prospectus dated 10 july 2006investor.cdlht.com/misc/ipo.pdf · 2008. 4. 7. · listed on the...

Joint Financial Advisers, Global Coordinators and Bookrunners

Joint Underwriters Sponsor

PROSPECTUS DATED 10 JULY 2006

CDL HOSPITALITY REAL ESTATE INVESTMENT TRUST(a real estate investment trust constituted on 8 June 2006 under the laws of the Republic of Singapore)

CDL HOSPITALITY BUSINESS TRUST(a business trust constituted on 12 June 2006 under the laws of the Republic of Singapore)

Managed by:M&C REIT Management Limited (the “H-REIT Manager”) and

M&C Business Trust Management Limited (the “HBT Trustee-Manager”)

425,000,000 Stapled Securities

Offering Price: S$0.83 per Stapled Security

This is the initial public offering (the “Offering”) of 425,000,000 stapled securities in CDL Hospitality Trusts (“Stapled Securities”, and each, a “Stapled Security”), a stapled group comprising CDL Hospitality Real Estate Investment Trust (“H-REIT”), a real estate investment trust, and CDL Hospitality Business Trust (“HBT”), a business trust. Each Stapled Security comprises a unit in H-REIT (“H-REIT Unit”) and a unit in HBT (“HBT Unit”) for subscription at the offering price of S$0.83 per Stapled Security (the “Offering Price”). The Offering consists of (i) an international placement of 410,000,000 Stapled Securities to investors, including institutional and other investors in Singapore (the “Placement Tranche”), of which 12,500,000 Stapled Securities (the “Reserved Stapled Securities”) will be reserved for subscription by the directors, management, employees and business associates of Millennium & Copthorne Hotels plc (“M&C” or the “Sponsor”) and persons who have contributed to the success of the Offering (the “Reserved Tranche”) and (ii) an offering of 15,000,000 Stapled Securities to the public in Singapore (the “Public Offer”), subject to re-allocation.

The Offering is fully underwritten by DBS Bank Ltd (“DBS Bank”) and BNP Paribas (acting through its Singapore branch) (“BNP Paribas”, and together with DBS Bank, the “Underwriters”) at the Offering Price.

Separate from the Offering, Hospitality Holdings Pte. Ltd., an indirect wholly owned subsidiary of the Sponsor incorporated in Singapore, has entered into a subscription agreement to subscribe for 273,000,000 Stapled Securities at the Offering Price, conditional upon the Underwriting Agreement (as defi ned herein) having been entered into and not having been terminated pursuant to its terms on or prior to the Settlement Date (as defi ned herein).

Prior to the Offering, there has been no market for the Stapled Securities. The Offering is by way of an initial public offering in Singapore. Application has been made to Singapore Exchange Securities Trading Limited (the “SGX-ST”) for permission to list on the Main Board of the SGX-ST all the Stapled Securities in issue as at the Listing Date (as defi ned herein), as well as all the Stapled Securities which may be issued to the H-REIT Manager or the HBT Trustee-Manager from time to time in full or in part payment of fees payable to the H-REIT Manager or the HBT Trustee-Manager. Such permission will be granted when CDL Hospitality Trusts has been admitted to the Offi cial List of the SGX-ST (the “Listing Date”). Acceptance of applications for the Stapled Securities will be conditional upon issue of the Stapled Securities and upon permission being granted to list the Stapled Securities. In the event that such permission is not granted, application monies will be returned in full, at each investor’s own risk, without interest or any share of revenue or other benefi t arising therefrom, and without any right or claim against CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager, DBS Trustee Limited (the “H-REIT Trustee”), the HBT Trustee-Manager, either of the Underwriters or the Sponsor.

CDL Hospitality Trusts has received a letter of eligibility from the SGX-ST for the listing and quotation of the Stapled Securities on the Main Board of the SGX-ST. CDL Hospitality Trusts’ eligibility to list on the Main Board of the SGX-ST does not indicate the merits of the Offering, the Stapled Securities, CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager, the H-REIT Trustee or the HBT Trustee-Manager. The SGX-ST assumes no responsibility for the correctness of any statements or opinions made or reports contained in this Prospectus. Admission to the Offi cial List of the SGX-ST is not to be taken as an indication of the merits of the Offering, the Stapled Securities, CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager, the H-REIT Trustee or the HBT Trustee-Manager.

H-REIT is an authorised scheme under the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”). HBT is a registered business trust under the Business Trusts Act, Chapter 31A of Singapore (the “BTA”). A copy of this Prospectus has been lodged with, and registered by, the Monetary Authority of Singapore (the “MAS”). The MAS assumes no responsibility for the contents of this Prospectus. Lodgement with, or registration by, the MAS of this Prospectus does not imply that the SFA, the BTA or any other legal or regulatory requirement has been complied with. The MAS has not, in any way, considered the investment merits of the H-REIT Units, the HBT Units, and the Stapled Securities, being offered for investment. The date of registration of this Prospectus with the MAS is 10 July 2006. No Stapled Security shall be allotted or allocated on the basis of this Prospectus later than six months after the date of registration of this Prospectus by the MAS.

This document is important. 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 adviser.

See “Risk Factors” commencing on page 47 of this Prospectus for a discussion of certain factors to be considered in connection with an investment in the Stapled Securities. None of CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager, the H-REIT Trustee, the HBT Trustee-Manager, the Underwriters or the Sponsor guarantees the performance of CDL Hospitality Trusts, the repayment of capital or the payment of a particular return on the Stapled Securities.

Investors applying for the Stapled Securities by way of Application Forms or Electronic Applications (both as referred to in Appendix VI, “Terms, Conditions and Procedures for Application for and Acceptance of the Stapled Securities in Singapore”) will pay the Offering Price per Stapled Security on application, subject to a refund of the full amount or, as the case may be, the balance of the application monies (in each case without interest or any share of revenue or other benefi t arising therefrom), where (i) an application is rejected or accepted in part only, or (ii) if the Offering does not proceed for any reason.

The Stapled Securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) and, subject to certain exceptions, may not be offered or sold within the United States or to, or for the account or benefi t of, U.S. persons (as defi ned in Regulation S under the Securities Act (“Regulation S”)). The Stapled Securities are being offered and sold outside the United States to non-U.S. persons in reliance on Regulation S.

Orchard Hotel Shopping Arcade

Copthorne King’s Hotel

M Hotel

Grand Copthorne Waterfront Hotel

Orchard Hotel

(Registered with the Monetary Authority of Singapore on 10 July 2006)

Earn

6.37%(1)

tax-free(2) yield

ABOUT CDL HOSPITALITY TRUSTS

CDL Hospitality Trusts is a stapled group comprising CDL Hospitality Real Estate Investment Trust (“H-REIT”), a real estate investment trust, and CDL Hospitality Business Trust (“HBT”), a business trust.

H-REIT, the fi rst hotel real estate investment trust (“REIT”) in Singapore, is established with the principal investment strategy of investing, directly or indirectly, in a diversifi ed portfolio of income-producing real estate which is primarily used for hospitality and/or hospitality-related purposes, whether wholly or partially, and real estate-related assets in relation to the foregoing.

The initial asset portfolio of H-REIT, as at the Listing Date, will comprise Orchard Hotel, Grand Copthorne Waterfront Hotel, M Hotel and Copthorne King’s Hotel (the “Hotels“, and each a “Hotel“), all of which are located in Singapore and marketed as “superior” hotels, with a total of over 1,900 rooms as at 9 June 2006, as well as Orchard Hotel Shopping Arcade, the shopping arcade adjoining Orchard Hotel (together with the Hotels, the “Properties”). Orchard Hotel Shopping Arcade is included in H-REIT’s portfolio as it is complementary to the guest facilities at Orchard Hotel, providing shopping and leisure facilities to hotel guests.

HBT is a business trust which will be dormant as at the Listing Date. It exists primarily as “a master lessee of last resort” and will become active if H-REIT is unable to appoint a master lessee for any of the Hotels in its portfolio at the expiry of the relevant master lease agreement or for a newly acquired hotel. HBT may also become active if it undertakes certain hospitality and hospitality-related development projects, acquisitions and investments which may not be suitable for H-REIT.

ABOUT THE SPONSOR

Millennium & Copthorne Hotels plc

Listed on the London Stock Exchange, with a market capitalisation of approximately £1.17 billion as at 9 June 2006, M&C is an internationally recognised hotel group with a portfolio of 105 hotels in 18 countries around the world.

M&C hotel brands represent a wide variety of hotel styles with high standards of service and facilities. M&C hotels are recognised for providing excellent business, leisure, incentives, meetings and events experience to its customers worldwide.

ABOUT THE H-REIT MANAGER

M&C REIT Management Limited

The H-REIT Manager is an indirect wholly owned subsidiary of M&C. The directors and the executive offi cers of the H-REIT Manager have an extensive and broad range of experience including expertise in fund, asset, hospitality and property management. The H-REIT Manager is responsible for formulating the business plans in relation to the properties, including setting the strategic direction of H-REIT and giving recommendations to the H-REIT Trustee on the acquisition, divestment or enhancement of assets of H-REIT in accordance with its stated investment strategy.

(1) Annualised fi gure for the six months ending 31 December 2006. Based on the Offering Price of S$0.83 per Stapled Security and the forecast, together with the accompanying assumptions, in this Prospectus. Such yield will vary accordingly for investors who purchase Stapled Securities in the secondary market at a market price that differs from the Offering Price.

(2) For individuals (irrespective of nationality or tax residence status) who hold Stapled Securities as investment assets and not through a partneship in Singapore.

This overview section is qualifi ed in its entirety by, and should be read in conjunction with, the full text of this Prospectus.Words and expressions not defi ned herein have the same meaning as in the main body of this Prospectus unless the context requires otherwise. Meanings of capitalized terms may be found in the Glossary of this Prospectus, the Stapling Deed, the H-REIT Trust Deed or the HBT Trust Deed.

GRAND COPTHORNE WATERFRONT HOTEL

• Proximity to the Central Business District (“CBD”), the proposed Business and Financial Centre (“BFC”) and Integrated Resorts (“IRs”), HarbourFront Centre, Suntec City, Orchard Road, Chinatown, Clarke Quay, Boat Quay and Robertson Quay

• One of the largest conference facilities in Singapore, with three levels of conference/meeting and banquet facilities• Four ballrooms dedicated to banqueting events, with the largest ballroom being the Grand Ballroom which has a maximum capacity of

1,000 persons in theatre style • Awards include Excellent Service Award (2005) for achieving 17 Gold and 6 Silver excellent service awards awarded by Singapore Hotel

Association (“SHA”), SPRING Singapore and Certifi cate of Commendation Hotel Gold by SHA/NCPC/STB (2005, 2004, 2003)• Well positioned to benefi t from the STB’s stated goal of increasing Singapore’s appeal in the meetings, incentives, conventions and

exhibitions (“MICE”) market• Managed and operated by MCIL

COPTHORNE KING’S HOTEL

• Modern business hotel that meets the needs of corporate travellers • Completed extensive refurbishments in 2004• Restaurants have built up a loyal customer base • Awards and accolades include Singapore’s Best Restaurants (2006) by American Express and Top Restaurant Award (2005) by Wine &

Dine publication• Expected to benefi t from the STB’s plans to grow Singapore’s tourism industry• Managed and operated by MCIL

ORCHARD HOTEL

• Signifi cant strength lies in its location in the major shopping belt of Orchard Road, the retail and entertainment activity hub of Singapore• Recently completed extensive renovations to upgrade rooms at one of the two wings, Orchard Wing• Strong and consistent revenue from its food and beverage department, with numerous awards and accolades awarded to Hua Ting Restaurant• Expected to benefi t from the increased activities and revitalisation of Orchard Road planned by the Singapore Tourism Board (the “STB”)• Awards and accolades include Executive Chef of the Year and Asian Ethnic Chef of the Year by World Gourmet Summit Awards of Excellence

2006, Best Accommodation Experience (Superior Hotel) 2005 by 20th Singapore Tourism Awards, and Asian Ethnic Restaurant of the Year by World Gourmet Summit Awards of Excellence 2005

• Managed and operated by Millennium & Copthorne International Limited (“MCIL“)

M HOTEL

• Strong following of business travellers due to location in the heart of the CBD and its proximity to the HarbourFront Centre• Unique and contemporary design clearly differentiates the property from others in its class• Accolades include “Best Mid-Range Business Hotel” in 2005 by Trade Travel Gazette Asia and “Best Corporate/Business Hotel” by Hospitality Asia Platinum Awards in 2004• Well positioned to benefit from the increased activities by its proximity to the proposed BFC and IRs• Managed and operated by MCIL

ORCHARD HOTEL SHOPPING ARCADE

• Proximity to Orchard Hotel and Orchard Road ensures a steady stream of shoppers comprising tourists and business travellers and locals• Eight major tenants occupying a total of 2,910.7 sq m (representing 58.9% of the rentable retail space) as at 31 January 2006• Occupancy rate as at 31 January 2006 was about 95.9%

(See “Business and Properties” in this Prospectus)

The table below sets out a summary of the details of the Properties in H-REIT’s intial property portfolio:

PROPERTYNUMBER OF AVAILABLE

ROOMS

GFA(sq m)

CONTRIBUTION TO H-REIT’S

GROSS REVENUE FY2005 (S$ m)

HOTEL RevPAR(3)

FY2005 (S$)

PURCHASE CONSIDERATION(4)

(S$ m)

Orchard Hotel 653 49,940.9 (5) 16.1 112 330.1


539 46,662.6 11.7 96 234.1

M Hotel 413 32,379.3 9.0 110 161.5

Copthorne King’s Hotel 310 17,598.3 5.3 88 86.1

Orchard Hotel Shopping Arcade N.A. N.A.(6) 3.4 N.A. 34.5

Total 1,915 146,581.1 45.5 N.A. 846.3

(3) Room Revenue Per Available Room (“RevPAR”).

(4) Based on appraisal by CB Richard Ellis (“CBRE”) asat 28 February 2006.

(5) Shares Gross Floor Area (“GFA”) with Orchard Hotel Shopping Arcade.

(6) Net Lettable Area (“NLA”) is 4,939.3 sq m. Shares GFA with Orchard Hotel.

N.A. means not applicable

1. Orchard Hotel and Orchard Hotel Shopping Arcade2. Grand Copthorne Waterfront Hotel3. Copthorne King’s Hotel4. M Hotel

SINGAPORECENTRAL BUSINESS DISTRICT

CIVIC DISTRICT

SINGAPORE RIVER

MARINA BAYSANDS

(Future Marina Integrated Resort)

BRASBASAH/BUGIS

CENTRALBUSINESSDISTRICT

2

3

4

1

INVESTMENT HIGHLIGHTS

The H-REIT Manager considers the key investment highlights of H-REIT to include:

• Investment in a portfolio of quality hospitality and/or hospitality-related assets - Hotels are strategically located in or near the CBD or along or near Orchard Road, and Orchard Hotel Shopping Arcade is located along Orchard Road - Hotels have been marketed as “superior” hotels, and are therefore positioned to capture what the H-REIT Manager believes to be

the relatively more profi table section of the hospitality market

• Distributions via long-term Master Lease Agreements - H-REIT’s current distribution policy is to distribute 100.0% of its taxable income and tax-exempt income (if any) for the period from the Listing Date to 31 December 2007 and at least 90.0% of its taxable and tax-exempt income (if any) thereafter - Annualised distribution yield of 6.37% for the Forecast Period 2006(8),(9)

- Long-term Master Lease Agreements of at least 20 years for each of the Hotels, which entitle H-REIT to a Fixed Revenue, thereby providing holders of the Stapled Securities with downside protection and a stable and long-term stream of quality rental income

The table below sets out a summary of the forecast and projected distribution yields of the Stapled Securities:

• Leverage on established Master Lessees - The Master Lessees are indirect wholly owned subsidiaries of M&C which is listed on the London Stock Exchange with a market

capitalisation of approximately £1.17 billion as at 9 June 2006

• Exposure to hotel sector growth - The STB forecasts a strong demand for hotel rooms in Singapore in the coming years and visitor arrivals in Singapore are projected

to double from 8.3 million in 2004 to 17 million by 2015 - Extended average length of stay of tourists from 3.2 days in 2004 to 3.4 days in 2005 - Other contributing factors that will further increase tourist arrivals in Singapore include: - Completion of two IRs located at Marina Bay and Sentosa - Completion of the proposed BFC located at Marina Bay - Emergence of new low-cost air-carriers in the Southeast Asia region - Increase in tourists from the People’s Republic of China (the “PRC“) and India - Singapore’s increasing popularity as a global MICE hub - Insuffi cient supply of hotel rooms in Singapore to meet the expected growing demand - Potential for growth in the local hotel industry as well as a possible upward revision in room rates in view of increasing tourism

demand outstripping the pace of additional rooms supply

• Potential for growth through acquisitions - Pursue asset acquisition opportunities that are yield accretive (from both M&C’s existing portfolio and third parties) - Potential benefit from expected trend for hospitality service providers to free up capital for business expansion, which may

increase the availability of assets for acquisition

(8) Annualised fi gure for the six months ending 31 December 2006.(9)Based on the Offering Price of S$0.83 per Stapled Security and the profi t forecast and profi t

projection, together with the accompanying assumptions, in this Prospectus. Such yield will vary accordingly for investors who purchase Stapled Securities in the secondary market at a market price that differs from the Offering Price.

Offering Price Distribution Yield

Forecast Period 2006

Projection Year 2007

S$0.83 6.37%(8),(9) 6.69%(9)

Forecast Period 2006 Projection Year 2007

Yield(%)

6.37%

6.10

6.20

6.30

6.40

6.50

6.60

6.706.69%

(8),(9)

(9)

(12)Based on CBRE’s appraised valuation as at 28 February 2006.

M HotelS$161.5m, 19.1%

Orchard HotelS$330.1m, 39.0%

Orchard Hotel Shopping ArcadeS$34.5m, 4.0%

Copthorne King’s HotelS$86.1m, 10.2%

Grand Copthorne Waterfront HotelS$234.1m, 27.7%

Portfolio by Gross Revenue Contribution of Individual Property

Forecast Period 2006(13)

(13)For the 6 months ending 31 December 2006 and based on the assumptions set out in this Prospectus.

M HotelS$5.4m, 19.7%





(14)Based on the assumptions set out in this Prospectus.

M HotelS$10.8m, 19.2%





4. Recent refurbishments carried out on the Hotels and cost of future furniture, fi xtures and equipment (“FF&E”) not borne by H-REIT• Hotels are in a good state of upkeep due to recent

signifi cant refurbishment programmes which promote the attraction of the Hotels and may thus increase patronage and revenue

(See “Summary - Competitive Strengths of the Properties” in this Prospectus)

OUTLOOK FOR THE HOSPITALITY SECTOR IN SINGAPORE

• Strong prospects expected for the tourism and hospitality sector in Singapore in 2006 and 2007

• Record 8.94 million tourist arrivals in Singapore for 2005, with 14.6% growth for January 2006 to April 2006 over the same period in 2005

• Increasing visitor arrivals in Singapore due to better regional and worldwide economic growth and the advent of budget air-carriers in Asia

• Double-digit growth in room revenue for Singapore hotels of 15.5% in 2005, on top of a 16.0% increase in 2004

• 12.0% growth in Average Daily Rate in 2005 over 2004 and 3.5% increase in Average Occupancy Rate to 84.1% in 2005 over 2004

• Signifi cant increase in visitor arrivals from high growth source markets such as India and the PRC over the years

• Extended length of stay of visitors from an average of 3.2 days in 2004 to 3.4 days in 2005

• Efforts by both the STB and the local tourism industry to develop better tourism offerings and initiatives. A S$2.0 billion tourism development fund has been set up by the Singapore Government to achieve the desired growth in the local tourism industry

• Existing hotel supply insuffi cient to meet the accommodation needs of the 17 million visitors targeted by the STB by 2015

(See “Summary - Outlook for the Hospitality Sector in Singapore” in this Prospectus)

INDICATIVE TIMETABLE

(See “Summary - Indicative Timetable” in this Prospectus for further details)

Portfolio by Gross Revenue Contribution of Individual Property

Projection Year 2007(14)

Total:S$846.3m

Total:S$27.2m

Total:S$56.3m

Portfolio by Purchase Price of Individual Property(12)

(11) Subject to the SGX-ST being satisfi ed that all conditions necessary for the commencement of trading in the Stapled Securities on a “ready” basis have been fulfi lled.

DATE AND TIME EVENT

10 July 2006, 3.30 p.m. Opening date and time for the Offering

17 July 2006, 12.00 p.m. Closing date and time for the Offering

19 July 2006, 2.00 p.m. Commence trading on a “ready” basis(11)

• Benefi ts of M&C as the Sponsor and MCIL as the Hotel Manager - CDL Hospitality Trusts stands to benefi t from the Sponsor’s fi nancial strength, experience, market reach and network of contacts

in the global hotel and hospitality industry and MCIL’s experience as the principal hotel management arm of the Sponsor in Asia - Continue to benefi t from being associated with the M&C brand and its globally marketed brands

• The Sponsor’s interest is substantially aligned with that of the holders of the Stapled Securities - M&C will, through an indirect wholly owned subsidiary, hold approximately 39.1% of the total number of Stapled Securities upon

the completion of the Offering - M&C and its subsidiary have entered into lock-up arrangements with DBS Bank and BNP Paribas Peregrine in respect of their

interests in the Stapled Securities for 180 days commencing from the Listing Date

• Experienced and professional management - Leverage on the experience of the directors and the executive offi cers of the H-REIT Manager in fund, asset, hospitality and property management obtained in Singapore and elsewhere in the world

• Highly independent board - The majority of directors of the H-REIT Manager and the HBT Trustee-Manager are independent directors

• Management fees structured to incentivise and align interests of the H-REIT Manager and the HBT Trustee-Manager with that of holders of the Stapled Securities - The management fees of the H-REIT Manager and the HBT Trustee-Manager have a performance-based element - The H-REIT Manager is entitled to receive a base fee of 0.25% per annum of the value of the H-REIT Deposited Property as well

as an additional performance fee of 5.0% per annum of H-REIT’s Net Property Income in the relevant fi nancial year - 80.0% of H-REIT Manager’s fees will be paid in Stapled Securities for the fi rst fi ve years

• Capital structure that provides future fi nancing fl exibility - The H-REIT Manager intends to use a combination of debt and equity to fund future acquisitions and property enhancements, maintain a strong balance sheet and remain within the aggregate leverage limit set out in the Property Funds Guidelines, minimise

the cost of debt fi nancing, secure diversifi ed funding sources, and manage the exposure in interest rates and foreign exchange

• Tax benefi ts for holders of the Stapled Securities - H-REIT enjoys tax transparency on its taxable income from the Properties - Distributions made to individuals are generally exempt from Singapore income tax regardless of their nationality or tax residence

status

(See “Summary - Key Investment Highlights of H-REIT” in this Prospectus)

COMPETITIVE STRENGTHS

The H-REIT Manager believes that the Properties enjoy the following competitive strengths:

1. Strategic locations with signifi cant contribution for the Hotels from corporate segments • With all of the Hotels strategically located in or near to the CBD or along or near to Orchard Road, the Hotels cater to

both business and leisure travellers • 69.1% of the room revenue of the Hotels for FY2005 was contributed by the higher yielding corporate segments

2. Unique strengths of each of the Properties • A signifi cant strength of Orchard Hotel is its premier location along Orchard Road, the retail and entertainment activity hub of

Singapore • Grand Copthorne Waterfront Hotel has one of the largest conference facilities in Singapore, deriving a signifi cant percentage of

its revenue from banquets • M Hotel, which has a strong following of business travellers, boasts a unique and contemporary design that clearly differentiates

it from others in its class • Copthorne King’s Hotel has been extensively refurbished into a modern business hotel with a loyal base of patrons for its

restaurants • Orchard Hotel Shopping Arcade’s proximity to Orchard Hotel and its Orchard Road location ensure a steady stream of shoppers

3. Improving RevPAR of the Hotels The Hotels have been experiencing improving RevPAR performance over the last three years:

RevPAR (S$)

FY2003 FY2004 FY2005

Orchard Hotel 70 97 112

Grand Copthorne Waterfront Hotel 57 81 96

M Hotel 63 89 110

Copthorne King’s Hotel 49 66 88

Weighted Average(10) 62 86 103(10) Computed based on total room revenues of the four Hotels divided by total number of Available Rooms of the four Hotels during the year.

NOTICE TO INVESTORS

AS BUSINESS TRUSTS ARE SUBJECT TO THE SINGAPORE CODE ON TAKE-OVERS ANDMERGERS (THE “TAKE-OVER CODE”), AND ONE OF THE COMPONENTS OF CDL HOSPITALITYTRUSTS IS A BUSINESS TRUST, THE TAKE-OVER CODE IS APPLICABLE TO THE STAPLEDSECURITIES.

No person is authorised to give any information or to make any representation not contained in thisProspectus and any information or representation not so contained must not be relied upon as havingbeen authorised by or on behalf of CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager, theH-REIT Trustee, the HBT Trustee-Manager, the Underwriters or the Sponsor. Neither the delivery of thisProspectus nor any offer, subscription, sale or transfer made hereunder shall in the circumstancesimply that the information contained herein is correct as at any date subsequent to the date hereof orconstitute a representation that there has been no change or development reasonably likely to involvea material adverse change in the affairs, conditions and prospects of the Stapled Securities, CDLHospitality Trusts, H-REIT or HBT since the date hereof. Where such changes occur and are materialor required to be disclosed by law, the SGX-ST and/or any other regulatory or supervisory body oragency, the H-REIT Manager and/or the HBT Trustee-Manager will make an announcement of thesame to the SGX-ST and, if required, issue and lodge a supplementary document or replacementdocument pursuant to Section 282D and Section 298 of the SFA and take immediate steps to complywith Section 282D and Section 298 of the SFA. Investors should take notice of such announcementsand documents and upon release of such announcements and documents shall be deemed to havenotice of such changes. No representation, warranty or covenant, express or implied, is made by anyof CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager, the H-REIT Trustee, the HBTTrustee-Manager, the Underwriters, the Sponsor or any of their respective affiliates, directors, officers,employees, agents, representatives or advisers as to the accuracy or completeness of the informationcontained herein, and nothing contained in this Prospectus is, or shall be relied upon as, a promise,representation or covenant by any of CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager, theH-REIT Trustee, the HBT Trustee-Manager, the Underwriters, the Sponsor or their respective affiliates,directors, officers, employees, agents, representatives or advisers.

None of CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager, the H-REIT Trustee, the HBTTrustee-Manager, the Underwriters, the Sponsor or any of their respective affiliates, directors, officers,employees, agents, representatives or advisers makes any representation or undertaking to anypurchaser or subscriber of the Stapled Securities regarding the legality of an investment by suchpurchaser or subscriber of the Stapled Securities under appropriate legal, investment or similar laws.In addition, this Prospectus is issued solely for the purpose of the Offering and investors in the StapledSecurities should not construe the contents of this Prospectus as legal, business, financial or taxadvice. Investors should be aware that they are required to bear the financial risks of an investment inthe Stapled Securities, and may be required to do so for an indefinite period of time. Investors shouldconsult their own professional advisers as to the legal, tax, business, financial and related aspects ofan investment in the Stapled Securities.

In the event that a supplementary or replacement prospectus is lodged with the MAS, the Offering shallbe kept open for at least 14 days after the lodgement of such supplementary or replacementprospectus.

Where prior to the lodgement of the supplementary or replacement prospectus, applications have beenmade under this Prospectus to subscribe for the Stapled Securities and:

(a) where the Stapled Securities have not been issued to the applicants, the H-REIT Manager and theHBT Trustee-Manager shall:

(i) within two days (excluding any Saturday, Sunday or public holiday) from the date oflodgement of the supplementary or replacement prospectus, give applicants notice in writingof how to obtain, or arrange to receive, a copy of the same and provide applicants with an

i

option to withdraw their applications and take all reasonable steps to make available withina reasonable period the supplementary or replacement prospectus to applicants who haveindicated they wish to obtain, or who have arranged to receive, a copy of the supplementaryor replacement prospectus; or

(ii) within seven days from the date of lodgement of the supplementary or replacementprospectus, give the applicants the supplementary or replacement prospectus, as the casemay be, and provide the applicants with an option to withdraw their applications; or

(iii) treat the applications as withdrawn and cancelled, in which case the applications shall bedeemed to have been withdrawn and cancelled, and the H-REIT Manager and the HBTTrustee-Manager shall within seven days from the date of lodgement of the supplementaryor replacement prospectus, return all monies paid in respect of any application to theapplicants, without interest or a share of revenue or benefit arising therefrom; or

(b) where the Stapled Securities have been issued to the applicants, the H-REIT Manager and theHBT Trustee-Manager shall:

(i) within two days (excluding any Saturday, Sunday or public holiday) from the date oflodgement of the supplementary or replacement prospectus, give applicants notice in writingof how to obtain, or arrange to receive, a copy of the same and provide applicants with anoption to return to the H-REIT Manager and the HBT Trustee-Manager the StapledSecurities, which they do not wish to retain title in and take all reasonable steps to makeavailable within a reasonable period the supplementary or replacement prospectus toapplicants who have indicated they wish to obtain, or who have arranged to receive, a copyof the supplementary or replacement prospectus; or

(ii) within seven days from the date of lodgement of the supplementary or replacementprospectus, give the applicants the supplementary or replacement prospectus, as the casemay be, and provide the applicants with an option to return to the H-REIT Manager and theHBT Trustee-Manager the Stapled Securities, which they do not wish to retain title in; or

(iii) treat the issue of the Stapled Securities as void, in which case the issue shall be deemedvoid and the H-REIT Manager and the HBT Trustee-Manager shall, within seven days fromthe date of lodgement of the supplementary or replacement prospectus, return all moniespaid in respect of any application to the applicants, without interest or a share of revenue orbenefit arising therefrom.

An applicant who wishes to exercise his option under paragraph (a)(i) or (ii) to withdraw his applicationshall, within 14 days from the date of lodgement of the supplementary or replacement prospectus,notify the H-REIT Manager and HBT Trustee-Manager of this, whereupon the H-REIT Manager and theHBT Trustee-Manager shall, within seven days from the receipt of such notification, pay to him allmonies paid by him on account of his application for those Stapled Securities without interest or a shareof revenue or benefit arising therefrom, at the applicant’s risk.

An applicant who wishes to exercise his option under paragraph (b)(i) or (ii) to return the StapledSecurities issued to him shall, within 14 days from the date of lodgement of the supplementary orreplacement prospectus, notify the H-REIT Manager and the HBT Trustee-Manager of this and returnall documents, if any, purporting to be evidence of title to those Stapled Securities, to the H-REITManager and the HBT Trustee-Manager, whereupon the H-REIT Manager and the HBT Trustee-Manager shall, within seven days from the receipt of such notification and documents, if any, pay to himall monies paid by him for those Stapled Securities without interest or a share of revenue or benefitarising therefrom, at the applicant’s risk, and the issue of those Stapled Securities shall be deemed tobe void. Under the SFA, the MAS may, in certain circumstances issue a stop order (the “Stop Order”)to the H-REIT Manager and the HBT Trustee-Manager, directing that no or no further Stapled Securitiesto which this Prospectus relates be allotted or issued. Such circumstances will include a situation wherethis Prospectus (i) contains a statement or matter, which in the opinion of the MAS is false ormisleading, (ii) omits any information that should be included in accordance with the SFA, (iii) does not,

ii

in the opinion of the MAS, comply with the requirements of the SFA or (iv) the MAS is of the opinion thatit is in the public interest to do so. In the event that the MAS issues a Stop Order pursuant to Section282E and/or Section 297 of the SFA and applications to subscribe for the Stapled Securities have beenmade prior to the Stop Order, and:

(a) where the Stapled Securities have not been issued to the applicants, the applications for theStapled Securities shall be deemed to have been withdrawn and cancelled and the H-REITManager and the HBT Trustee-Manager shall, within 14 days from the date of the Stop Order, payto the applicants all monies the applicants have paid on account of their applications for theStapled Securities; or

(b) where the Stapled Securities have been issued to the applicants, the issue of the StapledSecurities shall be deemed to be void and the H-REIT Manager and the HBT Trustee-Managershall, within 14 days from the date of the Stop Order, pay to the applicants all monies paid by themfor the Stapled Securities.

Copies of this Prospectus and the Application Forms may be obtained on request, subject to availability,from:

DBS Bank Ltd6 Shenton Way

DBS Building Tower OneSingapore 068809

BNP Paribas, Singapore Branch20 Collyer Quay

#01-01 Tung CentreSingapore 049319

as well as from branches of DBS Bank (including POSB) and, where applicable, from certain membersof the Association of Banks in Singapore, members of the SGX-ST as well as merchant banks inSingapore. A copy of this Prospectus is also available on the SGX-ST website: http://www.sgx.com.

The distribution of this Prospectus and the offering, subscription, purchase, sale or transfer of theStapled Securities in certain jurisdictions may be restricted by law. CDL Hospitality Trusts, H-REIT,HBT, the H-REIT Manager, the H-REIT Trustee, the HBT Trustee-Manager, the Underwriters and theSponsor require persons into whose possession this Prospectus comes to inform themselves aboutand to observe any such restrictions at their own expense and without liability to any of CDL HospitalityTrusts, H-REIT, HBT, the H-REIT Manager, the H-REIT Trustee, the HBT Trustee-Manager, theUnderwriters and the Sponsor. This Prospectus does not constitute an offer of, or an invitation tosubscribe for or purchase, any of the Stapled Securities in any jurisdiction in which such offer orinvitation would be unlawful. Persons to whom a copy of this Prospectus has been issued shall notcirculate to any other person, reproduce or otherwise distribute this Prospectus or any informationherein for any purpose whatsoever nor permit or cause the same to occur.

iii

FORWARD-LOOKING STATEMENTS

Certain statements in this Prospectus constitute forward-looking statements. This Prospectus alsocontains forward-looking financial information in “Profit Forecasts and Profit Projections”. Suchforward-looking statements and financial information involve known and unknown risks, uncertaintiesand other factors which may cause the actual results, performance or achievements of CDL HospitalityTrusts, H-REIT, HBT, the H-REIT Manager and/or the HBT Trustee-Manager and/or industry results, tobe materially different from any future results, performance or achievements expressed or implied bysuch forward-looking statements and financial information. Such forward-looking statements andfinancial information are based on numerous assumptions regarding present and future businessstrategies of the H-REIT Manager and/or the HBT Trustee-Manager and the environment in which CDLHospitality Trusts, H-REIT, HBT, the H-REIT Manager and/or the HBT Trustee-Manager will operate inthe future. As these statements and financial information reflect current views of the H-REIT Managerand/or the HBT Trustee-Manager concerning future events, these statements and financial informationnecessarily involve risks, uncertainties and assumptions. Actual future performance could differmaterially from these forward-looking statements and financial information. You should not place anyundue reliance on these forward-looking statements.

Among the important factors that could cause the actual results, performance or achievements of CDLHospitality Trusts, H-REIT, HBT, the H-REIT Manager and/or the HBT Trustee-Manager to differmaterially from those in the forward-looking statements and financial information are the condition of,and changes in, the domestic, regional and global economies, including, but not limited to, factors suchas the political landscape, environmental conditions and viral epidemics such as human avian flu andsevere acute respiratory syndrome (“SARS”) that may result in reduced occupancy rates and roomrates for the hospitality and hospitality-related assets of CDL Hospitality Trusts, H-REIT and/or HBT,changes in government laws and regulations affecting CDL Hospitality Trusts, H-REIT and/or HBT,competition in the Singapore and global hospitality and hospitality-related industry, currency exchangerates, interest rates, relations with service providers, relations with lenders, hostilities (including futureterrorist attacks), or fear of hostilities that affect travel, in general, within or to Asia or any other countriesin which the hospitality and hospitality-related assets of CDL Hospitality Trusts, H-REIT and/or HBTmay be located in the future, the performance and reputation of master lessees, hotel managers andthe other independent hotel companies with whom CDL Hospitality Trusts, H-REIT and/or HBT maycontract, difficulties in identifying hospitality and hospitality-related assets to acquire and completingand integrating acquisitions, changes in the board of directors and executive officers of the H-REITManager and/or the HBT Trustee-Manager, risks related to natural disasters, the general volatility of thecapital markets, risks related to investments in shopping arcades, the market price of the StapledSecurities and other matters not yet known to the H-REIT Manager and/or the HBT Trustee-Manageror not currently considered material by the H-REIT Manager and/or the HBT Trustee-Manager.Additional factors that could cause actual results, performance or achievements to differ materiallyinclude, but are not limited to, those discussed under “Risk Factors”, “Profit Forecasts and ProfitProjections” and “Business and Properties”. These forward-looking statements and financialinformation speak only as at the date of this Prospectus. The H-REIT Manager and the HBTTrustee-Manager expressly disclaim any obligation or undertaking to release publicly any updates of orrevisions to any forward-looking statement or financial information contained herein to reflect anychange in the expectations of the H-REIT Manager and/or the HBT Trustee-Manager with regardthereto or any change in events, conditions or circumstances on which any such statement orinformation is based, subject to compliance with all applicable laws and regulations and/or the rules ofthe SGX-ST and/or any other relevant regulatory or supervisory body or agency.

iv

CERTAIN DEFINED TERMS AND CONVENTIONS

CDL Hospitality Trusts, H-REIT and HBT will publish their financial statements in Singapore dollars. Inthis Prospectus, references to “S$”, “$”, “Singapore dollars” and “cents” are to the lawful currency of theRepublic of Singapore. Capitalised terms used in this Prospectus shall have the meanings set out in theGlossary.

H-REIT’s unaudited pro forma statements of total return for FY2003, FY2004 and FY2005, unauditedpro forma cash flow statement for FY2005 and unaudited pro forma balance sheet as at 31 December2005 (collectively, the “Unaudited Pro Forma Financial Information”) have been prepared inaccordance with Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issuedby the Institute of Certified Public Accountants of Singapore, the applicable requirements of the Codeon Collective Investment Schemes (the “CIS Code”) issued by the MAS and the provisions of the trustdeed dated 8 June 2006 constituting H-REIT (the “H-REIT Trust Deed”), and on the bases set out inAppendix II “Independent Accountants’ Report on the Unaudited Pro Forma Financial Information ofH-REIT”. No pro forma financial information of HBT has been presented as it is newly established andis dormant as at the Listing Date. Accordingly, no consolidated pro forma financial information of CDLHospitality Trusts has been presented.

Certain historical financial data in this Prospectus, including financial terms, is derived from theUnaudited Pro Forma Financial Information of H-REIT and presented on an unaudited pro formabasis (see “Unaudited Pro Forma Financial Information”).

The forecast and projected yields and yield growth are calculated based on the Offering Price. Suchyields and yield growth will vary accordingly for investors who purchase the Stapled Securities in thesecondary market at a market price different from the Offering Price.

Any discrepancies in the tables, graphs and charts included in this Prospectus between the listedamounts and totals thereof are due to rounding. Where applicable, figures and percentages arerounded to one decimal place. Measurements in square metres (“sq m”) are converted to square feet(“sq ft”) and vice versa based on the conversion rate of 1 sq m = 10.7639 sq ft. References to“Appendices” are to the appendices set out in this Prospectus. All references in this Prospectus to datesand times shall mean Singapore dates and times unless otherwise specified.

v

MARKET AND INDUSTRY INFORMATION

This Prospectus includes market and industry data and forecasts that have been obtained from internalsurveys, reports and studies, where appropriate, as well as market research, publicly availableinformation and industry publications. Industry publications, surveys and forecasts generally state thatthe information they contain has been obtained from sources believed to be reliable, but there can beno assurance as to the accuracy or completeness of such included information. While the H-REITManager and the HBT Trustee-Manager have taken reasonable steps to ensure that the information isextracted accurately and in its proper context, the H-REIT Manager and the HBT Trustee-Managerhave not independently verified any of the data from third party sources or ascertained the underlyingeconomic assumptions relied upon therein.

vi

TABLE OF CONTENTS

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

OWNERSHIP OF THE STAPLED SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

CAPITALISATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

UNAUDITED PRO FORMA FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

PROFIT FORECASTS AND PROFIT PROJECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

STRATEGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

BUSINESS AND PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

MANAGEMENT AND CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

CDL HOSPITALITY TRUSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

H-REIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

HBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

THE SPONSOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

THE FORMATION AND STRUCTURE OF CDL HOSPITALITY TRUSTS, H-REIT AND HBT 170

THE FORMATION AND STRUCTURE OF CDL HOSPITALITY TRUSTS . . . . . . . . . . . . . . 170

THE FORMATION AND STRUCTURE OF H-REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173

THE FORMATION AND STRUCTURE OF HBT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184

CERTAIN AGREEMENTS RELATING TO CDL HOSPITALITY TRUSTS, H-REIT, HBT ANDTHE PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192

TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204

CLEARANCE AND SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213

EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215

GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216

GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220

vii

APPENDIX I — INDEPENDENT ACCOUNTANTS’ REPORT ON THE PROFITFORECASTS AND PROFIT PROJECTIONS . . . . . . . . . . . . . . . . . . . . I-1

APPENDIX II — INDEPENDENT ACCOUNTANTS’ REPORT ON THE UNAUDITEDPRO FORMA FINANCIAL INFORMATION OF H-REIT . . . . . . . . . . . . II-1

APPENDIX III — INDEPENDENT PROPERTY VALUATION SUMMARY REPORTS . . . . III-1

APPENDIX IV — INDEPENDENT SINGAPORE TOURISM AND HOTEL MARKETOVERVIEW REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1

APPENDIX V — INDEPENDENT TAXATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . V-1

APPENDIX VI — TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION FORAND ACCEPTANCE OF THE STAPLED SECURITIES IN SINGAPORE. VI-1

APPENDIX VII — LIST OF PRESENT AND PAST PRINCIPAL DIRECTORSHIPS OFDIRECTORS AND EXECUTIVE OFFICERS OF THE H-REITMANAGER AND/OR THE HBT TRUSTEE-MANAGER . . . . . . . . . . . . VII-1

viii

SUMMARY

The following summary is qualified in its entirety by, and is subject to, the more detailed informationcontained or referred to elsewhere in this Prospectus. Investing in the Stapled Securities involves risks.Investors should read this Prospectus in its entirety and, in particular, the sections from which theinformation in this summary is extracted and “Risk Factors”. The meanings of terms not defined in thissummary can be found in the Glossary, the Stapling Deed, the H-REIT Trust Deed or the HBT TrustDeed. A copy of the Stapling Deed and the H-REIT Trust Deed can be inspected at the registered officeof the H-REIT Manager while a copy of the Stapling Deed and the HBT Trust Deed can be inspectedat the registered office of the HBT Trustee-Manager.

Statements contained in this summary that are not historical facts may be forward-looking statements.Such statements are based on certain assumptions and are subject to certain risks, uncertainties andassumptions which could cause actual results to differ materially from those forecast or projected (see“Forward-looking Statements”). In no circumstances should the inclusion of such information herein beregarded as a representation, warranty or prediction with respect to the accuracy of the underlyingassumptions by the H-REIT Manager, the H-REIT Trustee, the HBT Trustee-Manager, theUnderwriters, the Sponsor or any other person or that these results will be achieved or are likely to beachieved.

Overview of CDL Hospitality Trusts, H-REIT and HBT

CDL Hospitality Trusts

CDL Hospitality Trusts is a stapled group comprising H-REIT and HBT. The H-REIT Units and HBTUnits are stapled together under the terms of a stapling deed dated 12 June 2006 entered into betweenthe H-REIT Manager, the H-REIT Trustee and the HBT Trustee-Manager (the “Stapling Deed”) andcannot be traded separately. CDL Hospitality Trusts is regulated by the Stapling Deed, the H-REIT TrustDeed and the HBT Trust Deed as well as any legislation and regulations governing CDL HospitalityTrusts, H-REIT and HBT.

H-REIT is a Singapore-based real estate investment trust (“REIT”) constituted by a trust deed dated8 June 2006 (the “H-REIT Trust Deed”). It is principally regulated by the SFA, the Code of CollectiveInvestment Schemes issued by the MAS (the “CIS Code”), including the Property Funds Guidelinesin Appendix 2 to the CIS Code (the “Property Funds Guidelines”), other relevant legislation andregulations as well as the Stapling Deed and the H-REIT Trust Deed.

HBT is a business trust constituted by a trust deed dated 12 June 2006 (the “HBT Trust Deed”). It isprincipally regulated by the BTA, the SFA, other relevant legislation and regulations as well as theStapling Deed and the HBT Trust Deed.

H-REIT

H-REIT is established with the principal investment strategy of investing, directly or indirectly, in adiversified portfolio of income-producing real estate which is primarily used for hospitality and/orhospitality-related purposes, whether wholly or partially, and real estate-related assets in relation to theforegoing. In this Prospectus, real estate which is used for “hospitality” purposes includes hotels,motels and other lodging facilities, serviced residences and resorts, whether in existence bythemselves as a whole or as part of larger mixed-use developments (where such mixed-usedevelopments may also include entertainment, leisure and/or gaming-related facilities).

The H-REIT Manager is an indirect wholly owned subsidiary of the Sponsor, which has a marketcapitalisation of approximately £1.17 billion as at the Latest Practicable Date.

1

The initial asset portfolio of H-REIT, as at the Listing Date, comprises Orchard Hotel, Grand CopthorneWaterfront Hotel, M Hotel and Copthorne King’s Hotel (the “Hotels”, and each, a “Hotel”), all of whichare located in Singapore and marketed as “superior” hotels, with a total of over 1,900 rooms as at theLatest Practicable Date, as well as Orchard Hotel Shopping Arcade (together with the Hotels, the“Properties”), the shopping arcade adjoining Orchard Hotel. Orchard Hotel Shopping Arcade isincluded in H-REIT’s portfolio as it is complementary to the guest facilities at Orchard Hotel, providingshopping and leisure facilities to hotel guests. While the assets in H-REIT’s initial portfolio are alllocated in Singapore, H-REIT’s investment strategy envisages investments globally.

On the Listing Date, Republic Hotels & Resorts Limited, Harbour View Hotel Pte. Ltd. and City HotelsPte. Ltd. will be lessees of the Hotels (the “Master Lessees”, and each, a “Master Lessee”). RepublicHotels & Resorts Limited will lease and operate Grand Copthorne Waterfront Hotel and CopthorneKing’s Hotel while City Hotels Pte. Ltd. and Harbour View Hotel Pte. Ltd. will lease and operate OrchardHotel and M Hotel respectively. Republic Hotels & Resorts Limited, Harbour View Hotel Pte. Ltd. andCity Hotels Pte. Ltd. are indirect wholly owned subsidiaries of the Sponsor. H-REIT, as the masterlessor of the Hotels will, in return, receive rental payment for each Hotel from the relevant MasterLessee, comprising a Fixed Rent, a Service Charge and a Variable Rent (as defined below). For eachHotel, a master lease agreement will be entered into between H-REIT and the relevant Master Lesseeon the Listing Date (each a “Master Lease Agreement” and collectively, the “Master LeaseAgreements”).

Each of the Master Lease Agreements has an initial term of 20 years with an option to obtain anadditional lease for a further 20 years on the same terms and conditions (save for amendmentsrequired due to any change in law). The Master Lease Agreements contain long lease terms in orderto assure a long term stream of quality rental income for H-REIT.

At the expiry of a Master Lease Agreement, the relevant Master Lessee has an option to obtain anadditional lease on the same terms (save for amendments required due to any change in law), failingwhich H-REIT may, in relation to the Hotel which lease is not renewed, enter into a new master leaseagreement, on terms to be agreed, with either the existing Master Lessee or a new master lessee.

H-REIT may be unable to appoint a master lessee for any of the Hotels in its portfolio at the expiry ofthe relevant Master Lease Agreement, for example because of a failure to reach commerciallyacceptable terms with the existing Master Lessee or potential new master lessees. When this happens,in order to ensure the Hotel’s continued operation and revenue generation under such circumstances,H-REIT will appoint HBT as the master lessee for that Hotel on substantially the same terms as thoseof the previous master lease agreement.

In relation to each Hotel, the relevant Master Lessee will appoint a professional hotel manager tomanage the day to day operations and marketing of that Hotel. Millennium & Copthorne InternationalLimited (“MCIL”), an indirect wholly owned subsidiary of the Sponsor and the current hotel managerfor the Hotels (the “Hotel Manager”), has agreed to being appointed by the relevant Master Lesseeon the Listing Date. As MCIL is already well acquainted with the day to day operations and marketingof these Hotels, its appointment will assure continuity in operations for the Hotels with minimaldisruption or downtime, which may otherwise be encountered if a hotel manager which is unfamiliarwith the Hotels is appointed.

Orchard Hotel Shopping Arcade will not be subject to any master lease arrangement upon itsacquisition by H-REIT. Individual retail units within Orchard Hotel Shopping Arcade will be leased outto individual tenants directly, with the leases existing as at the Listing Date being assigned to H-REITat that time. Property management, lease management and marketing activities at Orchard HotelShopping Arcade will be the responsibility of the H-REIT Manager, which may decide, at its discretion,whether to carry out these tasks by itself or to delegate any or all of them to a third party, such as City

2

Developments Limited (“CDL”), the intermediate holding company of the Sponsor, or a relatedcompany of CDL. Any fees or commissions payable to such third parties are to be borne by H-REIT.

HBT

As at the Listing Date, HBT will be dormant. It will, however, become active if H-REIT is unable toappoint a master lessee for any of the Hotels in its portfolio at the expiry of the relevant Master LeaseAgreement or for a newly acquired hotel. In such circumstances, HBT will be appointed by H-REIT asa master lessee for that hotel, and HBT will in turn appoint a professional hotel manager to manage theday-to-day operations and marketing of the hotel. HBT exists primarily as “a master lessee of lastresort”.

HBT may also become active if it undertakes certain hospitality and hospitality-related developmentprojects, acquisitions and investments which may not be suitable for H-REIT. In this regard, HBT willgenerally be considered to be active in the event that it carries on any business activity other than:

• activities which HBT is required to carry out under any applicable law, regulation, rule or directiveof any agency, regulatory or supervisory body;

• the lending or use of the initial S$0.5 million working capital raised from the Offering; and

• equity fund-raising activities and issue of new HBT Units carried out in conjunction with H-REITwhich are solely for the purposes of funding H-REIT’s business activities.

The HBT Trustee-Manager is wholly owned by the H-REIT Manager and its board composition isidentical to that of the H-REIT Manager.

3

Key

Po

rtfo

lioS

tati

stic

san

dD

etai

ls

Asu

mm

ary

ofth

ede

tails

ofea

chof

the

Pro

pert

ies

asat

the

Late

stP

ract

icab

leD

ate

isas

follo

ws:

Orc

har

dH

ote

l

Gra

nd

Co

pth

orn

eW

ater

fro

nt

Ho

tel

MH

ote

lC

op

tho

rne

Kin

g’s

Ho

tel

Orc

har

dH

ote

lS

ho

pp

ing

Arc

ade

Tota

l

Loca

tion

Orc

hard

Roa

dH

avel

ock

Roa

dA

nson

Roa

dH

avel

ock

Roa

dO

rcha

rdR

oad

N.A

.

Gro

ssF

loor

Are

a(“

GFA

”)/S

trat

aA

rea(1

)49

,940

.9sq

m(2

)46

,662

.6sq

m32

,379

.3sq

m17

,598

.3sq

mN

.A.(3

)14

6,58

1.1

sqm

Num

ber

ofA

vaila

ble

Roo

ms

653

539

413

310

N.A

.1,

915

room

s

Car

Par

kLo

ts45

4(4)

287(5

)23

777

N.A

.(6)

1,05

5

Hot

elR

evP

AR

(FY

2005

)S

$112

S$9

6S

$110

S$8

8N

.A.

N.A

.

App

rais

edV

alue

byC

BR

E(a

sat

28F

ebru

ary

2006

)S

$330

.1m

illio

nS

$234

.1m

illio

nS

$161

.5m

illio

nS

$86.

1m

illio

nS

$34.

5m

illio

nS

$846

.3m

illio

n

App

rais

edV

alue

byK

nigh

tF

rank

(as

at28

Feb

ruar

y20

06)

S$3

30.0

mill

ion

S$2

33.9

mill

ion

S$1

61.7

mill

ion

S$8

5.5

mill

ion

S$3

5.2

mill

ion

S$8

46.3

mill

ion

Pur

chas

eP

rice

S$3

30.1

mill

ion

S$2

34.1

mill

ion

S$1

61.5

mill

ion

S$8

6.1

mill

ion

S$3

4.5

mill

ion

S$8

46.3

mill

ion

Fix

edR

even

ue(p

eran

num

)(7)

S$1

0.3

mill

ion

S$7

.2m

illio

nS

$6.1

mill

ion

S$2

.8m

illio

nN

.A.

S$2

6.4

mill

ion

Var

iabl

eR

ent

for

FY

2005

S$5

.8m

illio

nS

$4.5

mill

ion

S$2

.9m

illio

nS

$2.5

mill

ion

N.A

.S

$15.

7m

illio

n

Gro

ssR

even

uefo

rF

Y20

05S

$16.

1m

illio

nS

$11.

7m

illio

nS

$9.0

mill

ion

S$5

.3m

illio

nS

$3.4

mill

ion

S$4

5.5

mill

ion

Pro

port

ion

ofV

aria

ble

Ren

tto

Gro

ssR

even

uefo

rF

Y20

0536

.0%

38.5

%32

.2%

47.2

%N

.A.

34.5

%

Var

iabl

eR

ent

20%

ofre

venu

epl

us20

%of

gros

sop

erat

ing

prof

itfo

rth

epr

evai

ling

finan

cial

year

less

the

sum

ofF

ixed

Ren

tan

dS

ervi

ceC

harg

eN

.A.

N.A

.

4

Orc

har

dH

ote

l

Gra

nd

Co

pth

orn

eW

ater

fro

nt

Ho

tel

MH

ote

lC

op

tho

rne

Kin

g’s

Ho

tel

Orc

har

dH

ote

lS

ho

pp

ing

Arc

ade

Tota

l

Mar

kete

dIm

age

“Sup

erio

r”“S

uper

ior”

“Sup

erio

r”“S

uper

ior”

N.A

.N

.A.

Title

75-y

ear

leas

ehol

din

tere

stco

mm

enci

ngon

the

List

ing

Dat

ew

ithth

eex

cept

ion

ofC

opth

orne

Kin

g’s

Hot

elw

hich

will

bean

appr

oxim

atel

y61

-yea

rle

aseh

old

inte

rest

expi

ring

on31

Janu

ary

2067

Mas

ter

Less

eeC

ityH

otel

sP

te.

Ltd.

Rep

ublic

Hot

els

&R

esor

tsLi

mite

dH

arbo

urV

iew

Hot

elP

te.

Ltd.

Rep

ublic

Hot

els

&R

esor

tsLi

mite

dN

.A.

N.A

.

Ven

dor

City

Hot

els

Pte

.Lt

d.C

DL

Har

bour

Vie

wH

otel

Pte

.Lt

d.R

epub

licH

otel

s&

Res

orts

Lim

ited

City

Hot

els

Pte

.Lt

d.N

.A.

No

tes:

(1)

For

Gra

ndC

opth

orne

Wat

erfr

ont

Hot

el.

(2)

Sha

res

GFA

with

Orc

hard

Hot

elS

hopp

ing

Arc

ade.

(3)

Net

letta

ble

area

(“N

LA

”)is

4,93

9.3

sqm

.S

hare

sG

FAw

ithO

rcha

rdH

otel

.

(4)

Sha

res

car

park

lots

with

Orc

hard

Hot

elS

hopp

ing

Arc

ade.

(5)

CD

Lha

sgr

ante

dto

H-R

EIT

anea

sem

entf

orth

eus

eof

the

base

men

tlev

elca

rpa

rkfa

cilit

yin

the

Gra

ndC

opth

orne

Wat

erfr

ontH

otel

bygu

ests

and

visi

tors

ofG

rand

Cop

thor

neW

ater

fron

tH

otel

.

(6)

Sha

res

car

park

lots

with

Orc

hard

Hot

el.

(7)

Fix

edR

even

ueco

mpr

ises

Fix

edR

ent

and

Ser

vice

Cha

rge.

N.A

.m

eans

not

appl

icab

le.

5

Outlook for the Hospitality Sector in Singapore

The Increase in Visitor Arrivals in Singapore

• The prospects for the tourism and the hospitality sector in Singapore are expected to be strongfor 2006 and 2007. The Singapore Tourism Board (the “STB”) recently recorded 8.94 milliontourist arrivals into Singapore for 2005, an increase of 7% over 2004, and the highest number ofarrivals ever achieved in a single year. (See Appendix IV, “Independent Singapore Tourism andHotel Market Overview Report”.) The high number of visitors in 2005 indicates the tourismindustry’s strong and sustainable recovery from the impact of the SARS epidemic that hit theregion in 2003 (“SARS Outbreak”). Based on the STB’s report on tourism performance forJanuary to April 2006, visitor arrivals to Singapore increased by 14.6% over the same period in2005 to 3.1 million visitors.

International visitor arrivals to Singapore grew at an annual compounded rate of 5.4% from 1990to 7.3 million visitors in 1996, reaching 7.7 million in 2000. (See Appendix IV, “IndependentSingapore Tourism and Hotel Market Overview Report”.) There were short periods when visitorarrivals dipped due to external events such as the Asian financial crisis, the attack by terrorists onthe New York World Trade Center and the Pentagon in the United States on 11 September 2001(the “September 11 Incident”), the SARS Outbreak and the war in Iraq led by the U.S. in 2003(the “Iraq War”). The fact that visitor arrivals in 2005 have climbed up further to attain the 8.9million-mark and the continued growth of visitors to Singapore in the period from January 2006 toApril 2006 attests to the resilience of the tourism industry. This can be attributed to better regionaland worldwide economic growth and the advent of budget air-carriers in Asia. These trends areexpected to be sustainable with improving regional and global economic forecasts.

Room Revenue

• According to the STB report for 2005, room revenue for Singapore hotels also posted double-digitgrowth of 15.5% to reach S$1.2 billion in 2005, on top of the 16% increase in 2004.

The Average Daily Rate increased by 12% in 2005 compared to 2004 to reach an estimatedS$136 while the Average Occupancy Rate was estimated to have reached 84.1% in 2005, a 3.5%increase over 2004. (See Appendix IV, “Independent Singapore Tourism and Hotel MarketOverview Report”.) Further, according to the STB, Singapore hotel room revenue for April 2006reached S$119 million, a 25.7% increase over April 2005.

Singapore Source Market

• By geographical origin, Indonesia remains Singapore’s top source market for 2005, accounting for20.0% of total visitor arrivals. This was followed by arrivals from the People’s Republic of China(the “PRC”) (9.6%), Australia (6.9%), Japan (6.6%), India (6.5%) and Malaysia (6.4%). (SeeAppendix IV, “Independent Singapore Tourism and Hotel Market Overview Report”.)

• Arrivals from the PRC have been rising significantly over the years in line with the increasingaffluence of the Chinese. The significant increase is largely due to aggressive marketingpromotions in the PRC and the increased air linkages between Singapore and the PRC. Inaddition, the tourism industry is reaping the benefits of the introduction in Singapore of a newsocial visa scheme on 1 December 2003 that extends the validity period of visas of visitors fromthe PRC from a three-week single-journey visa to a five-week multiple-journey visa. (See theviews of Jones Lang LaSalle Hotels in Appendix IV, “Independent Singapore Tourism and HotelMarket Overview Report”, at pages IV-8 and IV-13.)

6

Length of Stay of Visitors

• Based on official data from the STB, international visitors (inclusive of day-trippers) arriving inSingapore stayed an average of 3.20 days in 2004, up slightly from the 3.18 days registered in2003. For 2005, the average period of stay per visitor increased to 3.4 days, indicating that morevisitors are extending their stay in Singapore. (See Appendix IV, “Independent Singapore Tourismand Hotel Market Overview Report”.)

Development of the Singapore Tourism Industry

The upswing in international arrivals can also be attributed to efforts by both the STB and the localtourism industry to develop better tourism offerings and initiatives. The Singapore Government’s goalis to achieve tourism receipts of S$30 billion by 2015 by investing in better tourism offerings andinitiatives so as to attract a target of 17 million visitor arrivals per annum by 2015, and a S$2.0 billiontourism development fund has been set up by the Singapore Government to achieve the desired growthin the local tourism industry. The STB and the local tourism industry are further working towards thefollowing deliverables to ensure the medium to long-term growth of the tourism industry:

• Launching Phase Two of the STB’s “Uniquely Singapore” brand campaign through a global printand television campaign, and delivering enriching and memorable experiences for each visitor;

• Growing the existing source markets like Indonesia, Malaysia, Australia and North Asian marketsand attracting the high growth source markets of the PRC and India;

• Developing the much-anticipated integrated resorts (“IRs”) at Marina Bay and Sentosa. Thesewill be distinctive world-class developments with a comprehensive range of amenities such ashotels, house casinos, convention facilities, restaurants, entertainment shows and retail shops.The IRs are estimated to be scheduled for completion in 2009 and are expected to help generatemore inbound visitors, increase tourist receipts and create a more broad-based tourism productfor Singapore;

• Developing the Marina Bay area to be the future downtown of Singapore. In the pipeline are plansfor a business and financial centre (the “BFC”), one of the two IRs with a casino component andrecreational and entertainment opportunities along the promenade, waterfront gardens and theMarina Barrage. In addition, the Singapore Flyer, a giant observation wheel (similar to the LondonEye) which is scheduled to be completed in 2008, will occupy a prime spot in this “necklace ofattractions” and provide a breathtaking, unobstructed radial view of 45 km spanning Singapore,Malaysia and Indonesia;

• Growing the meetings, incentives, conventions and exhibitions (“MICE”) sector. As an example,Singapore is gearing up to host the 2006 Annual Meetings of the Board of Governors of theInternational Monetary Fund and World Bank Group in September 2006. Successfulimplementation of the STB’s plan to grow the MICE business may cause a positive change in thedynamics of the hotel industry, with the hotel industry and the Singapore economy benefiting frommajor meetings and events being held in Singapore. This may result in an increase in demand inthe hotel, food and beverage (“F&B”) and retail sectors;

• Revitalisation of Orchard Road. Plans to rejuvenate Singapore’s premier shopping and tourist beltalong Orchard Road include new shopping, dining and entertainment development sites,incentives for the extension of GFA and revised guidelines to encourage building owners to createmore dynamic pop-out facades and expand their shopping podiums up to their boundaries. TheSTB will be introducing more exciting events and activities and will attract investments in retail,F&B and entertainment as part of the initiatives to inject greater life and vibrancy into the area;

7

• Tapping on the potential of the high-yielding medical tourism segment. As a leading healthcareservices hub in the region, more than 150,000 international patients come to Singapore each yearfor a whole range of medical care. The Singapore Government is targeting to attract, by 2012, upto 1.0 million overseas patients and boost the economy by S$3.0 billion from this medical tourismsegment alone;

• Bugis Area Development. There are plans to develop the Bugis Area into an arts, cultural,entertainment and learning hub. The Nanyang Academy of Fine Arts, the new National Library, anew city campus of the Singapore Management University and the new campus of LASALLE-SIACollege of Arts will be located at and around the Bugis area. The URA has also sold a 8,919 sqm site at Victoria Street in 2005 for development into an Urban Entertainment Centre (“UEC”).Located in the heart of the Bras Basah/Bugis district, the UEC is envisioned to be a keydevelopment comprising an attractive mix of arts, entertainment and leisure activities that will bea draw for both locals and tourists;

• Sentosa Master Plan. A S$8.0 billion plan to redevelop Sentosa to transform it into an internationalleisure and tourist destination with an aim of attracting 8.0 million visitors by 2012 is currentlyunderway. New and revamped attractions include the Images of Singapore, the Merlion, the FortSiloso Tour, the Carlsberg Sky Tower, the Magical Sentosa programme and the new SentosaLuge. Other developments include a new monorail that will link Sentosa to the main Singaporeisland, new resorts and the planned IR to be located in Sentosa;

• Future Marina Cruise Centre located at Marina South. To further enhance Singapore’s position asa cruise gateway, the Maritime and Port Authority of Singapore is working with the STB and UrbanRedevelopment Authority to develop a new cruise centre at Marina South; and

• Other Future Developments. These include the proposed S$2.0 billion HarbourFrontDevelopment to develop an integrated leisure resort, improvement to Singapore’s entertainmentscene to inject greater vibrancy, expansion of Changi International Airport and entry into moreopen skies agreements.

(See Appendix IV, “Independent Singapore Tourism and Hotel Market Overview Report”.)

Future Hotel Supply

There are a total of 102 hotels gazetted in Singapore (including Sentosa island) under the SingaporeTourism Cess Collection Act, Chapter 305C of Singapore, with a total of 30,300 rooms as at 31December 2004. As the existing gazetted stock of hotel rooms in Singapore is already 80% to 85%occupied, there is a balance of only about 5,800 to 5,900 rooms which is insufficient to meet theaccommodation needs of the 17 million visitors targeted by the STB by 2015. In the circumstances,there are 1,257 rooms in the pipeline on the main Singapore island and another 670 rooms on Sentosaisland that are expected to be completed between 2006 and 2008. (See the views of Jones LangLaSalle Hotels in Appendix IV, “Independent Singapore Tourism and Hotel Market Overview Report”, atpages IV-18, IV-20 and IV-21.)

Competitive Strengths of the Properties


• Strategic locations with significant contribution for the Hotels from corporate segments

All of the Properties are strategically located in or near the Central Business District (“CBD”) oralong or near Orchard Road. Their strategic locations enable the Hotels to cater to both businessand leisure travellers. All the Hotels enjoy significant revenue contribution from the higher yieldingcorporate segments. In fact, more than 50.0% of the room revenue of each of the Hotels forFY2005 came from the corporate segments, as shown in the table below.

8

Business Mix of Hotels — by room revenue contributionfor FY2005 (%)

Corporate segments(1) Leisure/Others segments(2)

Orchard Hotel 69.6 30.4

Grand Copthorne Waterfront Hotel 58.6 41.4

M Hotel 83.9 16.1

Copthorne King’s Hotel 63.6 36.4

Weighted Average(3) 69.1 30.9

Notes:

(1) Based on the Sponsor’s internal classification, the H-REIT Manager considers the term “corporate segments” to referto guests who are staying at the hotel primarily for the purpose of business as opposed to leisure or other guests suchas cabin crew. Under this segment the following category of guests would be included: (i) guests who book at rackrate (full published rate), (ii) guests who book through corporate travel agents/management companies, (iii) guestswho book through the Internet, (iv) guests who book at rates offered under a corporate agreement and (v) guests whoare attending meetings, incentive activities or events/exhibitions/conferences in the city.

(2) Room revenue contribution by “Leisure/Others” segments refers to contribution from sources other than theabove-mentioned corporate segments.

(3) Weighted by room revenue.

Specifically, Orchard Hotel and Orchard Hotel Shopping Arcade are ideally located along thejunction of Orange Grove Road and Orchard Road (the heart of Singapore’s shopping andentertainment district), and are within short walking distance from the Orchard MRT station. Theproperties are also located close to the offices of many foreign/diplomatic missions and offices ofmultinational and regional companies within the area.

Grand Copthorne Waterfront Hotel and Copthorne King’s Hotel are situated close to the banks ofthe Singapore River, along Havelock Road, near its junction with Kim Seng Road, with easyaccess to major expressways. They are located just minutes away from the CBD, the proposedBFC and IRs as well as the shopping and entertainment circuit of Suntec City, Orchard Road andHarbourFront Centre. The Hotels are also very close to Chinatown and the dining andentertainment strip along the Singapore River including Clarke Quay, Boat Quay and RobertsonQuay. Grand Copthorne Waterfront Hotel has one of the largest conference facilities in Singaporewhich caters to business travellers’ needs.

M Hotel is located along Anson Road, at its junction with Palmer Road, in the CBD. It is withinwalking distance from certain major government offices, commercial buildings, financialinstitutions, tourist attractions and is easily accessible from or to the shopping and entertainmenthub because of its close proximity to the Tanjong Pagar MRT station. Its location also places it inclose proximity to Marina Bay and Sentosa, which are the sites of the proposed IRs. Marina Bayis also the site of Singapore’s up and coming BFC.

The Hotels are well positioned to capitalise on opportunities to refer business and clientele to oneanother. This gives greater flexibility in meeting different customer requirements in terms ofbudget, location and other specific needs.

9

• Unique Strengths of Each of the Properties

Orchard Hotel

Located in the major shopping belt of Orchard Road, the retail and entertainment activity hub ofSingapore, Orchard Hotel appeals to customers who are on business or on leisure trips. Itspremier location is a significant strength of the Hotel. The Hotel has maintained strong andconsistent revenue in its F&B department, having won a number of accolades and awards suchas “Best Dim Sum” and “Best Cantonese Cuisine” awards in 2004 which were awarded to HuaTing Restaurant. In 2005, the restaurant won the Asian Ethnic Restaurant of the Year award givenby the World Gourmet Summit, and its master chef, Chan Kwok, has been accorded Asian EthnicChef of the Year for the past two years. This year, the Hotel’s Executive Chef Eric Teo was alsohonoured with the World Gourmet Summit’s Executive Chef of the Year award. Adding to itsaccolades is “The Best Accommodation Experience — Superior Hotel” awarded by the STB —20th Tourism Awards 2005. Extensive renovations to significantly upgrade rooms at one of the twowings, Orchard Wing, was recently completed in March 2006. Orchard Hotel is expected to benefitfrom the increased activities and revitalisation of Orchard Road planned by the STB.


Grand Copthorne Waterfront Hotel is a business hotel with one of the largest conference facilitiesin Singapore and is located midway between the primary retail district of Singapore, OrchardRoad, and the CBD. Grand Copthorne Waterfront Hotel derived a significant percentage of itsrevenue from banquets. The Hotel currently has four ballrooms dedicated to banqueting events,the largest ballroom being the Grand Ballroom which has a maximum capacity of 1,000 personsin theatre style. In addition, the Hotel has many other smaller meeting and function rooms whichafford choice and flexibility to its clientele. The percentage of revenue derived from banquetingfacilities was close to 30% for FY2005. In line with Singapore’s appeal in the MICE market, withits conference facilities, the Hotel is well positioned to benefit from the STB’s stated goal ofincreasing Singapore’s appeal in the MICE market.

M Hotel

The unique and contemporary design of the Hotel clearly differentiates it from others in its class.M Hotel has attracted a strong following of business travellers due to its location in the heart ofthe CBD and its proximity to HarbourFront Centre. M Hotel has received various accolades andthese include “Best Mid-Range Business Hotel” in 2002 and 2005 by Trade Travel Gazette Asia(“TTG Asia”) and “Best Corporate/Business Hotel” by Hospitality Asia Platinum Awards in 2004.By its proximity, M Hotel will be well positioned to benefit from increased activities due to theproposed BFC and IRs.


Following an extensive refurbishment of Copthorne King’s Hotel that was completed in November2004, the Hotel has been transformed into a modern business hotel to meet the needs ofcorporate travellers. The Executive Club Lounge features alfresco dining with an open garden anda mini golf putting green. With its dining outlets offering Cantonese delicacies and Penang buffetand cuisine since the 1970s, the Hotel has built up a loyal base of patrons for its restaurants.Copthorne King’s Hotel is expected to benefit from the STB’s plans to grow Singapore’s tourismindustry.


The shopping arcade annexed to Orchard Hotel has a varied mix of stores which arecomplementary to the guest facilities at Orchard Hotel, providing shopping and leisure facilities tohotel guests. Its proximity to the Hotel and its Orchard Road location ensures a steady stream ofshoppers comprising tourists, business travellers and locals.

10

• Improving RevPAR of the Hotels

RevPAR is a commonly used indicator of market performance for hotels and means room revenueper available room (“RevPAR”). It represents the product of the Average Daily Rate charged andthe Average Occupancy Rate achieved and measures daily room revenues generated on a peravailable room basis. RevPAR does not include F&B or other revenues generated by the hotel.

The Hotels have been experiencing improving RevPAR performance for the last three years.

RevPAR

FY2003 FY2004 FY2005

(S$) (S$) (S$)



M Hotel 63 89 110


Weighted Average(1) 62 86 103

Note:

(1) Computed based on total room revenues of the four Hotels divided by total number of Available Rooms of the fourHotels during the year.

Amongst the four Hotels, Orchard Hotel is the strongest performer in terms of RevPAR, followedby M Hotel, with both properties achieving RevPAR yields at or higher than the competitive marketcomprising similar class hotels (see the views of Jones Lang LaSalle Hotels in Appendix IV,“Independent Singapore Tourism and Hotel Market Overview Report”, at page IV-25).

From FY2003 to FY2005, the RevPAR for Grand Copthorne Waterfront Hotel and CopthorneKing’s Hotel were lower than the competitive market due to various extenuating factors (see theviews of Jones Lang LaSalle Hotels in Appendix IV, “Independent Singapore Tourism and HotelMarket Overview Report”, at page IV-24).

Grand Copthorne Waterfront Hotel commenced operations only in October 1999. GrandCopthorne Waterfront Hotel’s RevPAR for the period from FY2003 to FY2005 was still shruggingoff the effects of the disruption to its gestation period (being the period for a new hotel to reachits normalised trading levels), caused by the September 11 Incident, the SARS Outbreak and theIraq War. The gestation period of Grand Copthorne Waterfront Hotel ended in the second half ofFY2005.

The RevPAR of Copthorne King’s Hotel for FY2003 and FY2004 was similarly adversely affectedby the downturn in the economy as a result of the SARS Outbreak and the Iraq War. In addition,the Hotel’s performance was further affected by room closures at the Hotel for the substantialrenovation exercise which took place from 2002 to 2004.

• Recent refurbishments carried out on the Hotels and future furniture, fixtures andequipment (“FF&E”) not borne by H-REIT

The Hotels have recently undergone significant refurbishment programs and are thus in a goodstate of upkeep. Such refurbishments promote the attraction of the Hotels and may thus increasepatronage and revenue.

11

Renovation and refurbishment works were carried out in Orchard Hotel since 2002. These worksinclude the upgrading and reconfiguration of the guest rooms in phases and renovation of the F&Boutlets and public areas. Extensive renovation works on the Orchard Wing were recentlycompleted. Orchard Hotel has 653 total Available Rooms compared to 674 Available Roomsbefore the renovation as the sizes of some rooms of the Hotel have been increased by mergingwith other rooms.

In Grand Copthorne Waterfront Hotel, minor renovation works were carried out on some of theguest rooms, F&B outlets and public areas between 2002 and 2004. In July 2005, GrandCopthorne Waterfront Hotel relocated certain plant and machinery such that the area previouslyoccupied by the plant and machinery would undergo renovation/refurbishment and, uponexpected completion in late 2006, would increase the number of rooms in the Hotel by 11 to 550Available Rooms. The Independent Valuers have taken the expected increase in the number ofrooms into consideration when performing their valuations.

At M Hotel, major renovation and refurbishment works commencing from November 1999 werecarried out to convert the Hotel into a more upmarket business hotel catering to corporatetravellers. The transformation of the Hotel was carried out in three phases, the last of which wascompleted in 2003.

Copthorne King’s Hotel has undergone a few refurbishment programs recently. In 2002, the guestrooms within the Tower Wing, as well as the front lobby area and coffee house, were refurbished.The most recent renovations which were completed in 2004 included the refurbishment of theremaining guest rooms and some public areas.

Going forward, the cost of FF&E at each of the Hotels will be borne by the respective MasterLessee under the terms of the relevant Master Lease Agreements, while other capitalimprovement expenditure (such as improvement works on the physical structures of the Hotels)will be borne by H-REIT.

Key Investment Highlights of H-REIT

The H-REIT Manager considers the key investment highlights of H-REIT to include:

• Investment in a portfolio of quality hospitality and hospitality-related assets

All of the Hotels are strategically located in or near to the CBD or along or near to Orchard Road,and Orchard Hotel Shopping Arcade is located along Orchard Road. Such strategic locationsenable the Hotels to cater to both business and leisure travellers and Orchard Hotel ShoppingArcade to attract shopper traffic.

The Hotels have been marketed by the M&C group as “superior” hotels, and are, therefore,positioned to capture what the H-REIT Manager believes to be the relatively more profitablesection of the hospitality market.

• Distributions via long-term Master Lease Agreements

Distributions from CDL Hospitality Trusts will be from H-REIT and HBT and are thus dependenton the financial performance of H-REIT and HBT respectively. However, as HBT will be dormantinitially, the initial distributions will be from H-REIT only.

Approximately 93.5% of the forecast revenue during the Forecast Period 2006 (defined as the sixmonths ending 31 December 2006) and 93.6% of the projected revenue during the ProjectionYear 2007 of CDL Hospitality Trusts are expected to be derived from the Master LeaseAgreements.

12

The Hotels will be leased to City Hotels Pte. Ltd., Harbour View Hotel Pte. Ltd. and RepublicHotels & Resorts Limited pursuant to the terms of the Master Lease Agreements. The initial termof each of the Master Lease Agreements is 20 years from the Listing Date with an option to obtainan additional lease for a further 20 years on the same terms and conditions, save for amendmentsrequired due to any change in law. The long tenure of the Master Lease Agreements will provideholders of the Stapled Securities with a long-term stream of quality rental income. Under eachMaster Lease Agreement, H-REIT will be entitled to rental payment comprising the sum of a FixedRent, a Service Charge and a Variable Rent. The Fixed Rent and Service Charge are fixedamounts, as detailed below.

The aggregate Fixed Rent for the four Hotels is S$13.4 million, with the following breakdown:

• S$5.9 million per annum in respect of Orchard Hotel;

• S$3.0 million per annum in respect of Grand Copthorne Waterfront Hotel;

• S$3.9 million per annum in respect of M Hotel; and

• S$0.6 million per annum in respect of Copthorne King’s Hotel.

The aggregate Service Charge for the four Hotels is S$13.0 million, with the following breakdown:





The Variable Rent per annum for each Hotel is computed based on the sum of 20.0% of theHotel’s revenue for the prevailing financial year and 20.0% of the Hotel’s gross operating profit forthe prevailing financial year, less the sum of Fixed Rent and Service Charge. Should thecalculation of the Variable Rent yield a negative figure, the Variable Rent will be deemed to bezero.

H-REIT’s current distribution policy is to distribute at least 90.0% of its taxable income, comprisingsubstantially its income from the letting of its Properties after deduction of allowable expenses andallowances, and of its tax-exempt income (if any). However, H-REIT will distribute 100.0% of itstaxable income and tax-exempt income (if any) for the period from the Listing Date to 31December 2007. Thereafter, H-REIT will distribute at least 90.0% of its taxable income andtax-exempt income (if any), with the actual level of distribution to be determined at the H-REITManager’s discretion. Distributions, when paid, will be in Singapore dollars.

H-REIT’s ability to make distributions will be subject to its available cash flow. Where the cash flowgenerated from operations is not sufficient to meet the distributions of H-REIT, H-REIT may incurborrowings for the purpose of funding such distributions. H-REIT’s ability to borrow is, however,limited by the Property Funds Guidelines and the availability of debt financing. On the other hand,the actual proportion of taxable income and tax-exempt income (if any) distributed to holders ofthe Stapled Securities beyond the Projection Year 2007 may be greater than 90.0% if the H-REITManager believes it to be appropriate, having regard to H-REIT’s funding requirements, othercapital management considerations and the overall stability of distributions.

H-REIT’s distributions will be paid on a semi-annual basis for the periods ending 30 June and 31December each year. H-REIT’s first distribution after the Listing Date will be for the period fromthe Listing Date to 31 December 2006 and will be paid by the H-REIT Manager on or before 1March 2007. Subsequent distributions will take place on a semi-annual basis as well (see“Distributions”).

13

In addition, HBT may make distributions in the future when it becomes active and profitable.Whether any of such distributions will be made, and if so, the amount of the distribution, will bedetermined by the board of the HBT Trustee-Manager (the “HBT Trustee-Manager Board”) atits sole discretion.

Based on the Offering Price of S$0.83 per Stapled Security, the H-REIT Manager has forecast adistribution of approximately 2.65 cents per Stapled Security in respect of the Forecast Period2006, which, on an annualised basis, is equivalent to a distribution of 5.29 cents per StapledSecurity. However, the actual amount distributed will be adjusted based on the actual number ofdays from the Listing Date to 31 December 2006.

Based on the Offering Price, the H-REIT Manager has projected a distribution of approximately5.55 cents per Stapled Security in respect of the Projection Year 2007. The growth in distributionyield per Stapled Security of 4.92% between the Forecast Period 2006 (annualised) and theProjection Year 2007 reflects the continued improvement of the Singapore hotel market andexpected RevPAR growth.

The table below sets out a summary of the forecast and projected annualised distribution yieldsof the Stapled Securities based on the abovementioned distribution per Stapled Security:

Distribution Yield

Based on Offering Price ofS$0.83 per Stapled Security

Forecast Period 2006(1) 6.37%

Projection Year 2007(2) 6.69%

Annualised Growth 4.92%

Notes:

(1) For the 6 months ending 31 December 2006. Distribution yields are annualised by extrapolating the Forecast Period2006 figures for a year. It should be noted that due to the seasonal nature of the hotel business, the financialperformance of hotels is generally better in the second half of the year as compared to the first half of the year. (See“Risk Factors — Risks relating to an Investment in the Stapled Securities — The actual performance of CDLHospitality Trusts and the Properties could differ materially from the forward-looking statements in this Prospectus”.)

(2) For the 12 months ending 31 December 2007.

The forecast distribution for the Forecast Period 2006 represents an annualised yield ofapproximately 6.37% based on the Offering Price. Based on the projected distribution for theProjection Year 2007, the yield will grow to approximately 6.69% based on the Offering Price.

Such yields will vary accordingly for investors who purchase the Stapled Securities in thesecondary market at a market price different from the Offering Price. The profit forecasts and profitprojections, from which this information is extracted, are based on various assumptions set out in“Profit Forecasts and Profit Projections”. There can be no assurance that the profit forecasts andprofit projections will be met and the actual yields per Stapled Security may be materially differentfrom the forecast and projected amounts (see “Risk Factors”).

• Established Master Lessees

The Master Lessees are City Hotels Pte. Ltd. in relation to Orchard Hotel, Republic Hotels &Resorts Limited in relation to Grand Copthorne Waterfront Hotel and Copthorne King’s Hotel, andHarbour View Hotel Pte. Ltd. in relation to M Hotel. Each of the Master Lessees is an indirectwholly owned subsidiary of the Sponsor. The Sponsor is listed on the London Stock Exchangewith a market capitalisation of approximately £1.17 billion as at the Latest Practicable Date. The

14

Sponsor is a large hotel group which, as at the Latest Practicable Date, comprises a portfolio of105 hotels in 18 countries around the world, of which 20 and 11 are third-party owned hotelsrespectively managed and franchised by the Sponsor group. The Sponsor is staffed byexperienced professionals who have in-depth experience in the areas of investment,management and operation in relation to hospitality and hospitality-related assets.

• Exposure to hotel sector growth

H-REIT is the first Singapore REIT to focus primarily on hotel and hotel-related assets.

The STB forecasts a strong demand for hotel rooms in Singapore in the coming years. In addition,the STB projects that visitor arrivals in Singapore will double from 8.3 million in 2004 to 17 millionin 2015, implying an average growth rate of at least 7.5% a year. Tourists are also staying longer.The average length of stay rose to 3.4 days in 2005 from 3.2 days in 2004. The following factorsare also predicted to further increase tourist arrivals in Singapore:

• scheduled completion in 2009 of the two IRs located at Marina Bay and Sentosa, which isexpected to boost the local tourism and hospitality industry;

• scheduled completion of the proposed BFC located at Marina Bay in 2009, which isexpected to boost the local business and hospitality industry;

• emergence of new low-cost air-carriers in the Southeast Asia region;

• increase in tourists from the PRC and India into Singapore as the fastest growing and thelargest source markets to fuel tourism growth;

• increase in business travel generally and Singapore’s increasing popularity as a globalMICE hub. Singapore was voted a ‘Favourite MICE Centre’ by TIME Readers Choice 2004;and

• Singapore’s efforts to enter into liberalised air traffic agreements with many countries is amajor impetus in creating higher demand for travel into Singapore. Liberalised air servicesagreements have been concluded with, among other countries, the U.S. and the PRC. By2007, ASEAN countries are expected to adopt an open sky policy amongst its membercountries.

The current and projected supply of hotel rooms in Singapore may be insufficient to meet thegrowing demand highlighted in the foregoing. According to the latest available data from the STB,the total number of hotel rooms as at 31 December 2004 was just over 30,000. Considering thatthe existing stock of hotel rooms in Singapore is already 80% to 85% occupied, there is a balanceof only about 5,800 to 5,900 rooms, which is insufficient to meet the medium to longer-term needsof the tourism industry. (See the views of Jones Lang LaSalle Hotels in Appendix IV, “IndependentSingapore Tourism and Hotel Market Overview Report”, at pages IV-18 and IV-20.)

Statistics from the URA, Sentosa Leisure Group and Jones Lang LaSalle Hotels show that thesupply of newly-gazetted hotel rooms currently under construction and expected to be completedby 2008 will only add 1,257 rooms on the main Singapore island to the industry. (See AppendixIV, “Independent Singapore Tourism and Hotel Market Overview Report.”)

These additions include the 299-room St Regis Hotel, Singapore which is only expected to beready in 2007. Even then, it would appear that the supply of rooms under construction would beinsufficient to satisfy the growing short term tourism demand. If the Singapore Governmentreleases land for hotel sites as at the Listing Date, it will probably take at least up to the secondhalf of 2007 to complete the construction of any additional rooms.

15

While there could be the potential generation of more than 3,000 rooms from the two IR projectsat Marina Bay and Sentosa, the actual number will depend on the final concepts and designs bythe chosen developers. (See the views of Jones Lang LaSalle Hotels in Appendix IV,“Independent Singapore Tourism and Hotel Market Overview Report”, at page IV-22.)

Comparatively, hotel room rates in Singapore are lower than those in other countries/cities suchas Tokyo, Hong Kong SAR, Beijing and Shanghai but only Hong Kong SAR has higher occupancyrates. As such, there is potential for growth in the local hotel industry as well as a possible upwardrevision in room rates in view of increasing tourism demand outstripping the pace of additionalrooms supply.

• Potential for growth through acquisitions

The H-REIT Manager will pursue opportunities for asset acquisitions that are yield accretive. Inevaluating new acquisition opportunities, the H-REIT Manager may consider the need for thediversification of the portfolio by geography and asset profile. The H-REIT Manager’s acquisitionstrategy is supported by:

• the H-REIT Manager’s belief that hospitality service providers are increasingly looking tolighten balance sheets to free up capital for business expansion, which may increase theavailability of assets for acquisition. In addition, H-REIT can seek partnership and co-operation opportunities with the Sponsor as it expands in Singapore and globally;

• H-REIT’s global investment strategy provides a greater universe of potential acquisitionopportunities;

• the right of first refusal granted by the Sponsor to H-REIT over future sales by the Sponsoror any of its wholly owned subsidiaries (each a “Sponsor Entity”), and offers to anySponsor Entity, of Singapore real estate which is used primarily for hospitality purposes, fora period of five years from the Listing Date(1) (see “Certain Agreements Relating to CDLHospitality Trusts, H-REIT, HBT and the Properties — Right of First Refusal” for furtherdetails); and

• in addition to the four Hotels to be acquired by H-REIT on the Listing Date, the remaininghotel portfolio of the Sponsor, comprising 101 hotels, may form potential acquisition targetsfor H-REIT.

• Benefits of M&C as the Sponsor and MCIL as the Hotel Manager

The Sponsor is an internationally recognised company which owns and operates hotels globally.As at the Latest Practicable Date, its global hotel portfolio comprises, amongst others, 105 hotels,of which 20 and 11 are third party owned hotels respectively managed and franchised by theSponsor group, in 18 countries, including Europe, Asia, the Middle East, North Africa, Australasiaand the U.S. The Hotels will continue to benefit from being associated with the M&C brand andits globally marketed brands. H-REIT expects to benefit by drawing upon the Sponsor’s expertiseand experience via MCIL, which is the principal hotel management arm of the Sponsor in Asia.The Sponsor is staffed by experienced professionals who have in-depth experience in the areasof investment, management and operation in relation to hospitality and hospitality-related assets.

CDL Hospitality Trusts stands to benefit from the Sponsor’s financial strength, experience, marketreach and network of contacts in the global hotel and hospitality industry. The H-REIT Managerbelieves that these characteristics would enable it to enhance the performance of the Hotels, andto make appropriate yield-accretive acquisitions via H-REIT.

Note:(1) Presently there is one hotel available for such acquisition.

16

• The Sponsor has significant expertise, experience and knowledge in relation to thehospitality industry and has a global sales network, as well as integrated hotel operations;

• The Sponsor has long-standing relationships with institutional and other property ownersand property brokers, thereby allowing the H-REIT Manager to respond quickly toacquisition opportunities; and

• The Sponsor has numerous marketing partnerships with airlines and credit cards, and isdeveloping its own points-based global loyalty programme by end 2007. In 2006, it will belaunching its global frequent guest recognition programme. Such programmes will be madeavailable to hotels managed by MCIL, including the Hotels in H-REIT’s portfolio.

Holders of the Stapled Securities will benefit from MCIL’s extensive experience in managinghotels, including the Hotels. MCIL manages the nine hotels (including the Hotels) in the Sponsor’sglobal portfolio located in Singapore and other parts of Asia.

Since MCIL is the principal hotel-management arm of the Sponsor for hotel properties located inAsia, the H-REIT Manager believes that the Hotels will continue to enjoy competitive advantagesunder MCIL’s management. MCIL’s global marketing programs and reservation systems willenable the Hotels to maintain their competitiveness in both occupancy and room rates. Further,the Hotels will benefit from the cross referral of guests by MCIL. Based on historical data, theH-REIT Manager believes that MCIL-managed properties have performed well in their respectivemarkets. (See “Summary — Competitive Strengths of the Properties — Improving RevPAR of theHotels”.)

• The Sponsor’s interest is substantially aligned with that of the holders of the StapledSecurities

The Sponsor, through its indirect wholly owned subsidiary, Hospitality Holdings Pte. Ltd., will,immediately after the completion of the Offering, hold 273,000,000 Stapled Securities(constituting approximately 39.1% of the total number of Stapled Securities expected to be inissue then).

To demonstrate the Sponsor’s commitment to CDL Hospitality Trusts, the Sponsor and HospitalityHoldings Pte. Ltd. have entered into certain lock-up arrangements with DBS Bank and BNPParibas Peregrine in respect of their effective or, as the case may be, direct interests in all of theStapled Securities held as at the Listing Date during the period commencing from the Listing Dateuntil the date falling 180 days after the Listing Date (the “Lock-up Period”).

• Experienced and professional management

The H-REIT Manager believes that holders of the Stapled Securities will benefit from theexperience of the directors and executive officers of the H-REIT Manager in fund, asset,hospitality and property management obtained in Singapore and elsewhere in the world.

• Highly independent board

The statutory requirements relating to corporate governance for a business trust are morestringent than those for a REIT. Under Section 12 of the Business Trust Regulations 2005, at leasta majority of the HBT Trustee-Manager Board is required to comprise directors who areindependent from management and business relationships with the HBT Trustee-Manager whileunder paragraph 2.1 of the Code of Corporate Governance, at least one-third of the board ofH-REIT Manager (“H-REIT Manager Board”) is required to comprise independent directors. Asthe H-REIT Manager Board will comprise the same members as the HBT Trustee-Manager Board,at least a majority of the H-REIT Manager Board and the HBT Trustee-Manager Board willcomprise independent directors.

17

• Management fees structured to incentivise and align interests of the H-REIT Manager andthe HBT Trustee-Manager with that of holders of the Stapled Securities

The management fees payable to the H-REIT Manager have a performance-based element thatis designed to align the interests of the H-REIT Manager with those of the holders of the StapledSecurities, and incentivise the H-REIT Manager to grow revenues and minimise operating costs.

Under the H-REIT Trust Deed, the H-REIT Manager is entitled to receive a base fee of 0.25% perannum of the value of the H-REIT Deposited Property (as defined herein) (the “Base Fee”), aswell as an additional performance fee of 5.0% per annum of H-REIT’s Net Property Income in therelevant financial year (the “Performance Fee”)(1). The same may be said of the managementfees payable to the HBT Trustee-Manager when HBT becomes active which are based on apercentage of the profit before interest and tax of HBT (before taking into account the HBTTrustee-Manager’s management fee for the relevant financial year). Further, under the H-REITTrust Deed, 80.0% of the H-REIT Manager’s Base Fee and Performance Fee will be paid inStapled Securities for the first five years.

Any increase in the rate or any change in the structure of these fees must be approved by aresolution proposed and passed as such by a majority consisting of 75.0% or more of the totalnumber of votes cast for and against such resolution (an “Extraordinary Resolution”) atmeetings of the holders of H-REIT Units and meetings of the holders of HBT Units duly convenedand held.

• Capital structure that provides future financing flexibility

The H-REIT Manager intends to use a combination of debt and equity to fund future acquisitionsand property enhancements such that it is within the “aggregate leverage”(2) limit set out in theProperty Funds Guidelines.

The objectives of the H-REIT Manager in relation to capital and risk management are to:

• maintain a strong balance sheet and remain within the aggregate leverage limit set out in theProperty Funds Guidelines;

• minimise the cost of debt financing;

• secure diversified funding sources from both financial institutions and capital markets asH-REIT grows in size and scale; and

• manage the exposure arising from adverse market movements in interest rates and foreignexchange through appropriate hedging strategies.

As at the Listing Date (based on the unaudited pro forma balance sheet of H-REIT as at 31December 2005), H-REIT will have an initial aggregate leverage of S$290.0 million based on theOffering Price of S$0.83 per Stapled Security or approximately 33.9% of the value of the H-REITDeposited Property. (See “Management’s Discussion and Analysis of Financial Condition andResults of Operations — Indebtedness”.)

Notes:(1) For the purpose of calculating the Base Fee and the Performance Fee, if H-REIT holds only a partial interest in (i) any

H-REIT Deposited Property, or (ii) any investment from which any Net Property Income is derived, such H-REIT DepositedProperty or Net Property Income shall be pro-rated in proportion to the partial interest held.

(2) According to the Property Funds Guidelines, this means total borrowings and deferred payments for assets. Such deferredpayments may be made in the form of cash or Stapled Securities.

18

At the current level of borrowings, the H-REIT Manager believes that H-REIT will have flexibilityin respect of future capital expenditure or acquisitions. Based on the 35.0% aggregate leveragelimit imposed by the Property Funds Guidelines, H-REIT has additional funding capacity ofapproximately S$9.7 million.

The aggregate leverage of H-REIT may exceed 35.0% of the H-REIT Deposited Property (up toa maximum of 60.0%) only if a credit rating from Fitch Inc., Moody’s or Standard and Poor’s isobtained and disclosed to the public. H-REIT will continue to maintain and disclose a credit ratingso long as its aggregate leverage exceeds 35.0% of the H-REIT Deposited Property.

(See “Strategy — Capital and Risk Management Strategy”.)

• Tax benefits for holders of the Stapled Securities

Tax transparency for H-REIT

Distributions by H-REIT

H-REIT has obtained a Tax Ruling from the Inland Revenue Authority of Singapore (“IRAS”) inrelation to its real properties in Singapore.

The Tax Ruling grants tax transparency to H-REIT on its taxable income that is distributed to theholders of the Stapled Securities such that H-REIT will not be taxed on such taxable income at thetrust level. Instead, tax will be imposed on the distributions made out of such taxable income byH-REIT to the holders of the Stapled Securities, by way of tax deduction at source or throughdirect assessment of the distributions to tax in the hands of the holders of the Stapled Securities.Distributions made by H-REIT to individuals are generally exempt from Singapore income taxregardless of the individuals’ nationality or tax residence status.

Taxable income of H-REIT for the purposes of the tax transparency treatment refers to the incomefrom the letting of its real properties in Singapore after deduction of allowable expenses.

Tax transparency is not extended to taxable income that is not distributed (i.e. retained taxableincome) and any gains arising from the sale of H-REIT’s properties determined by the Comptrollerof Income Tax to be revenue gains. Such income will be taxed at H-REIT’s level.

Distributions made out of income of H-REIT which have previously been taxed at H-REIT’s leveland capital gains arising from the sale of H-REIT’s properties will not be subject to tax deductionat source.

Depending on their respective circumstances, holders of the Stapled Securities are entitled toclaim tax credit against their Singapore income tax liabilities for any tax paid or deducted at sourceby H-REIT that relates to any distributions made by H-REIT.

19

Key tax implications on distributions made out of the taxable income of H-REIT covered bythe Tax Ruling and received by each class of the holders of the Stapled Securities

The key tax implications on the distributions made out of H-REIT’s taxable income covered by theTax Ruling and received by each class of holders of the Stapled Securities are summarised below:

Individuals who hold the StapledSecurities as investment assets andnot through a partnership inSingapore

• Taxable income will not be taxed at H-REIT’slevel. The distribution out of such income willalso not be subject to tax deduction at source.

• The distribution will be tax exempt at theindividuals’ level.

Individuals who hold the StapledSecurities as trading assets


• The distribution will however be taxed at theindividuals’ level at their applicable income taxrates.

Qualifying holders of the StapledSecurities(1)


• The distribution will however be subject to tax atthe level of the Qualifying holders of the StapledSecurities at their applicable income tax rates.

Foreign non-individual holders of theStapled Securities(2)

• Taxable income will not be taxed at H-REIT’slevel. However, the distribution out of suchincome will be subject to tax deduction at sourceat the reduced rate of 10.0% for a period of fiveyears from 18 February 2005 to 17 February2010.

• The tax deducted at 10.0% is generally a final taxand such holders of the Stapled Securities whodo not have a permanent establishment inSingapore do not need to pay any furtherSingapore tax on the distribution.

Nominee holders of the StapledSecurities

• Taxable income will not be taxed at H-REIT’slevel. The distributions out of such income willhowever be subject to tax deduction at source atthe prevailing corporate tax rate, currently at20.0%, except in the following situations:

— where the Stapled Securities are held forbeneficial owners who are individualsand/or Qualifying holders of the StapledSecurities, tax may not be deducted atsource under certain circumstances. Theseinclude a declaration by the nominee of thestatus of the beneficial owners of theStapled Securities and the provision ofcertain particulars of the beneficial ownersof the Stapled Securities to the H-REITTrustee and the H-REIT Manager;

20

— where the Stapled Securities are held forbeneficial owners who are foreign non-individual holders of the Stapled Securities,tax may be deducted at the reduced taxrate of 10.0% for distributions made duringthe period from 18 February 2005 to 17February 2010 under certaincircumstances. These include a declarationby the nominee of the status of thebeneficial owners of the Stapled Securitiesand the provision of certain particulars ofthe beneficial owners of the StapledSecurities to the H-REIT Trustee and theH-REIT Manager.

• The tax treatment of the distribution in the handsof the beneficial holders of the Stapled Securitieswill depend on the respective status of suchbeneficial holders.

Other holders of the StapledSecurities

• Taxable income will not be taxed at H-REIT’slevel. The distribution out of such income willhowever be subject to tax deduction at source atthe prevailing corporate tax rate, currently at20.0%.

• The distribution will be taxed at the holders of theStapled Securities’ level at their applicableincome tax rates. Such holders may, dependingon their respective circumstances, claim a creditfor the tax deducted at source.

Notes:

(1) Qualifying holders of the Stapled Securities refer to holders who are:

(a) Singapore-incorporated companies which are tax residents in Singapore;

(b) Bodies of persons, other than companies or partnerships, registered or constituted in Singapore (for example,town councils, statutory boards, registered charities, registered trade unions, management co-operations, clubsand trade and industry associations); and

(c) Singapore branches of foreign companies which have presented a letter of approval from the IRAS granting awaiver from tax deduction at source in respect of distributions from H-REIT.

(2) Foreign non-individual holders of the Stapled Securities refer to holders who are non-residents of Singapore forincome tax purposes and:

(a) who do not have a permanent establishment in Singapore; or

(b) who carry on any operation in Singapore through a permanent establishment in Singapore, where the fundsused to acquire the Stapled Securities are not obtained from that operation in Singapore.

21

Apart from its taxable income, H-REIT also has other income which has Singapore income taxconsequences for both the H-REIT Trustee as well as the holders of the Stapled Securities.

(See “Taxation” and Appendix V, “Independent Taxation Report” for further information on theSingapore income tax consequences of the purchase, ownership and disposition of the StapledSecurities.)

Key tax implications on distributions made out of the taxable income of HBT and receivedby each class of the holders of the Stapled Securities

Taxation of HBT

HBT, being a business trust, will be assessed to Singapore income tax on its profits, if any, derivedfrom or accrued in Singapore, at the prevailing corporate tax rate, currently at 20.0%.

The subsequent distributions made by HBT out of its profits, if any, to the holders of the StapledSecurities will be treated like one-tier dividends. Such distributions will be exempt from Singaporeincome tax in the hands of the holders of the Stapled Securities, regardless of their respectivestatus.

22

STRUCTURE OF CDL HOSPITALITY TRUSTS

The following diagram illustrates the relationship between, among others, H-REIT, HBT, the H-REITManager, the H-REIT Trustee, the HBT Trustee-Manager, the Master Lessees and the holders of theStapled Securities as at the Listing Date:

Acts on behalfof the holders of

the H-REITUnits(6)

H-REITTrustee

Master Lessees

HBT

Operates andmanages the Hotels

Holding ofHBT Units

Holders of the StapledSecurities

HBT(4) HBT Trustee-Manager

Acts on behalfof the holders of theHBT Units(5)

Operates andmanages the Hotels

Hotel Manager(8)

Distributions

Fixed Rent,Service Chargeand Variable Rent

Stapling Deed

Lease of Hotels

Managementservices(2)

H-REIT(owns the

Properties)(3)H-REIT

Manager

Distributions(1)

Hotel Manager(7)

Lease of Hotels

H-REIT

Holding of H-REIT Units

Notes:

(1) Distributions (if any) to be made by HBT, when activated, will be determined by the HBT Trustee-Manager Board in its solediscretion.

(2) See “Management and Corporate Governance — Fees Payable to the H-REIT Manager — Management fees payable tothe H-REIT Manager” for details on the H-REIT Manager’s management fees.

(3) Properties include Orchard Hotel Shopping Arcade. However, for simplicity, the diagram reflects the relationships in relationto the Hotels only. Upon the acquisition of Orchard Hotel Shopping Arcade, the various tenants of the retail units at OrchardHotel Shopping Arcade would make rental payments to H-REIT directly under the terms of their respective leases. TheH-REIT Manager will manage Orchard Hotel Shopping Arcade directly.

(4) Dormant as at the Listing Date.

(5) See “Management and Corporate Governance — Fees Payable to the HBT Trustee-Manager” for details of the fees payableto the HBT Trustee-Manager.

(6) See “The Formation and Structure of H-REIT — Trustee’s Fee” for details on the H-REIT Trustee’s fee.

(7) The Master Lessees or (in the absence of the Master Lessees and any other master lessees) HBT will appoint a professionalhotel manager to manage the Hotels leased from H-REIT. Such a hotel manager will typically be entitled to a fee paymentcomputed as a percentage of the revenue and a percentage of the gross operating profit of the Hotels under management.At the Listing Date, MCIL will manage and operate the Hotels.

(8) This Hotel Manager will only be appointed when HBT steps in as master lessee of a hotel in H-REIT’s portfolio.

23

The H-REIT Manager: M&C REIT Management Limited

The H-REIT Manager was incorporated in Singapore under the Companies Act on 17 May 2006. It hasan issued share capital of S$1.0 million and its registered office is located at 36 Robinson Road, #04-01City House, Singapore 068877.

The H-REIT Manager is an indirect wholly owned subsidiary of the Sponsor.

The H-REIT Manager Board is made up of individuals with a broad range of commercial experience,including expertise in fund, asset, hospitality and property management. The H-REIT Manager Boardconsists of Mr Wong Hong Ren, Mr Yeo Wee Eng Vincent, Dr Tan Cheng Bock, Ms Lim Yin Nee Jennyand Mr Chan Chun Ming Jimmy.

Generally, the H-REIT Manager will provide the following services to H-REIT:

• Investment strategy — Formulate and execute H-REIT’s investment strategy, includingdetermining the location, sub-sector type and other characteristics of H-REIT’s property portfolio;

• Acquisitions and sales — Make recommendations to the H-REIT Trustee on the acquisition andsale of properties;

• Advisory services on existing hotel portfolio — Liaise closely with the Master Lessees to monitorthe operational performance of the Hotels and review any renovation and refurbishmentprogrammes proposed by the Master Lessees for the Hotels;

• Financing — Provide advisory services regarding plans for equity and debt financing for H-REIT’sproperty acquisitions, distribution payments, expense payments and capital expenditurepayments;

• Planning and reporting — Make periodic property plans, including budgets and reports, relatingto the performance of H-REIT’s properties;

• Administrative services — Perform day-to-day administrative services as H-REIT’srepresentative, including providing administrative services relating to meetings of the holders ofH-REIT Units when such meetings are convened;

• Investor relations — Communicate and liaise with the holders of H-REIT Units and potentialinvestors;

• Compliance management — Make all regulatory filings on behalf of H-REIT, and ensure thatH-REIT is in compliance with the applicable provisions of the SFA and all other relevantlegislation, the Listing Manual of the SGX-ST (the “Listing Manual”), the CIS Code, the H-REITTrust Deed, the Stapling Deed, the Tax Ruling and all relevant contracts;

• Accounting records — Maintain accounting records and prepare or cause to be preparedaccounts and annual reports; and

• Property management, lease management and marketing services — With regard to propertiesin H-REIT’s portfolio which are not under any master lease arrangement, being Orchard HotelShopping Arcade in the initial portfolio of H-REIT as at the Listing Date, either by itself or throughthird parties under its supervision, (i) recommend third party service contracts for provision ofproperty maintenance services, supervise the performance of contractors, arrange for adequateinsurance and ensure compliance with building and safety regulations, (ii) coordinate tenants’fitting-out requirements, administration of rental collection, management of rental arrears andadministration of all property tax matters and (iii) provide marketing and marketing co-ordinationservices, such as initiating lease renewals and negotiation of terms.

24

The H-REIT Trustee: DBS Trustee Limited

The H-REIT Trustee was incorporated in Singapore and registered as a trust company under the TrustCompanies Act, Chapter 336 of Singapore (the “Trust Companies Act”) on 24 November 1975. TheH-REIT Trustee has a place of business in Singapore located at 6 Shenton Way #36-02, DBS Building,Tower One, Singapore 068809. The H-REIT Trustee’s powers and duties include: (i) acting as trusteeof H-REIT, (ii) holding the properties of H-REIT for the benefit of the holders of H-REIT Units and (iii)exercising all the powers of a trustee and the powers accompanying ownership of the properties ofH-REIT.

(See “The Formation and Structure of CDL Hospitality Trusts, H-REIT and HBT — H-REIT — TheH-REIT Trustee”.)

The HBT Trustee-Manager: M&C Business Trust Management Limited

The HBT Trustee-Manager was incorporated in Singapore under the Companies Act on 17 May 2006.It has an issued share capital of S$2.00 and its registered office is located at 36 Robinson Road, #04-01City House, Singapore 068877.

The HBT Trustee-Manager is wholly owned by the H-REIT Manager and is an indirect wholly ownedsubsidiary of the Sponsor.

As at the Listing Date, the composition of the HBT Trustee-Manager Board will be identical to that ofthe H-REIT Manager Board.

The HBT Trustee-Manager has the dual responsibility of safeguarding the interests of the holders ofHBT Units, and managing the business conducted by HBT. The HBT Trustee-Manager has generalpowers of management over the assets of HBT and its main responsibility is to manage HBT’s assetsand liabilities for the benefit of the holders of HBT Units. The HBT Trustee-Manager will set the strategicdirection of HBT and decide on, amongst other things, the distribution policy of HBT when it becomesactive and profitable. The HBT Trustee-Manager is also responsible for ensuring compliance with theapplicable provisions of all relevant legislation including the BTA, the SFA, the Companies Act, theListing Manual, the Stapling Deed, the HBT Trust Deed and all other relevant regulations and contracts.

The Master Lessees:

(1) Orchard Hotel:

The Master Lessee of Orchard Hotel is City Hotels Pte. Ltd., a private limited companyincorporated in Singapore on 16 December 1982 with its registered address at 36 RobinsonRoad, #04-01 City House, Singapore 068877. The current principal activities of City Hotels Pte.Ltd. are that of hotel ownership of Orchard Hotel and investment holding. Through its subsidiaryand investment in a jointly-controlled entity, it is involved in hotel management and propertydevelopment.

25

Selected financial information extracted from the audited accounts of City Hotels Pte. Ltd. as atand for the year ended 31 December 2005 are as follows:

As at 31 December 2005 (S$’000)

Net cash 9,956

Shareholders’ equity 149,119

FY2005

Revenue 58,574

Profit before interest, tax, depreciation and amortisation 23,676

Net finance income 516

Net profit 12,458

(2) Grand Copthorne Waterfront Hotel and Copthorne King’s Hotel:

The Master Lessee of Grand Copthorne Waterfront Hotel and Copthorne King’s Hotel is RepublicHotels & Resorts Limited, a public company incorporated in Singapore on 28 November 1967 withits registered address at 36 Robinson Road, #04-01 City House, Singapore 068877. The currentprincipal activities of Republic Hotels & Resorts Limited are that of hotel ownership andinvestment holding. Through its subsidiaries, Republic Hotels & Resorts Limited is involved in,inter alia, hotel ownership, property ownership, investment holding and provision of managementservices.

Selected financial information extracted from the audited consolidated accounts of RepublicHotels & Resorts Limited as at and for the year ended 31 December 2005 are as follows:


Net debt 82,175


FY2005

Revenue 276,513


Net finance cost 7,160

Net profit 44,081

Republic Hotels & Resorts Limited was publicly listed in Singapore in 1968 and its shares weretraded until 2 September 2002 when it was de-listed following the completion of a voluntaryunconditional cash offer by M&C Hotels Holdings Limited (a wholly owned subsidiary of theSponsor) to acquire all the then ordinary shares in Republic Hotels & Resorts Limited not alreadyowned by it.

(3) M Hotel:

The Master Lessee of M Hotel is Harbour View Hotel Pte. Ltd., a private limited companyincorporated in Singapore on 17 January 1980 with its registered address at 36 Robinson Road,#04-01 City House, Singapore 068877. The current principal activity of Harbour View Hotel Pte.Ltd. is that of hotel ownership of M Hotel.

26

Selected financial information extracted from the audited accounts of Harbour View Hotel Pte. Ltd.as at and for the year ended 31 December 2005 are as follows:


Net cash 1,861(1)


FY2005

Revenue 30,869


Net finance income 0

Net profit 6,392

Note:

(1) Excluding cash held on behalf of a related corporation.

Republic Hotels & Resorts Limited, Harbour View Hotel Pte. Ltd. and City Hotels Pte. Ltd. are indirectwholly owned subsidiaries of the Sponsor.

The Hotel Manager: Millennium & Copthorne International Limited (“MCIL”)

MCIL is a public limited company incorporated in Singapore on 16 January 1996 with principal activitiesrelating to those of hotels and resorts management. Its registered address is 36 Robinson Road #04-01City House, Singapore 068877. As at the Latest Practicable Date, the Hotel Manager has an issuedshare capital of S$8.2 million. MCIL is an indirect wholly owned subsidiary of the Sponsor.

MCIL will be engaged by the Master Lessees under hotel management contracts and will provide,amongst others, the following services, on an exclusive basis for the Hotels:

• Hotel management services such as the daily running and managing of the Hotels and its relatedactivities (e.g. procurement, F&B, laundry etc);

• Marketing services, including the planning, preparation and conduct of marketing, advertising,promotion, sales, public relations, publicity and related activities for the purpose of promoting thereputation and business of the Hotels;

• Development of programs and policies to maximise patronage and profits of the Hotels’ facilities;

• Collecting charges, rents and other amounts due from guests, patrons and hotel tenants;

• Employ, supervise and train hotel employees and staff, in accordance with the annual budgetagreed with the Master Lessees;

• Establish the details of the hotel refurbishment plans for the Hotels, in consultation with the MasterLessees;

• Purchase all furniture, fixtures and equipment for the Hotels in accordance with capitalrefurbishment programs or the approved annual budget for the Hotels;

• Establish the cash management and banking arrangements for the Hotels; and

• Establish the Hotels’ policy regarding its association with any credit card system.

MCIL presently provides management services to nine hotels (including the Hotels) located in Asia, twoof which are “Millennium” branded properties and four of which are “Copthorne” branded properties.Holders of the Stapled Securities will benefit from MCIL’s extensive experience in managing hotelproperties in Asia. As MCIL is well acquainted with the Hotels, its continued management of the Hotels

27

will ensure continuity in operations for the Hotels with minimal disruption or downtime, as compared toa hotel manager which is new to the Hotels.

