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2014

Champion Real Estate Investment Trust (stock code: 2778) is a Hong Kong collective investment scheme authorised under section 104 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

ANNUAL REPORT 2014

TRUST

PROFILE

TRUST

OBJECTIVES

Champion Real Estate Investment Trust is a trust formed to own and invest in income-producing office and retail properties and is one of the 10 largest REITs by market capitalization in the Asia excluding Japan region. The Trust’s focus is on Grade-A commercial properties in prime locations. It currently offers investors direct exposure to 2.93 million sq. ft. of prime office and retail floor area by way of two landmark properties in Hong Kong, Citibank Plaza and Langham Place, one on each side of the Victoria Harbour.

Champion REIT’s key objectives are to provide investors with stable and sustainable distributions and to achieve long-term capital growth. This aim of providing attractive total returns will be achieved by, among other things, proactive management of the properties in the Trust’s portfolio and the selective acquisition of properties that will enhance distributions.

REVIEW02 TimelineofSignificantEvents

03 FiveYearFinancialSummary

04 Chairman’sReporttoUnitholder

06 CEO’sReview

CONTENTS

PORTFOLIO26 PropertyAt-a-glance

28 CitibankPlaza

34 LanghamPlace

REPORTS42 ValuationReport

69 Trustee’sReport

70 CorporateGovernanceReport

93 ConnectedPartyTransactionsReport

102 DisclosureofInterests

FINANCIALS106 IndependentAuditor’sReport

108 FinancialStatements

155 MajorRealEstateAgents andContractors

156 PerformanceTable

CORPORATEINFORMATION

MANAGEMENT10 BoardofDirectors

14 SeniorManagement

16 ManagementPhilosophy

17 FinancialReview

20 EnvironmentalandSocialReview

2 Champion Real Estate Investment Trust

REVIEW

TIMELINE OFSIGNIFICANTEVENTS

2014

2015

JAN15

JAN20 MyFavouriteShoppingMallAwards2014/15:

LanghamPlaceMallvotedoneofHK’stop10Malls

RolloverofHK$7.5bnDebttoa3-yearHK$3.7bnand5-yearHK$3.8bnbankloansMAY

24

FEB27

Announcementof2014InterimResultsAUG12

MAR23

QualityProperty&FacilityManagementAwards: CitibankPlazawontheGrandAwardinOfficeBuildingManagement

Paymentof2014InterimDistributionOCT

9

MAY22

EGMApprovingExpansionoftheREIT’sInvestmentScopeandAmendmentstoDistributionFormulaDEC

23

MAY28

ClosureofRegisterofUnitholders

AnnualGeneralMeeting

Paymentof2014FinalDistribution

Announcementof2014FinalResults

Publicationof2014AnnualReport

SEP12

MAY18-22

RICSHongKongAwards2014: CitibankPlazateamnamedPropertyManagementTeamoftheYear

3Annual Report 2014

Fortheyearended31December

2010 2011 2012 2013 2014 PROFIT(HK$ MIL)

$1,720 $1,776 $1,886 $1,989 $2,080 TotalRentalIncome

($211) ($214) ($220) ($241) ($280) NetOperatingExpenses

$1,509 $1,562 $1,666 $1,748 $1,800 NetPropertyIncome

$5,309 $6,493 $4,160 $2,199 $1,929 ProfitAfterTax

2010 2011 2012 2013 2014 DISTRIBUTIONS(HK$)

$1,084 $1,170 $1,254 $1,271 $1,234 DistributableIncome(mil)

$1,067 $1,111 $1,186 $1,201 $1,171 DistributionAmount(mil)

$0.216 $0.224 $0.209 $0.210 $0.204 DistributionperUnit

2010 2011 2012 2013 2014 FINANCIALRATIOS

12.3% 12.0% 11.7% 12.1% 13.5% ExpenseRatio

94.8% 94.4% 94.6% 94.5% 94.8% PayoutRatio

28.4% 25.0% 20.4% 23.4% 23.1% GearingRatio

2010 2011 2012 2013 2014 VALUATION(HK$)

$50,223 $54,857 $58,297 $61,509 $62,438 GrossValueofPortfolio(mil)

$6.72 $7.82 $7.80 $7.94 $8.06 NetAssetValueperUnit

2010 2011 2012 2013 2014 OPERATIONALSTATISTICS

80.8% 90.0% 88.7% 84.8% 75.4% CitibankPlazaOfficeOccupancy

$84.67 $85.15 $85.12 $84.60 $77.53 ...andPassingRent(HK$psf)

99.4% 96.8% 99.2% 99.0% 100.0% LanghamPlaceOfficeOccupancy


99.2% 100.0% 100.0% 100.0% 100.0% LanghamPlaceMallOccupancy


FIVEYEAR

FINANCIALSUMMARY

REVIEW


CHAIRMAN’S REPORTTOUNITHOLDER

REVIEW

TheTotalRentalIncomeofChampionREITfor2014

increased4.6%toHK$2,080 million. WhilerentalincomeatCitibankPlazafell3.7%toHK$1,064 million becauseofthedepartureofamajortenantattheendofthethirdquarter,thestrongperformanceofLanghamPlacewasenoughtooffsetthedecline;thecombinedofficeandshoppingmallrentalincomeofLanghamPlaceroseby14.9%toHK$1,016 million.

NetPropertyOperatingExpensesrose16%toHK$280million,primarilyduetohigherleasingcommissionsatCitibankPlazaandanincreaseinnetbuildingmanagementexpensesatLanghamPlaceMall.NetPropertyIncomeimprovedby3.0%overthepreviousyear,toHK$1,800 million.ProfitAfterTaxdecreasedfromHK$2,199 million in 2013 toHK$1,929million,mainlyduetolowerrevaluationgainsofonlyHK$890millionascomparedtoHK$1,117millionfor2013.

Excludingrevaluationgainsandotheritemsthatarenon-cashinnaturefromtheYear’saccountingprofit,DistributableIncomedecreased2.9%toHK$1,234million.DistributableIncomewaslowerthisyeardespitethebetterNetPropertyIncomebecauseofhigherfinancingcostsandhighertaxation.InterestexpensesincreasedHK$37millionfromahigheraverageinterestrateaftertheHK$7.5billionrefinancingofbankloansinthemiddleoftheYearandbecauseofincrementalfinancingcostsassociatedwiththe

acquisitionofadditionalfloorsatCitibankPlazain2013.TherewasalsoaHK$48millionincreaseintaxespayableintheabsenceofone-offtaxdeductionsinthesecondhalfof2014.AfterretentionofHK$63 million,theDistributionAmountisHK$1,171million.DistributionPerUnit(“DPU”)forthesecondhalfoftheyearisHK$0.0998.CombinedwiththeHK$0.1039paidoutforthefirsthalf,thetotalDPUfor2014isHK$0.2037,adecreaseof3.0%comparedto2013.

TheappraisedvalueoftheREIT’spropertiesatyear-end2014wasHK$62,438millioncomparedtoHK$61,509millionasof31December2013.Asaresult,NetAssetValueperUnitincreasedtoHK$8.06fromHK$7.94ayearago.AsnoadditionaldebtwasincurredduringtheYear,therewasalsoacorrespondingdecreaseinGearingRatiofrom23.4%to23.1%.

In2015,weareexpectingsustainedincomegrowthatLanghamPlace.ItwillnonethelessbeinsufficienttocompensateforthelowerincomeatCitibankPlaza.ThereshouldbeaweakeninginTotalRentalIncomeasitwilltaketimefortheincomefromrelettingatCitibankPlazatobefullyrealised.Therefore,DPUismostlikelytobelowerin2015beforerecoveringin2016.Wewillcontinuetoactivelymanageourtwotrophyassetstomaximizerentalincomeoverthelongterm.

LO Ka Shui Chairman

0.20

89

DISTRIBUTIONS NETASSETVALUEPERUNIT

(HK$)

DR.LOKASHUICHAIRMAN

TheTotalRentalIncomeof ChampionREITfor2014increased 4.6%toHK$2,080 million.

TheappraisedvalueoftheREIT’spropertiesatyear-end2014wasHK$62,438millioncomparedtoHK$61,509millionasof31December2013.Asaresult,NetAssetValueperUnitincreasedtoHK$8.06 fromHK$7.94ayearago.

CEO’S REVIEW

REVIEW

ApotentialbrightspotfortheHongKongfinancialmarketsisthenewfinancialliberalizationmeasuresbetweenHongKongandChina.

WhilethechangeinspendingpatternsofmainlandvisitorshassignificantlyaffectedtheluxuryretailsegmentinHongKong,theirunabatedappetite

forcosmeticsandmid-pricedfashiongoodshasbeenaboon

toLanghamPlaceMall.

MR.LEECHINGMING, ADRIANCHIEFEXECUTIVEOFFICER

7Annual Report 2014

CITIBANKPLAZA

Whiletheglobalbusinessenvironmentwasgenerally

morepositivein2014,multinationalbanksremainedcautiousaboutexpansionasprofitsweresuppressedbynonoperationalfactors.Asaresult,newdemandforofficesfromfinancialcompanieswasconstrainedtothefundmanagementandsecuritiessectorsthattypicallyrequiresmallerspaces.Onabrighternote,thelackoflargespacesinsecondaryofficedistrictshascurtaileddecentralizationwhilethegenerallackofnewsupplyofspacewithinCentralhaslentsupporttooveralloccupancyandrentalrates.

Theyear-endofficeoccupancyatCitibankPlazawas75.4%comparedto84.8%attheendoflastyear.Thisfallinoccupancywastheresultofthe

expiryofamajorlease,representing14.3%ofthebuildingfloorarea,attheendofSeptember2014.Progresshassincebeenmadeinre-lettingsomeofthespaces.Year-endaskingrentswereatHK$75-80persq.ftlettable.AttheserentallevelsthePropertyhasentered

aphaseofnegativerentalreversionastenanciesarerolledover.Passingrents(theaveragerentalrateofexistingtenanciesweightedbyfloorarea)atCitibankPlazahavecomedownfromHK$84.60persq.ft.toHK$77.53persq.ft.overthepast12months.

FY 2014HK$’000

FY2013HK$’000

%CHANGE

Citibank Plaza

RentalIncome 1,064,055 1,105,007 -3.7%

NetOperatingExpenses 131,886 114,985 +14.7%

NetPropertyIncome 932,169 990,022 -5.8%

Langham Place Office Tower

RentalIncome 281,386 252,982 +11.2%


NetPropertyIncome 253,111 231,872 +9.2%

Langham Place Mall

RentalIncome 734,732 631,095 +16.4%


NetPropertyIncome 615,093 525,908 +17.0%

Place Net Operating Expenses

RENTALINCOME(HK$ million) NETPROPERTYINCOME

(HK$ million)


CEO’SREVIEW

REVIEW

ThelowerpassingrentandloweroccupancyresultedinadropinrentalincometoHK$1,064 million. The dropwaslimitedto3.7%onlybecausethemajorincreaseinvacancytookeffectinthefourthquarter.AtthesametimenetoperatingexpensesincreasedbyHK$16.9 million. The increaseinoperatingexpenseswasmainlycausedbyaHK$17.6 million increaseinleasingcommissioncosts,whicharechargedoffinlumpsumatthecommencementofnewleases.ThenetpropertyincomeofCitibankPlazawasHK$932million,a5.8%decreaseyear-on-year.

LANGHAMPLACEOFFICE TOWER

OutsideofCentral,theresilienceofthenon-financialsectorshassustaineddemandforspaceintheotherkeyofficedistrictsofHongKongwherevacancylevelshaveremainedinthelowsingledigits.Rentshavegenerallybeenwellsupported,underpinningthestrongperformanceoftheLanghamPlaceOfficeTowerin2014.

AlthoughtherewassomedowntimeforafewfloorsinthesecondhalfoftheYear,by31December2014theoccupancyrateattheOfficeTowerwasbackto100%.Askingrents(basedonGrossFloorArea)forspaceatLanghamPlaceOfficeTowerweremaintainedatHK$38-45persq.ft.

Therecontinuedtobepositiverentalreversionandover2014thepassingrentrateincreasedbyafurtherHK$3.00,fromHK$32.86toHK$35.87.Thiswasaresultoftherolloverof33%ofthefloorareaduringtheYear.

RentalincomefortheLanghamPlaceOfficeTowerwasHK$281 million, an11.2%increaseover2013.Netoperatingexpensesincreased33.9%toHK$28million,drivenbyaHK$4 millionincreaseinrentalcommissionassociatedwiththere-lettingofthemid-yearvacancies.NetPropertyIncomegrew9.2%fromHK$232 milliontoHK$253 million.

