ANNUAL 2017REPORT - listed companyshreit.listedcompany.com/misc/ar/20180426-shreit-ar2017...For the Property in Indonesia, PT Agung Podomoro Land Tbk. agrees to provide the REIT with

ANNUALREPORT

2017Strategic Hospitality Extendable Freehold and Leasehold

Real Estate Investment Trust(SHREIT)

Message from the REIT Manager

To: Unitholders of Strategic Hospitality Extendable Freehold and Leasehold REIT (SHREIT)

Strategic Hospitality Extendable Freehold and Leasehold REIT (SHREIT) was established on December 20, 2017. The REIT invested through holding companies by holding more than 99% in 3 hotel owning companies (one company for Pullman Central Park Hotel in Jakarta Indonesia, and two companies in Vietnam for Capri by Fraser and IBIS Saigon South. The hotels are international standard managed by professional hotel management team. In addition, these hotels are located in the countries with high population and economic growth rate.

This is a new dimension of trusts in Thailand investing in real estate in foreign countries, providing an opportunity for unitholders to diversify the investment risk. The REIT is managed by professional independent REIT manager with experience in overseas investment and hospitality businesses. To grow the REIT continuously, the REIT manager has flexibility to freely choose to invest in variety of hospitality assets across the globe subject to appropriate return to unitholders.

In 2018, REIT manager will use its ability to manage SHREIT with efficiency and effectiveness and to seek new investment opportunities in order to maximize benefits of all unitholders. The REIT manager hopes to get all support from all unitholders and all stakeholders from now onwards.

Yours sincerely,

Strategic Property Investors Company Limited REIT Manager

Part 1 Business operation of Trust

REIT’s Information 6

Policy, Business Strategy and benefit procurement from the Properties 6

Information of investment assets 8

Debt Policy 35

Industry analysis relating to investment assets 40

Risk Factors 57

Legal dispute 84

Other major information 84

PART 2 Management and Governance

Unit Trust Information 86

REIT Manager 90

Corporate governance and REIT Management 103

Trustee 122

Prevention of conflict of interest 128

Auditor, Registrar and Appraiser 134

PART 3 REIT’s Performance and Financial Status

Financial Statement and REIT manager’s analysis 136

CONTENT

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Business operation

of Trust

1

006 ANNUALREPORT 2017

Trust Name (Thai) ทรัสตเพื่อการลงทุนในอสังหาริมทรัพยแบบตออายุไดเพื่อธุรกิจโรงแรมและสิทธิการเชา สตราทีจิก ฮอสพิทอลลิตี้Trust Name (English) Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment TrustAbbreviation SHREITREIT Manager Strategic Property Investors Company LimitedTrustee Krung Thai Asset Management Public Company LimitedTerm of Trust Indefinite MaturityType of Trust Unit UnredeemableRegistered Capital 3,528,367,000 THBTotal Unit Trust 352,836,700 Units

Policy, Business Strategy and benefit procurement from the Properties

Vision 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 rentalincome. 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.

Business operation of TrustREIT’s Information

PART 1

Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust

007ANNUALREPORT 2017

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 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.

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.• The Master Lessee (whose ultimate shareholder is the same as the ultimate shareholder of the REIT Manager) is the company related to the REIT Manager. Therefore, the REIT Manager shall have the authority to control the Master Lessee and to have the Master Lessee complying with the terms and conditions of the lease agreement. The REIT Manager shall control the Master Lessee 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.

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PART 1

Information of investment assets

Assets in Indonesia: Pullman Jakarta Central Park Hotel

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 (approximately within the next nine years) with the extension of 20 years whereby the REIT manager expects that the ownership could be renewed for another period of 30 years with 20 year extension, structures 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 Indonesiaand 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.

Assets in Vietnam: Capri by Fraser Hotel and IBIS Saigon South Hotel

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 26 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 26 years) and proprietary rights in the structures and movable properties associated with IBIS Saigon South, for a total price of 15 million USD and 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.

Business operation of Trust



Diag

ram

of

the

REIT

Str

uctu

re a

fter

the

Est

ablis

hmen

t Strategic Hospitality

Holding Lim

ited

100%

100%

99.98%

100%

ยีซเี

นดโ

นิอ

IBIS Saigon South,

Ho Chi M

inh City

(leasehold)

Capri by Fraser,

Ho Chi M

inh City

(leasehold)

Pullman Jakarta

Central Park

(freehold)

BBVN Pte Ltd.

(Singapore)

(Singapore)

(BVI)

(BVI)

(BVI)

(BVI)

SHR IBIS Pte.Ltd.

VietH

an Hotel

Corporation

AAPC Thailand Ltd.

Fraser Hospitalities

Pte.Ltd.

Strategic Hospitality Service Co.,Ltd

Luxel APT

Co., Ltd

SHR Finco

Pte.Ltd.

BBDM

Singapore Pte.Ltd.

SHR Indonesia Pte.Ltd.

PT SHR Pullman

Indonesia

(Indonesia)

PT Central Pesona Palace (“CPP”)

PT Accor Asia Pacific Indonesia

100%

100%

100%

100%

100% and

loan

Thailand

Offshore HoldCo Level(1

)

Offshore SPV Level

Underlying

Hotels

Master

Lessees(2

)

Hotek

Operators

Loan from financial institution

Unitholders

Strategic Hospitality REIT

REIT M

anager

Loan

Loan

Loan

Vietnam

(Vietnam)

Dividents

Investm

ents

Manage

Management fee

Monitoring

Moster Lease

Rent

Hotel

management

Moster Lease

agreement

Management

fee

Trustee fee

Trustee

Trus

t Str

uctu

re


PART 1

Pul

lman

Jaka

rta C

entra

l Par

k In

done

sia

Jaka

rta

Pullm

an

Acco

r 5

317

2012

Fr

eeho

ld

NA

94.73

mill

ion

USD

Cap

ri by

Fra

ser

Viet

nam

HC

MC

Capr

i Fr

aser

s Hos

pita

lity

4 17

5 20

13

Leas

ehol

d 26

Yea

rs 21

.00 m

illio

n US

D

I BIS

Saigo

n So

uth

Viet

nam

HC

MC

IBIS

Acco

r 3

140(

1)

2012

Le

aseh

old

26 Y

ears

15.00

mill

ion

USD

To

tal

130.7

3 m

illio

n US

D

Rem

ark:

(1) P

rese

ntly

, 140

room

s are

ava

ilabl

e wi

th fu

ture

pla

ns fo

r add

itions

by

20 ro

oms.

Key

Deta

ils a

bout

the

Pro

pert

ies

of t

he T

rust

Brie

f Des

crip

tion

of th

e Pr

oper

ties

Inve

stm

ent V

alue

Not E

xcee

ding

Hot

el C

ount

ry

Loca

tion

Bran

d Ho

tel E

xecu

tives

Rank

(Sta

rs)No

. of

Room

sYe

ar o

fCo

mm

ence

men

tFr

eeho

ld /

Leas

ehol

dRe

main

ing D

urat

ion

of L

ease

Righ

ts




Valuation Approach Income Approach Income Approach Income Approach

Type of asset Freehold Leasehold approximately Leasehold approximately 26 years 26 years

Date of valuation 31 December 2017 31 December 2017 31 December 2017

Valuation Value 1,354,800,000,000 IDR 23,100,000 USD 15,200,000 USD

Assumptions

Room Revenue Approximately 58.0 Approximately 96.0 Approximately 83.0 Percent of Total revenue Percent of Total revenue Percent of Total revenue

ADR 1,400,610 IDR on the first 63 USD on the first 46 USD on the first projected year (2018) projected year (2018) projected year (2018)

Occupancy Rete Approximately 80.1 Percent Approximately 75.0 Percent Approximately 66.0 of the first projected year of the first projected year of the first projected year

Food and Beverage Approximately 70.0 Percent Approximately 2.0 Percent Approximately 16.0 Percentrevenue of room revenue of room revenue of room revenue

Other direct operating Approximately 3.0 Percent Approximately 2.0 Percent Approximately 1.0 Percentrevenue of room revenue of room revenue of room revenue

Room Expenses Approximately 16.1 Percent Approximately 15.0 Percent Approximately 15.0 Percent of room revenue of room revenue of room revenue

Food and beverage Approximately 51.1 Percent Approximately 85.0 Percent Approximately 65.0 Percentexpenses of food and beverage revenue of food and beverage revenue of food and beverage revenue

Other direct operating Approximately 56.7 Percent Approximately 30.0 Percent Approximately 33.0 Percent expenses of other incomes from of other incomes from of other incomes from operation operation operation

Undistributed Approximately 35.0 Percent Approximately 18.5 Percent Approximately 24 Percentoperating expenses of total revenue of total revenue of total revenue

Base fee 2.0 Percent of total revenue 2.1 Percent of total revenue 2.0 Percent of total revenue

Incentive Fee 7.0 percent of GOP 6.3 percent of GOP 8.0 percent of GOP

Discount Rate 11% 10% 10%

Assets valuation

Pullman Jakarta Capri By Fraser IBIS Saigon SouthCentral Park

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.

Overview of Master lessees


PART 1

• 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 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 ultimateshareholder. 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 leaseholdright 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 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




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 relatedparty 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 Lessorand 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 • 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


PART 1

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, lawsand 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.

Freehold (HGB Title. Under Indonesian law, HGB has a term, which will expire on 17 March 2026. An extension for an additional term of not exceeding 20 years may be applied for. After expiration of the extension, the REIT Manager expects to be able to renew the freeholdfor 30 years, and subsequently obtain extension of 20 years.

• 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

PT SHR Pullman Indonesia (Indonesia)

PT SHR Pullman Indonesia (Indonesia)

Accor

Podomoro City Jl. Let. Jend. S. Parman Kav. 28, 11470 West Jakarta, Indonesia

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 Lessorhas entered into an agreement with the owner of the entrance to secure the use of the entrance.

The main road connected to the entrance and exit of Podomoro City is Jalan Let. Jend. S. Parman.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .General information on the properties

1) Pullman Jakarta Central Park in Indonesia

Details Pullman Jakarta Central Park

Nature of property to be invested in by the REIT

Type of ownership of land

Type of ownership of the buildings and moveable assets

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

Owner of the buildings and moveable assets

Management of the Property

Location

Entrance and exit to the Property




25 HMSRS / Strata Title certificates registered in the name of PT AgungPodomoro Land, Tbk, domicile in West Jakarta.

25,144 sq m

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

2012 (construction completed on 1 November 2011)

First and only five-star international hotel in West Jakarta with total of 317 rooms

High-speed Wi-Fi and Internet, contemporary art, iPod docking system, stylish furniture, espresso machine, LCD TV, in-room safe

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.

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

USD 94.73 million

Details Pullman Jakarta Central Park

Nature of property to be invested in by the REIT

Particulars of the land

Land area

Buildings

Year of operation

General description of the property

In-room amenities

Other services and amenities

Utilities

The amount of invested in the property


PART 1

Room Types

Pullman Jakarta Central Park consists of one building with 12 floors, two basements, and a rooftop. As of January 2017, the property contains 317 rooms, which can be categorized into four types as follows.

Deluxe RoomsExecutive Deluxe RoomsExecutive SuitesCentral Park SuitesTotal

19567541

317

323268135

12,191

Room Types

Room type Number Area (square meters)


. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pullman Jakarta Central Park

Map of Hotel’s Relative Distance to Surroundings

Map



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

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

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

Upon the expiry of lease agreement, the parties agree that the lessee shall continueto 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. Upon the lease agreement being renewed:1. The parties agree that the lease conditions, including the conditions with respect to renewal of lease period, shall remain the same as are set out in the 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 longer than the effective term of the lease agreement of the land where the Leased Properties are located on. 3. Apart from 1. and 2. above, if the lessor does not wish to continue the lease, the lessor shall inform the lessee in writing no less than 6 months prior to the expiry of the lease period pursuant to the lease agreement or the renewed lease period. In the event that there is a renewal pursuant to the agreement but the lesseeencounters legal restriction or impossibility of performance due to lack of specifiedqualities which result in the termination of this agreement and/or any cause otherthan with intention or gross negligence of the lessee that results in the lessee beingunable to continue to lease the Leased Properties for the hotel operation, the lesseeshall 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 tolease the Leased Properties temporarily for the hotel operation until there is a newlessee 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,

Lessor

Lessee

Leased Properties

Lease Period

Renewal Condition upon the Expiry of Lease Agreement

Renewal Method upon the Expiry of Lease Agreement

1.1) Master Lease Agreement between Master Lessor and Master Lessee


PART 1

and the lessee shall be deemed to have no obligation to continue leasing the Leased Properties.

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 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. 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.

Rental Payment




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.

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

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.

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 theparticular 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.

Base Rental

Base Rental Calculation

Postponement of Rental Payment due toForce Majeure


PART 1

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 ofthe 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 bedetermined, the lessor and the lessee shall mutually agree to use other standardizedinformation, 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 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) whichshall 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.

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:

1. fixed rental for the month that force majeure does not take place, during the particular quarter2. variable rental for the month that force majeure does not take place, during the particular quarter (if any)3. fixed rental which has been deferred4. variable rental which has been deferred (if any)

H 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 makeany 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.

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 periodwhich shall be impacted by that event in writing and the calculation of monthlyrental payment which are not affected by such event in accordance with the calculation criteria set out in this agreement.

Payment of the Deferred Rental Payment due to Force Majeure

Exemption of Rental Payment due to Force Majeure




1. In the event of force majeure (Force majeure are the events with the meaning as set out in the agreement which shall be elaborated later on) that has effect on the Leased Properties, either directly or to the neighbouring area of he 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 RevParof the same period of the preceding year (which is thenormal 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 competitiveset 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.

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 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.

Lessor's Obligation


PART 1

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 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 Obligation




• 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.

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

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. "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

Lessee's Undertaking

Insurance

Transfer of Leasehold Rights


PART 1

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.

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.

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. (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

Taxes and Fees

Termination of 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).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).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.

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 500,0002. 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.

Exemption of the Termination of Agreement

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


PART 1

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 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.

Consequence of Termination




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.

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.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.

Force Majeure

Leased Properties that are Damaged or Appropriated


PART 1

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

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.

Luxel APT Co., Ltd.

Luxel APT Co., Ltd.

Frasers Hospitality

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

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

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 2011, by Ho Chi Minh City Department of Natural Resources and the Environment.

1,709 square meters

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

12 March 2013

Four-star hotel in HCMC with 175 rooms.

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

Type of ownership of land

Type of ownership of the buildings and moveable assets

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

Owner of the buildings and moveable assets

Management of the Property

Location

Entrance and exit to the Propertymeters


Land area

Buildings

Year of operation

General description of the Property

In-room amenities

2) Capri by Fraser

General information on the Property

Details Capri

Nature of Property to be invested in by the REIT




Details Capri

Nature of Property to be invested in by the REIT

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.

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

USD 21 million


Utilities

The amount to be invested in the Property

Map. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capri by Fraser

Map of relative distance to surroundings


PART 1

Studio Deluxe 92 26

One Bedroom Superior 27 43

One Bedroom Deluxe 51 53

Two Bedroom Executive 5 69

Total 175 6,601

Room types

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

Room types

Room type Number Area (square meters)

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

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

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

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.

USD 1,586,000 per annum, whereby the rental payment shall be made in local currency. The exchange rate shall be as mutually determined.


2.1) Agreement Granting Permission to Use Assets for Operation of Hotel Business between Master Lessor and Master Lessee

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

Lessee

Leased Properties


Base Rental

Base Rental Calculation for renewal

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .





Governing Law

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.

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

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

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

Viethan Hotel Corporation

Viethan Hotel Corporation

Accor

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

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

• 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.

Type of land investment

Type of building and immovable asset investment

Holder of subleasehold

Owner of the buildings and the

movable assets

ManagementLocation

Entrance and exit to the property


Details IBIS

Nature of asset to be invested in by the REIT

3) IBIS Saigon South

General information on the properties


PART 1

936 sq m

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

21 June 2012

A three-star hotel located in HCMC with 140 rooms.

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

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

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

USD 15 million

Land area

Buildings

First year of operation

General description of the property

In-room amenities


Utilities

The amount to be invested in the property

Details IBIS

Nature of asset to be invested in by the REIT




Map

Standard room 140 18

Total 140 2,520

Note: There is a plan to add 20 more guest rooms.

Guest room details

IBIS Saigon South consists of one building with 13 floors. In December 2016 the hotel had 140 rooms of one type only.

Guest room details

Room type Number of rooms Average area (square meters)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

IBIS Saigon South

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Map of hotel’s relative distance to surroundings

3.1) Agreement Granting Permission to Use Assets for Operation of Hotel Business between Master Lessor and Master Lessee

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.

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

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

(a) Buildings including any construction situated within IBIS Saigon South ("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".

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.

USD 791,000 per annum, whereby the rental payment shall be made in local currency. The exchange rate shall be 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. 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.

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


PART 1

Lessor

Lessee

Leased Properties


Base Rental

Base Rental Calculation for renewal


Governing Law




Subject to a borrowing framework policy, the REIT may, at any time in the future, ask to borrow moneyfrom 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.

Debt Policy

Policy in Obtaining Future Loans and Creating Encumbrances to the REIT assets

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


PART 1

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; theREIT 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.

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.

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

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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.

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.

5. REIT’s Borrowing information as of year end 2017

For this investment by the REIT, part of the REIT's financing shall be from loan. The REIT entered into loan agreement with the lender for long-term loan USD 47.50 million for such investment. The terms and conditions of the loan shall be in accordance with the loan agreement between the REIT and the lender, with the key provisions as follows.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


PART 1

Siam Commercial Bank Public Company Limited

Trustee on behalf of Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust

Tranche 1 : Long-term credit USD 47.50 million, but shall not be greater than 35 percent debt to total assets ratio (loan in USD currency)

Tranche 2: Working capital in THB currency not exceeding THB 36 million, which is the short-term loan in the form of promissory note, each of which shall have duration of no more than 3 months (loan in THB currency)

Remark : As of 31 December 2017, there was no outstanding balance of Tranche 2.

Tranche 1: Interest rate based on London Interbank Offered Rate (3M LIBOR). For year 1-2, the interest rate shall be equivalent to 3M LIBOR plus interest rate of no more than 3.30 percent per annum. The interest rate for the remaining term of the agreement shall be 3M LIBOR plus interest rate of no more than 6.50 percent per annum.

Tranche 2: Floating interest rate referencing to Money Market Rate (MMR) of the lender.

