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THE ART EDGEAscott Residence Trust
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Disclaimer
IMPORTANT NOTICE
The value of units in ART and the income derived from them may fall as well as rise. Units in ART are not obligations of, deposits in, or guaranteed by the Manager or any of its affiliates. An investment in the units in ART is subject to investment risks, include the possible loss of the principal amount invested. The past performance of ART is not necessarily indicative of its future performance.
This presentation may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from similar developments, shifts in expected levels of property rental income, changes in operating expenses, including employee wages, benefits and training, property expenses and governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on the current view of the Manager on future events.
Investors have no right to request the Manager to redeem their units in ART while the units in ART are listed. It is intended that unitholders may only deal in their units in ART through trading on the SGX-ST. Listing of the units in ART on the SGX-ST does not guarantee a liquid market for the units in ART.
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Agenda
Introduction
Financial Highlights
Management StrategiesGrowth by AcquisitionActive Asset ManagementCapital and Risk Management
Conclusion
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World’s First Pan-Asian Serviced Residence REIT
China• 4 properties in Beijing, Shanghai
and Tianjin
Vietnam• 3 properties in Hanoi and
Ho Chi Minh City
Singapore• 2 properties
Japan• 2 properties in Tokyo
The Philippines• 3 properties in Makati
City, Manila
Indonesia• 3 properties in Jakarta
S$1.2 billion portfolio value1
2,904 apartment units in 18 properties10 Pan-Asian cities in 7 countries
Australia• 1 property
in Melbourne
1. Includes the acquisition of Somerset Gordon Heights, Melbourne, which is expected to completed in 2Q 2007.
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ART’s Portfolio in Vietnam
Ho Chi Minh City
Hanoi
S$103.1mAppraised Value
185Number of Units
Somerset Grand HanoiHai Ba Trung Street
76%Effective Interest
67%Effective Interest
S$72.0mAppraised Value
172Number of Units
Somerset Chancellor CourtDistrict 1, Ho Chi Minh City
69%Effective Interest
S$66.6mAppraised Value
165Number of Units
Somerset Ho Chi Minh City District 1, Ho Chi Minh City
Vietnam portfolio valued at S$241.7 million* (US$161 million), with a total of 522 units in 3 properties
* Includes share of minority interests.
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Serviced Residences — An Attractive Asset Class
More intensive staffingrequirements due to need to cater complete range of servicesHigh maintenance due to significant wear and tear
Less intensive staffingrequirements as only limited services are providedLower maintenance costs as average length of stay is longer
Minimal staff cost and low maintenance costs
Cost Structure
Full range of hospitality serviceRole and involvement of property manager most intensive
Limited services providedRole and involvement of property manager less intensive compared to hotels
No service providedRange of
Services
Seasonal nature of hotel industryHighly correlated with the tourism industry
Some seasonality of hospitality industry, though longer lease terms provide certain level of rental support
Dependent on general property sector conditions
Seasonality
Short-term accommodationHybrid between hotels and apartments/condominiumsVariable lease terms from one week to one year or longer
Long-term leasesLease Structure & Terms
HotelsServiced ResidencesApartments for Rent
61. 2007 figures. FDI refers to inward foreign direct investment. Source: Economist Intelligence Unit.
