REPORT - listed companyshreit.listedcompany.com/misc/ar/20190329-shreit-ar2018-en-02.pdf · For...

2018ANNUAL

REPORT

ทรัสตเพ�อการลงทุนในอสังหาริมทรัพยแบบตออายุไดเพ�อธุรกิจโรงแรม

และสิทธิเชาสตราทีจิก ฮอสพิทอลลิตี้

Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust

For more information please visit at www.sec.or.th or the SHREIT’s website at www.sh-reit.com

ทรัสตเพ�อการลงทุนในอสังหาริมทรัพยแบบตออายุไดเพ�อธุรกิจโรงแรม

และสิทธิการเชาสตราทีจิก ฮอสพิทอลลิตี้

Strategic Hospitality Extendable Freehold and Leasehold

Real Estate Investment Trust

(SHREIT)

2018ANNUAL

REPORT

Message from the REIT Manager

Last year we “Strategic Property Investors Company Limited” “SPI” the REIT Manager of Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust “SHREIT” used our best endeavors to manage REIT business under good governance and transparency by considering the interest of unitholders and all stakeholders. Our focuses are growth and stability of the REIT in order to generate steady return to the unitholders. SHREIT invested in international standard hotels which are managed by international branded hotel operators and located in 3 high growth countries in ASEAN namely 1) Pullman Jakarta Central Park located in Indonesia 2) Capri by Fraser in Vietnam and 3) IBIS Saigon South in Vietnam. We as the REIT manager of SHREIT will use our best endeavors to generate steady return for unitholders from the operation of these 3 hotels. In addition, we will continue to identify new investment opportunity focusing on ASEAN for the expansion and diversification of the REIT. Our goal is to grow SHREIT to be the top hospitality REIT in ASEAN region.

REIT manager would like to thank you unitholders for your trust and kind support. We promise that

we will manage the REIT under the good governance and transparency for the interest of the unitholders.

Yours Sincerely,

Strategic Property Investors Company Limited REIT Manager


Trustee’s Opinion


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Content

Page

Part 1 Essential Content of the REIT

1. REIT’s Information 6

2. Risk Factors 17

Part 2 Business Operation of the REIT

1. REIT’s Information 22

2. Policy, Business Strategy and Benefit Procurement from the Properties 22

3. Overview of the Industry Related to the Investment Properties 76

4. Risk Factors 96

5. Legal Dispute 134

6. Other Major Informati 134

Part 3 Management and Governance

7. Units Trust and Unitholder Information 136

8. Information of the REIT Manager 141

9. Corporate Governance and REIT Management 165

10. Responsibility to the Society 192

11. Internal Control and Risk Management 192

12. Prevention of Conflict of Interest 192

Part 4 Financial Position and Operating Results

13. Financial Highlights 200

14. Financial Position and Operating Results of the REIT 204

Essential Content of the REIT

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2018ANNUAL

REPORTรายงานประจำป


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Part 1

Essential Content of the REIT

1. Essential Content of the REIT

1.1 REIT’s Information Trust name (Thai) ทรสัต์เพื�อการลงทุนในอสงัหารมิทรพัยแ์บบต่ออายุไดเ้พื�อธุรกจิโรงแรมและสทิธกิาร

เช่าสตราทจีกิ ฮอสพทิอลลติี� Trust name (English) Strategic Hospitality Extendable Freehold and Leasehold Real Estate

Investment Trust Abbreviation SHREIT REIT Manager Strategic Property Investors Company Limited Trustee Krungthai Asset Management Public Company Limited Term of Trust Indefinite Maturity Type of Trust Unit Unredeemable Registered Capital 3,486,205,375 THB as at 31 December 2018 Total Unit Trust 352,836,700

7

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8

2018ANNUAL



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1.3 Overview of the income from the investment properties

1.3.1 Overview of the benefit procurement from the Properties The REIT's initial investment in the Properties is the investment to create stable return to the

Unitholders and for the Unitholders to achieve sustainable distributions per Unit and net asset value (NAV), while maintaining an appropriate capital structure. The REIT has a policy to invest in a diversified portfolio of income-generating real estate located in the ASEAN with an initial focus on the Mekong region and Indonesia, which is used primarily for hospitality and/or hospitality-related purposes, whether wholly or partially, as well as real estate-related assets in connection to the foregoing. Through the Master Lessors, the investment will be made by way of purchase, lease, sub-lease and/or acceptance of the transfer of leasehold rights and/or sub-leasehold rights in the Properties, as well as improvement modification, development and/or transfer of other properties. After the REIT's investment, the REIT shall procure the benefit from assets by way of leasing the Properties to the Master Lessee and take other necessary actions for the benefit of the REIT, with the aim to generate income and returns for the REIT and all Unitholders.

1.3.2 Strategy of the benefit procurement from the Properties The REIT Manager has the following strategy of the benefit procurement from the Properties: The REIT Manager has the policy of appointing its representatives to be directors of each of the

Investment Companies. The REIT Manager will monitor the operating performance of the Investment Company in each quarter and compare with the annual budget and the past operating results (if any). If the operating performance of any of the Investment Companies misses the target, the REIT Manager will analyse the issues and develop operating plan in order to achieve the target.

After the REIT's investment, the Properties will be leased by the Master Lessors to the Master Lessees with the lease period of 3 years each. The REIT will receive both fixed and variable rental from the Master Lessees as set out in the summary of agreement and material agreements relevant to the Properties which the REIT Manager is of the view that the rental rate is appropriate.

For the initial investment, REIT Manager will control Master Lessees to comply with the term and conditions of the lease through the Master lease agreement.

In the event that there is a change in Master Lessee of the Properties, this may affect the change in terms and conditions of the lease agreement, including fixed rental and variable rental.

The REIT reserves the right to improve and modify the Properties to ensure that the Properties look modern and consistently meet the demand of the customers to continually attract the customers to come use the services.

In the event that the Master Lessee does not comply with the lease agreement which can cause the termination of lease agreement, the REIT shall proceed to procure new lessee, by setting the initial qualification which is evaluated based on experience in hotel business, financial position, system, credibility and business profile, to negotiation and propose conditions and details of the leased Properties in place of the previous Master Lessee.

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ทรัสตเพ�อการลงทุนในอสังหาริมทรัพยแบบตออายุไดเพ�อธุรกิจโรงแรมและสิทธิเชาสตราทีจิก ฮอสพิทอลลิตี้



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1.3.3 Esstential content of the Master Lease Agreement between Master Lessor and Master Lessee

1) Pullman Jakarta Central Park Hotel

Lessor PT SHR Pullman Indonesia (INDONESIA), a company wholly owned by the REIT.

Lessee PT Central Persona Palace, with the ultimate shareholder being the same as REIT Manager's ultimate shareholder.

Leased Properties (a) Buildings including any construction situated within Pullman Jakarta Central Park ("Hotel Buildings"); and

(b) Component parts of the Hotel Buildings which are the common utilities system such as electrical system, water system, telephone system, elevator, escalator, air- conditioning, engineering system, as well as any amenities in relation to Hotel Buildings including any right with respect to the aforesaid assets.

The assets as listed in (a) - (b) above are collectively referred to as the "Hotel" or the "Leased Properties".

Lease Period Lease term of 3 years from the effective date stipulated in this agreement ("Effective Date")

Renewal Condition upon the Expiry of Lease Agreement

Upon the expiry of lease agreement, the parties agree that the lessee shall continue to lease the Leased Properties from the lessor for a period of 3 years each on an automatic renewal basis, and the renewal condition of the lease agreement shall terminate when the lessor no longer has qualities of being the owner of the Leased Properties. The calculation of fixed rent and variable rent shall be in accordance with the method stipulated in the agreement.

Base Rental USD 6,605,000 per annum, whereby the rental payment shall be made in local currency. The exchange rate is as mutually determined.

Base Rental Calculation

Base rental for the renewal of the agreement shall be equivalent to the average fixed rental of the lease period under the previous lease agreement.

Exemption of the Termination of Agreement

From the date that the REIT invests in the Properties, in the event that the lessee is not capable of paying fixed rental in full but the lessor's relevant shareholder has received the payment in full equivalent to the fixed rental amount that the lessor shall receive after deducting expenses from any of the following sources, this shall not be deemed as breach of rental agreement

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1. The REIT and/ or company that the REIT invests in, either directly or indirectly, receives the net operating income (NOI) support from the Vendor Company (if any and as applicable).

2. The REIT and/ or company that the REIT invests in, either directly or indirectly, receives support for the fixed rental payment from reserve account that Strategic Property Investment Pte Ltd. has placed with the Trustee of the REIT.

3. The REIT and/ or company that the REIT invests in, either directly or indirectly, receives other support from the relevant company of the lessee and/or the lessee's shareholder.

Governing Law This agreement is enforced and interpreted in accordance with the laws of Indonesia.

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Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust

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2) Capri by Fraser

Lessor Luxel APT Company Limited, a company wholly owned by the REIT through BBDM Singapore Pte Ltd.

Lessee Strategic Hospitality Services Co Ltd, with the ultimate shareholder being the same as REIT Manager's ultimate shareholder.

Leased Properties

(a) Buildings including any construction situated within Capri by Fraser ("Hotel Buildings"); and

(b) Component parts of the Hotel Buildings which are the common utilities system such as electrical system, water system, telephone system, elevator, escalator, air-conditioning, engineering system, as well as any amenities in relation to Hotel Buildings including any right with respect to the aforesaid assets.



Upon the expiry of lease agreement, the parties agree that the lessee shall continue to lease the Leased Properties from the lessor for a period of 3 years each on an automatic renewal basis, and the renewal condition of the lease agreement shall not be effective for a period of longer than the term under the land lease agreement of the land where the hotel is situated on, and the terms with respect to rental renewal shall terminate when the lessor no longer has qualities of being the owner of the Leased Properties.


Base Rental Calculation for renewal



From the date that the REIT invests in the Properties, in the event that the lessee is not capable of paying fixed rental in full but the lessor's relevant shareholder has received the payment in full equivalent to the fixed rental amount that the lessor shall receive after deducting expenses from any of the following sources, this shall not be deemed as breach of rental agreement. 1. The REIT and/or company that the REIT invests in, either directly or

indirectly, receives support for the fixed rental payment from reserve account that Strategic Property Investment Pte Ltd. has placed with the Trustee of the REIT.

2. The REIT and/or company that the REIT invests in, either directly or indirectly, receives other support from the relevant company of the lessee and/or the lessee's shareholder.

Governing Law This agreement is enforced and interpreted in accordance with the laws of Vietnam.

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3) IBIS Saigon South Lessor Viethan Hotel Corporation, a company wholly owned by the REIT through BBVN

Singapore Pte Ltd. Lessee Strategic Hospitality Services Co Ltd, with the ultimate shareholder being the same

as REIT Manager's ultimate shareholder.

Leased Properties

(a) Buildings including any construction situated within IBIS Saigon South ( " Hotel Buildings" ) ; and Component parts of the Hotel Buildings which are the common utilities system such as electrical system, water system, telephone system, elevator, escalator, air-conditioning, engineering system, as well as any amenities in relation to Hotel Buildings including any right with respect to the aforesaid assets. The assets as listed in (a) - (b) above are collectively referred to as the "Hotel" or the "Leased Properties".



Base Rental USD 791,000 per annum, whereby the rental payment shall be made in local currency. The exchange rate is as mutually determined.




From the date that the REIT invests in the Properties, in the event that the lessee is not capable of paying fixed rental in full but the lessor's relevant shareholder has received the payment in full equivalent to the fixed rental amount that the lessor shall receive after deducting expenses from any of the following sources, this shall not be deemed as breach of rental agreement.

1. 1. The REIT and/ or company that the REIT invests in, either directly or indirectly, receives support for the fixed rental payment from reserve account that Strategic Property Investment Pte Ltd. has placed with the Trustee of the REIT.

2. 2. The REIT and/ or company that the REIT invests in, either directly or indirectly, receives other support from the relevant company of the lessee and/or the lessee's shareholder.


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1.4 Essential Content of Net Operating Income Support (NOI Support) Pullman Jakarta Central Park has received an NOI Support for 3 years from the date of 1 January 2018 the REIT. The REIT will receive the NOI Support directly from PT Agung Pomodoro Land Tbk, which is the Vendor of Pullman Jakarta Central Park. The NOI Support will be provided in the case that the net operating income of the hotel after deducting the FF&E Reserve, as prescribed in the NOI Support provision, for a duration of 12 months in aggregate is less than 8.25 million USD. However, the Vendor has agreed to pay for the shortfall not exceeding 2.50 million USD each year.

1.5 Significant events which has impact to business operation (Milestone)

A subsidiary company of REIT, Strategic Hospitality Holdings Limited, has entered into a loan agreement to take a loan of 44,670,000 euros (approximately 1,724.43 million Baht), which is sourced from an oversea financial institution. This loan has been used for repaying the existing debt which REIT owed to another local financial institution in USD from the date on which REIT first invested in the Properties. The loan is payable at the end of year 3 and interest is payable on a quarterly basis with floating rate (at EURIBOR plus 3.25% per annum for the first year after the drawdown date and not exceeding EURIBOR plus 4.25% per annum over the whole contract period). On 29 June 2018 the subsidiary company drew down all amount of the loan facility and on 17 August 2018 the company subsidiary entered into a loan amendment agreement to increase the loan facility from the financial institution described previously by 1,500,000 euros to support business expansion. On 20 August 2018 the company subsidiary drew down 1,165,000 euros from this part of long-term loan facility.

1.6 Essential content of the Facility Agreement

Lender Oversea financial institution who is not related to the REIT Manager and/or theTrustee Borrower Strategic Hospitality Holdings Limited, the REIT’s subsidiary with 100% shareholding Loan Balance as at 31 December 2018

Long-term loan facility EUR 45.84 mn.

Interest Rate Floating Rate - Euro Interbank Offered Rate 3 months (3M EURIBOR) : Year 1 3M EURIBOR plus 3.25% per annum Year 2 3M EURIBOR plus 3.75% per annum Year 3 3M EURIBOR plus 4.25% per annum

Term of Agreement 3 Years from draw down date and 1 more year conditional extend Principal Repayment 100% on final maturity date Payment of Interest Quarterly

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1.7 Distributions of net income to unitholders Distributions during the year 2018 detailed as the following :

Periods Dividend* (Baht per unit)

Capital Reduction* (Baht per unit) Payment Date

20 December 2017 - 31 March 2018 0.0894 0.0616 15-Jun-2018 1 April 2018 - 31 July 2018 0.1409 0.0517 14-Sep-2018 1 August 2018 - 31 October 2018 0.2212 0.0349 28-Dec-2018

Year 2018 Amount (Baht per unit)

Dividend 0.4515 Capital Reduction 0.1482 Total Amount 0.5997

* There are 2 unitholders with total amount of 68,345,300 units are not entitled to receive any returns or cash distributions from capital reduction of SHREIT: 1) PT Agung Podomoro Land Tbk, with total of 63,928,100.00units; and 2) LEEBRO HOLDING PTE LTD.[1] ,with total of4,417,200.00units The provision of non-entitlement of cash distribution are in accordance with the prospectus of SHREIT Part 2, Clause 12. “Distribution Policy and Limitation” and Trust Deed, Clause 17.2 “Limitation in Receiving Distribution and Distribution Management”. The announced distribution payable per unit to other unitholders are calculated in proportion to their respective unitholding by excluding the portion of such aforementioned unitholders. To avoid of any doubt, this provision of non-entitlement of cash distribution is in accordance with the Binding Investment Agreement between vendors and SHREIT for the 1 st acquisition. Referring to Binding Investment Agreements, the units of non-entitlement of cash distribution of PT Agung Podomoro Land Tbk, and LEEBRO HOLDING PTE LTD were limited at 63,928,100.00 units and 4,417,200.00 units respectively throughout the Lock up period.

1.8 Fee and Expenses for the year 2018

No. Fee and Expenses Amount (THB) % 1 REIT Manager fee 13,575,944 0.42 2 Trustee fee 15,221,762 0.47 3 Registrar fee 3,201,216 0.10 4 Professional fee 18,487,264 0.57 5 Amortization of Deffered Tax Asset 28,833,617 0.88 6 Other expenses 122,861,087 3.76 7 Finance cost 143,108,998 4.37

Total Expense 345,289,888 10.56 Average NAV during the year THB 3,271,248,439

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1.9 Management Discussion and Analysis Financial position and operating results of Strategic Hospitality Extendable Freehold and

Leasehold Real Estate Investment Trust or SHREIT (the “Trust”) for the year 2018, as from 1 January to 31 December 2018.

Since the Trust had made the first investment in the properties on 20 December 2017, fisical year

2017 had only 10 days operation period from 20 to 31 December 2017 which can not be compared with the operating result of year 2018. Financial position of the REIT Assets As of31 December 2018, the REIT and subsidiaries have total assets of 4,946.63 million Baht, decreasing 435.43 million Baht or 8.09% from the total assets as of 31 December 2017 mainly due to the decrease in Investments in immovable and movable properties and Cash and cash at bank. Investments in immovable and movable properties as of 31 December 2018 is 4,377.80 million Baht, decreasing 134.25 million Baht from 4,512.06 million as of year end 2017 or 2.98% due to Exchange differences on translation of financial statements. Cash and cash at bank as of 31 December 2018 is 12.51 million baht, decreasing 301.15million from 313.66 million Baht as of year end 2017 or 96.01%. Liabilities As of31 December 2018, the REIT and subsidiaries have total liabilities of 1,751.49 million Baht, decreasing 114.46 million Baht or 6.13% from the end of the year 2017 due to the decreaseg in Accounts payable,accrued expenses and the increase in Long-term loans from financial institutions. Accounts payable and accrued expenses as of 31 December 2018 is 78.80 million baht, decreasing 196.88 million baht from 275.68 million Baht as of year end 2017 or 71.42%. Long-term loans from financial institutions increased from 1,506.43 million Baht at the end of the year 2017 to 1,626.74 million Baht as of year end 2018, increasing 120.31 million Baht or 7.99%. Net assets before other components of unitholders’ equity As of31 December 2018, the REIT and subsidiaries have Net assets before other components of unitholders’ equity of 3,489.85 million Baht, decreasing 28.99 million Baht or 0.82% from 3,518.83 million Baht at the end of the year 2017, mainly due to Capital from unitholders decreased from 3,528.37 million Baht at the end of the year 2017 to 3,489.85 million, decreasing 42.16 million Baht or 1.19% resultingfrom capital reduction without the change of total Trust units from excess cash including non-cash expenses.and increasing in the Retained Earning to 3.64 million Baht.

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Operating Results Investment Income

Inyear 2018, the REIT and subsidiaries have total income of 351.52 million Baht, comprised of Rental fee income from Master Lease agreement of 3 hotels for the total amount of 261.84 million Baht (74.49% of total income) and Other incomes of 78.87 million Baht (22.44% of total income) which mainly derived from NOI support for hotel operation and subsidy income on the cost related to the assets acquisition. Expenses

In year 2018, the REIT and subsidiaries have total expenses of 345.29 million Baht, comprised of Financing cost of 143.11 million Baht or 41.45% of total expenses and Other expenses of 90.91 million Baht or 26.33% of total expenses which mainly was cost relating for capital increasing and assets acquisition. Net investment income and changing in the net assets from operations In year 2018, the REIT and subsidiaries have Net investment income of 6.23 million Baht and Net unrealised gain from investments in immovable and movable properties of 135.39 million Baht, resulting in the increase of net assets from operations of 141.62 million Baht. Statement of cashflows

At the end of year 2018, the REIT and subsidiaries have Net cash flows from operating activities of 97.90 million Baht and Net cash used in financing activities of 391.25 million Baht. Net cash used in financing activities comprised of Cash paid for issuance and offering of trust units costs and borrowing fee of 219.99 million Baht, Cash paid for capital reduction and Cash paid for distributions of net income of 170.61 million Baht, Cash paid for interest expenses and loan prepayment fee of 83.70 million Baht. In addition the REIT had paid for refinancing 1,521.71 million Baht with cash received from long-term loans by subsidiary of the REIT of 1,604.23 million Baht. At the end of the year, the REIT and subsidiaries have remaining Cash and cash at banks of 12.51 million Baht, decreasing 301.15 million Baht from 313.66 million Baht at the beginning of the year.

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2. Risk Factors 2.1 Risks Associated with the REIT or the Operation of the REIT 2.1.1 The success of the REIT depends on the capacity of the REIT Manager, the Master Lessors and

the Hotel Operators in managing and seeking benefits from the Properties. 2.1.2 The income of the REIT depends on the financial position and operating results of the Master

Lessees and the decision to renew the Lease Agreements upon termination. 2.1.3 The Master Lessors may not obtain the rent in accordance with the lease agreement due to force

majeure under the lease agreement. 2.1.4 The base rent involved in the renewal of the lease agreement may be different from the base rent

estimates. 2.1.5 The risks that the REIT may incur additional cost from changing the REIT Manager which is not

due to the REIT Manager's false. 2.1.6 The risks arising from the renovation of Properties and the sufficiency of the reserves for

renovation. 2.1.7 Reliance on the Hotel Operators and use of their Trademarks or Brands for the Properties. 2.1.8 Risks arising in loans obtained by the REIT. 2.1.9 The Unitholders may not obtain dividend from the REIT in case of default of the loan agreement

The REIT has to rely on the third party for some services. 2.1.10 The REIT has no direct control over the Hotel Operators. 2.1.11 Risks arising from inability to find a lessee in the future. 2.1.12 There is no assurance that the REIT will be able to leverage on the Vendor Companies’

experience in the operation of the Properties at the expiration of the lock-up period. 2.1.13 The REIT may engage in hedging transactions, which can limit risk relating to the interest and the

exchange rates and may restrict the benefit obtained from the Properties and such transaction may not cover the risks relating to the interest rate and exchange rates

2.1.14 Benefit remittance to the REITs depends on the mode remittance and may be affected by any change in capital requirements, regulations relating to the remittance of fund and exchange controls in each jurisdiction invested by the REIT.

2.1.15 Yields distributed to the Unitholders may not be equivalent to yields distributed in the first year as a result of expiry of conditions for NOI Support by the Vendor Companies.

2.1.16 The Unitholders or other persons may not be able to recover damages against the REIT Manager as in certain circumstances the REIT Manager has limited liability.

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2.2 Risks Associated with the Properties 2.2.1 The REIT is exposed to risks arising from volatility in the economy and tourism in the Territories 2.2.2 The Properties may be exposed to risks arising from rising competition in the hotel and tourism

industry 2.2.3 Damage or loss may arise if the Properties are not fully covered under an insurance policy 2.2.4 The Assets may be defective, or certain actions may violate the laws or rules and regulations, or

there may be other defects 2.2.5 There may be existing liabilities in the Master Lessors before the REIT's investment 2.2.6 Representations, warranties and indemnities by the Vendor Companies are submitted to a limited

scope, amount, and period 2.2.7 Pullman Jakarta Central Park Hotel's access and parking space are not be part of the Properties to

be invested in by the REIT 2.2.8 Natural disasters, other events of force majeure, terrorism, war, and political instability may negatively

affect the REIT's income 2.2.9 The values of the Properties as appraised by the Asset Appraisers do not always reflect the actual

values of the Properties, and cannot guarantee that the selling prices of the Properties are, or will be, consistent with the appraised values

2.2.10 Decrease in the fair value of the Properties and investment in leaseholds will have an adverse effect on the income statement, property net value, and the REIT's ability to pay returns

2.2.11 Risks related to the relevant extension or renewal of the rights to use land 2.2.12 The definite fees for the application for extension or renewal of the HGB certificate for the

Properties in Indonesia are not fixed as they are subject to the land value at the time of the application for extension or renewal of the HGB certificate

2.2.13 Risks from investment in the subleased land plots of Capri by Fraser and IBIS Saigon South.

2.3 Risks Associated with the Investment in Immovable Property 2.3.1 General risks related to investment in immovable property 2.3.2 The REIT may be adversely affected by lack of liquidity as a result of investment in immovable

property, and may lack other options in exploiting the Properties 2.3.3 Strategies of the REIT in investment in property used for the operation of the hotel business may

expose the REIT to higher risks when compared with other types of funds with more diversified portfolios

2.3.4 The Properties may be subject to expropriation 2.3.5 The REIT will invest in leasehold right of the immovable property, of which the value may decrease

in alignment with the remaining lease term, resulting in a pro rata decrease in the value of the Units 2.3.6 Changes in the accounting standards or applicable laws, or practices of relevant authorities

Risks related to the investment of the REIT in the Properties located offshore 2.3.7 Risks related to the investment of the REIT in the Properties located offshore

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2.4 Risks Associated with Investment in the Units of the REIT 2.4.1 Risks arising from the lack of a secondary market for trading the Units of the REIT 2.4.2 Unitholders cannot redeem the Units 2.4.3 The value of the Units may decrease if newly issued units are issued at a lower price after the

additional offering 2.4.4 Future material sale of Units by Strategic Partners may have adverse effects on the market price of

the Units 2.4.5 The capital return as a result of dissolution of the REIT may be lower than the amount invested by

the Unitholders in this offering 2.4.6 Net asset value of the REIT may not be equal to the actual trading price on the exchange market 2.4.7 Net asset value of the REIT is not the actual value of the assets to be received by the REIT in the

event of a total sale of the assets or dissolution of the REIT 2.4.8 Unitholders may not receive returns from the REIT if there is a breach of the loan agreement 2.5 Jurisdictional Risk

Business Operation of the REIT

2

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Part 2

Business Operation of Trust

1. REIT’s Information

Trust Name (Thai) ทรสัต์เพื�อการลงทุนในอสงัหารมิทรพัยแ์บบต่ออายไุดเ้พื�อธุรกจิโรงแรมและสทิธกิาร

เช่าสตราทจีกิ ฮอสพทิอลลติี�

Trust Name (English) Strategic Hospitality Extendable Freehold and Leasehold Real Estate

Investment Trust

Abbreviation SHREIT

REIT Manager Strategic Property Investors Company Limited

Trustee Krungthai Asset Management Public Company Limited

Term of Trust Indefinite Maturity

Type of Trust Unit Unredeemable

Registered Capital 3,486,205,375 THB as at 31 December 2018

Total Unit Trust 352,836,700

2. Policy, Business Strategy and Benefit Procurement from the Properties

2.1 Objective and Target of the REIT

Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust (“REIT”) was

established under the TRUST’s regulation of Thailand on 20 December 2017. The REIT is under

management by Krung Thai Asset Management Public Company Limited as a Trustee and Strategic

Property Investors Company Limited as a REIT Manager. The REIT registered in the Stock Exchange of Thailand on 27 December 2017.

The REIT was established under the ACT on Trust and regulations issued by SEC on the

purpose of issuing units of Real Estate Investment Trust for public offering and listed in the Stock

Exchange of Thailand.

REIT Manager used the money from Fund raising to invest in the properties to obtain the

rental income. The benefit of procurement of the REIT must comply with the SEC’s regulations

and/or any related laws in Thailand.

The revenue which the REIT will receive from the benefit of procurement is the rental income

from operation. The management is under the supervision and control by the Trustee to comply

with the terms and conditions of the Trust deed and/or any regulations relating to SEC. Other

than rental, REIT will not conduct any other business and/or operations, REIT will not lease the

properties to any party who is suspected to use the properties for any illegal and/or immoral

activities.

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2.2 Significant Events which Has Impact to Business Operation (Milestone) A subsidiary company of REIT, Strategic Hospitality Holdings Limited, has entered into a loan

agreement to take a loan of 44,670,000 euros (approximately 1,724.43 million Baht), which is sourced by an oversea financial institution. This loan has been used for repaying the existing debt which REIT owed to another local financial institution in USD from the date on which REIT first invested in the Properties. The loan is payable at the end of year 3 and interest is payable on a quarterly basis with floating rate (at EURIBOR plus 3.25% per annum for the first year after the drawdown date and not exceeding EURIBOR plus 4.25% per annum over the whole contract period). On 29 June 2018 the subsidiary company drew down all amount of the loan facility and on 17 August 2018 the company subsidiary entered into a loan amendment agreement to increase the loan facility from the financial institution described previously by 1,500,000 euros to support business expansijon. On 20 August 2018 the company subsidiary drew down 1,165,000 euros from this part of long-term loan facility.

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2.4.2 Investment Structure of the Properties Investment in Indonesia: Pullman Jakarta Central Park

Strategic Hospitality Holding Limited (BVI) holds 100 percent of the shares of SHR Indonesia Pte. Ltd. (BVI) through an investment to acquire 100 percent of the shares of PT SHR Pullman Indonesia which has been registered to acquire the strata titles in land, which is the ownership with prescribed period and such ownership will expire on 17 March 2026 and has been extended until 9 June 2037. The HGB Title under Indonesian law has an initial term of 30 years, and the certificate holder is entitled to apply for an extension of no more than 20 years. When that term expires, the REIT Manager expects that the REIT, which is the holder of the certificate, will be entitled to apply for a renewal. It is expected that the certificate may be renewed for a term equivalent to the HGB initial term – that is, 30 years, with an extension of no more than 20 years. The REIT bought land, buildings and movable properties related to Pullman Jakarta Central Park from PT Agung Podomoro Land Tbk in a total value of 94.73 million USD. The investment divided into acquisition of shares in PT SHR Pullman Indonesia and shareholder loans to PT SHR Pullman Indonesia.

For the Property in Indonesia, PT Agung Podomoro Land Tbk. agrees to provide the REIT with the net operating income guarantee if guaranteed net operating income generated over 12 months is less than USD 8.25 million, for the period of three years started from 1 January 2018. PT Agung Podomoro Land Tbk. agrees to fund a shortfall not exceeding USD 2.5 million per year during such three-year period. Accordingly, during the guaranteed period if actual net operating income is less than the guaranteed net operating income, the PT Agung Podomoro Land Tbk. agrees to compensate for that shortfall.

Properties in Vietnam: Capri by Fraser and IBIS Saigon South

For Capri by Fraser Hotel, Strategic Hospitality Holding Limited (BVI) made investment by purchasing from Mr. Lee Young Jin 100 percent of the shares of BBDM Singapore Pte., Ltd., which holds 100 percent of the shares of Luxel APT Company Limited, the holder of land sublease rights (with remaining sublease period of approximately 25 years) and proprietary rights in the structures and movable properties associated with Capri by Fraser Hotel, for a price of 21 million USD of the investment is the price of shares in BBDM Singapore Pte., Ltd., while Strategic Hospitality Holding Limited (BVI) registered the establishment of SHR Finco Pte., Ltd. (BVI) to provide shareholder loans to Luxel APT Company Limited

As for IBIS Saigon South, Strategic Hospitality Holding Limited (BVI) made investment by acquiring from B.B. Dai Minh Corporation and its related persons 100 percent of the shares of BBVN Pte., Ltd., which holds 99.98 percent of the shares of Viethan Hotel Corporation, a holder of land sublease rights (with remaining sublease period of approximately 25 years) and proprietary rights in the structures and movable properties associated with IBIS Saigon South, for a total price of 15 million USD and

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investment of shares in BBVN Pte., (The remaining shares of 0.02 percent held by natural persons will be transferred to the person(s) designated by the Trustee, which shall be completed as soon as possible and within two years.) , while Strategic Hospitality Holding Limited (BVI) registered the establishment of SHR IBIS Pte., Ltd. (BVI) to provide shareholder loans to Viethan Hotel Corporation.

2.4.3 Information on the core property of the REIT 1) Pullman Jakarta Central Park, Indonesia Key highlights

Pullman Jakarta Central Park is the first and only five-star international hotel in West Jakarta. The hotel is conveniently located in the heart of metropolis West Jakarta, close to the Central Business District area. The hotel is located in the Podomoro City, a mixed-use large project, with an area of approximately 22 Hectare, consisting of 11 residential buildings, three department store and commercial projects, such as the Central Park Jakarta Department Store, the Neo Soho Project, with Central Department Store as a major lessee, two office buildings, and a five-star hotel.

The hotel is popular with business travelers and domestic tourists given its convenient location in the mixed-use project, surrounded by shops and facilities. The hotel is also strategically located approximately 25 minutes from Soekarno-Hatta International Airport, 30 minutes from the Central Business District, and is located nearby major universities and residential areas.

The hotel is uniquely positioned for conferences and local weddings given its ballroom is the second largest currently in Jakarta, and a total area of over 5 , 6 9 8 square meters for events, with a capacity to accommodate up to 8,000 guests. As a result, the hotel also has income from holding weddings, seminars, and exhibitions. The parking area of the project can also accommodate over 6,000 vehicles, sufficient for the customers visiting the hotel and the shopping center.

Furthermore, Pullman Jakarta Central Park may also benefit from the future development of the Jakarta Mass Rapid Transit system ("MRT") – the government has initiated the construction of the MRT, whereby the North-South line is expected to begin its operation in March 2019 and the East-West line is expected to begin its operation in 2025. The MRT station will be located approximately 500 meters from the hotel, which provides additional convenience to various attractions around Jakarta.

Currently, there are no other five-star international hotels in West Jakarta. However, other five-star international hotels in Jakarta comparable to Pullman Jakarta Central Park include JW Marriot Jakarta, InterContinental Jakarta, Indonesia Kempinski Jakarta, and Grand Hyatt Jakarta.

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General information on the Property - Pullman Jakarta Central Park

Details

Nature of property to be invested in by the REIT

Type of ownership of land Freehold (HGB Title. Under Indonesian law, HGB has a term, which will expire on 9 June 2037. After the end of the extended term, the REIT Manager expects that it will be able to renew the HGB Title for another 30 years and extend for another 20 years. However, the terms are not clearly prescribed in Indonesian law, and there has been no previous case of such renewal and extension.

Type of ownership of the buildings and moveable assets

- Freehold (Strata Title Certificate or HMSRS) HMSRS applies only to property located on land with HGB Title (HGB is a termed right under Indonesian law. The term of the HMSRS is consistent with the term of the HGB title.) - Freehold in moveable assets

Owner of the land (following REIT's investment in the properties)

PT SHR Pullman Indonesia (Indonesia)

Owner of the buildings and moveable assets

PT SHR Pullman Indonesia (Indonesia)

Management of the Property Accor Location Podomoro City Jl. Let. Jend. S. Parman Kav. 28,

11470 West Jakarta, Indonesia Access of the Property The road in front of the hotel is within the Pomodoro

City Project, held by an associated company of PT Agung Pomodoro Land TBK, and shared between several properties located within the same complex as Pullman Jakarta Central Park. However, the Master Lessor has entered into an agreement with the owner of the entrance to secure the use of the entrance. The main road connected to the access of Podomoro City is Jalan Let. Jend. S. Parman.

Particulars of the land 25 HMSRS / Strata Title certificates. Land area 25,144.26 sq m

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Details

Buildings a 102.8-meter building consisting of 12 floors, two basements, and a rooftop.

Year of operation 2012 (construction completed on 1 November 2011) Encumbrances on the land Used as the collateral for the REIT’s and/or its

subsidiaries’existing loan. General description of the property First and only five-star international hotel in West

Jakarta with total of 317 rooms In-room amenities High-speed Wi-Fi and Internet, contemporary art, Ipod

docking system, stylish furniture, espresso machine, LCD TV, in-room safe

Other services and amenities Executive lounge, business center, connectivity lounge, swimming pool, Zen garden, fitness and spa lounge, two restaurants and bars, Collage All Day Dining and Bunk Lobby Lounge, and conference and seminar rooms.

Utilities Electricity systems, emergency power systems, fire protection systems, automatic sprinkler systems, detection and fire alarm systems, elevators

Appraised value of the asset Appraised value of IDR 1,511,181 million (or approximately USD 105.39 million) appraised as of 1 December 2018 by KJPP Susan Widjojo & Raken in Association with VPC Asia Pacific Cluttons (by Thai Property Appraisal Lynn Phillips Company Limited)1

Remark: 1. Exchange rate as at 30 November 2018, IDR 14,339 to USD

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MAP

Pullman Jakarta Central Park Overview

Map of Hotel’s Relative Distance to Surroundings

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Room Information Pullman Jakarta Central Park consists of one building with 12 floors, two basements, and a

rooftop. The property contains 317 rooms, which can be categorized into four types as follows. Room Types

Room type Number Area (square meters)

Deluxe Rooms 195 32 6,240 Executive Deluxe Rooms 67 32 2,144 Executive Suites 54 68 3,672 Central Park Suites 1 135 135 Total 317 12,191

Customer Segmentation

For the 12-months period ending December 2018, the customers of the property can be categorized into groups as follows.

Customer origin Percentage of total occupancy

1. Indonesia 38.50% 2. Asia (excluding Indonesia) 35.36% 3. Europe 6.86% 4. Middle East 3.29% 5. Oceanic countries (e.g. Australia and New Zealand) 2.97% 6. USA 1.57% 7. Other 11.46%

Details of the Management of the Hotel

Pullman Jakarta Central Park is managed by PT AAPC Indonesia, a hotel management company in the Accor group, under the hotel management agreement with the term of 15 years from 2011 to 2026. The parties can agree to extend the period of the agreement twice, five years each.

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Restriction on the Use of the Property

With respect to Pullman Jakarta Central Park, the land on which the property is located is subject to the Spatial Plan (Rencana Tata Ruang Wilayah) of the relevant area, which is town planning restricting the types of "commercial and commercial support area." In this area, a hotel may be built with a maximum of 24 floors. To build a new or additional construction, the conditions specified by law must be fulfilled. However, as the construction of Pullman Jakarta Central Park is complete and the hotel has received the required license related to construction and opened for business, there are no restrictions on construction of the properties in which the REIT will invest.

With respect to the entrance, exit, and the parking area of Pullman Jakarta Central Park, the

investment of REIT will not include the entrance, exit, and the parking area. This is because Pullman Jakarta Central Park is located in and a part of Central Park Pomodoro City, of which the entrance, exit, and parking area are owned by PT Central Prima Kelola, a group company of Agung Podomoro Land Tbk. assigned to manage the Central Park Podomoro City Project, and shared among other properties located in the Central Park Podomoro City Project. An agreement has been entered to secure the use of the shared facility, with a perpetual term until the parties agree to terminate the agreement. Under the agreement, the fees for using the accessare included in other services in the amount of IDR 5,000 per month (including VAT), calculated based on the area of Pullman Jakarta Central Park (unlike Thailand, there is no real right such as servitude under Indonesian law). After the REIT has invested in the property, the Master Lessor (PT SHR Pullman Indonesia) will enter into an agreement with a relevant party which owns the entrance, exit, and parking area, to ensure that the Master Lessor and the hotel customers can use the entrance, exit, and parking area of the hotel without obstruction. After PT SHR Pullman Indonesia, the Master Lessor, enters into the agreement with the project owner, and if the agreement is signed by an authorized person of both parties and is made in local language, Hadiputranto, Hadinoto & Partners (a group company of Baker & McKenzie in Indonesia), as the legal advisor, is of the opinion that the agreement would be binding and enforceable between the parties.

Currently, the parking area of Central Park Podomoro City has a capacity of 6,000 vehicles, which

can accommodate the customers of the department store and hotel even though the REIT will not invest in the parking area for hotel customers. This is because the parking area is the property of PT Central Prima Kelola. The hotel customers or guests can use the parking area of Central Park Podomoro City under such service agreement. The service agreement clearly states that guests of Pullman Jakarta Central Park may use the parking area, and that PT Central Prima Kelola will manage and take care of the area and provide service to the hotel customers. The hotel has the right to use the parking area for the first 20 vehicles free of charge. If the use exceeds that maximum number, the hotel will be responsible for the

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vehicles of the hotel customers at IDR 10,000 per vehicle per day. The hotel customers will not be charged for the parking fees in some cases, if a person using the parking lot has a stamp of the hotel for exemption of parking fee, for example, preventing the hotel from charging the guest with parking fees, which depends on the hotel management policy.

