ANNUAL REPORT 2019shreit.listedcompany.com/misc/ar/20200403-shreit-ar2019...2020/04/03 · 6...

2019ANNUALREPORT

* Investors can learn more about the fund from the Annual Registration Statement (Form 56-REIT1).As shown on www.sec.or.th Or the website of the REIT Manager www.sh-reit.com

Strategic Hospitality Extendable Feehold and LeaseholdReal Estate Investment Trust

Strategic Hospitality Extendable Feehold and Leasehold Real Estate Investment Trust

Message from the REIT Manager As the first international hospitality REIT listed in Thailand, Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust invests in properties outside of Thailand. Our strategy is to invest in high quality, branded hospitality real estate in the ASEAN region and to hold in order to provide a stable dividend to our unitholders.

The hotels in our portfolio include Capri by Fraser and Ibis Saigon South in Vietnam’s Ho Chi Minh City and Pullman Jakarta Central Park in Indonesia. Both countries are among countries experiencing the strongest economic growth in the world. While the tourism sector in Thailand was slowing down, such portfolio provided the diversification needed to achieve stable yields. In 2019, the good performance of our hotels in Vietnam have compensated the ones of the Pullman in Jakarta, impacted in the first half of the year by the uncertainty of the presidential elections in Indonesia.

Our most important objective is to achieve stable returns for our unitholders while implementing the best practices of the industry. We believe our team’s expertise will help us grow SHREIT with the objective to become a leading hospitality REIT in the region. Opportunities in ASEAN are numerous and we have a unique set of skills to exploit them. We would like to extend our appreciation to the unitholders who believe in our vision and have shown trust in our management expertise. We are determined to continue focusing on the interest of the unitholders while implementing the best standard and governance of the industry.

.

Yours Sincerely, Strategic Property Investors Company Limited REIT Manager

Content

Page

Part 1 Essential Content of the REIT 1. REIT’s Information2. Risk Factors

Part 2 Business Operation of the REIT 1. REIT’s Information2. Policy, Business Strategy and Benefit Procurement from the Properties3. Overview of the Industry Related to the Investment Properties4. Risk Factors5. Legal Dispute6. Other Major Informati

Part 3 Management and Governance 7. Units Trust and Unitholder Information8. Management’s Structure

9. Corporate Governance and the REIT Management10. Responsibility to the Society11. Internal Control and Risk Management12. Prevention of Conflict of Interest

Part 4 Financial Position and Operating Results 13. Financial Highlights14. Financial Position and Operating Results of the REIT

Content

Page






Content

Page






6

18

22

22

71

90

130

202

128

135

202

210

128

169

202

213

1 Essential Content of the REIT

6

Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust

-4-

Part 1 Essential Content of the REIT

1. Essential Content of the REIT

1.1 REIT’s Information Trust name (Thai) ทรสตเพอการลงทนในอสงหารมทรพยแบบตออายไดเพอธรกจโรงแรมและสทธการ

เชาสตราทจก ฮอสพทอลลต Trust name (English) Strategic Hospitality Extendable Freehold and Leasehold Real Estate

Investment Trust Abbreviation SHREIT REIT Manager Strategic Property Investors Company Limited Trustee Krungthai Asset Management Public Company Limited Term of Trust Indefinite Maturity Type of Trust Unit Unredeemable Registered Capital 3,414,798,033 THB as at 31 December 2019 Total Unit Trust 352,836,700


7

Stra

tegi

c H

ospi

talit

y Ex

tend

able

Fre

ehol

d an

d Le

aseh

old

Rea

l Est

ate

Inve

stm

ent T

rust

-5-

1.2

Key

det

ails

of t

he P

rope

rtie

s as

at 3

1 D

ecem

ber 2

019

Brie

f des

crip

tion

of th

e Pr

oper

ties

that

the

REI

T in

vest

ed /

will

inve

st in

Hot

el

Cou

ntry

Lo

catio

n B

rand

M

anag

er

Ran

k

(sta

rs) 3

No.

of

room

s

Year

of

com

men

cem

ent

Free

hold

/L

ease

hold

Rem

aini

ng

dura

tion

of

leas

ehol

d rig

hts

App

rais

ed v

alue

As

of 3

1 D

ecem

ber 2

019

Prop

ertie

s

Pullm

an J

akar

ta C

entra

l Par

k In

done

sia

Jaka

rta

Pullm

an

Acco

r 5

317

2012

Fr

eeho

ld

NA

100.

56 m

illion

USD

Cap

ri by

Fra

ser

Viet

nam

H

CM

C

Cap

ri Fr

aser

s H

ospi

talit

y 4

175

2013

Le

aseh

old

24 y

ears

2

3.70

milli

on U

SD

IBIS

Sai

gon

Sout

h Vi

etna

m

HC

MC

IB

IS

Acco

r 3

1401

2012

Le

aseh

old

24 y

ears

1

4.70

milli

on U

SD

Rem

ark

(1)C

urre

ntly

, 140

gue

st ro

oms

are

in o

pera

tion.

The

hot

el p

lans

to re

nova

te fo

r add

ition

al 2

0roo

ms

in th

e fu

ture

,

8


-6-

1.3 Overview of the income from the investment properties

1.3.1 Overview of the benefit procurement from the Properties The REIT's initial investment in the Properties is the investment to create stable return to the

Unitholders and for the Unitholders to achieve sustainable distributions per Unit and net asset value (NAV), while maintaining an appropriate capital structure. The REIT has a policy to invest in a diversified portfolio of income-generating real estate located in the ASEAN with an initial focus on the Mekong region and Indonesia, which is used primarily for hospitality and/or hospitality-related purposes, whether wholly or partially, as well as real estate-related assets in connection to the foregoing. Through the Master Lessors, the investment will be made by way of purchase, lease, sub-lease and/or acceptance of the transfer of leasehold rights and/or sub-leasehold rights in the Properties, as well as improvement modification, development and/or transfer of other properties. After the REIT's investment, the REIT shall procure the benefit from assets by way of leasing the Properties to the Master Lessee and take other necessary actions for the benefit of the REIT, with the aim to generate income and returns for the REIT and all Unitholders.

1.3.2 Strategy of the benefit procurement from the Properties • The REIT Manager has the following strategy of the benefit procurement from the Properties: • The REIT Manager has the policy of appointing its representatives to be directors of each of the

Investment Companies. The REIT Manager will monitor the operating performance of the Investment Company in each quarter and compare with the annual budget and the past operating results (if any). If the operating performance of any of the Investment Companies misses the target, the REIT Manager will analyse the issues and develop operating plan in order to achieve the target.

• After the REIT's investment, the Properties will be leased by the Master Lessors to the Master Lessees with the lease period of 3 years each. The REIT will receive both fixed and variable rental from the Master Lessees as set out in the summary of agreement and material agreements relevant to the Properties which the REIT Manager is of the view that the rental rate is appropriate.

• For the initial investment, REIT Manager will control Master Lessees to comply with the term and conditions of the lease through the Master lease agreement.

• In the event that there is a change in Master Lessee of the Properties, this may affect the change in terms and conditions of the lease agreement, including fixed rental and variable rental.

• The REIT reserves the right to improve and modify the Properties to ensure that the Properties look modern and consistently meet the demand of the customers to continually attract the customers to come use the services.

• In the event that the Master Lessee does not comply with the lease agreement which can cause the termination of lease agreement, the REIT shall proceed to procure new lessee, by setting the initial qualification which is evaluated based on experience in hotel business, financial position, system, credibility and business profile, to negotiation and propose conditions and details of the leased Properties in place of the previous Master Lessee.


9


-7-

1.3.3 Esstential content of the Master Lease Agreement between Master Lessor and Master Lessee

1) Pullman Jakarta Central Park Hotel

Lessor PT SHR Pullman Indonesia (INDONESIA), a company wholly owned by the REIT.

Lessee PT Central Persona Palace, with the ultimate shareholder being the same as REIT Manager's ultimate shareholder.

Leased Properties (a) Buildings including any construction situated within Pullman Jakarta Central Park ("Hotel Buildings"); and

(b) Component parts of the Hotel Buildings which are the common utilities system such as electrical system, water system, telephone system, elevator, escalator, air- conditioning, engineering system, as well as any amenities in relation to Hotel Buildings including any right with respect to the aforesaid assets.

The assets as listed in (a) - (b) above are collectively referred to as the "Hotel" or the "Leased Properties".

Lease Period Lease term of 3 years from the effective date stipulated in this agreement ("Effective Date")

Renewal Condition upon the Expiry of Lease Agreement

Upon the expiry of lease agreement, the parties agree that the lessee shall continue to lease the Leased Properties from the lessor for a period of 3 years each on an automatic renewal basis, and the renewal condition of the lease agreement shall terminate when the lessor no longer has qualities of being the owner of the Leased Properties. The calculation of fixed rent and variable rent shall be in accordance with the method stipulated in the agreement.

Base Rental USD 6,605,000 per annum, whereby the rental payment shall be made in local currency. The exchange rate is as mutually determined.

Base Rental Calculation

Base rental for the renewal of the agreement shall be equivalent to the average fixed rental of the lease period under the previous lease agreement.

Exemption of the Termination of Agreement

From the date that the REIT invests in the Properties, in the event that the lessee is not capable of paying fixed rental in full but the lessor's relevant shareholder has received the payment in full equivalent to the fixed rental amount that the lessor shall receive after deducting expenses from any of the following sources, this shall not be deemed as breach of rental agreement

10


-8-

1. The REIT and/ or company that the REIT invests in, either directly or indirectly, receives the net operating income (NOI) support from the Vendor Company (if any and as applicable).

2. The REIT and/ or company that the REIT invests in, either directly or indirectly, receives support for the fixed rental payment from reserve account that Strategic Property Investment Pte Ltd. has placed with the Trustee of the REIT.

3. The REIT and/ or company that the REIT invests in, either directly or indirectly, receives other support from the relevant company of the lessee and/or the lessee's shareholder.

Governing Law This agreement is enforced and interpreted in accordance with the laws of Indonesia.


11


-9-

2) Capri by Fraser

Lessor Luxel APT Company Limited, a company wholly owned by the REIT through BBDM Singapore Pte Ltd.

Lessee Strategic Hospitality Services Co Ltd, with the ultimate shareholder being the same as REIT Manager's ultimate shareholder.

Leased Properties

(a) Buildings including any construction situated within Capri by Fraser ("Hotel Buildings"); and

(b) Component parts of the Hotel Buildings which are the common utilities system such as electrical system, water system, telephone system, elevator, escalator, air-conditioning, engineering system, as well as any amenities in relation to Hotel Buildings including any right with respect to the aforesaid assets.



Upon the expiry of lease agreement, the parties agree that the lessee shall continue to lease the Leased Properties from the lessor for a period of 3 years each on an automatic renewal basis, and the renewal condition of the lease agreement shall not be effective for a period of longer than the term under the land lease agreement of the land where the hotel is situated on, and the terms with respect to rental renewal shall terminate when the lessor no longer has qualities of being the owner of the Leased Properties.


Base Rental Calculation for renewal



From the date that the REIT invests in the Properties, in the event that the lessee is not capable of paying fixed rental in full but the lessor's relevant shareholder has received the payment in full equivalent to the fixed rental amount that the lessor shall receive after deducting expenses from any of the following sources, this shall not be deemed as breach of rental agreement. 1. The REIT and/or company that the REIT invests in, either directly or

indirectly, receives support for the fixed rental payment from reserve account that Strategic Property Investment Pte Ltd. has placed with the Trustee of the REIT.

2. The REIT and/or company that the REIT invests in, either directly or indirectly, receives other support from the relevant company of the lessee and/or the lessee's shareholder.

Governing Law This agreement is enforced and interpreted in accordance with the laws of Vietnam.

12


-10-

3) IBIS Saigon South Lessor Viethan Hotel Corporation, a company wholly owned by the REIT through BBVN

Singapore Pte Ltd. Lessee Strategic Hospitality Services Co Ltd, with the ultimate shareholder being the same

as REIT Manager's ultimate shareholder.

Leased Properties

(a) Buildings including any construction situated within IBIS Saigon South ( " Hotel Buildings" ) ; and Component parts of the Hotel Buildings which are the common utilities system such as electrical system, water system, telephone system, elevator, escalator, air-conditioning, engineering system, as well as any amenities in relation to Hotel Buildings including any right with respect to the aforesaid assets. The assets as listed in (a) - (b) above are collectively referred to as the "Hotel" or the "Leased Properties".



Base Rental USD 791,000 per annum, whereby the rental payment shall be made in local currency. The exchange rate is as mutually determined.




From the date that the REIT invests in the Properties, in the event that the lessee is not capable of paying fixed rental in full but the lessor's relevant shareholder has received the payment in full equivalent to the fixed rental amount that the lessor shall receive after deducting expenses from any of the following sources, this shall not be deemed as breach of rental agreement.

1. 1. The REIT and/ or company that the REIT invests in, either directly or indirectly, receives support for the fixed rental payment from reserve account that Strategic Property Investment Pte Ltd. has placed with the Trustee of the REIT.

2. 2. The REIT and/ or company that the REIT invests in, either directly or indirectly, receives other support from the relevant company of the lessee and/or the lessee's shareholder.



13


-11-

1.4 Essential Content of Net Operating Income Support (NOI Support) Pullman Jakarta Central Park has received an NOI Support for 3 years from the date of 1 January 2018 the REIT. The REIT will receive the NOI Support directly from PT Agung Pomodoro Land Tbk, which is the Vendor of Pullman Jakarta Central Park. The NOI Support will be provided in the case that the net operating income of the hotel after deducting the FF&E Reserve, as prescribed in the NOI Support provision, for a duration of 12 months in aggregate is less than 8.25 million USD. However, the Vendor has agreed to pay for the shortfall not exceeding 2.50 million USD each year.

1.5 Significant events which has impact to business operation (Milestone)

A subsidiary company of REIT, Strategic Hospitality Holdings Limited, has entered into a loan agreement to take a loan of 44,670,000 euros (approximately 1,724.43 million Baht), which is sourced from an oversea financial institution. This loan has been used for repaying the existing debt which REIT owed to another local financial institution in USD from the date on which REIT first invested in the Properties. The loan is payable at the end of year 3 and interest is payable on a quarterly basis with floating rate (at EURIBOR plus 3.25% per annum for the first year after the drawdown date and not exceeding EURIBOR plus 4.25% per annum over the whole contract period). On 29 June 2018 the subsidiary company drew down all amount of the loan facility and on 17 August 2018 the company subsidiary entered into a loan amendment agreement to increase the loan facility from the financial institution described previously by 1,500,000 euros to support business expansion. On 20 August 2018 the company subsidiary drew down 1,165,000 euros from this part of long-term loan facility.

1.6 Essential content of the Facility Agreement

Lender Oversea financial institution who is not related to the REIT Manager and/or theTrustee Borrower Strategic Hospitality Holdings Limited, the REIT’s subsidiary with 100% shareholding Loan Balance as at 31 December 2019

Long-term loan facility EUR 45.02 mn.

Interest Rate Floating Rate - Euro Interbank Offered Rate 3 months (3M EURIBOR) : Year 1 3M EURIBOR plus 3.25% per annum Year 2 3M EURIBOR plus 3.75% per annum Year 3 3M EURIBOR plus 4.25% per annum

Term of Agreement 3 Years from draw down date and 1 more year conditional extend Principal Repayment 100% on final maturity date Payment of Interest Quarterly

14


-12-

1.7 Distributions of net income to unitholders Distributions during the year 2018 and 2019 detailed as the following :

Periods Dividend*

(Baht per unit) Capital Reduction*

(Baht per unit) Payment Date

20 December 2017 - 31 March 2018 0.0894 0.0616 15-Jun-2018 1 April 2018 - 31 July 2018 0.1409 0.0517 14-Sep-2018 1 August 2018 - 31 October 2018 0.2212 0.0349 28-Dec-2018 1 January 2019 - 31 March 2019 0.0959 0.0941 12-Jun-2019 1 April 2019 - 30 June 2019 0.1146 0.0754 20-Sep-2019 1 July 2019 - 30 Sep 2019 0.0285 0.0815 25-Dec-2019

Year 2018 Amount (Baht per unit)

Dividend 0.4515 Capital Reduction 0.1482 Total Amount 0.5997

Year 2019 Amount (Baht per unit) Dividend 0.2390 Capital Reduction 0.2510 Total Amount 0.4900

* There are 2 unitholders with total amount of 68,345,300 units are not entitled to receive any returns or cash distributions from capital reduction of SHREIT: 1) PT Agung Podomoro Land Tbk, with total of 63,928,100.00units; and 2) LEEBRO HOLDING PTE LTD.[1] ,with total of4,417,200.00units The provision of non-entitlement of cash distribution are in accordance with the prospectus of SHREIT Part 2, Clause 12. “Distribution Policy and Limitation” and Trust Deed, Clause 17.2 “Limitation in Receiving Distribution and Distribution Management”. The announced distribution payable per unit to other unitholders are calculated in proportion to their respective unitholding by excluding the portion of such aforementioned unitholders. To avoid of any doubt, this provision of non-entitlement of cash distribution is in accordance with the Binding Investment Agreement between vendors and SHREIT for the 1 st acquisition. Referring to Binding Investment Agreements, the units of non-entitlement of cash distribution of PT Agung Podomoro Land Tbk, and LEEBRO HOLDING PTE LTD were limited at 63,928,100.00 units and 4,417,200.00 units respectively throughout the Lock up period.

1.8 Fee and Expenses for the year 2019

No. Fee and Expenses Amount (THB) % 1 Trust Manager fee 13,413,322 0.43

2 Trustee fee 14,640,277 0.47

3 Registrar fee 2,553,419 0.08

4 Professional fee 17,844,311 0.58

5 Amortization of deferred expenses 27,407,183 0.89

6 Other expenses 101,590,233 3.09

7 Finance costs 92,693,755 3.00

Total Expenses 270,142,500 8.73

Average NAV during the year THB 3,093,452,831


15


-13-

1.9 Management Discussion and Analysis Financial position and operating results of Strategic Hospitality Extendable Freehold and

Leasehold Real Estate Investment Trust or SHREIT (the “Trust”) for the year 2019, as from 1 January to 31 December 2019. Financial position of the REIT Assets As of 31 December 2019, the REIT and its subsidiaries had total assets of 4,353.02 million Baht, decreasing 593.61 million Baht or 12.00% from the total assets as of 31 December 2018 mainly due to the decreasing in Investments in immovable and movable properties, decreasing in other receivables and decreasing in other assets. Investments in immovable and movable properties as of 31 December 2019 decreased from 4,377.80 million Baht in 2018 to 3,948.31 million Baht in 2019, or decreasing 429.49 million Baht or 9.81% due to the result of the latest reappraising of the fair value of the REIT’s hotel assets overseas at the end of 2019 and the exchange differences on translation of financial statements because Thai Baht as of 31 December 2019 appreciated against the US dollar 7% compared to 31 December 2018. Other receivables as of 31 December 2019 decreased from 93.98 million Baht in 2018 to 3.14 million Baht in 2019, or decreasing 90.85 million Baht or 96.66% due to allowance from doubtful account and the exchange differences on translation of financial statements.

Other assets as of 31 December 2019 decreased from 33.99 million Baht in 2018 to 2.35 million Baht in 2019, or decreasing 31.64 million Baht or 93.07% due to allowance from doubtful account and the exchange differences on translation of financial statements. Liabilities As of 31 December 2019, the REIT and its subsidiaries had total liabilities of 1,540.24 million Baht, decreasing 211.25 million Baht or 12.06% from the end of the year 2018 due to the decreasing in Accounts payable and accrued expenses, the decreasing in deposit received for income guarantees from asset seller and the decreasing in Long-term loans from financial institution. Accounts payable and accrued expenses as of 31 December 2019 decreased from 78.80 million Baht in 2018 to 18.56 million Baht in 2019, or decreasing 60.23 million Baht or 76.44% because in 2018 had costs associated with plan to acquire assets. Long-term loans from financial institution decreased from 1,626.74 million Baht at the end of the year 2018 to 1,490.46 million Baht as of year ended 2019, decreasing 136.28 million Baht or 8.38% because of repayment of loan 815,500 Euro in May 2019.

16


-14-

Net assets before other components of unitholders’ equity As of 31 December 2019 , the REIT and its subsidiaries had Net assets before other components of unitholders’ equity of 3,218.81 million Baht, decreasing 271.03 million Baht or 7.77% from 3,489 . 8 5 million Baht at the end of the year 2018 , mainly due to Capital from unitholders decreased from 3,486.21 million Baht at the end of the year 2018 to 3,414.80 million Baht at the end of the year 2019, decreasing 71.41 million Baht or 2.05%. The first reason is capital reduction without the change of total Trust units from excess cash including non-cash expenses. The second reason is decreasing in the Retained earnings from 3.64 million Baht in 2018 to deficits 195.98 million Baht in 2019 or decreasing 199.62 million Baht or 5,484.45% because of dividend payment 67.99 million Baht and decreasing in net assets from operation 131.63 million Baht. Operating Results Investment Income

In year 2019, The REIT and its subsidiaries had a total income of 357.08 million Baht, increased 5.56 million Baht or 1.58% compared to the same period of last year which had total income of 351.52 million Baht. Main changes include:

A gain on exchange rate of 21.97 million Baht (6.15% of total income) from the Long-term loans from financial institution in Euro and, the Euro depreciated against the US dollar which made an increase in gain of 11.46 million Baht or 109.04% from last year which had Gain on exchange rate of 10.51 million Baht

The rental income from master lease agreements 3 hotels of 252.24 million Baht (70.64% of total income) decreased by 9.60 million Baht or 3.67 percent from the same period of previous year which had a Rental income of 261.84 million Baht, mainly due to the appreciation of the Thai Baht against the US dollar

Other incomes of 82.77 million Baht (23.18% of total income), increased 3.90 million Baht or 4.95 percent compared to the same period of last year which had Other incomes of 78.87 million Baht from receiving support in the form of guarantees of the annual net operating income of the Hotel in Indonesia Expenses

In year 2019, the REIT and its subsidiaries had total expenses of 270.14 million Baht, decreased 75.15 million Baht or 21.76% compared to the same period of last year which had total expenses of 345.29 million Baht with the main causes as follow:

Other expenses of 95.50 million Baht (35.35% of total expenses), increased 4.58 million Baht or 5.04% from the same period of last year which had Other expenses of 90.91 million Baht because in 2019, there was a loss from allowance of doubtful account in full amount of advance payment and


17


-15-

other receivables 43.52 million Baht, unrealized loss on changes in the fair value of derivatives increased 2.49 million Baht, expenses related to loan decreased 3.71 million Baht. Moreover, in 2019 there were no expenses related to the new asset acquisition project which was cancelled in 2018 causing a decrease of expenses of 33.5 million Baht

Finance costs of 92.69 million Baht (34.31% of total expenses), decreased 50.42 million Baht or 35.23% from the same period of last year which had Finance cost of 143.11 million Baht because last year there was a refinancing loan expense. The refinancing of this loan helped reduce the finance costs in 2019

Income tax expenses of 6.09 million Baht (2.26% of total expenses), decreased 25.85 million Baht or 80.93% from the same period of last year which had Income tax expense of 31.95 million Baht due to the fact that in 2019, there was an unrealized loss from investments in immovable and movable properties which can be used to reduce income tax expenses Net investment income and changing in the net assets from operations In year 2019, the REIT and its subsidiaries had decreasing in net assets from operation (loss) of 131.63 million Baht. This represents a decrease of 273.25 million Baht of the investment profit, or a decrease of 192.95% from the same period of last year which reported an increasing in net assets from operation (profit) of 141.62 million Baht with the main causes as follow: Net investment income of 86.94 million Baht or an increase in profit of 80.71 million Baht or 1,295.79% compared to the year 2018 with a net investment income of 6.22 million Baht An unrealized loss from investments in immovable and movable properties of 218.57 million Baht which made the gain from asset valuation decrease to 353.96 million Baht or 261.44% compared to the same period last year which had unrealized gain from investment in immovable and movable properties of 135.39 million Baht. This number is the result of the latest reappraising of the fair value of the REIT’s hotel assets overseas at the end of 2019. Statement of cash flows

For the operating results ending 31 December 2019, the REIT and its subsidiaries had Net cash from operating activities of 238.84 million Baht and Net cash used in financing activities of 236.35 million Baht. Net cash used in financing activities comprised of Cash paid for issuance and offering of trust units costs of 10.02 million Baht, Cash paid for capital reduction of 71.41 million Baht, Cash paid for distributions of net income of 67.99 million Baht, Cash paid for long-term loan repayment of 29.32 million Baht and Cash paid for interest expenses and loan prepayment penalty of 57.61 million Baht. So at the end of the year, the REIT and its subsidiaries had remaining Cash and cash at banks of 22.83 million Baht, increasing 10.32 million Baht from 12.51 million Baht at the beginning of the year.

18


-16-

2. Risk Factors 2.1 Risks Associated with the REIT or the Operation of the REIT 2.1.1 The success of the REIT depends on the capacity of the REIT Manager, the Master Lessors and

the Hotel Operators in managing and seeking benefits from the Properties. 2.1.2 The income of the REIT depends on the financial position and operating results of the Master

Lessees and the decision to renew the Lease Agreements upon termination. 2.1.3 The Master Lessors may not obtain the rent in accordance with the lease agreement due to force

majeure under the lease agreement. 2.1.4 The base rent involved in the renewal of the lease agreement may be different from the base rent

estimates. 2.1.5 The risks that the REIT may incur additional cost from changing the REIT Manager which is not

due to the REIT Manager's false. 2.1.6 The risks arising from the renovation of Properties and the sufficiency of the reserves for

renovation. 2.1.7 Reliance on the Hotel Operators and use of their Trademarks or Brands for the Properties. 2.1.8 Risks arising in loans obtained by the REIT. 2.1.9 The Unitholders may not obtain dividend from the REIT in case of default of the loan agreement

The REIT has to rely on the third party for some services. 2.1.10 The REIT has no direct control over the Hotel Operators. 2.1.11 Risks arising from inability to find a lessee in the future. 2.1.12 There is no assurance that the REIT will be able to leverage on the Vendor Companies’

experience in the operation of the Properties at the expiration of the lock-up period. 2.1.13 The REIT may engage in hedging transactions, which can limit risk relating to the interest and the

exchange rates and may restrict the benefit obtained from the Properties and such transaction may not cover the risks relating to the interest rate and exchange rates

2.1.14 Benefit remittance to the REITs depends on the mode remittance and may be affected by any change in capital requirements, regulations relating to the remittance of fund and exchange controls in each jurisdiction invested by the REIT.

2.1.15 Yields distributed to the Unitholders may not be equivalent to yields distributed in the first year as a result of expiry of conditions for NOI Support by the Vendor Companies.

2.1.16 The Unitholders or other persons may not be able to recover damages against the REIT Manager as in certain circumstances the REIT Manager has limited liability.


19


-17-

2.2 Risks Associated with the Properties 2.2.1 The REIT is exposed to risks arising from volatility in the economy and tourism in the Territories 2.2.2 The Properties may be exposed to risks arising from rising competition in the hotel and tourism

industry 2.2.3 Damage or loss may arise if the Properties are not fully covered under an insurance policy 2.2.4 The Assets may be defective, or certain actions may violate the laws or rules and regulations, or

there may be other defects 2.2.5 There may be existing liabilities in the Master Lessors before the REIT's investment 2.2.6 Representations, warranties and indemnities by the Vendor Companies are submitted to a limited

scope, amount, and period 2.2.7 Pullman Jakarta Central Park Hotel's access and parking space are not be part of the Properties to

be invested in by the REIT 2.2.8 Natural disasters, other events of force majeure, terrorism, war, and political instability may negatively

affect the REIT's income 2.2.9 The values of the Properties as appraised by the Asset Appraisers do not always reflect the actual

values of the Properties, and cannot guarantee that the selling prices of the Properties are, or will be, consistent with the appraised values

2.2.10 Decrease in the fair value of the Properties and investment in leaseholds will have an adverse effect on the income statement, property net value, and the REIT's ability to pay returns

2.2.11 Risks related to the relevant extension or renewal of the rights to use land 2.2.12 The definite fees for the application for extension or renewal of the HGB certificate for the

Properties in Indonesia are not fixed as they are subject to the land value at the time of the application for extension or renewal of the HGB certificate

2.2.13 Risks from investment in the subleased land plots of Capri by Fraser and IBIS Saigon South.

2.3 Risks Associated with the Investment in Immovable Property 2.3.1 General risks related to investment in immovable property 2.3.2 The REIT may be adversely affected by lack of liquidity as a result of investment in immovable

property, and may lack other options in exploiting the Properties 2.3.3 Strategies of the REIT in investment in property used for the operation of the hotel business may

expose the REIT to higher risks when compared with other types of funds with more diversified portfolios

2.3.4 The Properties may be subject to expropriation 2.3.5 The REIT will invest in leasehold right of the immovable property, of which the value may decrease

in alignment with the remaining lease term, resulting in a pro rata decrease in the value of the Units 2.3.6 Changes in the accounting standards or applicable laws, or practices of relevant authorities

Risks related to the investment of the REIT in the Properties located offshore 2.3.7 Risks related to the investment of the REIT in the Properties located offshore

20


-18-

2.4 Risks Associated with Investment in the Units of the REIT 2.4.1 Risks arising from the lack of a secondary market for trading the Units of the REIT 2.4.2 Unitholders cannot redeem the Units 2.4.3 The value of the Units may decrease if newly issued units are issued at a lower price after the

additional offering 2.4.4 Future material sale of Units by Strategic Partners may have adverse effects on the market price of

the Units 2.4.5 The capital return as a result of dissolution of the REIT may be lower than the amount invested by

the Unitholders in this offering 2.4.6 Net asset value of the REIT may not be equal to the actual trading price on the exchange market 2.4.7 Net asset value of the REIT is not the actual value of the assets to be received by the REIT in the

event of a total sale of the assets or dissolution of the REIT 2.4.8 Unitholders may not receive returns from the REIT if there is a breach of the loan agreement 2.5 Jurisdictional Risk

2 Business Operation of the REIT

22


-19-

Part 2

Business Operation of Trust 1. REIT’s Information

Trust Name (Thai) ทรสตเพอการลงทนในอสงหารมทรพยแบบตออายไดเพอธรกจโรงแรมและสทธการเชาสตราทจก ฮอสพทอลลต

Trust Name (English) Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust

Abbreviation SHREIT REIT Manager Strategic Property Investors Company Limited Trustee Krungthai Asset Management Public Company Limited Term of Trust Indefinite Maturity Type of Trust Unit Unredeemable Registered Capital 3,414,798,033 THB as at 31 December 2019 Total Unit Trust 352,836,700

2. Policy, Business Strategy and Benefit Procurement from the Properties

2.1 Objective and Target of the REIT

Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust (“REIT”) was established under the TRUST’s regulation of Thailand on 20 December 2017. The REIT is under management by Krung Thai Asset Management Public Company Limited as a Trustee and Strategic Property Investors Company Limited as a REIT Manager. The REIT registered in the Stock Exchange of Thailand on 27 December 2017.

The REIT was established under the ACT on Trust and regulations issued by SEC on the purpose of issuing units of Real Estate Investment Trust for public offering and listed in the Stock Exchange of Thailand.

REIT Manager used the money from Fund raising to invest in the properties to obtain the rental income. The benefit of procurement of the REIT must comply with the SEC’s regulations and/or any related laws in Thailand.

The revenue which the REIT will receive from the benefit of procurement is the rental income from operation. The management is under the supervision and control by the Trustee to comply with the terms and conditions of the Trust deed and/or any regulations relating to SEC. Other than rental, REIT will not conduct any other business and/or operations, REIT will not lease the properties to any party who is suspected to use the properties for any illegal and/or immoral activities.


-20-

2.2 Significant Events which Has Impact to Business Operation (Milestone)

-None-


23

Str

ategic

Hos

pitali

ty Ex

tenda

ble Fr

eeho

ld an

d Lea

seho

ld Re

al Es

tate I

nves

tmen

t Trus

t

2.3 T

he R

EIT St

ructu

re as

at 31

Dec

embe

r 201

9

Re

mark:

*Stra

tegic

Hosp

itality

Serv

ices C

o., Lt

d. an

d PT C

entra

l Pers

ona P

alace

are t

he M

aster

Less

ee w

ho ha

s the

same

Ultim

ated S

hareh

older

as S

trateg

ic Pr

opert

y Inv

estor

s Co.,

Ltd.

that is

the R

EIT

M

anag

er.

24

Str

ategic

Hos

pitali

ty Ex

tenda

ble Fr

eeho

ld an

d Lea

seho

ld Re

al Es

tate I

nves

tmen

t Trus

t

-22-

2.4

Prop

erties

of th

e Tru

st 2.4

.1 K

ey D

etails

abou

t the P

rope

rties

of th

e Tru

st as

at 31

Dec

embe

r 201

9

Br

ief de

scrip

tion o

f the P

rope

rties t

hat th

e REIT

inve

sted /

will

inves

t in

Hotel

Co

untry

Lo

catio

n Br

and

Mana

ger

Rank

(st

ars) 3

No. o

f roo

ms

Year

of co

mmen

ceme

nt

Freeh

old/L

ease

hold

Rema

ining

du

ration

of

lease

hold

rights

Appri

sed V

alue A

s of 3

1 De

cemb

er 20

19

Prop

erties

Pullm

an Ja

karta

Cen

tral P

ark

Indon

esia

Jaka

rta

Pullm

an

Acco

r 5

317

2012

Fre

ehold

NA

10

0.56 m

illion U

SD

Capri

by Fr

aser

Vietna

m HC

MC

Capri

Fra

sers

Hosp

itality

4

175

2013

Le

aseh

old

24 ye

ars

23.7

0 millio

n USD

IBI

S Sa

igon S

outh

Vietna

m HC

MC

IBIS

Acco

r 3

1401

2012

Le

aseh

old

24 ye

ars

14.7

0 millio

n USD

Rema

rk (1)

Curr

ently

, 140

gues

t room

s are

in op

eratio

n. Th

e hote

l plan

s to r

enov

ate fo

r add

itiona

l 20ro

oms i

n the

futur

e,


25


-23-

2.4.2 Investment Structure of the Properties Investment in Indonesia: Pullman Jakarta Central Park

Strategic Hospitality Holding Limited (BVI) holds 100 percent of the shares of SHR Indonesia Pte. Ltd. (BVI) through an investment to acquire 100 percent of the shares of PT SHR Pullman Indonesia which has been registered to acquire the strata titles in land, which is the ownership with prescribed period and such ownership will expire on 17 March 2026 and has been extended until 9 June 2037. The HGB Title under Indonesian law has an initial term of 30 years, and the certificate holder is entitled to apply for an extension of no more than 20 years. When that term expires, the REIT Manager expects that the REIT, which is the holder of the certificate, will be entitled to apply for a renewal. It is expected that the certificate may be renewed for a term equivalent to the HGB initial term – that is, 30 years, with an extension of no more than 20 years. The REIT bought land, buildings and movable properties related to Pullman Jakarta Central Park from PT Agung Podomoro Land Tbk in a total value of 94.73 million USD. The investment divided into acquisition of shares in PT SHR Pullman Indonesia and shareholder loans to PT SHR Pullman Indonesia.

For the Property in Indonesia, PT Agung Podomoro Land Tbk. agrees to provide the REIT with the net operating income guarantee if guaranteed net operating income generated over 12 months is less than USD 8.25 million, for the period of three years started from 1 January 2018. PT Agung Podomoro Land Tbk. agrees to fund a shortfall not exceeding USD 2.5 million per year during such three-year period. Accordingly, during the guaranteed period if actual net operating income is less than the guaranteed net operating income, the PT Agung Podomoro Land Tbk. agrees to compensate for that shortfall.

Properties in Vietnam: Capri by Fraser and IBIS Saigon South

For Capri by Fraser Hotel, Strategic Hospitality Holding Limited (BVI) made investment by purchasing from Mr. Lee Young Jin 100 percent of the shares of BBDM Singapore Pte., Ltd., which holds 100 percent of the shares of Luxel APT Company Limited, the holder of land sublease rights (with remaining sublease period of approximately 24 years) and proprietary rights in the structures and movable properties associated with Capri by Fraser Hotel, for a price of 21 million USD of the investment is the price of shares in BBDM Singapore Pte., Ltd., while Strategic Hospitality Holding Limited (BVI) registered the establishment of SHR Finco Pte., Ltd. (BVI) to provide shareholder loans to Luxel APT Company Limited

As for IBIS Saigon South, Strategic Hospitality Holding Limited (BVI) made investment by acquiring from B.B. Dai Minh Corporation and its related persons 100 percent of the shares of BBVN Pte., Ltd., which holds 99.98 percent of the shares of Viethan Hotel Corporation, a holder of land sublease rights (with remaining sublease period of approximately 24 years) and proprietary rights in the structures and movable properties associated with IBIS Saigon South, for a total price of 15 million USD and

26


-24-

investment of shares in BBVN Pte., (The remaining shares of 0.02 percent held by natural persons will be transferred to the person(s) designated by the Trustee, which shall be completed as soon as possible and within two years.) , while Strategic Hospitality Holding Limited (BVI) registered the establishment of SHR IBIS Pte., Ltd. (BVI) to provide shareholder loans to Viethan Hotel Corporation.

2.4.3 Information on the core property of the REIT

1) Pullman Jakarta Central Park, Indonesia Key highlights

Pullman Jakarta Central Park is the first and only five-star international hotel in West Jakarta. The hotel is conveniently located in the heart of metropolis West Jakarta, close to the Central Business District area. The hotel is located in the Podomoro City, a mixed-use large project, with an area of approximately 22 Hectare, consisting of 11 residential buildings, three department store and commercial projects, such as the Central Park Jakarta Department Store, the Neo Soho Project, with Central Department Store as a major lessee, two office buildings, and a five-star hotel.

The hotel is popular with business travelers and domestic tourists given its convenient location in the mixed-use project, surrounded by shops and facilities. The hotel is also strategically located approximately 25 minutes from Soekarno-Hatta International Airport, 30 minutes from the Central Business District, and is located nearby major universities and residential areas.

The hotel is uniquely positioned for conferences and local weddings given its ballroom is the second largest currently in Jakarta, and a total area of over 5 , 6 9 8 square meters for events, with a capacity to accommodate up to 8,000 guests. As a result, the hotel also has income from holding weddings, seminars, and exhibitions. The parking area of the project can also accommodate over 6,000 vehicles, sufficient for the customers visiting the hotel and the shopping center.

Furthermore, Pullman Jakarta Central Park may also benefit from the future development of the Jakarta Mass Rapid Transit system ("MRT") – the government has initiated the construction of the MRT, whereby the North-South line has officially operated in 24 March 2019 and the East-West line is expected to begin construct in 2 0 2 5 . The MRT station will be located approximately 5 0 0 meters from the hotel, which provides additional convenience to various attractions around Jakarta.

Currently, there are no other five-star international hotels in West Jakarta. However, other five-star international hotels in Jakarta comparable to Pullman Jakarta Central Park include JW Marriot Jakarta, InterContinental Jakarta, Indonesia Kempinski Jakarta, and Grand Hyatt Jakarta.


27


-25-

General information on the Property - Pullman Jakarta Central Park

Details

Nature of property to be invested in by the REIT

Type of ownership of land Freehold (HGB Title. Under Indonesian law, HGB has a term, which will expire on 9 June 2037. After the end of the extended term, the REIT Manager expects that it will be able to renew the HGB Title for another 30 years and extend for another 20 years. However, the terms are not clearly prescribed in Indonesian law, and there has been no previous case of such renewal and extension.

Type of ownership of the buildings and moveable assets

- Freehold (Strata Title Certificate or HMSRS) HMSRS applies only to property located on land with HGB Title (HGB is a termed right under Indonesian law. The term of the HMSRS is consistent with the term of the HGB title.) - Freehold in moveable assets

Owner of the land (following REIT's investment in the properties)

PT SHR Pullman Indonesia (Indonesia)

Owner of the buildings and moveable assets

PT SHR Pullman Indonesia (Indonesia)

Management of the Property Accor Location Podomoro City Jl. Let. Jend. S. Parman Kav. 28,

11470 West Jakarta, Indonesia Access of the Property The road in front of the hotel is within the Pomodoro

City Project, held by an associated company of PT Agung Pomodoro Land TBK, and shared between several properties located within the same complex as Pullman Jakarta Central Park. However, the Master Lessor has entered into an agreement with the owner of the entrance to secure the use of the entrance. The main road connected to the access of Podomoro City is Jalan Let. Jend. S. Parman.

Particulars of the land 25 HMSRS / Strata Title certificates. Land area 25,144.26 sq m

28


-26-

Details

Buildings a 102.8-meter building consisting of 12 floors, two basements, and a rooftop.

Year of operation 2012 (construction completed on 1 November 2011) Encumbrances on the land Used as the collateral for the REIT’s and/or its

subsidiaries’existing loan. General description of the property First and only five-star international hotel in West

Jakarta with total of 317 rooms In-room amenities High-speed Wi-Fi and Internet, contemporary art, Ipod

docking system, stylish furniture, espresso machine, LCD TV, in-room safe

Other services and amenities Executive lounge, business center, connectivity lounge, swimming pool, Zen garden, fitness and spa lounge, two restaurants and bars, Collage All Day Dining and Bunk Lobby Lounge, and conference and seminar rooms.

Utilities Electricity systems, emergency power systems, fire protection systems, automatic sprinkler systems, detection and fire alarm systems, elevators

Appraised value of the asset Appraised value of IDR 1,397,850 million (or approximately USD 100.56 million) appraised as of 31 December 2019 by KJPP Willson dan Rekan in Association with Knight Frank (by Knight Frank Chartered (Thailand) Company Limited)1

Remark: 1. Exchange rate as at 30 December 2019, IDR 13,901.01 to USD


29


-27-

MAP

Pullman Jakarta Central Park Overview

Map of Hotel’s Relative Distance to Surroundings


-27-

MAP




-27-

MAP




-27-

MAP




-28-

Room Information Pullman Jakarta Central Park consists of one building with 12 floors, two basements, and a

rooftop. The property contains 317 rooms, which can be categorized into four types as follows. Room Types

Room type Number Area (square meters)

Deluxe Rooms 195 32 6,240 Executive Deluxe Rooms 67 32 2,144 Executive Suites 54 68 3,672 Central Park Suites 1 135 135 Total 317 12,191

Customer Segmentation

For the 12-month period ending December 2019, the customers of the property can be categorized into groups as follows.

Customer Origin Percentage of Total Occupancy

1. Indonesia 34.76% 2. Asia (excluding Indonesia) 36.60% 3. Europe 2.19% 4. Middle East 2.56% 5. Oceanic countries (e.g. Australia and New Zealand) 2.23% 6. USA 1.64% 7. Other 20.03%

Details of the Management of the Hotel

Pullman Jakarta Central Park is managed by PT AAPC Indonesia, a hotel management company in the Accor group, under the hotel management agreement with the term of 15 years from 2011 to 2026. The parties can agree to extend the period of the agreement twice, five years each.

30


-28-

Room Information Pullman Jakarta Central Park consists of one building with 12 floors, two basements, and a

rooftop. The property contains 317 rooms, which can be categorized into four types as follows. Room Types

Room type Number Area (square meters)

Deluxe Rooms 195 32 6,240 Executive Deluxe Rooms 67 32 2,144 Executive Suites 54 68 3,672 Central Park Suites 1 135 135 Total 317 12,191


For the 12-month period ending December 2019, the customers of the property can be categorized into groups as follows.

Customer Origin Percentage of Total Occupancy

1. Indonesia 34.76% 2. Asia (excluding Indonesia) 36.60% 3. Europe 2.19% 4. Middle East 2.56% 5. Oceanic countries (e.g. Australia and New Zealand) 2.23% 6. USA 1.64% 7. Other 20.03%

Details of the Management of the Hotel

Pullman Jakarta Central Park is managed by PT AAPC Indonesia, a hotel management company in the Accor group, under the hotel management agreement with the term of 15 years from 2011 to 2026. The parties can agree to extend the period of the agreement twice, five years each.


-29-

Restriction on the Use of the Property

With respect to Pullman Jakarta Central Park, the land on which the property is located is subject to the Spatial Plan (Rencana Tata Ruang Wilayah) of the relevant area, which is town planning restricting the types of "commercial and commercial support area." In this area, a hotel may be built with a maximum of 24 floors. To build a new or additional construction, the conditions specified by law must be fulfilled. However, as the construction of Pullman Jakarta Central Park is complete and the hotel has received the required license related to construction and opened for business, there are no restrictions on construction of the properties in which the REIT will invest.

With respect to the entrance, exit, and the parking area of Pullman Jakarta Central Park, the

investment of REIT will not include the entrance, exit, and the parking area. This is because Pullman Jakarta Central Park is located in and a part of Central Park Pomodoro City, of which the entrance, exit, and parking area are owned by PT Central Prima Kelola, a group company of Agung Podomoro Land Tbk. assigned to manage the Central Park Podomoro City Project, and shared among other properties located in the Central Park Podomoro City Project. An agreement has been entered to secure the use of the shared facility, with a perpetual term until the parties agree to terminate the agreement. Under the agreement, the fees for using the accessare included in other services in the amount of IDR 5,000 per month (including VAT), calculated based on the area of Pullman Jakarta Central Park (unlike Thailand, there is no real right such as servitude under Indonesian law). After the REIT has invested in the property, the Master Lessor (PT SHR Pullman Indonesia) will enter into an agreement with a relevant party which owns the entrance, exit, and parking area, to ensure that the Master Lessor and the hotel customers can use the entrance, exit, and parking area of the hotel without obstruction. After PT SHR Pullman Indonesia, the Master Lessor, enters into the agreement with the project owner, and if the agreement is signed by an authorized person of both parties and is made in local language, Hadiputranto, Hadinoto & Partners (a group company of Baker & McKenzie in Indonesia), as the legal advisor, is of the opinion that the agreement would be binding and enforceable between the parties.

Currently, the parking area of Central Park Podomoro City has a capacity of 6,000 vehicles, which

can accommodate the customers of the department store and hotel even though the REIT will not invest in the parking area for hotel customers. This is because the parking area is the property of PT Central Prima Kelola. The hotel customers or guests can use the parking area of Central Park Podomoro City under such service agreement. The service agreement clearly states that guests of Pullman Jakarta Central Park may use the parking area, and that PT Central Prima Kelola will manage and take care of the area and provide service to the hotel customers. The hotel has the right to use the parking area for the first 20 vehicles free of charge. If the use exceeds that maximum number, the hotel will be responsible for the


31


-29-

Restriction on the Use of the Property

With respect to Pullman Jakarta Central Park, the land on which the property is located is subject to the Spatial Plan (Rencana Tata Ruang Wilayah) of the relevant area, which is town planning restricting the types of "commercial and commercial support area." In this area, a hotel may be built with a maximum of 24 floors. To build a new or additional construction, the conditions specified by law must be fulfilled. However, as the construction of Pullman Jakarta Central Park is complete and the hotel has received the required license related to construction and opened for business, there are no restrictions on construction of the properties in which the REIT will invest.

With respect to the entrance, exit, and the parking area of Pullman Jakarta Central Park, the

investment of REIT will not include the entrance, exit, and the parking area. This is because Pullman Jakarta Central Park is located in and a part of Central Park Pomodoro City, of which the entrance, exit, and parking area are owned by PT Central Prima Kelola, a group company of Agung Podomoro Land Tbk. assigned to manage the Central Park Podomoro City Project, and shared among other properties located in the Central Park Podomoro City Project. An agreement has been entered to secure the use of the shared facility, with a perpetual term until the parties agree to terminate the agreement. Under the agreement, the fees for using the accessare included in other services in the amount of IDR 5,000 per month (including VAT), calculated based on the area of Pullman Jakarta Central Park (unlike Thailand, there is no real right such as servitude under Indonesian law). After the REIT has invested in the property, the Master Lessor (PT SHR Pullman Indonesia) will enter into an agreement with a relevant party which owns the entrance, exit, and parking area, to ensure that the Master Lessor and the hotel customers can use the entrance, exit, and parking area of the hotel without obstruction. After PT SHR Pullman Indonesia, the Master Lessor, enters into the agreement with the project owner, and if the agreement is signed by an authorized person of both parties and is made in local language, Hadiputranto, Hadinoto & Partners (a group company of Baker & McKenzie in Indonesia), as the legal advisor, is of the opinion that the agreement would be binding and enforceable between the parties.