Business environment in the Asia-Pacific region remains positiveCountries where ART has a presence are expected to register real GDP growth1 of between 2 - 10% in 2007Increasing trend in business travel into Asia
VietnamUS$3.1 bn FDI
7.1% real GDP growth
SingaporeUS$21.8 bn FDI
4.5% real GDP growth
IndonesiaUS$5.0 bn FDI
6.0% real GDP growth
JapanUS$4.8 bn FDI
1.8% real GDP growth
ChinaUS$81.2 bn FDI
9.5% real GDP growth
The PhilippinesUS$2.0 bn FDI
5.5% real GDP growth
AustraliaUS$12.1 bn FDI
3.0% real GDP growth
Tap Growth of Pan-Asian Economies
Growing popularity and demand for serviced residences
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Highlights of the ART-TAG Model
Business focus
Leading international serviced residence owner-operator with a presence in key cities of Asia Pacific, Europe and the Gulf region
Injection of yield accretive Pan-Asian assets
ART granted right of first refusal by Ascott
Portfolio exposure
World’s first and only serviced residence real estate investment trust
Owner of Pan-Asian portfolio of quality serviced residence assets
Manages about 19,000 serviced residence units
70% in Asia Pacific, 28% in Europe and 2% in the Gulf Region
Total portfolio value of S$1.2 billion
Owns 2,904 serviced residence units in 18 properties across 10 key Pan-Asian cities in 7 countries
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ART’s Compelling Growth Story
Demand for serviced residences underpinned by FDI inflows and GDP growth
Strong international brand name
Positive rates reversion with upside momentum
Exposure to high-growth serviced residence/ hospitality asset class
TAG/ART model+ right of first refusal
Ability to leverage on strategic relationship with CapitaLand GroupStrong sponsorship
Achieved total return of more than 195% since listing
Organic – Strong 12% Portfolio RevPAU Growth in 1Q 2007
Ability to acquire assets from The Ascott Group and third party owner
Target S$2 billion portfolio value by end-2008
Growth
Consistently high occupancy rates
Diversified income across 7 Pan-Asian countries
Sustainability of cashflow
Asia-focused investment mandate
FDI/ GDP growth relatively high in Asia compared to other countries
Exposure to Asia’s growth
Financial Highlights
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ART Achieved Capital Growth
Strong Trading PerformanceStrong Trading Performance
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
Mar
-06
Apr-
06
May
-06
Jun-
06
Jul-
06
Aug-
06
Sep-
06
Oct
-06
Nov
-06
Dec
-06
Jan-
07
Feb-
07
Mar
-07
Apr-
07
181 % appreciation1
1. Based on ART’s preferential offering price at listing of S$0.68/Unit and closing price of S$1.91/Unit on 24 April 2007.
S$/U
nit
Announced acquisition of Shoan Heights Serviced
Apartment, Melbourne and 26.8% effective interest in Somerset Chancellor Court,
Ho Chi Minh City
Completed acquisitions of Somerset Olympic Tower Property, Tianjin and 40% effective
interest in Somerset Roppongi, Tokyo
Announced acquisition of Oakwood Premier Ayala Center, The Philippines
Announced acquisitions of Somerset AzabuEast, Tokyo, remaining 60% effective
interest in Somerset Roppongi, Tokyo and 40.2% effective interest in Somerset Chancellor Court, Ho Chi Minh City
