151007 Insights a Beneficial Breather From the Fed

www.dbsvickers.com

ed: TH / sa: YM

A breather from the Fed • Big cap Big cap Big cap Big cap SSSS----REITs key beneficREITs key beneficREITs key beneficREITs key beneficiaries from iaries from iaries from iaries from an expected an expected an expected an expected

delay in rate delay in rate delay in rate delay in rate liftliftliftlift----off off off off and a and a and a and a more more more more modest hike path in modest hike path in modest hike path in modest hike path in 2016 2016 2016 2016

• Retail REITs to weather uncertainties best as Retail REITs to weather uncertainties best as Retail REITs to weather uncertainties best as Retail REITs to weather uncertainties best as operational headwinds across most subsectors to operational headwinds across most subsectors to operational headwinds across most subsectors to operational headwinds across most subsectors to persist persist persist persist

• Picks MAGIC, FCT and CRCTPicks MAGIC, FCT and CRCTPicks MAGIC, FCT and CRCTPicks MAGIC, FCT and CRCT

Delay in rate lift-off a booster for S-REITs in the immediate term. The weakness in jobs data from the US prompted DBS economists to revise our forecast for the FED to postpone their rate lift-off to 1Q16 (from Dec’15) and subsequent hikes to be more modest (2 more in 2016 vs 4 previously). 10-year UST and 10-year SG bonds have retreated by 30-40bps from year highs. We believe this to be a positive boost for S-REITs in the shorter term and big caps like (CMT, CCT, MINT, MCT, KREIT, SUN) should benefit. S-REITs currently offer an average FY16F yield of 7.0% and with yield spreads of 4.7% at close to its – 1 SD range, we see a comfortable buffer for investors to add at current levels.

Retail REITs to perform best in the upcoming 3Q15 results. With a slowing economy, we believe operational headwinds will persist across most subsectors in the upcoming result but we expect the retail REITsretail REITsretail REITsretail REITs to be the most resilient. FCT and MCT will likely be the top performers amongst peer group given strong foot traffic and sustained tenant sales given their unique mall positioning in their respective locality. We expect most weakness in the hospitality REITshospitality REITshospitality REITshospitality REITs come 3Q15, despite it being a seasonally strong quarter. We believe that Hospitality REITs with regional exposure will likely perform better as the outlook for Singapore remains weak. For industrial REITsindustrial REITsindustrial REITsindustrial REITs, we believe that performance will remain fairly flattish, with market rents expected to further moderate and rental reversionary gap to tighten further as passing rents catch up to market levels. Office REITsOffice REITsOffice REITsOffice REITs will continue to face increasing headwinds of weak demand in CBD, while occupancy risks might emerge if more firms (especially the telecoms, media sector) look to re-locate to sub-urban locations and business parks to save costs. While we see value in the office REITs, near term stock performance is likely to be range bound given that rents remain on a downward trend.

Prefer REITs with sustainable growth to withstand medium term uncertainties. Picks MAGIC, FCT and CRCT. Notwithstanding shorter term macro tailwinds, we advocate investors to remain “positioned for hikes”, focusing on S-REITs with an ability to grow dividends on a sustainable basis. Stocks we like are MAGIC MAGIC MAGIC MAGIC and FCTFCTFCTFCT. We also believe that CRCTCRCTCRCTCRCT, trading at 7.9% forward yield, is attractive.

STISTISTISTI :::: 2,897.412,897.412,897.412,897.41

Analyst Derek Tan +65 6682 3716 [email protected]

Mervin Song +65 6682 3715 [email protected]

Rachael TAN +65 6682 3713 [email protected]

STOCKS

Source: DBS Bank

Mapletree Greater China Commercial TrustMapletree Greater China Commercial TrustMapletree Greater China Commercial TrustMapletree Greater China Commercial Trust :::: MAGIC is a Singapore real estate investment trust (“REIT”) established with the investment strategy of principally investing, directly or indirectly, in a diversified portfolio of income-producing commercial real estate in the Greater China region.

Frasers Centrepoint TrustFrasers Centrepoint TrustFrasers Centrepoint TrustFrasers Centrepoint Trust :::: Frasers Centrepoint Trust is a retail real estate investment trust with a portfolio of shopping malls located in suburban areas in Singapore.

CapitaLand Retail China TrustCapitaLand Retail China TrustCapitaLand Retail China TrustCapitaLand Retail China Trust :::: CapitaLand Retail China Trust (CRCT) is a real estate investment trust which invests in income-producing retail properties located mainly in China, Hong Kong and Macau.

