ASCOTT RESIDENCE TRUST

Transcription

1 Circular dated 20 August 2010 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. The Singapore Exchange Securities Trading Limited (the SGX-ST ) takes no responsibility for the accuracy of any statements or opinions made, or reports contained, in this Circular. If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional, or independent adviser immediately. Approval in-principle has been obtained from the SGX-ST for the listing of and quotation for the new units (the New Units ) in Ascott Residence Trust ( Ascott REIT ) to be issued for the purpose of the Equity Fund Raising (as defined herein) on the Main Board of the SGX-ST. The SGX-ST s in-principle approval is not an indication of the merits of the Equity Fund Raising, the New Units, Ascott REIT and/or its subsidiaries. If you have sold or transferred all your units in Ascott REIT (the Units ), you should immediately forward this Circular, together with the Notice of Extraordinary General Meeting and the accompanying Proxy Form in this Circular, to the purchaser or 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. These materials are not an offer of securities for sale in the United States. The Units will not be registered under the Securities Act of 1933, as amended, and securities may not be offered or sold in the United States absent registration or an exemption from registration. Any offering of securities to be made in the United States will be made by means of an offering memorandum that may be obtained from the Manager (as defined herein) and that will contain detailed information about Ascott REIT and management, as well as financial statements. ASCOTT RESIDENCE TRUST (a unit trust constituted on 19 January 2006 under the laws of the Republic of Singapore) MANAGED BY ASCOTT RESIDENCE TRUST MANAGEMENT LIMITED CIRCULAR TO UNITHOLDERS IN RELATION TO: (1) THE PROPOSED ACQUISITION OF INTERESTS IN SERVICED RESIDENCE PROPERTIES IN SINGAPORE, VIETNAM AND EUROPE AND THE PROPOSED DIVESTMENT OF INTEREST IN A SERVICED RESIDENCE PROPERTY IN THE PEOPLE S REPUBLIC OF CHINA; (2) THE PROPOSED ISSUE OF NEW UNITS UNDER THE EQUITY FUND RAISING; AND (3) THE PROPOSED PLACEMENT OF NEW UNITS TO THE CAPITALAND GROUP, A CONTROLLING UNITHOLDER, AS PART OF THE EQUITY FUND RAISING. Sole Financial Adviser and Sole Global Coordinator for the Equity Fund Raising Joint Lead Managers, Bookrunners and Underwriters for the Equity Fund Raising IMPORTANT DATES AND TIMES FOR UNITHOLDERS Last date and time for lodgment of Proxy Forms : 7 September 2010 at 10:00 a.m. Date and time of Extraordinary General Meeting : 9 September 2010 at 10:00 a.m. Place of Extraordinary General Meeting : Jubilee Hall Level 3, Raffles Hotel Singapore 1 Beach Road Singapore

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3 TABLE OF CONTENTS Page FORWARD-LOOKING STATEMENTS... MARKET AND INDUSTRY INFORMATION... CERTAIN DEFINED TERMS AND CONVENTIONS... IMPORTANT NOTICE.... GLOSSARY... CORPORATE INFORMATION... iii iv iv vi vii xvii SUMMARY... 1 RISK FACTORS INDICATIVE TIMETABLE OVERVIEW OF THE TRANSACTIONS SUMMARY OF APPROVALS SOUGHT THE PROPOSED TARGET ACQUISITIONS AND DIVESTMENT THE PROPOSED EQUITY FUND RAISING THE PROPOSED PLACEMENT TO THE CAPITALAND GROUP CERTAIN FORECAST FINANCIAL INFORMATION RELATING TO THE TRANSACTIONS, THE EQUITY FUND RAISING AND THE DEBT FINANCING PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTIONS MORATORIUM RECOMMENDATIONS EXTRAORDINARY GENERAL MEETING PROHIBITION ON VOTING ACTION TO BE TAKEN BY UNITHOLDERS DIRECTORS RESPONSIBILITY STATEMENTS SOLE FINANCIAL ADVISER S RESPONSIBILITY STATEMENT CONSENTS DOCUMENTS AVAILABLE FOR INSPECTION UNITHOLDERS HELPLINE APPENDIX A INFORMATION ON THE ENLARGED PORTFOLIO... A-1 APPENDIX B TAX CONSIDERATIONS... B-1 APPENDIX C UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION.. C-1 i

4 APPENDIX D THE INDEPENDENT ACCOUNTANTS REPORT ON THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION... D-1 APPENDIX E PROFIT FORECAST AND PROFIT PROJECTION... E-1 APPENDIX F INDEPENDENT ACCOUNTANTS REPORT ON PROFIT FORECAST AND PROFIT PROJECTION... F-1 APPENDIX G INDEPENDENT FINANCIAL ADVISER S LETTER... G-1 APPENDIX H SUMMARY VALUATION CERTIFICATES OF THE TARGET PROPERTIES AND ASCOTT BEIJING... H-1 APPENDIX I INDEPENDENT SERVICED RESIDENCES MARKET OVERVIEW REPORT BY JONES LANG LASALLE HOTELS / JONES LANG LASALLE PROPERTY CONSULTANTS PTE LTD... I-1 NOTICE OF EXTRAORDINARY GENERAL MEETING... J-1 ii