LANGHAMPLACEMALL

WhileHongKongretailsalesin2014weresignificantlyaffectedbyreducedtouristspendingonjewelryandluxuryitems,performanceatLanghamPlaceMallhasbeenresilient.TheMall’sfocusoncosmeticsandmid-pricefashionandlimitedexposuretotheluxurysegmenthaslargelysheltereditfromtheretailslump.Tosupporttenants,theMallalsoundertookmorepromotionalactivitiesduringtheyear.Theaveragesalespersq.ft.oftenantsshowedanincreaseof9.8%year-on-year,whichsignificantlyoutperformedtheoverallHongKongretailmarket,whichdeclined0.2%.Theout-performanceofLanghamPlace

mainlyreflectedthestronggrowthinthefirstthreequarters.Businessinthefourthquarterwasinevitablyaffectedby“OccupyMongkok”,whensomemainroadsservingtheMallwereclosedinOctoberandNovemberbycivilprotests.TheiraftermathscontinuedtodampenshoppingsentimentsthroughDecember.Duringtheperiod,afairnumberoftenantsthattargetlocalconsumers,includingmanyfoodandbeverageoutlets,suffereddouble-digitdropsintheirsales.OverallsalesattheMallforthefourthquarterdroppedonly1%year-on-year,thankstothestrongperformanceofthecosmeticstradeaswellassomepopularnewtenantsthatcommencedtradinginthelatterpartoftheYear.

Overthetwelvemonthsof2014,tenanciesrepresenting36%oftheMall’sfloorareawererolledover,drivinga14.7%increaseinpassingbaserents(basedonlettablefloorarea)fromHK$144.26persq.ft.toHK$165.44persq.ft.IncomefromturnoverrentwasonlymarginallyloweratHK$96.5million(2013:HK$99million),equivalenttoanadditionalHK$25.2persq.ft.permonthinincrementalincomeoverthebaserents.Thisindicatesthatthesalesgrowthofthetenantshasout-pacedtheheftyriseinbaserents.

9Annual Report 2014

Thepositivebase-rentalreversion,togetherwithsteadyturnoverrentincome,resultedina16.4%increaseinrentalincomefromHK$631 milliontoHK$735million.Netoperatingexpenseswereup13.7%toHK$120millionduetoanHK$11.4 millionincreaseinnetbuildingmanagementexpensesasmarketlabourcostscontinuedtoescalateandmaintenancecostsalsoincreased.Asincomeincreasedfasterthanexpenses,however,NetPropertyIncomeincreasedby17.0%,toHK$615 million.

OUTLOOK

Theglobaleconomicoutlookismixed.TheUnitedStateseconomyisstrongerthanithasbeenforyears.Therecentcollapseincrudeoilpriceshaspushedasideinflationaryfearsevenasunemploymentisata6yearlow.Interestratesmayremainlowforalongerperiodthanexpected.However,notallisrosy.TheJapaneseeconomyremainsanemicwhilepartsofEuropeareonthevergeofrecession.GrowthintheChineseeconomyalsoappearstobeunderpressure.ApotentialbrightspotfortheHongKongfinancialmarketsisthenewfinancialliberalizationmeasuresbetweenHongKongandChina,suchastherecentlaunchofShanghai-HongKongStockConnectandtheimpendingHongKong-ShenzhenStockConnect.

CitibankPlazaisjustenteringthenadirofitsincomecycle.Majorvacanciesdidnotoccuruntilthelast3monthsin2014andrentalincomeisexpectedtofallin2015evenasoccupancyisbeingrebuilt.Furthermore,theweightedaveragerentalrateoftenanciesexpiringin2015isconsiderablyhigherthanthecurrentspotrents.Therewillbenegativerentalreversionasleasesarerolledover,butfortunatelyonly9.9%oftheleasesbyfloorareawillbeexpiringin2015.Inrecentmonths,newdemandforofficespacefromPRCfundmanagementcompaniesandotherfinancialservicesprovidershashelpedstabilizedrentsinCentral.MeaningfulprogressisbeingmadeinrefillingthevacanciesatCitibankPlaza.Sinceyear-end,incrementallettingsamountto3.5%oftotalfloorarea.

In2015,therewillbemorenewsupplyofofficespaceintheKowloonEastdistrict.TherestoftheKowloonPeninsulaisalreadyfeelingitseffectsandrentratesappeartohaveplateauedafteramulti-yearrally.Nevertheless,wecontinuetoexpectaveryhighlevelofoccupancyattheLanghamPlaceOfficeTowerasthemajorityoftheleasesexpiringin2015havebeenrenewed.Rentalincomeisexpectedtocontinueonitsuptrend

becauseofincomemomentumfromrentalreversions.Inthemediumterm,theprimelocationofMongkokandthebuilding’sfocusonlifestyletradesshouldcontinuetosupportoccupancyandrentalincome.

WhilethechangeinspendingpatternsofmainlandvisitorshassignificantlyaffectedtheluxuryretailsegmentinHongKong,theirunabatedappetiteforcosmeticsandmid-pricedfashiongoodshasbeenaboontoLanghamPlaceMall.TheMallhasbeenreinforcingitspositionasoneofHongKong’smostpopulardestinationsforChinesetourists.SpendingbyPRCtouristshasremainedrobustattheMall,thoughthereremainsalingeringeffectfromlastyear’sOccupyprotestsonourdomesticshoppers.ThereshouldcontinuetobeexcellentincomegrowthfromLanghamPlaceMallin2015,asthefullimpactof2014increaseinbaserentsfor36%offloorareawillbefinallyreflected.Leasesrepresenting31%offloorareaareexpiringorsubjecttorentreviewin2015.Weareconfidentthatthevastmajorityoftheseleasescanberolledoverwithmeaningfulupwardrentaladjustments.

LEE Ching Ming, Adrian ChiefExecutiveOfficer

10 ChampionRealEstateInvestmentTrust

MR.CHAMOUSING, PAYSONIndependent

Non-executiveDirector

DR.LOKASHUIChairmanand


MR.LOKAISHUINon-executiveDirector

MR.IPYUKKEUNG, ALBERT


MR.SHEKLAIHIM, ABRAHAM

Independent Non-executiveDirector

BOARDOF DIRECTORS

MANAGEMENT

TheBoardoftheREITManagerprincipallyoverseestheday-to-daymanagementoftheREIT

Manager’saffairsandtheconductofitsbusinessandisresponsiblefortheoverallgovernanceof

theREITManager.TheBoardwillalsoreviewmajorfinancialdecisionsandtheperformanceofthe

REITManager.TheBoardcurrentlyconsistsoftheChairman,theChiefExecutiveOfficer,3Non-

executiveDirectorsand3IndependentNon-executiveDirectors.

11Annual Report 2014

MR.LEECHINGMING, ADRIAN

ExecutiveDirectorand ChiefExecutiveOfficer

MR.CHENGWAICHEE, CHRISTOPHER

Independent Non-executiveDirector

MR.HOSHUTKANNon-executiveDirector

DR.LOKASHUIaged68,wasappointedtheChairman,aNon-executiveDirectorandmembersofAuditCommitteeandDisclosuresCommitteeoftheREITManagerin2006.HeisalsoaDirectorofallspecialpurposevehiclesofChampionREIT.Dr.LoistheChairmanandManagingDirectorofGreatEagleHoldingsLimited,andtheChairmanandNon-executiveDirectoroftheManagerofthepubliclylistedtrust,LanghamHospitalityInvestments.Heisan

IndependentNon-executiveDirectorofShanghaiIndustrialHoldingsLimited,PhoenixSatelliteTelevisionHoldingsLimited,ChinaMobileLimitedandCitye-SolutionsLimited,allofwhicharelistedonTheHongKongStockExchange.HeisalsoaVicePresidentoftheRealEstateDevelopersAssociationofHongKong,atrusteeoftheHongKongCentreforEconomicResearch,theViceChairmanofTheChamberofHongKongListedCompaniesandaMemberoftheExchangeFundAdvisoryCommitteeoftheHong

KongMonetaryAuthority.

Dr.LograduatedfromMcGillUniversitywithaBachelorofScienceDegreeandfromCornellUniversitywithaDoctorofMedicine(M.D.)Degree.HewascertifiedinInternalMedicineandCardiology.HehasoverthreedecadesofexperienceinpropertyandhoteldevelopmentandinvestmentbothinHongKongandoverseas.HeisanelderbrotherofMr.LoKaiShui,aNon-executiveDirectoroftheREITManager.


BOARDOFDIRECTORS

MANAGEMENT

MR.HOSHUTKAN

aged66,wasappointedaNon-executiveDirectoroftheREITManagerin2007.Hehasoverthirtyyearsofexperienceinthepropertysector.HeiscurrentlyservingasanExecutiveDirectorandCo-ManagingDirectorofKerryPropertiesLimited,alistedcompanyinHongKong.HeisalsoadirectorofShangProperties,Inc.whichislistedinthePhilippines.

Mr.HoholdsaMasterofBusinessAdministrationDegreefromtheUniversityofEastAsia.

MR.IPYUKKEUNG,ALBERT

aged62,hasbeenaDirectoroftheREITManagersince2011.HewasanIndependentNon-executiveDirectoroftheREITManagerpriortohisre-designationasaNon-executiveDirectoroftheREITManagerinJune2014.Mr.Ipisaninternationalbankingandrealestateprofessionalwithover30yearsofbankingexperienceinHongKong,AsiaandUnitedStates.HewasNorthAsiaRealEstateHead,HongKongCorporateBankHead,TransactionBankingHead–HongKongandAsiaInvestmentFinanceHead(GlobalWealthManagement)ofCitigroup.HewasformerlyaManagingDirectorofCitigroupandManagingDirectorofInvestmentsinMerrillLynch(AsiaPacific).Mr.IpistheExecutiveDirectorandChiefExecutiveOfficeroftheManagerofthepubliclylistedtrust,LanghamHospitalityInvestments.HeisalsoanIndependentNon-executiveDirectorofHopewellHighwayInfrastructureLimited,NewWorldChinaLandLimited,TOMGroup

Limited,AEONCreditService(Asia)CompanyLimited,PowerAssetsHoldingsLtd.andLifestyleInternationalHoldingsLimited,allofwhicharelistedontheMainBoardoftheStockExchangeofHongKong.

Withapassiontoserveineducation,Mr.IpisanAdjunctProfessorofLingnanUniversityandCityUniversityofHongKong.HeisalsoaCouncilMemberofLingnanUniversity,aMemberoftheInternationalAdvisoryCommitteeatUniversityofMacauandanExecutiveFellowinAsiaofWashingtonUniversityinSt.Louis.Mr.IpholdsaBachelorofScienceDegreeatWashingtonUniversityinSt.Louis(summacumlaude),andMasterofScienceDegreesatCornellUniversityandCarnegie-MellonUniversity.HewasanMBAlectureratUniversityofPittsburgh,USA.Mr.IpisanHonoraryFellowofVocationalTrainingCouncil.Mr.IpwasappointedasaMemberofLegalAidServicesCouncilinSeptember2014andwasappointedtotheBoardofGovernorsofWorldGreenOrganisationLimitedeffectivefrom2015.

MR.LOKAISHUI

aged55,wasappointedaNon-executiveDirectoroftheREITManagerin2006.HeisalsoaDirectorofallspecialpurposevehiclesofChampionREIT.Mr.LoistheDeputyManagingDirectorofGreatEagleHoldingsLimited,acompanywhosesharesarelistedontheHongKongStockExchange,andthefounderofSunFookKongGroupLimited.Hehasmorethanthirtyyearsofpropertydevelopment,investmentandbuildingconstruction

experienceandhasbeeninvolvedinnumerousconstructionprojectsbothinpublicandprivatesectors.

Mr.LograduatedfromColumbiaUniversitywithaBachelor’sDegreeinEngineering.HeisayoungerbrotheroftheChairman,Dr.LoKaShui.

MR.LEECHINGMING,ADRIAN

aged63,wasappointedtheChiefExecutiveOfficer,anExecutiveDirector,aResponsibleOfficerandtheChairmanofDisclosuresCommitteeoftheREITManagerin2008.HeisalsoaDirectorofallspecialpurposevehiclesofChampionREIT.Mr.Leehasacquiredextensivepropertyandbankingindustryexperienceoveracareerspanningoverforty-oneyears.PriortojoiningtheREITManager,Mr.LeeheldseniormanagementpositionsformorethanfourteenyearsintheGreatEagleGroupofcompanies,amajorlistedrealestatecompanyinHongKong,wherehisresponsibilitiesincludedthemanagementofmarketing,leasingandsalesactivities,bankingrelationships,corporatecommunicationsandinvestorrelations.HewasalsoaDirectorandtheGeneralManagerofEaglePropertyManagement(CP)Limited,thePropertyManagerofChampionREIT.Mr.Leealsohasovertwodecadesofcorporaterealestatelendingandadvisoryexperiencewithamultinationalbankinginstitution.Mr.LeeisatpresentaNon-executiveDirectorofCinderellaMediaGroupLimited.

