GrowinG FroM FIRM FOUNDATIONS - listed companyfeht.listedcompany.com/misc/ar2012.pdf · investment strategy of investing on a long-term basis, directly or indirectly, in a diversified

A N N U A L R E P O R T 2 0 1 2

GrowinG FroM FIRM FOUNDATIONS

01 AboutUs•OurStructure

02 OurStrategy

08 LetterfromChairman

12 LetterfromChairman(Chinese)

14 FinancialHighlights

16 PerformanceReview

24 PropertyPortfolio

28 BoardofDirectors

32 ManagementTeam

36 InvestorRelations

38 CorporateDirectory

39 CorporateGovernance

57 StatementofPoliciesandPractices

65 Financials•FarEastHospitalityTrust

109 Financials•Trustee-Manager

128 StatisticsofStapledSecurityholdings

131 NoticeofAnnualGeneralMeeting

ProxyForm

FIRST AND ONLYSINGAPORE-FOCUSEDHOSPITALITYTRUST

The Quincy hoTel

01

AnnuAl RePoRT 2012

About us

Far east hospitality Trust ( Far east h-Trust) is the first and only Singapore-focused hotel and serviced residence hospitality trust listed on the Main Board of Singapore exchange Securities Trading limited (“SGX-ST”). comprising Far east hospitality Real estate investment Trust (“Far east h-ReiT”) and Far east hospitality Business Trust (“Far east h-BT”), it is Singapore’s largest diversified hospitality portfolio by asset value. listed on the SGX-ST on 27 August 2012, Far east hospitality Trust has a market capitalisation of approximately S$1,607 million as at 31 December 2012.

Far east h-ReiT holds 7 hotels and 4 Serviced Residences and is managed by the ReiT Manager,

Feo hospitality Asset Management Pte ltd. each of the 11 Properties will be under a Master lease Agreement where the Master lessee will pay a rent that comprises a fixed rent and a variable rent from the respective property’s revenue from operations. As at the listing date, the hotel and Serviced Residence operator is Jelco Properties Pte ltd.

Far east h-ReiT is established with the principal investment strategy of investing on a long-term basis, directly or indirectly, in a diversified portfolio of income-producing real estate in Singapore, 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.

FAR EAST H-REIT FAR EAST H-BT

Far East Hospitality Trust Structure

our structure

1 As at the reporting date, Far east h-BT is dormant.

02

FAR eAST hoSPiTAliTy TRuST

our strAtegy

The ReiT Manager takes pro-active measures to capitalise on organic growth opportunities, improve cost management and enhance the properties for better operational performance to optimise cash flow and property value.

The ReiT Manager plans to source and acquire assets from third parties and the Sponsor, focusing on those that provide attractive cash flows and yields to enhance the returns and improve opportunities for future income and capital growth.

For capital and risk management, the ReiT Manager endeavours to maintain a strong balance sheet with diversified funding sources. it seeks to optimise its cost of debt financing and utilise interest hedging strategies to reduce exposure to market volatility and employ an appropriate mix of debt and equity to finance acquisitions.

These efforts are fundamental to the objective of generating better performance and returns from our portfolio to deliver value to our Stapled Securityholders.

oASiA hoTel SinGAPoRe

03

AnnuAl RePoRT 2012

chAnGi VillAGe hoTel

TARGETING HIGHGROWTHMID-TIERANDUPSCALESEGMENTS

04


ABILITY TO CAPTURESHORTANDLONGTERMDEMAND

AlBeRT couRT VillAGe hoTel

05

AnnuAl RePoRT 2012

“As A sinGApore-Focused hotel And serviced residence hospitAlity trust, FAr eAst h-trust reMAins well-plAced to beneFit FroM the Growth oF sinGApore’s hospitAlity MArket As the country reMAins A hiGhly reGArded destinAtion For business And leisure.”

KoH Boon HwEE, CHAIRmAn And non-ExECuTIvE dIRECToR

+0.9% in portfolio valuation

since listing, reaching approximately

$2.16 billion as at 31 december 2012.

The elizABeTh hoTel

houGAnG VillAGe ReSiDenceS

06


“we Are proGressively executinG our Asset enhAnceMent proGrAMMes on selected properties to cApitAlise on the expected Growth in the tourisM industry. we Are Also Actively MAnAGinG our Assets. these eFForts Are FundAMentAl to our objective oF GenerAtinG better perForMAnce And returns FroM our portFolio to deliver vAlue to our stApled securityholders. we will Also seek Accretive Growth by AcquirinG third pArty properties with Good potentiAl, in Addition to sponsor properties, to expAnd FAr eAst h-trust’s portFolio.”

GERAld lEE, CHIEF ExECuTIvE oFFICER

86.4% average occupancy at the hotels helped to buoy revenue per Available room.

oRchARD PARADe hoTel

chAnGi VillAGe hoTel

07

AnnuAl RePoRT 2012

WELL-POSITIONEDTOCAPITALISEONGROWTHOPPORTUNITIES

oASiA hoTel SinGAPoRe

08


mr Koh Boon Hweechairman and non-executive Director

The Quincy hoTel

09

AnnuAl RePoRT 2012

dear Stapled Securityholders

on behalf of the Board of the ReiT Manager and Trustee-Manager, i am pleased to present this inaugural annual report of Far east hospitality Trust (“Far east h-Trust”) to you.

Far east h-Trust was launched on 16 August 2012 with a well-received initial Public offering (“iPo”) which saw the placement and retail tranches oversubscribed by more than 30 times and 14 times, including proceeds raised respectively. We raised about S$717.6 million from a number of cornerstone investors. This was followed by our successful listing on the Main Board of the Singapore exchange Securities Trading limited (“SGX-ST”) on 27 August 2012. Far east h-Trust’s portfolio comprises 7 hotels and 4 Serviced Residences with assets under management of more than S$2.1 billion. Market capitalisation stands at about S$1.7 billion which accounts for about 38.5% of the market capitalisation of Singapore’s hospitality ReiT sector as at 28 February 2013. This strong show of support validates the merits of Far east h-Trust,

the only Singapore-focused hospitality trust – in the eyes of the investing community. We thank you, our Stapled Securityholders, for your support of our iPo and listing.

making good progress with solid debut

Far east h-Trust reported its first set of results on a commendable note despite a tentative economic climate over the last two quarters of 2012.

We delivered income Available for Distribution of S$33.6 million for the period from 27 August 2012 to 31 December 2012. This exceeded our forecast of S$32.2 million at the time of our iPo, by 4.5%. This achievement demonstrates the ReiT Manager’s ability to manage the performance and expenses of the portfolio as well as the Far east h-Trust as a whole.

As a result, we were able to deliver Distribution per Stapled Security (“DPS”) of 2.09 Singapore cents, which is 4.5% higher than the 2.00 Singapore cents forecast at the time of the iPo. This translates into an annualised yield of 6.5% based on our iPo price of S$0.93.

laying the foundations for growth

Singapore’s position as a premier tourist destination is being bolstered by significant investments in new tourist attractions. These include recent additions such as the Gardens by the Bay, Marine life Park, River Safari and the international cruise Terminal. Tourism catalyst projects in the pipeline include the Singapore Sports hub and the national Art Gallery. A new Terminal 4 at changi Airport is expected to accommodate the expected increase in visitor arrivals when ready by 2017.

Letter FroM tHe cHAIrMAN

“FAr eAst h-trust reported its First set oF results on A coMMendAble note despite A tentAtive econoMic cliMAte over the lAst two quArters oF 2012.”

Income Available for distribution

+4.5%

10


letter FroM the chAirMAn

Far east h-Trust’s portfolio comprises well-located and high quality assets that provide easy access to these tourist attractions as well as to business, shopping and cultural districts and healthcare facilities. our assets, consisting of mid-tier and upscale hospitality properties are uniquely positioned to capitalise on the growth opportunities from these Singapore tourist attractions.

Apart from leisure traffic, the anticipated economic expansion in Asia is expected to generate more business travel. The share of business travellers as a percentage of total visitors to Singapore is expected to increase. We are cautiously optimistic that corporate demand in Singapore will be sustained at healthy levels, in line with the economic developments in Singapore and the neighbouring countries.

orchard Parade hotel, The elizabeth hotel, landmark Village hotel and The Quincy hotel are strategically located to benefit from demand among corporate guests, due to their convenient access to the central Business District (“cBD”) and the orchard Road area, Singapore’s prime areas of business and tourism. oasia hotel, which is currently into its second year of operations, will continue to leverage on the expansion of the medical hub at novena.

changi Village hotel and hougang Village Residences which are close to business hubs such as changi Business Park and Seletar Aerospace Park; are well-situated to cater to corporate guests in the eastern and northern parts of Singapore with their proximity to business. our other Serviced Residences: central Square Village Residences, Regency house, and Riverside Village Residences will continue to attract guests requiring close proximity to the cBD.

Investing for future growth

it is with the interests of the leisure and corporate travellers in mind that we continue to refine our processes and products to stay abreast of competition. We are executing a number of asset enhancement initiatives to improve the performance of our assets. our objective is to bring about higher revenue-generating capabilities of our assets and to build greater value into the long-term.

For the year 2013, we have set aside capital expenditure for the purpose of refurbishments, renovations and improvement works on our properties to enhance their attractiveness to our leisure and corporate guests. The funds will be applied towards renovations of rooms and public areas, and upgrading of mechanical and electrical infrastructure. At this present moment, refurbishment works are being carried out at landmark Village hotel and orchard Parade hotel. We will also commence refurbishment and asset enhancement works on Albert court Village hotel, changi Village hotel and Regency house in 2013.

As we implement initiatives to increase the returns of our properties, we also aim to grow our portfolio by acquiring third party properties and tapping on the pipeline of assets from our Sponsor.

Far east h-Trust’s portfolio mix of hotels and Serviced Residences exemplifies our strategy – that we are uniquely positioned to ride the growth of the hospitality sector in Singapore. We are committed to build a defensive and resilient portfolio that will enable Far east h-Trust to deliver regular and stable distributions to Stapled Securityholders over the long-term.

11

AnnuAl RePoRT 2012

letter FroM the chAirMAn

Far east h-ReiT has distributed 100% of its taxable income for the period from 27 August 2012 to 31 December 2013, and at least 90% of its taxable income thereafter. on capital management, prudent capital and risk management have enabled Far east h-Trust to achieve a fine balance between the cost and tenure of debt.

looking ahead

As a Singapore-focused hotel and serviced residence hospitality trust, Far east h-Trust remains well-placed to benefit from the growth of Singapore’s hospitality market as the country remains a highly regarded destination for business and leisure.

in the near term, we still see some headwinds. The unites States has shown some signs of recovery, but the european economies are still concerned with the sovereign debt problems. A slow recovery to full economic health may dampen corporate commitments and business travel. The strength of the economies in the Asia-Pacific region is expected to support the growth. in Singapore, the Government has steered towards a productivity-led growth economy and reduced reliance on foreign manpower. This will put pressure on labour supply and manpower cost for the hospitality industry, although the introduction of the Wage credit Scheme on 1 March 2013 will help cushion some of the increase in wage cost. The ReiT Manager is optimistic about the potential of the tourism and hospitality industry in Singapore, and remains committed to pursuing quality and sustainable yield accretive investments to grow the Trust.

Appreciation

Far east h-Trust’s successful listing on the SGX-ST would not have been possible without the concerted effort of many parties. i would like to thank my fellow colleagues on the Board for their invaluable counsel and wisdom. We are also grateful to our corporate customers and business partners for their continuous support

on behalf of our Board, i would also like to thank the Sponsor, which is part of the Far east organization, for their strong support and the management team for their dedication and hard work in making the iPo listing of Far east h-Trust a success.

lastly, i would like to thank you, our Stapled Securityholders, for your trust and confidence in us, and for your investment in Far east h-Trust.

i am confident that we can look toward another fruitful year and deliver steady performance for Far east h-Trust.

Koh Boon Hweechairman

12


远东酒店信托2012年常年报告主席致辞

各位合订证券持有人

我谨代表房地产投资信托管理人以及信托经理的董事会，提呈远东酒店信托的第一份常年报告书。

远东酒店信托于2012年8月16日展开首次公开发售计划并获得投资者的热烈反应，配售给机构投资者和供散户认购的单位分别取得了超过30倍和14倍的认购率，集资总额达到7亿1760万新元，其中包括来自多个基础投资者的资金。2012年8月27日，我们在新加坡证券交易所的主板成功上市。远东酒店信托的资产组合是由7家酒店和4个服务公寓项目组成，资产价值总额超过21亿新元。截至 2013年2月28日，远东酒店信托的市值高达17亿新元，相等于新加坡整体酒店业房地产投资信托市值总额的大约 38.5% 。投资者给予的大力支持，核实了远东酒店信托作为唯一专注于新加坡酒店业的信托的种种优势。我们在此向各位证券持有人表示由衷的感谢，谢谢你对我们上市计划的鼎力支持。

上市后业绩表现进展良好

尽管2012年最后两个季度的经济状况不稳定，远东酒店信托发表的第一份财务报告仍然呈现出良好的业绩表现。

从2012年8月27日到12月31日期间，信托的可派发收入多达3365万新元，这比当初在首次公开发售计划期间预计的3220万新元超出了4.5%。这意味着房地产投资信托管理人在管理投资组合的表现和开销方面，发挥了良好的实力。

因此，每合订证券可派发收入为2.09分新币，比首次公开发售计划期间预期的2.00分高出了4.5%。根据首次公开发售价0.93分（新币）计算，远东酒店信托提供的年收益率高达6.5%。

奠定增长的基础

为了持续巩固新加坡作为主要旅游中心的地位，新加坡投入了大笔资金积极开发新的旅游景点，其中包括滨海湾花园、圣淘沙海洋生物园、河川生态园以及滨海南国际邮轮中心。目前还在进行开发中的旅游重点项目还包括新加坡体育城以及新加坡国家艺术馆。樟宜机场也正在筹建新的第四航站楼，预计2017年建成后将能够符合日渐增长的旅客需求。

远东酒店信托投资组合旗下的酒店资产不但素质良好，而且地点优越，方便住客通往各大旅游景点，商业、购物和文化地区，以及医药保健设施。我们的资产主要是属于中高档酒店项目，而这类项目具有一定的优势，可受惠于新加坡旅游业的增长潜能。

除了休闲旅游以外，亚洲经济的蓬勃发展预料也会带动更多的商务旅游需求，到访新加坡的商务旅客所占的比重预料将提高。我们对商务旅客的需求保持谨慎且乐观的态度，相信这股需求将随着新加坡及其邻近国家的经济发展而维持在稳健的水平。

乌节广场酒店、伊丽莎白酒店、黄金龙马酒店与昆西酒店受到一般企业客户的青睐，这是因为它们的地点适中，方便住客来往中央商业区及乌节路地区。刚刚投入第二年运作的绿洲大酒店将随着诺维娜医药枢纽的发展趋势而持续取得增长。

樟宜村酒店与后港村酒店式公寓的位置靠近樟宜商业园与实里达航空园区等商业枢纽，则可满足新加坡东部与北部的企业客户的需求。我们的其他服务公寓项目如中央广场村酒店式公寓、丽晶大厦与河滨村酒店式公寓将继续吸引那些需要住得靠近中央商业区的住客。

13

AnnuAl RePoRT 2012

远东酒店信托2012年常年报告主席致辞

为未来增长作出投资

我们以满足休闲和商务旅客的需求作为出发点，不断改善我们的工作流程和产品，以增进竞争能力。我们正在推展一些资产提升计划以改善资产的表现。我们的目标是确保资产具有更高的营收能力，并在长期内创造更大的价值。

我们已为2013年拨出一笔资金作为装修、翻新及改善部分资产和设施用途，以维持对休闲和商务旅客的吸引力。这些资金将用于装修酒店的客房和部分共用设施，以及提升机械和电力基础设施。

目前，黄金龙马酒店和乌节广场酒店已经开展翻新工程。我们也将在2013年开始为雅柏酒店、樟宜村酒店和丽晶大厦展开翻新及资产提升工程。

在推行各种措施来提高资产回报之际，我们也定下目标，希望通过收购第三方及保荐人的资产来扩大我们的资产组合。

远东酒店信托由酒店和服务公寓组成的资产组合，充分体现了我们的战略--我们占有独特的优势与新加坡酒店业的发展趋势同步增长。我们致力于打造一个具备防御性的和有弹性的组合，让远东酒店信托能够长期为合订证券持有人提供定期和稳定的收入。

远东酒店信托已把其2012年8月27日至2013年12月31日期间应纳税收入的100%全数派发给证券持有人，以后也将派发至少90%的应纳税收入给投资者。在资本管理方面，基于审慎的资本和风险管理，远东信托在债务的成本和期限之间取得了良好的平衡。

展望未来

作为一个专注于新加坡酒店和服务公寓的信托，远东酒店信托持续处于有利的地位，从新加坡酒店业市场的增长中受益，毕竟新加坡仍是一个备受高度重视的商务和休闲旅游目的地。

在近期内，我们仍然会面对一些挑战。虽然美国经济已显露一些复苏的迹象，不过欧洲经济体仍受到主权债务问题的困扰。经济全面复苏的步伐缓慢，可能会影响到企业的商业投资活动及商务旅行。亚太地区经济体的实力，预料将为经济增长提供一定的支持。在新加坡，政府已着手朝以生产力为主导的经济增长发展，并致力于减少对外国劳工的依赖。这将给酒店业的人力供应与成本造成一定的压力，尽管政府于2013年3月1日推行的加薪补贴计划，将有助于舒缓工资成本上涨的部分压力。

房地产投资信托管理人看好新加坡旅游业和酒店业的发展潜力，并会继续致力于追求高素质且可持续增加收益的投资项目来扩展信托。

致谢

远东酒店信托的成功上市要归功于许多人的共同努力。我非常感激董事会的同事们，他们都提供了宝贵的意见和智慧。我们也要感谢所有企业客户和业务合作伙伴所给予的支持。我在此代表董事会向附属于远东机构集团的保荐人致谢。同时，我也要感谢管理团队的奉献和努力。有了他们的支持和努力，远东酒店信托的首次公开发售计划才得以顺利落实。

最后，我也要向你--我们的合订证券持有人说声谢谢，由衷感谢你们对我们的信任和信心，谢谢你对远东酒店信托的投资。

我有信心，接下来的一年会是另一个丰收年，而远东酒店信托将继续取得稳健的业绩表现。

许文辉主席

14


FINANcIAL HIgHLIgHts

1 Actual results are from 27 August 2012 to 31 December 2012 as Far east h-Trust was listed on SGX-ST on 27 August 2012.2 The forecast as disclosed in the prospectus has been prorated, where appropriate for the period from 27 August 2012 to 31 December 2012,

after taking into consideration the respective master lease arrangements.

14


InComE AvAIlABlE FoR dISTRIBuTIon

+4.5%S$33.6million

(S$’000)

Actual 20121

Forecast 20122

33,646

32,172

dISTRIBuTIon PER STAPlEd SECuRITY

+4.5%2.09cents

(cents)

Actual 20121

Forecast 20122

2.09

2.00

nET PRoPERTY InComE

+0.2%S$38.8million

Actual 20121

Forecast 20122

(S$’000)

38,783

38,694

nET ASSET vAluE PER STAPlEd SECuRITY

+4.3%97cents

31 December 2012

27 August 2012

(cents)

97

93

15

AnnuAl RePoRT 2012

FinAnciAl hiGhliGhts

STATEmEnT oF ToTAl RETuRn S$ mIllIon

Gross revenue 42.2

net property income 38.8

net income before fair value change 18.1

distribution to stapled security holders 33.6

BAlAnCE SHEET S$ mIllIon

total assets 2,215.0

investment properties 2,158.4

total liabilities 662.1

net assets 1,552.9

KEY FInAnCIAl RATIo

borrowings / total assets 29.2%

interest cover ratio1 10.1 times

weighted average debt maturity 4.0 years

15

AnnuAl RePoRT 2012

chAnGi VillAGe hoTel1 Defined as net property income divided by interest paid / payable to banks.

16


PerForMANce reVIeW

listing on the SGx-ST

Far east hospitality Trust (“Far east h-Trust”), a stapled group comprising Far east hospitality Real estate investment Trust and Far east hospitality Business Trust launched its initial Public offering (“iPo”) on 17 August 2012, becoming the first and only Singapore-focused hospitality trust to be listed on the SGX-ST.

it is backed by a committed and reputable sponsor - Far east organization, Singapore’s largest private property developer and one of the largest owner-operators of hospitality assets in the city-state. Far east h-Trust commenced trading on 27 August 2012, closing its first trading day at 95 Singapore cents, gaining 2.2% above the iPo price of 93 Singapore cents.

Status Report on the use of IPo Proceeds

in August 2012, Far east h-Trust raised gross proceeds of S$1,491.6 million from the initial public offering and issue of Stapled Securities to cornerstone investors and the Sponsor.

The use of proceeds is in accordance with the stated use and is in accordance with the percentage allocated in the iPo prospectus, except for S$12.2 million which has been reallocated for asset enhancement purposes. This savings resulted from lower fees, spending on prospectus production, road show expenses and certain other expenses incurred in relation to the iPo.

27 August 2012 31 december 2012 28 February 2013

opening Price s$0.93 s$1.00 s$1.10

High s$0.98 s$1.00 s$1.10

low s$0.95 s$1.00 s$1.09

Closing Price s$0.95 s$1.00 s$1.10

volume 95,690,000 2,533,000 3,999,000

17

AnnuAl RePoRT 2012

perForMAnce review

1 Source: STB, Tourism Performance Report – Quarter Four and Full year 2011, Tourism Sector Performance for 2011

Stock price movement and trading volume of Far East H-Trust

120.0

100.0

80.0

60.0

40.0

20.0

0.0

1.150

1.100

1.050

1.000

0.950

0.900

0.850

volume (’000) Price (S$)

Voiume Price

Aug octsep nov Febdec jan

Stapled Securities Price Performance and Returns

The primary objective of Far east h-Trust is to provide Stapled Securityholders with regular, stable and growing distributions on a quarterly basis. Far east h-Trust’s policy is to distribute 100% of its taxable income for the Projection year 2013 and at least 90% of its taxable income thereafter. Based on its Distribution per Stapled Security of 2.09 cents for the period from 27 August 2012 to 31 December 2012, the annualised distribution yield for Far east h-Trust is 6.5% based on the iPo price of S$0.93.

in terms of stock price performance, Far east h-Trust stapled security climbed a healthy 7.5% from its iPo price of S$0.93 to close at S$1.00 on 31 December 2012, gaining further to close at S$1.10 on 28 February 2013. This translates to a market capitalisation of approximately S$1.6 billion and S$1.7 billion at closing on the respective dates.

The graph above shows Far east h-Trust’s average monthly closing price between 27 August 2012 and 28 February 2013.

Industry overview

As a Singapore-focused hospitality trust, Far east h-Trust seeks to leverage on the country’s stature as a highly regarded location for business travellers as well as leisure and medical tourists. in 2011, Singapore recorded 13.2 million visitor arrivals1, a growth of 20.2% from a year earlier.

in the area of business travel, Singapore’s position as a key financial centre and its growing repute as a global meetings, incentives, conventions and exhibitions (Mice) hub are expected to boost the country’s viability as a choice business destination. These business travellers typically require executive style hotel rooms or serviced residences for longer-term accommodation. in 2011, 34.4% of the visitors to Singapore are on business-related travel.1

leisure travel on the other hand, has gained on the back of significant investment to bolster the country’s position as a premier tourist destination. investments worth more than S$18 billion1 for new as well as upcoming major projects are expected to provide stimulus for both the short to longer-term growth of the tourism and hospitality markets in Singapore.

18


Portfolio of Properties

PoRTFolIo HoTElS1 Albert court village hotel2 landmark village hotel3 the quincy hotel4 the elizabeth hotel5 orchard parade hotel6 oasia hotel singapore7 changi village hotel

PoRTFolIo SERvICEd RESIdEnCES8 regency house9 riverside village residences10 central square village residences11 hougang village residences

mRT STATIon

perForMAnce review

novena medical Hub

Civic & Cultural district

Singapore River

marina Bay Cruise Centre

orchard Road Shopping Belt

orchard rd

bukit timah rdbalestier rd

raffles blvd

victoria

stTanglin

Rd

ecp

cte

Aye

pie

kpe

rochor rd

Central Region

711

1

9

10

6

5 43

82

world-class destination for advanced patient care. According to market research consultant cBRe Pte ltd, the compounded annual growth rate of medical tourist arrivals was 14.2% between 2005 and 2009. This growth is estimated to have accelerated to 17.4% to one million visitors from 2010 to 2012.

Asset Portfolio and value

Far east h-Trust has a portfolio of 11 properties consisting of 7 hotels and 4 Serviced Residences

Beyond the lure of tourist attractions in Singapore, the positive economic prospects of Asian countries are expected to drive the flow of outbound tourists from these countries to neighbouring destinations. As a premier tourist destination, Singapore potentially stands to benefit from this healthy trend to further stimulate the growth of the hospitality market.

Singapore is also seeking to strengthen its position as a destination for medical tourism, targeting to be Asia’s leading medical hub and a

19

AnnuAl RePoRT 2012

with a total of 2,163 hotel rooms and 368 serviced residence units (includes serviced residence units designated for house use). The assets are marketed primarily as mid-tier and upscale hospitality properties, allowing Far east h-Trust to capture what is believed to be the fastest-growing, most profitable and scalable hospitality market segments.

Most of the properties in the portfolio are located in the core central region: within the orchard Road shopping belt, the Marina Bay and Singapore River as well as the civic and cultural districts, which cater to both corporate and leisure guests. other hotels are in proximity to healthcare facilities. Properties outside the central region largely cater to corporate guests requiring close access to the back-office operations of many large corporations.As at 31 December 2012, total value of investment properties grew to $2,158.4 million, up from $2,139.9 million at the iPo on 27 August 2012.

perForMAnce review

Financial Performance

in its first reporting, for the period from 27 August 2012 to 31 December 2012, Far east h-Trust achieved an income Available for Distribution of S$33.6 million and Distribution per Stapled Security of 2.09 cents, exceeding its iPo forecast by 4.5%.

The Gross Revenue was marginally below forecast, mainly due to the softer performance of the Serviced Residences. The underperformance was caused by macro uncertainties in the second half of 2012 when major companies held back spending in the face of the european debt crisis and the uS “Fiscal cliff”. Serviced Residences accounted for 19.6% or S$8.3 million of the overall portfolio revenue of S$42.2 million. hotels contributed a significant 80.4% or S$33.9 million, exceeding forecast by 0.6%. The better performance was partly attributed to the strong rental income from the commercial space and significant increase in meetings and banquet business in the hotels.

Portfolio valuation breakdown by percentage as at 31 december 2012

Albert court 5.8%

changi village 11.9%

the elizabeth 8.9%

landmark village 10.5%

oasia 14.9%

orchard parade 19.5%

the quincy 3.9%

central square village 8.7%

hougang village 3.0%

regency house 7.6%

riverside village 5.3%

20


net Property income was 0.2% higher than forecast at S$38.8 million, a result of lower operating expenses. Active management of finance costs and other trust expenses also contributed to the higher than forecast income Available for Distribution.

The stapled group paid out to its Securityholders a Distribution per Stapled Security of 2.09 cents, which was 4.5% higher than forecast.

Capital and Risk management

Far east h-Trust endeavours to maintain a strong balance sheet, employ an appropriate mix of debt and equity to finance acquisitions of properties, secure diversified funding sources by accessing both financial institutions and capital markets, optimise its cost of debt financing and utilise interest rate hedging strategies where appropriate; in order to reduce exposure to market volatility.

Far east h-Trust seeks to optimise the capital structure and cost of capital, within the borrowing limits set out in the Property Fund Appendix, by employing an optimal capital structure using a combination of debt and equity in financing acquisitions of properties and asset enhancement. it adopts and maintains an appropriate aggregate leverage level to ensure optimal returns to Stapled

Securityholders, while maintaining flexibility in respect of future capital expenditure or acquisitions.