5 FORWARD-LOOKING STATEMENTS Certain statements in this Circular constitute forward-looking statements. This Circular also contains forward-looking financial information in Profit Forecast and Profit Projection. All statements other than statements of historical facts included in this Circular, including those regarding Ascott REIT s financial position and results, business strategies, plans and objectives of management for future operations are forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Ascott REIT s actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements are based on numerous assumptions regarding Ascott REIT s present and future business strategies and the environment in which Ascott REIT will operate in the future. Forward-looking statements involve inherent risks and uncertainties. The forward-looking statements included in this Circular reflect the Manager s current views with respect to future events and are not a guarantee of the future performance of Ascott REIT. A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement. These factors include, but are not limited to, the following: general global, regional and local political, social and economic conditions; regulatory developments and changes in the industry in which we operate; the general economic condition of, and changes in, the economy and financial markets in Asia, Europe and elsewhere; changes in Ascott REIT s need for capital and the availability of financing and capital to fund these needs; whether Ascott REIT can successfully execute its business strategies and carry out its growth plans; competition in the real estate industry (including serviced apartments) in Asia, Europe and elsewhere; Ascott REIT s ability to anticipate and respond to trends concerning serviced residences or rental housing properties; changes in government regulations, including tax laws, licensing, foreign exchange rates and capital controls; war or acts of international or domestic terrorism; occurrences of catastrophic events, natural disasters and acts of God that affect Ascott REIT s properties; changes in Ascott REIT s senior management team or loss of key employees; changes in interest rates or inflation rates; changes in the value of certain currencies that are used in Ascott REIT s business, including the Singapore dollar, the Renminbi, the US Dollar, the Euro, the Vietnam Dong, the Philippines Peso, the Japanese Yen, the Pound Sterling, the Australian dollar and the Indonesia Rupiah; other factors beyond Ascott REIT s control; and any other matters not yet known to Ascott REIT. Additional factors that could cause Ascott REIT s actual results, performance or achievements to differ materially include, but are not limited to, those discussed under Risk Factors, Profit Forecast and Profit Projection and the Independent Serviced Residences Market Overview Report by Jones Lang LaSalle Hotels / Jones Lang LaSalle Property Consultants Pte Ltd. These forward-looking statements speak only as of the date of this Circular. Although the Manager believes that the expectations reflected in the forwardlooking statements are reasonable, the Manager cannot guarantee future results, levels of activity, performance or achievements. The Manager does not intend to update any of the forward-looking statements after the date of this Circular to conform those statements to actual results, subject to compliance with all applicable laws including the Securities and Futures Act and/or the rules of the SGX-ST. iii

6 MARKET AND INDUSTRY INFORMATION This Circular includes market and industry data and forecasts that have been obtained from internal surveys, reports and studies, where appropriate, as well as market research, publicly available information and industry publications. Industry publications, surveys and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of such included information. While the Manager has taken reasonable steps to ensure that the information is extracted accurately and in its proper context, the Manager has not independently verified any of the data from third party sources or ascertained the underlying economic assumptions relied upon therein. CERTAIN DEFINED TERMS AND CONVENTIONS Ascott REIT will publish its financial statements in Singapore dollar. In this Circular, references to $, Singapore dollar or Singapore cent are to the lawful currency of the Republic of Singapore, references to US$, US dollar or US cent are to the lawful currency of the United States of America, references to AUD or Australian dollar are to the lawful currency of Australia, references to Vietnam Dong are to the lawful currency of Vietnam, references to Renminbi or RMB are to the lawful currency of the People s Republic of China, references to, Japanese Yen or Yen are to the lawful currency of Japan, references to e or Euro are to the lawful currency of the European Union and references to or Pound Sterling or GBP are to the lawful currency of Great Britain. All references to dates and times are to Singapore dates and times. Capitalised terms used in this Circular shall have the meanings set out in the Glossary on pages vii to xvi of this Circular. References to the acquisition of the Target Properties by Ascott REIT in this Circular shall, where the context so requires, include the acquisition of shares in the Property Holding Companies from the Vendor Companies. References to ownership include instances where the property is held pursuant to a longterm lease. The Singapore Target Property, the Vietnam Target Property and Ascott Beijing are properties which are held under a leasehold estate. References to an interest in any of the Target Properties shall include, (a) with respect to the Relevant France Target Properties, an equity interest in the relevant Finance Lessee and (b) with respect to the Singapore Target Property, the Vietnam Target Property and Ascott Beijing, the leasehold interest in such property. References to property values refer to the average of the two appraised values based on the appraisals of (a) Savills and (b) HVS. References to the France Target Properties in this Circular shall include the shares in the Property Holding Companies (the Finance Lessees ) which lease certain of the France Target Properties, namely, Citadines Montpellier Antigone, Citadines Marseille Castellane, Citadines Paris Austerlitz, Citadines Paris Voltaire République, Citadines Paris Maine-Montparnasse, Citadines Cannes Carnot and Citadines Paris Didot Alésia (the Relevant France Target Properties ) from two third-party finance companies (the Finance Companies ) for a period of between 15 to 20 years in consideration for the payment of rental by the Finance Lessees to the Finance Companies. Under each of these finance lease arrangements (the Finance Lease Arrangements ), the Finance Lessee has a contractual right to use the premises and a promise of sale at the expiry of the finance lease. The Finance Lessee may acquire legal title to the Relevant France Target Property by exercising its option to purchase the property (a) prior to the expiry of the finance lease by, among other things, providing six months notice to the Finance Company and making pre-payment for the outstanding rentals due to the Finance Company, or (b) at the expiry of the finance lease by making a nominal payment to the Finance Company. Upon the exercise of the option by serving the six months notice, the legal title will, in accordance with the Finance Lease Arrangements, be delivered to the Finance Lessees by the end of the financial year in which notice is given or the next financial year (if the period between the date of notice to the year end is less than six months). References to interest in the Target Properties shall include the lease by the Finance Lessees of the Relevant Target Properties from the Finance Companies under the Finance Lease Arrangements. The forecast and projected yields and yield growth are calculated based on an illustrative market price range of $1.07 to $1.23 per Unit. Such yields will vary accordingly for investors who purchase Units in the secondary market at a market price different from the illustrative market price range of $1.07 to $1.23 per Unit. Under no circumstances should the inclusion of such an illustrative market price range be regarded iv

