CAMBRIDGE INDUSTRIAL TRUST MANAGEMENT LIMITEDcambridgeindustrialtrust.listedcompany.com/... · 3/25/2013 · Marina Bay Financial Centre Tower 3 Singapore 018982 Legal Adviser to

CIRCULAR DATED 25 MARCH 2013

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of

any of the statements made, reports contained or opinions expressed in this Circular. If you are

in any doubt as to the course of action you should take, you should consult your stockbroker, bank

manager, solicitor, accountant or other professional adviser immediately.

If you have sold or transferred all your units in Cambridge Industrial Trust, you should immediately

forward this Circular together with the Notice of Extraordinary General Meeting and the

accompanying Proxy Form to the purchaser or the transferee or to the bank, stockbroker or other

agent through whom the sale or transfer was effected for onward transmission to the purchaser

or transferee.

(A unit trust constituted in the Republic of Singapore pursuant to a trust deed dated 31 March 2006 (as amended))

MANAGED BY

CAMBRIDGE INDUSTRIAL TRUST MANAGEMENT LIMITED(Company Registration No.: 200512804G, Capital Markets Services Licence No.: CMS 100132-2)

CIRCULAR TO UNITHOLDERS

IN RELATION TO

(1) THE PROPOSED UNIT ISSUE SUPPLEMENT TO THE TRUST DEED;

(2) THE PROPOSED DEVELOPMENT MANAGEMENT FEE SUPPLEMENT TO THE TRUST

DEED, AN INTERESTED PERSON TRANSACTION AND AN INTERESTED PARTY

TRANSACTION; AND

(3) THE PROPOSED PERFORMANCE FEE SUPPLEMENT TO THE TRUST DEED, AN

INTERESTED PERSON TRANSACTION AND AN INTERESTED PARTY TRANSACTION

IMPORTANT DATES AND TIMES:

Last date and time for lodgment of Proxy Form : 17 April 2013 at 2.30 p.m.

Date and time of Extraordinary General Meeting : 19 April 2013 at 2.30 p.m. (or as soon

thereafter following the conclusion/

adjournment of the Annual General Meeting

of CIT to be held at 2.00 p.m. on the same

day and at the same place)

Place of Extraordinary General Meeting : NTUC Auditorium, Level 7, NTUC Centre,

One Marina Boulevard, Singapore 018989

TABLE OF CONTENTS

CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

LETTER TO UNITHOLDERS

1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

2. THE PROPOSED UNIT ISSUE SUPPLEMENT TO THE TRUST DEED . . . . . . . . . . 17

3. THE PROPOSED DEVELOPMENT MANAGEMENT FEE SUPPLEMENT TO THE

TRUST DEED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

4. THE PROPOSED PERFORMANCE FEE SUPPLEMENT TO THE TRUST DEED. . . 24

5. INTERESTS OF DIRECTORS, SUBSTANTIAL UNITHOLDERS AND THE

MANAGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

6. RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

7. EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

8. ABSTENTIONS FROM VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

9. ACTION TO BE TAKEN BY UNITHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

10. DIRECTORS’ RESPONSIBILITY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

11. CONSENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

12. DOCUMENTS ON DISPLAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

APPENDIX A – PROPOSED UNIT ISSUE SUPPLEMENT TO THE TRUST DEED . . . . 34

APPENDIX B – PROPOSED DEVELOPMENT MANAGEMENT FEE SUPPLEMENT TO

THE TRUST DEED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

APPENDIX C – PROPOSED PERFORMANCE FEE SUPPLEMENT TO THE TRUST

DEED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

APPENDIX D – LETTER OF THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . 47

APPENDIX E – INTERESTED PERSON TRANSACTIONS AND INTERESTED PARTY

TRANSACTIONS ENTERED INTO BY CIT . . . . . . . . . . . . . . . . . . . . . . 69

NOTICE OF EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

PROXY FORM

i

CORPORATE INFORMATION

Directors of Cambridge

Industrial Trust

Management Limited

(the manager of CIT)

(the “Manager”)

: Dr Chua Yong Hai

(Independent Chairman)

Professor Ong Seow Eng

(Independent Director, Chairman of Audit, Risk Management

and Compliance Committee)

Mr Tan Guong Ching

(Independent Director, Member of Audit, Risk Management


Mr Ooi Eng Peng

(Independent Director, Member of Audit, Risk Management


Mr Michael Patrick Dwyer

(Non-Executive Director, Member of Audit, Risk Management


Mr Victor Ong Wei Tak

(Alternate Director to Mr Michael Patrick Dwyer)

Mr Masaki Kurita

(Non-Executive Director)

Mr Ian Andrew Smith


Mr Lee Stuart Neibart


Mr Christopher Dale Calvert

(Executive Director and Chief Executive Officer)

Registered Office

of the Manager

: 61 Robinson Road

#12-01 Robinson Centre

Singapore 068893

Trustee of CIT

(the “Trustee”)

: RBC Investor Services Trust Singapore Limited, in its capacity

as trustee of CIT

20 Cecil Street

#28-01 Equity Plaza

Singapore 049705

Legal Adviser

to the Manager

: WongPartnership LLP

12 Marina Boulevard Level 28

Marina Bay Financial Centre Tower 3

Singapore 018982

Legal Adviser

to the Trustee

: Lee & Lee

50 Raffles Place

#06-00 Singapore Land Tower

Singapore 048623

Independent Financial

Adviser to the

Independent Directors

of the Manager

: Deloitte & Touche Corporate Finance Pte Ltd

6 Shenton Way

#32-00 Tower Two

Singapore 068809

Unit Registrar and

Unit Transfer Office

: B.A.C.S. Private Limited

63 Cantonment Road

Singapore 089758

1

SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the

full text of this Circular. Capitalised terms shall have the meanings ascribed to them in the section

titled “Definitions” of this Circular.

SUMMARY OF APPROVALS SOUGHT

The Manager seeks approval from Unitholders for the matters stated below:

(1) The Proposed Unit Issue Supplement to the Trust Deed

The Manager proposes to supplement the Trust Deed with the Unit Issue Supplement, with

the proposed changes summarised in the table below:

Relevant

components

of the Unit

issue

structure

Specific limits under

the current Unit issue

structure

Limits set out in the Listing Manual

under the proposed Unit issue

structure

Issue price of

a Unit for a

rights issue

Must not be less than

50% (or such other

percentage permitted by,

inter alia, the SGX-ST) of

the prevailing Market

Price1.

No distinction is made

between non-

renounceable and

renounceable rights

issue.

Removal of existing specific limits and

replaced by the limits set out in the Listing

Manual2 as revised and updated from time

to time.

As of the Latest Practicable Date, the limits

set out in the Listing Manual on issue price

for rights issues are as follows:

– Non-renounceable Rights Issue:

• Rule 816(2)(a)(i) – no discount

limits if specific Unitholders’

approval is sought.

• Rule 816(2)(a)(ii) – 10% discount

limit if issuance is made in

reliance on general mandate

obtained under Rule 806.

– Renounceable Rights Issue:

• No limits specified as to issuance

price.

1 “Market Price” means the volume weighted average price for a Unit for all trades on the SGX-ST in the ordinary course

of trading on the SGX-ST for the period of 10 Business Days immediately preceding the relevant Business Day or (if

the Manager believes that such calculation does not provide a fair reflection of the market price of a Unit) an amount

as determined by the Manager and the Trustee (after consultation with a stockbroker approved by the Trustee), as

being the fair market price of a Unit.

2 “Listing Manual” means the Listing Manual of the SGX-ST, as the same may be modified, amended, supplemented,

revised or replaced from time to time.

2

Relevant

components

of the Unit

issue

structure



structure



structure

Issue price of

a Unit for any

reinvestment

of distribution

arrangement

Must not be less than

90% of the prevailing

Market Price.



Manual (applicable under “Scrip Dividend

Schemes”) as revised and updated from

time to time.



are as follows:

– Scrip Dividend Schemes (as

applicable to any reinvestment of

distribution arrangement):

• Rule 862(4) – The issue price of

Units allotted pursuant to the

reinvestment of distribution

arrangement must be determined

in accordance with a formula

based on the market price, but

any discount must not exceed

10% of the market price.

Issue price of

new Units

issued other

than by way of

rights issue

offered on a

pro rata basis

to all

Unitholders

Where such an issue is

made at a discount to the

Market Price, the

discount does not exceed

5%.



Manual as revised and updated from time to

time.



are as follows:

– Issue of Units other than by way of

rights issue offered on a pro rata basis:

• Rule 811(1) – not more than 10%

discount, unless specific

Unitholders’ approval is obtained

pursuant to Rule 811(3).

3

Relevant

components

of the Unit

issue

structure



structure



structure

Number of

new Units

issued other

than by way of

rights issue

offered on a

pro rata basis

to all

Unitholders

The issue (together with

any other issue of Units

other than by way of a

rights issue in the same

financial year) must not,

immediately after the

issue, exceed 10% of the

Value3 of Deposited

Property4 provided that

the number of Units

which would be

represented by such

percentage does not

exceed 20% of the total

Units.



Manual as revised and updated from time to

time.


set out in the Listing Manual on the number

of new Units to be issued are as follows:


rights issue offered on a pro rata basis:

• Rule 806(2) – aggregate number

of units shall be not more than

20% of total issued Units

excluding treasury Units.

3 “Value” means except where otherwise expressly stated, means with reference to any Authorised Investment or the

Deposited Property, its value for the time being as determined pursuant to the Trust Deed.

4 “Deposited Property” means all the assets of CIT, including all its Authorised Investments for the time being held or

deemed to be held upon the trusts of the Trust Deed.

4

Relevant

components

of the Unit

issue

structure



structure



structure

Parties to

whom Units

may be issued

for Units

issued other

than by way of

rights issue

offered on a

pro rata basis

to all

Unitholders

The existing restrictions

provide, inter alia, that

except for an issuance of

Units to the Manager in

payment of its base fee

and/or performance fee,

the following persons

may not participate in an

issue of Units other than

by way of a rights issue

offered on a pro rata

basis:

– the Trustee and/or

its related parties

– the Manager and/or

its related parties

– the directors of the

Trustee, the

directors of

Manager and/or

their immediate

family members,

unless specific

Unitholders’ approval by

Ordinary Resolution5 (at

which certain persons are

to abstain from voting)

has been obtained.

Removal of existing restrictions on

placements of Units to the Manager and/or

its related parties, and the Directors and/or

their immediate family members. Such

persons will be subject to the restrictions

set out in the Listing Manual as revised and

updated from time to time.

As of the Latest Practicable Date, the

Listing Manual restrictions on placements of

Units to certain persons are as follows:


rights issue:

• Rule 812(1) – an issue must not

be placed to any of the following

persons:

(a) The issuer’s directors and

substantial Unitholders

(b) Immediate family members

of the directors and

substantial Unitholders

(c) Substantial Unitholders,

related companies,

associated companies and

sister companies of the

issuer’s substantial

Unitholders

(d) Corporations in whose

shares the issuer’s directors

and substantial Unitholders

have an aggregate interest

of at least 10%

(e) Any person who, in the

opinion of the SGX-ST, falls

within the abovementioned

categories (a) to (d).

5 “Ordinary Resolution” means a resolution proposed and passed as such by a majority being greater than 50% or more

of the total number of votes cast for and against such resolution at a meeting of Unitholders convened in accordance

with the provisions of the Trust Deed.

5

Relevant

components

of the Unit

issue

structure



structure



structure

• Rule 812(2) – Rule 812(1) will not

apply if specific Unitholders’

approval for such a placement

has been obtained. The

abovementioned persons, and

their associates (as defined

under the Listing Manual) must

abstain from voting on the

resolution approving the

placement.

• Rule 812(3) – Rule 812(1)(a) will

not apply in certain

circumstances.

• Rule 812(4) – SGX-ST may agree

to a placement to a person in

Rule 812(1)(b), (c) or (d) if it is

satisfied that the person is

independent and is not under the

control or influence of any of the

issuer’s directors or substantial

shareholders.

Level of

Unitholders’

approval

required for

issuance of

Units in

numbers

exceeding the

limit (if any)

set out in any

applicable

laws,

regulations

and the Listing

Rules6

Extraordinary

Resolution7.

Ordinary Resolution unless an

Extraordinary Resolution is required by any

applicable laws, regulations and the Listing

Rules.

Please see paragraph 2 of this Circular and Appendix A for details of the Unit Issue

Supplement.

6 “Listing Rules” means the listing rules for the time being applicable to the listing of CIT as an investment fund on the

SGX-ST as the same may be modified, amended, supplemented, revised or replaced from time to time.

7 “Extraordinary Resolution” means a resolution proposed and passed as such by a majority consisting of 75% or more

of the total number of votes cast for and against such resolution at a meeting of Unitholders convened in accordance

with the provisions of the Trust Deed.

6

(2) The Proposed Development Management Fee Supplement to the Trust Deed

The Manager proposes to supplement the Trust Deed with the Development ManagementFee Supplement for the purpose of facilitating the undertaking of Development Projects8 bythe Manager on behalf of CIT. Under the Development Management Fee Supplement, theManager proposes to charge a Development Management Fee9 of up to 3.0% of the totalproject cost incurred in Development Projects undertaken by CIT subject to the following:

(a) where the estimated total project costs in respect of a Development Project is up toS$50 million, the amount of Development Management Fee to be paid to the Managerin respect of that Development Project shall be reviewed and approved by the ARCC10;

(b) where the estimated total project costs in respect of a Development Project exceedS$50 million, the amount of Development Management Fee to be paid to the Managerin respect of that Development Project shall first be reviewed and approved by theTrustee and the Independent Directors. Where the Trustee and the IndependentDirectors so direct, the Development Management Fee shall be reduced accordingly;

(c) where the market pricing for comparable development management services asdetermined by independent quantity surveyors is materially lower than the DevelopmentManagement Fee, the Manager shall reduce the Development Management Fee tomatch the lower market pricing. To further safeguard Unitholders’ interests, standardoperating procedures for determining the competitiveness of the DevelopmentManagement Fee will also be put in place by the Manager in consultation with theIndependent Directors; and

(d) any increase in the percentage of the Development Management Fee or any change in

the structure of the Development Management Fee shall be approved by an

Extraordinary Resolution.

For the purpose of calculating the Development Management Fee, “total project costs”

means the sum of the construction costs, land costs (where applicable), principal consultants

fees, cost of obtaining all approvals for the Development Project, site staff costs, interest

costs and any other costs which could reasonably be considered to meet the definition of

total project costs and can be capitalised to the Development Project in accordance with

generally accepted accounting principles.

Please see paragraph 3 of this Circular and Appendix B for details of the Development

Management Fee Supplement.

8 “Development Project” means a project involving the development of land, or buildings, or part(s) thereof (including

asset enhancement initiatives) on land which is acquired, held or leased by CIT, provided always that the Property

Funds Appendix shall be complied with for the purposes of such development, but does not include refurbishment,

retrofitting and renovations.

9 “Development Management Fee” means development management fees for Development Projects undertaken and

managed by the Manager on behalf of CIT.

10 “ARCC” means the Audit, Risk Management and Compliance Committee of the Manager.

7

(3) The Proposed Performance Fee Supplement to the Trust Deed

The Manager proposes to supplement the Trust Deed with the Performance Fee

Supplement, with the proposed changes summarised in the table below:

Relevant

components of

the Performance

Fee calculation

formula

Current Performance Fee

calculation formula

Proposed Performance Fee

calculation formula

Closing value of

the Benchmark

Index11 for the

relevant Half Year

Based on the investible (i.e. free

float) market capitalisation

weightings of the securities

comprising the Benchmark Index

recorded on the SGX-ST during

the five Business Days

preceding the last day of the

relevant Half Year (including the

last day of the relevant Half

Year) and the five Business Days

after the last day of the relevant

Half Year (10 Business Days in

total).

Based on the average of the

closing values of the Benchmark

Index for the 10 Business Days




Year).

The closing value of the

Benchmark Index for each

Business Day is based on the

investible (i.e. free float) market

capitalisation weightings of the

securities comprising the

Benchmark Index recorded on

the SGX-ST.

11 “Benchmark Index” means (a) a performance tracking index comprising all of the real estate investment trusts

contained in the FTSE AllCap Singapore universe (but excluding CIT) provided by FTSE International Limited or

another index provider with similar capabilities; or (b) such other index as may be chosen in accordance with Clause

15 of the Trust Deed.

8

Relevant

components of

the Performance

Fee calculation

formula


calculation formula


calculation formula

Closing value of

the Trust Index12

for the relevant

Half Year

Calculated based on the last

Business Day of the relevant

Half Year (i.e. one Business Day

only).

Calculated based on the average

of the closing values of the Trust





Year).

Additionally, if the Manager

believes that the above

calculation does not provide a

fair reflection of the closing value

of the Trust Index for that

Business Day, the closing value

shall be a value as determined

by the Independent Directors

and the Trustee (in consultation

with FTSE International Limited

or another approved index

provider) as being fair closing

value of the Trust Index for that

Business Day, in favour of CIT.

VWAP13 for a Unit

(used to calculate

the equity market

capitalisation of

CIT)

Based on all trades on the

SGX-ST in the ordinary course of

trading during the five Business

Days preceding the last day of

the Half Year and the five

Business Days after the last day

of the relevant Half Year (10

Business Days in total).



trading during the 10 Business


the Half Year (including the last

day of the relevant Half Year).



calculation does not provide fair

reflection of the VWAP of a Unit,

an amount as determined by the

Independent Directors and the

Trustee (after consultation with

an approved stockbroker) as

being the fair VWAP of a Unit in

favour of CIT.

12 “Trust Index” means the performance tracking index for CIT, as calculated by FTSE or another index provider with

similar capabilities, as appointed by the Manager, in consultation with the Trustee. The Trust Index measures the total

return of CIT, combining both capital performance of the security and its reinvested income.

13 “VWAP” means volume weighted average price for that relevant period.

9

Relevant

components of

the Performance

Fee calculation

formula


calculation formula


calculation formula

Issue price of the

relevant Units to

be issued to the

Manager as

payment for

Performance

Fees (if any)

The greater of (a) the VWAP for

a Unit for all trades on the


trading during the five Business


the relevant Half Year (including

the last day of the relevant Half

Year) and the five Business Days

after the last day of the relevant

Half Year (10 Business Days in

total) and (b) Value of the

Deposited Property divided by

the number of Units in

issue/deemed to be in issue at

the end of the Half Year.








Year), or if the Manager believes

that the above calculation does

not provide fair reflection of the

VWAP of a Unit, an amount as

determined by the Independent

Directors and the Trustee (after

consultation with an approved

stockbroker) as being the fair

VWAP of a Unit and (b) Current

Unit Value14 at the end of the

Half Year.

Note that instances where the values of the Trust Index and the VWAP of a Unit not being

reflective of the fair values or VWAP (as the case may be) are limited to very rare occasions

(such as acts of market manipulation or error trades that might cause an abnormal reflection

of the closing value of the Units).

It is further proposed that the Manager may at its sole discretion waive, partially or fully, its

Performance Fees if the Manager finds the Performance Fee to be overstated, so as to

reflect the impact of the fair market pricing for all closing values relating to the calculation of

the Performance Fees.

Please see paragraph 4 of this Circular and Appendix C for details of the Performance Fee

Supplement.

14 “Current Unit Value” means at any time the Net Asset Value of the Deposited Property at that time divided by the

number of Units in issue and deemed to be in issue at that time.

