30 November 2006

Part 5 The Independent Financial Advisor's Opinion Regarding Change in Property Management Fee Background In accordance with the condition agreed upon between the Fund and CPN, CPN would allow the Fund to invest in the Central Plaza Pinklao Project when the Fund agrees to appoint CPN as the Property Manager for such property investment. Currently, CPN has been appointed as the Property Manager for both the Central Plaza Rama II Project and the Central Plaza Rtachada-Rama III Project that are two of the Fund's current property investments in accordance with the Property Management Agreement entered into between CPN and the Fund dated August 11, 2005 ('the Property Management Agreement'). In addition, the Investment Committee of the Fund passed a resolution on November 2, 2006 to appoint CPN as the Property Manager of the Central Plaza Pinklao Project to be additionally invested, to amend/increase leasing commission for procuring new tenants and managing existing tenants and to include development fee as part of the Fund's property management fee so that the property management fee to be paid to CPN, as the Fund's Property Manager, is more aligned with the size of the Fund's assets and the market situation. Such amendment/addition of property management fee is regarded as the connected transaction, and this requires careful consideration of the rationale and necessity of entering into the transaction. Parts of the property management fee to be amended/ added would be applied to the Fund's existing investments including the Central Plaza Rama II Project and the Central Plaza-Ratchada Rama III Project as well as the newly invested one, namely the Central Plaza Pinklao Project. Amendment of the Leasing Commission Fee and the Development Fee The Investment Committee of the Fund passed a resolution on 2, 2006 to approve amendment and addition of the Fund Management Project in regard to leasing commission fee to be paid for procuring new tenants and managing all tenants and development fee to be paid for managing the improvement and/or development of real properties of the Fund for the purpose of enhancing value to such real properties projects. Details of the amendment/addition together with the Independent Financial Advisor's opinion regarding reasonableness and necessity of such amendment/addition are as follows: - Leasing Commission Fee to be paid for Procuring New Tenants and Managing Existing Ones in the Shopping Complex Comparison of the existing leasing commission fee structure (for the shopping complex) with the proposed amendment is showed as below: Structure of Leasing Commission Fee in accordance with the Property Management Agreement dated August 11, 2005 Leasing Commission Fee (based on rental rate of particular tenant) 1. For renewal of lease with existing tenants 0.5 month 2. For entering into new lease agreements, 3 rates depending on terms of lease agreements - Less than 1 year term 0.5 month - 1-3 years term 1.0 month - Over 3 years term 1.5 month Note: Given the assets in the Central Plaza Rama II Project and the Central Plaza Ratchada-Rama III Project the Fund already invested comprise only of shopping complexes, the leasing commission fee as specified in the Property Management Agreement dated August 11, 2005 is a compensation to be made to CPN for procuring new tenants and managing all tenants in the shopping complexes. New Commission Fee Structure to be Proposed for Approval by the Meeting of Unitholders (For Procuring New Tenants and Managing All Tenants in the Shopping Complexes Only) Leasing Commission Fee (based on rental rate of particular tenant) 1. For renewal of lease with existing tenants 0.5 month 2. For entering into new lease agreements, 4 rates depending on terms of lease agreements 2.1 For tenants who make payments on a monthly basis: - Less than 1 year term 0.5 month - From 1 year but less than 3 years term 1.0 month - From 3 years on term 1.5 month 2.2 For entering into lease agreements for more than 3 years with upfront payment of remuneration for leasehold right by tenant 3% of the remuneration paid upfront for leasehold right received from the tenant In addition to amendment of leasing commission fee for procuring new tenants and managing all tenants for shopping complexes, leasing commission fee structure for procuring new tenants and managing all tenants for the office buildings of the Central Plaza Pinklao Project would also be proposed to the Meeting of Unitholders for approval. The details are as below: Leasing Commission Fee Structure for Procuring New Tenants and Managing All Tenants for the Office Buildings Leasing Commission Fee (based on rental rate of particular tenant) 1. For renewal of lease with existing tenants 0.5 month 2. For entering into new lease agreements, 3 rates depending on terms of lease agreements 2.1 For tenants who make payments on a monthly basis: - Less than 3 years term 0.5 month - From 3 years on term 1.0 month 2.2 For entering into lease agreements for more than 3 years with upfront payment of remuneration for leasehold right by tenant 3% of the remuneration paid upfront for leasehold right received from the tenant The Independent Financial Advisor's Opinion Regarding the Reasonableness of the Rate of Leasing Commission Fee In accordance with the Property Management Agreement dated August 11, 2005, the Fund and CPN, as the counterparties in the agreement, are allowed to request for reviewing and considering of the terms and conditions in the agreement after the end of the second accounting year from the date the Property Management Agreement is effective. After that the terms and conditions in the agreement could be reviewed and amended every 3 years or when counterparties deem necessary. The Investment Committee of the Fund passed a resolution on November 2, 2006 to amend leasing commission fee to be paid by the Fund to compensate CPN for procuring new tenants and managing all tenants. The purpose to do so is to adjust leasing commission fee to be paid to CPN to be more in line with increase in the Fund's assets and current market situation. Commission Fee Structure for the Shopping Complexes The components of the existing commission fee structure (for shopping complexes) to be amended and proposed