Far east h-ReiT obtained an unsecured floating rate term loan facility of S$650 million and revolving credit facilities of $75 million from DBS Bank limited, ocBc Bank limted and hSBc limited. The term loan facility has been fully drawn at iPo to finance the acquisition of properties with staggered debt maturities of 3, 5 and 7 years, while the revolving credit facility remains undrawn. As of 31 December 2012, gearing level was at 29.2%.

in managing the interest rate exposure, Far east h-ReiT has entered into interest rate swap contracts to fix the borrowing costs. The proportion of fixed rate loans stood at 54% as at balance sheet date. on 5 February 2013, Fitch Ratings accorded Far east h-Trust a debt rating of ‘BBB- long-Term Foreign and local currency issuer Default Ratings with a Stable outlook’. With a credit rating, aggregate leverage limit can be increased to a maximum of 60% of the value of its deposited property, up from the previous limit of 35% in the absence of a credit rating. The credit rating by Fitch Ratings will therefore allow Far east h-Trust more flexibility in managing its capital structure to cater for future acquisitions.

perForMAnce review

Actual Forecast1 variance

(%)

Gross revenue ($’000) 42,216 42,529 (0.7)

net property income ($’000) 38,783 38,694 0.2

income Available for distribution ($’000) 33,646 32,172 4.5

distribution per stapled security (cents) 2.09 2.00 4.5

1 The forecast figures are derived by pro-rating the forecast disclosed in the Prospectus for the period from 27 August 2012 to 31 December 2012, after taking into consideration the respective master lease arrangement.

21

AnnuAl RePoRT 2012

Business and operations Review: Hotels

While there was some pressure on average room rates, resulting in the average Revenue per Available Room (“RevPAR”) of $171 versus the forecast of $174, the Manager has actively managed the properties’ occupancy and ADR to optimise RevPAR. The higher revenue from the commercial space, the increased meetings and banquet business as well as the higher level of occupancy helped to offset the lower room revenue of the hotels. consequently, the hotels performed better than forecast.

Geographically, the north Asia and Southeast Asia segments collectively increased their market share within the hotel portfolio, rising from 45.8% to 52.6% between 2011 and 2012 respectively. hotels attracted more business travellers in 2012. contribution from the corporate market segment increased to 48.3% from 43.6% a year earlier.

market Segmentation FY 20121 – Hotels

hotels (by revenue)

1 Actual results are from 27 August to 31 December 2012 as Far east h-Trust was listed on 27 August 2012.

hotels (by region)

perForMAnce review

Summary of Portfolio Performance - Hotels

Actual Occupancy vs Forecast Actual ADR vs Forecast Actual RevPAR vs Forecast

100

80

60

40

20

0

%220200180160140120100806040200

S$

Actual 2012

86.4

Forecast 2012

84.9

Actual 2012 Forecast 2012

220200180160140120100806040200

S$

198

Actual 2012

171

Forecast 2012

174205

leisure / independent

51.7%

corporate 48.3%

southeast Asia29.9%

north Asia 22.7%europe 16.4%

south east Asia 11.2%

oceania 7.9%

north America 7.2%

others 4.7%

22


Business and operations Review: Serviced Residences

Performance of Serviced Residences was softer, as major companies held back commitments in the face of the european debt crisis and the uS “Fiscal cliff”, especially in 2012. Two of our properties which used to receive strong bookings from the Banking and Financial sector were particularly affected. Revenue per available serviced residence unit (“RevPAu”) was $204 as compared to $216 that was forecast in the Prospectus.

The Banking and Finance industry is the largest segment by revenue contribution for our Serviced Residences. in 2012, it contributed 28.4% of total revenue, up from 27.3% a year earlier. The Serviced Residences diversified their client base by tapping into higher yielding independent traveller segment. These guests, together with leisure travellers, grew to 20% of the customer base as compared to 12.2% in the previous year.

market Segmentation FY 20121 – Serviced Residences

serviced residences

(by revenue)

1 Actual results are from 27 August to 31 December 2012 as Far east h-Trust was listed on 27 August 2012.

serviced residences

(by industry)

perForMAnce review

Summary of Portfolio Performance - Serviced Residences

Actual Occupancy vs Forecast Actual ADR vs Forecast Actual RevPAR vs Forecast

100

80

60

40

20

0

%300

250

200

150

100

50

0

S$

Actual 2012

79.1

Forecast 2012

89.5

Actual 2012 Forecast 2012

250

200

150

100

50

0

S$

258

Actual 2012

204

Forecast 2012

216242

leisure / independent

20.0%

corporate 80.0%

banking & Finance 28.4%

services 28.3%

oil & Gas 17.0%

electronics & Manufacturing 6.0%

Fast Moving consumer Goods 5.4%

logistics 2.3%

others 12.6%

23

AnnuAl RePoRT 2012

2 Refer to SGXnet announcement on 26 november 2012

perForMAnce review

Business and operations Review:Excluded Commercial Properties

Far east h-Trust has a total of 262 commercial units distributed over 8 of the 11 properties, namely Albert court Village hotel, changi Village hotel, The elizabeth hotel, landmark Village hotel, orchard Parade hotel, central Square Village Residences, Regency house, and Riverside Village Residences. These properties include office, serviced office, and retail components with leases primarily ranging from 1 to 3 years. The average occupancy for 2012 was 96.5%.

The retail and office revenue outperformed the 2012 forecast by 7.5%, contributing 14.9% of the Portfolio’s Gross Revenue. The higher performance of the commercial properties was due primarily to occupancies higher than forecast. The longer leases secured also bolstered the portfolio’s performance.

Asset Enhancement Initiatives

As an ongoing strategy to enhance operational performance, asset enhancement programmes were progressively executed at selected hotels and Serviced Residences.

Hotels: Refurbishment works to upgrade 213 superior and deluxe hotel rooms at the landmark Village hotel that started in 2012 are expected to be completed by March 2013. Similar works to upgrade 101 hotel rooms in orchard Parade hotel were also carried out in the second half of 2012 and are expected to be completed by April 2013.

Serviced Residences: in the second half of 2012, light refurbishment works were undertaken at central Square Village Residences and Riverside Village Residences. This exercise involved 127 Serviced Residence units in central Square Village Residences and 71 Serviced Residence units in Riverside Village Residences. The refurbishment work was completed in January 2013.

Growth through Acquisitions

Apart from the active asset management and enhancement strategy, Feo hospitality Asset Management Pte ltd, as ReiT Manager, will source for and pursue asset acquisition opportunities which provide attractive cash flows and yields that satisfy the ReiT Manager’s investment mandate to enhance returns to Securityholders. To this end, the ReiT Manager will actively seek to acquire suitable third party properties as well as tap the Sponsor’s asset pipeline.

on the acquisition front, in november 20122, Far east h-Trust announced that it, together with a member of Far east organization group of companies, entered into a non-binding memorandum of understanding with The Straits Trading company limited to acquire Rendezvous Grand hotel Singapore and its retail component Rendezvous Gallery Singapore. negotiations and due diligence are ongoing. The Managers will provide further details in subsequent announcements in accordance with the listing Rules at appropriate times.

lAnDMARK VillAGe hoTel


24


ProPerty PortFoLIo

HoTElS

Property AlbertCourtVillageHotel ChangiVillageHotel TheElizabethHotel LandmarkVillageHotel OasiaHotelSingapore OrchardParadeHotel TheQuincyHotel

location 180 Albert Street, Singapore 189971

1 netheravon Road, Singapore 508502

24 Mount elizabeth, Singapore 228518

390 Victoria Street, Singapore 188061

8 Sinaran Drive, Singapore 307470

1 Tanglin Road, Singapore 247905


Description Albert court Village hotel is in a pre-war conservation development. The Straits chinese carvings that adorn the hotel walls reflect the cultural heritage of its vicinity. The hotel is easily accessible by public transport and a short walk away from shopping malls and Sim lim Square, a popular electronics shopping centre.

changi Village hotel is an idyllic retreat, set apart from other hotels in urban Singapore. it overlooks the sea, providing guests refreshing sea views while luxuriating in the hotel. changi Village hotel is an attractive venue for weddings.

The elizabeth hotel is designed with a distinct european accent. it is a short walk from orchard Road, Singapore’s famous shopping and entertainment belt; providing guests with a convenient and wide range of leisure and dining options.

landmark Village hotel is located in the Arab Street-Kampong Glam heritage area, a popular tourist destination. The vibrant eateries, art galleries and boutiques in the nearby conservation buildings have given the area a new lease of life.

oasia hotel Singapore is designed for both the business and leisure travellers and is strategically located in the prime novena district, Singapore’s premier medical hub. Guests have direct access to novena MRT station for convenient connections to the central Business District and major shopping belts in the city.

orchard Parade hotel’s location near the famous orchard Road provides guests with a wide variety of dining and shopping choices; a great appeal to both business and leisure travellers. orchard Parade hotel has received awards for its excellent service.

The Quincy hotel is a hip boutique hotel designed for the busy business executive and the discerning leisure traveller. The hotel was the 2012 winner of TripAdvisor’s® Travelers’ choice® award. its proximity to orchard Road provides guests with a wide range of facilities and shopping opportunities.

number of guest rooms 210 380 256 393 428 388 108

latest valuation (S$ million as of 31 December 2012)

126.0 257.0 193.0 227.0 322.0 419.0 84.0

Gross revenue for period 27 August - 31 December 2012 (S$ million)

2.45 4.99 3.66 4.61 7.25 9.36 1.60

lease tenure at listing date 75 years 65 years 75 years 66 years 92 years 50 years 75 years

Approximate GFA / Strata Area (sq m)

11,426 22,826 11,723 21,676 22,457 34,072 4,810

Purchase Price (based on the offering Price) (S$ million)

120.7 238.5 186.7 218.4 318.2 412.5 82.3

Vendor & Master lessee First choice Properties Pte ltd Far east organization centre Pte ltd

Golden Development Private limited

Golden landmark Pte ltd Transurban Properties Pte ltd Far east orchard limited Golden Development Private limited

25

AnnuAl RePoRT 2012

property portFolio

Property AlbertCourtVillageHotel ChangiVillageHotel TheElizabethHotel LandmarkVillageHotel OasiaHotelSingapore OrchardParadeHotel TheQuincyHotel

location 180 Albert Street, Singapore 189971

1 netheravon Road, Singapore 508502


390 Victoria Street, Singapore 188061

8 Sinaran Drive, Singapore 307470

1 Tanglin Road, Singapore 247905


Description Albert court Village hotel is in a pre-war conservation development. The Straits chinese carvings that adorn the hotel walls reflect the cultural heritage of its vicinity. The hotel is easily accessible by public transport and a short walk away from shopping malls and Sim lim Square, a popular electronics shopping centre.

changi Village hotel is an idyllic retreat, set apart from other hotels in urban Singapore. it overlooks the sea, providing guests refreshing sea views while luxuriating in the hotel. changi Village hotel is an attractive venue for weddings.

The elizabeth hotel is designed with a distinct european accent. it is a short walk from orchard Road, Singapore’s famous shopping and entertainment belt; providing guests with a convenient and wide range of leisure and dining options.

landmark Village hotel is located in the Arab Street-Kampong Glam heritage area, a popular tourist destination. The vibrant eateries, art galleries and boutiques in the nearby conservation buildings have given the area a new lease of life.

oasia hotel Singapore is designed for both the business and leisure travellers and is strategically located in the prime novena district, Singapore’s premier medical hub. Guests have direct access to novena MRT station for convenient connections to the central Business District and major shopping belts in the city.

orchard Parade hotel’s location near the famous orchard Road provides guests with a wide variety of dining and shopping choices; a great appeal to both business and leisure travellers. orchard Parade hotel has received awards for its excellent service.

The Quincy hotel is a hip boutique hotel designed for the busy business executive and the discerning leisure traveller. The hotel was the 2012 winner of TripAdvisor’s® Travelers’ choice® award. its proximity to orchard Road provides guests with a wide range of facilities and shopping opportunities.

number of guest rooms 210 380 256 393 428 388 108


126.0 257.0 193.0 227.0 322.0 419.0 84.0


2.45 4.99 3.66 4.61 7.25 9.36 1.60

lease tenure at listing date 75 years 65 years 75 years 66 years 92 years 50 years 75 years


11,426 22,826 11,723 21,676 22,457 34,072 4,810

Purchase Price (based on the offering Price) (S$ million)

120.7 238.5 186.7 218.4 318.2 412.5 82.3

Vendor & Master lessee First choice Properties Pte ltd Far east organization centre Pte ltd

Golden Development Private limited

Golden landmark Pte ltd Transurban Properties Pte ltd Far east orchard limited Golden Development Private limited

26


SERvICEd RESIdEnCES

ProPerty PortFoLIo

Property CentralSquareVillageResidences HougangVillageResidences RegencyHouse RiversideVillageResidences

location 20 havelock Road, Singapore 059765

1 hougang Street 91, Singapore 538692

121 Penang Road, Singapore 238464

30 Robertson Quay, Singapore 238251

Description central Square Village Residences is in a mixed-use development comprising commercial and residential components. The development accommodates shops and restaurants, and is within walking distance to the clarke Quay MRT station. The historic chinatown and the cBD are just a couple of stops away.

hougang Village Residences is located in one of Singapore’s popular suburbs. Facilities at the Serviced Residence include a swimming pool, Jacuzzi, gymnasium, and a tennis court. Situated next to hougang one Mall, it provides residents convenient access to shopping, food outlets and a 24-hour supermarket.

Regency house is popular with young professionals. located near orchard Road, it is within walking distance from Somerset and Dhoby Ghaut MRT stations with direct access to Singapore’s prime shopping belt and the cBD. The Serviced Residence also contains commercial components.

Riverside Village Residences is part of a development comprising commercial and residential spaces. Situated on the banks of the Singapore River, it is a walk away from the trendy dining and entertainment district of Robertson Quay. Residents can also connect to the rest of the island via the nearby clarke Quay MRT station.

number of Serviced Residence units

128 78 90 72


186.8 65.8 164.0 113.8


3.10 1.06 2.30 1.83

lease tenure at listing date 80 years 81 years 81 years 78 years


17,858 14,635 10,723 10,570

Purchase Price (based on the offering Price) (S$ million) 183.3 64.7 166.4 113.2

Vendor and Master lessee oPh Riverside Pte ltd Serene land Pte ltd oxley hill Properties Pte ltd Riverland Pte ltd

27

AnnuAl RePoRT 2012

property portFolio

Property CentralSquareVillageResidences HougangVillageResidences RegencyHouse RiversideVillageResidences

location 20 havelock Road, Singapore 059765

1 hougang Street 91, Singapore 538692

121 Penang Road, Singapore 238464

30 Robertson Quay, Singapore 238251

Description central Square Village Residences is in a mixed-use development comprising commercial and residential components. The development accommodates shops and restaurants, and is within walking distance to the clarke Quay MRT station. The historic chinatown and the cBD are just a couple of stops away.

hougang Village Residences is located in one of Singapore’s popular suburbs. Facilities at the Serviced Residence include a swimming pool, Jacuzzi, gymnasium, and a tennis court. Situated next to hougang one Mall, it provides residents convenient access to shopping, food outlets and a 24-hour supermarket.

Regency house is popular with young professionals. located near orchard Road, it is within walking distance from Somerset and Dhoby Ghaut MRT stations with direct access to Singapore’s prime shopping belt and the cBD. The Serviced Residence also contains commercial components.

Riverside Village Residences is part of a development comprising commercial and residential spaces. Situated on the banks of the Singapore River, it is a walk away from the trendy dining and entertainment district of Robertson Quay. Residents can also connect to the rest of the island via the nearby clarke Quay MRT station.

number of Serviced Residence units

128 78 90 72


186.8 65.8 164.0 113.8


3.10 1.06 2.30 1.83

lease tenure at listing date 80 years 81 years 81 years 78 years


17,858 14,635 10,723 10,570

Purchase Price (based on the offering Price) (S$ million) 183.3 64.7 166.4 113.2

Vendor and Master lessee oPh Riverside Pte ltd Serene land Pte ltd oxley hill Properties Pte ltd Riverland Pte ltd

28


From Top Left to Right

From Bottom Left to Right

boArD oF DIrectors

mr Koh Boon Hweechairman and non-executive Director

mr Huang Cheng Engindependent Director

mr Kyle lee Khai Fattindependent Director

mr willie Cheng Jue Hianglead independent Director

mr Chia Boon Kuahnon-executive Director

mr wee Kheng Jinnon-executive Director

29

AnnuAl RePoRT 2012

mr Koh Boon Hweechairman and non-executive Director Mr Koh Boon hwee has extensive experience in corporate management. he is currently chairman (executive) at credence capital Fund ii (cayman) ltd and credence Partners Pte ltd. he is also currently non-executive chairman of Sunningdale Tech ltd (formerly known as “Tech Group Asia ltd”), yeo hiap Seng limited, yeo hiap Seng (Malaysia) Berhad, AAc Technologies holdings inc, Rippledot capital Advisers Pte ltd and Far east orchard limited.

he started his career in 1977 at hewlett Packard and rose to become its Managing Director in Singapore, a post he held from 1985 to 1990. From 1991 to 2000, he was executive chairman of the Wuthelam Group, and from 2002 to 2009, Mr Koh was at S i2i limited (formerly known as “MediaRing ltd”) where his last held position was executive Director. he was responsible for overseeing the corporate strategy and management of these companies. Mr Koh has concurrently been with Sunningdale Tech ltd (“Tech Group Asia ltd”) since 2003, where he oversaw the operations of the company as executive chairman and chief executive officer from 2005 to 2008 and where he now acts in a non-executive capacity as chairman.

Mr Koh was also the non-executive chairman of the Singapore Telecom Group (SingTel) and its predecessor organisations from 1986 to 2001. From 2001 to 2005, Mr Koh served as non-executive chairman of Singapore Airlines limited, and from 2005 to 2010 as non-executive chairman of DBS Group holdings ltd and DBS Bank ltd.

From 1996 to 2010, Mr Koh served on the board of Temasek holdings Pte ltd, and was a member of the executive committee from 1997 to 2010.

Mr Koh is also a director of Agilent Technologies, inc, as well as a number of local and overseas private companies and local non-profit organisations, including the harvard Singapore Foundation,

nanyang Technological university Board of Trustees, eDB international Advisory council, the Research, innovation and enterprise council (Riec) and William and Flora hewlett Foundation.

Mr Koh graduated from imperial college with a Bachelor of Science (Mechanical engineering), First class honours, in 1972, and obtained a Master in Business Administration with Distinction from harvard Business School in 1976.

mr Huang Cheng Engindependent Director

Mr huang cheng eng has extensive experience in commercial and marketing activities.

From 1974 to 2010, Mr huang was with Singapore Airlines limited. While there, he had 10 years of overseas experience (from 1977 to 1987) in Taiwan, France and hong Kong. From 1987 to 1996, he was overall in charge of air cargo and developed SiA cargo into a full-fledged division. Thereafter, he was posted back to the passenger side of the airline business. Before his retirement in 2010, Mr huang was executive Vice President – Marketing and the Regions, where he was overall in charge of commercial and marketing activities as well as all the overseas regions and offices of Singapore Airlines. he is a member (co-opt) of children’s Aid Society.

Some of Mr huang’s past directorships include directorships with SATS Airport Services Pte ltd, Virgin Atlantic Airways Pte ltd and the Singapore Tourism Board. he was also chairman of cargo community network Pte ltd, SATS catering Pte ltd, SiA cargo Pte ltd and Silkair Pte ltd.

Mr huang graduated from the university of hawaii with a Bachelor of Business Administration in 1971 and obtained a Master in Business Administration from Michigan State university in 1973.

boArd oF directors

30


boArd oF directors

mr Kyle lee Khai Fattindependent Director

Mr Kyle lee Khai Fatt has extensive experience in professional services comprising accounting, auditing and business advisory. Between 1976 and 1980, Mr lee trained and qualified as a chartered Accountant in london. he joined Pricewaterhousecoopers llP and its legacy firm Price Waterhouse in Singapore in 1981. he retired in 2010 having served as a partner for 20 years. Prior to his retirement, Mr lee led the firm’s Advisory Practice for 5 years. he is also a director of Jurong international holdings Pte ltd. he is an independent Director of WBl corporation ltd and capitaMall Trust Management limited (as manager of capitaMall Trust).

Mr lee is a Fellow of the institute of chartered Accountants in england and Wales and the institute of certified Public Accountants of Singapore. he holds a Master of Science (Distinction) in international Management, Master of Business Administration from the university of london and a Bachelor of Arts (honours) in Business Studies from the council for national Academic Awards in united Kingdom.

mr willie Cheng Jue Hianglead independent Director

Mr Willie cheng Jue hiang has extensive experience in the fields of accountancy, management consulting, technology implementation and corporate governance.

From 1977 to 2003, Mr cheng was working at Accenture (and its predecessor, Arthur Andersen & co). he started off in audit and subsequently transferred to consulting where he was involved with the design and implementation of mission-critical systems and business transformation for its clients in government, financial services and the high tech industries. Prior to his retirement in 2003, he was Managing Director of its Singapore office and head of its Asian communications & high-Tech practice, where he was responsible for overseeing the business of both divisions.

currently, Mr cheng is a director of three groups of companies: (i) Singapore Press holdings ltd and three of its subsidiaries; SPh interactive Pte ltd, SPh interactive international Pte ltd, 701 Search Pte ltd); (ii) three subsidiaries of Ministry of health holdings; Singapore health Services Pte ltd, Aescapulus holdings Pte ltd and integrated health information Systems Pte ltd and (iii) united overseas Bank ltd.

he is presently Vice-chairman of the Singapore institute of Directors. he is also active in the non-profit sector and is chairman of caritas humanitarian Aid & Relief initiatives, Singapore, as well as a board member in several charities.

Mr cheng graduated from the university of Singapore with a Bachelor of Accountancy in 1977. he is a certified Public Accountant and Fellow of the institute of certified Public Accountants of Singapore, a Fellow of the Singapore institute of Directors and honorary Fellow of the Singapore computer Society.

31

AnnuAl RePoRT 2012

boArd oF directors

mr Chia Boon Kuahnon-executive Director

Mr chia Boon Kuah has extensive experience in hospitality, real estate development and investment. he is currently an executive Director of Far east organization, where he is responsible for overseeing the property sales business group and the hospitality business. he has been with Far east organization since 2003.

From 1975 to 2003, Mr chia was with Singapore Airlines limited, where his last held position was Area Vice President Singapore. he was responsible for the marketing and sales operations of Singapore.

Mr chia is a director of various companies in Far east organization; such as Far east Real estate Pte ltd, Parc Visa Pte ltd, oS Residence Pte ltd and Feo Business Services Pte ltd. he is also the President of Real estate Developers’ Association of Singapore. he is a member of Singapore Polytechnic Board of Governors.

Mr chia obtained a Master in Business Administration from the national university of Singapore in 1990.

mr wee Kheng Jinnon-executive Director

Mr Wee Kheng Jin is currently an executive Director of Far east organization. he has more than 33 years of finance experience in a variety of industries including banking, construction, hospitality services and real estate development.

he started his career in 1978 with Price Waterhouse and worked there for 3 years before moving to united engineers limited. in 1984 he joined citigroup and served in various positions; he was the citibank country controller for several years and a board member of citicorp investment Bank Singapore limited. he then moved to join Far east organization in 2000.

Mr Wee is presently appointed as a non-executive Director of Tung lok Restaurants (2000) ltd, Parkson Retail Asia limited and yeo hiap Seng limited. he is also a director of various companies in Far east organization; such as Far east hospitality Management Services Pte ltd and Far east Property Services Pte ltd.

Mr Wee graduated from the university of Singapore with a degree in Accountancy in 1978 and has been a member of the institute of certified Public Accountants of Singapore since 1979.

32


MANAgeMeNt teAM

mr Gerald lee Hwee Keongchief executive officer

From Top Left to Right

From Bottom Left to Right

mr danny Peh Kok Khengchief Financial officer and head of investor Relations

mr Bryant lee PetteyAsset Manager

ms lee Pei Yeeinvestment Manager

ms Jill Chay Suet Yeecompliance Manager and company Secretary

ms Sandra Chia Sien InnFinance Manager

33

AnnuAl RePoRT 2012

MAnAGeMent teAM

The management team has an extensive track record in sourcing, acquiring and operating hospitality assets in the hospitality industry. Their in-depth industry knowledge, established relationships and operational expertise in the hospitality sector will be a competitive advantage when sourcing for new acquisitions or executing various asset enhancement and operational strategies in order to optimise value to Stapled Securityholders.

mr Gerald lee Hwee Keongchief executive officer

Mr Gerald lee hwee Keong has extensive experience in corporate management. he is currently employed by the ReiT Manager, where he is responsible for overseeing hospitality asset management.

From 1991 to 2005, Mr lee was at Singapore Tourism Board, and his last held position was Assistant ceo (leisure), where he was in charge of all the leisure divisions. he was seconded to the Ministry of Trade & industry as Deputy Director from 2000 to 2001, where he was responsible for overseeing policies and industry development of the tourism and services sectors. Mr lee was concurrently seconded to Sentosa Development corporation as Director (Strategic Development) from 2001 to 2003, where he was in charge of strategic projects and redevelopment initiatives.

From 2005 to 2010, Mr lee was at capitaland limited/The Ascott limited. he was concurrently appointed Senior Vice President at capitaland from 2005 to 2006, where he started the corporate marketing department. his roles in Ascott included that of ceo (europe), responsible for overseeing the business in that region, and Deputy ceo, responsible for overseeing operations of the group.

From 2010 to 2011, Mr lee was executive Director of 08hundred llP, where he was responsible for overseeing the company.

Mr lee graduated from cornell university with a Bachelor of Science (with Distinction) in 1991, and obtained an executive Master of Business Administration (with Distinction) from inSeAD and Tsinghua university in 2012.

mr danny Peh Kok Khengchief Financial officer and head of investor Relations

Mr Danny Peh Kok Kheng has extensive experience in financial management. he is currently employed by the ReiT Manager, where he is responsible for overseeing all the financial and accounting matters as well as investor relations.

From 2000 to 2012, Mr Peh was at Far east Management Pte ltd, and his last held position at Far east Management Pte ltd was Director of Financial Management Division where he was responsible for overseeing the accounts, income tax and corporate secretarial departments within Far east organization.

From 2008 to 2012, Mr Peh was also the chief corporate officer and Group Financial controller of Far east orchard limited, where he was responsible for all corporate and financial matters and reported to the chairman and Board of Directors.

Mr Peh holds directorships in various companies in Far east organization, including Far east capital ltd, Far east capital nominees Pte ltd and oc Beauty Pte ltd. Mr Peh was also a director of several subsidiaries of Far east orchard limited.

Mr Peh obtained his professional degree from the Association of chartered certified Accountants, uK. he is a fellow member of the Association of chartered certified Accountants, uK as well as a member of the institute of certified Public Accountants of Singapore.

34


MAnAGeMent teAM

mr Bryant lee PetteyAsset Manager

Mr Bryant lee Pettey has experience in the hospitality real estate industry. he is currently employed by the ReiT Manager, where he is responsible for asset management.

From 2003 to 2004, Mr Pettey was at The hodgson company as a project manager, where he was responsible for the management of development projects.

From 2005 to 2009, Mr Pettey was at The January Group, and his last held position was Director of Development, where he was responsible for the acquisition and development of real estate.

From 2010 to 2012, Mr Pettey was at W hotels (Starwood), and his last held position was Director of Residences, where he was involved in the opening of The Residences at W Singapore Sentosa cove.

Mr Pettey graduated from Brigham young university with a Bachelor of Science in 2000, and subsequently obtained a Master of Science in Real estate Development from columbia university in 2005.

ms lee Pei Yeeinvestment Manager

Ms lee Pei yee has experience in financial analysis and modelling as well as investment management. She is currently employed by the ReiT Manager, where she is responsible for investment management.

From 2011 to 2012, Ms lee was at Far east organization as a Manager – Special Projects, where she was responsible for providing corporate finance support to local and overseas business expansion.

From 2009 to 2011, Ms lee was at Fortune capital Management Pte ltd as an investment Manager. From 2007 to 2009, Ms lee was with PrimePartners Asset Management Pte ltd as an Assistant Manager – investments, where she assisted in evaluating potential investment deals. in 2007, Ms lee was with KPMG Business Advisory Pte ltd as a Senior Associate – Business Performance Services, where she assisted in strategic consulting.