Mr.LeegraduatedfromtheUniversityofHongKongwithaBachelorofSocialSciencesDegree.


MR.CHAMOUSING,PAYSON

aged72,wasappointedan

IndependentNon-executiveDirector

oftheREITManagerin2006.Mr.

ChaistheChairmanoftheBoard

ofDirectorsofHKRInternational

Limited,theChairmanandNon-

executiveDirectorofHanison

ConstructionHoldingsLimited

andanIndependentNon-executive

DirectorofNewWorldDevelopment

CompanyLimited,allofwhich

arelistedontheHongKongStock

Exchange.HeisalsoanIndependent

Non-executiveDirectorofHongkong

InternationalThemeParksLimited

andtheChairmanofMingly

Corporation.HeisalsoaDirectorof

LBJRegentsLimitedandCCMTrust

(Cayman)Limited,bothofwhich

aresubstantialshareholdersofHKR

InternationalLimited.

Mr.ChaholdsanHonorary

DoctorateDegreeofSocialScience

fromCityUniversityofHongKong.

Hehasoverfortyyearsofexperience

inpropertydevelopment.

MR.CHENGWAICHEE,CHRISTOPHER

aged66,hasbeenaDirectorofthe

REITManagersince2006.Hewasa

Non-executiveDirectoroftheREIT

Managerpriortohisre-designation

asanIndependentNon-executive

DirectoroftheREITManager

inMay2014.Mr.Chengisthe

ChairmanofWingTaiProperties

Limited.HeisanIndependentNon-

executiveDirectorofseverallisted

companies,includingNWSHoldings

Limited,NewWorldChinaLand

LimitedandKingboardChemical

HoldingsLimited.Heisalsoadirector

ofTemasekFoundationCLGLimited

andaNon-executiveDirectorofThe

HongkongandShanghaiBanking

CorporationLimited.Mr.Cheng

playsanactiveroleinpublicservice.

HeisacouncilmemberofThe

UniversityofHongKong,amember

oftheBoardofOverseersatColumbia

BusinessSchool,amemberofthe

President’sCouncilonInternational

ActivitiesofYaleUniversity,asteward

ofTheHongKongJockeyClub,the

formerChairmanoftheHongKong

GeneralChamberofCommerce

andamemberofJudicialOfficers

RecommendationCommissionofthe

GovernmentoftheHKSAR.

Mr.ChengholdsaDoctoratein

SocialScienceshonoriscausafrom

TheUniversityofHongKonganda

DoctorateinBusinessAdministration

honoriscausafromTheHongKong

PolytechnicUniversity.Hegraduated

fromtheUniversityofNotreDame,

IndianawithaBachelor’sDegreein

BusinessAdministrationandfrom

ColumbiaUniversity,NewYork

withaMaster’sDegreeinBusiness

Administration.

MR.SHEKLAIHIM,ABRAHAM

aged69,wasappointedan

IndependentNon-executive

Directorin2006.Heisamember

ofDisclosuresCommitteeandthe

ChairmanofAuditCommitteeof

theREITManager.Mr.Shekisa

memberoftheLegislativeCouncil

fortheHKSARrepresenting

therealestateandconstruction

functionalconstituencysince2000

andaDirectorofTheHongKong

MortgageCorporationLimited.

Mr.ShekistheChairmanandan


ofChuang’sChinaInvestments

Limited,theViceChairmanandan


ofITCPropertiesGroupLimited,

andanIndependentNon-executive

DirectorofMTRCorporation

Limited,MidasInternationalHoldings

Limited,PaliburgHoldingsLimited,

LifestyleInternationalHoldings

Limited,NWSHoldingsLimited,

Chuang’sConsortiumInternational

Limited,ITCCorporationLimited,

HopHingGroupHoldingsLimited,

CountryGardenHoldingsCompany

Limited,SJMHoldingsLimited,

DorsettHospitalityInternational

Limited,ChinaResourcesCement

HoldingsLimited,LaiFung

HoldingsLimitedandCosmopolitan

InternationalHoldingsLimited,all

ofwhicharecompanieswhoseshares

arelistedonTheStockExchangeof

HongKongLimited.Heisalsoan


ofRegalPortfolioManagement

Limited(managerofthepubliclylisted

RegalREIT)andJetstarHongKong

AirwaysLimited.

Mr.Shekgraduatedfromthe

UniversityofSydneywithaBachelor

ofArtsdegree.

MR.LEECHINGMING, ADRIANChiefExecutiveOfficer

MS.ADAWONGDeputyChiefExecutiveOfficer

MR.PATRICKCHOOChiefInvestmentOfficer


SENIOR MANAGEMENT

MANAGEMENT

TheREITManager,EagleAssetManagement(CP)Limited,ischargedwiththeresponsibilityofmanagingtheassetsofChampionREITforthebenefitofUnitholders.Itisresponsibleforensuring

compliancewiththeapplicableprovisionsoftheREITCode,theSecuritiesandFuturesOrdinanceandotherrelevantlegislation.

Aspartofitsduties,itwillsetthestrategicdirectionandriskmanagementpoliciesofChampionREIT,appointandsuperviseserviceproviders,andinitiatetheacquisition,divestmentorenhancementofassets.CommunicationwithinvestorsandotherstakeholdersisanotherroleoftheREITManager.

Mr.Lee,aged63,asChiefExecutiveOfficer,isresponsibleforplanningthestrategicdevelopmentofChampionREITandensuringthatChampionREITisoperatedinaccordancewithstatedinvestmentstrategy,policiesandregulations.Additionally,heisresponsiblefortheday-to-dayoperations.Mr.LeeisaResponsibleOfficerasdefinedundertheSecuritiesandFuturesOrdinance.

BiographicalinformationonMr.Leecanbefoundonthepagehighlightingtheboardofdirectors,ofwhichheisamember.

Mr.Choo,aged49,isresponsibleforidentifyingandevaluatingpotentialacquisitionsorinvestmentsandforinvestorrelations.HeisalsoresponsibleforthecapitalstructuringofChampionREIT,includingtheplanningandoverseeingofcapitalraisingactivitiesfromthemarket.Mr.Choohasover20yearsofassetmanagementexperienceinHongKongandSingaporeasalicensedfundmanagerandiswellacquaintedwiththeoperationalandregulatoryenvironmentinvolvingmulti-investortruststructuresregisteredinHongKong.Inpreviousjobs,hehasledinvestmentteamsatvariouswellestablishedassetmanagementcompanies,managingprivateassets,publicauthorizedunittrustsandMandatoryProvidentFundmastertrustfunds.

Mr.ChoograduatedmagnacumlaudefromtheUniversityofPennsylvaniawithaBachelorofScienceinEngineeringdegree.

Ms.Wong,aged34,isresponsibleforassistingCEOtooverseeday-to-dayoperationsandsetstrategicdirectionforChampionREIT.Shehasacquiredover10yearsoffinanceindustryexperience.PriortojoiningtheREITManager,Ms.Wongworkedatareputableinternationalinvestmentbank’sHongKongcoverageteamandexecutednumbersoflandmarkIPOs,capitalmarketsfund-raisingsandstrategicM&Atransactions.

Ms.WonggraduatedfromUniversityofMichigan(AnnArbor)–RossSchoolofBusinesswithaBachelorofBusinessAdministrationdegree.

MS.SUNGKARWAI,ROSANASeniorFinanceandOfficeAdministrationManager

MR.LAW,DAVIDComplianceManager

MR.YUENCHIHANG, TONYInternalAuditor

15AnnualReport2014

MR.KWONGCHIKWONGChiefOperatingOfficer

Ms.Sung,aged40,isprimarilyresponsibleforthefinancialreportingandgeneralofficeadministrationofChampionREIT.Herdutiesincludereviewingmanagementaccounts,maintainingprofitandcashflowforecastsandthereportingoffinancialreturnstoregulators.Withmorethan15yearsofaccountingandauditexperience,Ms.Sunghadpreviouslyworkedasasenioraccountantatalistedcompanyandearlierinhercareerwasemployedbyareputablecertifiedpublicaccountantsfirmtoperformauditduties.

Ms.SungholdsaMasterofProfessionalAccountingdegreefromtheHongKongPolytechnicUniversityandaBachelorofBusinessAdministrationdegreewithmajorinAccountancyfromtheChineseUniversityofHongKong.SheisalsoanassociatememberofHongKongInstituteofCertifiedPublicAccountantsandaFellowoftheAssociationofCharteredCertifiedAccountants.

Mr.Law,aged46,isresponsibleforformulatinginternalcontrolproceduresandensuringthemanagementandoperationalcomplianceofChampionREITwithstatutoryrequirementsandregulations.PriortojoiningtheREITManager,Mr.Lawworkedinvariouslegalfirms,anestatedeveloperandaninternationalinsurancecompany,performingparalegalservicesandcomplianceduties.

Mr.LawholdsaBachelorofLawsfromtheUniversityofLondonandaHighDiplomainLegalExecutiveStudiesfromtheHongKongPolytechnicUniversity.

Mr.Yuen,aged40,isresponsibleforreviewingtheaccuracyandcompletenessofrecordsofoperationsandtransactionsofChampionREIT.Aspartofhisduties,heensuresinternalcontrolsystemsfunctionproperlyandprovidesregularreportstotheauditcommitteeoftheboardofdirectors.PriortojoiningtheREITManager,Mr.Yuenworkedasaninternalauditoratawell-recognizedlistedpropertycompany.Hehasover10yearsofexperienceinthefieldofinternalaudit.Earlierinhiscareer,heperformedexternalauditdutieswhileworkingattworeputablecertifiedpublicaccountantsfirms.

Mr.YuenholdsaBachelorofCommercedegreeinProfessionalAccountingfromMacquarieUniversity.Heisalsoamemberof CPAAustralia.

Mr.Kwong,aged55,isresponsibleforformulatingthebusinessplansofChampionREIT’spropertiesandsupervisingthepropertymanagementteamwithaviewtomaximizingrentalincomeviaactiveassetmanagement.Mr.Kwonghasmorethan20yearsofexperienceintheindustryandhasheldavarietyofmanagementandsupervisoryrolesinareasofleasingandsalesofproperties,formulationandimplementationofmarketplans,marketresearch,siteacquisitions,feasibilitystudies,liaisonwithgovernmentauthoritiesandexternalprofessionalsandadministration.

Mr.KwongholdsaBachelorofArtsdegreefromtheUniversityofHongKong.


MANAGEMENT

MANAGEMENT PHILOSOPHY

ASSETMANAGEMENTSTRATEGY

ACQUISITIONSTRATEGY

TheREITManagerremainscommittedtoprovidingUnitholderswithattractivetotalreturnsinthe

formofstableandsustainableDistributionsperUnitandlong-termgrowthinNetAssetValueper

Unit.Itwillachievethisthroughproactiveassetmanagementandtheselectiveacquisitionofproperties.

TheREITmanagementteam,workingcloselywiththepropertymanagementteam,willproactivelymanageitsproperties,andachievethefollowing:

TheREITManagerintendstoactivelypursueyieldenhancingopportunitiesthroughtheadditionofnewincome-producingcommercialproperties.Thefollowinginvestmentcriteriawillbeusedintheevaluationofacquisitionopportunities:

MAXIMIZERENTALINCOME

byoptimizingrentalincomefromeachtenancyandwherepossibleaugmentingrentalincomethroughadditional

floorarea,assetenhancementsorturnoverrent.

YIELD ACCRETION

Propertiestobeacquiredshouldhavestrongexistingorpotentiallyhigher

rentalincome.

LOCATIONAND ACCESSIBILITY

Propertiesforconvenientaccesstothepublictransportationnetwork,major roadsandpedestrianthoroughfares

willbefavoured.

HIGHOCCUPANCYLEVELS

bymaintaininghighqualityserviceandtechnicalstandards,

andbycapitalizingontherequirementsoftargetedtenantnichesandactivelymanaging

tenancyexpiries.

POTENTIALFOR NETASSETGROWTH

Macroeconomicfactorsandthe potentialforfuturechangesinassetvalue

willbeassessed.

VALUE-ADDING OPPORTUNITIES

throughrenovation;otherenhancementsandproactivepropertymanagementwill

alsobeassessed.

HIGHTENANCYRENEWALRATES

throughproactivelytenantrelationshipmanagementandanticipationoffuturetenantneeds.Thiswillminimize

rentallossesduetodowntimeandlowerexpensesandagencyfeesincurredfornewtenancies.

TENANT CHARACTERISTICS

Rentandoccupancytrendswillbeassessedwithemphasisongoodtenant

retentiondefaultrates.

BUILDING SPECIFICATIONS

shouldbebestofclass;Otheraspects suchasbuildingcondition,compliancewithregulationswillalsobeexamined.