S-REIT yield sector yield spread

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

(%)(%)(%)(%)

Yield Yield Spread vs 10-year bond Historical Mean Historical - 1 SD

Source: DBS Bank

DBS Group Research . Equity DBS Group Research . Equity DBS Group Research . Equity DBS Group Research . Equity

7 Oct 2015

Singapore Industry Focus

Singapore REITs

Refer to important disclosures at the end of this report

Price Price Price Price Mkt CapMkt CapMkt CapMkt Cap Target PriceTarget PriceTarget PriceTarget Price Performance (%)Performance (%)Performance (%)Performance (%)

S$S$S$S$ US$mUS$mUS$mUS$m S$S$S$S$ 3333----mthmthmthmth 12121212----mthmthmthmth RatingRatingRatingRating

Mapletree Greater China Commercial

0.95 1,834 1.12 (6.9) 4.4 BUY Frasers Centrepoint Trust

1.97 1,270 2.05 (5.1) 2.6 BUY CapitaLand Retail China Trust

1.42 838 1.69 (16.3) (8.1) BUY

Industry Focus

Singapore REITs

Peer Comparison

REITREITREITREIT FYEFYEFYEFYE PricePricePricePrice RecRecRecRec Target Target Target Target PricePricePricePrice

Mkt Mkt Mkt Mkt CapCapCapCap

Total Total Total Total ReturnReturnReturnReturn

YieldYieldYieldYield P/NAVP/NAVP/NAVP/NAV

(S$)(S$)(S$)(S$) (S$)(S$)(S$)(S$) S$'mS$'mS$'mS$'m (%)(%)(%)(%) FY15/16FFY15/16FFY15/16FFY15/16F FY16/17FFY16/17FFY16/17FFY16/17F FY17/18FFY17/18FFY17/18FFY17/18F FY15/16FFY15/16FFY15/16FFY15/16F

