Page 91 - TreasuryChinaTrust

The transition to a listed structure in Asia from its former position as an AIM listed company in the UK has substantially increased the profile of TCT, enabling a number of milestones to be successfully met:

• Refinance of the entire loan portfolio represented by US$450 million and RMB525 million for the City Center, Central Plaza and Treasury Building assets

• Reduction in average interest costs by 33% from 6.05% for 2010 to a projected 4.03% for 2011

• Finalising development loans of RMB970 million for the City Center Extension and Beijing Logistics Park projects, which have since commenced construction

• Entered into Strategic Partnership Agreements with the TRIO Group in Qingdao and the Ginwa Group of Xi’an which are considered vital to TCT’s regional expansion plans which will deliver accretive growth in terms of net assets and net property income

• Entered into binding contracts for the acquisition of a 55% interest in Central Avenue Mall in Qingdao (45% to be held by TRIO Group) and 100% ownership of the Huai Hai Mall in Shanghai for a total outlay of RMB1.052 billion which is fully funded from an equity placement, convertible bond issue and secured borrowings to deliver balance sheet growth of RMB1.787 billion as independently valued by DTZ Debenham Tie Leung prior to year end

• Execution of a private placement to issue 16,095,047 new units in December 2010 which was substantially over-subscribed and expanded our share register to include APG Algemene Pensioen Groep NV, which confirmed subsequent to the placement to be a substantial unitholder at 7.8% • Issuance of S$59.7 million in convertible bonds on 17 March 2010

• Net profit after tax for 6 months of S$39.61 million

• Strengthening performance of gross revenue with Q4 income representing a 9.4% increase over Q3 • Improvement in portfolio leasing occupancy from 83.6% at the beginning of 2010 to 90.9% by year end • Increase in the value of the existing portfolio by 4.61% to RMB9.61 billion (S$1.88 billion) as at 31 December 2010 and growing to more than RMB11.3 billion (S$2.20 billion) as a consequence of the expected acquisitions of the Central Avenue Mall and Huai Hai Mall in early 2011 • Retention of more than S$100 million in cash reserves at year end

TCT has benefited from an economy in China which continues to grow in size, substance and importance in a global context. Whilst China’s economy will likely face some headwinds during 2011 as the government seeks to meet with concerns of a higher inflationary environment, TCT with its increasing exposure to the retail property sector, is well-positioned to exploit the areas of growth, whilst mitigating the areas of risk likely to emerge in the short to medium term.

As one of the largest investors in Chinese commercial real estate, TCT with more than 240,000 square metres of existing office and retail properties, will exhibit strong and consistent cashflow across the short to medium term, underpinned by an occupancy rate of more than 90% which is expected to be maintained as a minimum during 2011. Furthermore, strong organic gross rental income growth is assured via the ongoing development of an additional 163,000 square metres of retail, office and logistics properties in Shanghai and Beijing. This current development cycle is expected to be completed in 2012 by which time gross revenue is projected to double from its 2010 level.