MAKING IT HAPPEN - listed companystarhillglobalreit.listedcompany.com/misc/ar/ar2007.pdf · 18 Board of Directors 20 Management 24 Corporate Governance 32 Property Proﬁ le 34 Property

MACQUARIE MEAG PRIME REITANNUAL REPORT 2007

MAKING IT HAPPEN

www.mmpreit.comCompany Registration No.: 200502123C


MA

KIN

G IT H

AP

PEN

M

AC

QU

AR

IE M

EA

G P

RIM

E R

EIT

A

NN

UA

L REP

OR

T 2007M

AK

ING

IT HA

PP

EN

MA

CQ

UA

RIE

ME

AG

PR

IME

RE

IT

AN

NU

AL R

EPO

RT 2007

MMP Reit AR07 coverback_OK.indd 1 3/7/08 10:26:05 PM

Macquarie MEAG Prime REIT (MMP REIT) is a Singapore-based real estate investment trust (REIT) investing primarily in real estate used for retail and offi ce purposes, both in Singapore and overseas. Listed on the mainboard of the SGX-ST in September 2005, MMP REIT is the only Singapore REIT to own two landmark properties on Orchard Road, Singapore’s renowned shopping street. Its initial portfolio included a 74.23% strata title interest in Wisma Atria and a 27.23% strata title interest in Ngee Ann City. In 2007, MMP REIT enlarged its asset base

and geographical footprint with the acquisition of seven properties in the prime areas of Roppongi, Shibuya-ku, Minato-ku and Meguro-ku in Tokyo, Japan and a premier retail property in Chengdu, China. MMP REIT’s portfolio now comprises 10 properties in the three countries, valued at about S$2.2 billion. MMP REIT remains focused on sourcing property assets in Asia, while driving organic growth from its existing portfolio, through proactive leasing efforts and creative asset enhancements.

CONTENTS

01 Vision / Mission / Corporate Values /Portfolio Overview

02 Stepping into Asia04 View from the Top06 Style Meets Performance08 Business with Pleasure10 Financial Highlights12 Signifi cant Events13 Message from the Chairman and

Chief Executive Offi cer17 Organisation Chart18 Board of Directors20 Management24 Corporate Governance32 Property Profi le34 Property Portfolio Summary37 - Singapore Properties45 - China Property46 - Japan Properties47 Market Overview49 Capital Management51 Risk Management52 Management Information System 53 Investor Relations54 Community Outreach / Our People55 Financial Review57 Financial Statements98 Statistics of Unitholders100 Additional Information101 Corporate Directory102 Glossary


1MACQUARIE MEAG PRIME REIT

ANNUAL REPORT 2007

VISION

To be the most valued real estate investment trust in Singapore which is committed to delivering long term superior returns to our unitholders

MISSIONTo create and deliver superior returns to our investors through growth and value creation in our assets, products and services, unconstrained by boundary and reach

To be the landlord of choice for our tenants and shoppers and be committed in our delivery of quality products and services

To be a forward-thinking real estate company with strong management expertise and provide fulfi llment for our people

CORPORATE VALUESThe values to which we aspire can be summarised under six principles:

IntegrityClient commitmentStrive for profi tabilityFulfi llment for our peopleTeamworkHighest standards

SINGAPORE

CHENGDU

TOKYO

PORTFOLIOOVERVIEW

MMP Reit AR07_P02-09.indd Sec1:3 3/7/08 10:21:57 PM

Our maiden acquisitions in 2007 comprise S$250 million worth of quality assets in China and Japan, paving the way for geographical and income diversifi cation.

STEPPING INTO ASIA

MMP Reit AR07_P02-09.indd Sec1:2 3/7/08 10:21:47 PM

MMP REIT is the Singapore REIT with the largest presence on Singapore’s prime shopping

street Orchard Road. Its portfolio of properties, including Ngee Ann City and Wisma Atria in

Singapore, are of top notch quality and status.

VIEWFROM

THE TOP

MMP Reit AR07 1-31v5_OK.indd 5 3/6/08 1:29:20 PMMMP Reit AR07 1-31v5_OK.indd 4 3/6/08 1:29:11 PM

MMP Reit AR07 1-31v5_OK.indd 7 3/6/08 1:36:50 PM

STYLEMEETSPERFORMANCEOur retail properties enjoy solid growth and strong brand positioning, underpinned by our extensive asset enhancement capabilities, including the remixing of various tenancies.



BUSINESSWITHPLEASUREMMP REIT remains focused on retail and offi ce properties. These sectors have tremendous growth potential in Singapore and the rest of Asia.


10

FINANCIAL HIGHLIGHTS

FY 2007 FY 2006 CHANGE (%)

Gross Revenue (millions) $103.0 $89.9 14.6

Net Property Income (millions) $76.8 $69.3 10.9

Distributable Income (millions) $59.0 $54.9 7.5

Distribution Per Unit 6.19 cents 5.79 cents 6.9

Distribution Yield 5.63% 4.95% @ 31 Dec 07 ($1.10) @ 31 Dec 06 ($1.17)

Net Asset Value Per Unit $1.61 $1.16 38.8

Total Assets (millions) $2,278 $1,526 49.3Investment Properties

- Number of Properties 10 2 - Value (millions) $2,209 $1,498 47.4

Gearing 29.0% 25.6%


ANNUAL REPORT 2007

MMP REIT Unit Price and Volume since IPO(20 Sep 2005 - 31 Dec 2007)

1 January to 31 December 2007

Opening price (3 Jan 07) $1.17Closing price (31 Dec 07) $1.10High (16 May 07) $1.28Low (28 Nov 07) $1.01Volume traded (in million units) 654.0

0.800

0.975

1.150

1.325

Sep05

Dec 05

Mar 06

Jun 06

Sep 06

Dec 06

Mar 07

Jun 07

Sep 07

Dec 07

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

‘000$

0

Daily Volume (units)

Last Price

12

SIGNIFICANT EVENTS

DECEMBER6 MMP REIT makes submission to SGX-ST for Unit Buy-back Scheme

SEPTEMBER26 Completion of acquisition of “Ebisu Fort” in Tokyo

SEPTEMBER18 Lee Hwa Jewellery and Bakerzin launch fi rst ever concept tie-up at Wisma Atria

AUGUST28 Completion of acquisition of 100% stake in retail property in Chengdu

JULY24 Cotton On from Australia opens its fi rst Asian store at Wisma Atria; along with other new retail concept stores

MAY30 Completion of acquisition of portfolio of six properties in Tokyo

MAY15 Moody’s Investors Service affi rms “Baa1” corporate family rating with a stable outlook for MMP REIT

APRIL23 MMP REIT announces acquisition of 50% stake in prime retail property in Chengdu

APRIL10 MMP REIT announces acquisition of seven properties in Tokyo


ANNUAL REPORT 2007

MESSAGE FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Dear Unitholders On behalf of the Board of Macquarie Pacifi c Star Prime REIT Management Limited, as Manager of MMP REIT, we are pleased to present the report of MMP REIT for the fi nancial year ended 31 December 2007.

Left to right: Stephen Girdis (Chairman) and Franklin Heng (CEO)

14

Better Performance and Higher NAV Growth in 2007

The past year has been an impressive one for MMP REIT. The Trust outperformed all key performance metrics of gross revenue, net property income, distributable income and Distribution Per Unit (DPU) achieved in 2006, while laying a strong foundation for future growth through its acquisitions and asset enhancement initiatives. In particular, MMP REIT delivered total DPU of 6.19 cents to unitholders, 6.9 per cent higher than that in 2006. MMP REIT’s portfolio has grown from two prime properties in Singapore to 10 quality assets in Singapore, Japan and China.

MMP REIT’s fi nancial performance was further boosted by strong revaluation gains of S$448.9 million for its expanded portfolio, contributing to a 38.8 per cent increase in Net Asset Value (NAV) fromS$1.16 at end December 2006 to S$1.61 at end December 2007.

As announced on 19 February 2008, the Manager is sponsoring a strategic review of MMP REIT, with the specifi c objective of enhancing value for all unitholders. The review, which is being undertaken in the context of strong underlying property fundamentals in the Singapore market, will consider both corporate and asset level strategies, including mergers and acquisitions, full privatisation or sale of assets. Further announcements will be made as appropriate.

Geographical and Income Diversifi cation through Acquisitions

In 2007, we embarked on our acquisition trail, buying seven quality properties located in the prime areas of Tokyo, Japan for S$180.4 million and a premier retail property in Chengdu, China for S$70.6 million.

The seven properties in Tokyo are situated in the sought-after areas of Roppongi, Shibuya-ku, Minato-ku and Meguro-ku. The properties, totaling approximately 68,000 square feet in net lettable area, have a balance of master leases and medium-term leases

which provide stable rental income and potential for rental upside respectively.

The property in Chengdu, the capital city of Sichuan Province, the second most populous province in China, is known as Renhe Spring Zongbei Department Store. Strategically located in the Wuhou District of Chengdu, the property has a gross fl oor area of approximately 101,000 square feet. The property, currently used as a high-end department store, houses premium brands such as Prada, Dunhill, Ermenegildo Zegna, Givenchy, Gucci, Hugo Boss and Montblanc. Aside from this property, MMP REIT also has the fi rst right of refusal to Renhe Spring Group’s pipeline of commercial and/or retail developments in China, including another two prime retail properties in Chengdu with a combined gross fl oor area of more than one million square feet.

Contributions from six of the newly-acquired properties in Tokyo commenced in June while that from the Chengdu property and the seventh Tokyo asset began in the third quarter of 2007. The value of these newly-acquired properties has appreciated by approximately S$25.2 million since acquisition.

Solid Asset Management Capabilities Reaping Rewards

To fuel organic growth, our asset management team continues to improve returns at our existing Singapore properties through a three-pronged strategy of pro-active retail leasing, introduction of more step-rent structures and effective asset enhancements.

Ngee Ann City and Wisma Atria continued to perform exceptionally well in 2007, amid Singapore’s thriving retail scene and buoyant demand for offi ce space, the supply of which remains tight. Driving this organic growth for the Singapore portfolio are favourable market conditions, strong rental reversions for offi ce space and substantial rental increases arising from focused asset management efforts. As at 31 December 2007, both assets enjoyed full occupancy for retail space and 99 per cent occupancy for offi ce space.



ANNUAL REPORT 2007

In 2007, approximately 79,000 square feet of offi ce renewals and new leases were contracted at an average of 69 per cent over previous rents. Average rents for these leases grew from a range of S$4.90 to S$5.30 per square foot (psf ) per month to a range of S$7.70 to S$12.10 psf per month, taking advantage of the continuing shortage of offi ce space relative to demand.

The robust retail scene continues to be boosted by various government initiatives. These include the development of two integrated resorts, growth of the Meetings, Incentives, Conventions and Exhibitions (MICE) sector, a S$40 million plan to rejuvenate Orchard Road and the introduction of the Formula One™ Singapore Grand Prix 2008. Singapore also welcomed its 10 millionth visitor in December 2007 and looks set to achieve Singapore Tourism Board’s long-term target of tripling tourism receipts to S$30 billion per annum by 2015.

Retail space at Orchard Road is expected to increase by 913,000 square feet in the next year. We view this increase in supply positively, as it has been more than a decade since any substantial new retail space has been added to Singapore’s premier shopping street. These new retail developments will allow more room for new players in the Singapore retail arena, adding to the evolution and vibrancy of the sector. When construction work for the nearby ION Orchard is completed at the end of 2008, Ngee Ann City, Wisma Atria and ION Orchard will form a formidable nucleus for shopping activity on Orchard Road, seamlessly connected by air-conditioned passageways.

In response to the temporary closure of the Orchard MRT linkway to the basement of Wisma Atria in October 2006, the Trust promptly installed a set of new escalators to bring shoppers from the street level to the basement. From December 2006 through the whole of 2007, we organised a range of attractive promotions and events to drive shopper traffi c and spending at the centre. Shopper traffi c has since recovered to close to 80 per cent of the level achieved before the basement linkway closure. Of greater signifi cance is the healthy increase in the centre’s overall tenants’ sales turnover in 2007, despite the slightly lower shopper traffi c.

Aside from running promotions, we also collaborated with a number of established tenants to either expand, upgrade and/or revamp their stores. These included popular brands like Charles & Keith, G2000, Giordano and Prettyfi t. Despite the linkway closure, the Charles & Keith Wisma Atria store is their best performing store in Singapore. In the same period, we also took the opportunity to strengthen the tenancy mix in the basement of Wisma Atria with new and international fashion concept stores like Cotton On and Cotton On Body from Australia, Schu from France and Lee Cooper from the USA.

In 2007, we also carried out asset enhancements at Wisma Atria. Initiatives on Level 2 of the centre have resulted in new shops with both improved shop frontage and layout, all of which have reported higher sales.

A tenancy remix complemented the physical transformation, with several well-known brands establishing themselves in Wisma Atria with their fl agship stores in Singapore. Other new brands that opened in Wisma Atria in 2007 include Beijafl or from Brazil, Giordano Concepts from Hong Kong and a tie-up between home-grown Lee Hwa Jewellery and Bakerzin to establish a deluxe café that has a jewellery-inspired dessert line. Cult jeans stores Bread & Butter and TOUGH Jeansmith, and niche fashion stores such as Patterns and Eclecticism, also opened at Wisma Atria. This is a testament to the centre’s pole position and sterling reputation as one of the premier malls along Orchard Road.

Proactive Capital Management

Nearly 90 per cent of MMP REIT’s borrowings have been hedged against fl uctuation in interest rates for the next 2.75 years. The weighted average interest rate, including hedges, is 2.69 per cent as at 31 December 2007 and the interest cover is a healthy 4.5 times for the year. Gearing as at end December 2007 was 29.0 per cent, compared to 25.6 per cent as at end December 2006.

16

In the best interest of unitholders, we have decided to adopt the prudent approach of considering shorter term funding options until the outcome of the strategic review exercise is clear. To this end, we have refi nanced S$190 million of short-term loans due in end May 2008 to end September 2008.

In December 2007, to increase returns to investors and to improve the Trust’s NAV per Unit and DPU in an expedient, effective and cost-effi cient way, MMP REIT became the fi rst Singapore REIT to initiate a Unit Buy-back Scheme. The scheme was subsequently approved by unitholders in January 2008, refl ecting their confi dence in the quality of the Trust’s portfolio.

Given the strategic review, the Unit Buy-back Scheme will be deferred until further notice.

Keeping Our Focus while Laying a Strong Foundation for Future Growth

Through acquisitions, tenancy remixing and asset enhancement initiatives undertaken in 2007, we have laid a strong foundation for organic growth in the next couple of years. We remain focused in our vision to deliver long-term superior returns to our unitholders.

The year 2007 saw MMP REIT seizing opportunities to diversify and expand its income stream through strategic acquisitions in Japan and China. More importantly, by securing a foothold in the gateway cities of Tokyo and Chengdu, MMP REIT is well-positioned to develop strategic relationships with key players in both markets. Based on present demand, we are targeting an increase in rental performance in 2008. With some 100,000

square feet of offi ce space due for renewal in 2008, and another 68,000 square feet in 2009, MMP REIT’s prime Grade-A offi ce properties are well placed to take advantage of the robust offi ce market. Further, we believe that the tenancy remix and asset enhancement initiatives carried out in Wisma Atria in 2007, in anticipation of increasing competition along Orchard Road, will allow us to maintain our properties’ relevance as the leading malls on Singapore’s iconic shopping street. Lastly, we expect an increase in rental income from Ngee Ann City when the rent review is fi nalised with our master lessee in June 2008 and 17,000 square feet of retail space on Level 5 is relaunched as a beauty and wellness precinct in the second quarter of 2008.

Acknowledgements

We wish to express our appreciation to our fellow directors and the management team for their commitment, contributions and guidance in the past year. We thank Mr Timothy Chia who relinquished his appointment as a non-executive director for his contributions and welcome Mr Keith Tay Ah Kee on our board. We also thank our investors, tenants and business partners for their ongoing support, confi dence and trust in us.


Stephen GirdisChairman

Franklin HengChief Executive Offi cer

5 March 2008


ANNUAL REPORT 2007

The Manager

TrusteeHSBC

Institutional Trust Services

(Singapore) Limited

Management Fees

ManagementServices

Acts onbehalf of Unitholders

TrusteeFees

Macquarie MEAG Prime REIT



(MMP REIT)(MMP REIT)(MMP REIT)

Unitholders

The Property Manager The

Properties

PropertyManagement

Services

Property Management Fees

Hold Units Distributions

Ownership of Assets

Net Property Income

ORGANISATIONCHART

18

P541CM YC K

While every effort has been taken to carry out instruction to customers satisfactionNO RESPONSIBILITY liablilty will be accepted for errorsCUSTOMERSARE THEREFOREURGEDTO CHECKTHOROUGHLY BEFOREAUTHORISINGPRINT RUNS SL032

SLSL238137 DL-MAC WPA 07.03.2008 175# 3HTS

DALIM

1 2 3 4 5 6 7 8 9 10 OKP18Size: 297mmHx210mmW 175#

BOARD OF DIRECTORS

Mr Stephen GirdisNon-Executive Chairman Mr Girdis is Global Head of Macquarie Real Estate Group, and one of the leaders in the establishment and growth of a range of successful real estate trusts. He is an Executive Director of Macquarie Group Limited (MGL) and is or has been a Director on many of Macquarie Real Estate’s listed and unlisted real estate funds including Macquarie ProLogis Trust, Macquarie DDR, Goodman Group, Macquarie Offi ce Trust, Macquarie Countrywide, M3 Capital Partners LLC and Macquarie Global Property Funds Limited. He has more than 25 years of experience in chartered accounting, property fi nance, funds management and investment banking. Mr Girdis has a BComm from the University of New South Wales.

Mr Michael HwangIndependent Director Mr Hwang was one of the fi rst 12 Senior Counsel appointed in Singapore and now practices as an independent barrister and international arbitrator. His international appointments include Commissioner of UN Compensation Commission, Deputy Chief Justice of the Dubai International Finance Centre, Vice President of the ICC International Court of Arbitration, Member of the Permanent Court of Arbitration at the Hague and Singapore’s Non Resident Ambassador to Switzerland. He advised the Real Estate Development Association of Singapore (REDAS) for many years, preparing for the establishment of REITs in Singapore. Formerly a director of PSA Corporation Ltd (the Port of Singapore Authority), Mr Hwang is currently also a director of The Straits Trading Company Limited and President of the Law Society of Singapore.

Dr Hong HaiIndependent DirectorDr Hong Hai is Professor at Nanyang Business School, Nanyang Technological University in Singapore. He is a director of IDT Holdings (Singapore) Ltd, Poh Tiong Choon Logistics Ltd, Asiapharm Ltd, China Merchant Pacifi c Holding Ltd, and is a member of the board of Singapore Deposit Insurance Corporation. He was previously President and Chief Executive Offi cer of Haw Par Corporation Limited (1990-2003), and has taught at the Kellogg School of Management in Chicago and the National University of Singapore. He is Honorary Council Member of the Singapore Chinese Chamber ofCommerce & Industry and a member of Network China Steering Committee.

Top row left to right: Mr Stephen Girdis, Mr Franklin Heng, Mr James Hodgkinson

Bottom row left to right: Dr Hong Hai, Mr Michael Hwang, Mr Keith Tay Ah Kee, Mr Wolfgang Wente

MMP Reit AR07_P01/10-31.indd 18MMP Reit AR07_P01/10-31.indd 18 3/31/08 4:58:30 PM3/31/08 4:58:30 PM


ANNUAL REPORT 2007

Mr Franklin HengExecutive DirectorMr Heng is the Chief Executive Offi cer of the Manager. He was previously engaged in real estate investments for the ERGO Group companies and property funds management for the Pacifi c Star Group. With more than 15 years of real estate and investment banking experience (including eight years in JP Morgan), Mr Heng is well-versed in regional mergers and acquisitions, project fi nance advisory, equity and debt capital markets transactions. He obtained a Masters in Telecommunications Management from Institut National des Telecommunications, Evry, France in 1993 through a France Telecom Scholarship and an Honours (Second Upper) Degree in Business Administration from the National University of Singapore in 1990.

Mr James HodgkinsonNon-Executive Director Mr Hodgkinson is an Executive Director of MGL and Joint Head of Macquarie Bank’s Real Estate Capital (REC) Division. With over 20 years of experience in property funds management, investment banking and chartered accounting, he oversees all of REC’s businesses, including REIT development in Asia and core real estate investments for MGL. He was responsible for Macquarie Industrial Trust, which was successfully merged with Goodman Hardie Trust to form what became known as the Goodman Group (GMG). He sits on the board of GMG, as well as the management company of Ascendas REIT. He is also on the board of a number of management companies of various wholesale funds across the Macquarie Asia platform.

Mr Keith Tay Ah KeeIndependent Director Mr Tay is the Chairman of Stirling Coleman Capital Ltd and Aviva Ltd, Vice-Chairman of the Singapore Institute of Directors and a Board Member of the Singapore International Chamber of Commerce. In addition to the Manager, Mr Tay is also a director of Singapore Post Limited, FJ Benjamin Holdings Ltd, Allgreen Properties Ltd, Rotary Engineering Ltd and Singapore Airport Terminal Services Limited. He was the Chairman and Managing Partner of KPMG Peat Marwick Singapore from 1984 to 1993 and President of the Institute of Certifi ed Public Accountants of Singapore. He was conferred the BBM – Public Service Star in 1990 by the President of the Republic of Singapore.

Mr Wolfgang WenteNon-Executive Director As Head of International Real Estate Investment Management for MEAG MUNICH ERGO AssetManagement GmbH (MEAG), Mr Wente is responsible for all foreign real estate activities such as Fund Management, Asset Management, Partnership Network, Product Development and Acquisitions and Sales. He has been with ERGO Trust/MEAG since 1997 and was responsible for ERGO Treasury Centre Ltd., an ERGO Group fi nancing entity, for more than eight years. As Head of Finance in ERGO Trust GmbH, he oversaw the accounting, control and asset management of ERGO Trust’s direct participations and ERGO Group companies. Mr Wente’s experience in asset management spans more than 13 years. He continues to manage several closed-end real estate funds in Europe and the United States.

20

MANAGEMENT

Mr Franklin HengChief Executive Offi cerMr Heng is responsible for working with the Board to determine the overall business, investment and operational strategies of MMP REIT. He also works closely with other members of the Manager and the Property Manager to ensure the business, investment and operational strategies of MMP REIT are carried out as planned.

Mr Edmund TanSenior Vice President (Investments)Mr Tan oversees investments for MMP REIT. He has 15 years of investment experience, having held senior positions in several international investment banks and fund management houses in Singapore, Hong Kong, Indonesia and Malaysia; including at NM Rothschild Ltd, Barclays Capital, HSBC Hong Kong and Bechtel Group. Before his last position as Senior Vice President of Pacifi c Star Group’s Asia Real Estate Income Fund, Mr Tan ran his own consulting fi rm and founded a successful retail joint-venture.

Mr Tan holds an MBA in International Business and Export Management from the City University Business School in London and a Bachelor of Laws from the University of London. He has been a Barrister-at-Law of the Honorable Society of the Middle Temple in London since 1989.

EXECUTIVE OFFICERS OF THE MANAGER

Left to right: Ms Mok Lai Siong, Senior Vice President (Investor Relations and Corporate Communications); Mr Andrew Neary, Senior Vice President (Asset Management); Ms Ong Mei-Lynn, Vice President (Asset Management); Mr Stephen Yeo, Vice President (Finance and Accounting); Ms Alice Cheong, Chief Operating Offi cer; Mr Kevin Chee, Senior Vice President (Asset Management); Mr David Mason, Senior Vice President (Finance and Accounting)


ANNUAL REPORT 2007

Left to right: Mr Cedric Cheah, Analyst; Ms Patricia Ong, Senior Vice President (Legal); Mr Jeffrey Jin, Vice President (Investments); Mr Franklin Heng, Chief Executive Offi cer; Ms Clare Koh, Vice President (Investments); Mr Edmund Tan, Senior Vice President (Investments); Ms Christine M Chan, Senior Vice President (Legal and Compliance) / Company Secretary

Mr Andrew NearySenior Vice President (Asset Management)Mr Neary is responsible for delivering asset enhancement and organic growth of MMP REIT’s properties. He has more than 20 years of banking and property experience having worked in the Commonwealth Bank of Australia in Credit, Risk Management and Corporate Finance roles, before spending seven years with the Westfi eld group in the Centre Management, Asset Management and Development divisions. While at Westfi eld, Mr Neary spent three years as the General Manager of Suria KLCC in Malaysia, before undertaking external consulting work in the region. More recently, he worked with Lend Lease Retail in Australia, before joining Macquarie Real Estate Capital in 2006.

Mr Neary holds a Graduate Certifi cate in Financial Studies from UTS, Australia and an MBA (International Business) from Griffi th University, Australia.

Mr Kevin CheeSenior Vice President (Asset Management)Mr Chee is responsible for delivering asset enhancement and organic growth of MMP REIT’s properties. Prior to joining the Manager, Mr Chee was the President of the Property Manager and before that, a vice president in the Pacifi c Star Group involved in asset and investment management of local and cross-border real estate transactions. He has 15 years of working experience, six in regional mergers and acquisitions and project fi nance advisory at JP Morgan and Barclays Capital and four as a fi nancial analyst at Shell Eastern Petroleum.