AQUALITY TENANTBASE

builtuponhighcovenantmulti-nationalofficeoccupiersandwellrecognizedretail

tenants,tomaintainapremiumimageforourpropertiesandto

minimizedefaultrates.


FINANCIALREVIEW

W iththeloanrefinancinginMay2014,theaverageoutstandinglifeofthe

Trust’scommitteddebtfacilitieshasnowbeenextendedto4.12years.

DISTRIBUTIONS

TheTotalDistributionAmountofChampionREITfortheYearwasHK$1,170,668,000(2013:HK$1,201,226,000).ThisTotalDistributionAmountwasbasedon90%(2013:90%)ofChampionREIT’sDistributableIncomebutbecauseofthecompulsoryinclusionofretaineddistributionsfromthefirsthalfofeachyearintothedistributableincomeofthesecondhalfofeachyearasrequiredundertheTrustDeed,theeffectivepayoutratiofor2014was94.8%(2013:94.5%).

TheDistributionperUnitforthesixmonthsended31December2014(“FinalDistributionperUnit”)wasHK$0.0998.ThisFinalDistributionperUnitissubjecttoadjustmentupontheissuanceofnewUnitsbetween1January2015andtherecorddate.AfurtherannouncementwillbemadetoUnitholdersinformingthemofanyadjustmenttotheFinalDistributionperUnit.

HK$11,600mBankLoanHibor+1.33%

HK$3,104mMediumTermNote3.75%Coupon

GrossAssets NetofBorrowings

HK$14.7bn Debt

23.1% Gearing

WithaninterimDistributionperUnitofHK$0.1039andaFinalDistributionperUnitofHK$0.0998, theTotalDistributionperUnitfortheYearamountedtoHK$0.2037 (2013:HK$0.2099).BasedontheclosingUnitpriceofHK$3.60asat31December2014,theTotalDistributionperUnitisequivalenttoadistributionyieldof5.66%.

CLOSUREOFREGISTEROFUNITHOLDERS

TheRegisterofUnitholderswillbeclosedfromMonday,18May2015

toFriday,22May2015(“RecordDate”),bothdaysinclusive,duringwhichperiodnotransferofUnitswillbeeffected.Thepaymentofthedistributionforthesixmonthsended31December2014(“2014FinalDistribution”)willbemadeon28May2015toUnitholderswhosenamesappearontheRegisterofUnitholdersontheRecordDate.

MANAGEMENT


FINANCIALREVIEW

MANAGEMENT

COMMITTEDDEBTFACILITIES(1) Asat31December2014

HK$ MILLIONFIXEDRATE

DEBTFLOATINGRATEDEBT

UTILISEDFACILITIES

UNDRAWNFACILITIES

TOTALCOMMITTED

FACILITIES

BankLoans – 11,600.0 11,600.0 300.0 11,900.0

MTN(2) 3,103.7 – 3,103.7 – 3,103.7

Total 3,103.7 11,600.0 14,703.7 300.0 15,003.7

Percentage 21.1% 78.9% 98.0% 2.0% 100.0%

(1) Allamountsarestatedatfacevalue

(2) Afteraccountingforcrosscurrencyswaps

Inordertoqualifyforthe2014FinalDistributionandbeentitledtoattendandvoteatthe2015AnnualGeneralMeetingtobeheldon22May 2015,allproperlycompleted transferforms(accompaniedby therelevantUnitcertificates)mustbelodgedwithChampionREIT’sUnitRegistrar,ComputershareHongKongInvestorServicesLimitedofShops1712-1716,17thFloor,HopewellCentre,183Queen’sRoadEast,Wanchai,HongKongforregistrationnotlaterthan4:30p.m.onFriday,15May2015.

DEBT PROFILE

InMay2014,theTrustarrangeda3-yearHK$3,700milliontermloananda5-yearHK$3,800milliontermloanforthepurposeofrefinancingloansofHK$7,000millionandHK$500millionwhichweredueinMay2014andSeptember2015respectively.The3-yearHK$3,700 milliontermloanbearsaninterestofHIBORplus1.20%perannumand

isrepayableinMay2017.The5-yearHK$3,800milliontermloanbearsaninterestofHIBORplus1.36%perannumandisrepayableinMay2019.

Asat31December2014,totaloutstandingborrowingsoftheTrustwasHK$14,703.7millionwithtotalfixedratedebtamountingtoHK$3,103.7million,unchangedfromayearago.InordertofullyhedgethecurrencyexposurewithrespecttotheprincipalaswellastheinterestoftheMediumTermNote(“MTN”),theTrustenteredintocrosscurrencyswaps(the“CCSs”)inanaggregateamountofUS$400million.WiththeseCCSs,theTrusthaslockedintheexchangeratesofboththefinalprincipalandinterestpaymentsatanaveragerateofHK$7.7593toUS$1.00.

WiththeloanrefinancinginMay2014,theaverageoutstandinglifeoftheTrust’scommitteddebtfacilitieshasnowbeenextendedto4.12years(31December2013:3.11years).

ThevalueoftheTrust’sinvestmentpropertiesat31December2014wasappraisedatHK$62,438 million, representinga1.5%increasefromHK$61,509millionasat31December2013.Accordingly,theGearingRatio(ortotalborrowingsasapercentageofgrossassets)decreasedslightlyto23.1%asat31December2014(31December2013:23.4%).Thegrossliabilities(excludingnetassetsattributabletounitholders)asapercentageofgrossassetswere27.3%(31December2013:27.8%).

NETASSETSATTRIBUTABLETOUNITHOLDERS

NetassetsattributabletoUnitholderswasHK$46,275.1millionasat31December2014,anincreaseof2.0%comparedtoHK$45,364.0millionasat31December2013.

TheNetAssetValueperUnitasat31December2014wasHK$8.06 (31December2013:HK$7.94).This


FACILITYMATURITYPROFILE Asat31December2014

HK$ MILLION %OFTOTAL

Dueinyear2016 2,200.0 15.0

Dueinyear2017 3,700.0 25.2

Dueinyear2018 1,900.0 12.9

Dueinyear2019 3,800.0 25.8

Dueinyear2023 3,103.7 21.1

Total 14,703.7 100.0

representsa123.9%premiumtotheclosingunitpriceofHK$3.60asat31December2014.

CASHPOSITION

Asat31December2014,theTrusthadtotalundrawnbankloanfacilitiesofHK$300million(31December2013:HK$300million)andacashbalanceofHK$1,005.1 million (31December2013:HK$1,066.4 million).TakingintoconsiderationthefinancialresourcesavailabletotheTrust,theTrusthassufficientliquidassetstosatisfyitsworkingcapitalandoperatingrequirements.

PLEDGEDASSETS

Asat31December2014,propertiesofChampionREITwithafairvalueofHK$42,746million(31December2013:HK$43,778million)werepledgedtosecurethedebtfacilitiesgrantedtotheTrust,representing68.5%oftheREIT’spropertiesbyfairvalue.NopropertyispledgedtosecuretheMTN.

COMMITMENTS

ExceptforthecapitalcommitmentofapproximatelyHK$44 million (31 December2013:HK$26.6 million) inrespectofimprovementworksforinvestmentpropertiescontractedforbutnotprovidedintheconsolidatedfinancialstatements,theTrustdidnothaveanyothersignificantcommitmentsasat31December2014.


MANAGEMENT

ENVIRONMENTAL ANDSOCIALREVIEW

CorporateSocialResponsibilityisoneofthetenetsofChampionREIT’s

managementphilosophy.WerecognizethatCorporateSocialResponsibilitywill

createlong-termvalueforourcustomers,partners,investors,employeesandother

stakeholders.Tothisend,issuescoveringethicaloperatingpractices,theworkplace,

theenvironmentandthecommunityaregivenseriousconsiderationatthestrategic

levelaswellasintheday-to-dayoperationsoftheTrust’sproperties.

WORKPLACEQUALITY

HEALTHANDSAFETY

ChampionREIT’spropertiespossessthehealthandsafetyfeaturesgenerallyexpectedofmodernpremiumgradeproperties,includingcomputerizedautomaticfiredetectionalarmsystemsandemergencypowersupplytocommonareasandessentialfacilitieswhenthereisapowerfailureevent.Regularfiredrillsarealsoconducted.ThemanagementsystemsofbothCitibankPlazaandLangham

PlacearecertifiedunderOHSAS(OccupationalHealthandSafetyAssessmentSeries)18001toensurehealthandsafetyrisksareminimizedbypropermonitoringandoperatingprocedurescombinedwithregulartraininganddrills.

Tenantsofgrade‘A’propertiesinparticularhavehighexpectationsforindoorairqualityandcirculation.Inthisrespectourpropertiesareclassifiedas‘Excellent’undertheHongKongEnvironmentalProtection

Department’sIndoorAirQualityCertificationSchemeforOfficesandPublicPlaces.TheyarealsorecipientsoftheQualityWaterRecognitionAwardissuedbytheHongKongWaterSuppliesDepartment.

WORKINGCONDITIONS

ChampionREITismanagedbytheREITManageranddoesnotdirectlyemployanystaffitself.TheREITManagerisdedicatedtodiversityintheworkplaceandadherestoHongKong’sequalopportunitylaws.Underourequalopportunitypolicy,nojobapplicantoremployeeisdisadvantagedbyorreceiveslessfavourabletreatmentbecauseofdisability,gender,pregnancy,maritalstatusorsexualorientation.

Werecognizethatproductiveemployeesarethosewhomaintainahealthywork-lifebalance.Tothisend,employeesoftheREITManagerareprovidedwithaccesstovariouswellnessandinterestclassesthatareofferedonayearlybasis.


BREAKDOWNOFEMPLOYEESANDTURNOVERRATEBYAGEGROUPANDGENDER

BYAGEGROUP(YEARSOLD) BYGENDER

Under20 20–29 30–39 40–49 over49 Male Female

EmployedonDec312014 0% 0% 46% 31% 23% 62% 38%

TurnoverRatein2014 0% 0% 0% 0% 33% 0% 20%

ThetableabovereferstotheemployeesoftheREITManager.AstheREITManagerdelegatesthepropertymanagement,leasemanagementandmarketing&promotionfunctionstovariousserviceproviders,ithasonlyarelativelysmallnumberofemployees.Thiscanleadtomisleadinglyhighturnoverratesevenifjustoneemployeeinanyonecategoryhastobereplaced.

DEVELOPMENTANDTRAINING

Webelievetheavailabilityoftraininganddevelopmentopportunitiesisanimportantfactorforattractingandretainingqualitystaff.Besidesofferingacompetitivecompensationandbenefitspackage,weprovidecorporateandvocationaltrainingstostaffatalllevels.Ourcomprehensiveperformanceappraisalsystemprovidesaregulardialoguemechanismwherebystaffcanprovidefeedbacktotheirsuperiors,establishkeyobjectivesforeachyearanddeterminetheirtraininganddevelopmentneeds.Forthereportingyear,100%ofeligibleemployees(thosewhoareemployedbeforeAugust1stoftheyear)receivedperformanceandcareerdevelopmentreviews.

LABOURSTANDARDS

ChampionREITisincompliancewiththeHongKongEmploymentOrdinancewhichcoversacomprehensiverangeofemploymentprotectionandbenefitsforemployeesincluding:wageprotection,restdays,holidayswithpay,paidannualleave,sicknessallowance,maternityprotection,severancepayment,longservicepayment,employmentprotection,terminationofemploymentcontractandprotectionagainstanti-uniondiscrimination.

Therearenoemployeesthataredefinedaschildrenoryoungpersonsundertheordinance(personsundertheageof18).AsChampionREITisapurelandlordandhasnoindustrialormanufacturingoperations,therearenopotentialissuesinvolvingchildorforcedlabour.


ENVIRONMENTALANDSOCIALREVIEW

MANAGEMENT

ENVIRONMENTALPROTECTION

USEOFRESOURCES

Energyefficiencyisanimportantmeansofreducingemissionsandconservingtheworld’slimitedresources.Pursuingenergyefficiencyalsohastheparallelbenefitofreducingoperatingexpenses,evenwhileglobalwarmingisameliorated.AnenergysavingfeatureinherenttobothofChampionREIT’spropertiesistheuseoflargemulti-storeyglasscurtainwallstoprovideatriumandlobbyareaswithnaturallighting.AtLanghamPlace,thisfeatureisparticularlynoticeableandanyonecanlookthroughthe9-storeymallatriumandseetheneighbourhoodbuildingsontheotherside.Reflectivecoatingsalongtheprimaryglasswallsprovideadditionalenergysavingsbyreflectingheatwhileallowinglighttoentertheinterior.