Tranche 1: Term of principal repayment of 13 year with the grace period during the first 3 years

Tranche 2: Term of principal repayment of no more than 3 months from the issuing date of each promissory note or as indicated in the loan agreement. The credit limit has the term of 1 year from the signing date of the loan agreement and the extension of the credit limit shall depend on the annual review of credit limit.

Tranche 1: Every 6 month after the grace period, in instalment with increasing proportion under the whole amount is paid within the term of this loan agreement, with the repayment schedule as follows.

• Year 4 - 7 at 7.00% of the loan amount • Year 8 at 7.50% of the loan amount • Year 9 at 8.00% of the loan amount • Year 10 at 9.00% of the loan amount • Year 11 at 9.50% of the loan amount • Year 12 at 10.50% of the loan amount • Year 13 at 27.50% of the loan amount

However, after the grace period, in the event that the borrower has excess cash flow, calculated based on earnings before, interest, tax, depreciation and amortization, deducted with debt service which consists of principal that has to be repaid each year,interest, and finance costs (if any) which is based on the separate financial statementof the REIT. The borrower shall use the excess cash flow for the principal repayment in addition to the proportion set out above, with the details as follows

• Year 4 at 0.50% of the loan amount • Year 5 - 6 at 1.00% of the loan amount • Year 7 onward at 2.00% of the loan amount

Lender

Borrower

Credit Limit

Interest Rate

Term of Agreement

Principal Repayment

Summary of Key Terms in Loan Agreement




ranche 2 : Principal repayment in 3 months from the issuing date of each promissory note or as set out in the loan agreement. The term of principal repayment of tranche 2 shall not exceed final maturity date of tranche 2.

Tranche 1 : Quarterly basisTranche 2: Upon the expiry date of each promissory note

• Pledge of shares of subsidiaries of the REIT• Business security agreement on the deposit 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 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.

• Interest bearing debt to total assets according to consolidated financial statement of the REIT shall not exceed 35 percent.• Interest bearing debt to equity according to consolidated financial statement of the REIT shall not exceed 1.0 times.• Debt service coverage ratio according to separate financial statement of the REIT shall not be lower than 1.2:1.• Reserves in the account for the loan payment upon the anniversary of 5 years from the first drawdown and the EBITDA of the REIT falls below USD 8 million.• No dividend payment can be made in the event of the default under the loan agreement.

Other than the conditions as set out above, the terms and conditions relating to this credit shall be in accordance with the conditions in the loan agreement, security agreement and other finance documents that the parties shall agree upon.

Payment of Interest

Security

Key Conditions

Other Terms and Conditions


PART 1

1.1 ASEAN economic overview

The economy of ASEAN member states has seen leaping growth during the last decade. The gross domestic product (GDP) of ASEAN member states currently is at USD 2.5 trillion, almost double the figure from 2007, or average annual growth of 6 percent. If ASEAN member states can maintain their economic growth at that rate, their economy may become the world’s fourth largest in 2050. (In 2016, the ASEAN economy was the world’s fifth largest, based on the World Bank Data 2016.) The CLMV group (Cambodia, Laos, Myanmar, and Vietnam) and Indonesia have the highest economic growth trend in the region.

The overall economy of ASEAN member states can strongly expand due to the expanding intra-ASEAN trade. Intra-ASEAN trade accounted for 24.1 percent of the total international trade of ASEAN member states in 2014, considered the largest market. In addition, ASEAN has become one of the destinations for foreign direct investment (FDI) that is fastest growing in the world. The FDI value in ASEAN accounted for 11 percent of the global FDI value in 2014, a 5-percent increase from that in 2007. If classified by sources of funds, intra-ASEAN investment represented 17.9 percent, or the second largest volume after investment from the European Union.

1. ASEAN Overview

Industry analysis related to investment assets

ASEAN GDP growth rate forecast under different scenarios

Source: Asian Development Bank (ADB) | Colliers International

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

Brunei

Darussalam

Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam

Actual Growth

2534-2553

Positive Scenario

2554-2573

Negative Scenario

2554-2573




1.2 ASEAN tourism market overview

ASEAN tourism market overview is based on data of the World Travel & Tourism Council (WTTC).In 2014 the tourism sector accounted for 4.8 percent of total GDP of ASEAN member states and accounted for 3.7 percent of the total employment rate of ASEAN member states. It was forecast that the ratio of tourism as compared with GDP would increase from 4.8 percent to 4.9 percent and the employment rate would increase from 3.7 percent to 4.3 percent in 2025. Major tourists were intra-ASEAN tourists, representing 46 percent of foreign tourists traveling to ASEAN in 2014.

Apart from attracting growing interest from European tourists and tourists from countries in the American continents, the ASEAN tourism sector also gain the attention of tourists from China and other emerging countries. The region’s tourism strengths include nature and diverse culture, the close geographical proximity to large countries with high economic growth rates such as China and India, and Asian counties with strong purchasing power such as Japan, South Korea, Taiwan, and Middle-Eastern countries. A factor that will support the ASEAN tourism growth in the next phase is the income growth of middle-income households in China, India and ASEAN countries. This will lead to increasing consumption expenditure, including tourism and leisure expenditures, which will help stimulate the AEC tourism industry. An increase in air traffic in the region also helps increase the number of tourists in the region.

Number of inbound tourists in ASEAN in percentage of the global tourism market

Source: World Tourism Organization, World Bank, and World Travel & Tourism Council

2.1) Vietnam’s economic overview

Vietnam is one of the countries with the highest global economic growth rate from 1995 – 2015, with the average growth rate of 6.2 percent per annum. In 2015, Vietnam’s economy expanded up to 6.68 percent. In addition, Vietnam’s economy will be supported by a free trade agreement that will enable Vietnam to maintain its economic growth at a high rate. Vietnam’s tourism sector accounted for 6.6 percent of its GDP in 2015 and its growth is in line with Vietnam’s economic growth.

2. Overview of Vietnam

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2553 2557 2573F

Other tourists 38.71 55.86 99.41

Intra-ASEAN tourists 35.14 49.22 87.59

% of world market 7.40% 8.50% 10.30%

Intra-ASEAN tourists Other tourists % of world market

0%

2%

4%

6%

8%

10%

12%

0

20

40

60

80

100

120

140

160

180

200


PART 1

2015 2016 2017 2018 2019 2020 2021 2022

Vietnam’s forecast GDP 6.68 6.21 6.50 6.30 6.20 6.20 6.20 6.20 growth rate (percentage)

Vietnam’s forecast 0.63 2.67 4.87 5.00 5.00 5.00 5.00 5.00 inflation rate

Source: International Monetary Fund (IMF)

In addition, the International Monetary Fund (IMF) expected that Vietnam’s GDP growth rate from 2016 to 2022 would be approximately 6.26 percent annually and forecast that Vietnam’s inflation rate during the said period would be 4.65 percent per annum.

GDP and tourism of Vietnam

In addition, the value of foreign direct investment in 2016 was approximately USD 24.4 billion, an approximate increase of 7.1 percent from the value in 2015. It consisted of 78-percent investment from countries in the Asian region. In 2016, the top three investors were South Korea, Japan and Singapore, representing 29, 10 and 10 percent respectively.

Source: World Bank and World Travel & Tourism Council

Foreign Direct Investment Value

Source: Grant Thornton

-10%

0%

10%

20%

30%

40%

2548 2549 2550 2551 2552 2553 2554 2555 2556 2557 2558 2559F

GDP growth rate Tourism growth rate

3 3 2 2 2 610

20

64

22 1915 13

22 2023 24

0

20

40

60

80

2543 2544 2545 2546 2547 2548 2549 2550 2551 2552 2553 2554 2555 2556 2557 2558 2559

(Billion US dollars)




Phu My Hung Project

The Phu My Hung Project is in District 7 where manufacturing plants of leading companies such as 3M and Unilever are located. It is also a new town zone of Ho Chi Minh City. The project is a joint venture by Central Trading and Development Group (CT&D Group) from Taiwan and the local government of Vietnam. The project features modern town planning, infrastructure, and construction systems. The developers of the Phu My Hung Project will lease out the developed land and/or make an investment jointly with other developers to develop different types of real estate projects. Phu MyHung consists of horizontal and vertical residential projects, hotels, serviced apartments, office buildings, commercial buildings, convention centers, department stores, international schools, hospitals, medical centers, green zones, and a lake. The project is therefore popular among and chosen by foreign companies as location for their offices. Foreigners working in Ho Chi Minh City also choose the projectas their residence. (Source: Website of Phu My Hung Development)

In addition, the Phu My Hung Project has major strengths as follows:

• It is a location of the most modern and largest convention center in Vietnam, namely the Saigon Exhibition and Convention Centre (SECC), which is the only international standard and modern convention center equipped with comprehensive facilities in Ho Chi Minh City. The convention center has four exhibition halls and covers a total of 40,000 square meters. It regularly hosts conventions all year round, including the Vietnam Motor Show 2017. In addition, SECC is planning to expand the center in 2017 to be able to accommodate more conventions in the future. (Source: SECC website)

40%

16%

10%

10%8%

7%

7%

4%

3%

3%

3%

South Korea

Japan

Singapore

China

Taiwan

Hong Kong

Malaysia

British Virgin Islands

Thailand

Cayman Islands

Others

Foreign Direct Investment from each country in 2016



PART 1

2014 2015 2016 2017

Number of events 43 52 56 56/1

Number of events held at SECC

Note: (1) Based on the data from the SECC website as of 24 July 2017

• The Phu My Hung Project is located approximately five kilometers away from the Tan Thuan Industrial Estate. The industrial estate is also a joint venture of CT&D Group from Taiwan and the local government of Vietnam. Tan Thuan Industrial Estate covers 20 hectares, consisting of industrial plants, warehouses, ports, office buildings, and commercial buildings. (Source: the website of Tan Thuan Development)

• The Phu My Hung Project is in an area from where it takes about one hour to travel conveniently to Binh Duong and Dong Nai, which are major industrial zones.




• The Phu My Hung Project is located near the highway linking the Cai Mep Port, a new port that will support future import and export activities

Note: (1) The overall occupancy rate, average room rate, and RevPAR are the weighted average value of five-star and four-star hotels.

Source: VNAT (Vietnam National Administration of Tourism) | Grant Thornton | Colliers International

2.2) Tourism market in Vietnam

2.2.1. Supply

Hotel Market Overview in Vietnam in 2015

5-star 4-star 3-star Total (1)

Number of hotels 91 215 441 747

Total number of rooms 24,212 27,379 30,734 82,325

Occupancy rate 62.7% 61.5% N/A 61.9%

Average room rate (USD/room/night) 111.4 72.3 N/A 87.0

RevPAR (USD/room/night) 70.1 44.7 N/A 54.2

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PART 1

2.2.2 Demand

In 2015, Vietnam welcomed over 7.9 million foreign tourists, lower than the projected figure of 8.3 million tourists. However, there were 57 million Vietnamese tourists, a rise of up to 48 percent from the figure in 2014. For the first six months of 2016, the number of foreign tourists began to pick up, reaching 4.8 million tourists, or a 21.3-percent increase compared to the figure in 2015. Vietnam continues to promote low-cost airlines and tour packages, including developing facilities for tourism to encourage Vietnamese people to travel for leisure trips more.

Number of inbound tourists in Vietnam

Foreign tourists from high-income countries are therefore able to pay more than local people and thus tourists staying in four-star and five-star hotels are more than 80-percent foreigners, while Vietnamese people who travel domestically often choose to stay at three-star hotels or lower.

Source: GSO (GENERAL STATISTICS OFFICE of VIETNAM) / VNAT (Vietnam National Administration of Tourism)

Source of guests staying at four-star and five-star hotels in Vietnam

In 2016, foreign visitors to Vietnam in the top two rankings were from East Asia and ASEAN member states. Chinese tourists took the lead in the number of foreign tourists, reaching around 2.7 million, followed by Korean and Japanese tourists.


Domestic Guest

International Guests

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

International Guests Domestic Guest

2554 2555 2556 2557 2558

30,000,000 32,500,000 35,000,000 38,500,000 57,000,000

6,014,032 6,847,678 7,572,678 7,874,312 7,943,651

79.7%

83.0%

81.1%

20.3%

17.0%

18.9%

2556

2557

2558

International guest Domestic guest




. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The proportions of hotel guests in 2015 by purpose of stay at four and five-star hotels were quite similar. Except for group tourists and business travelers, the proportions of them staying at four-star hotels were 3.9 percent and 1.5 percent respectively higher than those at five-star hotels.

Purpose of stay by hotel rankings in 2015

Source: GSO (General Statistics Office of Vietnam)

Countries of origin of inbound foreign tourists in Vietnam in 2016

Other 22.8%

Singapore, 2.6%

Thailand, 2.7%

Australia, 3.2%

Malasia, 4.1%

Russia, 4.3%

Taiwan, 5.1%Japan, 7.4%

Korea, 15.4%

China, 26.9%

USA, 5.5%

2.3) Performance

2.3.1 Occupancy rate

The average occupancy rates from 2013 - 2015 remained quite the same. However, in 2016 the average occupancy rate significantly increased for both four and five-star hotels. Grant Thornton expected that the hotel business, especially five-star hotels, would see growing competition because the number of hotel rooms would increase and more hotels would be opened in the future.

Source: GSO (General Statistics Office of Vietnam)

35.4%

35.9%

30.1%

26.2%

14.0%

12.5%

6.4%

7.2%

2.5%

2.0%

11.6%

16.2%

4-star

5-star

Individual tourists Tour groups Business travellers

Conference participants (MICE) Government employee travellers Others guests

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


PART 1

Average occupancy rate in Vietnam by hotel rankings

2.3.2 Average room rate

In 2016 the overall annual average room rate was USD 88.1, an increase of 1.2 percent from the rate in 2015. Grant Thornton expected that the hotel business would have better operating results due to the number of tourists that is expected to increase in 2017. It is likely to continue that way due to a significant increase in the number of tourists in 2016, an increase of approximately 17.9 percent from that in 2015. (Based on data from the General Statistics Office of Vietnam.)

Source: Grant Thornton - Colliers International

Overall average room rate of hotels in Vietnam

When compared with neighboring countries, the overall room rates of hotels in Vietnam are lower than those in the Philippines and Indonesia, although the room rates of four-star hotels in Vietnam are higher than the room rates of four-star hotels in Thailand and Cambodia.


Comparison of average room rates by hotel rankings in 2015

62.6%

60.3%61.5%

67.2%

61.0% 61.1%62.7%

68.0%

50.0%

60.0%

70.0%

2556 2557 2558 2559

4-star 5-star

80

90

100

2556

97.6 98.0

87.0 88.1

2557 2558 2559

USD/

room

/nigh

tUS

D/ro

om/n

ight

Source: Grant Thornton | Colliers International

Vietnam Thai Philippines Cambodia Indonesia

72.3 72.184.7

65.181.6

111.4 106.4

158.9

125.2

166.5

0

50

100

150

200

4-star 5-star




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2.4) Outlook

Currently Vietnam is implementing its Socio-Economic Development Plan for 2016-2020. The plan will enable Vietnam’s tourism business to recover and enjoy a leaping growth in accordance with Vietnam’s “Strategy on Tourism Development Until 2020 and Vision to 2030.” Vietnam’s tourism sector expects to welcome more than 10 million foreign tourists per year, accounting for 6.5-7.0 percent of GDP. In addition, a very important factor in creating a strategy to attract more tourists to Vietnam is the cooperation from the government, hotel business operators and tour companies.

Source: Grant Thornton | Colliers International

2.3.3 Revenue Per Available Room (RevPAR)

Four and five-star hotels in Vietnam had RevPAR in 2016 at USD 51.4 and USD 68.7 respectively,which increased 9.8 percent and 4.1 percent respectively from that in 2015. This was due to the significant increase in the number of tourists, resulting in higher average occupancy and average room rates.

USD

Revenue Per Available Room in Vietnam by Hotel Rankings

5-star 4-star 3-star Total (1)

Number of hotels 24 43 118 185

Total number of rooms 6,355 4,737 8,186 19,278

Occupancy rate 65% 68% 60% 63.6%

Average room rate (USD/room/night) 124.4 68.9 46.7 77.7

RevPAR (USD/room/night) 80.9 46.8 28.0 49.4

2.5) Ho Chi Minh City’s tourism sector

Overview of the hotel business in Ho Chi Minh City in 2016

Note: (1) The overall occupancy rate, average room rate, and RevPAR are the weighted average value of five-star and four-star hotels.Source: VNAT (Vietnam National Administration of Tourism) | Grant Thornton | Colliers International

52.7 52.646.8

51.4

71.867.2 66.0 68.7

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PART 1

2.5.1 Supply

In 2016 there were 16 newly-constructed hotels and an increase of 910 rooms in three to five-star hotels compared with the number in 2015. With the positive tourism growth trend, hotel developers began new construction projects, including expediting the construction of existing projects. As a result, the number of four and five-star hotels is likely to increase from 2017-2019.

Number of hotel rooms in Ho Chi Minh City

2.5.2 Demand

In 2016 Ho Chi Minh City welcomed 5.2 million foreign tourists, accounting for 20 percent of total foreign tourists, and 21.8 Vietnamese tourists, accounting for 80 percent of total tourists. Both groups of tourists have a growth rate of 10 percent when compared with the figures in 2015. If the forecast of the growth rate of tourists in Ho Chi Minh City is based on the past growth rates from 2011 to 2016, i.e. 6.9 percent for foreign tourists and 16.1 percent for domestic tourists, the number of tourists in Ho Chi Minh City will reach 32.7 million tourists in 2018, consisting of 6.3 million foreign tourists and 26.4 million Vietnamese tourists.

Number of tourists in Ho Chi Minh City

Source: Department of Tourism of HCMC | Colliers International

Source: Colliers International

3-star 4-star 5-star

6,588 6,632 7,622 7,346 8,186

3,390 3,6803,635 4,667

4,737

4,769 5,3735,373

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Foreign tourist Vietnamese tourist




2.5.3 Performance of the hotel business

• Average room rate

In 2016 the average room rate of four and five-star hotels in Ho Chi Minh City decreased 4.66 percent and 2.90 percent compared with those in 2015, to USD 92.4 and USD 169.9 respectively. This is due to an increase in the number of hotel rooms which led to higher competition. As a result, in 2017, the average room rate is likely to decrease 5 percent per year until 2018. In addition, it is likely that in 2018 the average room rate will be USD 84 for four-star hotels and USD 160 for five-starhotels.