From 2000 to 2005, Ms lee was at the Ministry of Trade and industry, and her last held position was Assistant Director – international Business Development Division.

Ms lee graduated from the national university of Singapore with a Bachelor of Arts in 1999 and a Bachelor of Social Sciences (with honours) in 2000, and obtained a Master in Business Administration (Dean’s honours list) from nanyang Technological university in 2007. She also participated in “The Global Manager in europe Summer Module” at eSSec Business School - Paris in 2006.

35

AnnuAl RePoRT 2012


MAnAGeMent teAM

ms Jill Chay Suet Yeecompliance Manager and company Secretary

Ms Jill chay Suet yee is employed by the ReiT Manager, and has more than ten years experience in corporate secretarial and compliance.

From 2007 to 2012, Ms chay was with Ascendas Pte ltd, where she provided corporate secretarial support to Ascendas Group of companies includingSGX-ST and MAS reporting and compliance for Ascendas Real estate investment Trust and Ascendas india Trust.

in 2006, Ms chay was with Guocoland limited, where she assisted the head of legal and company Secretary on corporate secretarial matters of Guocoland limited.

From 2001 to 2005, Ms chay was with haw Par corporation limited, where she assisted the company Secretary on corporate secretarial matters of haw Par Group of companies.

Ms chay is a fellow member of the Singapore Association of the institute of chartered Secretaries and Administrators. She graduated from the university of Southern Queensland with a Bachelor of Business major in Applied economics and Resource Management.

ms Sandra Chia Sien InnFinance Manager

Ms Sandra chia Sien inn has more than 20 years of experience in areas of financial and management accounting, financial planning and analysis, taxation, treasury, compliance and all finance-related matters. She is currently employed by the ReiT Manager, where she is responsible for the statutory reporting and compliance, management accounting and analysis, taxation and treasury.

From 2007 to 2012, Ms chia was at Ascendas Property Fund Trustee Pte ltd as Vice President, Finance, where she was responsible for the finance function including SGX-ST reporting and compliance for Ascendas india Trust. From 2000 to 2006, Ms chia was at equinix Asia Pacific Pte ltd as Finance Manager, where she was responsible for statutory accounts, group consolidation, financial planning and analysis, management reporting, taxation, cash flow management and SoX compliance.

Ms chia holds a Bachelor of Applied Accounting from oxford Brooke university (uK) and professional qualification from the Association of chartered certified Accountants (AccA). She is a certified Public Accountant with the institute of certified Public Accountants of Singapore.

36


INVestor reLAtIoNs

overview

Far east hospitality Trust (“Far east h-Trust”) is committed to communicate with Stapled Securityholders, analysts and the broader investing community in a timely and comprehensive manner. Far east h-Trust posts its corporate announcements on the SGXneT and Far east h-Trust’s corporate website. Far east h-Trust strives to achieve highest standard of disclosures and transparency to help investors make informed investment decisions. Far east h-Trust also explores new platforms to reach out to existing and potential investors.

Investor outreach

To enhance access to Management, Far east h-Trust shares the financial performance, strategy and outlook with investors, analysts and the media by hosting results briefings, through face-to-face meetings, conference calls and road shows. Management also regularly attends local and overseas investor conferences to raise Far east h-Trust’s profile (refer to events calendar for details). As a newly listed hospitality trust, Management places strong importance on attracting new investors

and broadening its investor base. Since listing, Management has participated in conferences and non-deal road shows to meet potential investors and update existing investors. Far east h-Trust also facilitates site visits for fund managers and analysts for better insights of the quality and scale of Far east h-Trust’s properties.

Far east h-Trust is a component stock of FTSe ST Mid cap index from 18 March 2013.

WeBSiTe:Far east h-Trust website is a key information resource for retail and institutional investors. Announcements, press releases, financial results and results presentation slides can be downloaded from the website.

uRl : www.feht.com.sg

enQuiRieS:Stapled Securityholders with queries relating to Far east hospitality Trust may contact the investor relations team at:

Telephone : (65) 6833 6688emai : [email protected]

36


37

AnnuAl RePoRT 2012

37investor relAtions

BRoKERAGES CovERInG FAR EAST H-TRuST

1. bnp paribas 4. hsbc

2. dbs vickers securities 5. ocbc

3. Goldman sachs 6. standard chartered bank

InvESToR RElATIonS EvEnTS

date event

2012 september •DBSVickersInvestorLuncheon,Singapore

2013 january•DBSPulseofAsiaConference,Singapore•CreditSuisseASEANConference,Singapore

2013 February•Financialresultsmediaandanalystbriefing,Singapore•InvestorLuncheonhostedbyGoldmanSachs,Singapore•HSBCnon-dealroadshow,HongKong

2013 March•SGXGoldmanSachsGlobalMarketDay2013,Tokyo•HSBCnon-dealroadshow,Europe

AwARd

date event

2013 February •TheAssetTripleARegionalDealAwards,2012 best mid-cap equity / best reit

ReGency houSe

AnnuAl RePoRT 2012

38


corPorAte DIrectory

BoARd oF dIRECToRS & mAnAGEmEnTChairmanandNon-ExecutiveDirectorMr Koh Boon hwee

IndependentDirectorsMr huang cheng engMr Kyle lee Khai Fatt

LeadIndependentDirectorMr Willie cheng Jue hiang

Non-ExecutiveDirectorsMr chia Boon KuahMr Wee Kheng Jin

ChiefExecutiveOfficerMr Gerald lee hwee Keong

ChiefFinancialOfficerand HeadofInvestorRelationsMr Danny Peh Kok Kheng

AssetManagerMr Bryant lee Pettey

InvestmentManagerMs lee Pei yee

FinanceManagerMs Sandra chia Sien inn

ComplianceManager& CompanySecretaryMs Jill chay Suet yee

AudIT CommITTEEChairmanMr Willie cheng Jue hiang

MembersMr huang cheng engMr Kyle lee Khai Fatt

IndEPEndEnT AudIToRernst and young llPPublic Accountants and certified Public Accountants, Singaporeone Raffles Quay, north Tower, level 18, Singapore 048583

Partner-in-charge: nelson chenAppointed on 24 August 2012

AS TRuSTEE oF FAR EAST HoSPITAlITY REAl ESTATE InvESTmEnT TRuSTDBS Trustee limited 12 Marina Boulevardlevel 44 DBS Asia central@ Marina Bay Financial centre Tower 3Singapore 018982Telephone : (65) 68788888Facsimile : (65) 68783977

AS REIT mAnAGER oF FAR EAST HoSPITAlITY REAl ESTATE InvESTmEnT TRuSTFeo hospitality Asset Management Private limited1 Tanglin Road #05-01orchard Parade hotelSingapore 247905 AS TRuSTEE-mAnAGER oF FAR EAST HoSPITAlITY TRuSTFeo hospitality Trust Management Private limited1 Tanglin Road #05-01orchard Parade hotelSingapore 247905

AS HoTEl And SERvICEd RESIdEnCE oPERAToRJelco Properties Private limited1 Tanglin Road #05-01orchard Parade hotelSingapore 247905

SHARE REGISTRARBoardroom corporate & Advisory Services Private limited50 Raffles Place#32-01 Singapore land TowerSingapore 048623Telephone : (65) 6536 5355Facsimile : (65) 6536 1360

REGISTEREd oFFICE FoR THE REIT mAnAGER And TRuSTEE-mAnAGER14 Scotts Road #06-01, Far east PlazaSingapore 228213Telephone : (65) 6235 2411Facsimile : (65) 6235 3316email : [email protected] : www.feht.com.sg

CoRPoRATE oFFICE1 Tanglin Road #05-01orchard Parade hotelSingapore 247905Telephone : (65) 6833 6688Facsimile : (65) 6738 8085

mAIn BAnKERSoversea-chinese Banking corporation limited

DBS Bank limited

The hongkong and Shanghai Banking corporation limited

39

AnnuAl RePoRT 2012

corPorAte goVerNANce

InTRoduCTIon

Far east hospitality Trust (“Far east h-Trust”) is a hospitality stapled group comprising Far east hospitality Real estate investment Trust (“Far east h-ReiT”) and Far east hospitality Business Trust (“Far east h-BT”).

Far east h-ReiT is a real estate investment trust constituted by the trust deed dated 1 August 2012 and entered into between Feo hospitality Asset Management Pte. ltd. (in its capacity as the manager of Far east h-ReiT) (the “ReiT Manager”) and DBS Trustee limited (in its capacity as the trustee of Far east h-ReiT) (the “ReiT Trustee”).

Far east hospitality Business Trust (“Far east h-BT”) is a business trust constituted by the Trust Deed dated 1 August 2012 and entered into by Feo hospitality Trust Management Pte. ltd. (in its capacity as the trustee-manager of Far east h-BT) (the “Trustee-Manager”). Far east h-BT has been dormant ever since Far east h-Trust was listed on the Main Board of Singapore exchange Securities Trading limited (the “SGX-ST”).

The ReiT Manager has been issued a capital Market Services licence for ReiT management (“cMS licence”) pursuant to the Securities and Futures Act, chapter 289 of Singapore (the “SFA”) on 10 August 2012.

The framework of relevant legislation and guideline governing Far east h-Trust include:

(i) the SFA;

(ii) Appendix 6 of the code on collective investment Schemes (the “ciS code”, and Appendix 6 of the ciS code, the “Property Funds Appendix”);

(iii) the listing Manual of SGX-ST (the “listing Manual”);

(iv) the Business Trusts Act, chapter 31A of Singapore; and

(v) the code of corporate Governance 2012 (the “code”).

The ReiT Manager and the Trustee-Manager (collectively, the “Managers”) are committed to high standards of corporate governance, business integrity and professionalism in all its activities. The Managers recognise that having clear policies, transparent processes, a system of stringent internal checks and controls, is essential in enhancing Stapled Securityholders’ value and thereby achieving sustainable growth for Far east h-Trust.

This Report sets out Far east h-Trust’s corporate governance framework and practices with specific reference to guidelines set out in the code. Due to the different legislative and regulatory requirements in relation to a ReiT as compared with a business trust, the corporate governance disclosure requirements in relation to the ReiT Manager are different from those in relation to the Trustee-Manager.

40


The Board’s Conduct of its Affairs

Principle 1: Effective Board to lead and control the company

The board of directors of the ReiT Manager (the “ReiT Manager Board”) is entrusted with the responsibility for the overall management of the ReiT Manager and has general powers of management over the assets of Far east h-ReiT.

The key roles of the ReiT Manager Board are to:

• setstrategicobjectivesanddirection,andprovideguidancetothemanagementoftheREITManager(“Management”)in executing those objectives;

• manageFarEastH-REIT’sassetsandliabilitiesforthebenefitoftheholdersofFarEastH-REITUnits;

• formulatethebusinessplansinrelationtoFarEastH-REIT’sproperties;

• recommend to theREITTrusteeon theacquisition,divestmentorenhancementofassetsof FarEastH-REIT inaccordance with its stated investment strategy;

• ensureManagementdischargesitsdutieswithintegrityanddemonstratehighestlevelofprofessionalism;

• establish a framework of prudent and effective controls which enables risks to be assessed andmanaged tosafeguard the interests of the Stapled Securityholders and the assets of Far east h-Trust; and

• ensurethatManagementmaintainssoundmeasuresrelatingtocorporategovernance,financial regulations,andinternal policies.

in the discharge of its functions, the ReiT Manager Board is supported by the audit committee of the ReiT Manager (the “Audit committee”) which provides independent oversight of Management and serves to ensure that there are appropriate checks and balances. The Audit committee operates under delegated authority from the ReiT Manager Board. The ReiT Manager has delegated to the Audit committee the responsibilities of reviewing significant financial reporting issues, risk oversight function, etc. Details of the Audit committee’s term of reference are disclosed on pages 51 to 52 of the Annual Report.

corporAte GovernAnce

41

AnnuAl RePoRT 2012

The ReiT Manager Board meets at least once every three months to review the portfolio performance, business outlook, movement in stapled security holdings and to deliberate growth opportunities of Far east h-ReiT, including acquisitions and disposals, and approval of the quarterly financial statements and annual budget. The ReiT Manager Board also meets as warranted by particular circumstances or as deemed appropriate by the directors of the ReiT Manager (the “Directors”). The number of meetings of the ReiT Manager Board and Audit committee held during the period from 27 August 2012 to 31 December 2012, as well as the attendance of every Director at these meetings is disclosed below:

Board Meeting Audit Committee MeetingName of Director/ Date of Meeting 20/11/2012 20/11/2012Mr Koh Boon hweeBoard Chairman/Non-Executive Director

–

Mr Willie chengAudit Committee Chairman/Independent Director

Mr huang cheng engAudit Committee Member/Independent Director

Mr Kyle lee Khai FattAudit Committee Member/Independent Director

Mr Wee Kheng Jin*Non-Executive Director

Mr chia Boon KuahNon-Executive Director –

* Mr Wee is not a Audit committee member. he has attended the Ac meeting by invitation.


42


The ReiT Manager Board has approved a list of matters reserved for the Board’s decision. This set clear directions to Management on matters that must be approved by the Board.

The list of matters reserved for the ReiT Manager Board’s approval are: • LongtermstrategyandobjectiveofFarEastH-REIT

• AnnualbudgetandbusinessplansinrelationtoFarEastH-REIT’sproperties;

• PoliciestosafeguardtheinterestsoftheStapledSecurityholdersandtheassetsofFarEastH-REIT

• Changeofinvestmentstrategyaftertheexpiryofthree-yearperiodfromlisting

• RecommendationtotheREITTrusteeontheacquisition,divestmentorenhancementofassetsofFarEastH-REITinaccordance with its stated investment strategy

• UnstaplingofFarEastH-Trust

• RecommendationtotheREITTrusteeonthechangeintheHotelandServicedResidenceOperatorfortheExcludedcommercial Premises

• RecommendationtotheREITTrusteeonthechangeinMasterLessee

• ChangeintheREITTrustee

• Recommendation to theREIT Trustee on the changeon percentagepegged to eachProperty’sGrossOperatingRevenue across the initial Portfolio

• RecommendationtotheREITTrusteeonthechangeinmanagementfeecomprisingaBaseFeeof0.3%perannumof the value of Far east h-ReiT Deposited Property and a Performance Fee of 4% of net Property income

• RecommendationtotheREITTrusteeonthechangeof80%oftheREITManager’smanagementfeesinstapledsecurities instead of cash

• CapitalstructureofFarEastH-REIT

• DistributionPolicyofFarEastH-REIT

• Significantchangeinaccountingpolicies

• Materialadjustmentstofinancialstatements

• DeterminationofthenatureandextentofsignificantrisksthattheREITManagerBoardiswillingtotakeinachievingthe strategic objective of Far east h-ReiT

• announcementsandpressreleases

• Boardmembershipsandotherappointments

The ReiT Manager Board has approved a set of internal controls which sets out approved limits for investments and divestments, unbudgeted items, award of contracts, general and administrative expenses and leases as well as arrangements in relation to cheque signatories. in addition, approval sub-limits are also delegated to Management to facilitate operational efficiency.

changes in regulations and accounting standards are monitored closely by the ReiT Manager Board and Management. To keep pace with regulatory changes, where these changes have an important bearing on the disclosure obligations of the ReT Manager or its Directors, the ReiT Manager Board will be briefed either during the meetings of the ReiT Manager Board or at specially convened meetings involving the relevant professionals. For the period under review, Allen & Gledhill llP has walk-through with the Directors on the new disclosure regime for Substantial Stapled Securityholders and directors/chief executive officers (“ceos”) under the SFA.


43

AnnuAl RePoRT 2012

Save for Mr huang cheng eng and Mr chia Boon Kuah, who have undergone an orientation programme to familiarise themselves with the Far east h-ReiT’s business and governance practices, each of the Directors has served as a director of a public listed company and has appropriate experience to act as a directors of the ReiT Manager and are familiar with the rules and responsibilities of a director of a ReiT Manager of a publicly-listed ReiT or of a Trustee-Manager of a publicly-listed business trust.

The Board was briefed on the business activities and strategic directions of Far east h-ReiT when the Board attended the verification meeting for the initial public offering of Far east h-Trust.

newly appointed Directors will be briefed by Management on the business activities and strategic directions of Far east h-ReiT.

Board Composition and Guidance

Principle 2: Strong and Independent Element on the Board

The ReiT Manager Board comprises 3 independent Directors and 3 non-executive Directors. This enables Management to benefit from their external, diverse and objective perspective on issues that are brought before the ReiT Manager Board.

The independent Directors of the ReiT Manager Board are Mr Willie cheng Jue hiang, Mr huang cheng eng and Mr Kyle lee Khai Fatt. The ReiT Manager Board considers Mr Koh Boon hwee, Mr Wee Kheng Jin and Mr chia Boon Kuah to be non-independent. Mr Koh is the chairman of the Board of Far east orchard limited which owns 33% of the share capital of the ReiT Manager as of 28 March 2013. Mr Wee is a director of various companies in Far east organization (“Feo”), such as Far east hospitality Management Services Pte ltd and Far east Property Services Pte ltd. Mr chia is an executive Director of Feo.

Chairman and Chief Executive Officer

Principle 3: Clear Division of Responsibilities between Chairman of the Board and the Chief Executive Officer responsible for managing the REIT’s business

The positions of chairman of the ReiT Manager Board and ceo of the ReiT Manager are held by two different individuals in order to ensure an appropriate balance of power, increased accountability and to maintain effective checks and balances. The chairman of the ReiT Manager Board is Mr Koh Boon hwee, while the ceo of the ReiT Manager is Mr Gerald lee hwee Keong. Mr Koh is also the chairman of the Trustee-Manager Board and Mr lee is also the ceo of the Trustee-Manager.

There is a clear separation of the roles and responsibilities between the chairman and the ceo of the ReiT Manager. The chairman is responsible for the overall management of the ReiT Manager Board as well as ensuring that the Directors and Management work together with integrity and competency, and that the Directors engage Management in constructive debate on strategy, business operations, enterprise risk and other plans. The ceo has full executive responsibilities over the business directions and operational decisions in the day-to-day management of the ReiT Manager.

The code requires that the ReiT Manager Board appoints an independent Director to be the lead independent Director where the chairman is not an independent Director. As Mr Koh is a non-independent director, the ReiT Manager Board has appointed Mr Willie cheng as the lead independent Director on 5 February 2013.


44


Board Membership

Principle 4: Formal and Transparent Process for the appointment and re-appointment of Directors to the Board

As the ReiT Manager is not itself a listed entity, the ReiT Manager does not consider it necessary for the ReiT Manager Board to establish a nominating committee.

The ReiT Manager Board performs the functions that a nominating committee would otherwise perform, namely, it administers nominations to the ReiT Manager Board, reviews the size and composition of the ReiT Manager Board to ensure that it has the appropriate mix of expertise and experience, and reviews the independence of the Directors. The Directors are not subject to periodic retirement by rotation.

The ReiT Manager Board currently comprises directors with a broad range of commercial experience including expertise in property development, investment, management, marketing and leasing and/or finance.

The ReiT Manager Board believes that a director’s competencies, contribution and performance go beyond his attendances at board meetings and Audit committee meetings (where applicable). The ReiT Manager Board is of the view that each of the Directors has adequately carried out his duties as a Director taking into consideration the Directors’ number of board representations and other principal commitments for the period from 1 August 2012 to 31 December 2012. Key information regarding the Directors such as academic and professional qualifications, committee membership, date of appointment and a list of the present and past directorships of each Director over the last five years are set out on pages 28 to 31 of this Annual Report. The Directors’ Stapled Securityholdings in Far east h-Trust are set out on page 130.

The ReiT Manager Board believes that putting a maximum number of listed company board representations which a Director may hold is arbitrary, given that time requirements for each vary, and thus should not be prescriptive. The ReiT Manager Board is satisfied that all Directors have discharged their duties adequately for the period from 27 August 2012 to 31 December 2012.

The composition of the ReiT Manager Board, including the selection of candidates for new appointments to the ReiT Manager Board as part of its renewal process, is determined using the following principles:

• theREITManagerBoardshouldcomprisedirectorswithabroadrangeofcommercialexperience;

• atleastone-thirdoftheREITManagerBoardshouldcompriseindependentdirectorsandindependentdirectorsshouldmake up at least half of the ReiT Manager Board where the chairman is not an independent director; and

• whetherthecandidateisafitandproperpersoninaccordancewithMAS’GuidelinesonFitandProperCriteria,takinginto account his/her track record, age, experience and capabilities and such other relevant experience as may be determined by the ReiT Manager Board.

The selection of candidates is evaluated taking into account various factors including the current and mid-term needs and goals of Far east h-ReiT, and hence the ReiT Manager, as well as the relevant expertise of the candidates and their potential contributions. candidates are first sourced through an extensive network of contacts of ReiT Manager Directors. The chairman of the ReiT Manager Board will interview the candidates and the curriculum vitae of shortlisted candidates will be tabled to the ReiT Manager Board for formal consideration.

The independence of each Director is reviewed prior to his appointment, and thereafter annually. There will also be periodic reviews of board performance and while there may be renewal or replacement of board members, such reviewal or replacement do not necessarily reflect the Directors’ contributions to date and may instead be promoted by the overarching need to position and shape the board in line with medium-term needs of Far east h-Trust and its business.


45

AnnuAl RePoRT 2012

Board Performance

Principle 5: Formal Annual Assessment of the Effectiveness of the Board as a whole and its committee and the contribution by each director to the effectives of the Board

The performance of the ReiT Manager Board and individual Directors are reflected and evidenced by their wise counsel and guidance, diligent oversight and able leadership, and the support that they lends to Management to steer Far east h-ReiT in the appropriate direction, and the long-term performance of Far east h-Trust under favourable or challenging market conditions. ultimately, the interests of Far east h-Trust will be safeguarded.

The factors to consider in the review of individual Directors include the Directors’ attendance for and participation during meetings, the quality of Directors’ special skills and the directors’ contributions. As Far east h-Trust was constituted on 1 August 2012, there was no formal assessment of the Board, Audit committee and each Director. The ReiT Manager Board’s performance and individual Director’s performance will be evaluated when Far east h-Trust has been operated for a full financial year.

contributions by the Directors can be in the form of providing objective perspectives of issues, facilitating business opportunities and strategic relationships, etc. each Director is given sufficient time to bring to the ReiT Manager Board his or her perspective to enable balanced and well considered decisions to be made.

Access to Information

Principle 6: Directors to have Complete, Adequate and Timely Information

As a general rule, the ReiT Manager Board and Audit committee papers are required to be sent to the Directors and Audit committee members at least three business days before the meetings. however, papers containing price sensitive information may be tabled at the meetings themselves or discussed without any papers being distributed. The executive officers of Feo or external consultants or advisers who can provide additional insight into the relevant matters at hand may be invited to attend at the relevant time during the meetings. The executive officers of Feo will not participate in any deliberations or discussions or decision-making processes involving transactions between Far east h-Trust and Feo group of companies.

The ReiT Manager Board has separate and independent access to Management and the company secretary of the ReiT Manager (the “company Secretary”) at all times and they are entitled to request from Management additional information as needed to make informed decisions. The Directors also have access to independent professional advice where appropriate and whenever requested.

The Board and Audit committee papers are accompanied by related materials, background or explanatory information relating to matters to be brought before the ReiT Manager Board and the Audit committee. in respect of financial results, any material variance between the projections and actual results would be disclosed and explained.

Management recognises that the flow of information of relevant information on an accurate, complete, adequate and timely manner is critical for the ReiT Manager Board to be effective in the discharge of its duties. Management keeps the ReiT Manager Board informed on a quarterly basis on Far east h-ReiT’s portfolio and financial performance, financial position, and progress on achieving its strategic objectives or financial targets and other information relevant to the strategic issues facing Far east h-ReiT.


46


The company Secretary attends to all corporate secretarial administration matters for the ReiT Manager, both in its own capacity and in its capacity as manager of Far east h-ReiT. She attends all Board and Audit committee meetings and prepares minutes of meetings proceedings. She assists the Board chairman and the Audit committee chairman in ensuring that Board and Audit committee procedures are followed and that applicable rules and regulations are complied with. under the direction of the Board chairman and Audit committee chairman, the company Secretary’s responsibilities include ensuring good information flows within the ReiT Manager Board and its Audit committee and between Management and the Directors, advising the ReiT Manager Board on all governance matters, as well as facilitating orientation and assisting with professional development as required. her responsibilities also include assisting in the application process for the appointment of new directors to the ReiT Manager Board and Trustee-Manager Board, and assisting the ReiT Manager in preparing the announcements and notifications to be uploaded on the SGXneT as required under the listing Manual.

The company Secretary is also the compliance officer for the ReiT Manager. The compliance officer reports to the ceo of the ReiT Manager and her duties include:

• assistingtheREITManagerinputtinginplacesuitablecomplianceprocessestoensurethattheREITManagerfulfillsthe compliance requirements under the SFA, the Property Funds Appendix, the listing Manual, the cMS licence, and all applicable laws, regulations and guidelines, as well as updating the Directors, the ceo, executive officers, and employees of the ReiT Manager on such compliance requirements;

• preparingreturnstotheMASasrequiredundertheSFA(includingthoserequiredbytheCMSLicence);and

• assisting inanyothermatters concerning compliancewith theSFA, theCISCode (including theProperty FundsAppendix), the listing Manual, the cMS licence and all applicable laws, regulations and guidelines.

Remuneration Matters

Principle 7: Procedures for Developing Remuneration PoliciesPrinciple 8: Level and Mix of RemunerationPrinciple 9: Disclosure of Remuneration

As the ReiT Manager is not itself a listed entity, the ReiT Manager does not consider it necessary for the ReiT Manager Board to establish a remuneration committee.

As a subsidiary of Feo, the ReiT Manager takes its reference from the remuneration policies and practices of Feo in determining the remuneration of its Directors and senior executives. Feo determines the framework of remuneration, terms of engagement, compensation and benefits for Directors and senior executives of the Manager. Remuneration of the Directors, executive officers and employees of the ReiT Manager are not paid out of the deposited property of Far east h-ReiT, but are paid by the ReiT Manager from the fees it receives. For the period ended 31 December 2012, the Directors’ fees are paid in cash.

Since Far east h-ReiT does not bear the remuneration of the ReiT Manager’s board of directors and employees, the ReiT Manager does not consider it necessary to include information on the remuneration of its directors or key executives.

none of the Directors have any service contracts with the ReiT Manager. They receive a base fee, an additional fee for serving on the Audit committee and an attendance fee for attending meetings. Fees payable to the chairman and members of Audit committee are higher compared to Directors who are not members of the Audit committee.

The ReiT Manager applies the principle that remuneration matters are to be sufficiently structured and benchmarked to good market practices, in order to attract suitably qualified talents, so as to grow and manage Far east h-ReiT. The ReiT Manager applies the principle that the remuneration for the ReiT Manager Board and senior executives should be viewed in totality. it is a concerted pursuit of strong and ethical leadership for the success of Far east h-Trust and the ReiT Manager.


47

AnnuAl RePoRT 2012

Accountability and Audit

Principle 10: The Board should present a balanced and understandable assessment of the REIT’s performance, position and prospects

The ReiT Manager Board is responsible for providing a balanced and understandable assessment of Far east h-ReiT’s and the ReiT Manager’s performance, position and prospects, including interim and other price sensitive public reports, and reports to regulators.

The ReiT Manager Board has embraced openness and transparency in the management of Far east h-ReiT, while preserving the commercial interests of Far east h-ReiT. Financial reports, press releases, media and analyst presentation slides and other price sensitive information are disseminated to Stapled Securityholders through announcements via SGXneT and Far east h-Trust’s website.

Risk Management and Internal Controls

Principle 11: A sound system of risk management and internal controls to safeguard Stapled Securityholders’ Interests and the REIT’s assets

The ReiT Manager Board recognizes the importance of a sound system of risk management and internal controls to safeguard Stapled Securityholders’ interests and Far east h-ReiT’s assets. it therefore seeks to ensure the adequacy and effectiveness of Far east h-Trust’s risk management and internal control systems, including financial, operational, compliance and information technology controls.

in assessing business risk, the ReiT Manager Board considers the economic environment and risks that are relevant to the hospitality and hospitality-related industries. it reviews Management’s recommendations prior to approving major transactions, and acts upon any comments from both the internal and external auditors of Far east h-ReiT.