7 as a representation, warranty or prediction with respect to the market price of the Units upon the listing of the New Units on the SGX-ST. Any discrepancies in the tables included herein between the listed amounts and totals thereof are due to rounding. Where applicable, figures and percentages are rounded off to one decimal place. This Circular contains conversions of Singapore dollar amounts into Euro, Pound Sterling, US$ and Renminbi solely for the convenience of the reader. Unless otherwise indicated, Singapore dollar amounts in this Circular have been translated into Euro, Pound Sterling, US$ and Renminbi, based on the exchange rates of e1.00 = $1.75, 1.00 = $2.07, US$1.00 = $1.38 and RMB1.00 = $0.205 respectively. However, these translations should not be construed as representations that Singapore dollar amounts have been, would have been or could be converted into Euro, Pound Sterling, US$ and Renminbi or that Euro, Pound Sterling, US$ and Renminbi amounts have been, would have been or could be converted into Singapore dollar at those rates or any other rate, at any particular rate or at all. v

8 IMPORTANT NOTICE The value of Units and the income derived from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, the Manager or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. Investors have no right to request the Manager to redeem their Units while the Units are listed. 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. The past performance of Ascott REIT is not necessarily indicative of the future performance of Ascott REIT. This Circular may contain forward-looking statements that involve risks and uncertainties. Please refer to the section Forward-looking Statements of the Circular for more information. You are cautioned not to place undue reliance on these forward-looking statements, which are based on the Manager s current view of future events. All forecasts are based on a specified range of issue prices per Unit and on the Manager s assumptions as explained in Appendix E of this Circular. Such yields will vary accordingly for investors who purchase Units in the secondary market at a market price higher or lower than the issue price range specified in this Circular. The major assumptions are certain expected levels of property rental income and property expenses over the relevant periods, which are considered by the Manager to be appropriate and reasonable as at the date of this Circular. The forecast financial performance of Ascott REIT is not guaranteed and there is no certainty that it can be achieved. Investors should read the whole of this Circular for details of the forecasts and consider the assumptions used and make their own assessment of the future performance of Ascott REIT. If you have sold or transferred all your Units, you should immediately forward this Circular, together with the Notice of Extraordinary General Meeting and the accompanying Proxy Form, to the purchaser or 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. vi

9 GLOSSARY In this Circular, the following definitions apply throughout unless otherwise stated: 2009 Audited Consolidated Financial Statements Advanced Distribution Advanced Distribution Books Closure Date AIM AIM Group Aggregate Leverage Apartment Unit Apartment Rental Income Ascott REIT Asia Target Acquisitions Asia Target Properties Ascott Beijing Sale and Purchase Agreement Ascott Europe Ascott Group Ascott Jersey Ascott Netherlands Average Daily Rates Belgium Target Acquisitions Belgium Target Properties Business Day CapitaLand CapitaLand Group CapitaLand Group Placement : The audited consolidated financial statements of Ascott REIT for the financial year ended 31 December 2009 : The proposed distribution of the Distributable Income for the period from 1 July 2010 to the day immediately prior to the date on which the New Units are issued : Date on which the Transfer Books and Register of Unitholders will be closed to determine the Unitholders entitlement to the Advanced Distribution : Ascott International Management (2001) Pte Ltd, a whollyowned subsidiary of TAL : AIM and its affiliates : The ratio of the value of borrowings and deferred payments (if any) to the value of the Deposited Property : An available apartment unit for lease or licence, as the case may be, in the Existing Portfolio or Target Properties : Income from the rental or licensing of Apartment Units under Ascott REIT s portfolio including rental income under the Master Leases : Ascott Residence Trust, a unit trust constituted on 19 January 2006 under the laws of the Republic of Singapore : The Singapore Target Acquisition and the Vietnam Target Acquisition : The Singapore Target Property and the Vietnam Target Property : The conditional sale and purchase agreements entered into between Ascott Investments Pte. Ltd. and the Trustee in relation to the Divestment : The Ascott (Europe) Pte. Ltd., a wholly-owned subsidiary of TAL : TAL and its subsidiaries : Ascott (Jersey) Limited, a wholly-owned subsidiary of TAL : The Ascott (Europe) NV, a wholly-owned subsidiary of TAL : Apartment Rental Income divided by the number of paid occupied nights during the applicable period : The acquisition of 100.0% effective interest in the Belgium Target Properties : Citadines Bruxelles Sainte-Catherine and Citadines Bruxelles Toison d Or : 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 : CapitaLand Limited : TAL, Somerset Capital Pte Ltd and the Manager : The proposed placement of New Units to the CapitaLand Group as part of the Equity Fund Raising vii

10 Capital Distributions CDP Citadines Holborn Controlling Unitholder : Capital component of the distributions made by Ascott REIT out of Unitholders contributions and representing such part of the income derived from the Europe Target Properties and Vietnam Target Property that is not/cannot be repatriated back to Singapore in the form of dividends : The Central Depository (Pte) Limited : Citadines Holborn CI Limited, a wholly-owned subsidiary of TAL : A person who: (a) holds directly or indirectly, 15.0% or more of the nominal amount of Units; or (b) in fact exercises control over Ascott REIT, as defined in the Listing Manual Debt Financing : The existing debt facilities available to Ascott REIT including any loan facility and comprising the $1.0 billion multi-currency medium term note programme of Ascott REIT launched in 2009 Deed of Guarantee : The guarantee given by TAL to the Trustee on 20 August 2010, pursuant to which TAL will guarantee the due performance of Ascott Europe s obligations under the Sale and Purchase Agreement in relation to the Europe Target Acquisitions Deposited Property Directors Distributable Income Divestment DPU EBITDA EBITDA Yield EGM Enlarged Ascott REIT Group Enlarged Portfolio Equity Fund Raising : All the assets of Ascott REIT for the time being held or deemed to be held upon the trusts of the Trust Deed : The directors of the Manager : Comprises Ascott REIT s Taxable Income and Net Overseas Income : The proposed divestment by Ascott REIT of a 100.0% interest in Hemliner Pte Ltd, a Singapore incorporated company, which owns indirectly a 100.0% interest in Ascott Beijing to Ascott Investments Pte. Ltd. : Distribution per Unit : Earnings before net interest expenses, tax, depreciation and amortisation : EBITDA before deduction of the Manager s management fees divided by property value : The extraordinary general meeting of Unitholders to be held on 9 September 2010 at 10:00 a.m. to approve the matters set out in the Notice of EGM on pages J-1 and J-2 of this Circular : Ascott REIT, after taking into consideration the completion of the Target Acquisitions and the Divestment : The Existing Portfolio and the Target Properties, excluding Ascott Beijing : The proposed issue of New Units under the Preferential Offering and the Private Placement to international and other investors by the Joint Lead Managers, Bookrunners and Underwriters so as to raise gross proceeds of approximately $560.6 million which is underwritten by Credit Suisse (Singapore) Limited and DBS Bank Ltd. viii