Currently, the parking area of Central Park Podomoro City has a capacity of 6,000 vehicles, which

can accommodate the customers of the department store and hotel even though the REIT will not invest in the parking area for hotel customers. This is because the parking area is the property of PT Central Prima Kelola. The hotel customers or guests can use the parking area of Central Park Podomoro City under such service agreement. The service agreement clearly states that guests of Pullman Jakarta Central Park may use the parking area, and that PT Central Prima Kelola will manage and take care of the area and provide service to the hotel customers. The hotel has the right to use the parking area for the first 20 vehicles free of charge. If the use exceeds that maximum number, the hotel will be responsible for the


-30-

vehicles of the hotel customers at IDR 10,000 per vehicle per day. The hotel customers will not be charged for the parking fees in some cases, if a person using the parking lot has a stamp of the hotel for exemption of parking fee, for example, preventing the hotel from charging the guest with parking fees, which depends on the hotel management policy.

Title to the assets of Pullman Jakarta Central Park is in the form of Strata Title Certificate or

HMSRS. The HMSRS must exist on a land with HGB Title (HGB title is a termed ownership under Indonesian law). The term of the HMSRS will be consistent with the term of the HGB Title of Pullman Jakarta Central Park, which will expire on 17 March 2026 and has been extended until 9 June 2037. The HGB under Indonesian law has an initial term of 30 years. A licensee is entitled to apply for an extension of not exceeding 20 years. PT Agung Podomoro Land Tbk., the Vendor Company, filed an application to the Land Department and received an approval for the extension of the HGB Title on 17 May 2018. However, upon the approval for the extension of the term of the HGB Title, a tariff will have to be paid to the relevant authority within the specified time period, otherwise the extension will not be deemed complete. Once the tariff has been paid to the relevant authority, the extended term will commence on the day of payment of the tariff to the relevant agencies, regardless of the remaining period of the current term.

The HGB Title under Indonesian law has an initial term of 30 years, and the certificate holder is

entitled to apply for an extension of no more than 20 years. When that term expires, the REIT Manager expects that the REIT, which is the holder of the certificate, will be entitled to apply for a renewal. It is expected that the certificate may be renewed for a term equivalent to the HGB initial term – that is, 30 years, with an extension of no more than 20 years. However, these terms are not clearly stipulated under Indonesian law, and there have been no examples of renewal and extension. For the renewal of HGB, the normal practice is that the relevant agencies will consider approving the extension or renewal of HGB within 2 years before the expiry of the HGB Title. However, the local legal counselors have seen a case where the extension or renewal of the HGB Title occurs before the 2-year period prior to the expiry of the term. The relevant agency will consider whether the use of land is in accordance with the conditions prescribed by law, e.g. whether the land has been used as per the prescribed objectives or conditions, and whether the terms have been complied with, and whether the use of land complies with the city zoning.

32


-30-

vehicles of the hotel customers at IDR 10,000 per vehicle per day. The hotel customers will not be charged for the parking fees in some cases, if a person using the parking lot has a stamp of the hotel for exemption of parking fee, for example, preventing the hotel from charging the guest with parking fees, which depends on the hotel management policy.

Title to the assets of Pullman Jakarta Central Park is in the form of Strata Title Certificate or

HMSRS. The HMSRS must exist on a land with HGB Title (HGB title is a termed ownership under Indonesian law). The term of the HMSRS will be consistent with the term of the HGB Title of Pullman Jakarta Central Park, which will expire on 17 March 2026 and has been extended until 9 June 2037. The HGB under Indonesian law has an initial term of 30 years. A licensee is entitled to apply for an extension of not exceeding 20 years. PT Agung Podomoro Land Tbk., the Vendor Company, filed an application to the Land Department and received an approval for the extension of the HGB Title on 17 May 2018. However, upon the approval for the extension of the term of the HGB Title, a tariff will have to be paid to the relevant authority within the specified time period, otherwise the extension will not be deemed complete. Once the tariff has been paid to the relevant authority, the extended term will commence on the day of payment of the tariff to the relevant agencies, regardless of the remaining period of the current term.

The HGB Title under Indonesian law has an initial term of 30 years, and the certificate holder is

entitled to apply for an extension of no more than 20 years. When that term expires, the REIT Manager expects that the REIT, which is the holder of the certificate, will be entitled to apply for a renewal. It is expected that the certificate may be renewed for a term equivalent to the HGB initial term – that is, 30 years, with an extension of no more than 20 years. However, these terms are not clearly stipulated under Indonesian law, and there have been no examples of renewal and extension. For the renewal of HGB, the normal practice is that the relevant agencies will consider approving the extension or renewal of HGB within 2 years before the expiry of the HGB Title. However, the local legal counselors have seen a case where the extension or renewal of the HGB Title occurs before the 2-year period prior to the expiry of the term. The relevant agency will consider whether the use of land is in accordance with the conditions prescribed by law, e.g. whether the land has been used as per the prescribed objectives or conditions, and whether the terms have been complied with, and whether the use of land complies with the city zoning.


-31-

To apply for extension or renewal of the HGB license, the applicant must pay the tariff prescribed by the Indonesian government, currently under Government Regulation No. 13 of 2010 on Types and Tariffs for the Applicable Non-Tax State Income at the National Land Office), which will be calculated based on the following formula:

Tariff = (0.2% x land value1) + IDR 100,000

For the current status of HGB of Pullman Jakarta Central Park, PT Agung Podomoro Land Tbk,

as the holder of HMSRS right situated on an HGB right before the REIT’s investment, has applied for an extension to the land office and obtained approval for extension of the HGB on 17 May 2017. However, after the extension of HGB is approved, the tariff for the extension must be paid to the relevant authority within the prescribed period, which is when the extension will be deemed completed. If the payment of tariff is made to the relevant authority, the HGB term that is extended will commence on the date of payment of tariff to the relevant authority without factoring in the HGB remaining term prior to the extension. Currently the tariff was already paid and the HGB has been extended to 9 June 2037.

1 "Land value" will be determined using the appraised price of the land by the Land Department, and as determined in accordance with the Land Value Zone Map. If the land value of a zone has not been prescribed, the Land Department will appraise the price of such land by reflecting the current value of the appraised price, or known as the sales value of taxable object (NJOP).


-31-

To apply for extension or renewal of the HGB license, the applicant must pay the tariff prescribed by the Indonesian government, currently under Government Regulation No. 13 of 2010 on Types and Tariffs for the Applicable Non-Tax State Income at the National Land Office), which will be calculated based on the following formula:

Tariff = (0.2% x land value1) + IDR 100,000

For the current status of HGB of Pullman Jakarta Central Park, PT Agung Podomoro Land Tbk,

as the holder of HMSRS right situated on an HGB right before the REIT’s investment, has applied for an extension to the land office and obtained approval for extension of the HGB on 17 May 2017. However, after the extension of HGB is approved, the tariff for the extension must be paid to the relevant authority within the prescribed period, which is when the extension will be deemed completed. If the payment of tariff is made to the relevant authority, the HGB term that is extended will commence on the date of payment of tariff to the relevant authority without factoring in the HGB remaining term prior to the extension. Currently the tariff was already paid and the HGB has been extended to 9 June 2037.

1 "Land value" will be determined using the appraised price of the land by the Land Department, and as determined in accordance with the Land Value Zone Map. If the land value of a zone has not been prescribed, the Land Department will appraise the price of such land by reflecting the current value of the appraised price, or known as the sales value of taxable object (NJOP).


33


-32-

2) Capri by Fraser, Vietnam

Key Highlights

Capri by Fraser, set on an area of 1 rai and 27.25 square wah (or 1,709 square meters), with 175 rooms, is a fusion hotel and serviced apartment. The hotel is designed in a modern and clean setting with complete in-room facilities including a kitchen, to cater to business and leisure customers, and Internet-connected travelers. The unique long-stay and short-stay configuration provides the security of longer-term income associated with long stays, but with the pricing growth associated with short-term stays.

Located in the center of Phu My Hung, a new urban area in Ho Chi Minh City, the hotel provides easy access to nearby business districts neighboring HCMC's port, global corporate offices, shopping malls, international schools, and a wide range of local dining options.

The hotel is located less than 100 meters away from HCMC's largest and newest convention center, the Saigon Exhibition and Convention Centre (SECC). The SECC is HCMC's only convention center of international standard. It hosted 68 and 65 regular conventions in 2018 and 2019, respectively. Capri by Fraser and the neighboring IBIS Saigon South regularly attract business people and organizers of exhibitions and conventions. There are no other hotels in HCMC District 7 that are comparable to Capri by Fraser. This hotel is managed by management of international standards. Neighboring hotels are managed by local management teams. General Information on the Property

Details

Nature of Property to be invested in by the REIT

Type of ownership of land Sub-leasehold (sublease from Phu My Hung Development LLC, of which the term will expire on 19 May 2043).

Type of ownership of the buildings and moveable assets

Freehold. When the land lease term is terminated without an extension of the agreement, the ownership will return to Phu My Hung Development LLC, the sub-lessor.

Owner of the land (following the REIT's investment in the Properties)

Luxel APT Co., Ltd.

34


-33-

Details

Owner of the buildings and moveable assets

Luxel APT Co., Ltd.

Management of the Property Frasers Hospitality

Location 2 Street C, Tan Phu Ward, District 7, Lot A, New Urban South City, Ho Chi Minh City, Vietnam.

Access of the Property The hotel connects to Street C, which is public road that is 16 meters wide, with 10 meters of road surface width.

Particulars of the land Land Use Right Certificate, Certificate of House Ownership, And Ownership of Other Properties Associated With Land (for Land) No. BD866719, dated 15 February 2011, and its amendment, dated 7 November 2011, by Ho Chi Minh City People’s Committee.

Land Use Right Certificate, Certificate of House Ownership, And Ownership of Other Property Associated With Land (for Building) No. CA209609, dated 11 August 2015, and its amendment, dated 11 August 2015, by Ho Chi Minh City Department of Natural Resources and the Environment.

Land area 1,709 square meters

Buildings Consisting of a serviced apartment building with ancillary facilities including restaurants, meeting rooms, gym, and convenience store.

Year of operation 12 March 2013

Encumbrances on the land -None-

General description of the Property Four-star hotel in HCMC with 175 rooms.

In-room amenities Well-equipped kitchenette, LCD TV, air-conditioning, in-room safe, standing shower, hairdryer, iron and ironing board, and free Wi-Fi.


35


-34-

Details

Other services and amenities Gym, sauna and locker room, reception, business center, hot spot lounge with workstations, parking space, airport shuttle service, laundry service, and four units of retail space.

Utilities Air-conditioning, elevator, electricity, water supply, telephone, sewerage, and drainage.

Appraised value Appraised value of USD 23.70 million, appraised as of 31 December 2019 by Savills (Thailand) Limited (by Nexus Property Consultants Company Limited)

Map

Capri by Fraser overview

Map of relative distance to surroundings


-34-

Details




Map




-34-

Details




Map




-34-

Details




Map




-27-

MAP



36


-35-

Room Information

Capri by Fraser contains 175 rooms, which can be categorized into four types: Room Type

Room Type Room Number Average Area per Room (Sq.m.) Studio Deluxe 92 26 One Bedroom Superior 27 43 One Bedroom Deluxe 51 53 Two Bedroom Executive 5 69 Total 175 6,601


For the 12-month period ending December 2019, the customers of the Property can be categorized based on origin:

Customer Origin Percentage of Total Occupancy 1. South Korea 33.09% 2. Asia (Except South Korea, Japan and Taiwan) 27.26% 3. Taiwan 8.73% 4. Japan 7.08% 5. America 3.64% 6. Canada 2.48% 7. Australia 1.73% 8. Others 16.00%

For the twelve-month period ending December 2019, the customers of the Property can be categorized based on purpose of the visit:

Purpose Percentage of Total Occupancy

1. Corporate customers 50.14%

2. Leisure customers 49.86%

Duration of Stay Percentage of Total Occupancy

1. Long-stay 22.25%

2. Short-stay 77.75%


37


-36-

Details of the Management of the Hotel Capri by Fraser is managed by Frasers Hospitality Pte. Ltd., which is a hotel management

company under Frasers group. This is in accordance with the hotel management agreement with Frasers, which has a term of 10 years from 2013 to 2023. Currently, the Master Lessee of Capri by Fraser is Strategic Hospitality Services Co., Ltd. which is the party in the hotel management agreement by virtue of the deed of novation dated 22 December 2017, entered into between (i) Luxel APT Company Limited (ii) Strategic Hospitality Services Co., Ltd. and (iii) Frasers Hospitality Pte Ltd. Restrictions on Use of the Property

Currently, the area in which the Property is situated is subject to Law No. 63/2006/QH11 on the Real Estate Business, which prescribes that any building construction, modification, or correction must obtain approval from the local authority.

The plot of land on which Capri by Fraser is located is under the land lease agreement between Phu My Hung Development LLC (land lessor) and Luxel APT Co., Ltd. (land lessee), at 2 Street C, Block A, Sai Gon South, Tan Phu Ward, District 7. The land lease expires on 19 May 2043, and renewal requires consent from the lessor.

Luxel APT Co., Ltd. has ownership of the buildings and structures.

38


-37-

3) IBIS Saigon South, Vietnam Key Highlights

IBIS Saigon South is located on an area of 234 square wah (or 936 square meters), consisting of 140 available rooms. IBIS Saigon South is located next to Capri by Fraser. The hotel is operated by Accor Group. It is opposite the Saigon Exhibition and Convention Center (SECC) and only 30 minutes by car from the city center. This is an affordable international hotel. International offices, hospitals, medical centers, and shopping malls are all within walking distance.

The hotel earns from corporate customers, whose numbers increase during exhibitions or important conferences, and from group tours from China, Hong Kong, Korea, and Europe, including crews from Europe. The organization that operates the SECC also plans to extend the center's size, in order to host more conferences.

There is no other hotel of the same standard in District 7 of Ho Chi Minh City, or which is comparable to IBIS Saigon South, which is operated by a world-class hotel group. Hotels near the IBIS Saigon South are run by local management, with the exception of Capri by Fraser. However, both hotels have different target markets. Capri by Fraser targets corporate customers, while IBIS Saigon South targets leisure travelers.


39


-38-

General Information on the Properties

Details

Nature of asset to be invested in by the REIT

Type of land investment Subleasehold (from Phu My Hung Development Limited Liability Company; the subleasehold period ends on 19 May 2043)

Type of building and immovable asset investment

Ownership. However, after the subleasehold period ends and if there is no extension of the contract, the ownership will return to the sublessor: Phu My Hung Development Limited Liability Company

Holder of subleasehold Viethan Hotel Corporation

Owner of the buildings and the movable assets Viethan Hotel Corporation

Management Accor

Location 77 Hong Van Thai Street, Tan Phu Ward, District 7, Lot A, New Urban South City, HCMC, Vietnam

Access of the property The hotel is connected to Hong Van Thai public street which is 20 meters in width. The road surface is 12 meters in width.

Particulars of the land - Certificate of Land Use, Certificate of Ownership in the Building and other Land-related Properties (for buildings), No. CA209336, dated 17 June 2015, issued by Ho Chi Minh City Department of Natural Resources and Environment. - Certificate of Ownership in the Building and other Land-related Properties (for buildings), No. BD866719, dated 15 February 2011 and the amended agreement, dated 7 November 2011, issued by Ho Chi Minh City People's Committee.

Land area 936 sq m

40


-39-

Details

Nature of asset to be invested in by the REIT

Buildings Consisting of one main building, with additional facilities including restaurants, conference rooms and public areas.

First year of operation 21 June 2012

Encumbrances on the land -None-

General description of the property A three-star hotel located in HCMC with 140 rooms.1

In-room amenities Air conditioning, safety box, telephone system, Wi-Fi, coffee and tea maker.

Other services and amenities Car park, accessibility, sport facilities, business center, sauna, jacuzzi and one unit of rental space for restaurants.

Utilities Air conditioning system, elevator, electric system, waterworks, waste disposal system, and drainage system.

Appraised value Appraised value is USD 14.70, as appraised on 31 December 2019 by Savills (Thailand) Limited (by Nexus Property Consultants Company Limited)

Remark: 1. (1) Currently, 140 guest rooms are in operation. The hotel plans to renovate for additional 20rooms in the future,subject to the market conditions and the study on the appropriate room type for the target customers.


41


-40-

Map

IBIS Saigon South Overview



-40-

Map




-40-

Map




-40-

Map




-27-

MAP




-41-

Room Information IBIS Saigon South consists of one building with 13 floors. The hotel had 140 rooms of one type

only.

Remark: Currently 140 guest rooms are in operation. The hotel plans to renovate for additional 20rooms in the future, subject to the market conditions and the study on the appropriate room type for the target customers.

Customer segmentation For the twelve-month period ending December 2019, customers of the property were categorized as follows:

Customer Origin Percentage of Total Occupancy 1. Asia (excluding China, South Korea, and Vietnam) 42.38% 2. South Korea 18.99% 3. China 14.76% 4. Vietnam 8.64% 5. Europe 6.47% 6. USA 4.07% 7. Others 2.09%

For the nine-month period ending September 2019, , customers of the property were categorized

by their objectives for staying, as follows:

Objectives of the Stay Percentage of Total Occupancy 1. Corporate 61% 2. Leisure 39%

Guest Room Details Room Type Number of Rooms Average Area (Square Meters)

Standard Room 140 18 Total 140 2,520

42


-41-

Room Information IBIS Saigon South consists of one building with 13 floors. The hotel had 140 rooms of one type

only.

Remark: Currently 140 guest rooms are in operation. The hotel plans to renovate for additional 20rooms in the future, subject to the market conditions and the study on the appropriate room type for the target customers.

Customer segmentation For the twelve-month period ending December 2019, customers of the property were categorized as follows:

Customer Origin Percentage of Total Occupancy 1. Asia (excluding China, South Korea, and Vietnam) 42.38% 2. South Korea 18.99% 3. China 14.76% 4. Vietnam 8.64% 5. Europe 6.47% 6. USA 4.07% 7. Others 2.09%

For the nine-month period ending September 2019, , customers of the property were categorized

by their objectives for staying, as follows:

Objectives of the Stay Percentage of Total Occupancy 1. Corporate 61% 2. Leisure 39%

Guest Room Details Room Type Number of Rooms Average Area (Square Meters)

Standard Room 140 18 Total 140 2,520


-42-

Details of the Management of the Hotel IBIS Saigon South is managed by AAPC Thailand Ltd. which is a hotel management company

under Accor. This is in accordance with the hotel management agreement, which has a term of 15 years from 2012 to 2027. Currently, the Master Lessee of Capri by Fraser is Strategic Hospitality Services Co., Ltd. which is the party in the hotel management agreement by virtue of the deed of novation dated 22 December 2017, entered into between (i) Viethan Hotel Co., Ltd. (ii) Strategic Hospitality Services Co., Ltd. and (iii) AAPC Thailand Ltd.

Restrictions on the Use of Property

The asset's location is currently under Law No.63/2006/QH11 on Real Estate Business which regulates the construction and modification of buildings in Vietnam; any building construction and modification must be approved by local authorities.

Moreover, IBIS Saigon South's land is under sublease contract between Phu My Hung Development Limited Liability Company (the Sublessor) and Viethan Hotel Corporation (Sublessee). The land is located at 73 Hong Van Thai Street, Lot A, South Saigon, Tan Phu Ward, District 7. The sublease contract ends on 19 May 2043 and extending the contract needs the sublessor's approval and consent.

Viethan Hotel Corporation is the owner of the buildings and the structures.


43


-42-

Details of the Management of the Hotel IBIS Saigon South is managed by AAPC Thailand Ltd. which is a hotel management company

under Accor. This is in accordance with the hotel management agreement, which has a term of 15 years from 2012 to 2027. Currently, the Master Lessee of Capri by Fraser is Strategic Hospitality Services Co., Ltd. which is the party in the hotel management agreement by virtue of the deed of novation dated 22 December 2017, entered into between (i) Viethan Hotel Co., Ltd. (ii) Strategic Hospitality Services Co., Ltd. and (iii) AAPC Thailand Ltd.

Restrictions on the Use of Property

The asset's location is currently under Law No.63/2006/QH11 on Real Estate Business which regulates the construction and modification of buildings in Vietnam; any building construction and modification must be approved by local authorities.

Moreover, IBIS Saigon South's land is under sublease contract between Phu My Hung Development Limited Liability Company (the Sublessor) and Viethan Hotel Corporation (Sublessee). The land is located at 73 Hong Van Thai Street, Lot A, South Saigon, Tan Phu Ward, District 7. The sublease contract ends on 19 May 2043 and extending the contract needs the sublessor's approval and consent.

Viethan Hotel Corporation is the owner of the buildings and the structures.


-43-

Details of Assets Valuation

Pullman Jakarta Central Park Capri By Fraser IBIS Saigon South

Valuation Approach Income Approach Income Approach Income Approach Type of asset Freehold Leasehold approximately 25

years Leasehold approximately 25 years

Date of valuation 31 December 2019 31 December 2019 31 December 2019 Valuation Value 1,397,850,000,000 IDR 23,700,000 USD 14,700,000 USD Assumptions Room Revenue Approximately 57.7 Percent of

Total revenue Approximately 89.5 Percent of Total revenue

Approximately 84.5 Percent of Total revenue

ADR 1,530,215 IDR on the year 2020 66 USD on the year 2020 50 USD on the year 2020 Occupancy Rete Approximately 78.0 on the year

2020 Approximately 71.5 on the year 2020

Approximately 60 on the year 2020

Food and Beverage revenue

Approximately 70.1 Percent of total revenue



Other direct operating revenue




Room Expenses Approximately 17.0 Percent of room revenue

Approximately 10.5 Percent of room revenue

Approximately 14.0 Percent of room revenue

Food and beverage expenses

Approximately 48.0 Percent of food and beverage revenue



Other direct operating expenses

Approximately 415.7 Percent of other incomes from operation



Undistributed operating expenses




Base fee 1.75 Percent of total revenue 2.1 Percent of total revenue 2.0 Percent of total revenue Incentive Fee 6.5 percent of GOP 6.3 percent of GOP 8.0 percent of GOP Discount Rate 11.99% 10% 10%

44


-44-

2.4.3 Assets which is Projects Not Completed -None- 2.4.4 Assets which REIT’s Cannot Indirect Investing Through Holding Share and Voting

With 99 Percents -None- 2.4.5 Details of Major Assets Acquisition in This Year

-None- 2.4.6 Details of Major Assets Disposal in This Year

-None- 2.5 The Benefit Procurement from the Properties

The REIT's initial investment in the Properties is the investment to create stable return to the Unitholders and for the Unitholders to achieve sustainable distributions per Unit and net asset value (NAV) , while maintaining an appropriate capital structure. The BVI Holding Company has a policy to invest in a diversified portfolio of income-generating real estate located in the ASEAN with an initial focus on the Mekong region and Indonesia, which is used primarily for hospitality and/ or hospitality-related purposes, whether wholly or partially, as well as real estate-related assets in connection to the foregoing. Through the Master Lessors, the investment will be made by way of purchase, lease, sub-lease and/or acceptance of the transfer of leasehold rights and/or sub-leasehold rights in the Properties, as well as improvement modification, development and/or transfer of other properties. After the REIT's investment, the REIT shall procure the benefit from assets by way of leasing the Properties to the Master Lessee and take other necessary actions for the benefit of the REIT, with the aim to generate income and returns for the REIT and all Unitholders.

2.5.1 Strategy of the Benefit Procurement from the Properties

The REIT Manager has the following strategy of the benefit procurement from the Properties: • The REIT Manager has the policy of appointing its representatives to be directors of each

of the Investment Companies. The REIT Manager will monitor the operating performance of the Investment Company in each quarter and compare with the annual budget and the past operating results (if any). If the operating performance of any of the Investment Companies misses the target, the REIT Manager will analyse the issues and develop operating plan in order to achieve the target.

• After the REIT's investment, the Properties will be leased by the Master Lessors to the Master Lessees with the lease period of 3 years each. The REIT will receive both fixed and variable rental from the Master Lessees as set out in the summary of agreement and material agreements relevant to the Properties which the REIT Manager is of the view that the rental rate is appropriate.


45


-45-

• For the initial investment, the REIT manager will control Master Lessees to comply with the term and conditions of the lease through the Master lease agreement.

• In the event that there is a change in Master Lessee of the Properties, this may affect the change in terms and conditions of the lease agreement, including fixed rental and variable rental.

• The REIT reserves the right to improve and modify the Properties to ensure that the Properties look modern and consistently meet the demand of the customers to continually attract the customers to come use the services.

• In the event that the Master Lessee does not comply with the lease agreement which can cause the termination of lease agreement, the REIT shall proceed to procure new lessee, by setting the initial qualification which is evaluated based on experience in hotel business, financial position, system, credibility and business profile, to negotiation and propose conditions and details of the leased Properties in place of the previous Master Lessee.

2.5.2 Master Lease Agreement between Lessor and Lessee

1.) Indonesia asset : Pullman Jakarta Central Park

Lessor PT SHR Pullman Indonesia ( INDONESIA) , a company wholly owned by the REIT.

Lessee PT Central Persona Palace, with the ultimate shareholder being the same as REIT Manager's ultimate shareholder.

Leased Properties (a) Buildings including any construction situated within Pullman Jakarta Central Park ("Hotel Buildings"); and

(b) Component parts of the Hotel Buildings which are the common utilities system such as electrical system, water system, telephone system, elevator, escalator, air-conditioning, engineering system, as well as any amenities in relation to Hotel Buildings including any right with respect to the aforesaid assets.


Lease Period Lease term of 3 years from the effective date stipulated in this agreement ("Effective Date")

46


-46-


Upon the expiry of lease agreement, the parties agree that the lessee shall continue to lease the Leased Properties from the lessor for a period of 3 years each on an automatic renewal basis, and the renewal condition of the lease agreement shall terminate when the lessor no longer has qualities of being the owner of the Leased Properties. The calculation of fixed rent and variable rent shall be in accordance with the method stipulated in the agreement.

Renewal Method upon the Expiry of Lease Agreement

Upon the lease agreement being renewed:

1. The parties agree that the lease conditions, including the conditions withrespect to renewal of lease period, shall remain the same as are set out inthe first lease agreement.

2. In the event that the Leased Properties are located on the leasehold land,the parties agree that the renewal condition shall be effective no longerthan the effective term of the lease agreement of the land where the LeasedProperties are located on.

3. Apart from 1. and 2. above, if the lessor does not wish to continue thelease, the lessor shall inform the lessee in writing no less than 6 monthsprior to the expiry of the lease period pursuant to the lease agreement orthe renewed lease period.

In the event that there is a renewal pursuant to the agreement but the lessee encounters legal restriction or impossibility of performance due to lack of specified qualities which result in the termination of this agreement and/ or any cause other than with intention or gross negligence of the lessee that results in the lessee being unable to continue to lease the Leased Properties for the hotel operation, the lessee shall be deemed to have no obligation to continue leasing the Leased Properties.

However, in the event that there is a renewal as set out in 1. but the lessee encounters legal restriction or impossibility of performance, but can continue to lease the Leased Properties temporarily for the hotel operation until there is a new lessee to lease the Leased Properties, the lessor and the lessee shall mutually determine the conditions of the extended period. Nevertheless, the lease period shall not be extended longer than 180 days from the expiry of the lease period, and the lessee shall be deemed to have no obligation to continue leasing the Leased Properties.

Rental Payment 1. Unless there is a postponement of rental payment and exemption of rental

payment due to force majeure as stated in this agreement, the lessee


47


-47-

agrees to make the rental payment to the lessor in accordance with the terms and conditions of this agreement. The rental payment is as follows:

1.1 Fixed Rental

A Fixed rental = ( base rental with the exact amount being determined per annum or annual fixed rental of the preceding operating years, whatever is higher) + additional base rental per annum (if any),

B where:

C base rental with exact amount being determined is the amount set out in the section titled "base rental" below.

D additional base rental per annum = (a x b) – c

E where

F a = 67.00 percent

G b = Net Operating Income (NOI) per annum which shall be equivalent to Gross Operating Profit (GOP) of the Property deducted by the expenses in relation to the Properties not included as part of the GOP, namely

(i) hotel management fee paid to the hotel manager (base fee and incentive fee;

(ii) land and building rental;

(iii) insurance premiums;

(iv) property taxes;

(v) maintenance expense;

(vi) used FF&E reserve under the lessee's responsibility (if any);

(vii) operating expenses of the lessee; and (viii) other income and expenses which are not captured in the GOP.

c = base rental with exact amount being determined (as set out in the section titled " base rental" below) or the fixed rental per annum of the preceding operating years, whatever is higher.

In the event that the calculation of additional base rental per annum according to the formula above results in the additional base rental per annum of lower than zero, the lessee shall not use the result of that calculation in deriving the additional base rental for that particular year.

48


-48-

1.2 Variable Rental Variable rental = d - e - f where: d = Net Operating Income (NOI) (with details as set out above)

e = fixed rental of the relevant quarter

f = accrued rental payment which has been postponed due to force majeure (if any), as stated in the section titled "postponement of rental payment due to force majeure"

If the result of the calculation of variable rental according to the formula above is lower than zero, the variable rental shall be set at zero.

2. The lessee shall make the fixed rental payment for the portion equivalent

to the base rental set out above within 30 days from the end of the month

and/ or additional base rental per annum ( if any) within 45 days from the

end of the year, and variable rental for each quarter as set out above within

45 days from the end of the quarter, with reference to the financial

information in the management account. Therefore, in the event that the

lessee is not capable of making such rental payment in full, the payment

not received by the lessor shall be deemed as accrued rental revenue, and

the lessee shall make the payment of the accrued rental revenue within 30

days from the due date.

3. The lessee shall be entitled to accrue rental payment only once a year. If

it happens more than once, the lessee shall pay the default interest at the

rate of 15 percent per annum, calculated based on the accrued rental

revenue and the number of days from the due date until the payment is

made in full.

4. The fixed rental and/ or variable rental may be adjusted to comply with the

regulation of relevant Securities Laws, which includes in the event that the

proportion between the fixed rental and variable rental does not comply with

the relevant Securities Laws. The REIT and the lessee shall mutually

amend the terms and conditions of the fixed rental and/or variable rental to

be in compliance with the regulation under the relevant Securities Laws.


Base Rental Calculation



49


-49-

Postponement of Rental Payment due to Force Majeure

If any of the events below occurs during any quarter, the lessor agrees that the lessee can postpone the rental payment of the month that the event occurs, which shall not be deemed as breach of contract by the lessee. The lessor and the lessee shall mutually determine the time period that shall be affected by the particular event in writing.

1. If the force majeure has effect on the Leased Properties, either directly or on the neighboring area of the Leased Properties such as fire, flood and earthquake, and has material impact on hotel operation and results in average monthly RevPar of the hotel during that period being lower than the monthly RevPar of the same period of the preceding year (which is the normal period that the Leased Properties are not affected by such event) , at or greater than 20 percent but not exceeding 50 percent.

2. If the force majeure has material impact on the hotel operation and results in:

(a) monthly RevPar during that particular period of the hotel being lower than monthly RevPar during that particular period of the preceding year (which is the normal period that the Leased Properties are not affected by such event) , at or greater than 20 percent but not exceeding 50 percent; and

(b) monthly RevPar of the competitive set is lower than monthly RevPar during that particular period of the preceding year of the competitive set (which is the normal period that the Leased Properties are not affected by such event), at or greater than 15 percent.

If the Leased Properties were also affected by the force majeure during the particular period of the preceding year, the monthly RevPar of the hotel and monthly RevPar of competitive set (as applicable) during the particular period of the current year shall be compared with RevPar of the particular period of the most recent year that the Leased Properties were not affected by force majeure or any major renovation instead, for the purpose of comparison. (Remark: If the Leased Properties are impacted by force majeure during the second year and third year, monthly RevPar of the hotel and competitive set (as applicable) of the first year shall be used for comparison.)

Moreover, the lessee shall use its best effort and in good faith in deriving monthly RevPar of the competitive set, for the benefit of evaluating if the force majeure has occurred. In the event that monthly RevPar of the competitive set cannot be determined, the lessor and the lessee shall mutually agree to use other standardized information, criteria or ratio that are available in the ordinary

50


-50-

course of hotel business operation for the criteria in the evaluation instead. If the lessor and the lessee determine the competitive set of more than one hotel in calculating the RevPar, simple average of the RevPar will be used in the calculation for such competitive set.

Competitive Set is a set of hotels and/ or resorts (no less than 3 properties) which shall be determined by the parties from time to time to be the hotels and/or resorts with the most similar standards or grades as the Property of the REIT, by considering location, group of customers, hotel grade and size.

Payment of the Deferred Rental Payment due to Force Majeure

If the payment is postponed due to force majeure which occurs during any particular quarter, the lessee shall make the payment to the lessor in the following sequence:

• fixed rental for the month that force majeure does not take place, duringthe particular quarter

• variable rental for the month that force majeure does not take place, duringthe particular quarter (if any)

• fixed rental which has been deferred• variable rental which has been deferred (if any)

For the payment as stated above, the lessee agrees to make deferred rental payment in equal instalment on a quarterly basis according to the actual lease period up until the expiry of lease period pursuant to this agreement ( including the extended lease period) or the period that the parties mutually agree. The lessor agrees that the lessee shall not pay default interest for the failure to make any instalment payment or payment of damages due to deferred rental payment or delay in rental payment due to the postponement of rental payment as a result of force majeure.

Force majeure is the event which has the meaning has defined in this agreement and shall be elaborated later on.

Exemption of Rental Payment due to Force Majeure

If any of the following events occurs during any quarter, the lessor consents to exempt the rental payment to the lessee for the month that such event takes place during the quarter. The lessee is not liable to make rental payment for that particular period. The lessor and the lessee shall mutually determine the period which shall be impacted by that event in writing and the calculation of monthly rental payment which are not affected by such event in accordance with the calculation criteria set out in this agreement.

1. In the event of force majeure ( Force majeure are the events with themeaning as set out in the agreement which shall be elaborated later on)


51


-51-

that has effect on the Leased Properties, either directly or to the neighbouring area of the Leased Properties, which shall have material impact on hotel operation and causes monthly RevPar of the hotel during that period to be lower than monthly RevPar of the same period of the preceding year (which is the normal period that the Leased Properties are not affected by such event), at or greater than 50 percent.

2. If the force majeure has material impact on the hotel operation and results in:

(a) monthly RevPar during that particular period of the hotel being lower than monthly RevPar during that particular period of the preceding year (which is the normal period that the Leased Properties are not affected by such event), at or greater than 50 percent; and

(b) monthly RevPar of the competitive set is lower than monthly RevPar during that particular period of the preceding year of the competitive set (which is the normal period that the Leased Properties are not affected by such event), at or greater than 30 percent (if any).

If the Leased Properties were also affected by the force majeure during the particular period of the preceding year, the monthly RevPar of the hotel and monthly RevPar of competitive set (as applicable) during the particular period of the current year shall be compared with RevPar of the particular period of the most recent year that the Leased Properties were not affected by force majeure or any major renovation instead, for the purpose of comparison. (Remark: If the Leased Properties are impacted by force majeure during the second year and third year, monthly RevPar of the hotel and competitive set (as applicable) of the first year shall be used for comparison.)

Moreover, the lessee shall use its best effort and in good faith in deriving monthly RevPar of the competitive set, for the benefit of evaluating if the force majeure has occurred. In the event that monthly RevPar of the competitive set cannot be determined, the lessor and the lessee shall mutually agree to use other standardized information, criteria or ratio that are available in the ordinary course of hotel business operation for the criteria in the evaluation instead. If the lessor and the lessee determines the competitive set of more than one hotel in calculating the RevPar, simple average of the RevPar will be used in the calculation for such competitive set.

Lessor's Obligation 1. The lessor shall deliver the Leased Properties "as-is" as of the commencing date of the lease period. The lessor shall bear the expenses relevant to the investment in the properties, moveable assets, immoveable assets and/or

52


-52-

be responsible for the improvement or major renovation of the infrastructure or the major components of the buildings.

2. If the lessee wishes to reimburse the aforesaid expenses from the lessor, the lessee shall give prior written notice to the lessor for the lessor to consider and approve the reimbursement within the due date of the payment. The approval for reimbursement is upon the lessor's sole discretion, but the lessor shall not unreasonably disapprove the reimbursement.

3. The lessor shall not cause any infringement or act in any way that can or shall result in the lessee not being able to benefit from all or part of the Leased Properties.

Lessee's Obligation 1. The lessee shall use its best effort as hotel operator in ensuring that the Leased Properties are in good condition during the lease period.

2. To ensure that the Leased Properties are in good and appropriate conditions for usage in accordance with its purposes set out in this agreement, the lessee shall be responsible for maintaining and repairing (except the expenses related to investment in properties, moveable assets, immoveable assets and/ or improvement or major renovation of the infrastructure or the major components of the buildings which are the lessor's obligation) , or any action on the Leased Properties as necessary for the Leased Properties to operator the hotel business, by using furniture, fixtures and equipment reserves (FF&E reserves). If the FF&E reserves are not sufficient for the investment, the lessee shall be responsible for the remaining expenses which, if any, shall be part of the operating expenses in the budget approved by the lessor as set out in this agreement.

3. The lessee shall not engage or consent any person to engage in any action that is illegal or potentially hazardous to health, without permits under the relevant laws, or is offensive, or causes danger, damage or annoyance to third parties and lessor. And if the aforesaid problem or damage occurs, the lessee shall use its best effort to resolve the aforesaid problem or damage, including negotiating and alleviating the damages arisen from the aforesaid action to person(s) as set out above.

4. The lessee agrees not to create any liability or encumbrance except liability or encumbrance arising from the normal course of business of the lessee, or due to or for the purpose of the lease under this agreement and relevant business such as expenses from the operation of hotel business or to comply with this agreement or relevant agreement. The lessee agrees to


53


-53-

maintain debt to equity ratio of the lessee at the ratio of not greater than 2 to 1, which calculate only the liabilities that are loan from financial institutions or issuance of fixed income instrument, but shall not include loan from shareholder.

5. The lessee agrees to arrange for and maintain permits important for hotel operation during the lease period under this agreement.

6. The lessee shall not cause any encumbrance over the Leased Properties.

7. The lessee shall be responsible for and engage in any action to protect the lessor from any claim over the use of the Leased Properties for lessee's operation and/ or ignorance to complete its duty or obligation under this agreement, including the action taken by the lessee's representative and/or dependents. If the lessor is claimed or proceeded the legal action due to the aforesaid cause, the lessee shall immediately release the lessor's liability, and the expenses shall be borne solely by the lessee.

8. Certain important actions such as selling or transferring of the lessee's material business entirely or partially to third party, creating security over the lessee's assets including the assets used in hotel operation, leasing of more than 50 percent of the area of the Leased Properties to any one particular person. The lessee shall proceed the actions above only when (a) consented in writing by the lessor or (b) indicated in the hotel's annual operating budget or capital expenditure budget which has been approved by the lessor.

9. Other obligations under the lease agreement such as conducting and delivering financial report, operating budget and capitalized expense budget to the lessor.

Lessee's Undertaking • The lessee shall not operate any business other than hotel or related business that is for the REIT's business.

• The lessee shall not provide loan, security or financial support (or being creditor in other means than trade creditor) for the benefit of third party.

• The lessee agrees not to loan other than loan from shareholders for the purpose of rental payment or necessary operational support of the lessee.

• The lessee shall not engage in action that competes with the Core Property of the REIT.

Insurance 1. During the lease period, the lessee and the lessor shall procure the following insurance:

54


-54-

1.1 The lessor shall procure property all risks insurance, whereby the insurance premium shall be borne solely by the lessee during the lease period.

1.2 Business interruption insurance whereby the lessee acknowledges and agrees the insured amount under the business interruption insurance shall not be less than expected revenue from the Leased Property deducted by relevant operating expense (GOP) for the period of 2 years, not including rental payment under this lease agreement. The aforesaid insurance shall set out that the lessor and the lessee be co-beneficiaries. Upon receipt of compensation from the insurer, the lessor agrees to deduct fixed rental which the lessor is entitled to receive in proportion of the time period that the insurer uses as the base for calculation of the due compensation and shall immediately pass the remaining compensation to the lessee. After the lessee uses the compensation for the payment relevant to the business operation during such period of time and there is remaining compensation, the lessee shall pay such compensation to the lessor in proportion of the variable rental that the lessor is entitled to receive pursuant to the conditions in this agreement.

1.3 Public liabilities insurance for protection of body injuries, lives, and potential damages on the assets to third party.

These are under the insured amount, terms and conditions of the insurance policies that the lessor and the lessee mutually consent under hotel management agreement. Insurance premiums of the aforesaid insurances shall be borne solely by the lessee.

2. The lessee agrees to use its best effort to promptly coordinate in any necessary action to claim the insurer for the compensation.

Transfer of Leasehold Rights

1. During the lease period, the lessee shall not transfer the right and/ or obligation under this agreement, either in whole or in part, to any person without prior written consent from the lessor except the transfer of right and/ or obligation to lessee's Affiliated Company that has qualification and capability to perform under this agreement. If the lessor gives consent to the lessee to transfer right and/ or obligation under this agreement, the lessee shall procure that the transferee agrees to be bound by the conditions as set out in this agreement. The lease period transferred to the transferee shall be expressly determined and shall not be longer than the remaining period of the lessee under this agreement.


55


-55-

"Affiliated Company" means person or juristic person which (a) directly or indirectly controls the person or juristic person or (b) is under direct or indirect control of the person or juristic person. " Control" means having authority to control, determine or guide the management and policy of any person or juristic person, either directly or indirectly, and either as a result of its voting rights of greater than 45 percent of the registered and paid up shares of such person or juristic persons by contract or other means.

2. The lessor consents that the lessee shall sublease the area in the Leased Properties in accordance with the objectives of the lease set out in this agreement.

3. During the term of this agreement, the lessor shall not transfer right and/or obligation under this agreement, either in whole or in part, to any person without prior written consent from the lessee.

Taxes and Fees 1. The lessee shall be responsible for the payment of fees, stamp duties and other expenses in relation to the Leased Properties arisen under this agreement ( if any) during the lease period under this agreement and the extended lease period.

2. The lessee shall be responsible for relevant land and building taxes of the Leased Properties under the laws.

Termination of Agreement

This agreement may be terminated by any party of the agreement under any of the following events:

1. Breach of contract by the lessee

(a) If the lessee breaches or does not comply with material terms under this agreement or any representation given in this agreement which is material and the lessee fails to remedy within 60 days from the date that it is informed or acknowledges the cause of the breach or from the date mutually agreed by the parties, except the breach of contract or representation due to force majeure or any circumstance beyond control of the lessee. If the lessee fails to pay fixed rental and/ or variable rental, it shall be deemed as breach of contract only when the lessee defers the payment for longer than 30 days from the due date of the rental payment, unless the failure to make rental payment is due to circumstances other than the lessee's false, which the lessor and the lessee agree to extend the payment period.

56


-56-

(b) When there is any amendment, suspension or revocation of permits, certificates, consents or other benefits that the lessee is entitled to from any governmental authority, governmental officer, person or juristic person and that the lessee is required to obtain or use for the main operation of the lessee, and such cause cannot be resolved within lease period that the lessor and the lessee mutually agree, which may have material negative impact on the hotel operation.

(c) When the lessee faces legal proceeding or government order, or due to any other causes that have material negative impact on the lessee's performance pursuant to this agreement, or when the lessee's authority to operate the business has been changed or interrupted, or when assets or revenue of the lessee either in whole or in part are confiscated or appropriated which the lessor considers as having material negative impact on the lessee's performance pursuant to this agreement.

(d) If the lessee has a receiver/ administrator appointed, or is ordered bankrupted, or in the process of winding up, liquidating or filing a request to the court or relevant governmental authority to have a receiver/ administrator appointed, or any other similar process, which have material negative impact to the lessee's ability to make rental payment or perform under this agreement

(e) If the lessee ceases to operate the business, either in whole or in part, which prevents the lessee from benefiting from the Leased Properties and which have material negative impact to the hotel operation.

2. Breach of contract by the lessor

If the lessor breaches or does not comply with material terms under this agreement or representation given in this agreement which is material and the lessor fails to remedy within 60 days from the date that it is informed or acknowledges the cause of the breach or from the date mutually agreed by the parties, except the breach of contract or representation due to force majeure or any circumstance beyond control of the lessor.

3. If the lessor is no longer the owner of the Leased Properties, or the lessor is not entitled to use the Leased Properties (as applicable).


57


-57-

4. Upon the end of the lease period under this agreement and the lessor or the lessee does not agree to extend the lease period of this agreement under the terms and conditions with respect to the extension of lease agreement pursuant to this agreement.

5. When the Leased Properties are damaged or appropriated, either in whole or in part, which potentially prevents the lessee from using the Leased Properties for the purpose of hotel operation and any other business relevant to the aforesaid business.

6. If the Trustee enforces its right to terminate the REIT Manager Appointment Agreement in any case, the lessor shall have the right to terminate this agreement.


From the date that the REIT invests in the Properties, in the event that the lessee is not capable of paying fixed rental in full but the lessor's relevant shareholder has received the payment in full equivalent to the fixed rental amount that the lessor shall receive after deducting expenses from any of the following sources, this shall not be deemed as breach of rental agreement

1. The REIT and/ or company that the REIT invests in, either directly or indirectly, receives the net operating income (NOI) support from the Vendor Company (if any and as applicable).



Termination by the Lessor other than due to Lessee's False and Penalty

If the lessor enforces its right to terminate this agreement other than due to the lessee's breach of terms and conditions under this agreement, the lessor shall pay the lessee to compensate for the termination of this agreement that is not due to the lessee's false.

1. Penalty of USD 500,000

2. Related actual expenses that the lessee has to pay to other person(s) due to the termination of this agreement, which has to be direct related expenses to third party as a result of this agreement being terminated.

58


-58-

Consequence of Termination

1. When this agreement is terminated without extension, the lessee agrees to proceed as follows: 1.1 delivery of the Leased Properties to the lessor or the lessor's

designated person in the condition that is appropriate and suitable for usage in accordance with the purpose set out in this agreement;

1.2 payment of fixed rental and variable rental pursuant to guidelines set out in this agreement, calculated in proportion of the actual lease period to the lessor within 60 days from the date that the termination under this agreement is effective;

1.3 delivery of any benefit that the lessee receives in advance such as advanced rental payment and other revenues received in advance ( if any) , including deposits paid to the lessor or the lessor's designated person, where

(a) if the lessee receives the benefit after the termination of this agreement, the lessee agrees to deliver the benefits to the lessor or the lessor's designated person set out in this agreement, and

(b) if the lessor receives the benefit which is expected to be delivered to the lessee prior to the termination of this agreement, the lessor agrees to return such benefit to the lessee,

in the two cases above, the parties agree to deliver such benefits to the other party within 30 days after receipt of such benefit.

1.4 Provision of cooperation as necessary and appropriate, without compensation, to ensure the lessor's designated person can continue to operate in accordance with the laws and/ or as stipulated by other authorities within appropriate time after receipt of written request from the lessor, including providing support to the lessor or the lessor's designated person to transfer or to apply for permit to operate hotel business, or transferring of rights and obligations under any agreement. If the lessor is unable to find new lessee to lease the Leased Properties, the lessee agrees to continue leasing the Leased Properties for hotel operation under the lessor is able to find other lessee to lease


59


-59-

the Leased Properties. The aforesaid extended period shall not exceed 180 days from the end of lease period. However, the lessee shall have no obligation to continue leasing the Leased Properties during the aforesaid period if the extension of lease agreement due to any restriction or impossibility of performance.

2. In the event that this agreement is terminated, the parties shall not be deprived of rights to claim for expenses or damages that they are entitled to prior to the termination of agreement, expenses and damages arising due to termination of agreement and/ or damages as stipulated under the laws.

During the lease period under this agreement and any extended period, the lessor shall have no rights to terminate the lease agreement with the lessee if there is no breach of contract due to the lessee's false.

Leased Properties that are Damaged or Appropriated.

1. In the event that the Leased Property is appropriated or damaged, either in whole or in part, which is not due to false by any party to the agreement, which prevents the lessee from potentially using the Leased Properties for the hotel business operation, it shall be deemed that this agreement is terminated on the day that the Leased Properties are damaged or appropriated. Each party shall have no right to claim compensation, expenses, cash or other benefits from the other party, except compensation due to breach of contract prior to the termination of this agreement, or expenses or other benefit due or arising before the termination of this agreement.