The Audit committee (“Ac”) assists the ReiT Manager Board in the oversight of risk management in Far east h-ReiT. The Ac reviews and guides Management in the formulation of risk policies and processes to effectively identify, evaluate and manage any material risks. The Ac will then report to the Board on material findings and make recommendations in respect of any material risk issues.

The internal controls and risk management functions are performed by Management that meets regularly to review the operations of Far east h-ReiT and reports are submitted to the Audit committee for review on a quarterly basis.

Management has identified the key risks such as investment and divestment risks, conflicts of interest, human capital risk, funding risks, and regulatory and compliance risks. There are documented procedures in place covering compliance, finance, investment, asset management and other risk management issues to mitigate these risks.

Based on the internal controls and risk management system established and adhered to by Far east h-Trust, the assurance received from the ceo and cFo, and works performed by the external auditor and internal auditor, the Audit committee and the Board are of the opinion that Far east h-Trust’s risk management and internal control systems, addressing financial, operational, compliance and information technology risks were adequate as at 31 December 2012.

The ReiT Manager Board has received assurance from ceo and cFo of the ReiT Manager that:

(a) the financial records have been properly maintained and the financial statements give a true and fair view of the Far east h-Trust’s operations and finances; and


48


(b) Far east h-Trust’s risk management and internal control systems, addressing financial, operational, compliance and information technology controls were adequate.

Conflicts of Interest

The ReiT Manager has instituted the following procedures to deal with issues of conflicts of interest:

• TheREITManagerwillnotmanageanyotherREITwhichinvestsinthesametypeofpropertiesasFarEastH-REIT;

• AllexecutiveofficerswillbeemployedbytheREITManagerandwillnotholdexecutivepositionsinanyotherentities;

• Alldirectors’resolutionsinwritingoftheREITManagerinrelationtomattersconcerningFarEastH-REITmustbeapproved by a majority of the directors, including at least one director being independent from management and business relationships with the ReiT Manager;

• Atleastone-thirdoftheREITManagerBoardshallcompriseindependentdirectors;

• Inrespectofmatters inwhichaREITManagerDirectororhisassociates(asdefinedintheListingManual)hasan interest, direct or indirect, such interested Director will abstain from voting. in such matters, the quorum must comprise a majority of the ReiT Manager Directors and must exclude such interested director;

• InrespectofmattersinwhichtheSponsorhasaninterest,directorindirect,forexample,inmattersrelatingto:

– potential acquisitions of additional properties or property-related investments by Far east h-ReiT in competition with the Sponsor; and

– competition for tenants between properties owned by Far east h-ReiT and properties owned by the Sponsor,

any nominees appointed by the Sponsor to the ReiT Manager Board to represent its interests will abstain from deliberations and voting on such matters. in such matters, the quorum must comprise a majority of the ReiT Manager Directors independent from management and business relationships with the ReiT Manager and must exclude nominee directors of the Sponsor;

• Save as to resolutions relating to the removal of the REITManager, the REITManager and its associates areprohibited from voting or being counted as part of a quorum for any meeting of the holders of Far east h-ReiT units convened to approve any matter in which the ReiT Manager and/or any of its associates has an interest, and for so long as the ReiT Manager is the manager of Far east h-ReiT, the controlling shareholders of the ReiT Manager and of any of its associates are prohibited from voting or being counted as part of a quorum for any meeting of the holders of Far east h-ReiT units convened to consider a matter in respect of which the relevant controlling shareholders of the ReiT Manager and/or of any of its associates have an interest; and

• ItisalsoprovidedintheFarEastH-REITTrustDeedthatiftheREITManagerisrequiredtodecidewhetherornottotake any action against any person in relation to any breach of any agreement entered into by the ReiT Trustee for and on behalf of Far east h-ReiT with an interested Person (as defined in the listing Manual) and/or, as the case may be, an interested Party (as defined in the Property Funds Appendix) (collectively, a “Related Party”) of the ReiT Manager, the ReiT Manager shall be obliged to consult with a reputable law firm (acceptable to the ReiT Trustee) which shall provide legal advice on the matter. if the said law firm is of the opinion that the ReiT Trustee, on behalf of Far east h-ReiT, has a prima facie case against the party allegedly in breach under such agreement, the ReiT Manager shall be obliged to take appropriate action in relation to such agreement. The ReiT Manager Directors will have a duty to ensure that the ReiT Manager so complies. notwithstanding the foregoing, the ReiT Manager shall inform the ReiT Trustee as soon as it becomes aware of any breach of any agreement entered into by the ReiT Trustee for and on behalf of Far east h-ReiT with a Related Party of the ReiT Manager and the ReiT Trustee may take such action as it deems necessary to protect the rights of the holders of Far east h-ReiT units and/or which is in the interests of the holders of Far east h-ReiT units. Any decision by the ReiT Manager not to take action against a Related Party of the ReiT Manager shall not constitute a waiver of the ReiT Trustee’s right to take such action as it deems fit against such Related Party.


49

AnnuAl RePoRT 2012

Aggregate value of interested Person Transactions entered into from 1 August 2012 (date of constitutition) to 31 December 2012.

Aggregate value of iPTs for the period from 1 August 2012 to 31 December 2012 (excluding

transactions less than S$100,000 each)Stapled Group Far East H-REIT Far East H-BT

S$’000 S$’000 S$’000

Rental income received/receivable from related corporations of the ReiT Manager(1)

35,910 35,910 –

Rental income received/receivable from related corporations of the ReiT Manager(2)

812 812 –

Rental income received/receivable from the ReiT Manager 42 42 –

36,764 36,764

Management fees paid/payable to ReiT Manager 3,830 3,830 –Shared service fees paid/payable to related corporations of the

ReiT Manager(3)

188 188 –

Property management fees paid/payable to the Property Manager 147 147 –Reimbursement of expenses paid/paybale to the ReiT Manager(4) 344 344 –Reimbursement of expenses paid/paybale to related coproations

of the ReiT Manager(5)

862 862 –

5,371 5,371

The entry into and the fees and charges payable by Far east h-ReiT under the Far east h-ReiT Trust Deed, the Stapling Deed, the Property Management Agreement, the Shared Services Agreements, the Shared electricity Services Agreements, the licence Agreement and the leases set out in the section “— other Related Party Transactions” in the iPo prospectus, to the extent that details of these have been specifically disclosed, which each constitutes an interested Person Transaction, are deemed to have been specifically approved by Stapled Securityholders upon purchase of the Stapled Securities and are therefore not subject to Rules 905 and 906 of the listing Manual to the extent that there is no subsequent change to the rates and/or bases of the fees charged thereunder which will adversely affect Far east h-ReiT.

(1) The related corporations are the master lessees of the properties in Far east h-ReiT’s portfolio: (i) Far east organization centre Pte ltd (ii) Golden Development Pte ltd (iii) Far east orchard limited (iv) First choice Properties Pte ltd (v) oPh Riverside Pte ltd (vi) Serene land Pte ltd (vii) oxley hill Properties Pte ltd (viii) Transurban Properties Pte ltd (ix) Golden landmark Pte ltd (x) Riverland Pte ltd(2) The related corporations of the ReiT Manager are: (i) china classic Pte ltd (ii) Far east organization centre Pte ltd (iii) Far east Management Pte ltd (iv) Far east hospitality Services Pte ltd (v) Jelco Properties Pte ltd(3) (i) Staff costs payable to lyon cleaning & Maintenance Services Pte ltd and Far east Management (Pte) ltd, related corporations of the ReiT Manager. (ii) lease administration fees, arrears management fees, etc payable to Jelco Properties Pte ltd, a related corporation of the ReiT Manager.(4) The ReiT Manager has paid initial listing fee, listing processing fee, engagement of valuers, Far east h-Trust’s website design, and iPo prospectus and related costs

on behalf of Far east h-Trust. (5) Recovery of repairs and maintainenace costs by Albert court Village hotel, changi Village hotel, The elizabeth Singapore and iPo related costs by Far east

organization centre Pte ltd.


50


Material Contracts

There are no material contracts entered into by Far east h-Trust involving the interests of the ceo of the ReiT Manager, eachDirector of the ReiT Manager or controlling unitholder of Far east h-Trust (as defined in the listing Manual of the SGX-ST), either still subsisting at the end of the financial period ended 31 December 2012, or if not then subsisting, entered into since the constitution of Far east h-Trust, other than, where applicable:

(a) as disclosed in note 15 to the financial statements of the Annual Report; and

(c) interested person transactions as listed in the interested Person Transactions section of the Annual Report.

Related Party TransactionsThe REIT Manager’s Internal Control System

The ReiT Manager has established an internal control system to ensure that all future Related Party Transactions:

• willbeundertakenonnormalcommercialterms;and

• willnotbeprejudicialtotheinterestsofFarEastH-REITandtheholdersofFarEastH-REITUnits.

As a general rule, the ReiT Manager must demonstrate to the Audit committee that such transactions satisfy the foregoing criteria, which may entail:

• obtaining(wherepracticable)quotationsfrompartiesunrelatedtotheREITManager;or

• obtainingvaluationsfromindependentprofessionalvaluers(inaccordancewiththePropertyFundsAppendix).

The ReiT Manager maintains a register to record all Related Party Transactions which are entered into by Far east h-ReiT and the bases, including any quotations from unrelated parties and independent valuations obtained to support such bases, on which they are entered into.

The ReiT Manager has incorporated into its internal audit plan a review of all Related Party Transactions entered into by Far east h-ReiT. The Audit committee will review the internal audit reports at least twice a year to ascertain that the guidelines and procedures established to monitor Related Party Transactions have been complied with. in addition, the ReiT Trustee will also have the right to review such audit reports to ascertain that the Property Funds Appendix has been complied with. The review will include the examination of the nature of the transaction and its supporting documents or such other data deemed necessary to the Audit committee. if a member of the Audit committee has an interest in a transaction, he or she is to abstain from participating in the review and approval process in relation to that transaction.

Further, the following procedures will be undertaken:

• anytransaction(eitherindividuallyoraspartofaseriesorifaggregatedwithothertransactionsinvolvingthesameRelated Party during the same financial year) equal to or exceeding S$100,000 in value but less than 3.0% of the value of Far east h-ReiT’s net tangible assets (based on the latest audited accounts) will be subject to review by the Audit committee at regular intervals;

• anytransaction(either individuallyoraspartofaseriesor ifaggregatedwithothertransactionsinvolvingthesameRelated Party during the same financial year) equal to or exceeding 3.0% but below 5.0% of the value of Far east h-ReiT’s net tangible assets (based on the latest audited accounts) will be subject to the review and prior approval of the Audit committee. Such approval shall only be given if such transaction is on normal commercial terms and is consistent with similar types of transactions made by the ReiT Trustee with third parties which are unrelated to the ReiT Manager; and


51

AnnuAl RePoRT 2012

• anytransaction(eitherindividuallyoraspartofaseriesorifaggregatedwithothertransactionsinvolvingthesameRelated Party during the same financial year) equal to or exceeding 5.0% of the value of Far east h-ReiT’s net tangible assets (based on the latest audited accounts) will be reviewed and approved prior to such transaction being entered into, on the basis described in the preceding paragraph, by the Audit committee which may, as it deems fit, request advice on the transaction from independent sources or advisers, including the obtaining of valuations from independent professional valuers. Further, under the listing Manual and the Property Funds Appendix, such transaction would have to be approved by the holders of Far east h-ReiT units at a meeting duly convened.

Pursuant to the listing Manual, transactions with a value below S$100,000 are disregarded on the ground that they do not put Far east h-ReiT at risk. Accordingly, such transactions are excluded from aggregation with other transactions involving the same Related Parties. Where matters concerning Far east h-ReiT relate to transactions entered into or to be entered into by the ReiT Trustee for and on behalf of Far east h-ReiT with a Related Party of the ReiT Manager (which would include relevant “associates” as defined under the listing Manual) or Far east h-ReiT, the ReiT Trustee is required to consider the terms of such transactions to satisfy itself that such transactions are conducted on normal commercial terms, are not prejudicial to the interests of Far east h-ReiT and the holders of Far east h-ReiT units, and in accordance with all applicable requirements of the Property Funds Appendix and/or the listing Manual relating to the transaction in question. Further, the ReiT Trustee has the ultimate discretion under the Far east h-ReiT Trust Deed to decide whether or not to enter into a transaction involving a Related Party of the ReiT Manager or Far east h-ReiT. if the ReiT Trustee is to sign any contract with a Related Party of the ReiT Manager or Far east h-ReiT, the ReiT Trustee will review the contract to ensure that it complies with the relevant requirements relating to Related Party Transactions (as may be amended from time to time) as well as such other guidelines as may from time to time be prescribed by the MAS and the SGX-ST to apply to ReiTs.

Save for the Related Party Transactions in connection with the Setting up of Far east h-ReiT and Future Related Party Transactions (as disclosed in the iPo prospectus), Far east h-ReiT will comply with Rule 905 of the listing Manual by announcing any interested Person Transaction in accordance with the listing Manual if such transaction, by itself or when aggregated with other interested Person Transactions entered into with the same interested Person (as defined in the listing Manual) during the same financial year, is 3.0% or more of the value of Far east h-ReiT’s latest audited net tangible assets.

The aggregate value of all interested Person Transactions in accordance with the listing Manual in a particular year, each of at least S$100,000 in value and which are subject to Rules 905 and 906 of the listing Manual, will be disclosed in Far east h-Trust’s annual report, or (if unstapling of Far east h-Trust has occurred), Far east h-ReiT’s annual report for the relevant financial year.

Role of the Audit Committee for Related Party Transactions

The Audit committee will monitor the procedures established to regulate Related Party Transactions, including reviewing any Related Party Transactions entered into from time to time and the internal audit reports to ensure compliance with the relevant provisions of the listing Manual and the Property Funds Appendix.

if a member of the Audit committee has an interest in a transaction, he or she is to abstain from participating in the review and approval process in relation to that transaction.

The ReiT Manager Board recognizes the importance of a sound system of risk management and internal controls to safeguard Stapled Securityholders’ interests and Far east h-Trust’s assets. The ReiT Manager Board affirms its responsibility for Far east h-ReiT’s system of risk management and internal controls, and for reviewing the adequacy and effectiveness of Far east h-ReiT’s risk management and internal control systems, including financial, operational, compliance and information technology controls on an annual basis.


52


Audit Committee

Principle 12: Establishment of Audit Committee with written terms of reference

The Audit committee of the ReiT Manager comprises three independent Directors namely Mr Willie cheng as chairman, and Mr huang cheng eng and Mr Kyle lee as members.

Both Mr cheng and Mr lee have accounting and financial management expertise or experience. The ReiT Manager Board considers Mr huang as having sufficient financial management knowledge to discharge his responsibilities as a member of the Audit committee.

The Audit committee’s responsibilities include:

(i) monitoring the procedures established to regulate Related Party Transactions (as defined herein), including ensuring compliance with the provisions of the listing Manual relating to “interested person transactions” (as defined therein) and the provisions of the Property Funds Appendix relating to “interested party transactions” (as defined therein) (both such types of transactions constituting “Related Party Transactions”);

(ii) reviewing transactions constituting Related Party Transactions;

(iii) deliberating on resolutions relating to conflicts of interest involving Far east h-ReiT;

(iv) monitoring the procedures in place to ensure compliance with applicable legislation, the listing Manual and the Property Funds Appendix;

(v) reviewing the arrangements by which employees of Far east h-ReiT may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters and ensuring that arrangements are in place for the independent investigation of such matters and for appropriate follow-up action;

(vi) examining the effectiveness of financial, operating and compliance controls and risk management policies and systems at least annually;

(vii) reviewing external audit reports to ensure that where deficiencies in internal controls have been identified, appropriate and prompt remedial action is taken by the management;

(viii) reviewing the adequacy of external audits in respect of cost, scope and performance;

(ix) making recommendations to the ReiT Manager Board on the appointment, reappointment and removal of external auditors and approving the remuneration and terms of engagement of external auditors;

(x) reviewing, on an annual basis, the independence and objectivity of the external auditors and where the external auditors also provide a substantial volume of non-audit services to Far east h-ReiT, keeping the nature and extent of such services under review, seeking to balance the maintenance of objectivity and value for money;

(xi) reviewing internal audit reports at least twice a year to ascertain that the guidelines and procedures established to monitor Related Party Transactions have been complied with;

(xii) ensuring that the internal audit function is independent from the management and will report to the chairman of the Audit committee and is adequately qualified to perform an effective role;

(xiii) ensuring, at least annually, the adequacy of the internal audit function;

(xiv) meeting with external and internal auditors, without the presence of the executive officers of the Manager, at least on an annual basis;

(xv) reviewing the financial statements of Far east h-ReiT;

(xvi) reviewing the significant financial reporting issues and judgments so as to ensure the integrity of the financial statements of Far east h-ReiT and any formal announcements relating to Far east h-ReiT’s financial performance;

(xvii) investigating any matters within the Audit committee’s terms of reference, whenever it deems necessary; and


53

AnnuAl RePoRT 2012

(xviii) reporting to the ReiT Manager Board on material matters, findings and recommendations.

The Audit committee has full access to and co-operation by Management and full discretion to invite any Director or executive officer to attend its meetings, and reasonable resources to enable it to discharge its functions properly.

The Audit committee meetings will be convened at the end of every financial quarter. only one Audit committee meeting was held during the period under review. The Audit committee has met with the external and internal auditors, without the presence of the executive officers of the ReiT Manager at least once annually.

The Audit committee has conducted a review of all non-audit services provided by ernst & young llP, the external auditor, during the period under review. Given that the substantial amount of work was iPo related and the way Far east h-Trust was structured with master leases in place, the statutory audit fee was low in relation to the non-audit fee. The Audit committee is satisfied that the nature and extent of non-audit services will not prejudice the independence and objectivity of the external auditors. A breakdown of the fees paid in total for audit and non-audit services is set out below:

Audit and non-Audit Services paid/accrued to ernst & young llP for the period from 27 August 2012 to 31 December 2012

Breakdown of audit and non-audit services Amount

Audit Services

Statutory Audit S$60,000

non-Audit Services

IPO Related WorkTax Advise on iPoReporting Accountant’s work on Far east h-Trust’s listingApplication to Ministry of Finance for stamp duty remission on transfer of propertiesGST matters relating to Far east h-Trust’s listingDisbursement

Non-IPO Related WorkReview of Quarterly GST Submission Review of corporate Tax Submission

Total :

S$150,000S$205,000S$24,000S$31,900S$4,810

S$15,500S$20,000

S$451,210

% of Statutory Audit 752%

exclude iPo related work 59%

Management is in the process of formalising a Whistle Blowing Policy for which relevant employees and Directors of Feo, the ReiT Manager and the Trustee-Manager may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters in good faith, with the confidence that the relevant persons making the reports will be treated fairly and be protected from reprisal. The Whistle Blowing Policy will be disclosed on its corporate website when it is approved by the ReiT Manager Board.


54


During the period under review, the Audit committee performed independent review of the financial statements of Far east h-ReiT before recommending to the ReiT Manager Board for approval on the release of the financial results for the period from 1 August 2012 (date of constitution of Far east h-ReiT) to 31 December 2012. in the process, the Audit committee reviewed the significant financial reporting issues and judgements so as to ensure adequate provisioning and disclosure, critical accounting policies and any changes made that would have a material impact on the financials.

The Audit committee also reviewed and approved both the Group internal Auditor’s and external auditor’s plans to ensure that the plans covered sufficiently in terms of audit scope in reviewing the significantly internal controls of Far east h-ReiT. Such controls include financial and operational controls. All audit findings and recommendations were tabled at Audit committee meetings for discussion and approval.

The Group internal Auditor (“GiA”) is a unit of Feo. its scope of work includes the following:

(i) reviewing the renewed leases within the excluded commercial Premises (“ecP”) to ensure that these are transacted at arms’ length;

(ii) lease administration, billings, collection of security deposits and, where applicable, gross sales turnover for ecP;(iii) the cost of any acquisition and replacement of the furniture, fixtures and equipment for each of the properties will

be borne by the respective master lessee under the terms of the relevant Master lease Agreements while capital improvement expenditure such as improvement works on the physical structures of the properties will be borne by Far east h-ReiT. GiA will review the tendering, procurement, payment and recording process of capital improvement expenditure incurred by Far east h-ReiT;

(iv) Far east h-ReiT incurs expenses for certain insurance coverage, including fire insurance and physical damage for the properties as well as rental losses from business interruption for the ecP. GiA will review the various insurance policies, claims record and internal insurance procurement process; and

(v) GiA will review the process of vacancy tax claims, timeliness of the claims and compliance with applicable laws and regulations.

The ReiT Manager Board will incorporate into its audit plan a review of all related party transactions entered into by Far east h-ReiT. This function will be performed by an external party as internal auditor of Far east h-ReiT, as the GiA, being an unit of Feo is conflicted.

Management will provide updates at meetings of the Ac so as to enable the Ac members to keep abreast of the changes in Statement of Recommended Accounting Practice (“RAP”) 7 issued by the institute of certified Public Accountants of Singapore, which is applicable to Far east h-ReiT. RAP 7 requires the accounting policies to generally comply with the principles relating to recognition and measurement under the Singapore Financial Reporting Standards.

The ReiT Manager on behalf of Far east h-ReiT, confirms that Far east h-ReiT has complied with Rules 712 and 715 of the listing Manual in relation to its auditing firm.

Internal Audit

Principle 13: Independent Internal Audit Function

The role of the internal auditors is to assist the Audit committee to ensure that the ReiT Manager maintains a sound system of internal controls by regular monitoring of key controls and procedures and ensuring their effectiveness, undertaking investigations as directed by the Audit committee, and conduct regular in-depth audits of high risk areas.


55

AnnuAl RePoRT 2012

Feo’s Group internal Audit function will review all the renewed leases within the excluded commercial Properties to ensure that these are transacted at arms’ length. The ReiT Manager is in the process of sourcing another auditing firm to review all related party transactions entered into by Far east h-ReiT.

Staffed by suitably qualified executives, the Group internal Auditor has unfettered access to the Audit committee and will be provided the documents, records, properties and personnel required for it to perform its function.

The Group internal Auditor performs its function in accordance with the standards of the institute of internal Auditors.

Stapled Securityholders’ Rights and Responsibilities

Principle 14: Stapled Securityholders’ Rights

Far east h-Trust is committed to communicating with investors, analysts and the investment community in a timely and comprehensive manner. Far east h-Trust releases corporate information through posting announcements on SGXneT and Far east h-Trust’s corporate website. Far east h-Trust continues to strive towards improving the standard of disclosures and transparency to help investors make more informed investment decisions and look for new platform to reach out to existing and potential investors.

Communication with Stapled Securityholders

Principle 15: Regular, Effective and Fair Communication with Stapled Securityholders

The ReiT Manager is in the process of devising an investor relations policy that governs regular, effective and fair communication with Stapled Securityholders.

Material information is disclosed in a comprehensive, accurate and timely manner via SGXneT and the press release. During the period under review, there is no inadvertent disclosure made to a select group of Stapled Securityholders.

The ReiT Manager has established Far east h-Trust’s corporate website as an information resource centre for retail and institutional investors and for regular dialogue with investors, such as to gather their views or inputs, and address their concerns through Far east h-Trust’s corporate email: at [email protected]. Management shares the financial performance, position and outlook with investors, analysts and media by hosting results briefings, through face-to-face meetings, conference calls, road shows and conferences. Management also regularly attends local and overseas investor conferences to raise Far east h-Trust’s profile among investors,

As a newly listed hospitality trust, Management places strong emphasis on understanding the views of the investors. Since listing, Management have participated in conferences and non-deal road shows to meet potential investors and update existing investors. Far east h-Trust also arranges site visits for fund managers and analysts which will allow them to gain insights into the quality and scale of Far east h-Trust’s property portfolio.


56


Distribution Policy

Far east h-ReiT’s distribution policy is to distribute 100% of Far east h-ReiT’s taxable income for the period from 27 August 2012 to 31 December 2013 and at least 90% of its taxable income thereafter. Far east h-ReiT’s distribution policy is stated in the corporate website.

Conduct of Stapled Securityholders’ Meetings

Principle 16: Greater participation by Stapled Securityholders at General Meetings

Stapled Securityholders are informed of annual general meetings or extraordinary general meetings through reports or circulars sent to them. Stapled Securityholders are encouraged to attend and participate by voting at the general meetings. opportunity is given to every Stapled Securityholder to communicate their views on matters affecting Far east h-ReiT. if any Stapled Securityholder is unable to attend, he is allowed to appoint up to two proxies to vote on his behalf at the meetings through proxy forms sent in advance.

each distinct issue is proposed as a separate resolution at the general meetings.

All Directors and the ReiT Trustee will be present to address Stapled Securityholders’ queries at the forthcoming AGM and eGM. The external auditors will also be present to answer Stapled Securityholders’ questions about the conduct of audit and the content of the auditors’ report.

All the resolutions at the forthcoming AGM and eGM will be moved by voting by poll and an announcement of the results showing the number of votes cast for and against each resolution and the respective percentages will be made through SGXneT.

Dealings in Stapled Securities

The ReiT Manager has adopted its own Trading Policy to provide guidance to relevant employees and Directors of the Sponsor, the ReiT Manager, the Trustee-Manager and Feo in the dealing of the stapled securities. The Trading Policy sets out the implications of insider trading and principles that all relevant employees and Directors have to observe at all times:

• ToactinthebestinterestsofStapledSecurityholders.

• Toavoid,andbeseentoavoid,actualorpotentialconflictbetweenpersonalinterestandStapledSecurityholders.

• TocomplywiththeprohibitionontradingintheStapledSecurities.

• ToinformtheComplianceManagerofFarEastH-Trustwithintwo(2)workingdaysofcompletionofthetrade.

• DealinginthesecuritiesofFarEastH-Trustshouldnotbeundertakenonshorttermconsiderations.

All relevant employees and Directors are strictly prohibited to deal in the following instances:

• Duringtheperiodcommencingtwo(2)weeksbeforetheannouncementofFarEastH-Trust’sfinancialstatementsfor each quarter of its financial year, and one (1) month before the announcement of Far east h-Trust’s financial statements for the full financial year, as the case may be, and ending on the date of announcement of the relevant results; and

• AtanytimewhenrelevantemployeesandDirectorsareinpossessionofmaterialorpricesensitiveinformationthatis not available in the market.


57

AnnuAl RePoRT 2012

stAteMeNt oF PoLIcIes AND PrActIces

Far east hospitality Business Trust (“Far east h-BT”) has been dormant since the listing of Far east hospitality Trust (“Far east h-Trust”) on the Main Board of the SGX-ST on 27 August 2012.

Although Far east h-BT is dormant, the board of directors of the Trustee-Manager (the “Trustee-Manager Board”) is committed to complying with the requirements under the listing Manual, the Business Trust Act, chapter 31A of Singapore (the “BTA”) and the Business Trusts Regulations 2005 (the “BTR”) (except where waivers have been obtained from the Monetary Authority of Singapore (the “MAS”) and disclosed in the iPo prospectus of Far east h-Trust), the Securities and Futures Act, chapter 289 of Singapore (the “SFA”) as well as the Far east h-BT Trust Deed and the Stapling Deed.

The Trustee-Manager has the dual responsibilities of safeguarding the interests of the holders of Far east h-BT units (the “Far east h-BT unitholders”), and managing the business conducted by Far east h-BT. The Trustee-Manager has general powers of management over the business and assets of Far east h-BT and its main responsibility is to manage Far east h-BT’s assets and liabilities for the benefit of the Far east h-BT unitholders as a whole.