Announced ART’s 1Q 2007 financial results
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Total Return Close to 200%
At listing At present
Accumulated DPU since listing
Capital appreciation based on unit price
Preferential offering price at initial listing
190% total
return
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S$1.23/Unit
6.41 cents/Unit
S$0.68/Unit
S$0.68/Unit
1. Based on closing price of S$1.91/Unit on 24 April 2007.
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Net Distributable Income Higher Than Forecast
Net Distributable Income of S$8.0 million 10% Above Forecast
+ 10 %
7.3
1.59
8.0
1.59
Distribution (S$million) DPU (cents)
1Q 2007 Forecast1Q 2007 Actual
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152 146
8360
119 112
188
146
68
108132 125
0
50
100
150
200
Singapore China Indonesia ThePhilippines
Vietnam Overall
March 2006 Actual March 2007 Actual
Strong 12% Portfolio RevPAU Growth
+ 24 %
+ 12 %
Indonesia:- Drop in occupancy for Ascott Jakarta due to massive construction activities surrounding the residence and recent flood in the city
+ 80 %+ 11 %
S$
Management Strategies
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Strategy 1 — Growth Through Acquisitions
Acquisition Growth Strategies Acquisition Growth Strategies
1 Focus on Pan-Asian Region
ART granted right of first refusal by AscottEstimated S$1.1 billion Pan-Asian portfolio with about 3,800 Apartment Units owned by The Ascott Group
Acquire properties from third party owners Estimated S$2 billion Pan-Asian portfolio with about 4,600 Apartment Units managed/leased by The Ascott Group
Strategic relationship with CapitaLand Group
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3
4
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Owned and managed by The Ascott Group prior to acquisition
Owned and managed by third parties prior to acquisitionOwned by third parties and managed by The Ascott Group prior to acquisition
Somerset Chancellor Court, Ho Chi Minh City
(Vietnam)40.2% effective interest
Ascott Makati (Manila, The Philippines)
100% effective interest
Somerset Gordon Heights, Melbourne1
(Australia)100% effective interest
Somerset Roppongi, Tokyo (Japan)
40% effective interest
Somerset Azabu East, Tokyo (Japan)
100% effective interest
26.8% effective interest
Remaining 60% effective interest
Somerset Olympic Tower, Tianjin (China)100% effective interest
Strong Acquisition Pipeline
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Details of Acquisitions
24 Jan 200726.8> 8% [2]
72.0172Somerset Chancellor Court, Ho Chi Minh City, Vietnam
24 Jan 200760.04.3% [2,3]
8.1% [2]
Around 11% [2]
4.3% [2,3]
5% [1]
7% [1]
6.9 [2]
PropertyYield (%)
30 Mar 200740.2
22 Mar 2007100.087.9306Oakwood Premier Ayala Center, The Philippines (re-branded Ascott Makati)
24 Jan 2007100.079.879Somerset Azabu East, Tokyo, Japan
3 Oct 200640.060.264Somerset Roppongi, Tokyo,
Japan
3 Oct 20061 Feb 2007
90.010.0
76.2172Somerset Olympic Tower, Tianjin, China
2Q 2007100.013.943
Shoan Heights Serviced Apartment, Australia (to be re-branded Somerset Gordon Heights, Melbourne)
CompletionEffective Interest (%)
Appraised Value (S$m)
No. of UnitsProperty
1. Annualised property yield for year 2006. 2. Annualised property yield for year 2007.3. Blended property yield.
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Estimated S$400 million in Pan-Asian Assets Owned* By The Ascott Group (In Operation)
Malaysia
China Vietnam
Ascott Bangkok Sathorn
Somerset West Lake, Hanoi
Thailand
Ascott Shanghai Pudong
Ascott Kuala Lumpur Somerset Seri Bukit Ceylon, Kuala Lumpur
Somerset Orchard, Singapore
Singapore
Properties In OperationProperties In Operation
Somerset Zhong Guan Cun, Beijing
* Properties either wholly owned, majority or minority stake.
Citadines Bangkok Sukhumvit 16
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Estimated S$700 million in Pan-Asian Assets Owned* By The Ascott Group (Under Development)
China
Thailand
Ascott Guangzhou
Ascott Singapore Raffles Place
Singapore
Citadines Bangkok Sukhumvit 11
Citadines Bangkok Sukhumvit 23
Citadines Bangkok Sukhumvit 8
Somerset Youyi, Tianjin
Citadines Shanghai Biyun
Citadines Hong Kong Ashley
Citadines SuzhouLejia
IndiaSomerset Whitefield, Bangalore
Somerset Greenways, Chennai
JapanCitadines Shinjuku, Tokyo
Citadines Chennai Boulevard
Properties Under DevelopmentProperties Under Development
* Properties either wholly owned, majority or minority stake.
