Why Invest in REITs?

Bursa Malaysia

Kuala Lumpur

13 August 2011

1

Increasing Inflation

2

How to protect your investments?

• Finding alternative investment options that

generate higher return than inflation rate.

• But do not want too high risks?

3

Make your $ work harder!

Many options depending on your risk profiles:

– Physical • Gold (But no periodic cash/dividend income?)

• Properties (But not liquid and maintenance issues?)

– Financial• Saving or Fixed deposits (But cannot hedge against inflation?)

• Capital market

– Bond market (But too low return?)

– Equity market /ETF (But too high risk?)

• Unit Trusts (But payments are made in units and distribution not

more than 90%? Incur upfront cost for equity related unit trust

funds)

• REITs

4

REIT?

Real Estate Investment Trust

5

REIT Model

6

Types of REITs in Malaysia

No.Malaysia REITs Retail Hospitality Office Industrial Others1Sunway REIT v v v2CMMT v3Hektar v4Axis v v5Al-Aqar KPJ v6Al-Hadharah Boustead v7Quill Capita v v v8UOA v9Tower v

10Amanah Harta Tanah PNB v v11AmanahRaya v v v v12AmFirst v v v13Atrium v14Starhill v

7

Global trend of REITs?

8

9Source: Ernst & Young Global Real Estate Investment Trust Report 2010

Market capitalisation

10

Total rate of return

Source: Ernst & Young Global Real Estate Investment Trust Report 2010

11

M-REITs are relatively less risky

Source: Ernst & Young Global Real Estate Investment Trust Report 2010

12

Conclusions

• Malaysia REIT (M-REIT) industry is still relatively young and small.

• Potential to grow to be on par with regional players as more stakeholders help to develop the M-REIT industry over time.

13

Malaysian REITs?

14

What do institutional investors look for?

1. Size in terms of asset value and market capitalisation.

2. Liquidity in terms of average daily trading volume and free float.

15

Size of M-REITs

159 184555 606 782 844 896 998 1,011 1,045 1,209

1,619

2,278

4,305

Amanah Harta

Tanah PNB

Atrium REIT UOA REIT Tower REIT Quill Capita

Trust

Al-Hadharah

Boustead

REIT

AmanahRaya

REIT

Hektar REIT Al-Aqar KPJ

REIT

AmFirst REIT Axis REIT Starhill REIT Capitamalls

M alaysia

Trust

Sunway REIT

Total asset value (RM millions)

Source: Asset value of 8 existing assets of Sunway REIT was appraised by Knight Frank on 16 March 2010 and Putra Place on 16 March 2011 while total asset values of other M-REITs were obtained from Bloomberg as at 30 June 2011.

(RM millions)

106 133351 421 432 506 527 596 685

909 921 1,043

1,854

2,982

Amanah Harta

Tanah PNB

Atrium REIT Tower REIT Quill Capita

Trust

Hektar REIT AmFirst REIT AmanahRaya

REIT

UOA REIT Al-Aqar KPJ

REIT

Al-Hadharah

Boustead

REIT

Axis REIT Starhill REIT Capitamalls

M alaysia

Trust

Sunway REIT

Market capitalisation (RM millions)(RM millions)

Source: Bloomberg as at 30 June 2011.

16

Liquidity of M-REITs

Source: Bloomberg and Sunway REIT Management as at 30 June 2011.

Free float (RM millions)

47 57 84 124 168 194 243 279 317 343 384

736 793

1,299

Al-Aqar KPJ

REIT

Amanah

Harta Tanah

PNB

Atrium REIT Hektar REIT Quill Capita

Trust

Al-Hadharah

Boustead

REIT

Amanahraya

REIT

Tower REIT AmFirst REIT Starhill REIT UOA REIT Axis REIT Capitamalls

M alaysia

Trust

Sunway REIT

(RM millions)

23,614 65,043 91,367 106,630 114,698 178,535 178,998 186,839 187,659 268,696 300,650 426,996

1,324,012

2,947,096

Amanah Harta

Tanah PNB

UOA REIT Atrium REIT Al-Hadharah

Boustead

REIT

Hektar REIT Axis REIT Tower REIT AmanahRaya

REIT

Quill Capita

Trust

Starhill REIT Al-Aqar KPJ

REIT

AmFirst REIT Capitamalls

M alaysia

Trust

Sunway REIT

Average daily trading volume (Units) since 8 July 2010

Source: Bloomberg as at 30 June 2011

46.0% of M-REITs’ average daily volume(Units)

17

Retail investors?