The Trustee-Manager, in exercising its powers and carrying out its duties as Far east h-BT’s trustee-manager, is required to:

• treattheFarEastH-BTUnitholdersinthesameclassfairlyandequallyandFarEastH-BTUnitholderswhoholdFareast h-BT units in different classes (if any) fairly;

• ensurethatallpaymentsoutoftheFarEastH-BTTrustPropertyaremadeinaccordancewiththeFarEastH-BTTrustDeed and the Stapling Deed;

• reporttotheMASanycontraventionoftheBTAortheSecuritiesandFutures(OffersofInvestments)(BusinessTrusts)(no. 2) Regulations 2005 by any other person that:

– relates to Far east h-BT; and

– has had, has or is likely to have, a material adverse effect on the interests of all the Far east h-BT unitholders, or any class of Far east h-BT unitholders, as a whole, as soon as practicable after the Trustee-Manager becomes aware of the contravention;

• ensurethattheFarEastH-BTTrustPropertyisproperlyaccountedforandensurethattheFarEastH-BTTrustPropertyis kept distinct from the property held in its own capacity.

in the event that Far east h-BT becomes active, the Trustee-Manager will:

• atalltimesacthonestlyandexercisereasonablediligenceinthedischargeofitsdutiesasFarEastH-BT’strustee-manager in accordance with the BTA and the Far east h-BT Trust Deed;

• actinthebestinterestsofallFarEastH-BTUnitholdersasawholeandgiveprioritytotheinterestsofallFarEasth-BT unitholders as a whole over its own interests in the event of a conflict between the interests of all Far east h-BT unitholders as a whole and its own interests;

• notmakeimproperuseofanyinformationacquiredbyvirtueofitspositionasFarEastH-BT’strustee-managertogain,directly or indirectly, an advantage for itself or for any other person to the detriment of the Far east h-BT unitholders;

• holdtheFarEastH-BTTrustPropertyontrustforallFarEastH-BTUnitholdersasawholeinaccordancewiththetermsof the Far east h-BT Trust Deed;

• adherewiththebusinessscopeofFarEastH-BTassetoutintheFarEastH-BTTrustDeed;

• reviewinterestedpersontransactionsinrelationtoFarEastH-BT;and

• reviewexpenseandcostallocationspayabletotheTrustee-Managerinitscapacityastrustee-managerofFarEastH-BTout of the Trust Property of Far east h-BT, and ensure that fees and expenses charged to Far east h-BT are appropriate and in accordance with the Far east h-BT Trust Deed.

58


stAteMent oF policies And prActices

The MAS has also granted the Trustee-Manager an exemption from compliance with sections 10(2)(a) and 11(1)(a) of the BTA to the extent that sections 10(2)(a) and 11(1)(a) require the Trustee-Manager Directors to act in the best interests of the Far east h-BT unitholders only so long as:

(a) the Trustee-Manager ensures that the units of Far-east h-BT remains stapled to the units of Far east h-ReiT; and

(b) the Trustee-Manager and its Directors shall act in the best interest of all the Stapled Securityholders as a whole.

Trust Property is Properly Accounted for

in the event that Far east h-BT becomes active, the trust property of Far east h-BT (the “Far east h-BT Trust Property”) shall be properly accounted for and kept distinct from the property of the Trustee-Manager in its own capacity. Different bank accounts shall be maintained for the Trustee-Manager in its personal capacity and its capacity as trustee-manager of Far east h-BT.

Adherence to the Business Scope of Far East H-BT

in the event that Far east h-BT becomes active, the Trustee-Manager Board shall review and approve all authorised businesses undertaken by Far east h-BT so as to ensure its adherence to the business scope as set out in the Far east h-BT Trust Deed. Such authorised businesses include:

(i) the acquisition, disposition and ownership of authorised investments and all activities, concerns, functions and matters reasonably incidental thereto;

(ii) ownership of subsidiaries which are engaged in the acquisition, disposition and ownership of authorised investments and all activities, concerns, functions and matters reasonably incidental thereto; and

(iii) any business, undertaking or activity associated with, incidental and/or ancillary to the carrying on of the businesses referred to in paragraphs (i) and (ii), including the management and leasing of the authorised investments.

Fees Payable to the Trustee-Manager

Management Fee

The Trustee-Manager shall be entitled under the Far east h-BT Trust Deed to a management fee comprising 10.0% of the profit of Far east h-BT before interest and tax in the relevant financial year (calculated before accounting for this management fee in that financial year), payable in the event that Far east h-BT becomes active.

Trustee Fee

under the Far east h-BT Trust Deed, 0.1% per annum of the value of the Far east h-BT Trust Property and subject to a minimum fee of S$10,000 per month, if any, shall be paid to the Trustee-Manager as trustee fees, provided that the value of the Far east h-BT Trust Property is at least S$50.0 million and Far east h-BT is active.

For the period under review, no management fee and trustee fee were paid to the Trustee-Manager as Far east h-BT remains dormant.

59

AnnuAl RePoRT 2012


Expenses Charged to Far East H-BT

The Trustee-Manager Board will carry out quarterly reviews to ensure that the expenses payable to the Trustee-Manager out of the Far east h-BT Trust Property are appropriate and in accordance with the Far east h-BT Trust Deed, in the event Far east h-BT becomes active.

For the period under review, no expenses were paid to the Trustee-Manager from the Far east h-BT Trust Property as Far east h-BT remains dormant.

Compliance with the BTA and the Listing Manual

The Trustee-Manager will engage the services of and obtain advice from professional advisers and consultants from time to time to ensure compliance with the requirements of the BTA and the listing Manual in the event that Far east h-BT becomes active.

Composition of the Trustee-Manager Board

under Regulation 12(1) of the BTR, the Trustee-Manager Board is required to comprise:

• atleastamajorityofTrustee-ManagerDirectorswhoareindependentfrommanagementandbusinessrelationshipswith the Trustee-Manager;

• atleastone-thirdofTrustee-ManagerDirectorswhoareindependentfrommanagementandbusinessrelationshipswith the Trustee-Manager and from every Substantial shareholder of the Trustee-Manager; and

• atleastamajorityofTrustee-ManagerDirectorswhoareindependentfromanysingleSubstantialshareholderoftheTrustee-Manager.

The Trustee-Manager Board consists of five Directors, three of whom are independent Directors for the purposes of the BTA. They are:

Name Position

Mr Koh Boon hwee chairman and non-executive Director

Mr Willie cheng independent Director

Mr huang cheng eng independent Director

Mr Kyle lee Khai Fatt independent Director

Mr Wee Kheng Jin non-executive Director

Mr Koh is considered a non-independent director as he is also the chairman and non-executive Director of Far east orchard limited. As at 28 March 2013, The Trustee-Manager is 67.0% owned by Feo Asset Management Pte ltd (“FAMPl”), which is a wholly-owned subsidiary of Far east organization centre Pte ltd (“Feoc”), and 33.0% owned by Far east orchard limited, which is 59.8% owned by Far east organization Pte ltd (“FeoPl”). Far east organization centre (“Feoc”), Far east organization Pte ltd (“FeoPl”) and Far east orchard are all members of the Sponsor.

Mr Wee is considered a non-independent director as he is a director of various companies in Far east organization, such as Far east hospitality Management Services Pte ltd and Far east Property Services Pte ltd.

60



As majority of the Trustee-Manager Directors are also the directors of the ReiT Manager, none of the Trustee-Manager Directors would, by definition under the BTR, be independent from a Substantial Shareholder as both the Trustee-Manager and the ReiT Manager are 67.0% owned by FAMPl, which is a wholly-owned subsidiary of Feoc, and 33.0% owned by Far east orchard limited, which is 59.8% owned by FeoPl. Feoc, FeoPl and Far east orchard are all members of the Sponsor.

The MAS has also granted the Trustee-Manager an exemption from compliance with regulations 12(1)(a) and 12(1)(b) of the BTR to the extent that regulations 12(1)(a) and 12(1)(b) of the BTR require the Trustee-Manager Directors to be independent, subject to certain conditions.

The stapling together of Far east h-BT units and Far east h-ReiT units means that the Far east h-BT unitholders are at the same time the investors of the Stapled Securities, who stand to benefit as a whole regardless of whether the appointed Trustee-Manager Directors are independent of the Sponsor.

in the event that Far east h-BT becomes active, the number of directors on the Trustee-Manager Board will be a minimum of five directors, and the Trustee-Manager shall ensure that its board of directors shall comprise a majority of independent Directors for the purposes of the BTA. in addition, for so long as Far east h-BT is part of a stapled group and in the event that Far east h-BT becomes active, the boards of directors of the ReiT Manager and the Trustee-Manager shall consist of the same individuals.

in addition to compliance with requirements under the BTA, the composition of the Trustee-Manager Board is determined using the following principles:

• theChairmanoftheTrustee-ManagerBoardshouldbeanon-executiveDirector;and

• theTrustee-ManagerBoardshouldconsistofDirectorswithabroadrangeofcommercialexperience.

The composition of the Trustee-Manager Board will be reviewed regularly to ensure that the Trustee-Manager Board has the appropriate mix of expertise and experience.

Chairman and Chief Executive Officer

The positions of chairman of the Trustee-Manager Board and chief executive officer of the Trustee-Manager are held by two different individuals in order to ensure an appropriate balance of power, increased accountability and to maintain effective checks and balances. The chairman of the Trustee-Manager Board is Mr Koh Boon hwee, while the chief executive officer of the Trustee-Manager is Mr Gerald lee hwee Keong.

Access to Information

The Trustee-Manager Board has separate and independent access to the management of the Trustee-Manager (the “Management”) and the company of the Trustee-Manager (the “company Secretary”) at all times and they are entitled to request from the Management additional information as needed to make informed decisions. The Directors also have access to independent professional advice where appropriate and whenever requested.

61

AnnuAl RePoRT 2012


The company Secretary for the ReiT Manager, Ms Jill chay, is also the company Secretary for the Trustee-Manager.

The company Secretary reports to the chief executive officer of the Trustee-Manager and her duties include:

• assistingtheTrustee-ManagerinputtinginplaceprocessestoensurethattheTrustee-Managerfulfilsthecompliancerequirements under the listing Manual, the BTA and the BTR (except where waivers have been obtained), the SFA as well as the Far east h-BT Trust Deed and the Stapling Deed;

• preparingreturnstotheMASasrequiredundertheBTAandBTR;and

• assistinginanyothermattersconcerningcompliancewiththeListingManual,theBTAandtheBTR(exceptwherewaivers have been obtained), the SFA as well as the Far east h-BT Trust Deed and the Stapling Deed.

her roles also include the following:

• ensuringthatboardproceduresoftheTrustee-ManagerBoardarefollowed;

• assistingtheTrustee-ManagerwithcorporatesecretarialadministrationmattersfortheTrustee-Manager,bothinitspersonal capacity and in its capacity as trustee-manager of Far east h-BT, including attending all board and committee meetings; and

• assistingtheTrustee-ManagerinpreparingtheannouncementsandnotificationstobeuploadedontheSGXNETasrequired under the listing Manual.

Remuneration Matters

As Far east h-BT remains dormant, no compensation is payable to the Directors of the Trustee-Manager.

Audit Committee

The MAS has granted the Trustee-Manager an exemption from compliance with section 15(1) of the BTA to the extent that section 15(1) requires an audit committee to be constituted when Far east h-BT is active, subject to certain conditions.

External Auditor

The Trustee-Manager, on behalf of Far east h-BT, confirms that Far east h-BT has complied with Rules 712 and 715 of the listing Manual in relation to its auditing firm.

Internal Audit

As Far east h-BT remains dormant, no internal auditor is appointed.

62



Risk Management and Internal Controls

The Trustee-Manager Board will put in place appropriate internal control systems including the following to manage business risk in the event that Far east h-BT becomes active.

The Trustee-Manager Board will meet quarterly or more frequently if necessary and will review the financial performance of Far east h-BT against a previously approved budget. The Trustee-Manager Board will also review the business risks of Far east h-BT, examine liability management and will act upon any comments from both the internal and external auditors of Far east h-BT.

in assessing business risk, the Trustee-Manager Board will consider the economic environment and risks relevant to the property industry. it will review management reports prior to approving major transactions.

The Management will meet regularly to review the operations of the Trustee-Manager and Far east h-BT and discuss any disclosure issues.

Interested Person Transactions and Potential Conflicts of Interest

in general, transactions between:

• anentityatrisk(inthiscase,theTrustee-Manager(actinginitscapacityasthetrusteemanagerofFarEastH-BT)orany of the subsidiaries or associated companies of Far east h-BT); and

• anyoftheInterestedPersons(namelytheTrustee-Manager(actinginitspersonalcapacity),arelatedcorporationorrelated entity of the Trustee-Manager (other than a subsidiary or subsidiary entity of Far east h-BT), an associated company or associated entity of the Trustee-Manager (other than an associated company or associated entity of Far east h-BT) (as defined in the Securities and Futures (offers of investments) (Business Trusts) (no. 2) Regulations 2005), a Director, chief executive officer or controlling shareholder of the Trustee-Manager, a controlling Far east h-BT unitholder or an associate of any such Director, chief executive officer, controlling shareholder or controlling Far east h-BT unitholder), would constitute an interested Person Transaction.

For so long as Far east h-BT is part of a stapled group and in the event that the Board of Directors of the ReiT Manager and the Trustee-Manager Board cannot reach an agreement on any resolution relating to governance or compliance matters before them where such resolution would require the collective approval of both the boards of directors of the ReiT Manager and the Trustee-Manager, the votes of the independent Directors of the ReiT Manager will prevail in the event that the Trustee-Manager Board has approved such resolutions.

Since the Far east h-ReiT units and Far east h-BT units are held by the same pool of investors in the same proportion, concerns and potential abuses applicable to interested party transactions will be absent in transactions between Far east h-ReiT and Far east h-BT.

63

AnnuAl RePoRT 2012


Internal Control System

in the event the Far east h-BT becomes active, the Trustee-Manager will establish an internal control system to ensure that all future interested Person Transactions:

• willbeundertakenonnormalcommercialterms;and

• willnotbeprejudicialtotheinterestsofFarEastH-BTandtheFarEastH-BTUnitholders.

The Trustee-Manager will maintain a register to record all interested Person Transactions which are entered into by Far east h-BT and the bases, including any quotations from unrelated parties obtained to support such bases, on which they are entered into.

The Trustee-Manager will also incorporate into its internal audit plan a review of all interested Person Transactions entered into by Far east h-BT.

Where matters concerning Far east h-BT relate to transactions entered into or to be entered into by the Trustee-Manager for and on behalf of Far east h-BT with an interested Person (as defined in the BTA) of the Trustee-Manager (which would include relevant associates thereof) or Far east h-BT, the Trustee-Manager will consider the terms of such transactions to satisfy itself that such transactions are conducted:

• onnormalcommercialterms;

• arenotprejudicialtotheinterestsofFarEastH-BTandtheFarEastH-BTUnitholders;and

• inaccordancewithallapplicablerequirementsoftheListingManualandtheBTArelatingtothetransactioninquestion.

if the Trustee-Manager is to sign any contract with an interested Person of the Trustee-Manager or Far east h-BT, the Trustee-Manager will review the contract to ensure that it complies with the provisions of the listing Manual and the BTA relating to interested Person Transactions (as may be amended from time to time) as well as such other guidelines as may from time to time be prescribed by the MAS and the SGX-ST to apply to business trusts.

Far east h-BT will comply with Rule 905 of the listing Manual by announcing any interested Person Transaction in accordance with the listing Manual if such transaction, by itself or when aggregated with other interested Person Transactions entered into with the same interested Person during the same financial year, is 3.0% or more of Far east h-BT’s latest audited net tangible assets.

The aggregate value of all interested Person Transactions which are subject to Rules 905 and 906 of the listing Manual in a particular financial year will be disclosed in Far east h-Trust’s annual report for the relevant financial year.

Save for the interested Person Transactions in connection with the setting up of Far east h-BT and Future interested Party Transactions (as disclosed in the iPo prospectus of Far east hospitality Trust), Far east h-BT will comply with Rule 905 of the listing Manual by announcing any interested Person Transaction in accordance with the listing Manual if such transaction, by itself or when aggregated with other interested Person Transactions entered into with the same interested Person (as defined in the listing Manual) during the same financial year, is 3.0% or more of the value of Far east h-ReiT’s latest audited net tangible assets.

64



Potential Conflicts of Interest

The Trustee-Manager has instituted the following procedures to deal with conflict of interest issues:

• allresolutionsinwritingoftheTrustee-ManagerDirectorsinrelationtomattersconcerningFarEastH-Trustwillbeapproved by a majority of the Trustee-Manager Directors, including at least one independent Trustee-Manager Director;

• allexecutiveofficersoftheREITManagerwillbeemployedbytheTrustee-Manager;

• inrespectofmattersinwhichaTrustee-ManagerDirectororhisAssociates(asdefinedintheListingManual)hasaninterest, direct or indirect, such interested director will abstain from voting. in such matters, the quorum must comprise a majority of the Trustee-Manager Directors and must exclude such interested director;

• inrespectofmattersinwhichtheSponsorhaveaninterest,directorindirect,anynomineesappointedbytheSponsorto the Trustee-Manager Board to represent its/their interests will abstain from voting. in such matters, the quorum must comprise a majority of the independent Trustee-Manager Directors and must exclude any nominee directors of the Sponsor; and

• wheremattersconcerningFarEastH-BTrelatetotransactionsenteredintoortobeenteredintobytheTrustee-Managerfor and on behalf of Far east h-BT with an interested Person of the Trustee-Manager (which would include relevant associates thereof) or Far east h-BT, the Trustee-Manager Board is required to consider the terms of the transactions to satisfy itself that the transactions are conducted on normal commercial terms, are not prejudicial to the interests of Far east h-BT and the Far east h-BT unitholders and are in compliance with all applicable requirements of the listing Manual and the BTA relating to the transaction in question. if the Trustee-Manager is to sign any contract with an interested Person of the Trustee-Manager or Far east h-BT, the Trustee-Manager will review the contract to ensure that it complies with the provisions of the listing Manual and the BTA relating to interested Person Transactions (as may be amended from time to time) as well as any other guidelines as may from time to time be prescribed by the MAS and SGX-ST that apply to business trusts.

66 ReportoftheTrustee

67 ReportoftheManager

68 ReportoftheTrustee-Manager

70 StatementbytheChiefExecutiveOfficeroftheTrustee-Manager

71 IndependentAuditor’sReport

73 BalanceSheets

74 StatementsofTotalReturnoftheFarEastH-REITandtheStapledGroup•StatementofComprehensiveIncomeof FarEastH-BT

75 DistributionStatements

76 StatementsofMovementsinUnitholders’Funds

77 PortfolioStatements

78 CashFlowStatements

79 NotestotheFinancialStatements

FINANcIALs FAREASTHOSPITALITYTRUST

66


rePort oF tHe trustee oF FAr eAst HosPItALIty reAL estAte INVestMeNt trust

DBS Trustee limited (the “ReiT Trustee”) is under a duty to take into custody and hold the assets of Far east hospitality Real estate investment Trust (“Far east h-ReiT”) in trust for the holders (“unitholders”) of units in Far east h-ReiT. in accordance with the Securities and Futures Act (chapter 289), its subsidiary legislation and the code on collective investment Schemes and the listing Manual (collectively referred to as the “Regulations”), the ReiT Trustee shall monitor the activities of Feo hospitality Asset Management Pte ltd (the “ReiT Manager”) for compliance with the limitations imposed on the investment and borrowing powers as set out in the trust deed dated 1 August 2012 and the supplemental deed dated 19 october 2012 (collectively referred to as the “Trust Deed”) between the ReiT Manager and the ReiT Trustee in each annual accounting period and report thereon to unitholders in an annual report. To the best knowledge of the ReiT Trustee, the ReiT Manager has, in all material respects, managed Far east h-ReiT during the period covered by these financial statements set out on pages 73 to 108, in accordance with the limitations imposed on the investment and borrowing powers set out in the Trust Deed.

For and on behalf of the ReiT Trustee,DBS Trustee limited

Jane LimDirector

Singapore8 March 2013

67

AnnuAl RePoRT 2012

rePort oF tHe MANAger oF FAr eAst HosPItALIty reAL estAte INVestMeNt trust

in the opinion of the directors of Feo hospitality Asset Management Pte ltd (the “ReiT Manager”), the Manager of Far east hospitality Real estate investment Trust (“Far east h-ReiT”), the accompanying financial statements of Far east h-ReiT and Far east hospitality Trust (the “Stapled Group”, comprising the Far east h-ReiT and Far east hospitality Business Trust (“Far east h-BT”)), set out on pages 73 to 108, comprising their Balance Sheets, Statements of Total Return, Distribution Statements, Statements of Movements in unitholders’ Funds, Portfolio Statements, cash Flow Statements and notes to the Financial Statements are drawn up so as to present fairly, in all material respects, the financial positions of Far east h-ReiT and the Stapled Group as at 31 December 2012, the total returns, movements in unitholders’ funds, distributable income and cash flows of the Far east h-ReiT and the Stapled Group for the period from 1 August 2012 (date of constitution) to 31 December 2012, in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for unit Trusts” issued by the institute of certified Public Accountants of Singapore and the provisions of Far east h-ReiT’s trust deed dated 1 August 2012 and the first supplemental trust deed dated 19 october 2012 between DBS Trustee limited (the “ReiT Trustee”) and the ReiT Manager (collectively referred to as the “Trust Deed”) and the stapling deed of Far east hospitality Trust between the ReiT Trustee, the ReiT Manager and Feo hospitality Trust Management Pte ltd (the Trustee Manager of Far east h-BT) dated 1 August 2012. At the date of this statement, there are reasonable grounds to believe that Far east h-ReiT and the Stapled Group will be able to meet their respective financial obligations as and when they materialise.

For and on behalf of the ReiT Manager,Feo hospitality Asset Management Pte ltd

Wee Kheng JinDirector


68


rePort oF tHe trustee-MANAger oF FAr eAst HosPItALIty busINess trust

The directors of Feo hospitality Trust Management Pte ltd, the Trustee-Manager of Far east hospitality Business Trust (“Far east h-BT”), submit this report to the unitholders together with the audited financial statements for the financial period from 1 August 2012 (date of constitution) to 31 December 2012.

The directors of the Trustee-Manager in office at the date of this report are as follows:

Koh Boon hwee (chairman) (Appointed on 30 April 2012)Willie cheng Jue hiang (Appointed on 30 April 2012)huang cheng eng (Appointed on 30 April 2012)Kyle lee Khai Fatt (Appointed on 24 July 2012)Wee Kheng Jin (Appointed on 24 July 2012)

According to the register kept by the Trustee-Manager for the purposes of Section 76 of the Business Trusts Act, chapter 31A of Singapore (the “Act”), no director who held office at the end of the financial period had interests in units of Far east h-BT either at the date of constitution or at the end of the financial period.

neither at the end of, nor at any time during the financial period, was the Trustee-Manager a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Trustee-Manager to acquire benefits by means of the acquisition of units in or debentures of Far east h-BT.

Since the date of constitution, no director of the Trustee-Manager has received or become entitled to receive a benefit by reason of a contract made by Far east h-BT or a related corporation with the director, or with a firm of which is a member, or with a company in which the director has a substantial financial interest, except that the directors served as directors or employees of related corporations and received remuneration in that capacity from related corporation.

There were no changes in any of the abovementioned interests in Far east h-BT between the end of the financial period and 21 January 2013.

During the financial period, there were:

(i) no options granted by the Trustee-Manager to any person to take up unissued units in Far east h-BT; and

(ii) no units issued by virtue of any exercise of option to take up unissued units of Far east h-BT.

As at the end of the financial period, there were no unissued units of Far east h-BT under options.

The auditor, ernst & young llP, have expressed their willingness to accept re-appointment.

in our opinion:

(a) the financial statements of Far east h-BT set out on pages 73 to 108 are drawn up so as to give a true and fair view of the state of affairs of Far east h-BT as at 31 December 2012 and of the results, and movements in unitholders’ funds and cash flows of Far east h-BT for the period from 1 August 2012 (date of constitution) to 31 December 2012 in accordance with the provisions of the Act and Singapore Financial Reporting Standards; and

(b) at the date of this statement, there are reasonable grounds to believe that Far east h-BT will be able to pay its debts as and when they fall due.

69

AnnuAl RePoRT 2012

report oF the trustee-MAnAGer oF FAr eAst hospitAlity business trust

With respect to the income statement of Far east h-BT for the period ended 31 December 2012:

– interested person transactions are not detrimental to the interests of all the unitholders as a whole based on the circumstances at the time of the transaction; and

– the Board of Directors is not aware of any violation of duties of the Trustee-Manager which would have a materially adverse effect on the business of Far east h-BT or on the interests of all the unitholders as a whole.

The Board of Directors has, on the date of this statement, authorised these financial statements for issue.

For and on behalf of the Board of Directors of the Trustee-Manager,Feo hospitality Trust Management Pte ltd

Koh Boon HweeDirector



70


stAteMeNt by tHe cHIeF executIVe oFFIcer oF tHe trustee-MANAger

in accordance with Section 86 of the Act, i certify that i am not aware of any violation of duties of the Trustee-Manager which would have a materially adverse effect on the business of Far east h-BT or on the interests of all the unitholders of Far east h-BT as a whole.

Gerald Lee Hwee Keongchief executive officer


71

AnnuAl RePoRT 2012

INDePeNDeNt AuDItor’s rePortto the unitholders of Far east hospitality real estate investment trust Far east hospitality business trust

REPoRT on THE FInAnCIAl STATEmEnTS

We have audited:

(i) the financial statements of Far east hospitality Real estate investment Trust (“Far east h-ReiT”) (constituted in the Republic of Singapore pursuant to a trust deed dated 1 August 2012 and the first supplemental deed dated 19 october 2012), which comprise the Balance Sheet and Portfolio Statement as at 31 December 2012, the Statement of Total Return, Distribution Statement, Statement of Movements in unitholders’ Funds and cash Flow Statement for the financial period from 1 August 2012 (date of constitution) to 31 December 2012, and a summary of significant accounting policies and other explanatory information;

(ii) the financial statements of Far east hospitality Business Trust (“Far east h-BT”) (constituted in the Republic of Singapore pursuant to a trust deed dated 1 August 2012), which comprise the Balance Sheet as at 31 December 2012, the Statement of comprehensive income, Statement of Movement in unitholders’ Funds and cash Flow Statement for the financial period from 1 August 2012 (date of constitution) to 31 December 2012, and a summary of significant accounting policies and other explanatory information; and

(iii) the consolidated financial statements of Far east hospitality Trust (“Far east h-Trust”) (constituted in the Republic of Singapore pursuant to a stapling deed dated 1 August 2012 (the “Stapling Deed”)), which comprise the Balance Sheet and Portfolio Statement as at 31 December 2012, the Statement of Total Return, Distribution Statement, Statement of Movements in unitholders’ Funds and cash Flow Statement for the financial period from 1 August 2012 (date of constitution) to 31 December 2012, and a summary of significant accounting policies and other explanatory information,

as set out on pages 73 to 108. Far east hospitality Trust, which comprises Far east h-BT and the Far east h-ReiT, is hereinafter referred to as the “Stapled Group”.

Far East H-REIT Manager’s responsibilities for the financial statements

Feo hospitality Asset Management Pte ltd, the Manager of Far east h-ReiT (the “ReiT Manager”), is responsible for the preparation and fair presentation of the financial statements of the Far east h-ReiT and the Stapled Group in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for unit Trusts” issued by the institute of certified Public Accountants of Singapore, and for such internal control as the ReiT Manager of the Far east h-ReiT determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Far East H-BT Trustee-Manager’s responsibilities for the financial statements

Feo hospitality Trust Management Pte ltd, the Trustee-Manager of Far east h-BT (the “Far east h-BT Trustee-Manager”), is responsible for the preparation of financial statements of Far east h-BT that gives a true and fair view in accordance with the provisions of the Business Trusts Act, chapter 31A of Singapore (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets that are part of the trust property of the registered business trust are safeguarded against loss from unauthorised use or disposition; and transactions by the Trustee-Manager entered into on behalf of or purported to be entered into on behalf of the registered business trust are properly authorised and that they are recorded as necessary to permit the preparation of true and fair accounts and to maintain accountability of assets.

72


independent Auditor’s reportto the unitholders of Far east hospitality real estate investment trust Far east hospitality business trust

AudIToR’S RESPonSIBIlITY

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. in making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Far east h-BT Trustee-Manager and the ReiT Manager, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

oPInIon

in our opinion:

(a) the financial statements of Far east h-ReiT and the Stapled Group present fairly, in all material respects, the financial positions and portfolio positions of Far east h-ReiT and the Stapled Group as at 31 December 2012 and the total return, movements in unitholders’ funds, distributable income and cash flows of the Far east h-ReiT and the Stapled Group for the period from 1 August 2012 (date of constitution) to 31 December 2012 in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for unit Trusts” issued by the institute of certified Public Accountants of Singapore and the provisions of the Far east h-ReiT Trust Deed and the Stapling Deed; and

(b) the financial statements of Far east h-BT are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of Far east h-BT as at 31 December 2012 and the results, movements in unitholders’ funds and cash flows of Far east h-BT for the period from 1 August 2012 (date of constitution) to 31 December 2012.