10

DEFINITIONS

In this Circular, the following definitions shall apply throughout unless the context otherwise

requires or unless otherwise stated:

“ARCC” : The Audit, Risk Management and Compliance Committee of

the Manager

“Authorised Investments” : Has the meaning as defined in the Trust Deed

“Authority” : The Monetary Authority of Singapore

“Base Fee” : The base fee payable to the Manager, determined pursuant to

Clause 15.1.1 of the Trust Deed

“Benchmark Index” : (a) A performance tracking index comprising all of the real

estate investment trusts contained in the FTSE AllCap

Singapore universe (but excluding CIT) provided by FTSE

International Limited or another index provider with similar

capabilities; or (b) such other index as may be chosen in

accordance with Clause 15 of the Trust Deed. A link to the

Benchmark Index is available on CIT’s website

“Business Day” : Any day (other than a Saturday, Sunday or gazetted public

holiday) on which commercial banks are generally open for

business in Singapore and the SGX-ST is open for trading

“CDP” : The Central Depository (Pte) Limited

“Circular” : This circular to Unitholders dated 25 March 2013

“CIT” or “Trust” : Cambridge Industrial Trust, a unit trust constituted in the

Republic of Singapore pursuant to a trust deed dated 31

March 2006 (as amended)

“Code” : The Code on Collective Investment Schemes issued by the

Authority, as the same may be modified, amended,

supplemented, revised or replaced from time to time

“Convertible Securities” : Convertible securities (including but not limited to warrants) or

other instruments which may be convertible into Units

“Current Unit Value” : At any time the Net Asset Value of the Deposited Property at

that time divided by the number of Units in issue and deemed

to be in issue at that time

“Deposited Property” All the assets of CIT, including all its Authorised Investments

for the time being held or deemed to be held upon the trusts

of the Trust Deed

“Development

Management Fee”

: Development management fees for Development Projects

undertaken and managed by the Manager on behalf of CIT

11

“Development

Management Fee

Supplement”

: The proposed amendments to the Trust Deed as set out in

Appendix B to this Circular

“Development Project” : A project involving the development of land, or buildings, or

part(s) thereof (including asset enhancement initiatives) on

land which is acquired, held or leased by CIT, provided always

that the Property Funds Appendix shall be complied with for

the purposes of such development, but does not include

refurbishment, retrofitting and renovations

“Directors” : The directors of the Manager

“EGM” : The extraordinary general meeting of Unitholders to be held

on 19 April 2013 at 2.30 p.m. (or as soon thereafter following

the conclusion/adjournment of the Annual General Meeting of

CIT to be held at 2.00 p.m. on the same day and at the same

place), notice of which is set out on page 70 of this Circular

“Extraordinary

Resolution”

: A resolution proposed and passed as such by a majority

consisting of 75% or more of the total number of votes cast for

and against such resolution at a meeting of Unitholders

convened in accordance with the provisions of the Trust Deed

“Half Year” : A period of six months ending 30 June or 31 December in

each year

“IFA” : The independent financial adviser, being Deloitte & Touche

Corporate Finance Pte Ltd

“IFA Letter” : The letter of the IFA as set out in Appendix D to this Circular

“Independent Directors” : The independent directors of the Manager

“Latest Practicable Date” : 15 March 2013, being the latest practicable date prior to the

printing of this Circular

“Liabilities” : All the liabilities of CIT (including liabilities accrued but not yet

paid) and any provision which the Manager decides in

consultation with the auditors of CIT should be taken into

account in determining the liabilities of CIT

“Listing Manual” : The Listing Manual of the SGX-ST, as the same may be

modified, amended, supplemented, revised or replaced from

time to time

“Manager” : Cambridge Industrial Trust Management Limited, solely in its

capacity as manager of CIT

12

“Market Price” : The volume weighted average price for a Unit for all trades on

the SGX-ST in the ordinary course of trading on the SGX-ST

for the period of 10 Business Days immediately preceding the

relevant Business Day or (if the Manager believes that such

calculation does not provide a fair reflection of the market

price of a Unit) an amount as determined by the Manager and

the Trustee (after consultation with a stockbroker approved by

the Trustee), as being the fair market price of a Unit

“Net Asset Value of the

Deposited Property”

: At any time the Value of the Deposited Property, less the

Liabilities

“Ordinary Resolution” : A resolution proposed and passed as such by a majority being

greater than 50% or more of the total number of votes cast for

and against such resolution at a meeting of Unitholders

convened in accordance with the provisions of the Trust Deed

“Performance Fee” : The performance fee payable to the Manager, determined

pursuant to the Trust Deed

“Performance Fee

Supplement”

: The proposed amendments to the Trust Deed as set out in

Appendix C to this Circular

“Preliminary Charge” : A charge upon the issue or sale of a Unit of such amount as

shall from time to time be fixed by the Manager generally or in

relation to any specific or class of transaction provided that it

shall not exceed 5% of the issue price (excluding the

Preliminary Charge) at the time of issue or sale of the Unit;

such expression in the context of a given date shall refer to

the charge or charges fixed by the Manager pursuant to the

Trust Deed and applicable on that date, provided further that

this charge shall not apply while the Units are listed

“Property Funds

Appendix”

: The investment guidelines issued by the Authority regulating

collective investment schemes that invest or propose to invest

in real estate and real estate-related assets in Appendix 6 to

the Code, as the same may be modified, amended,

supplemented, revised or replaced from time to time

“REIT” : Real estate investment trust

“Securities Account” : A securities account maintained by a depositor with CDP but

does not include a securities sub-account maintained with a

depository agent

“SGX-ST” : Singapore Exchange Securities Trading Limited

13

“Trust Deed” : The deed of trust dated 31 March 2006 constituting CIT

entered into between the Manager and the Trustee, as

supplemented and amended by a first supplemental deed

dated 15 August 2007, a second supplemental deed dated 28

January 2009, a third supplemental deed dated 13 November

2009, a fourth supplemental deed dated 27 January 2010, a

fifth supplemental deed dated 22 April 2010 and a sixth

supplemental deed dated 2 February 2012

“Trust Index” : The performance tracking index for CIT, as calculated by

FTSE or another index provider with similar capabilities, as

appointed by the Manager, in consultation with the Trustee.

The Trust Index measures the total return of CIT, combining

both capital performance of the security and its reinvested

income. A link to the Trust Index is available on CIT’s website

“Trustee” : RBC Investor Services Trust Singapore Limited, in its capacity

as trustee of CIT

“Unit” : A unit representing an undivided interest in CIT

“Unit Issue Supplement” : The proposed amendments to the Trust Deed as set out in

Appendix A to this Circular

“Unitholder” : The registered holder for the time being of a Unit, including

persons so registered as joint holders, except where the

registered holder is CDP, the term “Unitholder” shall, in

relation to Units registered in the name of CDP, mean, where

the context requires, the Depositor whose Securities Account

with CDP is credited with Units

“Value” : Except where otherwise expressly stated, means with

reference to any Authorised Investment or the Deposited

Property, its value for the time being as determined pursuant

to the Trust Deed

“VWAP” : Volume weighted average price for that relevant period

“%” : Per centum or percentage

“S$” and “cents” : Singapore dollars and cents, respectively, the lawful currency

of the Republic of Singapore

The terms “depositor”, “depository agent” and “Depository Register” shall have the meanings

ascribed to them respectively in Section 130A of the Companies Act, Chapter 50 of Singapore.

The terms “associate” and “interested person” shall have the meanings ascribed to them

respectively in the Listing Manual.

Words importing the singular shall, where applicable, include the plural and vice versa and words

importing any one gender shall, where applicable, include the other genders where applicable.

References to persons shall, where applicable, include corporations.

14

Any reference to a time of day in this Circular shall be a reference to Singapore time unless

otherwise stated.

Any reference in this Circular to any enactment is a reference to that enactment as for the time

being amended or re-enacted. Any term defined under the Code or the Listing Manual and used

in this Circular shall, where applicable, have the meaning ascribed to it under the Code or the

Listing Manual, as the case may be, unless otherwise provided. Summaries of the provisions of

any laws and regulations (including the Code and the Listing Manual) contained in this Circular are

of such laws and regulations (including the Code and the Listing Manual) as at the Latest

Practicable Date.

Any discrepancies in the tables in this Circular between the listed amounts and the totals thereof

are due to rounding.

15

CAMBRIDGE INDUSTRIAL TRUST(A unit trust constituted in the Republic of Singapore

pursuant to a trust deed dated 31 March 2006 (as amended))

Directors of the Manager: Registered Office:

Dr Chua Yong Hai (Independent Chairman) 61 Robinson Road

#12-01

Robinson Centre

Singapore 068893

Professor Ong Seow Eng (Independent Director, Chairman of Audit,

Risk Management and Compliance

Committee)

Mr Tan Guong Ching (Independent Director, Member of Audit,


Committee)

Mr Ooi Eng Peng (Independent Director, Member of Audit,


Committee)

Mr Michael Patrick Dwyer (Non-Executive Director, Member of Audit,


Committee)

Mr Victor Ong Wei Tak (Alternate Director to Mr Michael Patrick

Dwyer)

Mr Masaki Kurita (Non-Executive Director)

Mr Ian Andrew Smith (Non-Executive Director)

Mr Lee Stuart Neibart (Non-Executive Director)

Mr Christopher Dale

Calvert

(Executive Director and Chief Executive

Officer)

25 March 2013

To: Unitholders of Cambridge Industrial Trust

Dear Sir/Madam

1. INTRODUCTION

1.1 Summary of Approvals Sought

The Manager is seeking approval from Unitholders on each of the following resolutions,

which shall be proposed as Extraordinary Resolutions at the EGM:

(a) the proposed Unit Issue Supplement to the Trust Deed;

(b) the proposed Development Management Fee Supplement to the Trust Deed; and

(c) the proposed Performance Fee Supplement to the Trust Deed,

as further explained in paragraphs 2, 3 and 4 respectively below.

The SGX-ST assumes no responsibility for the correctness of any of the statements made,

reports contained or opinions expressed in this Circular.

16

1.2 Supplemental Deed

Unitholders’ approval is being sought for the above resolutions as the Manager is proposing

to amend the Trust Deed. Subject to approval from the Unitholders in respect of all or any of

the resolutions set out in the notice of the EGM, the Manager intends to enter into a

supplemental deed with the Trustee to amend the Trust Deed and also to take this

opportunity to streamline and rationalise certain other provisions in the Trust Deed.

2. THE PROPOSED UNIT ISSUE SUPPLEMENT TO THE TRUST DEED

2.1 The Unit Issue Supplement

The Trust Deed currently provides, among others, that for so long as CIT is listed, without

prior approval of Unitholders:

(a) the issue price of a Unit for a rights issue offered on a pro rata basis to all Unitholders

must not be less than 50% (or such other percentage as may be permitted by, inter alia,

the SGX-ST) of the prevailing Market Price;

(b) the issue price of a Unit for any reinvestment of distribution arrangement must not be

less than 90% of the prevailing Market Price;

(c) new Units may be issued other than by way of a rights issue offered on a pro rata basis

to all Unitholders provided that:

(i) the issue (together with any other issue of Units other than by way of a rights issue

offered on a pro rata basis to all Unitholders in the same financial year) would not,

immediately after the issue, exceed 10% of the Value of the Deposited Property

provided that the number of Units which would be represented by such percentage

does not exceed 20% of the total Units; and

(ii) where such an issue is made at a discount to the market price, the discount does

not exceed 5%; and

(d) except in the case of an issue of Units to the Manager in payment of the Manager’s base

fee and/or Performance Fee:

(i) the Trustee and/or its related parties;

(ii) the Manager and/or its related parties; and

(iii) the directors of the Trustee, the Directors and/or their immediate family members,

may not participate in the issue of Units other than by way of a rights issue offered on

a pro rata basis to all existing Unitholders.

In addition, the Trust Deed also provides that where specific approval of Unitholders is

required in respect of the issue of Units in certain circumstance (such as where the

thresholds under paragraph 2.1(c) above are exceeded), the Manager is required to obtain

Unitholders’ approval by way of an Extraordinary Resolution instead of an Ordinary

Resolution.

17

In connection with the above, the Manager proposes to supplement the Trust Deed with the

Unit Issue Supplement by:

(A) removing the existing specific limits on the issue price of a Unit offered by way of a pro

rata rights issue, a distribution reinvestment plan or otherwise and instead requiring the

Manager to comply with the Listing Manual as revised and updated from time to time,

when determining the issue price of a Unit;

(B) removing the provisions which restrict the number of Units, which may be issued without

Unitholders’ approval, to 10% of the Value of the Deposited Property and the

corresponding discount, if any, to 5% of the market price of a Unit. The Manager will

instead be required to comply with the Listing Manual which sets out when specific

Unitholders’ approval is required for an issue of new Units and/or Convertible

Securities;

(C) removing the provisions which restrict the issue of Units to the Manager and/or its

related parties, and the Directors and/or their immediate family members. The Manager

will instead be required to comply with the Listing Manual which sets out when

placements of Units may be made to certain restricted placees; and

(D) removing the provisions which require specific approval of Unitholders in respect of an

issue of Units to be by way of an Extraordinary Resolution.

For so long as CIT is listed, the Manager will comply with any applicable laws, regulations

and the rules of the SGX-ST for the time being applicable in relation to issuances of Units.

For the avoidance of doubt, the current provisions in the Trust Deed restricting the issue of

Units to the Trustee and/or its related parties and the directors of the Trustee and/or their

immediate family members remain unchanged.

In the event that CIT is delisted, Clause 5.4 of the Trust Deed currently provides, inter alia,

that the Manager may issue Units at an issue price equal to the Current Unit Value on the

date of the issue of the Unit plus, if so determined by the Manager, an amount equal to the

Preliminary Charge and an amount to adjust the resultant total upwards to the nearest whole

cent. The Preliminary Charge shall be retained by the Manager for its own benefit and the

amount of the adjustment shall be retained as part of the Deposited Property. There are no

proposed amendments to Clause 5.4 of the Trust Deed.

2.2 Rationale for the Unit Issue Supplement

The Manager proposes to supplement the Trust Deed with the Unit Issue Supplement to

provide the Manager with the flexibility to, among others:

(a) determine the issue price for new Units offered by way of a pro rata rights issue or

otherwise so long as such issue price complies with the Listing Manual;

(b) determine the number of new Units issued by way of a pro rata rights issue or otherwise

so long as such issuance of new Units complies with the Listing Manual; and

(c) obtain Unitholders’ approval for the issue of Units, where such approval is required by

way of an Extraordinary Resolution, by way of an Ordinary Resolution instead.

The Manager is of the view that the proposed amendments are consistent with the industry’s

best practices and will also serve to align the provisions of the Trust Deed to the Listing

Manual. This is intended to enable CIT to raise funds in a prompt and efficient manner and

to better handle its capital requirements, as well as to avoid any potentially confusing

situations where the requirements under the Trust Deed and the Listing Manual differ.

Please see Appendix A for details of the Unit Issue Supplement.

18

3. THE PROPOSED DEVELOPMENT MANAGEMENT FEE SUPPLEMENT TO THE TRUST

DEED

3.1 The Development Management Fee Supplement

The Manager proposes to supplement the Trust Deed with the Development Management

Fee Supplement for the purpose of facilitating the undertaking of Development Projects by

the Manager on behalf of CIT. In this regard, the Manager proposes to charge a Development

Management Fee of up to 3.0% of the total project cost incurred in Development Projects

undertaken by CIT subject to the following:

(a) where the estimated total project costs in respect of a Development Project is up to

S$50 million, the amount of Development Management Fee to be paid to the Manager

in respect of that Development Project shall be reviewed and approved by the ARCC;

(b) where the estimated total project costs in respect of a Development Project exceed

S$50 million, the amount of Development Management Fee to be paid to the Manager

in respect of that Development Project shall first be reviewed and approved by the

Trustee and the Independent Directors. Where the Trustee and the Independent

Directors so direct, the Development Management Fee shall be reduced accordingly;

(c) where the market pricing for comparable development management services as

determined by independent quantity surveyors is materially lower than the Development

Management Fee, the Manager shall reduce the Development Management Fee to

match the lower market pricing. To further safeguard Unitholders’ interests, standard

operating procedures for determining the competitiveness of the Development

Management Fee will also be put in place by the Manager in consultation with the

Independent Directors; and

(d) any increase in the percentage of the Development Management Fee or any change in

the structure of the Development Management Fee shall be approved by an

Extraordinary Resolution.


means the sum of the construction costs, land costs (where applicable)15, principal

consultants fees, cost of obtaining all approvals for the Development Project, site staff costs,

interest costs and any other costs which could reasonably be considered to meet the

definition of total project costs and can be capitalised to the Development Project in

accordance with generally accepted accounting principles.

The Development Management Fee will only be payable in respect of Development Projects

actually undertaken by the Trust. As such, the Manager will not charge a Development

Management Fee for sourcing and conducting feasibility studies on development

opportunities which do not eventually materialise into Development Projects.

The Development Management Fee will be paid to the Manager in cash in equal monthly

instalments over the construction period of each Development Project, based on the

Manager’s best estimate of the total project costs and construction period and, in the event

of any overpayment or underpayment, a final adjustment of the balance when the total

project costs are finalised. If the total project costs have been over-estimated, a refund of the

excess Development Management Fee will be made by the Manager to CIT.

15 For redevelopment of existing properties, land cost refers to all costs associated with land such as any payment of

additional premium or amounts to the regulatory authorities in connection with the redevelopment, but does not

include the value of the land. For avoidance of doubt, there will be no land cost component for land which has been

allocated at no cost to CIT for built-to-suit developments.

19

For any development management services provided by any third party service providers in

connection with a Development Project, any payment to such third party service providers

shall be borne by the Manager, and not additionally out of the Trust. CIT shall bear all

applicable goods and services tax and all other applicable sales tax, governmental

impositions, duties and levies whatsoever imposed on the Development Management Fee by

the relevant authorities in Singapore or elsewhere.

Please see Appendix B for details of the Development Management Fee Supplement.

3.2 Responsibility of Manager as Development Manager

As development manager, the Manager shall be responsible for providing development

management services such as:

(a) sourcing for and conducting feasibility studies on development opportunities and

coordinating with consultants to perform technical due diligence;

(b) overall responsibility for the planning, control and monitoring of the progress of the

Development Project from conception to completion to ensure that the Development

Project is completed within the stipulated time and budget and to the stipulated quality;

(c) working closely with and overseeing the appointed project manager16, architect and

consultants to carry out relevant value engineering to ensure a cost-efficient building;

(d) reporting to the Trustee on a regular basis, in particular, on the cost and progress of the

Development Project;

(e) representing the Trustee in all site meetings during the construction period, and to

advise on any variation works and (where applicable) make appropriate

recommendations to the Trustee for consideration;

(f) establishing the prospective tenant’s real estate requirements, make site selection,

negotiate with government authorities on land allocation and conditions;

(g) providing value-added inputs on the concept and schematic plans by engaging the

Trustee’s service providers, namely property managers and marketers and involving the

Manager’s asset managers to ensure an efficient, functional and marketable end

product;

(h) liaising with the prospective tenant for acceptance of concept and schematic plans and

building specifications;

(i) establishing and ensuring agreement with the prospective tenant on the overall

milestones for the delivery of the Development Project; and

(j) finalising with the prospective tenant the architectural schematic plans/specifications

for use as the basis for calling of tender(s).

16 The role of the project manager is distinct from that of the development manager and includes the preparation of

tender documents, evaluating tender submissions, programme management and scheduling, contract administration

and regular reporting of cost, time, quality and project concerns to the development manager.

20

3.3 Rationale for the Development Management Fee Supplement

The Manager intends to complement its existing strategy of organic growth and acquisition

growth by undertaking development activities, subject to the limit imposed by the Property

Funds Appendix (i.e. the total contract value of the property development activities

undertaken and investments in uncompleted property developments at any one time, is

limited to 10% of the Deposited Property).

In this connection, the Manager proposes to amend the Trust Deed with the Development

Management Fee Supplement for the following reasons:

(a) the Manager believes that having a development strategy is beneficial to Unitholders as

Development Projects can potentially provide greater returns compared to outright

acquisitions of income-producing properties and thus may improve the net asset value

of CIT’s portfolio and enhance distributions to Unitholders.

Table 3.3(a) below shows three recently completed Development Projects and the only

Development Project currently in progress undertaken by CIT. No Development

Management Fees are payable to the Manager for these projects. For illustration

purposes, the table shows the gross yield on cost for each project, where no

Development Management Fee was paid, as well as on the assumption that a

Development Management Fee of 3.0% is payable.

The development cost of a property is usually lower than an outright acquisition due to

the absence of developer’s profit which is payable to the developer as part of the

purchase price in an outright acquisition. Hence, CIT may benefit from a larger

unrealised valuation gain (if there is an uplift of valuation in the property after

development) than an outright acquisition and this may in turn result in an improvement

in the net asset value of CIT. In turn, this may result in an uplift in CIT’s unit price as a

consequence of CIT’s underlying asset value increasing.

Unitholders may receive a savings benefit if the total construction cost is lower than the

cost of acquiring the properties at completion from a developer, assuming that the price

paid to the developer for these properties was the valuation amount. In addition, the

gross yield on cost is likely to be higher than the gross yield on the valuation amount,

which would potentially result in increased distributions to Unitholders;

21

Table 3.3(a) − CIT’s Development Projects

Project

Description

Completed

On

Total Project

Cost

(excluding

Development

Management

Fee)

(S$ million)

Valuation

as at

31 December

2012

(S$ million)

Capital Value

Appreciation

(S$ million)

Gross

Yield on

Cost

(%)

Development

Management

Fee (for

illustrative

purposes

only)

(S$ million)

Gross Yield

on Cost

(assuming a

Development

Management

Fee is

payable)

(%)

43 Tuas View

Circuit

3Q2012 13.5 14.7 1.2 9.5 0.4 9.2

70 Seletar

Aerospace

4Q2012 8.6 8.8 0.2 10.8 0.3 10.5

30 Toh Guan

Road

4Q2012 8.1 9.6 1.5 10.4 0.2 10.1

88 International

Road

Targeted

2Q2013

23.4(1)(2) 28.2(2) 4.8 7.7 0.5 7.5

(1) Consists of initial building carrying value of S$6.6 million and an estimated total project cost of S$16.8 million for

full completion of the project.

(2) Estimated cost/valuation based on full completion of project.

(b) unlike outright acquisitions of completed income-producing properties, the process of

property development is more complex as it requires a longer “gestation” period and

involves the management and supervision of significant construction activity. The

“gestation” period (i.e. from the time taken between identification of development

opportunities and the confirmation of a deal) may take up to a year and sometimes

longer. From confirmation of a deal to the completion of the construction of the

Development Project, the development management process typically takes 18 to 30

months depending on the size of the Development Project. In contrast, the time frame

for outright acquisitions may be as short as three to four months from the initial

inspection until the completion of the acquisition;

(c) development management usually involves more extensive liaisons with external

parties such as architects, engineers and the relevant authorities. The amount of

services rendered for a Development Project is significantly more than the amount of

services rendered for an acquisition; and

(d) not all development opportunities may result in confirmed Development Projects. Any

costs incurred during the period when the Manager identifies a development opportunity

to the time when confirmation of the Development Project is sought (i.e. the pre-

construction phase) will be borne by the Manager, if such confirmation of the

Development Project is not subsequently obtained.