Title to the assets of Pullman Jakarta Central Park is in the form of Strata Title Certificate or

HMSRS. The HMSRS must exist on a land with HGB Title (HGB title is a termed ownership under Indonesian law). The term of the HMSRS will be consistent with the term of the HGB Title of Pullman Jakarta Central Park, which will expire on 17 March 2026 and has been extended until 9 June 2037. The HGB under Indonesian law has an initial term of 30 years. A licensee is entitled to apply for an extension of not exceeding 20 years. PT Agung Podomoro Land Tbk., the Vendor Company, filed an application to the Land Department and received an approval for the extension of the HGB Title on 17 May 2018. However, upon the approval for the extension of the term of the HGB Title, a tariff will have to be paid to the relevant authority within the specified time period, otherwise the extension will not be deemed complete. Once the tariff has been paid to the relevant authority, the extended term will commence on the day of payment of the tariff to the relevant agencies, regardless of the remaining period of the current term.

The HGB Title under Indonesian law has an initial term of 30 years, and the certificate holder is

entitled to apply for an extension of no more than 20 years. When that term expires, the REIT Manager expects that the REIT, which is the holder of the certificate, will be entitled to apply for a renewal. It is expected that the certificate may be renewed for a term equivalent to the HGB initial term – that is, 30 years, with an extension of no more than 20 years. However, these terms are not clearly stipulated under Indonesian law, and there have been no examples of renewal and extension. For the renewal of HGB, the normal practice is that the relevant agencies will consider approving the extension or renewal of HGB within 2 years before the expiry of the HGB Title. However, the local legal counselors have seen a case where the extension or renewal of the HGB Title occurs before the 2-year period prior to the expiry of the term. The relevant agency will consider whether the use of land is in accordance with the conditions prescribed by law, e.g. whether the land has been used as per the prescribed objectives or conditions, and whether the terms have been complied with, and whether the use of land complies with the city zoning.

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To apply for extension or renewal of the HGB license, the applicant must pay the tariff prescribed by the Indonesian government, currently under Government Regulation No. 13 of 2010 on Types and Tariffs for the Applicable Non-Tax State Income at the National Land Office), which will be calculated based on the following formula:

Tariff = (0.2% x land value1) + IDR 100,000

For the current status of HGB of Pullman Jakarta Central Park, PT Agung Podomoro Land Tbk,

as the holder of HMSRS right situated on an HGB right before the REIT’s investment, has applied for an extension to the land office and obtained approval for extension of the HGB on 17 May 2017. However, after the extension of HGB is approved, the tariff for the extension must be paid to the relevant authority within the prescribed period, which is when the extension will be deemed completed. If the payment of tariff is made to the relevant authority, the HGB term that is extended will commence on the date of payment of tariff to the relevant authority without factoring in the HGB remaining term prior to the extension. Currently the tariff was already paid and the HGB has been extended to 9 June 2037.

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2) Capri by Fraser, Vietnam

Key Highlights

Capri by Fraser, set on an area of 1 rai and 27.25 square wah (or 1,709 square meters), with 175 rooms, is a fusion hotel and serviced apartment. The hotel is designed in a modern and clean setting with complete in-room facilities including a kitchen, to cater to business and leisure customers, and Internet-connected travelers. The unique long-stay and short-stay configuration provides the security of longer-term income associated with long stays, but with the pricing growth associated with short-term stays.

Located in the center of Phu My Hung, a new urban area in Ho Chi Minh City, the hotel provides easy access to nearby business districts neighboring HCMC's port, global corporate offices, shopping malls, international schools, and a wide range of local dining options.

The hotel is located less than 100 meters away from HCMC's largest and newest convention center, the Saigon Exhibition and Convention Centre (SECC). The SECC is HCMC's only convention center of international standard. It hosted 76 and 68 regular conventions in 2017 and 2018, respectively. Capri by Fraser and the neighboring IBIS Saigon South regularly attract business people and organizers of exhibitions and conventions. There are no other hotels in HCMC District 7 that are comparable to Capri by Fraser. This hotel is managed by management of international standards. Neighboring hotels are managed by local management teams. General Information on the Property

Details

Nature of Property to be invested in by the REIT

Type of ownership of land Sub-leasehold (sublease from Phu My Hung Development LLC, of which the term will expire on 19 May 2043).

Type of ownership of the buildings and moveable assets

Freehold. When the land lease term is terminated without an extension of the agreement, the ownership will return to Phu My Hung Development LLC, the sub-lessor.

Owner of the land (following the REIT's investment in the Properties)

Luxel APT Co., Ltd.

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Details

Owner of the buildings and moveable

assets

Luxel APT Co., Ltd.

Management of the Property Frasers Hospitality

Location 2 Street C, Tan Phu Ward, District 7, Lot A, New Urban

South City, Ho Chi Minh City, Vietnam.

Access of the Property The hotel connects to Street C, which is public road that

is 16 meters wide, with 10 meters of road surface width.

Particulars of the land Land Use Right Certificate, Certificate of House

Ownership, And Ownership of Other Properties

Associated With Land (for Land) No. BD866719, dated

15 February 2011, and its amendment, dated 7

November 2011, by Ho Chi Minh City People’s

Committee.

Land Use Right Certificate, Certificate of House

Ownership, And Ownership of Other Property

Associated With Land (for Building) No. CA209609,

dated 11 August 2015, and its amendment, dated 11

August 2015, by Ho Chi Minh City Department of

Natural Resources and the Environment.

Land area 1,709 square meters

Buildings Consisting of a serviced apartment building with

ancillary facilities including restaurants, meeting rooms,

gym, and convenience store.

Year of operation 12 March 2013

Encumbrances on the land -None-

General description of the Property Four-star hotel in HCMC with 175 rooms.

In-room amenities Well-equipped kitchenette, LCD TV, air-conditioning, in-

room safe, standing shower, hairdryer, iron and ironing

board, and free Wi-Fi.

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Details

Other services and amenities Gym, sauna and locker room, reception, business center, hot spot lounge with workstations, parking space, airport shuttle service, laundry service, and four units of retail space.

Utilities Air-conditioning, elevator, electricity, water supply, telephone, sewerage, and drainage.

Appraised value Appraised value of USD 23.40 million, appraised as of 31 December 2018 by Savills (Thailand) Limited (by Nexus Property Consultants Company Limited)

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Map

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Room Information Capri by Fraser contains 175 rooms, which can be categorized into four types:

Room Type Room Type Room Number Average Area per Room (Sq.m.)

Studio Deluxe 92 26 One Bedroom Superior 27 43 One Bedroom Deluxe 51 53 Two Bedroom Executive 5 69 Total 175 6,601

Customer Segmentation

For the 12-month period ending December 2018, the customers of the Property can be categorized based on origin:

Customer Origin Percentage of Total Occupancy 1. South Korea 39.10% 2. Asia (Except South Korea, Japan and Taiwan) 19.60% 3. Japan 17.90% 4. Taiwan 9.90% 5. America 2.90% 6. Australia 2.30% 7. Europe 1.10% 8. Others 7.20%

For the twelve-month period ending December 2018, the customers of the Property can be categorized based on purpose of the visit:

Purpose Percentage of Total Occupancy

1. Corporate customers 98.00%

2. Leisure customers 2.00%

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Duration of Stay Percentage of Total Occupancy

1. Long-stay 57.8%

2. Short-stay 42.2% Details of the Management of the Hotel

Capri by Fraser is managed by Frasers Hospitality Pte. Ltd., which is a hotel management company under Frasers group. This is in accordance with the hotel management agreement with Frasers, which has a term of 10 years from 2013 to 2023. Currently, the Master Lessee of Capri by Fraser is Strategic Hospitality Services Co., Ltd. which is the party in the hotel management agreement by virtue of the deed of novation dated 22 December 2017, entered into between (i) Luxel APT Company Limited (ii) Strategic Hospitality Services Co., Ltd. and (iii) Frasers Hospitality Pte Ltd. Restrictions on Use of the Property

Currently, the area in which the Property is situated is subject to Law No. 63/2006/QH11 on the Real Estate Business, which prescribes that any building construction, modification, or correction must obtain approval from the local authority.

The plot of land on which Capri by Fraser is located is under the land lease agreement between Phu My Hung Development LLC (land lessor) and Luxel APT Co., Ltd. (land lessee), at 2 Street C, Block A, Sai Gon South, Tan Phu Ward, District 7. The land lease expires on 19 May 2043, and renewal requires consent from the lessor.

Luxel APT Co., Ltd. has ownership of the buildings and structures.

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3) IBIS Saigon South, Vietnam Key Highlights

IBIS Saigon South is located on an area of 234 square wah (or 936 square meters), consisting of 140 available rooms. IBIS Saigon South is located next to Capri by Fraser. The hotel is operated by Accor Group. It is opposite the Saigon Exhibition and Convention Center (SECC) and only 30 minutes by car from the city center. This is an affordable international hotel. International offices, hospitals, medical centers, and shopping malls are all within walking distance.

The hotel earns from corporate customers, whose numbers increase during exhibitions or important conferences, and from group tours from China, Hong Kong, Korea, and Europe, including crews from Europe. The organization that operates the SECC also plans to extend the center's size, in order to host more conferences.

There is no other hotel of the same standard in District 7 of Ho Chi Minh City, or which is comparable to IBIS Saigon South, which is operated by a world-class hotel group. Hotels near the IBIS Saigon South are run by local management, with the exception of Capri by Fraser. However, both hotels have different target markets. Capri by Fraser targets corporate customers, while IBIS Saigon South targets leisure travelers.

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General Information on the Properties

Details

Nature of asset to be invested in by the REIT

Type of land investment Subleasehold (from Phu My Hung Development Limited Liability Company; the subleasehold period ends on 19 May 2043)

Type of building and immovable asset investment

Ownership. However, after the subleasehold period ends and if there is no extension of the contract, the ownership will return to the sublessor: Phu My Hung Development Limited Liability Company

Holder of subleasehold Viethan Hotel Corporation

Owner of the buildings and the movable assets Viethan Hotel Corporation

Management Accor

Location 77 Hong Van Thai Street, Tan Phu Ward, District 7, Lot A, New Urban South City, HCMC, Vietnam

Access of the property The hotel is connected to Hong Van Thai public street which is 20 meters in width. The road surface is 12 meters in width.

Particulars of the land - Certificate of Land Use, Certificate of Ownership in the Building and other Land-related Properties (for buildings), No. CA209336, dated 17 June 2015, issued by Ho Chi Minh City Department of Natural Resources and Environment. - Certificate of Ownership in the Building and other Land-related Properties (for buildings), No. BD866719, dated 15 February 2011 and the amended agreement, dated 7 November 2011, issued by Ho Chi Minh City People's Committee.

Land area 936 sq m

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Details

Nature of asset to be invested in by the REIT

Buildings Consisting of one main building, with additional

facilities including restaurants, conference rooms

and public areas.

First year of operation 21 June 2012

Encumbrances on the land -None-

General description of the property A three-star hotel located in HCMC with 140

rooms.1

In-room amenities Air conditioning, safety box, telephone system,

Wi-Fi, coffee and tea maker.

Other services and amenities Car park, accessibility, sport facilities, business

center, sauna, jacuzzi and one unit of rental

space for restaurants.

Utilities Air conditioning system, elevator, electric system,

waterworks, waste disposal system, and drainage

system.

Appraised value Appraised value is USD 15.40, as appraised on

31 December 2018 by Savills (Thailand) Limited

(by Nexus Property Consultants Company

Limited)

Remark: 1. (1) Currently, 140 guest rooms are in operation. The hotel plans to renovate for additional 20rooms in the

future,subject to the market conditions and the study on the appropriate room type for the target customers.

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Map

Map of Hotel’s Relative Distance to Surroundings

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Room Information

IBIS Saigon South consists of one building with 13 floors. The hotel had 140 rooms of one type

only.

Remark: Currently 140 guest rooms are in operation. The hotel plans to renovate for additional 20rooms in the future, subject

to the market conditions and the study on the appropriate room type for the target customers.

Customer segmentation

For the twelve-month period ending December 2018, customers of the property were categorized

as follows:

Customer Origin Percentage of Total Occupancy

1. Asia (excluding China, South Korea, and Vietnam) 49%

2. South Korea 17%

3. China 15%

4. Vietnam 9%

5. Europe 6%

6. USA 2%

7. Others 2%

For the nine-month period ending September 2018, , customers of the property were categorized

by their objectives for staying, as follows:

Objectives of the Stay Percentage of Total Occupancy

1. Corporate 61%

2. Leisure 39%

Guest Room Details

Room Type Number of Rooms Average Area (Square Meters)

Standard Room 140 18

Total 140 2,520

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Details of the Management of the Hotel IBIS Saigon South is managed by AAPC Thailand Ltd. which is a hotel management company

under Accor. This is in accordance with the hotel management agreement, which has a term of 15 years from 2012 to 2027. Currently, the Master Lessee of Capri by Fraser is Strategic Hospitality Services Co., Ltd. which is the party in the hotel management agreement by virtue of the deed of novation dated 22 December 2017, entered into between (i) Viethan Hotel Co., Ltd. (ii) Strategic Hospitality Services Co., Ltd. and (iii) AAPC Thailand Ltd.

Restrictions on the Use of Property

The asset's location is currently under Law No.63/2006/QH11 on Real Estate Business which regulates the construction and modification of buildings in Vietnam; any building construction and modification must be approved by local authorities.

Moreover, IBIS Saigon South's land is under sublease contract between Phu My Hung Development Limited Liability Company (the Sublessor) and Viethan Hotel Corporation (Sublessee). The land is located at 73 Hong Van Thai Street, Lot A, South Saigon, Tan Phu Ward, District 7. The sublease contract ends on 19 May 2043 and extending the contract needs the sublessor's approval and consent.

Viethan Hotel Corporation is the owner of the buildings and the structures.

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2.4.4 Details of Assets Valuation

Pullman Jakarta Central Park Capri By Fraser IBIS Saigon South

Valuation Approach Income Approach Income Approach Income Approach Type of asset Freehold Leasehold approximately 25

years Leasehold approximately 25 years

Date of valuation 1 December 2018 31 December 2018 31 December 2018 Valuation Value 1,511,181,000,000 IDR 23,400,000 USD 15,400,000 USD Assumptions Room Revenue Approximately 61.16 Percent of

Total revenue Approximately 90.0 Percent of Total revenue

Approximately 84.0 Percent of Total revenue

ADR 1,640,000 IDR on the year 2019 60 USD on the year 2019 48 USD on the year 2019 Occupancy Rete Approximately 80.0 on the year

2019 Approximately 75.0 on the year 2019

Approximately 67.0 on the year 2019

Food and Beverage revenue

Approximately 60.0 Percent of room revenue



Other direct operating revenue




Room Expenses Approximately 15.0 Percent of room revenue



Food and beverage expenses

Approximately 50.0 Percent of food and beverage revenue



Other direct operating expenses

Approximately 60.0 Percent of other incomes from operation



Undistributed operating expenses

Approximately 18.8 Percent of total revenue



Base fee 1.75 Percent of total revenue 2.1 Percent of total revenue 2.0 Percent of total revenue Incentive Fee 7.0 percent of GOP 6.3 percent of GOP 8.0 percent of GOP Discount Rate 14.17% 10% 10%

2.4.5 Details of Major Assets Acquisition in This Year

-None- 2.4.6 Details of Major Assets Disposal in This Year

-None-

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a. The Benefit Procurement from the Properties

The REIT's initial investment in the Properties is the investment to create stable return to the

Unitholders and for the Unitholders to achieve sustainable distributions per Unit and net asset value

( NAV) , while maintaining an appropriate capital structure. The BVI Holding Company has a policy to

invest in a diversified portfolio of income- generating real estate located in the ASEAN with an initial

focus on the Mekong region and Indonesia, which is used primarily for hospitality and/ or hospitality-

related purposes, whether wholly or partially, as well as real estate-related assets in connection to the

foregoing. Through the Master Lessors, the investment will be made by way of purchase, lease, sub-

lease and/or acceptance of the transfer of leasehold rights and/or sub-leasehold rights in the Properties,

as well as improvement modification, development and/or transfer of other properties. After the REIT's

investment, the REIT shall procure the benefit from assets by way of leasing the Properties to the

Master Lessee and take other necessary actions for the benefit of the REIT, with the aim to generate

income and returns for the REIT and all Unitholders.

2.5.1 Strategy of the Benefit Procurement from the Properties

The REIT Manager has the following strategy of the benefit procurement from the Properties:

The REIT Manager has the policy of appointing its representatives to be directors of each

of the Investment Companies. The REIT Manager will monitor the operating performance

of the Investment Company in each quarter and compare with the annual budget and

the past operating results (if any). If the operating performance of any of the Investment

Companies misses the target, the REIT Manager will analyse the issues and develop

operating plan in order to achieve the target.

After the REIT's investment, the Properties will be leased by the Master Lessors to the

Master Lessees with the lease period of 3 years each. The REIT will receive both fixed

and variable rental from the Master Lessees as set out in the summary of agreement

and material agreements relevant to the Properties which the REIT Manager is of the

view that the rental rate is appropriate.

For the initial investment, the REIT manager will control Master Lessees to comply with

the term and conditions of the lease through the Master lease agreement.

In the event that there is a change in Master Lessee of the Properties, this may affect

the change in terms and conditions of the lease agreement, including fixed rental and

variable rental.

The REIT reserves the right to improve and modify the Properties to ensure that the

Properties look modern and consistently meet the demand of the customers to continually

attract the customers to come use the services.

In the event that the Master Lessee does not comply with the lease agreement which

can cause the termination of lease agreement, the REIT shall proceed to procure new

lessee, by setting the initial qualification which is evaluated based on experience in hotel

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business, financial position, system, credibility and business profile, to negotiation and propose conditions and details of the leased Properties in place of the previous Master Lessee.

2.5.2 Master Lease Agreement between Lessor and Lessee

1.) Indonesia asset : Pullman Jakarta Central Park

Lessor PT SHR Pullman Indonesia ( INDONESIA) , a company wholly owned by the REIT.

Lessee PT Central Persona Palace, with the ultimate shareholder being the same as REIT Manager's ultimate shareholder.

Leased Properties (a) Buildings including any construction situated within Pullman Jakarta Central Park ("Hotel Buildings"); and

(b) Component parts of the Hotel Buildings which are the common utilities system such as electrical system, water system, telephone system, elevator, escalator, air-conditioning, engineering system, as well as any amenities in relation to Hotel Buildings including any right with respect to the aforesaid assets.


Lease Period Lease term of 3 years from the effective date stipulated in this agreement ("Effective Date")


Upon the expiry of lease agreement, the parties agree that the lessee shall continue to lease the Leased Properties from the lessor for a period of 3 years each on an automatic renewal basis, and the renewal condition of the lease agreement shall terminate when the lessor no longer has qualities of being the owner of the Leased Properties. The calculation of fixed rent and variable rent shall be in accordance with the method stipulated in the agreement.

Renewal Method upon the Expiry of Lease Agreement

Upon the lease agreement being renewed:

1. The parties agree that the lease conditions, including the conditions with respect to renewal of lease period, shall remain the same as are set out in the first lease agreement.

2. In the event that the Leased Properties are located on the leasehold land, the parties agree that the renewal condition shall be effective no longer

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than the effective term of the lease agreement of the land where the Leased

Properties are located on.

3. Apart from 1. and 2. above, if the lessor does not wish to continue the

lease, the lessor shall inform the lessee in writing no less than 6 months

prior to the expiry of the lease period pursuant to the lease agreement or

the renewed lease period.

In the event that there is a renewal pursuant to the agreement but the lessee

encounters legal restriction or impossibility of performance due to lack of

specified qualities which result in the termination of this agreement and/ or any

cause other than with intention or gross negligence of the lessee that results in

the lessee being unable to continue to lease the Leased Properties for the hotel

operation, the lessee shall be deemed to have no obligation to continue leasing

the Leased Properties.

However, in the event that there is a renewal as set out in 1. but the lessee

encounters legal restriction or impossibility of performance, but can continue to

lease the Leased Properties temporarily for the hotel operation until there is a

new lessee to lease the Leased Properties, the lessor and the lessee shall

mutually determine the conditions of the extended period. Nevertheless, the

lease period shall not be extended longer than 180 days from the expiry of the

lease period, and the lessee shall be deemed to have no obligation to continue

leasing the Leased Properties.

Rental Payment 1. Unless there is a postponement of rental payment and exemption of rental

payment due to force majeure as stated in this agreement, the lessee

agrees to make the rental payment to the lessor in accordance with the

terms and conditions of this agreement. The rental payment is as follows:

1.1 Fixed Rental

A Fixed rental = ( base rental with the exact amount being determined

per annum or annual fixed rental of the preceding operating years, whatever

is higher) + additional base rental per annum (if any),

B where:

C base rental with exact amount being determined is the amount set out

in the section titled "base rental" below.

D additional base rental per annum = (a x b) – c

E where

F a = 67.00 percent

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G b = Net Operating Income (NOI) per annum which shall be equivalent

to Gross Operating Profit (GOP) of the Property deducted by the expenses

in relation to the Properties not included as part of the GOP, namely

(i) hotel management fee paid to the hotel manager (base fee and

incentive fee;

(ii) land and building rental;

(iii) insurance premiums;

(iv) property taxes;

(v) maintenance expense;

(vi) used FF&E reserve under the lessee's responsibility (if any);

(vii) operating expenses of the lessee; and

(viii) other income and expenses which are not captured in the GOP.

c = base rental with exact amount being determined ( as set out in the

section titled " base rental" below) or the fixed rental per annum of the

preceding operating years, whatever is higher.

In the event that the calculation of additional base rental per annum

according to the formula above results in the additional base rental per

annum of lower than zero, the lessee shall not use the result of that

calculation in deriving the additional base rental for that particular year.

1.2 Variable Rental

Variable rental = d - e - f

where:

d = Net Operating Income (NOI) (with details as set out above)

e = fixed rental of the relevant quarter

f = accrued rental payment which has been postponed due to force majeure

(if any), as stated in the section titled "postponement of rental payment due

to force majeure"

If the result of the calculation of variable rental according to the formula

above is lower than zero, the variable rental shall be set at zero.

2. The lessee shall make the fixed rental payment for the portion equivalent

to the base rental set out above within 30 days from the end of the month

and/ or additional base rental per annum ( if any) within 45 days from the

end of the year, and variable rental for each quarter as set out above within

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45 days from the end of the quarter, with reference to the financial

information in the management account. Therefore, in the event that the

lessee is not capable of making such rental payment in full, the payment

not received by the lessor shall be deemed as accrued rental revenue, and

the lessee shall make the payment of the accrued rental revenue within 30

days from the due date.

3. The lessee shall be entitled to accrue rental payment only once a year. If

it happens more than once, the lessee shall pay the default interest at the

rate of 15 percent per annum, calculated based on the accrued rental

revenue and the number of days from the due date until the payment is

made in full.

4. The fixed rental and/ or variable rental may be adjusted to comply with the

regulation of relevant Securities Laws, which includes in the event that the

proportion between the fixed rental and variable rental does not comply with

the relevant Securities Laws. The REIT and the lessee shall mutually

amend the terms and conditions of the fixed rental and/or variable rental to

be in compliance with the regulation under the relevant Securities Laws.

Base Rental USD 6,605,000 per annum, whereby the rental payment shall be made in local

currency. The exchange rate is as mutually determined.

Base Rental

Calculation

Base rental for the renewal of the agreement shall be equivalent to the average

fixed rental of the lease period under the previous lease agreement.

Postponement of

Rental Payment due

to Force Majeure

If any of the events below occurs during any quarter, the lessor agrees that the

lessee can postpone the rental payment of the month that the event occurs,

which shall not be deemed as breach of contract by the lessee. The lessor and

the lessee shall mutually determine the time period that shall be affected by the

particular event in writing.

1. If the force majeure has effect on the Leased Properties, either directly or

on the neighboring area of the Leased Properties such as fire, flood and

earthquake, and has material impact on hotel operation and results in

average monthly RevPar of the hotel during that period being lower than

the monthly RevPar of the same period of the preceding year (which is the

normal period that the Leased Properties are not affected by such event) ,

at or greater than 20 percent but not exceeding 50 percent.

2. If the force majeure has material impact on the hotel operation and results

in:

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(a) monthly RevPar during that particular period of the hotel being lower than monthly RevPar during that particular period of the preceding year (which is the normal period that the Leased Properties are not affected by such event) , at or greater than 20 percent but not exceeding 50 percent; and

(b) monthly RevPar of the competitive set is lower than monthly RevPar during that particular period of the preceding year of the competitive set (which is the normal period that the Leased Properties are not affected by such event), at or greater than 15 percent.

If the Leased Properties were also affected by the force majeure during the particular period of the preceding year, the monthly RevPar of the hotel and monthly RevPar of competitive set (as applicable) during the particular period of the current year shall be compared with RevPar of the particular period of the most recent year that the Leased Properties were not affected by force majeure or any major renovation instead, for the purpose of comparison. (Remark: If the Leased Properties are impacted by force majeure during the second year and third year, monthly RevPar of the hotel and competitive set (as applicable) of the first year shall be used for comparison.)

Moreover, the lessee shall use its best effort and in good faith in deriving monthly RevPar of the competitive set, for the benefit of evaluating if the force majeure has occurred. In the event that monthly RevPar of the competitive set cannot be determined, the lessor and the lessee shall mutually agree to use other standardized information, criteria or ratio that are available in the ordinary course of hotel business operation for the criteria in the evaluation instead. If the lessor and the lessee determine the competitive set of more than one hotel in calculating the RevPar, simple average of the RevPar will be used in the calculation for such competitive set.

Competitive Set is a set of hotels and/ or resorts (no less than 3 properties) which shall be determined by the parties from time to time to be the hotels and/or resorts with the most similar standards or grades as the Property of the REIT, by considering location, group of customers, hotel grade and size.

Payment of the Deferred Rental Payment due to Force Majeure

If the payment is postponed due to force majeure which occurs during any particular quarter, the lessee shall make the payment to the lessor in the following sequence:

fixed rental for the month that force majeure does not take place, during the particular quarter

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variable rental for the month that force majeure does not take place, during the particular quarter (if any)

fixed rental which has been deferred variable rental which has been deferred (if any) H For the payment as stated above, the lessee agrees to make deferred rental payment in equal instalment on a quarterly basis according to the actual lease period up until the expiry of lease period pursuant to this agreement ( including the extended lease period) or the period that the parties mutually agree. The lessor agrees that the lessee shall not pay default interest for the failure to make any instalment payment or payment of damages due to deferred rental payment or delay in rental payment due to the postponement of rental payment as a result of force majeure.

Force majeure is the event which has the meaning has defined in this agreement and shall be elaborated later on.

Exemption of Rental Payment due to Force Majeure

If any of the following events occurs during any quarter, the lessor consents to exempt the rental payment to the lessee for the month that such event takes place during the quarter. The lessee is not liable to make rental payment for that particular period. The lessor and the lessee shall mutually determine the period which shall be impacted by that event in writing and the calculation of monthly rental payment which are not affected by such event in accordance with the calculation criteria set out in this agreement.

1. In the event of force majeure ( Force majeure are the events with the meaning as set out in the agreement which shall be elaborated later on) that has effect on the Leased Properties, either directly or to the neighbouring area of the Leased Properties, which shall have material impact on hotel operation and causes monthly RevPar of the hotel during that period to be lower than monthly RevPar of the same period of the preceding year (which is the normal period that the Leased Properties are not affected by such event), at or greater than 50 percent.

2. If the force majeure has material impact on the hotel operation and results in:

(a) monthly RevPar during that particular period of the hotel being lower than monthly RevPar during that particular period of the preceding year (which is the normal period that the Leased Properties are not affected by such event), at or greater than 50 percent; and

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(b) monthly RevPar of the competitive set is lower than monthly RevPar during that particular period of the preceding year of the competitive set (which is the normal period that the Leased Properties are not affected by such event), at or greater than 30 percent (if any).

If the Leased Properties were also affected by the force majeure during the particular period of the preceding year, the monthly RevPar of the hotel and monthly RevPar of competitive set (as applicable) during the particular period of the current year shall be compared with RevPar of the particular period of the most recent year that the Leased Properties were not affected by force majeure or any major renovation instead, for the purpose of comparison. (Remark: If the Leased Properties are impacted by force majeure during the second year and third year, monthly RevPar of the hotel and competitive set (as applicable) of the first year shall be used for comparison.)

Moreover, the lessee shall use its best effort and in good faith in deriving monthly RevPar of the competitive set, for the benefit of evaluating if the force majeure has occurred. In the event that monthly RevPar of the competitive set cannot be determined, the lessor and the lessee shall mutually agree to use other standardized information, criteria or ratio that are available in the ordinary course of hotel business operation for the criteria in the evaluation instead. If the lessor and the lessee determines the competitive set of more than one hotel in calculating the RevPar, simple average of the RevPar will be used in the calculation for such competitive set.

Lessor's Obligation 1. The lessor shall deliver the Leased Properties "as-is" as of the commencing date of the lease period. The lessor shall bear the expenses relevant to the investment in the properties, moveable assets, immoveable assets and/or be responsible for the improvement or major renovation of the infrastructure or the major components of the buildings.

2. If the lessee wishes to reimburse the aforesaid expenses from the lessor, the lessee shall give prior written notice to the lessor for the lessor to consider and approve the reimbursement within the due date of the payment. The approval for reimbursement is upon the lessor's sole discretion, but the lessor shall not unreasonably disapprove the reimbursement.

3. The lessor shall not cause any infringement or act in any way that can or shall result in the lessee not being able to benefit from all or part of the Leased Properties.

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Lessee's Obligation 1. The lessee shall use its best effort as hotel operator in ensuring that the Leased Properties are in good condition during the lease period.

2. To ensure that the Leased Properties are in good and appropriate conditions for usage in accordance with its purposes set out in this agreement, the lessee shall be responsible for maintaining and repairing (except the expenses related to investment in properties, moveable assets, immoveable assets and/ or improvement or major renovation of the infrastructure or the major components of the buildings which are the lessor's obligation) , or any action on the Leased Properties as necessary for the Leased Properties to operator the hotel business, by using furniture, fixtures and equipment reserves (FF&E reserves). If the FF&E reserves are not sufficient for the investment, the lessee shall be responsible for the remaining expenses which, if any, shall be part of the operating expenses in the budget approved by the lessor as set out in this agreement.

3. The lessee shall not engage or consent any person to engage in any action that is illegal or potentially hazardous to health, without permits under the relevant laws, or is offensive, or causes danger, damage or annoyance to third parties and lessor. And if the aforesaid problem or damage occurs, the lessee shall use its best effort to resolve the aforesaid problem or damage, including negotiating and alleviating the damages arisen from the aforesaid action to person(s) as set out above.

4. The lessee agrees not to create any liability or encumbrance except liability or encumbrance arising from the normal course of business of the lessee, or due to or for the purpose of the lease under this agreement and relevant business such as expenses from the operation of hotel business or to comply with this agreement or relevant agreement. The lessee agrees to maintain debt to equity ratio of the lessee at the ratio of not greater than 2 to 1, which calculate only the liabilities that are loan from financial institutions or issuance of fixed income instrument, but shall not include loan from shareholder.

5. The lessee agrees to arrange for and maintain permits important for hotel operation during the lease period under this agreement.

6. The lessee shall not cause any encumbrance over the Leased Properties.

7. The lessee shall be responsible for and engage in any action to protect the lessor from any claim over the use of the Leased Properties for lessee's operation and/ or ignorance to complete its duty or obligation under this agreement, including the action taken by the lessee's representative and/or

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dependents. If the lessor is claimed or proceeded the legal action due to the aforesaid cause, the lessee shall immediately release the lessor's liability, and the expenses shall be borne solely by the lessee.

8. Certain important actions such as selling or transferring of the lessee's material business entirely or partially to third party, creating security over the lessee's assets including the assets used in hotel operation, leasing of more than 50 percent of the area of the Leased Properties to any one particular person. The lessee shall proceed the actions above only when (a) consented in writing by the lessor or (b) indicated in the hotel's annual operating budget or capital expenditure budget which has been approved by the lessor.

9. Other obligations under the lease agreement such as conducting and delivering financial report, operating budget and capitalized expense budget to the lessor.

Lessee's Undertaking The lessee shall not operate any business other than hotel or related business that is for the REIT's business.

The lessee shall not provide loan, security or financial support (or being creditor in other means than trade creditor) for the benefit of third party.

The lessee agrees not to loan other than loan from shareholders for the purpose of rental payment or necessary operational support of the lessee.

The lessee shall not engage in action that competes with the Core Property of the REIT.

Insurance 1. During the lease period, the lessee and the lessor shall procure the following insurance:

1.1 The lessor shall procure property all risks insurance, whereby the insurance premium shall be borne solely by the lessee during the lease period.

1.2 Business interruption insurance whereby the lessee acknowledges and agrees the insured amount under the business interruption insurance shall not be less than expected revenue from the Leased Property deducted by relevant operating expense (GOP) for the period of 2 years, not including rental payment under this lease agreement. The aforesaid insurance shall set out that the lessor and the lessee be co-beneficiaries. Upon receipt of compensation from the insurer, the lessor agrees to deduct fixed rental which the lessor is entitled to receive in proportion of the time period that the insurer uses as the base for

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calculation of the due compensation and shall immediately pass the remaining compensation to the lessee. After the lessee uses the compensation for the payment relevant to the business operation during such period of time and there is remaining compensation, the lessee shall pay such compensation to the lessor in proportion of the variable rental that the lessor is entitled to receive pursuant to the conditions in this agreement.

1.3 Public liabilities insurance for protection of body injuries, lives, and potential damages on the assets to third party.

These are under the insured amount, terms and conditions of the insurance policies that the lessor and the lessee mutually consent under hotel management agreement. Insurance premiums of the aforesaid insurances shall be borne solely by the lessee.

2. The lessee agrees to use its best effort to promptly coordinate in any necessary action to claim the insurer for the compensation.

Transfer of Leasehold Rights

1. During the lease period, the lessee shall not transfer the right and/ or obligation under this agreement, either in whole or in part, to any person without prior written consent from the lessor except the transfer of right and/ or obligation to lessee's Affiliated Company that has qualification and capability to perform under this agreement. If the lessor gives consent to the lessee to transfer right and/ or obligation under this agreement, the lessee shall procure that the transferee agrees to be bound by the conditions as set out in this agreement. The lease period transferred to the transferee shall be expressly determined and shall not be longer than the remaining period of the lessee under this agreement.

"Affiliated Company" means person or juristic person which (a) directly or indirectly controls the person or juristic person or ( b) is under direct or indirect control of the person or juristic person. " Control" means having authority to control, determine or guide the management and policy of any person or juristic person, either directly or indirectly, and either as a result of its voting rights of greater than 45 percent of the registered and paid up shares of such person or juristic persons by contract or other means.

2. The lessor consents that the lessee shall sublease the area in the Leased Properties in accordance with the objectives of the lease set out in this agreement.

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3. During the term of this agreement, the lessor shall not transfer right and/or obligation under this agreement, either in whole or in part, to any person without prior written consent from the lessee.

Taxes and Fees 1. The lessee shall be responsible for the payment of fees, stamp duties and other expenses in relation to the Leased Properties arisen under this agreement ( if any) during the lease period under this agreement and the extended lease period.

2. The lessee shall be responsible for relevant land and building taxes of the Leased Properties under the laws.

Termination of Agreement

This agreement may be terminated by any party of the agreement under any of the following events:

1. Breach of contract by the lessee

(a) If the lessee breaches or does not comply with material terms under this agreement or any representation given in this agreement which is material and the lessee fails to remedy within 60 days from the date that it is informed or acknowledges the cause of the breach or from the date mutually agreed by the parties, except the breach of contract or representation due to force majeure or any circumstance beyond control of the lessee. If the lessee fails to pay fixed rental and/ or variable rental, it shall be deemed as breach of contract only when the lessee defers the payment for longer than 30 days from the due date of the rental payment, unless the failure to make rental payment is due to circumstances other than the lessee's false, which the lessor and the lessee agree to extend the payment period.

(b) When there is any amendment, suspension or revocation of permits, certificates, consents or other benefits that the lessee is entitled to from any governmental authority, governmental officer, person or juristic person and that the lessee is required to obtain or use for the main operation of the lessee, and such cause cannot be resolved within lease period that the lessor and the lessee mutually agree, which may have material negative impact on the hotel operation.

(c) When the lessee faces legal proceeding or government order, or due to any other causes that have material negative impact on the lessee's

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performance pursuant to this agreement, or when the lessee's authority to operate the business has been changed or interrupted, or when assets or revenue of the lessee either in whole or in part are confiscated or appropriated which the lessor considers as having material negative impact on the lessee's performance pursuant to this agreement.

(d) If the lessee has a receiver/ administrator appointed, or is ordered bankrupted, or in the process of winding up, liquidating or filing a request to the court or relevant governmental authority to have a receiver/ administrator appointed, or any other similar process, which have material negative impact to the lessee's ability to make rental payment or perform under this agreement

(e) If the lessee ceases to operate the business, either in whole or in part, which prevents the lessee from benefiting from the Leased Properties and which have material negative impact to the hotel operation.

2. Breach of contract by the lessor

If the lessor breaches or does not comply with material terms under this agreement or representation given in this agreement which is material and the lessor fails to remedy within 60 days from the date that it is informed or acknowledges the cause of the breach or from the date mutually agreed by the parties, except the breach of contract or representation due to force majeure or any circumstance beyond control of the lessor.

3. If the lessor is no longer the owner of the Leased Properties, or the lessor is not entitled to use the Leased Properties (as applicable).

4. Upon the end of the lease period under this agreement and the lessor or the lessee does not agree to extend the lease period of this agreement under the terms and conditions with respect to the extension of lease agreement pursuant to this agreement.

5. When the Leased Properties are damaged or appropriated, either in whole or in part, which potentially prevents the lessee from using the Leased Properties for the purpose of hotel operation and any other business relevant to the aforesaid business.

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6. If the Trustee enforces its right to terminate the REIT Manager Appointment Agreement in any case, the lessor shall have the right to terminate this agreement.


From the date that the REIT invests in the Properties, in the event that the lessee is not capable of paying fixed rental in full but the lessor's relevant shareholder has received the payment in full equivalent to the fixed rental amount that the lessor shall receive after deducting expenses from any of the following sources, this shall not be deemed as breach of rental agreement

1. The REIT and/ or company that the REIT invests in, either directly or indirectly, receives the net operating income (NOI) support from the Vendor Company (if any and as applicable).



Termination by the Lessor other than due to Lessee's False and Penalty

If the lessor enforces its right to terminate this agreement other than due to the lessee's breach of terms and conditions under this agreement, the lessor shall pay the lessee to compensate for the termination of this agreement that is not due to the lessee's false.

1. Penalty of USD 500,000

2. Related actual expenses that the lessee has to pay to other person(s) due to the termination of this agreement, which has to be direct related expenses to third party as a result of this agreement being terminated.

Consequence of Termination

1. When this agreement is terminated without extension, the lessee agrees to proceed as follows: 1.1 delivery of the Leased Properties to the lessor or the lessor's

designated person in the condition that is appropriate and suitable for usage in accordance with the purpose set out in this agreement;

1.2 payment of fixed rental and variable rental pursuant to guidelines set out in this agreement, calculated in proportion of the actual lease period to the lessor within 60 days from the date that the termination under this agreement is effective;

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1.3 delivery of any benefit that the lessee receives in advance such as advanced rental payment and other revenues received in advance ( if any) , including deposits paid to the lessor or the lessor's designated person, where

(a) if the lessee receives the benefit after the termination of this agreement, the lessee agrees to deliver the benefits to the lessor or the lessor's designated person set out in this agreement, and

(b) if the lessor receives the benefit which is expected to be delivered to the lessee prior to the termination of this agreement, the lessor agrees to return such benefit to the lessee,

in the two cases above, the parties agree to deliver such benefits to the other party within 30 days after receipt of such benefit.

1.4 Provision of cooperation as necessary and appropriate, without compensation, to ensure the lessor's designated person can continue to operate in accordance with the laws and/ or as stipulated by other authorities within appropriate time after receipt of written request from the lessor, including providing support to the lessor or the lessor's designated person to transfer or to apply for permit to operate hotel business, or transferring of rights and obligations under any agreement. If the lessor is unable to find new lessee to lease the Leased Properties, the lessee agrees to continue leasing the Leased Properties for hotel operation under the lessor is able to find other lessee to lease the Leased Properties. The aforesaid extended period shall not exceed 180 days from the end of lease period. However, the lessee shall have no obligation to continue leasing the Leased Properties during the aforesaid period if the extension of lease agreement due to any restriction or impossibility of performance.