Mr Chee graduated with a Bachelor of Business (Honours) Degree in Banking from Nanyang Technological University, Singapore in 1992.

22

Ms Alice CheongChief Operating Offi cerMs Cheong oversees the Legal and Compliance, Finance and Accounting, as well as the Investors Relations and Corporate Communications functions. Ms Cheong has more than 12 years of working experience in fi nancial advisory, mergers and acquisitions and fundraising, including four years in the real estate sector. Prior to joining the Manager, she was a vice president in Ergo Tru Asia from May 2003 to June 2005 involved in the evaluation, structuring, funding and execution of real estate acquisitions in Asia. Ms Cheong has had seven years of investment banking experience with HSBC and NM Rothschild & Sons in Singapore.

Ms Cheong graduated with First Class Honours from Warwick University in the United Kingdom with a Bachelor of Science in Management Science in 1994. She is also a Chartered Financial Analyst (CFA Institute).

Mr David MasonSenior Vice President (Finance and Accounting)Mr Mason is responsible for the fi nance function of MMP REIT including fi nancial reporting, taxation, treasury and capital management. He has more than 20 years of experience in audit, accounting, statutory reporting, compliance and tax in England, Bermuda and Australia. Following audit stints in Cooper & Parry in Nottingham, England, and in Ernst & Young and the National Audit Offi ce in Bermuda, Mr Mason was Financial Controller of Lend Lease US Offi ce Trust in Sydney for three years. In 2003, he joined Macquarie Bank Limited, Sydney where he was Associate Director, Financial Operations Division.

Mr Mason holds a Bachelor of Arts (Honours) Degree in Accounting & Finance from the University of Central England Birmingham, England. He is a member of the Institute of Chartered Accountants in England & Wales and the Institute of Chartered Accountants of Australia. Ms Christine M ChanSenior Vice President (Legal and Compliance) Company SecretaryMs Chan trained and worked as a barrister in England and Wales and was called to the Bar as an advocate & solicitor of the Supreme Court of Singapore. After working in Chambers in London for nearly two years, she returned to Singapore and was engaged in all aspects of commercial litigation, international arbitration,

corporate advisory (for parties in China, Indonesia, Thailand, Burma, Korea, Japan and Singapore) and commercial leasing/centre management for six years with two major law fi rms in Singapore. After a three-year sabbatical to write, teach and train, she returned to legal practice with a focus on corporate fi nance. She became Corporate Counsel to another REIT manager in Singapore and joined the Manager in October 2006.

Ms Patricia OngSenior Vice President (Legal)Alternate Company SecretaryMs Ong is responsible for legal matters pertaining to investments and asset management for MMP REIT. She was in legal practice as a real estate lawyer with a major law fi rm in Singapore for more than fi ve years before moving on to various in-house legal roles, including fi ve years with a Singapore-based property development group advising on real estate acquisitions & divestment, property development and hotel management matters. Prior to joining the Manager, Ms Ong was the Regional Corporate Counsel for a UK-based MNC, responsible for regional projects covering Asia Pacifi c, Africa and Middle East.

Ms Ong holds a Bachelor of Law (Honours) Degree from the National University of Singapore, and a Certifi ed Diploma in Financial Management, accredited by the Association of Chartered Certifi ed Accountants (ACCA). Ms Mok Lai SiongSenior Vice President (Investor Relations and Corporate Communications) Ms Mok is responsible for strategic communications with unitholders, potential investors, analysts and the media. She has over 15 years of experience in communications, including 10 years in the real estate sector. Prior to joining the Manager, she was Corporate Communications Manager at CapitaLand Limited, responsible for results briefi ngs, media relations, branding, publications, community relations and event management. Ms Mok has also held positions in Oversea-Chinese Banking Corporation, Overseas Union Bank, Pidemco Land and the National University of Singapore.

Ms Mok holds a Master in Business (International Marketing) from the Curtin University of Technology, Australia, and a Bachelor of Arts Degree in English & Philosophy from the National University of Singapore. She is an accredited member of the Institute of Public Relations, Singapore.

EXECUTIVE OFFICERS OF THE MANAGER


ANNUAL REPORT 2007

Left to right: Ms Jesse Wu, Leasing Manager; Mr Tan How Song, Property Operations Manager; Ms Kulanthaivelu Parameshvari, Finance Manager; Ms Amy Lim, General Manager; Ms Sandra Lee, Human Resources Manager; Ms Chan Shuk Ling, Marketing Manager

EXECUTIVE OFFICERS OF THE PROPERTY MANAGER

Ms Amy LimGeneral Manager Ms Lim is responsible for the overall property management of WA and NAC, including Leasing, Marketing, Property Operations, Finance and Human Resources. Before this, Ms Lim was the Assistant General Manager for Leasing and Marketing. She has more than 14 years’ experience in the real estate business. She was the Corporate Director (Leasing) at Tincel Properties Private Limited from 2001 to 2006 where she was responsible for the leasing of the retail and offi ce spaces at Raffl es City. Between 1994 and 2001, Ms Lim was with OCBC Property Services Pte Ltd, overseeing the leasing functions for the group’s portfolio of commercial properties. She holds an Honours Degree in Estate Management from the National University of Singapore. Ms Kulanthaivelu ParameshvariFinance ManagerMs Parameshvari, with more than 20 years’ experience in the audit and fi nance industry, is responsible for fi nance, accounting and tax functions. Prior to joining the Property Manager, she was with Wisma Development Pte Ltd (WDPL) from 1986 to 2002 where she was responsible for its fi nance, accounting and tax functions and served as the chairman, treasurer, secretary and a council member (representing WDPL) of the Wisma Atria Management Corporation. She was with Ernst and Young from 1979 to 1986. Ms Parameshvari graduated with a Bachelor of Science from the University of Madras in 1972. She is also a graduate of the Association of Chartered Certifi ed Accountants (United Kingdom) as well as a member of the Association of Chartered Certifi ed Accountants and the Certifi ed Public Accountants of Singapore. Ms Jesse WuLeasing ManagerMs Wu is in charge of all leasing operations and tenant relationships for WA and NAC, Level 5. Prior to joining

the Property Manager, Ms Wu was Senior Manager (Retail Department) at Knight Frank Pte Ltd from 2004 to 2007 where she provided marketing consultancy services for several retail developments in Singapore and Vietnam. She has more than 14 years of marketing experience and has held various positions at Singapore Telecommunications, Raffl es City, Sime Singapore and United Overseas Land. Ms Wu holds a Master of Science (Real Estate) from the National University of Singapore and a Bachelor of Business (Marketing) from the Nanyang Technological University. Ms Chan Shuk LingMarketing ManagerMs Chan is responsible for conceptualising and implementing marketing programmes to attract shoppers and increase tenants’ sales turnover at WA. Ms Chan has 11 years of marketing experience. From 2001, she was with WDPL where she was responsible for advertising and promotion activities for WA. Prior to that, Ms Chan worked with Seiyu Department Store where she was in charge of implementing marketing programmes for all the chain outlets. Ms Chan graduated with a degree in Arts from the National University of Singapore in 1996. Mr Tan How SongProperty Operations ManagerMr Tan is responsible for the building operations of the Properties. Mr Tan has more than 10 years of experience in the property management industry. He was a project manager at Orchard Square Development Corporation (OSDC), a joint developer of NAC, from 1997 to 2003, before joining the Property Manager. Prior to OSDC, he was the project manager involved in managing construction activities, upgrading, maintenance programmes and addition and alteration works at Metrobilt Construction, Kmart-Singapore and Omni Marco Polo Hotel Singapore. Mr Tan obtained an Advanced Diploma in Building Services Engineering from Ngee Ann Polytechnic in 1991.

24

CORPORATEGOVERNANCE

The Manager believes that strong and effective corporate governance is essential in fulfi lling its mandate to protect the best interests of the unitholders of MMP REIT (“Unitholders”) and is critical to the success of its performance as the Manager.

The following sections describe the Manager’s primary corporate governance policies and practices. They encompass pro-active measures for avoiding situations of confl ict and potential confl icts of interest, including prioritising the interests of Unitholders over those of the Manager. They also ensure that applicable laws and regulations contained in the listing manual of the SGX-ST, the Code of Collective Investment Schemes (the “CIS Code”) (including the Property Funds Guidelines) issued by the MAS, the Securities and Futures Act Chapter 289 of Singapore (the “SFA”) and the tax ruling dated 20 May 2005 issued by the Inland Revenue Authority of Singapore (the “Tax Ruling”) are complied with, and that the Manager’s obligations in the MMP REIT Trust Deed (including any supplemental, amended or restated deeds thereto) are honoured.

Manager of MMP REIT

Macquarie Pacifi c Star Prime REIT Management Limited was appointed the Manager of MMP REIT in accordance with the terms of the Trust Deed dated 8 August 2005 (last amended and restated on 10 December 2007) (the “Trust Deed”). The terms and duration of the Manager’s appointment are governed by the Trust Deed (including any supplemental, amended or restated deeds thereto).

The Manager of MMP REIT has general power of management over the assets of MMP REIT. The Manager’s main responsibility is to manage MMP REIT’s assets and liabilities for the benefi t

of Unitholders. The primary role of the Manager is to set the strategic direction of MMP REIT and to make recommendations to HSBC Institutional Trust Services (Singapore) Limited, as trustee of MMP REIT (the “Trustee”) on acquisitions, divestments and enhancement of the assets of MMP REIT, in accordance with its stated business strategy and the terms of the Trust Deed (including any supplemental, amended or restated deeds thereto). Other important functions and responsibilities of the Manager include:

(1) Using its best endeavours to ensure that the business of MMP REIT is carried out and conducted in a proper and effi cient manner andto conduct all transactions with, or for MMP REIT, at arm’s length;

(2) Preparing property plans on a regular basis, which may contain proposals and forecasts on net income, capital expenditure, sales and valuations, explanations of major variances to previous forecasts, written commentary on key issues and underlying assumptions on rental rates, occupancy costs and any other relevant assumptions. The purpose of these plans is to explain the performance of MMP REIT’s assets;

(3) Ensuring compliance with the applicable provisions of the SFA and all other relevant legislations, the listing manual of the SGX-ST, the CIS Code, the Trust Deed, the Tax Ruling and all relevant contracts;

(4) Attending to all communications with Unitholders; and

(5) Supervising Macquarie Pacifi c Star Property Management Pte. Ltd. which performs the day-to-day property management functions (such as

Committed to upholding the highest standards of corporate governance


ANNUAL REPORT 2007

leasing, marketing, maintenance, promotion and accounting) for the Properties, pursuant to the property management agreements.

MMP REIT, constituted as a trust, is externally managed by the Manager and accordingly has no personnel or staff of its own. The Manager appoints experienced and well-qualifi ed management staff to run its operations. All directors and employees of the Manager are remunerated by the Manager, and not by MMP REIT.

Pursuant to amendments made to the Property Funds Guidelines in October 2005, the Manager and the Trustee entered into a First Supplemental Deed dated 20 April 2006 to provide inter alia for the following:

(1) The Manager may be removed by way of resolution passed by a simple majority of Unitholders present and voting at general meeting, with no Unitholder being disenfranchised; and

(2) A general meeting may be convened at the request in writing of not less than 50 Unitholders or Unitholders representing not less than 10% of the issued units.

Board Matters

The Role of the BoardThe Board of Directors of the Manager (the “Board’’) is responsible for the overall management and corporate governance of the Manager and MMP REIT, including establishing performance objectives forthe management team of the Manager and monitoring the achievement of these objectives. All Board members participate in matters relating to corporate governance, business operations and risk management, and fi nancial performance.

The Board has established a framework for the management of the Manager and MMP REIT, including a system of internal controls and an enterprise risk management framework (application of the policies and protocol under the framework in respect of MMP

REIT assets and operations is further described in the section “Risk Management” on Page 51). The Board has adopted a set of internal controls which sets out approval limits for capital expenditure, investments and divestments, bank borrowings and cheque signatories, amongst others. Financial risk management is exercised in accordance with a robust policy. Appropriate delegations of authority have been provided to the management to facilitate operational effi ciency. Changes to regulations, policies and accounting standards are monitored closely. Where the changes have signifi cant impact on MMP REIT and its obligations of continuing disclosure, the directors will be briefed and updated by the Company Secretary during Board meetings, at ad hoc Board meetings or by circulation of Board papers. Board meetings are scheduled and held at least once every quarter. Directors meet to discuss and review the strategies and policies of MMP REIT, including any signifi cant matters pertaining to acquisitions and disposals, the annual budget, the fi nancial performance of the Manager and MMP REIT measured against a previously approved budget. The Board also reviews and approves the release of the quarterly, half-yearly and annual results. The Board will generally review matters which impact on the business risks and management of liability of MMP REIT, and comments from the statutory auditors of MMP REIT and recommendations of the internal auditors.

Board CompositionThe Board presently comprises seven members, three of whom are independent directors. The non-executive Chairman of the Board is Mr Stephen Girdis and the Chief Executive Offi cer of the Manager is Mr Franklin Heng. The other members of the Board include Mr James Hodgkinson (non-executive director) and Mr Wolfgang Wente (non-executive director). The three independent directors are Dr Hong Hai, Mr Michael Hwang and Mr Keith Tay Ah Kee. The composition of the Board has been determined in accordance with the following principles:

(1) The Chairman of the Board should be a non-executive director of the Manager;

26

(2) The Board should comprise directors with a broad range of commercial experience including expertise in funds management and experience in all facets of the property or real estate industry;

(3) At least one-third of the Board should comprise independent directors; and

(4) The composition will be reviewed regularly to ensure that the Board has the appropriate mix of expertise and experience.

The positions of non-executive Chairman and Chief Executive Offi cer are held by two separate persons in order to maintain an effective segregation of duties. The Chairman ensures that the Board members work together with management in a constructive manner to address strategies, business operations and enterprise issues. The Chief Executive Offi cer has full executive responsibilities over the business direction and operational decisions of the Manager of MMP REIT. The majority of the Board members is non-executive with at least one third of the Board being independent directors. This enables the management to benefi t from their external and objective perspectives on issues that are brought before the Board. In this way, the Board is also better able to interact and work with management through a healthy exchange of ideas and views to help shape the strategic process. This, together with the clear separation of roles between the Chairman and the Chief Executive Offi cer, facilitates a vigorous professional relationship between the Board and the management. Newly appointed directors are given briefi ngs by the Company Secretary on their roles and responsibilities as directors of the Manager, and of the business activities and strategic directions of MMP REIT.

Access to informationManagement provides the Board with regular updates on fi nancial results, market and business developments,

and business and operational information. Board papers and agenda are provided to each director in advance of Board meetings so that directors can review the matters arising beforehand. Management staff is invited to attend the Board meetings whenever the Board decides or requests, in order that additional insight or information may be presented for the Board’s consideration. The Board has unfettered access to members of senior management and the Company Secretary at all times. The Company Secretary attends to corporate secretarial administration matters, attends Board meetings and communicates regularly with Board members on matters in respect of MMP REIT and the Manager. The Board also has access to independent professional advice (legal, fi nancial or otherwise) where appropriate or necessary.

Audit CommitteeThe Audit Committee is appointed by the Board from amongst the directors of the Manager and currently comprises three members, the majority of whom (including the Chairman of the Audit Committee) are independent directors. The members of the Audit Committee are Dr Hong Hai (Chairman), Mr Michael Hwang and Mr Keith Tay Ah Kee. The Audit Committee assists the Board in overseeing the risk management framework and any matters of signifi cance affecting fi nancial reporting and internal controls of MMP REIT. The terms of reference for the Audit Committee include:

(1) Reviewing audit reports to ensure that where defi ciencies in internal controls have been identifi ed, appropriate and prompt remedial action is taken by management;

(2) Monitoring the procedures in place to ensure compliance with applicable legislation, the listing manual of the SGX-ST and the Property Funds Guidelines;

CORPORATE GOVERNANCE


ANNUAL REPORT 2007

(3) Reviewing and making recommendations to the Board in relation to the fi nancial statements;

(4) Monitoring the procedures established to regulate Related Party Transactions (as defi ned below), including ensuring compliance with the provisions of the relevant regulations;

(5) Making recommendations to the Board on the appointment, reappointment and removal of external auditor, and approving the remuneration and terms of engagement of such auditor; and

(6) Ensuring that the internal audit function is adequately resourced through outsourcing the appointment to a reputable accounting fi rm where appropriate. The role of the Audit Committee is to monitor and evaluate the effectiveness of the Manager’s internal controls. The Audit Committee also reviews the quality and veracity of information prepared for inclusion in fi nancial reports. The Audit Committee is responsible for the nomination of external auditors and internal auditors, and reviewing the adequacy of existing audits in respect of cost, scope and performance. The Audit Committee meets with the internal and external auditors without the presence of the management, at least once a year.

The Audit Committee is authorised to investigate any matters within its terms of reference. It is entitled to unfettered access to and cooperation from management and may invite any director or executive offi cer of the Manager to attend its meetings. The Audit Committee has unfettered access to reasonable resources to enable it to discharge its functions. The Audit Committee has also conducted a review of all non-audit services provided by the external auditors and is satisfi ed that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors.

Upon the Audit Committee’s recommendation, the Board has instituted a “whistle-blowing” policy. The Audit Committee is tasked with the review of arrangements by which members of staff may, in confi dence, raise concerns about potential or actual improprieties in matters of fi nancial reporting or otherwise, so as to facilitate independent investigations of such matters and ensure that appropriate remedial and follow-up action is taken.

The Audit Committee meets before the Board is convened, generally in every calendar quarter.

Internal AuditThe Manager has put in place a system of internal controls, compliance procedures and processes to safeguard MMP REIT’s assets, Unitholders’ interests, manage risks and ensure compliance and the highest standard of corporate governance. The Audit Committee has appointed BDO Raffl es Consultants Pte Ltd, a member fi rm of BDO International, to perform the internal audit functions. The internal auditor is mandated to provide risk assessment services and compliance audits in order to ensure internal controls are aligned to business objectives and related risks, and are effectively performed. Management is responsible for addressing issues identifi ed by the internal auditor, and the internal auditor will report to the Audit Committee when the issues have been appropriately resolved or redressed. The internal auditor will also audit and report on the appropriateness and effectiveness of processes for the management of Related Party Transactions at least twice a year. In addition, the Trustee will also have a right to review the internal audit reports so to ascertain that the Property Funds Guidelines have been complied with. The internal auditor will report directly to the Audit Committee on audit matters and to the Chief Executive Offi cer of the Manager on administrative or operational matters.

28

Attendance at Board and Audit Committee MeetingsThe Manager believes that contributions from each director go beyond his/her attendance at Board and committee meetings. A director of the Manager would have been appointed on the principles outlined earlier in this statement, and on his/her ability to contribute to the proper guidance of the Manager in its management of MMP REIT.

Dealing with Related Party Transactions

Review Procedures for Related Party TransactionsThe Manager has established internal control procedures to ensure that transactions involving the Trustee, as trustee for MMP REIT, and any related party of the Manager (“Related Party Transactions’’) are undertaken on normal commercial terms, which are generally no more favourable than those extended to unrelated third parties. As a general rule, the Manager would have to demonstrate to the Audit Committee that such transactions satisfy the foregoing criteria, which may entail obtaining (where practicable) quotations from parties unrelated to the Manager, or obtaining valuations from independent professional valuers (in accordance with the Property Funds Guidelines). In addition, the following procedures are followed:

(1) Transactions (either individually or as part of a series or if aggregated with other transactions involving the same interested party during the same fi nancial year) equal to or exceeding S$100,000 in value but below 3.0% of MMP REIT’s net tangible assets will be subject to review by the Audit Committee at regular intervals;

(2) Transactions (either individually or as part of a series or if aggregated with other transactions involving the same interested party during the same fi nancial year) equal to or exceeding 3.0% but below 5.0% of MMP REIT’s net tangible assets will be subject to the review and prior approval of the Audit Committee. Such approval shall only be given if the transactions are on normal commercial terms and consistent with similar types of transactions made by the Trustee, as trustee for MMP REIT, with third parties which are unrelated to the Manager; and

(3) Transactions (either individually or as part of a series or if aggregated with other transactions involving the same interested party during the same fi nancial year) equal to or exceeding 5.0% of MMP REIT’s net tangible assets will be reviewed and approved by the Audit Committee which may, as it deems fi t, request advice on the transaction from


BOARDAUDIT COMMITTEE

No. of meetings held in 2007: 8

No. of meetings held in 2007: 4

Attended Attended

Mr Stephen Girdis 8 n.a.

Mr Franklin Heng 8 n.a.

Mr James Hodgkinson^ 5 n.a.

Mr Wolfgang Wente^ 6 n.a.

Dr Hong Hai 8 4

Mr Timothy Chia* 5 3

Mr Michael Hwang 6 4

Mr Keith Tay Ah Kee* 2 1

^ Whenever the director may have been absent from a meeting, his views on matters arising have been canvassed beforehand and/or his alternate director has attended in his place.

* Mr Timothy Chia resigned from the Board on 30 September 2007 and Mr Keith Tay Ah Kee was appointed to the Board with effect from 1 October 2007.


ANNUAL REPORT 2007

independent sources or advisers, including obtaining valuations from professional valuers. Further, under the listing manual of the SGX-ST and the Property Funds Guidelines, such transactions would have to be approved by Unitholders at a meeting of Unitholders. Where matters concerning MMP REIT relate to transactions entered into or to be entered into by the Trustee for and on behalf of MMP REIT with a related party of the Manager, the Trustee is required to ensure that such transactions are conducted on normal commercial terms and are not prejudicial to the interests of MMP REIT or Unitholders and are in accordance with all applicable requirements of the Property Funds Guidelines and/or the listing manual of the SGX-ST relating to the transaction in question. Further, the Trustee, as trustee for MMP REIT, has the ultimate discretion under the Trust Deed to decide whether or not to enter into a transaction involving a related party of the Manager. If the Trustee is to sign any contract with a related party of the Trustee or the Manager, the Trustee will review the contract to ensure that it complies with the requirements relating to interested party transactions in the Property Funds Guidelines (as may be amended from time to time) and the provisions of the listing manual of the SGX-ST relating to interested person transactions (as may be amended from time to time) as well as such other guidelines as may from time to time be prescribed by the MAS and the SGX-ST to apply to real estate investment trusts.

Internal Control ProceduresThe Manager’s internal control procedures are intended to ensure that Related Party Transactions are conducted at arm’s length and on normal commercial terms and are not prejudicial to Unitholders. The Manager maintains a register to record all Related Party Transactions (and the basis, including, where practicable, the quotations obtained to support such basis, on which they are entered into) which are entered into by MMP REIT. The Manager has incorporated into its internal audit plan a review of all Related Party Transactions entered into by MMP REIT. The Audit Committee reviews the internal audit reports to ascertain that the guidelines

and procedures established to monitor Related Party Transactions have been complied with. The Audit Committee periodically reviews all Related Party Transactions to ensure compliance with the internal control procedures and with the relevant provisions of the listing manual of the SGX-ST and the Property Funds Guidelines. The review includes the examination of the nature of the transaction and its supporting documents or such other data deemed necessary by the Audit Committee. If a member of the Audit Committee or any director has an interest in a transaction, he is to abstain from participating in the review and approval process in relation to that transaction. The Manager discloses in MMP REIT’s annual report the aggregate value of Related Party Transactions entered into during the relevant fi nancial year.

In relation to the Manager’s internal controls, nothing has come to the attention of the Board to suggest that such internal controls are not adequate.

Dealing with Confl icts of Interest

The Manager has instituted the following procedures to deal with potential confl icts of interest issues:

(1) The Manager will not manage any other real estate investment trust which invests in the same type of properties as MMP REIT;

(2) All executive offi cers will be employed by the Manager;

(3) All resolutions in writing of the directors of the Manager in relation to matters concerning MMP REIT must be approved by a majority of the directors, including at least one independent director;

(4) At least one-third of the Board shall be independent;

(5) All Related Party Transactions must be reviewed by the Audit Committee and approved by a majority of the Audit Committee in accordance with the materiality thresholds and procedures outlined

30

above. If a member of the Audit Committee has an interest in a transaction, he or she will abstain from voting; and

(6) In respect of matters in which a director of the Manager or his Associates (as defi ned in the listing manual of the SGX-ST) have an interest, direct or indirect, such interested director will abstain from voting. In such matters, the quorum must comprise a majority of the directors of the Manager and must exclude such interested directors.

It is also provided in the Trust Deed that if the Manager is required to decide whether or not to take any action against any person in relation to any breach of any agreement entered into by the Trustee for and on behalf of MMP REIT with a related party of the Manager, the Manager shall be obliged to consult with a reputable law fi rm (acceptable to the Trustee) which shall provide legal advice on the matter. If the said law fi rm is of the opinion that the Trustee, on behalf of MMP REIT, has a prima facie case against the party allegedly in breach under such agreement, the Manager shall be obliged to take appropriate action in relation to such agreement. The directors of the Manager (including its independent directors) have a duty to ensure that the Manager so complies. Notwithstanding the foregoing, the Manager shall inform the Trustee as soon as it becomes aware of any breach of any agreement entered into by the Trustee for and on behalf of MMP REIT with a related party of the Manager and the Trustee may take such action as it deems necessary to protect the rights of Unitholders and/or which is in the interests of Unitholders. Any decision by the Manager not to take action against a related party of the Manager shall not constitute a waiver of the Trustee’s right to take such action as it deems fi t against such related party.