The Sponsor: Millennium & Copthorne Hotels plc

The Sponsor is listed on the London Stock Exchange with its registered office located at Victoria House,Victoria Road, Horley, Surrey RH6 7AF, United Kingdom with a market capitalisation of approximately£1.17 billion as at the Latest Practicable Date. The Sponsor is a large hotel group which, as at theLatest Practicable Date, owns, operates and/or manages 105 hotels, of which 20 and 11 are thirdparty-owned hotels respectively managed and franchised by the Sponsor group, in 18 countries aroundthe world. The Sponsor’s global hotel portfolio currently includes 16 hotels comprising 7,778 rooms inAsia, 11 hotels comprising 3,179 rooms in the Middle East/Africa, 31 hotels comprising 3,688 rooms inNew Zealand, 25 hotels comprising 5,711 rooms in Europe and 22 hotels comprising 8,038 rooms inthe Americas. The principal activity of the Sponsor is that relating to investment holding. As at the LatestPracticable Date, the Sponsor has an authorised share capital of £300.0 million and an issued and fullypaid share capital of £87.1 million.

The M&C hotel brands represent a wide variety of hotel styles with high standards of service andfacilities in every hotel. M&C hotels are recognised for providing an excellent business, leisure,incentives, meetings and events experience to its customers worldwide.

The M&C group manages and operates its hotel properties under three main brands, namely the“Millennium” brand, “Copthorne” brand and “Kingsgate” brand. The “Millennium” brand is an emergingand international hotel brand introduced in October 1995. Today, there are 47 “Millennium” brandedhotel properties in 13 countries around the world. A majority of the “Millennium” branded hotels are4-star deluxe or 5-star hotel properties in premier locations in major gateway cities. “Copthorne”branded hotels are principally 4-star hotels in major business locations or business centres. There are29 “Copthorne” branded properties across the United Kingdom, Germany, New Zealand, Malaysia andSingapore. A well-established European brand, Copthorne’s international expansion started in October1997 in New Zealand. In 1998, the “Copthorne” brand was introduced in Asia. Millennium & CopthorneHotels New Zealand Limited is a member of the M&C group, having 31 properties and is the largesthotel owner/operator in New Zealand.

(See “The Sponsor” for more information.)

Certain Fees and Charges

The following is a summary of the amounts of certain fees and charges payable by the holders of theStapled Securities in connection with the subscription for the Stapled Securities (so long as the StapledSecurities are listed on the SGX-ST):

Payable by the holders of the StapledSecurities directly Amount payable

(a) Subscription fee or preliminary charge N.A.(1)

(b) Realisation fee N.A.(1)

(c) Switching fee N.A.(1)

Note:

(1) As the Stapled Securities will be listed and traded on the SGX-ST, holders of the Stapled Securities will have no right torequest the H-REIT Manager and the HBT Trustee-Manager to redeem their Stapled Securities while the Stapled Securitiesare listed. No subscription fee, preliminary charge, realisation fee or switching fee is payable in respect of the StapledSecurities.

28

The following is a summary of certain fees and charges payable by H-REIT in connection with theestablishment and on-going management of the operations of H-REIT:

Payable by H-REIT Amount payable

(a) The H-REIT Manager’s management fees Base Fee

0.25% per annum of the value of the H-REITDeposited Property. For the purpose of calculating theBase Fee, if H-REIT holds only a partial interest in anyof the H-REIT Deposited Property, such H-REITDeposited Property shall be pro-rated in proportion tothe partial interest held.

Performance Fee

5.0% per annum of the Net Property Income of H-REITin the relevant financial year. For the purpose ofcalculating the Performance Fee, if H-REIT holds onlya partial interest in an investment from which any ofthe Net Property Income is derived, such Net PropertyIncome shall be pro-rated in proportion to the partialinterest held.

The Base Fee and Performance Fee will be paid80.0% in Stapled Securities and 20.0% in cash for aperiod of five years, and thereafter at the discretion ofthe H-REIT Manager.

(b) The H-REIT Trustee’s fee A maximum of 0.1% per annum of the value of theH-REIT Deposited Property, subject to a minimum ofS$10,000 per month, excluding out-of-pocketexpenses and goods and services tax (“GST”). Forthe purpose of calculating the H-REIT Trustee’s fee, ifH-REIT holds only a partial interest in any of theH-REIT Deposited Property, such H-REIT DepositedProperty shall be pro-rated in proportion to the partialinterest held.

The actual fee payable will be determined between theH-REIT Manager and the H-REIT Trustee from time totime. The H-REIT Trustee’s fee is presently chargedon a scaled basis of up to 0.02% per annum of thevalue of the H-REIT Deposited Property.

H-REIT will also pay the H-REIT Trustee a one-timeinception fee of S$15,000.

(c) Any other substantial fee or charge (i.e. 0.1%or more of the value of the H-REIT DepositedProperty)

(i) Acquisition fee(payable to the H-REIT Manager)

1.0% of each of the following as is applicable (subjectto there being no double-counting):

(i) the acquisition price of any real estatepurchased, whether directly or indirectly throughone or more special purpose vehicles, byH-REIT, plus any other payments in connectionwith the purchase of the real estate (pro-rated ifapplicable to the proportion of H-REIT’sinterest);

29


(ii) the underlying value1 of any real estate which istaken into account when computing theacquisition price payable for the equity interestsof any vehicle holding directly or indirectly thereal estate, purchased whether directly orindirectly through one or more special purposevehicles, by H-REIT (pro-rated if applicable tothe proportion of H-REIT’s interest); or

(iii) the acquisition price of any investmentpurchased by H-REIT, whether directly orindirectly through one or more special purposevehicles, in any debt securities of any propertycorporation or other special purpose vehicleowning or acquiring real estate or any debtsecurities which are secured whether directly orindirectly by the rental income from real estate.

For the purpose of this acquisition fee, real estate-related assets include all classes and types of equitysecurities relating to real estate which shall, for theavoidance of doubt, exclude any investment in debtsecurities of any property corporation or other specialpurpose vehicle owning or acquiring real estate.

The acquisition fee is payable to the H-REIT Managerin the form of cash and/or Stapled Securities (as theH-REIT Manager may elect) provided that in respect ofany acquisition of real estate assets from InterestedParties, such a fee should be in the form of StapledSecurities at prevailing market price(s) instead ofcash. Such Stapled Securities should not be soldwithin one year from date of their issuance.

No acquisition fee is payable for the acquisition of theProperties.

(ii) Divestment fee(payable to the H-REIT Manager)

0.5% of each of the following as is applicable (subjectto there being no double-counting):

(i) the sale price of any real estate sold or divested,whether directly or indirectly through one ormore special purpose vehicles, by H-REIT, plusany other payments in connection with the saleor divestment of the real estate (pro-rated ifapplicable to the proportion of H-REIT’sinterest);

(ii) the underlying value of any real estate which istaken into account when computing the saleprice for the equity interests in any vehicleholding directly or indirectly the real estate, soldor divested, whether directly or indirectlythrough one or more special purpose vehicles,by H-REIT (pro-rated if applicable to theproportion of H-REIT’s interest); or

Note:1 For example, if H-REIT acquires a special purpose company which holds a property, such underlying value would be the

value of the property derived from the amount of equity paid by H-REIT as purchase consideration and any debt assumedby the special purpose company.

30


(iii) the sale price of the investment referred to inparagraph (iii) above for the acquisition fee.

For the purpose of this divestment fee, real estate-related assets include all classes and types of equitysecurities relating to real estate which shall, for theavoidance of doubt, exclude any investment in debtsecurities of any property corporation or other specialpurpose vehicle owning or acquiring real estate.

The divestment fee is payable to the H-REIT Managerin the form of cash and/or Stapled Securities (as theH-REIT Manager may elect) provided that in respect ofany sale or divestment of real estate assets toInterested Parties, such a fee should be in the form ofStapled Securities at prevailing market price(s)instead of cash. Such Stapled Securities should not besold within one year from date of their issuance.

The following is a summary of certain fees and charges payable by HBT in circumstances where HBTbecomes active:

Payable by HBT Amount payable

(a) The HBT Trustee-Manager’s trustee fee If HBT Deposited Property is at least S$50.0 million, amaximum of 0.1% per annum of the value of the HBTDeposited Property, subject to a minimum of S$10,000per month (excluding out-of-pocket expenses andGST). For the purpose of calculating the HBT Trustee-Manager’s trustee fee, if HBT holds only a partialinterest in any HBT Deposited Property, such HBTDeposited Property shall be pro-rated in proportion tothe partial interest held.

(b) The HBT Trustee-Manager’s managementfees

10.0% of the profit of HBT before interest and tax inthe relevant financial year (calculated beforeaccounting for this management fee in that financialyear). For the purpose of calculating the managementfee, if HBT holds only a partial interest in aninvestment from which such profit is derived, suchprofit shall be pro-rated in proportion to the partialinterest held.

The management fee is payable to the HBT Trustee-Manager in the form of cash and/or Stapled Securities(as the HBT Trustee-Manager may elect).

(c) Performance fee N.A.

(d) Guarantee fee N.A.

(e) Any other substantial fee or charge (i.e. 0.1%or more of the value of HBT DepositedProperty)

(i) Acquisition fee(payable to the HBT Trustee-Manager)

A maximum of 0.1% of the acquisition price of anyauthorised investment acquired directly or indirectly byHBT (pro-rated if applicable to the proportion of HBT’sinterest in the authorised investment acquired).

The acquisition fee is payable to the HBT Trustee-Manager in the form of cash and/or Stapled Securities(as the HBT Trustee-Manager may elect).

(ii) Divestment fee(payable to the HBT Trustee-Manager)

N.A.

31

THE OFFERING

CDL Hospitality Trusts A stapled group comprising H-REIT and HBT.

H-REIT CDL Hospitality Real Estate Investment Trust, a real estateinvestment trust constituted by the H-REIT Trust Deed.

HBT CDL Hospitality Business Trust, a business trust constituted bythe HBT Trust Deed.

The H-REIT Manager M&C REIT Management Limited

The H-REIT Trustee DBS Trustee Limited

The Sponsor Millennium & Copthorne Hotels plc

The Master Lessees City Hotels Pte. Ltd., Republic Hotels & Resorts Limited andHarbour View Hotel Pte. Ltd.

The HBT Trustee-Manager M&C Business Trust Management Limited

The Offering 425,000,000 Stapled Securities offered under the PlacementTranche and the Public Offer.

The Placement Tranche 410,000,000 Stapled Securities offered by way of aninternational placement to investors, including institutional andother investors in Singapore, and including the ReservedTranche. The Stapled Securities have not been and will not beregistered under the Securities Act and, subject to certainexceptions, may not be offered or sold within the United Statesor to, or for the account of, U.S. persons (as defined inRegulation S). The Stapled Securities are being offered andsold outside the United States to non-U.S. persons in relianceon Regulation S.

The Public Offer 15,000,000 Stapled Securities offered by way of a public offerin Singapore.

Stapled Securities Stapled Securities of CDL Hospitality Trusts, each consistingof one unit in H-REIT and one unit in HBT. The units arestapled together such that the units cannot be issued,transferred, traded, or otherwise dealt with separately.

Reserved Stapled Securities 12,500,000 Stapled Securities from the Placement Tranche(the “Reserved Stapled Securities”, which shall comprisethe “Reserved Tranche”) are reserved for subscription by thedirectors, management, employees and business associatesof the Sponsor and persons who have contributed to thesuccess of the Offering.

In the event that any of the Reserved Stapled Securities arenot subscribed for, they will be made available to satisfyexcess applications (if any) under the Placement Tranche(excluding the Reserved Tranche) and/or the Public Offer.

Clawback and Re-allocation The Stapled Securities may be re-allocated between thePlacement Tranche and the Public Offer.

Offering Price S$0.83 per Stapled Security.

32

Subscription for the SingaporeOffering

Investors applying for the Stapled Securities by way ofApplication Forms or Electronic Applications (both as referredto in Appendix VI, “Terms, Conditions and Procedures forApplication for and Acceptance of the Stapled Securities inSingapore”) will pay the Offering Price of S$0.83 per StapledSecurity on application, subject to a refund of the full amountor, as the case may be, the balance of the application monies(in each case, without interest or any share of revenue or otherbenefit arising therefrom) where (i) an application is rejected oraccepted in part only, or (ii) the Offering does not proceed forany reason.

For the purpose of illustration, an investor who applies for1,000 Stapled Securities by way of an Application Form or anElectronic Application under the Public Offer will have to payS$830.00, which is subject to a refund of the full amount or, asthe case may be, the balance thereof (in each case, withoutinterest or any share of revenue or other benefit arisingtherefrom), upon the occurrence of any of the foregoingevents.

The minimum initial subscription is for 1,000 StapledSecurities. An applicant may subscribe for a larger number ofthe Stapled Securities in integral multiples of 1,000.

Investors in Singapore must follow the application proceduresset out in Appendix VI, “Terms, Conditions and Procedures forApplication for and Acceptance of the Stapled Securities inSingapore”. Subscriptions under the Public Offer must be paidfor in Singapore dollars. No fee is payable by applicants for theStapled Securities, save for an administration fee for eachapplication made through automated teller machines(“ATMs”) and the internet banking websites of certainparticipating banks.

Lock-ups The Sponsor and Hospitality Holdings Pte. Ltd. have enteredinto certain lock-up arrangements with DBS Bank and BNPParibas Peregrine in respect of their effective or, as the casemay be, direct interests in all of the Stapled Securities held asat the Listing Date during the period commencing from theListing Date until the date falling 180 days after the ListingDate (the “Lock-up Period”), subject to certain exceptions(see “Plan of Distribution — Lock-up Arrangements”).

The H-REIT Manager and the HBT Trustee-Manager havealso entered into a lock-up arrangement with DBS Bank, BNPParibas and BNP Paribas Peregrine in respect of any offer,issue or contract to issue any Stapled Securities, and themaking of any announcements in connection with any of theforegoing transactions during the Lock-Up Period, subject tocertain exceptions (see “Plan of Distribution — Lock-upArrangements”).

Capitalisation of CDL HospitalityTrusts

S$848.5 million (comprising S$848.0 million from H-REIT andS$0.5 million from HBT) (see “Capitalisation”).

33

Use of Proceeds See “Use of Proceeds” and “Certain Agreements Relating toCDL Hospitality Trusts, H-REIT, HBT and the Properties”.

Listing and Trading Prior to the Offering, there has been no market for the StapledSecurities. Application has been made to the SGX-ST forpermission to list on the Main Board of the SGX-ST all theStapled Securities as at the Listing Date, as well as all theStapled Securities which may be issued to the H-REITManager and the HBT Trustee-Manager from time to time infull or part payment of fees payable to the H-REIT Managerand the HBT Trustee-Manager (see “Management andCorporate Governance — H-REIT — Fees Payable to theH-REIT Manager” and “Management and CorporateGovernance — HBT — Fees Payable to the HBT TrusteeManager”). Such permission will be granted when CDLHospitality Trusts is admitted to the Official List of the SGX-ST.

The Stapled Securities will, upon their issue, listing andquotation on the SGX-ST, be traded in Singapore dollars underthe book-entry (scripless) settlement system of The CentralDepository (Pte) Limited (“CDP”). The Stapled Securities willbe traded in board lot sizes of 1,000 Stapled Securities.

Financial Advisory Fee andUnderwriting and SellingCommission Payable byCDL Hospitality Trusts to DBS Bank,BNP Paribas and BNP ParibasPeregrine

The H-REIT Manager, on behalf of H-REIT, and the HBTTrustee-Manager, on behalf of HBT, have agreed to pay DBSBank, BNP Paribas and BNP Paribas Peregrine for theirservices in connection with the offering of the StapledSecurities under the Offering, an aggregate financial advisoryfee, and underwriting and selling commission (includingincentive fees) of up to S$12.0 million excluding GST based onthe Offering Price of S$0.83 per Stapled Security.

Risk Factors Prospective investors should carefully consider certainrisks connected with an investment in the StapledSecurities, as discussed under “Risk Factors”.

No Redemption Holders of the Stapled Securities have no right to request theH-REIT Manager or the HBT Trustee-Manager to redeem theirStapled Securities while the Stapled Securities are listed onthe SGX-ST. It is intended that holders of the StapledSecurities may only deal in their listed Stapled Securitiesthrough trading on the SGX-ST. Listing of the StapledSecurities on the SGX-ST does not guarantee a liquid marketfor the Stapled Securities.

34

Meetings The H-REIT Trustee, the H-REIT Manager and HBT Trustee-Manager may at any time convene meetings of holders ofH-REIT Units and holders of HBT Units in accordance with theprovisions of the Stapling Deed, the H-REIT Trust Deed andthe HBT Trust Deed.

• The H-REIT Manager shall at the request in writing of notless than 50 holders of H-REIT Units or holders ofH-REIT Units with not less than 10.0% of the issuedH-REIT Units, call a meeting of holders of H-REIT Units;or

• The HBT Trustee-Manager shall at the request of two ormore holders of HBT Units call a meeting of holders ofHBT Units if they hold in the aggregate not less than 10%of the total voting rights of all the holders of HBT Unitshaving at the date of calling of the meeting a right to voteat general meetings of the holders of HBT Units; orconstitute not less than 5.0% in number of the holders ofHBT Units.

Distribution Policy Distributions from CDL Hospitality Trusts comprisesdistributions from H-REIT and HBT (if any). Distributions fromH-REIT are computed based on 100.0% of H-REIT’s taxableincome for the period from the Listing Date to 31 December2007 and at least 90.0% of its taxable income thereafter on asemi-annual basis, to the holders of the Stapled Securitiesexcept for the first distribution, which will be in respect of theperiod from the Listing Date to 31 December 2006 and will bepaid by the H-REIT Manager on or before 1 March 2007. Thedistribution will be made on a half yearly basis for the periodsending 30 June and 31 December. Distributions, when paid,will be in Singapore dollars (see “Distributions”).

HBT is dormant as at the Listing Date and no distributions willbe made during the period that HBT remains dormant. It isassumed that HBT will have no revenue for the ForecastPeriod 2006 and the Projection Year 2007. In the event thatHBT becomes active and profitable, the declaration andpayment of distributions by HBT will be at the sole discretion ofthe HBT Trustee-Manager Board. There is no assurance thatHBT would make any distributions to the holders of the StapledSecurities.

Tax Considerations Distributions by H-REIT

Individuals and Qualifying holders of the Stapled Securitiesreceiving distributions made out of H-REIT’s taxable incomewill receive these distributions without tax deduction at source(i.e. the taxable income is given tax transparency treatment).

The tax transparency treatment will not apply to distributionsmade out of H-REIT’s retained taxable income and gainsarising from the sale of properties determined by the IRAS tobe revenue in nature. Such income (other than capital gainsarising from the sale of properties) will be taxed at H-REIT’slevel.

35

Distributions made out of H-REIT’s taxable income (excludingdistributions made out of franked dividends) and paid toindividuals are exempt from Singapore income tax regardlessof the individuals’ nationality or tax residence status. This taxexemption will not apply to individuals who hold the StapledSecurities as trading assets or through a partnership inSingapore.

Distributions made out of the taxable income of H-REIT toholders of the Stapled Securities who are foreign non-individual investors will be subject to Singapore withholdingtax at the reduced rate of 10.0% for a five-year periodcommencing from 18 February 2005. The withholding tax isgenerally a final tax and the holders who do not have apermanent establishment in Singapore do not need to pay anyfurther Singapore income tax on the distributions.

Distributions made out of the taxable income of H-REIT to allother holders of the Stapled Securities who are not individualswill be subject to income tax on the gross amount of suchdistributions, regardless of whether H-REIT had deducted taxfrom the distributions.

Where applicable, the holders of the Stapled Securities mayclaim a tax credit for the tax deducted at source and/or theimputed tax paid by H-REIT as a set-off against theirSingapore income tax liabilities.

Distributions by HBT

HBT will be assessed to Singapore income tax on its profits, ifany, derived from or accrued in Singapore.

Any distributions made by HBT out of its after tax profits to theholders of the Stapled Securities will be exempt fromSingapore income tax in the hands of the holders of theStapled Securities, regardless of whether they are individual ornon-individual holders of the Stapled Securities.

(See “Taxation” and Appendix V, “Independent TaxationReport” for further information on the Singapore income taxconsequences of the purchase, ownership and disposition ofthe Stapled Securities.)

Governing Law The Stapling Deed, the H-REIT Trust Deed and the HBT TrustDeed, pursuant to which CDL Hospitality Trusts, H-REIT andHBT are respectively constituted, are governed by Singaporelaw.

Unstapling CDL Hospitality Trusts can be terminated when staplingbecomes unlawful or prohibited by the Listing Manual, or wheneither H-REIT or HBT is terminated or wound up respectively.Termination can also occur if Extraordinary Resolutions fromthe holders of H-REIT Units and the holders of HBT Units areobtained.

36

Termination H-REIT may, under certain circumstances specified in theH-REIT Trust Deed, be terminated by either the H-REITManager or the H-REIT Trustee (see “The Formation andStructure of CDL Hospitality Trusts, H-REIT and HBT —H-REIT — Termination of H-REIT”).

HBT may, under certain circumstances specified in the HBTTrust Deed, be wound up by the HBT Trustee-Manager (see“The Formation and Structure of CDL Hospitality Trusts,H-REIT and HBT — The Formation and Structure of HBT —Winding-up”).

37

INDICATIVE TIMETABLE

An indicative timetable for the Offering and trading in the Stapled Securities is set out below for thereference of applicants for the Stapled Securities:

Indicative date and time Event

10 July 2006, 3.30 p.m. Opening date and time for the Offering.

17 July 2006, 12 p.m. Closing date and time for the Offering.

18 July 2006 Balloting of applications or otherwise as may be approved by theSGX-ST (in the event of over-subscription for the StapledSecurities under the Public Offer (“Offering StapledSecurities”)). Commence returning or refunding of applicationmonies to unsuccessful or partially successful applicants.

19 July 2006, 2 p.m. Commence trading on a “ready” basis.

24 July 2006 Settlement date for all trades done on a “ready” basis on 19 July2006.

The above timetable is only indicative as it assumes (i) that the closing of the application list for thePublic Offer (the “Application List”) is 17 July 2006, (ii) that the Listing Date is 19 July 2006, (iii)compliance with the SGX-ST’s Stapled Securities holding spread requirement and (iv) that the StapledSecurities will be issued and fully paid up prior to 2 p.m. on 19 July 2006. All dates and times referredto above are Singapore dates and times.

Trading in the Stapled Securities on a “ready” basis will commence at 2 p.m. on 19 July 2006 (subjectto the SGX-ST being satisfied that all conditions necessary for the commencement of trading in theStapled Securities on a “ready” basis have been fulfilled), as the completion of the acquisition of theProperties is expected to take place at or before 2 p.m. on 19 July 2006 (see “Certain AgreementsRelating to CDL Hospitality Trusts, H-REIT, HBT and the Properties”). If H-REIT is terminated, or HBTis wound up, or the Stapled Securities are unstapled under the circumstances specified in the H-REITTrust Deed, HBT Trust Deed and the Stapling Deed respectively prior to, or if the acquisition of theProperties is not completed by, 2 p.m. on 19 July 2006 (being the time and date of commencement oftrading in the Stapled Securities), the Offering will not proceed and the application monies will berefunded (without interest or any share of revenue or other benefit arising therefrom and at eachapplicant’s own risk and without any right or claim against CDL Hospitality Trusts, H-REIT, HBT, theH-REIT Manager, the H-REIT Trustee, the HBT Trustee-Manager, either of the Underwriters or theSponsor) (see “The Formation and Structure of CDL Hospitality Trusts, H-REIT and HBT — TheFormation and Structure of H-REIT — Termination of H-REIT”).

In the event of an early or extended closure of the Application List or the shortening or extension of thetime period during which the Offering is open, the H-REIT Manager and the HBT Trustee-Manager willpublicly announce the same:

• via SGXNET, with the announcement to be posted on the Internet at the SGX-ST website:http://www.sgxnet.sgx.com; and

• in one or more major Singapore newspapers, such as The Straits Times, The Business Times andLianhe Zaobao.

38

Investors should consult the SGX-ST announcement on the “ready” trading date on the Internet (at theSGX-ST website http://www.sgx.com), or the newspapers, or check with their brokers on the date onwhich trading on a “ready” basis will commence.

The H-REIT Manager and the HBT Trustee-Manager will provide details and results of the Public Offer(including the level of subscription for the Offering Stapled Securities and the basis of allocation of theOffering Stapled Securities pursuant to the Offering), as soon as practicable after the close of theOffering through SGXNET and in one or more major Singapore newspapers, such as The StraitsTimes, The Business Times and Lianhe Zaobao.

The H-REIT Manager and the HBT Trustee-Manager reserve the right to reject or accept, in whole orin part, or to scale down or ballot any application for the Stapled Securities, without assigning anyreason for it, and no enquiry and/or correspondence on the decision of the H-REIT Manager and theHBT Trustee-Manager will be entertained. In deciding the basis of allotment, due consideration will begiven to the desirability of allotting the Stapled Securities to a reasonable number of applicants with aview to establishing an adequate market for the Stapled Securities.

Where an application is rejected or accepted in part only or if the Offering does not proceed for anyreason, the full amount or the balance of the application monies, as the case may be, will be refunded(without interest or any share of revenue or other benefit arising therefrom) to the applicant, at his ownrisk, and without any right or claim against CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager,the H-REIT Trustee, the HBT Trustee-Manager, either of the Underwriters or the Sponsor.

The return of unsuccessful applications using printed Application Forms by ordinary post, together withthe full amount of the application monies (without interest or any share of revenue or other benefitarising therefrom), is expected to be completed within 24 hours after balloting. For unsuccessfulElectronic Applications, it is expected that the full amount or the balance of such application monies willbe refunded (without interest or any share of revenue or other benefit arising therefrom) byautomatically crediting to the applicants’ accounts with their Participating Banks or, in the case ofapplications for Placement Tranche for the Stapled Securities through the website of DBS VickersSecurities Online (Singapore) Pte Ltd (“DBS Vickers Online”), by ordinary post or such other meansas DBS Vickers Online may agree with the unsuccessful applicants, at their own risk, within two MarketDays after the closing date for the Offering, or such shorter period as the SGX-ST may require,provided that the remittance in respect of such applications which has been presented for payment orother processes has been honoured and the application monies received in the designated stapledsecurities issue account.

In respect of partially successful applications using printed Application Forms, the balance of theapplication monies is expected to be refunded (without interest or any share of revenue or other benefitarising therefrom) to applicants by ordinary post at their own risk, within two Market Days after theclosing date for the Offering, or such shorter period as the SGX-ST may require, provided that theremittance accompanying such application which has been presented for payment or other processeshas been honoured and the application monies received in the designated stapled securities issueaccount.

In respect of partially successful applications using Electronic Applications, the balance of theapplication monies, if any, is expected to be refunded (without interest or any share of revenue or otherbenefit arising therefrom) through the crediting of the relevant amount to the applicants’ accounts withtheir Participating Banks (in the case of electronic applications via ATM and electronic applications viathe Internet), or by ordinary post at their own risk or such other means as DBS Vickers Online mayagree within two Market Days after the closing date for the Offering, or such shorter period as theSGX-ST may require, provided that the remittance accompanying such application which has beenpresented for payment or other processes has been honoured and the application monies received inthe designated Stapled Securities issue account.

39

UNAUDITED PRO FORMA FINANCIAL INFORMATION

H-REIT

The following tables present the unaudited pro forma statements of total return for H-REIT for FY2003,FY2004 and FY2005 (collectively referred to as the “Relevant Period”), the unaudited pro forma cashflow statement for H-REIT for FY2005 and unaudited pro forma balance sheet for H-REIT as at 31December 2005. Such unaudited pro forma financial information should be read in conjunction with therelated notes thereto.

H-REIT’s independent accountants, KPMG, have reported on the unaudited pro forma financialinformation and their report is included in Appendix II, “Independent Accountants’ Report on theUnaudited Pro Forma Financial Information of H-REIT”. The unaudited pro forma financial informationhas been prepared on the basis of assumptions and the accounting policies set out in Appendix II,“Independent Accountants’ Report on the Unaudited Pro Forma Financial Information of H-REIT”. Theunaudited pro forma financial information should be read together with these assumptions andaccounting policies.

The unaudited pro forma statements of total return of H-REIT for the Relevant Period reflect the totalreturn of H-REIT, assuming H-REIT had purchased the Properties and entered into the Master LeaseAgreements on 1 January 2003, under the same terms set out in the Prospectus.

The unaudited pro forma cash flow statement shows the cash flows of H-REIT for FY2005, assumingH-REIT had purchased the Properties and entered into the Master Lease Agreements on 1 January2005 under the same terms set out in the Prospectus.

The unaudited pro forma balance sheet of H-REIT as at 31 December 2005 reflects the financialposition of H-REIT, assuming H-REIT had purchased the Properties and entered into the Master LeaseAgreements on 31 December 2005 under the same terms set out in the Prospectus.

The objective of the unaudited pro forma financial information is to show what the total return, cashflows and financial position might have been had H-REIT existed at an earlier date. However, theunaudited pro forma financial information of H-REIT is not necessarily indicative of the total return andcash flows of the operations or the financial position that would have been attained had H-REIT actuallyexisted earlier. The unaudited pro forma financial information has been prepared for illustrativepurposes only and, because of its nature, may not give a true picture of the actual total return, cashflows or financial position of H-REIT.

The SGX-ST has granted H-REIT a waiver from compliance with Rule 409(3) of the Listing Manual inrespect of the requirement for inclusion of the annual accounts of H-REIT for the past five years.

HBT and CDL Hospitality Trusts

No pro forma financial information of HBT has been presented as it is newly established and is dormantas at the Listing Date. Accordingly, no consolidated pro forma financial information of CDL HospitalityTrusts has been presented.

40

Unaudited Pro Forma Statements of Total Return of H-REIT

FY2003 FY2004 FY2005

(S$’000) (S$’000) (S$’000)

Gross Revenue 29,770 38,390 45,488

Property Expenses (3,018) (3,748) (4,008)

Net Property Income 26,752 34,642 41,480

H-REIT Manager’s management fees (3,468) (3,873) (4,234)

H-REIT Trustee’s fee (140) (141) (141)

Other trust expenses (990) (1,010) (1,030)

Finance costs (net)(1) (6,755) (10,816) (10,914)

Net income before tax 15,399 18,802 25,161

Income tax expense — — —

Net income after tax 15,399 18,802 25,161

Add/(Less): Non-tax (chargeable)/deductible items(2) (1,005) 3,590 3,887

Total return for the year 14,394 22,392 29,048

Notes:

(1) Comprises interest expense incurred on borrowings, amortisation of transaction costs on borrowings capitalised andfinancial expense arising from remeasuring non-current rental deposits at amortised cost, for all periods presented. ForFY2003, the balance is stated net of financial income arising from the initial recognition of non-current rental deposits at fairvalue.

(2) Non-tax (chargeable)/deductible items comprise the H-REIT Manager’s management fees paid/payable in StapledSecurities, the H-REIT Trustee’s fee, amortisation of upfront debt arrangement fee and financial expense arising fromremeasuring non-current rental deposits at amortised cost, net of financial income arising from the initial recognition of the

non-current rental deposits at fair value (if any).

41

Unaudited Pro Forma Balance Sheet of H-REIT

As at31 December 2005

(S$’000)

Non-current assetsInvestment properties 846,300

Current assetsOther receivables 1,071Cash and cash equivalents 9,161

10,232

Total assets 856,532

Current liabilitiesOther payables(1) 23,410Rental deposits(2) 918

24,328

Non-current liabilitiesBorrowings(3) 265,993Rental deposits(2) 3,920

269,913

Total liabilities (excluding net assets attributable to holders of H-REIT Units) 294,241

Net assets attributable to holders of H-REIT Units 562,291

Number of H-REIT Units in issue (’000) 698,000

Net asset value per H-REIT Unit (S$) 0.81

Borrowings(4)/Total assets (%) 33.9%

Notes:

(1) Other payables relate to the balance 10% of the purchase consideration payable to the relevant Vendor of Grand CopthorneWaterfront Hotel, on legal completion after all regulatory approvals for excision or creation of a separate strata lot comprisingGrand Copthorne Waterfront Hotel have been obtained, which is expected to take place within six months from the ListingDate.

(2) Current rental deposits relate to rental deposits of Orchard Hotel Shopping Arcade. Non-current rental deposits relate torental deposits collected from the Master Lessees, stated at amortised cost.

(3) This is stated net of transaction costs of S$597,000.

(4) For the purpose of computing the borrowings to total assets ratio, borrowings comprise bank loans of S$266,590,000 andother payables of S$23,410,000 which relate to the balance 10% of the purchase consideration payable to the relevantVendor of Grand Copthorne Waterfront Hotel, on legal completion after all regulatory approvals for the excision or creationof a separate strata lot comprising Grand Copthorne Waterfront Hotel have been obtained (see “Certain AgreementsRelating to CDL Hospitality Trusts, H-REIT, HBT and the Properties — Specific Terms Relevant to the Properties —Separate Title to Grand Copthorne Waterfront Hotel”).

42

Unaudited Pro Forma Cash Flow Statement of H-REIT

FY2005

(S$’000)

Operating activities

Net income before income tax 29,397

Adjustments for:

Finance costs (net)(1) 6,732

H-REIT Manager’s management fees paid/payable in Stapled Securities 3,376

Operating income before working capital changes 39,505

Changes in working capital:

Trade and other payables 8,329

Cash flows from operating activities 47,834

Investing activities

Purchase of investment properties and related assets and liabilities(2) (845,443)

Subsequent capital expenditure (8,091)

Cash flows from investing activities (853,534)

Financing activities

Proceeds from issue of H-REIT Units (net of issue costs paid) 558,025

Proceeds from borrowings 290,000

Repayment of borrowings (12,579)

Finance costs paid (11,249)

Distribution to holders of H-REIT Units (14,497)

Cash flows from financing activities 809,700

Net increase in cash & cash equivalents 4,000

Cash & cash equivalents at beginning of year —

Cash & cash equivalents at end of year 4,000

Notes:

(1) Comprises interest expense incurred on borrowings, amortisation of transaction costs on borrowings capitalised andfinancial expense arising from remeasuring non-current rental deposits at amortised cost, net of financial income arisingfrom the initial recognition of non-current rental deposits at fair value.

(2) Comprises the purchase price on the Properties of S$846,300,000, net of cash acquired of S$857,000 relating to OrchardHotel Shopping Arcade’s rental deposits.

43

PROFIT FORECASTS AND PROFIT PROJECTIONS

The following is an extract from “Profit Forecasts and Profit Projections”. Statements contained in thisextract that are not historical facts may be forward-looking statements. Such statements are based onthe assumptions set out on pages 95 to 105 of this Prospectus and are subject to certain risks anduncertainties that could cause actual results to differ materially from those forecast and projected.Under no circumstances should the inclusion of such information herein be regarded as arepresentation, warranty or prediction with respect to the accuracy of the underlying assumptions byCDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager, the H-REIT Trustee, the HBT Trustee-Manager, the Underwriters, the Sponsor or any other person, or that these results will be achieved orare likely to be achieved (see “Forward-looking Statements” and “Risk Factors”). Investors in theStapled Securities are cautioned not to place any undue reliance on these forward-looking statementsthat are valid only as at the date of this Prospectus.

None of CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager, the H-REIT Trustee, the HBTTrustee-Manager, the Underwriters or the Sponsor guarantees the performance of CDLHospitality Trusts, H-REIT and HBT, the repayment of capital or the payment of anydistributions, or any particular return on the Stapled Securities. The forecast and projectedyields stated in the following table are calculated based on (i) the Offering Price and (ii) theassumption that the Listing Date is 1 July 2006. Such yields will vary accordingly since theListing Date is after 1 July 2006 and in relation to investors who purchase the Stapled Securitiesin the secondary market at a market price that differs from the Offering Price.

The following tables set forth the forecast and projected Statements of Net Income and Distribution ofCDL Hospitality Trusts and H-REIT, both for the Forecast Period 2006 and the Projection Year 2007,respectively. The financial year-end of CDL Hospitality Trusts is 31 December. CDL Hospitality Trusts’first accounting period is for the period from 12 June 2006, being the date of its establishment, to 31December 2006 and its next accounting period will be for the period from 1 January 2007 to 31December 2007. Investors in the Stapled Securities should read the whole of the “Profit Forecasts andProfit Projections” set out on pages 92 to 106 of this Prospectus together with the report set out inAppendix I, “Independent Accountants’ Report on the Profit Forecasts and Profit Projections”.

44

H-REIT Forecast and Projected Statements of Net Income and Distribution

Forecast Period 2006(6 months ending

31 December 2006)

Projection Year 2007(12 months ending31 December 2007)

(S$’000) (S$’000)

Gross Revenue 27,217.2 56,258.6

Less: Property Expenses (2,217.0) (4,765.4)

Net Property Income 25,000.2 51,493.2

H-REIT Manager’s management fees (2,316.9) (4,710.7)

Other trust expenses (840.1) (1,130.5)

Finance costs (net)(1) (1,148.9) (10,788.5)

Net income before tax 20,694.3 34,863.5

Income tax expense — —

Net income after tax 20,694.3 34,863.5

Add/(Less): Non-tax (chargeable)/deductible items (net)(2) (2,169.0) 4,260.5

Taxable income available for distribution to holders ofH-REIT Units 18,525.3 39,124.0

Offering Price (S$) 0.83 0.83

Number of H-REIT Units/Stapled Securities in issue(3)

(’000) 700,233.1 704,773.6

Distribution per H-REIT Unit/Stapled Security (cents) 2.65 5.55

Annualised distribution yield (%)(4) 6.37% 6.69%

Notes:

(1) Comprises interest expenses incurred on borrowings, amortisation of transaction costs on borrowings capitalised andfinancial expense arising from remeasuring non-current rental deposits at amortised cost, for all periods presented. For theForecast Period 2006, the balance is stated net of the financial income arising from the initial recognition of the non-currentrental deposits at fair value.

(2) Non-tax (chargeable)/deductible items comprise the H-REIT Manager’s management fees paid/payable in StapledSecurities, the H-REIT Trustee’s fee, amortisation of upfront debt arrangement fee and financial expense arising fromremeasuring non-current rental deposits at amortised cost, net of financial income arising from the initial recognition of thenon-current rental deposits at fair value (if any).

(3) The number of Stapled Securities includes the assumed payment of the H-REIT Manager’s management fees for therelevant period in the form of Stapled Securities issued at the Offering Price.

(4) Annualised by extrapolating the Forecast Period 2006 figures for a year. It should be noted that due to the seasonal natureof the hotel business, the financial performance of hotels is generally better in the second half of the year as compared tothe first half of the year.

45

CDL Hospitality Trusts Forecast and Projected Statements of Net Income(1)


31 December 2006)


(S$’000) (S$’000)

Gross Revenue 27,217.2 56,258.6





Finance costs (net) (1,148.9) (10,788.5)


Income tax expense — —


Note:

(1) The Forecast and Projected Statements of Net Income of CDL Hospitality Trusts comprise the results of H-REIT and HBT.H-REIT’s forecast and projected statements are set out above. HBT is dormant as at the Listing Date and is assumed toremain dormant during the Forecast Period 2006 and the Projection Year 2007. Accordingly, HBT is assumed to incur onlystatutory and administrative expenses during the Forecast Period 2006 and the Projection Year 2007, and will not make anydistributions during these periods.

46

RISK FACTORS

Prospective investors should consider carefully, together with all other information contained in thisProspectus, the factors described below before deciding to invest in the Stapled Securities.

This Prospectus also contains forward-looking statements (including profit forecasts and profitprojections) that involve risks, uncertainties and assumptions. The actual results of CDL HospitalityTrusts could differ materially from those anticipated in these forward-looking statements as a result ofcertain factors, including the risks faced by CDL Hospitality Trusts as described below and elsewherein this Prospectus.

Due to the fact that CDL Hospitality Trusts comprises H-REIT and HBT, risk factors for CDL HospitalityTrusts include considerations relevant to stapled securities, collective investment schemes andbusiness trusts.

As an investment in the Stapled Securities is meant to produce returns over the long-term, investorsshould not expect to obtain short-term gains.

Investors should be aware that the price of the Stapled Securities, and the income from them, might fallor rise. Investors should note that they might not get back their original investment.

Before deciding to invest in the Stapled Securities, prospective investors should seek professionaladvice from the relevant advisers about their particular circumstances.

Risks in Relation to the Global Hospitality Industry

The financial performance of CDL Hospitality Trusts is dependent on the conditions of thehospitality industry in the countries in which CDL Hospitality Trusts has assets and/or operates

CDL Hospitality Trusts is made up of H-REIT and HBT. The initial property portfolio of H-REIT as at theListing Date comprises the four Hotels and a shopping arcade, being Orchard Hotel Shopping Arcade,all of which are located in Singapore, while HBT will not own any properties on the Listing Date. In thefuture, CDL Hospitality Trusts’ strategy, including H-REIT’s global strategy, may lead it to acquirehospitality and hospitality-related assets outside of Singapore.

The rental payment for the duration of the term of each Master Lease Agreement is principallydependent on the revenue and gross operating profit for each of the Hotels. Therefore, anydeterioration in such revenue and gross operating profit of the Hotels will have a material adverse effecton the profitability and financial condition of H-REIT and consequently, distributions from H-REIT toholders of the Stapled Securities.

A number of factors, many of which are common to the global hospitality and retail industry and beyondthe control of CDL Hospitality Trusts, could affect the financial performance of CDL Hospitality Trusts,including the following:

• the condition of, and changes in, the domestic, regional and global economies, including, but notlimited to, factors such as the political landscape, environmental conditions and viral epidemicssuch as human avian flu and SARS that may result in reduced occupancy rates and room ratesfor CDL Hospitality Trusts’ hospitality and hospitality-related assets;

• increased threat of terrorism, terrorist events, airline strikes, hostilities between countries orincreased risk of natural disasters that may affect travel patterns and reduce the number ofbusiness and commercial travellers and tourists;

• dependence on business and commercial travel, leisure travel and tourism, all of which may affectthe length of a traveller’s stay;

47

• new supply in the markets which CDL Hospitality Trusts operates in, which could harm theoccupancy levels and revenue at the Hotels or future hospitality or hospitality-related assets ofCDL Hospitality Trusts;

• changes in CDL Hospitality Trusts’ relationships with, and the performance and reputation of thehotel managers for the Hotels in CDL Hospitality Trusts’ portfolio;

• changes in governmental laws and regulations, fiscal policies and zoning ordinances and therelated costs of compliance with laws and regulations, fiscal policies and ordinances;

• increased competition in the Singapore and global hospitality and hospitality-related industry;

• the nature and length of a typical hotel guest’s stay — hotel guests typically stay on a short-termbasis and there is therefore no assurance of long-term occupancy for hotel rooms;

• increases in operating costs due to inflation, labour costs (including the impact of unionisation),workers’ compensation and health-care related costs, utility costs, insurance and unanticipatedcosts such as acts of nature and their consequences;

• changes in exchange rates that may adversely affect CDL Hospitality Trusts’ operating results orability to finance;

• changes in interest rates and in the availability, cost and terms of debt financing and otherchanges in CDL Hospitality Trusts’ business that adversely affect CDL Hospitality Trusts’ ability tocomply with debt financing covenants;

• relations between CDL Hospitality Trusts and service providers or lenders;

• difficulties in identifying hospitality and hospitality-related assets to acquire and completing andintegrating acquisitions;

• the reputation and standing of the restaurants located within the Hotels and/or future hospitalityand hospitality-related assets of CDL Hospitality Trusts; and

• adverse effects of a downturn in the hospitality industry.

These factors could have adverse effects on CDL Hospitality Trusts’ financial condition, results ofoperations and ability to make distributions to the holders of the Stapled Securities.

The hospitality industry is competitive

The hospitality industry in Singapore is highly competitive. Each of the Hotels experiences competitionprimarily from other similar upscale hotels in their immediate vicinity, and also with other hotels in theirgeographical market. The level of competition in the Singapore hospitality industry is affected byvarious factors, including changes in economic conditions, both locally, regionally and globally, changesin local, regional and global populations, the supply and demand for hotel rooms and changes in travelpatterns and preferences. Competing hotels may offer more facilities at their premises at similar ormore competitive prices compared to the facilities offered at the Hotels. Competing hotels may alsosignificantly lower their rates or offer greater convenience, services or amenities, to attract moreguests. If these efforts are successful, the results of operations at the Hotels may be adversely affected.There can also be no assurance that demographic, geographic or other changes will not adverselyaffect the convenience or demand for the Hotels.

Over-supply in room availability in Singapore could adversely affect occupancy rates and Average DailyRates and therefore RevPAR.

48

The hospitality business is a regulated business

The operation of hotels in Singapore is subject to various laws and regulations, such as the Hotels Act,which hotels in Singapore are required to be licensed under. The withdrawal, suspension ornon-renewal of any of these licences, or the imposition of any penalties, as a result of any infringementor non-compliance with any requirement, will have an adverse impact on the business and results ofoperations of the Hotels. Further, any changes in such laws and regulations may also have an impacton the businesses at the Hotels and result in higher costs of compliance. In addition, any failure tocomply with these laws and regulations could result in the imposition of fines or other penalties by therelevant authorities. This could have an adverse impact on the revenues and profits of the Hotels orotherwise adversely affect the Hotels’ operations.

Acts of God, wars, terrorist attacks, riots, civil commotions, widespread communicablediseases (such as human avian flu and SARS) and other events beyond the control of CDLHospitality Trusts may adversely affect the financial performance of CDL Hospitality Trusts

The hospitality industry and CDL Hospitality Trusts may be adversely affected by acts of God, wars,terrorist attacks, riots, civil commotions, widespread communicable diseases (such as human avian fluand SARS) and other events beyond the control of CDL Hospitality Trusts. Neither the H-REIT Managernor the HBT Trustee-Manager can predict the extent to which these factors will continue to directly orindirectly impact distributions to holders of the Stapled Securities, the hospitality industry or theoperating results of CDL Hospitality Trusts in the future.

Since the end of 2003, at least 170 cases of human avian flu have been reported in South East Asiaand of this number, at least 99 human deaths have been confirmed. The outbreak of the disease in2005 followed an outbreak in late 2003 and early 2004, and since this time, human deaths haveoccurred in the PRC, Thailand, Vietnam, Cambodia and Indonesia, with Vietnam being the mostseverely affected country.

Should there be confirmation that the virus can mutate and human-to-human transmission of thedisease arises, the consequences for the business of the hospitality and hospitality-related assets inH-REIT’s portfolio could be substantial. As with the international SARS Outbreak in 2003, the WorldHealth Organisation (the “WHO”) and certain governments may decide to issue travel advisoriesagainst non-essential travel to affected regions, or even impose travel restrictions. Travel advisories orrestrictions are likely to have a material adverse effect on the number of international visitor arrivals toSingapore and the corresponding demand for hotel rooms under H-REIT’s portfolio of Hotels.Accordingly, the spread of human avian flu or any other contagious or virulent diseases, and anyconsequential travel advisories or restrictions may adversely affect the business of the hospitality andhospitality-related assets in H-REIT’s portfolio.

CDL Hospitality Trusts’ financial performance may be affected by changes in travel patternsresulting from increases in transportation or fuel costs, strikes among workers in thetransportation industry and adverse weather patterns

Changes in travel patterns can be erratic and this may adversely affect the revenue and gross operatingprofit of the hospitality and hospitality-related assets in H-REIT’s portfolio, with a consequent impact onthe rental payments received by H-REIT and the distributions to be made to holders of the StapledSecurities.

Increases in transportation or fuel costs, strikes among workers in the transportation industry andadverse weather patterns may deter travellers and the financial performance of H-REIT may beadversely affected as a consequence. These travellers represent a crucial source of income for thehospitality and hospitality-related assets of H-REIT.

49

No assurance that the STB will succeed in increasing Singapore tourism receipts or that suchsuccess, if any, will improve the financial performance of CDL Hospitality Trusts

There can be no assurance that the STB’s initiatives (see “Summary — Outlook for the HospitalitySector in Singapore”) to increase tourism receipts will be successful. Even if the STB’s initiatives aresuccessful, it is not certain that an increase in tourism receipts would lead to a corresponding increasein the number of visitors to Singapore or the length of their stay in Singapore. Furthermore, an increasein the number of visitors or the length of their stay may not result in an increase in the revenues or grossoperating profits of the Hotels, or an increase in rental payments received by H-REIT from the Hotels.

The hospitality business is capital intensive, and the growth of CDL Hospitality Trusts may beaffected if it is unable to obtain financing

The Hotels will require periodic capital expenditure, refurbishments, renovation and improvements toremain competitive. Acquisitions or development of additional hotels will require significant capitalexpenditure. CDL Hospitality Trusts may not be able to fund capital improvements or acquisitions solelyfrom cash provided from its operating activities. CDL Hospitality Trusts may not be able to obtainadditional equity or debt nor be able to obtain such financing on favourable terms.

Risks Relating to Orchard Hotel Shopping Arcade

The loss of key tenants or a downturn in the businesses of the tenants in Orchard HotelShopping Arcade could have an adverse effect on the financial performance of CDL HospitalityTrusts

The forecast and projected contribution of Orchard Hotel Shopping Arcade to the Gross Revenue ofH-REIT is 6.5% for the Forecast Period 2006 and 6.4% for the Projection Year 2007. As such, H-REIT’sfinancial condition, operating results and ability to make distributions may be adversely affected by thebankruptcy, insolvency or downturn in the businesses of key tenants in Orchard Hotel ShoppingArcade, including the decision by any such tenants not to renew their leases.

By floor area, there are eight major tenants occupying a total aggregate of 2,910.7 sq m (representing58.9% of rentable retail area) as at 31 January 2006. In terms of rental collection, these eight majortenants contribute 57.4% of the total rental income of Orchard Hotel Shopping Arcade for January 2006.The lease for one of these eight major tenants will expire in October 2006. Another four of these leaseswill expire in 2007 and the remaining three will expire in 2008 and 2009.

Orchard Hotel Shopping Arcade is dependent upon its key tenants for a significant portion of its income.If these leases are terminated for any reason, or the tenants do not renew their leases at expiry orreduce their leased space or renew their leases at lower rentals, the income of Orchard Hotel ShoppingArcade may be adversely affected. Substitute tenants on satisfactory terms may not be found in timeor at all.

Further, certain key tenants in Orchard Hotel Shopping Arcade may help generate shopper traffic. Theloss of one or more of these key tenants may reduce shopper traffic, thereby reducing theattractiveness of Orchard Hotel Shopping Arcade to potential tenants and affecting the ability ofOrchard Hotel Shopping Arcade to retain existing tenants. This may adversely impact CDL HospitalityTrusts’ operating results.

Orchard Hotel Shopping Arcade faces competition from other retail properties and also fromnew retail development projects in the Orchard area

Competition for shopper traffic amongst shopping malls in the Orchard area is intense. Orchard HotelShopping Arcade faces competition from the surrounding shopping malls like Delfi Orchard, OrchardTowers, Forum The Shopping Mall, Far East Shopping Centre and Palais Renaissance. The most directcompetition to Orchard Hotel Shopping Arcade is posed by Delfi Orchard, which is a keen rival in terms

50

of retail offerings. Delfi Orchard could divert shopper traffic in the immediate vicinity away from OrchardHotel Shopping Arcade, leading to a drop in demand for tenancy.

Aside from competition faced in the immediate area, Orchard Hotel Shopping Arcade faces stiffcompetition from other shopping malls in the Orchard area. Shopper traffic may be attracted to otherpopular shopping malls such as Ngee Ann City, Wisma Atria and The Paragon, which are all locatedclose to each other. This could lure shopper traffic away from the vicinity of Orchard Hotel ShoppingArcade, leading to a drop in demand for tenancy.

New shopping, dining and entertainment development sites, such as the Orchard Turn site, have beenlaunched. When successfully completed, such sites will compete keenly for shopper traffic in OrchardRoad. In addition, the Singapore Government has recently announced certain initiatives that wouldenable existing buildings to gain additional GFA. Such initiatives have been introduced to encourageshopping malls to extend their facades outwards and to extend their retail podiums to connect withneighbouring shopping malls. In the event, properties in Singapore (and in particular, those in theOrchard area) take advantage of these initiatives to increase their GFA and retail space, shopper trafficat Orchard Hotel Shopping Arcade may be diverted to such properties in the future, which mayadversely affect the demand for and the rental rates of retail space in Orchard Hotel Shopping Arcade.

Factors that affect the ability of shopping malls to attract or retain tenants include the attractiveness ofthe building and the surrounding areas to prospective tenants and their customers or clients and thequality of the building’s existing tenants. The income from, and market value of, Orchard HotelShopping Arcade will be largely dependent on its ability to compete against other shopping malls inSingapore in attracting and retaining tenants.

Whenever competing properties in the Orchard Area are developed or substantially upgraded andrefurbished, the attractiveness of Orchard Hotel Shopping Arcade may be affected, which mayadversely impact the rental rates and hence reduce its income.

Historical market values of Orchard Hotel Shopping Arcade may not be indicative of its futuremarket value

There is no guarantee that Orchard Hotel Shopping Arcade will be able to consistently charge the samelevel of rental rates if its future market value declines. This will reduce its income, resulting directly orindirectly in lower distributions to holders of the Stapled Securities.

Risks Relating to CDL Hospitality Trusts’ Operations

The Sponsor will be a controlling holder of Stapled Securities, and will be able to exerciseinfluence over certain activities of H-REIT and HBT

The Sponsor, its subsidiaries, related corporations and associates are engaged in, among other things,hotel management and operation as well as investing in real estate which is primarily used forhospitality and/or hospitality-related purposes, whether wholly or partially. The Sponsor, through itsindirect wholly owned subsidiary, Hospitality Holdings Pte. Ltd., will immediately after the completion ofthe Offering, hold 273,000,000 Stapled Securities (constituting approximately 39.1% of the totalnumber of Stapled Securities expected to be in issue then).

The Sponsor will therefore be in a position to exercise influence in matters which require the approvalof holders of H-REIT Units or holders of HBT Units by way of an Extraordinary Resolution, for example,the modification, alteration or addition to the provisions of the H-REIT Trust Deed or the HBT TrustDeed, or the removal of the trustee-manager of HBT.

51

H-REIT may not be able to readily sell or mortgage its equitable title to Grand CopthorneWaterfront Hotel for a period of time

H-REIT will acquire Grand Copthorne Waterfront Hotel from CDL on the basis that (i) CDL undertakesto obtain within six months from Listing Date all regulatory approvals for the excision and creation ofa separate strata lot to comprise Grand Copthorne Waterfront Hotel and (ii) legal completion will takeplace after regulatory approvals are obtained for the separate strata lot. On Listing Date, H-REIT willpay 90% of the purchase price to CDL and will acquire an equitable 75-year leasehold title and takepossession of the property. The balance 10% of the purchase price will be retained by H-REIT and willbe paid on legal completion to CDL, subject to a retention sum to be withheld until satisfactorycompletion of additional works on the Grand Copthorne Waterfront Hotel undertaken by CDL. On legalcompletion, following the creation of the separate strata lot, H-REIT will acquire the legal title when thelease of the property is registered at the Singapore Land Authority. There can be no assurance thatthere would not be a delay in obtaining regulatory approvals for the creation of the separate strata titleand hence a delay in legal completion date. It should be noted that until such time H-REIT obtains legaltitle to the property, H-REIT may not be able to readily sell or mortgage its equitable title in the propertyif any of the prospective purchasers or lending banks have a conservative policy in relation toacquisition or financing of equitable interests in properties.

There may be potential conflicts of interest between CDL Hospitality Trusts, the H-REITManager, the HBT Trustee-Manager and the Sponsor as the H-REIT Manager and the HBTTrustee-Manager are indirect wholly owned subsidiaries of the Sponsor

The Sponsor may exercise influence over the activities of CDL Hospitality Trusts through the H-REITManager and the HBT Trustee-Manager, which are indirect wholly owned subsidiaries of the Sponsor.As a result, the strategy and activities of CDL Hospitality Trusts may be influenced by the overallinterests of the Sponsor (including MCIL) including acquisitions of properties and competition forclients. Moreover, the Sponsor may in the future sponsor, manage or invest in other REITs or othervehicles which may also compete directly with CDL Hospitality Trusts. There can be no assurance thatconflicts of interest will not arise between CDL Hospitality Trusts and the Sponsor in the future, or thatCDL Hospitality Trusts’ interests will not be subordinated to those of the Sponsor, whether in relationto the future acquisition of additional properties or property-related investments or in relation tocompetition for tenants, in Singapore and elsewhere globally.

The loss of a Master Lessee, or a downturn in the business of a Master Lessee could have anadverse effect on the financial condition and results of operations of CDL Hospitality Trusts

Each Hotel is entirely let to a single lessee. H-REIT is dependent on rental payments from the MasterLessees as H-REIT cannot directly operate the Hotels under the Property Funds Guidelines. TheMaster Lessees will contract with third party hotel managers to manage H-REIT’s hospitality andhospitality-related assets. H-REIT’s revenue and ability to make distributions to holders of the StapledSecurities will depend solely upon the ability of the Master Lessees to make rental payments.

However, CDL Hospitality Trusts’ financial condition, results of operations and ability to makedistributions to holders of the Stapled Securities will depend substantially upon the ability of eachMaster Lessee to make timely lease payments under the Master Lease Agreements. As such, thefinancial condition and results of operations of CDL Hospitality Trusts may be adversely affected by thebankruptcy, insolvency or downturn in the business of a Master Lessee.

The ability of any of the Master Lessees to pay rent may be affected by factors beyond their control,such as changes in general economic conditions, the level of demand for the Hotels, the performanceof the Hotel Manager, competition in the hospitality industry, and other factors relating to the operationsof the Hotels.

There can be no assurance that each Master Lessee will have sufficient assets, income and access tofinancing to enable it to satisfy its obligations under the respective Master Lease Agreement.

52

If a Master Lessee terminates or defaults on any Master Lease Agreement or does not renew anyMaster Lease Agreement on expiry, the financial performance, and consequently the distributionswhich CDL Hospitality Trusts may be able to make to holders of the Stapled Securities, may beadversely affected. In addition, the amount of rental and the terms on which each Master LeaseAgreement is renewed and each new master lease agreement is agreed may be less favourable thanthe current Master Lease Agreements. The replacement of a master lessee on satisfactory terms maynot be carried out in a timely manner or at all.

H-REIT has no control over the Master Lessees or the Hotel Manager

The financial performance of H-REIT, including the distributions which may be made to holders of theStapled Securities, are dependant upon the revenue and gross operating profit of each of the Hotels.H-REIT is entering into long term lease agreements with each of the Master Lessees which enjoy,subject to certain limitations, full discretion in the operation of the Hotels. The Master Lessees in turnare entering into hotel management agreements with the Hotel Manager. Although H-REIT has the rightunder certain limited circumstances to approve the replacement of the Hotel Manager, there is no directcontractual relationship between H-REIT and the Hotel Manager. Accordingly, the financialperformance of H-REIT is dependent on the performance of the Master Lessees and the Hotel Managereven though H-REIT has no control over the operations, management, branding or marketing of theHotels. There is therefore no assurance that the Hotels will continue to be operated, managed, brandedor marketed as “superior” hotels in the future.

The management for H-REIT and HBT may not comprise the same board of directors, which maylead to differences or deadlock in the operation of CDL Hospitality Trusts

The appointment of the same, or substantially the same, board of directors for the management ofH-REIT and HBT is intended to promote efficient management of CDL Hospitality Trusts. Due to thestructure of CDL Hospitality Trusts and the terms of the Stapling Deed, the H-REIT Manager and theHBT Trustee-Manager will be required to co-operate with each other in carrying out, among otherthings, administrative and managerial duties in respect of CDL Hospitality Trusts.

The circumstances in which the H-REIT Manager and the HBT Trustee-Manager may be removeddiffer:

• Under the H-REIT Trust Deed, the H-REIT Manager may be removed by the H-REIT Trustee uponthe occurrence of a number of events, including the passing of a resolution by a majorityconsisting of 50.0% or more of the total number of votes present and voting (with no participantsbeing disenfranchised) at a meeting of the holders of H-REIT Units duly convened and held (see“Management and Corporate Governance — H-REIT — Retirement or Removal of the H-REITManager”).

• The HBT Trust Deed however provides that the HBT Trustee-Manager may be removed only ifholders of HBT Units, by a resolution duly passed by a majority consisting of 75.0% or more of thetotal number of votes present and voting (with no participants being disenfranchised) at a meetingof the holders of HBT Units duly convened and held (see “Management and CorporateGovernance — HBT — Retirement or Removal of the HBT Trustee-Manager”).

The lower threshold of approval of unitholders for the removal of the H-REIT Manager, as well as theexistence of other grounds, gives rise to a higher possibility of the H-REIT Manager being removed andreplaced as compared to the HBT Trustee-Manager. In the event that only the H-REIT Manager isremoved and replaced, the HBT Trustee-Manager will be required to co-operate with the new managerof H-REIT (which will have a different board of directors from the HBT Trustee-Manager) in themanagement of CDL Hospitality Trusts.

As a result, CDL Hospitality Trusts will lose the advantage of being managed more efficiently by thesame, or substantially the same, board of directors. Further, there can be no assurance that having

53

different boards of directors for the management of H-REIT and HBT will not lead to differences ordeadlock in the operation of CDL Hospitality Trusts, which may have adverse effects on CDL HospitalityTrusts’ financial condition, results of operations and ability to make expected distributions to the holdersof the Stapled Securities.

There is no assurance that H-REIT will be able to leverage on the Sponsor’s experience in theoperations of hotels

Upon completion of the Offering, the Sponsor will hold an effective interest in 39.1% of the StapledSecurities through its indirect wholly owned subsidiary, Hospitality Holdings Pte. Ltd., and accordinglybe a controlling holder of H-REIT Units and HBT Units (see “Ownership of the Stapled Securities”). TheSponsor has also agreed to a 180-day lock-up period (the “Lock-up Period”) in respect of its effectiveinterest in such Stapled Securities. There is no assurance that the Sponsor will not dispose of itseffective interest in the Stapled Securities following the expiry of the Lock-up Period. In the event thatthe Sponsor decides to transfer or dispose of its effective interest in the Stapled Securities and ceasesto be a controlling holder of H-REIT Units and HBT Units, H-REIT may no longer be able to leverageon the Sponsor’s financial strength, experience, market reach and network of contacts in the globalhotel and hospitality industry to further its growth. This may have a material and adverse impact onH-REIT’s results of operations and financial condition which may as a consequence, affect CDLHospitality Trusts’ ability to make its distributions to holders of the Stapled Securities.

Future acquisitions may not yield the returns expected, may result in disruptions to CDLHospitality Trusts’ business, may strain management resources and may result in dilution ofholdings

CDL Hospitality Trusts’ external growth strategy and its market selection process may not ultimately besuccessful and may not provide positive returns to holders of the Stapled Securities. Acquisitions maycause disruptions to the operations of CDL Hospitality Trusts and divert management’s attention awayfrom day-to-day operations. New Stapled Securities issued in connection with any new acquisitioncould also be substantially dilutive to existing holders of the Stapled Securities.

H-REIT’s strategy of investing mainly in hospitality and hospitality-related assets may entail ahigher level of risk compared to other types of unit trusts that have a more diverse range ofinvestments

H-REIT is established with the principal investment strategy of investing, directly or indirectly, in adiversified portfolio of income-producing real estate which (a) is primarily used for hospitality and/orhospitality-related purposes, whether wholly or partially, and real estate-related assets in relation to theforegoing and (b) may exist as part of larger mixed-use developments (where such mixed-usedevelopments may also include entertainment, leisure and/or gaming-related facilities).

A concentration of investments in a portfolio of such specific real estate assets may cause H-REIT tobe susceptible to a downturn in the real estate market as well as the hospitality industry in Singaporeand the relevant regions elsewhere. This may lead to a decline in occupancy and room ratescorrespondingly for such real estate assets including those in H-REIT’s portfolio, and/or a decline in thecapital value of H-REIT’s portfolio, which will have an adverse impact on the distributions to holders ofthe Stapled Securities and/or on the results of operations and the financial condition of H-REIT.

The amount H-REIT may borrow is limited, which may affect the operations of H-REIT

Under the Property Funds Guidelines, H-REIT is generally permitted to borrow only up to 35.0% of thevalue of the H-REIT Deposited Property at the time the borrowing is incurred, taking into accountdeferred payments (including deferred payments for assets whether to be settled in cash or in H-REITUnits). The Property Funds Guidelines allow H-REIT to borrow more than 35.0% (up to a maximum of60.0%) of the value of the H-REIT Deposited Property only if a credit rating from Fitch Inc., Moody’s orStandard and Poor’s is obtained and disclosed to the public.

54

Adverse business consequences of this limitation on borrowings may include:

• an inability to fund capital expenditure requirements in relation to H-REIT’s existing asset portfolioor in relation to H-REIT’s future acquisitions of additional hotels and/or hospitality-related assetsto expand its portfolio;

• a decline in the value of the H-REIT Deposited Property may cause the borrowing limit to beexceeded, thus affecting H-REIT’s ability to make further borrowings; and

• cash flow shortages (including with respect to distributions) which H-REIT might otherwise be ableto resolve by borrowing funds.

CDL Hospitality Trusts faces risks associated with debt financing

Both H-REIT and HBT will be subject to risks associated with debt financing, including the risk that theircash flow will be insufficient to meet required payments of principal and interest under such financingand to make distributions to holders of the Stapled Securities.

H-REIT will distribute 100.0% of its taxable income and tax-exempt income (if any) for the period fromthe Listing Date to 31 December 2007. Thereafter, H-REIT will distribute at least 90.0% of its taxableincome and tax-exempt income (if any). As a result of this distribution policy, H-REIT may not be ableto meet all of its obligations to repay principal on its debt obligations through its cash flow fromoperations. As such, H-REIT may be required to repay maturing debt with funds from additional debtor equity financing or both. There can be no assurance that such financing will be available onacceptable terms or at all.

Both H-REIT and HBT will also be subject to the risk that the terms of any refinancing of existingborrowings will not be as favourable as the terms of existing borrowings. In addition, they may besubject to certain covenants in connection with any future borrowings that may limit or otherwiseadversely affect their operations and their ability to make distributions to holders of the StapledSecurities. Such covenants may also restrict their ability to acquire hospitality and hospitality-relatedassets or undertake other capital expenditure or may require them to set aside funds for maintenanceor repayment of security deposits. Furthermore, if prevailing interest rates or other factors at the timeof refinancing (such as the possible reluctance of lenders to make loans in relation to hospitalityproperties) result in higher interest rates upon refinancing, the interest expense relating to suchrefinanced indebtedness would increase, which would adversely affect both H-REIT’s and HBT’s cashflow and the amount of distributions they could make to holders of the Stapled Securities.

CDL Hospitality Trusts does not have an established operating history

CDL Hospitality Trusts was established on 12 June 2006. The H-REIT Manager and the HBTTrustee-Manager were both incorporated on 17 May 2006. As such, H-REIT, HBT, the H-REIT Managerand the HBT Trustee-Manager do not have an operating history by which their respective pastperformances may be judged. This will make it more difficult for investors to assess their likely futureperformance. There can be no assurance that (a) H-REIT and HBT will be able to generate sufficientrevenue from operations to make distributions; or (b) such distributions will be in line with those set outin “Profit Forecasts and Profit Projections”; or (c) HBT will generate sufficient cash flow to meet its rentalpayment obligations to H-REIT when HBT becomes the master lessee of any of the Hotels.

The H-REIT Manager may not be able to implement its investment strategy

H-REIT is established with the principal investment strategy of investing, directly or indirectly, in adiversified portfolio of income-producing real estate which (a) is primarily used for hospitality and/orhospitality-related purposes, whether wholly or partially, and real estate-related assets in relation to theforegoing and (b) may exist as part of larger mixed-use developments (where such mixed-usedevelopments may also include entertainment, leisure and/or gaming-related facilities). Regulardistributions to the holders of the Stapled Securities will be made by the H-REIT Manager. However,

55

there can be no assurance that the H-REIT Manager will be able to implement its investment strategysuccessfully or that it will be able to expand H-REIT’s portfolio at all, or at any specified rate or to anyspecified size. The H-REIT Manager may not be able to make acquisitions or investments onfavourable terms or within a desired time frame. H-REIT will be relying on external sources of fundingto expand its asset portfolio, which may not be available on favourable terms, or at all. Even if H-REITwere able to successfully make additional property acquisitions or investments, there can be noassurance that H-REIT will achieve its intended return on such acquisitions or investments. Since theamount of borrowings that H-REIT can incur to finance acquisitions is limited by the Property FundsGuidelines, such acquisitions are likely to be largely dependent on H-REIT’s ability to raise equitycapital, which may result in a dilution of existing holdings of the holders of the Stapled Securities. Therecan be no assurance that the equity to debt financing structure would be carried out in a way as tooptimise the return to investors. Potential vendors may also view the prolonged time frame and lack ofcertainty generally associated with the raising of equity capital to fund any such purchase negativelyand may prefer other potential purchasers.

Furthermore, there may be significant competition for attractive investment opportunities from otherreal estate investors. There can be no assurance that H-REIT will be able to compete effectively againstsuch entities.

CDL Hospitality Trusts may depend on certain key personnel, and the loss of any key personnelmay adversely affect its operations

CDL Hospitality Trusts’ performance may depend, in part, upon the continued service and performanceof key staff members of the H-REIT Manager and HBT Trustee-Manager. These key personnel mayleave the H-REIT Manager and HBT Trustee-Manager in the future or compete with the H-REITManager, the HBT Trustee-Manager and CDL Hospitality Trusts. The loss of any of these individuals,or of one or more of the H-REIT Manager’s or the HBT Trustee-Manager’s other key employees, couldhave a material adverse effect on CDL Hospitality Trusts’ financial condition and results of operations.

H-REIT and/or HBT may engage in hedging transactions, which can limit gains and increaseexposure to losses

H-REIT and/or HBT may enter into hedging transactions to protect itself from the effects of interest ratefluctuations on floating rate debt and also to protect its portfolio from interest rate and prepaymentfluctuations. Hedging transactions may include entering into interest rate hedging instruments,purchasing or selling futures contracts, purchasing put and call options or entering into forwardagreements. Hedging activities may not have the desired beneficial impact on the results of operationsor financial condition of H-REIT and/or (as the case may be) HBT. No hedging activity can completelyinsulate risks associated with changes in interest rates and exchange rates. Moreover, interest ratehedging could fail to protect CDL Hospitality Trusts or adversely affect CDL Hospitality Trusts becauseamong other things:

• available interest rate hedging may not correspond directly with the interest rate risk for whichprotection is sought;

• the duration of the hedge may not match the duration of the related liability;

• the party owing money in the hedging transaction may default on its obligation to pay;

• the credit quality of the party owing money on the hedge may be downgraded to such an extentthat it impairs H-REIT’s or HBT’s (as the case may be) ability to sell or assign its side of thehedging transaction; and

• the value of the derivatives used for hedging may be adjusted from time to time in accordance withaccounting rules to reflect changes in fair value. Downward adjustments would reduce the netasset value of CDL Hospitality Trusts.

56

Hedging involves risks and typically involves costs, including transaction costs, which may reduceoverall returns. These costs increase as the period covered by the hedging increases and duringperiods of rising and volatile interest rates. These costs will also limit the amount of cash available fordistributions to holders of the Stapled Securities. The H-REIT Manager and HBT Trustee-Manager, willregularly monitor the feasibility of engaging in such hedging transactions taking into account the costof such hedging transactions.

The Master Lessees may not maintain the Hotels properly

The Master Lessees may not maintain the Hotels properly and run down the Hotels, resulting insubstantial deferred capital expenditure. Lack of capital or insufficient cash flow may adversely impactfuture operations and profitability of the Hotels, thereby adversely affecting the ability of the MasterLessees to fund costs of repairs, maintenance, renewals of FF&E, Operating Equipment, inventories,and/or to make rental payments to H-REIT.

If HBT steps in as a master lessee for any of H-REIT’s Hotels, it may be required to indemnifythe hotel manager

In the event that HBT steps in as a master lessee for any of H-REIT’s Hotels, it may be required by therelevant hotel manager to indemnify the hotel manager against any claims arising from the managingof that Hotel, as the industry standard is for the hotel manager to act merely as an agent of the hotelowner/lessee. Accordingly, HBT may be required to indemnify the hotel manager for all claims fromemployees working at that particular Hotel as well as former employees of the Hotel. There can be noassurance that any such claims will not adversely impact HBT’s financial condition thereby affecting itsability to perform its duties as a master lessee, as well as its ability to make distributions (if any) toholders of the Stapled Securities.

Risks Relating to Investing in Real Estate

The initial properties of CDL Hospitality Trusts are located in Singapore, but CDL HospitalityTrusts may make future acquisitions of properties elsewhere in the world. This exposes CDLHospitality Trusts to economic and real estate market conditions and changes in fiscal policiesin such other countries

While the assets in H-REIT’s initial portfolio are all located in Singapore, H-REIT’s investment strategyenvisages investments globally. As a result, H-REIT’s results of operations depend, to a large extent,on the performance of the local, regional or global economy.

An economic decline in Singapore could adversely affect H-REIT’s results of operations and futuregrowth. Political upheavals, natural disasters, insurgency movements, riots and governmental policiesall play a pivotal role in the performance of H-REIT’s hospitality and hospitality-related assets.

Investments in hospitality and/or hospitality-related assets in other countries will expose CDLHospitality Trusts to the local real estate market conditions in these countries. An economic decline inany one or more of the countries in which the hospitality and hospitality-related assets of CDLHospitality Trusts are located could adversely affect CDL Hospitality Trusts’ results of operations andfuture growth.

Other local real estate market conditions which may adversely affect the performance of CDLHospitality Trusts include the attractiveness of competing hospitality and hospitality-related assets or,for example, if there is an oversupply or reduced demand for such hospitality and hospitality-relatedassets. CDL Hospitality Trusts may also be exposed to risks associated with exchange rate fluctuationsbetween the Singapore dollar and the local currency of foreign countries.

Further, CDL Hospitality Trusts will be subject to foreign real estate laws, regulations and policies as aresult of its property investments in foreign countries. There might be negative impact on a property

57

owned by CDL Hospitality Trusts in a foreign country as a result of measures and policies adopted bythe relevant foreign governments and regulatory authorities at national, provincial or local levels, suchas government control over property investments or regulations in relation to foreign exchange. Legalprotection and recourse available to CDL Hospitality Trusts in certain countries may be limited.

In addition, the income and gains derived from investments in hospitality and/or hospitality-relatedassets in other countries will be subject to various types of taxes in Singapore and these foreigncountries, including income tax, withholding tax, capital gains tax and any other taxes that may beimposed specifically for ownership of real estate. All of these taxes, which are subject to changes inlaws and regulations that may lead to an increase in tax rates or the introduction of new taxes, couldadversely affect and erode the returns from these hospitality and hospitality-related assets and hencethe yield to holders of the Stapled Securities. There is also no assurance that CDL Hospitality Trustswill be able to repatriate to Singapore the income and gains derived from investments in hospitalityand/or hospitality-related assets outside Singapore on a timely and regular basis. Any inability torepatriate the income and gains to Singapore will affect CDL Hospitality Trusts’ ability to makedistributions to holders of the Stapled Securities out of such income and gains.

Defects affecting the land could result in the inability to operate the Properties and cause thetenants to be unable to make timely payments of rent

The Master Lessees, as the tenants of the Hotels, and the tenants of Orchard Hotel Shopping Arcadeare not required to repair any latent or patent defects in the Properties or carry out structural or capitalrepairs. However, these defects could have an impact on the operations and/or cash flow of the tenantsresulting in their inability to make timely payments of rent, which would have an impact on the revenue,total returns and financial condition of CDL Hospitality Trusts.

The value of CDL Hospitality Trusts’ assets might be adversely affected if any of the Sponsor,the H-REIT Manager, the Master Lessees, other master lessees and/or HBT (as the case may be)do not provide adequate management and maintenance or purchase or put in place adequateinsurance in relation to the assets of CDL Hospitality Trusts and its potential liabilities to thirdparties

Should the Sponsor, the H-REIT Manager, the Master Lessees, other master lessees and/or HBT (asthe case may be) fail to provide adequate management and maintenance, or fail to establish andmaintain adequate insurance in relation to damage to any of the assets of CDL Hospitality Trusts andits potential liabilities to third parties, CDL Hospitality Trusts may be exposed to various liabilities andlosses to the extent that such assets and liabilities are not adequately insured.

Catastrophic losses and/or potential liabilities to third parties may not be economically insurable, if atall. CDL Hospitality Trusts would also be responsible for the deductible to all its policies.

Currently, the Sponsor maintains various policies on a global or regional basis. For cost efficiencyreasons, H-REIT may participate and insure against physical damage, rental losses from businessinterruption, terrorism and public liability under these policies up to certain limits. The Sponsor has notgiven any undertaking or assurance to H-REIT that it is able, or would continue, to allow H-REIT toparticipate in the Sponsor’s policies or that it would keep these policies in full force and effect, andcontinue to pay premiums in a timely manner and ensure that they are not voidable or breached on thepart of the Sponsor. Although the H-REIT Trustee would be named as a beneficiary under thesepolicies, there is no assurance that H-REIT has obtained or will obtain adequate insurance for any ofthe assets of H-REIT or that such insurance will be cost efficient or properly maintained. In the eventthat there is any breach or default in the policies, H-REIT may not be properly or adequately insured.

CDL Hospitality Trusts may suffer material losses in excess of insurance proceeds

CDL Hospitality Trusts’ portfolio of assets could suffer physical damage caused by fire or other causesor CDL Hospitality Trusts may suffer public liability claims, all of which may result in losses (including

58

loss of rent) that may not be fully compensated by insurance proceeds. In addition, certain types of risks(such as terrorism, war risk and losses caused by the withholding of supply of, e.g. utilities, by a supplyauthority and contamination or other environmental breaches) may be uninsurable or becomeuninsurable or the cost of insurance may be prohibitive when compared to the risk. H-REIT’s insurancepolicies to be entered into at Listing Date for the Properties do not cover certain types of risks such asacts of war, contamination or other environmental breaches, radioactive contaminations or explosivenuclear assemblies. Should an uninsured loss or a loss in excess of insured limits occur, CDLHospitality Trusts could be required to pay compensation and/or lose capital invested in the affectedproperty as well as anticipated future revenue from that property. CDL Hospitality Trusts would alsoremain liable for any debt or other financial obligation related to that property. No assurance can begiven that material losses in excess of insurance proceeds will not occur in the future.

CDL Hospitality Trusts may be subject to increases in property expenses and other operatingexpenses

CDL Hospitality Trusts’ ability to make distributions to holders of the Stapled Securities could beadversely affected if property expenses and other operating expenses increase.

Factors that could increase property expenses and other operating expenses include:

• increases in property taxes and other statutory charges;

• changes in statutory laws, regulations or government policies which increase the cost ofcompliance with such laws, regulations or policies;

• increases in insurance premiums;

• increases in the rate of inflation;

• in relation to Orchard Hotel Shopping Arcade, increases in advertising and promotion expensesand other costs in relation to the management of Orchard Hotel Shopping Arcade and increasesin utility charges;

• increases in leasing fees and commissions payable to third party agents for marketing OrchardHotel Shopping Arcade to tenants;

• defects affecting or environmental pollution in connection with CDL Hospitality Trusts’ hospitalityand hospitality-related assets which need to be rectified, leading to unforeseen capitalexpenditure; and

• increase in H-REIT Manager’s management fees, H-REIT Trustee’s fee and other trust expenses.

There can be no assurance that should the property expenses and other operating expenses increase,such increase will not have a significant impact on CDL Hospitality Trusts’ financial condition and totalreturns. In addition, such increase may adversely affect the ability of CDL Hospitality Trusts to makeexpected distributions to holders of the Stapled Securities.

Property tax of CDL Hospitality Trusts may be subject to increase

Property expenses for CDL Hospitality Trusts include property tax on the Hotels and Orchard HotelShopping Arcade. Such property tax is based on 10.0% of the annual value of the Hotels and OrchardHotel Shopping Arcade.

The annual value of a hotel comprises the annual value of hotel rooms and F&B outlets, and other partsof the hotel. Under existing legislation, there are two methods of assessing the annual value of hotels:

• Under the Property Tax (Valuation by Gross Receipts for Hotel Premises) Order, provided thehotel meets certain conditions (one of which is that the hotel is not leased or licensed out), theannual value of its hotel rooms in any year is assessed at 15% of the gross receipts of thepreceding calendar year whereas the annual value of its F&B outlets is assessed at 5% of the

59

gross receipts of the preceding calendar year (the “Gross Receipts Method”). The annual valueof the other parts of the hotel (excluding hotel rooms and F&B outlets) is based on their rentalvalue (the “Rental Method”); and

• In the event that the hotel does not meet the conditions set out in the above Order, the annualvalue of the hotel is derived from the Rental Method. The annual value of the hotel will be basedon the gross rent derived from the hotel, less any service charge.

As H-REIT will be leasing out the Hotels to the Master Lessees, in assessing property tax on the Hotels,the annual value of the Hotels’ hotel rooms and F&B outlets will be determined using the RentalMethod. The Ministry of Finance has however granted H-REIT a tax remission of any amount ofproperty tax on the Hotels payable by H-REIT under the Rental Method in excess of the property taxon such Hotels computed by way of the Gross Receipts Method. The grant of this tax remissioneffectively means that the Gross Receipts Method is used in the assessment of the annual value of thehotel rooms and F&B outlets. The tax remission is limited to the four Hotels in H-REIT’s asset portfolioas at the Listing Date.

The property tax of CDL Hospitality Trusts in “Profit Forecasts and Project Projections” is computed onthe above bases. Should the tax remission be withdrawn, the annual value of the hotel rooms and F&Boutlets will be assessed based on the Rental Method, which is expected to produce a higher annualvalue than an assessment based on the Gross Receipts Method.

There is no assurance that the property tax of CDL Hospitality Trusts will remain as forecast andprojected. Property tax expenses of CDL Hospitality Trusts may increase due to reasons including butnot limited to the following:

• increase in the applicable property tax rate;

• changes to the Property Tax (Valuation by Gross Receipts for Hotel Premises) Order including butnot limited to changes to the basis of assessment and rates of the gross receipts;

• changes to the basis of assessment for property tax on the other parts of the Hotels and OrchardHotel Shopping Arcade; and

• changes to property tax legislation/regime including but not limited to changes in definition ofannual value.

There can be no assurance that should the property tax increase, such increase will not have asignificant impact on the total returns, financial condition and cash flows of CDL Hospitality Trusts. Inaddition, such increase may adversely affect the ability of CDL Hospitality Trusts to make expecteddistributions to holders of the Stapled Securities.

There is no assurance that the tax remission granted by the Ministry of Finance will be extendedto other Singapore hotels which H-REIT may acquire

The tax remission granted by the Ministry of Finance is specific to the four Hotels in H-REIT’s assetportfolio as at the Listing Date. There is no assurance that the Ministry of Finance will extend the taxremission to other Singapore hotels which H-REIT may acquire after the Listing Date. As a result, noassurance can be given that the property tax payable in respect of any Singapore hotel which H-REITmay acquire after the Listing Date will be computed on a similar basis as that for the four Hotels.

CDL Hospitality Trusts may be adversely affected by the illiquidity of real estate investments

CDL Hospitality Trusts’ strategy is to invest primarily in hospitality and hospitality-related assets. Thisinvolves a higher level of risk as compared to a portfolio which has a diverse range of investments. Realestate investments, particularly investments in high value properties such as those in which CDLHospitality Trusts has invested or intends to invest, are relatively illiquid. Such illiquidity may affect CDLHospitality Trusts’ ability to vary its investment portfolio or liquidate part of its assets in response to

60

changes in economic, real estate market or other conditions. For instance, CDL Hospitality Trusts maybe unable to sell its assets on short notice or may be forced to give a substantial reduction in the pricethat may otherwise be sought for such assets in order to ensure a quick sale. Moreover, CDL HospitalityTrusts may face difficulties in securing timely and commercially favourable financing in asset-basedlending transactions secured by real estate due to the illiquid nature of real estate assets. These factorscould have an adverse effect on CDL Hospitality Trusts’ financial condition and results of operations,with a consequential adverse effect on CDL Hospitality Trusts’ ability to deliver expected distributionsto holders of the Stapled Securities.

The Properties or a part of them may be acquired compulsorily

The Land Acquisition Act, Chapter 152 of Singapore gives the Singapore Government the power toacquire any land in Singapore:

• for any public purpose;

• where the acquisition is of public benefit or of public utility or in the public interest; or

• for any residential, commercial or industrial purposes.

The compensation to be awarded pursuant to any compulsory acquisition would be based on the lowestof (i) the market value of the property as at 1 January 1995, (ii) the market value of the property as atthe date of the publication in the Government Gazette of the notification of the likely acquisition of theland (provided that within six months from the date of publication, a declaration of intention to acquireis made by publication in the Government Gazette), and (iii) the market value of the property as at thedate of publication in the Government Gazette of the declaration of intention to acquire. Accordingly, ifthe market value of a property (or part thereof) in Singapore, that is compulsorily acquired, is greaterthan the lowest of the market values referred to above, the compensation paid in respect of theacquired property will be less than its market value.

CDL Hospitality Trusts may acquire hospitality and hospitality-related assets located in other countries.The laws of these countries may also provide for a right by the governments of these countries tocompulsorily acquire any land or property with no compensation to the owner, or for compensationbelow market value. Such compulsory acquisitions would have an adverse effect on the revenue,results of operations and value of CDL Hospitality Trusts’ asset portfolio.

Pursuant to the terms of the Master Lease Agreement, if the whole of a Hotel is compulsorily acquiredor such parts of a Hotel so as to make it, in the Master Lessee’s reasonable opinion impracticable orunreasonable to use the remainder of the Hotel as a hotel of the same type and class, either party mayterminate the Master Lease Agreement and no compensation is payable in respect of that termination.Any compensation awarded shall be equitably apportioned between the parties with priority torecoupment by H-REIT of its entire investment.

Where only part of a Hotel is compulsorily acquired such that it is not impracticable or unreasonable tooperate the remainder of the Hotel as a hotel of the same type and class, the Master Lessee may, bynotice given within one month of the acquisition, elect to undertake, at its cost, alterations ormodifications of the Hotel to make it a satisfactory architectural unit as a hotel of similar type and classand any compensation awarded shall be applied to reimburse the Master Lessee for such costs withthe balance, if any, to be equitably apportioned between the parties to compensate for any loss ofincome.

H-REIT’s acquisition of the Properties or future acquisitions may be subject to risks associatedwith the acquisition of real estate

While the H-REIT Manager believes that reasonable due diligence investigations have been conductedwith respect to the Properties, there can be no assurance that the Properties or future acquisitions willnot have defects or deficiencies requiring significant capital expenditure, repair or maintenance

61

expenses, or payment or other obligations to third parties, other than those disclosed in thisProspectus. The expert reports, which the H-REIT Manager has relied upon as part of its due diligenceinvestigations of the Properties, may contain inaccuracies and deficiencies. Certain building defectsand deficiencies may be difficult or impossible to ascertain due to the limitations inherent in the scopeof the inspections, the technologies or techniques used and other factors.

In addition, laws and regulations (including those relating to real estate) may have been breached andcertain regulatory requirements in relation to the Properties or future acquisitions may not be or havebeen complied with, which the H-REIT Manager’s due diligence investigations did not or might notuncover. As a result, H-REIT may incur financial or other obligations in relation to such breaches ornon-compliance.

In the event that any of the Properties is damaged prior to the Listing Date and the cost ofrepair/reinstatement of such damage is less than 50.0% of the purchase price of the Property, neitherthe Vendor nor the H-REIT Trustee may terminate the relevant Property Sale and PurchaseAgreements. The Vendor would however be obliged to rectify the damage at its own cost and expenseprior to the Listing Date or, if this is not possible, as soon as reasonably practicable after the ListingDate. In the event of such damage to any of the Properties, there can be no assurance that the relevantVendor would have sufficient means and resources to complete any such repair/reinstatement or to doso prior to the Listing Date.

In particular, the representations, warranties and indemnities granted in favour of H-REIT by theVendors of the Properties or future acquisitions are subject to limitations as to their scope and as to theamount and timing of claims which can be made thereunder. There can be no assurance that H-REITwould be entitled to be reimbursed under such representations, warranties and indemnities for alllosses or liabilities suffered or incurred by it as a result of its acquisition of the Properties or futureacquisitions.

Risks Relating to an Investment in the Stapled Securities

The actual performance of CDL Hospitality Trusts and the Properties could differ materially fromthe forward-looking statements in this Prospectus

This Prospectus contains forward-looking statements regarding, among other things, forecast andprojected distribution levels for the period from 1 July 2006 to 31 December 2007. These forward-looking statements are based on a number of assumptions which are subject to significant uncertaintiesand contingencies, many of which are outside CDL Hospitality Trusts’ control (see “Forward-LookingStatements”).

Some or all of the events and circumstances contained in these forward-looking statements may notoccur as expected, or events and circumstances, which are not currently anticipated, may arise. Actualresults and performances of CDL Hospitality Trusts and the Properties may differ materially from thatforecast in these forward-looking statements.

HBT is dormant as at the Listing Date. The forecast and projected distributions of CDL Hospitality Trustsin this Prospectus are based on (i) the forecast and projected distributions of H-REIT and (ii) HBTremaining dormant during the Forecast Period 2006 and the Projection Year 2007. In the event thatHBT is activated, it is likely that the actual distributions of CDL Hospitality Trusts for the Forecast Period2006 and the Projection Year 2007 will differ materially from the forecast and projected distributions ofCDL Hospitality Trusts in this Prospectus.

Further, while profit forecasts are prepared for the Forecast Period 2006, being the period commencingfrom 1 July 2006 and ending 31 December 2006, it should be noted that due to the seasonal nature ofthe hotel business, the financial performance of hotels is generally better in the second half of the yearas compared to the first half of the year.

62

Activities carried out by HBT may affect the returns of CDL Hospitality Trusts

As at the Listing Date, HBT will be dormant. It will, however, become active if H-REIT is unable toappoint a master lessee for any of the Hotels in its portfolio at the expiry of the relevant master leaseagreement or for a newly acquired hotel. In such circumstances, HBT will be appointed by H-REIT asa master lessee for that hotel, and HBT will in turn appoint a professional hotel manager to manage theday-to-day operations and marketing of the hotel. HBT exists primarily as “a master lessee of lastresort”.

HBT may also become active if it undertakes certain hospitality and hospitality-related developmentprojects, acquisitions and investments which may not be suitable for H-REIT. In this regard, HBT willgenerally be considered to be active in the event that it carries on any business activity other than:




By expanding into business activities other than the above, HBT faces risks normally associated withsuch activities. Such risks include, but are not limited to, material losses suffered as a result of businessor commercial risks, downturns in the relevant economies or markets, a lack of demand for its productsand services and an inability to compete efficiently against other competitors. Should HBT sufferlosses, or should its relative returns based on criteria such as capital or equity employed be lower thanthat of H-REIT, the returns of CDL Hospitality Trusts may be adversely affected since such returnscomprise an aggregate of returns from H-REIT and HBT.

Such risks will be different from the risk profile of CDL Hospitality Trusts as at the Listing Date, whichis essentially that of a property owner deriving mainly rental income from the Master Lessees and retailtenants of Orchard Hotel Shopping Arcade.

Risk of Unstapling of the Stapled Securities

Holders of the Stapled Securities may, for various reasons, after the Listing Date, decide that theStapled Securities ought to be unstapled, subject to the Stapling Deed, the H-REIT Trust Deed, theHBT Trust Deed and any relevant legislation. In the event that Unstapling should occur, the structureof CDL Hospitality Trusts may be undermined and there may be ramifications and adverse effects toholders of the Stapled Securities. As the letter of eligibility issued by the SGX-ST to CDL HospitalityTrusts for the listing and quotation on the Main Board of the SGX-ST is in relation to the StapledSecurities and does not extend to the listing and quotation of the individual components of the StapledSecurities, being H-REIT Units and HBT Units, upon Unstapling, the Stapled Securities will be de-listedfrom the SGX-ST. As a result, investors’ ability to liquidate their investments in H-REIT Units and/orHBT Units in response to changes in economic, real estate market or other conditions may beadversely affected and the realisable value of H-REIT Units and HBT Units may be less than their fairvalues.

Market price of the Stapled Securities may be adversely affected

The Stapled Securities will be tradable on the Main Board of the SGX-ST. If the Sponsor and HospitalityHoldings Pte. Ltd. (following the lapse of their lock-up arrangements or pursuant to any applicablewaivers) sell or are perceived as intending to sell a substantial amount of their direct or effective interestin the Stapled Securities held as at the Listing Date, the market price for the Stapled Securities may beadversely affected (see “Distribution — Lock-up Arrangements” and “Ownership of the StapledSecurities”).

63

The net asset value per Stapled Security may be diluted if further issues are priced below thecurrent net asset value per Stapled Security

New Stapled Securities may be issued at a subscription price at or below the then current net assetvalue per Stapled Security. Where new Stapled Securities, including Stapled Securities which may beissued to the H-REIT Manager in payment of the H-REIT Manager’s management fees, are issued atless than the net asset value per Stapled Security, the net asset value of each existing Stapled Securitymay be diluted.

H-REIT may be unable to comply with the terms of the Tax Ruling or the Tax Ruling may berevoked or amended

H-REIT has received the Tax Ruling from the IRAS under which tax transparency has been granted toH-REIT on stipulated terms and conditions. These terms and conditions include a requirement for theH-REIT Trustee and the H-REIT Manager to take all reasonable steps necessary to safeguard the IRASagainst the loss of tax as a result of the Tax Ruling and to comply with all administrative requirementsto ensure ease of tax administration. The Tax Ruling is also subject to the requirement that the rentalincome received by H-REIT from each Master Lessee is market rent.

The Tax Ruling grants tax transparency to H-REIT on taxable income that is distributed to holders ofthe Stapled Securities. The Tax Ruling, either in part or in whole, may be revoked or its terms may bereviewed and amended by the IRAS at any time. If the Tax Ruling is revoked or if H-REIT is unable tocomply with its terms, or if the rental income received by H-REIT is not considered by the IRAS to bemarket rent, H-REIT will be subject to tax on its taxable income and the tax will be assessed on, andcollected from, the H-REIT Trustee, in which case distributions to all holders of the Stapled Securitieswill be made after tax. In such event, the actual amount of distributions made to holders of StapledSecurities may, depending on their effective rates of individual taxation, be less than the amount theywould have otherwise received if H-REIT had been granted tax transparency in respect of itsdistributions. If the terms of the Tax Ruling are amended, H-REIT may not be able to comply with thenew terms imposed and this non-compliance could affect H-REIT’s tax transparent status and its abilityto distribute its taxable income free of tax deduction at source (see “Taxation” and Appendix V,“Independent Taxation Report” for more information on the terms of the Tax Ruling).

Foreign holders of the Stapled Securities may not be permitted to participate in future rightsissues by CDL Hospitality Trusts

The H-REIT Trust Deed and the HBT Trust Deed provide that in relation to any rights issue, the H-REITManager and the HBT Trustee-Manager may, in their absolute discretion, elect not to extend an offerof the Stapled Securities under a rights issue to those holders of the Stapled Securities whoseaddresses, as registered with CDP, are outside Singapore. The rights or entitlements to the StapledSecurities to which such holders of the Stapled Securities would have been entitled will be offered forsale and sold in such manner, at such price and on such other terms and conditions as the H-REITManager and the HBT Trustee-Manager may determine, subject to such other terms and conditions asthe H-REIT Trustee and the HBT Trustee-Manager may impose. The proceeds of any such sale, ifsuccessful, will be paid to the holders of the Stapled Securities whose rights or entitlements have beenso sold, provided that where such proceeds payable to the relevant holders of the Stapled Securitiesare less than S$10, the H-REIT Manager and the HBT Trustee-Manager are entitled to retain suchproceeds as part of the H-REIT Deposited Property and the HBT Deposited Property respectively. Theholding of the relevant holder of the Stapled Securities may be diluted as a result of such sale.

CDL Hospitality Trusts’ distribution policy may cause CDL Hospitality Trusts to face liquidityconstraints

The H-REIT Manager will distribute 100.0% of H-REIT’s taxable income and tax-exempt income (if any)for the period commencing from the Listing Date to 31 December 2007. Thereafter, the H-REITManager will distribute at least 90.0% of H-REIT’s taxable income and tax-exempt income (if any).

64

H-REIT is required by the Tax Ruling to distribute at least 90.0% of its taxable income. If H-REIT’staxable income is greater than its cash flow from operations, there may be liquidity constraints and itmay have to borrow to meet ongoing cash flow requirements in order to distribute at least 90.0% of itstaxable income since it may not have any reserves to draw on. H-REIT’s ability to borrow is, however,limited by the Property Funds Guidelines. Failure to make distributions would put H-REIT in breach ofthe terms of the Tax Ruling and H-REIT would be liable to pay income tax.Should HBT be active andprofitable, the declaration and payment of distributions by HBT will be at the sole discretion of the HBTTrustee-Manager Board. HBT is not compulsorily required to make any distributions to holders of theStapled Securities. If any such distributions are made to holders of the Stapled Securities, HBT mayhave to borrow in order to meet outgoing cash flow requirements.

Holders of the Stapled Securities may bear the effects of tax adjustments on income distributedin prior periods

Distributions will be based on H-REIT’s taxable income as computed by the H-REIT Manager. H-REIT’staxable income as computed by the H-REIT Manager may, however, be subject to adjustment by theIRAS. The effect of this adjustment would mean that H-REIT’s actual taxable income might either behigher or lower than what was computed by the H-REIT Manager. The difference between H-REIT’sactual taxable income and H-REIT’s taxable income as computed by the H-REIT Manager for thepurpose of making a distribution to holders of the Stapled Securities will be added to or deducted fromthe taxable income computed by the H-REIT Manager for the subsequent distribution to holders of theStapled Securities and thus affect the amount of these subsequent distributions. Similarly, if H-REITdistributes gains realised from the disposal of hospitality and hospitality-related assets and such gainsare subsequently assessed for taxation as trading gains by the IRAS, holders of the Stapled Securitiesin subsequent distribution periods will bear the incidence of such taxes (see Appendix V, “IndependentTaxation Report”).

CDL Hospitality Trusts may not be able to make distributions or the level of distributions mayfall

The income which CDL Hospitality Trusts earns from its real estate investments depends on, amongother factors, the amount of rental income received, and the level of property expenses and otheroperating expenses incurred. If properties owned by CDL Hospitality Trusts do not generate sufficientincome, CDL Hospitality Trusts’ cash flow and ability to make distributions will be adversely affected.No assurance can be given as to CDL Hospitality Trusts’ ability to pay or maintain distributions. Neitheris there any assurance that the level of distributions will increase over time, that there will be contractualincreases in rent under the leases of the properties or that the receipt of rental revenue in connectionwith any expansion of the Hotels or further acquisitions of properties will increase CDL HospitalityTrusts’ income available for distribution to holders of Stapled Securities.

The laws, regulations and accounting standards in Singapore to which CDL Hospitality Trustsis subject to may change

CDL Hospitality Trusts may be affected by the introduction of new or revised legislation, regulations oraccounting standards. There can be no assurance that any such changes will not have an adverseeffect on the ability of the H-REIT Manager to carry out H-REIT’s investment strategy, on the ability ofthe HBT Trustee-Manager to carry out HBT’s strategy or on the operations and financial condition ofCDL Hospitality Trusts.

Market and economic conditions may affect the market price and demand for the StapledSecurities

Movements in domestic and international securities markets, economic conditions, foreign exchangerates and interest rates may affect the market price of and demand for the Stapled Securities. Inparticular, an increase in market interest rates may have an adverse impact on the market price of the

65

Stapled Securities if the annual yield on the price paid for the Stapled Securities gives investors a lowerreturn as compared to other investments.

Neither the H-REIT Manager nor the HBT Trustee-Manager is obliged to redeem the StapledSecurities

Holders of the Stapled Securities have no right to request either the H-REIT Manager or the HBTTrustee-Manager to redeem their Stapled Securities while the Stapled Securities are listed on theSGX-ST. It is intended that holders of the Stapled Securities may only deal in their listed StapledSecurities through trading on the SGX-ST.

The Stapled Securities have never been publicly traded and the listing of the Stapled Securitieson the Main Board of the SGX-ST may not result in an active or liquid market for the StapledSecurities

Prior to the Offering, there is no public market for the Stapled Securities and an active public marketfor the Stapled Securities may not develop or be sustained after the Offering. While a letter of eligibilityfrom the SGX-ST for the listing and quotation of the Stapled Securities on the Main Board of theSGX-ST has been received, listing and quotation does not guarantee that a trading market for theStapled Securities will develop or, if a market does develop, the liquidity of that market for the StapledSecurities. Prospective holders of the Stapled Securities should view the Stapled Securities as illiquidand must be prepared to hold their Stapled Securities for an indefinite length of time.

Although it is currently intended that the Stapled Securities will remain listed on the SGX-ST, there isno guarantee of the continued listing of the Stapled Securities. H-REIT and/or HBT may not continueto satisfy the listing requirements of the SGX-ST.

Further, it may be difficult to assess CDL Hospitality Trusts’ performance against either domestic orinternational benchmarks.

The price of the Stapled Securities may decline after the Offering

The Offering Price of the Stapled Securities has been determined by agreement between the H-REITManager, the HBT Trustee-Manager, DBS Bank, BNP Paribas and BNP Paribas Peregrine, and maynot be indicative of the market price for the Stapled Securities after the completion of the Offering. TheStapled Securities may trade at prices significantly below the Offering Price after the Offering. Thetrading price of the Stapled Securities will depend on many factors, including:

• the perceived prospects of H-REIT’s and HBT’s (if any) business and investments and thehospitality real estate market in Singapore and other regions;

• differences between CDL Hospitality Trusts’ actual financial and operating results and thoseexpected by investors and analysts;

• changes in analysts’ recommendations or projections;

• changes in general economic or market conditions;

• the market value of CDL Hospitality Trusts’ assets;

• the perceived attractiveness of the Stapled Securities against those of other equity or debtsecurities, including those not in the real estate sector;

• the balance of buyers and sellers of the Stapled Securities;

• the future size and liquidity of the Singapore REIT market;

• any future changes to the regulatory system, including the tax system, both generally andspecifically in relation to Singapore REITs;

• the ability on H-REIT’s part to implement successfully its investment and growth strategies;

66

• foreign exchange rates; and

• broad market fluctuations, including weakness of the equity market and increases in interestrates.

For these reasons, among others, the Stapled Securities may trade at prices that are higher or lowerthan the net asset value per Stapled Security. To the extent that H-REIT retains operating cash flow forinvestment purposes, working capital requirements or other purposes, these retained funds, whileincreasing the value of its underlying assets, may not correspondingly increase the market price of theStapled Securities. Any failure on CDL Hospitality Trusts’ part to meet market expectations with regardto future earnings and cash distributions may adversely affect the market price for the StapledSecurities.

In addition, the Stapled Securities are not capital-safe products and there is no guarantee that holdersof the Stapled Securities can realise a higher amount or even the principal amount of their investment.If CDL Hospitality Trusts, H-REIT or HBT is terminated or liquidated, it is possible that investors maylose all or a part of their investment in the Stapled Securities.

The strategy of H-REIT may be changed

H-REIT’s policy with respect to certain activities, including investments and acquisitions, will bedetermined by the H-REIT Manager. While H-REIT is established with the principal investment strategyof investing, directly or indirectly, in a diversified portfolio of income-producing real estate which (a) isprimarily used for hospitality and/or hospitality-related purposes, whether wholly or partially, and realestate-related assets in relation to the foregoing and (b) may exist as part of larger mixed-usedevelopments (where such mixed-use developments may also include entertainment, leisure and/orgaming-related facilities), such strategy may not be changed for a period of three years commencingfrom the Listing Date (as the Listing Manual prohibits a departure from the H-REIT Manager’s statedinvestment strategy for H-REIT for the said period unless otherwise approved by an ExtraordinaryResolution of holders of the H-REIT Units), the H-REIT Trust Deed gives the H-REIT Manager widepowers to invest in other types of assets, including any real estate, real estate-related assets, as wellas listed and unlisted securities in Singapore and other jurisdictions. There are risks and uncertaintieswith respect to the selection of investments and with respect to the investments themselves.

The business trust regime is in its infant stages and its application has not been tested

The BTA came into operation on 12 October 2004 while the Business Trusts Regulations 2005 onlycame into operation on 6 January 2005. The first set of guidelines on business trust (i.e. “Guidelineson Disclosure of Financial Information in Prospectus”) was issued on 15 October 2005. As such, theapplication of the legislation and regulations has not been tested and some degree of uncertaintyexists. The role of HBT in CDL Hospitality Trusts may possibly face issues under the new legislation andguidelines. Valuable time and costs may have to be expended to rectify any contraventions, and thecosts associated therewith will impact on the operating results of the HBT.

67

USE OF PROCEEDS

The H-REIT Manager intends to raise an aggregate of approximately S$579.3 million from the Offeringand the issuance of Stapled Securities to Hospitality Holdings Pte. Ltd.

The H-REIT Trustee also intends to make a draw down from the Facilities.

The total proceeds from the Offering, the issuance of Stapled Securities to Hospitality Holdings Pte. Ltd.and the draw down from the Facilities will be used towards the following:

(i) payment of the purchase price of the Properties to their respective Vendors;

(ii) issue and debt related costs;

(iii) working capital; and

(iv) investment in HBT for an amount of S$0.5 million.

The following table, included for the purposes of illustration, sets out the intended source andapplication of the total proceeds for CDL Hospitality Trusts as well as the draw down of the Facilities.

Source S$’000 Application S$’000

Borrowings by H-REIT 266,590.0(1) Acquisition of the Propertiesby H-REIT

822,890.0(2)

Offering of the Stapled Securities and thesubscription by Hospitality Holdings Pte. Ltd.of the Stapled Securities

579,340.0 Issue and debt related costsof H-REIT

22,482.6

Working capital of H-REIT 57.4

Working capital of HBT 500.0

Total 845,930.0 Total 845,930.0

Notes:

(1) Excludes Deferred Consideration.

(2) Being the total purchase consideration on the Properties of S$846,300,000 less Deferred Consideration.

The H-REIT Manager believes that the amount to be set aside for H-REIT’s working capital of at leastS$9.0 million (inclusive of rental deposits) as at the Listing Date will be sufficient for H-REIT’s workingcapital requirements over the next 12 months following the close of the Offering.

The HBT Trustee-Manager believes that the working capital of approximately S$0.5 million will besufficient for HBT’s working capital requirements over the next 12 months following the close of theOffering.

68

OWNERSHIP OF THE STAPLED SECURITIES

The Sponsor

As at the Latest Practicable Date, the Sponsor, through an indirect wholly owned subsidiary, holds allthe issued shares in the capital of the H-REIT Manager, and through the H-REIT Manager, all theissued shares in the capital of the HBT Trustee-Manager. The Sponsor will hold at least 15.0% of theStapled Securities in issue after the Listing Date and will accordingly be a controlling holder of H-REITUnits and HBT Units (as defined in the Listing Manual). (For more information on the Sponsor, see “TheSponsor”.)

Subscription of Stapled Securities by an Indirect Wholly Owned Subsidiary of the Sponsor

Hospitality Holdings Pte. Ltd., an indirect wholly owned subsidiary of the Sponsor, has entered into asubscription agreement to subscribe, at the Offering Price, for 273,000,000 Stapled Securities,constituting approximately 39.1% of the Stapled Securities in issue on the Listing Date.

Principal Holders of the Stapled Securities and Their Holdings

The following table sets out the principal holders of the Stapled Securities of and their holdings after theOffering:

Stapled Securities owned after Offering

(’000) (%)

Sponsor and its subsidiaries 273,000 39.1

Public and institutional investors 425,000 60.9

Total 698,000 100.0

List of Substantial Holders of the Stapled Securities

The following table sets out, to the knowledge of the H-REIT Manager, the H-REIT Trustee and the HBTTrustee-Manager as at the Latest Practicable Date, the holders with interests in the Stapled Securities,whether direct or deemed (as defined in Section 4 of the SFA), constituting not less than 5.0% of all theStapled Securities in issue (the “Substantial Holders”) and their holdings after the Offering:

Stapled Securities owned after Offering

Direct Deemed(’000) (%) (’000) (%)

Hospitality Holdings Pte. Ltd. (“HHPL”) 273,000 39.1 — —

ATOS Holding AG — — 273,000* 39.1

Millennium & Copthorne (Austrian Holdings) Limited — — 273,000* 39.1

Millennium & Copthorne Hotels plc — — 273,000* 39.1

City Developments Limited — — 273,000* 39.1

Hong Leong Investment Holdings Pte. Ltd. — — 273,000* 39.1

Kwek Holdings Pte Ltd — — 273,000* 39.1

Davos Investment Holdings Private Limited — — 273,000* 39.1

* The above Substantial Holders have deemed interests in the direct holdings of HHPL by virtue of Section 4 of the SFA.

69

Subscription by the H-REIT Manager Directors and the HBT Trustee-Manager Directors

The H-REIT Manager Directors and the HBT Trustee-Manager Directors may subscribe for the StapledSecurities under the Public Offer and/or the Placement Tranche. Save for the H-REIT Manager’s andthe HBT Trustee-Manager’s respective internal policies, which prohibit the H-REIT Manager Directorsand the HBT Trustee-Manager Directors from dealing in the Stapled Securities at certain times, thereare no restrictions on the H-REIT Manager Directors or the HBT Trustee-Manager Directors disposingof or transferring all or any part of their holdings. (See “Management and Corporate Governance —H-REIT — Dealings in Stapled Securities or H-REIT Units” and “Management and CorporateGovernance — HBT — Dealings in Stapled Securities or HBT Units” for further details.)

Options on Stapled Securities

No option to subscribe for the Stapled Securities has been granted to any of the H-REIT ManagerDirectors, the executive officers of the H-REIT Manager or the HBT Trustee-Manager Directors.

Subscription for Reserved Stapled Securities

12,500,000 Stapled Securities have been reserved for subscription by the directors, management,employees and business associates of the Sponsor and persons who have contributed to the successof the Offering.

70

DISTRIBUTIONS

It should be noted that the total distributions available to holders of the Stapled Securities is anaggregate of the distributions from H-REIT and HBT, and is thus dependant on the financialperformance of H-REIT and HBT respectively, instead of the consolidated financial performance ofH-REIT and HBT.

H-REIT’s Distribution Policy

H-REIT’s current distribution policy is to distribute at least 90.0% of its taxable income, comprisingsubstantially its income from the letting of the Properties and related property services income afterdeduction of allowable expenses and allowances, and of its tax exempt income (if any). However,H-REIT will distribute 100.0% of its taxable income, and tax-exempt income (if any) for the period fromthe Listing Date to 31 December 2007. Thereafter, H-REIT will distribute at least 90.0% of its taxableincome and tax-exempt income (if any), with the actual level of distribution to be determined at theH-REIT Manager’s discretion. Distributions, when paid, will be in Singapore dollars.

After CDL Hospitality Trusts has been admitted to the Main Board of the SGX-ST, H-REIT will makedistributions to holders of the Stapled Securities on a semi-annual basis, with the amount calculated asat 30 June and 31 December each year for the six-month period ending on each of the said dates.H-REIT’s first distribution after the Listing Date will be for the period from the Listing Date to 31December 2006 and will be paid by the H-REIT Manager on or before 1 March 2007. Subsequentdistributions will take place on a semi-annual basis as well. Under the H-REIT Trust Deed, the H-REITManager is required to pay distributions within 60 days after the end of each distribution period.

While the investment strategy of H-REIT is to hold its investments for the long-term (see “Strategy —H-REIT’s Strategy”), in the event that there are gains arising from sales of real properties, and only ifsuch gains are surplus to the business requirements and needs of H-REIT and its taxability or otherwiseconfirmed by the IRAS, the H-REIT Manager may, at its discretion, direct the H-REIT Trustee todistribute such gains. Such gains, if not distributed, will form part of the H-REIT Deposited Property.

H-REIT’s primary source of liquidity to fund distributions, servicing of debt, payment of propertyexpenses and capital expenditure will be from the receipts from operations and the borrowings,including the Facilities, where appropriate.

H-REIT’s ability to make distributions will be subject to its available cash flow. Where the cash flowgenerated from operations is not sufficient to meet the distributions of H-REIT, H-REIT may incurborrowings for the purpose of funding such distributions. H-REIT’s ability to borrow is, however, limitedby the Property Funds Guidelines and the availability of debt financing. On the other hand, the actualproportion of taxable income and tax-exempt income (if any) distributed to holders of the StapledSecurities beyond the Projection Year 2007 may be greater than 90.0% if the H-REIT Manager believesit to be appropriate, having regard to H-REIT’s funding requirements, other capital managementconsiderations and the overall stability of distributions.