2. In the event that this agreement is terminated, the parties shall not be deprived of rights to claim for expenses or damages that they are entitled to prior to the termination of agreement, expenses and damages arising

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due to termination of agreement and/ or damages as stipulated under the laws.

During the lease period under this agreement and any extended period, the lessor shall have no rights to terminate the lease agreement with the lessee if there is no breach of contract due to the lessee's false.

Leased Properties that are Damaged or Appropriated.

1. In the event that the Leased Property is appropriated or damaged, either in whole or in part, which is not due to false by any party to the agreement, which prevents the lessee from potentially using the Leased Properties for the hotel business operation, it shall be deemed that this agreement is terminated on the day that the Leased Properties are damaged or appropriated. Each party shall have no right to claim compensation, expenses, cash or other benefits from the other party, except compensation due to breach of contract prior to the termination of this agreement, or expenses or other benefit due or arising before the termination of this agreement.

2. In the event that the Leased Properties are partially damaged or appropriated, and the lessor and the lessee agrees that the Leased Properties being partially damaged or appropriated can continue to be used for hotel operation, it shall be deemed that this agreement shall continue to be effective only for the Leased Properties that are not damaged or appropriated and that it is still considered Leased Properties under this agreement. The parties shall mutually evaluate the appropriate adjustment to the rental rate and other terms of the agreement to be consistent with the Leased Properties which are partially damaged or appropriated.

Force Majeure 1. For the purpose of this agreement, in addition to the events as set out in this agreement, force majeure shall include the force majeure as defined in hotel management agreement that is effective during that particular time.

2. In the event of force majeure which prevents any party of this agreement from performing pursuant to this agreement, that party shall immediately inform the other party in writing of the force majeure. In such event, both parties are entitled to postpone the performance pursuant to this agreement for the period that force majeure lasts, whereby the lessor and the lessee shall mutually determine such time period and shall not be deemed as breach of contract by any of the parties. The parties of the agreement agree not to use force majeure as a claim to call for payment under this agreement, unless:

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(a) If force majeure results in the Leased Properties being materially damaged to the extent that the lessee shall not be able to utilize the Leased Properties in accordance with the purpose of the lease during any particular period of time, the lessee shall have no obligation to make rental payment during that particular period of time that the lessee cannot utilize the Leased Properties; and/or

(b) In the event of the force majeure that the lessee can request for the postponement of the rental payment and exemption of rental payment due to force majeure as set out in this agreement respectively.

3. If force majeure as set out above is the cause that any party to this agreement is unable to perform pursuant to this agreement, or that any party to this agreement is unable to receive benefit as set out in this agreement, the parties agree to reconsider the conditions of this agreement in good faith for the parties to operate for the benefit of the parties and/or to return to the previous positions.

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2.) Vietnam : Capri by Fraser Other than as set out in the table, the terms and conditions of the agreement granting

permission to use assets for operation of hotel business between Master Lessor and Master Lessee of Capri by Fraser shall be the same as terms and conditions of the lease agreement of Pullman Jakarta Central Park, with the change in the reference from Pullman Jakarta Central Park to Capri by Fraser.

Lessor Luxel APT Company Limited, a company wholly owned by the REIT through BBDM Singapore Pte Ltd.


Leased Properties (a) Buildings including any construction situated within Capri by Fraser ( " Hotel Buildings"); and

(b) Component parts of the Hotel Buildings which are the common utilities system such as electrical system, water system, telephone system, elevator, escalator, air- conditioning, engineering system, as well as any amenities in relation to Hotel Buildings including any right with respect to the aforesaid assets.








From the date that the REIT invests in the Properties, in the event that the lessee is not capable of paying fixed rental in full but the lessor's relevant shareholder has received the payment in full equivalent to the fixed rental amount that the

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lessor shall receive after deducting expenses from any of the following sources, this shall not be deemed as breach of rental agreement




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(3) Viewnam : IBIS Saigon South Other than as set out in the table, the terms and conditions of the agreement granting

permission to use assets for operation of hotel business between Master Lessor and Master Lessee of IBIS Saigon South shall be the same as terms and conditions of the lease agreement of Pullman Jakarta Central Park, with the change in the reference from Pullman Jakarta Central Park to IBIS Saigon South.

Lessor Viethan Hotel Corporation, a company wholly owned by the REIT through BBVN Singapore Pte Ltd.


Leased Properties (a) Buildings including any construction situated within IBIS Saigon South ("Hotel Buildings"); and

(c) Component parts of the Hotel Buildings which are the common utilities system such as electrical system, water system, telephone system, elevator, escalator, air- conditioning, engineering system, as well as any amenities in relation to Hotel Buildings including any right with respect to the aforesaid assets.




Base Rental USD 791,000 per annum, whereby the rental payment shall be made in local currency. The exchange rate is as mutually determined.




From the date that the REIT invests in the Properties, in the event that the lessee is not capable of paying fixed rental in full but the lessor's relevant shareholder has received the payment in full equivalent to the fixed rental amount that the

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lessor shall receive after deducting expenses from any of the following sources, this shall not be deemed as breach of rental agreement.




2.5.3 Details of Master Lessees and Relationship as Related Parties Master Lessee are 1) Strategic Hospitality Services Co., LTD which is located in Vietnam and

2) PT Central Persona Palace which is located in Indonesia, both are associated companies of the REIT Manager.

Qualification and experiences of the Master Lessees

Master Lessees are subsidiaries of the major shareholder of the REIT Manager, which has different personnel from the personnel of the REIT Manager. In addition, personnel of the Master Lessees shall have expertise in hotel business and has policy to general revenue from hotel property and hospitality by hiring reputable hotel operator with global standard and acceptable in the hotel industry to help with the management of the Properties.

Relationship in terms of shareholding and business with the REIT Manager

Master Lessees are subsidiaries of Strategic Hospitality Services Pte Ltd (Singapore), whereby Strategic Hospitality Services Pte Ltd (Singapore) and the REIT Manager shall have the same ultimate shareholder. Strategic Hospitality Services Pte Ltd (Singapore) holds 100 percent ownership in PT Central Pesona Palace and Strategic Hospitality Services Co. Ltd. (Vietnam), which are the Master Lessees in Indonesia and Vietnam respectively.

Operational Period

Master Lessees shall engage hotel operator for the business operation during the term of the Master Lease and could be extended per conditions as stipulated in the lease agreement.

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Opinion of the REIT Manager on the Ability of the Master Lessee in the Operation Pursuant to the Lease Agreement

REIT Manager shall perform its obligation through the Master Lessor which is the party to the agreement with the Master Lessee, by enforcing its right pursuant to the lease agreement in monitoring and ensuring that the Master Lessees comply with terms and conditions in the lease agreement. As the REIT Manager shall use its best effort to monitor and enforce the Master Lessees, it is confident that the Master Lessors shall have the ability to control the Master Lessee to comply with the requirement as set out in the lease agreement.

Non- compliance with the requirement and obligation as set out in the lease agreement by the Master Lessees may result in the termination of lease agreement and the Master Lessors shall be entitled to terminate the agreement and claim for compensation due to breach of agreement by the Master Lessees. The Master Lessors are entitled to procure new lessees to accept the leasehold right in the Properties in place of the Master Lessee and shall agree with the new party under the new lease agreement with terms and conditions that are beneficial to the Master Lessors.

Mechanisms or Measures for Monitoring of the Master Lessee to Prevent Conflict of Interest between Master Lessee and the REIT

Even though the Master Lessees are direct related persons of the REIT Manager as the ultimate shareholder of the REIT Manager and the ultimate shareholder of the Master Lessees are the same. However, in procuring the lease agreement to procure benefits from the Core Properties of the REIT, the REIT Manager shall use its best effort in negotiating the lease agreement and rental fee, including other terms and conditions in the lease agreement with the Master Lessees for the best interest of the REIT and Unitholders, on the principle that the Master Lessees and REIT Manager are the separate entities. The REIT Manager is of the view that the terms and conditions under the lease agreement that the Master Lessors shall enter into with the Master Lessee for the lease of the Core Properties during the REIT's initial investment shall be terms and conditions that are appropriate and consistent with conditions of the ordinary course of business when comparing to other business operations of the similar natures. Such lease agreement shall be reviewed by the Trustee to prevent the conflict of interest between the Master Lessees and the REIT. In the event that there shall be transaction between the REIT and Master Lessee, the REIT shall operate on the related party transaction between the REIT Manager and related party of the REIT Manager, as well as the REIT and Trustee and related party of the Trustee.

In the event that there is any conflict of interest between the REIT and Master Lessees after the REIT's establishment and from the entering into the lease agreement between the Master Lessor and Master Lessee, the REIT Manager shall ensure that the REIT Manager can monitor the Master Lessees for the best interest of the REIT, and shall engage in certain actions to control the Master Lessee. In the situation of the conflict of interest between the REIT and Master Lessees, the REIT Manager shall arrange

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for sufficient and appropriate measures to prevent conflict of interest and shall be under supervision of the Trustee to ensure the management of the REIT is in compliance with relevant law and regulations, including Trust Deed, REIT Manager Appointment Agreement and other relevant agreements, with the criteria and approach according to the law and regulations as set out in the agreement, and shall comply with the operational manual of the REIT Manager. In addition, in the event that the REIT shall enter into any action with the Master Lessee other than the lease agreement with key terms as disclosed in this registration statement, the REIT Manager shall have the obligation under the Trust Deed to ensure that such actions shall have the essence as set out, namely:

Comply with Trust Deed and relevant regulations For the best interest of the REIT Appropriate and based on fair value Expenses for entering into the transaction which shall be reimbursed from the REIT is

fair and appropriate, and The person with the interest from entering into the transaction shall not be above to

make decision with respect to the entering into the transaction

In addition, in the event that the REIT shall enter into the transaction or any action with the Master Lessee other than as set out in the lease agreement and as disclosed in this registration statement, which may result in the change to the key terms of the lease agreement that have been disclosed in this registration statement such as

Change in key terms of lease agreement between Master Lessee and Master Lessor Decision to proceed according to the rights under the agreement or under the law in the

event of the breach of agreement and/or dispute Change in Master Lessee or termination of lease agreement

In any case as stated above, the REIT Manager which shall be the entity approved by the SEC Office to perform the duty as the REIT Manager of the REIT shall have obligations under Trust Act, relevant laws and regulation to perform duties according to the principle of business operation, by performing the obligation with responsibility, care, good faith, and shall fairly treat the Unitholders and for the benefit of the Unitholders as a whole, and shall perform its obligation in accordance with relevant laws and regulations relating to the entering into the related transaction between REIT and the REIT Manager of persons related to the REIT Manager, including Trust Deed and other relevant agreements. In addition, the REIT Manager shall perform its obligation with care to avoid conflict of interest. In the event that there is conflict of interest, the REIT Manager shall have duty to ensure that the investors are treated fairly and appropriately. The REIT Manager shall ensure that the management according to mechanisms or measures to monitor the Master Lessees as stated above shall be to prevent conflict of interest between the Master Lessee and the REIT and for the best interest of the REIT.

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In addition, the actions of the REIT Manager shall be overseen by the Trustee, which is the juristic person approved to be the Trustee of the REIT. The Trustee shall have duty under the Trust Deed, laws and regulation to monitor, oversee and inspect the REIT Manager to ensure compliance with Trust Deed and relevant laws relating to the entering into the related transaction between REIT and the REIT Manager or persons related to the REIT Manager. 2.5.4 Hiring of Property Management

- None-

2.5.5 Performance of Master Lessees In the year 2018, Master Lessees can comply with the conditions in accordance with the Master Lease agreement and paid rental fee in local currency as follow :

Master Lessees PT Central Pesona Palace Strategic Hospitality Services Pte. Ltd. Hotel Pullman Jakarta Central Park Capri by Fraser IBIS Saigon South Currency IDR VND VND Fix Rent 80,313,180,823 32,173,264,381 16,046,060,605 Variable Rent - 5,580,485,126 2,742,405,555 Total 80,313,180,823 37,753,749,506 18,788,466,160

2.5.6 Rental Fee Income Guarantee

-None-

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2.6 Loan

2.6.1 REIT’s Borrowing as of year end 2018

The REIT has entered a loan agreement of EUR 44,670,000 (approximately 1,724.43 million Baht) with an oversea financial institution for the purpose of using such loan for repaying the REIT's loans with a local financial institution existing from the date of the REIT's investment in the Properties. The loan has been drawn down all on 29 June 2018 and On 17 August 2018, the loan agreement was amended to increase the loan facility by EUR 1.5 million to support business expansion. On 20 August 2018 the loan has been drawn down EUR 1.165 million. Terms and conditions of the loan are in accordance with the facility agreement details as below :

Summary of Key Terms in Loan Agreement

Lender Oversea financial institution who is not related to the REIT Manager and/or theTrustee Borrower Strategic Hospitality Holdings Limited, the REIT’s subsidiary with 100% shareholding Loan Balance as at 31 December 2018

Long-term loan facility EUR 45.84 mn.

Interest Rate Floating Rate - Euro Interbank Offered Rate 3 months (3M EURIBOR) : Year 1 3M EURIBOR plus 3.25% per annum Year 2 3M EURIBOR plus 3.75% per annum Year 3 3M EURIBOR plus 4.25% per annum

Term of Agreement 3 Years from draw down date and 1 more year conditional extend Principal Repayment 100% on final maturity date Payment of Interest Quarterly Collateral - Pledge of shares of some subsidiaries of the REIT

- Mortgage of assets in Indonesia - Transfer of rights to receive relevant benefits under the master agreement to the lender, namely loan agreement between company under the REIT's service agreement, lease agreement, asset management agreement, insurance agreement and/or endorsement of the insurance policy. - Guarantee provided by some subsidiaries of the REIT Other than the securities set out above, other terms and conditions related to securities for this loan shall be in accordance with loan agreement, security agreement and other relevant finance documents that the parties shall agree upon.

Key Terms - Total debt to total assets (Gearing Ratio) according to consolidated financial statement of the REIT shall not exceed 45 percent. - Secured loan to secured asset (Loan to Value Ratio) according to consolidated financial statement of the REIT shall not exceed 45 percent.

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- Interest cover ratio according to colsolidated financial statement of the REIT shall not be lower than 2.5 - No dividend payment can be made in the event of the default under the loan agreement.

Other Conditions 2.6.2 Policy in Obtaining Future Loans and Creating Encumbrances to the REIT Assets

Subject to a borrowing framework policy, the REIT may, at any time in the future, ask to borrow money from the financial institutions, or issue instruments or securities, or enter into any loan agreement, or create an encumbrance on the REIT property for further investment in the additional assets for the Property, or renovation of the Property invested in by the REIT, or for other purposes that shall benefit the REIT business.

1. Objectives of obtaining loans

In managing the REIT, the REIT may obtain the loans, with or without collateral, and the REIT Manager may obtain the loans or change or create any encumbrance for managing the REIT and the REIT assets for the following purposes:

(1) To renovate or repair the REIT immovable property, or immovable property in which the REIT has leasehold rights or possessory right, in order for such property to be in good condition and ready for benefits procurement, including to change the image of that property;

(2) To renovate, repair or replace the movable property or equipment related to the REIT immovable property, or immovable property in which the REIT has leasehold rights or possessory rights, in order to be in good condition and ready for benefits procurement;

(3) To construct annexes or additional buildings on the existing land owned by the REIT or that the REIT has leasehold rights or possessory right for the purpose of benefits procurement of the REIT;

(4) To invest in additional immovable property or leasehold rights;

(5) To leverage the loans as the REIT's working capital or for guaranteeing the business operation of the REIT;

(6) To restructure or refinance;

(7) To hedge against the exchange rate risk and/or interest rate risk due to any borrowing or issuing of debt instruments; or

(8) To execute other matters deemed necessary by the REIT Manager for the REIT management where by the REIT Manager shall consider the necessity and appropriateness for the benefits of the REIT and Unitholders in which the REIT Manager shall notify the Trustee in advance. In case where there are other borrowings that shall have material

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affect on the encumbrance or financial position of the REIT, the REIT Manager shall seek for the Trustee approval and/or the resolution of Unitholders prior to the execution of such transaction.

Special conditions

The REIT may enter into a derivative agreement for the purpose of hedging against the exchange rate risk and/or interest rate risk arising from any borrowing, whether in whole or in part for example; the REIT may enter into a derivative agreement with a commercial bank as a counterparty in order to hedge against exchange rate risk.

2. Procedures for obtaining loans

The REIT may at any time determine the procedures of borrowing money or creating any encumbrance to the REIT property, in either one method or joint methods, including issuing any instruments or entering into agreements in whichever form that have meanings or the true substance relating to the borrowing of money as follows:

(1) borrowing money, applying for credit lines, over-drafting the accounts from juristic persons or other financial institutions, in domestic and international, as well as insurance company incorporated under the insurance governing laws. The REIT may consider giving a guarantee to secure such loans payment. The REIT may also enter into any futures contract or buy and sell of the derivative products in order to hedge against an exchange rate risk and/or interest rate risk arising from the borrowing whether in whole or in part, such as a Cross-Currency Swap or Interest Rate Swap; or

(2) issuing any short-term or long-term debt instrument and offer to both individual and institutional investors in accordance with the relevant notifications of the SEC or the SEC Office and the REIT may consider giving the collateral relating to the issuance thereof.

(3) For the benefit of the REIT and Unitholders, the REIT Manager shall take into account the necessity and justification for borrowing money, or any change and encumbrance on the REIT property, and the REIT Manager shall ensure such operations are in compliance with the rules and procedures for borrowing money without seeking any approval from Unitholders' meeting at the extent of no violation of law and breach of the Trust Deed. In case where the REIT places the assets as collateral for the loan repayment, including an increase in guarantee limit for those creditors with collateral, the REIT Manager shall ensure that such operation are in accordance with the REIT borrowing procedures as well as any encumbrance incurring to the REIT assets shall be in accordance with the Trust Deed and other relevant laws.

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The Trustee shall be the person who has the authority to execute the loan agreement in order to change or incur any encumbrance on the REIT property, or the Trustee may assign the REIT Manager to execute such agreement on behalf of the Trustee.

3. Loan amount

The REIT borrowing is subject to limitations that the amount will not exceed any of the following ratios, unless such excess is not the result of an additional borrowing:

(1) 35 percent of the Total Asset Value of the REIT; or

(2) 60 percent of the Total Asset Value of the REIT in case where the REIT's crediting rating is in the investment-grade in which the latest update on the rating shall be rated by a credit rating agency approved by the SEC Office and within one year period prior to the borrowing date.

The REIT abovementioned borrowing shall include the issuance of an instrument, security, or execution of any agreement in whichever form with an intention or true substance related to the borrowing of money characteristics.

4. Incurring of encumbrances on the Property

The REIT shall create any encumbrance to the Property only deemed as necessary and in connection with the Property management, as follows:

(1) creation of an encumbrance in connection with any major agreements such as placing the Property as collateral as a guarantee of loan payment described in this section 11; or

(2) creation of an encumbrance which is considered as commercial practice or common business practice of such transaction.

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3. Overview of the Industry Related to the Investment Properties 3.1 ASEAN Overview

3.1.1 ASEAN economic overview

Over the past decade, ASEAN countries have witnessed strong economic growth. In 2017, the gross domestic products (GDP) of the ASEAN countries leaped to USD 2.8 trillion, almost two times the 2008 GDP. The average growth is 5.9 percent per annum. ASEAN's combined GDP as a percentage of world GDP is 3.4. If ASEAN were a single country, it would be the fifth-largest economy in the world after the United States of America, China, Japan, and Germany.

Strong growth of ASEAN's member states' economies comes from the export of goods and

services. In 2017, the value of exports of goods and services was USD 1.6 trillion. the fourth-highest export value in the world after China, the USA, and Germany. In 2016, foreign direct investment in ASEAN as a percentage of world foreign direct investment is 5.0, 41.4 percent higher than in 2007. ASEAN's inflows of foreign direct investment are ranked number six in the world.

Projection of ASEAN member states' GDP growth rate (%)

Source: International Monetary Fund (IMF)

0%

2%

4%

6%

8%

10%

2017

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3.1.2 ASEAN's tourism market overview With respect to ASEAN's tourism market overview, according to the World Travel and

Tourism Council (WTTC), the travel and tourism direct GDP (TTDGDP) 2017 is 4.9 percent of the ASEAN member countries' combined GDP. The travel and tourism sector creates 4.7% of total employment in ASEAN. WTTC forecasts that TTDGDP as a percentage of GDP will increase from 4.9% to 5.2% by 2028, and the employment rate derived from tourism and travel sector, compared with the combined employment rate will increase from 5.6% to 13.7% by 2028. In 2017, spending from tourists who are non-ASEAN citizens and ASEAN citizens were 53.2% and 46.8% respectively.

Spending on ASEAN's travel and tourism sector (USD)

Source: The World Travel and Tourism Council

The number of tourists visiting the ASEAN region is increasing constantly. Based on the

ASEAN Secretariat data, tourists coming to the ASEAN region increased from 73.9 million in 2010 to 108.9 million in 2015, equivalent to 8.1% per annum. It is projected that in 2030 the number of tourists will increase to 187.0 million, equivalent to an average growth rate of 11.4 percent per annum.

Inbound tourists (millions)

Source: the SEAN Secretariat

118.6 126.3207.8

136.2 143.7

243.2

0

100

200

300

400

500

2017 2018F 2028FASEAN citizens Non-ASEAN citizens

0.050.0

100.0150.0200.0

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3.2 Vietnam Overview

3.2.1 Vietnam economic overview A report issued by the National Center for Socio-Economic Information and Forecast Under

the Ministry of Planning and Investment (MPI) of Vietnam discloses that Vietnam's 2018 GDP is expected to increase by 6.8%. The General Statistics Office of Vietnam reveals that in the first half of 2018, Vietnam's GDP growth reached 7.1%, the highest growth rate for H1 since 2011. The growth is driven by the industry, construction, and service sectors, which have sent a reassuring signal for growth since the beginning of the year.

In the June 2018 issue of the Global Economic Prospects, a World Bank report, it is forecast

that the expected growth of Vietnam's GDP in 2018, 2019, and 2020 will be 6.8%, 6.6%, and 6.5% respectively.

GDP growth rate (%)

Source: World Bank Vietnam's inflation rate over last two years has tended to be stable, at 2.7% to 3.5% over the

past two years, especially when compared with its considerably fluctuated inflation rate in the last decade. This evidences growing stability in Vietnam's economic system. FocusEconomics forecasts that Vietnam's inflation rates in 2018 and 2020 will be 3.9% and 4.2%.

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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Inflation rate (%)

Source: World Bank, FocusEconomics Vietnam's population grew rapidly from 88 million in 2010 to approximately 96 million in

2017, making it the third most densely populated country in Southeast Asia and the 14th most populous country in the world. The nation's population has been increasing by approximately one million people each year from 2011 to 2017, and is projected to grow steadily to 98 million by 2020 (Source: World Bank).

Population (millions) and population growth rate (%)

Source: World Bank

Over the last ten years, Vietnam's GDP per capita has rapidly increased, leading to an increase in the purchasing power of the population, which has benefited Vietnam's overall economic condition.

8.3% 7.4% 8.3%

23.1%

7.1%8.9%

18.7%

9.1%6.6%

4.1%0.6%

2.7% 3.5% 3.9% 4.2%

0%

5%

10%

15%

20%

25%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F

88.5 89.490.5

91.592.5

93.694.6

95.5

0.0%

1.0%

2.0%

3.0%

85.087.089.091.093.095.097.0

2010 2011 2012 2013 2014 2015 2016 2017Number Growth rate

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GDP per capita (USD)

Source: World Bank

Foreign direct investment (FDI) in Vietnam has been expanding since 2011. Over the last ten years, FDI average growth rate has been approximately 4.4% per annum. FDI is one of the key factors to drive Vietnam's economic growth in the future.

Foreign direct investment (million USD)

Source: World Bank

3.2.2 Vietnam tourism markets (1) Supply In 2015, there were 747 hotels in Vietnam, consisting of 91 five-star hotels, 215 four-star

hotels, and 441 three-star hotels, equaling 82,325 rooms, divided into 24,212 rooms in five-star hotels, 27,379 rooms in four-star hotels, and 30,734 rooms in three-star hotels.

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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Hotels and hotel rooms in 2015

Five Star Four Star Three Star Total Hotels in 2015 91 215 441 747 Hotel rooms in 2015 24,212 27,379 30,734 82,325

Source: VNAT (Vietnam National Administration of Tourism) (2) Demand In 2017, the number of tourist arrivals in Vietnam was approximately 13 million, an increase

of 29% from 2016 in which year the number of tourist arrivals was approximately 10 million. Colliers International Research projects that the increase in the number of tourists may come from Vietnam's greater relaxation of visa requirements

Tourist arrivals in Vietnam (persons) and growth rate (%)

Source: Colliers International Research, Vietnam International Administration of Tourism

Most tourists come from countries in Asia. From 2012 to 2017, China is the number one

source of foreign tourists to Vietnam, with Korea as number two. The number of tourists from China and Korea has been rising. According to Colliers International Research's analysis, the main reason for the increase is an increase of flights operated by low cost airlines to more tourist destinations in Vietnam. It is projected that Capri by Fraser HCMC and IBIS Saigon South, the majority of whose customers are Chinese and Korean, would benefit from the anticipated rising of tourists.

6.8 7.6 7.9 7.910.0

12.9

0%

10%

20%

30%

40%

50%

2555 2556 2557 2558 2559 2560

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Number of tourists by nationality (millions)

Source: Colliers International Research, Vietnam National Administration of Tourism

For the types of customers, based on their purpose of stay in Vietnam, free individual travelers

(FITs) comes first at 35.8%, with tour groups at 27.2%. The number of hotel guests in each type in 2017 and 2016 increased marginally.

2017 purpose of stay

Source: Grant Thornton: Executive Summary Hotel Survey 2018

Tourist spending growth in Vietnam has increased in line with the rising number of tourists. In

2017, tourist spending is equivalent to USD 22 billion, an increase of 27.9% from 2016, in which tourist spending was USD 17.2 billion.

2012 2013 2014 2015 2016 2017

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Tourist spending in Vietnam (USD million) and growth rate (%)

Source: Colliers International Research, Vietnam National Administration of Tourism

3.2.3 Operating results

1) Average room rate

In 2017, average daily room rates for four-star hotels and five-star hotels were USD 75.2 and USD 107.6, an increase from 2016 of 0.8% and 4.3%, respectively. An average room rate at Capri by Fraser HCMC, a four-star hotel, is less than an average room rate at other four-star hotels in Vietnam. The average room rate is relatively low because most of its hotel guests are long-stay guests, i.e. guests who stay over one month, and the average room rate offered to long-stay guests is lower than that offered to short-stay guests. The hotel operator now has a policy of increasing the number of short stay guests.

Four-star and five-star hotels' average room rates compared to the hotels in which the REIT will invest

Sources: Grant Thornton: Executive Summary Hotel Survey 2017, Grant Thornton: Executive Summary Hotel Survey 2018

6.9 8.6 9.9

14.517.2

22.0

0%10%20%30%40%50%60%

0

5

10

15

20

25

2555 2556 2557 2558 2559 2560Toursist spending Growth rate

36.2 42.0 42.048.9 56.1 60.072.3 74.6 75.2

106.8 103.2 107.6

0

50

100

150

2015 2016 2017

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2) Average occupancy rate Four-star hotels and five-star hotels' average occupancy rates from 2015 to 2017 have been

increasing. In 2017, four-star hotels' average occupancy rate was 72.2%, increasing from 67.4% in 2016 while in 2017, five-star hotels' average occupancy rate was 75.2%, increasing from 69.2% in 2016. It is apparent that previously. the average occupancy rate at Capri by Fraser HCMC, a four-star hotel, is greater than the average occupancy rates of other four-star hotels in Vietnam. This shows good competitiveness for Capri by Fraser HCMC, when compared to other hotels at the same level.

Four-star and five-star hotels' average occupancy rates compared to the hotels in which the REIT invests (%)


3) Revenue per available room (RevPAR)

In 2017, the average RevPAR of four-star and five-star hotels in Vietnam was USD 54.0 and USD 79.1, an increase from 2016 of 7.6% and 10.2%, respectively. The RevPAR of Capri by Fraser HCMC, a four-star hotel, was less than an average of that of other four-star hotels in Vietnam, as most of its guests were long-stay groups. Please see the details in 3.1 Average Room Rates

Average revenue per available room at four-star and five-star hotels in Vietnam, compared to the hotels in which the

REIT invests (USD)


53.0%

64.4% 66.1%67.8%73.8% 74.7%

61.5%67.4%

72.2%

62.7%69.2%

75.2%

40%

50%

60%

70%

80%

2558 2559 2560

19.2 24.8 27.833.141.3 44.746.8 50.2 54.0

66.0 71.879.1

0

20

40

60

80

100

2015 2016 2017IBIS Saigon South (3-star) Capri by Fraser HCMC (4-star) 4-star hotels 5-star hotels

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3.2.4 Tourism sector of Ho Chi Minh City

2017 business overview of three-star and four-star hotels in Ho Chi Minh City

Four-star Three-star Hotels 26 118(1) Total rooms 3,677 8,186(1) Average room rate (USD/room/night) (2) 71.2 43.5 Average occupancy rate (%) 76.2 65.0 RevPAR (USD/room/night) (2) 54.3 28.3

Source: Colliers International Research, Savills Market Research Notes: (1) 2016 information (2) VND 23,347.50: USD published by Bloomberg on 23 November 2018.

(1) Supply Colliers International Research forecasts that from 2018 to 2020, there will be no development

of new four-star hotels in Ho Chi Minh City. However, eight new five-star hotels housing 1,840 rooms will start their operations, increasing the number of five-star hotel rooms by approximately 32.0% when compared to five-star hotel rooms in 2017. Those five-star hotels anticipated to be opened are chain-brand hotels, such as Mandarin Oriental and Hilton Saigon. Seven out of those eight hotels will be located in the heart of the Ho Chi Minh City business district, except the Mövenpick Hotel, which will be located in District 7, an area adjacent to two hotels in which the REIT invests.

Overview of supply of four-star and five-star hotels in Ho Chi Minh City

Five-star Four-star Current hotels 19 26 Current hotel rooms 5,750 3,677 New hotels (to launch in 2018 to 2020) 8 0 New hotel rooms (to be available in 2018 to 2020) 1,840 0

Source: Colliers International Research (2) Demand In 2017, the number of foreign tourists visiting Ho Chi Minh City reached 6.4 million,

equivalent to 20.4% of total tourists, while the number of local tourists reached 24.9 million, equivalent to 79.6% of the combined foreign and local tourists. The growth rate increased by 15.9% compared to that in 2016. Colliers International Research anticipates that in 2018, the number of tourists visiting Ho Chi Minh City will reach 36.5 million, i.e. 7.5 million foreign tourists and 29 million local tourists

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Tourists visiting Ho Chi Minh City (millions)

Source: Colliers International Research, Vietnam International Administration of Tourism

(3) Operating results of the hotel industry (3.1) Average room rate The average room rate at four-star hotels in the first quarter of the year 2018 is 5.9% up from

2017 while average room rates of 3-star hotels remain USD 44.0 to USD 45.0 per night. The average room rate of Capri by Fraser HCMC, a four-star hotel, is considerably less than

an average room rate of other four-star hotels in Ho Chi Minh City, due to the fact that most of its guests are long-stay guests, i.e. guests who stay over a month. An average room rate offered to long-stay guests is lower than the normal rate. Due to its strategy to increase the number of short-stay guests, Capri by Fraser HCMC will likely increase its average room rate.

The average room rate at IBIS Saigon South, a 3-star hotel, is comparable with that at other 3-star hotels in Ho Chi Minh City.

Average room rates of 3-star and 4-star hotels in Ho Chi Minh City compared with the hotels in which the REIT invests

(USD per night)(1)

Source: Savills Market Research Note: (1) VND 23,347.50: USD published by Bloomberg on 23 November 2018.

4.7 5.2 6.4 7.5

19.321.8

24.929.0

05

101520253035

2015 2016 2017 2018F

45.5 43.4 42.9 44.7 44.7

73.765.1 71.6 78.1 78.1

42.0 44.160.0 57.0

0

20

40

60

80

100

0

20

40

60

80

100

2017 7 months 2018 Q1/2017 Q2/2017 Q3/2017 Q4/2017 Q1/20183-star hotels 4-star hotels IBIS Saigon South (3-star) Capri by Fraser HCMC (4-star)

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(3.2) Occupancy rate In 2017, the average occupancy rates of 3-star and 4-star hotels in Ho Chi Minh City were

65% and 76.5%, respectively. For Q1 of 2018, there was an increase of average occupancy rates of 3-star and 4-star hotels when compared with Q1 of 2017.

In 2017, the average occupancy rate of Capri by Fraser HCMC, a 4-star hotel, is slightly lower than that of other 4-star hotels in Ho Chi Minh City, while the average room rate of IBIS Saigon South, a 3-star hotel, is marginally greater than the average occupancy rate of other 3-star hotels in Ho Chi Minh City.

Occupancy rates of 3-star and 4-star hotels in Ho Chi Minh City compared to the hotels in which the REIT Invests (%)

Source: Savills Market Research

(3.3) Revenue per available room (RevPAR) In Q1 of 2018, the average RevPAR of 3-star and 4-star hotels in Ho Chi Minh City were

USD 31.2 and USD 62.0, respectively, 6.7% and 18.3% up from the corresponding period in 2017. The average RevPAR of Capri by Fraser HCMC, a 4-star hotel is noticeably lower than the

average RevPAR of other 4-star hotels in Ho Chi Minh City, as most of its guests are long-stay groups. Please see section 3.1: Average room rate.

The average RevPAR of IBIS Saigon South, a 3-star hotel, is comparable with that of other 3-star hotels in Ho Chi Minh City.

65.0% 59.0% 60.0%76.0% 70.0%72.0% 76.0% 77.0% 81.0% 80.0%

66% 62%75% 74%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

0%

20%

40%

60%

80%

100%

2017 7 months of2017

Q1/2017 Q2/2017 Q3/2017 Q4/2017 Q1/2018

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Average RevPAR of 3-star and 4-star hotels in Ho Chi Minh City compared to the hotels in which the REIT invests (USD)(1)

Source: Savills Market Research Note: (1) VND 23,347.50: USD 1 published by Bloomberg on 23 November 2018.

(4) Outlook On the whole, Vietnam's tourism market is likely to flourish thanks to a steady increase in

the number of tourists. The government also supports the development of public utilities projects to enhance efficiency and capacity to accommodate tourists. Those projects include the expansion of Tan Son Nhat International Airport to accommodate 50 million passengers per year, up from 35 million per year (source: Globthailand), a scheme to build a north-south express railway, a proposed high speed railway connecting the four large cities of Vietnam (Hanoi-Vinh-Nha Trang-Ho Chi Minh City) to facilitate increasing inter-city travel in the future, the construction of which is anticipated to begin in 2021 and be completed in 2030, a scheme to build roads to connect the major cities of Vietnam, Laos, and Thailand (source: ManagerOnline), and the Ho Chi Minh City transportation development plans to afford greater convenience and connectivity, such as schemes to construct expressways and subways (source: Wikipedia).

It is expected that there will be a development project for HCMC Monorail Line No. 2

running along Nguyen Van Linh road, adjacent to Capri by Fraser HCMC and IBIS Saigon South, the Properties. At present, a feasibility study is being conducted for the Monorail Line No. 2 project, and the locations of the monorail stations have not been officially revealed. There is a plan to link Monorail Line No. 2 with Metro Line 3a in the future (source: Management Authority for Urban Railways Ho Chi Minh City).

29.6 25.6 25.834.0 31.3

53.1 49.455.1

63.2 62.5

27.8 27.5

44.7 42.2

0.0

20.0

40.0

60.0

80.0

0

20

40

60

80

2017 7 months of 2018 Q1/2017 Q2/2017 Q3/2017 Q4/2017 Q1/20183-star hotels 4-star hotels IBIS Saigon South (3-star) Capri by Fraser HCMC (4-star)

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3.3 Indonesia Overview

3.3.1 Indonesia economic overview After the financial crisis in the late 1990s, Indonesia has seen steady growth of its GDP.

At present, the country's GDP per capita is approximately USD 4,000 and is forecast to maintain its steady climb in the next 3 years. Now in the third phase of its 20-year development plan, the Indonesian economy has recorded strong growth. In 2017, its GDP annual growth rate rose to 5.1 percent from 5.0 percent in 2016, its highest growth rate in four years. It is forecast that the country's GDP growth rate will rise to 5.3 percent in 2018, and its inflation rate will be at 4.4 percent.

GDP growth rate (%)

Source: International Monetary Fund (IMF)

Inflation Rate (%)

Source: Economist Intelligent Unit (EIU) Indonesia has a population estimated at 260 million. It is estimated that 42.5 percent of the

population are of working age, ages 25 - 54. Indonesia's median age is 30 years. As the proportion of working-page population is higher than median age population it will surely accelerate the country's economic growth. Over the last decade, Indonesia's GDP per capita has grown at a steady pace of 7.6 percent, showing increasing wealth and growing incomes, thus improving purchasing power.

5.6%

5.0%4.9%

5.0%5.1%

5.3%5.5%

5.6% 5.6% 5.6%

4.4%4.6%4.8%5.0%5.2%5.4%5.6%5.8%

2556 2557 2015 2016 2017 2018F 2019F 2020F 2021F 2022F

6.4% 6.4% 6.4%

3.5% 3.8%4.4% 4.6%

3.9% 4.1%4.6%

2%

3%

4%

5%

6%

7%

8%

2013 2014 2015 2016 2017 2018F 2019F 2020F 2021F 2022F

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GDP per capita (USD)

Source: World Bank

Foreign direct investment in Q1 of 2018 in Indonesia significantly increased from Q1 of 2017.

The major foreign investors in Indonesia are Singapore, Japan, China, Hong Kong, and Korea. Most foreign investment went into the real estate sector, in particular, housing, industrial estates, and office buildings. Foreign direct investment is one of the key factors that is driving the country's economic growth ahead.

Foreign direct investment (USD billions)

Source: World Bank

3.3.2 Indonesia tourism market In 2017, foreign visitor arrivals totaled approximately 14 million, up 21.9 percent from arrivals in 2016, i.e. 11.5 million. There was due to an increase of tourist attractions thanks to the Indonesian government's promotion and development plan for the country's tourist attractions, driving a steady rise of tourist spending in Indonesia (source: Colliers International Research).

1,855.12,160.5 2,254.4

3,113.53,634.3 3,688.0 3,620.7 3,491.6 3,334.5 3,570.3 3,846.9

0

1,000

2,000

3,000

4,000

5,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

9.34.9

15.3

20.6 21.223.3 25.1

19.8

4.5

22.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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Total tourist arrivals in Indonesia (millions) and growth rate (%)

Source: Colliers International Research, Ministry of Tourism Republic of Indonesia

Tourist spending in Indonesia (unit: billion USDs) and growth rate (%)

Source: Colliers International Research, Ministry of Tourism, Republic of Indonesia

Tourists from China make up the majority of inbound arrivals in Indonesia, followed by Singapore and Malaysia. The number of Chinese visitors has increased steadily over the years. In 2017, the number of Chinese tourists surpassed Singaporean visitors, who had for many years arrived in Indonesia in the greatest number.