11 Europe Target Acquisitions Europe Target Properties Existing Portfolio Existing Units Extraordinary Resolution : The France Target Acquisitions, the UK Target Acquisitions, the Belgium Target Acquisitions, the Germany Target Acquisitions and the Spain Target Acquisition : The France Target Properties, the UK Target Properties, the Belgium Target Properties, the Germany Target Properties and the Spain Target Property : Somerset Grand Cairnhill, Singapore; Somerset Liang Court Property, Singapore; Ascott Beijing; Somerset Grand Fortune Garden Property, Beijing; Somerset Xu Hui, Shanghai; Somerset Olympic Tower Property, Tianjin; Somerset Azabu East, Tokyo; Somerset Roppongi, Tokyo; Asyl Court Nakano Sakaue, Tokyo; Gala Hachimanyama I, Tokyo; Gala Hachimanyama II, Tokyo; Joy City Koishikawa Shokubutsuen, Tokyo; Joy City Kuramae, Tokyo; Zesty Akebonobashi, Tokyo; Zesty Gotokuji, Tokyo; Zesty Higashi Shinjuku, Tokyo; Zesty Kagurazaka I, Tokyo; Zesty Kagurazaka II, Tokyo; Zesty Kasugacho, Tokyo; Zesty Koishikawa, Tokyo; Zesty Komazawa Daigaku II, Tokyo; Zesty Nishi Shinjuku III, Tokyo; Zesty Sakura Shinmachi, Tokyo; Zesty Shin Ekoda, Tokyo; Zesty Shoin Jinja, Tokyo; Zesty Shoin Jinja II, Tokyo; Ascott Jakarta; Somerset Grand Citra, Jakarta; Country Woods, Jakarta; Ascott Makati; Somerset Millenium, Makati; Somerset Salcedo Property, Makati; Somerset Chancellor Court, Ho Chi Minh City; Somerset Grand Hanoi; Somerset West Lake, Hanoi; Somerset Gordon Heights, Melbourne and Somerset St Georges Terrace, Perth : The outstanding Units in issue on the day immediately prior to the date on which the New Units are issued : A resolution proposed and passed as such by a majority consisting of 75.0% or more of the total number of votes cast for and against such resolution at a meeting of Unitholders duly convened under the provisions of the Trust Deed Finance Companies : The two third-party finance companies, namely, Genefim SA and Antin Bail, which are related corporations of Société Générale and BNP Paribas respectively, that lease the Relevant France Target Properties to the Finance Lessees Finance Lease Arrangements : The arrangements entered into between the Finance Companies and the Finance Lessees pursuant to which the Finance Lessees have been granted a contractual right to use the Relevant France Target Properties and a promise of sale at the expiry of the finance leases Finance Lessees Forecast Period 2010 France Property Holding Companies : The Property Holding Companies that lease the Relevant France Target Properties from the Finance Companies : The Manager s forecast for the three-month period ending 31 December 2010 included in Appendix E and subject to the qualifications, assumptions and limitations set forth therein : Résidence des Deux Gares, Place de Metz-Grenoble, S.C.I. Citadines Paris Louvre, Reo Saint-Didier, Société Civile Immobiliére Résidence Lyon, Société Civile Immobiliére Résidence Italie, S.N.C. 14bis/16/18 Avenue Rachel Paris, Société Civile Immobiliére Résidence Grenelle, SCI Montpellier Antigone, S.C.I. SODI (formerly known as S.C.I. ix

12 Didot), S.C.I. Austerlitz, S.C.I. République, S.C.I. Montparnasse, S.C.I. Marseille, S.C.I. Cannes Carnot and Oriville France Target Acquisitions : The acquisition of 100.0% effective interest in the France Target Properties, which for this purpose, shall include the Relevant France Target Properties that are in existing Finance Lease Arrangements with the Finance Companies France Target Properties : Citadines Lille Centre; Citadines Grenoble; Citadines Paris Louvre; Citadines Paris Trocadéro; Citadines Lyon Presqu île; Citadines Paris Place d Italie; Citadines Paris Montmartre; Citadines Paris Tour Eiffel; Citadines Montpellier Antigone; Citadines Marseille Castellane; Citadines Paris Austerlitz; Citadines Paris Voltaire République; Citadines Paris Maine-Montparnasse; Citadines Marseille Prado Chanot; Citadines Paris Les Halles; Citadines Paris Didot Alésia and Citadines Cannes Carnot FRS : Financial Reporting Standards FY2009 : The financial year ended 31 December 2009 Germany Property Holding Companies Germany Target Acquisitions : Citador Olivaer Platz GmbH & Co. KG and Citadines Munich Arnulfpark GmbH & Co. KG : The acquisition of 100.0% effective interest in Citadines Berlin Kurfürstendamm and 99.0% effective interest in Citadines Munich Arnulfpark Germany Target Properties : Citadines Berlin Kurfürstendamm and Citadines Munich Arnulfpark GFA : Gross floor area Gross Profit : Has the meaning ascribed to it in the Trust Deed Gross Rent : Comprises net rental income (after rent rebates and provisions for rent free periods), service charge (which is a contribution paid by tenant(s) towards covering the operating maintenance expenses of the relevant property) and licence fees (where applicable) Gross Revenue : Consists of (i) Gross Rent and (ii) other income earned from the relevant property or properties Group : Ascott REIT and its subsidiaries GST : Goods and services tax HVS : HVS International HY2010 : The six months ended 30 June 2010 IFA : PricewaterhouseCoopers Corporate Finance Pte Ltd, the Independent Financial Adviser IFA Letter : The letter from the IFA to the Independent Directors containing its advice Income Tax Act : Income Tax Act, Chapter 134 of Singapore Independent Accountants : KPMG LLP Independent Directors : Messrs Lim Jit Poh, Ku Moon Lun, S. Chandra Das and Giam Chin Jeremy Giam Independent Property Consultant : Jones Lang LaSalle Hotels/Jones Lang LaSalle Property Consultants Pte Ltd x