2. In the event that the Leased Properties are partially damaged or appropriated, and the lessor and the lessee agrees that the Leased Properties being partially damaged or appropriated can continue to be used for hotel operation, it shall be deemed that this agreement shall continue to be effective only for the Leased Properties that are not damaged or appropriated and that it is still considered Leased Properties under this agreement. The parties shall mutually evaluate the appropriate adjustment to the rental rate and other terms of the agreement to be consistent with the Leased Properties which are partially damaged or appropriated.

Force Majeure 1. For the purpose of this agreement, in addition to the events as set out in this agreement, force majeure shall include the force majeure as defined in hotel management agreement that is effective during that particular time.

60


-60-

2. In the event of force majeure which prevents any party of this agreement from performing pursuant to this agreement, that party shall immediately inform the other party in writing of the force majeure. In such event, both parties are entitled to postpone the performance pursuant to this agreement for the period that force majeure lasts, whereby the lessor and the lessee shall mutually determine such time period and shall not be deemed as breach of contract by any of the parties. The parties of the agreement agree not to use force majeure as a claim to call for payment under this agreement, unless:

(a) If force majeure results in the Leased Properties being materially damaged to the extent that the lessee shall not be able to utilize the Leased Properties in accordance with the purpose of the lease during any particular period of time, the lessee shall have no obligation to make rental payment during that particular period of time that the lessee cannot utilize the Leased Properties; and/or

(b) In the event of the force majeure that the lessee can request for the postponement of the rental payment and exemption of rental payment due to force majeure as set out in this agreement respectively.

3. If force majeure as set out above is the cause that any party to this agreement is unable to perform pursuant to this agreement, or that any party to this agreement is unable to receive benefit as set out in this agreement, the parties agree to reconsider the conditions of this agreement in good faith for the parties to operate for the benefit of the parties and/or to return to the previous positions.


61


-61-

2.) Vietnam : Capri by Fraser Other than as set out in the table, the terms and conditions of the agreement granting

permission to use assets for operation of hotel business between Master Lessor and Master Lessee of Capri by Fraser shall be the same as terms and conditions of the lease agreement of Pullman Jakarta Central Park, with the change in the reference from Pullman Jakarta Central Park to Capri by Fraser.

Lessor Luxel APT Company Limited, a company wholly owned by the REIT through BBDM Singapore Pte Ltd.


Leased Properties (a) Buildings including any construction situated within Capri by Fraser ( " Hotel Buildings"); and

(b) Component parts of the Hotel Buildings which are the common utilities system such as electrical system, water system, telephone system, elevator, escalator, air- conditioning, engineering system, as well as any amenities in relation to Hotel Buildings including any right with respect to the aforesaid assets.








From the date that the REIT invests in the Properties, in the event that the lessee is not capable of paying fixed rental in full but the lessor's relevant shareholder has received the payment in full equivalent to the fixed rental amount that the

62


-62-

lessor shall receive after deducting expenses from any of the following sources, this shall not be deemed as breach of rental agreement




(3) Viewnam : IBIS Saigon South Other than as set out in the table, the terms and conditions of the agreement granting

permission to use assets for operation of hotel business between Master Lessor and Master Lessee of IBIS Saigon South shall be the same as terms and conditions of the lease agreement of Pullman Jakarta Central Park, with the change in the reference from Pullman Jakarta Central Park to IBIS Saigon South.

Lessor Viethan Hotel Corporation, a company wholly owned by the REIT through BBVN Singapore Pte Ltd.


Leased Properties (a) Buildings including any construction situated within IBIS Saigon South ("Hotel Buildings"); and

(c) Component parts of the Hotel Buildings which are the common utilities system such as electrical system, water system, telephone system, elevator, escalator, air- conditioning, engineering system, as well as any amenities in relation to Hotel Buildings including any right with respect to the aforesaid assets.



63


-63-



Base Rental USD 791,000 per annum, whereby the rental payment shall be made in local currency. The exchange rate is as mutually determined.




From the date that the REIT invests in the Properties, in the event that the lessee is not capable of paying fixed rental in full but the lessor's relevant shareholder has received the payment in full equivalent to the fixed rental amount that the lessor shall receive after deducting expenses from any of the following sources, this shall not be deemed as breach of rental agreement.




2.5.3 Details of Master Lessees and Relationship as Related Parties Master Lessee are 1) Strategic Hospitality Services Co., LTD which is located in Vietnam and

2) PT Central Persona Palace which is located in Indonesia, both are associated companies of the REIT Manager.

• Qualification and experiences of the Master Lessees

Master Lessees are subsidiaries of the major shareholder of the REIT Manager, which has different personnel from the personnel of the REIT Manager. In addition, personnel of the Master Lessees

64


-64-

shall have expertise in hotel business and has policy to general revenue from hotel property and hospitality by hiring reputable hotel operator with global standard and acceptable in the hotel industry to help with the management of the Properties.

• Relationship in terms of shareholding and business with the REIT Manager

Master Lessees are subsidiaries of Strategic Hospitality Services Pte Ltd (Singapore), whereby Strategic Hospitality Services Pte Ltd (Singapore) and the REIT Manager shall have the same ultimate shareholder. Strategic Hospitality Services Pte Ltd (Singapore) holds 100 percent ownership in PT Central Pesona Palace and Strategic Hospitality Services Co. Ltd. (Vietnam), which are the Master Lessees in Indonesia and Vietnam respectively.

• Operational Period

Master Lessees shall engage hotel operator for the business operation during the term of the Master Lease and could be extended per conditions as stipulated in the lease agreement.

• Opinion of the REIT Manager on the Ability of the Master Lessee in the Operation Pursuant to the Lease Agreement

REIT Manager shall perform its obligation through the Master Lessor which is the party to the agreement with the Master Lessee, by enforcing its right pursuant to the lease agreement in monitoring and ensuring that the Master Lessees comply with terms and conditions in the lease agreement. As the REIT Manager shall use its best effort to monitor and enforce the Master Lessees, it is confident that the Master Lessors shall have the ability to control the Master Lessee to comply with the requirement as set out in the lease agreement.

Non- compliance with the requirement and obligation as set out in the lease agreement by the Master Lessees may result in the termination of lease agreement and the Master Lessors shall be entitled to terminate the agreement and claim for compensation due to breach of agreement by the Master Lessees. The Master Lessors are entitled to procure new lessees to accept the leasehold right in the Properties in place of the Master Lessee and shall agree with the new party under the new lease agreement with terms and conditions that are beneficial to the Master Lessors.

• Mechanisms or Measures for Monitoring of the Master Lessee to Prevent Conflict of Interest between Master Lessee and the REIT

Even though the Master Lessees are direct related persons of the REIT Manager as the ultimate shareholder of the REIT Manager and the ultimate shareholder of the Master Lessees are the same. However, in procuring the lease agreement to procure benefits from the Core Properties of the REIT, the


65


-65-

REIT Manager shall use its best effort in negotiating the lease agreement and rental fee, including other terms and conditions in the lease agreement with the Master Lessees for the best interest of the REIT and Unitholders, on the principle that the Master Lessees and REIT Manager are the separate entities. The REIT Manager is of the view that the terms and conditions under the lease agreement that the Master Lessors shall enter into with the Master Lessee for the lease of the Core Properties during the REIT's initial investment shall be terms and conditions that are appropriate and consistent with conditions of the ordinary course of business when comparing to other business operations of the similar natures. Such lease agreement shall be reviewed by the Trustee to prevent the conflict of interest between the Master Lessees and the REIT. In the event that there shall be transaction between the REIT and Master Lessee, the REIT shall operate on the related party transaction between the REIT Manager and related party of the REIT Manager, as well as the REIT and Trustee and related party of the Trustee.

In the event that there is any conflict of interest between the REIT and Master Lessees after the REIT's establishment and from the entering into the lease agreement between the Master Lessor and Master Lessee, the REIT Manager shall ensure that the REIT Manager can monitor the Master Lessees for the best interest of the REIT, and shall engage in certain actions to control the Master Lessee. In the situation of the conflict of interest between the REIT and Master Lessees, the REIT Manager shall arrange for sufficient and appropriate measures to prevent conflict of interest and shall be under supervision of the Trustee to ensure the management of the REIT is in compliance with relevant law and regulations, including Trust Deed, REIT Manager Appointment Agreement and other relevant agreements, with the criteria and approach according to the law and regulations as set out in the agreement, and shall comply with the operational manual of the REIT Manager. In addition, in the event that the REIT shall enter into any action with the Master Lessee other than the lease agreement with key terms as disclosed in this registration statement, the REIT Manager shall have the obligation under the Trust Deed to ensure that such actions shall have the essence as set out, namely:

- Comply with Trust Deed and relevant regulations - For the best interest of the REIT - Appropriate and based on fair value - Expenses for entering into the transaction which shall be reimbursed from the REIT is

fair and appropriate, and - The person with the interest from entering into the transaction shall not be above to

make decision with respect to the entering into the transaction

In addition, in the event that the REIT shall enter into the transaction or any action with the Master Lessee other than as set out in the lease agreement and as disclosed in this registration statement, which may result in the change to the key terms of the lease agreement that have been disclosed in this registration statement such as

- Change in key terms of lease agreement between Master Lessee and Master Lessor

66


-66-

- Decision to proceed according to the rights under the agreement or under the law in the event of the breach of agreement and/or dispute

- Change in Master Lessee or termination of lease agreement

In any case as stated above, the REIT Manager which shall be the entity approved by the SEC Office to perform the duty as the REIT Manager of the REIT shall have obligations under Trust Act, relevant laws and regulation to perform duties according to the principle of business operation, by performing the obligation with responsibility, care, good faith, and shall fairly treat the Unitholders and for the benefit of the Unitholders as a whole, and shall perform its obligation in accordance with relevant laws and regulations relating to the entering into the related transaction between REIT and the REIT Manager of persons related to the REIT Manager, including Trust Deed and other relevant agreements. In addition, the REIT Manager shall perform its obligation with care to avoid conflict of interest. In the event that there is conflict of interest, the REIT Manager shall have duty to ensure that the investors are treated fairly and appropriately. The REIT Manager shall ensure that the management according to mechanisms or measures to monitor the Master Lessees as stated above shall be to prevent conflict of interest between the Master Lessee and the REIT and for the best interest of the REIT.

In addition, the actions of the REIT Manager shall be overseen by the Trustee, which is the juristic person approved to be the Trustee of the REIT. The Trustee shall have duty under the Trust Deed, laws and regulation to monitor, oversee and inspect the REIT Manager to ensure compliance with Trust Deed and relevant laws relating to the entering into the related transaction between REIT and the REIT Manager or persons related to the REIT Manager. 2.5.4 Hiring of Property Management

- None-

2.5.5 Performance of Master Lessees In the year 2019, Master Lessees can comply with the conditions in accordance with the Master Lease agreement and paid rental fee in local currency as follow :

Master Lessees PT Central Pesona Palace Strategic Hospitality Services Pte. Ltd. Hotel Pullman Jakarta Central Park Capri by Fraser IBIS Saigon South Currency IDR VND VND Fix Rent 80,340,818,184 32,173,264,380 16,046,060,604 Variable Rent - 7,169,622,913 1,943,193,906 Total 80,340,818,184 39,342,887,293 17,989,254,510

2.5.6 Rental Fee Income Guarantee

-None-


67


-67-

2.6 Loan

2.6.1 REIT’s Borrowing as of year end 2019

The REIT has entered a loan agreement of EUR 44,670,000 (approximately 1,724.43 million Baht) with an oversea financial institution for the purpose of using such loan for repaying the REIT's loans with a local financial institution existing from the date of the REIT's investment in the Properties. The loan has been drawn down all on 29 June 2018 and On 17 August 2018, the loan agreement was amended to increase the loan facility by EUR 1.5 million to support business expansion. On 20 August 2018 the loan has been drawn down EUR 1.165 million and there are EUR 0.8 was paid on 2 May 2019 as pre-payment. Terms and conditions of the loan are in accordance with the facility agreement details as below :

Summary of Key Terms in Loan Agreement

Lender Oversea financial institution who is not related to the REIT Manager and/or theTrustee Borrower Strategic Hospitality Holdings Limited, the REIT’s subsidiary with 100% shareholding Loan Balance as at 31 December 2019

Long-term loan facility EUR 45.02 mn.

Interest Rate Floating Rate - Euro Interbank Offered Rate 3 months (3M EURIBOR) : Year 1 3M EURIBOR plus 3.25% per annum Year 2 3M EURIBOR plus 3.75% per annum Year 3 3M EURIBOR plus 4.25% per annum

Term of Agreement 3 Years from draw down date and 1 more year conditional extend Principal Repayment 100% on final maturity date Payment of Interest Quarterly Collateral - Pledge of shares of some subsidiaries of the REIT

- Mortgage of assets in Indonesia - Transfer of rights to receive relevant benefits under the master agreement to the lender, namely loan agreement between company under the REIT's service agreement, lease agreement, asset management agreement, insurance agreement and/or endorsement of the insurance policy. - Guarantee provided by some subsidiaries of the REIT Other than the securities set out above, other terms and conditions related to securities for this loan shall be in accordance with loan agreement, security agreement and other relevant finance documents that the parties shall agree upon.

Key Terms - Total debt to total assets (Gearing Ratio) according to consolidated financial statement of the REIT shall not exceed 45 percent. - Secured loan to secured asset (Loan to Value Ratio) according to consolidated financial statement of the REIT shall not exceed 45 percent. - Interest cover ratio according to colsolidated financial statement of the REIT shall not be lower than 2.5 - No dividend payment can be made in the event of the default under the loan agreement.

Other Conditions -

68


-68-

2.6.2 Policy in Obtaining Future Loans and Creating Encumbrances to the REIT Assets Subject to a borrowing framework policy, the REIT may, at any time in the future, ask to borrow

money from the financial institutions, or issue instruments or securities, or enter into any loan agreement, or create an encumbrance on the REIT property for further investment in the additional assets for the Property, or renovation of the Property invested in by the REIT, or for other purposes that shall benefit the REIT business.

1. Objectives of obtaining loans

In managing the REIT, the REIT may obtain the loans, with or without collateral, and the REIT Manager may obtain the loans or change or create any encumbrance for managing the REIT and the REIT assets for the following purposes:

(1) To renovate or repair the REIT immovable property, or immovable property in which the REIT has leasehold rights or possessory right, in order for such property to be in good condition and ready for benefits procurement, including to change the image of that property;

(2) To renovate, repair or replace the movable property or equipment related to the REIT immovable property, or immovable property in which the REIT has leasehold rights or possessory rights, in order to be in good condition and ready for benefits procurement;

(3) To construct annexes or additional buildings on the existing land owned by the REIT or that the REIT has leasehold rights or possessory right for the purpose of benefits procurement of the REIT;

(4) To invest in additional immovable property or leasehold rights;

(5) To leverage the loans as the REIT's working capital or for guaranteeing the business operation of the REIT;

(6) To restructure or refinance;

(7) To hedge against the exchange rate risk and/or interest rate risk due to any borrowing or issuing of debt instruments; or

(8) To execute other matters deemed necessary by the REIT Manager for the REIT management where by the REIT Manager shall consider the necessity and appropriateness for the benefits of the REIT and Unitholders in which the REIT Manager shall notify the Trustee in advance. In case where there are other borrowings that shall have material affect on the encumbrance or financial position of the REIT, the REIT Manager shall seek for the Trustee approval and/or the resolution of Unitholders prior to the execution of such transaction.


69


-69-

Special conditions

The REIT may enter into a derivative agreement for the purpose of hedging against the exchange rate risk and/or interest rate risk arising from any borrowing, whether in whole or in part for example; the REIT may enter into a derivative agreement with a commercial bank as a counterparty in order to hedge against exchange rate risk.

2. Procedures for obtaining loans

The REIT may at any time determine the procedures of borrowing money or creating any encumbrance to the REIT property, in either one method or joint methods, including issuing any instruments or entering into agreements in whichever form that have meanings or the true substance relating to the borrowing of money as follows:

(1) borrowing money, applying for credit lines, over-drafting the accounts from juristic persons or other financial institutions, in domestic and international, as well as insurance company incorporated under the insurance governing laws. The REIT may consider giving a guarantee to secure such loans payment. The REIT may also enter into any futures contract or buy and sell of the derivative products in order to hedge against an exchange rate risk and/or interest rate risk arising from the borrowing whether in whole or in part, such as a Cross-Currency Swap or Interest Rate Swap; or

(2) issuing any short-term or long-term debt instrument and offer to both individual and institutional investors in accordance with the relevant notifications of the SEC or the SEC Office and the REIT may consider giving the collateral relating to the issuance thereof.

(3) For the benefit of the REIT and Unitholders, the REIT Manager shall take into account the necessity and justification for borrowing money, or any change and encumbrance on the REIT property, and the REIT Manager shall ensure such operations are in compliance with the rules and procedures for borrowing money without seeking any approval from Unitholders' meeting at the extent of no violation of law and breach of the Trust Deed. In case where the REIT places the assets as collateral for the loan repayment, including an increase in guarantee limit for those creditors with collateral, the REIT Manager shall ensure that such operation are in accordance with the REIT borrowing procedures as well as any encumbrance incurring to the REIT assets shall be in accordance with the Trust Deed and other relevant laws.

The Trustee shall be the person who has the authority to execute the loan agreement in order to change or incur any encumbrance on the REIT property, or the Trustee may assign the REIT Manager to execute such agreement on behalf of the Trustee.

70


-70-

3. Loan amount

The REIT borrowing is subject to limitations that the amount will not exceed any of the following ratios, unless such excess is not the result of an additional borrowing:

(1) 35 percent of the Total Asset Value of the REIT; or

(2) 60 percent of the Total Asset Value of the REIT in case where the REIT's crediting rating is in the investment-grade in which the latest update on the rating shall be rated by a credit rating agency approved by the SEC Office and within one year period prior to the borrowing date.

The REIT abovementioned borrowing shall include the issuance of an instrument, security, or execution of any agreement in whichever form with an intention or true substance related to the borrowing of money characteristics.

4. Incurring of encumbrances on the Property

The REIT shall create any encumbrance to the Property only deemed as necessary and in connection with the Property management, as follows:

(1) creation of an encumbrance in connection with any major agreements such as placing the Property as collateral as a guarantee of loan payment described in this section 11; or

(2) creation of an encumbrance which is considered as commercial practice or common business practice of such transaction.


71


-71-

3. Overview of the Industry Related to the Investment Properties 3.1 ASEAN Overview

3.1.1 ASEAN economic overview

Over the past decade, ASEAN countries have witnessed strong economic growth. In 2018, the gross domestic products (GDP) of the ASEAN countries leaped to USD 2.9 trillion and expect to increase at 3.1 and 3.3 trillion in 2019 and 2020 respectively. The average growth by 6.1 percent per annum. ASEAN's combined GDP as a percentage of world GDP about 3.5 percent. If ASEAN were a single country, it would be the fifth-largest economy in the world after the United States of America, China, Japan, and Germany.

Strong growth of ASEAN's member states' economies comes from the export of goods and

services. In 2018, the value of exports of goods and services was USD 1.4 trillion. the fourth-highest export value in the world after China, the USA, and Germany. In 2018, foreign direct investment in ASEAN as a percentage of world foreign direct investment is 12.9. ASEAN's inflows of foreign direct investment are ranked number three in the world.

Projection of ASEAN member states' GDP growth rate (%)

Source: International Monetary Fund (IMF)

3.1.2 ASEAN's tourism market overview With respect to ASEAN's tourism market overview, according to the World Travel and

Tourism Council (WTTC), the travel and tourism direct GDP (TTDGDP) 2018 is 12.6 percent of the ASEAN member countries' combined GDP. The travel and tourism sector creates 12.2% of total employment in ASEAN. In 2018, spending from tourists who are non-ASEAN citizens and ASEAN citizens were 53.0% and 47.0% respectively.

0%2%4%6%8%

10%

Brunei Cambodia Indonesia Laos Malaysia Myanmar Phillipines Singapore Thailand Vietnam

2017 2018 2019F 2020F

72


-72-

Spending on ASEAN's travel and tourism sector (USD)

Source: The World Travel and Tourism Council

The number of tourists visiting the ASEAN region is increasing constantly. Based on the

ASEAN Secretariat data, tourists coming to the ASEAN region increased from 73.9 million in 2010 to 135.3 million in 2018, equivalent to 7.9% per annum. It is projected that in 2030 the number of tourists will increase to 187.0 million, equivalent to an average growth rate of 2.73 percent per annum.

Inbound tourists (millions)

Source: the SEAN Secretariat

3.2 Vietnam Overview

3.2.1 Vietnam economic overview A report issued by the National Center for Socio-Economic Information and Forecast Under

the Ministry of Planning and Investment (MPI) of Vietnam discloses that Vietnam's 2019 GDP is expected to increase by 6.6%. The General Statistics Office of Vietnam reveals that in the first half of 2019, Vietnam's GDP growth reached 6.73%. The growth is driven by the industry, construction, and service sectors, which have sent a reassuring signal for growth since the beginning of the year.

118.6 126.3207.8

136.2 143.7

243.2

0

100

200

300

400

500

2017 2018F 2028FASEAN citizens Non-ASEAN citizens

2011 2018 2030ASEAN citizens 35.1 49.7 87.6Non-ASEAN citizens 38.7 85.6 99.4Total 73.9 135.3 187.0

0.050.0

100.0150.0200.0


73


-73-

In the June 2019 issue of the Global Economic Prospects, a World Bank report, it is forecast that the expected growth of Vietnam's GDP in 2019, 2020, and 2021 will be 6.6%, 6.5%, and 6.5% respectively.

GDP growth rate (%)

Source: World Bank Vietnam's inflation rate over last two years has tended to be stable, at 2.7% to 3.5% over the

past two years, especially when compared with its considerably fluctuated inflation rate in the last decade. This evidences growing stability in Vietnam's economic system. FocusEconomics forecasts that Vietnam's inflation rates in 2018 and 2020 will be 3.9% and 4.2%

Source: World Bank

Moreover, Inflation rate in Vietnam a couple year lately has stably between 3.52 to 3.60 percent. It is quite unflutuates compared to last ten years. That is shows stabilitie of economic in Vietnam. However, FocusEconomics forecasts inflation rate in Vietnam for 2019 and 2020 at 3.6 and 3.4 percent respectively.

Inflation rate (%)

Source: World Bank, FocusEconomics Vietnam's population grew rapidly from 88 million in 2010 to approximately 97 million in

2018, making it the third most densely populated country in Southeast Asia and the 14th most populous country in the world. The nation's population has been increasing by approximately one million people each year from 2011 to 2018, and is projected to grow steadily to 101 million by 2025 (Source: United Nations).

5.4%

6.4% 6.2%

5.2% 5.4%6.0%

6.7%6.2%

6.8% 7.1%6.6% 6.5% 6.5%

4%

5%

6%

7%

8%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F

7.1%8.9%

18.7%

9.1%6.6%

4.1%

0.6%2.7% 3.5% 3.5% 3.6% 3.4% 3.9%

0%

5%

10%

15%

20%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F

74


-74-

Population (millions) and population growth rate (%) Source: United Nations

Over the last ten years, Vietnam's GDP per capita has rapidly increased, leading to an

increase in the purchasing power of the population, which has benefited Vietnam's overall economic condition.

GDP per capita (USD)

Source: World Bank

Foreign direct investment (FDI) in Vietnam has been expanding since 2011. Over the last ten years, FDI average growth rate has been approximately 8.2% per annum. FDI is one of the key factors to drive Vietnam's economic growth in the future.

92.7 93.6 94.6 95.596.9 97.3

101.1

0.0%

1.0%

2.0%

3.0%

4.0%

85.0

90.0

95.0

100.0

105.0

2015 2016 2017 2018 2019 2020F 2025FPopulation (person) Growth rate

1,210.7 1,310.41,515.5

1,722.7 1,871.3 2,012.0 2,065.2 2,170.6 2,343.12,563.8

0

500

1,000

1,500

2,000

2,500

3,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018


75


-75-

Foreign direct investment (million USD)

Source: World Bank

3.2.2 Vietnam tourism markets (1) Supply In 2018, there were 965 hotels in Vietnam, consisting of 152 five-star hotels, 276 four-star

hotels, and 537 three-star hotels, equaling 126,734 rooms, divided into 51,810 rooms in five-star hotels, 36,754 rooms in four-star hotels, and 38,170 rooms in three-star hotels.

Hotels and hotel rooms in 2018

Five Star Four Star Three Star Total Hotels in 2018 152 276 537 965 Hotel rooms in 2018 51,810 36,754 38,170 126,734

Source: VNAT (Vietnam National Administration of Tourism) (2) Demand In 2018, the number of tourist arrivals in Vietnam was approximately 15.5 million, an

increase of 20% from 2017 in which year the number of tourist arrivals was approximately 12.9 million. Colliers International Research projects that the increase in the number of tourists may come from Vietnam's greater relaxation of visa requirements

7600 8000 7430 8368 8900 920011800 12600

1410015500

0

5,000

10,000

15,000

20,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

76


-76-

Tourist arrivals in Vietnam (persons) and growth rate (%)

Source: Colliers International Research, Vietnam International Administration of Tourism

Most tourists come from countries in Asia. From 2012 to 2018, China is the number one

source of foreign tourists to Vietnam, with Korea as number two. The number of tourists from China and Korea has been rising. According to Colliers International Research's analysis, the main reason for the increase is an increase of flights operated by low cost airlines to more tourist destinations in Vietnam. It is projected that Capri by Fraser HCMC and IBIS Saigon South, the majority of whose customers are Chinese and Korean, would benefit from the anticipated rising of tourists.

Number of tourists by nationality (millions)

Source: Colliers International Research, Vietnam National Administration of Tourism

For the types of customers, based on their purpose of stay in Vietnam, free individual travelers

(FITs) comes first at 37.1%, with tour groups at 23.5%. The number of hotel guests in each type in 2017 and 2018 increased marginally.

6.8 7.6 7.9 7.910.0

12.9 15.5

0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%

0.02.04.06.08.0

10.012.014.016.018.0

2012 2013 2014 2015 2016 2017 2018Tourists arrival Growth rate

0.01.02.03.04.05.06.0

2012 2013 2014 2015 2016 2017 2018

China Korea Taiwan Japan USA


77


-77-

2017 purpose of sta

Source: Grant Thornton: Executive Summary Hotel Survey 2019

Tourist spending growth in Vietnam has increased in line with the rising number of tourists. In

2018, tourist spending is equivalent to USD 27.4 billion, an increase of 24.7% from 2017, in which tourist spending was USD 22.0 billion.

Tourist spending in Vietnam (USD million) and growth rate (%)

Source: Vietnam National Administration of Tourism, CEIC data

3.2.3 Operating results

1) Average room rate

In 2018, average daily room rates for four-star hotels and five-star hotels were USD 73.4 and USD 112.0, an decrease in four-star hotels from 2017 of 2.4% and increase in five-star hotels of 4.1%. An average room rate at Capri by Fraser HCMC, a four-star hotel, is less than an average room rate at other four-star hotels in Vietnam. The average room rate is relatively low because most of its hotel guests are long-stay guests, i.e. guests who stay over one month, and the average room rate offered to long-stay guests is lower than that offered to short-stay guests. The hotel operator now has a policy of increasing the number of short stay guests.

37.1%

17.3%

23.5%

15.3%

6.8%Free Individual Traveller : FIT Other guest

Tour Groups Corporate Traveller

MICE

6.9 8.6 9.914.5

17.2

22.0 27.4

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2012 2013 2014 2015 2016 2017 2018Tourist spending Growth rate

78


-78-

Four-star and five-star hotels' average room rates compared to the hotels in which the REIT will invest

Sources: Grant Thornton: Executive Summary Hotel Survey 2017, Grant Thornton: Executive Summary Hotel Survey 2018, Grant Thornton: Executive Summary Hotel Survey 2019

2) Average occupancy rate Four-star hotels and five-star hotels' average occupancy rates from 2015 to 2017 have been

increasing. In 2018, four-star hotels' average occupancy rate was 71.2%, decreasing from 72.2% in 2017 while in 2018, five-star hotels' average occupancy rate was 75.7%, increasing from 75.2% in 2017. It is apparent that previously. the average occupancy rate at Capri by Fraser HCMC, a four-star hotel, is greater than the average occupancy rates of other four-star hotels in Vietnam. This shows good competitiveness for Capri by Fraser HCMC, when compared to other hotels at the same level.

Four-star and five-star hotels' average occupancy rates compared to the hotels in which the REIT invests (%)

Source: Grant Thornton: Executive Summary Hotel Survey 2018, Grant Thornton: Executive Summary Hotel Survey 2019

3) Revenue per available room (RevPAR)

In 2018, the average RevPAR of four-star and five-star hotels in Vietnam was USD 52.0 and USD 83.4, an decrease in four-star hotels from 2017 of 2.0% and increase in five-star hotels 10.2%. The RevPAR of Capri by Fraser HCMC, a four-star hotel, was less than an average of that of other four-star hotels in Vietnam, as most of its guests were long-stay groups. Please see the details in 3.1 Average Room Rates

36.2 42.0 42.0 48.148.9 56.1 60.0 58.472.3 74.6 75.2 73.4

106.8 103.2 107.6 112.0

0

50

100

150

2015 2016 2017 2018IBIS Saigon South (Three-star) Capri by Fraser HCMC (Four-star) Four-star hotels Five-star hotels

53.0%

64.4% 66.1% 64.6%67.8%

73.8% 74.7% 73.4%

61.5%67.4%

72.2% 71.2%

62.7%69.2%

75.2% 75.7%

40%

50%

60%

70%

80%

2015 2016 2017 2018

IBIS Saigon South (Three-star) Capri by Fraser HCMC (Four-star) Four-star hotels Five-star hotels


79


-79-

Average revenue per available room at four-star and five-star hotels in Vietnam, compared to the hotels in which the REIT invests (USD)

Source: Grant Thornton: Executive Summary Hotel Survey 2018, Grant Thornton: Executive Summary Hotel Survey 2019

3.2.4 Tourism sector of Ho Chi Minh City

(1) Supply Colliers International Research forecasts that from 2018 to 2020, there will be no development

of new four-star hotels in Ho Chi Minh City. However, eight new five-star hotels housing 1,840 rooms will start their operations, increasing the number of five-star hotel rooms by approximately 32.0% when compared to five-star hotel rooms in 2017. Those five-star hotels anticipated to be opened are chain-brand hotels, such as Mandarin Oriental and Hilton Saigon. Seven out of those eight hotels will be located in the heart of the Ho Chi Minh City business district, except the Mövenpick Hotel, which will be located in District 7, an area adjacent to two hotels in which the REIT invests.

Overview of supply of four-star and five-star hotels in Ho Chi Minh City

Five-star Four-star Current hotels 19 26 Current hotel rooms 5,750 3,677 New hotels (to launch in 2018 to 2020) 8 0 New hotel rooms (to be available in 2018 to 2020) 1,840 0

Source: Colliers International Research (2) Demand In 2018, the number of foreign tourists visiting Ho Chi Minh City reached 7.5 million,

equivalent to 20.5% of total tourists, while the number of local tourists reached 29.0 million, equivalent to 79.5% of the combined foreign and local tourists. The growth rate increased by 16.7% compared to that in 2017. Ho Chi Minh City Ministry of Tourism anticipates that in 2018, the number of tourists

19.2 24.8 27.8 31.133.141.3 44.7 47.046.8 50.2 54.0 52.0

66.0 71.879.1 83.4

0

20

40

60

80

100

2015 2016 2017 2018IBIS Saigon South (3-star) Capri by Fraser HCMC (4-star) 4-star hotels 5-star hotels

80


-80-

visiting Ho Chi Minh City will reach 41.3 million, i.e. 8.5 million foreign tourists and 32.8 million local tourists

Tourists visiting Ho Chi Minh City (millions)

Source: Ho Chi Minh City Ministry of Tourism, Vietnam International Administration of Tourism

(3) Operating results of the hotel industry (3.1) Average room rate

The average room rate of Capri by Fraser HCMC, a four-star hotel, is considerably less than

an average room rate of other four-star hotels in Ho Chi Minh City, due to the fact that most of its guests are long-stay guests at 23 percent, i.e. guests who stay over a month. An average room rate offered to long-stay guests is lower than the normal rate. Due to this strategy, the average of occupancy rate will not fluctuation.

The average room rate at IBIS Saigon South, a 3-star hotel do not have direct competitor around that area. That is make average room rate lower than the market where located at District 1.

Average room rates of 3-star to 5-star hotels in Ho Chi Minh City compared with the hotels in which the REIT invests

(USD per night)(1)

Source: Savills Market Research Note: (1) VND 23,800 : USD 1 published by State Bank of Vietnam on 31 December 2019.

4.7 5.2 6.4 7.5 8.5

19.321.8

24.929.0 32.8

05

101520253035

2015 2016 2017 2018 2019FForeign tourists Local tourists

80

78

80

83

48 545873

0

50

100

150

74

76

78

80

82

84

2014 2015 2016 2017 2018 2019

Average room rate of 3-star to 5-star hotels in HCMC IBIS Saigon South (Three-star) Capri by Fraser HCMC (Four-star)


81


-81-

(3.2) Occupancy rate In 2019, the average occupancy rates of the hotels in which the REIT Invests in Ho Chi Minh

City went down moderately which is direct to the same way of market. Both hotels which the REIT Invests have occupancy rate slightly lower than the market. Due

to different in location of hotels. The hotel in Ho Chi Minh City mostly located in District 1 where is more business district centre than District 7. However, hotels which the REIT Invests have clearly differenct target from hotels which located in District 1.

Occupancy rates of 3-star to 5-star hotels in Ho Chi Minh City compared to the hotels in which the REIT Invests (%)

Source: Savills Market Research

(3.3) Revenue per available room (RevPAR) In 2019, the average RevPAR of 3-star to 5-star hotels in Ho Chi Minh City were USD 57

incresing 1.8 percent from 2018. The graph shows that the market of of 3-star to 5-star hotels in Ho Chi Minh City is in stabilities suitiation since 2016 to 2019.

However, The average RevPAR of Capri by Fraser HCMC, a 4-star hotel is slightly lower than the average RevPAR of other 4-star hotels in Ho Chi Minh City.

70% 73% 70% 69%65%57%

74%66%

0

1

1

0%

50%

100%

2014 2015 2016 2017 2018 2019

Average occupancy rate of 3-star to 5-star hotels in HCMC IBIS Saigon South (Three-star) Capri by Fraser HCMC (Four-star)

82


-82-

Average RevPAR of 3-star to 5-star hotels in Ho Chi Minh City compared to the hotels in which the REIT invests (USD)(1)

Source: Savills Market Research Note: (1) VND 23,800 : USD 1 published by State Bank of Vietnam on 31 December 2019.

(4) Outlook On the whole, Vietnam's tourism market is likely to flourish thanks to a steady increase in

the number of tourists. The government also supports the development of public utilities projects to enhance efficiency and capacity to accommodate tourists. Those projects include the expansion of Tan Son Nhat International Airport to accommodate 50 million passengers per year, up from 35 million per year (source: Globthailand), a scheme to build a north-south express railway, a proposed high speed railway connecting the four large cities of Vietnam (Hanoi-Vinh-Nha Trang-Ho Chi Minh City) to facilitate increasing inter-city travel in the future, the construction of which is anticipated to begin in 2021 and be completed in 2030, a scheme to build roads to connect the major cities of Vietnam, Laos, and Thailand (source: ManagerOnline), and the Ho Chi Minh City transportation development plans to afford greater convenience and connectivity, such as schemes to construct expressways and subways (source: Wikipedia).

It is expected that there will be a development project for HCMC Monorail Line No. 2

running along Nguyen Van Linh road, adjacent to Capri by Fraser HCMC and IBIS Saigon South, the Properties. At present, a feasibility study is being conducted for the Monorail Line No. 2 project, and the locations of the monorail stations have not been officially revealed. There is a plan to link Monorail Line No. 2 with Metro Line 3a in the future (source: Management Authority for Urban Railways Ho Chi Minh City).

31 31

47 4856 57 56 57

0

10

20

30

40

50

60

70

80

0

20

40

60

80

2014 2015 2016 2017 2018 2019

IBIS Saigon South (Three-star) Capri by Fraser HCMC (Four-star) Average RevPar of 3-star to 5-star hotels in HCMC


83


-83-

3.3 Indonesia Overview

3.3.1 Indonesia economic overview After the financial crisis in the late 1990s, Indonesia has seen steady growth of its GDP.

At present, the country's GDP per capita is approximately USD 4,000 and is forecast to maintain its steady climb in the next 2 years. Now in the third phase of its 20-year development plan, the Indonesian economy has recorded strong growth. In 2018, its GDP annual growth rate rose to 5.2 percent from 5.1 percent in 2017, its highest growth rate in four years. It is forecast that the country's GDP growth rate will rise to 5.2 percent in 2019, and its inflation rate will be at 3.2 percent.

GDP growth rate (%)

Source: International Monetary Fund (IMF)

Inflation Rate (%)

Source: Economist Intelligent Unit (EIU), Statista Indonesia has a population estimated at 270 million. It is estimated that 42.4 percent of the

population are of working age, ages 25 - 54. Indonesia's median age is 29 years. As the proportion of working-page population is higher than median age population it will surely accelerate the country's economic growth. Over the last decade, Indonesia's GDP per capita has grown at a steady pace of 6.6 percent, showing increasing wealth and growing incomes, thus improving purchasing power.

5.6%

5.0%4.9%

5.0%5.1% 5.2% 5.2% 5.2% 5.2% 5.3%

4.4%4.6%4.8%5.0%5.2%5.4%5.6%5.8%

2013 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F

6.4% 6.4% 6.4%

3.5% 3.8%3.2% 3.2%

3.9%3.3% 3.1%

2%

3%

4%

5%

6%

7%

8%

2013 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F

84


-84-

GDP per capita (USD)

Source: World Bank

Foreign direct investment in Q3 of 2019 in Indonesia significantly increased from Q3 of 2018

at USD 7,000 million or increasing 17.8 percent. The major foreign investors in Indonesia are Singapore, Netherland and China. Most foreign investment went into the transpotation, warehouse and communicating. Foreign direct investment is one of the key factors that is driving the country's economic growth ahead.

Foreign direct investment (USD billions)

Source: World Bank

3.3.2 Indonesia tourism market In 2018, foreign visitor arrivals totaled approximately 15.8 million, up 13 percent from arrivals in 2017, i.e. 11.5 million. More than 2.5 million persons are malaysian and the second 2.14 million persons are chiness tourist. 20 million persons have been set for target in 2019 (source: Bloomberg).

2,254.4

3,113.53,634.3 3,688.0 3,620.7 3,491.6 3,334.5 3,570.3 3,846.9

4,284.7

0

1,000

2,000

3,000

4,000

5,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

4.9

15.3

20.6 21.223.3 25.1

19.8

4.5

22.120.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2552 2553 2554 2555 2556 2557 2558 2559 2560 2561


85


-85-

Total tourist arrivals in Indonesia (millions) and growth rate (%)

Source: Colliers International Research, Ministry of Tourism Republic of Indonesia

Tourists from Malaysia make up the majority of inbound arrivals in Indonesia, followed by China

and Singapore.

Number of foreign tourists by nationality

Source: Aseanstats

8.0 8.8 9.4 10.2 11.514.0

15.8

0%5%10%15%20%25%30%

0.0

5.0

10.0

15.0

20.0

2012 2013 2014 2015 2016 2017 2018Tourist arrivals Growth rate

0.0

1.0

2.0

3.0

2013 2014 2015 2016 2017 2018Singapore Malaysia Australia China Japan

86


-86-

3.3.3 Tourism sector in Jakarta

Business overview of Three-star to five-star hotels in Jakarta in 2018 3-star 4-star 5-star

Number of hotels 87 76 39 Number of rooms 11,855 16,248 13,070

Number of additional hotels in 2019-2022 10 6 7

Number of additional rooms in 2019-2022 1,506 1,251 1,519

Average room rate of Thre-star to five-star hotels (USD /room/night)

78

Average occupancy rate of Thre-star to five-star hotels (%) 69

RevPAR of Thre-star to five-star hotels (USD /room/night) 46.8(1) Source: Colliers International Research Notes: (1) RevPAR calculation is based on and average room rate and average occupancy rate from Colliers International Research (1) Supply

In 2017, the number of rooms in the three-star to five-star hotel category has increased at a slower pace, when compared to the previous increase. According to the Colliers International Research forecast, growth in the number of hotel rooms is expected to recover in 2019. At present, most hotel rooms in Jakarta belong in the four-star category. It is estimated that the number of rooms will increase by 3,213 in 2019.

Number of rooms in Jakarta

Source: Colliers International Research

34,716 39,715 41,173 44,386

- 10,000 20,000 30,000 40,000 50,000

2016 2017 2018 2019F


87


-87-

(2) Demand Jakarta is one of Indonesia’s major tourist destinations for international visitors. In the period

between 2017 and 2018, the number of foreign tourists who visited Jakarta accounted for 18.9% and 17.8% of all foreign tourist arrivals in Indonesia. In the period between 2014 and 2018, the number of foreign tourists visiting Jakarta rose by 4.9% annually. In 2018, the number of foreign tourists visiting Jakarta reached 2.8 million.

Moreover, the average occupancy rate in Jarkata between 2016 to 2018 has been increased by 7.1 percent per year and expected to continue in 2019 and 2020 by government policy which support tourist sector.

Number of inbound tourist arrivals to Jakarta (unit: million arrivals)

Source: Jakarta Central Bureau of Statistics

2.3 2.4 2.5

2.72.8

58.29%

63.26%

66.87%

54%56%58%60%62%64%66%68%

0.0

1.0

2.0

3.0

4.0

2014 2015 2016 2017 2018Foreign tourist Occupacy rate

88


-88-

(3) Operating results of the hotel industry (3.1) Average room rate The average room rates of direct comprtitors in Jakarta in 2018 and 2019 were USD 133.7

and USD 130.6 per night, respectively, or a 2.3% decrease. Pullman Jakarta Central Park also was decrease at 4.1%. Average room rates of direct comprtitors in Jakarta compared to hotel in which the REIT has invested (Unit:

USD/night)

Source: STR

(3.2) Occupancy rate In 2019 the average occupancy rate of direct comprtitors in Jakarta decreased to 61.1%

from 62.5% in the previous year. In the other hand, Pullman Jakarta Central Park Hotel registered a significant increase in average occupancy rate.

Average occupancy rate of direct comprtitors in Jakarta compared to the hotel in which the REIT has invested (%)

Source: STR

107.6

112.2

130.6

133.7

60 70 80 90 100 110 120 130 140 150

2562

2561

Direct competitors Pullman Jakarta Central Park (5 ดาว)

75.8%

78.5%

61.1%

62.5%

40% 45% 50% 55% 60% 65% 70% 75% 80% 85%

2019

2018



89


-89-

(3.3) Revenue per Available Room (RevPAR)

Direct competitors of Pullman Jakarta Central Park Hotel registered average 2019 RevPAR of USD 79.8, a 4.4% drop from 2018 average RevPAR at USD 83.5. Pullman Jakarta Central Park Hotel also was decrease in RevPAR. However, Pullman Jakarta Central Park Hotel have a higher RevPar among of competitors because lower average room rate that can significantly attract occupancy.

Average RevPAR of direct comprtitors in Jakarta compared to the hotel in which the REIT has invested (USD)

Source: STR (4) Outlook The proliferation of hotels in Jakarta has intensified competition, leading to lackluster

operating results for the hotel business as a whole from 2013 to 2016. The hotel operation overview has slowdown in 2019 because election protest and expect to recover in beginning of 2020. In addition, the Indonesian authorities have introduced a plan to develop a mass rapid transit system, or MRT, in Jakarta, initially consisting of 2 main lines: North-South and East-West (Source: Indonesia-investment website). The project asset, Pullman Jakarta Central Park Hotel, is located in the vicinity of the MRT East-West line. The first phase of MRT North-South line has officially operated in 24 March 2019. (Source: Jakarta MRT website), while the MRT East-West line is at the feasibility study phase and will start construction in 2022 (Wikipedia).

Location, hotel operator, and marketing strategy are key factors determining the competitiveness of a hotel in the face of stiff competition.

81.6

88.1

79.8

83.5

74 76 78 80 82 84 86 88 90

2019

2018


90


-90-

4. Risk Factors 4.1 Risks associated with the REIT or the operation of the REIT

(1) The success of the REIT depends on the capacity of the REIT Manager, the Master Lessees

and the Hotel Operators in managing and seeking benefits from the Properties. In the event of failure to carry out or manage effectively and efficiently, they may significantly cause the negative impact on the value of the Properties, the performance and the ability to pay benefit by the REIT. The REIT Manager will manage the REIT in accordance with the Trust Deed. Failure to effectively

manage the hotels by the REIT Manager, the Master Lessees and the hotel operators may result in negative impact on the value of the Properties, operating results, and the ability to distribute of the REIT. The operating results of the REIT will depend on return from the lessor companies which receives the rents from the Master Lessees. The Master Lessees are not directly the hotel operators but entered into the hotel management agreements with the hotel operators. The hotel management agreement stipulates that the hotel operators shall be responsible for various tasks in relation to the management of the Properties under the supervision of the Master Lessees, which includes the responsibilities regarding the customers service, reservation services, management, marketing, maintenance, security and safety of the buildings, and financial management.

If the hotel operators cannot implement the strategies with success, there may be negative impact on the value of the Properties and/or the variable rental income the Master Lessors should receive, which will affect the REIT's operating results and its ability to pay benefits to the Unitholders as well as to repay due debts. Furthermore, any negative change which affect the relationship between the Master Lessors and the Master Lessees or between the Master Lessees and the hotel operators, may affect the ability of the hotel operators in managing the Properties. Also, if the Master Lessees fail to effectively perform their duties as Master Lessees under the Lease Agreements and/or the hotel operators appointed by the Master Lessees fail to effectively perform their duties as hotel operators, there may be an negative impact on the operation and financial position of the REIT. (2) The income of the REIT depends on the financial position and operating results of the Master

Lessees and the decision to renew the lease agreements upon termination.

The REIT's financial position and operating results depend on the rent of the Properties leased by the Master Lessors to the Master Lessees (having the same ultimate shareholder as the REIT Manager). The cash distributable to the REIT consists mainly of dividends distributed from the Strategic Hospitality Holdings Limited, Strategic Hospitality Holdings 2 Limited, Offshore Holding Companies, and the Master Lessors and cash distribution by any means that is permitted by the agreements and not contrary to the


91


-91-

SEC Notification. The income of the Master Lessors to be distributed to the REIT are ultimately derived from the fixed rent, variable rent obtained in accordance with the calculation method specified in the Lease Agreements. Therefore, if at any time the Master Lessee's financial position declines, it may cause the Master Lessees the delay of payment or default of payment of rent by the Master Lessees and cause the Master Lessees the failure of repayment of debt and/or the Master Lessors may not obtain the rent as projected. This may affect the incomes of the Master Lessors and the benefits that is distributable to the REIT and to the trust unit holders.

The REIT's income highly depends on the receipt of the fixed and variable rent under the Lease Agreements between the Master Lessors and the Master Lessees. In the event of a default of the Lease Agreements by the Master Lessors or the Master Lessees, there may be a significantly negative impact on the operating results and financial position of the REIT.

Furthermore, even if the Lease Agreement to be concluded by the Master Lessors and the Master Lessees is fixed to expire at each term of the Lease Agreement (every 3 years), the Parties agree to continue to lease the Properties until the Master Lessors will not be the owner of the leased Properties under the existing terms and conditions of the Lease Agreement. Except for the fixed and variable rent, the calculation of which shall be in accordance with the terms and conditions of the Lease Agreement. The REIT’s risk may come from the fact that the Master Lessors may not comply with the terms in the Lease Agreement relating to the renewal of such agreement. However, in the event that the Master Lessors and the hotel operator can operate their business as usual and there is no volatility in the economy or increased competition as well as the necessity to close down the Property in whole or in part for renovation to the extent that there is an significant impact on the normal operation of the Master Lessees, and in the event that the Master Lessees have no intention to be in default of payment of fixed rent or variable rent, the Master Lessors will still receive the fixed rent specified in the Lease Agreements. However, the REIT Manager has the duty to control and monitor the Master Lessees to comply with the conditions of the agreement, including the monitoring of the payment of rent on the specified time for the best benefit of the REIT as the REIT Manager. And for those reasons this may reduce the risk that the Master Lessees do not renew the lease contract or do not comply with the conditions specified in the lease agreement.

(3) The Master Lessors may not obtain the rent in accordance with the lease agreement due to force

majeure under the lease agreement.