Number of foreign tourists by nationality

Source: Colliers International Research, Ministry of Tourism, Republic of Indonesia

8.0 8.8 9.4 10.211.5

14.0

0%5%10%15%20%25%30%

0.0

5.0

10.0

15.0

2012 2013 2014 2015 2016 2017

13.7 14.918.6 20.3 21.6

24.3

0%

10%

20%

30%

40%

0.05.0

10.015.020.025.030.0

2012 2013 2014 2015 2016 2017

0.0

1.0

2.0

3.0

2012 2013 2014 2015 2016 2017Singapore Malaysia Australia China Japan

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3.3.3 Tourism sector in Jakarta

Business overview of four- and five-star hotels in Jakarta in 2017 Five-star Four-star Number of hotels 39 72 Number of new hotels expected to be operational in 2018-2020

8 3

Number of rooms Approx. 12,500 Approx. 15,500 Number of additional rooms in 2018-2020 1,721 770 Average room rate (USD /room/night) 78.2 Average occupancy rate (%) 59.0 RevPAR (USD /room/night) 46.09 (1)

Source: Colliers International Research Notes: (1) RevPAR calculation is based on and average room rate and average occupancy rate from Colliers International Research (1) Demand

In 2017, the number of rooms in the four- and five-star hotel category has increased at a slower pace, when compared to the previous increase. According to the Colliers International Research forecast, growth in the number of hotel rooms is expected to recover in 2018. At present, most hotel rooms in Jakarta belong in the four-star category. It is estimated that the number of rooms will increase by 3,471 in 2018. Of these, 964 belong in the three-star category, 1,647 in the four-star category, and 860 in the five-star category.

Number of hotels in Jakarta

Source: Colliers International Research

3041 45 50 56

65 69 72 76 78 78

24 25 30 30 32 34 37 39 42 44 46

020406080

100

2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F

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(2) Supply Jakarta is one of Indonesia’s major tourist destinations for international visitors. In the period

between 2012 and 2016, the number of foreign tourists who visited Jakarta accounted for 25.0-26.0% of all foreign tourist arrivals in Indonesia. In the period between 2001 and 2016, the number of foreign tourists visiting Jakarta rose by 6.4% annually. In 2016, the number of foreign tourists visiting Jakarta reached 2.6 million.

By geographical region, Asian tourists form the bulk of inbound international visitors to Jakarta, with Malaysia, China, Singapore, Japan, and Saudi Arabia contributing most of the foreign tourist arrivals. According to the forecast, the number of foreign tourists visiting Jakarta will reach 3.3 million in 2019. However, domestic tourists, numbering 23.7 million in 2016, an increase of 6.6% over the previous year, continue to form the overwhelming majority of tourists visiting Jakarta.

Between 2006 and 2016, the number of domestic tourists rose by an average of 5.6

annually. Based on the growth rate during such period, the number of domestic tourists visiting Jakarta is projected to reach 27.9 million in 2019.

Number of inbound tourist arrivals to Jakarta (unit: thousand arrivals)

Source: Colliers International Research According to Colliers International Research forecast, demand for tourism resources in Jakarta is expected to rise due to a national election expected to be held in 2019. Demand for meeting venues at five-star hotels in Jakarta is expected to increase significantly in 2018 and 2019.

0.0

10,000.0

20,000.0

30,000.0

40,000.0

2544 2545 2546 2547 2548 2549 2550 2551 2552 2553 2554 2555 2556 2557 2558 2559 2560F2561F2562F

นกัทอ่งเที�ยวชาวตา่งชาติ นกัทอ่งเที�ยวชาวอนิโดนีเซยี

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(3) Operating results of the hotel industry (3.1) Average room rate The average room rates of four- and five-star hotels in Jakarta in 2016 and 2017 were

USD 81.4 and USD 78.2 per night, respectively, or a 3.2% decrease. Pullman Jakarta Central Park, however, was able to raise its average room rates marginally over the same period.

Average room rates of four- and five-star hotels in Jakarta compared to hotel in which the REIT has invested (Unit: USD/night)


(3.2) Occupancy rate In 2017 the average occupancy rate of four- and five-star hotels in Jakarta increased to

59.0 % from 57.6% in the previous year. Pullman Jakarta Central Park Hotel also registered a significant increase in average occupancy rate.

Average occupancy rate of four- and five-star hotels in Jakarta compared to the hotel in which the REIT has invested

(%)


96.9

96.5

78.2

81.4

60 65 70 75 80 85 90 95 100

2017

2016

79.4%

75.7%

59.0%

57.6%

40% 45% 50% 55% 60% 65% 70% 75% 80% 85%

2017

2016

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(3.3) Revenue per Available Room (RevPAR)

Four- and five-star hotels in Jakarta registered average 2017 RevPAR of USD 46.1, a 1.2% drop from 2016 average RevPAR at USD 46.9. Pullman Jakarta Central Park Hotel managed to raise its RevPAR by 5.3% as the result of an increase in occupancy rate.

Average RevPAR of four- and five-star hotels in Jakarta compared to the hotel in which the REIT has invested (USD)

Source: Colliers International Research Notes: (1) RevPAR is calculation based on average room rate and average occupancy rate of four- and five-

star hotels in Jakarta based on data from Colliers International Research (4) Outlook The proliferation of hotels in Jakarta has intensified competition, leading to lackluster

operating results for the hotel business as a whole from 2013 to 2016. Colliers International Research expects the tourism market to recover in 2018 and 2019, when the presidential election is expected to take place. In addition, the Indonesian authorities have introduced a plan to develop a mass rapid transit system, or MRT, in Jakarta, initially consisting of 2 main lines: North-South and East-West (Source: Indonesia-investment website). The project asset, Pullman Jakarta Central Park Hotel, is located in the vicinity of the MRT East-West line. The first phase of MRT North-South line is expected to commence operations in March 2019. (Source: Jakarta MRT website), while the MRT East-West line is at the feasibility study phase (Wikipedia).

Location, hotel operator, and marketing strategy are key factors determining the competitiveness of a hotel in the face of stiff competition.

76.9

73.0

46.1

46.9

0 10 20 30 40 50 60 70 80 90

2017

2016

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4. Risk Factors 4.1 Risks associated with the REIT or the operation of the REIT

(1) The success of the REIT depends on the capacity of the REIT Manager, the Master Lessees

and the Hotel Operators in managing and seeking benefits from the Properties. In the event of failure to carry out or manage effectively and efficiently, they may significantly cause the negative impact on the value of the Properties, the performance and the ability to pay benefit by the REIT. The REIT Manager will manage the REIT in accordance with the Trust Deed. Failure to effectively

manage the hotels by the REIT Manager, the Master Lessees and the hotel operators may result in negative impact on the value of the Properties, operating results, and the ability to distribute of the REIT. The operating results of the REIT will depend on return from the lessor companies which receives the rents from the Master Lessees. The Master Lessees are not directly the hotel operators but entered into the hotel management agreements with the hotel operators. The hotel management agreement stipulates that the hotel operators shall be responsible for various tasks in relation to the management of the Properties under the supervision of the Master Lessees, which includes the responsibilities regarding the customers service, reservation services, management, marketing, maintenance, security and safety of the buildings, and financial management.

If the hotel operators cannot implement the strategies with success, there may be negative impact on the value of the Properties and/or the variable rental income the Master Lessors should receive, which will affect the REIT's operating results and its ability to pay benefits to the Unitholders as well as to repay due debts. Furthermore, any negative change which affect the relationship between the Master Lessors and the Master Lessees or between the Master Lessees and the hotel operators, may affect the ability of the hotel operators in managing the Properties. Also, if the Master Lessees fail to effectively perform their duties as Master Lessees under the Lease Agreements and/or the hotel operators appointed by the Master Lessees fail to effectively perform their duties as hotel operators, there may be an negative impact on the operation and financial position of the REIT. (2) The income of the REIT depends on the financial position and operating results of the Master

Lessees and the decision to renew the lease agreements upon termination.

The REIT's financial position and operating results depend on the rent of the Properties leased by the Master Lessors to the Master Lessees (having the same ultimate shareholder as the REIT Manager). The cash distributable to the REIT consists mainly of dividends distributed from the Strategic Hospitality Holdings Limited, Strategic Hospitality Holdings 2 Limited, Offshore Holding Companies, and the Master Lessors and cash distribution by any means that is permitted by the agreements and not contrary to the

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SEC Notification. The income of the Master Lessors to be distributed to the REIT are ultimately derived from

the fixed rent, variable rent obtained in accordance with the calculation method specified in the Lease

Agreements. Therefore, if at any time the Master Lessee's financial position declines, it may cause the

Master Lessees the delay of payment or default of payment of rent by the Master Lessees and cause the

Master Lessees the failure of repayment of debt and/or the Master Lessors may not obtain the rent as

projected. This may affect the incomes of the Master Lessors and the benefits that is distributable to the

REIT and to the trust unit holders.

The REIT's income highly depends on the receipt of the fixed and variable rent under the Lease

Agreements between the Master Lessors and the Master Lessees. In the event of a default of the Lease

Agreements by the Master Lessors or the Master Lessees, there may be a significantly negative impact on

the operating results and financial position of the REIT.

Furthermore, even if the Lease Agreement to be concluded by the Master Lessors and the Master

Lessees is fixed to expire at each term of the Lease Agreement (every 3 years), the Parties agree to continue

to lease the Properties until the Master Lessors will not be the owner of the leased Properties under the

existing terms and conditions of the Lease Agreement. Except for the fixed and variable rent, the calculation

of which shall be in accordance with the terms and conditions of the Lease Agreement. The REIT’s risk may

come from the fact that the Master Lessors may not comply with the terms in the Lease Agreement relating

to the renewal of such agreement. However, in the event that the Master Lessors and the hotel operator can

operate their business as usual and there is no volatility in the economy or increased competition as well as

the necessity to close down the Property in whole or in part for renovation to the extent that there is an

significant impact on the normal operation of the Master Lessees, and in the event that the Master Lessees

have no intention to be in default of payment of fixed rent or variable rent, the Master Lessors will still receive

the fixed rent specified in the Lease Agreements. However, the REIT Manager has the duty to control and

monitor the Master Lessees to comply with the conditions of the agreement, including the monitoring of the

payment of rent on the specified time for the best benefit of the REIT as the REIT Manager. And for those

reasons this may reduce the risk that the Master Lessees do not renew the lease contract or do not comply

with the conditions specified in the lease agreement.

(3) The Master Lessors may not obtain the rent in accordance with the lease agreement due to force

majeure under the lease agreement.

The lease agreement between the Master Lessors and the Master Lessees : ( 1) the fixed rent which

comprises the base rent and the additional base rent (if any) and (2) the variable rent . The financial position

and operating results of the REIT will depend on the rents to be received from the lease of the Project’ s

Properties to the Master Lessees (with the ultimae shareholders being the same as the ultimate shareholder

of the REIT Manager). However, the force majeure such as natural disaster or events that are beyond control

which may affect the operation of hotel business under the condition as specified in the relevant lease

agreement are the exception to the rent payment by the Master Lessees to the Master Lessors. The

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exception of the rental payment due to the force majeure will have negative impact on the income of the Master Lessors and on the operating results, financial position and the ability to pay benefits or returns by the REIT.

(4) The base rent involved in the renewal of the lease agreement may be different from the base

rent estimates

The rent under the lease agreement between the Master Lessors and the Master Lessees consists of 2 parts of rents i.e. (1) the fixed rent which comprises the base rent and the additional base rent (if any) and (2) the variable rent for the base rent for a 3-year lease period under the previous lease agreement with a period of 3 years. With the calculation method of the base rent for the renewal of the lease agreement as mentioned in the above, if the operating results for the period of lease in accordance with the previous lease agreement are different from the projections, this may result at the fixed rent for the period of lease in accordance with the renewed lease agreement be different from the projections. This is because the additional base rent which is part for the calculation of the fixed rent will vary as to the income from the net operating income (NOI) since the additional base rent which is part of the calculation of the fixed rent will vary as to the income. Therefore, the base rent for the period of lease as to the renewed lease agreement will also be different from the projections. These are the consequences of the calculation of the average fixed rent for a period of lease of the previous lease agreement.

In the event that the average fixed rent for the period of lease as to the previous lease agreement is lower that the projections, this will result that the base rent for the period of lease as to the renewed lease agreement be lower than the projected base rent for such period of lease and will affect the operating results of the REIT. And the REIT will not able to pay benefits or return as projected and result that the trust unit holders may not obtain the return as projected.

On the other hand, in the event that the average fixed rent for the period of lease as to the previous lease agreement is higher than the projections, this will result that the base rent for the period of lease of the next lease agreement also be higher than the projected base rent for such period of lease. Therefore, the Master Lessees need to make its operating results higher than the projections in order to pay a higher base rent. The reasons that make the operating results for the period of lease as to the previous lease agreement is temporary or do not affect the income growth of the Properties. In the long term, this may affect the ability to pay rent by the Master Lessee in the future, including the over standing of the rent or the non-renewal of the lease agreement for which if the REIT fails to seek a new lessee which will be able to pay rent at the same rate as the previous Master Lessee and may have the negative impact on the operation of the REIT and the trust units holds may not obtain rent.

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(5) Risks that the REIT may incur additional expenses from the change of REIT Manager which is not the direct fault of the REIT Manager The REIT Manager Appointment Agreement which the REIT entered with the Trustee contains the

terms and causes for changing the REIT Manager, e.g. (1) the REIT is terminated and the Properties are terminated in accordance with the REIT's prospectus and liquidation has been carried out in accordance with the relevant rules; (2) the SEC has revoked its consent for the REIT Manager to act as the manager of the REIT or has ordered a suspension of the REIT Manager for more than 90 days; (3) the approval for the REIT Manager has expired and the REIT Manager does not submit a request to extend such approval; (4) the REIT Manager has ceased to be a juristic person or has been liquidated or fallen into receivership, whether or note by absolute order, or a motion has been filed for the rehabilitation of the REIT Manager; (5) the Trustee has terminated the REIT Manager Appointment Agreement in the case where the REIT Manager willfully or negligently fails to exercise its duties in relation to the REIT and the Trustee views that such failure causes materially adverse damages to the REIT and/or the Unitholders, and is not capable of being remedied within 90 days or in the case that the REIT Manager has any characteristics not in compliance with the law or the relevant rules, or where it arises that the SEC's approval for the REIT Manager has ceased and such approval has not been extended by the SEC; (6) the REIT Manager has exercised its rights to resign in accordance with the procedures laid out in the REIT Manager Appointment Agreement, provided that any of the these cases constitute a cause for the change of the REIT Manager. Upon such change, the REIT Manager will not receive any compensation from the REIT apart from the REIT Manager fee which has become due and other expenses advanced by the REIT Manager for the REIT, subject to the terms and conditions in the REIT Manager Appointment Agreement (Please see additional details in section 8.10 of item 2.8 re: the procedures and conditions for the change of the REIT Manager).

Nonetheless, the REIT Manager Appointment Agreement stipulates that in any case of the change of the REIT Manager for any cause otherwise than the causes in items (1) to (6) above, or for reasons not directly attributable to the fault of the REIT Manager within the 10-year period, from the date of entering into the REIT Manager Appointment Agreement (20 December 2017), the Trustee (using the assets of the REIT) agrees to pay the compensation for the change of the REIT Manager to the REIT Manager in same rate as the base fee and the incentive fee of the REIT Manager for 5 years (by calculating from the average base fee and incentive fee in the preceding 12-month period or any equivalent rate). Such compensation will be paid on the date on which the change of the REIT Manager becomes effective. Therefore, in the case that the REIT Manager is changed because of reasons other than as a direct result of the fault of the REIT Manager within such period, the REIT will incur an additional cost of compensation to be paid to the REIT Manager in the rate so specified.

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(6) The risks arising from the renovation of Properties and the sufficiency of the reserves for renovation Each of the Properties needs regular repairs and renovation to maintain a new and modern look,

keep customers satisfied, and attract continuous business from customers. Regular annual renovations or repairs do not have any impact on the operation of the REIT, with the exception of major renovation or repairs for the purpose of revamping the exterior and interior look of the Properties, or changing major systems of the Properties, namely electrical system, water supply system, elevator, etc. The costs of maintaining the Properties and the risk of unforeseen maintenance or repair requirements tend to increase over time as the Properties age. In the event of the application of new rules or laws, the Properties may require additional renovation or repair or maintenance beyond what is planned. The business operations of the Properties may be disrupted as a result of renovation works. This may affect the business operations of the Master Lessees of the affected Properties and their ability to make timely rental payments under the Lease Agreements or result that the Master Lessor cannot fully collect the rent for the areas under repair and maintenance.

The hotel management agreements for the Properties require the relevant Master Lessees to set aside FF&E reserves (if any) and the Master Lessor shall set aside capital expenditure sinking fund (if any). The hotel operator believes that the FF&E reserve rate prescribed in the hotel management agreements of the Properties will be sufficient for the maintenance of the Properties in accordance with the current hotel standards. However, such reserves may not be sufficient for the repair, renovation, or refurbishment of the Properties in the future in order to increase their competitiveness or to add facilities for the hotel upgrade. In the event that the reserves are insufficient, the REIT must consider other financial sources for the renovation and refurbishment of the Properties, in order to mitigate the impact that the insufficiency of the reserve may have on the trust unit holders. The insufficiency of the reserves may have the negative impact on the operations and the financial position of the Properties.

Nonetheless, renovation or repairs will be carried out during a period deemed appropriate by the management of the Properties or by the Master Lessees and require approval of the REIT Manager. The Properties do not normally suspend their operations during the repair and maintenance. The renovation of the real estate shall be made only in the sections where renovation is required. Other sections of the Properties may stay in operation, unless major repair or renovation is required and continued operation may cause the inconvenience to the customers, lead to complaint, or may not be economically viable, in which case the Master Lessees or the hotel operators may consider suspending the service for the major renovation.

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(7) Reliance on the Hotel Operators and use of their Trademarks or Brands for the Properties

The Properties shall be managed by hotel operators under hotel management agreements between the respective Master Lessees and the hotel operators by which the hotel operator or a third party grants the right to the Master Lessees to use the hotel operators’ trademarks and service marks for, and in connection with, the operation of the Properties. In the event that the agreement between the Master Lessees and the hotel operators or such third party is terminated for any reason, the use of all the relevant trademarks and service marks in connection with the Property will end. All logos and materials bearing those logos or other indicia connecting the Property with the relevant hotel operator or such third party must be removed from the hotel and such hotel operator or such third party will no longer provide services. In addition, upon termination of the hotel management agreements between the Master Lessees and the hotel operators, there may be potential loss of distribution channel and access to central reservation systems as well as loss of the hotel operator’s royalty customers and members.

In the event of degradation to the name or brand these Hotel Operators and their respective affiliated brands, the reputation of the Properties and their attractiveness of guests and customers may be affected. This may have the negative impact on the business, financial position and operating results.

However, the Properties are in good location and regularly renovated and kept in good condition. In the event that the hotel management agreement between the Master Lessees and the Hotel Operators is terminated for any reason, new Hotel Operators may continue the management of the Properties.

Since each of the Properties is managed by different Hotel Operator and located in different countries. In the event of the degradation to a Hotel Operator's brand, the risk that such degradation to the brand of a Hotel Operator will significantly affect the overall operations of the REIT is minimal. Each Hotel Operator has engaged in the business under his/ her own brand for a long time in the hotel management market. Each Hotel Operator has an international service standard or brand standards recognized in the hospitality industry and can regularly strengthen and maintain the reputation of his/her brand which is known around the world. This shows that those Hotel Operators have the capacity and measure to care for the reputation and standards of their brand. Therefore, the risk that degradation to the brands of the Hotel Operators will occur is minimal.

(8) Risks arising in loans obtained by the REIT.

The REIT has entered a loan agreement of EUR 44,670,000 (approximately 1,724.43 million Baht) with an oversea financial institution for the purpose of using such loan for repaying the REIT's loans with a local financial institution existing from the date of the REIT's investment in the Properties. The loan has been drawn down all on 29 June 2018 and On 17 August 2018, the loan agreement was amended to increase the loan facility by EUR 1.5 million to support business expansion. On 20 August 2018 the loan has been drawn down EUR 1.165 million.

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Therefore, there is a risk that a fluctuation in the interest rate during the term as well as the REIT's obligation to the repayment of the principal, which will affect the operating performance of the REIT and its ability to distribute returns to the trust unit holders in that the returns to the Unitholders may be different from the projected distribution of interests to the Unitholders and the benefits which the Unitholders have received.

In addition, the loan agreements for the investment in Properties may contain certain covenants for the REIT. If the REIT is not able to pay the interest or the principal amount and adhere to the covenants as specified under the terms of the loan agreement, this may lead to the lender taking legal actions against the REIT or enforcing other rights under the loan agreement. For instance, the lender may call for the immediate repayment of all or part of the principals in whole or in part or enforce the collateral under the loan agreement. Nonetheless, upon the expiry of the loan term, the REIT Manager will seek a new source of funding, which may include offering and issuing additional units, issuing bonds, or borrowing from commercial banks and/or financial institutions and/or life insurance companies and/or non-life insurance companies and/or other types of juristic persons authorized to provide loans to the REIT for the purpose of repaying the existing loans. The REIT Manager will seek a good source of funding for the Unitholders and the REIT, taking into account the collateral and the REIT's ability to repay the loan. Nonetheless, where the REIT takes out a new loan for the refinancing, the REIT may be exposed to the risk that the new loan agreement will have terms which are different from the terms in the existing loan agreement. Where the new loan agreement contains different terms, the operations of the REIT may be restricted.

The REIT Manager must manage the REIT by taking into account those risks. Measures should be put in place in order to regularly monitor the operating results of the REIT and external factors as well as trends in interest rates. Furthermore, the REIT Manager may consider using financial tools to mitigate such risks, such as interest rate swaps or, taking action with the creditor, including a request for extension of repayment, exemption of conditions that obstruct the management of the REIT, etc. The REIT Manager will do so by taking into consideration the relevant laws and the best interest of the trust unit holders.

The REIT Manager is of the opinion that the risk that the REIT will be unable to pay the interest and/or to repay the principal is minimal since the REIT's expected debt to equity ratio will be at the manageable level and will be in accordance with the rules prescribed by the SEC. And the repayment of such loan will be made once at the end of the loan term. During the loan term, the REIT will only have to pay the interest. The REIT Manager expects that upon the repayment of the principal at the expiry of the loan term, the REIT Manager will have sought a new source of funding for the repayment of the said loan. In addition, the Properties’ ability to create revenue for the REIT makes the REIT Manager believe that the REIT will have the ability to pay the interests.

Trust unit holders may not obtain dividend from the REIT in case of default of the loan agreement.

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(9) The REIT has to rely on the third party for some services.

Since the Master Lessees will engage the third parties for providing some services to the Properties such as water supply, electricity, liquid petroleum gas and waste management service, the REIT Manager may not guarantee that such third parties will comply with their contractual obligations for completely providing any service. Nevertheless, there will be contractual clauses in case of default of the contract by a party or occurrence of any event which will be the reasons for termination or default of contract and give right the Master Lessees to terminate the contract or to file a claim for damage against the other party, the event of default of the contract by the other party may cause service provision to the Properties to be interrupted which become the obstacle for the business operation and has significantly the negative impact on the business, financial position, operating results and the business opportunity for the REIT.

However, the REIT Manager is of the opinion that the services to be provided by the third parties to the Properties may be substituted without much difficulties by other providers in the market since those services are generally required in the hotels. Therefore, the risk of interruption of some services which may become obstacles to the business and have significantly the negative impact on the business, financial position, operating results of the Properties would be minimal. (10) The REIT has no direct control over the Hotel Operators

The financial performance of the REIT, including the dividend payment to the trust unit holders,

depends on the rent payment by the Master Lessees. The Master Lessees’ ability to pay rent depends on net operating profit of each Properties. The Master Lessors will conclude the lease agreement with the Master Lessees with the full power to manage the Properties. Each Master Lessee will conclude hotel management agreement with hotel operators. The REIT will not be direct party with those hotel operator. Meanwhile, the operating results of the REIT will depend on the operation of the Master Lessees and hotel operators. Therefore, the REIT Manager may not guarantee that the Properties will be operated, managed and maintained as expected in the future. This may affect the business, financial position, operating results of the REIT.

However, the hotel operators of the Properties which have been engaged by the Master Lessees are considered as specialized, reputed and experienced operators in the hotel management. Furthermore, hotel operators have the duties to comply with the terms and conditions of the hotel management agreement. The REIT Manager will control and verify the operation of the hotel operators through the Master Lessors and the Properties lease agreement.

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(11) Risks arising from inability to find a lessee in the future

Under the lease agreement, the Master Lessor and the Master Lessees agrees to conclude an lease agreement for a period of 3 years and at the expiration of the agreement, the Master Lessors and the Master Lessees agree to automatically renew the agreement for 3 years each time and until the Master Lessors will not satisfy the qualification as owner or leaseholder.

If any of the Lease Agreements of any of the Properties is prematurely terminated, it may be a while before the Master Lessor can find a new lessee, and that person may not have similar qualifications or ability to the previous Master Lessee, or the Master Lessor may not be able to find any new lessee or a lessee who would pay the same rate of rent as the previous Master Lessees. This may have a direct effect on the REIT's income and ability to pay returns to the trust unit holders.

If the Master Lessors have certain legal restrictions or do not satisfy the qualifications required by the law and which is not caused by the fault or negligence of the Master Lessors and result that the latter will not be able to renew this lease agreement, the Master Lessees shall not be contractually liable. This may be considered as reason of default which may lead to the termination of the agreement. This will directly affect the income of the REIT and the ability to pay benefits to the trust unit holders.

If the Master Lessors are still able to lease the Properties in order to temporarily continue their management, the Master Lessee and the Master Lessor must jointly find the solution in order that other lessee can lease the Properties and substitute the Master Lessee of the management of the Properties. In this case, the Master Lessee agrees to extend the lease period in order to manage the Properties until a new lessee will be found. The Master Lessor and the Master Lessee must joint determine the conditions of the extended lease agreement.

The Properties are considered as assets which are kept and renovated in good condition and from the past information the Properties had continuously served the customers. Further, the main assets of the REIT are located in the area that can attract the customers. And each Properties are managed by hotel operators specialized in the hotel business operation. And each hotel is well known in its area for that reason. The risk that a new Master Lessee may not be found for the Properties would be minimal. In the event that a new Master Lessee cannot be found, the Properties may be offered for sale to the third party due to the condition, the number of customers and the location of the Properties. This would attract real estate investors without difficulty.

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(12) There is no assurance that the REIT will be able to leverage on the Vendor Companies’ experience in the operation of the Properties at the expiration of the lock-up period

Upon completion of the initial offering of units, the Vendor Companies of the Properties and related

companies, including PT Agung Podomoro Land Tbk and Leebro Holding Pte Ltd have become Unitholders of the REIT in the proportions as agreed, which are equivalent to 63,928,100 units (or 18.12 percent of the total units issued and offered initially) and 4,417,200 units (or 1.25 percent of the total units issued and offered initially), respectively. The aforesaid companies agree to not sell their units, subscribed under the Share Sale and Purchase Agreement, for a period of 2 years from the date on which the first unit is traded in the SET (27 December 2017).

The acquisition of the Vendor Company of the trust units will result in the benefits of the Vendor Company being in line with the benefits of the Unitholders, as the Vendor Company will have an interest in the REIT proportionately to its unitholding. In addition, within the said period during which the Vendor Company agrees not to sell the units it holds, the REIT Manager will monitor the shareholding of the Vendor Company to ensure that the unitholding of the Vendor Company is maintained in accordance with the terms of the agreement. The REIT Manager will do so by reviewing, at least once every quarter, the names of all Unitholders. If it transpires that the Vendor Company does not comply with the terms of the agreement, the REIT Manager will take any suitable actions and/or exercise the rights available to it under the law. Nonetheless, there is no guarantee that the Vendor Company will not dispose or transfer the units it holds, in whole or in part, after the restriction period of the sale of the units subscribed to under the agreement. In the case that the Vendor Company decides to transfer or sell its units, resulting in the Vendor Company no longer having any interest as a unitholder and potentially lacking incentive to utilize its experience for the benefits of the REIT in managing the Properties, e.g. giving legal advice to the REIT as well as provide guidelines or procedures for any conducts in the country where the assets are situated, the administration of the Properties and the ability of the REIT in paying benefits to the Unitholders may be affected.

Nonetheless, since the REIT’ s portfolio will continue to be managed by internationally experienced hotel operators with significant experience in the Territories, we believe any risk relating to transition from the Strategic Partners will be mitigated. (13) The REIT may engage in hedging transactions, which can limit risk relating to the interest and

the exchange rates and may restrict the benefit obtained from the Properties and such transaction may not cover the risks relating to the interest rate and exchange rates. The REIT's structure involves the investment in the Investment Company, which are companies

located in different jurisdictions, and payments in foreign local currencies are involved. Furthermore, the

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income and expenses of the Master Lessors and the Offshore Holding Companies will also be in their

respective local currencies, whereas the REIT's distribution to the Unitholders made in Thai Baht. As such,

the REIT is subject to risks of exchange rate fluctuations.

The income generated from the Properties in Vietnam and Indonesia are denominated in

Vietnamese Dong and Indonesian Rupiah, which are operationally benchmarked to the US dollar in terms of

daily room rates and services. The Master Lessees will pay the Master Lessors Vietnamese Dong and

Indonesian Rupiah respectively, and Master Lessors will distribute dividends in US dollars to the Offshore

Holding Companies and then to Strategic Hospitality Holding Limited (BVI). As income received in US Dollar,

the REIT Manager may consider and procure the REIT to enter into hedging contracts against the USD/Baht

exchange rate. The REIT Manager will take into account the suitability of the risk mitigating mechanisms

and other factors, such as the relevant regulations, the interest rate and transaction costs. Furthermore, the

REIT Manager will continuously monitor the swap point rate every three months in order to consider whether

to enter into a hedging transaction.

However, it may not always be possible for the REIT to enter into hedging activities and hedging

may not always have the desired beneficial effect on the results of operations or financial condition of the

REIT. No hedging activity can completely insulate the REIT from risks associated with changes in interest

rates and exchange rates, and changes in foreign exchange rates for example, may negatively affect the

REIT’ s asset value. Moreover, interest rate hedging could fail to protect the REIT or negatively affect the

REIT because, among other things:

• the available hedging may not correspond directly with the risk for which protection is sought;

• the duration or nominal amount of the hedge may not match the duration of the related liability;

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

• the credit quality of the party owing money on the hedge may be downgraded to such an extent

that it impairs the ability of the REIT and/ or the Master Lessors ( as the case may be) to sell or

assign its side of the hedging transaction; and;

• the value of the derivatives used for hedging may be adjusted from time to time in accordance with

accounting rules to reflect changes in fair value.

Downward adjustments and the significant loss in value of hedging instruments due to a write down

to fair value would reduce the NAV of the REIT. Hedging involves risks and typically involves costs, including

transaction costs, which may reduce overall returns. These costs increase as the period covered by the

hedging increases and during periods of rising and volatile interest rates. These costs will also limit the

amount of cash available for distributions to the Units. The REIT Manager will regularly monitor the feasibility

of engaging in such hedging transactions taking into account the cost of such hedging transactions.

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(14) Benefit remittance to the REIT depends on the mode of remittance and may be affected by any change in capital requirements, regulations relating to the remittance of fund and exchange controls in each jurisdiction invested by the REIT

The investment with the object to acquire the Properties by the REIT consists of the direct and

indirect investment in the Properties across Territories, including the grant of loans to the Master Lessors. The fact that companies invested by the REIT are located in each country, the transborder remittances of fund are under different forms as follows: 1) the repayment of the shareholder loan’s principal; 2) the payment of the interest on the shareholder loan; 3) the management fee and service fee and ; 4) dividend, etc. Each different form of remittance of fund offers different benefit, tax rate and fee. In addition, the investment must comply with capital requirements, regulations relating to the remittance of fund and exchange controls in each jurisdiction. This may cause the REIT to be affected by the risk associated with the exchange rate and rules relating to the remittance of fund to the REIT.

For instance, 1) in certain jurisdictions such as Indonesia, the company may distribute dividend from accumulated profit and may distribute it only from net profit after tax payment and depreciation deduction (non-cash expense). And due to these non cash expenses, the company may have the liquidity in excess which may not be distributed under the form of dividend. 2) the remittance of fund in the form of repayment of shareholder loans’ principal has the limit : It may be done only in case of loans between companies and only in the event that there is a balance. If the principal has been fully repaid, the REIT may need to change the form of remittance of fund between the companies involved in the investment. There may be different benefit, taxes, and fees compared to the current form in use and there may be the impact on the distribution of dividend generated from the operation of the Properties to the REIT.

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The details are as per the diagram on benefits, taxes, and fees relevant to the Properties as follows:

Diagram of benefits, taxes and fees associated with Pullman Jakarta Central Park

Holding Structure of Pullman Jakarta Central Park

Level 1: Indonesia

Company Item Related Taxes

PT SHR Pullman Indonesia

Rental Income 10% of Final Tax(4) deduct : Properties related expenses deduct: management fee and service fee to SHR Indonesia Pte.Ltd

20% of withholding tax

deduct: Interest on the shareholder loans to SHR Indonesia Pte.Ltd


Net (loss) profit(2) -None Other items Principal repaid to SHR Indonesia Pte. Ltd(1) -None- Dividend distributed from the net profit (if any) to SHR Indonesia Pte.Ltd (3)


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Remark: (1) On 31 December 2018, PT SHR Pullman Indonesia has a total of approximately IDR 1,110,059 million shareholders loan

remaining (approximately USD 78.17 million). It is expected that such loans will be fully repaid within approximately 11 years from the investment date (calculating from the current rental income from the base rent), except in the case where the shareholders will provide more loans. The repayment period will depend on the future actual operating performance of the hotel and the appropriateness in repaying the loan for the purpose of remitting the moneys as efficiently as possible. The said shareholders loan is a method for remitting the moneys, in addition to other money remittance methods, e.g. dividend payments, interests, management and services fees income. Each method carries different tax obligations.

(2) Corporate tax shall not be collected if the business receives rental income on which a final tax has been paid. (3) Dividend will be used when the company will have generated profit in the future. (4) VAT will be assessed at 10 percent of the rental. In the case of Pullman Jakarta Central Park, purchase tax from the

acquisition of the assets of Pullman Jakarta Central Park Hotel (as of 31 December 2018) by PT SHR Pullman Indonesia of approximately IDR 119,411 million (approximately USD 8.41 million) can be utilized as deductions for approximately 14 years (calculating from the current rental income from the base rent), subject to the future actual operating performance of Pullman Jakarta Central Park Hotel. Once such purchase tax has been fully deducted, the hotel will incur an additional 10 percent VAT of its rental.

Level 2 : BVI

Company Item Related taxes

SHR Indonesia Pte.Ltd

Rental income from PT SHR Pullman Indonesia

Dividend from PT SHR Pullman Indonesia

Management and service fees from PT SHR Pullman Indonesia

deduct: other expenses Net profit(1) -None- Other items Loan repaid from PT SHR Pullman Indonesia

Dividend distributed from the net profit to Strategic Hospitality Holdings Limited (2)

-None-

Remark: (1) Companies located in BVI are exempt of corporate tax; (2) BVI : dividend may be distributed under solvency test. If the assets are higher than liabilities, dividend may be distributed

from the excess of net profit in the form of the dividend.

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Level 3 : BVI Company Item Related Tax

Strategic Hospitality Holdings Limited

Dividend distributed from SHR Indonesia Pte.Ltd deduct :other expenses Net profit (1) -None- Other items Dividend distributed from net profit to the REIT(2) -None-

Remark: (1) Companies located in BVI are exempt of corporate tax; (2) BVI : dividend may be distributed under solvency test. If the assets are higher than liabilities, dividend may be distributed

from the excess of net profit in the form of the dividend and exempt of withholding tax Level 4: Thailand

Company Item Related Tax

REIT

Dividend distributed from Strategic Hospitality Holdings Limited deduct: expenses associated with the REIT Net profit(1) -None- Other items Dividend distributed from net profit to the trust unit holders

Remark: The REIT is exempt of corporate tax.

Level 4: Thailand

Company Description Applicable taxes

REIT

Dividends paid out from Strategic Hospitality Holdings 2 Limited

Less other expenses relating to the management of the REIT

Net profit(1) -None-

Other items Dividends paid out to Unitholders

Remark: (1) The REIT is exempt from corporate income tax.

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Luxel APT Company Limited and Viethan Hotel Corporation

Rental income

Less property-related expenses

Less management fees and services fees paid to BBDM Singapore Pte Ltd and BBVN Pte Ltd

Withholding tax rate 10%

Less interest expenses paid for the shareholders loan, provided by SHR Finco Pte Ltd and SHR IBIS Pte Ltd

Withholding tax rate 5%

Net profit (losses) Corporate income tax rate 20%

Others

Repayment of the loan principal to SHR Finco Pte Ltd and SHR IBIS Pte Ltd(1)

-None-

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Dividends paid out from net profit (if any) to BBDM Singapore Ptd Ltd and BBVN Ptd Ltd(2)

-None-

Remarks:

(1) On 31 December 2018, Luxel APT Company Limited and Viethan Hotel Corporation have the approximately USD 9.33 million and USD 3.48 million remaining of the shareholders loans, respectively. It is expected that such loans will be repaid in approximately 5 and 4 years from the investment date, respectively (calculated from the base rental income at present), except where the shareholders will provide more loans. The period of repayment is subject to the future actual operating performance of the hotel and the appropriateness of the repayment in order to remit moneys as efficiently as possible. The said shareholders loan is a method for remitting the moneys, in addition to other money remittance methods, e.g. dividend payments, interests, management and services fees income. Each method carries different tax obligations.

(2) Dividends will be utilized when the company makes profit.

SHR Finco Pte Ltd. and SHR IBIS Pte Ltd.

Interest income paid by Luxel APT Company Limited and Viethan Hotel Corporation

Less other expenses


Other items

Repayment of loans paid by Luxel APT Company Limited and Viethan Hotel Corporation

Dividends paid out from net profit to Strategic Hospitality Holding Limited (2)

-None-

Remarks: (1) Companies in the BVI are exempt from corporate income tax. (2) In BVI, dividends may be paid if a solvency test is satisfied. If the value of assets exceeds liabilities, a surplus amount

may be paid out of net profit as dividends. Dividends will be exempt from withholding tax.

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BBDM Singapore Pte Ltd and BBVN Pte Ltd

Interest income paid by Luxel APT Company Limited and Viethan Hotel Corporation

Income from management fees and services fees paid by Luxel APT Company Limited and Viethan Hotel Corporation

Less other expenses


Other items

Dividends paid out from net profit to Strategic Hospitality Holdings Limited 2)

-None-

Remarks: (1) No tax applied because the income, such as dividends received from overseas investment, are exempt from tax. (2) In Singapore, dividends will be exempt from withholding tax.

Strategic Hospitality Holdings Limited

Dividend income paid by SHR Finco Ltd and SHR IBIS Pte Ltd, and BBDM Singapore Pte Ltd and BBVN Pte Ltd

Less other expenses


Other items

Dividends paid out from net profit to the REIT (2) -None-

Remarks: (1) All companies incorporated in BVI are exempt from corporate income tax. (2) In BVI, dividends may be paid if a solvency test is satisfied. If the value of assets exceeds liabilities, a surplus amount

can be paid out of net profit as dividends. Dividends will be exempt from withholding tax.

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The REIT

Dividend income paid by Strategic Hospitality Holding Limited (BVI)

Less expenses incurred in managing the REIT

Net profit(1)

Other items

Dividends paid out from net profit to the Unitholders

Remark: The REIT is exempted from corporate income tax. (15) Yields distributed to the Unitholders may not be equivalent to yields distributed in the first

year as a result of expiry of conditions for NOI Support by the Vendor Companies With regards the Pullman Jakarta Central Park Hotel in Indonesia, the Vendor Company, namely

PT Agung Podomoro Land Tbk, agrees to provide the REIT with the NOI Support if the net operating income as prescribed in the NOI Support condition generated over 12 months is less than USD 8.25 million, for the period of three years from the completion of the investment in the Properties (1 January 2018). The Vendor Company agrees to fund a shortfall not exceeding USD 2.5 million per year during such three-year period. Accordingly, during the guaranteed period of NOI Support from the Vendor Company of Pullman Jakarta Central Park Hotel, if actual net operating income is less than the guaranteed net operating income, the Vendor Company agrees to compensate for that shortfall. The net operating income guaranteed for the three-year period helps minimize returns generated by the REIT during the first three years to be exposed to volatility or business risk because the operating income is guaranteed by the Vendor Company to be as projected.