Average room rate of four and five-star hotels in Ho Chi Minh City

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117.5 137.3 200.6 152.8 128.2 138.4 124.4 126.3 153.0 175.0 169.9 161.4 160.1

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• Occupancy rate

Due to higher competition in the upscale hotel market and more varieties of accommodation such as homestays and boutique hotels, the occupancy rate of four and five-star hotels in Ho Chi Minh City in 2016 reduced to 61.8 percent and 65 percent respectively from 77.1 percent and 75.6 percent in 2015. The occupancy rate is likely to continue to decrease during 2017 – 2021 because the supply, which is higher than demand, is likely to increase. It is expected that the occupancy rate of four and five-star hotels will decrease to 60.5 percent and 64.7 percent respectively in 2018.

Occupancy rate of four and five-star hotels in Ho Chi Minh City

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86.7% 73.3% 67.7% 67.5% 68.7% 70.7% 70.0% 70.3% 70.6% 77.1% 61.8% 61.1% 60.5%

81.4% 70.6% 61.5% 63.0% 68.7% 68.9% 62.1% 61.9% 61.0% 75.6% 65.0% 64.9% 64.7%

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PART 1

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• Outlook

As the number of visitors to Ho Chi Minh City continues to grow over the years, the government plans to expand Tan Son Nhat International Airport to accommodate 50 million passengers per year or double the existing capacity. In addition, the government has other tourism stimulus plans such as construction of new tourist attractions. With these plans, the availability of different types of accommodations, and room rates, it is possible that the tourism business of Ho Chi Minh City will significantly expand soon.

As Capri by Fraser and IBIS Saigon South Hotels’ strength is their location. They are in District 7 where the customer base consists of both business and tourism sectors and situated opposite the SECC convention and exhibition center. Capri by Fraser and IBIS Saigon South Hotels are managed by the only international hotel management in District 7 for four-star and three-star hotels respectively. As a result, the REIT Manager believes that both hotels will not be affected by significantly higher competition in Ho Chi Minh City.

3. Indonesia’s overview

3.1) Indonesia’s economic overview

Indonesia faces declining economic growth, from 6 percent in 2011 to 4.8 percent in 2015, because of global economic slowdown. However, the projected economic growth rate of Indonesia from 2017 to 2022 by the IMF is an average of 5.33 percent annually

3.2) Tourism market in Jakarta

3.2.1 Supply

Jakarta is Indonesia’s capital and a center of businesspersons and tourists. As a result, the demand for hotels in Jakarta is rising very quickly. From 2010 to 2016, Indonesia’s economic growth rate led to more construction and development of hotels in Jakarta. From 2010-2016, the number of rooms in Jakarta increased approximately 8.72 per year.

2015 2016 2017 2018 2019 2020 2021 2022

Indonesia’s forecast GDP 4.87 5.02 5.10 5.30 5.40 5.50 5.50 5.50growth rate (percentage)

Source: International Monetary Fund (IMF)




In 2016, there are 189 three to five-star hotels in Jakarta which provide a combined total of 39,208 rooms, being 11,223 rooms at three-star hotels, 15,217 rooms at four-star hotels, and 12,588 rooms at five-star hotels. Colliers International expects that in 2019, the number of hotel rooms will increase approximately 5.1 percent per year. That growth rate is lower than the rate during 2010 – 2016 due to the relatively high competition. It is expected that in 2019 there will be 219 hotels offering approximately 45,314 rooms.

Growth in number of rooms of three to five-star hotels in Jakarta

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3.2.2 Demand

Jakarta is one of the major cities accommodating Indonesia’s overseas tourists. From 2012 to 2016,the number of foreign visitors to Jakarta accounted for 25 – 26 percent of the total number of foreign visitors to Indonesia. From 2001 to 2016, the number of tourists in Jakarta increased 6.4 percent per year. In 2016 a total of 2.6 million foreign tourists traveled to Jakarta.

Based on nationalities of tourists, Asian travelers are the main tourists arriving in Jakarta in 2015-2016, especially Chinese and Malaysian tourists, followed by tourists from Saudi Arabia and Europe, such as France and England. It is expected that the number of foreign arrivals in Jakarta will be approximately 3.33 million persons in 2019. However, local tourists still took the lead in the number of tourists, with up to 23.66 tourists in 2016 and increased 6.6 percent from the number of domestic tourists in 2015.

From 2006 to 2016, the number of domestic tourists increased by an average of 5.6 percent per year. If the growth rate of the number of domestic tourists during that period is analyzed, it could be seen that the number of domestic tourists in Jakarta will increase to 27.87 million tourists in 2019.


Number of inbound tourists in Jakarta

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Source: Jakarta Bureau of Statistics and Jakarta Tourism and Culture Office (*Domestic tourists: Preliminary figures)


PART 1

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3.2.3 Performance

• Occupancy rate

From 2000 to 2012 the occupancy rate of hotels in Jakarta has been increasing, from 37.9 percent in 2000 to 73.5 percent in 2012. However, after an increase in the number of hotel rooms, competition in the market is higher, leading to a decrease in the occupancy rate in 2013 to 70 percent. However, although the occupancy rate of hotels in Jakarta is likely to increase, the hotel business was affected by the measure issued by the government to control the number of meetings held in hotels by government agencies. As a result, the occupancy rate in 2016 reduced to 61.8 percent, even though later the government cancelled the measure. Moreover, higher competition in the market causes the occupancy rate to continue decreasing to 55.7 percent in 2016.

As five-star hotels’ reliance on the foreign tourist market is relatively high, the occupancy rate of five-star hotels is low compared with that of hotels of other rankings. The occupancy rate of five-star hotels decreased from 73 percent in 2012 to 57.5 percent in 2016. The Pullman Jakarta Central Park Hotel, managed by Accor, is the only five-star hotel in West Jakarta that can maintain a high occupancy rate since it opened for business in 2011. This is because the Pullman Jakarta Central Park Hotel’s main customers are domestic tourists and it is the only five-star hotel in West Jakarta. In 2016 the Pullman Jakarta Central Park Hotel’s average occupancy rate was 75.7 percent.

In addition, due to the slowdown in the demand in Indonesia’s hotel market, the political condition, and relatively high market competition, the occupancy rate of four-star and three-star hotels in 2016 declined to 54.3 percent and 56.1 percent respectively.

The number of rooms is likely to grow 5.1 percent per year while the room demand is likely to grow only 4.5 percent per year. Therefore, it is expected that the occupancy rate will reduce to 52.5 percent in 2017. The occupancy rate will later increase to 55.7 percent in 2019.


Average occupancy rate of three to five-star hotels in Jakarta from 2000 onwards

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averag3 star 4 star 5 star




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Forecast of average occupancy rate in Jakarta up to 2019

• Average room rate

Intense competition and the weakened Indonesian rupiah caused the average room rate to decrease from the average room rate of USD 56.23 in 2014 to USD 51.95 in 2016. The average room rate for five-star hotels was USD 104.68 in 2016, an increase of 3 percent from the rate in 2015.

In 2016 the average room rate for four-star hotels was approximately USD 47.94, rising 2 percent from the rate in 2015, and the average room rate for three-star hotels was approximately USD 32.46 which slightly increased only 0.5 percent from the rate in 2015. It is expected that the average room rate would increase only 1 – 3 percent per year (in USD currency).


Average room rate of three to five-stars hotels in Jakarta from 2000 onwards

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PART 1

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• Revenue Per Available Room (RevPAR)

RevPAR of three to five stars hotels in Jakarta

RevPAR of three to five-star hotels has been declining since 2013 and was at its lowest in 2016. RevPAR for three, four and five-star hotels in 2016 was USD 18.36, 26.03, and 60.19 respectively. It is expected that RevPAR in 2017 would remain unchanged before slightly increasing in 2018 and 2019. In 2019 it is expected that RevPAR of three, four and five-star hotels will be USD 21.27, 28.80 and 72.81 respectively.

• Outlook

The higher number of hotels in Jakarta’s tourism market results in higher competition in the market. The operating results of the hotel business has decreased since 2013 up to 2016. It is expected that in 2017 the tourism market will remain unchanged and will recover in 2018 and 2019. Locations, hotel managers, and marketing strategies are significant factors of hotel businesses in defeating other business operators in the market.


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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. In the event of failing 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 Properties by the REIT Manager, the Master Lessors and the Hotel Operators may result in negative impact on the value of the Properties, operating results, and the ability to distribute returns of the REIT. The operating results of the REIT will depend on return from the Master Lessors who receive the rents from the Master Lessees. The Master Lessees are not directly the Hotel Operators but have 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 successfully, 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 distribute 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 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 that the Master Lessors lease to the Master Lessees (with the ultimate shareholder being the same as the ultimate shareholder of the REIT Manager). The cash distributable to the REIT consists mainly of dividends distributed from the Strategic Hospitality Holding Limited (BVI) and the Master Lessors and cash distribution by any means that is permitted by the agreements and not contrary to the SEC Notification. The income of the Master Lessors to be distributed to the REIT are ultimately derived from the fixed rent, variable rent obtained

Risk Factors

1. Risks associated with the REIT or the operation of the REIT


PART 1

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 to delay the payment or default on the rental payment, and cause the Master Lessees to fail to repay debt and/or the Master Lessors to fail to obtain the rent as estimated. This may affect the incomes of the Master Lessors and the benefits distributable to the REIT and to the Unitholders.

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

Furthermore, even if the Lease Agreement that the Master Lessees shall enter into with the Master Lessors stipulate that, upon the expiry of the Lease Agreement (every 3 years), the parties agrees to continue leasing the Properties until the Master Lessors shall no longer own the Leased Properties, under the original terms and conditions of the Leased Agreement, except the method of fixed rental and variable rental calculations which shall be as stipulated in the Lease Agreements. The REIT may be exposed to risk that the Master Lessees not complying with the terms in the Lease Agreement with respect to the renewal of the Lease Agreement. However, if the Master Lessees and Hotel Operators continue to operate the business as usual and there is no economic fluctuation or greater competition, including the necessity of closing down the project, either in whole or in part, to improve the assets which is to the extent that it materially affects the operation as usual of the Master Lessees, or if the Master Lessees have no intention of failing to pay fixed and/or variable rentals, the Master Lessors shall receive the fixed rental as set out in the lease agreement. In addition, the REIT Manager has a duty to monitor the compliance of the Master Lessee to the conditions under the lease agreements, which include ensuring that the rental be paid punctually for the best interest of the REIT. This shall lower the risks that the Master Lessees will not renew the lease agreement or comply with the conditions under 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 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 : (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 during the rental period under the first lease agreement, which is 3 years, the lease agreement already sets out the fixed amount of base rent for each year for each Properties. However, for the renewal of the lease period, the base rent of the renewed lease agreement shall be equal to the average of the fixed rent during the rental period of the previous lease agreement (3 years). In this regard, with the calculation method of the base rent for the renewed period, if the performance during any rental period according to the previous lease agreement is different from the estimates, this shall result in the fixed rental during the renewed period to differ from the estimates as well. As the additional base rent during the renewed period will vary with the net operating income (NOI), the base rent for the renewed period will also be different from the estimates. These are the consequences of the calculation of the average of the fixed rent during the lease period under the previous lease agreement. In the event that the average of the fixed rent during the lease period under the previous lease agreement is lower than the estimates, this will result in the the base rent for the lease period under the renewed lease agreement being lower than the estimated base rent for such lease period and will affect the operating results of the REIT. And the REIT will not able to distribute benefits or return as estimated and result in the Unitholders not being ble to obtain the return as estimated. On the other hand, in the event that the average fixed rent for the lease period as to the previous lease agreement is higher than the estimates, this will result in the base rent for the lease period of the renewed lease agreement being higher than the estimated base rent for such lease period. Therefore, the Master Lessees need to make its operating results higher than the estimates in order to pay a higher base rent. If the reason for the operating result during the lease period under the previous lease agreement is temporary or does not impact revenue growth of the Properties in the long term, it may affect the Master Lessee's ability to make rental payment in the future, which may include delaying rental payment or not renewing lease agreement. In this case, if the REIT is unable to find the new Master Lessees who can make equal rental payment to the previous Master Lessees, it may have negative impact on the performance of the REIT and distribution to the Unitholders.


PART 1Business operation of TrustBusiness operation of Trust

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.

REIT Manager Appointment Agreement that the REIT by Trustee entered into with the REIT Manager shall stipulate the terms and cause of changing the REIT Manager, such as (1) in case the REIT is discontinued and the projects are terminated as set out in the prospectus of the REIT and the liquidation of the REIT has taken place under the relevant criteria, (2) the Office of the SEC revokes the approval of the REIT Manager or suspend the performance of the REIT Manager for longer than 90 days, (3) the approval of the REIT Manager has expired and the REIT Manager does not submit renewal application for approval, (4) the REIT Manager is no longer the juristic entity or is liquidated or receives order whether the absolute order or not, or whether there is reorganization of the REIT Manager, (5) the Trustee terminates the REIT Manager Appointment Agreement in the event that the REIT Manager, either with intention or gross negligence, does not accurately and completely perform its duty as the REIT Manager and the Trustee views that this non-performance causes material damage to the REIT and/or the Unitholders and cannot be remedied within 90 days, or in the event that the characteristics of the REIT Manager are not compliance with the relevant law and regulations, or in the event that it is found that the approval to be the REIT Manager by the Office of the SEC expires and the REIT Manager is not granted approval to renew by the Office of the SEC, (6) the REIT Manager uses its right to resign as set out in the REIT Manager Appointment Agreement. All of which as set out above are the causes of the change of the REIT Manager, which the REIT Manager shall not be entitled to compensation from the REIT other than fee that falls due and the expenses that the REIT Manager has paid on behalf of the REIT. This shall be in accordance with the terms and conditions set out in the REIT Manager Appointment Agreement.

Nevertheless, the REIT Manager Appointment Agreement has set out that, in the event that there is a change in the REIT Manager for any reason, and is not due to the REIT Manager's false within 10 years after the date of the REIT Manager Appointment Agreement, Trustee (by the assets of the REIT) agrees to compensate for the change of the REIT Manager to the REIT Manager equivalent to the base fee and incentive fees of the REIT Manager for the period of 5 years (calculated based on the average base fee and incentive fee that the REIT Manager receives during the preceding 12 months or proportionately), which is due on the date that the change of the REIT Manager becomes effective. Therefore, in the event that there is a change of the REIT Manager due to any cause other than the REIT Manager's false within the aforesaid period, this shall cause the REIT Manager to incur additional cause to compensate for the change of the REIT Manager payable to the REIT Manager at the rate as set out above. 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. 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. 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 Unitholders. The insufficiency of the reserve may have the negative impact on the operations and the financial position of the Properties.

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.

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,


PART 1Business operation of TrustBusiness operation of Trust

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.

Since the REIT wishes to take out loans in the amount USD 47.5 million as a source of funding for the REIT to be invested in the initial portfolio. However, such loan shall have the term of approximately 13 years, with floating interest rate and obligation to repay loan after the grace period of 3 years, which may cause the REIT to be exposed to the potential risks from the interest rate adjustment during the loan term as well as loan repayment obligation, which shall impact the performance of the REIT and the ability of the REIT to make distribution to the Unitholders, which may be lower than the estimated distribution to the Unitholders during the first year. In addition, the loan agreements 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, which may also include the Properties of the REIT.

Furthermore, the terms of the loans are expected to be 13 years. In the event of refinancing, the new loan agreements may differ from the existing loan agreements. In the event of additional loans, there may be certain contractual clauses which differ from the original contractual clauses and restrict the operation of the REIT.



Furthermore, the terms of the loans are expected to be 13 years. In the event of refinancing, the new loan agreements may differ from the existing loan agreements. In the event of additional loans, there may be certain contractual clauses which differ from the original contractual clauses and restrict the operation of the REIT.

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.

However, after the loan repayment, the REIT Manager will consider other sources of funding which may include offerring for sale additional investment units and issuing of debentures or contracting loans to commercial banks and/or financial institutions and/or life insurance companies and/or non-life insurance companies, and/or other corporate entities authorized to grant loans to the REIT. The REIT Manager will select the source of funding that is the most beneficial to the trust units holders and the REIT by taking into account the collateral required and the REIT's ability to repay the principal.

However, 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 such loan agreement will include the first 3 years of grace period. During the grace period, the REIT will only have to pay the interest. The REIT Manager expects that after the grace period the growth of the operating results of the REIT will correspond to the principal repayment schedule which requires the repayment of principal at a low proportion in the first period of the principal repayment and then in a higher proportion. This makes the REIT Manager believe that the REIT will be able to pay the interest and to repay the due principals. Furthermore, the overall debt to equity ratio of the REIT is in compliance with the requirements provided by SEC, accompanied by the efficiency of the Properties in terms of the continuity in generating income. In addition, the REIT Manager have prepared a preliminary estimated operating results. From the estimates under the relevant assumption, it shows that the REIT is able to pay the interest and to repay the principal as specified in the loan agreement.

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.

Since the Master Lessees will engage the third parties to provide some services to the Properties such as water supply, electricity, liquid petroleum gas and waste management service, REIT manager cannot guarantee that such third parties will comply with their contractual obligations for completely providing any service. Even though there are provisions in the contracts in case of default of the contract by a party or occurrence of any event


PART 1Business operation of Trust

which is deemed as event of default or breach of default which gives right to the Master Lessees to terminate the contracts or seek compensation from the defaulting party, such event of default may cause an interruption to the provision of the services to the Properties, which may be an obstacle to business operations and have material negative impact on the business, financial position, operating resutls 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 service 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 Unitholders, depends on the rental payment by the Master Lessees. The Master Lessees’ ability to pay rent depends on the gross operating revenue and gross operating profit of each Properties. The Master Lessors will conclude 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 Operators. Meanwhile, the operating results of the REIT will depend on the operation of the Master Lessees and Hotel Operators. Therefore, the REIT Manager cannot 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 Lease Agreement.

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

Under the Lease Agreement, the Master Lessor and the Master Lessees agree to conclude a 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 are disqualified from being the land owner or having leasehold rights.

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 rental rate as the previous Master Lessees. This may have a direct effect on the REIT's income and ability to



pay returns to the Unitholders. If the Master Lessees have certain legal restrictions or do not meet qualification required under the law and which is not caused by the fault or negligence of the Master Lessees, and result in the Master Lessees not being able to renew this lease agreement, the Master Lessees shall not be contractually liable. This may be considered as event 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 Unitholders. If the Master Lessees are still able to lease the Properties in order to temporarily continue their management, the Master Lessees and the Master Lessors must jointly find the solution in order that other lessees can lease the Properties and substitute the Master Lessees of the management of the Properties. In this case, the Master Lessees agree to extend the lease period in order to manage the Properties until a new lessee can be found. The Master Lessor and the Master Lessee must jointly determine the conditions of the extended lease agreement.