The lease agreement between the Master Lessors and the Master Lessees : (1) the fixed rent which comprises the base rent and the additional base rent (if any) and (2) the variable rent . The financial position and operating results of the REIT will depend on the rents to be received from the lease of the Project ’ s Properties to the Master Lessees (with the ultimae shareholders being the same as the ultimate shareholder of the REIT Manager). However, the force majeure such as natural disaster or events that are beyond control which may affect the operation of hotel business under the condition as specified in the relevant lease agreement are the exception to the rent payment by the Master Lessees to the Master Lessors. The

92


-92-

exception of the rental payment due to the force majeure will have negative impact on the income of the Master Lessors and on the operating results, financial position and the ability to pay benefits or returns by the REIT.

(4) The base rent involved in the renewal of the lease agreement may be different from the base

rent estimates

The rent under the lease agreement between the Master Lessors and the Master Lessees consists of 2 parts of rents i.e. (1) the fixed rent which comprises the base rent and the additional base rent (if any) and (2) the variable rent for the base rent for a 3-year lease period under the previous lease agreement with a period of 3 years. With the calculation method of the base rent for the renewal of the lease agreement as mentioned in the above, if the operating results for the period of lease in accordance with the previous lease agreement are different from the projections, this may result at the fixed rent for the period of lease in accordance with the renewed lease agreement be different from the projections. This is because the additional base rent which is part for the calculation of the fixed rent will vary as to the income from the net operating income (NOI) since the additional base rent which is part of the calculation of the fixed rent will vary as to the income. Therefore, the base rent for the period of lease as to the renewed lease agreement will also be different from the projections. These are the consequences of the calculation of the average fixed rent for a period of lease of the previous lease agreement.

In the event that the average fixed rent for the period of lease as to the previous lease agreement is lower that the projections, this will result that the base rent for the period of lease as to the renewed lease agreement be lower than the projected base rent for such period of lease and will affect the operating results of the REIT. And the REIT will not able to pay benefits or return as projected and result that the trust unit holders may not obtain the return as projected.

On the other hand, in the event that the average fixed rent for the period of lease as to the previous lease agreement is higher than the projections, this will result that the base rent for the period of lease of the next lease agreement also be higher than the projected base rent for such period of lease. Therefore, the Master Lessees need to make its operating results higher than the projections in order to pay a higher base rent. The reasons that make the operating results for the period of lease as to the previous lease agreement is temporary or do not affect the income growth of the Properties. In the long term, this may affect the ability to pay rent by the Master Lessee in the future, including the over standing of the rent or the non-renewal of the lease agreement for which if the REIT fails to seek a new lessee which will be able to pay rent at the same rate as the previous Master Lessee and may have the negative impact on the operation of the REIT and the trust units holds may not obtain rent.


93


-93-

(5) Risks that the REIT may incur additional expenses from the change of REIT Manager which is not the direct fault of the REIT Manager The REIT Manager Appointment Agreement which the REIT entered with the Trustee contains the

terms and causes for changing the REIT Manager, e.g. (1) the REIT is terminated and the Properties are terminated in accordance with the REIT's prospectus and liquidation has been carried out in accordance with the relevant rules; (2) the SEC has revoked its consent for the REIT Manager to act as the manager of the REIT or has ordered a suspension of the REIT Manager for more than 90 days; (3) the approval for the REIT Manager has expired and the REIT Manager does not submit a request to extend such approval; (4) the REIT Manager has ceased to be a juristic person or has been liquidated or fallen into receivership, whether or note by absolute order, or a motion has been filed for the rehabilitation of the REIT Manager; (5) the Trustee has terminated the REIT Manager Appointment Agreement in the case where the REIT Manager willfully or negligently fails to exercise its duties in relation to the REIT and the Trustee views that such failure causes materially adverse damages to the REIT and/or the Unitholders, and is not capable of being remedied within 90 days or in the case that the REIT Manager has any characteristics not in compliance with the law or the relevant rules, or where it arises that the SEC's approval for the REIT Manager has ceased and such approval has not been extended by the SEC; (6) the REIT Manager has exercised its rights to resign in accordance with the procedures laid out in the REIT Manager Appointment Agreement, provided that any of the these cases constitute a cause for the change of the REIT Manager. Upon such change, the REIT Manager will not receive any compensation from the REIT apart from the REIT Manager fee which has become due and other expenses advanced by the REIT Manager for the REIT, subject to the terms and conditions in the REIT Manager Appointment Agreement (Please see additional details in section 8.10 of item 2.8 re: the procedures and conditions for the change of the REIT Manager).

Nonetheless, the REIT Manager Appointment Agreement stipulates that in any case of the change of the REIT Manager for any cause otherwise than the causes in items (1) to (6) above, or for reasons not directly attributable to the fault of the REIT Manager within the 10-year period, from the date of entering into the REIT Manager Appointment Agreement (20 December 2017), the Trustee (using the assets of the REIT) agrees to pay the compensation for the change of the REIT Manager to the REIT Manager in same rate as the base fee and the incentive fee of the REIT Manager for 5 years (by calculating from the average base fee and incentive fee in the preceding 12-month period or any equivalent rate). Such compensation will be paid on the date on which the change of the REIT Manager becomes effective. Therefore, in the case that the REIT Manager is changed because of reasons other than as a direct result of the fault of the REIT Manager within such period, the REIT will incur an additional cost of compensation to be paid to the REIT Manager in the rate so specified.

94


-94-

(6) The risks arising from the renovation of Properties and the sufficiency of the reserves for renovation Each of the Properties needs regular repairs and renovation to maintain a new and modern look,

keep customers satisfied, and attract continuous business from customers. Regular annual renovations or repairs do not have any impact on the operation of the REIT, with the exception of major renovation or repairs for the purpose of revamping the exterior and interior look of the Properties, or changing major systems of the Properties, namely electrical system, water supply system, elevator, etc. The costs of maintaining the Properties and the risk of unforeseen maintenance or repair requirements tend to increase over time as the Properties age. In the event of the application of new rules or laws, the Properties may require additional renovation or repair or maintenance beyond what is planned. The business operations of the Properties may be disrupted as a result of renovation works. This may affect the business operations of the Master Lessees of the affected Properties and their ability to make timely rental payments under the Lease Agreements or result that the Master Lessor cannot fully collect the rent for the areas under repair and maintenance.

The hotel management agreements for the Properties require the relevant Master Lessees to set aside FF&E reserves (if any) and the Master Lessor shall set aside capital expenditure sinking fund (if any). The hotel operator believes that the FF&E reserve rate prescribed in the hotel management agreements of the Properties will be sufficient for the maintenance of the Properties in accordance with the current hotel standards. However, such reserves may not be sufficient for the repair, renovation, or refurbishment of the Properties in the future in order to increase their competitiveness or to add facilities for the hotel upgrade. In the event that the reserves are insufficient, the REIT must consider other financial sources for the renovation and refurbishment of the Properties, in order to mitigate the impact that the insufficiency of the reserve may have on the trust unit holders. The insufficiency of the reserves may have the negative impact on the operations and the financial position of the Properties.

Nonetheless, renovation or repairs will be carried out during a period deemed appropriate by the management of the Properties or by the Master Lessees and require approval of the REIT Manager. The Properties do not normally suspend their operations during the repair and maintenance. The renovation of the real estate shall be made only in the sections where renovation is required. Other sections of the Properties may stay in operation, unless major repair or renovation is required and continued operation may cause the inconvenience to the customers, lead to complaint, or may not be economically viable, in which case the Master Lessees or the hotel operators may consider suspending the service for the major renovation.


95


-95-

(7) Reliance on the Hotel Operators and use of their Trademarks or Brands for the Properties

The Properties shall be managed by hotel operators under hotel management agreements between the respective Master Lessees and the hotel operators by which the hotel operator or a third party grants the right to the Master Lessees to use the hotel operators’ trademarks and service marks for, and in connection with, the operation of the Properties. In the event that the agreement between the Master Lessees and the hotel operators or such third party is terminated for any reason, the use of all the relevant trademarks and service marks in connection with the Property will end. All logos and materials bearing those logos or other indicia connecting the Property with the relevant hotel operator or such third party must be removed from the hotel and such hotel operator or such third party will no longer provide services. In addition, upon termination of the hotel management agreements between the Master Lessees and the hotel operators, there may be potential loss of distribution channel and access to central reservation systems as well as loss of the hotel operator’s royalty customers and members.

In the event of degradation to the name or brand these Hotel Operators and their respective affiliated brands, the reputation of the Properties and their attractiveness of guests and customers may be affected. This may have the negative impact on the business, financial position and operating results.

However, the Properties are in good location and regularly renovated and kept in good condition. In the event that the hotel management agreement between the Master Lessees and the Hotel Operators is terminated for any reason, new Hotel Operators may continue the management of the Properties.

Since each of the Properties is managed by different Hotel Operator and located in different countries. In the event of the degradation to a Hotel Operator's brand, the risk that such degradation to the brand of a Hotel Operator will significantly affect the overall operations of the REIT is minimal. Each Hotel Operator has engaged in the business under his/ her own brand for a long time in the hotel management market. Each Hotel Operator has an international service standard or brand standards recognized in the hospitality industry and can regularly strengthen and maintain the reputation of his/her brand which is known around the world. This shows that those Hotel Operators have the capacity and measure to care for the reputation and standards of their brand. Therefore, the risk that degradation to the brands of the Hotel Operators will occur is minimal.

(8) Risks arising in loans obtained by the REIT.

The REIT has entered a loan agreement of EUR 44,670,000 (approximately 1,724.43 million Baht) with an oversea financial institution for the purpose of using such loan for repaying the REIT's loans with a local financial institution existing from the date of the REIT's investment in the Properties. The loan has been drawn down all on 29 June 2018 and On 17 August 2018, the loan agreement was amended to increase the loan facility by EUR 1.5 million to support business expansion. On 20 August 2018 the loan has been drawn down EUR 1.165 million.

96


-96-

Therefore, there is a risk that a fluctuation in the interest rate during the term as well as the REIT's obligation to the repayment of the principal, which will affect the operating performance of the REIT and its ability to distribute returns to the trust unit holders in that the returns to the Unitholders may be different from the projected distribution of interests to the Unitholders and the benefits which the Unitholders have received.

In addition, the loan agreements for the investment in Properties may contain certain covenants for the REIT. If the REIT is not able to pay the interest or the principal amount and adhere to the covenants as specified under the terms of the loan agreement, this may lead to the lender taking legal actions against the REIT or enforcing other rights under the loan agreement. For instance, the lender may call for the immediate repayment of all or part of the principals in whole or in part or enforce the collateral under the loan agreement. Nonetheless, upon the expiry of the loan term, the REIT Manager will seek a new source of funding, which may include offering and issuing additional units, issuing bonds, or borrowing from commercial banks and/or financial institutions and/or life insurance companies and/or non-life insurance companies and/or other types of juristic persons authorized to provide loans to the REIT for the purpose of repaying the existing loans. The REIT Manager will seek a good source of funding for the Unitholders and the REIT, taking into account the collateral and the REIT's ability to repay the loan. Nonetheless, where the REIT takes out a new loan for the refinancing, the REIT may be exposed to the risk that the new loan agreement will have terms which are different from the terms in the existing loan agreement. Where the new loan agreement contains different terms, the operations of the REIT may be restricted.

The REIT Manager must manage the REIT by taking into account those risks. Measures should be put in place in order to regularly monitor the operating results of the REIT and external factors as well as trends in interest rates. Furthermore, the REIT Manager may consider using financial tools to mitigate such risks, such as interest rate swaps or, taking action with the creditor, including a request for extension of repayment, exemption of conditions that obstruct the management of the REIT, etc. The REIT Manager will do so by taking into consideration the relevant laws and the best interest of the trust unit holders.

The REIT Manager is of the opinion that the risk that the REIT will be unable to pay the interest and/or to repay the principal is minimal since the REIT's expected debt to equity ratio will be at the manageable level and will be in accordance with the rules prescribed by the SEC. And the repayment of such loan will be made once at the end of the loan term. During the loan term, the REIT will only have to pay the interest. The REIT Manager expects that upon the repayment of the principal at the expiry of the loan term, the REIT Manager will have sought a new source of funding for the repayment of the said loan. In addition, the Properties’ ability to create revenue for the REIT makes the REIT Manager believe that the REIT will have the ability to pay the interests.

Trust unit holders may not obtain dividend from the REIT in case of default of the loan agreement.


97


-97-

(9) The REIT has to rely on the third party for some services.

Since the Master Lessees will engage the third parties for providing some services to the Properties such as water supply, electricity, liquid petroleum gas and waste management service, the REIT Manager may not guarantee that such third parties will comply with their contractual obligations for completely providing any service. Nevertheless, there will be contractual clauses in case of default of the contract by a party or occurrence of any event which will be the reasons for termination or default of contract and give right the Master Lessees to terminate the contract or to file a claim for damage against the other party, the event of default of the contract by the other party may cause service provision to the Properties to be interrupted which become the obstacle for the business operation and has significantly the negative impact on the business, financial position, operating results and the business opportunity for the REIT.

However, the REIT Manager is of the opinion that the services to be provided by the third parties to the Properties may be substituted without much difficulties by other providers in the market since those services are generally required in the hotels. Therefore, the risk of interruption of some services which may become obstacles to the business and have significantly the negative impact on the business, financial position, operating results of the Properties would be minimal. (10) The REIT has no direct control over the Hotel Operators

The financial performance of the REIT, including the dividend payment to the trust unit holders,

depends on the rent payment by the Master Lessees. The Master Lessees’ ability to pay rent depends on net operating profit of each Properties. The Master Lessors will conclude the lease agreement with the Master Lessees with the full power to manage the Properties. Each Master Lessee will conclude hotel management agreement with hotel operators. The REIT will not be direct party with those hotel operator. Meanwhile, the operating results of the REIT will depend on the operation of the Master Lessees and hotel operators. Therefore, the REIT Manager may not guarantee that the Properties will be operated, managed and maintained as expected in the future. This may affect the business, financial position, operating results of the REIT.

However, the hotel operators of the Properties which have been engaged by the Master Lessees are considered as specialized, reputed and experienced operators in the hotel management. Furthermore, hotel operators have the duties to comply with the terms and conditions of the hotel management agreement. The REIT Manager will control and verify the operation of the hotel operators through the Master Lessors and the Properties lease agreement.

98


-98-

(11) Risks arising from inability to find a lessee in the future

Under the lease agreement, the Master Lessor and the Master Lessees agrees to conclude an lease agreement for a period of 3 years and at the expiration of the agreement, the Master Lessors and the Master Lessees agree to automatically renew the agreement for 3 years each time and until the Master Lessors will not satisfy the qualification as owner or leaseholder.

If any of the Lease Agreements of any of the Properties is prematurely terminated, it may be a while before the Master Lessor can find a new lessee, and that person may not have similar qualifications or ability to the previous Master Lessee, or the Master Lessor may not be able to find any new lessee or a lessee who would pay the same rate of rent as the previous Master Lessees. This may have a direct effect on the REIT's income and ability to pay returns to the trust unit holders.

If the Master Lessors have certain legal restrictions or do not satisfy the qualifications required by the law and which is not caused by the fault or negligence of the Master Lessors and result that the latter will not be able to renew this lease agreement, the Master Lessees shall not be contractually liable. This may be considered as reason of default which may lead to the termination of the agreement. This will directly affect the income of the REIT and the ability to pay benefits to the trust unit holders.

If the Master Lessors are still able to lease the Properties in order to temporarily continue their management, the Master Lessee and the Master Lessor must jointly find the solution in order that other lessee can lease the Properties and substitute the Master Lessee of the management of the Properties. In this case, the Master Lessee agrees to extend the lease period in order to manage the Properties until a new lessee will be found. The Master Lessor and the Master Lessee must joint determine the conditions of the extended lease agreement.

The Properties are considered as assets which are kept and renovated in good condition and from the past information the Properties had continuously served the customers. Further, the main assets of the REIT are located in the area that can attract the customers. And each Properties are managed by hotel operators specialized in the hotel business operation. And each hotel is well known in its area for that reason. The risk that a new Master Lessee may not be found for the Properties would be minimal. In the event that a new Master Lessee cannot be found, the Properties may be offered for sale to the third party due to the condition, the number of customers and the location of the Properties. This would attract real estate investors without difficulty.


99


-99-

(12) There is no assurance that the REIT will be able to leverage on the Vendor Companies’ experience in the operation of the Properties at the expiration of the lock-up period

Upon completion of the initial offering of units, the Vendor Companies of the Properties and related

companies, including PT Agung Podomoro Land Tbk and Leebro Holding Pte Ltd have become Unitholders of the REIT in the proportions as agreed, which are equivalent to 63,928,100 units (or 18.12 percent of the total units issued and offered initially) and 4,417,200 units (or 1.25 percent of the total units issued and offered initially), respectively. The aforesaid companies agree to not sell their units, subscribed under the Share Sale and Purchase Agreement, for a period of 2 years from the date on which the first unit is traded in the SET (27 December 2017).

The acquisition of the Vendor Company of the trust units will result in the benefits of the Vendor Company being in line with the benefits of the Unitholders, as the Vendor Company will have an interest in the REIT proportionately to its unitholding. In addition, within the said period during which the Vendor Company agrees not to sell the units it holds, the REIT Manager will monitor the shareholding of the Vendor Company to ensure that the unitholding of the Vendor Company is maintained in accordance with the terms of the agreement. The REIT Manager will do so by reviewing, at least once every quarter, the names of all Unitholders. If it transpires that the Vendor Company does not comply with the terms of the agreement, the REIT Manager will take any suitable actions and/or exercise the rights available to it under the law. Nonetheless, there is no guarantee that the Vendor Company will not dispose or transfer the units it holds, in whole or in part, after the restriction period of the sale of the units subscribed to under the agreement. In the case that the Vendor Company decides to transfer or sell its units, resulting in the Vendor Company no longer having any interest as a unitholder and potentially lacking incentive to utilize its experience for the benefits of the REIT in managing the Properties, e.g. giving legal advice to the REIT as well as provide guidelines or procedures for any conducts in the country where the assets are situated, the administration of the Properties and the ability of the REIT in paying benefits to the Unitholders may be affected.

Nonetheless, since the REIT’ s portfolio will continue to be managed by internationally experienced hotel operators with significant experience in the Territories, we believe any risk relating to transition from the Strategic Partners will be mitigated. (13) The REIT may engage in hedging transactions, which can limit risk relating to the interest and

the exchange rates and may restrict the benefit obtained from the Properties and such transaction may not cover the risks relating to the interest rate and exchange rates. The REIT's structure involves the investment in the Investment Company, which are companies

located in different jurisdictions, and payments in foreign local currencies are involved. Furthermore, the

100


-100-

income and expenses of the Master Lessors and the Offshore Holding Companies will also be in their respective local currencies, whereas the REIT's distribution to the Unitholders made in Thai Baht. As such, the REIT is subject to risks of exchange rate fluctuations.

The income generated from the Properties in Vietnam and Indonesia are denominated in Vietnamese Dong and Indonesian Rupiah, which are operationally benchmarked to the US dollar in terms of daily room rates and services. The Master Lessees will pay the Master Lessors Vietnamese Dong and Indonesian Rupiah respectively, and Master Lessors will distribute dividends in US dollars to the Offshore Holding Companies and then to Strategic Hospitality Holding Limited (BVI). As income received in US Dollar, the REIT Manager may consider and procure the REIT to enter into hedging contracts against the USD/Baht exchange rate. The REIT Manager will take into account the suitability of the risk mitigating mechanisms and other factors, such as the relevant regulations, the interest rate and transaction costs. Furthermore, the REIT Manager will continuously monitor the swap point rate every three months in order to consider whether to enter into a hedging transaction.

However, it may not always be possible for the REIT to enter into hedging activities and hedging may not always have the desired beneficial effect on the results of operations or financial condition of the REIT. No hedging activity can completely insulate the REIT from risks associated with changes in interest rates and exchange rates, and changes in foreign exchange rates for example, may negatively affect the REIT’ s asset value. Moreover, interest rate hedging could fail to protect the REIT or negatively affect the REIT because, among other things:

• the available hedging may not correspond directly with the risk for which protection is sought; • the duration or nominal amount of the hedge may not match the duration of the related liability; • party owing money in the hedging transaction may default on its obligation to pay; • the credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs the ability of the REIT and/ or the Master Lessors (as the case may be) to sell or assign its side of the hedging transaction; and; • the value of the derivatives used for hedging may be adjusted from time to time in accordance with accounting rules to reflect changes in fair value.

Downward adjustments and the significant loss in value of hedging instruments due to a write down to fair value would reduce the NAV of the REIT. Hedging involves risks and typically involves costs, including transaction costs, which may reduce overall returns. These costs increase as the period covered by the hedging increases and during periods of rising and volatile interest rates. These costs will also limit the amount of cash available for distributions to the Units. The REIT Manager will regularly monitor the feasibility of engaging in such hedging transactions taking into account the cost of such hedging transactions.


101


-101-

(14) Benefit remittance to the REIT depends on the mode of remittance and may be affected by any change in capital requirements, regulations relating to the remittance of fund and exchange controls in each jurisdiction invested by the REIT

The investment with the object to acquire the Properties by the REIT consists of the direct and

indirect investment in the Properties across Territories, including the grant of loans to the Master Lessors. The fact that companies invested by the REIT are located in each country, the transborder remittances of fund are under different forms as follows: 1) the repayment of the shareholder loan’s principal; 2) the payment of the interest on the shareholder loan; 3) the management fee and service fee and ; 4) dividend, etc. Each different form of remittance of fund offers different benefit, tax rate and fee. In addition, the investment must comply with capital requirements, regulations relating to the remittance of fund and exchange controls in each jurisdiction. This may cause the REIT to be affected by the risk associated with the exchange rate and rules relating to the remittance of fund to the REIT.

For instance, 1) in certain jurisdictions such as Indonesia, the company may distribute dividend from accumulated profit and may distribute it only from net profit after tax payment and depreciation deduction (non-cash expense). And due to these non cash expenses, the company may have the liquidity in excess which may not be distributed under the form of dividend. 2) the remittance of fund in the form of repayment of shareholder loans’ principal has the limit : It may be done only in case of loans between companies and only in the event that there is a balance. If the principal has been fully repaid, the REIT may need to change the form of remittance of fund between the companies involved in the investment. There may be different benefit, taxes, and fees compared to the current form in use and there may be the impact on the distribution of dividend generated from the operation of the Properties to the REIT.

102


-102-

The details are as per the diagram on benefits, taxes, and fees relevant to the Properties as follows:

Diagram of benefits, taxes and fees associated with Pullman Jakarta Central Park

Holding Structure of Pullman Jakarta Central Park

Level 1: Indonesia

Company Item Related Taxes

PT SHR Pullman Indonesia

Rental Income 10% of Final Tax(4) deduct : Properties related expenses deduct: management fee and service fee to SHR Indonesia Pte.Ltd

20% of withholding tax

deduct: Interest on the shareholder loans to SHR Indonesia Pte.Ltd


Net (loss) profit(2) -None Other items Principal repaid to SHR Indonesia Pte. Ltd(1) -None- Dividend distributed from the net profit (if any) to SHR Indonesia Pte.Ltd (3)



103


-103-

Remark: (1) On 31 December 2019, PT SHR Pullman Indonesia has a total of approximately IDR 1,054,556 million shareholders loan

remaining (approximately USD 75.86 million). It is expected that such loans will be fully repaid within approximately 11 years from the investment date (calculating from the current rental income from the base rent), except in the case where the shareholders will provide more loans. The repayment period will depend on the future actual operating performance of the hotel and the appropriateness in repaying the loan for the purpose of remitting the moneys as efficiently as possible. The said shareholders loan is a method for remitting the moneys, in addition to other money remittance methods, e.g. dividend payments, interests, management and services fees income etc. Each method carries different tax obligations.

(2) Corporate tax shall not be collected if the business receives rental income on which a final tax has been paid. (3) Dividend will be used when the company will have generated profit in the future. (4) VAT will be assessed at 10% of the rental. In the case of Pullman Jakarta Central Park, purchase tax from the acquisition

of the assets of Pullman Jakarta Central Park Hotel (as of 31 December 2019) by PT SHR Pullman Indonesia of approximately IDR 111,475 million (approximately USD 8.02 million) can be utilized as deductions for approximately 13 years (calculating from the current rental income from the base rent), subject to the future actual operating performance of Pullman Jakarta Central Park Hotel. Once such purchase tax has been fully deducted, the hotel will incur an additional 10% VAT of its rental.

Level 2 : BVI

Company Item Related taxes

SHR Indonesia Pte.Ltd

Rental income from PT SHR Pullman Indonesia

Dividend from PT SHR Pullman Indonesia

Management and service fees from PT SHR Pullman Indonesia

deduct: other expenses Net profit(1) -None- Other items Loan repaid from PT SHR Pullman Indonesia

Dividend distributed from the net profit to Strategic Hospitality Holdings Limited (2)

-None-

Remark: (1) Companies located in BVI are exempt of corporate tax; (2) BVI : dividend may be distributed under solvency test. If the assets are higher than liabilities, dividend may be distributed

from the excess of net profit in the form of the dividend.

104


-104-

Level 3 : BVI Company Item Related Tax

Strategic Hospitality Holdings Limited

Dividend distributed from SHR Indonesia Pte.Ltd deduct :other expenses Net profit (1) -None- Other items Dividend distributed from net profit to the REIT(2) -None-

Remark: (1) Companies located in BVI are exempt of corporate tax; (2) BVI : dividend may be distributed under solvency test. If the assets are higher than liabilities, dividend may be distributed

from the excess of net profit in the form of the dividend and exempt of withholding tax Level 4: Thailand

Company Item Related Tax

REIT

Dividend distributed from Strategic Hospitality Holdings Limited deduct: expenses associated with the REIT Net profit(1) -None- Other items Dividend distributed from net profit to the trust unit holders

Remark: The REIT is exempt of corporate tax.

Level 4: Thailand

Company Description Applicable taxes

REIT

Dividends paid out from Strategic Hospitality Holdings 2 Limited

Less other expenses relating to the management of the REIT

Net profit(1) -None-

Other items Dividends paid out to Unitholders

Remark: (1) The REIT is exempt from corporate income tax.


105


-105-

Shareholding Structure of Capri by Fraser and IBIS Saigon South

Level 1: Vietnam


Luxel APT Company Limited and Viethan Hotel Corporation

Rental income

Less property-related expenses

Less management fees and services fees paid to BBDM Singapore Pte Ltd and BBVN Pte Ltd

Withholding tax rate 10%

Less interest expenses paid for the shareholders loan, provided by SHR Finco Pte Ltd and SHR IBIS Pte Ltd

Withholding tax rate 5%

Net profit (losses) Corporate income tax rate 20%

Others

Repayment of the loan principal to SHR Finco Pte Ltd and SHR IBIS Pte Ltd(1)

-None-

106


-106-


Dividends paid out from net profit (if any) to BBDM Singapore Ptd Ltd and BBVN Ptd Ltd(2)

-None-

Remarks:

(1) On 31 December 2019, Luxel APT Company Limited and Viethan Hotel Corporation had the approximately USD 8.12 million and USD 3.04 million remaining of the shareholders loans, respectively. It is expected that such loans will be repaid in approximately 6 years from the investment date, (calculated from the base rental income at present), except where the shareholders will provide more loans. The period of repayment is subject to the future actual operating performance of the hotel and the appropriateness of the repayment in order to remit moneys as efficiently as possible. The said shareholders loan is a method for remitting the moneys, in addition to other money remittance methods, e.g. dividend payments, interests, management and services fees income etc. Each method carries different tax obligations.

(2) Dividends will be utilized when the company makes profit. Level 2.1: BVI


SHR Finco Pte Ltd. and SHR IBIS Pte Ltd.

Interest income paid by Luxel APT Company Limited and Viethan Hotel Corporation

Less other expenses


Other items

Repayment of loans paid by Luxel APT Company Limited and Viethan Hotel Corporation

Dividends paid out from net profit to Strategic Hospitality Holding Limited (2)

-None-

Remarks: (1) Companies in the BVI are exempt from corporate income tax. (2) In BVI, dividends may be paid if a solvency test is satisfied. If the value of assets exceeds liabilities, a surplus amount

may be paid out of net profit as dividends. Dividends will be exempt from withholding tax.


107


-107-

Level 2.2: Singapore


BBDM Singapore Pte Ltd and BBVN Pte Ltd

Interest income paid by Luxel APT Company Limited and Viethan Hotel Corporation

Income from management fees and services fees paid by Luxel APT Company Limited and Viethan Hotel Corporation

Less other expenses


Other items

Dividends paid out from net profit to Strategic Hospitality Holdings Limited 2)

-None-

Remarks: (1) No tax applied because the income, such as dividends received from overseas investment, are exempt from tax. (2) In Singapore, dividends will be exempt from withholding tax.

Level 3: BVI


Strategic Hospitality Holdings Limited

Dividend income paid by SHR Finco Ltd and SHR IBIS Pte Ltd, and BBDM Singapore Pte Ltd and BBVN Pte Ltd

Less other expenses


Other items

Dividends paid out from net profit to the REIT (2) -None-

Remarks: (1) All companies incorporated in BVI are exempt from corporate income tax. (2) In BVI, dividends may be paid if a solvency test is satisfied. If the value of assets exceeds liabilities, a surplus amount

can be paid out of net profit as dividends. Dividends will be exempt from withholding tax.

108


-108-

Level 4: Thailand


The REIT

Dividend income paid by Strategic Hospitality Holding Limited (BVI)

Less expenses incurred in managing the REIT


Other items

Dividends paid out from net profit to the Unitholders

Remark: The REIT is exempted from corporate income tax. (15) Yields distributed to the Unitholders may not be equivalent to yields distributed in the first

year as a result of expiry of conditions for NOI Support by the Vendor Companies With regards the Pullman Jakarta Central Park Hotel in Indonesia, the Vendor Company, namely

PT Agung Podomoro Land Tbk, agrees to provide the REIT with the NOI Support if the net operating income as prescribed in the NOI Support condition generated over 12 months is less than USD 8.25 million, for the period of three years from the completion of the investment in the Properties (1 January 2018). The Vendor Company agrees to fund a shortfall not exceeding USD 2.5 million per year during such three-year period. Accordingly, during the guaranteed period of NOI Support from the Vendor Company of Pullman Jakarta Central Park Hotel, if actual net operating income is less than the guaranteed net operating income, the Vendor Company agrees to compensate for that shortfall. The net operating income guaranteed for the three-year period helps minimize returns generated by the REIT during the first three years to be exposed to volatility or business risk because the operating income is guaranteed by the Vendor Company to be as projected.

In addition, the Vendor Company of Pullman Jakarta Central Park agrees that for the period of two years from the first trading day of the REIT Units, subscribed to by the Vendor Company under the Share Sale and Purchase Agreement, on the SET on 27 December 2017, the Vendor Companies of Pullman Jakarta Central Park Hotel, their affiliates or related persons holding the REIT units will not be entitled to receive any returns or cash distributions from capital reduction of the REIT for the respective units to which the Vendor Company subscribes under the Share Sale and Purchase Agreement. In addition, the REIT Manager has similar arrangements with the Vendor Companies of Capri by Fraser and IBIS Saigon South in Vietnam as well. Therefore, through the period of non-entitlement of the Vendor Companies of the benefits and cash distribution from the capital decrease of the REIT, the said dividends will be allocated to the other


109


-109-

Unitholders, resulting in the higher rate of return to the other Unitholders when compared to the return rate received by the Vendor Companies for the shares to which they subscribe under the Share Sale and Purchase Agreement. Upon the expiration of the non-entitlement, the rate of return to Unitholders may be affected as those returns and cash must be distributed to all Unitholders, including the Vendor Companies of Pullman Jakarta Central Park and Vendor Companies of Capri by Fraser and IBIS Saigon South.

However, the REIT Manager noted that a risk of material decrease of returns to Unitholders is somewhat unlikely as its debt-to-equity remains at a manageable level, and in accordance with the SEC regulations. The relevant loan agreement provides that the principal repayment shall be made once at the end of the three-year loan term, during which time the REIT is liable for interest payments only. The REIT Manager anticipated that upon the expiry of the loan term, the REIT Manager will have sought a new source of funding in order to repay such loan. In addition, the main assets from the first investment are highly capable of generating income to the REIT. Therefore, the REIT Manager is positive that the REIT has the ability to pay interest on an ongoing basis.

(16) The Unitholders or other persons may not be able to recover damages against the REIT

Manager as in certain circumstances the REIT Manager has limited liability The Unitholders or other persons may later file a lawsuit or make a claim against the REIT Manager for any act in connection with the REIT Manager's duties, including a duty related to the public initial offering of the additional trust units and this prospectus, subject to provisions of the establishment of the REIT agreement. In the event of the REIT Manager's failure to manage the REIT in accordance with the establishment of the REIT agreement, the REIT Manager appointment agreement, or the Trust Act, negligence of any duty set forth in the REIT Management appointment agreement, negligence of performance of duty, or willfully breach of trust, the REIT Manager must be liable for penalties, or damages suffered by the REIT without limitation. Nevertheless, the REIT Manager may not be liable for any loss or damage incurred by the REIT, Unitholders, or any persons as a result of their performance of duty in that capacity if the REIT Manager honestly performs its duty with due professional care and reasonable skill, and treats the Unitholders fairly for the best interest of the Unitholders in accordance with the establishment of the REIT agreement, the REIT Manager appointment agreement as well as all applicable laws and commitments provided to the Unitholders (if any). The REIT Manager will not be liable to the Unitholders if any action or omission of any action (as applicable) by the REIT Manager is in compliance with provisions of any law, rules, regulations, notification, court order, judgment or other orders of any government authority. The REIT Manager will not be liable if the non-compliance with any clause of the agreement is caused by any force majeure event.

110


-110-

4.2 Risks associated with the Properties (1) The REIT is exposed to risks arising from volatility in the economy and tourism in the

Territories

The REIT are exposed to risks arising from volatility in the economic system and tourism industry, the effects of global economic recession or stagnation, currency fluctuations which may affect the income and expenses of tourists from target countries, the slowdown of activities of multi-national corporations in the Territories and the decrease of foreign investment for whatever reason, may weaken the number of businessmen who are guests of the hotel and tourists traveling to the Territories as a result of economic slowdown. The operation of the business by the Master Lessees or the hotel operators may be affected by changes in the number and category of hotel guests due to changes in tourist seasons and any negative image caused by any event that reduces the attractiveness of the Territories as locations for commercial dealings and business operations, and as a destination for foreigners. The business of the Properties may also be affected by the purchasing power of foreigners and the popularity of, or confidence in, tourism in the Territories which will in turn affect the operation of the REIT. However, the Master Lessees and/or the hotel operators may mitigate the foregoing risk by not limiting hotel guests only in certain regions or nationalities in order to accommodate different tourist seasons. Furthermore, if problems arise with one region or customer group, other groups can make up for the loss. Also, the purposes of guest visits can be diversified, e.g. for business and for leisure. (2) The Properties may be exposed to risks arising from rising competition in the hotel and

tourism industry The Properties may be affected by competition in the hotel and tourism industry, such as a rising number of hotel operators in the markets, an increase in the supply of hotel accommodations in the same area, or other tourist destinations that can be an alternative in terms of price, service quality, image and facilities. The purchasing power, average spending per stay, and number of target tourists and businessmen will also affect revenues and operating expenses of the Master Lessee, which in turn may materially affect the ability of the Master Lessee to pay fixed and variable rent, particularly if competitors renovate their hotels or improve their service quality in order to have higher capacity and attract more guests. However, the risk may be mitigated since the Properties are generally located in an area with convenient access to transport hubs for foreign guests, surrounded by tourist attractions, department stores and office buildings. The rooms are also well designed with basic amenities and facilities to accommodate all types of customers.


111


-111-

(3) Damage or loss may arise if the Properties are not fully covered under an insurance policy A sum insured or an amount received as compensation under the insurance policy may be insufficient for damage suffered by the REIT. The REIT will seek advice from insurance consultants in order to secure an insurance policy that covers property damage and liability related to the Properties. For business interruption insurance as prescribed in the hotel management agreement, the hotel manager must set an appropriate insured sum for the business interruption insurance. The REIT Manager is convinced that the coverage conditions and the sum insured are consistent with general practice in the immovable property business. Under the relevant insurance policy, there may be coverage conditions beyond the control of the REIT, that limit the extent of the coverage provided by the insurance policy, or include limitations in connection with the taking out of insurance policy at a reasonable premium. Defects in the design and construction, or latent defect of the property or equipment, or defects in the Properties may result in higher investment expenses incurred by the REIT for special repair and maintenance, or compensation for damage or obligations towards third parties, which may not be covered under the relevant policy. Furthermore, the REIT is exposed to risks of legal actions or claims initiated by customers, contractors, or guests of the Properties for various reasons, such as accidents or injury sustained within the premises of the Properties, inability of the Master Lessees to seek benefits from the Properties in accordance with the Lease Agreements, and inability of the REIT to perform duties in accordance with any lease agreements, construction agreements, or other agreements entered into with contractors, the Master Lessees, or third parties. Certain loss or damage arising from disasters, terrorism, epidemics, or other loss as a result thereof may not be covered under the policy, or the premium may be unreasonably high. As a result, the REIT may need to pay additional premium or reduce the coverage. Upon occurrence of serious damage, the coverage under the policy maintained by the REIT may not be sufficient for the damage claimed or sufficient for the market price or the replacement cost, or equal to investment by the REIT or the Master Lessors. Certain loss or damage may not be fully covered by insurance. As a result, the REIT may lose any or all of its investment in the Properties as well as future income expected to gained from the Properties. The REIT's insurance policies and coverage conditions are subject to renewal and future negotiation. The REIT Manager may provide a guarantee that the REIT will be protected under the existing and/or commercially reasonable conditions. Material increase in premium or decrease in coverage will adversely affect the operation, financial status, and ability to pay returns to the Unitholders.

112


-112-

(4) Investment Assets may be defective, or certain actions may violate the laws or rules and regulations, or there may be other defects

Unless otherwise disclosed in this Prospectus, the Financial Advisors and the REIT Manager has conducted a due diligence investigation and provided relevant professionals to examine the condition of the Properties and their component parts in the Territories to ensure that they are in good condition and investable, and that there is no non-compliance with the relevant laws and regulations. No material defect or deficiency that requires significant repair or maintenance (other than defect in the design, construction, or latent defects in the assets or equipment of the Properties that may incur additional investment, repair costs or special maintenance fees if those defects become overt after the investment by the REIT) was detected and no legal non-compliance was found. However, although the Financial Advisors and the REIT Manager have conducted a due diligence including arranging for relevant experts to assist in such due diligence, the ordinary restrictions for the due diligence makes it not possible for the Financial Advisors and the REIT Manager to give any assurance that the due diligence will uncover all defects relating to the Properties, especially certain defects of the real assets which are difficult to detect or are undetectable because of the restrictions of the due diligence, including techniques used for the due diligence or other factors which are relevant to the due diligence. These include defects that require repair and maintenance, or will reveal any non-compliance with the laws and regulations applicable to the Properties or the entities holding the Properties. Non-compliance with laws, rules or regulations, or other deficiency related to the Properties may be not detectable. Reports by the Asset Appraisers appointed by the REIT Manager to appraise the value of the Properties, the building inspection report, and the property appraisal report may be subject to some limitations that result in errors. Such latent defects or deficiencies may require additional investment by the REIT for repairs or may involve third party’s obligations which create unforeseeable expenses that may have a material adverse effect on the REIT's profit and cash flows. In case that the Properties and relevant parts thereof are not in compliance with laws or regulations, the REIT may also incur financial or other obligations arising from the breach or non-compliance. Furthermore, the scope of the due diligence on the Properties is limited only to: (i) any information or documents disclosed in the course of due diligence; (ii) publicly available information; and (iii) physical due diligence. Therefore, the Financial Advisors and the REIT Manager cannot give any assurance that all material documents and relevant information have been disclosed in the course of the due diligence investigation. Legal due diligence may not uncover all instances of non-compliance with the laws, regulations or terms of all contracts relevant to the Properties.


113


-113-

In order to mitigate the risk, the Master Lessee will set aside cash as a reserve to cover any unforeseen costs and expenses, to ensure the Properties are in good condition. Hotels operated by the hotel operators are subject to the requirements for structural and building compliance audits to ensure their compliance and to keep them in good condition, as required by the hotel management agreements. In the course of negotiation on the relevant sale and purchase agreements in relation to the Properties, the REIT Manager has required the relevant Vendor Company to give general representations and warranties on the Properties condition. In the event of any defect in the Properties or non-compliance with laws for which the Vendor Company is responsible under the relevant sale and purchase agreement, the REIT may also recover damages from breach of representations and warranties by the Vendor Company under the conditions of the relevant sale and purchase agreement. (5) There may be existing liabilities in the Master Lessors before the REIT's investment

In acquiring the assets, the REIT will directly and indirectly invest in the Master Lessors. As the Master Lessors have operated their business for some time liabilities may have been incurred before the REITs investment. There is no assurance that all material documents and relevant information have been disclosed in the course of due diligence. Legal due diligence may fail to identify all non-compliance with the law, regulations or terms of all contracts relevant to the Properties. However, the REIT Manager has engaged reputable professional advisors to conduct due diligence on the Master Lessors before making investment in their shares in order to locate any liabilities of those entities. Moreover, in the course of negotiation on the relevant sale and purchase agreements in relation to the Properties, the REIT Manager has required the relevant Vendor Company to give general representations and warranties, including those in relation to liabilities of the offshore holding companies and the Lessors existing before the REIT's investment. If any liabilities for which the Vendor Company is responsible under the relevant sale and purchase agreement are incurred, the REIT may also recover damages from breach of representations and warranties by the Vendor Company under the conditions of the relevant sale and purchase agreement.

(6) Representations, warranties and indemnities by the Vendor Companies are submitted to a

limited scope, amount, and period Any and all representations, warranties and indemnities granted in favor of the REIT by the Vendor Companies are subject to limitations as to the scope, amounts and time during which claims may be brought. The scope, amount and time depend on the significance of the representation or warranty, and is subject to the conditions of the relevant sale and purchase agreement in relation to the Properties. Based on the policy, in negotiating any sale and purchase agreement of the shares relevant to the Properties, the REIT Manager splits the seller's limitation of liability into three main categories: (i) representations and warranties given by

114


-114-

the seller in relation to the ownership of the relevant Property under which the seller represents and warrants that they hold the ownership thereof by holding shares or title to the land and structures at the closing; (ii) representations and warranties in relation to tax liabilities under which the seller represents and warrants that the relevant Property is not subject to any tax liability; and (iii) other representations and warranties, such as business-related licenses, actions, employees, financial status, accuracy of information provided to the REIT Manager during the closing. With respect to the ownership of the Assets, the REIT Manager discussed with the seller that a time limit on representation, warranties, and indemnities in relation to ownership will depend on the the Properties, such as 10 years or without pre-determined period. Time limits on representations and warranties regarding tax liabilities, and other representations and warranties vary from one year to five years, depending on the relevant business conditions. However, the REIT Manager can give no assurance that the REIT will be reimbursed under the representations, warranties and indemnification for all losses or liabilities suffered or incurred by it as a result of its investment in the Properties through the Investment Companies. The REIT Manager will exert their best efforts for the best interests of the REIT and the Unitholders. (7) Pullman Jakarta Central Park Hotel's access, and parking space, will not be part of the

Properties to be invested in by the REIT. Pullman Jakarta Central Park's access, and parking space, are not a part of the Properties to be

invested in by the REIT. The land used as the entrance, exit, and parking space is in the possession of other companies: PT Central Prima Kelola, which is an associated company of PT Agung Podomoro Land Tbk. ("APL"), the Seller. The land is commonly used with other properties located in the same project as Pullman Jakarta Central Park. However, the Lessor will directly enter into an agreement with the owner of the access, and parking space, to ensure that Pullman Jakarta Central Park and its customers can use the land as an entrance, exit, and parking space. The hotel customers will not be charged a parking fee in certain cases – for example, a customer that has the hotel's stamp will not have to pay a parking fee, in which case the hotel will not be able to charge parking fees from its customers, subject to the hotel management policy.

Even though the REIT does not invest in the entrance, exit, and parking space, there is a low risk of the entrance, exit, and parking space of Pullman Jakarta Central Park being obstructed or prohibited, as the agreement to be entered into with the land owner will be for an indefinite term and termination thereof must be with the consent of both parties (except for breach of contractual clause). Furthermore, the entrance, exit, and parking space are commonly used by the properties located in the same project and are used by a large number of people. For this reason, the REIT Manager is of the view that there is a relatively low possibility of obstruction or prohibition on using the entrance, exit, and parking space, which would affect other operators in the project and users in the areas.


115


-115-

(8) Natural disasters, other events of force majeure, terrorism, war, and political instability may negatively affect the REIT's income.

Many risks such as natural disasters or other events of force majeure that occur in the area in which the Properties are situated, and other areas with a large number of customers, may result in a decrease in consumption and tourism. Furthermore, wars, acts of terrorism, political turmoil, protests, and other political uncertainties, whether actual or threatened, may have similar effects. One or more of these events may reduce the number of guests staying at or using the service of the Properties, which will materially affect the income of the Master Lessees and its ability to pay fixed and variable rent. This will have a significant adverse effect on the REIT's operating results, financial status, and ability to pay returns or yields. These events may also cause damage to the Properties that are not covered under an insurance policy. (9) The values of the Properties as appraised by the Asset Appraisers do not always reflect the

actual values of the Properties, and cannot guarantee that the selling prices of the Properties are, or will be, consistent with the appraised values. Normally, appraisal of a property takes into consideration certain factors related to the property, such

as market condition, financial strength, competitiveness, and physical characteristics of the property, which may change in the future. This is because some or all of the events under the assumptions may not occur, or an unexpected event or situation may occur. These assumptions are based on the information provided by the Vendor Companies, and have been discussed with them. The assumptions contain projections and opinions on an event that may occur in the future. Therefore, they may involve certain risks and uncertainties, whether known or unknown to the investors. Even though the REIT Manager has caused Asset Appraisers to conduct the appraisal review, the REIT Manager is of the view that the Asset Appraisers' assumptions are reasonable. The actual and future operating results of the Properties may be different from the assumptions by the Asset Appraisers. Furthermore, some information related to property appraisal and information of the report of property appraisal specified herein may be based on, and contain, information that constitutes prediction or estimation, or other forward- looking statements, which involve risks and are uncertain. Therefore, the risks, uncertainties, and other factors in future events may cause the actual operating results to be materially different from the future operating results contained in the forward-looking statement, whether expressly or by implication. Moreover, this Prospectus does not contain all assumptions used for the appraisal of the property values.

116


-116-

Information shown in this Prospectus does not concern opinions on commercial ethics or structure of the REIT and Properties, nor does it concern opinions, whether express or implied, regarding the future trading price of the Units or the financial status of the REIT upon being listed on the Stock Exchange of Thailand. Moreover, the information does not completely include all that may be necessary or desirable for the appraisal of the Properties, and investment in the REIT or the Units. Information and particulars related to the Asset Appraisers do not grant rights or solutions to investors or any other persons, and are not intended to constitute, or be construed as, warranty of any kind of the future financial status or operation of the REIT, or any other forward-looking statements.

Moreover, REIT Manager cannot guarantee that the property appraisal by the Asset Appraisers would always reflect the actual values of the Properties, or guarantee that other asset appraisers would determine the same values. As a result, REIT Manager cannot guarantee that the assumptions that are the basis of the appraisal will be accurate and precise. The price at which the REIT sells any property may be lower than the price at which the Asset Appraisers determined as of the date on which the REIT invested in the Properties, or may be lower than the purchase price at which the REIT obtained the Properties. Furthermore, the net value of the property initially appraised by the Asset Appraisers may not always reflect the actual value of the property when the REIT disposes of the property or liquidation is made on the REIT.

The reports on property appraisal by the Asset Appraisers merely contain the appraisal information as of the date specified therein. Therefore, any person related to the offering, or any other person, should not consider the reports as advice regarding how a person should proceed based on the appraisal by the Asset Appraisers disclosed in this Prospectus. The decision to buy the Units in the REIT by the investors should not rely solely on the appraisal and the information in the property appraisal reports of the Asset Appraisers as set out in this Prospectus.