OfficeOfficeOfficeOffice //// Commercial Commercial Commercial Commercial

CCT Dec 1.34 BUY 1.48 3,939 17% 6.5% 6.9% 7.3% 0.8

FCOT Sep 1.37 BUY 1.51 1,075 17% 7.1% 7.2% 7.3% 0.8

KREIT Dec 0.97 BUY 1.12 3,088 23% 7.2% 7.4% 7.5% 0.7

OUECT Dec 0.63 HOLD 0.67 799 14% 6.6% 7.6% 7.9% 0.7

Suntec Dec 1.55 HOLD 1.58 3,899 9% 6.2% 6.5% 6.8% 0.7

RetailRetailRetailRetail

CRCT Dec 1.37 BUY 1.69 1,150 32% 7.8% 8.0% 8.2% 0.8

CMT Dec 1.96 BUY 2.07 6,913 12% 5.8% 6.0% 6.2% 1.1

FCT Sep 1.94 BUY 2.05 1,774 12% 6.1% 6.2% 6.4% 1.0

SPH REIT Aug 0.95 HOLD 0.99 2,390 11% 5.8% 5.8% 6.0% 1.0

MCT Mar 1.28 HOLD 1.35 2,700 19% 6.5% 6.8% 7.0% 1.0

MAGIC Mar 0.93 BUY 1.12 2,548 29% 7.8% 8.5% 8.5% 0.8

SGREIT Dec 0.76 BUY 0.91 1,658 17% 6.7% 7.1% 7.4% 0.8

IndustrialIndustrialIndustrialIndustrial

a-itrust Mar 0.87 HOLD 0.90 804 10% 6.4% 6.7% 7.6% 1.3

Cache Dec 1.00 BUY 1.09 784 18% 8.5% 8.7% 8.9% 1.0

CREIT Dec 0.62 HOLD 0.61 794 8% 8.1% 8.2% 8.3% 0.9

MINT Mar 1.51 HOLD 1.50 2,673 6% 7.0% 6.9% 7.4% 1.1

MLT Mar 1.01 BUY 1.11 2,491 18% 7.4% 7.7% 8.0% 1.0

SBREIT Dec 0.82 BUY 0.86 764 13% 7.7% 7.8% 7.9% 1.0

HospitalityHospitalityHospitalityHospitality

ASCHT Mar 0.66 BUY 0.74 731 22% 8.6% 8.7% 8.7% 0.9

ART Dec 1.21 BUY 1.38 1,860 19% 7.3% 7.6% 7.6% 0.9

CDREIT Dec 1.34 BUY 1.65 1,315 32% 8.3% 8.5% 8.6% 0.8

FEHT Dec 0.66 HOLD 0.71 1,178 15% 7.2% 7.1% 7.0% 0.7

FHT Sep 0.74 HOLD 0.83 1,004 20% 8.2% 8.2% 8.3% 0.8

OUEHT Dec 0.81 BUY 0.98 1,079 29% 8.1% 8.1% 8.3% 0.9

HealthcareHealthcareHealthcareHealthcare & Others& Others& Others& Others

P-Life Dec 2.29 BUY 2.56 1,385 17% 5.7% 5.3% 5.4% 1.3

RHT Mar 0.96 HOLD 0..97 764 8% 7.6% 8.3% 9.1% 1.0

KDCREIT Dec 1.03 BUY 1.14 909 16% 6.2% 6.8% 7.2% 1.2

Sector AverageSector AverageSector AverageSector Average 6.8%6.8%6.8%6.8% 7.0%7.0%7.0%7.0% 7.2%7.2%7.2%7.2% Source: Bloomberg Finance L.P., DBS Bank

Industry Focus

Singapore REITs

Key Discussion Point 1: REITs' Operational Outlook: Headwinds to revenue growth Operational Outlook and Trends

No of REITs No of REITs No of REITs No of REITs CAGRCAGRCAGRCAGR Rental ReversionRental ReversionRental ReversionRental Reversion Market OutlookMarket OutlookMarket OutlookMarket Outlook

SectorSectorSectorSector CoveredCoveredCoveredCovered (FY15(FY15(FY15(FY15----17F)17F)17F)17F) TrendTrendTrendTrend

Office 5 4.1%

Retail 4 2.5%

Commercial 4 4.9%

Industrial 8 2.2%

Hospitality 6 0.8%

Healthcare 2 1.1%

TotalTotalTotalTotal 29*29*29*29* 3.3.3.3.2222%%%%

* DBS covers 29 out of the 36 REITs/Business Trusts listed on the SGX

Source: DBS Bank

S-REIT DPU Growth by Sectors (FY15-17F) Remarks

Earnings Cut by subsectors in 2Q15

1. R1. R1. R1. Risks to topisks to topisks to topisks to top----line growthline growthline growthline growth

We are seeing slowing top-line growth outlook

for most S-REITs, translating into a more modest

outlook for distributions in the coming years.

Based on our forecasts, the S-REITs are projected

to deliver 3.2% growth in DPU over FY15-17F.

The growth outlook differs across various real

estate sub-sectors, ranging between 0.8% and

4.9%.

2. C2. C2. C2. Cautious guidance for 2autious guidance for 2autious guidance for 2autious guidance for 2H15H15H15H15

General management guidance remains cautious

and operational outlook for most sectors remains

muted with headwinds impairing top-line

growth. While the office, retail, commercial, and

industrial REITs are expected to continue

recording positive rental reversions in 2H15, we

believe that risks are on the downside with rental

reversionary gap closing and potentially turning

negative in 2016 ( office, industrial sectors).

We continue to believe that retail REITs will

remain firmly resilient.

Source: Companies, DBS Bank

4.0%

2.5%

4.2%

2.1%2.3%

1.1%

3.2%

Office Retail Commercial Industrial Hospitality Healthcare S-REIT Average

-4%

-2%

-3%

-1%

-5%

0%

Office Retail Commercial Industrial Hospitality Healthcare

Industry Focus

Singapore REITs

Operational Outlook and Trends

Office SectorOffice SectorOffice SectorOffice Sector Outlook : Negative Outlook : Negative Outlook : Negative Outlook : Negative

Office REITs (all) : Sector thoughtsOffice REITs (all) : Sector thoughtsOffice REITs (all) : Sector thoughtsOffice REITs (all) : Sector thoughts

• WeWeWeWe are still expecting better DPU performance on a qare still expecting better DPU performance on a qare still expecting better DPU performance on a qare still expecting better DPU performance on a q----oooo----q basis for most office REITs/officeq basis for most office REITs/officeq basis for most office REITs/officeq basis for most office REITs/office----focusedfocusedfocusedfocused REITs. REITs. REITs. REITs.

• Rental reversions are still expected to be positive; albeit at a lower rate of c5Rental reversions are still expected to be positive; albeit at a lower rate of c5Rental reversions are still expected to be positive; albeit at a lower rate of c5Rental reversions are still expected to be positive; albeit at a lower rate of c5----10% as market rents continue to remain on a 10% as market rents continue to remain on a 10% as market rents continue to remain on a 10% as market rents continue to remain on a downtrend.downtrend.downtrend.downtrend.