VietnamSomerset Hoa Binh, Hanoi
Citadines SuzhouXinghai
Citadines Xi’anCentral
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Balance of Assets in Stable and EmergingMarkets
Target S$2 billion portfolio value by end-2008
China
Vietnam
Philippines
Singapore
Indonesia
Thailand Japan
Korea
Malaysia
India
Australia
Countries with existing ART-owned propertiesCountries with investment opportunities
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Growth Through Active Acquisition
Listing Mar 2006 April 2007
Singapore33%
China37%
ART has announced the acquisition of 6 yield-accretive assets1 since listing in March 2006
Indonesia12%
Philippines3%
Vietnam15%
Singapore25%
China31%Indonesia
8%
Philippines9%
Vietnam14%
Japan12%
Total S$856 million Total S$1.2 billion
Australia1%
1. The acquisitions of Somerset Olympic Tower Property, Tianjin and an effective 40% interest in Somerset Roppongi, Tokyo were completed in 2006. The remaining acquisitions were completed or will be completed in 2007.
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Equity Fund Raisings
Positive response for ART’s equity fund raising exercises
8 million New Units fully subscribed
First-come, first-served basis to retail investors
65.8 million New Units
More than 15 times subscribed
Placed to about 80 institutional and other investors from Asia, Australia, Europe and the Gulf region
31.5 million New Units allocated
Non-renounceable offering of 1 New Unit for every 10 Existing Units held
ATM Offering
Private Placement
Preferential Offering
September 2006September 2006 March 2007March 2007
Placement of 44 million New Units
Raised S$48.4 million (US$31million)
Increased free float from 23% to 30%
Private Placement
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Free Float Increased
27.7%
29.5%
42.8%
Free Float Ascott CapitaLand
18.8%
27.7%
53.5%
1. Includes CapitaLand’s placement of 100 million ART units to a small group of high quality, long term institutional investors.
499.4 million units in issue
604.7 million units in issue
Free Float Increased to 53.5%
Before March 2007 Equity Fund RaisingBefore March 2007 Equity Fund Raising
After March 2007 Equity Fund Raising1
After March 2007 Equity Fund Raising1
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< 1 month 27%
1 to 6 months
21%
> 12 months
32%
6 to 12 months
20%
Diversified by Length of Stay and Market Segment
Apartment rental income by length of stay1
Apartment rental income by length of stay1
Apartment rental income by market segment1
Apartment rental income by market segment1
1. For the year ended 31 December 2006. 2. Includes training, medical, etc.
Stability in Earnings
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Business Trip 30%
Relocation 36%
Project 18%
Others 11%
Family/ Leisure 5%
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Diverse Tenant Mix and Quality Clientele
Industrial21%
Real estate/ Lodging
12%
Manufacturing11%
Financial Institutions
9%
Consumers5%
Healthcare5%
Energy & Utilities3%
Others16%
Government & NGOs
7%
IT 6%
Media & Telecomms
5%
Apartment rental income by industry1Apartment rental income by industry1
Earnings not reliant on a single industry or tenant
1. For the year ended 31 December 2006.
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Portfolio Diversification
China 31%Indonesia 8%
Japan 12%
Philippines 9%
Vietnam 14%
Australia1%
Singapore25%
ART’s Share of Gross Profit1ART’s Share of Gross Profit1ART’s Share of Property Values1ART’s Share of Property Values1
Australia 1%
China 29%
The Philippines
13%
Vietnam 20%
Japan 9%
Indonesia 8%
Singapore20%
Total = S$1.2 billion Total = S$48.9m1. For the Forecast Period 2007.
