Macquarie Pacific Star Prime REIT Management Limited (“the Manager”), as manager of Macquarie Prime Real Estate Investment Trust (“MP REIT”), has been informed by Futuregement K.K. (“Futuregement”), the local asset manager of one of the properties in MP REIT’s Japan portfolio, that its parent company F.L.E.G. International Co., Ltd. (“FLEG”) has filed a petition for commencement of civil rehabilitation with the Tokyo District Court on 18 December 2008. Future Revolution K.K. (“Future Revolution”), another wholly owned subsidiary of FLEG, is the master tenant and local property manager of MP REIT’s seven Tokyo properties. Both Futuregement and Future Revolution have advised that this will not have any direct impact on their business operations.

As at 30 September 2008, MP REIT’s Japan portfolio of seven properties enjoyed 100% occupancy except for Roppongi Primo (86%) and Daikanyama (88%). The portfolio contributed 7.0% (S$6.6 million) and 8.2% (S$5.7 million) to MP REIT’s gross revenue and net property income respectively for the nine months ended 30 September 2008.

Future Revolution and its related entities directly occupy 19,162 sq ft of NLA (33.3% of Japanese portfolio NLA) while the remainder of the Japan portfolio’s NLA is occupied by end tenants that are not related to Future Revolution (or its related entities). At this juncture, Future Revolution and its related entities are current on their rental obligation. In the event of rent arrears, MP REIT may draw on security deposits provided for the properties, amounting to approximately six months of rent for each property to offset any potential negative impact on MP REIT’s financial results in the near term.

The properties are all relatively new, ranging from 1 to 4 years old. They are located in prime Tokyo areas of Roppongi, Aoyama, Jingumae, Ebisu, Daikanyama and Nakameguro and are all within five minutes’ walk from the nearest sub-way station. Subject to prevailing market conditions, the prime locations of the assets should be advantageous to re-letting should there be a need.

The Manager is in close consultation with its legal advisors, to assess the potential impact of FLEG’s filing on Future Revolution’s and Futuregement’s ability to continue to meet their obligations in relation to MP REIT’s portfolio of Japan properties. The Manager will also look into the possibility of replacing Future Revolution and Futuregement in their respective roles if necessary.

The Manager will closely monitor the situation and will take necessary actions to mitigate MP REIT’s risk exposure.