkt. Cap (S$m/US$m) 4,924 / 3,448
Consensus EPS (S cts): 47.6 47.8 46.6
Other Broker Recs: B: 9 S: 0 H: 3 Major Shareholders (%)
CY Wee & Co Pte Ltd 13.9
Source of all data on this page: Company, DBS Bank, Bloomberg Wee Investment Pte Ltd 13.4
Finance L.P
United Overseas Bank 7.5
Free Float (%) 59.8

ed: JS / sa: JC, PY
Page 127
Company Guide
UOL Group
Revenue (S$’m)
S$'m
1,400.0
Earnings Drivers: 1,200.0
Retail and office sub-segments to offer stable returns. UOL 1,000.0
Group Limited (UOL) derives a significant 47%-58% of its 800.0
revenues from retail, office and hotel segments which should 600.0
continue delivering stable cashflows in the coming years. 400.0

200.0
0.0
While we see headwinds in both the retail and office segments 15 16F 17F 18F
ahead, we believe that the positioning and location of UOL’s Investments
Hotel Operations
Management Services
Property Investments
portfolio of commercial properties mainly along the fringe areas Property Development
of the CBD will result in lower volatility in rents. Thus, PATMI (S$’m)
operational performance is likely to remain stable going 400.0 S $' m
forward.
390.0
Its retail malls - United Square and Novena Square - are located 380.0
in the Novena area, close to the emerging medical hub. The 370.0
malls have formed a niche, which should result in high tenant
360.0
stickiness. This is especially so for United Square, which houses
350.0
tenants well known for providing various children’s education
programs. On the other hand, Novena Square’s tenant mix 340.0
mainly caters to necessity shopping and the needs of the 330.0
vicinity’s growth as a medical hub. 15 16F 17F 18F
Operating Margins (%)

Hotel performance – weakness in Asia; overall outlook stable. 35.0%
Growth will be driven by the addition of close to 1,582 rooms
30.0%
(6 hotels), implying 16% growth in total rooms under
management. Performances from hotels and serviced residences 25.0%
are expected to remain mixed. We expect the operational 20.0%

performance of the group’s hotels & residences in Singapore
15.0%
and Malaysia to be weak, but partially offset by a better
10.0%
performance from its hotels in Australia. We project portfolio
RevPAR to remain fairly flattish. 5.0%
0.0%
Presales for residential projects doing well amid muted FY13 FY14 FY15F FY16F FY17F
residential outlook. Despite tepid residential transactions year-

RNAV (S$’m)
to-date, UOL’s projects have continued to do fairly well. As at Breakdown of RNAV
Sep 2016, the Group has substantially sold most of its projects
that are completed or currently under development and its Properties OMV ($m)
Investment Properties 2,950.8
latest project - Principal Garden - has seen good take-up rate of less book value -4,137.0
50% (vs 33.5% last quarter). Park Eleven in Shanghai had a Surplus/deficit -1,186.2
private launch in 3Q2016 and sold 131units out of the 168
NPV of devt profits 390.6
units approved for sale. Looking ahead, UOL will launch further Mark to TP value of quoted holdings
phases of Park Eleven in Shanghai, The Clement Canopy in Listed equities/Strategic Holdings 3,145.9
Singapore and its London project in 2017. Hotel operations 2,219.8
Total 5,365.7
less book value -4,367.4
The 555-unit Riverbank @ Fernvale (78.2% sold as at Sep 2016), Surplus 998.3
and 797-unit Botanique at Bartley (95.9% sell-through rate)
have sold well. Despite the low sales take-up rate, Principal Book NAV 7,894.2
Garden recorded steady sales and is now 43.4% sold. We view RNAV 8,096.8
this as a testament of the Group’s ability to design residential Total Shares 787.0
projects that are well liked and attractively priced. RNAV/share ($) 10.29
Discount 30%
Price Target ($) 7.20

Page 2
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Company Guide
UOL Group

Balance Sheet: 0.45 0.2
Balance sheet remains strong. Debt to equity ratio is expected 0.40 0.2
0.2
to remain stable at 0.3x to 0.4x from FY16F-FY18F. This leaves 0.35
0.2
UOL with sufficient headroom to acquire projects / new land 0.30
0.2
0.25
when such opportunities come by. 0.20
0.2
0.1
0.15
0.1
Share Price Drivers: 0.10 0.1
Replenishing land bank key to income sustainability. The Group 0.05 0.1
turns around its projects quickly and has little land bank on its 0.00
2014A 2015A 2016F 2017F 2018F
0.1
balance sheet. UOL has always been active in land tenders to Gross Debt to Equity (LHS) Asset Turnover (RHS)
replenish its land bank especially in Singapore but remains

Capital Expenditure
selective given the high competitive environment seen in recent S$m
government land tenders. The ability to secure additional land 300.0
bank at lower prices will mean upside to RNAVs and this could 250.0
re-rate the stock. 200.0
150.0
Relaxation of property cooling measures in Singapore. 100.0

Expectations of policy relaxation (especially cyclical measures like 50.0
the buyers’ and sellers’ stamp duties) may improve market
0.0
sentiment and spark a revival in transacted volumes in the 2014A 2015A 2016F 2017F 2018F
Singapore residential market. This would also lift sentiment on Capital Expenditure (-)
property stocks, which should enable UOL to close the gap ROE (%)
between its stock price and its NAV.
9.0%
8.0%
Deep value from its hotel business. We believe that deep value 7.0%
lies in the group’s portfolio of well located hotels and serviced 6.0%
residences in Singapore, Malaysia and Australia. These hotels 5.0%
are held on a historical cost basis, which we believe are 4.0%
3.0%
conservative compared to potential realisable value. We 2.0%
estimate potential upside of more than S$1bn if these 1.0%
properties are valued on marked-to-market basis. 0.0%
2014A 2015A 2016F 2017F 2018F
Key Risks: Forward PE Band (x)

Economic slowdown. The downside risk to our projections is if (x)
residential sales are slower than projected or if its hotel
19.7
operations are impacted by slower-than-projected RevPAR +2sd: 18.7x
performance. The upside risks to our view and target price 17.7
+1sd: 16.7x
would be higher-than-expected selling prices or upgrades to 15.7
the target prices of its listed investment holdings. Avg: 14.8x

13.7
-1sd: 12.8x
11.7
Company Background -2sd: 10.8x
With a track record of nearly 50 years, UOL Group's impressive 9.7
list of property development projects includes best-selling
residential units, office towers, shopping centres, hotels and PB Band (x)
serviced suites. 1.0
(x)
0.9
+2sd: 0.86x
0.8
+1sd: 0.77x
0.7
Avg: 0.69x
0.6 -1sd: 0.6x
0.5 -2sd: 0.51x
0.4

Page 3
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Company Guide
UOL Group
Segmental Breakdown
FY Dec 2014A 2015A 2016F 2017F 2018F
Revenues (S$m)
Property Development 676 578 595 675 754
Property Investment 198 219 200 214 218
Hotel Operations 438 419 369 371 374
Investments 20.3 42.3 42.3 42.3 42.3 Pre-sales of residential
Others 28.8 20.2 20.8 21.4 22.0 units to add to earnings.
Total 1,361 1,279 1,228 1,324 1,410

FY Dec 2014A 2015A 2016F 2017F 2018F
Revenue 1,361 1,279 1,228 1,324 1,410
Gross Profit 581 504 446 485 506
Exceptional Gain/(Loss) 322 48.8 0.0 0.0 0.0
Pre-tax Profit 837 460 424 453 470
Tax (76.7) (47.2) (50.9) (54.3) (56.4)
Net Profit 686 391 355 372 386
EBITDA 604 514 567 601 618
Growth
Revenue Gth (%) 28.5 (6.0) (4.0) 7.8 6.5
EBITDA Gth (%) 15.1 (14.8) 10.1 6.1 2.8
Opg Profit Gth (%) 10.1 (26.6) (4.3) 9.6 2.8
Net Profit Gth (Pre-ex) (%) 39.5 (5.9) 3.6 4.8 3.6
Margins & Ratio
Gross Margins (%) 42.7 39.4 36.3 36.6 35.9
ROAE (%) 9.5 5.0 4.4 4.5 4.5
ROA (%) 6.2 3.4 3.0 3.1 3.1
ROCE (%) 3.2 2.2 2.0 2.1 2.1
Div Payout Ratio (%) 17.2 30.5 33.6 32.1 31.0

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Company Guide
UOL Group

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Revenue 354 344 330 364 393

Gross Profit 137 123 114 125 130
Other Oper. (Exp)/Inc (52.2) (56.2) (55.0) (55.2) (56.5)
Operating Profit 84.5 67.1 59.0 70.2 73.7
Other Non Opg (Exp)/Inc (2.4) (2.4) 5.33 3.86 6.75
Exceptional Gain/(Loss) 2.89 (15.1) 0.17 (26.5) 0.0
Pre-tax Profit 118 76.6 93.7 79.3 104
Tax (13.7) (10.5) (12.4) (10.7) (12.3)
Minority Interest (4.0) (2.3) (4.3) 0.19 (4.4)
Net Profit 101 63.8 77.1 68.8 87.1
Net profit bef Except. 97.9 79.0 76.9 95.3 87.1
EBITDA 144 123 115 128 123
Growth
Revenue Gth (%) 3.4 (2.7) (4.1) 10.1 8.2
EBITDA Gth (%) 7.2 (14.8) (6.3) 11.7 (4.3)
Opg Profit Gth (%) (0.4) (20.5) (12.1) 18.9 5.1
Net Profit Gth (Pre-ex) (%) 6.2 (19.4) (2.6) 23.9 (8.5)
Margins
Gross Margins (%) 38.6 35.8 34.5 34.5 33.1
Balance Sheet (S$m)

FY Dec 2014A 2015A 2016F 2017F 2018F
Net Fixed Assets 1,241 1,179 1,384 1,517 1,500

Other LT Assets 4,528 4,981 4,981 4,981 4,981
Cash & ST Invts 935 276 254 288 482
Inventory 0.80 0.73 0.70 0.76 0.81
Debtors 248 197 189 204 217
Total Assets 11,848 11,501 11,955 12,255 12,567
ST Debt 1,292 523 523 523 523

Creditor 282 238 229 247 263
Other Current Liab 75.2 42.1 51.2 54.6 56.7
LT Debt 1,737 1,980 2,180 2,180 2,180
Minority Interests 488 507 525 552 580
Total Cap. & Liab. 11,848 11,501 11,955 12,255 12,567

Net Cash/(Debt) (2,094) (2,227) (2,449) (2,415) (2,222)
Current Ratio (x) 1.8 2.5 2.5 2.4 2.4 healthy
Quick Ratio (x) 0.7 0.6 0.6 0.6 0.8
Net Debt/Equity (X) 0.3 0.3 0.3 0.3 0.2
Capex to Debt (%) 5.2 1.9 10.1 7.4 1.8
Z-Score (X) 1.9 2.0 2.0 2.0 2.0

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Company Guide
UOL Group

FY Dec 2014A 2015A 2016F 2017F 2018F
Pre-Tax Profit 760 413 424 453 470

Dep. & Amort. 60.1 67.2 67.2 67.2 67.2
Tax Paid (96.5) (66.7) (41.8) (50.9) (54.3)
Assoc. & JV Inc/(loss) (158) (156) (220) (229) (238)
Chg in Wkg.Cap. (726) 259 (60.8) 114 118
Other Operating CF (250) (0.1) 0.0 0.0 0.0
Net Operating CF (411) 517 170 354 363
Capital Exp.(net) (157) (47.0) (273) (200) (50.0)
Other Invts.(net) (0.8) 0.68 0.0 0.0 0.0
Invts in Assoc. & JV (1.6) 79.8 0.0 0.0 0.0 Acquisition of 2
Div from Assoc & JV 18.7 42.0 0.0 0.0 0.0 properties in London
Other Investing CF 8.89 (12.3) 0.0 0.0 0.0 and Raintree Gardens
Net Investing CF (132) 63.2 (273) (200) (50.0) in 2017
Div Paid (57.1) (64.3) (119) (119) (119)
Chg in Gross Debt 690 (466) 200 0.0 0.0
Capital Issues 3.58 7.93 0.0 0.0 0.0
Other Financing CF (103) (62.1) 0.0 0.0 0.0
Net Financing CF 534 (584) 80.6 (119) (119)
Currency Adjustments 2.42 (5.7) 0.0 0.0 0.0
Chg in Cash (6.9) (10.1) (22.6) 34.5 193
Opg CFPS (S cts) 40.1 32.4 28.9 30.1 30.7
Free CFPS (S cts) (72.2) 59.0 (13.0) 19.3 39.3
6.59
S$
12- mt h
Report Pric e
Pric e
6.19 1: 18 J an 16 5.54 8.47 BUY
2: 29 F eb 16 5.66 7.39 BUY
5.99
6 3: 13 May 16 5.70 7.39 BUY
10 4: 27 May 16 5.68 7.39 BUY
5.79 2 4
89 5: 09 J un 16 5.61 7.39 BUY
6: 05 Aug 16 5.83 7.20 BUY
5.59 3 11 7: 16 Sep 16 5.51 7.20 BUY
5
5.39 1 7 8: 30 Sep 16 5.61 7.20 BUY
9: 07 Oct 16 5.85 7.20 BUY
5.19 10: 18 Oct 16 5.76 7.20 BUY
11: 11 Nov 16 5.66 7.20 BUY
4.99
Source: DBS Bank

Analyst: Derek TAN
Rachel TAN

Page 6
Page 132
Ascendas Hospitality Trust
Version 6 | Bloomberg: ASCHT SP | Reuters: ASHP.SI Refer to important disclosures at the end of this report
BUY Untapped balance sheet

Last Traded Price ( 4 Jan 2017): S$0.70 (STI : 2,921.31)
Price Target 12-mth: S$0.84 (20% upside and 7.9% yield) Attractive yield and discount to book value. We maintain our
BUY recommendation and TP of S$0.84. We believe at current
Potential Catalyst: Earnings recovery/further acquisitions/potential levels, Ascendas Hospitality Trust’s (ASCHT) offers a compelling
takeover offer yield in excess of 7% which is based on a 95% payout ratio. In
Where we differ: DBS is the sole broker covering this REIT addition, the stock trades at 16% discount to its NAV per unit
Analyst of S$0.88 and speculated offer price in excess of S$0.80 when
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com several parties were considering a takeover bid for ASCHT earlier
Derek TAN +65 6682 3716 derektan@dbs.com this year.
What’s New Mitigating factors against known headwinds. While ASCHT’s

faces several headwinds in the form of an oversupply in the
 2Q17 DPU of 1.38 Scts flat y-o-y but up 4% y-o-y
Singapore and Brisbane hospitality markets and recent
on normalised basis
strengthening of the JPY, we believe ASCHT can still deliver
 Some near term headwinds but there are levers to relatively stable DPUs going forward. This is premised on higher
drive earnings earnings from a renegotiated management contract at its Osaka
property, uplift from the recently completed refurbishment at
 Low gearing (c.32%) provides capacity to pursue Courtyard by Marriott North Ryde, and still positive increase in
acquisitions tourist arrivals into Australia and Japan boosting demand for
ASCHT’s Sydney, Melbourne and Tokyo properties.
Acquisition capability enhanced due to low gearing and new

Price Relative Chairman with extensive hospitality experience. With gearing of
only c.32%, ASCHT is in a strong financial position to pursue
debt-funded acquisitions. In addition, we believe the ability to
execute on non-organic opportunities is enhanced by the recent
appointment of Mr Miguel Ko as Chairman of ASCHT. Mr Ko,
who is currently the CEO of ASCHT’s sponsor, was formerly the
Chairman and President of Starwoods Hotels & Resorts (Asia
Pacific Division) and Deputy Chairman and CEO of CDL Hotels
International.
Forecasts and Valuation Valuation:

FY Mar (S$m) 2015A 2016A 2017F 2018F We maintain our DCF-based TP at S$0.80. With 20% capital
Gross Revenue 227 215 226 225 upside and attractive 7.9% yield, we reiterate our BUY call.
Net Property Inc 93.3 90.9 92.3 91.6
Total Return 28.6 147 34.4 33.2 Key Risks to Our View:
Distribution Inc 56.3 63.7 65.4 64.3 Significant drop in AUD/JPY and demand/supply imbalance. If
EPU (S cts) 1.72 0.10 3.06 2.94 the AUD/JPY drops significantly from current levels and there is
EPU Gth (%) 137 (94) 3,072 (4)
DPU (S cts) 5.06 5.41 5.52 5.39
excess supply in ASCHT’s respective markets, there will be
DPU Gth (%) (8) 7 2 (2) downside risks to our DPU estimates and ASCHT may continue
NAV per shr (S cts) 74.2 86.0 85.8 85.7 to trade at a discount to book value.
PE (X) 40.7 726.0 22.9 23.8
Distribution Yield (%) 7.2 7.7 7.9 7.7 At A Glance
P/NAV (x) 0.9 0.8 0.8 0.8 Issued Capital (m shrs) 1,123
Aggregate Leverage (%) 37.2 32.7 32.8 32.8 Mkt. Cap (S$m/US$m) 786 / 589
ROAE (%) 2.3 0.1 3.6 3.4
Distn. Inc Chng (%): 0 0 TJ Holdings 27.1
Tang Yigang 6.2
Source of all data on this page: Company, DBS Bank, Bloomberg Jinquan Tong 4.9
Finance L.P.
Free Float (%) 61.8
ICB Industry : Real Estate / Real Estate Investment Trusts

ed: JS / sa: YM, PY
Page 133
Company Guide
Net Property Income and Margins (%)
Earnings Drivers:
Australia – the largest contributor. ASCHT’s Australian portfolio
contributed c.55% of FY16 NPI. With a positive outlook for the
Australian hospitality market, driven by a combination of
continued growth in tourist arrivals (+12% y-o-y for 8M16
following 8% growth in CY15) and modest new hotel supply in
Sydney and Melbourne in the near term, we expect ASCHT’s
Australian operations to drive the REIT’s performance going
forward. Contribution from Australia should also rise in 2019 as Net Property Income and Margins (%)
ASCHT inked an agreement to acquire the serviced apartment
component at Aurora Melbourne Central for A$120m, on an
NPI yield of 7.6%. Construction of Aurora Melbourne Central is
due to be completed in 2H19. Due to uncertainty over how
ASCHT will fund the acquisition of Aurora Melbourne and
RevPAR in 2019, we have yet to include this investment in our
estimates.
Japan is another growth driver. Despite potential softening in

ASCHT’s Japanese operations due to the recent strengthening
of the JPY, we remain positive on the outlook for ASCHT’s
Distribution Paid / Net Operating CF
Japanese properties (c.21% of FY16 NPI). This is because while
the pace of inbound tourists may slow, it should remain on an
uptrend as the Japanese government continues to support the
tourism sector through the relaxation of visa requirements.
Overall tourist arrivals climbed 24% y-o-y in 9M16 following a
47% y-o-y increase in CY15.
New operator for Osaka Namba hotel. Another boost for

ASCHT in FY17 is the 13% uplift in annual fixed rents for its
Osaka Namba Washington Hotel, as ASCHT has recently
appointed a new operator, Sunroute Co Ltd. As part of the new
10-year agreement, the hotel will undergo a refurbishment and Interest Cover (x)
will be rebranded under the “Sunroute” name.
Modest contribution from Singapore and China. In FY17, we

see modest contributions from ASCHT’s Singapore (16% of
FY16 NPI) and China (8%) properties due to challenging
operating conditions induced by new hotel supply. For
Singapore, we project a decline in RevPAR. However, the
downside from Singapore is limited given an annual fixed rent
of c.S$12m with a 3% annual escalation.
Financial flexibility to pursue acquisitions. Following recent

revaluation gains, ASCHT’s gearing has fallen to c.32%. This
provides the REIT with some debt headroom to pursue
acquisitions.

Page 2
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Company Guide
Aggregate Leverage (%)

Balance Sheet:
Stable gearing. Excluding revaluation gains, we expect ASCHT’s
gearing to remain stable at around the 32% level in the near
term. However, this may increase should ASCHT fund the
acquisition of Aurora Melbourne in 2019.

Consistent delivery with upside risk from potential takeover.
ASCHT’s share price has been negatively impacted since its IPO
due to a patchy DPU track record. We believe a more stable
DPU will re-rate ASCHT in the medium term given that ASCHT
trades at a c.80bps yield premium to other listed hospitality ROE (%)
SREITs. Should ASCHT’s manager fail to deliver, there is
potential for activist unitholders soliciting a takeover offer from
a third party to crystallise the full value for ASCHT’s portfolio.
Inorganic drivers. While ASCHT's ability to raise equity in the

short term is constrained by the fact the trust is trading on a
relative high distribution yield (above 7%), we think its gearing
of c.32% provides ASCHT with some headroom to pursue debt
funded acquisitions.
Key Risks:
Interest rate risk. As the US Fed is expected to raise interest Distribution Yield (%)
rates, ASCHT faces the challenge of higher interest costs.
Nevertheless, with c.97% of the group’s debt on fixed rates,
ASCHT is partially insulated in the near term.
FX risks. Significant volatility in AUD and JPY would negatively

impact our DPU estimates. However, this risk is tempered by
ASCHT entering into 15-month rolling hedges.
Supply risk. Any significant increase in the number of hotel

rooms without a commensurate growth in demand could limit
income growth for the REIT, as hotels may have to lower their PB Band (x)
room rates in order to remain competitive and maintain high
occupancies.
Company Background
A-HTRUST is a stapled group comprising Ascendas Hospitality
Business Trust (A-HBT) and Ascendas Hospitality REIT (A-
HREIT), established to invest in a diversified portfolio of hotel
assets in Asia, Australia and New Zealand.

Page 3
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Company Guide

FY Mar 2014A 2015A 2016A 2017F 2018F
Gross revenue 214 227 215 226 225
Property expenses (131) (134) (124) (134) (133)
Net Property Income 83.5 93.3 90.9 92.3 91.6
Other Operating expenses (40.7) (35.9) (34.6) (36.0) (36.0)
Other Non Opg (Exp)/Inc (13.7) (15.0) (3.9) 0.0 0.0
Net Interest (Exp)/Inc (15.0) (17.2) (17.9) (18.4) (18.8) Growth driven by
Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0 ASCHT’s Australian and
Net Income 14.3 28.4 38.5 37.9 36.8 Japanese properties
Tax (7.7) (9.9) (37.4) (3.6) (3.6)
Minority Interest 0.0 0.0 0.0 0.0 0.0
Net Income After Tax 6.66 18.5 1.08 34.4 33.2
Total Return 16.7 28.6 147 34.4 33.2
Non-tax deductible Items 38.0 37.8 62.6 31.1 31.1
Net Inc available for Dist. 54.6 56.3 63.7 65.4 64.3
Growth & Ratio
Revenue Gth (%) 55.5 6.0 (5.3) 5.1 (0.4)
N Property Inc Gth (%) 73.4 11.8 (2.7) 1.5 (0.7)
Net Inc Gth (%) (25.3) 177.5 (94.2) 3,090.0 (3.4)
Dist. Payout Ratio (%) 100.0 100.0 95.0 95.0 95.0
Net Prop Inc Margins (%) 39.0 41.1 42.2 40.8 40.7
Net Income Margins (%) 3.1 8.1 0.5 15.2 14.8
Dist to revenue (%) 25.5 24.8 29.6 28.9 28.6
Managers & Trustee’s fees 19.0 15.8 16.1 15.9 16.0
ROAE (%) 0.9 2.3 0.1 3.6 3.4
ROA (%) 0.5 1.3 0.1 2.1 2.0
ROCE (%) 1.8 3.0 0.1 3.6 3.5
Int. Cover (x) 2.9 3.3 3.1 3.1 3.0

Page 4
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Company Guide

FY Mar 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017
Gross revenue 54.5 54.9 52.9 52.4 55.6

Property expenses (31.9) (31.5) (29.5) (29.8) (31.2)
Other Non Opg (Exp)/Inc (2.7) 0.0 1.23 (3.2) 0.92
Net Income 6.80 10.7 11.2 5.56 11.4
Tax (1.4) (1.8) (33.4) (1.3) (2.1)
Net Income after Tax 5.36 8.90 (22.2) 4.22 9.36
Total Return 5.36 8.90 123 4.22 9.36
Growth & Ratio
Revenue Gth (%) 3 1 (4) (1) 6
N Property Inc Gth (%) 5 4 0 (3) 8
Net Inc Gth (%) (41) 66 nm nm 122
Net Prop Inc Margin (%) 41.5 42.6 44.3 43.2 43.8
Balance Sheet (S$m)

FY Mar 2014A 2015A 2016A 2017F 2018F
Investment Properties 516 618 788 792 797

Other LT Assets 763 734 733 733 733
Cash & ST Invts 72.4 91.5 94.6 84.6 82.2
Inventory 0.65 0.49 0.37 0.37 0.37
Debtors 8.13 9.67 10.9 9.62 9.58
Other Current Assets 5.79 6.40 5.01 5.01 5.01
Total Assets 1,366 1,460 1,632 1,624 1,627
ST Debt 0.0 72.0 58.0 58.0 58.0

Creditor 31.1 31.5 44.7 31.5 31.4
LT Debt 485 472 475 475 475
Other LT Liabilities 45.3 52.4 81.4 81.4 81.4
Unit holders’ funds 795 826 963 967 970
Minority Interests 0.0 0.0 0.0 0.0 0.0
Total Funds & Liabilities 1,366 1,460 1,632 1,624 1,627
Non-Cash Wkg. Capital (25.8) (20.9) (37.7) (28.0) (28.0)

Net Cash/(Debt) (413) (452) (439) (449) (451) Gearing expected to
Ratio remain relatively stable going
Current Ratio (x) 2.2 1.0 1.0 1.0 1.0 forward
Quick Ratio (x) 2.1 1.0 1.0 1.0 1.0
Aggregate Leverage (%) 35.5 37.2 32.7 32.8 32.8
Z-Score (X) 0.9 0.9 0.8 0.8 0.8

Page 5
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Company Guide

FY Mar 2014A 2015A 2016A 2017F 2018F
Pre-Tax Income 14.3 28.4 38.5 37.9 36.8

Dep. & Amort. 27.4 27.9 26.0 26.0 26.0
Tax Paid (2.5) (6.8) (3.1) (1.3) (3.6)
Associates &JV Inc/(Loss) (0.2) (3.1) (4.0) 0.0 0.0
Chg in Wkg.Cap. 11.7 7.26 9.19 (12.0) 0.0
Other Operating CF 17.0 1.94 2.92 5.06 5.06
Net Operating CF 67.7 55.6 69.5 55.7 64.3
Net Invt in Properties (300) (110) (11.4) (3.6) (5.6)
Other Invts (net) 0.0 0.0 29.5 0.0 0.0
Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0
Div from Assoc. & JVs 1.15 1.33 1.02 0.0 0.0
Other Investing CF (24.3) (10.0) (13.8) 0.0 0.0
Net Investing CF (323) (119) 5.26 (3.6) (5.6)
Distribution Paid (51.5) (56.9) (58.2) (62.1) (61.0)
Chg in Gross Debt 120 85.7 (8.8) 0.0 0.0
New units issued 198 49.2 0.0 0.0 0.0
Other Financing CF 0.0 0.0 0.0 0.0 0.0
Net Financing CF 266 77.9 (67.0) (62.1) (61.0)
Currency Adjustments 2.84 1.14 (1.2) 0.0 0.0
Chg in Cash 13.1 15.8 6.48 (10.0) (2.4)
Operating CFPS (S cts) 6.09 4.50 5.40 6.02 5.69

Free CFPS (S cts) (25.3) (5.1) 5.19 4.64 5.19
Source: DBS Bank

Analyst: Mervin SONG CFA
Derek TAN

Page 6 Page 138
Ascendas India Trust
Version 7 | Bloomberg: AIT SP | Reuters: AINT.SI Refer to important disclosures at the end of this report
BUY Still under the radar

Price Target 12-mth: S$1.13 (12% upside and 5.8% yield) Still has legs to run. We maintain our BUY call on Ascendas India
Trust (a-iTrust), with a revised TP of S$1.13. While a-iTrust has
Potential Catalyst: Acquisitions and/or further redevelopments rallied over 30% since we upgraded the stock to BUY in late
Where we differ: Above consensus due to incorporation of Blue Ridge January, and investor interest has picked up, we believe a-iTrust’s
Phase II acquisition
growth story still has yet to gain recognition among investors at
Analyst large. With Singapore-focused REITs increasingly facing headwinds
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com translating into slowing DPU growth (average DPU CAGR of 1%),
Derek TAN +65 6682 3716 derektan@dbs.com we anticipate investors will gravitate to a-iTrust given its healthy 2-
year DPU CAGR of 8% and a still decent 5.5% yield.
Price Relative Clear growth drivers with prospects of healthy rental reversions
ahead. Over the past year, a-iTrust has announced several
developments including the construction of The V, a new 408k sqft
IT building, as well as acquisitions of CyberVale, aVance 3 & 4 and
BlueRidge Phase 2. Coupled with the potential for healthy rental
reversions ahead, of 12-20% in Chennai and up to 5% for
Hyderabad and Bangalore, provides confidence over a-iTrust’s ability
to deliver a robust 8% DPU CAGR over the next two years.
Untapped land bank and acquisition pipeline. Through its untapped

land bank and sponsor pipeline, a-iTrust has access to c.5.9m sqft
Forecasts and Valuation of floor area. This provides the trust with a visible and sustainable
FY Mar (S$m) 2015A 2016A 2017F 2018F
source of growth over the long term. The ability to execute on these
Gross Revenue 129 144 168 196
Net Property Inc 77.6 93.7 104 125
growth opportunities is supported by its healthy balance sheet
Total Return 65.9 105 53.6 57.9 (current gearing is low at 29%, rising to c.36% with planned
Distribution Inc 49.8 56.5 60.9 66.2 developments and acquisitions in the next couple of years).
EPU (S cts) 2.97 1.01 5.76 6.19
EPU Gth (%) 59 (66) 470 8 Valuation:
DPU (S cts) 4.86 5.50 5.89 6.37 We maintain our DDM-based TP of S$1.13.
DPU Gth (%) 7 13 7 8
NAV per shr (S cts) 66.2 67.2 66.6 66.1
PE (X) 34.0 99.9 17.5 16.3 Key Risks to Our View:
Distribution Yield (%) 4.8 5.4 5.8 6.3 The key risk to our bullish stance is a significant depreciation of the
P/NAV (x) 1.5 1.5 1.5 1.5 INR, downturn in the Indian economy which will depress rents or
Aggregate Leverage (%) 25.1 26.9 36.0 37.1
delays in the completion of announced acquisitions and
ROAE (%) 4.6 1.5 8.4 9.1
development projects.
Distn. Inc Chng (%): - - At A Glance

Consensus DPU (S cts): 6.00 6.40 Issued Capital (m shrs) 930
Other Broker Recs: B: 3 S: 0 H: 1 Mkt. Cap (S$m/US$m) 939 / 652
Source of all data on this page: Company, DBS Bank, Bloomberg Major Shareholders (%)
Finance L.P. Ascendas Pte Ltd 23.9
Massachusetts Financial Services 12.7
JPMorgan Chase & Co 9.5
Free Float (%) 53.9
ICB Industry : Real Estate / Real Estate Investment Trust

ed: JS / sa: YM, PY
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Company Guide
Earnings Drivers:
Leveraged on offshoring trends. a-iTrust provides exposure to
India, which remains a leading IT and offshoring hub. The
growing demand for offshoring services is underpinned by the
country's low-cost environment. According to PayScale, the
average salary for IT/software, developers or programmers in
India stands at US$5,451 p.a. which is way below that of other
competing and/or developed countries such as the US
(US$73,031), Australia (US$51,331), Hong Kong (US$23,600) Net Property Income and Margins (%)
and Malaysia (US$10,165). Combined with an abundant skilled
labour force and qualified English-speaking talent pool, based
on NASSCOM (National Association of Software and Services
Companies) estimates, IT-BPM (business process management)
revenues are forecast to grow by 10-12% in FY16/17 to
US$157-160bn.
Balanced lease expiry to capture upside in rents. a-iTrust’s WALE

stands at 5.7 years, with 8% and 30% of leases up for renewal
in FY17 and FY18 respectively. Given the favourable demand
backdrop and limited supply in certain markets such as Chennai,
we believe a-iTrust’s lease expiry profile provides it with ample
opportunities to capture the upside in rents.
Boost from recent acquisitions and developments. Over the past

year, a-iTrust announced the construction of The V, a new
408k-sqft IT building, as well as the acquisitions of CyberVale,
aVance 3 & 4 and BlueRidge Phase II. These organic and
inorganic developments should boost a-iTrust’s DPU,
contributing to a healthy 8% DPU CAGR over the next two
years.
Potential one-third increase in floor area. a-iTrust currently has a Interest Cover (x)
portfolio of properties with 9.7m sqft of space with announced
plans to take it to c.12m sqft. Beyond this, through its sponsors
and assuming a-iTrust exercises its right of first refusal (ROFR), it
could access c.2.3m sqft worth of properties. In addition, we
understand the trust is also open to the acquisition of third-
party properties. Currently, it is exploring acquisition
opportunities in Mumbai, Delhi and Gurgaon, thereby
expanding its presence beyond its current core markets of
Bangalore, Chennai, Hyderabad and Pune.

Page 2
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Company Guide

Balance Sheet:
Flexible balance sheet. a-iTrust’s current gearing remains low at
<30%. However, we expect gearing to rise to c.36% by end-
FY17 after including the trust’s existing development projects
and announced acquisitions. This is within management
comfortable level of 35%-45%.
100% of debt fixed. As at end September 2016, 100% of the

trust’s debt was fixed with an all-in cost of debt of 7.0%. This
minimises the trust’s exposure to short-term volatility in interest
rates.
Share Price Drivers: ROE (%)

Stronger INR. Since a-iTrust’s IPO in 2008, NPI in INR terms has
grown at a CAGR of 8%. However, due to the weak INR, a-
iTrust’s share price has been capped and net property income in
SGD terms has only grown at c.5% CAGR. Should the INR
appreciate, this will be a major tailwind for a-iTrust’s share
price.
Crystallisation of development and sponsor pipeline. The trust

has a development and sponsor pipeline of c.3m sqft and 2.3m
sqft respectively. The delivery of the development pipeline and
acquisition of its sponsor’s properties with resultant increase in
earnings/DPU should drive the stock price higher over the
Distribution Yield (%)
medium term.
Key Risks:
Currency risk. a-iTrust’s distributions are generated in INR but
paid in SGD. While the trust hedges each half-yearly
distribution, DPU from the trust will be negatively impacted on
a lagged basis if the INR depreciates. In addition, as 75% and
25% of the trust’s borrowings are in INR and SGD respectively,
while all its assets are in India, a depreciation of the INR would
also be negative to its NAV per share.
Economic risk. Deterioration in the Indian economic outlook

and/or companies outsourcing their operations to India may PB Band (x)
negatively impact demand for space and rents at a-iTrust’s
properties.
Interest rate risk. Increases in interest rates will result in higher

interest payments which would reduce income available for
distribution. This risk is partially mitigated by the fact that
100% of the trust’s debt is fixed.
Company Background
Ascendas India Trust ("a-iTrust") was listed in August 2007 as
the first Indian property trust in Asia. Its principal objective is to
own income-producing real estate used primarily as business
space in India. a-iTrust may also develop and acquire land or
uncompleted developments to be used primarily as business
space, with the objective of holding the properties upon
completion. a-iTrust is managed by Ascendas Property Fund
Trustee Pte Ltd, a subsidiary of the Ascendas Group.

Page 3
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Company Guide

FY Mar 2014A 2015A 2016A 2017F 2018F
Gross revenue 121 129 144 168 196
Net Property Income 72.1 77.6 93.7 104 125
Exceptional Gain/(Loss) (8.1) 4.31 0.0 0.0 0.0
Net Income 52.2 70.7 68.4 77.6 83.5
Tax (30.4) (38.3) (51.1) (20.8) (22.2)
Total Return 50.1 65.9 105 53.6 57.9
Non-tax deductible Items (13.3) (16.1) (11.9) 7.34 8.28
Growth & Ratio
Revenue Gth (%) (4.4) 6.7 11.8 17.0 16.5
N Property Inc Gth (%) (0.1) 7.6 20.8 11.0 19.8 Improvement in earnings
Net Inc Gth (%) (25.4) 59.8 (65.8) 473.2 8.2 on the back of positive
Dist. Payout Ratio (%) 90.0 90.0 90.0 90.0 90.0 rental reversions and
Net Prop Inc Margins (%) 59.7 60.3 65.1 61.8 63.5 contributions from new
Net Income Margins (%) 14.2 21.2 6.5 31.8 29.5 properties/acquisitions
Dist to revenue (%) 38.2 38.7 39.2 36.2 33.8
ROAE (%) 2.9 4.6 1.5 8.4 9.1
ROA (%) 1.6 2.4 0.7 3.7 3.7
ROCE (%) 2.6 2.8 1.6 4.9 5.4
Int. Cover (x) 16.3 24.4 8.4 6.2 4.1

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Company Guide

FY Mar 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017
Gross revenue 36.5 37.5 35.9 36.1 37.1

Other Operating expenses 0.11 2.35 (2.2) (2.5) (2.9)
Exceptional Gain/(Loss) 0.17 (5.7) 0.13 (2.6) 3.00
Net Income 21.4 18.5 18.4 14.9 21.9
Tax (6.1) (8.0) (30.2) (4.6) (3.6)
Net Income after Tax 14.2 9.70 (17.0) 9.39 17.1
Total Return 16.8 9.70 72.6 9.39 17.1
Non-tax deductible Items (4.6) (5.2) (4.0) (0.9) (3.0)
Growth & Ratio
Revenue Gth (%) 7 3 (4) 1 3
N Property Inc Gth (%) 8 5 (6) 2 6
Net Inc Gth (%) 75 (32) nm nm 82
Balance Sheet (S$m)

FY Mar 2014A 2015A 2016A 2017F 2018F
Investment Properties 0.41 0.26 3.29 3.21 3.13

Other LT Assets 953 1,150 1,222 1,442 1,488
Cash & ST Invts 74.4 69.7 85.9 44.2 35.9
Inventory 0.71 0.74 0.69 0.97 1.12
Debtors 20.3 22.8 15.1 29.8 34.7
Total Assets 1,063 1,257 1,350 1,543 1,586
ST Debt 49.9 89.9 45.0 45.0 45.0

Creditor 39.3 42.6 57.4 55.7 64.9
LT Debt 184 225 318 511 543

Net Cash/(Debt) (160) (246) (277) (512) (552) Increase in gearing due to
Ratio new properties
Current Ratio (x) 1.2 0.8 1.2 1.0 0.9
Quick Ratio (x) 1.0 0.7 1.0 0.7 0.6
Z-Score (X) 1.5 1.1 1.1 0.9 0.9

Page 5
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Company Guide

FY Mar 2014A 2015A 2016A 2017F 2018F
Pre-Tax Income 52.2 70.7 68.4 77.6 83.5

Dep. & Amort. 0.10 0.08 0.08 0.08 0.08
Tax Paid (11.3) (12.4) (51.1) (20.8) (22.2)
Associates &JV Inc/(Loss) 0.0 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. 14.2 3.73 13.3 (16.8) 4.10
Net Operating CF 77.4 79.6 97.1 40.0 65.5
Net Invt in Properties (35.5) (17.7) (51.8) (198) (68.0)
Other Invts (net) (8.6) (91.8) 0.0 (22.2) 22.2
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 Includes $133m
Other Investing CF 0.04 0.08 0.0 0.0 0.0 investment in
Net Investing CF (44.0) (109) (51.8) (220) (45.8) BlueRidge Phase 2
Chg in Gross Debt 17.7 80.5 24.7 193 31.6
New units issued 0.0 0.0 0.0 0.0 0.0
Other Financing CF 0.0 (16.3) (0.4) 0.0 0.0
Net Financing CF (22.5) 20.8 (23.7) 138 (28.0)
Chg in Cash 4.52 (4.7) 21.6 (41.8) (8.3)

Free CFPS (S cts) 4.59 6.73 4.90 (17.0) (0.3)
Source: DBS Bank

Derek TAN

Page 6 Page 144
Ascendas REIT
Version 6 | Bloomberg: AREIT SP | Reuters: AEMN.SI Refer to important disclosures at the end of this report
BUY Takes three at a go!

Price Target 12-mth: S$2.65 (15% upside and 6.9% yield) Maintain BUY, TP maintained at S$2.65. Ascendas REIT (A-REIT)
offers attractive yields of close to 6.6% to investors looking for
Potential Catalyst: Acquisitions steady returns in the current volatile market. A low leverage of
Where we differ: Estimates are in line with consensus 35% supports any potential M&A activities which the REIT has
the ability and access to deliver on.
Analyst
Derek TAN +65 6682 3716 derektan@dbs.com Acquisition that ticks the right boxes. A-REIT continues to
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com deepen its exposure to the Business Parks/Science Parks Space
Singapore Research Team equityresearch@dbs.com
with an acquisition of three properties at a price of S$420m.
The acquisition ticks most of the boxes – long lease tenure (16.5
years with annual escalations of 2.0%-2.5%), long unexpired
Price Relative
S$ Relative Index
land lease tenure (65.7 years) and offers investors a deeper
3.1
2.9
222
202
exposure to a sector (R&D) that continues to grow. The yield of
2.7
182 6.0% (all-in cost) appears low at first glance but we believe it
reflects the properties’ relatively young age (2.0 years) and long
162
2.5
142
2.3
2.1
122
102
land lease tenure. Accretion is projected to be marginal at
1.9
82
Jan-17
0.5%. We have yet to factor in the acquisition, pending EGM.
Ascendas REIT (LHS) Relative STI (RHS)
Conservative capital management. A-REIT stands tall in the face

of rising interest rates going into 2017 with a spread-out debt
expiry profile of 3.8 years, implying that the REIT does not face
Forecasts and Valuation any major refinancing in any one year. The manager adopts a
FY Mar (S$m) 2015A 2016A 2017F 2018F prudent interest rate risk management strategy with a weighted
Gross Revenue 673 761 837 858 average cost of debt of 3.0% with 78.0% hedged into fixed
Net Property Inc 463 534 598 617 rates.
Total Return 398 349 415 434
Distribution Inc 351 378 427 446 Valuation:
EPU (S cts) 14.6 13.9 15.3 15.3
EPU Gth (%) 0 (5) 10 1 Our DCF-based TP is maintained at S$2.65 as a result of
DPU (S cts) 14.6 15.4 15.7 15.6 additional contribution from acquisitions. Maintain BUY on the
DPU Gth (%) 3 5 2 (1) back of total potential returns of c.15%
NAV per shr (S cts) 208 207 207 201
PE (X) 15.8 16.6 15.1 15.0
Distribution Yield (%) 6.3 6.7 6.8 6.7 Key Risks to Our View:
P/NAV (x) 1.1 1.1 1.1 1.1 Interest rate risk. An increase in lending rates will negatively
Aggregate Leverage (%) 33.4 37.1 34.2 34.4 impact dividend distributions. However, A-REIT's strategy has
ROAE (%) 7.1 6.7 7.4 7.5 been to actively manage its exposure and it currently has
c.70% of its interest cost hedged into fixed rates.
Distn. Inc Chng (%):
Consensus DPU (S cts): 15.7 15.9 At A Glance
Other Broker Recs: B: 15 S: 0 H: 7 Issued Capital (m shrs) 2,843
Mkt. Cap (S$m/US$m) 6,566 / 4,597
Finance L.P. Major Shareholders (%)
Ascendas Pte Ltd 20.0
Mondrian Investment 8.0
Blackrock 5.1
Free Float (%) 36.9

ed: CK / sa: YM, PY
Page 145
Company Guide
Ascendas REIT

CRITICAL DATA POINTS TO WATCH S$ m
700
600 77.3%
Earnings Drivers: 500 75.3%
Rebound in occupancy rates to provide upside to earnings. A- 400 73.3%
REIT’s Singapore portfolio occupancy rates dipped marginally to 300 71.3%
87.9%, compared to c.88.3% in 1QFY17 and 89.9% a year 200 69.3%
ago. The dip was mainly due to non-renewals of leases at 40 100 67.3%
Penjuru Lane and Pioneer hub. Given A-REIT’s scale in 0 65.3%

2014A 2015A 2016A 2017F 2018F
Singapore, the manager continues to attract a diverse tenant
Net Property Income Net Property Income Margin %
base to its properties, despite the current economic slowdown.
The manager is still seeing expansionary and new demand
mainly from businesses in the transport and storage, Net Property Income and Margins (%)
159 76%
distribution, and electronics sectors. Looking ahead, with close 74%
to 13% of the portfolio still vacant, the ability to back-fill the 149
72%
unoccupied space provides potential upside to our earnings 139 70%
estimates. A long portfolio-weighted average lease expiry 68%
129
(WALE) profile of 3.7 years (4.4 years post latest acquisition) 66%
means good earnings visibility for the REIT. 119

64%
109 62%
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
4Q2016
1Q2017
2Q2017
Still positive rental reversions, but spread will likely narrow.
Rental reversionary trends are moderating and reached a low of Net Property Income Net Property Income Margin %
0.9% in 2QFY17. Looking ahead, leases representing close to
12% in Singapore and given the narrowing spread between Distribution Paid / Net Operating CF
passing and market rents, we expect rental reversionary trends 1.2 (x)
to remain flattish or even turn negative. In Australia, given the 1.1
well-spread lease expiry profile, we do not anticipate too much 1.0
volatility in the rentals and the manager is pro-actively engaging 0.9

0.8
tenants ahead of expiry to renew their leases. In Australia, the 0.7
manager is seeing a pick-up in demand for space in the recent 0.6
quarter and reported a 4.2 percentage point increase in 0.5
occupancy to 94.2%, back-filling most of the empty space in 0.4
the previous quarter. Australia continues to offer the strongest 0.3

2014A 2015A 2016A 2017F 2018F
earnings visibility with a WALE of 5.1 years.
Inorganic growth to drive contributions in Australia and Interest Cover (x)

(x)
Singapore. A-REIT has regularly embarked on acquisitions and 12.00
development projects, which have helped the REIT to deliver
10.00
sustained growth in distributions over time. Given the limited
opportunities in Singapore and the fragmented market in 8.00
China, the manager has looked overseas for higher returns. The 6.00
manager remains focused on deepening its presence in the core 4.00

markets of Singapore, Australia and China, when the
2.00
opportunity arises.
0.00
2014A 2015A 2016A 2017F 2018F
Apart from the recently acquired acquisitions in Australia
(A$179m in total), A-REIT will be embarking on a new asset
enhancement project at 50 Kallang Avenue for S$45.2m which
will be anchored by a new tenant on a long lease. A-REIT has in
total S$113.1m in asset enhancements currently underway. The
manager is also looking at further asset refurbishment options
at its portfolio in Singapore in order to position the assets to
capture changing tenant needs.