13 Independent Valuers Interested Party Interested Party Transaction Interested Person Interested Person Transaction IRAS Issue Price Joint Lead Managers, Bookrunners and Underwriters Jones Lang LaSalle Latest Practicable Date Listing Manual Lock-up Restrictions Managed Properties Manager Market Day Master Leases Master Lessees Master Lessors MAS Moratorium Units Moratorium Period n.a. NAV Net Overseas Income : Savills and HVS : Has the meaning ascribed to it in the Property Funds Appendix : Has the meaning ascribed to it in the Property Funds Appendix : Has the meaning ascribed to it in the Listing Manual : Has the meaning ascribed to it in the Listing Manual : Inland Revenue Authority of Singapore : The price per New Unit to be issued under the Equity Fund Raising : Credit Suisse (Singapore) Limited and DBS Bank Ltd. : Jones Lang LaSalle Hotels and Jones Lang LaSalle Property Consultants Pte Ltd : 16 August 2010, being the latest practicable date prior to the printing of this Circular : The Listing Manual of the SGX-ST : The lock-up restrictions that TAL has undertaken to the Joint Lead Managers, Bookrunners and Underwriters, as described in paragraph 8 of the Letter to Unitholders : The Target Properties that are not under the Master Leases : Ascott Residence Trust Management Limited, as manager of Ascott REIT : A day on which the SGX-ST is open for trading in securities : The 17 existing master lease agreements between the relevant Property Holding Companies and Citadines SA in relation to the France Target Properties and the two existing master lease agreements between the relevant Property Holding Companies and Citadines Betriebsgesellschaft mbh in relation to the Germany Target Properties : Citadines SA in relation to the France Target Properties and Citadines Betriebsgesellschaft mbh in relation to the Germany Target Properties, as the case may be : The Property Holding Companies that lease the relevant Target Properties to the Master Lessees : Monetary Authority of Singapore : Units held by TAL, Somerset Capital Pte Ltd and the Manager as at 20 August 2010 and any New Units subscribed for by them in the Equity Fund Raising : The period from 20 August 2010 until the date falling 180 days from the date the New Units are listed on the SGX-ST during which the Lock-up Restrictions apply : Not applicable : Net asset value : The consolidated net profits (excluding any gains from the sale of property or shares, as the case may be) after applicable taxes and adjustment for non-cash items, for example depreciation, derived by Ascott REIT from its properties located outside Singapore xi

14 Net Purchase Consideration New Units Non-Independent Non-Executive Directors NOP NTA Ordinary Resolution Pan-Asian Region per cent or % PRC or China Pre-Existing Master Leases and SR Management Agreements Preferential Offering Preferential Offering Books Closure Date Private Placement Profit Forecast Profit Projection Projection Year 2011 : $814.2 million for the acquisition of the Target Properties : The new Units proposed to be issued under the Equity Fund Raising by way of the Preferential Offering and the Private Placement : Messrs Liew Mun Leong, Lim Ming Yan, Jennie Chua and Wen Khai Meng : In relation to the SR Management Agreements, excluding those for the Asia Target Properties, net operating profit per annum that the SR Management Companies have warranted would be achieved : Net tangible assets : A resolution proposed and passed as such by a majority consisting of more than 50.0% 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 : In the context of this Circular, it refers to all countries in Asia and the Asia-Pacific region : Per centum or percentage : The People s Republic of China, excluding Hong Kong Special Administrative Region and Macau Special Administrative Region for the purposes of this Circular : The Master Leases and SR Management Agreements which the Property Holding Companies have entered into prior to the date of the Sale and Purchase Agreements : A non-renounceable preferential offering of New Units to Singapore Registered Unitholders Date on which the Transfer Books and Register of Unitholders will be closed to determine the provisional allocations of Singapore Registered Unitholders under the Preferential Offering : The private placement of New Units by the Joint Lead Managers, Bookrunners and Underwriters to institutional and other investors as part of the Equity Fund Raising : The forecast consolidated statement of Ascott REIT s net income and distribution for the three months ending 31 December 2010 and the accompanying assumptions and sensitivity analysis set out in Appendix E of this Circular : The projected consolidated statement of Ascott REIT s net income and distribution for the financial year ending 31 December 2011 and the accompanying assumptions and sensitivity analysis set out in Appendix E of this Circular : The Manager s projections for the financial year ending 31 December 2011 included in Appendix E and subject to the qualifications, assumptions and limitations set forth therein Property Funds Appendix : The guidelines for real estate investment trusts issued by the MAS as Appendix 2 of Code on Collective Investment Schemes issued by the MAS Property Holding Companies : Somerset Hoa Binh Joint Venture Company Limited, Résidence des Deux Gares, Place de Metz-Grenoble, S.C.I. Citadines Paris Louvre, Reo Saint-Didier, Société Civile xii