The Manager has in-house project and property development capabilities. The team is led by

Mr Michael Long, an experienced development manager with over 20 years of experience in

the real estate development and construction industries in, among others, the large-scale

industrial, residential and commercial sectors. During his career in project development and

construction, Mr Michael Long has successfully delivered premium quality developments

working as a Senior Project Manager for Confluence Project Management in Singapore and

Bovis Lend Lease in Singapore, London and Sydney. He holds a Clerk of Works, Building

Diploma from Sydney TAFE and is an active member of the Project Managers Institute of

Australia.

22

CIT will only undertake developments on a selective basis to ensure they are value

enhancing to the existing portfolio. For example, the Manager believes that development

activities such as built-to-suit developments could be undertaken to cater to a prospective

tenant’s operational requirements and specifications. Such developments may generate long

term master leases to enable CIT to extend its lease expiry profile.

In carrying out development activities, the Manager will consider, among other things,

development and construction risks, as well as the overall benefits to Unitholders and the

tenants.

3.4 Application of the Development Management Fee

Subject to approval by Unitholders for the Development Management Fee Supplement, the

Development Management Fee will be chargeable in respect of all current and future

Development Projects of CIT managed by the Manager. In respect of current Development

Projects, the Development Management Fee will be charged with effect from the date of

amendment to the Trust Deed (assuming Unitholders’ approval is obtained at the EGM) on

a pro rata basis over the remaining construction period of such projects. However, in respect

of the current Development Project at 88 International Road, the Manager has agreed to

waive the Development Management Fee because the project is nearing completion. Save

for the abovementioned project at 88 International Road, there are no other current projects

undergoing development as of the Latest Practicable Date.

No acquisition fees and other additional fees will be paid to the Manager for development

management services which are rendered for Development Projects if the Manager receives

the Development Management Fee. For instance, if CIT invests in real estate to be built on

vacant land that has been approved for development or other uncompleted property

developments, CIT will pay to the Manager a Development Management Fee for the

Development Project. CIT will not have to pay to the Manager an acquisition fee in respect

of its investment in the Development Project.

A Development Management Fee is chargeable for redevelopment of an existing property.

However, the Manager will not receive a Development Management Fee for activities

involving refurbishment, retrofitting and renovations.

3.5 Applicability of Rules Relating to Interested Person Transactions and Interested Party

Transactions

Under Chapter 9 of the Listing Manual, where CIT proposes to enter into a transaction with

an interested person and the value of the transaction (either in itself or when aggregated with

the value of other transactions, each a value equal to or greater than S$100,000, with the

same interested person during the same financial year) is equal to or exceeds 5% of the

latest audited net tangible assets of CIT and its subsidiaries, Unitholders’ approval is

required in respect of the transaction.

Paragraph 5 of the Property Funds Appendix also imposes a requirement for Unitholders’

approval for an interested party transaction by CIT which value is equal to or exceeds 5% of

CIT’s net asset value.

As the Manager is an interested person of CIT under the Listing Manual and an interested

party of CIT under the Property Funds Appendix, the proposed Development Management

Fee Supplement is an interested person transaction under the Listing Manual and an

interested party transaction under the Property Funds Appendix.

23

Although the Development Management Fee together with the Performance Fee is unlikely

to exceed 5% of CIT’s latest audited net tangible assets or net asset value in any given

financial year, the Manager is nonetheless seeking Unitholders’ approval for the

Development Management Fee Supplement as a matter of good corporate governance

practice. Further, should such approval be obtained, the payment of Development

Management Fees to the Manager in accordance with the Development Management Fee

Supplement shall not be subject to aggregation or further Unitholders’ approval requirements

under Rules 905 and 906 of the Listing Manual and under paragraph 5 of the Property Funds

Appendix, to the extent that there is no subsequent increase in the rates of, or change in the

structure of, the Development Management Fee.

As the quantum of any Development Management Fees payable to the Manager will be

determined based on the total costs incurred in the Development Projects undertaken by the

Manager on behalf of CIT, the Manager will disclose the aggregate Development

Management Fees paid to the Manager during the financial year in CIT’s annual report each

year.

Details of interested person transactions and interested party transactions entered into by

CIT for the financial year ended 31 December 2012 and for the current financial year are set

out in Appendix E to the Circular.

3.6 Advice of the Independent Financial Adviser

The IFA has been appointed to advise the Independent Directors in relation to the proposed

Development Management Fee Supplement.

Having considered the terms of reference, the principal terms of the proposed Development

Management Fee Supplement, evaluation of the proposed Development Management Fee

Supplement and the assumptions set out in the IFA Letter, and subject to the qualifications

set out therein, the IFA is of the opinion that the proposed Development Management Fee

Supplement is on normal commercial terms and not prejudicial to CIT and its Unitholders who

are not interested persons.

The IFA has therefore advised the Independent Directors to recommend that Unitholders

vote in favour of the Development Management Fee Supplement.

The IFA Letter, containing its advice in full, is set out in Appendix D of this Circular.

4. THE PROPOSED PERFORMANCE FEE SUPPLEMENT TO THE TRUST DEED

4.1 The Performance Fee Supplement

The Manager earns a performance fee if the total return (combining both capital performance

of a Unit and its reinvested income) of the Trust Index outperforms the total return of the

Benchmark Index, currently consisting of the eight largest REITs in Singapore. The

Performance Fee is calculated in two tiers based on a fixed percentage of the

outperformance multiplied by the equity market capitalisation of CIT. The Manager may opt

to receive the Performance Fees in Units or cash or a combination thereof. Unitholders may

refer to Appendix C of this Circular for an understanding of how the Performance Fee is

calculated.

24

The Trust Deed currently provides, amongst others, that for the purposes of calculating the

Performance Fee of the Manager (if any) in respect of a Half Year:

(a) the closing value of the Benchmark Index for the relevant Half Year will be based on the

investible (i.e. free float) market capitalisation weightings of the securities comprising

the Benchmark Index recorded on the SGX-ST (or other exchange on which such

securities are quoted) during the five Business Days preceding the last day of the

relevant Half Year (including the last day of the relevant Half Year) and the five Business

Days after the last day of the relevant Half Year (10 Business Days in total);

(b) the Trust Index will be calculated in accordance with the index provider’s standard

practices in relation to index calculation;

(c) the VWAP for a Unit used to calculate the market capitalisation of CIT shall be based

on all trades on the SGX-ST in the ordinary course of trading during the five Business

Days preceding the last day of the Half Year (including the last day of the relevant Half

Year) and the five Business Days after the last day of the relevant Half Year (10

Business Days in total); and

(d) where the whole or part of the Performance Fee is to be paid in the form of Units, the

issue price of the Units to be issued, shall be the greater of (i) the VWAP for a Unit for

all trades on the SGX-ST in the ordinary course of trading during the five Business Days

preceding the last day of the relevant Half Year (including the last day of the relevant

Half Year) and the five Business Days after the last day of the relevant Half Year (10

Business Days in total) and (ii) the Value of the Deposited Property divided by the

number of Units in issue or deemed to be in issue at the end of the Half Year. The

number of Units to be issued will thereafter be determined based on the issue price of

the Units to be issued.

Issue of Units at Market Price

For so long as CIT is listed, the Manager may, subject to the provisions of the Listing Manual

and the Trust Deed, issue further Units on any Business Day at the Market Price. Market

Price is defined in Clause 5.3.1 of the Trust Deed as follows:

“(i) the volume weighted average price for a Unit (if applicable, of the same Class) for all

trades on the SGX-ST, or such other Recognised Stock Exchange on which the Trust is

listed, in the ordinary course of trading on the SGX-ST or, as the case may be, such

other Recognised Stock Exchange, for the period of 10 Business Days (or such other

period as may be prescribed by the SGX-ST or relevant Recognised Stock Exchange)

immediately preceding the relevant Business Day; or

(ii) if the Manager believes that the calculation in Clause 5.3.1(i) does not provide a fair

reflection of the market price of a Unit, an amount as determined by the Manager and

the Trustee (after consultation with a Stockbroker approved by the Trustee), as being

the fair market price of a Unit.”

This residual ability of the Manager to investigate whether the VWAP is a fair reflection of the

market price for a Unit and if not, to determine an amount (after consultation with a

stockbroker approved by the Trustee), as being the fair market price of a Unit has been

termed as a “recourse option” by some professionals in the REIT industry. Such a “recourse

option” is a common provision in the trust deeds of most REITs in Singapore (please refer to

section 6.3 of the IFA Letter).

25

Differences between issue price of Units for payment of Base Fee and Performance Fee

The management fees payable to the Manager comprise the Base Fee and Performance

Fee. There are some differences between the applicable provisions in the Trust Deed for

payment of Base Fee and Performance Fee to the Manager.

First, the issue price of Units for payment of Base Fee is taken with reference to Clause 5.3.1

of the Trust Deed (please refer to the extract reproduced above). However, the issue price

of Units for payment of Performance Fee is taken with reference to Clause 15.1.2(iv) of the

Trust Deed (please refer to Appendix C of this Circular). The latter contains a “greater of”

provision while the former does not. Next, the issue price of Units for payment of Base Fee

takes reference from the “relevant Business Day”, while the issue price of Units for payment

of Performance Fee takes reference from the end of the Half Year. Finally, the issue price of

Units for payment of Base Fee contains a “recourse option” pursuant to which the Manager

and the Trustee may determine the fair market price of a Unit. On the other hand, the issue

price of Units for payment of Performance Fee currently does not contain any “recourse

option”. As explained further below, the Manager is proposing that a “recourse option” be

introduced for the latter, with the Independent Directors and the Trustee to be given the

ability to determine the fair market price of a Unit.

In connection with the above, the Manager proposes to supplement the Trust Deed with the

Performance Fee Supplement by providing that, for the purposes of calculating its

Performance Fee (if any) in respect of a Half Year:

(1) the calculations for the values of the Benchmark Index and the Trust Index, as at the

close of the Half Year, shall be aligned and based on the average of the closing values

of the Benchmark Index or, as the case may be, the Trust Index, for the 10 Business

Days preceding the last day of the relevant Half Year (including the last day of the

relevant Half Year). If the Manager believes that the foregoing calculation for the Trust

Index does not provide a fair reflection of the closing value of the Trust Index for that

Business Day, the closing value shall be a value as determined by the Independent

Directors and the Trustee (after consultation with FTSE International Limited or another

index provider approved by the Manager and Trustee), as being the fair closing value

of the Trust Index for that Business Day in favour of CIT. The closing value of the

Benchmark Index for each Business Day will be based on the investible (i.e. free float)

market capitalisation weightings of the securities comprising the Benchmark Index

recorded on the SGX-ST (or other exchange on which such securities are quoted);

(2) the VWAP for a Unit used to calculate the market capitalisation of CIT shall be based

on all trades on the SGX-ST in the ordinary course of trading during the 10 Business

Days preceding the last day of the Half Year (including the last day of the relevant Half

Year), or if the Manager believes that the foregoing calculation does not provide a fair

reflection of the VWAP of a Unit, an amount as determined by the Independent Directors

and the Trustee (after consultation with a stockbroker approved by the Trustee), as

being the fair VWAP of a Unit in favour of CIT; and

(3) where the whole or part of the Performance Fee is to be paid in the form of Units, the

issue price of the Units to be issued shall be the greater of (A) the VWAP for a Unit for

all trades on the SGX-ST in the ordinary course of trading during the 10 Business Days


Half Year), or if the Manager believes that the foregoing calculation does not provide a

fair reflection of the VWAP of a Unit, an amount as determined by the Independent

Directors and the Trustee (after consultation with a stockbroker approved by the

26

Trustee), as being the fair VWAP of a Unit and (B) the Current Unit Value, at the end of

the Half Year. The number of Units to be issued will thereafter be determined based on

the issue price of the Units to be issued.

Note that instances where the values of the Trust Index and the VWAP of a Unit not being



of the closing value of the Units).

It is further proposed that the Manager may at its sole discretion waive, partially or fully, its

Performance Fees if the Manager finds the Performance Fee to be overstated, so as to

reflect the impact of the fair market pricing for all closing values relating to the calculation of

the Performance Fees.

4.2 Rationale for the Proposed Performance Fee Supplement

(a) Alignment of Benchmark Index and Trust Index

The Manager wishes to align the calculations of the Benchmark Index and the Trust

Index to make them less susceptible to erratic market fluctuations and consistent with

each other. Currently, the closing value of the Benchmark Index for the Half Year is

based on an average of 10 Business Days, whereas the closing value of the Trust Index

is based on one Business Day only.

The Manager is therefore proposing the Performance Fee Supplement to provide that

the closing value of the Trust Index for the relevant Half Year shall be calculated based

on the average of the closing values of the Trust Index for the 10 Business Days


Half Year). The Manager believes that the Trust Index calculated based on the

10-Business Day average is more representative of the Trust Index as at the close of

a Half Year, as it will not be wholly dependent on the closing price of the Units as at the

last Business Day of a Half Year, and is consistent with the calculation of the Benchmark

Index.

In addition, the closing value of the Benchmark Index for the relevant Half Year is

currently calculated based on the average of the Benchmark Index values for 10

Business Days being the five Business Days preceding the last day of the relevant Half

Year (including the last day of the relevant Half Year) and the five Business Days after

the last day of the relevant Half Year. The Manager is therefore also proposing to align

the period for the calculations of the closing value of the Benchmark Index with that of

the proposed calculation period of the closing value of the Trust Index, for the relevant

Half Year for consistency. In addition, the Manager is of the view that the proposed

reference period of 10 Business Days preceding the last day of the relevant Half Year

(including the last day of the relevant Half Year), is more appropriate and relevant as

such reference period will fall within the Half Year which the Performance Fee is being

computed for, and also appears to be more common amongst REITs.

By adjusting the calculation methods, the Manager believes that the performance

measurements will be more consistent and the Trust Index will be less susceptible to

erratic market fluctuations. The current calculation of the Trust Index, which is based on

one Business Day only, will be subject to the impact of market price fluctuations for that

day. Hence, the proposed calculation of the Trust Index, which is based on the

10-Business Day average, aims to reduce the impact of market price fluctuations of any

particular day during the period through averaging.

27

The amendment to the calculation for market capitalisation is also for the purposes of

consistency with the proposed amendments to the calculations for the Benchmark Index

and Trust Index.

(b) Proposed inclusion of “recourse options” for calculation of Performance Fee and

Manager’s discretion to waive Performance Fees payable

There may be rare occasions where the values of the Trust Index and the VWAP of a

Unit are not fairly reflective of the values of the Trust Index or VWAP (as the case may

be) due to acts of market manipulation or error trades and this impacts the computation

of the Performance Fee.

Hence, the Manager believes that it is desirable to introduce “recourse options” for the

calculation of the Performance Fee such that if the Manager believes that the

calculation does not provide a fair reflection of the closing value of the Trust Index or

the VWAP of a Unit (as the case may be), the Independent Directors and the Trustee

may, after consultation with the index provider or a stockbroker (as the case may be),

determine a value or amount, in favour of CIT, as being the fair closing value of the Trust

Index or the fair VWAP of a Unit (as the case may be). The index provider or the

stockbroker (as the case may be) will recommend a fair value, which the Independent

Directors and the Trustee will consider when determining the fair closing value of the

Trust Index or the fair VWAP of a Unit (as the case may be). This is to ensure that the

quantum of the Manager’s Performance Fee is fairly and reasonably determined in the

interests of CIT and ultimately, the Unitholders.

Currently, the provisions of the Trust Deed relating to the calculation of the Performance

Fee payable to the Manager do not contain any “recourse options”.

The Manager is of the opinion that instances where the values of the Trust Index and

the VWAP of a Unit not being reflective of the fair values or VWAP (as the case may be)

are limited to very rare occasions (such as acts of market manipulation or error trades

that might cause an abnormal reflection of the closing value of the Units). Accordingly,

the “recourse options” are expected to be applicable only in very limited situations.

The Manager will only use the “recourse options” if it believes that the daily value

of the Trust Index or the VWAP of a Unit for the reference period are higher than

the fair closing values of the Trust Index and VWAP. Therefore, the Manager will

only use the “recourse options” to adjust the quantum of the Performance Fee

lower and not higher, such that the adjustments will only be made in the interests

of CIT and ultimately, the Unitholders.

The Manager may at its sole discretion waive, partially or fully, its Performance Fees if

the Manager finds the Performance Fee to be overstated, so as to reflect the impact of

the fair market pricing for all closing values relating to the calculation of the

Performance Fees.

(c) Issue price formula for Performance Fee to be paid in Units

The amendment to the calculation of the issue price of the Units to be issued where the

whole or part of the Performance Fee is to be paid in the form of Units is for the purpose

of alignment with best practices and consistency with other REITs in Singapore. In this

regard, the Manager is proposing to substitute the current reference to the “Value of the

Deposited Property” per Unit with a reference to the “Current Unit Value” instead. The

former definition is based on the total assets of CIT while the latter definition is based

on the net asset value of CIT. The Manager is of the view that under the current mode

28

of computation, it is unlikely for the Manager to elect to receive its Performance Fee in

Units. By way of illustration, under the current computation method, if the Manager

elects to receive its Performance Fee in Units, the Units will be issued to the Manager

based on the higher of the VWAP for a Unit (being approximately S$0.672, as at 31

December 2012) and the Value of the Deposited Property per Unit (being approximately

S$1.073, based on the reported financial statements of CIT for the financial year ended

31 December 2012). Under such a situation, the Manager will not elect to receive its

Performance Fee in Units as it will be paying a substantial premium over what it would

have paid had it purchased Units directly from the market instead.

If the proposed amendment is approved by Unitholders at the EGM, the computation will

then be based on the higher of the VWAP for a Unit (being approximately S$0.672, as

at 31 December 2012) and the Current Unit Value (being approximately S$0.647, based

on the reported financial statements of CIT for the financial year ended 31 December

2012). Under such a situation, the Manager will be more likely to elect to receive its

Performance Fee in Units as the issue price of such Units will more accurately reflect

the prevailing market price. At the same time, Unitholders’ interests are still protected

as the Manager will not enjoy any discount to the current traded price of a Unit.

Furthermore, the Manager is of the view that it is beneficial for Unitholders if the

Manager were to receive its Performance Fees in Units for the following reasons: (a) it

would not decrease the amount of cash that CIT has for distribution or reinvestment

purposes; (b) the cash retained could be used as part of CIT’s working capital; and (c)

it would align the interests of the Manager and Unitholders.

Please see Appendix C for details of the Performance Fee Supplement.

4.3 Applicability of Rules Relating to Interested Person Transactions and Interested Party

Transactions

Under Chapter 9 of the Listing Manual, where CIT proposes to enter into a transaction with

an interested person and the value of the transaction (either in itself or when aggregated with

the value of other transactions, each a value equal to or greater than S$100,000, with the

same interested person during the same financial year) is equal to or exceeds 5% of the

latest audited net tangible assets of CIT and its subsidiaries, Unitholders’ approval is

required in respect of the transaction.



CIT’s net asset value.

As the Manager is an interested person of CIT under the Listing Manual and an interested

party of CIT under the Property Funds Appendix, the proposed Performance Fee Supplement

is an interested person transaction under the Listing Manual and an interested party

transaction under the Property Funds Appendix.

Although the Performance Fee together with the Development Management Fee is unlikely

to exceed 5% of CIT’s latest audited net tangible assets or net asset value in any given

financial year, the Manager is nonetheless seeking Unitholders’ approval for the

Performance Fee Supplement as a matter of good corporate governance practice. Further,

should such approval be obtained, the payment of Performance Fees to the Manager in

accordance with the Performance Fee Supplement shall not be subject to aggregation or

further Unitholders’ approval requirements under Rules 905 and 906 of the Listing Manual

and under paragraph 5 of the Property Funds Appendix, to the extent that there is no

subsequent increase in the rates of, or change in the structure of, the Performance Fee.

29

The Manager will disclose the aggregate Performance Fees paid to the Manager during the

financial year in CIT’s annual report each year.

Details of interested person transactions and interested party transactions entered into by

CIT for the financial year ended 31 December 2012 and for the current financial year are set

out in Appendix E to the Circular.

4.4 Advice of the Independent Financial Adviser

The IFA has been appointed to advise the Independent Directors in relation to the proposed

Performance Fee Supplement.

Having considered the terms of reference, the principal terms of the proposed Performance

Fee Supplement, evaluation of the proposed Performance Fee Supplement and the

assumptions set out in the IFA Letter, and subject to the qualifications set out therein, the IFA

is of the opinion that the proposed Performance Fee Supplement is on normal commercial

terms and not prejudicial to CIT and its Unitholders who are not interested persons.

The IFA has therefore advised the Independent Directors to recommend that Unitholders

vote in favour of the Performance Fee Supplement.

The IFA Letter, containing its advice in full, is set out in Appendix D of this Circular.

5. INTERESTS OF DIRECTORS, SUBSTANTIAL UNITHOLDERS AND THE MANAGER

5.1 Directors’ Interests

The interests of the Directors in Units, as recorded in the Register of Directors’ Unitholdings

as at the Latest Practicable Date, are set out below.