Page 2
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Company Guide
Ascendas REIT

Balance Sheet:
Optimal gearing level of c.34%. A-REIT’s gearing is estimated to
dip to 34% (from c.37%) upon the assumed full conversion of 35.0%
S$300m of Exchange Collateralised Securities (ECS) by end of 30.0%
FY17F. This will be at the lower end of management’s 25.0%

comfortable 35-40% range. We believe that there is still 20.0%
capacity for management to utilise its debt headroom for 15.0%
further acquisitions but any significant deals could mean
10.0%
potential issuance of new equity. 2014A 2015A 2016A 2017F 2018F
Well-staggered debt maturity profile. The manager adopts a

prudent interest rate risk management strategy with a weighted ROE (%)
average cost of debt of 3.0% with 78.0% hedged into fixed 7.0%
rates. The debt tenure is long at 3.8 years, with a well spread-
6.0%
out refinancing profile ensuring no concentration risk.
5.0%
4.0%
3.0%
Direction of 10-year long bonds impacts share price. Seen by
investors as a key S-REIT proxy, A-REIT’s share price has typically 2.0%
been closely linked to investors’ perception on the direction of 1.0%
the US benchmark 10-year bond yields. A fall in 10-year bond 0.0%

2014A 2015A 2016A 2017F 2018F
yields on the back of a delay in Fed hikes is likely to mean a
higher share price.
(%)
Capital recycling strategy. With limited acquisition opportunities 7.8
in Singapore, A-REIT regularly looks to divest older, lower- 7.3

+2sd: 7%
yielding properties and re-cycle the capital into asset- 6.8
+1sd: 6.6%
enhancement exercises (AEI), development projects or 6.3
Avg: 6.2%
acquisitions. The aim is to optimise the portfolio returns and 5.8 ‐1sd: 5.8%
distributions which have a positive impact on its share price. 5.3 ‐2sd: 5.3%
4.8
Key Risks:
4.3
Interest rate risk. Any increase in interest rates will result in 2013 2014 2015 2016
higher interest payments, which will reduce income available

for distribution and result in lower distribution per unit (DPU) PB Band (x)
to unitholders. 1.7
(x)
1.6
Economic risk. A deterioration in the economic outlook could 1.5
have a negative impact on industrial rents and occupancies as 1.4
companies cut back production and require less space, given 1.3 +2sd: 1.32x
that industrial rents have a strong correlation with GDP 1.2
+1sd: 1.24x
Avg: 1.16x
growth. 1.1 ‐1sd: 1.09x
1.0 ‐2sd: 1.01x
A-REIT is Singapore’s first and largest listed business space and
industrial real estate investment trust. It has a diversified
portfolio comprising assets in Singapore, China and Australia. Source: Company, DBS Bank
A-REIT is managed by Ascendas Funds Management (S)
Limited, a wholly owned subsidiary of the Singapore-based
Ascendas Group.

Page 3
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Company Guide
Ascendas REIT

FY Mar 2014A 2015A 2016A 2017F 2018F
Gross revenue 614 673 761 837 858
Net Property Income 436 463 534 598 617
Driven by acquisitions
Other Operating expenses (40.8) (43.8) (67.4) (55.2) (55.4) and development
Other Non Opg (Exp)/Inc 2.67 41.7 (5.7) 0.0 0.0 projects.
Net Interest (Exp)/Inc (35.9) (105) (77.5) (109) (108)
Net Income 374 357 383 434 454
Tax (23.2) (6.7) (25.1) (4.2) (4.7)
Preference Dividend 0.0 0.0 (6.6) (15.0) (15.0)
Net Income After Tax 351 351 351 415 434
Total Return 482 398 349 415 434
Non-tax deductible Items (8.7) 0.57 26.9 11.6 11.7
Net Inc available for Dist. 342 351 378 427 446
Growth & Ratio
Revenue Gth (%) 6.6 9.8 13.0 9.9 2.5
N Property Inc Gth (%) 6.6 6.1 15.3 12.1 3.1
Net Inc Gth (%) 32.8 0.0 0.2 18.1 4.6
Dist to revenue (%) 55.7 52.1 49.7 51.0 52.0
ROAE (%) 7.4 7.1 6.7 7.4 7.5
ROA (%) 4.9 4.5 3.9 4.2 4.4
ROCE (%) 5.3 5.5 5.0 5.6 5.7
Int. Cover (x) 11.0 4.0 6.0 5.0 5.2

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Ascendas REIT

FY Mar 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017
Gross revenue 183 194 204 208 205

Other Non Opg (Exp)/Inc 32.3 3.16 (12.6) (9.3) (13.2)
Net Income 123 101 70.8 88.7 101
Tax (0.7) (7.3) (16.7) (2.1) 13.7
Net Income after Tax 123 93.9 54.1 86.6 115
Total Return 123 93.9 47.3 86.6 115
Non-tax deductible Items (23.9) 3.02 41.8 15.7 (7.8)
Net Inc available for Dist. 99.3 96.9 89.1 102 107
Growth & Ratio
Revenue Gth (%) 1 6 5 2 (1)
N Property Inc Gth (%) 0 15 1 4 2
Net Inc Gth (%) 41 (24) (42) 60 33
Balance Sheet (S$m)

FY Mar 2014A 2015A 2016A 2017F 2018F
Investment Properties 6,923 7,868 9,599 9,665 9,695

Other LT Assets 290 135 96.2 96.2 96.2
Cash & ST Invts 67.3 41.6 56.2 8.64 15.3
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 65.1 90.1 89.3 98.2 101
Total Assets 7,358 8,160 9,876 9,903 9,942
ST Debt 893 286 1,180 1,190 1,220

Creditor 128 189 172 189 194
LT Debt 1,231 2,442 2,485 2,195 2,205
Unit holders’ funds 4,849 5,014 5,797 6,085 6,074
Non-Cash Wkg. Capital (136) (105) (90.6) (95.1) (98.0)

Net Cash/(Debt) (2,057) (2,686) (3,608) (3,376) (3,409) Steady gearing profile
Ratio
Current Ratio (x) 0.1 0.3 0.1 0.1 0.1
Quick Ratio (x) 0.1 0.3 0.1 0.1 0.1
Z-Score (X) 1.4 1.3 0.9 1.1 1.1

Page 5
Page 149
Company Guide
Ascendas REIT

FY Mar 2014A 2015A 2016A 2017F 2018F
Pre-Tax Income 374 357 383 434 454

Dep. & Amort. 0.70 0.37 0.18 0.0 0.0
Tax Paid (0.8) (2.4) (4.5) (7.9) (4.2)
Chg in Wkg.Cap. (1.4) (10.2) 11.5 8.22 2.28
Other Operating CF 28.5 17.4 (6.6) (15.0) (15.0)
Net Operating CF 401 362 384 420 437
Net Invt in Properties 0.0 0.0 0.0 0.0 0.0
Other Invts (net) (94.7) (643) (1,496) (66.0) (30.0)
Invts in Assoc. & JV 0.0 0.0 0.04 0.0 0.0
Other Investing CF (40.2) 5.50 5.50 5.50 5.50
Net Investing CF (135) (638) (1,491) (60.5) (24.5)
Distribution Paid (326) (261) (442) (427) (446)
Chg in Gross Debt 170 577 1,218 (280) 40.0
New units issued (0.1) 0.0 342 300 0.0
Other Financing CF (70.8) (68.1) 0.0 0.0 0.0
Net Financing CF (227) 249 1,118 (407) (406)
Chg in Cash 47.8 (25.7) 9.56 (47.6) 6.67

Free CFPS (S cts) 16.7 15.1 15.2 15.4 15.4
S$
12- mt h
Report Pric e
Pric e
2.52 6
1: 08 J an 16 2.25 2.52 BUY
7 2: 04 Feb 16 2.34 2.52 BUY
8 10
5 12
2.42 11 14 3: 18 May 16 2.32 2.50 BUY
2 9 4: 10 J un 16 2.32 2.50 BUY
4
2.32 5: 12 J ul 16 2.48 2.55 BUY
13 6: 21 J ul 16 2.49 2.61 BUY
3
7: 22 J ul 16 2.53 2.61 BUY
2.22
1 8: 22 Aug 16 2.42 2.61 BUY
9: 29 Aug 16 2.44 2.61 BUY
2.12 10: 20 Sep 16 2.42 2.61 BUY
11: 26 Sep 16 2.46 2.61 BUY
2.02 12: 21 Oct 16 2.40 2.65 BUY
Jan-16 May-16 Sep-16 Jan-17 13: 08 Nov 16 2.34 2.65 BUY
14: 06 Dec 16 2.37 2.65 BUY
Source: DBS Bank

Analyst: Derek TAN
Mervin SONG CFA
Singapore Research Team

Page 6 Page 150
Ascott Residence Trust
Version 5 | Bloomberg: ART SP | Reuters: ASRT.SI Refer to important disclosures at the end of this report
BUY Unrealised potential

Price Target 12-mth: S$1.32 (14% upside and 7.0% yield) Diversified portfolio underpins resilience. We maintain our BUY
recommendation on Ascott Residence Trust (ART) and TP of
Potential Catalyst: Further acquisitions and asset recycling to accelerate S$1.32. Amid the volatility in the Singapore hospitality market,
growth, improvement in performance of ART’s Chinese properties we believe ART’s diversified portfolio with serviced residences
Where we differ: Below consensus on lower assumed sales and rental housing across 14 countries in the Asia Pacific,
Europe and the US, offers investors a more resilient DPU
Analyst outlook. ART’s resiliency and cashflow visibility also comes from
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com having 40-50% of its income sourced from master leases and
management contracts with minimum guaranteed income.
Price Relative Value from recent acquisitions/AEIs yet to be fully realised. ART
1.7
S$ Relative Index has announced c.S$1.2bn worth of acquisitions over the last
two years, increasing the value of its assets under management
216
1.6
196
(AUM) by one-third to S$5bn. Combined with completed and

1.5 176
1.4 156
1.3
1.2
136
ongoing asset enhancement initiatives (AEIs), ART should
116
1.1 96 progressively realise benefits over the next few years.

1.0 76
Ascott Residence Trust (LHS) Relative STI (RHS)

Divestments to strengthen balance sheet. ART’s headline
gearing of c.41% is slightly elevated and we are mindful of
ART’s adjusted gearing (treating 50% of perpetual securities as
debt) which stands at 42-44%. However, we understand this is
FY Dec (S$m) 2014A 2015A 2016F 2017F temporary as ART is reviewing its portfolio mix, and looking to
Gross Revenue 357 421 464 490 divest some of its lower yielding properties.
Net Property Inc 180 205 219 229
Total Return 121 152 111 102 Valuation:
Distribution Inc 126 123 134 134 We maintain our DCF-based TP and DPU forecasts which have
EPU (S cts) 4.83 4.61 6.14 6.13 incorporated the realised forex gains in 3Q16 and lower
EPU Gth (%) (5) (4) 33 0
DPU (S cts) 8.20 7.99 8.20 8.11
assumed interest rates given prospects of achieving interest
DPU Gth (%) (2) (3) 3 (1) savings as ART refinances its borrowings over the next couple
NAV per shr (S cts) 137 141 137 134 of years, partially offset by moderation of average daily rate
PE (X) 23.9 25.0 18.8 18.8 (ADR) growth in Japan due to potential impact of the recent
Distribution Yield (%) 7.1 6.9 7.1 7.0 strengthening of the JPY.
P/NAV (x) 0.8 0.8 0.8 0.9
ROAE (%) 3.5 3.3 4.5 4.5 Key Risks to Our View:
Oversupply and forex volatility. The key risk to our call is
potential oversupply in ART’s key markets as well as impact
Distn. Inc Chng (%): 0 0 from forex volatility. These risks are mitigated by ART’s
Consensus DPU (S cts): 8.20 8.40 diversified portfolio with no country contributing more than
20% of the group’s net property income.
Finance L.P.
At A Glance
Mkt. Cap (S$m/US$m) 1,910 / 1,317
CapitaLand Limited 43.8
Aia Group Ltd 5.0
Free Float (%) 51.2

ed: JS / sa: JC, PY
Page 151
Company Guide

S$ m
300
CRITICAL DATA POINTS TO WATCH 54.4%
250
200 52.4%
Earnings Drivers:
150 50.4%
Value of past acquisitions yet to be realised. ART has had an
48.4%
active two years, marking its maiden entries into Malaysia and 100
the US. In addition, ART has deepened its presence in Australia, 50 46.4%
China and Japan. All in, ART has acquired c.S$1.2bn worth of 0 44.4%
2013A 2014A 2015A 2016F 2017F
properties on an average yield of 5-8%. The benefits from these
acquisitions should accrue over the next few years.
Asset enhancements to drive earnings. Beyond the announced Net Property Income and Margins (%)
54%
acquisitions, another growth driver for ART are the asset 59
52%
enhancement initiatives it has undertaken or in the process of 57
55
50%
completing. Refurbishments, which are initiated every 7-10 53
years, are designed to enhance the market positioning of ART’s 51

49
48%
various properties and should translate to higher occupancies 47 46%
and room rates. It has announced c.S$95m worth of 45

44%
43
renovations over the last 18 months in various cities including 41 42%
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
Barcelona, Dalian, Ho Chi Minh City, London, Manila,
Singapore, Shanghai and Tianjin. Net Property Income Net Property Income Margin %
Australia, Japan and US - key growth markets. With a timely Distribution Paid / Net Operating CF
expansion into Australia and Japan, ART is well positioned to (x)
take advantage of the growing Australian and Japanese 0.9
hospitality markets which should translate to healthy RevPAR 0.8
growth. In addition, ART’s entry into New York provides 0.7
exposure to the recovering US economy. The abovementioned 0.6

markets, representing c.34% of ART’s 9M16 net property 0.5
income (NPI), should help offset potential weakness from its
0.4
Chinese properties (c.9% of group NPI) which are affected by
the economic slowdown in China. 0.3
2013A 2014A 2015A 2016F 2017F
Steady income base from Europe and Japan rental properties.

Around a third of ART’s NPI comes from properties under Interest Cover (x)
(x)
master leases in France, Germany, Singapore and Japan (rental 5.00
properties). With the prudent use of forex hedges, and having 4.50
properties under management contracts with minimum 4.00

3.50
guaranteed income (14% of group NPI) in Belgium, Spain and 3.00
UK, ART provides investors with a solid income base. 2.50
2.00
1.50
Ambitions to grow portfolio size to S$6bn. ART has ambitions
1.00
to grow its portfolio from S$5bn currently to S$6bn by 2017. 0.50
The properties will be sourced from its Sponsor and third 0.00
2013A 2014A 2015A 2016F 2017F
parties.

Page 2
Page 152
Company Guide

Balance Sheet:
Temporary increase in gearing. Post ART’s recent acquisition of 40.0%
properties in Australia, Japan and the US, ART’s headline 35.0%
gearing is expected to settle at around the 40-41% level. 30.0%
However, on an adjusted basis treating 50% of the perpetual
25.0%
securities as debt (in line with Moody’s treatment), gearing is
20.0%
expected to hover around 42-44%. While cognizant of the
15.0%
higher gearing near term, we understand ART will look to pare
10.0%
down its debt by disposing some of its lower-yielding 2013A 2014A 2015A 2016F 2017F
properties.

Overcoming past disappointments. ART’s share price has been 4.5%
range bound over the last year due to inconsistent DPU growth 4.0%
3.5%
over the last two years on account of the dilution impact from
3.0%
the rights issue in late 2013 and weakness from its Chinese 2.5%
properties. However, we believe ART will re-rate as the full 2.0%
benefits from c.S$1.2bn worth of acquisitions and 1.5%
refurbishment activities over the past two years are realised. 1.0%
0.5%
0.0%
2013A 2014A 2015A 2016F 2017F
Key Risks:
Interest rate risks. Any increase in interest rates will result in
higher interest payments and reduce the income available for Distribution Yield (%)
(%)
distribution, which will result in lower distribution per unit
8.1
(DPU) for unitholders. As at 30 September 2016, 80% of ART’s
7.6
debts are on fixed rates. +2sd: 7.5%
7.1 +1sd: 7.1%
Avg: 6.8%
Currency risk. As ART earns rental income in various 6.6
‐1sd: 6.4%
currencies, a depreciation of any foreign currency against the 6.1 ‐2sd: 6%
SGD could negatively impact DPU. Nevertheless, through the 5.6
use of currency hedges for EUR and JPY sourced income, as
5.1
well as the benefits from having a diversified portfolio, FX 2013 2014 2015 2016 2017
volatility has had a minimal impact on ART’s earnings

historically. In FY13-FY15, changes in ART’s basket of PB Band (x)
currencies had only a net 0.8-1.5% negative impact on 1.3
(x)
earnings.
1.2
1.1
Company Background
+2sd: 1.02x
Ascott REIT's Investment portfolio primarily comprises real 1.0
+1sd: 0.96x
estate used mainly as serviced residences or rental housing 0.9 Avg: 0.89x
‐1sd: 0.82x
properties (including investments in real estate-related assets 0.8
‐2sd: 0.75x
and/or other related value-enhancing assets or instruments). 0.7
0.6

Page 3
Page 153
Company Guide

FY Dec 2013A 2014A 2015A 2016F 2017F
Gross revenue 317 357 421 464 490
Net Income 112 120 135 151 153
Tax (36.2) (36.9) (36.8) (25.7) (26.1)
Preference Dividend 0.0 (1.4) (13.4) (19.2) (19.2)
Net Income After Tax 69.3 74.1 71.2 99.9 102
Total Return 209 121 152 111 102
Non-tax deductible Items (93.8) 4.51 (28.4) 22.5 32.8
Growth & Ratio
Revenue Gth (%) 4.2 12.8 17.9 10.2 5.6
Net Inc Gth (%) 11.2 6.9 (4.0) 40.4 1.7 Growth driven by
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 100.0 acquisitions in China,
Net Prop Inc Margins (%) 50.9 50.4 48.6 47.2 46.7 Malaysia, Australia, US and
Net Income Margins (%) 21.9 20.7 16.9 21.5 20.7 Japan over the past 18
Dist to revenue (%) 36.3 35.2 29.3 28.8 27.4 months
ROAE (%) 3.8 3.5 3.3 4.5 4.5
ROA (%) 2.1 1.9 1.6 2.1 2.1
ROCE (%) 3.2 3.0 3.0 3.5 3.6
Int. Cover (x) 3.5 3.9 3.6 4.3 3.9

Page 4
Page 154
Company Guide

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Gross revenue 113 119 106 119 124

Net Income 46.9 37.4 33.7 37.7 37.1
Tax (10.3) (16.6) (6.3) (17.3) (5.6)
Net Income after Tax 35.5 19.0 26.0 19.3 30.0
Total Return 45.8 68.1 25.9 55.6 32.1
Non-tax deductible Items (8.9) (31.2) 6.25 (25.3) 11.5
Growth & Ratio
Revenue Gth (%) 15 5 (11) 13 4
N Property Inc Gth (%) 12 3 (14) 19 (1)
Net Inc Gth (%) 174 (46) 37 (26) 56
Balance Sheet (S$m)

FY Dec 2013A 2014A 2015A 2016F 2017F

Other LT Assets 81.1 80.9 80.2 75.7 71.7
Cash & ST Invts 205 193 220 174 147
Inventory 0.37 0.29 0.30 0.30 0.30
Debtors 11.7 36.4 49.7 50.2 53.0
Other Current Assets 107 87.8 84.2 84.2 84.2
Total Assets 3,582 4,122 4,725 4,951 4,933
ST Debt 50.3 249 258 258 258

Creditor 4.37 119 136 143 151
Other Current Liab 114 7.85 5.24 5.24 5.24
LT Debt 1,147 1,302 1,557 1,695 1,695
Non-Cash Wkg. Capital 0.68 (2.0) (7.5) (13.4) (18.5)

Net Cash/(Debt) (993) (1,358) (1,595) (1,779) (1,806) Increase in gearing on the
Ratio back of announced
Current Ratio (x) 1.9 0.8 0.9 0.8 0.7 acquisitions
Quick Ratio (x) 1.3 0.6 0.7 0.6 0.5
Z-Score (X) 1.0 0.9 0.8 0.7 0.7

Page 5
Page 155
Company Guide

FY Dec 2013A 2014A 2015A 2016F 2017F
Pre-Tax Income 112 120 135 151 153

Dep. & Amort. 13.5 16.3 16.6 16.4 16.4
Tax Paid (13.3) (22.4) (24.1) (25.7) (26.1)
Associates &JV Inc/(Loss) 0.00 0.0 0.0 (0.2) (0.2)
Chg in Wkg.Cap. 2.30 (25.8) (14.8) 5.91 5.15
Net Operating CF 152 153 177 147 149
Other Invts (net) (180) (428) (352) (10.0) (10.0)
Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0 Acquisition of
Div from Assoc. & JVs 0.0 0.0 0.0 0.0 0.0 properties in Australia,
Other Investing CF 2.23 7.76 1.76 0.0 0.0 Japan and US partially
Net Investing CF (220) (461) (397) (277) (22.3) offset by asset
Distribution Paid (107) (116) (125) (134) (134) disposals in Japan and
Chg in Gross Debt (89.8) 315 581 138 0.0 Philippines
New units issued 398 0.0 0.0 98.5 0.0
Other Financing CF (52.3) 99.7 (213) (19.2) (19.2)
Net Financing CF 149 298 243 83.7 (154)
Currency Adjustments (0.8) (2.0) 3.66 0.0 0.0
Chg in Cash 79.3 (12.0) 27.9 (46.1) (27.4)

Free CFPS (S cts) 8.03 7.33 8.48 (7.4) 8.22
1.25
S$
12- mt h
Dat e of Closing
Report Pric e
1.20 Pric e
1: 26 J an 16 1.12 1.33 BUY
2: 15 Mar 16 1.08 1.33 BUY
6
1.15 3: 13 Apr 16 1.12 1.33 BUY
5
4: 18 Apr 16 1.11 1.28 BUY
4
5: 21 J ul 16 1.16 1.31 BUY
1.10 1 3 6: 21 Oct 16 1.15 1.32 BUY
2
1.05
1.00
Source: DBS Bank


Page 6 Page 156
Cache Logistics Trust
Version 7 | Bloomberg: CACHE SP | Reuters: CALT.SI Refer to important disclosures at the end of this report
HOLD Operational weakness to persist

Price Target 12-mth: S$0.93 (14% upside and 9.2% yield) Maintain HOLD, TP unchanged at S$0.93. Maintain our HOLD call
on Cache Logistics Trust (Cache) on uncertainty regarding the
outcome of the holding arrangement with Schenker. This currently
Potential Catalyst: Better than expected results
has a negative impact on outlook and portfolio valuation. While
Where we differ: Estimates are below consensus on lower rental yields are attractive at 8.5%, we believe that uncertainties owing to
reversion assumption the oversupply in the overall Singapore warehouse market and
more pressure on Cache’s organic growth potential will cap re-
Analyst rating opportunities.
Singapore Research Team equityresearch@dbs.com Interim solution to 51 Alps Avenue a key overhang. 3Q16 DPU fell
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com
13.7% y-o-y on the back of an enlarged share base. Looking ahead,
we expect pressure on earnings arising from the holding
arrangement with Schenker in relation to 51 Alps Avenue until the
Price Relative
S$ Relative Index
Court’s final judgement of the dispute. In the interim, Cache has
1.6
1.5 204
agreed to receive in “protest” Schenker’s rent of S$0.77 per square
1.4
1.3
184 foot (psf)/ month until further resolution. Under the worst-case
scenario, FY17F DPU will drop by 4.0% to 7.2 Scts. We understand
164
1.2
144
1.1
1.0
0.9
124
104
that the decline in future cashflows will also result in a c.S$44m
0.8 84
write-off on the property valuation and thus, gearing may inch
higher to c.42%.
0.7 64
Cache Logistics Trust (LHS) Relative STI (RHS)
Cache may need to address its gearing in the near term. A scenario
of higher gearing of 42% (vs 45% regulatory cap), which is above
the management’s comfortable level of 35-40% is likely to result in
Forecasts and Valuation an overhang in the share price of Cache in the immediate term. We
FY Dec (S$m) 2015A 2016F 2017F 2018F believe that the Manager may consider divestments or acquisitions
Gross Revenue 89.7 116 120 124 (funding through equity) to pare down its gearing. Depending on
Net Property Inc 76.2 91.1 89.1 92.5 the strategy, potential DPU dilution is possible, this has not been
Total Return (12.3) (2.5) 58.7 61.3
factored in our model yet.
Distribution Inc 67.9 70.8 67.7 68.2
EPU (S cts) 6.66 6.84 6.50 6.75
EPU Gth (%) (8) 3 (5) 4 Valuation:
DPU (S cts) 8.50 7.87 7.51 7.50 Our target price remains at S$0.93. Maintain HOLD.
DPU Gth (%) (1) (7) (5) 0
NAV per shr (S cts) 100 91.1 90.1 89.4 Key Risks to Our View:
PE (X) 12.2 11.9 12.5 12.1 Schenker’s rent dispute. The rent dispute at 51 Alps Avenue
Distribution Yield (%) 10.4 9.7 9.2 9.2 (Schenker Megahub) is pending the Court’s resolution with an
P/NAV (x) 0.8 0.9 0.9 0.9 uncertain timeline. If the Court rules to settle the rent significantly
Aggregate Leverage (%) 39.9 39.1 39.2 39.3 below the market price (which is also our assumption), there could
ROAE (%) 6.7 7.7 7.2 7.5 be further pressure on TP and DPU.
At A Glance
Distn. Inc Chng (%): - - -
Consensus DPU (S cts): 8.10 7.80 7.90
Other Broker Recs: B: 2 S: 1 H: 7 Mkt. Cap (S$m/US$m) 732 / 504
Source of all data on this page: Company, DBS Bank, Bloomberg Bank of New York Mellon Corp 4.4
Finance L.P. CWT Ltd 4.4
Capital Group Companies Inc 4.3
Free Float (%) 86.9

ed: JS / sa: YM, PY
Page 157
Company Guide

S$ m
100
90 100.8%
CRITICAL DATA POINTS TO WATCH 80
95.8%
70
60 90.8%
Earnings Drivers: 50
85.8%
40
Well-spread out lease profile offers strong income visibility. 30 80.8%
Cache Logistics Trust (Cache) offers investors strong income 20
75.8%
10
visibility supported by a weighted average lease to expiry 0 70.8%
(WALE) of 3.8 years by revenues. Cache has renewed a majority 2014A 2015A 2016F 2017F 2018F
of leases up till 2017 and is actively managing these expiries in Net Property Income Net Property Income Margin %
order to limit disruption to distributions. The REIT has a stable

occupancy rate of 96.5% as of 3Q16. Net Property Income and Margins (%)
24 100%
Stable underlying occupancy for expiring master-leases. The 23 95%
underlying occupancies for both properties (Schenker Megahub 22 90%
and Hi-Speed Logistics Centre) are fairly high and given the 21 85%
strategic location at the airport logistics hub where there is 20 80%
minimal new supply. Hence, demand for the space should 19 75%
remain resilient, despite the current weak operating climate, 18 70%
made worse by high supply from completions.
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
The non-renewal of the master lease at Hi-Speed Logistics
Centre (40 Alps Ave) is not expected to impact earnings
significantly. We anticipate that net property income (NPI) for (x)
the property will dip by on the back of lower rents and 1.1
efficiency for the property. However, given that the property 1.0
only contributes c.5% of top line, actual impact to distributions 0.9
is expected to be marginal. 0.8
0.7
The court case regarding the renewal of the lease at Schenker 0.6
Megahub from the anchor tenant (Schenker) is expected to take 0.5
some time to resolve. Given this uncertainty, we have assumed 0.4

2014A 2015A 2016F 2017F 2018F
that rental from this property will fall to the “pre-agreed” rent
levels, which reflects a worst-case scenario, in our view.
Interest Cover (x)
Deepening its presence in Australia to diversify and grow (x)
6.00
earnings stream. Cache has been able to diversify its earnings
base through an acquisition of six properties in Australia, which 5.00
now contribute close to 14% of top line. The acquisition of 4.00
these properties in Australia has enabled the REIT to weather 3.00

the downturn in Singapore better as the long leases from
2.00
Australia helps provide the REIT with strong income visibility.
1.00
DHL project a key driver of growth from FY16 onwards. 0.00

Revenue contribution the DHL property will be a key earnings 2014A 2015A 2016F 2017F 2018F
driver for Cache in 2016 and beyond. The weighted average

occupancy for the property is >85% (100% for block 1 by DHL Source: Company, DBS Bank
and the tenant is expected to take up the remaining space at
block 2 in two years' time). The long 10-year lease, coupled
with extension options to the end of the land lease offers strong
income visibility for the REIT.

Page 2
Page 158
Company Guide

Balance Sheet:
Gearing close to optimal level of 40%; limited capacity to
40.0%
acquire further. Cache’s gearing is expected to hover around
35.0%
40% in FY16-18F. We note that this is at the higher end of
30.0%
management’s comfortable range of 35-40%, and will likely
25.0%
mean that further acquisition capacity will be limited. However,
20.0%
given more acquisition opportunities on the horizon, we believe
15.0%
that new deals will be partly funded by raising new equity.
10.0%
2014A 2015A 2016F 2017F 2018F
No refinancing required in 2016. Cache has a weighted average

debt to maturity of 2.4 years with no refinancing requirements
till 2017. It has 64% of its borrowings hedged into fixed rates. ROE (%)
7.0%
6.0%
Acquisition of assets in its ROFR. Cache has been granted the
5.0%
Rights of First Refusal (ROFR) to 15 properties by its Sponsor
4.0%
(CWT) and C&P in the Asia Pacific. These 15 properties can
approximately contribute 5.7m sq ft in gross floor area which 3.0%
when acquired, is expected to significantly increase its portfolio 2.0%
size, earnings and thus provide uplift to share price. 1.0%
0.0%
2014A 2015A 2016F 2017F 2018F
Beating market outlook. While the warehouse market is
expected to see a deluge of new supply completions over 2016-
2018, a majority of Cache’s leases are MNCs and 3PLs, and Distribution Yield (%)
(%)
hence we believe occupancy rates should remain steady. Higher 11.1
rents achieved given its quality portfolio could outperform 10.1 +2sd: 10.2%
market expectations that rents would moderate.
9.1 +1sd: 9.1%
Key Risks: 8.1

Avg: 7.9%
Interest rate risk 7.1
‐1sd: 6.8%
Any increase in interest rates will result in higher interest 6.1
payments for the REIT, hence reducing the income available for ‐2sd: 5.7%
5.1
distribution, which will result in lower distribution per unit 2013 2014 2015 2016 2017
(DPU) for unitholders.

PB Band (x)
Economic risk 1.7
(x)
A weaker economic outlook could have a negative impact on
industrial rents and occupancies as companies cut back on 1.5
+2sd: 1.43x
production and require less space. Industrial rents have a
1.3
+1sd: 1.27x
strong historical correlation with GDP growth.
1.1 Avg: 1.11x
Company Background ‐1sd: 0.96x

0.9
Cache is a REIT whose investment mandate is to invest
‐2sd: 0.8x
primarily in logistics properties located in the Pan Pacific 0.7
region.

Page 3
Page 159
Company Guide

FY Dec 2014A 2015A 2016F 2017F 2018F
Gross revenue 82.9 89.7 116 120 124
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Driven mainly from
Net Interest (Exp)/Inc (12.2) (13.7) (18.9) (19.5) (20.1) conversion of single user
Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0 to multi-user properties
Net Income 57.2 53.0 62.1 59.4 62.1
Tax (0.5) (0.6) (0.6) (0.8) (0.8)
Total Return 65.7 (12.3) (2.5) 58.7 61.3
Growth & Ratio
Revenue Gth (%) 2.3 8.3 29.4 2.9 3.9
N Property Inc Gth (%) 1.5 (2.4) 19.7 (2.2) 3.8
Net Inc Gth (%) (0.4) (7.7) 17.3 (4.6) 4.6
Dist to revenue (%) 80.6 75.7 61.0 56.7 55.0
ROAE (%) 7.4 6.7 7.7 7.2 7.5
ROA (%) 5.1 4.3 4.6 4.3 4.5
ROCE (%) 6.3 5.4 6.0 5.8 6.0
Int. Cover (x) 5.7 4.9 4.3 4.0 4.1

Page 4
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Company Guide

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Gross revenue 23.1 24.0 27.9 28.1 28.0

Net Income 12.6 11.5 14.6 15.5 14.2
Tax (0.2) (0.2) (0.4) 0.12 (0.3)
Minority Interest 0.0 0.0 0.0 0.0 0.0 Outlook remains flattish given
Net Income after Tax 12.4 11.3 14.2 15.6 13.9 limited expiries.
Total Return 12.4 (53.4) 14.2 15.6 (22.2)
Growth & Ratio
Revenue Gth (%) 7 4 16 1 0
N Property Inc Gth (%) 2 2 15 2 (2)
Net Inc Gth (%) (8) (9) 25 10 (11)
Balance Sheet (S$m)

FY Dec 2014A 2015A 2016F 2017F 2018F

Other LT Assets 0.24 1.84 1.84 1.84 1.84
Cash & ST Invts 11.3 8.05 7.37 6.09 6.99
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 3.46 4.98 2.90 2.99 3.10
Total Assets 1,137 1,326 1,357 1,356 1,358
ST Debt 6.62 8.31 8.31 8.31 8.31

Creditor 20.5 14.3 9.68 9.96 10.3
LT Debt 343 515 517 519 521

Net Cash/(Debt) (338) (515) (518) (521) (522) Gearing level remains close to
Ratio 40%.
Current Ratio (x) 0.5 0.6 0.6 0.5 0.5
Quick Ratio (x) 0.5 0.6 0.6 0.5 0.5
Z-Score (X) 1.5 1.1 1.3 1.2 1.2

Page 5
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Company Guide

FY Dec 2014A 2015A 2016F 2017F 2018F
Pre-Tax Income 57.2 53.0 62.1 59.4 62.1

Dep. & Amort. 0.22 0.65 0.0 0.0 0.0
Tax Paid (0.3) (0.6) 0.0 (0.6) (0.8)
Chg in Wkg.Cap. 13.2 (8.1) (2.5) 0.20 0.27
Net Operating CF 73.8 75.1 65.6 65.0 67.7
Net Invt in Properties (63.5) (263) (97.5) (0.6) (0.6)
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
Other Investing CF 0.17 0.06 0.0 0.0 0.0
Net Investing CF (63.3) (263) (97.5) (0.6) (0.6)
Chg in Gross Debt 42.2 173 2.00 2.00 2.00
New units issued 0.0 98.5 100 0.0 0.0
Net Financing CF (40.1) 185 31.2 (65.7) (66.2)
Chg in Cash (29.5) (3.2) (0.7) (1.3) 0.90

Free CFPS (S cts) 1.33 (23.9) (3.5) 7.14 7.38
S$
12- mt h
Dat e of Closing
0.95 Report Pric e
Pric e
6 1: 26 J an 16 0.88 0.96 BUY
2: 25 Apr 16 0.89 0.93 BUY
0.90 2
4 5 3: 31 May 16 0.87 0.93 BUY
4: 21 J ul 16 0.88 0.93 BUY
5: 22 Aug 16 0.91 0.93 BUY
1
0.85 3 7 6: 28 Sep 16 0.91 0.93 HOLD
7: 24 Oct 16 0.87 0.93 HOLD
0.80
0.75
Source: DBS Bank

Analyst: Derek TAN
Mervin SONG CFA

Page 6 Page 162
Cambridge Industrial Trust
Version 5 | Bloomberg: CREIT SP | Reuters: CMIT.SI Refer to important disclosures at the end of this report
HOLD Still Feeling the Pain of Transition

Price Target 12-mth: S$0.54 (0% upside and 7.6% yield) Transitional pain to continue, HOLD. TP S$0.54. Cambridge
Industrial Trust (CREIT) remains in the midst of a portfolio reposition
Potential Catalyst: Turnaround in rental prospects. in the midst of the current downtown in the industrial space. While
Where we differ: Estimates are below consensus portfolio occupancy remains fairly high, it is at the expense of
declining rents, a painful but justified strategy for the REIT. A couple
Derek TAN +65 6682 3716 derektan@dbs.com of roadbumps : (i) its Australian partner is terminating its joint
Singapore Research Team equityresearch@dbs.com venture, putting a pause to plans to develop and grow an
Australian business; and (ii) more potential downside to DPUs on
the back of more conversions from single-tenanted properties to
multi-tenanted ones. Our TP and estimates are cut by 8% on the
Price Relative
S$
back of lower margin assumptions. Maintain HOLD, TP S$0.54.
Relative Index
0.9
216
Asset recycling to redeploy capital; looking to Australia. CREIT has

0.9
0.8 196
0.8 176
0.7
0.7
156 been active in acquisitions, and is focusing on optimizing its
0.6
0.6
136
116
portfolio performance through strategic asset enhancement
initiatives (AEIs) and divestments to redeploy capital to higher-
0.5
96
0.5
0.4 76
yielding sources. While its Australia JV partner has ceased the
Cambridge Industrial Trust (LHS) Relative STI (RHS)
partnership, the Manager remains committed to its long-term
acquisition strategy in Australia and is actively exploring other
opportunities.
FY Dec (S$m) 2015A 2016F 2017F 2018F Outcome of strategic review key to re-rating. The Manager is
conducting a strategic review of CREIT’s business and operations to
Net Property Inc 86.2 80.3 81.5 82.6 fulfill its strategy of maximising value for its unitholders and has
Total Return 52.5 52.2 53.2 53.1 appointed Goldman Sachs (Singapore) Pte to assist in its analysis.
Distribution Inc 61.8 53.2 54.2 54.1 The strategic review may open up a myriad of scenarios (M&A,
EPU (S cts) 4.33 4.03 4.08 4.07 trade sale or even an internalisation). Any incremental steps taken
EPU Gth (%) 3 (7) 1 0 by the Manager to drive value should be well received by investors.
DPU (S cts) 4.79 4.11 4.16 4.15
DPU Gth (%) (4) (14) 1 0 Valuation:
NAV per shr (S cts) 67.7 66.9 66.8 66.7
PE (X) 12.6 13.5 13.3 13.4 Our DCF-backed TP is S$0.54. The stock is offering a forward yield
Distribution Yield (%) 8.8 7.5 7.6 7.6 over 7.5%, which we believe will cap further downside to share
P/NAV (x) 0.8 0.8 0.8 0.8 price. Maintain HOLD.
ROAE (%) 6.3 6.0 6.1 6.1
Key Risks to Our View:
Distn. Inc Chng (%): 0 0 0 Interest rate risk. Any increase in interest rates will result in higher
Consensus DPU (S cts): 4.20 4.20 4.30 interest payments which will reduce income available for
distribution and DPUs.
Finance L.P. At A Glance
Mkt. Cap (S$m/US$m) 704 / 498
Jinquan Tong 17.84
Chan Wai Kheong 5.39
Credit Suisse Group AG 5.00
Free Float (%) 71.77
Earnings Drivers:

ed: JS / sa: YM, PY
Page 163
Company Guide

Property conversions to cause headwinds to occupancy rates. S$ m
100
While we note that CREIT offers strong income visibility with a 90
85.4%
83.4%
relatively long weighted average lease expiry of 3.8 years, 80
70 81.4%
property conversions (from single-tenanted properties to multi- 60 79.4%
50
tenanted ones when the leases expire) which account for 40
77.4%
75.4%
11.3% and 23.6% of revenues over FY16-17F will translate to 30
73.4%
20
near-term pressure to top line. This is due to the loss of property 10 71.4%
efficiency and higher vacancy rates when these conversions take 0

2014A 2015A 2016F 2017F 2018F
69.4%
place. However, the pace of conversions is expected to taper off

from FY17 onwards, meaning that further downside in vacancy
rates will likely be limited.
82%
In view of the competitive environment, the Manager is 23
80%
22
focusing on maintaining occupancy rates and thus rental 22 78%
reversionary rates are likely to turn slightly negative over these 21 76%
two years. 21
74%
20
72%
20
Optimal gearing level implies that upside from acquisitions is 19 70%
likely to be limited. Gearing level of c.37% is within 19 68%
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
management's comfortable range of 35-40% and is optimal, in
our view. This is likely to mean that while the Manager remains Net Property Income Net Property Income Margin %
keen to grow the portfolio via acquisitions and is looking to
venture overseas for potential opportunities, there is a cap to Distribution Paid / Net Operating CF
the number of deals it can look at. (x)
1.2
Asset rejuvenation strategy. CREIT has recently completed the 1.0
sale of 23 Tuas Ave 10. The divestment price is 5% above

0.8
valuation. Proceeds are expected to be utilised towards debt
repayment and/or asset enhancement opportunities. The 0.6
Manager will be embarking on asset enhancement initiative at 0.4

120 Pioneer Road (completing in 3Q17) which will increase the
property’s attractiveness to end-users. 0.2
2014A 2015A 2016F 2017F 2018F
Strategic review. The Manager is conducting a strategic review

of CREIT’s business and operations to fulfill its strategy of Interest Cover (x)
(x)
maximising value for unitholders of CREIT and has appointed 4.00
Goldman Sachs (Singapore) Pte to assist in its analysis. 3.90
3.80
3.70
3.60
3.50
3.40
3.30
3.20
2014A 2015A 2016F 2017F 2018F

Page 2
Page 164
Company Guide

Balance Sheet:
Gearing remains stable Looking ahead, there is limited capacity 40.0%
to pursue acquisition opportunities with gearing at c.37%. 35.0%
30.0%
Pro-active capital management. CREIT has refinanced most of its 25.0%
loans expiring and has no refinancing due till 2H18. In addition, 20.0%
the Manager has fixed c.88% of its interest rates over the next 15.0%
3.2 years, meaning that volatility from a hike in interest rates to
10.0%
have a marginal impact to distributions. 2014A 2015A 2016F 2017F 2018F

Pick-up in occupancy rate. We believe that expected vacancies ROE (%)
and earnings weakness arising from property conversions from 6.0%
single-tenanted to multi-tenanted could be an overhang on the
5.0%
stock. The ability to retain tenants will alleviate such risks and
may result in higher prices. 4.0%
3.0%
Not likely to see acquisitions given gearing of 37%. The 2.0%

Manager remains keen to grow the portfolio through
1.0%
acquisitions. Given limited accretive deals in Singapore, CREIT
has broadened its investment focus to Australia, Japan and 0.0%
2014A 2015A 2016F 2017F 2018F
Malaysia, which the Manager has identified as having similar
sovereign risks and transparency characteristics with Singapore.
(%)
Key Risks:
Interest rate risk. Any increase in interest rates will result in 10.0
higher interest payments which will reduce income available 9.0

+2sd: 8.8%
for distribution and result in lower distribution per unit (DPU) +1sd: 8.1%
8.0
to unitholders. That said, CREIT has substantially hedged its Avg: 7.4%
interest rate exposure. 7.0
‐1sd: 6.6%
6.0
‐2sd: 5.9%
Economic risk. A deterioration in the economic outlook could
5.0
have a negative impact on industrial rents and occupancies as 2013 2014 2015 2016
companies cut back production and require less space.