HBT Distribution Policy

As at the Listing Date, HBT will be dormant.

In the event HBT becomes active and profitable, the determination to distribute and the quantum ofdistributions to be made by HBT will be determined by the HBT Trustee-Manager Board at its solediscretion.

71

CAPITALISATION

The following tables set forth the pro forma capitalisation of H-REIT, HBT and CDL Hospitality Trustsas at the Listing Date and after application of the total proceeds from the Offering and the issuance ofStapled Securities to Hospitality Holdings Pte. Ltd., based on the Offering Price. The information in thetable below should be read in conjunction with “Use of Proceeds” and “Management’s Discussion andAnalysis of Financial Condition and Results of Operations”.

CDL Hospitality Trusts As at the Listing Date

(S$’000)Pro forma

Deferred Consideration(1) 23,410

Long term secured debt 266,590

Aggregate leverage 290,000

Stapled Securities in issue (net of issue costs) 558,525(2)

Total capitalisation 848,525

Notes:

(1) Relates to the balance 10% of the purchase consideration payable to the relevant Vendor of Grand Copthorne WaterfrontHotel, on legal completion after all regulatory approvals for the excision or creation of a separate strata lot comprising GrandCopthorne Waterfront Hotel have been obtained (see “Certain Agreements Relating to CDL Hospitality Trusts, H-REIT, HBTand the Properties — Specific Terms Relevant to the Properties — Separate Title to Grand Copthorne Waterfront Hotel”).

(2) Comprises Stapled Securities in issue of S$579,340,000, net of issue costs of S$20,815,000 (excluding GST).

H-REIT As at the Listing Date

(S$’000)Pro forma

Deferred Consideration(1) 23,410

Long term secured debt 266,590

Aggregate leverage 290,000

H-REIT Units in issue (net of issue costs) 558,025(2)

Total capitalisation 848,025

Notes:

(1) Relates to the balance 10% of the purchase consideration payable to the relevant Vendor of Grand Copthorne WaterfrontHotel, on legal completion after all regulatory approvals for the excision or creation of a separate strata lot comprising GrandCopthorne Waterfront Hotel have been obtained (see “Certain Agreements Relating to CDL Hospitality Trusts, H-REIT, HBTand the Properties — Specific Terms Relevant to the Properties — Separate Title to Grand Copthorne Waterfront Hotel”).

(2) Comprises H-REIT Units in issue of S$578,840,000, net of issue costs of S$20,815,000 (excluding GST).

HBT As at the Listing Date

(S$’000)Pro forma

HBT Units in issue 500

Total capitalisation 500

72

UNAUDITED PRO FORMA FINANCIAL INFORMATION

H-REIT

The following tables present the unaudited pro forma statements of total return for H-REIT for FY2003,FY2004 and FY2005 (collectively referred to as the “Relevant Period”), the unaudited pro forma cashflow statement for H-REIT for FY2005 and unaudited pro forma balance sheet for H-REIT as at 31December 2005. Such unaudited pro forma financial information should be read in conjunction with therelated notes thereto.

H-REIT’s independent accountants, KPMG, have reported on the unaudited pro forma financialinformation and their report is included in Appendix II, “Independent Accountants’ Report on theUnaudited Pro Forma Financial Information of H-REIT”. The unaudited pro forma financial informationhas been prepared on the basis of assumptions and the accounting policies set out in Appendix II,“Independent Accountants’ Report on the Unaudited Pro Forma Financial Information of H-REIT”. Theunaudited pro forma financial information should be read together with these assumptions andaccounting policies.

The unaudited pro forma statements of total return of H-REIT for the Relevant Period reflect the totalreturn of H-REIT, assuming H-REIT had purchased the Properties and entered into the Master LeaseAgreements on 1 January 2003, under the same terms set out in the Prospectus.

The unaudited pro forma cash flow statement shows the cash flows of H-REIT for FY2005, assumingH-REIT had purchased the Properties and entered into the Master Lease Agreements on 1 January2005 under the same terms set out in the Prospectus.

The unaudited pro forma balance sheet of H-REIT as at 31 December 2005 reflects the financialposition of H-REIT, assuming H-REIT had purchased the Properties and entered into the Master LeaseAgreements on 31 December 2005 under the same terms set out in the Prospectus.

The objective of the unaudited pro forma financial information is to show what the total return, cashflows and financial position might have been had H-REIT existed at an earlier date. However, theunaudited pro forma financial information of H-REIT is not necessarily indicative of the total return andcash flows of the operations or the financial position that would have been attained had H-REIT actuallyexisted earlier. The unaudited pro forma financial information has been prepared for illustrativepurposes only and, because of its nature, may not give a true picture of the actual total return, cashflows or financial position of H-REIT.

The SGX-ST has granted H-REIT a waiver from compliance with Rule 409(3) of the Listing Manual inrespect of the requirement for inclusion of the annual accounts of H-REIT for the past five years.

HBT and CDL Hospitality Trusts

No pro forma financial information of HBT has been presented as it is newly established and is dormantas at the Listing Date. Accordingly, no consolidated pro forma financial information of CDL HospitalityTrusts has been presented.

73

Unaudited Pro Forma Statements of Total Return of H-REIT

FY2003 FY2004 FY2005(S$’000) (S$’000) (S$’000)

Gross Revenue 29,770 38,390 45,488

Property Expenses (3,018) (3,748) (4,008)

Net Property Income 26,752 34,642 41,480



Other trust expenses (990) (1,010) (1,030)

Finance costs (net)(1) (6,755) (10,816) (10,914)






Notes:

(1) Comprises interest expense incurred on borrowings, amortisation of transaction costs on borrowings capitalised andfinancial expense arising from remeasuring non-current rental deposits at amortised cost, for all periods presented. ForFY2003, the balance is stated net of financial income arising from the initial recognition of non-current rental deposits at fairvalue.


74

Unaudited Pro Forma Balance Sheet of H-REIT

As at31 December 2005

(S$’000)

Non-current assets

Investment properties 846,300

Current assets

Other receivables 1,071

Cash and cash equivalents 9,161

10,232


Current liabilities

Other payables(1) 23,410

Rental deposits(2) 918

24,328

Non-current liabilities

Borrowings(3) 265,993

Rental deposits(2) 3,920

269,913

Total liabilities (excluding net assets attributable to holders of H-REIT Units) 294,241

Net assets attributable to holders of H-REIT Units 562,291

Number of H-REIT Units in issue (’000) 698,000


Borrowings(4)/Total assets (%) 33.9%

Notes:

(1) Other payables relate to the balance 10% of the purchase consideration payable to the relevant Vendor of Grand CopthorneWaterfront Hotel, on legal completion after all regulatory approvals for excision or creation of a separate strata lot comprisingGrand Copthorne Waterfront Hotel have been obtained, which is expected to take place within six months from the ListingDate.

(2) Current rental deposits relate to rental deposits of Orchard Hotel Shopping Arcade. Non-current rental deposits relate torental deposits collected from the Master Lessees, stated at amortised cost.

(3) This is stated net of transaction costs of S$597,000.

(4) For purpose of computing the borrowings to total assets ratio, borrowings comprise bank loans of S$266,590,000 and otherpayables of S$23,410,000 which relate to the balance 10% of the purchase consideration payable to the relevant Vendorof Grand Copthorne Waterfront Hotel, on legal completion after all regulatory approvals for the excision or creation of aseparate strata lot comprising Grand Copthorne Waterfront Hotel have been obtained (see “Certain Agreements Relatingto CDL Hospitality Trusts, H-REIT, HBT and the Properties — Specific Terms Relevant to the Properties — Separate Titleto Grand Copthorne Waterfront Hotel”).

75

Unaudited Pro Forma Cash Flow Statement of H-REIT

FY2005

(S$’000)



Adjustments for:








Purchase of investment properties and related assets and liabilities(2) (845,443)










Net increase in cash & cash equivalents 4,000

Cash & cash equivalents at beginning of year —

Cash & cash equivalents at end of year 4,000

Notes:

(1) Comprises interest expense incurred on borrowings, amortisation of transaction costs on borrowings capitalised andfinancial expense arising from remeasuring non-current rental deposits at amortised cost, net of financial income arisingfrom the initial recognition of non-current rental deposits at fair value.

(2) Comprises the purchase price on the Properties of S$846,300,000, net of cash acquired of S$857,000 relating to OrchardHotel Shopping Arcade’s rental deposits.

76

MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Unaudited Pro Forma FinancialInformation of H-REIT, and notes thereto included elsewhere in this Prospectus. Statements containedin this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” thatare not historical facts may be forward-looking statements. Such statements are subject to certain risks,uncertainties and assumptions which could cause actual results to differ materially from those forecastand projected. Under no circumstances should the inclusion of such information herein be regarded asa representation, warranty or prediction with respect to the accuracy of the underlying assumptions bythe H-REIT Manager, the H-REIT Trustee, HBT Trustee-Manager, the Underwriters, the Sponsor, orany other person, nor that these results will be achieved or are likely to be achieved (see“Forward-looking Statements” and “Risk Factors”). Recipients of this Prospectus and all prospectiveinvestors in the Stapled Securities are cautioned not to place undue reliance on these forward-lookingstatements that speak only as of the date of this Prospectus.

General Background

H-REIT is a real estate investment trust established in Singapore as a unit trust pursuant to the H-REITTrust Deed. As H-REIT was only established on 8 June 2006, H-REIT has no historical operating resultsand financial information based on which recipients of this Prospectus may evaluate H-REIT. H-REIT’sfirst accounting period will be from 8 June 2006, the date of its establishment, to 31 December 2006.

H-REIT is established with the principal investment strategy of investing, directly or indirectly, in adiversified portfolio of income-producing real estate which is primarily used for hospitality and/orhospitality-related purposes, whether wholly or partially, and real estate-related assets in relation to theforegoing. In this Prospectus, real estate which is used for “hospitality” purposes includes hotels,motels and other lodging facilities, serviced residences and resorts, whether in existence bythemselves as a whole or as part of larger mixed-use developments (where such mixed-usedevelopments may also include entertainment, leisure and/or gaming-related facilities). While theassets in H-REIT’s initial portfolio are all located in Singapore, H-REIT’s investment strategy envisagesinvestments globally.

The Properties

As at the Listing Date, the initial property portfolio of H-REIT comprises Orchard Hotel, GrandCopthorne Waterfront Hotel, M Hotel and Copthorne King’s Hotel, all of which are located in Singaporeand marketed as “superior” class hotels with a total of over 1,900 rooms as at the Latest PracticableDate, as well as Orchard Hotel Shopping Arcade, the shopping arcade adjoining Orchard Hotel.Orchard Hotel Shopping Arcade is included in H-REIT’s portfolio as it is complementary to the guestfacilities at Orchard Hotel, providing shopping and leisure facilities to hotel guests.

H-REIT will acquire a 75-year leasehold interest in Orchard Hotel and Orchard Hotel Shopping Arcadefrom City Hotels Pte. Ltd., a 75-year leasehold interest in Grand Copthorne Waterfront Hotel from CDL,a 75-year leasehold interest in M Hotel from Harbour View Hotel Pte. Ltd. and an approximately 61-yearleasehold interest expiring on 31 January 2067 in Copthorne King’s Hotel from Republic Hotels &Resorts Limited. City Hotels Pte. Ltd., Harbour View Hotel Pte. Ltd. and Republic Hotels & ResortsLimited are indirect wholly owned subsidiaries of the Sponsor. CDL is listed on the Main Board of theSGX-ST and is the intermediate holding company of the Sponsor.

As at the Listing Date, Republic Hotels & Resorts Limited, Harbour View Hotel Pte. Ltd. and City HotelsPte. Ltd. will be Master Lessees of the Hotels. Republic Hotels & Resorts Limited will lease and operateGrand Copthorne Waterfront Hotel and Copthorne King’s Hotel while City Hotels Pte. Ltd. and HarbourView Hotel Pte. Ltd. will lease and operate Orchard Hotel and M Hotel respectively.

77

The initial term of the Master Lease Agreements for each of the Hotels will be 20 years with an optionto obtain an additional lease for a further 20 years on the same terms and conditions save foramendments required due to any change in law. H-REIT may, in relation to any Hotel for which theoption for an additional lease is not exercised, enter into a new master lease agreement, on terms tobe agreed, with either the existing Master Lessee or a new master lessee. The Master LeaseAgreements contain long lease terms in order to assure a long term stream of quality rental income forH-REIT.

H-REIT may be unable to appoint a master lessee for any of the Hotels in its portfolio at the expiry ofthe relevant master lease agreement, for example because of a failure to reach commerciallyacceptable terms with the relevant Master Lessee or potential new master lessees. When this happens,in order to ensure the hotel’s continual operation and revenue generation, H-REIT will appoint HBT asa master lessee for that Hotel on substantially the same terms as the relevant Master LeaseAgreement.

In relation to each Hotel, the relevant Master Lessee will appoint a professional hotel manager tomanage the day to day operations and marketing of that hotel. On the Listing Date, MCIL, an indirectwholly owned subsidiary of the Sponsor, will be appointed by the Master Lessees as the hotel managerin relation to the Hotels. MCIL is the current hotel manager for the Hotels and is therefore wellacquainted with the day to day operations and marketing of these Hotels. The appointment of MCIL willassure continuity in operations for the Hotels with minimal disruption or downtime, which may otherwisebe encountered if a hotel manager which is unfamiliar with the Hotels is appointed.

Orchard Hotel Shopping Arcade will not be subject to any master lease arrangement upon itsacquisition by H-REIT. Individual retail units within Orchard Hotel Shopping Arcade will be leased outto individual tenants directly with the leases existing as at the Listing Date being assigned to H-REITat that time. The H-REIT Manager will be responsible for the management of Orchard Hotel ShoppingArcade and may engage CDL or its related parties to undertake leasing activities in respect of OrchardHotel Shopping Arcade. All leasing fees, advertisement costs, marketing-related expenses andcommissions shall be borne by H-REIT.

HBT

No pro forma financial information of HBT has been presented as it was newly established and isdormant as at the Listing Date. Accordingly, no consolidated pro forma financial information of CDLHospitality Trusts has been presented.

Acquisition of Properties

As at the date of this Prospectus, the H-REIT Trustee, as trustee of H-REIT, has entered into theProperty Sale and Purchase Agreements with the Vendors for the sale of the leasehold interests in theProperties to H-REIT at a purchase price of S$846.3 million which is based on CBRE’s appraised valueof the Properties as at 28 February 2006. The purchase price under the Property Sale and PurchaseAgreements will be satisfied wholly in cash. H-REIT will fund the purchase price partly by the issue of698.0 million Stapled Securities and the balance by bank borrowings.

(See “Certain Agreements Relating to CDL Hospitality Trusts, H-REIT, HBT and the Properties —Description of the agreements to acquire the Properties” and “Use of Proceeds”.)

78

Factors Affecting H-REIT’s Results of Operations

Gross Revenue of H-REIT

Gross Revenue of H-REIT consists of gross rental income from the Hotels (see below) and retail rentalincome from Orchard Hotel Shopping Arcade. Such retail rental income accrues from H-REIT leasingout retail space in Orchard Hotel Shopping Arcade directly to individual tenants.

Gross rental income from the Hotels

H-REIT generates rental income from each of the Hotels under the terms of the Master LeaseAgreements consisting of the Fixed Rent, the Service Charge and the Variable Rent.

The aggregate Fixed Rent for the four Hotels is S$13.4 million, with the following breakdown:





The aggregate Service Charge for the four Hotels is S$13.0 million, with the following breakdown:





The Variable Rent per annum for each Hotel is computed based on the sum of 20.0% of the Hotel’srevenue for the prevailing financial year and 20.0% of the Hotel’s gross operating profit for theprevailing financial year, less the sum of Fixed Rent and Service Charge. Should the calculation of theVariable Rent yield a negative figure, the Variable Rent will be deemed to be zero.

The Gross Revenue for H-REIT for FY2003, FY2004 and FY2005 is as follows:

FY2003 FY2004 FY2005S$ million S$ million S$ million

Gross rental income from Hotels:

Orchard Hotel 10.3 13.9 16.1

Grand Copthorne Waterfront Hotel 7.2 10.0 11.7

M Hotel 6.1 7.4 9.0

Copthorne King’s Hotel 2.8 3.7 5.3

Total Hotels 26.4 35.0 42.1

Retail rental income:

Orchard Hotel Shopping Arcade 3.4 3.4 3.4

Gross Revenue 29.8 38.4 45.5

Hence, H-REIT’s performance is significantly affected by the performance of the underlying hoteloperations, which in turn is affected by factors including changes in their revenue mix and occupancylevels. The performance of the Hotels for FY2003, FY2004 and FY2005 is further discussed in thefollowing sections.

79

Hotels’ Revenue and Gross Operating Profit Trends

The Hotels’ revenue and gross operating profit for FY2003, FY2004 and FY2005 are set out below:

FY2003 FY2004 FY2005

Revenue

GrossOperating

Profit Revenue

GrossOperating

Profit Revenue

GrossOperating

Profit

S$ million S$ million S$ million S$ million S$ million S$ million

Hotels 101.1 30.9 129.7 45.0 149.1 61.2

The following table sets out the Hotels’ unaudited pro forma net (loss)/profit before tax (from the MasterLessees’ perspective) for FY2003, FY2004 and FY2005.

FY2003 FY2004 FY2005

S$ million S$ million S$ million

Unaudited pro forma (loss)/profit before tax of theHotels

(0.4) 3.4 11.0

The above figures have been prepared from relevant management accounts of the Hotels and adjustedfor differences in relation to how the Master Lessees will account for revenue and operating expensesdirectly attributable to their hotel operations in accordance with the terms of the Master LeaseAgreements. A detailed breakdown of the Hotels’ unaudited pro forma profit and loss items (from theMaster Lessees’ perspective) is set out below.

OrchardHotel

GrandCopthorneWaterfront

Hotel M Hotel

CopthorneKing’sHotel Total

S$’000 S$’000 S$’000 S$’000 S$’000

FY2003

Revenue(1) 37,762 29,308 22,231 11,750 101,051

Operating expenses(2) (23,798) (22,781) (14,174) (9,362) (70,115)

Gross operating profit 13,964 6,527 8,057 2,388 30,936

Gross operating profit margin 37% 22% 36% 20% 31%

Less:

— Rental to H-REIT(3) (10,345) (7,167) (6,058) (2,827) (26,397)

— Management fees(4) (1,029) (583) (600) (186) (2,398)

— FF&E reserves(5) (944) (733) (556) (294) (2,527)

(12,318) (8,483) (7,214) (3,307) (31,322)

Profit/(loss) before tax(6) 1,646 (1,956) 843 (919) (386)

80

OrchardHotel


Hotel M Hotel


S$’000 S$’000 S$’000 S$’000 S$’000

FY2004

Revenue(1) 49,416 38,470 26,743 15,102 129,731




Less:

— Rental to H-REIT(3) (13,925) (9,958) (7,350) (3,720) (34,953)

— Management fees(4) (1,462) (933) (735) (274) (3,404)

— FF&E reserves(5) (1,235) (962) (669) (378) (3,244)

(16,622) (11,853) (8,754) (4,372) (41,601)

Profit/(loss) before tax(6) 3,586 (535) 1,253 (872) 3,432

FY2005

Revenue(1) 55,143 43,756 30,869 19,307 149,075




Less:

— Rental to H-REIT(3) (16,046) (11,730) (8,990) (5,290) (42,056)

— Management fees(4) (1,783) (1,184) (987) (509) (4,463)

— FF&E reserves(5) (1,379) (1,094) (772) (483) (3,728)

(19,208) (14,008) (10,749) (6,282) (50,247)

Profit before tax(6) 5,877 889 3,330 862 10,958

Notes:

(1) Refer to the “Hotels’ Revenue Mix” section below for an analysis of the revenue mix of each Hotel. The RevPAR of eachHotel is listed in the “Key Drivers of Hotel Room Revenue” section.

(2) These comprise staff costs, F&B cost of sales, energy and utilities, other direct expenses and other hotel expenses.

(3) This refers to the sum of the Fixed Rent, the Service Charge and the Variable Rent computed on the basis as mentionedin the “Gross rental income from the Hotels” section above.

(4) This represents management fees paid to the Hotel Manager, a related company of the Master Lessees, and is based ona percentage of revenue and gross operating profit of each Hotel.

(5) This represents 2.5% of annual revenue of the Hotel, which the relevant Master Lessee is obliged to set aside as FF&Ereserves under the terms of the Master Lease Agreements. Refer to further details in the “Capital Expenditure” sectionbelow.

(6) This excludes administrative and corporate expenses which are non-hotel related.

81

Hotels’ Revenue Mix

The following table sets out the composition of the revenue of the four Hotels during FY2003, FY2004and FY2005.

FY2003 FY2004 FY2005

Revenue Revenue Revenue

S$ million % S$ million % S$ million %

Room revenue 43.4 42.9% 60.5 46.6% 72.9 48.9%

F&B revenue 43.6 43.1% 52.3 40.3% 56.7 38.0%

Service charge 8.7 8.6% 11.3 8.7% 13.0 8.7%

Other income 5.4 5.4% 5.6 4.4% 6.5 4.4%

Total 101.1 100.0% 129.7 100.0% 149.1 100.0%

Room revenue and F&B revenue are consistently the major contributors to the Hotels’ revenue.

Business mix of the Hotels by room revenue contribution for FY2003 to FY2005 is as follows:

FY2003 FY2004 FY2005

Average for four Hotels S$ million (%) S$ million (%) S$ million (%)

Corporate(1) 29.0 66.8% 40.4 66.8% 50.4 69.1%

Leisure/Others 14.4 33.2% 20.1 33.2% 22.5 30.9%

Total 43.4 100.0% 60.5 100.0% 72.9 100.0%

Note:

(1) “Corporate segments” as defined by the Sponsor would refer to guests who are staying at the hotel for primarily businesspurposes as opposed to leisure or other guests such as cabin crew. Under this segment, the following category of guestswould be included: (i) guests who book at rack rate (full published rate), (ii) guests who book through corporate travelagencies/management companies, (iii) guests who book through the Internet, (iv) guests who book at rates offered undera corporate agreement and (v) guests who are attending meetings, incentive activities or events/exhibitions/conferences inthe city.

F&B revenue encompasses revenue from the various restaurants, cafes, lounges and bars located ateach of the Hotels, including revenue from catering services, banqueting sales, room service and roommini bar sales.

Service charge represents 10.0% of room revenue, F&B revenue and revenue from laundry services.

Other income includes revenue from the provision of telecommunications services, Internet broadbandservices, laundry services, the operation of the car park and fitness centres (where applicable), rentalincome from the concessionaires and the usage of business centres and serviced offices (whereapplicable).

82

Key Drivers of Hotel Room Revenue

The Average Daily Rates, occupancy rate and RevPAR for the four Hotels are as follows:

FY2003 FY2004 FY2005

Weighted Average Daily Rate(1) (S$) 107 112 133

Weighted Occupancy Rate(2) (%) 58 76 78

RevPAR (S$) 62 86 103

Notes:

(1) Weighted by the total rooms sold at the Hotels for the relevant period.

(2) Weighted by total Available Rooms of the Hotels for the relevant period.

The RevPAR of the respective individual Hotels for FY2003, FY2004 and FY2005 are further set outbelow:

RevPAR (S$) FY2003 FY2004 FY2005



M Hotel 63 89 110



Note:

(1) Computed based on total room revenues of the four Hotels divided by total number of Available Rooms of the four Hotelsfor the relevant periods.

General Commentary on Hotels’ Performance During FY2003 to FY2005

FY2004 over FY2003

The Hotels operated under very challenging conditions in FY2003 with the build up of hostilities and thesubsequent Iraq War, compounded by the SARS Outbreak, which significantly impacted the Hotels’operations from the second half of March 2003 until July 2003. The impact of both the Iraq War and theSARS Outbreak were mitigated by cost cutting measures such as a shorter working week for staff, aswell as temporary closures of guest rooms and unprofitable F&B outlets. The hotel business began torecover, albeit at a gradual pace, from the third quarter of FY2003 onwards. Consequently, an overallpro forma net loss in FY2003 was recorded for the four Hotels, with Grand Copthorne Waterfront Hoteland Copthorne King’s Hotel each recording a pro forma net loss for the year.

The Hotels’ performance improved significantly in FY2004, boosted by the return of overseas arrivalspost SARS Outbreak. This is reflected in the 28% and 46% increase in the Hotels’ revenue and grossoperating profit respectively over FY2003 to S$129.7 million and S$45.0 million respectively.

The Hotels’ room revenue increased by nearly 40% from S$43.4 million in FY2003 to S$60.5 million inFY2004. This is primarily the result of double-digit growth in occupancy rate and RevPAR over FY2003experienced by each of the Hotels. (Refer to RevPAR of each Hotel in the respective financial years inthe “Key Drivers of Hotel Room Revenue” section above.)

83

In FY2004, the Hotels achieved an occupancy rate of 76% (FY2003: 58%), an Average Daily Rate ofS$112 (FY2003: S$107), and a resultant RevPAR for the year of S$86 (FY2003: S$62). In that financialyear, the priority of the Hotels was to restore their occupancy rate to pre-SARS Outbreak levels so asto achieve a base from which higher rate aspirations could be built upon.

Orchard Hotel, Grand Copthorne Waterfront Hotel and Copthorne King’s Hotel achieved an increase intheir Average Daily Rates of between 5% to 6% over FY2003, whilst the Average Daily Rates for MHotel remained stable. Copthorne King’s Hotel enjoyed the benefits of post SARS Outbreak recoveryand increased its occupancy rates and its Average Daily Rates slightly over FY2003. However,occupancy rates did not enjoy the full benefits of the post-SARS Outbreak recovery as CopthorneKing’s Hotel was undergoing a renovation exercise throughout FY2004.

The increase in Average Daily Rates in FY2004 was derived largely from upward adjustment to theroom rates emanating from the curtailing of heavily discounted rates offered in 2003 due to the adverseeffects of the SARS Outbreak and the Iraq War. The rates were also bolstered by an improvement inbusiness mix as the Hotels started seeing traffic return and could afford to be more selective inbusiness acceptance, thus shifting their focus to higher yielding categories such as the corporatesegments.

The increase in Average Daily Rates in FY2004 for Orchard Hotel was the result of several factors. Therestoration of rates back to the corporate rate chart previously negotiated instead of the ad hoc specialrates for the corporate and leisure segment was a key factor. Other factors included the clinching oflong haul leisure programs to reduce dependency on ad hoc leisure groups, focusing on replacing loweryielding businesses with better yielding businesses such as the oil and gas segment, and a change toa higher yielding nationality mix from late 2004 onwards.

The increase in Average Daily Rates in FY2004 for Grand Copthorne Waterfront Hotel was partiallycontributed by the expiry of a low yielding aircrew contract (entered in 2003 during the SARS Outbreak)in August 2004 in addition to the shift towards the higher yielding corporate segments.

The Average Daily Rates remained stable for M Hotel in FY2004 as the impact of the increase incorporate rates was negated by increased room nights from its leisure group ad hoc segment (whichhas a lower Average Daily Rate). This was in order for the Hotel to fill in gaps during the weekdayswhilst it was rebuilding its corporate base and filling the ‘headroom’ for the weekends whereoccupancies tended to be lower than on weekdays generally due to the location of the Hotel in the CBD.

The Hotels’ F&B revenue increased by nearly 20% from S$43.6 million in FY2003 to S$52.3 million inFY2004. This increase resulted from the return of customers post SARS Outbreak, increasedpromotions at the various F&B outlets, increased pricing for some F&B outlets, and increased banquetrevenue due to the effect of postponement of weddings and functions from the SARS Outbreak periodto FY2004.

The total gross operating profit of the Hotels for FY2004 increased by S$14.1 million or 46% overFY2003. This was largely attributable to the flow through effect of the significant increase in revenueand the perpetuation of cost control exercised by the Hotels.

Grand Copthorne Waterfront Hotel, which commenced operations in late 1999 also continued toexperience a slight loss for the year of S$0.5 million in FY2004 due to the effect of a prolongedgestation period experienced by the Hotel, brought about by the negative impact of the September 11Incident, the SARS Outbreak and the Iraq War.

Despite the improved trading conditions post the SARS Outbreak and the Iraq War, Copthorne King’sHotel continued to record a net loss in FY2004 of approximately S$0.9 million which only improvedmarginally from the prior financial year. This depressed performance was due to on-going renovationcarried out at the Hotel premises until late 2004. These included renovation of guest rooms in the MainWing, Tien Court Restaurant and the Executive Lounge, making these areas unavailable for use.

84

FY2005 over FY2004

The Hotels experienced continuing improvement in performance for FY2005 through higher room ratesfrom active yield management and recorded an approximately 15% or S$19.4 million increase in totalrevenue to S$149.1 million. Room revenue grew by over 20% to S$72.9 million, driven primarily by anapproximately 19% increase in the Average Daily Rate, whilst F&B revenue grew by approximately 8%to S$56.7 million for FY2005.

For FY2005, the occupancy rate for the Hotels was 78% (FY2004: 76%), the Average Daily Rate wasS$133 (FY2004: S$112), and the resultant average RevPAR for the Hotels for the year was S$103(FY2004: S$86).

Each of the Hotels achieved a substantial increase in their Average Daily Rates and RevPAR overFY2004, ranging between 14% to 25% and 16% to 34% respectively.

Aside from better market conditions due to increased travel, the significant increase in Average DailyRates and resultant yields has arisen from various yield enhancement initiatives taken by the Hotels.These included the continued increase in room rates for FY2005 upon the renewal of additionalcontracts committed at low rates during the SARS Outbreak, reduced dependency on lower yieldingsegments (e.g. airline crew), increased market share in the corporate market segments, change incorporate clientele by replacing those lower rated corporate business during high demand period, andincrease in rates quoted to travel agents. The effect of the major refurbishment programme at OrchardHotel has also led to strong room rate growth in the second half of FY2005.

Corporate room yields for Orchard Hotel, Grand Copthorne Waterfront Hotel and Copthorne King’sHotel grew at a stronger rate than the non-corporate segments for FY2005 following the aboveinitiatives. M Hotel’s corporate and non-corporate segments generated relatively similar yield growthduring FY2005, with its corporate segments constituting approximately 84% of the Hotel’s business mixduring the financial year.

Grand Copthorne Waterfront Hotel recorded an unaudited pro forma net profit before tax of S$0.9million for FY2005 after incurring pro forma net losses for FY2003 and FY2004. This return toprofitability reflects the end of the Hotel’s prolonged gestation period as its Average Daily Rates andRevPAR increased under the positive market conditions and shift of clientele mix from low yieldingsegments including airline crew towards the higher yielding corporate segments.

In addition, Copthorne King’s Hotel experienced significant improvement in its performance for FY2005following the completion of its renovation in late 2004. The refurbishment exercise was on-goingthroughout 2004 and involved the renovation of the guest rooms in the Main Wing, Tien CourtRestaurant and the Executive Lounge. In particular, room revenue increased by 34% on the back of asimilar percentage rise in RevPAR to S$88 (FY2004: S$66). F&B revenue also increased by 19% overthe prior financial year. The Hotel embarked on an active acquisition of MICE business in the first halfof FY2005 and hosted several high profile events during the financial year. Profit before tax more thandoubled for FY2005 resulting from the above and the Hotel returned to an unaudited pro forma net profitposition for FY2005 at S$0.9 million.

The Hotels experienced an overall 36% or S$16.2 million growth in their total gross operating profit overFY2004 to S$61.2 million. This is the result of the higher room revenue arising partly from thecompletion of the renovation of Copthorne King’s Hotel as mentioned above and continued costcontrols.

85

Property Expenses

Property Expenses for H-REIT consist of (i) property tax and insurance expenses for the Hotels and (ii)property expenses incurred for Orchard Hotel Shopping Arcade.

(i) Property tax and insurance expenses for the Hotels

Property tax is based on 10.0% of the annual value of the Hotels. The annual value of the Hotelscomprise the annual value of hotel rooms and F&B outlets, and other parts of the Hotels.

Under existing legislation, there are two methods of assessing the annual value of hotels:

• Under the Property Tax (Valuation by Gross Receipts for Hotel Premises) Order, providedthe hotel meets certain conditions (one of which is that the hotel is not leased or licensedout), the annual value of its hotel rooms and F&B outlets is assessed using the GrossReceipts Method. The annual value of the other parts of the hotel (excluding hotel rooms andF&B outlets) is assessed using the Rental Method; and

• In the event that the hotel does not meet the conditions set out in the above Order, theannual value of the hotel is derived using the Rental Method. The annual value of the hotelwill be based on the gross rent derived from the hotel, less any service charge.

As H-REIT will be leasing out the Hotels to the Master Lessees, in assessing property tax on theHotels, the annual value of the Hotels’ hotel rooms and F&B outlets will be determined using theRental Method. The Ministry of Finance has however granted H-REIT a tax remission of anyamount of property tax on the Hotels payable by H-REIT based on the Rental Method in excessof the property tax that would be payable for such Hotels based on the Gross Receipts Method.The grant of this tax remission effectively means that the Gross Receipts Method is used in theassessment of the annual value of the hotel rooms and F&B outlets. The tax remission is limitedto the four Hotels in H-REIT’s asset portfolio as at the Listing Date.

For the purpose of preparing the unaudited pro forma financial information, it is assumed that thetax remission granted by the Ministry of Finance is applicable and the property tax for the Hotelsis assumed to be 10.0% of the annual value of the Hotels determined based on the GrossReceipts Method.

Certain property tax rebates were given by the tax authorities for FY2003.

With respect to insurance expenses, H-REIT retains the responsibility for certain insurancecoverage for the Hotels, including physical damage and rental losses from business interruptionfor the Properties.

(ii) Property expenses for Orchard Hotel Shopping Arcade

The property expenses incurred by H-REIT on Orchard Hotel Arcade Shopping Arcade consist ofthe following:

• Property tax is assessed based on 10.0% of the estimated annual value of Orchard HotelShopping Arcade. Certain property tax rebates were given by the tax authorities for FY2003;

• Marketing and leasing expenses which comprise commissions payable to agents,advertising and publicity costs, public relations and related marketing and leasing expense;and

• Other property expenses which comprise reimbursable salaries and wages, water andelectricity expenses, repair and maintenance expenses, general and administrativeexpenses and other miscellaneous operating expenses.

86

Finance Costs

Finance costs consist of interest expense incurred on borrowings, amortisation of transaction costs onborrowings capitalised and financial expense arising from remeasuring non-current rental deposits atamortised cost. For FY2003, the balance is stated net of the financial income arising from initialrecognition of the non-current rental deposits at fair value.

H-REIT Manager’s Management Fees

Management fees paid/payable to the H-REIT Manager comprise a Base Fee of 0.25% per annum ofthe value of the H-REIT Deposited Property and a Performance Fee of 5.0% of Net Property Income.80% of the H-REIT Manager’s management fees were paid in Stapled Securities and the balance incash.

H-REIT Trustee’s Fee

The H-REIT Trustee’s fee is computed based on a scaled basis of up to 0.02% per annum of the valueof the H-REIT Deposited Property, subject to a minimum of S$10,000 per month, excludingout-of-pocket expenses and GST. Such fees are limited to a maximum of 0.1% per annum of the valueof the H-REIT Deposited Property.

Other Trust Expenses of H-REIT

Other trust expenses comprise H-REIT’s recurring operating expenses such as annual listing fees,registry fees, audit and tax advisory fees, valuation fees, costs associated with the preparation anddistribution of reports to holders of the Stapled Securities, investor communication costs and othermiscellaneous costs.

Total Return for the Year

The total return for the year distributable to holders of the Stapled Securities is derived by adding backthe following items to the net income after tax of H-REIT:

(a) 80% of H-REIT Manager’s management fees being the portion of management fees that ispaid/payable to the H-REIT Manager in Stapled Securities instead of cash;

(b) H-REIT Trustee’s fee and amortisation of upfront debt arrangement fee which are items that arenon-deductible for tax purposes; and

(c) Financial income arising from the initial recognition of the non-current rental deposits at fair value(if any) which is non-tax chargable, net of financial expenses arising from remeasuringnon-current rental deposits at amortised cost, which is non-tax deductible.

Comparison of H-REIT’s Performance in FY2004 to FY2003

Gross Revenue

H-REIT’s performance improved significantly in FY2004 over FY2003. Gross Revenue experienced agrowth of 29% or approximately S$8.6 million over FY2003 to S$38.4 million in FY2004. The Hotelscontributed over 99% of this increase whilst Orchard Hotel Shopping Arcade contributed the remaining1%.

Gross rental income from Hotels

H-REIT generated gross rental income of S$35.0 million from the Hotels, a S$8.6 million or 32% riseover FY2003. This increase comprises (i) S$5.8 million or 28% growth in gross rental attributable tounderlying revenue growth of the Hotels and (ii) S$2.8 million or 46% increase attributable to theincrease in the underlying gross operating profit of the Hotels.

87

The negative impact of the SARS Outbreak and the Iraq War significantly weakened the Hotels’performance as the entire industry suffered from a significant decline in occupancy rates anddepressed Average Daily Rates. The Hotels rebounded in FY2004 from the return of overseas arrivalspost SARS Outbreak recovery. This is reflected in the significant increase in their revenue and grossoperating profit over FY2003, which in turn contributed to the improvement in rental income to H-REIT.Refer to the previous section for a detailed analysis of the improvement in underlying performance ofthe Hotels in FY2004 over FY2003.

Rental income — Retail

Orchard Hotel Shopping Arcade generated a marginal 2% increase in rental income over the priorfinancial year.

Property Expenses

Property Expenses comprising property tax and insurance expenses for the Hotels, and propertyexpenses incurred for Orchard Hotel Shopping Arcade increased by approximately S$0.7 million or24% over the prior financial year.

Property Expenses relating to the Hotels grew by approximately S$0.4 million or 23% to S$2.3 millionin FY2004. This was mainly due to an increase in property tax on the Hotels of approximately 36% fromS$0.9 million in FY2003 to S$1.2 million in FY2004. The increase was due to the effect of property taxrebates granted to the Hotels in FY2003 ceasing to be available in FY2004. Insurance expenses for theHotels grew by 12% or approximately S$0.1 million to S$1.1 million in FY2004.

Property Expenses for Orchard Hotel Shopping Arcade increased by approximately 26% or S$0.3million to S$1.5 million in FY2004.

Net Property Income

Net Property Income grew by almost S$8.0 million or 29% over FY2003 as the Properties recoveredfrom the effects of the SARS Outbreak and the Iraq War in FY2003.

Finance costs (net)

Net finance costs amounted to approximately S$10.8 million, a significant increase over the S$6.8million recorded in FY2003.

The finance costs in FY2003 was net of financial income of S$4.3 million arising from the initialrecognition of non-current rental deposits at fair value. Excluding the impact of such financial income,the finance costs declined slightly in FY2004 due to a lower average debt balance held during thefinancial year.

H-REIT Manager’s management fees

The S$0.4 million or 12% increase in FY2004 over FY2003 is reflective of the increase in underlyingNet Property Income for the financial year.

H-REIT Trustee’s fee

The H-REIT Trustee’s fee remained substantially unchanged from FY2003 at approximately S$141,000as the underlying value of the H-REIT Deposited Property remained substantially unchanged.

88

Other trust expenses

The 2% increase in other trust expenses noted in FY2004 over FY2003 represents an assumption oninflationary adjustment.

Net income after tax

The improvement in performance as outlined above has resulted in the overall net income after tax togrow from S$15.4 million (52% net income margin) in FY2003 to S$18.8 million (49% net incomemargin) in FY2004.

Comparison of H-REIT’s Performance in FY2005 to FY2004

Gross Revenue

In FY2005, Gross Revenue was approximately S$45.5 million, a 18% increase or approximately S$7.1million from the prior financial year.

The growth in Gross Revenue was contributed by the Hotels, as retail rental from Orchard HotelShopping Arcade remained relatively stable at S$3.4 million for both financial years.

Gross rental income from Hotels

The increase in Hotel gross rental comprises S$3.9 million or 15% growth in gross rental attributableto underlying revenue growth of the Hotels, and S$3.2 million or 36% increase attributable to the higherunderlying gross operating profit of the Hotels.

This was the result of various yield-enhancing initiatives embarked by the Hotels during FY2005, whichhas seen a significant increase in their gross profit margin. FY2005 also marked a turning point forCopthorne King’s Hotel, which benefited from its first full year of operations after the completion of therefurbishment exercise in late 2004. Refer to the previous section for a detailed analysis of theunderlying performance of the Hotels in FY2005 over FY2004.

Rental income — Retail

The rental income of Orchard Hotel Shopping Arcade was relatively stable at S$3.4 million.

Property Expenses

Property Expenses increased by approximately 7% over the prior financial year to S$4.0 million, ofwhich S$2.6 million relates to the Hotels and S$1.5 million relates to Orchard Hotel Shopping Arcade.

Property Expenses relating to the Hotels grew by approximately S$0.3 million or 14% to S$2.6 millionin FY2005. This is mainly attributable to a 25% increase in property tax on the Hotels to S$1.5 million.The rise in property tax is consistent with the increase in preceding year’s gross receipts of the Hotels.

Property Expenses of Orchard Hotel Shopping Arcade remained substantially unchanged atapproximately S$1.5 million in both financial years.

Net Property Income

H-REIT achieved an overall 20% growth in its Net Property Income to S$41.5 million, a S$6.8 millionincrease over FY2004. Net property income margin increased marginally from 90% to 91% in FY2005.

Finance costs (net)

Finance costs amounted to approximately S$10.9 million, a marginal 1% increase over FY2004.

89

H-REIT Manager’s management fees

The S$0.4 million or 9% increase in FY2005 over FY2004 is reflective of the increase in underlying NetProperty Income for the financial year.

H-REIT Trustee’s fee

The H-REIT Trustee’s fee has remained substantially unchanged from FY2004 at S$141,000 as theunderlying value of the H-REIT Deposited Property has remained substantially unchanged.

Other trust expenses

The increase in other trust expenses over FY2004 relates to an assumption on inflationary adjustmentof 2% per annum.

Net income after tax

H-REIT recorded an overall net income after tax of S$25.2 million for the financial year, a 34% increasefrom the previous financial year. Net income margin increased from 49% in FY2004 to 55% in FY2005.

Indebtedness

H-REIT has put in place a S$220.0 million secured term loan facility and a S$70.0 million securedrevolving credit facility from DBS Bank and The Royal Bank of Scotland plc available for a 3-year term(the “Facilities”). The Facilities are floating rate facilities. As security for payments in connection withthe Facilities, the Properties have been mortgaged to the lenders. Fixed and floating charges have alsobeen created over certain assets of H-REIT. The H-REIT Trustee has entered into an interest rate swapagreement with The Royal Bank of Scotland plc to fix the floating interest rate for S$260.0 million of theFacilities for a period of 1.5 years with effect from 13 July 2006.

An amount of up to S$266.6 million of the Facilities will be drawn down at the Listing Date to partiallyfund the acquisition of the Properties. The balance of the Facilities will be used to fund the balance 10%purchase consideration payable to the relevant Vendor of Grand Copthorne Waterfront Hotel and meetthe short-term working capital needs and capital expenditure requirements of H-REIT.

As at the Listing Date, based on the unaudited pro forma balance sheet of H-REIT as at 31 December2005, H-REIT will have an aggregate leverage of approximately S$290.0(1) million, representingapproximately 33.9% of the H-REIT Deposited Property. At this aggregate leverage level, the H-REITManager believes that H-REIT will have flexibility in respect of future capital expenditure oracquisitions. Based on the 35.0% aggregate leverage limit imposed by the Property Funds Guidelines,H-REIT will have additional funding capacity of approximately S$9.7 million.

(See “Strategy — Capital and Risk Management Strategy” for further details.)

Liquidity and Capital ResourcesNet cash from operations will be H-REIT’s primary source of liquidity for funding distributions, servicingof debt, payment of expenses and meeting the working capital and capital expenditure requirements ofH-REIT.

Taking into account the Facilities and the rental deposits received, the H-REIT Manager is of the opinionthat H-REIT’s working capital is sufficient for its present requirements.

Note:(1) Comprising bank loans of S$266,590,000 and other payables of S$23,410,000 which relate to the balance of purchase

consideration payable on Grand Copthorne Waterfront Hotel.

90

The cash flows from operating activities of H-REIT in FY2005 amounted to S$47.8 million. This wassufficient to cover finance costs of approximately S$11.2 million, distribution to holders of the StapledSecurities amounting to S$14.5 million as well as the capital expenditure amounting to S$8.1 million inFY2005 as shown by the unaudited pro forma statement of cash flows of H-REIT.

Capital Expenditure

Capital expenditure incurred by H-REIT mainly relate to capital expenditure on the building, and plantand machinery of the Hotels and Orchard Hotel Shopping Arcade. Capital expenditure incurred byH-REIT is capitalised as part of the value of the relevant property. Capital expenditure on FF&E of theHotels are mainly the responsibility of the Master Lessees.

Under the terms of the Master Lease Agreements, each Master Lessee is obliged to set aside a FF&Ereserve (amounting to 2.5% of the respective Hotel’s annual revenue) for recurring capital expenditureon the furniture, fixtures and equipment of the Hotels. Any overspending in one year will be carriedforward and debited against the contribution to the FF&E reserve in the next year. Any unspent FF&Ereserve in a particular year may be utilised by the Master Lessee in any subsequent year. Any unspentFF&E reserve at the end of ten years, the end of the lease term or, as the case may be, the terminationof the relevant Master Lease Agreement will be paid in cash to H-REIT.

Capital expenditure incurred is capitalised as part of the value of the relevant Property and has noimpact on the unaudited pro forma statements of total return or distributions other than the interestincurred on borrowings to fund the capital expenditure if any, and increasing the value of the H-REITDeposited Property for the purposes of computation of the management fees payable to the H-REITManager and the fees payable to the H-REIT Trustee.

The unaudited pro forma statements of total return have been prepared based on the following capitalexpenditure incurred by H-REIT during the relevant financial years:

Property FY2003 FY2004 FY2005

S$ million S$ million S$ millionOrchard Hotel and Orchard Hotel Shopping Arcade 0.4 0.5 0.8Grand Copthorne Waterfront Hotel 0.3 * 6.6M Hotel 0.1 1.7 0.5Copthorne King’s Hotel 1.2 1.8 0.2

Total 2.0 4.0 8.1

* Less than S$50,000

The unaudited pro forma statement of cash flows in FY2005 has been prepared based on capitalexpenditure of S$8.1 million incurred during the financial year.

Accounting Policies

For a discussion of the principal accounting policies of H-REIT, HBT and CDL Hospitality Trusts, seeAppendix II, “Independent Accountant’s Report on the Unaudited Pro Forma Financial Information ofH-REIT”.

91

PROFIT FORECASTS AND PROFIT PROJECTIONS

HBT will not make distributions for the period in which it is dormant. Therefore distributions by CDLHospitality Trusts, when HBT is dormant, will comprise distributions by H-REIT solely.

Statements contained in this “Profit Forecasts and Profit Projections” section that are not historical factsmay be forward-looking statements. Such statements are based on the assumptions set out in thissection of the Prospectus and are subject to certain risks and uncertainties which could cause actualresults to differ materially from those forecast and projected. Under no circumstances should theinclusion of such information herein be regarded as a representation, warranty or prediction withrespect to the accuracy of the underlying assumptions by the H-REIT Manager, the H-REIT Trustee, theHBT Trustee-Manager, the Underwriters, the Sponsor or any other person, or that these results will beachieved or are likely to be achieved (see “Forward-looking Statements” and “Risk Factors”). Investorsin the Stapled Securities are cautioned not to place any undue reliance on these forward-lookingstatements that are valid only as at the date of this Prospectus.

None of CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager, the H-REIT Trustee, the HBTTrustee-Manager, the Underwriters and the Sponsor guarantees the performance of CDLHospitality Trusts, H-REIT and HBT, the repayment of capital or the payment of anydistributions, or any particular return on the Stapled Securities. The forecast and projectedyields stated in the following tables are calculated based on (i) the Offering Price and (ii) theassumption that the Listing Date is 1 July 2006. Such yields will vary accordingly since theListing Date is after 1 July 2006 and in relation to investors who purchase the Stapled Securitiesin the secondary market at a market price that differs from the Offering Price.

The following tables set forth the forecast and projected Statements of Net Income and Distribution ofCDL Hospitality Trusts and H-REIT, both for the Forecast Period 2006 and the Projection Year 2007,respectively. The financial year-end of CDL Hospitality Trusts is 31 December. CDL Hospitality Trusts’first accounting period is for the period from 12 June 2006, being the date of its establishment, to 31December 2006 and its next accounting period will be for the period from 1 January 2007 to 31December 2007. The profit forecasts and profit projections are based on the assumptions set out in thissection. The assumptions have been reviewed and the computations have been checked by KPMG(the “Independent Accountants”). The profit forecasts and profit projections should be read togetherwith the report set out in Appendix I, “Independent Accountants’ Report on the Profit Forecasts andProfit Projections”, as well as the assumptions and the sensitivity analysis set out in this section.

While profit forecasts are prepared for the Forecast Period 2006, being the period commencing from1 July 2006 and ending 31 December 2006, it should be noted that due to the seasonal nature of thehotel business, the financial performance of hotels is generally better in the second half of the year ascompared to the first half of the year. Hence, based on historical performance, each Hotel’s revenueand gross operating profit during the Forecast Period 2006 is likely to be more than the periodcommencing 1 January 2006 and ending 30 June 2006.

92

H-REIT Forecast and Projected Statements of Net Income and Distribution


31 December 2006)


(S$’000) (S$’000)

Gross Revenue 27,217.2 56,258.6





Finance costs (net)(1) (1,148.9) (10,788.5)


Income tax expense − −


Add/(Less): Non-tax (chargeable)/deductible items (net)(2) (2,169.0) 4,260.5

Taxable income available for distribution to holders ofH-REIT Units 18,525.3 39,124.0

Offering Price (S$) 0.83 0.83

Number of H-REIT Units/Stapled Securities in issue(3)

(’000) 700,233.1 704,773.6

Distribution per H-REIT Unit/Stapled Security (cents) 2.65 5.55

Annualised distribution yield (%)(4) 6.37% 6.69%

Notes:

(1) Comprises interest expenses incurred on borrowings, amortisation of transaction costs on borrowings capitalised andfinancial expense arising from remeasuring non-current rental deposits at amortised cost, for all periods presented. For theForecast Period 2006, the balance is stated net of the financial income arising from the initial recognition of the non-currentrental deposits at fair value.


(3) The number of Stapled Securities includes the assumed payment of the H-REIT Manager’s management fees for therelevant period in the form of Stapled Securities issued at the Offering Price.

(4) Annualised by extrapolating the Forecast Period 2006 figures for a year. It should be noted that due to the seasonal natureof the hotel business, the financial performance of hotels is generally better in the second half of the year as compared tothe first half of the year.

93

CDL Hospitality Trusts Forecast and Projected Statements of Net Income(1)


31 December 2006)


(S$’000) (S$’000)

Gross Revenue 27,217.2 56,258.6





Finance costs (net) (1,148.9) (10,788.5)


Income tax expense − −


Note:

(1) The Forecast and Projected Statements of Net Income of CDL Hospitality Trusts comprise the results of H-REIT and HBT.H-REIT’s forecast and projected statements are set out above. HBT is dormant as at the Listing Date and is assumed toremain dormant during the Forecast Period 2006 and the Projection Year 2007. Accordingly, HBT is assumed to incur onlystatutory and administrative expenses during the Forecast Period 2006 and the Projection Year 2007, and will not make anydistributions during these periods.

Gross Revenue and Net Property Income Contribution of Individual Property

The forecast and projected contribution of the Properties to Gross Revenue is as follows:


31 December 2006)


(S$’000) (%) (S$’000) (%)

Orchard Hotel 9,290.1 34.1 19,644.0 34.9

Grand Copthorne Waterfront Hotel 7,577.9 27.8 15,503.0 27.6

M Hotel 5,360.3 19.7 10,803.8 19.2

Copthorne King’s Hotel 3,224.9 11.9 6,687.9 11.9

Orchard Hotel Shopping Arcade 1,764.0 6.5 3,619.9 6.4

Total 27,217.2 100.0 56,258.6 100.0

94

The forecast and projected contribution of the Properties to Net Property Income is as follows:


31 December 2006)


(S$’000) (%) (S$’000) (%)

Orchard Hotel 8,801.0 35.2 18,584.2 36.1

Grand Copthorne Waterfront Hotel 7,179.8 28.7 14,592.6 28.3

M Hotel 5,022.5 20.1 10,083.8 19.6

Copthorne King’s Hotel 3,043.8 12.2 6,310.9 12.3

Orchard Hotel Shopping Arcade 953.1 3.8 1,921.7 3.7

Total 25,000.2 100.0 51,493.2 100.0

Significant Accounting Policies of H-REIT and CDL Hospitality Trusts

The significant accounting policies which have been applied in preparing H-REIT’s Forecast andProjected Statements of Net Income and Distribution and CDL Hospitality Trusts’ Forecast andProjected Statements of Net Income are set out in Appendix II, “Independent Accountants’ Report onthe Unaudited Pro Forma Financial Information of H-REIT”.

In preparing the Forecast and Projected Statements of Net Income of CDL Hospitality Trusts, thefinancial information of H-REIT and HBT have been combined line by line by adding together like itemsof assets, liabilities, net assets attributable to holders of Stapled Securities, income and expenses.

Balances, transactions, income and expenses between H-REIT and HBT are eliminated in full.

Assumptions

The consolidated profit forecast and profit projection for CDL Hospitality Trusts comprises the profitforecasts and profit projections for H-REIT and HBT. HBT is assumed to be dormant during theForecast Period 2006 and the Projection Year 2007. Accordingly, HBT is assumed to incur onlystatutory and administrative expenses during the Forecast Period 2006 and the Projection Year 2007,and will not make any distributions during these periods.

The H-REIT Manager has prepared the profit forecasts of H-REIT and CDL Hospitality Trusts for theForecast Period 2006 and the profit projections for the Projection Year 2007 based on the Offering Priceand the assumptions listed below. The H-REIT Manager considers these assumptions to beappropriate and reasonable as at the date of this Prospectus. However, investors should considerthese assumptions as well as the profit forecasts and profit projections and make their own assessmentof the future performance of H-REIT and CDL Hospitality Trusts.

(I) Gross Revenue

Gross Revenue of H-REIT comprises (A) gross rental income from the Hotels and (B) retail rentalincome from Orchard Hotel Shopping Arcade. A summary of the assumptions which have beenused in calculating the Gross Revenue is set out below.

(A) Gross rental income from the Hotels

H-REIT will receive gross rental income under the terms of the Master Lease Agreementsbased on the Fixed Rent, the Service Charge and the Variable Rent.

95

The Fixed Rent and the Service Charge for each Hotel are as follows:

HotelFixed Rentper annum

Service Chargeper annum

Fixed Revenueper annum

S$ million S$ million S$ million

Orchard Hotel 5.9 4.4 10.3

Grand Copthorne Waterfront Hotel 3.0 4.2 7.2

M Hotel 3.9 2.2 6.1

Copthorne King’s Hotel 0.6 2.2 2.8

Total 13.4 13.0 26.4

The Fixed Revenue, which comprise Fixed Rent and Service Charge, is approximately thesum of 20% of the Hotel’s revenue in FY2003 and 20% of the Hotel’s gross operating profitin FY2003.

The Variable Rent is computed based on the sum of 20% of the Hotel’s revenue for theprevailing financial year and 20% of the Hotel’s gross operating profit for the prevailingfinancial year less the sum of Fixed Rent and Service Charge. Should the calculation of theVariable Rent yield a negative figure, the Variable Rent will be deemed to be zero (see“Certain Agreements Relating to CDL Hospitality Trusts, H-REIT, HBT and the Properties —Master Lease Agreements” for additional details on the Master Leases).

The forecast and projected revenue and gross operating profit of the Hotels used incomputing H-REIT’s rental income is as follows:

Hotel revenue and gross operating profitForecast Period 2006

(6 months ending 31 December 2006)

S$ millionOrchard

Hotel


Hotel M Hotel


Room revenue 16.7 12.4 10.2 6.0 45.3

F&B revenue 11.0 11.8 5.2 3.9 31.9

Service charge 2.7 2.4 1.5 1.0 7.6

Other income 1.2 0.8 1.3 0.5 3.8

Hotel Revenue 31.6 27.4 18.2 11.4 88.6

Operating expenses (16.8) (16.9) (9.6) (6.7) (50.0)

Gross Operating Profit 14.8 10.5 8.6 4.7 38.6

96

Projection Year 2007(12 months ending 31 December 2007)

S$ millionOrchard

Hotel


Hotel M Hotel


Room revenue 34.3 25.3 20.7 12.3 92.6

F&B revenue 24.2 24.8 10.3 8.3 67.6

Service charge 5.8 4.6 3.1 2.1 15.6

Other income 2.6 1.4 2.6 1.0 7.6

Hotel Revenue 66.9 56.1 36.7 23.7 183.4

Operating expenses (35.6) (34.7) (19.3) (14.0) (103.6)

Gross Operating Profit 31.3 21.4 17.4 9.7 79.8

The Hotels’ revenue and gross operating profit are forecast and projected based on thefollowing assumptions.

Hotel Revenue

The Hotels’ revenue consists of (i) room revenue, (ii) F&B revenue, (iii) service charge and(iv) other income.

(i) Room revenue

The forecast and projected hotel revenue are based on each Hotel’s room revenue peravailable room (RevPAR), which in turn is driven by the Average Daily Rate and theAverage Occupancy Rate assumptions, for the Forecast Period 2006 and theProjection Year 2007.

The weighted Average Daily Rate and occupancy for the Hotels assumed in theForecast Period 2006 and the Projection Year 2007 are as follows:

Weighted Average


31 December 2006)


Average Occupancy Rate(1) 82.8% 82.0%

Average Daily Rate(2) S$155 S$162

Notes:

(1) Weighted by the total Available Rooms of the Hotels for the relevant period.

(2) Weighted by the total rooms sold at the Hotels for the relevant period.

97

Forecast and projected occupancies and Average Daily Rates are derived after takinginto account the historical and current operating performance of each of the Hotels.Other factors considered include the prospects of the Singapore hospitality industry,the expected demand and supply of hotel rooms in Singapore, the competitive positionof competing hotels, major conventions and events that are scheduled to take place inSingapore, the historical and expected future renovations or refurbishments at theHotels, the respective location of the Hotels and the materialisation rate of the existingand potential room contracts.

In addition, the Hotels intend to continue to reposition themselves to adjust thecustomer mix and increase the contribution from the higher yielding corporatesegments.

The RevPAR of each of the Hotels for the Forecast Period 2006 and the ProjectionYear 2007 are as follows:

RevPAR


31 December 2006)


(S$) (S$)

Orchard Hotel 139 144

Grand Copthorne Waterfront Hotel 125 128

M Hotel 135 137

Copthorne King’s Hotel 105 109

Weighted Average(1) 129 132

Note:

(1) Computed based on total room revenues of the four Hotels divided by the total Available Rooms of thefour Hotels for the relevant periods.

(ii) F&B revenue

F&B revenue encompasses revenue from the various restaurants, cafes, lounges andbars located at each of the Hotels, including revenue from catering services,banqueting sales, room service and room mini bar sales. For the Forecast Period 2006and the Projection Year 2007, F&B revenue is expected to constitute approximately36.0% and 36.9% of the total revenue of the Hotels respectively.

The forecast and projected F&B revenue are estimated based on the historicalperformance of the F&B outlets of the Hotels and taking into account the location of theHotels, the competitive position of the Hotels’ F&B outlets, popularity and reputation ofthe F&B outlets, as well as expected bookings for banquets, wedding dinners andcorporate events.

(iii) Service charge

Service charge refers to the service charge that is typically levied on room revenue,F&B revenue and revenue from laundry services, and is forecast and projected basedon 10.0% of such forecast and projected revenue.

98

(iv) Other income

Other income includes income from the provision of telecommunication services,internet broadband services, laundry services, the operation of the car park and fitnesscentres (where applicable), rental income from concessionaires and the usage ofbusiness centres and serviced offices (where applicable).

Usage of internet broadband services and laundry services are expected to increaseas the Hotels continue their initiative to reposition themselves to target corporateguests who are traditionally heavier users of such services as compared to leisureguests. For the Forecast Period 2006 and the Projection Year 2007, the remainingconstituents of other income are estimated based on the historical levels achieved byeach of the Hotels.

Operating expenses

Operating expenses include staff costs, F&B cost of sales, energy and utilities, other directexpenses as well as other hotel expenses.

(a) Staff costs

Staff costs relate to wages, salaries and the related staff benefits in connection with thehiring of full-time and casual staff to carry out day-to-day operations at the Hotelsincluding housekeeping services, reception services, security services, F&B,administrative, marketing, property operation and maintenance and other services.

For the Forecast Period 2006 and the Projection Year 2007, staff costs are estimatedbased on the Hotels’ historical payroll costs and after adjusting for an expectedincrement in each year. In addition, consideration has been given to staffingrequirements at the Hotels by taking into account the forecast and projectedperformance of the Hotels (in particular, expected occupancy levels, expectedbanqueting demand and expected operating efficiencies).

(b) F&B cost of sales

F&B cost of sales relates to direct costs incurred in the provision of F&B services. F&Bcost of sales has been forecast and projected to vary in proportion to the F&B revenuefor the Forecast Period 2006 and the Projection Year 2007.

(c) Energy and utilities

For the Forecast Period 2006 and the Projection Year 2007, it has been assumed thatenergy and utilities costs are based on contracted utilities rates (where applicable) andwhere utilities rates are not contracted, are based on the estimated utilities costs,taking into consideration historical rates, expected rate increments and expectedutilisation.

(d) Other direct expenses

Other direct expenses of hotel room and F&B operations include operating supplies,cleaning supplies, commissions to travel agents and central reservations,transportation for guests, guests amenities and other expenses incurred directly in theprovision and maintenance of hotel rooms and F&B outlets. It has been assumed thatsuch expenses vary in proportion to occupancy and F&B revenue respectively for theForecast Period 2006 and the Projection Year 2007. Other direct expenses includeoperating supplies, operating equipment and other expenses incurred in the provision

99

of services classified under other income. It has been assumed that such expenses arebased on historical amounts incurred and expected increases.

(e) Other hotel expenses

Other hotel expenses include repair and maintenance expenses, advertising andpromotion expenses, and administrative and general expenses.

Repair and maintenance expenses relate to costs incurred for the provision of servicesand upkeep of the Hotels, including the cost of materials, supplies and contractsrelated to the general repair and maintenance of the Hotels. Repair and maintenanceexpenses are assumed to be approximately 2.0% to 3.0% of each Hotel’s revenue,based on historical and expected future renovations and refurbishments at each Hotel.

Advertising and promotion expenses relate to costs incurred in marketing, advertisingand promoting the Hotels. Such expenses are assumed to be approximately 2.0% to4.0% of each Hotel’s revenue for the Forecast Period 2006 and the Projection Year2007, taking into account expected marketing efforts at each Hotel.

Administrative and general expenses include credit card commissions, maintenance ofinformation technology systems and other general and administrative expenses. Suchexpenses are assumed to be approximately 2.0% to 3.0% of each Hotel’s revenuetaking into account historical amounts incurred for each Hotel.

(B) Retail rental income

H-REIT will receive retail rental income from Orchard Hotel Shopping Arcade. Retail rentalincome comprises base rental income (after rent rebates, refunds, credits or rent freeperiods, where applicable) and service charge payable by tenants of Orchard HotelShopping Arcade. Rents paid under H-REIT’s retail lease agreements are generally fixed fora period ranging from one to three years, which is consistent with the usual market practicein Singapore.

For the Forecast Period 2006 and the Projection Year 2007, Orchard Hotel Shopping Arcadeis forecast and projected to contribute 6.5% and 6.4% to Gross Revenue respectively and3.8% and 3.7% to Net Property Income respectively.

(i) Base rental income

In order to forecast and project base rental income, the rents payable by tenants undercommitted leases as at 31 December 2005 have been considered.

In respect of leases expiring in the Forecast Period 2006 and the Projection Year 2007,the new base rent applicable under new leases (or renewed leases) is assessed on alease by lease basis, having taken into account the assessment by property brokers ofthe market rent for each lettable area, which considers, amongst others, the locationand size of each lettable area, the effect of competing properties, likely marketconditions, inflation levels and tenant demand levels.

(ii) Service charge contribution

The service charge is a contribution paid by tenants towards the property expenses ofOrchard Hotel Shopping Arcade. It is based on a rate of S$1.00 per sq ft per monthcalculated on the total forecast or projected occupied areas of the arcade.

100

(II) Property Expenses

Property Expenses for H-REIT consist of (i) property tax and insurance expenses for the Hotelsand (ii) property expenses incurred for Orchard Hotel Shopping Arcade.

(i) Property tax and insurance expenses for the Hotels

Property tax is based on 10.0% of the annual value of the Hotels.

The annual value of a hotel comprises the annual value of hotel rooms and F&B outlets, andother parts of the hotel. Under existing legislation, there are two methods of assessing theannual value of hotels:

• Under the Property Tax (Valuation by Gross Receipts for Hotel Premises) Order,provided that the hotel meets certain conditions (one of which is that the hotel is notleased or licensed out), the annual value of its hotel rooms and F&B outlets isassessed using the Gross Receipts Method. The annual value of the other parts of thehotel (excluding hotel rooms and F&B outlets) is assessed using the Rental Method;and

• In the event that the hotel does not meet the conditions set out in the above Order, theannual value of the hotel is derived using the Rental Method. The annual value of thehotel will be based on the gross rent derived from the hotel, less any service charge.

As H-REIT will be leasing out the Hotels to the Master Lessees, in assessing property taxon the Hotels, the annual value of the Hotels’ hotel rooms and F&B outlets will be determinedusing the Rental Method. The Ministry of Finance has however granted H-REIT a taxremission of any amount of property tax on the Hotels payable by H-REIT based on theRental Method in excess of the property tax that would be payable for such Hotels based onthe Gross Receipts Method. The grant of this tax remission effectively means that the GrossReceipts Method is used in the assessment of the annual value of the hotel rooms and F&Boutlets.

For the Forecast Period 2006 and the Projection Year 2007, it is assumed that the taxremission granted by the Ministry of Finance as described above is applicable and theproperty tax for the Hotels is assumed to be 10.0% of the annual value of the Hotelsdetermined based on the Gross Receipts Method.

In addition, it is assumed that no property tax rebate is given by the tax authorities for theperiods presented.

Insurance expenses are estimated based on the amounts incurred on the Propertieshistorically.

(ii) Property expenses incurred for Orchard Hotel Shopping Arcade includes:

(i) Property tax

It has been assumed that property tax will remain at 10.0% of the estimated annualvalue of Orchard Hotel Shopping Arcade and that no property tax rebate is to be givenby the tax authorities.

(ii) Marketing expenses and other property expenses

Marketing expenses comprise leasing commissions, advertising and publicity costs,public relations and related marketing expenses. Other property expenses includereimbursable salaries and wages, water and electricity expenses, repair andmaintenance expenses, general and administrative expenses and other miscellaneousoperating expenses. The marketing expenses and other property expenses for theForecast Period 2006 and the Projection Year 2007 have been forecast and projectedbased on the historical expenses and existing service and maintenance contracts withsuppliers.

101

(III) Finance Costs

H-REIT has put in place a S$220.0 million secured term loan facility and a S$70.0 million securedrevolving credit facility from DBS Bank and The Royal Bank of Scotland plc available for a 3-yearterm (“Facilities”). The Facilities are floating rate facilities. H-REIT is expected to have anaggregate leverage of approximately S$290.0 million.(1)

The net finance costs for the Forecast Period 2006 and the Projection Year 2007 are as follows:


31 December 2006)


S$ million S$ million

Finance costs in relation to the Facilities 5.3 10.6

Financial income arising from recognition of non-current rental deposits at fair value(1)

(4.3) —

Financial expenses arising from remeasuring non-current rental deposits at amortised cost(1)

0.1 0.2

Finance costs (net) 1.1 10.8

Note:

(1) In accordance with Singapore Financial Reporting Standard 39 Financial Instruments: Recognition andMeasurement.

The H-REIT Trustee has entered into an interest rate swap agreement with The Royal Bank ofScotland plc to fix the floating interest rate for S$260.0 million of the Facilities for a period of 1.5years with effect from 13 July 2006. An effective interest rate of approximately 3.83% per annum(inclusive of interest margin and amortisation of upfront debt arrangement fee) based on theOffering Price has been assumed for the Forecast Period 2006 and the Projection Year 2007.Finance costs in relation to the Facilities are assumed to be S$5.3 million and S$10.6 million inthe Forecast Period 2006 and the Projection Year 2007, respectively.

In addition to the finance costs in relation to the Facilities, the H-REIT Manager has taken intoaccount the recognition of financial income of S$4.3 million for the Forecast Period 2006 arisingfrom the initial recognition of the Hotels’ non-current rental deposits at fair value together withfinancial expense of S$0.07 million and S$0.15 million for the Forecast Period 2006 and theProjection Year 2007, respectively, in relation to stating the Hotels’ rental deposits at amortisedcost thereafter. These income and expenses are non-cash in nature, and are assumed to have noimpact on the distributions of H-REIT.

(See “Strategy — Capital and Risk Management Strategy” and “Management’s Discussion andAnalysis of Financial Condition and Results of Operations — Indebtedness”.)

(IV) H-REIT Manager’s management fees

Pursuant to the H-REIT Trust Deed, the H-REIT Manager is entitled to management feescomprising a Base Fee of 0.25% per annum of the value of the H-REIT Deposited Property anda Performance Fee of 5.0% of Net Property Income.

Note:(1) Comprising bank loans of S$266,590,000 and other payables of S$23,410,000 which relate to the balance of purchase

consideration payable on Grand Copthorne Waterfront Hotel.

102

The H-REIT Manager has assumed, for the Forecast Period 2006 and the Projection Year 2007,that 80.0% of the management fees will be paid in Stapled Securities and the balance in cash.Where the management fees are payable in Stapled Securities, the H-REIT Manager hasassumed that such Stapled Securities are issued at the Offering Price.

The portion of the management fees payable in cash shall be payable monthly in arrears and theportion of the management fees payable in the form of Stapled Securities shall be payablequarterly in arrears.

(See “Management and Corporate Governance — Fees Payable to the H-REIT Manager —Management Fees Payable to the H-REIT Manager” for further details.)

(V) Other trust expenses

H-REIT

Other trust expenses comprise H-REIT’s recurring operating expenses such as H-REIT Trustee’sfee, annual listing fees, registry fees, audit and tax advisory fees, valuation fees, costs associatedwith the preparation and distribution of reports to holders of the Stapled Securities, investorcommunication costs and other miscellaneous costs.

Pursuant to the H-REIT Trust Deed, the H-REIT Trustee’s fee is limited to a maximum of 0.1% perannum of the value of the H-REIT Deposited Property. The H-REIT Trustee’s fee is presentlycharged on a scaled basis of up to 0.02% per annum of the value of the H-REIT DepositedProperty, subject to a minimum of S$10,000 per month, excluding out-of-pocket expenses andGST.

The H-REIT Trustee’s fee for the Forecast Period 2006 and the Projection Year 2007 is assumedto be S$0.07 million and S$0.14 million respectively.

The fee is accrued daily and paid monthly in arrears in accordance with the H-REIT Trust Deed.(See “The Formation and Structure of H-REIT — Trustee’s Fee” for further details.)

HBT

It has been assumed that HBT will incur statutory and administrative expenses of S$0.04 millionand S$0.05 million for the Forecast Period 2006 and the Projection Year 2007 respectively.

(VI) HBT Trustee-Manager’s fees

Pursuant to the HBT Trust Deed, the HBT Trustee-Manager is entitled to:

(a) a management fee comprising 10.0% of HBT’s profit before interest and tax in the relevantfinancial year (calculated before accounting for this management fee in that financial year);and

(b) (if the HBT Deposited Property is at least S$50.0 million) a trustee fee of a maximum of 0.1%per annum of the value of the HBT Deposited Property if any, subject to a minimum ofS$10,000 per month (excluding out of pocket expenses and GST).

For CDL Hospitality Trusts’ profit forecast and profit projection, it has been assumed that HBT isdormant, and the value of HBT Deposited Property is less than S$50.0 million in the ForecastPeriod 2006 and the Projection Year 2007, and that, as a result, no HBT Trustee-Manager feesare payable.

103

(VII) Capital Expenditure

Certain forecast and projected capital expenditure has been included based on the H-REITManager’s budgets. It had been assumed that such capital expenditure will be funded byborrowings under the Facilities. Capital expenditure incurred is capitalised as part of the value ofthe relevant Property and has no impact on the Forecast and Projected Statements of TotalReturn or forecast and projected distributions other than the interest incurred on bank borrowingsand increasing the value of the H-REIT Deposited Property for the purposes of computation of theH-REIT Manager’s management fees and the H-REIT Trustee’s fees.


31 December 2006)


Capital Expenditure S$2.7 million S$2.0 million

(See “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Capital Expenditure” for further details.)

(VIII) Distribution Reinvestment Arrangement

The H-REIT Trust Deed and the HBT Trust Deed grant the H-REIT Manager and the HBTTrustee-Manager respectively, where appropriate, the option of activating an arrangementwhereby the holders of the Stapled Securities may elect to re-invest all or part of their distributionentitlement in return for an issue of additional Stapled Securities. It has been assumed that theH-REIT Manager and the HBT Trustee-Manager will not activate the distribution reinvestmentarrangement before 31 December 2007. This assumption does not, however, preclude theH-REIT Manager and the HBT Trustee-Manager from exploring the implementation of such adistribution reinvestment arrangement before 31 December 2007.

(IX) Issue Expenses

The costs associated with the issue of the Stapled Securities will be paid by H-REIT. These costsare charged against net assets attributable to holders of H-REIT Units in the balance sheet andhave no impact on the Forecast and Projected Statements of Net Income and Distribution ofH-REIT.

(X) Properties

The Properties have been acquired at the CBRE appraised value of S$846.3 million. It is assumedthat the Properties will be revalued annually, effective 31 December each year, and that the nextvaluation will be carried out on 31 December 2006. For the purpose of the profit forecasts andprofit projections, the H-REIT Manager has assumed an increase in the value of the Propertiesonly to the extent of the budgeted capital expenditure described in paragraph (VII) above for eachof the relevant periods.

The H-REIT Manager has made the hypothetical assumption that the values of the Properties(except for effect of the budgeted capital expenditure) will, until 31 December 2007, remain atS$846.3 million, the amount at which they were valued as at 28 February 2006.

Any subsequent write-down of the values of the Properties will not affect the forecast andprojected distributions per H-REIT Unit for the Forecast Period 2006 and the Projection Year 2007because H-REIT’s distributions are based on taxable income, which excludes any revaluationsurplus or deficit upon revaluation of the Properties.

104

(XI) Accounting Standards

The H-REIT Manager has assumed that there will be no change in applicable accountingstandards or other financial reporting requirements that may have a material effect on the forecastor projected net income.

Significant accounting policies adopted by the H-REIT Manager in the preparation of the profitforecasts and profit projections are set out in Appendix II, “Independent Accountants’ Report onthe Unaudited Pro Forma Financial Information of H-REIT”.

(XII) Other Assumptions

The H-REIT Manager has made the following additional assumptions in preparing the profitforecasts for the Forecast Period 2006 and the profit projections for the Projection Year 2007:

• the property portfolio of H-REIT remains unchanged throughout the periods;

• no further capital will be raised during the periods;

• there will be no material change in taxation legislation or other applicable legislation;

• there will be no material change to the Tax Ruling and that the terms and conditions of theTax Ruling are complied with;

• the Facilities are available during the periods at the same effective interest rate;

• all Master Lease Agreements are enforceable and will be performed in accordance with theirterms;

• 100.0% of the distributable income will be distributed. Distributions to holders of the StapledSecurities will be made on a semi-annual basis in arrears; and

• where derivative financial instruments are undertaken to hedge against interest ratemovements, there is no change in the fair value of such instruments during the ForecastPeriod 2006 and the Projection Year 2007.

Sensitivity Analysis

The forecast and projected distributions included in this Prospectus are based on a number ofassumptions that have been outlined above. The forecast and projected distributions are also subjectto a number of risks as outlined in “Risk Factors”.

Investors should be aware that future events cannot be predicted with any certainty and deviations fromthe figures forecast or projected in this Prospectus are to be expected. To assist investors in assessingthe impact of these assumptions on the profit forecasts and profit projections, a series of tablesdemonstrating the sensitivity of the distribution per Stapled Security to changes in the principalassumptions are set out below.

The sensitivity analysis is intended to provide a guide only and variations in actual performance couldexceed the ranges shown. Movement in other variables may offset or compound the effect of a changein any variable beyond the extent shown.

Gross Revenue

Changes in Gross Revenue will impact the Net Property Income of H-REIT and, consequently, thedistribution yield. The assumptions for Gross Revenue have been set out earlier in the section.

105

The effect of variations in the Rental Income on the distribution yield is set out below:

Impact on distribution yield pursuant tochanges in Gross Revenue

Based on Offering Price of S$0.83 per Stapled Security


31 December 2006)


2.5% above base case 6.61% 6.93%

Base case 6.37% 6.69%

2.5% below base case 6.14% 6.45%

Property Expenses

Changes in Property Expenses will impact the Net Property Income of H-REIT and, consequently, thedistribution yield. The assumptions for Property Expenses have been set out earlier in the section.

The effect of variations in the Property Expenses on the distribution yield is set out below:

Impact on distribution yield pursuant tochanges in Property Expenses



31 December 2006)


2.5% above base case 6.36% 6.67%

Base case 6.37% 6.69%

2.5% below base case 6.39% 6.71%

Finance Costs

The assumptions for finance costs, including the H-REIT Trustee’s interest rate swap agreement to fixthe floating interest rate for S$260.0 million of the Facilities for a period of 1.5 years with effect from 13July 2006, have been set out earlier in the section. Changes in finance costs will impact the net incomeof H-REIT and, consequently, the distribution yield.

The effect of variations in the finance costs on the distribution yield is set out below:

Impact on distribution yield pursuant tochanges in Finance Costs



31 December 2006)


25 basis points above base case 6.25% 6.57%

Base case 6.37% 6.69%

25 basis points below base case 6.50% 6.81%

106

STRATEGY

H-REIT’s Strategy

H-REIT is established with the principal investment strategy of investing, directly or indirectly, in adiversified portfolio of income-producing real estate which is primarily used for hospitality and/orhospitality-related purposes, whether wholly or partially, and real estate-related assets in relation to theforegoing. In this Prospectus, real estate which is used for “hospitality” purposes includes hotels,motels and other lodging facilities, serviced residences and resorts, whether in existence bythemselves as a whole or as part of larger mixed-use developments (where such mixed-usedevelopments may also include entertainment, leisure and/or gaming-related facilities). Regulardistributions to the holders of the Stapled Securities will be made by the H-REIT Manager. Inaccordance with the requirements of the Listing Manual, this principal investment strategy will beadhered to for at least three years following the Listing Date unless otherwise agreed to by the passingof Extraordinary Resolutions in meetings of holders of H-REIT Units and holders of HBT Units. After theexpiry of the three-year period, the H-REIT Manager may from time to time change the principalinvestment strategy of H-REIT so long as the H-REIT Manager has given not less than 30 days’ priornotice of the change to the H-REIT Trustee and the holders of H-REIT Units by way of anannouncement to the SGX-ST.

The initial property portfolio of H-REIT will comprise the Properties. While the assets in H-REIT’s initialportfolio are all located in Singapore, H-REIT’s investment strategy envisages investments globally.Such investments may be by way of direct acquisition and ownership of properties by H-REIT or maybe effected indirectly through the acquisition and ownership of companies or other legal entities whoseprimary purpose is to hold or own real estate and real estate-related assets which are used forhospitality and hospitality-related purposes. It is intended that H-REIT’s investments will be for thelong-term.

Generally, H-REIT’s investment will only be made where the H-REIT Manager considers suchinvestment to be yield accretive and feasible in the light of regulatory, commercial, political and otherrelevant considerations.

The H-REIT Manager’s objectives are to maximise the rate of return for the holders of H-REIT Units andto make regular distributions. The H-REIT Manager plans to achieve these objectives through thefollowing strategies.

Acquisition Growth Strategy

The H-REIT Manager will pursue opportunities for asset acquisitions that are yield accretive. Inevaluating new acquisition opportunities, the H-REIT Manager may consider the need for thediversification of the portfolio by geography and asset profile. The H-REIT Manager believes that it iswell qualified to pursue its acquisition strategy. The directors and executive officers of the H-REITManager have extensive experience and strong track records in sourcing, acquiring and financing theacquisition of hotel properties globally. The industry knowledge, relationships and access to marketinformation of the directors and executive officers of the H-REIT Manager provide a competitiveadvantage with respect to identifying, evaluating and acquiring hospitality and hospitality-relatedassets.

The H-REIT Manager’s strategy will be supported by:

• H-REIT’s relationship with the Sponsor: H-REIT intends to leverage on the Sponsor’sexperience, market reach and network of contacts in the global hotel and hospitality sector for itsacquisition strategy to make yield-accretive acquisitions. The Sponsor has the capacity to supportthe portfolio growth of H-REIT in the following ways:

— The Sponsor has granted a right of first refusal to H-REIT over future sales by any SponsorEntity and offers to any Sponsor Entity of Singapore real estate which is used primarily for

107

hospitality purposes for a period of five years from the Listing Date so long as it is notrestricted by law. (See “Certain Agreements Relating to CDL Hospitality Trusts, H-REIT, HBTand the Properties — Right of First Refusal” for further details.);

— In addition to the four Hotels being acquired by H-REIT on the Listing Date, the remaininghotel portfolio of the Sponsor, currently comprising 101 hotels, may form potential acquisitiontargets for H-REIT;

— By allowing the H-REIT Manager to leverage on the established network of relationships thatthe Sponsor has developed in the global hotel and hospitality sector to pursue its overseasgrowth strategy; and

— Lending its extensive industry experience and expertise to the H-REIT Manager inassessing potential acquisition opportunities.

• Opportunities arising from trends in the hospitality industry: The H-REIT Manager believesthat hospitality service providers are increasingly looking to free up capital for businessexpansion, which may increase the availability of assets for acquisition. In addition, H-REIT canseek partnership and co-operation opportunities with the Sponsor as it expands globally.

• H-REIT’s international investment strategy will provide for greater potential acquisitionopportunities: H-REIT’s international investment strategy will increase the universe of availableinvestment opportunities as it expands globally. This will increase the ability to identify assetswhich meet H-REIT’s investment criteria.

Capital and Risk Management Strategy

The H-REIT Manager intends to use a combination of debt and equity to fund future acquisitions andproperty enhancements such that it is within the “aggregate leverage” limit set out in the Property FundsGuidelines.

The objectives of the H-REIT Manager in relation to capital and risk management are to:

• maintain a strong balance sheet and remain within the aggregate leverage limit set out in theProperty Funds Guidelines;

• minimise the cost of debt financing;

• secure diversified funding sources from both financial institutions and capital markets as H-REITgrows in size and scale; and

• manage the exposure arising from adverse market movements in interest rates and foreignexchange through appropriate hedging strategies.

The H-REIT Manager will consider diversifying its sources of debt financing in the future, including byway of accessing the public debt capital markets through a commercial mortgage backed securitystructure or, alternatively, the establishment of a medium term note program. Access to the public debtcapital markets will improve H-REIT’s ability to source debt for acquisitions, refurbishment of itsProperties and the refinancing of existing loans. The public debt markets may also provide H-REIT withthe ability to secure longer term funding options in a more cost efficient manner.

The H-REIT Manager’s capital and risk management strategy includes managing the risk of potentialinterest rate and foreign exchange volatility through the use of interest rate hedging instruments and/orfixed rate borrowings. The H-REIT Manager will regularly evaluate the feasibility of putting in place theappropriate level of interest rate and foreign exchange hedges, after taking into account the prevailingmarket conditions.

In order to manage the currency risk involved in investing in assets outside of Singapore, the H-REITManager may adopt currency risk management strategies that may include the use of foreign currencydenominated borrowings to match the currency of the asset investment as a natural currency hedge.

108

Active Asset Management

The H-REIT Manager intends to leverage upon its relationship with the Sponsor, which has extensiveexperience in the hospitality industry, to actively improve the operational performance and maximisethe cash flow and value of the Hotels.

The H-REIT Manager will work closely with the Master Lessees to improve the operational performanceof the Hotels. The Master Lessees, in consultation with the H-REIT Manager, will oversee the annualbudgeting process for the Hotels and be responsible for and recommend strategies to improve revenue.This will include drawing upon the Sponsor’s global experience to provide strategic direction in areassuch as room yield management, optimising guest mix, development of marketing programs, access toglobal hospitality market intelligence, and leveraging-off the Sponsor’s in-depth understanding of thelatest hospitality industry trends to implement innovative hotel and F&B concepts.

Further, the H-REIT Manager will actively work with the Master Lessees to create opportunities toenhance the hotel portfolio and thus cash flow to generate more attractive returns on invested capitalof the Hotels. This will include discussions between the H-REIT Manager and the Master Lessees onany renovation and refurbishment programmes proposed by the Master Lessees for the Hotels. Boththe H-REIT Manager and the Master Lessees will also hold joint discussions over such plans insofaras they will enhance the overall market share, cash flow and returns on invested capital of the Hotels.

The hotel management contracts between the Master Lessees and the Hotel Manager allow the MasterLessees to closely monitor the performance of the Hotel Manager. The Master Lessees will ensure thatthe Hotel Manager uses its best efforts to follow an approved annual plan relating to matters such assales and marketing plans.

Close interaction and consultation between the H-REIT Manager and the Master Lessees and then inturn between the Master Lessees and the Hotel Manager will ensure that H-REIT’s asset managementstrategies are implemented.

HBT’s strategy

As at the Listing Date, HBT will be dormant. It will, however, become active if any of the followingoccurs:

• It is appointed by H-REIT, in the absence of any other master lessee(s) being appointed, as amaster lessee of one of the Hotels. HBT will not, however, manage or operate any of the hotelassets in H-REIT’s portfolio, and the intention is for HBT to appoint a professional hotel manager,such as MCIL, to manage that hotel. HBT exists primarily as “a master lessee of last resort” withregard to the Hotels so that in the event that the Master Lessees terminate or do not renew theMaster Lease Agreements beyond their initial terms and H-REIT is unable to lease any of theHotels to another master lessee for any reason, including failing to reach agreement oncommercially acceptable terms with other potential master lessees, HBT will enter into a masterlease agreement for the Hotels on substantially the same terms as the previous master leaseagreement (see “The Formation and Structure of CDL Hospitality Trusts, H-REIT and HBT — TheFormation and Structure of HBT”);

• H-REIT acquires hotels in the future, and, if there are no other suitable master lessees, H-REITwill lease these acquired hotels to HBT. HBT will then become a master lessee for that hotel andwill appoint a professional hotel manager to manage that hotel; or

• It undertakes certain hospitality and hospitality-related development projects, acquisitions andinvestments which may not be suitable for H-REIT.

109

In general, HBT will be considered to be active in the event that it carries on any business activity otherthan:




H-REIT will not guarantee any debt of HBT, and vice versa. This will help shield each entity from theother’s financial obligations because each entity’s creditors will not have recourse to the other.

The HBT Trustee-Manager intends where appropriate, if and when activated, to manage the exposurearising from adverse market movements in interest rates and foreign exchange through appropriatehedging strategies.

110

BUSINESS AND PROPERTIES

Initial Property Portfolio of H-REIT

H-REIT’s initial property portfolio will, on the Listing Date, comprise the following Properties:

• Orchard Hotel

Orchard Hotel has 653 Available Rooms and comprises an 18-storey block with four basementlevels known as Orchard Wing and a 17-storey extension block with four basement levels knownas Claymore Wing.

Facilities and amenities available to the guests include a half-Olympic size pool with sun deck,seminar and banquet facilities including a pillarless ballroom which can house up to 1,500 people(theatre seating), in-house shopping arcade, baggage store room, a fitness club, business centre,hospitality room, children’s room, putting green and F&B outlets within the Hotel including theaward winning Hua Ting Restaurant, Intermezzo Bar, La Terrasse, Orchard Cafe and OrchardTerrace. Services offered at Orchard Hotel include 24-hour concierge and security, 24-hourin-room dining service, laundry, dry cleaning, valet, travel and tour reservation services.

The GFA for the whole development, inclusive of Orchard Hotel Shopping Arcade, is 49,940.9 sq m.

• Grand Copthorne Waterfront Hotel

Grand Copthorne Waterfront Hotel has 539 Available Rooms. The Hotel comprises a 30-storeytower block with two basement levels and incorporating a four-storey podium. The Hotelcommenced operations in October 1999. Minor renovation works were carried out to some of theguest rooms, F&B outlets and public areas between 2002 and 2004. The number of rooms willincrease by 11 no later than 31 December 2006 following completion of the refurbishment/renovation of the additional space available after the relocation of some plant and equipment.

Facilities and amenities available to the guests include a swimming pool with a sun deck, agymnasium, three levels (including Waterfront Conference Centre at Waterfront Plaza) ofconference/meeting and banquet facilities, a business centre and food and entertainment outletssuch as Cafe Brio’s, Piano Bar and Pontini. Services offered at Grand Copthorne Waterfront Hotelinclude 24-hour concierge and security, 24-hour in-room dining service, laundry, dry cleaning,serviced offices and complimentary shuttle bus connection to UE Square, Republic Plaza,International Plaza and Orchard Road.

The Hotel has direct access to the adjoining Waterfront Plaza and King’s Centre, the latter beinga building next to the Waterfront Plaza. The Hotel also shares the use of the basement level carpark facility with the adjoining Waterfront Plaza. Only the Hotel and the adjoining Waterfront Plaza(excluding level one and level two of Waterfront Plaza and the basement level car park) will beacquired by H-REIT.

The GFA for the whole development, excluding level one and level two of Waterfront Plaza andthe basement level car park, is 46,662.6 sq m.

• M Hotel

M Hotel has 413 Available Rooms housed within a 29-storey building with two basement levels.

Facilities and amenities available to the guests include a swimming pool with a sun deck, a healthspa with massage rooms, seminar and banquet facilities, baggage store room, a gymnasium anda business centre and restaurants such as Restaurant J Toshi and J Bar, Cafe 2000, The Buffetand Tea Bar. Services offered at M Hotel include 24-hour concierge and security, 24-hour in-room

111

dining service, laundry, valet, foreign currency exchange, baby-sitting, courier and mailing, traveland tour reservation services, and business and secretarial services available to hotel guests andserviced office tenants offered through the Hotel’s business centre.

The GFA for the whole development is 32,379.3 sq m.

• Copthorne King’s Hotel

The Hotel has 310 Available Rooms within two adjoining and interconnected wings. The MainWing is a 13-storey rectangular building which comprises a two-storey podium and a slab blockabove it. The Tower Wing is a 20-storey semi-circular wing that adjoins the western end of theoriginal building. In addition, there is a three-storey annexe at the rear of the Main Wing.

Facilities and amenities available to the guests include a swimming pool with a sun deck, agymnasium, seminar and banquet facilities, a business centre, a sundry shop, a barber shop,baggage store room, and food and entertainment outlets such as Tien Court, Princess TerraceCafe, Connections Lounge, La La La Lounge and Mino-Q Teppan-yaki Steak House. Servicesoffered at Copthorne King’s Hotel include 24-hour concierge and security, 24-hour in-room diningservice, gymnasium, laundry, dry cleaning, complimentary shuttle bus connection to OrchardRoad, Great World City, Chinatown, Outram and Somerset MRT stations, Suntec City andShenton Way within the CBD.

The GFA for the whole development is 17,598.3 sq m.

• Orchard Hotel Shopping Arcade

Orchard Hotel Shopping Arcade comprises a four-storey retail podium (basement level to thirdlevel) block incorporated in Orchard Hotel’s Claymore Wing. It is located at the junction of OrangeGrove Road and Orchard Road, some four km away from the city centre at Raffles Place. Theproperty is prominently located within the heart of the Orchard Road shopping and tourist belt andis within short walking distance from the Orchard MRT station.

By floor area, there are eight major tenants occupying a total aggregate of 2,910.7 sq m(representing 58.9% of the rentable retail space) as at 31 January 2006. In terms of rentcollection, these eight major tenants contribute 57.4% of total rental income for January 2006. Thelease for one of these eight major tenants will expire in October 2006 while four other leases willexpire in 2007, and the remaining three leases will expire in 2008 and 2009.

The total lettable floor area for the shopping arcade is approximately 4,939.3 sq m. The monthlygross rental for the month ended 31 January 2006 was S$278,866 inclusive of service charge atthe rate of about S$1.00 per sq ft per month. The occupancy rate as at 31 January 2006 wasabout 95.9%.

The GFA for the whole development, inclusive of Orchard Hotel, is 49,940.9 sq m.

Outlook for the Hospitality Sector in Singapore

The Increase in Visitor Arrivals in Singapore

• The prospects for the tourism and the hospitality sector in Singapore are expected to be strongfor 2006 and 2007. The STB recently recorded 8.94 million tourist arrivals into Singapore for 2005,an increase of 7% over 2004, and the highest number of arrivals ever achieved in a single year.(See Appendix IV, “Independent Singapore Tourism and Hotel Market Overview Report”.) Thehigh number of visitors in 2005 indicates the tourism industry’s strong and sustainable recoveryfrom the impact of the SARS Outbreak. Based on the STB’s report on tourism performance forJanuary 2006 to April 2006, visitor arrivals to Singapore increased by 14.6% over the same periodin 2005 to 3.1 million visitors.

112

International visitor arrivals to Singapore grew at an annual compounded rate of 5.4% from 1990to 7.3 million visitors in 1996, reaching 7.7 million in 2000. (See Appendix IV, “IndependentSingapore Tourism and Hotel Market Overview Report”.) There were short periods when visitorarrivals dipped due to external events such as the Asian financial crisis, the September 11Incident, the SARS Outbreak and the Iraq War. The fact that visitor arrivals in 2005 have climbedup further to attain the 8.9 million-mark and the continued growth of visitors to Singapore in theperiod from January to April 2006 attests to the resilience of the tourism industry. This can beattributed to better regional and worldwide economic growth and the advent of budget air-carriersin Asia. These trends are expected to be sustainable with improving regional and global economicforecasts.

Room Revenue

• According to the STB report for 2005, room revenue for Singapore hotels also posted double-digitgrowth of 15.5% to reach S$1.2 billion in 2005, on top of the 16% increase in 2004.

The Average Daily Rate increased by 12% in 2005 compared to 2004 to reach an estimatedS$136 while the Average Occupancy Rate was estimated to have reached 84.1% in 2005, a 3.5%increase over 2004. (See Appendix IV, “Independent Singapore Tourism and Hotel MarketOverview Report”.) Further, according to the STB, Singapore hotel room revenue for April 2006reached S$119 million, a 25.7% increase over April 2005.

Singapore Source Market

• By geographical origin, Indonesia remains Singapore’s top source market for 2005, accounting for20.0% of total visitor arrivals. This was followed by arrivals from the PRC (9.6%), Australia (6.9%),Japan (6.6%), India (6.5%) and Malaysia (6.4%). (See Appendix IV, “Independent SingaporeTourism and Hotel Market Overview Report”.)

• Arrivals from the PRC have been rising significantly over the years in line with the increasingaffluence of the Chinese. The significant increase is largely due to aggressive marketingpromotions in the PRC and the increased air linkages between Singapore and the PRC. Inaddition, the tourism industry is reaping the benefits of the introduction in Singapore of a newsocial visa scheme on 1 December 2003 that extends the validity period of visas of visitors fromthe PRC from a three-week single-journey visa to a five-week multiple-journey visa. (See theviews of Jones Lang LaSalle Hotels in Appendix IV, “Independent Singapore Tourism and HotelMarket Overview Report”, at pages IV-8 and IV-13.)

Length of Stay of Visitors

• Based on official data from the STB, international visitors (inclusive of day-trippers) arriving inSingapore stayed an average of 3.20 days in 2004, up slightly from the 3.18 days registered in2003. For 2005, the average period of stay per visitor increased to 3.4 days, indicating that morevisitors are extending their stay in Singapore. (See Appendix IV, “Independent Singapore Tourismand Hotel Market Overview Report”.)

Development of the Singapore Tourism Industry

This upswing in international arrivals can also be attributed to efforts by both the STB and the localindustry to develop better tourism offerings and initiatives. The Singapore Government’s goal is toachieve tourism receipts of S$30 billion by 2015 by investing in better tourism offerings and initiativesso as to attract a target of 17 million visitor arrivals by 2015, and a S$2.0 billion tourism developmentfund has been set up by the Singapore Government to achieve the desired growth in the local tourismindustry. The STB and the local industry are further working towards the following deliverables toensure the medium to long-term growth of the tourism industry:

• Launching Phase Two of the STB’s “Uniquely Singapore” brand campaign through a global printand television campaign, and delivering enriching and memorable experiences for each visitor;

113

• Growing the existing source markets like Indonesia, Malaysia, Australia and North Asian marketsand attracting the high growth source markets of the PRC and India;

• Developing the much-anticipated IRs at Marina Bay and Sentosa, which will be distinctiveworld-class developments with a comprehensive range of amenities such as hotels, housecasinos, convention facilities, restaurants, entertainment shows and retail shops. The IRs areestimated to be scheduled for completion in 2009 and are expected to help generate moreinbound visitors, increase tourist receipts and create a more broad-based tourism product forSingapore;

• Developing the Marina Bay area to be the future downtown of Singapore. In the pipeline are plansfor a BFC, one of the two IRs with a casino component and recreational and entertainmentopportunities along the promenade, waterfront gardens and the Marina Barrage. In addition, theSingapore Flyer, a giant observation wheel (similar to the London Eye) which is scheduled to becompleted in 2008, will occupy a prime spot in this “necklace of attractions” and provide abreathtaking, unobstructed radial view of 45 km spanning Singapore, Malaysia and Indonesia;

• Growing the MICE sector. As an example, Singapore is gearing up to host the 2006 AnnualMeetings of the Board of Governors of the International Monetary Fund and World Bank Group inSeptember 2006. Successful implementation of the STB’s plan to grow the MICE business maycause a positive change in the dynamics of the hotel industry, with the hotel industry and theSingapore economy benefiting from major meetings and events being held in Singapore. Thismay result in an increase in demand in the hotel, F&B and retail sectors;

• Revitalisation of Orchard Road. Plans to rejuvenate Singapore’s premier shopping and tourist beltalong Orchard Road include new shopping, dining and entertainment development sites,incentives for the extension of GFA and revised guidelines to encourage building owners to createmore dynamic pop-out facades and expand their shopping podiums up to their boundaries. TheSTB will be introducing more exciting events, activities and will attract investments in retail, F&Band entertainment as part of the initiatives to inject greater life and vibrancy into the area;

• Tapping on the potential of the high-yielding medical tourism segment. As a leading healthcareservices hub in the region, more than 150,000 international patients come to Singapore each yearfor a whole range of medical care.The Singapore Government is targeting to attract, by 2012, upto 1.0 million overseas patients and boost the economy by S$3.0 billion from this medical tourismsegment alone;

• Bugis Area Development. There are plans to develop the Bugis Area into an arts, cultural,entertainment and learning hub. The Nanyang Academy of Fine Arts, the new National Library, anew city campus of the Singapore Management University and the new campus of LASALLE-SIACollege of Arts will be located at and around the Bugis area. The URA has also sold a 8,919 sqm site at Victoria Street in 2005 for development into an UEC. Located in the heart of the BrasBasah/Bugis district, the UEC is envisioned to be a key development comprising an attractive mixof arts, entertainment and leisure activities that will be a draw for both locals and tourists;

• Sentosa Master Plan. A S$8.0 billion plan to redevelop Sentosa to transform it into an internationalleisure and tourist destination with an aim of attracting 8.0 million visitors by 2012 is currentlyunderway. New and revamped attractions include the Images of Singapore, the Merlion, the FortSiloso Tour, the Carlsberg Sky Tower, the Magical Sentosa programme and the new SentosaLuge. Other developments include a new monorail that will link Sentosa to the main Singaporeisland, new resorts and the planned IR to be located in Sentosa;

• Future Marina Cruise Centre located at Marina South. To further enhance Singapore’s position asa cruise gateway, the Maritime and Port Authority of Singapore is working with the STB and UrbanRedevelopment Authority to develop a new cruise centre at Marina South; and

114

• Other Future Developments. These include the proposed S$2.0 billion HarbourFrontDevelopment to develop an integrated leisure resort, improvement to Singapore’s entertainmentscene to inject greater vibrance, expansion of Changi International Airport and entry into moreopen skies agreements.

(See Appendix IV, “Independent Singapore Tourism and Hotel Market Overview Report”.)

Future Hotel Supply

According to the latest available data from the STB, there are a total of 102 hotels gazetted inSingapore (including Sentosa Island) under the Singapore Tourism Cess Collection Act, Chapter 305Cof Singapore with a total of 30,300 rooms as at 31 December 2004. As the existing gazetted stock ofhotel rooms in Singapore is already 80% to 85% occupied, there is a balance of only about 5,800 to5,900 rooms which is insufficient to meet the accommodation needs of the 17 million visitors targetedby the STB by 2015. In the circumstances, there are 1,257 rooms in the pipeline on the main Singaporeisland and another 670 rooms on Sentosa island that are expected to be completed between 2006 and2008. (See the views of Jones Lang LaSalle Hotels in Appendix IV, “Independent Singapore Tourismand Hotel Market Overview Report”, at pages IV-18, IV-20 and IV-21.)

Competitive Strengths of the Properties


• Strategic locations with significant contribution for the Hotels from corporate segments

All of the Properties are strategically located in or near to the CBD or along or near to OrchardRoad. Their strategic locations enable the Hotels to cater to both business and leisure travellers.All the Hotels enjoy significant revenue contribution from the higher yielding corporate segments.In fact, more than 50.0% of the room revenue of each of the Hotels in FY2005 comes from thecorporate segments, as shown in the table below.

Business Mix of Hotels — by room revenue contributionin FY2005 (%)

Corporate segments(1) Leisure/Others segments(2)



M Hotel 83.9 16.1


Weighted Average(3) 69.1 30.9

Notes:

(1) Based on the Sponsor’s internal classification, the H-REIT Manager considers the term “corporate segments” to referto guests who are staying at the hotel primarily for the purpose of business as opposed to leisure or other guests suchas cabin crew. Under this segment the following category of guests would be included: (i) guests who book at rackrate (full published rate), (ii) guests who book through corporate travel agents/management companies, (iii) guestswho book through the Internet, (iv) guests who book at rates offered under a corporate agreement and (v) guests whoare attending meetings or incentive activities or events/exhibitions/conferences in the city.

(2) Room revenue contribution by “Leisure/Others” segments refers to contribution from sources other than theabove-mentioned corporate segments.

(3) Weighted by room revenue.

115

Specifically, Orchard Hotel and Orchard Hotel Shopping Arcade are ideally located along thejunction of Orange Grove Road and Orchard Road (the heart of Singapore’s shopping andentertainment district), and are within short walking distance from the Orchard MRT station. Theproperties are also located close to the offices of many foreign/diplomatic missions and offices ofmultinational and regional companies within the area.

Grand Copthorne Waterfront Hotel and Copthorne King’s Hotel are situated close to the banks ofthe Singapore River, along Havelock Road, near its junction with Kim Seng Road, with easyaccess to major expressways. They are located just minutes away from the CBD, the proposedBFC and IRs as well as the shopping and entertainment circuit of Suntec City, Orchard Road andHarbourFront Centre. The Hotels are also very close to Chinatown and the dining andentertainment strip along the Singapore River including Clarke Quay, Boat Quay and RobertsonQuay. Grand Copthorne Waterfront Hotel has one of the largest conference facilities in Singaporewhich facilitates business travellers’ needs.

M Hotel is located along Anson Road, at its junction with Palmer Road, in the CBD. It is withinwalking distance from certain major government offices, commercial buildings, financialinstitutions, tourist attractions and is easily accessible from or to the shopping and entertainmenthub because of its close proximity to the Tanjong Pagar MRT station. Its location also places it inclose proximity to Marina Bay and Sentosa, which are the sites of the proposed IRs. Marina Bayis also the site of Singapore’s up and coming BFC.

The Hotels are well positioned to capitalise on opportunities to refer business and clientele to oneanother. This gives greater flexibility in meeting different customer requirements in terms ofbudget, location and other specific needs.

• Unique Strengths of Each of the Properties

Orchard Hotel

Located in the major shopping belt of Orchard Road, the retail and entertainment activity hub ofSingapore, Orchard Hotel appeals to customers who are on business or on leisure trips. Itspremier location is a significant strength of the Hotel. The Hotel has maintained strong andconsistent revenue in its F&B department, having won a number of accolades and awards suchas “Best Dim Sum” and “Best Cantonese Cuisine” Awards in 2004 which were awarded to HuaTing Restaurant. In 2005, the restaurant won the Asian Ethnic Restaurant of the Year award givenby the World Gourmet Summit, and its master chef, Chan Kwok, has been accorded Asian EthnicChef of the Year for the past two years. This year, the Hotel’s Executive Chef Eric Teo was alsohonoured with the World Gourmet Summit’s Executive Chef of the Year award. Adding to itsaccolades is “The Best Accommodation Experience — Superior Hotel” awarded by the STB —20th Tourism Awards 2005. Extensive renovations to significantly upgrade rooms at one of the twowings, Orchard Wing, was recently completed in March 2006. Orchard Hotel is expected to benefitfrom the increased activities and revitalisation of Orchard Road planned by the STB.


Grand Copthorne Waterfront Hotel is a business hotel with one of the largest conference facilitiesin Singapore, and is located between the primary retail district of Singapore, Orchard Road, andthe CBD. Grand Copthorne Waterfront Hotel derived a significant percentage of its revenue frombanquets. The Hotel currently has four ballrooms dedicated to banqueting events, the largestballroom being the Grand Ballroom which can hold up to 1,000 persons in theatre style. Inaddition, the Hotel has many other smaller meeting and function rooms which afford choice andflexibility to its clientele. The percentage of revenue derived from banqueting facilities was closeto 30% in FY2005. In line with Singapore’s appeal in the MICE market, with its conferencefacilities, the Hotel is well positioned to benefit from the STB’s stated goal of increasingSingapore’s appeal in the MICE market.

116

M Hotel

The unique and contemporary design of the Hotel clearly differentiates it from others in its class.M Hotel has attracted a strong following of business travellers due to its location in the heart ofthe CBD and its proximity to HarbourFront Centre. M Hotel has received various accolades andthese include “Best Mid-Range Business Hotel” in 2002 and 2005 by TTG Asia and “BestCorporate/Business Hotel” by Hospitality Asia Platinum Awards in 2004. By its proximity, M Hotelwill be well positioned to benefit from increased activities due to the proposed BFC and IRs.


Following an extensive refurbishment of Copthorne King’s Hotel that was completed in November2004, the Hotel has been transformed into a modern business hotel to meet the needs ofcorporate travellers. The Executive Club Lounge features alfresco dining with an open garden anda mini golf putting green. With its dining outlets offering Cantonese delicacies and Penang buffetand cuisine since the 1970s, the Hotel has built up a loyal base of patrons for its restaurants.Copthorne King’s Hotel is expected to benefit from STB’s plans to grow Singapore’s tourismindustry.


The shopping arcade annexed to Orchard Hotel has a varied mix of stores, which arecomplementary to the guest facilities at Orchard Hotel, providing shopping and leisure facilities tohotel guests. Its proximity to the Hotel and its Orchard Road location ensure a steady stream ofshoppers comprising tourists, business travellers and locals.

• Improving RevPAR of the Hotels

RevPAR is a commonly used indicator of market performance for hotels and means room revenueper available room. It represents the product of the Average Daily Rate charged and the AverageOccupancy Rate achieved and measures daily room revenues generated on a per available roombasis. RevPAR does not include F&B or other revenues generated by the hotel.

The Hotels have been experiencing improving RevPAR performance for the last three years.

RevPAR

FY2003 FY2004 FY2005

(S$) (S$) (S$)



M Hotel 63 89 110



Note:

(1) Computed based on total room revenues of the four Hotels divided by total number of Available Rooms of the fourHotels during the year.

Amongst the four Hotels, Orchard Hotel is the strongest performer in terms of RevPAR, followedby M Hotel, with both properties achieving RevPAR yields at or higher than the competitive marketcomprising similar class hotels (see the views of Jones Lang LaSalle Hotels in Appendix IV,“Independent Singapore Tourism and Hotel Market Overview Report”, at page IV-25).

117

From FY2003 to FY2005, the RevPAR for Grand Copthorne Waterfront Hotel and CopthorneKing’s Hotel were lower than the competitive market due to various extenuating factors (see theviews of Jones Lang LaSalle Hotels in Appendix IV, “Independent Singapore Tourism and HotelMarket Overview Report”, at page IV-24).

Grand Copthorne Waterfront Hotel commenced operations only in October 1999. GrandCopthorne Waterfront Hotel’s RevPAR for the period from FY2003 to FY2005 was still shruggingoff the effects of the disruption to its gestation period (being the period for a new hotel to reachits normalised trading levels), caused by the September 11 Incident, the SARS Outbreak and theIraq War. The gestation period of Grand Copthorne Waterfront Hotel ended in the second half ofFY2005.

The RevPAR of Copthorne King’s Hotel in FY2003 and FY2004 were similarly adversely affectedby the downturn in the economy as a result of the SARS Outbreak and the Iraq War. In addition,the Hotel’s performance was further affected by room closures at the Hotel for the substantialrenovation exercise which took place from 2002 to 2004.

• Recent refurbishments carried out on the Hotels and future FF&E not borne by H-REIT

The Hotels have recently undergone significant refurbishment programs and are thus in a goodstate of upkeep. Such refurbishments promote the attraction of the Hotels and may thus increasepatronage and revenue.

Renovation and refurbishment works were carried out in Orchard Hotel since 2002. These worksinclude the upgrading and reconfiguration of the guest rooms in phases and renovation of the F&Boutlets and public areas. Extensive renovation works on the Orchard Wing was recentlycompleted. Upon completion of the renovation works, Orchard Hotel has 653 Available Roomscompared to 674 Available Rooms before the renovation as the sizes of some rooms of the Hotelhave been increased by merging with other rooms.

In Grand Copthorne Waterfront Hotel, minor renovation works were carried out on some of theguest rooms, F&B outlets and public areas between 2002 and 2004. In July 2005, GrandCopthorne Waterfront Hotel relocated certain plant and machinery such that the area previouslyoccupied by the plant and machinery would undergo renovation/refurbishment and, uponexpected completion in late 2006, would increase the number of rooms in the Hotel by 11 to 550Available Rooms. The Independent Valuers have taken the expected increase in the number ofrooms into consideration when performing their valuations.

At M Hotel, major renovation and refurbishment works commencing from November 1999 werecarried out to convert the Hotel into a more upmarket business hotel catering to corporatetravellers. The transformation of the Hotel was carried out in three phases, the last of which wascompleted in 2003.

Copthorne King’s Hotel has undergone a few refurbishment programs recently. In 2002, the guestrooms within the Tower Wing, as well as the front lobby area and coffee house, were refurbished.The most recent renovations which were completed in 2004 included the refurbishment of theremaining guest rooms and some public areas.

Going forward, the cost of FF&E at each of the Hotels will be borne by the respective MasterLessee under the relevant Master Lease Agreements, while other capital expenditure (such asimprovement works on the physical structures of the Hotels) will be borne by H-REIT.

118

Certain Information about the Properties

The table below sets out certain information with respect to each of the Properties as at the LatestPracticable Date.

Property GFA

Number ofAvailableRooms

Issue of TemporaryOccupation Permit(1)

LandLeaseExpiry

(sq m) (Year) (Year)

Orchard Hotel 49,940.9(2) 653 1982 (Orchard Wing)1994 (Claymore Wing)

2081

Grand Copthorne WaterfrontHotel

46,662.6 539(3) 1999 2081

M Hotel 32,379.3 413 1988 2081

Copthorne King’s Hotel 17,598.3 310 1974 (Main Wing)1981 (Tower Wing)

2067

Orchard Hotel Shopping Arcade N.A.(4) N.A. 1994 2081

Total 146,581.1 1,915

Notes:

(1) Date on which the relevant Property first received its temporary occupation permit.

(2) Inclusive of Orchard Hotel Shopping Arcade.

(3) The number of rooms will increase by 11 following completion of the refurbishment/renovation of the space formerlyoccupied by plant and machinery.

(4) Net Lettable Area is 4,939.3 sq m. Shares GFA with Orchard Hotel.

Valuation

The valuations of the Properties by CBRE and Knight Frank are summarised below:

PropertyValuation by

CBREValuation byKnight Frank

S$ million S$ million



M Hotel 161.5 161.7


Orchard Hotel Shopping Arcade 34.5 35.2

Total 846.3 846.3

(See Appendix III, “Independent Property Valuation Summary Reports”.)