(10) Decrease in the fair value of the Properties and investment in leaseholds will have an adverse

effect on the income statement, property net value, and the REIT's ability to pay returns

If the fair value of the Properties and investments in the leaseholds of the immovable property decreases due to loss arising from the appraisal of property fair values and the investment in that year, the net value of the property will decrease and the REIT may have excess liquidity due to loss arising from the appraised fair values. This will affect the REIT's ability to pay returns. However, the REIT may reduce its registered capital and return the excess liquidity to the Unitholders to be able to pay returns.


117


-117-

(11) Risks related to the relevant extension or renewal of the rights to use land

The ownership of Pullman Jakarta Central Park is in the form of a strata title with a strata title certificate, known as HMSRS. The project's HMSRS has to be on land with an HGB Title (the term of an HGB under Indonesian law is fixed). The HMSRS term and HGB term for Pullman Jakarta Central Park are consistent – that is, both terms will expire on 17 March 2026 and has been extended until 9 June 2037. The HGB Title under Indonesian law has an initial term of 30 years, and the certificate holder is entitled to apply for an extension of no more than 20 years. When that term expires, the REIT Manager expects that the REIT, which is the holder of the certificate, will be entitled to apply for a renewal. It is expected that the certificate may be renewed for a term equivalent to the HGB initial term – that is, 30 years, with an extension of no more than 20 years. However, The relevant agency will consider whether the use of land is in accordance with the conditions prescribed by law, e.g. whether the land has been used as per the prescribed objectives or conditions (if any), and whether the terms have been complied with, and whether the use of land complies with the city zoning. The REIT Manager has opinion that there is less chance for rejecting of the future extension period since Hotel operation dosen’t conflict with the terms and conditions of the land and city zoning. (12) The definite fees for the application for extension or renewal of the HGB certificate forthe

Properties in Indonesia are not fixed as they are subject to the land value at the time of the application for extension or renewal of the HGB certificate

The assets of Pullman Jakarta Central Park, Indonesia, are held under the Strata Title Certificate, known as the HMSRS. The nature of the HMSRS right is that the right must always be created over the land which has an HGB Title (a non-perpetual right under Indonesian laws), and the HMSRS right will have the same period as the HGB Title. For Pullman Jakarta Central Park, the HMSRS right will expire on 17 March 2026 (in the next 8 years, approximately) and has been extended until 9 June 2037. Under the laws of Indonesia, the HGB Title has an initial term of 30 years and the right holder is entitled to an extension of not exceeding 20 years. Upon the expiry of such term, the REIT Manager anticipates that the REIT (currently the holder of the certificate after investing in Pullman Jakarta Central Park) will be entitled to a renewal and the renewal period is expected to be equivalent to the initial term of the HGB Title, 30 years. After the lapse of the 30 years, the REIT will be entitled to an extension of 20 years. Nonetheless, such period has not been explicitly prescribed in Indonesia laws and there has not been an example case of such renewal. In practice, the extension and renewal of the extension will be considered by the relevant agencies within 2 years before the expiry of the term. However, the local legal counselors have seen cases where the approval process for granting HGB Title was extended prior to the 2-year before of the expiration of the term.

118


-118-

In applying for an extension or renewal of the HGB certificate, the applicant must pay a fee as determined by the government, currently in accordance with the regulation related to the specification of types and fees charged by the land office (Indonesia) (Government Regulation No. 13 of 2010 on Types and Tariffs for Applicable Non-Tax State Income at the National Land Office). The fee will be calculated based on the following formula: tariff = (0.2 percent X land value) + IDR 100,000. The regulation prescribes that the land value must be the land value according to the Land Value Zone Map. If there is no value determined for any zone, the land office will appraise the price reflecting the current appraisal price called the sales value of taxable object (NJOP).

Nonetheless, the value of land on which Pullman Jakarta Central Park is situated may change, subject to various factors including the economic climate and the policies of the Indonesian government. If the value of the land significantly increased at the time of the application for extension or renewal of the HGB certificate, the REIT would be liable to pay an increased tariff charged by the land office for the extension or renewal of the HGB certificate, and as a result, the returns for the Unitholders may decrease.

To mitigate the risk, the REIT Manager will follow up with the land office to ensure and procure that the lessor company of Pullman Jakarta Central Park strictly complies with the conditions or the relevant rules relevant to the extension and renewal of the HGB Title. The REIT Manager will also ensure that the lessor has enough cash flow to pay the tariff for the extension or renewal (whichever is the case) upon such renewal or extension of the HGB term.

The independent appraisers have not taken into account the costs of the extension. However, the financial advisors and the REIT Manager has adjusted the appraised values to reflect such expense.

(13) Risks from investment in the subleased land plots of Capri by Fraser and IBIS Saigon South

Both Properties of the REIT in Vietnam, namely Capri by Fraser and IBIS Saigon South, are situated on subleased land plots. The Ho Chi Minh City (HCMC) local authority is the landlord that subleases the land plots on which the Properties are situated, to Phu My Hung Development LLC (PMH), which is licensed to develop the project on land in HCMC District 7. If the lease agreements for the land plots on which the Properties are situated, between the Ho Chi Minh City People’s Committee (HCMC People’s Committee) and PMH, are cancelled or terminated, the sublease of the land plots between PMH and the lessors, the REIT's subsidiaries, will also be terminated. This will result in all Properties constructed on the subleased land becoming the property of the land owner, which is currently Ho Chi Minh City, without having to pay compensation to the sub-lessees under the terms and conditions of the land sublease agreements, which will significantly affect the REIT's ability to operate business and its income.


119


-119-

The REIT Manager is of the view that there is a low possibility that the Lease Agreements for the land plots on which the Properties are situated, between the HCMC People’s Committee and PMH, will be cancelled or terminated before the terms specified therein. This is because PMH is licensed by the HCMC People’s Committee to develop the project on the land in HCMC District 7, and PMH is incorporated by co-investment between the HCMC People’s Committee and Central Trading & Development Group, with its head office in Taiwan (source: PMH's website). As a result, the REIT Manager believes that at the date of filing of this registration statement or draft prospectus, there is a relatively low chance that the landlord will terminate the land sublease agreements with its co-investor without reasonable cause. 4.3 Risks associated with the investment in immovable property (1) General risks related to investment in immovable property

Investment in immovable property involves various risks, including: (1) negative changes in politics and economic conditions, such as domestic and international economic recession, and decrease in overall consumption demand; (2) negative condition of the domestic real estate markets in the Territories; (3) changes in interest rates, inflation rates, and foreign exchange rates; (4) changes in financial policies or other economic policies in and outside the country; (5) unexpected increase in operating expenses related to immovable property; (6) changes in the laws or regulations related to the environment, city plans, and other government rules and regulations, including public finance policies; (7) demand for responsibility for the environment related to immovable property; (8) changes in the fixed and variable rents to be received from the immovable property invested in; (9) changes in the prices of oil and other fuels; (10) changes in the popularity of types of immovable property and locations, leading to an excessive number of rooms or decrease in demand by any target customers for some types of rooms or immovable property invested in; (11) ability of the hotel operators or the Master Lessees that may affect the business and reputation of the hotels; (12) inability to renew the lease agreement and the sublease agreement; (13) inability to collect rent from the Master Lessees within the specified periods, or inability to collect payment due to bankruptcy or insolvency of the Master Lessees, or otherwise; (14) insufficient coverage under existing insurance policies, or increases in premiums; (15) inability of the Master Lessees to provide adequate maintenance and other services; (16) defects in the immovable property that require correction or repair, and maintenance of the immovable property, causing unexpected investment expenses; (17) lack of liquidity in investment in immovable property; (18) excessive reliance on cash flow for the maintenance and renovation of the existing immovable property; (19) increase in operating expenses, as well as applicable taxes and duties; (20) interests or obligations not discovered or disclosed during the examination of the land at the relevant land office; (21) events of force majeure that are not insured, and other factors; and (22) changes in the laws and regulations concerning taxation and other things.

120


-120-

The various factors above may cause volatility in the rental rates, occupancy rates, and operating expenses for the immovable property, and tax related to payment of returns, which will in turn adversely affect the value of the immovable property, and the fixed and variable rents generated by the immovable property. Annual valuation of the Properties will reflect those factors, and may cause the value of the Properties to increase or decrease. The investment value of the Properties may materially decrease in the event of a sudden crisis regarding the immovable property price or the economy in the Territories where current or future Properties are located. (2) The REIT may be adversely affected by lack of liquidity as a result of investment in

immovable property, and may lack other options in exploiting the Properties.

The REIT will mainly invest in immovable property and properties related to the immovable property. Generally, investment in immovable property – especially the investment in high-value property to be invested in by the REIT – has low liquidity. Low liquidity may affect the ability of the REIT in making changes to its investment portfolio, or the ability to convert some property into cash to accommodate changes in economic conditions, real estate market, and other factors. For example, the REIT may not be able to sell the Properties within a short time, or might be forced to considerably reduce its price in order to sell the property quickly. The REIT may also have problems in finding loan sources in a timely manner and under commercially agreeable terms, in the case of secured loans. This is because immovable property lacks liquidity. Furthermore, the use of the Properties cannot be changed promptly if they cannot generate profit due to competition, age of the property, decreased demand, or other factors. Normally, changes in the manner of use of the Properties require additional investment. These factors may adversely affect the financial status and operating results of the REIT, as well as its ability to pay returns to Unitholders.

However, as the REIT is investing in the shares in the Investment Companies instead of directly investing in ownership or leasehold rights of the Properties, the REIT may dispose of its investments by selling the shares in the Investment Companies, which is more liquid than selling the Properties. (3) Strategies of the REIT in investment in property used for the operation of the hotel business

may expose the REIT to higher risks when compared with other types of funds with more diversified portfolios. The main strategies for investment in property used in the operation of the hotel business will expose

the REIT to risks arising from investment in immovable property, which are higher compared to other types of funds with diversified portfolios in other industries.


121


-121-

The investment that focuses on leasehold of the immovable property used for the hotel business operation may expose the REIT to risks if a crisis or adverse event occurs in the tourism industry and hotel business in the ASEAN region, especially the Territories. A crisis may lead to a decrease in the prices of guestrooms, or occupancy rates, of the Properties, which may affect the returns or yields to be paid to Unitholders, or the operating results and financial status of the REIT.

The REIT may seek to mitigate this risk by investing in immovable properties located in many jurisdictions and of different grades and market positioning, so that an adverse event affecting the tourism industry in one country would not excessively affect the overall operating results of the REIT.

(4) The Properties may be subject to expropriation.

The Properties are exposed to an expropriation risk under the government's policy. All compensation

that may be obtained as a result of damage from expropriation will be for the landowner or person exploiting the property, and the amount thereof may not be equivalent to the amount paid to purchase the property. This may cause the returns paid to the Unitholders to be inconsistent with the projections, both regarding the return and the priority. The REIT may receive only the compensation from the local government or relevant government agency, pursuant to the rules and procedures prescribed by law. The amount received by the REIT will depend on the conditions specified in relevant law and agreements, and the remaining term for use of the Properties after expropriation. The REIT Manager cannot determine the possibility of expropriation, as land expropriation is under government policy and depends on the government's necessity in using the land at a particular time. The expropriation may adversely affect the financial status and operating results of the REIT, which as a result, affects the ability of the REIT to pay returns to the Unitholders. (5) The REIT will invest in leasehold right of the immovable property, of which the value may

decrease in alignment with the remaining lease term, resulting in a pro rata decrease in the value of the Units.

At present, the REIT has invested in the leasehold right of Capri by Fraser and IBIS Saigon South.

The value of the leasehold right to the said assets may decrease in alignment with the remaining lease term, due to appraisal of the leasehold right value, changes in occupancy rates, rent rates, costs of public utility services, or other reasons beyond the REIT's control. The change of the leasehold right value may significantly affect the net asset value of the REIT's property, value of the Units, or ultimately the REIT's distribution payments.

122


-122-

(6) Changes in the accounting standards or applicable laws, or practices of relevant authorities

The REIT may be affected by the enforcement of new accounting standards or amendments to the laws, rules, regulations, accounting standards, or the Thai Financial Reporting Standards, or changes in the accounting standards that are amended to be consistent with the International Financial Reporting Standards (IFRS). The REIT's financial statements may be affected by the enforcement of amended financial standards. The condition and time for these changes are unknown and subject to the relevant agency. Therefore, the REIT Manager cannot guarantee that these changes will not significantly affect the preparation of the REIT's financial statements, or its operating results and financial standard. The changes may also negatively affect the REIT's ability to pay returns to Unitholders. Furthermore, it cannot be guaranteed that no changes to any rules or regulations will adversely affect the REIT Manager's ability to comply with the REIT's investment strategies, or its operating results and financial status.

Furthermore, the REIT may be affected by the accounting standards of Indonesia and Vietnam, as well as amendments to the laws, rules, regulations, or accounting standards thereof, due to the calculation of net operating income for the Master Lessees' rent payment to the Master Lessors. This may adversely affect the REIT's ability to pay returns to the Unitholders.

The income tax calculation for the Properties in Vietnam is based on income after expenses, including related-party expenses such as fees for the services between the Offshore Holding Companies and the Master Lessor company in each country, in which the pricing and remuneration shall b determined for such items. The consideration on these matters depends on the practice and discretion of the agency overseeing tax collection and assessment in Vietnam. These practices and discretion are subject to change. If the agency overseeing tax collection and assessment changes its practice or, at its discretion, deems that certain expenses are not considered expenditure, or changes its practice on pricing or related-party compensation, the difference resulting from offsetting the net operating income (NOI) with the lessors' rental income may be assessed by an agency related to tax calculation. This may result in an increased tax burden for the REIT, which may negatively affect the REIT's ability to pay returns to the Unitholders.

(7) Risks related to the investment of the REIT in the Properties located offshore

Since the investment of the REIT consists the investment in Properties in Vietnam and Indonesia.

The REIT is exposed to the risk relating to investment offshore, including: (1) inter-country financial management of the REIT; (2) risks relating to the economic, political and tourism climate in the country in which the REIT's assets are located; and (3) legal risks specific to each country.


123


-123-

Since the income of the REIT will be in foreign currencies, and the income and the expenses of the Lessor company and the offshore holding companies will be in the relevant currencies, while the funds raised and the dividend payment to the Unitholders will be in Thai Baht, the REIT is exposed to the risks relating to the fluctuation in exchange rate. In addition, since the investment of the REIT consists of investment in the Properties in multiple countries, the method for paying out benefits from the operation of the Properties are different depending on the method of remittance, tax benefits and relevant fees. Further, the REIT has to comply with the standards on the restrictions of capital transfer, the regulations on money transfer, and the control on the exchange rate in each of the countries in which the REIT invests. This results in the REIT being exposed to the risks relating to the management of the REIT's moneys in different countries.

The risks relating to the economic, political, and tourism business conditions in the countries in which the Properties are located, are different because those risks are dependent on the particulars of each of those countries, and thus affect differently the consumption and tourism in that country. In addition, the possibility of the eventuality of war, terrorist attack, political unrest, and other political uncertainties of each country is also different. The occurrence of any of those events may result in the demand for the hotel in any one country decreasing and affecting the income of the Master Lessee and also its ability to pay rental. In that case, the operating performance of the hotel will be negatively affected, as well as its financial status, ability to pay benefits and dividends to the REIT.

The specific legal risks of each country - The right to the assets of Pullman Central Park in Indonesia is Strata Title Certificate right (HMSRS) on the land with HGB Title (a non-perpetual right under Indonesian laws), incurs a fee as prescribed by the Indonesia government. Owing to the legal restrictions and regulations of Indonesia as mentioned, the REIT is exposed to the risks relating to the assets arising from the holding of fixed-term rights. In all countries, the REIT is exposed to the risk of legal compliance.

The REIT's assets in Vietnam are located on land which is subleased. This means that there is a risk that the master lease of the land on which the Properties in Vietnam are situated, entered into between the local administrator of Ho Chi Minh City and Phu My Hung Development Limited Liability Company (PMH), may be terminated or expires, which will cause the subleasing of the land by Phu My Hung Development Limited Liability Company to the Lessor company, which is a subsidiary company of the REIT, to end and therefore affecting the REIT's ability to continue its operations and materially affect the income of the REIT. 4.4 Risks associated with investment in the Units of the REIT (1) Risks arising from the lack of a secondary market for trading the Units of the REIT

124


-124-

The offering price of the Units was determined by the REIT Manager and the Underwriters, based on the demand from investors and selling agents of the Units. The offering price may not reflect the market price of the Units to be traded in a secondary market after this secondary offering. The trading price of the Units in the secondary market may be significantly lower than the offering price of the Units in this offering. The trading price of the Units depends on the following factors:

• perspective on the potential for operation and investment of the REIT and the real estate market in the Territories;

• difference between the actual financial status and operating results, and those forecasted by the investors and analysts;

• changes in advice or projections of the analysts; • changes in general economic or market conditions, and changes in the need for

consumption, and interest rates, foreign exchange rates, and the government's import and export policies;

• the number of tourists in the Territories; • the market value of the Properties; • the attractiveness of the Units compared with other types of equity, including trust units in

other industries apart from the real estate business; • balance between the demand for and supply of the Units; • sale of, or intention to sell, a large amount of the Units by the Unitholders; • future size and liquidity of the Thai market for REITs; • future changes related to structure, rules, and tax burdens, in general and specific to

REITs, and investment in the Territories and other jurisdictions; • the REIT’s inability to comply with investment and business expansion strategies; and • volatility of market conditions, including the vulnerability of the capital market and increased

interest rates. Based on the factors above, the Units may be traded in the secondary market at a higher or lower

price than the net asset value of the trust Units. Furthermore, the REIT may set aside some profit, as reserves for working capital, or for other purposes. Although this could cause the net asset value of the REIT to be higher than when no profit is set aside, this may not cause the market price of the Units to increase. The REIT’s inability to meet the expectation of the market in terms of profit and returns may negatively affect the market price of the Units.


125


-125-

The Units are not financial products with capital protection. The REIT Manager cannot guarantee that the Unitholders will receive the capital back in full. In the event of dissolution or termination of the REIT, the investors may lose all or some of their investment in the Units. Corporate income tax has not been imposed on the income of the REIT. However, if there are any changes to the applicable laws and regulations concerning taxation or other matters, the REIT or the Unitholders may have tax burdens. Tax payment will have a significant adverse effect on the business, financial status, operating results, and opportunities of the Unitholders, and may cause the returns paid to the Unitholders to decrease, or lead to higher tax burden, which may have a negative effect on the price of the Units. Therefore, the REIT Manager cannot guarantee whether the REIT will be able to pay returns or yields for the Units, or maintain the return rate at a stable level.

The income received from investment in real estate depends on various factors, including the rent receivable; operating and other expenses incurred as a result of many factors, such as the economic conditions in Thailand and other countries; potential of the Master Lessees and hotel operators to maintain their ability to operate the business, control the operating expenses, competition, and occupancy rates, change the operational rules and regulations, and handle natural disasters and political turmoil. If the Properties and other related properties do not generate consistent and sufficient income, and the REIT cannot find a capital source with appropriate cost or conditions in a timely manner, it may cause adverse effects to the income, cash flow, and the REIT’s ability to pay returns.

Therefore, the REIT Manager cannot guarantee that the REIT will have the ability to pay returns or maintain the rate of returns in accordance with the determined policy of payment of returns. The Settlor cannot guarantee whether the rate of return or yield will increase or remain at a constant rate, whether the rent generated from letting or subletting the Properties to the Master Lessees will increase, or whether the revenue from fixed and variable rents of the Properties invested in by the REIT in the future will increase the income of the REIT, which may lead to payment of returns or yields to the Unitholders. (2) Unitholders cannot redeem the Units.

As the REIT is a fund with no redemption allowed, the Unitholders cannot redeem their Units. Therefore, there is no guarantee that the Unitholders will be able to sell their trust units at the price at which they purchased them, or at any price, or that they can be sold. However, the Unitholders can sell the Units on the exchange market. The liquidity of the trade will be consistent with market conditions.

126


-126-

(3) The value of the Units may decrease if newly issued units are issued at a lower price after the additional offering

For the offering of the additional trust units, the offering price is 9.45 Baht per unit, which is an offering price that is lower than the par value of the REIT of 9.9086 Baht per unit. Since the offering price is lower than the par value of the REIT, the offering may reduce the value of the trust units. (4) Future material sale of Units by Strategic Partners may have adverse effects on the market

price of the Units

The market price of the Units may be materially affected by future sale of the Units by the Strategic Partners. After the additional offering, the Strategic Partners will become one of the major Unitholders of the REIT. The details on the units held by the Business Alliance are as follows:

The units which are held by the Strategic Partners with the undertaking on non-entitlement to sell for a period of 2 years form the first trading day of the units in the SET (27 December 2017) in accordance with the terms relating to the Properties are as follows:

Strategic Partners Number of Units % 1 PT Agung Podomoro Land Tbk 63,928,100 18.12 Leebro Holding Pte Ltd 4,417,200 1.25 Total 68,345,300 19 .37

Remark: 1. Calculated from the current total units of 352,869,700

Even though the said persons have agreed to not sell, dispose, transfer the units, to which they subscribed pursuant to the Share Sale and Purchase Agreement, there is no guarantee that upon the expiry of the 2-year period such persons will not sell a significant portion of their units. If such sale occurs, the price of the units in the market may be negatively affected. (5) The capital return as a result of dissolution of the REIT may be lower than the amount

invested by the Unitholders in this offering

If the REIT is dissolved, the Settlor cannot guarantee that the Unitholders will receive capital return, in whole or in part. This depends on the cause, method of dissolution, rules for sale of the REIT's property, and the remaining leasehold term.


-126-

(3) The value of the Units may decrease if newly issued units are issued at a lower price after the additional offering

For the offering of the additional trust units, the offering price is 9.45 Baht per unit, which is an offering price that is lower than the par value of the REIT of 9.9086 Baht per unit. Since the offering price is lower than the par value of the REIT, the offering may reduce the value of the trust units. (4) Future material sale of Units by Strategic Partners may have adverse effects on the market

price of the Units

The market price of the Units may be materially affected by future sale of the Units by the Strategic Partners. After the additional offering, the Strategic Partners will become one of the major Unitholders of the REIT. The details on the units held by the Business Alliance are as follows:

The units which are held by the Strategic Partners with the undertaking on non-entitlement to sell for a period of 2 years form the first trading day of the units in the SET (27 December 2017) in accordance with the terms relating to the Properties are as follows:

Strategic Partners Number of Units % 1 PT Agung Podomoro Land Tbk 63,928,100 18.12 Leebro Holding Pte Ltd 4,417,200 1.25 Total 68,345,300 19 .37

Remark: 1. Calculated from the current total units of 352,869,700

Even though the said persons have agreed to not sell, dispose, transfer the units, to which they subscribed pursuant to the Share Sale and Purchase Agreement, there is no guarantee that upon the expiry of the 2-year period such persons will not sell a significant portion of their units. If such sale occurs, the price of the units in the market may be negatively affected. (5) The capital return as a result of dissolution of the REIT may be lower than the amount

invested by the Unitholders in this offering

If the REIT is dissolved, the Settlor cannot guarantee that the Unitholders will receive capital return, in whole or in part. This depends on the cause, method of dissolution, rules for sale of the REIT's property, and the remaining leasehold term.


127


-127-

(6) Net asset value of the REIT may not be equal to the actual trading price on the exchange market

The net asset value of the REIT announced by the REIT Manager is calculated from the total assets less gross liabilities as per the financial statement of the REIT, the fair value of investment in the real estate and movable properties of which have been adjusted using the latest appraisal report or appraisal review report as the basis for valuation of the immovable property. The value may not reflect the actual trading price on the exchange. This is because the trading price also depends on other factors such as demand for, and supply of, the securities, and inflow of investment by foreign investors, etc.

(7) Net asset value of the REIT is not the actual value of the assets to be received by the REIT in

the event of a total sale of the assets or dissolution of the REIT

The net asset value of the REIT specified herein is calculated based on the data from the appraisal report for the investment assets. The value may not be the actual value to be received by the REIT upon a total sale of the assets or dissolution of the REIT.

(8) Unitholders may not receive returns from the REIT if there is a breach of the loan agreement

The loan agreements have a condition that the borrower must not pay dividends to the Unitholders if there is a default under the loan agreements. For this reason, if the REIT and/or the subsidiary of the REIT, as the borrower thereunder, default on the loan, the REIT will not be able to pay dividends to the Unitholders until the default is remedied as prescribed in the loan agreements or as the Parties shall later agree upon. However, the REIT Manager is of the view that there is relatively low risk of the REIT breaching the loan agreement, as the REIT Manager has conducted an audit and believes that the REIT can comply with the conditions prescribed under the loan agreement. 4.5 Jurisdictional risk

The Properties are in a number of jurisdictions, and therefore the operation of the Properties will be subject to the applicable laws of the respective jurisdictions. The REIT's structure also involves the shareholding in the Investment Vehicles, which are companies located in different countries. The operation of the Properties and the investment in the Investment Vehicles are currently permitted by the applicable laws of the relevant countries. The REIT may be affected by the enforcement of new or amended laws, rules,

128


-128-

or regulations related to the operation or investment. The conditions and time for these changes are unknown and depend on the relevant agencies. However, based on the current data, the REIT Manager has found no information on changes to the laws, rules, or regulations that may affect the investment by the REIT, or the operation of the Properties. 5. Legal Dispute

-None- 6. Other Major Information -None-

3 Management and Governance

130


-131-

Part 3

Management and Governance

7. Units Trust and Unitholder information

7.1 Units Trust and Unit Price information

7.1.1 Units Trust information

REIT has been registered on 20th December 2017 with the registered capital of 3,528,367,000 THB and fully paid-up capital of 352,836,700 units

• Units trust information as of 30 December 2019

Registered Capital (THB) 3,528,367,000

Paid-up Capital (THB) 3,414,798,033

Par Value per Unit (THB) 9.6781

Total Units (Unit Trust)

352,836,700

Closed Price as of 30 December 2019 (THB) 5.80

Market Price (THB) 2,046,452,860

Weighted Average of Trading Volume per Day (Unit Trust) 62,666

Weighted Average of Trading Value per Day (THB) 44,828

Type of Unit Trust Unredeemable

1st Offering Price (THB) 10.00

Net Asset Value (NAV per unit) (THB) as of 3 January 2019 9.0555

Net Asset Value (NAV per unit) (THB) as of 30 December 2019 7.9718


131


-132-

• Capital Reduction for 2018

• Capital Reduction for 2019

7.2 Bonds issued by the REIT

-None- 7.3 Structure of Trust Unitholders

Top 10 Unitholders Information of book closing date as of 28 November 2019 are as follows:

No Name Number of Units % 1 PT AGUNG PODOMORO LAND TBK 100,194,500 28.397 2 GIC PRIVATE LIMITED 68,652,800 19.457 3 FWD Lile Insurance Public Company Limited 28,900,000 8.191 4 Mr. Chanond Ruangkritya 16,000,000 4.535 5 MACQUARIE BANK LIMITED (HKB) 15,638,700 4.432 6 B Senior Citizen Mixed Fund 13,545,000 3.839 7 Mrs. Darika Punnagun 8,000,000 2.267 8 Mr. Tanarat Pasawongse 7,050,000 1.998 9 Bualuang Income Fund 6,974,600 1.977 10 SCB Income Plus Fund 6,801,800 1.928

Total 272,087,200 77.021

No. Performance Period for the year of 2018

Capital reduction

Book Closing Date

Payment Date THB

THB per Unit

1 20-Dec-17 to 31-Mar-18 17,524,670.25 0.0616 31-May-18 15-Jun-18

2 1-Apr-18 to 31-Jul-18 14,708,205.33 0.0517 29-Aug-18 14-Sep-18

3 1-Aug-18 to 31-Oct-18 9,928,749.65 0.0349 19-Dec-18 28-Dec-18 Remark: Cash from capital reduction was paid in 3 periods paid from excess liqidity from non-cash expenses.

No. Performance Period for the year of 2019

Capital reduction

Book Closing Date

Payment Date THB

THB per Unit

1 1-Jan-19 to 31-Mar-19 26,770,640.74 0.0941 22-May-19 12-Jun-19

2 1-Apr-19 to 30-Jun-19 21,450,651,56 0.0754 30-Aug-19 20-Sep-19

3 1-Jul-19 to 30-Sep-19 23,186,049.10 0.0815 28-Nov-19 25-Dec-19 Remark: Cash from capital reduction was paid in 3 periods paid from excess liqidity from non-cash expenses.

132


-133-

7.3.1 Major Shareholders Who Has Significant Influence on the Policy, Management and Operation of the REIT Manager

- None – 7.4 Return Distribution of the REIT 7.4.1 Policies of Return Distribution and Restrictions Terms, policy, and procedures for distribution of return to Unitholders are to comply with the guideline as follows:

1) The REIT Manager shall distribute return to Unitholders no less than 90 percent of the adjusted net profit for that Fiscal Year. The return shall be distributed no more than 4 times per Fiscal Year. The REIT Manager may consider to distribute special return to Unitholders other than the regular 4 times per Fiscal Year as abovementioned as the REIT Manager views as necessary and appropriate. Such return shall be distributed within 90 days from the end date of the Fiscal Year or the accounting period in which the return is distributed, as the case may be.

Adjusted net earnings referred to in paragraph one shall include net profit based on the cash status of the REIT in accordance with the guidance determined by the SEC Office.

In case where the REIT Manager fails to distribute return within the specified period of time, the REIT Manager shall give notice thereof to Unitholders via the IT system of the SET.

2) In case there is a distribution of returns to the Unitholders in that Fiscal Year, the REIT Manager shall announce the distribution of returns to the Unitholders and close the Unitholders registration book in order to identify the Unitholders who are entitled to receive the returns. The REIT Manager shall comply with the following conditions in distributing the returns to the Unitholders:

(a.) In case the distribution is at year-end, the REIT Manager shall distribute the returns within 90 days from the last date of that Fiscal Year, and within 30 days from the date which the Unitholders registration book is closed for the identification of the Unitholders who are entitled to receive the distribution of returns.

(b.) In case of the interim distributions (if any), the REIT Manager shall distribute returns to the Unitholders within 90 days from the last date of teach quarter where the distribution is executed and shall distribute within 30 days from the date which the Unitholders registration book is closed for the identification of the Unitholders who are entitled to receive the distribution of returns.

3) In case the REIT operates with accumulated losses, the REIT Manager shall not distribute any return to the Unitholders.

4) The Unitholders who have the right to receive the distribution of returns shall have their names appear in the REIT’s Unitholders registration book on the date which the unitholders registration book is closed for the distribution of returns proportionated with the unitholding of each Unitholder. In case any person or group of persons holds more Units than the units holding limit determined by the SEC, such


133


-134-

persons or group of persons shall not be entitled to receive a distribution of returns for such excess portion of Units determined by the SEC.

Additional conditions

(1) In considering the distribution of returns, in case the return to be distributed per Unit during or for Fiscal Year is less than or equivalent to Baht 0.10, the REIT Manager shall reserve the right to not distribute the return of such period and carry forward to distribute in the subsequent period in accordance with the distribution procedures set forth.

The REIT Manager shall comply with the distribution rules specified above unless otherwise amended, changed, announced, stipulated, directed, approved, or relaxed by the SEC or the SEC Office or any or any agencies with authority, the REIT Manager shall also comply with such aforesaid hereof, accordingly.

(2) The REIT Manager shall announce the distribution of return, the registration book closing date, and a yield rate by giving notice thereof to the Unitholders, whose names appear in the Unitholders registration book on the book closing date, via the IT system of the SET, and sending notice in writing to the Trustee.

(3) The REIT Manager shall distribute the returns by wire transferring to each bank account of the Unitholder or providing an account payee only cheque to the Unitholder whose name and address are recorded in the Unitholders registration book.

(4) In case a Unitholder does not exercise its right to receive any return amount within the specified period of time of the right to claim prescribed under the Civil and Commercial Code, the REIT Manager shall not spend such amount for any purpose other than for the benefits of the REIT.

Conditions and procedures on the distribution

The REIT Manager shall distribute the returns to Unitholders in proportion to each of their unitholdings. The REIT Manager shall reserve the right to distribute the return to Unitholders who hold Units exceeding the unitholding limit or not in accordance with the rules prescribed under Notification No. ThorJor. 49/2555 only to the extent that is in contrary to the rules, and the portion of returns not payable to such Unitholders shall be distributed to the others Unitholders in proportion to their unitholding.

Non-entitlement to cash distribution

The REIT (by the Trustee or the company whose shares are held by the REIT) and certain Unitholders may enter into a contract or agreement whereby such Unitholders and its affiliated companies or persons agree not be entitled to any rights with respect to the cash distribution (may including a capital reduction) from their unitholdings during the Lock-Up Period, and in this case such Unitholders shall not have any right to receive the distribution during the Lock-Up Period and the REIT Manager shall calculate the distribution payable to other Unitholders in proportion to their respective unitholding by excluding the aforementioned portion of such unitholders.

134


-135-

The terms of the non-entitlement to dividend for each of the Vendor Companies are as follows: 1) PT Agung Podomoro Land Tbk., which is the Vendor Company with respect to Pullman

Jakarta Central Park, agrees that the Units held by PT Agung Podomoro Land Tbk and its affiliated company or persons in the same group shall not be entitled to any rights with respect to the dividends and a return of capital from a capital reduction of the REIT for the period of 2 years from the first trading day of the Units in the SET. The above condition shall not apply in case of distributions of dividends or cash with respect to the disposal of REIT assets occurred during the period of 2 years from the first trading day of the Units in the SET.

During the initial subscription period of REIT Units, PT Agung Podomoro Land Tbk. (or its affiliated company or persons approved by the REIT Manager) subscribed for 63,928,100 initial Units according to the sale and purchase agreement.

2) B.B. Dai Minh Corporation, which is the Vendor Company with respect to Capri by Fraser and IBIS Saigon South, agrees to waive its rights to receive any rights with respect to any return from the REIT capital reduction for the period of 2 years from the first trading day of the Units in the SET.

Leebro Holding Pte. Ltd. (B.B. Dai Minh Corporation affiliated company) subscribed for the REIT at the amount 4,417,200 units.

Unitholders can find more details related to non-entitlement to dividend in the Trust Deed at REIT manager’s Office.

7.3.2 The Record of Return Distribution

Performance Period of the Year 2018

Return Distribution (Baht per Unit)

Cash Return from Captial Reduction*

(Baht per Unit)

Total of

Each Quarter

20-Dec 17 to 31-Mar-18 0.0894 0.0616 0.1510 1-Apr-18 to 31-Jul-18 0.1409 0.0517 0.1926 1-Aug-18 to 31-Oct-18 0.2212 0.0349 0.2561

Total for 2018 0.4515 0.1482 0.5997

Performance Period of the Year 2019

Return Distribution (Baht per Unit)

Cash Return from Captial Reduction*

(Baht per Unit)

Total of

Each Quarter

1-Jan-19 to 31-Mar-19 0.0959 0.0941 0.19 1-Apr-19 to 30-Jun-19 0.1146 0.0754 0.19 1-Jul-19 to 30-Sep-19 0.0285 0.0815 0.11

Total for 2019 0.2390 0.2510 0.49


135


-136-

Remark: * There are 2 unitholders with total amount of 68,345,300 units are not entitled to receive any returns or cash distributions from capital reduction of SHREIT: 1) PT Agung Podomoro Land Tbk, with total of 63,928,100.00 units; and 2) LEEBRO HOLDING PTE LTD, with total of 4,417,200.00 units. The provision of non-entitlement of cash distribution are in accordance with the prospectus of SHREIT Part 2, Clause 12. “Distribution Policy and Limitation” and Trust Deed, Clause 17.2 “Limitation in Receiving Distribution and Distribution Management”. The announced distribution payable per unit to other unitholders are calculated in proportion to their respective unitholding by excluding the portion of such aforementioned unitholders. To avoid of any doubt, this provision of non-entitlement of cash distribution is in accordance with the Binding Investment Agreement between vendors and SHREIT for the 1st acquisition. Referring to Binding Investment Agreements, the units of non-entitlement of cash distribution of PT Agung Podomoro Land Tbk, and LEEBRO HOLDING PTE LTD were limited at 63,928,100.00 units and 4,417,200.00 units respectively throughout the Lock up period.

8. Management’s Structure

8.1 The REIT Manager

Strategic Property Investors Company Limited (REIT Manager) has been registered in Thailand on 12 April 2016, Registered number is 0105559061009, paid up capital 10,000,000 THB with common share 100,000 shares and par value is 10 THB/unit.

8.1.1 Summary of the REIT Manager’s Company

Company Name Strategic Property Investors Company Limited

Registered Number 0105559061009

Registered Date 12 April 2559 Head office’s address No. 1 Empire Tower Building, 24th Floor,

Unit 2401, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120

Contact Tel : 02 286 2461 Website : www.sp-investors.com Email : [email protected]

Registered Capital Baht 10,000,000 (Ten Million)

Paid-Up Capital Baht 10,000,000 (Ten Million)

Type of Business REIT Manager of Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust

136


-137-

Directors 1. Mr. Chanitr Charnchainarong (Chairman of the Board/ Independent Director)

2. Ms. Jotima Jotibundhit (Independent Director) 3. Mr. Krit Phanratanamala (Independent Director) 4. Mr. Christophe Wybe Angelo Forsinetti (Executive Director/ Managing Director) 5. Mr. James Teik Beng Lim (Executive Director/ Chief Business Development Officer)

Authorized Directors 1) “Mr. James Teik Beng Lim and Mr. Christophe Wybe Angelo Forsinetti both 2 directors to sign together with the Company seal; and

2) “Authority to act on behalf of the Company, which is for registration form, request form and other documentations including proceeding to registration, signing to certify, contacting, providing the clarification both verbally and officially in writing a letter, submitting the documentations and providing the information to related government organizations regarding to the request to obtain the certificate letter of corporate tax deduction, immigration, staying in the country, work permit of foreign employee, renewal of work permit and visa of foreign employee, social security. The Company will authorize Mr. Christophe Wybe Angelo Forsinetti to sign only with the Company seal.”

Fiscal year As of 31 December, of each year

The REIT Manager was granted with license to be the REIT Manager pursuant to Notification of the Office of the Securities and Exchange Commission No. SorShor. 29/2555 on 20 February 2017 with the validation period of five (5) years until 19 February 2022.

The REIT Manager shall have general authority in managing the assets of the REIT. The REIT Manager shall have principal responsibility to manage the assets and liabilities of the REIT for the utmost benefit of the Unitholders.

8.1.2 Shareholders of the REIT Manager

The shareholders of the REIT Manager as of 31 December 2019 as follow:

No. Shareholder Name

Juristic Person

Registered Country

Number of

Shares Held

Percent (%) of the Total

Outstanding Shares

1. Strategic Property Investors Pte. Ltd. Singapore 99,998 99.99 2. Calibration Partners Limited Cayman 1 0.001 3. Mr. James Teik Beng Lim - 1 0.001


137


-138-

Regarding to the table and shareholders structure above, the Strategic Property Investors Pte. Ltd. ( registered in Singapore) holds 99. 99 percent shares of the Calibration Partners Limited ( registered in Cayman) holds 0. 001 percent shares and Mr. James Teik Beng Lim holds 0. 001 percent shares of the REIT Manager.

Ultimate Shareholders of the REIT Manager

The diagram hereunder displayed the structure of the other shareholders of the REIT Manager.

Remark: 1. Mr. James Teik Beng Lim is the ultimate shareholder of the REIT Manager.

The Strategic Property Investors Pte. Ltd. , one of the major shareholders of the REIT Manager in

which another major shareholder is Mr. Chanond Ruangkritya who holds 4 9 percent shares and the Calibration Partners Limited ( registered in Cayman in which Mr. James Teik Beng Lim is an Ultimate Shareholder who hold 50 percent shares, respectively.

The Strategic Property Investors Pte.Ltd. , and its major shareholders have experiences in the investment and Real Estate businesses for a long period as follows:

- Mr. Chanond Ruangkritya, a Thai nationality, has over 19 years of experiences in investment and real estate development. He is also a founder and a Chief Executive Officer (CEO) and a Managing Director of the ANANDA Development PCL and a member of the Board of Directors for various companies in which are Joint Venture between the ANANDA Development PCL and the group of Mitsui Fodosan (Japan) and the ANANDA Development PCL associates. The past educations of Mr. Chanond Ruangkritya are that he graduated his Bachelor degree in Economic from the University of California at Berkeley, USA, and his Master degree in International Finance and Accounting from the London School of Economics, UK; furthermore, he also joined the Director Accreditation Program (DAP) class of 23/2004 of the Institute of Directors (IOD).

138


-139-

- Mr. James Teik Beng Lim, an Australian nationality, has over 22 years of experiences in investment banking and finance. He was a former Managing Director and Head of Asia Pacific Real Estate, Hospitality and Leisure Investment Banking at Barclays Capital (Hong Kong), and held the same role at Lehman Brothers Asia and BNP Paribas. Mr. James Teik Beng Lim also has experiences in mega real estate transactions, including the IPO of DLF Ltd. ( the largest Indian real estate company) , IPO of JSM Indonesia Ltd. ( the largest IPO for real estate investment in Vietnam and Cambodia) , the IPO related transactions of the real estate mutual fund and leasehold right of Tesco Lotus Retail Growth and Ananda Developments, capital raisings for Shui On Land Ltd. , REIT establishment for K-REIT Asia and REIT establishment for Frasers Commercial Trust. Mr. James Teik Beng Lim was also a former advisor regrading the REIT rules and regulations to the Stock Exchange of Thailand in 2007. Mr. James Teik Beng Lim graduated his Bachelor in Laws and Commerce (Finance) , double degree, from Monash University in Melbourne, Australia.

- The Calibration Partners Limited ( registered in Cayman) is a finance company focusing on strategic investment and providing source of funds (equity and debt instruments) to institutions, Private Sector, and Private Equity in the Asia Pacific region. The Calibration Partners Limited also has the managing authority in The Calibration Partners (Hong Kong) Limited which is an associate with license granted from the Office of the Securities and Futures of Hong Kong. The employees of the Calibration Partners Limited and its associates have experiences of more than USD 6 0 billion value transactions around the world in advising and providing source of funds including executing transactions related to REIT in Australia, Europe, and Singapore.

8.1.3 Structure of Management

With respect to the corporate structure, the REIT Manager adheres to the principle of clear separation between respective duties and responsibilities of each unit within the organization. Each department works independently and systematically in line with the principles of trust and good corporate governance. It shall also take into consideration the control of any potential risk arising from corruption, fraud, and conflicts of interest. Such management structure enables the REIT Manager to fulfill its fiduciary duties owed to the Unitholders, to prioritize Unitholders' interests over those of the REIT Manager, and prevent any information leaks or illegal acts. Moreover, the structure is also commensurate with the characteristics, size, and complexity of the business operations.


139


-140-

8.1.3.1 The Corporate Structure of the REIT Manager

The structure of directors of the REIT Manager consists of 1 set, the Board of Directors including 5 directors as follows:

• 2 Executive Directors• 3 Independent Directors

The organizational structure of the REIT Manager comprises of 5 departments, namely 1) Business Development Department 2) Operation Department 3) Accounting and Finance Department 4) Property Management Department and 5) Compliance & Risk Management Department, as well as internal audit, as illustrated in the diagram above.

8.1.3.2 The Board of Directors

-Please insert the summary of work experience of directors of 5 persons-

140

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Date of

Appo

intme

nt as

Dire

ctor

Fami

ly’s

Relat

ionsh

ip am

ong

Mana

geme

nts

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

1.Mr

. Cha

nitr

Charn

chain

arong

-Cha

irman

of th

e Bao

rd-In

depe

nden

t Dire

ctor

56

•M.

S. in

Electr

ical

Engin

eerin

g, Pu

rdue

Unive

rsity,

U.S.

A.•

B.SC.

in E

lectric

alEn

ginee

ring,

Purdu

eUn

iversi

ty, U

.S.A.

Traini

ngDir

ector

Cert

ificati

onPr

ogram

(DCP

)Cla

ss N

o. 52

/2004

,IO

D

12-Ju

l-16

None

No

ne

Listed

Com

pany

/ or L

isted

Unit

Trus

t and

Com

panie

s Grou

p: 20

16 -P

resen

t Ch

airma

n of th

e Bo

ard/ In

depe

nden

t Dir

ector

Strate

gic P

ropert

y Inv

estor

s Co.,

Ltd.

REIT

Mana

ger o

f SH

REIT

Othe

r List

ed C

ompa

nies:

2018

-Pres

ent

Chair

man o

f the

Board

/ Inde

pend

ent

Direc

tor

North

east

Rubb

er PC

L: NE

R

Manu

factur

er/

distrib

utor

of na

tural

rubbe

r bo

th do

mesti

c an

d exp

orter

20

15 -P

resen

t Ind

epen

dent

Direc

tor

Audit

Com

mitte

e GM

M Gr

ammy

PCL

: GR

AMMY

En

tertai

nmen

t, mov

ies,

media

, TV,

radio,

ho

me sh

oppin

g, an

d rel

ated b

uisne

ss

2015

- 20

18

Chair

man o

f the

Board

/ Inde

pend

ent

Direc

tor

Coma

nche

Int

ernati

onal

PCL:

COMA

N

Hotel

man

agem

ent

softw

are de

velop

er

Othe

r Com

panie

s or O

rganiz

ation

s:

Str

ategic

Hos

pitali

ty Ex

tenda

ble Fr

eeho

ld an

d Lea

seho

ld Re

al Es

tate I

nves

tmen

t Trus

t

-140-

8.1.3.

1 Th

e Corp

orate

Struc

ture o

f the R

EIT M

anag

er

Th

e stru

cture

of dir

ector

s of th

e REIT

Man

ager

cons

iats o

f 1 se

t, the

Boa

rd of

Direc

tors i

nclud

ing

6 dire

ctors

as fo

llows

:

• 2

Exe

cutiv

e Dire

ctors

• 3

Inde

pend

ent D

irecto

rs

Th

e orga

nizati

onal

struc

ture o

f the R

EIT M

anag

er co

mpris

es of

5 de

partm

ents,

name

ly 1)

Busin

ess

Deve

lopme

nt De

partm

ent 2

) Ope

ration

Dep

artme

nt 3)

Acco

untin

g and

Fina

nce D

epart

ment

4) Pr

opert

y Ma

nage

ment

Depa

rtmen

t and

5) C

ompli

ance

& R

isk M

anag

emen

t Dep

artme

nt, as

well

as in

terna

l aud

it, as

illus

trated

in th

e diag

ram ab

ove.

8.1

.3.2

The

Board

of Di

rector

s

-Pl

ease

inse

rt the

summ

ary of

wor

k exp

erien

ce of

direc

tors o

f 5 pe

rsons

-


141

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Date of

Appo

intme

nt as

Dire

ctor

Fami

ly’s

Relat

ionsh

ip am

ong

Man

agem

ents

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

2016

-Pres

ent

Senio

r Exe

cutiv

e Vic

e Pres

ident

CE

NTRA

L Grou

p De

aprtm

ent s

tore &

sh

oppin

g mall

&

prope

rties (

CPN)

, im

porte

r & di

stribu

tor

(CRC

), ho

tels &

res

tauran

ts (C

ENTE

L),

and

retail

s bus

iness

(C

OL)

2015

-Pres

ent

Chair

man o

f the

Audit

Com

mitte

e/ Ind

epen

dent

direc

tor

Unite

d Ove

rseas

Ban

k (Th

ai) P

CL

Finan

cial In

stitut

ion

2015

-Pres

ent

VNET

Cap

ital C

o.,

Ltd.

VNET

Cap

ital C

o., Lt

d. IT

& bu

sines

s adv

isor

and c

apita

l ven

ture

2011

– 20

15

Vice P

reside

nt Th

e Stoc

k Exc

hang

e of

Thail

and (

SET)

Stock

Exc

hang

e

2007

– 20

14

Pres

ident

The M

arket

Altern

ative

Inve

stmen

t (M

AI)

Seco

ndary

Stoc

k Ma

rket

142

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Date of

Appo

intme

nt as

Dire

ctor

Fami

ly’s

Relat

ionsh

ip am

ong

Man

agem

ents

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

2.Ms

. Joti

maJo

tibun

dhit

-Inde

pend

ent D

irecto

r

55

•Ba

chelo

r’s D

egree

ofSc

ience

, Com

puter

Scien

ce, S

immo

nsCo

llege

, Bos

ton,

Mass

achu

setts

, USA

21-A

ug-19

None

No

ne

Listed

Com

pany

/ or L

isted

Unit

Trus

t and

Com

panie

s Grou

p: Au

g’19 -

Pres

ent

Indep

ende

nt Dir

ector

Str

ategic

Prop

erty

Inves

tors C

o., Lt

d. RE

IT Ma

nage

r of

SHRE

IT Ot

her L

isted

Com

panie

s: -

- -

- Ot

her C

ompa

nies o

r Orga

nizati

ons:

2006

- 20

10

Senio

r Vice

Pr

eside

nt, P

ropert

y Fu

nd D

epart

ment

SCB

Asse

t Ma

nage

ment

Co., L

td.