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Strategy #2 — Active Asset Management
Responsive yield management to maximise RevPAU
Leverage on the branding and marketing expertise of serviced residence management company to attract quality clientele
Ensure effective cost management by improving operating efficiencies and economies of scale
Implement asset enhancement plans to enhance property yields and maintain quality of portfolio
Key StrategiesKey Strategies
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Asset Enhancements
Ascott Beijing, ChinaPhased reconfiguration of 35 larger units
Creation of 70 smaller one-bedroom units to tap into the higher-yielding short and medium term business segmentsWill complete reconfiguration by June 2007
Somerset Xu Hui, Shanghai, ChinaRenovation and reconfiguration of 15,000 sqf clubhouse
Created 9,600 sqf NLA commercial space for leaseCompleted in September 2006
Somerset Olympic Tower Property, Tianjin, ChinaPhased reconfiguration of 10 penthouse duplex units into 20 smaller two-bedroom units
Target completion in Q2 2007
Ascott Beijing Somerset Xu Hui, Shanghai
Somerset Olympic Tower Property, Tianjin
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Strategy #3 — Capital and Risk Management
Maintain strong balance sheet and optimise gearingGearing of 24.8% Obtained a Baa2 investment grade rating from Moody’s
Greater funding flexibility for future acquisitions
Adopt conservative interest rate management strategy
ART’s proportionate share of asset
value S$1,218.9m
ART Gearing ProfileART Gearing Profile
Fixed/ 5-yearS$262.6m
FloatingS$39.9m
Bank LoansBank Loans
13%
87%
DebtS$302.5m(24.8%)
EquityS$916.4m(75.2%)
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Managing Foreign Exchange Exposure
Capital valuesAdopt natural hedge strategy, as far as possible
Borrowing in the same currency as underlying asset
CashflowsManage volatility of foreign currency cash flow from overseas assets, examples:
In Australia and Japan, revenue and operating expenses are in A$ and Yen respectivelyIn China, majority of revenue and operating expenses are in RMBFor Indonesia, Philippines & Vietnam, majority of revenue in US$ while operating expenses are in local currencies
Monitor foreign exchange risks associated with remitting RMB, US$, A$ and Yen to Singapore for distribution, to the extent feasible, hedge these currency risks
Conclusion
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Conclusion – Key Attractions of ART
Stable and Growing Distributions
Exposure to growing serviced residence industry in the fastest growing region — Asia
Quality Portfolio — Well located and quality assets in key gateway cities
Strong Sponsorship from The Ascott Group
Thank You
Appendices
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Ascott Residence Trust’s Portfolio (1/3)
Ascott Beijing
ChinaSomerset Grand Fortune Garden Property, Beijing
Somerset Xu Hui, Shanghai
Somerset Olympic Tower Property, Tianjin
•Located along Jian Guo Road, in the Chaoyang District
•272 apartment units
•Located along Liangmaqiao Road, in the Chaoyang District
•81 apartment units
•Located in Shanghai’s prime residential district
•167 apartment units
•Located in the Heping District, in Tianjin’s business district
•172 apartment units
Somerset Gordon Heights, Melbourne
Australia
•Located in Melbourne’s Central Business District
•43 apartment units
Somerset Liang Court Property, Singapore
Singapore
•Located on the fringe of Singapore’s CBD, along River Valley Road
•193 apartment units
Somerset Grand Cairnhill, Singapore
•Located along Orchard Road, Singapore’s main shopping area
•144 apartment units
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Ascott Residence Trust’s Portfolio (2/3)
Somerset Roppongi, Tokyo
Japan
•Located in the heart of Minato-Ku in Tokyo’s Central Business District
•64 apartment units
Somerset AzabuEast, Tokyo
•Located in the heart of Minato-Ku in Tokyo’s Central Business District
•79 apartment units
Ascott Jakarta
IndonesiaSomerset Grand Citra, Jakarta
Country Woods, Jakarta
•Located in the Golden Triangle, Jakarta’s business and shopping district
•198 apartment units
•Located in the Golden Triangle, Jakarta’s business and shopping district
•203 apartment units
•Located in South Jakarta•251 apartment units
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Ascott Residence Trust’s Portfolio (3/3)
Somerset Grand Hanoi
Vietnam
•Located within Hanoi’s CBD•185 apartment units
Somerset Ho Chi Minh City
•Located within Ho Chi Minh City’s CBD
•165 apartment units
Somerset Chancellor Court, Ho Chi Minh City
•Located within Ho Chi Minh City’s CBD
•172 apartment units
Ascott Makati
The Philippines
•Located in Makati City’s shopping and business district
•306 apartment units
Somerset Millennium, Makati
•Located in Makati City’s shopping and business district
•138 apartment units
Somerset SalcedoProperty, Makati
•Located in Makati City’s shopping and business district
•71 apartment units