119

Purchase Price

The purchase price of the Properties, which is based on CBRE’s appraised valuation, are as follows:

Property Purchase Price

S$ million

Orchard Hotel 330.1

Grand Copthorne Waterfront Hotel 234.1(1)

M Hotel 161.5

Copthorne King’s Hotel 86.1

Orchard Hotel Shopping Arcade 34.5

Total 846.3(1)

Note:

(1) Includes Deferred Consideration of S$23,410,000.

Capital Expenditure

In July 2005, Grand Copthorne Waterfront Hotel relocated certain plant and machinery such that thearea previously occupied by the plant and machinery would undergo renovation/refurbishment and,upon expected completion in late 2006, would increase the number of rooms in the Hotel by 11 to 550Available Rooms.

Going forward, the cost of FF&E at each of the Hotels will be borne by the respective Master Lesseeunder the relevant Master Lease Agreement, while other capital improvement expenditure of the Hotelswill be borne by H-REIT.

Insurance

The Properties are insured in accordance with industry practice in Singapore. Currently, the Hotels areinsured by the Sponsor under various global and regional policies. For cost efficiency reasons, H-REITmay participate under these global and regional policies to insure against physical damage, rentallosses from business interruption, terrorism as well as public liability up to certain limits. There arecertain types of risks that are not covered by these policies, including acts of war, contamination orother environmental breaches and radioactive contaminations or explosive nuclear assemblies. TheH-REIT Manager will in the future take up insurance against environmental damage as and when theH-REIT Manager considers there is a need to do so. For each Hotel, other insurance premiums inrelation to areas such as workmen’s compensation will be borne by the relevant Master Lessee.

Legal Proceedings

None of CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager or the HBT Trustee-Manager iscurrently involved in any material litigation nor, to the best of the knowledge of the H-REIT Manager andthe HBT Trustee-Manager, is any material litigation currently contemplated or threatened against anyof CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager or the HBT Trustee-Manager.

120

Competition

The following table sets out some of the competition faced by the Hotels:

Hotel Competition

Orchard Hotel Traders Hotel; Orchard Parade Hotel; Meritus Negara HotelSingapore; Hilton Singapore; and Royal Plaza on Scotts.

Grand Copthorne Waterfront Hotel Sheraton Towers Hotel; Marina Mandarin Hotel; SwissotelMerchant Court, Singapore; Swissotel The Stamford, Singapore;and Pan Pacific Singapore.

M Hotel Amara Hotel; Swissotel Merchant Court, Singapore; Carlton Hotel;Marina Mandarin Hotel; and Novotel Clark Quay Singapore.

Copthorne King’s Hotel Furama Riverfront Singapore; Novotel Clark Quay Singapore; andHoliday Inn Atrium Singapore.

The hospitality industry in Singapore is highly competitive. Each of the Hotels experience competitionprimarily from other similar upscale hotels in their immediate vicinity, and also with other hotels in theirgeographical market. The level of competition in the Singapore hospitality industry is affected byvarious factors, including changes in economic conditions, both locally, regionally and globally, changesin local, regional and global populations, the supply and demand for hotel rooms and changes in travelpatterns and preferences. Competing hotels may offer more facilities at their premises at similar ormore competitive prices compared to the facilities offered at the Hotels. Competing hotels may alsosignificantly lower their rates or offer greater convenience, services or amenities, to attract moreguests. If these efforts are successful, the results of operations at the Hotels may be adversely affected.There can also be no assurance that demographic, geographic or other changes will not adverselyaffect the convenience or demand for the Hotels.

Oversupply in room availability in Singapore could adversely affect occupancy rates and Average DailyRates and therefore RevPAR.

Orchard Hotel Shopping Arcade faces competition from the surrounding shopping malls like DelfiOrchard, Orchard Towers, Forum the Shopping Mall, Far East Shopping Centre and PalaisRenaissance. Aside from competition faced in the immediate area, Orchard Hotel Shopping Arcadefaces stiff competition from other shopping malls in the Orchard area including Ngee Ann City, WismaAtria, and the Paragon.

CDL, its subsidiaries and associates are engaged in the investment in, and development andmanagement of, among others, retail properties. Some of these properties compete directly withOrchard Hotel Shopping Arcade for tenants. Furthermore, CDL may in the future invest in other REITsor business trusts which may also compete directly with CDL Hospitality Trusts. There can be noassurance that the interests of CDL Hospitality Trusts will not conflict with CDL in such circumstances.

Future Competing Developments

The STB has plans to double Singapore’s hotel room supply to help meet the accommodation needsof the targeted 17 million visitors by 2015. The following table, which is an extract from Appendix IV,“Independent Singapore Tourism and Hotel Market Overview Report”, sets out the major future supplydevelopments in the pipeline, which represents future supply which may compete with the Hotels:

121

Major* Future Supply in Singapore Until 2008 (as at 12 January 2006)

Project Name LocationEstimated

No. of RoomsExpectedQuality

ExpectedDue

UNDER CONSTRUCTION/PROPOSED

Siloso Beach Resort Sentosa 174+15villas+1

treehouse

3-/4-star 2006

Boutique Hotel @ Tiong Bahru Tiong Bahru Road 288 3-star 2006

The Amara Sentosa Sentosa 125 5-star 2007

St. Regis Hotel Tanglin Road/Cuscaden Road

299 5-star 2007

Proposed NTUC Beach Club Sentosa 200 3-star 2008

The Knolls Sentosa 171 5-star 2008

Selegie Complex Redevelopment(proposed hotel/shopping/officedevelopment)

Selegie Road 150 4-star 2008

Proposed Airport Hotel Changi Airport 400 4-star 2008

Proposed Business Hotel One North(Buona Vista)

120 4-star 2007/2008

Total Room Supply 1,927***

(A) Singapore Mainland (A) 1,257

(B) Sentosa Island (B) 670

PLANNED#

Sentosa Cove Hotel(The Quayside Collection)

Sentosa 320 4-star TBC**

Carlton Extension North Bridge Road/Bras Basah Road

TBC** 4-star TBC**

Integrated Resorts Sentosa/Marina Bay 3,400 TBC** TBC**

* At least 50 rooms

** TBC — to be confirmed

*** Excludes the 15 villas/treehouse at Siloso Beach Resort

# Refers to planned projects where the site is not awarded/no confirmed plans submitted yet

Source: URA, Sentosa Leisure Group, Jones Lang LaSalle Hotels

In summary, there are 1,257 rooms in the pipeline on the main Singapore island and another 670 roomson Sentosa island that are expected to be completed between 2006 and 2008. This represents acompounded annual growth rate (“CAGR”) of 2.0% from 2005 to 2008. (See the views of Jones LangLaSalle Hotels in Appendix IV, “Independent Singapore Tourism and Hotel Market Overview Report”, atpage IV-21.)

HBT Business Prospects

The HBT Trustee-Manager expects HBT to be dormant for the period from the Listing Date to 31December 2006. Save as disclosed in this Prospectus and based on the prevailing market conditionsas at the date of this Prospectus, the HBT Trustee-Manager is not aware of any event which maymaterially affect HBT’s business prospects in the current financial year.

122

A detailed description of each of the Properties is set out below.

Orchard Hotel

442 Orchard RoadSingapore 238879

Description

Orchard Hotel has 653 Available Rooms and is located at the junction of Orange Grove Road andOrchard Road, some 4 km away from the city centre at Raffles Place. The property is prominentlylocated within the heart of the Orchard Road shopping and tourist belt and is within a short walkingdistance from the Orchard MRT station which is situated at the junction of Scotts Road, Paterson Roadand Orchard Road. The Hotel comprises an 18-storey block with four basement levels known asOrchard Wing and a 17-storey extension block with four basement levels known as Claymore Wing.

Orchard Wing, which was completed in the early 1980s, comprises a three-storey with a four-storeybasement podium and a 15-storey tower block above it. Claymore Wing consists of a three-storey witha four-storey basement podium and a 14-storey tower block above it. The Orchard Wing wasrefurbished and integrated with the Claymore Wing in 1992.

Renovation and refurbishment works were carried out on the Orchard Wing since 2002. These worksinclude the upgrading and reconfiguration of the guest rooms in phases and renovation of the F&Boutlets and public areas which were recently completed at a total cost of S$32.4 million. Consequently,Orchard Hotel now has 653 Available Rooms compared to 674 Available Rooms before the renovationas the sizes of some rooms of the Hotel have been increased by merging with other rooms.

Orchard Wing incorporates a three-storey shopping arcade known as Orchard Hotel Galleria whilst theClaymore Wing incorporates a three-storey basement shopping arcade known as Orchard HotelShopping Arcade. Both shopping arcades have separate entrances, the former having its mainentrance along Orchard Road and the latter having its main entrance along Claymore Road. In 1997,part of the retail space within Orchard Hotel Galleria was reconfigured and converted to form part of theconference/banquet facilities of the Hotel. The abovementioned Orchard Hotel Galleria and OrchardHotel Shopping Arcade (collectively known as “Orchard Hotel Shopping Arcade”) constitutes theproperty which will be acquired by H-REIT.

Facilities and amenities available to the guests include a half-Olympic size pool with sun deck, seminarand banquet facilities including a pillarless ballroom which can house up to 1,500 people (theatre-styleseating), in-house shopping arcade, baggage store room, a fitness club, business centre, hospitalityroom, children’s room, putting green and F&B outlets within the Hotel including the award winning HuaTing Restaurant, Intermezzo Bar, La Terrasse, Orchard Cafe and Orchard Terrace. Services offered atOrchard Hotel include 24-hour concierge and security, 24-hour in-room dining service, laundry, drycleaning, valet, travel and tour reservation services.

The Hotel has a centralised air-conditioning system. Access to the upper floors of the Orchard Wing andClaymore Wing is facilitated by three and four passenger lifts respectively. Several service lifts are alsoprovided to serve the various floors.

Generally, the finishes to the foyer and reception hall comprise marble flooring and false ceilings, whilethe restaurants and other F&B outlets are finished with carpet/marble flooring, and the remaining areasof the Hotel are finished with ceramic tile/carpet flooring.

The fire protection system includes automatic sprinkler system, smoke detectors, hose-reels, dry andwet risers, fire extinguishers and break-glass alarm systems.

123

Orchard Wing: Each room is equipped with thermostat control unit, electronic safe, hairdryer, colourtelevision with in-house movies, CNN and other satellite channels, IDD telephone with dedicated linesand voicemail facilities, data port, broadband internet access, computer and facsimile data port, coffeeand tea making facilities and minibar. In each room, the bathroom is furnished with granite flooring whilethe remaining areas are carpeted. The room sizes range from approximately 24 sq m for the superiorroom to approximately 46 sq m for the suites.

Claymore Wing: Each room is equipped with thermostat control unit, electronic safe, hairdryer, colourtelevision with in-house movies, CNN and other satellite channels, IDD telephone with dedicated linesand voicemail facilities, data port, broadband internet access, computer and facsimile data port, coffeeand tea making facilities and minibar. In each room, the bathroom is furnished with granite flooring whilethe remaining areas are carpeted. The room sizes range from the superior room of approximately 32sq m to the presidential suite of approximately 115 sq m.

Number of Available Rooms

653 Available Rooms, with 325 Available Rooms in the Orchard Wing and 328 Available Rooms in theClaymore Wing.

Car Park Facilities

454 car park lots

The car park facilities are shared with Orchard Hotel Shopping Arcade.

Marketed Image

“Superior” hotel

Land Area

8,588.0 sq m

GFA

49,940.9 sq m

Appraised Value (as at 28 February 2006)

Appraised value by CBRE: S$330.1 millionAppraised value by Knight Frank: S$330.0 million

Issue of First Temporary Occupation Permit

Orchard Wing: 1982Claymore Wing: 1994

Title

75-year leasehold interest commencing from the Listing Date.

Vendor

City Hotels Pte. Ltd.

Master Lessee


Rental

This rental payment comprises the sum of the Fixed Rent, the Service Charge and the Variable Rent.

The Fixed Rent is S$5.9 million per annum and the Service Charge is S$4.4 million per annum.

124

The Variable Rent per annum is computed based on the sum of 20.0% of the Hotel’s revenue for theprevailing financial year and 20.0% of the Hotel’s gross operating profit for the prevailing financial year,less the sum of Fixed Rent and Service Charge. Should the calculation of the Variable Rent yield anegative figure, the Variable Rent will be deemed to be zero.

RevPAR in FY2005

S$112

Awards & Accolades

World Gourmet Summit Awards of Excellence 2006:Executive Chef of the Year — Executive Chef Eric TeoAsian Ethnic Chef of the Year — Master Chef Chan Kwok

20th Singapore Tourism Awards:Best Accommodation Experience (awarded in 2006 in respect of 2005) (Superior Hotel)

SHA (Singapore Hotels Associations) Excellent Service Award 2005:15 Gold and 58 Silver awards

World Gourmet Summit Awards of Excellence 2005:Asian Ethnic Restaurant of the Year — Hua Ting RestaurantAsian Ethnic Chef of the Year — Master Chef Chan Kwok

Hospitality Asia Platinum Awards 2004–2005:The Award For Excellence — Western Cuisine Chef — Executive Chef Eric Teo

Culinary World Masters 2005:Executive Chef Eric Teo won the championship at the prestigious Culinary World Masters 2005, thefood Olympics held in Switzerland

Singapore Hotel Association (“SHA”) Excellent Service Award 2004:2 Gold and 15 Silver awards

International Culinary Olympics 2004:Singapore’s National team led by Executive Chef Eric Teo won 2 gold, 1 silver and 1 bronze and wasranked the first Asian country in the overall results

Food & Hotel Asia 2004 Culinary Challenge:Culinary Team won 1 gold, 2 silver and 5 bronze

Singapore’s Great Tables Awards 2004:Greatest Tables for Cantonese Cuisine — Hua Ting RestaurantFinest Cantonese Chef in Singapore — Master Chef Chan KwokGreat Tables under the Dim Sum category — Hua Ting Restaurant“The Publisher Award 2004” by Ch’ng Poh Tiong — Master Chef Chan Kwok

World Gourmet Summit Awards of Excellence 2003:Best Asian Ethnic Restaurant of the Year — Hua Ting Restaurant

Expogast 2002 World Culinary Competition:Executive Chef Eric Teo as team captain of the Singapore National Team & members came in third afterSweden and Switzerland — a gold medal for hot presentation and a silver medal for cold presentation

125


392 Havelock RoadSingapore 169663

Description

Grand Copthorne Waterfront Hotel has 539 Available Rooms. It is located along Havelock Road, nearits junction with Kim Seng Road. It is just outside the CBD and is about 2.5 km from the city centre atRaffles Place. It is located just minutes away from the CBD, the proposed BFC and IRs as well as theshopping and entertainment circuit of HarbourFront Centre, Suntec City, Orchard Road, Chinatown,Clarke Quay, Boat Quay and Robertson Quay. The Hotel has one of the largest conference facilities inSingapore and facilitates business travellers’ needs. The Hotel has direct access to the adjoiningWaterfront Plaza and also shares the basement level car park facility which is connected to King’sCentre as well.

H-REIT will acquire a 75-year leasehold interest in the Hotel and the adjoining Waterfront Plaza whichexcludes the first and second levels of Waterfront Plaza and the basement level car park. The secondlevel of Waterfront Plaza comprises the Waterfront Conference Centre and will be leased by CDL toH-REIT for a term of five years with an option to renew for another 14 terms of five years each at theoption of H-REIT. The rental terms of the renewal option will be based on market rent.

The Hotel comprises a 30-storey tower block with two basement levels and incorporating a four-storeypodium. The Hotel commenced operations in October 1999. Minor renovation works were carried outto some of the guest rooms, F&B outlets and public areas between 2002 and 2004. The number ofrooms will increase by 11 following completion of the refurbishment/renovation of the additional spaceavailable after the relocation of some plant and equipment.

The building is generally constructed of reinforced concrete frames with infill brick walls/granite wallcladdings, reinforced concrete floors, staircases and flat roofs. It has a centralised air-conditioningsystem. Access to the upper levels is facilitated by six passenger lifts, four service lifts, one fireman’slift and several sets of staircases. Generally, the finishes to the foyer and reception hall comprisegranite/stone slab flooring and false ceilings, while the restaurants and other F&B outlets are finishedwith carpet flooring, and the remaining areas of the Hotel are finished with ceramic tile/carpet flooring.

Each room is equipped with thermostat control unit, electronic safe, hair dryer, colour television within-house movies, CNN and other satellite channels, IDD telephone with dedicated lines and voicemailfacilities, data port, broadband internet access, computer and facsimile data port (from the twenty-firstlevel onwards), coffee and tea making facilities and minibar. Each guest room is provided with abathroom with marble floor finishing while the remaining areas of the guest rooms are furnished withparquet/carpet flooring. The Hotel’s accommodation includes one presidential suite and 19 suites. Thesize of the rooms ranges from approximately 26 sq m for a deluxe room to approximately 219 sq m forthe presidential suite.

Facilities and amenities available to the guests include a swimming pool with a sun deck, a gymnasium,three levels (including Waterfront Conference Centre at Waterfront Plaza) of conference/meeting andbanquet facilities, a business centre and food and entertainment outlets such as Cafe Brio’s, Piano Barand Pontini. Services offered at Grand Copthorne Waterfront Hotel include 24-hour concierge andsecurity, 24-hour in-room dining service, laundry, dry cleaning, service offices and complimentaryshuttle bus connection to UE Square, Republic Plaza, International Plaza and Orchard Road.


539 Available Rooms

126

Car Park Facilities(1)

287 car park lots

Marketed Image


Land Area

10,860.2 sq m (including adjoining Waterfront Plaza)

GFA

46,662.6 sq m




1999

Title


Vendor

CDL

Master Lessee

Republic Hotels & Resorts Limited

Rental


The Fixed Rent is S$3.0 million per annum and the Service Charge is S$4.2 million per annum.


RevPAR in FY2005

S$96

Note:(1) The basement level car park facility will not be acquired by H-REIT but will continue to be owned by CDL. However, Grand

Copthorne Waterfront Hotel will enjoy a right of easement to use the basement level car park facility. (See “CertainAgreements Relating to CDL Hospitality Trusts, H-REIT, HBT and the Properties — Specific Terms Relevant to theProperties — Vendor’s Leases” for more details.)

127

Awards & Accolades

The Hotel was awarded two awards by Food and Hotel Asia in 2004, being a silver medal award for the“Hot Cooking” competition and another silver medal award for the “Three-Course Ethnic Asian Menu”competition

Certificate of Commendation Hotel Gold awarded by SHA/NCPC/STB (2005, 2004, 2003)

Excellent Service Award (2005) for achieving 17 Gold and 6 Silver excellent service awards awardedby SHA, SPRING Singapore

128

M Hotel

81 Anson RoadSingapore 079908

Description

M Hotel is a 29-storey hotel development comprising a total of 413 Available Rooms, two basementlevels and an eight-storey podium. It is located along Anson Road, at its junction with Palmer Road. TheHotel is within the CBD and is about 1.3 km away from the city centre at Raffles Place. It is withinwalking distance from certain major government offices, commercial buildings, banks, touristattractions and is easily accessible from or to the shopping and entertainment hub. Its location alsoplaces it in close proximity to Marina Bay and Sentosa, the sites of the proposed IRs. Marina Bay is alsothe site for Singapore’s up and coming BFC.

The Hotel was originally completed circa 1987. There are a total of 237 car park lots on the third toseventh levels of the podium block. The eighth level, a former car park floor, was converted in 1997 into44 units of serviced offices, 11 of which were subsequently used as the Hotel’s internal sales officessince 2004 and one which has been used as the Hotel’s business centre. Major renovation andrefurbishment works were carried out from November 1999 to convert the existing Hotel into aupmarket business hotel catering to the corporate traveller. The transformation of the Hotel was carriedout in three phases.

Phase I included the upgrading of all the Hotel guest rooms, common corridors, lift landings and ClubLounge, hotel frontage/main lobby, conference centre (basement level one), Cafe 2000 and Tea Bar(first level), The Buffet (second level), conference centre and kitchen (second level). All the guest roomswere re-designed to reflect a modern, contemporary look and fitted-out with new furniture and fixturesas well as the installation of facilities and technical support equipment that provide access to financialand other information crucial to the business traveller. This phase was completed around July 2000.

Phase II entailed the revamping of the former Japanese restaurant located on the ninth storey into amodern contemporary Japanese restaurant now known as Restaurant J Toshi and J Bar, converting theformer Chinese restaurant on the tenth level into a banquet suite (main ballroom) and relocating thesales and catering office to the tenth level and renovating the employees’ back-of-house area(basement level two). Phase II of the renovation was completed in 2002.

Phase III of the renovation programme was completed in 2003 and it includes the reconfiguration of the11th storey space into a health spa and renovation of the swimming pool and its surroundings.

The Hotel has a centralised air-conditioning system. Access to the upper floors is facilitated by fourpassenger lifts, two service lifts and reinforced concrete staircases. In addition, four service lifts areprovided to serve the Hotel staff from basement two to the various floors. The fire protection systemprovided includes an automatic sprinkler system, smoke detectors, hose-reels, dry and wet risers, fireextinguishers and a break-glass alarm system.

Each room is provided with thermostat control unit, electronic safe, hair dryer, colour television within-house movies, CNN and other satellite channels, IDD telephone with dedicated lines and voicemailfacilities, high speed internet access, computer and facsimile data port, coffee and tea making facilitiesand mini-bar. Each room has a bathroom with long bath and separate shower facility. The bathroom isfurnished with marble flooring while the remaining areas are carpeted. The room sizes range fromapproximately 29 sq m for the standard room to approximately 72 sq m for the suite.

129

Facilities and amenities available to the guests include a swimming pool with a sun deck, a health spawith massage rooms, seminar and banquet facilities, baggage store room, a gymnasium and abusiness centre and restaurants such as Restaurant J Toshi and J Bar, Cafe 2000, The Buffet and TeaBar. Services offered at M Hotel include 24-hour concierge and security, 24-hour in-room diningservice, laundry, valet, foreign currency exchange, baby-sitting, courier and mailing, travel and tourreservation services, and business and secretarial services available to hotel guests and servicedoffice tenants offered through the Hotel’s business centre.


413 Available Rooms

Car Park Facilities

237 car park lots

Marketed Image


Land Area

2,133.9 sq m

GFA

32,379.3 sq m




1988

Title


Vendor

Harbour View Hotel Pte. Ltd.

Master Lessee

Harbour View Hotel Pte. Ltd.

Rental


The Fixed Rent for M Hotel is S$3.9 million per annum and the Service Charge is S$2.2 million perannum.


130

RevPAR in FY2005

S$110

Awards & Accolades

Best Mid-Range Business Hotel Award (2005) by Travel Trade Gazette Asia Awards

Best Corporate/Business Hotel Award (2004) by Hospitality Asia Platinum Awards

131


403 Havelock RoadSingapore 169632

Description

The Hotel has 310 Available Rooms within two adjoining and interconnected wings. Copthorne King’sHotel is located along Havelock Road, near the junction with Kim Seng Road. It is just outside the CBDand is about 2.5 km from the city centre at Raffles Place. The Main Wing is a 13-storey rectangularbuilding which comprises a two-storey podium and a slab block above it. The Tower Wing is a 20-storeysemi-circular wing that adjoins the western end of the original building. In addition, there is athree-storey annexe at the rear of the Main Wing.

The Main Wing and the annexe were completed in 1970 whilst the Tower Wing was completed in 1980.

The Hotel has a centralised air-conditioning system. Access to the upper floors is facilitated by fourpassenger lifts, two service lifts, one F&B lift and reinforced concrete staircases. The fire protectionsystem provided includes an automatic sprinkler system, smoke detectors, hose-reels, dry and wetrisers, fire extinguishers and a break-glass alarm system.

The Hotel has undergone a few refurbishment programs which include renovations of the guest rooms.In 2002, the guest rooms within the Tower Wing were refurbished as well as the front lobby area andcoffee house. The most recent renovations, completed in 2004, included the refurbishment of theremaining guest rooms and some public areas. All guest rooms and Hotel public areas have been wiredup for broadband and internet access.

Each room is equipped with thermostat control unit, electronic safe, hair dryer, colour television within-house movies, CNN and other satellite channels, IDD telephone with dedicated lines and voice mailfacilities, data port, broadband internet access, computer and tea making facilities and minibar. In eachroom, the bathroom is finished with ceramic tile/marble flooring while the remaining areas are carpeted.The size of the rooms range from the deluxe room of approximately 22 sq m to the suite ofapproximately 72 sq m.

Facilities and amenities available to the guests include a swimming pool with a sun deck, a gymnasium,seminar and banquet facilities, a business centre, a sundry shop, a barber shop, baggage store room,and food and entertainment outlets such as Tien Court, Princess Terrace Cafe, Connections Lounge,La La La Lounge and Mino-Q Teppan-yaki Steak House. Services offered at Copthorne King’s Hotelinclude 24-hour concierge and security, 24-hour in-room dining service, gymnasium, laundry, drycleaning, complimentary shuttle bus connection to Orchard Road, Great World City, Chinatown,Outram and Somerset MRT stations, Suntec City and Shenton Way within the CBD.


310 Available Rooms

Car Park Facilities

77 car park lots

Marketed Image


132

Land Area

5,636.9 sq m

GFA

17,598.3 sq m




1974 — Main Wing1981 — Tower Wing

Title

Approximately 61-year leasehold interest expiring on 31 January 2067.

Vendor


Master Lessee


Rental


The Fixed Rent for Copthorne King’s Hotel is S$0.6 million per annum and the Service Charge is S$2.2million per annum.


RevPAR in FY2005

S$88

Awards & Accolades

Excellent Service Award (2005) by SHA/SPRING Singapore

Singapore’s Best Restaurants (2006) awarded to Tien Court by American Express

Best Buffet award (2005) awarded to Princess Terrace by Wine & Dine publication

Top Restaurant Award (2005) awarded to Princess Terrace by Wine & Dine publication

133


442 Orchard RoadSingapore 238879

Description

Orchard Hotel Shopping Arcade is a four-storey retail podium (basement level to third level) blockincorporated in Orchard Hotel’s Claymore Wing. It is located at the junction of Orange Grove Road andOrchard Road. The property is prominently located within the heart of the Orchard Road shopping andtourist belt and is within short walking distance of the Orchard MRT station which is situated at thejunction of Scotts Road, Paterson Road and Orchard Road.

Orchard Hotel Shopping Arcade has its main entrance along Claymore Road and there is access toOrchard Hotel on the second and third levels. Access to the upper levels is by means of a set oftwo-way escalators, two passenger lifts, two service lifts and numerous sets of staircases.

The total lettable floor area of the shopping arcade is approximately 7,505.3 sq m of which 4,939.3 sqm represents retail rental area and 2,566.0 sq m is used by Orchard Hotel at no charge. The monthlygross rental for the month ended 31 January 2006 was S$278,866 inclusive of service charge at a rateof S$1.00 per sq ft per month.

Retail Tenants

The majority of retail tenancies are occupied under a standard form of lease, with typical lease termsranging from one to three years. All leases provide for the payment of base rental and service chargeswith a limited number of leases incorporating structured increases of base rent during the lease term.Retail leases typically do not incorporate mid-term reviews, with rentals generally being reviewed tomarket on lease renewal.

By floor area, there are eight major tenants occupying a total aggregate of 2,910.7 sq m (representing58.9% of rentable retail area as at 31 January 2006). In terms of rent collection, these eight majortenants contribute 57.4% of total rental income for the month ended 31 January 2006. The lease for oneof these eight major tenants will expire in October 2006 while four other leases will expire in 2007 andthe remaining three will expire in 2008 and 2009.

NLA

4,939.3 sq m (represents rentable retail area)

Car Park Facilities

The car park facilities are shared with Orchard Hotel. (See “Business and Properties — OrchardHotel”.)

Land Area

8,588.0 sq m

GFA

49,940.9 sq m (including Orchard Hotel)

134




1994

Title


Vendor


Occupancy as at 31 January 2006

95.9%

135

MANAGEMENT AND CORPORATE GOVERNANCE

CDL Hospitality Trusts

CDL Hospitality Trusts comprises a REIT and a business trust, being H-REIT and HBT. The H-REITManager and the HBT Trustee-Manager, being the responsible entities of H-REIT and HBTrespectively, each has its own board of directors and its own set of procedures in relation to corporategovernance.

As at the Listing Date, for the purpose of avoiding any conflict between H-REIT and HBT, the H-REITManager Board and the HBT Trustee-Manager Board will comprise the same directors.

Due to the different legislative and regulatory requirements in relation to a REIT as compared with abusiness trust, the corporate governance procedures and disclosure requirements in relation to theH-REIT Manager are different from those in relation to the HBT Trustee-Manager.

A discussion of the management and corporate governance procedures in relation to the H-REITManager and the HBT Trustee-Manager is set out below.

H-REIT

The H-REIT Manager

The H-REIT Manager, M&C REIT Management Limited, was incorporated in Singapore under theCompanies Act on 17 May 2006. The H-REIT Manager has an issued share capital of S$1.0 million. Itsregistered office is located at 36 Robinson Road, #04-01 City House, Singapore 068877 and itstelephone number is (65) 6877 8228.

The H-REIT Manager is an indirect wholly owned subsidiary of the Sponsor.

The H-REIT Trustee

The H-REIT Trustee, DBS Trustee Limited, was incorporated in Singapore and registered as a trustcompany under the Trust Companies Act on 24 November 1975. The H-REIT Trustee has an issuedshare capital of S$5.0 million, its registered office is located at 6 Shenton Way #36-02, DBS BuildingTower One, Singapore 068809 and its telephone number is (65) 6878 8888.

Composition of the H-REIT Manager Board and the HBT Trustee-Manager Board

Under Regulation 12 of the Business Trust Regulations 2005, at least a majority of the HBTTrustee-Manager Board is required to comprise directors who are independent from management andbusiness relationships with the HBT Trustee-Manager. On the other hand, under paragraph 2.1 of theCode of Corporate Governance 2005, only at least one-third of the H-REIT Manager Board is requiredto comprise independent directors.

While H-REIT remains stapled to HBT, in order to avoid any conflict between H-REIT and HBT, eachof the directors of the H-REIT Manager Board will also be a director of the HBT Trustee-Manager Board,and vice versa. Accordingly, a majority of the directors of the HBT Trustee-Manager Board and theH-REIT Manager Board will comprise independent directors.

The following table sets forth information regarding the H-REIT Manager Directors:

Name Age Address Position

Mr Wong Hong Ren 54 43 Mount Sinai AvenueSingapore 277181

Chairman/Non-executive Director

136

Name Age Address Position

Mr Yeo Wee Eng Vincent 37 9 Tanglin HillSingapore 248047

CEO/Executive Director

Dr Tan Cheng Bock 66 8 Holland Grove DriveSingapore 278856

Independent Director

Ms Lim Yin Nee Jenny 52 65 Summer PlaceSingapore 555747


Mr Chan Chun Ming Jimmy 48 50 Draycott Park#13-01 The DraycottSingapore 259396


Mr Wong Hong Ren and Mr Yeo Wee Eng Vincent are the Sponsor’s nominees to the H-REIT ManagerBoard and the HBT Trustee-Manager Board.

Company Secretaries of the H-REIT Manager

The Company Secretaries of the H-REIT Manager are Ms Enid Ling Peek Fong and Ms Boey MuiTiang. Both Ms Ling and Ms Boey are Associate Members of the Institute of Chartered Secretaries andAdministrators.

H-REIT Manager Directors

Information on the business and working experience of the H-REIT Manager Directors is set out below:

Mr Wong Hong Ren is the Chairman of the H-REIT Manager Board. He is also the Chairman ofMillennium & Copthorne Hotels New Zealand Limited (formerly known as CDL Hotels New ZealandLimited) and CDL Investments New Zealand Limited (both listed on the New Zealand Stock Exchange),Grand Plaza Hotel Corporation (listed on the Philippines Stock Exchange) and LKN-Primefield Limited(listed on the SGX-ST). In addition, Mr Wong is an executive director and investment manager of theSponsor and is currently also sitting on the boards of a number of public listed companies, namely Citye-Solutions Limited (listed on the Stock Exchange of Hong Kong), China Yuchai International Limited(listed on the New York Stock Exchange) and Thakral Corporation Ltd (listed on the SGX-ST).

Mr Wong joined Hong Leong Management Services Pte. Ltd. (“HLMS”), a wholly owned subsidiary ofHong Leong Investment Holdings Pte. Ltd. (“HLIH”), in 1988 as Group Investment Manager and hassince played a key role in the investment and growth of HLIH Group’s hospitality and industrialbusinesses overseas. He is widely experienced in investment analysis, international capital market andmergers and acquisitions transactions as well as post-acquisition management re-organisationmatters. Although not normally involved in the day-to-day operational management of the business, hetook special assignments in management matters in situations such as the 1997 Asian financial crisisand the September 11 Incident. Prior to 1988, he was a director and general manager (Investment andProperty) of Haw Par Brothers International Limited (now known as Haw Par Corporation Limited), anda Director of Investment with Royal Trust Asset Management Pte. Ltd. (now known as RT InvestmentNominees Pte Ltd) and First Capital Corporation Ltd. (now known as Guocoland Limited) where he wasactively involved in managing these companies’ funds in international equities.

Mr Wong holds a Masters of Business Administration from Bradford University, United Kingdom.

Mr Yeo Wee Eng Vincent is an executive director of the H-REIT Manager Board as well as the ChiefExecutive Officer of the H-REIT Manager.

Prior to his appointment as Chief Executive Officer of the H-REIT Manager, he was the president ofMCIL — Asia Pacific from 2003 onwards. He was previously its chief operating officer from 2001 to2003. His key responsibilities included setting the overall direction of the Millennium & Copthorne hotel

137

chain incorporating operations, finance, sales and marketing, procurement and technical services inthe Asia-Pacific region. His role also encompassed asset management for the hotels owned by theM&C group located in Asia but managed by third-party operators. Another vital aspect of his role wasto execute the growth strategy of the chain in Asia via acquisitions and joint ventures. He wasaccountable for revenues of 13 hotels comprising 6,586 rooms with the revenues totaling S$690 millionin FY2005.

Mr Yeo is currently also the executive director and chief executive officer of Hong Kong-listed Citye-Solutions Limited since 2000. His responsibilities include the development of the company’soperations as a leading hospitality service provider in the USA, providing integrated solutionsincorporating electronic distribution and revenue management services to a large number of hotels inthe USA.

From 1998 to 2000, Mr Yeo was the executive director of the Sponsor overseeing the global sales andmarketing functions. From 1994 to 1998, he was the executive director of Kingsgate InternationalCorporation Limited, a New Zealand listed company which was delisted in August 2004. From 1993 to1998, he was an executive director before becoming the managing director of Millennium & CopthorneHotels New Zealand Limited (formerly known as CDL Hotels New Zealand Limited), growing the chaininto the largest hotel owner/operator in New Zealand. Mr Yeo joined New Zealand-listed CDLInvestments New Zealand Limited (“CDL Investments”) as an executive director in 1993 beforebecoming its managing director from 1994 to 1998, establishing CDL Investments as one of the biggestland developers in New Zealand.

Mr Yeo graduated Summa Cum Laude and the top of his faculty in 1988 from Boston University witha Bachelor of Science in Business Administration (Major in Finance).

Dr Tan Cheng Bock is an independent director of the H-REIT Manager Board.

A private medical practitioner by profession, Dr Tan served as a Member of Parliament for Ayer Rajahfrom 1980 to 2006.

Currently, Dr Tan is the managing director of Ama Keng Medical Clinic and chairs the board of directorsof Chuan Hup Holdings Limited and Dredging International Asia Pacific Pte Ltd. He is also a boardmember of PCI Limited (a public listed company) and Tsao Foundation (a charitable organisation).

Dr Tan also chairs the advisory board of Enterprise Promotion Centre and Jurong Healthconnect. Hispast roles include being the Chairman of West Coast-Ayer Rajah Town Council, Chairman of BukitTimah Community Development Council and Vice-Chairman of the South West CommunityDevelopment Council. He chaired numerous government parliamentary committees, was leader of theSingapore Southeast Asia Parliamentary Group and was the only backbencher to be elected as amember of the Central Executive Committee of the People’s Action Party from 1987 to 1996.

Dr Tan is a Fellow of the College of Family Practitioners, a member of the College of GeneralPractitioners and an Honorary Member of the Singapore Medical Association. He obtained his Bachelorof Medicine and Surgery from the then University of Singapore in 1968.

Ms Lim Yin Nee Jenny is an independent director of the H-REIT Manager Board. Ms Lim retired as apartner of KPMG Singapore on 31 December 2001 to devote her time as a volunteer of a charitableorganisation. She was the head of the firm’s tax practice and represented its Asian Anchor practice onKPMG International Committee. She remained as an advisor to KPMG Singapore till 31 January 2004.

Ms Lim has been involved in many corporate reorganisations, mergers and acquisitions andinternational tax planning assignments which require in-depth knowledge and experience inaccounting, corporate and commercial law, and local and international tax.

138

Ms Lim started her career in audit, but has focused her attention on taxation since 1979. Her taxexperience encompasses both the domestic and international arenas in corporate and individualtaxation and in financial planning. She also served as the tax regional co-ordinator for various local andinternational clients with investments in the Asia Pacific region.

Ms Lim is a fellow of the Association of Chartered Certified Accountants, United Kingdom. Presently,she serves as a vice president of Viriya Community Services, a voluntary (charitable) welfareorganisation and a board member of Raffles Institution. She also shares her practical experience withthe under-graduates of the Singapore Management University in her capacity as its adjunct professorin “Tax Planning”.

Mr Chan Chun Ming Jimmy is an independent director of the H-REIT Manager Board. He is also adirector of Beijing International Art Palace Co. Ltd., a Chinese joint venture which owns Crowne PlazaHotel in Wangfujing, Beijing, PRC.

Mr Chan has twenty years of experience in corporate advisory and financing transactions. He ispresently a director and the General Manager of Aareal Financial Services (Singapore) Pte. Ltd., awholly owned subsidiary and the Asia Pacific regional headquarters of Aareal Bank AG (“AarealBank”). In his current position, Mr Chan is responsible for the development of Aareal Bank’s real estatestructured finance business in Asia Pacific, with particular focus on hotel advisory and financingtransactions in PRC and various resort destinations. He has represented Aareal Bank in various majortransactions, most notably the US$700 million Raffles Hotels & Resorts acquisition financing facility forColony Capital and the US$744 million financing facility for Wynn Resort, Macau.

Prior to joining Aareal Financial Services (Singapore) Pte. Ltd., Mr Chan spent three years withStarwood Hotels & Resorts Worldwide, Inc. as its Managing Director of Acquisitions and Development.During his time there, he was responsible for the company’s investment and financing transactions aswell as the development of its management contract business in Australia, New Zealand, Japan andThailand.

He was the Chief Financial Officer of City e-Solutions Limited from September 2000 to June 2001, incharge of financing, investment, treasury and accounting functions.

Mr Chan holds a Hong Kong Taxation Certificate from the Hong Kong Management Association and aSecurities Brokers Examination Certificate from The Stock Exchange of Hong Kong Limited.

He graduated from the University of British Columbia in 1980 with a Bachelor of Applied Science, CivilEngineering, and the University of Missouri-Columbia in 1981 with a Master of Science in ConstructionManagement. In 1994 and 1999, he attended the Executive Management Programs organised by theKellogg Graduate School of Management, Northwestern University.

A list of the present and past directorships of each H-REIT Manager Director over the last five yearspreceding 30 April 2006 is set out in Appendix VII, “List of Present and Past Principal Directorships ofDirectors and Executive Officers of the H-REIT Manager and/or the HBT Trustee-Manager”.

Experience and Expertise of the H-REIT Manager Board

Mr Wong Hong Ren has experience in being a director of public listed companies in the UnitedKingdom, Singapore, New Zealand, the Philippines, the United States, Hong Kong, Malaysia andThailand.

Mr Yeo Wee Eng Vincent has experience in being a director of public listed companies in Hong Kong,New Zealand, the United Kingdom and Thailand.

Dr Tan Cheng Bock has experience in being a director of public listed companies in Singapore.

139

They therefore have the appropriate experience to act as directors of the H-REIT Manager and arefamiliar with the rules and responsibilities of a director of a public listed company.

The H-REIT Manager will arrange for the relevant training to prepare Mr Chan Chun Ming Jimmy andMs Lim Yin Nee Jenny for the roles and responsibilities of a director of the manager of a public listedREIT subsequent to the listing of CDL Hospitality Trusts.

Management Reporting Structure of the H-REIT Manager

The H-REIT Manager Board

Mr Wong Hong Ren (Chairman / Non-Executive Director)

Investment Manager(1)

Mr Ee Yew Beng Alexander John

Chief Executive Officer

Mr Yeo Wee Eng Vincent

Head, Investor Relations Chief Financial Officer

Mr Ravi Sreen

Dr Tan Cheng Bock (Independent Director)

Mr Yeo Wee Eng Vincent (CEO / Executive Director)

Ms Lim Yin Nee Jenny (Independent Director)

Mr Chan Chun Ming Jimmy (Independent Director)

Mr Ee Yew Beng Alexander John

Roles of the Executive Officers of the H-REIT Manager

The Chief Executive Officer of the H-REIT Manager is responsible for working with the H-REITManager Board to determine the overall business, investment and operational strategies for H-REIT.The Chief Executive Officer will also work with the other members of the H-REIT Manager’smanagement team and the Master Lessees to ensure that the business, investment and operationalstrategies of H-REIT are carried out as planned. In addition, the Chief Executive Officer is responsiblefor the overall management and planning of the strategic direction of H-REIT, including overseeing theacquisition of hospitality and hospitality-related assets and asset and property management strategiesfor H-REIT.

The Chief Financial Officer of the H-REIT Manager is responsible for the finances of H-REIT. A keyrole of the Chief Financial Officer is to focus, monitor and report on the financial performance of H-REIT.The Chief Financial Officer is also responsible for the preparation of statutory accounts, co-ordinationwith external auditors, managing tax affairs and treasury matters, and preparation of performancereports for investors and regulators.

Note:(1) A full-time candidate will be appointed to assume the position of the Head, Investments of the H-REIT Manager after the

Listing Date.

140

The Head, Investor Relations of the H-REIT Manager is responsible for facilitating communicationsand liaison with the holders of the Stapled Securities. This includes producing annual reports to theholders of the Stapled Securities and ensuring compliance by CDL Hospitality Trusts with the reportingrequirements under the Listing Manual and the law. The key role of the Head, Investor Relations is tomaintain continuous disclosure and transparent communications with the holders of the StapledSecurities and the market. He will promote and market CDL Hospitality Trusts to the holders of theStapled Securities, prospective investors and media through regular communication.

The Investment Manager of the H-REIT Manager is responsible for identifying, researching andevaluating potential acquisitions and related investments or divestments where applicable.

Executive Officers of the H-REIT Manager

Information on the working experience of the executive officers of the H-REIT Manager is set out below:

Mr Yeo Wee Eng Vincent is the Chief Executive Officer of the H-REIT Manager. Details of his workingexperience have been set out in “Management and Corporate Governance — Directors of the H-REITManager”.

Mr Ravi Sreen is the Chief Financial Officer of the H-REIT Manager.

Prior to joining the H-REIT Manager, Mr Sreen was the Senior Vice President — Finance of MCIL sinceApril 2006.

Mr Sreen has over 28 years of experience in financial and general management, including more than12 years as the head of corporate finance with Jaiprakash Group, one of the leading industrial groupsin India. From September 1993 till March 2006, he was the Group Chief Financial Officer of ThakralCorporation Limited (“TCL”). Mr Sreen coordinated and managed the listing of TCL in 1995 on theMain Board of the SGX-ST. He also worked closely with the independent financial adviser, banks’working group and other professional advisers from 1999 onwards to successfully complete TCLGroup’s restructuring in March 2002.

An Honours graduate in Commerce, Mr Sreen is a Fellow member of the Institute of CharteredAccountants of India. He attended the Advanced Management Programme at University of Oxford, UKin 1996.

Mr Ee Yew Beng Alexander John is the Head, Investor Relations of the H-REIT Manager and is alsothe H-REIT Manager’s Investment Manager. As the Investment Manager, Mr Ee will be acting under thesupervision of Mr Yeo Wee Eng Vincent, the Chief Executive Officer who has over ten years ofexperience in hotel property management. Following the appointment of the Head, Investments of theH-REIT Manager after the Listing Date, the Investment Manager will report to the Head, Investmentswho will in turn be acting under the supervision of the Chief Executive Officer.

Mr Ee founded Enterprise Advisers in 2004 (now Enterprise Advisers Pte Ltd), a boutique strategy andmergers and acquisitions advisory firm. During his time there, he has advised large listed corporationsas well as small and medium enterprises on strategic business issues. He advised MCIL on hotelrelated investment opportunities in various countries in the Asia Pacific and South Asia, primarily, PRC,Malaysia, Macau, Singapore, India and the Maldives. He was also the adviser to a Maldivianconsortium in the preparation of tender documents for a tender exercise called by the MaldivianGovernment for the lease of resort properties in the Maldives.

In addition to hospitality related work, Mr Ee has also advised various other companies in strategy andcorporate development. In particular, he advised City e-Solutions Limited, a company listed on theHong Kong Stock Exchange on its business strategy and corporate development and helped to identifypotential industries and companies with diversification opportunities.

141

From 2001 to 2004, Mr Ee was a consultant at the Boston Consulting Group, USA and Singapore. Hehas worked on a variety of projects covering various industries, including the media, property, financialservices, automotive, energy, transportation and industrial materials industries. In particular, he hasworked on a variety of projects for the evaluation of markets and business development options forclients. He was involved in the study to evaluate strategic business options for a media company’snon-core business valued at more than US$500 million. Additionally, he conducted market research tosize and assess prospects for the aluminium market in South East Asia and identified and assessedglobal business diversification and expansion trends of leading transport companies around the world.Mr Ee has also worked on projects which involved other strategic issues. He advised on there-structuring and re-organisation of a large financial services institution, formulated the e-strategy fora South East Asian government ministry which resulted in the identification of US$120 million in valueand cost savings, partnered with the BiosGroup, then a US based business consultancy firm andmembers of the Santa Fe Institute, a leading US based institute, on the development of a frameworkfor developing organisational innovation, developed a framework for integrated risk management forthe energy industry and benchmarked global best practices in customer relationship management.

From 1995 to 2000, Mr Ee was with the law firm Rajah & Tann first as a Senior Associate before beingits General Manager. As General Manager, Mr Ee was responsible for driving and supporting the firm’sgrowth and managed various mergers made by Rajah & Tann, including the merger between Rajah &Tann and Arthur Andersen to create Singapore’s first multi-disciplinary professional services firm withabout 1,000 professional staff and employees and the merger of Rajah & Tann with a law firmspecialising in corporate finance law. Prior to this, Mr Ee was with the law firm Drew & Napier from 1993to 1995.

Mr Ee obtained his Masters of Business Administration in 2002 from the Darden Graduate School ofBusiness Administration, University of Virginia and graduated from the National University of Singaporewith a Bachelor of Laws (Honours) in 1993.

A list of the present and past directorships of each Executive Officer of the H-REIT Manager over thepast five years preceding 30 April 2006 is set out in Appendix VII, “List of Present and PastDirectorships of Directors and Executive Officers of the H-REIT Manager and/or the HBT Trustee-Manager”.

Roles and Responsibilities of the H-REIT Manager

The H-REIT Manager has general powers of management over the assets of H-REIT. The H-REITManager’s main responsibility is to manage H-REIT’s assets and liabilities for the benefit of the holdersof H-REIT Units.

The H-REIT Manager is responsible for formulating the business plans in relation to H-REIT’sproperties. The H-REIT Manager will work closely with the Master Lessees and the Hotel Manager toimplement H-REIT’s strategies. Further, the H-REIT Manager will set the strategic direction of H-REITand give recommendations to the H-REIT Trustee on the acquisition, divestment or enhancement ofassets of H-REIT in accordance with its stated investment strategy.

The H-REIT Manager will also manage Orchard Hotel Shopping Arcade with a view to maintaining thephysical condition of the property for the benefit of the tenants and the shoppers/patrons alike. TheH-REIT Manager will be engaging CDL to provide leasing services in respect of the vacant shop spacesin the property with a view to maintaining its high occupancy levels.

The H-REIT Manager has covenanted in the H-REIT Trust Deed to use its best endeavours to carry onand conduct its business in a proper and efficient manner and to ensure that H-REIT is carried on andconducted in a proper and efficient manner and to conduct all transactions with or for H-REIT at arm’slength and on normal commercial terms.

142

The H-REIT Manager will also be responsible for ensuring that H-REIT complies with the applicableprovisions of the SFA and all other relevant legislation, the Listing Manual, the CIS Code (including theProperty Funds Guidelines), the H-REIT Trust Deed, the Tax Ruling and all relevant contracts.

The H-REIT Manager may require the H-REIT Trustee to:

• (while the units of H-REIT and HBT are stapled together) lend moneys to HBT out of the H-REITDeposited Property (on such terms and conditions as may be determined by the H-REITManager) whenever the H-REIT Manager considers, among other things, that such lending isnecessary or desirable in order to further the interests of the investors of the Stapled Securitiesas a whole; and

• borrow on behalf of H-REIT (upon such terms and conditions as the H-REIT Manager deems fit,including the charging or mortgaging of all or any part of the H-REIT Deposited Property)whenever the H-REIT Manager considers, among other things, that such borrowings arenecessary or desirable in order to:

• enable H-REIT to meet any liabilities;

• finance the acquisition of any property or the undertaking of any capital improvements; or

• while the units of H-REIT and HBT are stapled together, on-lend moneys to HBT in order tofurther the interests of the investors of the Stapled Securities as a whole.

However, the H-REIT Manager must not direct the H-REIT Trustee to incur a borrowing if to do sowould mean that H-REIT’s total borrowings would exceed 35.0% (up to a maximum of 60.0%) ofthe value of H-REIT Deposited Property at the time the borrowing is incurred, taking into accountdeferred payments (including deferred payments for assets whether to be settled in cash, H-REITUnits or (as the case may be) Stapled Securities). The aggregate leverage of H-REIT may exceed35.0% of the H-REIT Deposited Property (up to a maximum of 60.0%) only if a credit rating fromFitch Inc., Moody’s or Standard and Poor’s is obtained and disclosed to the public. H-REIT willcontinue to maintain and disclose a credit rating so long as its aggregate leverage exceeds 35.0%of the H-REIT Deposited Property.

In the absence of fraud, gross negligence, wilful default or breach of the H-REIT Trust Deed by theH-REIT Manager, it shall not incur any liability by reason of any error of law or any matter or thing doneor suffered to be done or omitted to be done by it in good faith under the H-REIT Trust Deed. In addition,the H-REIT Manager shall be entitled, for the purpose of indemnity against any actions, costs, claims,damages, expenses or demands to which it may be put as manager of H-REIT, to have recourse to theH-REIT Deposited Property or any part thereof save where such action, cost, claim, damage, expenseor demand is occasioned by the fraud, gross negligence, wilful default or breach of the H-REIT TrustDeed by the H-REIT Manager. The H-REIT Manager may, in managing H-REIT and in carrying out andperforming its duties and obligations under the H-REIT Trust Deed, with the written consent of theH-REIT Trustee, appoint such person to exercise any or all of its powers and discretions and to performall or any of its obligations under the H-REIT Trust Deed, provided always that the H-REIT Managershall be liable for all acts and omissions of such persons as if such acts and omissions were its own.

Fees Payable to the H-REIT Manager

Management fees payable to the H-REIT Manager

The H-REIT Manager is entitled under the H-REIT Trust Deed to the following management fees:

• a Base Fee of 0.25% per annum of the value of the H-REIT Deposited Property; and

• a Performance Fee of 5.0% per annum of the Net Property Income of H-REIT in the relevantfinancial year.

143

For the purpose of calculating the Base Fee and the Performance Fee, if H-REIT holds only a partialinterest in (i) any H-REIT Deposited Property, or (ii) any investment from which any Net PropertyIncome of H-REIT is derived, such H-REIT Deposited Property or Net Property Income shall bepro-rated in proportion to the partial interest held.

For a period of five years commencing from the Listing Date, 80.0% of the Base Fee and thePerformance Fee will be paid in either Stapled Securities or (in the event that Unstapling has takenplace) H-REIT Units, with the remainder 20.0% to be paid in cash. Thereafter, the proportion of theBase Fee and the Performance Fee which will be paid in Stapled Securities or (as the case may be)H-REIT Units, and the remaining proportion which would be paid in cash, would be determined at thediscretion of the H-REIT Manager.

Any portion of management fees payable in the form of Stapled Securities or (as the case may be)H-REIT Units shall be payable quarterly in arrears and any portion of management fees payable in cashshall be payable monthly in arrears. On the basis that the Stapled Securities or (as the case may be)H-REIT Units are listed on the SGX-ST, when management fees are payable in the form of StapledSecurities or (as the case may be) H-REIT Units, the H-REIT Manager shall be entitled to receive suchnumber of Stapled Securities or (as the case may be) H-REIT Units as may be purchased with therelevant amount of the management fees at an issue price equivalent to the “market price’’, i.e. thevolume weighted average price per Stapled Security or (as the case may be) H-REIT Units for all tradeson the SGX-ST, in the ordinary course of trading, for the last 10 Business Days of the relevant periodin which the management fees accrue. Otherwise, the H-REIT Manager shall be entitled to receivesuch number of Stapled Securities or (as the case may be) H-REIT Units as may be purchased withthe relevant amount of the management fees at an issue price equivalent to the Current StapledSecurity Value or (as the case may be) Current Unit Value.

Any increase in the rate or any change in the structure of the H-REIT Manager’s management feesmust be approved by an Extraordinary Resolution at a meeting of the holders of H-REIT Units dulyconvened and held in accordance with the provisions of the H-REIT Trust Deed.

Acquisition fee and divestment fee payable to the H-REIT Manager

The H-REIT Manager is also entitled to:

• an acquisition fee of 1.0% of each of the following as is applicable (subject to there being nodouble-counting):

(i) the acquisition price of any real estate purchased, whether directly or indirectly through oneor more special purpose vehicles, by H-REIT, plus any other payments in addition to theacquisition price made to the vendor in connection with the purchase of the real estate(pro-rated if applicable to the proportion of H-REIT’s interest);

(ii) the underlying value1 of any real estate which is taken into account when computing theacquisition price payable for the equity interests of any vehicle holding directly or indirectlythe real estate, purchased whether directly or indirectly through one or more special purposevehicles, by H-REIT (pro-rated if applicable to the proportion of H-REIT’s interest); or

(iii) the acquisition price of any investment by H-REIT, whether directly or indirectly through oneor more special purpose vehicles, in any debt securities of any property corporation or otherspecial purpose vehicle owning or acquiring real estate or any debt securities which aresecured whether directly or indirectly by the rental income from real estate.

1 For example, if H-REIT acquires a special purpose company which holds a property, such underlying value would be thevalue of the property derived from the amount of equity paid by H-REIT as purchase price and any debt assumed by thespecial purpose company.

144

• a divestment fee of 0.5% of each of the following as is applicable (subject to there being nodouble-counting):

(i) the sale price of any real estate sold or divested, whether directly or indirectly through oneor more special purpose vehicles, by H-REIT, plus any other payments in connection withthe sale or divestment of the real estate (pro-rated if applicable to the proportion of H-REIT’sinterest);

(ii) the underlying value of any real estate which is taken into account when computing the saleprice for the equity interests in any vehicle holding directly or indirectly the real estate, soldor divested, whether directly or indirectly through one or more special purpose vehicles, byH-REIT (pro-rated if applicable to the proportion of H-REIT’s interest); or

(iii) the sale price of the investment referred to in paragraph (iii) above for the acquisition fee.

For the purpose of this acquisition fee and/or divestment fee, real estate-related assets include allclasses and types of equity securities relating to real estate which shall, for the avoidance of doubt,exclude any investment in debt securities of any property corporation or other special purpose vehicleowning or acquiring real estate.

Any payment to third party real estate agents or brokers in connection with the acquisition or divestmentof any real estate of H-REIT shall be paid by the H-REIT Manager to such persons out of the acquisitionfee or the divestment fee received by the H-REIT Manager, and not additionally out of the H-REITDeposited Property.

The acquisition fee and divestment fee are payable to the H-REIT Manager in the form of cash and/orStapled Securities or (as the case may be) H-REIT Units (as the H-REIT Manager may elect and insuch proportion as may be determined by the H-REIT Manager) provided that in respect of anyacquisition, sale or divestment of real estate assets from/to Interested Parties, such a fee should be inthe form of Stapled Securities or (as the case may be) H-REIT Units at prevailing market price(s) if theStapled Securities or (as the case may be) H-REIT Units are listed, or the Current Stapled SecurityValue or the Current Unit Value if the Stapled Securities or (as the case may be) H-REIT Units areunlisted, instead of cash. The Stapled Securities or (as the case may be) H-REIT Units issued to theH-REIT Manager as fees should not be sold within one year from the date of their issuance.

Any increase in the maximum permitted level of the acquisition fee or divestment fee must be approvedby an Extraordinary Resolution passed at a meeting of holders of H-REIT Units duly convened and heldin accordance with the provisions of the H-REIT Trust Deed.

Retirement or Removal of the H-REIT Manager

The H-REIT Manager shall have the power to retire in favour of a corporation approved by the H-REITTrustee to act as the manager of H-REIT subject to the corporation entering into a deed to secure itsperformance as the new manager of H-REIT.

Also, the H-REIT Manager may be removed by notice given in writing by the H-REIT Trustee if:

• the H-REIT Manager goes into liquidation (except a voluntary liquidation for the purpose ofreconstruction or amalgamation upon terms previously approved in writing by the H-REIT Trustee)or a receiver is appointed over its assets or a judicial manager is appointed in respect of theH-REIT Manager;

• the H-REIT Manager ceases to carry on business;

• the H-REIT Manager fails or neglects after reasonable notice from the H-REIT Trustee to carry outor satisfy any material obligation imposed on the H-REIT Manager by the H-REIT Trust Deed;

145

• the holders of H-REIT Units, by a resolution duly passed by a majority greater than 50.0% of thetotal number of votes cast for and against such resolution with no participants beingdisenfranchised at a meeting of holders of H-REIT Units duly convened and held in accordancewith the provisions of the H-REIT Trust Deed, shall so decide;

• for good and sufficient reason, the H-REIT Trustee is of the opinion, and so states in writing, thata change of the H-REIT Manager is desirable in the interests of the holders of H-REIT Units; or

• the MAS directs the H-REIT Trustee to remove the H-REIT Manager.

Corporate Governance of the H-REIT Manager

The following outlines the main corporate governance practices of the H-REIT Manager.

The H-REIT Manager Board

The H-REIT Manager Board is responsible for the overall corporate governance of the H-REIT Managerincluding establishing goals for management and monitoring the achievement of these goals. TheH-REIT Manager is also responsible for the strategic business direction and risk management ofH-REIT. All H-REIT Manager Board members participate in matters relating to corporate governance,business operations and risks, financial performance and the nomination and review of performance ofdirectors. The H-REIT Manager Board has established a framework for the management of the H-REITManager and H-REIT, including a system of internal control and a business risk management process.The H-REIT Manager Board consists of five members, three of whom are independent1 directors.

The composition of the H-REIT Manager Board is determined using the following principles:

• the Chairman of the H-REIT Manager Board should be a non-executive director of the H-REITManager;

• the H-REIT Manager Board should comprise directors with a broad range of commercialexperience including expertise in funds management and the property industry; and

• while H-REIT Units remain stapled to HBT Units, in order to avoid any conflict between H-REITand HBT, each of the directors of the H-REIT Manager Board will also be a director of the HBTTrustee-Manager Board, and vice versa. Accordingly, in order for the HBT Trustee-ManagerBoard to comply with the requirement under Regulation 12 of the Business Trust Regulations2005 for at least a majority of the directors of the board of the trustee-manager of a business trustto comprise directors who are independent from management and business relationships with thetrustee-manager, at least a majority of the directors of both the H-REIT Manager Board and theHBT Trustee-Manager Board will comprise such independent directors.

The composition will be reviewed regularly to ensure that the H-REIT Manager Board has theappropriate mix of expertise and experience.

Audit Committee

The Audit Committee is appointed by the H-REIT Manager Board from among the H-REIT ManagerDirectors and is composed of three non-executive members, a majority of whom (including theChairman of the Audit Committee) are required to be directors independent from management andbusiness relationships with the H-REIT Manager. As at the date of this Prospectus, the members of theAudit Committee are Dr Tan Cheng Bock, Ms Lim Yin Nee Jenny and Mr Chan Chun Ming Jimmy, allof whom are independent directors. Ms Lim Yin Nee Jenny has been appointed as the Chairman of theAudit Committee.

1 The independence of the directors in this context refers to their independence from management and business relationshipswith the H-REIT Manager.

146

The Audit Committee’s responsibilities include:

• reviewing the financial statements and the internal audit report;

• reviewing external audit reports to ensure that where deficiencies in internal controls have beenidentified, appropriate and prompt remedial action is taken by the management;

• reviewing activities of the internal auditors on factors such as their independence, adequateresources and appropriate standing to perform an effective role;

• monitoring the procedures in place to ensure compliance with applicable legislation, the ListingManual and the Property Funds Guidelines;

• monitoring and evaluating the effectiveness of the H-REIT Manager’s internal controls;

• reviewing the quality and reliability of information prepared for inclusion in financial reports;

• nominating external auditors and reviewing the adequacy of external audits in respect of cost,scope and performance;

• reviewing the independence and objectivity of the external auditors and where the auditors alsosupply a substantial volume of non-audit services to H-REIT, the Audit Committee should keep thenature and extent of such services under review, seeking to balance the maintenance ofobjectivity and value for money; and

• monitoring the procedures established to regulate Related Party Transactions, includingreviewing any Related Party Transactions entered into from time to time and ensuring compliancewith the relevant provisions of the Listing Manual and the Property Funds Guidelines.

Dealings in Stapled Securities or H-REIT Units

The H-REIT Trust Deed requires each H-REIT Manager Director to give notice to the H-REIT Managerof his acquisition of Stapled Securities or (in the event that Unstapling has taken place) H-REIT Unitsor of changes in the number of Stapled Securities or (as the case may be) H-REIT Units which he holdsor in which he has an interest, within two Business Days after such acquisition or the occurrence of theevent giving rise to changes in the number of the Stapled Securities or (as the case may be) H-REITUnits which he holds or in which he has an interest (see “The Formation and Structure of CDLHospitality Trusts, H-REIT and HBT — The Formation and Structure of H-REIT — The H-REIT ManagerBoard’s Declaration of Holdings of H-REIT Units”).

The directors and employees of the H-REIT Manager are encouraged, as a matter of internal policy, tohold the Stapled Securities or (in the event that Unstapling has taken place) H-REIT Units but areprohibited from dealing in the Stapled Securities or (as the case may be) H-REIT Units:

• in the period commencing one month before the public announcement of the annual andsemi-annual results and (where applicable) property valuations, and two weeks before the publicannouncement of the quarterly results of CDL Hospitality Trusts or (in the event that Unstaplinghas taken place) H-REIT, and ending on the date of announcement of the relevant results or (asthe case may be) property valuations; and

• at any time while in possession of price sensitive information.

In addition, the H-REIT Manager has given an undertaking to the MAS that it will announce to theSGX-ST the particulars of its holdings in the Stapled Securities or (in the event that Unstapling hastaken place) H-REIT Units and any changes thereto within two Business Days after the date on whichit acquires or disposes of any Stapled Securities or (as the case may be) H-REIT Units. The H-REITManager has also undertaken that it will not deal in the Stapled Securities or (as the case may be)H-REIT Units in the period commencing one month before the public announcement of the annual andsemi-annual results and (where applicable) property valuations, and two weeks before the publicannouncement of the quarterly results of CDL Hospitality Trusts or (as the case may be) H-REIT, andending on the date of announcement of the relevant results or (as the case may be) property valuations.

147

Management of Business Risk

The H-REIT Manager Board will meet quarterly or more often if necessary and will review the financialperformance of H-REIT against a previously approved budget. The H-REIT Manager Board will alsoreview the business risks of H-REIT, examine liability management and will act upon any commentsfrom both the internal and external auditors of H-REIT.

The H-REIT Manager has appointed experienced and well-qualified management personnel to handlethe day-to-day operations of H-REIT. In assessing business risk, the H-REIT Manager Board willconsider the economic environment and risks relevant to the property industry. It will reviewmanagement reports and feasibility studies on individual development projects prior to approving majortransactions. The management will meet regularly to review the operations of the H-REIT Manager andH-REIT and discuss any disclosure issues.

Conflicts of Interest

The H-REIT Manager has instituted the following procedures to deal with conflicts of interest issues:

• The H-REIT Manager will not manage any other REIT which invests in the same type of propertiesas H-REIT;

• All executive officers will be employed by the H-REIT Manager;

• All resolutions in writing of the H-REIT Manager Directors in relation to matters concerningH-REIT must be approved by a majority of the directors, including at least one directorindependent from management and business relationships with the H-REIT Manager;

• At least a majority of the H-REIT Manager Board shall comprise such independent directors;

• In respect of matters in which a H-REIT Manager Director or his Associates has an interest, director indirect, such interested director will abstain from voting. In such matters, the quorum mustcomprise a majority of the H-REIT Manager Directors and must exclude such interested director;

• In respect of matters in which the Sponsor and/or its subsidiaries have an interest, direct orindirect, for example, in matters relating to:

— potential acquisitions of additional properties or property-related investments by H-REIT incompetition with the Sponsor and/or its subsidiaries; and

— competition for tenants with the Sponsor and/or its subsidiaries,

any nominees appointed by the Sponsor to the H-REIT Manager Board to represent its interestswill abstain from deliberations and voting on such matters. In such matters, the quorum mustcomprise a majority of the directors independent from management and business relationshipswith the H-REIT Manager and must exclude nominee directors of the Sponsor;

• Save as to resolutions relating to the removal of the H-REIT Manager, the H-REIT Manager andits Associates are prohibited from voting or being counted as part of a quorum for any meeting ofthe holders of H-REIT Units convened to approve any matter in which the H-REIT Manager and/orany of its Associates has an interest, and for so long as the H-REIT Manager is the manager ofH-REIT, the controlling shareholders (as defined in the Listing Manual) of the H-REIT Managerand of any of its Associates are prohibited from voting or being counted as part of a quorum forany meeting of the holders of H-REIT Units convened to consider a matter in respect of which therelevant controlling shareholders of the H-REIT Manager and/or of any of its Associates have aninterest; and

• It is also provided in the H-REIT Trust Deed that if the H-REIT Manager is required to decidewhether or not to take any action against any person in relation to any breach of any agreemententered into by the H-REIT Trustee for and on behalf of H-REIT with a Related Party of the H-REITManager, the H-REIT Manager shall be obliged to consult with a reputable law firm (acceptableto the H-REIT Trustee) which shall provide legal advice on the matter. If the said law firm is of theopinion that the H-REIT Trustee, on behalf of H-REIT, has a prima facie case against the party

148

allegedly in breach under such agreement, the H-REIT Manager shall be obliged to takeappropriate action in relation to such agreement. The H-REIT Manager Directors will have a dutyto ensure that the H-REIT Manager so complies. Notwithstanding the foregoing, the H-REITManager shall inform the H-REIT Trustee as soon as it becomes aware of any breach of anyagreement entered into by the H-REIT Trustee for and on behalf of H-REIT with a Related Partyof the H-REIT Manager and the H-REIT Trustee may take such action as it deems necessary toprotect the rights of the holders of H-REIT Units and/or which is in the interests of the holders ofH-REIT Units. Any decision by the H-REIT Manager not to take action against a Related Party ofthe H-REIT Manager shall not constitute a waiver of the H-REIT Trustee’s right to take such actionas it deems fit against such Related Party.

Related Party Transactions

The H-REIT Manager’s Internal Control System

The H-REIT Manager has established an internal control system to ensure that all future Related PartyTransactions will be undertaken on normal commercial terms and will not be prejudicial to the interestsof H-REIT and the holders of H-REIT Units. As a general rule, the H-REIT Manager must demonstrateto the Audit Committee that such transactions satisfy the foregoing criteria, which may entail obtaining(where practicable) quotations from parties unrelated to the H-REIT Manager, or obtaining valuationsfrom independent professional valuers (in accordance with the Property Funds Guidelines).

The H-REIT Manager will maintain a register to record all Related Party Transactions which are enteredinto by H-REIT and the bases, including any quotations from unrelated parties and independentvaluations obtained to support such bases, on which they are entered into. The H-REIT Manager willalso incorporate into its internal audit plan a review of all Related Party Transactions entered into byH-REIT. The Audit Committee shall review the internal audit reports at least once a year to ascertainthat the guidelines and procedures established to monitor Related Party Transactions have beencomplied with. In addition, the H-REIT Trustee will also have the right to review such audit reports toascertain that the Property Funds Guidelines have been complied with. Further, the followingprocedures will be undertaken:

• any transaction (either individually or as part of a series or if aggregated with other transactionsinvolving the same Related Party during the same financial year) of value below 3.0% of the valueof H-REIT’s net tangible assets will be subject to review by the Audit Committee at regularintervals;

• any transaction (either individually or as part of a series or if aggregated with other transactionsinvolving the same Related Party during the same financial year) equal to or exceeding 3.0% butbelow 5.0% of the value of H-REIT’s net tangible assets will be subject to the review and priorapproval of the Audit Committee. Such approval shall only be given if such transaction is onnormal commercial terms and is consistent with similar types of transactions made by the H-REITTrustee with third parties which are unrelated to the H-REIT Manager; and

• any transaction (either individually or as part of a series or if aggregated with other transactionsinvolving the same Related Party during the same financial year) equal to or exceeding 5.0% ofthe value of H-REIT’s net tangible assets will be reviewed and approved prior to such transactionbeing entered into, on the basis described in the preceding paragraph, by the Audit Committeewhich may, as it deems fit, request advice on the transaction from independent sources oradvisers, including the obtaining of valuations from independent professional valuers. Further,under the Listing Manual and the Property Funds Guidelines, such transaction would have to beapproved by the holders of H-REIT Units at a meeting duly convened.

149

Transactions each of value below S$100,000 are disregarded on the ground that they do not putH-REIT at risk. Accordingly, such transactions are excluded from aggregation with other transactionsinvolving the same Related Parties.

Where matters concerning H-REIT relate to transactions entered into or to be entered into by theH-REIT Trustee for and on behalf of H-REIT with a Related Party of the H-REIT Manager or H-REIT,the H-REIT Trustee is required to consider the terms of such transactions to satisfy itself that suchtransactions are conducted on normal commercial terms, are not prejudicial to the interests of H-REITand the holders of H-REIT Units, and in accordance with all applicable requirements of the PropertyFunds Guidelines and/or the Listing Manual relating to the transaction in question. Further, the H-REITTrustee has the ultimate discretion under the H-REIT Trust Deed to decide whether or not to enter intoa transaction involving a Related Party of the H-REIT Manager or H-REIT. If the H-REIT Trustee is tosign any contract with a Related Party of the H-REIT Manager or H-REIT, the H-REIT Trustee willreview the contract to ensure that it complies with the relevant requirements relating to Related PartyTransactions (as may be amended from time to time) as well as such other guidelines as may from timeto time be prescribed by the MAS and the SGX-ST to apply to REITs.

Save for the transactions described under the sections “Related Party Transaction In Connection withthe Setting Up of H-REIT” and “Future Related Party Transactions”, H-REIT will comply with Rule 905of the Listing Manual by announcing any Interested Person Transaction in accordance with the ListingManual if such transaction, by itself or when aggregated with other Interested Person Transactionsentered into with the same Interested Person during the same financial year, is 3.0% or more of thevalue of H-REIT’s latest audited net tangible assets.

The aggregate value of all Related Party Transactions each of at least S$100,000 in value in aparticular financial year will be disclosed in H-REIT’s annual report for the relevant financial year.

Role of the Audit Committee for Related Party Transactions

The Audit Committee will monitor the procedures established to regulate Related Party Transactions,including reviewing any Related Party Transactions entered into from time to time and ensuringcompliance with the relevant provisions of the Listing Manual and the Property Funds Guidelines.

If a member of the Audit Committee has an interest in a transaction, he or she is to abstain fromparticipating in the review and approval process in relation to that transaction.

Related Party Transactions In Connection with the Setting Up of H-REIT

The H-REIT Trustee, on behalf of H-REIT, has entered into a number of transactions with the H-REITManager and certain Related Parties of the H-REIT Manager in connection with the setting up ofH-REIT. These Related Party Transactions are as follows:

(1) The H-REIT Trustee has entered into the H-REIT Trust Deed with the H-REIT Manager. The termsof the H-REIT Trust Deed are generally described in “The Formation and Structure of CDLHospitality Trusts, H-REIT and HBT — The Formation and Structure of H-REIT”.

(2) The H-REIT Trustee has entered into the Property Sale and Purchase Agreements with theVendors for the sale of the Properties to the H-REIT Trustee. The terms of the Property Sale andPurchase Agreements are generally described in “Certain Agreements Relating to CDL HospitalityTrusts, H-REIT and HBT and the Properties — Property Sale and Purchase Agreements”.

Based on their experience, expertise and knowledge of contracts, the board and executiveofficers of the H-REIT Manager believe that the Property Sale and Purchase Agreements weremade on normal commerical terms and are not prejudicial to the interests of H-REIT and theholders of the H-REIT Units.

150

(3) The H-REIT Trustee and the H-REIT Manager will enter into the Master Lease Agreements withthe Master Lessees for the lease of the Hotels by the Listing Date. These agreements are moreparticularly described in “Certain Agreements Relating to CDL Hospitality Trusts, H-REIT and HBTand the Properties — Master Lease Agreements”.

Based on its experience, expertise and knowledge of contracts, the board and executive officersof the H-REIT Manager believe that the Master Lease Agreements will be made on normalcommercial terms and are not prejudicial to the interests of H-REIT and the holders of the H-REITUnits.

(4) The H-REIT Trustee will enter into a lease agreement with CDL for the lease of the second levelof Waterfront Plaza adjoining Grand Copthorne Waterfront Hotel by the Listing Date. Thisagreement is more particularly described in “Certain Agreements Relating to CDL HospitalityTrusts, H-REIT, HBT and the Properties — Waterfront Conference Centre Lease Agreement”.

Based on their experience, expertise and knowledge of contracts, the board and executiveofficers of the H-REIT Manager believe that the Waterfront Conference Centre Lease Agreementwill be made on normal commercial terms and is not prejudicial to the interests of H-REIT and theholders of H-REIT Units.

(5) The H-REIT Trustee will enter into a leasing services agreement with CDL by the Listing Datepursuant to which CDL will provide certain leasing services in respect of Orchard Hotel ShoppingArcade on its behalf. This agreement is more particularly described in “Certain AgreementsRelating to CDL Hospitality Trusts, H-REIT, HBT and the Properties — Leasing ServicesAgreement for Orchard Hotel Shopping Arcade”.

The board and executive officers of the H-REIT Manager consider that CDL has the necessaryexpertise and resources to perform the leasing services in respect of Orchard Hotel ShoppingArcade.

Based on their experience, expertise and knowledge of contracts, the board and executiveofficers of the H-REIT Manager believe that the leasing services agreement will be made onnormal commercial terms and is not prejudicial to the interests of H-REIT and the holders ofH-REIT Units.

(6) The H-REIT Trustee has entered into a management and consultancy agreement with HLMSpursuant to which HLMS has agreed to provide management and consultancy services to H-REITin relation to the establishment of H-REIT and CDL Hospitality Trusts for a one-off fee equivalentto 0.6% of the proceeds of the Offering.

The board and executive officers of the H-REIT Manager consider that HLMS has the necessaryexpertise and resources to perform the management and consultancy services to H-REIT inrelation to the establishment of H-REIT and CDL Hospitality Trusts.

Based on their experience, expertise and knowledge of contracts, the board and executiveofficers of the H-REIT Manager believe that the management and consultancy agreement hasbeen made on normal commercial terms and is not prejudicial to the interests of H-REIT and theholders of H-REIT Units.

151

(7) By the Listing Date, the H-REIT Trustee will participate in insurance policies together with theSponsor group, to insure against physical damage, rental losses arising from businessinterruption, terrorism and public liability.

Based on their experience, expertise and knowledge of contracts, the board and executiveofficers of the H-REIT Manager believe that the above insurance policies will be made on normalcommercial terms and are not prejudicial to the interests of H-REIT and the holders of the StapledSecurities.

Save as disclosed in this Prospectus, the H-REIT Trustee has not entered into any other transactionswith the H-REIT Manager or any Related Party of the H-REIT Manager in connection with the settingup of H-REIT.

Exempted Agreements

(i) The fees and charges payable by H-REIT to the H-REIT Manager under the H-REIT Trust Deed, (ii)the purchase price payable under the Property Sale and Purchase Agreements, (iii) the amountspayable under the Master Lease Agreements, (iv) the amounts payable under the WaterfrontConference Centre Lease Agreement, (v) the amounts payable under the leasing services agreementwith CDL in relation to Orchard Hotel Shopping Arcade, (vi) the amounts payable under themanagement and consultancy agreement with HLMS in relation to the establishment of H-REIT andCDL Hospitality Trusts and (vii) the premiums payable under the insurance policies relating to theProperties maintained by H-REIT, together with the Sponsor group, to insure against physical damage,rental losses arising from business interruption, terrorism and public liability (collectively, the“Exempted Agreements”), each of which constitutes a Related Person Transaction, are deemed tohave been specifically approved by the holders of H-REIT Units upon purchase of the StapledSecurities and are therefore not subject to Rules 905 and 906 of the Listing Manual to the extent thatthere is no subsequent change to the rates and/or bases of the fees charged thereunder which willadversely affect H-REIT. However, the renewal of such agreements will be subject to Rules 905 and906 of the Listing Manual.

Future Related Party Transactions

As a REIT listed on the SGX-ST, H-REIT is regulated by the Property Funds Guidelines and the ListingManual. The Property Funds Guidelines regulate, among other things, transactions entered into by theH-REIT Trustee (for and on behalf of H-REIT) with an Interested Party relating to H-REIT’s acquisitionof assets from or sale of assets to an Interested Party, H-REIT’s investment in securities of or issuedby an Interested Party and the leasing of assets to an Interested Party.

Depending on the materiality of transactions entered into by H-REIT for the acquisition of assets from,the sale of assets to or the investment in securities of or issued by, an Interested Party, the PropertyFunds Guidelines may require that an immediate announcement to the SGX-ST be made, and may alsorequire that the approval of the holders of H-REIT Units be obtained.

The Listing Manual regulates all “Interested Person Transactions” (as defined therein), includingtransactions already governed by the Property Funds Guidelines. Depending on the materiality of thetransaction, H-REIT may be required to make a public announcement of the transaction (Rule 905 ofthe Listing Manual), or to make a public announcement of and to obtain the holders of H-REIT Units’prior approval for the transaction (Rule 906 of the Listing Manual). The H-REIT Trust Deed requires theH-REIT Trustee and the H-REIT Manager to comply with the provisions of the Listing Manual relatingto Interested Person Transactions as well as such other guidelines relating to Interested PersonTransactions as may be prescribed by the SGX-ST to apply to REITs.

152

The H-REIT Manager may at any time in the future seek a general annual mandate from the holdersof H-REIT Units pursuant to Rule 920(1) of the Listing Manual for recurrent transactions of a revenueor trading nature or those necessary for its day-to-day operations, including a general mandate inrelation to leases and/or license agreements (including any Master Lease Agreements entered into bythe H-REIT Trustee with an Interested Party) to be entered into with Interested Persons, and alltransactions conducted under such general mandate for the relevant financial year will not be subjectto the requirements under Rules 905 and 906 of the Listing Manual. In seeking such a general annualmandate, the H-REIT Trustee will appoint an independent financial adviser (without being required toconsult the H-REIT Manager) pursuant to Rule 920(1)(b)(v) of the Listing Manual to render an opinionas to whether the methods or procedures for determining the transaction prices of the transactionscontemplated under the annual general mandate are sufficient to ensure that such transactions will becarried out on normal commercial terms and will not be prejudicial to the interests of H-REIT and theholders of H-REIT Units.

Both the Property Funds Guidelines and the Listing Manual requirements would have to be compliedwith in respect of a proposed transaction which is prima facie governed by both sets of rules. Wherematters concerning H-REIT relate to transactions entered or to be entered into by the H-REIT Trusteefor and on behalf of H-REIT with a Related Party of H-REIT or the H-REIT Manager, the H-REIT Trusteeis required to ensure that such transactions are conducted in accordance with applicable requirementsof the Property Funds Guidelines and/or the Listing Manual relating to the transaction in question.

The H-REIT Manager is not prohibited by either the Property Funds Guidelines or the Listing Manualfrom contracting or entering into any financial, banking or any other type of transaction with the H-REITTrustee (when acting other than in its capacity as trustee of H-REIT) or from being interested in anysuch contract or transaction, provided that any such transaction shall be on normal commercial termsand is not prejudicial to the interests of H-REIT and the holders of H-REIT Units. The H-REIT Managershall not be liable to account to the H-REIT Trustee or to the holders of H-REIT Units for any profits orbenefits or other commissions made or derived from or in connection with any such transaction. TheH-REIT Trustee shall not be liable to account to the H-REIT Manager or to the holders of H-REIT Unitsfor any profits or benefits or other commission made or derived from or in connection with any suchtransaction.

HBT

The HBT Trustee-Manager was incorporated in Singapore under the Companies Act on 17 May 2006.It has an issued share capital of S$2.00. Its registered office is located at 36 Robinson Road, #04-01City House, Singapore 068877 and its telephone number is (65) 6877 8228.

The Company Secretaries of the HBT Trustee-Manager are Ms Enid Ling Peek Fong and Ms Boey MuiTiang, who are also the Company Secretaries of the H-REIT Manager. Both Ms Ling and Ms Boey areAssociate Members of the Institute of Chartered Secretaries and Administrators.

The HBT Trustee-Manager is wholly owned by the H-REIT Manager and is an indirect wholly ownedsubsidiary of the Sponsor.

Under Section 10(2)(a) of the BTA, the HBT Trustee-Manager is required to act in the best interests ofall the holders of HBT Units as a whole. Further, under Section 11(1)(a) of the BTA, a HBTTrustee-Manager Director is required to act honestly and exercise reasonable diligence in thedischarge of the duties of his office and, in particular, shall take all reasonable steps to ensure that theHBT Trustee-Manager discharges its duties under, among other things, Section 10(2)(a) of the BTA.

153

The MAS has exempted the HBT Trustee-Manager from compliance with Section 10(2)(a) of the BTAand the HBT Trustee-Manager Directors from compliance with Section 11(1)(a) of the BTA subject tothe conditions that

(i) for the duration of time the H-REIT Units are stapled to the HBT Units, the HBT Trustee-Managerand the HBT Trustee-Manager Directors shall act in the best interests of all the holders of theStapled Securities; and

(ii) the exemptions relating to Section 10(2)(a) of the BTA and Section 11(1)(a) of the BTA aredisclosed in this Prospectus.

Further, the MAS has exempted the HBT Trustee-Manager from compliance with the requirement underSection 53(1) of the BTA to call annual general meetings subject to the following conditions:

(i) the HBT Trustee-Manager shall ensure that HBT does not carry out any business activity otherthan:

(a) activities which HBT is required to carry out under any applicable law, regulation, rule ordirective of any agency, regulatory or supervisory body;

(b) the lending or the use of the initial S$0.5 million working capital raised from the Offering; and

(c) equity fund-raising activities and issue of new HBT Units carried out in conjunction withH-REIT which are solely for the purposes of funding H-REIT’s business activities; and

(ii) the HBT Trustee-Manager shall ensure the dissemination of information on CDL Hospitality Truststo the holders of the Stapled Securities via the distribution of annual reports, quarterly reports andannouncements made through SGXNET.

The MAS has therefore consequently also exempted the HBT Trustee-Manager from compliance withthe consequential requirements under Sections 74(1), 76(1) and 78(1) of the SFA relating to certainobligations of the HBT Trustee-Manager in connection with the holding of annual general meetingssubject to the conditions set out in sub-paragraphs (i) and (ii) immediately above.

In the event that HBT becomes active and engages in development contracts which carry asubstantially different risk vis-a-vis H-REIT, such transactions (including contracts) should be subject tothe threshold set out in Rule 1006 of the Listing Manual.

HBT Trustee-Manager Directors

As at the Listing Date, the HBT Trustee-Manager Directors will be the same as the H-REIT ManagerDirectors. (See the section above on “H-REIT — Composition of the H-REIT Manager Board and theHBT Trustee-Manager Board”.) As HBT will be dormant as at the Listing Date, no compensation ispayable to the HBT Trustee-Manager Directors.

Executive Officers of the HBT Trustee-Manager

As HBT will be dormant as at the Listing Date, the HBT Trustee-Manager will not have any executiveofficers as at the Listing Date.

Employees

As HBT is dormant at the Listing Date, the HBT Trustee-Manager will have no employees at that time.In the event that the HBT becomes active, however, it may have employees. Details in relation to theengagement of such employees will be determined by the HBT Trustee-Manager Board at that time.The HBT Trustee-Manager Board has therefore not set aside or accrued any amounts for potentialemployees to provide for pension, retirement or similar benefits.

154

Service Agreements

HBT has no executive officers and none of the members of HBT Trustee-Manager Board has enteredor proposed to enter into service agreements with the HBT Trustee-Manager.

Constituent Documents of the HBT Trustee-Manager

Certain key provisions of the Memorandum and Articles of Association of the HBT Trustee-Manager areset out below.

The power of a HBT Trustee-Manager Director to vote on a proposal, arrangement or contractin which he is interested

A HBT Trustee-Manager Director has to, as soon as practicable after the relevant facts have come tohis knowledge, declare the nature of his interest at a meeting of the HBT Trustee-Manager Board.Subject to such disclosure, as well as Section 156 of the Companies Act and the BTA, the HBTTrustee-Manager Director is entitled to vote on transactions in which he is interested and he shall betaken into account in ascertaining whether a quorum is present.

The borrowing powers exercisable by the HBT Trustee-Manager and how such borrowingpowers may be varied

Pursuant to the Memorandum of Association of the HBT Trustee-Manager, the HBT Trustee-Managerhas full rights, powers and privileges to carry on or undertake any business or activity, do any act orenter into any transaction subject to the provisions of the Companies Act, the BTA and any other writtenlaw, in this case, the business of acting as trustee-manager of HBT.

Section 28(4) of the BTA prohibits the HBT Trustee-Manager from borrowing on behalf of HBT unlessthe power of borrowing is conferred upon it by the HBT Trust Deed. The HBT Trust Deed empowers theHBT Trustee-Manager to borrow moneys on behalf of HBT for the purpose of enabling the HBTTrustee-Manager to meet any liabilities under or in connection with the trusts of the HBT Trust Deed orwith any investment of HBT, for the purpose of financing any acquisition of any authorised investmenton behalf of HBT, conducting or carrying on or furthering any authorised business undertaken by HBTin accordance with the HBT Trust Deed or, while the units of H-REIT and HBT are stapled together,on-lend moneys to H-REIT in order to further the interests of the investors of the Stapled Securities asa whole upon such terms and conditions as it thinks fit and, in particular, by charging or mortgaging allor any of the investments of HBT or by issuing debentures and other securities, whether outright or ascollateral security for any debt, liability or obligation of the HBT Trustee-Manager, as trustee-managerof HBT, provided that the HBT Trustee-Manager shall not be required to execute any instrument, lien,charge, pledge, hypothecation, mortgage or agreement in respect of the borrowing or raising of moneyswhich (in its opinion) would render its liability to extend beyond it being limited to the HBT DepositedProperty.

Any variation of the borrowing powers as contained in the HBT Trust Deed would require the approvalof the holders of HBT Units by way of an Extraordinary Resolution passed at a meeting of holders ofHBT Units duly convened and held in accordance with the HBT Trust Deed and such other regulatoryapprovals as may be required to vary the terms of the HBT Trust Deed.

The retirement or non-retirement of a HBT Trustee-Manager Director under an age limitrequirement

The Memorandum and Articles of Association of the HBT Trustee-Manager do not specify an age limitbeyond which a HBT Trustee-Manager Director shall retire.

155

The number of units in the business trust, if any, required for the qualification of a HBTTrustee-Manager Director

A HBT Trustee-Manager Director is not required to hold any HBT Units to qualify as a HBTTrustee-Manager Director.

Retirement of HBT Trustee-Manager Directors

The appointment of the directors on the HBT Trustee-Manager Board shall continue until such time asthey resign or are otherwise removed by way of an Ordinary Resolution passed at a meeting of theshareholder(s) of the HBT Trustee-Manager duly convened and held.

Fees Payable to the HBT Trustee-Manager

Management fee

The HBT Trustee-Manager is entitled under the HBT Trust Deed to a management fee of 10.0% ofHBT’s profit before interest and tax in the relevant financial year (calculated before accounting for thismanagement fee in that financial year). For the purpose of calculating the management fee, if HBTholds only a partial interest in an investment from which such profit is derived, such profit shall bepro-rated in proportion to the partial interest held.

The management fee is payable to the HBT Trustee-Manager in the form of cash and/or StapledSecurities or (as the case may be) HBT Units as the HBT Trustee-Manager may elect, and in suchproportion and for such period as may be determined by the HBT Trustee-Manager.

Any portion of management fee payable in the form of Stapled Securities or (as the case may be) HBTUnits shall be payable quarterly in arrears and any portion of management fees payable in cash shallbe payable monthly in arrears. On the basis that the Stapled Securities or (as the case may be) HBTUnits are listed on the SGX-ST, when management fees are payable in the form of Stapled Securitiesor (as the case may be) HBT Units, the HBT Trustee-Manager shall be entitled to receive such numberof Stapled Securities or (as the case may be) HBT Units as may be purchased with the relevant amountof the management fees at an issue price equivalent to the “market price’’, i.e. the volume weightedaverage price per Stapled Security or (as the case may be) HBT Units for all trades on the SGX-ST, inthe ordinary course of trading, for the last 10 Business Days of the relevant period in which themanagement fees accrue. Otherwise the HBT Trustee-Manager shall be entitled to receive suchnumber of Stapled Securities or (as the case may be) HBT Units as may be purchased with the relevantamount of management fee at an issue price equivalent to the Current Stapled Security Value or (asthe case may be) the Current Unit Value.

Subject to the HBT Trustee-Manager’s undertaking to the MAS not to deal in the Stapled Securitiesduring certain specific periods (see the section below “Dealings in Stapled Securities or HBT Units” formore information), the HBT Trustee-Manager may sell any Stapled Securities or (as the case may be)HBT Units issued in payment of the management fee and is entitled to keep any gains made on suchsale.

No management fee is payable while HBT remains dormant.

Trustee fee

Under the HBT Trust Deed, if the value of the HBT Deposited Property is at least S$50.0 million, amaximum of 0.1% per annum of the value of HBT Deposited Property (if any), subject to a minimum feeof S$10,000 per month, excluding out-of-pocket expenses and GST, is payable to the HBT Trustee-Manager as trustee fee. For the purpose of calculating the trustee fee, if HBT holds only a partialinterest in any of HBT Deposited Property, such HBT Deposited Property shall be pro-rated inproportion to the partial interest held.

156

The trustee fee shall be payable in arrears on a monthly basis in the form of cash.

No fees are payable during the period that HBT is dormant and any out of pocket expenses incurredwhen HBT is dormant (such as auditing and legal expenses) may be funded by HBT’s working capitalfunded from the Offering or by loans granted by H-REIT.

Acquisition fee

The HBT Trustee-Manager is entitled to a maximum of 0.1% of the acquisition price of any authorisedinvestment acquired directly or indirectly by HBT (pro-rated if applicable to the proportion of HBT’sinterest in the authorised investment acquired).

The acquisition fee is payable to the HBT Trustee-Manager in the form of cash and/or StapledSecurities or (as the case may be) HBT Units as the HBT Trustee-Manager may elect, and in suchproportion as may be determined by the HBT Trustee-Manager.

The acquisition fee is payable as soon as practicable after the completion of the acquisition of theauthorised investment. On the basis that the Stapled Securities or (as the case may be) HBT Units arelisted on the SGX-ST, when acquisition fees are payable in the form of Stapled Securities or (as thecase may be) HBT Units, the HBT Manager shall be entitled to receive such number of StapledSecurities or (as the case may be) HBT Units as may be purchased with the relevant amount of theacquisition fees at an issue price equivalent to the “market price’’, i.e. the volume weighted averageprice per Stapled Security or (as the case may be) HBT Units for all trades on the SGX-ST, in theordinary course of trading, for the last 10 Business Days of the relevant period in which the acquisitionfees accrue. Otherwise, the HBT Trustee-Manager shall be entitled to receive such number of StapledSecurities or (as the case may be) HBT Units as may be purchased with the relevant amount ofacquisition fee at an issue price equivalent to the Current Stapled Security Value or (as the case maybe) the Current Unit Value.

Any increase in the rate or any change in the structure of the HBT Trustee-Manager’s management feeand trustee fee, or in the maximum permitted level of the acquisition fee, must be approved by anExtraordinary Resolution passed at a meeting of holders of HBT Units duly convened and held inaccordance with the provisions of the HBT Trust Deed.

Retirement or Removal of the HBT Trustee-Manager

Under the BTA, the HBT Trustee-Manager may be removed, as trustee-manager of HBT, if the holdersof HBT Units (with no holder of HBT Units being disenfranchised from voting) pass an ExtraordinaryResolution at a meeting of the holders of the HBT Units duly convened and held in accordance with theprovisions of the HBT Trust Deed. The HBT Trustee-Manager may resign as trustee-manager. Anyremoval or resignation of the HBT Trustee-Manager must be made in accordance with such proceduresas the MAS may prescribe. Any purported change of the trustee-manager of a registered business trustis ineffective unless it is made in accordance with the BTA.

The HBT Trustee-Manager will remain the trustee-manager of HBT until another person is appointedby:

(a) the holders of HBT Units to be the trustee-manager of HBT; or

(b) the court under Section 21(1) of the BTA to be the temporary trustee-manager of HBT,

and such appointment shall be effective from the date stated in the resolution of the holders of HBTUnits or court order as the effective date of the appointment of the trustee-manager or temporarytrustee-manager, as the case may be.

157

Pursuant to Section 21(1) of the BTA, on an application by the MAS or the HBT Trustee-Manager or aholder of HBT Units, the court may, by order, appoint a company that has consented in writing to serveas a temporary trustee-manager to be the temporary trustee-manager of HBT for a period of threemonths if the court is satisfied that the appointment is in the interest of the holders of HBT Units.

The temporary trustee-manager of HBT is required, within such time and in accordance with suchrequirements as may be prescribed by the MAS, to take such steps to enable the holders of HBT Unitsto appoint another person as the trustee-manager (not being a temporary trustee-manager) of HBT.

Corporate Governance of the HBT Trustee-Manager

The BTA stipulates requirements and obligations in respect of corporate governance that are morestringent than those for companies and collective investment schemes. Corporate governance ofcompanies and collective investment schemes are governed by the Code of Corporate Governanceand, in the case of collective investment schemes, the CIS Code. The Code of Corporate Governanceand the CIS Code only set out broad principles for guidance while the regime under the BTA sets outthe requirements for, among other things, board composition of a trust-manager, audit committeecomposition of a trustee-manager and independence of directors of a trustee-manager.

Roles and Responsibilities of the HBT Trustee-Manager

If HBT becomes active, the HBT Trustee-Manager has the dual responsibility of safeguarding theinterests of the holders of HBT Units, and managing the business conducted by HBT. The HBTTrustee-Manager has general powers of management over the assets of HBT and its mainresponsibility is to manage HBT’s assets and liabilities for the benefit of the holders of HBT Units. TheHBT Trustee-Manager will set the strategic direction of HBT, and has given an undertaking to theSGX-ST that it will not engage in activities that are in conflict with the objectives of H-REIT. The HBTTrustee-Manager is also responsible for ensuring that HBT complies with the applicable provisions ofall relevant legislation including the BTA, the SFA, the Hotels Act, the Companies Act, the ListingManual, the HBT Trust Deed and all relevant contracts.

The HBT Trustee-Manager, in exercising its powers and carrying out its duties as HBT’s trustee-manager, is required to:

• treat holders of HBT Units who hold HBT Units in the same class fairly and equally and holdersof HBT Units who hold HBT Units in different classes (if any) fairly;

• ensure that all actions taken are made in accordance with the BTA and the HBT Trust Deed;

• report to the MAS any contravention of the BTA or the Securities and Futures (Offers ofInvestments) (Business Trusts) (No. 2) Regulations 2005 by any other person that:

— relates to HBT; and

— has had, has or is likely to have, a materially adverse effect on the interests of all the holdersof HBT Units, or any class of holders of HBT Units, as a whole, as soon as practicable afterthe HBT Trustee-Manager becomes aware of the contravention;

• ensure that the HBT Deposited Property is properly accounted for; and

• ensure that the HBT Deposited Property is kept distinct from the property held in its own capacity.

The HBT Trustee-Manager may:

• while the units of H-REIT and HBT are stapled together, lend moneys to H-REIT out of HBT’sproperty whenever the HBT Trustee-Manager considers, among other things, that such lending isnecessary or desirable in order to further the interests of the investors of the Stapled Securitiesas a whole; and

158

• borrow on behalf of HBT (upon such terms and conditions as it deems fit, including the chargingor mortgaging of all or any part of HBT’s property) whenever the HBT Trustee-Manager considers,among other things, that such borrowings are necessary or desirable in order to:

— enable HBT to meet any liabilities;

— finance the acquisition of any authorised investment or the undertaking of any authorisedbusiness under the HBT Trust Deed; or

— (while the units of H-REIT and HBT are stapled together) on-lend moneys to H-REIT in orderto further the interests of the investors of the Stapled Securities as a whole.

HBT will not guarantee the financial obligations, debts or any other liabilities of H-REIT and vice versa.

The HBT Trustee-Manager also has the following statutory duties under the BTA:

• at all times act honestly and exercise reasonable diligence in the discharge of its duties as HBT’strustee-manager in accordance with the BTA and the HBT Trust Deed;

• act in the best interests of all the holders of HBT Units as a whole and give priority to the interestsof all the holders of HBT Units as a whole over its interests in the event of a conflict between theinterests of all the holders of HBT Units and its own interests;

• not make improper use of any information acquired by virtue of its position as HBT’s trustee-manager to gain, directly or indirectly, an advantage for itself or for any other person to thedetriment of the holders of HBT Units; and

• hold the HBT Deposited Property on trust for all the holders of HBT Units as a whole inaccordance with the terms of the HBT Trust Deed.

Should the HBT Trustee-Manager contravene any of the provisions setting out the aforesaid duties, it:

• is liable to all the holders of HBT Units as a whole for any profit or financial gain directly orindirectly made by it or any of its related corporations or for any damage suffered by all the holdersof HBT Units as a whole as a result of the contravention; and

• is guilty of an offence and shall be liable on conviction to a fine not exceeding S$100,000.

While the HBT Trustee-Manager is required to be dedicated to the conduct of the business of HBT, itis not prohibited from delegating its duties and obligations to third parties. In the absence of fraud, wilfuldefault or breach of trust by the HBT Trustee-Manager, it shall not incur any liability by reason of anyerror of law or any matter or thing done or suffered to be done or omitted to be done by it in good faithunder the HBT Trust Deed. In addition, the HBT Trustee-Manager shall be entitled, for the purpose ofindemnity against any actions, costs, claims, damages, expenses or demands to which it may be putas HBT Trustee-Manager, to have recourse to the HBT Deposited Property or any part thereof savewhere such action, cost, claim, damage, expense or demand is occasioned by the fraud, wilful defaultor breach of trust by the HBT Trustee-Manager. The HBT Trustee-Manager may, in managing HBT andin carrying out and performing its duties and obligations under the HBT Trust Deed appoint such personto exercise any or all of its powers and discretions and to perform all or any of its obligations under theHBT Trust Deed, provided always that the HBT Trustee-Manager shall be liable for all acts andomissions of such persons as if such acts and omissions were its own.

Composition of the HBT Trustee-Manager Board

Under Regulation 12(1) of the Business Trusts Regulations 2005, the HBT Trustee-Manager Board isrequired to comprise:

• at least a majority of the HBT Trustee-Manager Directors who are independent from managementand business relationships with the HBT Trustee-Manager;

159

• at least one-third of HBT Trustee-Manager Directors who are independent from management andbusiness relationships with the HBT Trustee-Manager and from every shareholder of the HBTTrustee-Manager with an interest in not less than 5.0% of the shares in issue (“SubstantialShareholder”); and

• at least a majority of HBT Trustee-Manager Directors who are independent from any singleSubstantial Shareholder of the HBT Trustee-Manager.

A majority of the HBT Trustee-Manager Directors, and therefore the H-REIT Manager Directors, areindependent from management and business relationships with the HBT Trustee-Manager.

Independence from management and business relationships

To be considered to be independent from management and business relationships with the HBTTrustee-Manager (whether or not the HBT Trustee-Manager is acting for or on behalf of HBT or CDLHospitality Trusts), a HBT Trustee-Manager Director must not have any:

• management relationships with the HBT Trustee-Manager or with any of its subsidiaries; and

• business relationships with the HBT Trustee-Manager or with any of its related corporations, orwith any officer of the HBT Trustee-Manager or any of its related corporations, that could interferewith the exercise of his independent judgment with regard to the interests of all the holders of HBTUnits as a whole.

Independence from management relationships

A HBT Trustee-Manager Director is not considered to be independent from management relationshipswith the HBT Trustee-Manager if:

• he is employed by the HBT Trustee-Manager or by any of its subsidiaries, or has been soemployed, at any time during the current financial year or any of the preceding three financialyears of the HBT Trustee-Manager;

• any member of his immediate family:

— is being employed by the HBT Trustee-Manager or by any of its subsidiaries as an executiveofficer whose compensation is determined by the HBT Trustee-Manager Board or thesubsidiary, as the case may be; or

— has been so employed at any time during the current financial year or any of the precedingthree financial years of the HBT Trustee-Manager; or

• he is accustomed or under an obligation, whether formal or informal, to act in accordance with thedirections, instructions or wishes of the management of the HBT Trustee-Manager or any of itssubsidiaries.

Independence from business relationships

A HBT Trustee-Manager Director is not considered to be independent from business relationships withthe HBT Trustee-Manager or with any of its related corporations, or with any officer of the HBTTrustee-Manager or any of its related corporations, if:

• he is a Substantial Shareholder, a director or an executive officer of any corporation, or a soleproprietor or partner of any firm, where such corporation, sole proprietorship or firm carries onbusiness for purposes of profit to which the HBT Trustee-Manager or any of its relatedcorporations has made, or from which the HBT Trustee-Manager or any of its related corporationshas received, payments (whether or not the HBT Trustee-Manager is acting for or on behalf ofHBT or CDL Hospitality Trusts) at any time during the current or immediately preceding financialyear of the HBT Trustee-Manager; or

160

• he is receiving or has received compensation from the HBT Trustee-Manager or any of its relatedcorporations, other than remuneration received for his service as a HBT Trustee-ManagerDirector or as an employee of the HBT Trustee-Manager or any of its related corporations, at anytime during the current or immediately preceding financial year of the HBT Trustee-Manager.

Independence from Substantial Shareholders of the HBT Trustee-Manager

A HBT Trustee-Manager Director is considered to be independent from a Substantial Shareholder ofthe HBT Trustee-Manager if he is not that Substantial Shareholder or is not connected to thatSubstantial Shareholder.

In the case where the Substantial Shareholder is a corporation, the HBT Trustee-Manager Directorwould be considered to be connected to that Substantial Shareholder if he is at the same time a directorof the Substantial Shareholder.

None of the HBT Trustee-Manager Directors would, by definition under the Business TrustsRegulations 2005, be independent from a Substantial Shareholder as the composition of the HBTTrustee-Manager Board is the same as that of the H-REIT Manager and within CDL Hospitality Trusts,the HBT Trustee-Manager is wholly owned by the H-REIT Manager.

However, due to the structure of CDL Hospitality Trusts, appointing a HBT Trustee-Manager Boardwhich is the same, or substantially the same, as the H-REIT Manager Board would avoid anydifferences or deadlock in the operation of CDL Hospitality Trusts. Operationally, the structure of CDLHospitality Trusts would require a high degree of co-operation between the H-REIT Manager and theHBT Trustee-Manager. In order for H-REIT and HBT to function effectively, it is important that theH-REIT Manager and the HBT Trustee-Manager co-operate with each other in, for example:

• sharing accounting and other information as may be necessary or desirable to fulfil theirrespective obligations under the stapling deed;

• preparing and providing financial information to investors;

• holding general meetings;

• issuing Stapled Securities; and

• making distributions.

The MAS has granted an exemption from the requirement under Regulation 12(1) of the Business TrustRegulations 2005, which deals with the independence of the HBT Trustee-Manager Directors, subjectto the following conditions:

(i) the HBT Trustee-Manager shall ensure that the HBT Units remain stapled to the H-REIT Units,and that the composition of the HBT Trustee-Manager Board is identical to that of the H-REITManager Board;

(ii) in relation to the composition of the HBT Trustee-Manager Board, the HBT Trustee-Manager shallensure that, except to the extent that the HBT Trustee-Manager Directors are H-REIT ManagerDirectors:

(a) at least a majority of the HBT Trustee-Manager Directors shall be independent frommanagement and business relationships with the H-REIT Manager; and

(b) at least one-third of the HBT Trustee-Manager Directors shall be independent frommanagement and business relationships with the H-REIT Manager and from everysubstantial shareholder of the H-REIT Manager;

161

(iii) in relation to the members of the HBT Audit Committee, the HBT Trustee-Manager shall ensurethat, except to the extent that the members of the HBT Audit Committee are H-REIT ManagerDirectors:

(a) all the members of the HBT Audit Committee shall be independent from management andbusiness relationships with the H-REIT Manager; and

(b) at least a majority of the members of the HBT Audit Committee, including the chairman of theHBT Audit Committee; shall be independent from management and business relationshipswith the H-REIT Manager and independent from every substantial shareholder of theH-REIT Manager; and

(iv) the HBT Trustee-Manager shall ensure that the Stapling Deed shall contain covenants binding theH-REIT Manager to exercise all due diligence and vigilance to safeguard the rights and interestsof the holders of the Stapled Securities in the event of a conflict of interests between the H-REITManager and its shareholders collectively, and the holders of the Stapled Securities.

HBT Audit Committee

Under Regulation 13(1) of the Business Trusts Regulations 2005, the Audit Committee of a registeredbusiness trust is required to comprise three or more members appointed by the trustee-manager fromits board of directors:

• all of whom are independent of management and business relationships with the trustee-manager; and

• at least a majority of whom, including the chairman of the audit committee, are independent ofmanagement and business relationships with the trustee-manager and independent from everySubstantial Shareholder of the trustee-manager.

The MAS has granted an exemption from the requirement under Regulation 13(1) of the Business TrustRegulations 2005, which deals with the independence of the members of the HBT Audit Committee,subject to the conditions set out above in “— Independence from Substantial Shareholders of the HBTTrustee-Manager”. The Audit Committee is appointed by the HBT Trustee-Manager Board from amongthe HBT Trustee-Manager Directors and is composed of three non-executive members, all of whom(including the Chairman of the Audit Committee) are directors independent from management andbusiness relationships with the HBT Trustee-Manager. As at the date of the Prospectus, the membersof the Audit Committee are Dr Tan Cheng Bock, Ms Lim Yin Nee Jenny and Mr Chan Chun Ming Jimmy,all of whom are independent directors. Mr Chan Chun Ming Jimmy has been appointed as Chairmanof the Audit Committee.

The role of the HBT Audit Committee is to monitor and evaluate the effectiveness of the HBTTrustee-Manager’s internal controls.

The HBT Audit Committee also reviews the quality and reliability of information prepared for inclusionin financial reports, and is responsible for the nomination of external auditors and reviewing theadequacy of external audits in respect of cost, scope and performance.

In addition, the HBT Audit Committee’s responsibilities include:

• reviewing external audit reports to ensure that where deficiencies in internal controls have beenidentified, appropriate and prompt remedial action is taken by the management;

• monitoring the procedures in place to ensure compliance with applicable legislation, the ListingManual and the BTA;

• reviewing the financial statements and the internal audit report; and

• monitoring the procedures established to regulate Interested Person Transactions includingensuring compliance with the relevant provisions of the Listing Manual.

162

Dealings in Stapled Securities or HBT Units

The HBT Trust Deed requires each HBT Trustee-Manager Director to give notice in writing to the HBTTrustee-Manager of his acquisition of Stapled Securities or (in the event that Unstapling has takenplace) HBT Units or changes in the number of Stapled Securities, or (as the case may be) HBT Unitswhich he holds or in which he has an interest, within two Business Days after the date on which the HBTTrustee-Manager Director became a director of the HBT Trustee-Manager or the date of suchacquisition or the occurrence of the event giving rise to changes in the number of Stapled Securities,or (as the case may be) HBT Units which he holds or in which he has an interest.

The directors and employees of the HBT Trustee-Manager are encouraged, as a matter of internalpolicy, to hold the Stapled Securities or (in the event that Unstapling has taken place) HBT Units butare prohibited from dealing in the Stapled Securities or (as the case may be) HBT Units:

• in the period commencing one month before the public announcement of the annual andsemi-annual results and (where applicable) property valuations, and two weeks before the publicannouncement of the quarterly results of CDL Hospitality Trusts or (in the event that Unstaplinghas taken place) HBT, and ending on the date of announcement of the relevant results or (as thecase may be) property valuations; and

• at any time while in possession of price sensitive information.

In addition, the HBT Trustee-Manager has given an undertaking to the MAS that it will announce to theSGX-ST the particulars of its holdings in the Stapled Securities or (in the event that Unstapling hastaken place) HBT Units and any changes thereto within two Business Days after the date on which itacquires or disposes of any Stapled Securities or (as the case may be) HBT Units. The HBTTrustee-Manager has also undertaken that it will not deal in the Stapled Securities or (as the case maybe) HBT Units in the period commencing one month before the public announcement of the annual andsemi-annual results and (where applicable) property valuations, and two weeks before the publicannouncement of the quarterly results of CDL Hospitality Trusts or (as the case may be) HBT, andending on the date of announcement of the relevant results or (as the case may be) property valuations.

Interested Person Transactions

Role of the Audit Committee for Interested Person Transactions

The Audit Committee will monitor the procedures established to regulate Interested PersonTransactions, including reviewing any Interested Person Transactions entered into from time to timeand ensuring compliance with the relevant provisions of the Listing Manual.

If a member of the Audit Committee has an interest in a transaction, he or she is to abstain fromparticipating in the review and approval process in relation to that transaction.

Interested Person Transactions In Connection with the Setting Up of HBT

The HBT Trustee-Manager has entered into the HBT Trust Deed in connection with the setting up ofHBT. The terms of the HBT Trust Deed are generally described in “The Formation and Structure of CDLHospitality Trusts, H-REIT and HBT — HBT”.

Exempted Agreement

The fees and charges payable by HBT to the HBT Trustee-Manager under the HBT Trust Deed, whichconstitutes an Interested Person Transaction, are deemed to have been specifically approved byholders of HBT Units upon purchase of the Stapled Securities and are therefore not subject to Rules905 and 906 of the Listing Manual to the extent that there is no subsequent change to the rates and/orbases of the fees charged thereunder which will adversely affect HBT. However, the renewal of suchagreement will be subject to Rules 905 and 906 of the Listing Manual.