REPoRT on oTHER lEGAl And REGulAToRY REquIREmEnTS

in our opinion, the accounting and other records required by the Act to be kept by Far east h-BT Trustee-Manager on behalf of Far east h-BT have been properly kept in accordance with the provisions of the Act.

ERNST & YOUNG LLPPublic Accountants and certified Public AccountantsSingapore8 March 2013

73

AnnuAl RePoRT 2012

bALANce sHeets as at 31 december 2012

Note Stapled GroupFar East

H-REITFar East

H-BT$’000 $’000 $’000

Non-current assetsinvestment properties 3 2,158,400 2,158,400 –

Current assetscash and cash equivalents 4 35,658 35,658 –Prepayments 76 76 –Trade and other receivables 5 20,896 20,896 30

Total current assets 56,630 56,630 30

Total assets 2,215,030 2,215,030 30

Current liabilitiesTrade and other payables 6 1,480 1,510 –Accruals 2,202 2,200 2Derivative financial liabilities 1,843 1,843 –Rental deposits 1,989 1,989 –Deferred income 8 162 162 –

Total current liabilities 7,676 7,704 2

Non-current liabilitiesBorrowings 7 647,257 647,257 –Rental deposits 5,435 5,435 –Deferred income 8 1,728 1,728 –

Total non-current liabilities 654,420 654,420 –

Total liabilities 662,096 662,124 2

Net assets 1,552,934 1,552,906 28

Represented by:

Unitholders’ funds unitholders’ funds of h-ReiT 1,552,906 1,552,906 –unitholders’ funds of h-BT 28 – 28

1,552,934 1,552,906 28

units/Stapled Securities in issue (’000) 9 1,603,888 1,603,888 1,603,888

net asset value per Stapled Security/unit (cents) 10 96.64 96.64 0.00174

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

74


stAteMeNts oF totAL returN oF FAr eAst H-reIt AND tHe stAPLeD grouPstAteMeNt oF coMPreHeNsIVe INcoMe oF H-btForthefinancialperiodfrom1August2012(dateofconstitution)to31December2012

Note Stapled GroupFar East

H-REITFar East

H-BT$’000 $’000 $’000

Master lease rental 35,910 35,910 –Retail and office revenue 6,306 6,306 –

Gross revenue 42,216 42,216 –

Property tax (2,354) (2,354) –Property insurance (53) (53) –McST contribution (16) (16) –Retail and office expenses (863) (863) –Property manager fees (147) (147) –

Property expenses (3,433) (3,433) –

Net property income 38,783 38,783 –

ReiT Manager’s fees 11 (3,831) (3,831) –Trustee’s fees (98) (98) –other trust expenses 12 (12,706) (12,704) (2)

REIT and BT level expenses (16,635) (16,633) (2)

interest expense (4,077) (4,077) –

Total finance costs (4,077) (4,077) –

Net income before tax and fair value changes 18,071 18,073 (2)

Fair value change in investment properties 3 53,309 53,309 –Fair value change in derivative financial instruments (1,843) (1,843) –

Total fair value changes 51,466 51,466 –

Total return for the period before income tax 69,537 69,539 (2)income tax expense 13 – – –

Total return for the period after income tax 69,537 69,539 (2)other comprehensive income for the period, net of income

tax –

Total comprehensive expense for the period (2)

Earnings per unit (cents)Basic 14 4.34 4.34 –

Diluted 14 4.34 4.34 –


75

AnnuAl RePoRT 2012

DIstrIbutIoN stAteMeNtsForthefinancialperiodfrom1August2012(dateofconstitution)to31December2012

StapledGroup

Far East H-REIT

$’000 $’000

income available for distribution to unitholders of Stapled Securities at the date of constitution

– –

Total return after income tax 69,537 69,539net tax adjustments (note A) (35,891) (35,891)

income available for distribution for the current period 33,646 33,648

income available for distribution to unitholders of Stapled Securities 33,646 33,648

note A – net tax adjustments relate to the following non-tax deductible items:

- ReiT Manager’s fees paid/payable in Stapled Securities 3,065 3,065- Trustee’s fees 98 98- Amortisation of debt upfront cost 237 237- issuance costs not deductible 12,175 12,175- Fair value change in investment properties (53,309) (53,309)- Fair value change in derivative financial instruments 1,843 1,843

net tax adjustments (35,891) (35,891)

income available for distribution of the Stapled Group for the period is contributed solely by Far east h-ReiT as Far east h-BT was dormant during the period.


76


stAteMeNts oF MoVeMeNts IN uNItHoLDers’ FuNDsForthefinancialperiodfrom1August2012(dateofconstitution)to31December2012

Unitholders’ funds of Far East H-REIT Unitholders’ funds of Far East H-BTStapled

GroupUnit inissue

Accumulatedprofit Total

Unit inissue

Accumulatedloss Total Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

Balance at 1 August 2012 (date of constitution) – – – – – – –

Operations

increase/ (decrease) in net assets resulting from operations – 69,539 69,539 – (2) (2) 69,537

– 69,539 69,539 – (2) (2) 69,537

Unitholders’ transactions

- issuance of units 1,491,586 – 1,491,586 30 – 30 1,491,616

- Payment of ReiT Manager’s fees 3,065 – 3,065 – – – 3,065

- issue expenses (11,284) – (11,284) – – – (11,284)

net increase in net assets resulting from unitholders’ transactions 1,483,367 – 1,483,367 30 – 30 1,483,397

Balance at 31 December 2012 1,483,367 69,539 1,552,906 30 (2) 28 1,552,934


77

AnnuAl RePoRT 2012

The

acco

mpa

nyin

g ac

coun

ting

polic

ies

and

expl

anat

ory

note

s fo

rm a

n in

tegr

al p

art

of t

he fi

nanc

ial s

tate

men

ts.

Por

tFo

LIo

stA

teM

eNts

As

at 3

1 d

ec

em

be

r 201

2

Sta

pled

Gro

up F

ar E

ast

H-R

EIT

Car

ryin

g va

lue at

Per

cent

age

of t

otal

net

asse

tsC

arry

ing

valu

e at

Per

cent

age

of t

otal

net

asse

ts

Des

crip

tion

of

prop

erty

Leas

e te

nure

Loca

tion

Exis

ting

use

31.1

2.2

012

31.1

2.2

012

31.1

2.2

012

31.1

2.2

012

$’0

00

%$’0

00

%

Inve

stm

ent

prop

erti

es -

Sin

gapo

re

Albe

rt c

ourt

Vill

age

hot

el7

5-y

ear

leas

ehol

d fr

om 2

7 A

ugus

t 2012

180 A

lber

t S

tree

th

otel

126,0

00

8.1

126,0

00

8.1

cha

ngi V

illag

e h

otel

65

-yea

r le

aseh

old

from

27 A

ugus

t 2012

1 n

ethe

ravo

n R

oad

hot

el257,0

00

16.6

257,0

00

16.6

The

eliz

abet

h h

otel

75

-yea

r le

aseh

old

from

27 A

ugus

t 2012

24 M

ount

eliz

abet

hh

otel

193,0

00

12.4

193,0

00

12.4

land

mar

k Vill

age

hot

el6

6-y

ear

leas

ehol

d fr

om 2

7 A

ugus

t 2012

390 V

icto

ria S

tree

th

otel

227,0

00

14.6

227,0

00

14.6

oas

ia h

otel

92

-yea

r le

aseh

old

from

27 A

ugus

t 2012

8 S

inar

an D

rive

hot

el322,0

00

20.8

322,0

00

20.8

orc

hard

Par

ade

hot

el5

0-y

ear

leas

ehol

d fr

om 2

7 A

ugus

t 2012

1 T

angl

in R

oad

hot

el419,0

00

27.0

419,0

00

27.0

The

Qui

ncy

75

-yea

r le

aseh

old

from

27 A

ugus

t 2012

22 M

ount

eliz

abet

hh

otel

84,0

00

5.4

84,0

00

5.4

cen

tral

Squ

are

Villa

ge R

esid

ence

s8

0-y

ear

leas

ehol

d fr

om 2

7 A

ugus

t 2012

20 h

avel

ock

Roa

dS

ervi

ced

Res

iden

ce186,8

00

12.0

186,8

00

12.0

hou

gang

Vill

age

Res

iden

ces

81

-yea

r le

aseh

old

from

27 A

ugus

t 2012

1 h

ouga

ng S

tree

t 91

Ser

vice

d R

esid

ence

65,8

00

4.2

65,8

00

4.2

Reg

ency

hou

se8

1-y

ear

leas

ehol

d fr

om 2

7 A

ugus

t 2012

121 P

enan

g R

oad

Ser

vice

d R

esid

ence

164,0

00

10.6

164,0

00

10.6

Riv

ersi

de V

illag

e R

esid

ence

s7

8-y

ear

leas

ehol

d fr

om 2

7 A

ugus

t 2012

30 R

ober

tson

Qua

yS

ervi

ced

Res

iden

ce113,8

00

7.3

113,8

00

7.3

inve

stm

ent

prop

ertie

s, a

t va

luat

ion

2,1

58,4

00

139.0

2,1

58,4

00

139.0

oth

er a

sset

s an

d lia

bilit

ies

(net

)(6

05,4

66)

(39.0

)(6

05,4

94)

(39.0

)

Net

ass

ets

1,5

52,9

34

100.0

1,5

52,9

06

100.0

on

31

Dec

embe

r 2

012, i

ndep

ende

nt v

alua

tions

of t

he in

vest

men

t pr

oper

ties

wer

e un

dert

aken

by

col

liers

inte

rnat

iona

l con

sulta

ncy

& V

alua

tion

(Sin

gapo

re) P

te l

td b

ased

on

both

in

com

e ca

pita

lisat

ion

met

hod

and

the

disc

ount

ed c

ash

flow

ana

lysi

s fo

r ho

tels

and

SG

& R

Sin

gapo

re P

te l

td (

“hVS

”) b

ased

on

the

inco

me

appr

oach

for

ser

vice

d re

side

nces

. Th

e R

eiT

Man

ager

bel

ieve

s th

at t

hese

inde

pend

ent

valu

ers

poss

ess

appr

opria

te p

rofe

ssio

nal q

ualifi

catio

ns a

nd r

ecen

t ex

perie

nce

in t

he lo

catio

n an

d ca

tego

ry o

f th

e in

vest

men

t pr

oper

ties

bein

g va

lued

.

The

net

chan

ges

in fa

ir va

lues

of th

ese

inve

stm

ent

prop

ertie

s ha

ve b

een

reco

gnis

ed in

the

Sta

tem

ents

of T

otal

Ret

urn

in a

ccor

danc

e w

ith t

he S

tapl

ed G

roup

’s a

ccou

ntin

g po

licie

s.

78


cAsH FLoW stAteMeNts Forthefinancialperiodfrom1August2012(dateofconstitution)to31December2012

Stapled GroupFar East

H-REITFar East

H-BT$’000 $’000 $’000

Cash flows from operating activitiesTotal return before tax 69,537 69,539 (2)Adjustments for:Finance costs 4,077 4,077 –Fair value change in derivative financial instruments 1,843 1,843 –Fair value change in investment properties (53,309) (53,309) –ReiT Manager’s fees issuable in Stapled Securities 3,065 3,065 –

operating profit before working capital changes 25,213 25,215 (2)changes in working capitalTrade and other receivables (20,972) (20,972) –Trade and other payables 3,585 3,583 2Rental deposits 9,314 9,314 –

Cash flows generated from operating activities 17,140 17,140 –

Cash flows from investing activityAcquisition of investment properties (1,269,785) (1,269,785) –

Cash flows used in investing activity (1,269,785) (1,269,785) –

Cash flows from financing activitiesProceeds from borrowings 650,000 650,000 –Finance costs paid (6,723) (6,723) –issuance of new Stapled Securities 656,310 656,310 –issue expense (11,284) (11,284) –

Cash flows from financing activities 1,288,303 1,288,303 –

net increase in cash and cash equivalents 35,658 35,658 –cash and cash equivalents at beginning of the period – – –

Cash and cash equivalents at end of the period (Note 4) 35,658 35,658 –

Significant cash and non-cash transactions

on listing date, 1,603,887,999 stapled securities in Far east h-Trust were issued at $0.93 each. 705,710,000 stapled securities were issued to the public and cornerstone investors for cash consideration of $650 million and 898,177,999 stapled securities were received by related corporations of the h-ReiT Manager in part satisfaction of the purchase consideration of the investment properties amounting to $835 million.

A total of 3,055,895 Stapled Securities will be issued to the ReiT Manager as satisfaction of management fees payable to the ReiT Manager in Stapled Securities, amounting to $3,065,000 in respect of the financial period from 1 August 2012 (date of constitution) to 31 December 2012.


79

AnnuAl RePoRT 2012

Notes to tHe FINANcIAL stAteMeNts31 december 2012

1. GEnERAl

Far east hospitality Trust (“Far east h-Trust”) is a stapled group comprising Far east hospitality Real estate investment Trust (“Far east h-ReiT” or “h-ReiT”) and Far east hospitality Business Trust (“Far east h-BT” or “h-BT”) (collectively, the “Stapled Group”).

Far east h-ReiT is a Singapore-domiciled real estate investment trust constituted in Singapore pursuant to the trust deed dated 1 August 2012 and the first supplemental deed dated 19 october 2012 (the “Far east h-ReiT Trust Deed”) between Feo hospitality Asset Management Pte ltd (the “ReiT Manager”) and DBS Trustee limited (the “ReiT Trustee”). The ReiT Trustee is under a duty to take into custody and hold the assets of Far east h-ReiT held by it in trust for the unitholders of Far east h-ReiT.

Far east h-BT is a Singapore-domiciled business trust constituted in Singapore by a trust deed dated 1 August 2012 (“h-BT Trust Deed”) and is managed by Feo hospitality Trust Management Pte ltd (the “Trustee-Manager”).

The registered office of the ReiT Manager and the Trustee-Manager is located at 14 Scotts Road #06-01, Far east Plaza, Singapore 228213.

The securities in each of Far east h-ReiT and Far east h-BT are stapled together under the terms of a stapling deed dated 1 August 2012 entered into between the ReiT Manager, the ReiT Trustee and the Trustee-Manager (the “Stapling Deed”) and cannot be traded separately. each stapled security in Far east hospitality Trust (the “Stapled Security”) comprises a unit in h-ReiT (the “h-ReiT unit”) and a unit in h-BT (the “h-BT unit”).

Far east h-Trust was formally admitted to the official list of Singapore exchange Securities Trading limited (“SGX-ST”) on 27 August 2012.

The principal activity of h-ReiT is to invest in income producing real estate in Singapore, used primarily for hospitality and/or hospitality related purposes, with the primary objective of achieving an attractive level of return from rental income and for long-term capital growth.

As at the reporting date, Far east h-BT is dormant.

The Far east h-ReiT has entered into several service agreements in relation to management of the h-ReiT and its property operations. The fee structures of these services are as follow:

(a) REIT Manager’s management fees

Pursuant to the h-ReiT Trust Deed, the h-ReiT Manager is entitled to a management fee comprising a base fee of 0.3% per annum of the value of the h-ReiT Deposited Property (as defined in the h-ReiT Trust Deed) and a performance fee of 4.0% per annum of net property income (as defined in the h-ReiT Trust Deed).

For financial period 2012 commencing from the listing of the Stapled Securities on the SGX-ST and financial year 2013, 80% of the management fees will be paid in Stapled Securities, as the case may be, h-ReiT units issued at the market price (as defined in the h-ReiT Trust Deed) with the remainder to be paid in cash. Thereafter, the h-ReiT Manager may elect to receive the base fee and the performance fee in cash or h-ReiT units or a combination of cash and h-ReiT units (as it may in its sole discretion determine).

notes to the FinAnciAl stAteMents31 december 201280


1. GEnERAl (ConT’d)

(a) REIT Manager’s management fees (cont’d)

Any increase in the rate or any change in the structure of the h-ReiT Manager’s management fees must be approved by an extraordinary resolution at a meeting of holders of the h-ReiT units duly convened and held in accordance with the provisions of the h-ReiT Trust Deed.

The portion of the management fees payable in the form of Stapled Securities is paid on a quarterly basis, in arrears. The portion of the management fees payable in the form of cash is paid on a monthly basis, in arrears.

The h-ReiT Manager is entitled to receive an acquisition fee of 0.75% for acquisition from related parties and 1% for all other cases (or such lower percentage as maybe determined by the h-ReiT Manager in its absolute discretion) and 0.5% of divestment fee. The acquisition or divestment fee is payable to the h-ReiT Manager in the form of cash and/or Stapled Securities or, as the case may be, h-ReiT units (as the h-ReiT Manager may elect) provided that in respect of any acquisition or divestment of real estate assets from or to related parties, such a fee should in the form of Stapled Securities or, as the case may be, h-ReiT units issued at prevailing market price instead of cash.

(b) H-REIT Trustee’s fees

The h-ReiT Trustee’s fee is presently charged on a scaled basis of up to 0.02% per annum of the value of h-ReiT’s Deposited Property, subject to a minimum of S$20,000 per month, excluding out-of-pocket expenses and GST. The actual fee payable will be determined between the h-ReiT Manager and the h-ReiT Trustee from time to time. The ReiT Trustee was paid a one-time inception fee of S$50,000.

Pursuant to the h-ReiT Trust Deed, the h-ReiT Trustee’s fee shall not exceed the rate of 0.02% per annum of the value of h-ReiT Deposited Property and is subject to a minimum amount of S$20,000 per month.

Any increase in the h-ReiT Trustee’s fee above the permitted limit or change in the structure of the remuneration of the ReiT Trustee shall be approved by an extraordinary Resolution of unitholders passed at a unitholders’ meeting duly convened and held in accordance with the provisions of the Trust Deed.

The Trustee’s fees are payable monthly in arrears.

(c) H-REIT property management fees

under the property management agreement dated 3 August 2012 between the h-ReiT Trustee and the hotel and serviced residence operators in relation to the excluded commercial properties (the “Property Management Agreement”), the hotel and serviced residence operators will provide property management services, lease management services, property tax services and marketing coordination services in relation to the excluded commercial properties. The hotel and serviced residence operators are entitled to a fee of 3.0% per annum of the net property income of the excluded commercial properties (calculated before accounting for the property management fee in that financial period).

notes to the FinAnciAl stAteMents31 december 2012 81

AnnuAl RePoRT 2012

1. GEnERAl (ConT’d)

(d) H-REIT Development management fees

The h-ReiT Manager is entitled to receive development management fees equivalent to 3.0% of the total project costs incurred in a development project undertaken by the ReiT Manager on behalf of h-ReiT. h-ReiT will only undertake development activities within the limits of the Property Fund Appendix (which currently allows a ReiT to commit no more than 10.0% of its deposited property to development and investment in uncompleted property developments).

(e) H-BT Trustee-Manager’s fees

Pursuant to the h-BT Trust Deed, the h-BT Trustee-Manager is entitled to the following:

– a management fee comprising 10.0% of the profit of h-BT before interest and tax in the relevant financial year (calculated before accounting for this management fees in that financial year), payable in the event that h-BT becomes active; and

– a trustee fee of not exceeding 0.1% per annum of the value of h-BT’s Trust Property (as defined in the Business Trust Act), if any, subject to a minimum fee of S$10,000 per month, provided that the value of the h-BT’s Trust Property is at least S$50.0 million and h-BT has become active.

The management fee is payable in the form of cash and/or Stapled Securities or, as the case may be, h-BT units (as the Trustee-Manager may elect).

Any portion of the management fee payable in the form of Stapled Securities is payable quarterly in arrears and any portion of the management fee payable in cash is payable monthly in arrears.

– the Trustee-Manager is also entitled to receive an acquisition fee of 0.75% for acquisition from related parties and 1.0% for all other cases (or such lower percentage as may be determined by the Trustee-Manager in its absolute discretion) and 0.5% divestment fee.

The acquisition fee and divestment fee are payable to the Trustee-Manager in the form of cash and/ or Stapled Securities or, as the case may be, h-BT units as Trustee-Manager may elect, and in such proportion as may be determined by the Trustee-Manager.

(f) H-BT Development management fees

The Trustee-Manager is entitled to receive development management fees equivalent to 3.0% of the total project costs incurred in a development project undertaken by the Trustee-Manager on behalf of h-BT.



2. SummARY oF SIGnIFICAnT ACCounTInG PolICIES

2.1 Basis of preparation

The financial statements of the h-ReiT and the Stapled Group have been prepared in accordance with the recommendations of Statement of Recommended Accounting Practice (“RAP”) 7 “Reporting Framework for unit Trusts” issued by the institute of certified Public Accountants of Singapore, the applicable requirements of the code on collective investment Schemes (the “ciS code”) issued by the Monetary Authority of Singapore (“MAS”) and the provisions of the h-ReiT Trust Deed and the Stapling Deed. RAP 7 requires the accounting policies to generally comply with the principles relating to recognition and measurement under the Singapore Financial Reporting Standards (“FRS”).

The financial statements of h-BT have been prepared in accordance with FRS.

The financial statements are presented in Singapore dollars, which is the functional currency of h-ReiT and h-BT and rounded to the nearest thousand, unless otherwise stated, have been prepared on the historical cost basis except as disclosed in the accounting policies below.

The accounting policies set out below have been applied consistently by the h-ReiT, h-BT and the Stapled Group.

2.2 Standards issued but not yet effective

The h-ReiT, h-BT and the Stapled Group have not adopted the following standards and interpretations that have been issued but not yet effective:

DescriptionEffective for annual periods

beginning on or after

Amendments to FRS 1 Presentation of Items of Other Comprehensive Income 1 July 2013FRS 113 Fair Value Measurements 1 January 2013Amendments to FRS 107 Disclosure – Offsetting Financial Assets and Financial

Liabilities1 January 2013

improvements to FRSs 2012– Amendment to FRS 1 Presentation of Financial Statements 1 January 2013– Amendment to FRS 32 Financial Instruments: Presentation 1 January 2013Amendments to FRS 32 Offsetting Financial Assets and Financial Liabilities 1 January 2014

The ReiT Manager and the Trustee Manager expect that the adoption of the above standards have no material impact on the financial statements in the period of initial application.


AnnuAl RePoRT 2012

2. SummARY oF SIGnIFICAnT ACCounTInG PolICIES (ConT’d)

2.3 Investment properties

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

• atleastonceayearinaccordancewiththePropertyFundsAppendixofCISCodeissuedbytheMAS;and

• wheretheH-REITManagerproposestoissuenewunitsforsubscriptionortoredeemexistingunitsunless the investment properties have been valued not more than 6 months ago.

Any increase or decrease on revaluation is credited or charged to the Statement of Total Return as a net revaluation surplus or deficit in the value of the investment properties.

Subsequent expenditure relating to investment properties that have already been recognised is added to the carrying amount of the asset when it is probable that future economic benefits, in excess of originally assessed standard of performance of the existing asset, will flow to the h-ReiT. All other subsequent expenditure is recognised as an expense in the period in which it is incurred.

investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the statement of total return in the year of retirement or disposal.

investment properties are not depreciated. investment properties are subject to continued maintenance and regularly revalued on the basis set out above. For taxation purposes, the h-ReiT may claim capital allowances on assets that qualify as plant and machinery under the Singapore income Tax Act.

2.4 Financial assets

Financial assets are recognised when, and only when, Far east h-ReiT or Far east h-BT or the Stapled Group becomes a party to the contractual provisions of the financial instrument. The h-ReiT Manager and h-BT Trustee-Manager determine the classification of financial assets at initial recognition. Financial assets are initially recognised at fair value plus transaction costs except for financial assets, at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit or loss are recognised immediately as expenses.

Loans and receivables

non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.




2.4 Financial assets (cont’d)

Loans and receivables (cont’d)

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. on disposal of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in statement of total return. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the ReiT Manager commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.

2.5 Impairment of financial assets

A financial asset is assessed at end of each reporting period whether there is any objective evidence that a financial asset is impaired.

individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

if there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. if a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in statement of total return.

When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset. To determine whether there is objective evidence that an impairment loss on financial assets has incurred, factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments are considered.

if in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the statement of total return.

2.6 Cash and cash equivalents

cash and cash equivalents comprise cash balances and bank deposits.


AnnuAl RePoRT 2012


2.7 Financial liabilities

Initial recognition and measurement

Financial liabilities are recognised when, and only when, the h-ReiT or h-BT or the Stapled Group becomes a party to the contractual provisions of the financial instrument. The h-ReiT Manager determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at fair value through profit or loss, directly attributable transaction costs.

Subsequent measurement

The measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss includes financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the h-ReiT Manager that are not designated as hedging instruments in hedge relationships. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial liabilities are recognised in the statement of total return.

Other financial liabilities

After initial recognition, other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the statement of total return when the liabilities are derecognised, and through the amortisation process.

De-recognition

A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the statement of total return.




2.8 Rental deposits and deferred income

Rental deposits relate to rental deposits received from tenants at the h-ReiT investment properties. The accounting policy for rental deposits as a financial liability is set out in note 2.7.

Deferred income relates to the difference between consideration received for rental deposits and its fair value at initial recognition, and is credited to the statement of total return as gross rental income on a straight line basis over individual lease term.

2.9 Net assets attributable to holders of the Stapled Security

net assets attributable to the Stapled Security holders represent the holders’ residual interest in the Staple Security’s net assets upon termination.

expenses incurred in connection with the initial public offering of the Stapled Security units and listing on the SGX-ST are deducted directly against net assets attributable to holders of Stapled Security units.

2.10 Revenue recognition

Rental from operating leases

Rental income receivable under operating leases is recognised in the statement of total return on a straight-line basis over the term of the lease, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased assets. lease incentives granted are recognised as an integral part of the total rental to be received. The aggregate cost of incentives provided to lessees is recognised as a reduction of rental income over the lease term on a straight-line basis. contingent rent, which comprises gross turnover rental, is recognised as income in the accounting period on a receipt basis. no contingent rent is recognised if there are uncertainties that may result in the possible return of amounts received.

All its master lease rental agreements are entered into between the Group and related parties.

2.11 Expenses

(a) Property expenses

Property expenses are recognised on an accrual basis.

(b) H-REIT Manager fees

Fees paid or payable to h-ReiT Manager is recognised on an accrual basis based on the applicable formula stipulated in note 1.

(c) Trust expenses

Trust expenses are recognised on an accrual basis.


AnnuAl RePoRT 2012


2.12 Taxation

(a) Current income tax

current income tax is the expected tax payable on the taxable income for the period, using tax rates and tax laws enacted or substantively enacted at the balance sheet date.

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

– Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

– in respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

– Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

– in respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.




2.12 Taxation (cont’d)

(b) Deferred tax (cont’d)

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the assets are realised or the liabilities are settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.

The inland Revenue Authority of Singapore (“iRAS”) has issued a tax ruling on the income tax treatment of the Far east h-ReiT. Subject to meeting the terms and conditions of the tax ruling which includes a distribution of at least 90% of the taxable income of the Far east h-ReiT, the Trustee will not be assessed to tax on the taxable income of the h-ReiT. instead, the distributions made by the h-ReiT out of such taxable income are subject to tax in the hands of unitholders, unless they are exempt from tax on the h-ReiT’s distributions (the “tax transparency ruling”). Accordingly, the Trustee and the Manager will deduct income tax at the prevailing corporate tax rate from the distributions made to unitholders that are made out of the taxable income of the Far east h-ReiT, except:

(i) where the beneficial owners are individuals or Qualifying unitholders, the Trustee and the Far east h-ReiT Manager will make the distributions to such unitholders without deducting any income tax; and

(ii) where the beneficial owners are foreign non-individual investors or where the units are held by nominee unitholders who can demonstrate that the units are held for beneficial owners who are foreign non-individual investors, the Trustee and the h-ReiT Manager will deduct/withhold tax at a reduced rate of 10% from the distributions.