15 Property Values Qualifying Unitholders Immobiliére Résidence Lyon, Société Civile Immobiliére Résidence Italie, S.N.C. 14bis/16/18 Avenue Rachel Paris, Société Civile Immobiliére Résidence Grenelle, SCI Montpellier Antigone, S.C.I. SODI (formerly known as S.C.I. Didot), S.C.I. Austerlitz, S.C.I. République, S.C.I. Montparnasse, S.C.I. Marseille, S.C.I. Cannes Carnot, Oriville, FBM London Limited, Citagrep Limited, Citadines Holborn CI Limited, FBM Belgique, Immobiliere Toisor SA, Citador Olivaer Platz GmbH & Co. KG, Citadines Munich Arnulfpark GmbH & Co. KG and Eurimeg Espana, S.A. and Property Holding Company means any one of them : The aggregate of the values of Real Estate held directly by Ascott REIT and where Real Estate is held indirectly by Ascott REIT through special purpose vehicles, the values of the underlying Real Estate held by such special purpose vehicles pro-rated to the effective interest of Ascott REIT s respective shareholdings in such special purpose vehicles : Unitholders who are tax resident, Singapore incorporated companies, bodies of persons (other than companies or partnerships) registered or constituted in Singapore (for example, town councils, statutory boards, registered charities, registered cooperative societies, registered trade unions, management corporations, clubs and trade and industry associations) and Singapore branches of foreign companies which have presented a letter of approval from the IRAS granting a waiver from tax deduction at source in respect of distributions from Ascott REIT Real Estate : Any land, and any interest, option or other right in or over any land. For the purpose of this definition, land includes land of any tenure, whether or not held apart from the surface, and buildings or parts thereof (whether completed or otherwise and whether divided horizontally, vertically or in any other manner) and tenements and hereditaments, corporeal and incorporeal, and any estate or interest therein, and Real Estate includes shares and stocks in an unlisted company which is constituted to hold/own such real estate, such as a special purpose vehicle Relevant France Target Properties : Citadines Montpellier Antigone, Citadines Marseille Castellane, Citadines Paris Austerlitz, Citadines Paris Voltaire République, Citadines Paris Maine-Montparnasse, Citadines Paris Didot Alésia and Citadines Cannes Carnot REVPAU : Refers to revenue per available unit in the Existing Portfolio or Target Properties, determined by dividing Apartment Rental Income by the number of available nights in the applicable period ROFR : The right of first refusal agreement dated 20 January 2006 between the Trustee and TAL (formerly known as The Ascott Group Limited) Rounding Mechanism : Where a Singapore Registered Unitholder s provisional allocation of New Units under the proposed Preferential Offering is other than an integral multiple of 1,000 Units, the increase in the provisional allocation of New Units to the Unitholder by such number which, when added to the Unitholder s unitholding as at the Preferential Offering Books Closure Date, results in an integral multiple of 1,000 xiii

16 Sale and Purchase Agreements Sale Consideration Savills Savills UK Savills HK Scheduled Distribution SGX-ST Singapore Registered Unitholders Singapore Target Acquisition Singapore Target Property Spain Target Acquisition Spain Target Property SR Management Agreement : The three separate conditional sale and purchase agreements entered into between (a) Citadines Singapore Mount Sophia Pte Ltd and the Trustee in relation to the Singapore Target Acquisition, (b) TAHL and the Trustee in relation to the Vietnam Target Acquisition, (c) Ascott Europe and the Trustee in relation to the Europe Target Acquisitions : $214.0 million for the divestment of Ascott Beijing : Savills UK and Savills HK : Savills Commercial Properties Limited : Savills Valuation and Professional Services Limited : The next distribution originally scheduled to take place in respect of Ascott REIT s Distributable Income for the period from 1 July 2010 to 31 December 2010 for the Existing Units : Singapore Exchange Securities Trading Limited : Unitholders as at the Preferential Offering Books Closure Date other than those whose registered addresses with CDP are outside Singapore, and who have not, at least three Market Days prior to the Preferential Offering Books Closure Date, provided CDP with addresses in Singapore for the service of notices and documents : The acquisition of 100.0% effective interest in the Singapore Target Property : Citadines Singapore Mount Sophia Property, being the strata lot number U2778V of Town Subdivision 19 at 8 Wilkie Road, #01-26 Singapore : The acquisition of 100.0% effective interest in the Spain Target Property : Citadines Barcelona Ramblas : The agreements entered into between(a) AIM and Citadines Singapore Mount Sophia Pte Ltd in relation to the Singapore Target Property, (b) AIM and Somerset Hoa Binh Joint Venture Company Limited in relation to the Vietnam Target Property, (c) Soderetour UK Ltd and FBM London Limited and Citagrep Limited in relation to the UK Target Properties, (d) Citadines SA and FBM Belgique SPRL and Immobiliere Toisor in relation to the Belgium Target Properties, (e) Aparthotel Citadines SA and Eurimeg Espana S.A. in relation to the Spain Target Property SR Management Companies : AIM, Soderetour UK Ltd, Citadines SA and Aparthotel Citadines SA and SR Management Company means any one of them SR Management Services Substantial Unitholder sq ft sq m TAHL TAL : The proposed provision of serviced residence management services by SR Management Companies : A Unitholder with an interest in one or more Units constituting not less than 5.0% of all outstanding Units : Square feet : Square metres : The Ascott Holdings Limited, a wholly-owned subsidiary of TAL : The Ascott Limited, the sponsor and Controlling Unitholder of Ascott REIT xiv