1.Not enough time to do research.2.Do not have access to many research tools,

data and information.3.Do not have in-depth financial and market

knowledge to do proper research.

Leverage on institutional investors to do the above!

18

Why REITs?

19

REITs vs Physical Properties

1. More liquid as can buy and sell via stock market2. Relatively lower risks:

• Diversification benefits due to scale and size• Less leverage due to maximum borrowing

ratio of 50%3. Hassle free due to professional management

services4. Transparent due to stringent REIT guidelines5. Don’t need so much capital 6. Chance to own part of iconic assets which were

previously not available in the market for sale

20

1. Stable rental income with multiple tenants

2. Pay more than 90% of net income to unit holders

3. Withholding tax at 10% for REITs vs 25% corporate

tax for property companies hence more efficient

4. Relatively less fluctuations in share price

5. More stringent regulatory requirements:

A. Shorter reporting period (e.g. annual report 2 months for

REITs vs 6 months for listed property stocks)

B. Borrowing < 50%

REITs vs Property Stocks

21

REITs vs Fixed Deposits

2.29%higher than Fixed Deposits

Source: Sunway REIT Management and Maybank2u.com

5.44Sunway REIT’s net yield

3.15

22

Some risks of investing in REITs

1. Fluctuation of unit prices

2. Dividend yield might fluctuates:

A. Rental income might change due to change of tenants

B. Other business and financial risks that might impact cash flows

C. Fluctuation of unit prices will cause yield to change

Please make sure you do your own research, understand all risks involved in any investments as well as your own risk profile. If in doubt, please kindly contact your broker or any licensed financial advisors for more information or guidance.

23

Invest according to your own risk appetite

Risk

Return

Shares

Bonds

Fixed Deposits

REITs

24

Conclusions

• REITs are a good alternative asset class for an investment portfolio:

– REITs will help to generate additional potential return through distribution yield and potential capital appreciation.

– REITs will help reduce portfolio risk through diversification.

• Park some additional funds to REITs to have a more balanced investment portfolio!

25

What should you look for when investing in REITs?

26

Some key considerations

1. Size and liquidity matters to institutional investors

2. Gearing of REITs

3. Experienced management team with relevant skills and good track record

4. Quality and location of assets

27

Sunway REITDriving values through sustainable growth

28

PORTFOLIO OVERVIEW: 11 assets worthRM4.379 billion

Sunway Resort Hotel & Spa

Room: 439 guest rooms, 3 villas

Sunway Pyramid Shopping Mall

NLA: 1,685,568 sq ft (1)

Room: 549 guest rooms

Pyramid Tower Hotel

Menara Sunway

NLA: 268,978 sq ft

Value: RM 480m

Value: RM 2,300m Value: RM 138m

Value: RM 270m

Bandar Sunway

NLA: 181,216 sq ft

SunCity Ipoh Hypermarket

Value: RM 50m

Ipoh

Sunway Hotel Seberang Jaya

Room: 202 guest rooms

Sunway Carnival Shopping Mall

NLA: 484,364 sq ft(2)

Value: RM 250m Value: RM 56m

Pusat Bandar Seberang Jaya

(1) Includes convention centre of 143,467 sq. ft. of NLA.

(2) Includes convention centre of 32,292 sq. ft. of NLA.

Pahang

Johor

Negeri Sembilan

Kedah

Perlis

Terengganu

Malacca

Kelantan

Selangor

Penang

Perak

Kuala Lumpur

Retail

Hotel

Office

Sunway Tower

NLA: 268,412 sq ft

Value: RM 185m

Kuala Lumpur

Putra Place

Value: RM 576m

Retail, hotel and office

Source: Sunway REIT management, Knight Frank (3 Feb 2010) and Putra Place was valued by Knight Frank on 16 March 2011.

29

STATISTICS: Overall snapshot

Facts Figures

Average daily turnover1 2.95 million units

Av. daily turnover as a % of M-REITs’ av. daily turnover1 46.0%

Gross floor area 10.6 million sq. ft.