Bothofourpropertiesalsoboastacomprehensiveventilationandairconditioningsystemcompletewithfloor-by-floorclimatesensors.Tominimizeredundantcooling,air-conditioningcanbecontrolledinincrementalareasandturnedoffforunusedareas.BothCitibankPlazaandLanghamPlacehavepledgedtheirsupportforthe“EnergySavingCharter”schemesetupbytheEnvironmentBureautopromotelowerair-conditioningenergyconsumption.Underthispledge,anaverageinteriortemperatureofbetween24-26°CwillbemaintainedduringthesummermonthsofJunetoSeptember.

CitibankPlazaisintheprocessofupgradingitslightingfixturestoaccommodateT5fluorescenttubesandinsomecasesLEDlightfittings.T5tubeshaveamuchhigherlumens-per-wattefficiencyandlowermercurycontentthanitspredecessor.Lightingcontrolwithmotionsensorsinourcarparks,backofhousecorridorsandstaircaseshavebeeninstalledinLanghamPlaceandarebeing

installedatCitibankPlaza.Toreducewaterusage,wehaveinstalledlowflowwaterfaucetsinallourpropertiesandarereusingwatercollectedinanundergroundtankforirrigationatCitibankPlaza.BothCitibankPlazaandLanghamPlacereceivedGreenManagementAwardsissuedbytheGreenCouncilin2014.TosupporttheintroductionofelectricvehiclestoHongKong,ElectricVehicleRechargingStationshavebeenaddedtobothourcarparks.

In2014thecombinedenergyconsumptionatourpropertiesdecreasedby5.6%to180,552gigaJoules.ElectricityconsumptionatCitibankPlazainparticularwasreducedby9.1%withtheinstallationofadditionalenergy-efficientchillerplants.Combinedwaterusageincreasedby7%to387,082cubicmeters.Therewasan11.1%increaseinwaterusageatCitibankPlazaasitsnewchillerplantsusecirculatingwaterasitsheatexchangemedium.Thetrendoflowerelectricityconsumptioncoupledwithhigherwaterusageshouldceasenextyearasalltheair-cooledchillerplantsatCitibankPlazahavenowbeenreplacedwithwater-cooledones.


MATERIALSCOLLECTEDFORRECYCLING

2012 2013 2014

WastePaper(kg) 238,000 220,235 306,150

FluorescentTubes(kg) 1,004 1,228 924

PlasticBottles(kg) 846 1,061 1,048

AluminumCans(kg) 98 93 121

ReusableBatteries 338 488 325

ENERGYCONSUMPTION(gigajoules)WATERUSAGE

(cubicmeters) CARBONEMISSIONS(tonsCO2

equivalent)

EMISSIONS

AsChampionREITisapurelandlordandhasnomanufacturingoperations,therearenohazardousbyproductsproducedordischarged.Theonlyrelevantemissionswouldbethosegeneratedthroughtheday-to-dayoperationsatourproperties.OurstatisticsasdisclosedtothecarbonfootprintrepositoryinHongKongincludedirectemissionsaswellasindirectemissionssuchasthoseresultingfromelectricitygeneratedoffsite.In2014theestimatedcombinedcarbonemissionsofourpropertiesdecreasedby18.6%to36,630tonsofcarbondioxide.CarbonemissionsatCitibankPlazahavefallendramaticallythisyearbecauseofthereducedenergyrequirementsofnewchillerplantsinstalledin2013.Thechillerplantsinstalledin2014haveyettohaveanimpactonourcarbonfootprintastheirenergysavinggainshavefirsttobeoffsetagainsttheone-offimpactofincorporatingtheirrefrigerants.

THEENVIRONMENTANDNATURALRESOURCES

TheenvironmentalmanagementsystemsofbothCitibankPlazaandLanghamPlacearecertifiedunder

ISO14001.Thisdrivesprogressiveenvironmentalprotectionpoliciesthatstrivetoreducetheenvironmentalimpactofourpropertiesandfacilitaterecycling.Proceduresatourpropertiesareinplacetoadministerandfacilitatetheseparationandcollectionofofficeandretailwasteforthird-partyrecycling.Tenantsareinvitedaspartnerstoenlargethescaleandefficacyoftheserecyclinginitiatives.

Paperisbyfarthelargestcategoryofmaterialssentforrecycling,with306tonscollectedin2014.Besidestypicalwasteproductssuchaspaperandplasticbottles,foodwastefromourfoodcourttenantsarealsocollectedandsentforreprocessing.

ThepropertymanagementteamatCitibankPlazawonasilveraward

undertheHongKongAwardsforEnvironmentalExcellence.CitibankPlazawasalsoawardeda“ClassofExcellence”attheWastewi$eAwardsforEnvironmentalExcellence.TheEnvironmentalProtectionDepartmentoftheHongKongGovernmenthasissuedcertificatestoCitibankPlazaandLanghamPlacecertifyingtheeffectivenessoftheirProgramsonSourceSeparationofCommercialandIndustrialWaste.

Toreducepaperusageitself,ChampionREITallowsitsUnitholderstochooseiftheywishtobemailedaphysicalcopyoftheTrust’sInterimReportandAnnualReportseachyear.PDFversionsoftheTrust’sfinancialreportshavebeenavailableatwww.championreit.comsinceChampionREITwaslistedin2006.

986


ENVIRONMENTALANDSOCIALREVIEW

MANAGEMENT

OPERATINGPRACTICES

PRODUCTRESPONSIBILITY

Westriveforqualityservicetoourcustomers,whoareourtenantsandshoppers.OurbuildingmanagementteamsoperateundertheISO9001QualityManagementSystemwhichamongotherthingsrequiresthemonitoringofcustomersatisfaction.Tothisend,questionnairesaresentregularlybytheBuildingManagerstoourtenantstoobtaintheirfeedback.TenantscanalsosendsuggestionsorcomplaintstothebuildingmanagementthroughmultiplechannelsandmayalsodirectlycontacttheREITManagerthroughourpropertyspecificwebsites.ServicequalitymanagementatCitibankPlazaandLanghamPlacearecertifiedbytheHongKongQualityAssuranceAgency.

In2014,CitibankPlazawonthegrandawardfortheofficebuildingsegmentattheQualityProperty&FacilityManagementAwardsorganizedbytheHongKongInstituteofSurveyors.ItwasalsonamedPropertyManagementTeamoftheYearattheHongKongPropertyAwardsorganizedbytheRoyalInstitutionofCharteredSurveyors.LanghamPlaceMallearnedanExcellenceinFacilityManagementAwardfromtheHongKongInstituteofFacilityManagement.Inaddition,LanghamPlacealsoreceivedanEnterpriseAwardattheHongKongStarBrandsAwardsinacknowledgmentofthewidespreadrecognitionoftheLanghamPlacebrandanditsassociationwithquality.

ANTI-CORRUPTION

ChampionREITiscommittedto

thehighestethicalstandards.AllemployeesaregivenaCodeofConducttowhichtheyarerequiredtoadhere.Employeesareexplicitlyprohibitedfromsoliciting,accepting,orofferingbribesoranyotherformofadvantage.TheawardingofnewprojectandservicecontractsvaluedatHK$100,000andaboveisprimarilybasedontheresultsofatenderingprocess,withsomeexceptionssuchasinthecaseofutilityprovidersandtherolloverofexistingserviceagreements.Furthermore,multiplequotationsmustbeobtainedfortransactionsofoverHK$5,000. TheCodeofConductalsooutlinesexpectationsonstaffwithregardstoconflictsofinterest.TradinginunitsofChampionREITisstrictlyprohibitedduringblackoutperiodsandothertimeswhenstaffareinpossessionoffinanciallysensitiveinformation.

25AnnualReport2014

SUPPLYCHAINMANAGEMENT

SubjecttotheoverallmanagementandsupervisionoftheREITManager,thefunctionofmanagingofthepropertiesoftheTrustisdelegatedtoserviceproviderssuchasEaglePropertyManagement(CP)Limited,thePropertyManageraswellasvariousBuildingManagers.AllofChampionREIT’smainserviceprovidersarerequiredtohavesimilarorcomplimentarypoliciesandprocedureswithregardstooperatingpractices,theworkplacequalityandenvironmentalprotection.

COMMUNITYINVOLVEMENT

COMMUNITYINVESTMENT

ChampionREIT’scommunityinvolvementtendstofocusonthreethematicareas:theArts,ChildrenandtheEnvironment.Basedonthesethemes,weoftenpartnerwithnon-profitorganizations,offeringourpropertiesasvenuesforvariousprojectsthatsourcefordonationsorcreateawarenessofworthycauses.

AsapatronoftheArts,CitibankPlazaishomeandsponsortotheMusicadelCuoreconcertseriesprovidingfreeclassicalmusicperformancestothegeneralpublic.Theprogram’saimistoprovideanadditionalperformanceplatformforlocaltalentwhilenurturinganewgenerationofmusiclovers.Well-establishedartistsandchambergroupsfromHongKongshowcasetheirartistryweeklyinourconcerts.Topromoteculturalexchange,guestartistsfromaroundtheworldarealsoinvitedtoperformatMusicadelCuoreonoccasion.Foradditionalinformation,pleasevisitwww.musicadelcuore.com.hk.

IntheareaofChildren,HK$84,484 ofdonationswasaccumulatedfortheMake-A-WishFoundationthroughtheSpiralStarsGalleryatLanghamPlace.Donationboxesbuiltintothe12zodiacsculpturesofthegalleryhavebeendirectingfundstochildrenwithlife-threateningmedicalconditionsformanyyearsnowanddonationsofHK$1.3 millionhavebeencollectedthiswaysincethegallerywaslaunched.Thisyear,LanghamPlacewasavenuesponsorforeventsoftheShiningStarsFoundationandTheHongKongFederationofYouthGroups.

InsupportoftheEnvironmentin2014,bothCitibankPlazaandLanghamPlaceservedasexhibitionvenuesfor‘EnlightenOurGreenSenses’,acollaborativeexhibitionbetweenGreenMondayandfamousmake-upartistAnnieChantoinspireaudienceswithnewperspectivesongreenliving.

Inadditiontothecorethemes,ChampionREITparticipatesinothercivicactivitiessuchasblood

donationdrivesandcharityruns/walkathons.Thisyear,LanghamPlacewasthevenuesponsorforacharityeventorganizedbytheCollegeofOphthalmologistsofHongKong.LanghamPlacewasonceagainselectedthisyearasaCaringCompanybytheHongKongCouncilofSocialService.

Portionsofbothpropertiesarealsodedicatedtopublicusage.Inservicetothecommunity,CitibankPlazaprovidesmorethan60,000sq.ft.offloorspaceasapublicthoroughfare.Italsomaintainstwopedestrianbridgesabuttingthepublicthoroughfare,providingshelteredelevatedaccessbetweenHongKongParkandCentral.LanghamPlaceprovidesapedestriansystemconsistingofbridgeandundergroundtunnelthatallowseasyandsafeaccessfromtheMTRStationtothecommunitycentreandminibusdepotonShanghaiStreet.


PORTFOLIO

PROPERTY AT-A-GLANCE

CITIBANKPLAZA

isoneofthelargestGrade-AcommercialcomplexesinHongKong’sCentraldistrictwithagrossfloorareaof1,638,000sq.ft.Itconsistsofa47storeyanda37storeyofficetowerlinkedthroughapodium.Bothtowersareintelligentbuildingscapableofmeetingthedemandingtechnicalspecificationsofglobalfinancialinstitutions.

TENANTPROFILE

33% Banking

25% Vacant

11% Others

5% Legal

2% Consultancy

7% HedgeFunds

2% Securities

14% AssetManagement

MAJORTENANTSOFCHAMPIONREIT(INALPHABETICALORDER):

AllianzGlobalInvestors

BeautyAvenue

CinemaCity

Citibank

HennisandMauritz

IndustrialandCommercial BankofChina

Invesco

NeoDerm

PureYoga

Sears


THELANGHAMPLACE OFFICE TOWER

isa703,000grosssq.ft.59storeyofficetowerlocatedwithintheLanghamPlacemixed-usedevelopment.ItisaGrade-AofficepropertyinMongkok,amajortransporthubinKowloonandabusyshoppingdistrict.Thebuildingfocusesontenantsinvolvedintheservicesandlifestyleindustries.

LANGHAMPLACEMALL

isa15-level,590,000grosssq.ft.‘vertical’mallfocusingonmid-pricedfashion,beautyproductsandfood&beverage.ItanchorstheLanghamPlacedevelopmentandoffersauniqueshoppingexperiencethroughitsdistinctarchitecturalfeaturesanditsnovelpromotionevents.TheMallhasbuiltitsreputationasatrendysocialandretaildestinationforyoungandfashion-consciousshoppers,andispopularamongtourists.