In addition, the Vendor Company of Pullman Jakarta Central Park agrees that for the period of two years from the first trading day of the REIT Units, subscribed to by the Vendor Company under the Share Sale and Purchase Agreement, on the SET on 27 December 2017, the Vendor Companies of Pullman Jakarta Central Park Hotel, their affiliates or related persons holding the REIT units will not be entitled to receive any returns or cash distributions from capital reduction of the REIT for the respective units to which the Vendor Company subscribes under the Share Sale and Purchase Agreement. In addition, the REIT Manager has similar arrangements with the Vendor Companies of Capri by Fraser and IBIS Saigon South in Vietnam as well. Therefore, through the period of non-entitlement of the Vendor Companies of the benefits and cash distribution from the capital decrease of the REIT, the said dividends will be allocated to the other

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Unitholders, resulting in the higher rate of return to the other Unitholders when compared to the return rate received by the Vendor Companies for the shares to which they subscribe under the Share Sale and Purchase Agreement. Upon the expiration of the non-entitlement, the rate of return to Unitholders may be affected as those returns and cash must be distributed to all Unitholders, including the Vendor Companies of Pullman Jakarta Central Park and Vendor Companies of Capri by Fraser and IBIS Saigon South.

However, the REIT Manager noted that a risk of material decrease of returns to Unitholders is somewhat unlikely as its debt-to-equity remains at a manageable level, and in accordance with the SEC regulations. The relevant loan agreement provides that the principal repayment shall be made once at the end of the three-year loan term, during which time the REIT is liable for interest payments only. The REIT Manager anticipated that upon the expiry of the loan term, the REIT Manager will have sought a new source of funding in order to repay such loan. In addition, the main assets from the first investment are highly capable of generating income to the REIT. Therefore, the REIT Manager is positive that the REIT has the ability to pay interest on an ongoing basis.

(16) The Unitholders or other persons may not be able to recover damages against the REIT

Manager as in certain circumstances the REIT Manager has limited liability The Unitholders or other persons may later file a lawsuit or make a claim against the REIT Manager for any act in connection with the REIT Manager's duties, including a duty related to the public initial offering of the additional trust units and this prospectus, subject to provisions of the establishment of the REIT agreement. In the event of the REIT Manager's failure to manage the REIT in accordance with the establishment of the REIT agreement, the REIT Manager appointment agreement, or the Trust Act, negligence of any duty set forth in the REIT Management appointment agreement, negligence of performance of duty, or willfully breach of trust, the REIT Manager must be liable for penalties, or damages suffered by the REIT without limitation. Nevertheless, the REIT Manager may not be liable for any loss or damage incurred by the REIT, Unitholders, or any persons as a result of their performance of duty in that capacity if the REIT Manager honestly performs its duty with due professional care and reasonable skill, and treats the Unitholders fairly for the best interest of the Unitholders in accordance with the establishment of the REIT agreement, the REIT Manager appointment agreement as well as all applicable laws and commitments provided to the Unitholders (if any). The REIT Manager will not be liable to the Unitholders if any action or omission of any action (as applicable) by the REIT Manager is in compliance with provisions of any law, rules, regulations, notification, court order, judgment or other orders of any government authority. The REIT Manager will not be liable if the non-compliance with any clause of the agreement is caused by any force majeure event.

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4.2 Risks associated with the Properties (1) The REIT is exposed to risks arising from volatility in the economy and tourism in the

Territories

The REIT are exposed to risks arising from volatility in the economic system and tourism industry, the effects of global economic recession or stagnation, currency fluctuations which may affect the income and expenses of tourists from target countries, the slowdown of activities of multi-national corporations in the Territories and the decrease of foreign investment for whatever reason, may weaken the number of businessmen who are guests of the hotel and tourists traveling to the Territories as a result of economic slowdown. The operation of the business by the Master Lessees or the hotel operators may be affected by changes in the number and category of hotel guests due to changes in tourist seasons and any negative image caused by any event that reduces the attractiveness of the Territories as locations for commercial dealings and business operations, and as a destination for foreigners. The business of the Properties may also be affected by the purchasing power of foreigners and the popularity of, or confidence in, tourism in the Territories which will in turn affect the operation of the REIT. However, the Master Lessees and/or the hotel operators may mitigate the foregoing risk by not limiting hotel guests only in certain regions or nationalities in order to accommodate different tourist seasons. Furthermore, if problems arise with one region or customer group, other groups can make up for the loss. Also, the purposes of guest visits can be diversified, e.g. for business and for leisure. (2) The Properties may be exposed to risks arising from rising competition in the hotel and

tourism industry The Properties may be affected by competition in the hotel and tourism industry, such as a rising number of hotel operators in the markets, an increase in the supply of hotel accommodations in the same area, or other tourist destinations that can be an alternative in terms of price, service quality, image and facilities. The purchasing power, average spending per stay, and number of target tourists and businessmen will also affect revenues and operating expenses of the Master Lessee, which in turn may materially affect the ability of the Master Lessee to pay fixed and variable rent, particularly if competitors renovate their hotels or improve their service quality in order to have higher capacity and attract more guests. However, the risk may be mitigated since the Properties are generally located in an area with convenient access to transport hubs for foreign guests, surrounded by tourist attractions, department stores

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and office buildings. The rooms are also well designed with basic amenities and facilities to accommodate all types of customers. (3) Damage or loss may arise if the Properties are not fully covered under an insurance policy A sum insured or an amount received as compensation under the insurance policy may be insufficient for damage suffered by the REIT. The REIT will seek advice from insurance consultants in order to secure an insurance policy that covers property damage and liability related to the Properties. For business interruption insurance as prescribed in the hotel management agreement, the hotel manager must set an appropriate insured sum for the business interruption insurance. The REIT Manager is convinced that the coverage conditions and the sum insured are consistent with general practice in the immovable property business. Under the relevant insurance policy, there may be coverage conditions beyond the control of the REIT, that limit the extent of the coverage provided by the insurance policy, or include limitations in connection with the taking out of insurance policy at a reasonable premium. Defects in the design and construction, or latent defect of the property or equipment, or defects in the Properties may result in higher investment expenses incurred by the REIT for special repair and maintenance, or compensation for damage or obligations towards third parties, which may not be covered under the relevant policy. Furthermore, the REIT is exposed to risks of legal actions or claims initiated by customers, contractors, or guests of the Properties for various reasons, such as accidents or injury sustained within the premises of the Properties, inability of the Master Lessees to seek benefits from the Properties in accordance with the Lease Agreements, and inability of the REIT to perform duties in accordance with any lease agreements, construction agreements, or other agreements entered into with contractors, the Master Lessees, or third parties. Certain loss or damage arising from disasters, terrorism, epidemics, or other loss as a result thereof may not be covered under the policy, or the premium may be unreasonably high. As a result, the REIT may need to pay additional premium or reduce the coverage. Upon occurrence of serious damage, the coverage under the policy maintained by the REIT may not be sufficient for the damage claimed or sufficient for the market price or the replacement cost, or equal to investment by the REIT or the Master Lessors. Certain loss or damage may not be fully covered by insurance. As a result, the REIT may lose any or all of its investment in the Properties as well as future income expected to gained from the Properties. The REIT's insurance policies and coverage conditions are subject to renewal and future negotiation. The REIT Manager may provide a guarantee that the REIT will be protected under the existing and/or commercially reasonable conditions. Material increase in premium or decrease in coverage will adversely affect the operation, financial status, and ability to pay returns to the Unitholders.

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(4) Investment Assets may be defective, or certain actions may violate the laws or rules and regulations, or there may be other defects

Unless otherwise disclosed in this Prospectus, the Financial Advisors and the REIT Manager has conducted a due diligence investigation and provided relevant professionals to examine the condition of the Properties and their component parts in the Territories to ensure that they are in good condition and investable, and that there is no non-compliance with the relevant laws and regulations. No material defect or deficiency that requires significant repair or maintenance (other than defect in the design, construction, or latent defects in the assets or equipment of the Properties that may incur additional investment, repair costs or special maintenance fees if those defects become overt after the investment by the REIT) was detected and no legal non-compliance was found. However, although the Financial Advisors and the REIT Manager have conducted a due diligence including arranging for relevant experts to assist in such due diligence, the ordinary restrictions for the due diligence makes it not possible for the Financial Advisors and the REIT Manager to give any assurance that the due diligence will uncover all defects relating to the Properties, especially certain defects of the real assets which are difficult to detect or are undetectable because of the restrictions of the due diligence, including techniques used for the due diligence or other factors which are relevant to the due diligence. These include defects that require repair and maintenance, or will reveal any non-compliance with the laws and regulations applicable to the Properties or the entities holding the Properties. Non-compliance with laws, rules or regulations, or other deficiency related to the Properties may be not detectable. Reports by the Asset Appraisers appointed by the REIT Manager to appraise the value of the Properties, the building inspection report, and the property appraisal report may be subject to some limitations that result in errors. Such latent defects or deficiencies may require additional investment by the REIT for repairs or may involve third party’s obligations which create unforeseeable expenses that may have a material adverse effect on the REIT's profit and cash flows. In case that the Properties and relevant parts thereof are not in compliance with laws or regulations, the REIT may also incur financial or other obligations arising from the breach or non-compliance. Furthermore, the scope of the due diligence on the Properties is limited only to: (i) any information or documents disclosed in the course of due diligence; (ii) publicly available information; and (iii) physical due diligence. Therefore, the Financial Advisors and the REIT Manager cannot give any assurance that all material documents and relevant information have been disclosed in the course of the due diligence investigation. Legal due diligence may not uncover all instances of non-compliance with the laws, regulations or terms of all contracts relevant to the Properties.

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In order to mitigate the risk, the Master Lessee will set aside cash as a reserve to cover any unforeseen costs and expenses, to ensure the Properties are in good condition. Hotels operated by the hotel operators are subject to the requirements for structural and building compliance audits to ensure their compliance and to keep them in good condition, as required by the hotel management agreements. In the course of negotiation on the relevant sale and purchase agreements in relation to the Properties, the REIT Manager has required the relevant Vendor Company to give general representations and warranties on the Properties condition. In the event of any defect in the Properties or non-compliance with laws for which the Vendor Company is responsible under the relevant sale and purchase agreement, the REIT may also recover damages from breach of representations and warranties by the Vendor Company under the conditions of the relevant sale and purchase agreement. (5) There may be existing liabilities in the Master Lessors before the REIT's investment

In acquiring the assets, the REIT will directly and indirectly invest in the Master Lessors. As the Master Lessors have operated their business for some time liabilities may have been incurred before the REITs investment. There is no assurance that all material documents and relevant information have been disclosed in the course of due diligence. Legal due diligence may fail to identify all non-compliance with the law, regulations or terms of all contracts relevant to the Properties. However, the REIT Manager has engaged reputable professional advisors to conduct due diligence on the Master Lessors before making investment in their shares in order to locate any liabilities of those entities. Moreover, in the course of negotiation on the relevant sale and purchase agreements in relation to the Properties, the REIT Manager has required the relevant Vendor Company to give general representations and warranties, including those in relation to liabilities of the offshore holding companies and the Lessors existing before the REIT's investment. If any liabilities for which the Vendor Company is responsible under the relevant sale and purchase agreement are incurred, the REIT may also recover damages from breach of representations and warranties by the Vendor Company under the conditions of the relevant sale and purchase agreement.

(6) Representations, warranties and indemnities by the Vendor Companies are submitted to a

limited scope, amount, and period Any and all representations, warranties and indemnities granted in favor of the REIT by the Vendor Companies are subject to limitations as to the scope, amounts and time during which claims may be brought. The scope, amount and time depend on the significance of the representation or warranty, and is subject to the conditions of the relevant sale and purchase agreement in relation to the Properties. Based on the policy,

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in negotiating any sale and purchase agreement of the shares relevant to the Properties, the REIT Manager splits the seller's limitation of liability into three main categories: (i) representations and warranties given by the seller in relation to the ownership of the relevant Property under which the seller represents and warrants that they hold the ownership thereof by holding shares or title to the land and structures at the closing; (ii) representations and warranties in relation to tax liabilities under which the seller represents and warrants that the relevant Property is not subject to any tax liability; and (iii) other representations and warranties, such as business-related licenses, actions, employees, financial status, accuracy of information provided to the REIT Manager during the closing. With respect to the ownership of the Assets, the REIT Manager discussed with the seller that a time limit on representation, warranties, and indemnities in relation to ownership will depend on the the Properties, such as 10 years or without pre-determined period. Time limits on representations and warranties regarding tax liabilities, and other representations and warranties vary from one year to five years, depending on the relevant business conditions. However, the REIT Manager can give no assurance that the REIT will be reimbursed under the representations, warranties and indemnification for all losses or liabilities suffered or incurred by it as a result of its investment in the Properties through the Investment Companies. The REIT Manager will exert their best efforts for the best interests of the REIT and the Unitholders. (7) Pullman Jakarta Central Park Hotel's access, and parking space, will not be part of the

Properties to be invested in by the REIT. Pullman Jakarta Central Park's access, and parking space, are not a part of the Properties to be

invested in by the REIT. The land used as the entrance, exit, and parking space is in the possession of other companies: PT Central Prima Kelola, which is an associated company of PT Agung Podomoro Land Tbk. ("APL"), the Seller. The land is commonly used with other properties located in the same project as Pullman Jakarta Central Park. However, the Lessor will directly enter into an agreement with the owner of the access, and parking space, to ensure that Pullman Jakarta Central Park and its customers can use the land as an entrance, exit, and parking space. The hotel customers will not be charged a parking fee in certain cases – for example, a customer that has the hotel's stamp will not have to pay a parking fee, in which case the hotel will not be able to charge parking fees from its customers, subject to the hotel management policy.

Even though the REIT does not invest in the entrance, exit, and parking space, there is a low risk of the entrance, exit, and parking space of Pullman Jakarta Central Park being obstructed or prohibited, as the agreement to be entered into with the land owner will be for an indefinite term and termination thereof must be with the consent of both parties (except for breach of contractual clause). Furthermore, the entrance, exit, and parking space are commonly used by the properties located in the same project and are used by

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a large number of people. For this reason, the REIT Manager is of the view that there is a relatively low possibility of obstruction or prohibition on using the entrance, exit, and parking space, which would affect other operators in the project and users in the areas. (8) Natural disasters, other events of force majeure, terrorism, war, and political instability may

negatively affect the REIT's income.

Many risks such as natural disasters or other events of force majeure that occur in the area in which the Properties are situated, and other areas with a large number of customers, may result in a decrease in consumption and tourism. Furthermore, wars, acts of terrorism, political turmoil, protests, and other political uncertainties, whether actual or threatened, may have similar effects. One or more of these events may reduce the number of guests staying at or using the service of the Properties, which will materially affect the income of the Master Lessees and its ability to pay fixed and variable rent. This will have a significant adverse effect on the REIT's operating results, financial status, and ability to pay returns or yields. These events may also cause damage to the Properties that are not covered under an insurance policy. (9) The values of the Properties as appraised by the Asset Appraisers do not always reflect the

actual values of the Properties, and cannot guarantee that the selling prices of the Properties are, or will be, consistent with the appraised values. Normally, appraisal of a property takes into consideration certain factors related to the property, such

as market condition, financial strength, competitiveness, and physical characteristics of the property, which may change in the future. This is because some or all of the events under the assumptions may not occur, or an unexpected event or situation may occur. These assumptions are based on the information provided by the Vendor Companies, and have been discussed with them. The assumptions contain projections and opinions on an event that may occur in the future. Therefore, they may involve certain risks and uncertainties, whether known or unknown to the investors. Even though the REIT Manager has caused Asset Appraisers to conduct the appraisal review, the REIT Manager is of the view that the Asset Appraisers' assumptions are reasonable. The actual and future operating results of the Properties may be different from the assumptions by the Asset Appraisers. Furthermore, some information related to property appraisal and information of the report of property appraisal specified herein may be based on, and contain, information that constitutes prediction or estimation, or other forward- looking statements, which involve risks and are uncertain. Therefore, the risks, uncertainties, and other factors in future events may cause the actual operating results to be materially different from the future operating results contained in the forward-looking statement, whether

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expressly or by implication. Moreover, this Prospectus does not contain all assumptions used for the appraisal of the property values.

Information shown in this Prospectus does not concern opinions on commercial ethics or structure of the REIT and Properties, nor does it concern opinions, whether express or implied, regarding the future trading price of the Units or the financial status of the REIT upon being listed on the Stock Exchange of Thailand. Moreover, the information does not completely include all that may be necessary or desirable for the appraisal of the Properties, and investment in the REIT or the Units. Information and particulars related to the Asset Appraisers do not grant rights or solutions to investors or any other persons, and are not intended to constitute, or be construed as, warranty of any kind of the future financial status or operation of the REIT, or any other forward-looking statements.

Moreover, REIT Manager cannot guarantee that the property appraisal by the Asset Appraisers would always reflect the actual values of the Properties, or guarantee that other asset appraisers would determine the same values. As a result, REIT Manager cannot guarantee that the assumptions that are the basis of the appraisal will be accurate and precise. The price at which the REIT sells any property may be lower than the price at which the Asset Appraisers determined as of the date on which the REIT invested in the Properties, or may be lower than the purchase price at which the REIT obtained the Properties. Furthermore, the net value of the property initially appraised by the Asset Appraisers may not always reflect the actual value of the property when the REIT disposes of the property or liquidation is made on the REIT.

The reports on property appraisal by the Asset Appraisers merely contain the appraisal information as of the date specified therein. Therefore, any person related to the offering, or any other person, should not consider the reports as advice regarding how a person should proceed based on the appraisal by the Asset Appraisers disclosed in this Prospectus. The decision to buy the Units in the REIT by the investors should not rely solely on the appraisal and the information in the property appraisal reports of the Asset Appraisers as set out in this Prospectus.

(10) Decrease in the fair value of the Properties and investment in leaseholds will have an adverse

effect on the income statement, property net value, and the REIT's ability to pay returns

If the fair value of the Properties and investments in the leaseholds of the immovable property decreases due to loss arising from the appraisal of property fair values and the investment in that year, the net value of the property will decrease and the REIT may have excess liquidity due to loss arising from the appraised fair values. This will affect the REIT's ability to pay returns. However, the REIT may reduce its registered capital and return the excess liquidity to the Unitholders to be able to pay returns.

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(11) Risks related to the relevant extension or renewal of the rights to use land

The ownership of Pullman Jakarta Central Park is in the form of a strata title with a strata title certificate, known as HMSRS. The project's HMSRS has to be on land with an HGB Title (the term of an HGB under Indonesian law is fixed). The HMSRS term and HGB term for Pullman Jakarta Central Park are consistent – that is, both terms will expire on 17 March 2026 and has been extended until 9 June 2037. The HGB Title under Indonesian law has an initial term of 30 years, and the certificate holder is entitled to apply for an extension of no more than 20 years. When that term expires, the REIT Manager expects that the REIT, which is the holder of the certificate, will be entitled to apply for a renewal. It is expected that the certificate may be renewed for a term equivalent to the HGB initial term – that is, 30 years, with an extension of no more than 20 years. However, The relevant agency will consider whether the use of land is in accordance with the conditions prescribed by law, e.g. whether the land has been used as per the prescribed objectives or conditions (if any), and whether the terms have been complied with, and whether the use of land complies with the city zoning. The REIT Manager has opinion that there is less chance for rejecting of the future extension period since Hotel operation dosen’t conflict with the terms and conditions of the land and city zoning. (12) The definite fees for the application for extension or renewal of the HGB certificate forthe

Properties in Indonesia are not fixed as they are subject to the land value at the time of the application for extension or renewal of the HGB certificate

The assets of Pullman Jakarta Central Park, Indonesia, are held under the Strata Title Certificate, known as the HMSRS. The nature of the HMSRS right is that the right must always be created over the land which has an HGB Title (a non-perpetual right under Indonesian laws), and the HMSRS right will have the same period as the HGB Title. For Pullman Jakarta Central Park, the HMSRS right will expire on 17 March 2026 (in the next 8 years, approximately) and has been extended until 9 June 2037. Under the laws of Indonesia, the HGB Title has an initial term of 30 years and the right holder is entitled to an extension of not exceeding 20 years. Upon the expiry of such term, the REIT Manager anticipates that the REIT (currently the holder of the certificate after investing in Pullman Jakarta Central Park) will be entitled to a renewal and the renewal period is expected to be equivalent to the initial term of the HGB Title, 30 years. After the lapse of the 30 years, the REIT will be entitled to an extension of 20 years. Nonetheless, such period has not been explicitly prescribed in Indonesia laws and there has not been an example case of such renewal. In practice, the extension and renewal of the extension will be considered by the relevant agencies within 2 years before the expiry of the term. However, the local legal

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counselors have seen cases where the approval process for granting HGB Title was extended prior to the 2-year before of the expiration of the term.

In applying for an extension or renewal of the HGB certificate, the applicant must pay a fee as determined by the government, currently in accordance with the regulation related to the specification of types and fees charged by the land office (Indonesia) (Government Regulation No. 13 of 2010 on Types and Tariffs for Applicable Non-Tax State Income at the National Land Office). The fee will be calculated based on the following formula: tariff = (0.2 percent X land value) + IDR 100,000. The regulation prescribes that the land value must be the land value according to the Land Value Zone Map. If there is no value determined for any zone, the land office will appraise the price reflecting the current appraisal price called the sales value of taxable object (NJOP).

Nonetheless, the value of land on which Pullman Jakarta Central Park is situated may change, subject to various factors including the economic climate and the policies of the Indonesian government. If the value of the land significantly increased at the time of the application for extension or renewal of the HGB certificate, the REIT would be liable to pay an increased tariff charged by the land office for the extension or renewal of the HGB certificate, and as a result, the returns for the Unitholders may decrease.

To mitigate the risk, the REIT Manager will follow up with the land office to ensure and procure that the lessor company of Pullman Jakarta Central Park strictly complies with the conditions or the relevant rules relevant to the extension and renewal of the HGB Title. The REIT Manager will also ensure that the lessor has enough cash flow to pay the tariff for the extension or renewal (whichever is the case) upon such renewal or extension of the HGB term.

The independent appraisers have not taken into account the costs of the extension. However, the financial advisors and the REIT Manager has adjusted the appraised values to reflect such expense.

(13) Risks from investment in the subleased land plots of Capri by Fraser and IBIS Saigon South

Both Properties of the REIT in Vietnam, namely Capri by Fraser and IBIS Saigon South, are situated on subleased land plots. The Ho Chi Minh City (HCMC) local authority is the landlord that subleases the land plots on which the Properties are situated, to Phu My Hung Development LLC (PMH), which is licensed to develop the project on land in HCMC District 7. If the lease agreements for the land plots on which the Properties are situated, between the Ho Chi Minh City People’s Committee (HCMC People’s Committee) and PMH, are cancelled or terminated, the sublease of the land plots between PMH and the lessors, the REIT's subsidiaries, will also be terminated. This will result in all Properties constructed on the subleased land becoming the property of the land owner, which is currently Ho Chi Minh City, without having to pay

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compensation to the sub-lessees under the terms and conditions of the land sublease agreements, which will significantly affect the REIT's ability to operate business and its income. The REIT Manager is of the view that there is a low possibility that the Lease Agreements for the land plots on which the Properties are situated, between the HCMC People’s Committee and PMH, will be cancelled or terminated before the terms specified therein. This is because PMH is licensed by the HCMC People’s Committee to develop the project on the land in HCMC District 7, and PMH is incorporated by co-investment between the HCMC People’s Committee and Central Trading & Development Group, with its head office in Taiwan (source: PMH's website). As a result, the REIT Manager believes that at the date of filing of this registration statement or draft prospectus, there is a relatively low chance that the landlord will terminate the land sublease agreements with its co-investor without reasonable cause. 4.3 Risks associated with the investment in immovable property

General risks related to investment in immovable property

Investment in immovable property involves various risks, including: (1) negative changes in politics and economic conditions, such as domestic and international economic recession, and decrease in overall consumption demand; (2) negative condition of the domestic real estate markets in the Territories; (3) changes in interest rates, inflation rates, and foreign exchange rates; (4) changes in financial policies or other economic policies in and outside the country; (5) unexpected increase in operating expenses related to immovable property; (6) changes in the laws or regulations related to the environment, city plans, and other government rules and regulations, including public finance policies; (7) demand for responsibility for the environment related to immovable property; (8) changes in the fixed and variable rents to be received from the immovable property invested in; (9) changes in the prices of oil and other fuels; (10) changes in the popularity of types of immovable property and locations, leading to an excessive number of rooms or decrease in demand by any target customers for some types of rooms or immovable property invested in; (11) ability of the hotel operators or the Master Lessees that may affect the business and reputation of the hotels; (12) inability to renew the lease agreement and the sublease agreement; (13) inability to collect rent from the Master Lessees within the specified periods, or inability to collect payment due to bankruptcy or insolvency of the Master Lessees, or otherwise; (14) insufficient coverage under existing insurance policies, or increases in premiums; (15) inability of the Master Lessees to provide adequate maintenance and other services; (16) defects in the immovable property that require correction or repair, and maintenance of the immovable property, causing unexpected investment expenses; (17) lack of liquidity in investment in immovable property; (18) excessive reliance on cash flow for the maintenance and renovation of the existing immovable property; (19) increase in operating expenses, as well as applicable taxes and duties; (20) interests or obligations not discovered or disclosed during the examination of the land at the relevant land

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office; (21) events of force majeure that are not insured, and other factors; and (22) changes in the laws and regulations concerning taxation and other things.

The various factors above may cause volatility in the rental rates, occupancy rates, and operating expenses for the immovable property, and tax related to payment of returns, which will in turn adversely affect the value of the immovable property, and the fixed and variable rents generated by the immovable property. Annual valuation of the Properties will reflect those factors, and may cause the value of the Properties to increase or decrease. The investment value of the Properties may materially decrease in the event of a sudden crisis regarding the immovable property price or the economy in the Territories where current or future Properties are located. (2) The REIT may be adversely affected by lack of liquidity as a result of investment in

immovable property, and may lack other options in exploiting the Properties.

The REIT will mainly invest in immovable property and properties related to the immovable property. Generally, investment in immovable property – especially the investment in high-value property to be invested in by the REIT – has low liquidity. Low liquidity may affect the ability of the REIT in making changes to its investment portfolio, or the ability to convert some property into cash to accommodate changes in economic conditions, real estate market, and other factors. For example, the REIT may not be able to sell the Properties within a short time, or might be forced to considerably reduce its price in order to sell the property quickly. The REIT may also have problems in finding loan sources in a timely manner and under commercially agreeable terms, in the case of secured loans. This is because immovable property lacks liquidity. Furthermore, the use of the Properties cannot be changed promptly if they cannot generate profit due to competition, age of the property, decreased demand, or other factors. Normally, changes in the manner of use of the Properties require additional investment. These factors may adversely affect the financial status and operating results of the REIT, as well as its ability to pay returns to Unitholders.

However, as the REIT is investing in the shares in the Investment Companies instead of directly investing in ownership or leasehold rights of the Properties, the REIT may dispose of its investments by selling the shares in the Investment Companies, which is more liquid than selling the Properties.

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(3) Strategies of the REIT in investment in property used for the operation of the hotel business may expose the REIT to higher risks when compared with other types of funds with more diversified portfolios.

The main strategies for investment in property used in the operation of the hotel business will expose

the REIT to risks arising from investment in immovable property, which are higher compared to other types of funds with diversified portfolios in other industries. The investment that focuses on leasehold of the immovable property used for the hotel business operation may expose the REIT to risks if a crisis or adverse event occurs in the tourism industry and hotel business in the ASEAN region, especially the Territories. A crisis may lead to a decrease in the prices of guestrooms, or occupancy rates, of the Properties, which may affect the returns or yields to be paid to Unitholders, or the operating results and financial status of the REIT.

The REIT may seek to mitigate this risk by investing in immovable properties located in many jurisdictions and of different grades and market positioning, so that an adverse event affecting the tourism industry in one country would not excessively affect the overall operating results of the REIT.

(4) The Properties may be subject to expropriation.

The Properties are exposed to an expropriation risk under the government's policy. All compensation

that may be obtained as a result of damage from expropriation will be for the landowner or person exploiting the property, and the amount thereof may not be equivalent to the amount paid to purchase the property. This may cause the returns paid to the Unitholders to be inconsistent with the projections, both regarding the return and the priority. The REIT may receive only the compensation from the local government or relevant government agency, pursuant to the rules and procedures prescribed by law. The amount received by the REIT will depend on the conditions specified in relevant law and agreements, and the remaining term for use of the Properties after expropriation. The REIT Manager cannot determine the possibility of expropriation, as land expropriation is under government policy and depends on the government's necessity in using the land at a particular time. The expropriation may adversely affect the financial status and operating results of the REIT, which as a result, affects the ability of the REIT to pay returns to the Unitholders.

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(5) The REIT will invest in leasehold right of the immovable property, of which the value may decrease in alignment with the remaining lease term, resulting in a pro rata decrease in the value of the Units.

At present, the REIT has invested in the leasehold right of Capri by Fraser and IBIS Saigon South.

The value of the leasehold right to the said assets may decrease in alignment with the remaining lease term, due to appraisal of the leasehold right value, changes in occupancy rates, rent rates, costs of public utility services, or other reasons beyond the REIT's control. The change of the leasehold right value may significantly affect the net asset value of the REIT's property, value of the Units, or ultimately the REIT's distribution payments. (6) Changes in the accounting standards or applicable laws, or practices of relevant authorities

The REIT may be affected by the enforcement of new accounting standards or amendments to the laws, rules, regulations, accounting standards, or the Thai Financial Reporting Standards, or changes in the accounting standards that are amended to be consistent with the International Financial Reporting Standards (IFRS). The REIT's financial statements may be affected by the enforcement of amended financial standards. The condition and time for these changes are unknown and subject to the relevant agency. Therefore, the REIT Manager cannot guarantee that these changes will not significantly affect the preparation of the REIT's financial statements, or its operating results and financial standard. The changes may also negatively affect the REIT's ability to pay returns to Unitholders. Furthermore, it cannot be guaranteed that no changes to any rules or regulations will adversely affect the REIT Manager's ability to comply with the REIT's investment strategies, or its operating results and financial status.

Furthermore, the REIT may be affected by the accounting standards of Indonesia and Vietnam, as well as amendments to the laws, rules, regulations, or accounting standards thereof, due to the calculation of net operating income for the Master Lessees' rent payment to the Master Lessors. This may adversely affect the REIT's ability to pay returns to the Unitholders.

The income tax calculation for the Properties in Vietnam is based on income after expenses, including related-party expenses such as fees for the services between the Offshore Holding Companies and the Master Lessor company in each country, in which the pricing and remuneration shall b determined for such items. The consideration on these matters depends on the practice and discretion of the agency overseeing tax collection and assessment in Vietnam. These practices and discretion are subject to change. If the agency overseeing tax collection and assessment changes its practice or, at its discretion, deems that certain expenses are not considered expenditure, or changes its practice on pricing or related-party compensation, the difference resulting from offsetting the net operating income (NOI) with the lessors' rental

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income may be assessed by an agency related to tax calculation. This may result in an increased tax burden for the REIT, which may negatively affect the REIT's ability to pay returns to the Unitholders.

(7) Risks related to the investment of the REIT in the Properties located offshore

Since the investment of the REIT consists the investment in Properties in Vietnam and Indonesia.

The REIT is exposed to the risk relating to investment offshore, including: (1) inter-country financial management of the REIT; (2) risks relating to the economic, political and tourism climate in the country in which the REIT's assets are located; and (3) legal risks specific to each country.

Since the income of the REIT will be in foreign currencies, and the income and the expenses of the Lessor company and the offshore holding companies will be in the relevant currencies, while the funds raised and the dividend payment to the Unitholders will be in Thai Baht, the REIT is exposed to the risks relating to the fluctuation in exchange rate. In addition, since the investment of the REIT consists of investment in the Properties in multiple countries, the method for paying out benefits from the operation of the Properties are different depending on the method of remittance, tax benefits and relevant fees. Further, the REIT has to comply with the standards on the restrictions of capital transfer, the regulations on money transfer, and the control on the exchange rate in each of the countries in which the REIT invests. This results in the REIT being exposed to the risks relating to the management of the REIT's moneys in different countries.

The risks relating to the economic, political, and tourism business conditions in the countries in which the Properties are located, are different because those risks are dependent on the particulars of each of those countries, and thus affect differently the consumption and tourism in that country. In addition, the possibility of the eventuality of war, terrorist attack, political unrest, and other political uncertainties of each country is also different. The occurrence of any of those events may result in the demand for the hotel in any one country decreasing and affecting the income of the Master Lessee and also its ability to pay rental. In that case, the operating performance of the hotel will be negatively affected, as well as its financial status, ability to pay benefits and dividends to the REIT.

The specific legal risks of each country - The right to the assets of Pullman Central Park in Indonesia is Strata Title Certificate right (HMSRS) on the land with HGB Title (a non-perpetual right under Indonesian laws), incurs a fee as prescribed by the Indonesia government. Owing to the legal restrictions and regulations of Indonesia as mentioned, the REIT is exposed to the risks relating to the assets arising from the holding of fixed-term rights. In all countries, the REIT is exposed to the risk of legal compliance.

The REIT's assets in Vietnam are located on land which is subleased. This means that there is a risk that the master lease of the land on which the Properties in Vietnam are situated, entered into between

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the local administrator of Ho Chi Minh City and Phu My Hung Development Limited Liability Company (PMH), may be terminated or expires, which will cause the subleasing of the land by Phu My Hung Development Limited Liability Company to the Lessor company, which is a subsidiary company of the REIT, to end and therefore affecting the REIT's ability to continue its operations and materially affect the income of the REIT. 4.4 Risks associated with investment in the Units of the REIT (1) Risks arising from the lack of a secondary market for trading the Units of the REIT

The offering price of the Units was determined by the REIT Manager and the Underwriters, based

on the demand from investors and selling agents of the Units. The offering price may not reflect the market price of the Units to be traded in a secondary market after this secondary offering. The trading price of the Units in the secondary market may be significantly lower than the offering price of the Units in this offering. The trading price of the Units depends on the following factors:

perspective on the potential for operation and investment of the REIT and the real estate market in the Territories;

difference between the actual financial status and operating results, and those forecasted by the investors and analysts;

changes in advice or projections of the analysts; changes in general economic or market conditions, and changes in the need for

consumption, and interest rates, foreign exchange rates, and the government's import and export policies;

the number of tourists in the Territories; the market value of the Properties; the attractiveness of the Units compared with other types of equity, including trust units in

other industries apart from the real estate business; balance between the demand for and supply of the Units; sale of, or intention to sell, a large amount of the Units by the Unitholders; future size and liquidity of the Thai market for REITs; future changes related to structure, rules, and tax burdens, in general and specific to

REITs, and investment in the Territories and other jurisdictions; the REIT’s inability to comply with investment and business expansion strategies; and

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volatility of market conditions, including the vulnerability of the capital market and increased interest rates.

Based on the factors above, the Units may be traded in the secondary market at a higher or lower price than the net asset value of the trust Units. Furthermore, the REIT may set aside some profit, as reserves for working capital, or for other purposes. Although this could cause the net asset value of the REIT to be higher than when no profit is set aside, this may not cause the market price of the Units to increase. The REIT’s inability to meet the expectation of the market in terms of profit and returns may negatively affect the market price of the Units.

The Units are not financial products with capital protection. The REIT Manager cannot guarantee that the Unitholders will receive the capital back in full. In the event of dissolution or termination of the REIT, the investors may lose all or some of their investment in the Units. Corporate income tax has not been imposed on the income of the REIT. However, if there are any changes to the applicable laws and regulations concerning taxation or other matters, the REIT or the Unitholders may have tax burdens. Tax payment will have a significant adverse effect on the business, financial status, operating results, and opportunities of the Unitholders, and may cause the returns paid to the Unitholders to decrease, or lead to higher tax burden, which may have a negative effect on the price of the Units. Therefore, the REIT Manager cannot guarantee whether the REIT will be able to pay returns or yields for the Units, or maintain the return rate at a stable level.

The income received from investment in real estate depends on various factors, including the rent receivable; operating and other expenses incurred as a result of many factors, such as the economic conditions in Thailand and other countries; potential of the Master Lessees and hotel operators to maintain their ability to operate the business, control the operating expenses, competition, and occupancy rates, change the operational rules and regulations, and handle natural disasters and political turmoil. If the Properties and other related properties do not generate consistent and sufficient income, and the REIT cannot find a capital source with appropriate cost or conditions in a timely manner, it may cause adverse effects to the income, cash flow, and the REIT’s ability to pay returns.

Therefore, the REIT Manager cannot guarantee that the REIT will have the ability to pay returns or maintain the rate of returns in accordance with the determined policy of payment of returns. The Settlor cannot guarantee whether the rate of return or yield will increase or remain at a constant rate, whether the rent generated from letting or subletting the Properties to the Master Lessees will increase, or whether the revenue from fixed and variable rents of the Properties invested in by the REIT in the future will increase the income of the REIT, which may lead to payment of returns or yields to the Unitholders.

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(2) Unitholders cannot redeem the Units.

As the REIT is a fund with no redemption allowed, the Unitholders cannot redeem their Units. Therefore, there is no guarantee that the Unitholders will be able to sell their trust units at the price at which they purchased them, or at any price, or that they can be sold. However, the Unitholders can sell the Units on the exchange market. The liquidity of the trade will be consistent with market conditions. (3) The value of the Units may decrease if newly issued units are issued at a lower price after the

additional offering For the offering of the additional trust units, the offering price is 9.45 Baht per unit, which is an offering price that is lower than the par value of the REIT of 9.9086 Baht per unit. Since the offering price is lower than the par value of the REIT, the offering may reduce the value of the trust units. (4) Future material sale of Units by Strategic Partners may have adverse effects on the market

price of the Units

The market price of the Units may be materially affected by future sale of the Units by the Strategic Partners. After the additional offering, the Strategic Partners will become one of the major Unitholders of the REIT. The details on the units held by the Business Alliance are as follows:

The units which are held by the Strategic Partners with the undertaking on non-entitlement to sell for a period of 2 years form the first trading day of the units in the SET (27 December 2017) in accordance with the terms relating to the Properties are as follows:

Strategic Partners Number of Units % 1 PT Agung Podomoro Land Tbk 63,928,100 18.12 Leebro Holding Pte Ltd 4,417,200 1.25 Total 68,345,300 19.37

Remark: 1. Calculated from the current total units of 352,869,700

Even though the said persons have agreed to not sell, dispose, transfer the units, to which they subscribed pursuant to the Share Sale and Purchase Agreement, there is no guarantee that upon the expiry of the 2-year period such persons will not sell a significant portion of their units. If such sale occurs, the price of the units in the market may be negatively affected.

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(5) The capital return as a result of dissolution of the REIT may be lower than the amount invested by the Unitholders in this offering

If the REIT is dissolved, the Settlor cannot guarantee that the Unitholders will receive capital return, in whole or in part. This depends on the cause, method of dissolution, rules for sale of the REIT's property, and the remaining leasehold term. (6) Net asset value of the REIT may not be equal to the actual trading price on the exchange market

The net asset value of the REIT announced by the REIT Manager is calculated from the total assets less gross liabilities as per the financial statement of the REIT, the fair value of investment in the real estate and movable properties of which have been adjusted using the latest appraisal report or appraisal review report as the basis for valuation of the immovable property. The value may not reflect the actual trading price on the exchange. This is because the trading price also depends on other factors such as demand for, and supply of, the securities, and inflow of investment by foreign investors, etc.

(7) Net asset value of the REIT is not the actual value of the assets to be received by the REIT in

the event of a total sale of the assets or dissolution of the REIT

The net asset value of the REIT specified herein is calculated based on the data from the appraisal report for the investment assets. The value may not be the actual value to be received by the REIT upon a total sale of the assets or dissolution of the REIT.