163

ANNUAL REPORTS

So long as H-REIT is stapled to HBT, an annual report covering the period incorporating disclosures asrequired under the Listing Manual and all relevant laws will be issued by CDL Hospitality Trusts whichwill comprise consolidated financial statements of CDL Hospitality Trusts and the separate financialstatements of H-REIT and HBT to the holders of the Stapled Securities within three months from theend of each accounting period of CDL Hospitality Trusts containing, among other things, the followingkey items:

(i) details of all real estate transactions entered into during the accounting period;

(ii) details of real estate assets of H-REIT and (if applicable) HBT;

(iii) if applicable, with respect to investments other than real property:

(a) a brief description of the business;

(b) proportion of share capital owned;

(c) cost;

(d) (if relevant) directors’ valuation and in the case of listed investments, marketvalue;

(e) dividends received during the year (indicating any interim dividends);

(f) dividend cover or underlying earnings;

(g) any extraordinary items; and

(h) net assets attributable to investments;

(iv) cost of each property held by H-REIT and (if applicable) HBT;

(v) annual valuation of each property of H-REIT and (if applicable) HBT;

(vi) analysis of provision for impairment of each property of H-REIT and (if applicable) HBT (to theextent possible);

(vii) remaining term for each of the leasehold properties of H-REIT and (if applicable) HBT;

(viii) amount of distributable income of H-REIT and (if applicable) HBT;

(ix) details of assets other than real estate of H-REIT and (if applicable) HBT;

(x) details of the exposure to derivatives of H-REIT and (if applicable) HBT;

(xi) details of investments in other property funds by H-REIT and (if applicable) HBT;

(xii) details of borrowings by and other financial accommodation to H-REIT and (if applicable) HBT;

(xiii) value of the deposited property and the net asset value of HBT and H-REIT at the beginning andend of the accounting period under review;

(xiv) the prices at which the Stapled Securities were quoted at the beginning and end of theaccounting period, and the highest and lowest prices at which the Stapled Securities were tradedon the SGX-ST during the accounting period;

(xv) volume of trade in the Stapled Securities during the accounting period;

(xvi) the aggregate value of all transactions entered into by H-REIT and (if applicable) HBT with aRelated Party during the accounting period under review;

(xvii) total operating expenses of H-REIT and HBT in respect of the accounting period, includingexpenses paid to the H-REIT Manager, the H-REIT Trustee, the HBT Trustee-Manager andRelated Parties (if any), and taxation incurred in relation to their properties;

164

(xviii) historical performance of H-REIT and HBT, including rental income obtained for each propertywhere applicable in respect of the accounting period and other various periods of time (e.g.1-year, 3-year, 5-year or 10-year) and any distributions made;

(xix) name of the H-REIT Manager, the H-REIT Trustee and the HBT Trustee-Manager, together withan indication of the terms and duration of its appointment and the basis of its remuneration;

(xx) total amount of fees paid to the H-REIT Manager, the H-REIT Trustee and the HBT Trustee-Manager and the price(s) at which any Stapled Securities were issued in part payment thereof;

(xxi) an analysis of realised and unrealised surpluses or losses, stating separately profits and lossesas between listed and unlisted investments, if applicable;

(xxii) audited financial statements of H-REIT;

(xxiii) audited financial statements of HBT;

(xxiv) audited consolidated financial statements of CDL Hospitality Trusts; and

(xxv) any extraordinary items.

The first report will cover the period from the Listing Date to 31 December 2006.

Additionally, CDL Hospitality Trusts will announce the net asset value of H-REIT and HBT on a quarterlybasis. The announcement of the net asset value of H-REIT will be based on the latest availablevaluation of H-REIT’s real estate, which will be conducted at least once a year (as required under theProperty Funds Guidelines). The first such valuation will be conducted by 31 December 2006.

165

THE SPONSOR

The Sponsor is listed on the London Stock Exchange with its registered office located at Victoria House,Victoria Road, Horley, Surrey RH6 7AF, United Kingdom, with a market capitalisation of approximately£1.17 billion as at the Latest Practicable Date. The Sponsor is a large hotel group which, as at theLatest Practicable Date, comprises a portfolio of, among others, 105 hotels in 18 countries around theworld, of which 20 and 11 are third-party owned hotels respectively managed and franchised by theSponsor group. The principal activities of the Sponsor are those relating to investment holdings. As atthe Latest Practicable Date, the Sponsor has an authorised share capital of £300.0 million and anissued and fully paid share capital of £87.1 million.

In 1995, CDL Hotels International Limited (now known as City e-Solutions Limited) acquired theCopthorne group of hotels with properties in the United Kingdom, France and Germany. The Sponsorwas then floated on the London Stock Exchange in 1996. In 1999, the Sponsor purchased the majorityhotel interests of its then immediate-holding company, CDL Hotels International Limited, in South EastAsia and Australasia, for £556 million. In the same year, the M&C group acquired the Millennium SeoulHilton in Seoul, Korea for US$228 million and in December 1999, the M&C group acquired the NorthAmerican hotel interests of the Regal chain of hotels for US$640 million. As at 31 December 2005, thegross assets and total equity of the M&C group are £2.35 billion and £1.38 billion respectively.

The M&C hotel brands represent a wide variety of hotel styles with high standards of service andfacilities. M&C hotels are recognised for providing excellent business, leisure, incentives, meetings andevents experience to its customers worldwide.

The M&C group manages and operates its hotel properties under three main brands, namely the“Millennium” brand, “Copthorne” brand and “Kingsgate” brand. The “Millennium” brand is aninternational hotel brand introduced in October 1995. Today, there are 47 “Millennium” branded hotelproperties in 13 countries around the world. The majority of the “Millennium” branded hotels are 4-stardeluxe or 5 star hotel properties in premier locations in major gateway cities. “Copthorne” brandedhotels are hotels in major business locations or business centres. There are 29 “Copthorne” brandedproperties across the United Kingdom, Germany, New Zealand, Malaysia and Singapore. A well-established European brand, Copthorne’s international expansion started in October 1997 in NewZealand. In 1998, the brand was introduced in Asia. Millennium & Copthorne Hotels New ZealandLimited is a member of the M&C Group, having 31 properties and is the largest hotel owner/operatorin New Zealand.

CDL Hospitality Trusts stands to benefit from the Sponsor’s financial strength, experience, marketreach and network of contacts in the global hotel and hospitality industry. The H-REIT Managerbelieves that these characteristics would enable it to continue to enhance the performance of theHotels, and to make appropriate and potentially yield-accretive acquisitions that are expected tomaintain or enhance returns to holders of the Stapled Securities and provide potential for net assetgrowth. CDL Hospitality Trusts stands to benefit from the Sponsor in the following ways:

• the Sponsor has significant expertise, experience and knowledge in relation to the hospitalityindustry and has a global sales network, as well as integrated hotel operations;

• the Sponsor has long-standing relationships with institutional and other property owners andproperty brokers, thereby allowing the H-REIT Manager to respond quickly to acquisitionopportunities;

• the Sponsor has numerous marketing partnerships with airlines and credit cards, and isdeveloping its own points-based global loyalty programme by end 2007. In 2006, it will belaunching its global frequent guest recognition programme. Such programmes will be madeavailable to hotels managed by MCIL, including the Hotels in H-REIT’s portfolio;

166

• holders of the Stapled Securities will benefit from MCIL’s extensive experience in managinghotels, including the Hotels, and other hospitality-related properties. MCIL manages the ninehotels (including the Hotels) in the Sponsor’s global portfolio located in Singapore and other partsof Asia;

• since MCIL is the principal hotel-management arm of the Sponsor for hotel properties located inAsia, the H-REIT Manager believes that the Hotels will continue to enjoy competitive advantagesunder the Sponsor and MCIL’s proven hotel management expertise. MCIL’s global marketingprogrammes and reservation systems will enable the Hotels to maintain their competitiveness inboth occupancy and room rates. Further, the Hotels will benefit from the cross referral of guestsby MCIL. Based on historical data, the H-REIT Manager believes that MCIL-managed propertieshave performed well in their respective markets. In addition to managing its owned hotels, theSponsor currently manages 11 third party owned hotels around the world with contracts in placeto manage a further nine third party hotels, demonstrating its hotel management expertise; and

• in addition to the four Hotels being acquired by H-REIT on the Listing Date, the remaining hotelportfolio of the Sponsor, comprising 101 hotels as at the Latest Practicable Date, may formpotential acquisition targets for H-REIT. The Sponsor has granted a right of first refusal to H-REITover future sales by any Sponsor Entity of Singapore real estate which is used primarily forhospitality purposes for a period of five years from the Listing Date. In addition, the Sponsor hasgranted to H-REIT, for the period of five years from the Listing Date, a right of first refusal toacquire any Singapore real estate (which is used primarily for hospitality purposes) that is offeredfor sale to any Sponsor Entity.

The following table sets out the Sponsor’s global hotel portfolio (excluding the four Hotels beingacquired by H-REIT on the Listing Date):

M&C’s Global Hotel PortfolioRegion/Country Hotel No. of Rooms

Worldwide 26,479

Asia Pacific 5,863

China Millennium Hongqiao Hotel Shanghai* 350

China Millennium Beijing* 520

Hong Kong JW Marriott Hotel Hong Kong 602

Hong Kong Nikko Hong Kong 462

Indonesia Millennium Hotel Sirih Jakarta 390

Korea The Millennium Seoul Hilton 683

Malaysia Copthorne Orchid Hotel Penang 318

Malaysia The Regent Kuala Lumpur 468

Philippines The Heritage Hotel Manila 448

Singapore Copthorne Orchid Hotel Singapore 440

Taiwan Grand Hyatt Taipei 856

Thailand Millennium Sukhumvit Hotel Bangkok* 326

Middle East/Africa 3,179

Egypt The Coral Beach Diving Hotel 206

Egypt Millennium Tiran Hotel & Resort, Sharm el Sheikh* 350

Egypt Millennium Oy Oun Hotel, Sharm el Sheikh* 576

United Arab Emirates Millennium Airport Hotel Dubai 484

United Arab Emirates Millennium Hotel Abu Dhabi 300

United Arab Emirates Millennium Hotel Sharjah 259

United Arab Emirates Millennium Executive Suites* 200

167


United Arab Emirates Kingsgate Abu Dhabi* 180

United Arab Emirates Millennium Gardens Dubai Hotel* 220

United Arab Emirates Millennium Gardens Dubai Hotel Apartments* 166

Qatar Millennium Doha, Qatar* 238

Oceania 3,688

New Zealand Copthorne Hotel Christchurch Durham Street 161

New Zealand Copthorne Hotel Christchurch Central 142

New Zealand Copthorne Hotel & Resort Queenstown Lakefront 241

New Zealand Copthorne Hotel & Resort Solway Park Masterton 107

New Zealand Copthorne Hotel & Resort Waitangi Bay of Islands 145

New Zealand Copthorne Hotel Auckland Anzac Avenue 110

New Zealand Copthorne Hotel Auckland Harbour City 187

New Zealand Copthorne Hotel Wellington Plimmer Towers 94

New Zealand Copthorne Commodore, Christchurch Airport 105

New Zealand Copthorne Hotel Grand Central New Plymouth 67

New Zealand Copthorne Hotel and Resort Hokianga 37

New Zealand Kingsgate Hotel Greymouth 102

New Zealand Kingsgate Hotel Autolodge Christchurch 74

New Zealand Kingsgate Hotel Autolodge Paihai, Bay of Islands 77

New Zealand Kingsgate Hotel Beachcomber, Nelson 47

New Zealand Kingsgate Hotel Brydon, Oamura, Christchurch 50

New Zealand Kingsgate Hotel Dunedin 55

New Zealand Kingsgate Hotel Greenlane, Auckland 216

New Zealand Kingsgate Hotel Hamilton 147

New Zealand Kingsgate Hotel Oriental Bay, Wellington 116

New Zealand Kingsgate Hotel Palmerston North 151

New Zealand Kingsgate Hotel Parnell, Auckland 117

New Zealand Kingsgate Hotel Rotorua 136

New Zealand Kingsgate Hotel Te Anau 94

New Zealand Kingsgate Hotel Terraces, Queenstown 85

New Zealand Kingsgate Hotel Wanganui 53

New Zealand Kingsgate Hotel Whangarei, Northland 95

New Zealand Millennium Hotel Christchurch 179

New Zealand Millennium Hotel Queenstown 220

New Zealand Millennium Hotel Rotorua 227

New Zealand Millennium Hotel & Resort Manuels Taupo 51

Europe 5,711

United Kingdom Copthorne Hotel & Resort, Effingham Park, LondonGatwick

122

United Kingdom Copthorne Hotel Aberdeen 89

United Kingdom Copthorne Hotel Birmingham 212

United Kingdom Copthorne Hotel Cardiff Caerdydd 135

United Kingdom Copthorne Hotel London Gatwick 227

United Kingdom Copthorne Hotel Manchester 166

168


United Kingdom Copthorne Hotel Merry Hill Dudley 138

United Kingdom Copthorne Hotel Newcastle 156

United Kingdom Copthorne Hotel Plymouth 135

United Kingdom Copthorne Hotel Slough Windsor 219

United Kingdom Kirtons Farm Hotel Reading 81

United Kingdom Copthorne Hotel at Chelsea Football Club 160

United Kingdom Copthorne Tara Hotel London Kensington 834

United Kingdom Millennium Bailey’s Hotel London Kensington 211

United Kingdom Millennium Gloucester Hotel London Kensington 609

United Kingdom Millennium Hotel Glasgow 117

United Kingdom Millennium Hotel London Knightsbridge 222

United Kingdom Millennium Hotel London Mayfair 348

United Kingdom Millennium Hotel at Chelsea Football Club 115

United Kingdom Millennium Madejski Hotel Reading 140

United Kingdom Millennium Hotel Southampton Ocean Village* 200

Germany Copthorne Hotel Hannover 222

Germany Millennium Hotel Stuttgart 451

France Millennium Hotel Paris Charles de Gaulle 239

France Millennium Hotel Paris Opera 163

Americas 8,038

United States Comfort Inn Avon/Vail 146

United States Eldorado, New Mexico 219

United States Millenium Hilton Hotel New York 569

United States Millennium Biltmore Hotel Los Angeles 683

United States Millennium Bostonian Hotel Boston 201

United States Millennium Hotel Anchorage 248

United States Millennium Hotel Boulder 269

United States Millennium Hotel Cincinnati 872

United States Millennium Hotel Durham 313

United States Millennium Hotel Minneapolis 321

United States Millennium Hotel New York Broadway 750

United States Millennium Hotel New York UN Plaza 427

United States Millennium Hotel St. Louis 780

United States Millennium Knickerbocker Hotel Chicago 305

United States Millennium Maxwell House Nashville 287

United States Millennium Resort Scottsdale McCormick Ranch 125

United States Sunnyvale* 250

United States Pine Lake Trout Club, Ohio 6

United States Millennium Airport Hotel Buffalo 300

United States Wynfield Inn Orlando 299

United States Best Western Lakeside 651

Ecuador Royal Palm Hotel, Galapagos (A Millennium Partner) 17

* Hotel not yet operational

169

THE FORMATION AND STRUCTURE OFCDL HOSPITALITY TRUSTS, H-REIT AND HBT

The Stapling Deed, the H-REIT Trust Deed and the HBT Trust Deed (the “Deeds”) are complexdocuments and the following is a summary only and is qualified in its entirety by, and is subject to, thecontents of the Deeds. Investors should refer to the Deeds themselves to confirm specific informationor for a detailed understanding of CDL Hospitality Trusts, H-REIT and HBT. A copy of the Stapling Deedand the H-REIT Trust Deed are available for inspection at the registered office of the H-REIT Managerwhile a copy of the Stapling Deed and the HBT Trust Deed are available for inspection at the registeredoffice of the HBT Trustee-Manager.

THE FORMATION AND STRUCTURE OF CDL HOSPITALITY TRUSTS

CDL Hospitality Trusts is a stapled group comprising units in H-REIT and HBT. The units in each ofH-REIT and HBT are stapled together under the terms of the Stapling Deed and cannot be tradedseparately. The units in H-REIT and the units in HBT together form the Stapled Securities, and aretreated as one instrument. H-REIT cannot issue (including the issue of partly paid units), transfer,register the transfer, consolidate or divide, redeem or buy back or cancel any of its units, unless thesame action occurs in respect of HBT, and vice versa.

As at the Listing Date, HBT will be dormant. It will, however, become active if any of the followingoccurs:

• It is appointed by H-REIT, in the absence of any other master lessee(s) being appointed, as amaster lessee of one of the Hotels. HBT will not, however, manage or operate any of the hotelassets in H-REIT’s portfolio, and the intention is for HBT to appoint a professional hotel manager,such as MCIL, to manage that hotel. HBT exists primarily as “a master lessee of last resort” withregard to the Hotels so that in the event that the Master Lessees terminate or do not renew theMaster Lease Agreements beyond their initial terms and H-REIT is unable to lease any of theHotels to another master lessee for any reason, including failing to reach agreement oncommercially acceptable terms with other potential master lessees, then HBT will enter into amaster lease agreement for the Hotels on substantially the same terms as the previous MasterLease Agreement (see “The Formation and Structure of CDL Hospitality Trusts, H-REIT and HBT— The Formation and Structure of HBT”);

• H-REIT acquires hotels in the future, and, if there are no other suitable master lessees, leasesthese acquired hotels to HBT. HBT will then become a master lessee for that hotel and will appointa professional hotel manager to manage that hotel; or

• HBT expands into other activities on its own such as project development and asset acquisitions.

Further, through HBT, CDL Hospitality Trusts may undertake certain hospitality-related developmentprojects, acquisitions and investments which may not be suitable for H-REIT. HBT may thus acquireand/or invest in properties in its own name.

In general, HBT will be considered to be active in the event that it carries on any business activity otherthan:




H-REIT will not guarantee any debt of HBT, and vice versa. This will help to shield each entity from theother’s financial obligations because each entity’s creditors will not have recourse to the other.

170

The Stapling Deed

The units in H-REIT and HBT are stapled together under the terms of the Stapling Deed. In the eventof any inconsistencies, the terms and conditions of the Stapling Deed takes precedence over therespective constitutions of the two entities forming CDL Hospitality Trusts namely, the H-REIT TrustDeed and the HBT Trust Deed, and is governed by the laws of Singapore.

Under the terms of the Stapling Deed, H-REIT and HBT must co-operate with each other in all mattersconcerning the Stapled Securities and must disclose relevant information between themselves as maybe necessary or desirable to fulfil their respective obligations under the Stapling Deed. H-REIT andHBT must also keep confidential any information obtained concerning the affairs or assets of the other.

Notwithstanding the above, H-REIT and HBT will remain separate entities. The Stapling Deed does notcreate any association, joint venture or partnership between H-REIT and HBT for any purpose or anysharing of the benefit of any assets.

The Stapling Deed requires each holder of the Stapled Securities to hold the same number of units inH-REIT and in HBT. These units are stapled, meaning that an individual unit in H-REIT may not betransferred, or otherwise dealt with, without the other corresponding stapled HBT Unit.

In addition, so long as the units in H-REIT and HBT are stapled together, in relation to:

• Co-operation — The H-REIT Manager and the HBT Trustee-Manager must co-operate with eachother to ensure that each entity complies with its obligations under the Stapling Deed, theconstitutions of the two entities, the Companies Act, the Hotels Act, the Listing Manual, theProperty Funds Guidelines and any other legislation and regulations that may be relevant, asapplicable;

• Administration — So long as HBT remains dormant and the HBT Trustee-Manager has noemployees of its own, the H-REIT Manager shall carry out all the activities necessary for theadministration of CDL Hospitality Trusts such as developing and maintaining investor relations,including but not limited to customer service to investors, register analysis, informationcoordination and distribution, coordination of investor and analyst briefing and marketing,coordination of media releases and SGX-ST announcements (if applicable); corporate branding;and liaising with and responding to queries from the public in relation to CDL Hospitality Trusts;

• Issue price — The H-REIT Manager and the HBT Trustee-Manager have the flexibility to allocatefunds between the H-REIT and HBT and must agree on the apportionment of the issue price, therepurchase price or buy-back price of the Stapled Securities between the units of H-REIT andHBT before the issue, redemption or buy-back of the Stapled Securities;

• Options — An offering or issue of options over units in CDL Hospitality Trusts may only take placeif it is part of a concurrent offering or issue of options in units of H-REIT and HBT. An option mayonly be exercised if, at the same time as H-REIT Units are acquired under one option, the sameperson exercises an option over an identical number of units in HBT;

• Meetings — The directors or other representatives of the H-REIT Manager and the HBTTrustee-Manager may attend and speak at any meeting of the holders of H-REIT Units and anymeeting of the holders of HBT Units or invite any other person to attend and speak. If permittedby the Companies Act, any meeting of the holders of H-REIT Units and any meeting of the holdersof HBT Units may be held with and as part of a joint meeting of the unitholders of each entity. Atany such joint meeting, on a show of hands, each holder of the Stapled Securities has one vote,and on a poll, each holder of the Stapled Securities has one vote per Stapled Security;

171

• Joint expenses — The H-REIT Manager, the H-REIT Trustee and the HBT Trustee-Manager mayin their absolute discretion agree to the apportionment of expenses reasonably incurred inconnection with the carrying out of their duties under the Stapling Deed, as among each of theentities in CDL Hospitality Trusts. If no agreement is reached, the expenses will be borne equallybetween H-REIT and HBT; and

• Interests of the holders of the Stapled Securities to be considered — So long as H-REITUnits remain stapled to the HBT Units, in exercising any power or discretion, (a) the H-REITManager, the H-REIT Trustee and the HBT Trustee-Manager may have regard to the interests ofthe holders of the Stapled Securities as a whole and not only to the interests of the H-REITunitholders or HBT unitholders; and (b) the H-REIT Manager shall exercise all due diligence andvigilance to safeguard the rights and interests of the holders of the Stapled Securities in the eventof a conflict of interests between the H-REIT Manager and the shareholder(s) of the H-REITManager collectively, and the holders of the Stapled Securities.

Subject to the Companies Act, the SFA, the Hotels Act, the Listing Manual, the Property FundsGuidelines and any relevant legislation or regulations, H-REIT and HBT may agree to cause thestapling of any further security to the Stapled Securities. Any such “attached securities” may begoverned by the laws of a jurisdiction other than Singapore, and in the case of units in a trustconstituted outside Singapore, subject to the grant by the MAS (at its discretion) of any relevantexemptions under Singapore law if and when such stapling occurs. For example, if CDL HospitalityTrusts intends to staple a business trust constituted in New Zealand in the future, such stapling cannotoccur unless the MAS had granted the relevant exemptions. For purposes of any such stapling, H-REITand HBT may make an in-specie distribution of securities to holders of the Stapled Securities.

Unstapling

From the Stapling Commencement Date, all Stapled Securities will remain stapled for so long as theStapled Securities remain in issue, unless otherwise determined by Extraordinary Resolutions passedby the holders of H-REIT Units and the holders of HBT Units respectively; or if stapling becomesunlawful or prohibited by the rules in the Listing Manual; or if one of the parties is terminated or woundup.

On and from the occurrence of an unstapling event, the H-REIT Manager and the HBT Trustee-Manager must procure that H-REIT Units and HBT Units are unstapled.

If, as a consequence of unstapling, units are no longer stapled, each entity must promptly:

(a) repay any outstanding amount under any loan given to it by the other stapling entity prior tounstapling, unless the relevant other stapling entity otherwise agrees;

(b) pay any outstanding amounts which it is responsible for; and

(c) obtain a release from the other stapling entity from any guarantee or other security given by thatother stapling entity on its behalf to any person.

Relevant legislation applicable to CDL Hospitality Trusts

H-REIT is principally a Singapore-based hospitality and hospitality-related REIT constituted by theH-REIT Trust Deed and is principally regulated by the SFA, the Companies Act, the Property FundsGuidelines, other relevant legislation and regulations as well as the H-REIT Trust Deed.

HBT is a business trust constituted by the HBT Trust Deed and is principally regulated by the BTA, theProperty Funds Guidelines, the SFA, other relevant legislation and regulations as well as the HBT TrustDeed.

172

The Take-Over Code

Business trusts, unlike REITs, are subject to the Take-Over Code(1). In CDL Hospitality Trusts, asH-REIT is stapled to HBT under the Stapling Deed, the Stapled Securities are effectively subject to theTake-Over Code as a consequence. Thus, holders of the Stapled Securities must closely adhere to theTake-Over Code in acquisitions or investments.

THE FORMATION AND STRUCTURE OF H-REIT

The H-REIT Trust Deed

H-REIT is a REIT constituted by the H-REIT Trust Deed and is principally regulated by the SFA and theCIS Code (including the Property Funds Guidelines).

While H-REIT Units remain stapled to HBT Units, the terms and conditions of the Stapling Deed shalltake precedence over those in the H-REIT Trust Deed in the event of any inconsistencies.

The provisions of the SFA and the CIS Code (including the Property Funds Guidelines) prescribecertain terms of the H-REIT Trust Deed and certain rights, duties and obligations of the H-REITManager and the H-REIT Trustee. The Property Funds Guidelines also impose certain restrictions onREITs in Singapore, including a restriction on the types of investments which REITs in Singapore mayhold, a general limit on their level of borrowings and certain restrictions with respect to Interested PartyTransactions.

Operational Structure

H-REIT is established to invest in real estate and real estate-related assets and the H-REIT Managermust manage H-REIT so that the principal investments of H-REIT are real estate and real estate-related assets (including ownership of companies or other legal entities whose primary purpose is tohold or own real estate or real estate-related assets). The principal investment strategy of H-REIT is toinvest, whether directly or indirectly, in a diversified portfolio of income-producing real estate which isprimarily used for hospitality-related purposes, whether wholly or partially, in Singapore and elsewhere,as well as real estate-related assets in relation to the foregoing.

H-REIT aims to generate returns for the holders of H-REIT Units by owning, buying and activelymanaging such properties in line with its investment strategy (including selling of any property that hasreached a stage that offers only limited scope for growth).

Subject to the restrictions and requirements in the Property Funds Guidelines, the Listing Manual andthe Tax Ruling, the H-REIT Manager is also authorised under the Trust Deed to invest in investmentsother than real estate. Although the H-REIT Manager may use certain financial derivative instrumentsfor hedging purposes or efficient portfolio management provided that such financial derivativeinstruments are not used to gear H-REIT’s overall investment portfolio or are intended to be borrowingsof H-REIT, the H-REIT Manager presently does not have any intention for H-REIT to invest in options,warrants, commodities, futures contracts and precious metals.

For further details of the investment objectives and policies of the H-REIT Manager, see Clause 9 of theH-REIT Trust Deed.

Note:(1) REITs may, in the future, be subject to the Take-Over Code as well. On 21 June 2006, the Securities Industry Council issued

the “Consultation Paper on Revision of the Singapore Code on Take-Overs and Mergers”. One of the key proposals is forthe Take-Over Code to apply to REITs.

173

H-REIT Units and the Holders of H-REIT Units

The rights and interests of the holders of H-REIT Units are contained in the H-REIT Trust Deed. Underthe H-REIT Trust Deed, these rights and interests are safeguarded by the H-REIT Trustee.

Each H-REIT Unit represents an undivided interest in H-REIT. A holder of H-REIT Units has noequitable or proprietary interest in the underlying assets of H-REIT and is not entitled to the transfer toit of any asset (or any part thereof) or of any real estate, any interest in any asset and real estate-relatedassets (or any part thereof) of H-REIT. The right of a holder of H-REIT Units is limited to the right torequire due administration of H-REIT in accordance with the provisions of the H-REIT Trust Deed,including, without limitation, by suit against the H-REIT Trustee or the H-REIT Manager.

Under the H-REIT Trust Deed, each holder of H-REIT Units acknowledges and agrees that it will notcommence or pursue any action against the H-REIT Trustee or the H-REIT Manager seeking an orderfor specific performance or for injunctive relief in respect of the assets of H-REIT (or any part thereof),including all its Authorised Investments (as defined in the H-REIT Trust Deed), and waives any rightsit may otherwise have to such relief. If the H-REIT Trustee or the H-REIT Manager breaches orthreatens to breach its duties or obligations to the holders of H-REIT Units under the H-REIT TrustDeed, the holders of H-REIT Units have recourse against the H-REIT Trustee or the H-REIT Managerbut this is limited to a right to recover damages or compensation from the H-REIT Trustee or the H-REITManager in a court of competent jurisdiction, and the holder of H-REIT Units acknowledges and agreesthat damages or compensation is an adequate remedy for such breach or threatened breach.

Further, unless otherwise expressly provided in the H-REIT Trust Deed, a holder of H-REIT Units maynot interfere or seek to interfere with the rights, powers, authority or discretion of the H-REIT Manageror the H-REIT Trustee, exercise any right in respect of the assets of H-REIT or any part thereof or lodgeany caveat or other notice affecting the real estate assets and real estate-related assets of H-REIT (orany part thereof), or require that any Authorised Investments forming part of the assets of H-REIT betransferred to such holders of H-REIT Units.

No certificate shall be issued to a holder of the H-REIT Units by either the H-REIT Manager or theH-REIT Trustee in respect of H-REIT Units issued to the holders of H-REIT Units. For so long as CDLHospitality Trusts is listed, quoted and traded on the SGX-ST and/or any other Recognised StockExchange and the Stapled Securities have not been suspended from such listing, quotation and tradingfor more than 60 consecutive calendar days or de-listed permanently, the H-REIT Manager shall,pursuant to the depository services agreement dated 30 June 2006 entered into between CDP, theH-REIT Manager, the H-REIT Trustee and the HBT Trustee-Manager (the “Depository ServicesAgreement”), appoint CDP as the depository for Stapled Securities, and all H-REIT Units issued aspart of the Stapled Securities will be represented by entries in both the register of the holders of H-REITUnits kept by the H-REIT Trustee or the agent appointed by the H-REIT Trustee and the register of theholders of Stapled Securities jointly kept by the H-REIT Trustee and the HBT Trustee-Manager or theiragents in the name of, and deposited with, CDP as the registered holder of such Stapled Securities.The H-REIT Manager and the HBT Trustee-Manager or their jointly appointed agent shall issue to CDPnot more than 10 Business Days after the issue of Stapled Securities a confirmation note confirming thedate of issue and the number of Stapled Securities so issued and, if applicable, also stating that StapledSecurities are issued under a lock-up and the expiry date of such lock-up and for the purposes of theH-REIT Trust Deed and the Stapling Deed, such confirmation note shall be deemed to be a certificateevidencing title to the H-REIT Units and the corresponding Stapled Securities issued.

There are no restrictions under the Stapling Deed, the H-REIT Trust Deed, the HBT Trust Deed orSingapore law on a person’s right to purchase (or subscribe for) H-REIT Units and to own H-REIT Units.

174

Issue of the Stapled Securities

The following is a summary of the provisions of the Stapling Deed, the H-REIT Trust Deed and the HBTTrust Deed relating to the issue of Stapled Securities, on the assumption that the units of H-REIT willremain stapled to the units of HBT.

The H-REIT Manager and the HBT Trustee-Manager have the joint exclusive right to issue StapledSecurities. For so long as CDL Hospitality Trusts is listed on the SGX-ST or such other RecognisedStock Exchange and H-REIT Units remain stapled to HBT Units, the H-REIT Manager and the HBTTrustee-Manager may, subject to the following sub-paragraphs (1), (2) and (3) and in accordance withsuch laws, rules and regulations as may be applicable (including the provisions of the Listing Manual),the Stapling Deed, the H-REIT Trust Deed and the HBT Trust Deed, issue further Stapled Securities onany Business Day at an Issue Price equal to the “market price”, without prior approval of the holdersof H-REIT Units and HBT Units. For this purpose, “market price” shall mean (i) the volume weightedaverage price per Stapled Security (if applicable, of the same class) for all trades on the SGX-ST, orsuch other Recognised Stock Exchange on which CDL Hospitality Trusts is listed, in the ordinarycourse of trading, for the period of 10 Business Days (or such other period as prescribed by theSGX-ST or relevant Recognised Stock Exchange) immediately preceding the relevant Business Day or,(ii) where the H-REIT Manager and the HBT Trustee-Manager believes that such market price is not afair reflection of the market price of a Stapled Security, such amount as determined by the H-REITManager and the HBT Trustee-Manager, as being the fair market price of a Stapled Security.

(1) The H-REIT Manager and the HBT Trustee-Manager shall comply with the Listing Manual or thelisting rules of such relevant Recognised Stock Exchange in determining the Issue Price, includingthe Issue Price for a rights issue on a pro-rata basis to all existing holders of the StapledSecurities, the Issue Price of a Stapled Security issued other than by way of a rights issue offeredon a pro-rata basis to all existing Holders and the Issue Price for any reinvestment of distributionarrangement.

(2) Where the Stapled Securities are issued as full or partial consideration for the acquisition of aninvestment in conjunction with an issue of the Stapled Securities to raise cash for the balance ofthe consideration for the said investment (or part thereof) or for acquiring other investments inconjunction with the said investment, the H-REIT Manager and the HBT Trustee-Manager shallhave the discretion to determine that the Issue Price of the Stapled Securities so issued asconsideration shall be the same as the Issue Price for the Stapled Securities issued in conjunctionwith an issue of Stapled Securities to raise cash for the aforesaid purposes.

(3) Following the recent amendments to the Listing Manual concerning the issue of additional unitsby a REIT which will take effect from 1 September 2006, the holders of the Stapled Securitiesmust give separate general mandates (which are to be renewed every financial year) by OrdinaryResolution in general meetings of the holders of H-REIT Units and general meetings of theholders of HBT Units before the H-REIT Manager and the HBT Trustee-Manager can jointly issueadditional Stapled Securities. The scope of the general mandate to be given in a general meetingof the holders of H-REIT Units is limited to the issue of an aggregate number of additional H-REITUnits which must not exceed 50.0% of the total number of H-REIT Units in issue, of which theaggregate number of additional H-REIT Units to be issued other than on a pro rata basis to theexisting holders of H-REIT Units must not exceed 20.0% of the total number of HBT Units in issue.The scope of the general mandate to be given in a general meeting of the holders of HBT Unitsis limited to the issue of an aggregate number of additional HBT Units which must not exceed50.0% of the total number of HBT Units in issue, of which the aggregate number of additional HBTUnits to be issued other than on a pro rata basis to the existing holders of HBT Units must notexceed 20.0% of the total number of HBT Units in issue.

If in connection with an issue of a Stapled Security, any requisite payment of the Issue Price for suchStapled Security has not been received by the H-REIT Trustee and the HBT Trustee-Manager beforethe seventh Business Day after the Stapled Security was agreed to be issued (or such other date asthe H-REIT Manager and the HBT Trustee-Manager may agree), the H-REIT Manager and the HBT

175

Trustee-Manager may cancel its agreement to issue such Stapled Security and upon notice being givento the H-REIT Trustee, such Stapled Security will be deemed never to have been issued or agreed tobe issued. In such an event, the H-REIT Manager and the HBT Trustee-Manager may, at theirdiscretion, charge the investor (and retain the same for their own account) (i) a cancellation fee of suchamount as the H-REIT Manager and the HBT Trustee-Manager may from time to time determine torepresent the administrative costs involved in processing the application for such Stapled Security, and(ii) an amount (if any) by which the Issue Price of such Stapled Security exceeds the repurchase priceapplying if such Stapled Security was requested to have been repurchased or redeemed on the sameday.

Suspension of Issue of the Stapled Securities

The H-REIT Manager, the H-REIT Trustee or the HBT Trustee-Manager may, subject to the ListingManual or the listing rules of any other Recognised Stock Exchange, suspend the issue of the StapledSecurities during:

• any period when the SGX-ST or any other relevant recognised stock exchange is closed(otherwise than for public holidays) or during which dealings are restricted or suspended;

• the existence of any state of affairs which, in the opinion of the H-REIT Manager, the H-REITTrustee or the HBT Trustee-Manager (as the case may be), might seriously prejudice the interestsof the holders of the Stapled Securities as a whole, the H-REIT Deposited Property or the HBTDeposited Property (as the case may be);

• any breakdown in the means of communication normally employed in determining the price of anyassets of CDL Hospitality Trusts or the current price thereof on the SGX-ST or any other relevantRecognised Stock Exchange, or when for any reason the prices of any assets of CDL HospitalityTrusts cannot be promptly and accurately ascertained;

• any period when remittance of money which will or may be involved in the realisation of any assetof CDL Hospitality Trusts or in the payment for such asset of CDL Hospitality Trusts cannot, in theopinion of the H-REIT Manager or the HBT Trustee-Manager, be carried out at normal rates ofexchange;

• any period where the issuance of the Stapled Securities is suspended pursuant to any order ordirection issued by the MAS;

• in relation to any general meeting of the holders of H-REIT Units or the holders of HBT Units, any48-hour period before such general meeting or any adjournment thereof; or

• when the business operations of the H-REIT Manager, the H-REIT Trustee or the HBTTrustee-Manager in relation to H-REIT are substantially interrupted or closed as a result of, orarising from, pestilence, acts of war, terrorism, insurrection, revolution, civil unrest, riots, strikesor acts of God.

Such suspension shall take effect forthwith upon the declaration in writing thereof by the H-REITManager, the H-REIT Trustee or the HBT Trustee-Manager (as the case may be) and shall terminateon the day following the first Business Day on which the condition giving rise to the suspension ceasesto exist and no other conditions under which suspension is authorised (as set out above) exists, uponthe declaration in writing thereof by the H-REIT Manager, the H-REIT Trustee or the HBT Trustee-Manager (as the case may be).

In the event of any suspension while the Stapled Securities are listed on the SGX-ST and/or any otherRecognised Stock Exchange(s), the H-REIT Manager and the HBT Trustee-Manager shall ensure thatimmediate announcement of such suspension is made through the SGX-ST or the relevant RecognisedStock Exchange.

176

Redemption of the Stapled Securities

When the Stapled Securities are Unlisted

When the Stapled Securities are Unlisted, the H-REIT Manager and the HBT Trustee-Manager may butis not obliged to repurchase or cause the redemption of Stapled Securities more than once a year inaccordance with the Property Funds Guidelines and a holder of Stapled Securities has no right torequest for the repurchase or redemption of Stapled Securities more than once a year. “Unlisted” in thiscontext means not being included on, or having been delisted from, the Official List of the SGX-ST or(as the case may be) any other Recognised Stock Exchange, and in relation to the Stapled Securities,means having been suspended for more than 60 consecutive calendar days from being listed, quotedor traded on the SGX-ST or (as the case may be) any other Recognised Stock Exchange.

When the Stapled Securities are listed on the SGX-ST and/or any other Recognised StockExchange

Holders of the Stapled Securities have no right to request the H-REIT Manager or the HBTTrustee-Manager to repurchase or redeem their Stapled Securities while the Stapled Securities arelisted on the SGX-ST and/or any other Recognised Stock Exchange. It is intended that the holders ofthe Stapled Securities may only deal in their listed Stapled Securities through trading on the SGX-ST.However, under the Stapling Deed, the H-REIT Trust Deed and the HBT Trust Deed, the H-REITManager and the HBT Trustee-Manager may jointly decide to make any offer to repurchase or redeemthe Stapled Securities. In the event the H-REIT Manager and the HBT Trustee-Manager so decides,such repurchase or redemption must comply with the Property Funds Guidelines and the listing rulesof the SGX-ST and/or the listing rules of any other relevant Recognised Stock Exchange.

The H-REIT Manager and the HBT Trustee-Manager may also, subject to the listing rules of theSGX-ST and/or any other Recognised Stock Exchange, suspend the repurchase or redemption of theStapled Securities for any period when the issue of the Stapled Securities is suspended pursuant to theterms and conditions of the Stapling Deed (see “The Formation and Structure of H-REIT — Suspensionof Issue of the Stapled Securities”).

When the Stapled Securities are suspended indefinitely or permanently de-listed

If CDL Hospitality Trusts is suspended from trading indefinitely or has been permanently de-listed fromthe SGX-ST and/or any other Recognised Stock Exchange, the H-REIT Manager and the HBTTrustee-Manager are required to offer to redeem the Stapled Securities at least once a year. In otherwords, CDL Hospitality Trusts will then be treated as an unlisted property fund under the PropertyFunds Guidelines.

Redemption Procedures

For an offer to redeem Stapled Securities under the Property Funds Guidelines, the H-REIT Managerand the HBT Trustee-Manager will send an offer notice to the holders of the Stapled Securities in theevent of any offer to redeem the Stapled Securities. Such offer of repurchase or redemption of theStapled Securities shall be offered on a pro rata basis to all the holders of the Stapled Securities. Theperiod during which such offer will remain open will last for at least 21 calendar days but in any eventno longer than 35 calendar days after the offer is made. Holders of the Stapled Securities wishing toredeem will be asked to respond by sending a request for repurchase or redemption. Following thereceipt of such request for repurchase or redemption, the repurchase price for the Stapled Securitiesthat are the subject of the request shall be paid by the H-REIT Manager and the HBT Trustee-Managerto the holders of the Stapled Securities within 30 calendar days or such longer period as may beprescribed by the Property Funds Guidelines after the date of the receipt of the request.

177

Meeting of Holders of H-REIT Units

Under applicable law and the provisions of the H-REIT Trust Deed, H-REIT will not hold any meetingsfor holders of H-REIT Units unless the H-REIT Manager or the H-REIT Trustee convenes a meeting orunless not less than 50 holders of H-REIT Units or the holders of H-REIT Units holding not less than10% of issued H-REIT Units (whichever is the lesser) request a meeting to be convened.

A meeting of holders of H-REIT Units when convened may:

• by Extraordinary Resolution and in accordance with the H-REIT Trust Deed, sanction anymodification, alteration or addition to the H-REIT Trust Deed which shall be agreed by the H-REITManager and the H-REIT Trustee as provided in the H-REIT Trust Deed;

• by Extraordinary Resolution and in accordance with the H-REIT Trust Deed, sanction asupplemental deed increasing the maximum permitted limit or any change in the structure of feespayable to the H-REIT Manager;

• by Extraordinary Resolution and in accordance with the H-REIT Trust Deed, remove the auditorsof H-REIT;

• by Ordinary Resolution and in accordance with the H-REIT Trust Deed, remove the H-REITManager;

• by Extraordinary Resolution and in accordance with the H-REIT Trust Deed, remove the H-REITTrustee; and

• by Extraordinary Resolution and in accordance with the H-REIT Trust Deed, direct the H-REITTrustee to take any action pursuant to Section 295 of the SFA.

Any decision to be made by resolution of the holders of H-REIT Units other than the above shall bemade by Ordinary Resolution, unless an Extraordinary Resolution is required by the SFA, the CISCode, the Listing Manual or any other applicable laws and regulations.

Except as otherwise provided for in the H-REIT Trust Deed, 14 days’ notice at the least (not inclusiveof the day on which the notice is served or deemed to be served and of the day for which the noticeis given) of every meeting shall be given to the holders of H-REIT Units in the manner provided in theH-REIT Trust Deed. The quorum at a meeting shall not be less than two holders of H-REIT Unitspresent in person or by proxy of one-tenth in value of all H-REIT Units for the time being in issue. Eachnotice shall specify the place, day and hour of the meeting, and the terms of the resolutions to beproposed, and each such notice may, in general, be given by advertisement in the daily press and inwriting to each stock exchange on which H-REIT is listed.

Voting at a meeting shall be by a show of hands unless a poll is demanded by the chairman of themeeting, or by five or more holders of H-REIT Units present in person or by proxy, or holding orrepresenting one tenth in value of all H-REIT Units represented at the meeting. Holders of H-REIT Unitsdo not have different voting rights on account of the number of votes held by a particular holder ofH-REIT Units. On a show of hands, every holder of H-REIT Units has one vote. On a poll, every holderof H-REIT Units has one vote for each H-REIT Unit of which it is the holder. The H-REIT Trust Deeddoes not contain any limitation on non-Singapore resident or foreign holders of H-REIT Units holdingH-REIT Units or exercising the voting rights with respect to their holdings of H-REIT Units.

Rights and Liabilities of the Holders of H-REIT Units

The key rights of the holders of H-REIT Units include rights to:

• receive income and other distributions attributable to H-REIT Units held;

• receive audited financial statements and the annual reports of H-REIT; and

• participate in the termination of H-REIT by receiving a share of all net cash proceeds derived fromthe realisation of the assets of H-REIT less any liabilities, in accordance with their proportionateinterests in H-REIT.

No holder of H-REIT Units has a right to require that any asset of H-REIT be transferred to him.

178

Further, the holders of H-REIT Units cannot give any directions to the H-REIT Manager or the H-REITTrustee (whether at a meeting of holders of H-REIT Units or otherwise) if it would require the H-REITManager or the H-REIT Trustee to do or omit from doing anything which may result in:

• H-REIT ceasing to comply with applicable laws and regulations; or

• the exercise of any discretion expressly conferred on the H-REIT Manager or the H-REIT Trusteeby the H-REIT Trust Deed or the determination of any matter which, under the H-REIT Trust Deed,requires the agreement of either or both of the H-REIT Manager and the H-REIT Trustee.

The H-REIT Trust Deed contains provisions that are designed to limit the liability of a holder of H-REITUnits to the amount paid or payable for any H-REIT Unit. The provisions seek to ensure that if the issueprice of H-REIT Units held by a holder of H-REIT Units has been fully paid, no such holder of H-REITUnits, by reason alone of being a holder of H-REIT Units, will be personally liable to indemnify theH-REIT Trustee or any creditor of H-REIT in the event that the liabilities of H-REIT exceed its assets.

Under the H-REIT Trust Deed, every H-REIT Unit carries the same voting rights.

Amendment of the H-REIT Trust Deed

Subject to paragraph (3) below, save where an amendment to the H-REIT Trust Deed has beenapproved by an Extraordinary Resolution passed at a meeting of holders of H-REIT Units dulyconvened and held in accordance with the provisions of the H-REIT Trust Deed, no amendment maybe made to the provisions of the H-REIT Trust Deed unless the H-REIT Trustee certifies, in its opinion,that such amendment:

(1) does not materially prejudice the interests of the holders of H-REIT Units and does not operateto release to any material extent the H-REIT Manager or the H-REIT Trustee from anyresponsibility to the holders of H-REIT Units;

(2) is necessary in order to comply with applicable fiscal, statutory or official requirements (whetheror not having the force of law); or

(3) is made to correct a manifest error.

No such amendment shall impose upon any holder of H-REIT Units any obligation to make any furtherpayments in respect of his H-REIT Units or to accept any liability in respect thereof.

Notwithstanding any of the above, the H-REIT Manager and the H-REIT Trustee may, with the writtenapproval of the competent authorities, alter certain provisions in Clause 9 of the H-REIT Trust Deedrelating to the use of derivatives.

Substantial H-REIT Unitholdings

The H-REIT Trust Deed and the HBT Trust Deed contain provisions relating to reporting requirementsapplicable to Substantial H-REIT Unitholders and Substantial HBT Unitholders, as required under theSFA and the BTA.

As the Stapled Securities comprise H-REIT Units and HBT Units stapled together, the holders of theStapled Securities have to comply with the regulatory requirements imposed on both H-REIT and HBT,including that of the requirement to disclose substantial holdings.

With regard to H-REIT, Substantial H-REIT Unitholders will be required to notify the H-REIT Trustee andthe SGX-ST of their deemed and direct holdings and any subsequent change in the percentage levelof such holdings or their ceasing to hold 5.0% or more of the total number of H-REIT Units within twoBusiness Days of acquiring such holdings or of such changes or such cessation. Failure to comply withthe notification requirements of the SFA constitutes an offence and will render a Substantial H-REITUnitholder liable to a fine on conviction.

179

The H-REIT Manager also has power under the H-REIT Trust Deed to require information to beprovided where it has reasonable cause to believe that the relevant SFA provisions have beentriggered. Failure to comply with a request of the H-REIT Manager or with the SFA requirements willalso entitle the H-REIT Manager to take various actions with respect to the particular H-REIT Units,including suspending voting rights and suspending distribution entitlements.

With regard to HBT, under Section 38 of the BTA, Substantial HBT Unitholders will be required to notifythe HBT Trustee-Manager of their deemed and direct holdings and any subsequent change in thepercentage level of such holdings (rounded down to the next whole number) or their ceasing to holdsuch number of HBT Units to which is attached not less than 5.0% of the total votes attached to all thevoting HBT Units issued for the time being 5.0% or more of the total number of HBT Units, within twoBusiness Days after they become aware of such changes or such cessation (as the case may be).

Under Section 37 of the BTA, Substantial HBT Unitholders must also, within the same time limit, submitsuch notifications to the SGX-ST.

Failure to comply with either Section 38 or Section 37 of the BTA constitutes an offence and will rendera Substantial HBT Unitholder liable to a fine on conviction.

The H-REIT Manager Board’s Declaration of Holdings of H-REIT Units

Under the H-REIT Trust Deed, the H-REIT Manager Directors are required to give notice to the H-REITManager of their acquisition of H-REIT Units or of changes to the number of H-REIT Units which theyhold or in which they have an interest, within two Business Days after such acquisition or theoccurrence of the event giving rise to changes in the number of H-REIT Units which they hold or inwhich they have an interest, as applicable. Upon such notification, the H-REIT Manager will promptlyannounce such interests or changes to the SGX-ST.

A H-REIT Manager Director is deemed to have an interest in H-REIT Units in the followingcircumstances:

• Where he is the beneficial owner of a H-REIT Unit (whether directly through a direct SecuritiesAccount or indirectly through a depository agent or otherwise), he is deemed to have an interestin that H-REIT Unit;

• Where a body corporate is the beneficial owner of a H-REIT Unit and he is entitled to exercise orcontrol the exercise of not less than 20.0% of the votes attached to the voting shares in the bodycorporate, he is deemed to have interest in that H-REIT Unit;

• Where his spouse or infant child (including step-child and adopted child) has any interest in aH-REIT Unit, he is deemed to have an interest in that H-REIT Unit;

• Where he, his spouse or infant child (including step-child and adopted child):

— has entered into a contract to purchase a H-REIT Unit;

— has a right to have a H-REIT Unit transferred to any of them or to their order, whether theright is exercisable presently or in the future and whether on the fulfilment of a condition ornot;

— has the right to acquire a H-REIT Unit under an option, whether the right is exercisablepresently or in the future and whether on the fulfilment of a condition or not; or

— is entitled (otherwise than by reason of any of them having been appointed a proxy orrepresentative to vote at a meeting of holders of H-REIT Units) to exercise or control theexercise of a right attached to a H-REIT Unit, not being a H-REIT Unit of which any of themis the holder,

that director is deemed to have an interest in that H-REIT Unit; and

180

• Where the property subject to a trust consists of, or includes, a H-REIT Unit and the H-REITManager Director knows or has reasonable grounds for believing that he has an interest under thetrust and the property subject to the trust consists of or includes such H-REIT Unit, he is deemedto have an interest in that H-REIT Unit.

The H-REIT Trustee

The trustee of H-REIT is DBS Trustee Limited. The H-REIT Trustee is a company incorporated inSingapore and registered as a trust company under the Trust Companies Act. It is approved to act asa trustee for authorised collective investment schemes under the SFA. The H-REIT Trustee has apaid-up capital of S$2.5 million. The H-REIT Trustee has a place of business in Singapore at 6 ShentonWay #36-02, DBS Building Tower One, Singapore 068809. The H-REIT Trustee is independent of theH-REIT Manager.

Powers, Duties and Obligations of the H-REIT Trustee

The H-REIT Trustee’s powers, duties and obligations are set out in the H-REIT Trust Deed. The powersand duties of the H-REIT Trustee include:

• acting as trustee of H-REIT and, in such capacity, safeguarding the rights and interests of theholders of H-REIT Units, for example, by satisfying itself that transactions it enters into for and onbehalf of H-REIT with a Related Party of the H-REIT Manager or H-REIT are conducted on normalcommercial terms, are not prejudicial to the interests of H-REIT and the holders of H-REIT Units,and in accordance with all applicable requirements under the Property Funds Guidelines and/orthe Listing Manual relating to the transaction in question;

• holding the assets of H-REIT on trust for the benefit of the holders of H-REIT Units in accordancewith the H-REIT Trust Deed;

• lending moneys out of the assets of H-REIT for the benefit of the holders of the Stapled Securitiesin accordance with the H-REIT Trust Deed; and

• exercising all the powers of a trustee and the powers that are incidental to the ownership of theassets of H-REIT.

The H-REIT Trustee has covenanted in the H-REIT Trust Deed that it will exercise all due diligence andvigilance in carrying out its functions and duties, and in safeguarding the rights and interests of theholders of H-REIT Units.

In the exercise of its powers, the H-REIT Trustee may (on the recommendation of the H-REIT Manager)and subject to the provisions of the H-REIT Trust Deed, acquire or dispose of any real or personalproperty, borrow and encumber any asset.

The H-REIT Trustee may, subject to the provisions of the H-REIT Trust Deed, appoint and engage:

• a person or entity to exercise any of its powers or perform its obligations; and

• any real estate agents or managers, including a Related Party of the H-REIT Manager, in relationto the management, development, leasing, purchase or sale of any real estate assets and realestate-related assets.

Although the H-REIT Trustee may borrow money and obtain other financial accommodation for thepurposes of H-REIT and on-lend money to HBT, both on a secured and unsecured basis, the H-REITManager must not direct the H-REIT Trustee to incur a liability if to do so would mean that total liabilitiesof H-REIT exceed 35.0% (up to a maximum of 60.0%) of the value of the H-REIT Deposited Propertyat the time the borrowing is incurred, taking into account deferred payments (including deferredpayments for assets whether to be settled in cash or in units of H-REIT). The Property FundsGuidelines allow H-REIT to borrow more than 35.0% of the value of the H-REIT Deposited Propertyonly if a credit rating from Fitch Inc., Moody’s or Standard and Poor’s is obtained and disclosed to thepublic.

181

The H-REIT Trustee must carry out its functions and duties and comply with all the obligations imposedon it and set out in the H-REIT Trust Deed, the Listing Manual, the SFA, the CIS Code (including theProperty Funds Guidelines), the Tax Ruling and all other relevant laws. It must retain H-REIT’s assets,or cause H-REIT’s assets to be retained, in safe custody and cause H-REIT’s accounts to be audited.It can appoint valuers to value the real estate assets and real estate-related assets of H-REIT.

The H-REIT Trustee is not personally liable to a holder of H-REIT Units in connection with the office ofthe H-REIT Trustee except in respect of its own fraud, gross negligence, wilful default, breach of trustor breach of the H-REIT Trust Deed. Any liability incurred and any indemnity to be given by the H-REITTrustee shall be limited to the assets of H-REIT over which the H-REIT Trustee has recourse, providedthat the H-REIT Trustee has acted without fraud, gross negligence, wilful default, breach of trust orbreach of the H-REIT Trust Deed. The H-REIT Trust Deed contains certain indemnities in favour of theH-REIT Trustee under which it will be indemnified out of the assets of H-REIT for liability arising inconnection with certain acts or omissions. These indemnities are subject to any applicable laws.

Retirement and Replacement of the H-REIT Trustee

The H-REIT Trustee may retire or be replaced under the following circumstances:

• The H-REIT Trustee shall not be entitled to retire voluntarily except upon the appointment of a newtrustee (such appointment to be made in accordance with the provisions of the H-REIT TrustDeed); and

• The H-REIT Trustee may be removed by notice in writing to the H-REIT Trustee by the H-REITManager:

— if the H-REIT Trustee goes into liquidation (except a voluntary liquidation for the purpose ofreconstruction or amalgamation upon terms previously approved in writing by the H-REITManager) or if a receiver is appointed over any of its assets or if a judicial manager isappointed in respect of the H-REIT Trustee;

— if the H-REIT Trustee ceases to carry on business;

— if the H-REIT Trustee fails or neglects after reasonable notice from the H-REIT Manager tocarry out or satisfy any material obligation imposed on the H-REIT Trustee by the H-REITTrust Deed;

— if the holders of H-REIT Units by Extraordinary Resolution duly passed at a meeting ofholders of H-REIT Units held in accordance with the provisions of the H-REIT Trust Deed,and of which not less than 21 days’ notice has been given to the H-REIT Trustee and theH-REIT Manager, shall so decide; or

— if the MAS directs that the H-REIT Trustee be removed.

Trustee’s Fee

Under the H-REIT Trust Deed, the maximum fee payable to the H-REIT Trustee is 0.1% per annum ofthe value of the H-REIT Deposited Property, subject to a minimum of S$10,000 per month, excludingout-of-pocket expenses and GST. In addition, H-REIT will pay the H-REIT Trustee a one-time inceptionfee of S$15,000.

For the purpose of calculating the H-REIT Trustee’s fee, if H-REIT holds only a partial interest in anyof the H-REIT Deposited Property, such Deposited Property shall be pro-rated in proportion to thepartial interest held.

The actual fee payable to the H-REIT Trustee will be determined between the H-REIT Manager and theH-REIT Trustee from time to time. The H-REIT Trustee’s fee is presently charged on a scaled basis ofup to 0.02% per annum of the value of the H-REIT Deposited Property.

182

Any increase in the maximum permitted amount or any change in the structure of the H-REIT Trustee’sfee must be passed by an Extraordinary Resolution of the holders of H-REIT Units at a meetingconvened and held in accordance with the provisions of the H-REIT Trust Deed.

Termination of H-REIT

Under the provisions of the H-REIT Trust Deed, the duration of H-REIT shall end on the earliest of:

• the date on which H-REIT is terminated by the H-REIT Manager in such circumstances as set outunder the provisions of the H-REIT Trust Deed, as described below; or

• the date on which H-REIT is terminated by the H-REIT Trustee in such circumstances as set outunder the provisions of the H-REIT Trust Deed, as described below.

The H-REIT Manager may in its absolute discretion terminate H-REIT by giving notice in writing to allthe holders of H-REIT Units and the H-REIT Trustee not less than three months in advance and to theMAS not less than seven days before the termination in any of the following circumstances:

• if any law shall be passed which renders it illegal or in the opinion of the H-REIT Managerimpracticable or inadvisable to continue H-REIT;

• if the net asset value of the H-REIT Deposited Property shall be less than S$50.0 million after theend of the first anniversary of the date of the H-REIT Trust Deed or any time thereafter; and

• if at any time H-REIT becomes unlisted after it has been listed.

Subject to the SFA and any other applicable law or regulation, H-REIT may be terminated by theH-REIT Trustee by notice in writing in any of the following circumstances, namely:

• if the H-REIT Manager shall go into liquidation (except a voluntary liquidation for the purpose ofreconstruction or amalgamation upon terms previously approved in writing by the H-REIT Trustee)or if a receiver is appointed over any of its assets or if a judicial manager is appointed in respectof the H-REIT Manager or if any encumbrancer shall take possession of any of its assets or if itshall cease business and the H-REIT Trustee fails to appoint a successor manager in accordancewith the provisions of the H-REIT Trust Deed;

• if any law shall be passed which renders it illegal or in the opinion of the H-REIT Trusteeimpracticable or inadvisable to continue H-REIT; and

• if within the period of three months from the date of the H-REIT Trustee expressing in writing tothe H-REIT Manager the desire to retire the H-REIT Manager shall have failed to appoint a newtrustee in accordance with the provisions of the H-REIT Trust Deed.

The decision of the H-REIT Trustee in any of the events specified above shall be final and binding uponall the parties concerned but the H-REIT Trustee shall be under no liability on account of any failure toterminate H-REIT pursuant to the paragraph above or otherwise. The H-REIT Manager shall accept thedecision of the H-REIT Trustee and relieve the H-REIT Trustee of any liability to it therefor and hold itharmless from any claims whatsoever on its part for damages or for any other relief.

Generally, upon the termination of H-REIT, the H-REIT Trustee shall, subject to any authorisations ordirections given to it by the H-REIT Manager or the holders of H-REIT Units pursuant to the H-REITTrust Deed, sell the H-REIT Deposited Property and repay any borrowings incurred on behalf of H-REITin accordance with the H-REIT Trust Deed (together with any interest accrued but remaining unpaid)as well as all other debts and liabilities in respect of H-REIT before distributing the balance of theH-REIT Deposited Property to the holders of H-REIT Units in accordance with their proportionateinterests in H-REIT.

183

THE FORMATION AND STRUCTURE OF HBT

HBT was constituted as a business trust on 12 June 2006 by a declaration of trust made by the HBTTrustee-Manager. HBT was registered on 12 June 2006.

Pursuant to Section 36 of the BTA and Clause 6.1 of the HBT Trust Deed, no HBT Units may be issuedwithout the prior approval of the holders of HBT Units in general meeting by passing an OrdinaryResolution in accordance with the BTA. By subscribing for the Stapled Securities pursuant to or inconnection with the Offering, holders of the Stapled Securities are deemed to have approved the issueof HBT Units pursuant to or in connection with the Offering under Section 36 of the BTA and Clause 6.1of the HBT Trust Deed.

With regard to the issue of additional HBT Units, as the HBT Units are stapled with the H-REIT Units,such issue must comply with both the regulatory requirements imposed on H-REIT and HBT.Accordingly, following the recent amendments to the Listing Manual concerning the issue of additionalunits by a REIT which will take effect from 1 September 2006, the holders of HBT Units must give ageneral mandate (which is to be renewed every financial year) by Ordinary Resolution in a generalmeeting of the holders of HBT Units before the HBT Trustee-Manager can issue additional HBT Units.The scope of the general mandate is limited to the issue of an aggregate number of additional HBTUnits which must not exceed 50.0% of the total number of HBT Units in issue, of which the aggregatenumber of additional HBT Units to be issued other than on a pro rata basis to the existing holders ofHBT Units must not exceed 20.0% of the total number of HBT Units in issue.

The HBT Trust Deed

HBT is a registered business trust constituted by the HBT Trust Deed and principally regulated by theSFA and the BTA.

The provisions of the BTA prescribe certain terms of the HBT Trust Deed, certain rights, duties andobligations of the HBT Trustee-Manager, and (while H-REIT Units remain stapled to HBT Units) theholders of the Stapled Securities.

In addition, the terms and conditions of the HBT Trust Deed shall be binding on each holder of HBTUnits (and persons claiming through such holder) as if such holder had been a party to the HBT TrustDeed and as if the HBT Trust Deed contains covenants by such holder to observe and be bound by theprovisions of the HBT Trust Deed and an authorisation by each holder of HBT Units to do all such actsand things as the HBT Trust Deed may require the HBT Trustee-Manager to do. However, while H-REITUnits remain stapled to HBT Units, the terms and conditions of the Stapling Deed will prevail in theevent of any inconsistencies with those of the HBT Trust Deed.

The HBT Units and the Holders of HBT Units

The rights and interests of holders of HBT Units are contained in the HBT Trust Deed. Under the HBTTrust Deed, these rights and interests are safeguarded by the HBT Trustee-Manager.

Each HBT Unit represents an undivided interest in HBT. Holders of HBT Units have no equitable orproprietary interest in the underlying assets of HBT and are not entitled to the transfer to it of any asset(or any part thereof) or of any real estate, any interest in any asset and any real estate-related assets(or any part thereof) of HBT. The rights of the holders of HBT Units are limited to the right to require dueadministration of HBT in accordance with the provisions of the HBT Trust Deed, including, withoutlimitation, by suit against the HBT Trustee-Manager.

184

Under the HBT Trust Deed, each holder of HBT Units acknowledges and agrees that it will notcommence or pursue any action against the HBT Trustee-Manager seeking an order for specificperformance or for injunctive relief in respect of the assets of HBT (or any part thereof), including all itsAuthorised Investments (as defined in the HBT Trust Deed), and waives any rights it may otherwisehave to such relief. If the HBT Trustee-Manager breaches or threatens to breach its duties orobligations to holders of HBT Units under the HBT Trust Deed, recourse by the holders of HBT Unitsagainst the HBT Trustee-Manager is limited to a right to recover damages or compensation from theHBT Trustee-Manager in a court of competent jurisdiction, and holders of HBT Units acknowledge andagree that damages or compensation is an adequate remedy for such breach or threatened breach.

Further, unless otherwise expressly provided in the HBT Trust Deed, holders of HBT Units may notinterfere or seek to interfere with the rights, powers, authority or discretion of the HBT Trustee-Manager,exercise any right in respect of the assets of HBT or any part thereof, or require that any AuthorisedInvestments forming part of the assets of HBT be transferred to such holders of HBT Units.

No certificate shall be issued to holders of HBT Units by the HBT Trustee-Manager in respect of HBTUnits issued to holders of HBT Units. For so long as CDL Hospitality Trusts is listed, quoted and tradedon the SGX-ST, the HBT Trustee-Manager shall pursuant to the Depository Services Agreementappoint CDP as the depository for the Stapled Securities, and all HBT Units issued as part of theStapled Securities will be represented by entries in both the register of holders of HBT Units kept by theHBT Trustee-Manager or the agent appointed by it and the register of holders of the Stapled Securitiesjointly kept by the H-REIT Trustee and the HBT Trustee-Manager or their agents in the name of, anddeposited with, CDP as the registered holder of such Stapled Securities. The H-REIT Manager and theHBT Trustee-Manager or their jointly appointed agent shall issue to CDP not more than 10 BusinessDays after the issue of Stapled Securities a confirmation note confirming the date of issue and thenumber of Stapled Securities so issued and, if applicable, also stating that the Stapled Securities areissued under a lock-up and the expiry date of such lock-up and for the purposes of the HBT Trust Deedand the Stapling Deed, such confirmation note shall be deemed to be a certificate evidencing title to theHBT Units and the corresponding Stapled Securities issued.

There are no restrictions under the HBT Trust Deed or Singapore law on a person’s right to purchase(or subscribe for) HBT Units and to own HBT Units except in the case of rights issue where the HBTTrustee-Manager has the right under the HBT Trust Deed to elect not to extend an offer of HBT Unitsunder rights issue to holders of HBT Units whose addresses are outside Singapore.

Changes in Equity of the Holders of HBT Units

The HBT Trustee-Manager may at any time and on prior written notice (such notice period shall bedetermined by the HBT Trustee-Manager in its absolute discretion) to each holder of HBT Units (or,when HBT is listed) by the HBT Trustee-Manager delivering such notice in writing to CDP for onwarddelivery to the holders of HBT Units), determine that each HBT Unit shall be sub-divided into two ormore HBT Units or consolidated with one or more other HBT Units and the holders of HBT Units shallbe bound accordingly.

The Register shall be altered accordingly to reflect the new number of HBT Units held by each HBTUnitholder as a result of such sub-division or consolidation and the HBT Trustee-Manager shall causeCDP to alter the depository register accordingly in respect of each relevant HBT Unitholder’s SecuritiesAccount to reflect the new number of HBT Units held by such HBT Unitholder as a result of suchsub-division or consolidation.

185

Rights, Preferences and Restrictions Attaching to Each Class of HBT Units

The HBT Trust Deed provides that rights attached to the HBT Units issued with special conditions haveto be clearly defined in the HBT Trust Deed and, if at any time, different classes of HBT Units areissued, the rights attached to any class (unless otherwise provided by the terms of issue of the HBTUnits of that class) may, subject to the provisions of any applicable laws, regulations and guidelines, bevaried or abrogated with the sanction of an Extraordinary Resolution passed at a separate meeting ofthe holders of HBT Units of that class.

Currently, there is only one class of HBT Units and every HBT Unit carries the same voting rights. Underthe BTA, only persons registered in the statutory register maintained by the HBT Trustee-Manager arerecognised as registered holders of the HBT Units in issue. In the event that HBT is listed on theSGX-ST, the CDP shall be the registered holder of all the HBT Units in issue and the CDP shallpursuant to a depository services agreement maintain a record in a depository register of the holdersof HBT Units having HBT Units credited into their respective Securities Accounts and to record in thedepository register the following information stated below in relation to each namely:

(1) the names and addresses of the holders of HBT Units;

(2) the number of HBT Units held by each holder of HBT Units;

(3) the date on which every such person entered in respect of the HBT Units standing in his namebecame a holder of HBT Units and, where he became a holder of HBT Units by virtue of aninstrument of transfer, a sufficient reference to enable the name and address of the transferor tobe identified; and

(4) the date on which any transfer is registered and the name and address of the transferee.

Each holder of HBT Units named in the depository register shall for such period as the HBT Units areentered against his name in the depository register, be deemed to be the owner in respect of thenumber of HBT Units entered against the name of such holder of HBT Units in the depository registerand the HBT Trustee-Manager shall be entitled to rely on any and all such information in the depositoryregister.

The entries in the depository register shall (save in the case of manifest error) be conclusive evidenceof the number of HBT Units held by each holder of HBT Units and in the event of any discrepancybetween the entries in the depository register and the details appearing in any confirmation note ormonthly statement issued by CDP, the entries in the depository register shall prevail unless the holderof HBT Units proves to the satisfaction of the HBT Trustee-Manager and CDP that the depositoryregister is incorrect.

Distributions

Subject to applicable laws, regulations and guidelines, and the HBT Trust Deed, the HBT Trustee-Manager shall have the right to make regular distributions of all (or such lower percentage as the HBTTrustee-Manager may determine) net tax-exempt income to Holders at such intervals as the HBTTrustee-Manager shall decide in its absolute discretion, and the HBT Trustee-Manager may distributeall (or such lower percentage as the HBT Trustee-Manager may determine) net taxable income at suchtime as the HBT Trustee-Manager may in its absolute discretion deem fit. Any moneys payable toholders of HBT Units which remain unclaimed after a period of 12 months shall be accumulated in aspecial account (the “Unclaimed Moneys Account”) from which the HBT Trustee-Manager may, fromtime to time, make payments to holders of HBT Units claiming any such moneys. Subject to thewinding-up provisions in the HBT Trust Deed, the HBT Trustee-Manager, may, at its discretion and ifpracticable, cause such sums which represent moneys remaining in the Unclaimed Moneys Account forfive years after the date of payment of such moneys into the Unclaimed Moneys Account and interest,if any, earned thereon, to be paid into the Courts of Singapore after deducting from such sums all fees,

186

costs and expenses incurred in relation to such payment into the Courts of Singapore1. If the saidmoneys are insufficient to meet all such fees, costs and expenses, the HBT Trustee-Manager shall beentitled to have recourse to the HBT Deposited Property.

Voting Rights

A holder of HBT Units is entitled to attend, speak and vote at any general meeting of the holders of HBTUnits in person or by proxy and a holder of HBT Units may appoint not more than two proxies to attendand vote at the same general meeting as an HBT Unitholder if his name appears on the depositoryregister as at 48 hours before the time of the relevant general meeting as certified by the CDP to HBT.Except as otherwise provided in the HBT Trust Deed, not less than two holders of HBT Units must bepresent in person or by proxy of one-tenth in value of all the HBT Units for the time being in issue toconstitute a quorum at any general meeting. Under the HBT Trust Deed, on a show of hands everyholder of HBT Units present in person or by proxy shall have one vote, and on a poll, every holder ofHBT Units who is present in person or by proxy shall have one vote for every HBT Unit which he holdsor represents. A poll may be demanded in certain circumstances, including by the chairman of thegeneral meeting or by five or more holders of HBT Units (including their proxies) having the right to voteat the general meeting or by holders of HBT Units (including their proxies) representing not less than10.0% of the total voting rights of all the holders of HBT Units having the right to vote at the generalmeeting.

Variation of Rights of Respective Classes of HBT Units

If at any time different classes of HBT Units are issued, the rights attached to any class (unlessotherwise provided by the terms of issue of the HBT Units of that class) may, subject to any applicablelaws, regulations and guidelines, whether or not HBT is being wound up, be varied or abrogated withthe sanction of an Extraordinary Resolution passed at a separate meeting of the holders of HBT Unitsof that class. To every such separate meeting of the holders of HBT Units of that class the provisionsof the HBT Trust Deed relating to general meetings of the holders of HBT Units shall mutatis mutandisapply; but so that the necessary quorum shall be two persons at least holding or representing by proxyor by attorney one-third of the issued HBT Units of the class and that any HBT Unitholder of that classpresent in person or by proxy or by attorney may demand a poll.

The rights conferred upon the holders of HBT Units of any class issued with preferred or other rightsshall, unless otherwise expressly provided by the terms of issue of the HBT Units of that class or by theHBT Trust Deed as are in force at the time of such issue, be deemed to be varied by the creation orissue of further HBT Units ranking equally therewith.

The HBT Trust Deed does not impose more stringent conditions for the variation of rights of respectiveclasses of HBT Units, if any, than those required by the applicable law.

Issue of HBT Units

The HBT Trustee-Manager has the exclusive right to issue HBT Units for the account of HBT. For solong as HBT is listed on the SGX-ST, the HBT Trustee-Manager may, subject to the provisions of theListing Manual, the HBT Trust Deed, the BTA and any other relevant laws, regulations and guidelines,issue HBT Units.

1 The Trustees Act, Chapter 337 of Singapore, allows a trustee to discharge its liabilities towards unclaimed moneys by payingsuch moneys into Singapore courts, although it does not prescribe the period for which the moneys must be unclaimedbefore they may be paid into the courts. Although the Trustees Act is not applicable to a registered business trust, as amatter of prudence, the HBT Trust Deed has provided that the HBT Trustee-Manager may pay unclaimed moneys into thecourts.

187

If in connection with an issue of a HBT Unit, any requisite payment of the issue price for such HBT Unithas not been received by the HBT Trustee-Manager before the seventh Business Day after the HBTUnit was agreed to be issued (or such other later date as the HBT Trustee-Manager may decide), theHBT Trustee-Manager may cancel its agreement to issue such HBT Unit and such HBT Unit will bedeemed never to have been issued or agreed to be issued. In such an event, the HBT Trustee-Managermay, at its discretion, charge the investor (and retain the same for its own account) a cancellation feeof such amount as the HBT Trustee-Manager may from time to time determine to represent theadministrative costs involved in processing the application for such HBT Unit.

Suspension of Issue of HBT Units

The HBT Trustee-Manager may, subject to the Listing Manual, suspend the issue of HBT Units during:

• any period when the SGX-ST or any other relevant Recognised Stock Exchange is closed(otherwise than for public holidays) or during which dealings are restricted or suspended;

• the existence of any state of affairs which, in the opinion of the HBT Trustee-Manager, mightseriously prejudice the interests of the holders of HBT Units as a whole or the HBT DepositedProperty;

• any breakdown in the means of communication normally employed in determining the price of anyassets of HBT or the current price thereof on the SGX-ST or any other relevant Recognised StockExchange, or when for any reason the prices of any assets of HBT cannot be promptly andaccurately ascertained;

• any period when remittance of money which will or may be involved in the realisation of any assetof HBT or in the payment for such asset of HBT cannot, in the opinion of the HBT Trustee-Manager, be carried out at normal rates of exchange;

• any 48-hour period before any general meeting of the holders of HBT Units or any adjournmentthereof;

• any period where the issuance of HBT Units is suspended pursuant to any order or directionissued by the MAS; or

• when the business operations of the HBT Trustee-Manager in relation to HBT are substantiallyinterrupted or closed as a result of, or arising from, pestilence, acts of war, terrorism, insurrection,revolution, civil unrest, riots, strikes or acts of God.

Such suspension shall take effect forthwith upon the declaration in writing thereof by the HBTTrustee-Manager and shall terminate on the day following the first Business Day on which the conditiongiving rise to the suspension ceases to exist and no other conditions under which suspension isauthorised (as set out above) exists, upon the declaration in writing thereof by the HBT Trustee-Manager.

In the event of any suspension while HBT is listed on the SGX-ST, the HBT Trustee-Manager shallensure that the immediate announcement of such suspension is made through the SGX-ST.

Rights and Liabilities of the Holders of HBT Units

The rights of the holders of HBT Units include rights to:

• receive income and other distributions attributable to the HBT Units held;

• receive audited accounts and the annual reports of HBT; and

• participate in the termination of HBT by receiving a share of all net cash proceeds derived fromthe realisation of the assets of HBT less any liabilities, in accordance with their proportionateinterests in HBT.

188

No holder of HBT Units has a right to require that any asset of HBT be transferred to him.

Further, holders of HBT Units cannot give any directions to the HBT Trustee-Manager (whether at ameeting of the holders of HBT Units or otherwise) if it would require the HBT Trustee-Manager to door omit doing anything which may result in:

• HBT ceasing to comply with applicable laws and regulations; or

• the exercise of any discretion expressly conferred on the HBT Trustee-Manager by the HBT TrustDeed.

The HBT Trust Deed contains provisions that are designed to limit the liability of a holder of HBT Unitsto the amount paid or payable for any HBT Unit. The provisions seek to ensure that if the issue priceof the HBT Units held by a holder of HBT Units has been fully paid, no such holder of HBT Units, byreason alone of being a holder of HBT Units, will be personally liable to indemnify the HBTTrustee-Manager or any creditor of HBT in the event that the liabilities of HBT exceed its assets.

Limitation on Right to Own HBT Units

HBT Units Issued to Persons Resident Outside Singapore

In relation to any rights issue, the HBT Trustee-Manager may in its absolute discretion elect not toextend an offer of HBT Units under the rights issue to those holders of HBT Units, whose addressesare outside Singapore. In such event, the rights or entitlements to the HBT Units of such holders of HBTUnits will be offered for sale by the HBT Trustee-Manager as the nominee and authorised agent of eachsuch relevant HBT Unitholder in such manner and at such price, as the HBT Trustee-Manager maydetermine.

Where necessary, the HBT Trustee-Manager shall have the discretion to impose such other terms andconditions in connection with the sale. The proceeds of any such sale, if successful, will be paid to therelevant holders of HBT Units whose rights or entitlements have been thus sold, provided that wheresuch proceeds payable to the relevant holders of HBT Units are less than S$10.00, the HBTTrustee-Manager shall be entitled to retain such proceeds as part of the HBT Deposited Property.

Amendments to the HBT Trust Deed

The HBT Trust Deed provides that any modification, alteration or addition to the HBT Trust Deed shallonly be in accordance with applicable laws, regulations and guidelines. As such, pursuant to Section31 of the BTA, the HBT Trust Deed may not be modified or replaced unless such modification orreplacement is approved:

• by Extraordinary Resolution of the holders of HBT Units; or

• by the HBT Trustee-Manager, where the modification is necessary in order to comply with anywritten law or rule of law applicable in Singapore.

Notwithstanding the above, any modification or replacement of the HBT Trust Deed which will result ina removal of provision from the HBT Trust Deed for any of the following is not permissible:

• such particulars as are sufficient to define the scope of HBT and disclose the structure of, and thenature of HBT Units;

• the powers of the HBT Trustee-Manager in relation to managing and operating the business ofHBT;

• the duration of HBT;

• the conditions governing the transfer of HBT Units;

189

• the full particulars of the remuneration of the HBT Trustee-Manager and the manner in which thatremuneration is provided for;

• the full particulars of any other fees or charges payable out of the HBT Deposited Property;

• the provision for the winding up of HBT; and

• such matters as may be prescribed by the MAS.

Circumstances under which the HBT Trustee-Manager may be Indemnified out of the HBTDeposited Property

In general, subject to any express provision under the HBT Trust Deed and without prejudice to anyright of indemnity at law given to the HBT Trustee-Manager, the HBT Trustee-Manager is entitled for thepurpose of indemnity against any actions, costs, claims, damages, expenses or demands to which itmay be put as HBT’s trustee-manager to have recourse to the HBT Deposited Property or any partthereof, save where such action, cost, claim, damage, expense or demand is occasioned by the fraud,wilful default or breach of trust by the HBT Trustee-Manager where the HBT Trustee-Manager fails toexercise the degree of care and diligence required of a trustee-manager of a registered business trustunder the BTA.

Circumstances under which the HBT Trustee-Manager may Exclude Liability in Relation toCarrying Out of Its Duties With Respect to HBT

Subject to the duties and obligations of the HBT Trustee-Manager under the HBT Trust Deed, the HBTTrustee-Manager shall not be liable for any act or omission of in relation to HBT save where there is,on the part of the HBT Trustee-Manager, fraud, wilful default or breach of trust where the HBTTrustee-Manager fails to exercise the degree of care and diligence required of a trustee-manager of aregistered business trust under the BTA.

In the absence of fraud, wilful default or breach of trust by the HBT Trustee-Manager where the HBTTrustee-Manager fails to exercise the degree of care and diligence required of a trustee-manager of aregistered business trust under the BTA, the HBT Trustee-Manager shall not incur any liability to theholders of HBT Units by reason of any error of law or any matter or thing done or suffered or omittedto be done by it in good faith under the HBT Trust Deed.

Removal of the HBT Trustee-Manager and appointment of new trustee-manager

The HBT Trust Deed provides that appointment and removal of the HBT Trustee-Manager shall only bein accordance with applicable laws, regulations and guidelines. (See “Management and CorporateGovernance — HBT — Retirement or Removal of HBT Trustee-Manager” for details.)

Change in the Fees and Charges Payable to the HBT Trustee-Manager

An Extraordinary Resolution of the holders of HBT Units is required to approve:

• any increase in the rate or any change in the structure of the HBT Trustee-Manager’smanagement fee or trustee fee; and

• any increase above the permitted limit of the HBT Trustee-Manager’s acquisition fee or anychange in its structure.

190

Winding-Up

In the event that any law is passed which renders it illegal or, in the opinion of the HBTTrustee-Manager, impracticable or inadvisable to continue HBT, HBT may be wound up subject toapproval by not less than a majority of number of votes of the holders of HBT Units in a generalmeeting.

HBT may also be wound up upon the passing of an Extraordinary Resolution by the holders of HBTUnits pursuant to Section 45 of the BTA.

Issue of Stapled Securities

For as long as H-REIT Units are stapled to HBT Units, the H-REIT Manager may only issue H-REITUnits if such issue is accompanied by the issue of HBT Units. Similarly, the HBT Trustee-Manager mayonly issue HBT Units if such issue is accompanied by the issue of H-REIT Units. For the avoidance ofdoubt, both the H-REIT Manager and the HBT Trustee-Manager must satisfy the requirements underthe H-REIT Trust Deed, the HBT Trust Deed and all applicable laws and regulations for the issue ofH-REIT and HBT Units before Stapled Securities can be issued. On the assumption that HBT Units willremain stapled to H-REIT Units, see the section “The Formation and Structure of H-REIT — Issue ofthe Stapled Securities” above for a discussion on the issue of Stapled Securities.

191

CERTAIN AGREEMENTS RELATING TO CDL HOSPITALITY TRUSTS, H-REIT,HBT AND THE PROPERTIES

The agreements discussed in this section are complex documents and the following is a summary only.Investors should refer to the agreements themselves to confirm specific information or for a detailedunderstanding of CDL Hospitality Trusts, H-REIT, HBT and the Properties. The agreements areavailable for inspection at the registered office of the H-REIT Manager at 36 Robinson Road, #04-01City House, Singapore 068877 for a period of six months from the date of this Prospectus.

Description of the Agreements to Acquire the Properties

Property Sale and Purchase Agreements

On 12 June 2006, the H-REIT Trustee entered into the Property Sale and Purchase Agreements withthe Vendors for the sale of leasehold titles in respect of the Properties to H-REIT. The principal termsof the Property Sale and Purchase Agreements are summarised below.

The sale of each property includes the plant and equipment on the property and the FF&E relating tothe hotel operations at the property.

The purchase price for Orchard Hotel and Orchard Hotel Shopping Arcade is S$364.6 million, GrandCopthorne Waterfront Hotel is S$234.1 million, M Hotel is S$161.5 million and Copthorne King’s Hotelis S$86.1 million.

Under each agreement, H-REIT will acquire a leasehold title as follows:

• in respect of Orchard Hotel and Orchard Hotel Shopping Arcade, a 75-year leasehold titlecommencing from the Listing Date to be comprised in a lease to be issued by City Hotels Pte. Ltd.to H-REIT;

• in respect of Grand Copthorne Waterfront Hotel, a 75-year leasehold title commencing from theListing Date to be comprised in a lease to be issued by CDL to H-REIT;

• in respect of M Hotel, a 75-year leasehold title commencing from the Listing Date to be comprisedin a lease to be issued by Harbour View Hotel Pte. Ltd. to H-REIT; and

• in respect of Copthorne King’s Hotel, the remainder of a 99-year leasehold title ending on 31January 2067 to be transferred by Republic Hotels & Resorts Limited to H-REIT;

Certain limited representations and warranties are made by each Vendor. Claims for breach ofwarranties are subject to an aggregate maximum limit per property, and must be made within 18months after completion.

On the Listing Date, the sale and purchase of Orchard Hotel and Orchard Hotel Shopping Arcade, MHotel, and Copthorne King’s Hotel must be concurrently completed together with the concurrentdelivery of possession of Grand Copthorne Waterfront Hotel to H-REIT. For Grand CopthorneWaterfront Hotel, the date (which must be the Listing Date) on which CDL delivers possession of GrandCopthorne Waterfront Hotel to H-REIT is hereinafter referred to as the “GCW Completion Date”.

Waterfront Conference Centre Lease Agreement

The sale of the 75-year leasehold title in respect of the Grand Copthorne Waterfront Hotel does notinclude the first and second levels of the adjoining Waterfront Plaza and the basement level car park.On the GCW Completion Date, the Waterfront Conference Centre located on level two of the WaterfrontPlaza will be leased by CDL to the H-REIT Trustee under the Waterfront Conference Centre LeaseAgreement for an initial term of five years at the monthly rent of S$37,762.20, excluding GST, with 14consecutive options to renew at the option of H-REIT for a renewal term of five (5) years each at theprevailing market rent at the time of exercise of each option to renew.

192

Under the Waterfront Conference Centre Sub-Lease Agreement which will be entered into by theH-REIT Trustee as landlord and the Master Lessee of Grand Copthorne Waterfront Hotel as tenant onthe GCW Completion Date, H-REIT will sub-lease to the Master Lessee the Waterfront ConferenceCentre with the Master Lessee paying to H-REIT the same rent and other sums that are payable byH-REIT to CDL under the Waterfront Conference Centre Lease Agreement. For so long as the MasterLease Agreement of Grand Copthorne Waterfront Hotel is subsisting, H-REIT intends to continue tosub-lease the Waterfront Conference Centre to the Master Lessee on the exercise by H-REIT of eachof its 14 consecutive options to renew under the Waterfront Conference Centre Lease Agreement.

Specific Terms Relevant to the Properties

Separate Title to Grand Copthorne Waterfront Hotel

Pursuant to the Property Sale and Purchase Agreement for Grand Copthorne Waterfront Hotel, CDLwill undertake to obtain within six months from GCW Completion Date all regulatory approvals for theexcision and creation of a separate strata lot to comprise Grand Copthorne Waterfront Hotel and legalcompletion will take place when regulatory approvals are obtained for the separate strata lot. On GCWCompletion Date, H-REIT will pay 90% of the purchase price to CDL and will acquire an equitable 75-year leasehold title and take possession of the property. On legal completion, H-REIT will pay thebalance 10% of the purchase price to CDL and register the lease of the property at the Singapore LandAuthority, and if the certificate(s) of statutory completion and possession of the 11 additional hotelrooms (referred to in the paragraph below) are not delivered to H-REIT on or before legal completion,a retention sum of S$5.0 million will be retained by H-REIT for payment to CDL only upon delivery toH-REIT of the certificate(s) of statutory completion and possession of the 11 additional hotel rooms.

Additional hotel rooms at Grand Copthorne Waterfront Hotel

Under the Property Sale and Purchase Agreement for Grand Copthorne Waterfront Hotel, CDL isrequired to carry out, complete the construction of and obtain the certificate(s) of statutory completionfor 11 additional hotel rooms on the 17th to 20th storeys of the Hotel by no later than 31 December 2006and in accordance with the quality and standard of the existing hotel rooms in the Hotel.

Occupation Agreements

In respect of Grand Copthorne Waterfront Hotel where the Master Lessee is Republic Hotels & ResortsLimited, all Occupation Agreements will be assigned by CDL, as Vendor, to the Master Lessee on theGCW Completion Date. Concurrent with the assignment of the Occupation Agreements, the tenancysecurity deposits held by the relevant Vendor in relation to such Occupation Agreements will betransferred to the Master Lessee and all bank/insurance company guarantees covering tenancysecurity deposits issued to CDL, as Vendor, for such Occupation Agreements will be assigned toRepublic Hotels & Resorts Limited as the Master Lessee.

In respect of Orchard Hotel, M Hotel, and Copthorne King’s Hotel where the relevant Vendors are therespective Master Lessees, all Occupation Agreements existing on completion date will continue to beheld by the respective Vendors after completion as sub-tenancies and sub-licences under therespective Master Lease Agreements.

In respect of Orchard Hotel Shopping Arcade which will not be leased to the Master Lessee, oncompletion of the Property Sale and Purchase Agreement, all Occupation Agreements will be assignedby the relevant Vendor to the H-REIT Trustee, as purchaser. Concurrently with the assignment of theOccupation Agreements, the tenancy security deposits held by the relevant Vendor in relation to suchOccupation Agreements will be transferred to H-REIT and all bank/insurance company guaranteescovering tenancy security deposits issued to the relevant Vendor for such Occupation Agreements willbe assigned to H-REIT.

193

Electricity Services Agreements

Electricity supplies to Orchard Hotel and Orchard Hotel Shopping Arcade are provided by Senokopursuant to an electricity supply agreement entered into between the relevant Vendor and Senoko, andelectricity supplies to Grand Copthorne Waterfront Hotel are provided by Senoko pursuant to anotherelectricity supply agreements entered into between the relevant Vendor and the Senoko retailer.

In respect of:

• Orchard Hotel and Orchard Hotel Shopping Arcade, the relevant Vendor as the Master Lessee willcontinue with the electricity supply agreement, and on completion the H-REIT Trustee will enterinto an electricity sharing agreement with the relevant Vendor to authorise the relevant Vendor topurchase electricity supply on H-REIT’s behalf for Orchard Hotel Shopping Arcade. H-REIT willperiodically reimburse the relevant Vendor as the Master Lessee for the electricity supplied toOrchard Hotel Shopping Arcade as ascertained from sub-meters installed at Orchard HotelShopping Arcade; and

• Grand Copthorne Waterfront Hotel, where the relevant Vendor is not the Master Lessee, theelectricity supply agreement will be novated to the Master Lessee on the GCW Completion Date.

On the GCW Completion Date, the Master Lessee will enter into an electricity sharing agreementwith CDL to authorise the Master Lessee to purchase electricity supply on CDL’s behalf for levelone of the Waterfront Plaza. CDL will periodically reimburse the Master Lessee for the electricitysupplied to level one of the Waterfront Plaza.

State Lease

Copthorne King’s Hotel is held under a 99-year State Lease issued by the President of the Republic ofSingapore as head lessor to the relevant Vendor (Republic Hotels & Resorts Limited, formerly knownas King’s Hotel Limited), as lessee. Principal terms of the State Lease include, inter alia:

• a prohibition against the lessee transferring, demising, mortgaging, charging or assigning thewhole or part of the property without first obtaining the written approval of the lessor;

• a provision for the lessee to pay all rates, taxes, charges and outgoings imposed on the property;

• a provision for the lessee to maintain the property in a good and tenantable condition; and

• a prohibition against the lessee making any alteration or addition to the building or erecting anynew building on the property without first obtaining the written consent of the lessor.

The consent of the head lessor has been obtained for the sale of the property to H-REIT as well as forthe lease and mortgage of the property by H-REIT.

The terms of the State Lease will be binding on H-REIT as the purchaser of the leasehold title of theProperty after completion.

On completion, H-REIT will acquire the remainder of a 99-year leasehold title commencing from 1February 1968 in respect of Copthorne King’s Hotel.

Vendor’s Leases

The Properties, other than Copthorne King’s Hotel, are comprised in freehold estates granted by thePresident of the Republic of Singapore pursuant to State grants. The State grants do not contain anyprohibition against the grantees selling the properties. On legal completion (which in the case of GrandCopthorne Waterfront Hotel will take place within six (6) months of the GCW Completion Date), H-REITwill in respect of the Properties other than Copthorne King’s Hotel, acquire registrable 75-yearleasehold titles pursuant to separate leases (the “Vendor Leases”) commencing from the Listing Dateto be issued by the relevant Vendors to the H-REIT Trustee.

Each Vendor Lease, inter alia, requires H-REIT as the lessee:

• to pay an annual rent of $12 (waived until further notice) in the case of Copthorne King’s Hotel,and $1.00 in the case of each of Orchard Hotel, Grand Copthorne Waterfront Hotel and M Hotel(in each case waived until further notice);

• to pay all rates, taxes, charges and outgoings imposed on the property;

194

• not to use the property otherwise than in accordance with the approved use approved by therelevant authorities; and

• to deliver to the relevant Vendor possession of the property together with the Hotel and all plantand equipment therein in the state and condition as at date of such delivery of possession, at theend of the lease,

and requires the relevant Vendor as lessor:

• to perform and observe the covenants on the lessor’s part contained in the State grant;

• not to amend or modify any terms of the State grant in any respect which may have an adverseeffect on the lessee’s rights; and

• not to do or omit any act or thing which will cause a forfeiture of its interest under the State grant.

Under the Vendor Lease of Grand Copthorne Waterfront Hotel, CDL as the Vendor will grant to H-REITas the lessee the right of support, the right to maintain and replace certain plant and equipmentbelonging to H-REIT and located in certain areas in the adjoining property owned by CDL, and the rightof access to and from the adjoining property owned by CDL. CDL will also grant rights to H-REIT for,inter alia, the use of the car park and certain areas comprising, inter alia, the forecourt, promenade,boundary areas abutting Jiak Kim Street and the driveway all located within the adjoining propertyowned by CDL.

In addition, there are provisions for:

• the sharing of costs by CDL and H-REIT for common services and facilities including, inter alia,the central air-conditioning and central fire alarm systems;

• the sharing of costs by CDL and H-REIT for certain lifts and escalators located within the adjoiningproperty owned by CDL;

• the purchase by H-REIT (or the lessee or manager of the Hotel as nominated by H-REIT) fromCDL, of up to 81,000 car park entry tickets per year for use in connection with the hotel operationat a concessionary fee of S$2.00 per ticket during the first five years from the GCW CompletionDate (the “Concessionary Ticket Fee”), and such fee per ticket is subject to increases every fiveyears thereafter in accordance with a formula that takes into account the higher of (i) theaggregated percentage increase of the consumer price index for the preceding five years and (ii)the difference between 50% of the then prevailing car park per entry charge and theConcessionary Ticket Fee for the preceding five year period;

• H-REIT to provide at its cost personnel for operation of only the car park management systemowned by CDL located within the Hotel; and

• H-REIT to maintain, repair and resurface at its cost the areas comprising the forecourt,promenade, boundary areas abutting Jiak Kim Street and driveway all located within the adjoiningproperty.

Master Lease Agreements

Under each Master Lease Agreement, the H-REIT Trustee leases to the Master Lessee, the Hoteltogether with the plant and equipment and FF&E.

The term of each Master Lease Agreement is for 20 years with an option for the Master Lessee to obtainan additional lease for a further 20 years on the same terms and conditions save for amendmentsrequired due to change in law and excluding any further option to renew.

The Master Lessee is required to pay rent on a monthly basis in arrears on the 15th day of the followingmonth, which rent shall comprise:

(a) a Fixed Rent of:


195



• S$0.6 million per annum in respect of Copthorne King’s Hotel;

(b) a Service Charge of:




• S$2.2 million per annum in respect of Copthorne King’s Hotel; and

(c) a Variable Rent computed based on the sum of 20.0% of the Hotel’s revenue for that fiscal yearand 20.0% of the Hotel’s gross operating profit for that fiscal year, less the sum of the Fixed Rentand Service Charge in respect of the relevant property, and if the calculation of the Variable Rentyields a negative figure, the Variable Rent will be deemed to be zero.

The quantum of the Variable Rent will be adjusted at the end of each fiscal year based on the auditedprofit and loss statement of each Hotel for such fiscal year.

If the Hotel is damaged or destroyed, the Master Lessee is not liable to pay rent for the period that theHotel cannot be used, and if part of the Hotel is still useable, the Master Lessee’s liability to pay rentis adjusted such that:

• if the total reinstatement costs exceed 25% of the purchase price of the Hotel, in respect of theperiod commencing from the date such damage occurred until the date of completion ofrestoration and reinstatement, the Master Lessee will pay an amount equivalent to the sum of (a)20% of the Hotel’s revenue and 20% of the Hotel’s gross operating profit for such period less theService Charge for such period and (b) the Service Charge for such period, and for such periodthe Master Lessee is not required to pay the Fixed Rent or any pro-rated part thereof; or

• if the total reinstatement costs does not exceed 25% of the purchase price of the Hotel, in respectof the period commencing from the date such damage occurred until the date of completion ofrestoration and reinstatement, the Master Lessee will continue to pay H-REIT the rent for suchperiod, without any abatement of the Fixed Rent amount.

Each Master Lessee will provide to H-REIT a cash security deposit, in the amount of S$3.1 million forOrchard Hotel, S$2.4 million for Grand Copthorne Waterfront Hotel, S$1.7 million for M Hotel and S$1.0million for Copthorne King’s Hotel, as security for the Master Lessee’s compliance of all the provisionsin the Master Lease Agreement and to secure against any loss or damage resulting from any defaultby the Master Lessee and any claim by H-REIT against the Master Lessee.

The FF&E located in the Hotel prior to the commencement date of the Master Lease Agreementremains the property of H-REIT and is leased to the Master Lessee. All FF&E acquired or replaced bythe Master Lessee during the term of the Master Lease Agreement will be the property of the MasterLessee subject to the condition that the title to the FF&E items which are owned by the Master Lesseeand still in use shall be transferred to H-REIT (i) at the end of the first 10 years of the term of the MasterLease Agreement for S$1.00 and (ii) at the end or earlier termination of the Master Lease Agreementfor S$1.00. For each fiscal year, the Master Lessee is required to set aside in the FF&E reserve anamount equivalent to 2.5% of the Hotel’s revenue for such fiscal year to be utilised in accordance with,an annual FF&E plan proposed by the Master Lessee in consultation with the H-REIT Trustee. Anyunutilised balance in the FF&E reserve at the end of a fiscal year must be carried forward and madeavailable in the next fiscal year but this shall not reduce the required contribution to the FF&E reservein the next fiscal year. Where the total expenditure by the Master Lessee in any fiscal year is in excessof the unutilised balance in the FF&E reserve, the excess shall be carried forward and debited againstthe contribution to the FF&E reserve in the next fiscal year. Any unutilised amounts standing to thecredit of the FF&E reserve (i) at the end of the first 10 years of the term of the Master Lease Agreementand (ii) at the end or earlier termination of the Master Lease Agreement will be the property of H-REITand shall be paid in cash by the Master Lessee to H-REIT.

196

The Master Lessee must submit to the H-REIT Manager for review by no later than 31 January of eachfiscal year, an annual budget for that fiscal year which includes, inter alia, a proposed capital budgetfor capital improvements. In respect of such proposed capital budget, H-REIT is not obliged toundertake any expenditure for capital improvements unless (i) it is approved in writing by the H-REITManager, or (ii) such capital improvements are (a) required to comply with any directive, order orrequirement of any relevant government authorities or (b) required to meet safety or healthrequirements relating to the Hotel, in which case H-REIT will at its own costs undertake such capitalimprovements. If a dispute arises in respect of (ii) above, such disputes must be referred to an expertfor determination.

Each Master Lessee is required to enter into a hotel management agreement with MCIL (or such othersubsidiary of the Sponsor as may be appointed by the Master Lessee) and is not permitted to terminate,amend, modify or assign the hotel management agreement or waive any right, breach or default underthe hotel management agreement without the consent of the H-REIT Trustee if it would have anadverse effect on H-REIT. Each hotel management agreement must provide that upon termination ofthe Master Lease Agreement or termination of H-REIT’s or the Master Lessee’s right to possession ofthe Hotel, the hotel management agreement may be terminated by the H-REIT Trustee by written noticeto the Hotel Manager without liability on the part of the H-REIT Trustee for any payment due or tobecome due to the Hotel Manager thereunder.

The H-REIT Trustee acting reasonably has the right to approve or disapprove in advance anyreplacement of the Hotel Manager. H-REIT, following receipt of notice of Master Lessee’s intention toreplace the Hotel Manager (such notice to contain in reasonable details, information on the qualificationand experience of the proposed replacement), must act promptly to provide its decision to the MasterLessee within seven Business Days (or such other number of days as may be agreed by the parties)of receipt of the said notice. In the case where the replacement of the Hotel Manager is a subsidiaryof M&C, the H-REIT Trustee’s approval is not required.

The Master Lessee must, at its cost, repair and maintain the Hotel, its infrastructure, plant andequipment and the Master Lessee’s property (including without limitation, the FF&E, OperatingEquipment and inventories) in good and substantial repair and working order required for the operationof the Hotel but the Master Lessee is not responsible for works which are in the nature of capitalimprovements. The Master Lessee must also, at its cost, repair and replace all FF&E required for theoperations of the Hotel.

All necessary licences and permits must be obtained and maintained by the Master Lessee at its cost.

The Master Lessee must, at its cost, take out and maintain public liability insurance policy, insurancerelating to workers’ compensation and contract works insurance in respect of any works undertaken orcarried out by the Master Lessee. The H-REIT Trustee will take out and maintain, at H-REIT’s cost, aproperty insurance insuring the Hotels, the infrastructure, plant and equipment and the contents of theHotels including all FF&E, Operating Equipment and inventories, and business interruption policy forthe respective rights and interests of the H-REIT Trustee as lessor, and the Master Lessee. The MasterLessee is required to pay the insurance premium in respect of the business interruption policyattributable to the insurance coverage for the Master Lessee’s interests.

The Master Lessee is required to indemnify H-REIT in respect of loss or damage arising from thenegligent acts or omissions of the Master Lessee or its agents or any default by the Master Lessee.

In the event a Hotel is damaged or destroyed such that at least 75% of the hotel rooms cannot be used,or the total reinstatement costs exceed 50% of the purchase price of the Hotel and if the H-REITTrustee considers it impracticable or undesirable to repair or rebuild, either party may terminate theMaster Lease Agreement and no compensation is payable in respect of such termination. If the damageor destruction does not satisfy the above threshold, H-REIT must use the insurance proceeds which itreceives to reinstate the Hotel (including the FF&E, Operating Equipment and inventories) to the

197

condition of the Hotel immediately prior to the occurrence of the damage or destruction as far aspracticable and to the extent possible with the available insurance proceeds. If H-REIT is so requiredto reinstate the Hotel and following written request from the Master Lessee, does not agree to rebuildor fails to do so within a reasonable time, the Master Lessee may undertake the repairs at the MasterLessee’s costs and H-REIT must apply the insurance proceeds received by H-REIT to reimburse theMaster Lessee for the repair costs.

H-REIT has various rights of termination including in relation to non-payment of rent and breach ofessential terms. Upon termination, the Master Lessee must comply with various obligations includingin relation to, the sale of Operating Equipment and inventories to H-REIT or another master lessee orhotel manager nominated by H-REIT at a consideration not exceeding the net book value or if the netbook value is zero, then at a consideration of S$1.00, and the transfer of employees, contracts, licencesand any electricity supply agreement entered into by the Master Lessee for the supply of electricity tothe relevant Hotel, subject to the consent of the electricity supply provider.

H-REIT may sell or assign its interest in a Hotel subject to the terms of the Master Lease Agreement.H-REIT may also sell its interest in the Hotel free and clear of the Master Lease Agreement providedH-REIT pays the Master Lessee a termination fee equal to the fair market value of the Master Lessee’sleasehold interest in the remaining term and the option term. The fair market value is computed on thepresent value of “A” for each year of the unexpired term and the option term using a discount rate of8%, where “A” means a per annum amount which is the average of the adjusted gross operating profitof the Hotel for the three fiscal years preceding the completion of such sale, or if the Hotel has not beenin operation for at least three fiscal years, then the average during the preceding fiscal years that haveelapsed, and “adjusted gross operating profit” in respect of a fiscal year means the gross operatingprofit of the Hotel for that fiscal year less the rent (comprising Fixed Rent, Variable Rent and ServiceCharge) payable to H-REIT for that fiscal year.

In the case of the Master Lease Agreement of Grand Copthorne Waterfront Hotel, the revenue of theHotel includes the revenue from the Waterfront Conference Centre and the operating expenses of theHotel includes the rent and other sums payable by the Master Lessee to H-REIT under the WaterfrontConference Centre Sublease Agreement.

The Master Lessee may not assign its interest under the Master Lease Agreement without the H-REITTrustee’s prior written consent, except that the H-REIT Trustee’s prior consent is not required in thecase of any assignment to any subsidiary of CDL or the Sponsor, provided that such subsidiary is ofsound financial capacity capable of complying with all of the Master Lessee’s obligations (includingwithout limitation any financial obligations).

Leasing Services Agreement for Orchard Hotel Shopping Arcade

A leasing services agreement will be entered into between the H-REIT Trustee and CDL on the ListingDate, pursuant to which H-REIT will appoint CDL for a period of 3 years to provide certain leasingservices in respect of Orchard Hotel Shopping Arcade subject to payment to CDL of (i) a monthlyretainer fee of S$2,000, (ii) commissions for new leases at S$750 for a new lease with monthly grossrent of less than S$2,000; S$1,500 for a new lease with monthly gross rent of S$2,000 and up toS$5,000; S$2,500 for a new lease with monthly gross rent of more than S$5,000 and up to S$10,000;and S$5,000 for a new lease with monthly gross rent of more than S$10,000; and (iii) commissions forlease renewals of 50% of the commissions payable for new leases, and the payment by the H-REITTrustee of advertisement costs, marketing-related expenses and commissions of one month’s grossrent to external leasing agents.

198

Right of First Refusal

An agreement was entered into on 22 June 2006 between the H-REIT Trustee and the Sponsorpursuant to which H-REIT was granted a right of first refusal over Singapore real estate which isprimarily used for hospitality purposes and/or, if applicable, the shares or equity interests in singlepurpose companies which hold such real estate (together, the “Relevant Assets”), which are whollyowned by a Sponsor Entity.

Where:

• a Sponsor Entity proposes to sell a Relevant Asset (excluding a sale of a Relevant Asset by theSponsor to any of its related corporations pursuant to a bona fide reconstruction, amalgamation,restructuring, merger or any analogous event); or

• a proposed offer of sale of a Relevant Asset is made to a Sponsor Entity;

the Sponsor shall give written notice thereof to the H-REIT Trustee setting out the principal terms andconditions upon which the Relevant Asset is to be offered for sale (including, without limitation, theproposed sale price), and will grant to the H-REIT Trustee the first right to purchase the Relevant Assetfor the benefit of H-REIT on the same terms and conditions for a period of 30 days from the date of theSponsor’s written notice or such longer period as may be mutually agreed between the Sponsor andthe H-REIT Trustee (the “Offer Period”).

If (i) the H-REIT Trustee does not enter into a binding commitment for the purchase of the RelevantAsset within the Offer Period, or (ii) the H-REIT Trustee delivers notice to the Sponsor in writing that itdoes not intend to purchase the Relevant Asset within the Offer Period, the relevant Sponsor Entity isentitled to (as the case may be):

• sell its Relevant Asset to a third party on terms and conditions no more favourable to the thirdparty than those offered by the Sponsor Entity to the H-REIT Trustee; or

• purchase the Relevant Asset offered to it on terms and conditions no more favourable to it thanthose offered to the H-REIT Trustee without any accountability, liability or obligation to the H-REITTrustee.

The right of first refusal was granted by the Sponsor to the H-REIT Trustee for a period of five yearsfrom the Listing Date, for so long as the H-REIT Manager remains the manager of H-REIT and theSponsor and/or any of its related corporations remains a controlling shareholder of the H-REITManager.

In order to minimise potential conflicts of interest between H-REIT and the Sponsor which has interestsin acquiring additional properties in Singapore which are primarily used for hospitality purposes orproperty-related investments and divesting the same in competition with H-REIT, the H-REIT ManagerBoard has submitted an undertaking to the SGX-ST (i) that the Audit Committee of the H-REIT Managerwill review this conflict of interest issue upon the expiry of the right of first refusal after five years andpropose measures to resolve any conflicts which must be sufficient to meet the requirements underRule 223 of the Listing Manual regulating conflicts of interests; and (ii) to announce the AuditCommittee’s assessment of the issue and the measures to be adopted at that time.

199

TAXATION

The following summary of certain Singapore income tax consequences of the purchase, ownership anddisposition of the Stapled Securities is based upon laws, regulations, rulings and decisions now ineffect, all of which are subject to change (possibly with retroactive effect).

The summary does not purport to be a comprehensive description of all the tax considerations that maybe relevant to a decision to purchase, own or dispose of the Stapled Securities and does not purportto deal with the consequences of application to all categories of investors, some of which may besubject to special rules.

Investors should consult their own tax advisers concerning the application of Singapore income taxlaws to their particular situations as well as any consequences of the purchase, ownership anddisposition of the Stapled Securities arising under the laws of any other taxing jurisdiction.

The IRAS has issued a Tax Ruling on the taxation of H-REIT and that of the holders of the StapledSecurities. In accordance with the Tax Ruling, the Singapore income tax consequences of H-REIT andthat of the holders of the Stapled Securities are described below.

Taxation of H-REIT

Subject to meeting the terms and conditions of the Tax Ruling, the H-REIT Trustee will not be taxed onH-REIT’s taxable income. Instead, the H-REIT Trustee and the H-REIT Manager will deduct income taxat the prevailing corporate tax rate from distributions made to the holders of the Stapled Securities thatare made out of H-REIT’s taxable income. However, to the extent that the beneficial owner is anindividual or a Qualifying holder of the Stapled Securities, the H-REIT Trustee and the H-REIT Managerwill make the distributions without deducting any income tax. Also, to the extent that the beneficialowner is a foreign non-individual holder of the Stapled Securities, the H-REIT Trustee and the H-REITManager will deduct income tax at the reduced rate of 10.0% for distributions made during the periodfrom 18 February 2005 to 17 February 2010.

A Qualifying holder of the Stapled Securities refers to a holder who is a:

• Singapore-incorporated company which is tax resident in Singapore;

• body of persons, other than a company or a partnership, registered or constituted in Singapore(for example, town councils, statutory boards, registered charities, registered co-operativesocieties, registered trade unions, management corporations, clubs and trade and industryassociations); or

• Singapore branch of a foreign company which has presented a letter of approval from the IRASgranting a waiver from tax deduction at source in respect of distributions from H-REIT.

A foreign non-individual holder of the Stapled Securities is one who is not a resident of Singapore forSingapore income tax purposes and:

• who does not have a permanent establishment in Singapore; or

• who carries on any operation in Singapore through a permanent establishment in Singapore,where the funds used to acquire the Stapled Securities are not obtained from that operation.

To obtain distributions free of tax deduction at source, or at the reduced rate of 10.0%, the holders ofthe Stapled Securities who are Qualifying holders or foreign non-individual holders of the StapledSecurities, must disclose their respective tax status in a prescribed form provided by the H-REITTrustee and the H-REIT Manager (see Appendix V, “Independent Taxation Report”).

200

Where the Stapled Securities are held in joint names, the H-REIT Trustee and the H-REIT Manager willdeduct income tax from the distributions made out of H-REIT’s taxable income at the prevailingcorporate tax rate (currently at 20.0%), unless all the joint owners are individuals.

Where the Stapled Securities are held through a nominee, the H-REIT Trustee and the H-REITManager will deduct income tax from the distributions made out of H-REIT’s taxable income at theprevailing corporate tax rate (currently at 20.0%) except in the following situations:

• where the Stapled Securities are held for beneficial owners who are individuals and/or Qualifyingholders of the Stapled Securities, tax may not be deducted at source under certain circumstances.These include a declaration by the nominee of the status of the beneficial owners of the StapledSecurities and the provision of certain particulars of the beneficial owners of the StapledSecurities by the nominee to the H-REIT Trustee and the H-REIT Manager in a prescribed formprovided by the H-REIT Trustee and the H-REIT Manager; and

• where the Stapled Securities are held for beneficial owners who are foreign non-individual holdersof the Stapled Securities, tax may be deducted at the reduced tax rate of 10.0% for distributionsmade during the period from 18 February 2005 to 17 February 2010 under certain circumstances.These include a declaration by the nominee of the status of the beneficial owners of the StapledSecurities and the provision of certain particulars of the beneficial owners of the StapledSecurities by the nominee to the H-REIT Trustee and the H-REIT Manager in a prescribed formprovided by the H-REIT Trustee and the H-REIT Manager.

H-REIT will distribute 100% of its taxable income (other than gains on sale of real properties determinedto be trading gains) for the period from the Listing Date to 31 December 2007. Thereafter, H-REIT willdistribute at least 90% of its taxable income (other than gains on sale of real properties determined tobe trading gains). The amount of taxable income not distributed (i.e. the retained taxable income) willbe assessed to Singapore income tax, and the tax assessed will be collected from the H-REIT Trusteeon such amount. In the event of a distribution subsequently made out of such retained taxable income,the H-REIT Trustee and the H-REIT Manager will not have to make a further deduction of income taxfrom the distribution made.

Gains or profits arising from sale of real properties, if considered to be trading gains derived from atrade or business carried on by H-REIT, will be taxable under Section 10(1)(a) of the Income Tax Act,Chapter 134 of Singapore. Tax on such gains or profits will be assessed on, and collected from theH-REIT Trustee. Consequently, if such after tax gains or profits are distributed, the H-REIT Trustee andthe H-REIT Manager will not have to make a further deduction of income tax from the distribution made.

Gains or profits arising from the sale of real properties, if confirmed to be capital gains by the IRAS, arenot subject to tax as there is no capital gains tax in Singapore. Such capital gains may be distributed(at the discretion of the H-REIT Trustee and the H-REIT Manager) to the holders of the StapledSecurities. If a distribution is made out of such confirmed capital gains, the H-REIT Trustee and H-REITManager will not have to deduct income tax from the distribution made.

See “Risks Factors — Risks Relating to an Investment in the Stapled Securities — H-REIT may beunable to comply with the terms of the Tax Ruling or the Tax Ruling may be revoked or amended”.

Taxation of HBT

HBT which is registered as a business trust in Singapore under the BTA will be treated like a companyunder the one-tier corporate tax system for Singapore income tax purposes. Consequently, HBT will beassessed to Singapore income tax on its profits, if any, like any other company, in accordance with theIncome Tax Act, Chapter 134 of Singapore.