• Occupancy Rates (CCT/KREIT/OUECT/Suntec/FCOT) should remain stableOccupancy Rates (CCT/KREIT/OUECT/Suntec/FCOT) should remain stableOccupancy Rates (CCT/KREIT/OUECT/Suntec/FCOT) should remain stableOccupancy Rates (CCT/KREIT/OUECT/Suntec/FCOT) should remain stable,,,, given the lack of empty space as of 3Q15 bgiven the lack of empty space as of 3Q15 bgiven the lack of empty space as of 3Q15 bgiven the lack of empty space as of 3Q15 but ut ut ut should be at risk in the medium term when supply completes should be at risk in the medium term when supply completes should be at risk in the medium term when supply completes should be at risk in the medium term when supply completes fromfromfromfrom endendendend----2016 onwards. 2016 onwards. 2016 onwards. 2016 onwards.

Dividend ForecastsDividend ForecastsDividend ForecastsDividend Forecasts

REITREITREITREIT YEYEYEYE Reporting Reporting Reporting Reporting

Qtr in Qtr in Qtr in Qtr in CY3QCY3QCY3QCY3Q

FrequencyFrequencyFrequencyFrequency Paying in Paying in Paying in Paying in CY3Q?CY3Q?CY3Q?CY3Q?

FY15/16FFY15/16FFY15/16FFY15/16F DPUDPUDPUDPU (Scts)(Scts)(Scts)(Scts)

% % % % achieved achieved achieved achieved

YTDYTDYTDYTD

DPU trend DPU trend DPU trend DPU trend (q(q(q(q----oooo----q)q)q)q)

Company Specific dataCompany Specific dataCompany Specific dataCompany Specific data----pointspointspointspoints

CCT Dec 3QFY15 Quarter Yes 8.6 50%

Rental reversions and market rents for its Grade A buildings; acquisition of CapitaGreen (60% stake)

Keppel REIT

Dec 3QFY15 Quarter Yes 6.9 49%

Rental reversion trend for its Grade A office (OFC/MBFC) expected to remain positive, given low expiring rent. DPU to remain flattish as income support for OFC falls off

FCOT Sep 4QFY15 Quarter Yes 9.7 25%

DPU trend to higher y-o-y on the back of acquisition of 257 Collins Street, positive rents achieved at Alexandra Technopark. Offset by weaker AUD

Suntec REIT


Completion of AEI at Suntec Retail phase 3 to start contributing to earnings. Office portfolio to remain stable

OUE CT Dec 3QFY15 Quarter Yes 4.2 48%

DPU to be diluted from recently completed rights issue; pending completion of acquisition of OUBC

Source: REIT Managers, DBS Bank

Industry Focus

Singapore REITs


RetailRetailRetailRetail SectorSectorSectorSector Outlook : Outlook : Outlook : Outlook : StableStableStableStable

Retail REITs (all) : Sector thoughtsRetail REITs (all) : Sector thoughtsRetail REITs (all) : Sector thoughtsRetail REITs (all) : Sector thoughts

• We believe that retailWe believe that retailWe believe that retailWe believe that retail----focusedfocusedfocusedfocused REITs REITs REITs REITs willwillwillwill continue reporting continue reporting continue reporting continue reporting firmlyfirmlyfirmlyfirmly resilient earnings and steady DPU growth qresilient earnings and steady DPU growth qresilient earnings and steady DPU growth qresilient earnings and steady DPU growth q----oooo----q and yq and yq and yq and y----oooo----y. y. y. y.

• Retail tenant operating environment to remain tough and rental reversions will further moderate.Retail tenant operating environment to remain tough and rental reversions will further moderate.Retail tenant operating environment to remain tough and rental reversions will further moderate.Retail tenant operating environment to remain tough and rental reversions will further moderate.

• Impact is expected to be Impact is expected to be Impact is expected to be Impact is expected to be on on on on selective malls and we believe thaselective malls and we believe thaselective malls and we believe thaselective malls and we believe that malls with t malls with t malls with t malls with a a a a (i) larger operational footprint, (i) larger operational footprint, (i) larger operational footprint, (i) larger operational footprint, and and and and (ii) historical (ii) historical (ii) historical (ii) historical track record of high recurring traffic and spendtrack record of high recurring traffic and spendtrack record of high recurring traffic and spendtrack record of high recurring traffic and spend,,,, will do betterwill do betterwill do betterwill do better....