Industrial rents have a strong correlation with GDP growth. PB Band (x)
1.5
(x)
Cambridge Industrial Trust (CREIT) is a real estate investment 1.3
trust which invests primarily in income-producing industrial 1.2 +2sd: 1.22x
assets located in Singapore. 1.1 +1sd: 1.09x

1.0
Avg: 0.97x
0.9
‐1sd: 0.85x
0.8
0.7 ‐2sd: 0.72x
0.6

Page 3
Page 165
Company Guide

FY Dec 2014A 2015A 2016F 2017F 2018F
Gross revenue 99.3 112 110 112 113
Earnings outlook to
remain flattish in the
absence of acquisitions
Net Income 52.3 55.2 52.2 53.2 53.1
Tax (0.1) 0.0 0.0 0.0 0.0
Total Return 45.3 52.5 52.2 53.2 53.1
Growth & Ratio
Revenue Gth (%) 3.0 13.0 (2.0) 1.5 1.4
N Property Inc Gth (%) (3.2) 10.7 (6.8) 1.5 1.4
Net Inc Gth (%) 4.2 5.8 (5.3) 1.9 (0.3)
Dist to revenue (%) 63.5 55.1 48.4 48.6 47.8
ROAE (%) 6.0 6.3 6.0 6.1 6.1
ROA (%) 3.9 3.9 3.7 3.7 3.7
ROCE (%) 5.3 5.6 5.1 5.2 5.3
Int. Cover (x) 3.9 3.5 3.6 3.6 3.4

Page 4
Page 166
Company Guide

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Gross revenue 28.5 28.5 28.4 28.3 27.6

Exceptional Gain/(Loss) 0.0 (0.2) (0.4) (0.9) 0.0
Net Income 14.7 14.0 13.8 12.5 12.2
Tax 0.0 0.0 0.0 0.0 0.0
Lower distributable income
Total Return 14.7 12.5 13.8 12.5 12.9
mainly due to higher finance
Non-tax deductible Items 0.87 2.30 0.73 1.53 0.0 costs and zero management
Net Inc available for Dist. 15.6 14.8 14.5 14.1 12.9 fees paid in units.
Growth & Ratio
Revenue Gth (%) 2 0 0 0 (2)
N Property Inc Gth (%) 1 (1) (1) (2) (6)
Net Inc Gth (%) 37 (5) (1) (9) (3)
Balance Sheet (S$m)

FY Dec 2014A 2015A 2016F 2017F 2018F

Other LT Assets 16.4 0.0 0.0 0.0 0.0
Cash & ST Invts 6.10 2.66 2.20 4.28 6.37
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 10.9 9.65 1.69 1.72 1.74
Total Assets 1,381 1,431 1,424 1,429 1,433
ST Debt 50.0 0.0 0.0 0.0 0.0

Creditor 26.4 24.0 7.58 7.70 7.80
LT Debt 426 525 536 541 546
Non-Cash Wkg. Capital (3.6) 26.9 35.3 35.2 35.1

Net Cash/(Debt) (469) (523) (534) (537) (540) Gearing to remain at the
Ratio optimal level of c.38%
Current Ratio (x) 0.4 2.2 5.9 6.1 6.3
Quick Ratio (x) 0.2 0.5 0.5 0.8 1.0
Z-Score (X) 1.0 1.0 1.1 1.1 1.1

Page 5
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Company Guide

FY Dec 2014A 2015A 2016F 2017F 2018F
Pre-Tax Income 52.3 55.2 52.2 53.2 53.1

Dep. & Amort. 0.0 0.0 0.0 0.0 0.0
Tax Paid 0.0 (0.1) 0.0 0.0 0.0
Associates &JV Inc/(Loss) (0.5) (0.1) 0.0 0.0 0.0
Chg in Wkg.Cap. (4.2) (0.3) (8.5) 0.09 0.08
Net Operating CF 66.9 79.1 43.8 53.3 53.2
Net Invt in Properties (195) (40.6) (2.0) (2.0) (2.0)
Other Invts (net) 0.0 (10.6) 0.0 0.0 0.0
Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0
Net Investing CF (194) (50.1) (2.0) (2.0) (2.0)
Chg in Gross Debt 102 16.1 11.0 5.00 5.00
New units issued (0.2) (0.3) 0.0 0.0 0.0
Net Financing CF 59.4 (32.6) (42.2) (49.2) (49.1)
Chg in Cash (67.9) (3.6) (0.5) 2.09 2.08

Free CFPS (S cts) (10.3) 3.02 3.22 3.94 3.92
0.60 S$
12- mt h
Dat e of Closing
Report Price
0.58 Pric e
2 1: 28 Apr 16 0.55 0.56 HOLD
0.56 4 2: 25 J ul 16 0.56 0.60 HOLD
3: 22 Aug 16 0.55 0.60 HOLD
0.54 4: 26 Oct 16 0.55 0.54 HOLD
1 3 5: 28 Nov 16 0.53 0.54 HOLD
0.52 5
0.50
0.48
0.46
Source: DBS Bank

Analyst: Derek TAN, Singapore Research Team

Page 6 Page 168
CapitaLand Commercial Trust
Version 6 | Bloomberg: CCT SP | Reuters: CACT.SI Refer to important disclosures at the end of this report
BUY Moving from green to gold

Last Traded Price ( 4 Jan 2017): S$1.51 (STI : 2,921.31) Timely acquisition of CapitaGreen. Despite the expected decline
Price Target 12-mth: S$1.70 (13% upside and 6.2% yield)
in the office market, we believe the timely acquisition of the
remaining 60% in CapitaGreen not only helps to offset
Potential Catalyst: Delivery of DPU growth in the midst of a downturn in
the Singapore office market potential negative rental reversions and lower occupancies for
Where we differ: Above consensus after incorporating the acquisition of the rest of CapitaLand Commercial Trust (CCT)’s portfolio but
60% interest in CapitaGreen will allow CCT to deliver a 2-year DPU CAGR of 4% (2015-2017
excluding impact from redevelopment of Golden Shoe), which is
Analyst among the highest in the office sector (average of 2%) and
Derek TAN +65 6682 3716 derektan@dbs.com above the S-REIT DPU CAGR of 1%.
Trading at a discount to physical office transactions. Investors
have been concerned over the value of CCT’s portfolio given
Price Relative falling office rents. We believe this is unwarranted given the
resiliency of office property values in Singapore. CCT’s
S$ Relative Index
2.1
214
2.0
1.9
1.8
194
174
Singapore Grade A office portfolio trades at an implied value of
1.7
1.6
154
134
c.S$1,900 per square foot (psf) compared to recent sales of
1.5
1.4
1.3
114 between c.S$2,700 (adjusted for 99-year leasehold for
94
CapitaGreen) and $3,500 psf. While CCT’s Grade A portfolio is

1.2
1.1 74
CapitaLand Commercial Trust (LHS) Relative STI (RHS) unlikely to trade up to c.S$2,700 given the older profile of some
of its properties, we believe the current strength of the physical
market and 999-year leasehold status of some of its buildings,
warrants CCT to trade close to its book value per unit of S$1.72
FY Dec (S$m) 2014A 2015A 2016F 2017F or an implied valuation of S$2,000 psf.
Net Property Inc 205 213 217 273 Medium term upside from redevelopment of Golden Shoe Car
Total Return 449 307 241 259 Park. CCT announced the redevelopment of its Golden Shoe Car
Distribution Inc 249 254 266 280 Park property. Subject to obtaining the necessary government
EPU (S cts) 12.6 10.4 8.15 8.62
approvals, the property will be developed into one with c.1m
EPU Gth (%) 38 (18) (22) 6
DPU (S cts) 8.46 8.62 8.98 9.31 square feet (sqft) of commercial space in terms of gross floor
DPU Gth (%) 3 2 4 4 area (GFA) and comprise an office tower of up to 280 metres
NAV per shr (S cts) 175 177 177 175 high. Upon completion in 2021, the property will provide a
PE (X) 11.9 14.4 18.5 17.5
Distribution Yield (%) 5.6 5.7 6.0 6.2 medium term uplift to CCT’s current NAV per unit of S$1.72.
P/NAV (x) 0.9 0.8 0.9 0.9
Valuation:
ROAE (%) 7.3 5.9 4.6 4.9 Our DCF-based TP of S$1.70 implies a price of c.S$2,000 psf
for CCT’s Singapore portfolio.
Distn. Inc Chng (%): - -
Consensus DPU (S cts): 8.90 9.10 Key Risks to Our View:
Other Broker Recs: B: 13 S: 4 H: 7 A key risk to our view is new office supply causing spot rents
Source of all data on this page: Company, DBS Bank, Bloomberg to fall below S$7 psf, which is likely to lead to lower-than-
Finance L.P. expected asking rents and rental income.
At A Glance
Mkt. Cap (S$m/US$m) 4,460 / 3,075
Capitaland Limited 31.1
Blackrock 6.6
CBRE Group Inc 4.9
Free Float (%) 57.4

ed: JS / sa: YM, PY Page 169
Company Guide

S$ m
300
86.0%
250
CRITICAL DATA POINTS TO WATCH 84.0%
200 82.0%
150
Earnings Drivers: 80.0%
Staggered weighted lease expiry profile to help mitigate 100 78.0%
negative rental reversions. We have factored in lower 50 76.0%
occupancies and negative reversions at Capital Tower, Six 0 74.0%

2013A 2014A 2015A 2016F 2017F
Battery Road, and One George Street for FY16 and FY17. CCT’s
defensive weighted average lease expiry (WALE) of 6.8 years (by Net Property Income Net Property Income Margin %
net lettable area (NLA)) should also help ensure that the
negative impact from an anticipated decline in rents over the Net Property Income and Margins (%)
80%
next two years will be gradual rather than immediate. Thus, 79%
58
CCT offers investors a measure of earnings stability and 79%
56 78%
certainty amid record office completions over the next two 78%
years. 54 77%
77%
52
76%
Defensive portfolio with >70% of office leases expiring in FY19 50 76%
75%
and beyond, coinciding with the period when Singapore faces 48 75%
no new office supply. CCT has maintained a defensive leasing
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
strategy amid stiff competition for larger tenants by locking in
longer-term leases for most of its top 10 tenants. With proactive
forward renewals, more than 70% of office leases now expire
in FY19 and beyond. This fortuitously coincides with the period (x)
1.4
when the Singapore office market should be on an upturn as no 1.3
new office buildings will be completed from FY18 onwards. 1.2
1.1
CapitaGreen contribution to weather CCT through tough times. 1.0

0.9
CCT’s near-term earnings will be driven by the acquisition of the 0.8
60% remaining interest in CapitaGreen. We believe the 0.7
increased contribution from CapitaGreen will not only help 0.6
offset potential negative rental reversions at CCT’s other 0.5

2013A 2014A 2015A 2016F 2017F
properties but also contribute to 4% DPU CAGR over the next
couple of years (excluding any loss of income from
redevelopment of Golden Shoe). Beyond the boost from the Interest Cover (x)
higher equity interest in CapitaGreen (40% previously to (x)
7.00
100%), CCT should benefit from the higher underlying earnings
6.00
at CapitaGreen as tenants progressively move into the building
5.00
and rent-free periods start to expire.
4.00
Medium term upside from redevelopment of Golden Shoe Car 3.00
Park. CCT announced the redevelopment of its Golden Shoe 2.00
Car Park property. Subject to obtaining the necessary 1.00
government approvals, the property will be developed into one 0.00

2013A 2014A 2015A 2016F 2017F
with c.1m sqft of commercial GFA and comprise an office tower
of up to 280 metres high. Upon completion in 2021, the
property will provide a medium term uplift to CCT’s current
NAV per unit of S$1.72 and earnings. This is on top of any value
creation from disposal of its stake in One George Street (50%
interest) and Wilkie Edge as speculated by the press.

Page 2
Page 170
Company Guide

Balance Sheet:
Increase in gearing post acquisition of CapitaGreen. Post
acquisition of the remaining 60% interest in CapitaGreen, its 35.0%
gearing has risen to c.38% from c.30% previously. While this is 30.0%
higher than CCT’s average gearing over the last few years, we 25.0%
believe this remains prudent, as it is below the 45% gearing cap 20.0%
imposed by MAS and provides some buffer in the event of any 15.0%
decline in the value of CCT’s portfolio.
10.0%
2013A 2014A 2015A 2016F 2017F

Higher-than-average DPU growth. Following the acquisition of
the remaining 60% interest CapitaGreen, CCT will have the ROE (%)
highest 2-year DPU growth among the office REITs (average of 7.0%
2%) which is also higher than the average S-REIT growth of 6.0%
1.7%. With a superior growth profile in a slowing growth 5.0%
environment, we believe investors will gravitate towards CCT,
4.0%
causing the stock to re-rate.
3.0%
2.0%
1.0%
Key Risks:
Risk of higher vacancies and negative rental reversions for 0.0%
2013A 2014A 2015A 2016F 2017F
FY16. In FY16-17, c.10% of CCT’s office leases will be due for
expiry, the majority of which stems from One George Street,
Six Battery Road and Raffles City, where expiring rents are Distribution Yield (%)
(%)
close to or higher than market rents. As the Manager has 7.4
prioritised tenant retention, there is a possibility of negative 6.9

+2sd: 6.6%
rental reversions, which would impede earnings growth. 6.4
+1sd: 6.1%
5.9
Competition from other landlords. Between 2016 and 2018, 5.4

Avg: 5.5%
c.5.3m sqft of office (NLA) will be completed within the 4.9 ‐1sd: 5%
downtown core, translating to a 15% increase in existing
4.4 ‐2sd: 4.4%
stock, or 3-year CAGR of 4.6%. Due to weaker net absorption
3.9
rates of <1m sqft in recent years, CCT could face higher 2013 2014 2015 2016 2017
competition for large tenants from landlords of newer

buildings, which have large floor plates of 30-40k sqft. PB Band (x)
1.3
(x)
Pressure on rents from shadow space. We see some
1.2
downsizing activity from banks and financial institutions, and
1.1
shadow space (particularly in the Marina Bay area) could put +2sd: 1.05x
some pressure on rents for CCT’s portfolio, which is located 1.0
+1sd: 0.97x
primarily in the Raffles Place/Tanjong Pagar areas. 0.9
Avg: 0.89x
0.8 ‐1sd: 0.8x
Company Background 0.7 ‐2sd: 0.72x
CapitaLand Commercial Trust (CCT) is a real investment trust 0.6

investing exclusively in commercial properties in Singapore.

Page 3
Page 171
Company Guide

FY Dec 2013A 2014A 2015A 2016F 2017F
Gross revenue 251 263 273 277 348
Exceptional Gain/(Loss) 2.52 (2.5) 47.5 0.0 0.0
Net Income 261 368 309 242 260
Tax 0.0 0.0 (0.1) (0.7) (0.9)
Total Return 367 449 307 241 259
Non-tax deductible Items (139) (200) (52.8) 24.6 20.9
Growth & Ratio
Revenue Gth (%) (33.1) 4.4 4.0 1.3 25.7
N Property Inc Gth (%) (33.3) 4.1 3.7 2.0 26.0
Net Inc Gth (%) 26.9 40.9 (16.4) (21.4) 7.4 Earnings growth will be
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 100.0 driven by increased
Net Prop Inc Margins (%) 78.4 78.2 77.9 78.4 78.6 contribution from
Net Income Margins (%) 103.8 140.0 112.5 87.2 74.5 CapitaGreen, which should
Dist to revenue (%) 93.1 94.9 93.1 96.1 80.5 offset income loss from
lower occupancies and
negative rental reversions at
ROAE (%) 5.4 7.3 5.9 4.6 4.9
existing office assets such
ROA (%) 3.9 5.8 4.7 3.3 3.3 as Capital Tower, 6 Battery
ROCE (%) 2.8 3.0 3.0 2.6 3.1 Road and One George
Int. Cover (x) 3.9 5.8 6.1 4.6 3.2 Street

Page 4
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Company Guide

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Gross revenue 68.3 67.6 66.9 67.6 74.4

Other Non Opg (Exp)/Inc 0.11 (0.3) 1.66 0.0 1.22
Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 (13.5)
Net Income 56.7 68.0 61.9 74.3 51.6
Tax 0.0 (0.1) (0.2) 0.0 (0.2)
Total Return 0.0 0.0 0.0 0.0 0.0
Growth & Ratio
Revenue Gth (%) (1) (1) (1) 1 10
N Property Inc Gth (%) (2) (1) 0 (1) 11
Net Inc Gth (%) (26) 20 (9) 20 (31)
Balance Sheet (S$m)

FY Dec 2013A 2014A 2015A 2016F 2017F

Other LT Assets 1,359 1,499 1,504 1,199 1,199
Cash & ST Invts 84.1 101 81.2 140 156
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 33.7 38.3 45.3 17.2 21.6
Total Assets 6,245 6,521 6,593 7,934 7,959
ST Debt 0.0 270 0.0 0.0 0.0

Creditor 50.9 47.4 37.3 64.2 80.7
LT Debt 1,218 970 1,255 2,546 2,379

Net Cash/(Debt) (1,134) (1,139) (1,174) (2,406) (2,223) Increased gearing due the
Ratio acquisition of remaining 60%
Current Ratio (x) 1.9 0.4 2.8 2.1 2.0 interest in CapitaGreen
Quick Ratio (x) 1.9 0.4 2.8 2.1 2.0
Z-Score (X) 2.1 2.2 2.2 1.2 1.3

Page 5
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Company Guide

FY Dec 2013A 2014A 2015A 2016F 2017F
Pre-Tax Income 261 368 307 242 260

Dep. & Amort. 1.39 3.51 3.51 3.51 3.51
Tax Paid (0.1) 0.0 0.0 (0.1) (0.7)
Associates &JV Inc/(Loss) (127) (217) (97.3) (95.8) (89.2)
Chg in Wkg.Cap. 7.68 (4.6) (19.8) 55.0 12.1
Net Operating CF 195 189 197 229 207
Other Invts (net) (1.0) 0.0 0.0 0.0 0.0 Higher capex due to
Invts in Assoc. & JV (526) (397) 0.0 0.0 0.0 the acquisition of
Div from Assoc. & JVs 82.6 86.1 85.0 95.8 89.2 remaining 60% interest
Other Investing CF 526 392 0.0 0.0 0.0 in CapitaGreen
Net Investing CF 60.5 51.7 63.7 (305) 81.2
Chg in Gross Debt 40.2 50.3 5.00 401 8.00
New units issued 0.0 0.0 0.0 0.0 0.0
Other Financing CF (98.8) (30.7) (33.4) 0.0 0.0
Net Financing CF (290) (223) (280) 135 (272)
Chg in Cash (34.3) 17.0 (19.9) 59.2 15.7

Free CFPS (S cts) 6.07 5.45 5.95 (5.8) 6.60
1.72
S$
12- mt h
Dat e of Closing
Report Pric e
1.62 5 Pric e
6 1: 20 J an 16 1.33 1.45 BUY
4
2: 15 Apr 16 1.43 1.53 BUY
1.52 7 3: 24 May 16 1.39 1.61 BUY
4: 21 J ul 16 1.56 1.70 BUY
2 5: 05 Sep 16 1.59 1.70 BUY
1.42 6: 19 Oct 16 1.58 1.70 BUY
7: 09 Nov 16 1.56 1.70 BUY
3
1.32
1
1.22
Source: DBS Bank

Derek TAN

Page 6 Page 174
CapitaLand Mall Trust
Version | Bloomberg: CT SP | Reuters: CMLT.SI Refer to important disclosures at the end of this report
BUY Christmas Present is Still in the Box

Price Target 12-mth: S$2.25 (16% upside and 5.8% yield) Negative DPU in 3Q16 is a false alarm as retention is boxed for
distribution in 4Q16. CapitaLand Mall Trust (CMT)’s reported 3Q16
Potential Catalyst: Delay in rate hike expectations; more uncertainties DPU was 2.78Scts and 9M16 DPU was 8.25Scts, down 6.7% and
from Brexit execution plans; better-than-expected rental reversion 1.4% y-o-y, respectively. Investors should not be alarmed by the
Where we differ: We are line with consensus negative growth, as a higher base was set by the DPU in 3Q15 due to
Analyst S$8.0m (or 0.23Scts) retention paid out in 3Q15, out of S$12.5m
Singapore Research Team equityresearch@dbs.com retained from 1Q15. Stripping out the payment of S$8m in 3Q15,
Derek TAN +65 6682 3716 derektan@dbs.com DPU growth was up a marginal 1.1% in 3Q16. CMT retained
S$12.0m of its taxable income in 1Q16, equivalent to c.0.34Scts in
DPU terms, and will pay this out in the festive season next quarter.
Price Relative We expect flattish DPU growth for the full year.
S$ Relative Index
2.6
Funan’s redevelopment plans are within our expectations. Plans for

219
2.5
199
2.4
2.3
2.2
179
159
Funan 2.0, including a cycle-through mall, two Grade A office towers,
and co-living apartment units, were largely in line with our scenario
2.1
2.0 139
1.9 119
1.8
1.7
99 study published on 1 July 2016 (Rhapsody of Funan 2.0). We are
supportive of CMT’s decision to undertake the redevelopment. Apart
1.6 79
CapitaLand Mall Trust (LHS) Relative STI (RHS)

from a potential 4 Scts (or 2.0%) boost to NAV, we applaud the
proactive asset management strategy to turn the ageing mall into a
’lifestyle destination’.
FY Dec (S$m) 2015A 2016F 2017F 2018F Gearing has room to finance asset enhancement programs and other
Gross Revenue 669 697 695 700 developments. As CMT will fund Funan’s redevelopment cost of
Net Property Inc 466 488 480 481 S$560m entirely with debt, which is comfortably below the S$800m
Total Return 580 413 418 417 headroom available, gearing is expected to increase to 38%, which is
Distribution Inc 405 417 418 421 still healthy.
EPU (S cts) 13.5 11.7 11.8 11.8
EPU Gth (%) 2 (14) 1 0
DPU (S cts) 11.1 11.2 11.2 11.3 Valuation:
DPU Gth (%) 2 1 0 1 We have a DCF-backed TP of S$2.25. The stock offers FY16/17F DPU
NAV per shr (S cts) 192 189 190 190 yields over 5.0%.
PE (X) 14.3 16.5 16.4 16.4
P/NAV (x) 1.0 1.0 1.0 1.0
A rate hike surprise before December. While consensus is still ruling
ROAE (%) 7.3 6.2 6.2 6.2 out a hike in November just days before the US election, any surprise
move by the Fed may cause ripples in the market. In the unlikely
Distn. Inc Chng (%): - - - scenario of a rate hike ahead of consensus’ year-end expectation, we
Consensus DPU (S cts): 11.0 11.0 11.2 believe this will be an opportunity for investors to accumulate the
Other Broker Recs: B: 10 S: 0 H: 12 stock on any dips.
Mkt. Cap (S$m/US$m) 6,838 / 4,715
Capitaland 29.3
Blackrock 5.0
NTUC Enterprise Co-operativ 5.0
Free Float (%) 60.7

ed: JS / sa: YM, PY
Page 175
Company Guide

500 76.6%
450
400 74.6%
Mall owner of choice despite retail headwinds. CMT’s portfolio 300
72.6%
250
of malls stands out in Singapore’s retail landscape due to its (a) 200
70.6%
accessibility, (b) excellent asset management track record, and 150 68.6%
100
(c) strong rewards/marketing programme. Despite recent retail 50
66.6%
headwinds, we believe that CMT’s malls will continue to see 0 64.6%

2014A 2015A 2016F 2017F 2018F
good demand as retailers look to consolidate their footprints
within CMT’s malls.
Ability to deliver value through AEIs. Strategic asset Net Property Income and Margins (%)
72%
enhancement initiatives (AEIs) across its properties will result in 131
70%
increased shopper traffic in the medium term. For instance, the 126
68%
completion of AEI at IMM building in November 2015 has 121
repositioned the mall as the largest outlet mall in Singapore 116

66%
with wider offerings, which should help to further differentiate 111

64%
the mall in the midst of new supply. The upcoming 106 62%
redevelopment of Funan 2.0 could also offer upside potential to 101 60%
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
the Trust.
Expect rental reversions to underperform historical levels. CMT’s
rental reversion trends have been moderating (3.7% for FY15 Distribution Paid / Net Operating CF
and 1.7% for 9M16) and as retailers’ profitability continues to (x)
1.2
be squeezed by high labour costs and falling retail sales. We 1.1
believe that rental reversions are likely to fall within the 1-2% 1.0
range in the next 1-2 years, compounded by pressure from 0.9
escalating labour costs and labour shortage. 0.8
0.7
NPI margins could decline as the Manager expands marketing 0.6
efforts. The Manager is looking to ramp up marketing efforts to 0.5
attract a younger audience by deploying various digital and 0.4

2014A 2015A 2016F 2017F 2018F
social media initiatives and the rollout of the enhanced
CapitaStar reward programme to attract and retain shoppers. In
addition, the Manager intends to step up the installation and Interest Cover (x)
(x)
adoption of mobile and internet-enabled infrastructure within 4.80
its malls to allow complementary e-commerce activities (J
4.60
Avenue website for shoppers to buy online and collect in store).
While the immediate benefits are not obvious and are likely to 4.40
drive up operating expenses in the medium term, we laud the 4.20
efforts of the management in embracing changes in shoppers' 4.00

expectations.
3.80
3.60
2014A 2015A 2016F 2017F 2018F

Page 2
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Company Guide

Balance Sheet:
Gearing to remain stable. CMT’s gearing ratio is forecast to
35.0%
remain fairly stable at 35-38% over FY16-18F. This is after the
placement of new units as consideration for the purchase of 30.0%
Bedok Mall in 3Q15 and assuming 100% debt financing for the 25.0%
redevelopment of Funan. Gearing level is within management's 20.0%
comfortable level of between 35% and 40%. 15.0%
10.0%
Cost of debt to remain stable. The average debt cost is 3.2%, 2014A 2015A 2016F 2017F 2018F
which should remain stable in the immediate term. With

interest rates on the rise, we have priced in a 25 bps increase in
average interest cost once hedges are rolled over in the coming ROE (%)
two years. 7.0%
6.0%
5.0%
Acquisitions to drive earnings. CMT has the right of first refusal
4.0%
to acquire its Sponsor’s retail assets in Singapore. CapitaLand
3.0%
has several retail assets in its portfolio which could be injected
into the REIT, including Star Vista and the remaining 70% stake 2.0%
in Westgate. 1.0%
0.0%
2014A 2015A 2016F 2017F 2018F
Better-than-expected operational results. We believe that CMT’s
portfolio will continue to remain resilient despite headwinds.
The Trust's ability to maintain a steady growth in top line while Distribution Yield (%)
(%)
holding occupancies will be a strong testament of the 6.6
Manager's capability to stand out among its peers. 6.1

+2sd: 6%
5.6 +1sd: 5.6%
IMM could be a positive surprise. With the completion of
Avg: 5.2%
phase two, IMM is now the largest outlet mall in Singapore, 5.1
‐1sd: 4.9%
with 85 outlet stores. Feedback has been positive as the mall 4.6
‐2sd: 4.5%
renewed 22.0% of its NLA over 9M16 at 4.6% reversion rate 4.1
which is highest among all properties.
3.6
2013 2014 2015 2016 2017
Key Risks:
Downside risk to rental reversions. A worse-than-expected PB Band (x)
slowdown in consumer sentiment and consumption outlook 1.6
(x)
may result in lower reversionary potential (vs our 2% estimate) 1.5
for leases expiring in 2016. Funan’s redevelopment could be a 1.4
near-term catalyst. Further upside risk is from interest savings. 1.3 +2sd: 1.29x
The Trust has been proactive in extending its debt profile, 1.2 +1sd: 1.21x
locking in long-tenure MTNs at lower rates than previously 1.1 Avg: 1.13x
achieved. Further interest savings from refinancing associate 1.0

‐1sd: 1.04x
‐2sd: 0.96x
debt would offer upside to our estimates. 0.9
0.8
The uncertainties from the implementation of Brexit following
the referendum on 24 June 2016 will continue to cause ripples
in the market. Source: Company, DBS Bank
Company Background
CapitaMall Trust is a real estate investment trust which owns
and invests in retail properties in the suburban areas and
downtown core of Singapore.

Page 3
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Company Guide

FY Dec 2014A 2015A 2016F 2017F 2018F
Gross revenue 659 669 697 695 700
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Earnings from Bedok
Net Interest (Exp)/Inc (99.3) (91.6) (103) (91.7) (94.1) Mall will more than
Exceptional Gain/(Loss) 4.89 72.8 0.0 0.0 0.0 offset the loss of
Net Income 457 473 413 418 417 earnings from Funan for
Tax 0.0 (0.6) 0.0 0.0 0.0 3 years from 2H16.
Minority Interest 0.0 0.0 0.0 0.0 0.0 (Bedok's FY16 NPI was
Preference Dividend 0.0 0.0 0.0 0.0 0.0 S$10.9m vs Funan's
Net Income After Tax 457 473 413 418 417 S$5.6m)
Total Return 619 580 413 418 417
Non-tax deductible Items (44.6) (68.3) 3.95 0.0 4.00
Growth & Ratio
Revenue Gth (%) 3.3 1.5 4.2 (0.3) 0.8
N Property Inc Gth (%) 2.2 4.0 4.7 (1.7) 0.2
Net Inc Gth (%) 12.3 3.5 (12.6) 1.1 (0.2)
Dist to revenue (%) 62.6 60.5 59.9 60.2 60.2
ROAE (%) 7.4 7.3 6.2 6.2 6.2
ROA (%) 4.8 4.7 4.0 3.9 3.8
ROCE (%) 4.3 4.2 4.3 4.2 4.1
Int. Cover (x) 4.1 4.6 4.3 4.7 4.6

Page 4
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Company Guide

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Gross revenue 162 180 180 171 170

Exceptional Gain/(Loss) 0.0 72.7 (0.6) 0.06 (0.2)
Net Income 101 181 111 98.2 104
Tax 0.0 (0.6) 0.0 0.0 0.0
Net Income after Tax 101 180 111 98.2 104
Total Return 101 234 111 154 104
Non-tax deductible Items (0.7) (2.7) 1.31 1.80 (0.8)
Net Inc available for Dist. 102 102 115 97.1 105
Growth & Ratio S$12m of 1Q16 taxable
Revenue Gth (%) 1 12 0 (5) (1) income has been retained for
N Property Inc Gth (%) 3 11 2 (9) 3 distribution in 4Q16,
Net Inc Gth (%) 14 78 (38) (12) 6 equivalent to c.0.34Scts in
Net Prop Inc Margin (%) 70.1 69.7 71.1 67.9 70.4 DPU terms
Balance Sheet (S$m)

FY Dec 2014A 2015A 2016F 2017F 2018F

Other LT Assets 1,194 1,357 1,357 1,357 1,357
Cash & ST Invts 1,130 604 870 892 913
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 25.1 28.8 32.9 32.8 33.1
Total Assets 9,858 10,356 10,546 10,744 10,941
ST Debt 762 0.0 0.0 0.0 0.0

Creditor 217 200 282 281 283
LT Debt 2,407 3,312 3,405 3,581 3,757
Non-Cash Wkg. Capital (228) (175) (249) (248) (250)

Net Cash/(Debt) (2,040) (2,708) (2,536) (2,689) (2,844)
Ratio
Current Ratio (x) 1.1 3.1 3.2 3.3 3.3
Quick Ratio (x) 1.1 3.1 3.2 3.3 3.3
Z-Score (X) 5.8 5.6 5.5 5.4 5.3

Page 5
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Company Guide

FY Dec 2014A 2015A 2016F 2017F 2018F
Pre-Tax Income 457 473 413 418 417

Dep. & Amort. 0.0 0.0 0.0 0.0 0.0
Tax Paid (0.5) 0.0 (3.6) 0.0 0.0
Associates &JV Inc/(Loss) (149) (71.8) (77.9) (79.2) (80.5)
Chg in Wkg.Cap. 5.21 0.91 78.0 (0.7) 1.89
Net Operating CF 409 422 410 338 339
Net Invt in Properties (64.7) (95.0) 79.0 (176) (176)
Other Invts (net) 0.0 0.0 0.0 0.0 0.0 Funan’s earnings have
Invts in Assoc. & JV 12.3 (17.6) 0.0 0.0 0.0 been removed for c.3.5
Div from Assoc. & JVs 96.6 70.8 77.9 79.2 80.5 years from 2H16
Other Investing CF 6.47 (422) 0.0 0.0 0.0 (expected opening in
Net Investing CF 50.6 (464) 157 (96.8) (95.4) 4QFY19). After which,
Distribution Paid (370) (389) (397) (397) (400) our new forecasts for
Chg in Gross Debt 315 (890) 93.0 176 176 Funan 2.0 have been
New units issued 0.0 151 1.88 1.89 1.91 incorporated in the
Other Financing CF (105) 644 0.0 0.0 0.0 model
Net Financing CF (160) (484) (302) (219) (222)
Chg in Cash 300 (525) 265 22.1 20.9

Free CFPS (S cts) 9.94 9.35 13.8 4.58 4.59
S$
12- mt h
Report Pric e
Pric e
3 4
1: 22 J an 16 1.97 2.10 BUY
2.17
6 2: 25 J an 16 1.97 2.10 BUY
5 7 3: 18 Apr 16 2.16 2.10 HOLD
2.07 4: 01 J ul 16 2.17 2.20 HOLD
5: 25 J ul 16 2.15 2.23 HOLD
2 6: 22 Sep 16 2.12 2.25 BUY
1.97 7: 24 Oct 16 2.15 2.25 BUY
1
1.87
1.77
Source: DBS Bank

Analyst: Singapore Research Team
Derek TAN
Mervin SONG CFA

Page 6 Page 180
CDL Hospitality Trusts
Version 6 | Bloomberg: CDREIT SP | Reuters: CDLT.SI Refer to important disclosures at the end of this report
BUY Unloved now but offers outstanding value

Last Traded Price ( 4 Jan 2017): S$1.36 (STI : 2,921.31) Attractive valuations. We maintain our BUY call on CDL Hospitality
Price Target 12-mth: S$1.59 (17% upside and 6.6% yield) Trusts (CDREIT) and TP of S$1.59. Although we now expect the
Potential Catalyst: Recovery in the Singapore hospitality market, and
Singapore market to only recover in 2018, we believe the current
acquisitions
low share price has largely priced in the current downturn and
Where we differ: Below due to assumption of excess supply of new
CDREIT offers compelling long-term value given its Singapore
rooms in Singapore
portfolio trades on a heavily discounted implied price per key. In
Analyst
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com addition, CDREIT offers patient investors an attractive 6.8% yield
Derek TAN +65 6682 3716 derektan@dbs.com (based on 90% payout ratio) ahead of the eventual upturn.
Cheapest REIT to ride the eventual upturn. CDREIT’s implied

price per key for its Singapore portfolio stands at less than c.S$500k
Price Relative which is below its replacement cost of c.S$700k, recent market
transactions of above S$650k and that of other listed Singapore
hospitality REITs of between S$650k and S$1m. Given the quality of
the portfolio and CREIT’s long-term track record, we believe this
discount is unwarranted. Thus, CDREIT is the cheapest REIT
providing exposure to the eventual upturn in the Singapore
hospitality market which we project will occur in 2018 as supply
pressures ease.
Several mitigating factors during downturn in the Singapore

Forecasts and Valuation hospitality market. While CDREIT’s core Singapore market faces a
FY Dec (S$m) 2015A 2016F 2017F 2018F downturn, we believe this will be tempered by higher earnings
Gross Revenue 172 175 174 182 contribution from New Zealand, following the appointment of
Total Return 58.4 89.6 85.5 90.2
Millennium & Copthorne Hotels as the new operator of CDREIT’s
Distribution Inc 109 103 99.3 104 Auckland property and the negotiation of a more favourable lease
EPU (S cts) 8.99 9.02 8.56 8.97 structure. In addition, we see upside to our DPU estimates should it
EPU Gth (%) (16) 0 (5) 5 decide to utilise its S$382m debt headroom for acquisitions.
DPU (S cts) 10.1 9.37 8.95 9.33
DPU Gth (%) (8) (7) (5) 4
Valuation:
NAV per shr (S cts) 159 159 159 159
PE (X) 15.1 15.1 15.9 15.2 We maintain our TP and DPU forecast which have incorporated the
Distribution Yield (%) 7.4 6.9 6.6 6.9 delayed expectations of the recovery of Singapore’s hospitality
P/NAV (x) 0.9 0.9 0.9 0.9 market.
Weaker-than-expected demand supply outlook in Singapore. The
Distn. Inc Chng (%): 0 0 0 key risk to our view is a weaker-than-expected demand-supply
Consensus DPU (S cts): 9.50 9.50 9.80 outlook for the Singapore hospitality market.
At A Glance
Finance L.P.
Mkt. Cap (S$m/US$m) 1,349 / 937
Hospitality Holdings Pte Ltd 31.7
Aberdeen 5.0
M & C Reit Management Ltd 5.0
Free Float (%) 54.3

ed: JS / sa: YM, PY
Page 181
Company Guide
Earnings Drivers:
Challenging near-term operating conditions in Singapore.
CDREIT’s profitability is largely dependent on earnings from its
Singapore hotels. Near term, we see headwinds to the group’s
core operations due to the growth in new hotel room supply in
Singapore (6-7% of existing supply). The more competitive
landscape is likely to lead to pressure on ADRs (average room
rates) and occupancies, which we estimate will result in a c.6%
decline in RevPAR in 2016. Nevertheless, over the medium term, Net Property Income and Margins (%)
as the Singapore government has not released any land for
hotel development over the past two years, supply pressures
should ease from 2018 onwards.
Softness from Maldives. The significant depreciation of the

Russian rubble has resulted in a decline in the number of high-
yielding Russian guests into the Maldives. Combined with a
recent slowdown in Chinese visitors, we expect softness in
CDREIT’s Maldives operations on the back of more aggressive
price competition by other resorts. Nevertheless, this could be
partially offset by a weakening of the SGD versus USD, as Distribution Paid / Net Operating CF
forecast by our DBS economists. CDREIT’s income from the
Maldives is generated in USD.
Boost from Japanese and UK acquisitions as well as reopening

of Claymore Link mall. The timely acquisitions of two Japanese
business hotels, Hotels MyStays Asakusabashi and Hotel
MyStays Kamata in December 2014 worth c.S$64m, should
help CDREIT buffer against the slowdown in its core Singapore
operations. The expected growth in tourist arrivals into Japan
should translate into higher room rates and occupancies for
CDREIT’s properties in medium term albeit near term there may
be some volatility in performance due to the recent strength in Interest Cover (x)
the JPY. Furthermore, CDREIT should benefit from the
acquisition of Cambridge City Hotel and the recent
appointment of Hilton as its operator. Moreover, the recent
reopening of the Claymore Link, a retail mall in the heart of
Orchard Road (after a 1.5-year renovation), is another positive
for CDREIT’s earnings.
Asset optimisation. In the medium term, we believe CDREIT can

further maximise the returns of its portfolio by undertaking AEIs
such as those being conducted at Grand Copthorne Waterfront
Hotel and M Hotel in Singapore. In addition, at end-FY16,
CDREIT should receive an earnings boost, following the
appointment of Millennium & Copthorne Hotels as the new
operator at its Auckland property with a new lease structure.

Page 2
Page 182
Company Guide

Balance Sheet:
Gearing within optimal range. CDREIT’s gearing at end-
September 2016 stood at c.36%, which is within its optimal
gearing range of 35-40%. However, should CDREIT gear up to
40%, it will have c.S$140m worth of debt headroom to pursue
acquisitions.
Moderate exposure to rising interest rates. Approximately 60%

of CDREIT’s borrowings are on fixed interest rates. Thus, CDREIT
has moderate exposure to rising interest rates.

Near-term earnings risk priced in. While CDREIT’s earnings are
expected to be under pressure near term due to projected
supply and demand imbalance in Singapore, we believe this has
largely been priced in. The implied price per key for CDREIT’s
Singapore portfolio stands at c.S$510k, which is below its
replacement cost of c.S$700k and recent market transactions of
above S$650k.
Unjustified discount to other hospitality REITs. Compared to

other hospitality S-REITs, CDREIT offers the cheapest exposure
to the eventual upturn in the Singapore market. The implied
price per key for other S-REITs stands at between S$650k and Distribution Yield (%)
S$1m versus c.S$500k for CDREIT. Given the mid-tier to luxury
category of CDREIT’s room inventory and its successful track
record, we believe this valuation discount is unjustified.
Key Risks:
Interest rate risk. Any increase in interest rates will result in
higher interest payments, which could result in lower
distribution per unit (DPU) for unitholders.
Currency risk. As CDREIT earns rental income in various

currencies (AUD, GBP, JPY, NZD and USD), a depreciation of PB Band (x)
any foreign currency against the SGD could negatively impact
distribution income, which is distributed in SGD.
Brexit. CDREIT’s hotel in Cambridge, UK contributed c.6% of

9M16 group NPI. With the UK voting to exit EU (Brexit), this
may negatively impact business activities in the UK and
CDREIT’s property. In addition, Brexit may result in a
depreciation of the GBP versus SGD, which will negatively
impact distributions in SGD.
Company Background
CDL Hospitality Trusts (CDREIT) is a stapled group comprising Source: Company, DBS Bank
H-REIT and HBT. H-REIT is a real estate investment trust that
invests in a portfolio of income-producing hospitality-related
properties while HBT is a business trust.

Page 3
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Company Guide

FY Dec 2014A 2015A 2016F 2017F 2018F
Gross revenue 167 172 175 174 182
Net Income 106 89.6 91.9 89.0 93.8
Tax (1.4) (0.9) (2.3) (3.5) (3.6)
Net Income After Tax 105 88.7 89.6 85.5 90.2
Total Return 122 58.4 89.6 85.5 90.2
Net Inc available for Dist. 120 109 103 99.3 104
Growth & Ratio
Revenue Gth (%) 12.1 3.4 1.6 (0.7) 4.5
N Property Inc Gth (%) 2.3 (2.5) (0.7) (0.4) 5.5 Improvement in earnings in
Net Inc Gth (%) 1.0 (15.4) 1.0 (4.5) 5.5 FY18 due to a recovery in
Dist. Payout Ratio (%) 90.0 90.0 90.0 90.0 90.0 the Singapore hospitality
Net Prop Inc Margins (%) 84.2 79.5 77.6 77.8 78.5 market
Dist to revenue (%) 71.6 63.2 59.0 57.1 57.4
ROAE (%) 6.5 5.6 5.7 5.4 5.6
ROA (%) 4.4 3.5 3.5 3.3 3.5
ROCE (%) 5.1 4.5 4.4 4.3 4.6
Int. Cover (x) 7.5 5.0 5.1 4.6 4.4

Page 4
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Company Guide

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Gross revenue 41.1 50.1 44.7 42.5 45.4

Net Income 21.6 22.0 21.9 18.9 22.6
Tax (0.3) 1.25 (1.0) (1.0) 0.0
Total Return 0.0 0.0 0.0 0.0 0.0
Growth & Ratio
Revenue Gth (%) 5 22 (11) (5) 7
N Property Inc Gth (%) 5 14 (11) (7) 11
Net Inc Gth (%) 14 9 (10) (15) 26
Balance Sheet (S$m)

FY Dec 2014A 2015A 2016F 2017F 2018F

Other LT Assets 146 278 278 278 278
Cash & ST Invts 76.5 72.0 86.8 94.9 104
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 20.0 19.1 21.1 20.9 21.8
Total Assets 2,450 2,547 2,570 2,583 2,599
ST Debt 317 219 219 219 219

Creditor 39.7 32.2 41.7 41.4 43.2
LT Debt 458 703 703 703 703

Net Cash/(Debt) (698) (850) (836) (827) (818) Gearing within optimal
Ratio 35-40% range
Current Ratio (x) 0.3 0.4 0.4 0.4 0.5
Quick Ratio (x) 0.3 0.4 0.4 0.4 0.5
Z-Score (X) 1.3 1.2 1.2 1.2 1.2

Page 5
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Company Guide

FY Dec 2014A 2015A 2016F 2017F 2018F
Pre-Tax Income 106 89.6 91.9 89.0 93.8

Dep. & Amort. 0.0 0.0 0.0 0.0 0.0
Tax Paid (0.2) (1.0) 0.0 0.0 0.0
Chg in Wkg.Cap. 3.83 0.39 7.46 (0.2) 0.92
Net Operating CF 139 132 113 103 109
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
Increase in capex due
Div from Assoc. & JVs 0.0 0.0 0.0 0.0 0.0 to acquisition of
Other Investing CF 0.35 (2.0) 0.0 0.0 0.0 Cambridge City Hotel
Net Investing CF (92.6) (152) (5.3) (5.2) (5.5)
Distribution Paid (106) (103) (93.0) (89.4) (93.9)
Chg in Gross Debt 83.2 138 0.0 0.0 0.0
New units issued 0.0 0.0 0.0 0.0 0.0
Net Financing CF (39.1) 15.3 (93.0) (89.4) (93.9)
Chg in Cash 7.72 (4.0) 14.9 8.04 9.53

Free CFPS (S cts) 4.75 (1.8) 10.9 9.75 10.3
Source: DBS Bank

Derek TAN

Page 6 Page 186
Croesus Retail Trust
Version 5 | Bloomberg: CRT SP | Reuters: CROE.SI Refer to important disclosures at the end of this report
BUY Onwards and upwards

Price Target 12-mth: S$0.99 (16% upside and 8.9% yield) Internally managed to improve alignment and removes one barrier to
a takeover. We maintain our BUY call and TP of S$0.99. We believe
Potential Catalyst: DPU accretive acquisitions the perception of a greater alignment between the interest of
Where we differ: Below on lower top line Croesus Retail Trust (CRT)’s unitholders and management following
Analyst CRT’s move to be the first internally managed trust will help close the
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com discount to our TP. This is despite dissatisfaction from some
Derek TAN +65 6682 3716 derektan@dbs.com unitholders with the price paid to buy out CRT’s trustee-manager
(c.S$50m) and concerns over the large upfront cash payment to the
current management team for their stake in the trustee-manager. In
Price Relative addition, with CRT no longer having an external trustee-manager, we
1.2
S$ Relative Index believe this may remove a hurdle to a potential takeover by a J-REIT as
1.2
1.1
208
speculated by some market participants due to CRT’s persistent high
188
1.1
1.0 168 yield and discount to its NAV.
1.0
148
0.9
0.9 128
0.8
0.8
108 Boost from recent acquisitions. Going forward, CRT should benefit
from the full-year contribution from the acquisition of Torius property
0.7 88
May-13 May-14 May-15 May-16
Croesus Retail Trust (LHS) Relative STI (RHS)

in Fukuoka (7.8% yield based on net property income (NPI)) in Sep15
and recent purchase of three retail malls (Fuji Grand Natalie, Mallage
Saga and Feeeal Asahikawa) on 7.1% NPI yield. In addition, with
FY18 income hedged at SGD/JPY rate of 76.4, down from 83.6 in
FY Jun (JPYm) 2015A 2016A 2017F 2018F FY17, CRT has one of the highest growth rates among our SREIT
Gross Revenue 7,635 9,581 12,153 12,325 universe with a two-year DPU CAGR of 8% in SGD terms. This is
Net Property Inc 4,681 5,449 6,402 6,494 before any interest savings on the back of lower Japanese interest
Total Return 7,579 6,003 3,666 3,735 rates which we have yet to fully price in.
Distribution Inc 3,358 3,981 4,957 5,034
EPU (S cts) 3.22 0.59 5.99 5.77
Medium-term upside potential from asset enhancement initiatives
EPU Gth (%) (31) (82) 914 (4)
DPU (S cts) 7.64 6.95 7.52 8.18 (AEIs). Over the medium term, CRT should also receive a boost from
DPU Gth (%) (3) (9) 8 9 potential AEI and/or tenant remixing at One’s Mall, Torius Mall and
NAV per shr (S cts) 103 94.7 86.4 84.5 Feeeal Asahikawa. This is in addition to any further acquisitions.
PE (X) 26.4 143.9 14.2 14.7
Distribution Yield (%) 9.0 8.2 8.9 9.7 Valuation:
P/NAV (x) 0.8 0.9 1.0 1.0
We maintain our DCF-based TP of S$0.99.
ROAE (%) 3.3 0.6 6.6 6.8
The key risks to our view include: (1) weaker JPY versus SGD, (2)
Distn. Inc Chng (%): 0 0 higher-than-expected take-up of its Dividend Reinvestment Plan (DRP)
Consensus DPU (S cts): 9.3 9.6 which we have assumed c.25% take-up and (3) lower-than-expected
uplift in rents
Mkt. Cap (S$m/US$m) 644 / 444
GKG Investment 6.8
Value Partners Group Ltd 6.2
DBS Group Holdings Ltd 5.7
Free Float (%) 81.8

ed: JS / sa: AS, PY
Page 187
Company Guide

CRITICAL DATA POINTS TO WATCH JPY m
70.0%
Earnings Drivers: 6,000
Strong cashflow visibility. CRT has a weighted average lease 5,000

65.0%
expiry (WALE) by net lettable area (NLA) of seven years, which is 4,000
among the longest in the S-REIT market. Its occupancy of close 3,000 60.0%
to 100% provides investors with significant cashflow visibility. In
addition, with c.88% and c.79% of FY17 and FY18 rents 2,000
55.0%
already locked in respectively, CRT offers a stable income 1,000
stream. This, combined with lease expiry profile of 11.9%, 0 50.0%
9.0% and 6.7% of leases (by NLA) in FY17, FY18 and FY19 2014A 2015A 2016A 2017F 2018F
respectively, gives CRT the opportunity to change the tenant Net Property Income Net Property Income Margin %
mix and/or drive higher rentals. This in turn provides upside to
our earnings and DPU estimates.
150%
Contribution from recent acquisitions and favourable hedges. 1,411 100%
Moving forward, CRT should also receive an earnings boost 50%

0%
911
from the acquisition of Torius property in Fukuoka (7.8% NPI -50%
-100%
yield) in Sep15 and recent purchase of three retail malls (Fuji 411
-150%
Grand Natalie, Mallage Saga and Feeeal Asahikawa) on a 7.1% -89
-200%
-250%
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
4Q2016
1Q2017
NPI yield. In addition, with CRT having already hedged its FY18 -300%
income at SGD/JPY rate of 76.4, we project a two-year SGD -589 -350%
DPU CAGR of 8%.
Continued benefits from renewal of Mallage Shobu. CRT’s

Mallage Shobu property which contributed c.26% of the trust’s Net Property Income Net Property Income Margin %
4Q16 NPI undertook a major renewal exercise in March 2015
which consisted of (1) AEI works including family-friendly
improvement works to restrooms, nursing rooms and rest areas,
(x)
as well as improved LED lightning facilities, (2) introduction of 2.0
69 new brands/tenants such as Toys R Us, Kurashiki Coffee and 1.8
Majestic Legon (women’s apparel and fashion), (3) tenant 1.6
renewal exercise for 155 out of 242 leases, and (4) positive 1.4
rental reversions in the double digits. We believe CRT’s earnings 1.2
should continue to benefit from this AEI as the mall gains 1.0
further traction from its nearby residents. 0.8
0.6
Favourable lease structures. Approximately 62% of the CRT’s
leases are under fixed term leases. Under this lease structure, 0.4
2014A 2015A 2016A 2017F 2018F
which are typically shorter in tenure (between 3-5 years), CRT
has the flexibility to adjust rents and tenant composition upon
expiry of leases. This compares to the standard lease, which is
Interest Cover (x)
more favourable to tenants as upon expiry of the lease, the (x)
tenants can opt to stay and renew the lease at market rates. 6.00
5.00
Medium-term upside at One’s Mall, Torius property and Feeeal
Asahikawa. We understand there are opportunities to drive 4.00
rents higher at One’s Mall, Torius property and Feeeal
Asahikawa in the medium term. This will come primarily from 3.00
the change in tenant mix as some tenants/anchor tenants are 2.00

low yielding at the moment. At this stage, CRT has not provided
any details on its AEI plans. 1.00
0.00
Costs savings from internalisation. We expect CRT to benefit 2014A 2015A 2016A 2017F 2018F
from its decision to bring in house its trustee-manager. This
should result in costs savings as fees paid to a third party Source: Company, DBS Bank
manager are now eliminated and replaced with lower internal
overheads. Partially offset this benefit is the higher units on
issue following the preferential offering use to help fund the
purchase of the third party trustee-manager.