201

Taxation of the Holders of the Stapled Securities

H-REIT Distributions

Individuals who hold the Stapled Securities as Investment Assets

Individuals who hold the Stapled Securities as investment assets (excluding individuals who hold suchStapled Securities as trading assets or individuals who hold such Stapled Securities through apartnership in Singapore) are exempt from income tax on the distributions (excluding distributionsmade out of franked dividends) made by H-REIT, regardless of the individuals’ nationality or taxresidence status.

Distributions made out of income previously taxed at the Trustee level (i.e. distributions made out ofretained taxable income or out of gains or profits taxed as trading gains under Section 10(1)(a) of theIncome Tax Act, Chapter 134 of Singapore) will also be exempt from tax in the hands of the suchindividuals. Distributions made out of gains or profits arising from a disposal of properties that havebeen confirmed by the IRAS as capital gains are not taxable in the hands of individual holders of theStapled Securities, provided that the Stapled Securities are not held by them as trading assets.

Individuals who hold the Stapled Securities as trading assets or through a partnership inSingapore

Individuals who hold the Stapled Securities as trading assets or through a partnership in Singapore aresubject to Singapore income tax on the gross amount of distributions that are made out of H-REIT’staxable income. Such distributions will be taxed in the hands of the individuals at their applicableincome tax rates.

Distributions made out of income previously taxed at H-REIT’s level (i.e. distributions made out ofretained taxable income or out of gains or profits taxed as trading gains under Section 10(1)(a) of theIncome Tax Act, Chapter 134 of Singapore) will also be taxed in the hands of these individuals at theirapplicable income tax rates. The amount of distribution that is subject to tax is the re-grossed amount(i.e. the amount of distribution and the proportionate amount of the imputed tax). However, theseindividuals may claim the imputed tax as a tax credit against their Singapore income tax liabilities.

Distributions made out of gains or profits arising from a disposal of properties that have been confirmedby the IRAS as capital gains will also be taxed in the hands of those individuals who hold the StapledSecurities as trading assets, at their applicable income tax rates.

Non-individuals

Non-individual holders of the Stapled Securities are subject to income tax on the gross amount ofdistributions that are made out of H-REIT’s taxable income, irrespective of whether or not tax has beendeducted from the distributions by the H-REIT Manager and the H-REIT Trustee.

Where tax has been deducted at source at the prevailing corporate tax rate, the tax deducted is not afinal tax. Non-individual holders of the Stapled Securities can use such tax deducted at source as a setoff against their Singapore income tax liabilities.

Distributions made out of income previously taxed at H-REIT’s level (i.e. distributions made out ofretained taxable income or out of gains or profits taxed as trading gains under Section 10(1)(a) of theIncome Tax Act, Chapter 134 of Singapore) will also be taxed in the hands of these non-individuals attheir applicable income tax rates. The amount of distribution that is subject to tax is the re-grossedamount (i.e. the amount of distribution and the proportionate amount of the imputed tax). However,these non-individuals may claim the imputed tax as a tax credit against their Singapore income taxliabilities.

202

Distributions made out of gains or profits arising from a disposal of properties that have been confirmedby the IRAS as capital gains are not taxable in the hands of non-individual holders of the StapledSecurities, provided that the Stapled Securities are not held by them as trading assets.

Distributions made by H-REIT to foreign non-individual holders of the Stapled Securities will be subjectto tax at the reduced rate of 10.0% for distributions made during the five-year period from 18 February2005 to 17 February 2010. The reduced rate of 10.0% will also apply to distributions made to nomineeholders of the Stapled Securities if they can demonstrate that the beneficial owners of the StapledSecurities are qualifying foreign non-individual investors.

HBT Distributions

Distributions made by HBT out of its profits, if any, to the holders of the Stapled Securities will be treatedlike one-tier dividends. Such distributions will be exempt from Singapore income tax in the hands of theholders of the Stapled Securities, regardless of their respective status.

Disposal of the Stapled Securities

Any gains on disposal of the Stapled Securities are not liable to tax provided the Stapled Securities arenot held as trading assets.

Terms and Conditions of the Tax Ruling

The application of the Tax Ruling is conditional upon the H-REIT Trustee and the H-REIT Managerfulfilling certain terms and conditions. The H-REIT Trustee and the H-REIT Manager are required totake all reasonable steps necessary to safeguard the IRAS against tax leakages and to comply with alladministrative requirements to ensure ease of tax administration.

The IRAS has expressly reserved the rights to review, amend and revoke the Tax Ruling either in partor in whole at any time.

Stamp Duty

By virtue of the Stamp Duty (Real Estate Investment Trust) (Remission) Rules 2005, stamp duty on theinstruments of transfer of Singapore properties to real estate investment trusts to be listed or alreadylisted on the SGX-ST would be waived for a period of five years from 18 February 2005.

As such, stamp duty will be waived on the transfer of Singapore properties to H-REIT for a period offive years from 18 February 2005.

In an adjudication obtained from the Commissioner of Stamp Duties, it was confirmed that based oncertain terms of the H-REIT Trust Deed:

(a) the sale, purchase and transfer of the Stapled Securities is not subject to stamp duty; and

(b) in the event of a change in the H-REIT Trustee, stamp duty on any document effecting theappointment of a new trustee and the transfer of trust assets from the incumbent trustee to thenew trustee will be charged at a nominal rate not exceeding S$10.00 as specified under Article3(g)(ii) of the First Schedule to the Stamp Duties Act, Chapter 312 of Singapore.

203

PLAN OF DISTRIBUTION

The offering comprises 425,000,000 Stapled Securities (representing 60.9% of the total number of theStapled Securities in issue after the Offering) for subscription at the Offering Price under the PlacementTranche and the Public Offer. Within the Placement Tranche, 12,500,000 Stapled Securities will bereserved for subscription by the directors, management, employees and business associates of theSponsor and persons who have contributed to the success of the Offering. 15,000,000 StapledSecurities will be offered under the Public Offer.

The Stapled Securities may be re-allocated between the Placement Tranche and the Public Offer at thediscretion of DBS Bank and BNP Paribas Peregrine, following consultation with the H-REIT Manager,the HBT Trustee-Manager and the Sponsor.

The Public Offer is open to members of the public in Singapore. Under the Placement Tranche, theStapled Securities are intended to be offered by way of an international placement through DBS Bankand BNP Paribas Peregrine to investors, including institutional investors in Singapore, and includes theReserved Tranche.

Subject to the terms and conditions set forth in the underwriting agreement entered into between DBSBank, BNP Paribas and BNP Paribas Peregrine, the H-REIT Manager, the HBT Trustee-Manager andthe Sponsor on 10 July 2006 (the “Underwriting Agreement”), the H-REIT Manager is expected toeffect for the account of H-REIT and the HBT Trustee-Manager is expected to effect for the account ofHBT the issue of, and the Underwriters are expected to severally (and not jointly) subscribe, or procuresubscribers, for 425,000,000 Stapled Securities, in the proportions set forth opposite their respectivenames below:

Underwriters Number of Stapled Securities

DBS Bank 212,500,000

BNP Paribas 212,500,000

Total 425,000,000

The Stapled Securities will be offered at the Offering Price. The Offering Price per Stapled Security inthe Placement Tranche and the Public Offer will be identical.

Subscribers of Stapled Securities may be required to pay brokerage or other similar fees (and if sorequired, such brokerage will be up to 1.0% of the Offering Price), any stamp and taxes and othersimilar charges in accordance with the laws and practices of the country of subscription, in addition tothe Offering Price.

The H-REIT Manager and the HBT Trustee-Manager have agreed in the Underwriting Agreement toindemnify DBS Bank, BNP Paribas and BNP Paribas Peregrine against certain liabilities. The Sponsorhas agreed in a separate deed of undertaking to indemnify DBS Bank, BNP Paribas and BNP ParibasPeregrine against certain liabilities.

The Underwriting Agreement also provides that the obligations of the Underwriters to subscribe for orto procure the subscription of the Stapled Securities in the Offering are subject to certain conditionscontained in the Underwriting Agreement.

The Underwriting Agreement may be terminated by each of DBS Bank and BNP Paribas Peregrine atany time prior to the issuance and allotment of the Stapled Securities on the Listing Date, upon theoccurrence of certain events including, among other things, any introduction or prospective introductionof (as announced by a competent authority) or any change or any prospective change in (as announcedby a competent authority) any legislation, regulation, order, policy, rule, guideline or directive inSingapore, Hong Kong or the United Kingdom in the interpretation or application thereof by any court,government body, regulatory authority or other competent authority in Singapore, Hong Kong or the

204

United Kingdom, or any change, or any development involving a prospective change in local, national,regional or international financial, political, industrial, economic, legal or monetary conditions, taxationor exchange controls, or any occurrence of any local, national, regional or international outbreak orescalation of epidemics, hostilities, insurrection, terrorist attacks or armed conflict involving Singapore,Hong Kong or the United Kingdom, in each case the effect of which is, in the sole opinion of DBS Bankand BNP Paribas Peregrine, likely to materially and adversely affect the success of the subscription,purchase, offer or distribution of the Stapled Securities, or likely to have a material and adverse effecton the financial condition, business, operations or prospects of H-REIT and HBT or CDL HospitalityTrusts as a whole, or results in the issue of a Stop Order by the MAS pursuant to the SFA.

Each of DBS Bank, BNP Paribas and BNP Paribas Peregrine and their respective associates mayengage in transactions with, and perform services for CDL Hospitality Trusts, H-REIT, HBT, the H-REITManager, the H-REIT Trustee, the HBT Trustee-Manager and the Sponsor in the ordinary course ofbusiness and have engaged, and may in the future engage, in commercial banking and/or investmentbanking transactions with CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager, the H-REITTrustee, the HBT Trustee-Manager and the Sponsor, for which they have received, or may in the futurereceive, customary fees.

Lock-up Arrangements

Hospitality Holdings Pte. Ltd.

Subject to the exceptions described below, Hospitality Holdings Pte. Ltd. has agreed with DBS Bankand BNP Paribas Peregrine that it will not, without the prior written consent of DBS Bank and BNPParibas Peregrine (such consent not to be unreasonably withheld or delayed), directly or indirectly,offer, sell or contract to sell or enter into any transaction (including a derivative transaction) having aneconomic effect similar to that of, or otherwise dispose of any or all of its Stapled Securities (includingany securities convertible into or exchangeable for or which carry rights to subscribe or purchase suchStapled Securities and/or the units of H-REIT and HBT comprised therein) held as at the Listing Dateduring the Lock-up Period.

The restriction described in the preceding paragraph does not apply to the transfer of StapledSecurities to the Sponsor, its wholly owned subsidiaries or as among the wholly owned subsidiaries ofthe Sponsor, provided that each such transferee gives a similar undertaking for the remainder of theLock-Up Period.

The Sponsor

To demonstrate the Sponsor’s commitment to CDL Hospitality Trusts, the Sponsor has agreed withDBS Bank and BNP Paribas Peregrine that it will not, without the prior written consent of DBS Bank andBNP Paribas Peregrine (such consent not to be unreasonably withheld or delayed), directly or indirectlyoffer, sell or contract to sell or enter into any transaction (including a derivative transaction) having aneconomic effect similar to that of, or otherwise dispose of any or all of its effective interest in the StapledSecurities (including any securities convertible into or exchangeable for such Stapled Securities orwhich carry rights to subscribe or purchase such Stapled Securities and/or the units of H-REIT and HBTcomprised therein) held as at the Listing Date during the Lock-up Period.

The H-REIT Manager and the HBT Trustee-Manager

Each of the H-REIT Manager and the HBT Trustee-Manager has agreed with DBS Bank, BNP Paribasand BNP Paribas Peregrine that it will not (and will not cause or permit H-REIT and HBT to), directlyor indirectly, without the prior written consent of DBS Bank and BNP Paribas Peregrine (such consentnot to be unreasonably withheld or delayed), offer, issue, sell, contract to issue, grant any option topurchase, grant security over, encumber, or otherwise dispose of, any Stapled Securities (including anysecurities convertible into or exchangeable for, or which carry rights to subscribe or purchase suchStapled Securities and/or the units in H-REIT and HBT comprised therein), or enter into any transaction(including a derivative transaction) having an economic effect similar to that of a sale of any units ofH-REIT and HBT comprised in the Stapled Securities (including any securities convertible into or

205

exchangeable for, or which carry rights to subscribe or purchase Stapled Securities and/or the units inH-REIT and HBT comprised therein) or the deposit of any of the units of H-REIT and HBT comprisedin the Stapled Securities (including any securities convertible into or exchangeable for, or which carryrights to subscribe or purchase such Stapled Securities and/or the units in H-REIT and HBT comprisedtherein) in any depository receipt facilities, other than the Stapled Securities to be issued under theOffering, nor make any announcement with respect to any of the foregoing transactions other than asrequired by applicable laws or regulations during the Lock-up Period. The restrictions described in thisparagraph do not apply to Stapled Securities to be issued to (a) Hospitality Holdings Pte. Ltd., whichis subject to the lock-up arrangement described above, or (b) the H-REIT Manager in payment of anyfees payable to the H-REIT Manager, or (c) the HBT Trustee-Manager in payment of any fees payableto the HBT Trustee-Manager.

If, for any reason, the Offering is not completed by 30 September 2006, the lock-up arrangementsdescribed above will be terminated.

SGX-ST Listing

CDL Hospitality Trusts has received a letter of eligibility from the SGX-ST for the listing of and quotationfor the Stapled Securities on the Main Board of the SGX-ST. The SGX-ST assumes no responsibilityfor the correctness of any statements or opinions made or reports contained in this Prospectus.Admission to the Official List of the SGX-ST is not to be taken as an indication of the merits of theOffering, CDL Hospitality Trusts, H-REIT, HBT, the H-REIT Manager, the HBT Trustee-Manager or theStapled Securities. It is expected that the Stapled Securities will commence trading on the SGX-ST ona “ready” basis on or about 19 July 2006.

Prior to this Offering, there has been no trading market for the Stapled Securities. There can be noassurance that an active trading market will develop for the Stapled Securities, or that the StapledSecurities will trade in the public market subsequent to this Offering at or above the Offering Price.

Issue Expenses

The estimated amount of the expenses in relation to the Offering of S$21.9 million (based on theOffering Price of S$0.83 per Stapled Security) includes the underwriting and selling commission,professional and other fees and all other incidental expenses in relation to the Offering, which will beborne by H-REIT. A breakdown of these estimated expenses is as follows(1):

(S$’000) As a percentage of theOffering based on the

Offering Priceof S$0.83

(%)

Professional and other fees(2) 5,367.1 1.5Financial advisory fee and underwriting and selling

commission(3)12,593.2 3.6

Miscellaneous Offering expenses(4) 3,895.5 1.1Total estimated expenses of the Offering 21,855.8 6.2

Notes:

(1) Amounts include GST, where applicable.

(2) Includes solicitors’ fees and fees for the Independent Accountants, the Independent Tax Adviser, the Independent Valuersand other professionals, and the payment of a fee of 0.6% of the proceeds of the Offering to HLMS for management andconsultancy services.

(3) Such financial advisory fee and underwriting and selling commission (including incentive fees) represent a maximum ofapproximately 3.4% (excluding GST) of the total amount of the Offering and a maximum of approximately 3.4% (excludingGST) on a per Stapled Security basis.

(4) Includes cost of prospectus production, roadshow expenses and certain other expenses incurred or to be incurred inconnection with the Offering.

206

Subscription for More Than 5% of HBT Units

To the HBT Trustee-Manager’s knowledge, other than the Sponsor through an indirect wholly ownedsubsidiary, Hospitality Holdings Pte. Ltd., no person intends to subscribe for more than 5.0% of the HBTUnits comprised in the Public Offer. If any persons other than the Sponsor were to make an applicationfor HBT Units amounting to more than 5.0% of the HBT Units comprised in the Offering and aresubsequently allotted or allocated such number of HBT Units, the HBT Trustee-Manager will make thenecessary announcements at an appropriate time. The final allocation of HBT Units will be inaccordance with the HBT unitholding spread and distribution guidelines set out in Rule 210 of theListing Manual.

Distribution and Selling Restrictions

No action has been or will be taken in any jurisdiction that would permit a public offering of the StapledSecurities or the possession, circulation or distribution of this Prospectus or any other offering orpublicity material relating to CDL Hospitality Trusts or the Stapled Securities in any country orjurisdiction (other than Singapore, where action for the purpose is required). Accordingly, the StapledSecurities may not be offered or sold, directly or indirectly, and neither this Prospectus nor any otheroffering material, circular, form of application or advertisement in connection with the Stapled Securitiesmay be distributed or published, in or from any country or jurisdiction except under circumstances thatwill result in compliance with all applicable laws and regulations of any such country or jurisdiction.

Australia

Offers of Stapled Securities under this Prospectus to investors in Australia are only made to thoseinvestors who are “wholesale clients” under section 761G of the Corporations Act 2001 (Cth). If theStapled Securities are to be on-sold to investors in Australia without a product disclosure statementwithin 12 months of issue of the Stapled Securities, they may only be on-sold to investors in Australiawho are “wholesale clients” under section 761G of the Corporations Act 2001 (Cth). This Prospectusdoes not constitute a prospectus or product disclosure statement within the meaning of theCorporations Act 2001 (Cth) and has not been lodged with the Australian Securities and InvestmentsCommission.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented theProspectus Directive (each, a “Relevant Member State”) with effect from and including the date onwhich the Prospectus Directive is implemented in that Relevant Member State (the “RelevantImplementation Date”) an offer of any Stapled Securities to the public may not be made in that RelevantMember State prior to the publication of a prospectus in relation to the Stapled Securities which hasbeen approved by the competent authority in that Relevant Member State, except that, with effect fromand including the Relevant Implementation Date, an offer to the public in that Relevant Member Stateof any Stapled Securities may be made at any time:

(a) to legal entities which are authorised or regulated to operate in the financial markets or, if not soauthorised or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during thelast financial year; (2) a total balance sheet of more than C43,000,000 and (3) an annual netturnover of more than C50,000,000, as shown in its last annual or consolidated accounts; or

(c) in any other circumstances which do not require the publication by H-REIT and/or HBT of aprospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of any Stapled Securities to the public” inrelation to any Stapled Securities in any Relevant Member State means the communication in any formand by any means of sufficient information on the terms of the offer and any Stapled Securities to beoffered so as to enable an investor to decide to purchase or subscribe for the Stapled Securities, as thesame may be varied in that Member State by any measure implementing the Prospectus Directive in

207

that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC andincludes any relevant implementing measure in each Relevant Member State.

France

This Prospectus does not constitute an offer or invitation for the subscription or purchase of StapledSecurities in France. Neither this Prospectus nor anything contained herein shall form the basis of anycontract or any obligation of any kind whatsoever in France. Any person who is in possession of thisProspectus is hereby notified that no action has or will be taken that would allow the offer and marketingof Stapled Securities in France. Accordingly, the Stapled Securities may not be marketed, offered, soldor delivered in France, and neither the Stapled Securities nor any offering material relating to theStapled Securities may be distributed or made available in France, except as permitted by French lawand regulation.

Germany

The distribution of the Stapled Securities has not been and will not be notified to the Bundesanstalt furFinanzdienstleistungsaufsicht (the “BaFin”) and no documents or other information relating to theStapled Securities have been and will be filed with, approved by or notified to the BaFin in accordancewith the German Investment Act (Investmentgesetz), the Securities Prospectus Act(Wertpapierprospektgesetz) or any other present or future applicable laws in Germany and the StapledSecurities shall not be sold, distributed or promoted in Germany other than in compliance with theInvestment Act, the Securities Prospectus Act and any other applicable German laws and regulations.

Hong Kong

This Prospectus has not been registered and will not be registered as a prospectus under theCompanies Ordinance (Cap. 32 of the Laws of Hong Kong). The Stapled Securities may not be offeredor sold in the Hong Kong Special Administrative Region of the People’s Republic of China (“HongKong”), by means of any document, other than to “professional investors” within the meaning of section1 of Part 1 of Schedule 1 to the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong)(“SFO”) and in accordance with the requirements under the SFO and any rules made under the SFO.No person may have in its possession for the purposes of issue, or issue (in each case whether in HongKong or elsewhere), any prospectus, notice, circular, brochure, advertisement, invitation or otherdocument relating to the Stapled Securities which is directed at, or the contents of which are likely tobe accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of HongKong) other than with respect to Stapled Securities which are or are intended to be disposed of (i) onlyto persons outside Hong Kong or (ii) only to “professional investors” within the meaning of the SFO andany rules made under the SFO and in accordance with the requirements under the SFO and any rulesmade under the SFO.

Ireland

The Stapled Securities described in this Prospectus are interests in a collective investment schemewhich is not supervised or authorised by the Irish Financial Regulator or approved by the Irish FinancialRegulator to market the Stapled Securities in Ireland. Therefore, no advertising or marketing of StapledSecurities may take place in Ireland without the prior approval in writing of the Irish Financial Regulator.In addition, any sales or marketing of Stapled Securities in Ireland must take place in accordance withall applicable provisions of the Irish Investment Intermediaries Act, 1995 (as amended), the Irish MarketAbuse (Directive 2003/6/EEC) Regulations 2006 (as amended) and all other relevant laws, regulationsand rules.

208

Italy

The offering of the Stapled Securities has not been cleared by CONSOB (the Italian SecuritiesExchange Commission) pursuant to Italian securities legislation or the Bank of Italy. Accordingly, noStapled Securities may be offered, sold or delivered, directly or indirectly, nor may copies of thisProspectus nor any other documentation relating to the Stapled Securities be distributed or madeavailable in Italy except (a) to professional investors, as defined under Article 31, second paragraph,of CONSOB Regulation No. 11522 of 1 July 1998, as amended (“Regulation No. 11522”), inaccordance with Article 100 and Article 30, second paragraph, of Legislative Decree No. 58 of 24February 1998, as amended (the “Financial Services Act”), provided that such professional investorsact in their capacity and not as depositories or nominees for other person; or (b) in circumstances whichare exempted from the rules on solicitation of investments pursuant to Article 100 of the FinancialServices Act and Article 33, first paragraph, of CONSOB Regulation No. 11971 of 14 May 1999, asamended (“Regulation No. 11971”).

In any event, the offering of the Stapled Securities must be effected in compliance with all relevantItalian securities, tax and exchange controls and any other applicable laws and regulations.

Accordingly, the Stapled Securities may not be offered, sold or delivered and copies of this Prospectusor any other documentation relating to the Stapled Securities may not be distributed or made availablein Italy unless such offer of the Stapled Securities or distribution or availability of copies of thisProspectus or any other documentation relating to the Stapled Securities in Italy is made: (i) by aninvestment firm, a bank or a financial intermediary permitted to conduct such activities in Italy inaccordance with Legislative Decree No. 385 of 1 September 1993, as amended (the “Banking Act”)and the implementing instructions of the Bank of Italy, the Financial Services Act, Regulation No. 11522,Regulation No. 11971 and any other applicable laws and regulations; (ii) in compliance with Article 129of the Banking Act and the implementing instructions of the Bank of Italy, pursuant to which the issueor offer of securities in Italy is subject to prior notification to the Bank of Italy unless an exemption,depending, inter alia, on the aggregate value of the securities issued or offered and the features of thesecurities, applies; and (iii) in compliance with any other applicable notification, requirement orlimitation which may be imposed by CONSOB or the Bank of Italy. In any case, the Stapled Securitiesshould not be placed, offered, sold, re-sold or delivered on a retail basis, either in the primary or thesecondary market, to any persons which are not professional investors and in any case to anyindividual residing in Italy. Each person in Italy receiving this Prospectus acknowledges that it (i) is aprofessional investor, as defined under Article 31, second paragraph, of CONSOB Regulation No.11522 of 1 July 1998, as amended, (ii) is acting in its capacity as a professional investor and not as adepository or nominee for another person, and (iii) has agreed that it will not resell or deliver the StapledSecurities purchased in this offering in Italy to persons which are not professional investors and in anycase it will not resell or deliver the Stapled Securities purchased in this offering to any individualresiding in Italy.

Japan

The Stapled Securities have not been and will not be registered under the Securities and ExchangeLaw of Japan (the “Securities and Exchange Law”) and each of DBS Bank, BNP Paribas and BNPParibas Peregrine has agreed that it will not offer or sell any securities, directly or indirectly, in Japanor to, or for the benefit of, any resident of Japan (which term as used herein means any person residentof Japan, including any corporation or other entity organised under the laws of Japan), or to others forre-offering or resale, directly or indirectly, in Japan or to a resident of Japan except pursuant to afollowing exemption; no Stapled Securities may be transferred by any holder thereof in Japan to anyother person unless such person is a Qualified Institutional Investor, as defined in the CabinetOrdinance Concerning Definitions under Article 2 of the Japanese Securities and Exchange Law andthe cabinet order and the cabinet office ordinance promulgated thereunder.

209

Switzerland

Neither this Prospectus nor the Stapled Securities have been approved by any Swiss regulatoryauthority. Accordingly, the Stapled Securities must not be publicly (as defined by Swiss law) offered,sold or marketed in any way to any investors domiciled in Switzerland or to or for the account or thebenefit of persons domiciled in Switzerland. This Prospectus does not constitute a prospectus withinthe meaning of Article 652a and Article 1156 of the Swiss Code of Obligations.

The Stapled Securities will be distributed and offered in Switzerland and this Prospectus will bedistributed or otherwise made available in Switzerland on a private placement basis to a limited numberof individually selected and approached institutional investors with a professional treasury without anypublic distribution, offering or marketing in or from Switzerland.

The Netherlands

The offer of the Stapled Securities is subject to the provisions of the Prospectus Directive referred toabove in the paragraph under the sub-heading ‘European Economic Area’. The Stapled Securities canonly be offered in the Netherlands without the publication, approval or notification of a prospectus inrelation to the Stapled Securities if an exemption applies. In the case of the offering of the StapledSecurities, an exemption applies in view of the fact that the Stapled Securities are solely offered toprofessional market parties within the meaning of the Exemption Regulation to the Act on theSupervision of the Securities Transactions 1995 (Vrijstellingsregeling Wet toezicht effectenverkeer1995).

The H-REIT Manager is exempted from the obligation to obtain a license within the meaning of the Acton the Supervision of the Investment Institutions (Wet toezicht beleggingsinstellingen) as the StapledSecurities may only be offered, sold, delivered or transferred, directly or indirectly, solely to individualsor legal entities that trade or invest in investment objects (beleggingsobjecten) in the conduct of aprofession or trade, including banks, brokers and institutional investors, within the meaning of theExemption Regulation to the Act on the Supervision of the Investment Institutions (VrijstellingsregelingWet toezicht beleggingsinstellingen), as amended from time to time.

Each person in the Netherlands receiving this Prospectus acknowledges that (i) it is a professionalmarket party, within the meaning of the Exemption Regulation to the Act on the Supervision of theSecurities Transactions 1995 (Vrijstellingsregeling Wet toezicht effectenverkeer 1995), as amendedfrom time to time, (ii) it is an individual or legal entity which trades or invests in investment objects(beleggingsobjecten) in the conduct of a profession or trade within the meaning of the ExemptionRegulation to the Act on the Supervision of the Investment Institutions (Vrijstellingsregeling Wettoezicht beleggingsinstellingen), as amended from time to time, and (iii) it has agreed that it will not(re)sell, transfer or deliver the Stapled Securities purchased in this offering in the Netherlands topersons which do not comply with the requirement mentioned under item (i) or to persons in or from theNetherlands which do not comply with the requirement mentioned under item (ii).

United Arab Emirates

The Stapled Securities have not been and will not, directly or indirectly, be issued, offered, sold,delivered or publicly promoted or advertised in the United Arab Emirates other than in compliance withany laws applicable in the United Arab Emirates governing the issue, offering, and/or sale, delivery orpublic promotion or advertisement of securities including without limitation those laws applicable in theDubai International Financial Centre. This Prospectus is strictly private and confidential and has notbeen and will not be reviewed by, deposited or registered with any licensing authority or governmentalagencies in the United Arab Emirates, including without limitation the Emirates Securities andCommodities Authority or the UAE Central Bank, the Dubai Financial Market, the Abu Dhabi SecuritiesMarket or any other UAE Exchange. This Prospectus may be issued to a limited number of institutionaland/or sophisticated investors in the UAE upon their request and confirmation that they understand thatneither H-REIT nor HBT have been licensed by or registered with the UAE authorities concerned and

210

that this Prospectus is intended only for the original recipient to whom it is addressed, must nottherefore be provided to any person other than such original recipient and may not be reproduced orused for any other purpose. Further, the information contained in this Prospectus does not, and is notintended to, constitute a public offer of securities in any part of the United Arab Emirates in accordancewith the Commercial Companies Law (UAE Federal Law No.8 of 1984 (as amended)) or otherwise, andis not intended to be an offer or an invitation to subscribe for or purchase any Stapled Securities.Furthermore, the information contained in this Prospectus is not intended to lead to the conclusion ofany contract of whatsoever nature within the territory of the United Arab Emirates.

United Kingdom

The Stapled Securities are interests in a collective investment scheme (as defined in the FinancialServices and Markets Act 2000 (the “FSMA”)) which has not been authorised or reviewed by theFinancial Services Authority or any other regulatory authority of the United Kingdom. Accordingly, thisProspectus is not being distributed to, and must not be passed on to, or relied or acted upon by, thegeneral public in the United Kingdom.

This Prospectus is for distribution in the United Kingdom only to persons (i) who have professionalexperience of participating in unregulated collective investment schemes and of markets relating toinvestments falling within both Article 14(5) of the Financial Services and Markets Act 2000 (Promotionof Collective Investment Schemes) (Exemptions) Order 2002 (the “CIS Order”) and Article 19(5) of theFinancial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “FP Order”), or (ii) whofall within both Article 22(2)(a) to (d) of the CIS Order and Article 49(2)(a) to (d) of the FP Order, or (iii)to whom communications relating to unregulated collective investment schemes may otherwise lawfullybe made (such persons together “relevant eligible persons”).

By way of explanation, the following persons fall within Article 49(2)(a) to (d) of the FP Order and Article22(2)(a) to (d) of the CIS Order:

(1) a body corporate which has more than 20 members or which is a subsidiary undertaking of aparent undertaking which has more than 20 members and which has a called up share capital ornet assets of not less than £500,000;

(2) any other body corporate, unincorporated association or partnership which has a called up capitalor net assets of not less than £5 million;

(3) the trustee of a high value trust (being a trust where the aggregate value of the cash andinvestments which form part of the trust’s assets (before deducting the amount of its liabilities) is(a) £10 million or more, or (b) has been £10 million or more at any time during the yearimmediately preceding the date on which this communication was first directed); or

(4) any person acting in the capacity of a director, officer or employer of one of the previous threecategories of persons and whose responsibilities include him or her engaging in investmentactivity.

Any investment or investment activity to which this Prospectus relates is only available to relevanteligible persons or will be engaged in only with relevant eligible persons and this financial promotionmust not be relied or acted upon by persons who are not relevant eligible persons. Expressions ofinterest resulting from this Prospectus will only be responded to if received from persons falling withinthose Articles.

United States of America

The Stapled Securities have not been and will not be registered under the Securities Act and may notbe offered or sold within the United States or to, or for the account or benefit of, U.S. persons exceptin certain transactions exempt from the registration requirements of the Securities Act.

211

The Stapled Securities are being offered and sold outside the United States to non-U.S. persons inreliance on Regulation S. Each Underwriter has severally agreed that, except as permitted by theUnderwriting Agreement, it will not offer or sell the Stapled Securities:

(1) as part of their distribution at any time; or

(2) otherwise until 40 days after the later of the commencement of the Offering and the closing datethereof,

within the United States or to, or for the account or benefit of, U.S. persons, and that it will have sentto each dealer to which it sells any of the Stapled Securities during the distribution compliance perioda confirmation or other notice setting forth the restrictions on offers and sales of the Stapled Securitieswithin the United States or to, or for the account or benefit of, U.S. persons.

In addition, until 40 days after the later of the commencement of the Offering and the closing datethereof, an offer or sale of the Stapled Securities within the United States or to any U.S. person by anydealer (whether or not participating in the Offering) may violate the registration requirements of theSecurities Act.

Terms used in this section have the meanings given to them by Regulation S.

212

CLEARANCE AND SETTLEMENT

Introduction

A letter of eligibility has been obtained from the SGX-ST for the listing and quotation of the StapledSecurities. For the purpose of trading on the SGX-ST, a board lot for the Stapled Securities willcomprise 1,000 Stapled Securities.

Upon listing and quotation on the SGX-ST, the Stapled Securities will be traded under the electronicbook-entry clearance and settlement system of CDP. All dealings in and transactions of the StapledSecurities through the SGX-ST will be effected in accordance with the terms and conditions for theoperation of Securities Accounts, as amended from time to time.

CDP, a wholly owned subsidiary of Singapore Exchange Limited, is incorporated under the laws ofSingapore and acts as a depository and clearing organisation. CDP holds securities for its accountholders and facilitates the clearance and settlement of securities transactions between account holdersthrough electronic book-entry changes in the Securities Accounts maintained by such account holderswith CDP.

It is expected that the Stapled Securities will be credited into the Securities Accounts of applicants forthe Stapled Securities within four Market Days after the closing date for applications for the StapledSecurities.

Clearance and Settlement under the Depository System

The Stapled Securities will be registered in the name of CDP or its nominee and held by CDP for andon behalf of persons who maintain, either directly or through depository agents, Securities Accountswith CDP. Persons named as direct Securities Account holders and depository agents in the depositoryregister maintained by CDP, rather than CDP itself, will be treated as holders of the Stapled Securitiesin respect of the number of Stapled Securities credited to their respective Securities Accounts.

Transactions in the Stapled Securities under the book-entry settlement system will be reflected by theseller’s Securities Account being debited with the number of Stapled Securities sold and the buyer’sSecurities Account being credited with the number of Stapled Securities acquired. No transfer stampduty is currently payable for the transfer of the Stapled Securities that are settled on a book-entry basis.

The Stapled Securities credited to a Securities Account may be traded on the SGX-ST on the basis ofa price between a willing buyer and a willing seller. The Stapled Securities credited into a SecuritiesAccount may be transferred to any other Securities Account with CDP, subject to the terms andconditions for the operation of Securities Accounts and a S$10.00 transfer fee payable to CDP. Allpersons trading in the Stapled Securities through the SGX-ST should ensure that the relevant StapledSecurities have been credited into their Securities Account, prior to trading in such Stapled Securities,since no assurance can be given that the Stapled Securities can be credited into the Securities Accountin time for settlement following a dealing. If the Stapled Securities have not been credited into theSecurities Account by the due date for the settlement of the trade, the buy-in procedures of the SGX-STwill be implemented.

Clearing Fees

A clearing fee for the trading of the Stapled Securities on the SGX-ST is payable at the rate of 0.05%of the transaction value, subject to a maximum of S$200.00 per transaction. The clearing fee, depositfee and Stapled Security withdrawal fee may be subject to GST (currently 5.0%).

213

Dealings in the Stapled Securities will be carried out in Singapore dollars and will be effected forsettlement in CDP on a scripless basis. Settlement of trades on a normal “ready” basis on the SGX-STgenerally takes place on the third Market Day following the transaction date and payment for theStapled Securities is generally settled on the following Market Day. CDP holds Stapled Securities onbehalf of investors in Securities Accounts. An investor may open a direct account with CDP or asub-account with a CDP depository agent. The CDP depository agent may be a member company ofthe SGX-ST, bank, merchant bank or trust company.

Other Fees

The Stapled Securities will be listed and traded on the SGX-ST and holders of the Stapled Securitieshave no right to request the H-REIT Manager or the HBT Trustee-Manager to redeem their StapledSecurities and no subscription fee, preliminary charge, realisation fee or switching fee is payable inrespect of the Stapled Securities.

214

EXPERTS

KPMG, the Independent Accountants, were responsible for preparing the Independent Accountants’Report on the Profit Forecasts and Profit Projections and the Independent Accountants’ Report on theUnaudited Pro Forma Financial Information of H-REIT found in Appendix I and Appendix II of thisProspectus, respectively.

CBRE and Knight Frank, the Independent Valuers, were responsible for preparing the IndependentProperty Valuation Summary Reports in Appendix III of this Prospectus.

Jones Lang LaSalle Property Consultants Pte Ltd, the Independent Property Consultant, wasresponsible for preparing the Independent Singapore Tourism and Hotel Market Overview Report inAppendix IV of this Prospectus.

KPMG Tax Services Pte Ltd, the Independent Tax Adviser, was responsible for preparing theIndependent Taxation Report found in Appendix V of this Prospectus.

Allen & Gledhill, Lee & Lee, Latham & Watkins and Shook Lin & Bok do not make, or purport to make,any statement in this Prospectus and none of them is aware of any statement in this Prospectus whichpurports to be based on a statement made by it and it makes no representation, express or implied,regarding, and takes no responsibility for, any statement in or omission from this Prospectus.

215

GENERAL INFORMATION

(1) The profit forecasts and profit projections contained in “Profit Forecasts and Profit Projections”have been stated by the H-REIT Manager Board and the HBT Trustee-Manager Board after dueand careful enquiry.

(2) There are no legal or arbitration proceedings pending or, so far as the H-REIT Manager Board andthe HBT Trustee-Manager Board are aware, threatened against the H-REIT Manager and theHBT Trustee-Manager the outcome of which, in the opinion of the H-REIT Manager Board and theHBT Trustee-Manager Board, may have or have had during the 12 months prior to the date of thisProspectus, a material adverse effect on the financial position of the H-REIT Manager and theHBT Trustee-Manager.

(3) There are no legal or arbitration proceedings pending or, so far as the H-REIT Manager Board andthe HBT Trustee-Manager Board are aware, threatened against H-REIT and/or HBT the outcomeof which, in the opinion of the H-REIT Manager Board and the HBT Trustee-Manager Board, mayhave or have had during the 12 months prior to the date of this Prospectus, a material adverseeffect on the financial position (on a pro forma basis) of H-REIT Manager and the HBTTrustee-Manager.

(4) The name, age and address of each of the H-REIT Manager Directors and the HBT Trustee-Manager Directors are set out in “Management and Corporate Governance — H-REIT ManagerDirectors”. A list of the present and past directorships of each director and executive officer of theH-REIT Manager and the HBT Trustee-Manager over the last five years preceding the LatestPracticable Date is set out in Appendix VII, “List of Present and Past Principal Directorships ofDirectors and Executive Officers of the H-REIT Manager and/or the HBT Trustee-Manager”.

(5) There is no family relationship among the directors and executive officers of the H-REIT Managerand the HBT Trustee-Manager.

(6) None of the directors or executive officers of the H-REIT Manager and the HBT Trustee-Manageror the Sponsor is or was involved in any of the following events:

• at any time during the last 10 years, an application or a petition under any bankruptcy lawsof any jurisdiction filed against him or against a partnership of which he was a partner at thetime when he was a partner or at any time within two years from the date he ceased to bea partner;

• at any time during the last 10 years, an application or a petition under any law of anyjurisdiction filed against an entity (not being a partnership) of which he was a director or anequivalent person or a key executive, at the time when he was a director or an equivalentperson or a key executive of that entity or at any time within two years from the date heceased to be a director or an equivalent person or a key executive of that entity, for thewinding up or dissolution of that entity or, where that entity is the trustee of a business trust,that business trust, on the ground of insolvency;

• any unsatisfied judgment against him;

• a conviction of any offence, in Singapore or elsewhere, involving fraud or dishonesty whichis punishable with imprisonment, or has been the subject of any criminal proceedings(including any pending criminal proceedings of which he is aware) for such purpose;

• a conviction of any offence, in Singapore or elsewhere, involving a breach of any law orregulatory requirement that relates to the securities or futures industry in Singapore orelsewhere, or has been the subject of any criminal proceedings (including any pendingcriminal proceedings of which he is aware) for such breach;

• at any time during the last 10 years, judgment been entered against him in any civilproceedings in Singapore or elsewhere involving a breach of any law or regulatoryrequirement that relates to the securities or futures industry in Singapore or elsewhere, or afinding of fraud, misrepresentation or dishonesty on his part, or any civil proceedings

216

(including any pending civil proceedings of which he is aware) involving an allegation offraud, misrepresentation or dishonesty on his part;

• a conviction in Singapore or elsewhere of any offence in connection with the formation ormanagement of any entity or business trust;

• disqualification from acting as a director or an equivalent person of any entity (including thetrustee of a business trust), or from taking part directly or indirectly in the management of anyentity or business trust;

• any order, judgment or ruling of any court, tribunal or governmental body permanently ortemporarily enjoining him from engaging in any type of business practice or activity;

• to his knowledge, been concerned with the management or conduct, in Singapore orelsewhere, of the affairs of:

(i) any corporation which has been investigated for a breach of any law or regulatoryrequirement governing corporations in Singapore or elsewhere;

(ii) any entity (not being a corporation) which has been investigated for a breach of any lawor regulatory requirement governing such entities in Singapore or elsewhere;

(iii) any business trust which has been investigated for a breach of any law or regulatoryrequirement governing business trusts in Singapore or elsewhere; or

(iv) any entity or business trust which has been investigated for a breach of any law orregulatory requirement that relates to the securities or futures industry in Singapore orelsewhere,

in connection with any matter occurring or arising during the period when he was soconcerned with the entity or business trust; or

• the subject of any current or past investigation or disciplinary proceedings, or has beenreprimanded or issued any warning, by the MAS or any other regulatory authority, exchange,professional body or government agency, whether in Singapore or elsewhere.

(7) The financial year-end of CDL Hospitality Trusts, H-REIT and HBT is 31 December. The annualaudited consolidated financial statements of CDL Hospitality Trusts will be prepared and sent tothe holders of the Stapled Securities within three months of the financial year-end.

(8) Save as disclosed elsewhere in this Prospectus, there is no arrangement or understanding witha Substantial Shareholder of the HBT Trustee-Manager, Substantial Unitholder of HBT, customeror supplier of the HBT Trustee-Manager, pursuant to which any HBT Trustee-Manager Director orany executive officer of HBT was selected as a director or executive officer of HBT.

(9) There is no known arrangement the operation of which may at a subsequent date, result in achange of control in the HBT Trustee-Manager.

(10) Save as disclosed under the sections entitled “Risk Factors”, “Capitalisation”, “Profit Forecastsand Profit Projections”, “Strategy” and “Business and Properties” of this Prospectus, the financialcondition and operations of HBT is not likely to be affected by any of the following:

(a) known trends or demands, commitments, events or uncertainties that will result in or arereasonably likely to result in the HBT’s liquidity increasing or decreasing in any material way;

(b) material commitments for capital expenditure;

(c) unusual or infrequent events or transactions or any insignificant economic changes thatmaterially affect the amount of reported income from operations; and

(d) known trends or uncertainties that have had or that HBT reasonably expects will have amaterial favourable or unfavourable impact on revenues or operating income.

217

(11) HBT has only recently been registered as a business trust and as such, no previous financialstatements have been prepared.

(12) HBT is not engaged in any legal or arbitration proceedings as plaintiff or defendant in the past 12months before the date of lodgment of this Prospectus in respect of any amounts or claims whichare material in the context of the Offering and to the best of the HBT Trustee-Manager Board’sknowledge and belief, having made all due enquiries, there are no proceedings pending orthreatened against HBT or any facts likely to give rise to any litigation, claims or proceedingswhich might have a material effect on the financial position or the profitability of HBT.

(13) As at the date of this Prospectus, there is no governmental law, decree or regulatory requirementor any other requirement which may affect the repatriation of capital and the remittance of profitsby or to the HBT Trustee-Manager.

(14) A full valuation of each of the real estate assets held by H-REIT will be carried out at least oncea year in accordance with the Property Funds Guidelines. Generally, where CDL Hospitality Trustsproposes to issue new Stapled Securities or to redeem existing Stapled Securities, a valuation ofthe real properties held by H-REIT must be carried out in accordance with the Property FundsGuidelines. The H-REIT Manager or the H-REIT Trustee may at any other time arrange for thevaluation of any of the real properties held by H-REIT if it is of the opinion that it is in the bestinterest of the holders of the Stapled Securities to do so.

(15) While CDL Hospitality Trusts is listed on the SGX-ST, investors may check the SGX-ST websitehttp://www.sgx.com for the prices at which the Stapled Securities are being traded on the SGX-ST.Investors may also check one or more major Singapore newspapers such as The Straits Times,The Business Times and Lianhe Zaobao for the price range within which the Stapled Securitieswere traded on the SGX-ST on the preceding day.

(16) The H-REIT Manager does not intend to receive soft dollars (as defined in the CIS Code) inrespect of H-REIT. Save as disclosed in this Prospectus, unless otherwise permitted under theListing Manual, neither the H-REIT Manager, the HBT Trustee-Manager nor any of theirAssociates will be entitled to receive any part of any brokerage charged to H-REIT or HBT, or anypart of any fees, allowances or benefits received on purchases charged to H-REIT or HBT.

(17) The material contracts which the H-REIT Trustee has entered into within the two years precedingthe date of this Prospectus (not being contracts entered into in the ordinary course of the businessof CDL Hospitality Trusts) are as follows:

(a) the H-REIT Trust Deed;

(b) the Stapling Deed;

(c) the Property Sale and Purchase Agreements;

(d) the management and consultancy agreement with HLMS as described in “Management andCorporate Governance — H-REIT — Related Party Transactions — Related PartyTransactions in connection with the Setting Up of H-REIT”; and

(e) the right of first refusal agreement as described in “Certain Agreements Relating to CDLHospitality Trusts, H-REIT, HBT and the Properties — Right of First Refusal”.

(18) The dates of, parties to, and general nature of every material contract which the HBTTrustee-Manager has entered into within the two years preceding the date of this Prospectus (notbeing contracts entered into in the ordinary course of the business of CDL Hospitality Trusts) areas follows:

(a) the HBT Trust Deed; and

(b) the Stapling Deed.

218

(19) Copies of the following documents are available for inspection at the registered offices of theH-REIT Manager and the HBT Trustee-Manager at 36 Robinson Road, #04-01 City House,Singapore 068877 for a period of six months from the date of this Prospectus:

(a) the material contracts referred to in paragraphs 17 and 18 above, save for the StaplingDeed, the H-REIT Trust Deed and the HBT Trust Deed (which will be available for inspectionfor so long as H-REIT and HBT are in existence);

(b) the Underwriting Agreement;

(c) the subscription agreement entered into between the H-REIT Manager, the HBT Trustee-Manager and Hospitality Holdings Pte. Ltd. in relation to Hospitality Holdings Pte. Ltd.’ssubscription for the Stapled Securities;

(d) the Master Lease Agreements;

(e) the Waterfront Conference Centre Lease Agreement;

(f) the Waterfront Conference Centre Sub-Lease Agreement;

(g) the leasing services agreement for Orchard Hotel Shopping Arcade as described in “CertainAgreements Relating to CDL Hospitality Trusts, H-REIT, HBT and the Properties - LeasingServices Agreement for Orchard Hotel Shopping Arcade”;

(h) the Independent Accountants’ Report on the Profit Forecasts and Profit Projections as setout in Appendix I of this Prospectus;

(i) the Independent Accountants’ Report on the Unaudited Pro Forma Financial Information ofH-REIT as set out in Appendix II of this Prospectus;

(j) the Independent Property Valuation Summary Reports as set out in Appendix III of thisProspectus;

(k) the Independent Singapore Tourism and Hotel Market Overview Report as set out inAppendix IV of this Prospectus;

(l) the Independent Taxation Report as set out in Appendix V of this Prospectus;

(m) the written consents of the Independent Accountants, the Independent Valuers, theIndependent Property Consultant and the Independent Tax Advisers, as described in“Experts”;

(n) the undertaking of the H-REIT Manager to the MAS covenanting, among other things, not todeal in the Stapled Securities during certain stipulated periods as described in “Managementand Corporate Governance — The H-REIT Manager”;

(o) the undertaking of the H-REIT Manager to the SGX-ST covenanting that its Audit Committeewill review and propose measures to resolve the issue of potential conflicts of interestbetween H-REIT and the Sponsor, and that it would announce such assessment and themeasures to be adopted;

(p) the undertaking of the HBT Trustee-Manager to the SGX-ST that it would not engage inactivities that are in conflict of the objectives of H-REIT; and

(q) the Depository Services Agreement.

(20) DBS Bank and BNP Paribas, named as the Joint Underwriters, have given and have notwithdrawn their written consent to the issue of this Prospectus with the inclusion herein of, and allreferences to, its name and all references thereto in the form and context in which they appear inthis Prospectus, and to act in such capacity in relation to this Prospectus.

(21) DBS Bank and BNP Paribas Peregrine, named as Joint Financial Advisers, Global Coordinatorsand Bookrunners, have given and have not withdrawn their written consent to the issue of this

219

Prospectus with the inclusion herein of, and all references to, its name and all references theretoin the form and context in which they appear in this Prospectus, and to act in such capacity inrelation to this Prospectus.

(22) The Independent Accountants, the Independent Valuers, the Independent Property Consultantand the Independent Tax Advisers have each given and have not withdrawn their written consentsto the issue of this Prospectus with the inclusion herein of their names and their respective reports(where applicable) and all references thereto in the form and context in which they respectivelyappear in this Prospectus and to act in such capacity in relation to this Prospectus.

220

GLOSSARY

£ Pound sterling, the lawful currency of the United Kingdom

Aggregate Leverage According to the Property Funds Guidelines, this means the ratio ofH-REIT’s total borrowings (including deferred payments for assetswhether to be settled in cash or in H-REIT Units) to the value of theH-REIT Deposited Property, adjusted for the distribution of anyaccrued taxable income and tax exempt income

Application Forms The printed application forms to be used for the purpose of theOffering and which form part of this Prospectus

Application List The list of applicants subscribing for the Stapled Securities whichare the subject of the Public Offer

Appraised Value In relation to each of the Properties, the value(s) for that property asat 28 February 2006, as appraised by the Independent Valuers

ASEAN Association of South East Asian Nations

Associate Has the meaning ascribed to it in the Listing Manual

ATM Automated teller machine

Available Rooms Number of guest rooms in a hotel less permanent house use rooms

Average Daily Rate Room revenue divided by the total number of rooms sold

Average Occupancy Rate Rooms sold for a particular period divided by the Available Roomsavailable for the relevant period

Base Fee 0.25% per annum of the value of the H-REIT Deposited Property

BFC The business and financial centre to be located at Marina Bay,Singapore

BNP Paribas BNP Paribas (acting through its Singapore Branch)

BNP Paribas Peregrine BNP Paribas Peregrine (Singapore) Ltd

BTA Business Trusts Act, Chapter 31A of Singapore

Business Day Any day (other than a Saturday, Sunday or gazetted public holiday)on which commercial banks are open for business in Singapore andthe SGX-ST is open for trading

CAGR Compounded annual growth rate

CBD The central business district of Singapore

CBRE CB Richard Ellis (Pte) Ltd, one of the independent valuers

CDL City Developments Limited

CDL Hospitality Trusts The stapled group comprising H-REIT and HBT

CDP The Central Depository (Pte) Limited

CIS Code The Code on Collective Investment Schemes issued by the MAS

Companies Act Companies Act, Chapter 50 of Singapore

Copthorne King’s Hotel The hotel known as Copthorne King’s Hotel Singapore, located at403 Havelock Road, Singapore 169632

221

Current Stapled SecurityValue

Means at any time, the value of all the assets of CDL HospitalityTrusts, less all the liabilities of CDL Hospitality Trusts (includingliabilities accrued but not yet paid) and any provision is taken intoaccount in determining the liabilities of CDL Hospitality Trusts at thattime divided by the number of Stapled Securities in issue anddeemed to be in issue at that time

Current Unit Value Means at any time:

(i) in relation to H-REIT, the value of all the assets of H-REIT, lessall the liabilities of H-REIT (including liabilities accrued but notyet paid) and any provision is taken into account indetermining the liabilities of H-REIT at that time divided by thenumber of H-REIT Units in issue and deemed to be in issue atthat time; and

(ii) in relation to HBT, the value of all the assets of HBT, less all theliabilities of HBT (including liabilities accrued but not yet paid)and any provision is taken into account in determining theliabilities of HBT at that time divided by the number of HBTUnits in issue and deemed to be in issue at that time

DBS Bank DBS Bank Ltd

Deferred Consideration Relates to the balance 10% of the purchase consideration payableto the relevant Vendor of Grand Copthorne Waterfront Hotel, onlegal completion after all regulatory approvals for the excision orcreation of a separate strata lot comprising Grand CopthorneWaterfront Hotel have been obtained (see “Certain AgreementsRelating to CDL Hospitality Trusts, H-REIT, HBT and the Properties— Specific Terms Relevant to the Properties — Separate Title toGrand Copthorne Waterfront Hotel”)

Depository ServicesAgreement

The depository services agreement dated 30 June 2006 enteredinto between CDP, the H-REIT Manager, the H-REIT Trustee andthe HBT Trustee-Manager relating to the deposit of the StapledSecurities in CDP

Extraordinary Resolution A resolution proposed and passed as such by a majority consistingof 75.0% or more of the total number of votes cast for and againstsuch resolution at a meeting of the holders of H-REIT Units or HBTUnits (as the case may be) duly convened and held

F&B Food and beverage

Facilities The secured loan facilities comprising a three-year floating rate termloan facility of S$220.0 million and a three-year floating raterevolving credit facility of S$70.0 million made available to H-REITby DBS Bank and The Royal Bank of Scotland plc

FF&E Furniture, fixtures and equipment

Fixed Rent The aggregate Fixed Rent for the four Hotels is S$13.4 million, withthe following breakdown: S$5.9 million per annum in respect ofOrchard Hotel, S$3.0 million per annum in respect of GrandCopthorne Waterfront Hotel, S$3.9 million per annum in respect ofM Hotel; and S$0.6 million per annum in respect of CopthorneKing’s Hotel

Fixed Revenue Comprises (a) Fixed Rent; and (b) Service Charge

222

fka formerly known as

Forecast Period 2006 The period commencing from 1 July 2006 and ending 31 December2006

Foreign non-individualholder of the StapledSecurities

A holder of the Stapled Securities who is not a resident of Singaporefor Singapore income tax purposes and who does not have apermanent establishment in Singapore, or who carries on anyoperation in Singapore through a permanent establishment inSingapore, where the funds used to acquire the Stapled Securitiesare not obtained from that operation

FY The financial year ended or (as the case may be) ending 31December

GDP Gross domestic product

GFA Gross floor area

Grand Copthorne WaterfrontHotel

The hotel known as Grand Copthorne Waterfront Hotel Singapore,located at 392 Havelock Road, Singapore 169663 comprised or tobe comprised in a separate strata lot which is excised from theparent lots TS21-1093C and TS21-1094M both comprised in CTVol. 611 Fol. 115

Gross Receipts Method The method of assessing the annual value of a property based onthe gross receipts of the preceding calendar year. Using thismethod, in the context of the Property Tax (Valuation by GrossReceipts for Hotel Premises) Order, the annual value of a hotel’shotel rooms in any year is assessed at 15% of the gross receipts ofthe preceding calendar year whereas the annual value of its F&Boutlets in any year is assessed at 5% of the gross receipts of thepreceding calendar year

Gross Revenue Comprises (a) the Fixed Rent, Service Charge and Variable Rentfrom the Hotels and (b) retail rental income from Orchard HotelShopping Arcade

GST Goods and services tax

HBT CDL Hospitality Business Trust

HBT Deposited Property The gross assets of HBT, including all the authorised investments ofHBT for the time being held or deemed to be held by the trust underthe HBT Trust Deed

HBT Trust Deed The HBT trust deed dated 12 June 2006 entered into by the HBTTrustee-Manager constituting HBT

HBT Trustee-Manager M&C Business Trust Management Limited, as trustee-manager ofHBT

HBT Trustee-Manager Board The board of directors of the HBT Trustee-Manager

HBT Trustee-ManagerDirector

A director on the HBT Trustee-Manager Board

HBT Unit An undivided interest in HBT as provided for in the HBT Trust Deed

HLMS Hong Leong Management Services Pte. Ltd.

Hotel Manager MCIL

223

Hotels Orchard Hotel, Copthorne King’s Hotel, M Hotel and GrandCopthorne Waterfront Hotel, and each a Hotel

Hotels Act Hotels Act, Chapter 127 of Singapore

H-REIT CDL Hospitality Real Estate Investment Trust

H-REIT Deposited Property The gross assets of H-REIT, including the Properties and all theauthorised investments of H-REIT for the time being held or deemedto be held by the trust under the H-REIT Trust Deed

H-REIT Manager M&C REIT Management Limited, as manager of H-REIT

H-REIT Manager Board The board of directors of the H-REIT Manager

H-REIT Manager Director A director on the H-REIT Manager Board

H-REIT Trust Deed The H-REIT trust deed dated 8 June 2006 made between theH-REIT Manager and the H-REIT Trustee constituting H-REIT

H-REIT Trustee DBS Trustee Limited, as trustee of H-REIT

H-REIT Unit An undivided interest in H-REIT as provided for in the H-REIT TrustDeed

IDD International direct dialling

Independent Accountants KPMG

Independent PropertyConsultant

Jones Lang LaSalle Property Consultants Pte Ltd

Independent Tax Adviser KPMG Tax Services Pte Ltd

Independent Valuers CBRE and Knight Frank, being the independent valuers in respectof the Properties

Interested Party Has the meaning ascribed to it in the Property Funds Guidelines

Interested Party Transaction Has the meaning ascribed to it in the Property Funds Guidelines

Interested Person Has the meaning ascribed to it in the Listing Manual

Interested PersonTransaction

Has the meaning ascribed to it in the Listing Manual

Iraq War The 2003 invasion of Iraq led by the U.S.

IRAS Inland Revenue Authority of Singapore

IRs The two integrated resorts in Singapore, one of which is to belocated at Marina Bay, and the other to be located at Sentosa

Issue Price Issue price of each Stapled Security

King’s Centre The building known as King’s Centre Singapore located at 390Havelock Road, Singapore 169662

km kilometres

Knight Frank Knight Frank Pte Ltd

Latest Practicable Date 9 June 2006, being the latest practicable date prior to the lodgementof this Prospectus with the MAS

Listing Date The date of admission of the Stapled Securities to the Official List ofthe SGX-ST

224

Listing Manual The Listing Manual of the SGX-ST

Lock-up Period The period commencing from the Listing Date until the date falling180 days after the Listing Date

M Hotel The hotel known as M Hotel Singapore, located at 81 Anson Road,Singapore 079908

M&C Millennium & Copthorne Hotels plc

Market Day A day on which the SGX-ST is open for trading in securities

MAS The Monetary Authority of Singapore

Master Lease Agreements The lease agreements entered into by the H-REIT Trustee, theH-REIT Manager and the Master Lessees in relation to the Hotels

Master Lessees Republic Hotels & Resorts Limited in respect of Grand CopthorneWaterfront Hotel and Copthorne King’s Hotel, Harbour View HotelPte. Ltd. in respect of M Hotel, and City Hotels Pte. Ltd. in respectof Orchard Hotel

MCIL Millennium & Copthorne International Limited

MICE Meetings, incentives, conventions and exhibitions

MRT The Mass Rapid Transit system in Singapore

NCPC National Crime Prevention Council

Net Property Income Consists of Gross Revenue less Property Expenses

NLA Net lettable area

Occupation Agreements The tenancies and licences in respect of the whole or any part(s) ofthe property

Offer Period The period of time during which the H-REIT Trustee is granted thefirst right to purchase a Relevant Asset from the Sponsor or aRelevant Asset offered for sale to the Sponsor for the benefit ofH-REIT

Offering The offering of 425,000,000 Stapled Securities by the H-REITManager and the HBT Trustee-Manager for subscription at theOffering Price under the Placement Tranche and the Public Offer

Offering Price The subscription price of S$0.83 for each Stapled Security underthe Offering

Offering Stapled Securities The Stapled Securities under the Public Offer

Operating Equipment Items customarily referred to as operating equipment in the hotelindustry including but not limited to glassware, silverware, cutlery,chinaware, crockery, linen and uniforms as well as all those itemsgenerally required for the day to day operation of a hotel

Orchard Hotel The hotel known as Orchard Hotel Singapore, located at 442Orchard Road, Singapore 238879

Orchard Hotel ShoppingArcade

The retail shopping centre adjacent to and annexed to OrchardHotel

225

Ordinary Resolution A resolution proposed and passed as such by a majority consistingof more than 50% of the total number of votes cast for and againstsuch resolution at a meeting of the holders of H-REIT Units or HBTUnits (as the case may be) duly convened and held

Participating Banks DBS Bank (including POSB), Oversea-Chinese BankingCorporation Limited and United Overseas Bank Limited and itssubsidiary, Far Eastern Bank Limited (the “UOB Group”)

Performance Fee 5.0% per annum of the Net Property Income in the relevant financialyear

PIE Pan Island Expressway

Placement Tranche The international placement of the Stapled Securities to investors,including institutional and other investors in Singapore, andincluding the Reserved Tranche, pursuant to the Offering

PRC The People’s Republic of China excluding, for the purposes of thisProspectus only, Hong Kong Special Administrative Region and theMacau Special Administrative Region of the People’s Republic ofChina

Prescribed Period For the first Prescribed Period, the period from and including theListing Date to and including 31 December and, for any subsequentPrescribed Periods, the period from and including 1 January in onecalendar year to and including 31 December in the same calendaryear

Projection Year 2007 The financial year ending 31 December 2007

Properties The Hotels and Orchard Hotel Shopping Arcade

Property Expenses Comprises (a) property tax on the Hotels, (b) insurance expenseson the Hotels and (c) other direct operating expenses of OrchardHotel Shopping Arcade

Property Funds Guidelines The guidelines for real estate investment trusts issued by the MASas Appendix 2 to the CIS Code

Property Sale and PurchaseAgreements

The sale and purchase agreements dated 12 June 2006 betweenthe Vendors and the H-REIT Trustee on behalf of H-REIT in respectof the sale and purchase of the Properties

Public Offer The offering to the public in Singapore

Qualifying holders of theStapled Securities

Holders of the Stapled Securities who are:

(a) Singapore-incorporated companies which are tax residents inSingapore;

(b) bodies of persons, other than companies or partnerships,registered or constituted in Singapore (for example, towncouncils, statutory boards, registered charities, registeredco-operative societies, registered trade unions, managementcorporations, clubs and trade and industry associations); and

(c) Singapore branches of foreign companies which havepresented a letter of approval from the IRAS granting a waiverfrom tax deduction at source in respect of distributions fromH-REIT.

Recognised Stock Exchange Any stock exchange of repute in any part of the world

226

Regulation S Regulation S under the Securities Act

REIT Real estate investment trust

Related Party Refers to an Interested Person and/or, as the case may be, anInterested Party

Related Party Transactions Refers to an “interested person transaction” (as defined in theListing Manual) and/or, as the case may be, an “interested partytransaction” (as defined in the Property Funds Guidelines)

Relevant Assets Properties which are primarily used for hospitality purposes and/or,if applicable, the shares or equity interests in single purposecompanies which hold such properties

Relevant Period The financial years ended 31 December 2003, 31 December 2004and 31 December 2005

Rental Method The method of assessing the annual value of a property based on itsrental value

Reserved Stapled Securities 12,500,000 Stapled Securities reserved for subscription by thedirectors, management, employees and business associates of theSponsor and persons who have contributed to the success of theOffering

Reserved Tranche The offering under the Placement Tranche of 12,500,000 StapledSecurities reserved for subscription by the directors, management,employees and business associates of the Sponsor, and personswho have contributed to the success of the Offering

RevPAR Room revenue per Available Room — this figure represents theproduct of the Average Daily Rate and the Average Occupancy Rate

S$, $, or Singapore dollarsand cents

Singapore dollars and cents, the lawful currency of the Republic ofSingapore

SARS Severe acute respiratory syndrome

SARS Outbreak The international outbreak of SARS in 2003

Securities Account Securities account or sub-account maintained by a Depositor (asdefined in Section 130A of the Companies Act) with CDP

Securities Act U.S. Securities Act of 1933

September 11 Incident The attack by terrorists on the New York World Trade Center and thePentagon in the United States on 11 September 2001

Service Charge The aggregate Service Charge for the four Hotels is a fixed S$13.0million, with the following breakdown: S$4.4 million per annum inrespect of Orchard Hotel, S$4.2 million per annum in respect ofGrand Copthorne Waterfront Hotel, S$2.2 million per annum inrespect of M Hotel and S$2.2 million per annum in respect ofCopthorne King’s Hotel

SFA Securities and Futures Act, Chapter 289 of Singapore

SGX-ST Singapore Exchange Securities Trading Limited

SLA Singapore Land Authority

Sponsor M&C

227

Sponsor Entity Any of the Sponsor or its wholly owned subsidiaries

Sq m Square metres

Stapled Security A security comprising one unit of H-REIT and one unit of HBTstapled together under the terms of the Stapling Deed

Stapling CommencementDate

The date whereby the H-REIT Units were stapled to the HBT Units,which is on 12 June 2006

Stapling Deed The stapling deed dated 12 June 2006 made between the H-REITManager, the H-REIT Trustee and the HBT Trustee-Manager

STB Singapore Tourism Board

Stop Order Stop order issued by the MAS in certain circumstances under theSFA

Subsidiary Has the meaning ascribed thereto in the Companies Act

Substantial HBT Unitholder Any holder of HBT Units with an interest in not less than 5.0% of allHBT Units in issue

Substantial Holder Any holder of the Stapled Securities with an interest in not less than5.0% of all the Stapled Securities in issue

Substantial H-REITUnitholder

Any holder of H-REIT Units with an interest in not less than 5.0% ofall H-REIT Units in issue

Substantial Shareholder Any shareholder of the HBT Trustee-Manager with an interest in notless than 5.0% of the shares in issue

Take-Over Code The Singapore Code on Take-Overs and Mergers issued by theMAS

Tax Ruling The tax ruling dated 7 February 2006 issued by the IRAS on thetaxation of H-REIT and the holders of the Stapled Securities

TTG Asia Trade Travel Gazette Asia

Trust Companies Act Trust Companies Act 2005, Chapter 336 of Singapore

U.S. United States of America

UEC Urban Entertainment Centre

Underwriters DBS Bank and BNP Paribas

Underwriting Agreement The underwriting agreement dated 10 July 2006 entered intobetween the H-REIT Manager, the HBT Trustee-Manager, theSponsor, DBS Bank, BNP Paribas and BNP Paribas Peregrine

Unstapling The process that results in a H-REIT Unit no longer being stapled toa HBT Unit

URA Urban Redevelopment Authority of Singapore

Variable Rent The Variable Rent per annum for each Hotel is computed based onthe sum of 20.0% of the Hotel’s revenue for the prevailing financialyear and 20.0% of the Hotel’s gross operating profit for theprevailing financial year, less the sum of Fixed Rent and ServiceCharge. Should the calculation of the Variable Rent yield a negativefigure, the Variable Rent will be deemed to be zero

228

Vendors City Hotels Pte. Ltd. in respect of Orchard Hotel and Orchard HotelShopping Arcade; CDL in respect of Grand Copthorne WaterfrontHotel; Harbour View Hotel Pte. Ltd. in respect of M Hotel andRepublic Hotels & Resorts Limited in respect of Copthorne King’sHotel

Waterfront ConferenceCentre

The premises of approximately 20,979 square feet located on leveltwo of Waterfront Plaza which is adjacent to Grand CopthorneWaterfront Hotel

Waterfront ConferenceCentre Lease Agreement

The lease agreement to be entered into on the Listing Date betweenCDL, as lessor and H-REIT Trustee, as lessee relating to the leaseof the Waterfront Conference Centre for an initial term of five yearswith fourteen consecutive options to renew for a renewal term of fiveyears each on the terms therein contained

Waterfront ConferenceCentre Sub-LeaseAgreement

(1) The sub-lease agreement to be entered into on the Listing Datebetween H-REIT Trustee, as sub-lessor and Republic Hotels &Resorts Limited, as sub-lessee relating to the sub-lease of theWaterfront Conference Centre with Republic Hotels & ResortsLimited paying to H-REIT Trustee the same rent, service charge andother sums that are payable by H-REIT Trustee to CDL under theWaterfront Conference Centre Lease Agreement and (2) for so longas the Master Lease Agreement in respect of Grand CopthorneWaterfront Hotel with Republic Hotels & Resorts Limited is valid andsubsisting, each subsequent sub-lease agreement entered into bythe H-REIT Trustee, as sub-lessor and Republic Hotels & ResortsLimited, as sub-lessee relating to the sub-lease of the WaterfrontConference Centre for sub-lease period(s) in aggregate notexceeding the residue of the term and (if Republic Hotels & ResortsLimited exercises its option to renew) for the residue of the optionterm

Words importing the singular shall, where applicable, include the plural and vice versa. Words importingthe masculine gender shall, where applicable, include the feminine and neuter genders. References topersons shall include corporations.

Any reference in this Prospectus to any enactment is a reference to that enactment for the time beingamended or re-acted.

Any reference to a time of day in this Prospectus is made by reference to Singapore time unlessotherwise stated.

229

SignedMr Wong Hong RenDirector

SignedMr Yeo Wee Eng VincentDirector

SignedDr Tan Cheng BockDirector

SignedMs Lim Yin Nee JennyDirector

SignedMr Chan Chun Ming JimmyDirector

APPENDIX I

INDEPENDENT ACCOUNTANTS’ REPORT ONTHE PROFIT FORECASTS AND PROFIT PROJECTIONS

The Board of DirectorsM&C REIT Management Limited(in its capacity as Manager of CDL Hospitality Real Estate Investment Trust)36 Robinson Road#04-01 City HouseSingapore 068877

DBS Trustee Limited(in its capacity as Trustee of CDL Hospitality Real Estate Investment Trust)6 Shenton Way#36-02 DBS Building Tower OneSingapore 068809

The Board of DirectorsM&C Business Trust Management Limited(in its capacity as Trustee-Manager of CDL Hospitality Business Trust)36 Robinson Road#04-01 City HouseSingapore 068877

10 July 2006

Dear Sirs

Letter from the Reporting Accountants on the Profit Forecasts for the Period from 1 July 2006to 31 December 2006 and the Profit Projections for the Year Ending 31 December 2007

This letter has been prepared for inclusion in the prospectus (the “Prospectus”) to be issued inconnection with the offering of 425,000,000 stapled securities in CDL Hospitality Trusts, comprisingCDL Hospitality Real Estate Investment Trust (“H-REIT”) and CDL Hospitality Business Trust (“HBT”)at the offering price of S$0.83 per stapled security (the “Offering”).

The directors of M&C REIT Management Limited and M&C Business Trust Management Limited(collectively, the “Directors”) are responsible for the preparation and presentation of the forecastStatement of Net Income and Distribution of H-REIT and the forecast Statement of Net Income of CDLHospitality Trusts, both for the period from 1 July 2006 to 31 December 2006 (collectively, the “ProfitForecasts”), and the projected Statement of Net Income and Distribution of H-REIT and projectedStatement of Net Income of CDL Hospitality Trusts, both for the year ending 31 December 2007(collectively, the “Profit Projections”), as set out on pages 93 and 94 of the Prospectus, which havebeen prepared on the basis of the assumptions as set out on pages 95 to 105 of the Prospectus.

We have examined the Profit Forecasts of H-REIT and CDL Hospitality Trusts for the period from 1 July2006 to 31 December 2006 and the Profit Projections of H-REIT and CDL Hospitality Trusts for the yearending 31 December 2007 as set out on pages 93 and 94 of the Prospectus in accordance withSingapore Standard on Assurance Engagements applicable to the examination of prospective financialinformation. The Directors are solely responsible for the Profit Forecasts and Profit Projectionsincluding the assumptions set out on pages 95 to 105 of the Prospectus on which they are based.

I-1

Profit Forecasts

Based on our examination of the evidence supporting the assumptions, nothing has come to ourattention which causes us to believe that these assumptions do not provide a reasonable basis for theProfit Forecasts. Further, in our opinion the Profit Forecasts, so far as the accounting policies andcalculations are concerned, are properly prepared on the basis of the assumptions, are consistent withthe accounting policies set out on page 95 and pages II-15 to II-18 of the Prospectus, and are presentedin accordance with the relevant presentation principles of Recommended Accounting Practice 7“Reporting Framework for Unit Trusts” (but not all the required disclosures) issued by the Institute ofCertified Public Accountants of Singapore (“ICPAS”), which is the framework to be adopted by H-REITand CDL Hospitality Trusts in the preparation of their financial statements.

Profit Projections

The Profit Projections are intended to show a possible outcome based on the stated assumptions. AsH-REIT and HBT are newly established without any history of activities and because the length of theperiod covered by the Profit Projections extends beyond the period covered by the Profit Forecasts, theassumptions used in the Profit Projections (which included hypothetical assumptions about futureevents which may not necessarily occur) are more subjective than would be appropriate for profitforecasts. The Profit Projections do not therefore constitute profit forecasts.

Based on our examination of the evidence supporting the assumptions, nothing has come to ourattention which causes us to believe that these assumptions do not provide a reasonable basis for theProfit Projections. Further, in our opinion the Profit Projections, so far as the accounting policies andcalculations are concerned, are properly prepared on the basis of the assumptions, are consistent withthe accounting policies as set out on page 95 and pages II-15 to II-18 of the Prospectus, and arepresented in accordance with the relevant presentation principles of Recommended AccountingPractice 7 “Reporting Framework for Unit Trusts” (but not all the required disclosures) issued by theICPAS, which is the framework to be adopted by H-REIT and CDL Hospitality Trusts in the preparationof their financial statements.

Events and circumstances frequently do not occur as expected. Even if the events anticipated underthe hypothetical assumptions described above occur, actual results are still likely to be different fromthe Profit Forecasts and Profit Projections since other anticipated events frequently do not occur asexpected and the variation may be material. The actual results may therefore differ materially fromthose forecast and projected. For the reasons set out above, we do not express any opinion as to thepossibility of achievement of the Profit Forecasts and Profit Projections.

Attention is drawn, in particular, to the risk factors set out on pages 47 to 67 of the Prospectus whichdescribe the principal risks associated with the Offering, to which the Profit Forecasts and ProfitProjections relate and the sensitivity analysis of the Directors’ Profit Forecasts and Profit Projections asset out on pages 105 to 106 of the Prospectus.

Yours faithfully

KPMGCertified Public Accountants(Partner-in-charge: Lo Mun Wai)

Singapore

I-2

APPENDIX II

INDEPENDENT ACCOUNTANTS’ REPORT ONTHE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF H-REIT

The Board of DirectorsM&C REIT Management Limited(in its capacity as Manager of CDL Hospitality Real Estate Investment Trust)36 Robinson Road#04-01 City HouseSingapore 068877

DBS Trustee Limited(in its capacity as Trustee of CDL Hospitality Real Estate Investment Trust)6 Shenton Way#36-02 DBS Building Tower OneSingapore 068809

10 July 2006

Dear Sirs

CDL Hospitality Real Estate Investment Trust

We report on the unaudited pro forma financial information of CDL Hospitality Real Estate InvestmentTrust (“H-REIT”) set out on pages II-3 to II-26 of the prospectus (the “Prospectus”) to be issued inconnection with the offering of 425,000,000 stapled securities in CDL Hospitality Trusts, comprisingCDL Hospitality Real Estate Investment Trust and CDL Hospitality Business Trust. The unaudited proforma financial information of H-REIT has been prepared for illustrative purposes only and based oncertain assumptions after making certain adjustments:

(A) Unaudited pro forma statements of total return for the years ended 31 December 2003, 2004 and2005, which have been prepared to provide information on the total return of H-REIT had itpurchased the properties comprising Orchard Hotel, Grand Copthorne Waterfront Hotel, M Hotel,Copthorne King’s Hotel and Orchard Hotel Shopping Arcade (collectively, the “Properties”), andentered into master lease agreements with City Hotels Pte. Ltd. (“CHPL”), Republic Hotels &Resorts Limited (“RHR”) and Harbour View Hotel Pte. Ltd. (“HVH”) (“Master Lease Agreements”),under the same terms set out in the Prospectus on 1 January 2003;

(B) Unaudited pro forma cash flow statement for the year ended 31 December 2005, which has beenprepared to provide information on the cash flows of H-REIT, had it purchased the Properties andentered into the Master Lease Agreements, under the same terms set out in the Prospectus on1 January 2005; and

(C) Unaudited pro forma balance sheet as at 31 December 2005, which has been prepared to provideinformation on the financial position of H-REIT, had it purchased the Properties and entered intothe Master Lease Agreements, under the same terms set out in the Prospectus on 31 December2005.

The unaudited pro forma financial information has been prepared for illustrative purposes only and,because of its nature, may not give a true picture of H-REIT’s actual total returns, cash flows or financialposition.

The unaudited pro forma financial information is the responsibility of the directors of M&C REITManagement Limited (the “Directors”). Our responsibility is to express an opinion on the unaudited proforma financial information based on our work.

II-1

We carried out procedures in accordance with Singapore Statement of Auditing Practice (“SSAP”) 24“Auditors and Public Offering Documents” where appropriate. Our work, which involved no independentexamination of the underlying financial information, consisted primarily of:

(A) comparing the financial information used in the preparation of the unaudited pro forma financialinformation to the audited financial statements of CHPL and HVH for the years ended 31December 2003, 2004 and 2005, the audited financial statements of RHR for the years ended 31December 2004 and 2005, the unaudited financial statements of RHR for the year ended 31December 2003, and the unaudited divisional financial statements of City Developments Limited(“CDL”) relating to Grand Copthorne Waterfront Hotel for the years ended 31 December 2003,2004 and 2005. The aforementioned financial statements are hereinafter collectively referred toas “the Relevant Financial Statements”. CHPL, HVH, RHR and CDL owned the Properties priorto their acquisition by H-REIT; and

(B) considering the evidence supporting the pro forma adjustments and discussing the unaudited proforma financial information with the Directors.

In our opinion:

(A) the unaudited pro forma financial information has been properly prepared based on informationin the Relevant Financial Statements (which were prepared in accordance with SingaporeFinancial Reporting Standards) and is presented in accordance with the relevant presentationprinciples of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issuedby the Institute of Certified Public Accountants of Singapore;

(B) the unaudited pro forma financial information has been properly prepared in a manner consistentwith both the format of the financial statements and the accounting policies to be adopted byH-REIT;

(C) each material adjustment to the information used in the preparation of the unaudited pro formafinancial information is appropriate for the purpose of preparing such financial information and inaccordance with SSAP 24; and

(D) the unaudited pro forma financial information has been properly prepared on the basis of theassumptions set out on pages II-4 to II-9 after making the adjustments described on pages II-4 toII-9.

Yours faithfully

KPMGCertified Public Accountants(Partner-in-charge: Lo Mun Wai)

Singapore

II-2

(A) Introduction

CDL Hospitality Trusts (“CDL Hospitality Trusts”) is a stapled group comprising CDL HospitalityReal Estate Investment Trust (“H-REIT”) and CDL Hospitality Business Trust (“HBT”). H-REIT isa Singapore-based real estate investment trust constituted pursuant to a trust deed dated 8 June2006 (“H-REIT Trust Deed”) made between M&C REIT Management Limited (the “H-REITManager”) and DBS Trustee Limited (the “H-REIT Trustee”). H-REIT is established with theprincipal investment strategy of investing, directly or indirectly, in a diversified portfolio ofincome-producing real estate which is primarily used for hospitality and/or hospitality-relatedpurposes, whether wholly or partially, and real-estate related assets in relation to the foregoing.HBT is a business trust constituted by a trust deed dated 12 June 2006 (“HBT Trust Deed”) andwill be managed by M&C Business Trust Management Limited (the “HBT Trustee-Manager”). Thesecurities in each of H-REIT and HBT are stapled together under the terms of a stapling deeddated 12 June 2006 entered into between the H-REIT Manager, the H-REIT Trustee and the HBTTrustee-Manager (“Stapling Deed”) and cannot be traded separately. Each stapled security inCDL Hospitality Trusts (the “Stapled Security”) comprises a unit in H-REIT (“H-REIT Unit”) and aunit in HBT (“HBT Unit”).

Under the proposed initial public offering of the Stapled Securities in CDL Hospitality Trusts,425,000,000 Stapled Securities (the “Offering”) will be offered at an offering price of S$0.83 perStapled Security (the “Offering Price”), payable in full on application. The Offering consists of aninternational placement to investors, including institutional and other investors in Singapore andan offering to the public in Singapore, of which 12,500,000 Stapled Securities will be reserved forsubscription by the directors, management, employees and business associates of Millennium &Copthorne Hotels plc (the “Sponsor”) and persons who have contributed to the success of theOffering. Separate from the Offering, an indirect wholly-owned subsidiary of the Sponsor hasentered into a subscription agreement to subscribe for an aggregate of 273,000,000 StapledSecurities at the Offering Price.

H-REIT proposes to acquire a 75-year leasehold interest commencing on the date of listing ofCDL Hospitality Trusts on the Singapore Exchange Securities Trading Limited (“SGX-ST”) (the“Listing Date”) in Orchard Hotel from City Hotels Pte. Ltd. (“CHPL”), a 75-year leasehold interestcommencing on the Listing Date in Grand Copthorne Waterfront Hotel from City DevelopmentsLimited (“CDL”), a 75-year leasehold interest commencing on the Listing Date in M Hotel fromHarbour View Hotel Pte. Ltd. (“HVH”) and an approximately 61-year leasehold interest expiring on31 January 2067 in Copthorne King’s Hotel from Republic Hotels & Resorts Limited (“RHR”)(collectively, the “Hotels”), as well as a 75-year leasehold interest in a shopping arcade, beingOrchard Hotel Shopping Arcade (together with the Hotels, the “Properties”) from CHPL. CHPL,CDL, HVH and RHR are hereinafter referred to as “the Vendors”.

On the Listing Date, CHPL (as master lessee of Orchard Hotel), RHR (as master lessee ofCopthorne King’s Hotel and Grand Copthorne Waterfront Hotel) and HVH (as master lessee of MHotel), will enter into master lease agreements (the “Master Lease Agreements”) with H-REIT tolease and operate the Hotels. The initial term of each of the Master Lease Agreements is 20 yearsfrom the Listing Date with an option to obtain an additional lease for a further 20 years on thesame terms and conditions save for amendments required due to any change in law. RHR, CHPLand HVH (collectively, the “Master Lessees”) will each enter into a hotel management contractwith Millennium & Copthorne International Limited (the “Hotel Manager”) to manage and operatethe Hotels. Orchard Hotel Shopping Arcade will not be subject to any master lease agreementupon its acquisition by H-REIT. Retail space within Orchard Hotel Shopping Arcade will be leasedby H-REIT to individual tenants directly.

II-3

At the Listing Date, HBT will be dormant.

The HBT Trustee-Manager is a wholly owned subsidiary of the H-REIT Manager. The H-REITManager, the Master Lessees and the Hotel Manager are indirect wholly owned subsidiaries ofthe Sponsor. CDL is the parent company of the Sponsor.

Details on the H-REIT Manager’s management fees, the H-REIT Trustee’s fee and the leasepayments under the Master Lease Agreements are set out in Section H.

(B) Bases of Preparation of Unaudited Pro Forma Financial Information

No financial statements of CDL Hospitality Trusts have been prepared for the financial yearsended 31 December 2003, 2004 and 2005 as H-REIT and HBT were established on 8 June 2006and 12 June 2006, respectively.

KPMG has been appointed as auditors of H-REIT and HBT since the inception of H-REIT andHBT.

No pro forma financial information of HBT has been presented as it is newly established as setout above. Accordingly, no consolidated pro forma financial information for CDL Hospitality Trustshas been presented.

The unaudited pro forma financial information of H-REIT set out in this report, expressed inSingapore dollars, is prepared for illustrative purposes only and is based on certain assumptions,and shows the unaudited Pro Forma Statements of Total Return of H-REIT for each of the threeyears ended 31 December 2003, 2004 and 2005, the unaudited Pro Forma Cash Flow Statementof H-REIT for the year ended 31 December 2005 and the unaudited Pro Forma Balance Sheet ofH-REIT as at 31 December 2005. In preparing the unaudited pro forma financial information,certain assumptions have been applied on the audited financial statements of CHPL and HVH forthe years ended 31 December 2003, 2004 and 2005, the audited financial statements of RHR forthe years ended 31 December 2004 and 2005, the unaudited financial statements of RHR for theyear ended 31 December 2003*, and the unaudited divisional financial statements of CDL relatingto Grand Copthorne Waterfront Hotel for the years ended 31 December 2003, 2004 and 2005,after making certain adjustments. The aforementioned financial statements of the Vendors arehereinafter collectively referred to as “the Relevant Financial Statements”.

The audited financial statements of CHPL and HVH for the years ended 31 December 2003, 2004and 2005 and the audited financial statements of RHR for the years ended 31 December 2004and 2005 were prepared in accordance with Singapore Financial Reporting Standards and wereaudited by KPMG, whose partners are members of the Institute of Certified Public Accountants ofSingapore, in accordance with Singapore Standards on Auditing issued by the Institute of CertifiedPublic Accountants of Singapore. The auditors’ reports on the aforementioned financialstatements of CHPL, HVH and RHR were not subject to any qualifications, modifications ordisclaimers.

The unaudited financial statements of RHR for the year ended 31 December 2003 and unauditeddivisional financial statements of CDL relating to Grand Copthorne Waterfront Hotel for the yearsended 31 December 2003, 2004 and 2005 were prepared in accordance with Singapore FinancialReporting Standards.

* Only the audited consolidated financial statements of RHR and its subsidiaries and the balance sheet of RHR for the yearended 31 December 2003 are available. The full set of the separate financial statements of RHR are not required under thelaws of the country in which RHR is incorporated.

II-4

The unaudited Pro Forma Statements of Total Return of H-REIT for the years ended 31 December2003, 2004 and 2005 reflect the total return of H-REIT, assuming H-REIT had purchased theProperties and entered into the Master Lease Agreements on 1 January 2003, under the sameterms set out in the prospectus to be issued in connection with the Offering (“the Prospectus”).

The unaudited Pro Forma Cash Flow Statement shows the cash flows of H-REIT for the yearended 31 December 2005, assuming H-REIT had purchased the Properties and entered into theMaster Lease Agreements on 1 January 2005 under the same terms set out in the Prospectus.

The unaudited Pro Forma Balance Sheet of H-REIT as at 31 December 2005 reflects the financialposition of H-REIT, assuming H-REIT had purchased the Properties and entered into the MasterLease Agreements on 31 December 2005 under the same terms set out in the Prospectus.

The unaudited pro forma financial information has been prepared on the basis of the accountingpolicies as set out in Section G and is to be read in conjunction with Section H. In addition, theunaudited pro forma financial information has been prepared based on the assumption that theissue price is the Offering Price per Stapled Security.

The unaudited pro forma financial information is prepared for illustrative purposes only andbecause of its nature, may not give a true picture of H-REIT’s actual total returns, cash flows orfinancial position.

(i) Unaudited Pro Forma Statements of Total Return

The unaudited Pro Forma Statements of Total Return have been prepared on the basis thatH-REIT purchased the Properties at their respective purchase prices and entered into theMaster Lease Agreements, on 1 January 2003.

The following assumptions were made for each of the periods presented:

• Gross revenue is assumed to be computed based on the terms of the Master LeaseAgreements as set out in Section H note (c), which have been applied to the revenueand gross profit in the Relevant Financial Statements, where applicable, after makingcertain adjustments as set out below:

CHPL CDL(1) HVH RHR TotalPro Forma

Adjustments Adjusted(2)

S$’000 S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Revenue of the Vendors

— 2003 41,136 29,595 22,116 50,146 142,993 (41,942)(3) 101,051

— 2004 52,853 38,954 26,585 19,103 137,495 (7,764)(3) 129,731

— 2005 58,574 44,457 30,869 63,535 197,435 (48,360)(3) 149,075

Gross profit of the Vendors

— 2003 24,449 14,398 13,185 44,265 96,297 (65,361)(4) 30,936

— 2004 32,053 20,376 15,922 12,034 80,385 (35,352)(4) 45,033

— 2005 37,025 24,617 20,415 56,014 138,071 (76,866)(4) 61,205

II-5

The variable rent component of H-REIT’s gross revenue derived from the MasterLessees is computed as follows:

Year ended

31/12/2003 31/12/2004 31/12/2005Pro Forma Pro Forma Pro Forma

S$’000 S$’000 S$’000

20% of adjusted revenue(2) 20,213 25,946 29,815

20% of adjusted gross profit(2) 6,187 9,007 12,241

26,400 34,953 42,056

Less: Fixed rent and service charge (26,400) (26,400) (26,400)

Variable rent — 8,553 15,656

Year ended

31/12/2003 31/12/2004 31/12/2005Pro Forma Pro Forma Pro Forma

S$’000 S$’000 S$’000

H-REIT’s gross revenue comprising thosederived from:

— Master Lessees based on terms of MasterLease Agreements

— Fixed rent and service charge 26,400 26,400 26,400

— Variable rent — 8,553 15,656

26,400 34,953 42,056

— Orchard Hotel Shopping Arcade 3,370 3,437 3,432

29,770 38,390 45,488

Notes:

(1) Being the unaudited divisional financial statements of CDL relating to Grand Copthorne WaterfrontHotel.

(2) The adjusted revenue and gross profit represent the revenue and gross operating profit of the Hotelson which H-REIT’s gross revenue from the Master Lessees is derived based on the terms of the MasterLease Agreements as set out in Section H note (c).

(3) Key pro forma adjustments relate to the following:

— Adjustments to exclude the non-hotel related revenue of RHR, which mainly pertains to dividendincome;

— Adjustments to exclude the revenue of the car park operations and shopping arcade of GrandCopthorne Waterfront Hotel which are not proposed to be acquired by H-REIT; and

— Adjustments to exclude the revenue of Orchard Hotel Shopping Arcade as it is not subject to anyMaster Lease Agreement. H-REIT will lease the units in Orchard Hotel Shopping Arcade toindividual tenants directly.

II-6

(4) Key pro forma adjustments relate to the following:

— Adjustments to exclude the non-hotel related revenue of RHR, which mainly pertains to dividendincome;

— Adjustments to exclude the gross operating profit of the car park operations and shopping arcadeof Grand Copthorne Waterfront Hotel which is not proposed to be acquired by H-REIT;

— Adjustments to exclude the gross operating profit of Orchard Hotel Shopping Arcade as it is notsubject to any Master Lease Agreement. H-REIT will lease the units in Orchard Hotel ShoppingArcade to individual tenants directly; and

— Adjustments to include the payroll and related expenses of certain overhead departments relatingto the hotel operations of the Vendors in arriving at the adjusted gross profits of the MasterLessees for purpose of computing the rental payable to H-REIT in accordance with the terms ofthe Master Lease Agreements. Such expenses are classified below the gross profit line in theRelevant Financial Statements.

• Property tax is assumed to be the amounts incurred by the respective Vendors on theProperties in the relevant period based on the Relevant Financial Statements, whereapplicable, after making certain adjustments as set out below:

CHPL(1) CDL(2) HVH RHR TotalPro Forma

Adjustments

H-REITPro

Forma

S$’000 S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Property tax

— 2003 358 293 218 126 995 (25)(3) 970

— 2004 711 251 372 175 1,509 (37)(3) 1,472

— 2005 802 398 357 191 1,748 3(3) 1,751

Notes:

(1) Includes property tax for Orchard Hotel Shopping Arcade.


(3) Adjustments to exclude overprovisions or underprovisions in respect of prior years.

• Insurance expense is assumed to be the amounts incurred by the respective Vendorson the Properties in the relevant period based on the Relevant Financial Statements,where applicable, after making certain adjustments as set out below:

CHPL(1) CDL(2) HVH RHR TotalPro Forma

Adjustments

H-REITPro

Forma

S$’000 S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Insurance

— 2003 254 369 83 (9) 697 261(3) 958

— 2004 396 374 223 106 1,099 (29)(3) 1,070

— 2005 380 221 230 123 954 122(3) 1,076

Notes:

(1) Includes insurance expense for Orchard Hotel Shopping Arcade.


(3) Adjustments to exclude overprovisions or underprovisions in respect of prior years.

II-7

• Other property expenses comprises property expenses (other than property tax andinsurance expense) of Orchard Hotel Shopping Arcade which include marketing andleasing expenses, reimbursable salaries and wages, utility expenses, repair andmaintenance expenses, general and administrative expenses and other miscellaneousoperating expenses and are based on the amounts incurred on Orchard HotelShopping Arcade included in the audited financial statements of CHPL for the yearsended 31 December 2003, 2004 and 2005;

• H-REIT Manager’s management fees are based on the formula as set out in SectionH note (a);

• H-REIT Trustee’s fee is based on the formula as set out in set out in Section H note (b);

• Other trust expenses comprise annual listing fee, registry fee, audit and tax advisoryfees, valuation fees, costs associated with the preparation and distribution of reports toholders of Stapled Securities, investor communication costs and miscellaneousexpenses. Other trust expenses of S$990,000, S$1,010,000 and S$1,030,000 areassumed to be incurred by H-REIT for the years ended 31 December 2003, 2004 and2005 respectively;

• Interest expense on borrowings is based on an effective interest rate of approximately3.83% per annum (inclusive of all margins and amortisation of upfront debtarrangement fee) and an average principal of S$284,346,000, S$278,790,000 andS$281,307,000 for the years ended 31 December 2003, 2004 and 2005 respectively;

• The term loan and revolving credit facilities for an aggregate amount of S$290,000,00were in place at the time of the acquisition of the Properties;

• 100% of the taxable income available for distribution to the holders of H-REIT Units isdistributed;

• H-REIT is not taxed on the taxable income that is distributed to holders of the StapledSecurities;

• Properties are acquired at an estimated aggregate purchase price of S$846,300,000based on an independent valuation by CB Richard Ellis (Pte) Ltd as of 28 February2006;

• The aggregate valuation of the Properties of S$846,300,000 remained unchangedthroughout the periods presented except to the extent of the assumed capitalexpenditure described below; and

• Capital expenditure of S$2,037,000, S$4,014,000 and S$8,091,000 were incurred byH-REIT on the Properties for the years ended 31 December 2003, 2004 and 2005respectively.

(ii) Unaudited Pro Forma Cash Flow Statement

The unaudited Pro Forma Cash Flow Statement for the year ended 31 December 2005 hasbeen prepared assuming H-REIT had purchased the Properties and entered into the MasterLease Agreements on 1 January 2005, and is based on the cash flows directly attributableto the Properties and H-REIT’s borrowing and unit structures.

In addition, the following assumptions were made:


• The term loan and revolving credit facilities for an aggregate amount of S$290,000,000were in place at the time of the acquisition of the Properties;

II-8

• The date that H-REIT’s borrowings were fully drawn down and the Stapled Securitieswere issued correspond to the timing of the purchase of the Properties on 1 January2005;

• A cash balance of S$4,000,000 is maintained at the end of the period presented.Amounts in excess of the cash balance assumed are used to repay borrowings on thelast day of the period presented;

• Interest expense on borrowings is paid on the last day of the period presented;

• Management fees payable to the H-REIT Manager in the form of Stapled Securities arepaid on a quarterly basis, in arrears in the following quarter. Management fees payableto the H-REIT Manager in cash are paid on a monthly basis, in arrears in the followingmonth;

• 100% of taxable income available for distribution to holders of H-REIT Units isdistributed for each of the periods presented. Distributions to holders of H-REIT Unitsare paid on a half yearly basis, in arrears; and

• H-REIT is not taxed on the taxable income that is distributed to holders of H-REITUnits.

(iii) Unaudited Pro Forma Balance Sheet

The unaudited Pro Forma Balance Sheet has been prepared on the basis that H-REITpurchased the Properties at their respective purchase prices and entered into the MasterLease Agreements on 31 December 2005.

The following assumptions are made:


• Assets (comprising cash) and liabilities (comprising rental deposits of Orchard HotelShopping Arcade) directly attributable to the Properties, amounting to S$857,000 andS$857,000 respectively, were also acquired by H-REIT;

• Issue costs relating to the Offering are estimated to be S$20,815,000; and

• Borrowings of S$266,590,000 were drawn down by H-REIT on 31 December 2005 topartially fund the acquisition of the Properties, issue and debt related costs.

II-9

(C) Unaudited Pro Forma Statements of Total Return

The unaudited Pro Forma Statements of Total Return of H-REIT for the years ended 31 December2003, 2004 and 2005 have been prepared for inclusion in this Prospectus and are presentedbelow. The assumptions used to prepare the unaudited Pro Forma Statements of Total Return areconsistent with those described in Bases of Preparation of Unaudited Pro Forma FinancialInformation.

Year ended

31/12/2003 31/12/2004 31/12/2005

Note S$’000 S$’000 S$’000

Gross revenue 10 29,770 38,390 45,488

Property expenses

Property tax (970) (1,472) (1,751)

Insurance (958) (1,070) (1,076)

Other property expenses(1) (1,090) (1,206) (1,181)

(3,018) (3,748) (4,008)

Net property income 26,752 34,642 41,480



Other trust expenses(2) (990) (1,010) (1,030)

Finance costs (net) 11 (6,755) (10,816) (10,914)






Notes:

(1) Other property expenses comprise property expenses (other than property tax and insurance) of Orchard HotelShopping Arcade which includes marketing and leasing expenses, reimbursable salaries and wages, utilityexpenses, repair and maintenance expenses and other miscellaneous operating expenses.

(2) Other trust expenses include annual listing fee, registry fee, audit and tax advisory fees, valuation fees, costsassociated with the preparation and distribution of reports to holders of Stapled Securities, investor communicationcosts and miscellaneous expenses.

(3) Non-tax (chargeable)/deductible items comprise H-REIT Manager’s management fee paid/payable in StapledSecurities, H-REIT Trustee’s fee, amortisation of upfront debt arrangement fee and financial expense arising fromremeasuring non-current rental deposits at amortised cost, for all periods presented. For the year ended 31December 2003, the balance is stated net of financial income arising from the initial recognition of the non-currentrental deposits at fair value.

II-10

(D) Unaudited Pro Forma Movements in Net Assets Attributable to Holders of H-REIT Units

The movements in the net assets attributable to holders of H-REIT Units, which have beenprepared based on the assumptions described in the Bases of Preparation of Unaudited ProForma Financial Information applicable to the unaudited Pro Forma Statement of Total Return, forthe year ended 31 December 2005, are set out below:

Year ended31/12/2005

S$’000

Operations

Net income after tax 25,161

Increase in net assets resulting from operations 25,161

Transactions relating to holders of H-REIT Units

Creation of units

— H-REIT Manager’s management fees paid in Stapled Securities 3,388


Net decrease in net assets resulting from transactions of holders of H-REIT Units (22,332)

Increase in net assets during the year 2,829

II-11

(E) Unaudited Pro Forma Cash Flow Statement

The unaudited Pro Forma Cash Flow Statement for the year ended 31 December 2005 has beenprepared for inclusion in the Prospectus and is presented below. The assumptions used toprepare the unaudited Pro Forma Cash Flow Statement are consistent with those described inBases of Preparation of Unaudited Pro Forma Financial Information.


S$’000



Adjustments for:








Purchase of investment properties and related assets and liabilities (see note below) (845,443)










Net increase in cash and cash equivalents 4,000

Cash and cash equivalents at beginning of the year —

Cash and cash equivalents at end of the year 4,000

Notes:

(1) Comprises interest expense incurred on borrowings, amortisation of transaction costs on borrowings capitalised andfinancial expense arising from remeasuring non-current rental deposits at amortised cost, net of financial incomearising from the initial recognition of non-current rental deposits at fair value.

II-12

Notes to the unaudited Pro Forma Cash Flow Statement

The effect of acquisition of the Properties and related assets and liabilities on H-REIT’s pro formacash flows for the year ended 31 December 2005 is set out below:


S$’000

Investment properties 846,300

Cash 857

Rental deposits (857)

Net assets acquired 846,300

Purchase price (846,300)

Less:

Cash acquired 857

Net cash outflow (845,443)

Significant Non-Cash Transaction

During the year, approximately 3,051,000 Stapled Securities at S$0.83 per Stapled Security,amounting to approximately S$2,532,000, were issued as payment for the portion of the H-REITManager’s management fees which is payable in the form of Stapled Securities (see Section Hnote (a)).

II-13

(F) Unaudited Pro Forma Balance Sheet

The unaudited Pro Forma Balance Sheet as at 31 December 2005 has been prepared forinclusion in the Prospectus and is presented below. The assumptions used to prepare theunaudited Pro Forma Balance Sheet are consistent with those described in Bases of Preparationof Unaudited Pro Forma Financial Information.

As at31/12/2005

Note S$’000Non-current assets

Investment properties 2 846,300

846,300Current assetsOther receivables 3 1,071Cash and cash equivalents(1) 9,161

10,232


Current liabilitiesOther payables 4 23,410Rental deposits 5 918

24,328

Non-current liabilitiesBorrowings (secured) 6 265,993Rental deposits 5 3,920

269,913

Total liabilities (excluding net assets attributable to holders of H-REITUnits) 294,241

Net assets attributable to holders of H-REIT Units 7 562,291

Number of H-REIT Units in issue (’000) 8 698,000


Borrowings(2)/Total assets 33.9%

Notes:

(1) Includes rental deposits of Orchard Hotel Shopping Arcade and those assumed to be received from the MasterLessees of S$9,104,000.

(2) For purpose of computing the borrowings to total assets ratio, borrowings comprise bank loans of S$266,590,000 andother payables of S$23,410,000.

II-14

(G) Notes to the Unaudited Pro Forma Financial Information

1. Significant Accounting Policies of H-REIT

The significant accounting policies of H-REIT, which have been consistently applied inpreparing the unaudited pro forma financial information set out in this report, are as follows:

(a) Basis of Preparation of Unaudited Pro Forma Financial Information

The unaudited pro forma financial information, expressed in Singapore dollars androunded to the nearest thousand, are prepared in accordance with the bases set outin Section B. The unaudited pro forma financial information is presented in accordancewith the relevant presentation principles of Recommended Accounting Practice(“RAP”) 7 “Reporting Framework for Unit Trusts” issued by the Institute of CertifiedPublic Accountants of Singapore and the applicable requirements of the Code onCollective Investment Schemes issued by the Monetary Authority of Singapore(“MAS”) and the provisions of the H-REIT Trust Deed.

The unaudited pro forma financial information is prepared on a historical basis, exceptthat investment properties and derivative financial instruments are stated at valuation.

The functional currency of H-REIT is Singapore dollars. Revenue, expenses, receiptsand payments are denominated primarily in Singapore dollars.

(b) Investment Properties

Investment properties comprising interests in land, buildings and plant and equipment,are accounted for as non-current assets and are stated at valuation. Valuations aredetermined in accordance with the H-REIT Trust Deed, which requires the investmentproperties to be valued by independent registered valuers at least once a year, inaccordance with the Code on Collective Investment Schemes issued by the MonetaryAuthority of Singapore.

Any increase or decrease in valuation on revaluation is credited or charged directly tothe Statement of Total Return as a net appreciation or depreciation in the value of theinvestment properties.

When an investment property is disposed of, the resulting gain or loss recognised inthe Statement of Total Return is the difference between net disposal proceeds and thecarrying amount of the property.

Acquisition of properties is accounted for as acquisition of non-current assets.

(c) Depreciation

Investment properties are not depreciated. The properties are subject to continuingmaintenance and are regularly revalued on the basis set out in note 1(b). For taxationpurposes, H-REIT may claim capital allowances on assets that qualify as plant andmachinery under the Income Tax Act, Chapter 134.

(d) Other Receivables

Other receivables are recognised initially at fair value and subsequently measured atamortised cost using the effective interest method, less allowance for impairment.

II-15

(e) Impairment

The carrying amounts of H-REIT’s assets are reviewed at each balance sheet date todetermine whether there is any indication of impairment. If such indication exists, theasset’s recoverable amount is estimated at each balance sheet date.

An impairment loss is recognised in the Statement of Total Return whenever thecarrying amount of an asset or its cash-generating unit exceeds its recoverableamount. An impairment loss in respect of investment property carried at revaluedamount is recognised in the same way as a revaluation decrease on the basis set outin note 1(b).

(f) Liabilities and Interest-bearing Liabilities

Trade and other payables are recognised initially at fair value. Interest-bearingliabilities are recognised initially at fair value less attributable transaction costs.Subsequent to initial recognition, trade and other payables and interest-bearingliabilities are stated at amortised cost with any difference between cost and redemptionvalue being recognised in the Statement of Total Return over the period of theborrowings on an effective interest basis.

(g) Derivative Financial Instruments

H-REIT uses derivative financial instruments to hedge its exposure to interest rate risksarising from operational, financing and investment activities. In accordance with itstreasury policy, H-REIT does not hold or issue derivative financial instruments fortrading purposes.

Derivative financial instruments are recognised initially at fair value. Subsequent toinitial recognition, derivative financial instruments are remeasured at fair value. Thegain or loss on remeasurement to fair value is recognised immediately in the Statementof Total Return. However, where derivatives qualify for hedge accounting, recognitionof any resultant gain or loss depends on the nature of the item being hedged (seeaccounting policy 1(h)).

The fair value of interest rate swaps is the estimated amount that H-REIT would receiveor pay to terminate the swap at balance sheet date, taking into account current interestrates and the current credit worthiness of swap counterparties.

(h) Cash Flow Hedges

Where a derivative financial instrument is designated as a hedge of the variability incash flows of a recognised asset or liability, or a highly probable forecasted transaction,the effective part of any gain or loss on the derivative financial instrument is recogniseddirectly in net assets attributable to holders of H-REIT Units. The ineffective part of anygain or loss is recognised immediately in the Statement of Total Return.

When a hedging instrument expires or is sold, terminated or exercised, or H-REITrevokes designation of the hedge relationship but the hedged forecast transaction isstill expected to occur, the cumulative gain or loss at that point remains in equity andis recognised when the transaction occurs. If the hedged transaction is no longerexpected to take place, the cumulative unrealised gain or loss recognised in equity isrecognised immediately in the Statement of Total Return.

II-16

(i) Net Assets Attributable to Holders of H-REIT Units

Net assets attributable to holders of H-REIT Units represents the holders’ residualinterest in H-REIT’s net assets upon termination.

Expenses incurred in connection with the initial public offering of H-REIT Units on theSGX-ST are deducted directly against the net assets attributable to holders of H-REITUnits.

(j) Revenue Recognition

Rental income from operating leases

Rental income receivable under operating leases is recognised on an accrual basis.Contingent rentals are recognised as income in the accounting period in which they areearned.

Interest income

Interest income is recognised on an accrual basis.

(k) Expenses

(i) Property expenses

Property expenses are recognised on an accrual basis.

(ii) H-REIT Manager’s management fees

H-REIT Manager’s management fees are recognised on an accrual basis basedon the applicable formula stipulated in Section H note (a).

(iii) Trust expenses

Trust expenses are recognised on an accrual basis. Included in trust expenses isH-REIT Trustee’s fee which is based on the applicable formula stipulated inSection H note (b).

(iv) Finance costs

Interest expense and similar charges are recognised on an accrual basis.

(l) Taxation

Taxation on the return for the year comprises current and deferred tax. Income tax isrecognised in the Statement of Total Return except to the extent that it relates to itemsdirectly related to net assets attributable to holders of H-REIT Units, in which case it isrecognised as part of net assets attributable to holders of H-REIT Units.

Current tax is the expected tax payable on the taxable income for the year, using taxrates enacted or substantively enacted at the balance sheet date.

Deferred tax is provided using the balance sheet liability method, providing fortemporary differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for taxation purposes. Thetemporary differences on initial recognition of assets or liabilities that affect neitheraccounting nor taxable profit are not provided for. The amount of deferred tax providedis based on the expected manner of realisation or settlement of the carrying amount ofassets and liabilities, using tax rates enacted or substantively enacted at the balancesheet date.

II-17

A deferred tax asset is recognised only to the extent that it is probable that futuretaxable profits will be available against which the temporary differences can be utilised.Deferred tax assets are reduced to the extent that it is no longer probable that therelated tax benefit will be realised.

The Inland Revenue Authority of Singapore (“IRAS”) has issued a tax ruling on thetaxation of H-REIT for income earned and expenditure incurred after its listing onSGX-ST. Subject to meeting the terms and conditions of the tax ruling which includesa distribution of at least 90% of the taxable income of H-REIT, the H-REIT Trustee willnot be taxed on the portion of taxable income of H-REIT that is distributed to holdersof H-REIT Units. Any portion of the taxable income that is not distributed to holders ofH-REIT Units will be taxed on the H-REIT Trustee. In the event that there aresubsequent adjustments to the taxable income when the actual taxable income ofH-REIT is finally agreed with the IRAS, such adjustments are taken up as anadjustment to the taxable income for the next distribution following the agreement withthe IRAS.

Although H-REIT is not taxed on its taxable income distributed, the H-REIT Trustee andthe H-REIT Manager are required to deduct income tax at the applicable corporate taxrate from distributions of such taxable income of H-REIT (i.e. which has not been taxedin the hands of the H-REIT Trustee) to certain holders of H-REIT Units. The H-REITTrustee and the H-REIT Manager will not deduct tax from distributions made out ofH-REIT’s taxable income to the extent that the beneficial holder of H-REIT Units is:

• An individual (excluding partnership in Singapore);

• A tax resident Singapore-incorporated company;

• A body of persons registered or constituted in Singapore (e.g. town council,statutory board, registered charity, registered co-operative society, registeredtrade union, management corporation, club and trade and industry association;and

• A Singapore branch of a foreign company which has presented a letter ofapproval from the IRAS granting waiver from tax deduction at source in respectof distributions from H-REIT.

The above tax transparency ruling does not apply to gains from sale of real properties.Such gains which are considered as trading gains are assessable to tax on the H-REITTrustee. Where the gains are capital gains, the H-REIT Trustee will not be assessed totax and may distribute the capital gains without tax being deducted at source.

(m) Segment Information

A segment is a distinguishable component of H-REIT that is engaged either inproviding goods or services (business segment), or in providing goods or serviceswithin a particular economic environment (geographical segment), which is subject torisks and rewards that are different from those of other segments.

No business segment information has been presented as the H-REIT Manager is of theview that all the properties are being leased and operated as hotels and thecontribution of Orchard Hotel Shopping Arcade’s to H-REIT’s results and net assets isinsignificant. No geographical segment has been presented as all the properties arelocated in Singapore.

II-18

2. Investment Properties

As at31/12/2005

S$’000

Investment properties, at cost 846,300

The investment properties are mortgaged as security for the bank facilities obtained fromfinancial institutions (note 6).

Description ofProperty Title

Term oflease

(years)

Remainingterm

(years) LocationExisting

UseCarrying

Value

Percentageof Total

NetAssets

31/12/2005 31/12/2005

S$’000 %

Orchard Hotel Leasehold 75 75 442 Orchard RoadSingapore 238879

Hotel 330,100 58.7

Orchard HotelShopping Arcade

Leasehold 75 75 442 Orchard RoadSingapore 238879

Retail 34,500 6.2

Grand CopthorneWaterfront Hotel

Leasehold 75 75 392 HavelockRoad Singapore169663

Hotel 234,100 41.6

M Hotel Leasehold 75 75 81 Anson RoadSingapore 079908

Hotel 161,500 28.7

Copthorne King’sHotel

Leasehold 61 61 403 HavelockRoad Singapore169632

Hotel 86,100 15.3

Investment properties, at valuation 846,300 150.5

Net liabilities (284,009) (50.5)

Net assets attributable to holders of H-REIT Units 562,291 100.0

The carrying amounts of the investment properties at 31 December 2005 are based on anindependent valuation undertaken by CB Richard Ellis (Pte) Ltd as of 28 February 2006. Thevaluations were based on the capitalisation of income, discounted cash flow and directcomparison methods.

The investment properties are leased to the Master Lessees for a period of 20 years with anoption to obtain an additional lease for a further 20 years on the same terms and conditionssave for amendments required due to any change in law. Contingent rents recognised in theStatement of Total Return for each of the years ended 31 December 2003, 2004 and 2005,amounted to S$Nil, S$8,553,000 and S$15,656,000, respectively.

II-19

3. Other Receivables

Other receivables relate to input goods and service tax to be claimed from the taxauthorities.

4. Other Payables

This relates to the balance of the purchase consideration payable to the relevant Vendor ofGrand Copthorne Waterfront Hotel, on legal completion after all regulatory approvals for theexcision or creation of a separate strata lot comprising Grand Copthorne Waterfront Hotelhave been obtained.

5. Rental deposits

Current rental deposits relate to rental deposits of Orchard Hotel Shopping Arcade.

Non-current rental deposits relate to rental deposits collected from the Master Lessees,stated at amortised cost.

6. Borrowings (secured)

This note provides information about the contractual terms of H-REIT’s bank loans.

As at31/12/2005

S$’000

Bank loans 266,590

Less: Transaction costs capitalised (597)

265,993

H-REIT has in place secured bank facilities of S$290 million, comprising a S$220 millionterm loan facility and a S$70 million revolving credit facility, each for a term of 3 years (“the“Facilities”).