(8) Unitholders may not receive returns from the REIT if there is a breach of the loan agreement

The loan agreements have a condition that the borrower must not pay dividends to the Unitholders if there is a default under the loan agreements. For this reason, if the REIT and/or the subsidiary of the REIT, as the borrower thereunder, default on the loan, the REIT will not be able to pay dividends to the Unitholders until the default is remedied as prescribed in the loan agreements or as the Parties shall later agree upon. However, the REIT Manager is of the view that there is relatively low risk of the REIT breaching the loan agreement, as the REIT Manager has conducted an audit and believes that the REIT can comply with the conditions prescribed under the loan agreement.

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4.5 Jurisdictional risk

The Properties are in a number of jurisdictions, and therefore the operation of the Properties will be subject to the applicable laws of the respective jurisdictions. The REIT's structure also involves the shareholding in the Investment Vehicles, which are companies located in different countries. The operation of the Properties and the investment in the Investment Vehicles are currently permitted by the applicable laws of the relevant countries. The REIT may be affected by the enforcement of new or amended laws, rules, or regulations related to the operation or investment. The conditions and time for these changes are unknown and depend on the relevant agencies. However, based on the current data, the REIT Manager has found no information on changes to the laws, rules, or regulations that may affect the investment by the REIT, or the operation of the Properties. 5. Legal Dispute

-None- 6. Other Major Information -None-

Management and Governance

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Part 3

Management and Governance

7. Units Trust and Unitholder information

7.1 Units Trust and Unit Price information

7.1.1 Units Trust information

REIT has been registered on 20th December 2017 with the registered capital of 3,528,367,000 THB and fully paid-up capital of 352,836,700 units

Units trust information as of 28 December 2018

Registered Capital (THB) 3,528,367,000

Paid-up Capital (THB) 3,486,205,375

Par Value per Unit (THB) 9.8805

Total Units (Unit Trust)

352,836,700

Closed Price as of 28 December 2018 (THB) 9.05

Market Price (THB) 3,193,172,135

Weighted Average of Trading Volume per Day (Unit Trust) 127,875.61

Weighted Average of Trading Value per Day (THB) 1,212,764.23

Type of Unit Trust Unredeemable

1st Offering Price (THB) 10.00

Net Asset Value (NAV per unit) (THB) as of 3 January 2018 9.9653

Net Asset Value (NAV per unit) (THB) as of 28 December 2018 9.0555

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Capital Reduction

7.2 Unitholder information

7.2.1 Top 10 Unitholders Information

Information of book closing date as of 24 December 2018

No Name Number of Units % 1 PT AGUNG PODOMORO LAND TBK 100,139,500 28.381 2 GIC PRIVATE LIMITED 68,652,800 19.457 3 FWD Lile Insurance Public Company Limited 30,000,000 8.503 4 Mr. Chanond Ruangkritya 16,000,000 4.535 5 JPMORGAN THAILAND FUND 13,721,900 3.889 6 B Senior Citizen Mixed Fund 13,624,000 3.861 7 SIX SIS LTD 8,109,000 2.298 8 Mrs. Darika Punnagun 8,000,000 2.267 9 Bualuang Income Fund 7,040,000 1.995 10 Mr. Tanarat Pasawongse 6,800,000 1.927

Total 272,087,200 77.113

No. Performance Period Capital reduction

Book Closing Date

Payment Date THB

THB per Unit

1 20-Dec 17 to 31-Mar-18

17,524,670.25

0.0616 31-May-18 15-Jun-18

2 1-Apr-18 to 31-Jul-18

14,708,205.33

0.0517 29-Aug-18 14-Sep-18

3 1-Aug-18 to 31-Oct-18

9,928,749.65

0.0349 19-Dec-18 28-Dec-18 Remark: Cash from capital reduction was paid in 3 periods paid from excess liqidity from non-cash expenses.

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7.2.2 Major shareholders who has significant influence on the policy, management and operation of the REIT manager.

- None -

7.3 Policies of Return Distribution and Restrictions

7.3.1 Terms, policy, and procedures for distribution of return to Unitholders

Terms, policy, and procedures for distribution of return to Unitholders are to comply with the guideline as follows:

1) The REIT Manager shall distribute return to Unitholders no less than 90 percent of the adjusted net profit for that Fiscal Year. The return shall be distributed no more than 4 times per Fiscal Year. The REIT Manager may consider to distribute special return to Unitholders other than the regular 4 times per Fiscal Year as abovementioned as the REIT Manager views as necessary and appropriate. Such return shall be distributed within 90 days from the end date of the Fiscal Year or the accounting period in which the return is distributed, as the case may be.

Adjusted net earnings referred to in paragraph one shall include net profit based on the cash status of the REIT in accordance with the guidance determined by the SEC Office.

In case where the REIT Manager fails to distribute return within the specified period of time, the REIT Manager shall give notice thereof to Unitholders via the IT system of the SET.

2) In case there is a distribution of returns to the Unitholders in that Fiscal Year, the REIT Manager shall announce the distribution of returns to the Unitholders and close the Unitholders registration book in order to identify the Unitholders who are entitled to receive the returns. The REIT Manager shall comply with the following conditions in distributing the returns to the Unitholders:

(a.) In case the distribution is at year-end, the REIT Manager shall distribute the returns within 90 days from the last date of that Fiscal Year, and within 30 days from the date which the Unitholders registration book is closed for the identification of the Unitholders who are entitled to receive the distribution of returns.

(b.) In case of the interim distributions (if any), the REIT Manager shall distribute returns to the Unitholders within 90 days from the last date of teach quarter where the distribution is executed and shall distribute within 30 days from the date which the Unitholders registration book is closed for the identification of the Unitholders who are entitled to receive the distribution of returns.

3) In case the REIT operates with accumulated losses, the REIT Manager shall not distribute any return to the Unitholders.

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4) The Unitholders who have the right to receive the distribution of returns shall have their names appear in the REIT’s Unitholders registration book on the date which the unitholders registration book is closed for the distribution of returns proportionated with the unitholding of each Unitholder. In case any person or group of persons holds more Units than the units holding limit determined by the SEC, such persons or group of persons shall not be entitled to receive a distribution of returns for such excess portion of Units determined by the SEC.

Additional conditions

(1) In considering the distribution of returns, in case the return to be distributed per Unit during or for Fiscal Year is less than or equivalent to Baht 0.10, the REIT Manager shall reserve the right to not distribute the return of such period and carry forward to distribute in the subsequent period in accordance with the distribution procedures set forth.

The REIT Manager shall comply with the distribution rules specified above unless otherwise amended, changed, announced, stipulated, directed, approved, or relaxed by the SEC or the SEC Office or any or any agencies with authority, the REIT Manager shall also comply with such aforesaid hereof, accordingly.

(2) The REIT Manager shall announce the distribution of return, the registration book closing date, and a yield rate by giving notice thereof to the Unitholders, whose names appear in the Unitholders registration book on the book closing date, via the IT system of the SET, and sending notice in writing to the Trustee.

(3) The REIT Manager shall distribute the returns by wire transferring to each bank account of the Unitholder or providing an account payee only cheque to the Unitholder whose name and address are recorded in the Unitholders registration book.

(4) In case a Unitholder does not exercise its right to receive any return amount within the specified period of time of the right to claim prescribed under the Civil and Commercial Code, the REIT Manager shall not spend such amount for any purpose other than for the benefits of the REIT.

Conditions and procedures on the distribution

The REIT Manager shall distribute the returns to Unitholders in proportion to each of their unitholdings. The REIT Manager shall reserve the right to distribute the return to Unitholders who hold Units exceeding the unitholding limit or not in accordance with the rules prescribed under Notification No. ThorJor. 49/2555 only to the extent that is in contrary to the rules, and the portion of returns not payable to such Unitholders shall be distributed to the others Unitholders in proportion to their unitholding.

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Non-entitlement to cash distribution

The REIT (by the Trustee or the company whose shares are held by the REIT) and certain Unitholders may enter into a contract or agreement whereby such Unitholders and its affiliated companies or persons agree not be entitled to any rights with respect to the cash distribution (may including a capital reduction) from their unitholdings during the Lock-Up Period, and in this case such Unitholders shall not have any right to receive the distribution during the Lock-Up Period and the REIT Manager shall calculate the distribution payable to other Unitholders in proportion to their respective unitholding by excluding the aforementioned portion of such unitholders

The terms of the non-entitlement to dividend for each of the Vendor Companies are as follows:

1) PT Agung Podomoro Land Tbk., which is the Vendor Company with respect to Pullman Jakarta Central Park, agrees that the Units held by PT Agung Podomoro Land Tbk and its affiliated company or persons in the same group shall not be entitled to any rights with respect to the dividends and a return of capital from a capital reduction of the REIT for the period of 2 years from the first trading day of the Units in the SET. The above condition shall not apply in case of distributions of dividends or cash with respect to the disposal of REIT assets occurred during the period of 2 years from the first trading day of the Units in the SET.

During the initial subscription period of REIT Units, PT Agung Podomoro Land Tbk. (or its affiliated company or persons approved by the REIT Manager) subscribed for 63,928,100 initial Units according to the sale and purchase agreement.

2) B.B. Dai Minh Corporation, which is the Vendor Company with respect to Capri by Fraser and IBIS Saigon South, agrees to waive its rights to receive any rights with respect to any return from the REIT capital reduction for the period of 2 years from the first trading day of the Units in the SET.

Leebro Holding Pte. Ltd. (B.B. Dai Minh Corporation affiliated company) subscribed for the REIT at the amount 4,417,200 units.

Unitholders can find more details related to non-entitlement to dividend in the Trust Deed at REIT manager’s Office.

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7.3.2 The Record of Return Distrition

Remark: * There are 2 unitholders with total amount of 68,345,300 units are not entitled to receive any returns or cash distributions from capital reduction of SHREIT: 1) PT Agung Podomoro Land Tbk, with total of 63,928,100.00 units; and 2) LEEBRO HOLDING PTE LTD. ,with total of 4,417,200.00 units. The provision of non-entitlement of cash distribution are in accordance with the prospectus of SHREIT Part 2, Clause 12. “Distribution Policy and Limitation” and Trust Deed, Clause 17.2 “Limitation in Receiving Distribution and Distribution Management”. The announced distribution payable per unit to other unitholders are calculated in proportion to their respective unitholding by excluding the portion of such aforementioned unitholders. To avoid of any doubt, this provision of non-entitlement of cash distribution is in accordance with the Binding Investment Agreement between vendors and SHREIT for the 1st acquisition. Referring to Binding Investment Agreements, the units of non-entitlement of cash distribution of PT Agung Podomoro Land Tbk, and LEEBRO HOLDING PTE LTD were limited at 63,928,100.00 units and 4,417,200.00 units respectively throughout the Lock up period.

8. Information of the REIT Manager

8.1 REIT Manager

Strategic Property Investors Company Limited (REIT Manager) has been registered in Thailand on 12 April 2016, Registered number is 0105559061009, paid up capital 10,000,000 THB with common share 100,000 shares and par value is 10 THB/unit

8.1.1 Summary of REIT Manager’s Company

Company Name Strategic Property Investors Company Limited

Registered Number 0105559061009

Registered Date 12 April 2559 Head office’s address

No. 1 Empire Tower Building, 24thFloor, Unit 2401, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120

Performance Period

Return Distrition (Baht per Unit)

Cash Return from Captial Reduction* (Baht per Unit)

20-Dec 17 to 31-Mar-18 0.0894 0.0616 1-Apr-18 to 31-Jul-18 0.1409 0.0517 1-Aug-18 to 31-Oct-18 0.2212 0.0349

Total for 2017 0.4515 0.1482

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Contact Tel : 02 286 2461 Website : www.sp-investors.com Email : [email protected]

Registered Capital Baht 10,000,000 (Ten Million)

Paid-Up Capital Baht 10,000,000 (Ten Million)

Type of Business REIT Manager of Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust

Directors 1. Mr. Chanitr Charnchainarong (Chairman of the Board/ Independent Director) 2. Mr. Chanond Ruangkritya (Director) 3. Mr. Tanarat Pasawongse (Independent Director) 4. Mr. Putra Pratana (Director) 5. Mr. James Teik Beng Lim (Executive Director) 6. Mr. Patan Somburanasin (Managing Director)

Authorized Directors Mr. James Teik Beng Lim or Mr. Patan Somburanasin or Mr. Chanond Ruangkritya (Co-signing 2 out of 3 with the Company’s stamp)

Fiscal year As of 31 December, of each year

The REIT Manager was granted with license to be the REIT Manager pursuant to Notification of the Office of the Securities and Exchange Commission No. SorShor. 29/2555 on 20 February 2017 with the validation period of five (5) years until 19 February 2022.

The REIT Manager shall have general authority in managing the assets of The REIT. The REIT Manager shall have principal responsibility to manage the assets and liabilities of the REIT for the utmost benefit of the Unitholders.

8.1.2 Shareholders of the REIT Manager

The shareholders of the REIT Manager as of 31 December 2018 as follow:

No.

Shareholder Name

Juristic Person

Registered Country

Number of

Shares Held

Percent (%) of the Total Outstanding

Shares 1. Strategic Property Investors Pte. Ltd. Singapore 99,998 99.99 2. Calibration Partners Limited Cayman 1 0.001 3. Mr. James Teik Beng Lim - 1 0.001

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Regarding to the table and shareholders structure above, the Strategic Property Investors Pte. Ltd.

( registered in Singapore) holds 99. 99 percent shares of the Calibration Partners Limited ( registered in Cayman) holds 0. 001 percent shares and Mr. James Teik Beng Lim holds 0. 001 percent shares of the REIT Manager.

Ultimate shareholders of the REIT Manager

The diagram hereunder displayed the structure of the other shareholders of the REIT Manager.

Remark: 1. Mr. James Teik Beng Lim is the ultimate shareholder of the REIT Manager.

The Strategic Property Investors Pte. Ltd. , one of the major shareholders of the REIT Manager in which another major shareholder is Mr. Chanond Ruangkritya who holds 4 9 percent shares and the Calibration Partners Limited ( registered in Cayman in which Mr. James Teik Beng Lim is an Ultimate Shareholder who hold 50 percent shares, respectively.

The Strategic Property Investors Pte.Ltd. , and its major shareholders have experiences in the investment and Real Estate businesses for a long period as follows:

- Mr. Chanond Ruangkritya, a Thai nationality, has over 18 years of experiences in investment and real estate development. He is also a founder and a Chief Executive Officer (CEO) and a Managing Director of the ANANDA Development PCL and a member of the Board of Directors for various companies in which are Joint Venture between the ANANDA Development PCL and the group of Mitsui Fodosan (Japan) and the ANANDA Development PCL associates. The past educations of Mr. Chanond Ruangkritya are that he graduated his Bachelor degree in Economic from the University of California at Berkeley, USA, and his Master degree in International

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Finance and Accounting from the London School of Economics, UK; furthermore, he also joined the Director Accreditation Program (DAP) class of 23/2004 of the Institute of Directors (IOD).

- Mr. James Teik Beng Lim, an Australian nationality, has over 21 years of experiences in investment banking and finance. He was a former Managing Director and Head of Asia Pacific Real Estate, Hospitality and Leisure Investment Banking at Barclays Capital (Hong Kong), and held the same role at Lehman Brothers Asia and BNP Paribas. Mr. James Teik Beng Lim also has experiences in mega real estate transactions, including the IPO of DLF Ltd. ( the largest Indian real estate company) , IPO of JSM Indonesia Ltd. ( the largest IPO for real estate investment in Vietnam and Cambodia) , the IPO related transactions of the real estate mutual fund and leasehold right of Tesco Lotus Retail Growth and Ananda Developments, capital raisings for Shui On Land Ltd. , REIT establishment for K-REIT Asia and REIT establishment for Frasers Commercial Trust. Mr. James Teik Beng Lim was also a former advisor regrading the REIT rules and regulations to the Stock Exchange of Thailand in 2007. Mr. James Teik Beng Lim graduated his Bachelor in Laws and Commerce (Finance) , double degree, from Monash University in Melbourne, Australia.

- The Calibration Partners Limited ( registered in Cayman) is a finance company focusing on strategic investment and providing source of funds (equity and debt instruments) to institutions, Private Sector, and Private Equity in the Asia Pacific region. The Calibration Partners Limited also has the managing authority in The Calibration Partners (Hong Kong) Limited which is an associate with license granted from the Office of the Securities and Futures of Hong Kong. The employees of the Calibration Partners Limited and its associates have experiences of more than USD 6 0 billion value transactions around the world in advising and providing source of funds including executing transactions related to REIT in Australia, Europe, and Singapore.

8.1.3 Structure of Management

With respect to the corporate structure, the REIT Manager adheres to the principle of clear separation between respective duties and responsibilities of each unit within the organization. Each department works independently and systematically in line with the principles of trust and good corporate governance. It shall also take into consideration the control of any potential risk arising from corruption, fraud, and conflicts of interest. Such management structure enables the REIT Manager to fulfill its fiduciary duties owed to the Unitholders, to prioritize Unitholders' interests over those of the REIT Manager, and prevent any information leaks or illegal acts. Moreover, the structure is also commensurate with the characteristics, size, and complexity of the business operations.

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8.1.3.1 The Corporate Structure of the REIT Manager

At present, the Board of Directors has 6 directors as follows:

2 Executive Directors 2 Director 2 Independent Directors

The organizational structure of the REIT Manager comprises of 5 departments, namely 1) Business Development Department 2) Operation Department 3) Accounting and Finance Department 4) Property Management Department and 5) Compliance & Risk Management Department, as well as internal audit, as illustrated in the diagram above.

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8.1.3.2 The Board of Directors

Name - Last Name Position

Education and Training Work Experience (In the past 5 years)

1. Mr. Chanitr Charnchainarong Chairman of the Baord/ Independent Director

M.S. in Electrical Engineering, Purdue University, U.S.A.

B.SC. in Electrical Engineering, Purdue University, U.S.A.

Director Certification Program (DCP)

Class No. 52/2547, IOD

(2018 – Present) Chairman of the Board/ Independent Director Northeast Rubber PCL.

(2016 – Present) Senior Executive Vice President Central Group

(2015 – Present) Chairman of the Board/ Independent director Comanche International PCL

(2015 – Present) Independent Director/ Audit Committee GMM Grammy PCL

(2015 – Present) Chairman of the Audit Committee/ Independent director United Overseas Bank (Thai) PCL

(2015 – Present) Advisor VNET Capital Co., Ltd.

(2011 – 2015) Vice President The Stock Exchange of Thailand (SET)

(2007 – 2014) President of the Market Alternative Investment (MAI)

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2. Mr. Chanond Ruangkritya Director

Bachelor’s Degree in Economics, University of California at Berkeley, U.S.A.

M.S. in Accounting and International Finance, London School of Economics, U.K., Thai Institute of Directors

Director Accreditation Program (DAP), Class No. 23/2004, IOD

Founder of Ananda Development PCL Chief Executive Officer and Chairman of

Ananda Development PCL Director of joint ventures companies

between Ananda Development PCL and Mitsui Fudosan (Japan)

Managing Director of the affiliates within Ananda Development PCL

3. Mr. Tanarat Pasawongse Independent Director

Bachelor’s Degree in Engineering, University of Washington, USA

M.A. in Business Administration, Sasin, Chulalongkorn University

Corporate Governance for Capital Market Intermediaries: CGI

Class No. ��/��ม IOD

(2014 – Present) Chief Executive Officer Hua Seng Heng Group

(2009 – Present) Managing Director Hua Seng Heng Commoditas Co., Ltd.

(2008 – Present) Managing Director Hua Seng Heng Gold Futures Co., Ltd.

(2004 – 2008) Deputy Managing Director Hua Seng Heng Goldsmith Co., Ltd.

(2003 – 2004) Managing Director Appworks Co., Ltd.

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4. Mr. Putra Pratana Director

Bachelor’s Degree in Science, Business Management Major University of Southern California, U.S.A.

(2011 - 2017) Director PT Central Pesona Palace, Indonesia

(2011 - 2017) Director PT Griya Pancaloka, Indonesia

(2010-2017) Director PT Manggala Gelora Perkasa, Indonesia (2011 – 2016)

Director PT Central Indah Palace, Indonesia

5. Mr. James Teik Beng Lim Executive Director

Bachelor of Commerce (Accounting and Finance), Monash University, Australia

Bachelor of Laws (with Honors) Monash University, Australia

(2016 – Present) Executive Director and Head of Business Development of Strategic Property Investors Company Limited

(2014 – Present) Partner and Co-founder Calibration Partners Limited, Hong Kong

(2010 – 2014) Head of Real Estate and Hospitality Asia Pacific of Barclays Capital, Hong Kong

(2008 – 2010) Managing Director / Head of Real Estate and Hospitality Asia Pacific of BNP Paribas, Hong Kong

(2005 – 2008) Head of Real Estate and Hospitality Asia Pacific (ex Japan) / Director of European Financing Group Lehman Brothers, Hong Kong and London

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6. Mr. Patan Somburanasin Executive Director/ Managing Director

MBA Southern Illinois University at Carbondale, U.S.A.

Bechelor’s Degree in Engineering, King Mongkut's Institute of Technology Ladkrabang

(2016 – Present) Managing Director and Acting Head of Property Management at Strategic Property Investors Company Limited

(2009 - July 2016) Managing Director Ticon Logistics Park Co., Ltd.

8.1.3.3 Management, Duty, and Responsibility of All Departments

In managing the REIT, the REIT Manager shall appoint the following departments to undertake the responsibilities and standard duties in various areas as follows:

(1) Business Development Department

This department is responsible for implementing plans for selecting and investing in the REIT immovable properties and other assets ( if any) that are qualified and suitable, whether through direct or indirect investment. The investment has to be in accordance with the REIT investment policy and strategy for the purpose of continuously creating growth for the REIT and maximizing return for the Unitholders.

(2) Operation Department

2.1) Capital Market Business Unit

This business unit is responsible for conducting an in-depth Due Diligence of the property to be invested by the REIT in which it shall be in accordance with the investment policy specified by the REIT Board of Directors. The scope of the Due Diligence of the property to be invested by the REIT shall cover various areas such as the analysis of historical financial position and performance of such property (Track Record), the analysis and assessment of the occupation rate of the passed period, the inspection of the building structures and existing facilities, and the examination of legal compliance and any encumbrance that may affect the valuation of the immovable property or result in making no investing decision.

In addition, in conducting the Commercial Feasibility, it shall take into consideration the forecast of operational performance including the Occupancy Rate and room rate to be factored in for the reasonableness of the appraisal value.

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The business unit is also responsible for seeking the appropriate fundraising from capital market for the REIT such as fundraising by issuing and offering the new REIT Units by considering the appropriateness of the REIT capital structure and the compliance with the policy determined by the REIT Board of Directors.

2.2) Investor Relations and Operational Support Business Unit

This business unit is responsible for coordinating with other internal departments and business units to receive certain information, which are to be disclosed to the Trustee, the Unitholders, the office of SEC, the SET, and other relevant units as deemed necessary, including providing related information of the RIET asset management to the investors, securities analysts in local and foreign countries, as well as other relevant units requested for the REIT information.

(3) Accounting and Finance Department

This department is responsible for the calculation of The REIT Net Asset Value (NAV), preparing the financial report and budget of the REIT, as well as managing the budget, cash flows and currency risk arising from offshore investment to be in accordance with the REIT investment policy.

In addition, the Accounting and Financing department is responsible for seeking the appropriate fundraising from capital market for the REIT including securing short- term and long- term loan by considering the appropriateness of the REIT capital structure and the compliance with the policy determined by the REIT Board of Directors.

(4) Property Management Department

This department is responsible for formulating the marketing and business strategies that shall procure the benefits from the REIT assets, including the rental rate adjustment, target customers identification for the immovable properties are to be invested by the REIT and seek for appropriate Master Lessees. The department is also responsible for the financial budgeting of incomes and expense of the REIT immovable properties and other assets, and shall monitor and examine the actual revenue and expense are in line with the budget. In addition, the department is responsible to ensure that the assets receive a maintenance follow the schedule or as deemed necessary and are consistently under good condition and ready to generate income, as well as, to maintain the common areas and environment to be in good condition at all times.

(5) Compliance and Risk Management Department

This business unit is responsible for monitoring and managing the risks related to the management and investment of the REIT to be in compliance with the Trust Deed and relevant Laws, in order to maintain the utmost interest of the REIT and Unitholders. The principle duties and responsibilities of the REIT Manager also include the examination of the REIT transactions,

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whether it is a related transaction, and the supervision of the transaction with the connected persons in order to prevent any conflict of interest between the REIT and the connected persons and be in compliance with the Laws and relevant regulations.

(6) Internal Control Department

This department is appointed by and under the supervision of independent Director(s) of the REIT Manager. It is responsible for ensuring that the operation of each department is in line with the work plan and following-up with the related departments that the remedy is in place for any inconsistency occurs. In addition, the department is responsible for preparing reports on the follow-up of such remedy and propose to the Independent Director(s).

The REIT Manager shall hire an outsource to be an internal auditor by having the Manager of Compliance and Risk Management as a coordinator to ensure the internal auditor can perform its duty effectively and shall prepare the examination report to the Independent Director(s).

The details of the personnel and responsible persons in each department as of the REIT Establishment date are expected to be as follows:

Department Number of

Manpower

Main Reponsible

Person

Qualifications and Experience

1) Business Development 2 Mr. James Teik Beng Lim

(2016 – Present) Head of Business Development at the Strategic Property Investors Company Limited

(2014 – Present) Partner and Co-founder of Calibration Partners (Hong Kong) Limited,

(2010 – 2014) Managing Director / Head of Real Estate and Hospitality Asia Pacific at Barclays Capital, Hong Kong

(2008 – 2010) Managing Director / Head of Real Estate and

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Manpower

Main Reponsible

Person


Hospitality Asia Pacific at BNP Paribas, Hong Kong

(2005 – 2008) Head of Real Estate and Hospitality Asia Pacific (excluded Japan) / Director of European Financing Group at Lehman Brothers, Hong Kong and London

2) Operation 2 Miss Warittha Lerttiwakorn

(2016 – Present) Head of Operation at Strategic Property Investors Company Limited

(2014 – 2015) Head of Business Development at Ticon Management Co., Ltd.

(2010 – 2013) Manager of Investment Department at Ticon Industrial PCL.

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Manpower

Main Reponsible

Person


3) Accounting & Finance 5 Mr. Pichai Chinachoti

(2016 – Present) Head of Accounting and Finance at the Strategic Property Investors Company Limited

(2010 – 2016) Head of Accounting and Finance at the Royal Orchid Sheraton Hotel & Towers

(2008 – 2010) Head of Accounting and Finance at Sheraton Nha Trang Hotel & Spa, Vietnam

4) Property Management 1 Mr. Patan Somburanasin

(2016 – Present) Managing Director and Acting Head of Property Management at Strategic Property Investors Company Limited

(2009 - July 2016) Managing director of Ticon Logistics Park Co., Ltd.

5) Compliance and Risk Management

1 Ms. Kemakorn Ariyakun

(Sep. 2018 – Present) Manager, Compliance and Risk Management at the Strategic Property Investors Co., Ltd.

(Sep 2017- May 2018) Company Secretary of

Asia Capital Group PCL (Jan - Sep 2016)

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Manpower

Main Reponsible

Person


Company Secretary of TVD Shopping Company Limited

(Jan-Dec 2015) Company Secretary of Advanced Connection Corporation PCL

8.2 Duties and Responsibilities of the REIT Manager

The REIT Manager has the primary duty and responsibilities to manage the REIT and invest in the properties of the REIT and supervise the performance of the Master Lessees. The REIT Manager shall perform its duty under supervision of the Trustee, and has the duties and responsibilities as follows:

(1) Investment strategy: formulate and execute the REIT’s investment strategy, including determining the location, sub-sector type and other characteristics of the property shall be invested by the REIT.

(2) Business acquisition and disposal: manage the REIT acquisition and sale of the properties.

(3) Asset planning and reporting: determine periodic property plans, including budgets and reports, and provide plan that shall maximize returns in relation to the performance of the REIT’s properties.

(4) Financial and capital management: formulate and execute plans with the REIT's banking partners for equity and debt financing for the REIT’s property acquisitions, foreign exchange hedging, dividend payments, expense payments and property maintenance payments.

(5) Administrative and advisory services: provide day-to-day administrative services as the REIT’s representative, including providing administrative services relating to the Unitholders' meetings when such meetings are convened. The REIT Manager shall disclose, provide views, and key information for investors' investment decisions. Such information shall be clearly communicated, not distorted, and not misleading.

(6) Investor relations: communicate and liaise with the Unitholders, investors, analysts, and the investment community.

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(7) Corporate publication: communicate and liaise with the mass media community.

(8) Compliance management: ensure that all regulatory filings on behalf of the REIT, and that the REIT and its subsidiaries business operations are in compliance with the applicable provisions, the Securities Act, the Trust Deed, any tax ruling and other relevant contracts, as well as the code of ethics and standards of professional conduct as defined by the associations related to securities business or by organizations in connection with the securities business as recognized by the SEC Office, mutatis mutandis. In addition, the REIT Manager shall not conspire, employ or collaborate with any person to violate such laws and regulations.

(9) Accounting records: keep records and prepare the accounts, financial reports (complying with principal accounting policies in accordance with Thai Financial Reporting Standards) and annual reports.

(10) Performing its duties with knowledge and skills that may reasonably be expected as a professional, and with diligence, care and honesty. In this regard, the REIT Manager shall treat the Unitholders fairly and exercise its authority for the best interests of the Unitholders as a whole. Additionally, the REIT Manager shall comply with the Trust Deed, REIT Manager Appointment Agreement, objectives for establishing the REIT, the resolution of Unitholders and relevant laws and regulations.

(11) Maintaining sufficient capital for business continuity and indemnification for any event occurred herein under performing as the REIT Manager at any time.

(12) No inappropriate exploitation in any information acknowledged under performing the role as the REIT Manager for its own interest or in a manner that may cause a damage or effect the benefit of the REIT as a whole.

(13) Performing duties with due care in order to avoid any conflict of interest. In case any conflict of interest occurs, the REIT Manager shall ensure that the Unitholders' interest are treated in a fair and appropriate manner.

(14) Cooperating with the Trustee or the SEC Office in performing their duties, and disclosing information which may have significant impact to the REIT management or other information deemed to be notified.

(15) Complying the characteristic to be in accordance with the Notification no. SorChor 29/2555 over the approval period.

(16) Preparing the financial statement in accordance with financial reporting standards as stipulated by the law on the accounting profession, and submit such financial statements to the SEC Office within 3 months from the end of its accounting period.

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(17) Ensuring in any case of Unitholders' resolution, the REIT Manager who holds the REIT Units shall vote in such a manner that it believes to be beneficial for the REIT Unitholders as a whole.

(18) In performing and operating the business as the REIT Manager, it shall comply with the Securities Act, REIT Act and other relevant laws relating to the REIT management as well as the code of ethics and standards of professional conduct as defined by the associations related to securities business or by organizations in connection with the securities business as recognized by the SEC Office, mutatis mutandis. In addition, the REIT Manager shall not conspire, employ or collaborate with any person to violate such laws and regulations.

8.3 Trustee 8.3.1 General Information

Name : Krung Thai Asset Management Public Company Limited Head Office’s Address : No. 1 Empire Tower Building, 32nd Floor,

South Sathorn Rd., Yannawa, Sathorn, Bangkok 10120

Registration No. : 0107545000373 Telephone : +66 (0)2 686 6100 Fax : +66 (0)2 670 0417 Website : www.ktam.co.th Registered Capital : Baht 200,000,000 Paid-Up Capital : Baht 200,000,000 Releant License : Trust business license issued by the SEC Office on

23 January 2014

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8.3.2 Shareholders’ Structure

List of Shareholders as of June 22, 2018

No. List of Shareholder Amount (Share) 1. Krung Thai Bank PCL 19,999,986 2. Mr. Warayu Thienpramuk 1 3. Miss Hathaiwarn Mugthong 1 4. Mr. Kuntapon Punjaprakarn 1 5. Miss Prangtip Wanichanukorn 1 6. Mr. Suphasit Jawkonan 1 7. Miss Lalita Siriyakorn 1 8. Mr. Manote Leelawattanapanite 1 9. Mrs. Yanin Tantiphimonphan 1 10. Miss Jongkol Thongmeeprasert 1 11. Miss Antika Nunang 1 12. Mrs. Anny Mekpruksavong 1 13. Miss Sita Vachiraprakarnsakul 1 14. Miss Narongsak Saipun 1 15. Miss Nutcha Jamroonjan 1

Total 20,000,000

8.3.3 Duties and Responsibilities of the Trustee

The Trustee has duty to manage the REIT with integrity and prudence as a professional with expertise by providing fair treatment to the REIT Unitholders and for the best interests of the REIT Unitholders, with effectiveness and independence, and in accordance with the Trust Deed, relevant laws, and additional obligations to the REIT Unitholders (if any). For Trustee to perform its duties, it shall not perform any act that may cause the conflict of interest to the REIT, regardless of whether such act is for the interest of the Trustee or other persons, except in case where the Trustee demands for the remuneration of its performance as the Trustee or in case where the Trustee is able to demonstrate that it has fairly managed the REIT as well as sufficiently disclosed related information to the REIT Unitholders in advance in which the REIT Unitholders who acknowledge the information have no objection. In this regard, disclosure of abovementioned information and objection shall be in accordance with relevant notifications and rules of SEC and the SEC office.

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Principle duties of the Trustee as specified under the Trust Deed are as follows:

1. The Trustee shall monitor, supervise and oversee the REIT Manager to manage the REIT in accordance with the Trust Deed and other relevant laws.

2. The Trustee shall report to the SEC Office and take actions to resolve, terminate or rectify the damage incurred to the REIT as it deems appropriate where any action or omission of any action that may cause damage to the REIT or failure to perform duties under the Trust Deed or other relevant laws.

3. The Trustee shall attend every REIT Unitholders' meeting. In case the resolution of the REIT Unitholders' meeting to be sought in order to proceed any matter, the Trustee shall comply with the followings:

3.1 Provide answers to the questions and opinions whether the performance is in accordance with the Trust Deed or other relevant laws; and 3.2 Raise objection and notify the REIT Unitholders that such action shall not be executed in case it is not in accordance with the Trust Deed or other relevant laws.

4. The Trustee shall ensure that the REIT under the management of the REIT Manager approved by the SEC Office is valid throughout the establishment of the REIT, unless in case where the REIT Manager fails to perform its duties, the Trustee shall act on behalf of the REIT Manager to manage the REIT as necessary to prevent or cease the severe damage to occur for the benefit of the REIT or the REIT Unitholders as a whole, and to undertake actions according to its authorities and duties specified under the Trust Deed and the Trust Act to procure a new REIT Manager where by the Trustee shall have a duty to act as the REIT Manager in the interim period.

5. The Trustee shall enforce the repayment of debts or supervise the enforcement of debt repayment to be in compliance with the agreements between the REIT and the third party.

6. The Trustee shall have rights, duties, and responsibilities as specified in the Securities Laws and other relevant laws.

7. Duties on the asset management

7.1 The Trustee shall assign the REIT Manager approved by the SEC Office to manage the properties unless the management is for assets other than the Core Property, the Trustee may act on its own behalf according to clause 7. 2 hereunder or shall assign other persons to proceed such act.

7.2 In case the management is for assets other than the Core Property, at the least it shall be in compliance with the following rules:

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7.2.1 In case the Trustee act on its own behalf, the following measures shall be executed:

- to separate the division with duty to manage the investment of the aforementioned assets from the divisions that may constitute conflict of interest or dispute over such duty;

- to prevent the access of internal information by separating the division and personnel having the duty to manage the investment of the aforementioned assets from other divisions and personnel that may exploit such information.

7.2.2 In case the Trustee assign any third party other than the REIT Manager to operate, the Trustee shall ensure that it is in compliance with the rules specified under the Notifications of the SEC Office regarding the outsourcing operational function relating to business operation to a third party in the REIT investment, mutatis mutandis.

8. The Trustee shall amend the Trust Deed in compliance with the order of the SEC Office.

9. The Trustee shall not set off any obligation arising beyond the performance in trusteeship and owing by the Trustee to a third party against the obligation arising from the management of the REIT owing by the third party to the REIT. In case of any contravention of this clause, such action is void.

10. In proceeding with any juristic act or a transaction with a third party, the Trustee shall notify the third party in writing that it acts in trusteeship and expressly stipulates as such in the evidence of that juristic act or transaction.

11. The Trustee shall prepare an account of the REIT's property separately from any other accounts under its responsibility. In case where the Trustee manages several trusts, the Trustee shall prepare the account of the trust property of each trust separately. In doing so, the Trustee shall keep the accounts correct, complete, and up- to-date. In managing the REIT, the Trustee shall segregate the REIT's property from those held in its own capacity, and any property in its possession. In case where the Trustee manages several trusts, it shall segregate the property of one trust from another.

12. In case the Trustee fails to perform the duty under clause (11) , which causes the REIT assets to be commingled with the property held in its own capacity in a manner in which it is unable to distinguish the REIT's property from that held in the Trustee's own capacity, it shall be presumed that:

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12.1 The commingled property is held by the REIT.

12.2 The Trustee shall be personally liable for damage and liability arising from the management of commingled property.

12.3 The benefit arising from commingled property belongs to the REIT.

12.4 The comingles property under first paragraph shall include the property that is transformed into a different form or state.

13. In case the Trustee fails to perform duty described under clause (11) which causes the property of two or more trusts to be commingled in a manner in which it is unable to identify to which respective trust the property belongs, it shall be presumed that the commingled property, including property that is transformed into a different form or state, and any benefits or obligations incurred from the management of such commingled property, shall belong to each trust in proportion to the amount brought to commingle.

14. The Trustee specify its opinions on the performance of the REIT Manager in the report presented to the REIT Unitholders together with the annual report of the REIT and whether it is in accordance with Trust Deed, including relevant laws and other related notifications and regulations.

15. In case of change of the Trustee, if the new Trustee finds that the previous management of the REIT has contravened any provisions stipulated under the Trust Deed or the Trust Act, and consequently caused damage to the REIT, the new Trustee shall:

15.1 Claim for damages against the liable Trustee;

15.2 Recover property from a third person regardless of whether such third person directly acquired such property from the former trustee, and whether the property is transformed into a different form or state, except the acquisition of the property was done in good faith and for value, providing further that the person who acquired that property did not know, or should not have known, that the acquired property has been disposed of or transferred in breach of trust.

16. In case where the Trustee fails to manage the REIT in accordance with the Trust Deed or the Trust Act, the Trustee shall be liable to indemnify the REIT.

In case where it is necessary and there is a reasonable ground for the benefit of the REIT, the Trustee may apply for the SEC Office's approval prior to the management of the REIT in a different manner from those stipulated under the Trust Deed. The Trustee shall not be liable under the first paragraph if the Trustee manages the REIT as approved, in good faith, and for the best interest of the REIT.

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17. The Trustee shall not be responsible for any loss or damage occurred from causes beyond the control of the Trustee or employees of the Trustee including but not limited to the transfer back of assets to the state, expropriation of the immovable property, rules of currency exchange, wars, acts of terrorism, insurrection, revolution, and other civil unrest, protest, force majeure, failure of tools or computer's equipment, and other causes as such.

18. The Trustee shall ensure that the Trust Deed complies with all material aspects of the relevant laws, and in case of any amendments to the Trust Deed, the Trustee shall act in accordance with the following rules:

18.1 Ensure that any amendments to the Trust Deed complies with the procedures and conditions as specified in the Trust Deed and the rules as stipulated in the relevant laws.

18.2 In case the amendment to the Trust Deed fails to meet the requirements, the Trustee shall proceed in accordance with its power and duties as specified in the Trust Deed and the Trust Act in order to protect the rights and interest of the Unitholders as a whole.

18.3 In case there is any subsequent change to the rules relating to the offering of Units or REIT management promulgated under the Securities and Exchange Act and the REIT for Transactions in Capital Market Act, the Trustee shall amend the Trust Deed in compliance with those rules, according to the procedures specified in the Trust Deed, or in accordance with the SEC Office's order.