Risk Assessment and Management

Effective risk management is a fundamental part of MMP REIT’s business strategy. Recognising and managing risk is central to the business and to protecting Unitholders’ interests and value. The Manager has in place an enterprise risk management framework and policies that provide a structured

approach to identifying and managing the risks that could arise in the course of managing MMP REIT. The framework and policies are monitored and reviewed by the Board at least once a year, and major developments and signifi cant revisions to the framework or policies will be submitted to the Board for approval. Risks at both the Manager / Property Manager and MMP REIT levels are managed through this risk management framework, which include:

(1) Regulatory and reporting risks;

(2) Financial risks (such as liquidity, interest rate, currency, investment, credit);

(3) Legal risks (such as contract enforceability, covenants, litigation);

(4) Operation risks (such as people, processes, infrastructure, technology, systems);

(5) Environmental, health and safety risks;

(6) Project risks;

(7) Asset performance risks;

(8) Reputation risks (such as investor relations, media management); and

(9) Strategic risks.

The Audit Committee has also been tasked by the Board to include risk management within its oversight role. This entails (but is not limited to) the review, assessment and analysis of risks which could arise with respect to the business operations of the Manager, MMP REIT and the assets of MMP REIT. Guidelines and parameters within which such risks are recognised, identifi ed, managed and mitigated are set by the Board. The primary objective is to protect the interests of Unitholders whilst effectively enhancing the value of their interests. Application of the policies and protocol under the framework in respect of MMP REIT assets and operations is further described in the section “Risk Management” on Page 51).



ANNUAL REPORT 2007

Dealing in MMP REIT Units

The Trust Deed requires each director of the Manager to give notice to the Manager of his acquisition of units or of changes in the number of units which he holds or in which he has an interest, within two business days after such acquisition or the occurrence of the event giving rise to changes in the number of units which he holds or in which he has an interest. All dealings in units by directors of the Manager will be announced via SGXNET, with the announcement to be posted on the internet at the SGX-ST website http://www.sgx.com. The directors and employees of the Manager are encouraged, as a matter of internal policy, to hold units but are prohibited from dealing in the units:

(1) In the period commencing one month before the public announcement of MMP REIT’s annual and semi-annual results and (where applicable) property valuations and two weeks before the public announcement of MMP REIT’s quarterly results, and ending on the date of announcement of the relevant results or, as the case may be, property valuations; and

(2) At any time while in possession of price sensitive information. The directors and employees are advised not to deal in the units on short-term considerations. In addition, the Manager has given an undertaking to the MAS that it will announce to the SGX-ST the particulars of its holdings in the units and any changes thereto within two business days after the date on which it acquires or disposes of any units, as the case may be. The Manager has also undertaken that it will not deal in the units in the period commencing one month before the public announcement of MMP REIT’s annual and semi-annual results and (where applicable) property valuations and two weeks before the public announcement of MMP REIT’s quarterly results, and ending on the date of announcement of the relevant results or, as the case may be, property valuations.

Communication with Unitholders

The SGX-ST listing rules require that a listed entity discloses to the market matters that could or might be expected to have a material effect on the price of the entity’s securities. The Manager upholds a strong culture of continuous disclosure and transparent communication with Unitholders and the investing community. The Manager has developed a communications policy, the cornerstone of which is delivery of timely and full disclosure of all material information relating to MMP REIT by way of public releases or announcements to the SGX-ST via SGXNET at fi rst instance and then including the announcements on MMP REIT’s website at www.mmpreit.com. MMP REIT’s website contains recent announcements, press releases, presentations, past and current reports to Unitholders. The website also provides visitors with the option of signing up for a free email alert service on public materials released by the Manager in relation to MMP REIT. In the spirit of upholding active and open communication, the Manager conducts briefi ngs for analysts and media representatives, which generally coincide with the release of MMP REIT’s results. During these briefi ngs, the Manager will review MMP REIT’s most recent performance as well as discuss the business outlook for MMP REIT. In line with the Manager’s objective of transparent communication, briefi ng materials are released to the SGX-ST via SGXNET and also made available on MMP REIT’s website. The Manager also participates in real estate focused conferences locally and in the region as part of its efforts to cultivate and maintain regular contact with investors and analysts and to build interest in and strengthen the branding of MMP REIT.

32

PROPERTY PROFILE

THEWISMA ATRIA PROPERTY (WA)

THENGEE ANN CITY PROPERTY (NAC)

RENHE SPRINGZONGBEI1 EBISU FORT2

ROPPONGI PRIMO2

Address 435 Orchard Road Singapore 238877

391/391B Orchard Road Singapore 238874

No. 19 Renminnan Road, Chengdu, China

24-1 Ebisu-Minami 1 Chome, Shibuya-ku, Tokyo, Japan

212-16 Roppongi, 7 Chome Minato-ku, Tokyo, Japan

Description 331 strata lots in Wisma Atria representing 74.23% of the total share value of the strata lots in Wisma Atria

4 strata lots in Ngee Ann City representing 27.23% of the total share value of the strata lots in Ngee Ann City

A four storey plus mezzanine level retail podium forming part of a mixed used commercial development

Seven-storey building for retail use

Eight-storey building for offi ce and retail use

NLA (sq ft) (as at 31 Dec 2007)

Retail: 128,718Offi ce: 98,913

Retail: 256,022Offi ce: 140,986

101,000 27,917 5,069

Number of Tenants (as at 31 Dec 2007)

134 39 90 1 7

Title Leasehold estate of 99 years expiring on 31 March 2061

Leasehold estate of 69 years, 4 months expiring on 31 March 2072

Leasehold estate of 40 years expiring on 27 December 2035

Freehold Freehold

Purchase Price(S$ million)

663.0 640.0 70.63 71.34 13.84

Market Valuation (S$ million) (as at 31 Dec 2007)

901.5 1,030.9 76.86 79.65 16.95

Committed Occupancy Rate(as at 31 Dec 2007)

Retail: 100.0%Offi ce: 99.0%

Retail: 100.0% Offi ce: 98.5%

100% 100% 100%

Major Tenants Topshop/Topman, Forever 21, GAP, Food Republic

Toshin, National Library, EDS International

Prada, Dunhill, Bally, Hugo Boss, Zegna

F.L.E.G. InternationalCo Ltd

FAPS Co Ltd, Fine Art Investment Co Ltd

Gross Revenue(S$ million)

51.4 42.9 4.7 0.9 0.5

Net Property Income (S$ million)

36.3 33.9 3.2 0.8 0.4


ANNUAL REPORT 2007

ROPPONGI TERZO2 HOLON L2

HARAJYUKU SECONDO2 DAIKANYAMA2 NAKAMEGURO2

Address 101-1 Roppongi 7 Chome, Minato-ku, Tokyo, Japan

46-7 Kita Aoyama, 3 ChomeMinato-ku, Tokyo, Japan

19-1 Jingumae 1 Chome, Shibuya-ku, Tokyo, Japan

31-11, Ebisu-Nishi 1 Chome, Shibuya-ku, Tokyo, Japan

152-7 Aobadai 1-Chome, Meguro-ku, Tokyo, Japan

Description Five-storey building for F&B and entertainment use

Three-storey building for retail use

Three-storey building for retail use

Three-storey building for retail and food and beverage use

Four-storey building for retail use

NLA (sq ft) (as at 31 Dec 2007)

16,005 4,865 2,253 8,087 3,528

Number of Tenants (as at 31 Dec 2007)

1 2 1 5 1

Title Freehold Freehold Freehold Freehold Freehold

Purchase Price(S$ million)

38.94 20.44 6.14 22.84 7.14

Market Valuation (S$ million)(as at 31 Dec 2007)

42.15 21.85 6.35 25.35 7.45

Committed Occupancy Rate(as at 31 Dec 2007)

100% 100% 100% 100% 100%

Major Tenants F.L.E.G. International Co Ltd

Dashing Diva International Co Ltd

F.L.E.G. International Co Ltd

Zwisel Japan Co LtdGood Design Company Co Ltd

F.L.E.G. International Co Ltd

Gross Revenue(S$ million)

1.0 0.6 0.2 0.6 0.2

Net Property Income (S$ million)

0.9 0.5 0.1 0.5 0.2

Notes:

1. Renhe Spring Zongbei was acquired on 28 August 2007.2. Roppongi Primo, Roppongi Terzo, Holon L, Harajyuku Secondo, Daikanyama and Nakameguro

were acquired on 30 May 2007 while the seventh, Ebisu Fort, was acquired on 26 September 2007.3. Based on exchange rate of RMB4.96 : S$1 at acquisition 4. Based on exchange rate of JPY79.97 : S$1 at acquisition5. Based on the exchange rate of JPY77.89 : S$1 at 31 Dec 20076. Based on the exchange rate of RMB5.08 : S$1 at 31 Dec 2007

Left to right: Renhe Spring Zongbei, Chengdu; Holon L, Tokyo

34

PROPERTY PORTFOLIO SUMMARY

MMP REIT’s portfolio comprises 10 properties (the “Portfolio”) – two landmark properties located in the heart of Orchard Road, Singapore, a prime property in the Wuhou district of Chengdu, China, and seven well-located properties in central Tokyo, Japan

Diversifi ed Retail and Offi ce Portfolio

Based on FY2007 total gross revenue, the mixed portfolio is diversifi ed across Singapore (92%), China (4%) and Japan (4%). 84% and 16% of the Portfolio’s revenue is derived from retail and offi ce assets respectively.

As at 31 December 2007, the Portfolio had 281 tenants. The top 10 tenants accounted for 44% of the Portfolio gross rent for the month of December 2007. Except for Toshin which accounted for 25.3% of the Portfolio gross rent, no other tenant accounted for more than 4.8% of the Portfolio gross rent for the month of December 2007.

16%Office

84%Retail

50%WA

4%Renhe Spring Zongbei

42%NAC

4%Japanese Properties

92%Singapore

4%China

4%Japan

Gross Revenue by Retail 2007

Gross Revenue by Property 2007

Gross Revenue by Country 2007


ANNUAL REPORT 2007

TENANT NAME PROPERTYTRADESECTOR

LEASED AREA (SQFT)

% OF PORTFOLIO GROSS RENT

% OF PORTFOLIONLA

Toshin Development Co Ltd NAC Master Tenant 225,969 25.3% 28.4%

F.L.E.G. InternationalCo Ltd

Ebisu Fort Harajyuku Secondo Nakameguro Roppongi Terzo

Master Tenant 49,703 4.8% 6.3%

Wing Tai Retail Pte Ltd WA Fashion 19,998 4.3% 2.5%

MWA Pte Ltd WA Food & Beverage 23,121 1.8% 2.9%

RSH (Singapore) Pte Ltd WA Fashion 4,062 1.5% 0.5%

FJ Benjamin Lifestyle Pte Ltd WA Fashion 7,847 1.3% 1.0%

Aspial Singapore Pte Ltd WA Jewellery & Watches

3,315 1.3 % 0.4%

Fashion Retail Pte Ltd NAC Fashion 3,832 1.2 % 0.5%

National Library Board NAC Library 16,781 1.2% 2.1%

G2000 Apparel (S) Pte Ltd

WA Fashion 2,799 1.1% 0.4%

Strong Lease Profi le

The Portfolio has a range of short and long-term leases that provide upside in the short term and income certainty and stability in the long term. In Singapore, earnings are derived from both retail and offi ce leases which are generally contracted for a period of three years, in line with the prevailing market rental practice. The exception is the Toshin master lease in the Ngee Ann City Property, which expires in June 2013 with an option to renew for a further term of 12 years. The Japanese properties have a mix of master leases and standard leases expiring within two to eight years. Renhe Spring Zongbei in China is operated as a department store with mostly short term concessions.

The weighted average lease term expiry (by Net Lettable Area or NLA) of the Portfolio is 3.3 years for the period from 31 December 2007.

Note: The Portfolio lease expiry profi le does not include the Chengdu property as it operates as a department store with short-term concessionaire leases running 3-6 months

Portfolio Lease Expiry (as at 31 Dec 07)

0

10

20

30

40

50

24.1% 23.0%

13.9%15.7%

22.5%

16.1%

38.8%

45.4%

0.4% 0.0%

FY2008 FY2009 FY2010 Beyond 2010 Vacant

%

NLA Gross Rent

36

100,319

67,59868,881

S$5.10

S$8.20S$7.40

FY2008 FY2009 FY2010

Office Expiry (by NLA)Expiring Office Leases Average Monthly Gross Rent (S$ psf pm)

Highest achieved rent is S$13.50 psf pm

(as at 31 Dec 2007)

Sq ft S$ psf pm

2

4

6

8

10

12

14

16

18

20

20,000

40,000

60,000

80,000

100,000

120,000

0

0

12,8208,506

12,529

45,252

S$5.20 S$5.30S$5.20S$4.90

S$7.70S$7.70

S$12.10S$12.10

S$9.20S$9.20

S$$7.90S$$7.90

1Q 2Q 3Q 4Q

Office Expiry (by NLA)Expiring Office Leases Average Monthly Gross Rent (S$ psf pm)Average Gross Rents for Renewals & New Office Leases (S$ psf pm)

Sq ft S$ psf pm

10,000

20,000

30,000

40,000

50,000

2

4

6

8

10

12

14

1,303

2,209

1,7181,498

Sep 05 Dec 06 Jun 07 Dec 07

WA NAC Japan Properties Chengdu

S$ million

S$906million uplift since IPO

0

500

1,000

1,500

2,000

2,500

Robust Offi ce Rentals Continue

In 2007, the Wisma Atria Property and the Ngee Ann City Property in Singapore capitalised on the strong upswing in the offi ce rental market achieving an average increase of 69% over passing rents. The properties will continue to ride on the strength of the offi ce sector in 2008 as the average passing rents of offi ce leases expiring in 2008 are below current market rents.

Valuation Growth

With the revaluation of the Singapore properties and new acquisitions, the value of properties in the portfolio has increased S$906 million since MMP REIT’s initial public offering (IPO) in September 2005. Driven primarily by higher offi ce rents, the value of the Wisma Atria Property and the Ngee Ann City Property has on a combined basis increased by S$629 million since the IPO and by S$434 million since December 2006.

Portfolio Offi ce Lease Expiry Profi le

2007 Portfolio Offi ce Lease Expiry Profi le

Growth in Portfolio Value since IPO

PROPERTY PORTFOLIO SUMMARY


ANNUAL REPORT 2007

Unmatched Trophy Assets

The Singapore properties comprise two landmark buildings, the Wisma Atria Property and the Ngee Ann City Property. The prime location, long linear retail frontage and seamless connectivity of Wisma Atria and Ngee Ann City give them immediate visibility and prominence along Orchard Road, Singapore’s premier shopping and tourist precinct. In addition, the ease of access to public transport, being next to the Orchard MRT station (one of the busiest stations in the MRT system) and connection to a network of major roads ensure a high fl ow of visitors to the properties. Although the properties are located alongside each other, they complement each other and provide diversity through the different markets they target.

Singapore Properties Poised to Take Advantage of a Developing Orchard Streetscape

Orchard Road is set to become more vibrant with the addition of new malls and the Singapore Tourism Board’s S$40 million upgrading programme

for Orchard Road’s pedestrian walkways, which is expected to be completed by April 2009. The Singapore properties are well poised to benefi t from these developments.

Around 1.8 million square feet of new retail gross fl oor area is expected to come on stream in Orchard Road between 2008 and 2009. Most of the new spaces will come from new malls including ION Orchard (663,000 sq ft) and Orchard Central (250,000 sq ft), which are due to be completed by the end of 2008. They will be the fi rst new malls to open along Orchard Road in a decade. The new malls would make Orchard Road an even stronger shopping destination, drawing more shoppers.

Wisma Atria is expected to reap the benefi ts of being situated between two of the largest shopping attractions on Orchard Road – the upcoming ION Orchard and the perennial favourite, Ngee Ann City. When completed, ION Orchard, Wisma Atria and Ngee Ann City will collectively present shoppers with the largest and longest block of malls, all seamlessly connected via comfortable, air-conditioned pedestrian linkways.

SINGAPORE PROPERTIES

Left to right: Ngee Ann City, Wisma Atria

38

THE WISMA ATRIA PROPERTY

Strategically-located Landmark Property

Wisma Atria, with its all-glass blue facade, is an unmistakable landmark along Orchard Road. It comprises a retail podium block with four levels and one basement, three levels of carpark space and an offi ce tower with 13 levels of offi ce space. Located next to the Orchard MRT station, Wisma Atria enjoys high pedestrian fl ow from the Orchard Road street level and underground pedestrian linkway connecting Wisma Atria and Ngee Ann City. Apart from locals, the shopping centre also enjoys a strong catchment of tourists and business travelers staying in the many hotels located on and within walking distance of Orchard Road. In 2007, the centre enjoyed a total shopper footfall of 17.1 million.

MMP REIT’s stake in Wisma Atria comprises 331 strata lots representing 74.23% of the total share value of the strata lots in Wisma Atria. These strata lots represent all the retail areas (excluding Isetan Department Store) and the offi ce tower.

Strong Market Position

Wisma Atria enjoys a strong positioning as a fashion mall with the best of high-street fashion and unique fashion brands under one roof. The attractive fashionmix and wide product offering deliver a compelling selection of fashion labels for the fashion-conscious female shoppers. The centre’s key fashion retailers include Topshop/Topman, Warehouse, Bebe, BCBG, Max Studio, Karen Millen, Gap, FCUK, Miss Selfridge, Dorothy Perkins, Bread & Butter, Nine West, Forever21, Charles & Keith and G2000. The fashion offering is well complemented by casual lifestyle dining options such as IndoChine, Din Tai Fung, Starbucks, Ichiban-Boshi and the all-time favourite, Food Republic.

Diversifi ed Tenant Mix

As at 31 December 2007, the Wisma Atria Property has a well-diversifi ed base of 93 retail tenants and 41 offi ce tenants. These tenants cover a wide variety of business sectors, providing earnings diversifi cation. Fashion and F&B are the two key contributors to the Wisma Atria Property’s retail gross rent.

A fashionista’s mall offering the best of international high-street brands with a sprinkling of unique fashion labels

Retail and Offi ce Mix (by Gross Revenue)

WA Retail Trade Mix (by NLA)

52%Fashion

26%F&B

7% Jewellery & Watches

8% Other Retail

7% Shoes & Accessories

86%Retail

14% Office


ANNUAL REPORT 2007

Strong Array of New Fashion Concepts

To reinforce the fashion positioning of Wisma Atria, several new brands and concept stores were introduced to the centre in 2007. These included a number of “fi rst-in-Singapore” stores such as popular Australian label Cotton On and Cotton On Body and multi-label, Brazilian fashionwear, Beijafl or. Other new fashion boutiques launched in 2007 included Miss Selfridge, Dorothy Perkins, Bread & Butter, TOUGH Jeansmith, SINO London, Patterns, Eclecticism, Lee Cooperand Schu.

To further elevate shoppers’ shopping & dining experience, two of Singapore’s best homegrown brands – Lee Hwa Jewellery and Bakerzin collaborated to develop a fi rst-in-Singapore and two-in-one concept - Lee Hwa Diamond Gallery and deluxe café by Bakerzin.

Wisma Atria will continue to renew and refi ne its retail offerings to stay relevant to its core shoppers and deliver sustainable and long-term rental growth.

WA Occupancy Rates (%)

Asset Enhancements

As part of the ongoing asset enhancement programme, a number of reconfi gurations were carried out during 2007. On Level 2, the space occupied by fashion stores Karen Millen, Bebe and Warehouse was reconfi gured to improve circulation and visibility of the shop fronts. The reconfi guration works were completed in June 2007 to coincide with the Great Singapore Sale shopping period. The size of the Orchard Road fronting units was also increased as a result and provisions were made for future street level connectivity with ION Orchard.

Taking advantage of the temporary basement MRT linkway closure at the end of 2006, tenants in the basement level were remixed to enhance the centre’s casual lifestyle positioning. New concept stores such as G2000 Men and Women and Giordano Concepts were introduced along with a new Charles & Keith fl agship store.

The F&B outlet on Level 1 was replaced by a new retail concept Lee Hwa Diamond Gallery and deluxe café by Bakerzin. The new retail concept combines the best of jewellery and a stylish café, further strengthening the retail cluster on Level 1 and delivering higher rentals.

Office Retail

96.7%

99% 100% 100%

80

82

84

86

88

90

92

94

96

98

100

As at 31 Dec 2006As at 31 Dec 2007

%

40

Centre Traffi c and Sales

The Orchard MRT basement linkway remained closed in 2007 to facilitate the construction of the adjoining ION Orchard development. Since the new escalators next to the GAP store opened in December 2006, the centre has managed to recover more than 70% of total shopper traffi c for 2007. Focused marketing campaigns were complemented by a series of targeted promotional activities to drive shopper traffi c and spend to the centre. Overall, shopper traffi c to the mall was 17.1 million in 2007 and despite the Orchard MRT basement linkway closure, overall sales for the centre increased by 5% compared to 2006 with sales peaking in June 2007 during the Great Singapore Sale.

Increase Variable Rental Component

It is MMP REIT’s intention to align the rental structure of all retail leases in the Wisma Atria Property to the prevailing market practice of a base rent plus a percentage of the retailers’ gross sales turnover. This rental structure will enable the centre to derive additional rental contributions from retailers in tandem with their sales performance. To ensure steady rental growth over time, the new rent structure would also include step-ups in the base rents over the lease tenure. In 2007, turnover rent contributed to about 3% of total gross rent derived from the Wisma Atria Property.


Jan Feb Mar AprMay Jun Jul

Aug Sep OctNov

10

11

12

13

14

15

16

17

18

19

Mill

ions

2007 Sales Turnover2006 Sales Turnover

Basement linkwayto MRT station closed

on 30 Sep 06

Jan Feb Mar AprMay Jun Jul

Aug Sep OctNov Dec

0

500

1,000

1,500

2,000

2,500

Year 2006 (pre-closure)Year 2007 (post-closure)Year 2007

Basement linkwayto MRT station closed

on 30 Sep 06

Vis

itors

(’00

0)

Wisma Atria Traffi c Count at Primary Entrances

Wisma Atria Property Retail Sales Turnover

Lease Structure (by % of Retail NLA)

Higher of Base Rent or % GTO

66%

42%

33%

56%

18%

48%

Base Rent plus% GTO

Step-up Rent

Dec 2005

0

10

20

30

40

50

60

70

Dec 2007

%


ANNUAL REPORT 2007

Advertising and Promotion

Wisma Atria undertook an integrated marketing programme throughout the year to reinforce the mall’s positioning as a fashionista’s mall and at the same time encourage frequent visitations and increase spend.

W = What Women Want @ WismaTo reinforce the Wisma Atria’s positioning as a fashion mall, a series of advertisements and events focusing on the letter “W” was rolled out throughout the year targeting the fashionable female shopper. The “W” was carried through in advertising visuals and specially created “What Women Want” events where shoppers received pampering and shopping treats. These include an ice-themed cocktail event, a chocolate indulgence event and a tie up with local fashion tabloid URBAN by Straits Times to search for women with the ‘W’ factor.

Late Night ShoppingWisma Atria continued to be one of the key malls on Orchard Road to support Singapore Tourism Board’s (STB) initiative of regular late night shopping Fridays since it started in July 2006. In September 2007, late night shopping Fridays was changed to every Saturday from 9pm to 11pm instead. Wisma Atria continued to support this initiative with close to 50% participation from tenants. Outdoor entertainment events were also organised on late night Saturdays to create night buzz on Orchard Road. During the Christmas season, late night shopping was held over three nights and the event contributed to two million shoppers visiting the mall in December 2007.

42

Special Promotion for Basement ShopsSince December 2006, shoppers could access the basement directly from street level via the escalators installed. This has helped maintain total shopper traffi c to the mall at 70% of pre-tunnel closure. Tactical promotions were organised to further drive traffi c and spend to the basement and this included an instant voucher rebate program from March to May 2007.

Tourist MarketingThe Wisma Atria Property continued to collaborate with Singapore Airlines (SIA) on the SIA Boarding Pass Privileges programme. The programme rewarded all overseas visitors fl ying on SIA fl ights with a three-day tourist card packed with discounts and shopping privileges at the Wisma Atria Property.

Awards & Accolades

Best Maintained MallIn 2007, Wisma Atria received the award for “Best Maintained Mall” by the Singapore Retailer’s Association (SRA). The SRA Shopping Centre Scorecard is an annual national industry project designed to demonstrate the retail industry’s recognition of leading shopping centres and their management. Retail tenants of all malls are asked to score their malls in terms of Advertising and Promotions, Maintenance as well as Tenant Relations. A total of 60 malls were ranked against one another.

Finalist for Tourism AwardsWisma Atria is one of the fi nalists for the Tourism Awards 2008 in the Best Shopping Experience category. The annual Singapore Tourism Awards honours the stars of Singapore’s tourism industry. Organised by the STB, the event recognises individuals and organisations that provide services and products of excellence and encourages them to keep outdoing themselves in offering a truly ‘Uniquely Singapore’ experience to visitors.