Each loan made under the Facilities will bear interest at the relevant Singapore dollar swapoffer rate plus a margin of 0.24% per annum throughout the 3 years so long as H-REITmaintains a certain minimum interest coverage ratio.

The H-REIT Manager has entered into an interest rate swap agreement with The Royal Bankof Scotland plc to fix the floating interest rate for S$260 million of the Facilities for a periodof 1.5 years with effect from 13 July 2006. The effective interest rate of the loans as at thebalance sheet date is assumed to be approximately 3.83%, inclusive of all margins andamortisation of upfront debt arrangement fee.

The Facilities are secured on the following:

• A first legal mortgage on the investment properties;

• Debenture over all present and future assets (including without limitation all furniture,fixtures, fittings, equipment and inventory) in the investment properties which areowned or acquired by H-REIT but not including the operating bank accounts of theHotels;

• An assignment of H-REIT’s rights, title and interests in the present and future sale andpurchase agreements, leases and tenancy agreements in connection with theinvestment properties;

II-20

• An assignment of H-REIT’s rights, title and interests in the lease agreement in respectof Waterfront Conference Centre, which is leased by H-REIT from CDL and sub-leasedto RHR;

• An assignment of insurance policies effected over the investment properties (otherthan with respect to public liability); and

• Assignment of the escrow account to be opened with the financial institutions grantingthe Facilities for the purposes of depositing all rental and sale proceeds in relation tothe investment properties.

7. Net Assets Attributable to Holders of H-REIT Units

NoteAs at

31/12/2005

S$’000

Net assets attributable to holders of H-REIT Units comprises:

— H-REIT Units in issue 8 578,840

— Issue costs 9 (20,815)

— Financial income arising from the initial recognition of non-currentrental deposits at fair value 4,266

562,291

8. H-REIT Units in Issue

As at 31/12/2005

No. of units

’000 S$’000

Creation of new H-REIT Units arising from:

— the Offering 425,000 352,446

— subscription by a subsidiary of the Sponsor 273,000 226,394

698,000 578,840

Each H-REIT Unit is stapled together with a unit in HBT under the terms of a stapling deeddated 12 June 2006 entered into between the H-REIT Manager, the H-REIT Trustee and theHBT Trustee-Manager and cannot be traded separately. Each Stapled Security representsan undivided interest in H-REIT and HBT.

A holder of the H-REIT Units has no equitable or proprietary interest in the underlying assetsof H-REIT and is not entitled to the transfer to it of any asset (or any part thereof) or of anyreal estate, any interest in any asset and real estate-related assets (or any part thereof) ofH-REIT.

The rights and interests of holders of the H-REIT Units include the rights to:

• Receive income and other distributions attributable to the H-REIT Units held; and

• Participate in the termination of H-REIT by receiving a share of all net cash proceedsderived from the realisation of the assets of H-REIT less any liabilities, in accordancewith their proportionate interests in H-REIT.

II-21

The restrictions of a holder of the H-REIT Units include the following:

• No holder has the right to require that any asset of H-REIT be transferred to him; and

• A holder of the H-REIT Units cannot give any directions to the H-REIT Manager or theH-REIT Trustee (whether at a meeting of holders of H-REIT Units or otherwise) if itwould require the H-REIT Manager or the H-REIT Trustee to do or omit from doinganything which may result in:

• H-REIT ceasing to comply with applicable laws and regulations; or

• The exercise of any discretion expressly conferred on the H-REIT Manager or theH-REIT Trustee by the H-REIT Trust Deed or the determination of any matterwhich, under the H-REIT Trust Deed, requires the agreement of either or both ofthe H-REIT Manager or the H-REIT Trustee.

The liability of a holder of the H-REIT Units is limited to the amount paid or payable for theH-REIT Units. The provisions of the H-REIT Trust Deed provide that no holder of the H-REITUnits will be personally liable to indemnify the H-REIT Trustee or any creditor of H-REIT inthe event that liabilities of H-REIT exceed its assets.

Under the H-REIT Trust Deed, every H-REIT Unit carries the same voting rights.

9. Issue Costs

As at31/12/2005

S$’000

Issue costs (excluding goods and services tax) comprise the following:

— Professional and other fees(1) 5,111

— Financial advisory fee and underwriting and selling commission 11,994

— Miscellaneous issue expenses(2) 3,710

20,815

Notes:

(1) Includes solicitors’ fees and fees for the reporting accountants, tax adviser and independent valuers and otherprofessionals, and management and consultancy fee to Hong Leong Management Services Pte. Ltd. inconnection with the Offering.

(2) Includes cost of prospectus production and other expenses in connection with the Offering.

Issue costs have been deducted directly against the proceeds from the issuance of theH-REIT Units.

10. Gross Revenue

Gross revenue represents rental income received/receivable on H-REIT’s investmentproperties.

II-22

11. Finance Costs (net)

Year ended

31/12/2003 31/12/2004 31/12/2005

S$’000 S$’000 S$’000

Interest paid and payable to banks 10,675 10,465 10,557

Amortisation of transaction costs capitalised 199 199 199

Financial income arising from the initialrecognition of the non-current rental depositsat fair value (4,266) — —

Financial expense arising from remeasuringnon-current rental deposits at amortised cost 147 152 158

6,755 10,816 10,914

12. Financial Instruments

Financial risk management objectives and policies

Exposure to credit, interest rate, liquidity and foreign currency risks arises in the normalcourse of H-REIT’s business. H-REIT has written policies and guidelines, which set out itsoverall business strategies and its general risk management philosophy.

Credit risk

Credit risk is the potential financial loss resulting from the failure of a customer to settle itsfinancial and contractual obligations to H-REIT, as and when they fall due.

The H-REIT Manager has established credit limits for customers and monitors theirbalances on an ongoing basis. Credit evaluations are performed by the H-REIT Managerbefore lease agreements are entered into with customers. Cash and fixed deposits areplaced with financial institutions which are regulated.

At the balance sheet date, the investment properties of H-REIT, except for Orchard HotelShopping Arcade, are leased to three Master Lessees. The maximum exposure to credit riskis represented by the carrying value of each financial asset on the balance sheet.

Interest rate risk

H-REIT’s exposure to changes in interest rates relate primarily to interest-earning financialassets and interest-bearing financial liabilities. The H-REIT Manager’s strategy to activelymanage the risk of potential interest rate volatility may be through the use of interest ratehedging instruments and/or fixed rate borrowings. The H-REIT Manager will regularlyevaluate the feasibility of putting in place the appropriate level of interest rate hedges, aftertaking into account the prevailing market conditions.

Liquidity risk

The H-REIT Manager monitors and maintains a level of cash and cash equivalents deemedadequate by management to finance H-REIT’s operations. In addition, the H-REIT Manageralso monitors and observes the Code on Collective Investment Schemes issued by the MASconcerning limits on total borrowings.

Foreign currency risk

The H-REIT Manager’s investment strategy includes investing, directly or indirectly, in adiversified portfolio of income-producing real estate which is primarily used for hospitality

II-23

and/or hospitality-related purposes, whether wholly or partially, and real estate-relatedassets. In order to manage the currency risk involved in investing in assets outside ofSingapore, the H-REIT Manager may adopt currency risk management strategies that mayinclude the use of foreign currency denominated borrowings to match the currency of theasset investment as a natural currency hedge.

Estimating fair values

Derivatives

For interest rate swaps, broker quotes are used. Those quotes are back tested usingdiscounted cash flow techniques.

Where discounted cash flow techniques are used, estimated future cash flows are based onmanagement’s best estimates and the discount rate is a market related rate for a similarinstrument at the balance sheet date. Where other pricing models are used, inputs arebased on market related data at the balance sheet date.

Interest-bearing loans

Fair value is calculated based on discounted expected future principal and interest cashflows.

Other financial assets and liabilities

The notional amounts of financial assets and liabilities with a maturity of less than one year(including other receivables, cash and cash equivalents, and trade and other payables) areassumed to approximate their fair values. All other financial assets and liabilities arediscounted to determine their fair values.

13. Commitments

(a) H-REIT leases out its investment properties. Non-cancellable operating lease rentalsare receivable as follows:

As at31/12/2005

S$’000

Receivable

— Within 1 year 44,935

— After 1 year but within 5 years 171,137

— After 5 years 630,840

846,912

The above operating lease rental receivables comprise amounts receivable under theMaster Leases and the leases relating to Orchard Hotel Shopping Arcade.

Rental receivable under the Master Leases are based on the terms of the MasterLease Agreements as set out in Section H note (c). The amounts receivable for suchleases computed above are based on each Hotel’s revenue and gross operating profitfor the financial year ended 31 December 2005.

(b) The H-REIT Trustee has granted an option to each of the Master Lessees to obtain anadditional lease for another 20 years on expiry of the initial 20-year leases based onthe same terms as described above save for amendments required due to any changein law.

II-24

(H) H-REIT Manager’s Management Fees, H-REIT Trustee’s Fee and Lease Payments underMaster Lease Agreements

(a) H-REIT Manager’s Management Fees

The H-REIT Manager is entitled under the H-REIT Trust Deed to the following managementfees:

• a Base Fee of 0.25% per annum of the value of H-REIT’s Deposited Property (beingthe gross assets of H-REIT, as stipulated in the H-REIT Trust Deed); and

• a Performance Fee of 5% per annum of the Net Property Income (as defined in theH-REIT Trust Deed) of H-REIT in the relevant financial year (calculated beforeaccounting for this additional fee in that financial year).

For a period of five years commencing from the Listing Date, 80% of the management feespayable to the H-REIT Manager will be paid in the form of Stapled Securities or (in the eventthat Unstapling of the H-REIT Units and HBT Units has taken place) H-REIT Units issued atthe market price (as defined in the H-REIT Trust Deed) prevailing at the date of issue and20% of the management fees will be paid in the form of cash.

Any increase in the maximum permitted rate or any change in the structure of the H-REITManager’s management fees must be approved by an Extraordinary Resolution at ameeting of holders of the H-REIT Units duly convened and held in accordance with theprovisions of the H-REIT Trust Deed.

The portion of the management fees payable in the form of Stapled Securities will be madeon a quarterly basis, in arrears. The portion of the management fees payable in the form ofcash will be made on a monthly basis, in arrears.

The aforementioned basis has been used to compute the H-REIT Manager’s managementfees for the purpose of the unaudited pro forma financial information of H-REIT.

(b) H-REIT Trustee’s Fee

Under the H-REIT Trust Deed, the H-REIT Trustee’s fee shall not exceed 0.1% per annumof the value of H-REIT’s Deposited Property (subject to a minimum of S$10,000 per month)or such higher percentage as may be fixed by an Extraordinary Resolution of a meeting ofholders of the H-REIT Units. In addition, H-REIT will pay the H-REIT Trustee a one-timeinception fee of S$15,000. The H-REIT Trustee’s fee is payable out of the DepositedProperty of H-REIT on a monthly basis, in arrears. The H-REIT Trustee is also entitled toreimbursement of expenses incurred in the performance of its duties under the H-REIT TrustDeed.

Based on the current agreement between the H-REIT Manager and the H-REIT Trustee, theH-REIT Trustee’s fee is charged on a scaled basis of up to 0.02% per annum of the valueof H-REIT’s Deposited Property (subject to a minimum of S$10,000 per month).

The aforementioned basis has been used to compute the H-REIT Trustee’s fee for thepurpose of the unaudited pro forma financial information of H-REIT.

II-25

(c) Lease Payments under the Master Lease Agreements

Under the terms of the Master Lease Agreements, H-REIT will be entitled to an annual rentalpayment for the duration of the term of each Master Lease Agreement comprising thefollowing:

• A fixed rent and a service charge for each Hotel. The fixed rent for the Hotels isS$13,400,000, comprising S$5,900,000, S$3,000,000, S$3,900,000 and S$600,000for Orchard Hotel, Grand Copthorne Waterfront Hotel, M Hotel and Copthorne King’sHotel respectively. The service charge for the Hotels is S$13,000,000, comprisingS$4,400,000, S$4,200,000, S$2,200,000 and S$2,200,000 for Orchard Hotel, GrandCopthorne Waterfront Hotel, M Hotel and Copthorne King’s Hotel respectively; and

• A variable rent computed based on the sum of 20% of the Hotel’s revenue for theprevailing financial year and 20% of the Hotel’s gross operating profit for the prevailingfinancial year for each Hotel, less the sum of fixed rent and service charge. Should thecalculation of the variable rent yield a negative figure, the variable rent will be deemedto be zero.

II-26

III-1

APPENDIX III

INDEPENDENT PROPERTY VALUATION SUMMARY REPORTS

CB Richard Ellis (Pte) Ltd

6 Battery Road #32-01

Singapore 049909

T 65 6224 8181

F 65 6225 1987

www.cbre.com.sg

V A L U A T I O N & A D V I S O R Y S E R V I C E SV A L U A T I O N & A D V I S O R Y S E R V I C E SV A L U A T I O N & A D V I S O R Y S E R V I C E SV A L U A T I O N & A D V I S O R Y S E R V I C E S

5 June 2006

DBS Trustee Limited

(as Trustee of CDL Hospitality Real Estate Investment Trust)

6 Shenton Way #36-02

DBS Building, Tower One

Singapore 068809

M&C REIT Management Limited

(as Manager of CDL Hospitality Real Estate Investment Trust)

36 Robinson Road #04-01

City House

Singapore 068877

DBS Bank Ltd

6 Shenton Way

DBS Building Tower One

Singapore 068809

BNP Paribas Peregrine (Singapore) Ltd &

BNP Paribas (acting through its Singapore branch)

20 Collyer Quay

#08-01, #01-01 Tung Centre

Singapore 049319

The Royal Bank of Scotland Plc

50 Raffles Place #08-00

Singapore Land Tower

Singapore 048623

Dear Sirs

Orchard Hotel, 442 Orchard Road, Singapore

Grand Copthorne Waterfront Hotel, 392 Havelock Road, Singapore

M Hotel, 81 Anson Road, Singapore

Copthorne King's Hotel, 403 Havelock Road, Singapore, collectively (the "Hotels"

Orchard Hotel Shopping Arcade, 442 Orchard Road, Singapore

collectively (the "Properties"

Instructions

We refer to instructions issued by M&C REIT Management Limited (as Manager of CDL Hospitality Real Estate

Investment Trust ("H-REIT")) (the "Manager") requesting formal valuation advice in respect of the Properties.

We have specifically been instructed to provide our opinion of Market Value of the leasehold interest in the

Properties as at 28 February 2006, subject to the existing leases and occupancy arrangements of the Orchard

Hotel Shopping Arcade and subject to the proposed leases to certain subsidiaries of Millennium & Copthorne

Hotels plc for the Hotels.

III-2

5 June 2006

Page 2


We have prepared a comprehensive formal valuation report for each of the Properties (the "Report") in

accordance with the requirements of our instructions and the following international definition of "Market

Value", namely:

“Market Value is the estimated amount for which an asset should exchange on the date of valuation between a

willing buyer and a willing seller in an arm’s length transaction, after proper marketing, wherein the parties had

each acted knowledgeably, prudently and without compulsion”.

and also on the following basis:

"the price at which the property might reasonably be expected to be sold at the date of the valuation assuming:

i. a willing, but not anxious, buyer and seller; and

ii. a reasonable period within which to negotiate the sale, having regard to the nature and situation of

the property and the state of the market for property of the same kind; and

iii. that the property will be reasonably exposed to the market; and

iv. that no account is taken of the value or other advantage or benefit, additional to market value, to the

buyer incidental to ownership of the property being valued; and

v. that the seller has sufficient resources to allow a reasonable period for the exposure of the property for

sale; and

vi. that the seller has sufficient resources to negotiate an agreement for the sale of the property".

In adopting this definition of Market Value, we are of the opinion that it is consistent with the international

definition of Market Value as advocated by the Royal Institution of Chartered Surveyors.

For the specific purposes of the Prospectus to be issued by the Manager in connection with the offering of units

in the H-REIT (the "Prospectus"), we provide a summary of the Reports outlining key factors that have been

considered in arriving at our opinion of Market Value. The conclusion on Market Value reflects all information

known by the valuers of CB Richard Ellis who worked on the valuation in respect to the Properties, market

conditions and available data.

Reliance on this Letter

For the purposes of the Prospectus, we have prepared this letter which summarises our Reports and outlines key

factors which have been considered in arriving at our opinion of Market Value. This letter alone does not

contain the necessary data and support information included in our Reports. For further information to that

contained herein, reference should be made to the Reports, copies of which are held by the Manager and

which we understand will be available for inspection for a period of six months from the date of the Prospectus.

CB Richard Ellis has provided the Manager with comprehensive formal valuation reports of the Properties. The

valuation and market information are not guarantees or predictions and must be read in conjunction with the

following:

• Each report is approximately 60 to 80 pages in length and the conclusion as to the estimated value is

based upon the factual information within the Reports. Whilst CB Richard Ellis has endeavoured to

ensure the accuracy of the factual information, it has not independently verified all information

provided by the Manager (primarily copies of financial information with respect to the Properties as

well as reports by independent consultants engaged by the Manager) or the Singapore Statutory

Boards (primarily statistical information relating to market conditions and demographics). CB Richard

III-3

5 June 2006

Page 3


Ellis believes that every investor, before making an investment in the H-REIT, should review the Reports

to understand the complexity of the methodology and the many variables involved.

• The methodologies used by CB Richard Ellis in valuing the Properties – Capitalisation of Income

Approach, Discounted Cash Flow Analysis and Direct Comparison Method – are based upon

estimates of future results and are not predictions. These valuation methodologies are summarised in

the Valuation Rationale section of this letter. Each of the income methodology begins with a set of

assumptions as to income and expenses of the Properties and future economic conditions in the local

market. The income and expense figures are mathematically extended with adjustments for estimated

changes in economic conditions. The resultant value is considered the best practice estimate, but is

not to be construed as a prediction or guarantee and is fully dependent upon the accuracy of the

assumptions as to income, expenses and market conditions. The basic assumptions utilised for the

Properties are summarised in the Valuation Rationale section of this letter.

• The Report was undertaken based upon information available as at 28 February 2006. CB Richard

Ellis accepts no responsibility for subsequent changes in information as to income, expenses or market

conditions.

The Properties

The Properties comprise four hotels and a shopping arcade adjoining the Orchard Hotel which is separate

from the hotel operations. The Hotels have a total of 1,915 saleable guest rooms after taking into account the

renovation in Orchard Hotel. Each hotel is to be leased to certain subsidiaries of Millennium & Copthorne

Hotels plc, who is the existing hotel operator whilst Orchard Hotel Shopping Arcade operates as a traditional

retail property.

Hotel Leases

Each hotel is to be subject to a lease which will commence on the settlement of the properties. The leases all

have the same commercial terms, which are briefly detailed as follows:

Lessees: Wholly owned subsidiaries of Millennium & Copthorne Hotels plc (see "The Lessees"

below).

Term: 20-year initial term. At the expiry of the initial term, the Lessees of each Hotel have the

option to renew the lease for another 20-year term.

Rent: The rent for the Hotels comprises the Fixed Rent, Variable Rent and Service Charge. The

Variable Rent is calculated based on 20% of the prevailing financial year's revenue plus

20% of prevailing financial year’s gross operating profit of the Hotels less the sum of

Fixed Rent and Service Charge.

The Fixed Rent and Service Charge for the Hotels are S$10.3 million for Orchard Hotel,

S$7.2 million for Grand Copthorne Waterfront Hotel, S$6.1 million for M Hotel and

S$2.8 million for Copthorne King’s Hotel.

Owner's Expenses: The owner (the H-REIT) will be responsible to bear insurance and property tax on the

Hotels.

III-4

5 June 2006

Page 4


FF&E: In order to ensure that the Lessees incur a minimum level of capital expenditure during

the lease period, the Lessees are required to set aside as a Furniture, Fixture &

Equipment ("FF&E") reserve, an amount equal to 2.5% of each hotel’s revenue per year

from which it will utilise for capital expenditure on the Hotels.

The Lessees

The Lessees for the Hotels are wholly owned subsidiaries of Millennium & Copthorne Hotels plc, which is a

London listed global hotel operator. The Lessees are City Hotels Pte. Ltd. for Orchard Hotel; Republic Hotels &

Resorts Limited for Grand Copthorne Waterfront Hotel and Copthorne King's Hotel; and Harbour View Hotel

Pte. Ltd. for M Hotel.

SUMMARY OF THE PROPERTIES

Orchard Hotel

Orchard Hotel is located at the junction of Orange Grove Road and Orchard Road, some 4 km away from

the city centre at Collyer Quay. The property is prominently located within the heart of the Orchard Road

shopping and tourist belt and is within a short walking distance from the Orchard MRT station which is situated

at the junction of Scotts Road, Paterson Road and Orchard Road. The hotel comprises an 18-storey block with

4 basement levels known as Orchard Wing and a 17-storey extension block with 4 basement levels known as

Claymore Wing.

Orchard Wing, which was completed in the early 1980's, comprises a 3-storey with a 4-level basement podium

and a 15-storey tower block above it. Claymore Wing consists of a 3-storey with a 4-level basement podium

and a 14-storey tower block above it. The Orchard Wing was refurbished and integrated with the Claymore

Wing in 1992.

Renovation and refurbishment works have been carried out since 2002. These works include the upgrading

and reconfiguration of the guest rooms in phases and renovation of the Food & Beverage outlets and public

areas. As at 28 February 2006, extensive renovation works on the Orchard Wing have been in progress.

Orchard Hotel currently has 674 saleable rooms where upon completion of the renovation, the hotel will have

653 total saleable rooms. The average saleable rooms during 2006 will be 654 rooms. In addition, further

renovation of the Claymore Wing is anticipated in 2008.

Orchard Wing incorporates a 3-storey shopping arcade known as Orchard Hotel Galleria whilst the Claymore

Wing incorporates a 3-storey with a basement shopping arcade known as Orchard Hotel Shopping Arcade.

Both shopping arcades have separate entrances, the former having its main entrance along Orchard Road and

the latter having its main entrance along Claymore Road. In 1997, part of the retail space within Orchard

Hotel Galleria was reconfigured and converted to form part of the conference/banquet facilities of the hotel.

The abovementioned Orchard Hotel Galleria and Orchard Hotel Shopping Arcade (collectively known as

"Orchard Hotel Shopping Arcade") constitutes the property which would be sold to H-REIT.

Facilities and amenities available for the guests include a half Olympic size pool with sun deck; seminar and

banquet facilities including a pillarless ballroom which can house up to 1,500 people (theatre seating), in-

house shopping arcade, baggage store room, a gymnasium, business centre, hospitality room, putting green,

food and entertainment outlets within the hotel including award winning Hua Ting Restaurant, Intermezzo Bar,

La Terrasse, Orchard Café and Orchard Terrace. Services offered at Orchard Hotel include 24-hour

concierge and security, 24-hour in-room dining service, laundry, dry cleaning, valet, travel and tour

reservations, babysitting and photo processing.

III-5

5 June 2006

Page 5


The historical trading performance of the Orchard Hotel is briefly detailed as follows:

F ore castF ore castF ore castF ore cast

2003200320032003 2004200420042004 2005200520052005 2006200620062006

H ote l P rof i l eH ote l P rof i l eH ote l P rof i l eH ote l P rof i l e Rooms 674 674 674 654

RevPAR 70.06 96.58 112.31 16.3% 135.99 21.1%

G ross Re ve nueG ross Re ve nueG ross Re ve nueG ross Re ve nue Rooms 17,219,445 23,835,000 27,628,186 50.1% 32,455,223 51.9%

Food & Beverage 15,513,117 19,419,000 20,574,111 37.3% 22,289,091 35.6%

Telephone 273,770 276,900 215,139 0.4% 229,080 0.4%

Service Charges 3,203,780 4,288,300 4,799,561 8.7% 5,456,000 8.7%

Rent & Other Income 1,552,297 1,597,100 1,925,647 3.5% 2,145,000 3.4%

Total Revenue 37,762,409 49,416,300 55,142,644 62,574,394

D e par tme nt C ost sD e par tme nt C ost sD e par tme nt C ost sD e par tme nt C ost s Rooms 3,747,415 5,118,400 5,132,885 18.6% 5,800,660 17.9%

Food & Beverage 11,275,172 13,990,200 14,788,693 71.9% 15,662,789 70.3%

Telephone 238,513 248,000 242,945 112.9% 293,392 128.1%

Rent & Other Income 335,543 237,900 202,776 10.5% 208,135 9.7%

Total Department Costs 15,596,643 19,594,500 20,367,299 36.9% 21,964,976 35.1%

G ross I n comeG ross I n comeG ross I n comeG ross I n come 22,165,766 29,821,800 34,775,345 63.1% 40,609,418 64.9%

U ndi st r i bu te d O pe ra t i ng E xpe nse sU nd i st r i bu te d O pe ra t i ng E xpe nse sU nd i st r i bu te d O pe ra t i ng E xpe nse sU nd i st r i bu te d O pe ra t i ng E xpe nse s 8,200,933 9,613,500 9,690,403 17.6% 11,493,145 18.4%

G ross O pe rat i ng P ro f i tG ross O pe rat i ng P ro f i tG ross O pe rat i ng P ro f i tG ross O pe rat i ng P ro f i t 13,964,833 20,208,300 25,084,942 45.5% 29,116,273 46.5%

H i st or i c T rad i ngH i st or i c T rad i ngH i st or i c T rad i ngH i st or i c T rad i ng


Tenancy Details

As at the date of valuation, Orchard Hotel Shopping Arcade has a total lettable area of 7,505.2 square metres

(80,785 square feet), including 2,566 square metres (27,620 square feet) leased to Orchard Hotel at no

charge. The rentable retail area is therefore 4,939.2 square metres (53,165 square feet). On this basis, the

rentable area has 50 retail leases which occupy 4,663.4 square metres (50,196 square feet) of the total

4,939.2 square metres (53,165 square feet), representing 94.42% of the property’s net lettable area

(excluding the area occupied under the hotel lease). Of the remaining 6 tenancies, 2 are occupied under

monthly tenancy arrangements with 4 currently vacant.

The majority of retail tenancies are occupied under a standard form of lease, with typical lease terms ranging

from 1 to 3 years. All leases provide for the payment of base rental and service charges with a limited number

of leases incorporating structured increases of base rent during the lease term. Retail leases typically do not

incorporate mid-term reviews, with rentals generally being reviewed to market on lease renewal. The majority

of the leases also incorporate provisions for reporting of sales turnover and payment of "turnover" rental.

The lease expiry analysis of the property is detailed as follows:

LEASE EXPIRY PROFILELEASE EXPIRY PROFILELEASE EXPIRY PROFILELEASE EXPIRY PROFILE

by areaby areaby areaby area

-

5,000

10,000

15,000

20,000

25,000

Vaca

nt

Month

ly

2006

2007

2008

2009

Are

a

III-6

5 June 2006

Page 6



Grand Copthorne Waterfront Hotel is located along Havelock Road, near its junction with Kim Seng Road. It

is just outside the Central Business District ("CBD") and is about 2.5 km from the city centre at Raffles Place.

The hotel has direct access to the adjoining Waterfront Plaza and King's Centre, the latter being a building next

to Waterfront Plaza. The hotel also shares the use of the basement level car park facility with the adjoining

Waterfront Plaza.

The property forming this valuation comprises the hotel building (excluding the basement car park) and the

adjoining Waterfront Plaza. However, it excludes the 1st and 2nd storey within Waterfront Plaza. The 2nd

storey comprises the Waterfront Conference Centre and this will be held under lease to H-REIT for an initial

term of 5 years with a renewal option for another 14 terms of 5 years at the H-REIT’s option based on market

rent. The hotel together with Waterfront Plaza were built on the same 2 land lots.

Grand Copthorne Waterfront Hotel has 539 saleable rooms. The hotel comprises a 30-storey with 2

basement levels building incorporating a 4-storey podium and a 30-storey tower block. The hotel started

trading in October 1999. Minor renovation works were carried out to some of the guest rooms, Food and

Beverage outlets and public areas between 2002 and 2004. We understand that the vendor will add 11 new

guest rooms in 2006. Upon completion of the 2006 renovation, the hotel will have 550 saleable rooms. We

further understand that there are plans in the pipe-line to refurbish and upgrade the guest rooms in 2008 and

that these additions and renovation works will be undertaken by the Lessee.

Facilities and amenities available for the guests include a swimming pool with a sun-deck, a gymnasium, 3

levels (including Waterfront Conference Centre at Waterfront Plaza) of conference/meeting and banquet

facilities, a business centre and food and entertainment outlets such as Café Brio & Piano Bar and Pontini.

Services offered at Grand Copthorne Waterfront include 24-hour concierge and security, 24-hour in-room

dining service, laundry, dry cleaning, service offices and complimentary shuttle bus connection to UE Square,

Republic Plaza, International Plaza, and Orchard Road.

The historical trading performance of the Grand Copthorne Waterfront Hotel is briefly detailed as follows:

F or e castF or e castF or e castF or e cast

2003200320032003 2004200420042004 2005200520052005 2006200620062006

H ote l P r o f i l eH o te l P r o f i l eH o te l P r o f i l eH o te l P r o f i l e Rooms 536 536 539 539

RevPAR 57.40 81.34 95.56 17.5% 122.02 27.7%

G ross Re ve nueG ross Re ve nueG ross Re ve nueG ross Re ve nue Rooms 11,162,590 15,880,100 18,801,000 43.0% 24,005,183 45.7%

Food & Beverage 14,623,958 18,178,000 19,883,400 45.4% 22,734,128 43.3%

Telephone 169,421 190,200 142,000 0.3% 157,284 0.3%

Service Charges 2,575,693 3,407,900 3,868,000 8.8% 4,359,209 8.3%

Rent & Other Income 776,281 813,633 1,062,000 2.4% 1,246,408 2.4%

Total Revenue 29,307,943 38,469,833 43,756,400 52,502,212

D e par tme n t C ost sD e par tme n t C ost sD e par tme n t C ost sD e par tme n t C ost s Rooms 3,605,022 4,448,100 4,865,000 25.9% 5,445,067 22.7%

Food & Beverage 11,654,510 14,394,000 15,125,600 76.1% 16,510,053 72.6%

Telephone 158,971 204,000 176,000 123.9% 207,661 132.0%



G ross In comeG ross In comeG ross In comeG ross In come 13,763,891 19,323,194 23,429,800 53.5% 30,101,130 57.3%

U ndi st r i bu t e d O pe ra t i ng E x pe nse sU nd i st r i bu t e d O pe ra t i ng E x pe nse sU nd i st r i bu t e d O pe ra t i ng E x pe nse sU ndi st r i bu t e d O pe ra t i ng E x pe nse s 7,237,688 8,005,300 8,531,500 19.5% 10,462,897 19.9%

G ross O pe ra t i ng P ro fi tG ross O pe ra t i ng P ro fi tG ross O pe ra t i ng P ro fi tG ross O pe ra t i ng P ro fi t 6,526,203 11,317,894 14,898,300 34.0% 19,638,233 37.4%

H i sto r i c T r ad i ngH i st o r i c T r ad i ngH i st o r i c T r ad i ngH i st o r i c T r ad i ng

III-7

5 June 2006

Page 7


M Hotel

M Hotel is located along Anson Road, at its junction with Palmer Road. It is within the CBD and is about 1.3

km away from the city centre at Collyer Quay. M Hotel has 413 saleable rooms housed within a 29-storey

building with 2 basement levels. The hotel was originally completed circa 1987. The 8th storey, a former car

park floor, was converted in 1997 into 44 units of serviced offices. Major renovation and refurbishment works

was carried out since November 1999 to convert the existing hotel into a deluxe business hotel catering to the

corporate traveller, befitting a hotel within the Millennium & Copthorne Hotels plc group. The transformation

of the hotel was carried out in three phases.

Phase I includes the upgrading of all the hotel guest rooms, common corridors, lift landings and Club Lounge;

hotel frontage/main lobby, Conference Centre (Basement One), Café 2000 and Tea Bar (1st storey), The

Buffet (2nd storey), and Conference Centre & kitchen (2nd storey). All the guest rooms were re-designed to

reflect a modern, contemporary look and fitted-out with new furniture and fittings as well as the installations of

facilities and technical support equipment that provides access to financial and other information crucial to the

business traveller. This phase was completed around July 2000.

Phase II entails the revamping of the former Japanese restaurant located on the 9th storey into a modern

contemporary Japanese restaurant now known as Restaurant J Toshi and J Bar; converting the former Chinese

restaurant on the 10th storey into a Banquet Suite (main Ballroom) and relocating the Sales and Catering office

to the 10th storey; and renovating the employees back-of-house area (Basement Two). Phase II of the

renovation was completed in 2002.

Phase III of the renovation programme was completed in 2003 and it includes the reconfiguration of the 11th

storey space into a health spa and renovation of the swimming pool and its surrounding. There are a total of

237 car park lots on the 3rd to 7th storey of the podium block.

Facilities and amenities available for the guests include a swimming pool with a sun deck, a health spa with

massage rooms, seminar and banquet facilities, baggage store room, a gymnasium and a business centre and

restaurants such as Restaurant J Toshi and J Bar, Café 2000, The Buffet and Tea Bar. Services offered at M

Hotel include 24-hour concierge and security, 24-hour in-room dining service, laundry, valet, foreign currency

exchange, baby-sitting, courier and mailing, travel and tour reservations and iron and board.

The historical trading performance of the M Hotel is briefly detailed as follows:

F or e c astF or e c astF or e c astF or e c ast

2003200320032003 2004200420042004 2005200520052005 2006200620062006

H ote l P r o f i l eH ote l P r o f i l eH ote l P r o f i l eH ote l P r o f i l e Rooms 413 413 413 413

RevPAR 63.40 88.64 109.57 23.6% 128.99 17.7%

G ross R e v e nu eG ross R e v e nu eG ross R e v e nu eG ross R e v e nu e Rooms 9,550,868 13,393,300 16,517,125 53.5% 19,445,260 55.8%

Food & Beverage 8,931,123 9,103,200 9,483,242 30.7% 9,947,917 28.5%

Telephone 138,304 148,300 105,231 0.3% 120,000 0.3%

Service Charges 1,846,146 2,243,100 2,631,666 8.5% 2,934,278 8.4%

Rent & Other Income 1,764,774 1,855,400 2,131,973 6.9% 2,411,939 6.9%

Total Revenue 22,231,215 26,743,300 30,869,237 34,859,394


Food & Beverage 6,050,580 6,910,500 6,666,177 70.3% 7,043,698 70.8%

Telephone 167,471 185,000 174,959 166.3% 210,238 175.2%



G ross I ncomeG ross I ncomeG ross I ncomeG ross I ncome 13,183,286 15,921,700 20,414,700 66.1% 23,518,350 67.5%

U nd i st r i bu te d O pe ra t i ng E x pe nse sU nd i st r i bu te d O pe ra t i ng E x pe nse sU nd i st r i bu te d O pe ra t i ng E x pe nse sU nd i st r i bu te d O pe ra t i ng E x pe nse s 5,126,087 5,914,700 6,335,807 20.5% 7,701,907 22.1%

G ross O pe ra t i ng P ro f i tG ross O pe ra t i ng P ro f i tG ross O pe ra t i ng P ro f i tG ross O pe ra t i ng P ro f i t 8,057,199 10,007,000 14,078,893 45.6% 15,816,443 45.4%

H i st or i c T radi ngH i st or i c T radi ngH i st or i c T radi ngH i st or i c T radi ng

III-8

5 June 2006

Page 8



Copthorne King’s Hotel is located along Havelock Road, about 50 m from its junction with Kim Seng Road. It

is just outside the CBD and is about 2.5 km from the city centre at Raffles Place. The hotel has 310 saleable

rooms within two adjoining and interconnected wings. The original wing is a 13-storey rectangular building

which comprises a 2-storey podium and a slab block above it. The extension wing is a 20-storey semi-circular

wing that adjoins the western end of the original building. In addition, there is a 3-storey annexe at the rear of

the original wing. Ample surface car parking lots are available within the compound of the development.

The original wing and the annexe were completed in 1970 whilst the extension wing was completed in 1980.

In 2002, the guest rooms within the Tower Block were refurbished as well as the front Lobby area and coffee

house. The most recent renovations, in 2004, included the refurbishment of the remaining guest rooms and

some public areas. All guest rooms and hotel public areas have been wired up for broadband internet access.

Facilities and amenities available for the guests include a swimming pool with a sun-deck, a gymnasium,

seminar and banquet facilities, a business centre, a sundry shop, a barber, baggage store room, and food and

entertainment outlets such as Tien Court, Princess Terrace Café, Lavazza Café, Connections Lounge, La La La

Lounge and Mino-Q Teppan-yaki Steak House. Services offered at Copthorne King’s include 24-hour

concierge and security, 24-hour in-room dining service, gymnasium, laundry, dry cleaning, complimentary

shuttle bus connection to Orchard Road, Great World City, Chinatown, Outram and Somerset MRT stations,

Suntec City and Shenton Way within the CBD.

The historical trading performance of the Copthorne King's Hotel is briefly detailed as follows:

F ore castF ore castF ore castF ore cast

2003200320032003 2004200420042004 2005200520052005 2006200620062006

H ote l P r o f i l eH o te l P r o f i l eH o te l P r o f i l eH o te l P r o f i l e Rooms 308 308 310 310

RevPAR 48.90 65.91 88.15 33.7% 102.37 16.1%

G ross R e ve nueG ross R e ve nueG ross R e ve nueG ross R e ve nue Rooms 5,496,320 7,431,500 9,967,700 51.6% 11,582,976 52.2%

Food & Beverage 4,548,722 5,646,100 6,711,800 34.8% 7,704,000 34.7%

Telephone 86,155 103,000 92,900 0.5% 96,000 0.4%

Service Charges 1,008,763 1,314,700 1,674,600 8.7% 1,939,000 8.7%


Total Revenue 11,750,077 15,102,100 19,307,100 22,196,976


Food & Beverage 3,881,327 4,577,100 4,960,300 73.9% 5,532,000 71.8%

Telephone 151,794 173,300 158,200 170.3% 175,000 182.3%



G ross I n comeG ross I n comeG ross I n comeG ross I n come 5,869,015 8,032,800 11,786,100 61.0% 13,930,976 62.8%

U ndi st r i bu t e d O pe ra t i ng E x pe nse sU ndi st r i bu t e d O pe ra t i ng E x pe nse sU ndi st r i bu t e d O pe ra t i ng E x pe nse sU ndi st r i bu t e d O pe ra t i ng E x pe nse s 3,481,238 4,532,400 4,642,200 24.0% 5,062,000 22.8%

G ross O pe ra t i ng P ro f i tG ross O pe ra t i ng P ro f i tG ross O pe ra t i ng P ro f i tG ross O pe ra t i ng P ro f i t 2,387,777 3,500,400 7,143,900 37.0% 8,868,976 40.0%

H i sto r i c T r ad i ngH i st o r i c T r ad i ngH i st o r i c T r ad i ngH i st o r i c T r ad i ng

III-9

5 June 2006

Page 9


Revenue per Available Room (RevPAR

The revenue per available room for each of the four hotels for the calendar years 2003, 2004, 2005 and

forecast for 2006 are depicted as follows:

$45

$55

$65

$75

$85

$95

$105

$115

$125

$135

2003 2004 2005 2006

Rev

Par

(S

$)

Orchard Hotel

GrandCopthorneWaterfrontHotel

M Hotel

CopthorneKing's Hotel

The chart indicated the relativity of the RevPar between the four hotels and shows the growth in this market of

the past three years.

Net Income Analysis

Based on our interpretation of the proposed leases and the disclosed tenancy arrangements for the retail component, the estimated income derived from the Properties as at the date of valuation, is detailed in the following table:

OrchardOrchardOrchardOrchard Grand CopthorneGrand CopthorneGrand CopthorneGrand Copthorne CopthorneCopthorneCopthorneCopthorne Orchard HotelOrchard HotelOrchard HotelOrchard Hotel

HotelHotelHotelHotel Waterfront HotelWaterfront HotelWaterfront HotelWaterfront Hotel M HotelM HotelM HotelM Hotel King's HotelKing's HotelKing's HotelKing's Hotel Shopping ArcadeShopping ArcadeShopping ArcadeShopping Arcade

MajorsMajorsMajorsMajors

Number of Rooms 654 539 413 310

Lettable Area (square feet) (1)53,165

Fixed Rent (including Service Charge) 10,300,000 7,200,000 6,100,000 2,800,000 2,743,661

Variable Rent 8,038,133 7,228,089 4,035,167 3,413,190 -

Service Charge for Orchard Hotel Shopping Arcade 602,736

Other Income 107,346

Gross Rent $pa 18,338,133 14,428,089 10,135,167 6,213,190 3,453,743

$per room per month/$psft 2,337 2,231 2,045 1,670 5.41

Less Less Less Less

Operating Expenses 396,428 374,056 240,000 125,000 1,264,751

Property Tax 752,563 549,720 494,783 270,710 223,160

Property Management Fee 35,421

Other Owner Expenses 31,899

NET PASSING INCOME NET PASSING INCOME NET PASSING INCOME NET PASSING INCOME 17,189,143 13,504,313 9,400,384 5,817,480 1,898,512

Vacant Tenancies 158,436

Vacancy/Bad Debts Allowance (70,097)

NET INCOMENET INCOMENET INCOMENET INCOME (2) (2) (2) (2) 17,189,14317,189,14317,189,14317,189,143 13,504,31313,504,31313,504,31313,504,313 9,400,3849,400,3849,400,3849,400,384 5,817,4805,817,4805,817,4805,817,480 1,986,8521,986,8521,986,8521,986,852

(2) Fully Leased-After Vacancy Allowance

(1) The total NLA of the Orchard Hotel Shopping Arcade is 80,785 square feet. The hotel occupies 27,620 square feet under the hotel lease at no charge. The rentable retail area is

therefore 53,165 square feet.

In our assessment of value, we have as instructed, calculated property tax based on the provisions under the Property Tax (Valuation by Gross Receipts for Hotel Premises) Order. Under the Order, the Annual Value of (a) hotel rooms and (b) tourist food establishments and tourist public houses situated within the tourist hotel is to be determined on the basis of 15% and 5% respectively of their total gross receipts in the preceding calendar year. We have not calculated property tax as 10% of the net rental under the lease. If this proves incorrect we reserve the right to review our valuation.

III-10

5 June 2006

Page 10


Property Details

The following table summarises other key property details for the Properties:

PropertyPropertyPropertyProperty TitleTitleTitleTitle

Details Details Details Details

Land AreaLand AreaLand AreaLand Area

(sqm)(sqm)(sqm)(sqm)

Tenure Tenure Tenure Tenure Zoning ZoningZoningZoning

(2003 Master Plan)(2003 Master Plan)(2003 Master Plan)(2003 Master Plan)

Orchard Hotel and Orchard

Hotel Shopping Arcade

442 Orchard Road,

Singapore

Lots 99883M, 549A

551T, 982P, 984A and

985K of Town

Subdivision 25

8,588.0 75 years leasehold

from Settlement. The

freehold owner is City

Hotels Pte. Ltd., the

vendor.

Hotel with plot ratio

of 4.9+.

Grand Copthorne

Waterfront Hotel

392 Havelock Road

Singapore

Lots 1093C and 1094M

of Town Subdivision 21

10,860.2 * 75 years leasehold


freehold owner is City

Developments Limited,

the vendor


of 3.8.

M Hotel

81 Anson Road,

Singapore

Lot 874C of Town

Subdivision 23



freehold owner is

Harbour View Hotel

Pte. Ltd., the vendor


of 5.6+.

Copthorne King's Hotel

403 Havelock Road,

Singapore

Lot 172K of Town

Subdivision 22


from 1 February 1968.


of 3.5.

* Grand Copthorne Waterfront Hotel and Waterfront Plaza sit on the same 2 land lots We understand that our client is currently in the process of excising the 1st and 2nd storey of Waterfront Plaza as well as the basement car park of the hotel building which do not form part of the property to be acquired by H-REIT.

Valuation Rationale

In arriving at our opinion of value, we have considered relevant general and economic factors and in particular

have investigated recent sales and leasing transactions of comparable properties that have occurred in the

hotel and shopping centre markets. In undertaking the assessment of the Properties, we have utilised the

Capitalisation of Income Approach, Discounted Cash Flow Analysis and Direct Comparison Approach on the

basis of rates per hotel room and the rate per square foot of retail lettable area.

Capitalisation of Income Approach

As our primary method of valuation, we have utilised a capitalisation of income approach in which the

sustainable net income from the proposed hotel leases has been estimated, from which we have deducted

insurance and property tax. The capitalisation of income approach has also been used for the Orchard Hotel

Shopping Arcade, in which the sustainable net income on a fully leased basis has been estimated for the retail

component having regard to the current passing rental income and potential future income from existing

vacancies. Other income relating to advertising and promotion recoveries, casual leasing, sundry items and

car parking revenue has additionally been incorporated within our calculations. From this figure, we have

deducted outgoings expenditure, property tax, management fees and an ongoing vacancy allowance to reflect

possible future vacancies and bad debts. We have additionally incorporated an ongoing owner’s non-

recoverable expenditure allowance within our calculations.

III-11

III-12

5 June 2006

Page 12


Valuation Assessment

We are of the opinion that the Market Value of the leasehold interest in the Properties as at 28 February 2006,

subject to the proposed hotel leases and all existing tenancies and occupancy arrangements for Orchard Hotel

Shopping Arcade, is S$846,300,000 (Eight Hundred Forty-six Million and Three Hundred

Thousand Singapore Dollars .

Disclaimer

Mr Danny Mohr, Ms Sim Hwee Yan and CB Richard Ellis have prepared this Valuation Summary Letter for

inclusion in the Prospectus and specifically disclaim liability to any person in the event of any omission from or

false or misleading statement included in the Prospectus, other than in respect of the information provided

within the aforementioned Report and this Valuation Summary Letter. Mr Danny Mohr, Ms Sim Hwee Yan and

CB Richard Ellis do not make any warranty or representation as to the accuracy of the information in any other

part of the Prospectus other than as expressly made or given by CB Richard Ellis in this letter.

CB Richard Ellis has relied upon property data supplied by the Manager which we assume to be true and

accurate. CB Richard Ellis takes no responsibility for inaccurate client supplied data and subsequent

conclusions related to such data.

The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting

conditions and are our personal, unbiased professional analyses, opinions and conclusions. Messrs Danny

Mohr and Sim Hwee Yan have no present or prospective interest in the Properties and have no personal

interest or bias with respect to the party/s involved. The valuers’ compensation is not contingent upon the

reporting of a predetermined value or direction in value that favours the cause of the client, the amount of the

value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event (such as a lending

proposal or sale negotiation).

We hereby certify that the valuers undertaking these valuations are authorised to practise as valuers and have

at least 15 years continuous experience in valuation.

Yours sincerely

CB Richard Ellis (Pte Ltd

Danny Mohr AAPI MRICS Sim Hwee Yan BSc (Est.Mgt) Hons FSISV

Registered Valuer Appraiser’s Licence No. AD041-20041-55J

Executive Director – REITs Asia Executive Director – REITs Asia

III-13

Other Offices: KF Property Network Pte Ltd 16 Raffles Quay, #30-00 Hong Leong Building, Singapore 048581 Knight Frank Estate Management Pte Ltd (a subsidiary of Knight Frank Pte Ltd) 138 Cecil Street, #16-00 Cecil Court, Singapore 069538

7 June 2006

DBS Trustee Limited (as Trustee of the CDL Hospitality Real Estate Investment Trust) 6 Shenton Way #36-02 DBS Building Tower One Singapore 068809

M&C REIT Management Limited (as Manager of CDL Hospitality Real Estate Investment Trust) 36 Robinson Road #04-01 City House Singapore 068877

BNP Paribas Peregrine (Singapore) Ltd & BNP Paribas (acting through its Singapore Branch) 20 Collyer Quay #08-01, #01-01 Tung Centre Singapore 049319

DBS Bank Ltd The Royal Bank of Scotland 6 Shenton Way 50 Raffles Place #08-00 DBS Building Tower One Singapore Land Tower Singapore 068809 Singapore 048623

Dear Sirs

RE: VALUATION OF (A) NO. 81 ANSON ROAD “M HOTEL” (B) NO. 392 HAVELOCK ROAD “GRAND COPTHORNE WATERFRONT HOTEL”

(C) NO. 403 HAVELOCK ROAD “COPTHORNE KING’S HOTEL” (D) NO. 442 ORCHARD ROAD “ORCHARD HOTEL & SHOPPING ARCADE” SINGAPORE

1 Instructions

We have been instructed by DBS Trustee Limited to carry out a formal valuation in respect of the abovementioned properties (the “Properties” and each, a “Property”). We have specifically been instructed to provide our opinion of the Open Market Values of the Properties, prepared as at 28 February 2006, subject to the existing and proposed leases and occupancy arrangements.

We have, in accordance with the instructions, prepared formal comprehensive valuation reports (individually a “Report” and collectively the “Reports”). Our valuation is our opinion of the Open Market Value, which we would define as intended to mean:

"the best price at which the sale of an interest in property might reasonably be expected to have been completed unconditionally for cash consideration on the date of valuation, assuming:-

Knight Frank Pte Ltd 16 Raffles Quay #30-00 Hong Leong Building Singapore 048581 (65) 6222 1333 (65) 6224 5843 fax www.knightfrank.com.sg Reg No 198205243Z

[email protected] direct tel +65 6228 6860 direct fax +65 6323 5042

abcdefCert No. 160076

III-14

2

1 Instructions

(a) a willing, but not anxious, buyer and seller;

(b) that prior to the date of valuation there had been a reasonable period (having regard to the nature of the property and the state of the market), for the proper marketing of the interest, for the agreement of price and terms and for the completion of the sale;

(c) that the state of the market, level of values and other circumstances were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation; and

(d) that no account is taken of any additional bid by a purchaser with a ‘special interest’.”

Our valuation has been made on the assumption that the Properties are sold in the open market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to alter the value of the Properties.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the Properties or for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the Properties are free from encumbrances, restrictions and outgoings of an onerous nature which could affect value.

In preparing this valuation, we have relied on information provided by M&C REIT Management Limited (the “Manager”), particularly in respect of such matters as site and floor areas, revenues (rooms, food and beverage outlets, etc.), tenancy information, etc. Dimensions, measurements and areas are only approximations.

We have prepared and provided this Summary of the Reports outlining key factors that have been considered in arriving at our opinions of value for inclusion in the Prospectus to be issued in connection with the Initial Public Offer of stapled securities in CDL Hospitality Trusts. The value conclusions reflect all information known by the valuers of Knight Frank Pte Ltd who worked on the valuations in respect to the Properties, market conditions and available data.

2 Reliance on This Letter

This letter alone does not contain all the necessary data and support information included in our Reports. For further information to that contained herein, reference should be made to the Reports, copies of which are available for inspection during normal business hours at the registered office of the Manager at 36 Robinson Road #04-01, City House, Singapore 068877, for a period of six months commencing from the date of the Prospectus.

Knight Frank Pte Ltd has provided the Trustee with a comprehensive valuation report for each of the Properties. The valuation and market information are not guarantees or predictions and must be read in consideration of the following:

(a) Each Report is several pages in length and the conclusion as to the estimated value is based upon the factual information set forth in that Report. Whilst Knight Frank Pte Ltd has endeavoured to assure the accuracy of the factual information, it has not independently verified all information provided by the Manager (primarily copies of profit and loss statements, rent roll and other information with respect to the Properties) or the Government of Singapore (primarily statistical information relating to market conditions). Knight Frank Pte Ltd believes that every investor and every recipient of the Prospectus, before making an investment in the CDL Hospitality Trusts, should review the Reports to understand the complexity of the methodology and the many variables involved.

III-15

3

2 Reliance on This Letter

(b) The methodologies used by Knight Frank Pte Ltd in valuing the Properties – the Investment Method and Discounted Cash Flow Analysis – are based upon estimates of future results and are not predictions. These valuation methodologies are summarised in Section 9 of this letter. Each methodology is based on a set of assumptions as to income and expenses of the relevant Property and future economic conditions in the local market. The income and expense figures are mathematically extended with adjustments for estimated changes in economic conditions. The resultant value is considered the best practice estimate but is not to be construed as a prediction or guarantee and is fully dependent upon the accuracy of the assumptions as to income, expenses and market conditions.

(c) The Reports were undertaken based upon information available as at 28 February 2006. Knight Frank Pte Ltd accepts no responsibility for subsequent changes in information as to income, expenses or market conditions.

3 Hotel Leases

Lessee

We understand that the hotels will be leased to certain wholly owned subsidiaries of Millennium & Copthorne Hotels plc, namely, City Hotels Pte. Ltd. (which owned Orchard Hotel), Republic Hotels & Resorts Limited (which owned Copthorne King’s Hotel) and Harbour View Hotel Pte. Ltd. (which owned M Hotel). Millennium & Copthorne Hotels plc is a London listed global hotel owner and operator.

Lease Team

20 years with an option to renew exerciseable by the lessee for another 20 years based on the same commercial terms.

Gross Rent

The gross rent of each hotel comprises three components, namely fixed rent, variable rent and service charge. Variable rent is the sum of 20% of hotel’s revenue for the prevailing financial year and 20% of hotel’s gross operating profit for the prevailing financial year, less the sum of fixed rent and service charge. The sum of fixed rent and service charge of each hotel are as follows:

Property Fixed Rent and Service Charge (per annum)

M Hotel $ 6,100,000

Grand Copthorne Waterfront Hotel $ 7,200,000

Copthorne King’s Hotel $ 2,800,000

Orchard Hotel $10,300,000

III-16

4

3 Hotel Leases

Owner’s Expenses

Owner’s expenses include property tax and insurance.

Furniture, Fixtures & Equipment

An amount equal to 2.5% of revenue of the respective hotel will have to be set aside by the respective lessee as a reserve for furniture, fixtures and equipment during the lease term. This amount will be utilised for the capital expenditure on the hotel.

4 Summary of M Hotel

Brief Description

M Hotel is located at the southern junction of Anson Road and Palmer Road, in the heart of the Central Business District and approximately 1.3 km from the City Centre. It is a 29-storey business hotel with 2 basement levels accommodating a total of 413 saleable guest rooms. It has received numerous accolades, including “2003 PATA Gold Awards Marketing Category”;“Best Mid-Range Business Hotel 2002 and 2005” by TTG Asia and “Award for Excellence, Best Corporate/Business Hotel” by Hospitality Asia 2004.

The hotel has a total of 5 food and beverage outlets (including 1 let-out unit). There are 9 multi-purpose function rooms and a banquet suite.

Business centre with secretarial services and a reference library is provided within the hotel. The Waterfloor on the 11th storey features a spa managed by M Hotel and Haach, offers a gymnasium and swimming pool in addition to spa suites.

On the 8th storey are fully furnished serviced offices offering business facility and support.

We understand that the total gross floor area of the subject building is about 32,379.32 sm.

As extracted from the tenancy schedule provided, the total lettable floor area of the serviced offices is about 895.4 sm, subject to final survey.

Hotel Operation Details

For Financial Year 2005, the yield per available room was $109.57.

In Year 2005, a total revenue of $30,869,237/- was generated from various hotel operating departments and other income. Rooms and Food & Beverage were the main revenue generators contributing 53.5% and 30.7% of the total revenue respectively. Service charges amounted to 8.5% of the total revenue. The remaining 7.3% of revenue was from communications and other income. Other income includes revenue from function rooms and meeting rooms, income from the 32 serviced offices (excluding 12 owner-occupied units) on the 8th storey, a Japanese Restaurant on the 9th storey, a spa on the 11th storey and car park revenue.

The Gross Operating Profit for Financial Year 2005 was $14,078,893/- reflecting a gross operating profit margin of about 45.6%.

III-17

5

5 Summary of Grand Copthorne Waterfront Hotel

Brief Description

Grand Copthrone Waterfront Hotel is located at the junction of Havelock Road and Kim Seng Road, just outside the traffic restricted zone of the Central Business District and approximately 2.5 km from the City Centre. It is situated on the banks of the historic Singapore River.

Grand Copthorne Waterfront Hotel is part of a comprehensive development which comprises a hotel and a 6-storey commercial development known as Waterfront Plaza. The hotel and Waterfront Plaza share the 2 levels of basement car park. The 75-year leasehold title in respect of the Grand Copthorne Waterfront Hotel does not include the 1st and 2nd storeys of the adjoining Waterfront Plaza and the basement car park. The 2nd storey of Waterfront Plaza which comprises the Waterfront Conference Centre will be leased by City Developments Limited to CDL Hospitality Real Estate Investment Trust for a term of 5 years with an option to renew for another 14 terms of 5 years each at the option of CDL Hospitality Real Estate Investment Trust. The rental terms of the renewal option will be based on market rental. We have valued the subject property assuming proper subdivision of title from the basement car park and 1st & 2nd storeys of Waterfront Plaza.

Grand Copthorne Waterfront Hotel comprises a 30-storey block accommodating a total of 539 saleable guest rooms. It was opened in October 1999. We understand that 11 new guest rooms will be added on the 17th to 20th storeys. The addition works are scheduled to be completed by end 2006. Upon completion of the addition works, the hotel will have a total saleable guest rooms of 550.

The hotel offers lifestyle and business enabling conveniences to facilitate business and leisure traveller’s needs with health and leisure facilities, restaurants and bars, executive accommodation and privileges, wireless connection, business support services and serviced offices.

The hotel has a total of 3 food and beverage outlets. There are several multi-purpose function rooms on the 2nd, 3rd and 4th storeys.

Located on the 3rd storey of the hotel are 25 units of fully furnished serviced offices with a range of business support services such as on-site IT support, high-speed internet connection, conference and meeting facilities.

Facilities provided include swimming pool, jacuzzi, tennis courts and health and fitness centre.

We understand that the total gross floor area of the subject property (excluding basement car park and 1st & 2nd storeys of Waterfront Plaza) is about 46,662.55 sm.

As extracted from the tenancy schedule provided, the total lettable floor area of the serviced offices is about 335.7 sm, subject to final survey.

The 5th and part of the 6th storeys, with a total gross floor area of about 2,504.2 sm, has been vacant since the operation of the hotel in 1999.

III-18

6

5 Summary of Grand Copthorne Waterfront Hotel



In Year 2005, a total revenue of $43,756,885/- was generated from various hotel operating departments and other income. Rooms and Food & Beverage were the main revenue generators contributing 43.0% and 45.4% of the total revenue respectively. Service charges amounted to 8.8% of the total revenue. The remaining 2.8% of revenue was from communications and other income. Other income includes revenue from function rooms and meeting rooms, serviced offices, a tennis court on the 6th storey and telecommunication operators.


6 Summary of Copthorne King’s Hotel

Brief Description

Copthrone King’s Hotel is located at Havelock Road, just outside the traffic restricted zone of the Central Business District and approximately 2.5 km from the City Centre. It is a boutique-style business hotel accommodating a total 310 saleable guest rooms. It has two adjoining and interconnected wings. The original wing is a 13-storey block (main block) comprising a 2-storey podium and a slab block above the podium. The extension wing is a 20-storey semi-circular block (tower block) adjoining the main block. There is also a 3-storey annexe at the rear of the main block.

The hotel has a total of 5 food and beverage outlets (including 2 let-out units). There are 5 multi-purpose function rooms and 2 retail units (gift shop and barber shop) within the hotel.

Facilities provided include business centre, swimming pool, sauna, steam bath, outdoor jacuzzi, gymnasium and mini putting green.




In Year 2005, a total revenue of $19,307,100/- was generated from various hotel operating departments and other income. Rooms and Food & Beverage were the main revenue generators contributing 51.6% and 34.8% of the total revenue respectively. Service charges amounted to 8.7% of the total revenue. The remaining 4.9% of revenue was from communications and other income. Other income includes revenue from function rooms and meeting rooms, rental income from retail space, licence fees from telecommunication operators and car park revenue.


III-19

7

7 Summary of Orchard Hotel & Shopping Arcade

Brief Description

Orchard Hotel is located at the north-eastern junction of Orchard Road/Orange Grove Road, outside the traffic restricted zone of the Central Business District and approximately 4.0 km from the City Centre. It is located at the western “entrance” to the popular tourist and retail belt along Orchard Road where several modern retail complexes and tourist hotels can be found.

Orchard Hotel is a part 17/part 18-storey hotel accommodating a total of 653 saleable guest rooms. It has an adjoining 3-storey galleria facing the junction of Orange Grove Road/Orchard Road and a 3-storey with a basement level shopping arcade facing Claymore Road, collectively known as Orchard Hotel Shopping Arcade. The guest rooms are housed in 2 separate tower blocks known as Orchard Wing (from 4th to 18th storeys) and Claymore Wing (from 5th to 17th storeys). The shopping arcade is connected to the hotel on the 1st and 2nd storeys.

The hotel has a total of 5 food and beverage outlets (including one at poolside). There are 6 conference rooms, 4 function rooms and 3 ballrooms within the hotel.

Business centre with secretarial, meetings and conference services is provided. Facilities provided within the hotel include swimming pool, fitness centre, sauna, putting green, giant chess set and dart board.


As extracted from the tenancy schedule provided, the total lettable floor area of Orchard Hotel Shopping Arcade is about 4,939.3 sm, excluding about 2,566.0 sm leased to Orchard Hotel at no charge.



In Year 2005, a total revenue of $55,142,644/- was generated from various hotel operating departments and other income. Rooms and Food & Beverage were the main revenue generators contributing 50.1% and 37.3% of the total revenue respectively. Service charges amounted to 8.7% of the total revenue. The remaining 3.9% of revenue was from communications and other income. Other income includes revenue from function rooms, business centre and fitness centre, etc.


III-20

8

7 Summary of Orchard Hotel & Shopping Arcade

Shopping Arcade Tenancy Details

As at 31 January 2006, 95.9% of the Shopping Arcade’s total lettable area was occupied. Retail tenancies generated a total gross monthly rental income of $278,866/- excluding other income of about $14,393/- per month from licence fees, showcases, tour desk and utilities charges, etc. Major tenants occupied 58.9% of the total lettable area while the remaining 41.1% of the area was 89.9% occupied and tenanted to specialty retailers. There were 4 vacant units with a total of 204.9 sm or 4.1% of total lettable area. Major tenants include World Spa Health Club Pte Ltd, Gaelic Inns Pte Ltd, Esmirada Mediterranean Restaurant, Mas Millennium, Backstage Hair Salon Pte Ltd, Aromatic House Pte Ltd, Icon One Pte Ltd and Ch’l Life Pte Ltd. Most of the tenancies are for periods of 1 to 3 years.

Our lease ageing analysis indicates that the percentages of specialty leases expiring each year from 2006 to 2008 are 47.1%, 42.6% and 10.3% of the total lettable area respectively. In terms of gross monthly rental income, their contributions amounted to 45.0%, 43.8% and 11.2% respectively.

8 Summary of Property Details

The following table summarises other key property details for each of the Properties:

Property

Land Area (sm)

Gross Floor

Area (sm) Tenure Interest Valued Master

Plan 2003

M Hotel 2,133.9 32,379.32 Estate in Fee Simple

Fresh Leasehold 75 yrs from 28/2/2006

Hotel zone


10,860.2* 46,662.55** Estate in Fee Simple


Hotel zone

Copthorne King’sHotel

5,636.9 17,598.34 Leasehold 99 yrs wef 1/2/1968

Balance lease term of about 60.9 yrs as at 28/2/2006

Hotel zone

Orchard Hotel & Shopping Arcade

8,588.0 49,940.90 Estate in Fee Simple


Hotel zone

* For Grand Copthorne Waterfront Hotel & Waterfront Plaza. ** Excluding basement car park and 1st & 2nd storeys of Waterfront Plaza.

III-21

9

9 Valuation Rationale

In arriving at our opinion of value, we have considered relevant general and economic factors. We have utilised the Investment Method and Discounted Cash Flow Analysis in undertaking our assessment for each of the Properties.

We have followed The Property Tax (Valuation by Gross Receipts For Hotel Premises) Order 1987 in our computation of property tax of the hotels. The annual values of the hotel guest rooms and food & beverage outlets are based on 15% and 5% respectively of the preceding year gross receipts.

Investment Method

In the Investment Method, the estimated revenue of the hotel has been adjusted to reflect anticipated operating expenses (e.g. payroll and related expenses and other direct expenses) producing a gross operating profit.

The gross rent of each hotel comprises three components, namely fixed rent, variable rent and service charge. Variable rent is the sum of 20% of hotel’s revenue for the prevailing financial year and 20% of hotel’s gross operating profit for the prevailing financial year, less the sum of fixed rent and service charge. Property tax and insurance are deducted to derive at the net income.

For the shopping arcade, the estimated revenue has been adjusted to reflect anticipated operating expenses, an ongoing vacancy and bad debts allowance, property tax and owner’snon-recoverable expenditure, providing a net income.

The net income of the Property is capitalised for the balance term of the lease tenure at a yield rate which is appropriate for the type of use, tenure and reflective of the quality of the investment, based on analysis of yields reflected in the sales of comparable property types. Capital adjustments such as letting up allowance, leasing commissions, capital expenditure and capitalised revenue reversions are then made to derive the capital value of the Property.

Revenue of the hotel comprises revenue from guest rooms, food and beverage outlets, communications and other income, service charge and potential future income from existing vacant lettable units (if any).

Revenue of the shopping arcade comprises rental from existing tenancies, potential future income from existing vacant units and turnover and other income of the property. Other income is in respect of licence fees, rentals of showcases, etc.

Discounted Cash Flow Analysis

A valuation using the Discounted Cash Flow (DCF) model is carried out over a holding period from 28 February 2006 (the material date) to 31 December 2015 for the Properties.

The Properties are hypothetically assumed to be sold at the end of the holding period. The cash outflows (comprising property tax, insurance, etc) are deducted from the cash inflows of the relevant Properties to obtain the net cash flows. The stream of net cash flows is discounted at an estimated required rate of return applicable to that class of property to obtain the Net Present Value.

III-22

10

9 Valuation Rationale

The Discounted Cash Flow method is used, as the subject properties are income-producing properties. This form of analysis reflects investors’ decision-making process and values the property in such a manner as to attain the desired level of investment return commensurate with the risk of that asset class. This method is also more precise as it takes into account the timing of receipts and payments. In undertaking this analysis, we have also used a wide range of assumptions for the valuation of all the hotels and the shopping arcade of Orchard Hotel. Assumptions for hotels include growth of room rates and other revenues during holding period, room occupancy, expense ratios and other related expenses. Assumptions for the shopping arcade include rental growth during holding period, other income revenue growth, vacancy allowances, inflation rate and other related expenses.

One key component of the DCF model is the estimation of two rates. One is the hurdle rate at which investors will discount the income stream over the assumed 10-year investment horizon. The second is the terminal yield for the asset, which is used to capitalise the income from year 11 onwards, to derive the terminal value of the asset after providing disposal cost and related expenses. The terminal value took into account the remaining tenure of the lease, where applicable.

Based on the above, the following table outlines the salient valuation assumptions adopted in undertaking our assessment:

Property Capitalisation Rate Target Discount Rate

(10 years) Terminal Yield

M Hotel 5.75% 8.50% 6.00%


6.00% 8.50% 6.25%

Copthorne King’s Hotel 6.75% 8.75% 7.00%

Orchard Hotel & Shopping Arcade

5.75% 8.50% 6.00%

III-23

11

10 Summary of Values

We are of the opinion that the Open Market Values of the unencumbered interest in the Properties, as at 28 February 2006, subject to all existing and proposed tenancies and occupancy arrangements, are:

Property Interest Valued Open Market Value

As At 28 February 2006

No. 81 Anson Road “M Hotel”Singapore 079908


$161,730,000/-

No. 392 Havelock Road “Grand Copthorne Waterfront Hotel”Singapore 169663


$233,880,000/-

No. 403 Havelock Road “Copthorne King’s Hotel”Singapore 169632

Balance lease term of about 60.9 yrs as at 28/2/2006

$85,500,000/-

No. 442 Orchard Road “Orchard Hotel & Shopping Arcade”Singapore 238879


Hotel - $330,010,000/-

ShoppingArcade - $ 35,190,000/- Total - $365,200,000/-

GRAND TOTAL $846,310,000/-

11 DISCLAIMER

We have prepared this valuation summary for inclusion in the Prospectus and specifically disclaim liability to any person in the event of any omission from or false or misleading statement included in the Prospectus, other than in respect of the information provided within the aforementioned Reports and this valuation summary. We do not make any warranty or representation as to the accuracy of the information in any other part of the Prospectus other than as expressly made or given by Knight Frank Pte Ltd in this valuation summary or in the Reports.

Knight Frank Pte Ltd has relied upon property data supplied by the Manager which we assume to be true and accurate. Knight Frank Pte Ltd takes no responsibility for inaccurate data supplied by the Manager and subsequent conclusions related to such data.

III-24

12

11 DISCLAIMER

The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, unbiased professional analyses, opinions and conclusions. We have no present or prospective interest in the Properties and have no personal interest or bias with respect to the party/parties involved. The valuers’compensation is not contingent upon the reporting of a predetermined value or direction in value that favours the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event.

We hereby certify that our valuers undertaking the valuation are authorised to practice as valuers and have the necessary expertise and experience in valuing similar types of properties.

Yours faithfully Knight Frank Pte Ltd

Low Kin Hon B.Sc. (Estate Management) Hons. MSISVExecutive Director Valuation

Woo Ai Lian MBA, B.Sc. (Estate Management) Hons. MSISVAssociate Director Consultancy & Research

IV-1

Jones Lang LaSalle Property Consultants Pte Ltd

9 Raffles Place #38-01 Republic Plaza Singapore 048619

tel +65 6536 0606 fax +65 6533 2107

www.joneslanglasallehotels.com

Company Reg No. 198004794D

To:

The Board of Directors of M&C REIT Management Limited (as manager of CDL Hospitality Real Estate Investment Trust) 36 Robinson Road #04-01 City House Singapore 068877

The Board of Directors of M&C Business Trust Management Limited (as trustee-manager of CDL Hospitality Business Trust) 36 Robinson Road #04-01 City House Singapore 068877

1 February 2006 Dear Sirs,

SINGAPORE TOURISM AND HOTEL MARKET OVERVIEW

INTRODUCTION This letter report has been prepared in response to instructions dated January 5th, 2006 received from Millennium & Copthorne Hotels plc (the “Client”) requesting Jones Lang LaSalle Hotels to prepare a Singapore Tourism and Hotel market overview for the purpose of inclusion in a prospectus for a proposed Hotel Real Estate Investment Trust (REIT) public listing in Singapore. In accordance with our proposal of January 5th, 2006 and based on our subsequent discussions, this letter report outlines our overview of the Singapore Tourism and Hotel market. Our report is based on desktop information and we have prepared the market overview on the basis of our in-house database and our knowledge of the Singapore Tourism and Hotel market. SCOPE OF SERVICES Our scope of work included, but was not limited to, the following: 1. Tourism Market in General

a. Brief overviews of the tourism market in order to provide a context for the respective market’s

hotel performance. b. Visitor arrivals to the subject destination by (where available) nationality, purpose of visit,

seasonality, average length of stay, etc. Commentary on changes and trends in arrivals. c. Overview of the key factors driving the tourism and hotel industry, examining prevailing and

likely future market trends.

APPENDIX IV

INDEPENDENT SINGAPORE TOURISM AND HOTEL MARKET OVERVIEW REPORT

IV-2

Letter Report - Singapore Tourism and Hotel Market Overview Page 2 Prepared for Millennium & Copthorne Hotels plc 1 February 2006

2. Competitive Hotel Market

a. General review of the lodging market in the destination, highlighting market trends affecting the competitive hotels in these respective markets.

b. Average room rate and occupancy for the competitive hotels in 2005. The subject property’s

average room rate and occupancy will be benchmarked against their competitive grouping of hotels in the respective market place. These figures will be aggregated numbers and reflective of the averages within the particular product tier.

c. Where available, we will make general comments on these properties’ business mix. d. Commentary on future supply of competitive hotels to include (where available) information on

project facilities and management. MAJOR ASSUMPTIONS

Our market assessments are based upon current market, as well as likely future conditions as perceived by the market. We stress that the estimation of future market conditions is a very problematic exercise which, at best, should be regarded as an indicative assessment of possibilities rather than absolute certainties. The process of making forward projections and market outlook involves assumptions regarding a considerable number of variables, which are acutely sensitive to changing conditions. Some assumptions inevitably will not materialise and unanticipated events and circumstances may occur. To rely upon this report therefore, readers must satisfy themselves as to the reasoning behind these future estimates. The assumptions relied upon in preparing this report follow: We assume no significant changes of an adverse nature will occur within Singapore’s economic

and political environment that may negatively impact general confidence in Singapore to the detriment of corporate activity and leisure visitation.

We have also assumed Singapore’s currency exchange rate against other major international

currencies will remain stable. Tourism trends in Singapore are forecasted to be at least maintained with gradual improvement

in visitor arrivals over the coming years. There will be no additional hotel room inventory in Singapore other than those proposals

discussed in this report. The two proposed Integrated Resorts at Marina Bay and Sentosa with a casino component will

be developed as planned and operational before the end of the decade. It must be recognised that real estate investment markets are subject to fluctuations and that

estimation of future market conditions may become out of date after an extended period from the date of this report.

IV-4


I. SINGAPORE ECONOMIC OVERVIEW

The Singapore economy is heavily dependent on external trade. Apart from rising competition in the region, particularly from Mainland China and India, there has also been a rise in the number and frequency of external shocks on the economy. The negative repercussions or lagged effect from these external shocks are reflected in the economic figures. Data from the Department of Statistics (DOS) show the economy contracting by 0.8% in 1998 due to the Asian financial crisis that was sparked off with the devaluation of the Thai Baht in July 1997. The subsequent economic recovery in 1999 and 2000 was disrupted when the global economic downturn and slump in the technology sector in 2001 led to a 2.0% year-on-year contraction in economic growth. This was further exacerbated by the September 11 terrorist attacks in the United States (US). Although the economy turned around quickly in 2002 on the back of a swift global economic recovery to record a 3.2% real GDP growth, the Severe Acute Respiratory Syndrome (SARS) epidemic and the war in Iraq reduced the rate of growth to 1.4% in 2003. In line with the overall improvement in economic sentiments in the region, the Singapore economy registered a strong year-on-year growth of 8.4% in 2004. For the first three quarters of 2005, figures from the Ministry of Trade and Industry (MTI) show the economy recording year-on-year growth rates of 2.7%, 5.4% and 7.2% respectively. Latest official estimates also show the growth rate strengthening to 7.7% in the fourth quarter and a better-than-expected full year growth of 5.7%. This exceeded the higher end of the official growth forecast of 3.5% to 4.5% in 2005. Economic prospects are expected to stay positive in 2006. The Government has indicated that growth will likely be in the range of 3-5%, barring any shocks, while the Economist Intelligence Unit (EIU) is expecting the economy to expand at a rate of 4.5% according to its latest available forecast dated 6 December 2005. For 2007, the EIU is expecting growth to be relatively stable at 4.4%. In the medium- to longer-term, the Government will seek to diversify and broaden Singapore’s economic base. These initiatives will be based on the proposals/recommendations put forth by the Economic Review Committee (ERC) which was set up in December 2001 to review Singapore’s development strategy. Amongst the key initiatives adopted is a greater emphasis on the services sector, which would be developed as Singapore’s second engine of growth to complement the main manufacturing sector. More specifically, Singapore is developing new niche areas in healthcare and education, in addition to the financial, tourism and info-communications industries.

IV-5


Singapore Real GDP Growth

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5F

20

06

F*

20

07

F*

An

nu

al G

DP

Gro

wth

(%

)

* EIU forecast (as at 6 Dec 2005)Source: Department of Statistics (DOS), EIU

Economic Snapshot

2002 2003 2004 2005(e) 2006(f) 2007(f)

Real GDP Growth 3.2% 1.4% 8.4% 5.7%* 4.5% 4.4%

Inward Direct Investment (US$ billion)

5.7 9.3 16.0 15.7 14.9 15.1

Average Inflation Rate (CPI) -0.4% 0.5% 1.6% 0.4% 0.8% 1.2%

Unemployment Rate 3.6% 4.0% 3.4% 3.3% 3.1% 3.0%

(e) estimates (f) forecasts * Advance estimates from the Ministry of Trade & Industry Source: Department of Statistics (DOS), Economist Intelligence Unit (as at 6 December 2005)

II. SINGAPORE TOURISM MARKET

i) International Tourism - Visitor Arrivals

International Visitor Arrivals to Singapore

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

No

. o

f V

isito

rs (

'00

0s)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Da

ys (

'00

0s)

No. of Visitors ('000s) Days* ('000s)Source: STB, Jones Lang LaSalle Hotels*STB data using 60 days as cut-off point

IV-6


Prior to the Asian financial crisis in 1997, international visitor arrivals rose steadily at an annual compounded rate of 5.4% from 1990 to peak at 7.3 million visitors in 1996. Arrivals, however, dipped to 6.2 million in 1998 at the height of the Asian financial crisis, before returning to the growth path in 1999. International arrivals which subsequently reached a new peak of 7.7 million in 2000 maintained at around the 7.5 to 7.6 million-level for the next two years. However, the Severe Acute Respiratory Syndrome (SARS) outbreak and the war in Iraq in the first half of the year resulted in a 19.1% decline in international visitors to 6.1 million in 2003. With the containment of SARS and overall improvement in regional economic prospects as well as the growth of the low cost carrier industry, visitor arrivals registered a strong 36% year-on-year rebound to a new record high of 8.3 million in 2004. Arrivals also exceeded the tourism authority’s targeted 7.6 million by nearly 10%. This uptrend continued into 2005. According to latest available figures from the Singapore Tourism Board (STB), Singapore received a new record high of 8.94 million visitors in 2005. This exceeded STB’s target of 8.9 million arrivals and represents a 7% growth over 2004.

ii) Average Length of Stay Based on official data from the STB, visitors to Singapore stayed an average of 3.08 to 3.71 days (inclusive of day-trippers) from 1994 to 2004. Between 1994 and 1998, visitors stayed for around 3.3 to 3.7 days. The average length of

stay shortened to around 3.1 to 3.2 days over the next six years. In 2004, international arrivals to Singapore stayed 3.20 days (inclusive of day-trippers),

translating into a total of 26.7 million visitor days during the year, up 36.8% from 2003. This is just slightly longer than the 3.18 days registered in 2003.

According to the STB, total visitor days reached 30.6 million in 2005. This works out to

an average of about 3.4 days which is slightly longer than the previous year.

Average Length of Stay*

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Days

Source: STB, Jones Lang LaSalle Hotels *STB data includes day visitors

IV-7


iii) Seasonality Except for 2003, where inbound travel patterns were affected by the SARS outbreak, arrivals to Singapore generally followed a consistent pattern between 2000 and 2005. Typically, the June through August period is peak season for the tourism sector, coinciding with the annual Great Singapore Sale (GSS), the winter season in Australia and the summer holidays in Europe and US. Another high season period is from late-November to December that coincides with the year-end school holidays and Christmas/New Year festive holidays. In particular, the annual Christmas in the Tropics featuring the Christmas Light-Up, as well as activities such as evening performances and street acts, has become a key year-end event and a major draw for overseas visitors. According to the STB, a survey conducted during 2004’s Christmas celebrations indicated that 38% of visitors to Singapore coincide their trip with the celebrations and 24% of them were repeat visitors to the event. Available statistics also show that during the 2004’s Christmas in the Tropics event, close to 1.6 million visitors were received in the months of November and December. The lull periods are generally around the Chinese New Year period in January/February, April/May and from September to around mid-November.

Seasonality of Visitor Arrivals to Singapore

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Vis

its

2000 2001 2002

2003 2004 2005Source: STB, Jones Lang LaSalle Hotels

iv) Geographic Origin Indonesia remains as Singapore’s top source market in 2005, accounting for 20.0% of total visitor arrivals. This is followed by arrivals from Mainland China (9.6%), Australia (6.9%), Japan (6.6%), India (6.5%) and Malaysia (6.4%). Amongst the top five markets, arrivals from India registered the strongest growth, up

23.8% from 2004. This is also the first time that India is ranked among Singapore’s top five markets. The steady increase in arrivals from India can be attributed to committed efforts by both India and Singapore to foster greater bilateral tourism cooperation as well

IV-8


as increased air connectivity between the two countries. For example, Air Sahara and Jet Airways have started direct flights to Singapore in April/May 2005.

On the other hand, there was a dip in arrivals from Mainland China (-2.5%) and Japan (-

1.7%) when compared to 2004. The decline in arrivals from these source markets can be attributed to the tsunami in December 2004 and the slow recovery in the later months. For example, January arrivals from the People’s Republic of China (PRC) were significantly 42.5% lower compared to arrivals in January 2004. While arrivals from Japan rose in January, it contracted by 7.9% in February 2005. Other factors include security concerns in Southern Thailand, stiff competition from Hong Kong and Macau and Mainland China’s domestic tourism push.

Notwithstanding the 2.5% drop in number of Mainland Chinese arrivals, Mainland China

remains as Singapore’s second top source market in 2005. Continued efforts to tap on this major source market had included aggressive marketing promotions in Mainland China, as well as increased air linkages between the two countries. In addition, the tourism industry is enjoying the benefits of a new Social Visa scheme introduced on 1 December 2003 that extends visas for PRC visitors from three weeks to a five-week multiple-journey visa.

Foreign Visitor Arrivals to Singapore in 2005

- By Geographic Origin

South Korea4.1%

UK5.2%

Malaysia6.5%

India6.5% Japan

6.6%

Australia6.9%

Mainland China9.6%

Indonesia20.3%

Others30.2%

USA4.2%

Source: STB, Jones Lang LaSalle Hotels

As shown in the following chart, the total number of arrivals from the major source markets of India (+55%), Indonesia (+30%) and Mainland China (+28%) has increased significantly from 2002 (pre-SARS) to 2005.

IV-9


Foreign Visitor Arrivals to Singapore by Geographic Origin

(2002 to 2005)

0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000

Others

Indonesia

Mainland China

Australia

Japan

India

Malaysia

UK

USA

South Korea

2002

20032004

2005


v) Purpose of Visit

Vacation travellers traditionally form the bulk of international visitors to Singapore. This trend remained consistent in 2004 (latest available statistics from STB), with vacation travellers contributing to 34% of international visitors to Singapore, based on the Overseas Visitors Survey.

Business arrivals accounted for another 21% of total arrivals in 2004, followed by those visiting friends and relatives (15%) and MICE (Meetings, Incentives, Conventions, Exhibitions) arrivals (5%). The remaining 25% are from those in transit, education or did not state their purpose of visit.

Foreign Visitor Arrivals to Singapore in 2004

- By Purpose of Visit*

Business21%

Holiday34%

Not Stated6%

Others12%

Education2%

In Transit5%

MICE5%

Visiting Friends/Relatives

15%

* Based on STB's Overseas Visitors SurveySource: STB, Jones Lang LaSalle Hotels

IV-10


vi) Key Demand Drivers

Although the tourism sector is not the mainstay of the Singapore economy, the Government has actively promoted the Republic as a tourist and business conference destination, which also acts as a gateway to other cities in South East Asia. In line with the Government’s intention to grow the services sector, of which tourism is one component, as Singapore’s second economic growth engine to complement the key manufacturing sector, the STB has announced in January 2005 ambitious targets of tripling tourism receipts and creating an additional 100,000 jobs in the tourism industry by 2015.

Indicator Year 2004 Year 2015 CAGR*

Tourism Receipts S$9.8 billion S$30 billion +10.7%

Visitor Arrivals 8.3 million 17 million +6.7%

Employment 150,000 250,000 +4.8%

*compounded annual growth rate


To achieve these targets, three key areas of focus have been identified by the STB: Strengthening Singapore’s position as a ‘Leading Convention & Exhibition City in Asia’

with a strong and dynamic business environment. Developing Singapore as a leading Asian leisure destination by providing an enriching

experience that is ‘Uniquely Singapore1’. Establishing Singapore as the ‘Services Centre of Asia’ – a place where visitors come to

enjoy high-end quality services such as healthcare and education services. A S$2-billion Tourism Development Fund has also been set up to support initiatives in the following four areas: Infrastructure Development: Developing critical infrastructure to support tourism growth

Capability Development: Enhancing the capability of Singapore-based travel and tourism

players as well as attracting world class travel and tourism businesses and organizations to set up in Singapore

Anchoring Iconic/Major Events: Attracting iconic or mega events that will highlight

Singapore as a premier destination for Leisure, Business and Services customer segments Product Development: Developing strategic tourism products

1 According to the STB’s brand management division, Unique is the word that best captures Singapore, a dynamic city that provides a bridge between the East and the West.

IV-11


In order to meet the STB’s ambitious tourism targets to ensure the medium- to longer-term growth of the tourism industry, new demand drivers have been proposed. Some initiatives already undertaken by the STB and other Government agencies include: 1. Developing New / Improving Existing Tourist Attractions 2. Improving Singapore’s Entertainment Scene 3. Developing Newer Source Markets 4. Growing the BTMICE2 Market 5. Attracting More Medical Tourists 6. Positioning Singapore as a Water Sports Hub

These new initiatives will also help to ensure Singapore’s competitiveness as a business and leisure destination in the region.

1. Developing New / Improving Existing Tourist Attractions

To reinvent the Singapore tourism sector and turn it into a key driver of economic growth, there are plans to develop new or improve the existing tourist attractions in Singapore, in addition to the liberalisation of the leisure and entertainment industry. Major initiatives include: Revitalisation of Orchard Road: Plans to rejuvenate Singapore’s premier shopping and

tourist belt along Orchard Road are taking shape and a multi-pronged approach has been adopted. New shopping, dining and entertainment development sites such as the Orchard Turn site have been launched while the Urban Redevelopment Authority (URA) has extended gross floor area incentives and relaxed its guidelines to encourage building owners to create more dynamic pop-out facades and expand their shopping podiums up to their boundaries. Meanwhile, the STB will work on improving the infrastructure at Orchard Road, introducing more exciting events and activities and attracting investments in flagship concept projects in retail, food & beverage and entertainment as part of the initiatives to inject greater life and vibrancy into the area.

Bugis Area Development: There are plans to develop the Bugis Area into an Arts, Cultural, Entertainment and Learning Hub. The Nanyang Academy of Fine Arts, the new National Library, a new city campus of the Singapore Management University and the new campus of LASALLE-SIA College of the Arts will be located at and around the area. The URA has also sold a 8,919-square metre site at Victoria Street in 2005 for development into an Urban Entertainment Centre (UEC). Located in the heart of the Bras Basah/Bugis district, UEC is envisioned to be a key development comprising an exciting mix of arts, entertainment and leisure-related uses that will be a draw for both locals and tourists.

Integrated Resorts (IRs): On 18 April 2005, the Government announced its intention to proceed with two IRs. The strategic objective of the Government is to broaden Singapore’s leisure and entertainment options to enhance Singapore’s reputation as a premium “must-visit” destination for leisure and business visitors. The proposed IRs will be distinctive world-class developments with a comprehensive range of amenities such as

2 BTMICE: Business Travel, Meetings, Incentives, Conventions, Exhibitions

IV-12


hotels, convention facilities, entertainment shows, theme attractions, luxury retail, fine dining and casino gaming. - The Request for Proposals (RFP) for the IR at Marina Bay was subsequently

launched on 15 November 2005 and will close on 29 March 2006. The four contenders (as of 1 February 2006) for the Marina IR are Las Vegas Sands, MGM Mirage-CapitaLand, Harrah’s Entertainment-Keppel Land and Genting International-Star Cruises.

- For the Sentosa IR, the RFP is targeted to be launched in the first quarter of 2006

and will close four months after the Marina Bay RFP is awarded. Parties still interested in the Sentosa IR (as of 1 February 2006) are Eighth Wonder, Genting International-Star Cruises, Universal, Harrah’s Entertainment-Keppel Land, Kerzner International-CapitaLand, and Sun International.

- The development of the two IRs is expected to help generate more inbound visitors,

increase tourist receipts and create a more broad-based tourism product for Singapore. According to the Ministry of Trade and Industry (MTI), with the two IRs, the incremental annual GDP is estimated to exceed S$1.5 billion and total incremental employment is about 35,000 jobs3.

Marina Bay Area Development: The Marina Bay area is the future downtown of

Singapore and the planned waterfront city in a garden. In the pipeline are plans for a Business and Financial Centre (BFC), an Integrated Resort with a casino component and recreational and entertainment opportunities along the promenade, waterfront gardens and the Marina Barrage. In addition, the Singapore Flyer – a giant observation wheel – will occupy a prime spot in this “necklace of attractions” and will provide a breathtaking, unobstructed radial view of 45 kilometres spanning three countries – Singapore, Malaysia and Indonesia, when completed in 2008.

Sentosa Master Plan: A S$8-billion redevelopment of Sentosa4 into a world-class leisure and tourist destination with an aim of attracting 8 million visitors by 2012 is currently underway. New / revamped attractions include the Images of Singapore, Merlion, Fort Siloso Tour, Carlsberg Sky Tower, Magical Sentosa and the new Sentosa Luge. Other developments include a new monorail that will link Sentosa to the main Singapore island, new resorts and the Integrated Resort.

HarbourFront Development: The HarbourFront precinct, currently undergoing redevelopment, is an important part of the development of the Sentosa-HarbourFront precinct into an integrated leisure destination at Singapore’s southern tip. The development will be a landmark project comprising offices, cruise and ferry terminals, Singapore’s only cableway system, a multi-concept entertainment hub housed in a heritage building as well as Singapore’s largest retail and lifestyle mall called VivoCity. When completed by end 2006, the S$2-billion HarbourFront Development is expected to become Singapore’s new world-class waterfront business and lifestyle hub.

3 Source: Statement by Minister for Trade and Industry Lim Hng Kiang on Integrated Resort on Monday, 18 April 2005 at Parliament House.

4 Sentosa is Singapore’s premier island resort getaway. Just 15 minutes from the city, it is a unique blend of leisure and recreational facilities including family attractions, sea sports, golf as well as hotel accommodation and retreats.

IV-13


2. Improving Singapore’s Entertainment Scene

To inject greater life and vibrancy into the local entertainment scene, about 240 entertainment outlets located at Clarke Quay, Boat Quay, Orchard Road, Chijmes, and East Coast Park have been allowed to apply for a 24-hour operator license with effect from 7 June 2004. The Government has also awarded a site at Victoria Street for the development of an Urban Entertainment Centre in the Bugis area. Other measures include allowing bar-top dancing. One significant development that is currently underway is the S$80-million redevelopment of the Clarke Quay area into one of Singapore’s main food, entertainment and lifestyle destinations. Work commenced on 9 February 2004 with full project completion targeted by 2006. The aim is to transform Clarke Quay into a world class waterfront destination for Singaporeans and tourists to enjoy, and to restore and regenerate the deteriorated buildings to further enhance the appeal and character of Clarke Quay. The G-MAX Reverse Bungy which was launched in November 2003 is also located in the area. The December 2005 openings of the Crazy Horse Paris and the 40,000 square feet Ministry of Sound (MoS) are also expected to inject more buzz into the area. Opening its doors for the first time in Asia in Singapore’s 24-hour entertainment precinct Clarke Quay, Crazy Horse Paris will in addition to the 450-seat theatre, include a bar and chic bistro where guests can enjoy dinner before or after the show. The MoS is the anchor tenant in The Cannery complex, a restored warehouse in Clarke Quay. Visitors and local residents can also look forward to a variety of international food and beverage, entertainment, retail and lifestyle brands such as Bice, Café Del Mar, Fashion TV/Bar and Dashing Diva that are slated to open at The Cannery in 2006. 3. Developing Newer Source Markets

While the STB will continue to strengthen its existing major source markets (e.g. Indonesia), significant emphasis will be placed on the development of newer source markets such as Mainland China and India. The potential of the Chinese outbound market is huge with the World Tourism Organization (WTO) expecting more than 100 million Chinese outbound travellers by 2020, compared to 29 million in 2004. Likewise, the Indian outbound market is expanding owing to more destination choices, increased air connectivity, aggressive promotions by travel companies and the population’s growing affluence. According to the STB, arrivals from India grew by 24% in 2005 and for the first time, India made it to the fifth position, ranking as one of Singapore’s top five source markets. Other emerging markets will include Vietnam, Russia and the Middle East. Apart from promoting Singapore via the ongoing Uniquely Singapore campaign and other marketing initiatives such as road shows and familiarisation (FAM) trips for the media, other strategies include improving the overall accessibility to Singapore.

IV-14


4. Growing the BTMICE Market

The tourism authority is projecting that the Asia Pacific region will attract over 100 million business travellers and MICE visitors by 2015 and has earmarked the business travel, meetings, incentives, conventions and exhibitions (BTMICE) segment as one of the growth engines to help meet its 2015 targets. Growth in this segment will be supported by Singapore’s excellent transportation infrastructure, availability of quality accommodation, modern convention and exhibition facilities as well as Singapore’s image as a leading business and financial centre. The Republic has been voted the Best Business City in the World for the fifth year running by readers of the Business Traveller Asia-Pacific magazine in 2005. Other recent accolades won include the top convention city in Asia and the third top convention city in the world (International Congress and Convention Association 2004) and the top convention city in Asia for 22 consecutive years (Union of International Associations 2004). This segment received a further boost when Singapore became a member of a global alliance of leading convention cities – BestCities.net – with effect from 1 January 2005. The alliance, which comprises some of the world’s more established convention cities such as Boston, Cape Town, Copenhagen, Dubai, Edinburgh, Melbourne and Vancouver, will enable Singapore to tap into the group’s information and marketing networks and business leads. According to the STB, Singapore will host some 30 exhibitions in 2006. Some of these major events include Food & Hotel Asia 2006 in April 2006, which is expected to attract 14,000 foreign delegates and CommunicAsia2006 in June 2006, which is expected to attract 16,000 foreign delegates. We understand that the BTMICE group within the STB is also looking at implementing major initiatives, including an extensive marketing campaign to attract a greater number of strategic business events and significantly grow the number of business and MICE travellers to Singapore. The growth of the MICE industry is also supported with the addition of more MICE facilities. The industry received a boost with the completion of the interim expansion of the Singapore Expo in September 2005, the largest facility for MICE events in Singapore and one of the largest exhibition centres in Southeast Asia. With the expansion, Singapore Expo now has four additional halls of 10,000 square metres each, bringing the total event space to 100,000 square metres, up from 60,000 square metres previously. In preparation for the World Bank/International Monetary Fund (IMF) meetings in September 2006, the Suntec Singapore International Convention and Exhibition Centre, which typically holds about 1,200 events each year (about 70% local events, 20% international and 10% regional), is also undergoing a S$10-million facelift. The positive downstream from the BTMICE segment is expected to benefit the entire tourism industry.

IV-15


5. Attracting More Medical Tourists

Singapore is gaining increasing recognition as a medical services hub in the region and the STB is keen to tap on the growth potential of this segment and attract more visitors to the country. In October 2003, the Government launched Singapore Medicine, a drive to develop the country’s potential as a health-care hub. With medical tourism taking off in Singapore, other sectors are also experiencing economic spin-offs from the 150,000 patients arriving here every year. The increasing number of medical tourists from the Middle East is also giving Singapore’s Arab district a welcome boost. By 2012, the Government has set itself the target of attracting up to a million overseas patients, who will generate 13,000 jobs and boost the economy by S$3 billion. 6. Positioning Singapore As A Water Sports Hub

STB is encouraging more extreme sports events to be held in Singapore to inject more excitement and vibrancy to the city and position Singapore as a Water Sports Hub. The Republic has hosted many major water-based events in the past such as the Formula One (F1) Powerboat Grand Prix, the Wakeboard World Cup and the World Water Ski Championships. In 2005, a two-week long WaterFest Singapore was launched for the first time, beginning with the Sava Sprints International dragon boat race on October 8 and 9 and ending with the HSBC Wakeboard World Cup on October 22 and 23. This was intended to help raise the profile of water sports and showcase Singapore as a tropical paradise. vii) Accessibility/Infrastructure Developments

The growth of the tourism industry has also been supported by Singapore’s excellent air, sea and land transport infrastructure. Major key initiatives introduced by the Government to improve and enhance the entire transportation network include:

Enhancing Air Transport Facilities & Capabilities

To enhance Singapore’s airport facilities, the Civil Aviation Authority of Singapore (CAAS) is currently upgrading Changi Airport’s Terminal 2 with work expected to complete by mid-2006. In addition, a new Terminal 3 is being constructed. When completed in 2008, Terminal 3 will be able to handle about 20 million passengers annually. This will increase Changi Airport’s total annual passenger handling capacity to 64 million passengers. To facilitate the operations of low cost carriers in Singapore and as part of CAAS’ efforts to grow Singapore’s status as an aviation hub, a new Low Cost Terminal (LCT) is also being constructed. Scheduled to open on 26 March 2006, the LCT will be able to handle about 2.7 million passengers a year. The decision to proceed with the LCT was backed by the rapid growth of the regional budget airline industry over the past two years. According to an October 2005 press article by OAG5,

5 OAG is a widely recognised global content management company specialising in travel and transport.

IV-16


the number of low-cost flights operating to and from the Asia-Pacific region has rocketed by a phenomenal 666% since 2004. Budget carriers with flight connections to Singapore include Air Asia, Jetstar Asia, Valuair, Tiger Airways and Air Sahara. The growth of the budget airline industry has also helped to lower the overall cost of air travel to Singapore as mainstream carriers such as Singapore Airlines, Cathay Pacific and Thai Airways are pressured to lower their air fares in order to stay competitive. Land reclamation to the east of Changi Airport is also currently underway and the reclaimed land will be reserved for the future development of new airport infrastructure.

Future Marina Cruise Centre

To further enhance Singapore’s position as a cruise gateway, the Maritime and Port Authority of Singapore (MPA) is working with the STB and Urban Redevelopment Authority (URA) to develop a new cruise centre at Marina South.

Construction of the Marina/Circle Line

In March 2002, construction commenced on the first stage of the 33.3-kilometre Circle Line (CCL). The new underground line will interchange with the North South Line, East West Line and North East Line. To be implemented in five stages, the project is expected to be fully completed in 2010. In June 2005, it was announced that the Circle Line will be extended to Marina South, with the addition of three new stations. To be called Downtown Extension, the southward extension will be completely underground. It will join the Circle Line’s Millenia station (near Suntec City) at one end and the North East Line’s Chinatown station at the other end. Construction on this 3.4-kilometre extension will start in mid-2007 and is expected to complete by 2012.

III. SINGAPORE HOTEL MARKET

i) Location Brief

The Singapore hotel market can be broadly classified into the boutique, five-star, four-star, three-star and budget categories. Most of the hotels are concentrated in Singapore’s City Centre at the following main districts/locations: Orchard Road – Singapore’s premier shopping street with large shopping and hotel

complexes providing a mix of retail, office and hotel uses. Major international standard four- and five-star hotels located in this area include the Four Seasons Hotel, Singapore Marriott Hotel, Shangri-La Hotel, Grand Hyatt Singapore, Orchard Hotel, Goodwood Park Hotel, Holiday Inn Parkview, Hilton Singapore and Meritus Mandarin Hotel. These hotels mainly target tourists and business travellers.

IV-17


Marina Centre/Suntec City – An established mixed-used hub with offices, hotels, shopping and convention facilities, including the Suntec Singapore International Convention & Exhibition Centre. Major hotel chains in this locality include The Ritz Carlton Millenia Singapore, Conrad Centennial Singapore, Pan Pacific Hotel, Marina Mandarin and The Oriental Singapore. MICE travellers are one of their main target market segments.

Central Business District (CBD)/Singapore River – This is the main business and

financial belt of Singapore comprising a mixed number of commercial buildings, conserved shop houses, residential developments and hotels. Major hotel establishments in this area include The Fullerton Hotel, Swissotel Merchant Court Singapore, M Hotel Singapore, Grand Copthorne Waterfront, Copthorne Kings, Hotel Miramar, The Gallery Hotel, Robertson Quay Hotel and Amara Hotel.

Singapore’s City Centre Map

Source: Urban Redevelopment Authority of Singapore

IV-18


Civic District/City Hall – The area is the historical seat of the Government and home to many of Singapore’s conserved buildings and monuments, many of which now house arts and cultural facilities, as well as parks and major open spaces. Places of attractions include City Hall, the War Memorial Park, Fort Canning Park and Chijmes. Hotels in this area, such as Raffles The Plaza, Swissotel The Stamford and the Grand Plaza Parkroyal Singapore, serve both tourists and business travellers.

Bras Basah/Bugis – Three new city campuses and a new National Library, together with a number of arts housing developments and commercial schools, are transforming the area into a vibrant arts, culture, entertainment and learning hub. A series of pedestrian malls and plazas provide lively gathering spaces for bazaars and outdoor events and activities. Hotels concentrated in this area are a mixed class including the Raffles Hotel, InterContinental Singapore, Carlton Hotel Singapore, Hotel Rendezvous Singapore, Strand Hotel and The City Bayview Hotel Singapore.

Chinatown – One of Singapore’s oldest districts with its rows of conserved shophouses that is rich in both heritage and culture, the hotels in this area are mainly smaller establishments that cater to the more budget-conscious travellers. These include Hotel 1929, Majestic Hotel, Dragon Inn Chinatown, The Royal Peacock Hotel and The Inn at Temple Street.

Little India – Along the Little India stretch, most of the hotels are also smaller establishments that cater to the budget-conscious travellers. Examples include Broadway Hotel, New Park Hotel, Albert Court Hotel and Fortuna Hotel.

Elsewhere, there is also a small concentration of hotels in the eastern part of Singapore mainly along the Geylang/Joo Chiat/East Coast area. However, the majority are small, self-managed budget establishments. In addition, Singapore’s resort island – Sentosa – offers a number of mid- to high-end accommodation options including The Sentosa Resort & Spa, Shangri-La’s Rasa Sentosa Resort and Sijori Resort (Sentosa).

ii) Existing Hotel Supply

According to latest available data from the STB, there are a total of 102 gazetted hotels in Singapore (including Sentosa Island) with a total of 30,300 available rooms as at 31 December 2004. These are hotels gazetted under the Singapore Tourism Cess Collection Act, which stipulates that these hotels have to pay a cess charge. Cess is a tax levied at the rate of 1% on all cessable items (see Appendix A) sold by tourist hotels, tourist food establishments and tourist public houses.

IV-19


Existing Hotel Room Stock in Singapore

(as at end-2004)

Non-GazettedHotels18%

Gazetted* Hotels82%

Total Stock220 hotels

36,765 rooms

* Hotels gazetted under the Singapore Tourism Cess Collection Act Source: STB

Based on Jones Lang LaSalle Hotels’ categorisation, an estimated 38% of this gazetted hotel stock are five-star hotels, achieving an average room rate of S$155 and above in 2005. Four-star hotels (with achieved 2005 average room rates of S$70 to S$154) accounted for another 43%. Note that there is currently no official star-rating system in use in Singapore.

Distribution of Gazetted Hotel Room Supply* by Star-Rating

4-star43%

5-star38%

Others19%

* Based on 30,300 gazetted hotel rooms as at 31 Dec 2004Source: STB, Jones Lang LaSalle Hotels

Similar to the previous two years, the Singapore hotel industry has generally focused on upgrading their physical products and brand names during 2005 rather than new hotel openings. Hotels that have carried out rebranding or renovation activities during the year include: The former 408-room Hotel New Otani was re-launched as Novotel Clarke Quay

Singapore from 1st January. In September, Accor announced that Novotel Clarke Quay Singapore has completed a comprehensive multi-million dollar renovation to key public areas, restaurants and guest rooms, giving the hotel a bold new look. The renovation and hotel relaunch coincides with the upgrading program for Clarke Quay.

IV-20


The 515-room Holiday Inn Atrium Singapore, previously known as Concorde Hotel Singapore, was officially launched in January.

The Oriental Singapore re-launched in mid-May following a multi-million dollar

renovation. The hotel closed last August and partly reopened in December. All 527 rooms have been redesigned and include a state of the art entertainment system and wireless Internet. Public areas were also renovated along with their meeting rooms.

Meritus Hotels and Resorts’ Marina Mandarin Hotel reopened for business on 1

September after closing for a S$25-million renovation in mid-May. All 575 guest rooms, meeting and banquet rooms, restaurants, as well as the fitness centre, spa, and pool were upgraded.

Meritus Negara relaunched in September following a S$3.5 million facelift of the main

lobby, meeting facilities, guestrooms and suites. The project also included the upgrading of the hotel’s food & beverage establishments, audiovisual equipment, and guest amenities. The hotel is also offering guests a purified mineral water swimming pool.

Plaza Parkroyal unveiled its new and improved facilities in October after having recently

undergone a S$3.8 million renovation.

In 2005, Orchard Hotel underwent a S$13.0 million renovation while Grand Copthorne Waterfront spent S$7.7 million on refurbishments.

iii) Future Hotel Supply

The STB has plans to double Singapore’s hotel room supply to help meet the accommodation needs of the targeted 17 million visitors by 2015. This is after taking into account that the existing gazetted stock of hotel rooms in Singapore is already 80-85% occupied, leaving a balance of only about 5,800 to 5,900 rooms which is insufficient to meet the medium- to longer-term needs of the tourism industry.

Gazetted Hotel Room Supply & Occupancy

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005*2006f 2007f 2008f

No.

of

Room

s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Avera

ge O

ccupancy

No. of Rooms

Average Occupancy

*Room supply figure from STB's Annual Tourism Report 2004F: Forecast based on Jones Lang LaSalle Hotels' major future supply dataSource: STB, Jones Lang LaSalle Hotels

IV-21


Major supply developments in the pipeline include:

Major* Future Supply in Singapore Until 2008 (as at 12 January 2006) Project Name Location Estimated Expected Expected

No. of Rooms Quality Due

UNDER CONSTRUCTION / PROPOSED

Siloso Beach Resort Sentosa 174+15 villas+1

treehouse

3- / 4-star 2006

Boutique Hotel @ Tiong Bahru Tiong Bahru Road 288 3-star 2006

The Amara Sentosa Sentosa 125 5-star 2007

St. Regis Hotel Tanglin Road/Cuscaden Road 299 5-star 2007

Proposed NTUC Beach Club Palawan Beach, Sentosa 200 3-star 2008

The Knolls Sentosa 171 5-star 2008

Selegie Complex Redevelopment (proposed hotel/shopping/office development)

Selegie Road 150 4-star 2008

Proposed Airport Hotel Changi Airport 400 4-star 2008

Proposed Business Hotel One North (Buona Vista) 120 4-star 2007/2008

Total Room Supply

(A) Singapore Mainland

(B) Sentosa Island

1,927***

(A) 1,257

(B) 670

PLANNED#

Sentosa Cove Hotel (The Quayside Collection)

Sentosa

320 4-star TBC**

Carlton Extension North Bridge Road/Bras Basah Rd

TBC 4-star TBC

Integrated Resorts Sentosa/Marina Bay 3,400 TBC TBC

Business and Financial Centre (BFC) Site

Marina Boulevard/Central Boulevard

TBC TBC TBC

Hotel Site on Reserve List for 1H06

Sinaran Drive TBC TBC TBC


Clemenceau Avenue/Unity Street

TBC TBC TBC


Bencoolen Street TBC TBC TBC

Total Planned Supply 3,720

* At least 50 rooms ** TBC – to be confirmed *** Excludes the 15 villas/treehouse at Siloso Beach Resort # Refers to planned projects where the site is not awarded/no confirmed plans submitted yet Source: URA, Sentosa Leisure Group, Jones Lang LaSalle Hotels

In summary, there are 1,257 rooms in the pipeline on the main Singapore island and another 670 rooms on Sentosa island that are expected to be completed between 2006 and 2008. This represents a CAGR of 2.0% from 2005 to 2008.

IV-22


In addition to the above supply list, we also understand Mapletree Investments, the developer of the 24-hectare HarbourFront precinct, is exploring the conversion of the Singapore Port Institute (SPI) Building into a tourist-class hotel with about 150 rooms, according to an announcement on Mapletree’s website. There is potential to increase the total number of rooms to about 300 with the development of an adjacent site. Mapletree is looking for investors and hotel operators who have the necessary expertise to own or run the hotel.

The latest Government Land Sales (GLS) Programme for the first half of 2006 has

provision for sites that could potentially generate 1,305 new hotel rooms. These include three new hotel sites at Clemenceau Avenue/Unity Street, Sinaran Drive and Bencoolen Street. The rationale for the addition of the three hotel sites in the latest Reserve List is to support the anticipated growth in tourist arrivals to Singapore. Outside the Reserve List, there are another estimated 3,400 hotel rooms that may be generated from the two proposed Integrated Resorts (IRs) at Marina Bay and Sentosa. The actual room supply from the IRs will depend on the final concepts and designs proposed by the selected developers. In addition, another 1,100 new hotel rooms may potentially be yielded from projects in several locations, including Sentosa.

iv) Historical Market Performance

According to official data from the STB, Singapore’s gazetted hotels reported better performance figures in 2004, in line with the overall pick up in economic sentiment and the return of international visitors to the city. This also marked a recovery from 2002 and 2003 when the Singapore gazetted hotel performance was affected by the Bali bombings in October 2002 and the SARS crisis/Iraq war in 2003. In 2004, the islandwide average occupancy rate for hotels improved by 13.4-percentage points year-on-year to 80.6%. Over the same period, the Average Daily Rate (ADR) increased by 5.4% year-on-year to S$122. With the improvement in both ADR and occupancy rate, Revenue Per Available Room (RevPAR6) registered a significant 26.4% increase to S$98 over the same period.

The trading performance of Singapore’s gazetted hotels continued to improve in 2005, on the back of sustained growth in inbound tourist arrivals. During the year, ADR reached S$136.40, representing an increase of about 12% year-on-year while the average occupancy rate was up 3.5-percentage points to 84.1%. This translated into a 16.9% increase in RevPAR to S$114.70 over the same period.

6 RevPAR = ADR x Occupancy

IV-23


Marketwide Performance of Gazetted Hotels in Singapore

0

20

40

60

80

100

120

140

160

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

AD

R/R

evP

AR

(S

$)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Occupancy

ADR RevPAR OccupancySource: STB, Jones Lang LaSalle Hotels

v) Regional Upper-Tier Hotel Market Comparison

A comparison of the average occupancy rates and ADR of upper-tier hotels in Singapore against upper-tier hotels in Bangkok, Beijing, Shanghai and Hong Kong shows the following: Upper-tier hotels in Hong Kong achieved the highest occupancy and ADR.

Only Hong Kong hotels are able to achieve a higher occupancy than Singapore hotels.

In terms of ADR, upper-tier hotels in Singapore command lower ADR compared to

similar quality hotels in Beijing, Shanghai and Hong Kong, suggesting that there is potential for further room rate growth.

Regional Upper-Tier* Hotel Market Comparison**

0

50

100

150

200

250

300

350

400

450

500

Bangkok Singapore Beijing Shanghai Hong Kong

AD

R (

S$

)

73%

74%

75%

76%

77%

78%

79%

80%

Ave

rag

e O

ccu

pa

ncy

ADR Occupancy*Comprises 4- and 5-star hotels **YTD Dec 2005Source: Jones Lang LaSalle Hotels, Industry Sources

IV-24


IV. COMPETITIVE MARKET OVERVIEW

This section focuses on the grouping of hotels which the four subject hotels are benchmarked within in their respective competitive markets. The competitive groupings comprise primarily hotels within the four star categories of hotels in Singapore

Performance of the Competitive Market

The performance of the competitive four star hotel market for the period from 2002 to 2005 is based on a representative stock of 12 four star hotel establishments comprising 5,541 rooms. We note that the competitive basket may differ slightly over the historical period due to the repositioning of some properties. Based on this competitive grouping of hotels, we note the following:

The October 2002 Bali bombings and the SARS crisis/Iraq war in the first half of 2003

affected trading performance in 2003, resulting in the decline in the average occupancy, ADR and RevPAR.

Backed by stronger visitor arrivals in 2004, the competitive four star hotels registered an

improvement in trading performance during the year. RevPAR growth was however almost entirely driven by the substantial 20-percentage points increase in the average occupancy rate to 79.1%, while ADR remained relatively stable at S$108. Consequently, RevPAR surged by 35.2% to S$85.

Supported by the sustained growth in room demand, hoteliers adjusted room rates

upwards in 2005. Over the one year period, ADR rose by 11.8% to S$121. The average occupancy rate, on the other hand, registered only a marginal 1.4-percentage point increase to 80.5%. This translated into a 13.8% increase in RevPAR to S$97.