Page 2
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Company Guide

Balance Sheet:
Gearing on downtrend. Following proceeds from the recent
rights issue, CRT’s gearing fell to 44.6% from 45.3% at end 50.0%
June 2016. While this is high compared to other S-REITs, given 45.0%
that CRT’s underlying properties are located in Japan, the 40.0%
35.0%
willingness of Japanese banks to extend credit to CRT and its
30.0%
business trust structure provides CRT the ability to sustain a
25.0%
gearing closer to 50% level.
20.0%
2014A 2015A 2016A 2017F 2018F
100% hedged. To manage its interest exposure, CRT has fully

hedged all its borrowings, with its all-in cost of debt standing at
c.1.9%. ROE (%)
6.0%
Re-rating on internally managed trust. With the recent buy-out 5.0%
of CRT’s trustee-manager, CRT will be the first trust in 4.0%
Singapore to be internally managed. We believe the improved 3.0%

perception that the management team of CRT is aligned with its
2.0%
unitholders, will help close the discount between CRT’s share
price and its NAV per share of c.S$1.00 (JPY75.14). 1.0%
0.0%
2014A 2015A 2016A 2017F 2018F
Inorganic growth through acquisitions. CRT continues to look
for acquisition opportunities. Such DPU-accretive transactions
should boost CRT’s DPU and help re-rate its share price. Near Distribution Yield (%)
(%)
term it has the funding advantage to secure to pursue DPU 10.5
accretive acquisitions as CRT is able to secure cheap debt (sub 10.0
+2sd: 9.7%
1% interest rate). 9.5
9.0 +1sd: 9.2%
8.5 Avg: 8.6%
Key Risks: 8.0 ‐1sd: 8.1%
Downturn in Japanese economy. The quantitative easing (QE) 7.5 ‐2sd: 7.6%
programme initiated by the BOJ was designed to boost the 7.0
Japanese economy and inflationary expectations. Should the 6.5

6.0
QE fail to deliver on its objectives, there is risk that a weaker 2014 2015 2016
economy may negatively impact rents and capital values of

CRT’s portfolio. PB Band (x)
1.2
(x)
FX risks. While CRT has hedged its projected distributable
1.1
income until June 2018, should the JPY depreciate against the +2sd: 1.06x
SGD, going forward, CRT’s DPU would be negatively impacted. 1.0
+1sd: 0.98x
0.9 Avg: 0.91x
Company Background ‐1sd: 0.84x
0.8
Croesus Retail Trust is a business trust that focuses on income- ‐2sd: 0.76x
generating retail assets in Japan. Its portfolio comprises seven 0.7
assets which are close to fully occupied and backed by a long 0.6
Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16
lease expiry profile.

Page 3
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Company Guide
Income Statement (JPYm)

FY Jun 2014A 2015A 2016A 2017F 2018F
Gross revenue 6,261 7,635 9,581 12,153 12,325
Property expenses (2,232) (2,954) (4,132) (5,751) (5,830)
Net Property Income 4,029 4,681 5,449 6,402 6,494
Other Operating expenses (765) (720) (976) (775) (779)
Other Non Opg (Exp)/Inc (44.4) 370 (1,239) 0.0 0.0
Net Interest (Exp)/Inc (705) (1,001) (1,096) (1,126) (1,129)
Net Income 2,515 3,330 2,137 4,501 4,586
Tax (1,551) (2,087) (1,840) (835) (851)
Net Income After Tax 964 1,242 297 3,666 3,735
Total Return 4,793 7,579 6,003 3,666 3,735
Non-tax deductible Items 2,215 2,116 3,684 1,290 1,298
Net Inc available for Dist. 3,180 3,358 3,981 4,957 5,034
Growth & Ratio
Revenue Gth (%) N/A 21.9 25.5 26.8 1.4
N Property Inc Gth (%) nm 16.2 16.4 17.5 1.4
Net Inc Gth (%) nm 28.8 (76.1) 1,134.5 1.9 Growth arising from
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 100.0 acquisition of One’s Mall,
Net Prop Inc Margins (%) 64.3 61.3 56.9 52.7 52.7 Torius property, Fuji Grand
Net Income Margins (%) 15.4 16.3 3.1 30.2 30.3 Natalie, Mallage Saga and
Dist to revenue (%) 50.8 44.0 41.5 40.8 40.8 Feeeal Asahikawa
ROAE (%) 6.0 3.3 0.6 6.6 6.8
ROA (%) 2.5 1.4 0.3 2.8 2.8
ROCE (%) 3.6 1.9 0.6 4.2 4.3
Int. Cover (x) 4.6 4.0 4.1 5.0 5.1

Page 4
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Company Guide
Quarterly / Interim Income Statement (JPYm)

FY Jun 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017
Gross revenue 2,007 2,434 2,466 2,675 3,126

Property expenses (774) (1,066) (1,057) (1,236) (1,529)
Net Property Income 1,233 1,368 1,409 1,440 1,596
Other Operating expenses (232) (246) (255) (300) (787)
Exceptional Gain/(Loss) (584) 136 29.2 (821) 14.0
Net Income 160 989 919 12.2 507
Tax (174) (248) (187) (1,231) (245)
Net Income after Tax (13.7) 741 732 (1,219) 262
Total Return (13.7) 794 732 4,434 262
Non-tax deductible Items 932 179 289 (3,366) 890
Net Inc available for Dist. 919 973 1,021 1,068 1,152
Growth & Ratio
Revenue Gth (%) 1 21 1 9 17
Net Inc Gth (%) 96 nm (1) nm nm
Balance Sheet (JPYm)

FY Jun 2014A 2015A 2016A 2017F 2018F

Other LT Assets 3,335 5,063 6,628 6,628 6,628
Cash & ST Invts 2,754 2,942 5,385 6,046 6,069
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 708 491 1,655 1,736 1,761
Total Assets 78,551 100,401 131,175 132,038 132,332
ST Debt 358 647 8,337 8,337 8,337

Creditor 885 1,219 2,151 2,300 2,332
Other Current Liab 681 914 2,112 2,705 2,721
LT Debt 40,244 46,840 51,057 51,179 51,425

Net Cash/(Debt) (37,848) (44,546) (54,010) (53,471) (53,694) Decline due to asset
Ratio revaluation gains
Current Ratio (x) 3.3 2.7 0.9 0.9 0.9
Quick Ratio (x) 3.3 2.7 0.9 0.9 0.9
Z-Score (X) 0.5 0.6 0.4 0.5 0.5

Page 5
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Company Guide
Cash Flow Statement (JPYm)

FY Jun 2014A 2015A 2016A 2017F 2018F
Pre-Tax Income 2,515 3,330 2,137 4,501 4,586

Dep. & Amort. 0.0 0.0 0.0 0.0 0.0
Tax Paid (148) (337) (400) (243) (835)
Chg in Wkg.Cap. (2,661) (344) (1,588) 68.4 7.18
Other Operating CF 1,204 561 2,278 1,290 1,298
Net Operating CF 909 3,210 2,427 5,617 5,057
Net Invt in Properties (66,053) (11,712) (19,004) (122) (246)
Other Invts (net) 0.0 0.0 0.0 0.0 0.0 Acquisition of Torius
Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0 property, Fuji Grand
Div from Assoc. & JVs 0.0 0.0 0.0 0.0 0.0 Natalie, Mallage Saga
Other Investing CF 0.0 0.0 0.0 0.0 0.0 and Feeeal Asahikawa
Net Investing CF (66,053) (11,712) (19,004) (122) (246)
Distribution Paid (1,810) (3,101) (4,652) (4,957) (5,034)
Chg in Gross Debt 40,305 5,634 13,420 122 246
New units issued 29,404 6,108 10,273 0.0 0.0
Two rights issues and
Net Financing CF 67,898 8,642 19,040 (4,835) (4,787)
placement for
acquisitions and to
Chg in Cash 2,754 187 2,443 660 23.4 fund internalisation of
the trustee-manager
Free CFPS (S cts) (316) (22.0) (33.0) 8.98 7.43
0.92
S$
12- mt h
Dat e of Closing
Report Pric e
Pric e
0.87 4 1: 11 Feb 16 0.79 0.86 HOLD
6 2: 16 May 16 0.82 0.90 BUY
5
3: 13 J un 16 0.81 0.90 BUY
2
4: 29 Aug 16 0.86 0.99 BUY
0.82
5: 08 Nov 16 0.87 0.99 BUY
6: 11 Nov 16 0.85 0.99 BUY
3
1
0.77
0.72
Source: DBS Bank

Analyst: Mervin SONG CFA, Derek TAN

Page 6 Page 192
Far East Hospitality Trust
Version 5 | Bloomberg: FEHT SP | Reuters: FAEH.SI Refer to important disclosures at the end of this report
HOLD Headwinds still present

Price Target 12-mth: S$0.62 (4% upside and 6.6% yield) Limited re-rating catalysts. We maintain our HOLD call and TP of
S$0.62. As a Singapore-focused REIT and with competitive
Potential Catalyst: Recovery in the Singapore hospitality market, and pressures in the Singapore hospitality market that are expected
acquisitions to persist, we believe there are limited re-rating catalysts for Far
Where we differ: Below consensus due to expected decline in RevPAR
East Hospitality Trust (FEHT) in the near term. This is despite the
inherent long-term value given that FEHT is trading at 0.6x P/BV.
Analyst
Derek TAN +65 6682 3716 derektan@dbs.com Competitive pressures to persist. While the majority of new
hotel supply in Singapore this year is largely concentrated within
the Singapore River precinct away from FEHT’s hotels, we
believe the 5-6% increase in overall industry room inventory will
Price Relative still put pressure on FEHT’s operations. In addition, with new
1.3
S$ Relative Index
218
room supply not easing until 2018, corporate demand still soft
1.2
1.1
198
178
and FEHT’s new hotel in Sentosa only completing in 2018, we
1.0
0.9
158 expect FEHT’s DPU performance to remain muted over the
coming year.
138
0.8 118
0.7 98
0.6 78
0.5
58
Jan-17 Strong balance sheet. Even though we are cautious on FEHT’s
Far East Hospitality Trust (LHS) Relative STI (RHS) near-term earnings, there is significant upside to our forecast if
FEHT deploys its strong balance sheet well. FEHT’s gearing as at
end-September 2016 stood at approximately 32% and its
sponsor provides a clear and visible ROFR pipeline of seven
Forecasts and Valuation properties.
FY Dec (S$m) 2015A 2016F 2017F 2018F
Gross Revenue 115 111 109 114 Valuation:
Net Property Inc 104 100 97.9 103
Total Return 33.2 65.5 62.8 68.2 We maintain our DCF-based TP of S$0.62 which has
Distribution Inc 82.2 76.6 73.8 79.5 incorporated the delayed expectations of the recovery of the
EPU (S cts) 4.20 3.65 3.48 3.75 Singapore office market from 2017 to 2018.
EPU Gth (%) (5) (13) (5) 8
DPU (S cts) 4.60 4.26 3.95 4.23
DPU Gth (%) (11) (7) (7) 7 Key Risks to Our View:
NAV per shr (S cts) 93.9 93.7 93.1 92.6 Rebound in demand and acquisitions. Our cautious stance on
PE (X) 14.2 16.3 17.1 15.9 FEHT is premised on a supply imbalance in the Singapore
Distribution Yield (%) 7.7 7.2 6.6 7.1
P/NAV (x) 0.6 0.6 0.6 0.6
hospitality market. However, a significant rebound in demand,
Aggregate Leverage (%) 32.4 32.8 33.3 33.3 absorbing the new room supply, and FEHT utilising its strong
ROAE (%) 4.4 3.9 3.7 4.0 balance sheet, would lead to upside risks to our DPU estimates
and TP.
DPU Chng (%): - 0 -
Consensus DPU (S cts): 4.2 4.2 4.4 At A Glance
Other Broker Recs: B: 1 S: 2 H: 5 Issued Capital (m shrs) 1,801
Mkt. Cap (S$m/US$m) 1,072 / 750
Source of all data on this page: Company, DBS Bank, Bloomberg Major Shareholders (%)
Finance L.P.
Golden Development Pte Ltd 20.4
Golden Landmark Pte Ltd 10.7
Far East Organization 10.1
Free Float (%) 44.3

ed: TH / sa: JC, PY
Page 193
Company Guide

200 99.4%
180
97.4%
160
Downturn in the Singapore hospitality market. The Singapore 120 93.4%
100
hospitality market faces the challenge of navigating a 5-6% 80 91.4%
increase in hotel room supply this year but at the same time, 60 89.4%
40
only a modest recovery in total visitors days and weak corporate 20
87.4%
demand which is typically higher yielding. In such an 0 85.4%

2014A 2015A 2016F 2017F 2018F
environment, we believe hotels including those owned by FEHT,
will face pressure on occupancy and ADRs. With supply
expected to increase by 6% in 2017, we believe pressure on
RevPAR will persist. Thus, we estimate that the price-heightened Net Property Income and Margins (%)
92%
29
competition will lead to 5-7% and 4% declines in FEHT’s FY16F
28 91%
and FY17F hotel and serviced residence RevPAR/RevPAU.
27 91%
26
Some cushion from asset enhancement initiatives. Partially 25
90%
mitigating the effects of a supply imbalance in the Singapore 24

90%
hospitality market are the asset enhancement initiatives (AEI) 23 89%
that FEHT has undertaken. The refurbishments are expected to 22 89%
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
help maintain FEHT’s relevance in the market place as well as
boost occupancy and ADR over the medium term. The following Net Property Income Net Property Income Margin %
are the AEIs that FEHT has completed across its portfolio: (1)
extension of outdoor refreshment area at Village Residence Distribution Paid / Net Operating CF
Robertson Quay, (2) soft refurbishment of club & suite rooms (x)
1.0
and meeting areas at Village Hotel Changi, (iii) reconfiguration
0.9
of the serviced office space to create nine additional units as
0.8
well as the upgrade of the main lobby, breakfast lounge and
0.7
pantry at Central Square (Village Residence Clarke Quay), (iv)
0.6
refurbishment of 2- and 3-bedroom units at Regency House,
0.5
and (v) upgrading of the swimming pool, function rooms, lobby
area and lobby bar. 0.4
0.3
2014A 2015A 2016F 2017F 2018F
Medium-term outlook remains bright. Despite the short-term
headwinds, the medium-term outlook for FEHT remains bright.
With no new hotel land sites being released by the Singapore Interest Cover (x)
(x)
government over the last two years, supply could be 6.00
constrained from 2018 onwards. In addition, FEHT should
5.00
benefit from the opening of the 850-room Sentosa hotel
development in 2018. 4.00
3.00
Acquisitions yet to be priced in. With gearing at only 32%, 2.00

FEHT is well positioned to expand its portfolio through
1.00
acquisitions. Assuming FEHT gears up to the 40% level, we
estimate the trust to have c.S$300-350m of debt headroom. 0.00
2014A 2015A 2016F 2017F 2018F
Through its sponsor, Far East Organization, FEHT has a visible
acquisition pipeline. In particular, it has the right of first refusal
over seven properties.

Page 2
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Company Guide

Balance Sheet:
Gearing unchanged. FEHT’s gearing at end-3Q16 was stable at 35.0%
c.32% which is comfortably below management’s 40% and 30.0%

MAS’s new 45% gearing limit.
25.0%
Moderate exposure to rising interest rates. Currently, 71% of 20.0%
FEHT’s borrowings are under fixed rates, reducing its exposure 15.0%
to volatility in interest rates.
10.0%
2014A 2015A 2016F 2017F 2018F

Negative near-term sentiment. FEHT’s share price has been
weak over the past year due to a combination of soft tourist ROE (%)
arrivals and large new room supply which has translated into a 4.5%
fall in RevPAR and DPU. While tourist arrivals are recovering, 4.0%
3.5%
new hotel supply should continue to outpace demand. Thus, we
3.0%
believe there are limited re-rating catalysts for the stock in the 2.5%
near term. 2.0%
1.5%
Key Risks: 1.0%
Interest rate risk. Any increase in interest rates will result in 0.5%
higher interest payments that the REIT has to make annually to 0.0%
2014A 2015A 2016F 2017F 2018F
service its loans. This reduces the income available for
distribution, which will result in lower distribution per unit
(DPU) for unitholders. Distribution Yield (%)
(%)
9.9
+2sd: 9%
Competitive landscape. The Singapore hospitality market has 8.9
been impacted by a decline in tourist arrivals in 2014 and 2015 7.9

+1sd: 7.5%
thus far. With an increase in new hotel supply in 2016 and 6.9
5.9 Avg: 6.1%

2017 and if demand does not recover, FEHT’s earnings may be
4.9
impacted. -1sd: 4.7%
3.9
-2sd: 3.3%
2.9
Company Background
1.9
Far East Hospitality Trust (FEHT) is a hospitality stapled group 2013 2014 2015 2016
comprising Far East H-REIT and Far East H-Business Trust. Far
East H-REIT is a Singapore-based real estate investment trust, PB Band (x)
which invests in hospitality assets including both hotels and 1.4
(x)
serviced residences. 1.3
1.2
1.1 +2sd: 1.12x
1.0
+1sd: 0.97x
0.9
0.8 Avg: 0.82x
0.7
-1sd: 0.67x
0.6
0.5 -2sd: 0.53x
0.4

Page 3
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Company Guide

FY Dec 2014A 2015A 2016F 2017F 2018F
Gross revenue 122 115 111 109 114
Net Property Income 110 104 100 97.9 103
Other Non Opg (Exp)/Inc (0.8) 4.93 0.0 0.0 0.0
Net Income 78.0 75.0 65.5 62.8 68.6
Tax 0.0 0.0 0.0 0.0 (0.4)
Total Return 71.3 33.2 65.5 62.8 68.2
Growth & Ratio
Revenue Gth (%) (0.6) (5.8) (2.8) (2.2) 5.0
N Property Inc Gth (%) (1.7) (5.8) (3.1) (2.5) 5.2
Net Inc Gth (%) (15.5) (3.9) (12.6) (4.2) 8.6 The decline in earnings is
Dist. Payout Ratio (%) 100.0 100.0 100.0 97.0 97.0 largely a result of a
Net Prop Inc Margins (%) 90.4 90.4 90.1 89.8 90.0 projected decline in FEHT’s
Net Income Margins (%) 64.1 65.4 58.8 57.6 59.6 FY16 and FY17 serviced
Dist to revenue (%) 75.2 71.7 68.7 67.7 69.5 residence and hotel RevPAR
to sales(%)
ROAE %) 4.5 4.4 3.9 3.7 4.0
ROA (%) 3.1 3.0 2.6 2.5 2.7
ROCE (%) 3.9 3.6 3.5 3.4 3.6
Int. Cover (x) 5.5 4.4 4.0 3.8 4.0

Page 4
Page 196
Company Guide

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Gross revenue 29.7 28.9 27.4 26.1 28.0

Net Income 21.1 18.3 8.82 14.2 15.4
Tax 0.0 0.0 0.0 0.0 0.0
Total Return 21.1 (23.5) 8.82 14.2 15.4
Growth & Ratio
Revenue Gth (%) 3 (3) (5) (4) 7
N Property Inc Gth (%) 3 (2) (6) (5) 8
Net Inc Gth (%) 30 (13) (52) 61 9
Balance Sheet (S$m)

FY Dec 2014A 2015A 2016F 2017F 2018F

Other LT Assets 15.6 15.5 31.5 47.5 47.6
Cash & ST Invts 20.9 25.4 35.8 36.2 36.3
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 19.3 30.5 17.6 17.2 18.1
Total Assets 2,537 2,521 2,538 2,557 2,562
ST Debt 116 36.9 36.9 36.9 36.9

Creditor 3.28 2.80 3.01 2.94 3.09
LT Debt 680 780 797 814 815
Non-Cash Wkg. Capital 15.2 27.9 14.9 14.5 14.8

Net Cash/(Debt) (774) (792) (798) (815) (816) FEHT remains in a strong
Ratio financial position with
Current Ratio (x) 0.4 1.3 1.3 1.3 1.3 gearing in the low 30s
Quick Ratio (x) 0.4 1.3 1.3 1.3 1.3
Z-Score (X) 0.9 0.9 0.9 0.8 0.8

Page 5
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Company Guide

FY Dec 2014A 2015A 2016F 2017F 2018F
Pre-Tax Income 78.0 75.0 65.5 62.8 68.6

Dep. & Amort. 0.0 0.0 0.0 0.0 0.0
Tax Paid 0.0 0.0 0.0 0.0 0.0
Associates &JV Inc/(Loss) 0.0 0.08 0.0 0.0 (1.5)
Chg in Wkg.Cap. 2.56 9.55 13.1 0.32 (0.7)
Net Operating CF 110 111 89.7 74.1 77.7
Net Invt in Properties (8.1) (5.0) (3.3) (3.3) (3.4)
Equity contribution for
Other Invts (net) 0.0 0.0 0.0 0.0 0.0 FEHT’s 30% stake in
Invts in Assoc. & JV (15.6) (21.3) (16.0) (16.0) 0.0 the 850-room Sentosa
Div from Assoc. & JVs 0.0 0.0 0.0 0.0 1.30 hotel development
Net Investing CF (23.7) (26.3) (19.3) (19.2) (2.1)
Chg in Gross Debt 15.6 21.3 16.6 17.1 1.59
New units issued 0.0 0.0 0.0 0.0 0.0
Net Financing CF (94.1) (79.8) (60.0) (54.5) (75.5)
Chg in Cash (8.3) 4.54 10.4 0.41 0.08

Free CFPS (S cts) 5.73 5.92 4.81 3.93 4.09
0.70 S$
12- mt h
Dat e of Closing
0.68 Report Pric e
Pric e
2 1: 21 J an 16 0.64 0.63 HOLD
0.66 3 2: 13 Apr 16 0.66 0.63 HOLD
1 3: 27 Apr 16 0.67 0.63 HOLD
0.64 4
4: 01 Aug 16 0.63 0.65 HOLD
0.62 5: 05 Sep 16 0.61 0.65 HOLD
6 6: 11 Nov 16 0.60 0.62 HOLD
0.60
5
0.58
0.56
0.54
Source: DBS Bank


Page 6 Page 198
Frasers Centrepoint Trust
Version 6 | Bloomberg: FCT SP | Reuters: FCRT.SI Refer to important disclosures at the end of this report
BUY Fruits from Floating Rates

Price Target 12-mth: S$2.29 (19% upside and 6.1% yield) Ability to maintain stable DPUs. While many other S-REITs are
expected to face declining DPUs over the next couple of years
Potential Catalyst: Delay in rate hike expectations; better-than-expected due to the slowing Singapore economy, Frasers Centrepoint
rental reversion Trust (FCT) offers investors a steady DPU profile. This is made
Where we differ: Lower cost of capital assumptions than consensus
possible by FCT’s conservative strategy of paying the majority of
Analyst its management fees in cash, which enables FCT to temporarily
Singapore Research Team equityresearch@dbs.com increase payment of fees in units to sustain DPU.
Near-monopoly of shopping malls in the north. Northpoint and
Causeway Point together contribute c.70% of FCT’s Net
Price Relative Property Income (NPI). While it is still 15 months away until
S$ Relative Index
221
Northpoint completes its asset enhancement initiative (AEI), we
2.5
2.3
201
believe strong rental reversion at Causeway Point will support
earnings and cushion any pressures from any decline in
181
2.1 161
1.9
141
121
occupancy rates.
1.7
101
Significant reduction in cost of debt. The Manager has

1.5 81
Frasers Centrepoint Trust (LHS) Relative STI (RHS)

proactively reduced the percentage of borrowings hedged into
fixed rates to 59% from 74%, to benefit from their view that
interest rates may stay low for an extended period. As such, we
have brought down our cost of debt assumptions to account
Forecasts and Valuation lower interest expense in the near term.
FY Sep (S$m) 2015A 2016A 2017F 2018F
Valuation:
Total Return 171 123 95.7 107 DCF-based TP of S$2.29. The stock offers a forward yield over
Distribution Inc 106 108 109 112 6.0%. Maintain BUY.
EPU (S cts) 11.7 10.3 10.4 11.6
EPU Gth (%) 4 (12) 0 12
DPU (S cts) 11.6 11.8 11.8 12.1
DPU Gth (%) 4 1 0 3 Lease renewal in FY17. We estimate that 39.6% of total gross
NAV per shr (S cts) 191 193 191 191 rent will be due for renewal in FY17. Reversion rate at
PE (X) 16.5 18.7 18.6 16.7 Northpoint will test tenant’s confidence in the mall after AEI,
P/NAV (x) 1.0 1.0 1.0 1.0 whereas tactical lease management at Changi City Point and
Aggregate Leverage (%) 28.2 28.3 30.5 30.6 Bedok Point will help in the repositioning of the two malls.
ROAE (%) 6.2 5.4 5.4 6.1
Interest rate risks. If expectations of rate hikes increase, the
Distn. Inc Chng (%): 0 0
Consensus DPU (S cts): 12.0 12.2 41% exposure to floating interest rate will amplify the increase
Other Broker Recs: B: 13 S: 1 H: 3 in the REIT’s cost of debt, putting pressure on valuation.
Mkt. Cap (S$m/US$m) 1,775 / 1,224
Frasers Centrepoint Ltd 41.5
Schroders Plc 5.6
Free Float (%) 52.9

ed: JS / sa: YM, PY
Page 199
Company Guide

S$ m
200
CRITICAL DATA POINTS TO WATCH 180 77.8%
160
75.8%
140
100
Strong rental reversion at Causeway Point. FCT’s largest asset 80
71.8%
(50% of top line) has achieved an average rental reversion of 60 69.8%

40
9.6% in FY16, thanks to its low occupancy cost relative to its 20
67.8%
near-monopolistic position in Woodlands, one of Singapore’s 0 65.8%

2014A 2015A 2016A 2017F 2018F
most populous residential estates. FCT has a short Weight
Average Lease Renewal (WALE) of 1.38/1.36 years by NLA/Gross
Rent as 39.6% of the portfolio’s NLA will be due for renewal in
FY17, out of which, 161,501sqft comes from Causeway Point. Net Property Income and Margins (%)
73%
We believe the strong reversion trend at this mall is likely to 35 72%
continue and should cushion any pressures from declining 34 71%

70%
portfolio occupancy rates and may even bring more earnings 33
69%
32
surprise on the upside in the next 12-18 months. 68%
31
67%
30
66%
Northpoint AEI is the turnkey to accelerate growth. We remain 29 65%
excited about the planned AEI and integration of the Northpoint 28 64%
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
4Q2016
asset with the extension wing currently being built by the
Sponsor. With an enlarged footprint, we see Northpoint as a Net Property Income Net Property Income Margin %
key driver in accelerating growth in the medium term. We are
positive on the AEI given that (i) the northern region has the Distribution Paid / Net Operating CF
lowest retail space density in Singapore; (ii) the fast population (x)
growth in the North region should support retail spending in 1.0
the medium term; and (iii) relatively low occupancy costs in the 0.9
15-17% range. FCT is in a strong negotiating position with 0.8
tenants who want a presence in the north where the group has 0.7
close to 75% market share of retail malls (For detailed analysis
0.6
on Northpoint’s AEI, please refer to the Company Focus Report:
0.5
Igniting the northern start, published on 7 Mar 2016).
0.4
2014A 2015A 2016A 2017F 2018F
Acquisition growth potential from Sponsor’s pipeline. FCT is
able to purchase retail assets from its Sponsor, Frasers
Centrepoint Limited (FCL). We believe a potential target is Interest Cover (x)
(x)
Waterway Point, in which the Sponsor has a 33% stake, which 6.80
was completed in Jan 2016 and well received by shoppers and 6.60
tenants. Given a one- or two-year stabilisation period, a realistic 6.40
timeline for this acquisition would be in 2017-18. An acquisition 6.20

6.00
value of S$300-400m (given estimated development costs of
5.80
S$1bn) would allow FCT to grow its portfolio considerably. We 5.60
have not included this into our model. 5.40
5.20
5.00
2014A 2015A 2016A 2017F 2018F

Page 2
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Company Guide

Balance Sheet:
Healthy balance sheet. Gearing to remain <30%, one of the
lowest in the S-REIT universe, and well within the Manager’s 30.0%
comfortable level of 35%. 25.0%
20.0%
Increased floating rates exposure. Percentage of borrowings on
fixed rates has been reduced to 59% from 74% in 3QFY16. 15.0%
This enables the REIT to benefit from lower cost of debt due to
10.0%
lower expectations of rate hikes for now. Its average cost of 2014A 2015A 2016A 2017F 2018F
borrowings of 2.1% is among the lowest in S-REITs.
ROE (%)
Share Price Drivers: 6.0%
Keep an eye on the risk-free rate. As a yield play, FCT’s share 5.0%
price is sensitive to fluctuations in the risk-free rate. Anticipated
hikes in the US Fed Funds rate have a negative impact on the 4.0%
stock. Correspondingly, any delay in rate hikes would be a 3.0%
positive catalyst for share price performance. 2.0%
1.0%
Key Risks:
Near-term fall in NPI margin. As Northpoint’s average 0.0%
2014A 2015A 2016A 2017F 2018F
occupancy drops to 76% during its AEI period (Mar 2016-Sep
2017), some narrowing in the portfolio NPI margin is expected.
While we have priced in a temporary decline in occupancy at Distribution Yield (%)
(%)
Northpoint and generally weaker occupancy rates at other
malls in the next 2 years, any unexpected sharp decline in
7.0
+2sd: 6.6%
occupancy and/or rents may drag down NPI margin and the 6.5
+1sd: 6.2%
share price. 6.0
Avg: 5.8%
5.5
-1sd: 5.4%
Interest rate risks. If expectations of rate hikes increase, the 5.0 -2sd: 5%
41% exposure to floating interest rates will amplify the 4.5
increase in the REIT’s cost of debt, putting pressure on
4.0
valuation. 2013 2014 2015 2016 2017
PB Band (x)
(x)
Frasers Centrepoint Trust (FCT) is a retail real estate investment 1.5
trust with a portfolio of shopping malls located in suburban 1.4
areas in Singapore. Its two largest assets are Causeway Point 1.3
+2sd: 1.24x
and Northpoint. 1.2
+1sd: 1.15x
1.1
Avg: 1.06x
1.0
-1sd: 0.98x
0.9 -2sd: 0.89x
0.8
0.7

Page 3
Page 201
Company Guide

FY Sep 2014A 2015A 2016A 2017F 2018F
Gross revenue 169 189 184 186 204
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Weak top line growth
Net Interest (Exp)/Inc (18.4) (19.2) (17.2) (19.1) (21.8) from the planned AEI at
Exceptional Gain/(Loss) 3.88 5.44 (1.9) 0.0 0.0 Northpoint over FY16-
Net Income 95.6 107 95.0 95.7 107 17F
Tax 0.0 0.0 0.0 0.0 0.0
Net Income After Tax 95.6 107 95.0 95.7 107 Expect lower interest
expense due to a higher
Total Return 165 171 123 95.7 107
proportion of
Non-tax deductible Items 4.34 6.79 (12.9) 12.9 4.97
borrowings under
Net Inc available for Dist. 95.4 106 108 109 112 floating rate interest vs
Growth & Ratio fixed.
Revenue Gth (%) 6.8 12.1 (2.9) 1.1 9.6
N Property Inc Gth (%) 5.8 11.0 (0.9) 1.4 11.3
Net Inc Gth (%) 3.8 12.4 (11.5) 0.7 12.2
Dist to revenue (%) 56.6 56.2 58.8 58.5 55.1
to sales(%)
ROAE %) 6.0 6.2 5.4 5.4 6.1
ROA (%) 4.1 4.2 3.7 3.6 4.0
ROCE (%) 4.6 4.6 4.5 4.5 4.9
Int. Cover (x) 5.6 6.0 6.6 6.0 5.9

Page 4
Page 202
Company Guide

FY Sep 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016
Gross revenue 47.5 47.1 47.1 45.0 44.6

Exceptional Gain/(Loss) 1.07 0.15 (5.4) (0.4) (0.3)
Net Income 25.8 26.4 21.1 23.5 24.0
Tax 0.0 0.0 0.0 0.0 0.0
Total Return 25.2 26.8 29.2 25.6 89.8
Non-tax deductible Items (64.1) 1.29 7.88 2.27 (26.8)
Net Inc available for Dist. 25.7 27.7 29.0 25.8 25.6 Payout ratios in 2HFY16 were
Growth & Ratio greater than 100% thanks to
Revenue Gth (%) 1 (1) 0 (4) (1) cash conservation from the
N Property Inc Gth (%) (4) 6 0 (7) 1 previous two quarters.
Net Inc Gth (%) 1 2 (20) 12 2
Balance Sheet (S$m)

FY Sep 2014A 2015A 2016A 2017F 2018F

Other LT Assets 74.7 63.2 60.0 60.0 60.0
Cash & ST Invts 47.1 21.6 18.7 17.4 19.4
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 0.0 0.0 6.80 6.80 6.80
Total Assets 2,522 2,549 2,594 2,675 2,681
ST Debt 95.0 278 218 218 218

Creditor 39.9 31.8 40.0 40.7 44.6
LT Debt 644 440 516 598 602

Net Cash/(Debt) (692) (696) (715) (799) (800)
Ratio
Current Ratio (x) 0.3 0.1 0.1 0.1 0.1
Quick Ratio (x) 0.3 0.1 0.1 0.1 0.1
Z-Score (X) 1.4 1.5 1.4 1.3 1.3

Page 5
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Company Guide

FY Sep 2014A 2015A 2016A 2017F 2018F
Pre-Tax Income 95.6 107 95.0 95.7 107

Dep. & Amort. 0.0 0.0 (0.5) 0.0 0.0
Tax Paid 0.0 0.0 0.0 0.0 0.0
Associates &JV Inc/(Loss) (6.6) (5.8) (0.1) (0.1) (0.1)
Chg in Wkg.Cap. (6.4) 2.25 4.33 0.73 3.92
Net Operating CF 100 120 105 107 114
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
Other Investing CF (1.5) 0.18 0.0 0.0 0.0
Net Investing CF (296) (0.6) (22.5) (81.9) (3.5)
Distribution Paid (94.5) (106) (108) (109) (112)
Chg in Gross Debt 150 (21.0) 22.6 82.0 3.66
New units issued 162 0.0 0.0 0.0 0.0
Net Financing CF 197 (145) (85.5) (26.7) (109)
Chg in Cash 2.03 (25.5) (3.3) (1.3) 1.92

Free CFPS (S cts) (23.4) 12.5 8.93 2.74 11.9
2.33
S$
12- mt h
Dat e of Closing
2.23 Report Pric e
Pric e
6 1: 08 J an 16 1.83 2.04 BUY
2.13 7 8 2: 04 F eb 16 1.90 2.04 BUY
3: 07 Mar 16 1.93 2.11 BUY
4 4: 05 Apr 16 2.01 2.11 BUY
2.03
5: 25 Apr 16 2.00 2.10 BUY
9 6: 16 J ul 16 2.12 2.29 BUY
5
1.93 2 7: 18 J ul 16 2.17 2.29 BUY
3 8: 24 Oct 16 2.10 2.29 BUY
9: 07 Nov 16 2.03 2.29 BUY
1.83
1
1.73
Source: DBS Bank

Derek TAN

Page 6 Page 204
Frasers Logistics & Industrial Trust
Version 1 | Bloomberg: FLT SP | Reuters: FRAE.SI Refer to important disclosures at the end of this report
BUY Positioned to grow

Price Target 12-mth: S$1.10 (17% upside and 7.0% yield) Maintain BUY, TP S$1.10. We believe that Frasers Logistics &
Industrial Trust (FLT) offers good returns with a prospective yield
Potential Catalyst: Acquisitions of close to 7.0% which is attractive in the current low-yield
Where we differ: Estimates are more conservative than consensus
environment. With an under-geared balance sheet, FLT is poised
Analyst
Derek TAN +65 6682 3716 derektan@dbs.com to grow through acquisitions from a visible pipeline of
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com development and completed properties from their sponsor.
Maintain BUY and TP at S$1.10. In addition, upside to earnings
will come potentially from the rollover of forex hedges (currently
Price Relative A$1 to S$1) to current spot rates which are 6% higher.
S$ Relative Index
1.1
1.1
207
187
Maiden distribution exceeds forecasts. FLT’s maiden distribution
(DPU ) of 1.84 Scts exceeds IPO forecasts by close to 2.8%. This
1.0
167
1.0
147
0.9
127 was mainly due to lower-than-projected interest costs at 2.8%
0.9
vs 3.4% (forecasted during IPO). Revenue and net property

107
0.8 87
Jun-16 Sep-16 Dec-16
Frasers Logistics & Industrial Trust (LHS) Relative STI (RHS)

income of A$43.1m and A$32.7m were marginally ahead of
IPO forecasts at +0.8% and 0.02% respectively. Portfolio
occupancy increased marginally to 99.2%. The forward outlook
remains stable given limited expiries over the coming year.
FY Sep (A$m) 2016A 2017F 2018F 2019F
Gross Revenue 43.1 162 162 162 Visible ROFR pipeline. The Sponsor has granted FLT a right of
Net Property Inc 35.7 137 136 135 first refusal (ROFR) over any of the completed income-producing
Total Return 3.87 83.3 86.5 90.2 industrial properties it intends to divest. This currently comprises
Distribution Inc 26.4 95.0 98.3 102
EPU (S cts) 0.53 6.07 6.26 6.47 11 properties which can be acquired in the medium term.
EPU Gth (%) nm nm 3 3
DPU (S cts) 1.85 6.61 6.79 7.0
DPU Gth (%) nm 258 3 3 Valuation:
NAV per shr (S cts) 87.0 87.0 87.0 87.0 BUY maintained, TP S$1.10. Our TP is based on DCF and we
PE (X) *15.8 15.5 15.0 14.5
Distribution Yield (%) *6.7 7.0 7.1 7.3
have not assumed any further acquisitions. Our TP offers 15%
P/NAV (x) 1.0 1.0 1.0 1.1 upside to current price.
Currency risk. As the manager pays its distributions in SGD but
Distn. Inc Chng (%): 0 0 0 earns in AUD, the REIT is exposed to currency fluctuations. The
Consensus DPU (S cts): 6.91 6.70 7.02 manager attempts to reduce foreign fluctuations by hedging
Other Broker Recs: B: 4 S: 0 H: 1 distributions regularly.
*annualised
At A Glance
Finance L.P.
Mkt. Cap (S$m/US$m) 1,342 / 925
FCL Investments (Industrial) Pte 20.5
TCC Group Investments Limited 6.3
Principal Financial Group 5.0
Free Float (%) 68.2
ICB Industry : Financials / Real Estate Investment Trusts

ed: TH / sa: YM, PY
Page 205
Company Guide

A$ m
200 92.7%
180
90.7%
CRITICAL DATA POINTS TO WATCH 160
140 88.7%
120
86.7%
80 84.7%
Unique pure-play Australia play. Frasers Logistics & Industrial 60 82.7%
Trust (FLT) offers investors the unique opportunity to invest in a 40
80.7%
20
portfolio of 53 assets (as at end of September 2016) that are 0 78.7%
concentrated within major industrial markets in Australia, 2016A 2017F 2018F 2019F
including Melbourne, Sydney and Brisbane. Apart from a Net Property Income Net Property Income Margin %
geographically diversified portfolio, the REIT’s tenants are mainly

in the consumer and logistics sectors which are expected to Net Property Income and Margins (%)
90%
remain resilient and continue growing as Australia’s economy 37
80%
transitions itself from being resource-led to consumption-led. 37
70%
36
60%
36 50%
Long WALE of 6.6 years with in-built organic growth a key trait 40%
35
in current uncertain environment. In our view, the long WALE by 30%
35
Adjusted Gross Rental Income of 6.6 years, which is longer than 20%
34 10%
the majority of Singapore industrial REITs (between 2.9 and 4.7 34 0%
years), provides strong cashflow visibility.
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
4Q2016
In addition, FLT’s organic growth is underpinned by in-built
rental escalations. All of the leases of the initial portfolio have
fixed and/or Consumer Price Index-linked (CPI-linked) (x)
1.1
increments. The fixed rental increments, which are built into the
1.0
existing leases, range from 2.5-3.75% which translates to an 0.9
average annual rental increment of c.3.2% for the Initial 0.8
Portfolio. 0.7
0.6
Predominantly freehold and long leasehold land tenure is a 0.5
positive. FLT’s portfolio predominantly comprises properties on 0.4
freehold (60.0% by appraised value) and long leasehold land 0.3

2016A 2017F 2018F 2019F
(30.2% on leasehold land with a tenure of more than 80 years).
FLT’s weighted land lease expiry of c.82 years is double that of
other industrial S-REITs' average of 41 years. Based on our Interest Cover (x)
estimates, the component of capital return based on the (x)
7.00
remaining leasehold tenure on FLT’s annual distribution yield (at
6.80
c.0.5%) is much smaller than the average of 2-3% for most
industrial S-REITs. 6.60
6.40
Strong Sponsor with long track record of development and 6.20
management of Australian Industrial assets. FLT's subsidiary 6.00
Frasers Property Australia Pty Limited (FPA) offers FLT access to a 5.80
strong and fully integrated real estate platform. In particular, 5.60

FPA’s industrial business has an end-to-end capability and 2016A 2017F 2018F 2019F
leadership in the development of industrial assets, having

developed over A$3.5bn worth of industrial assets since 2001. Source: Company, DBS Bank
The Sponsor has granted FLT a right of first refusal (ROFR) over
any of the completed income-producing industrial properties it
intends to divest. This currently comprises eleven existing
properties in Australia.

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Company Guide

Balance Sheet:
Balance sheet; gearing up for acquisitions. Gearing is projected
to remain fairly stable at c.31% in the medium term. The low 30.0%
gearing level allows significant headroom for the manager to 25.0%

execute on opportunistic acquisitions when the time arises. The
20.0%
manager has a medium-term target gearing level of c.35-40%,
implying there is headroom to gear up. 15.0%
10.0%
Healthy financial metrics. The REIT has minimal debt expiries till 2016A 2017F 2018F 2019F
FY19 with a weighted average cost of borrowing of 2.8%.

Interest coverage ratio remains healthy at >7.0%. Close to 84%
of the debt is hedged, implying minimal volatility to distributions ROE (%)
in the event of an interest rate hike. 7.0%
6.0%
5.0%
Executing on acquisitions. FLT is looking to complete the
3.0%
planned acquisition of Martin Brower property in the coming
2.0%
quarter which will bring gearing up to the c.30-31% level.
Despite this, we believe that the portfolio remains under-geared 1.0%
in relation to peers and optimal level. With opportunities 0.0%

2016A 2017F 2018F 2019F
abound in the market, we believe that the execution of more
acquisitions which is projected to be accretive to earnings, will
be a catalyst for its stock price. Distribution Yield (%)
PB Band (x)
(x)
Key Risks: 20.3
Single-country concentration. While FLT provides exposure to 19.3

+2sd: 19.1x
the Australian industrial market, as a pure-play REIT, its 18.3
portfolio is 100% concentrated in Australia. However, this risk 17.3 +1sd: 17.5x
is mitigated by the fact that its portfolio is diversified across 16.3

Avg: 15.9x
five states in Australia and various industries. 15.3
14.3 -1sd: 14.2x
The geographic and tenant diversity across various industries 13.3

-2sd: 12.6x
imply that the REIT is not dependent and over-reliant on the 12.3
performance of any particular industry. 11.3

Aug-
2016
23-Jul-
2016
2016
2016
Sep-
Jun-
Oct-
21-
25-
27-
24-
2016

Company Background
Frasers Logistics & Industrial Trust (FLT) offers investors a
unique opportunity to invest in a quality portfolio of industrial
assets in Australia. FLT’s initial portfolio consists of 51
properties spread across five states in Australia with an
appraised value of A$1,584.6m. The initial portfolio is well
diversified across the key states of Victoria (40% of appraised
value), New South Wales (28%) and Queensland (28%).