ANNUAL REPORT 2007

The shopping mall of choice amongst retailers and shoppers with a depth of offerings across the spectrum of trade sectors and price range

Distinctive Landmark Property

Ngee Ann City is a landmark property on Orchard Road, given its distinctive architecture and wide Orchard Road frontage. Its retail outlets and restaurants are a mecca to tourists and business travelers from the many hotels located in the Orchard Road vicinity. Ample parking lots and easy access to a network of major roads make it popular among more affl uent shoppers who drive. The pedestrian fl ows at Ngee Ann City are also sustained by the underground pedestrian walkway linking Basement 1 of Ngee Ann City to Wisma Atria and the underpass from the opposite side of Orchard Road to Ngee Ann City.

Strong Retail Positioning

Ngee Ann City is the shopping centre of choice amongst retailers and shoppers. Its depth of offerings across all retail trade sectors appeals to a wide demography and differentiates it from other malls along Orchard Road. The mall appeals to the affl uent shopper with its wide complement of luxury retailers such as Louis Vuitton, Chanel, Cartier, Tiffany and Burberry; the young and upwardly mobile with trendy retail stores such as Guess, Zara, Shanghai Tang and Max Mara; and the family crowd with tenants such as Takashimaya Department Store and Books Kinokuniya.

Events such as the Singapore Fashion Festival, Singapore Lion Dance Championship, product launches and festive events held in the open concourse outside Ngee Ann City draw strong crowds to the mall. The strong brand recognition of the “Ngee Ann City” name is a refl ection of the mall’s appeal to both shoppers and retailers.

Diversifi ed Tenant Mix

MMP REIT’s stake in Ngee Ann City comprises four strata lots representing 27.23% of the total share value of the strata lots in Ngee Ann City. The Ngee Ann City Property has a well diversifi ed portfolio of tenants. As at 31 December 2007, the property had nine retail tenants and 30 offi ce tenants.

88%Toshin

4% Beauty & Wellness7% Library

1% Other Trade

79%Retail

21%Office

THE NGEE ANN CITY PROPERTY

Retail Tenant Mix (by NLA)

Retail And Offi ce Mix (by Gross Revenue)

44

Master Tenant Toshin

Toshin Development Co., Ltd (Toshin) accounted for 67% of gross revenue and 57% of the Net Lettable Area (NLA) in the Ngee Ann City Property as at December 2007. Toshin is a wholly-owned subsidiary of Takashimaya Company Limited, which is listed on the Tokyo Stock Exchange. The company is a strong and credible retail operator with over 40 years of experience in the development, operation and management of shopping malls. As a master tenant, Toshin leases retail space from Basement 2 to Level 4 of the Ngee Ann City Property and sublets the space to a host of retailers in the various trade sectors. Toshin also manages all the other specialty areas in Ngee Ann City, ensuring consistency of branding and positioning of the entire mall. MMP REIT’s long-term master lease with Toshin expires in June 2013 with an option to renew for 12 years. The master lease provides for a rent review every three years with the next review coming up in June 2008. The lease is benefi cial to MMP REIT as it provides long-term income stability with the potential for rental upside.

In 2007, Toshin renewed the leases of many of its luxury retail tenants such as Louis Vuitton and Chanel, strengthening the high-end positioning of the mall for more years to come. Flagship stores such as Cartier and Celine also revamped their stores to their latest international concepts. In a move that will bring even more cheer to fans of high-end fashion, Toshin also revamped and repositioned the Level 2 of Ngee Ann City to feature more top international brands such as Van Cleef & Arpels, La Perla, Marc by Marc Jacobs, Stella McCartney and Chloé.

Going forward, Louis Vuitton and Chanel plan to double the size of their fl agship stores in Ngee Ann City, creating brand new two-storey concept duplexes of close to 10,500 square feet and 7,000 square feet respectively. Fashion brand Hugo Boss will consolidate its 2,600 square feet men’s boutique on Level 1 and its 4,600 square feet women’s and men’s leisure wear store on Level 3 into a 7,000 square feet fl agship outlet on Level 1. Jeweller Tiffany & Co will also embark on renovation plans in the middle of 2008 for its 6,000 square feet duplex in response to high customer traffi c and sales revenue.

Level 5

MMP REIT actively manages the retail space on Level 5, covering an area of approximately 30,000 square feet. To complement the shopping experience on lower fl oors, tenants on Level 5 offer a variety of services covering beauty & wellness and education. The lease with National Library Board for the library@Orchard will expire in February 2008. In its place, the 16,781 square feet of space will be reconfi gured into smaller units for lease to new retailers in the beauty & wellness trade and other service trades.

Advertising and Promotion

Ngee Ann City is the venue of choice for events and activities, given its prime location in the heart of Singapore’s major shopping belt. The large event hall, Takashimaya Square, plays host to regular bazaars and fairs that draw throngs of shoppers. With a capacity for over 3,000 people, the large outdoor semi-circular Civic Plaza is an extremely popular venue for many prestigious events including concerts, fairs, product launches, roadshows, fashion showcases, carnivals and lifestyle launches. In 2007, these included the Singapore Fashion Festival, the Jewel Festival and the Subaru Challenge.

NAC Occupancy Rates (%)

Office Retail80

82

84

86

88

90

92

94

96

98

100

As at 31 Dec 2006

As at 31 Dec 2007

%

98.6% 98.5% 100% 100%

THE NGEE ANN CITY PROPERTY


ANNUAL REPORT 2007

THE RENHE SPRING ZONGBEI PROPERTY

MMP REIT acquired the Renhe Spring Zongbei Department Store (Renhe Spring Zongbei) in Chengdu, China on 28 August 2007 at a price of RMB 350 million (SGD 70.6 million1). Chengdu is the capital of Sichuan, one of the most populous provinces in China, and the fourth largest city in China. Chengdu’s year-on-year GDP for 2007 was 15.3%2, higher than Shanghai’s GDP growth rate of 13.3%3 in the same year. Chengdu has a population of 11.3 million and is an important economic centre in China serving as a transport and communications hub for southwest China.

Renhe Spring Zongbei is located in Chengdu’s consulate precinct, in a high-end commercial centre and high income area. It comprises the retail podium of a mixed-use development completed in 2003, which includes a Grade A offi ce tower. Renhe Spring Zongbei has gross fl oor area of about 101,000 square feet and comprises four levels of retail premises plus a mezzanine fl oor, and is served by basement and road level open carparking. The property is serviced by two main roads, Renminnan Road and Lingshiguan Road. A new metro line is being constructed in Chengdu, and the Ni Jia Qian station, with an expected completion date of 2010, will be located directly in front of the property.

Renhe Spring Zongbei is positioned as a mid-to-high end department store operating under the Renhe Spring brand name. Tenants include luxury brands such as Prada, Hugo Boss, Montblanc, Vertu, Givenchy, Dunhill, Bally, as well as popular international brands such as Miss Sixty and Ecco. The property enjoyed full occupancy in 2005, 2006 and 2007, with sales revenue hitting year-on-year growth of 22% in 2007.

CHINA PROPERTY

1 Based on exchange rate of RMB 4.96: S$1 at acquisition2 Chengdu Statistics Bureau 3 Shanghai Statistics Bureau

46

In 2007, MMP REIT acquired seven properties in Tokyo, Japan. Six of these properties, namely Roppongi Primo, Roppongi Terzo, Holon L, Harajyuku Secondo, Daikanyama and Nakameguro were acquired on 30 May 2007 at a purchase price of JPY 8.73 billion (S$109.1 million4). The seventh property, Ebisu Fort, was acquired on 26 September 2007 at a purchase price of JPY 5.7 billion (S$71.3 million4).

All seven properties are contemporarily designed commercial buildings located in the prime Tokyo areas of Aoyama, Roppongi, Harajyuku, Meguro and Ebisu and within fi ve minutes’ walk from the nearest subway station. Ebisu Fort is a new property that was completed in September 2007. All the other properties are relatively new, having been completed between August 2004 and September 2005. All seven properties are also fully occupied through a combination of standard leases and master leases.

JAPAN PROPERTIES

4 Based on exchange rate of JPY 77.89 : S$1 at acquisition

32%Long Term Master Leases

41%Medium Term Master Lease

27%Non-master Leases

Clockwise from left: Ebisu Fort,Roppongi Terzo, Daikanyama


ANNUAL REPORT 2007

Singapore Offi ce Property Market1

The offi ce market grew from strength to strength in 2007 amid rapid expansion by the fi nancial and banking sectors. Prime rents increased 19.0% quarter-on-quarter, averaging S$15.00 psf per month in 4Q 07. Current prime rents are almost four times higher than that in 2003. The annual increase in prime offi ce rents in 2007 was 92.4%, far exceeding the 50.0% growth rate set in 2006. The last time rental growth breached 70.0% was in the early-1980s (78.0% in 1981) when investments poured into the island-state.

About 9.7 million square feet of offi ce space is expected to be completed in the next fi ve years, representing an average 1.9 million square feet per annum. Occupancy is expected to remain above 90.0% for the next fi ve years, and demand for CBD offi ce space is likely to remain buoyant in 2008 given the limited supply coming on stream during the year.

Singapore Retail Property Market1

Retail sales in 2007 totalled S$23.83 billion, 7.1% higher than in 2006, boosted by robust economic growth and increased tourists arrivals. The Singapore economy grew 7.5% in 2007, marking its fourth straight year of strong growth. Singapore also posted an estimated S$13.8 billion in tourism receipts in 2007, an 11.3% increase over 2006, and setting a new record for tourism receipts. In 2007, Singapore welcomed 10.3 million visitors, registering a growth of 5.4% over 2006. This is the highest annual visitor arrivals recorded for the Singapore tourism sector.

In 2007, retail rents have increased as good quality prime space is limited. In addition, there is a signifi cant increase of new fashion brands coming into the market. Several notable foreign fashion brands made their debut in the local retail scene in 2007, including Cotton On, Beijafl or and Sino London at Wisma Atria and Van Cleef & Arpels and Stella McCartney at Ngee Ann City.

Underpinned by healthy demand, the CBRE index of islandwide prime retail rents rose 6.9% in 2007. The average Orchard Road prime rent increased 5.4% during the year to reach S$36.40 psf per month at end-December 2007. Keen competition for super prime Orchard Road retail space led rents to increase 10.5% year-on-year to an average of S$51.50 psf per month. In 4Q 07, the Singapore Tourism Board fi nalised its S$40-million Orchard Road Infrastructural Enhancement plan, characterised by enhanced road and pedestrian mall paving and lighting.

About 5.3 million of new retail space will come on stream in 2008 and 2009. As such, leasing momentum is likely to remain strong in the next two years, with keener competition for brands and a greater need for better retail concepts and tenant mix to differentiate the various malls. The completion of a couple of new malls along Orchard Road will generate new hotspots and enhance the attractiveness of the street as a shopping destination. Retailers are expected to continue to do well in 2008 with sustained economic growth, low unemployment rate and the upcoming Formula One™ race. CBRE expects prime rents in Orchard Road to rise by 4.0% to 7.0% in 2008.

Japan Property Market2

In 2007, corporate profi ts and business investment in Japan have been strong, unemployment has been low and the ratio of job offers to job seekers has been high, despite the Japanese economy being weighed down by a weak household sector. Against this backdrop, commercial land prices in central Tokyo continued to show signifi cant growth, with Minato and Shibuya districts registering the highest year-on-year increases from 11.2% and 11.1% respectively in 2006 to 23.2% and 29.3% respectively in 2007. Overall in Tokyo’s 23 districts, the year-on-year gain was 15.9% in 2007, compared to 3.7% in 2006. Commercial offi ce rents appeared to be rising more quickly than in other sectors.

Sources:1 Valuation reports by CB Richard Ellis (“CBRE”) (December 2007)2 Colliers Halifax - Japan Investment Update 2007 (October 2007) Colliers Halifax - Japan Leasing Update 2007 (October 2007)

MARKET OVERVIEW

48

Over the past three years, central Tokyo offi ce rents have increased 60% to 70% and yields have compressed from 4% to about 3%, which suggests that property prices have more than doubled in the same period. Going forward, new supply of commercial offi ce space is set to bottom in 2008, maintaining the current ‘landlord market’ conditions. In light of this, quality commercial investment properties remain highly sought after by domestic and overseas investors as spreads between investment yield and fi nancing costs remain attractive relative to other markets.

Land prices in the prime retail locations of Ginza and Omotesando have seen signifi cant increases in part to competition for luxury brand fl agship store sites. There have been a number of high profi le transactions in the Ginza area, the latest being Goldman Sachs’ purchase of the Tiffany property for JPY 37 billion equating to a land price of approximately JPY 175 million per tsubo. Retail rents are the highest in prime areas of Ginza and Omotesando where street level rents range between JPY 120,000 to 250,000 per tsubo per month. Retail rents in other prime areas tend to be more correlated to the consumer market.

Chengdu Property Market3

Chengdu is the capital of China’s Sichuan province. Chengdu’s economy has been growing strongly and steadily over the past few years, with a GDP growth rate of 15.3% in 2007. The city’s new subway system is expected to commence operations in 2010. While there is a strong pipeline of offi ce and retail supply in Chengdu over the next three years, offi ce rents are expected to remain steady as demand is increasing in line with supply.

According to CBRE, quoted rents of most prime offi ce space have sustained increases in 4Q 07. The average prime rent was RMB 92.2 psm per month, increasing 2.7% from the previous quarter. Grade A offi ce space rents shot up by 1.6% quarter-on-quarter. The vacancy

rate of prime offi ce space in Chengdu decreased slightly to 28.2%, of which Grade A and Grade B were 25% and 32.8% respectively.

Retail rents, on the other hand, are expected to increase steadily, in view of increasing demand from the infl ux of new retailers entering the Chengdu retail scene. The city, boasting a population of 11.03 million, recorded RMB 115.53 billion in total retail sales of consumer goods in 2006. Department stores’ promotional activities were most prominent in the fourth quarter and prime retail rentals on the ground and fi rst fl oor rose by 1.9% and 1.3% quarter-on-quarter, respectively. Several new department stores which were opened in the fourth quarter were quickly fi lled up with tenants. The overall vacancy rate dropped to 4.8% from 6.4% at the end of the third quarter.

Top to bottom: Harajyuku Secondo, Tokyo; Renhe Spring Zongbei, Chengdu

MARKET OVERVIEW

Sources:3 Chengdu Statistics Bureau, News Release (January 2008) CBRE, “Market View - People’s Republic of China” (4Q 2007)


ANNUAL REPORT 2007

CAPITAL MANAGEMENT

Prudent Capital Management to Optimise Stable Returns to Investors

The Manager will review the use of appropriate levels of debt and equity capital to fund acquisitions and new investments, and aims to maximise the cheaper source of capital to deliver higher returns to unitholders. Given MMP REIT’s relatively low gearing level of 29.0% and the availability of competitively priced debt capital, the Manager intends to optimise the level of borrowings before considering raising equity. The use of borrowings does however result in returns being infl uenced by market interest rates. The Manager intends to hedge the majority of any interest rate and foreign currency risks by entering into derivative fi nancial instruments to help protect the unitholders’ returns from interest rate and foreign currency volatility.

MMP REIT’s fi nancial risk management policy is described in greater detail below.

Interest Rate Risk Management

MMP REIT’s policy is to hedge the majority of its interest rate exposure in the medium term by using fi xed rate debt and interest rate derivatives. The policy aims to protect MMP REIT’s earnings from the volatility in interest rates, providing stability to unitholders’ returns.

MMP REIT has fi xed approximately 89% of its debt for the next 2.75 years using a combination of derivative fi nancial instruments and fi xed rate debt. The weighted average interest rate including hedges was 2.69% for the fi nancial year ended 31 December 2007. The interest service coverage ratio was a healthy 4.5 times for the year, indicating that MMP REIT can comfortably pay interest on its outstanding debt.

As at 31 December 2007, MMP REIT’s borrowings comprised a term loan (CMBS equivalent) of S$380 million, a S$160 million bridging loan,

S$75 million in revolving credit facilities, a JPY 3.1 billion (S$40 million) Japanese bond and RMB 40 million (S$8 million) payable to the vendor of the Renhe Spring Zongbei Property in China.

The S$380 million term loan (CMBS equivalent), representing 58% of total borrowings, has a fi xed rate of interest of 3.18% per annum up to its maturity in September 2010.

The S$160 million bridging loan was used to fi nance the acquisition of the Japanese Properties and is repayable at the end of May 2008. The interest rate on the loan has been fi xed at an average rate of 2.32% per annum until September 2012, using interest rate swaps and cross currency swaps.

The S$75 million due under the RCF represents 11% of total borrowings and comprises a S$60 million facility fully drawn to fi nance the acquisition of the Renhe Spring Zongbei Property and S$15 million drawn from a S$35 million facility used for working capital. These borrowings have not been hedged for interest rate exposures.

The JPY 3.1 billion (S$40 million) fi ve-year Japanese bond was used to part fi nance the acquisition of the Japanese properties and has been hedged via an interest rate cap (capped at 2.1% per annum) until May 2012. The RMB 40 million (S$8 million) represents deferred consideration payable to Rendong Company and was assumed as part of the acquisition of Renhe Spring Zongbei Property in China. The amount is interest-free, and is repayable over seven years in equal, annual instalments.

Foreign Exchange Risk Management

MMP REIT is exposed to foreign exchange risk arising from its investments in Japan and China. The income generated from these investments and net assets are denominated in foreign currencies, mainly Japanese Yen (“JPY”) and Chinese Renminbi (“RMB”).

50

Note: (1) Stated at present value (face value is S$8m)(2) Based on deposited property(3) Including fi nancial derivatives

DEBT HIGHLIGHTS AS AT 31 DECEMBER 2007

Term loan (CMBS equivalent)Bridging loanRevolving Credit FacilitiesJapanese bondPayable to Chinese property vendor (1)

S$380mS$160mS$ 75mS$ 40mS$ 6m

Total Debt S$661m

Gearing ratio (2)

Fixed rate debt (up to Sept 2010) (3)

Interest coverWeighted average interest rate per annum

29.0%89.4%4.5x

2.69% p.a.

Income HedgingMMP REIT’s policy is to hedge the majority of the forecast net income from its overseas investments in the next two years, in order to minimise the impact of exchange rate fl uctuations on the distributions to unitholders.

As at 31 December 2007, MMP REIT has entered into a combination of foreign exchange forward contracts and cross currency swap contracts to hedge approximately 87% of the forecast foreign net income for the next two years.

Capital HedgingMMP REIT’s policy is to hedge substantially all of its capital invested in foreign currencies, in order to minimise the impact of exchange rate fl uctuations on the net asset value of the Trust.

As at 31 December 2007, MMP REIT has entered into a combination of foreign currency denominated loans, cross currency swap contracts and foreign currency options to hedge approximately 95% of its net assets denominated in foreign currencies.

Increased Debt Capacity

MMP REIT had a relatively low gearing of 29.0% as at 31 December 2007, on the strength of higher revaluations of its Singapore properties, valued at S$1,932 million and revaluations of its Japanese and China properties valued at a total of S$277 million as at 31 December 2007.

The Manager intends to maintain a long term optimal gearing level of 45% for MMP REIT. This means that MMP REIT has the capacity to raise up to S$662 million of additional borrowings to fund new investments and acquisitions without having the need to raise equity. MMP REIT may also raise the gearing above this limit for short periods to quickly secure strategic and opportunistic yield accretive acquisitions.

2008 2009 2010 2011 Beyond2012

Bridging loan

RCF - Citi

Japanese bond

Payable to Chinese property vendor

RCF - SCB

Term loan (CMBS)

Debt S$m

0

50

100

150

200

250

300

350

400

380

60

160

15

236*

0.90.90.90.9 402.7

Debt Maturity Profi le as at 31 December 2007

Note: * S$190m is due at the end of May 2008, the balance is due in August and

September 2008.

CAPITAL MANAGEMENT


ANNUAL REPORT 2007

RISK MANAGEMENT

As stated in the Corporate Governance Report above, the Manager revised its enterprise risk management framework for MMP REIT (“RMF”). The RMF establishes procedures and protocol to identify and initiate mitigation of enterprise risks, which may arise in the management and operations of MMP REIT, particularly in the areas of asset acquisitions, asset integration, fi nancial risk management, and environmental, health and safety (“EHS”). To address each of these areas, the Manager has either adopted policies, hired or designated staff with specifi c expertise in that area, and continues to assess the potential impact of risks which may arise and the necessary response or process to effectively mitigate those risks.

Asset Acquisition Process

Prior to any new acquisition, each of the key risks attributable to the acquisition or the subsequent management of the asset is assessed and rated. Functional heads in the Manager or the Property Manager are responsible for this process. Checklists and/or “sign-offs” are provided to the Board to confi rm that all key risks have been considered and addressed or mitigated successfully.

Asset Integration Process

Following every successful acquisition, it is imperative that each asset is quickly integrated into the existing MMP REIT portfolio, from fi nancial, operational and compliance perspectives. This process is activated before the closing of each acquisition, and completed as soon as practicable thereafter. Checklists and/or “sign-offs” are provided to the Board, together with quarterly asset management reports, to confi rm that all key risks associated with this process have been considered and addressed or mitigated successfully.

Environmental, Health and Safety (“EHS”)

The Manager developed and began to implement a robust EHS protocol in 2007, with the support of Macquarie Bank Limited (“MBL”). This protocol complies with local legislative requirements and has been put in place for the Singapore assets of MMP REIT. A qualifi ed EHS manager oversees the process, to ensure that risks associated with EHS aspects of the assets are appropriately minimised and/or mitigated. Together with the Manager’s asset management team, the EHS manager is responsible for ensuring that assets not located in Singapore are also appropriately managed from an EHS perspective.

Robust Financial Risk Management Policy

MMP REIT’s returns are primarily from net operating income and capital appreciation of its assets, however, these are exposed to three major fi nancial risks – interest rate risk, foreign exchange risk and liquidity risk with additional risks including credit and operational risk.

The Manager has therefore implemented a policy of actively managing fi nancial market risks to provide certainty and stability of distributions to unitholders, whilst maintaining or increasing unitholders’ equity. This is achieved by entering into hedges to stabilise interest costs and to stabilise the Singapore dollar equivalent of foreign currency income and foreign currency net investments. The Manager’s overall strategy for MMP REIT in this respect is to hedge the majority of exposures within limits stipulated, having regard to the availability of hedge instruments and their associated cost.

The policy contains the parameters and processes for managing these risks, and defi nes the roles and responsibilities of those who manage the process.

52

Business Continuity Planning

In accordance with guidelines issued by the Monetary Authority of Singapore, the Manager has developed a plan with the support of corporate risk specialists from MBL, to address the impact of any major disruption to its business and operations. Key areas such as IT, fi nance, regulatory compliance, vital record storage and recovery are addressed, to ensure smooth continuation of the Manager’s and the Property Manager’s essential business operations, in the event of major disruption or contingency.

Operational Risk Self Assessments (“ORSA”)

The Manager has developed an ORSA protocol to ensure a regular and considered review and assessment of the internal processes which have been implemented under the RMF. The Manager therefore periodically conducts ORSA to assess the key risks and controls identifi ed. This process also ensures that adequate resources are allocated to mitigate these risks.

Risk Reporting

The Manager actively assesses and manages legal and compliance risks for MMP REIT. Such risks may arise in each of the various jurisdictions which MMP REIT has assets located in, with the application of different laws and regulatory requirements, the enforceability of counterparty obligations and/or in the process of appropriately documenting all contractual agreements. Quarterly reports are made to the Manager’s Audit Committee (on an exceptions basis), and the Board and the Trustee are regularly updated on all such matters.

New Property Management System

With MMP REIT’s expansion beyond Singapore shores, implementation of a new property management platform that can be replicated across multiple properties in different countries was set in motion in 2007. The Yardi property management system, besides being scalable, provides a strong platform that will form the backbone of property management by integrating the various functions including accounting, leasing, marketing and operations.

The browser-based property management programme is widely used by property managers, third party managers, asset managers, fund managers, principal investors and owners with commercial properties in 14 countries across Europe and 11 countries in Asia. From a single data source, we are now able to create reports in their local language, managing Generally Accepted Accounting Principles (GAAP), Good & Services Tax (GST) regulations, indexation, currency and language restrictions across multiple countries.

MANAGEMENT INFORMATIONSYSTEM


ANNUAL REPORT 2007

Contact UsIf you have any enquiries or would like to fi nd out more about MMP REIT, please contact:

Unitholder Enquiries Unitholder Depository

INVESTOR RELATIONS

MMP REIT made several leaps to improve its investor relations in 2007.

Of top priority was to communicate to all stakeholders in a regular and timely fashion. More than 100 one-on-one investor or analyst meetings and conference calls were conducted in 2007, averaging two meetings a week throughout the year. These were over and above MMP REIT’s participation in equity forums, conference and investor roadshows in Singapore, Hong Kong, London and the USA during the year. These meetings were good platforms for management to share with potential and existing investors, as well as analysts, the latest developments in MMP REIT’s portfolio and the Trust’s investment and growth strategies. An analyst and media briefi ng was also conducted for MMP REIT’s full year results.

To facilitate investors’ access to up-to-date information on MMP REIT, a new, user-friendly website was created in 2007. An email alert system which sends out the latest announcements and news releases ensures that registered users are kept abreast of MMP REIT’s business activities.

Other new Investor Relations activities undertaken in 2007 included an advertorial in Business Times’ REIT Guide 2007, a series of investor meetings in Sydney and Melbourne, and an informal media briefi ng session to Australian media in Sydney.