Asse

t man

agem

ent

2002

- 20

05

Direc

tor

Real

Estat

e Inv

estm

ent

Depa

rtmen

t,Go

vernm

ent P

ensio

n Fu

nd

Gove

rnmen

t pen

sion

fund

1994

- 20

02

Gene

ral M

anag

er Ge

neral

Man

ager

Siam

Sindh

orn C

o.,

Ltd. (

A joi

nt ve

nture

of Th

e Crow

n Prop

erty

Bu

reau,

Siam

Prop

erty d

evelo

pmen

t


143

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Date of

Appo

intme

nt as

Dire

ctor

Fami

ly’s

Relat

ionsh

ip am

ong

Man

agem

ents

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

Comm

ercial

Ban

k, an

d La

nd an

d Hou

ses P

lc.)

Rema

rk: 2

010 -

2019

Reti

red.

3.Mr

. Krit

Phan

ratan

amala

-Inde

pend

ent D

irecto

r

51

•Ma

ster’s

Deg

reeof

Scien

ceCo

mmun

icatio

n &Sig

nal P

roces

sing,

Britis

h Gov

ernme

ntSc

holar

, Impe

rial

Colle

ge Lo

ndon

,En

gland

•MB

A, Un

iversi

ty of

Florid

a, US

A•

Electr

ical E

ngine

ering

Chula

longk

ornUn

iversi

ty

25-N

ov-19

None

No

ne

Listed

Com

pany

/ or L

isted

Unit

Trus

t and

Com

panie

s Grou

p: No

v’19-P

resen

t Ind

epen

dent

Direc

tor

Strate

gic P

ropert

y Inv

estor

s Co.,

Ltd.

REIT

Mana

ger o

f SH

REIT

Othe

r List

ed C

ompa

nies:

2015

- Pr

esen

t Ind

epen

dent

Direc

tor/ A

udit

Comm

itee

TPBI

PCL.

: TPB

I Ma

nufac

turer

and

distrib

utor o

f plas

tic

pack

aging

and o

ther

items

20

06- P

resen

t Ind

epen

dent

Direc

tor/ A

udit

Comm

itee

Union

Mos

aic In

dustr

y PC

L.: U

MI

Manu

factur

er an

d dis

tributo

r of

Mosa

ic tile

UMI

bra

nd, c

erami

c tile

, an

d rela

ted pr

oduc

ts 20

15 -

2017

Dir

ector

Dh

ipaya

Life

Assu

rance

PCL

. : TIP

In

suran

ce &

lif

e ins

uranc

e

144

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Date of

Appo

intme

nt as

Dire

ctor

Fami

ly’s

Relat

ionsh

ip am

ong

Man

agem

ents

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

Ce

rtifica

te •

Chart

ered F

inanc

ialAn

alyst

(CFA

),CF

A Ins

titute,

USA

Traini

ng•

Direc

tor C

ertific

ation

Prog

ram (D

CP),

Class

No.

86/20

07,

IOD

•Ad

vanc

edAu

dit C

ommi

ttee

Prog

ram (A

ACP)

,Cla

ss N

o. 1/2

009,

IOD

•Pr

ogram

AAC

P,Cla

ss N

o. 1/2

009,

IOD

2011

- 201

7 Ind

epen

dent

Direc

tor/ A

udit

Comm

itee

Grou

p Lea

se P

CL.: G

L Fin

ance

2011

- 20

17

Direc

tor

Diamo

nd B

uildin

g Pr

oduc

ts PC

L.: D

RT

Manu

factur

er an

d dis

tributo

r of r

oof ti

les,

ceilin

g, wa

ll pan

el,

synth

etic w

ood,

roof

moun

ting e

quipm

ent,

and h

ome s

tructu

re pro

duct

- Dim

ond

brand

, Lan

gka b

rnad

Adam

us br

and,

and

Jieyra

nai b

rand

Othe

r Com

panie

s or O

rganiz

ation

s:


145

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Date of

Appo

intme

nt as

Dire

ctor

Fami

ly’s

Relat

ionsh

ip am

ong

Man

agem

ents

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

2018

- Pr

esen

t Inv

estm

ent A

dviso

r Bu

aluan

g Ven

tures

Ltd

. [Sus

idairie

s of

Bang

kok B

ank P

CL.)

Joint

ventu

re wit

h sta

rt-up

comp

anies

in

aboa

rd 20

15 -

2018

Ma

nagin

g Dire

ctor

Thai

Pros

perity

Ad

visory

Co.,

Ltd.

Advio

sry se

rvice

to

advis

e and

analy

sis in

fin

ancia

l data

20

05 –

2015

Dir

ector

Th

ai Pr

ospe

rity

Advis

ory C

o., Lt

d. Ad

viosry

se

rvice

to

advis

e an

d an

alysis

in

finan

cial d

ata

4.M

r. C

hris

toph

e W

ybe

Ange

lo F

orsi

netti

-Exe

cutiv

e Dire

ctor

-Man

aging

Dire

ctor

-Acti

ng C

hief

Opera

ting O

fficer

-Acti

ng C

hief

Prop

erty

Mana

geme

nt Of

ficer

41

•Ma

ster’s

in G

eopo

litics

from

the U

nivers

ity of

Paris

8 (Fr

ance

)

•Ba

chelo

r’s D

egree

inInt

ernati

onal

Busin

ess

from

Institu

t de

Prep

aratio

n al’A

dmini

strati

on et

laGe

stion

(Fran

ce)

27-Fe

b-19

None

No

ne

Listed

Com

pany

/ or L

isted

Unit

Trus

t and

Com

panie

s Grou

p: Oc

t’19 -

Pres

ent

Mana

ging D

irecto

r/ Ac

ting C

hief

Opera

ting O

fficer/

Ac

ting C

hief

Prop

erty

Mana

geme

nt Of

ficer

Strate

gic P

ropert

y Inv

estor

s Co.,

Ltd.

REIT

Mana

ger o

f SH

REIT

Feb’1

9 -Pr

esen

t Ex

ecuti

ve D

irecto

r Str

ategic

Prop

erty

Inves

tors C

o., Lt

d. RE

IT Ma

nage

r of

SHRE

IT

146

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Date of

Appo

intme

nt as

Dire

ctor

Fami

ly’s

Relat

ionsh

ip am

ong

Man

agem

ents

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

2017

– No

v’19

Exec

utive

Dire

ctor

Strate

gic P

ropert

y Inv

estor

s Pte.

Ltd.

Singa

pore

(Pare

nt Co

mpan

y of th

e REIT

Ma

nage

r of S

HREIT

)

Holdi

ng co

mpan

y for

prope

rty bu

sines

s

Othe

r List

ed C

ompa

nies:

- -

- -

Othe

r Com

panie

s or O

rganiz

ation

s: 20

01 -

Pres

ent

Exec

utive

Dire

ctor

SCI Z

ypoli

te, Fr

ance

Ho

lding

comp

any f

or pro

perty

busin

ess

20

15 –

2018

C

hief O

perat

ing O

fficer

JSM

Indoc

hina S

ervice

s, Ind

ochin

a A

leadin

g prop

erty

fund m

anag

er an

d

deve

loper

20

14 –

2015

Re

giona

l De

velop

ment

Direc

tor, S

ingap

ore

Grou

p Lea

se,Si

ngap

ore

Publi

cly lis

ted fin

ancia

l lea

sing s

ervice

s

2013

– 20

15

Exec

utive

Dire

ctor

Grou

p Lea

se,

Camb

odia

Finan

cial le

asing

se

rvice

s


147

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Date of

Appo

intme

nt as

Dire

ctor

Fami

ly’s

Relat

ionsh

ip am

ong

Man

agem

ents

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

2008

- 20

12

Co-Fo

unde

r/ Ch

ief

Exec

utive

Offic

er De

venc

o Co.,

Ltd.

Camb

odia

Ventu

re ca

pital

2006

- 20

07

Mana

ging D

irecto

r Mi

crocre

d Ban

k, Ma

daga

scar

Finan

cial in

stitut

ion

5.Mr

. Jam

es Te

ikBe

ng Li

m

-Exe

cutiv

e Dire

ctor

-Chie

f Bus

iness

Deve

lopme

nt Of

ficer

46

•Ba

chelo

r of

Comm

erce

(Acc

ounti

ng an

dFin

ance

), Mon

ash

Unive

rsity,

Austr

alia

•Ba

chelo

r of L

aws

(with

Hon

ors)

Traini

ngDir

ector

Acc

redita

tion

Prog

ram (D

AP),

Class

No.

16/20

18,

IOD

9-Jun

-16No

ne

0.067

9 Lis

ted C

ompa

ny/ o

r List

ed U

nit Tr

ust a

nd C

ompa

nies G

roup:

Jun’1

6 -Pr

esen

t Ex

ecuti

ve D

irecto

r/ Ch

ief B

usine

ss

Deve

lopme

nt Of

ficer

Strate

gic P

ropert

y Inv

estor

s Co.,

Ltd.

REIT

Mana

ger o

f SH

REIT

Nov’1

6 - S

ep’19

Ex

ecuti

ve D

irecto

r Str

ategic

Prop

erty

Inves

tors P

te. Lt

d.,

Singa

pore

(Pare

nt Co

mpan

y of th

e REIT

Ma

nage

r of S

HREIT

)

Holdi

ng co

mpan

y for

prope

rty bu

sines

s

2014

- Pr

esen

t Pa

rtner)

and C

o-Fo

unde

r Ca

librat

ion P

artne

rs

Limite

d, Ho

ngko

ng

(Sha

rehold

er of

the R

EIT

Mana

ger o

f SHR

EIT)

Priva

te eq

uity a

nd

finan

cial a

dviso

ry

148

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Date of

Appo

intme

nt as

Dire

ctor

Fami

ly’s

Relat

ionsh

ip am

ong

Man

agem

ents

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

Othe

r List

ed C

ompa

nies:

Feb’1

7 -Pr

esen

t Dir

ector

An

and D

evelo

pmen

t PC

L. : A

NAN

Prop

ery de

velop

ment

and p

rojec

t ma

nage

ment

servi

ce

Othe

r Com

panie

s or O

rganiz

ation

s: 20

10 -

2014

He

ad of

Rea

l Esta

te an

d Hos

pitali

ty As

ia Pa

cific

of Ba

rclay

s Cap

ital,

Hong

Kon

g

Barcl

ays C

apita

l, Ho

ng K

ong

Real

estat

e, ho

spita

lity an

d lei

sure

inves

tmen

t an

d fina

ncing

2008

- 20

10

Mana

ging D

irecto

r/ He

ad of

Rea

l Esta

te an

d Hos

pitali

ty As

ia Pa

cific

BNP

Parib

as,

Hong

Kon

g Re

al es

tate,

hosp

itality

and

leisu

re inv

estm

ent

and f

inanc

ing

2005

- 20

08

Head

of R

eal E

state

and H

ospit

ality

Asia

Pacif

ic (ex

Japa

n)/

Direc

tor of

Euro

pean

Fin

ancin

g Grou

p

Lehm

an B

rothe

rs,

Hong

kong

& Lo

ndon

Re

al es

tate,

hosp

itality

an

d leis

ure in

vestm

ent

and f

inanc

ing

Rema

rk:

Direc

tors w

ho re

signe

d duri

ng th

e yea

r are

as fo

llows

: 1.

Mr. P

utra P

ratan

a, as

direc

tor re

signe

d with

effec

t on 1

7 Feb

ruary

2019

.2.

Mr. C

hano

nd R

uang

kritya

, as d

irecto

r res

igned

with

effec

t on 3

0 July

2019

.3.

Mr. P

atan S

ombu

ranas

in, as

exec

utive

direc

tor an

d man

aging

direc

tor re

signe

d with

effec

t on 1

Octo

ber 2

019.

4.Mr

. Tan

arat P

asaw

ong,

as in

depe

nden

t dire

ctor r

esign

ed w

ith ef

fect o

n 17 O

ctobe

r 201

9.


149

8.1.3.2 The Board of Directors

-Please insert the summary of work experience of directors of 5 persons-

Scope of Authorities and Responsibilities of the Board of Directors

The Board of Directors shall have the role, duties and responsibilities to ensure that the business operations are undertaken with due care and integrity based on the interests of the organization as a whole, and without any conflict of interest among individuals or any groups of shareholders. The duties and responsibilities of the Board of Directors are as follows:

(1) to perform duties in accordance with relevant regulations, objectives, Articles of Association of the REIT Manager, as well as the resolution of the Board of Directors' meeting and Unitholders' meeting with Duty of Loyalty and Duty of Care as well as with Accountability and Ethic;

(2) to manage the overall business operation of REIT Manager and the REIT under the supervision of Trustee, including to formulate long- term strategic direction of the business operation and suitable organizational structure, as well as to monitor business policy in relation to REIT's investment scheme, financial return, financial budget, and business plan, by taking into account the relevant risks to the REIT benefits, other departments' business operation as well as considering the transactions that might constitute a conflict of interest;

(3) to follow up and provide necessary guidance to the management team and employees to ensure the operation is in accordance with relevant agreements and regulations regarding the duties of the REIT Manager;

(4) to continuously follow up with the BVI Holding Company as the REIT Manager and provide necessary advice to ensure that the REIT Manager operation is in accordance with the target and that the barriers or problems shall be eliminated with an immediate effect and appropriate amount of time.

(5) to consider, follow-up, and assess the performance of the Master Lessees and the lessor companies and to provide necessary advice to ensure that Master Lessees and the lessor companies fulfill their authorized responsibilities efficiently and in accordance with rules and clauses under the relevant agreements for the benefit of the REIT; and

(6) to agree, approve and make decision regarding the investment and sale of the REIT assets to be in accordance with the Trust Deed, the registration statement, the Prospectus, Laws and other relevant Notifications.

150


-141-

8.1.3.3 Management, Duty, and Responsibility of All Departments

In managing the REIT, the REIT Manager shall appoint the following departments to undertake the responsibilities and standard duties in various areas as follows:

(1) Business Development Department

This department is responsible for implementing plans for selecting and investing in the REIT immovable properties and other assets ( if any) that are qualified and suitable, whether through direct or indirect investment. The investment has to be in accordance with the REIT investment policy and strategy for the purpose of continuously creating growth for the REIT and maximizing return for the Unitholders.

(2) Operation Department

2.1) Capital Market Business Unit This business unit is responsible for conducting an in-depth Due Diligence of the property

to be invested by the REIT in which it shall be in accordance with the investment policy specified by the REIT Board of Directors. The scope of the Due Diligence of the property to be invested by the REIT shall cover various areas such as the analysis of historical financial position and performance of such property (Track Record) , the analysis and assessment of the occupation rate of the passed period, the inspection of the building structures and existing facilities, and the examination of legal compliance and any encumbrance that may affect the valuation of the immovable property or result in making no investing decision.

In addition, in conducting the Commercial Feasibility, it shall take into consideration the

forecast of operational performance including the Occupancy Rate and room rate to be factored in for the reasonableness of the appraisal value.

The business unit is also responsible for seeking the appropriate fundraising from capital

market for the REIT such as fundraising by issuing and offering the new REIT Units by considering the appropriateness of the REIT capital structure and the compliance with the policy determined by the REIT Board of Directors.

2.2) Investor Relations and Operational Support Business Unit

This business unit is responsible for coordinating with other internal departments and business units to receive certain information, which are to be disclosed to the Trustee, the Unitholders, the office of SEC, the SET, and other relevant units as deemed necessary, including providing related information of the RIET asset management to the investors, securities analysts in local and foreign countries, as well as other relevant units requested for the REIT information.


151


-142-

(3) Accounting and Finance Department

This department is responsible for the calculation of The REIT Net Asset Value (NAV), preparing the financial report and budget of the REIT, as well as managing the budget, cash flows and currency risk arising from offshore investment to be in accordance with the REIT investment policy.

In addition, the Accounting and Financing department is responsible for seeking the appropriate

fundraising from capital market for the REIT including securing short- term and long- term loan by considering the appropriateness of the REIT capital structure and the compliance with the policy determined by the REIT Board of Directors.

(4) Property Management Department

This department is responsible for formulating the marketing and business strategies that shall procure the benefits from the REIT assets, including the rental rate adjustment, target customers identification for the immovable properties are to be invested by the REIT and seek for appropriate Master Lessees. The department is also responsible for the financial budgeting of incomes and expense of the REIT immovable properties and other assets, and shall monitor and examine the actual revenue and expense are in line with the budget. In addition, the department is responsible to ensure that the assets receive a maintenance follow the schedule or as deemed necessary and are consistently under good condition and ready to generate income, as well as, to maintain the common areas and environment to be in good condition at all times.

(5) Compliance and Risk Management Department

This business unit is responsible for monitoring and managing the risks related to the management and investment of the REIT to be in compliance with the Trust Deed and relevant Laws, in order to maintain the utmost interest of the REIT and Unitholders. The principle duties and responsibilities of the REIT Manager also include the examination of the REIT transactions, whether it is a related transaction, and the supervision of the transaction with the connected persons in order to prevent any conflict of interest between the REIT and the connected persons and be in compliance with the Laws and relevant regulations.

(6) Internal Control Department

This department is appointed by and under the supervision of independent Director(s) of the REIT Manager. It is responsible for ensuring that the operation of each department is in line with the work plan and following-up with the related departments that the remedy is in place for any inconsistency occurs. In

152


-143-

addition, the department is responsible for preparing reports on the follow-up of such remedy and propose to the Independent Director(s).

The REIT Manager shall hire an outsource to be an internal auditor by having the Manager of Compliance and Risk Management as a coordinator to ensure the internal auditor can perform its duty effectively and shall prepare the examination report to the Independent Director(s).

The details of the personnel and responsible persons as of 31 December 2019 in each department of the REIT Manager are as follows:

Department Manpower Responsible Person 1) Business Development Department 2 Mr. James Teik Beng Lim

2) Operation Department 2 Mr. Christophe Wybe Angelo Forsinetti

3) Accounting and Finance Department 4 Mr. Deepong Sahachartsiri

4) Property Management Department 1 Mr. Christophe Wybe Angelo Forsinetti

5) Compliance & Risk Management Department 1 Ms. Kemakorn Ariyakul


153

•รายล

ะเอยด

เกยว

กบผบ

รหาร รอ

งผจด

การ ผ

ชวยผ

จดกา

ร ผอ า

นวยก

ารฝา

ย และ

ผด า

รงต า

แหนง

เทยบ

เทาท

เรยกช

ออยา

งอน ซง

รบผด

ชอบใ

นสาย

งานเกย

วกบก

ารดแ

ลจดก

ารกอ

งทรส

ต

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Fami

ly’s

Relat

ionsh

ip am

ong

Mana

geme

nts

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

1.M

r. C

hris

toph

e W

ybe

Ange

lo F

orsi

netti

-Exe

cutiv

e Dire

ctor

-Man

aging

Dire

ctor

-Acti

ng C

hief O

perat

ing

Offic

er-A

cting

Chie

f Prop

erty

Mana

geme

nt Of

ficer

41

•Mas

ter’s

in Ge

opoli

tics

from

the U

nivers

ity of

Paris

8 (Fr

ance

)

•Ba

chelo

r’s D

egree

inInt

ernati

onal

Busin

ess

from

Institu

t de

Prep

aratio

n al’A

dmini

strati

on et

laGe

stion

(Fran

ce)

None

No

ne

Listed

Com

pany

/ or L

isted

Unit

Trus

t and

Com

panie

s Grou

p: Oc

t’19 -

Pres

ent

Mana

ging D

irecto

r/ Ac

ting C

hief O

perat

ing

Offic

er/ A

cting

Chie

f Pr

opert

y Man

agem

ent

Offic

er

Strate

gic P

ropert

y Inv

estor

s Co.,

Ltd.

REIT

Mana

ger o

f SHR

EIT

Feb’1

9 -Pr

esen

t Ex

ecuti

ve D

irecto

r Str

ategic

Prop

erty

Inves

tors C

o., Lt

d. RE

IT Ma

nage

r of S

HREIT

2017

- No

v’19

Exec

utive

Dire

ctor

Strate

gic P

ropert

y Inv

estor

s Pte.

Ltd.

Singa

pore

(Pare

nt Co

mpan

y of th

e REIT

Ma

nage

r of S

HREIT

)

Holdi

ng co

mpan

y for

prope

rty bu

sines

s

154

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Fami

ly’s

Relat

ionsh

ip am

ong

Man

agem

ents

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

Othe

r List

ed C

ompa

nies:

- -

- -

Othe

r Com

panie

s or O

rganiz

ation

s: 20

01 -

Pres

ent

Exec

utive

Dire

ctor

SCI Z

ypoli

te, Fr

ance

Ho

lding

comp

any f

or pro

perty

busin

ess

20

15 –

2018

C

hief O

perat

ing O

fficer

JSM

Indoc

hina S

ervice

s, Ind

ochin

a A

leadin

g prop

erty f

und

mana

ger a

nd

deve

loper

20

14 –

2015

Re

giona

l Dev

elopm

ent

Direc

tor, S

ingap

ore

Grou

p Lea

se,Si

ngap

ore

Publi

cly lis

ted fin

ancia

l lea

sing s

ervice

s 20

13 –

2015

Ex

ecuti

ve D

irecto

r Gr

oup L

ease

, Ca

mbod

ia Fin

ancia

l leas

ing se

rvice

s

2008

- 20

12

Co-Fo

unde

r/ Ch

ief

Exec

utive

Offic

er De

venc

o Co.,

Ltd.

Camb

odia

Ventu

re ca

pital

2006

- 20

07

Mana

ging D

irecto

r Mi

crocre

d Ban

k, Ma

daga

scar

Finan

cial in

stitut

ion


155

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Fami

ly’s

Relat

ionsh

ip am

ong

Man

agem

ents

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

2.Mr

. Jam

es Te

ikBe

ng Li

m

-Exe

cutiv

e Dire

ctor

-Chie

f Bus

iness

Deve

lopme

nt Of

ficer

46

•Ba

chelo

r of C

omme

rce(A

ccou

nting

and

Finan

ce), M

onas

hUn

iversi

ty,Au

strali

a•

Bach

elor o

f Law

s(w

ith H

onors

)Tra

ining

Direc

tor A

ccred

itatio

nPr

ogram

(DAP

),Cla

ss N

o. 16

/2018

,IO

D

None

0.0

679

Listed

Com

pany

/ or L

isted

Unit

Trus

t and

Com

panie

s Grou

p: Ju

n’16 -

Pres

ent

Exec

utive

Dire

ctor/

Ch

ief B

usine

ss

Deve

lopme

nt Of

ficer

Strate

gic P

ropert

y Inv

estor

s Co.,

Ltd.

REIT

Mana

ger o

f SHR

EIT

Nov’1

6 - S

ep’19

Ex

ecuti

ve D

irecto

r Str

ategic

Prop

erty

Inves

tors P

te. Lt

d. Sin

gapo

re (P

arent

Comp

any o

f the R

EIT

Mana

ger o

f SHR

EIT)

Holdi

ng co

mpan

y for

prope

rty bu

sines

s

2014

- Pr

esen

t Pa

rtner/

Co-F

ound

er Ca

librat

ion P

artne

rs

Limite

d, Ho

ngko

ng

(Sha

rehold

er of

the R

EIT

Mana

ger o

f SHR

EIT)

Priva

te eq

uity a

nd

finan

cial a

dviso

ry

Othe

r List

ed C

ompa

nies:

Feb’1

7 -Pr

esen

t Dir

ector

An

and D

evelo

pmen

t PC

L. : A

NAN

Prop

ery de

velop

ment

and

projec

t man

agem

ent

servi

ce

156

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Fami

ly’s

Relat

ionsh

ip am

ong

Man

agem

ents

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

Othe

r Com

panie

s or O

rganiz

ation

s: 20

10 -

2014

He

ad of

Rea

l Esta

te an

d Hos

pitali

ty As

ia Pa

cific

of Ba

rclay

s Ca

pital,

Ho

ng K

ong

Barcl

ays C

apita

l, Ho

ng K

ong

Real

estat

e, ho

spita

lity

and l

eisure

inve

stmen

t an

d fina

ncing

2008

- 20

10

Mana

ging D

irecto

r/ He

ad of

Rea

l Esta

te an

d Hos

pitali

ty As

ia Pa

cific

BNP

Parib

as,

Hong

Kon

g Re

al es

tate,

hosp

itality

an

d leis

ure in

vestm

ent

and f

inanc

ing

2005

- 20

08

Head

of R

eal E

state

and H

ospit

ality

Asia

Pacif

ic (ex

Japa

n)/

Direc

tor of

Euro

pean

Fin

ancin

g Grou

p

Lehm

an B

rothe

rs,

Hong

kong

& Lo

ndon

Re

al es

tate,

hosp

itality

an

d leis

ure in

vestm

ent

and f

inanc

ing


157

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Fami

ly’s

Relat

ionsh

ip am

ong

Man

agem

ents

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

3.Mr

. Dee

pong

Saha

chart

siri

-Chie

f Fina

ncial

Offic

er- C

ompa

ny S

ecret

ary

46

•Ma

ster’s

Deg

ree,

Busin

ess

Admi

nistra

tion,

Tham

masa

rtUn

iversi

ty•

Bech

elor’s

Deg

ree,

A rch

itectu

re,Kin

g Mon

gkut'

sIns

titute

of Te

chno

logy

Ladk

raban

g•

Bech

elor’s

Deg

ree,

Law,

Suk

hotha

iTh

amma

thirat

Ope

nUn

iversi

ty•

None

0.0

069

Listed

Com

pany

/ or L

isted

Unit

Trus

t and

Com

panie

s Grou

p: Au

g’19 -

Pres

ent

Comp

any S

ecret

ary

Strate

gic P

ropert

y Inv

estor

s Co.,

Ltd.

REIT

Mana

ger o

f SHR

EIT

May’1

9 -Pr

esen

t Ch

ief Fi

nanc

ial O

fficer

Strate

gic P

ropert

y Inv

estor

s Co.,

Ltd.

REIT

Mana

ger o

f SHR

EIT

Aug’1

8 -Ma

y’19

Depu

ty Ch

ief Fi

nanc

ial

Offic

er Str

ategic

Prop

erty

Inves

tors C

o., Lt

d. RE

IT Ma

nage

r of S

HREIT

Othe

r List

ed C

ompa

nies:

2012

- 20

16

Direc

tor/ C

hief F

inanc

ial

Offic

er Gr

oup L

ease

PCL

. : GL

Fin

ancia

l leas

ing se

rvice

s

2007

- 20

12

Direc

tor/ C

hief F

inanc

ial

Offic

er/

Mana

ger o

f Or

ganiz

ation

Reta

tion

Grou

p Lea

se P

CL. :

GL

Finan

cial le

asing

servi

ces

Othe

r Com

panie

s or O

rganiz

ation

s: -

- -

-

158

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Fami

ly’s

Relat

ionsh

ip am

ong

Man

agem

ents

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

4.Ms

. Kem

akorn

Ariy

akul

-Man

ager,

Com

plian

cean

d Risk

Man

agem

ent

47

•Ma

ster’s

Deg

ree,

Busin

ess

Admi

nistra

tiom,

Unive

rsity

of La

Vern

,US

A•

Bach

elor’s

Deg

ree,

Busin

ess

Admi

nistra

tiom,

Intern

ation

al Bu

sines

sAd

minis

tratio

n,Un

iversi

ty of

Thai

Cham

ber o

fCo

mmerc

e

None

No

ne

Listed

Com

pany

/ or L

isted

Unit

Trus

t and

Com

panie

s Grou

p: Se

p’18 -

Pres

ent

Mana

ger,

Comp

lianc

e an

d Risk

Man

agem

ent

Strate

gic P

ropert

y Inv

estor

s Co.,

Ltd.

REIT

Mana

ger o

f SHR

EIT

Sep’1

8 -Au

g’19

Comp

any S

ecret

ary

Strate

gic P

ropert

y Inv

estor

s Co.,

Ltd.

REIT

Mana

ger o

f SHR

EIT

Othe

r List

ed C

ompa

nies:

Sep’1

7 -Ma

y’18

Comp

any S

ecret

ary

Asia

Capit

al Gr

oup

PCL.

: ACA

P Fin

ance

Jan’1

5 -De

c’15

Comp

any S

ecret

ary

Adva

nce C

onne

ction

Co

rporat

ion P

CL. :

ACC

Distrib

utor o

f Ceil

ing fa

n/ La

mp/ s

olar e

nergy

bu

sines

s Ot

her C

ompa

nies o

r Orga

nizati

ons:

Jan’1

6 -Se

p’16

Comp

any S

ecret

ary

TVD

Shop

ping P

CL.

Home

shop

ping

2002

- 20

16

Exec

utive

Sec

retary

Ph

illip S

ecuri

ties

(Thail

and)

PCL.

: PST

Br

okera

ge C

ompa

ny


159

Name

- La

stnam

e Po

sition

Age

(Yea

r) Ed

ucati

on

Fami

ly’s

Relat

ionsh

ip am

ong

Man

agem

ents

Prop

ortion

of

Share

Ho

lding

in

the

Comp

any

(%)

Work

Expe

reinc

e (Ba

ck to

5 ye

ars)

Time P

eriod

Po

sition

Na

me of

Com

pany

Ty

pe of

Bus

iness

5.Mr

. Tha

naklit

Anuc

hava

litwon

g

-Assi

stant

Mana

ger,

Busin

ess D

evelo

pmen

t

27

•Ma

ster’s

Deg

ree,

Appli

ed Fi

nanc

e Majo

r,Ka

setsa

rt Un

iversi

ty•

Bach

elor’s

Deg

ree,

Mana

geme

nt an

dEc

onom

ic, R

eal E

state

Deve

lopme

nt Ma

jor,

Assu

mptio

n Univ

ersity

None

No

ne

Listed

Com

pany

/ or L

isted

Unit

Trus

t and

Com

panie

s Grou

p: No

v’19 -

Perse

nt As

sistan

t Man

ager,

Bu

sines

s Dev

elopm

ent

Strate

gic P

ropert

y Inv

estor

s Co.,

Ltd.

REIT

Mana

ger o

f SHR

EIT

Othe

r List

ed C

ompa

nies:

- -

- -

Othe

r Com

panie

s or O

rganiz

ation

s: Ma

y’18 -

Nov

’19

Analy

sis &

Adv

isor/

Prop

erty A

pprai

ser

Knigh

tfrank

Cha

rter

(Thail

and)

Co., L

td.

Prop

erty

Aug’1

6 - Fe

b’18

Assis

tant M

anag

er,

Busin

ess D

evelo

pmen

t Ath

akrav

i Co.,

Ltd.

Prop

erty

160


-144-

8.2 Duties and Responsibilities of the REIT Manager

The REIT Manager has the primary duty and responsibilities to manage the REIT and invest in the properties of the REIT and supervise the performance of the Master Lessees. The REIT Manager shall perform its duty under supervision of the Trustee, and has the duties and responsibilities as follows:

(1) Investment strategy: formulate and execute the REIT’s investment strategy, including determining the location, sub-sector type and other characteristics of the property shall be invested by the REIT.

(2) Business acquisition and disposal: manage the REIT acquisition and sale of the properties.

(3) Asset planning and reporting: determine periodic property plans, including budgets and reports, and provide plan that shall maximize returns in relation to the performance of the REIT’s properties.

(4) Financial and capital management: formulate and execute plans with the REIT's banking partners for equity and debt financing for the REIT’s property acquisitions, foreign exchange hedging, dividend payments, expense payments and property maintenance payments.

(5) Administrative and advisory services: provide day-to-day administrative services as the REIT’s representative, including providing administrative services relating to the Unitholders' meetings when such meetings are convened. The REIT Manager shall disclose, provide views, and key information for investors' investment decisions. Such information shall be clearly communicated, not distorted, and not misleading.

(6) Investor relations: communicate and liaise with the Unitholders, investors, analysts, and the investment community.

(7) Corporate publication: communicate and liaise with the mass media community.

(8) Compliance management: ensure that all regulatory filings on behalf of the REIT, and that the REIT and its subsidiaries business operations are in compliance with the applicable provisions, the Securities Act, the Trust Deed, any tax ruling and other relevant contracts, as well as the code of ethics and standards of professional conduct as defined by the associations related to securities business or by organizations in connection with the securities business as recognized by the SEC Office, mutatis mutandis. In addition, the REIT Manager shall not conspire, employ or collaborate with any person to violate such laws and regulations.

(9) Accounting records: keep records and prepare the accounts, financial reports (complying with principal accounting policies in accordance with Thai Financial Reporting Standards) and annual reports.

(10) Performing its duties with knowledge and skills that may reasonably be expected as a professional, and with diligence, care and honesty. In this regard, the REIT Manager shall treat the Unitholders fairly and exercise its authority for the best interests of the Unitholders as a whole. Additionally,


161


-145-

the REIT Manager shall comply with the Trust Deed, REIT Manager Appointment Agreement, objectives for establishing the REIT, the resolution of Unitholders and relevant laws and regulations.

(11) Maintaining sufficient capital for business continuity and indemnification for any event occurred herein under performing as the REIT Manager at any time.

(12) No inappropriate exploitation in any information acknowledged under performing the role as the REIT Manager for its own interest or in a manner that may cause a damage or effect the benefit of the REIT as a whole.

(13) Performing duties with due care in order to avoid any conflict of interest. In case any conflict of interest occurs, the REIT Manager shall ensure that the Unitholders' interest are treated in a fair and appropriate manner.

(14) Cooperating with the Trustee or the SEC Office in performing their duties, and disclosing information which may have significant impact to the REIT management or other information deemed to be notified.

(15) Complying the characteristic to be in accordance with the Notification no. SorChor 29/2555 over the approval period.

(16) Preparing the financial statement in accordance with financial reporting standards as stipulated by the law on the accounting profession, and submit such financial statements to the SEC Office within 3 months from the end of its accounting period.

(17) Ensuring in any case of Unitholders' resolution, the REIT Manager who holds the REIT Units shall vote in such a manner that it believes to be beneficial for the REIT Unitholders as a whole.

(18) In performing and operating the business as the REIT Manager, it shall comply with the Securities Act, REIT Act and other relevant laws relating to the REIT management as well as the code of ethics and standards of professional conduct as defined by the associations related to securities business or by organizations in connection with the securities business as recognized by the SEC Office, mutatis mutandis. In addition, the REIT Manager shall not conspire, employ or collaborate with any person to violate such laws and regulations. 8.3 Trustee 8.3.1 General Information

Name : Krung Thai Asset Management Public Company Limited Head Office’s Address : No. 1 Empire Tower Building, 32nd Floor,

South Sathorn Rd., Yannawa, Sathorn, Bangkok 10120

Registration No. : 0107545000373

162


-146-

Telephone : +66 (0)2 686 6100 Fax : +66 (0)2 670 0417 Website : www.ktam.co.th Registered Capital : Baht 200,000,000 Paid-Up Capital : Baht 200,000,000 Releant License : Trust business license issued by the SEC Office on

23 January 2014

8.3.2 Shareholders’ Structure

List of Shareholders as of December 12, 2019

No. List of Shareholder Amount (Share) 1. Krung Thai Bank PCL 19,999,986 2. Mrs. Angkana Limsiri 1 3. Miss Hathaiwarn Mugthong 1 4. Mr. Kuntapon Punjaprakarn 1 5. Miss Prangtip Wanichanukorn 1 6. Mr. Suphasit Jawkonan 1 7. Miss Lalita Siriyakorn 1 8. Mr. Manote Leelawattanapanite 1 9. Mrs. Yanin Tantiphimonphan 1 10. Miss Jongkol Thongmeeprasert 1 11. Miss Antika Nunang 1 12. Mrs. Anny Mekpruksavong 1 13. Miss Sita Vachiraprakarnsakul 1 14. Miss Narongsak Saipun 1 15. Miss Nutcha Jamroonjan 1

Total 20,000,000

8.3.3 Duties and Responsibilities of the Trustee

The Trustee has duty to manage the REIT with integrity and prudence as a professional with expertise by providing fair treatment to the REIT Unitholders and for the best interests of the REIT Unitholders, with effectiveness and independence, and in accordance with the Trust Deed, relevant laws, and additional obligations to the REIT Unitholders (if any). For Trustee to perform its duties, it shall not perform any act that may cause the conflict of interest to the REIT, regardless of whether such act is for the interest of the Trustee or other persons, except in case where the Trustee demands for the remuneration of its performance as the Trustee or in case where the Trustee is able to demonstrate that


163


-147-

it has fairly managed the REIT as well as sufficiently disclosed related information to the REIT Unitholders in advance in which the REIT Unitholders who acknowledge the information have no objection. In this regard, disclosure of abovementioned information and objection shall be in accordance with relevant notifications and rules of SEC and the SEC office.

Principle duties of the Trustee as specified under the Trust Deed are as follows:

1. The Trustee shall monitor, supervise and oversee the REIT Manager to manage the REIT in accordance with the Trust Deed and other relevant laws.

2. The Trustee shall report to the SEC Office and take actions to resolve, terminate or rectify the damage incurred to the REIT as it deems appropriate where any action or omission of any action that may cause damage to the REIT or failure to perform duties under the Trust Deed or other relevant laws.

3. The Trustee shall attend every REIT Unitholders' meeting. In case the resolution of the REIT Unitholders' meeting to be sought in order to proceed any matter, the Trustee shall comply with the followings:

3.1 Provide answers to the questions and opinions whether the performance is in accordance with the Trust Deed or other relevant laws; and

3.2 Raise objection and notify the REIT Unitholders that such action shall not be executed in case it is not in accordance with the Trust Deed or other relevant laws.

4. The Trustee shall ensure that the REIT under the management of the REIT Manager approved by the SEC Office is valid throughout the establishment of the REIT, unless in case where the REIT Manager fails to perform its duties, the Trustee shall act on behalf of the REIT Manager to manage the REIT as necessary to prevent or cease the severe damage to occur for the benefit of the REIT or the REIT Unitholders as a whole, and to undertake actions according to its authorities and duties specified under the Trust Deed and the Trust Act to procure a new REIT Manager where by the Trustee shall have a duty to act as the REIT Manager in the interim period.

5. The Trustee shall enforce the repayment of debts or supervise the enforcement of debt repayment to be in compliance with the agreements between the REIT and the third party.

6. The Trustee shall have rights, duties, and responsibilities as specified in the Securities Laws and other relevant laws.

7. Duties on the asset management

7.1 The Trustee shall assign the REIT Manager approved by the SEC Office to manage the properties unless the management is for assets other than the Core Property, the Trustee may act on its own behalf according to clause 7. 2 hereunder or shall assign other persons to proceed such act.

164


-148-

7.2 In case the management is for assets other than the Core Property, at the least it shall be in compliance with the following rules:

7. 2. 1 In case the Trustee act on its own behalf, the following measures shall be executed:

- To separate the division with duty to manage the investment of the aforementioned assets from the divisions that may constitute conflict of interest or dispute over such duty;

- To prevent the access of internal information by separating the division and personnel having the duty to manage the investment of the aforementioned assets from other divisions and personnel that may exploit such information.

7. 2. 2 In case the Trustee assign any third party other than the REIT Manager to operate, the Trustee shall ensure that it is in compliance with the rules specified under the Notifications of the SEC Office regarding the outsourcing operational function relating to business operation to a third party in the REIT investment, mutatis mutandis.

8. The Trustee shall amend the Trust Deed in compliance with the order of the SEC Office.

9. The Trustee shall not set off any obligation arising beyond the performance in trusteeship and owing by the Trustee to a third party against the obligation arising from the management of the REIT owing by the third party to the REIT. In case of any contravention of this clause, such action is void.

10. In proceeding with any juristic act or a transaction with a third party, the Trustee shall notify the third party in writing that it acts in trusteeship and expressly stipulates as such in the evidence of that juristic act or transaction.

11. The Trustee shall prepare an account of the REIT's property separately from any other accounts under its responsibility. In case where the Trustee manages several trusts, the Trustee shall prepare the account of the trust property of each trust separately. In doing so, the Trustee shall keep the accounts correct, complete, and up-to-date. In managing the REIT, the Trustee shall segregate the REIT's property from those held in its own capacity, and any property in its possession. In case where the Trustee manages several trusts, it shall segregate the property of one trust from another.

12. In case the Trustee fails to perform the duty under clause (11) , which causes the REIT assets to be commingled with the property held in its own capacity in a manner in which it is unable to distinguish the REIT's property from that held in the Trustee's own capacity, it shall be presumed that:

12.1 The commingled property is held by the REIT.

12.2 The Trustee shall be personally liable for damage and liability arising from the management of commingled property.

12.3 The benefit arising from commingled property belongs to the REIT.


165


-149-

12.4 The comingles property under first paragraph shall include the property that is transformed into a different form or state.

13. In case the Trustee fails to perform duty described under clause (11) which causes the property of two or more trusts to be commingled in a manner in which it is unable to identify to which respective trust the property belongs, it shall be presumed that the commingled property, including property that is transformed into a different form or state, and any benefits or obligations incurred from the management of such commingled property, shall belong to each trust in proportion to the amount brought to commingle.

14. The Trustee specify its opinions on the performance of the REIT Manager in the report presented to the REIT Unitholders together with the annual report of the REIT and whether it is in accordance with Trust Deed, including relevant laws and other related notifications and regulations.

15. In case of change of the Trustee, if the new Trustee finds that the previous management of the REIT has contravened any provisions stipulated under the Trust Deed or the Trust Act, and consequently caused damage to the REIT, the new Trustee shall:

15.1 Claim for damages against the liable Trustee;

15.2 Recover property from a third person regardless of whether such third person directly acquired such property from the former trustee, and whether the property is transformed into a different form or state, except the acquisition of the property was done in good faith and for value, providing further that the person who acquired that property did not know, or should not have known, that the acquired property has been disposed of or transferred in breach of trust.

16. In case where the Trustee fails to manage the REIT in accordance with the Trust Deed or the Trust Act, the Trustee shall be liable to indemnify the REIT.

In case where it is necessary and there is a reasonable ground for the benefit of the REIT, the Trustee may apply for the SEC Office's approval prior to the management of the REIT in a different manner from those stipulated under the Trust Deed. The Trustee shall not be liable under the first paragraph if the Trustee manages the REIT as approved, in good faith, and for the best interest of the REIT.

17. The Trustee shall not be responsible for any loss or damage occurred from causes beyond the control of the Trustee or employees of the Trustee including but not limited to the transfer back of assets to the state, expropriation of the immovable property, rules of currency exchange, wars, acts of terrorism, insurrection, revolution, and other civil unrest, protest, force majeure, failure of tools or computer's equipment, and other causes as such.

166


-150-

18. The Trustee shall ensure that the Trust Deed complies with all material aspects of the relevant laws, and in case of any amendments to the Trust Deed, the Trustee shall act in accordance with the following rules:

18.1 Ensure that any amendments to the Trust Deed complies with the procedures and conditions as specified in the Trust Deed and the rules as stipulated in the relevant laws.

18.2 In case the amendment to the Trust Deed fails to meet the requirements, the Trustee shall proceed in accordance with its power and duties as specified in the Trust Deed and the Trust Act in order to protect the rights and interest of the Unitholders as a whole.

18.3 In case there is any subsequent change to the rules relating to the offering of Units or REIT management promulgated under the Securities and Exchange Act and the REIT for Transactions in Capital Market Act, the Trustee shall amend the Trust Deed in compliance with those rules, according to the procedures specified in the Trust Deed, or in accordance with the SEC Office's order.

19. The Trustee shall monitor, govern, and control the REIT Manager or any other designated person (if any) to act in compliance with the Trust Deed and the relevant laws. The monitoring, governing, and controlling shall include the following duties:

19.1 Ensuring that the REIT is managed by a REIT Manager approved by the SEC Office throughout the establishment of the REIT.

19.2 Monitoring and taking all necessary action to ensure that the designated person maintains the qualifications and has performed duties in compliance with the Trust Deed and the relevant laws, including dismissal of the current designated person and appointment of a new one.

19. 3 Ensuring that the investment of the REIT complies with the Trust Deed and the relevant laws.

19.4 Ensuring that the information of the REIT is disclosed accurately and completely, in compliance with the Trust Deed and the relevant laws.

19.5 Giving opinions relating to management or execution of transactions for the REIT by the REIT Manager or other designated person in support of seeking resolutions of the Unitholders' meetings, disclosure of the REIT information to investors, or upon the request of the SEC Office.

19.6 In case it deems necessary for the benefit of the REIT and Unitholders as a whole, the Trustee may assign the REIT Manager to proceed any matter as deemed appropriate and shall not incur any obligation to the REIT Manager more than its duties specified under the Trust Deed or prescribed under the relevant laws. Such act assigned to the REIT Manager shall not contravene with the Trust Deed, the relevant laws, rules, regulations, or rules prescribed by the relevant agencies. In case


167


-151-

such act incurred excessive expenses to the REIT Manager, the Trustee and the REIT Manager shall form a mutual agreement regrading to such matter.

20. In case where the REIT Manager acts or fails to act and such act caused damage to the REIT, or the REIT Manager fails to perform its duties in accordance with the Trust Deed and the relevant laws, the Trustee shall proceed as follows:

20.1 Submit a report to the SEC Office within five business days from the date when the circumstance became known or should have been known.

20.2 Rectify or mitigate the damage as deemed appropriate.

21. In case the REIT Manager fails to perform its duties, the Trustee shall act on behalf of the REIT Manager to manage the REIT as necessary in order to prevent or cease the severe damage to occur for the benefit of the REIT or the REIT Unitholders as a whole, and to undertake actions in accordance with its authorities and duties specified under the Trust Deed and the Trust Act to procure a new REIT Manager.

22. In case the Trustee shall have to manage the REIT on behalf of the REIT Manager for the reasons abovementioned, the Trustee may appoint assign other persons to manage the REIT in the interim period, where by such assigned person shall be in accordance with the scope, rules, and conditions as specified in the Trust Deed.

23. In case the Trustee is also a Unitholder of the REIT under its trusteeship, and in case any voting or action the Trustee shall proceeded as a Unitholder, the Trustee shall consider and maintain the best interest of the Unitholders as a whole, by adhering to the principles of good faith and due care, including avoidance of any conflict of interest or any effect to the performance of its duties as Trustee of the REIT.

24. The Trustee shall prepare the Unitholders register book, or may assign the SET or a licensed securities registrar under the Securities Act to prepare the register on behalf of the Trustee. In case of an assignment to other person for such case, the Trustee shall monitor and supervise the assigned person to act in accuracy unless there is an evidence recording system at the securities depository.

25. The Trustee shall provide evidence representing the rights in units and send to the Unitholders, such evidence shall convey the information at the least specified in the notifications of the SEC, unless the evidence is provided by the system of a Thailand Securities Depository Co. , Ltd. (TSD) and in compliance with conditions specified by the TSD.

26. In case a Unitholder requests the Trustee or the Securities Registrar to issue new evidence representing rights in units to replace the one having been lost, faded, or materially damaged, the Trustee shall issue and proceed such request within a reasonable period of time.

168


-152-

The Unitholders can find more details related to the roles and responsibilities of the Trustee in the Trust Deed.

8.3.4 Trustee's Fees

Trustee fees shall be at the rate no more than 0.30 (zero point three zero) per annum of the Total Asset Value (TAV) of the REIT but shall not be less than Baht 4,000,000 per annum.

8.4 Investment Committee (if any)

-None-

8.5 Other Contact Informations

8.5.1 Auditor Name: EY Office Limited

Address: 193/136-7, Lake Rajada Office Complex, Rajadapisek Road, Klongtoey, Bangkok 10110, Thailand

Tel: +66 (0)2 264 0777 Fax: +66 (0)2 264 0789

8.5.2 Registrar of Unit Trust Name: Thailand Securities Depository Company Limited Address: 93, The Stock Excahnge of Thailand’s Building, Rajadapisek Road, Dindaeng,

Dindaeng, Bangkok 10400, Thailand Tel: +66 (0)2 009 9000

8.5.3 Appriaser’s Companies

(1) Name: KJPP Wilson dan Rekan in association with Knight FrankAddress: Chaze Plaza 17th Floor, JI. Jenderal Sudirman Kav. 21 Jakarta 12920 Indonesia Tel: +62 21 570 7170

Name: Knight Frank Chartered (Thailand) Company Limited Address: 65/192, 23rd Floor, Chamnan Phenjati Business Center Rama IX Rd, Huaykwang

Huai Khwang, Bangkok 10310 Tel: 02 643 8223 Fax: 02 643 8224 E-mail: [email protected]


169


-153-

(2) Name: Savills (Thailand) Limited (by Nexus Property Consultants Co., Ltd.)