to the unitholder meeting for approval consist of: - Amendment of leasing commission fee for procuring new tenants with 3 year term from 1.0 month to 1.5 months; - Addition of leasing commission fee for procuring new tenants who enter into lease agreements for more than 3 years with upfront payment of remuneration for leasehold right by tenant. The proposed leasing commission fee is 3% of the remuneration paid upfront for leasehold right received from the tenant. In considering and evaluating the reasonableness of the proposed amendment of the leasing commission fee as initially discussed, given no standardized commission fee structure exists in the market, evaluation of the reasonableness of the proposed amendment of the Funds's commission fee structure could not be conducted by comparing with the market rate. This is because leasing commission fee to be paid for different property managers could vary, depending upon location of the properties, types of tenants to be procured as well as track record & experience of property managers themselves. Thus, in evaluating the reasonableness of the proposed amendment of leasing commission fee, the Independent Financial Advisor used information obtained from CPN in relation to commission fee structure that CPN has used as a basis for collecting leasing commission fee from third parties/outside persons. According to information obtained from CPN, it has been employed to manage two shopping complexes run by two different joint ventures in which outside investors have hold majority stakes. One of those outside investors is a foreign firm with specialization in running and managing shopping complexes. In considering the two commission fee structures used as a basis for comparison, it was found that some differences between the two commission fee structures used as a basis for comparison and the one to be used as a basis for collecting fee from the Fund exist. Such differences exist in the area of leasing commission fee to be paid for procuring tenants with less than 3 years term that normally account for a minor portion of tenants structure. However, it could be seen that such leasing commission fee is determined based on lease term in proportion to the leasing commission fee to be paid for procuring tenants with 3 years term that account for a majority portion of tenant structure of most shopping complexes managed by CPN. If considering only the portions of the commission fee structure to be proposed for amendment, namely commission fee to be paid for procuring tenants with 3 years term with a payment of 1.5 months and that to be paid for procuring new tenants who enter into lease agreements for more than 3 years with upfront payment of remuneration for leasehold right by tenant with a payment of 3% of the remuneration paid upfront for leasehold right received from the tenant, it could be found that those existing in the two commission fee structures used as a basis for comparision are the same as those existing in the commission fee structure to be proposed for approval by the meeting of unitholders. Thus, the proposed amendments of leasing commission fee conforms to those applied by CPN to third parties and outside persons. It should be noted that the commission fee structure to be proposed for approval by the meeting of unitholders for applying for procuring new tenants and managing all tenants of the Central Plaza Rama II Project, the Central Plaza Ratchada-Rama III Project and the Central Plaza Pinklao Project is also taken into account in preparing Forecast for 11-month period from February 1-December 31, 2007 as prepared by the Management Company and CPN and reviewed by KPMG Phoomchai Audit Ltd. that is a certified auditor as well as in appraising the value of leasehold rights of the Central Plaza Pinklao Project as conducted by CBRE and TPA, the two independent asset appraisers appointed by the Management Company. Leasing Commission Fee to be Applied for the Office Buildings of the Central Plaza Pinklao Project In considering the leasing commission fee to be additionally paid to CPN for procuring new tenants and managing all tenants of the Office Buildings of the Central Plaza Pinklao Project, it is the view of the Independent Financial Advisor that the leasing commission fee of 0.5 month in case of renewal of leasing term by existing tenants and that of 1 month for procuring new tenants with term of 3 years or more that account for a major portion of the Office Buildings' tenant structure are reasonable as both of them are applicable market rates (Source: Appraisal Report for the Office Buildings of the Central Plaza Pinklao Project dated November 8, 2006 as prepared by an independent asset appraiser). For the leasing commission fee to be paid for procuring new tenants with term of more than 3 years and for procuring new tenants entering into lease agreements for more than 3 years with upfront payment of remuneration for leasehold right by tenant, it was found that no market rates for such commission fees exist. However, from the information obtained from CPN property managers of some office buildings projects would determine leasing commission fee for lease terms other than a 3-year term on a proportional basis using the leasing commission fee of 1 month for lease term of 3 years as a base. Thus, if the leasing commission fee for procuring new tenants with 3 years term is 1 month, the commission fee to be paid is approximately equal to 3 % (1/36) of rentals to be earned over the whole lease term. Thus, using the basis that the leasing commission fee to be paid for procuring new tenants with 3 years term is roughly equal to 3 % of rentals to be earned over the entire lease term, the leasing commission fee of 3% of the remuneration paid upfront for leasehold right received from the tenant for procuring tenants entering into lease agreements for more than 3 years with upfront payment of remuneration for leasehold right is close to the basis and thus acceptable. In regard to leasing commission fee to be paid for procuring new tenants with less than 3 years term that account for a small portion of the Office Buildings' tenant structure, from the information the Independent Financial Advisor obtained from CPN, it was found that, if the tenants