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Company Guide
Income Statement (A$m)

FY Sep 2016A 2017F 2018F 2019F
Gross revenue 43.1 162 162 162
Property expenses (7.4) (24.9) (25.7) (26.5)
Net Property Income 35.7 137 136 135
Other Operating expenses (12.8) (14.0) (14.2) (14.2) Driven mainly by annual
Other Non Opg (Exp)/Inc (5.7) 0.0 0.0 0.0 rental escalations
Net Interest (Exp)/Inc (3.8) (18.1) (18.3) (18.3) coupled with
Exceptional Gain/(Loss) 0.0 (12.5) (7.7) (2.8) acquisitions
Net Income 13.4 92.5 96.2 100
Tax (6.1) (9.3) (9.6) (10.0)
Minority Interest 0.0 0.0 0.0 0.0
Preference Dividend 0.0 0.0 0.0 0.0
Net Income After Tax 7.24 83.3 86.5 90.2
Total Return 3.87 83.3 86.5 90.2
Non-tax deductible Items 22.5 11.7 11.8 11.8
Net Inc available for Dist. 26.4 95.0 98.3 102
Growth & Ratio
Revenue Gth (%) N/A 276.3 0.0 0.0
N Property Inc Gth (%) nm 284.2 (0.6) (0.6)
Net Inc Gth (%) nm 1,049.9 3.9 4.2 Interest cost locked in
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0
Net Prop Inc Margins (%) 82.9 84.6 84.1 83.6
Net Income Margins (%) 16.8 51.4 53.4 55.7
Dist to revenue (%) 61.3 58.6 60.7 62.9
Managers & Trustee’s fees 29.7 8.7 8.7 8.7
ROAE (%) 0.6 6.7 6.9 7.2
ROA (%) 0.4 4.7 4.8 5.0
ROCE (%) 0.7 6.3 6.1 6.1
Int. Cover (x) 6.0 6.8 6.7 6.6

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Company Guide
Quarterly / Interim Income Statement (A$m)

FY Sep 4Q2016
Gross revenue 43.1

Property expenses (7.4)
Net Property Income 35.7
Other Operating expenses (12.8)
Other Non Opg (Exp)/Inc (5.7)
Net Interest (Exp)/Inc (3.8)
Exceptional Gain/(Loss) 0.0
Net Income 13.4
Tax (6.1)
Minority Interest 0.0
Net Income after Tax 7.24
Total Return 3.87
Non-tax deductible Items 22.5
Net Inc available for Dist. 26.4
Growth & Ratio Maiden distributions
Revenue Gth (%) N/A
N Property Inc Gth (%) nm
Net Inc Gth (%) nm
Net Prop Inc Margin (%) 82.9
Dist. Payout Ratio (%) 100.0
Balance Sheet (A$m)

FY Sep 2016A 2017F 2018F 2019F
Investment Properties 1,678 1,753 1,757 1,761

Other LT Assets 0.0 0.0 0.0 0.0
Cash & ST Invts 85.8 50.6 51.0 51.4
Inventory 0.0 0.0 0.0 0.0
Debtors 4.96 8.10 8.10 8.10
Other Current Assets 0.0 0.0 0.0 0.0
Total Assets 1,768 1,811 1,816 1,820
ST Debt 0.0 0.0 0.0 0.0

Creditor 2.24 8.10 8.10 8.10
Other Current Liab 17.2 9.25 9.62 10.0
LT Debt 492 537 541 545
Other LT Liabilities 8.21 8.21 8.21 8.21
Unit holders’ funds 1,249 1,249 1,249 1,249
Minority Interests 0.0 0.0 0.0 0.0
Total Funds & Liabilities 1,768 1,811 1,816 1,820
Non-Cash Wkg. Capital (14.5) (9.3) (9.6) (10.0)

Net Cash/(Debt) (406) (486) (490) (493) Gearing to remain stable
Ratio
Current Ratio (x) 4.7 3.4 3.3 3.3
Quick Ratio (x) 4.7 3.4 3.3 3.3

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Company Guide
Cash Flow Statement (A$m)

FY Sep 2016A 2017F 2018F 2019F
Pre-Tax Income 13.4 92.5 96.2 100

Dep. & Amort. 0.0 0.0 0.0 0.0
Tax Paid 0.0 (17.2) (9.3) (9.6)
Associates &JV Inc/(Loss) 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. 12.1 2.72 0.0 0.0
Other Operating CF 6.69 11.7 11.8 11.8
Net Operating CF 32.1 89.8 98.7 102
Net Invt in Properties (1,365) (75.0) (4.0) (4.0)
Other Invts (net) 0.0 0.0 0.0 0.0 Assumed acquisition of
Invts in Assoc. & JV 0.0 0.0 0.0 0.0 Martin Brower property
Div from Assoc. & JVs 0.0 0.0 0.0 0.0
Other Investing CF (29.6) 0.0 0.0 0.0
Net Investing CF (1,394) (75.0) (4.0) (4.0)
Distribution Paid (26.4) (95.0) (98.3) (102)
Chg in Gross Debt 491 45.0 4.00 4.00
New units issued 982 0.0 0.0 0.0
Other Financing CF (9.0) 0.0 0.0 0.0
Net Financing CF 1,438 (50.0) (94.3) (97.9)
Currency Adjustments 0.0 0.0 0.0 0.0
Chg in Cash 75.8 (35.2) 0.36 0.40
Operating CFPS (S cts) 1.47 6.35 7.14 7.34

Free CFPS (S cts) (97.6) 1.08 6.85 7.05
S$
1.05
Closing T arget
S.No. Dat e Rat ing
Pric e Price
1.00
1 29 J ul 16 0.99 1.10 BUY
0.95
0.90
0.85
0.80
Jun-16 Jul-16 Aug-16 Sep-16 Oct-16
Not e: Share price and Target price are adjusted for corporate actions.
Source: DBS Bank

Analyst: Derek TAN
Mervin SONG CFA

Page 6 Page 210
IREIT Global
Version 5 | Bloomberg: IREIT SP | Reuters: IREI.SI Refer to important disclosures at the end of this report
HOLD Waiting for new sponsor’s direction

Price Target 12-mth: S$0.75 (4% upside and 8.9% yield) Uncertainty over IREIT’s new sponsor. We maintain our HOLD
recommendation on IREIT Global (IREIT) and TP of S$0.75. While
Potential Catalyst: Acquisitions/increase in Germany’s CPI IREIT offers an attractive yield in excess of 8%, uncertainty over
Where we differ: In line with consensus the direction of IREIT’s new sponsor Tikehau Capital, a European
investment manager, will likely cap IREIT’s near-term share price
Analyst
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com performance. Furthermore, with IREIT’s gearing at c.42%, any
Derek TAN +65 6682 3716 derektan@dbs.com growth plans are likely to entail an equity-raising exercise to
fund the acquisition of new properties in Europe which may be
DPU dilutive in the near term, given IREIT’s already high
Price Relative distribution yield.
Strong cashflow visibility. With a weighted average lease expiry

(WALE) by gross rental income of 6.2 years, IREIT provides
strong cashflow visibility. The strength of its cashflows is also
underpinned by its blue chip tenants, such as Allianz, Deutsche
Telekom, Deutsche Rentenversicherung Bund and ST
Microelectronics.
Full-year contribution from Berlin acquisition. IREIT's earnings

this year should benefit from the full-year contribution from a
FY Dec (EURm) 2015A 2016F 2017F 2018F
Gross Revenue 26.9 33.1 33.4 33.7 Berlin property which was acquired in mid-2015 and on a
Net Property Inc 24.0 30.3 30.6 30.9 proforma 7.1% NPI yield. We estimate that this will translate to
Total Return 11.8 23.4 22.6 23.9 a 21% uplift in FY16 DPU (SGD basis).
EPU (S cts) 3.03 5.77 5.49 5.78
Valuation:
EPU Gth (%) nm 90 (5) 5
DPU (S cts) 5.24 6.32 6.41 6.34 We maintain our DCF valuation of S$0.75 to account for the
DPU Gth (%) 155 21 1 (1) recent depreciation of the EUR versus SGD, after imputing a
NAV per shr (S cts) 61.8 63.4 62.7 62.2 new EURSGD rate of 1.51.
PE (X) 23.8 12.5 13.1 12.5
P/NAV (x) 1.2 1.1 1.1 1.2 Key Risks to Our View:
Aggregate Leverage (%) 42.3 42.0 42.2 42.4 The key risk to our view is a significant depreciation of EUR
ROAE (%) 5.2 9.2 8.8 9.3 versus SGD. For every 0.10 change in the EURSGD FX rate, our
DCF valuation changes by 6%. In addition, a weaker-than-
Distn. Inc Chng (%): 0 0 0 expected inflation rate would also delay any increase in rents.
Consensus DPU (S cts): 6.34 6.34 -
Other Broker Recs: B: 1 S: 0 H: 1 At A Glance
Finance L.P. Mkt. Cap (S$m/US$m) 446 / 309
Jinquan Tong 55.9
Chap Huat Lim 18.4
Free Float (%) 25.7

ed: TH / sa: AS, PY
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Company Guide
IREIT Global

Earnings Drivers:
Stable cash flow profile with inflation protection. IREIT’s
portfolio of five properties has a WALE by gross rental income
of 6.2 years (as at end-September 2016), which provides
investors with significant cashflow visibility. The portfolio is also
resilient as the majority of leases contain rent adjustment
clauses which are subject to indexation to the German CPI.
Rents are adjusted by a rise or a percentage of the change in
CPI, upon the CPI crossing a prescribed hurdle rate or a
prescribed percentage hurdle. Another attractive feature of Net Property Income and Margins (%)
IREIT’s portfolio is that the properties are leased to blue chip
tenants such as Allianz, Deutsche Telekom, Deutsche
Rentenversicherung Bund and ST Microelectronics which
mitigate payment/credit risks for the REIT.
Boost from acquisition of Berlin property. IREIT purchased a

property in Berlin in mid-2015 for EUR144.2m (c.S$217.7m) on
a 7.1% proforma NPI yield. The full benefits from the
acquisition should accrue this year. Located in the district of
Lichtenberg, 6km east of Berlin city centre, the freehold
property consists of two fully connected building sections of Distribution Paid / Net Operating CF
eight and 13 storeys respectively. Close to fully occupied
(c.99.2%), the property provides exposure to Berlin, one of the
strongest economic regions in Germany. The acquisition further
diversifies IREIT’s portfolio to five cities from its initial base of
four (Munster, Bonn, Darmstadt and Munich) and lengthens
IREIT’s WALE.
Hedges in place to mitigate against FX volatility. IREIT distributes

its income in SGD but its rental income is in EUR. To mitigate
this risk, IREIT has entered into hedges for 100% of 2016
distributable income at an average hedge rate of S$1.53. Going
forward, IREIT has also entered into hedges for 2017 Interest Cover (x)
distributions at an average hedge rate of S$1.55.
New sponsor. Tikehau Capital, a pan-European asset

management firm with over EUR9bn of assets under
management of which EUR900m are in real estate, recently
completed the purchase of an 80% stake in IREIT’s manager.
While Tikehau Capital’s European pedigree and larger business
potentially opens up greater opportunities for IREIT compared to
its previous sponsor, there remains significant uncertainty on
how Tikehau intends to grow the REIT and the strategic
direction of the REIT given a widening of its investment
mandate from purely office properties in Europe to now include
retail and industrial assets.

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IREIT Global

Balance Sheet:
Naturally hedged portfolio. As at end-September 2016, IREIT’s
gearing stood at 42.5%. While its gearing is higher than other
S-REITs, this risk is mitigated by the fact that all of IREIT’s
borrowings are in EUR. In addition, interest rate risk is managed
by having c.88% of its borrowings on fixed interest rates.

Uncertainty arising from IREIT’s new sponsor. Tikehau Capital, a
European investment manager, recently completed the
acquisition of an 80% stake in IREIT’s manager and announced
plans to broaden IREIT’s investment mandate beyond European ROE (%)
offices to include retail and industrial properties. Given the lack
of details over which asset classes Tikehau Capital plans to focus
on and how it intends to grow the REIT given IREIT’s already
high gearing, we believe IREIT’s share price performance will be
capped in the near term.
Boost to capital values from negative interest rates. As negative

interest rates in Europe incentivise investors to invest in riskier
assets, we believe this will lead to further cap rate compression
of European properties. As a German property REIT, IREIT is well
positioned to capture the expected increase in property values.
Key Risks: 10.0%
9.0%
Deflation risk. Should Germany experience another bout of +1sd: 8.3%
8.0%
deflation, this may cause a delay a potential rise in rents in the 7.0%
Avg: 6.5%
future. This would negatively impact projected distributions 6.0%
going forward. 5.0%

-1sd: 4.8%
4.0%
3.0% -2sd: 3%
Interest rates risks. Any increase in interest rates will result in 2.0%
higher interest payments and reduce the income available for 1.0%
distribution, which will result in lower distribution per unit 0.0%
Dec-14 Jun-15 Dec-15 Jun-16
(DPU) for unitholders.
PB Band (x)
Single-tenant leases. IREIT is reliant on GMG, a wholly owned
subsidiary of Deutsche Telekom for c. 60% of gross rental
income (GRI). Non-performance by GMG will negatively impact
distributions to unitholders.
Changes in tax regime. Any changes in the tax regime could

negatively impact IREIT’s distributions.
Company Background
IREIT is a Singapore REIT established with the investment
strategy of principally investing, directly or indirectly, in a
portfolio of income-producing real estate in Europe which is Source: Company, DBS Bank
used primarily for office purposes.

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IREIT Global
Income Statement (EURm)

FY Dec 2015A 2016F 2017F 2018F
Gross revenue 26.9 33.1 33.4 33.7
Net Property Income 24.0 30.3 30.6 30.9
Other Operating expenses (3.0) (3.3) (4.5) (3.4)
Other Non Opg (Exp)/Inc (1.0) 0.0 0.0 0.0
Net Interest (Exp)/Inc (2.6) (4.0) (4.0) (4.0)
Exceptional Gain/(Loss) (5.2) 0.0 0.0 0.0
Net Income 12.2 23.0 22.1 23.5
Tax (0.4) 0.44 0.44 0.44
Total Return 11.8 23.4 22.6 23.9
Non-tax deductible Items 3.72 1.92 3.08 1.98
Net Inc available for Dist. 20.8 25.4 25.6 25.9
Growth & Ratio
Revenue Gth (%) 223.4 22.9 1.0 0.9
N Property Inc Gth (%) 219.3 25.9 1.0 1.0
Net Inc Gth (%) nm 98.2 (3.7) 6.0 Increase in earnings from
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 the acquisition of the Berlin
Net Prop Inc Margins (%) 89.2 91.4 91.4 91.5 property
Dist to revenue (%) 77.2 76.6 76.7 76.8
to sales(%)
ROAE %) 5.2 9.2 8.8 9.3
ROA (%) 3.1 5.0 4.7 5.0
ROCE (%) 5.8 6.2 6.0 6.2
Int. Cover (x) 8.0 6.8 6.6 6.8

Page 4
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Company Guide
IREIT Global
Quarterly / Interim Income Statement (EURm)

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Gross revenue 7.35 8.62 8.80 8.48 8.54

Other Non Opg (Exp)/Inc (1.0) (0.2) 0.41 0.71 (0.4)
Net Income 3.68 5.81 6.25 6.54 5.12
Tax 0.74 (0.7) (0.3) (1.7) (0.4)
Total Return (3.6) 6.65 5.83 13.0 4.60
Non-tax deductible Items 9.14 (0.2) 0.58 (6.6) 1.74
Growth & Ratio
Revenue Gth (%) 36 17 2 (4) 1
Net Inc Gth (%) 35 16 15 (18) (3)
Balance Sheet (EURm)

FY Dec 2015A 2016F 2017F 2018F
Investment Properties 441 450 452 454

Other LT Assets 2.30 2.30 2.30 2.30
Cash & ST Invts 21.2 19.8 19.8 19.8
Inventory 0.0 0.0 0.0 0.0
Debtors 1.56 2.76 2.79 2.81
Total Assets 466 475 477 479
ST Debt 0.0 0.0 0.0 0.0

Creditor 3.90 4.14 4.18 4.22
LT Debt 197 199 201 203
Unit holders’ funds 251 257 257 257
Total Funds & Liabilities 466 475 477 479

Net Cash/(Debt) (176) (180) (182) (184) Increase in gearing due to
Ratio acquisition of the Berlin
Current Ratio (x) 1.4 1.4 1.4 1.4 property
Quick Ratio (x) 1.4 1.4 1.4 1.4

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IREIT Global
Cash Flow Statement (EURm)

FY Dec 2015A 2016F 2017F 2018F
Pre-Tax Income 17.4 23.0 22.1 23.5

Dep. & Amort. 1.00 1.00 1.00 1.00
Tax Paid (0.4) 0.44 0.44 0.44
Chg in Wkg.Cap. (0.2) (1.4) 0.01 0.01
Net Operating CF 23.9 25.0 26.7 26.9
Net Invt in Properties (156) (2.0) (2.0) (2.0)
Other Invts (net) 0.0 0.0 0.0 0.0
Invts in Assoc. & JV 0.0 0.0 0.0 0.0
Div from Assoc. & JVs 0.0 0.0 0.0 0.0 Acquisition of Berlin
Other Investing CF 0.0 0.0 0.0 0.0 property
Net Investing CF (156) (2.0) (2.0) (2.0)
Distribution Paid (15.1) (25.4) (25.6) (25.9)
Chg in Gross Debt 101 2.00 2.00 2.00
New units issued 58.0 0.0 0.0 0.0
Other Financing CF (2.2) 0.0 0.0 0.0
Net Financing CF 142 (23.4) (23.6) (23.9)
Chg in Cash 9.94 (0.4) 1.01 1.01

Free CFPS (S cts) (33.9) 5.65 6.00 6.02
Source: DBS Bank

Derek TAN

Page 6 Page 216
Keppel DC REIT
Version 6 | Bloomberg: KDCREIT SP | Reuters: KEPE.SI Refer to important disclosures at the end of this report
BUY Destiny in its own hands

Price Target 12-mth: S$1.33 (11% upside and 6.0% yield) BUY with S$1.33 TP. Keppel DC REIT (KDC REIT) remains one of
the few REITs in Singapore that is projected to deliver a solid 5%
Potential Catalyst: Acquisitions CAGR in distributions supported by positive market dynamics.
Where we differ: Estimates are more conservative than consensus Low gearing of c.30% and low cost of capital empower the REIT
with financial capacity to acquire accretive assets. Maintain BUY
Analyst
Derek TAN +65 6682 3716 derektan@dbs.com and TP of S$1.33 which has already priced in the recently
Singapore Research Team equityresearch@dbs.com announced acquisition of Keppel DC Singapore 3 (KDC SG 3).
Acquisition of KDC SG 3 to power earnings forward; impact on
Price Relative DPUs estimated to be significant. The acquisition of KDC SG 3
further diversifies the REIT’s earnings base and fuels a stronger
earnings growth trajectory of 5% going forward. Apart from
being a significantly accretive deal, upside will come from the
ability for management to garner tax transparency status, which
allows an additional 3.5% upside to our estimates, which is not
factored in.
Further flexibility to acquire post balance sheet recapitalisation

exercise. The S$279.5m in new equity raised improved the
REIT’s liquidity and further strengthened its balance sheet,
FY Dec (S$m) 2015A 2016F 2017F 2018F
Gross Revenue 102 102 136 141 positioning KDC REIT for another year of strong growth driven
Net Property Inc 86.9 83.5 115 120 from acquisitions. This is supported by low gearing of c.30%
Total Return 105 57.9 80.0 84.2 coupled with low cost of capital. We have not factored in
further acquisitions in our estimates.
EPU (S cts) 7.17 6.55 7.98 7.50
EPU Gth (%) 32 (9) 22 (6)
DPU Gth (%) 20 5 5 5 We currently have a BUY recommendation, with a DCF-backed
NAV per shr (S cts) 92.1 92.1 97.0 97.0
PE (X) 16.7 18.3 15.0 16.0 TP of S$1.33. The stock offers attractive FY17F yields of 6.0%
Distribution Yield (%) 5.4 5.7 6.0 6.3 and upside will hinge on better-than-expected returns from
P/NAV (x) 1.3 1.3 1.2 1.2 acquisitions.
ROAE (%) 8.0 7.1 8.4 7.7
Rising interest rates. A faster than anticipated rise in interest
Distn. Inc Chng (%): 0 0 0 rates will negatively impact distributions.
At A Glance
Finance L.P. Mkt. Cap (S$m/US$m) 1,350 / 938
Keppel Corp Ltd 27.5
Free Float (%) 72.5

ed: TH / sa: YM, PY
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Company Guide
Keppel DC REIT
Earnings Drivers:
Tapping on global data storage and usage growth. As an owner
of data centres in key data gateways and financial centres
across Asia Pacific and Europe, KDC REIT is poised to ride the
wave of rising global data usage and demand for data centres.
The Trust offers investors a stable and visible earnings growth
profile, with 30% of NPI derived from long-dated master leases
with embedded rental step-ups of 2-4% p.a. With 61% of
leases by rental income due for renewal between 2015 and Net Property Income and Margins (%)
2017, earnings will be further driven by positive rental
reversions and higher occupancies at its co-location data centres
in Singapore (T25, S25), Australia (part of Gore Hill), and Ireland
(Citadel 100). As it stands, the Trust has a WALE of 2.6 years for
co-location properties, 9.9 years for fully fitted properties, and
16 years for shell & core properties.
Strong ambitions to grow portfolio. The acquisition of KDC SG

3 for S$202.5m is well anticipated but highly accretive to
portfolio earnings estimates, given the high initial yield of
10.25%. The REIT raised S$279.5m which will fully fund the
acquisition with equity. The remaining S$65m will be utilised to
pay down short-term loans for the purchase of Intellicentre 2
(previously announced) and future acquisitions which are not
factored in at this point.
We estimate the deal to be accretive and project the full-year

impact from this acquisition to grow FY17F DPU by 5.0%
(FY16F DPU estimate of 6.8 Scts vs FY17F DPU of 7.2 Scts).
Assuming that IRAS approves tax transparency status for the
REIT, impact to DPU is estimated to be close to 8.5%.
Occupancy saw marginal improvement to 92.7% from 92.3%, Interest Cover (x)
mainly due to the take-up of half of the lease renewal (6,800
sqft in total or 6.2% of the property NLA) at Keppel DC
Singapore 1 (aka S25) that was previously committed and
announced. The remaining half is intended to be taken up in
2H17. WALE remains healthy at 8.6 years.
Expansion to Italy and the UK: The REIT had recently announced
acquisitions in two new markets, a shell and core building of a
data centre in Milan, Italy, and another one in Cardiff, UK. Both
backed by long master leases with embedded rental escalations,
the former has been fully leased to one of the world’s largest
telecommunications companies for 12 years, whereas the latter
has been fully leased to one of the largest global cloud service
providers for 15 years.

Page 2
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Keppel DC REIT

Balance Sheet:
Conservative hedging policies. Major currencies that will impact
earnings - AUD and EUR - have been hedged for two years at
better-than-current spot rates, minimising any currency
fluctuations going forward. While the Manager has hedged the
majority of its foreign-sourced income until 1H17, we note that
the REIT could face translation losses upon rolling forward these
hedges if the AUD and EUR remain at current levels.
Conservative balance sheet. KDC REIT’s gearing stands at below

c.30%, with an all-in cost of debt of 2.4%. As at end-3Q16,
87% of the Trust’s borrowings were hedged into fixed rate ROE (%)
debt, which will provide earnings visibility in a volatile interest
rate environment.

Acquisitions to be a key share price driver. Given that earnings
profile is fairly stable; growth in DPUs is likely to be driven by
acquisitions, which the Manager alludes to be considering.
Given its current share price, target acquisition returns of c.7-
8% should mean that acquisitions are likely to be accretive.
Key Risks:
Higher maintenance capex relative to other asset classes. Due Distribution Yield (%)
to the shorter lifespan of a datacentre’s infrastructure, it is
possible that the REIT may have to rely on borrowings to fund
maintenance capex at certain properties, which could impact
gearing.
Competition from larger third-party data centre players. The

data centre market is dominated by several large international
operators which have been aggressively expanding into
markets where KDC REIT has a presence. KDC REIT may face
higher barriers to entry and stiffer competition to attract and
retain tenants. PB Band (x)
Company Background
Keppel DC REIT (KDC REIT) is a Singapore-based real estate
investment trust (REIT), established with the principal
investment strategy of investing, directly or indirectly, in a
portfolio of income-producing real estate assets which are
used primarily for data centre purposes, with an initial focus on
Asia Pacific and Europe.

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Keppel DC REIT

FY Dec 2015A 2016F 2017F 2018F
Gross revenue 102 102 136 141
Property expenses (15.6) (18.3) (20.8) (21.0) Earnings growth mainly
Net Property Income 86.9 83.5 115 120 from KDC SG 3
Other Operating expenses (7.3) (12.7) (16.6) (16.4) acquisition
Other Non Opg (Exp)/Inc 0.77 0.0 0.0 0.0
Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0
Net Income 69.0 61.3 87.0 91.5
Tax (5.6) (3.4) (7.0) (7.3)
Total Return 105 57.9 80.0 84.2
Non-tax deductible Items (46.9) 2.30 0.30 0.30
Growth & Ratio
Revenue Gth (%) 28.2 (0.7) 33.8 3.8
N Property Inc Gth (%) 28.8 (3.9) 38.2 4.3
Net Inc Gth (%) 32.3 (8.6) 38.2 5.2
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0
Net Prop Inc Margins (%) 84.8 82.0 84.7 85.1
Dist to revenue (%) 56.1 59.1 59.0 59.7
to sales(%)
ROAE %) 8.0 7.1 8.4 7.7
ROA (%) 5.4 4.6 5.6 5.3
ROCE (%) 6.4 5.3 6.4 6.0
Int. Cover (x) 7.0 7.5 8.4 8.4

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FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Gross revenue 25.7 24.6 24.8 24.9 22.7

Other Operating expenses (1.0) (3.7) (3.6) 0.31 4.87
Net Income 17.5 15.3 15.5 19.6 22.0
Tax (0.6) (2.4) (0.9) (1.2) (0.9)
Minority Interest 0.0 0.0 0.0 0.0 (0.1)
Total Return 16.9 54.8 14.6 18.4 21.0
Non-tax deductible Items (2.4) (40.3) 0.13 (3.6) (4.3)
Growth & Ratio
Revenue Gth (%) (1) (5) 1 0 (9)
N Property Inc Gth (%) (3) 2 (3) 4 (10)
Net Inc Gth (%) 10 (24) 13 26 14
Balance Sheet (S$m)

FY Dec 2015A 2016F 2017F 2018F

Other LT Assets 17.3 17.3 17.3 17.3
Cash & ST Invts 37.2 41.9 34.1 32.8
Inventory 0.0 0.0 0.0 0.0
Debtors 53.1 40.7 54.5 56.5
Total Assets 1,211 1,325 1,538 1,657
ST Debt 33.6 33.6 33.6 33.6

Creditor 17.8 6.78 9.08 9.42
LT Debt 338 460 392 510
Unit holders’ funds 813 813 1,089 1,089
Non-Cash Wkg. Capital 36.1 31.4 39.3 40.7

Net Cash/(Debt) (335) (451) (391) (511) Gearing to remain within
Ratio comfortable range
Current Ratio (x) 1.8 1.9 1.8 1.8
Quick Ratio (x) 1.7 1.9 1.8 1.8
Z-Score (X) 1.9 1.5 1.9 1.7

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Keppel DC REIT

FY Dec 2015A 2016F 2017F 2018F
Pre-Tax Income 69.0 61.3 87.0 91.5

Dep. & Amort. 0.0 0.0 0.0 0.0
Tax Paid (0.2) 0.0 (3.4) (7.0)
Chg in Wkg.Cap. (24.4) 1.36 (11.5) (1.7)
Net Operating CF 56.3 64.9 72.5 83.1
Net Invt in Properties (477) (121) (207) (118)
Other Invts (net) (8.8) 0.0 0.0 0.0
Invts in Assoc. & JV 0.0 0.0 0.0 0.0
Div from Assoc. & JVs 0.0 0.0 0.0 0.0 Investments in KDC SG
Other Investing CF (47.6) 0.0 0.0 0.0 3 (2017) and
Net Investing CF (533) (121) (207) (118) mainCubes (2018)
Chg in Gross Debt 149 121 (68.1) 118
New units issued 507 0.0 275 0.0
Other Financing CF (118) 0.0 0.0 0.0
Net Financing CF 507 61.2 127 33.9
Currency Adjustments (0.7) 0.0 0.0 0.0
Chg in Cash 29.7 4.76 (7.8) (1.3)

Free CFPS (S cts) (47.6) (6.4) (13.4) (3.1)
Source: DBS Bank

Analyst: Derek TAN
Mervin SONG CFA

Page 6 Page 222
Keppel REIT
Version 6 | Bloomberg: KREIT SP | Reuters: KASA.SI Refer to important disclosures at the end of this report
BUY Money left on the table

Last Traded Price ( 4 Jan 2017): S$1.02 (STI : 2,921.31) Recent rally to continue. Keppel REIT (KREIT)’s share price has
Price Target 12-mth: S$1.23 (21% upside and 6.4% yield) rallied over 25% since its lows in January 2016. KREIT’s
valuation is still attractive on the basis of its cheap valuation on
Potential Catalyst: Better than expected rental reversions, resilient office
a per square foot (sqft) basis and decent yield of c.6.5%. In
property values
addition, through proactive lease renewals, KREIT has derisked
Where we differ: In line with consensus
its portfolio to mitigate against potential downside from
Analyst
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com occupancies and rental rates. Thus, we maintain our BUY call
Derek TAN +65 6682 3716 derektan@dbs.com with a TP of S$1.23.
Tenancy risk in 2017 and 2018 significantly reduced. The impact
on DPU from the potential loss of key tenants in 2017 and 2018
Price Relative has been reduced considerably. With forward renewal efforts
year-to-date, there are only 5% of leases left for renewal in
S$ Relative Index
1.8
1.7 210
1.6
1.5
190 each of 2017 and 2018 with no further leases due for the
170
1.4
1.3 150 remainder of 2016. While expiring rents over the next two
1.2 130
1.1
1.0
110 years are in the low S$9 level, close to current Grade A rents of
S$9.30, we believe premium status of KREIT’s properties will
0.9 90
0.8 70
Keppel REIT (LHS) Relative STI (RHS)

help mitigate the potential decline in overall office rents.
Furthermore, with S$50-60m of disposal gains yet to be
distributed, KREIT has the flexibility to stabilise its DPU going
forward.
FY Dec (S$m) 2014A 2015A 2016F 2017F Compelling valuations on per sqft valuation basis. KREIT’s
Gross Revenue 184 170 159 158 Singapore Grade A office portfolio is trading at an implied value
Net Property Inc 151 137 130 129 of c.S$2,400 per sqft compared to recent office market
Total Return 372 337 161 158
Distribution Inc 206 217 212 216 transactions including the sale of Asia Square Tower 1, 60%
EPU (S cts) 5.46 3.71 4.95 4.77 interest in CapitaGreen and Straits Trading Building at between
EPU Gth (%) 0 (32) 33 (4) S$2,700 (adjusted for 99-year leasehold for CapitaGreen) to
DPU (S cts) 7.23 6.76 6.51 6.51 S$3,500 psf. With abundant liquidity as well as long term
DPU Gth (%) (8) (7) (4) 0
NAV per shr (S cts) 154 143 139 136
investors being positive on the Singapore office market and
PE (X) 18.7 27.5 20.6 21.4 looking beyond short term supply headwinds, we believe capital
Distribution Yield (%) 7.1 6.6 6.4 6.4 values for office properties will remain resilient near term and
P/NAV (x) 0.7 0.7 0.7 0.7 KREIT’s discount to the physical market is unwarranted.
ROAE (%) 3.8 2.6 3.5 3.4 Valuation:
We maintain our DCF-based TP of S$1.23 which has
DPU Chng (%): (2) (2)
incorporated higher number of shares on issue and near term
Consensus DPU (S cts): 6.70 6.50 drag from loss of California Fitness at Bugis Junction Towers.
Other Broker Recs: B: 8 S: 4 H: 9 Our TP implies a valuation of c.S$2,500 per sqft for KREIT’s
Source of all data on this page: Company, DBS Bank, Bloomberg Grade A offices in Singapore.
Finance L.P. Key Risks to Our View:
A key risk to our view is new offices supply causing spot rents
to fall below S$7 per sqft, which will likely lead to lower asking
rents, coming in below our expectations.
At A Glance
Mkt. Cap (S$m/US$m) 3,357 / 2,315
Keppel Land 46.0
Free Float (%) 54.0

ed: JS / sa: YM, PY
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Keppel REIT

200
180 89.5%
160 87.5%
Factors mitigating potential impact on occupancies and rents. 120
100 83.5%
On the back of forward renewals in 9M16, KREIT no longer has 80 81.5%
any leases up for renewal for the remainder of 2016. This is 60 79.5%
40
down from 13.6% at the start of the year. Thus, we believe 20 77.5%
KREIT’s risk profile near term has reduced significantly. In 0 75.5%

2013A 2014A 2015A 2016F 2017F
addition, the forward renewal strategy has also resulted in only
5% of leases up for renewal in 2017 and 2018 respectively,
which in our view will help KREIT navigate the impending 2.8m
sqft of new office supply. Furthermore, tenancy risks are Net Property Income and Margins (%)
84%
partially mitigated by the fact that the majority of the leases due 40
83%
in 2017 and 2018 are in their first renewal cycle. With tenants 38 82%
in relatively new offices and having made considerable 81%
36
investments in fit-outs, there is potentially less incentive for 80%
them to relocate. In addition, we understand expiring rents for 34
79%
FY17 and FY18 leases are in the low S$9’s which means if 32
78%
Grade A office rents bottom out close to our expectations of 30 77%
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
around S$9 per sqft, risk of negative rental reversions will be
minimised. Net Property Income Net Property Income Margin %
Long WALE offers income visibility. K-REIT has a long weighted Distribution Paid / Net Operating CF
average lease expiry (WALE) of c.6 years, with c.95% of leases (x)
5.1
due only from FY18F and beyond. Despite the increase in grade 4.6
A office supply in Singapore in 2016-2017, the Manager 4.1
remains optimistic on its future outlook as it believes that its 3.6

3.1
assets will continue to be well coveted due to their location in
2.6
Marina Bay. 2.1
1.6
Stable income from Australia. KREIT's Australian properties have 1.1
a WALE profile of c.10 years, with a majority of leases having 0.6

2013A 2014A 2015A 2016F 2017F
annual rental escalation clauses, which provides income stability
for the REIT. In 2016, KREIT should also benefit from the
recently opened office tower on the Old Treasury Building site in Interest Cover (x)
(x)
Perth, which incidentally has been renamed as the David 6.00
Malcolm Justice Centre. However, contribution in SGD terms
5.00
could potentially be erorded due to the depreciation of the AUD
against the SGD. 4.00
3.00
Divestment gains to smooth future distributions. We 2.00

understand KREIT has c.S$50-60m of divestment gains which it
1.00
has yet to pay out to unitholders. These gains are from past
disposals such as the sale of Prudential Tower and the recent 0.00
2013A 2014A 2015A 2016F 2017F
sale of 77 George Street. We believe these gains provide KREIT
with the flexibility to smooth future distributions, providing
income stability in the event of an unexpected rise in interest
rates and/or lower than projected rents.

Page 2
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Keppel REIT

Balance Sheet:
Gearing now below 40%. With recent asset revaluation gains 45.0%
and the disposal of 77 King Street in Sydney, KREIT’s gearing is
40.0%
now at c.39%. Going forward, we expect gearing to remain
35.0%
below 40%.
30.0%
Decent debt maturity. KREIT has a weighted average debt to 25.0%

expiry of 3.7 years, with c.74% of debt on fixed rates.
20.0%
2013A 2014A 2015A 2016F 2017F

Sentiment too negative on office capital values? With the
looming new office supply and spot Grade A office rents ROE (%)
declining recently, investors have generally avoided the office 4.0%
sector. However, with KREIT’s share price having already 3.5%
corrected significantly from peak levels in 2013 causing KREIT to 3.0%
trade at 0.8x P/BV, and evidence that physical office asset values 2.5%
are unlikely to correct further near term based on recent market 2.0%
transactions, we believe KREIT’s decent 5.8% yield deserves 1.5%
another relook by investors. 1.0%
0.5%
Key Risks: 0.0%

2013A 2014A 2015A 2016F 2017F
Risks to capital values. Should an increase in office supply and
a persistently weak office market outlook lead to a larger than
expected fall in rents, valuers could downgrade rental and Distribution Yield (%)
(%)
growth outlook, and this could trigger a decline in capital
8.3
values, which would put the REIT’s NAV at risk. 7.8
7.3 +2sd: 7.4%

Interest rate risk. Any increase in interest rates will result in 6.8 +1sd: 6.8%
higher interest payments that the REIT has to make annually to 6.3 Avg: 6.3%
service its loans. Nevertheless, the risk is partially mitigated by 5.8 -1sd: 5.8%
the fact that c.74% of the KREIT’s debt is on fixed rates. 5.3 -2sd: 5.3%
4.8
4.3
Currency risk. As KREIT earns rental income from its Australian 2013 2014 2015 2016 2017
assets in AUD, any depreciation in the AUD would result in

relatively lower contributions from Australia to K-REIT's total PB Band (x)
distributable income. To manage this risk, almost all of KRETI’s 1.4
(x)
income from Australia has been hedged for 2016. 1.3
1.2

+2sd: 1.03x
Keppel REIT is a real estate investment trust investing in 1.0
0.9 +1sd: 0.91x

predominantly commercial properties in Singapore and key
0.8 Avg: 0.8x
gateway cities in Australia. 0.7 -1sd: 0.69x
0.6
-2sd: 0.58x
0.5

Page 3
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FY Dec 2013A 2014A 2015A 2016F 2017F
Gross revenue 174 184 170 159 158
Other Non Opg (Exp)/Inc 28.0 12.6 5.60 1.17 (0.1)
Net Interest (Exp)/Inc (18.2) (22.7) (30.4) 8.24 7.29
Net Income 163 171 149 172 170
Tax (16.8) (11.6) (28.0) (3.7) (3.9)
Minority Interest 0.0 (0.1) (0.1) 0.0 0.0
Preference Dividend 0.0 0.0 (1.2) (7.5) (7.5)
Total Return 535 372 337 161 158
Non-tax deductible Items 132 (166) (120) 50.8 57.5
Growth & Ratio
Revenue Gth (%) 10.9 5.8 (7.5) (6.9) (0.5)
N Property Inc Gth (%) 10.9 9.5 (9.2) (5.7) (0.6)
Net Inc Gth (%) 25.5 9.4 (25.1) 35.0 (1.9) We expect distribution
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 100.0 income to be fairly stable
Net Prop Inc Margins (%) 79.5 82.3 80.7 81.8 81.7 going forward, as KREIT’s
Net Income Margins (%) 83.8 86.7 70.1 101.7 100.3 portfolio average rents are
Dist to revenue (%) 123.0 112.0 127.5 133.7 136.8 below market. This limits
downside from negative
reversions as well as KREIT’s
to sales(%)
ROAE %) 4.0 3.8 2.6 3.5 3.4
ability to payout past
ROA (%) 2.3 2.3 1.6 2.2 2.2 disposal gains
ROCE (%) 1.3 1.3 0.9 1.1 1.1
Int. Cover (x) 4.9 4.3 2.7 NM NM

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FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Gross revenue 42.2 42.8 41.2 40.6 39.5

Net Income 34.6 36.7 36.6 39.4 41.8
Tax (4.5) (19.8) (7.0) (3.0) (1.8)
Minority Interest 0.0 (0.1) 0.0 0.0 0.0
Total Return 51.0 213 56.0 96.5 40.0
Non-tax deductible Items 3.42 (159) (1.6) (44.0) 12.5
Growth & Ratio
Revenue Gth (%) (2) 1 (4) (1) (3)
N Property Inc Gth (%) (4) 4 (5) (1) (3)
Net Inc Gth (%) (19) (48) 77 24 16
Balance Sheet (S$m)

FY Dec 2013A 2014A 2015A 2016F 2017F

Other LT Assets 2,635 3,490 3,570 3,570 3,570
Cash & ST Invts 90.6 200 145 152 121
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 33.9 25.0 18.1 26.4 26.3
Total Assets 6,776 7,329 7,425 7,301 7,273
ST Debt 282 275 25.4 25.4 25.4

Creditor 94.3 84.5 51.2 96.4 96.1
LT Debt 2,401 2,390 2,464 2,314 2,314

Net Cash/(Debt) (2,592) (2,466) (2,345) (2,188) (2,219) Expected decline in gearing
Ratio due to recent revaluation
Current Ratio (x) 0.3 0.6 1.8 1.3 1.1 gains and disposal of 77
Quick Ratio (x) 0.3 0.6 1.8 1.3 1.1 George Street
Z-Score (X) 0.7 0.8 0.9 1.0 1.0

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FY Dec 2013A 2014A 2015A 2016F 2017F
Pre-Tax Income 163 171 149 172 170

Dep. & Amort. 0.0 0.0 0.0 0.0 0.0
Tax Paid (15.4) (14.3) (7.6) (3.7) (3.9)
Associates &JV Inc/(Loss) (64.2) (70.6) (92.9) (83.3) (83.5)
Chg in Wkg.Cap. (45.3) (74.0) (5.5) 36.9 (0.2)
Net Operating CF 60.3 42.6 114 153 112
Net Invt in Properties 504 504 (12.1) 140 (3.2)
Other Invts (net) 0.0 0.0 0.0 0.0 0.0
Net gain of c.S$140m
Invts in Assoc. & JV (585) (585) 63.2 0.0 0.0
from the disposal of 77
Div from Assoc. & JVs 65.4 73.4 89.5 83.3 83.5 George Street
Other Investing CF (208) 99.6 0.0 0.0 0.0
Net Investing CF (224) 92.2 141 223 80.4
Chg in Gross Debt 258 (20.9) (346) (150) 0.0
New units issued 173 225 150 0.0 0.0
Other Financing CF (54.9) (56.5) 0.0 (7.5) (7.5)
Net Financing CF 165 (67.4) (400) (369) (223)
Chg in Cash (11.3) 109 (145) 6.99 (30.7)

Free CFPS (S cts) 21.1 18.7 3.18 9.00 3.29
S$
1.16 12- mt h
Dat e of Closing
5 S.No. T arget Rat ing
Report Pric e
6 7 Pric e
1.11 2 8
4 1: 15 Apr 16 1.01 1.11 BUY
2: 20 J ul 16 1.08 1.26 BUY
1.06
3 3: 22 J ul 16 1.07 1.26 BUY
1.01 4: 29 Aug 16 1.07 1.26 BUY
5: 05 Sep 16 1.12 1.26 BUY
1 6: 26 Sep 16 1.10 1.26 BUY
0.96
7: 19 Oct 16 1.10 1.23 BUY
0.91 8: 08 Nov 16 1.09 1.23 BUY
0.86
0.81
Source: DBS Bank

Derek TAN

Page 6 Page 228
Manulife US Real Estate Inv
Version 3 | Bloomberg: MUST SP | Reuters: MANU.SI Refer to important disclosures at the end of this report
BUY America’s office is great

Last Traded Price ( 4 Jan 2017): US$0.84 (STI : 2,921.31)
Price Target 12-mth: US$0.93 (12% upside and 7.3% yield) Play on exposure to an improving US office market. We
maintain our BUY call and TP of US$0.93. We continue to like
Potential Catalyst: Exceeding IPO forecasts, and acquisitions
Manulife US REIT's (MUST) attractive prospective 7.3% yield,
strong organic growth prospects and exposure to the favourable
Where we differ: na
demand and supply fundamentals in the US office markets
Analyst
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com where MUST’s properties are located. This translates to an 8%
Derek TAN +65 6682 3716 derektan@dbs.com DPU growth in FY17, one of the highest among REITs in
Singapore. The expected strength of the USD/SGD exchange
rate could also result in inflows into the stock.
Price Relative Increased confidence on the REIT’s ability to deliver. Our recent
visit to properties in the US and meetings with various property
brokers as well as MUST’s strong maiden results indicate that
market fundamentals remain firm. We believe that MUST's
properties in Midtown Atlanta and Downtown Los Angeles
submarkets will continue to see steadily increasing rents,
continued expansionary tenant demand, increased employment
opportunities and also a lack of competitive new supply. Apart
from upside when leases come due, 84.2% of leases (by NLA)
Forecasts and Valuation have annual rental escalations of around 3%, and 15.0% have
FY Dec (US$m) 2015P* 2016F* 2017F 2018F provisions for mid-term or period rent increases.
Gross Revenue 71.0 78.7 79.3 80.7
Net Property Inc 44.2 48.7 48.6 49.5 Acquisitions to be the next driver of growth. The manager has
Total Return 26.0 27.2 30.8 33.9 been disciplined towards acquisitions and with the recent
Distribution Inc 34.3 35.4 38.4 38.8 decline in gearing to 34.6%, MUST is well placed to execute on
EPU (US cts.) 4.15 4.32 4.84 5.29 DPU-accretive acquisitions. Apart from that, we expect any
EPU Gth (%) nm 4 12 9 acquisition to diversify the REIT’s geographic earnings base and
DPU (US cts.) 5.48 5.61 6.05 6.06 tenant concentration. Markets that are of interest are core
DPU Gth (%) nm 2 8 0 submarkets that enjoy demand from a diversified type of
NAV per shr (US cts.) 78.4 82.0 80.8 80.2
industries (i.e. manufacturing, financial, technology and law
PE (X) 20.1 19.3 17.2 15.8
firms) which imply stability across market cycles. We have not
P/NAV (x) 1.1 1.0 1.0 1.0 priced in acquisitions in our forecasts.
ROAE (%) 10.6 5.4 6.0 6.6 Valuation:
TP is maintained at US$0.93 based on DCF. The stock offers
attractive FY16-17F yields of 6.8-7.3%.
Other Broker Recs: B: 4 S: 0 H: 0 Key Risks to Our View:
Lower-than-expected rental income. The key risk to our view is
* FY15 numbers are on a proforma basis while FY16 are on an
lower-than-expected rental income, arising from the non-
annualised basis
replacement/renewal of leases and/or slower-than-expected
Source of all data on this page: Company, DBS Bank, Bloomberg recovery of office rents in the US.
Finance L.P.
At A Glance
Mkt. Cap (US$m) 524
Manulife International 7.5
Free Float (%) 92.5

ed: TH / sa: YM, PY
Page 229
Company Guide
Earnings Drivers:
Exposure to the recovery of US real estate market. According to
Colliers International (Colliers), the office market outlook for
Downtown Los Angeles, Orange County and Atlanta are
attractive given (i) rising demand due to projected falling
unemployment rates on the back of a pick-up in business
activities, and (ii) a deep pool of local talents and skilled workers
which attract companies to set up and maintain their presence
there. Net Property Income and Margins (%)
The sub-markets where Manulife US REIT’s properties are

located are also characterised by a lack of new competitive
supply due to limited land availability and high construction
costs. Given supportive market dynamics, Colliers expects Class
A rents in the respective markets to improve by 1.5-23.0% per
annum over 2015-2017. Through the initial portfolio and
potential acquisitions in the future, we believe that MUST offers
a cyclical recovery story, with rents and capital values at or close
to an upswing, underpinned by improved business activity in the
US and real estate values that are off previous highs.
Inbuilt organic growth. MUST’s properties are well positioned to

experience strong organic growth delivered through built-in
rental escalations embedded into their lease contracts. As at 30
September 2016, (1) approximately 84.2% of leases (by NLA)
for the initial portfolio had built-in annual rental escalations,
mostly between 2.5% and 3.5%, and (2) 15% of leases (by
NLA) had mid-term or period rent increases, thus providing a
visible and growing rental income stream.
Long WALE of 6.1 years offers strong income visibility. With

leases typically signed on a 3- to 10-year lease and some in Interest Cover (x)
excess of 10 years, the initial portfolio enjoyed a long WALE of
6.1 years (by NLA) as at 30 September 2016. As such, the initial
portfolio has minimal expiries in the following years - only 5.1%
and 1.7% of its leases (by cash rental income) are expiring in
2017 and 2018 respectively, and we are expecting these leases
to revert positively when leases are due for renewal.
Growth through acquisitions by tapping into the expertise of its

Sponsor. MUST’s Sponsor is The Manufacturer’s Life Insurance
Company, which is part of Manulife Financial Group, a Canada-
based financial services group. Through its subsidiary, Manulife
Real Estate (MRE), the Sponsor has a strong acquisition
capability and track record, demonstrated by the acquisition of
85 properties worth US$6.2bn since 2010. This has resulted in a
CAGR of 17.5% per annum in the value of MRE’s AUM.
Therefore, we believe MUST will be able to tap on its Sponsor’s
real estate platform, to source deals, access local market
expertise and gain assistance in securing financing to grow its
portfolio through DPU-accretive acquisitions in the US.