YTDYTDYTDYTD

DPUDPUDPUDPU trend trend trend trend (q(q(q(q----oooo----q)q)q)q)


CMT Dec 3QFY15 Quarter Yes 11.4 47%

Stable performance expected; mixed performance expected for its portfolio of retail malls

FCT Sep 4QFY15 Quarter Yes 11.8 25%

Earnings growth driven by expected rental uplifts from Causeway Point and Northpoint

SPH REIT Aug 4QFY15 Quarter Yes 5.5 75%

Paragon Mall to continue to perform strongly; offsetting the decline expected at Clementi Mall

MCT Mar 2QFY16 Quarter Yes 8.3 25%

VivoCity to continue to drive portfolio upside with completion of AEI to contribute positively. Downside risk from PSA building, Mapletree Anson given weak operating outlook for office

CRCT Dec 3QFY15 Semi-Anl No 10.6 51%

Stable performance expected; Wangjing, Grand Canyon and XiZhimen mall continue to drive performance, more than offset the loss of income at Mingzhongleyuan

MAGIC Mar 2QFY16 Semi-Anl Yes 7.3 22%

Festive Walk expected to remain resilient despite weakness in HK retail market. Contributions from Sandhill Plaza and tailwinds in the strength of the HKD to drive earnings

SGREIT Jun 1QFY16 Quarter Yes 5.4 24%

Contribution from recently acquired Myers Adelaide to drive earnings. Potential headwinds from currency


Industry Focus

Singapore REITs


IndustrialIndustrialIndustrialIndustrial SectorSectorSectorSector Outlook : NegativeOutlook : NegativeOutlook : NegativeOutlook : Negative/Neutral/Neutral/Neutral/Neutral

Industrial REITs (all) : Sector thoughtsIndustrial REITs (all) : Sector thoughtsIndustrial REITs (all) : Sector thoughtsIndustrial REITs (all) : Sector thoughts

• We believe that industrial REITs We believe that industrial REITs We believe that industrial REITs We believe that industrial REITs willwillwillwill continue to report moderating rental growth of 3continue to report moderating rental growth of 3continue to report moderating rental growth of 3continue to report moderating rental growth of 3----5% with selective assets 5% with selective assets 5% with selective assets 5% with selective assets (warehouse/multi(warehouse/multi(warehouse/multi(warehouse/multi----useruseruseruser factories) potentially seeing negative rental reversions. factories) potentially seeing negative rental reversions. factories) potentially seeing negative rental reversions. factories) potentially seeing negative rental reversions.

• Ongoing conversions of SingleOngoing conversions of SingleOngoing conversions of SingleOngoing conversions of Single----User to MultiUser to MultiUser to MultiUser to Multi----User factories (AREIT/Cambridge/MLT/Cache) to mean downside to occupancies User factories (AREIT/Cambridge/MLT/Cache) to mean downside to occupancies User factories (AREIT/Cambridge/MLT/Cache) to mean downside to occupancies User factories (AREIT/Cambridge/MLT/Cache) to mean downside to occupancies (loss of efficiency) and lower underlying occupancies. (loss of efficiency) and lower underlying occupancies. (loss of efficiency) and lower underlying occupancies. (loss of efficiency) and lower underlying occupancies.

• Business Park SegmentBusiness Park SegmentBusiness Park SegmentBusiness Park Segments to still see highest rental reversions (AREIT/MINT) but likely to s to still see highest rental reversions (AREIT/MINT) but likely to s to still see highest rental reversions (AREIT/MINT) but likely to s to still see highest rental reversions (AREIT/MINT) but likely to have a have a have a have a more modest mediummore modest mediummore modest mediummore modest medium----term term term term outlookoutlookoutlookoutlook....

• Acquisitions and completions of AEI/Developments for (MLT/AREIT/CREIT/MINT) to underpin earnings stability. Acquisitions and completions of AEI/Developments for (MLT/AREIT/CREIT/MINT) to underpin earnings stability. Acquisitions and completions of AEI/Developments for (MLT/AREIT/CREIT/MINT) to underpin earnings stability. Acquisitions and completions of AEI/Developments for (MLT/AREIT/CREIT/MINT) to underpin earnings stability.


REITREITREITREIT YEYEYEYE RepoRepoRepoReporting rting rting rting





YTDYTDYTDYTD



a-itrust Mar 2QFY16 Semi-Anl Yes 5.6 24%

Contribution from recently completed acquisitions and development projects

A-REIT Mar 2QFY16 Semi-Anl Yes 14.9 26%

Portfolio rental reversions est. 5-8%; contribution from acquisitions and in Australia to drive performance

Cache Dec 3QFY15 Quarter Yes 8.5 50%

Contributions from recently acquired Australian properties and an added boost when the DHL built-to-suit project is completed in 2016

CREIT Dec 3QFY15 Quarter Yes 5.0 25%

Portfolio rental reversions of c.5%; contributions from newly acquired properties