Competitive Four Star Hotel Performance

0

20

40

60

80

100

120

140

2002 2003 2004 2005

AD

R/R

evP

AR

(S

$)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Occu

pa

ncy (

%)

ADR RevPAR OccupancySource: Client, Jones Lang LaSalle Hotels

IV-25


V. OVERVIEW OF SUBJECT PROPERTIES

Based on information provided by the Client, the following summarises the trading performance of the four subject hotels:

Orchard Hotel Grand Copthorne Waterfront M Hotel Singapore Copthorne King’s

i) Room Yields

Comparing the performance of the four subject hotels against the performance of the competitive group of four star hotels, we note that the overall trend is broadly similar. Orchard Hotel is the strongest performer in terms of RevPAR, followed by the M Hotel, with both properties achieving higher yields than the competitive market. In 2005, M Hotel’s RevPAR was approximately 13% above the competitive market’s RevPAR, while Orchard Hotel’s RevPAR was approximately 16% higher. We note also the narrowing gap between the competitive RevPAR and the RevPAR achieved by Grand Copthorne Waterfront and Copthorne King’s from 2002 to 2005. This is clearly highlighted in the accompanying graph, reflecting the potential for the two properties to come on par or even exceed the competitive market level.

Revenue Per Available Room (S$)

$20

$30

$40

$50

$60

$70

$80

$90

$100

$110

$120

2002 2003 2004 2005

Competitive Four Star Hotels

Orchard Hotel

Grand Copthorne Waterfront

M Hotel Singapore

Copthorne King's

Source: Client, Jones Lang LaSalle Hotels

IV-26


ii) Business Mix

As shown in the following chart, the subject hotels’ room revenue is mainly derived from the Corporate7 segment, which contributes to more than 50% of room revenue. The properties’ proximity to the Central Business District and Orchard Road Office Submarket, as well as their relatively large room inventory (> 300 rooms) has helped to generate strong demand from the corporate sector. The business mix segmentation of the subject properties is not dissimilar to properties within the competitive grouping as properties at this quality level aggressively target the international corporate segment.

Business Mix by Room Revenue (Year 2005)

30.4%41.4%

16.1%

36.4%

69.6%

58.6%

83.9%

63.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Orchard Hotel Grand CopthorneWaterfront

M Hotel Singapore Copthorne King's

Revenue (

%)

Corporate Leisure/OthersSource: Client, Jones Lang LaSalle Hotels

iii) Yields by Business Segment

The following table shows the annual growth in room yields by business segment at each of the four subject hotels. We note that corporate room yields for the Orchard Hotel, Grand Copthorne Waterfront and Copthorne King’s grew at a stronger rate than the non-corporate segment in 2005 and is expected to be the main contributor to the overall business mix. While yields for the corporate and non-corporate segments grew at relatively similar levels at the M Hotel in 2005, we note that the corporate segment accounts for a significant 84% of the hotel’s business mix during the year.

7 A hotel’s business mix is typically classified based on different market segments which can include segments like Corporate, Airline, MICE and Rack. Rates for market segments such as Corporate, Airline and MICE are typically discounted and will vary depending on the individual hotel’s contractual room arrangements and the volume of business generated. Rack rates, on the other hand, are the published full price for which hotel rooms are sold. These are rates which have not been discounted. This can be broadly classified into the “Corporate” and “Non-Corporate” segments with “Corporate” comprising Corporate, MICE, Travel Agent/Internet Sales and Rack and “Non-Corporate” comprising Leisure, Airline and Others.

IV-27


2003* 2004 2005

Orchard Hotel

(a) Corporate** RevPAR (% change) -20% +42% +18%

(b) Non-Corporate RevPAR (% change) -31% +29% +12%

(c) Rate Difference of Corporate and Non-Corporate RevPAR +S$23 +S$36 +S$44

Grand Copthorne Waterfront

(a) Corporate RevPAR (% change) -24% +53% +35%

(b) Non-Corporate RevPAR (% change) -14% +31% -1%

(c) Rate Difference of Corporate and Non-Corporate RevPAR -S$3 +S$2 +S$16

M Hotel




Copthorne King’s




* The Singapore hotel market was affected by the SARS outbreak ** “Corporate” refers to Corporate, MICE, Travel Agent/Internet Sales and Rack Source: Client, Jones Lang LaSalle Hotels

VI. SINGAPORE TOURISM AND HOTEL MARKET OUTLOOK

Barring any unforeseen external shocks, we expect prospects for Singapore’s tourism and hotel industry to remain positive in 2006 and 2007. The STB is targeting to achieve S$12 billion in tourism receipts and attract 9.4 million visitor arrivals in 2006, reflecting an increase of 11% and 6% over the S$10.8 billion in tourist revenue and 8.94 million visitor arrivals achieved in 2005 respectively. In addition, Singapore’s hosting of the Asian Aerospace, CommunicAsia and the IMF/World Bank meetings will give visitor arrivals a boost in 2006. We note, however, that the tourism and hotel industry will continue to face several key challenges including increased competition from other destinations (e.g. China, Indonesia, Thailand, Malaysia). Increased risk of terrorism and an avian flu outbreak in Asia may also derail economic growth prospects and could impact the Asian tourism and hotel industry negatively. In addition, many companies are outsourcing some of their business processes to countries with lower labour costs such as India and the Philippines. The growing dominance of India and China in the world economic stage may also lead to the relocation of the headquarter functions of multinational corporations (MNCs) to these countries.

IV-28


Key factors contributing to Singapore’s tourism and hotel industry growth prospects will include: Economic and business sentiments are also looking optimistic with MNCs

announcing expansion plans in Singapore. In addition, the Government’s continued efforts to sign more Free Trade Agreements (FTAs) will lead to greater business, trade and investment inflows to Singapore. There are also plans to develop the services sector as Singapore’s second engine of growth to complement the main manufacturing sector. Niche areas will include healthcare and education, in addition to the financial, tourism and info-communications industry. These measures, which are supplemented by business-friendly policies and tax incentives, would help to ensure Singapore’s medium- to longer-term competitiveness in the region.

Singapore’s positioning as a leading business and financial hub will be enhanced

further with the development of the new Business and Financial Centre (BFC) located at the New Downtown @ Marina Bay.

The Economic Development Board will continue to attract and increase the number of

MNCs with international or regional headquarters in Singapore. The Singapore Government is also keen to attract more foreign talents to the country, as one of its strategies for continued economic growth.

Continued growth in visitor arrivals is anticipated, following strong commitment from

the Government to develop the local tourism and hospitality sector to meet its 2015 target of 17 million arrivals. These efforts include strengthening existing (e.g. Indonesia) and new (e.g. China and India) source markets, growing the MICE sector, developing new tourist attractions/demand generators or redevelop/reinvent existing ones, improving the existing transport (i.e. air, sea and land) infrastructure and tapping on the potential of the medical tourists segment. This is in line with the Government’s intention to secure Singapore’s position as an aviation hub and centre for conventions and meetings.

The two proposed Integrated Resorts at Marina Bay and Sentosa with a casino

component as well as measures taken to inject greater vibrancy into Singapore’s entertainment scene will also help to develop a more broad-based tourism product that would help to sustain the medium- to longer-term development of the local tourism and hotel industry.

The anticipated increase in visitor arrivals, coupled with the relatively limited new supply in 2006 and 2007, is expected to support the performance of the overall Singapore hotel market. Some upper-tier hotels have also indicated that they may increase room rates by 15-25% in 2006. Assuming trading conditions remain favourable, we are of the opinion that both occupancy and room rates for the competitive grouping will witness further upside in 2006 and 2007. Beyond 2007, however, the expected increase in new hotel additions in the market may place some pressure on trading performance.

IV-29


APPENDIX A

1. Cessable items include: (a) Room or suite occupied each day in every gazetted tourist hotel (subject to a minimum

charge of $1/day) (b) All charges for sale of Food & Drink (including take-away) (c) Sale of Cigarettes and Matches (if any) (d) Towel Charge (e) Admission charge for entertainment in such premises if not included in the food and drinks

charge (f) Corkage Charge (g) Novelties (h) Sale of Admission Tickets {in place of cover charge as (i)} promoted by the establishment (i) Cover Charge (j) Hire of Coats and Ties (k) Rental of the premises e.g. promotion of culture and fashion in function room / KTV room (l) Miscellaneous Charge (if any) 2. Non-Cessable items include: (a) Service Charges (b) Gratuities (Tips) (c) Telephone, cable & telex services (d) Laundry services (e) Secretarial services (f) Services of dance hostesses (g) Services of tourist guide and other services pertaining to sightseeing tours (h) Hire of vehicles (i) Bowling (j) Facilities for fishing or catching crabs (k) Boating facilities (l) Facilities which are usually provided in Health Clubs (m) Sales made, or charges levied or collected for services rendered, by a shop or office, which

is situated within a tourist public house and does not have the facilities for the preparation of cooked food for sale

(n) Rental of safe deposit boxes (o) Administrative fee for membership Source: Inland Revenue Authority of Singapore (IRAS) Website

IV-30This page has been intentionally left blank.

APPENDIX V

INDEPENDENT TAXATION REPORT

The Board of DirectorsM&C REIT Management Limited(in its capacity as Manager of CDL Hospitality Real Estate Investment Trust) (the “Manager”)36 Robinson Road#04-01 City HouseSingapore 068877

DBS Trustee Limited(in its capacity as Trustee of CDL Hospitality Real Estate Investment Trust) (the “Trustee”)6 Shenton Way#36-02 DBS Building Tower OneSingapore 068809

The Board of DirectorsM&C Business Trust Management Limited(in its capacity as Trustee-Manager of CDL Hospitality Business Trust) (the “Trustee-Manager”)36 Robinson Road#04-01 City HouseSingapore 068877

10 July 2006

Dear Sirs

THE SINGAPORE TAXATION REPORT

This letter has been prepared at the request of the Manager and the Trustee-Manager for inclusion inthe prospectus (the “Prospectus”) to be issued in relation to the initial public offering of the stapledsecurities (the “Stapled Securities”) in CDL Hospitality Trusts, a stapled group comprising CDLHospitality Real Estate Investment Trust (“H-REIT”) and CDL Hospitality Business Trust (“HBT”) onSingapore Exchange Securities Trading Limited.

The purpose of this letter is to provide prospective purchasers of the Stapled Securities with anoverview of the Singapore income tax consequences of the acquisition, ownership and disposal of theStapled Securities. This letter addresses principally purchasers who hold the Stapled Securities asinvestment assets. Purchasers who acquire the Stapled Securities for dealing purposes should consulttheir own tax advisors concerning the tax consequences of their particular situations.

This letter is not a tax advice and does not attempt to describe comprehensively all the taxconsiderations that may be relevant to a decision to purchase, own or dispose of the Stapled Securities.Prospective purchasers of the Stapled Securities should consult their own tax advisors to take intoaccount the tax law applicable to their particular situations. In particular, prospective purchasers whoare not Singapore tax residents are advised to consult their own tax advisors to take into account thetax laws of their respective countries of tax residence and the existence of any tax treaty which theircountry of tax residence may have with Singapore.

This letter is based on Singapore income tax laws and relevant interpretations thereof current as at thedate of this letter, all of which are subject to change, possibly with retroactive effect.

Words and expressions defined in the Prospectus have the same meaning in this letter. In addition,unless the context requires otherwise, words in the singular include the plural and the other way aroundand words of one gender include the other gender.

V-1

H-REIT

The general principles of taxation a trust in Singapore

The income of a trust derived from or accrued in Singapore is chargeable to Singapore income tax. Inaddition, income earned outside Singapore and received or deemed received in Singapore is alsochargeable to Singapore income tax unless otherwise exempted. There is no capital gains tax.However, gains from the sale of investments (including real properties) are chargeable to tax if suchgains are derived from a trade or business of dealing in investments (including real properties).

Singapore income tax is imposed on all income chargeable to tax after deduction of the allowableexpenses incurred and the tax depreciation claimed on assets used in the generation of the income (the“Taxable Income”).

The Taxable Income of the trust is assessed to tax in the name of the trustee at the prevailing corporatetax rate. The tax paid by the trustee is imputed to be the tax paid by the beneficiaries (the “imputed tax”).The Taxable Income after accounting for the tax payable will be distributed to the beneficiaries in theproportion of their respective share of the trust income.

The beneficiaries are chargeable to Singapore income tax on any distributions made by the trust. Taxwill be imposed on the re-grossed amount of distributions received (that is, the amount of distributionsand the proportionate amount of the imputed tax) at their applicable tax rates. Under the provisions ofSection 46(1)(b) of the Income Tax Act, Chapter 134 of Singapore, a tax credit will be granted to thebeneficiaries on the imputed tax.

The Tax Ruling

H-REIT has obtained a Tax Ruling dated 7 February 2006 from the Inland Revenue Authority ofSingapore (“IRAS”) to give effect to the application of the provisions of Section 43(2) of the Income TaxAct, Chapter 134 of Singapore, to impose tax on the holders of the Stapled Securities on the TaxableIncome of H-REIT instead of imposing tax on the Trustee (the “tax transparency treatment”). Section43(2) of the Income Tax Act, Chapter 134 of Singapore, states:

Where any trustee proves to the satisfaction of the Comptroller that any beneficiary of the trust isentitled to a share of the trust income, a corresponding share of the statutory income of the trustee maybe charged at a lower rate or not charged with any tax, as the Comptroller shall determine.

Subject to full compliance with the terms and conditions of the Tax Ruling, the taxation of H-REIT andthat of the holders of the Stapled Securities are described below.

Taxation of H-REIT

General

Notwithstanding the Tax Ruling, the Taxable Income of H-REIT will be determined in accordance withthe provisions of the Income Tax Act, Chapter 134 of Singapore, as is the case of any trust havingincome that is chargeable to Singapore income tax.

The Taxable Income of H-REIT will comprise substantially income from the letting of hotel propertiesand incidental property related service income but does not include gains from the disposal of realproperties. The Taxable Income of H-REIT shall qualify to be treated as income derived from thebusiness of the making of investments and shall be determined under the provisions of Section 10E ofthe Income Tax Act, Chapter 134 of Singapore.

The Tax Ruling grants tax transparency treatment on H-REIT’s Taxable Income that is distributed to theholders of the Stapled Securities. Any portion of the Taxable Income not distributed (the “RetainedTaxable Income”) will be assessed to tax in the name of the Trustee.

V-2

Requirement to deduct tax at source

Subject to meeting the terms and conditions of the Tax Ruling issued by IRAS, the Trustee will not beassessed to tax on H-REIT’s Taxable Income. Instead, the Trustee and the Manager will deduct incometax at the prevailing corporate tax rate, currently at 20.0%, from the distributions made to holders of theStapled Securities that are made out of H-REIT’s Taxable Income. However, where the beneficialowners are individuals or Qualifying holders of the Stapled Securities, the Trustee and the Manager willmake the distributions to such holders of the Stapled Securities without deducting any income tax. Also,where the beneficial owners are foreign non-individual holders of the Stapled Securities, the Trusteeand the Manager will deduct Singapore income tax at the reduced rate of 10.0% for distributions madeduring the period from 18 February 2005 to 17 February 2010.

“Qualifying holders” of the Stapled Securities refer to holders who are:

(a) Singapore-incorporated companies which are tax residents in Singapore;

(b) Bodies of persons, other than companies or partnerships, registered or constituted in Singapore(for example, town councils, statutory boards, registered charities, registered co-operativesocieties, registered trade unions, management corporations, clubs and trade and industryassociations); and

(c) Singapore branches of foreign companies which have presented a letter of approval from theIRAS granting a waiver from tax deduction at source in respect of distributions from H-REIT.

“Foreign non-individual holders” refer to holders of Stapled Securities who are non-residents ofSingapore for income tax purposes and;

(a) who do not have a permanent establishment in Singapore; or

(b) who carry on any operation in Singapore through a permanent establishment in Singapore, wherethe funds used to acquire the Stapled Securities are not obtained from that operation inSingapore.

Holders of the Stapled Securities who are individuals and who do not hold the Stapled Securitiesthrough a partnership in Singapore will receive their distributions from H-REIT without any taxdeduction at source.

Where the Stapled Securities are held in joint names, the Trustee and the Manager will deduct incometax from the distributions made out of the Taxable Income of H-REIT, unless all the joint owners areindividuals.

Where the Stapled Securities are held through a nominee, the Trustee and the Manager will deductincome tax at the prevailing corporate tax rate, currently at 20.0% from the distribution made out of theTaxable Income of H-REIT except in the following situations:

(i) where the Stapled Securities are held for beneficial owners who are individuals and/or Qualifyingholders of the Stapled Securities, tax will not be deducted at source under certain circumstances.These include a declaration by the nominee of the status of the beneficial owners of the StapledSecurities and the provision of certain particulars of the beneficial owners of the StapledSecurities by the nominee to the Trustee and the Manager; and

(ii) where the Stapled Securities are held for beneficial owners who are foreign non-individual holdersof the Stapled Securities, tax will be deducted at the reduced tax rate of 10.0% for distributionsmade during the period from 18 February 2005 to 17 February 2010 under certain circumstances.These include a declaration by the nominee of the status of the beneficial owners of the StapledSecurities and the provision of certain particulars of the beneficial owners of the StapledSecurities by the nominee to the Trustee and the Manager.

V-3

Tax Treatment of Retained Taxable Income

In accordance with H-REIT’s distribution policy, the Trustee and the Manager will distribute at least90.0% of the Taxable Income of H-REIT to the holders of the Stapled Securities. The portion of theTaxable Income not distributed (i.e. the Retained Taxable Income) will be immediately assessed to taxon the Trustee. The tax paid by the Trustee on the Retained Taxable Income is imputed to be tax paidby the holders of the Stapled Securities.

Distributions from H-REIT to all holders of the Stapled Securities made out of Retained Taxable Incomeand gains realised from the disposal of real properties will not be subject to tax deduction at source.

Tax Treatment of Gains from Disposal of Properties

The tax transparency treatment is not extended to gains realised from the sale of real properties. Thetax on such gains will be assessed on the Trustee if they are considered to be trading gains. Gains ofa capital nature are not subject to tax as there is no capital gains tax in Singapore. Whether a gainrealised from the disposal of real property is a capital gain or a trading profit will have to be determinedbased on the circumstances of the transaction and the overall business traits of H-REIT.

Where gains arising from the disposal of real properties by H-REIT are trading gains, such trading gainsare assessed to tax on the Trustee at the prevailing corporate tax rate, and the Trustee will have to paythe tax so assessed.

Rollover Adjustment

It is the intention of the Trustee and the Manager that distributions be made out of Taxable Income sodetermined by them. This may vary from the Taxable Income determined by the IRAS when the taxreturns of H-REIT are subsequently examined. In order to address this variance, the Tax Ruling hasallowed the Trustee and the Manager, subject to certain terms and conditions, to adopt a rolloveradjustment, such that the variance will be adjusted against the Taxable Income determined by theTrustee and the Manager for the next distribution immediately after the variance has been agreed withthe IRAS.

Taxation of holders of the Stapled Securities

Basis of Assessment

Holders of the Stapled Securities are charged to Singapore income tax on distributions from H-REIT forthe year of assessment corresponding to the year of assessment to which the Taxable Income ofH-REIT relates. This means that if a distribution is made out of Taxable Income of H-REIT for thefinancial year ending on 31 December 2006 forming the basis period for the Year of Assessment 2007,the holders of the Stapled Securities will be taxed on such distribution for the Year of Assessment 2007regardless of when the distribution is actually made.

The Income Source of Distributions

Holders of the Stapled Securities will be chargeable to Singapore income tax on distributions fromH-REIT either as income sourced under Section 10(1)(a) or Section 10(1)(g) of the Income Tax Act,Chapter 134 of Singapore, depending on the circumstances of the holders. If a holder of the StapledSecurities holds the Stapled Securities as investment assets, the distributions are chargeable to taxunder Section 10(1)(g) as gains or profits of an income nature. If a holder of the Stapled Securitiesholds the Stapled Securities as trading assets, the distributions are chargeable to tax under Section10(1)(a) as gains or profits from a trade or business.

V-4

Taxation of individual holders who hold the Stapled Securities as investment assets

All distributions (other than distributions made out of franked dividends) from H-REIT to individualholders of the Stapled Securities who are beneficially entitled to the distributions, regardless of theirnationality or place of residence, will be exempt from Singapore income tax if they receive suchdistributions as their investment income and not through a partnership in Singapore.

Taxation of individual holders who hold the Stapled Securities as trading assets or through apartnership in Singapore

Individuals who beneficially own the Stapled Securities will be subject to Singapore income tax if thedistributions they received do not qualify to be regarded as their investment income or that thedistributions are received through a partnership in Singapore. Whether or not the distributions receivedby the individual holders of the Stapled Securities form part of their investment income is a question offact and has to be determined based on the factual situations of the individual holders. It is advisablefor individual holders of the Stapled Securities to consult their tax advisors in relation to their particularsituations.

Individual holders of the Stapled Securities who do not qualify for the tax exemption as mentionedabove will be chargeable to Singapore income tax on distributions received from H-REIT (includingdistributions made out of capital gains realised from the sale of real properties in Singapore) if theStapled Securities are held as trading assets. They are required to report the re-grossed amount (theamount of distributions received and the proportionate amount of the imputed tax, if any) and to claima tax credit for the proportionate amount of the imputed tax.

Distribution of Retained Taxable Income or trading gains from the disposal of real properties on whichthe Trustee has been assessed to tax shall be treated as the net distribution and shall be re-grossedat the corporate tax rate prevailing at the time the distribution is made. Where the prevailing corporatetax rate at the time the distribution is made is lower than the corporate tax rate used in determining thetax payable by the Trustee on the Retained Taxable Income or trading gains from the disposal of realproperties, a part of the tax paid by the Trustee will not be imputed as tax paid by the holders of theStapled Securities.

Taxation of holders of the Stapled Securities who are not individuals

All holders of the Stapled Securities who are not individuals (“Non-Individual Holders”) are chargeableto Singapore income tax on distributions from H-REIT regardless of whether tax has been deducted atsource. Such Non-Individual Holders are required to report the gross amount (including the taxdeducted at source, as the case may be) or the re-grossed amount (the amount of distributionsreceived and the proportionate amount of the imputed tax, if any) when filing their tax returns and toclaim a tax credit for the tax deducted at source or the imputed tax. The reporting of the gross amountis applicable when distributions from H-REIT are made out of Taxable Income. The reporting ofre-grossed amount is applicable when distributions from H-REIT are made out of Retained TaxableIncome or trading gains from the disposal of real properties where tax has been assessed on theTrustee. For the purpose of arriving at the re-grossed amount, the Tax Ruling has stipulated that thedistribution from H-REIT shall be treated as the net distribution and shall be re-grossed at the corporatetax rate prevailing at the time the distribution is made. Where the prevailing corporate tax rate at thetime the distribution is made is lower than the corporate tax rate used in determining the tax payableby the Trustee on the Retained Taxable Income or trading gains from the disposal of real properties, apart of the tax paid by the Trustee will not be imputed as tax paid by the Non-Individual Holders.

Non-Individual Holders will not be taxable on distributions from H-REIT made out of capital gains fromthe disposal of real properties if the Stapled Securities are held by them as investment assets.Non-Individual Holders who are traders of such Stapled Securities or other related assets will betaxable on such distributions.

V-5

Distributions made by H-REIT to its foreign non-individual holders will be subject to Singaporewithholding tax or tax deduction at source at the reduced rate of 10.0% for a period of five years from18 February 2005. This reduced withholding tax rate of 10.0% will also apply to nominee holders of theStapled Securities who can demonstrate that the Stapled Securities are held for beneficial owners whoare foreign non-individual investors.

Declarations by holders of the Stapled Securities

All Qualifying holders, foreign non-individual holders and nominee holders of the Stapled Securitieswho can demonstrate that the Stapled Securities are held for beneficial owners who are individuals,Qualifying holders or foreign non-individual holders are required to make a declaration of their legal andtax residence status in the prescribed form to be provided by the Trustee. A draft sample is attachedas an annex to this letter. The prescribed form must be completed and returned to the Trustee withinthe time limit set by the Trustee and the Manager. The Trustee and the Manager will make a distributionwithout deduction of tax or with deduction at the reduced tax rate of 10.0% only if they are satisfied fromthe declarations made in the prescribed forms as to their legal and tax residence status.

Individual holders of the Stapled Securities do not have to make this declaration.

Definition of tax resident in the case of a company

A company is considered to be a tax resident in Singapore if the control and management of thecompany is exercised in Singapore.

Terms and conditions of the Tax Ruling

The Tax Ruling granted by the IRAS is conditional upon the Trustee and the Manager complying withcertain terms and conditions. The Trustee and the Manager have given the relevant undertakings to theIRAS to take all reasonable steps necessary to safeguard the IRAS against tax leakages as a result ofthe Tax Ruling and to comply with all administrative requirements to ensure ease of tax administration.

The IRAS has expressly reserved the rights to review, amend and revoke the Tax Ruling either in partor in whole at any time.

HBT

The general principles of taxation of a trust registered under the Business Trusts Act 2004

A trust registered under the Business Trusts Act 2004 is treated like a company under the one-tiersystem for income tax purposes. This tax treatment is effective from the first year such a trustcommences operation as a registered business trust. Accordingly, like a company under the one-tiersystem, a registered business trust is subject to Singapore income tax in accordance with theprovisions of the Income Tax Act, Chapter 134 of Singapore, where all references to a company in theIncome Tax Act, Chapter 134 of Singapore, also include references to a registered business trust.

The income of a trust derived from or accrued in Singapore is chargeable to Singapore income tax. Inaddition, income earned outside Singapore and received or deemed received in Singapore is alsochargeable to Singapore income tax unless otherwise exempted. There is no capital gains tax.However, gains from the sale of investments, if any, are chargeable to tax if such gains are derived froma trade or business of dealing in investments.

Singapore income tax is imposed on the chargeable income of the registered business trust afterdeduction of the allowable expenses incurred and the tax depreciation claimed on assets used in thegeneration of the income, and is assessed to tax in the name of the trustee-manager at the prevailingcorporate tax rate, currently at 20.0%.

V-6

The distributions made by the registered business trust to its beneficiaries out of such income afteraccounting for allowable expenses and the tax payable by the trustee-manager are made in theproportion of the beneficiaries’ respective share of the income. Such distributions, like dividenddistributions made by companies under the one-tier system, are exempt from Singapore income tax inthe hands of the beneficiaries, regardless of their nationality, corporate identity or tax residence status.Also, no credit will be allowed to the beneficiaries for the tax paid by the trustee-manager of theregistered business trust.

Taxation of HBT

It is intended that HBT will be dormant at the time of the initial public offering of the Stapled Securities,and HBT will remain dormant until such time when it takes over the leases from the out-going lessees.Consequently, HBT will not be subject to Singapore income tax during the time when it is dormant asHBT will not have any income accrued in or derived from Singapore. As such, HBT will also not haveany income for distribution purposes during this period.

However, when HBT takes over the leases from the out-going lessees, HBT will no longer be dormantbut will assume the out-going lessees’ role of operating the hotels. In this connection, the incomederived by HBT from the hotel operations after deduction of the allowable expenses incurred and thetax depreciation claimed on assets used in the generation of the income (i.e. Net Taxable Income) willbe subject to tax in Singapore at the prevailing corporate tax rate, currently at 20.0%.

HBT may subsequently distribute its Net Taxable Income to the holders of the Stapled Securities. Thedistribution of HBT’s Net Taxable Income is free from Singapore withholding tax or tax deduction atsource.

Taxation of holders of the Stapled Securities

Holders of the Stapled Securities receiving distributions made out of HBT’s Net Taxable Income wouldbe exempt from Singapore income tax on the distributions received, regardless of whether they areindividual or non-individual holders of the Stapled Securities. In this connection, no tax credit isavailable to the holders of the Stapled Securities for the tax paid by the Trustee-Manager at HBT’s levelon its Net Taxable Income.

GAINS ON DISPOSAL ON DISPOSAL OF THE STAPLED SECURITIES

Holders of the Stapled Securities who are in the trade or business of dealing in investments will bechargeable to tax on the profits realised from the disposal of the Stapled Securities. Whether or not aholder is in the trade or business of dealing in investments will be determined based on the holder’scircumstances. Holders of the Stapled Securities who are not in the trade or business of dealing ininvestments may also be chargeable to tax on the gains realised from the disposal of the StapledSecurities if such gains are treated as trading gains having regard to the circumstances of thetransaction. Holders of the Stapled Securities are encouraged to seek advice from their tax advisors todetermine the tax implications regarding the acquisition, ownership and disposition of their investmentsin the Stapled Securities.

Yours faithfully

Leonard OngDirector, TaxFor and on behalf ofKPMG Tax Services Pte Ltd

V-7

ANNEX A

To : M&C Services Private Limited138 Robinson Road#17-00 The Corporate OfficeSingapore 068906

FORM ADECLARATION FOR SINGAPORE TAX PURPOSES

Name of registered holder (preprinted) Securities Account No. (preprinted)Address (preprinted) Holding : Units (preprinted)

Name of Counter: Stapled securities in CDL Hospitality Trusts (comprising CDLHospitality Real EstateInvestment Trust and CDL Hospitality Business Trust) (the “StapledSecurities”)

Please read the following important notes carefully before completion of this Form:

1 The Trustee and the Manager of CDL Hospitality Real Estate Investment Trust (“H-REIT”) will notdeduct tax from distributions made out of H-REIT’s taxable income that is not taxed at H-REIT’slevel to:

(a) Holders who are individuals and who hold the units either in their sole names or jointly withother individuals;

(b) Holders which are companies incorporated and tax resident in Singapore;

(c) Holders which are Singapore branches of foreign companies that have obtained specificapproval from the Inland Revenue Authority of Singapore to receive the distribution fromH-REIT without deduction of tax; or

(d) Holders which are non-corporate entities (excluding partnerships) constituted or registeredin Singapore, such as:

(i) institutions, authorities, persons or funds specified in the First Schedule to the IncomeTax Act (Cap. 134);

(ii) co-operative societies registered under the Co-operative Societies Act (Cap. 62);

(iii) trade unions registered under the Trade Unions Act (Cap. 333);

(iv) charities registered under the Charities Act (Cap. 37) or established by an Act ofParliament; and

(v) town councils.

2 For distributions made to classes of holders that do not fall within the categories stated under Note1 above, the Trustee and the Manager of H-REIT will deduct tax at the rate of 10% if the holdersare foreign non-individual investors. A foreign non-individual investor is one who is not a residentof Singapore* for income tax purposes and:

(a) who does not have a permanent establishment^ in Singapore; or

V-8

(b) who carries on any operation in Singapore through a permanent establishment in Singapore,where the funds used to acquire the Stapled Securities are not obtained from that operation.

3 Holders are required to complete the applicable Section A, B or C if they fall within the categories(b) to (d) stated under Note 1 or Section D if they qualify as a foreign non-individual investor asdescribed under Note 2.

4 The Trustee and the Manager of H-REIT will rely on the declarations made in this Form todetermine (i) if tax is to be deducted for the categories of unitholders listed in (b) to (d) under Note1; and (ii) if tax is to be deducted at the rate of 10% for distributions to foreign non-individualinvestors. Please therefore ensure that the appropriate section of this Form is completed in fulland legibly and is returned to M&C Services Private Limited within the stipulated time limit. Failureto comply with any of these requirements will render this Form invalid and therefore, the Trusteeand the Manager will be obliged to deduct tax at the prevailing corporate tax rate from thedistributions in respect of which this declaration is made.

5 Holders who fall within class (a) under Note 1 are not required to submit this declarationform.

6 Holders who do not fall within the classes of Unitholders listed in Note 1 and Note 2 above canchoose not to return this Form as tax will be deducted from the distributions made to them at theprevailing corporate tax rate in any case.

7 Holders who hold the Stapled Securities jointly (where at least one of the joint holders is not anindividual) or through nominees do not have to return this Form.

8 Please make sure that the information given and the declaration made in this Form is true andcorrect. The making of a false or incorrect declaration constitutes an offence under the Income TaxAct and the Declarant shall be liable to the appropriate penalties imposed under the said Act.

9 This Form must be returned to M&C Services Private Limited, 138 Robinson Road, #17-00 TheCorporate Office, Singapore 068906 by [Date].

* A company is not a resident of Singapore if the management and control of its business is exercised outside Singapore.

^ A permanent establishment is defined under Section 2 of the Income Tax Act to mean a fixed place where a business iswholly or partly carried on. It includes a place of management, a branch and an office.

V-9

ANNEX A1DECLARATION FOR SINGAPORE TAX PURPOSES

Section A : To be completed by holder which is a Singapore incorporated company

Tick ( / ) either the "Yes" or "No" box Yes No

(a) the Company is incorporated in Singapore and its registration number is- - ;

(b) the management and control of the Company's business for the preceding year and from the beginningof this year to the date of this Declaration was exercised in Singapore and there is no intention, at thetime of this Declaration, to change the place of management and control of the Company to a location outside Singapore; and

(c) the Company has previously filed tax returns with the Inland Revenue Authority of Singapore.

If your reply to (c) is "Yes", please proceed with (d) -(d) the Company is declared as a tax resident of Singapore# based on the latest tax return filed

with the Inland Revenue Authority of Singapore.

Signature of Declarant : ________________________ Date: ________________

Contact No: ________________________# A company is tax resident in Singapore if the management and control of its business is exercised in Singapore.

Section B : To be completed by holder which is a Singapore branch of a foreign company

Signature of Declarant : ___________________________ Date : _______________

Contact No: ______________________

Section C : To be completed by holder which falls under Note 1(d)

- an institution, authority, person or fund specified in the First Schedule to the Income Tax Act (Cap. 134).

- a co-operative society registered under the Co-operative Societies Act (Cap. 62).

- a trade union registered under the Trade Unions Act (Cap. 333).

- a charity registered under the Charities Act (Cap. 37) or a charity established by an Act of Parliament.

- a town council.

- any other non-corporate entity (other than a partnership) constituted or registered in Singapore.

Signature of Declarant : _____________________________ Date : ______________

Contact No : ___________________________

Section D : To be completed by holder which falls under Note 2

Tick ( / ) either the "Yes" or "No" box Yes No

(a) the Entity is not a resident of Singapore* for income tax purposes for the preceding year and from thebeginning of this year to the date of this Declaration and there is no intention, at the time of this Declaration,to change the tax residence of the Entity to Singapore; and

(b) the Entity does not have a permanent establishment^ in Singapore.

If your reply to (b) is "No", please proceed with (c) -(c) the funds used to acquire the holdings in the Stapled Securities are not obtained by the Entity from any

operation carried on in Singapore through a permanent establishment in Singapore.

Signature of Declarant : _____________________________ Date : ______________

Contact No : ___________________________

*/^ Please see front page.

I, ____________________________________, NRIC/Passport No. _________________________, the Director of_________________________________________________ ("the Company") hereby declare that the Company is the beneficial owner ofthe holdings stated above and that:

I, _________________________________, NRIC/Passport No. _________________, the manager of_______________________________________________ (the "Singapore Branch") hereby declare that the Singapore Branch is thebeneficial owner of the holdings stated above and that the Inland Revenue Authority of Singapore has granted approval to the SingaporeBranch to receive distribution from H-REIT without deduction of tax. A copy of the letter of approval dated _____________ is attached.

I, ___________________________, NRIC/Passport No. __________________, the principal officer of__________________________________________________ ("the Entity") hereby declare that the Entity is the beneficial owner of theholdings stated above and that the entity is (tick whichever is applicable):

I, ____________________________, NRIC/Passport No. _____________________, the Director/Principal Officer of____________________________ (the "Entity") hereby declare that the Entity is the beneficial owner of the holdings stated above and that:

V-10

ANNEX B

To : M&C Services Private Limited138 Robinson Road#17-00 The Corporate OfficeSingapore 068906

FORM BDECLARATION BY DEPOSITORY AGENTS FOR SINGAPORE TAX PURPOSES

Name of registered holder (preprinted) Securities Account No. (preprinted)Address (preprinted) Holding: Units (preprinted)

Name of Counter: Stapled securities in CDL Hospitality Trusts (comprising CDL HospitalityReal Estate Investment Trust and CDL Hospitality Business Trust (the “StapledSecurities”)

Please read the following important notes carefully before completion of this Form:

1 The Trustee and the Manager of CDL Hospitality Real Estate Investment Trust (“H-REIT”) willdeduct tax at the prevailing corporate tax rate from distributions made out of H-REIT’s taxableincome, that is not taxed at H-REIT’s level, in respect of the Stapled Securities held by you in yourcapacity as a Depository Agent except where the beneficial owners of these securities are:

(i) individuals and the units are not held through a partnership in Singapore;

(ii) qualifying unitholders; or

(iii) foreign non-individual investors.

2 Tax will not be deducted for distributions made in respect of the Stapled Securities held by you forthe benefit of unitholders who fall within categories (i) and (ii) of Note 1. Tax will be deducted atthe reduced rate of 10% for distributions made in respect of the Stapled Securities held by you forthe benefit of foreign non-individuals.

3 A “Qualifying holder” refers to:

(i) a company incorporated and tax resident in Singapore;

(ii) non-corporate entities (excluding partnerships) constituted or registered in Singapore; suchas:

(a) institutions, authorities, persons or funds specified in the First Schedule to the IncomeTax Act (Cap. 134);

(b) co-operative societies registered under the Co-operative Societies Act (Cap. 62);

(c) trade unions registered under the Trade Unions Act (Cap. 333);

(d) charities registered under the Charities Act (Cap. 37) or established by an Act ofParliament; and

(e) town councils.

V-11

(iii) a Singapore branch of a foreign company which has obtained from the Inland RevenueAuthority of Singapore, a waiver from tax deducted at source in respect of distributions fromH-REIT.

4 A foreign non-individual is one who is not a resident in Singapore* for income tax purposes and:

(i) who does not have a permanent establishment^ in Singapore; or

(ii) who carries on any operation in Singapore through a permanent establishment in Singapore,where the funds used to acquire the Stapled Securities are not obtained from that operation.

5 The Trustee and the Manager of H-REIT will rely on the declarations made in this Form todetermine the applicable rate at which tax is to be deducted in respect of the Stapled Securitiesheld by you in your capacity as a Depository Agent. Please therefore ensure that this Form andthe Annexes are completed in full and legibly and is returned to M&C Services Private Limitedwithin the stipulated time limit. Failure to comply with any of these requirements will render thisForm invalid and the Trustee and the Manager will deduct tax at the prevailing corporate tax ratefrom the distributions in respect of which this declaration is made.

6 Please make sure that the information given and the declaration made in this Form is true andcorrect. The making of false or incorrect declaration constitutes an offence under the Income TaxAct and the Declarant shall be liable to the appropriate penalties imposed under the said Act.

7 This Form, together with hard copy of the Annexes, must be returned to M&C Services PrivateLimited, 138 Robinson Road, #17-00 The Corporate Office, Singapore 068906 by [Date]. Pleasecomplete the Annexes using the soft copy of the excel spreadsheet provided to you and also emaila soft copy of the completed Annexes to M&C Services Private Limited at [Email] by [Date].Please note that it is compulsory to email the soft copy of the completed Annexes.

Declaration

I, , NRIC/Passport No. ,the principal officer of (“the Depository Agent”) hereby declarethat the Stapled Securities registered in the name of the Depository Agent and deposited in thesub-accounts maintained with The Central Depository (Pte) Ltd, as listed in the Annexes B1 to B3to this declaration, belonged beneficially to persons who are individuals, Qualifying holders (asdefined in Note 3 above) and foreign non-individuals (as defined in Note 4 above), respectively.The details of each of these beneficial owners are also listed in the respective Annexes.

We hereby also undertake to provide the actual amount of gross distribution made to eachQualifying holder in the format provided in Annex B2.1 and to email a soft copy of Annex B2.1 toM&C Services Private Limited within 21 days from the date of the distribution.

Signature of Declarant : Date :

Contact No :

* A company is a not resident of Singapore if the management and control of its business for the preceding year and fromthe beginning of this year to the date of this declaration was exercised outside Singapore and there is no intention, at thetime of this declaration, to change tax residence of the company to Singapore.

^ A permanent establishment is defined under Section 2 of the Income Tax Act to mean a fixed place where a business iswholly or partly carried on. It includes a place of management, a branch and an office.

V-12

ANNEX B1

CDL HOSPITALITY TRUSTS(comprising CDL Hospitality Real Estate Investment Trust and CDL Hospitality Business Trust)

Distribution Period:

Annex to Declaration Form B — Individuals

S/No. CDP Sub-Account No. Name of beneficiary holder(s) Identification No.* Number of units

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

* This refers to Singapore NRIC No., foreign ID No. or Passport No.

V-13

ANNEX B2



Annex to Declaration Form B — Qualifying holders

S/No. CDP Sub-Account No. Name of beneficiary holder(s) Registration No.* Number of units

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

* This refers to ROC / Tax Reference No.

V-14

ANNEX B2.1



Annex to Declaration Form B — Qualifying holders

S/No.CDP Sub-Account

No.Name of beneficiary

holder(s)Registration

No.*Number of

unitsGross

distribution paid

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

* This refers to ROC / Tax Reference No.

V-15

ANNEX B3



Annex to Declaration Form B — Foreign Non-Individuals

S/No. CDP Sub-Account No. Name of beneficiary holder(s) Address Number of units

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

V-16

APPENDIX VI

TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION FOR ANDACCEPTANCE OF THE STAPLED SECURITIES IN SINGAPORE

Applications are invited for the subscription of the Stapled Securities under the Offering at thesubscription price of S$0.83 per Stapled Security (the “Offering Price”) on the terms and conditions setout below and in the relevant Application Forms or, as the case may be, the Electronic Applications (asdefined below). Investors applying for the Stapled Securities (as defined below) by way of ApplicationForms or Electronic Applications are required to pay the Offering Price of S$0.83 per Stapled Security,subject to a refund of the full amount or, as the case may be, the balance of the applications monies(in each case without interest or any share of revenue or other benefit arising therefrom) where (i) anapplication is rejected or accepted in part only, or (ii) if the Offering does not proceed for any reason.

Investors applying for the Placement Stapled Securities (as defined below) are required to pay, inSingapore dollars for each Placement Stapled Security applied for, the Offering Price in the case of anapplication by way of a Placement Stapled Securities Application Form and in the case of an applicationby way of an Internet Placement Application (as defined below), subject in each case to a refund of thefull amount or, as the case may be, the balance of the application monies (in each case without interestor any share of revenue or other benefit arising therefrom) where (i) an application is rejected oraccepted in part only, or (ii) if the Offering does not proceed for any reason.

(1) Your application must be made in lots of 1,000 Stapled Securities or integral multiplesthereof. Your application for any other number of Stapled Securities will be rejected.

(2) You may apply for the Stapled Securities under the Offering only during the period commencingon 10 July 2006 and expiring at 12 p.m. on 17 July 2006. The Offering period may be extendedor shortened to such date and/or time at the discretion of the H-REIT Manager and the HBTTrustee-Manager, in consultation with DBS Bank, BNP Paribas and BNP Paribas Peregrine,subject to all applicable laws and regulations and the rules of the SGX-ST.

(3) (a) Your application for the Stapled Securities offered in the Public Offer (the “Offer StapledSecurities”), may be made by way of the printed WHITE Offer Stapled Securities ApplicationForms or by way of Automated Teller Machines (“ATMs”) belonging to the ParticipatingBanks (“ATM Electronic Applications”) or the Internet Banking (“IB”) website of the relevantParticipating Banks (“Internet Electronic Applications”). You may ONLY make one singleapplication for the Offer Stapled Securities — see paragraph (5) below.

(b) Your application for the Stapled Securities offered in the Placement Tranche (the “PlacementStapled Securities”), other than the Reserved Stapled Securities may be made by way of theprinted BLUE Placement Stapled Securities Application Forms or such other forms ofapplication as DBS Bank, BNP Paribas and BNP Paribas Peregrine may, in consultation withthe H-REIT Manager and the HBT Trustee-Manager, deem appropriate or by way of theInternet website of DBS Vickers Securities Online (Singapore) Pte. Ltd. (“DBS VickersOnline”) at “www.dbsvonline.com” (“Internet Placement Applications”, which, together withATM Electronic Applications and Internet Electronic Applications, shall be referred to as“Electronic Applications”), if you have a trading account with DBS Vickers Online.

(c) Should you be eligible, your application for Reserved Stapled Securities may ONLY be madeby way of the printed PINK Reserved Stapled Securities Application Forms.

(4) Only one application may be made for the benefit of one person for the Offer StapledSecurities in his own name. Multiple applications for the Offer Stapled Securities will berejected, except in the case of applications by approved nominee companies where eachapplication is made on behalf of a different beneficiary.

VI-1

You may not submit multiple applications for the Offer Stapled Securities via the OfferStapled Securities Application Form, ATM Electronic Applications or Internet ElectronicApplications. An individual who is submitting an application for the Offer StapledSecurities by way of the Offer Stapled Securities Application Form may not submit anotherapplication for the Offer Stapled Securities by way of an ATM Electronic Application orInternet Electronic Application and vice versa.

An individual, other than an approved nominee company, who is submitting an applicationfor the Offer Stapled Securities in his own name should not submit any other applicationsfor the Offer Stapled Securities whether on a printed Application Form or through an ATMElectronic Application or Internet Electronic Application, for any other person. Suchseparate applications will be deemed to be multiple applications and shall be rejected.

Joint or multiple applications for the Offer Stapled Securities shall be rejected. Personssubmitting or procuring submissions of multiple applications for the Offer StapledSecurities may be deemed to have committed an offence under the Penal Code, Chapter224 of Singapore and the Securities and Futures Act, and such applications may bereferred to the relevant authorities for investigation.

(5) You may make one or more applications for the Placement Stapled Securities (other thanReserved Stapled Securities), (i) whether via the Placement Stapled Securities ApplicationForms or by such other forms of application as DBS Bank, BNP Paribas and BNP ParibasPeregrine, in consultation with the H-REIT Manager and the HBT Trustee-Manager, deemappropriate, or through the website of DBS Vickers Online), and/or (ii) make a singleapplication for the Offer Stapled Securities, and/or, if eligible, make one or moreapplications for Reserved Stapled Securities.

(6) Applications from any person under the age of 21 years, undischarged bankrupts, soleproprietorships, partnerships, non-corporate bodies and joint Securities Account holders of CDPwill be rejected.

(7) Applications from any person whose addresses (furnished in their printed Application Forms or, inthe case of ATM Electronic Applications and Internet Electronic Applications, contained in therecords of the relevant Participating Bank, as the case may be) bear post office box numbers willbe rejected. No person acting or purporting to act on behalf of a deceased person is allowed toapply under the Securities Account with CDP in the deceased’s name at the time of theapplication.

(8) The existence of a trust will not be recognised. Any application by a trustee or trusteesmust be made in his/her or their own name(s) and without qualification or, where theapplication is made by way of a printed Application Form by a nominee, in the name(s) ofan approved nominee company or approved nominee companies after complying withparagraph 9 below.

(9) Nominee applications may only be made by approved nominee companies only. Approvednominee companies are defined as banks, merchant banks, finance companies, insurancecompanies, licensed securities dealers in Singapore and nominee companies controlled by them.Applications made by nominees other than approved nominee companies will be rejected.

(10) If you are not an approved nominee company, you must maintain a Securities Account withCDP in your own name at the time of your application. If you do not have an existing SecuritiesAccount with the CDP in your own name at the time of application, your application will be rejected(if you apply by way of an Application Form) or you will not be able to complete your Electronicapplication. If you have an existing Securities Account with CDP but fail to provide your CDP

VI-2

Securities Account Number or provide an incorrect CDP Securities Account Number in yourApplication Form or in your Electronic Application, as the case may be, your application is liableto be rejected.

(11) Subject to paragraph 16 below, your application will be rejected if your particulars such as name,National Registration Identity Card (“NRIC”) or passport number, nationality and permanentresidence status, and CDP Securities Account Number provided in your Application Form, orcontained in the records of the relevant Participating Bank or DBS Vickers Online at the time ofyour Electronic Application, as the case may be, differ from those particulars in your SecuritiesAccount as maintained by CDP. If you have more than one individual direct Securities Accountwith the CDP, your application shall be rejected.

(12) If your address as stated in the Application Form or, in the case of an ElectronicApplication, contained in the records of the relevant Participating Bank or DBS VickersOnline, as the case may be, is different from the address registered with CDP, you mustinform CDP of your updated address promptly, failing which the notification letter onsuccessful allotment from CDP will be sent to your address last registered with CDP.

(13) This Prospectus and its accompanying Application Forms have not been registered in anyjurisdiction other than in Singapore. The distribution of this Prospectus and its Application Formsmay be prohibited or restricted (either absolutely or unless various securities requirements,whether legal or administrative, are complied with) in certain jurisdictions under the relevantsecurities laws of those jurisdictions. Without limiting the generality of the foregoing, neither thisProspectus (including its Application Forms) nor any copy thereof may be taken, transmitted,published or distributed, whether directly or indirectly, in whole or in part, in or into the UnitedStates or any other jurisdiction (other than Singapore) and they do not constitute an offer ofsecurities for sale into the United States or any jurisdiction in which such offer is not authorizedor to any person to whom it is unlawful to make such an offer. The Stapled Securities have notbeen and will not be registered under the U.S. Securities Act of 1933, as amended (the “SecuritiesAct”) and, subject to certain exceptions, may not be offered or sold within the United States or to,or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act(“Regulation S”)). The Stapled Securities are being offered and sold outside the United States tonon-U.S. persons (including institutional and other investors in Singapore) in reliance onRegulation S. There will be no public offer of Stapled Securities in the United States. Any failureto comply with this restriction may constitute a violation of United States securities laws.

The H-REIT Manager and the HBT Trustee-Manager reserve the right to reject anyapplication for Stapled Securities where the H-REIT Manager and the HBT Trustee-Managerbelieve or have reason to believe that such applications may violate the securities laws ofthe United States or any other jurisdiction or any applicable legal or regulatoryrequirements.

No person in any jurisdiction outside Singapore receiving this Prospectus or its accompanyingApplication Forms may treat the same as an offer or invitation to subscribe for any StapledSecurities unless such an offer or invitation could lawfully be made without compliance with anyregulatory or legal requirements in those jurisdictions.

(14) The H-REIT Manager and the HBT Trustee-Manager reserve the right to reject any applicationwhich does not conform strictly to the instructions set out in this Prospectus (including theinstructions set out in the Application Forms, in the ATM and IB websites of the relevantParticipating Banks and in the website of DBS Vickers Online) (or, in the case of an applicationby way of an Application Form, which is illegible, incomplete, incorrectly completed or which isaccompanied by an improperly drawn up or improper form of remittance.

(15) The H-REIT Manager and the HBT Trustee-Manager further reserve the right to treat as valid anyapplications not completed or submitted or effected in all respects in accordance with theinstructions set out in this Prospectus (including the instructions set out in the Application Forms

VI-3

and in the ATMs and IB websites of the relevant Participating Banks and in the website of DBSVickers Online), and also to present for payment or other processes all remittances at any timeafter receipt and to have full access to all information relating to, or deriving from, suchremittances or the processing thereof.

Without prejudice to the rights of the H-REIT Manager and the HBT Trustee-Manager, DBS Bank,BNP Paribas and BNP Paribas Peregine, as agents of the H-REIT Manager and the HBTTrustee-Manager, have been authorised to accept, for and on behalf of the H-REIT Manager andthe HBT Trustee-Manager, such other forms of application as DBS Bank, BNP Paribas and BNPParibas Peregrine may, in consultation with the H-REIT Manager and the HBT Trustee-Manager,deem appropriate.

(16) The H-REIT Manager and the HBT Trustee-Manager reserves the right to reject or to accept, inwhole or in part, or to scale down or to ballot, any application, without assigning any reasontherefore, and no enquiry and/or correspondence on the decision of the H-REIT Manager and theHBT Trustee-Manager will be entertained. This right applies to applications made by way ofApplication Forms and by way of Electronic Applications and by such other forms of applicationas DBS Bank, BNP Paribas and BNP Paribas Peregrine may, in consultation with the H-REITManager and the HBT Trustee-Manager, deem appropriate. In deciding the basis of allocation, theH-REIT Manager and the HBT Trustee-Manager, in consultation with DBS Bank, BNP Paribas andBNP Paribas Peregrine, will give due consideration to the desirability of allocating the StapledSecurities to a reasonable number of applicants with a view to establishing an adequate marketfor the Stapled Securities.

(17) The Stapled Securities may be reallocated between the Placement Tranche and the Public Offerfor any reason.

(18) There will not be any physical security certificates representing the Stapled Securities. It isexpected that CDP will send to you, at your own risk, within 15 Market Days after the close of theOffering, and subject to the submission of valid applications and payment for the StapledSecurities, a statement of account stating that your CDP Securities Account has been creditedwith the number of Stapled Securities allotted to you. This will be the only acknowledgement ofapplication monies received and is not an acknowledgement by the H-REIT Manager and the HBTTrustee-Manager. You irrevocably authorise CDP to complete and sign on your behalf astransferee or renouncee any instrument of transfer and/or other documents required for thetransfer of the Stapled Securities allotted to you. This authorisation applies to applications madeboth by way of printed Application Forms and by way of Electronic Applications.

(19) In the event that the H-REIT Manager and the HBT Trustee-Manager lodges a supplementary orreplacement prospectus (“Relevant Document”) pursuant to the Securities and Futures Act or anyapplicable legislation in force from time to time prior to the close of the Offering, and the StapledSecurities have not been issued, the H-REIT Manager and the HBT Trustee-Manager will (asrequired by law) at their sole and absolute discretion either:–

(a) within two days (excluding any Saturday, Sunday or public holiday) from the date of thelodgement of the Relevant Document, give you notice in writing of how to obtain, or arrangeto receive, a copy of the same and provide you with an option to withdraw your applicationand take all reasonable steps to make available within a reasonable period the RelevantDocument to you if you have indicated that you wish to obtain, or have arranged to receive,a copy of the Relevant Document; or

(b) within 7 days of the lodgement of the Relevant Document give you a copy of the RelevantDocument and provide you with an option to withdraw your application; or

(c) deem your application as withdrawn and cancelled and refund your application monies(without interest or any share of revenue or other benefit arising therefrom) to you within 7days from the lodgement of the Relevant Document.

VI-4

Any applicant who wishes to exercise his option under paragraphs 19(a) and (b) above towithdraw his application shall, within 14 days from the date of lodgement of the RelevantDocument, notify the H-REIT Manager and the HBT Trustee-Manager whereupon they shall,within 7 days from the receipt of such notification, return all monies in respect of such application(without interest or any share of revenue or other benefit arising therefrom).

In the event that the Stapled Securities have already been issued at the time of the lodgement ofthe Relevant Document but trading has not commenced, the H-REIT Manager and the HBTTrustee-Manager will (as required by law) either:–

(i) within two days (excluding Saturday, Sunday or public holiday) from the date of thelodgement of the Relevant Document, give you notice in writing of how to obtain, or arrangeto receive, a copy of the same and provide you with an option to return to the H-REITManager and the HBT Trustee-Manager the Stapled Securities which you do not wish toretain title in and take all reasonable steps to make available within a reasonable period theRelevant Document to you if you have indicated that you wish to obtain, or have arrangedto receive, a copy of the Relevant Document; or

(ii) within 7 days from the lodgement of the Relevant Document give you a copy of the RelevantDocument and provide you with an option to return the Stapled Securities which you do notwish to retain title in; or

(iii) deem the issue as void and refund your payment for the Stapled Securities (without interestor any share of revenue or other benefit arising therefrom) within 7 days from the lodgementof the Relevant Document.

Any applicant who wishes to exercise his option under paragraphs 19(i) and (ii) above to returnthe Stapled Securities issued to him shall, within 14 days from the date of lodgement of theRelevant Document, notify the H-REIT Manager and the HBT Trustee-Manager of this and returnall documents, if any, purporting to be evidence of title of those Stapled Securities, whereuponthey shall, within 7 days from the receipt of such notification and documents, pay to him all moniespaid by him for the Stapled Securities without interest or any share of revenue or other benefitarising therefrom and at his own risk, and the Stapled Securities issued to him shall be deemedto be void.

Additional terms and instructions applicable upon the lodgement of the supplementary orreplacement prospectus, including instructions on how you can exercise the option to withdraw,may be found in such supplementary or replacement prospectus.

(20) You irrevocably authorise CDP to disclose the outcome of your application, including the numberof Stapled Securities allotted to you pursuant to your application, to the H-REIT Manager and theHBT Trustee-Manager, DBS Bank, BNP Paribas and BNP Paribas Peregrine, DBS Vickers Onlineand any other parties so authorised by CDP, the H-REIT Manager, the HBT Trustee-Managerand/or DBS Bank, BNP Paribas and BNP Paribas Peregrine.

(21) Any reference to “you” or the “Applicant” in this section shall include an individual, a corporation,an approved nominee company and trustee applying for the Offer Stapled Securities by way of anOffer Stapled Securities Application Form or by way of an ATM Electronic Application or InternetElectronic Application, or an individual applying for Placement Stapled Securities (other thanReserved Stapled Securities) by way of a Placement Stapled Securities Application Form orInternet Placement Application or by such other forms of application as DBS Bank, BNP Paribasand BNP Paribas Peregrine may, in consultation with the H-REIT Manager and the HBTTrustee-Manager, deem appropriate.

(22) By completing and delivering an Application Form and, in the case of an ATM ElectronicApplication, by pressing the “Enter” or “OK” or “Confirm” or “Yes” key or any other relevant key onthe ATM or, in the case of an Internet Electronic Application or Internet Placement Application, by

VI-5

clicking “Submit” or “Continue” or “Yes” or “Confirm” or any other button on the IB website screenor the DBS Vickers Online website screen in accordance with the provisions herein, you:

(a) irrevocably agree and undertake to subscribe for the number of Stapled Securities specifiedin your application (or such smaller number for which the application is accepted) at theOffering Price for each Stapled Security and agree that you will accept such number ofStapled Securities as may be allotted to you, in each case on the terms of, and subject tothe conditions set out in, this Prospectus and its accompanying Application Forms theStapling Deed, the H-REIT Trust Deed and the HBT Trust Deed;

(b) agree that, in the event of any inconsistency between the terms and conditions forapplication set out in this Prospectus and its accompanying Application Forms and those setout in the website of DBS Vickers Online, or the IB websites or ATMs of the ParticipatingBanks, the terms and conditions set out in this Prospectus and its accompanying ApplicationForms shall prevail;

(c) in the case of an application by way of an Offer Stapled Securities Application Form, an ATMElectronic Application, Internet Electronic Application or Internet Placement Application,agree that the aggregate Offering Price for the Stapled Securities applied for is due andpayable to the H-REIT Manager and the HBT Trustee-Manager upon application;

(d) in the case of an application by way of a Placement Stapled Securities Application Form orsuch other forms of application as DBS Bank, BNP Paribas and BNP Paribas Peregrine may,in consultation with the H-REIT Manager and the HBT Trustee-Manager, deem appropriate,agree that the aggregate Offering Price for the Stapled Securities is due and payable to theH-REIT Manager and the HBT Trustee-Manager upon application;

(e) warrant the truth and accuracy of the information contained, and representations anddeclarations made, in your application, and acknowledge and agree that such information,representations and declarations will be relied on by the H-REIT Manager and the HBTTrustee-Manager in determining whether to accept your application and/or whether toallocate any Stapled Securities to you; and

(f) agree and warrant that, if the laws of any jurisdictions outside Singapore are applicable toyour application, you have complied with all such laws and none of the H-REIT Manager andthe HBT Trustee-Manager nor any of DBS Bank, BNP Paribas and BNP Paribas Peregrinewill infringe any such laws as a result of the acceptance of your application.

(23) Acceptance of applications will be conditional upon, inter alia, the H-REIT Manager and the HBTTrustee-Manager being satisfied that:

(a) permission has been granted by the SGX-ST to deal in and for quotation of all the StapledSecurities on the Main Board of the SGX-ST;

(b) the Underwriting Agreement has not been terminated; and

(c) the Monetary Authority of Singapore (the “MAS”) has not served a stop order which directsthat no or no further Stapled Securities to which this Prospectus relates be allotted or issued(“Stop Order”).

(24) In the event that a Stop Order in respect of the Stapled Securities is served by the MAS or othercompetent authority, and:–

(a) the Stapled Securities have not been issued, the H-REIT Manager and HBT Trustee-Manager will (as required by law) deem all applications to be withdrawn and cancelled andthe H-REIT Manager and the HBT Trustee-Manager shall refund the application monies(without interest or any share of revenue or other benefit arising therefrom) to you within 14days of the date of the Stop Order; or

VI-6

(b) if the Stapled Securities have already been issued but trading has not commenced, the issuewill (as required by law) be deemed void and the H-REIT Manager and the HBTTrustee-Manager will refund your payment for the Stapled Securities (without interest or anyshare of revenue or other benefit arising therefrom) to you within 14 days from the date ofthe Stop Order.

This shall not apply where only an interim Stop Order has been served.

(25) In the event that an interim Stop Order in respect of the Stapled Securities is served by the MASor other competent authority, no Stapled Securities shall be issued to you until the MAS revokesthe interim Stop Order.

(26) The MAS is not able to serve a Stop Order in respect of the Stapled Securities if the StapledSecurities have been issued and listed on the SGX-ST and trading in them has commenced.

(27) Additional terms and conditions for applications by way of Application Forms are set out in thesection entitled “Additional Terms and Conditions for Applications using Printed ApplicationForms” on pages VI-7 to VI-11 of this Prospectus.

(28) Additional terms and conditions for applications by way of Electronic Applications are set out in thesection entitled “Additional Terms and Conditions for Electronic Applications” on pages VI-12 toVI-21 of this Prospectus.

(29) No application will be held in reserve.

(30) This Prospectus is dated 10 July 2006. No Stapled Securities will be allocated or allotted on thebasis of this Prospectus later than six months after the date of the Prospectus.

ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING PRINTED APPLICATIONFORMS

Applications by way of an Application Form shall be made on, and subject to the terms and conditionsof this Prospectus, including but not limited to the terms and conditions set out below, as well as thoseset out under the section on “Terms, Conditions and Procedures for Application for and Acceptance ofthe Offering Stapled Securities in Singapore” on pages VI-1 and VI-7 of this Prospectus and theStapling Deed, the H-REIT Trust Deed and the HBT Trust Deed.

(1) Applications for the Offer Stapled Securities must be made using the WHITE Offer StapledSecurities Application Forms and WHITE official envelopes “A” and “B”, accompanying andforming part of this Prospectus.

Applications for the Placement Stapled Securities (other than Reserved Stapled Securities) mustbe made using the BLUE Placement Stapled Securities Application Forms or such other forms ofapplication as DBS Bank, BNP Paribas and BNP Paribas Peregrine may, in consultation with theH-REIT Manager and the HBT Trustee-Manager, deem appropriate, accompanying and formingpart of this Prospectus.

Applications for the Reserved Stapled Securities must be made using the PINK Reserved StapledSecurities Application Forms, accompanying and forming part of this Prospectus.

Your attention is drawn to the detailed instructions contained in the respective Application Formsand this Prospectus for the completion of the Application Forms, which must be carefully followed.The H-REIT Manager and the HBT Trustee-Manager reserve the right to reject applicationswhich do not conform strictly to the instructions set out in the Application Forms and thisProspectus or which are illegible, incomplete, incorrectly completed or which areaccompanied by improperly drawn remittances or improper form of remittances.

VI-7

(2) You must complete your Application Form in English. Please type or write clearly in ink usingBLOCK LETTERS.

(3) You must complete all spaces in your Application Forms except those under the heading “FOROFFICIAL USE ONLY” and you must write the words “NOT APPLICABLE” or “N.A.” in any spacethat is not applicable.

(4) Individuals, corporations, approved nominee companies and trustees must give their names infull. If you are an individual, you must make your application using your full name as it appearson your NRIC (if you have such an identification document) or in your passport and, in the caseof a corporation, in your full name as registered with a competent authority. If you are not anindividual, you must complete the Application Form under the hand of an official who must statethe name and capacity in which he signs the Application Form. If you are a corporation completingthe Application Form, you are required to affix your Common Seal (if any) in accordance with yourMemorandum and Articles of Association or equivalent constitutive documents of the corporation.If you are a corporate applicant and your application is successful, a copy of your Memorandumand Articles of Association or equivalent constitutive documents must be lodged with CDLHospitality Trusts Stapled Security Registrar and Stapled Security Transfer Office. The H-REITManager and the HBT Trustee-Manager reserve the right to require you to produce documentaryproof of identification for verification purposes.

(5) (a) You must complete Sections A and B and sign page 1 of the Application Form.

(b) You are required to delete either paragraphs 7(a) or 7(b) on page 1 of the Application Form.Where paragraph 7(a) is deleted, you must also complete Section C of the Application Formwith particulars of the beneficial owner(s).

(c) If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be,on page 1 of the Application Form, your application is liable to be rejected.

(6) You (whether an individual or corporate applicant, whether incorporated or unincorporated andwherever incorporated or constituted) are required to declare whether you are a citizen orpermanent resident of Singapore or a corporation in which citizens or permanent residents ofSingapore or any body corporate constituted under any statute of Singapore have an interest inthe aggregate of more than 50 per cent. of the issued share capital of or interests in suchcorporation. If you are an approved nominee company, you are required to declare whether thebeneficial owner of the Stapled Securities is a citizen or permanent resident of Singapore or acorporation, whether incorporated or unincorporated and wherever incorporated or constituted, inwhich citizens or permanent residents of Singapore or any body corporate incorporated orconstituted under any statute of Singapore have an interest in the aggregate of more than 50 percent. of the issued share capital of or interests in such corporation.

(7) You may apply and make payment for your application for the Stapled Securities in Singaporecurrency by using only cash. Each application must be accompanied by a remittance in Singaporecurrency for the full amount payable at the Offering Price of S$0.83 for each Stapled Security, inrespect of the number of Stapled Securities applied for. The remittance must be in the form of aBANKER’S DRAFT or CASHIER’S ORDER drawn on a bank in Singapore, made out in favourof “CDL H-TRUSTS STAPLED SECURITY ISSUE A/C” crossed “A/C PAYEE ONLY” with thename, CDP Securities Account Number and address of the applicant written clearly on the reverseside. Applications not accompanied by any payment or accompanied by any other form ofpayment will not be accepted. No combined Bankers’ Draft or Cashiers’ Order for different CDPSecurities Accounts shall be accepted. Remittances bearing “NOT TRANSFERABLE” or “NON-TRANSFERABLE” crossings will be rejected. No acknowledgement of receipt will be issued forapplications and application monies received.

VI-8

(8) Monies paid in respect of unsuccessful applications are expected to be refunded (without interestor any share of revenue or other benefit arising therefrom) to you by ordinary post within twoMarket Days (or such shorter period as the SGX-ST may require) after the balloting at your ownrisk. Where your application is accepted in part only, the balance of the application monies will berefunded (without interest or any share of revenue or other benefit arising therefrom) to you byordinary post at your own risk within 14 Market Days after the close of the Offering, PROVIDEDTHAT the remittance accompanying such application which has been presented for payment orother processes has been honoured and the application monies have been received in thedesignated stapled security issue account. If the Offering does not proceed for any reason, the fullamount of application monies (without interest or any share of revenue or other benefit arisingtherefrom) will be returned to you within three Market Days after the Offering is discontinued.

(9) Capitalised terms used in the Application Forms and defined in this Prospectus shall bear themeanings assigned to them in the Prospectus.

(10) By completing and delivering the Application Forms, you agree that:

(a) in consideration of the H-REIT Manager and the HBT Trustee-Manager having distributedthe Application Form to you and agreeing to close the Offering at 12 p.m. on 17 July 2006or such other time or date as the H-REIT Manager and the HBT Trustee-Manager may, inconsultation with DBS Bank, BNP Paribas and BNP Paribas Peregrine, decide:

(i) your application is irrevocable;

(ii) your remittance will be honoured on first presentation and that any monies returnablemay be held pending clearance of your payment without interest or any share ofrevenue or other benefit arising therefrom; and

(iii) you represent and agree that you are not a U.S. person (within the meaning ofRegulation S);

(b) all applications, acceptances or contracts resulting therefrom under the Offering shall begoverned by and construed in accordance with the laws of Singapore and that youirrevocably submit to the non-exclusive jurisdiction of the Singapore courts;

(c) in respect of the Stapled Securities for which your application has been received and notrejected, acceptance of your application shall be constituted by written notification by or onbehalf of the H-REIT Manager and the HBT Trustee-Manager and not otherwise,notwithstanding any remittance being presented for payment by or on behalf of the H-REITManager and the HBT Trustee-Manager;

(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at anytime after acceptance of your application;

(e) reliance is placed solely on information contained in this Prospectus and that none of theH-REIT Manager, the HBT Trustee-Manager, the H-REIT Trustee, any of DBS Bank, BNPParibas, BNP Paribas Peregrine, the Sponsor, or any other person involved in the Offeringshall have any liability for any information not contained therein;

(f) you consent to the disclosure of your name, NRIC/passport number, address, nationality,permanent resident status, CDP Securities Account Number, Stapled Security applicationamount and application details to the Stapled Security Registrar, the relevant ParticipatingBank, CDP, CPF, Securities Clearing Computer Services (Pte) Ltd (“SCCS”), SGX-ST, theH-REIT Manager, the H-REIT Trustee, the HBT Trustee-Manager and DBS Bank, BNPParibas and BNP Paribas Peregrine (the “Relevant Parties”); and

(g) you irrevocably agree and undertake to subscribe for the number of Stapled Securitiesapplied for as stated in the Application Form or any smaller number of such StapledSecurities that may be allotted to you in respect of your application. In the event that the

VI-9

H-REIT Manager and the HBT Trustee-Manager decide to allot any smaller number of suchStapled Securities or not to allot any Stapled Securities to you, you agree to accept suchdecision as final.

Procedures Relating to Applications for the Offer Stapled Securities by Way of PrintedApplication Forms

(1) Your application for the Offer Stapled Securities by way of printed Application Forms must bemade using the WHITE Offer Stapled Securities Application Forms and WHITE official envelopes“A” and “B”.

(2) You must:

(a) enclose the WHITE Offer Stapled Securities Application Form, duly completed and signed,together with your correct remittance for the full amount payable at the Offering Price inSingapore currency in accordance with the terms and conditions of the Prospectus and itsaccompanying documents, in the WHITE official envelope “A” provided;

(b) in appropriate spaces on the WHITE official envelope “A”:

(i) write your name and address;

(ii) state the number of Offer Stapled Securities applied for; and

(iii) tick the relevant box to indicate the form of payment; and

(iv) (where the application is despatched by ordinary post) affix adequate Singaporepostage;

(c) SEAL THE WHITE OFFICIAL ENVELOPE “A”;

(d) write, in the special box provided on the larger WHITE official envelope “B” addressed toDBS Bank Ltd, 6 Shenton Way, #36-01 DBS Building Tower One, Singapore 068809, thenumber of Offer Stapled Securities you have applied for;

(e) insert the WHITE official envelope “A” into the WHITE official envelope “B” and SEAL THEWHITE OFFICIAL ENVELOPE “B”; and

(f) affix adequate Singapore postage on the WHITE official envelope “B” (if dispatching byordinary post) and thereafter DESPATCH BY ORDINARY POST OR DELIVER BY HANDthe documents at your own risk to DBS Bank Ltd, 6 Shenton Way, #36-01 DBS BuildingTower One, Singapore 068809, so as to arrive by 12 p.m. on 17 July 2006 or such otherplace(s), date(s) and time(s) as the H-REIT Manager and the HBT Trustee-Manager may, inconsultation with DBS Bank, BNP Paribas and BNP Paribas Peregrine, decide. CourierServices or Registered Post must NOT be used.

(3) Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or which are not honoured upon their first presentation are liable to be rejected.Except for application for the Placement Stapled Securities where remittance is permitted to besubmitted separately, applications for the Offer Stapled Securities not accompanied by anypayment or accompanied by any form of payment will not be accepted.

(4) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement ofreceipt will be issued for any application or remittance received.

VI-10

Procedures Relating to Applications for the Placement Stapled Securities by Way of PrintedApplication Forms

(1) Your application for the Placement Stapled Securities by way of printed Application Forms mustbe made using the BLUE Placement Stapled Securities Application Forms.

(2) The BLUE Placement Stapled Securities Application Form, duly completed and signed,accompanied by your correct remittance in Singapore currency, in accordance with the terms andconditions of this Prospectus and its accompanying documents, for the full amount payable at theOffering Price for each Stapled Security in respect of the number of Placement Stapled Securitiesapplied for, with your name, CDP Securities Account Number and address clearly written on thereverse side, must be enclosed and sealed in an envelope to be provided by you. Thereafter, yourapplication for Placement Stapled Securities must be delivered to DBS Bank Ltd, 6 Shenton Way,#36-01 DBS Building Tower One, Singapore 068809, to arrive by 12 p.m. on 17 July 2006 or suchother place(s), date(s) and time(s) as the H-REIT Manager and the HBT Trustee-Manager may,in consultation with DBS Bank, BNP Paribas and BNP Paribas Peregrine, decide. CourierServices or Registered Post must NOT be used.

(3) Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or which are not honoured upon their first presentation are liable to be rejected.


(5) In respect of an application for Placement Stapled Securities, you may alternatively remit yourapplication monies by electronic transfer to the account of DBS Bank, Shenton Way Branch,Current Account number 003-710179-6 in favour of “CDL H-TRUSTS STAPLED SECURITYISSUE A/C” by 12 p.m. on 17 July 2006 or such other place(s), date(s) and time(s) as the H-REITManager and the HBT Trustee-Manager may, in consultation with DBS Bank, BNP Paribas andBNP Paribas Peregrine, decide. Applicants who remit their application monies via electronictransfer should send a copy of the telegraphic transfer advice slip to DBS Bank Ltd, 6 ShentonWay, #36-01 DBS Building Tower One, Singapore 068809, for the attention of Equity CapitalMarkets, to arrive by 12 p.m. on 17 July 2006 or such other place(s), date(s) and time(s) as theH-REIT Manager and the HBT Trustee-Manager may, in consultation with DBS Bank, BNPParibas and BNP Paribas Peregrine, decide.

Procedures Relating to Applications for the Reserved Stapled Securities by Way of PrintedApplication Forms

(1) Your application for the Reserved Stapled Securities by way of printed Application Forms must bemade using the PINK Reserved Stapled Securities Application Forms.

(2) The completed and signed PINK Reserved Stapled Securities Application Form and accompaniedby your correct remittance, in accordance with the terms and conditions of this Prospectus and itsaccompanying documents, in Singapore currency for the full amount payable at the Offering Pricefor each Stapled Security in respect of the number of Reserved Stapled Securities applied for, withyour name, CDP Securities Account Number and address clearly written on the reverse side, mustbe enclosed and sealed in an envelope to be provided by you. Your application for ReservedStapled Securities must be delivered to the Human Resource Department at the respectiveHotels, for the attention of the Human Resource Manager to arrive by 12 p.m. on 14 July 2006 orsuch other place(s), date(s) and time(s) as the H-REIT Manager and the HBT Trustee-Managermay, in consultation with DBS Bank, BNP Paribas and BNP Paribas Peregrine, decide. CourierServices or Registered Post must NOT be used.

(3) Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or which are not honoured upon their first presentation are liable to be rejected.


VI-11

ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS

Electronic Applications shall be made on and subject to the terms and conditions of this Prospectus andits accompanying documents, including but not limited to the terms and conditions set out below andthose under the section “Terms, Conditions and Procedures for Application for and Acceptance of theStapled Securities in Singapore” on pages VI-1 to VI-7 of this Prospectus, as well as the Stapling Deed,H-REIT Trust Deed and HBT Trust Deed.

(1) The procedures for Electronic Applications are set out on the ATM screens of the relevantParticipating Banks (in the case of ATM Electronic Applications), the IB website screens of therelevant Participating Banks (in the case of Internet Electronic Applications) and the website ofDBS Vickers Online (in the case of Internet Placement Applications). Currently, DBS Bank and theUOB Group are the only Participating Banks through which Internet Electronic Applications maybe made.

(2) For illustration purposes, the procedures for Electronic Applications through ATMs and the IBwebsite of DBS Bank, and the procedures for Internet Placement Applications through the websiteof DBS Vickers Online (together the “Steps”) are set out in pages VI-18 to VI-21 of thisProspectus. The Steps set out the actions that you must take at ATMs or the IB website of DBSBank or the website of DBS Vickers Online to complete an Electronic Application. The actions thatyou must take at the ATMs or the IB websites of the other Participating Banks are set out on theATM screens or the IB website screens of the respective Participating Banks.

Please read carefully the terms and conditions of this Prospectus and its accompanyingdocuments, the Steps and the terms and conditions for Electronic Applications set out belowbefore making an Electronic Application.

(3) Any reference to “you” or the “Applicant” in these Additional Terms and Conditions for ElectronicApplications and the Steps shall refer to you making an application for the Offer Stapled Securitiesthrough an ATM of one of the relevant Participating Banks or the IB website of a relevantParticipating Bank or an application for Internet Placement Stapled Securities through the websiteof DBS Vickers Online.

(4) If you are making an ATM Electronic Application:

(a) You must have an existing bank account with and be an ATM cardholder of the respectiveParticipating Bank. An ATM card issued by one Participating Bank cannot be used to applyfor Offer Stapled Securities at an ATM belonging to other Participating Banks.

(b) You must ensure that you enter your own CDP Securities Account Number when using theATM card issued to you in your own name. If you fail to use your own ATM card or do notkey in your own CDP Securities Account Number, your application will be rejected. If youoperate a joint bank account with any of the Participating Banks, you must ensure that youenter your own CDP Securities Account Number when using the ATM card issued to you inyour own name. Using your own CDP Securities Account Number with an ATM card whichis not issued to you in your own name will render your Electronic Application liable to berejected.

(c) Upon the completion of your ATM Electronic Application, you will receive an ATM transactionslip (“Transaction Record”), confirming the details of your ATM Electronic Application. TheTransaction Record is for your retention and should not be submitted with any printedApplication Form.

(5) If you are making an Internet Electronic Application:

(a) You must have an existing bank account with and a User Identification (“User ID”) as well asa Personal Identification Number (“PIN”) given by the respective Participating Bank.

VI-12

(b) You must ensure that the mailing address of your account selected for the application is inSingapore and you must declare that the application is being made in Singapore. Otherwise,your application is liable to be rejected.

(c) Upon the completion of your Internet Electronic Application through the IB website of DBSBank, there will be an on-screen confirmation (“Confirmation Screen”) of the applicationwhich can be printed out by you for your record. This printed record of the ConfirmationScreen is for your retention and should not be submitted with any printed Application Form.

(6) If you are making an Internet Placement Application:

(a) You must have an existing trading account with, and a User ID as well as a password givenby DBS Vickers Online.

(b) You must ensure that the mailing address of your account selected for the application is inSingapore and you must declare that the application is being made in Singapore. Otherwise,your application is liable to be rejected.

(c) Upon the completion of your Internet Placement Application, there will be a on-screenconfirmation (“Confirmation Screen”) which can be printed out by you for your record. Thisprinted record of the Confirmation Screen is for your retention and should not be submittedwith any printed Application Form.

(7) In connection with your Electronic Application, you are required to confirm statements to thefollowing effect in the course of activating the Electronic Application:

(a) that you have received a copy of this Prospectus and its accompanying documents (in thecase of ATM Electronic Applications) and have read, understood and agreed to all the termsand conditions of application for the Stapled Securities and this Prospectus and itsaccompanying documents prior to effecting the Electronic Application and agree to be boundby the same;

(b) that you consent to the disclosure of your name, NRIC/passport number, address,nationality, permanent resident status, CDP Securities Account Number, application detailsand Stapled Security application amount (the “Relevant Particulars”) from your account withthe relevant Participating Bank or DBS Vickers Online, as the case may be, to the RelevantParties; and

(c) where you are applying for the Offer Stapled Securities, that this is your only application forthe Offer Stapled Securities and it is made in your name and at your own risk.

Your application will not be successfully completed and cannot be recorded as a completedtransaction unless you press the “Enter” or “OK” or “Confirm” or “Yes” or any other relevant keyin the ATM or click “Confirm” or “OK” or “Submit” or “Continue” or “Yes” or any other relevantbutton on the Internet screen. By doing so, you shall be treated as signifying your confirmation ofeach of the above three statements. In respect of statement 7(b) above, your confirmation, bypressing the “Enter” or “OK” or “Confirm” or “Yes” or any other relevant key or by clicking “Confirm”or “OK” or “Submit” or “Continue” or “Yes” or any other relevant button, shall signify and shall betreated as your written permission, given in accordance with the relevant laws of Singapore,including Section 47(2) of the Banking Act, Chapter 19 of Singapore, to the disclosure by thatParticipating Bank or DBS Vickers Online, as the case may be, of the Relevant Particulars of youraccount(s) with that Participating Bank or DBS Vickers Online to the Relevant Parties.

(8) You must have sufficient funds in your bank account with your Participating Bank at the time youmake your ATM Electronic Application or Internet Electronic Application, failing which suchElectronic Application will not be completed. Any ATM Electronic Application or Internet ElectronicApplication which does not conform strictly to the instructions set out in this Prospectus or on thescreens of the ATMs or on the IB website, as the case may be, through which your ATM ElectronicApplication or Internet Electronic Application is being made shall be rejected.

VI-13

(9) You may apply and make payment for your application for the Offer Stapled Securities inSingapore currency through any ATM or IB website (as the case may be) of your ParticipatingBank using only cash by authorising your Participating Bank to deduct the full amount payablefrom your bank account(s) with such Participating Bank.

(10) If you make an Internet Placement Application through the website of DBS Vickers Online, youmust have sufficient funds in your nominated Automatic Payment account with an AutomaticPayment Facility (direct debit/credit authorisation or “GIRO”) with DBS Vickers Online. Yourapplication will be rejected if there are insufficient funds in your account with DBS Vickers Onlineto deduct the full amount payable for your application.

(11) You irrevocably agree and undertake to subscribe for and to accept the number of Offer StapledSecurities or Placement Stapled Securities (as the case may be) applied for as stated on theTransaction Record or the Confirmation Screen (as the case may be) or any lesser number ofsuch Offer Stapled Securities or Placement Stapled Securities (as the case may be) that may beallotted to you in respect of your Electronic Application. In the event that the H-REIT Manager andthe HBT Trustee-Manager decide to allot any lesser number of such Offer Stapled Securities orPlacement Stapled Securities (as the case may be) or not to allot any Offer Stapled Securities orPlacement Stapled Securities (as the case may be) to you, you agree to accept such decision asfinal. If your Electronic Application is successful, your confirmation (by your action of pressing the“Enter” or “OK” or “Confirm” or “Yes” or any other relevant key on the ATM or clicking “Confirm”or “OK” or “Submit” or “Continue” or “Yes” or any other relevant button on the Internet screen) ofthe number of Offer Stapled Securities or Placement Stapled Securities (as the case may be)applied for shall signify and shall be treated as your acceptance of the number of Offer StapledSecurities or Placement Stapled Securities (as the case may be) that may be allotted to you andyour agreement to be bound by the Stapling Deed, H-REIT Trust Deed and HBT Trust Deed.

(12) The H-REIT Manager and the HBT Trustee-Manager will not keep any application in reserve.Where your Electronic Application is unsuccessful or if the Offering does not proceed for anyreason, the full amount of the application monies will be refunded (without interest or any shareof revenue or other benefit arising therefrom) to you by being automatically credited to youraccount with your Participating Bank, or if you have applied for the Internet Placement StapledSecurities through DBS Vickers Online, by ordinary post or such other means as DBS VickersOnline may agree with you, at your own risk, within two Market Days (or such shorter period asthe SGX-ST may require) after balloting provided that the remittance in respect of such applicationwhich has been presented for payment or other processes has been honoured and the applicationmonies received in the designated Stapled Security issue account.

Where your Electronic Application is accepted in part only, the balance of the application monieswill be refunded (without interest or any share of revenue or other benefit arising therefrom) to youby being automatically credited to your account with your Participating Bank, or if you haveapplied for the Internet Placement Stapled Securities through DBS Vickers Online, by ordinarypost or such other means as DBS Vickers Online may agree with you, at your risk, within 14Market Days after the close of the Offering provided that the remittance in respect of suchapplication which has been presented for payment or other processes has been honoured and theapplication monies received in the designated stapled security issue account.

If the Offering does not proceed for any reason, the full amount of application monies (withoutinterest or any share of revenue or other benefit arising therefrom) will be returned to you withinthree Market Days after the Offering is discontinued.

VI-14

Responsibility for timely refund of application monies (whether from unsuccessful or partiallysuccessful Electronic Applications or otherwise) lies solely with the respective Participating Banksand with DBS Vickers Online (as the case may be). Therefore, you are strongly advised to consultyour Participating Bank or DBS Vickers Online as to the status of your Electronic Applicationand/or the refund of any money to you from an unsuccessful or partially successful ElectronicApplication, to determine the exact number of Offer Stapled Securities or Placement StapledSecurities (as the case may be), if any, allotted to you before trading the Stapled Securities on theSGX-ST. None of the SGX-ST, CDP, SCCS, CPF, the Participating Banks, DBS Vickers Online,the Sponsor, the H-REIT Manager, the HBT Trustee-Manager, the H-REIT Trustee, DBS Bank,BNP Paribas and BNP Paribas Peregrine assume any responsibility for any loss that may beincurred as a result of you having to cover any net sell positions or from buy-in proceduresactivated by the SGX-ST.

(13) If your ATM Electronic Application or Internet Electronic Application is unsuccessful, no notificationwill be sent by the relevant Participating Bank.

If your Internet Placement Application is unsuccessful, no notification will be sent by DBS VickersOnline.

It is expected that successful applicants who applied for Internet Placement Stapled Securities willbe notified of the results of their applications through the website of DBS Vickers Online no laterthan the evening of the day immediately prior to the commencement of trading of the StapledSecurities on the SGX-ST.

Applicants who make ATM Electronic Applications through the following banks may check theprovisional results of their ATM Electronic Applications as follows:

Bank Telephone Other ChannelsOperatingHours

Serviceexpectedfrom

DBSBank

1800-339 6666(for POSB accountholders)1800-111 1111(for DBS accountholders)

Internet Bankinghttp://www.dbs.com(1)

24 hours a day Evening of theballoting day

OCBC 1800-363 3333 ATM/Internet Banking/Phone Banking


UOBGroup

1800-222 2121 ATM (Other Transactions —“IPO Enquiry”)http://www.uobgroup.com(1),(2)


Notes:

(1) Applicants who have made Internet Electronic Applications through the IB websites of DBS Bank or UOB Group mayalso check the result of their applications through the same channels listed in the table above in relation to ATMElectronic Applications made at the ATMs of DBS Bank or UOB Group.

(2) Applicants who have made Electronic Applications through the ATMs or the IB website of the UOB Group may checkthe result of their applications through UOB Personal Internet Banking, UOB ATMs or UOB Phone Banking services.

(3) Applicants who have made Electronic Applications through the ATMs of OCBC Bank may check the result of theirapplications through OCBC Personal Internet Banking, OCBC ATMs or OCBC Phone Banking services.

VI-15

(14) ATM Electronic Applications shall close at 12 p.m. on 17 July 2006 or such other date and timeas the H-REIT Manager and the HBT Trustee-Manager may, in consultation with DBS Bank, BNPParibas and BNP Paribas Peregrine, decide. All Internet Electronic Applications and InternetPlacement Applications must be received by 12 p.m. on 17 July 2006, or such other date and timeas the H-REIT Manager and the HBT Trustee-Manager may, in consultation with DBS Bank, BNPParibas and BNP Paribas Peregrine, decide. Internet Electronic Applications and InternetPlacement Applications are deemed to be received when they enter the designated informationsystem of the relevant Participating Bank or DBS Vickers Online, as the case may be.

(15) You are deemed to have irrevocably requested and authorised the H-REIT Trustee or the H-REITManager and the HBT Trustee-Manager to:

(a) register the Offer Stapled Securities or Placement Stapled Securities, as the case may be,allotted to you in the name of CDP or its nominees for deposit into your CDP SecuritiesAccount;

(b) return or refund (without interest or any share of revenue earned or other benefit arisingtherefrom) the application monies, should your Electronic Application be rejected or if theOffering does not proceed for any reason, by automatically crediting your bank account withyour Participating Bank or if you have applied for the Internet Placement Stapled Securitiesthrough DBS Vickers Online, by ordinary post or such other means as DBS Vickers Onlinemay agree with you, at your risk, with the relevant amount within two Market Days afterballoting (or such shorter period as the SGX-ST may require), or within three Market Daysif the Offering does not proceed for any reason, after the close or discontinuation (as thecase may be) of the Offering, PROVIDED THAT the remittance in respect of such applicationwhich has been presented for payment or such other processes has been honoured andapplication monies received in the designated Stapled Security issue account; and

(c) return or refund (without interest or any share of revenue or other benefit arising therefrom)the balance of the application monies, should your Electronic Application be accepted orrejected in part only, by automatically crediting your bank account with your ParticipatingBank or if you have applied for Internet Placement Stapled Securities through DBS VickersOnline, by ordinary post or such other means as DBS Vickers Online may agree with you,at your risk, with the relevant amount within 14 Market Days after the close of the Offering,PROVIDED THAT the remittance in respect of such application which has been presentedfor payment or such other processes has been honoured and application monies receivedin the designated stapled security issue account.

(16) You irrevocably agree and acknowledge that your Electronic Application is subject to risks ofelectrical, electronic, technical and computer-related faults and breakdown, fires, acts of God andother events beyond the control of the Participating Banks, DBS Vickers Online, the H-REITManager, the HBT Trustee-Manager, the H-REIT Trustee, DBS Bank, BNP Paribas and BNPParibas Peregrine, and if, in any such event the H-REIT Manager, the HBT Trustee-Manager, theH-REIT Trustee, DBS Bank, BNP Paribas, BNP Paribas Peregrine, DBS Vickers Online and/or therelevant Participating Bank do not receive your Electronic Application, or any data relating to yourElectronic Application or the tape or any other devices containing such data is lost, corrupted ornot otherwise accessible, whether wholly or partially for whatever reason, you shall be deemednot to have made an Electronic Application and you shall have no claim whatsoever against theH-REIT Manager, the HBT Trustee-Manager, the H-REIT Trustee, DBS Bank, BNP Paribas, BNPParibas Peregrine and/or the relevant Participating Bank or DBS Vickers Online for the OfferStapled Securities or Placement Stapled Securities, as the case may be, applied for or for anycompensation, loss or damage.

(17) The existence of a trust will not be recognised. Any Electronic Application by a trustee must bemade in his own name and without qualification. The H-REIT Manager and the HBT Trustee-Manager shall reject any application by any person acting as nominee (other than approvednominee companies).

VI-16

(18) All your particulars in the records of your Participating Bank or DBS Vickers Online (as the casemay be) at the time you make your Electronic Application shall be deemed to be true and correctand your Participating Bank or DBS Vickers Online (as the case may be) and the Relevant Partiesshall be entitled to rely on the accuracy thereof. If there has been any change in your particularsafter making your Electronic Application, you must promptly notify your Participating Bank or DBSVickers Online (as the case may be).

(19) You should ensure that your personal particulars as recorded by both CDP and the relevantParticipating Bank or DBS Vickers Online (as the case may be) are correct and identical.Otherwise, your Electronic Application is liable to be rejected. You must promptly inform CDP ofany change in address, failing which the notification letter on successful allotment will be sent toyour address last registered with CDP.

(20) By making and completing an Electronic Application, you are deemed to have agreed that inconsideration of:

(a) the H-REIT Manager and the HBT Trustee-Manager making available the ElectronicApplication facility, through the Participating Banks and DBS Vickers Online acting as agentsof the H-REIT Manager and the HBT Trustee-Manager at the ATMs and at the IB websitesof the relevant Participating Banks and the website of DBS Vickers Online:

(i) your Electronic Application is irrevocable;

(ii) you represent and agree that you are not a U.S. person (as defined in Regulations Sunder the U.S. Securities Act); and

(iii) your Electronic Application, the acceptance by the H-REIT Manager and the HBTTrustee-Manager and the contract resulting therefrom under the Offering shall begoverned by and construed in accordance with the laws of Singapore and youirrevocably submit to the non-exclusive jurisdiction of the Singapore courts;

(b) none of CDP, the H-REIT Manager, the HBT Trustee-Manager, the H-REIT Trustee, DBSBank, BNP Paribas, BNP Paribas Peregrine, the Participating Banks and DBS VickersOnline shall be liable for any delays, failures or inaccuracies in the recording, storage or inthe transmission or delivery of data relating to your Electronic Application to the H-REITManager, the HBT Trustee-Manager, the H-REIT Trustee, CDP or the SGX-ST due tobreakdowns or failure of transmission, delivery or communication facilities or any risksreferred to in paragraph 16 above or to any cause beyond their respective controls;

(c) in respect of the Stapled Securities for which your Electronic Application has beensuccessfully completed and not rejected, acceptance of your Electronic Application shall beconstituted by written notification by or on behalf of the H-REIT Manager and the HBTTrustee-Manager and not otherwise, notwithstanding any payment received by or on behalfof the H-REIT Manager and the HBT Trustee-Manager;

(d) you will not be entitled to exercise any remedy for rescission for misrepresentation at anytime after acceptance of your application;

(e) reliance is placed solely on information contained in the Prospectus and that none of theH-REIT Manager, the HBT Trustee-Manager, the H-REIT Trustee, DBS Bank, BNP Paribas,BNP Paribas Peregrine and any other person involved in the Offering shall have any liabilityfor any information not contained; and

(f) you irrevocably agree and undertake to purchase the number of Stapled Securities appliedfor as stated in your Electronic Application or any smaller number of such Stapled Securitiesthat may be allotted to you in respect of your Electronic Application. In the event the H-REITManager and the HBT Trustee-Manager decides to allot any smaller number of such StapledSecurities or not to allot any Stapled Securities to you, you agree to accept such decision asfinal.

VI-17

Steps for ATM Electronic Applications for Offer Stapled Securities through ATMs of DBS Bank(including POSB)

Instructions for ATM Electronic Applications will appear on the ATM screens of the respectiveParticipating Bank. For illustration purposes, the steps for making an ATM Electronic Applicationthrough a DBS Bank or POSB ATM are shown below. Certain words appearing on the screen are inabbreviated form (“A/C”, “amt”, “appln”, “&”, “I/C”, “No.”, “SGX” and “Max” refer to “Account”, “amount”,“application”, “and”, “NRIC”, “Number”, “SGX-ST” and “Maximum”, respectively). Instructions for ATMElectronic Applications on the ATM screens of Participating Banks (other than DBS Bank (includingPOSB)) may differ slightly from those represented below.

Step 1: Insert your personal DBS Bank or POSB ATM Card.

2: Enter your Personal Identification Number.

3: Select “CASHCARD & MORE SERVICES”.

4: Select “ESA-IPO SHARE/INVESTMENTS”.

5: Select “ELECTRONIC SECURITY APPLN (IPOS/BOND/ST-NOTES/SECURITIES)”.

6: Read and understand the following statements which will appear on the screen:

• THE OFFER OF SECURITIES (OR UNITS OF SECURITIES) WILL BE MADE IN, ORACCOMPANIED BY, A COPY OF THE PROSPECTUS/OFFER INFORMATIONSTATEMENT/DOCUMENT OR PROFILE STATEMENT (AND IF APPLICABLE, ACOPY OF THE REPLACEMENT OR SUPPLEMENTARY PROSPECTUS/OFFERINFORMATION STATEMENT/DOCUMENT OR PROFILE STATEMENT) WHICH CANBE OBTAINED FROM ANY DBS/POSB BRANCH IN SINGAPORE AND, WHEREAPPLICABLE, THE VARIOUS PARTICIPATING BANKS DURING BANKING HOURS,SUBJECT TO AVAILABILITY.

• (IN THE CASE OF SECURITIES OFFERING THAT IS SUBJECT TO A PROSPECTUS/OFFER INFORMATION STATEMENT/DOCUMENT REGISTERED WITH THEMONETARY AUTHORITY OF SINGAPORE) ANYONE WISHING TO ACQUIRETHESE SECURITIES (OR UNITS OF SECURITIES) SHOULD READ THEPROSPECTUS/OFFER INFORMATION STATEMENT/DOCUMENT OR PROFILESTATEMENT (AS SUPPLEMENTED OR REPLACED, IF APPLICABLE) BEFORESUBMITTING HIS APPLICATION WHICH WILL NEED TO BE MADE IN THE MANNERSET OUT IN THE PROSPECTUS/OFFER INFORMATION STATEMENT/DOCUMENTOR PROFILE STATEMENT (AS SUPPLEMENTED OR REPLACED, IF APPLICABLE).A COPY OF THE PROSPECTUS/OFFER INFORMATION STATEMENT/DOCUMENTOR PROFILE STATEMENT, AND IF APPLICABLE, A COPY OF THE REPLACEMENTOR THE SUPPLEMENTARY PROSPECTUS/OFFER INFORMATION STATEMENT/DOCUMENT OR PROFILE STATEMENT HAS BEEN LODGED WITH ANDREGISTERED BY THE MONETARY AUTHORITY OF SINGAPORE WHO ASSUMESNO RESPONSIBILITY FOR ITS OR THEIR CONTENTS.

• PRESS THE “ENTER” KEY TO CONFIRM THAT YOU HAVE READ ANDUNDERSTOOD.

7: Select “CDLHT” to display details.

VI-18

8: Press the “ENTER” key to acknowledge:

• YOU HAVE READ, UNDERSTOOD AND AGREED TO ALL THE TERMS OFAPPLICATION AND (WHERE APPLICABLE) THE PROSPECTUS, OFFERINFORMATION STATEMENT, DOCUMENT, PROFILE STATEMENT, REPLACEMENTOR SUPPLEMENTARY PROSPECTUS/OFFER INFORMATION STATEMENT/DOCUMENT/PROFILE STATEMENT, NOTICE AND/OR CIRCULAR.

• YOU CONSENT TO DISCLOSE YOUR NAME, NRIC/PASSPORT NUMBER,ADDRESS, NATIONALITY, CDP SECURITIES ACCOUNT NO., CPF INVESTMENTACCOUNT NUMBER AND SECURITY APPLICATION AMOUNT FROM YOUR BANKACCOUNT(S) TO SHARE REGISTRARS, SGX, SCCS, CDP, CPF, ISSUER/VENDOR(S).

• FOR FIXED AND MAXIMUM PRICE SECURITIES APPLICATION, THIS IS YOURONLY APPLICATION AND IT IS MADE IN YOUR OWN NAME AND AT YOUR OWNRISK.

• THE MAXIMUM PRICE FOR EACH SECURITY IS PAYABLE IN FULL ONAPPLICATION AND SUBJECT TO REFUND IF THE FINAL PRICE IS LOWER.

• FOR TENDER SECURITIES APPLICATION, THIS IS YOUR ONLY APPLICATION ATTHE SELECTED TENDER PRICE AND IT IS MADE IN YOUR OWN NAME AND ATYOUR OWN RISK.

• YOU ARE NOT A US PERSON AS REFERRED TO IN (WHERE APPLICABLE) THEPROSPECTUS, OFFER INFORMATION STATEMENT, DOCUMENT, PROFILESTATEMENT, REPLACEMENT OR SUPPLEMENTARY PROSPECTUS/OFFERINFORMATION STATEMENT/DOCUMENT/PROFILE STATEMENT, NOTICE AND/ORCIRCULAR.

9: Select your nationality.

10: Select your payment method.

11: Select the DBS Bank account (Autosave/Current/Savings/Savings Plus) or the POSBaccount (Current/Savings) from which to debit your application monies.

12: Enter the number of securities you wish to apply for using cash.

13: Enter or confirm (if your CDP Securities Account Number has already been stored in DBSBank’s records) your own 12-digit CDP Securities Account Number (Note: This step will beomitted automatically if your CDP Securities Account Number has already been stored inDBS Bank’s records.

14: Check the details of your securities application, your CDP Securities Account Number,number of securities and application amount on the screen and press the “ENTER” key toconfirm your application.

15: Remove the Transaction Receipt for your reference and retention only.

VI-19

Steps for Internet Electronic Application for Offer Stapled Securities through the IB Website ofDBS Bank

For illustrative purposes, the steps for making an Internet Electronic Application through the DBS BankIB website are shown below. Certain words appearing on the screen are in abbreviated form (“A/C”, “&”,“amt”, “I/C” and “No.” refer to “Account”, “and”, “Amount”, “NRIC” and “Number”, respectively).

Step 1: Click on DBS Bank website (www.dbs.com)

2: Login to Internet banking.

3: Enter your User ID and PIN.

4: Select “Electronic Security Application (ESA)”.

5: Click “Yes” to proceed and to warrant, inter alia, that you are currently in Singapore, you haveobserved and complied with all applicable laws and regulations and that your mailingaddress for DBS Internet Banking is in Singapore and that you are not a U.S. person (assuch term is defined in Regulation S under the United States Securities Act of 1933,amended).

6: Select your country of residence and click “I confirm”.

7: Click on “CDLHT” and click “Submit”.

8: Click on “I Confirm” to confirm, inter alia:

• You have read, understood & agreed to all terms of this application and theProspectus/Document or Profile Statement and if applicable, the Supplementary orReplacement Prospectus/Document or Profile Statement.

• You consent to disclose your name, I/C or Passport number, address, nationality, CDPSecurities Account number, CPF Investment Account number (if applicable) andsecurities application amount from your DBS/POSB Account(s) to registrars ofsecurities, SGX-ST, SCCS, CDP, CPF Board and issuer/vendors(s).

• You are not a U.S. Person (as such term is defined in Regulation S under the UnitedStates Securities Act of 1933, as amended).

• You understand that the securities mentioned herein have not been and will not beregistered under the U.S. Securities Act of 1933 as amended (the “U.S. Securities Act”)or the securities laws of any State of the United States and may not be offered or soldin the United States or to, or for the account or benefit of any “U.S. person” (as definedin Regulation S under the U.S. Securities Act) except pursuant to an exemption from orin a transaction subject to, the registration requirements of the U.S. Securities Act andapplicable State security laws. There will be no public offer of the securities mentionedherein in the United States. Any failure to comply with this restriction may constitute aviolation of the United States securities laws.

• This application is made in your own name and at your own risk.

• For FIXED/MAX price securities application, this is your only application. For TENDERprice securities application, this is your only application at the selected tender price.

9: Fill in details for securities application and click “Submit”.

10: Check the details of your securities application, your NRIC or passport No. and click“Confirm” to confirm your application.

11: Print the Confirmation Screen (optional) for your reference and retention only.

VI-20

Steps for Internet Placement Applications for Placement Stapled Securities through the websiteof DBS Vickers Online

For illustrative purposes, the steps for making an application through the website of DBS Vickers Onlineis shown below.

Step 1: Access the website at “www.dbsvonline.com”.

2: Login with user ID and password.

3: Click on to the IPO Centre hyperlink to go to the IPO Section.

4: Click on the IPO Issue hyperlink.

5: Click “Yes” to represent and warrant that you are in Singapore, you have observed andcomplied will all applicable laws and regulations, you have a mailing address in Singapore,you have read, understood and agreed to the “APPLICATION TERMS AND CONDITIONS”and the “GENERAL TERMS AND DISCLAIMERS” and you are not a U.S. person (as suchterm is defined in Regulation S under the United States Securities Act of 1933, as amended).

6: Confirm the IPO applying for and its details by clicking on the “Next” button.

7: Click “Yes, I have read the above Terms and Conditions and wish to subscribe.” and click“Submit” to confirm, inter alia:–

• You have read, understood and agreed to the terms and conditions set out in theProspectus/Document or Profile Statement including the notes and instructions forcompletion of this Application Form and that this application has been made inaccordance with the Prospectus/Document or Profile Statement including such notesand instructions.

• You have read and understood the disclaimers.

• You have read, understood and agreed to the “APPLICATION TERMS ANDCONDITIONS” and the “GENERAL TERMS AND DISCLAIMERS”.

• You consent to disclose your name, NRIC or passport number, address, nationality andpermanent resident status, CDP Securities A/C No., CPF Investment A/C No. (ifapplicable) and securities application amount from your account with DBS VickersOnline to the Issuer and the Manager, registrars of securities, SGX, SCCS, CDP andCPF (as applicable).

• This application is your only application for securities and it is made in your own nameand at your own risk.

• This application is made in Singapore

• You understand that these are not deposits or other obligations of or guaranteed orinsured by DBS Vickers and are subject to investment risks, including the possible lossof the principal amount invested.

• You declare that (a) you are not under 21 years of age, (b) you are not a corporation,sole-proprietorship, partnership or any other business entity, (c) you are not anundisclosed bankrupt, (d) you are in Singapore, (e) you have a mailing address inSingapore, and (f) you are not a U.S. person (within the meaning of Regulation S underthe U.S. Securities Act of 1933, as amended).

8: Fill in amount of securities applied for and preferred payment mode, then click “Submit”.

9: Check and verify the details of your securities application and your personal particulars onthe screen.

10: Enter your password and click “Submit” to continue.

11: Click on “Application Status” to check your IPO application details.

12: Print page for your reference and retention only.

VI-21

This page has been intentionally left blank.

APPENDIX VII

LIST OF PRESENT AND PAST PRINCIPAL DIRECTORSHIPS OF DIRECTORSAND EXECUTIVE OFFICERS OF THE H-REIT MANAGER AND/OR THE HBT

TRUSTEE-MANAGER

The principal present directorships, other than those held in the H-REIT Manager and the HBTTrustee-Manager, and the principal past directorships in the last five years of each of the directors andexecutive officers (named in “Management and Corporate Governance”) of the H-REIT Manager and/orthe HBT Trustee-Manager are as follows:

Director/Executive Officer

(1) Mr Wong Hong Ren

Current Directorships Past Directorships (for a period of five yearspreceding 30 April 2006)

CDL Investments New Zealand Limited*China Yuchai International Limited*City e-Solutions Limited*Grand Plaza Hotel Corporation*LKN-Primefield Limited*Millennium & Copthorne Hotels New Zealand

Limited* (fka CDL Hotels New ZealandLimited)

Millennium & Copthorne Hotels plc*Thakral Corporation Ltd*All Seasons Hotels & Resorts LimitedBirkenhead Holdings Pty. Ltd.Birkenhead Investments Pty. Ltd.Birkenhead Services Pty. Ltd.CDL Entertainment & Leisure Pte LtdCDL Hotels (Korea) Ltd.CDL Hotels (Labuan) LimitedCDL Hotels (Phils.) CorporationCDL Hotels (Singapore) Pte LtdCDL Hotels Holdings New Zealand LimitedCDL Land New Zealand LimitedChancery LimitedConstellation Star Holdings LimitedContext Securities LimitedCopthorne Orchid Hotel Singapore Pte LtdGuangxi Yuchai Machinery Company LimitedHarbour Land CorporationHarrow Entertainment Pte LtdHospitality Group LimitedHospitality Holdings Pte. Ltd.Hospitality Leases LimitedHospitality Services LimitedHotelcorp New Zealand Pty LtdInternational Design Link Pte Ltd

Amarin Plaza Public Company Limited*ATOS Holding AGCopthorne Hotels & Resorts Pty LtdDiesel Machinery (BVI) LimitedLandcorp Property LimitedLPL Group LimitedRepublic Hotels & Resorts LimitedRepublic Hotels Holdings Pte LtdRepublic Hotels Investments Pte LtdTasek Corporation Berhad*Wrep Thailand Holdings

VII-1


KIN Holdings LimitedKingsgate Holdings Pty. Ltd.Kingsgate Hotel Pty. Ltd.Kingsgate Hotels and Resorts Limited (fka

Quality Hotels Limited)Kingsgate Hotels LimitedKingsgate International Corporation LimitedKingsgate Investments Pty. Ltd.LKN Investment International Pte. Ltd.London Britannia Hotel LimitedM&C Hotels Holdings Limited (fka

Chamberfrost Limited)Millennium & Copthorne Hotels LimitedMillennium & Copthorne Hotels Pty Ltd (fka

Millennium Hotels & Resorts Pty Ltd)Millennium & Copthorne International LimitedNewbury Investments Pte LtdPortland Limited (Alternate Director)PT. Millennium Sirih Jakarta Hotel

(Commissioner)QINZ (Anzac Avenue) LimitedQINZ Holdings (New Zealand) LimitedQuantum LimitedRepublic Hotels Suzhou Pte LtdRogo Realty CorporationThe Philippine Fund LimitedTOSCAP LimitedZatrio Pte Ltd

* Listed Company

(2) Mr Yeo Wee Eng Vincent


CDL Investments New Zealand Limited*City e-Solutions Limited*Millennium & Copthorne Hotels New Zealand

Limited* (fka CDL Hotels New ZealandLimited)

CDL Hotels Holdings New Zealand LimitedCity Hotels Pte. Ltd.Fena Estate Company LimitedHospitality Holdings Pte. Ltd.International Hotel Management School Pte.

Ltd. (Alternate Director)KIN Holdings LimitedKingsgate International Corporation LimitedM&C Holdings (Thailand) Co. Ltd.Millennium & Copthorne Hotels (Hong Kong)

Limited

Amarin Plaza Public Company Limited*Copthorne Orchid Penang Sdn. Bhd.Wrep Thailand Holdings

VII-2


Millennium & Copthorne Hotels LimitedRichfield Hospitality, Inc (fka SWAN Inc)Sceptre Hospitality Resources, Inc.SWAN Holdings LimitedSWAN USA, INC.The Elise Group, Inc.

* Listed Company

(3) Dr Tan Cheng Bock


Chuan Hup Holdings Limited*PCI Limited*Ama Keng Medical Clinic (Owner)Dredging International Asia Pacific Pte LtdTsao Foundation

Ama Keng Medical Clinic Pte LtdLand Transport AuthorityVentrade (Asia) Pte. Ltd.

* Listed Company

(4) Ms Lim Yin Nee Jenny


Nil KPMG Tax Services Pte Ltd

(5) Mr Chan Chun Ming Jimmy


Aareal Financial Services (Singapore) Pte. Ltd.Beijing International Art Palace Co. Ltd.Maple Fame Limited

Royal Orchid Hotel (Thailand) PublicCompany Ltd

(6) Mr Ravi Sreen


CAV Thakral Home Entertainment Co. Ltd.Shanghai Tetronics Co Ltd.Thakral Electronics (Shanghai) Ltd.Zhong Lu Voice Image Lease Co., Ltd.

China Express Associates Ltd.China Home Entertainment Ltd.Digital Infotech (BVI) Ltd.Digital Infotech (HK) Ltd.Digital Infotech Holdings Ltd.Dot Media Corporation Ltd.Dot Media Holdings (HK) Ltd.Dot Media Industries Ltd.Dot Media Ltd.

VII-3

(7) Mr Ee Yew Beng Alexander John


Enterprise Advisers Pte. Ltd.Hardenton Advisors Pte. Ltd.

Emerald Star Holdings Ltd.Elro Projekt Ag

VII-4

SPONSOR

Millennium & Copthorne Hotels plcVictoria HouseVictoria Road

HorleySurrey RH6 7AFUnited Kingdom

MANAGER OF H-REIT TRUSTEE-MANAGER OF HBT

M&C REIT Management Limited36 Robinson Road#04-01 City HouseSingapore 068877

M&C Business Trust Management Limited36 Robinson Road#04-01 City HouseSingapore 068877

JOINT FINANCIAL ADVISERS, GLOBAL COORDINATORSAND BOOKRUNNERS



BNP Paribas Peregrine (Singapore) Ltd20 Collyer Quay

#08-01 Tung CentreSingapore 049319

JOINT UNDERWRITERS



BNP Paribas(acting through its Singapore Branch)

20 Collyer Quay#01-01 Tung CentreSingapore 049319

TRUSTEE OF H-REIT

DBS Trustee Limited6 Shenton Way

#36-02 DBS Building Tower OneSingapore 068809

LEGAL ADVISERS

Legal Adviser to the Offering, and to the Sponsor,the H-REIT Manager and the HBT Trustee-Manager

Allen & GledhillOne Marina Boulevard #28-00

Singapore 018989

Legal Advisers to the Joint Financial Advisors, Global Coordinators andBookrunners and the Joint Underwriters

Lee & Lee168 Robinson Road

#25-01 Capital TowerSingapore 068912

Latham & Watkins80 Raffles Place

#14-20 UOB Plaza 2Singapore 048624

Legal Advisers to the H-REIT Trustee

Shook Lin & Bok1 Robinson Road#18-00 AIA TowerSingapore 048542

INDEPENDENT ACCOUNTANTS INDEPENDENT TAX ADVISERS

KPMG16 Raffles Quay

#22-00 Hong Leong BuildingSingapore 048581

KPMG Tax Services Pte Ltd16 Raffles Quay


UNIT REGISTRAR AND UNIT TRANSFER OFFICE

M & C Services Private Limited138 Robinson Road #17-00

The Corporate OfficeSingapore 068906

INDEPENDENT VALUERS

CB Richard Ellis (Pte) Ltd6 Battery Road #32-01

Singapore 049909

Knight Frank Pte Ltd16 Raffles Quay


INDEPENDENT PROPERTYCONSULTANT

RECEIVING BANK

Jones Lang LaSalleProperty Consultants Pte Ltd

9 Raffles Place#38-01 Republic Plaza

Singapore 048619



Orchard Hotel


M Hotel