Directors

Direct Interest Deemed Interest Total Interest

No. of

Units %

No. of

Units %

No. of

Units %

Dr Chua Yong Hai – – – – – –

Professor Ong Seow Eng 63,000 0.01 – – 63,000 0.01

Mr Tan Guong Ching – – – – – –

Mr Ooi Eng Peng – – – – – –

Mr Michael Patrick Dwyer(1) – – 8,839,295 0.72 8,839,295 0.72

Mr Victor Ong Wei Tak(2)

(Alternate Director to

Mr Michael Patrick Dwyer) – – 8,839,295 0.72 8,839,295 0.72

Mr Masaki Kurita – – – – – –

Mr Ian Andrew Smith – – – – – –

Mr Lee Stuart Neibart – – – – – –

Mr Christopher Dale Calvert 64,125 0.01 – – 64,125 0.01

Notes:

(1) Mr Michael Patrick Dwyer is deemed to be interested in the 8,839,295 Units held by the Manager by virtue

of his interest in Cambridge Real Estate Investment Management Pte. Ltd., which holds 80% interest in the

Manager.

(2) Mr Victor Ong Wei Tak is deemed to be interested in the 8,839,295 Units held by the Manager by virtue of his

interest in Cambridge Real Estate Investment Management Pte. Ltd., which holds 80% interest in the

Manager.

30

5.2 Interests of Substantial Unitholders

The interests of the substantial Unitholders in Units as recorded in the Register of

Substantial Unitholders as at the Latest Practicable Date are set out below.

Substantial

Unitholders


No. of Units % No. of Units % No. of Units %

Mr Chan Wai Kheong 56,349,536 4.60 41,770,085(1) 3.41 98,119,621 8.01

Franklin Resources, Inc – – 96,076,663(2) 7.85 96,076,663 7.85

Notes:

(1) Chan Wai Kheong is deemed to be interested in the 62,582 Units held by Oakgrove Pte Ltd, 41,644,921

Units held by Splendid Asia Macro Fund and 62,582 Units held by Sym Asia.

(2) Franklin Resources, Inc. is deemed to be interested in the Units held by funds and managed accounts

that are managed by investment advisers directly or indirectly owned by Franklin Resources, Inc.

5.3 Interests of the Manager and its Associates

The interests of the Manager and its associates in Units as at the Latest Practicable Date are

set out below.

Manager and its

Associates


No. of Units % No. of Units % No. of Units %

The Manager 8,839,295 0.72 – – 8,839,295 0.72

nabInvest Capital

Partners Pty Limited 15,795,000 1.29 8,839,295 0.72 24,634,295 2.01

6. RECOMMENDATIONS

6.1 The Unit Issue Supplement

The Directors (including members of the ARCC) have considered the relevant factors,

including the terms of the Unit Issue Supplement, the rationale for the Unit Issue Supplement

as set out in paragraph 2.2 above, and recommend that Unitholders vote in favour of the

resolution relating to the Unit Issue Supplement.

6.2 The Development Management Fee Supplement

The Independent Directors have considered the relevant factors, including the terms of the

Development Management Fee Supplement, the rationale for the Development Management

Fee Supplement as set out in paragraph 3.3 above, the opinion of the IFA (as set out in the

letter from the IFA in Appendix D to this Circular), and recommend that Unitholders vote in

favour of the resolution relating to the Development Management Fee Supplement.

6.3 The Performance Fee Supplement

The Independent Directors have considered the relevant factors, including the terms of the

Performance Fee Supplement, the rationale for the Performance Fee Supplement as set out

in paragraph 4.2 above, the opinion of the IFA (as set out in the letter from the IFA in

Appendix D to this Circular) and recommend that Unitholders vote in favour of the resolution

relating to the Performance Fee Supplement.

31

7. EXTRAORDINARY GENERAL MEETING

The EGM, notice of which is set out on page 70 of this Circular, will be held at NTUC

Auditorium, Level 7, NTUC Centre, One Marina Boulevard, Singapore 018989 on 19 April

2013 at 2.30 p.m. (or as soon thereafter following the conclusion/adjournment of the Annual

General Meeting of CIT to be held at 2.00 p.m. on the same day and at the same place) for

the purpose of considering and, if thought fit, passing, the Extraordinary Resolutions set out

in the notice of EGM.

A depositor shall not be regarded as a Unitholder entitled to attend the EGM and to speak

and vote thereat unless he is shown to have Units entered against his name in the Depository

Register, as certified by CDP as at 48 hours before the EGM.

8. ABSTENTIONS FROM VOTING

The Manager and its associates (including nabInvest Capital Partners Pty Limited), the

Directors and Mitsui & Co., Ltd. will abstain from voting on the Extraordinary Resolution in

respect of the Development Management Fee Supplement and the Performance Fee

Supplement. Further, each of them shall decline to accept appointment as proxy to attend

and vote at the EGM in respect of the Extraordinary Resolution relating to the Development

Management Fee Supplement and the Performance Fee Supplement unless the Unitholder

concerned has given specific instructions in his proxy form as to the manner in which his

votes are to be cast.

Cambridge Real Estate Investment Management Pte. Ltd. and Mitsui & Co., Ltd., have

shareholding interests of 80% and 20% in the Manager, respectively. Cambridge Real Estate

Investment Management Pte. Ltd. is a wholly-owned subsidiary of nabInvest Oxley

Singapore Pte. Ltd. who in turn is a subsidiary of nabInvest Capital Partners Pty Limited.

Accordingly, nabInvest Capital Partners Pty Limited is an “associate” of the Manager as

defined under paragraph 1.2(a) of the Property Funds Appendix, and shall abstain from

voting and decline to accept appointment as proxy as aforesaid.

Mitsui & Co., Ltd. is not an “associate” of the Manager as defined under paragraph 1.2(a) of

the Property Funds Appendix. However, pursuant to paragraph 5.2(b) of the Property Funds

Appendix, a person who “has an interest, whether commercial, financial or personal, in the

outcome of the transaction, other than in his capacity as a participant, will not be allowed to

vote on the resolution to approve the transaction”. As at the Latest Practicable Date, Mitsui

& Co., Ltd. has a direct shareholding interest of 20% in the Manager. Accordingly, Mitsui &

Co., Ltd. shall abstain from voting and decline to accept appointment as proxy as aforesaid.

9. ACTION TO BE TAKEN BY UNITHOLDERS

A Unitholder who is unable to attend the EGM and wishes to appoint a proxy to attend and

vote on his behalf, may complete, sign and return the proxy form attached to the notice of

EGM in accordance with the instructions printed thereon as soon as possible and in any

event so as to reach the CIT’s Unit Registrar’s office at 63 Cantonment Road, Singapore

089758 not later than 2.30 p.m. on 17 April 2013. The completion and return of the proxy form

by a Unitholder will not prevent him from attending and voting at the EGM, if he wishes to do

so, in place of his proxy.

Persons who have an interest in the approval of one or more of the resolutions must decline

to accept appointment as proxies unless the Unitholder concerned has specific instructions

in his proxy form as to the manner in which his votes are to be cast in respect of such

resolutions.

32

10. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors collectively and individually accept full responsibility for the accuracy of the

information given in this Circular and confirm after making all reasonable enquiries that, to

the best of their knowledge and belief, this Circular constitutes full and true disclosure of all

material facts about the Unit Issue Supplement, the Development Management Fee

Supplement, the Performance Fee Supplement, CIT and its subsidiaries, and the Directors

are not aware of any facts the omission of which would make any statement in this Circular

misleading.

Where information contained in this Circular has been extracted from published or otherwise

publicly available sources or obtained from a named source, the sole responsibility of the

Directors has been to ensure that such information has been accurately and correctly

extracted from these sources and/or reproduced in this Circular in its proper form and

context.

11. CONSENT

The IFA has given and has not withdrawn its written consent to the issue of this Circular with

the inclusion of its name and the letter dated 25 March 2013 from the IFA to the Independent

Directors (reproduced in Appendix D to this Circular) and all references thereto, in the form

and context in which they appear in this Circular.

12. DOCUMENTS ON DISPLAY

A copy of the letter from the IFA is available for inspection during normal business hours

(prior appointment will be appreciated) at the registered office of the Manager at 61 Robinson

Road, #12-01 Robinson Centre, Singapore 068893 from the date of this Circular up to and

including the date falling three months after the date of this Circular.

The Trust Deed will be available for inspection during normal business hours (prior

appointment will be appreciated) at the registered office of the Manager at 61 Robinson

Road, #12-01 Robinson Centre, Singapore 068893 for so long as CIT is in existence.

Yours faithfully,

Cambridge Industrial Trust Management Limited

(Company Registration No.: 200512804G, Capital Markets Services Licence No.: CMS 100132-2)

As manager of Cambridge Industrial Trust

Christopher Calvert

Chief Executive Officer and Executive Director

Singapore

25 March 2013

33

APPENDIX A

PROPOSED UNIT ISSUE SUPPLEMENT TO THE TRUST DEED

The proposed form of the amendments to the Trust Deed upon Unitholders’ approval of the Unit

Issue Supplement is as follows:

• that Clause 5.3.2 of the Trust Deed (as shown by the strikethrough below) be deleted in its

entirety and replaced with the underlined text below:

“5.3.2 Subject to the Listing Rules and this Clause 5 and for so long as the Trust is Listed,

the Manager may issue Units at an Issue Price other than calculated in accordance

with Clause 5.3.1 without prior approval of Holders in a meeting of Holders

PROVIDED THAT:

(i) the Issue Price of a Unit for a rights issue offered on a pro rata basis to all

existing Holders must not be less than 50% (or such other percentage as may

be permitted by the SGX-ST or relevant Recognised Stock Exchange) of the

Market Price of Units determined pursuant to Clause 5.3.1 (if applicable, of

the same Class) on the Business Day preceding the day on which the

intention to make the offer or issue is announced. Any such rights entitlement

must be tradable on the SGX-ST or any other Recognised Stock Exchange

on which the Trust is Listed, unless the Authority by notice in writing allows

otherwise. The Trustee must ensure that such a rights issue is made at a

price that is in accordance with the terms specified in this Clause 5.3.2(i);

(ii) the Issue Price of a Unit for any reinvestment of distribution arrangement

under Clause 11.11 must not be less than 90% (or such other percentage as

may be permitted by the SGX-ST or relevant Recognised Stock Exchange) of

the Market Price of a Unit determined pursuant to Clause 5.3.1 as at the

Business Day immediately following the Record Date for the determination of

Distribution Entitlements. The Trustee must ensure that such an issue is

made at a price that is in accordance with the terms specified in this Clause

5.3.2(ii);

(iii) the Issue Price of a Unit issued other than by way of a rights issue offered on

a pro rata basis to all existing Holders must be determined in accordance with

the conditions set out in Clauses 5.3.3 and 5.3.4; and

(iv) where Units are issued as full or partial consideration for the acquisition of an

Authorised Investment by the Trust in conjunction with an issue of Units

pursuant to Clause 5.3.2(i) or Clause 5.3.3 to raise cash for the balance of

the consideration for the said Authorised Investment (or part thereof) or to

acquire other Authorised Investments in conjunction with the said Authorised

Investment, the Manager shall have the discretion to determine that the Issue

Price of a Unit so issued as partial consideration shall be the same as the

Issue Price for the Units issued in conjunction therewith pursuant to Clause

5.3.2(i) or (as the case may be) Clause 5.3.3.

Subject to the Listing Rules and for so long as the Trust is Listed, the Manager may

issue Units at an Issue Price other than as calculated in accordance with Clause

5.3.1 without prior approval of Holders in a meeting of Holders, provided that the

Manager complies with the Listing Rules in determining the Issue Price, including

the Issue Price of a Unit for a rights issue offered on a pro rata basis to all existing

34

Holders, the Issue Price of a Unit issued other than by way of a rights issue offered

on a pro rata basis to all existing Holders, and the Issue Price of a Unit for any

reinvestment or distribution arrangement.”



“5.3.3 Subject to Clause 5.3.5, for so long as the Trust is Listed, new Units may be issued

other than by way of a rights issue offered on a pro rata basis to all existing Holders

without the prior approval of Holders in a meeting of Holders PROVIDED THAT:

(i) the issue (together with any other issue of Units other than by way of a rights

issue offered on a pro rata basis to all existing Holders in the same Financial

Year, including Units issued to the Manager in payment of the Manager’s

Base Fee and/or Performance Fee) would not, immediately after the issue,

exceed 10% (or such other percentage as may, from time to time, be

prescribed by the Authority) of the Value of the Deposited Property including

any Authorised Investment acquired or to be acquired by the Trust, for which

the new Units are to be issued PROVIDED THAT the number of Units which

would be represented by such percentage does not exceed the number of

Units represented by 20% of the outstanding Units (or such other percentage

of outstanding Units as may, from time to time, be prescribed by the SGX-ST

or relevant Recognised Stock Exchange); and

(ii) where such an issue is made at a discount to the Market Price, the discount

does not exceed 5% or such other percentage as may, from time to time, be

prescribed by the Authority.

For the purposes of this Clause 5.3.3, Market Price shall mean the volume

weighted average price for trades done on the SGX-ST or relevant Recognised

Stock Exchange on the day the placement agreement (or equivalent agreement) is

signed. The volume weighted average price shall be calculated based on the trades

done for a full market day, or if trading in the Listed Units is not available for a full

market day, the volume weighted average price shall be calculated based on the

trades done on the preceding market day up to the time the placement agreement

(or equivalent agreement) is signed.

The Trustee must ensure that an issue of new Units other than by way of a rights

issue offered on a pro rata basis to all existing Holders without the prior approval of

Holders in a meeting of Holders complies with the terms specified in this Clause

5.3.3.

Where Units are issued as full or partial consideration for the acquisition of an

Authorised Investment by the Trust in conjunction with an issue of Units to raise

cash for the balance of the consideration for the said Authorised Investment (or part

thereof) or to acquire other Authorised Investments in conjunction with the said

Authorised Investment, the Manager shall have the discretion to determine that the

Issue Price of a Unit so issued as full or partial consideration shall be the same as

the Issue Price for the Units issued in conjunction with an issue of Units to raise

cash for the aforesaid purposes.”

35



“5.3.4 Subject to Clause 5.3.5, for so long as the Trust is Listed, an issue of Units (other

than by way of rights issue offered on a pro rata basis to all existing Holders)

exceeding any of the above thresholds in Clauses 5.3.3(i) and 5.3.3(ii) will require

specific prior approval of Holders by Extraordinary Resolution at a meeting of

Holders to be convened by the Manager in accordance with Schedule 1. If relevant

in the circumstances, specific prior approval of Holders by Extraordinary Resolution

must also have been obtained to permit the issue of Units to the Manager in

payment of the Manager’s Base Fee and/or Performance Fee if the issue of Units

contemplated thereunder exceeds any of the thresholds in Clauses 5.3.3(i) and

5.3.3(ii). For the avoidance of doubt, any issue of Units pursuant to:

(i) such approval of Holders; and

(ii) Clause 5.2.4,

shall not be taken into account in determining whether a subsequent proposed issue

of Units in the same financial year will exceed any of the thresholds in Clauses

5.3.3(i) and 5.3.3(ii).

For so long as the Trust is Listed, subject to any applicable laws, regulations and the

Listing Rules, the Manager shall not issue any Units in numbers exceeding the limit

(if any) set out in any applicable laws, regulations and the Listing Rules, relating to

the issue of Units unless the Holders approve the issue of Units exceeding the

aforesaid limit in general meeting.”

• that Clause 5.3.5 of the Trust Deed be amended in accordance with the following deletions

indicated by the text in strikethrough and additions indicated by the underlined text below:

“5.3.5 (Except in the case of an issue of Units to the Manager in payment of the Manager’s

Base Fee and/or Performance Fee) fFor so long as the Trust is Listed:

(i) the Trustee and/or its related parties; and

(ii) the Manager and/or its related parties; and

(iii)(ii) the directors and/or immediate family members of the directors of the Trustee

and the Manager,

(unless otherwise permitted by the Authority in writing) may only participate in the

issue of Units pursuant to Clauses 5.3.3 or 5.3.4 (which, for the avoidance of doubt,

shall not include any issue of Units by way of a preferential offering of Units on a pro

rata basis to all existing Holders or an offering of Units to the public through the

internet or through the automated teller machines of participating banks which is

carried out without preference to any particular group of investors) with the prior

specific approval of Holders by Ordinary Resolution at a meeting to be convened by

the Manager in accordance with Schedule 1 at which the following persons (unless

otherwise permitted by the Authority in writing) must abstain from voting:

(aa) the person to which the issue is to be made;

(bb) where such person is a corporation, its directors and the immediate family

members of its directors; and

36

(cc) where such person is a corporation, its related parties.

For the purpose of this Clause 5.3.5, related parties in relation to an entity shall

mean its related corporations (as defined in the Companies Act) and companies in

which at least 20% but not more than 50% of its shares are held by such entity and

its related corporations.”

• that Clause 15.1.1(iv) of the Trust Deed be amended in accordance with the following

deletion indicated by the text in strikethrough below:

“(iv) The Base Fee may at the discretion of the Manager be structured at the initial public

offering of Units and subsequently as payable in the form of cash or Units or a

combination of both cash and Units in such proportions as may be determined at the

option of the Manager, and be based generally in relation to the Value of the

Deposited Property as a whole. If payment is in the form of Units, the Manager shall

be entitled to receive such number of Units as may be purchased for the relevant

amount of the Base Fee at the Issue Price with reference to the Market Price

determined under Clause 5.3.1 or, if applicable, Clause 5.3.3 determined as at the

end of each calendar quarter. In the event the payment or part thereof is to be made

in the form of Units and Holders’ prior approval is required for the issue of such

Units pursuant to Clause 5.3.4 but is not obtained, then the payment to the Manager

for that portion of the Base Fee shall be made in the form of cash.”

• that Clause 15.1.1(vi) of the Trust Deed be amended in accordance with the following

deletion indicated by the deleted text below:

“(vi) Subject to the restriction under Clause 5.3.4 and to the Base Fee remaining within

the permitted limit, tThe Manager may at any time determine or change the

structure of the payment of the Base Fee between cash and Units without the

requirement of obtaining approval by an Extraordinary Resolution of a meeting of

Holders or (as the case may be) Depositors.”

• that Clause 15.1.2(iii) of the Trust Deed be amended in accordance with the following

deletion indicated by the deleted text below:

“(iii) The Performance Fee may at the discretion of the Manager be structured as

payable in the form of cash or Units or a combination of both cash and Units in such

proportion as may be determined at the option of the Manager and, subject to the

restrictions under Clause 5.3.4, to the Performance Fee being determined in

accordance with formula calculated in accordance with Clause 15.1.2(ii) and to the

total of the Base Fee and the Performance Fee not exceeding the limit for that

Financial Year calculated in accordance with Clause 15.1.3(i), the Manager may at

any time change the structure of the payment of the Performance Fee between cash

and Units without the requirement of obtaining approval by an Extraordinary

Resolution of a meeting of the Holders or (as the case may be) Depositors Provided

That the Manager is entitled to payment of the Performance Fee for any Half Year

in cash (with the amount of the cash payment to be calculated in accordance with

Clause 15.1.4) if a Trigger Event occurs within that Half Year. In the event the

payment or part thereof is to be made in the form of Units and the Holders’ prior

approval is required for the issue of such Units pursuant to Clause 5.3.4 but is not

obtained, then the payment to the Manager for that portion of the Performance Fee

shall be made in the form of cash.”

37

• that Clause 15.2.4 of the Trust Deed be amended in accordance with the following deletion

indicated by the deleted text below:

“15.2.4 The Manager may opt to receive the Acquisition Fee in the form of cash or Units or

a combination of both cash and Units, Provided that in respect of any acquisition

under Clause 15.2.1 from a Related Party such Acquisition Fee shall be in the form

of Units. Where the Acquisition Fee is to be received in the form of Units, the

Manager shall be entitled to receive such number of Units as may be purchased for

the relevant amount of the Acquisition Fee at the Issue Price with reference to the

Market Price determined under Clause 5.3.1. or, if applicable, Clause 5.3.3. In the

event the payment or part thereof is to be made in the form of Units and the Holders

prior approval was required for the issue of such Units pursuant to Clause 5.3.4 but

was not obtained, then the payment to the Manager for that portion of that

Acquisition Fee shall be made in the form of cash.”

• that Clause 15.3.4 of the Trust Deed be amended in accordance with the following deletion

indicated by the deleted text below:

“15.3.4 The Manager may opt to receive the Disposal Fee in the form of cash or Units or a

combination of both cash and Units, Provided that in respect of any disposal under

Clause 15.3.1 from a Related Party such Disposal Fee shall be in the form of Units.

Where the Disposal Fee is to be received in the form of Units, the Manager shall be

entitled to receive such number of Units as may be purchased for the relevant

amount of the Disposal Fee at the Issue Price with reference to the Market Price

determined under Clause 5.3.1 or, if applicable, Clause 5.3.3. In the event the

payment or part thereof is to be made in the form of Units and the Holders prior

approval was required for the issue of such Units pursuant to Clause 5.3.4 but was

not obtained, then the payment to the Manager for that portion of that Disposal Fee

shall be made in the form of cash.”