Name: Savills (Thailand) Limited Address: 26/F Abdulrahim Place 990 Rama IV Road Silom, Bangrak, Bangkok 10500,

Thailand Tel: +66 (0)2 636 0300Fax: +66 (0)2 636 0339

Name: Nexus Property Consultants Co., Ltd. Address: 31st Floor, Bangkok Insurance Building / Y.W.C.A., 25 South Sathorn Road,

Thungmahamek Sathorn, Bangkok 10120, Thailand Tel: +66 (0)2 286 8899Fax: +66 (0)2 286 2863

8.5.4 Legal Advisor Name: Backer & McKenzie Limited Attorneys at Law Address: 5th Floor and 21st - 25th Floors, 990 Abdulrahim Place, Rama IV Road, Silom,

Bangrak, Bangkok 10500, Thailand Tel: +66 (0)2 636 2000 Fax: +66 (0)2 636 2111

9. Corporate Governance and the REIT Management

9.1 Duties for the REIT Management

1. The REIT Manager shall arrange to put in place efficient operating systems, including aneffective check-and-balance system to provide complete support for the work under itsresponsibility. In respect that at the least the REIT Manager shall ensure appropriate andefficient management of the REIT entrusted by the Trustee, as follows:

(a) Formulation of the REIT management policy, the structuring of the REIT investmentcapital, the real estate investment decision, and the formulation of policy and strategyrelating to the procurement of benefits from immovable property. As a result, the entrustedREIT investment shall be prudent, careful and conform with the investment policystipulated in the Trust Deed, and in compliance with the Laws and related regulations,as well as it shall protect the interest of the REIT and Unitholders as a whole.

170


-154-

(b) REIT Management and managing the associated risks in order to efficiently prevent and mitigate risks. (c) A system to prevent conflict of interest, particularly between the REIT and REIT Manager

and connected persons of the REIT Manager, including measures or guidelines to ensure the utmost benefit of the REIT or Unitholders as a whole when there is a conflict of interest.

(d) Selection of personnel by the REIT Manager and authorized persons within the functions related to the REIT operations (if any) to ensure personnel shall have knowledge and skill with appropriate qualifications suitable for the work allocated to them.

(e) Supervision of performance of the REIT Manager and related personnel, including the authorized personnel related to the REIT management to ensure compliance with Securities Laws, related regulations, and the Trust Deed.

(f) Disclosure of complete, accurate, and adequate information by the REIT in compliance with the provisions stipulated in the Trust Deed, the Securities Act, the Trust Act, and Notifications, regulations, and orders issued under such Laws as well as other relevant laws relating to the REIT operation.

(g) Operation of Back Office. (h) An internal audit and control system. (i) Communication with investors and investors' complaint management. (j) Management of legal disputes, the REIT Manager may assign other persons to handle

cases related to REIT management providing that such assignment is in accordance with the provisions specified under trust deed.

2. The REIT Manager may outsource other persons to operate the functions related to REIT management as deemed necessary in order to facilitate the business operation and enhance its efficiency in compliance with the following rules

(a) The outsourcing shall not be, in any manner, have an impact on the operating

efficiency of the REIT Manager.

(b) There shall be a measure to ensure continuity of business operation in case the service provider fails to proceed with the outsourced function.

(c) In case of outsourcing any function related to the investment in other assets of the REIT, the service provider shall be duly authorized by law to perform such functions.

3. The REIT Manager shall prepare its financial statement in accordance with financial reporting standards as stipulated by the law on the accounting profession, and shall


-155-

submit such financial statements to the SEC Office within 3 months from the end of its accounting period.

4. The REIT Manager shall not undertake any action that may restrain the Trustee from

performing its duty independently. 5. The REIT Manager shall provide indemnity insurance for the performance of its function,

and the conduct of its directors, executives, and personnel throughout the terms of the Trust Deed, in which shall be in accordance with operating systems of the REIT Manager.

6. The REIT Manager shall arrange for the Unitholders to attend meetings and vote to

resolve the issues as specified in the Trust Deed, such as the modification or amendments of the Trust Deed, capital increase of the REIT, or change of the Trustee, etc.

7. In case there is an appointment of an advisor to provide advice or recommendations

related to the investment and the management of immovable property, the REIT Manager shall act in accordance with the following guidelines:

(a) Ensuring the advisor declare any conflict of interest in the issue under

consideration;

(b) not allowing any advisor who has direct or indirect conflict of interest in the issue under consideration to get involved in the decision making on such issue.

8. In executing the transactions related to immovable property on behalf of the REIT, the REIT Manager shall comply with the following guidelines:

(a) Acting to ensure that the sale, disposition, transfer of immovable property or the

entering in any agreement relating to the immovable property on behalf of the REIT is executed accurately properly and is enforceable by law; and

(b) Acting to ensure that the investment in immovable property of the REIT is done properly, and at the least the following actions shall be proceeded:

- Self-assessment of readiness to manage the immovable property before accepting the position as the REIT Manager or before making additional investment in such properties, as the case may be; and

- Carrying out an analysis and feasibility study and undertaking due diligence for the immovable property, including an assessment of various risks that may arise from the investment in such property,


171


-155-

submit such financial statements to the SEC Office within 3 months from the end of its accounting period.

4. The REIT Manager shall not undertake any action that may restrain the Trustee from

performing its duty independently. 5. The REIT Manager shall provide indemnity insurance for the performance of its function,

and the conduct of its directors, executives, and personnel throughout the terms of the Trust Deed, in which shall be in accordance with operating systems of the REIT Manager.

6. The REIT Manager shall arrange for the Unitholders to attend meetings and vote to

resolve the issues as specified in the Trust Deed, such as the modification or amendments of the Trust Deed, capital increase of the REIT, or change of the Trustee, etc.

7. In case there is an appointment of an advisor to provide advice or recommendations

related to the investment and the management of immovable property, the REIT Manager shall act in accordance with the following guidelines:

(a) Ensuring the advisor declare any conflict of interest in the issue under

consideration;

(b) not allowing any advisor who has direct or indirect conflict of interest in the issue under consideration to get involved in the decision making on such issue.

8. In executing the transactions related to immovable property on behalf of the REIT, the REIT Manager shall comply with the following guidelines:

(a) Acting to ensure that the sale, disposition, transfer of immovable property or the

entering in any agreement relating to the immovable property on behalf of the REIT is executed accurately properly and is enforceable by law; and

(b) Acting to ensure that the investment in immovable property of the REIT is done properly, and at the least the following actions shall be proceeded:

- Self-assessment of readiness to manage the immovable property before accepting the position as the REIT Manager or before making additional investment in such properties, as the case may be; and

- Carrying out an analysis and feasibility study and undertaking due diligence for the immovable property, including an assessment of various risks that may arise from the investment in such property,


-156-

together with guidelines for risk management, including completion risk (if any), such as the risk that may arise from the delay in construction and the inability to procure benefits from the property, etc.

9. Arranging for the Property of the REIT to be appraised by an appraisal firm authorized by the SEC Office in accordance with relevant laws and under the regulations stipulated in the Trust Deed, for example, the appraisal prior to the acquisition or disposal of the Property of the REIT and the review of the appraised value of the Property, etc.

10. In addition to appraisal and due diligence of the immovable property in which the REIT

seeks to invest as required by the relevant Laws, the REIT shall professionally review the immovable property, including the condition of the property, the ability of the counterparty of the agreement, financial and legal information, the appropriateness of other aspects, etc. Such review shall support the REIT's decision making on investment and the information disclosure. Under any circumstance in which the REIT Manager is unable to perform its duties, it must be specified that the Trustee shall manage the REIT as deemed necessary in order to prevent, halt, or limit any severe damage to the interest of the REIT or all Unitholders. In this respect, the Trustee may appoint other persons to manage the REIT instead during such period.

11. Proceeding to acquire the Property or immovable property to be invested in by the REIT,

in case of capital increase or additional investment in immovable property, shall be executed within 60 days from the establishment of the REIT. In case of the initial offering of REIT Units, such acquisition shall be completed within 60 days from the closing date of the Units offering, or from the closing date of the Units offering in case of capital increase.

12. The investment in immovable property shall be only in terms of acquisition of ownership

or possessory right of the immovable property. 13. The acquired immovable property shall not be under the enforcement of real right or

subject to any disputes unless the REIT Manager and the Trustee have provided an opinion in writing stating that such enforcement of real rights or disputes do not have any significant impact on the provision for benefits from such properties, and the conditions for the acquisition of such property are still beneficial to the Unitholders as a whole.

14. The agreement pertaining to the acquisition of property shall not include any provision

or obligation that may cause the REIT to be unable to sell the property at a fair price at the time of selling, such as an agreement that grants the right of first refusal in purchasing

172


-156-

together with guidelines for risk management, including completion risk (if any), such as the risk that may arise from the delay in construction and the inability to procure benefits from the property, etc.

9. Arranging for the Property of the REIT to be appraised by an appraisal firm authorized by the SEC Office in accordance with relevant laws and under the regulations stipulated in the Trust Deed, for example, the appraisal prior to the acquisition or disposal of the Property of the REIT and the review of the appraised value of the Property, etc.

10. In addition to appraisal and due diligence of the immovable property in which the REIT

seeks to invest as required by the relevant Laws, the REIT shall professionally review the immovable property, including the condition of the property, the ability of the counterparty of the agreement, financial and legal information, the appropriateness of other aspects, etc. Such review shall support the REIT's decision making on investment and the information disclosure. Under any circumstance in which the REIT Manager is unable to perform its duties, it must be specified that the Trustee shall manage the REIT as deemed necessary in order to prevent, halt, or limit any severe damage to the interest of the REIT or all Unitholders. In this respect, the Trustee may appoint other persons to manage the REIT instead during such period.

11. Proceeding to acquire the Property or immovable property to be invested in by the REIT,

in case of capital increase or additional investment in immovable property, shall be executed within 60 days from the establishment of the REIT. In case of the initial offering of REIT Units, such acquisition shall be completed within 60 days from the closing date of the Units offering, or from the closing date of the Units offering in case of capital increase.

12. The investment in immovable property shall be only in terms of acquisition of ownership

or possessory right of the immovable property. 13. The acquired immovable property shall not be under the enforcement of real right or

subject to any disputes unless the REIT Manager and the Trustee have provided an opinion in writing stating that such enforcement of real rights or disputes do not have any significant impact on the provision for benefits from such properties, and the conditions for the acquisition of such property are still beneficial to the Unitholders as a whole.

14. The agreement pertaining to the acquisition of property shall not include any provision

or obligation that may cause the REIT to be unable to sell the property at a fair price at the time of selling, such as an agreement that grants the right of first refusal in purchasing


-157-

property from the REIT to the counterparty with a fixed purchase price, or which may cause the REIT to have more post obligation than normal obligations that a lessee should have at the time the lease agreement is terminated.

15. Arranging for the REIT to provide non-life insurance that insured the benefit of the

Unitholder in which it shall be similar or replace the disasters that is possible to occur to the Properties, as mutually agreed upon by the counterparties of the Trust Deed without violating relevant laws and regulations, , and to provide insurance for third party who might be affected from the damage or loss caused by the Property or operations related to the Property. Such insurance shall be procured from an acceptable insurer with an insured sum at the least sufficient and appropriate for the procurement of benefits from the Property.

16. Providing an opinion on the transactions related to the acquisition of the additional

Property together with a rationale and supporting information in the document seeking for the approval from the Unitholders or the invitation letter to the Unitholders’ meeting in considering the capital increase for additional investment in the Property by the REIT.

17. For disposition of the Property, arranging for the value appraisal of the Property, calling

the Unitholders’ meeting for an approval resolution, obtaining consent from the Trustee, and disclosing information according to the regulations specified in the Trust Deed and relevant laws.

18. In case of any change in the REIT Manager, the new REIT Manager to be nominated

shall agree to perform the duties in accordance with the Trust Deed and relevant laws and regulations. Whereas, the former REIT Manager shall corporate as necessary to ensure a successful handover of the work.

19. In case any modification or amendment of the Trust Deed, the REIT Manager shall

proceed to ensure that such modification or amendment is in accordance with the conditions and methods specified in the Trust Deed and relevant regulations. Upon completion of the modification or amendment, the REIT Manager shall submit a copy of the modified or amended Trust Deed to the SEC Office within 15 days from the signing date or the date on which the Trust Deed was modified or amended (as the case may be).

20. In case of a change in the Trustee, the REIT Manager shall proceed to notify the

Unitholders and the SEC Office of the change within the timeframe specified in the Trust Deed.


173


-157-

property from the REIT to the counterparty with a fixed purchase price, or which may cause the REIT to have more post obligation than normal obligations that a lessee should have at the time the lease agreement is terminated.

15. Arranging for the REIT to provide non-life insurance that insured the benefit of the

Unitholder in which it shall be similar or replace the disasters that is possible to occur to the Properties, as mutually agreed upon by the counterparties of the Trust Deed without violating relevant laws and regulations, , and to provide insurance for third party who might be affected from the damage or loss caused by the Property or operations related to the Property. Such insurance shall be procured from an acceptable insurer with an insured sum at the least sufficient and appropriate for the procurement of benefits from the Property.

16. Providing an opinion on the transactions related to the acquisition of the additional

Property together with a rationale and supporting information in the document seeking for the approval from the Unitholders or the invitation letter to the Unitholders’ meeting in considering the capital increase for additional investment in the Property by the REIT.

17. For disposition of the Property, arranging for the value appraisal of the Property, calling

the Unitholders’ meeting for an approval resolution, obtaining consent from the Trustee, and disclosing information according to the regulations specified in the Trust Deed and relevant laws.

18. In case of any change in the REIT Manager, the new REIT Manager to be nominated

shall agree to perform the duties in accordance with the Trust Deed and relevant laws and regulations. Whereas, the former REIT Manager shall corporate as necessary to ensure a successful handover of the work.

19. In case any modification or amendment of the Trust Deed, the REIT Manager shall

proceed to ensure that such modification or amendment is in accordance with the conditions and methods specified in the Trust Deed and relevant regulations. Upon completion of the modification or amendment, the REIT Manager shall submit a copy of the modified or amended Trust Deed to the SEC Office within 15 days from the signing date or the date on which the Trust Deed was modified or amended (as the case may be).

20. In case of a change in the Trustee, the REIT Manager shall proceed to notify the

Unitholders and the SEC Office of the change within the timeframe specified in the Trust Deed.

174


-158-

21. Applying for approval of the offering of REIT Units together with related documents in

case of the REIT capital increase, and duly certified the accuracy and completeness of the filing of information to the extent that is involved with its responsibilities.

22. Giving an opinion on the ability of the revenue guarantor to honor the obligations under

the revenue guarantee agreement (if any). 23. Proceeding the listing of the Units sold or newly issued (in case of a capital increase) on

the SET within 45 days from the closing date of Units offering. 24. Proceeding to allocate the Units to any person or group of persons in accordance with

the ratio and rules prescribed by relevant laws and regulations. Duties in Managing the REIT and the REIT Properties

1. Giving an opinion to relevant competent officers regarding the qualifications or characteristics of the immovable property invested in by the REIT upon request by relevant agencies.

2. Supervising and monitoring the renovations of, improvements to, and maintenance of the Property by the Master Lessees appointed to manage the Property to ensure that the Property is always in good condition and ready for use to procure benefits as specified in the annual action plan, Trust Deed, and related Laws.

3. Arranging for the Properties to be reformed, restored, or modified as deemed necessary and appropriate without violating or contradicting the Trust Deed and related Laws, including the land lease agreement entered with the owner of the land on which the Property is located, including all amendments and modifications of the definitive land lease agreement, immovable property sub-lease agreements, and movable property lease agreements in connection with Master Lessees. In this regard, prior notice to the Trustee is required.

4. Supervising and managing the Property, and procuring the benefit of the Property, as well as providing management in case of emergency, and the restoring of the property as deemed necessary. In case of major restoration, prior notice to the Trustee is required.


175


-159-

5. Managing and procuring benefits from other assets other than the REIT Property and undertaking any necessary actions to ensure that the management of the Property is in compliance with the annual action plan, the Trust Deed, and the relevant Laws.

6. Supervising and monitoring the Master Lessees as well as undertaking any actions in coordination with the Trustee and/or Master Lessees to enable the Trustee or Master Lessees to obtain the licenses, letter of authorization, letter of waiver, and/or any other related documents necessary for procuring benefits from the Property.

7. Facilitating the inspection of the Property for the REIT or other persons designated by the Trustee within the operating hours of the REIT Manager, as well as providing the access to information, testimony, and/or any documents (except the information, testimony, and/or documents related to the intellectual property of the REIT Manager or its associates) upon the request of the Trustee, as deemed necessary and appropriate.

8. Facilitating the appraisal firm in apprising the Property value or other persons designated by such appraisal firm to inspect the Properties for valuation, including providing an access to information, testimony, and/or any documents (except the information, testimony, and/or documents related to the intellectual property of the REIT Manager or its associates) upon request of the property appraisal firm as deemed necessary and appropriate.

9. Preparing any documents in the possession of the REIT Manager that are related or relevant to the Property and/or held in possession of the on behalf of the REIT, including any accounting documents and evidence related or relevant to the REIT, for inspection by the Trustee or persons designated by the Trustee, and/or the auditors, within the operating hours of the REIT Manager. The REIT Manager shall also deliver any documents related or relevant to the REIT as requested by the Trustee, and/or the auditors (as the case may be).

10. Controlling, supervising, and monitoring the Master Lessees and taking any actions in coordination with the Trustee and/or the Master Lessees to enable the Trustee or the Master Lessees to pay fees and taxes on land and building arising from the Property, including making contact, cooperating, providing information, submitting documents, and paying Withholding Taxes or any other taxes related to the management of the Property by the REIT Manager to competent officers of relevant agencies.

176


-160-

11. Controlling, supervising, and monitoring the Master Lessees in performing its duties as stipulated under the Lease Agreements and other related movable property lease agreements and other relevant Laws.

12. Notifying the Trustee of the following cases in an appropriate due time: (a) any damage or defect of the Property, including other equipment and facilities, or upon occurrence of any event that results in a significant reduction in the value of the Property; or (b) in case of any material breach of the Agreement by the Master Lessees.

13. Undertaking any other actions as the REIT deemed necessary and appropriate to ensure that the Property is in good condition and ready for procuring benefits, or in accordance with the objectives of the REIT Manager Appointment Agreement. In addition, the REIT Manager shall also give advice on the market situation in case the REIT wish to sell or assign the leasehold right or to lease the Property.

Preparation of Accounting and Reports, Operation Documents and Internal Audits

1. Preparing and disclosing information of the REIT in compliance with the provisions stipulated under the Trust Deed and the Securities Laws, to the SEC Office, the SET, the Trustee, and the Unitholders and submitting the annual report of the REIT together with the invitation letter to annual general meeting to the Trustee and the Unitholders.

2. Arranging to have in place accounting and various reports related to the REIT management and its Property, as it assigned by the Trustee or as deemed necessary and appropriate, as well as submitting such reports and documents to the SEC Office, the SET, the Trustee, and the Unitholders within the specified time period by the Trustee in order to be in compliance with the Securities Law, other relevant laws, including the orders of competent officers of relevant agencies.

In this regard, the REIT Manager shall prepare such accounting in compliance with the standard accounting principles by segregating the assets and/or any interests arising from the Property invested in by the REIT and/or any assets that have been accepted or shall be accepted by the REIT Manager on behalf of the REIT, from its own property. In this respect, the REIT Manager shall proceed the storing of the documents and evidence supporting the accounting process for at least a 5-year period which they shall be in complete condition and ready for the inspection of the Trustee.


177


-161-

3. Delivering the following documents to the Trustee within the specified time period by the Trustee in order to comply with the Securities Laws, other relevant laws, including orders of competent officers of relevant agencies.

(a) Submitting a full property appraisal report to the Trustee, at least 7 days prior to the end of the period before the announcement date of the REIT Net Asset Value to the Unitholders.

(b) Submitting reports on the REIT Net Asset Value and the Unit value on the last business day of each quarter, by sending to the Trustee for certification before submitting them to the SEC Office within 45 days from the last business day of such quarter.

(c) Submitting the up-to-dated information of the persons connected to the REIT Manager and essence of the transactions between the REIT and the REIT Manager or persons connected to the REIT Manager, by sending to the Trustee with no less than 14 days prior to the entering of the transaction.

(d) Disclosing the information of the transactions between the REIT and the REIT Manager or persons connected to the REIT Manager, for the previous and current accounting periods by publishing in the annual report and the financial statements of the REIT.

(e) Disclosing information regarding the conflict of interest between the owner of the Property invested in by the REIT and the REIT, together with measures for preventing such conflict to the investors on the first day of initial public offering of the Units, and upon the occurrence of any conflict.

(f) Disclosing information pertaining to the interests or benefits accepted by the REIT Manager or persons connected to the REIT Manager from the company or individual whom is the REIT business partner, by providing the information in the Prospectus, the registration statement, the invitation letter for Unitholders’ Meeting, in order to seek for approval on the transaction, as well as, in the REIT annual report for such information shall be used by the Unitholders and the Trustee in consideration of the REIT Manager's independence in executing various transactions for the REIT and the reasonableness of such transaction.

(g) The interest or benefits that shall be considered to disclose are such as the status of a creditor/debtor as a guarantor/recipient of the guarantee, of cross-shareholding, or having the same major shareholders or the group of management, as well as the provide/accept the service of intra-group transaction or paying expenses on behalf of another company, etc.

(h) Submitting information related to the REIT investment in immovable property to the Trustee upon request for examining the investment management.

178


-162-

(i) Submitting the updated information related to the acquisition and disposal of the REIT Property to the Trustee at least 14 days prior to the execution of the transaction, and proceeding the disclosure of such information to the public and the SEC Office within 15 days from the REIT Property acquisition or disposal date.

(j) Disclosing the information on the acquisition or disposal of the REIT Property and accessory assets for the previous and current accounting periods in the REIT annual report and financial statements.

(k) Submitting the updated information of transactions relating to the REIT borrowing and any encumbrance created by the REIT, to the Trustee at least 14 days prior to executing the transaction.

(l) Disclosing the information of transactions relating to the REIT borrowing and any encumbrance created by the REIT for the previous and current accounting period in the annual report and the financial statements of the REIT.

(m) Submitting the information related to the transaction deemed by the Trustee as having a significant impact on the REIT assets upon request by the Trustee, to be delivered to the Trustee at least 14 days prior to the execution of such transaction.

(n) Submitting the financial statements of the REIT Manager, together with information related to the preparation of the financial statements, to the Trustee at least 30 days from the last business day of each quarter.

The aforementioned reports are to be reference of basis formats and examples of reports, there may be a modification, an increase, or decrease in the number and type of the reports, or an alteration of report formats in order to be in compliance with the Securities Laws and other relevant laws, including the orders of competent officers of relevant agencies.

Duties in Executing the Agreements in Procuring Benefits from the REIT Immovable Properties

1. The REIT Manager shall procure benefits from the REIT immovable properties only through leasing and/or subleasing. The value of such leasing or subleasing shall not be lower than 75 percent of the total value of the offering of REIT Units plus the REIT borrowings (if any).

2. The REIT Manager shall control, supervise, implement controlling measures, and undertake any other actions as deemed necessary and appropriate to ensure that Master Lessors and Master Lessees perform their obligations in accordance with the duties, conditions, and/or covenants stipulated under the Lease Agreements, as well as the rules, criteria, and regulations of, and any provision or policy relating to the Property.


179


-163-

Supervision of Master Lessees

1. The REIT Manager shall control, supervise, and proceed any conduct to ensure that any action undertaken by Master lessees is in compliance with the conditions and duties specified under the Lease Agreement, and that the rental payment is in accordance with the terms and conditions as agreed upon.

2. The REIT Manager shall monitor and consider the Master lessees to precede the annual budgeting including other extra expenses beyond the budget (if any) as deemed appropriate and for the best interests of the REIT. The REIT shall also control and monitor the reimbursement of the expenses to be in line with the budget.

3. In case there is any breach of agreement or any evident possibility that the Master Lessees will conduct such breach, the REIT Manager shall undertake any conduct, in accordance with its right specified under the agreement or by the Law and through the REIT invested company in which it is a counter party of the contract between the Master Lessees, such as sending the written notification, proceed the litigation procedure, as well as mediation and dispute resolution in order to enforce and monitor the Master Lessees to undertake and perform in accordance with the agreement and shall be liable for the damage occurred from such breach to the REIT.

4. The REIT Manager shall arrange to have risk assessment arising from the Master Lessees and report the risks to the Board of Directors of the REIT Manager in case the Master Lessees has an evident possibility not to comply with the agreement.

5. Other measures that the REIT Manager views as appropriate for the REIT investment.

The Supervision of the Master Lessees in Case the Master Lessees are Persons Connected to the REIT Manager

In case the Master Lessees are persons connected to the REIT Manager may cause a conflict of interest between the REIT and the Master Lessees after the REIT has been established and the contract has been entered between the Master Lessors and the Master Lessees. The REIT Manager shall operate in a direction to ensure that the Master Lessees are under supervision for the best interest of the REIT. In supervising the Master Lessees, the REIT Manager shall proceed such supervision considering the conflict of interest protocol that are suitable and appropriate under the monitoring of Trustee. In order to ensure that the REIT management is in accordance with the Law and relevant regulations including Trust Deed, the REIT Manager Appointment Agreement, and other relevant Agreements in which shall be in compliance

180


-164-

with the regulations and procedures prescribed by the Law, regulation and rules including the aforementioned Agreements as well as the working handbook and internal supervision of the REIT Manager. In addition, in case the REIT shall need to enter into any legal transaction with the Master leases other than the Lease Agreement in which its essence is disclosed hereunder this Filling. The REIT Manager has an obligation stipulated under the Trust Deed to ensure that such legal transaction is in compliance with the terms and conditions for entering into transaction with connected person stipulated in the aforementioned herein Section 5 the Transactions between the REIT and the REIT Manager or persons connected to the REIT Manager, and between the REIT and the Trustee or persons connected to the Trustee.

Furthermore, in case the REIT Manager shall need to enter into any significant legal transaction that might occur between the REIT and the Master Lessees after the REIT has been established and the REIT has invested in the project's Properties, such entering might result in an alteration in the essence previously disclosed hereunder this filing as follows:

• An alteration in the essence of the Lease Agreement between the Master Lessors and the Master Lessees

• The decision making in accordance with the right under the Agreements or under the Law in case of breach of the contract or dispute

• The process of alternation in Master Lessees or termination of the Lease Agreement.

In the execution of the abovementioned process, the REIT Manager whom is a juristic person shall seek for an approval from the SEC in order to act on its role and duty as the REIT Manager in accordance with the Trust Act and relevant Law and Regulations for the REIT management with due care, responsibility, and trustworthiness. In addition, the REIT Manager shall treat the Unitholders with fairness and at the best interest of all the Unitholders and in accordance with the Law and relevant regulations including Trust Deed and other relevant Agreements. Furthermore, the REIT Manger shall act with due care in order to avoid conflict of interest, in case if any, the REIT Manager shall ensure that the Unitholders are treated with fairness and appropriation. The REIT Manager shall ensure that the Master Lessees Supervising Protocol is in compliance with the Regulations regarding the transaction between the REIT and the REIT Manager or persons connected to the REIT Manager such that the Directors with special interest shall have no voting right regarding the decisions on the supervision of Master Lessees and/or the special interest of such Master Lessees.

9.2 Committees -None-


181


-165-

9.3 The REIT Manager’s Meeting Board of Directors’ Meeting

Board of Directors of the REIT manager has to set the Board’s meeting at least 1 time per quarter to consider and approve REIT manager’s management and operation as below:

a) Determine strategy and long-term business plan, organize the organization chart and govern business policy and determine risk factors which may affect the benefit procurement of the REIT.

b) Performance of the REIT manager and REIT c) Draft the annual budget and business plan including strategy of the REIT which are provided

by the REIT manager acting through the REIT. d) Progress of operation following the business plan and marketing plan which were set by

the REIT manager in respect to the benefit procurement of the REIT, Problems and obstacles including the guide line for rectification with support from property manager.

f) Guide line for risk mitigation and other incidents that may affect the REIT’s operation. g) Operation result of the REIT manager units such as Compliance, Risk management, Business development and Investor relation. Problems and obstacles including the guideline for rectification. h) Guideline to receive dispute and complaint related to operation of the REIT which need to be considered by Board of Directors. i) Weakness of internal control process of REIT manager operation related to their duty as

the REIT manager acting through the REIT including the guideline for rectification. j) Related transactions and other transactions which may cause any conflict of interest of the REIT’s operation. k) Other transactions which need an approval from the REIT’s unitholders. l) Other material transactions related to the REIT manager’s operation and/or REIT’s operation

Quorum and Voting

Board of Directors’ meeting of the REIT manager requires directors to attend more than 50% of the total number of directors and the resolution is required the vote of more than 50% of total number of directors who attend the meeting. For each agenda, director who has conflicts of interest will not be able to vote and need to leave the meeting during the consideration of that agenda.

182


-166-

In the Board of Directors’ meeting, the Chairman of the Meeting will give opportunity to every director to opine openly before voting and summarize the resolution of each agenda. REIT manager will prepare the minutes of the meeting and keep the original version including invitation letter, other supporting documents and electronics files for the convenience of directors and relevant parties’ audit and inspection.

Case that the REIT has Indirect Investement The REIT Manager shall have the regulatory mechanism to the company that the REIT invests, in order to grant the REIT to have an authority to be able to manage and control the company that already set up or the Holding Company shall be set up in the purpose of investment in the main asset of REIT in every level in accordance with the Trust Deed, laws, and related regulations as specified. Compliance and Risk Management Department shall be responsible to control to ensure that after the REIT invests directly in the Holding Company in every level. The REIT shall have a measure of risk management on the indirect investment effectively. However, such measure may have a difference pursuant to the suitability and specification of the laws and regulations of those countries that the Holding Company are established.

1. Level of the Board

In order to manage the work to have the effectiveness in controlling and monitoring of the Holding Company in very level, the REIT Manager as assigned by the Trustee to manage the operation of the Holding Company shall have the duty and responsibility to operate as follows:

Duties and Responsibility of the REIT Manager

(a) The REIT Manager shall manage the Holding Company in different levels through the directors/ delegates as appointed with the integrity and carefulness pursuant to the standard of professional. The REIT Manager shall prepare and proceed in accordance with the asset acquisition plan, risk protection from the foreign exchange fluctuation, payment, expense payment, and asset maintenance.

(b) In case of any action taken by the Holding Company in many level, if the action is on the level of REIT, it shall be approved by the Board of Directors of the REIT Manager, Trustee, and/ or Trust unitholder pursuant to the Trust Deed or the notification of the SEC and/ or the Securities and Exchange Commission as specified. The REIT Manager shall proceed accordingly in the level of Holding Company at different level, which is not accepted if it has not been approved by the Board of Directors of the REIT Manager, Trustee, and/ or Trust unitholder in accordance with the related regulations as if those actions taken by the REIT level.

(c) The REIT Manager shall proceed to be ensured that the business scope of Holding Company in Different level. If as a juristic person establishing in order to holding shares in other companies, it shall limit only the shareholding in different companies and allow to act only other enterprises as related to such matters only. Another company which holds or has the ownership of main assets of the REIT, then the business scope of such company shall limit only the business scope of the REIT and be able to


183


-167-

proceed in accordance with the criteria that the SEC and/ or the Securities and Exchange Commissions has announced and specified. The Holding Company in different levels shall not be able to proceed any other matters other than the objective of the REIT.

(d) The REIT Manager as assigned by the Trustee to be responsible to the interest of the REIT, shall have the right to appoint directors as a delegate of the REIT directly to attend the Board of Directors of the Holding Companies in different levels.

(e) The REIT Manager as assigned by the Trustee, obtains the authority through the Board of Directors of the Holding Company in different level and shall have the right to appoint the person who is qualified (management) to participate in the management of the company in different level including with the right to withdraw if it deems appropriate.

(f) The REIT Manager as assigned by the Trustee must prepare agreements and/ or the appointment letter of directors who are the delegates and managements as assigned, which it shall be specified the authority, duties, and responsibility of those persons who are appointed in such position obviously.

(g) The REIT Manager as assigned by the Trustee shall review the qualification of directors who are the delegates directly of the REIT and management in every 2 years in order to evaluate the knowledge and performance as well as suitability. If there is any change or withdrawal of director and/ or management, the REIT Manager shall consider and not to delay to appoint directors who are the delegates directly of the REIT and management in order to manage and monitor the companies which are set up for investment of the REIT continuously.

(h) Whenever the REIT has the board meeting in different levels, the REIT Manager shall inform the meeting agendas including with the opinions of the REIT Manager to the Trustee for consideration and comments. It must be submitted to the Trustee in advance before convening of the meeting not less than seven (7) days. If the Trustee has no any objection and it shall deem that those meetings have already been approved by the Trustee. However, if the Trustee comments that the meeting agendas and opinions of the REIT Manager are against on the SEC notification or related laws as specified. Trustee shall have the Veto right to oppose before the meeting occurred.

Duties and Responsibility of directors and/ or management as a delegate of the REIT Manager A person who is appointed as a director and management of the company in different

levels must manage, supervise, and control as well as to set the different policies in management to comply with the specification in the Trust Deed and shall not be against to the laws and related regulations. The director must operate under the guideline to control as follows:

(a) The person who is appointed to be responsible as a director who is also a delegate directly of the REIT investment must perform duties under the regulations, objectives of the company, shareholder’s resolutions including to terms and conditions in accordance with the contract and letter of appointment of directors that have been specified scope of authority, duties and responsibilities of the directors.

184


-168-

(b) In the case that the director has appointed another person with appropriate qualifications to join the management (executive), the appointed person must perform the duties under the terms and conditions as specified in the contract/ appointment letter, which specifies the scope of authority, duties and responsibilities of those holding the position.

(c) In entering different transactions of the company, it must have a director who is a direct delegate of the REIT Manager assigned by the Trustee or at least 1 appointed person to sign the document every time. In addition, at every board meeting must have a director that is the direct delegate sent by the REIT to attend every meeting to constitute a quorum, which can be conference via phone or video (Video Conference) depending on the conditions of the law of that country.

(d) In the case of the board meeting of the company at all levels, directors who are direct delegates of the REIT Manager assigned by the Trustee, must inform the meeting agendas and details including with comments (if any) to the REIT Manager to know. The REIT Manager shall consider and set the guidelines for voting on the said agendas. Therefore, the transactions and operations that must be passed to the directors' resolution and must be approved by the REIT Manager without exception. However, the REIT Manager cannot specify the guideline for voting on those agendas that are contrary to the comments or issues of the objection (Veto) of the Trustee.

(e) In attending the board meetings and voting on different agendas on behalf of the REIT Manager assigned by the Trustee. The directors who are direct delegates of the REIT must perform the duties in accordance with the scope of authority, and vote as assigned by the REIT Manager or specify voting guidelines.

(f) In organizing a board meeting, procedures and voting rights shall be taken into account with the law applicable to companies established for investment of the REIT.

Indirect investment through the Holding Company and in the case of engaging the Master Lessee

For the indirect investment through the holding through the Holding Company that holds the

ownership and / or leasehold rights in the land and hotel buildings, which are located in foreign countries such as Indonesia, Cambodia and Vietnam. The REIT Manager will set up the company to act as follows:

(a) The REIT Manager will consider appointing a delegate to act as a director or

management at the Master Lessee Company. (b) The Master Lessee will be established for the purpose of operating the hotel business

and delivering revenue to the REIT, by not conducting any business other than the aforementioned objectives.

(c) Revenue after deduction of all expenses shall be delivered to the Master Lessor and Master Lessee is not a stakeholder of the Hotel Operator.


185


-169-

Delegate of the Directors in the Company which the REIT invests and Master Lessee Company

The REIT Manager will arrange for directors and/ or management to participate in the management, control, planning and administration of the Master Lessee Company established by the REIT Manager and the companies at different levels that the REIT will invest in through the Holding Company shall comply with the regulations of the REIT. (a) Directors who are a direct delegate

(1) The REIT Manager, as assigned by the Trustee, will send a direct delegate to participate in the Board of Directors of the company that the REIT invests at all levels in order to control and set policies at least one (1) person. In this regard, the REIT Manager will consider appointing the number of directors that can represent the majority of voting power to approve and control any transactions.

(2) The REIT Manager, as authorized by the Trustee, will send a director who is a direct delegate to join the Board of Directors of Master Lessee Company at least one (1) person.

(b) Directors appointed by the REIT Manager

The appointment of such directors shall depend on the suitability and / or the laws of the country that the REIT invests, such as the expertise and experience in the management of the assets that the REIT invests or in accordance with the law, some countries may require directors who have a nationality and residency in the country in which the REIT invests in etc.

(c) Managements appointed by the REIT Manager The appointment of the said management shall depend on the suitability. The

management is knowledgeable, experienced, and expert in property management in the type of properties that the REIT invests, including an understanding of the business of any area or country in which the REIT invests. The REIT Manager shall consider that it shall be beneficial to the management of the REIT.

Table of delegates of directors and managements of the companies that the REIT invests and the Master LesseeCompanies

Items

Master Lessee (Person)

Master Lessor (Person)

Intermediate Company (Person)

Holding Company (Person)

Note

Directors of the REIT Manager

At least 1 Person

To comply with the majority

votes and authority to

control



control



control

- The REIT Manager or person who is appointed by the REIT Manager shall join as a director of all company levels which the REIT Manager invests. A number of directors shall be related to

Directors as

assigned and/or Imperative

and/or in Imperative and/or in

Imperative and/or in

186


-170-

Items

Master Lessee (Person)

Master Lessor (Person)



Note

appointed by the REIT Manager

accordance with the law of each

country

accordance with the law

of each country


of each country

proportion of share in the company which the REIT Manager invests in all levels of the company. However, it shall be complied with the law in each country and/or the regulation in country which REIT Manager invests. - The REIT Manager

shall provide a contract and/or appointment letter which identifies obligation and responsibilities of the director who is assigned and/or appointed by the REIT Manager. - The REIT Manager has

a right to withdraw the director who is assigned and/or appointed by the REIT Manager in case of being incompetent and not performed in according with the contract and/or appointment letter. - Management of the

REIT Manager must be a director in the board meeting of master


187


-171-

Items

Master Lessee

(Person)

Master Lessor

(Person)



Note

lessee at least 1 person.

Managements as

assigned and/or appointed by the REIT Manager


accordance with the law of each

country



of each country



of each country

- The REIT Manager will provide a contract and/or appointment letter which identifies obligation and responsibilities of the director who is assigned and/or appointed by the REIT Manager. - REIT Manager has a

right to withdraw the director who is assigned and/or appointed by the REIT Manager in case of being incompetent and not performed in according with the contract and/or appointment letter.

Note: The REIT Manager shall act as representative and as assigned by the Trustee in Master Lessee Company, involved to impose policy and/or to control hotel operator via managing in Master Lessee Company because the hotel operator is not a direct contract party with the company that the REIT invests.

188


-172-

Conflict of Interest

The Board of Directors realizes the importance of the conflict of interest related to the REIT, REIT manager and other related parties. Therefore, the Board of Directors of the REIT manager has a policy to address the conflict of interest. In principle, decision of the REIT manager and its personnel shall be based on the best benefit of the REIT’s unitholders. The REIT manager shall avoid any action that may cause conflict of interest. In addition, directors and management of the REIT manager have duty to submit the stakeholder report related to the management of the REIT and the REIT manager for themselves and other related persons. 9.4 Management of Internal Information

The Company has set the policy to control personnel for disclosing the non-public information to outsiders for their own benefits. The policy shall determine the procedures and punitive measures for directors, management and personnel of the Company who disclose non-public information for their own benefits. These procedures and punitive measures shall be included in the Code of Conduct signed by directors and employment contract signed by management and personnel. The Company will appoint committee composed of relevant managers and managing director to determine the procedures and punitive measures by giving the written warning letter to the employees who disclose the information by negligence. The Company shall terminate the employment contract of the employee who intend to disclose information and cause material damage to the Company. In addition, the Company will inform directors and management about their duties to report their holding of the TRUST units including those of their spouses and under legal age children. 9.5 Procedures and Factors to Be Considered for Investment Decision Making and Managing the REIT

The procedure for making investment decision of the REIT Manager is summarized in the diagram as follows:

Investment Process Summary

Deal Sourcing

Preliminary Analysis

Detailed Due Diligence

Final Negotiation / Approvals

Execution / Closing

Asset Management


189


-173-

Deal Sourcing

The REIT Manager shall seek for the growth opportunity for the REIT by investing more in the additional assets. The REIT Manager shall also consider investing in the properties of the business partners and the third party, in which such investment shall be for the best interests of the REIT.

Preliminary Analysis

The REIT Manager performs examination and preliminary review on a feasible investment in order to decide whether or not such feasible investment is in accordance with the objectives and specified under the Trust Deed and the REIT investment policy. The preliminary financial analysis to view the feasibility of the project shall proceed with the same beginning procedure.

The REIT Manager shall conduct preliminary Due Diligence, in negotiation on investment conditions, including the Top Down Analysis, Bottom Up Analysis and Discounted Cash Flow model of the assets to be invested by the REIT, as well as, prepare the preliminary investment information and present to the Board of Directors comprised of the Managing Director and selected members of the Capital Market Development, Business Development, and Compliance and Risk Management departments.

Detailed Due Diligence

In case members of the abovementioned meeting agree to pursue such investment opportunity, the REIT Manager shall undertake more extensive Due Diligence, which typically includes appointing legal advisors, tax advisors and appraisers with potential in order to provide independent assets valuation and Due Diligence.

In case the consideration is based on the completed analysis (including but not limited to background checks, anti-money laundering compliance, feasibility study, legal review, financial review, capital structure analysis, and tax structure analysis), such investment opportunity shall be presented to the REIT Board of Directors for approval.

REIT Approval Procedure

After receiving an approval from the REIT Board of Directors, the REIT Manager shall notify the Trustee within 7 days after the approval by the Board of Directors, in order to seek for approval and proceed such action in accordance with the agreements related to REIT management.

Execution and Closing

Once received an approval from the Trustee, the REIT Manager shall conduct a negotiation and enter into related agreements including the conduct a negotiation with the seller of the property (if any) and proceed in line with the REIT Manager's guidelines.


-174-

The Closing will occur after the receipt of source of fund and all the completion of the precedent conditions (if any).

Asset Management / Monitoring

The REIT Manager shall be responsible for the investment management and operation in accordance with the REIT’ s investment strategy. Throughout the investment period, the REIT Manager shall clarify in details and periodically review the performance of such investment to be in accordance with the REIT’s investment objectives.

9.6 Selection of Asset Management -None- 9.7 Monitor of Operation of Asset Management -None- 9.8 Monitoring of the REIT’s Benefit Procurement

1. The REIT Manager has the policy of appointing its representatives to be directors of each Investment Companies. The REIT Manager will monitor the operating performance of the Investment Companies in each quarter and compare with the annual budget and the past operating results (if any). If the operating performance of any Investment Companies misses the target, the REIT Manager will analyze the issues and develop operating plan in order to achieve the target.

2. After the REIT's investment, the Properties will be leased by the Master Lessors to the Master Lessees with the lease period of 3 years each. The REIT will receive both fixed and variable rental from the Master Lessees as set out in the summary of agreement and material agreements relevant to the Properties which the REIT Manager is of the view that the rental rate is appropriate.

3. For the initial investment, the REIT manager will control Master Lessees to comply with the term and conditions of the lease through the Master lease agreement.

4. In the event that there is a change in Master Lessee of the Properties, this may affect the change in terms and conditions of the lease agreement, including fixed rental and variable rental.

5. The REIT reserves the right to improve and modify the Properties to ensure that the Properties look modern and consistently meet the demand of the customers to continually attract the customers to come use the services.

6. In the event that the Master Lessee does not comply with the lease agreement which can cause the termination of lease agreement, the REIT shall proceed to procure new lessee, by setting the initial qualification which is evaluated based on experience in hotel business, financial position,

190


-174-

The Closing will occur after the receipt of source of fund and all the completion of the precedent conditions (if any).

Asset Management / Monitoring

The REIT Manager shall be responsible for the investment management and operation in accordance with the REIT’ s investment strategy. Throughout the investment period, the REIT Manager shall clarify in details and periodically review the performance of such investment to be in accordance with the REIT’s investment objectives.

9.6 Selection of Asset Management -None- 9.7 Monitor of Operation of Asset Management -None- 9.8 Monitoring of the REIT’s Benefit Procurement

1. The REIT Manager has the policy of appointing its representatives to be directors of each Investment Companies. The REIT Manager will monitor the operating performance of the Investment Companies in each quarter and compare with the annual budget and the past operating results (if any). If the operating performance of any Investment Companies misses the target, the REIT Manager will analyze the issues and develop operating plan in order to achieve the target.

2. After the REIT's investment, the Properties will be leased by the Master Lessors to the Master Lessees with the lease period of 3 years each. The REIT will receive both fixed and variable rental from the Master Lessees as set out in the summary of agreement and material agreements relevant to the Properties which the REIT Manager is of the view that the rental rate is appropriate.

3. For the initial investment, the REIT manager will control Master Lessees to comply with the term and conditions of the lease through the Master lease agreement.

4. In the event that there is a change in Master Lessee of the Properties, this may affect the change in terms and conditions of the lease agreement, including fixed rental and variable rental.

5. The REIT reserves the right to improve and modify the Properties to ensure that the Properties look modern and consistently meet the demand of the customers to continually attract the customers to come use the services.

6. In the event that the Master Lessee does not comply with the lease agreement which can cause the termination of lease agreement, the REIT shall proceed to procure new lessee, by setting the initial qualification which is evaluated based on experience in hotel business, financial position,


-175-

system, credibility and business profile, to negotiation and propose conditions and details of the leased Properties in place of the previous Master Lessee.

9.9 Compensation of the REIT Manager

The Strategic Property Investors Company Limited shall collect the REIT management fee for managing the REIT; nevertheless, the payment of the REIT management fee shall be in compliance with the REIT Manager Appointment Agreement as follows:

1. The Base Fee shall not be more than 0. 75 percent of the Gross Asset Value (GAV) but shall not exceed THB 30 million per annum (excluding VAT) for the REIT's initial assets investment. The payment shall be paid on the monthly basis; however, during the first five years of the REIT management, the REIT Manager shall collect the Base Fee not exceeding 0.30 percent of the value of the REIT's initial assets investment but shall not exceed THB 21 million per annum (excluding VAT) for the REIT's initial assets investment.

The Gross Asset Value for the Base Fee calculation shall mean the Fair Value of the REIT's assets appraised by the independent appraisers that are disclosed or referred to in the REIT's financial statements.

2. The Incentive Fee shall be at 2. 00 percent of revenues in the separated financial statements of the REIT. Nonetheless, during the first six years of the REIT management, the REIT Manager shall not collect the Incentive Fee from the REIT for the REIT's initial assets investment.

3. REIT Manager shall receive the fees from transactions related to acquisition and disposal of the REIT assets not exceeding 1.00 percent of the total acquisition value and not exceeding 0.50 percent of the total disposal value, respectively. 9.10 Information Disclosure to Unitholders

The REIT Manager has emphasized the importance of information disclosure to unitholders in a sufficient, accurate, complete, fast and transparent manner. Also, the information disclosure of TREIT shall be complied with rules and guidelines of information disclosure of the Securities and Exchange Commission and the Stock Exchange of Thailand.

Key principles of information disclosure

1) Information to be disclosed must be accurate, complete, clear and timely. 2) Must be complied the rules and regulations of information disclosure accurately and

completely. 3) Every unitholder has the right to receive the information equally.


191


-175-

system, credibility and business profile, to negotiation and propose conditions and details of the leased Properties in place of the previous Master Lessee.