17 TAL Undertaking : The deed of undertaking to be entered into pursuant to which TAL will provide an undertaking in favour of the Trustee to procure that: (i) in respect of Master Leases with an original term of nine years, namely the Master Leases in relation to Citadines Lille Centre, Citadines Grenoble, Citadines Paris Louvre, Citadines Paris Trocadéro, Citadines Lyon Presqu île, Citadines Paris Place d Italie, Citadines Paris Montmartre, Citadines Paris Tour Eiffel, Citadines Marseille Prado Chanot and Citadines Paris Les Halles, Citadines SA fulfils the full nine-year term of these Master Leases; and/or (ii) in respect of other Master Leases with an original term of 12 years, namely the Master Leases in relation to Citadines Paris Austerlitz, Citadines Paris Didot Alésia, Citadines Maine Montparnasse, Citadines Paris Voltaire République, Citadines Marseille Castellane, Citadines Montpellier Antigone and Citadines Cannes Carnot, Citadines SA will renew such Master Leases (expiring in 2011) and waive its option to terminate at the end of the first three-year period of the renewed Master Leases Target Acquisitions : The Singapore Target Acquisition, the Vietnam Target Acquisition, the France Target Acquisitions, the UK Target Acquisitions, the Belgium Target Acquisitions, the Germany Target Acquisitions and the Spain Target Acquisition Target Properties Taxable Income Tax-Exempt Income Distributions Tax Ruling Transactions Trust Deed Trustee UK UK Target Acquisitions : The Singapore Target Property, the Vietnam Target Property, the France Target Properties, the UK Target Properties, the Belgium Target Properties, the Germany Target Properties and the Spain Target Property : The consolidated net profit (excluding any gains from the sale of property or shares, as the case may be) after applicable taxes and adjustment for non-cash items, for example, depreciation, derived by Ascott REIT from its properties located in Singapore : Tax-exempt income component of the distributions made by Ascott REIT out of the tax-exempt income derived in respect of the Europe Target Properties and Vietnam Target Property : The tax ruling dated 16 November 2005 issued by the Inland Revenue of Singapore on the taxation of Ascott REIT and its Unitholders : The proposed Target Acquisitions and Divestment : The trust deed dated 19 January 2006 entered into between the Trustee and the Manager constituting Ascott REIT, as amended and supplemented : DBS Trustee Limited, in its capacity as trustee of Ascott REIT : United Kingdom : The acquisition of 100.0% effective interest in the UK Target Properties UK Target Properties : Citadines London Barbican, Citadines London Trafalgar Square, Citadines London South Kensington and Citadines London Holborn-Covent Garden xv

18 Undertaking Unit Unitholder US$ Vendor Companies : The undertaking given by TAL to the Manager and the Joint Lead Managers, Bookrunners and Underwriters on 20 August 2010, pursuant to which: (a) in relation to the Preferential Offering, it will, and it will procure that each of Somerset Capital Pte Ltd and the Manager will, accept in full its provisional allocations of New Units under the Preferential Offering at the Issue Price; (b) in relation to the Private Placement, it will procure the CapitaLand Group to subscribe, at the Issue Price, for such number of New Units such that the total number of New Units subscribed for by the CapitaLand Group will be the difference between the total number of New Units which the CapitaLand Group would require to maintain its pre-preferential Offering unitholding, in percentage terms and the total number of New Units under the Preferential Offering provisionally allocated and accepted by the CapitaLand Group; and (c) in relation to the CapitaLand Group Placement, it and its associates will, and TAL will procure that each of Somerset Capital Pte Ltd and the Manager and their respective associates will, abstain from voting on the resolution to approve the CapitaLand Group Placement at the EGM to be convened for the purposes of, among others, approving the Transactions, the Equity Fund Raising and the CapitaLand Group Placement : A unit representing an undivided interest in Ascott REIT : The Depositor whose securities account with CDP is credited with Unit(s) : United States dollar : Citadines Singapore Mount Sophia Pte. Ltd., TAHL and Ascott Europe Vietnam Target Acquisition : The acquisition of a 90.0% effective interest in the Vietnam Target Property Vietnam Target Property : Somerset Hoa Binh, Hanoi $ and cent : Singapore dollar and cent respectively The terms Depositor and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Companies Act, Chapter 50 of Singapore. Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall include corporations. Any reference in this Circular to any enactment is a reference to that enactment for the time being amended or re-enacted. Any reference to a time of day in this Circular shall be a reference to Singapore time unless otherwise stated. The exchange rates used in this Circular are for reference only. No representation is made that any amounts could have been or could be converted into or from Singapore dollar amounts at any of the exchange rates used in this Circular, at any other rate or at all. Any discrepancies in the tables, graphs and charts between the listed amounts and totals thereof are due to rounding. Where applicable, figures and percentages are rounded to one decimal place. xvi

19 Directors of Ascott Residence Trust Management Limited (the manager of Ascott REIT (the Manager )) Registered Office of Ascott Residence Trust Management Limited Trustee of Ascott REIT (the Trustee ) Sole Financial Adviser and Sole Global Coordinator for the Equity Raising Joint Lead Managers, Bookrunners and Underwriters CORPORATE INFORMATION Mr Lim Jit Poh (Chairman and Independent Non-Executive Director) Mr Liew Mun Leong (Deputy Chairman and Non-Independent Non-Executive Director) Mr Chong Kee Hiong (Chief Executive Officer and Executive Director) Mr Ku Moon Lun (Independent Non-Executive Director) Mr S. Chandra Das (Independent Non-Executive Director) Mr Giam Chin Jeremy Giam (Independent Non- Executive Director) Mr Lim Ming Yan (Non-Independent Non-Executive Director) Ms Jennie Chua (Non-Independent Non-Executive Director) Mr Wen Khai Meng (Non-Independent Non-Executive Director) 8 Shenton Way #13-01 Singapore DBS Trustee Limited (in its capacity as trustee of Ascott REIT) 6 Shenton Way #14-01 DBS Building Tower One Singapore Credit Suisse (Singapore) Limited 1 Raffles Link #03/04-01 South Lobby Singapore Credit Suisse (Singapore) Limited 1 Raffles Link #03/04-01 South Lobby Singapore Legal Adviser for the Equity Fund Raising and to the Manager Legal Adviser to the Sole Financial Adviser and Sole Global Coordinator and the Joint Lead Managers, Bookrunners and Underwriters for the Equity Fund Raising as to Singapore law Legal Adviser to the Sole Financial Adviser and Sole Global Coordinator and the Joint Lead Managers, Bookrunners and Underwriters for the Equity Fund Raising as to United States federal securities law DBS Bank Ltd. 6 Shenton Way DBS Building Tower One Singapore WongPartnership LLP One George Street #20-01 Singapore Allen & Gledhill LLP One Marina Boulevard #28-00 Singapore Skadden, Arps, Slate, Meagher & Flom LLP 9 Temasek Boulevard Suite #29-01 Suntec Tower Two Singapore xvii