A Qualifying unitholder is a unitholder who is:

(i) A tax resident Singapore-incorporated company;

(ii) A non-corporate Singapore constituted or registered entity (e.g. town council, statutory board, charitable organisation, management corporation, club and trade and industry association constituted, incorporated, registered or organised in Singapore);

(iii) A Singapore branch of a foreign company which has been presented a letter of approval from the comptroller of income Tax granting waiver from tax deducted at source in respect of distributions from the Trust;

(iv) An agent bank or a Supplementary Retirement Scheme (“SRS”) operator acting as nominee for individuals who have purchased units in the Trust within the cPF investment Scheme (“cPFiS”) or the SRS respectively; or

(v) A nominee who can demonstrate that the units are held for beneficial owners who are individuals or who fall within the classes of unitholders listed in (i) to (iii) above.


AnnuAl RePoRT 2012


2.12 Taxation (cont’d)


The above tax transparency ruling does not apply to gains from the sale of real properties. Such gains which are considered as trading gains are assessable to tax on the Trustee. Where the gains are capital gains, the Trustee will not be assessed to tax and may distribute the capital gains without tax being deducted at source.

(c) Sales tax

Revenue, expenses and assets are recognised net of the amount of sales tax except:

– Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

– Receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables on the balance sheet.

2.13 Borrowing costs

Borrowing costs are expensed in the period they occur, and consist of interest and other costs that the Stapled Group incurs in connection with the borrowing of funds.

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

2.14 Segment reporting

For management purposes, the Stapled Group is organised into operating segments based on the types of operations within the Stapled Group’s portfolio. The segment managers report directly to the management of the Stapled Group who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in note 17, including the factors used to identify the reportable segments and the measurement basis of segment information.




2.15 Contingencies

A contingent liability is:

(a) A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Stapled Group; or

(b) A present obligation that arises from past events but is not recognised because:

(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) The amount of the obligation cannot be measured with sufficient reliability.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Stapled Group.

2.16 Related parties

A related party is defined as follows:

(a) A person or a close member of that person’s family is related to the Stapled Group if that person:

(i) has control or joint control over the Stapled Group;

(ii) has significant influence over the Stapled Group; or

(iii) is a member of the key management personnel of the Stapled Group or of the related corporations of the h-ReiT Manager.

(b) An entity is related to the Stapled Group if any of the following conditions applies:

(i) the entity and the Stapled Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) both entities are joint ventures of the same third party.


AnnuAl RePoRT 2012


2.16 Related parties (cont’d)

(b) An entity is related to the Stapled Group if any of the following conditions applies: (cont’d)

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) the entity is a post-employment benefit plan for the benefit of employees of either the Stapled Group or an entity related to the Stapled Group.

(vi) the entity is controlled or jointly controlled by a person identified in (a);

(vii) a person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

2.17 Significant accounting estimates and judgements

The preparation of the financial statements requires the management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

estimates and underlying assumptions are reviewed on an ongoing basis. Financial impact arising from revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

in particular, information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements is described in the following notes:

• Note3–Valuationofinvestmentproperties

2.18 Consolidation

Stapling

Where entities enter into a stapling arrangement, the stapling arrangement is accounted for as a business combination under the acquisition method.

Transactions eliminated on consolidation

intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements of the Stapled Group.



3. InvESTmEnT PRoPERTIES


H-REITFar East

H-BT$’000 $’000 $’000

At 1 August 2012 – date of constitution – – –Acquisition of investment properties 2,104,953 2,104,953 –capital expenditure capitalised 138 138 –Revaluation differences recognised in statement of total return 53,309 53,309 –

At 31 December 2012 2,158,400 2,158,400 –

During the financial period, the investment properties were acquired from related corporations of the h-ReiT Manager.

investment properties are stated at fair value based on valuations performed by independent professional valuers. The key assumptions used to determine the fair value of investment properties include market-corroborated capitalisation yields, terminal yields and discount rates. The h-ReiT Manager is of the view that the valuation methods and estimates are reflective of the market conditions as at 31 December 2012.

4. CASH And CASH EquIvAlEnTS

cash and cash equivalents comprise the following as at the balance sheet date:


H-REITFar East

H-BT$’000 $’000 $’000

cash at bank 35,658 35,658 –

The cash at bank does not earn interest.


AnnuAl RePoRT 2012

5. TRAdE And oTHER RECEIvABlES


H-REITFar East

H-BT$’000 $’000 $’000

Trade receivables – related companies of h-ReiT Manager 20,751 20,751 –other receivables – related companies 145 145 30

Total trade and other receivables 20,896 20,896 30Add: cash at bank 35,658 35,658 –

Total loans and receivables 56,554 56,554 30

Trade receivables are recognised at their original invoiced amounts which represent their fair values on initial recognition.

outstanding balances with the related parties are unsecured, interest-free and repayable on demand.

The h-ReiT has trade receivables amounting to $10,081,684 that are past due at the balance sheet date but not impaired. The aging receivables at the balance sheet date is as follows:

Far East H-REIT

andStapled Group

$’000

not past due 10,66930 – 60 days 10,082

20,751



6. TRAdE And oTHER PAYABlES


H-REITFar East

H-BT$’000 $’000 $’000

Trade payables - related companies of the h-ReiT Manager 156 156 – - the h-ReiT Manager 287 287 – - third parties 299 299 –other payables - related companies of the h-ReiT Manager 350 380 – - third parties 388 388

Total trade and other payables 1,480 1,510 –Add: Accruals 2,202 2,200 2 Borrowings 647,257 647,257 –

Total financial liabilities carried at amortised cost 650,939 650,967 2

outstanding balances with the related parties are unsecured, interest-free and repayable on demand.

7. BoRRowInGS


H-REITFar East

H-BT$’000 $’000 $’000

At amortised cost:

Non-current liabilitiesBank loans (unsecured) 650,000 650,000 –less: unamortised upfront fees (2,743) (2,743) –

647,257 647,257 –

Unsecured bank loans

The borrowings are unsecured term loan facilities of $650 million provided by three financial institutions, with staggered maturity of three-year, five-year and seven-year terms.

in addition, Far east h-ReiT has also put in place uncommitted revolving credit facilities of $75 million which remain unutilised as at 31 December 2012.


AnnuAl RePoRT 2012

8. dEFERREd InComE


H-REITFar East

H-BT$’000 $’000 $’000

CostAt 1 August 2012 (date of constitution) – – –Additions 1,890 1,890 –

At 31 December 2012 1,890 1,890 –

Accumulated amortisationAt 1 August 2012 (date of constitution) – – –charge for the period – – –

At 31 December 2012 – – –

Net deferred income 1,890 1,890 –

This comprises:current portion 162 162 –non-current portion 1,728 1,728 –

1,890 1,890 –



9. unITS/STAPlEd SECuRITIES In ISSuE

A Stapled Security means a security comprising one unit of Far east h-ReiT and one unit of Far east h-BT stapled together under the terms of the Stapling Deed dated 1 August 2012.


H-REITFar East

H-BTNo. of units No. of units No. of units

’000 ’000 ’000

Units/Stapled Securities in issueAt 1 August 2012 (date of constitution) – – –

Issue of units/stapled securitiesissue of new Stapled Securities upon initial public listing 1,603,888 1,603,888 1,603,888

At 31 December 2012 1,603,888 1,603,888 1,603,888

Units/Stapled Securities to be issuedAs h-ReiT Manager’s fees payable in units 3,056 3,056 3,056

Total issued and issuable units/stapled securities at end 1,606,944 1,606,944 1,606,944

on listing date, 1,603,887,999 stapled securities in Far east h-Trust were issued at $0.93 each. 705,710,000 stapled securities were issued to the public and cornerstone investors for cash consideration of $650 million and 898,177,999 stapled securities were received by related corporations of the h-ReiT Manager in part satisfaction of the purchase consideration of the investment properties amounting to $835 million.

A total of 3,055,895 Stapled Securities will be issued to the ReiT Manager as satisfaction of management fees payable to the ReiT Manager in Stapled Securities, amounting to $3,065,000 in respect of the financial period from 1 August 2012 (date of constitution) to 31 December 2012.

each Far east h-ReiT unit is stapled together with a Far east h-BT unit under the terms of a stapling deed dated 1 August 2012 (the “Stapling Deed”) entered into between the h-ReiT Manager, the h-ReiT Trustee and the h-BT Trustee-Manager and cannot be traded separately. each Stapled Security represents an undivided interest in Far east h-ReiT and Far east h-BT.

The liability of a holder of the Stapled Securities is limited to the amount paid or payable for the Stapled Securities.

each Stapled Security carries one vote.


AnnuAl RePoRT 2012

10. nET ASSET vAluE PER unIT


H-REITFar East

H-BT

net asset value per unit is based on:

net assets ($’000) 1,552,934 1,552,906 28

Total issued and issuable units (’000) (note 9) 1,606,944 1,606,944 1,606,944

net asset value per unit (cents) 96.64 96.64 0.00174

11. REIT mAnAGER’S FEES


H-REITFar East

H-BT$’000 $’000 $’000

Base fee 2,280 2,280 –Performance fees 1,551 1,551 –

3,831 3,831 –

As committed in the prospectus, the ReiT manager will take 80% of its fees in units. An aggregate of 3,055,895 units were issued or are issuable to the ReiT Manager as satisfaction of the 80% of the management fees payable.



12. oTHER TRuST ExPEnSES

other trust expenses comprises mainly of one-off non-capitalised issuance costs and recurring expenses.

included in other trust expenses are the following items:


H-REITFar East

H-BT$’000 $’000 $’000

Audit fees 60 60 –non-audit fees 251 251 –

Auditors’ remuneration 311 311 –

Besides the above fees, the Stapled Group also paid a non-recurring issuance costs of $199,702 to the auditors which is capitalised as part of the initial Public offering (“iPo”) issue expenses.


H-REITFar East

H-BT$’000 $’000 $’000

Valuation fees 434 434 –

Besides the above valuation fees, the Stapled Group also paid a non-recurring issuance costs of $263,588 to the valuers which is capitalised as part of the iPo issue expenses.

13. InComE TAx ExPEnSE

A reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the financial period ended 31 December 2012 is as follows:


H-REITFar East

H-BT$’000 $’000 $’000

Reconciliation of effective taxTotal return before tax 69,537 69,539 (2)

income tax using Singapore tax rate of 17% 11,821 11,821 –income not subject to tax (6,101) (6,101) –income exempt from tax (5,720) (5,720) –

– – –


AnnuAl RePoRT 2012

14. EARnInGS PER unIT

The calculation of basic earnings per unit is based on the weighted average number of Stapled Securities during the period and total return for the period.


H-REITFar East

H-BT$’000 $’000 $’000

Total return for the period after tax 69,537 69,539 (2)

Weighted average number of units in issue (‘000) 1,603,888 1,603,888 1,603,888

earnings per unit (cents) 4.34 4.34 –

Diluted earnings per unit is the same as basic earnings per unit as there is no dilutive instrument in issue during the period.

15. RElATEd PARTY TRAnSACTIonS

in addition to the related party information disclosed elsewhere in the financial statements, the following related party transactions were carried out at terms agreed between the parties during the financial period:


H-REITFar East

H-BT$’000 $’000 $’000

Rental income received/receivable from related corporations of the h-ReiT Manager(1)

35,910 35,910 –

Rental income received/receivable from related corporation of the h-ReiT Manager

812 812 –

Rental income received/receivable from h-ReiT Manager 42 42 –

36,764 36,764 –

Management fees paid/payable to h-ReiT Manager 3,830 3,830 –Shared service fees paid/payable to related corporation of the

h-ReiT Manager188 188 –

Property management fees paid/payable to the Property Manager(1)

147 147 –

Reimbursement of expenses paid/payable to the h-ReiT Manager

344 344 –

Reimbursement of expenses paid/payable to related corporations of the h-ReiT Manager

862 862–

5,371 5,371 –

(1) in accordance with service agreements in relation to management of the h-Trust and its property operations.



16. FInAnCIAl RISK mAnAGEmEnT

(a) Capital management

The primary objective of the Stapled Group’s and the Far east h-ReiT’s capital management is to ensure that it maintains a strong and healthy capital structure in order to support its business and maximise Stapled Securityholder value.

The Far east h-ReiT is subject to the aggregate leverage limit as defined in the Property Fund Appendix of the code on collective investment Schemes (“ciS”) code issued by MAS. The ciS code stipulates that borrowings and deferred payments (together the “Aggregate leverage”) of a property fund should not exceed 35.0% of the fund’s depository property. The Aggregate leverage of a property fund may exceed 35.0% of its depository property (up to a maximum of 60.0%) only if a credit rating from Fitch inc., Moody’s or Standard and Poor’s is obtained and disclosed to the public. The property fund should continue to maintain and disclose a credit rating so long as its aggregate leverage exceeds 35.0% of its deposited property.

As at 31 December 2012, the Stapled Group’s and the h-ReiT’s Aggregate leverage stood at 29.2% of its Depository Property, which is within the limit set by the Property Fund Appendix.

There were no substantial changes in the Far east h-ReiT’s and Stapled Group’s approach to capital management since the date of constitution.

(b) Financial risk management objectives and policies

exposure to credit, interest rate and liquidity risks arises in the normal course of the Far east h-ReiT’s business. The ReiT Manager continually monitors the Far east h-ReiT’s exposure to the above risks. There has been no change to the Far east h-ReiT’s exposure to these financial risks or the manner in which it manages and measures risks.

(i) Credit risk

credit risk is the potential financial loss resulting from the failure of a customer or counterparty to settle its financial and contractual obligations to the Far east h-ReiT as and when they fall due.

The Far east h-ReiT’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The h-ReiT Manager has established credit limits for customers and monitors their balances on an ongoing basis. credit evaluations are performed by the h-ReiT Manager before lease agreements are entered into with customers. credit risk is also mitigated by the rental deposits held for each of the customers. in addition, receivables are monitored on an on-going basis with the result that the exposure to bad debt is not significant.

The maximum exposure to credit risk is represented by the carrying value of each financial asset on the balance sheet. At the balance sheet date, approximately 82.66% of the Stapled Group’s trade receivables were due from 5 tenants who are reputable companies located in Singapore.

Trade and other receivables that are neither past due nor impaired represent creditworthy debtors with good payment record with the Stapled Group. cash are placed with a local bank regulated by the MAS.


AnnuAl RePoRT 2012

16. FInAnCIAl RISK mAnAGEmEnT (ConT’d)

(b) Financial risk management objectives and policies (cont’d)

(ii) Interest rate risk

The Far east h-ReiT’s exposure to changes in interest rates relates primarily to its interest-earning financial assets and interest-bearing financial liabilities. interest rate risk is managed by the h-ReiT Manager on an on-going basis with the primary objective of limiting the extent to which net interest expense could be affected by adverse movements in interest rates. The h-ReiT Manager adopts a policy of fixing the interest rates for a portion of its outstanding borrowings using financial derivatives or other suitable financial products.

As at 31 December 2012, the h-ReiT Manager has entered into interest rate swap contracts to exchange, at specified intervals, the difference between floating rate and fixed rate interest amounts calculated by reference to the agreed notional amounts of the unsecured bank loan.

The Far east h-ReiT’s exposure to interest rate risk relates primarily to the remaining portion (46%) of the unsecured bank loans that have not been hedged using interest rate swaps. The h-ReiT Manager will regularly evaluate the feasibility of putting in place the appropriate level of interest rate hedges, after taking into account the prevailing market conditions.

Sensitivity analysis for interest rate risk

For the floating rate loans, a change of a hundred basis points increase or decrease in interest rate at the balance sheet date, with all other variables held constant, would decrease or increase the Stapled Group’s total return for the period by approximately $3,000,000.

(iii) Liquidity risk

liquidity risk is the risk that the Far east h-ReiT will encounter difficulty in meeting financial obligations due to shortage of funds. The Far east h-ReiT’s objective is to maintain sufficient cash on demand to meet expected operational expenses for a reasonable period, including the servicing of financial obligations. The ReiT Manager monitors and maintains a level of cash and cash equivalents deemed adequate to finance the Far east h-ReiT’s operations and to mitigate the effects of fluctuations in cash flows. in addition, the h-ReiT Manager monitors and observes the ciS code issued by the MAS concerning limits on total borrowings.




(b) Financial risk management objectives and policies (cont’d)

(iii) Liquidity risk (cont’d)

The table below summarises the maturity profile of the Stapled Group’s financial liabilities at the balance sheet date based on contractual undiscounted payments.

Within1 year

1 – 5years

More than 5 years Total

$’000 $’000 $’000 $’000

As at 31 December 2012

Stapled GroupTrade and other payables 3,682 – – 3,682Derivative financial instruments 1,843 – – 1,843Rental deposits 2,011 7,303 – 9,314Borrowings 11,900 584,697 103,715 700,312

19,436 592,000 103,715 715,151

Far East H-REITTrade and other payables 3,710 – – 3,710Derivative financial instruments 1,843 – – 1,843Rental deposits 2,011 7,303 – 9,314Borrowings 11,900 584,697 103,715 700,312

19,464 592,000 103,715 715,179

Far East H-BTTrade and other payables 2 – – 2


AnnuAl RePoRT 2012


(c) Fair values

The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments of the Far east h-ReiT and the Stapled Group.

Derivative financial instruments

The fair value of interest rate swaps are derived by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date.

Non-derivative financial liabilities – non-current portion of rental deposits and interest-bearing borrowings

Fair values, which are determined for disclosure purposes, are estimated by discounting expected future cash flows at market incremental lending rates for similar types of lending or borrowing arrangements at the balance sheet date.

Other non-derivative financial assets and liabilities

The carrying amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents, current portion of rental deposits and interest-bearing borrowings, and trade and other payables) are reasonable approximation of fair values, due to their short-term nature.

The fair value of financial liabilities by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value are as follows:

As at 31.12.2012Carrying amount

Fairvalue

$’000 $’000

Stapled Group and Far East H-REITFinancial liabilities:interest-bearing borrowings (non-current) 647,257 650,784Rental deposits (non-current) 5,435 7,303

652,692 658,087




(c) Fair values (cont’d)

Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

• Level1: quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities;

• Level2: inputsother thanquotedprices includedwithin Level1 that areobservable for theasset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• Level3: inputs for the asset or liability that are not based on observable market data(unobservable inputs).

Level 1 Level 2 Level 3 Total$’000 $’000 $’000 $’000

Stapled Group and Far East H-REITAt 31 December 2012interest rate swaps – 1,843 – 1,843

During the financial period ended 31 December 2012, there have been no transfers between the respective levels.


AnnuAl RePoRT 2012

17. SEGmEnT REPoRTInG

Business segment

The Stapled Group has two reportable business segments as follows:

• Hotelsandservicedresidences• Retailandofficesandothers

Management monitors the operating results of the business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment information is presented in respect of the Far east h-ReiT and Stapled Group’s business segments, based on its management and internal reporting structure.

Segment revenue comprises mainly income generated from its tenants. Segment net property income represents the income earned by each segment after allocating property operating expenses. This is the measure reported to the chief operating decision maker for the purpose of assessment of segment performance.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. unallocated items comprise mainly management fees, performance fee, trust expenses, finance income, finance costs and related assets and liabilities.

Performance is measured based on segment net property income, as included in the internal management reports that are reviewed by the board of directors of the h-ReiT Manager. Segment net property income is used to measure performance as management believes that such information is the most relevant in evaluating the results of its segments relative to other entities that operate within the same industry.



17. SEGmEnT REPoRTInG (ConT’d)

The reportable segments’ results are as below:

Hotels and serviced

residences

Retails and offices and

others Total$’000 $’000 $’000

Gross revenue 35,910 6,306 42,216

Segment net property income 34,004 4,779 38,783ReiT Manager’s fees (3,831)Trustee’s fees (98)other trust expenses (12,706)Finance costs (4,077)

net income before tax and fair value changes 18,071Fair value change in investment properties 48,762 4,547 53,309Fair value change in derivative financial instruments (1,843)

Total return for the period before income tax 69,537income tax expense –

Total return for the period after income tax before distribution 69,537

Segment assets 1,906,551 272,821 2,179,372unallocated assets 35,658

Total assets 2,215,030

Segment liabilities 3,682 9,314 12,996unallocated liabilities 649,100

Total liabilities 662,096

Geographical segments

no geographical information is presented as the Stapled Group operates in Singapore only.


AnnuAl RePoRT 2012

18. CommITmEnTS

The Stapled Group and the Far east h-ReiT lease out their investment properties. non-cancellable operating lease rentals receivable are as follows:


H-REITFar East

H-BT$’000 $’000 $’000

Receivable:Within 1 year 69,690 69,690 –After 1 year but within 5 years 226,248 226,248 –After 5 years 791,482 791,482 –

1,087,420 1,087,420 –

The above operating lease rental receivables comprise amounts receivable under the Master leases and the leases relating to the commercial units of the Properties.

Rental receivable under the Master leases are based on the terms of the Master lease Agreements. The amounts receivable for such leases are based on the fixed rent as set out in the Master leases.

The ReiT Trustee has granted an option to each of the Master lessees to obtain an additional lease for another 20 years on expiry of the initial 20-year leases based on the same terms as described above save for amendments required due to any changes in law.

19. SuBSEquEnT EvEnTS

on 6 February 2013, the ReiT Manager declared a distribution of $33,646,000 or $0.0209 per unit to unitholders in respect of the period from 27 August 2012 to 31 December 2012.

on 30 January 2013, the Far east h-Trust issued 3,055,895 new Stapled Securities at a price of $1.0028 per unit in payment of 80% of the ReiT Manager’s fees for the period from 27 August 2012 to 31 December 2012.

Far east h-Trust has been assigned a ‘BBB- long-Term Foreign and local currency issuer Default Ratings with a Stable outlook’ by Fitch Ratings. This investment grade rating was assigned on 5 February 2013 and will be reviewed annually by the ratings agency.



20. FInAnCIAl RATIoS

Stapled Group Far East H-REIT

expense ratio(1) 0.82 0.82Turnover ratio(2) – –

(1) The annualised ratios are computed in accordance with the guidelines of the investment Management Association of Singapore. The expenses used in the computation relate to expenses of the Far east h-ReiT and the Stapled Group, excluding property expenses, interest expense and income tax expense of each entity, where applicable.

(2) The annualised ratio is computed based on the lesser of purchases or sales of underlying investment properties of the Far east h-ReiT and the Stapled Group expressed as a percentage of daily average net asset value.

21. ComPARATIvE FIGuRES

no comparative figures are provided as this is the first set of financial statements prepared for the Far east h-ReiT, Far east h-BT and the Stapled Group since the date of constitution.

22. AuTHoRISATIon oF FInAnCIAl STATEmEnTS FoR ISSuE

The financial statements for the period ended 31 December 2012 were authorised for issue by the ReiT Manager and the Trustee Manager on 8 March 2013.

110 ReportoftheDirectors

112 StatementbyDirectors

113 IndependentAuditor’sReport

114 StatementofComprehensiveIncome

115 BalanceSheet

116 StatementofChangesinEquity

117 CashFlowStatement

118 NotestotheFinancialStatements

FINANcIALs TRUSTEE-MANAGERFEOHOSPITALITYTRUSTMANAGEMENTPTE.LTD.

110


The directors present their report to the members together with the audited financial statements of Feo hospitality Trust Management Pte. ltd. (the “company”) for the financial period from 30 April 2012 (date of incorporation) to 31 December 2012.

Directors

The directors of the company in office at the date of this report are:-

Koh Boon hwee (Appointed on 30 April 2012)Willie cheng Jue hiang (Appointed on 30 April 2012)huang cheng eng (Appointed on 30 April 2012)Kyle lee Khai Fatt (Appointed on 24 July 2012)Wee Kheng Jin (Appointed on 24 July 2012)

Arrangements to enable directors to acquire shares and debentures

neither at the end of nor at any time during the financial period was the company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the company to acquire benefits by means of the acquisition of shares or debentures of the company or any other body corporate.

Directors’ interests in shares and debentures

no director who held office at the end of the financial period had, interests in shares, share options, warrants or debentures of the company, or of related corporations, either at the date of incorporation, or date of appointment if later, or at the end of the financial period.

Directors’ contractual benefits

Since the date of incorporation, no director of the company has received or become entitled to receive a benefit by reason of a contract made by the company or a related corporation with the director, or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, except that the directors served as directors or employees of related corporations and received remuneration in that capacity from related corporation.

rePort oF tHe DIrectors

111

AnnuAl RePoRT 2012

report oF the directors

Auditor

ernst & young llP have expressed their willingness to accept reappointment as auditor.

on behalf of the board of directors:




112


stAteMeNt by DIrectors

We, Koh Boon hwee and Wee Kheng Jin, being two of the directors of Feo hospitality Trust Management Pte. ltd., do hereby state that, in the opinion of the directors,

(i) the accompanying balance sheet, statement of comprehensive income, statement of changes in equity and cash flow statement together with the notes thereto are drawn up so as to give a true and fair view of the state of affairs of the company as at 31 December 2012 and the results of the business, changes in equity and cash flows of the company for the financial period from 30 April 2012 (date of incorporation) to 31 December 2012, and

(ii) at the date of this statement, with the continuing financial support from its ultimate holding company, there are reasonable grounds to believe that the company will be able to pay its debts as and when they fall due.

on behalf of the board of directors:




113

AnnuAl RePoRT 2012

INDePeNDeNt AuDItor’s rePortto the Members of Feo hospitality trust Management pte. ltd.

Report on the financial statements

We have audited the accompanying financial statements of Feo hospitality Trust Management Pte. ltd. (the “company”) set out on pages 114 to 127, which comprise the balance sheet as at 31 December 2012 and the statement of comprehensive income, statement of changes in equity and cash flow statement for the financial period from 30 April 2012 (date of incorporation) to 31 December 2012, and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore companies Act, chapter 50 (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.

Auditor’s responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. in making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

in our opinion, the financial statements are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the company as at 31 December 2012 and the results, changes in equity and cash flows of the company for the financial period from 30 April 2012 (date of incorporation) to 31 December 2012.

Report on other legal and regulatory requirements

in our opinion, the accounting and other records required by the Act to be kept by the company have been properly kept in accordance with the provisions of the Act.

Ernst & Young LLPPublic Accountants and certified Public AccountantsSingapore8 March 2013

114


stAteMeNt oF coMPreHeNsIVe INcoMeForthefinancialperiodfrom30April2012(dateofincorporation)to31December2012


Note

30.4.2012(date of incorporation)

to31.12.2012

$

Administrative expenses 4 (20,881)

Loss before taxation (20,881)

income tax expense 5 –

loss for the period, representing total comprehensive expense for the period (20,881)

115

AnnuAl RePoRT 2012

bALANce sHeet As at 31 december 2012


Note 2012$

Current assets

other receivable 6 100

Current liabilitiesother payables and accruals 7 (20,881)

Net current liabilities and net liabilities (20,781)

Equity attributable to the owners of the CompanyShare capital 8 100Accumulated losses (20,881)

Deficit in equity (20,781)

116



Sharecapital

(Note 8)Accumulated

losses Total$ $ $

At 30 April 2012 (date of incorporation) 100 – 100

loss representing total comprehensive expense for the period – (20,881) (20,881)

Balance at 31 December 2012 100 (20,881) (20,781)

stAteMeNt oF cHANges IN equIty Forthefinancialperiodfrom30April2012(dateofincorporation)to31December2012

117

AnnuAl RePoRT 2012


30.4.2012(date of

incorporation)to

31.12.2012$

Cash flows from operating activities:

loss before taxation (20,881)

Operating loss before working capital changes (20,881)

increase in other payables and accruals 20,881

Net cash flows used in operating activities –

Net movement in cash and cash equivalents and balance at end of the period –

cAsH FLoW stAteMeNt Forthefinancialperiodfrom30April3012(dateofincorporation)to31December2012

118


Notes to tHe FINANcIAL stAteMeNts31 december 2012

1. CoRPoRATE InFoRmATIon

Feo hospitality Trust Management Pte. ltd. (the “company”) is a private limited liability company incorporated and domiciled in Singapore.

The registered office and principal place of business of the company is located at 14 Scotts Road, #06-01 Far east Plaza, Singapore 228213.