TENANTPROFILE

38% Merchandizing& Trading

54% CitibankPlazaOffice 1,579,900

2% CitibankPlazaRetail 57,700

20% LanghamRetail 589,800

24% LanghamOffice 702,900

18% Professional& SalesServices

31% Health& Beauty

20% Food&Beverage

16% Entertainment

10% Lifestyle

3% Others

10% Others

TENANTPROFILE

44% Fashion& Accessories

10% Health&Beauty

GROSSFLOORAREA 2.93 MILLION SQ. FT.

PROPERTYVALUEASOF31DEC2014:HK$62.4 BILLION

CITIBANKPLAZAHK$ mil

LANGHAMPLACEHK$ mil

SUB-TOTALHK$ mil

Office 35,071 7,869 42,940

Retail 441 17,702 18,143

CarPark 410 315 720

Miscellaneous 410 220 630

Total 36,332 26,106 62,438

Foradditionaldetails,pleaserefertothevaluationreportsection

PORTFOLIO

CITIBANK PLAZA

With a gross floor area of over 1.6 million sq. ft., Citibank Plaza is

one of the biggest office complexes in Hong Kong.

The complex contains many distinct architectural features, such as the

flexibility to join 26 floors of both towers to provide an enlarged floor plate

of up to 34,000 sq. ft. This is the largest available floor plate in Central.


PRIME ASSET

Citibank Plaza is a modern glass and steel office complex that comprises Citibank Tower, ICBC Tower, a 3 level basement garage capable of accommodating 558 vehicles, as well as a retail podium. The complex is located in the Central District of Hong Kong and is well connected by elevated walkway to the rest of Central. It address at No. 3 Garden Road is nestled within the traditional banking hub of Hong Kong which also contains the headquarter buildings of all three of Hong Kong’s currency issuing banks. With the acquisition of the last four floors that it did not own in 2013, Champion REIT is now the owner of Citibank Plaza in its entirety.

ARCHITECTURAL EXCELLENCE

With a gross floor area of over 1.6 million sq. ft., Citibank Plaza is one of the biggest office complexes in Hong Kong, capable of serving a working population of over 10,000. The premium office complex is considered by many to be one of the Central District’s iconic structures. Besides its two characteristic curved reflective facades, the complex contains many distinct architectural features, such as the flexibility to join 26 floors of both towers to provide an enlarged floor plate of up to 34,000 sq. ft. This is the largest available floor plate in Central. In recognition of excellence in the area of architectural design, Citibank Plaza was awarded the Hong Kong Institute of Architects’ highest award when it was built.

PREMIUM GRADE ‘A’ SPECIFICATIONS

Citibank Plaza is the archetypal modern premium grade ‘A’ office complex, replete with fiber-optic backbone wiring to facilitate inter-floor communications, raised flooring to facilitate cabling and flexibility in office configurations, a central computerized


CITIBANKPLAZA

PORTFOLIO

controlcenterandamastersatellitesignaldistributionsystem.KeyamongCitibankPlaza’sattributesisitsabilitytoconformtotheformidablespecificationsrequiredbymulti-nationalfinancialinstitutions,thebuilding’sprimarytargettenants.Theseincludesecurityliftfacilitiesfortreasuryitems,highredundantpowersupplytofloorspaceratios,timelyemergencypowersupplyandmoreimportantlyemergencychilledwaterfacilitiestodatacentresduringpoweroutages.Italsooperatesanintelligentheatdetectionsystemwhichcanpreventtheunintentionalactivationofsprinklers.

AMENITIESANDSERVICES

Inadditiontoitsprimelocationandpremiumspecifications,the‘tenantexperience’alsoplaysanimportantroleinattractingqualitytenantstotheproperty.CitibankPlazaplacesgreatemphasisonthequalityoffacilitymanagementandlevelof

securitycardaccesssystem,electronicdirectoriesandanewinformationcounter.Thelowerlobbyhasalsorefurbishedintoatrendyloungearea.Tocatertothegrowingneedforeverhigherrequirementsforemergencypowerandback-upchilledwatersupplyforserverroomsandtradingareas,CitibankPlaza’semergencypowercapacityandback-upchilledwatercapacityhavealsobeenupgraded.Newenergyefficientchillerplantsandvariableairvolumeventilationunitshavealsobeeninstalledrecently.Thebasementcarparkisnowundergoingrenovation.Lookingforward,theassetenhancementprogramatCitibankPlazawillcontinuesoastobetterpositionCitibankPlazatoserveitstoptierbankingandfinancialtenants.

customerservice.TherelaxationandcardiovascularneedsofthetenantsarealsoanintegralpartofCitibankPlaza’ssuccessformula.CitibankPlazaishometoahealthcluboccupyingalmostfourfloorsofonetower.Thishealthclubfeaturesahealthspa,gymnasiumandaheatedswimmingpoolamongotherexercisefacilities.Anotheramenitytotenantsistheretailareainthelowerlobbyofthepodiumwheretenantshaveaccesstoavarietyoffoodandbeverageoutlets.Thisisalsothevenueforweeklyclassicalmusicalperformanceswhicharewellreceivedbytenants.

ASSETENHANCEMENT

SincethepropertywasinjectedintotheTrust,theupperlobbyofthepodiumhasbeenretrofittedwitha

HK$36.33billionAssessedValue

Builtin1992

205mTall,HighestFlooris50

558VehicleBasementGarage

104Tenants

1,638,000sq.ft.GrossFloorArea

1,225,000sq.ft.LettableOfficeArea

34,000sq.ft.GrossFloorplate

43,000sq.ft.LettableRetailArea

BUILDING STATISTICS


9EmergencyGenerators(12,400kVA)

36PassengerLiftsin9zones

SecurityCardAccess

PrivateDriveway

PrivateTaxiStand

ElectricVehicleChargingStations

ShuttleBusService

InternalLoadingDock

10-StoreyLobbyAtrium

HKIAQCertification

HeatedSwimmingPool

OHSAS18001Certification

ISO14001Certification

30,000sq.ft.HealthClub

FEATURES&AMENITIES


CITIBANKPLAZALEASINGANDPROPERTYMANAGEMENTTEAM

PORTFOLIO

MS.YVONNELAUGeneralManager,Leasing

MS.YOLANDAWONGGeneralManager,BuildingManagement

AsGeneralManager,Ms.LauisresponsibleforformulatingandimplementingCitibankPlaza’sleasingstrategiesandbusinessplans.Inherpreviousjob,shewasthedirectorinchargeofofficeassetmanagementataprivaterealestatefundlistedinSingapore.MsLauhasmorethan20yearsofexperienceinthefieldofpropertyandhadworkedforvariousfirsttierpropertydevelopersinHongKong.

MsLauholdsaMasterofSciencedegreeinRealEstatefromtheUniversityofHongKong;aPostgraduateDiplomainArbitrationandMediationfromtheHKUSpaceandaProfessionalDiplomainRealEstateAdministration(withDistinction)fromtheUniversityofHongKongSchoolofProfessionalandContinuingEducation.

Ms.Wonghasover20years’experienceinhospitalityandpropertymanagementindustryoverseasandinHongKong.PriortojoiningtheCompany,sheheldseniormanagementpositionsofaboutiquehotelgroupandapropertymanagementcompanyunderalistedpropertydevelopmentgroupinHongKong.Shehasexperienceinmanagingresidential&GradeAcommercialproperties,shoppingmalls,boutiquehotels,andservicedapartments.MsWonghasalsoexperienceinrenovationprojects,pre-management,sales&leasing,eventmanagementandqualitymanagement.

Ms.WongholdsaMasterofArtdegreeinBusinessAdministrationfromtheUniversityofHull,U.K.andaMasterofSciencedegreeinhospitalitymanagementfromtheSheffieldHallamUniversity,U.K.SheisalsoamemberoftheHotel&CateringInternationalManagementAssociationandtheAmericanSocietyforQuality.

MR.MARCOHOChiefEstateManager

Mr.Hohasover15years’experienceinrealestateandpropertymanagementindustry.HehasworkedforseveralofthemajorHongKongdevelopersinthepast,inrolesrelatedtothemanagementofvariousresidentialproperties,shoppingmallsandGradeAcommercialcomplexes.Mr.Hohasalsoexperienceinrenovationprojects,pre-management,crowdcontrolandthemanagementoflarge-scalepromotionevents.

Mr.HoholdsaBachelorofArtsdegreeinHousingStudiesandaBachelorofBusinessAdministrationinFinance.HeiscertifiedundertheHousingManagersRegistrationBoardandamemberoftheHKInstituteofHousing.

33AnnualReport2014

MS.CHRISTINELAMSeniorManager,TenancyService

MR.ALANMOKSeniorManager,Estate

Mr.Mokhasover10years’experienceinrealestateandpropertymanagementindustry.HehasworkedforvariouswellestablishedpropertydevelopersinHongKongandhasbeeninvolvedinmanagementofvariousshoppingmallsandGradeAcommercialbuildings.

Mr.MokholdsaBachelordegreeinEstateManagementfromtheUniversityofReadingandaMasterDegreeinHousingManagementfromtheUniversityofHongKong.HeisamemberoftheHongKongInstituteofHousingandamemberofInternationalFacilityManagementAssociation,HongKongChapter.

MR.YHKWOKHeadofTechnicalServices

Mr.Kwokhasover25years’experienceinrepairandmaintenance.HehasworkedforseveralmajorHongKongengineeringcompaniesinthepast,inrolesrelatedtothemanagementofvariousresidentialproperties,shoppingmallsandGradeAcommercialcomplexes.Mr.Kwokhasalsoexperienceinrenovationprojects,systemupgradeandmajorretrofits.

Mr.KwokholdsabachelordegreeinengineeringfromtheUniversityofHongKong.HeisaCorporatememberoftheHKInstitutionofEngineersandaRegisteredProfessionalEngineer.

MR.HUNGSIUFUNG,RONManager,Leasing

Mr.HungisresponsiblefortheleasingandtenancymanagementofCitibankPlaza.HehasworkedforvariousHongKongpropertycompaniesinthepastandhasover10yearsofexperienceinpropertyleasing.

Mr.HungobtainedhisBachelorofCommercefromUniversityofSydneyandholdsaMasterdegreeinConstructionandRealEstatefromTheHongKongPolytechnicUniversity.

MsLamhasover10yearsofexperienceintheserviceindustry.PriortojoiningthePropertyManagementteamatCitibankPlaza,sheheldanumberofkeyleadershippositionsininternational5-starhotelsandluxuryretailersinHongKong,responsibleforeventsplanningandservices,customerrelationshipmanagementandloyaltyprograms.

MsLamholdsaPostgraduateDiplomainStrategicManagementandLeadershipfromtheEdexcelInstitution,UKandaMasterDegreeinBusinessAdministrationfromtheUniversityofSunderland,UK.

The Langham Place Office Tower is a modern 59 storey Grade ‘A’

building that is the preferred corporate address in Mongkok.

Langham Place Mall is a lifestyle urban mall, and its design matches

the tastes of its target audience – young shoppers who are interested in

the latest fashion trends.

PORTFOLIO

LANGHAM PLACE


PREMIUM ASSET, PRIME LOCATION

Langham Place is an integrated commercial development which comprises a 59-storey Grade A office tower, a 15-storey shopping mall, a 250- space private carpark and a 42-storey 5- star hotel. The project occupies two entire city blocks defined by Argyle Street, Portland Street, Shantung Street and Reclamation Street and is the largest urban renewal project in Hong Kong with a Total Floor Area of almost 2 million sq. ft. Completed in 2004, Langham Place immediately became a defining landmark of Mongkok, a prime retail and commercial district of Kowloon and an important hub for Hong Kong’s major public transportation networks. Langham Place is directly linked via a pedestrian tunnel to the Mongkok Interchange of the Mass Transit Railway. The portion of Langham Place that Champion REIT owns is the entire Langham Place Mall and carpark and all but 4 floors of the Langham Place Office Tower. In percentage terms, this is equivalent to approximately 93.6% of the lettable area of the non-hotel portion of Langham Place.

FASHION MALL REDEFINING MONGKOK

The Langham Place Mall has several unique modern architectural and design features. From the surrounding shopping district, its distinctive multi-faceted façade of Fissured Brazilian Granite is immediately recognizable. Among its internal features are a Grand Atrium enclosed by 9-storey tall glass curtains showcasing the surrounding street-level activity, some

LANGHAMPLACE

PORTFOLIO

HK$26.1billionAssessedValue*

Builtin2004

255mTall,HighestFlooris60

255VehicleBasementGarage

66OfficeTenants*

193RetailTenants

1,293,000sq.ft.GrossFloorArea*

703,000sq.ft.GrossOfficeArea*

17,400sq.ft.GrossOfficeFloorplate

319,000sq.ft.LettableRetailArea

* onlyChampionREIT’sportion

BUILDING STATISTICS

oftheworld’slongestindoorescalatorsanda‘DigitalSky’projectedontothemall’sceiling.InuppersectionoftheMall,thereistheiconicSpiralsectionleadinguptoanindooralfrescoBarandRestaurantfloor.Foritsinnovativedesign,theLanghamPlaceMallhasreceivedseveralawardsfrompartiessuchastheInternationalCouncilofShoppingCentersandtheInstitutionofStructuralEngineersAwards.