20 Legal Adviser to the Trustee Unit Registrar and Unit Transfer Office Independent Accountants Independent Financial Adviser Independent Singapore Tax Adviser Independent Valuers Independent Property Consultant Shook Lin & Bok LLP 1 Robinson Road #18-00 AIA Tower Singapore Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place, #32-01 Singapore Land Tower Singapore KPMG LLP 16 Raffles Quay #22-00 Hong Leong Building Singapore PricewaterhouseCoopers Corporate Finance Pte Ltd 8 Cross Street #17-00 PWC Building Singapore Ernst & Young Solutions LLP One Raffles Quay North Tower, Level 18 Singapore Savills Commercial Properties Limited (appointed by the Trustee) 20 Grosvenor Hill London W1K 3HQ United Kingdom Savills Valuation and Professional Services Limited (appointed by the Trustee) 23/F Two Exchange Square Central, Hong Kong HVS International (appointed by The Ascott Limited) Temasek Boulevard #23-01A Suntec Tower Four Singapore Jones Lang LaSalle Hotels and Jones Lang LaSalle Property Consultants Pte Ltd #38-01 Republic Plaza 9 Raffles Place Singapore xviii

21 SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the full text of this Circular. Meanings of defined terms may also be found in the Glossary on pages vii to xvi of this Circular. Any discrepancies in the tables included herein between the listed amounts and totals thereof are due to rounding. ASCOTT REIT S PORTFOLIO, THE TARGET ACQUISITIONS AND THE DIVESTMENT Ascott REIT is the first Pan-Asian serviced residence real estate investment trust which has the objective of investing primarily in real estate and real estate-related assets which are income-producing and which are used or predominantly used as serviced residences or rental housing properties. Comprising an initial asset portfolio of 12 strategically located properties with 2,068 apartment units (the Apartment Units ) in five countries in the Pan-Asian Region, Ascott REIT was listed on the SGX-ST in March 2006 with an asset size of about $856.0 million. As at 30 June 2010, Ascott REIT s portfolio has expanded to $1.59 billion, comprising 38 properties with approximately 3,644 Apartment Units in 11 cities across seven countries. The Manager believes that the Target Acquisitions, comprising the acquisition by Ascott REIT of interests in one serviced residence property each in Singapore and Vietnam and 26 in Europe, represent an attractive, yield accretive opportunity to expand Ascott REIT s assets with a complementary portfolio of serviced residences in Asia and Europe. The Target Acquisitions also represent an attractive, rare and unique opportunity to acquire a sizeable portfolio of serviced residences with a total asset value of approximately $1.4 billion. Operating under the Citadines and Somerset brands, the Target Acquisitions would significantly expand Ascott REIT s geographical scope and enhance the diversification of Ascott REIT s portfolio across property and economic cycles. In the Manager s view, the Target Acquisitions would increase Ascott REIT s income stability through the addition of 19 properties which are subject to Master Leases and are expected to provide fixed rental income to Ascott REIT and seven properties which are on SR Management Agreements subject to a minimum guaranteed NOP per annum. The Target Acquisitions would also provide Ascott REIT with exposure to stable and established serviced residence markets in global cities such as London and Paris whilst strengthening Ascott REIT s presence in Asia Pacific. The vendors of the Target Acquisitions (the Vendor Companies ) are wholly-owned subsidiaries of The Ascott Limited ( TAL ), the sponsor and Controlling Unitholder of Ascott REIT. To fund the Target Acquisitions, Ascott REIT is proposing to dispose of its interests in Ascott Beijing to a wholly-owned subsidiary of TAL, undertake the Equity Fund Raising and incur additional borrowings. Ascott REIT is pursuing the Target Acquisitions as part of its growth strategy to expand its portfolio, and the Divestment to unlock value in Ascott Beijing which the Manager believes has reached the optimal stage in its life cycle to improve the yield of its portfolio. Completion of the Target Acquisitions and the Divestment is expected to increase Ascott REIT s total asset value to $2.85 billion, with 65 properties, comprising approximately 6,681 Apartment Units in 23 cities across 12 countries. In addition, the absolute size of Ascott REIT s free float will be substantially increased following the Equity Fund Raising. 1

22 The following map shows the locations of Ascott REIT s Existing Portfolio and Target Properties. Overview of Existing Portfolio and Asia Target Properties VIETNAM Somerset Hoa Binh, Hanoi Existing Ascott REIT properties Target Properties Japan 20 properties China 4(1) properties Vietnam properties Philippines 3 properties Singapore properties SINGAPORE Citadines Singapore Mount Sophia Property Indonesia 3 properties Australia 2 properties Note: (1) Includes Ascott Beijing which will be divested as part of the Transactions. Overview of Europe Target Properties BELGIUM UNITED KINGDOM Target Properties United Kingdom 4 properties France 17 properties (All under Master Lease contracts) Citadines London South Kensington Citadines London Barbican Citadines London Holborn-Covent Garden Citadines Bruxelles Sainte-Catherine Belgium 2 properties Citadines Bruxelles Toison d Or GERMANY Citadines Berlin Kurfürstendamm Germany 2 properties (All under Master Lease contracts) Citadines Munich Arnulfpark Spain 1 property SPAIN Citadines Barcelona Ramblas Citadines London Trafalgar Square Citadines Paris Tour Eiffel FRANCE Citadines Citadines Citadines Paris Paris Paris Louvre Voltaire République Place d Italie 2 Citadines Paris Les Halles Citadines Marseille Prado Chanot Citadines Lyon Presqu ile