• that Paragraph 5 of Schedule 1 to the Trust Deed be amended in accordance with the

following deletions indicated by the text in strikethrough and additions indicated by the

underlined text below:

“5. A meeting of Holders duly convened and held in accordance with the provisions of

this Schedule shall be competent by:

(i) Extraordinary Resolution to:

(a) sanction any modification, alteration or addition to the provisions of

this Deed which shall be agreed by the Trustee and the Manager as

provided in Clause 28 of this Deed;

(b) sanction a supplemental deed increasing the maximum permitted limit

or any change in the structure of the Management Fee (including the

Base Fee and the Performance Fee), the Acquisition Fee, the Disposal

Fee and the Trustee’s remuneration as provided in Clause 156 of this

Deed;

(c) sanction any issue of Units by the Manager under the circumstances

set out for an issue of Units other than by way of an issue of Units

pursuant to Clauses 5.2 to 5.4 of this Deed;

(d)(c) remove the Auditors as provided in Clause 22.1 of this Deed;

38

(e)(d) remove the Trustee as provided in Clause 23.3.4 of this Deed; and

(f)(e) direct the Trustee to take any action pursuant to Section 295 of the

Securities and Futures Act; and

(ii) an Ordinary Resolution to remove the Manager as provided in Clause 24.1.4

of this Deed;

(iii) a resolution duly proposed and passed as such by a majority representing

80% or more of the total number of votes cast for and against such resolution

to delist the Trust after it has been Listed as provided in Clause 9.2 of this

Deed,

and shall have such further or other powers under such terms and conditions as

may be determined by the Manager with the prior written approval of the Trustee.

Any decision to be made by resolution of the Holders other than those specified in

this paragraph 5(i) to (iii), shall be made by Ordinary Resolution, unless an

Extraordinary Resolution is required by the (where applicable) Securities and

Futures Act, the Regulations, the Property Funds Guidelines, the Code or the

Listing Rules.”

39

APPENDIX B

PROPOSED DEVELOPMENT MANAGEMENT FEE SUPPLEMENT

TO THE TRUST DEED

The proposed form of the amendments to the Trust Deed upon Unitholders’ approval of the

Development Management Fee Supplement is as follows:

• that Clause 1.1 of the Trust Deed be amended by inserting the following definitions of

“Development Management Fee” and “Development Project” immediately after the definition

of “Depository Services Agreement”:

“Development Management Fee” means the development management fee in respect of

Development Projects undertaken on behalf of the Trust by the Manager, which is calculated

in accordance with Clause 15.6;

“Development Project” means a project involving the development of land, or buildings, or

part(s) thereof (including asset enhancement initiatives) on land which is acquired, held or

leased by the Trust, provided always that the Property Funds Guidelines shall be complied

with for the purposes of such development, but does not include refurbishment, retrofitting

and renovations;”

• that Clause 1.1 of the Trust Deed be amended by inserting the following definition of “Total

Project Costs” immediately after the definition of “Tax Ruling”:

“Total Project Costs” means the sum of the following:

(a) construction cost based on the project final account prepared by the project quantity

surveyor;

(b) land cost including differential premium or development charge where applicable. For

land acquired on land rent basis, only the total amount of land rent payable during the

development period will be included. For redevelopment of existing properties, land

cost refers to all costs associated with land such as any payment of additional premium

or amounts to the regulatory authorities in connection with the redevelopment, but does

not include the value of the land. For avoidance of doubt, there will be no land cost

component for land which has been allocated at no cost to the Trust for built-to-suit

developments;

(c) principal consultants fees including payments to the Development Project’s architect,

civil and structure engineer, mechanical and electrical engineer, quantity surveyor and

project manager;

(d) the cost of obtaining all approvals for the Development Project;

(e) site staff costs;

(f) interest costs on borrowings used to finance project cashflows that are capitalised to

the project in line with generally accepted accounting principles; and

(g) any other costs which could reasonably be considered to meet the definition of total

project costs and can be capitalised to the Development Project in accordance with

generally accepted accounting principles;”

40

• that Clause 4.3.16 of the Trust Deed be amended by inserting the following addition indicated

by the underlined text below:

“4.3.16 the Management Fee comprising the Base Fee and the Performance Fee, the

Acquisition Fee, the Disposal Fee, the Development Management Fee and the

remuneration of the Trustee pursuant to Clause 15;”

• that Clause 15 of the Trust Deed be amended by inserting the following clause after Clause

15.5, and Clause 15.6 of the Trust Deed be renumbered accordingly:

“15.6 Development Management Fees

15.6.1 The Manager is entitled to receive a Development Management Fee of up

to 3.0 per cent. of the Total Project Costs incurred in a Development

Project undertaken on behalf of the Trust subject to the following:

(i) where the estimated Total Project Costs in respect of a Development

Project is up to S$50 million, the amount of Development

Management Fee to be paid to the Manager in respect of that

Development Project shall be reviewed and approved by the Audit,

Risk Management and Compliance Committee of the Manager;

(ii) where the estimated Total Project Costs in respect of a Development

Project exceed S$50 million, the amount of Development

Management Fee to be paid to the Manager in respect of that

Development Project shall first be reviewed and approved by the

Trustee and the independent directors of the Manager. Where the

Trustee and the independent directors of the Manager so direct, the

Development Management Fee shall be reduced accordingly;

(iii) where the market pricing for comparable development management

services as determined by independent quantity surveyors is

materially lower than the Development Management Fee calculated

in accordance with this Clause 15.6.1, the Manager shall reduce the

Development Management Fee to match the lower market pricing;

and

(iv) any increase in the percentage of the Development Management

Fee or any change in the structure of the Development Management

Fee shall be approved by an Extraordinary Resolution of a meeting

of Holders or (as the case may be) Depositors duly convened and

held in accordance with the provisions of the Schedule hereto.

15.6.2 Subject to the Property Funds Guidelines, the Development Management

Fee shall be paid to the Manager in the form of cash. For any

development management services provided by any third party service

providers in connection with a Development Project, any payment to such

third party service providers shall be borne by the Manager, and not

additionally out of the Trust. In addition, the Development Management

Fee shall be payable in equal monthly instalments over the construction

period of each Development Project undertaken by the Manager on

behalf of the Trust based on the Manager’s best estimate of the Total

Project Costs and construction period and, in the event of any

overpayment or underpayment, a final adjustment of the balance amount

when the Total Project Costs are finalised. If the Total Project Costs have

41

been over-estimated, a refund of the excess Development Management

Fee will be made by the Manager to the Trust. The Trust shall bear all

applicable GST and all other applicable sales tax, governmental

impositions, duties and levies whatsoever imposed on the Development

Management Fee by the relevant authorities in Singapore or elsewhere.

15.6.3 No Acquisition Fees and other additional fees will be paid to the Manager

for development management services which are rendered for

Development Projects if the Manager receives the Development

Management Fee.

15.6.4 A Development Management Fee is chargeable for redevelopment of an

existing property. However, the Manager will not receive a Development

Management Fee for activities involving refurbishment, retrofitting and

renovations.”

• that Clause 19.1 of the Trust Deed be amended by inserting the following clause after Clause

19.1.24, and Clause 19.1.25 of the Trust Deed be renumbered accordingly:

“19.1.25 provide development management services to the Trust in respect of Development

Projects. For the avoidance of doubt, the Manager may at its sole discretion

appoint one or more service providers to perform all or some of the development

management services provided that the Manager remains at all times responsible

for the development management services provided by the service provider(s) and

the Manager shall be entitled to the full Development Management Fee

notwithstanding the appointment of such service provider(s):”

• that Paragraph 5(i)(b) of Schedule 1 to the Trust Deed be amended in accordance with the

following deletions indicated by the text in strikethrough and additions indicated by the

underlined text below:

“5. A meeting of Holders duly convened and held in accordance with the provisions of

this Schedule shall be competent by:

(i) Extraordinary Resolution to:

(b) sanction a supplemental deed increasing the maximum permitted limit

or any change in the structure of the Management Fee (including the

Base Fee and the Performance Fee), the Acquisition Fee, the Disposal

Fee, the Development Management Fee and the Trustee’s remuneration

as provided in Clause 156 of this Deed;”

42

APPENDIX C

PROPOSED PERFORMANCE FEE SUPPLEMENT TO THE TRUST DEED

The proposed form of the amendments to the Trust Deed upon Unitholders’ approval of the

Performance Fee Supplement is as follows:

• that Clause 15.1.2 to the Trust Deed be amended in accordance with the following deletions

indicated by the text in strikethrough and additions indicated by the underlined text below:

“15.1.2 Performance Fee

(i) Subject to Clause 15.1.3, the Manager, in addition to its remuneration under

clause 15.1.1, will be entitled to receive for its own account out of the

Deposited Property a Performance Fee, which the Manager may at its sole

discretion waive, partially or fully, if the Manager finds the Performance Fee to

be overstated, so as to reflect the impact of the fair market pricing for all

closing values relating to the calculation of the Performance Fees;

(ii) The formula for determining the Performance Fee (if any) to be paid to the

Manager in respect of a Half Year is set out below. If the TR (as defined below)

for the Trust for a Half Year is negative, the Performance Fee to which the

Manager would have been entitled will not be paid to the Manager until the end

of the first succeeding Half Year in which the TR is positive.

Performance Fee to be paid to the Manager = PF + EPF

Where

PF (Tier 1 Performance Fee) = NPc x MCo x 5%, but equals zero if NPc

is not greater than zero;

EPF (Tier 2 Performance Fee) = (NPc − EPb) x MCo x 15% but equals

zero if NPc is not greater than EPb;

NPc = TR − BM (in percentage);

NPo (Opening Net Performance) = NPc of prior Half Year except in the

first Half Year when NPo = 0;

TR (Trust Return percentage) =(Tc − To) x 100

To

where

Tc = Trust Index at the close of the Half Year; and

To = Opening Trust Index being the Trust Index at close of the prior

Half Year or if NPo<0 then To = the Trust Index used as the

opening Trust Index (To) for the previous period,

43

BM (Benchmark Return percentage) =(Bc − Bo) x 100

Bo

where

Bc = Benchmark Index at the end of the Half Year; and

Bo = Opening Benchmark Index being the Benchmark Index at

close of the prior Half Year or if NPo<0 the Bo = the

Benchmark Index used as the opening Benchmark Index (Bo)

for the previous period;

MCo (Equity Market Capitalisation) = Po x Uo

where

Po = the volume weighted average price for a Unit for all trades on

the SGX-ST in the ordinary course of trading during the five10

Business Days preceding the last day of the relevant Half Year

(including the fast day of the relevant Half Year) and the five

Business Days after the last day of the relevant Half Year (ten

Business Days in total), or if the Manager believes that the

foregoing calculation does not provide a fair reflection of the

volume weighted average price of a Unit (note that instances

where the volume weighted average price of a Unit not being

reflective of the fair volume weighted average price are limited

to very rare occasions (such as acts of market manipulation or

error trades that might cause an abnormal reflection of the

closing value of the Units)), an amount as determined by the

independent directors of the Manager and the Trustee (after

consultation with a Stockbroker approved by the Trustee), as

being the fair volume weighted average price of a Unit in

favour of the Trust; and

Uo = Units on issue at the close of the last day of the prior Half

Year;

For avoidance of doubt, any adjustments to the volume weighted

average price of a Unit for Po will only be made to adjust the

quantum of the Performance Fee lower and not higher.

EPb (Tier 2 Performance Benchmark, in percentage) = 2% nominal per

annum outperformance for the Half Year; and

(iii) The Performance Fee may at the discretion of the Manager be structured as

payable in the form of cash or Units or a combination of both cash and Units

in such proportion as may be determined at the option of the Manager and,

subject to the restrictions under Clause 5.3.4, to the Performance Fee being

determined in accordance with formula calculated in accordance with Clause

15.1.2(ii) and to the total of the Base Fee and the Performance Fee not

exceeding the limit for that Financial Year calculated in accordance with

Clause 15.1.3(i), the Manager may at any time change the structure of the

payment of the Performance Fee between cash and Units without the

requirement of obtaining approval by an Extraordinary Resolution of a meeting

of the Holders or (as the case may be) Depositors Provided That the Manager

is entitled to payment of the Performance Fee for any Half Year in cash (with

the amount of the cash payment to be calculated in accordance with Clause

15.1.4) if a Trigger Event occurs within that Half Year. In the event the payment

or part thereof is to be made in the form of Units and the Holders’ prior

44

approval is required for the issue of such Units pursuant to Clause 5.3.4 but is

not obtained, then the payment to the Manager for that portion of the

Performance Fee shall be made in the form of cash.

(iv) Where the whole or part of the Performance Fee is to be paid in the form of

Units, the Performance Fee for that Half Year reduced by the amount of any

Performance Fee received in cash in respect of that Half Year shall be divided

by “Pc” to determine the number of Units to be issued where:

Pc = the greater of (A) the volume weighted average price for a Unit for

all trades on the SGX-ST in the ordinary course of trading during

the five10 Business Days preceding the last day of the relevant Half

Year (including the last day of the relevant Half Year), or if the

Manager believes that the foregoing calculation does not provide a

fair reflection of the volume weighted average price of a Unit (note

that instances where the volume weighted average price of a Unit

not being reflective of the fair volume weighted average price are

limited to very rare occasions (such as acts of market manipulation

or error trades that might cause an abnormal reflection of the

closing value of the Units)), an amount as determined by the

independent directors of the Manager and the Trustee (after

consultation with a Stockbroker approved by the Trustee), as being

the fair volume weighted average price of a Unit and the five

Business Days after the last day of the relevant Half Year (ten

Business Days in total) and the Value of the Deposited Property

divided by the number of Units in issue or deemed to be in issue (B)

the Current Unit Value at the end of the Half Year. This will be the

issue price of the relevant Units to be issued.

(v) If and when the Performance Fee is paid in the form of Units in respect of a

Half Year where the Trust Index is below its historical Half Year end high

achieved since listing of the Units, the Manager may not sell or otherwise

dispose of such Units until a time after the Trust Index equals or exceeds that

prior peak, and until the time the Manager is entitled to sell such Units, all

distributions in respect of such Units must, if a distribution reinvestment plan

then applies, be reinvested pursuant to the distribution reinvestment plan and

the Units received pursuant to the reinvestment will be subject to the same

restriction on sale or disposal. The restriction on sale or disposal will cease if

a Trigger Event occurs.

(vi) Any payment of the Performance Fee whether in the form of cash or Units shall

be payable out of the Deposited Property in arrears within 30 days after the

last day of each Half Year. Such payment shall be made out of whichever bank

account of the Trust the Manager in its discretion shall decide.

(vii) The amount of the Performance Fee (if any) payable to the Manager shall

exclude all applicable GST and all other applicable sales tax, governmental

impositions, duties and levies whatsoever imposed thereon by the relevant

authorities in Singapore or elsewhere, which shall be borne by the Trust and

paid in cash.

(viii) If the Benchmark Index referred to in paragraph (a) of the definition of

Benchmark Index in Clause 1.1 is, in the opinion of the Manager, in

consultation with the Trustee, not practical or relevant, the Benchmark Index

shall be a similar index calculated by FTSE International Limited or another

index provider with similar capabilities (the composition of which shall be

45

determined by the Manager after consultation with the Trustee) which the

Manager, after consultation with the Trustee, determines is more appropriate

for measuring the performance of the Trust.

(ix) Each of the Manager and the Trustee acknowledges as follows: (a) if the

Benchmark Index is to be changed pursuant to the above, the new index shall

be adopted as the new Benchmark Index as soon as practicable, if possible,

for the following Half-Year; (b) the Benchmark Index will commence at a base

value of 100 on the Listing Date, based upon the closing value of the securities

comprising the Benchmark Index on the Business Day preceding the Listing

Date; (c) the closing value of the Benchmark Index for the relevant Half-Year

will be computed based on the average of the closing values of the Benchmark

Index for the 10 Business Days preceding the last day of the relevant Half-Year

(including the last day of the relevant Half-Year). The closing value of the

Benchmark Index for each Business Day will be based on the investible (i.e.

free float) market capitalisation weightings of the securities comprising the

Benchmark Index recorded on the SGX-ST (or other exchange on which such

securities are quoted) during the five Business Days preceding the last day of

the relevant Half-Year (including the last day of the relevant Half-Year) and the

five Business Days after the last day of the relevant Half-Year (ten Business

Days in total); (d) if the Trust is included in the Benchmark Index, the

Benchmark Index will be adjusted by the index provider by removing the Trust

from the Benchmark Index; and (e) any change in the Benchmark Index will be

announced to the public by the Manager via SGXNet with a posting of the

announcement on the internet at the SGX-ST website.

(x) The Manager and Trustee shall procure that the Trust Index will be calculated

by FTSE International Limited or another index provider approved by the

Manager and Trustee. The Manager and the Trustee acknowledges that (a) the

Trust Index will be calculated in accordance with the index provider’s standard

practices in relation to index calculation. The Trust Index will measure the total

return of the Trust, combining both capital performance of the security and its

reinvested income; (b) the closing value of the Trust Index for the relevant

Half-Year will be computed based on the average of the closing values of the

Trust Index for the 10 Business Days preceding the last day of the relevant

Half-Year (including the last day of the relevant Half-Year), or if the Manager

believes that the foregoing calculation does not provide a fair reflection of the

closing value of the Trust Index for that Business Day (note that instances

where the values of the Trust Index not being reflective of the fair values are

limited to very rare occasions (such as acts of market manipulation or error

trades that might cause an abnormal reflection of the closing value of the

Units)), a value as determined by the independent directors of the Manager

and the Trustee (after consultation with FTSE International Limited or another

index provider approved by the Manager and Trustee), as being the fair closing

value of the Trust Index for that Business Day in favour of the Trust; (c) the

Trust Index will be calculated daily using declared dividends; (cd) the

calculation method will be adjusted according to whether any dividends are

declared ex-dividend on a given day; and (de) the ex-dividend adjustment

represents the value of dividends declared by the security on the ex-dividend

date expressed in index points.

For avoidance of doubt, any adjustments to the closing value of the Trust Index

will only be made to adjust the quantum of the Performance Fee lower and not

higher.

(xi) The Trust Index will commence at 100 on the Listing Date based on the initial

amount paid for each Unit pursuant to the Prospectus as at the Listing Date.”

46

APPENDIX D

LETTER OF THE INDEPENDENT FINANCIAL ADVISER

25 March 2013

The Independent Directors


(The Manager of Cambridge Industrial Trust)

61 Robinson Road

#12-01 Robinson Centre

Singapore 068893

Dear Sirs

PROPOSED DEVELOPMENT MANAGEMENT FEE SUPPLEMENT AND PROPOSED

PERFORMANCE FEE SUPPLEMENT ENTERED INTO BETWEEN RBC INVESTOR SERVICES

TRUST SINGAPORE LIMITED, IN ITS CAPACITY AS TRUSTEE OF CAMBRIDGE INDUSTRIAL

TRUST (“CIT”), AND CAMBRIDGE INDUSTRIAL TRUST MANAGEMENT LIMITED, IN ITS

CAPACITY AS MANAGER OF CIT

For the purpose of this letter, capitalised terms not otherwise defined shall have the meaning given

to them in the circular dated 25 March 2013 on the Proposed Development Management Fee

Supplement and Proposed Performance Fee Supplement, (the “Circular”) to the Unitholders of CIT.

1. INTRODUCTION

Cambridge Industrial Trust Management Limited, the manager of CIT (“CITM” or the

“Manager”), proposes to supplement the Trust Deed:

(a) to allow the Manager to receive development management fees for Development

Projects undertaken and managed by the Manager on behalf of CIT (the “Proposed

Development Management Fee Supplement”); and

(b) to (i) align the calculations of (aa) the Benchmark Index for Performance Fees

calculation, (bb) the Trust Index for Performance Fees calculation, (cc) the calculated

VWAP for a Unit used to determine market capitalisation for Performance Fees

calculation, and (dd) the market price to calculate the number of units to be issued to

the Manager (the “Issue Price”) in relation to the Performance Fees payment, to make

them more robust and consistent with each other, (ii) align the calculation of the issue

price of the Units to be issued as Performance Fees calculation with other Singapore

REITs, and (iii) propose “recourse options” for (aa) the calculated Trust Index value for

Performance Fees calculation, and (bb) the calculated VWAP for a Unit used to

determine the market capitalisation for Performance Fees calculation, and (cc) Issue

Price for Performance Fees payment (collectively, the “Proposed Performance Fee

Supplement”).

CITM, being the manager of CIT, is considered an interested person of CIT for the purpose

of Chapter 9 of the Listing Manual and an “interested party” of CIT for the purpose of

guidelines relating to interested party transactions under the Property Funds Appendix.



CIT’s net asset value. Although the Development Management Fee together with the

Performance Fee is unlikely to exceed 5% of CIT’s latest audited net tangible assets or net

47

asset value in any given financial year, the Manager is nonetheless seeking Unitholders’

approvals for both the Proposed Development Management Fee Supplement and the

Proposed Performance Fee Supplement as a matter of good corporate governance practice.

Further, should such approval be obtained, the payment of Development Management Fees

and Performance Fees to the Manager in accordance with the Development Management

Fee Supplement and the Performance Fee Supplement shall not be subject to aggregation

or further Unitholders’ approval requirements under Rules 905 and 906 of the Listing Manual

and under paragraph 5 of the Property Funds Appendix, to the extent that there is no

subsequent increase in the rates of, or change in the structure of, the Development

Management Fee or the Performance Fee respectively.

For the purpose of Chapter 9 of the Listing Manual, we, Deloitte & Touche Corporate Finance

Pte Ltd (“DTCF”), have been appointed as independent financial adviser to the Independent

Directors in respect of the Proposed Development Management Fee Supplement and the

Proposed Performance Fee Supplement and this letter sets out our evaluation.

