Trust Deed Amendment to Remove Trustee’s Acquisition Fee and Divestment Fee

Singapore, 20 January 2011 – Frasers Centrepoint Asset Management (Commercial) Ltd. (the “Manager”), as the manager of Frasers Commercial Trust (“FCOT”), wishes to announce the amendment of the trust deed dated 12 September 2005 constituting FCOT (as amended and restated) (the “Trust Deed”) by way of a seventh supplemental deed.

The seventh supplemental deed has been entered into today between the Manager and British and Malayan Trustees Limited, as trustee of FCOT (the “Trustee”), to amend the Trust Deed to remove the Trustee’s acquisition fee and divestment fee from the remuneration of the Trustee such that the Trustee will no longer be entitled to receive such fees, to be in line with market practice.

The Trust Deed will be available for inspection at the registered office of the Manager and the registered office of the Trustee.

High quality assets, Strong sponsor; Initiate with BUY rating

High quality assets. Frasers Commercial Trust (FCOT) owns 10 properties across three countries with retail and office components. FCOT derives some 52% of its gross revenue from Singapore, which comprises China Square Central, 55 Market Street and Alexandra Technopark. These assets are either high-quality commercial property located near the heart of the financial district or high-tech business space development at the fringe area of the central-region of Singapore. FCOT also owned four commercial properties in Tokyo & Osaka. Other asset includes Central Park (Perth) which is a premium grade office tower and the tallest building in Perth.

Strong sponsor. Sponsor, Frasers Centrepoint Limited (FCL), a wholly-owned subsidiary of Fraser and Neave, Limited (F&N), is a leading Singapore-based property company with a strong global foothold in property development, property investment, serviced residences and investment funds. Apart from financial support, having a developer sponsor also allows FCOT to be granted rights of first refusal to a possibly rich pipeline of sponsor-owned assets for future acquisition. In the near to middle term, StarHub Centre, Alexandra Point and Valley Point are possibly slated asset injection targets for FCOT, if they prove yield-accretive to unitholders.

Stable income. FCOT enjoys a number of blue-chip longtenure leases (such as Commonwealth of Australia, BHP Billiton Petroleum etc.) and master leases that provide longterm income stability to the REIT along with potential for rental upside. Approximately 65% of FCOT’s revenue is derived from such leases. 25% of its gross rental income also has built-in annual rent step-ups. In line with our OVERWEIGHT rating for Office-REITs, we believe that FCOT will likewise be able to ride on the recovery cycle & benefit from positive rental reversions in FY11-FY12. We also see potential to grow income through asset enhancement initiatives and acquisitions.

Valuation. FCOT is trading at a 59% discount-to-book compared to the broader Office-REITs which are trading at 30% discount-to-book. We believe this significant discount is unwarranted, considering FCOT’s high-quality assets, strong sponsor and sound financials. At S$0.16 per unit, FCOT has recently proposed the unit consolidation of five existing units, which it opined will improve market perception and attractiveness of its units. We concur with the manager’s strategy and apply a 40% discount to our RNAV instead, deriving a fair value of S$0.17. This translates to an estimated total return of 12.6% (Price Upside: 6.3%; Distribution Yield: 6.3%). We initiate coverage of FCOT with a BUY rating.

Frasers Commercial Trust (FCOT) said on Tuesday that it is proposing to consolidate every five existing units in FCOT into one unit.

It believes that the consolidation will increase in the theoretical trading price of each consolidated unit as well as improve the market perception and attractiveness of FCOT and its units.

FCOT also believes that the consolidation will reduce the magnitude of volatility of its unit price and market capitalisation due to the minimum bid and ask spread.

•4Q10 revenue of $29.3 million, net property income of $23.2 million, distributable income of $9.5 million

•4Q10 DPU of 0.31 cents

•Full year revenue up 21%, DPU up 29%

•Maintain Hold, target price $0.18

Spot-on DPU forecast

FCOT recorded 4Q10 revenue of $29.3 million (+14.1% y-y, +0.2% q-q), net property income of $23.2 million (+16.4% y-y, +2.3% q-q) and distributable income available to unitholders of $9.5 million (+54.6% y-y, +23.0% q-q). 4Q10 DPU was 0.31 cents (+55.0% y-y, +24.0% q-q). Full year results for the period 1 Oct 2009 to 30 Sep 2010 also improved correspondingly. Full year revenue was $117.9 million (+21.0% y-y) and DPU for the full year was 1.12 cents (+29.0% y-y) which was spot-on with our own forecast.

Favourable AUD, stabilization effect of Alexandra Technopark

The improved y-y performance is mainly attributed to the contribution from Alexandra Technopark, which was acquired in Aug 2009, as well as favorable exchange rate of the AUD. Revenue breakdown by country is Singapore: 51.7%, Australia: 35.2%, Japan: 13.1%.

All round improvement; Japan still the drag

Generally occupancy improved for the Singapore and Australia portfolio except for the Japan portfolio. Portfolio occupancy for 4Q10 was 90.8%. Occupancy by country is Singapore: 96.1%, Australia: 98.8%, Japan: 55.5%. Cosmo Plaza continues to be the drag on overall occupancy. Excluding Cosmo Plaza, Japan portfolio occupancy would be 93.5%.

Waiting for the right time

• DPU of 0.31Sct (+55%yoy,+24%qoq) in line

• Singapore operations stable; Japan remains a drag

• Maintain HOLD with revised TP of $0.19

4Q10 results in line. Gross revenue and net property income was 14% and 16% higher yoy at $29.3m and $23.2m respectively due a full quarter’s contribution from Alexandra Technopark and improved performance at Keypoint with higher occupancy of c81%. On a sequential basis, 4Q10 topline was flattish, dragged down by its Japan property – Cosmo Plaza – which posted a 22% qoq decline in rental income, although NPI rose a marginal 2.3% qoq, helped by lower property expenses. Distributable income net of CPPU dividend amounted to $9.5m (DPU: 0.31Scts), up 24% qoq, thanks to the stronger AUD. The group revalued its properties up by $36.3m or 1.9% at latest cap rates of 4-5% for its properties in Singapore and lowered gearing to 39.6%.

Operations a mixed bag. Occupancy of Cosmo Plaza Osaka dropped to 25.6% with the expiry of lease of a major tenant in Aug 2010. This will continue to be a drag on earnings. Management attributed the non-traditional business location a hurdle to attract tenants. Successful divestment of this asset would improve FCOT’s book NAV and gearing. Meanwhile, Central Park and Caroline Chisholm Centre in Australia should enjoy some reversion upside from rent reviews with step-up clauses in 2011. In Spore, boost in rental income will come from higher occupancy at Keypoint.

Financing could provide earnings uplift in the medium term. Management is also looking at refinancing its debt due in 2012 (100%), given the current attractive interest rate environment, and smoothening out the lumpy loan maturity profile. We believe the group could likely achieve lower than current interest cost of 4.1% upon refinancing and boost bottomline in the medium term. This had not been factored into our existing forecast.

Maintain Hold. While yields of c6.7 – 7.1% is attractive relative to other office peers, re-rating catalyst from further clarity of management portfolio restructuring plans, appears lacking. We are revising our DCF-backed TP to $0.19 as we roll our numbers forward into FY11. Retain Hold call.