We intend to further develop our multi-pronged Investor Relations initiatives in 2008, with the objective of strengthening relationships with unitholders, potential investors and analysts through the dissemination of accurate and timely information.

Financial Calendar 2008 – 2009 (Tentative)

APRIL2008 2008 First Quarter Results Announcement

MAY2008 2008 First Quarter Distribution to Unitholders

JULY2008 2008 Second Quarter Results Announcement

AUGUST2008 2008 Second Quarter Distribution to Unitholders

OCTOBER2008 2008 Third Quarter Results Announcement

NOVEMBER2008 2008 Third Quarter Distribution to Unitholders

JANUARY2009 2008 Full Year Results Announcement

FEBRUARY2009 2008 Full Year Distribution to Unitholders

The ManagerMacquarie Pacifi c Star Prime REIT Management Limited391B Orchard Road#21-08 Ngee Ann City Tower BSingapore 238874Phone: +65 6835 8633Fax: +65 6835 8644Email: [email protected]: www.mmpreit.com or www.macquariepacifi cstar.com

The Unit RegistrarBoardroom Corporate & Advisory Services Pte. Ltd.3 Church Street#08-01 Samsung HubSingapore 049483Phone: +65 6536 5355Fax: +65 6536 1360Website: www.boardroomlimited.com

The Central Depository (Pte) Limited4 Shenton Way#02-01 SGX Centre 2Singapore 068807Phone: +65 6535 7511Fax: +65 6535 0775Email: [email protected]: www.cdp.com.sg

54

Red Dress Campaign – 23 March - 1 April 2007

Wisma Atria was the offi cial venue for the globally successful Red Dress Campaign held to raise awareness of the risk of heart disease amongst women. Held in conjunction with the annual Singapore Fashion Festival, the exhibition showcased an exclusive exhibition of red dresses including designer pieces by Vivienne Tam, Mathew Williamson, Baylene and Francis Cheong. The public was encouraged to bid for their favourite dress and all proceeds went to the Singapore Heart Foundation.

Fresh Air for Women – 21 July 2007

Wisma Atria was an offi cial venue partner for Health Promotion Board’s anti-smoking campaign themed “Fresh Air for Women” targeted at young female smokers aged 20 to 35 years old.

Hosted by local celebrity Michelle Chong, the event encouraged women to quit smoking by revealing the harmful effects of smoking on the skin.

Starbucks Christmas – 6 December 2007

Starbucks held their annual Christmas Open House and raised funds for the Salvation Army.

To offi ciate the launch event, representatives from Starbucks and The Salvation Army were at the Wisma Atria outlet to ring handheld bells for a period of one minute, simultaneously with all other outlets. Customers were also offered complimentary tall-sized beverage between 5pm and 7pm in exchange for a donation.

A huge donation “cup” was placed along Orchard Road in front of Wisma Atria to raise donations from the public as well.

Two of our six corporate values - “Teamwork” and “Fulfi llment for our people” – relate to our commitment to develop our people to their full potential.

As the Manager of MMP REIT, we value the contributions of our team members, who each pulls his own weight among industry players in his own function, including asset, investment, property and capital management. To strengthen our experienced and committed team, we are constantly on the lookout for talent who are keen to join our lean but dynamic team.

Our people regularly undergo training and development programmes, seminars and conferences to hone their professional, technical and people management skills. Market study trips were also organised to allow our key managers to keep themselves abreast of latest developments in major retail markets. To foster teamwork and camaraderie, several social events were also organised during the year.

COMMUNITY OUTREACH

OUR PEOPLE


ANNUAL REPORT 2007

FINANCIAL REVIEW

Revenue

Gross revenue for the fi nancial year ended 31 December 2007 was S$103.0 million, an increase of S$13.1 million or 14.6% over the previous year ended 31 December 2006. This was mainly due to higher rental rates achieved for renewals, new committed leases and revenue from new acquisitions in Japan and China, which accounted for approximately 8% of total gross revenue for FY2007.

Property Expenses

Property operating expenses for the fi nancial year ended 31 December 2007 were S$26.1 million, an increase of S$5.5 million or 26.8% over the preceding year ended 31 December 2006. This was mainly due to higher commissions and property management fees paid for new and renewal leases, which were transacted at higher rentals and also property expenses incurred on the new acquisitions in Japan and China. In addition, there was a depreciation charge for the escalator installation linking Wisma Atria’s basement to Orchard Road following the closure of the Orchard Linkway on 30 September 2006.

Net Property Income (NPI)

As a result of the higher gross revenue, NPI of S$76.8 million was S$7.5 million or 10.9% higher than S$69.3 million for the fi nancial year ended 31 December 2006. Wisma Atria contributed 47.2% to NPI, Ngee Ann City contributed 44.2% and the new acquisitions contributed 8.6%.

Other Expenses

Borrowing costs for the year ended 31 December 2007 were S$16.4 million, an increase of S$3.0 million or 22.0% from the previous year ended 31 December 2006. This was mainly due to interest incurred on the additional borrowings used to fund the new property acquisitions in Japan and China.

Management fees were S$8.8 million for the fi nancial year ended 31 December 2007, an increase of S$2.3 million or 35.0% over the previous year. This was due to an increase in the asset base from acquisitions of properties in Japan and China, and from asset revaluations during the year.

The change in fair value of derivative fi nancial instruments of S$8.0 million represents an unrealised loss on interest rate swaps, interest rate cap and cross currency swaps which were entered into in relation to the acquisition of the Japanese Properties. The unrealised loss is offset by an increase in value of the Japanese Properties due to an improvement in foreign exchange rates. As the amount is unrealised it has been added back in determining net income available for distribution.

Distributable Income and Distributions Distributable income was S$59.0 million for the fi nancial year ended 31 December 2007, an increase of S$4.1 million or 7.5% over the previous fi nancial year.

Total distributions for 2007 were 6.19 cents per unit which represents an increase of 6.9% over the previous fi nancial year distributions of 5.79 cents per unit.

Assets

The Group’s total assets as at 31 December 2007 were S$2,278 million compared to S$1,526 million as at 31 December 2006. The increase of S$752 million or 49.3% was mainly due to revaluations of the Wisma Atria and Ngee Ann City properties which were independently valued at S$901.5 million and S$1,030.9 million respectively as at 31 December 2007, and the acquisition of the Japanese Properties and Renhe Spring Zongbei Property which were independently revalued at S$199.4 million and S$76.8 million respectively as at 31 December 2007.

56

2006 20070

1

2

3

4

5

6

7

Q4

Q3

Q2

Q1

Cents

5.79 cents

1.47

1.44

1.44

1.44 1.471.44 1.471.44

1.68

1.54

1.50

1.47

6.19 cents

53%WA

47%NAC

54%WA

46%NAC

47%WA

44%NAC

50%WA

42%NAC

9%Japan & China Properties

8%Japan & China Properties

2007 2006

2007 2006

FINANCIAL REVIEW

Gross Revenue

Net Property Income (NPI)

Distribution Per Unit (DPU)


ANNUAL REPORT 2007

FINANCIAL STATEMENTS

CONTENTS

58 Report of the Trustee59 Statement by the Manager60 Independent Auditor’s Report61 Balance Sheets62 Statements of Total Return63 Distribution Statements64 Statements of Movements in Net Assets

Attributable to Unitholders65 Investment Properties Portfolio Statement66 Consolidated Cash Flow Statement68 Notes to the Financial Statements

58

REPORT OF THE TRUSTEE

HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”) is under a duty to take into custody and hold the assets of Macquarie MEAG Prime Real Estate Investment Trust (the “Trust”) and its subsidiaries (collectively, the “Group”) in trust for the unitholders. In accordance with the Securities and Futures Act (Cap. 289), its subsidiary legislation and the Code on Collective Investment Schemes (collectively referred to as the “laws and regulations”), the Trustee shall monitor the activities of Macquarie Pacifi c Star Prime REIT Management Limited (the “Manager”) for compliance with the limitations imposed on the investment and borrowing powers as set out in the trust deed dated 8 August 2005 (last amended and restated on 10 December 2007) between the Trustee and the Manager (the “Trust Deed”) in each annual accounting period and report thereon to unitholders in an annual report which shall contain the matters prescribed by the laws and regulations as well as the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Certifi ed Public Accountants of Singapore and the provisions of the Trust Deed.

To the best knowledge of the Trustee, the Manager has, in all material respects, managed the Group during the year covered by these fi nancial statements, set out on pages 61 to 97, comprising the balance sheets of the Group and the Trust, the investment properties portfolio statement of the Group, the statements of total return, distribution statements and statements of movements in net assets attributable to unitholders of the Group and the Trust and the cash fl ow statement of the Group, and the notes to the fi nancial statements, in accordance with the limitations imposed on the investment and borrowing powers set out in the Trust Deed, laws and regulations, and otherwise in accordance with the provisions of the Trust Deed.

For and on behalf of the Trustee,HSBC Institutional Trust Services (Singapore) Limited

Arjun BambawaleDirector

Singapore5 March 2008


ANNUAL REPORT 2007

STATEMENT BY THE MANAGER

In the opinion of the directors of Macquarie Pacifi c Star Prime REIT Management Limited (the “Manager”), the accompanying fi nancial statements set out on pages 61 to 97, comprising the balance sheets of the Group and the Trust, the investment properties portfolio statement of the Group, the statements of total return, distribution statements and statements of movements in net assets attributable to unitholders of the Group and the Trust and the cash fl ow statement of the Group, and the notes to the fi nancial statements, are drawn up so as to present fairly, in all material respects, the fi nancial position of Macquarie MEAG Prime Real Estate Investment Trust (the “Trust”) and its subsidiaries (collectively, the “Group”) as at 31 December 2007, the total return, distributable income and movements in net assets attributable to unitholders of the Group and the Trust, and the cash fl ows of the Group for the year then ended in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Certifi ed Public Accountants of Singapore and the provisions of the Trust Deed. At the date of this statement, there are reasonable grounds to believe that the Group and the Trust will be able to meet its fi nancial obligations as and when they materialise.

For and on behalf of the Manager,Macquarie Pacifi c Star Prime REIT Management Limited

Franklin HengDirector


Franklin Heng

60

INDEPENDENT AUDITOR’S REPORTTo the Unitholders of Macquarie MEAG Prime Real Estate Investment Trust (a trust constituted on 8 August 2005 under the laws of the Republic of Singapore)

We have audited the accompanying fi nancial statements of Macquarie MEAG Prime Real Estate Investment Trust (the “Trust”) and its subsidiaries (collectively, the “Group”), which comprises the balance sheets of the Group and the Trust, the investment properties portfolio statement of the Group as at 31 December 2007, the statements of total return, distribution statements and statements of movements in net assets attributable to unitholders of the Group and the Trust and the cash fl ow statement of the Group for the year then ended, summary of signifi cant accounting policies and the notes to the fi nancial statements, as set out on pages 61 to 97.

The Manager’s and the Trustee’s responsibilities for the fi nancial statementsThe Manager and the Trustee of the Trust are responsible for the preparation and fair presentation of these fi nancial statements in accordance with the Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Certifi ed Public Accountants of Singapore. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of fi nancial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibilityOur responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance on whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Manager and the Trustee, as well as evaluating the overall presentation of the fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the fi nancial statements present fairly, in all material respects, the fi nancial position of the Group and the Trust as at 31 December 2007, the total return, distributable income and movements in net assets attributable to unitholders of the Group and the Trust, and the cash fl ows of the Group for the year then ended in accordance with the Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Certifi ed Public Accountants of Singapore.

Certifi ed Public Accountants


Certified Public Accou


ANNUAL REPORT 2007

BALANCE SHEETSAs at 31 December 2007

GROUP TRUST Note 2007 2006 2007 2006 $’000 $’000 $’000 $’000

AssetsInvestment properties 3 2,208,574 1,498,000 1,932,350 1,498,000Plant and equipment 4 2,259 3,431 2,155 3,431Interests in subsidiaries 5 – – 226,399 –Intangible asset 6 12,613 – – –Derivative fi nancial instruments 7 1,920 – 1,447 –Trade and other receivables 8 9,499 4,201 5,281 4,201Cash and cash equivalents 9 42,686 20,122 19,057 20,122

2,277,551 1,525,754 2,186,689 1,525,754

LiabilitiesTrade and other payables 10 (57,563) (39,093) (44,590) (39,093)Derivative fi nancial instruments 7 (8,036) – (8,036) –Income tax payable (656) – – –Deferred tax liabilities 11 (16,598) – – –Borrowings 12 (657,531) (388,200) (612,741) (388,200)

(740,384) (427,293) (665,367) (427,293)

Net assets 1,537,167 1,098,461 1,521,322 1,098,461

Represented by: Net assets attributable to unitholders 1,537,167 1,098,461 1,521,322 1,098,461

Units in issue (’000) 13 952,517 948,450 952,517 948,450

Net asset value per unit ($) 1.61 1.16 1.60 1.16

The accompanying notes form an integral part of these fi nancial statements.

62

STATEMENTSOF TOTAL RETURNYear ended 31 December 2007

GROUP TRUST Note 2007 2006 2007 2006 $’000 $’000 $’000 $’000

Gross revenue 14 102,959 89,876 94,314 89,876Property operating expenses 15 (26,145) (20,624) (24,147) (20,624)

Net property income 76,814 69,252 70,167 69,252

Finance income 18 222 344 222 344Fair value adjustment on security deposit and retention sum 42 (648) (387) (648)Tenancy relief (917) (1,028) (917) (1,028)Management fees 16 (8,843) (6,549) (8,751) (6,549)Performance fees 16 – – – –Trust expenses 17 (1,460) (1,476) (1,236) (1,476)Finance expense 18 (16,448) (13,483) (14,036) (13,483)

Net income before tax 49,410 46,412 45,062 46,412 Change in fair value of unrealised derivative instruments (7,983) – (7,698) –Unrealised foreign exchange gain – – 3,730 –Change in fair value of investment properties 3 448,870 171,000 433,652 171,000

Total return for the year before tax and distribution 490,297 217,412 474,746 217,412Income tax expense 19 (3,188) – – –

Total return for the year after tax, before distribution 487,109 217,412 474,746 217,412

Earnings per unit (cents) 20 51.30 22.98 50.00 22.98



ANNUAL REPORT 2007

DISTRIBUTION STATEMENTSYear ended 31 December 2007

GROUP TRUST 2007 2006 2007 2006 $’000 $’000 $’000 $’000

Income available for distribution to unitholders at the beginning of the year 14,006 14,911 14,006 14,911

Total return after tax, before distribution 487,109 217,412 474,746 217,412Net tax adjustments (Note A below) (428,071) (162,518) (415,708) (162,518)

Income available for distribution 73,044 69,805 73,044 69,805 Distributions to unitholders: Distribution of 1.58 cents per unit for the period 20 September to 31 December 2005 – (14,918) – (14,918)Distribution of 1.47 cents per unit for the period 1 October to 31 December 2006 (13,941) – (13,941) –Distribution of 1.47 cents (2006: 1.44 cents) per unit for the period 1 January to 31 March (13,954) (13,612) (13,954) (13,612)Distribution of 1.50 cents (2006: 1.44 cents) per unit for the period 1 April to 30 June (14,254) (13,627) (14,254) (13,627)Distribution of 1.54 cents (2006: 1.44 cents) per unit for the period 1 July to 30 September (14,650) (13,642) (14,650) (13,642) (56,799) (55,799) (56,799) (55,799)

Income available for distribution to unitholders at the end of the year 16,245 14,006 16,245 14,006

Note A – Net tax adjustmentsNon–tax deductible/(chargeable) items: – Management fees paid/payable in units 4,914 3,819 4,914 3,819 – Finance costs 910 772 910 772 – Sinking fund contribution 1,167 1,168 1,167 1,168 – Tenancy relief 917 1,028 917 1,028 – Depreciation 1,700 125 1,700 125 – Change in fair value of unrealised derivative instruments 7,983 – 7,698 – – Unrealised foreign exchange gain – – (3,730) – – Change in fair value of investment properties (448,870) (171,000) (433,652) (171,000) – Deferred tax expense 2,415 – – – – Other items 793 1,570 1,503 1,570 – Net overseas income not distributed to the Trust – – 2,865 –

Net tax adjustments (428,071) (162,518) (415,708) (162,518)


64

STATEMENTS OF MOVEMENTS IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERSYear ended 31 December 2007

GROUP TRUST 2007 2006 2007 2006 $’000 $’000 $’000 $’000

Net assets attributable to unitholdersat the beginning of the year 1,098,461 931,490 1,098,461 931,490

OperationsChange in net assets attributable to unitholders resulting from operations, before distributions 487,109 217,412 474,746 217,412Increase in net assets resulting from operations 487,109 217,412 474,746 217,412

Foreign currency translation reserve Translation differences from fi nancial statements of foreign entities (248) – – –Exchange differences on monetary items forming part of net investment in foreign operations 3,730 – – –Net gain recognised directly in net assets attributable to unitholders 3,482 – – –

Unitholders’ transactions Creation of units: – Management fees paid in units 3,600 3,028 3,600 3,028 – Management fees payable in units 1,314 791 1,314 791Issue expenses (Note 21) – 1,539 – 1,539Distributions to unitholders (56,799) (55,799) (56,799) (55,799)Decrease in net assets resulting from unitholders’ transactions (51,885) (50,441) (51,885) (50,441)

Net assets attributable to unitholders at the end of the year 1,537,167 1,098,461 1,521,322 1,098,461



ANNUAL REPORT 2007

INVESTMENT PROPERTIES PORTFOLIO STATEMENTAs at 31 December 2007

GROUP Description of Tenure Term Location Existing Occupancy At Percentage of total netproperty of lease Use rate valuation assets attributable to unitholders 31/12/2007 31/12/2007 31/12/2006 31/12/2007 31/12/2006 % $’000 $’000 % %

Wisma Atria Leasehold Leasehold estate 435 Orchard Road, Retail / Offi ce 99.6 901,450 (3) 750,000 58.6 68.3Property of 99 years Singapore 238877 expiring on 31 March 2061

Ngee Ann City Leasehold Leasehold estate 391/391B Orchard Retail / Offi ce 99.5 1,030,900(3) 748,000 67.1 68.1Property of 69 years Road, Singapore expiring on 238872/238874 31 March 2072

Ebisu Fort Freehold Not applicable 24–1 Ebisu-Minami, Retail 100.0 79,595(4) – 5.2 –Property(1) 1 Chome, Shibuya–ku, Tokyo, Japan

Roppongi Freehold Not applicable 212–16 Roppongi, Retail 100.0 16,946(4) – 1.1 –Primo 7 Chome, Minato–ku, Property(1) Tokyo, Japan

Roppongi Freehold Not applicable 101–1 Roppongi, F&B / 100.0 42,109(4) – 2.7 –Terzo 7 Chome, Minato Entertainment Property(1) –ku, Tokyo, Japan

Holon L Freehold Not applicable 46–7 Kita Retail 100.0 21,825(4) – 1.4 –Property(1) Aoyama, 3 Chome, Minato–ku, Tokyo, Japan

Harajyuku Freehold Not applicable 19–1 Jingumae, Retail 100.0 6,303(4) – 0.4 –Secondo 1 Chome, Shibuya– Property(1) ku, Tokyo, Japan

Daikanyama Freehold Not applicable 31–11, Ebisu–Nishi, Retail / F&B 100.0 25,291(4) – 1.7 –Property(1) 1 Chome, Shibuya– ku, Tokyo, Japan

Nakameguro Freehold Not applicable 152–7 Aobadai, Retail 100.0 7,395(4) – 0.5 –Property(1) 1 Chome, Meguro–ku, Tokyo, Japan

Renhe Spring Leasehold Leasehold estate No 19, Renminnan Retail 100.0 76,760(5) – 5.0 –Zongbei of 40 years Road, Chengdu, Property(2) expiring on 27 China December 2035

Investment properties, at valuation 2,208,574 1,498,000 143.7 136.4

Net liabilities (excluding net assets attributable to unitholders) (671,407) (399,539) (43.7) (36.4)

Net assets attributable to unitholders 1,537,167 1,098,461 100.0 100.0

Notes:(1) The Japanese Properties comprise seven properties. Six of these properties (Roppongi Primo Property, Roppongi Terzo Property, Holon L Property, Harajyuku

Secondo Property, Daikanyama Property and Nakameguro Property) were acquired on 30 May 2007, whilst the seventh property, Ebisu Fort Property, was acquired on 26 September 2007.

(2) The Renhe Spring Zongbei Property was acquired on 28 August 2007.(3) Based on the valuation performed by CB Richard Ellis (Pte) Ltd as at 31 December 2007.(4) Based on the valuation performed by Tokyo Asset Research Co Ltd as at 31 December 2007 and translated at the exchange rate of JPY77.89:$1.00.(5) Based on the valuation performed by Savills Valuation & Professional Services Ltd as at 31 December 2007 and translated at the exchange rate of RMB5.08:$1.00.

The Manager believes that the above independent valuers have appropriate professional qualifi cations and recent experience in the location and category of the Group’s investment properties being valued.


66

CONSOLIDATED CASH FLOW STATEMENTYear ended 31 December 2007

GROUP

2007 2006 $’000 $’000

Operating activitiesTotal return for the year before tax and distribution 490,297 217,412

Adjustments for: Finance income (222) (344)Fair value adjustment on security deposits and retention sum (42) 648Depreciation 1,708 125Management fees paid/payable in units 4,914 3,819Finance expense 16,448 13,483Change in fair value of unrealised derivative instruments 7,983 –Change in fair value of investment properties (448,870) (171,000)

Operating income before working capital changes 72,216 64,143

Changes in working capital: Trade and other receivables (2,462) (3,109)Trade and other payables 6,030 5,170Income tax paid (226) –

Cash generated from operating activities 75,558 66,204

Investing activities Net cash outfl ows on purchase of investment properties (Note A) (180,305) –Net cash outfl ows on acquisition of subsidiary (Note B) (59,859) –Purchase of plant and equipment (478) (2,956)Capital expenditure on investment properties (698) –Interest received on deposits 220 306

Cash fl ows from investing activities (241,120) (2,650)

Financing activities Borrowing costs paid (18,161) (12,651)Proceeds from borrowings 314,560 41,000Repayment of borrowings (51,500) (43,000)Unit issue costs – 1,539Distributions paid to unitholders (56,799) (55,799)

Cash fl ows from fi nancing activities 188,100 (68,911)

Net increase/(decrease) in cash and cash equivalents 22,538 (5,357) Cash and cash equivalents at the beginning of the year 20,122 25,479Effects of exchange rate differences on cash 26 –

Cash and cash equivalents at the end of the year 42,686 20,122



ANNUAL REPORT 2007

Note: (A) Net cash outfl ows on purchase of investment properties

Net cash outfl ows on purchase of investment properties (including acquisition costs) are set out below:

GROUP

2007 2006 $’000 $’000

Investment properties 181,256 –Cash and cash equivalents 1,629 –Trade and other payables (1,629) –

Purchase consideration paid 181,256 –Acquisition costs paid 678 –Cash acquired (1,629) –

Net cash outfl ows on purchase of investment properties (net of cash and cash equivalents acquired) 180,305 –

(B) Net cash outfl ows on acquisition of subsidiary

Net cash outfl ows on acquisition of subsidiary are set out below: GROUP

2007 2006 $’000 $’000

Investment properties 70,636 –Plant and equipment 56 –Trade and other receivables 2,874 –Cash and cash equivalents 4,184 –Trade and other payables (5,681) –Borrowings (6,096) –Deferred tax liabilities (14,543) –

Net identifi able assets acquired 51,430 –Goodwill on consolidation 12,613 –

Purchase consideration paid, satisfi ed in cash 64,043 –Cash acquired (4,184) –

Net cash outfl ows on acquisition of subsidiary (net of cash and cash equivalents acquired) 59,859 –


68

NOTES TO THE FINANCIAL STATEMENTS

These notes form an integral part of the fi nancial statements.

The fi nancial statements were authorised for issue by the Manager and the Trustee on 5 March 2008.

1 General

Macquarie MEAG Prime Real Estate Investment Trust (the “Trust”) is a Singapore–domiciled unit trust constituted pursuant to the trust deed dated 8 August 2005 and any amendments or modifi cations thereof between Macquarie Pacifi c Star Prime REIT Management Limited (the “Manager”) and HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”), governed by the laws of the Republic of Singapore (“Trust Deed”). On 8 August 2005, the Trust was declared an authorised unit trust scheme under the Trustees Act, Chapter 337.

The Trust was formally admitted to the Offi cial List of the Singapore Exchange Securities Trading Limited (“SGX–ST”) on 20 September 2005 and was included under the Central Provident Fund (“CPF”) Investment Scheme on 14 June 2005.

The principal activity of the Trust and its subsidiaries (the “Group”) is to invest primarily in prime real estate used mainly for retail and offi ce purposes, with the objective of delivering regular and stable distributions to unitholders and to achieve long–term growth in the net asset value per unit.

The Trust has entered into several service agreements in relation to the management of the Group and its operations. The fee structure of these services is as follows:

(a) Property Manager’s fee and leasing commission The Property Manager is entitled to receive a fee of 3.0% per annum of gross revenue of the Singapore

Properties (excluding GST) for the provision of property management, lease management as well as marketing and marketing co–ordination services. The Property Manager’s fee is to be paid on a monthly basis in arrears.