2. TERMS OF REFERENCE

Our responsibility is to provide our opinion as to whether each of the Proposed Development

Management Fee Supplement and the Proposed Performance Fee Supplement are on normal

commercial terms and will not be prejudicial to the interests of CIT and its Unitholders who are

not interested persons. The Property Funds Appendix require that we make our assessment

based on the impact of each of the Proposed Development Management Fee Supplement and

the Proposed Performance Fee Supplement on CIT on an overall basis and that we draw

Unitholders’ attention to any possible disadvantages of each of the Proposed Development

Management Fee Supplement and the Proposed Performance Fee Supplement.

We were neither a party to the negotiations entered into in relation to the Proposed

Development Management Fee Supplement and the Proposed Performance Fee

Supplement nor were we involved in the deliberations leading up to the decision on the part

of the Directors to enter into these transactions.

We do not, by this letter or otherwise, advise or form any judgement on the strategic,

commercial or financial merits or risks of each of the Proposed Development Management

Fee Supplement and the Proposed Performance Fee Supplement. All such evaluations,

advice, judgements or comments remain the sole responsibility of the Directors and their

advisers. We have however, drawn upon such evaluations, judgements and comments as we

deem necessary and appropriate in arriving at our opinion.

The scope of our appointment does not require us to express, and nor do we express, a view

on the future growth prospects, earnings potential or value of CIT. We do not express any view

as to the price at which the Units may trade nor on the future value, financial performance or

condition of CIT as a result of future proposed development projects or performance fee.

It is also not within our terms of reference to compare the merits of either the Proposed

Development Management Fee Supplement or the Proposed Performance Fee Supplement

to any alternative transactions that were or may have been available to CIT. Such

comparison and consideration remain the responsibility of the Directors and their advisers.

We have relied upon the assurances of the Directors who have accepted full responsibility for

the accuracy and completeness of the information provided to us. The Directors have

confirmed to us that to the best of their knowledge, information and belief, all material

information available to them in connection with the Proposed Development Management Fee

Supplement and the Proposed Performance Fee Supplement have been disclosed to us and

that such information constitutes full and true disclosure of all material information relating to

48

such transactions and that there is no other information the omission of which would cause any

of the information disclosed to us or relied on by us in making our recommendation to be

inaccurate, incomplete, untrue or misleading in any material respect. We have assumed that

all statements of fact, belief, opinion and intention made by the Directors in the Circular have

been reasonably made after due and careful enquiry. Accordingly, no representation or

warranty (whether express or implied) is made and no responsibility is accepted by us

concerning the accuracy, completeness or adequacy of such information. We have

nonetheless made reasonable enquiries and used our judgement in assessing such

information and have found no reason to doubt the reliability of such information.

We have not made any independent evaluation or appraisal of the assets and liabilities

(including, without limitation, the real properties) of CIT.

Our views are based on market, economic, industry, monetary and other conditions (where

applicable) prevailing on and our analysis of the information made available to us as at the

Latest Practicable Date. We assume no responsibility to update, revise or reaffirm our

opinion, factors or assumptions in light of any subsequent development after the Latest

Practicable Date that may affect our opinion or factors or assumptions contained herein.

Unitholders should take note of any announcements relevant to their considerations of the

Proposed Development Management Fee Supplement and the Proposed Performance Fee

Supplement which may be released by the Manager after the Latest Practicable Date.

The Manager has been separately advised by its own legal adviser in the preparation of the

Circular other than this letter. We have had no role or involvement and have not provided any

advice whatsoever in the preparation, review and verification of the Circular other than this

letter. Accordingly, we take no responsibility for, and express no views, whether express or

implied, on the contents of the Circular except as for this letter.

Our opinion in relation to the Proposed Development Management Fee Supplement and the

Proposed Performance Fee Supplement as set out under Section 7 of this letter should be

considered in the context of the entirety of our advice. While a copy of this letter may be

reproduced in the Circular, the Manager may not reproduce, disseminate or quote this letter

or any part thereof for any purpose, other than for the purpose stated herein, without our prior

written consent in each instance.

We have not had regard to the general or specific investment objectives, financial situation,

tax position, risk profiles or unique needs and constraints of any Unitholder. As Unitholders

will have different investment objectives, we advise the Independent Directors to recommend

that any Unitholder who may require specific advice in relation to his or her specific

investment objectives or portfolio should consult his or her stockbroker, bank manager,

solicitor, accountant, tax adviser or other professional advisers.

3. DETAILS OF THE PROPOSED DEVELOPMENT MANAGEMENT FEE SUPPLEMENT TO

THE TRUST DEED

3.1 Principal Terms of the Proposed Development Management Fee Supplement

The Manager proposes to charge a development management fee of up to 3.0% of the total

project costs incurred in Development Projects undertaken by the Manager on behalf of CIT

(the “Development Management Fee”). The Manager shall reduce the Development

Management Fee to match the lower market pricing in circumstances where market pricing

for comparable development management services as determined by independent quantity

surveyors is materially lower. To further safeguard Unitholders’ interests, standard operating

procedures for determining the competitiveness of the Development Management Fee will

also be put in place by the Manager in consultation with the Independent Directors. Where

49

the estimated total project costs in respect of a Development Project is up to S$50 million,

the amount of Development Management Fee to be paid to the Manager in respect of that

Development Project shall be reviewed and approved by the ARCC1. For Development

Project(s) having estimated total project costs greater than S$50 million, the Trustee and the

Independent Directors will need to review and approve the quantum of the Development

Management Fee. Where the Trustee and the Independent Directors so direct, the

Development Management Fee shall be reduced accordingly. Any increase in the percentage

of the Development Management Fee or change in the structure of the Development

Management Fee shall be approved by an Extraordinary Resolution.


means the sum of the construction costs, land costs (where applicable)2, principal

consultants fees, cost of obtaining all approvals for the Development Project, site staff costs,

interest costs and any other costs which could reasonably be considered to meet the

definition of total project costs and can be capitalised to the Development Project in

accordance with generally accepted accounting principles. Further details of components of

total project costs are set out in Appendix B of the Circular.




opportunities which do not eventually materialise into Development Projects.

The Development Management Fee will be paid in cash to the Manager in equal monthly

instalments over the construction period of each Development Project, based on the

Manager’s best estimate of the total project costs and construction period and, in the event

of any overpayment or underpayment, a final adjustment of the balance amount when the

total project costs are finalised. If the total project costs have been over-estimated, a refund

of the excess Development Management Fee will be made by the Manager to CIT. For any

development management services provided by any third party service providers in

connection with a Development Project, any payment to such third party service providers

shall be borne by the Manager, and not additionally out of the Trust. CIT shall bear all

applicable goods and services tax and all other applicable sales tax, governmental

impositions, duties and levies whatsoever imposed on the Development Management Fee by

the relevant authorities in Singapore or elsewhere.

3.2 Responsibilities of the Manager In Respect Of Development Management Services

We reproduce below the responsibilities of the Manager in respect of development

management services as set out in paragraph 3.2 of the Circular. The Manager shall be

responsible for providing development management services such as:

(i) sourcing for and conducting feasibility studies on development opportunities and

coordinating with consultants to perform technical due diligence;

(ii) overall responsibility for the planning, control and monitoring of the progress of the

Development Project from conception to completion to ensure that the Development

Project is completed within the stipulated time and budget and to the stipulated quality;

1 “ARCC” means the Audit, Risk Management and Compliance Committee of the Manager.





50

(iii) working closely with and overseeing the appointed project manager, architect and

consultants to carry out relevant value engineering to ensure a cost-efficient building;

(iv) reporting to the Trustee on a regular basis, in particular, on the cost and progress of the

Development Project;

(v) representing the Trustee in all site meetings during the construction period, and to

advise on any variation works and (where applicable) make appropriate

recommendations to the Trustee for consideration;

(vi) establishing the prospective tenant’s real estate requirements, make site selection,

negotiate with government authorities on land allocation and conditions;

(vii) providing value-add inputs on the concept and schematic plans by engaging the

Trustee’s service providers, namely property managers and marketers and involving the

Manager’s asset managers to ensure an efficient, functional and marketable end

product;

(viii) liaising with the prospective tenant for acceptance of concept and schematic plans and

building specifications;

(ix) establishing and ensuring agreement with the prospective tenant on the overall

milestones for the delivery of the Development Project; and

(x) finalising with the prospective tenant the architectural schematic plans/specifications

for use as the basis for calling of tender(s).

The role of the project manager is distinct from that of the development manager and

includes the preparation of tender documents, evaluating tender submissions, programme

management and scheduling, contract administration and regular reporting of cost, time,

quality and project concerns to the development manager.

The Manager has in-house project and property development capabilities. The team is led by

Mr Michael Long, an experienced development manager with over 20 years of experience in

the real estate development and construction industries in, among others, the large-scale

industrial, residential and commercial sectors. During his career in project development and

construction, Mr Michael Long has successfully delivered premium quality developments

working as a Senior Project Manager for Confluence Project Management in Singapore and

Bovis Lend Lease in Singapore, London and Sydney. He holds a Clerk of Works, Building

Diploma from Sydney TAFE and is an active member of the Project Managers Institute of

Australia.

CIT will only undertake developments on a selective basis to ensure they are value

enhancing to the existing portfolio. For example, the Manager believes that development

activities such as built-to-suit developments could be undertaken to cater to a prospective

tenant’s operational requirements and specifications. Such developments may generate long

term master leases and enable CIT to extend its lease expiry profile.

4. EVALUATION OF THE PROPOSED DEVELOPMENT MANAGEMENT FEE SUPPLEMENT

In reaching our recommendation in respect of the Proposed Development Management Fee

Supplement, we have given due consideration to the following factors:

(1) Rationale for the Proposed Development Management Fee Supplement.

51

(2) Comparison of the Development Management Fee with development management fees

payable by selected trusts and real estate investment trusts (“REITs”) that are listed on

the SGX-ST.

(3) Selected other relevant factors.

4.1 Rationale for the Proposed Development Management Fee Supplement

The Manager’s rationale for the Proposed Development Management Fee Supplement is set

out in paragraph 3.3 of the Circular.

4.2 Comparison of the Development Management Fee with Development Management

Fees payable by selected trusts and REITs that are listed on the SGX-ST

We have considered publicly available information for selected trusts and REITs that are

listed in Singapore.

We present in the table below, information on selected trusts and REITs listed in Singapore

that have development management agreements or arrangements. The list of selected trusts

and REITs presented in the table below is for illustration purpose only and is by no means

exhaustive.

Name of

Trust or REIT

Country of

Listing

Market

Cap(1)

(S$ Million)

Total

Assets(2)

(S$ Million)

Development

Management Fee Scope

Cambridge

Industrial Trust

(“CIT”)

Singapore 936.3 1,305.3 Up to 3.0% of total

project costs.(3)

Development management

services (including asset

enhancement initiatives)

including deal sourcing and

structuring, project

planning, control and

monitoring from conception

to completion, but does not

include refurbishment,

retrofitting and renovations.

Ascendas

REIT

(“A-REIT”)

Singapore 5,709.3 6,686.0 Up to 3.0% of total

project costs.(4)

(project costs

includes land cost,

no exceptions

noted)


services including deal

sourcing and structuring,

project planning, control

and monitoring from

conception to completion

but does not include

refurbishment, retrofitting

and renovations.

Mapletree

Logistics Trust

(“MLT”)

Singapore 2,845.5 2,774.8 3.0% of total project

costs.(5)

(project

costs includes land

cost, no exceptions

noted)


services including deal

sourcing and structuring,

project planning, control

and monitoring from

conception to completion



and renovations.

52

Name of

Trust or REIT

Country of

Listing

Market

Cap(1)

(S$ Million)

Total

Assets(2)

(S$ Million)

Development

Management Fee Scope

Mapletree

Industrial Trust

(“MIT”)


costs.(6)

Development of land, or

buildings, or part(s) thereof

on land which is acquired,

held or leased by MIT and

does not include


and renovations.

Ascendas

Hospitality

Trust

(“A-HREIT”)

Singapore 852.6 1,079.7 3.0% of total project

costs.(7)

(applicability

of land cost in

project cost is very

similar to that in

CIT’s Proposed

Development

Management

Supplement)




held or leased by A-HREIT,



and renovations.

Far East

Hospitality

Trust

(“Far East

H-REIT”)


costs.(8)

(Total

project cost for Far

East H-REIT does

not reference land

costs)




held or leased by Far East

H-REIT, including major

development,

re-development,

refurbishment, retrofitting,

addition and alteration and

renovations works.

Religare

Health Trust

Singapore 697.5 897.5 2.0% of total project

costs. (Total project

costs for Religare

Health Trust

excludes land costs

and interests costs)

Development or

redevelopment of medical

and healthcare assets

which are acquired or held

by the trust. This includes

any redevelopment

undertaken on the initial

portfolio after the listing

date.

Notes:

1. Market capitalisation as at 15 March 2013.

2. Total assets based on latest announced financial results as at 15 March 2013.

3. Where the market pricing for comparable management services is materially lower than the Development

Management Fee, the Manager shall reduce the Development Management Fee to match the lower market

pricing. In addition, where the estimated total project costs in respect of a Development Project exceed S$50

million, the amount of Development Management Fee to be paid to the Manager in respect of that

Development Project shall first be reviewed and approved by the Trustee and the Independent Directors.

Where the Trustee and the Independent Directors so direct, the Development Management Fee shall be

reduced accordingly.

4. Ascendas-MGM Funds Management Limited (“AMFM”), manager for A-REIT, will reduce the development

management fee to less than 3.0% of total project costs in cases where market pricing for comparable

services is materially lower. In addition, when the estimated total project cost is greater than S$100 million,

the trustee and the independent directors of AMFM will first review and approve the quantum of the

development management fee.

5. Mapletree Logistics Trust Management Limited (“MLTM”), manager for MLT, has the discretion to reduce the

development management fee to less than 3.0% of total project costs in cases where market pricing for

comparable services is materially lower. In addition, when the estimated total project cost is greater than

S$100 million, the trustee and the independent directors of MLTM will first review and approve the quantum

of the development management fee, and may direct MLTM to reduce the development management fee.

53

6. Mapletree Industrial Trust Management Limited (“MITM”), manager for MIT, has the discretion to reduce the

development management fee to less than 3.0% of total project costs in cases where market pricing for

comparable services is materially lower. In addition, when the estimated total project cost is greater than

S$100 million, the trustee and the independent directors of MITM will first review and approve the quantum

of the development management fee, whereupon MITM may be directed to reduce the development

management fee.

7. When the estimated total project costs are greater than S$200 million, The Trust Company (Asia) Limited (the

“A-HREIT Trustee”) and the independent directors of Ascendas Hospitality Fund Management Pte Ltd

(“AHFM”), manager for A-HREIT, will first review and approve the quantum of the development management

fee, whereupon AHFM may be directed by its board of directors to reduce the development management fee.

Approval to reduce the development management fee shall be obtained from the independent directors of

AHFM. Further, in cases where AHFM is of the view that the market pricing for comparable services is

materially lower than the development management fee, it shall have the discretion to accept a development

management fee which is less than 3.0% of the total project costs incurred in a development project

undertaken by AHFM on behalf of A-HREIT.

8. When the estimated total project costs are greater than S$100 million, DBS Trustee Limited (the “Far East

H-REIT Trustee”) and the independent directors of FEO Hospitality Asset Management Pte Ltd (“FHAM”),

manager for Far East H-REIT, will first review and approve the quantum of the development management fee,

whereupon the FHAM may be directed to reduce the development management fee. Further, in cases where the

market pricing for comparable services is, in FHAM’s view, materially lower than the development management

fee, FHAM will have the discretion to accept a development management fee which is less than 3.0% of the total

project costs incurred in a development project undertaken by FHAM on behalf of Far East H-REIT.

Based on table above, we note the following:

(i) All the 6 trusts or REITs use total project costs as a basis for calculation of development

management fees (“Comparable Property Trusts”).

(ii) For both A-REIT and MLT, the definition of land cost in total project costs excludes the

redevelopment provision3 found in the Proposed Development Management Supplement.

(iii) A-HREIT’s applicability of land cost in total project cost is very similar to that defined in

CIT’s Proposed Development Management Supplement.

(iv) We are not able to obtain MIT’s definition of total project costs from publicly available

information.

(v) We note that Far East H-REIT’s total project costs definition does not have any

reference to land costs.

(vi) We note that Religare Health Trust’s total project costs definition excludes the purchase

price of the land and financing costs relating to the development project. Furthermore,

Religare Health Trust’s development management fee is 2.0% of its definition of total

project costs.

(vii) The proposed Development Management Fee of up to 3.0% of total project costs is

within the range of development management fees paid by the Comparable Property

Trusts which ranges from 2.0% to 3.0%.

(viii) 3 of the 6 trusts or REITs are industrial trusts and they use total project costs as a basis

for calculation of development management fees (“Comparable Industrial Property

Trusts”). The proposed Development Management Fee of up to 3.0% of total project

costs is in line with the percentage paid by the Comparable Industrial Property Trusts.





54

(ix) Based on our research of publicly available information, we note that both A-REIT and

MLT have comparable scope of services under its development management services

to that of CIT as provided under section 3.2 of this Circular.

(x) We note that the REITs such as, Cache Logistics Trust, Sabana Shari’ah Compliant

REIT and AIMS AMP Capital Industrial REIT are directly comparable to Cambridge

Industrial Trust in terms of size and sub sector focus. Based on publicly available

information, we are not aware of Cache Logistics Trust, Sabana Shari’ah Compliant

REIT or AIMS AMP Capital Industrial REIT undertaking development management for

their respective REITs and as such, we are not able to use these REITs for our

benchmarking purposes.

Based on our findings above, CIT’s definition of “total project costs” is within the range of

observable market practice. As such, CIT’s definition of “total project costs” is on normal

commercial terms and not prejudicial to the interests of CIT and its Unitholders who are not

interested persons. Our opinion on the entire Development Management Fee would

encompass the definition of “total project costs” as well as other relevant components of the

Development Management Fee.

We would like to highlight that, majority of the details of roles and responsibilities of the

development managers for the trusts and REITs listed in the table above are not publicly

available. Differences in roles and responsibilities of the development manager, in addition

to factors such as nature, size, complexity of the developments and regulatory environment

could be a reason for the differing fee structures.

4.3 Selected Other Relevant Factors

(i) Manager bears the upfront risk of Development Projects that fail to reach the

construction phase




opportunities which do not eventually materialise into Development Projects. As such no

Development Management Fee will be payable should a Development Project be aborted

prior to commencement of construction. Therefore, the Manager bears the upfront risk in

respect of the Development Projects that fail to reach the construction phase.

(ii) Development Management Fees for project costs of up to S$50 million shall be

reviewed and approved by the ARCC

We note that where the estimated total project costs in respect of a Development Project is

up to S$50 million, the amount of Development Management Fee to be paid to the Manager

in respect of that Development Project shall be reviewed and approved by the ARCC.

(iii) Reduction of Development Management Fee under certain circumstances

We note that the Manager shall reduce the Development Management Fee to match the

lower market pricing in circumstances where market pricing for comparable management

services as determined by independent quantity surveyors is materially lower than the

Development Management Fee. To further safeguard Unitholders’ interests, standard

operating procedures for determining the competitiveness of the Development Management

Fee will also be put in place by the Manager in consultation with the Independent Directors.

This ensures that the Development Management Fee charged by the Manager is consistent

with market pricing for comparable services.

55

We also note that, the Trustee and the Independent Directors shall review and approve the

quantum of the Development Management Fee for any Development Project having total

project costs greater than S$50 million. Where the Trustee and the Independent Directors so

direct, the Development Management Fee shall be reduced accordingly. This specific

oversight role of the Trustee and the Independent Directors should ensure that the

Development Management Fee paid to the Manager for larger Development Projects is

commensurate to services provided by the Manager, taking into consideration the nature,

scale and complexity of the Development Project.

(iv) Manager is responsible for payment for development management services provided

by unrelated third party service provider(s) appointed by the Manager, if any

We note that the Manager may at its sole discretion appoint one or more unrelated third party

service providers to perform all or some of the development management services provided

that the Manager remains at all times responsible for the development management services

provided by the unrelated third party service provider(s) and the Manager shall be entitled to

the full Development Management Fee from CIT notwithstanding the appointment of such

unrelated third party service provider(s). For the avoidance of doubt, the payment of fees to

such unrelated third party service providers will be borne by the Manager and not by CIT.

(v) Application of Development Management Fee

We note that no acquisition fees and other additional fees will be paid to the Manager for

development management services which are rendered for Development Projects if the

Manager receives the Development Management Fee. For instance, if CIT invests in real

estate to be built on vacant land that has been approved for development or other

uncompleted property developments, CIT will pay to the Manager a Development

Management Fee for the Development Project. CIT will not have to pay the Manager an

acquisition fee in respect of its investment in the Development Project.

A Development Management Fee is chargeable for redevelopment of an existing property.

However, the Manager will not receive a Development Management Fee for activities

involving refurbishment, retrofitting and renovations.

(vi) Land Costs

For redevelopment of existing properties, land cost refers to all costs associated with land

such as any payment of additional premium or amounts to the regulatory authorities in

connection with the redevelopment, but does not include the value of the land. For avoidance

of doubt, there will be no land cost component for land which has been allocated at no cost

to CIT for built-to-suit developments.

5. PRINCIPAL TERMS OF THE PROPOSED PERFORMANCE FEE SUPPLEMENT TO THE

TRUST DEED

The Manager earns a performance fee if the total return (combining both capital performance

of a Unit and its reinvested income) of the Trust Index outperforms the total return of the

Benchmark Index, currently consisting of the eight largest REITs in Singapore. The

Performance Fee is calculated in two tiers based on a fixed percentage of the

outperformance multiplied by the equity market capitalisation of CIT. The Manager may opt

to receive the Performance Fees in Units or cash or a combination thereof.