LanghamPlaceMallisalifestyleurbanmall,anditsdesignmatchesthetastesofitstargetaudience–youngshopperswhoareinterestedinthelatestfashiontrends.Eachday,200,000to300,000shoppersvisitthemalltolookforthelatestinhipandtrendyapparel,accessoriesandfootwear.AspartoftheLangham

shoppingexperience,themallalsooffersitsshoppersacineplex,agamesarcadeandover30foodandbeverageoutlets.Becauseofitsimmensepopularityamongteensandyoungadults,LanghamPlaceMallhasbeenthevenueofchoiceforfanandmediaeventsbylocalandforeigncelebritiesalike.Themallisalsopopularwithtouristsfromthemainlandasitiswellknownforitswideselectionofcosmetics.LanghamPlaceMallwasvotedasoneofHongKong’stop10shoppingmallsforthethirdconsecutiveyearinthe2014/15MyFavoriteShoppingMallAwardssurveyorganizedbytheHongKongEconomicTimes.LanghamPlaceMallwasalsonamedamost-favouredshoppingmallbrandforHongKongconsumersandseparatelyformainlandconsumersaswell,atthe

PrestigiousCorporateBrandAwardsjointlyorganizedbyMingPaoDailyandtheChineseUniversityofHK.

MONGKOK’SPREFERRED OFFICE ADDRESS

TheLanghamPlaceOfficeTowerisamodern59storeyGrade‘A’buildingthatisthepreferredcorporateaddressinMongkok.Itiscoveredindistinctivereflectiveblueglassandtoppedoffwithalargecolour-changingdomevisiblefromasfarasHongKongislandatnight.Asthebuildingisconvenientlylocatedinadecentralizedofficedistrictitattractstenantsfrommerchandizingandwholesalesectors.Theofficetowerisalsohometomanysemi-retailandservice-orientedenterprisesbecause


ElectricVehicleChargingStations

InternalLoadingDock

HKIAQCertification

OHSAS18001Certification

ISO14001Certification

70,000sq.ft.FitnessCentre

World’sLargestYogaStudio

FEATURES&AMENITIES

ofitslocationwithinabusyshoppingdistrictanditssynergisticconnectiontotheLanghamPlaceMall.Thebuildingcontainsa70,000squarefeetfitnessandwell-beingcentre,purportedlyhousingtheworld’slargestyogastudio,aswellasmanysmallerspas.

At255meters,itwasthetallestofficebuildingontheKowloonPeninsulawhenitwaslaunchedin2004andoffersanunobstructedpanoramicviewofthesurroundingarea.TenantsareprovidedwiththelatestinGrade‘A’specifications,includingfiberopticwiring,raisedflooring,emergencypowersupplyandmastersatellitesignaldistribution.Beingarelativelynewbuilding,thereiscentralcomputerizedcontroloftheclimate,firealarm,liftandlightingsystems.

15StoreyShoppingMall

Adjoining5-starHotel

1,100SeatCineplex

36F&BOutlets

DirectMTRAccess

9-StoreyGlassAtrium

HongKong’sLongestIndoorEscalators

PanoramicViewofKowloon

1

2

3

4

LANGHAMPLACE

PORTFOLIO

Duringfourmonthsinthesummer,themallcollaboratedwithF&Btenantstoprovideshopperswithacompleteshopping-diningexperiencecalledSanrioStarDining.

1

LINEcharactermascotswereinvitedtocelebratetheopeningoftheUNIQLOLPstore.

4Canto-popdivaSandyLamatanautographeventatCDWarehouse.

3

AspartoftheSanrioStarDiningcampaignwereaseriesofactivitiesfeaturingthepopularSanriocharacters,includingathematicinstallationnamed“SanrioStarChefInstitute”.

2

WHAT’SBEENHAPPENINGATTHEMALL

5

6

7

8

9

Avenue1218,aconceptstoreofthehotteststreetchicandK-PopfashionforstylehunterscelebrateditsdebutopeninginHKwithafashionshowandstreetdance.

5

Celebritiesandfoodartistgatheredtosharethe“JoyonaPlate”hostedbyMARKETPLACEbyJASONS.ProceedsfromthecampaignweredonatedtoOrbis.

9

ThehostsofRunningMan,themostpopularKoreanvarietyshowintheworldgreetedfansatLanghamPlace.

7

EquippedwithHongKong’sfirst4DXtheatre,thebrandnewcinemacomplexCinemaCitywasopenedinlate2014.

6

About1,000braveandenergeticsoulstookpartinOceanPark’sHalloweenFestTalentHuntRecruitmentDay.

8


LANGHAMPLACELEASINGANDPROPERTYMANAGEMENTTEAM

PORTFOLIO

MS.LEUNGWAIMUN,VIVIANGeneralManager,LeasingandMarketing

MS.CHANFUNGKAM,JEANAssistantGeneralManager,Leasing

Ms.Leungistheteamleaderfortheleasing,promotion,marketingandpublicrelationactivitiesofLanghamPlace.MsLeunghasover20yearsofexperienceintheadvertisingandmarketingindustry.PriortojoiningthePropertyManager,sheworkedforvariousadvertisingagenciesandheldseniormarketingandbusinessdevelopmentpositionswithanumberofpublishingandmarketingcompanies.

Ms.LeungholdsaBachelorofArtsDegreefromYorkUniversityofCanada.

MR.DAVIDCHIUGeneralManager,PropertyManagement

Mr.ChiuisresponsiblefortheoverallpropertymanagementofLanghamPlace.Hehasmorethanmorethan20yearsofexperienceinmanagingqualityretailandcommercialproperties.PriortojoiningtheLanghamPlaceteamin2004,heworkedforvariousleadinglistedpropertycompaniesinHongKong.

Mr.ChiuholdsaDiplomainHousingManagementfromtheUniversityofHongKong,andaBachelorofArtsDegreefromtheConcordiaUniversity,MontrealCanada.HeisalsoamemberoftheInstituteofHousing,UnitedKingdomandamemberoftheCharteredInstituteofHousing,HongKong.

Ms.ChanisresponsiblefortheleasingandtenancymanagementofLanghamPlaceandhasover15yearsofexperienceinthepropertyleasingfield.Priortoherpresentjob,sheworkedforvariouspropertydevelopersinHongKong.

Ms.ChanholdsaMasterofSciencedegreeinRealEstatemajoringinSurveyingfromTheUniversityofHongKongandaBachelordegreeofBusinessStudiesfromTheCityUniversityofHongKong.

41AnnualReport2014

MS.AU-YEUNGHONYUK,MAKEYAssistantGeneralManager,Marketing

Ms.Au-Yeungisresponsibleformarketing,promotionandpublicrelationsactivitiesofLanghamPlace.Shehasover20yearsofexperienceworkingforvariousmarketingandpublicrelationsfirmsandhadheldthepositionofeditorialconsultantforanumberofwellestablishedpublishinghouses.

Ms.Au-YeungholdsaHigherDiplomainChineseTranslationandInterpretationfromtheHongKongPolytechnicUniversity.

MR.CHANCHORKIU,DESMONDChiefEstateManager

Mr.Chanisresponsibleforbuildingmanagementoftheshoppingmall,officetowerandcarparkatLanghamPlace.PriortojoiningthemanagementteamofLanghamPlacein2006,heworkedforseveralofHongKong’sleadinglistedpropertycompaniesandhasover15yearsofexperienceinthepropertymanagementindustry.

Mr.ChanholdsaBachelor’sdegreeinHousingManagementfromtheUniversityofHongKong,DiplomainSurveyingfromtheCollegeofEstateManagement.HeisalsoamemberoftheHongKongInstituteofHousing,theCharteredInstituteofHousing(UnitedKingdom)andaregisteredprofessionalhousingmanagerinHousingManagersRegistrationBoard.

MR.TIMOTHYCHUTechnicalManager

Mr.ChuisresponsibleforoverseeingthetechnicalmanagementofLanghamPlace.Withover15yearsofpracticalworkexperienceintheengineeringindustrysince1995,Mr.ChuhasworkedforseveralofHongKong’sleadinglistedpropertycompaniesinvestedinbothcommercialandresidentialbuildingsduringhiscareer.

Mr.ChuholdsaMasterofSciencedegreeinBuildingServicesEngineeringfromtheUniversityofHongKongandaBachelorofEngineering(Honors)degreeinBuildingServicesEngineeringfromtheCityUniversityofHongKong.HeisaRegisteredProfessionalEngineerinthebuildingservicesdisciplinewiththeHongKongEngineersRegistrationBoardandisaCharteredEngineeroftheU.K.EngineeringCouncil.


REPORTS

VALUATIONREPORT

EagleAssetManagement(CP)LimitedSuite3008,30/F,GreatEagleCentre23HarbourRoadWanchai,HongKong(theManagerforChampionRealEstateInvestmentTrust“ChampionREIT”)

HSBCInstitutionalTrustServices(Asia)Limited17/F,Tower2&3,HSBCCentre1ShamMongRoad,KowloonHongKong(theTrusteeforChampionREIT)

SavillsValuationandProfessionalServicesLimited

23/FTwoExchangeSquareCentral,HongKong

EALICENCE:C-023750T:(852)28016100

savills.com

6February2015

DearSirs

RE:CITIBANKPLAZA,3GARDENROAD,CENTRAL,HONGKONG(“PROPERTY”)

InaccordancewiththerecentinstructionsoftheManageronbehalfofChampionREITtovaluetheProperty,weconfirmthatwehavecarriedoutinspections,maderelevantenquiriesandsearchesandobtainedsuchfurtherinformationasweconsidernecessaryforthepurposeofprovidingyouwithouropinionofthemarketvalueofthePropertyasat31December2014(referredtoasthe“ValuationDate”)foraccountingpurposes.

BASISOFVALUATION

OurvaluationisouropinionofthemarketvalueofthePropertywhichwewoulddefineasintendedtomean“theestimatedamountforwhichasassetorliabilityshouldexchangeonthevaluationdatebetweenawillingbuyerandawillingsellerinanarm’slengthtransactionafterpropermarketingandwherethepartieshadeachactedknowledgeably,prudentlyandwithoutcompulsion”.

Marketvalueisunderstoodasthevalueofanassetorliabilityestimatedwithoutregardtocostsofsaleorpurchase(ortransaction)andwithoutoffsetforanyassociatedtaxesorpotentialtaxes.

WeareindependentofChampionREITandhavecarriedoutthevaluationindependentlyandimpartially.OurvaluationispreparedinaccordancewithChapter6.8oftheCodeonRealEstateInvestmentTrustpublishedbytheSecuritiesandFuturesCommissionofHongKongandTheHKISValuationStandards(2012Edition)publishedbytheHongKongInstituteofSurveyors.


VALUATIONMETHODOLOGIES

WehavevaluedthePropertyonthebasisofcapitalizationofthenetincomeshownonscheduleshandedtousandalsobyreferencetosalesevidenceavailableinthemarket.

Inarrivingatouropinionofvalue,wehaveconsideredrelevantgeneralandeconomicfactorsandinparticular,wehaveinvestigatedrecentsalesandleasingtransactionsofcomparableproperties.Inthecourseofourvaluationanalysis,wehaveprincipallyadoptedtheIncomeCapitalizationApproachandcounter-checkedbytheDirectComparisonApproach.Forthepurposesofthisvaluation,weconsidertheIncomeCapitalizationApproachtobethemostappropriatevaluationmethodforassessingthemarketvalueofthePropertywithregardtotheincome-drivennatureoftheProperty.WehaveassumedthatnosignificantcapitalexpenditurebytheownersofthePropertywillberequiredintheforeseeablefuture.

INCOMECAPITALIZATION

TheIncomeCapitalizationApproachisamethodofvaluationwherebytheexistingrentalincomeofalllettableunitsofthePropertyarecapitalizedfortheirrespectiveunexpiredtermsofcontractualtenancieswhilstvacantunitsareassumedtobeletattheirrespectivemarketrentsasattheValuationDate.Uponexpiryoftheexistingtenancies,eachunitisassumedtobeletatitsmarketrentasattheValuationDate,whichisinturncapitalizedatthemarketyieldasexpectedbyinvestorsforeachtypeofproperty.DueconsiderationhasbeengiventoexpectationsoftherenewalofGovernmentleaseuponitsexpiry.Thesummationofthecapitalizedvalueofthetermincomefortheleasedportion,thecapitalizedvalueofthereversionincomeasappropriatelydeferredfortheleasedportionandthecapitalizedvalueforthevacantportionprovidesthemarketvalueoftheProperty.