Distribution rate2 100%

Distribution per unit (FY2011)3 6.7 sen

Distribution yield (FY2011)4 6.0%

Market capitalisation5 RM2,982 million

Total asset value6 RM4,379 million

Notes:1. These statistics were calculated from 8 July 2010, Sunway REIT’s listing date, to 30 June 2011.2. This applies to Financial Years 2011 and 2012. Distribution rate from Financial Year 2013 onwards will be minimum of 90%.3. Annualsed Distribution Per Unit.4. This is calculated based on closing price on 30 June 2011. Such yield will vary accordingly for investors who purchase units in the secondary market at different market price. 5. Dated 30 June 2011 where closing price was RM1.11 and 2,686,898,400 units listed.6. Sunway REIT management, Knight Frank (3 Feb 2010) and Putra Place was valued by Knight Frank on 16 March 2011

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Sunway REIT Unit holders Information: Solid institutional backing

Total number of unit holders as at 30 June 2011: 6,255

Individual5%

Sunway City Berhad

37%Institutions58%

Breakdown by number of unitsDated: 30 June2011

Domestic76%

Foreign24%

31

Strong leadership and management: Turning vision into realities

Board of Directors

Elvin A/L Berty Luke Fernandez

Independent Non-Executive Director

Dato’ Ngeow Voon Yean

Non-Independent Non-Executive Director

Tan Sri Dato’ Seri Dr Cheah Fook Ling, AO

Chairman and Non-Independent Non-Executive Director

Willy Shee Ping Yah @ Shee Ping Yan

Independent Non-Executive Director

Sarena Cheah Yean Tih

Non-Independent Non-Executive Director

Dato’ Jeffrey Ng Tiong Lip

Chief Executive Officer &

Non-Independent Executive Director

Cheah Wing Choong

Investment/ Business Development Manager

Nicholas Lum Yew Choe

Investor Relations Manager

Wai Sow Fun

Chief Financial Officer

Goh Hai Thun @ Ng Hai Thun

Commercial Asset Manager

Desmond Chin Soon Yenn

Compliance Officer

Chow Pooi Onn

Finance Manager

Chan Hoi Choy

Retail Asset Manager

Management team

Dato’ Jeffrey Ng Tiong Lip

Chief Executive Officer &

Non-Independent Executive Director

Tan Sri Ahmad Bin MohdDonIndependent Non-Executive Director

32

THE LARGEST Malaysian REIT

and Retail focused REIT IN MALAYSIA

33

Portfolio overview: Retail focused REIT

Asset breakdown by appraised valueTotal appraised value: RM 4,379 mil

Source: Knight Frank (8 February 2010 for 8 original assets and 16 March 2011 for Putra Place).

Asset breakdown by GFATotal GFA: 10,621,086 sq. ft.

Source: Sunway REIT management.

63%

23%

14%

Retail

Hotel

Office66%

24%

10%

Retail

Hotel

Office

34

Largest retail focused REIT in Malaysia

Source: Sunway REIT Management and websites of CMMT and Hektar REIT as at 30 June 2011

Asset valueAsset value of retail assets of M-REITsRM million

NLA of retail assets of M-REITsNet Lettable Area (NLA) in square feet

2,891

2,431

782

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Sunway REIT CMMT Hektar

2,875,139

2,017,500

1,097,660

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Sunway REIT CMMT Hektar

35

Overall performance since IPO on 8 July 2010

Total return:29.3%*YTD 30 June 2011

30 June 2011 ActualResults

(RM ‘000)IPO Forecast

(RM’000)Variance

(%)Revenue 327,416 322,975 +1.4Net Property Income 244,015 241,377 +1.1Income Before Tax 533,663 166,769 +232.0

Distribution Per Unit (cents) -annualised 6.7 6.7 0.0

* Based on IPO Pricing of RM0.90 and closing price of RM1.11 on 30 June 2011 and distribution yield of 6%.

36

This presentation may contain forward-looking statements that involve risks and

uncertainties. Actual future performance, outcomes and results may differ materially from

those expressed or implied in forward-looking statements as a result of a number of risks,

uncertainties and assumptions. Such as (without limitation) general industry and

economic conditions, interest rate trends, cost of capital and capital availability,

availability of real estate properties, competition from other companies and venues for the

sale/distribution of goods and services, shifts in customer demands, customers and

partners, changes in operating expenses, including employee wages, benefits and

training, governmental and public policy changes and the continued availability of

financing in the amounts and the terms necessary to support future business. You are

cautioned not to place undue reliance on these forward-looking statements, which are

based on current view of management on future events. Please also note that past

performances do not necessary reflect similar future trend.

DISCLAIMER

37

For further information on this presentation kit, please kindly contact:

Nicholas LumSunway REIT Management Sdn. Bhd. (The Manager of Sunway REIT)Email: lumyc@sunway.com.myContact: +6012 327 0849

Website of Sunway REIT: www.sunwayreit.com