56

The below is extracted from the Circular:

“The Manager proposes to supplement the Trust Deed with the Performance Fee

Supplement, with the proposed changes summarised in the table below:

Relevant components of

the Performance Fee

calculation formula


calculation formula


calculation formula

Closing value of the

Benchmark Index4 for the

relevant Half Year

Based on the investible (i.e.

free float) market capitalisation

weightings of the securities

comprising the Benchmark

Index recorded on the

SGX-ST during the five

Business Days preceding the


Year (including the last day of

the relevant Half Year) and the

five Business Days after the


Year (10 Business Days in

total).

Based on the average of the

closing values of the Benchmark





Year).

The closing value of the

Benchmark Index for each

Business Day is based on the

investible (i.e. free float) market

capitalisation weightings of the

securities comprising the

Benchmark Index recorded on

the SGX-ST.

Closing value of the Trust

Index5 for the relevant Half

Year

Calculated based on the last

Business Day of the relevant

Half Year (i.e. one Business

Day only).

Calculated based on the average

of the closing values of the Trust





Year).



calculation does not provide a

fair reflection of the closing value

of the Trust Index for that

Business Day, the closing value

shall be a value as determined

by the Independent Directors and

the Trustee (in consultation with

FTSE International Limited or

another approved index provider)

as being fair closing value of the

Trust Index for that Business

Day, in favour of CIT.

4 “Benchmark Index” means (a) a performance tracking index comprising all of the real estate investment trusts

contained in the FTSE AllCap Singapore universe (but excluding CIT) provided by FTSE International Limited or

another index provider with similar capabilities; or (b) such other index as may be chosen in accordance with Clause

15 of the Trust Deed.

5 “Trust Index” means the performance tracking index for CIT, as calculated by FTSE or another index provider with

similar capabilities, as appointed by the Manager, in consultation with the Trustee. The Trust Index measures the total

return of CIT, combining both capital performance of the security and its reinvested income.

57

Relevant components of

the Performance Fee

calculation formula


calculation formula


calculation formula

VWAP for a Unit (used to

calculate the equity market

capitalisation of CIT)


SGX-ST in the ordinary course

of trading during the five


last day of the Half Year and

the five Business Days after

the last day of the relevant

Half Year (10 Business Days

in total).





the Half Year (including the last

day of the relevant Half Year).



calculation does not provide fair

reflection of the VWAP of a Unit,

an amount as determined by the

Independent Directors and the

Trustee (after consultation with

an approved stockbroker) as

being the fair VWAP of a Unit in

favour of CIT.

Issue Price of the relevant

Units to be issued to the

Manager as payment for

Performance Fees (if any)

The greater of (a) the VWAP

for a Unit for all trades on the

SGX-ST in the ordinary course

of trading during the five



Year (including the last day of

the relevant Half Year) and the

five Business Days after the


Year (10 Business Days in

total) and (b) Value of the

Deposited Property divided by

the number of Units in

issue/deemed to be in issue at

the end of the Half Year.








Year), or if the Manager believes

that the above calculation does

not provide fair reflection of the

VWAP of a Unit, an amount as

determined by the Independent

Directors and the Trustee (after

consultation with an approved

stockbroker) as being the fair

VWAP of a Unit and (b) Current

Unit Value6 at the end of the Half

Year.”

“Note that instances where the values of the Trust Index and the VWAP of a Unit not being



of the closing value of the Units).”

“The Manager will only use the “recourse options” if it believes that the daily value of the

Trust Index or the VWAP of a Unit for the reference period are higher than the fair closing

values of the Trust Index and VWAP. Therefore, the Manager will only use the “recourse

options” to adjust the quantum of the Performance Fee lower and not higher, such that the

adjustments will only be made in the interests of CIT and ultimately, the Unitholders.”

6 “Current Unit Value” means at any time the Net Asset Value of the Deposited Property at that time divided by the

number of Units in issue and deemed to be in issue at that time.

58

“The Manager may at its sole discretion waive, partially or fully, its Performance Fees if the

Manager finds the Performance Fee to be overstated, so as to reflect the impact of the fair

market pricing for all closing values relating to the calculation of the Performance Fees.”

Based on the above, the Proposed Performance Fee Supplement in essence revises the

current performance fee calculation and payment as follows:

(i) aligning the reference time-period for the calculations of the values of (aa) the

Benchmark Index for Performance Fees calculation, (bb) the Trust Index for

Performance Fees calculation, (cc) the calculated VWAP for a Unit used to determine

the market capitalisation for Performance Fees calculation, and (dd) Issue Price for

Performance Fees payment (the “Reference Time-period”);

(ii) the Reference Time-period being 10 Business Days preceding the last day of the

relevant Half Year (including the last day of the relevant Half Year) (the “10-day Prior

Time-period”);

(iii) the number of Units to be issued as Performance Fee will be determined based on the

issue price of the Units which is the greater of (i) the VWAP for a Unit for all trades on

the SGX-ST during the 10-day Prior Time-period, and (ii) the Current Unit Value (i.e. the

Net Asset Value per Unit) (the “Issue Price Formula”); and

(iv) if the Manager believes that the calculation for the Trust Index value (for Performance Fee

calculation) or calculated VWAP for a Unit (used to calculate VWAP for a Unit used to

determine the market capitalisation for Performance Fees calculation and for Issue Price

for Performance Fees payment) do not provide a fair reflection of the closing value of the

Trust Index for that Business Day, or does not provide a fair reflection of the market price

of a Unit, such value or market price shall be a value or a market price as determined by

the Independent Directors and the Trustee (after consultation with FTSE International

Limited or another index provider approved by the Manager and Trustee or stockbroker

approved by the Trustee, as the case may be), as being the fair closing value of the Trust

Index for that Business Day or the fair market price of a Unit (the “Recourse Option”). The

Manager will only use the Recourse Options in respect of the Trust Index value (for

Performance Fee calculation) and VWAP for a Unit used to determine the market

capitalisation (for Performance Fees calculation), to adjust the quantum of the

Performance Fee lower and not higher, such that the adjustments will only be made in the

interests of CIT and ultimately, the Unitholders. Furthermore, the Manager may at its sole

discretion waive, partially or fully, its Performance Fees if the Manager finds the

Performance Fee to be overstated, so as to reflect the impact of the fair market pricing

for all closing values relating to the calculation of the Performance Fees.

6. EVALUATION OF THE PROPOSED PERFORMANCE FEE SUPPLEMENT

In reaching our recommendation in respect of the Proposed Performance Fee Supplement,

we have given due consideration to the following factors:

(1) Rationale for the Proposed Performance Fee Supplement.

(2) Comparison of the Reference Time-period and 10-day Prior Time-period with

comparable terms for performance fee calculation of selected property funds, trusts and

REITs listed in Singapore and Australia.

(3) Comparison of the Issue Price Formula and the Recourse Option for determining the Unit

market price for Issue Price calculation (for Performance Fee payment), with comparable

terms of issue price calculation of selected trusts and REITs listed in Singapore.

59

(4) Comparison of the Recourse Option for determining the Trust Index value (for

Performance Fee calculation) and calculated VWAP for a Unit used to determine the

market capitalisation (for Performance Fees calculation) with selected trusts and REITs

in Singapore.

(5) Selected other factors.

6.1 Rationale for the Proposed Performance Fee Supplement

The full text of the Manager’s rationale for the Proposed Performance Fee Supplement is set

out in paragraph 4.2 of the Circular.

6.2 Comparison of the Reference Time-period and 10-day Prior Time-period with

comparable terms for performance fees calculation of selected property funds, trusts

and REITs listed in Singapore and Australia

We have considered publicly available information for selected property funds, trusts and

REITs that are listed in Singapore, Malaysia, Hong Kong, Australia and New Zealand. Based

on our research of public information, we note that selected property funds, trusts and REITs

listed in Singapore and Australia, do have comparable terms in their performance fees

calculation to compare with the Reference Time-period and 10-day Prior Time-period

proposed in the Proposed Performance Fee Supplement. We note that property funds,

trusts and REITs in Singapore would generally provide for a performance fee

component for their respective managers; however we note that only CitySpring

Infrastructure Trust and Starhill Global REIT calculate their performance fees on

comparable terms as that in the Proposed Performance Fee Supplement, using

Benchmark Index and Trust Index.

We present in the table below, information on selected property funds, trusts and REITs listed

in Singapore and Australia that have comparable terms in their performance fees

calculation to compare with the Reference Time-period and 10-day Prior Time-period

proposed in the Proposed Performance Fee Supplement. The list of selected property funds,

trusts and REITs presented in the table below is for illustration purpose only and is by no

means exhaustive.

Name of

Property Fund,

Trust or REIT

Reference Time-Period

Trust Index/Unit Price Benchmark Index Market Capitalisation

Singapore property funds, trusts and REITs

Cambridge

Industrial Trust

Average of the 10

Business Days

preceding the last day

of the relevant Half

Year (including the last

day of the relevant Half

Year).

Average of the 10

Business Days





Year).

The VWAP for a unit

based on all trades on

the SGX-ST, in the

ordinary course of

trading, during the 10

Business Days





Year) multiplied by the

number of Units on

issue at the close of

the last day of the prior

Half Year.

60

Name of

Property Fund,

Trust or REIT

Reference Time-Period

Trust Index/Unit Price Benchmark Index Market Capitalisation

CitySpring

Infrastructure

Trust

Based on the average

daily closing value over

the last 15 trading

days of the quarter.

Based on the average

daily closing value over

the last 15 trading

days of the quarter.

The weighted average

number of units on

issue at closing during

the last 15 trading

days of the quarter

multiplied by the VWAP

trading price of all

units traded on the

SGX-ST over those 15

trading days.

Starhill Global

REIT

N.A The VWAP of the

securities comprising

the benchmark index

recorded on the SGX-

ST, during the 5

business days


of the relevant half

year (including the last

day of the relevant half

year) and the 5

business days after the

last day of the relevant

half year.

The VWAP for a unit

for all trades on the

SGX-ST in the ordinary

course of trading

during the 5 business

days preceding the last

day of the relevant

half-year (including the


half year), and the 5

business days after the


half year (10 business

days in total),

multiplied by the

number of units on

issue at the close of

the last day of the prior

half year.

Australian property funds, trusts and REITs

Colonial First

State Retail

Property Trust

20-day VWAP. 20-day VWAP. N.A(1)

Commonwealth

Property Office

Fund

20-day VWAP. 20-day VWAP. N.A(1)

Source: Prospectuses, company circulars and annual reports.

Notes:

1. Outperformance basis is based on gross asset value.

Based on the table above, we note the following:

(i) CitySpring Infrastructure Trust uses a uniform reference time-period for the trust index

benchmark index and market capitalisation, similar to the Proposed Performance Fee

Supplement. However CitySpring Infrastructure Trust uses a 15-day reference time-

period instead of the 10-day Prior Time-period.

61

(ii) Starhill Global REIT adopts a uniform reference time-period for its benchmark index and

market capitalisation but not for its trust index. Starhill Global REIT’s reference

time-period is similar to CIT’s currently existing reference time-period.

(iii) Colonial First State Retail Property Trust and Commonwealth Property Office Fund use

a 20-day VWAP as the reference time period for both the trust index and the benchmark

index. Colonial First State Retail Property Trust and Commonwealth Property Office

Fund do not use market capitalisation in the calculation of Performance Fees and as

such, there is no comparable data. We would like to highlight that not all details on the

trust index and benchmark index reference time periods, for the property funds, trusts

or REITs, are publicly available.

6.3 Comparison of the Issue Price Formula and the Recourse Option for determining the

Unit market price for Issue Price calculation (for Performance Fee payment), with

comparable terms of issue price calculation of REITs listed in Singapore.

We have considered publicly available information for selected REITs that are listed in

Singapore. Based on our research of public information, we note that selected trusts and

REITs listed in Singapore do have comparable terms in their issue price calculation (for

Performance Fee payment) to compare with the Issue Price Formula proposed in the

Proposed Performance Fee Supplement.

We present in the table below, information on selected REITs listed in Singapore that have

comparable terms in their issue price calculation (for Performance Fee payment) to compare

with the Issue Price Formula in the Proposed Performance Fee Supplement. The list of

selected REITs presented in the table below is for illustration purpose only and is by no

means exhaustive.

Name of Trusts and REITs

Issue price of Units based on 10

Business Day VWAP

immediately preceding the end

of the relevant period Recourse Options

Cambridge Industrial Trust The issue price will be the greater

of the 10 Business Day VWAP

and the trust’s Current Unit Value

at the end of the Half Year

Recourse option(1)

AIMS AMP Capital Industrial REIT u Recourse Options(2)

Ascendas Hospitality Trust u Recourse Options(2)

Ascendas REIT u Recourse Options(2)

Ascott Residence Trust N.A(3) Recourse Options(2)

Cache Logistics Trust u Recourse Options(2)

CapitaCommercial Trust u Recourse Options(2)

CapitalRetail China Trust u N.A

CapitaMall Trust u Recourse Options(2)

CDL Hospitality Trust u N.A

Far East Hospitality Trust u Recourse Options(2)

First REIT u Recourse Options(2)

Fortune REIT u Recourse Options(2)

Frasers Centrepoint Trust u Recourse Options(2)

Frasers Commercial Trust u Recourse Options(2)

62

Name of Trusts and REITs

Issue price of Units based on 10

Business Day VWAP

immediately preceding the end

of the relevant period Recourse Options

K-REIT Asia u Recourse Options(2)

Lippo Malls Indonesian Retail Trust u Recourse Options(2)

Mapletree Commercial Trust u Recourse Options(2)

Mapletree Industrial Trust u Recourse Options(2)

Mapletree Logistics Trust u Recourse Options(2)

Parkway Life REIT u Recourse Options(2)

Sabana Shari’ah Compliant REIT u Recourse Options(2)

Saizen REIT u Recourse Options(2)

Starhill Global REIT The issue price will be the greater

of the 10 Business Day VWAP

and the value of trust property per

unit at the end of the half year.(4)

N.A

Suntec REIT u Recourse Options(2)

Notes:

1. If the Manager believes that the VWAP per Unit for all trades on the SGX-ST in the ordinary course of trading

during the 10 Business Days preceding the last day of the Half Year (including the last day of the relevant Half

Year), does not provide a fair reflection of the market price of a Unit, an amount as determined by the

Independent Directors and the Trustee (after consultation with a stockbroker approved by the Trustee), as

being the fair market price of a Unit.

2. If the manager believes that the VWAP per unit for all trades on the SGX-ST for the period of 10 business days

immediately preceding the end of the period, but including the last day of the period, does not provide a fair

reflection of the market price of a unit, an amount as determined by the manager and the Trustee (after

consultation with a stockbroker approved by the Trustee), as being the fair market price of the unit.

3. The issue price is determined based on the VWAP price per unit for all trades done on SGX-ST in the ordinary

course of trading for 5 business days immediately preceding the respective date of issue of the new units.

4. The issue price is based on the VWAP for a unit for all trades on the SGX-ST in the ordinary course of trading

during the 5 business days preceding the last day of the relevant half year, including the last day of the

relevant half year and the 5 business days after the last day of the relevant half year (10 business days in

total).


(i) 22 of the 24 REITs reviewed calculate issue price of units (for Performance Fee

payment) based on the 10 Business Day VWAP immediately preceding the end of the

relevant period. This is consistent with CIT’s proposed method of calculating issue price

of units (for Performance Fee payment).

(ii) Ascott Residence Trust calculates issue price of units (for Performance Fee payment)

based on trailing 5 day VWAP.

(iii) Starhill Global REIT calculates issue price (for Performance Fee payment) based on the

VWAP during the 5 business days before and 5 business days after relevant half year

(10 business days in total).

(iv) Starhill Global REIT is the only REIT in the sample to have a “greater of” provision in

its issue price formula (for Performance Fee payment), similar to CIT’s, although CIT’s

provision references Current Unit Value (i.e. the Net Asset Value per Unit) while Starhill

Global REIT’s provision references the value of trust property per unit which is similar

to CIT’s currently existing formula.

63

(v) 21 of the 24 REITs have a “recourse option” whereby if the manager believes that the

VWAP of the preceding 10 days before the end of the period, but including the last day

of the period, does not provide a fair reflection of the market price of a unit, an amount

as determined by the manager and the Trustee (after consultation with a stockbroker

approved by the Trustee), as being the fair market price of a unit. CIT’s trust deed does

not currently contain such a “recourse option” in relation to the Performance Fee but the

Manager has proposed such a “recourse option” in its Proposed Performance Fee

Supplement.

Please note that the Recourse Option for determining the Unit market price for Issue Price

calculation (for Performance Fee payment) is a mechanism which is intended to provide a

fair reflection of unit price and as such, it is not meant to be advantageous or

disadvantageous to either Unitholders or the Manager. However, as any adjustment will have

to be as directed by the Independent Directors and the Trustee (after consultation with an

approved stockbroker), this Recourse Option should be on normal commercial terms and not

prejudicial to the interests of Unitholders who are not interested persons.

6.4 Comparison of the Recourse Option for determining Trust Index value (for

Performance Fee calculation) and calculated VWAP for a Unit used to determine the

market capitalisation (for Performance Fee calculation) with selected trusts and REITs

in Singapore

We have considered publicly available information for selected trusts and REITs that are

listed in Singapore. We present in the table below, information on selected trusts and REITs

listed in Singapore and the availability of recourse options when determining the closing

value of the trust index (for Performance Fee calculation) and calculated VWAP for a Unit

used to determine the market capitalisation (for Performance Fee calculation). The list of

selected trusts and REITs presented in the table below is for illustration purpose only and is

by no means exhaustive.

Name of Trust or REIT

Recourse Option for Trust Index and

calculation of VWAP for a Unit used to

determine the market capitalisation

Cambridge Industrial Trust u(1)(2)

CitySpring Infrastructure Trust N.A.

Starhill Global REIT N.A.

Notes:

1. If the Manager believes that the calculation for the Trust Index does not provide a fair reflection of the closing

value of the Trust Index for that Business Day, the closing value shall be a value as determined by the

Independent Directors and the Trustee (after consultation with FTSE International Limited or another index

provider approved by the Manager and Trustee), as being the fair closing value of the Trust Index for that

Business Day.

2. The Manager will only use the “recourse options” to adjust the quantum of the Performance Fee lower and

not higher, such that the adjustments will only be made in the interests of CIT and ultimately, the Unitholders.

Furthermore, the Manager may at its sole discretion waive, partially or fully, its Performance Fees if the

Manager finds the Performance Fee to be overstated, so as to reflect the impact of the fair market pricing for

all closing values relating to the calculation of the Performance Fees.


(i) Only CitySpring Infrastructure Trust and Starhill Global REIT have been included as

they are the only trust and REIT listed in Singapore that base their performance fee

calculation on total returns or accumulated returns respectively of their respective trust

indices against their respective benchmark indices.

64

(ii) From the table above, if the Proposed Performance Fee Supplement is approved and

implemented, CIT will be the only REIT (or trust listed above) to have recourse options

for determining the trust index value (for Performance Fee calculation) and calculation

of VWAP for a Unit used to determine the market capitalisation (for Performance Fees

calculation).

Please note that the recourse option for Trust Index and calculation of VWAP for a Unit used

to determine the market capitalisation will only be used to adjust the quantum of the

Performance Fee lower and not higher, such that the adjustments will only be made in the

interests of CIT and ultimately, the Unitholders.

6.5 Selected other factors

(i) The Issue Price Formula reduces the potential issue price (for Performance Fee

payment) but not below that of the VWAP of Units in the preceding 10 days immediately

before the end of the half year

The current formula in calculating the Issue Price (for Performance Fee payment) based on

Deposited Property7 per Unit would result in a higher Issue Price (for Performance Fee

payment) than that estimated based on Current Unit Value8. However, the issue price (for

Performance Fee payment) cannot be lower than the VWAP of Units in the preceding 10 days

immediately before the end of the half year.

(ii) The Issue Price Formula encourages the Manager to elect to structure the payment of

the Performance Fee wholly or partially in Units

Manager has the discretion to structure the payment of the Performance Fee in the form of

cash or Units or a combination of both cash and Units.

The current formula in calculating the Issue Price (being the greater of (i) the VWAP for a

Unit for all trades on the SGX-ST in the ordinary course of trading during the 5 Business Days

preceding the last day of the relevant Half Year (including the last day of the relevant Half

Year) and the 5 Business Days after the last day of the relevant Half Year (10 Business Days

in total) and (ii) Deposited Property divided by the number of Units), and consequently the

number of Units to be issued for Performance Fee payment, would very likely result in the

issue price based on Deposited Property divided by the number of Units (i.e. total assets per

Unit). This would likely be a relatively high Issue Price (compared to market price) and

compels the Manager to elect to structure the payment of the Performance Fee in cash. The

proposed Issue Price Formula (being the greater of (i) the VWAP for a Unit for all trades on

the SGX-ST during the 10-day period before the end of the relevant half year, and (ii) the

Current Unit Value) would likely result in the Issue Price (for Performance Fee payment)

either at market price or a slight premium to market price which would be more attractive to

the Manager and consequently encourages the Manager to elect to structure the payment of

the Performance Fee wholly or partially in Units.

Should the Manager elect to structure the payment of the Performance Fee wholly or partially

in Units, there will be more cash available in CIT for distribution or re-investment.

