TREASURY CHINA TRUST RECORDS NPAT OF SGD18.675 million and DECLARES SGD2.5 cents/UNIT DISTRIBUTION FOR Q3 2010

• Increase in portfolio occupancy of 3.3%
• Achieved 3.5% increase in average rental rate
• Gross rental income and net property income in line with forecast
• Declares SGD2.5 cents DPU representing attractive annualised yield of 6.54%
• Commits to pay a further SGD2.5 cents DPU for 4Q 2010 (total of SGD5 cents per unit for the half year)
• Commits to pay SGD10 cents per unit for FY 2011 in 2 x SGD5 cent instalments (June and December 2011)
• Terms agreed for the refinance of Central Plaza resulting in a maturing debt profile extending to 2015

Treasury Holdings Real Estate Pte. Ltd., the Trustee-Manager of Treasury China Trust ("TCT"), today announced Net Profit After Tax ("NPAT") of SGD18.675 million, resulting in Net Distributable Income of SGD0.845 million for the quarter ending 30 September 2010. The Trust also declared Distribution Per Unit ("DPU") of SGD2.5 cents, translating to an attractive annualised yield of 6.54%¹.
 
TCT, which listed on Singapore's main board stock exchange in June of this year, focuses exclusively on the acquisition, development and management of commercial real estate assets in China. With a real estate portfolio valued at RMB9.42 billion (SGD1.866 billion), TCT recorded gross rental income for the quarter of RMB94.845 million and Net Property Income (NPI) of RMB52.067 million, both in line with forecast.

Proactive asset management by TCT has witnessed an increase in portfolio occupancy to 86.9%, an increase of 3.3% year to date. Furthermore a 3.5% increase in average rental per square metre has also been achieved.
 
Richard Barrett, Chairman of TCT, commented, "We are pleased to have delivered a strong operating performance in our maiden results since our listing in June. We believe that TCT not only offers investors the opportunity to access China's fast-growing commercial real estate sector, but our hands-on approach also maximises our property yield and enhances value for our unitholders."  

The higher occupancy and rental rates were driven largely by new leasing transactions with blue-chip tenants, including Casio, Adani Power, Micron and Rockwell Collins, as well as lease renewals for more than 15,000 square metres of TCT's office and retail space.

With the completion of the refurbishment of Central Plaza in June, occupancy of the three-level retail podium has reached 68% by end of September, with further leasing deals under negotiation to have the podium space substantially leased out by the end of October 2010.

During the quarter, TCT also signed a Strategic Partnership Agreement with the TRIO Group to expand into Shandong province. This allows the Trust to expand its geographical footprint from its current base in Beijing and Shanghai, and marks its strategic move into one of China's major regional gateway precincts.

Mr Richard David, Chief Executive Officer of TCT, said, "We are constantly looking for opportunities to achieve value growth, either organically through asset enhancements, or through acquisitions and strategic tie-ups where it makes sense."

In confirming TCT's announcement regarding its distribution policy through to the end of 2011, the CEO remarked, "It is important that we demonstrate a firm commitment to our unitholders to deliver consistent earnings. Through our unique combination of recurrent income and proactive balance sheet management, we are able to do this and we are very pleased to announce a distribution for the current quarter of SGD2.5 cents per unit, matched by another SGD2.5 cents per unit for the December 2010 quarter.  To provide certainty to our unitholders over the medium term, we have also committed to a minimum SGD10 cents per unit distribution for 2011."

Balance Sheet Strength
The Trust's Debt to Asset Ratio currently stands at 33.6%, significantly below the 45% covenant in the Trust Deed, which provides sufficient flexibility whilst also reflecting a very prudent approach to its debt obligations. In addition, TCT has total cash holdings of SGD97 million at the end of the quarter.   

TCT's debt portfolio has also undergone significant restructuring over the last 10 months, with 80% of its secured loans refinanced during this period. Most recently, the Trust finalised the refinancing of City Centre with a 5-year dual-currency loan from ICBC equivalent to USD480 million. This includes USD310 million and RMB410 million for the existing properties and RMB800 million for the development of City Centre Extension.

TCT has also confirmed that it has agreed terms with Citic Kawah Bank to refinance its existing loan for Central Plaza which is due for expiry in July 2011. "Commercial real estate is a very capital intensive business and proactive management of our loan book is a key component to delivering certainty and strong earnings over the medium term," remarked David. "The agreement with Citic Kawah concludes a very productive 10 months for TCT in which we have refinanced more than USD525 million of loan facilities whilst reducing our cost of debt by nearly half, translating into savings of more than SGD20.0 million per annum. Of equal importance, during this process, we have converted a substantial portion of our debt into USD and the benefits of this are flowing to our bottom line as the RMB continues its path of appreciation. Importantly our maturing debt profile now extends out to 2015 and we have secured an additional RMB800.0 million of development finance to undertake the construction of City Centre Extension, which upon completion in 2012, will underwrite a 100% increase in our gross revenue in the first full year of operations."

The Trust's Net Asset Value ("NAV") has increased 2.48% in RMB terms since its listing. This was driven largely by the appreciation of its property portfolio, which has been valued at 2.53% higher than December 2009 to RMB9.42 billion. However, given the sharp appreciation of the Singapore dollar against the RMB, NAV, when measured in SGD terms, dipped 2.97% to SGD3.91 per unit.

Outlook
Whilst the recent austerity measures implemented by the Chinese Government were targeted at residential properties, it has also impacted sentiment for the real estate sector in general. Nevertheless, the Trustee-Manager believes that the fundamentals of commercial property in China are still sound and that TCT has a strong brand in commercial real estate and is well positioned amongst existing and prospective tenants. TCT is optimistic about the outlook and expects to continue to improve occupancy rates from the current level of 87% by end of the year. 

Mr Barrett added, "We will continue to focus on our three-pronged strategy of higher occupancy rate and higher rental through asset enhancements and tenant mix management, as well as balance sheet expansion through sensible acquisitions. All these will ultimately result in value accretion for unitholders. China, with its rapid economic development and focus on stimulating domestic demand, will offer us tremendous opportunity for growth."  

http://www.treasurychinatrust.com/stockinformation.htm