of office buildings, most of which are commercial businesses, would enter into a lease term of less than 3 years, their lease terms would be one year or more. Thus, by comparing with the market rate of leasing commission fee of 1 month for procuring new tenants with 3 years term, on a proportional basis, the market rate of leasing commission fee for procuring new tenants with lease term of at least 1 year but less than 3 years should fall in the range between 0.33-1 month, or the average of 0.7 month. Thus, the leasing commission fee of 0.5 month to be collected by CPN for procuring new tenants with less than three years term deems to be reasonable. Development Fee The Investment Committee of the Fund passed a resolution on November 2, 2006 to approve amendment of the Property Management Agreement and its related parts in the Fund Management Project by allowing the application to the Fund of development fee to be paid to CPN for overseeing the improvement and/or development of real properties of the Fund, including its recommendation on the improvement and/or development of real properties of the Fund to enhance their potential and increase the returns of the Fund (Value Enhancement). Prior to entering into any real estate development activities that require payment of development fee, the Property Manager is required to propose the development plan including projected capital expenditures, benefits or income expected to be earned from the property development plan to the Fund's Investment Committee for approval. The development fee is determined based on the rate of 2.00 percent of the total construction value (hard cost) for improvement and/or development of the real properties of the Fund, provided that such hard cost for improvement and/or development includes the cost to repurchase the space to be improved and/or developed from the existing lessees, but shall not include the expense of design, consultation fees and other professional fees and related expenses. ? The Independent Financial Advisor's Opinion Regarding the Reasonableness and Fairness of Development Fee It is the view of the Independent Financial Advisor that the development fee of 2.00 % of the total construction value (hard cost) for improvement and/or development of the real properties of the Fund to be paid to CPN acting as the Fund's Property Manager is reasonable due to the reason as follows: 1. The scope of work and development activities that require payment of development fee aim to add value and enhance the properties' potential to generate more revenue and income From the information obtained from the Fund, the scope of work and activities that require payment of development fee are those other than annual property improvement and maintenance activities or major property renovation to be conducted every 5-10 years. They aim to improve and develop properties and land, with the main goal to enhance efficiency and usage of existing area to generate more income and return to the Fund. 2. The scope of work and activities that require payment of development fee require special expertise and experience to manage and control works and investment with the aim to generate good level of return to the Fund Successful management of a real estate investment project that would provide stable but good return to investors in the long-term requires continuous development and improvement of real estate properties to meet fast-changing market condition and customer demand as well as enhancement of potential of the area in such properties to generate more income. To achieve such objectives require the property manager with expertise and vast experience in terms of marketing and project construction & development. It is the view of the Independent Financial Advisor that with its past successful track record in managing many shopping complexes, CPN should be in the good position to perform activities required to sustain the competitive strengths of the Fund's real estate investments and provide good return to the Fund's unitholders on a continuous basis. 3. The activities of developing and improving real estate that require payment of development fee must be approved in accordance with the Fund's approval procedures to ensure it would obtain appropriate level of return From the information obtained from the Fund, it is required that performing activities of developing and improving real estate to enhance its potential must go through the Fund's approval procedures. The Property Manager must propose the property improvement & development plan with details regarding projected capital expenditure and benefit/return expected to be generated by the investment plan to the Fund's Investment Committee for approval. In making any investment decision, the Investment Committee will take into account benefit and return the Fund would obtain from the real estate development plan. 4. The development fee of 2.00 % of the total construction value (hard cost) for improvement and/or development of the real properties of the Fund is the normal rate CPN also charges other projects in which unconnected investors also hold significant stakes No standard/market rate for the cost of developing and improving real estate exist as the scope of work and activities required may vary, depending on negotiation and agreement between the counterparties as well as experience & expertise of developers. Thus, in evaluating the fairness and reasonableness of development fee of 2 % CPN will charge the Fund, the Independent Financial Advisor considers the normal rate of development fee CPN charges outside persons. From the information obtained from CPN, it is found that CPN applied the development fee of 2 % to a shopping complex that is a joint venture between CPN and outside juristic persons and another shopping complex owned by a property fund in which CPN and outside juristic persons that are not CPN's connected persons holds 49 % and 51 % stakes respectively. Thus, the development fee of 2 % of the total construction value (hard cost) for improvement and/or development of the real properties, but excluding the expense of design, consultation fees and other professional fees and related expenses could be regarded as the normal rate CPN charges outside persons.