7 Deposited Property means “All the assets of CIT, including all its Authorized Investments for the time being held or

deemed to be held upon the trusts of the Trust Deed”. As such, “the value of the Deposited Property divided by the

number of Units” is effectively “total assets per Unit”.

8 Current Unit Value (i.e. Net Asset Value of Deposited Property) refers to “At any time the Value of the Deposited

Property, less the Liabilities”. As such “the Current Unit Value divided by the number of Units” is effectively “net assets

value per Unit”.

65

(iii) Recourse Option is determined by the Independent Directors and the Trustee

CIT’s Recourse Option is determined by the Independent Directors and the Trustee, after

consultation with FTSE International Limited or another index provider approved by the

Manager and Trustee or stockbroker approved by the Trustee, as the case may be. This is

a safeguard to ensure that the Recourse Option will be on normal commercial terms and not

prejudicial to interests of CIT and its Unitholders who are not interested persons.

(iv) Recourse Option for Trust Index value (Performance Fee calculation) or the VWAP for

a Unit to determine the market capitalisation (for Performance Fee calculation) only in

favour of CIT and the Unitholders

The Manager will only use the Recourse Option in respect of the Trust Index value (for

Performance Fee calculation) and VWAP for a Unit used to determine the market

capitalisation (for Performance Fees calculation), if it believes that the daily value of the Trust

Index or the VWAP of a Unit for the reference period are higher than the fair closing values

of the Trust Index and VWAP. Therefore, the Manager will only use the Recourse Options to

adjust the quantum of the Performance Fee lower and not higher, such that the adjustments

will only be made in the interests of CIT and ultimately, the Unitholders.

(v) Manager may at its sole discretion waive, partially or fully, its Performance Fees

The Manager may at its sole discretion waive, partially or fully, its Performance Fees if the

Manager finds the Performance Fee to be overstated, so as to reflect the impact of the fair

market pricing for all closing values relating to the calculation of the Performance Fees.

7. OUR RECOMMENDATIONS

In arriving at our recommendation, we have taken into account the factors which we consider

have a significant bearing on our assessment of the Proposed Development Management

Fee Supplement including:

1. the rationale for the Proposed Development Management Fee Supplement;

2. the Development Management Fee is within the range of development management

fees paid by the Comparable Property Trusts;

3. the Development Management Fee is in line with the development management fees

paid by the Comparable Industrial Property Trusts;

4. the Development Management Fee will only be payable in respect of Development

Projects actually undertaken by the Trust. As such, the Manager will not charge a

Development Management Fee for sourcing and conducting feasibility studies on

development opportunities which do not eventually materialise into Development

Projects;

5. the Manager will not receive any Development Management Fee for Development

Projects that are aborted prior to the construction phase;

6. the Manager will reduce the Development Management Fee to the lower market pricing

for circumstances where market pricing for comparable management services as

determined by independent quantity surveyors is materially lower;

7. standard operating procedures for determining the competitiveness of the Development

Management Fee will also be put in place by the Manager in consultation with the

Independent Directors to further safeguard Unitholders’ interests;

66

8. Development Management Fees for project costs of up to S$50 million shall be

reviewed and approved by the ARCC;

9. for any Development Project having total project costs greater than S$50 million, the

Trustee and the Independent Directors shall review and approve the quantum of the

Development Management Fee and where the Trustee and the Independent Directors

so direct, the Development Management Fee shall be reduced accordingly;

10. the Manager is responsible for payment of fees to unrelated third party service

providers which are appointed by the Manager to perform all or some of the

development management services;

11. no acquisition fees and other additional fees will be paid to the Manager for

development management services which are rendered for Development projects if the

Manager receives the Development Management Fee;

12. a Development Management Fee is chargeable for redevelopment of an existing

property;

13. the Manager will not receive a Development Management Fee for activities involving

refurbishment, retrofitting and renovations;

14. the Development Management Fee will be charged with effect from the date of

amendment to the Trust Deed (assuming Unitholders’ approval is obtained at the EGM)

on a pro rata basis over the remaining construction period of current Development

Projects. However, in respect of the current Development Project at 88 International

Road, the Manager has agreed to waive the Development Management Fee because

the project is nearing completion. Save for the abovementioned project at 88

International Road, there are no other current projects undergoing development as of

the Latest Practicable Date; and

15. for redevelopment of existing properties, land cost refers to all costs associated with

land such as any payment of additional premium or amounts to the regulatory

authorities in connection with the redevelopment, but does not include the value of the

land. For avoidance of doubt, there will be no land cost component for land which has

been allocated at no cost to CIT for built-to-suit developments.

In arriving at our recommendation, we have taken into account the factors which we consider

have a significant bearing on our assessment of the Proposed Performance Fee Supplement

including:

1. the rationale for the Proposed Performance Fee Supplement;

2. while the comparables are limited, the analysis undertaken in Section 6.2 indicates that

it is commercially acceptable to (i) align the Reference Time-period for Benchmark

Index, Trust Index and VWAP per Unit used for market capitalisation calculations, and

(ii) use the 10-day Prior Time-period;

3. 22 of the 24 REITs reviewed calculate issue price of units (for Performance Fee

payment) based on the 10 Business Day VWAP immediately preceding the end of the

relevant period. This is consistent with CIT’s proposed method of calculating issue price

of units (for Performance Fee payment);

4. Starhill Global REIT is the only REIT in the sample to have a “greater of” provision in

its issue price formula (for Performance Fee payment), similar to CIT’s, although CIT’s

proposed provision (under the Proposed Performance Fee Supplement) references to

67

Current Unit Value (i.e. The Net Asset Value per Unit) while Starhill Global REIT’s

provision references to the value of trust property per unit which is similar to CIT’s

currently existing formula;

5. if the Proposed Performance Fee Supplement is approved and implemented, CIT will be

the only REIT or trust to have Recourse Options for determining the trust index value

(for Performance Fees calculation) and calculation of VWAP for a Unit used to

determine the market capitalisation (for Performance Fees calculation);

6. the Issue Price Formula reduces the potential issue price (for Performance Fee

payment) but not below that of the VWAP of Units in the preceding 10 days before the

end of the half year;

7. the Issue Price Formula encourages the Manager to elect to structure the payment of

the Performance Fee wholly or partially in Units, which would result in more cash

available in CIT for distribution or re-investment;

8. CIT’s Recourse Option is determined by the Independent Directors and the Trustee,

after consultation with FTSE International Limited or another index provider approved

by the Manager and Trustee or stockbroker approved by the Trustee, as the case may

be. This is a safeguard to ensure that the Recourse Option will be on normal commercial

terms and not prejudicial to interests of CIT and its Unitholders who are not interested

persons;

9. Recourse Option for Trust Index value (Performance Fee calculation) or the VWAP for

a Unit to determine the market capitalisation (for Performance Fee calculation) only in

favour of CIT and the Unitholders; and

10. Manager may at its sole discretion waive, partially or fully, its Performance Fees.

Having considered the above and subject to the assumptions and qualifications set out

herein and taking into account the prevailing conditions as at the Latest Practicable Date, we

are of the opinion that the Proposed Development Management Fee Supplement and the

Proposed Performance Fee Supplement are on normal commercial terms and will not be

prejudicial to CIT and its Unitholders who are not interested persons. Accordingly, we advise

that the Independent Directors recommend that the Unitholders vote in favour of the

Proposed Development Management Fee Supplement and the Proposed Performance Fee

Supplement.

Our recommendations are addressed to the Independent Directors for their benefit, in

connection with and for the purposes of their consideration of the Proposed Development

Management Fee Supplement and the Proposed Performance Fee Supplement. Any

recommendations made by the Independent Directors in respect of the Proposed

Development Management Fee Supplement and the Proposed Performance Fee

Supplement shall remain their responsibility.

Our recommendations are governed by the laws of Singapore and are strictly limited to the

matters stated herein and does not apply by implication to any other matter.

Yours faithfully,

Deloitte & Touche Corporate Finance Pte Ltd

Andrew Ooi

Executive Director

68

APPENDIX E

INTERESTED PERSON TRANSACTIONS AND

INTERESTED PARTY TRANSACTIONS ENTERED INTO BY CIT

Interested person transactions and interested party transactions (collectively referred to as

“IPTs”) entered into by CIT during the financial year ended 31 December 2012 (“FY2012”) and the

period from 1 January 2013 to the Latest Practicable Date are as follows:

Interested persons/parties

IPTs forFY2012

(S$ million)

IPTs for the periodfrom 1 Jan 2013

to the LatestPracticable Date

(S$ million)

Cambridge Industrial Trust Management Limited(the Manager)

Management fees paid and payable 5.9 1.1

Performance fees paid and payable 3.6 –

Acquisition fee paid relating to the purchase ofinvestment properties 1.7 0.9

Disposal fee paid relating to the divestment ofinvestment properties 0.1 –

Cambridge Industrial Property Management Pte.Ltd. (Subsidiary of immediate holding companyof the Manager)

Property Manager’s fees paid and payable 2.7 0.5

Lease marketing services commission paid andpayable 0.2 0.03

Project management fees paid and payable 0.8 0.1

RBC Investor Services Trust Singapore Limited(the Trustee of Cambridge Industrial Trust)

Trustee fees paid and payable 0.3 0.06

Oxley Opportunity #9 Pte. Ltd.(Related company of the Manager)(Note a)

Acquisition of 25 Pioneer Crescent Singapore628554 15.3 −

National Australia Bank Limited(Related company of the Manager)(Note b)

Net loan disbursed/(repaid) 34.1 (15.0)

Loan transaction costs paid and payable 1.0 –

Commitment fee paid and payable 0.4 0.1

Interest expense paid and payable 5.3 1.0

Notes:

a. Oxley Opportunity #9 Pte. Ltd., which is a subsidiary of the Oxley Global Limited (“Oxley Global”) (formerly known

as Oxley Holdings Limited), is related to the Manager by virtue of Oxley Global’s deemed equity interest in the

Manager of 24%.

b. National Australia Bank Limited (“NAB”) is the ultimate holding company of nabInvest Capital Partners Pty Limited

(“nabInvest Capital”). NAB is hence related to the Manager by virtue of nabInvest Capital’s deemed equity interest

of 56% in the Manager.

69


pursuant to a trust deed dated 31 March 2006 (as amended))

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an EXTRAORDINARY GENERAL MEETING of the holders of

units of Cambridge Industrial Trust (“CIT”, and the holders of units of CIT, “Unitholders”) will be

held at NTUC Auditorium, Level 7, NTUC Centre, One Marina Boulevard, Singapore 018989 on 19

April 2013 at 2.30 p.m. (or as soon thereafter following the conclusion/adjournment of the Annual

General Meeting of CIT to be held at 2.00 p.m. on the same day and at the same place) to consider

and, if thought fit, to pass, with or without any modifications, the following resolutions:

EXTRAORDINARY RESOLUTION 1: THE PROPOSED UNIT ISSUE SUPPLEMENT TO THE

TRUST DEED

That:

(a) approval be and is hereby given to amend CIT’s trust deed dated 31 March 2006 (as

amended) (the “Trust Deed”) with the Unit Issue Supplement (as defined in the circular to

Unitholders dated 25 March 2013 (the “Circular”)) in the manner set out in Appendix A to the

Circular; and

(b) Cambridge Industrial Trust Management Limited, as manager of CIT (the “Manager”) and

RBC Investor Services Trust Singapore Limited, as trustee of CIT (the “Trustee”) be and are

hereby authorised to complete and do all such acts and things (including executing all such

documents as may be required) as the Manager or, as the case may be, the Trustee may

consider expedient or necessary or in the interest of CIT to give effect to the Unit Issue

Supplement.

EXTRAORDINARY RESOLUTION 2: THE PROPOSED DEVELOPMENT MANAGEMENT FEE

SUPPLEMENT TO THE TRUST DEED

That:

(a) approval be and is hereby given to amend the Trust Deed with the Development

Management Fee Supplement (as defined in the Circular) in the manner set out in Appendix

B to the Circular; and

(b) the Manager and the Trustee be and are hereby authorised to complete and do all such acts

and things (including executing all such documents as may be required) as the Manager or,

as the case may be, the Trustee may consider expedient or necessary or in the interest of

CIT to give effect to the Development Management Fee Supplement.

EXTRAORDINARY RESOLUTION 3: THE PROPOSED PERFORMANCE FEE SUPPLEMENT

TO THE TRUST DEED

That:

(a) approval be and is hereby given to amend the Trust Deed with the Performance Fee

Supplement (as defined in the Circular) in the manner set out in Appendix C to the Circular;

and

70

(b) the Manager and the Trustee be and are hereby authorised to complete and do all such acts

and things (including executing all such documents as may be required) as the Manager or,

as the case may be, the Trustee may consider expedient or necessary or in the interest of

CIT to give effect to the Performance Fee Supplement.

BY ORDER OF THE BOARD


(Company Registration No.: 200512804G, Capital Markets Services Licence No.: CMS 100132-2)

As manager of Cambridge Industrial Trust

Christopher Calvert

Chief Executive Officer and Executive Director

Singapore

25 March 2013

Important Notice:

The value of Units and the income derived from them may fall as well as rise. Units are not

investments or deposits in, or liabilities or obligations of the Manager, the Trustee, or any of their

respective related corporations and affiliates.

An investment in Units is subject to equity investment risk, including the possible delays in

repayment and loss of income or the principal amount invested. Neither CIT, the Manager, the

Trustee nor any of their affiliates guarantees the repayment of any principal amount invested, the

performance of CIT, any particular rate of return from investing in CIT, or any taxation

consequences of an investment in CIT. Any indication of CIT performance returns is historical and

cannot be relied on as an indicator of future performance.

Investors should note that they will have no right to request the Manager to redeem or purchase

their Units for so long as the Units are listed on the SGX-ST. It is intended that Unitholders may

only deal in their Units through trading on the SGX-ST. Listing of the Units on the SGX-ST does

not guarantee a liquid market for the Units.

Notes:

1. A Unitholder entitled to attend and vote at the Extraordinary General Meeting is entitled to appoint not more than

two proxies to attend and vote in his/her stead. A proxy need not be a Unitholder.

2. The proxy form must be lodged at the CIT’s Unit Registrar’s office at 63 Cantonment Road, Singapore 089758 not

less than 48 hours before the time fixed for the Extraordinary General Meeting.

3. Where a Unitholder appoints more than one proxy, the appointments shall be invalid unless he/she specifies the

proportion of his/her holding (expressed as a percentage of the whole) to be represented by each proxy.

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pursuant to a trust deed dated 31 March 2006

(as amended))

PROXY FORM

Extraordinary General Meeting

IMPORTANT:1. For investors who have used their CPF monies to buy units

in Cambridge Industrial Trust, this Circular is forwarded tothem at the request of their Agent Banks and is sent solelyFOR THEIR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors andshall be ineffective for all intents and purposes if used or ispurported to be used by them.

3. CPF investors who wish to attend the Extraordinary GeneralMeeting as OBSERVERS must submit their requeststhrough their respective Agent Banks so that their AgentBanks may register, in the required format, with the UnitRegistrar of Cambridge Industrial Trust within the time framespecified. If they also wish to vote, they must submit theirvoting instructions to the Agent Bank within the time framespecified to enable them to vote on their behalf. (AgentBanks, please see Note No. 9 on required format)

4. PLEASE READ THE NOTES TO THE PROXY FORM.

I/We, (Name and NRIC no./Passport no./Company Registration no.)

of (Address)

being a unitholder/unitholders of Cambridge Industrial Trust (“CIT”), hereby appoint:

Name Address NRIC/Passport No.

Proportion of

Unitholdings

No. of Units %

and/or (delete as appropriate)

Name Address NRIC/Passport No. Proportion of

Unitholdings

No. of Units %

or, both of whom failing, the Chairman of the Extraordinary General Meeting as my/our proxy/proxies to attend and to vote

for me/us on my/our behalf and if necessary, to demand a poll, at the Extraordinary General Meeting of CIT to be held at

2.30 p.m. on 19 April 2013 at NTUC Auditorium, Level 7, NTUC Centre, One Marina Boulevard, Singapore 018989 (or as

soon thereafter following the conclusion/adjournment of the Annual General Meeting of CIT to be held at 2.00 p.m. on the

same day and at the same place) and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against

the resolutions to be proposed at the Extraordinary General Meeting as indicated hereunder. If no specific direction as to

voting is given, the proxy/proxies will vote or abstain from voting at his/her/their discretion, as he/she/they may on any

other matter arising at the Extraordinary General Meeting.

No. Extraordinary Resolutions: For* Against*

1 To approve the Unit Issue Supplement to the Trust Deed

2 To approve the Development Management Fee Supplement to the

Trust Deed

3 To approve the Performance Fee Supplement to the Trust Deed

* If you wish to exercise all your votes “For” or “Against”, please tick [u] within the box provided. Alternatively, if you wish

to exercise your votes both “For” and “Against” the relevant resolution, please insert the relevant number of Units in the

boxes provided.

Dated this day of 2013 Total number of

Units held

Signature(s) of unitholder(s)/Common Seal

IMPORTANT: PLEASE READ NOTES TO PROXY FORM ON REVERSE PAGE

-----------------------------------------------------------------------------------------------------------------------------------------------

"

B.A.C.S. Private Limited

(as unit registrar of Cambridge Industrial Trust)

63 Cantonment Road

Singapore 089758

IMPORTANT: PLEASE READ THE NOTES TO PROXY FORM BELOW

Notes to proxy form:

1. A unitholder of CIT (“Unitholder”) entitled to attend and vote at the Extraordinary General Meeting is entitled to appoint one or two proxies to attend and votein his/her stead.

2. Where a Unitholder appoints more than one proxy, the appointments shall be invalid unless he/she specifies the proportion of his/her holding (expressed asa percentage of the whole) to be represented by each proxy.

3. A proxy need not be a Unitholder.4. A Unitholder should insert the total number of Units held. If the Unitholder has Units entered against his/her name in the Depository Register maintained by

The Central Depository (Pte) Limited (“CDP”), he/she should insert that number of Units. If the Unitholder has Units registered in his/her name in the Registerof Unitholders of CIT, he/she should insert that number of Units. If the Unitholder has Units entered against his/her name in the said Depository Register andregistered in his/her name in the Register of Unitholders, he/she should insert the aggregate number of Units. If no number is inserted, this proxy form willbe deemed to relate to all the Units held by the Unitholder.

5. The instrument appointing a proxy or proxies (the “Proxy Form”) must be deposited at CIT’s unit registrar office at 63 Cantonment Road, Singapore 089758,not less than 48 hours before the time set for the Extraordinary General Meeting.

6. Completion and return of the Proxy Form shall not preclude a Unitholder from attending and voting at the Extraordinary General Meeting. Any appointmentof a proxy or proxies shall be deemed to be revoked if a Unitholder attends the Extraordinary General Meeting in person, and in such event, CambridgeIndustrial Trust Management Limited, as manager of CIT (the “Manager”), reserves the right to refuse to admit any person or persons appointed under theProxy Form, to the Extraordinary General Meeting.

7. The Proxy Form must be executed under the hand of the appointor or of his/her attorney duly authorised in writing. Where the Proxy Form is executed bya corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised officer.

8. Where the Proxy Form is signed on behalf of the appointor by an attorney or a duly authorised officer, the power of attorney or other authority (if any) underwhich it is signed, or a notarially certified copy of such power or authority must (failing previous registration with the Manager) be lodged with the Proxy Form,failing which the Proxy Form may be treated as invalid.

9. Agent Banks acting on the request of CPF investors who wish to attend the Extraordinary General Meeting as Observers are required to submit in writing,a list with details of the investors’ name, NRIC/Passport numbers, addresses and numbers of Units held. The list, to be signed by an authorised signatoryof the Agent Bank, should reach the Unit Registrar of Cambridge Industrial Trust not later than 48 hours before the time appointed for holding the ExtraordinaryGeneral Meeting.

10. The Manager shall be entitled to reject a Proxy Form which is incomplete, improperly completed, illegible or where the true intentions of the appointor arenot ascertainable from the instructions of the appointor specified on the Proxy Form. In addition, in the case of Units entered in the Depository Register, theManager may reject a Proxy Form if the Unitholder, being the appointor, is not shown to have Units entered against his/her name in the Depository Registeras at 48 hours before the time appointed for holding the Extraordinary General Meeting, as certified by CDP to the Manager.

11. All Unitholders will be bound by the outcome of the Extraordinary General Meeting regardless of whether they have attended or voted at the ExtraordinaryGeneral Meeting.

12. At any meeting, a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the resultof the show of hands) demanded by the Chairman or by five or more Unitholders present in person or by proxy, or holding or representing one-tenth in valueof the Units represented at the meeting. Unless a poll is so demanded, a declaration by the Chairman that such a resolution has been carried or carriedunanimously or by a particular majority or lost shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favourof or against such resolution.

13. On a show of hands, every Unitholder who (being an individual) is present in person or by proxy or (being a corporation) is present by one of its officers asits proxy shall have one vote. On a poll, every Unitholder who is present in person or by proxy shall have one vote for every Unit of which he/she is theUnitholder. A person entitled to more than one vote need not use all his/her votes or cast them the same way.

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Documents

CAMBRIDGE INDUSTRIAL TRUST MANAGEMENT LIMITEDcambridgeindustrialtrust.listedcompany.com/... · 3/25/2013 · Marina Bay Financial Centre Tower 3 Singapore 018982 Legal Adviser to