MINT Mar 2QFY16 Quarter Yes 10.6 25%

Positive portfolio rental reversions of 3-5%; completion of various AEI works

MLT Mar 2QFY16 Quarter Yes 7.5 24%

Portfolio rental reversions of c.5%; contribution from recently completed Australia acquisition

SBREIT Dec 3QFY15 Quarter Yes 6.3 51%

Contribution from acquisitions; portfolio rental reversions of 3-5%


Industry Focus

Singapore REITs


Hospitality SectorHospitality SectorHospitality SectorHospitality Sector Outlook : NegativeOutlook : NegativeOutlook : NegativeOutlook : Negative/Neutral/Neutral/Neutral/Neutral

Hospitality Hospitality Hospitality Hospitality REITs (all) : Sector thoughtsREITs (all) : Sector thoughtsREITs (all) : Sector thoughtsREITs (all) : Sector thoughts

• We believe that Hospitality REITs We believe that Hospitality REITs We believe that Hospitality REITs We believe that Hospitality REITs willwillwillwill continue to see a brief respite in 3Q for SGcontinue to see a brief respite in 3Q for SGcontinue to see a brief respite in 3Q for SGcontinue to see a brief respite in 3Q for SG----focused hotelsfocused hotelsfocused hotelsfocused hotels,,,, given a seasonally strong given a seasonally strong given a seasonally strong given a seasonally strong quarter (F1/conferences). quarter (F1/conferences). quarter (F1/conferences). quarter (F1/conferences).

• Growth in supply (c.6% per annum) over 2015Growth in supply (c.6% per annum) over 2015Growth in supply (c.6% per annum) over 2015Growth in supply (c.6% per annum) over 2015----2016 to remain a key overhang for RevPAR growth2016 to remain a key overhang for RevPAR growth2016 to remain a key overhang for RevPAR growth2016 to remain a key overhang for RevPAR growth.... • Acquisitions (CDREIT , Frasers HT and OUE HT) toAcquisitions (CDREIT , Frasers HT and OUE HT) toAcquisitions (CDREIT , Frasers HT and OUE HT) toAcquisitions (CDREIT , Frasers HT and OUE HT) to underpin earnings growthunderpin earnings growthunderpin earnings growthunderpin earnings growth....







YTDYTDYTDYTD



ASCHT Mar 2QFY16 Semi-Anl Yes 5.6 23%

Australian hotels to pull performance upwards; which will offset weakness in SG/China

ART Dec 3QFY15 Semi-Anl Yes 8.8 44%

Acquisitions to contribute to DPU growth y-o-y and q-o-q; diversified portfolio to mean that performance will be stable

CDREIT Dec 3QFY15 Semi-Anl No 11.1 42%

3Q15 is a seasonally stronger quarter for SG hotels; contribution from acquisition of UK hotel

FHT Sep 4QFY15 Semi-Anl Yes 6.0 74%

Acquisition of Swissotel Wentworth (Sydney) to drive portfolio performance

FEHT Dec 3QFY15 Quarter Yes 4.7 24%

3Q15 is a seasonally stronger quarter for SG hotels

OUEHT Dec 3QFY15 Quarter Yes 6.5 48%

3Q15 is a seasonally stronger quarter for SG hotels; contribution from acquisition of Crown Plaza Changi


Industry Focus

Singapore REITs


Hospitality SectorHospitality SectorHospitality SectorHospitality Sector Outlook : NegativeOutlook : NegativeOutlook : NegativeOutlook : Negative/Neutral/Neutral/Neutral/Neutral

Other Other Other Other REITs (all) : Sector thoughtsREITs (all) : Sector thoughtsREITs (all) : Sector thoughtsREITs (all) : Sector thoughts

• Healthcare REITs (PHealthcare REITs (PHealthcare REITs (PHealthcare REITs (P----Life and RHT) to continue to see upside in DPULife and RHT) to continue to see upside in DPULife and RHT) to continue to see upside in DPULife and RHT) to continue to see upside in DPU,,,, driven by stable earnings structure with annual upliftsdriven by stable earnings structure with annual upliftsdriven by stable earnings structure with annual upliftsdriven by stable earnings structure with annual uplifts....

• Keppel DC Keppel DC Keppel DC Keppel DC REIT : upside driven by favoREIT : upside driven by favoREIT : upside driven by favoREIT : upside driven by favouuuurable market dynamics, acquisitions. rable market dynamics, acquisitions. rable market dynamics, acquisitions. rable market dynamics, acquisitions.