The Property Manager is also entitled to receive leasing commission at the rates set out below when it secures a tenant or a tenancy renewal:

(a) one month’s base rental for securing a tenancy of three years or more;

(b) two thirds of one month’s base rental for securing a tenancy of two years or more but less than three years;

(c) one third of one month’s base rental for securing a tenancy of one year or more but less than two years; (d) one quarter of one month’s base rental for securing a renewal of tenancy of three years or more;

(e) one eighth of one month’s base rental for securing a renewal of tenancy of two years or more but less than three years; and

(f ) one twelfth of one month’s base rental for securing a renewal of tenancy of one year or more but less than two years.

Property management fees of 5.0% per annum of gross revenue of the Japanese Properties and 0.8% per annum of turnover rent of the Renhe Spring Zongbei Property in China, are paid to third parties on a monthly basis in arrears.


ANNUAL REPORT 2007

(b) Management fees Under the Trust Deed, the Manager is entitled to receive a base fee and a performance fee as follows:

i. Base fee The Manager is entitled to receive a base fee of 0.5% per annum of the Value of Trust Property (excluding

GST) (“Base Fee”) or such higher percentage as may be fi xed by an Extraordinary Resolution of a meeting of unitholders.

The Value of Trust Property means:

(a) the value of all authorised investments of the Group other than real estate related assets;

(b) the value of real estate related assets of any entity held by the Group if such holding is less than 30.0% of the equity of such entity; and

(c) where the Group invests in 30.0% or more of a real estate related asset of any entity, including any class of equity, equity–linked securities and/or securities issued in real estate securitisation, the Group’s proportionate interest in the value of the underlying real estate of the entity issuing the equity which comprises the real estate related asset.

The Manager has opted to receive, for the years ended 31 December 2007 and 31 December 2006, 60.0% of the Base Fee in respect of the Singapore properties in the form of units with the balance in cash. For the overseas properties acquired by the Group during the year ended 31 December 2007, the Manager has opted to receive 100.0% of the Base Fee in cash.

The Manager may opt to receive the Base Fee in respect of its Properties in cash or units or a combination of cash and units (as it may determine).

The portion of the Base Fee payable in cash shall be payable monthly in arrears and the portion of the Base Fee payable in the form of units shall be payable quarterly in arrears. If a trigger event occurs, resulting in the Manager being removed, the Manager is entitled to be paid the Base Fee up to the day on which the trigger event occurs.

ii. Performance fee The Manager is entitled to a performance fee (“Performance Fee”) where the accumulated return

(comprising capital gains and accumulated distributions and assuming all distributions are re–invested in the Trust) of the units (expressed as the “Trust Index”) in any six–month period ending 30 June or 31 December (“Half–Year”) exceeds the accumulated return (comprising capital gains and accumulated distributions and assuming re–investment of all distributions) of a benchmark index.

The Performance Fee is calculated in two tiers as follows: • a Tier 1 Performance Fee equal to 5.0% of the amount by which the accumulated return of the Trust

Index exceeds the accumulated return of the benchmark index, multiplied by the equity market capitalisation of the Trust; and

• a Tier 2 Performance Fee which is applicable only where the accumulated return of the Trust Index is in excess of 2.0% per annum (1.0% for each Half–Year) above the accumulated return of the benchmark index. This tier of the fee is calculated at 15.0% of the amount by which the accumulated return of the Trust Index is in excess of 2.0% per annum above the accumulated return of the benchmark index, multiplied by the equity market capitalisation of the Trust.

70

1 General (cont’d)

For the purposes of the Tier 1 Performance Fee and the Tier 2 Performance Fee, the amount by which the accumulated return of the Trust Index exceeds the accumulated return of the benchmark index shall be referred to as outperformance.

The outperformance of the Trust Index is assessed on a cumulative basis and any prior underperformance will need to be recovered before the Manager is entitled to any Performance Fee.

The Performance Fee, whether payable in any combination of cash and units or solely in cash or units will be payable six monthly in arrears. If a trigger event occurs in any Half–Year, resulting in the Manager being removed, the Manager is entitled to payment of any Performance Fee (whether structured in cash or in the form of units) to which it might otherwise have been entitled for that Half–Year in cash, which shall be calculated, as if the end of the Half–Year was the date of occurrence of the trigger event, in accordance with Clause 15.1.4 of the Trust Deed. If a trigger event occurs at a time when any accrued Performance Fee has not been paid, resulting in the Manager being removed, the Manager is entitled to payment of such accrued Performance Fee in cash.

The management fees (Base Fee and Performance Fee, including any accrued Performance Fee which has been carried forward from previous fi nancial years but excluding any acquisition fee or divestment fee) to be paid to the Manager in respect of a fi nancial year, whether in cash or in units or a combination of cash and units, is capped at an amount equivalent to 0.8% per annum of the Value of the Trust Property as at the end of the fi nancial year (referred to as the “annual fee cap”).

If the amount of such fees for a fi nancial year exceeds the annual fee cap, the Base Fee of the fi nancial year shall be paid to the Manager and only that portion of the Performance Fee equal to the balance of an amount up to the annual fee cap will be paid to the Manager. The remaining portion of the Performance Fee, which will not be paid, shall be accrued and carried forward for payment to the Manager in future Half–Years. If, at the end of a Half–Year, there is any accrued Performance Fee which has been accrued for a period of at least three years prior to the end of that Half–Year, such accrued Performance Fee shall be paid to the Manager if the accumulated return of the Trust Index in that three–year period exceeds the accumulated return of the benchmark index over the same period. The payment of such accrued Performance Fee shall not be subject to the annual fee cap.

(c) Acquisition and divestment feesThe Manager is entitled to receive an acquisition fee of 1.0% of the value of the real estate acquired. For any acquisition made by the Group in Singapore, any payment to third party agents or brokers in connection with the acquisition shall be borne by the Manager, and not additionally out of the Group. For any acquisition made by the Group outside Singapore, any payment to third party agents or brokers shall be borne by the Group, provided that the Manager shall charge an acquisition fee of 0.6% instead of 1.0%.

The Manager is entitled to receive a divestment fee of 0.5% of the value of the real estate divested. For any divestment made by the Group in Singapore, any payment to third party agents or brokers in connection with the divestment shall be borne by the Manager, and not additionally out of the Group. For any divestment made outside Singapore, the Manager shall charge a divestment fee of 0.5% of the sale price. The Manager also receives acquisition fees and divestment fees in instances other than an acquisition and divestment of real estate.

(d) Trustee’s feeUnder the Trust Deed, the Trustee’s fee shall not exceed 0.1% per annum of the value of the deposited property (subject to a minimum of $8,000 per month excluding out of pocket expenses and GST) or such higher percentage as may be fi xed by an Extraordinary Resolution of a meeting of unitholders. The Trustee’s fee is payable out of the deposited property of the Group on a monthly basis, in arrears. The Trustee is also entitled to reimbursement of expenses incurred in the performance of its duties under the Trust Deed.


ANNUAL REPORT 2007

Based on the current agreement between the Manager and the Trustee, the Trustee’s fee is charged on a scaled basis of up to 0.03% per annum of the value of the deposited property (subject to a minimum of $8,000 per month excluding out of pocket expenses and GST).

The Trustee’s fee is subject to annual review between the Trustee and the Manager.

2 Signifi cant accounting policies

(a) Basis of preparationThe fi nancial statements have been prepared in accordance with the Statement of Recommended Accounting Practice (“RAP”) 7 “Reporting Framework for Unit Trusts” issued by the Institute of Certifi ed Public Accountants of Singapore and the applicable requirements of the Code on Collective Investment Schemes (“CIS Code”) issued by the Monetary Authority of Singapore (“MAS”) and the provisions of the Trust Deed. RAP 7 requires that accounting policies adopted should generally comply with the principles relating to recognition and measurement of the Singapore Financial Reporting Standards (“FRS”) including related interpretations promulgated by the Council on Corporate Disclosure and Governance.

The fi nancial statements are presented in Singapore dollars and rounded to the nearest thousand, unless otherwise stated; and is prepared on the historical cost basis, except as set out in the accounting policies below.

The preparation of fi nancial statements in conformity with RAP 7 requires the Manager to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying amounts of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and any future periods affected.

Signifi cant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most signifi cant effect on the amount recognised in the fi nancial statements are described in the following notes to the fi nancial statements:

• Note 3 – Valuation of investment properties• Note 24 – Valuation of fi nancial instruments

The accounting policies set out below have been applied consistently by the Group and the Trust to all periods presented in these fi nancial statements.

(b) Consolidation

Business combinationsBusiness combinations are accounted for under the purchase method. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

The excess of the Group’s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities over the cost of acquisition is credited to the statement of total return in the period of the acquisition.

Subsidiaries Subsidiaries are entities controlled by the Group and include entities that are created to accomplish a narrow and well defi ned objective such as the execution of a specifi c transaction where the substance of the

72

2 Signifi cant accounting policies (cont’d)

relationship is that the Group controls the entity. Control exists when the Group has the power to govern the fi nancial and operating policies of an entity so as to obtain benefi ts from its activities. In assessing control, potential voting rights presently exercisable are taken into account. The fi nancial statements of subsidiaries are included in the consolidated fi nancial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group.

Transactions eliminated on consolidationIntra–group balances and transactions, and any unrealised income or expenses arising from intra–group transactions, are eliminated in preparing the fi nancial statements of the Group.

Accounting for subsidiaries by the TrustInterests in subsidiaries are stated in the Trust’s balance sheet at cost less accumulated impairment losses.

(c) Foreign currencies Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value was determined.

Foreign currency differences arising on retranslation are recognised in the statement of total return, except for differences arising on the retranslation of monetary items that in substance form part of the Group’s net investment in a foreign operation (see below).

Foreign operationsThe assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translated to Singapore dollars at exchange rates prevailing at the dates of the transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

Foreign currency differences are recognised in net assets attributable to unitholders. When a foreign operation is disposed of, in part or in full, the relevant amount in the foreign currency translation reserve is transferred to the statement of total return.

Net investment in a foreign operationExchange differences arising from monetary items that in substance form part of the Trust’s net investment in a foreign operation are recognised in the Trust’s statement of total returns. Such exchange differences are reclassifi ed to the foreign currency translation reserve in the consolidated fi nancial statements. When the foreign operation is disposed of, the cumulative amount in foreign currency translation reserve is transferred to the statement of total return as an adjustment to the profi t or loss arising on disposal.

(d) Plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of an asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the cost of dismantling and removing the items and restoring the site on which they are located.


ANNUAL REPORT 2007

When parts of an item of plant and equipment have different useful lives, they are accounted for as separate items (major components) of plant and equipment. The cost of replacing part of an item of plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefi ts embodied within the part will fl ow to the Group and its cost can be measured reliably. The costs of the day–to–day servicing of plant and equipment are recognised in the statement of total return as incurred.

Depreciation on plant and equipment is recognised in the statement of total return on a straight–line basis over their estimated useful lives of 2 to 8 years.

Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date.

(e) Investment propertiesInvestment properties are stated at initial cost on acquisition, and at valuation thereafter. Valuation is determined in accordance with the Trust Deed, which requires investment properties to be valued by independent registered valuers in the following events:

• in such manner and frequency required under the Property Fund Guidelines issued by MAS; and• at least once every 12 months.

Any increase or decrease on revaluation is credited or charged to the statement of total return as a net revaluation surplus or defi cit in the value of the investment properties.

Subsequent expenditure relating to investment properties that has already been recognised is added to the carrying amount of the asset when it is probable that future economic benefi ts, in excess of originally assessed standard of performance of the existing asset, will fl ow to the Group. All other subsequent expenditure is recognised as an expense in the period in which it is incurred.

When an investment property is disposed of, the resulting gain or loss recognised in the statement of total return is the difference between net disposal proceeds and the carrying amount of the property.

Investment properties are not depreciated. The investment properties are subject to continued maintenance and regularly revalued on the basis set out above.

(f) Intangible asset

GoodwillGoodwill and negative goodwill arise on the acquisition of subsidiaries.

Goodwill represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities of the acquiree.

Goodwill arising on the acquisition of subsidiaries is presented in intangible asset. Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested for impairment as described in Note 2(i). Negative goodwill is recognised immediately in the statement of total return.

(g) Financial instruments

Derivative fi nancial instruments and hedging activitiesThe Group holds derivative fi nancial instruments to hedge its foreign currency and interest rate risk exposures arising from fi nancing and investing activities. Derivative fi nancial instruments are not used for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.

74


Derivatives are recognised initially at fair value; attributable transaction costs are recognised in the statement of total return when incurred.

Subsequent to initial recognition, derivatives are measured at fair value. The gain or loss on remeasurement to fair value is recognised immediately in the statement of total return. However, if derivatives qualify for hedge accounting, subsequent to initial recognition, changes in fair value therein are accounted for as described below.

Cash fl ow hedges

Changes in the fair value of a derivative hedging instrument designated as a cash fl ow hedge are recognised directly in net assets attributable to unitholders to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in the statement of total return.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in net assets attributable to unitholders remains there until the forecast transaction occurs. When the hedged item is a non-fi nancial asset, the amount recognised in net assets attributable to unitholders is transferred to the carrying amount of the asset when it is recognised. In other cases the amount recognised in net assets attributable to unitholders is transferred to the statement of total return in the same period that the hedged item affects total return.

Fair value hedges

Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognised in the statement of total return. The hedged item also is stated at fair value in respect of the risk being hedged; the gain or loss attributable to the hedged risk is recognised in the statement of total return and the carrying amount of the hedged item is adjusted.

Non–derivative fi nancial instrumentsNon–derivative fi nancial instruments comprise trade and other receivables, cash and cash equivalents, borrowings, and trade and other payables. Cash and cash equivalents comprise cash balances and bank deposits.

Non–derivative fi nancial instruments are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, non–derivative fi nancial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

A fi nancial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group’s contractual rights to the cash fl ows from the fi nancial assets expire or if the Group transfers the fi nancial asset to another party without retaining control or transfers substantially all the risks and rewards of the asset. Regular way purchases and sales of fi nancial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group’s obligations specifi ed in the contract expire, are discharged or cancelled.

(h) Impairment of fi nancial assets A fi nancial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash fl ows of that asset.

An impairment loss in respect of a fi nancial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash fl ows discounted at the original effective interest rate.


ANNUAL REPORT 2007

Individually signifi cant fi nancial assets are tested for impairment on an individual basis. The remaining fi nancial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the statement of total return.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For fi nancial assets measured at amortised cost, the reversal is recognised in the statement of total return.

(i) Impairment of non–fi nancial assetsThe carrying amounts of the Group’s non–fi nancial assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated at each balance sheet date. For goodwill, the recoverable amount is estimated at each reporting date, and, as and when indicators of impairment are identifi ed.

An impairment loss is recognised if the carrying amount of an asset or its cash–generating unit exceeds its estimated recoverable amount. A cash–generating unit is the smallest identifi able asset group that generates cash fl ows that largely are independent from other assets and groups. Impairment losses are recognised in the statement of total return whenever the carrying amount of an asset or its cash–generating unit exceeds its recoverable amount. Impairment losses recognised in respect of cash–generating units are allocated fi rst to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

The recoverable amount of an asset or cash–generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre–tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset or cash–generating unit.

An impairment loss in respect of goodwill is not reversed. In respect to other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised.

(j) Employee benefi tsShort–term employee benefi t obligations, including contributions to defi ned contribution pension plans, if any, are measured on an undiscounted basis and are expensed to the statement of total returns as the related service is provided.

A provision is recognised for the amount expected to be paid under short–term cash bonuses if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(k) Unit issue costs Unit issue costs represent expenses incurred in connection with the initial public offering of the Trust. All such expenses were deducted directly against net assets attributable to unitholders.

(l) Revenue recognition

Rental income from operating leasesRental income receivable under operating leases is recognised in the statement of total return on a straight–line basis over the term of the lease, except where an alternative basis is more representative of the pattern of benefi ts to be derived from the leased assets. Lease incentives granted are recognised as an integral part of the total rental to be received. Contingent rentals, which include gross turnover rental, are recognised as income in the accounting period on a receipt basis. No contingent rentals are recognised if there are uncertainties due to the possible return of amounts received.

76


(m) Finance income and expenseFinance income comprises interest income on funds invested and derivative fi nancial instruments. Interest income is recognised as it accrues, using the effective interest method.

Finance expenses comprise interest expense on borrowings and derivative fi nancial instruments. All borrowing costs are recognised in the statement of total return using the effective interest method.

(n) Expenses

(i) Property operating expenses Property operating expenses are recognised on an accrual basis. Included in property operating

expenses are property tax, maintenance and sinking fund contributions, leasing and upkeep expenses, and the Property Manager’s fee and leasing commission which is based on the applicable formula stipulated in Note 1(a).

(ii) Management fees Management fees are recognised on an accrual basis based on the applicable formula stipulated in

Note 1(b).

(iii) Trust expenses Trust expenses are recognised on an accrual basis. Included in trust expenses is the Trustee’s fee which

is based on the applicable formula stipulated in Note 1(d).

(o) TaxationIncome tax expenses on the total return for the period comprises current and deferred tax. Income tax is recognised in the statement of total return except to the extent that it relates to items directly related to net assets attributable to unitholders, in which case it is recognised in net assets attributable to unitholders.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for fi nancial reporting purposes and the amounts used for taxation purposes. The temporary differences on initial recognition of assets or liabilities that affect neither accounting nor taxable profi t are not provided for. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profi ts will be available against which the unused tax losses and credits can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefi t will be realised.

The Inland Revenue Authority of Singapore (“IRAS”) has issued a Tax Ruling on the taxation of the Trust for income earned and expenditure incurred after its listing on the SGX–ST. Subject to meeting the terms and conditions of the Tax Ruling, the Trustee will not be assessed to tax on the taxable income of the Trust. Instead, the Trustee and the Manager will deduct income tax at the prevailing corporate tax rate (currently at 18.0%) from the distributions made to unitholders that are made out of the taxable income of the Trust. However, where the benefi cial owners are individuals or qualifying unitholders, the Trustee and the Manager will make the distributions to such unitholders without deducting any income tax. Also, where the benefi cial owners are foreign non–individual unitholders, the Trustee and the Manager will deduct Singapore income tax at the reduced rate of 10.0% for distributions made during the period from the date of constitution to 17 February 2010.


ANNUAL REPORT 2007

A qualifying unitholder is a unitholder who is:

(a) a Singapore–incorporated company which is a tax resident in Singapore;(b) a body of persons, other than a company or a partnership, registered or constituted in Singapore (for

example, a town council, a statutory board, a registered charity, a registered co–operative society, a registered trade union, a management corporation, a club and a trade and industry association); and

(c) a Singapore branch of a foreign company which has presented a letter of approval from the IRAS granting a waiver from tax deduction at source in respect of distributions from the Trust.

A foreign non–individual unitholder is one who is not a resident of Singapore for income tax purposes and

(a) which does not have a permanent establishment in Singapore; or(b) which carries on any operation in Singapore through a permanent establishment in Singapore where

the funds used to acquire the units are not obtained from that operation in Singapore.

The Trust is exempt from Singapore income tax under Section 13(12) of the Income Tax Act on the following income:

(a) dividends; and(b) interest on shareholder’s loans

payable by its subsidiaries out of underlying rental income derived from the investment properties in Japan and China. This exemption is granted subject to certain conditions, including the condition that the Trustee is a tax resident of Singapore. The Trust’s distribution policy is to at least distribute 90.0% of its taxable income for the year ended 31 December 2007 (2006: 100.0%). For any remaining amount of taxable income not distributed, tax will be assessed on, and collected from, the Trustee on such remaining amount (referred to as retained taxable income). In the event where a distribution is subsequently made out of such retained taxable income, the Trustee and the Manager will not have to make a further deduction of income tax from the distribution.

The above Tax Ruling does not apply to gains from sale of real properties, if considered to be trading gains derived from a trade or business carried on by the Trust. Tax on such gains or profi ts will be assessed, in accordance with Section 10(1)(a) of the Income Tax Act, Chapter 134 and collected from the Trustee. Where the gains are capital gains, it will not be assessed to tax and the Trustee and the Manager may distribute the capital gains without tax being deducted at source.

78

3 Investment properties GROUP TRUST

$’000 $’000

At 1 January 2006 1,327,000 1,327,000Change in fair value of investment properties 171,000 171,000

At 31 December 2006 1,498,000 1,498,000Additions and acquisition of investment properties 182,632 698Arising from acquisition of subsidiary (Note 26) 70,636 –Change in fair value of investment properties 448,870 433,652Translation differences 8,436 –

At 31 December 2007 2,208,574 1,932,350

Investment properties are stated at fair value based on valuations performed by independent professional valuers. In determining the fair value, the valuers have used valuation techniques which involves certain estimates. In relying on the valuation reports, the Manager has exercised its judgement and is satisfi ed that the valuation methods and estimates are refl ective of current market conditions. The fair values are based on open market values, which is the valuer’s opinion of the best price at which the sale of an interest in the property would complete unconditionally for cash consideration on the date of valuation and is prepared in accordance with recognised appraisal and valuation standards.

The valuers have considered the direct comparison method, capitalisation approach and discounted cash fl owsin arriving at the open market value as at the balance sheet date. The direct comparison method involves the analysis of comparable sales of similar properties and adjusting the sale prices to that refl ective of the investment properties. The capitalisation approach capitalises an income stream into a present value using single–year capitalisation rates, the income stream used is assumed to be on a fully leased basis and is also adjusted to market rentals currently being achieved within comparable investment properties and recent leasing transactions achieved within the investment property. The discounted cash fl ow method involves the estimation and projection of an income stream over a period and discounting the income stream with an internal rate of return to arrive at the market value. The discounted cash fl ow method requires the valuer to assume a rental growth rate indicative of market and the selection of a target internal rate of return consistent with current market requirements.

(a) The Singapore properties with carrying value totalling approximately $1,932.4 million (2006: $1,498.0 million) are mortgaged to secure credit facilities for the Trust (Note 12).

(b) The Group is restricted, under the Japanese bond covenants, to sell or dispose its interest in the Japanese properties, unless with the written approval from the bondholders (Note 12).


ANNUAL REPORT 2007

4 Plant and equipment GROUP TRUST $’000 $’000

Cost: At 1 January 2006 – –Additions 3,556 3,556

At 31 December 2006 3,556 3,556Additions 478 424Arising from acquisition of subsidiary (Note 26) 56 –Translation differences 2 –

At 31 December 2007 4,092 3,980

Accumulated depreciation:At 1 January 2006 – –Depreciation charge (125) (125)

At 31 December 2006 (125) (125)Depreciation charge (1,708) (1,700)

At 31 December 2007 (1,833) (1,825)

Carrying amount:At 31 December 2007 2,259 2,155

At 31 December 2006 3,431 3,431

5 Interests in subsidiaries TRUST

2007 2006 $’000 $’000

Equity investments at cost 54,656 –Advances to subsidaries(1) 171,743 –

226,399 – (1) Advances to subsidiaries are unsecured and stated at cost. The advances form part of the Trust’s interests in subsidiaries as settlement of

these amounts are neither planned nor likely to occur in the foreseeable future.

Details of the subsidiaries are as follows:

Effective equity held by Name of subsidiary Country of incorporation the Group 2007 2006 % %

MMP REIT Japan SPC One Pte Ltd(2) Singapore 100 –MMP REIT Japan SPC Two Pte Ltd(2) Singapore 100 –MMP REIT MTN Pte Ltd(2) Singapore 100 –MMP REIT One TMK(3) Japan 100 –MMP REIT Spring Ltd(4) British Virgin Islands 100 –Top Sure Investment Limited(5) Hong Kong 100 –Renhe Spring Department Store Co., Ltd(3) People’s Republic of China 100 –

(2) Audited by KPMG Singapore (3) Audited by other member fi rms of KPMG International (4) Not required to be audited by the laws of the country of incorporation (5) Audited by other auditors

80

6 Intangible asset The intangible asset represents goodwill on acquisition of Top Sure Investment Limited (“Top Sure”) in August 2007. Top Sure owns, through its wholly owned subsidiary, a retail property in Chengdu, People’s Republicof China.

7 Derivative fi nancial instruments GROUP TRUST 2007 2006 2007 2006 $’000 $’000 $’000 $’000

Assets: Foreign exchange forward contracts 480 – 480 –Interest rate swaps 347 – 347 –Interest rate cap 1,093 – 620 –

1,920 – 1,447 –

Liabilities: Cross currency swaps (8,036) – (8,036) –

(8,036) – (8,036) –

The following are the expected contractual undiscounted cash infl ows (outfl ows) of derivative fi nancial liabilities including interest payments:

Cash fl ows Carrying Contractual Within Within amount cash fl ows 1 year 1 to 5 years 2007 $’000 $’000 $’000 $’000

Group and Trust Derivative fi nancial liabilities

Cross currency swaps – infl ow – 177,953 4,728 173,225– outfl ow (8,036) (177,125) (3,417) (173,708)

(8,036) 828 1,311 (483)

8 Trade and other receivables GROUP TRUST

2007 2006 2007 2006 $’000 $’000 $’000 $’000

Trade receivables 5,212 715 684 715Deposits 45 45 45 45Prepayments 378 321 283 321Lease incentives 2,525 2,950 2,525 2,950Other receivables 1,339 170 1,744 170

9,499 4,201 5,281 4,201

Concentration of credit risk relating to trade receivables is limited due to the Group’s varied mix of tenants, and credit policy of obtaining security deposits from tenants for leasing the Group’s investment properties. As at 31 December 2007, the Group has security deposits of approximately $22.7 million (2006: $17.1 million) (Note 10).