Page 2
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Company Guide

Balance Sheet:
Stable gearing. Post recent portfolio revaluation gains, MUST’s
gearing has fallen to 34.7% from 36.8% as at end-December
2015. This provides for a debt headroom of c.US$75m should
MUST increase its gearing back up to 40%.
Conservative interest rate profiles. To manage its interest rate

risks, MUST has hedged 100% of its interest exposure at an
average interest rate of 2.46% till 2019.

Establishing a track record. A key pushback from potential ROE (%)
investors is the lack of familiarity with the US office market,
which we believe after a few quarters of strong results, will allay
most of investors' concerns. This may lead to a re-rating of the
stock. Another key share price driver is the potential
outperformance relative to MUST’s IPO forecast. This could be
driven by stronger-than-expected recovery of the US office
market leading to higher rental reversions.
Key Risks:
Risk of non-renewal and non-replacement of leases. MUST’s
financials, results of operations, and capital growth may be
adversely affected by bankruptcy, insolvency or downturn in Distribution Yield (%)
(%)
the businesses of one or more of the tenants, as well as the 7.2
7.1
decision by one or more of these tenants not to renew their 7.0 +2sd: 7%
lease/s at the end of a lease cycle. 6.9
+1sd: 6.9%
6.8
Avg: 6.7%
Foreign currency risks. All of the REIT’s assets are located in the
6.7
6.6
US and generate revenues in USD. Thus, investors who elect to 6.5
-1sd: 6.6%
receive distributions in SGD have exposure to volatility in the 6.4 -2sd: 6.4%
USD/SGD FX rate. This is mitigated should investors elect to 6.3
6.2
receive distributions in USD. May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16
Regulatory risks. MUST's tax efficiency relies in part on its PB Band (x)
Parent US REIT and Sub-US REITs being able to maintain their (x)
status as US REITs as well as qualifying for US portfolio interest 1.10
exemption when repatriating cashflows back to Singapore as +2sd: 1.07x
interest. Should there be any changes in tax or REIT 1.05 +1sd: 1.05x
Avg: 1.03x
regulations in either the US or Singapore which affects the
1.00 -1sd: 1.01x
current REIT structure or ability to repatriate cash in a tax- -2sd: 0.98x
efficient manner, distributions paid to MUST’s unitholders may 0.95
be adversely impacted.
0.90
May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16
Company Background
Manulife US REIT (MUST) is the first pure-play US office REIT
listed in Asia. Its portfolio consists of three freehold, Class A or Source: Company, DBS Bank
Trophy quality office properties in Atlanta, Los Angeles, and
Orange County with aggregate net lettable area (NLA) of
c.1.8m sqft.

Page 3
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Company Guide
Income Statement (US$m)

FY Dec 2016F 2017F 2018F
Gross revenue 78.7 79.3 80.7
Property expenses (30.0) (30.7) (31.1)
Net Property Income 48.7 48.6 49.5
Other Operating expenses (5.4) (5.4) (5.7)
Other Non Opg (Exp)/Inc 0.0 0.0 0.0
Net Interest (Exp)/Inc (8.2) (8.3) (8.7)
Exceptional Gain/(Loss) (6.6) (2.9) 0.0
Net Income 28.6 32.1 35.2
Tax (1.3) (1.3) (1.2)
Minority Interest 0.0 0.0 0.0
Preference Dividend 0.0 0.0 0.0
Net Income After Tax 27.2 30.8 33.9
Total Return 27.2 30.8 33.9
Non-tax deductible Items 8.14 7.65 4.91
Net Inc available for Dist. 35.4 38.4 38.8
Growth & Ratio
Revenue Gth (%) 11.0 0.8 1.7
N Property Inc Gth (%) 10.4 (0.2) 1.9
Net Inc Gth (%) 4.9 13.1 10.2 Growth driven by recovery
Dist. Payout Ratio (%) 100.0 100.0 100.0 in the US office market
Net Prop Inc Margins (%) 61.9 61.3 61.4
Net Income Margins (%) 34.6 38.8 42.1
Dist to revenue (%) 44.9 48.4 48.2
Managers & Trustee’s fees 6.9 6.8 7.0
to sales(%)
ROAE %) 5.4 6.0 6.6
ROA (%) 3.3 3.7 4.0
ROCE (%) 5.3 5.2 5.2
Int. Cover (x) 5.3 5.2 5.1

Page 4
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Company Guide
Quarterly / Interim Income Statement (US$m)

FY Dec 3Q2016
Gross revenue 28.2

Property expenses (10.6)
Net Property Income 17.6
Other Operating expenses (1.7)
Other Non Opg (Exp)/Inc 0.0
Net Interest (Exp)/Inc (3.1)
Exceptional Gain/(Loss) 0.0
Net Income 12.8
Tax (12.0)
Minority Interest 0.0
Net Income after Tax 0.85
Total Return 33.7
Non-tax deductible Items (21.1)
Net Inc available for Dist. 12.6
Growth & Ratio
Revenue Gth (%) N/A
N Property Inc Gth (%) nm
Net Inc Gth (%) nm
Net Prop Inc Margin (%) 62.4
Dist. Payout Ratio (%) 100.0
Balance Sheet (US$m)

FY Dec 2016F 2017F 2018F
Investment Properties 813 821 827

Other LT Assets 0.0 0.0 0.0
Cash & ST Invts 20.3 20.3 20.4
Inventory 0.0 0.0 0.0
Debtors 3.15 3.17 3.23
Other Current Assets 0.70 0.70 0.70
Total Assets 837 845 851
ST Debt 0.0 0.0 0.0

Creditor 7.87 7.93 8.07
Other Current Liab 4.34 4.34 4.34
LT Debt 303 314 320
Other LT Liabilities 5.10 5.10 5.10
Unit holders’ funds 517 514 514
Minority Interests 0.0 0.0 0.0
Total Funds & Liabilities 837 845 851
Non-Cash Wkg. Capital (8.4) (8.4) (8.5)

Net Cash/(Debt) (283) (294) (299)
Ratio
Current Ratio (x) 2.0 2.0 2.0
Quick Ratio (x) 2.0 2.0 2.0
Aggregate Leverage (%) 36.2 37.1 37.6

Page 5
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Company Guide
Cash Flow Statement (US$m)

FY Dec 2016F 2017F 2018F
Pre-Tax Income 35.1 35.0 35.2

Dep. & Amort. 0.0 0.0 0.0
Tax Paid (1.3) (1.3) (1.2)
Associates &JV Inc/(Loss) 0.0 0.0 0.0
Chg in Wkg.Cap. (4.3) 0.04 0.08
Other Operating CF 1.56 4.79 4.91
Net Operating CF 31.1 38.5 38.9
Net Invt in Properties (0.6) (2.1) (0.8)
Other Invts (net) 0.0 0.0 0.0 Minimal capex due to
Invts in Assoc. & JV 0.0 0.0 0.0 recently refurbished
Div from Assoc. & JVs 0.0 0.0 0.0 buildings
Other Investing CF (8.8) (8.4) (5.0)
Net Investing CF (9.4) (10.6) (5.8)
Distribution Paid (35.4) (38.4) (38.8)
Chg in Gross Debt 9.44 10.6 5.83
New units issued 0.0 0.0 0.0
Other Financing CF 0.0 0.0 0.0
Net Financing CF (25.9) (27.9) (33.0)
Currency Adjustments 0.0 0.0 0.0
Chg in Cash (4.3) 0.04 0.08
Operating CFPS (US cts.) 5.61 6.05 6.06

Free CFPS (US cts.) 4.84 5.72 5.95
Source: DBS Bank


Page 6 Page 234
Mapletree Commercial Trust
Version 5 | Bloomberg: MCT SP | Reuters: MACT.SI Refer to important disclosures at the end of this report
BUY An Eye on the Future

Price Target 12-mth: S$1.62 (14% upside and 6.2% yield) MBC I is a rare gem. We believe the acquisition of Mapletree
Business City – Phase 1 (MBC I) represents a rare gem, not only due
Potential Catalyst: Stronger-than-expected rental reversion; further delay to the scarcity of supply in Grade A Business Parks, but also adds
in interest rate hike expectations diversification to the portfolio by adding a new property type. After
Where we differ: We have slightly more optimistic assumptions in our the acquisition, the portfolio breakdown by valuation will be 22.2%
earnings forecast than consensus. for business parks, 58.2% office and 42.1% retail from 40.2%
Analyst office and 59.8% retail. This acquisition is expected to be DPU
Singapore Research Team equityresearch@dbs.com accretive and is reflected in our TP of S$1.62 and forecasted DPU
which translates to DPU growth of 7-10% for the next two years
from the pre-acquisition level in FY16.
VivoCity a preferred retail destination: As anticipated, the REIT has

Price Relative
utilised the opportunity of lease expiries to rebalance the tenant mix
at VivoCity. This has enabled it to achieve a whopping rental
reversion of 13.8% in 1H17 without compromising on the
occupancy rate.
Adequate debt headroom: As the S$1.8bn acquisition of MBC I was

financed by approximately 45/55 split in debt and equity, gearing
edged up to 37.3% from 35.0%, which translates to a debt
headroom of S$487.9m based on the regulatory cap of 45%. This
gives the REIT adequate debt headroom to finance future asset
enhancement initiatives.
FY Mar (S$m) 2016A 2017F 2018F 2019F
Valuation:
Gross Revenue 288 375 446 458 We maintain our DCF-backed target price to S$1.62. The stock
offers a dividend yield of 6.2-6.3% for FY17-18F at the current
Total Return 299 198 246 255
Distribution Inc 172 219 260 270
price. BUY call maintained.
EPU (S cts) 7.46 6.83 8.38 8.57
EPU Gth (%) 1 (8) 23 2 Key Risks to Our View:
DPU (S cts) 8.13 8.72 8.94 9.13 Weaker operational performance from VivoCity
DPU Gth (%) 2 7 2 2 While VivoCity’s performance has been very encouraging, the mall
NAV per shr (S cts) 130 130 130 130 is gradually phasing into a matured stage with potential decline in
PE (X) 19.0 20.7 16.9 16.5 growth ahead. Nonetheless, the acquisition of MBC I, still a
Distribution Yield (%) 5.7 6.2 6.3 6.4 segment in high demand, would mitigate the slowdown in growth
P/NAV (x) 1.1 1.1 1.1 1.1 at VivoCity.
ROAE (%) 5.9 6.0 6.4 6.5 At A Glance
Mkt. Cap (S$m/US$m) 4,061 / 2,800
Consensus DPU (S cts): 8.80 8.90 Major Shareholders (%)
Other Broker Recs: B: 10 S: 1 H: 3 Mapletree Investments Pte Ltd 38.38
AIA Group Ltd 6.00
Schroders Plc 5.98
Finance L.P.
Free Float (%) 49.64

ed: JS / sa: YM, PY
Page 235
Company Guide
Earnings Drivers:
VivoCity a preferred destination mall in Singapore. MCT
achieved a credible 12.3% in retail rental reversions in FY16
(from 142 leases) on the back of a retention rate of 87.9%
despite the current tough operating climate. The success
continues to 1H17 where 114 leases were renewed with a
reversion rate of 13.8%. Occupancy cost for the mall was stable
at 19%, in line with its peers. While the performance growth of
the mall will gradually slowdown as it enters into a more Net Property Income and Margins (%)
matured stage, VivoCity will prove its resilience to the retail
headwinds as one of the most popular retail destinations in
Singapore.
Minimal office expiries until FY17/FY18. Over FY16/17,

office/business park’s lease expiries will only account for less
than 10% of the Trust’s leases by gross rental revenue. This will
help to minimise the risk of negative office rental reversions,
particularly at Mapletree Anson, should CBD office rents start to
decline across the market. Amid potential volatility in office
rents and vacancies due to (a) lack of strong demand drivers,
and (b) large office supply completing over the next two years,
MCT offers investors both earnings visibility as well as downside
protection.
Potential acquisitions from the Sponsor. While we applaud to

the yield accretive acquisition of Mapletree Business City –
Phase 1, Mapletree Investments’ progressive redevelopment of
the Harbourfront and Alexandra precincts ensures a steady
pipeline of refurbished or newly developed assets ready to be
injected into the REIT.
Interest Cover (x)
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Company Guide

Balance Sheet:
MBC I acquisition edged up gearing slightly. As MBC was
funded by approximately 45/55 in debt and equity, a healthy
balance sheet is maintained with 37.7% aggregate leverage, up
from 35.0%. This level is within the Management’s comfortable
range of below 40% and gives adequate debt headroom based
on the regulatory 45%.
Average debt maturity extended to four years. MBC I’s

acquisition has brought the weighted average all-in cost of debt
down to 2.66% from 2.73%, and extended MCT’s debt tenure
to 4.3 years from 3.7 years. More than 95% of its total debt will ROE (%)
due only from FY18/19 onwards.

We have made a conservative assumption of low single-digit
rental reversion at VivoCity over the next two years. Any
improvement in the rent renewals may bring upside to share
price.
Moreover, the Management has guided for c.40% top line

growth as a result of the MBC I acquisition. Better performance
realised from the new asset could be a positive catalyst. Distribution Yield (%)
Key Risks:
Sustained drop in CBD office rents could impact office
earnings in the medium term. Although the REIT’s office
portfolio is largely located outside the CBD and therefore less
exposed to the large office supply completing from 2016
onwards, any prolonged decline in CBD rents would have a
negative spillover effect to the city fringe, as narrowing rental
differentials could entice tenants to relocate to the CBD
instead.
PB Band (x)
Company Background
Mapletree Commercial Trust (MCT) is a real estate investment trust that
invests in income-producing office and retail properties in Singapore.
The majority of its earnings are derived from VivoCity, the largest retail
mall in Singapore, and the recent acquisition of Mapletree Business City
– Phase 1.
Page 237
Company Guide

FY Mar 2015A 2016A 2017F 2018F 2019F
Gross revenue 282 288 375 446 458
Property expenses (70.8) (67.1) (84.3) (100) (102)
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Increase in top line due
Net Interest (Exp)/Inc (35.8) (39.3) (51.7) (63.1) (63.6) to MBC I acquisition
Net Income 156 159 198 246 255
Tax 0.0 0.0 0.0 0.0 0.0
Total Return 312 299 198 246 255
Growth & Ratio
Revenue Gth (%) 5.7 1.9 30.3 18.9 2.6
Net Inc Gth (%) 9.3 1.9 24.6 24.3 3.6
Dist to revenue (%) 59.6 59.9 58.4 58.4 58.9
to sales(%)
ROAE %) 6.2 5.9 6.0 6.4 6.5
ROA (%) 3.7 3.7 3.7 3.9 4.0
ROCE (%) 4.6 4.5 4.7 5.0 5.1
Int. Cover (x) 5.4 5.0 4.8 4.9 5.0
Page 238
Company Guide

FY Mar 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017
Gross revenue 71.3 73.8 73.0 73.4 88.1

Other Non Opg (Exp)/Inc (6.9) 0.0 0.0 (9.9) (3.5)
Net Income 41.3 41.3 37.7 40.9 48.9
Tax 0.0 0.0 0.0 0.0 0.0
Total Return 41.3 198 178 40.9 48.9
Growth & Ratio Both new asset (MBC I) and
Revenue Gth (%) 2 3 (1) 1 20 existing assets contributed to
N Property Inc Gth (%) 1 3 (3) 2 22 the positive performance over
Net Inc Gth (%) 7 0 (9) 9 20 the quarter
Balance Sheet (S$m)

FY Mar 2015A 2016A 2017F 2018F 2019F

Other LT Assets 4.91 3.52 3.52 3.52 3.52
Cash & ST Invts 54.9 63.6 92.7 110 113
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 3.29 5.04 6.56 7.81 8.01
Total Assets 4,263 4,415 6,302 6,332 6,346
ST Debt 189 355 355 355 355

Creditor 61.7 51.8 65.1 77.3 78.9
LT Debt 1,358 1,197 1,993 1,972 1,944

Net Cash/(Debt) (1,492) (1,488) (2,255) (2,216) (2,186)
Ratio
Current Ratio (x) 0.2 0.2 0.2 0.3 0.3
Quick Ratio (x) 0.2 0.2 0.2 0.3 0.3
Z-Score (X) 1.3 1.2 1.2 1.2 1.3
Page 239
Company Guide

FY Mar 2015A 2016A 2017F 2018F 2019F
Pre-Tax Income 156 159 198 246 255

Dep. & Amort. 0.0 0.0 0.0 0.0 0.0
Tax Paid 0.33 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. 3.07 3.81 11.8 11.0 1.39
Net Operating CF 204 213 231 271 271
Net Invt in Properties (7.9) (7.4) (1,856) (11.2) (11.4)
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
Net Investing CF (7.8) (6.9) (1,856) (11.2) (11.4)
Chg in Gross Debt (40.0) 0.0 797 (21.7) (27.6)
New units issued 0.0 0.0 1,044 0.0 0.0
Net Financing CF (211) (197) 1,655 (243) (257)
Chg in Cash (15.6) 8.72 29.1 17.2 2.75

Free CFPS (S cts) 9.26 9.64 (56.1) 8.87 8.73
Source: DBS Bank

Derek TAN
Mervin Song

Page 240
Mapletree Greater China Commercial Trust
Version 6 | Bloomberg: MAGIC SP | Reuters: MAPE.SI Refer to important disclosures at the end of this report
BUY Only a speed hump

Price Target 12-mth: S$1.11 (17% upside and 7.6% yield) Quality will shine through. We maintain our BUY call and TP of
S$1.11 for Mapletree Greater China Commercial Trust (MAGIC).
Potential Catalyst: Acquisitions and delivery of positive rental reversions
While MAGIC faces the challenge of a stronger SGD and higher
property taxes at Gateway Plaza, we believe these factors are only
despite concerns over a downturn in the HK retail market
speed humps in the near term. As MAGIC cycles through these
Where we differ: Below consensus due to impact of higher property taxes at headwinds over the next few quarters, the strength of core asset
Gateway Plaza Festival Walk (c.70% of net property income (NPI)) as well as the
Analyst boost from the Sandhill acquisition will shine through. Moreover,
MAGIC offers an attractive yield in excess of 6% which we believe
is high considering that its portfolio of quality properties is still
delivering healthy (7-23%) rental reversions.
Price Relative
Festival Walk’s defensive positioning. The strong market positioning
S$ Relative Index
of Festival Walk makes it well placed to weather the headwinds in
1.3 220
the HK retail market. Located in Kowloon Tong’s mid to upper
residential area and next to City University of Hong Kong, it serves
1.2 200
180
1.1
1.0
160
140
the needs of the local community rather than mainland Chinese
0.9
120 tourists which have been the main reason for the fall in HK retail
sales. In addition, due to the mall’s strong track record, we
0.8 100
0.7 80
Mar-13 Mar-14 Mar-15 Mar-16
Mapletree Greater China Commercial Trust (LHS)
understand there remains a queue of potential tenants eager to be
Relative STI (RHS)
located within the mall. Combined with occupancy costs of c.19%
which is in the middle of the 16-22% range for other malls in HK,
this bodes well for rents going forward. This is evidenced by rental
reversions of 15% in 1H17.
FY Mar (S$m) 2015A 2016A 2017F 2018F
Full contribution from Sandhill Plaza yet to be realised. With the
Gross Revenue 281 337 351 365 S$412m acquisition of Sandhill Plaza in Shanghai only completed in
June 2015, MAGIC’s earnings should receive a boost over the
Total Return 319 415 152 155
Distribution Inc 178 200 200 205 coming year, which should help mitigate any potential slowdown in
EPU (S cts) 4.55 6.40 5.46 5.54 HK, negative drag from higher property taxes in Beijing, and a
EPU Gth (%) 4 41 (15) 1 strengthening SGD.
DPU (S cts) 6.54 7.25 7.17 7.27
DPU Gth (%) 4 11 (1) 1 Valuation:
NAV per shr (S cts) 120 124 123 121 We maintain our DCF-based TP of S$1.11 which has incorporated
PE (X) 20.8 14.8 17.3 17.1 lower occupancy and higher taxes at Gateway Plaza partially offset
Distribution Yield (%) 6.9 7.7 7.6 7.7 by higher occupancies at Sandhill Plaza.
P/NAV (x) 0.8 0.8 0.8 0.8
Aggregate Leverage (%) 36.2 39.4 39.3 39.3 Key Risks to Our View:
ROAE (%) 4.0 5.3 4.4 4.5 The key risk to our view is a significant downturn in the HK and
Chinese economies, causing a decline in rents at Festival Walk,
Gateway Plaza and Sandhill Plaza.
Consensus DPU (S cts): 7.20 7.30
At A Glance
Source of all data on this page: Company, DBS Bank, Bloomberg Finance Mkt. Cap (S$m/US$m) 2,633 / 1,816
L.P. Major Shareholders (%)
Mapletree Investment Pte Ltd 30.6
Norges Bank 7.7
AIA Co Ltd 6.0
Free Float (%) 55.7

ed: JS / sa: JC, PY
Page 241
Company Guide

300 90.6%
250 88.6%
Earnings Drivers: 86.6%
200
Festival Walk still the star. Investors have raised concerns over 84.6%
150
the slowing retail market in Hong Kong impacting MAGIC’s 82.6%
core property Festival Walk. However, we believe Festival Walk 100

80.6%
will continue to deliver, although achieving lower rental 50 78.6%
reversions (estimated at 10-15%) than the 20-21% delivered 0 76.6%

2014A 2015A 2016A 2017F 2018F
over the past two years. We believe overall rental income will
remain on an uptrend and not turn negative due to the
following factors: (1) the mall’s prime location in Kowloon Tong
offering tenants exposure to nearby established upscale Net Property Income and Margins (%)
84%
residential areas, students and staff from the nearby City 75
83%
University of Hong Kong, and high transit crowd as the mall is 70 83%
82%
located next to Kowloon Tong Station which is an interchange 65 82%
between Kwun Tong Line (which serves Kowloon East) and East 81%
60
Rail Line (which connects to the Shenzhen border) and, (2) the 81%
80%
mall’s strong track record and resiliency. During the SARS 55
80%
epidemic and GFC, tenant sales were flattish. 50 79%
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
4Q2016
1Q2017
2Q2017
Full-year contribution from Sandhill Plaza. This year, MAGIC’s Net Property Income Net Property Income Margin %
earnings should receive a boost from the full year contribution
of the Sandhill Plaza acquisition which was only completed in Distribution Paid / Net Operating CF
June 2015. MAGIC should also benefit from positive rental (x)
1.0
reversions as passing rents are approximately 10% below
0.9
market rates. 0.8
0.7
Past rental reversions still provide support to Gateway Plaza’s 0.6
earnings. Gateway Plaza has achieved 25-33% uplift in rents 0.5
over the past two years. The benefits from the positive rental 0.4
reversions should continue to flow through, despite potential 0.3
headwinds in the near term due to increase in supply within the 0.2
2014A 2015A 2016A 2017F 2018F
Beijing office market and recent jump in vacancy. In the
medium/long term, Gateway Plaza should remain well placed
given the recent decision in August 2015 by the Beijing Interest Cover (x)
(x)
Municipal Commission of Development and Reform to ban new 6.00
large-scale public developments including office buildings within
5.00
the East Fifth Ring Road, West Fifth Ring Road, North Fifth Ring
Road and South Fourth Ring Road which covers the central area 4.00
of six urban districts of Beijing. 3.00
2.00
Acquisition pipeline from sponsor. MAGIC’s sponsor has several
1.00
malls, office buildings and business parks in China and HK
which have yet to be stabilised or are in the process of being 0.00
2014A 2015A 2016A 2017F 2018F
constructed. Subject to the price paid, these properties could
potentially provide MAGIC with a pipeline of DPU-enhancing
acquisitions.

Page 2
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Company Guide

Balance Sheet:
Optimised gearing levels. As at end-September 2016, MAGIC’s 40.0%
gearing stood at c.40% which is at an optimal level. 35.0%
Nevertheless, given the new 45% gearing limit for S-REITs in 30.0%
January 2016, MAGIC’s ability to pursue further acquisitions 25.0%
without further equity raisings is constrained. 20.0%
15.0%
Moderate exposure to rising interest rates. Currently, 85% of
10.0%
the MAGIC’s borrowings are on fixed rates which partially 2014A 2015A 2016A 2017F 2018F
insulates the REIT against rising interest rates in the near term.

Festival Walk continuing to deliver. Investors have been 5.0%
concerned over the outlook for retail rents in Hong Kong and
risk of negative rental reversions at Festival Walk. While 4.0%
acknowledging a moderating outlook, we think these fears are 3.0%

overplayed given Festival Walk’s suburban location, low
exposure to tourists (c.10-15% of tenant sales) and lack of 2.0%
exposure to luxury products. Evidence of this can be seen by the 1.0%

ability to achieve 15% positive rentals reversions in 1H17. This
and continued delivery of DPU growth over the coming few 0.0%
2014A 2015A 2016A 2017F 2018F
quarters should allay the growth fears and trigger a re-rating.
Key Risks: Distribution Yield (%)

(%)
Foreign exchange risks. While FX over the past two years has
10.0 +2sd: 10.1%
been a tailwind, the depreciation of the HKD and CNY would
negatively impact MAGIC’s DPU and NAV per share on a 8.0 +1sd: 8.1%
lagged basis. MAGIC hedges its income to smooth out the 6.0 Avg: 6.1%
volatility from movements in FX rates.
4.0 -1sd: 4.1%
Economic risks. A significant economic downturn in Hong 2.0 -2sd: 2.1%

Kong and China would cause a decline in rents for retail and
0.0
office properties. This in turn would negatively impact 2013 2014 2015 2016 2017
MAGIC’s earnings and DPU.

PB Band (x)
(x)
MAGIC is a Singapore real estate investment trust (S-REIT) 1.3
established with the investment strategy of principally 1.2
investing, directly or indirectly, in a diversified portfolio of 1.1

+2sd: 1.04x
income-producing commercial real estate in the Greater China 1.0
+1sd: 0.94x
0.9
region. Avg: 0.85x
0.8
-1sd: 0.75x
0.7
-2sd: 0.65x
0.6
0.5
Apr-13 Apr-14 Apr-15 Apr-16

Page 3
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Company Guide

FY Mar 2014A 2015A 2016A 2017F 2018F
Gross revenue 268 281 337 351 365
Net Income 148 157 213 187 192
Tax (30.5) (33.8) (37.8) (35.9) (37.0)
Total Return 387 319 415 152 155
Growth & Ratio
Revenue Gth (%) 137.0 5.1 19.7 4.2 4.1
Net Inc Gth (%) 113.4 4.9 42.5 (13.6) 2.4 Recovery in distributable
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 100.0 income on the back of
Net Prop Inc Margins (%) 80.8 81.6 82.4 80.6 80.7 positive rental reversions at
Net Income Margins (%) 43.8 43.8 52.1 43.2 42.5 Festival Walk, improvement
Dist to revenue (%) 62.9 63.3 59.4 57.0 56.2 in occupancy at Gateway
Plaza as well as increased
contribution from the
to sales(%)
ROAE %) 4.4 4.0 5.3 4.4 4.5
recently acquired Sandhill
ROA (%) 2.5 2.4 3.0 2.5 2.5 Plaza
ROCE (%) 3.5 3.3 3.6 3.7 3.9
Int. Cover (x) 4.6 5.1 3.7 3.6 3.5

Page 4
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Company Guide

FY Mar 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017
Gross revenue 84.6 88.2 87.8 85.0 83.1

Net Income 45.6 49.5 52.6 47.1 45.8
Tax (7.1) (7.5) (16.4) (7.7) (7.6)
Total Return 38.5 42.0 276 39.4 38.3
Growth & Ratio
Revenue Gth (%) 11 4 0 (3) (2)
N Property Inc Gth (%) 11 4 1 (5) (3)
Net Inc Gth (%) (46) 9 (14) 9 (3)
Balance Sheet (S$m)

FY Mar 2014A 2015A 2016A 2017F 2018F

Other LT Assets 8.00 1.00 9.30 9.30 9.30
Cash & ST Invts 133 125 207 208 203
Inventory 0.62 0.77 0.85 0.85 0.85
Debtors 8.33 11.1 10.7 11.2 11.6
Total Assets 4,873 5,488 6,154 6,160 6,161
ST Debt 0.0 274 462 462 462

Creditor 64.0 76.3 147 153 154
LT Debt 1,853 1,710 1,960 1,960 1,960
Other LT Liabilities 79.0 122 130 130 130
Non-Cash Wkg. Capital (91.8) (109) (169) (175) (175)

Net Cash/(Debt) (1,720) (1,859) (2,215) (2,214) (2,219) Increase in gearing on the
Ratio back of the debt-funded
Current Ratio (x) 1.4 0.3 0.3 0.3 0.3 acquisition of Sandhill Plaza
Quick Ratio (x) 1.4 0.3 0.3 0.3 0.3
Z-Score (X) 0.9 0.7 0.6 0.6 0.6

Page 5
Page 245
Mapletree Industrial Trust
Version 7 | Bloomberg: MINT SP | Reuters: MAPI.SI Refer to important disclosures at the end of this report
BUY Bring on HP!

Price Target 12-mth: S$1.90 (15% upside and 6.8% yield) Maintain BUY, TP S$1.90. We maintain our BUY call and TP of
S$1.90 on Mapletree Industrial Trust (MINT) on the back of a
Potential Catalyst: Better than expected results steady DPU growth profile of 2.3% over FY17-19F (vs 1.2%
Where we differ: Our estimates more conservative than consensus industrial REIT average). The REIT offers high earnings visibility
and we have confidence that the Manager has the flexibility to
Analyst execute on more developments to exploit its conservative
Derek TAN +65 6682 3716 derektan@dbs.com balance sheet. This implies potential upside to earnings.
Singapore Research Team equityresearch@dbs.com
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com Steady set of results with upside from 3QFY17 onwards.
2QFY17 (FYE Mar) topline and net property income (NPI) was up
1.8% and 4.3% to S$84.2m and S$63.6m respectively, mainly
Price Relative on the back of higher rentals achieved coupled with better cost
containment. As a result, NPI margins came in higher at 75.6%
S$ Relative Index
2.0
vs 73.8% a year ago. Interest costs were fairly stable. As a

1.9 207
1.8
187
result, distributable income was 3.4% higher at S$50.6m, but

1.7
167
1.6
DPU rose a slower 1.4% mainly due to higher units in issue

1.5 147
1.4
127
(dividend reinvestment scheme coupled with management fees

1.3
107
1.2
issued in units previously).

1.1 87
Mapletree Industrial Trust (LHS) Relative STI (RHS)
Flexibility from low gearing. MINT’s balance sheet is lowly

geared at c.30%, which is one of the lowest in the industrial
REIT sector, and gives the Manager significant debt-funded
FY Mar (S$m) 2016A 2017F 2018F 2019F
capacity for acquisitions or to undertake developments by taking
part in built-to-suit projects (BTS) or asset enhancement
Net Property Inc 245 253 262 274 initiatives. We have not assumed any further acquisitions or
Total Return 273 196 202 213 developments (apart from those announced) in our forecast.
EPU (S cts) 10.6 10.9 11.2 11.8 Valuation:
EPU Gth (%) 4 3 3 5 MINT’s resilience is a value trait in this market and has yet to
DPU (S cts) 11.2 11.3 11.5 12.0
DPU Gth (%) 8 1 2 4
be reflected in its current share price. We maintain our BUY
NAV per shr (S cts) 137 137 136 136 call and TP S$1.90.
PE (X) 15.6 15.2 14.7 14.0
P/NAV (x) 1.2 1.2 1.2 1.2
Rising interest rates An increase in refinancing rates will
ROAE (%) 8.0 8.0 8.2 8.6 negatively impact distributions. However, we note that MINT
has minimised these risks by having c.68% of its interest cost
hedged into fixed rates.
At A Glance
Source of all data on this page: Company, DBS Bank, Bloomberg Mkt. Cap (S$m/US$m) 2,964 / 2,082
Finance L.P. Major Shareholders (%)
Mapletree Investments Pte Ltd 34.2
Schroders Plc 7.0
AIA Group 5.0
Free Float (%) 53.8

ed: JS / sa: YM, PY
Page 246
Company Guide

S$ m
300
80.8%
250 78.8%
200 76.8%
Earnings Drivers:
150
Modest organic growth outlook. MINT has consistently 74.8%
delivered strong returns to shareholders post IPO, driven mainly 100 72.8%
from the marking to market of its leases which were below 50 70.8%
market rates. As most of its properties have already undergone 0 68.8%

2015A 2016A 2017F 2018F 2019F
at least one round of reversions, most of the leases are now at
or near-market levels in our view.
With the softening of market rents due to a slowing economy, Net Property Income and Margins (%)
77%
we are forecasting rental reversions to moderate further and 65 76%
expect the Manager to be increasingly focused on maintaining 63 75%
occupancies, a strategy which we believe will result in the trust 61 74%
delivering steady dividends in an increasingly competitive 59 73%
environment. 57 72%
55 71%
MINT’s earnings growth outlook is double that of the industrial 53 70%
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
4Q2016
1Q2017
2Q2017
REIT average. With organic growth slowing, the next thrust of
growth will come from the completion of its built-to-suit project Net Property Income Net Property Income Margin %
from HP, which emerges from the redevelopment of the Telok
Blangah cluster (expected TOP for phases 1 and 2 in 2H16 and Distribution Paid / Net Operating CF
1H17 respectively). (x)
1.0
0.9
Contribution from the new HP property will be timely just when 0.8
the REIT is facing rental pressure on its portfolio. The 0.7
restructuring of the rent free is a positive surprise. The 0.6
redistribution of the six-month rent free for both phase 1 0.5
(completing in 4QCY16) and phase 2 (completing in 2QCY17) 0.4
over the first 18 months will mean a more even distribution in 0.3
topline and costs for the REIT. This implies minimal downside 0.2
2015A 2016A 2017F 2018F 2019F
risk to DPUs in 2017 which has been a concern for investors.
Instead, we now see a steady growth profile of 2.3% over
FY17-FY19 vs industrial average of 1.2%. Interest Cover (x)
(x)
8.60
Development projects in Kallang Basin cluster to optimise 8.50
portfolio rent. MINT has also kick-started the development of a 8.40
new hi-tech building at Kallang Basin cluster 4 at an estimated 8.30

8.20
cost of S$77m, returning c.8% when completed in 4Q17. We
8.10
believe that demand for the property will be strong given the 8.00
good location in the central part of Singapore. The Manager has 7.90
ample headroom to fund this development. 7.80
7.70
2015A 2016A 2017F 2018F 2019F
Low gearing a positive. MINT’s gearing is low at close to 30%,
makes it one of the lowest-geared industrial REITs, offering the
Manager significant debt-funded capacity for acquisitions or to
undertake development by taking part in built-to-suit projects
(BTS) or asset enhancement initiatives. With a centrally located
industrial portfolio, we believe that there is an opportunity to do
more re-development projects which will be value accretive (to
NAV and DPUs).

Page 2
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Company Guide

Balance Sheet:
Low gearing allows for opportunistic acquisitions,
30.0%
developments. Current gearing is conservative, implying that
the Manager has the capability to take on debt-funded 25.0%
acquisitions when the opportunity arises. The Manager will be

20.0%
utilising its headroom towards higher-yielding development
projects (built-to-suit project for HP and Kallang Basin cluster 4) 15.0%
which we estimate to yield 8-9%, which is higher than

10.0%
acquisitions. Post development, we believe gearing will still be 2015A 2016A 2017F 2018F 2019F
within management's comfortable level at around 30%.
Stable weighted average debt-to-maturity. MINT has a well- ROE (%)

staggered debt profile with a majority of debt due for 8.0%
repayment only from FY17/18 onwards. With c.68% of its 7.0%
borrowings on fixed interest rates, MINT is well protected 6.0%
against future increases in interest rates. 5.0%
4.0%
3.0%
Better-than-expected rental reversions/acquisitions will boost 1.0%
earnings and share price. We are forecasting modest rental 0.0%

2015A 2016A 2017F 2018F 2019F
uplifts of 0-3%. The REIT's ability to maintain or beat
expectations will mean upside to our/consensus forecasts. In
addition, acquisitions or further development projects which are Distribution Yield (%)
(%)
accretive to earnings will likely result in upside to TP and share
price. 8.2
7.7
+2sd: 7.6%
Key Risks: 7.2 +1sd: 7.2%
Avg: 6.9%
Rising interest rates. An increase in refinancing rates will 6.7
-1sd: 6.6%
negatively impact distributions. However, MINT has minimised 6.2 -2sd: 6.2%
the impact as c.80% of its interest cost has been fixed. 5.7
5.2
Economic risk. A deterioration of the economic outlook could 2013 2014 2015 2016
have a negative impact on industrial rents and occupancies as

companies cut back on production and require less space. PB Band (x)
Industrial rents have a strong historical correlation with GDP 1.6
(x)
growth.
1.5
1.4
Company Background
+2sd: 1.32x
Mapletree Industrial Trust (MINT) is a real estate investment
1.3
+1sd: 1.26x
trust which invests primarily in income-producing industrial 1.2 Avg: 1.19x
-1sd: 1.13x
assets located in Singapore. Its portfolio includes a diverse mix 1.1
-2sd: 1.06x
of business parks, science parks, ramp-up warehouses and 1.0
flatted factories. 0.9


Page 3
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Company Guide

FY Mar 2015A 2016A 2017F 2018F 2019F
Gross revenue 314 332 343 362 378
Property expenses (85.3) (86.5) (90.1) (99.8) (103)
Driven mainly from the
Net Income 178 191 196 202 213
contribution from HP
Tax (1.1) 0.0 0.0 0.0 0.0
building
Total Return 374 273 196 202 213
Non-tax deductible Items (194) (74.8) 6.99 5.53 4.06
Growth & Ratio
Revenue Gth (%) 4.9 5.6 3.5 5.5 4.4
Net Inc Gth (%) 8.2 7.7 2.9 3.1 5.1
Dist to revenue (%) 57.6 59.7 59.2 57.4 57.3
to sales(%)
ROAE %) 8.2 8.0 8.0 8.2 8.6
ROA (%) 5.2 5.3 5.3 5.4 5.6
ROCE (%) 6.0 6.2 6.2 6.3 6.6
Int. Cover (x) 8.6 8.4 8.4 8.0 8.0

Page 4
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Company Guide

FY Mar 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017
Gross revenue 82.7 83.3 84.0 84.1 84.2

Net Income 47.4 48.2 48.3 50.1 49.7
Tax 0.0 0.0 0.0 0.0 0.0
Total Return 47.4 48.2 130 50.1 49.7
Non-tax deductible Items 1.51 2.08 (79.9) 1.38 0.89
Growth & Ratio
Revenue Gth (%) 1 1 1 0 0
Net Inc Gth (%) 2 2 0 4 (1)
Balance Sheet (S$m)

FY Mar 2015A 2016A 2017F 2018F 2019F

Other LT Assets 3.63 0.36 0.36 0.36 0.36
Cash & ST Invts 72.0 54.3 78.8 38.6 42.5
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 16.2 11.4 16.4 17.3 18.1
Total Assets 3,516 3,624 3,755 3,758 3,767
ST Debt 125 47.4 47.4 47.4 47.4

Creditor 70.3 79.7 100 106 110
LT Debt 949 974 1,089 1,089 1,094

Net Cash/(Debt) (1,003) (967) (1,057) (1,098) (1,099) Gearing to remain steady at
Ratio close to 30%.
Current Ratio (x) 0.5 0.5 0.6 0.4 0.4
Quick Ratio (x) 0.5 0.5 0.6 0.4 0.4
Z-Score (X) 1.7 1.9 1.7 1.7 1.7

Page 5
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Company Guide

FY Mar 2015A 2016A 2017F 2018F 2019F
Pre-Tax Income 178 191 196 202 213

Dep. & Amort. 0.0 0.0 0.0 0.0 0.0
Tax Paid (1.0) 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. (4.7) 14.3 15.6 4.58 3.90
Net Operating CF 205 220 215 210 219
Net Invt in Properties (54.5) (43.5) (102) (42.1) (3.8)
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
Net Investing CF (54.5) (43.5) (102) (42.1) (3.8)
Distribution Paid (97.5) (115) (203) (208) (217)
Chg in Gross Debt (54.3) (53.5) 115 0.0 5.00
New units issued 0.0 0.0 0.0 0.0 0.0
Net Financing CF (174) (194) (88.1) (208) (212)
Chg in Cash (23.8) (17.6) 24.5 (40.2) 3.95

Free CFPS (S cts) 8.62 9.78 6.25 9.29 11.9
1.90
S$
12- mt h
Dat e of Closing
2 Report Pric e
1.80 4 Pric e
1: 26 Apr 16 1.64 1.64 BUY
3 2: 12 J ul 16 1.79 1.81 HOLD
1.70 3: 27 J ul 16 1.78 1.90 BUY
4: 22 Aug 16 1.77 1.90 BUY
1.60 1
1.50
1.40
Oct-15 Feb-16 Jun-16 Oct-16
Source: DBS Bank

Analyst: Derek TAN
Mervin SONG CFA

Page 6 Page 251
Mapletree Logistics Trust
Version 5 | Bloomberg: MLT SP | Reuters: MAPL.SI Refer to important disclosures at the end of this report
BUY Firepower to acquire

Price Target 12-mth: S$1.15 (13% upside and 7.1% yield) Maintain BUY, TP S$1.15. Mapletree Logistics Trust (MLT) is
emerging stronger post balance sheet recapitalisation and we
Potential Catalyst: In line see acquisitions as a catalyst to drive earnings and share price
Where we differ: Estimates are in line with consensus upside. With firepower to execute on strategic purchases, MLT
Analyst
remains on a growth path. BUY maintained, yield of 7.0-7.2% is
Singapore Research Team equityresearch@dbs.com attractive for a strong quality name.
Acquisitions and developments to drive growth The issuance of
S$250m perpetual securities in May 2016 @ 4.18% has enabled
Price Relative
S$ Relative Index MLT to lock in attractive long-term funding for the REIT. Since
1.5 222
1.4 202 then, MLT has deployed close to S$161m and we see more
acquisitions in the pipeline. We believe that opportunities will
1.3 182
1.2 162
1.1
1.0
142
122
come from its Sponsor, and third parties in Australia, Korea, and
0.9
0.8
102
82
China. Acquisitions should more than compensate for
weaknesses in the various markets that MLT operates in.
Mapletree Logistics Trust (LHS) Relative STI (RHS)
2Q16 results in line. Top line and net property income are up
4.7% and 5.3% y-o-y to S$91.5m and S$76.8m respectively.
Forecasts and Valuation Higher revenues were mainly driven from acquisitions
FY Mar (S$m) 2016A 2017F 2018F 2019F
(portfolio expanded by six properties to 124 as of 2QFY17).
Net Property Inc 291 299 316 327 Distributable income is up by 1.0% while DPU is flat mainly
Total Return 190 172 182 187 due to higher interest incurred on the issuance of close to
Distribution Inc 183 179 185 188 S$250m worth of perpetual securities.
EPU (S cts) 7.66 6.91 7.29 7.53
EPU Gth (%) 20 (10) 5 3
DPU Gth (%) (2) (3) 3 2
NAV per shr (S cts) 102 101 101 101
We upgrade our BUY call and TP at S$1.15 which has imputed
PE (X) 13.3 14.8 14.0 13.5 acquisitions in our forecasts.
P/NAV (x) 1.0 1.0 1.0 1.0 Key Risks to Our View:
Acquisitions ramping up faster than expected. A faster-than-
ROAE (%) 7.5 6.8 7.2 7.4
projected acquisition pace or a better-than-expected outlook
for the Singapore warehouse market will translate to positive
Distn. Inc Chng (%): - - - surprises to earnings estimates, and re-rate the stock higher.
At A Glance
Finance L.P. Mkt. Cap (S$m/US$m) 2,550 / 1,785
Temasek Holdings Private Ltd 39.4
Free Float (%) 60.5


ed: TH / sa: YM, PY
Page 252
Company Guide

S$ m
400
350 91.0%
CRITICAL DATA POINTS TO WATCH 300 89.0%
250
87.0%
85.0%
Pressure on margins to ease as pace of property conversions 150
83.0%
100
slow. We are forecasting a modest decline/flattish outlook for 50 81.0%
distributions over FY17F-18F on the back of ongoing headwinds 0 79.0%
from a weakening rental outlook in Singapore and also Korea. 2015A 2016A 2017F 2018F 2019F
However, downside risk is expected to ease given the lower Net Property Income Net Property Income Margin %
pace of conversions. This stems from efficiency loss and higher

vacancy rates as master-tenants look to return un-utilised space Net Property Income and Margins (%)
86%
in the assets. Looking ahead, with only 10.1% of leases left to 79 85%
be renewed in FY17, we believe downside risk should be 77 85%
84%
marginal. 75
84%
73 83%
83%
Acquisitions to buffer against modest organic growth prospects. 71
82%
69
The issuance of S$250m perpetual securities in May 2016 was 82%
67
locked in at 4.18%, a good rate in our view. Since then, MLT 65
81%
81%
has deployed close to S$161m into four properties in Australia
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
4Q2016
1Q2017
2Q2017
(c.S$84.4m), and one each in Vietnam and Malaysia at yields of
c.7.1-9.9%. The Manager remains on a lookout for acquisitions,
targeting to deploy capital from its recent perpetual issuance.
Based on a S$161m worth of deals announced year-to-date, the (x)
1.0
Manager is looking to deploy a further S$90m in opportunities.
0.9
Markets of Australia and from the Sponsor's pipeline remain key
sources of acquisition possibilities. Apart from that, the 0.8
Manager is keen to re-deploy capital through selective 0.7
divestments. They are reviewing potential sale of mature, low- 0.6
yielding assets in Japan, China and Malaysia. 0.5
0.4
In the longer term, we see a sizeable and growing pipeline of 0.3

2015A 2016A 2017F 2018F 2019F
development properties from the Sponsor, Mapletree
Investments that is available for MLT to acquire in the medium
term. Potential assets for acquisitions are mainly in the Interest Cover (x)
development stages across Asia, especially in China, Japan, HK (x)
9.00
and Vietnam, where demand for logistics warehouses remains 8.00
robust. China remains a key growth area, where the 7.00
proliferation of e-commerce will drive demand for more logistic 6.00
space. 5.00
4.00
3.00
Development projects to drive value in the medium term. MLT
2.00
has completed the AEI at Mapletree Logistics Hub in Toh Guan 1.00
(GFA expanded by 2.7x to 63,500 sqm). Occupancy is estimated 0.00
to be c.92% as of 2Q16. There is another development project 2015A 2016A 2017F 2018F 2019F
in the works at 76 Pioneer Road, which will develop into a 5-

storey ramp-up warehouse, increasing its GFA by 1.8x to Source: Company, DBS Bank
72,000 sqm. This project will complete in 3QFY18F.