The Properties are kept and renovated in good condition and from the past information the Properties had continuously served the customers. The Properties are located in the area that can attract the customers. And each Property is managed by Hotel Operator specialized in the hotel business operation and each hotel is well known in its area. Therefore, 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. The condition, number of customers and the location of the Properties will attract real estate investors without difficulty. In the event that the Properties will be offered for sale for the abovementioned reasons, the offer for sale which should be done within a limited period may result in the Properties being sold at a price lower than the investment value of the Properties initially invested by the REIT.

12. The REIT is exposed to risks arising from reliance of income from the Property in Indonesia.

Although the REIT's portfolio comprises hotels across the Territories, income of the REIT is expected to mainly depend on income generated from the Properties located in Indonesia, in particular, with the base rent of approximately 73.54 percent and in Vietnam with 26.46 percent of the first year base rent of the REIT.

Even though the initial income will concentrate with the asset in Indonesia, the REIT’s portfolio is highly diversified across customer segments, both in terms of customer geography and customer type (leisure, MICE, business and weddings).

In addition, it is the REIT's investment policy to increase the diversification of the Properties that are invested in and to continuously expand its investments to different jurisdictions and hotels of different grades. Accordingly, the concentration risk will be mitigated as the REIT's portfolio of investments expands.



13. 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.

The Vendor Companies, PT Agung Podomoro Land Tbk and B.B. Dai Minh Corporation or group companies or relevant persons (“Strategic Partner”), invested in 63,928,100 and 4,417,200 units of REIT respectively, in order to provide the necessary alignment with REIT unit holders. The Strategic Partner have agreed to the 2-year Lock-up Period in respect of their effective interest in the trust units held by them on the Listing Date. However, there is no assurance however that the Strategic Partner will not dispose of all or part of their effective interest in the trust units following the expiry of the Lock-up Period. In the event that the Vendor Companies decide to transfer or dispose of their effective interest in the Units, the REIT may no longer be able to leverage on the Vendor Companies’ experience in the ownership and operation of the Properties, and this may have an adverse impact on the operation results of the Properties and financial condition which may, as a consequence, affect the REIT’s operation results and ability to pay benefit to the trust units holders.

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 Partner will be mitigated.

14. 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 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.

15. 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.

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 the 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.



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 public initial offering 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.

1. The Properties may be exposed to risks arising from rising competition in the hotel and tourism industry.

The Properties to be invested in by 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.

As a number of hotel guests of the Properties are businessmen and foreign tourists, 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.

2 Risks associated with the Properties



However, the Main Lessors 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. Investments in the Properties located in various countries will also minimize the risk.

2. 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. 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 Master 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 while still having the duty to fulfill their obligations or having other financial burdens related to 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. Financial consultants and the REIT Manager have assessed the sufficiency of coverage provided by the existing insurance policies taken out for the Properties. The REIT Manager considered that insurance policies taken out for certain Properties contain insufficient coverage conditions. Therefore, the REIT Manager will further review reasonable coverage conditions and the sums insured.



3. The Properties may be defective, certain actions may violate the laws or rules and regulations, or there may be other defects.

Unless otherwise disclosed in this Prospectus, 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. 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.

However, the REIT Manager cannot give any assurance that the due diligence will uncover all defects relating to the Properties, including 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 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 in a significant amount or may involve obligations to third parties that incur foreseeable expenses that may have a material adverse effect on the REIT's earnings and cash flows. Should any of the Properties or component parts thereof not be 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. The REIT Manager may not 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.

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.



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.

15. 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.

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 the 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.

4. There may be existing liabilities in the offshore holding companies and the Master Lessors before the REIT's investment.

In acquiring the assets, the REIT directly and indirectly invested in the Master Lessors. As the 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.

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, the REIT Manager splits the seller's limitation of liability into three main categories: (i) representations and warranties given by 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 Property, the REIT Manager discussed with the seller that a time limit on representation, warranties, and indemnities in relation to ownership will depend on 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 Company. The REIT Manager will exert their best efforts for the best interests of the REIT and the Unitholders.



5. 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, the REIT Manager splits the seller's limitation of liability into three main categories: (i) representations and warranties given by 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 Property, the REIT Manager discussed with the seller that a time limit on representation, warranties, and indemnities in relation to ownership will depend on 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 Company. The REIT Manager will exert their best efforts for the best interests of the REIT and the Unitholders

6. Pullman Jakarta Central Park Hotel's entrance and exit, and parking space, will not be part of the Properties to be invested in by the REIT.

Pullman Jakarta Central Park's entrance and exit, 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 entrance and exit, and xparking 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.

7. 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.

8. 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.



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.

9. 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.

10. Risks related to 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 (about nine years from now). 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 will be the holder of the certificate after investing in Pullman Jakarta Central Park) 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 HGB term, the person receiving the certificate must apply for a renewal or extension at Badan Pertanahan Nasional ("BPN") two years before the expiry date under the certificate, at the latest. The authority will consider whether the use of land complies with the conditions prescribed by law, in order to consider and approve the renewal or extension. The conditions include, for example, whether the land has been used in accordance with the objectives, whether the conditions prescribed (if any) have been complied with and to what extent, and whether the land use is in accordance with the city plan.

For the current HGB status of Pullman Jakarta Central Park, PT Agung Podomoro Land Tbk. as the holder of HMSRS on the HGB Title, filed an application with the BPN for an HGB extension on 17 May 2017, and received approval. However, the BPN will send the HGB Title holder a written notice on the effective date of the extension period. To mitigate the risk relating to the HMSRS term extension under the conditions, the REIT Manager will follow up with the BPN about the effective date of the extension period of the HGB for Pullman Jakarta Central Park.

11. The definite fees for the application for extension or renewal of the HGB certificate are not fixed as they are subject to the land value at the time of the application.

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 (a term of 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 (about nine years from now). 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 will be the holder of the certificate after investing in Pullman Jakarta Central Park) 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 termsare not clearly stipulated under Indonesian law, and there have been no examples of renewal and extension. For the HGB term, the person receiving the certificate must apply for a renewal or extension at Badan Pertanahan Nasional ("BPN") two years before the expiry date under the certificate, at the latest.

The REIT manager has an opinion that there is a low possibility that the HGB can not be extended since the hotel business complies with the condition of HMSRS.



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

Both Properties to be invested in by the REIT for the first time 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 rents out 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 sub-lessor, or PMH, 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.

The REIT Manager is of the view that there is a low possibility that the master 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 prospectus, there is a relatively low chance that the landlord will terminate the land lease agreements with its co-investor without reasonable cause.

After the REIT invests in the Properties in Vietnam, the REIT Manager will put in place a measure preventing risks due to termination of the master lease agreements. The REIT Manager will closely monitor the possibility that the master lease agreements may be cancelled or terminated before the terms specified therein. If the REIT Manager finds that the level of risk of the master lease agreements being cancelled elevates, or there is any event that may cause the master lease agreements to be cancelled or prematurely terminated, such as a conflict between related parties and PMH, or there are political changes or other situations, the REIT Manager will put in place additional preventive measures such as taking out leasehold insurance that covers potential damage to the REIT due to termination of the land sublease agreements between PMH and the Lessors, which are the REIT's subsidiaries. Furthermore, the REIT Manager may consider negotiating with the landlord promptly to seek measures to reduce or mitigate damage to the REIT due to the cancellation or premature termination of the master lease agreements – for example, by directly becoming a party to the land lease agreement with the landlord.



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 agreements; (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.

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 mainly invested 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 Company 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 Company, 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. 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 estimates, 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.

On the date of filing of this registration statement, the REIT Manager examined the publicly disclosed information in relevant countries, and did not find that the Properties are being, or may be, expropriated by the government agency.

5. The REITinvested 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.

The REIT invested in the leasehold right of immovable property. The value of the leasehold right may decrease in alignment with the remaining lease term (except for Pullman Jakarta Central Park, which is under the strata title), 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 value of the REIT's property, value of the Units, or ultimately the REIT's distribution payments

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, 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 Lessees' rent payment to


PART 1

7. Risks from the REIT's investment in the assets located overseas.

As the investment of the REIT comprises investment in assets located in Vietnam and Indonesia which are the investment in assets offshore, this will result in the REIT incurring risk related to offshore investment namely (1) REIT's management of flows of money across countries, (2) economic risk, political risk and tourism risk in the country whereby the asset of the REIT is located in, which may be different from country to country and (3) legal risk specific to each country.

As the income that the REIT receives will be in foreign currency, and the income and expense of the Master Lessor and the Offshore Holding Companies shall be in the currency of the relevant countries, while the money from funding and for distribution to the Unitholders shall be in Thai baht, which exposes the REIT to the currency fluctuation. In addition, as the REIT's investment comprises investment in the Properties located in a number of countries, with the distribution being made based on the operation of the Properties to the REIT depending on the remittance patterns, whereby each remittance pattern has its own benefit, tax and fee. In addition, the REIT shall comply with the monitoring standard in respect of the capital flow, remittance guideline and exchange rate monitoring of each country that the REIT invests in, which expose the REIT to the risk with respect to managing flow of money across countries. For the economic risk, political risk and tourism risk in the country whereby the asset of the REIT is located in, which may be different from country to country, as each country that the asset of the REIT will invest in has different risks from fluctuation of the economic system and tourism based on specific characteristics of each country which may lower demand, supply and tourism. In addition, the possibility of war, riot, political unrest, demonstration and other political uncertainty of each country are different and may cause similar impact, and any one or more incidents of which may lower the occupancy of the Properties in any country which shall affect the income of the Master Lessee which shall materially impact the ability to pay rental and may have negative impact on performance, financial position and ability to pay distribution or return of the REIT going forward.

For the legal risk specific to each country, as the investment in Indonesia will be in the form of Strata Title Certificate, or HMSRS, whereby the rights under HMSRS of this project

the Lessors. This may adversely affect the REIT's ability to pay returns to the Unitholders.

The income tax calculation for Vietnam is based on income after expenses, and takes into account income and pricing or related-party compensation. The consideration on these matters depends on the practice and discretion of the agency overseeing tax collection and assessment in each country. 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' rent 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.




is located on the land with HGB Title (whereby HGB rights under Indonesia law is definite) and in extending or renewal HGB license, the applicant who requests to extend or renew the approval shall pay the fee as set out by the Indonesia government. In addition, the transfer of Strata Title of Pullman Jakarta Central Park in Indonesia, the parties shall pay relevant fee s and expenses such as fees and expenses with respect to transfer of Strata Title to the Indonesian authority responsible for the registration which is the condition precedent for the authority to register the transfer of Strata Title to the other party. Therefore, due to specification and terms of Indonesia as stated above, the REIT is exposed to risk relating to the assets to be invested in due to the nature of the law in respect of the Strata Title ownership which is definite and risk of complying to the law of each country.

For the investment in the Properties in Vietnam which is located on the subleased land, this can cause the REIT to be exposed to the risk that the Master Lease Agreement of the land in Vietnam where the assets are located between the local authority of HCMC and Phu My Hung Development Limited Liability Company (PMH) will be cancelled or terminated, which shall cause the subleased land between Phu My Hung Development Limited Liability Company (PMH) and the Master Lessors which are the subsidiaries of the REIT to also be terminated, which shall affect the REIT's operation and materially impact the revenue of the REIT.

4 Risks associated with investment in the Units of the REIT

1. The trading price of the Units on a secondary market may be lower than the price at which they are offered for sale in this offering.

The offering price of the Units was determined by REIT Manager and the owner of the Properties, based on the volume of demand from investors and seller of the Units. The offering price may not reflect the market price of the Units to be traded in a secondary market after this 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 estimates 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;


PART 1

• 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 for additional investment, 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.

The Units are not financial products with capital protection. 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, 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 handlenatural 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, 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. REIT Manager 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.

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

After this offering, the REIT may issue additional units to increase its capital. The offering price of newly issued units may be lower than the offering price of this offering, which may result in a decrease in the value of the Units.

4. Future material sale of Units by Business Alliance 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 Partner. These persons hold no more than 19.4 percent of the total Units sold. Even though they agree not to dispose of the Units obtained in the initial offering for a holding period of two years from the first date the Units are traded on the exchange, there is no guarantee that upon expiration of that period, those persons would not sell the Units in significant amounts, which may adversely affect the market price of the Units.

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, REIT Manager 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.

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 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.

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 Company, which are companies located in different countries. The operation of the Properties and the investment in the Investment Company 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, 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.

Legal dispute-NONE-

Other major information-NONE-

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 agreement between the REIT and Siam Commercial Bank PCL, as the lender, for a long-term loan of USD 47.50 million, for investment in the Main Properties, prohibits the borrower from paying dividends to the Unitholders if there is a breach of the loan agreement. If there is a breach of agreement by the REIT, as the borrower, under the loan agreement between the REIT and Siam Commercial Bank PCL, such as failure to pay interest or to return capital within the period and under the conditions prescribed, failure to maintain financial ratios as prescribed thereunder, or breach of representations and guarantees, the REIT may not be able to pay dividends to the Unitholders until the agreement is complied with, or as to be agreed upon by the parties.

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.



PART 1

Management and Governance


2



1.1 Trust and Unit trust Information

REIT has been established on 20th December 2017 with the registered capital of 3,528,367,000 THB and fully paid up capital of 352,836,700 units.

REIT’s Information as of 25 December 2017

Registered Capital 3,528,367,000 THB

Total Units 352,836,700 Units

Paid up Capital 3,528,367,000 THB

Par Value 10.00 THB

Type of Trust Unit Unredeemable

Offering Price 10.00 THB

Net Asset Value (NAV) as of 29 November 2017 9.9639 THB

Market closing price as of 29 December 2017 9.90 THB

2. Unitholders Information

2.1 Top 10 Unitholders Information

Top 10 unitholders Information as of 26 December 2017

No. Name Number of Units (%)

1 Macquarie Capital Securities (Singapore) Pte.Ltd 145,602,000 41.27

2 PT Agung Podomoro Land Tbk. 63,928,100 18.12

3 FWD Life Insurance Public Company Limited 30,000,000 8.50

4 B-SENIOR Fund 13,624,000 3.86

5 นายชานนท เรืองกฤตยา 10,000,000 2.83

6 นางดาริกา ปุณณกันต 8,000,000 2.27

PART 2Unit Trust Information

1. Units Trust Information

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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



No. Name Number of Units (%)

7 B-INCOME Fund 7,040,000 2.00

8 นายธนรัชต พสวงศ 5,000,000 1.42

9 นายโชคชัย รัตนภราดร 4,600,000 1.30

10 Leebro Holding Pte.Ltd 4,417,200 1.25

Total 10 Ten unitholder 292,211,300 82.82

Other unitholders 60,625,400 17.18

Total 352,836,700 100.00

2.2 Major unitholders (who own the units trust more than 10% of the total units including related person)

-NONE-

2.3 Major shareholders who has significant influence on the policy, management and operation of the REIT manager.

-NONE–

3 Policies of Return Distribution and Restrictions

3.1 Terms, policy, and procedures for distribution of return to Unitholders

(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 are 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:

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PART 2Management and Governance

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 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.



3.2 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.

3.3 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

The terms of the non-entitlement to dividend for each of the Vendor Companies are as follows:

3.3.1 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. PT Agung Podomoro Land Tbk. subscribed for REIT at the amount 63,928,100 units

3.3.2 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.

Dividend payment historical -NONE-

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1. Information of 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

Summary of REIT manager’s company

Company name Strategic Property Investors Company Limited

Registered Number 0105559061009

Registered date 12 April 2559

Head office No. 1 Empire Tower Building, 24th Floor,

Room No. 2401, South Sathorn Road, Yannawa, Sathorn, Bangkok

Contact Chanel Tel : 02 286 2460 – 61

Website : www.sp-investors.com

Email : [email protected]

Registered Capital Baht 10,000,000

Paid-Up Capital Baht 10,000,000

Type of Business REIT Manager of Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust

Directors 1. Mr. James Teik Beng Lim (Executive Director) 2. Mr. Chanond Ruangkritya (Director) 3. Mr. Patan Somburanasin (Managing Director) 4. Mr. Chanitr Charnchainarong (Independent Director) 5. Mr. Tanarat Pasawongse (Independent Director)

Authorized Directors Mr. James Teik Beng Lim or Mr. Patan Somburanasin or Mr. Chanond Ruangkritya (Co-signing 2 out of 3 with company stamp)

Fiscal year As of 31 December, of each year

REIT Manager



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 0.005 percent shares and Mr. James Teik Beng Lim holds 0.005 percent shares of the REIT Manager.

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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. 2. Shareholders of the REIT Manager

2.1 Shareholders of the REIT Manager

The shareholders of the REIT Manager as of 31 December 2018 as follow:

Juristic Person Registered

CountryShareholder Name

No. ofshares held

percent (%)of the totaloutstanding

shares

1 Strategic Property Investors Pte.Ltd. Singapore 99,998 99.99

2 Calibration Partners Limited Cayman 1 0.005

3 James Teik Beng Lim - 1 0.005



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 49 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 17 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).

- Mr. James Teik Beng Lim, an Australian nationality, has over 20 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

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The diagram hereunder displayed the structure of the other shareholders of the REIT Manager.

2.2 Ultimate shareholders of the REIT Manager



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 60 billion value transactions around the world in advising and providing source of funds including executing transactions related to REIT in Australia, Europe, and Singapore.

3. Structure and Governance

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 ofthe 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.



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At present, there are 5 Board of Directors as follows: • 2 Directors • 1 Managing Director • 2 Independent Directors

Board of Director

The organizational structure of the REIT Manager comprises of five departments, namely business development department, operation department, accounting and finance department, property management department, as well as internal audit, as illustrated in the diagram above.

Board of Director

Managing of Director

BusinessDevelopmentDepartment

PropertyManagementDepartment

Reporting

OperationDepartment

Accounting andFinance

Department

Capital MarketBusiness Unit

Compliance and RiskMangementBusiness Unit

Investor Relation andOperational Support

Business Unit

Internal Audit(Outsource)



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• 2015 - present Independent director and President Comanche International PCL

• 2015 - present Independent director and director of audit committee GMM Grammy PCL • 2016 - present Senior Executive Vice President Central Group

• 1 May 2015 - present Independent director and President of audit committee United Overseas Bank (Thai) PCL

• 2015 - present Advisor VNET Capital Co., Ltd.