ANNUAL REPORT 2007

The tenant profi le of the Group is generally well-diversifi ed. Except for one major tenant in the Ngee Ann City Property, which accounted for 29.1% (2006: 33.4%) of the Group’s revenue for the year ended 31 December 2007, there are no other tenant that accounts for more than 5.0% of the Group’s revenue for the years ended 31 December 2007 and 31 December 2006 respectively.

Due to these factors and based on the Group’s historical experience in the collection of trade receivables, the Manager believes that no signifi cant credit risk is inherent in the Group’s trade receivables.

Impairment lossesThe ageing of trade receivables at the reporting date is:

Impairment Impairment Gross losses Gross losses 2007 2007 2006 2006 $’000 $’000 $’000 $’000

Group Not past due(1) 4,528 – – –Past due 0 – 30 days 488 – 356 –Past due 31 – 120 days 194 – 359 –More than one year 2 – – –

5,212 – 715 –

Trust Not past due – – – –Past due 0 – 30 days 488 – 356 –Past due 31 – 120 days 194 – 359 –More than one year 2 – – –

684 – 715 –

Security deposits of approximately $0.5 million (2006: $0.5 million) are held as collateral against the Group’s and the Trust’s past due receivables as at 31 December 2007. Based on historical default rates, the Group believes that no impairment allowance is necessary. These receivables arise mainly from tenants that have a good record with the Group.

(1) Includes a receivable of approximately $4.5 million (2006: $Nil) from a third party prepaid card centre, arising from turnover rental which was fully recovered in January 2008.

9 Cash and cash equivalents GROUP TRUST

2007 2006 2007 2006 $’000 $’000 $’000 $’000

Cash at bank and in hand(1) 28,267 6,088 4,638 6,088Fixed deposits with a fi nancial institution(2) 14,419 14,034 14,419 14,034

42,686 20,122 19,057 20,122

The weighted average effective interest rates per annum relating to cash and cash equivalents at the balance sheet date for the Group and the Trust are 2.29% (2006: 2.98%). Interest rates reprice at intervals of two months.

(1) Includes cash at bank of approximately $3.7 million (2006: $Nil), being working capital and debt service reserves held in respect of the Japanese properties as at 31 December 2007.

(2) Includes fi xed deposits of approximately $13.7 million (2006: $13.7 million) held for the settlement of the retention sum payable (Note 10).

82

10 Trade and other payables GROUP TRUST 2007 2006 2007 2006 $’000 $’000 $’000 $’000

Trade payables and accrued operating expenses 12,770 3,203 4,766 3,203Amounts due to: – the Manager (trade)(1) 1,263 277 1,263 277– the Property Manager (trade)(1) 405 280 405 280– the Trustee (non–trade)(1) 112 107 112 107Interest payable 693 403 615 403Deferred income 1,179 1,580 1,179 1,580Retention sum payable(2) 13,700 13,372 13,700 13,372Security deposits(3) 22,678 17,072 19,167 17,072Other payables 4,763 2,799 3,383 2,799

57,563 39,093 44,590 39,093 (1) The amounts due to the Manager, Property Manager and Trustee are unsecured, interest free and repayable on demand.

(2) Represents the fair value amount of the retention sum held by the Trustee to indemnify the Trust against any loss, costs, expenses, claimed or incurred on the strata redevelopment of the Wisma Atria Property and for any additional property tax payable on the Singapore properties. The retention sums will be retained until the later of (a) two years from the date of completion of the sale and purchase of the Singapore properties or (b) fi nalisation of strata redevelopment and payment by the Trust for additional property tax assessed by IRAS. The amount is expected to be repaid during the year ending 31 December 2008.

(3) Except for security deposits, all trade and other payables are expected to be settled within 12 months. Security deposits represent cash deposits received in advance from tenants to secure leases of the Group’s investment properties. The weighted average lease term expiry for the Group and the Trust is approximately 3.3 years as at 31 December 2007 (2006: 3.4 years).

11 Deferred tax liabilities GROUP TRUST

2007 2006 2007 2006 $’000 $’000 $’000 $’000

Deferred tax liabilities 16,598(1) – – –

(1) The deferred tax liability is mainly in respect of the Renhe Spring Zongbei Property, newly acquired in the People’s Republic of China, and has been estimated on the basis of an asset sale at the current book value. The amount will not be payable if the investment property was sold through a sale of shares in the holding company in Hong Kong.

Movements in deferred tax liabilities of the Group (prior to offsetting of balances) during the year are as follows:

Recognised At 1 in statement Acquisition At 31 January of return of Translation December 2007 (Note 19) subsidiary differences 2007 $’000 $’000 $’000 $’000 $’000

GroupDeferred tax liabilities Plant and equipment – 108 – – 108Investment properties – 2,335 14,141 (350) 16,126Borrowings – (28) 402 (10) 364

Total – 2,415 14,543 (360) 16,598


ANNUAL REPORT 2007

12 Borrowings GROUP TRUST 2007 2006 2007 2006 $’000 $’000 $’000 $’000

Secured borrowings Amount repayable within one year – 11,000 – 11,000Amount repayable after one year 380,000 380,000 380,000 380,000

380,000 391,000 380,000 391,000Unsecured borrowings Amount repayable within one year 235,833 – 235,000 –Amount repayable after one year 45,067 – – –

Total borrowings 660,900 391,000 615,000 391,000Unamortised loan acquisition expenses (3,369) (2,800) (2,259) (2,800)

Total borrowings (net of transaction costs) 657,531 388,200 612,741 388,200

Terms and debt repayment schedule Terms and conditions of the outstanding borrowings are as follows:

Nominal interest Year of Face Carrying rate per annum maturity value amount 2007 % $’000 $’000

Group Term loan facility(1) 3.18% 2010 380,000 380,000Bridging loan(2) 2.77–2.94% 2008 160,000 160,000Revolving credit facilities(3) 2.37–3.15% 2008 75,000 75,000Japanese bond(4) 1.71% 2012 39,798 39,798Loan payable to property vendor(5) – 2014 7,873(5) 6,102

662,671 660,900

Trust Term loan facility(1) 3.18% 2010 380,000 380,000Bridging loan(2) 2.77-2.94% 2008 160,000 160,000Revolving credit facilities(3) 2.37-3.15% 2008 75,000 75,000

615,000 615,000

2006

Group and Trust Term loan facility(1) 3.18% 2010 380,000 380,000Revolving credit facilities(6) 3.68 – 4.02% 2007 11,000 11,000

391,000 391,000

(1) The Singapore dollar term loan facility of $380 million (2006: $380 million), with a tenor of fi ve years, was granted by a special purpose company, Orion Prime Ltd (“Orion Prime”), and was funded from proceeds received from a Euro note issuance programme in 2005.

The term loan facility has a fi xed rate of interest of 3.18% per annum up to its maturity in September 2010 and is secured on

the following:

i) A fi rst legal mortgage on the Trust’s Singapore properties; ii) A fi rst fi xed charge over the Trust’s rental collection, current and fi xed deposit accounts; iii) An assignment of the Trust’s rights, title and interest in the property management agreement, tenancy documents and proceeds and

insurance policies in relation to the Singapore properties; and iv) A fi xed and fl oating charge over the assets of the Trust in relation to the Singapore properties, agreements and collateral, as required

by the fi nancial institution granting the facilities.

84

(2) The Singapore dollar $160 million bridging loan, which was used to fi nance the acquisition of the Japanese properties, is repayable in May 2008. The interest rate on the loan has been fi xed at an average rate of 2.32% per annum until September 2012, using a combination of interest rate swaps and cross currency swaps.

(3) The Singapore dollar $75 million due under the revolving credit facilities as at 31 December 2007 comprises a $60 million facility fully drawn to fi nance the acquisition of the Renhe Spring Zongbei Property and $15 million drawn from a $35 million facility used for working capital. These borrowings have not been hedged for interest rate exposures. Out of the $60 million drawn facility, $30 million is repayable in May 2008, while the remaining $30 million is repayable in August 2008. The $15 million drawn from the $35 million facility is repayable in September 2008.

(4) The JPY3.1 billion (approximately Singapore dollar $40 million) fi ve-year Japanese bond was used to part fi nance the acquisition of the Japanese properties and has been hedged via an interest rate cap (capped at 2.1% per annum) until May 2012, the fi nal maturity of the Japanese bond. Whilst no security has been pledged, the bondholders have a statutory preferred right, under the Japan Asset Liquidation Law, to receive payment of all obligations under the Japanese bond prior to other creditors out of the assets of the issuer (MMP REIT One TMK).

(5) The carrying amount of $6.1 million represents the discounted value of a Renminbi RMB40 million (approximately Singapore dollar $7.9 million) seven-year loan payable to a third party property vendor and was assumed as part of the acquisition of the Renhe Spring Zongbei Property in the People’s Republic of China. The amount is interest-free and repayable over seven years in equal, annual instalments.

(6) The Singapore dollar $11 million borrowing as at 31 December 2006, drawn from a $30 million revolving credit facility obtained by Orion Prime from certain fi nancial institutions, was fully repaid during the year ended 31 December 2007.

The following table shows the expected contractual undiscounted cash outfl ows of interest-bearing borrowings including interest payments and excluding the impact of netting agreements:

Cash fl ows Carrying Contractual Within Within After amount cash fl ows 1 year 1 to 5 years 5 years 2007 $’000 $’000 $’000 $’000 $’000

Group Term loan facility 380,000 (412,908) (12,117) (400,791) –Bridging loan 160,000 (161,587) (161,587) – –Revolving credit facilities 75,000 (76,103) (76,103) – –Japanese bond 39,798 (42,977) (682) (42,295) –Loan payable to property vendor 6,102 (7,873) (1,124) (4,500) (2,249)

660,900 (701,448) (251,613) (447,586) (2,249)

Trust Term loan facility 380,000 (412,908) (12,117) (400,791) –Bridging loan 160,000 (161,587) (161,587) – –Revolving credit facilities 75,000 (76,103) (76,103) – –

615,000 (650,598) (249,807) (400,791) –

2006

Group and Trust

Term loan facility 380,000 (424,992) (12,084) (412,908) –

Revolving credit facilities 11,000 (11,303) (11,303) – –

391,000 (436,295) (23,387) (412,908) –


ANNUAL REPORT 2007

13 Units in issue TRUST

2007 2006 No. of units No. of units ’000 ’000

At 1 January 947,375 943,000Issue of units:– Management fees issued in units (base fee) 3,873 4,375– Management fees issued in units (performance fee)(1) 81 –

At 31 December 951,329 947,375Units to be issued:– Management fees payable in units (base fee) 1,188 1,075

Total issued and issuable units at 31 December 952,517 948,450 (1) During the year ended 31 December 2007, the Trust issued 80,961 new units at an issue price of $1.4335 per unit as satisfaction of the

Manager’s performance fee entitlement in respect of the period from 8 August 2005 to 31 December 2005.

Each unit in the Trust represents an undivided interest in the Trust. The rights and interests of unitholders are contained in the Trust Deed and include the right to:

• Attend all unitholders meetings. The Trustee or the Manager may (and the Manager shall at the request in writing of not less than 50 unitholders or one-tenth in number of the unitholders, whichever is the lesser) at any time convene a meeting of unitholders in accordance with the provisions of the Trust Deed;

• Receive income and other distributions attributable to the units held; and• Participate in the termination of the Trust by receiving a share of all net cash proceeds derived from the

realisation of the assets of the Trust less any liabilities, in accordance with their proportionate interests in the Trust. However, a unitholder does not have the right to require that any assets (or part thereof ) of the Trust be transferred to him.

The restrictions of a unitholder include the following:

• A unitholder’s right is limited to the right to require due administration of the Trust in accordance with the provisions of the Trust Deed; and

• A unitholder has no right to request the Trust to redeem his units while the units are listed on SGX–ST.

A unitholder’s liability is limited to the amount paid or payable for any units in the Trust. The Trust Deed provides that no unitholders will be personally liable to indemnify the Trustee or any creditor of the Trustee in the event that liabilities of the Trust exceed its assets.

KWhile every effort has been taken to carry out instruction to customers satisfactionNO RESPONSIBILITY liablilty will be accepted for errorsCUSTOMERSARE THEREFOREURGEDTO CHECKTHOROUGHLY BEFOREAUTHORISINGPRINT RUNSDALIM

1 2 3 4 5 6 7 8 9 10 OK DVD:SL032 SL

SL238556 MAC11osx 13.03.2008 175#LCH/CLB

2P541CEquusMMP Reit AR07 Fin57-105v5.indd 85MMP Reit AR07 Fin57-105v5.indd 85 3/13/08 7:39:50 PM3/13/08 7:39:50 PM

86

14 Gross revenue GROUP TRUST

2007 2006 2007 2006 $’000 $’000 $’000 $’000

Property rental income 96,962 89,105 92,669 89,105Turnover rental income 5,742 714 1,446 714Other income 255 57 199 57

102,959 89,876 94,314 89,876

15 Property operating expenses GROUP TRUST

2007 2006 2007 2006 $’000 $’000 $’000 $’000

Maintenance and sinking fund contributions 5,459 5,348 5,348 5,348Property Manager’s fees 2,829 2,696 2,829 2,696Property tax 9,052 8,588 8,834 8,588Depreciation expense 1,708 125 1,700 125Leasing and upkeep expenses 3,418 1,528 2,918 1,528Staff costs (1) 209 – – –Other property management fees 457 – – –Marketing expenses 1,897 1,398 1,605 1,398Administrative expenses 1,116 941 913 941

26,145 20,624 24,147 20,624

(1) Relates solely to the staff costs of the Group’s newly acquired wholly owned subsidiary, Renhe Spring Department Store Co., Ltd, which operates a retail property in Chengdu, People’s Republic of China.

16 Management fees

Management fees include base fees and performance fees payable to the Manager, and asset management fees payable to the manager of the Japanese properties. Base fees paid and payable to the Manager for the year ended 31 December 2007 amounted to approximately $8,751,000 (2006: $6,549,000). Approximately $92,000 (2006: $Nil) was paid to the manager of the Japanese properties for the year ended 31 December 2007.

The Manager has opted to receive, for the years ended 31 December 2007 and 31 December 2006, 60.0% of the Base Fee in respect of the Singapore properties in the form of units with the balance in cash. For the overseas properties acquired by the Group during the year ended 31 December 2007, the Manager has opted to receive 100.0% of the Base Fee in cash.

No performance fee was earned by the Manager during the year ended 31 December 2007 (2006: $Nil).


ANNUAL REPORT 2007

17 Trust expenses GROUP TRUST

2007 2006 2007 2006 $’000 $’000 $’000 $’000

Auditor’s remuneration 266 124 167 124Trustee’s fees 303 253 303 253Professional fees 497 396 414 396Other trust expenses 394 703 352 703

1,460 1,476 1,236 1,476

Included in professional fees are non–audit fees of $64,000 (2006: $24,000) paid to the auditor and a member fi rm of KPMG International.

18 Finance income and expense GROUP TRUST 2007 2006 2007 2006 $’000 $’000 $’000 $’000

Interest income 222 344 222 344

Finance income 222 344 222 344

Interest on borrowings 16,011 12,711 13,851 12,711Interest on derivatives (net) (497) – (596) –Amortisation of transaction costs capitalised 934 772 781 772

Finance expense 16,448 13,483 14,036 13,483

19 Income tax expense GROUP TRUST

2007 2006 2007 2006 $’000 $’000 $’000 $’000

Current tax expense 773 – – –Deferred tax expense 2,415 – – –

3,188 – – –

Reconciliation of effective tax rate Total return before tax and distribution 490,297 217,412 474,746 217,412

Income tax using Singapore tax rate of 18% (2006: 20%) 88,253 43,482 85,454 43,482Effect of different tax rates in other countries (283) – – –Effect of income not subject to tax (78,057) (34,200) (78,057) (34,200)Non–tax deductible items 3,445 1,697 2,773 1,697Tax transparency (10,170) (10,979) (10,170) (10,979)

3,188 – – –

88

20 Earnings per unit

Basic earnings per unit is based on:

GROUP TRUST

2007 2006 2007 2006 $’000 $’000 $’000 $’000

Total return for the year after tax, before distribution 487,109 217,412 474,746 217,412

Earnings per unit (cents) 51.30 22.98 50.00 22.98

GROUP AND TRUST 2007 2006 No. of units No. of units ’000 ’000

Weighted average number of unitsIssued units at the beginning of the year 947,375 943,000Effect of units issued 2,161 2,969

Weighted average number of units issued at the end of the year 949,536 945,969Effect of units to be issued as payment of management fees 3 3

Weighted average number of issued and issuable units at the end of the year 949,539 945,972

Diluted earnings per unit is the same as the basic earnings per unit as there are no dilutive instruments in issue during the year.

21 Unit issue costs

Unit issue costs comprised professional and other fees, underwriting and selling commission and other miscellaneous issue expenses. These expenses were deducted directly against net assets attributable to unitholders.

22 Commitments

(a) Capital commitment The Group has capital commitments of approximately $2.7 million (2006: $Nil) authorised but not

contracted for as at 31 December 2007, for renovation works and space reconfi guration of its Singapore properties.

(b) Lease commitment The Group leases out its investment properties. Non–cancellable operating lease rentals are receivable

as follows: GROUP TRUST 2007 2006 2007 2006 $’000 $’000 $’000 $’000

Receivable: – Within 1 year 106,139 83,208 97,672 83,208 – After 1 year but within 5 years 222,048 205,101 194,916 205,101 – After 5 years 21,927 13,091 13,092 13,091

350,114 301,400 305,680 301,400

Except for one lease in Ngee Ann City Property (expiring in 2013) and various master leases pertaining to the Japanese Properties (expiring between 2015 to 2017), the Group’s leases generally contain an initial non-cancellable period ranging from one to fi ve years. Subsequent renewals are negotiated with the lessees.


ANNUAL REPORT 2007

23 Signifi cant related party transactions

For the purposes of these fi nancial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise signifi cant infl uence over the party in making fi nancial and operating decisions, or vice versa, or where the Group and the party are subject to common signifi cant infl uence. Related parties may be individuals or other entities.

In the normal course of operations of the Group, management fees, property management fees and trustee fees have been paid or are payable to the Manager, Property Manager and Trustee respectively.

Other than related party information shown elsewhere in the fi nancial statements, the following were signifi cant related party transactions carried out in the normal course of business:

GROUP AND TRUST

2007 2006 $’000 $’000

Property rental income from related parties of the Manager 2,350 2,880Property rental income from the Manager and Property Manager 707 707Lease commission fees paid to the Property Manager (798) (466)Acquisition fees paid to the Manager (1,806) –Reimbursements paid/payable to the Property Manager (872) (771)

24 Financial risk management

Capital managementThe Manager reviews the Group’s use of appropriate levels of debt and equity capital to fund acquisitions and new investments, and aims to maximize the cheaper source of capital to deliver higher returns to unitholders. Given the Group’s relatively low gearing level of 29.0% (2006: 25.6%), the Group intends to optimise the level of borrowings before considering raising equity. The use of borrowings does however result in returns being infl uenced by market interest rates. The Group intends to hedge the majority of any interest rate and foreign currency risks by entering into derivative fi nancial instruments to help protect the unitholders’ returns from interest rate and foreign currency volatility.

The Property Fund Guidelines stipulates that the total borrowings and deferred payments (together the “Aggregate Leverage”) of a property fund should not exceed 35.0% of the fund’s deposited property. The aggregate leverage of a property fund may exceed 35.0% of the fund’s deposited property (up to a maximum of 60.0%) only if a credit rating of the property fund from Fitch Inc., Moody’s or Standard and Poor’s is obtained and disclosed to the public. The property fund should continue to maintain and disclose a credit rating so long as its aggregate leverage exceeds 35.0% of the fund’s deposited property.

The Group and the Trust has maintained its corporate rating of Baa1 and complied with the Aggregate Leverage limit of 60.0% during the fi nancial year.

Overview of fi nancial risk management objectives and policiesThe Group’s returns are primarily from net operating income and capital appreciation of its assets. However, these returns are exposed to fi nancial risks including credit, liquidity, interest rate and foreign currency risks. The Manager has implemented a fi nancial risk management policy to actively manage these fi nancial risks to provide certainty and stability of distributions to unitholders, whilst maintaining or increasing unitholders’ equity. This is achieved by entering into hedges to stabilise interest costs, and to stabilise the Singapore dollar equivalent of foreign currency income and foreign currency net investments. The overall strategy is to hedge the majority of exposures within limits stipulated in the policy, having regard to the availability of hedge instruments and their associated cost.

90

The Group has a system of controls in place to create an acceptable balance between the cost of the fi nancial risks occurring and the cost of managing these risks. The Manager continually monitors the Group’s fi nancial risk management process to ensure that an appropriate balance between risk and control is achieved. Financial risk management policies and systems are reviewed regularly to refl ect changes in market conditions and the Group’s activities. The fi nancial risk management policies are described in greater detail below.

Credit riskCredit risk is the potential fi nancial loss resulting from the failure of a tenant or a counterparty to settle its fi nancial and contractual obligations to the Group, as and when they fall due.

The Group has established credit limits for its tenants and monitors their balances on an ongoing basis. Credit evaluations are performed by the Group before lease agreements are entered into with tenants. Cash and fi xed deposits are placed with fi nancial institutions which are regulated.

The maximum exposure to credit risk is represented by the carrying value of each fi nancial asset on the balance sheet. Concentration of credit risk is limited and insignifi cant due to the Group’s varied mix of tenants, and credit policy of obtaining security deposits from tenants for leasing the Group’s investment properties.

Liquidity riskThe Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate to fi nance its operations and to mitigate the effects of fl uctuations in cash fl ows. Typically the Group ensures that it has suffi cient cash on demand to meet expected operational expenses for a reasonable period, including the servicing of fi nancial obligations.

The Group maintains unsecured and short term revolving credit facilities (the “facilities”), comprising a $60 million facility and a $35 million facility with two major banks in Singapore. As at 31 December 2007, the Group has drawn down $75 million from the facilities, with a remaining $20 million available for working capital uses.

In addition, the Group also monitors and observes the Property Funds Guidelines issued by MAS concerning limits on total borrowings.

Interest rate riskThe Group’s exposure to changes in interest rates relates primarily to its interest–earning fi nancial assets and interest–bearing fi nancial liabilities. Interest rate risk is managed by the Manager on an ongoing basis with the primary objective of limiting the extent to which net interest expense could be affected by adverse movements in interest rates.

The Group’s policy is to hedge the majority of its interest rate exposure in the medium term by using fi xed rate debt and interest rate derivatives. The policy aims to protect the Group’s earnings from the volatility in interest rates, providing stability to unitholders’ returns.

The Group has fi xed approximately 89% of its debt for the next 2.75 years using a combination of derivative fi nancial instruments and fi xed rate debt. The weighted average interest rate on borrowings including hedges was 2.69% per annum as at ended 31 December 2007.

At 31 December 2007, the Group has hedged its exposure to changes in interest rates on its bridging loan by entering into the following contracts;

(i) Interest rate swap contracts whereby it receives a variable rate equal to the SIBOR on the notional contract amount of $80 million (2006: $Nil) until September 2013, and pays a fi xed rate interest of 3.12% per annum up to September 2012, and 3.60% per annum one year thereafter.

(ii) Interest rate cap contracts, with a notional contract amount of $85 million (2006: $Nil), where interest rates are capped at between 3.5% to 4% per annum until September 2012.


ANNUAL REPORT 2007

(iii) Cross currency swap contracts with a notional contract amount of $162 million (2006: $Nil), equivalent to approximately JPY13 billion. These cross currency swaps are denominated in Japanese Yen and have been entered into to achieve an appropriate mix of fi xed and fl oating rate exposures within the Group’s policy. The swaps mature over the next fi ve years following the maturity of the related loans and have fi xed interest rates ranging from 1.54% to 1.93% per annum.

Sensitivity analysisFor the interest rate swaps, interest rate cap, cross currency swaps and variable rate instruments, a change of 100 bps in interest rate at the reporting date would increase (decrease) total return of the Group by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

Total return 100 bps 100 bps increase decrease 2007 $’000 $’000

GroupVariable rate instruments (1,403) 1,403Derivative fi nancial instruments 8,824 (8,169)

7,421 (6,766)

2006

Group Variable rate instruments (110) 110

Foreign currency riskThe Group is exposed to foreign currency risk arising from its investments in Japan and People’s Republic of China. The income generated from these investments and net assets are denominated in foreign currencies, mainly Japanese Yen (“JPY”) and Chinese Renminbi (“RMB”).