Page 2
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Company Guide

Balance Sheet:
Gearing of c.38% remains within management's comfortable 40.0%
range. Post the issuance of S$250m in perpetual securities to 35.0%
fund acquisitions, we project gearing to settle around c.38%. 30.0%
With a fairly optimised balance sheet, we believe that the 25.0%
Manager may need to raise new equity if any acquisition
20.0%
opportunity arises in the medium term.
15.0%
10.0%
Well-staggered debt maturity profile; interest cost remains 2015A 2016A 2017F 2018F 2019F
stable. Interest rates remain stable at 2.3%, and are expected to

remain low given that a majority of its debts are in JPY, HKD
and RMB, where interest rates in those currencies are still soft. ROE (%)
To hedge against currency volatility, the Manager typically takes 7.0%
on local-denominated loans (pegged to the maximum of asset
6.0%
values in each overseas market).
5.0%
4.0%
MLT has a long debt-to-maturity (3.76 years as at end-2QFY17)
3.0%
and proactively renews its loans ahead of time.
2.0%
Potential buy-back of perpetual in September 2017. Given the 1.0%
strong demand for launch of perpetual securities (S$250m @ 0.0%

2015A 2016A 2017F 2018F 2019F
4.18%), we see the potential for MLT to refinance its first
tranche of perpetual securities (S$350m @ 5.375%) to a lower
rate. The first callable date will be in September 2017. A 1% Distribution Yield (%)
(%)
drop in coupon will mean S$3.5m in savings (c.1.5% of
8.6
distributions). 8.1
+2sd: 7.9%
7.6
Share Price Drivers: +1sd: 7.3%
7.1
Ability to drive growth through acquisitions. We remain 6.6 Avg: 6.7%
optimistic on the Trust's ability to drive growth through 6.1 -1sd: 6.1%
acquisitions. After its first foray into Australia, we see the Trust 5.6
-2sd: 5.5%
further deepening its exposure through strategic purchases over

5.1
4.6
the medium term. The Manager is also looking to divest low- 2013 2014 2015 2016
yielding assets in Singapore and Japan, and re-cycle the

proceeds into higher-yielding assets. PB Band (x)
1.7
(x)
The deployment of proceeds from recent perpetual issues will
mean upside to earnings. 1.5
+2sd: 1.34x
1.3
Key Risks: +1sd: 1.23x
Rise in interest rates. The Manager has hedged the majority of 1.1 Avg: 1.11x
its debt into fixed rates but is expected to see increased cost of -1sd: 1x
0.9
funds when these loans are rolled over in the coming year. -2sd: 0.88x
0.7
Company Background
Mapletree Logistics Trust (MLT) is a real estate investment trust
which invests in logistics warehouses in the Asia Pacific region. Source: Company, DBS Bank
It currently owns warehouses in Singapore, Japan, China,
South Korea, Vietnam, Australia and Hong Kong.

Page 3
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Company Guide

FY Mar 2015A 2016A 2017F 2018F 2019F
Gross revenue 330 350 360 375 390
Growth driven mainly
from acquisitions as
organic growth remains
Net Income 205 235 214 227 234 modest
Tax (29.1) (25.8) (15.0) (15.9) (16.4)
Total Return 241 190 172 182 187
Non-tax deductible Items (56.1) (6.9) 2.00 1.00 1.00
Growth & Ratio
Revenue Gth (%) 6.2 6.0 2.9 4.2 3.8
Net Inc Gth (%) (16.2) 21.1 (9.5) 5.5 3.3
Dist to revenue (%) 56.0 52.4 49.8 49.2 48.4
to sales(%)
ROAE %) 6.4 7.5 6.8 7.2 7.4
ROA (%) 3.4 3.8 3.3 3.4 3.5
ROCE (%) 4.9 4.3 4.6 4.9 5.0
Int. Cover (x) 7.8 5.4 6.2 5.9 5.6

Page 4
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Company Guide

FY Mar 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017
Gross revenue 87.5 88.9 88.5 89.6 91.6

Other Non Opg (Exp)/Inc (1.5) 3.44 (5.0) (17.2) (9.2)
Net Income 42.3 52.6 37.4 30.9 37.2
Tax (4.5) (6.0) (11.8) (3.5) (4.8)
Total Return 32.9 49.1 57.2 21.5 24.8
Non-tax deductible Items 13.2 (2.6) (12.4) 24.6 21.8
Growth & Ratio
Revenue Gth (%) 3 2 (1) 1 2
Net Inc Gth (%) (35) 27 (50) 3 15
Balance Sheet (S$m)

FY Mar 2015A 2016A 2017F 2018F 2019F

Other LT Assets 12.4 14.8 14.8 14.8 14.8
Cash & ST Invts 107 93.3 3.83 6.89 11.3
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 20.5 18.2 9.00 9.38 9.74
Total Assets 4,788 5,207 5,350 5,397 5,406
ST Debt 56.7 234 234 234 234

Creditor 164 154 120 125 130
LT Debt 1,575 1,824 1,747 1,791 1,795
Other LT Liabilities 94.6 111 111 111 111
Non-Cash Wkg. Capital (136) (130) (116) (121) (126)

Net Cash/(Debt) (1,525) (1,965) (1,978) (2,018) (2,018) Gearing remains stable
Ratio
Current Ratio (x) 0.6 0.3 0.1 0.1 0.1
Quick Ratio (x) 0.6 0.3 0.0 0.0 0.1
Z-Score (X) 1.0 0.8 0.8 0.8 0.8

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Company Guide

FY Mar 2015A 2016A 2017F 2018F 2019F
Pre-Tax Income 205 235 214 227 234

Dep. & Amort. 0.0 0.0 0.0 0.0 0.0
Tax Paid (3.9) (3.7) (5.2) (15.0) (15.9)
Chg in Wkg.Cap. (0.8) (7.0) (24.5) 4.65 4.45
Net Operating CF 236 231 185 217 222
Net Invt in Properties (247) (389) (242) (43.8) (3.9)
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
Other Investing CF 0.82 (0.6) 0.0 0.0 0.0
Net Investing CF (246) (390) (242) (43.8) (3.9)
Chg in Gross Debt 207 426 (76.8) 43.8 3.90
New units issued 0.0 17.9 0.0 0.0 0.0
Other Financing CF (29.9) (18.9) 223 (29.3) (29.3)
Net Financing CF 0.08 242 (32.5) (170) (214)
Chg in Cash (7.4) 83.3 (89.5) 3.06 4.39

Free CFPS (S cts) (0.5) (6.4) (2.3) 6.95 8.76
S$
12- mt h
Dat e of Closing
1.11 S.No. T arget Rat ing
6 Report Pric e
Pric e
1: 08 J an 16 0.99 1.15 BUY
1.06 5 2: 04 F eb 16 0.94 1.15 BUY
3 7 3: 03 May 16 1.05 1.10 HOLD
1.01 4: 31 May 16 0.98 1.10 HOLD
4 5: 27 J ul 16 1.08 1.15 BUY
6: 22 Aug 16 1.08 1.15 BUY
0.96 1 2 7: 26 Oct 16 1.06 1.15 BUY
0.91
0.86
Source: DBS Bank

Analyst: Derek TAN
Mervin SONG CFA

Page 6 Page 257
OUE Commercial REIT
Version 6 | Bloomberg: OUECT SP | Reuters: OUEC.SI Refer to important disclosures at the end of this report
HOLD Concerns to weigh on share price

Price Target 12-mth: S$0.74 (6% upside and 7.5% yield) Impediments to re-rating. We maintain our HOLD call for OUE
Commercial REIT (OUECT) and a TP of S$0.74. While we see
Potential Catalyst: Better than expected results long term value in OUECT as it trades at over 20% discount to
Where we differ: In line with consensus its book value and offers >7% yield, we believe the stock will be
Analyst range bound near term, due to its above-average gearing
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com (around 41%), relatively small capitalisation and fears over
Derek TAN +65 6682 3716 derektan@dbs.com falling office rents ahead of new office supply in 2017.
Uplift from One Raffles Place (ORP). With an income support

arrangement providing income stability to OUE Bayfront,
Price Relative contributing a third of net property income (NPI) till 2018,
earnings upside would come from driving a better performance
at ORP. With initial yield estimated at 3.4%, the Manager is
actively seeking to push occupancy rates closer to c.95% from
c.91% currently.
Earnings risk possible in FY17. As OUECT’s proactive forward

renewals have reduced the number of leases expiring in FY16,
the greatest earnings risk for OUECT is in FY17. There are
approximately 16% of leases by net lettable area (NLA) at OUE
Bayfront and 26% at ORP that are up for renewal in FY17. The
FY Dec (S$m) 2015A 2016F 2017F 2018F risk of negative rental reversions arises as rents for these leases
were signed during the better times in FY14/15. The potential
Net Property Inc 75.6 137 138 137 magnitude of falling rents is still uncertain as it is unclear how
Total Return 79.2 43.0 42.2 39.8 aggressive the management of the new office buildings will be
Distribution Inc 56.1 69.0 68.3 65.9 in discounting rental rates.
EPU (S cts) 5.09 3.31 3.23 3.02
EPU Gth (%) nm (35) (3) (7) Valuation:
DPU (S cts) 4.38 5.30 5.22 4.99
We maintain our DCF-based TP of S$0.74.
DPU Gth (%) (8) 21 (2) (4)
NAV per shr (S cts) 94.6 93.6 92.7 91.9
PE (X) 13.7 21.0 21.5 23.1 Key Risks to Our View:
Distribution Yield (%) 6.3 7.6 7.5 7.2 The key risk to our view is a greater-than-expected fall in spot
P/NAV (x) 0.7 0.7 0.7 0.8 Grade A office rents to below S$7 per square foot per month
ROAE (%) 5.2 3.5 3.4 3.2 (psf/mth).
At A Glance
Distn. Inc Chng (%): 0 0 0 Issued Capital (m shrs) 1,298
Consensus DPU (S cts): 5.1 5.2 5.2 Mkt. Cap (S$m/US$m) 902 / 622
Other Broker Recs: B: 1 S: 0 H: 3 Major Shareholders (%)
Source of all data on this page: Company, DBS Bank, Bloomberg OUE Realty Pte Ltd 65.1
Finance L.P. Tong Gordon 5.9
Free Float (%) 29.0

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Company Guide
OUE Commercial REIT
Earnings Drivers:
Prime office assets in the Central Business District (CBD). OUE
Commercial Trust (OUECT) comprises three Grade A commercial
assets – OUE Bayfront Property and One Raffles Place (ORP) in
downtown Central Business District in Singapore, and Lippo
Plaza Property in Shanghai, China. The REIT’s total asset under
management (AUM) is S$3.4bn, where Singapore contributes
close to c.84% of the value.
Better earnings diversity from the acquisition of a quality asset.
The acquisition of ORP (completed in October 2015) was a
significant milestone for OUECT as the acquisition more than
doubled OUECT’s Singapore NLA (to c.1m sqft from c.400k
presently) and portfolio size. From an operational standpoint,
we see increased flexibility for the property manager to cross-
sell and expand its addressable tenant base, as ORP is a
different office product when compared to OUE Bayfront. This
will thus improve its product offerings to existing and
prospective tenants, as well as result in a higher portfolio
retention rate.
Immediate earnings uplift from ORP to drive earnings growth

through operational optimisation. OUECT's acquisition of the
c.68% beneficial interest in ORP at an average valuation of
S$2,382 psf is attractive in our view. While initial yield is
estimated to be c.3.4%, the Manager has continued to deliver
operationally, through optimising occupancy and rents since
taking over.
Earnings visibility through Sponsor’s income support for OUE

Bayfront till 2018. OUE Bayfront is under an income support
arrangement, whereby the Sponsor has undertaken to top up Interest Cover (x)
any revenue shortfall below S$14.25m per quarter (or S$57m a
year) for a period of five years, up to a maximum sum of
S$50m. This provides earnings visibility and downside protection
amid potential supply-induced market volatility in 2016-17.
With OUECT outperforming its initial estimates and thus

drawing less from the annual income support amount, this
demonstrates the Manager’s flexibility in leasing arrangements
in order to maintain a steady earnings profile going forward.

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Company Guide
OUE Commercial REIT

Balance Sheet:
Gearing remains high compared to peers. At c.41% post
acquisition of ORP, OUECT has one of the highest gearing levels
among S-REIT peers, which average in the mid-30’s.
Long debt tenure minimises refinancing risk. OUECT’s weighted

average debt-to-expiry was 1.8 years in 3Q16, with c.78% of
debt hedged into fixed rates for 2.7 years. The REIT will have no
debt expiring until FY17, reducing near-term refinancing risk.

Lower gearing level will partly allay concerns. We believe that ROE (%)
the recent lacklustre share price performance could be due to
OUECT’s higher gearing versus the S-REITs’ average of c.35%.
Given a deteriorating office outlook, investors are concerned
that OUECT may need to raise further equity to shore up its
balance sheet in the event of deterioration in office values,
resulting in the REIT breaching the 45% gearing limit.
Rebound in operational results. The office market is on a

downtrend, in our view, given looming supply in the midst of
weak demand for space. While OUECT has still been able to
achieve positive rental reversions for 9M16, we believe this will
moderate with risk of negative reversions ahead. Distribution Yield (%)
Key Risks:
Concentration risk. While the acquisition of ORP will diversify
asset-specific risks, OUECT is still heavily exposed to
Singapore’s CBD office market via ORP and OUE Bayfront,
which account for >80% of earnings. Any downturn or
weakness in the Singapore office market could have a
significant negative impact on ORP, and the REIT.
Decline in office rents. Given the expected increase in office

supply over the next two years, there is risk that office rents PB Band (x)
could fall beyond our expectations, causing OUECT to miss our
DPU estimates.
Interest rate risk. A rise in interest rate will have a negative

impact on distributions. However, the Manager is actively
overseeing its exposure through forward hedges and has
c.78% of its interest cost hedged into fixed rates with a fairly
long duration of 2.7 years.
Company Background
OUE Commercial REIT (OUECT) is an office REIT with a
portfolio of office assets located in prime CBD locations in Source: Company, DBS Bank
Singapore and China.

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OUE Commercial REIT

FY Dec 2015A 2016F 2017F 2018F
Gross revenue 101 177 178 177
Net Property Income 75.6 137 138 137
Other Operating expenses (12.5) (18.4) (17.1) (15.7)
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0
Exceptional Gain/(Loss) 32.1 0.0 0.0 0.0
Net Income 69.3 63.7 63.5 61.0
Tax (10.4) (13.4) (13.9) (13.9)
Minority Interest (1.5) (7.3) (7.3) (7.3)
Total Return 79.2 43.0 42.2 39.8
Non-tax deductible Items (21.8) 31.3 31.4 31.4
Growth & Ratio
Revenue Gth (%) 41.2 75.0 0.8 (0.8)
N Property Inc Gth (%) 40.5 81.0 0.8 (0.8)
Net Inc Gth (%) nm (25.1) (1.7) (5.7) Driven mainly by better
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 performance at Lippo Plaza,
Net Prop Inc Margins (%) 74.9 77.4 77.4 77.4 offsetting weakness in
Net Income Margins (%) 56.8 24.3 23.7 22.5 Singapore
Dist to revenue (%) 55.5 39.0 38.3 37.3
to sales(%)
ROAE %) 5.2 3.5 3.4 3.2
ROA (%) 2.2 1.2 1.2 1.1
ROCE (%) 2.1 2.7 2.8 2.7
Int. Cover (x) 2.4 2.2 2.1 2.0

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OUE Commercial REIT

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Gross revenue 20.6 40.3 42.9 45.7 44.2

Other Operating expenses 0.03 (9.3) (3.5) (4.4) (4.1)
Other Non Opg (Exp)/Inc 0.28 30.6 (0.4) (0.3) 0.01
Net Income 10.4 61.4 15.7 16.8 17.1
Tax (1.3) (6.5) (3.9) (4.5) (4.4)
Total Return 8.04 53.5 9.97 10.7 11.0
Non-tax deductible Items 5.05 (34.6) 8.44 8.45 7.58
Growth & Ratio
Revenue Gth (%) 5 96 6 6 (3)
Net Inc Gth (%) (3) 502 (79) 5 3
Balance Sheet (S$m)

FY Dec 2015A 2016F 2017F 2018F

Other LT Assets 21.4 21.4 21.4 21.4
Cash & ST Invts 25.9 48.8 56.5 63.3
Inventory 0.0 0.0 0.0 0.0
Debtors 13.6 12.3 12.4 12.3
Total Assets 3,464 3,491 3,504 3,516
ST Debt 1.73 1.73 1.73 1.73

Creditor 54.1 68.2 68.8 68.2
LT Debt 1,302 1,307 1,313 1,318
Unit holders’ funds 1,762 1,762 1,762 1,762
Minority Interests 233 240 248 255

Net Cash/(Debt) (1,278) (1,260) (1,258) (1,257)
Ratio
Current Ratio (x) 0.6 0.8 0.8 0.9
Quick Ratio (x) 0.6 0.8 0.8 0.9

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OUE Commercial REIT

FY Dec 2015A 2016F 2017F 2018F
Pre-Tax Income 69.3 63.7 63.5 61.0

Dep. & Amort. 4.24 0.0 0.0 0.0
Tax Paid (1.6) (13.4) (13.9) (13.9)
Chg in Wkg.Cap. (3.4) 15.5 0.45 (0.5)
Net Operating CF 77.6 97.1 81.3 78.0
Net Invt in Properties (594) (5.3) (5.4) (5.3)
Other Invts (net) 0.0 0.0 0.0 0.0
Invts in Assoc. & JV 0.0 0.0 0.0 0.0
Div from Assoc. & JVs 0.0 0.0 0.0 0.0
Other Investing CF (1.2) 0.0 0.0 0.0
Net Investing CF (595) (5.3) (5.4) (5.3)
Chg in Gross Debt 363 5.31 5.35 5.30
New units issued 212 0.0 0.0 0.0
Other Financing CF (12.6) (5.3) (5.3) (5.3)
Net Financing CF 512 (69.0) (68.2) (65.9)
Chg in Cash (2.8) 22.8 7.78 6.81

Free CFPS (S cts) (45.8) 7.08 5.81 5.50
Source: DBS Bank

Derek TAN

Page 6 Page 263
OUE Hospitality Trust
Version 6 | Bloomberg: OUEHT SP | Reuters: OUER.SI Refer to important disclosures at the end of this report
BUY Keep the faith

Price Target 12-mth: S$0.72 (5% upside and 6.6% yield) Boost from timely acquisition. We reiterate our BUY call with a
Potential Catalyst: Acquisitions and better than expected results TP of S$0.72. While we now expect the recovery in the
Where we differ: Below consensus on expectations of recovery in the Singapore hospitality market to only occur in 2018 from 2017,
Singapore hospitality market in 2018 OUE Hospitality Trust (OUEHT) is one of the best-positioned
Analyst hospitality REITs to ride out near term headwinds. In fact,
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com through the rebasing of its DPU in FY16 and its timely
Derek TAN +65 6682 3716 derektan@dbs.com acquisition of Crown Plaza Changi Airport extension (CPEX)
OUEHT should still deliver healthy 5% growth in DPU in 2017.
Price Relative Multiple levers to pull to drive earnings in 2017. We expect

Mandarin Orchard Singapore (MOS) to report a 4% decline in
S$ Relative Index
1.0
215
1.0
0.9
195 revenue per available room (RevPAR) in FY17 versus 0% growth
previously. However, we believe DPU growth is still achievable in
175
0.9
155
0.8
0.8
0.7
135
115
2017. This is underpinned by full year contribution of CPEX,
0.7 95 draw down of S$7.5m income support for CPEX, as well as the
increased contribution from Mandarin Gallery following the
0.6 75
Aug-13 Aug-14 Aug-15 Aug-16
OUE Hospitality Trust (LHS) Relative STI (RHS)

opening of the Michael Kors and Victoria Secret stores in 2H16.
Removal of overhang. OUEHT’s share price corrected over the

past year due to the overhang from (1) potential capital raising
to fund the acquisition of CPEX, and (2) gearing that was over
FY Dec (S$m) 2015A 2016F 2017F 2018F
40%. However, these concerns have now been addressed,
Net Property Inc 109 101 105 109 following the recent rights issue which resulted in OUEHT’s
Total Return 77.7 62.5 67.8 69.6 gearing falling to c.37%.
EPU Gth (%) (6) (26) (2) 2 We maintain our DCF-based TP of S$0.72 which has
DPU (S cts) 6.07 4.30 4.52 4.60
incorporated delayed expectations for a recovery in the
DPU Gth (%) (3) (29) 5 2
NAV per shr (S cts) 83.6 80.1 79.4 78.7 Singapore hospitality market from 2017 to 2018.
PE (X) 13.2 17.8 18.2 17.8
P/NAV (x) 0.8 0.9 0.9 0.9
Competitive landscape. The key risk to our view is a weaker-
ROAE (%) 6.2 4.7 4.7 4.9 than-expected outlook for the Singapore hospitality market. In
addition, rents at Mandarin Gallery may fall below
expectations if there is a significant deterioration in the
Distn. Inc Chng (%): (1) 0 -
Consensus DPU (S cts): 44.5 5.0 5.2 Singapore retail scene.
At A Glance
Finance L.P. Mkt. Cap (S$m/US$m) 1,226 / 852
OUE Realty Ptd Ltd 40.0
Free Float (%) 60.0

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Page 264
Company Guide

200
180 96.7%
160
94.7%
92.7%
Increased contribution from Crowne Plaza Changi Airport. The 120
100 90.7%
main earnings driver for OUEHT over the coming year is the 80 88.7%
increased contribution from the acquisition of the Crown Plaza 60
86.7%
40
Changi Airport extension (CPEX) in August 2016 which will add 20 84.7%
another 243 rooms to the 320-room Crowne Plaza Changi 0 82.7%

2014A 2015A 2016F 2017F 2018F
Airport (CPCA) acquired on 30 January 2015. The enlarged
CPCA caters to transit passengers as well as visitors to the
Singapore Expo and businesses at Changi Business Park. The
property offers OUEHT exposure to a submarket that has limited Net Property Income and Margins (%)
90%
competition, and is a diversification away from Mandarin 30 89%
Orchard which is more focused on the tourism market. While 29 89%

88%
28
underlying contribution from CPEX is likely to be lower than 27
88%
originally anticipated, this is mitigated by S$7.5m worth of 26

87%
87%
income support that OUEHT is available for draw down over 25
86%
24
three years. 23
86%
85%
22 85%
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
Stability from fixed rentals. Besides having a more diversified
portfolio following the acquisitions of CPCA and CPEX, a Net Property Income Net Property Income Margin %
significant proportion of OUEHT’s earnings is stable and visible.
This arises from minimum S$45m rental from its Sponsor for Distribution Paid / Net Operating CF
Mandarin Orchard, and S$22.5m from Crown Plaza Changi (x)
1.2
Airport. 1.1
1.0
Recovery at Mandarin Gallery. In 2016, Mandarin Gallery Mall 0.9

0.8
suffered from a dip in occupancies, negative rental reversions
0.7
and fit out period associated with the new Michael Kors and 0.6
Victoria Secret stores. Nevertheless, earnings from the property 0.5
should recover in 2016, as occupancies have since recovered 0.4
and the retail mall will no longer contend with the loss of 0.3
2014A 2015A 2016F 2017F 2018F
income from the fit out period for Michael Kors and Victoria
Secret.
Interest Cover (x)
(x)
Short-term headwinds at Mandarin Orchard but supply 8.00
constrained in the medium term. OUEHT’s Mandarin Orchard 7.00
(MOS) hotel faces some short-term headwinds due to the 5-6% 6.00
p.a. growth in new hotel rooms in 2016 and 2017 as well as 5.00
weak corporate demand. This is likely to result in a decline in 4.00
RevPAR for MOS. Nevertheless, with the Singapore government 3.00
not releasing any new hotel sites for development over the last 2.00
two years constraining supply in the medium term, and supply 1.00
only projected to only increase by 0.3% in 2018, we expect a 0.00

2014A 2015A 2016F 2017F 2018F
recovery for MOS and the Singapore hospitality market in a
couple of years’ time.
Expansion through acquisitions. Over the medium term, we

expect OUEHT to make DPU-accretive acquisitions to expand its
portfolio of properties. Its sponsor, OUE Limited, owns service addition, we understand the REIT is exploring acquisition
residences at OUE Downtown and a 30% stake in Marina opportunities in Europe, Japan and the US.
Mandarin, which are potential acquisition targets for OUEHT. In

Page 2
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Company Guide

Balance Sheet:
Equity raising to fund acquisition. Following the recent S$239m
rights issue (441.9m units at S$0.54 per unit) and acquisition of 40.0%
Crown Plaza Changi Airport extension, OUEHT’s gearing has 35.0%
30.0%
settled around the 37% level.
25.0%
20.0%
15.0%
Delivery of DPU. OUEHT’s share price corrected over the past
10.0%
year due to the overhang from (1) the potential capital raising 2014A 2015A 2016F 2017F 2018F
to fund the acquisition of CPEX, (2) gearing that was over 40%
and (3) weakness in the overall Singapore hospitality market.
While the Singapore market is likely to remain weak, having ROE (%)
taken the dilution associated with the rights issue and suffered
6.0%
lower occupancies and earnings at Mandarin Gallery to secure
Michael Kors and Victoria Secret as tenants in 2016, OUEHT is 5.0%
poised to deliver DPU growth on the back of the acquisition of 4.0%
CPEX as well as full contribution from new stores at Mandarin 3.0%
Gallery. We believe the delivery of an increase in DPU in 2017, 2.0%

will re-rate OUEHT ahead of a potential recovery in the
1.0%
Singapore hospitality market in 2018.
0.0%
2014A 2015A 2016F 2017F 2018F
Influx of tourists and lack of new supply. The performance of
hospitality REITs is correlated to the growth in tourist arrivals
and hotel supply. Should Singapore receive an influx of tourists, Distribution Yield (%)
(%)
sentiment towards OUEHT’s stock price will improve. In
+2sd: 11.5%
addition, with no hotel sites being released by the government 11.0
over the last two years, this will constrain supply in the medium 9.0
+1sd: 8.3%
term which should increase OUEHT’s scarcity value over time. 7.0
5.0 Avg: 5.2%

Key Risks: 3.0
Interest rate risk. Any increase in interest rates will result in 1.0
-1sd: 2%
higher interest payments that the REIT has to make annually to

-1.02013 2014 2015 2016 2017
service its loan. This reduces the income available for
distribution, which will result in lower DPU for unitholders. We
understand c.90% of the group’s borrowings are on fixed PB Band (x)
rates. 1.3
(x)
1.2
Competitive landscape. The Singapore hospitality market has
1.1 +2sd: 1.1x
been impacted by a decline in tourist arrivals this year. Any
1.0 +1sd: 1.01x
further deterioration in demand would pose a downside risk to
Avg: 0.93x
our earnings estimates. 0.9
-1sd: 0.84x
0.8
-2sd: 0.76x
OUE H-Trust is a Singapore-based REIT, with the principal 0.6

Dec-13 Dec-14 Dec-15 Dec-16
investment strategy of investing, directly or indirectly, in a
portfolio of income-producing hospitality assets.

Page 3
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Company Guide

FY Dec 2014A 2015A 2016F 2017F 2018F
Gross revenue 116 125 116 120 125
Net Income 78.7 74.8 62.5 67.8 69.6
Tax 0.0 0.0 0.0 0.0 0.0
Total Return 78.6 77.7 62.5 67.8 69.6
Growth & Ratio
Revenue Gth (%) 128.8 7.5 (6.8) 3.7 4.0
Net Inc Gth (%) 166.5 (5.0) (16.4) 8.4 2.7 Growth in distributable
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 100.0 income largely due to the
Net Prop Inc Margins (%) 89.0 87.6 87.1 87.3 87.4 full year contribution from
Net Income Margins (%) 67.9 60.0 53.8 56.3 55.6 recently acquired Crown
Dist to revenue (%) 76.8 70.1 66.5 67.8 66.8 Plaza Changi extension as
well as drawdown of
S$7.5m worth of income
to sales(%)
ROAE %) 6.5 6.2 4.7 4.7 4.9
support.
ROA (%) 4.3 3.8 2.8 2.9 3.0
ROCE (%) 5.3 5.1 4.1 4.2 4.4
Int. Cover (x) 6.9 4.4 3.5 3.5 3.4

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Company Guide

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Gross revenue 32.7 33.0 30.1 26.9 33.3

Net Income 19.9 19.3 16.8 13.2 20.0
Tax 0.0 0.0 0.0 0.0 0.0
Total Return 19.9 22.2 16.8 13.2 19.0
Growth & Ratio
Revenue Gth (%) 10 1 (9) (11) 24
Net Inc Gth (%) 17 (3) (13) (22) 52
Balance Sheet (S$m)

FY Dec 2014A 2015A 2016F 2017F 2018F

Other LT Assets 0.0 6.25 6.25 6.25 6.25
Cash & ST Invts 31.3 31.4 52.2 46.3 39.7
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 9.27 8.88 8.88 8.88 8.88
Total Assets 1,797 2,101 2,332 2,329 2,326
ST Debt 0.0 292 292 292 292

Creditor 7.19 11.4 11.4 11.4 11.4
LT Debt 583 585 585 585 585

Net Cash/(Debt) (552) (846) (825) (831) (838) Decrease in gearing due to
Ratio the recent S$239m rights
Current Ratio (x) 4.2 0.1 0.2 0.2 0.2 issue
Quick Ratio (x) 4.2 0.1 0.2 0.2 0.2
Z-Score (X) 1.2 0.7 0.8 0.8 0.8

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Company Guide

FY Dec 2014A 2015A 2016F 2017F 2018F
Pre-Tax Income 78.7 74.8 62.5 67.8 69.6

Dep. & Amort. 0.0 0.0 0.0 0.0 0.0
Tax Paid 0.0 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. (13.8) 0.76 0.0 0.0 0.0
Net Operating CF 87.9 108 74.4 78.8 80.8
Net Invt in Properties (0.1) (293) (210) (3.0) (3.8)
Other Invts (net) 0.0 0.0 0.0 0.0 0.0 Net proceeds from
Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0 recent right issue
Div from Assoc. & JVs 0.0 0.0 0.0 0.0 0.0 (441.9m units at
Other Investing CF 0.03 0.04 0.0 0.0 0.0 S$0.54 per unit)
Net Investing CF (0.1) (293) (210) (3.0) (3.8)
Distribution Paid (104) (88.2) (77.2) (81.6) (83.7)
Chg in Gross Debt 0.0 292 0.0 0.0 0.0
New units issued 0.0 0.0 234 0.0 0.0
Net Financing CF (117) 185 156 (81.6) (83.7)
Chg in Cash (29.5) 0.06 20.8 (5.9) (6.6)

Free CFPS (S cts) 6.17 (12.8) (8.4) 4.21 4.25
0.78 S$
12- mt h
Dat e of Closing
0.76 S.No. T arget Rat ing
Report Pric e
Pric e
0.74 1: 06 J an 16 0.71 0.85 BUY
2: 21 J an 16 0.69 0.85 BUY
0.72
3: 09 May 16 0.67 0.75 BUY
0.70 1 2 4 4: 02 Aug 16 0.69 0.75 BUY
6
5: 05 Sep 16 0.68 0.75 BUY
0.68 6: 01 Nov 16 0.69 0.72 BUY
0.66 3
5
0.64
0.62
0.60
Source: DBS Bank

Derek TAN

Page 6 Page 269
Soilbuild Business Space Reit
Version 6 | Bloomberg: SBREIT SP | Reuters: SBSR.SI Refer to important disclosures at the end of this report
BUY A helping hand from the sponsor

Price Target 12-mth: S$0.75 (15% total return and 9.3% yield ) Negatives priced in, BUY and TP of S$0.75 maintained. With a
dividend yield of close to 9.0%, Soilbuild Business Space Reit
Potential Catalyst: Better than expected results (SBREIT) offers one of the highest in the industrial space. Despite
Where we differ: More conservative estimates than consensus operational headwinds, we believe that the worst is over.
SBREIT’s recent asset acquisition will diversify its portfolio, and
Analyst
Derek TAN +65 6682 3716 derektan@dbs.com updates on back-filling of vacated space at 72 Loyang Way will
Singapore Research Team equityresearch@dbs.com increase investor confidence for the stock. Maintain BUY.
Acquisition of Bukit Batok Connection to drive earnings as
Price Relative portfolio undergoes tenant churn. The timely acquisition of
Bukit Batok Connection from sponsor Soilbuild Group will
diversify the REIT’s earnings and lengthen its weighted average
lease expiry (WALE) to 4.7 years. This more than compensates
for potential operational headwinds from other assets in the
portfolio. In addition, the Manager is actively re-tenanting 72
Loyang Way where Technics is expected to progressively vacate.
We understand that the Manager has found tenants for a
substantial portion of the space but at lower rents.

Look out for asset revaluation. We believe that portfolio
FY Dec (S$m) 2015A 2016F 2017F 2018F
Gross Revenue 79.3 85.8 92.7 95.3 valuation could soften come year end, mainly from weaker net
Net Property Inc 67.8 72.7 79.4 81.6 property income portfolio-wide, and from 72 Loyang Way after
Total Return 51.7 51.0 55.7 57.5 the loss of income from its master tenant. Based on our
estimates, a 10%-20% drop in valuations in its properties will
EPU (S cts) 5.28 5.32 5.38 5.51
EPU Gth (%) 2 1 1 2 only result in gearing rising to 37% (from 36% currently), which
DPU (S cts) 6.49 6.09 6.11 6.18 is well within the REIT’s comfortable level.
DPU Gth (%) 5 (6) 0 1
NAV per shr (S cts) 79.8 84.5 78.4 78.4 Valuation:
PE (X) 12.4 12.3 12.2 11.9
Distribution Yield (%) 9.9 9.3 9.3 9.4 We have a DCF-backed TP of S$0.75 which has factored in the
P/NAV (x) 0.8 0.8 0.8 0.8 likely NAV devaluation. Maintain BUY, supported by an
Aggregate Leverage (%) 36.2 35.8 35.6 35.5 attractive yield of over 9.0%.
ROAE (%) 6.7 6.5 6.9 7.0
Distn. Inc Chng (%): 0 0 0 Interest rate risks. Rise in interest rates in the medium term will
Consensus DPU (S cts): 6.10 6.30 5.90 have a negative impact on distributions but the Manager has
Other Broker Recs: B: 4 S: 0 H: 1 substantially hedged out these risks with a high percentage of
Source of all data on this page: Company, DBS Bank, Bloomberg fixed-rate borrowings.
Finance L.P.
At A Glance
Mkt. Cap (S$m/US$m) 683 / 471
Chap Huat Lim 24.9
Schroders Plc 8.0
Jinquan Tong 6.9
Free Float (%) 59.4

ed: JS/ sa: YM, PY
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Company Guide
Earnings Drivers:
Well-staggered lease expiry profile offers income stability.

SBREIT has a healthy weighted average lease-to-expiry (WALE)
profile of 4.7 years by gross rental income as at 3Q16. Within
SBREIT’s portfolio, 49% of net property income is derived from
master lease agreements that provide long-term leases ranging
from 5-15 years which contain annual escalations in the range
of 2.0-5.0%, ensuring a steady growth profile. Net Property Income and Margins (%)
Steady occupancy rates; Manager to focus on tenant retention

rate. In view of the increasing supply outlook, the Manager of
SBREIT is looking to forward renew expiring leases with the aim
of maintaining a high level of portfolio occupancy.
Outlook remains modest with rental reversions expected to

moderate for its main properties (West Park Biz Central and
Tuas Connection). Given the competitive industrial landscape,
the Manager is aiming to retain tenants rather than pushing
rents higher, which in our view, is a right strategy to underpin Distribution Paid / Net Operating CF
earnings resiliency.
Acquisitions to drive earnings. The acquisition of Bukit Batok

Connection will contribute from 4Q16. We expect distributions
(and DPUs) to increase q-o-q from the full-quarter contribution
of Bukit Batok Connection. This is expected to compensate for
the expected weakness in rental reversions from WestPark Biz
Central and Tuas Connection 9 and back-filling of vacated
space at 72 Loyang Way. While the property will be leased-back
to the sponsor on a 7–year lease, we understand that
underlying occupancy is improving, currently at c.43%-44%
with tenants from diversified industries taking up space. We Interest Cover (x)
believe that the acquisition provides much needed stability and
visibility to the REIT’s earnings especially coming from the
uncertainty regarding 72 Loyang Way and the general negative
rental reversions felt across the assets in the portfolio
Technics re-tenanting update. Impact of Technics not paying

rent is compensated by the drawdown of cash from 18-month
deposit that SBREIT has called on. As at 3Q16, we understand
that the Manager is already in discussions with a number of
tenants who might be interested to take up the vacated space
as 72 Loyang Way (Technics’ Property) is undergoing a judicial
management process. If these discussions are concluded, most
of the vacated space is expected to be filled up. However, rental
rates are expected to be lower that the estimated c. S$3.0psf
that Technics was paying. That said, we believe that the
successful back-filing of space at 72 Loyang Way will provide
investors with increased comfort on the income stability going
forward.

Page 2
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Company Guide

Balance Sheet:
Gearing remains within management's comfort level. SBREIT's
current gearing remains at the lower end of management’s
range of 35-40% which provides sufficient headroom and
financial flexibility for the REIT to acquire opportunistically.
Prudent capital management; 100% of interest costs hedged

into fixed rates. All-in cost of debt fell marginally to 3.42% from
3.44%. Average debt maturity stays at 3.1 years and interest
rate for 88.5% of borrowings has been fixed.

High yields of >8.0%; one of the highest among S-REITs. SBREIT
currently offers one of the highest yields among industrial REITs.
We believe this is unjustified given the REIT’s superior portfolio
of high-quality industrial assets with a niche exposure in the
business park segment, which is expected to deliver a more
resilient performance than peers. In addition, with 49% of its
income pegged to single-tenant properties, we believe that
SBREIT offers one of the strongest income visibilities among
industrial REITs.
Better-than-expected operational performance. Better-than-

projected rental reversions from its main assets - namely West Distribution Yield (%)
Park Biz Central and Tuas Connection - will mean upside to our
DPU forecasts, implying higher TPs. In addition, with investors’
concerns of rising vacancy risks due to increased competition
from new completing supply, the ability to maintain a sustained
occupancy profile will lift investors’ confidence in SBREIT’s ability
to deliver consistent returns over time.
Key Risks:
Higher interest rates. Any increase in refinancing rates will
negatively impact distributions. The Manager has put in place
interest rate swaps/MTNs of 1-4 years to essentially convert PB Band (x)
c.98% of its debt into fixed rates.
Company Background
Soilbuild Business Space REIT is a real estate investment trust
that invests in income-producing real estate used primarily for
business space purposes in Singapore. Its flagship asset is
Solaris, located in the one-north business park. The REIT is
backed by Soilbuild Group, a household name in the
construction and real estate business in Singapore.

Page 3
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Company Guide

FY Dec 2014A 2015A 2016F 2017F 2018F
Gross revenue 68.1 79.3 85.8 92.7 95.3
Other Operating expenses (6.5) (7.8) (8.5) (8.5) (7.6) Driven by acquisitions
Net Income 42.1 47.1 51.0 55.7 57.5
Tax 0.0 0.0 0.0 0.0 0.0
Total Return 42.1 51.7 51.0 55.7 57.5
Growth & Ratio
Revenue Gth (%) 177.4 16.4 8.1 8.1 2.7
Net Inc Gth (%) 180.7 12.0 8.2 9.3 3.2
Dist to revenue (%) 73.6 72.9 68.1 68.3 67.7
to sales(%)
ROAE %) 6.5 6.7 6.5 6.9 7.0
ROA (%) 4.2 4.2 4.0 4.2 4.3
ROCE (%) 5.1 5.3 5.1 5.4 5.6
Int. Cover (x) 5.3 4.7 4.9 4.7 4.5

Page 4
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Company Guide

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Gross revenue 20.7 20.4 20.1 19.6 19.7

Net Income 12.5 12.0 12.4 12.4 12.1
Tax 0.0 0.0 0.0 0.0 0.0
Total Return 12.5 16.5 12.4 12.4 12.1
Non-tax deductible Items 2.65 (1.4) 2.24 2.31 2.47
Growth & Ratio
Revenue Gth (%) 6 (1) (1) (3) 1
N Property Inc Gth (%) 6 (2) (2) 1 0
Net Inc Gth (%) 8 (4) 3 0 (3)
Balance Sheet (S$m)

FY Dec 2014A 2015A 2016F 2017F 2018F

Other LT Assets 0.96 3.41 3.41 3.41 3.41
Cash & ST Invts 21.0 16.8 23.1 27.0 29.9
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 0.82 2.44 0.86 0.93 0.95
Total Assets 1,054 1,215 1,318 1,324 1,329
ST Debt 94.6 0.0 0.0 0.0 0.0

Creditor 8.68 10.1 8.58 9.27 9.53
LT Debt 274 399 439 439 439

Net Cash/(Debt) (348) (382) (415) (412) (409) Gearing to remain steady
Ratio
Current Ratio (x) 0.2 1.6 2.2 2.4 2.6
Quick Ratio (x) 0.2 1.5 2.1 2.3 2.5
Z-Score (X) 0.9 1.0 1.0 1.0 1.1

Page 5
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Company Guide

FY Dec 2014A 2015A 2016F 2017F 2018F
Pre-Tax Income 42.1 47.1 51.0 55.7 57.5

Dep. & Amort. 0.0 0.0 0.0 0.0 0.0
Tax Paid 0.0 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. 3.41 (0.7) 0.04 0.63 0.23
Net Operating CF 53.9 57.1 56.6 62.1 63.0
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
Net Investing CF (94.8) (124) (98.3) (2.0) (2.0)
Chg in Gross Debt 91.5 29.6 40.0 0.0 0.0
New units issued (0.1) 90.0 66.4 7.07 6.52
Other Financing CF 0.0 (1.6) 0.0 0.0 0.0
Net Financing CF 41.9 62.3 48.0 (56.2) (58.0)
Chg in Cash 1.00 (4.2) 6.33 3.90 2.95

Free CFPS (S cts) (5.1) (7.5) (4.3) 5.80 5.84
Source: DBS Bank

Analyst: Derek TAN
Mervin SONG CFA

Page 6 Page 275
SPH REIT
Version 4 | Bloomberg: SPHREIT SP | Reuters: SPHR.SI Refer to important disclosures at the end of this report
HOLD Potential influx of new traffic to Paragon

Price Target 12-mth: S$1.00 (4% upside and 5.9% yield) Stock is fairly priced. We currently have a HOLD
recommendation, with TP of S$1.00. SPH REIT's dividend yield
Potential Catalyst: Better-than-expected rental reversion; acquisition of
of 5.7% reflects the strength of its assets and stability of
earnings. However, at this point we believe that comparable
Seletar Mall
retail S-REITs offer more attractive yields.
Where we differ: More bullish on rents at selected Orchard Rd malls
Analyst
Paragon to continue to drive earnings growth. We believe that
Derek TAN +65 6682 3716 derektan@dbs.com Paragon will continue to outperform the rest of Orchard Road
for both retail and office assets, due to its (a) location and
frontage in the prime Orchard Road shopping district, as well as
Price Relative (b) proximity to the Mount Elizabeth medical cluster. As such,
we assume reversions of 3.5-4.0% for Paragon. A linkbridge
connecting Cairnhill redevelopment and Paragon, to be opened
in November/December 2016, may draw new traffic to the mall.
At Clementi Mall, more than 50% lease expirations in FY17
could set a new base for rent.
Potential acquisition a catalyst. With a healthy gearing of 25.7%

and cost of debt of 2.82%, SPH REIT is well poised for debt-
funded acquisitions. The next growth catalyst for the REIT will
be the acquisition of the Sponsor’s 70% stake in Seletar Mall.
Forecasts and Valuation However, we believe this acquisition is likely to be more of a
FY Aug (S$m) 2015A 2016A 2017F 2018F medium term-prospect, as the mall was only completed in
Gross Revenue 205 210 226 231 December 2014 and is still on its first lease cycle.
Total Return 154 128 127 129
Valuation:
EPU (S cts) 6.08 5.02 4.97 5.02 We have a DCF-backed target price of S$1.00, implying a
EPU Gth (%) (29) (17) (1) 1 dividend yield of 5.7% for FY17F-18F. Due to the lack of near-
DPU (S cts) 5.47 5.55 5.66 5.72 term catalysts and limited upside to TP, we maintain our HOLD
DPU Gth (%) 1 1 2 1
NAV per shr (S cts) 94.3 93.4 92.7 92.1
call.
PE (X) 15.7 19.0 19.2 19.0
P/NAV (x) 1.0 1.0 1.0 1.0 Short WALE due to lease expirations at Clementi Mall. The
ROAE (%) 6.5 5.3 5.3 5.4
portfolio has a relatively short WALE of 2.3 years by NLA.
18.5% of portfolio NLA (c.166,000 sqft) will expire in FY17.
The majority comes from Clementi Mall where more than 50%
Distn. Inc Chng (%): - - or close of 104,000 sqft of the mall’s NLA are due in the next
Other Broker Recs: B: 3 S: 0 H: 3 12 months.
Source of all data on this page: Company, DBS Bank, Bloomberg At A Glance
Finance L.P. Issued Capital (m shrs) 2,551
Mkt. Cap (S$m/US$m) 2,436 / 1,692
Singapore Press Holdings 68.7
Free Float (%) 31.3

ed: TH / sa: JC, PY
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Company Guide
SPH REIT
Earnings Drivers:
Maximising mall efficiency to generate higher yields. At the
Paragon, the additional 7k sqft of net lettable area (NLA) to be
generated by the chiller decanting project is progressing as
scheduled. Once completed, it is expected to generate
additional revenue of c.S$1m p.a. and ROI of >7%. This project
will be spread over three years from September 2015 to March
2018, in order to coincide with various lease expiries of tenants
in the area. Net Property Income and Margins (%)
Stable earnings profile over FY17 and FY18. SPH REIT secured
overall rental reversions 5.4% for FY16 (5.2% for Paragon;
7.8% for Clementi Mall) while maintaining a track record of
100% occupancy. As at 31 August 2016, the REIT’s portfolio
had a weighted average lease expiry (WALE) of 2.3 years and
2.2 years by NLA and gross rental income respectively. We
expect earnings to be stable over the next two years. The next
largest leasing tranche will be in FY17, when 51.6% of the
mall’s NLA will come up for renewal. Regardless of the results,
earnings next year should be stable due to the income support
from the Sponsor at Clementi Mall. However, reversion levels
are still crucial as they could set a new base for Clementi Mall
when the income support ends in 2018.
Healthy occupancy costs ensure a vibrant medium-term outlook

for the malls. While Paragon’s occupancy costs rose to 19.6%
as tenant sales grew at a slower rate than rents, we note that
this is still within the healthy range for a mall in Orchard Road,
where tenants are typically willing to count higher rents as part
of marketing costs. Higher sales growth in subsequent years will
allow the REIT to generate higher rental revenue in a sustainable
manner. Interest Cover (x)
Revitalised tenant mix. The REIT has a strategy to continuously

restructure the tenant mix to keep its investment properties
relevant to respective target shoppers. The aim is to enable the
REIT to reap better tenant synergies to improve traffic and
potentially boost the attractiveness of its malls which can lead
to higher rental reversions and renewals.