19. The Trustee shall monitor, govern, and control the REIT Manager or any other designated person ( if any) to act in compliance with the Trust Deed and the relevant laws. The monitoring, governing, and controlling shall include the following duties:

19.1 Ensuring that the REIT is managed by a REIT Manager approved by the SEC Office throughout the establishment of the REIT.

19.2 Monitoring and taking all necessary action to ensure that the designated person maintains the qualifications and has performed duties in compliance with the Trust Deed and the relevant laws, including dismissal of the current designated person and appointment of a new one.

19.3 Ensuring that the investment of the REIT complies with the Trust Deed and the relevant laws.

19.4 Ensuring that the information of the REIT is disclosed accurately and completely, in compliance with the Trust Deed and the relevant laws.

19.5 Giving opinions relating to management or execution of transactions for the REIT by the REIT Manager or other designated person in support of seeking resolutions

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of the Unitholders' meetings, disclosure of the REIT information to investors, or upon the request of the SEC Office.

19.6 In case it deems necessary for the benefit of the REIT and Unitholders as a whole, the Trustee may assign the REIT Manager to proceed any matter as deemed appropriate and shall not incur any obligation to the REIT Manager more than its duties specified under the Trust Deed or prescribed under the relevant laws. Such act assigned to the REIT Manager shall not contravene with the Trust Deed, the relevant laws, rules, regulations, or rules prescribed by the relevant agencies. In case such act incurred excessive expenses to the REIT Manager, the Trustee and the REIT Manager shall form a mutual agreement regrading to such matter.

20. In case where the REIT Manager acts or fails to act and such act caused damage to the REIT, or the REIT Manager fails to perform its duties in accordance with the Trust Deed and the relevant laws, the Trustee shall proceed as follows:

20.1 Submit a report to the SEC Office within five business days from the date when the circumstance became known or should have been known.

20.2 Rectify or mitigate the damage as deemed appropriate.

21. In case the REIT Manager fails to perform its duties, the Trustee shall act on behalf of the REIT Manager to manage the REIT as necessary in order to prevent or cease the severe damage to occur for the benefit of the REIT or the REIT Unitholders as a whole, and to undertake actions in accordance with its authorities and duties specified under the Trust Deed and the Trust Act to procure a new REIT Manager.

22. In case the Trustee shall have to manage the REIT on behalf of the REIT Manager for the reasons abovementioned, the Trustee may appoint assign other persons to manage the REIT in the interim period, where by such assigned person shall be in accordance with the scope, rules, and conditions as specified in the Trust Deed.

23. In case the Trustee is also a Unitholder of the REIT under its trusteeship, and in case any voting or action the Trustee shall proceeded as a Unitholder, the Trustee shall consider and maintain the best interest of the Unitholders as a whole, by adhering to the principles of good faith and due care, including avoidance of any conflict of interest or any effect to the performance of its duties as Trustee of the REIT.

24. The Trustee shall prepare the Unitholders register book, or may assign the SET or a licensed securities registrar under the Securities Act to prepare the register on behalf of the Trustee. In case of an assignment to other person for such case, the Trustee shall monitor and supervise the assigned person to act in accuracy unless there is an evidence recording system at the securities depository.

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25. The Trustee shall provide evidence representing the rights in units and send to the Unitholders, such evidence shall convey the information at the least specified in the notifications of the SEC, unless the evidence is provided by the system of a Thailand Securities Depository Co., Ltd. (TSD) and in compliance with conditions specified by the TSD.

26. In case a Unitholder requests the Trustee or the Securities Registrar to issue new evidence representing rights in units to replace the one having been lost, faded, or materially damaged, the Trustee shall issue and proceed such request within a reasonable period of time.

The Unitholders can find more details related to the roles and responsibilities of the Trustee in the Trust Deed.

8.3.4 Trustee's Fees

Trustee fees shall be at the rate no more than 0.30 (zero point three zero) per annum of the Total Asset Value (TAV) of the REIT but shall not be less than Baht 4,000,000 per annum.

8.4 Investment Committee (if any)

-None-

8.5 Other Contact Informations 8.5.1 Auditor Name: EY Office Limited

Address: 193/136-7, Lake Rajada Office Complex, Rajadapisek Road, Klongtoey, Bangkok 10110, Thailand Tel: +66 (0)2 264 0777 Fax: +66 (0)2 264 0789

8.5.2 Registrar of Unit Trust

Name: Thailand Securities Depository Company Limited Address: 93, The Stock Excahnge of Thailand’s Building, Rajadapisek Road, Dindaeng,

Dindaeng, Bangkok 10400, Thailand Tel: +66 (0)2 009 9000

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8.5.3 Appriaser’s Companies

(1) Name: KJPP Susan Widjojo & Raken in Association with VPC Asia Pacific Cluttons (by Thai Property Appraisal Lynn Phillips Co., Ltd.) Name: Susan Widjojo & Raken Address: Menara Batavia 28th Floor, JI. K.H. Mas Mansyur Kav. 126 Jakarta 10220, Indonesia Tel: +62 21 5795 0505 Fax: +62 21 5795 0555

Name: Thai Property Appraisal Lynn Phillips Co., Ltd.

Address: 121/47-48 RS Tower Building, 11th Floor, Rachadaphisek RD, Dindaeng, Dindaeng, Bangkok 10400, Thailand Tel: +66 (0)2 641 2128-32 Fax: +66 (0)2 641 2134

(2) Name: Savills (Thailand) Limited (by Nexus Property Consultants Co., Ltd.)

Name: Savills (Thailand) Limited Address: 26/F Abdulrahim Place 990 Rama IV Road Silom, Bangrak, Bangkok 10500, Thailand Tel: +66 (0)2 636 0300 Fax: +66 (0)2 636 0339

Name: Nexus Property Consultants Co., Ltd. Address: 31st Floor, Bangkok Insurance Building / Y.W.C.A., 25 South Sathorn Road, Thungmahamek Sathorn, Bangkok 10120, Thailand Tel: +66 (0)2 286 8899 Fax: +66 (0)2 286 2863

8.5.4 Legal Advisor

Name: Backer & McKenzie Limited Attorneys at Law Address: 5th Floor and 21st - 25th Floors, 990 Abdulrahim Place, Rama IV Road, Silom, Bangrak, Bangkok 10500, Thailand Tel: +66 (0)2 636 2000 Fax: +66 (0)2 636 2111

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9. Corporate Governance and REIT Management 9.1 Duties for the REIT Management

1. The REIT Manager shall arrange to put in place efficient operating systems, including an effective check-and-balance system to provide complete support for the work under its responsibility. In respect that at the least the REIT Manager shall ensure appropriate and efficient management of the REIT entrusted by the Trustee, as follows:

(a) Formulation of the REIT management policy, the structuring of the REIT investment

capital, the real estate investment decision, and the formulation of policy and strategy relating to the procurement of benefits from immovable property. As a result, the entrusted REIT investment shall be prudent, careful and conform with the investment policy stipulated in the Trust Deed, and in compliance with the Laws and related regulations, as well as it shall protect the interest of the REIT and Unitholders as a whole.

(b) REIT Management and managing the associated risks in order to efficiently prevent and mitigate risks. (c) A system to prevent conflict of interest, particularly between the REIT and REIT Manager

and connected persons of the REIT Manager, including measures or guidelines to ensure the utmost benefit of the REIT or Unitholders as a whole when there is a conflict of interest.

(d) Selection of personnel by the REIT Manager and authorized persons within the functions related to the REIT operations (if any) to ensure personnel shall have knowledge and skill with appropriate qualifications suitable for the work allocated to them.

(e) Supervision of performance of the REIT Manager and related personnel, including the authorized personnel related to the REIT management to ensure compliance with Securities Laws, related regulations, and the Trust Deed.

(f) Disclosure of complete, accurate, and adequate information by the REIT in compliance with the provisions stipulated in the Trust Deed, the Securities Act, the Trust Act, and Notifications, regulations, and orders issued under such Laws as well as other relevant laws relating to the REIT operation.

(g) Operation of Back Office. (h) An internal audit and control system. (i) Communication with investors and investors' complaint management. (j) Management of legal disputes, the REIT Manager may assign other persons to handle

cases related to REIT management providing that such assignment is in accordance with the provisions specified under trust deed.

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2. The REIT Manager may outsource other persons to operate the functions related to REIT management as deemed necessary in order to facilitate the business operation and enhance its efficiency in compliance with the following rules

(a) The outsourcing shall not be, in any manner, have an impact on the operating

efficiency of the REIT Manager.

(b) There shall be a measure to ensure continuity of business operation in case the service provider fails to proceed with the outsourced function.

(c) In case of outsourcing any function related to the investment in other assets of the REIT, the service provider shall be duly authorized by law to perform such functions.

3. The REIT Manager shall prepare its financial statement in accordance with financial

reporting standards as stipulated by the law on the accounting profession, and shall submit such financial statements to the SEC Office within 3 months from the end of its accounting period.

4. The REIT Manager shall not undertake any action that may restrain the Trustee from

performing its duty independently. 5. The REIT Manager shall provide indemnity insurance for the performance of its function,

and the conduct of its directors, executives, and personnel throughout the terms of the Trust Deed, in which shall be in accordance with operating systems of the REIT Manager.

6. The REIT Manager shall arrange for the Unitholders to attend meetings and vote to

resolve the issues as specified in the Trust Deed, such as the modification or amendments of the Trust Deed, capital increase of the REIT, or change of the Trustee, etc.

7. In case there is an appointment of an advisor to provide advice or recommendations

related to the investment and the management of immovable property, the REIT Manager shall act in accordance with the following guidelines:

(a) Ensuring the advisor declare any conflict of interest in the issue under

consideration;

(b) not allowing any advisor who has direct or indirect conflict of interest in the issue under consideration to get involved in the decision making on such issue.

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8. In executing the transactions related to immovable property on behalf of the REIT, the REIT Manager shall comply with the following guidelines:

(a) Acting to ensure that the sale, disposition, transfer of immovable property or the

entering in any agreement relating to the immovable property on behalf of the REIT is executed accurately properly and is enforceable by law; and

(b) Acting to ensure that the investment in immovable property of the REIT is done properly, and at the least the following actions shall be proceeded:

- Self-assessment of readiness to manage the immovable property before accepting the position as the REIT Manager or before making additional investment in such properties, as the case may be; and

- Carrying out an analysis and feasibility study and undertaking due diligence for the immovable property, including an assessment of various risks that may arise from the investment in such property, together with guidelines for risk management, including completion risk (if any), such as the risk that may arise from the delay in construction and the inability to procure benefits from the property, etc.

9. Arranging for the Property of the REIT to be appraised by an appraisal firm authorized by the SEC Office in accordance with relevant laws and under the regulations stipulated in the Trust Deed, for example, the appraisal prior to the acquisition or disposal of the Property of the REIT and the review of the appraised value of the Property, etc.

10. In addition to appraisal and due diligence of the immovable property in which the REIT

seeks to invest as required by the relevant Laws, the REIT shall professionally review the immovable property, including the condition of the property, the ability of the counterparty of the agreement, financial and legal information, the appropriateness of other aspects, etc. Such review shall support the REIT's decision making on investment and the information disclosure. Under any circumstance in which the REIT Manager is unable to perform its duties, it must be specified that the Trustee shall manage the REIT as deemed necessary in order to prevent, halt, or limit any severe damage to the interest of the REIT or all Unitholders. In this respect, the Trustee may appoint other persons to manage the REIT instead during such period.

11. Proceeding to acquire the Property or immovable property to be invested in by the REIT,

in case of capital increase or additional investment in immovable property, shall be executed within 60 days from the establishment of the REIT. In case of the initial offering of REIT Units, such acquisition shall be completed within 60 days from the closing date

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of the Units offering, or from the closing date of the Units offering in case of capital increase.

12. The investment in immovable property shall be only in terms of acquisition of ownership

or possessory right of the immovable property. 13. The acquired immovable property shall not be under the enforcement of real right or

subject to any disputes unless the REIT Manager and the Trustee have provided an opinion in writing stating that such enforcement of real rights or disputes do not have any significant impact on the provision for benefits from such properties, and the conditions for the acquisition of such property are still beneficial to the Unitholders as a whole.

14. The agreement pertaining to the acquisition of property shall not include any provision

or obligation that may cause the REIT to be unable to sell the property at a fair price at the time of selling, such as an agreement that grants the right of first refusal in purchasing property from the REIT to the counterparty with a fixed purchase price, or which may cause the REIT to have more post obligation than normal obligations that a lessee should have at the time the lease agreement is terminated.

15. Arranging for the REIT to provide non-life insurance that insured the benefit of the

Unitholder in which it shall be similar or replace the disasters that is possible to occur to the Properties, as mutually agreed upon by the counterparties of the Trust Deed without violating relevant laws and regulations, , and to provide insurance for third party who might be affected from the damage or loss caused by the Property or operations related to the Property. Such insurance shall be procured from an acceptable insurer with an insured sum at the least sufficient and appropriate for the procurement of benefits from the Property.

16. Providing an opinion on the transactions related to the acquisition of the additional

Property together with a rationale and supporting information in the document seeking for the approval from the Unitholders or the invitation letter to the Unitholders’ meeting in considering the capital increase for additional investment in the Property by the REIT.

17. For disposition of the Property, arranging for the value appraisal of the Property, calling

the Unitholders’ meeting for an approval resolution, obtaining consent from the Trustee, and disclosing information according to the regulations specified in the Trust Deed and relevant laws.

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18. In case of any change in the REIT Manager, the new REIT Manager to be nominated shall agree to perform the duties in accordance with the Trust Deed and relevant laws and regulations. Whereas, the former REIT Manager shall corporate as necessary to ensure a successful handover of the work.

19. In case any modification or amendment of the Trust Deed, the REIT Manager shall

proceed to ensure that such modification or amendment is in accordance with the conditions and methods specified in the Trust Deed and relevant regulations. Upon completion of the modification or amendment, the REIT Manager shall submit a copy of the modified or amended Trust Deed to the SEC Office within 15 days from the signing date or the date on which the Trust Deed was modified or amended (as the case may be).

20. In case of a change in the Trustee, the REIT Manager shall proceed to notify the

Unitholders and the SEC Office of the change within the timeframe specified in the Trust Deed.

21. Applying for approval of the offering of REIT Units together with related documents in

case of the REIT capital increase, and duly certified the accuracy and completeness of the filing of information to the extent that is involved with its responsibilities.

22. Giving an opinion on the ability of the revenue guarantor to honor the obligations under

the revenue guarantee agreement (if any). 23. Proceeding the listing of the Units sold or newly issued (in case of a capital increase) on

the SET within 45 days from the closing date of Units offering. 24. Proceeding to allocate the Units to any person or group of persons in accordance with

the ratio and rules prescribed by relevant laws and regulations. Duties in Managing the REIT and the REIT Properties

1. Giving an opinion to relevant competent officers regarding the qualifications or characteristics of the immovable property invested in by the REIT upon request by relevant agencies.

2. Supervising and monitoring the renovations of, improvements to, and maintenance of the Property by the Master Lessees appointed to manage the Property to ensure that the

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Property is always in good condition and ready for use to procure benefits as specified in the annual action plan, Trust Deed, and related Laws.

3. Arranging for the Properties to be reformed, restored, or modified as deemed necessary and appropriate without violating or contradicting the Trust Deed and related Laws, including the land lease agreement entered with the owner of the land on which the Property is located, including all amendments and modifications of the definitive land lease agreement, immovable property sub-lease agreements, and movable property lease agreements in connection with Master Lessees. In this regard, prior notice to the Trustee is required.

4. Supervising and managing the Property, and procuring the benefit of the Property, as well as providing management in case of emergency, and the restoring of the property as deemed necessary. In case of major restoration, prior notice to the Trustee is required.

5. Managing and procuring benefits from other assets other than the REIT Property and undertaking any necessary actions to ensure that the management of the Property is in compliance with the annual action plan, the Trust Deed, and the relevant Laws.

6. Supervising and monitoring the Master Lessees as well as undertaking any actions in coordination with the Trustee and/or Master Lessees to enable the Trustee or Master Lessees to obtain the licenses, letter of authorization, letter of waiver, and/or any other related documents necessary for procuring benefits from the Property.

7. Facilitating the inspection of the Property for the REIT or other persons designated by the Trustee within the operating hours of the REIT Manager, as well as providing the access to information, testimony, and/or any documents (except the information, testimony, and/or documents related to the intellectual property of the REIT Manager or its associates) upon the request of the Trustee, as deemed necessary and appropriate.

8. Facilitating the appraisal firm in apprising the Property value or other persons designated by such appraisal firm to inspect the Properties for valuation, including providing an access to information, testimony, and/or any documents (except the information, testimony, and/or documents related to the intellectual property of the REIT Manager or its associates) upon request of the property appraisal firm as deemed necessary and appropriate.

9. Preparing any documents in the possession of the REIT Manager that are related or relevant to the Property and/or held in possession of the on behalf of the REIT, including

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any accounting documents and evidence related or relevant to the REIT, for inspection by the Trustee or persons designated by the Trustee, and/or the auditors, within the operating hours of the REIT Manager. The REIT Manager shall also deliver any documents related or relevant to the REIT as requested by the Trustee, and/or the auditors (as the case may be).

10. Controlling, supervising, and monitoring the Master Lessees and taking any actions in coordination with the Trustee and/or the Master Lessees to enable the Trustee or the Master Lessees to pay fees and taxes on land and building arising from the Property, including making contact, cooperating, providing information, submitting documents, and paying Withholding Taxes or any other taxes related to the management of the Property by the REIT Manager to competent officers of relevant agencies.

11. Controlling, supervising, and monitoring the Master Lessees in performing its duties as stipulated under the Lease Agreements and other related movable property lease agreements and other relevant Laws.

12. Notifying the Trustee of the following cases in an appropriate due time: (a) any damage or defect of the Property, including other equipment and facilities, or upon occurrence of any event that results in a significant reduction in the value of the Property; or (b) in case of any material breach of the Agreement by the Master Lessees.

13. Undertaking any other actions as the REIT deemed necessary and appropriate to ensure that the Property is in good condition and ready for procuring benefits, or in accordance with the objectives of the REIT Manager Appointment Agreement. In addition, the REIT Manager shall also give advice on the market situation in case the REIT wish to sell or assign the leasehold right or to lease the Property.

Preparation of Accounting and Reports, Operation Documents and Internal Audits

1. Preparing and disclosing information of the REIT in compliance with the provisions stipulated under the Trust Deed and the Securities Laws, to the SEC Office, the SET, the Trustee, and the Unitholders and submitting the annual report of the REIT together with the invitation letter to annual general meeting to the Trustee and the Unitholders.

2. Arranging to have in place accounting and various reports related to the REIT management and its Property, as it assigned by the Trustee or as deemed necessary and appropriate, as well as submitting such reports and documents to the SEC Office, the SET, the Trustee, and the Unitholders within the specified time period by the Trustee

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in order to be in compliance with the Securities Law, other relevant laws, including the orders of competent officers of relevant agencies.

In this regard, the REIT Manager shall prepare such accounting in compliance with the standard accounting principles by segregating the assets and/or any interests arising from the Property invested in by the REIT and/or any assets that have been accepted or shall be accepted by the REIT Manager on behalf of the REIT, from its own property. In this respect, the REIT Manager shall proceed the storing of the documents and evidence supporting the accounting process for at least a 5-year period which they shall be in complete condition and ready for the inspection of the Trustee.

3. Delivering the following documents to the Trustee within the specified time period by the Trustee in order to comply with the Securities Laws, other relevant laws, including orders of competent officers of relevant agencies.

(a) Submitting a full property appraisal report to the Trustee, at least 7 days prior to the end of the period before the announcement date of the REIT Net Asset Value to the Unitholders.

(b) Submitting reports on the REIT Net Asset Value and the Unit value on the last business day of each quarter, by sending to the Trustee for certification before submitting them to the SEC Office within 45 days from the last business day of such quarter.

(c) Submitting the up-to-dated information of the persons connected to the REIT Manager and essence of the transactions between the REIT and the REIT Manager or persons connected to the REIT Manager, by sending to the Trustee with no less than 14 days prior to the entering of the transaction.

(d) Disclosing the information of the transactions between the REIT and the REIT Manager or persons connected to the REIT Manager, for the previous and current accounting periods by publishing in the annual report and the financial statements of the REIT.

(e) Disclosing information regarding the conflict of interest between the owner of the Property invested in by the REIT and the REIT, together with measures for preventing such conflict to the investors on the first day of initial public offering of the Units, and upon the occurrence of any conflict.

(f) Disclosing information pertaining to the interests or benefits accepted by the REIT Manager or persons connected to the REIT Manager from the company or individual whom is the REIT business partner, by providing the information in the Prospectus, the registration statement, the invitation letter for Unitholders’ Meeting, in order to seek for approval on the transaction, as well as, in the REIT annual report for such information

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shall be used by the Unitholders and the Trustee in consideration of the REIT Manager's independence in executing various transactions for the REIT and the reasonableness of such transaction.

(g) The interest or benefits that shall be considered to disclose are such as the status of a creditor/debtor as a guarantor/recipient of the guarantee, of cross-shareholding, or having the same major shareholders or the group of management, as well as the provide/accept the service of intra-group transaction or paying expenses on behalf of another company, etc.

(h) Submitting information related to the REIT investment in immovable property to the Trustee upon request for examining the investment management.

(i) Submitting the updated information related to the acquisition and disposal of the REIT Property to the Trustee at least 14 days prior to the execution of the transaction, and proceeding the disclosure of such information to the public and the SEC Office within 15 days from the REIT Property acquisition or disposal date.

(j) Disclosing the information on the acquisition or disposal of the REIT Property and accessory assets for the previous and current accounting periods in the REIT annual report and financial statements.

(k) Submitting the updated information of transactions relating to the REIT borrowing and any encumbrance created by the REIT, to the Trustee at least 14 days prior to executing the transaction.

(l) Disclosing the information of transactions relating to the REIT borrowing and any encumbrance created by the REIT for the previous and current accounting period in the annual report and the financial statements of the REIT.

(m) Submitting the information related to the transaction deemed by the Trustee as having a significant impact on the REIT assets upon request by the Trustee, to be delivered to the Trustee at least 14 days prior to the execution of such transaction.

(n) Submitting the financial statements of the REIT Manager, together with information related to the preparation of the financial statements, to the Trustee at least 30 days from the last business day of each quarter.

The aforementioned reports are to be reference of basis formats and examples of reports, there may be a modification, an increase, or decrease in the number and type of the reports, or an alteration of report formats in order to be in compliance with the Securities Laws and other relevant laws, including the orders of competent officers of relevant agencies.

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Duty in Executing the Agreements in Procuring Benefits from the REIT Immovable Properties

1. The REIT Manager shall procure benefits from the REIT immovable properties only through leasing and/or subleasing. The value of such leasing or subleasing shall not be lower than 75 percent of the total value of the offering of REIT Units plus the REIT borrowings (if any).

2. The REIT Manager shall control, supervise, implement controlling measures, and undertake any other actions as deemed necessary and appropriate to ensure that Master Lessors and Master Lessees perform their obligations in accordance with the duties, conditions, and/or covenants stipulated under the Lease Agreements, as well as the rules, criteria, and regulations of, and any provision or policy relating to the Property.

Supervision of Master Lessees

1. The REIT Manager shall control, supervise, and proceed any conduct to ensure that any action undertaken by Master lessees is in compliance with the conditions and duties specified under the Lease Agreement, and that the rental payment is in accordance with the terms and conditions as agreed upon.

2. The REIT Manager shall monitor and consider the Master lessees to precede the annual budgeting including other extra expenses beyond the budget (if any) as deemed appropriate and for the best interests of the REIT. The REIT shall also control and monitor the reimbursement of the expenses to be in line with the budget.

3. In case there is any breach of agreement or any evident possibility that the Master Lessees will conduct such breach, the REIT Manager shall undertake any conduct, in accordance with its right specified under the agreement or by the Law and through the REIT invested company in which it is a counter party of the contract between the Master Lessees, such as sending the written notification, proceed the litigation procedure, as well as mediation and dispute resolution in order to enforce and monitor the Master Lessees to undertake and perform in accordance with the agreement and shall be liable for the damage occurred from such breach to the REIT.

4. The REIT Manager shall arrange to have risk assessment arising from the Master Lessees and report the risks to the Board of Directors of the REIT Manager in case the Master Lessees has an evident possibility not to comply with the agreement.

5. Other measures that the REIT Manager views as appropriate for the REIT investment.

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The Supervision of the Master Lessees in Case the Master Lessees are Persons Connected to the REIT Manager

In case the Master Lessees are persons connected to the REIT Manager may cause a conflict of interest between the REIT and the Master Lessees after the REIT has been established and the contract has been entered between the Master Lessors and the Master Lessees. The REIT Manager shall operate in a direction to ensure that the Master Lessees are under supervision for the best interest of the REIT. In supervising the Master Lessees, the REIT Manager shall proceed such supervision considering the conflict of interest protocol that are suitable and appropriate under the monitoring of Trustee. In order to ensure that the REIT management is in accordance with the Law and relevant regulations including Trust Deed, the REIT Manager Appointment Agreement, and other relevant Agreements in which shall be in compliance with the regulations and procedures prescribed by the Law, regulation and rules including the aforementioned Agreements as well as the working handbook and internal supervision of the REIT Manager. In addition, in case the REIT shall need to enter into any legal transaction with the Master leases other than the Lease Agreement in which its essence is disclosed hereunder this Filling. The REIT Manager has an obligation stipulated under the Trust Deed to ensure that such legal transaction is in compliance with the terms and conditions for entering into transaction with connected person stipulated in the aforementioned herein Section 5 the Transactions between the REIT and the REIT Manager or persons connected to the REIT Manager, and between the REIT and the Trustee or persons connected to the Trustee.

Furthermore, in case the REIT Manager shall need to enter into any significant legal transaction that might occur between the REIT and the Master Lessees after the REIT has been established and the REIT has invested in the project's Properties, such entering might result in an alteration in the essence previously disclosed hereunder this filing as follows:

An alteration in the essence of the Lease Agreement between the Master Lessors and the Master Lessees

The decision making in accordance with the right under the Agreements or under the Law in case of breach of the contract or dispute

The process of alternation in Master Lessees or termination of the Lease Agreement.

In the execution of the abovementioned process, the REIT Manager whom is a juristic person shall seek for an approval from the SEC in order to act on its role and duty as the REIT Manager in accordance with the Trust Act and relevant Law and Regulations for the REIT management with due care, responsibility, and trustworthiness. In addition, the REIT Manager shall treat the Unitholders with fairness and at the best interest of all the Unitholders and in accordance with the Law and relevant regulations including Trust Deed and other relevant Agreements. Furthermore, the REIT Manger shall act with due care in order to avoid conflict of interest, in case if any, the REIT Manager shall ensure that the Unitholders

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are treated with fairness and appropriation. The REIT Manager shall ensure that the Master Lessees Supervising Protocol is in compliance with the Regulations regarding the transaction between the REIT and the REIT Manager or persons connected to the REIT Manager such that the Directors with special interest shall have no voting right regarding the decisions on the supervision of Master Lessees and/or the special interest of such Master Lessees.

9.2 Committees The structure of the REIT directors is included with 1 committee, which is the Board of Directors. Scope of Authorities and Responsibilities of the Board of Directors

The Board of Directors shall have the role, duties and responsibilities to ensure that the business operations are undertaken with due care and integrity based on the interests of the organization as a whole, and without any conflict of interest among individuals or any groups of shareholders. The duties and responsibilities of the Board of Directors are as follows:

(1) to perform duties in accordance with relevant regulations, objectives, Articles of Association of the REIT Manager, as well as the resolution of the Board of Directors' meeting and Unitholders' meeting with Duty of Loyalty and Duty of Care as well as with Accountability and Ethic;

(2) to manage the overall business operation of REIT Manager and the REIT under the supervision of Trustee, including to formulate long-term strategic direction of the business operation and suitable organizational structure, as well as to monitor business policy in relation to REIT's investment scheme, financial return, financial budget, and business plan, by taking into account the relevant risks to the REIT benefits, other departments' business operation as well as considering the transactions that might constitute a conflict of interest;

(3) to follow up and provide necessary guidance to the management team and employees to ensure the operation is in accordance with relevant agreements and regulations regarding the duties of the REIT Manager;

(4) to continuously follow up with the BVI Holding Company as the REIT Manager and provide necessary advice to ensure that the REIT Manager operation is in accordance with the target and that the barriers or problems shall be eliminated with an immediate effect and appropriate amount of time.

(5) to consider, follow-up, and assess the performance of the Master Lessees and the lessor companies and to provide necessary advice to ensure that Master Lessees and the lessor companies fulfill their authorized responsibilities efficiently and in accordance with rules and clauses under the relevant agreements for the benefit of the REIT; and

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(6) to agree, approve and make decision regarding the investment and sale of the REIT assets to be in accordance with the Trust Deed, the registration statement, the Prospectus, Laws and other relevant Notifications.

9.3 REIT Manager’s Meeting Board of Directors’ Meeting

Board of Directors of the REIT manager has to set the Board’s meeting to consider and approve REIT manager’s management and operation as below:

a) Determine strategy and long-term business plan, organize the organization chart and govern business policy and determine risk factors which may affect the benefit procurement of the REIT.

b) Performance of the REIT manager and REIT c) Draft the annual budget and business plan including strategy of the REIT which are provided

by the REIT manager acting through the REIT. d) Progress of operation following the business plan and marketing plan which were set by

the REIT manager in respect to the benefit procurement of the REIT, Problems and obstacles including the guide line for rectification with support from property manager.

f) Guide line for risk mitigation and other incidents that may affect the REIT’s operation. g) Operation result of the REIT manager units such as Compliance, Risk management, Business development and Investor relation. Problems and obstacles including the guideline for rectification. h) Guideline to receive dispute and complaint related to operation of the REIT which need to be considered by Board of Directors. i) Weakness of internal control process of REIT manager operation related to their duty as

the REIT manager acting through the REIT including the guideline for rectification. j) Related transactions and other transactions which may cause any conflict of interest of the REIT’s operation. k) Other transactions which need an approval from the REIT’s unitholders. l) Other material transactions related to the REIT manager’s operation and/or REIT’s operation

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Quorum and Voting

Board of Directors’ meeting of the REIT manager requires directors to attend more than 50% of the total number of directors and the resolution is required the vote of more than 50% of total number of directors who attend the meeting. For each agenda, director who has conflicts of interest will not be able to vote and need to leave the meeting during the consideration of that agenda.

In the Board of Directors’ meeting, the Chairman of the Meeting will give opportunity to every director to opine openly before voting and summarize the resolution of each agenda. REIT manager will prepare the minutes of the meeting and keep the original version including invitation letter, other supporting documents and electronics files for the convenience of directors and relevant parties’ audit and inspection.

Conflict of Interest

Board of Directors realizes the importance of the conflict of interest related to the REIT, REIT manager and other related parties. Therefore, Board of Directors of the REIT manager has a policy to address the conflict of interest. In principle, decision of the REIT manager and its personnel shall be based on the best benefit of the REIT’s unitholders. REIT manager shall avoid any action that may cause conflict of interest. In addition, directors and management of the REIT manager have duty to submit the stakeholder report related to the management of REIT and REIT manager for themselves and other related persons. 9.4 Management of Internal Information

The Company has set the policy to control personnel for disclosing the non-public information to outsiders for their own benefits. The policy shall determine the procedures and punitive measures for directors, management and personnel of the Company who disclose non-public information for their own benefits. These procedures and punitive measures shall be included in the Code of Conduct signed by directors and employment contract signed by management and personnel. The Company will appoint committee composed of relevant managers and managing director to determine the procedures and punitive measures by giving the written warning letter to the employees who disclose the information by negligence. The Company shall terminate the employment contract of the employee who intend to disclose information and cause material damage to the Company. In addition, the Company will inform directors and management about their duties to report their holding of the TRUST units including those of their spouses and under legal age children. 9.5 Procedures and Factors to Be Considered for Investment Decision Making and Managing the REIT

The procedure for making investment decision of the REIT Manager is summarized in the diagram as follows:

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Investment Process Summary

Deal Sourcing

The REIT Manager shall seek for the growth opportunity for the REIT by investing more in the additional assets. The REIT Manager shall also consider investing in the properties of the business partners and the third party, in which such investment shall be for the best interests of the REIT.

Preliminary Analysis

The REIT Manager performs examination and preliminary review on a feasible investment in order to decide whether or not such feasible investment is in accordance with the objectives and specified under the Trust Deed and the REIT investment policy. The preliminary financial analysis to view the feasibility of the project shall proceed with the same beginning procedure.

The REIT Manager shall conduct preliminary Due Diligence, in negotiation on investment conditions, including the Top Down Analysis, Bottom Up Analysis and Discounted Cash Flow model of the assets to be invested by the REIT, as well as, prepare the preliminary investment information and present to the Board of Directors comprised of the Managing Director and selected members of the Capital Market Development, Business Development, and Compliance and Risk Management departments.

Detailed Due Diligence

In case members of the abovementioned meeting agree to pursue such investment opportunity, the REIT Manager shall undertake more extensive Due Diligence, which typically includes appointing legal advisors, tax advisors and appraisers with potential in order to provide independent assets valuation and Due Diligence.

In case the consideration is based on the completed analysis (including but not limited to background checks, anti-money laundering compliance, feasibility study, legal review, financial review, capital structure analysis, and tax structure analysis), such investment opportunity shall be presented to the REIT Board of Directors for approval.

Deal Sourcing

Preliminary Analysis

Detailed Due Diligence

Final Negotiation / Approvals

Execution / Closing

Asset Management

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REIT Approval Procedure

After receiving an approval from the REIT Board of Directors, the REIT Manager shall notify the Trustee within 7 days after the approval by the Board of Directors, in order to seek for approval and proceed such action in accordance with the agreements related to REIT management.

Execution and Closing

Once received an approval from the Trustee, the REIT Manager shall conduct a negotiation and enter into related agreements including the conduct a negotiation with the seller of the property (if any) and proceed in line with the REIT Manager's guidelines.

The Closing will occur after the receipt of source of fund and all the completion of the precedent conditions (if any).

Asset Management / Monitoring

The REIT Manager shall be responsible for the investment management and operation in accordance with the REIT’ s investment strategy. Throughout the investment period, the REIT Manager shall clarify in details and periodically review the performance of such investment to be in accordance with the REIT’s investment objectives.

9.6 Selection of Asset Management -None- 9.7 Monitor of Operation of Asset Management -None- 9.8 Monitoring of the REIT’s Benefit Procurement

1. The REIT Manager has the policy of appointing its representatives to be directors of each Investment Companies. The REIT Manager will monitor the operating performance of the Investment Companies in each quarter and compare with the annual budget and the past operating results (if any). If the operating performance of any Investment Companies misses the target, the REIT Manager will analyze the issues and develop operating plan in order to achieve the target.

2. After the REIT's investment, the Properties will be leased by the Master Lessors to the Master Lessees with the lease period of 3 years each. The REIT will receive both fixed and variable rental from the Master Lessees as set out in the summary of agreement and material agreements relevant to the Properties which the REIT Manager is of the view that the rental rate is appropriate.

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3. For the initial investment, the REIT manager will control Master Lessees to comply with the term

and conditions of the lease through the Master lease agreement.

4. In the event that there is a change in Master Lessee of the Properties, this may affect the change

in terms and conditions of the lease agreement, including fixed rental and variable rental.

5. The REIT reserves the right to improve and modify the Properties to ensure that the Properties

look modern and consistently meet the demand of the customers to continually attract the

customers to come use the services.

6. In the event that the Master Lessee does not comply with the lease agreement which can cause

the termination of lease agreement, the REIT shall proceed to procure new lessee, by setting the

initial qualification which is evaluated based on experience in hotel business, financial position,

system, credibility and business profile, to negotiation and propose conditions and details of the

leased Properties in place of the previous Master Lessee.

9.9 Compensation of the REIT Manager

The Strategic Property Investors Company Limited shall collect the REIT management fee for

managing the REIT; nevertheless, the payment of the REIT management fee shall be in compliance with

the REIT Manager Appointment Agreement as follows:

1. The Base Fee shall not be more than 0. 75 percent of the Gross Asset Value ( GAV) but shall

not exceed THB 30 million per annum ( excluding VAT) for the REIT's initial assets investment. The

payment shall be paid on the monthly basis; however, during the first five years of the REIT management,

the REIT Manager shall collect the Base Fee not exceeding 0.30 percent of the value of the REIT's initial

assets investment but shall not exceed THB 21 million per annum ( excluding VAT) for the REIT's initial

assets investment.

The Gross Asset Value for the Base Fee calculation shall mean the Fair Value of the REIT's

assets appraised by the independent appraisers that are disclosed or referred to in the REIT's financial

statements.

2. The Incentive Fee shall be at 2. 00 percent of revenues in the separated financial statements

of the REIT. Nonetheless, during the first six years of the REIT management, the REIT Manager shall not

collect the Incentive Fee from the REIT for the REIT's initial assets investment.

3. REIT Manager shall receive the fees from transactions related to acquisition and disposal of

the REIT assets not exceeding 1.00 percent of the total acquisition value and not exceeding 0.50 percent

of the total disposal value, respectively.

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9.10 Information Disclosure to Unitholders

The REIT Manager has emphasized the importance of information disclosure to unitholders in a

sufficient, accurate, complete, fast and transparent manner. Also, the information disclosure of TREIT shall

be complied with rules and guidelines of information disclosure of the Securities and Exchange Commission

and the Stock Exchange of Thailand.

Key principles of information disclosure

1) Information to be disclosed must be accurate, complete, clear and timely.

2) Must be complied the rules and regulations of information disclosure accurately and

completely.

3) Every unitholder has the right to receive the information equally.

Parties who responsible for information disclosure

The Managing Director has assigned the Operation Department by Investor Relations for

disclosing of information to the Securities and Exchange and/or any related parties required by regulations.

Commission and/ or the Stock Exchange of Thailand. The information to be disclosed shall be

approved by the Board of Directors and/or the Managing Director (as the case may be) prior to disclosure.

Channels of Information Disclosure

In order to communicate efficiently, transparent and on timely basis, the REIT Manager has

arranged various channels for information disclosure as follows:

1) Report to the Stock Exchange of Thailand, which is the formal channel of the Trust to disclose

information.

2) The REIT Manager’s website (www.sh-reit.com) which gather all important information of the

Trust such as general information, REIT Structure, Financial Statement, Annual Report, Invitation to the

Unitholder’s Meeting, Distribution and interested news.

9.11 Unitholders’ Meeting

The Principle to Arrange the Unitholders’ Meeting

The REIT Manager shall arrange a meeting for unitholders as Annual General Meeting within four

months after the end of fiscal year. Other meeting of unitholders shall be called Extraordinary General

Meeting. The REIT Manager shall hold the Extraordinary General Meeting to be in line with the Trust Deed

and related laws as follows:

1) When the REIT Manager considers that it is appropriate to call the unitholders’ meeting for

REIT management propose.

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2 ) When the REIT Manager is required by the Trust Deed to get the resolution from the unitholders to carry out the following activities:

The acquisition or disposal of REIT’s major assets with the value equal to or over 30% of the total asset value;

The issuance of debenture or any debt instruments; The increase or decrease of REIT’s paid-up capital, as indicated in the Trust Deed; The connected transactions with the REIT Manager or connected persons with the REIT

Manager, with the transaction value equal to or above Baht 20 million or higher or more than 3% of net asset value, whichever is higher;

The change of benefits and the capital returned to the unitholders; The change of Trustee; The change of REIT Manager and the appointment of new REIT Manager; The amendment of Trust Deed that significant impacts to the right of unitholder or the

increase of fee and/or expenses to be higher than the maximum rate specified in the Trust Deed;

The cancellation of the Trust; Any other circumstance that the Trustee and/ or the REIT Manager deem necessary and

appropriate to propose to the unitholders’ meeting and to get resolution of such matter; and

Any other circumstance required by the Securities and Exchange Commission;

3) When the unitholders with the total number of units is not less than 10% of total units sold, make a written request to the REIT Manager to call for Unitholders Meeting with clear reason stated in the request. The REIT Manager shall arrange unitholders’ meeting within 1 month after the date receiving such request.