YTDYTDYTDYTD



Keppel DC REIT

Dec 3QFY15 Semi-Anl No 6.4 56%

Contribution from acquisition in Australia, rental uplift expected to be c.3-5% p.a.

p-Life REIT


Stable performance expected with CPI-pegged growth at 1% as SG CPI moderates

Religare Health Trust

Mar 2QFY16 Semi-Anl No 7.6 26%

Uplift driven by Average revenue per bed (ARPOB) for its hospitals of c.5% p.a.


Industry Focus

Singapore REITs

Key Discussion Point 2: Office REITs: Attractive Valuations but timing might be early Implied Valuations for Office REITs (Grade A)

Office REITs Office REITs Office REITs Office REITs Last Last Last Last

PricePricePricePrice

(S$)*(S$)*(S$)*(S$)*

Mkt Mkt Mkt Mkt

CapCapCapCap

Enterprise Enterprise Enterprise Enterprise

ValueValueValueValue

Book Book Book Book


DiscDiscDiscDisc Less: Less: Less: Less:

Value of Value of Value of Value of

Overseas/Overseas/Overseas/Overseas/

nonnonnonnon----Grade Grade Grade Grade

AAAA

Total Total Total Total

GFAGFAGFAGFA

Implied Implied Implied Implied


(Grade A)(Grade A)(Grade A)(Grade A)

(S$)(S$)(S$)(S$) (S$’bn)(S$’bn)(S$’bn)(S$’bn) (S$’bn)(S$’bn)(S$’bn)(S$’bn) (S$’bn)(S$’bn)(S$’bn)(S$’bn) (%)(%)(%)(%) (S$’bn)(S$’bn)(S$’bn)(S$’bn) m’m’m’m’sqftsqftsqftsqft S$ psf S$ psf S$ psf S$ psf

CCT 1.35 3.8 5.5 6.4 -16% (1.0) 3.1 1,541

KREIT 0.97 3.1 6.5 8.2 -21% (0.8) 2.6 2,196

OUECT 0.64 0.8 2.8 3.2 -13% (0.4) 1.0 2,334

Suntec REIT 1.56 3.9 6.8 8.5 -20% (2.2) 2.3 1,975

On an implied basis, most S-REITs are trading at an implied valuation S$ psf between S$1,541-2,334 which is a discount to current

transactions.

* Based on price as at 5th Oct 2015

Source: DBS Bank

Recent office transactions in the CBD

DateDateDateDate PropertyPropertyPropertyProperty LocationLocationLocationLocation

NLANLANLANLA****

(‘k sqft)(‘k sqft)(‘k sqft)(‘k sqft)

Purchase Purchase Purchase Purchase

PPPPricericericerice

(S$’m)(S$’m)(S$’m)(S$’m)

Price psfPrice psfPrice psfPrice psf

(S$)(S$)(S$)(S$) BuyerBuyerBuyerBuyer SellerSellerSellerSeller

1Q14 Finexis Building (50%) Robinson Road 142.0 337 2,371 NTUC Income Goldman Sachs

1Q14 OUE Bayfront Collyer Quay 402.4 1005 2,498 OUE Commercial REIT OUE Limited 2Q14 Straits Trading Building Battery Road 158.9 450 2,832 Sun Venture The Straits Trading

Company Jun-14 Prudential Tower Raffles Place 221.1 512 2,316 KOP/KSH/Lian Beng/

Centurion Global Keppel REIT

2Q14 Cecil House Cecil Street 50.0 110 2,177 Vibrant Group and DB2 Capital

Cheong Sim Lam

Aug-14 Equity Plaza Raffles Place 252.1 550 2,181 GSH Holdings Keppel Land/Alpha Investment Partners

Jul-14 Anson House Tanjong Pagar Area

76.4 172 2,252 SEB CBRE Global Investors (ING Real Estate)

Sep-14 MBFC Tower 3 (33%) Marina Bay 447.3 1248 2,790 Keppel REIT Keppel Land

Jan-15 AXA Tower Tanjong Pagar 675.0 1170 1,733 PREH Blackrock Jun-15 One Raffles Place (68%

beneficial interest) Raffles Place 600.0 1429 2,382 OUECT OUE

Source: Various news reports, DTZ, CBRE, Colliers, Savills, DBS Bank

Industry Focus

Singapore REITs

Price performance of CCT vs URA Median Rents

Source: URA, DBS Bank We note that CCT (seen as a proxy for the office market, trades closely to the performance of URA office rental index. The stock has peaked/troughed at 9-12 months before the turn of the office market over the past seven years.