• 2011 - 2015 Vice President The Stock Exchange of Thailand (SET)

• 2007 - 2014 President of the Market Alternative Investment (MAI)

Name Position Education Experience for the past 5 years

Mr. Chanitr Charnchainarong

• M.S. in Electrical Engineering, Purdue University, U.S.A.• B.Sc. in Electrical Engineering, Purdue University, U.S.A.

Chairman, Independent Director

• Bachelor of Commerce (Accounting and Finance), Monash University, Australia• Bachelor of Laws (with Honors) Monash University, Australia

Mr. James Teik Beng Lim Executive Director • 2016 - present Managing Director and Head of Business Development of Strategic Property Investors Company Limited

• 2014 - present Partner and Co-founder Calibration Partners Limited, Hong Kong

• 2010 - 2014 Head of Real Estate and Hospitality Asia Pacific of Barclays Capital, Hong Kong

• 2008 - 2010 Managing Director / Head of Real Estate and Hospitality Asia Pacific of BNP Paribas, Hong Kong- 2005 - 2008 Head of Real Estate and Hospitality Asia Pacific (ex Japan) / Director of European Financing Group Lehman Brothers, Hong Kong, London

3.2 The Board of Directors



Name Position Education Experience for the past 5 years

• 2016 - Present Managing Director and Acting Head of Property Management at Strategic Property Investors Company Limited

• 2009 - July 2016Managing directorTicon Logistics Park Co., Ltd.

• Founder of Ananda Development PCL• Chief Executive Officer and Chairman of Ananda Development PCL

• Director of joint ventures companies between Ananda Development PCL and Mitsui Fudosan (Japan)

• Managing Director of the affiliates within Ananda Development PCL

• 2014 - present Chief Executive Officer of Hua Seng Heng Group

• 2009 - present Managing Director of Hua Seng Heng Commoditas Company Limited

• 2008 - present Managing Director of Hua Seng Heng Gold Futures Co., Ltd.

• 2004 - 2008 Deputy Managing Director of Hua Seng Heng Goldsmith Company Limited

• 2003 - 2004 Managing Director, Appworks Co., Ltd.

Mr. Patan Somburanasin

Mr. Chanond Ruangkritya

Mr. Tanarat Pasawongse

• Bachelor in Engineering, King Mongkut's Institute of Technology Ladkrabang

• M.S. in Business Administration, Southern Illinois University at Carbondale, U.S.A.

• Bachelor in Economics, University of California at Berkeley, U.S.A.

• M.S. in Accounting and International Finance, London School of Economics, U.K.• Director Accreditation Program (DAP), Class 23/2004, Thai Institute of Directors

• Bachelor in Engineering, University of Washington, USA

• M.A. in Business Administration, Sasin, Chulalongkorn University

Director

Director

Independent Director



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 60 billion value transactions around the world in advising and providing source of funds including executing transactions related to REIT in Australia, Europe, and Singapore.

3. Structure and Governance

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 ofthe 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.

3.3 Scope of power 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.

3.4 Independent Director

The REIT Manager shall have the Independent Directors as in accordance with the Notification SorChor. 29/2555 as follows:

1. The Independent Directors shall be at least one-third (1/3) of the REIT Board of Directors. 2. Each of the REIT Independent Director shall have the following qualifications:

(a) 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;

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(b) 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;

(c) 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;

(d) 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 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;

(e) 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;



(f) 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;

(g) not being a director appointed as representative of directors of the applicant, major shareholder or shareholder who is related to major shareholder;

(h) 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;

(i) 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.

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:

(1) The business relationship or professional service which make such person’s qualifications not in compliance with the prescribed rules; (2) The reason and necessity for maintaining or appointing such person as independent director; (3) The opinion of the applicant’s board of directors for proposing the appointment of such person as independent director.

For the purpose of (e) and (f) 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


PART 2

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Department Main persons Qualifications and experience

Business Development Mr. James Teik Beng Lim • 2016 - present Head of Business Development at the Strategic Property Investors Company Limited • 2014 - present Partner and Co-founder of Calibration Partners (Hong Kong) Limited, • 2010 - 2014 Managing Director / Head of Real Estate and Hospitality Asia Pacific at Barclays Capital, Hong Kong • 2008 - 2010 Managing Director / Head of Real Estate and Hospitality Asia Pacific at BNP Paribas, Hong Kong • 2005 - 2008 Head of Real Estate and Hospitality Asia Pacific (excluded Japan) / Director of European Financing Group at Lehman Brothers, Hong Kong, London

Operation Miss Warittha Lerttiwakorn • 2016 - present Head of Operation at Strategic Property Investors Company Limited • 2014 - 2015 Head of Business Development at Ticon Management Co., Ltd. • 2010 - 2013 Manager of Investment Department at Ticon Industrial PCL.

Accounting and Finance Mr, Pichai China-Choti • 2016 - present Head of Accounting and Finance at the Strategic Property Investors Company Limited • 2010 - 2016 Head of Accounting and Finance at the Royal Orchid Sheraton Hotel & Towers • 2008 - 2010 Head of Accounting and Finance at Sheraton Nha Trang Hotel & Spa, Vietnam

Property Management Mr. Patan Somburanasin • 2016 - present Managing Director and Acting Head of Property Management at Strategic Property Investors Company Limited • 2009 - July 2016 Managing director of Ticon Logistics Park Co., Ltd.

Compliance and Risk Ms. Masaporn Aonpraiwan • 2008 - August 2016 Management Head of Compliance of the Thai Yazaki Corporation Co., Ltd. and its associates




3.6 Roles and Responsibilities of the REIT Manager

1. Duties to the REIT

1.1 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 following duties and responsibilities:

(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.


PART 2

(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, 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.




Corporate governance and REIT Management

Duties for the REIT Management

1. The REIT Manager shall arrange to put in place efficient operating systems, including an effective check-and-balance system to provide complete support for the work under its responsibility. In respect that at the least the REIT Manager shall ensure appropriate and efficient management of the REIT entrusted by the Trustee, as follows:

(1) Formulation of the REIT management policy, the structuring of the REIT investment capital, the real estate investment decision, and the formulation of policy and strategy relating to the procurement of benefits from immovable property. As a result, the entrusted REIT investment shall be prudent, careful and conform with the investment policy stipulated 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. (2) REIT Management and managing the associated risks in order to efficiently prevent and mitigate risks. (3) 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. (4) 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. (5) 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. (6) 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. (7) Operation of Back Office. (8) An internal audit and control system. (9) Communication with investors and investors' complaint management. (10) 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


PART 2

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 (1) The outsourcing shall not be, in any manner, have an impact on the operating efficiency of the REIT Manager. (2) There shall be a measure to ensure co ntinuity of business operation in case the service provider fails to proceed with the outsourced function. (3) 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 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: (1) Ensuring the advisor declare any conflict of interest in the issue under consideration; (2) 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: (1) 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 (2) 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: (a) 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 (b) 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, 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.




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.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 immov-able 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.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.The investment in immovable property shall be only in terms of acquisition of ownership or possessory right of the immovable property.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 acquisi-tion of such property are still beneficial to the Unitholders as a whole.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 proper-ty 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.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.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 approv-al 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.

9.

10.

11.

12.

13.

14.

15.

16.


PART 2

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(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, 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.

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.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 regula-tions. Whereas, the former REIT Manager shall corporate as necessary to ensure a successful handover of the work.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 modi-fication 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).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.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.Giving an opinion on the ability of the revenue guarantor to honor the obligations under the revenue guarantee agreement (if any).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.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.

1.

2.

3.

4.

17.

18.

19.

20.

21.

22.

23.

24.

Giving an opinion to relevant competent officers regarding the qualifications or characteris-tics of the immovable property invested in by the REIT upon request by relevant agencies.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 Proper-ty is always in good condition and ready for use to procure benefits as specified in the annual action plan, Trust Deed, and related Laws.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, immov-able property sub-lease agreements, and movable property lease agreements in connection with Master Lessees. In this regard, prior notice to the Trustee is required.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.

Duties in managing the REIT and the REIT Properties




5.

6.

7.

8.

9.

10.

11.

12.

13.

Managing and procuring benefits from other assets other than the REIT Property and under-taking any necessary actions to ensure that the management of the Property is in compli-ance with the annual action plan, the Trust Deed, and the relevant Laws.Supervising and monitoring the Master Lessees as well as undertaking any actions in coordina-tion 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 docu-ments necessary for procuring benefits from the Property.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. 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. 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 account-ing 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).Controlling, supervising, and monitoring the Master Lessees and taking any actions in coordi-nation 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.Controlling, supervising, and monitoring the Master Lessees in performing its duties as stipu-lated under the Lease Agreements and other related movable property lease agreements and other relevant Laws.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.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.


PART 2

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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.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.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.Disclosing the information of the transactions between the REIT and the REIT Manag-er or persons connected to the REIT Manager, for the previous and current account-ing periods by publishing in the annual report and the financial statements of the REIT.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 prevent-ing such conflict to the investors on the first day of initial public offering of the Units, and upon the occurrence of any conflict.Disclosing information pertaining to the interests or benefits accepted by the REIT Manager or persons connected to the REIT Manager from the company or individu-al whom is the REIT business partner, by providing the information in the Prospec

Preparation of Accounting and Reports, Operation Documents and Internal Audits

1.

2.

3.

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.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.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.

(1)

(2)

(3)

(4)

(5)

(6)




tus, 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 consider-ation of the REIT Manager's independence in executing various transactions for the REIT and the reasonableness of such transaction. 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-share-holding, 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 expens-es on behalf of another company, etc.Submitting information related to the REIT investment in immovable property to the Trustee upon request for examining the investment management.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 transac-tion, 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.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.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.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.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.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.

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).The REIT Manager shall control, supervise, implement controlling measures, and

(7)

(8)

(9)

(10)

(11)

(12)

(13)

1.

2.

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PART 2

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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.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 regula-tions. Whereas, the former REIT Manager shall corporate as necessary to ensure a successful handover of the work.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 modi-fication 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).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.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.Giving an opinion on the ability of the revenue guarantor to honor the obligations under the revenue guarantee agreement (if any).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.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.

1.

2.

3.

4.

5.

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 regula-tions of, and any provision or policy relating to the Property.

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 speci-fied under the Lease Agreement, and that the rental payment is in accordance with the terms and conditions as agreed upon.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 reimburse-ment of the expenses to be in line with the budget.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.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.Other measures that the REIT Manager views as appropriate for the REIT investment.

Supervision of Master Lessees

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 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 supervision of the Master Lessees in case the Master Lessees are persons connected to the REIT Manager




Other agreements

1. The REIT Manager agree not to undertake the role as the REIT Manager for any other Real Estate Investment Trust or leasehold right that has the same type of investment as the Core Property of the REIT( Hospitality assets) and/or the investment in any core asset that shall compete against the REIT business (providing leasehold right of properties for Hospitality business) 2. The REIT Manager shall undertake any conduct to ensure the compliance with the conditions and duties specified under the Lease Agreement and shall perform its duties to ensure that the rental income received by the Master Lessors shall be paid as the expense to the related service providers or distributed as dividend to the Master Lessors' shareholders or repaid back the shareholders' loan or other relevant matters (as the case may be), in order for the REIT to receive the return on investment in a continuous manner

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 connect-ed 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 transac-tion 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.


PART 2

Management of the REIT Manager

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 REITimmovable 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.

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3. 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.

4. 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.

5. 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.

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 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 director 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).

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PART 2

• 016 - present Head of Business Development at the Strategic Property Investors Company Limited• 2014 - present Partner and Co-founder of Calibration Partners (Hong Kong) Limited,• 2010 - 2014 Managing Director / Head of Real Estate and Hospitality Asia Pacific at Barclays Capital, Hong Kong • 2008 - 2010 Managing Director / Head of Real Estate and Hospitality Asia Pacific at BNP Paribas, Hong Kong • 2005 - 2008 Head of Real Estate and Hospitality Asia Pacific (excluded Japan) / Director of European Financing Group at Lehman Brothers, Hong Kong, London

• 2016 - present Head of Operation at Strategic Property Investors Company Limited• 2014 - 2015 Head of Business Development at Ticon Management Co., Ltd. • 2010 - 2013 Manager of Investment Department at Ticon Industrial PCL.

• 2016 - present Head of Accounting and Finance at the Strategic Property Investors Company Limited• 2010 - 2016 Head of Accounting and Finance at the Royal Orchid Sheraton Hotel & Towers• 2008 - 2010 Head of Accounting and Finance at Sheraton Nha Trang Hotel & Spa, Vietnam

• 2016 - present Managing Director and Acting Head of Property Management at Strategic Property Investors Company Limited • 2009 - July 2016 Managing director of Ticon Logistics Park Co., Ltd.

• 2008 - August 2016 Head of Compliance of the Thai Yazaki Corporation Co., Ltd. and its associates

The details of the personnel and responsible persons in each department as of the REIT Establishment date are expected to be as follows:

Department Number ofpersonnel

Main persons Qualifications and experience

Mr. James Teik Beng Lim

Miss Warittha Lerttiwakorn

Mr, Pichai China-Choti

Mr. Patan Somburanasin

Ms. Masaporn Aonpraiwan

1

4

3

2

1

Business Development

Operation

Accounting and Finance

Property Management

Compliance and Risk Management




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 below:

DealSourcing

PreliminaryAnalysis

Detailed Due Diligence

FinalNegotiadtionApprovals

ExecutionClosing

AssetManagemnt

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.


PART 2

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. The Closing will occur after the receipt of source of fund and all the completion of the prece-dent conditions (if any).

Asset Management / Monitoring The REIT Manager shall be responsible for the investment management and operation in accor-dance 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.

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; h owever, 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.




1. Causes for replacing the REIT Manager

(1.1) 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. (1.2) 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. (1.3) 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. (1.4) The REIT Manager is subject to receivership order, business reorganization order, or the REIT Manager loses its juristic person status. (1.5) 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. (1.6) The REIT Manager exercise its right to resign follow the procedure specified under the REIT Manager Appointment Agreement. (1.7) 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.

Procedures and Conditions for the REIT Manager Replacement


PART 2

(1.8) 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.

2. Resignation and Post-Resignation Duties of the REIT Manager

2.1 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 s hall 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. 2.2 Post-Resignation Duties After the REIT Manager submits its resignation notification, the REIT Manager shall have the following duties: (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.




3. 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.

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.

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.


PART 2

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:

(a) The acquisition or disposal of REIT’s major assets with the value equal to or over 30% of the total asset value; (b) The issuance of debenture or any debt instruments; (c) The increase or decrease of REIT’s paid-up capital, as indicated in the Trust Deed; (d) 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; (e) The change of benefits and the capital returned to the unitholders; (f) The change of Trustee; (g) The change of REIT Manager and the appointment of new REIT Manager (h) 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; (i) The cancellation of the Trust (j) 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; (k) 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.

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; 8. The cancellation of the REIT


PART 2

1. General information

Name : Krung Thai Asset Management Public Company LimitedType of Business : Portfolio, Fund Management activities and Asset Management

Head Office : 1 Empire Tower Building, 32nd Fl., South Sathorn Rd., Yannawa, Sathorn, Bangkok 10120, Thailand Registration No. : 0107545000373Telephone : +66-2686-6100Fax : +66-2670-0417Website : www.ktam.co.thRegistered Capital : Baht 200,000,000Paid-Up Capital : Baht 200,000,000

2. Relevant Permits

The Trustee was granted a trust business license by the SEC Office on 18 October 2013.

3. Roles 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 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.

Trustee




(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: • provide answers to the questions and opinions whether the performance is in accordance with the Trust Deed or other relevant laws; and • 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 assets 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. 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.


PART 2

(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. 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.

(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, 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.


PART 2

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 such act incur 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.




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

(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.

The Unitholders can find more details related to the roles and responsibilities of the Trustee in the Trust Deed.


PART 2

transactions for appointing the REIT Manager

• Juristic Person/Company that may have Conflict of Interest Strategic Property Investors Company Limited

• RelationshipStrategic Property Investors Company Limited was appointed as the REIT Manager.

• Nature of Related TransactionTrustee 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:

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.

Prevention of conflict of interest

Transactions between the REIT and the REIT Manager or Connected Persons of the REIT Manager and Trustee

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• 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 SHREIT manager has more responsibilities than the REIT manager as the SHREIT has offshore investment policy. Consequently, the SHREIT 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 SHREIT 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 revenues in the seperate financial statements of the REIT is comparable to the Incentive Fee calcula-tion 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.

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PART 2

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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: • 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 inthe 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.

Utilizing the REIT assets and earning revenues by leasing the REIT assets to Master Lessees, persons connected to the REIT Manager




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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.

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.


PART 2

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 ersons 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.

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:

• 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.

6) Transactions between the REIT and Trustee or Connected Persons of the Trustee - none-


PART 2

1. Auditor Name: EY Office Limited Address: 33rd Floor, Lake Rajada Office Complex 193/136-137 Rajadapisek Road, Klongtoey, Bangkok ,Thailand 10110 Tel: +66 2264 0777 Fax: +66 2264 0789 - 9

2. Registrar Name: Thailand Securities Depository Company Limited Address: 93 Rachadapisek Road, Dindaeng, Dindaeng, Bangkok , Thailand10400 Tel: +66 2009 9000 3. Appraiser Name: Colliers International Thailand Address: 17/F Ploenchit Center, 2 Sukhumvit Rd., Bangkok, Thailand 10110 Tel: +66 2656 7000 Fax: +66 2656 7111

Other Information



3

REIT’s Performance and Financial

Status

Independent Auditor's Report To the Unitholders of Strategic Hospitality Extendable Freehold and Leasehold Real Estate

Investment Trust

Opinion

I have audited the accompanying consolidated financial statements of Strategic Hospitality

Extendable Freehold and Leasehold Real Estate Investment Trust (the Trust) and its subsidiaries

(together as the Group), which comprise the consolidated balance sheet and the details of

investments as at 31 December 2017, and the related consolidated statements of income,

comprehensive income, changes in net assets and cash flows for the period as from 20 December

2017 (date of trust establishment) to 31 December 2017, and notes to the consolidated financial

statements, including a summary of significant accounting policies, and have also audited

the separate financial statements of Strategic Hospitality Extendable Freehold and Leasehold

Real Estate Investment Trust for the same period.

In my opinion, the financial statements referred to above present fairly, 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 2017, their financial performance

and cash flows for the period as from 20 December 2017 (date of trust establishment) to 31

December 2017 in accordance with Thai Financial Reporting Standards.