Page 2
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Company Guide
SPH REIT

Balance Sheet:
Gearing. SPH REIT has maintained a healthy gearing ratio at
25.7% that is well within the Manager’s comfortable range of
up to 40%. This provides the REIT with significantly larger
headroom for debt financing should it decide to gear up on
acquisitions.
Net Asset Value (NAV) per unit. NAV of S$0.94 is underpinned

by stable asset valuations.

Potential acquisitions. With a healthy gearing at 25.7% and cost ROE (%)
of debt of 2.82%, SPH REIT is well poised for debt-funded
acquisition activities. The next growth catalyst for the REIT will
be the acquisition of the Sponsor’s 70% stake in Seletar Mall,
which was completed in December 2014. However, this
acquisition is likely to be more of a medium-term prospect, as
the mall is still in its first leasing cycle and has yet to stabilise.
Key Risks:
Interest rate risk. The REIT has muted exposure to changes in
interest rates with no debt maturing until 2018 and 85.9% of
its S$850m debt facility on a fixed rate basis.
(%)
Visitor traffic is trending down by 2.5% and 2.4% for FY16 6.3
6.1 +2sd: 6.1%

full year at Paragon and Clementi Mall respectively. However,
5.9
we do not believe it is a concern. Paragon’s tenant sales 5.7
+1sd: 5.8%
registered a positive growth of 1.4%, and more traffic could 5.5 Avg: 5.5%
be drawn from the opening of the linkbridge. Decline at 5.3
-1sd: 5.2%
Clementi Mall was most likely from the unproductive traffic as 5.1
a new MRT exit at Clementi station opened early in the year 4.9 -2sd: 4.9%
4.7
provides an alternative route for the train passengers.
4.5
2013 2014 2015 2016
Short WALE mainly due to Clementi Mall. The portfolio has a

relatively short WALE of 2.3 years by NLA. 18.5% of portfolio PB Band (x)
NLA (c.166,000 sqft) will expire in FY17. The majority comes
from Clementi Mall.
Management fees payable in units. The REIT is one of the few

S-REITs that pays 100% of management fees in units as
opposed to cash (S$16.3m in FY16, 11.7% boost to
distributions). We believe that DPU growth may not be
sustainable in the longer term due to continuous share dilution
and the Management has no plans to tweak the payment
structure.

Company Background
SPH REIT is a real estate investment trust that invests in
income-producing retail malls in Singapore. It currently owns
the Paragon Mall within the Orchard Road district, as well as
Clementi Mall, located in the west of Singapore.

Page 3
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Company Guide
SPH REIT

FY Aug 2014A 2015A 2016A 2017F 2018F
Gross revenue 202 205 210 226 231
Exceptional Gain/(Loss) 103 36.6 7.69 0.0 0.0
Net Income 217 154 128 127 129
Tax 0.0 0.0 0.0 0.0 0.0
Total Return 217 154 128 127 129
Growth & Ratio
Revenue Gth (%) (6.7) 1.4 2.2 7.7 2.4
Net Inc Gth (%) 85.0 (29.1) (16.9) (0.3) 1.7
Dist to revenue (%) 67.4 67.5 67.3 64.4 63.9
to sales(%)
ROAE %) 9.6 6.5 5.3 5.3 5.4
ROA (%) 6.8 4.7 3.9 3.8 3.9
ROCE (%) 4.2 4.2 4.4 4.5 4.6
Int. Cover (x) 6.8 6.6 6.2 7.5 7.1

Page 4
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Company Guide
SPH REIT

FY Aug 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016
Gross revenue 50.8 52.1 53.1 52.2 52.2

Net Income 64.7 29.8 30.3 29.6 37.9
Tax 0.0 0.0 0.0 0.0 0.0
Total Return 132 28.6 30.7 29.3 28.1
Growth & Ratio
Revenue Gth (%) (1) 3 2 (2) 0
N Property Inc Gth (%) (3) 5 1 (1) 0
Net Inc Gth (%) 121 (54) 1 (2) 28
Balance Sheet (S$m)

FY Aug 2014A 2015A 2016A 2017F 2018F

Other LT Assets 13.5 14.4 7.99 7.99 7.99
Cash & ST Invts 90.7 77.4 67.4 43.3 46.6
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 5.91 5.01 5.89 5.89 5.89
Total Assets 3,269 3,310 3,311 3,297 3,305
ST Debt 0.0 249 0.0 0.0 0.0

Creditor 35.1 30.2 34.2 11.9 12.2
LT Debt 843 596 846 856 866

Net Cash/(Debt) (752) (768) (779) (813) (819)
Ratio
Current Ratio (x) 2.7 0.3 2.1 4.1 4.3
Quick Ratio (x) 2.7 0.3 2.1 4.1 4.3
Z-Score (X) 3.5 3.4 3.5 3.5 3.5

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Company Guide
SPH REIT

FY Aug 2014A 2015A 2016A 2017F 2018F
Pre-Tax Income 114 117 120 127 129

Dep. & Amort. 0.12 0.16 0.21 0.0 0.0
Tax Paid 0.0 0.0 0.0 0.0 0.0
Chg in Wkg.Cap. 21.0 1.28 (1.9) (22.3) 0.29
Net Operating CF 175 158 134 121 146
Net Invt in Properties (2.7) (15.3) (8.5) (9.9) (5.0)
Other Invts (net) (0.2) (0.1) (0.1) 0.0 0.0
Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0
Net Investing CF (2.7) (14.8) (7.8) (9.9) (5.0)
Chg in Gross Debt 0.0 (0.2) (1.0) 10.0 10.0
New units issued (9.0) (18.8) (22.3) 0.0 0.0
Other Financing CF (17.8) 0.0 0.0 0.0 0.0
Net Financing CF (142) (157) (162) (135) (138)
Chg in Cash 29.8 (13.3) (35.6) (24.1) 3.37

Free CFPS (S cts) 6.82 5.66 4.95 4.35 5.48
Source: DBS Bank

Derek TAN

Page 6 Page 281
Suntec REIT
Version 5 | Bloomberg: SUN SP | Reuters: SUNT.SI Refer to important disclosures at the end of this report
HOLD Fairly priced

Price Target 12-mth: S$1.71 (4% upside and 6.1% yield) Range bound for now. We maintain our HOLD call with a TP of
S$1.71. We believe Suntec REIT’s share price will be range
Potential Catalyst: Better-than-expected operational results bound in the near term due to headwinds in the retail sector,
Where we differ: Estimates in line with consensus which will likely cap its earnings as Suntec mall’s rents have
underperformed the Manager’s initial target. In addition, there
Analyst
Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com could be downside risk for the REIT’s office assets, which are
Derek TAN +65 6682 3716 derektan@dbs.com expected to see some volatility in rents and occupancies when
new office supply enters the CBD from 2016 onwards.
Price Relative Weak retail outlook to cap upside from asset enhancement
initiative. Assuming a typical 3-year lease cycle, tenants at phase
1 and 2 of the Suntec mall will be entering their first
reversionary cycle in 2016 and 2017. We understand that rental
reversion trends have been mixed, given the weak operating
climate. The Manager is looking to tweak the tenant mix going
forward.
But expect stable DPU through increased contribution from

Australian assets and capital distributions. Despite potential
downside risk to earnings at Suntec REIT’s Singapore properties,
FY Dec (S$m) 2014A 2015A 2016F 2017F
Gross Revenue 282 330 344 352 we expect a stable DPU profile going forward. This will be
Net Property Inc 192 229 243 250 achieved through (i) increased earnings contribution from the
Total Return 317 354 192 200 completion of 177 Pacific Highway (Sydney) project in 2H16 and
the recent acquisition of a 25% stake in the Southgate Complex
EPU (S cts) 9.18 8.95 7.56 7.77
EPU Gth (%) (8) (2) (16) 3 in Melbourne, and (ii) payout of proceeds from the disposal of
DPU (S cts) 9.40 10.0 10.0 10.0 Park Mall.
DPU Gth (%) 1 6 0 0
NAV per shr (S cts) 216 215 210 206
PE (X) 18.0 18.4 21.8 21.2 Valuation:
Distribution Yield (%) 5.7 6.1 6.1 6.1 With limited upside to our DCF-based TP of S$1.71 we
P/NAV (x) 0.8 0.8 0.8 0.8 maintain our HOLD recommendation.
ROAE (%) 4.3 4.2 3.6 3.7
Upside risk from acquisitions and better rental performance.
Distn. Inc Chng (%): 0 0 The key risks to our neutral view are DPU accretive acquisitions
Other Broker Recs: B: 0 S: 9 H: 12 and/or better rental performance achieved despite the
headwinds in the Singapore office and retail market.
Mkt. Cap (S$m/US$m) 4,180 / 2,904
Gorden Tang Ltd 11.0
Blackrock 6.9
ARA Re Investment 6.0
Free Float (%) 71.1

ed: JS / sa: JC, PY
Page 282
Company Guide
Suntec REIT
Earnings Drivers:
Office portfolio faces some earnings risk. Suntec REIT currently
owns three office assets in Singapore’s CBD – Suntec Office,
One Raffles Quay (ORQ; 33%), and MBFC Towers 1 and 2
(33%). With the expected oversupply of the Singapore office
market upon the completion of several new offices at the end
of 2016 and 2017, Suntec REIT’s properties may face stiffer
competition for its tenants as well as downward pressure on
rents. Partially mitigating this is the significant forward renewals Net Property Income and Margins (%)
already completed at ORQ and MBFC Tower 2 as well as the
strong positioning of Suntec Office which has the advantage of
ample car parking spaces, connectivity to two MRT stations and
a wide choice of amenities given its location next to Suntec City
Mall.
Retail headwinds. With Singapore consumers cutting back on

discretionary spending and compared to the initial rents signed
at Suntec Mall during more buoyant times, rents at Suntec Mall
will likely continue to be under pressure. Nevertheless, with the
recent appointment of Mr Chan Kong Leong formerly of
CapitaMalls Asia, recent changes in tenant mix including the
introduction of new to market retail brands, improved
marketing, greater number of events as well as better
engagement with its tenants, tenant sales and foot traffic have
improved. This should largely arrest the decline in rents,
signaling a potential a stabilisation of retail rents if the
improvement in tenant sales and foot traffic is sustained.
Secure income contribution from 177 Pacific Highway. Suntec

REIT’s 177 Pacific Highway property located in North Sydney
which was finally completed in August 2016 will provide
geographic diversification to its portfolio and improve the REIT’s Interest Cover (x)
income stream. The property is anchored by Leighton Holdings
will take up 76% of the net lettable area for an approximate
lease period of 10 years.
30% stake in redevelopment of Park Mall offers development

upside. Suntec REIT completed the sale of Park Mall for S$412m
in 4Q15, and has taken a 30% stake in the JV which will
completely redevelop Park Mall into a commercial development
comprising two office towers with an ancillary retail podium.
Suntec REIT will subsequently have the option to acquire one of
the two office towers. While details of this redevelopment
project have yet to be finalised, acquisition of the office tower
will be a long-term growth driver for the REIT.
Recent acquisition of Southgate property in Melbourne. Suntec

REIT recently announced the acquisition of 25% stake in
Southgate, a mixed office retail property in Melbourne for
A$154.9m. This acquisition adds another leg of growth that will
mitigate the slowdown faced by Suntec REIT in Singapore.

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Company Guide
Suntec REIT

Balance Sheet:
Comfortable level of gearing. Post the acquisition of 25%
interest in the Southgate Complex, Suntec REIT’s gearing is
expected to stabilise around the 37% level.
Minimal refinancing needs in FY16-17. Suntec REIT has more

than 60% of its borrowings hedged and minimal refinancing
requirements for the remainder of FY16 and in FY17. As such,
the REIT is fairly well protected against near-term interest rate
volatility.
ROE (%)
Better-than-expected performance at Suntec City retail. Higher
occupancy rates at Suntec City retail, as well as better-than-
expected rental reversions, would present upside to our
earnings estimates.
Acquisitions. The Manager could redeploy remaining proceeds

of c.S$284m from the divestment of Park Mall into yield-
accretive acquisitions, which would boost DPU growth and
diversify the REIT’s earnings base.
Key Risks: Distribution Yield (%)

Retail rental reversion risk. With a slowdown in retail sector,
rents at Suntec City Mall may face downward pressure causing
weakness in Suntec REIT’s DPU.
Vacancies at Suntec office. While we have flagged MBFC and

ORQ as key earnings risks in the Trust’s office portfolio, we
believe that occupancy and rents will remain stable at Suntec
Towers (office) due to its more differentiated product
offerings. Thanks to Suntec office’s staggered lease expiry
profile, any decline in rents will not be evident immediately.
However, higher vacancies could present some downside risks PB Band (x)
to our earnings assumptions.
Company Background
Suntec REIT has a portfolio of office and retail properties in
Singapore and Australia. Its most prominent asset is Suntec
City, which comprises four office towers, a retail mall, and a
convention centre, located close to the city area of Singapore.

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Company Guide
Suntec REIT

FY Dec 2013A 2014A 2015A 2016F 2017F
Gross revenue 234 282 330 344 352
Property expenses (85.4) (90.8) (100) (101) (102)
Net Income 239 225 244 210 219
Tax 4.72 (7.0) (6.7) (10.2) (11.7)
Minority Interest (17.6) 1.75 (12.1) (7.5) (7.9)
Total Return 364 317 354 192 200
Non-tax deductible Items (172) (97.6) (121) 63.8 58.9
Growth & Ratio
Revenue Gth (%) (10.6) 20.6 16.7 4.3 2.5
Net Inc Gth (%) (6.7) (2.8) 2.7 (14.6) 3.8 Driven mainly from the
Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 100.0 contribution of 177 Pacific
Net Prop Inc Margins (%) 63.5 67.9 69.6 70.6 71.0 Highway and Southgate in
Net Income Margins (%) 96.4 77.7 68.4 56.0 56.7 Australia
Dist to revenue (%) 90.2 81.5 76.5 74.6 73.5
to sales(%)
ROAE %) 4.7 4.3 4.2 3.6 3.7
ROA (%) 2.8 2.6 2.6 2.1 2.2
ROCE (%) 1.1 1.3 1.9 2.1 2.1
Int. Cover (x) 1.6 2.6 3.6 4.5 3.7

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Company Guide
Suntec REIT

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Gross revenue 86.1 87.5 78.3 78.9 82.4

Exceptional Gain/(Loss) 5.08 (2.9) (2.1) (1.7) 1.33
Net Income 51.2 94.1 35.0 46.2 55.3
Tax (2.0) (1.6) (1.3) (1.4) (1.7)
Total Return 46.9 216 32.4 43.4 52.2
Net Inc available for Dist. 63.6 228 51.1 67.4 64.3
Growth & Ratio
Revenue Gth (%) 6 2 (11) 1 4
Net Inc Gth (%) 6 86 (63) 34 20
Balance Sheet (S$m)

FY Dec 2013A 2014A 2015A 2016F 2017F

Other LT Assets 2,370 2,488 2,704 2,859 2,859
Cash & ST Invts 181 150 445 396 395
Inventory 0.01 0.0 0.0 0.0 0.0
Debtors 29.1 16.7 12.8 13.4 13.7
Total Assets 8,322 8,602 8,965 9,123 9,125
ST Debt 772 0.0 370 370 370

Creditor 91.2 107 108 109 110
LT Debt 2,389 2,981 2,843 3,048 3,098
Minority Interests 141 113 119 126 134
Non-Cash Wkg. Capital (82.9) (113) (114) (123) (125)

Net Cash/(Debt) (2,980) (2,831) (2,767) (3,022) (3,072) Gearing to inch higher to
Ratio 38%
Current Ratio (x) 0.2 1.3 0.9 0.8 0.8
Quick Ratio (x) 0.2 1.3 0.9 0.8 0.8
Z-Score (X) 0.8 0.9 0.9 0.8 0.8

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Company Guide
Suntec REIT

FY Dec 2013A 2014A 2015A 2016F 2017F
Pre-Tax Income 239 225 244 210 219

Dep. & Amort. 0.0 0.0 0.0 0.0 0.0
Tax Paid (4.1) 0.0 (1.8) (1.3) (10.2)
Associates &JV Inc/(Loss) (172) (139) (100) (57.2) (70.5)
Chg in Wkg.Cap. (1.3) 14.4 3.70 0.25 0.87
Net Operating CF 153 196 231 152 140
Other Invts (net) 0.0 0.0 304 0.0 0.0
Invts in Assoc. & JV 0.0 0.0 (15.0) (155) 0.0
Other Investing CF (32.6) 30.5 (123) 0.0 0.0
Net Investing CF (222) (65.9) 181 (150) 68.5
Chg in Gross Debt 260 98.2 139 205 50.0
New units issued 0.0 342 0.0 0.0 0.0
Other Financing CF (1.0) (376) (7.1) 0.0 0.0
Net Financing CF 50.6 (160) (115) (51.4) (209)
Currency Adjustments 0.0 (1.7) (1.7) 0.0 0.0
Chg in Cash (18.6) (31.6) 296 (49.2) (0.8)

Free CFPS (S cts) (1.6) 4.15 7.57 3.93 5.34
Source: DBS Bank

Derek TAN

Page 6 Page 287
YTL Starhill Global REIT
Version 4 | Bloomberg: SGREIT SP | Reuters: STHL.SI Refer to important disclosures at the end of this report
BUY The Magic of Payout Ratio

Price Target 12-mth: S$0.87 (15% upside and 6.9% distribution BUY for asset diversification and high income visibility from
yield) master leases. We like YTL Starhill Global REIT (SGREIT) for its
diversified portfolio of prime retail and office assets in the Asia Pacific
Potential Catalyst: Turnaround signals at Wisma Atria; appreciation of region. Singapore, Australia, and Malaysia which accounted for 62.6%,
MYR and/or AUD against SGD 19.5%, and 14.6% of net property income (NPI) in FY16 (FYE June)
respectively, limiting exposure and thereby risk to any single country.
Where we differ: We are largely in line with consensus
Analyst With c.45% of top line derived from master leases or long leases, the
Singapore Research Team equityresearch@dbs.com REIT offers investors income stability and visibility, as well as upside
Derek TAN +65 6682 3716 derektan@dbs.com potential from rental reversions embedded in the master leases.
Wisma Atria turning positive as occupancy edged back up. Wisma

Atria (Retail)’s occupancy improved to 99.5% from 94.9% over the last
Price Relative three quarters and footfall has increased by 6.6% y-o-y, thanks to the
tenant mix reconfiguration and the reopening of Isetan department
store in the same mall. We understand that the decline in revenue was
a result of converting level 1 from Fashion into F&B, which consists of
stickier tenants but yields lower rents. This is expected to drive higher
footfall for the floor going forward. The gradual re-opening of Isetan
should drive more footfall into the mall and eventually translate to
higher rents on other floors.
Tasting the sweetness of prudent payout. SGREIT has been

retaining 3-5% of distributable income to fund working capital, and it
FY Jun (S$m) 2015A* 2016A 2017F 2018F therefore has certain flexibility to manage future distributions without
touching its capital. In addition, it has been paying management fees in
Net Property Inc 238 170 176 182 cash, not units, hence there is no pressure from any dilution in its
Total Return 175 164 117 122 equity base.
EPU Gth (%) 40 (49) 36 4 Our DCF-derived TP is S$0.87. Maintain BUY.
DPU (S cts) 7.60 5.18 5.20 5.43
DPU Gth (%) 52 (32) 0 4
NAV per shr (S cts) 91.6 92.5 92.7 92.8 Key Risks to Our View:
PE (X) 9.8 19.2 14.1 13.5 Upside risk from AUD and MYR currency appreciation. As c.34% of net
Distribution Yield (%) 10.1 6.9 6.9 7.2 property income is derived from assets in Malaysia and Australia, an
P/NAV (x) 0.8 0.8 0.8 0.8
36.0 36.1 36.1 36.2
appreciation of any of these currencies versus SGD would present
ROAE (%) 8.3 4.3 5.8 6.0 upside to our estimates.
At A Glance
Distn. Inc Chng (%): 0 0 Issued Capital (m shrs) 2,181
Consensus DPU (S cts): 5.20 5.40 Mkt. Cap (S$m/US$m) 1,647 / 1,135
*FY2015A contains six quarters due to rebasing of financial year. YTL Corp Bhd 35.8
AIA Group Ltd 8.0
Finance L.P. Free Float (%) 56.2

ed: JS / sa: JC, PY
Page 288
Company Guide

Earnings Drivers:
Strong performance from local assets. SGREIT is primarily
exposed to Ngee Ann City and Wisma Atria in Singapore, which
together account for 63% of top line and 68% of asset value.
These assets offer a mix of stability from Toshin’s master lease
at Ngee Ann City and upside potential from Wisma Atria,
whose shorter leases provide exposure to strong retailer
demand for prime Orchard Road space in Singapore.
Weaker reversions for Wisma Atria on the horizon. That said, Net Property Income and Margins (%)
we would not be surprised if reversions in upcoming quarters
turn negative, as a portion of leases expiring in the year ahead
will come from fashion tenants on the first floor, whose
performances have been generally weak. These tenants are
more reticent about committing to space given (a) lacklustre
fashion sales, and (b) uncertainty over the outcome of the newly
renovated Isetan. However, we expect earnings at Wisma to still
see good growth, driven by stronger reversions from tenants on
the basement and second floors (selling watches & jewellery).
Growing presence in Australia. The REIT acquired Myer Centre Distribution Paid / Net Operating CF
Adelaide for A$288m, located in Adelaide’s prime CBD retail
core, in May 2015. With the inclusion of the Myer Centre
acquisition, rental income contribution from Australia doubled
from 10% to 20% in FY16.
Visible earnings growth from rental reviews at master leased

assets. In FY16, the base rent for Toshin (master tenant at Ngee
Ann City, Singapore) increased 5.5%, whereas Katagree (master
tenant at Starhill Gallery and Lot 10, Malaysia) extended its
lease with 6.7% rental uplift. Looking ahead, SGREIT has annual
rent review for key tenants in Australia; David Jones’ next lease
review is in August 2017. Interest Cover (x)

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Company Guide

Balance Sheet:
Future acquisitions to be partly funded via equity. Gearing rose
to 35% after the acquisition of Myer Centre Adelaide. Given
the Manager’s comfortable range of 35% gearing, any further
acquisitions or developments could trigger an equity fund
raising exercise.
Debt free in FY2017. Weighted debt tenure is 3.4 years at an

average interest cost of 3.06%. With 96% of debt hedged into
fixed rates and less than 1% of total debt requiring refinancing
in FY16/17, exposure to volatile short rates is minimised.
ROE (%)
Development/ AEI opportunities in Singapore and Australia. The
Manager has several AEI opportunities to improve portfolio
performance in the near and medium term. SGREIT will be
undertaking AEI works in Central Plaza, Perth, renovating the
shop façade to incorporate anchor tenants, as well as
converting some of the upper floors from office and storage to
retail use. Other potential development/AEI opportunities
include activating 116k sqft of vacant retail space in the fourth
and fifth floors of Myer Centre, Adelaide, as well as developing
the Spanish Steps between Wisma Atria and Ngee Ann City,
where the REIT has unutilised gross floor area of c.100k sqft. Distribution Yield (%)
Key Risks:
Currency risk. SGREIT’s overseas properties have been affected
by forex volatility and operational headwinds. In Malaysia and
Australia, stable underlying asset performance has been
masked by the depreciation of the MYR and AUD against the
SGD, resulting in currency translation losses and weaker DPU
performance.
Macroeconomic risks in China – retail oversupply and austerity

hits Chengdu asset. Contributions from Chengdu have been PB Band (x)
hit by ongoing austerity measures and oversupply of retail
space, resulting in steady declining earnings contribution since
2013. The property in Chengdu has revalued downwards from
S$66.3m to S$44.7m as at 30 Jun 2016. The property will be
converted from a fashion retailer to a home furnishing mall,
with a 10-year tenancy. While the asset’s contribution to
portfolio NPI is expected to drop to 1% from 1.5%, we believe
the long-term tenancy has mitigated any further downside risk.
Company Background
Starhill Global REIT is a real estate investment trust that invests
in income-producing upscale retail and/or office assets in the Source: Company, DBS Bank
Asia Pacific region. In Singapore, it owns portions of Ngee Ann
City and Wisma Atria. It also owns assets in Malaysia, Australia,
Japan and China.

Page 3
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Company Guide

FY Jun 2014A 2015A 2016A 2017F 2018F
Gross revenue 201 295 220 228 234
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 FY2015 consists of 6
Net Interest (Exp)/Inc (29.6) (45.3) (37.9) (37.3) (38.2) quarters due to the
Exceptional Gain/(Loss) 4.68 (1.0) 0.0 0.0 0.0 revision of its financial
Net Income 115 165 83.6 117 122 year end.
Tax (2.9) 0.56 2.32 0.40 0.41
Net Income After Tax 112 165 85.9 117 122
Total Return 250 175 164 117 122
Non-tax deductible Items (139) (3.0) (47.4) 0.0 0.0
Growth & Ratio
Revenue Gth (%) 7.9 46.9 (25.5) 3.8 2.7
Net Inc Gth (%) 5.1 47.1 (48.1) 36.2 4.2
Dist to revenue (%) 55.3 58.2 53.0 51.3 52.1 Room to increase
Managers & Trustee’s fees 8.8 9.0 22.2 9.5 9.3 payout ratio in order to
to sales(%)
ROAE %) 5.8 8.3 4.3 5.8 6.0 maintain DPU when
ROA (%) 3.9 5.4 2.7 3.7 3.8 necessary
ROCE (%) 4.8 7.0 3.8 4.8 5.0
Int. Cover (x) 4.7 4.7 3.2 4.1 4.2

Page 4
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Company Guide

FY Jun 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017
Gross revenue 56.8 55.6 53.6 53.7 55.3

Exceptional Gain/(Loss) (2.2) 1.74 (9.7) (19.4) (3.3)
Net Income 27.1 31.1 17.4 8.03 25.4
Tax (0.9) (0.9) (0.2) 4.21 (0.3)
Minority Interest 0.0 0.0 0.0 0.0 0.0 Revenue consists of a one-off
Net Income after Tax 26.2 30.2 17.2 12.2 25.1 compensation of S$1.9m
Total Return 0.0 0.0 0.0 0.0 0.0 from an early termination at
Non-tax deductible Items 3.81 (0.2) 10.7 (61.8) 4.33 Wisma Atria which has been
Net Inc available for Dist. 28.6 28.8 27.5 28.1 28.4 filled up
Growth & Ratio
Revenue Gth (%) 10 (2) (4) 0 3
Net Inc Gth (%) (7) 15 (43) (29) 105
Balance Sheet (S$m)

FY Jun 2014A 2015A 2016A 2017F 2018F

Other LT Assets 20.5 20.4 2.54 2.54 2.54
Cash & ST Invts 58.0 51.6 77.0 18.4 19.0
Inventory 0.0 0.0 0.0 0.0 0.0
Debtors 10.2 5.18 5.93 29.7 30.5
Total Assets 2,943 3,193 3,222 3,190 3,203
ST Debt 53.6 146 15.4 15.4 25.4

Creditor 43.0 37.2 39.5 3.53 3.63
LT Debt 792 983 1,108 1,108 1,108
Non-Cash Wkg. Capital (35.0) (34.1) (36.1) 23.6 24.3

Net Cash/(Debt) (788) (1,078) (1,046) (1,105) (1,114)
Ratio
Current Ratio (x) 0.7 0.3 1.4 2.2 1.6
Quick Ratio (x) 0.7 0.3 1.4 2.2 1.6
Z-Score (X) 1.1 1.0 0.9 1.0 1.0

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Company Guide

FY Jun 2014A 2015A 2016A 2017F 2018F
Pre-Tax Income 115 165 83.6 117 122

Dep. & Amort. 0.0 0.0 0.28 0.0 0.0
Tax Paid (3.5) (3.8) (1.7) 0.40 0.41
Chg in Wkg.Cap. 24.6 52.3 73.1 (59.8) (0.7)
Other Operating CF 4.68 (1.0) 0.0 0.0 0.0
Net Operating CF 141 212 155 57.3 121
Net Invt in Properties (59.4) (317) 27.2 (2.3) (12.3)
Other Invts (net) 0.0 (0.8) 0.0 0.0 0.0
Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0
Other Investing CF 0.53 1.55 0.92 0.0 0.0 S$10m AEI on Australia
Net Investing CF (58.9) (316) 28.0 (2.3) (12.3) property
Chg in Gross Debt 38.4 308 (9.8) 0.0 10.0
New units issued 0.0 0.0 0.0 0.0 0.0
Other Financing CF (39.9) (45.9) (37.3) 0.0 0.0
Net Financing CF (102) 99.8 (160) (114) (108)
Currency Adjustments (1.8) (2.8) 2.15 0.0 0.0
Chg in Cash (21.3) (6.5) 25.4 (58.5) 0.62

Free CFPS (S cts) 3.99 (4.8) 8.36 2.52 5.00
Source: DBS Bank

Derek TAN

Page 6 Page 293
Industry Focus
Research Team Directory

Analyst Sector E-mail
Regional
Timothy Wong Head, Group Research timothywong@dbs.com
Joanne Goh Regional Equity Strategist joannegohsc@dbs.com
Paul Yong, CFA Transport paulyong@dbs.com
Ben Santoso Plantations, Animal Protein bensantoso@dbs.com
Sachin Mittal Telecoms sachinmittal@dbs.com
Lim Sue Lin Banking suelinlim@dbs.com
Chong Tjen-San, CFA infrastructure, Conglomerates tjensan@alliancedbs.com
Hong Kong / China
Carol Wu Head of Research, China Property carol_wu@dbs.com
Alice Hui, CFA Deputy HOR, Consumer alicehuism@dbs.com
Addison Dai Basic materials, Clean energy (wind power, nuclear) addisondai@dbs.com
Alexander Lee, CFA Strategy alexander_lee@dbs.com
Alison Fok Consumer alisonfok@dbs.com
Andy Yee, CFA China Property andyyee@dbs.com
Chris Ko Small Mid Caps chriskof@dbs.com
Danielle Wang, CFA China Property danielle_wang@dbs.com
Dennis Lam Small Mid Caps dennis_lam@dbs.com
Eric Yee Consumer eric_yee@dbs.com
Ian Chui Hong Kong Property ianchui@dbs.com
Jeff Yau, CFA Hong Kong Property jeff_yau@dbs.com
Keith Tsang Automobile, Infrastructure, Machinery keith_tsang@dbs.com
Ken HE, CFA China Property ken_he@dbs.com
Mark Kong, CFA Healthcare mark_kong@dbs.com
Mavis Hui Consumer mavis_hui@dbs.com
Patricia Yeung Environmental, Industrial patricia_yeung@dbs.com
Rachel Miu Automobile, Infrastructure, Machinery rachel_miu@dbs.com
Susanna Chui Telecom/Media/Tech susanna_chui@dbs.com
Tam Tsz-Wang, CFA Telecom/Media/Tech tszwangtam@dbs.com
Tony Wu, CFA Small Mid Caps tonywuh@dbs.com
Trista Qin China Property trista_qin@dbs.com
Indonesia
Maynard Arif Head of Research, Strategy, Automotive, Consumer Maynard.arif@id.dbsvickers.com
Tiesha Narandha Putri Infrastructure, Transportation, Consumer tiesha.putri@id.dbsvickers.com
William Simadiputra Telecommunications, Mining william.simadiputra@id.dbsvickers.com
Benedictus Agung Swandono Banks and Multifinance agung.swandono@id.dbsvickers.com
Research Team Infrastructure, Transportation, Consumer, Bank & Multifinance
Plantation, Animal Protein, Telecommunications, Property & Industrial research@id.dbsvickers.com
Estate, Healthcare
Malaysia
Wong Ming Tek Executive Director mingtek@alliancedbs.com
Bernard Ching Head of Malaysian Research bernard@alliancedbs.com
Cheah King Yoong, CFA Consumer, Gaming cheahky@alliancedbs.com
Quah He Wei, CFA Property, Utilities hewei@alliancedbs.com
Toh Woo Kim Telecommunication, Media, Technology wookim@alliancedbs.com
Lynette Cheng Banks, Non-bank Financials lynettecheng@alliancedbs.com
Marvin Khor Transport , Plantation marvinkhor@alliancedbs.com
Ruzanna Faruk Auto, Rubber Glove sruzannamf@alliancedbs.com
Inani Rozidin Oil & Gas inanirozidin@alliancedbs.com
Singapore
Janice Chua Head of Research, Strategy, Industrials janicechust@dbs.com
Andy Sim, CFA Consumer Services andysim@dbs.com
Derek Tan Property, Reits derektan@dbs.com
Ho Pei Hwa Industrials peihwa@dbs.com
Mervin Song, CFA Property, Reits mervinsong@dbs.com
Rachel Tan Property, Healthcare racheltanlr@dbs.com
Suvro Sarkar Industrials, Transport survo@dbs.com
Allfie Yeo Consumer Services alfieyeo@dbs.com
Thailand
Chanpen Sirithanarattanakul Head of Research, Strategy, Property, REITs chanpens@th.dbsvickers.com
Thanawat Patchimkul Oversea research thanawatp@th.dbsvickers.com
Thaninee Satirareungchai Banking & Finance thaninees@th.dbsvickers.com
Chaipat Thanawattano Energy & Utilities, Petrochemicals chaipatt@th.dbsvickers.com
Namida Artispong Food and Beverage, Tourism, Commerce namidaa@th.dbsvickers.com
Wasu Mattanapotchanart Telecom, Property, REITs wasum@th.dbsvickers.com
Apichaya Ketruttanaborvorn Construction, Healthcare, Small-caps apichayak@th.dbsvickers.com
Research Team Commerce, Electronics, Air Transportation, Small-caps research@th.dbsvickers.com
Korea
Lee Eun Young Basic Materials, Utilities eunyoung@dbs.com

Page 103
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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: 6 Jan 2017 18:50:56 (SGT)

Dissemination Date: 6 Jan 2017 20:15:55 (SGT)
GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte 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 DBS Bank Ltd.
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”)) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to
change without notice. This document 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 and 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 Singapore, 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.
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.
DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-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.

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Industry Focus
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 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. As of 6 Jan 2017, the analyst(s) and his/her spouse and/or relatives who are financially dependent on the analyst(s), do not hold interests in
the securities recommended in this report (“interest” includes direct or indirect ownership of securities). 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.
COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. DBS Bank Ltd., DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”), their subsidiaries and/or other affiliates have proprietary
positions in CapitaLand Commercial Trust, Frasers Commercial Trust, Keppel REIT, Suntec REIT, CapitaLand Retail China Trust,
CapitaLand Mall 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, Ascott Residence 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 REIT, CapitaLand,
City Development, Global Logistic Properties, UOL Group, Wing Tai recommended in this report as of 30 Nov 2016.
2. DBS Bank Ltd does not market make 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 Frasers Commercial Trust, CapitaLand Retail China Trust, Croesus
Retail Trust, Mapletree Greater China Commercial Trust, YTL Starhill Global REIT, Ascendas REIT, Frasers Logistics & Industrial
Trust, Mapletree Logistics Trust, Soilbuild Business Space Reit, Ascott Residence Trust, CDL Hospitality Trusts, Frasers Hospitality
Trust, RHT Health Trust, Keppel DC REIT, Manulife US REIT, CapitaLand recommended in this report as of 30 Nov 2016.
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 Frasers Commercial Trust, Croesus Retail Trust, YTL Starhill Global REIT, Frasers Logistics & Industrial Trust,
Soilbuild Business Space Reit, Ascott Residence Trust, CDL Hospitality Trusts, Frasers Hospitality Trust, Keppel DC REIT, Manulife
US REIT as of 30 Nov 2016.
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 30 Nov 2016.
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, Frasers Commercial Trust, OUE Commercial REIT,
CapitaLand Mall 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, Ascott Residence Trust, Frasers Hospitality Trust, OUE Hospitality Trust, Parkway
Life Real Estate Investment Trust, RHT Health Trust, Keppel DC REIT, Manulife US REIT, City Development, United Engineers as of
30 Nov 2016.
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, Frasers Commercial Trust, Suntec REIT, CapitaLand Mall 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, Ascott Residence Trust, Frasers Hospitality Trust, OUE Hospitality Trust, Parkway Life Real Estate Investment
Trust, RHT Health Trust, Keppel DC REIT, Manulife US REIT, City Development, United Engineers in the past 12 months, as of 30
Nov 2016
8. 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.
Directorship/trustee interests
9. Euleen Goh Yiu Kiang, a member of DBS Group Holdings Board of Directors, is a Non-Exec Director of CapitaLand as of 1 Jan
2017.

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10 Disclosure of previous investment recommendation produced
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 is being distributed in Hong Kong by or on behalf of, and is attributable to DBS Vickers (Hong Kong) Limited
which is licensed and regulated by the Hong Kong Securities and Futures Commission and/or by DBS Bank (Hong Kong)
Limited which is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission. Where this
publication relates to a research report, unless otherwise stated in the research report(s), DBS Bank (Hong Kong) Limited
is not the issuer of the research report(s). This publication including any research report(s) is/are distributed on the express
understanding that, whilst the information contained within is believed to be reliable, the information has not been
independently verified by DBS Bank (Hong Kong) Limited. This report is intended for distribution in Hong Kong only to
professional investors (as defined in the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and
any rules promulgated thereunder.)
For any query regarding the materials herein, please contact Paul Yong (CE. No. ASE988) at equityresearch@dbs.com.
Indonesia This report is being distributed in Indonesia by PT DBS Vickers Securities 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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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 This report is produced by DBS Bank Ltd which is regulated by the Monetary Authority of Singapore.
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 in The Dubai International Financial Centre (“DIFC”) 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 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.
DBS Bank Ltd.

12 Marina Boulevard, Marina Bay Financial Centre Tower 3
Singapore 018982
Tel. 65-6878 8888
e-mail: equityresearch@dbs.com
Company Regn. No. 196800306E

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Industry Focus
Asian Equities Sales, Sales Trading and Research Contacts
Sales Heads Tel: Email:
Singapore Kenneth Tang 65-6398 6951 kennethtang@dbsvickers.com

Hong Kong Andrew Au 852-2820 4992 andrew_au@hk.dbsvickers.com
London Graham Booth 44-20-7618 1881 grahambooth@dbs.com
New York Elaine Yu 1-212-826 3553 elaineyu@us.dbsvickers.com
Thailand Narisara Viseskosin 662 657 7759 narisarav@th.dbsvickers.com
Sales Trading Contacts Tel: Email:
Singapore Vivian Goh 65-6398 6927 viviangohkb@dbsvickers.co

Hong Kong Franco Law 852-2971 1828 franco_law@hk.dbsvickers.com
London Charles Davies 44 20 7618 1883 charlesdavies@dbs.com
New York Brenda Wong 1 212 826 3558 brendawong@us.dbsvickers.com
Research Contacts Tel: Email:
Regional Timothy Wong 65 6682 3691 timothywong@dbs.com

Singapore Janice Chua 65 6682 3692 janicechuast@dbs.com
Hong Kong Carol Wu 852-2863 8841 carol_wu@hk.dbsvickers.com
Malaysia Wong Ming Tek 603-2711 0956 mingtek@alliancedbs.com
Thailand Chanpen Sirithanarattanakul 662-657 7824 chanpens@th.dbsvickers.com
Indonesia Maynard Priajaya Arif 6221 3003 4930 maynardpriajaya@dbs.com
DBS Vickers Securities – Regional Offices
HONG KONG MALAYSIA SINGAPORE

DBS Vickers (Hong Kong) Ltd AllianceDBS Research Sdn Bhd DBS Bank Ltd
18th Floor Man Yee Building 19th Floor, Menara Multi-Purpose 12 Marina Boulevard
68 Des Voeux Road Central Capital Square, 8 Jalan Munshi Abdullah Level 40, Marina Bay Financial Central Tower 3
Central, Hong Kong 50100 Kuala Lumpur Singapore 018982
Tel: 852-2820 4888 Tel: 603 2604 3333 Tel: 65-6878 8888
Fax: 852-2868 1523 Fax: 603 2604 3921
Member of The Stock Exchange of Hong Kong
INDONESIA THAILAND
PT DBS Vickers Securities (Indonesia) DBS Vickers Securities (Thailand) Co Ltd
DBS Bank Tower, Ciputra World 1, 32/F 15th Floor Siam Tower
Jl. Prof. Dr. Satrio Kav. 3-5, 989 Rama 1 Road
Jakarta 10350, Indonesia Pathumwan, Bangkok 10330
Tel. 6221-3003 4900, Tel: 66-2-658 1222
Fax: 6221-3003 4943 Fax: 66-2-658 1269
UNITED STATES UNITED KINGDOM

DBS Vickers Securities (USA) Inc DBS Vickers Securities (UK) Ltd
777 Third Avenue 4th Floor Paternoster House
Suite 26A 65 St Paul's Churchyard
New York, New York 10017 London EC4M 8AB United Kingdom
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Member of FINRA and SIPC The Financial Conduct Authority (FCA)

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Singapore Industry Focus

Singapore Developers & REITs

DBS Group Research . Equity 6 Jan 2017

Rocky Road, Take me home STI : 2,880.76

 Deleveraging trend to kick in from 2017

ASIAN INSIGHTS VICKERS SECURITIES

4. Developers – Catalysts abound to lift valuations from multi-year lows 10

5. Singapore REITs – Déjà vu 31

6. Residential Subsector Outlook: Luxury home prices to bottom out in 2017 47

7. Office Subsector Outlook: Grade A office space to bottom by end 2017 55

Note: Prices used as of 04 Jan-2017

ASIAN INSIGHTS VICKERS SECURITIES

Privatizations, mergers and acquisitions (M&A) in the

ASIAN INSIGHTS VICKERS SECURITIES

4. Deleveraging a focus as interest rate risks loom

Strategies for: 1. Faster-than-projected rise in shorter-term interest rates

Capital preservation is key. In an environment of low growth

ASIAN INSIGHTS VICKERS SECURITIES

ASIAN INSIGHTS VICKERS SECURITIES

Singapore Developers Peer Comparisons

ASIAN INSIGHTS VICKERS SECURITIES

Outlook – Positive (Luxury)

Monaco Hong London New York Los Japan Singapore Toronto

Key Assertions Risks

Source: URA, CBRE, DBS Bank

ASIAN INSIGHTS VICKERS SECURITIES

Retail Outlook - Neutral

Downtown Core Fringe Area Rest of Central Area

Key Assertions Risks

Source: DBS Bank

Office Outlook - Positive

Key Assertions Risks

ASIAN INSIGHTS VICKERS SECURITIES

Outlook – Negative (Factory & Warehouse Space)

Business Park Warehouse Factory

Key Assertions Risks

Hospitality Outlook - Negative

Source: DBS Bank

ASIAN INSIGHTS VICKERS SECURITIES

4. Developers – Catalysts abound to lift valuations from multi-year lows

Figure 1: Developers underperformed S-REITs in 2016 but caught up in 4Q16

Source: Bloomberg Finance L.P., DBS Bank

ASIAN INSIGHTS VICKERS SECURITIES

2002-2003 Dot Com Crash Me a n: 0.95x

0.50 -1 SD: 0.60x

2008-2009 Global Financial Crisis 2011 Euro Crisis

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

Source: Bloomberg Finance L.P., DBS Bank

140.0 2.00 -10%

-60% Discount to RNAV Mean +1 SD - 1 SD

Source: URA, DBS Bank

ASIAN INSIGHTS VICKERS SECURITIES

4.2 Diversification to remain a key strategy for developers

Figure 6: Investment Destinations for Singapore Developers (2013-YTD)

Source: Companies, DBS Bank

ASIAN INSIGHTS VICKERS SECURITIES

Figure 7: FX adjusted returns over time

2016 2017 2018

FX gain/loss Property Return FX adjusted total return

Source: JLL, DBS Bank

ASIAN INSIGHTS VICKERS SECURITIES

Figure 8: Prime Yields for commercial real estate

Source: JLL, DBS Bank