0

50

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2.5

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07

Q2

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07

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07

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07

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08

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08

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08

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09

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20

11

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12

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Q3

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14

Q2

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Q3

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Q1

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15

Q2

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15

To

da

y

CCT Share price (S$CCT Share price (S$CCT Share price (S$CCT Share price (S$

CAPITALAND COML.TST. URA office rental index

CBD rents have peaked earlier

than expected (2Q15 vs 1H16)12 months 9 months 9 months

Industry Focus

Singapore REITs

DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows:

STRONG BUYSTRONG BUYSTRONG BUYSTRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)

BUY BUY BUY BUY (>15% total return over the next 12 months for small caps, >10% for large caps)

HOLDHOLDHOLDHOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)

FULLY VALUEDFULLY VALUEDFULLY VALUEDFULLY VALUED (negative total return i.e. > -10% over the next 12 months)

SELL SELL SELL SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends GENERAL DISCLOSURE/DISCLAIMER GENERAL DISCLOSURE/DISCLAIMER GENERAL DISCLOSURE/DISCLAIMER GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd and DBS Vickers Securities (Singapore) Pte Ltd, its respective connected and associated corporations and affiliates (collectively, the “DBS Vickers Group”) 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. 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. 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, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months.

ANALYST CERTIFICATIONANALYST CERTIFICATIONANALYST CERTIFICATIONANALYST CERTIFICATION The research analyst 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 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 this report. As of the date the report is published,the analyst and his/her spouse and/or relatives who are financially dependent on the analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).

COMPANYCOMPANYCOMPANYCOMPANY----SPECIFIC / REGULATORY DISCLOSURES SPECIFIC / REGULATORY DISCLOSURES SPECIFIC / REGULATORY DISCLOSURES SPECIFIC / REGULATORY DISCLOSURES

1.1.1.1. DBS Bank Ltd., DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”), their subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of 31 Aug 2015 except CapitaLand Commercial Trust, Frasers Commercial Trust, Keppel REIT, Suntec REIT, CapitaLand Retail China Trust, CapitaLand Mall Trust, Frasers Centrepoint Trust, SPH REIT, Mapletree Commercial Trust, Mapletree Greater China Commercial Trust, Starhill Global REIT, Ascendas India Trust, Cache Logistics Trust, Cambridge 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, Keppel DC REIT

2.2.2.2. 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 Starhill Global REIT, Soilbuild Business Space Reit, Ascott Residence Trust, Far East Hospitality Trust, Frasers Hospitality Trust, Keppel DC REITas of 31 Aug 2015.

Industry Focus

Singapore REITs

3.3.3.3.

Compensation for investment banking services:Compensation for investment banking services:Compensation for investment banking services:Compensation for investment banking services:

DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates have received compensation, within the past 12 months, and within the next 3 months may receive or intends to seek compensation for investment banking services from Frasers Commercial Trust, OUE Commercial REIT, Soilbuild Business Space Reit, Ascott Residence Trust, Frasers Hospitality Trust and Keppel DC REIT.

DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager 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.

RESTRICTIONS ON DISTRIBUTIONRESTRICTIONS ON DISTRIBUTIONRESTRICTIONS ON DISTRIBUTIONRESTRICTIONS ON DISTRIBUTION

GeneralGeneralGeneralGeneral 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.

AustraliaAustraliaAustraliaAustralia 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 KongHong KongHong KongHong Kong This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by the Hong Kong Securities and Futures Commission.

IndonesiaIndonesiaIndonesiaIndonesia This report is being distributed in Indonesia by PT DBS Vickers Securities Indonesia.

MalaysiaMalaysiaMalaysiaMalaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR") (formerly known as HwangDBS Vickers Research Sdn Bhd). 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

SingaporeSingaporeSingaporeSingapore 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.

ThailandThailandThailandThailand 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 United United United KingdomKingdomKingdomKingdom

This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the meaning of the Financial Services and Markets Act and is regulated by The Financial Conduct Authority. Research distributed in the UK is intended only for institutional clients.

DubaiDubaiDubaiDubai

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, 3

rd 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 United United United StatesStatesStatesStates

Neither this report nor any copy hereof may be taken or distributed into the United States or to any U.S. person except in compliance with any applicable U.S. laws and regulations. It is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. 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 Other Other Other jurisdictionsjurisdictionsjurisdictionsjurisdictions

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

DBS Bank Ltd.DBS Bank Ltd.DBS Bank Ltd.DBS Bank Ltd. 12 Marina Boulevard, Marina Bay Financial Centre Tower 3

Singapore 018982 Tel. 65-6878 8888

Company Regn. No. 196800306E

151007 Insights a Beneficial Breather From the Fed

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