Basis for Opinion

I conducted my audit in accordance with Thai Standards on Auditing. My responsibilities under

those standards are further described in the Auditor’s Responsibilities for the Audit of the

Financial Statements section of my report. I am independent of the Group in accordance with the

Code of Ethics for Professional Accountants as issued by the Federation of Accounting

Professions as relevant to my audit of the financial statements, and I have fulfilled my other

ethical responsibilities in accordance with the Code. I believe that the audit evidence I have

obtained is sufficient and appropriate to provide a basis for my opinion.


REIT’s Performance and Financial Status

PART 3Management Discussion and Analysis from REIT manager

Financial position and operating results of Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust or SHREIT (the “Trust”) for the period as from 20 December 2017 (date of trust establishment) to 31 December 2017

Financial Position

• The Trust invests in three foreign hotels by holding shares through its overseas subsidiaries so the transaction is accounted for in the separate financial statements of the Trust as investment in subsidiaries using the cost method and recorded in the consolidated financial statement as investment in immovable and movable properties; • Cash and bank deposits are made available for payment of expenses incurred in establishing the Trust and recognized as liability in trade accounts payable and accrued expenses; • VAT refundable is tax imposed on purchase of assets and can be claimed for the refund, in form of tax credit to be used in the following months. • Deferred cost is the cost of establishment of the Trust, which will be amortized over a course of five years. • Long-term loan granted by a commercial bank is used for investment in subsidiaries and purchase of assets, which are overseas hotels.

Operating Results

• Deferred cost is the cost of establishment of the Trust, which will be amortized over a course of five years. • Long-term loan granted by a commercial bank is used for investment in subsidiaries and purchase of assets, which are overseas hotels. • Rental income is the income from the rental agreement of the three hotels during a period of 10 days from the date the Trust purchased the assets. • Gain on exchange is resulted from conversion of bank deposits held for repayment of debts. • Professional fees are legal and accounting service fees arising from acquisition of assets to be qualified for trading over a stock exchange. • Other expenses in the consolidated financial statements are amortization of prepaid expenses and exchange losses of subsidiaries. • Finance cost is the interest on long-term loan from a commercial bank. • Due to the fact that the Trust uses US dollar as its functional currency, there is a difference from conversion of financial statements shown in the statement of comprehensive income

An analysis of Financial Position and Operating Results



PART 3REIT’s Performance and Financial Status

Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust and its subsidiaries Report

and consolidated financial statements For the period as from 20 December 2017

(date of trust establishment) to 31 December 2017



Independent Auditor's Report To the Unitholders of Strategic Hospitality Extendable Freehold and Leasehold Real Estate

Investment Trust

Opinion

I have audited the accompanying consolidated financial statements of Strategic Hospitality

Extendable Freehold and Leasehold Real Estate Investment Trust (the Trust) and its subsidiaries

(together as the Group), which comprise the consolidated balance sheet and the details of

investments as at 31 December 2017, and the related consolidated statements of income,

comprehensive income, changes in net assets and cash flows for the period as from 20 December

2017 (date of trust establishment) to 31 December 2017, and notes to the consolidated financial

statements, including a summary of significant accounting policies, and have also audited

the separate financial statements of Strategic Hospitality Extendable Freehold and Leasehold

Real Estate Investment Trust for the same period.

In my opinion, the financial statements referred to above present fairly, 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 2017, their financial performance

and cash flows for the period as from 20 December 2017 (date of trust establishment) to 31

December 2017 in accordance with Thai Financial Reporting Standards.

Basis for Opinion

I conducted my audit in accordance with Thai Standards on Auditing. My responsibilities under

those standards are further described in the Auditor’s Responsibilities for the Audit of the

Financial Statements section of my report. I am independent of the Group in accordance with the

Code of Ethics for Professional Accountants as issued by the Federation of Accounting

Professions as relevant to my audit of the financial statements, and I have fulfilled my other

ethical responsibilities in accordance with the Code. I believe that the audit evidence I have

obtained is sufficient and appropriate to provide a basis for my opinion.


PART 3

2

Key Audit Matters

Key audit matters are those matters that, in my professional judgement, were of most significance

in my audit of the financial statements of the current period. These matters were addressed in the

context of my audit of the financial statements as a whole, and in forming my opinion thereon,

and I do not provide a separate opinion on these matters.

I have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the

Financial Statements section of my report, including in relation to these matters. Accordingly, my

audit included the performance of procedures designed to respond to my assessment of the risks

of material misstatement of the financial statements. The results of my audit procedures,

including the procedures performed to address the matters below, provide the basis for my audit

opinion on the accompanying financial statements as a whole.

Key audit matter and how audit procedures respond for the matter are described below.

The acquisition of investments in immovable and movable properties

Since the Trust was established on 20 December 2017, the material transactions occurring

during the current period were the acquisitions of the investments in subsidiaries made to acquire

three hospitality properties located in Indonesia and Vietnam, as described in Notes 1 and 6 to

the financial statements. The properties comprise the ownership (strata title) of land in Indonesia,

long-term land leases in Vietnam, and ownership of the buildings, furniture, fixtures and

equipment for use in hospitality business. As the value of the investment acquisitions is material,

I, therefore, focused on auditing the value of the acquisitions, and the existence and the

ownership of the assets.

I audited the value of the investment acquisitions, and the existence and the ownership of the

assets by examining share purchase agreements, assets purchase agreement, long-term land

leases, as well as payments and supporting documents. In addition, I examined the title deeds to

certain assets. Moreover, for certain assets that the Trust and subsidiaries have pledged as the

collateral for credit facilities obtained from a financial institution, I received confirmation from the

security agent, who is a financial institution, that the title deeds to such assets were held by them.




3

Other Information

Trust manager is responsible for the other information. The other information comprise the

information included in annual report of the Group, but does not include the financial statements

and my auditor’s report thereon. The annual report of the Group is expected to be made available

to me after the date of this auditor’s report.

My opinion on the financial statements does not cover the other information and I do not express

any form of assurance conclusion thereon.

In connection with my audit of the financial statements, my responsibility is to read the other

information and, in doing so, consider whether the other information is materially inconsistent with

the financial statements or my knowledge obtained in the audit or otherwise appears to be

materially misstated.

When I read the annual report of the Group, if I conclude that there is a material misstatement

therein, I am required to communicate the matter to trust manager for correction of the

misstatement.

Responsibilities of Trust Manager for the Financial Statements

Trust manager is responsible for the preparation and fair presentation of the financial statements

in accordance with Thai Financial Reporting Standards, and for such internal control as trust

manager determines is necessary to enable the preparation of financial statements that are free

from material misstatement, whether due to fraud or error.

In preparing the financial statements, trust manager is responsible for assessing the Group’s

ability to continue as a going concern, disclosing, as applicable, matters related to going concern

and using the going concern basis of accounting unless trust manager either intends to liquidate

the Group or to cease operations, or has no realistic alternative but to do so.

Trust manager is responsible for overseeing the Group’s financial reporting process.

4

Auditor’s Responsibilities for the Audit of the Financial Statements

My objectives are to obtain reasonable assurance about whether the financial statements as a

whole are free from material misstatement, whether due to fraud or error, and to issue an

auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but

is not a guarantee that an audit conducted in accordance with Thai Standards on Auditing will

always detect a material misstatement when it exists. Misstatements can arise from fraud or error

and are considered material if, individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the basis of these financial

statements.

As part of an audit in accordance with Thai Standards on Auditing, I exercise professional

judgement and maintain professional skepticism throughout the audit. I also:

Identify and assess the risks of material misstatement of the financial statements, whether

due to fraud or error, design and perform audit procedures responsive to those risks, and

obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for

one resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by trust manager.

Conclude on the appropriateness of trust manager’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty

exists related to events or conditions that may cast significant doubt on the Group’s ability

to continue as a going concern. If I conclude that a material uncertainty exists, I am

required to draw attention in my auditor’s report to the related disclosures in the financial

statements or, if such disclosures are inadequate, to modify my opinion. My conclusions

are based on the audit evidence obtained up to the date of my auditor’s report. However,

future events or conditions may cause the Group to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements,

including the disclosures, and whether the financial statements represent the underlying

transactions and events in a manner that achieves fair presentation.


PART 3

4

Auditor’s Responsibilities for the Audit of the Financial Statements

My objectives are to obtain reasonable assurance about whether the financial statements as a

whole are free from material misstatement, whether due to fraud or error, and to issue an

auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but

is not a guarantee that an audit conducted in accordance with Thai Standards on Auditing will

always detect a material misstatement when it exists. Misstatements can arise from fraud or error

and are considered material if, individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the basis of these financial

statements.

As part of an audit in accordance with Thai Standards on Auditing, I exercise professional

judgement and maintain professional skepticism throughout the audit. I also:

Identify and assess the risks of material misstatement of the financial statements, whether

due to fraud or error, design and perform audit procedures responsive to those risks, and

obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for

one resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by trust manager.

Conclude on the appropriateness of trust manager’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty

exists related to events or conditions that may cast significant doubt on the Group’s ability

to continue as a going concern. If I conclude that a material uncertainty exists, I am

required to draw attention in my auditor’s report to the related disclosures in the financial

statements or, if such disclosures are inadequate, to modify my opinion. My conclusions

are based on the audit evidence obtained up to the date of my auditor’s report. However,

future events or conditions may cause the Group to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements,

including the disclosures, and whether the financial statements represent the underlying

transactions and events in a manner that achieves fair presentation.




5

Obtain sufficient appropriate audit evidence regarding the financial information of the

entities or business activities within the Group to express an opinion on the consolidated

financial statements. I am responsible for the direction, supervision and performance of

the group audit. I remain solely responsible for my audit opinion.

I communicate with trust manager regarding, among other matters, the planned scope and timing

of the audit and significant audit findings, including any significant deficiencies in internal control

that I identify during my audit.

I also provide trust manager with a statement that I have complied with relevant ethical

requirements regarding independence, and to communicate with them all relationships and other

matters that may reasonably be thought to bear on my independence, and where applicable,

related safeguards.

From the matters communicated with trust manager, I determine those matters that were of most

significance in the audit of the financial statements of the current period and are therefore the key

audit matters. I describe these matters in my auditor’s report unless law or regulation precludes

public disclosure about the matter or when, in extremely rare circumstances, I determine that a

matter should not be communicated in my report because the adverse consequences of doing so

would reasonably be expected to outweigh the public interest benefits of such communication.

I am responsible for the audit resulting in this independent auditor’s report.

Waraporn Prapasirikul Certified Public Accountant (Thailand) No. 4579 EY Office Limited Bangkok: 28 February 2018

(Unit of presentation currency: Baht)

Consolidated Separate

Note financial statement financial statement

Assets

Investments in immovable and movable properties 6.2 4,512,058,099 -

at fair value (At cost: Baht 4,512.1 million)

Investment in subsidiary at cost 6.1 - 4,851,127,515

Cash and cash at banks 7 313,661,602 253,474,398

Receivables

Rental 8, 15 6,947,877 -

Others 5,990,912 -

Refundable input value added tax 307,510,629 -

Deferred expenses 9 130,422,538 130,422,538

Cash at bank - deposit for income guarantees 6.2, 15 81,601,750 81,601,750

by asset seller

Deferred tax assets 10 20,284,171 -

Other assets 3,585,221 2,576,539

Total assets 5,382,062,799 5,319,202,740

The accompanying notes are an integral part of the financial statements.

Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust and its subsidiaries

Balance sheet

As at 31 December 2017






Liabilities

Accounts payable and accrued expenses 275,677,246 222,499,627

Deposit for income guarantees from asset seller 6.2 81,601,750 81,601,750

Long-term loan 11 1,506,431,495 1,506,431,495

Other liabilities 2,243,857 1,343,686

Total liabilities 1,865,954,348 1,811,876,558

Net assets 3,516,108,451 3,507,326,182

Net assets:

Registered capital

352,836,700 units of Baht 10 each 3,528,367,000 3,528,367,000

Capital from unitholders

352,836,700 units of Baht 10 each 12 3,528,367,000 3,528,367,000

Deficits 13 (9,532,255) (12,489,488)

Net assets before other components of unitholder’s equity 3,518,834,745 3,515,877,512

Other components of unitholders’ equity

Exchange differences on translation of financial statements (2,726,294) (8,551,330)

Net assets 3,516,108,451 3,507,326,182

Net asset value per unit (Baht) 9.9653 9.9404

Number of units issued at the end of period (Units) 352,836,700 352,836,700




Balance sheet (continued)



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Investment income

Rental income 15 7,292,553 -

Interest income 151,761 47,212

Gain on exchange 761,263 1,041,013

Total income 8,205,577 1,088,225

Expenses

Trust manager fee 14, 15 439,806 439,806

Trustee fee 14, 15 507,251 507,251

Registrar fee 14 60,736 60,736

Professional fees 10,477,810 7,725,252

Amortisation of deferred expenses 9 863,249 863,249

Other expenses 1,683,382 277,126

Finance costs 11 3,705,598 3,704,293

Total expenses 17,737,832 13,577,713

Net investment loss (9,532,255) (12,489,488)

Decrease in net assets from operations (9,532,255) (12,489,488)


Statement of income

For the period as from 20 December 2017 (date of trust establishment) to 31 December 2017






financial statement financial statement


Other comprehensive income

Other comprehensive income to be reclassified

to profit or loss in subsequent periods

Exchange differences on translation of financial

statements in foreign currency 5,825,036 -

Net other comprehensive income to be reclassified

to profit or loss in subsequent periods 5,825,036 -

Other comprehensive income not to be reclassified

to profit or loss in subsequent periods:

Exchange differences on translation of financial statements

in functional currency to presentation currency (8,551,330) (8,551,330)

Net other comprehensive income not to be reclassified

to profit or loss in subsequent periods (8,551,330) (8,551,330)

Other comprehensive income for the period (2,726,294) (8,551,330)

Total decrease in net assets from oparations

and other components of unitholders' equity (12,258,549) (21,040,818)




Statement of comprehensive income






Decrease in net assets from operations

Net investment loss (9,532,255) (12,489,488)

Increase in capital from unitholders

Capital from unitholders 12 3,528,367,000 3,528,367,000

Decrease in net assets from other components

of unitholders' equity

Exchange differences on translation of financial statements (2,726,294) (8,551,330)

Increase in net assets during period 3,516,108,451 3,507,326,182

Net assets at the beginning of period - -

Net assets at the end of period 3,516,108,451 3,507,326,182

- -



Statement of changes in net assets







Cash flows from operating activities


Adjustments to reconcile increase in net assets from

operations to net cash provided by (used in) operating activities:

Purchases of investments in immovable and movable properties (4,512,058,099) -

Purchases of investment in subsidiary - (4,851,127,515)

Finance cost 3,705,598 3,704,293

Increase in receivables from rental (6,947,877) -

Increase in other receivables (5,990,912) -

Amortisation of deferred expenses 863,249 863,249

Increase in fefundable input value added tax (307,510,629) -

Increase in deferred tax assets (20,284,171) -

Increase in other assets (3,585,221) (2,576,539)

Increase in accounts payable and accrued expenses 273,407,053 220,229,433

Increase in other liabilities 2,243,857 1,343,686

Net cash flows used in operating activities (4,585,689,407) (4,640,052,881)

Cash flows from financing activities

Proceeds from issuance of trust units 3,528,367,000 3,528,367,000

Payment of issuance and offering of trust units

costs and front end fee for long-term loan (176,721,641) (176,721,641)

Cash received from long-term loan 1,550,433,250 1,550,433,250

Cash paid for Interest expenses (1,306) -

Net cash from financing activities 4,902,077,303 4,902,078,609

Exchange diffreences from translation of financial statements (2,726,294) (8,551,330)

Net increase in cash and cash at banks 313,661,602 253,474,398

Cash and cash at banks at the beginning of period - -

Cash and cash at banks at the end of period (Note 7) 313,661,602 253,474,398

- -



Statement of cash flows







Operating performance information (per unit)Net asset value at the beginning of period - -

Loss from investing activities

Net investment loss (0.0270) (0.0354)

Decrease in net assets value from other components of unitholder's equity

Exchange differences on translation of financial statements (0.0077) (0.0242)

Total (0.0347) (0.0596)

Add: Increase in capital from unitholders 10.0000 10.0000

Net asset value at the end of period 9.9653 9.9404

- -

Ratio of net decrease in net assets from operations to

average net assets during the period (%) (0.3480) (0.5981)

Significant financial ratios and additional significant information

Net assets at the end of period (Baht) 3,516,108,451 3,507,326,182

Ratio of total expenses to average net assets during the period (%) 0.5036 0.3860

Ratio of total investment income to average net assets during the period (%) 0.2330 0.0309

Ratio of weighted average investment purchases and sales during the period

to average net assets during the period (%)* 128.1020 137.9005

Average net assets during the period (Baht) 3,522,237,726 3,517,846,591

* The value of investment purchases and sales during the period does not include cash at bank,

and is calculated by a weighted average basis over the accounting period.


Significant financial information





1

Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust And its subsidiaries Notes to consolidated financial statements For the period as from 20 December 2017 (date of trust establishment) to 31 December 2017

1. Description of Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust

Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust (“the

Trust”) is a real estate investment trust established under the Trust for Transaction in Capital

Market Act, B.E.2550 in accordance with the Trust Deed executed on 20 December 2017

between Strategic Property Investors Company Limited as the trust settlor and Krung Thai

Asset Management Company Limited as the trustee. On 20 December 2017, the Trust was

established as a specific closed-end real estate investment trust with an indefinite term. The

Trust’s objective is to mobilise fund, raised from investors and loan from a financial institution,

to invest in real estate through acquiring the shares in or granting loans to the holding

companies in Note 3.2. The three subsidiary companies in Indonesia and Vietnam in note 3.2

are the companies invested in ownerships or leasehold rights of land, ownership of the

buildings, and movable properties of hotels located in Southeast Asia as listed below.

Properties Location Type of ownership of Properties

Pullman Jakarta Central

Park

Jakarta, Indonesia Ownership of strata title, building and

movable properties

Capri by Fraser Ho chi minh city,

Vietnam

Leasehold of land, of which the term will

expire on 19 May 2043 and ownership

of building and movable properties

Ibis Saigon South

Ho chi minh city,

Vietnam

Leasehold of land, of which the term will

expire on 19 May 2043 and ownership

of the building and movable properties

The Trust has a policy to seek benefits from the invested properties by leasing the properties

to related companies of the trust manager who will hire hotel management to operate the

hotel business. The trust manager is responsible for managing the properties and setting

policies to seek benefits from them.

The Stock Exchange of Thailand approved the listing of the Trust’s units and permitted their

trading from 27 December 2017 onwards.