The Group’s and the Trust’s exposures to foreign currency as at 31 December 2007 are as follows:

JPY RMB TOTAL $’000 $’000 $’000

Group Investment properties 199,464 76,760 276,224Plant and equipment – 103 103Intangible asset – 12,613 12,613Trade and other receivables 3,331 4,614 7,945Cash and cash equivalents 14,837 8,792 23,629Trade and other payables (4,411) (8,975) (13,386)Income tax payable (271) (385) (656)Deferred tax liabilities (386) (16,212) (16,598)Borrowings (39,798) (6,102) (45,900)

172,766 71,208 243,974

Trust Cash and cash equivalents 8 – 8Trade and other payables (1,384) – (1,384)

(1,376) – (1,376)

92

Sensitivity analysisA 10% strengthening of the Singapore dollar against the following currencies at the reporting date would increase/(decrease) net assets attributable to unitholders and the statement of total return as at 31 December 2007 by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and is stated before the impact of hedging instruments.

GROUP TRUST Net assets Net assets attributable to Statement of attributable to Statement of unitholders total return unitholders total return $’000 $’000 $’000 $’000

JPY (17,277) (921) 138 138RMB (7,121) (831) – –

A 10% weakening of the Singapore dollar against the above currencies would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

Income hedgingThe Group’s policy is to hedge the majority of the forecast net income from its overseas investments in the next two years, in order to minimise the impact of exchange rate fl uctuations on the distributions to unitholders. As at 31 December 2007, the Group has entered into foreign exchange forward contracts and cross currency swap contracts to hedge approximately 87% of the forecast foreign net income for the next two years.

Capital hedgingThe Group’s policy is to hedge substantially all of its capital invested in foreign currencies, in order to minimise the impact of exchange rate fl uctuations on the net asset value of the Group. As at 31 December 2007, the Group has entered into a combination of foreign currency denominated loans, cross currency swap contracts and a foreign currency option contract to hedge approximately 95% of its foreign currency net assets.

For its investments in Japan, the Group has a fi ve-year Japanese bond of JPY3.1 billion (equivalent to $40 million), which provides a natural hedge on the investment. For the remaining foreign currency exposure, the Group has entered into JPY-denominated cross currency swap contracts of approximately JPY13.0 billion (equivalent to $162 million), which mature over the next fi ve years.

For its investments in People’s Republic of China, the Group has entered into a foreign currency option contract, whereby the Group has the option to sell RMB342.7 million for $63 million at an exchange rate of RMB5.44:$1.00 up to September 2012.

Sensitivity analysisFor the foreign exchange forwards, foreign currency option and cross currency swaps, a change of 10% in foreign exchange rate at the reporting date would increase/(decrease) net assets attributable to unitholders and the statement of total return as at 31 December 2007 by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

Net assets attributable to Statement unitholders of total return 10% 10% 10% 10% increase decrease increase decrease 2007 $’000 $’000 $’000 $’000

GroupDerivative fi nancial instruments 16,324 (17,939) 16,324 (17,939)


ANNUAL REPORT 2007

Estimation of fair valueThe following summarises the signifi cant methods and assumptions used in estimating the fair values of fi nancial instruments of the Group and the Trust.

Financial derivativesThe fair value of foreign exchange forward contracts is based on their listed market price, if available. If a listed market price is not available, fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual period to maturity of the contract using a risk–free interest rate (based on government bonds).

The fair value of interest rate swaps, cross currency swaps and interest rate cap contracts are based on broker quotes. These quotes are tested for reasonableness by discounting estimated future cash fl ows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date.

The Group’s foreign exchange forward contracts, interest rate swaps, cross currency swaps and interest rate cap contracts have been recognised as derivative fi nancial instruments in the balance sheet and are stated at their fair values, disclosed in Note 7 to the fi nancial statements.

Non–derivative fi nancial liabilitiesFair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash fl ows, discounted at the market rate of interest at the reporting date.

Other fi nancial assets and liabilitiesThe carrying amounts of fi nancial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents, and trade and other payables) are assumed to approximate their fair values because of the short period to maturity. All other fi nancial assets and liabilities are discounted to determine their fair values.

The fair value of the $380 million fi xed rate term loan, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash fl ows discounted at the market rate of interest at the reporting date.

Interest rates used in determining fair valuesInterest rates used to discount estimated cash fl ows, where applicable, is computed from Singapore dollar swap offer rates as follows:

2007 2006 % %

Term loan 2.66 3.36

94

The aggregate net fair values of recognised fi nancial assets and liabilities which are not carried at fair value in the balance sheet at 31 December are represented in the following table:

Carrying Fair Carrying Fair amount value amount value Note 2007 2007 2006 2006 $’000 $’000 $’000 $’000

Group and TrustTerm loan 12 380,000 385,149 380,000 377,620

Unrecognised (loss) / gain (5,149) 2,380

25 Segment reporting

Segment information is presented in respect of the Group’s business segments and geographical segments. The primary format, business segments, is based on the Group’s management and internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly interest–earning assets and revenue, interest–bearing borrowings and expenses, and income tax assets and liabilities.

Segment capital expenditure is the total cost incurred during the period to acquire plant and equipment, and additions to investment properties.

Business segmentsAs at 31 December 2007, the business segments of the Group comprises the following segments, Wisma Atria Property, Ngee Ann City Property, Japan Properties and Renhe Spring Zongbei Property (2006: Wisma Atria Property and Ngee Ann City Property).

Geographical segmentsAs at 31 December 2007, the Group’s operations and its identifi able assets are located in Singapore (consisting of Wisma Atria Property and Ngee Ann City Property), Tokyo–Japan (consisting of seven Japan Properties) and Chengdu–China (consisting of Renhe Spring Zongbei Property). Accordingly, no geographical segmental analysis is separately presented (2006: Both Wisma Atria Property and Ngee Ann City Property are located in Singapore).


ANNUAL REPORT 2007

Business segments

Wisma Atria Ngee Ann Japan Renhe Spring Property City Property Properties Zongbei Property (Singapore) (Singapore) (Japan) (China) Total 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 Group $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Revenue and expenses Total revenue from external customers 51,370 48,812 42,944 41,064 3,987 – 4,658 – 102,959 89,876 Inter–segment revenue – – – – – – – – – –

Total revenue 51,370 48,812 42,944 41,064 3,987 – 4,658 – 102,959 89,876 Property operating expenses (15,143) (12,182) (9,004) (8,442) (557) – (1,441) – (26,145) (20,624)

Net property income 36,227 36,630 33,940 32,622 3,430 – 3,217 – 76,814 69,252

Finance income 222 344 Fair value adjustment on security deposit & retention sum 42 (648) Non–property expenses (11,220) (9,053) Finance expense (16,448) (13,483)

Net income before tax 49,410 46,412 Income tax expense (3,188) – Change in value of unrealised derivative instruments (7,983) – Change in fair value of investment properties 448,870 171,000

Total return for the year 487,109 217,412

Business segments Wisma Atria Ngee Ann Japan Renhe Spring Property City Property Properties Zongbei Property (Singapore) (Singapore) (Japan) (China) Total 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 Group $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Assets and liabilities Segment assets 906,825 757,348 1,030,582 748,062 201,213 – 94,090 – 2,232,710 1,505,410 Unallocated assets 44,841 20,344

Total consolidated assets 2,277,551 1,525,754

Segment liabilities (31,369) (29,105) (9,370) (4,914) (3,920) – (8,975) – (53,634) (34,019) Unallocated liabilities (686,750) (393,274)

Total consolidated liabilities (740,384) (427,293)

Other segmental information Capital expenditure 1,121 3,557 – – – – 55 – 1,176 3,557

Depreciation of plant and equipment 1,700 125 – – – – 8 – 1,708 125

Change in fair value of investment properties 150,755 75,000 282,897 96,000 7,345 – 7,873 – 448,870 171,000

96

26 Acquisition of subsidiary

On 28 August 2007, the Group acquired all the shares in Top Sure Investment Limited ( the “company”) for a purchase price of RMB350 million (approximately $70.6 million(1)), comprising RMB310 million payable in cash and remaining RMB40 million as a loan payable to the vendor. The loan is interest–free, and is repayable over seven years in equal, annual instalments. The company owns through its wholly owned subsidiary, Renhe Spring Department Store Co., Ltd, a retail property, Renhe Spring Zongbei Property, in Chengdu, People’s Republic of China. In the four months to 31 December 2007, the company contributed a net property income of approximately RMB16.4 million (equivalent to $3.2 million) to the consolidated total return for the year ended 31 December 2007.

The allocation of the purchase price to the identifi able assets, liabilities and contingent liabilities acquired in this business combination has been determined and the goodwill that results from the difference between the purchase price and the adjusted carrying amounts of the assets and liabilities acquired amounts to $12.6 million and is reported as an intangible asset in the balance sheet. There was no acquisition in the year ended 31 December 2006.

The effect of the acquisition of subsidiary for the year ended 31 December 2007 is set out below:

Carrying Fair value Recognised amounts adjustments values 2007 2007 2007 $’000 $’000 $’000

Investment properties 14,070 56,566 70,636Plant and equipment 56 – 56Trade and other receivables 2,874 – 2,874Cash and cash equivalents 4,184 – 4,184Trade and other payables (5,681) – (5,681)Borrowings (8,073) 1,977 (6,096)Deferred tax liabilities – (14,543) (14,543)

Net identifi able assets acquired 7,430 44,000 51,430

Goodwill on consolidation 12,613

Purchase consideration paid, satisfi ed in cash 64,043Cash acquired (4,184)

Net cash outfl ows on acquisition of subsidiary(net of cash and cash equivalents acquired) 59,859

(1) Based on exchange rate of RMB4.96:$1.00 at acquisition date.

27 Contingent liabilities

The Trustee, the Manager and the Property Manager had, on 8 November 2005, entered into a proprietary information licensing agreement (“PILA”) with Macquarie Bank Group (“Macquarie“) whereby Macquarie through its subsidiary, Macquarie Services Singapore Pte Limited granted a non–exclusive licence (“PILA Licence”) to the Trust.

Pursuant to the PILA Licence, the Trust and permitted users may use, reproduce and adapt certain proprietary information, technology, systems and processes developed by Macquarie in the course of its property funds management and asset services business (“PILA Information”) in connection with the management and operations of the Trust.


ANNUAL REPORT 2007

The Trust is required to pay a one–off licence fee of $21.7 million (excluding GST, which shall also be borne by the Trust) in consideration for the grant of the PILA Licence. Such licence fee shall be payable when:

(a) Macquarie ceases to have any interest (direct or indirect) in the issued and paid–up voting share capital of the entity which is the then manager of the Trust (except where such cessation is due to a voluntary sale, transfer or disposal by Macquarie of its interest); or

(b) the PILA Licence is terminated, without cause, by the Trust (except where such termination is required by law or regulation or any relevant governmental authority) with a notice period of 30 days, by written notice to such nominated subsidiary of Macquarie and shall be paid to such nominated subsidiary of Macquarie within a period of 14 days from the date of termination of the PILA Licence.

28 Subsequent events

Subsequent to the year ended 31 December 2007;

(a) the Trust issued 1,313,630 new units on 31 January 2008, at the issue price of $1.0051 per unit as partial satisfaction of the Manager’s base fee for the three months ended 31 December 2007.

(b) the Manager declared a distribution of 1.68 cents per unit in respect of the period from 1 October 2007 to 31 December 2007, and was paid on 29 February 2008.

29 Financial ratios GROUP

2007 2006 % %

Ratio of expenses to weighted average net assets (1) 0.92 0.88Portfolio turnover rate (2) – –

(1) The ratios are computed in accordance with guidelines of the Investment Management Association of Singapore. The expenses used in the computation relate to expenses of the Group and exclude property related expenses, fi nance expense and the performance component of the Manager’s fees.

(2) The ratio is computed based on the lesser of purchases or sales of underlying investment properties of the Group expressed as a percentage of weighted average net asset value.

30 Comparative information

The comparative information for the Group in 2006 relates solely to the fi nancial statements of the Trust for the year ended 31 December 2006, while 2007 comprises consolidated fi nancial statements of the Trust and its subsidiaries for year ended 31 December 2007.

31 New accounting standards and interpretations not yet adopted

The Group has not applied the following accounting standards (including its consequential amendments) and interpretations that have been issued as of the balance sheet date but are not yet effective:(i) FRS 23 Borrowing Costs(ii) FRS 108 Operating Segments

The initial application of these standards (and its consequential amendments) and interpretations is not expected to have any material impact on the Group’s fi nancial statements. The Group has not considered the impact of accounting standards issued after the balance sheet date.

98

Twenty largest unitholders

Name No. of Units %

1 United Overseas Bank Nominees Pte Ltd 327,271,200 34.352 Citibank Nominees Singapore Pte Ltd 156,194,967 16.403 DBS Nominees Pte Ltd 155,389,391 16.314 HSBC (Singapore) Nominees Pte Ltd 64,936,814 6.825 DBSN Services Pte Ltd 58,436,550 6.136 Raffl es Nominees Pte Ltd 25,665,307 2.697 Royal Bank of Canada (Asia) Ltd 9,158,000 0.968 Morgan Stanley Asia (Singapore) Securities Pte Ltd 7,997,000 0.849 DB Nominees (S) Pte Ltd 7,989,980 0.8410 DBS Vickers Securities (S) Pte Ltd 4,172,000 0.4411 UOB Kay Hian Pte Ltd 3,835,000 0.4012 BMT A/C Estate of Mse Angullia 3,410,000 0.36 (Wakaff ) Clause 7 Trust 13 OCBC Securities Private Ltd 2,108,860 0.2214 NTUC Thrift & Loan Co-Operative Limited 2,100,000 0.2215 Macquarie Pacifi c Star Prime Reit Management Limited 2,062,946 0.2216 Chin Kiam Hsung 1,590,000 0.1717 Rosna Tjuatja 1,510,000 0.1618 Merrill Lynch (Singapore) Pte Ltd 1,336,804 0.1419 OCBC Nominees Singapore Pte Ltd 1,234,000 0.1320 Economic Development Board 1,100,000 0.12

Total 837,498,819 87.92

Distribution of unitholdings

Size of Holdings No. of Unitholders % No. of Units %

1 - 999 11 0.13 1,132 0.001,000 - 10,000 6,739 81.46 26,974,297 2.8310,001 - 1,000,000 1,502 18.16 87,116,290 9.151,000,001 and above 21 0.25 838,550,819 88.02

Total 8,273 100.00 952,642,538 100.00

STATISTICS OFUNITHOLDERSAs at 27 February 2008


ANNUAL REPORT 2007

Substantial unitholdingsAs at 27 February 2008

No. of units Direct Indirect DeemedUnitholders interest interest interest

1 Macquarie Real Estate Singapore Pte Ltd – 247,101,000 –2 Macquarie Bank Limited(1) – – 249,390,9463 Morgan Stanley Entities(2) 27,000 102,407,744 –4 American International Assurance Company, Limited 94,516,000 – 104,516,000 and related entitites(3)

Notes:

(1) This includes the 247,101,000 units held by Macquarie Real Estate Singapore Pte Ltd and the 2,062,946 units held by Macquarie Pacifi c Star Prime REIT Management Limited, the Manager of MMP REIT.

(2) This includes Morgan Stanley Investment Management Company, Morgan Stanley (Singapore) Holdings Pte Ltd, Morgan Stanley Asia Regional (Holdings) III LLC, Morgan Stanley Asia Pacifi c (Holdings) Limited, Morgan Stanley International Holdings Inc., Morgan Stanley Investment Management Inc., Morgan Stanley & Co. International plc, Morgan Stanley UK Group, Morgan Stanley Group (Europe), Morgan Stanley International Limited, Morgan Stanley (together, the “Morgan Stanley Entities”).

(3) This includes AIG Global Investment Corporation (Singapore) Ltd, AIG Global Investment Corp (as investment manager for American International Group, Inc., AIG Life Holdings (International) LLC, American International Reinsurance Company, Ltd., American International Assurance Company, Ltd. and American International Assurance Company (Bermuda) Ltd.), Nan Shan Life Insurance Company, Ltd, AIG Global Investment Corporation (Singapore) Ltd, AIG Life Insurance Company and Delaware American Life Insurance Company.

Unitholdings of the directors of the Manager

As at 27 February 2008

No. of units Direct Indirect DeemedName of Director interest interest interest

1 Stephen Mark Girdis – – –2 James Taylor Hodgkinson – – –3 Wolfgang Michael Wente – – –4 Franklin Heng Ang Tee – 500,000 –5 Hong Hai @ Huang Hai – 200,000 –6 Sydney Michael Hwang – 15,000 –7 Keith Tay Ah Kee – – –

Free FloatUnder Rule 723 of the listing manual of the SGX-ST, a listed issuer must ensure that at least 10% of its listed securities are at all times held by the public. Based on information made available to the Manager as at 27 February 2008, no less than 60% were held in the hands of the public.

100

ADDITIONALINFORMATION

Related party transactions between MMP REIT and related parties Name of Related Party Aggregate value of all related party transactions during the fi nancial year under review (excluding transactions less than S$100,000)

2007 2006 $’000 $’000

Macquarie Pacifi c Star Prime REIT Management LimitedManagement fees(1) 8,752 6,549 Rental income 294 294 Acquisition fee income(2) 1,806 –

Macquarie Pacifi c Star Property Management Pte LtdProperty management fees and reimbursements 3,701 3,467 Lease commission fees 798 466 Rental income 413 413

MWA Pte Ltd(3) Rental income 2,187 2,188

Food Art Pte Ltd(4) Rental income 163 325

(1) The Manager has opted to receive, for the years ended 31 December 2007 and 31 December 2006, 60.0% of the Base Fee in respect of the Singapore properties in the form of units with the balance in cash. In respect of the period from 1 January 2007 to 31 March 2007, a total of 907,893 units of MMP REIT at $1.2427* were issued to the Manager on 24 April 2007. In respect of the period from 1 April 2007 to 30 June 2007, a total of 996,371 units at $1.2318* were issued to the Manager on 30 July 2007. In respect of the period from 1 July 2007 to 30 September 2007, a total of 1,048,945 units at $1.1803* were issued to the Manager on 31 October 2007. In respect of 1 October 2007 to 31 December 2007, a total of 1,313,630 units at $1.0051* were issued to the Manager on 31 January 2008.

* Based on the volume weighted average price for a MMP REIT unit for all trades on the SGX–ST in the ordinary course of trading on the SGX–ST for the last 10 business days immediately preceding the date of issue of the units.

(2) Comprises acquisition fees paid to the Manager between 0.6% to 1% of the purchase prices of the Japanese and Chinese acquisitions during the year ended 31 December 2007.

(3) MWA Pte Ltd is 50% owned by Ristorante Pte Ltd (a wholly–owned subsidiary of Investmore Enterprises Ltd), and 50% owned by Megabite (S) Pte Ltd (“Megabite”), which is not a related party of the Manager. Investmore Enterprises Ltd is a 25% indirect shareholder of the Manager and the Property Manager. With the disposal of Ristorante Pte Ltd’s 50% shareholding in MWA Pte Ltd to Megabite on

18 December 2007, MWA Pte Ltd has become a wholly–owned subsidiary of Megabite, and ceased to be a related party of MMP REIT on the same date.

(4) Food Art Pte Ltd is a wholly–owned subsidiary of MWA Pte Ltd.


ANNUAL REPORT 2007

CORPORATE DIRECTORY

ManagerMacquarie Pacifi c Star Prime REITManagement Limited391B Orchard Road#21-08 Ngee Ann City Tower BSingapore 238874Phone: +65 6835 8633Fax: +65 6835 8644Email: [email protected]

DirectorsMr Stephen Girdis (Non-Executive Chairman)Mr Franklin Heng (Executive Director and CEO)Mr James Hodgkinson (Non-Executive Director)Mr Wolfgang Wente (Non-Executive Director)Dr Hong Hai (Independent Director)Mr Michael Hwang (Independent Director)Mr Keith Tay Ah Kee (Independent Director)

Audit CommitteeDr Hong Hai (Chairman)Mr Michael Hwang (Member)Mr Keith Tay Ah Kee (Member)

Company SecretaryMs Christine M. Chan

Alternate Company SecretaryMs Patricia Ong

TrusteeHSBC Institutional Trust Services(Singapore) Limited21 Collyer Quay#14-01 HSBC BuildingSingapore 049320Phone: +65 6534 1900Fax: +65 6533 1077

Unit RegistrarBoardroom Corporate & Advisory Services Pte. Ltd.3 Church Street#08-01 Samsung HubSingapore 049483Phone: +65 6536 5355Fax: +65 6536 1360

Auditors of MMP REITKPMG16 Raffl es Quay#22-00 Hong Leong BuildingSingapore 048581Phone: +65 6213 3388Fax: +65 6225 4142(Partner in charge since period ended31 December 2005: Ms Eng Chin Chin)

SGX CodeMMP Reit

Websitewww.mmpreit.comwww.macquariepacifi cstar.com

102

1Q, 2Q, 3Q, 4Q Period for 1 January to 31 March, 1 April to 30 June, 1 July to 30 September, and 1 October to 31 December, respectively

Benchmark Index Provided by FTSE. Comprises all the REITs contained in the FTSE Allcap Singapore universe(as defi ned in the IPO Prospectus)

CMBS Commercial Mortgaged Backed Securities

CPF Central Provident Fund

DPU Distribution per unit

F&B Food and beverage

FTSE FTSE International Limited

FY Financial year for the period from 1 January to 31 December

GST Goods and services tax

GTO Gross turnover

IPO Initial Public Offering

IPO Projection Unless otherwise stated, means fi gures derived by pro-rating the projection for the year ending 31 December 2006 disclosed in the IPO Prospectus by the stipulated period

Manager Macquarie Pacifi c Star Prime REIT Management Limited

MAS Monetary Authority of Singapore

MMP REIT Macquarie MEAG Prime REIT

MRT Mass Rapid Transit

GLOSSARY


ANNUAL REPORT 2007

Ngee Ann City The building known as ‘Ngee Ann City’ comprising a commercial complex with 27 levels of offi ce space in the twin offi ce tower blocks (Tower A and B) and a seven-storey podium with three basement levels comprising retail and carpark space

Ngee Ann City Four strata lots in Ngee Ann City located on:Property or NAC a) Part of Basement 1, Basement 2 and Level 1 to Level 5 of the retail podium block; b) Part of Level 13 and the whole of Level 14 to Level 19 of Tower B (offi ce); and c) Whole of Level 21 to Level 24 of Tower B (offi ce)

NLA net lettable area

pm per month

Property Manager Macquarie Pacifi c Star Property Management Pte Ltd

psf per square foot

SGX-ST Singapore Exchange Securities Trading Limited

STB Singapore Tourism Board

Toshin Toshin Development Co., Ltd

Wisma Atria The building known as ‘Wisma Atria’ comprising a podium block with four levels and one basement level of retail space, three levels of carpark and 13 levels of offi ce space in the offi ce block

Wisma Atria 331 strata lots in Wisma AtriaProperty or WA

yoy year-on-year

All values are expressed in Singapore currency unless otherwise stated.

104

Macquarie MEAG Prime REIT (MMP REIT)

This Annual Report for the year ended 31 December 2007 has been prepared by Macquarie Pacifi c Star Prime REIT Management Limited (Company Registration No. 200502123C) as the Manager of MMP REIT. This report does not contain investment advice nor is it an offer to invest in units of MMP REIT.

Whilst every care has been taken in relation to the accuracy of this report, no warranty is given or implied. This report has been prepared without taking into account the personal objectives, fi nancial situation or needs of particular individuals. Before acting, we recommend potential investors speak to a fi nancial and/or other professional adviser.

Investments in MMP REIT are not deposits with or other liabilities of the Manager, Macquarie Bank Limited (ABN 46 008 583 542) (MBL), or of any Macquarie Bank Group company, and are subject to investment risk, including possible delays in repayment and loss of income or principal invested. None of the Manager, MBL or any member company of Macquarie Bank Group guarantees the performance of MMP REIT or the repayment of capital from MMP REIT or any particular rate of return.

Past performance information included in this report is no indication of future performance. The Manager is entitled to fees for acting in its capacity of the Manager. MBL, its related entities and offi cers and directors of those entities, may hold units in MMP REIT from time to time.

MBL holds a 50% indirect interest in the Manager. MBL is authorised by The Australian Prudential Regulation Authority in the Commonwealth of Australia and The Financial Services Authority in the United Kingdom, to carry out banking business or to accept deposits in those respective jurisdictions. Members of the Macquarie Bank Group are not otherwise currently authorized to carry out banking business or to accept deposits in any other country. The Macquarie Bank Group does not hold a licence under the Banking Act, Chapter 19 of Singapore and hence, does not carry on banking business in Singapore. Accordingly, the Macquarie Bank Group is not subject to the supervision of the Monetary Authority of Singapore in respect thereof.

Concept and Design by Equus


www.mmpreit.comCompany Registration No.: 200502123CCompany Registration No.: 200502123C

www.mmpreit.comwww.mmpreit.comCompany Registration No.: 200502123CCompany Registration No.: 200502123C


MA

KIN

G IT H

AP

PEN

M

AC

QU

AR

IE M

EA

G P

RIM

E R

EIT

A

NN

UA

L REP

OR

T 2007M

AK

ING

IT HA

PP

EN

MA

CQ

UA

RIE

ME

AG

PR

IME

RE

IT

AN

NU

AL R

EPO

RT 2007


Documents

MAKING IT HAPPEN - listed companystarhillglobalreit.listedcompany.com/misc/ar/ar2007.pdf · 18 Board of Directors 20 Management 24 Corporate Governance 32 Property Proﬁ le 34 Property