9.9 Compensation of the REIT Manager

The Strategic Property Investors Company Limited shall collect the REIT management fee for managing the REIT; nevertheless, the payment of the REIT management fee shall be in compliance with the REIT Manager Appointment Agreement as follows:

1. The Base Fee shall not be more than 0. 75 percent of the Gross Asset Value (GAV) but shall not exceed THB 30 million per annum (excluding VAT) for the REIT's initial assets investment. The payment shall be paid on the monthly basis; however, during the first five years of the REIT management, the REIT Manager shall collect the Base Fee not exceeding 0.30 percent of the value of the REIT's initial assets investment but shall not exceed THB 21 million per annum (excluding VAT) for the REIT's initial assets investment.

The Gross Asset Value for the Base Fee calculation shall mean the Fair Value of the REIT's assets appraised by the independent appraisers that are disclosed or referred to in the REIT's financial statements.

2. The Incentive Fee shall be at 2. 00 percent of revenues in the separated financial statements of the REIT. Nonetheless, during the first six years of the REIT management, the REIT Manager shall not collect the Incentive Fee from the REIT for the REIT's initial assets investment.

3. REIT Manager shall receive the fees from transactions related to acquisition and disposal of the REIT assets not exceeding 1.00 percent of the total acquisition value and not exceeding 0.50 percent of the total disposal value, respectively. 9.10 Information Disclosure to Unitholders

The REIT Manager has emphasized the importance of information disclosure to unitholders in a sufficient, accurate, complete, fast and transparent manner. Also, the information disclosure of TREIT shall be complied with rules and guidelines of information disclosure of the Securities and Exchange Commission and the Stock Exchange of Thailand.

Key principles of information disclosure

1) Information to be disclosed must be accurate, complete, clear and timely. 2) Must be complied the rules and regulations of information disclosure accurately and

completely. 3) Every unitholder has the right to receive the information equally.

192


-176-

Parties who responsible for information disclosure The Managing Director has assigned the Operation Department by Investor Relations for

disclosing of information to the Securities and Exchange and/or any related parties required by regulations. Commission and/ or the Stock Exchange of Thailand. The information to be disclosed shall be

approved by the Board of Directors and/or the Managing Director (as the case may be) prior to disclosure. Channels of Information Disclosure

In order to communicate efficiently, transparent and on timely basis, the REIT Manager has arranged various channels for information disclosure as follows:

1) Report to the Stock Exchange of Thailand, which is the formal channel of the Trust to disclose information.

2) The REIT Manager’s website (www.sh-reit.com) which gather all important information of the Trust such as general information, REIT Structure, Financial Statement, Annual Report, Invitation to the Unitholder’s Meeting, Distribution and interested news. 9.11 Unitholders’ Meeting The Principle to Arrange the Unitholders’ Meeting

The REIT Manager shall arrange a meeting for unitholders as Annual General Meeting within four months after the end of fiscal year. Other meeting of unitholders shall be called Extraordinary General Meeting. The REIT Manager shall hold the Extraordinary General Meeting to be in line with the Trust Deed and related laws as follows:

1) When the REIT Manager considers that it is appropriate to call the unitholders’ meeting for REIT management propose.

2 ) When the REIT Manager is required by the Trust Deed to get the resolution from the unitholders to carry out the following activities:

• The acquisition or disposal of REIT’s major assets with the value equal to or over 30% of the total asset value;

• The issuance of debenture or any debt instruments; • The increase or decrease of REIT’s paid-up capital, as indicated in the Trust Deed; • The connected transactions with the REIT Manager or connected persons with the REIT

Manager, with the transaction value equal to or above Baht 20 million or higher or more than 3% of net asset value, whichever is higher;

• The change of benefits and the capital returned to the unitholders; • The change of Trustee; • The change of REIT Manager and the appointment of new REIT Manager;


193


-177-

• The amendment of Trust Deed that significant impacts to the right of unitholder or the increase of fee and/or expenses to be higher than the maximum rate specified in the Trust Deed;

• The cancellation of the Trust; • Any other circumstance that the Trustee and/ or the REIT Manager deem necessary and

appropriate to propose to the unitholders’ meeting and to get resolution of such matter; and

• Any other circumstance required by the Securities and Exchange Commission;

3) When the unitholders with the total number of units is not less than 10% of total units sold, make a written request to the REIT Manager to call for Unitholders Meeting with clear reason stated in the request. The REIT Manager shall arrange unitholders’ meeting within 1 month after the date receiving such request.

Rights of the Unitholders At the unitholders’ meeting, the REIT Manager has a policy to facilitate and encourage all

unitholders to attend the meeting by assigning the Compliance Unit to administrate the unitholder’s meeting in accordance with the Trust Deed and related laws.

Procedure for Unitholders’ Meeting

1. The Compliance Department is responsible for the meeting appointment, preparing invitation, and meeting documents, accurately, completely and adequately. All documents will be given to The Thailand Securities Depository: TSD, the Registrar of the Trust, who will distribute invitation to all unitholders within 7 days or 14 days prior to the meeting (as the case may be) so that the unitholders will have sufficient time to review the related information before attending the meeting. In addition, the unitholder can download the invitation letter and supporting documents from the REIT Manager’s website (www.sh-reit.com) in both Thai and English. This is the same information that the REIT Manager send to unitholders as printed document. Information in the invitation shall include the explanation of how to attend the meeting as well as the detailed agenda, which are sufficient for unitholders to review and make decision.

2. At the meeting, every unitholder has the right and equality to express his/ her opinion and ask any questions to the Board of Directors on any matters relating to REIT according to the agenda or proposed topic. The REIT Manager shall inform the unitholders to acknowledge their voting right and procedure for voting prior to the meeting.

3. Unitholders have the right to consider and approve the connected transaction or the acquisition or disposal of the assets with the value specified by law and related regulations.

194


-178-

Voting of the Unitholders Voting of the unitholders in general case must receive an approval from the majority of the

unitholders who attending the meeting and entitled to vote. Voting of the following material transactions must receive at least three- fourth of total unitholders

attending the meeting and entitled to vote. 1) The acquisition or disposal of the major assets with the value over 30% of the total assets value; 2) The increase or decrease of the Trust’ s paid- up capital, especially there is required the

unitholders’ approval; 3) The capital increase under general mandate; 4) The connected transactions with the REIT Manager or connected person with the REIT Manager,

with the transaction value equal to or above Baht 20 million or higher or more than 3% of the net asset value, whichever is higher;

5) The change of benefits and the capital returned to the unitholders; 6) The change of Trustee; 7) The amendment of Trust Deed that significant impacts to the right of unitholder; and 8) The cancellation of the REIT

9.12 Selection and Nomination of Directors and Top Managments

Directors

The Company has not established a Nominating Committee. However, abilities, experiences, vision, and credit are factors to consider when nominating directors and proposing the list to shareholders to appoint.

The Company's Articles of Association states that in each of annual general meeting, one-third of directors or nearest amount (1/3) has to be resigned by rotation. In the first and second years after registering the entity, the resigning directors were determined by drawing lots. For the subsequent years later, the retired directors shall be determined by the ones who were in the position the longest. The retired Directors can be re-elected.

However, in case of the vacancy of director from the reasons other than the expiration of the term of office, the remaining board of directors shall appoint other director to fill the vacancy except the remaining term of office is less than 2 months. The resolution of such appointment has to be passed with not less than three-fourth of the votes from the remaining directors. The substitute director shall hold office only for the remaining term of office of the director whom he or she replaces.


195


-179-

Principle and voting methods for nominating directors are: 1. Each shareholder shall have a number of votes equal to the number of shared held. 2. Each shareholder must exercise all the votes he has according to number of shares held

(as in item 1). He may nominate one or several persons as directors. If several persons be nominated, he may not share his voting rights with others.

3. The candidates shall be ranked in descending order from the highest number of votes received to the lowest, and shall be elected as directors equivalent to the number of directors who are elected by the meeting of shareholders. In the event that there is a tie in the last to be elected, and this exceeds the said number of directors that the meeting of shareholders is required to appoint, the presiding Chairman shall have the deciding vote.

Independent Director The REIT Manager shall have 2 Independent Directors that shall not be less than one-third of the Company’s directors total in accordance with the Notification SorChor. 29/ 2555. The selection of Independent Directors shall be complied with the principles and qualifications as follows:

(1) holding shares not exceeding one per cent of the total number of shares with voting rights of the applicant, its parent company, subsidiary company, associate company, major shareholder or controlling person, including shares held by related persons of such independent director;

(2) neither being nor used to be an executive director, employee, staff, advisor who receives salary, or controlling person of the applicant, its parent company, subsidiary company, associate company, same- level subsidiary company, major shareholder or controlling person, unless the foregoing status has ended not less than two years prior to the date of filing an application with the Office. Such prohibited characteristic shall not include the case where the independent director used to be a government official or advisor of a government unit which is a major shareholder or controlling person of the applicant;

(3) not being a person related by blood or legal registration as father, mother, spouse, sibling, and child, including spouse of child, executive, major shareholder, controlling person, or person to be nominated as executive or controlling person of the applicant or its subsidiary company;

(4) neither having nor used to have a business relationship with the applicant, its parent company, subsidiary company, associate company, major shareholder or controlling person, in the manner which may interfere with his independent judgement, and neither being nor used to be a significant shareholder or controlling person of any person having a business relationship with the applicant, its parent company, subsidiary company, associate company, major shareholder or controlling person, unless the foregoing relationship has ended not less than two years prior to the date of filing an application with the Office.

The term ‘ business relationship’ under the first paragraph shall include any normal business transaction, rental or lease of immovable property, transaction relating to assets or services or granting or receipt of financial assistance through receiving or extending loans, guarantee, providing assets as collateral, and any other similar actions, which result in the applicant or his counterparty being subject to

196


-180-

indebtedness payable to the other party in the amount of three percent or more of the net tangible assets of the applicant or twenty million baht or more, whichever is lower. The amount of such indebtedness shall be calculated according to the method for calculation of value of connected transactions under the Notification of the Capital Market Supervisory Board governing rules on connected transactions mutatis mutandis. The consideration of such indebtedness shall include indebtedness occurred during the period of one year prior to the date on which the business relationship with the person commences;

(5) neither being nor used to be an auditor of the applicant, its parent company, subsidiary company, associate company, major shareholder or controlling person, and not being a significant shareholder, controlling person, or partner of an audit firm which employs auditors of the applicant, its parent company, subsidiary company, associate company, major shareholder or controlling person, unless the foregoing relationship has ended not less than two years prior to the date of filing an application with the SEC Office;

(6) neither being nor used to be a provider of any professional services including those as legal advisor or financial advisor who receives service fees exceeding two million baht per year from the applicant, its parent company, subsidiary company, associate company, major shareholder or controlling person, and not being a significant shareholder, controlling person or partner of the provider of professional services, unless the foregoing relationship has ended not less than two years prior to the date of filing an application with the Office;

(7) not being a director appointed as representative of directors of the applicant, major shareholder or shareholder who is related to major shareholder;

(8) not undertaking any business in the same nature and in competition to the business of the applicant or its subsidiary company or not being a significant partner in a partnership or being an executive director, employee, staff, advisor who receives salary or holding shares exceeding one per cent of the total number of shares with voting rights of other company which undertakes business in the same nature and in competition to the business of the applicant or its subsidiary company;

(9) not having any other characteristics which cause the inability to express independent opinions with regard to the applicant’s business operations.

After being appointed as independent director with the qualifications under (a) to (i) of the first paragraph, the independent director may be assigned by the board of directors to take part in the business decision of the applicant, its parent company, subsidiary company, associate company, same- level subsidiary company, major shareholder or controlling person, provided that such decision shall be in the form of collective decision.


197


-181-

In the case where the person appointed by the applicant as independent director has or used to have a business relationship or provide professional services exceeding the value specified under (d) or ( f) of the first paragraph, the applicant shall be granted an exemption from such prohibition only if the applicant has provided the opinion of the company’ s board of directors indicating that, by taking into account the provision in Section 89/ 7, the appointment of such person does not affect performing of duty and expressing of independent opinions. The following information shall be disclosed in the notice calling the shareholders meeting under the agenda for the appointment of independent directors:

(a) The business relationship or professional service which make such person’s qualifications not in compliance with the prescribed rules;

(b) The reason and necessity for maintaining or appointing such person as independent director; and

(c) The opinion of the applicant’ s board of directors for proposing the appointment of such person as independent director.

For the purpose of (5) and (6) of the first paragraph, the term “partner” shall mean a person assigned by an audit firm or a provider of professional service to sign on the audit report or the professional service report (as the case may be) on behalf of such juristic person. Senior Managements In the recruitment and appointment on the employees at levels of Managing Director, Head of Department, Head of Units of the REIT Manager, it shall be proceeded as follows:

(a) In case of recruitment of the Department Head and Unit Department, the Managing Director shall prepare the letter to inform and request the staff recruitment in writing to the Board of Drectors of the REIT Manager. The said letter shall indicate the details of duties, responsibilities, and qualifications as well as the necessity of such recruitment. The Board of Directors of the REIT Manager shall decide whether the recruiting requirement is necessary or not.

For the recruitment of Managing Director level, the Board of Directors of the REIT Manager shall indicate the details of duties, responsibilities, and qualifications as well as the necessity of such recruitment. After that the Board of Directors of the REIT Manager shall decide whether the recruitment isis necessary or not.

(b) After the Board of Directors of the REIT Manager approves such recruitment, the Board of Directors of the REIT Manager shall delivery the letter to inform and request for the recruitment to the Investor Relation and Operational Support Business Unit so that the Investor Relation and Operational Support Business Unit shall proceeed to advertise the suitable staff recruitment. The advertisement shall proceed in several channels such as using the agency, advertising via the recruitment website etc.

(c) The Investor Relation and Operational Support Business Unit shall recruit the candidates in the short-listed candidates about 2-3 persons according to the requested qualifications.

(d) The Managing Director and the Board of Directors of the REIT Manager shall contact to the short-listed candidates of 2-3 persons to come for interview.

198


-182-

(e) The Managing Director and the Board of Directors of the REIT Manager shall consider together for the most suitable staff recruitment by considering from the past experiences and suitability of duty and responsibility including other compensations.

(f) After being able to recruit the said candidate, the Managing Director (In case of recruitment of Departemnt Head level) or the Board of Directors of the REIT Manager (In case of recruitment of Managing Director level) shall negotiate the conditions of employment agreement in order to gain the suitable conditions and be acceptable in both 2 (two) partiies.

(g) The authorized directors of the REIT Manager and the selective candidate shall sign the employment agreement. The signed employment agreement shall be returned to the selective candidate in 1 (one) copy and the REIT Manager shall keep 1 (one) copy for reference and audit in the future.

(h) The Investor Relation and Operational Support Business Unit shall inform the Trustee in order to acknowledge the staff appointment by not hesitating and not over 3 (three) days after the said acknowledgement. 9.13 Remuneration of Auditors

Audit Fee of SHREIT for 2019 Amount (Baht)

- Audit of the consolidated and separate financial statements of the REIT

1,200,000

- Review of the consolidated and separate financial statements of the REIT for Q1-Q3

900,000

Total 2,100,000

Audit Fee of Subsidiaries Level of SHREIT for 2019 Amount

Total (Unit: USD) USD 86,100

Total SHREIT's Group Baht 4,772,000

9.14 Practice According to the Corporate Governance Principle in Other Matters -None- 9.15 Procedures and Conditions for the REIT Manager Replacement


199


-183-

Causes for replacing the REIT Manager 1) The REIT is terminated and complied with the termination procedure as specified in the

REIT Prospectus and also have completed the liquidation of the REIT in compliance with the Prospectus, Securities Act, Trust Act and other relevant Notification of the Office of SEC.

2) The SEC Office annuls the permission granted to the REIT Manager, or orders the suspension of the REIT Manager from performing its duties for at least 90 days in compliance with the SorChor. 29/2555.

3) In case the permission granted to the REIT Manager expires and the REIT Manager fails to submit an application to renew its permission to the SEC Office.

4) The REIT Manager is subject to receivership order, business reorganization order, or the REIT Manager loses its juristic person status.

5) The Trustee exercises its right stipulated under the REIT Manager Appointment Agreement to terminate the REIT Manager Appointment Agreement in the following cases:

(a) The REIT Manager constitutes willful misconduct or gross negligence, and fails to perform its duties accurately and completely as specified under the Trust Deed, the REIT Manager Appointment Agreement, the Trust Act, the Notifications of the Office of SEC and other relevant notifications, and such failure to perform its duties, the Trustee views that it has caused material damage to the REIT and/or the Unitholders and such failure is not rectified within 90 days from the date the Trustee notify the REIT of such damage. The Trustee shall call for the Unitholders' meeting to seek for the resolution to remove the REIT Manager within 60 days from the date such event occurred;

(b) The Trustee discovers that the REIT Manager has any qualification that is not in compliance with the rules stipulated under the Chapter 1 provision or the REIT Manager violates or fails to comply with the rules stipulated under Chapter 2 provision of the SorChor. 29/2555, or fails to comply with the orders of the Office of SEC or fails to rectify such failure with in the time determined by the Office of SEC; and

(c) The fact is revealed that the permission granted to the REIT Manager has expired and the REIT Manager fails to receive a renewal of its permission from the SEC Office.

6) The REIT Manager exercise its right to resign follow the procedure specified under the REIT Manager Appointment Agreement.

200


-184-

7) The REIT Manager exercises its right to terminate the REIT Manager Appointment Agreement in accordance with the provisions set out in the REIT Manager Appointment Agreement in case the Trustee fails to perform its duties accurately and completely as specified under the Trust Deed,, and such failure is proved to cause a significant impact to perform its duties specified under the Trust Deed, the REIT Manager Appointment Agreement, the Trust Act, the Notifications of the Office of SEC and other relevant notifications and such failure is not rectified within 90 days from the date the Trustee notify the REIT of such damage.

8) In case any change of the REIT Manager by any reason other than the provisions under REIT management agreement or any conduct deemed as direct fault of the REIT Manager with in the period of 10 years after the entering of the REIT Manager Appointment Agreement, the Trustee ( by the REIT’ s assets) agrees to pay the compensation for such change of the REIT Manager to the REIT Manager at the rate equivalent to the total amount of the 5 years Base Fee and Variable Fee ( calculating based on the average Base Fee and Incentive Fee the REIT Manager has received over the preceding 12 months or its pro- rata equivalent) and the payment shall be made on the effective date of the change of the REIT Manager.

Resignation and Post-Resignation Duties of the REIT Manager

1) Resignation of the REIT Manager

In case the REIT Manager wish to resign, it shall notify its resignation e to the Unitholders and the Trustee for their acknowledgement at least 120 days prior to the effective date of the resignation. The resignation shall not cause any impact to the Unitholders and the Trustee and during the period before the effectiveness of resignation, the REIT Manager shall facilitate as deemed necessary in appointing the new juristic person (qualified and granted permission from the Office of SEC) to be the new REIT Manager replacing the existing REIT Manager. In the mean time where the Trustee is still not able to appoint the new REIT Manager, the existing REIT Manager shall proceed with its duties until the new REIT Manager shall be able to succeed and completely perform the role as the REIT Manager in accordance with this agreement.

2) Post-Resignation Duties

After the REIT Manager submits its resignation notification, the REIT Manager shall have the following duties:


201


-185-

(a) To transfer work, work systems, client lists, books of account, documents, and any information related to the duty and conduct of the REIT Manager, regardless of whether it is a trade secret or not, to the Trustee and/or the new REIT Manager. The REIT Manager shall act on any reasonable requests made by the Trustee to enable the new REIT Manager to perform its duty as REIT Manager continuously for the utmost interest of the REIT and Unitholders.

(b) To prepare the REIT management executive summary report until the last effective date as the REIT Manager and transfer the report to the Trustee and/or to the new REIT Manager

(c) To safeguard trade secrets of the REIT by not disseminating information, drawings, client lists, or any other documents that materially represent trade secrets of the REIT, to other parties, without prior consent in writing from the Trustee, except such disclosure of information is for the relevant government agencies as required by law or it is already a part of the public information at the time such information is disclosed or disseminated.

(d) To undertake other measures as deemed appropriate to enable the new REIT Manager to perform its duty continuously in accordance with the REIT Manager Appointment Agreement.

Procedures for Appointing a New REIT Manager

The Trustee shall seek the Unitholders' resolution to appoint the new REIT Manager within 60 days upon the occurrence of any event described in clause 1 abovementioned, and proceed to appoint a new REIT Manager within 30 days from the date of the resolution, or within any other period required by the notification of the SEC Office. After having requested a resolution and failed to obtain a resolution, the Trustee shall proceed to appoint the new REIT Manager, taking into consideration the utmost interest of the Unitholders as a whole.

In case the Trustee fails to appoint a new REIT Manager because there is no qualified person, or no person applies for the position, the Trustee has the duty to perform the duties of the REIT Manager as stipulated in the Trust Deed, and shall be subject to the rules specified in the Securities Laws and other relevant laws.

202


-186-

10. Responsibility to the Society The REIT Manager considers that it is the responsibility of directors, executives and all employees to acknowledge and perform their duties diligently. In addition, they shall realize their responsibility to comply with the corporate governance best practices and the Business Code of Conduct. The Company Secretary will help coordinating, following up with results and reporting the practices so that information can be disclosed to shareholders through both internal and external channels. 11. Internal Control and Risk Management

The Company hired and appointed the outsouring- Dharmniti Internal Audit Co., Ltd., located at 178 Dharmniti Building, 5th Floor, Soi Permsup (Prachachuen 20), Prachachuen Road, Bangsue Sub-district, Bangsue District, Bangkok 10800 Telephone Number 02 596 0500 Ext. 520, 521, in order to be incharge of Internal Auditor of the Company. The Manager, Compliance and Risk Management Department shall be a coordinator to be ensured that the Internal Auditor can be able to peform the duties efficiently, including to present the audit report to Independent Directors. 12. Prevention of Conflict of Interest

Transactions between the REIT and the REIT Manager or Connected Persons of the REIT Manager and Trustee are as follows: Transaction of the REIT with the REIT Manager or Connected Person with the REIT Manager

12.1 Transactions for Appointing the REIT Manager

Juristic Person/Company that may have Conflict of Interest

Strategic Property Investors Company Limited

Relationship

Strategic Property Investors Company Limited was appointed as the REIT Manager.

Nature of Related Transaction

Trustee who is authorized to act on behalf of the REIT appointed the Strategic Property Investors Company Limited as the REIT Manager.

The Strategic Property Investors Company Limited shall collect the REIT management fee for managing the REIT; nevertheless, the payment of the REIT management fee shall be in compliance with the REIT Manager Appoinment Agreement as follows:


203


-187-

1. The Base Fee shall not be more than 0.75 percent of the Gross Asset Value (GAV) but shall not exceed THB 30 million per annum (excluding VAT) for the REIT's initial assets investment. The payment shall be paid on a monthly basis; however, during the first five years of the REIT management, the REIT Manager shall collect the Base Fee at the rate not exceeding 0.30 percent of the REIT initial assets value and no more than THB 21 million per annum (excluding VAT) for the REIT initial assets investment.

The Gross Asset Value for the Base Fee calculation shall mean the fair value of the REIT assets value appraised by the independent appraisers that are disclosed or referred to in the REIT's financial statements.

2. The Incentive Fee shall be at 2.00 percent of revenues in the separated financial statements of the REIT. Nonetheless, during the first six years of the REIT management, the REIT Manager shall not collect the Incentive Fee from the REIT for the REIT's initial assets investment.

3. REIT Manager shall receive the fees from transactions related to acquisition and disposal of

the REIT assets not exceeding 1.00 percent of the total acquisition value and not exceeding 0.50 percent of the total disposal value, respectively.

The Reasonableness of Transaction Execution

The fee stracture of the REIT Manager accordance with the real estate investment trust, listing in the Stock Exchange at present by fixing the standard fee, special management fee and transaction procedure fee in realtion to the assets acquisition of the REIT.

The Reasonableness

1. Base Fee

The Base Fee in general is comparable to the base fee for the managers of the REITs listed in the Stock Exchange of Thailand. Nonetheless, the REIT Manager has more responsibilities than the REIT manager as the SHREIT has offshore investment policy. Consequently, the REIT Manager shall need a working team with experience and efficiency and shall be responsible for the expenses incurred including the costs of transportation and communication. Therefore, the management fees for the REIT Manager tend to be higher than the management fees for the manager of general REIT listed in Thailand.

2. Incentive Fee

The Incentive Fee is calculated based on the revenues in the seperate financial statements of the REIT in which it reflects the REIT assets' operating profits from the operation and management of the REIT by the REIT Manager. The Incentive Fee is set out to create a motivation for the REIT Manager to efficiently manage the REIT, accordingly. Nonetheless, the Incentive Fee calculation based on the

204


-188-

revenues in the seperate financial statements of the REIT is comparable to the Incentive Fee calculation based on the Net Asset Value of the other REITs that have relatively the same return amount.

3. Fees from transactions related to acquisition and disposal of the REIT assets

The fees from transactions related to acquisition and disposal of the REIT assets, in general, is comparable to fees of REIT Managers in foreign countries that are not related to the REIT Manager. Furthermore, the fee is to create an incentive and motivation for the REIT Manager in order to acquire more assets into the REIT.

Utilizing the REIT assets and earning revenues by leasing the REIT assets to Master Lessees, persons connected to the REIT Manager

Juristic Person/Company that may have Conflict of Interest

1. The PT Central Pesona Palace Company as the Master Lessee of Pullman Jakarta Central Park Hotel

2. The Strategic Hospitality Services (Vietnam) Co. Ltd. as the Master Leasee of the Capri by Fraser Hotel and the IBIS Saigon South Hotel

3. The Strategic Hospitality Services Pte Ltd (Singapore) as a shareholder of the Master Lessees of the Properties and its Ultimate Shareholder is the same person as the Ultimate Shareholder of the REIT Manager.

Relationship

Strategic Hospitality Services Pte Ltd (Singapore) has an ultimate shareholder who is also an ultimate shareholder of the REIT Manager. The Strategic Hospitality Services Pte Ltd (Singapore) is a shareholder with a 100% ownership of the total shares of the PT Central Pesona Palace Company and the Strategic Hospitality Services Co. Ltd. (Vietnam).

Transactions between Parties

The PT Central Pesona Palace Company and the Strategic Hospitality Services Co. Ltd. (Vietnam) will enter into the lease agreement with the Master Lessors who are the REIT affiliates for the REIT's assets. The Master Lessees are the PT Central Pesona Palace Company and the Strategic Hospitality Services Co. Ltd. (Vietnam) and they shall pay the rent to the Master Lessors who are the REIT affiliates in the following details:

1) Rental fees consist of the Fixed Rental and Variable Rental

The formulas of the Fixed Rental and the Variable Rental calculation are as follows:


205


-189-

- Yearly Fixed Rental = Fixed amount of Base Rental per year or Fixed Rental of the preceding operating year, whichever is higher + Additional Base Rental (if any)

- Additional Base Rental Fees per year = ( 67. 00 percent x Net Operating Income per year (NOI) ) - fixed amount of Base Rental per year or Fixed Rental from the preceding operating year, whichever is higher

- Variable Rental = NOI - Fixed Rental - outstanding rental revenues from postponement of payment due to force majeure (if any)

The fixed amount of Base Rental is calculated from the projected income statements based on the scenarios and the forecast of dividend payout.

In case the calculation of Additional Base Rental per year following the abovementioned formula results in the value less than zero, the lessees shall not include the aforementioned value in the Additional Base Rentel Fees calculation for that year.

Furthermore, the Base Rental for the extension of lease agreement shall be equal to the average of Fixed Rental throughout the period of the previous lease agreement.

Reasonableness of the Transaction

The REIT Manager views that it is reasonable to sublease the Properties to the connected persons according to the rental revenue the REIT shall receive including the Fixed Rental and the Variable Rental. The Fixed Rental consists of; firstly, the fixed amount of Base Rental calculated from the projected income statement based on the scenarios and the forecast of dividend payout and taken into account the past financial performance of the Properties; secondly, the Additional Base Rental which would increase the Fixed Rental in case that the actual operating result is higher than the budget. The proportion between the Fixed Rental and the Variable Rental shall be in accordance with the Securities Law throughout the lease agreement term.

Policy of entering into transactions between the REIT and the REIT Manager or connected person of the REIT Manager

In case there is a transaction (other than the abovementioned) between the REIT Manager or connected person of the REIT Manager, the following procedures will be followed in order to comply with the Securities Laws:

1) Connected persons of the REIT Manager

Connected persons of the REIT Manager shall have the meaning as prescribed in the notifications of the Capital Market Supervisory Board on related transactions.

206


-190-

2) General terms and conditions in entering into transactions with connected persons are as follows:

• The entering into of transactions between the REIT and the REIT Manager or connected person of the REIT Manager, shall be in accordance with the Trust Deed and relevant laws, and for the best interest of the REIT.

• The entering into of transactions between the REIT and the REIT Manager or connected persons of the REIT Manager, shall be a reasonable transaction and at a fair price.

• Persons having a special interest in the transaction, whether directly or indirectly, shall not be involved in the decision making with respect to the entering into the transaction.

• Expenses, whether directly or indirectly, arising from transactions between the REIT and the REIT Manager or connected persons of the REIT Manager shall be reasonable and at a fair price.

• Transactions entering into between the REIT and the REIT Manager or connected persons the REIT Manager shall be in accordance with the Trust Deed and the relevant laws. The REIT Manager shall seek for the approval from Trustee' meeting before entering into such transaction according to the Notifications or Regulations of SEC, SET or other relevant regulators.

3) The approval procedures of transactions between the REIT and the REIT Manager or connected persons of the REIT Manager are as follows:

• Approval from the Trustee that the transaction is in accordance with the Trust Deed and relevant laws.

• In case the transaction value exceeds Baht 1 million or is equal to at least 0.03 percent of the NAV of the REIT, whichever is higher, the transaction must seek for approval from the REIT Manager's Board of Directors.

• In case the transaction value exceeds Baht 20 million or exceeds 3 percent of the NAV of the REIT, whichever is higher, the transaction must seek for approval from the REIT Unitholders' meeting by having at least three-fourths of all the votes from Unitholders whom have the right to vote attending the Unitholders' meeting.

In case the transaction between the REIT and the REIT Manager or connected persons of the REIT Manager is an acquisition or disposal of the Properties, the calculation of the transaction value shall be based on the value of the acquisition or disposal of the entire Properties of each project that is ready to generate income, including the related assets to such Property.


207


-191-

4) Policy for entering into transactions between the REIT and the REIT Manager or connected persons of the REIT Manager

• Any transaction between the REIT and the REIT Manager or connected persons of the REIT Manager shall be based on conditions that are fair and suitable, and in accordance with the terms and conditions of the Securities Laws. In any case the SEC or Office of the SEC, or the Capital Market Supervisory Board prescribes additional criteria for determining persons connected to the REIT Manager in the future, the transaction between the REIT and the REIT Manager or connected persons of the REIT Manager shall comply with the additional terms and conditions of Securities Laws.

• In addition, the REIT will disclose information related to the transaction with the REIT Manager or persons connected to the REIT Manager to the SEC and the SET, as well as in the notes of the REIT's audited financial statement and in the REIT's annual reports.

5) The additional policy regarding the supervision of the Master Lessees in case the Master Lessees are connected persons of the REIT Manager

In case the Master Lessees are connected persons of the REIT Manager which may cause a conflict of interest between the REIT and the Master Lessees after the REIT has been established and the contract has been entered between the Master Lessors and the Master Lessees. The REIT Manager shall operate in a direction to ensure that the Master Lessees are under supervision for the best interest of the REIT. In supervising the Master Lessees (defined under section 8. clause 8.4 (5) the supervision of Master Lessees), the REIT Manager shall proceed such supervision considering the conflict of interst protocol that are suitable and appropriate under the monitoring of Trustee to ensure that the REIT management is in accordance with the law and relevant regulations including Trust Deed, the REIT Manager Appointment Agreement, and other relevant agreements in which shall be in compliance with the operational manual of the REIT Managers. In addition, in case the REIT shall enter into any transaction with Master Lessees other than as stipulated in the Lease Agreement which has been disclosed in this registration statement, the REIT Manager shall have obligation under the Trust Deed to set out that the entering into such transaction consisting of contents in compliance with general terms and conditions of the REIT with respect to the entering into transaction with connected persons as set out in topic 2) above.

In addition, in case the REIT Manager shall enter into any legal transaction which may take place between the REIT and the Master Lessees after the REIT's establishment and REIT's investment in the Properties, which may impact the essence that has been previously disclosed under this registration statement, including:

208


-192-

• An alteration in the essence of the Lease Agreement between the Master Lessors and the Master Lessees

• The decision making in accordance with the right under the agreements or under the law in case of breach of the contract or dispute

• The process of the change in Master Lessees or termination of the Lease Agreement.

In the execution of the abovementioned process, the REIT Manager whom is a juristic person shall seek for an approval from the SEC in order to act on its role and duty as the REIT Manager in accordance with the Trust Act and relevant law and regulations for the REIT management with due care, responsibility, and trustworthiness. In addition, the REIT Manager shall treat the Unitholders with fairness and at the best interest of all the Unitholders and in accordance with the law and relevant regulations including Trust Deed and other relevant agreements. Furthermore, the REIT Manger shall act with due care in order to avoid conflict of interest, in case if any, the REIT Manager shall ensure that the Unitholders are treated fairly and appropriately. The REIT Manager shall ensure that the Master Lessees supervising protocol is in compliance with the regulations regarding the transaction between the REIT and the REIT Manager or connected persons of the REIT Manager such that the directors with special interest shall have no right in voting regarding the decisions on the supervision of Master Lessees and/or the special interest of such Master Lessees.

In addition, such action of the REIT Manager shall be under the monitoring of the Trustee, who is a juristic person with the license to be a Trustee of the REIT in which the Trustee shall have responsibilities under the Trust Act and other relevant laws and regulations to monitor and examine the performance of the REIT Manager to be in accordance with the Trust Deed and other relevant laws. 12.2 Transactions between the REIT and Trustee or Connected Persons of the Trustee

- None -

4 Financial Position and Operating Results

210

ทรสตเพอการลงทนในอสงหารมทรพยแบบตออายไดเพอธรกจโรงแรมและสทธการเชาสตราทจก ฮอสพทอลลต


Part 4

Financial Position and Operating Results 13. Financial Highlights The report shown below is a report on financial statements that were audited by a certified public accountant. 13.1 Summary Auditor’s report

As at 31 December 2019, the financial statements of the year 2019 audited by Suchada Tantioran, Certified Public Accountant (Thailand) No. 7138 from EY Office Limited, has opinion that in all material respects, the financial position of Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust and its subsidiaries and of Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust as at 31 December 2019, their financial performance, changes in their net assets, cash flows and significant financial information for the year then ended in accordance with Thai Financial Reporting Standards.


211


Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust 13.2 Summary of the REIT and its subsidiaries’ consolidated financial statement

13.2.1 Balance Sheet For the year ended

31 December 2019 For the year ended 31 December 2018

ASSETS Baht % Baht % ASSETS Investments in immovable and movable properties at fair value (At cost: Baht 4,044 million) (31 December 2018 : Baht 4,243 million) Cash and cash at banks Receivables Rental Others Refundable input value added tax Deferred expenses Cash at bank - deposit for income guarantees by asset seller Restricted bank deposits Deferred tax assets Other assets

3,948,310,079

22,833,341

37,322,946 3,135,156

241,812,613 79,292,895 3,047,303

14,906,988 -

2,354,953

90.70

0.53

0.86 0.07 5.56 1.82 0.07 0.34

- 0.05

4,377,804,819

12,513,099

8,892,089 93,982,885 267,582,703

113,976,401 23,889,283 13,998,950

- 33,990,541

88.50

0.25

0.18 1.90 5.41 2.30 0.48 0.28

- 0.70

Total Assets 4,353,016,274 100.00 4,946,630,770 100.00 Liabilities Accounts payable and accrued expenses Deposit received for income guarantees from asset seller Long-term loans from financial institutions Derivative liability Deferred tax liabilities Other liabilities

18,562,254 3,047,303

1,490,461,020 9,775,713

17,172,836 1,224,717

0.43 0.07

34.24 0.22 0.39 0.03

78,796,063

23,889,283 1,626,742,337

3,920,650 12,334,347 5,807,254

1.59 0.48

32.89 0.08 0.25 0.12

Total Liabilities 1,540,243,843 35.38 1,751,489,934 35.41 Net Assets 2,812,772,431 64.62 3,195,140,836 64.59 Registered capital 352,836,700 units of Baht 9.6781 each (31 December 2018: 352,836,700 units of Baht 9.8805 each) Capital from unitholders Retained earnings (deficits)

3,414,798,033 3,414,798,033 (195,983,842)

78.45 78.45 (4.50)

3,486,205,375 3,486,205,375

3,639,811

70.48 70.48 0.07

Net asset value per unit (Baht) 7.9718 9.0555 Number of units issued at the end of year/period (Units) 352,836,700 352,836,700

212


Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust 13.2.2 Statement of Income

For the year ended 31 December 2019


Baht % Baht % Investment income Rental income Share of profits from investments in subsidiaries Interest income Other incomes Gain on exchange rate

252,237,545

- 108,833

82,767,878 21,969,233

70.64

- 0.03

23.18 6.15

261,836,841

- 306,853

78,865,329 10,509,646

74.49

- 0.09

22.43 2.99

Total income 357,083,489 100.00 351,518,669 100.00 Expenses Trust manager fee Trustee fee Registrar fee Professional fees Amortisation of deferred expenses Other expenses Loss on exchange rate Finance costs Income tax expenses

13,413,322 14,640,277 2,553,419

17,844,311 27,407,183 95,497,502

- 92,693,755 6,092,731

3.76 4.10 0.71 5.00 7.67

26.74 -

25.96 1.71

13,575,944 15,221,762 3,201,216

18,487,264 28,833,617 90,913,833

- 143,108,998 31,947,254

3.86 4.33 0.91 5.26 8.21

25.86 -

40.71 9.09

Total expenses 270,142,500 75.65 345,289,888 98.23 Net investment income (loss) 86,940,989 6,228,781 Net unrealised gain from investments in immovable and movable properties

(218,571,198) 135,391,152

Increase (decrease) in net assets from operations (131,630,209) 141,619,933


Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust 13.2.3 Statement of cash flows



Baht Baht Net cash flows from (used in) operating activities Net cash from (used in) financing activities Exchange differences on translation of financial statements Net increase (decrease) in cash and cash at banks Cash and cash at banks at the beginning of year/period Cash and cash at banks at the end of year/period

238,835,158 (236,352,550)

7,837,634 10,320,242 12,513,099 22,833,341

97,904,751 (391,245,495)

(7,807,759) (301,148,503)

313,661,602 12,513,099


213

ทรสตเพอการลงทนในอสงหารมทรพยแบบตออายไดเพอธรกจโรงแรมและสทธการเชาสตราทจก ฮอสพทอลลต Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust

14. Financial Position and operating results of the REIT

14.1 Analysis of Past Performance

Financial position and operating results of Strategic Hospitality Extendable Freehold and

Leasehold Real Estate Investment Trust or SHREIT (the “Trust”) for the year 2019, as from 1 January to

31 December 2019.

Significant financial ratios

Significant financial ratios and additional significant information For the year ended

31 December 2019 For the year ended

31 December 2018

Net assets at the end of year/period (Baht)

Ratio of total expenses to average net assets during the year/period (%)

Ratio of total investment income to average net assets during the

year/period (%)

Ratio of weighted average investment purchases and sales during the

year/period to average net assets during the year/period (%)*

Average net assets during the year/period (Baht)

2,812,772,431

8.73

11.54

-

3,093,452,831

3,195,140,836

10.56

10.75

0.11

3,271,248,439 * Investment purchases and sales during the year/period exclude cash at bank and must be real purchases or sales of

investments which exclude purchases under resale agreements or sales under repurchase agreements.

214


Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust Financial position of the REIT Assets As of 31 December 2019, the REIT and its subsidiaries had total assets of 4,353.02 million Baht, decreasing 593.61 million Baht or 12.00% from the total assets as of 31 December 2018 mainly due to the decreasing in Investments in immovable and movable properties, decreasing in other receivables and decreasing in other assets. Investments in immovable and movable properties as of 31 December 2019 decreased from 4,377.80 million Baht in 2018 to 3,948.31 million Baht in 2019, or decreasing 429.49 million Baht or 9.81% due to the result of the latest reappraising of the fair value of the REIT’s hotel assets overseas at the end of 2019 and the exchange differences on translation of financial statements because Thai Baht as of 31 December 2019 appreciated against the US dollar 7% compared to 31 December 2018. Other receivables as of 31 December 2019 decreased from 93.98 million Baht in 2018 to 3.14 million Baht in 2019, or decreasing 90.85 million Baht or 96.66% due to allowance from doubtful account and the exchange differences on translation of financial statements.

Other assets as of 31 December 2019 decreased from 33.99 million Baht in 2018 to 2.35 million Baht in 2019, or decreasing 31.64 million Baht or 93.07% due to allowance from doubtful account and the exchange differences on translation of financial statements. Liabilities As of 31 December 2019, the REIT and its subsidiaries had total liabilities of 1,540.24 million Baht, decreasing 211.25 million Baht or 12.06% from the end of the year 2018 due to the decreasing in Accounts payable and accrued expenses, the decreasing in deposit received for income guarantees from asset seller and the decreasing in Long-term loans from financial institution. Accounts payable and accrued expenses as of 31 December 2019 decreased from 78.80 million Baht in 2018 to 18.56 million Baht in 2019, or decreasing 60.23 million Baht or 76.44% because in 2018 had costs associated with plan to acquire assets. Long-term loans from financial institution decreased from 1,626.74 million Baht at the end of the year 2018 to 1,490.46 million Baht as of year ended 2019, decreasing 136.28 million Baht or 8.38% because of repayment of loan 815,500 Euro in May 2019. Net assets before other components of unitholders’ equity As of 31 December 2019, the REIT and its subsidiaries had Net assets before other components of unitholders’ equity of 3,218.81 million Baht, decreasing 271.03 million Baht or 7.77% from 3,489.85 million Baht at the end of the year 2018 , mainly due to Capital from unitholders decreased from 3,4 8 6 . 2 1 million Baht at the end of the year 2018 to 3,41 4 . 8 0 million Baht at the end of the year 2019, decreasing 71.41 million Baht or 2.05%. The first reason is capital reduction without the change of total Trust units from excess


215

ทรสตเพอการลงทนในอสงหารมทรพยแบบตออายไดเพอธรกจโรงแรมและสทธการเชาสตราทจก ฮอสพทอลลต Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust

cash including non-cash expenses. The second reason is decreasing in the Retained earnings from 3.64 million Baht in 2018 to deficits 195.98 million Baht in 2019 or decreasing 199.62 million Baht or 5,484.45% because of dividend payment 67.99 million Baht and decreasing in net assets from operation 131.63 million Baht.

Operating Results

Investment Income In year 2019, The REIT and its subsidiaries had a total income of 357.08 million Baht, increased

5.56 million Baht or 1.58% compared to the same period of last year which had total income of 351.52 million Baht. Main changes include:

A gain on exchange rate of 21.97 million Baht (6.15% of total income) from the Long-term loans from financial institution in Euro and, the Euro depreciated against the US dollar which made an increase in gain of 11.46 million Baht or 109.04% from last year which had Gain on exchange rate of 10.51 million Baht

The rental income from master lease agreements 3 hotels of 252.24 million Baht (70.64% of total income) decreased by 9.60 million Baht or 3.67 percent from the same period of previous year which had a Rental income of 261.84 million Baht, mainly due to the appreciation of the Thai Baht against the US dollar

Other incomes of 82.77 million Baht (23.18% of total income), increased 3.90 million Baht or 4.95 percent compared to the same period of last year which had Other incomes of 78.87 million Baht from receiving support in the form of guarantees of the annual net operating income of the Hotel in Indonesia

Expenses In year 2019, the REIT and its subsidiaries had total expenses of 270.14 million Baht, decreased

75.15 million Baht or 21.76% compared to the same period of last year which had total expenses of 345.29 million Baht with the main causes as follow:

Other expenses of 95.50 million Baht (35.35% of total expenses), increased 4.58 million Baht or 5.04% from the same period of last year which had Other expenses of 90.91 million Baht because in 2019, there was a loss from allowance of doubtful account in full amount of advance payment and other receivables 43.52 million Baht, unrealized loss on changes in the fair value of derivatives increased 2.49 million Baht, expenses related to loan decreased 3.71 million Baht. Moreover, in 2019 there were no expenses related to the new asset acquisition project which was cancelled in 2018 causing a decrease of expenses of 33.5 million Baht

Finance costs of 92.69 million Baht (34.31% of total expenses), decreased 50.42 million Baht or 35.23% from the same period of last year which had Finance cost of 143.11 million Baht because last year there was a refinancing loan expense. The refinancing of this loan helped reduce the finance costs in 2019

Income tax expenses of 6.09 million Baht (2.26% of total expenses), decreased 25.85 million Baht or 80.93% from the same period of last year which had Income tax expense of 31.95 million Baht due to the


Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust fact that in 2019, there was an unrealized loss from investments in immovable and movable properties which can be used to reduce income tax expenses Net investment income and changing in the net assets from operations In year 2019, the REIT and its subsidiaries had decreasing in net assets from operation (loss) of 131.63 million Baht. This represents a decrease of 273.25 million Baht of the investment profit, or a decrease of 192.95% from the same period of last year which reported an increasing in net assets from operation (profit) of 141.62 million Baht with the main causes as follow: Net investment income of 86.94 million Baht or an increase in profit of 80.71 million Baht or 1,295.79% compared to the year 2018 with a net investment income of 6.22 million Baht An unrealized loss from investments in immovable and movable properties of 218.57 million Baht which made the gain from asset valuation decrease to 353.96 million Baht or 261.44% compared to the same period last year which had unrealized gain from investment in immovable and movable properties of 135.39 million Baht. This number is the result of the latest reappraising of the fair value of the REIT’s hotel assets overseas at the end of 2019. Statement of cashflows


Other significant financial ratios

Other significant financial ratios are the covenants in the facilities agreement with an oversea financial institution:

Ratios Conditions Remark GEARING not over 45% Comply with the covenant INTEREST COVER not less than 2.5 Comply with the covenant LTV* not over 45% Comply with the covenant

*LTV is in accordance with the facilities agreement, calculated by the interest bearing debt (secured loan) to secured assets value.

216


Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust fact that in 2019, there was an unrealized loss from investments in immovable and movable properties which can be used to reduce income tax expenses Net investment income and changing in the net assets from operations In year 2019, the REIT and its subsidiaries had decreasing in net assets from operation (loss) of 131.63 million Baht. This represents a decrease of 273.25 million Baht of the investment profit, or a decrease of 192.95% from the same period of last year which reported an increasing in net assets from operation (profit) of 141.62 million Baht with the main causes as follow: Net investment income of 86.94 million Baht or an increase in profit of 80.71 million Baht or 1,295.79% compared to the year 2018 with a net investment income of 6.22 million Baht An unrealized loss from investments in immovable and movable properties of 218.57 million Baht which made the gain from asset valuation decrease to 353.96 million Baht or 261.44% compared to the same period last year which had unrealized gain from investment in immovable and movable properties of 135.39 million Baht. This number is the result of the latest reappraising of the fair value of the REIT’s hotel assets overseas at the end of 2019. Statement of cashflows


Other significant financial ratios

Other significant financial ratios are the covenants in the facilities agreement with an oversea financial institution:

Ratios Conditions Remark GEARING not over 45% Comply with the covenant INTEREST COVER not less than 2.5 Comply with the covenant LTV* not over 45% Comply with the covenant

*LTV is in accordance with the facilities agreement, calculated by the interest bearing debt (secured loan) to secured assets value.


217



14.2 Factors or events that may have significant impact to future financial position or operating

result (Forward Looking)

• Economic and tourism growth level in each country where the REIT’s investment assets located, may have impact on the operating result of the investment Properties.

• Volatility in exchange rate of ASEAN currency and Euro to USD and/or to other currencies in the same region. As main operating income derived from each local currency while loan currency is in Euro and functional currency is USD and raising capital and financial report presented in THB.

• The REIT’s additional properties investment plan, which will increase the investment income and decrease the expenses per net asset value.

• Changing in the Debt to Equity ratio and loan interest rate from such as capital increase, loan repayment or refinance related to the REIT’s business plan which may has affected to increase/ decrease of interest payment or yield rate in the future.

• The situation of the spread of COVID-19 in early 2020 may have a short-term effect on the performance of the assets invested by the REIT which is considered to be a temporary instability event.

Date post:	17-Jun-2020
Category:	Documents
Upload:	others
View:	8 times
Download:	0 times