2

Strategic Property Investors Company Limited acts as the trust manager (the “Trust

Manager”) and Krung Thai Asset Management Company Limited acts as the trustee (the

“Trustee”) of the Trust.

2. Distribution policy

The Trust has a policy to pay distributions to unitholders as follows:

(1) Trust manager shall distribute to the Trust’s unitholders at least 90% of the adjusted net

profit for the accounting period, comprising the year-end distribution and the interim

distribution (if any). Trust manager shall pay distributions to the Trust’s unitholders not

more than 4 times in each accounting period, except in the event of a capital increase,

when the Trust may pay more than 4 distributions in an accounting period in the best

interests of the unitholders holding trust units prior to the capital increase. The Trust will

pay distributions starting from the first accounting period if the Trust has sufficient profit

to pay.

The adjusted net profit means the net profit adjusted by the following items;

(a) Deduction of unrealised gain from appraisal or appraisal review of assets of the Trust

including adjustment of other items as prescribed by the Securities and Exchange

Commission to reflect the cash position of the Trust.

(b) Deduction of the reserve provision for payment for debt from borrowing or obligation

arising from borrowing of the Trust under the limit stated in the registration statement

and prospectus or annual report, as the case may be.

(2) In that event that the Trust has accumulated losses, trust manager will not make any

distributions to the Trust’s unitholders.

If the amount of the interim distribution per unit to be paid is Baht 0.10 or less in each quarter, trust manager reserves the right not to pay a distribution at that time and to carry such distribution forward to be paid together with the following distribution.

3

3. Basis of preparation of financial statements

3.1 The financial statements have been prepared in accordance with Thai Financial Reporting

Standards enunciated under the Accounting Professions Act B.E. 2547 and in accordance

with the regulations and format specified in Thai Accounting Standard No. 106 “Accounting

for Investment Business”.

These financial statements are presented in Thai Baht which is different from the functional

currency of the Trust, which is US Dollar (USD). The presentation of financial statements is

in Thai Baht in accordance with the regulatory requirements in Thailand.

The USD functional currency financial statements are translated into the Thai Baht

presentation currency financial statements at the rate of exchange prevailing on the end of

reporting period in respect of assets and liabilities, and at a rate that approximates the actual

rate at the date of the transaction in respect of revenues and expenses, differences being

recorded as “Exchange differences on translation of financial statements in functional

currency to presentation currency” in other comprehensive income, other components of

unitholders' equity.

The financial statements in Thai language are the official statutory financial statements of

the Trust. The financial statements in English language have been translated from the Thai

language financial statements.

The financial statements have been prepared on a historical cost basis except where

otherwise disclosed in the accounting policies.

3.2 Basis of consolidation

a) The consolidated financial statements include the financial statements of the Trust and

the following subsidiary companies (“the subsidiaries”):

Company’s name Nature of business

Country of

incorporation

Percentage of

Shareholding

31 December

2017

Investment held by the Trust

Strategic Hospitality Holdings Limited

Holding company British Virgin Islands

100

Investment held by subsidiaries

BBDM Singapore Pte Ltd Holding company Singapore 100

SHR Finco Pte Ltd Providing loan to group company


100

BBVN Pte Ltd Holding company Singapore 100

SHR IBIS Pte Ltd Providing loan to group company


100



3

3. Basis of preparation of financial statements

3.1 The financial statements have been prepared in accordance with Thai Financial Reporting

Standards enunciated under the Accounting Professions Act B.E. 2547 and in accordance

with the regulations and format specified in Thai Accounting Standard No. 106 “Accounting

for Investment Business”.

These financial statements are presented in Thai Baht which is different from the functional

currency of the Trust, which is US Dollar (USD). The presentation of financial statements is

in Thai Baht in accordance with the regulatory requirements in Thailand.

The USD functional currency financial statements are translated into the Thai Baht

presentation currency financial statements at the rate of exchange prevailing on the end of

reporting period in respect of assets and liabilities, and at a rate that approximates the actual

rate at the date of the transaction in respect of revenues and expenses, differences being

recorded as “Exchange differences on translation of financial statements in functional

currency to presentation currency” in other comprehensive income, other components of

unitholders' equity.

The financial statements in Thai language are the official statutory financial statements of

the Trust. The financial statements in English language have been translated from the Thai

language financial statements.

The financial statements have been prepared on a historical cost basis except where

otherwise disclosed in the accounting policies.

3.2 Basis of consolidation

a) The consolidated financial statements include the financial statements of the Trust and

the following subsidiary companies (“the subsidiaries”):


Country of

incorporation

Percentage of

Shareholding

31 December

2017

Investment held by the Trust

Strategic Hospitality Holdings Limited

Holding company British Virgin Islands

100

Investment held by subsidiaries

BBDM Singapore Pte Ltd Holding company Singapore 100

SHR Finco Pte Ltd Providing loan to group company


100

BBVN Pte Ltd Holding company Singapore 100

SHR IBIS Pte Ltd Providing loan to group company


100



4


Country of

incorporation

Percentage of

Shareholding

31 December

2017

SHR Indonesia Pte Ltd Holding company British Virgin Islands

100

Luxel APT Company Limited

Leasing out the immovable and movable properties for the hotel business

Vietnam 100

Viethan Hotel Corporation Leasing out the immovable and movable properties for the hotel business

Vietnam 99.98

PT SHR Pullman Indonesia Leasing out the immovable and movable properties for the hotel business

Indonesia 100

b) The Trust is deemed to have control over an investee or a subsidiary if it has rights, or

is exposed, to variable returns from its involvement with the investee, and it has the

ability to direct the activities that affect the amount of its returns

c) Subsidiaries are fully consolidated, being the date on which the Trust obtains control,

and continue to be consolidated until the date when such control ceases

d) The financial statements of the subsidiaries are prepared using the same significant

accounting policies as the Trust

e) The assets and liabilities in the financial statements of overseas subsidiary companies,

who have functional currency other than USD, are translated to USD using the

exchange rate prevailing on the end of reporting period, and revenues and expenses

translated using monthly average exchange rates. The resulting differences are shown

under the caption of “Exchange differences on translation of financial statements in

foreign currency” in the statement of comprehensive income as one of the other

components of unitholders’ equity.

f) Material balances and transactions among the Trust and its subsidiary companies have

been eliminated from the consolidated financial statements

4. Financial reporting standards that will become effective in the future

During the current year, the Federation of Accounting Professions issued a number of the

revised financial reporting standards and interpretations (revised 2017) which is effective for

fiscal years beginning on or after 1 January 2018. These financial reporting standards were

aimed at alignment with the corresponding International Financial Reporting Standards with

most of the changes and clarifications directed towards disclosures in the notes to financial

statements.



5

The management of the Trust and subsidiaries believe that the revised financial reporting

standards will not have any significant impact on the financial statements when they are

initially applied.

5. Significant accounting policies

5.1 Revenues and expenses recognition

a) Rental income

Rental income from immovable and movable properties are recognised in the statement

of income on a straight-line basis over the term of the lease. The variable leases are

recognised as income when incurred.

b) Dividend income

Dividend income is recognised when the right to receive the dividends is established.

c) Interest income and finance costs

Interest income and finance cost are recognised on an accrual basis based on the effective

interest rate.

d) Other income

Other income is recognised on an accrual basis.

5.2 Measurement of investments

Investments are recognised as assets at cost on the date which the Trust and its subsidiaries

have rights on investments.

Cost of investments comprises the purchase prices and all direct expenses paid by the Trust

and its subsidiaries in order to acquire such investments.

Investments in immovable and movable properties

Investments in immovable and movable properties are presented at fair value without

depreciation.

The Trust and its subsidiaries measured fair values of such investments as at the end of the

first accounting period after the investment acquisition using the acquisition costs of the

investments. Cost of investment comprises the purchase price and all direct expenses which

the Trust and its subsidiaries paid to get the investment. Subsequently, fair values of such

investments will be based on the appraisal value assessed by an independent appraiser

approved by the Thai Valuers Association and the Valuers Association of Thailand (Pursuant

to the Notification of the Securities and Exchange Commission concerning the granting of

approval of valuation companies and principle valuers for public use).



6

Gain or loss on measurement of such investments are presented as net unrealised gain or

loss in the statement of income.

Investment in subsidiary

Investment in subsidiary is accounted for in the separate financial statements of the Trust

using the cost method. Investment in subsidiary is recognised as assets with the cost of

investment at the date on which the Trust has the right on investment. Cost of investment

comprises of the purchase price and all direct expenses which the Trust paid to get the

investment.

5.3 Cash and cash equivalents

Cash and cash equivalents consist of cash in hand and at banks, and all highly liquid

investments with an original maturity of three months or less and not subject to withdrawal

restrictions.

5.4 Receivables from rental

Receivables from rental are stated at the net realisable value. The allowance for doubtful

accounts is assessed primarily on analysis of payment histories and future expectations of

customer payments.

5.5 Deferred expenses

Deferred expenses comprise the capital unit issuance costs and other directly related

expenses as incurred e.g. underwriting fee on issuance of capital unit of Trust. Deferred

expenses are amortised as an expense over a period of 5 years on a straight line basis.

5.6 Related party transactions

Related parties of the Trust comprise individuals or enterprises that own voting interest of at

least 10% in the Trust, control, or are controlled by, the Trust, whether directly or indirectly,

or which are under common control with the Trust.

They also include the trust manager, trustee and their related parties and included associated

companies and individuals or enterprises which directly or indirectly own voting interests in the

Trust that gives them significant influence over the Trust, key management personnel and

directors of trust manager with authority in planning and directing the Trust’s operations.

7

The relationships of related parties are as follows:

Name of related parties Relationship

Strategic Property Investors Company Limited Trust manager

Krung Thai Asset Management Company

Limited

Trustee

Krung Thai Bank Public Company Limited Parent company of the trustee

Strategic Hospitality Services Pte. Ltd Related company of the trust manager

PT Central Persona Palace Related company of the trust manager

5.7 Foreign currencies

Transactions in foreign currencies are translated into functional currencies of each entity at

the exchange rate ruling at the date of the transaction. Monetary assets and liabilities

denominated in foreign currencies are translated into functional currencies of each entity at

the exchange rate ruling at the end of reporting period.

Gains and losses on exchange are included in determining income.

5.8 Distribution to unitholders

A decrease in retained earnings is recognised as at the date a distribution is declared.

5.9 Income tax

The Trust has no corporate income tax liability since it is exempted from corporate income

tax in Thailand.

Income tax expenses of subsidiaries represent the sum of corporate income tax currently

payable and deferred tax.

Current tax

Current income tax of its subsidiaries is provided in accounts at the amount expected to be

paid to the taxation authorities, based on taxable profits determined in accordance with tax

legislation.



7

The relationships of related parties are as follows:

Name of related parties Relationship

Strategic Property Investors Company Limited Trust manager

Krung Thai Asset Management Company

Limited

Trustee

Krung Thai Bank Public Company Limited Parent company of the trustee

Strategic Hospitality Services Pte. Ltd Related company of the trust manager

PT Central Persona Palace Related company of the trust manager

5.7 Foreign currencies

Transactions in foreign currencies are translated into functional currencies of each entity at

the exchange rate ruling at the date of the transaction. Monetary assets and liabilities

denominated in foreign currencies are translated into functional currencies of each entity at

the exchange rate ruling at the end of reporting period.

Gains and losses on exchange are included in determining income.

5.8 Distribution to unitholders

A decrease in retained earnings is recognised as at the date a distribution is declared.

5.9 Income tax

The Trust has no corporate income tax liability since it is exempted from corporate income

tax in Thailand.

Income tax expenses of subsidiaries represent the sum of corporate income tax currently

payable and deferred tax.

Current tax

Current income tax of its subsidiaries is provided in accounts at the amount expected to be

paid to the taxation authorities, based on taxable profits determined in accordance with tax

legislation.



8

Deferred tax

Deferred income tax of its subsidiaries is provided on temporary differences between the tax

bases of assets and liabilities and their carrying amounts at the end of each reporting period,

using the tax rates enacted at the end of the reporting period.

Its subsidiaries recognise deferred tax liabilities for all taxable temporary differences while

they recognise deferred tax assets for all deductible temporary differences, including unused

tax losses, to the extent that it is probable that future taxable profit will be available against

which such deductible temporary differences and unused tax losses can be utilised.

At each reporting date, its subsidiaries review and reduce the carrying amount of deferred

tax assets to the extent that it is no longer probable that sufficient taxable profit will be

available to allow all or part of the deferred tax asset to be utilised.

Its subsidiaries record deferred tax directly to net assets if the tax relates to items that are

recorded directly to net assets.

5.10 Significant accounting judgements and estimates

The preparation of financial statements in conformity with financial reporting standards at

times requires trust manager and its subsidiaries’ management to make subjective

judgements and estimates regarding matters that are inherently uncertain. These judgements

and estimates affect reported amounts and disclosures; and actual results could differ from

these estimates. Significant judgements and estimates are as follows:

Determining functional currency

Functional currency is the currency of the primary economic environment in which the Trust

operates. If indicators of the primary economic environment are mixed, then management

of the Trust uses its judgement to determine the functional currency that most faithfully

represents the economic effect of the underlying transactions, events and conditions. The

majority of the Trust’s investments and other principal transactions, including the acquisition

of investment in subsidiaries and the properties, debt financing activity, and rental income

and dividend are denominated in US dollar. Accordingly, management of the Trust has

determined that the functional currency of the Trust is US dollar.



9

Fair value of investments in immovable and movable properties

As at the balance sheet date, the Trust measured value of investments in immovable and

movable properties at fair value. The fair value is estimated based on investment cost for the

first period ended after the investment acquisition and appraisal value which appraised by

independent appraiser and/or financial adviser for other subsequent years. The independent

appraiser/financial adviser value the investments using the income approach and discounted

cash flow because there is no market price that could be used to apply a comparative

approach. The key assumptions used in estimating the fair value are occupancy rate, rental

rate adjustment, dividend yield of subsidiaries and discount rate.

Deferred tax assets

Deferred tax assets are recognised for deductible temporary differences, including unused

tax losses, to the extent that it is probable that taxable profit will be available against which

the temporary differences and losses can be utilised. Significant judgement of the

management of the Trust and subsidiaries is required to determine the amount of deferred

tax assets that can be recognised, based upon the likely timing and level of estimate future

taxable profits.

6. The information of investment acquisitions

6.1 Investment in subsidiary (separate financial statements of the Trust)

On 20 December 2017, the Trust invested in the common shares of Strategic Hospitality

Holdings Limited, which was incorporated in the British Virgin Islands. Strategic Hospitality

Holdings Limited, through the various offshore holding subsidiary companies described in

Note 3.2 to the financial statements, invested in three hospitality properties located in

Indonesia and Vietnam as described in Note 1 to the financial statements. Through these

investments, the Trust has control over Strategic Hospitality Holdings Limited and all

subsidiaries mentioned in Note 3.2 to the financial statements since the acquisitions and

relevant payments were made between 20 December and 22 December 2017. The Trust

paid a total of USD 148.6 million for the investment in Strategic Hospitality Holdings Limited

and related costs, and this represents 137.9% of the average net asset value as stated in the

separate financial statements of the Trust. Moreover, the Trust has pledged the shares

certificates of all subsidiaries to secure the credit facilities obtained from a financial institution

as described in Note 11 to the financial statements.

6.2 Investments in immovable and movable properties (consolidated financial statement)

(Unit: Thousand Baht)

Net book value at beginning of period -

Acquisition during the period 4,512,058

Net book value at end of period 4,512,058



10

The investments in immovable and movable properties for the hospitality business of the

Trust and its subsidiaries as at 31 December 2017 are as follows:

(1) Pullman Jakarta Central Park

On 22 December 2017, an Indonesian subsidiary acquired Pullman Jakarta Central Park

properties from PT Agung Podomoro Land Tbk., which was incorporated in Indonesia,

with total costs of acquisition of amounting to USD 101.7 million, inclusive of all direct

costs but exclusive of value added tax. This represents 94.3% of the average net asset

value as stated in the consolidated financial statement. The properties comprise the

ownership of land and hotel building (strata title or also known as HMSRS), and related

movable assets. The HMSRS is on land with HGB Title (under Indonesian law HGB has a

fixed term). The term of HMSRS and HGB term for Pullman Jakarta Central Park are

consistent with both terms to expire on 17 March 2026. In general, under Indonesian law

an HGB title has an initial term of 30 years, and the holder is entitled to apply for an

extension of no more than 20 years, with the application for a renewal is to be submitted

to the National Land Agency at least two years prior to the initial expiry date. The Trust

Manager firmly believes that the Indonesian subsidiary will be entitled to apply for a

renewal.

Under the asset purchase agreement, the seller agreed to provide support in the form of

guarantees of the annual net operating income of the Pullman Jakarta Central Park, with

the details stipulated in the agreement, for a period of 3 years starting from 1 January

2018. The guaranteed net operating income of the property is USD 8.25 million but the

seller will fund any shortfall between the actual achieved net operating income and this

guaranteed net operating income only to the extent it does not exceed USD 2.50 million

per annum., which is payable on a yearly basis. The Trust received a cash deposit of

USD 2.50 million from the seller as a performance guarantee and this was recorded as

“cash at bank - deposit for income guarantee by assets seller” and “deposit for income

guarantees from asset seller” (liabilities). The seller may later pledge a bank guarantee

with the Trust in place of such cash deposit.

In addition, as a part of the assets purchase agreement, the seller agreed to subscribe to

63,928,100 units of the Trust, representing 18.12% of the total trust units in issue. The

seller also agreed not to dispose of these units for a period of two years from the first

trading day of the units on the Stock Exchange of Thailand and agreed to waive rights

to cash distributions or any capital refund resulting from reduction of the Trust’s capital

during such 2 year period. However, this waiver on the capital refund is applicable with

the capital reduction resulting the amortisation of the deferred unit issuance costs.

11

(2) Capri by Fraser and Ibis Saigon South

Between 20 December to 22 December 2017, Strategic Hospitality Holdings Limited

(a subsidiary) acquired all common shares of another two subsidiaries which were

incorporated in Singapore from two individuals, in order to acquire the Capri by Fraser

and Ibis Saigon South properties in Vietnam. The acquisition costs, including direct

costs, totaled USD 36.5 million, representing 33.8% of the average net asset value

stated in the consolidated financial statements. The properties comprise long-term

leasehold rights to land that is subleased from a company, which will expire on 19 May

2043, and ownership of buildings and related movable properties of the two hotels. At the

end of the lease term, the ownership of the buildings will revert to the land lessor.