Rights of the Unitholders At the unitholders’ meeting, the REIT Manager has a policy to facilitate and encourage all

unitholders to attend the meeting by assigning the Compliance Unit to administrate the unitholder’s meeting in accordance with the Trust Deed and related laws.

Procedure for Unitholders’ Meeting

1. The Compliance Department is responsible for the meeting appointment, preparing invitation, and meeting documents, accurately, completely and adequately. All documents will be given to The Thailand Securities Depository: TSD, the Registrar of the Trust, who will distribute invitation to all unitholders within 7 days or 14 days prior to the meeting (as the case may be) so that the unitholders will have sufficient time to review the related information before attending the meeting. In addition, the unitholder can download the invitation letter and supporting documents from the REIT Manager’s website

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(www.sh-reit.com) in both Thai and English. This is the same information that the REIT Manager send to unitholders as printed document. Information in the invitation shall include the explanation of how to attend the meeting as well as the detailed agenda, which are sufficient for unitholders to review and make decision.

2. At the meeting, every unitholder has the right and equality to express his/ her opinion and ask any questions to the Board of Directors on any matters relating to REIT according to the agenda or proposed topic. The REIT Manager shall inform the unitholders to acknowledge their voting right and procedure for voting prior to the meeting.

3. Unitholders have the right to consider and approve the connected transaction or the acquisition or disposal of the assets with the value specified by law and related regulations. Voting of the Unitholders

Voting of the unitholders in general case must receive an approval from the majority of the unitholders who attending the meeting and entitled to vote.

Voting of the following material transactions must receive at least three- fourth of total unitholders attending the meeting and entitled to vote.

1) The acquisition or disposal of the major assets with the value over 30% of the total assets value; 2) The increase or decrease of the Trust’ s paid- up capital, especially there is required the

unitholders’ approval; 3) The capital increase under general mandate; 4) The connected transactions with the REIT Manager or connected person with the REIT Manager,

with the transaction value equal to or above Baht 20 million or higher or more than 3% of the net asset value, whichever is higher;

5) The change of benefits and the capital returned to the unitholders; 6) The change of Trustee; 7) The amendment of Trust Deed that significant impacts to the right of unitholder; and 8) The cancellation of the REIT

9.12 Selection and Nomination of Directors and Top Managments

Directors

The Company has not established a Nominating Committee. However, abilities, experiences, vision, and credit are factors to consider when nominating directors and proposing the list to shareholders to appoint.

The Company's Articles of Association states that in each of annual general meeting, one-third of directors or nearest amount (1/3) has to be resigned by rotation. In the first and second years after registering the entity, the resigning directors were determined by drawing lots. For the subsequent years

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later, the retired directors shall be determined by the ones who were in the position the longest. The retired Directors can be re-elected.

However, in case of the vacancy of director from the reasons other than the expiration of the term of office, the remaining board of directors shall appoint other director to fill the vacancy except the remaining term of office is less than 2 months. The resolution of such appointment has to be passed with not less than three-fourth of the votes from the remaining directors. The substitute director shall hold office only for the remaining term of office of the director whom he or she replaces.

Principle and voting methods for nominating directors are: 1. Each shareholder shall have a number of votes equal to the number of shared held. 2. Each shareholder must exercise all the votes he has according to number of shares held

(as in item 1). He may nominate one or several persons as directors. If several persons be nominated, he may not share his voting rights with others.

3. The candidates shall be ranked in descending order from the highest number of votes received to the lowest, and shall be elected as directors equivalent to the number of directors who are elected by the meeting of shareholders. In the event that there is a tie in the last to be elected, and this exceeds the said number of directors that the meeting of shareholders is required to appoint, the presiding Chairman shall have the deciding vote.

Independent Director The REIT Manager shall have 2 Independent Directors that shall not be less than one-third of the Company’s directors total in accordance with the Notification SorChor. 29/ 2555. The selection of Independent Directors shall be complied with the principles and qualifications as follows:

(1) holding shares not exceeding one per cent of the total number of shares with voting rights of the applicant, its parent company, subsidiary company, associate company, major shareholder or controlling person, including shares held by related persons of such independent director;

(2) neither being nor used to be an executive director, employee, staff, advisor who receives salary, or controlling person of the applicant, its parent company, subsidiary company, associate company, same- level subsidiary company, major shareholder or controlling person, unless the foregoing status has ended not less than two years prior to the date of filing an application with the Office. Such prohibited characteristic shall not include the case where the independent director used to be a government official or advisor of a government unit which is a major shareholder or controlling person of the applicant;

(3) not being a person related by blood or legal registration as father, mother, spouse, sibling, and child, including spouse of child, executive, major shareholder, controlling person, or person to be nominated as executive or controlling person of the applicant or its subsidiary company;

(4) neither having nor used to have a business relationship with the applicant, its parent company, subsidiary company, associate company, major shareholder or controlling person, in the manner which may interfere with his independent judgement, and neither being nor used to be a significant shareholder

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or controlling person of any person having a business relationship with the applicant, its parent company, subsidiary company, associate company, major shareholder or controlling person, unless the foregoing relationship has ended not less than two years prior to the date of filing an application with the Office.

The term ‘ business relationship’ under the first paragraph shall include any normal business transaction, rental or lease of immovable property, transaction relating to assets or services or granting or receipt of financial assistance through receiving or extending loans, guarantee, providing assets as collateral, and any other similar actions, which result in the applicant or his counterparty being subject to indebtedness payable to the other party in the amount of three percent or more of the net tangible assets of the applicant or twenty million baht or more, whichever is lower. The amount of such indebtedness shall be calculated according to the method for calculation of value of connected transactions under the Notification of the Capital Market Supervisory Board governing rules on connected transactions mutatis mutandis. The consideration of such indebtedness shall include indebtedness occurred during the period of one year prior to the date on which the business relationship with the person commences;

(5) neither being nor used to be an auditor of the applicant, its parent company, subsidiary company, associate company, major shareholder or controlling person, and not being a significant shareholder, controlling person, or partner of an audit firm which employs auditors of the applicant, its parent company, subsidiary company, associate company, major shareholder or controlling person, unless the foregoing relationship has ended not less than two years prior to the date of filing an application with the SEC Office;

(6) neither being nor used to be a provider of any professional services including those as legal advisor or financial advisor who receives service fees exceeding two million baht per year from the applicant, its parent company, subsidiary company, associate company, major shareholder or controlling person, and not being a significant shareholder, controlling person or partner of the provider of professional services, unless the foregoing relationship has ended not less than two years prior to the date of filing an application with the Office;

(7) not being a director appointed as representative of directors of the applicant, major shareholder or shareholder who is related to major shareholder;

(8) not undertaking any business in the same nature and in competition to the business of the applicant or its subsidiary company or not being a significant partner in a partnership or being an executive director, employee, staff, advisor who receives salary or holding shares exceeding one per cent of the total number of shares with voting rights of other company which undertakes business in the same nature and in competition to the business of the applicant or its subsidiary company;

(9) not having any other characteristics which cause the inability to express independent opinions with regard to the applicant’s business operations.

After being appointed as independent director with the qualifications under (a) to (i) of the first paragraph, the independent director may be assigned by the board of directors to take part in the business

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decision of the applicant, its parent company, subsidiary company, associate company, same- level subsidiary company, major shareholder or controlling person, provided that such decision shall be in the form of collective decision.

In the case where the person appointed by the applicant as independent director has or used to have a business relationship or provide professional services exceeding the value specified under (d) or ( f) of the first paragraph, the applicant shall be granted an exemption from such prohibition only if the applicant has provided the opinion of the company’ s board of directors indicating that, by taking into account the provision in Section 89/ 7, the appointment of such person does not affect performing of duty and expressing of independent opinions. The following information shall be disclosed in the notice calling the shareholders meeting under the agenda for the appointment of independent directors:

(a) The business relationship or professional service which make such person’s qualifications not in compliance with the prescribed rules;

(b) The reason and necessity for maintaining or appointing such person as independent director; and

(c) The opinion of the applicant’ s board of directors for proposing the appointment of such person as independent director.

For the purpose of (5) and (6) of the first paragraph, the term “partner” shall mean a person assigned by an audit firm or a provider of professional service to sign on the audit report or the professional service report (as the case may be) on behalf of such juristic person. Senior Managements In the recruitment and appointment on the employees at levels of Managing Director, Head of Department, Head of Units of the REIT Manager, it shall be proceeded as follows:

(a) In case of recruitment of the Department Head and Unit Department, the Managing Director shall prepare the letter to inform and request the staff recruitment in writing to the Board of Drectors of the REIT Manager. The said letter shall indicate the details of duties, responsibilities, and qualifications as well as the necessity of such recruitment. The Board of Directors of the REIT Manager shall decide whether the recruiting requirement is necessary or not.

For the recruitment of Managing Director level, the Board of Directors of the REIT Manager shall indicate the details of duties, responsibilities, and qualifications as well as the necessity of such recruitment. After that the Board of Directors of the REIT Manager shall decide whether the recruitment isis necessary or not.

(b) After the Board of Directors of the REIT Manager approves such recruitment, the Board of Directors of the REIT Manager shall delivery the letter to inform and request for the recruitment to the Investor Relation and Operational Support Business Unit so that the Investor Relation and Operational Support Business Unit shall proceeed to advertise the suitable staff recruitment. The advertisement shall proceed in several channels such as using the agency, advertising via the recruitment website etc.

(c) The Investor Relation and Operational Support Business Unit shall recruit the candidates in the short-listed candidates about 2-3 persons according to the requested qualifications.

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(d) The Managing Director and the Board of Directors of the REIT Manager shall contact to the short-listed candidates of 2-3 persons to come for interview.

(e) The Managing Director and the Board of Directors of the REIT Manager shall consider together for the most suitable staff recruitment by considering from the past experiences and suitability of duty and responsibility including other compensations.

(f) After being able to recruit the said candidate, the Managing Director (In case of recruitment of Departemnt Head level) or the Board of Directors of the REIT Manager (In case of recruitment of Managing Director level) shall negotiate the conditions of employment agreement in order to gain the suitable conditions and be acceptable in both 2 (two) partiies.

(g) The authorized directors of the REIT Manager and the selective candidate shall sign the employment agreement. The signed employment agreement shall be returned to the selective candidate in 1 (one) copy and the REIT Manager shall keep 1 (one) copy for reference and audit in the future.

(h) The Investor Relation and Operational Support Business Unit shall inform the Trustee in order to acknowledge the staff appointment by not hesitating and not over 3 (three) days after the said acknowledgement. 9.13 Remuneration of Auditors

Audit Fee of SHREIT for 2018 Amount (Baht)

- Audit of the consolidated and separate financial statements of the REIT

1,070,000

- Review of the consolidated and separate financial statements of the REIT for Q1-Q3

930,000

Total 2,000,000

Audit Fee of Subsidiaries Level of SHREIT for 2018 Amount

Total (Unit: USD) USD 81,600

Total SHREIT's Group Baht 4,652,000

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9.14 Practice According to the Corporate Governance Principle in Other Matters -None- 9.15 Procedures and Conditions for the REIT Manager Replacement Causes for replacing the REIT Manager

1) The REIT is terminated and complied with the termination procedure as specified in the REIT Prospectus and also have completed the liquidation of the REIT in compliance with the Prospectus, Securities Act, Trust Act and other relevant Notification of the Office of SEC.

2) The SEC Office annuls the permission granted to the REIT Manager, or orders the suspension of the REIT Manager from performing its duties for at least 90 days in compliance with the SorChor. 29/2555.

3) In case the permission granted to the REIT Manager expires and the REIT Manager fails to submit an application to renew its permission to the SEC Office.

4) The REIT Manager is subject to receivership order, business reorganization order, or the REIT Manager loses its juristic person status.

5) The Trustee exercises its right stipulated under the REIT Manager Appointment Agreement to terminate the REIT Manager Appointment Agreement in the following cases:

(a) The REIT Manager constitutes willful misconduct or gross negligence, and fails to perform its duties accurately and completely as specified under the Trust Deed, the REIT Manager Appointment Agreement, the Trust Act, the Notifications of the Office of SEC and other relevant notifications, and such failure to perform its duties, the Trustee views that it has caused material damage to the REIT and/or the Unitholders and such failure is not rectified within 90 days from the date the Trustee notify the REIT of such damage. The Trustee shall call for the Unitholders' meeting to seek for the resolution to remove the REIT Manager within 60 days from the date such event occurred;

(b) The Trustee discovers that the REIT Manager has any qualification that is not in compliance with the rules stipulated under the Chapter 1 provision or the REIT Manager violates or fails to comply with the rules stipulated under Chapter 2 provision of the SorChor. 29/2555, or fails to comply with the orders of the Office of SEC or fails to rectify such failure with in the time determined by the Office of SEC; and

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(c) The fact is revealed that the permission granted to the REIT Manager has expired and the REIT Manager fails to receive a renewal of its permission from the SEC Office.

6) The REIT Manager exercise its right to resign follow the procedure specified under the REIT Manager Appointment Agreement.

7) The REIT Manager exercises its right to terminate the REIT Manager Appointment Agreement in accordance with the provisions set out in the REIT Manager Appointment Agreement in case the Trustee fails to perform its duties accurately and completely as specified under the Trust Deed,, and such failure is proved to cause a significant impact to perform its duties specified under the Trust Deed, the REIT Manager Appointment Agreement, the Trust Act, the Notifications of the Office of SEC and other relevant notifications and such failure is not rectified within 90 days from the date the Trustee notify the REIT of such damage.

8) In case any change of the REIT Manager by any reason other than the provisions under REIT management agreement or any conduct deemed as direct fault of the REIT Manager with in the period of 10 years after the entering of the REIT Manager Appointment Agreement, the Trustee ( by the REIT’ s assets) agrees to pay the compensation for such change of the REIT Manager to the REIT Manager at the rate equivalent to the total amount of the 5 years Base Fee and Variable Fee ( calculating based on the average Base Fee and Incentive Fee the REIT Manager has received over the preceding 12 months or its pro- rata equivalent) and the payment shall be made on the effective date of the change of the REIT Manager.

Resignation and Post-Resignation Duties of the REIT Manager

1) Resignation of the REIT Manager

In case the REIT Manager wish to resign, it shall notify its resignation e to the Unitholders and the Trustee for their acknowledgement at least 120 days prior to the effective date of the resignation. The resignation shall not cause any impact to the Unitholders and the Trustee and during the period before the effectiveness of resignation, the REIT Manager shall facilitate as deemed necessary in appointing the new juristic person (qualified and granted permission from the Office of SEC) to be the new REIT Manager replacing the existing REIT Manager. In the mean time where the Trustee is still not able to appoint the new REIT Manager, the existing REIT Manager shall proceed with its duties until the new REIT Manager shall be able to succeed and completely perform the role as the REIT Manager in accordance with this agreement.

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2) Post-Resignation Duties

After the REIT Manager submits its resignation notification, the REIT Manager shall have the following duties:

(a) To transfer work, work systems, client lists, books of account, documents, and any information related to the duty and conduct of the REIT Manager, regardless of whether it is a trade secret or not, to the Trustee and/or the new REIT Manager. The REIT Manager shall act on any reasonable requests made by the Trustee to enable the new REIT Manager to perform its duty as REIT Manager continuously for the utmost interest of the REIT and Unitholders.

(b) To prepare the REIT management executive summary report until the last effective date as the REIT Manager and transfer the report to the Trustee and/or to the new REIT Manager

(c) To safeguard trade secrets of the REIT by not disseminating information, drawings, client lists, or any other documents that materially represent trade secrets of the REIT, to other parties, without prior consent in writing from the Trustee, except such disclosure of information is for the relevant government agencies as required by law or it is already a part of the public information at the time such information is disclosed or disseminated.

(d) To undertake other measures as deemed appropriate to enable the new REIT Manager to perform its duty continuously in accordance with the REIT Manager Appointment Agreement.

Procedures for Appointing a New REIT Manager

The Trustee shall seek the Unitholders' resolution to appoint the new REIT Manager within 60 days upon the occurrence of any event described in clause 1 abovementioned, and proceed to appoint a new REIT Manager within 30 days from the date of the resolution, or within any other period required by the notification of the SEC Office. After having requested a resolution and failed to obtain a resolution, the Trustee shall proceed to appoint the new REIT Manager, taking into consideration the utmost interest of the Unitholders as a whole.

In case the Trustee fails to appoint a new REIT Manager because there is no qualified person, or no person applies for the position, the Trustee has the duty to perform the duties of the REIT Manager as stipulated in the Trust Deed, and shall be subject to the rules specified in the Securities Laws and other relevant laws.

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10. Responsibility to the Society The REIT Manager considers that it is the responsibility of directors, executives and all employees to acknowledge and perform their duties diligently. In addition, they shall realize their responsibility to comply with the corporate governance best practices and the Business Code of Conduct. The Company Secretary will help coordinating, following up with results and reporting the practices so that information can be disclosed to shareholders through both internal and external channels. 11. Internal Control and Risk Management

The Company hired and appointed the outsouring- Dharmniti Internal Audit Co., Ltd., located at 178 Dharmniti Building, 5th Floor, Soi Permsup (Prachachuen 20), Prachachuen Road, Bangsue Sub-district, Bangsue District, Bangkok 10800 Telephone Number 02 596 0500 Ext. 520, 521, in order to be incharge of Internal Auditor of the Company. The Manager, Compliance and Risk Management Department shall be a coordinator to be ensured that the Internal Auditor can be able to peform the duties efficiently, including to present the audit report to Independent Directors. 12. Prevention of Conflict of Interest

Transactions between the REIT and the REIT Manager or Connected Persons of the REIT Manager and Trustee are as follows: Transaction of the REIT with the REIT Manager or Connected Person with the REIT Manager

12.1 Transactions for Appointing the REIT Manager

Juristic Person/Company that may have Conflict of Interest

Strategic Property Investors Company Limited

Relationship

Strategic Property Investors Company Limited was appointed as the REIT Manager.

Nature of Related Transaction

Trustee who is authorized to act on behalf of the REIT appointed the Strategic Property Investors Company Limited as the REIT Manager.

The Strategic Property Investors Company Limited shall collect the REIT management fee for managing the REIT; nevertheless, the payment of the REIT management fee shall be in compliance with the REIT Manager Appoinment Agreement as follows:

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1. The Base Fee shall not be more than 0.75 percent of the Gross Asset Value (GAV) but shall not exceed THB 30 million per annum (excluding VAT) for the REIT's initial assets investment. The payment shall be paid on a monthly basis; however, during the first five years of the REIT management, the REIT Manager shall collect the Base Fee at the rate not exceeding 0.30 percent of the REIT initial assets value and no more than THB 21 million per annum (excluding VAT) for the REIT initial assets investment.

The Gross Asset Value for the Base Fee calculation shall mean the fair value of the REIT assets value appraised by the independent appraisers that are disclosed or referred to in the REIT's financial statements.

2. The Incentive Fee shall be at 2.00 percent of revenues in the separated financial statements of the REIT. Nonetheless, during the first six years of the REIT management, the REIT Manager shall not collect the Incentive Fee from the REIT for the REIT's initial assets investment.

3. REIT Manager shall receive the fees from transactions related to acquisition and disposal of

the REIT assets not exceeding 1.00 percent of the total acquisition value and not exceeding 0.50 percent of the total disposal value, respectively.

The Reasonableness of Transaction Execution

The fee stracture of the REIT Manager accordance with the real estate investment trust, listing in the Stock Exchange at present by fixing the standard fee, special management fee and transaction procedure fee in realtion to the assets acquisition of the REIT.

The Reasonableness

1. Base Fee

The Base Fee in general is comparable to the base fee for the managers of the REITs listed in the Stock Exchange of Thailand. Nonetheless, the SHREIT manager has more responsibilities than the REIT manager as the SHREIT has offshore investment policy. Consequently, the SHREIT manager shall need a working team with experience and efficiency and shall be responsible for the expenses incurred including the costs of transportation and communication. Therefore, the management fees for the SHREIT Manager tend to be higher than the management fees for the manager of general REIT listed in Thailand.

2. Incentive Fee

The Incentive Fee is calculated based on the revenues in the seperate financial statements of the REIT in which it reflects the REIT assets' operating profits from the operation and management of the REIT by the REIT Manager. The Incentive Fee is set out to create a motivation for the REIT Manager to efficiently manage the REIT, accordingly. Nonetheless, the Incentive Fee calculation based on the

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revenues in the seperate financial statements of the REIT is comparable to the Incentive Fee calculation based on the Net Asset Value of the other REITs that have relatively the same return amount.

3. Fees from transactions related to acquisition and disposal of the REIT assets

The fees from transactions related to acquisition and disposal of the REIT assets, in general, is comparable to fees of REIT Managers in foreign countries that are not related to the REIT Manager. Furthermore, the fee is to create an incentive and motivation for the REIT Manager in order to acquire more assets into the REIT.

Utilizing the REIT assets and earning revenues by leasing the REIT assets to Master Lessees, persons connected to the REIT Manager

Juristic Person/Company that may have Conflict of Interest

1. The PT Central Pesona Palace Company as the Master Lessee of Pullman Jakarta Central Park Hotel

2. The Strategic Hospitality Services (Vietnam) Co. Ltd. as the Master Leasee of the Capri by Fraser Hotel and the IBIS Saigon South Hotel

3. The Strategic Hospitality Services Pte Ltd (Singapore) as a shareholder of the Master Lessees of the Properties and its Ultimate Shareholder is the same person as the Ultimate Shareholder of the REIT Manager.

Relationship

Strategic Hospitality Services Pte Ltd (Singapore) has an ultimate shareholder who is also an ultimate shareholder of the REIT Manager. The Strategic Hospitality Services Pte Ltd (Singapore) is a shareholder with a 100% ownership of the total shares of the PT Central Pesona Palace Company and the Strategic Hospitality Services Co. Ltd. (Vietnam).

Transactions between Parties

The PT Central Pesona Palace Company and the Strategic Hospitality Services Co. Ltd. (Vietnam) will enter into the lease agreement with the Master Lessors who are the REIT affiliates for the REIT's assets. The Master Lessees are the PT Central Pesona Palace Company and the Strategic Hospitality Services Co. Ltd. (Vietnam) and they shall pay the rent to the Master Lessors who are the REIT affiliates in the following details:

1) Rental fees consist of the Fixed Rental and Variable Rental

The formulas of the Fixed Rental and the Variable Rental calculation are as follows:

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- Yearly Fixed Rental = Fixed amount of Base Rental per year or Fixed Rental of the preceding operating year, whichever is higher + Additional Base Rental (if any)

- Additional Base Rental Fees per year = ( 67. 00 percent x Net Operating Income per year (NOI) ) - fixed amount of Base Rental per year or Fixed Rental from the preceding operating year, whichever is higher

- Variable Rental = NOI - Fixed Rental - outstanding rental revenues from postponement of payment due to force majeure (if any)

The fixed amount of Base Rental is calculated from the projected income statements based on the scenarios and the forecast of dividend payout.

In case the calculation of Additional Base Rental per year following the abovementioned formula results in the value less than zero, the lessees shall not include the aforementioned value in the Additional Base Rentel Fees calculation for that year.

Furthermore, the Base Rental for the extension of lease agreement shall be equal to the average of Fixed Rental throughout the period of the previous lease agreement.

Reasonableness of the Transaction

The REIT Manager views that it is reasonable to sublease the Properties to the connected persons according to the rental revenue the REIT shall receive including the Fixed Rental and the Variable Rental. The Fixed Rental consists of; firstly, the fixed amount of Base Rental calculated from the projected income statement based on the scenarios and the forecast of dividend payout and taken into account the past financial performance of the Properties; secondly, the Additional Base Rental which would increase the Fixed Rental in case that the actual operating result is higher than the budget. The proportion between the Fixed Rental and the Variable Rental shall be in accordance with the Securities Law throughout the lease agreement term.

Policy of entering into transactions between the REIT and the REIT Manager or connected person of the REIT Manager

In case there is a transaction (other than the abovementioned) between the REIT Manager or connected person of the REIT Manager, the following procedures will be followed in order to comply with the Securities Laws:

1) Connected persons of the REIT Manager

Connected persons of the REIT Manager shall have the meaning as prescribed in the notifications of the Capital Market Supervisory Board on related transactions.

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2) General terms and conditions in entering into transactions with connected persons are as follows:

The entering into of transactions between the REIT and the REIT Manager or connected person of the REIT Manager, shall be in accordance with the Trust Deed and relevant laws, and for the best interest of the REIT.

The entering into of transactions between the REIT and the REIT Manager or connected persons of the REIT Manager, shall be a reasonable transaction and at a fair price.

Persons having a special interest in the transaction, whether directly or indirectly, shall not be involved in the decision making with respect to the entering into the transaction.

Expenses, whether directly or indirectly, arising from transactions between the REIT and the REIT Manager or connected persons of the REIT Manager shall be reasonable and at a fair price.

Transactions entering into between the REIT and the REIT Manager or connected persons the REIT Manager shall be in accordance with the Trust Deed and the relevant laws. The REIT Manager shall seek for the approval from Trustee' meeting before entering into such transaction according to the Notifications or Regulations of SEC, SET or other relevant regulators.

3) The approval procedures of transactions between the REIT and the REIT Manager or connected persons of the REIT Manager are as follows:

Approval from the Trustee that the transaction is in accordance with the Trust Deed and relevant laws.

In case the transaction value exceeds Baht 1 million or is equal to at least 0.03 percent of the NAV of the REIT, whichever is higher, the transaction must seek for approval from the REIT Manager's Board of Directors.

In case the transaction value exceeds Baht 20 million or exceeds 3 percent of the NAV of the REIT, whichever is higher, the transaction must seek for approval from the REIT Unitholders' meeting by having at least three-fourths of all the votes from Unitholders whom have the right to vote attending the Unitholders' meeting.

In case the transaction between the REIT and the REIT Manager or connected persons of the REIT Manager is an acquisition or disposal of the Properties, the calculation of the transaction value shall be based on the value of the acquisition or disposal of the entire Properties of each project that is ready to generate income, including the related assets to such Property.

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4) Policy for entering into transactions between the REIT and the REIT Manager or connected persons of the REIT Manager

Any transaction between the REIT and the REIT Manager or connected persons of the REIT Manager shall be based on conditions that are fair and suitable, and in accordance with the terms and conditions of the Securities Laws. In any case the SEC or Office of the SEC, or the Capital Market Supervisory Board prescribes additional criteria for determining persons connected to the REIT Manager in the future, the transaction between the REIT and the REIT Manager or connected persons of the REIT Manager shall comply with the additional terms and conditions of Securities Laws.

In addition, the REIT will disclose information related to the transaction with the REIT Manager or persons connected to the REIT Manager to the SEC and the SET, as well as in the notes of the REIT's audited financial statement and in the REIT's annual reports.

5) The additional policy regarding the supervision of the Master Lessees in case the Master Lessees are connected persons of the REIT Manager

In case the Master Lessees are connected persons of the REIT Manager which may cause a conflict of interest between the REIT and the Master Lessees after the REIT has been established and the contract has been entered between the Master Lessors and the Master Lessees. The REIT Manager shall operate in a direction to ensure that the Master Lessees are under supervision for the best interest of the REIT. In supervising the Master Lessees (defined under section 8. clause 8.4 (5) the supervision of Master Lessees), the REIT Manager shall proceed such supervision considering the conflict of interst protocol that are suitable and appropriate under the monitoring of Trustee to ensure that the REIT management is in accordance with the law and relevant regulations including Trust Deed, the REIT Manager Appointment Agreement, and other relevant agreements in which shall be in compliance with the operational manual of the REIT Managers. In addition, in case the REIT shall enter into any transaction with Master Lessees other than as stipulated in the Lease Agreement which has been disclosed in this registration statement, the REIT Manager shall have obligation under the Trust Deed to set out that the entering into such transaction consisting of contents in compliance with general terms and conditions of the REIT with respect to the entering into transaction with connected persons as set out in topic 2) above.

In addition, in case the REIT Manager shall enter into any legal transaction which may take place between the REIT and the Master Lessees after the REIT's establishment and REIT's investment in the Properties, which may impact the essence that has been previously disclosed under this registration statement, including:

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An alteration in the essence of the Lease Agreement between the Master Lessors and the Master Lessees

The decision making in accordance with the right under the agreements or under the law in case of breach of the contract or dispute

The process of the change in Master Lessees or termination of the Lease Agreement.

In the execution of the abovementioned process, the REIT Manager whom is a juristic person shall seek for an approval from the SEC in order to act on its role and duty as the REIT Manager in accordance with the Trust Act and relevant law and regulations for the REIT management with due care, responsibility, and trustworthiness. In addition, the REIT Manager shall treat the Unitholders with fairness and at the best interest of all the Unitholders and in accordance with the law and relevant regulations including Trust Deed and other relevant agreements. Furthermore, the REIT Manger shall act with due care in order to avoid conflict of interest, in case if any, the REIT Manager shall ensure that the Unitholders are treated fairly and appropriately. The REIT Manager shall ensure that the Master Lessees supervising protocol is in compliance with the regulations regarding the transaction between the REIT and the REIT Manager or connected persons of the REIT Manager such that the directors with special interest shall have no right in voting regarding the decisions on the supervision of Master Lessees and/or the special interest of such Master Lessees.

In addition, such action of the REIT Manager shall be under the monitoring of the Trustee, who is a juristic person with the license to be a Trustee of the REIT in which the Trustee shall have responsibilities under the Trust Act and other relevant laws and regulations to monitor and examine the performance of the REIT Manager to be in accordance with the Trust Deed and other relevant laws. 12.2 Transactions between the REIT and Trustee or Connected Persons of the Trustee

- None -

Financial Position and Operating Results

4

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Part 4

Financial Position and Operating Results 13. Financial Highlights 13.1 Summary of the REIT’s Financial Statement for the Year 2018

As at 31 December 2018, the financial statements of the year 2018 audited by Ms. Waraporn Prapasirikul, Certified Public Accountant (Thailand) No. 4579 from EY Office Limited, has opinion that in all material respects, the financial position of Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust and its subsidiaries and of Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust as at 31 December 2018, their financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards.

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13.2 Summary of the REIT and Subsidiaries’ Consolidated Financial Statement Balance Sheet

For the year ended 31 December 2018

For the period from 19 December 2017

(Trust’s Establishment Date) to

31 December 2017 ASSETS Unit: Baht % Unit: Baht % ASSETS Investments in immovable and movable properties at fair value (At cost: Baht 4,242.9 million) (31 December 2017 : Baht 4,512.1 million) Cash and cash at banks Receivables Rental Others Refundable input value added tax Deferred expenses Cash at bank - deposit for income guarantees by asset seller Restricted bank deposits Deferred tax assets Other assets

4,377,804,819

12,513,099

8,892,089 93,982,885 267,582,703

113,976,401 23,889,283 13,998,950

- 33,990,541

88.50

0.25

0.18 1.90 5.41 2.30 0.48 0.28

- 0.69

4,512,058,099

313,661,602

6,947,877 5,990,912

307,510,629 130,422,538 81,601,750

- 20,284,171 3,585,221

83.84

5.83

0.13 0.11 5.71 2.42 1.52

- 0.38 0.07

Total Assets 4,946,630,770 100.00 5,382,062,799 100.00 Liabilities Accounts payable and accrued expenses Deposit received for income guarantees from asset seller Long-term loans from financial institutions Derivative liability Deferred tax liabilities Other liabilities

78,796,063

23,889,283 1,626,742,337

3,920,650 12,334,347 5,807,254

1.59 0.48

32.89 0.08 0.25 0.12

275,677,246 81,601,750

1,506,431,495 -

- 2,243,857

5.12 1.52

27.99 0.00 0.00 0.04

Total Liabilities 1,751,489,934 35.41 1,865,954,348 34.67 Net Assets 3,195,140,836 64.59 3,516,108,451 65.33 Registered capital 352,836,700 units of Baht 9.8805 each (31 December 2017: 352,836,700 units of Baht 10.00 each) Capital from unitholders Retained earnings (deficits)

3,486,205,375 3,486,205,375

3,639,811

70.48 70.48 0.07

3,528,367,000 3,528,367,000

(9,532,255)

65.56 65.56 0.18

Net asset value per unit (Baht) 9.0555 9.9653 Number of units issued at the end of year/period (Units)

352,836,700 352,836,700

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Statement of Income

For the year ended 31 December 2018

For the period from 20 December 2017


31 December 2017 Unit: Baht % Unit: Baht %

Investment income Rental income Share of profits from investments in subsidiaries Interest income Other incomes Gain on exchange rate

261,836,841

- 306,853

78,865,329 10,509,646

74.49

- 0.09%

22.44% 2.99%

7,292,553

- 151,761

- 761,263

88.87%

- 1.85% 0.00% 9.28%

Total income 351,518,669 100.00 8,205,577 100.00 Expenses Trust manager fee Trustee fee Registrar fee Professional fees Amortisation of deferred expenses Other expenses Loss on exchange rate Finance costs Income tax expenses

13,575,944 15,221,762 3,201,216

18,487,264 28,833,617 90,913,833

- 143,108,998 31,947,254

3.86 4.33 0.91 5.26 8.20

25.86 -

40.71 9.09

439,806

507,251 60,736

10,477,810 863,249

1,683,382 -

3,705,598 -

5.36 6.18 0.74

127.69 10.52 20.52

- 45.16

- Total expenses 345,289,888 98.23 17,737,832 216.17 Net investment income (loss) 6,228,781 (9,532,255) Net unrealised gain from investments in immovable and movable properties

135,391,152 -

Increase (decrease) in net assets from operations 141,619,933 (9,532,255)

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Statement of Cash Flows For the year ended

31 December 2018 For the period from 21 December 2017


31 December 2017 Unit: Baht Unit: Baht

Net cash flows from (used in) operating activities Net cash from (used in) financing activities Exchange differences on translation of financial statements Net increase (decrease) in cash and cash at banks Cash and cash at banks at the beginning of year/period Cash and cash at banks at the end of year/period

97,904,751 (391,245,495)

(7,807,759) (301,148,503)

313,661,602 12,513,099

(4,585,689,407) 4,902,077,303

(2,726,294) 313,661,602

- 313,661,602

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14. Financial Position and Operating Results of the REIT

14.1 Analysis of Past Performance Financial position and operating results of Strategic Hospitality Extendable Freehold and

Leasehold Real Estate Investment Trust or SHREIT (the “Trust”) for the year 2018, as from 1 January to 31 December 2018.

Since the Trust had made the first investment in the properties on 20 December 2017, fisical year 2017 had only 10 days operation period from 20 to 31 December 2017 which can not be compared with the operating result of year 2018. Significant financial ratios

Significant financial ratios and additional significant information For the year ended 31 December 2018

For the period from 22 December 2017 (Trust’s Establishment

Date) to

31 December 2017 Net assets at the end of year/period Ratio of total expenses to average net assets during the year/period (%) Ratio of total investment income to average net assets during the year/period (%) Ratio of weighted average investment purchases and sales during the year/period to average net assets during the year/period (%)* Average net assets during the year/period

3,195,140,836 10.56 10.75

0.11

3,271,248,439

3,516,108,451 0.50 0.23

128.10

3,522,237,726

* Investment purchases and sales during the year/period exclude cash at bank and must be real purchases or sales of investments which exclude purchases under resale agreements or sales under repurchase agreements.

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Financial position of the REIT Assets As of 31 December 2018, the REIT and subsidiaries have total assets of 4,946.63 million Baht, decreasing 435.43 million Baht or 8.09% from the total assets as of 31 December 2017 mainly due to the decrease in Investments in immovable and movable properties and Cash and cash at bank. Investments in immovable and movable properties as of 31 December 2018 is 4,377.80 million Baht, decreasing 134.25 million Baht from 4,512.06 million as of year end 2017 or 2.98% due to Exchange differences on translation of financial statements. Cash and cash at bank as of 31 December 2018 is 12.51 million baht, decreasing 301.15million from 313.66 million Baht as of year end 2017 or 96.01%. Liabilities As of 31 December 2018, the REIT and subsidiaries have total liabilities of 1,751.49 million Baht, decreasing 114.46 million Baht or 6.13% from the end of the year 2017 due to the decreaseg in Accounts payable,accrued expenses and the increase in Long-term loans from financial institutions. Accounts payable and accrued expenses as of 31 December 2018 is 78.80 million baht, decreasing 196.88 million baht from 275.68 million Baht as of year end 2017 or 71.42%. Long-term loans from financial institutions increased from 1,506.43 million Baht at the end of the year 2017 to 1,626.74 million Baht as of year end 2018, increasing 120.31 million Baht or 7.99%. Net assets before other components of unitholders’ equity As of 31 December 2018, the REIT and subsidiaries have Net assets before other components of unitholders’ equity of 3,489.85 million Baht, decreasing 28.99 million Baht or 0.82% from 3,518.83 million Baht at the end of the year 2017, mainly due to Capital from unitholders decreased from 3,528.37 million Baht at the end of the year 2017 to 3,489.85 million, decreasing 42.16 million Baht or 1.19% resultingfrom capital reduction without the change of total Trust units from excess cash including non-cash expenses.and increasing in the Retained Earning to 3.64 million Baht.

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Operating Results Investment Income

In year 2018, the REIT and subsidiaries have total income of 351.52 million Baht, comprised of Rental fee income from Master Lease agreement of 3 hotels for the total amount of 261.84 million Baht (74.49% of total income) and Other incomes of 78.87 million Baht (22.44% of total income) which mainly derived from NOI support for hotel operation and subsidy income on the cost related to the assets acquisition. Expenses

In year 2018, the REIT and subsidiaries have total expenses of 345.29 million Baht, comprised of Financing cost of 143.11 million Baht or 41.45% of total expenses and Other expenses of 90.91 million Baht or 26.33% of total expenses which mainly was cost relating for capital increasing and assets acquisition. Net investment income and changing in the net assets from operations In year 2018, the REIT and subsidiaries have Net investment income of 6.23 million Baht and Net unrealised gain from investments in immovable and movable properties of 135.39 million Baht, resulting in the increase of net assets from operations of 141.62 million Baht. Statement of cashflows

At the end of year 2018, the REIT and subsidiaries have Net cash flows from operating activities of 97.90 million Baht and Net cash used in financing activities of 391.25 million Baht. Net cash used in financing activities comprised of Cash paid for issuance and offering of trust units costs and borrowing fee of 219.99 million Baht, Cash paid for capital reduction and Cash paid for distributions of net income of 170.61 million Baht, Cash paid for interest expenses and loan prepayment fee of 83.70 million Baht. In addition the REIT had paid for refinancing 1,521.71 million Baht with cash received from long-term loans by subsidiary of the REIT of 1,604.23 million Baht. At the end of the year, the REIT and subsidiaries have remaining Cash and cash at banks of 12.51 million Baht, decreasing 301.15 million Baht from 313.66 million Baht at the beginning of the year.

Other significant financial ratios

Other significant financial ratios are the covenants in the facilities agreement with an oversea financial institution :

Ratios Conditions Remark GEARING not over 45% Comply with the covenant INTEREST COVER not less than 2.5 Comply with the covenant LTV* not over 45% Comply with the covenant

*LTV is in accordance with the facilities agreement, calculated by the interest bearing debt (secured loan) to secured assets value.

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14.2 Factors or events that may have significant impact to future financial position or operating result (Forward Looking)

Economic and tourism growth level in each country where the REIT’s investment assets located, may have impact on the operating result of the investment Properties.

Volatility in exchange rate of Asean currency to USD and/or to other currencies in the same region. Main operating income derived from each local currency while functional currency is USD and raising capital and financial report presented in THB.

The REIT’s additional properties investment plan, which will increase the investment income and decrease theexpensespernet asset value.

Change in the Debt to Equity ratio and loan interest rate from such as capital increase, loan repayment or refinance related to the REIT’s business plan which may effect to increase/ decrease of interest payment or yield rate in the future.

2018ANNUAL


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