The principal activities of the company are asset and portfolio management, and to act as Trustee manager for the hospitality Business Trust.

The immediate and ultimate holding companies are Feo Asset Management Pte. ltd. and Far east organization centre Pte ltd, respectively. Both companies are incorporated in Singapore.

2. SummARY oF SIGnIFICAnT ACCounTInG PolICIES

2.1 Basis of preparation

The financial statements of the company have been prepared in accordance with Singapore Financial Reporting Standards (FRS).

The financial statements have been prepared on the historical cost basis and are presented in Singapore Dollars (SGD or $) which is the company’s functional currency.

The financial statements of the company have been prepared on the basis of going concern notwithstanding that the company’s total and current liabilities exceeded its total and current asset by $20,781 as at 31 December 2012 because its ultimate holding company has agreed to provide continuing financial support to enable it to meet its liabilities as and when they fall due.

2.2 Standards issued but not yet effective

The company has adopted all the FRS and interpretations of FRS (“inT FRS”) that are effective for annual periods beginning on or after 30 April 2012. Since incorporation, the accounting policies have been consistently applied by the company in the current financial period.

The company has not adopted the following standards and interpretations that have been issued but not yet effective:

DescriptionEffective for annual periods

beginning on or after

FRS 113 Fair Value Measurements 1 January 2013

The directors expect that the adoption of the above standard will have no material impact on the financial statements in the period of initial application.


AnnuAl RePoRT 2012


2.3 Functional currency

The management has determined the currency of the primary economic environment in which the company operates, i.e. functional currency to be SGD. operating expenses are primarily influenced by fluctuations in SGD.

2.4 Financial liabilities

Initial recognition and measurement

Financial liabilities are recognised when, and only when, the company becomes a party to the contractual provisions of the financial instrument. The company determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at fair value through profit or loss, directly attributable transaction costs.

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

Other financial liabilities

After initial recognition, other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

2.5 Provisions

Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. if it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. if the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.




2.6 Taxes

(a) Current income tax

current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the end of the reporting period, in the countries where the company operates and generates taxable income.

current income taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

– Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

– in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

– Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

– in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.


AnnuAl RePoRT 2012


2.6 Taxes (cont’d)


The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of each reporting period.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it incurred during the measurement period or in profit or loss.

2.7 Related parties

A related party is defined as follows:

(a) A person or a close member of that person’s family is related to the company if that person:

(i) has control or joint control over the company;

(ii) has significant influence over the company; or

(iii) is a member of the key management personnel of the company or of a parent of the company.




2.7 Related parties (cont’d)

(b) An entity is related to the company if any of the following conditions applies:

(i) The entity and the company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the company or an entity related to the company. if the company is itself such a plan, the sponsoring employers are also related to the company.

(vi) The entity is controlled or jointly controlled by a person identified in (a).

(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

3. SIGnIFICAnT ACCounTInG JudGmEnTS And ESTImATES

The preparation of the company’s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of each reporting period. however, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

3.1 Judgements made in applying accounting policies

in the process of applying the company’s accounting policies, the management did not make any judgements that have effect on the amounts recognised in the financial statements.

3.2 Key sources of estimation uncertainty

There are no key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date that have significant risk of causing a material adjustments to the carrying amounts of assets within the next financial year.


AnnuAl RePoRT 2012

4. AdmInISTRATIvE ExPEnSE

30.4.2012(date of

incorporation)to

31.12.2012$

Management fee 17,120Professional fees 3,750other expenses 11

20,881

5. InComE TAx ExPEnSE

A reconciliation between income tax expense and the product of accounting loss multiplied by the applicable corporate tax rate for the period ended 31 December 2012 is as follows:

30.4.2012(date of

incorporation)to

31.12.2012$

loss before taxation 20,881

Tax benefit at applicable tax rate of 17% (3,550)unrecognised tax losses 3,550

income tax expense –

At the end of the reporting period, the company has tax losses of $20,881 that are available for offset against future taxable profits of the company, for which no deferred tax asset is recognised due to uncertainty of its recoverability. The use of the tax losses is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation.



6. oTHER RECEIvABlE

2012$

other receivable - immediate holding company 100

Total loans and receivables 100

Amount due from immediate holding company is non-trade related, unsecured, non-interest bearing, repayable upon demand and is to be settled in cash.

7. oTHER PAYABlES And ACCRuAlS

2012$

other payables - related parties 17,131Accrued operating expenses 3,750

Total financial liabilities carried at amortised cost 20,881

Amounts due to related parties are non-trade related, unsecured, non-interest bearing, repayable upon demand and are to be settled in cash.

8. SHARE CAPITAl

2012No. of

ordinary shares Amount

$

ordinary shares issued and fully paid-up:At 30 April 2012 (date of incorporation) and 31 December 2012 100 100

The holders of ordinary shares are entitled to receive dividends as and when declared by the company. The ordinary share carries one vote per share without restrictions. The ordinary shares have no par value.


AnnuAl RePoRT 2012

9. FInAnCIAl RISK mAnAGEmEnT oBJECTIvES And PolICIES

The main risks arising from the company’s financial instruments are interest rate risk, credit risk and liquidity risk. The management reviews and agrees policies for managing these risks and they are summarised below:

(a) Market risk

Currency risk

The company’s business is not exposed to any significant foreign exchange risk as its financial assets and liabilities are denominated in Singapore Dollar.

(b) Credit risk

credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the company. For financial assets, the company adopts the policy of dealing only with high credit quality counterparties.

The company has no significant concentrations of credit risk and has in place credit policies and procedures to ensure on-going evaluation and active account monitoring.

The maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the balance sheet.

(c) Liquidity risk

The company manages the liquidity risk through the availability of funding from its immediate holding company and related party.

The table below analyses the maturity profile of the company’s financial liabilities based on contractual undiscounted cash flows.

20121 year or less

$

At 2012other payables and accruals 20,881



9. FInAnCIAl RISK mAnAGEmEnT oBJECTIvES And PolICIES (ConT’d)

(d) Capital risk

The company’s objectives when managing capital are to safeguard the company’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. in order to maintain or achieve an optimal capital structure, the company may adjust the amount of dividend payment, return capital to shareholders, issue new shares or obtain new borrowings.

(e) Fair value measurements

Financial instruments whose carrying amount approximates fair value

Management has determined that the carrying amounts of other receivable and other payables and accruals approximate fair values due to their short term nature.

10. RElATEd PARTY TRAnSACTIonS

The following significant transaction took place between the company and related party at terms agreed between the parties:

2012$

Amount charged by related party:Management fee 17,120

outstanding balances with related parties as at 31 December 2012 are set out in note 7.


AnnuAl RePoRT 2012

11. ComPARATIvE FIGuRES

There are no comparative figures as this is the first set of financial statements since its incorporation on 30 April 2012.

12. AuTHoRISATIon oF FInAnCIAl STATEmEnTS FoR ISSuE

The financial statements for the financial period from 30 April 2012 (date of incorporation) to 31 December 2012 were authorised for issue in accordance with a resolution of the directors on 8 March 2013.

128


stAtIstIcs oF stAPLeD securItyHoLDINgsAs at 6 March 2013

ISSuEd And FullY PAId uP STAPlEd SECuRITIES

1,606,943,895 Stapled Securities (each Stapled Security carries one vote)Market capitalisation S$1,799,777,162 based on closing price of S$1.12 as at 6 March 2013

dISTRIBuTIon oF STAPlEd SECuRITYHoldInGS

Size of Holdings No. of Stapled Securityholders % No. of Stapled Securities %

1 - 999 3 0.03 1,460 0.001,000 - 10,000 8,401 82.34 34,316,708 2.1310,001 - 1,000,000 1,772 17.37 81,926,805 5.101,000,001 and above 27 0.26 1,490,698,922 92.77

Total 10,203 100.00 1,606,943,895 100.00

loCATIon oF STAPlEd SECuRITYHoldERS

Country No. of Stapled Securityholders % No. of Stapled Securities %

Singapore 10,040 98.40 1,603,739,895 99.80Malaysia 116 1.14 2,546,000 0.16others 47 0.46 658,000 0.04

Total 10,203 100.00 1,606,943,895 100.00

129

AnnuAl RePoRT 2012

stAtistics oF stApled securityholdinGsAs at 6 March 2013

TwEnTY lARGEST STAPlEd SECuRITYHoldERS

Name No. of Stapled Securities %

1 Golden Development Private limited 223,417,000 13.90

2 Golden landmark Pte ltd 191,806,000 11.94

3 Far east organization centre Pte ltd 182,307,000 11.34

4 DBS nominees Pte ltd 179,324,841 11.16

5 oxley hill Properties Pte ltd 154,481,000 9.61

6 citibank nominees Singapore Pte ltd 152,278,120 9.48

7 BnP Paribas Securities Services 85,944,000 5.35

8 hSBc (Singapore) nominees Pte ltd 82,604,680 5.14

9 Riverland Pte ltd 80,294,000 5.00

10 Raffles nominees Pte ltd 35,963,051 2.24

11 united overseas Bank nominees Pte ltd 32,587,000 2.03

12 DBSn Services Pte ltd 25,531,000 1.59

13 DB nominees (S) Pte ltd 21,267,000 1.32

14 Bank of Singapore nominees Pte ltd 14,981,566 0.93

15 Morgan Stanley Asia (Singapore) Securities Pte ltd 7,757,000 0.48

16 Feo hospitality Asset Management Pte ltd 3,055,895 0.19

17 Merrill lynch (Singapore) Pte ltd 2,916,769 0.18

18 BnP Paribas nominees Singapore Pte ltd 2,575,000 0.16

19 ocBc Securities Private ltd 1,708,000 0.11

20 chua hong Thuan 1,566,000 0.10

Total 1,482,364,922 92.25

130


dIRECToRS’ InTERESTS In STAPlEd SECuRITIES AS AT 27 AuGuST 2012, 31 dECEmBER 2012 And 21 JAnuARY 2013

Directors Direct Interests % Deemed Interests %

Mr Koh Boon hwee 500,000 0.03% 0Mr Wee Kheng Jin 500,000 0.03% 0Mr chia Boon Kuah 500,000 0.03% 0Mr huang cheng eng 500,000 0.03% 0Mr Willie cheng – – 500,000 0.03%Mr Kyle lee 500,000 0.03% 0

There were no change in the Directors’ interests in the Stapled Serurities between the end of the financial year and 21 January 2013

SuBSTAnTIAl STAPlEd SECuRITYHoldERS’ InTERESTS AS AT 6 mARCH 2013

Substantial Stapled Securityholders Direct Interests % Deemed Interests %

Golden Development Pte ltd 223,417,000 13.90% 154,481,000 9.61%(1)

Far east organization centre Pte ltd 182,307,000 11.34% 3,055,895 0.19(2)

oxley hill Properties Pte ltd 154,481,000 9.61% – –The estate of the late Mr ng Teng Fong – – 563,260,895 35.05%(3)

Golden landmark Pte ltd 191,806,000 11.94% – –Riverland Pte ltd 80,294,000 5.00% – –Victory Realty co Pte ltd – – 80,294,000 5.00%(4)

APG Algemene Pensioen Groep n.V. 94,263,000 5.86% – –F.e. holdings Pte ltd – – 272,100,000 16.93%(5)

Mdm Tan Kim choo – – 275,155,895 17.12%(6)

Mr Philip ng chee Tat – – 272,100,000 16.93%(7)

Aberdeen Asset Management Asia limited – – 97,352,000 6.06%(8)

Aberdeen Asset Management Plc – – 97,352,000 6.06%(9)

(1) Golden Development Pte ltd is deemed to be interested in the stapled securities held by oxley hill Properties Pte ltd.(2) Far east organization centre Pte ltd is deemed to be interested in the stapled securities held by Feo hospitality Asset Management Pte ltd.(3) The estate of the late Mr ng Teng Fong is deemed to be interested in the stapled securities held by Golden Development Pte ltd, Far east organization centre Pte ltd

oxley hill Properties Pte ltd and Feo hospitality Asset Management Pte ltd.(4) Victory Realty co. Pte ltd is deemed to be interested in the Stapled Securities held by Riverland Pte ltd.(5) F.e. holdings Pte ltd is deemed to be interested in the stapled securities held by Golden landmark Pte ltd and Riverland Pte ltd.(6) Mdm Tan Kim choo is deemed to be interested in the stapled securities held by Golden landmark Pte ltd, Riverland Pte ltd and Feo hospitality Asset Management Pte ltd.(7) Mr Philip ng is deemed to be interested in the stapled securities held by Golden landmark Pte ltd and Riverland Pte ltd.(8) Aberdeen Asset Management Asia limited acts as an investment manager for various clients/funds and has the power to exercise, or control the exercise of, a right

to vote attached to the securities and has the power to dispose of, or control the disposal of, the securities. The registered holders of the securities is the client’s or fund’s custodian.

(9) Aberdeen Asset Management Plc is deemed to be interested in the stapled securities held by Aberdeen Asset Management Asia limited (“AAMAl”) as AAMAl is a wholly owned subsidiary of Aberdeen Asset Management Plc.

FREE FloATin compliance with listing Rule 1207 (9) of the SGX-ST listing Manual, approximately 35.92% of the total number of stapled securities issued is held by public as at 6 March 2013.

Therefore, listing Rule 723 of the SGX-ST listing Manual has been complied.

stAtistics oF stApled securityholdinGsAs at 6 March 2013

131

AnnuAl RePoRT 2012

NotIce oF ANNuAL geNerAL MeetINg

NOTICE IS HEREBY GIVEN that the 1st Annual General Meeting of the holders of stapled securities in Far east hospitality Trust (“Far east h-Trust, and the holders of stapled securities of Far east h-Trust, “Stapled Securityholders”) will be held at Antica 1, level 2, 1 Tanglin Road, orchard Parade hotel, Singapore 247905 on Friday, 26 April 2013 at 2.30 p.m. to transact the following business:

Ordinary Business

ordinary Resolution 1 : To receive and adopt the audited Financial Statements of Far east h-Trust for the period from 1 August 2012 (date of constitution) to 31 December 2012, comprising the audited Financial Statement of Far east hospitality Real estate investment Trust (“Far east h-ReiT”) and the audited Financial Statement of Far east hospitality Business Trust (“Far east h-BT”), the Report of DBS Trustee limited, as the trustee of Far east h-ReiT (the “ReiT Trustee”), the Report of Feo hospitality Asset Management Pte. ltd., as the manager of Far east h-ReiT (the “ReiT Manager”), the Report of Feo hospitality Trust Management Pte. ltd., as the trustee-manager of Far east h-BT (the “Trustee-Manager”) for the period from 1 August 2012 (date of constitution) to 31 December 2012, together with the Auditor’s Report thereon.

ordinary Resolution 2 : To re-appoint ernst & young llP as auditor of Far east h-Trust comprising Far east h-ReiT and Far east h-BT to hold office until the conclusion of the next Annual General Meeting of Far east hospitality Trust and to authorise the ReiT Manager and theTrustee-Manager to fix their remuneration.

Special Business

To consider and if thought fit, to pass the following resolution as ordinary Resolution:

ordinary Resolution 3 :

THAT authority be and is hereby given to the ReiT Manager and the Trustee-Manager, to

(a) (1) issue new units in Far east h-ReiT (“Far east h-ReiT units”) and new units in Far east h-BT (“Far east h-BT units”, together the “Stapled Securities”) whether by way of rights or otherwise; and/or

(2) make or grant offers, agreements or options (collectively, “instruments”) that might or would require Stapled Securities to be issued, including but not limited to the creation and issue of (as well as adjustments to) securities, warrants, debentures or other instruments convertible into Stapled Securities,

at any time and upon such terms and conditions and for such purposes and to such persons as the ReiT Manager and the Trustee-Manager may in their absolute discretion deem fit; and

FAR EAST HOSPITALITY TRUSTA stapled group comprising:

FAR EAST HOSPITALITY REAL ESTATE INVESTMENT TRUST

(a real estate investment trust constituted on 1 August 2012 under the laws of the Republic of Singapore)

managed byFeo hospitality Asset Management Pte. ltd.

FAR EAST HOSPITALITY BUSINESS TRUST

(a business trust constituted on 1 August 2012 under the laws of the Republic of Singapore)

managed byFeo hospitality Trust Management Pte. ltd.

132


notice oF AnnuAl GenerAl MeetinG

(b) issue Stapled Securities in pursuance of any instrument made or granted by while this Resolution is in force (notwithstanding that the authority conferred by this Resolution may have ceased to be in force), provided that:

(1) the aggregate number of Stapled Securities to be issued pursuant to this Resolution (including Stapled Securities to be issued in pursuance of instruments made or granted pursuant to this Resolution), shall not exceed fifty per cent (50%) of the total number of issued Stapled Securities (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of Stapled Securities to be issued other than on a pro rata basis to Stapled Securityholders shall not exceed twenty per cent (20%) of the total number of issued Stapled Securities (as calculated in accordance with sub-paragraph (2) below);

(2) subject to such manner of calculation as may be prescribed by Singapore exchange Securities Trading limited (“SGX-ST”) for the purpose of determining the aggregate number of Stapled Securities that may be issued under sub-paragraph (1) above, the total number of issued Stapled Securities shall be based on the number of issued Stapled Securities at the time this Resolution is passed, after adjusting for:

(i) any new Stapled Securities arising from the conversion or exercise of any instruments which are outstanding at the time this Resolution is passed; and

(ii) any subsequent bonus issue, consolidation or subdivision of Stapled Securities;

(3) in exercising the authority conferred by this Resolution, the ReiT Manager and the Trustee-Manager shall comply with the provisions of the listing Manual of SGX-ST for the time being in force (unless such compliance has been waived by SGX-ST), the Business Trusts Act, chapter 31A of Singapore for the time being in force (unless otherwise exempted or waived by The Monetary Authority of Singapore), the trust deed constituting Far east h-ReiT (as amended) (the “ReiT Trust Deed”) for the time being in force (unless otherwise exempted or waived by the Monetary Authority of Singapore), the trust deed constituting Far east h-BT (the “BT Trust Deed”) for the time being in force (unless otherwise exempted or waived by The Monetary Authority of Singapore) and the stapling deed stapling Far east h-ReiT and Far east h-BT for the time being in force (unless otherwise exempted or waived by the Monetary Authority of Singapore);

(4) (unless revoked or varied by the Stapled Securityholders in a general meeting) the authority conferred by this Resolution shall continue in force until (i) the conclusion of the next Annual General Meeting of Far east h-Trust (ii) the date by which the next Annual General Meeting of Far east h-Trust is required by law to be held, whichever is earlier;

133

AnnuAl RePoRT 2012


(5) where the terms of the issue of the instruments provide for adjustment to the number of instruments or Stapled Securities into which the instruments may be converted, in the event of rights, bonus or other capitalisation issues or any other events, the ReiT Manager and the Trustee-Manager are authorised to issue additional instruments or Stapled Securities pursuant to such adjustment notwithstanding that the authority conferred by this Resolution may have ceased to be in force at the time the instruments are issued; and

(6) the ReiT Manager, the ReiT Trustee and the Trustee-Manager be and are hereby severally authorised to complete and do all such acts and things (including executing all such documents as may be required) as the ReiT Manager, the ReiT Trustee or, as the case may be, the Trustee-Manager may consider expedient or necessary or in the interest of Far east h-ReiT, Far east h-BT and Far east h-Trust as whole to give effect to the authority conferred by this Resolution.

By order of the Board By order of the Board

Jill Chay Suet Yee Jill Chay Suet Yeecompany Secretary company SecretaryFeo hospitality Asset Management Pte. ltd. Feo hospitality Trust Management Pte. ltd.(company Registration no. 201102629K) (company Registration no. 201210698W)28 March 2013 28 March 2013

Important Notice:

1. A Stapled Securityholder entitled to attend and vote at the AGM is entitled to appoint not more than two proxies to attend and vote in his/her stead. A proxy need not be a Stapled Securityholder.

2. Where a Stapled Securityholder appoints two proxies and does not specify the proportion of his/her stapled securityholding to be represented by each proxy, then the Stapled Securities held by the Stapled Securityholder are deemed to be equally divided between the proxies.

3. The proxy form must be lodged at the office of Far east h-Trust’s Stapled Security Registrar, Boardroom corporate & Advisory Services Pte. ltd., 50 Raffles Place, #32-01 Singapore land Tower, Singapore 048623 not later than 48 hours before the time set for holding the Annual General Meeting.

134


Explanatory Note on Ordinary Resolution 3

The ordinary Resolution 3 above, if passed, will empower the ReiT Manager and the Trustee-Manager to issue Stapled Securities and to make or grant instruments (such as warrants, debentures or other securities) convertible into Stapled Securities and issue Stapled Securities pursuant to such instruments from the date of the Annual General Meeting until (i) the conclusion of the next Annual General Meeting of Far east h-Trust or (ii) the date by which the next Annual General Meeting of Far east h-Trust is required by the applicable regulations to be held, whichever is earlier, unless such authority is earlier revoked or varied by the Stapled Securityholders at a general meeting. The aggregate number of Stapled Securities which the ReiT Manager and the Trustee-Manager may issue (including Stapled Securities to be issued pursuant to convertibles) under this Resolution must not exceed fifty per cent. (50%) of the total number of issued Stapled Securities of which up to twenty per cent. (20%) of the total number of issued Stapled Securities may be issued other than on a pro rata basis to Stapled Securityholders.

The ordinary Resolution 3 above, if passed, will empower the ReiT Manager and the Trustee-Manager from the date of the Annual General Meeting until the date of the next Annual General Meeting of Far east h-Trust, to issue Stapled Securities as either partial or full payment of the fees which the ReiT Manager and the Trustee-Manager are entitled to receive for their own accounts pursuant to the ReiT Trust Deed and BT Trust Deed respectively.

For the purpose of determining the aggregate number of Stapled Securities that may be issued, the percentage of issued Stapled Securities will be calculated based on the total number of issued Stapled Securities at the time that ordinary Resolution 3 above is passed, after adjusting for (i) new Stapled Securities arising from the conversion or exercise of any instruments which are outstanding at the time this Resolution is passed and (ii) any subsequent bonus issue, consolidation or subdivision of Stapled Securities.

Fund raising by issuance of new Stapled Securities may be required in instances of property acquisitions or debt repayments. in any event, if the approval of Stapled Securityholders is required under the listing Manual of SGX-ST, the ReiT Trust Deed, the BT Trust Deed and the Stapling Deed or any relevant laws and regulations in such instances, the ReiT Manager and the Trustee-Manager will then obtain the approval of Stapled Securityholders accordingly.


FIRST ANNUAL GENERAL MEETING OF FAR EAST HOSPITALITY TRUST

i/We (name(s) with nRic no./Passport no./company Registration no.) of (Address)

being a Stapled Securityholder/Stapled Securityholders of Far east hospitality Trust (“Far east h-Trust”) hereby appoint:

Name AddressNRIC No./

Passport No.Proportion of Stapled

SecurityholdingsNo. of Stapled

Securities %

and/or (delete as appropriate)

Name AddressNRIC No./

Passport No.Proportion of Stapled

SecurityholdingsNo. of Stapled

Securities %

or, both of whom failing, the chairman of the Annual General Meeting (“AGM”) as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and if necessary, to demand a poll, at the first Annual General Meeting of Far east h-Trust to be held at Antica 1, level 2, 1 Tanglin Road, orchard Parade hotel, Singapore 247905 on Friday, 26 April 2013 at 2.30 p.m. or at any adjournment thereof.

i/We direct my/our proxy/proxies to vote for or against the resolution to be proposed at the AGM as indicated hereunder. if no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/their discretion.

Ordinary ResolutionTo be used on

a show of handsTo be used in the

event of a poll

For* Against*

No. of Votes For**

No. of Votes

Against**Ordinary Business1. To receive and adopt the audited Financial Statements of Far east h-Trust for the

period from 1 August 2012 (date of constitution) to 31 December 2012, comprising the audited Financial Statement of Far east hospitality Real estate investment Trust (“Far east h-ReiT”) and the audited Financial Statement of Far east hospitality Business Trust (“Far east h-BT”), the Report of DBS Trustee limited, as the trustee of Far east h-ReiT (the “ReiT Trustee”), the Report of Feo hospitality Asset Management Pte. ltd., as the manager of Far east h-ReiT (the “ReiT Manager”), the Report of Feo hospitality Trust Management Pte. ltd., as the trustee-manager of Far east h-BT (the “Trustee-Manager”), together with the Auditor’s Report thereon.

2. To re-appoint ernst & young llP as auditor of Far east h-Trust comprising Far east h-ReiT and Far east h-BT to hold office until the conclusion of the next Annual General Meeting of Far east h-Trust and to authorise the ReiT Manager and the Trustee-Manager to fix their remuneration.

Special Business3. To authorise the ReiT Manager and the Trustee-Manager to issue Stapled Securities

and to make or grant convertible instruments.

* if you wish to exercise all your votes “For” or “Against”, please tick () within the box provided.** if you wish to exercise all your votes “For” or “Against”, please tick () within the box provided. Alternatively, please indicate

the number of votes as appropriate.

Dated this day of 2013

Signature(s) of Stapled Securityholder(s)/common Seal of corporate Stapled Securityholder

Proxy ForM

FAR EAST HOSPITALITY TRUSTA stapled group comprising:

FAR EAST HOSPITALITY REAL ESTATE INVESTMENT TRUST

(a real estate investment trust constituted on 1 August 2012 under the laws of the Republic of Singapore)

managed byFEO Hospitality Asset Management Pte. Ltd.

FAR EAST HOSPITALITY BUSINESS TRUST

(a business trust constituted on 1 August 2012 under the laws of the Republic of Singapore)

managed byFEO Hospitality Trust Management Pte. Ltd.

Total number of Stapled Securities held

c/oStapled Security Registrar

Boardroom Corporate & Advisory Services Pte. Ltd.50 Raffles Place, #32-01 Singapore land Tower

Singapore 048623

Notes to Proxy Form

1. A Stapled Securityholder entitled to attend and vote at the Annual General Meeting is entitled to appoint one or two proxies to attend and vote in his/her stead.

2. Where a Stapled Securityholder appoints more than one proxy, he/she must specify the proportion of his/her holding (expressed as a percentage of the whole) to be represented by each proxy. Where a Stapled Securityholder appoints two proxies and does not specify the proportion of his/her stapled securityholding to be represented by each proxy, then the Stapled Securities held by the Stapled Securityholder are deemed to be equally divided between the proxies.

3. A proxy need not be a Stapled Securityholder.

4. A Stapled Securityholder should insert the total number of Stapled Securities held. if the Stapled Securityholder has Stapled Securities entered against his name in the Depository Register maintained by The central Depository (Pte) limited (“CDP”), he should insert that number of Stapled Securities. if no number is inserted, this form of proxy will be deemed to relate to all the Stapled Securities held by the Stapled Securityholder.

5. The instrument appointing a proxy or proxies (the “Proxy Form”) must be deposited at the Stapled Security Registrar’s office at Boardroom corporate & Advisory Services Pte. ltd, 50 Raffles Place, #32-01 Singapore land Tower, Singapore 048623, not less than 48 hours before the time set for holding the Annual General Meeting.

6. The Proxy Form must be signed by the appointor or of his attorney duly authorised in writing. Where the Proxy Form is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised officer.

Fold along this line (1)

Fold along this line (2) and seal

BUSINESS REPLY SERVICEPERMIT NO. 08948

(089489)

Postage will be paid by addressee.

For posting inSingapore only.

FEO Hospitality Asset Management Pte. Ltd.

(as manager of Far east hospitality Real estate investment Trust)

FEO Hospitality Trust Management Pte. Ltd.

(as trustee-manager of Far east hospitality Business Trust)

and

1 tanglin road #05-01, orchard parade hotel, singapore 247905T +65 68336688 | F +65 68336622 | www.feht.com.sg

Gr

ow

inG

Fro

M FIR

M FO

UN

DA

TION

SA

NN

UA

L

RE

PO

RT

2

01

2FA

R EA

ST H

OSP

ITALITY

TRU

ST

Documents

GrowinG FroM FIRM FOUNDATIONS - listed companyfeht.listedcompany.com/misc/ar2012.pdf · investment strategy of investing on a long-term basis, directly or indirectly, in a diversified