In addition, under the related shares purchase agreements, the sellers undertook to

arrange for an entity in which they have interests to subscribe to 4,417,200 units of the

Trust, representing 1.25% of the total trust units in issue. The sellers also agreed not to

dispose of the units for a period of two years from the first trading day of the units on the

Stock Exchange of Thailand and also agreed to waive rights to any cash distributions or

any capital return resulting from reduction of the Trust’s capital during such 2 year period.

However, this condition does not apply to distributions or capital return resulting from the

disposal of the Trust’s properties.

The Trust has estimated the fair value of these investments in immovable and movable

properties in the consolidated financial statements as at 31 December 2017 at USD 138.2

million, which is equal to the total acquisition costs. The Trust Manager believes that this

represents the best estimation of the fair value because it is the latest price at which the

properties were actually exchange, and this exchange occured close to the period-end date.

The Trust and its subsidiaries have pledged the ownership of Pullman Jakarta Central Park

to secure the credit facilities that the Trust obtained from a financial institution mentioned in

Note 11.



11

(2) Capri by Fraser and Ibis Saigon South

Between 20 December to 22 December 2017, Strategic Hospitality Holdings Limited

(a subsidiary) acquired all common shares of another two subsidiaries which were

incorporated in Singapore from two individuals, in order to acquire the Capri by Fraser

and Ibis Saigon South properties in Vietnam. The acquisition costs, including direct

costs, totaled USD 36.5 million, representing 33.8% of the average net asset value

stated in the consolidated financial statements. The properties comprise long-term

leasehold rights to land that is subleased from a company, which will expire on 19 May

2043, and ownership of buildings and related movable properties of the two hotels. At the

end of the lease term, the ownership of the buildings will revert to the land lessor.

In addition, under the related shares purchase agreements, the sellers undertook to

arrange for an entity in which they have interests to subscribe to 4,417,200 units of the

Trust, representing 1.25% of the total trust units in issue. The sellers also agreed not to

dispose of the units for a period of two years from the first trading day of the units on the

Stock Exchange of Thailand and also agreed to waive rights to any cash distributions or

any capital return resulting from reduction of the Trust’s capital during such 2 year period.

However, this condition does not apply to distributions or capital return resulting from the

disposal of the Trust’s properties.

The Trust has estimated the fair value of these investments in immovable and movable

properties in the consolidated financial statements as at 31 December 2017 at USD 138.2

million, which is equal to the total acquisition costs. The Trust Manager believes that this

represents the best estimation of the fair value because it is the latest price at which the

properties were actually exchange, and this exchange occured close to the period-end date.

The Trust and its subsidiaries have pledged the ownership of Pullman Jakarta Central Park

to secure the credit facilities that the Trust obtained from a financial institution mentioned in

Note 11.



12

7. Cash and cash at banks

As at 31 December 2017, the Trust and its subsidiaries have cash and cash at banks with

the details as follows:

Consolidated

financial statement

Separate

financial statement

Balance

Interest rate

per annum Balance

Interest rate

per annum

(Thousand

Baht)

(%) (Thousand

Baht)

(%)

Cash 620 - - -

Cash at Banks

Savings accounts

Siam Commercial Bank Public

Company Limited 253,474 0.38 253,474 0.38

Current accounts

Oversea-Chinese Banking

Corporation Limited 23,946 - - -

KEB Hana Bank, Singapore Branch 1,050 - - -

PT Bank CIMB Niaga Tbk 11,435 1.75 - -

Industrial Bank of Korea,

Ho Chi Minh Branch 16,486 0.30 - -

Ocean bank 135 0.50 - -

Baoviet bank 5,746 1.00 - -

Joint Stock Commercial Bank for

Foreign Trade of Vietnam 463 0.20 - -

The Vietnam Bank for Agriculture

and Rural Development 301 0.30 - -

Petrolimex Group Commercial

Joint Stock Bank Bank 6 0.50 - -

Total cash at banks 313,042 253,474

Total cash and cash at banks 313,662 253,474

8. Receivables from rental

The outstanding balances of receivables from rental as at 31 December 2017 are not yet due.



13

9. Deferred expenses


Deferred expenses at beginning of period -

Add: Increase 131,286

Less: Amortisation for the period (863)

Deferred expenses at end of period 130,423

10. Deferred tax assets

The balance of deferred tax assets as stated in the consolidated financial statements as at

31 December 2017 represents the deferred tax assets that are recognised for unused tax

losses of two Vietnamese subsidiaries (the separate financial statements of the Trust: Nil).

11. Long-term loan

On 21 December 2017, the Trust obtained a long-term loan amounting to USD 47.5 million

from a Thai financial institution for the purpose of investing in the properties and payment of

trust establishment costs. The loan has a grace period of three years from the drawdown

date (no principal becoming due during such period), and subsequently the principal is

payable on a semi-annual basis as summarised below.

(Unit: USD)

The principal payable

on a semi-annual basis

The year after drawdown date:

4th - 7th 1,662,500

8th 1,781,250

9th 1,900,000

10th 2,137,500

11th 2,256,250

12nd 2,493,750

13rd 6,531,250

The loan carries interest, which is payable on a quarterly basis, at LIBOR plus 3.15% per

annum for the first two years after the drawdown date and at LIBOR plus 4.50% to 6.50%

per annum from the third year onwards.



14

The outstanding long-term loan balance as at 31 December 2018 comprises the following.


Long-term loan from a financial institution 1,550,433

Less: deferred transaction costs (45,436)

Add: adjustments to reflect the effective interest rate 1,434

Total 1,506,431

The abovementioned loan is a part of the credit facilities that the Trust obtained from a

financial institution. As at 31 December 2017, the Trust had a short-term loan facility for

working capital that is not yet drawn of Baht 36.0 million. The credit facilities are secured by

the pledge of share certificates of all subsidiaries of the Trust and the lessee of properties in

Indonesia (which is a related company of the trust manager), the mortgage of properties in

Indonesia, and guaranteed by the Indonesian subsidiary and the lessee of the properties in

Indonesia.

Under the abovementioned credit facility agreement, the Trust is required to comply with

covenants therein, which include maintainance of certain financial ratios, such as debt to

total asset ratio and interest bearing debt to EBITDA ratio as prescribed in the agreement,

maintainance of the SET listing status of the units of the Trust, and limitation on certain

material transactions of the Trust, among other things.

12. Capital from unitholders

On 20 December 2017, the trust manager established the Trust with a registered capital of

Baht 3,528.37 million, consisting of 352.84 million equity units with a par value of Baht 10

each. The Trust has fully called up and received funds of all units issued and has notified

the Office of the Securities and Exchange Commission of the called-up capital.

13. Retained earnings (deficits)

Details of retained earnings (deficits) for the period as from 20 December 2017 to 31 December

2017 are as follows:


Consolidated

financial statement

Separate

financial statement

Retained earnings at the beginning of period - -

Add: Decrease in net assets resulting from

operations (9,532) (12,489)

Deficits at the end of period (9,532) (12,489)

15

14. Expenses

14.1 Trust manager fee

Trust manager is entitled to monthly fees (exclusive of value added tax, specific business

tax or any other similar taxes) from the Trust, with the details as follows:

(1) A base fee, calculated at a rate not exceeding 0.75 percent per annum of the gross

asset value of investments, but not more than Baht 30 million. However, in the first

five years of the trust management, a base fee is calculated at a rate not exceeding

0.30 percent of the gross asset value of the initial assets investment, but not more

than Baht 21 million per annum.

(2) An incentive fee, calculated at a rate not exceeding 2.00% per annum on the Trust’s

net revenue, of the gross asset value (GAV) of the initial assets investment, in

separate financial statement. However, during the first six years of the trust

management, the trust manager will not charge this incentive fee.

Furthermore, the trust manager will receive fees in connection with the acquisition or sale of

the Trust’s investments at the rates of 1.0% and 0.5% of the assets value (exclusive of

value added tax), respectively. The fee, which is related to the assets acquisition, will be

recorded as a part of the costs of the investments.

14.2 Trustee fee

The trustee fee is monthly payable at a step rate as follows:

(1) 0.30% per annum of the total asset value of the Trust for the total asset value not over

Baht 4 billion;

(2) 0.20% per annum of the total asset value of the Trust for the value of the assets that is

more than Baht 4 billion but less than Baht 8 billion;

(3) 0.12% per annum of the total asset value of the Trust for the total asset value over

Baht 8 billion.

However, the total fee is not less than Baht 4 million per annum.

14.3 Registrar fee

The registrar fee is monthly payable at a rate not exceeding 0.05% per annum of the net

asset value of the Trust.



15

14. Expenses

14.1 Trust manager fee

Trust manager is entitled to monthly fees (exclusive of value added tax, specific business

tax or any other similar taxes) from the Trust, with the details as follows:

(1) A base fee, calculated at a rate not exceeding 0.75 percent per annum of the gross

asset value of investments, but not more than Baht 30 million. However, in the first

five years of the trust management, a base fee is calculated at a rate not exceeding

0.30 percent of the gross asset value of the initial assets investment, but not more

than Baht 21 million per annum.

(2) An incentive fee, calculated at a rate not exceeding 2.00% per annum on the Trust’s

net revenue, of the gross asset value (GAV) of the initial assets investment, in

separate financial statement. However, during the first six years of the trust

management, the trust manager will not charge this incentive fee.

Furthermore, the trust manager will receive fees in connection with the acquisition or sale of

the Trust’s investments at the rates of 1.0% and 0.5% of the assets value (exclusive of

value added tax), respectively. The fee, which is related to the assets acquisition, will be

recorded as a part of the costs of the investments.

14.2 Trustee fee

The trustee fee is monthly payable at a step rate as follows:

(1) 0.30% per annum of the total asset value of the Trust for the total asset value not over

Baht 4 billion;

(2) 0.20% per annum of the total asset value of the Trust for the value of the assets that is

more than Baht 4 billion but less than Baht 8 billion;

(3) 0.12% per annum of the total asset value of the Trust for the total asset value over

Baht 8 billion.

However, the total fee is not less than Baht 4 million per annum.

14.3 Registrar fee

The registrar fee is monthly payable at a rate not exceeding 0.05% per annum of the net

asset value of the Trust.



16

15. Related party transactions

During the period as from 20 December 2017 to 31 December 2017, the Trust and its

subsidiaries had significant business transactions with its related parties, which have been

agreed upon in the ordinary course of business between the Trust, its subsidiaries and its

related parties. The pricing policies and amount for particular type of transactions are as

follows:


Consolidated

financial

statement

Separate

financial

statement Transfer Pricing Policy

Transactions with related

companies

Assets purchased from the seller

who are the Trust’s unitholders

3,092,054 - Note 6.2

Rental income 7,293 - At the rate stipulated in

the lease agreement

Trust manager fee 440 440 Note 14

Trust manager fee in connection with

assets acquisitions

45,800 45,800 Note 14

Trustee fee 507 507 Note 14

Trust units underwriting fees 23,064 23,064 At the rate stipulated in

the service agreement

As at 31 December 2017, the Trust and its subsidiaries have the following significant

outstanding balances with its related parties as follows:


Consolidated

financial statement

Separate

financial statement

Related Company

Receivables from rental 6,948 -

Accounts payable and accrued expenses 32,863 25,470

Deposit for income guarantees by asset seller 81,602 81,602



17

16. Commitments

The Trust is committed to pay fees under the terms and conditions as described in Note 14

to the financial statement.

17. Segment information

Operating segment information is reported in a manner consistent with the Trust’s internal

reports that are regularly reviewed by the chief operating decision maker in order to make

decisions about the allocation of resources to the segment and assess its performance.

The Trust and its subsidiaries are principally engaged in leasing out the properties and

related movable assets. Its operations are carried on only in Southeast Asia. Segment

performance is measured based on operating profit or loss, on a basis consistent with that

used to measure operating profit or loss in the financial statements. As a result, all of the

revenues, operating profits and assets as reflected in these financial statements pertain to

the aforementioned reportable operating segment.

Geographic information

The Trust and its subsidiaries’ operations are carried on only in Southeast Asia. The

revenue and the investment in immovable and movable properties information based on the

location are as follow.

(Unit: Million Baht)

Revenue from

external customers

for the period

from 20 to 31

December 2017

Investment in

immovable and

movable properties

at fair value as at

31 Dec 2017

Indonesia 5 3,321

Vietnam 2 1,191

Total 7 4,512

Major customers

For the current period, the Trust and its subsidiaries earned revenues from two major customers amounted to Baht 7 million, arising from the engaged in leasing out the immoveable and movable properties.



19


Separate financial statement


Fixed

interest

rates within

1 year

Floating

interest rate

Non-interest

bearing Total

Interest rate

(% p.a.)

Financial assets

Cash and cash at banks - 253 - 253 0.38

Cash at bank - deposit

for income guarantees

by asset seller

- - 82 82 -

Financial liabilities

Accounts payable and

accrued expenses

- - 222 222 -

Deposit for income

guarantees by asset

seller

- - 82 82 -

Long-term loan - 1,506 - 1,506 LIBOR +

spread

Other liabilities - - 1 1 -

Credit risk

The Trust and its subsidiaries are exposed to credit risk primarily with respect to receivables

from rental. The trust manager manages the risk by requiring its customers to pay fixed

rental on a monthly basis as specified in the lease agreements and adopting appropriate

credit control policies and procedures and therefore the Trust and its subsidiaries do not

expect to incur material credit losses. The maximum exposure to credit risk is limited to the

carrying amounts of receivables from rental as stated in the balance sheet.

18

18. Financial instruments

18.1 Financial risk management

The Trust and it subsidiaries’ financial instruments, as defined under Thai Accounting

Standard No.107 “Financial Instruments: Disclosure and Presentations”, principally

comprise cash and cash at banks, receivables from rental, interest payables, accounts

payables and accrued expenses, deposit received from asset seller and long-term loan.

The financial risks associated with these financial instruments and how they are managed is

described below.

Interest rate risk

The Trust’s and its subsidiaries’ exposure to interest rate risk relates primarily to its cash

and cash at banks and long-term loan. However, most of the Trust’s and its subsidiaries’

financial assets and liabilities bear floating interest rates or mature in short period, the

interest rate risk is expected to be minimal.

Significant financial assets and liabilities classified by type of interest rates are summarised

in the table below. (Unit: Million Baht)

Consolidated financial statement


Fixed

interest

rates within 1 year

Floating interest rate

Non-interest bearing Total

Interest rate (% p.a.)

Financial assets

Cash and cash at banks - 313 1 314 0.20-1.75

Receivables from rental - - 7 7 -

Other receivables - - 6 6 -

Refundable input value

added tax

- - 308 308 -



by asset seller

- - 82 82 -



accrued expenses

- - 276 276 -

Deposit for income

guarantees from asset

seller

- - 82 82 -


spread




19


Separate financial statement


Fixed

interest

rates within

1 year

Floating

interest rate

Non-interest

bearing Total

Interest rate

(% p.a.)

Financial assets

Cash and cash at banks - 253 - 253 0.38



by asset seller

- - 82 82 -



accrued expenses

- - 222 222 -

Deposit for income

guarantees by asset

seller

- - 82 82 -


spread


Credit risk

The Trust and its subsidiaries are exposed to credit risk primarily with respect to receivables

from rental. The trust manager manages the risk by requiring its customers to pay fixed

rental on a monthly basis as specified in the lease agreements and adopting appropriate

credit control policies and procedures and therefore the Trust and its subsidiaries do not

expect to incur material credit losses. The maximum exposure to credit risk is limited to the

carrying amounts of receivables from rental as stated in the balance sheet.



20

Foreign currency risk

Foreign currency risk is the risk that the value of a financial instrument will fluctuate

because of changes in foreign exchange rates.

The Trust and its subsidiaries are exposed to foreign currency risk because the income

earned by the Trust and the long-term loan and interest payables are in the US dollar, the

income and expenses of the property subsidiary companies and offshore holding

companies will also be in their respective local currencies, whereas the Trust's distribution

to the unitholders will be made in Thai Baht. As such, the Trust is subject to risks of

exchange rate fluctuations. The trust manager may manage the risk by entering into

hedging transaction or entering into forward exchange contracts for the exchange rate of

US dollar and Thai Baht at their discretion.

18.2 Fair values of financial instruments

The fair value is determined by reference to the market price of the financial instruments or

by using an appropriate valuation technique, depending on the nature of the instrument.

Since the majority of financial instruments of the Trust and its subsidiaries are short-term in

nature and long-term loan bears floating interest rate, the Trust estimates their fair value of

financial instruments approximate to their carrying value presented in the balance sheet.

19. Capital management

The primary objectives of the Trust’s capital management are to maintain its ability to

continue as a going concern and to maintain an appropriate capital structure in order to pay

distribution for unitholders in accordance with the Trust’s establishment condition.

20. Functional currency financial statements

The US dollar functional currency balance sheets as at 31 December 2017 are as follow.

(Unit: Thousand USD)

Consolidated

financial statement Separate

financial statement Assets

Investments in immovable and movable properties at fair value

138,234 -

Investment in subsidiary at cost

- 148,622 Cash and cash at banks

9,609 7,765

Receivables

From rental

213 -

Others

184 -

Refundable input value added tax 9,421 - Deferred expenses

3,996 3,996

Cash at bank - deposit for income guarantees by asset seller 2,500 2,500




PART 3

21


Consolidated


financial statement Deferred tax assets 621 -

Other assets 110 79

Total assets 164,888 162,962

Liabilities

Accounts payable and accrued expense

8,446 6,817

Deposit for income guarantees from asset seller

2,500 2,500

Long-term loan 46,152 46,152

Other liabilities 68 41

Total liabilities 57,166 55,510

Net assets 107,722 107,452

Net assets:

Capital from unitholders 107,835 107,835

Deficits

(292) (383)

Net assets before other components of unitholder’s equity 107,543 107,452

Other components of unitholders’ equity

179 -

Net Assets

107,722 107,452

The US dollar functional currency statement of income for the period as from 20 December 2017 to 31 December 2017 are as follow.


Consolidated


financial statement Investment income Rental income 223 - Interest income 5 1

Gain on exchange 23 32

Total income 251 33

Expenses Trust manager fee 14 14 Trustee fee 16 16 Registrar fee 2 2 Professional fees

321 237

Amortisation of deferred expenses

26 26 Other expenses 51 8

Finance costs

113 113

Total expenses

543 416

Net investment loss

(292) (383)

Decrease in net assets from operations

(292) (383)


22

22. Approval of financial statements

These financial statements were authorised for issue by the Trust Manager’s Board of

Directors on 28 February 2018.