Themarketrentalsofalllettableunitsaremade(a)byreferencetotherentalsfetchedinthePropertyand(b)byreferencetothelettingsofsimilarpropertiesintheneighbourhood.Thecapitalizationrateadoptedismadebyreferencetotheyieldsachievedinanalysedmarketsalestransactionsandourknowledgeofthemarketexpectationfrompropertyinvestors.Thisexpectedreturnreflectsimplicitlythequalityoftheinvestment,theexpectationofthepotentialforfuturerentalgrowthandcapitalappreciation,operatingcosts,riskfactorandthelike.Ouradoptedcapitalizationratesfortheretailandofficeaccommodationsare4.25%and3.30%respectively.

DIRECTCOMPARISON

Asasupportingapproachtothevaluation,wehavealsoconsideredtheDirectComparisonApproachasacheckforthevaluationarrivedatfromusingtheIncomeCapitalizationApproach.Inthisregard,comparablesalestransactionsofretailpropertiesinCentralDistrictarecollectedandanalyzedeachintermsofapricepersquarefootage.Moreover,comparablesalestransactionsofbothen-blocandstrata-titleGradeAofficepremisesinCentralDistrictaroundtheValuationDatearecollectedandanalyzedeachintermsofapricepersquarefootage.ThecollectedcomparablesarethenadjustedtotakeaccountofthediscrepanciesbetweenthePropertyandcomparablesintermsoftime,location,age,buildingqualityandthelike.

TITLEINVESTIGATIONS

WehavenotbeenprovidedwithextractsfromtitledocumentsrelatingtothePropertybutwehavecausedsamplesearchestobemadeattheLandRegistry.Wehavenot,however,searchedtheoriginaldocumentstoverifyownershiportoascertaintheexistenceofanyamendmentwhichdoesnotappearonthecopieshandedtous.Wedonotacceptaliabilityforanyinterpretationwhichwehaveplacedonsuchinformationwhichismoreproperlythesphereofyourlegaladvisers.


REPORTS

VALUATIONREPORT

VALUATIONCONSIDERATION

Wehavereliedtoaveryconsiderableextentoninformationgivenbytheinstructingpartyandhaveacceptedinformationgiventousonsuchmattersasplanningapprovalsorstatutorynotices,easements,tenure,lettings,incomes,floorareasandallotherrelevantmatters.Wehavenoreasontodoubtthetruthandaccuracyoftheinformationprovidedtousbytheinstructingparty,andhavebeenadvisedbytheinstructingpartythatnomaterialfactshavebeenomittedfromtheinformationprovided.

Wehavenotcarriedoutdetailedon-sitemeasurementstoverifythecorrectnessofthefloorareasinrespectofthePropertybuthaveassumedthatthefloorareasshownonthedocumentshandedtousarecorrect.Dimensions,measurementsandareasincludedinthevaluationreportarebasedoninformationcontainedinthedocumentsprovidedtousbytheinstructingpartyandarethereforeonlyapproximations.

WehaveinspectedtheexteriorofthePropertyvaluedand,wherepossible,wehavealsoinspectedtheinteriorofthepremises.However,nostructuralsurveyhasbeenmade,butinthecourseofourinspection,wedidnotnoteanyseriousdefect.Wearenot,however,abletoreportthatthePropertyisfreeofrot,infestationoranyotherstructuraldefect.Notestswerecarriedouttoanyoftheservices.OurinspectionwasundertakenbyMr.VictorChow,MHKIS,on31December2014.

Noallowancehasbeenmadeinourreportforanycharge,mortgageoramountowingonthePropertynorforanyexpenseortaxationwhichmaybeincurredineffectingasale.Unlessotherwisestated,itisassumedthatthePropertyisfreefromencumbrances,restrictionsandoutgoingsofanonerousnaturewhichcouldaffectitsvalue.

Thereportedanalyses,opinionsandconclusionsaresubjecttotheassumptionsandlimitingconditionsstatedinourvaluationcertificateandareourpersonal,unbiasedprofessionalanalyses,opinionsandconclusions.WehavenopresentorprospectiveinterestinthePropertyandarenotarelatedcorporationofnordowehavearelationshipwiththeTrustee,theManagerorotherparty/partieswhoChampionREITiscontractingwith.Thevaluer’scompensationisnotcontingentuponthereportingofapredeterminedvalueordirectioninvaluethatfavoursthecauseoftheVendor,theamountofthevalueestimate,theattainmentofastipulatedresult,ortheoccurrenceofasubsequentevent.

Inaccordancewithourstandardpractice,wemuststatethatthisvaluationreportisfortheuseonlyofthepartiestowhomitisaddressedandnoresponsibilityisacceptedtoanyotherpartyforthewholeoranypartofitscontents.

Weencloseherewithourvaluationandmarketoverview.

YoursfaithfullyForandonbehalfofSavills Valuation and Professional Services LimitedCharles C K ChanMScFRICSFHKISMCIArbRPS(GP)Managing Director

* MrCharlesCKChan,charteredestatesurveyor,MSc,FRICS,FHKIS,MCIArb,RPS(GP),hasbeenaqualifiedvaluersinceJune1987andhasabout30yearsexperienceinthevaluationofpropertiesinHongKong.


VALUATIONCERTIFICATE

PROPERTY

CitibankPlaza,3GardenRoad,Central,HongKong

InlandLotNo.8888.

DESCRIPTIONANDTENURE

CitibankPlazaisanoffice/commercial/carparkingdevelopmentsituatedinCentraldistrict.Itcomprisesone47-storeyofficeblock,knownasCitibankTower,andone37-storeyofficeblock,knownasICBCTowersurmountinga6-levelpodium(including4basementlevels)withretailaccommodationonthelowergroundfloorandcarparkingspacesinthebasements.Thedevelopmentwascompletedin1992.

ThetotalfloorareaandthegrossrentableareaoftheretailandofficeportionsofthePropertyareasfollows:–

TOTALFLOORAREA

USE sq.m. sq.ft. Retail 5,362.41 57,721

Office 146,773.78 1,579,873

TOTAL 152,136.19 1,637,594

GROSSRENTABLEAREA

USE sq.m. sq.ft. Retail 3,956.99 42,593

Office 113,822.46 1,225,185

TOTAL 117,779.45 1,267,778

ThePropertyalsoincludes58privatecarparkingspacesandafeepayingpubliccarparkcomprising500carparkingspacesand50motorcycleparkingspacesinthebasements.

InlandLotNo.8888isheldfromtheGovernmentfortheresidueofthetermsofyearscommencingfrom3August1989andexpiringon30June2047underaGovernmentleasedeemedtohavebeenissuedunderandbyvirtueofSection14(3)oftheCoveyancingandPropertyOrdinance(Chapter219oftheLawsofHongKong)uponcompliancewiththeconditionsprecedentcontainedintheConditionsofSaleNo.12063atanannualrentequivalentto3%oftherateablevalueforthetimebeingofthelot.


REPORTS

VALUATIONREPORT

PARTICULARSOFOCCUPANCY

ExceptShop5withanareaof382sq.ft.whichisletunderasingletenancywithPortionAof40/Fand43/Fto50/FofCitibankTower,theretailportionofthePropertyisletundersixtenanciesforvarioustermswiththelastexpirydateinDecember2016,yieldingatotalmonthlyrentalincomeofapproximatelyHK$1.48millionexclusiveofrates,managementandair-conditioningcharges.Allthesetenanciesaresubjecttoturnoverrent.TheaveragemonthlyturnoverrentreceivablefromNovember2013toOctober2014isapproximatelyHK$43,000.

Theofficeportion(includingShop5)ofthePropertyisletundervarioustenanciesforvarioustermswiththelastexpirydateinJune2021,yieldingatotalmonthlyrentalincomeofapproximatelyHK$74.9millionexclusiveofrates,managementandair-conditioningcharges.Anumberoftenanciescontainrentreviewclausesand/oroptionstorenewforfurthertermsatthethenprevailingmarketrents.

Thecurrentoccupancyratesoftheretailandofficeportionsareapproximately100%and75.4%respectively.

Atotalof500carparksand50motorcycleparkingspacesarebeingoperatedasafee-payingpubliccarparkandtheremaining58carparksareoccupiedasprivatecarparksandletundervariouslicences.ThetotalaveragemonthlyincomefromJanuary2014toDecember2014isapproximatelyHK$1,534,000inclusiveofrates,managementandutilitycharges.

VariousspacesforcellularphonesystemsareletunderthreelicencesforvarioustermswiththelastexpirydateinAugust2017,yieldingatotalmonthlylicencefeeofapproximatelyHK$70,000exclusiveofrates,managementandutilitycharges.

Asatellitephoneantenna,variousadvertisingspacesandthenamingrightsofCitibankTowerandICBCTowerarelicensedundervariouslicencesfortermswiththelastexpirydateinMay2020,yieldingatotalmonthlylicencefeeofapproximatelyHK$1,807,000exclusiveofrates,managementandutilitycharges.

MARKETVALUEINEXISTINGSTATEASAT31DECEMBER2014

HK$36,332,000,000

ESTIMATEDNETPROPERTYYIELD

2.6%


Notes:

(1) ThePropertycomprisesthefollowingportions:–

Office&HealthClub(ICBCTower) WholeofICBCTowerincluding2ndto12thFloors,15thto18thFloors,20thto23rdFloorsand25thto40thFloors(13th,14thand24thFloorsareomittedfromfloornumbering;1stand19thFloorsaremechanicalfloors).

Office(CitibankTower) WholeofCitibankTowerincluding3rdto12thFloors,15thto18thFloors,20thto23rdFloors,25thto30thFloors,PortionsAandBon31stFloor,32ndto34thFloors,36thto39thFloors,PortionsAandBon40thFloorand41stto50thFloors(13th,14thand24thFloorsareomittedfromfloornumbering;1st,2nd,19thand35thFloorsaremechanicalfloors).

RetailShop RestaurantandShops1to5onLowerGroundFloorofthedevelopment.

CarParkingSpace Privatecarparkingspacenos.5to33,39to51,118to131and166to167onBasement2andpubliccarparkcomprising500carparkingspacesand50motorcycleparkingspaceswithinthedevelopment.

(2) TheregisteredownersoftherespectiveportionsofthePropertyasattheValuationDatearesetoutbelow:–

REGISTEREDOWNER PORTIONOFTHEPROPERTY

ShineHillDevelopmentLimited WholeofICBCTowerincluding2ndto12thFloors,15thto18thFloors,20thto23rdFloorsand25thto40thFloors(13th,14thand24thFloorsareomittedfromfloornumbering;1stand19thFloorsaremechanicalfloors).

VariousportionsofCitibankTower,including3rdto12thFloors,15thto18thFloors,20thto23rdFloorsand25thto28thFloors(13th,14thand24thFloorsareomittedfromfloornumbering;1st,2nd,19thand35thFloorsaremechanicalfloors).

RestaurantandShops1to4onLowerGroundFloorofthedevelopment.

Privatecarparkingspacenos.5to20,26to33,45to51,121to122and166and167onBasement2andpubliccarparkcomprising500privatecarparkingspacesand50motorcycleparkingspaceswithinthedevelopment.

AllthoseReservedAreasasdefinedintheDeedofMutualCovenantandManagementAgreementinrespectofCitibankPlazaregisteredintheLandRegistrybyMemorialNo.UB5511011(beingthosepartsofthebuildings(notspecificallyassignedfortheexclusiveuseofanyOwnerandnotbeingpartofthecommonareas)reservedfortheexclusiveuseandoccupationofShineHill(includingwithoutlimitationtothegeneralityoftheforegoing,theMainRoofs,theflatroof,theExternalWalls,theloading/unloadingareasontheFirstBasementandthree(3)flagpolesatoraboveLevel+14.668facingthetransverseroad).

MapleCourtLimited 29thto30thFloorsandPortionBon31stFloorofCitibankTower.

Privatecarparkingspacenos.21to22onBasement2ofthedevelopment.

PanhyLimited PortionAon31stFloorand32ndto33rdFloorsofCitibankTower.

Privatecarparkingspacenos.42to44onBasement2ofthedevelopment.

WellCharmDevelopmentLimited 38thFloorofCitibankTower.

CP(PortionA)Limited PortionAon40thFloor,41stto50thFloorsofCitibankTower.

Shop5onLowerGroundFloorofthedevelopment.

Privatecarparkingspacenos.118to120and123to131onBasement2ofthedevelopment.

CP(PortionB)Limited 39thFloorandPortionBon40thFloorofCitibankTower.

Privateparkingspacenos.23to25onBasement2ofthedevelopment.

ElegantWealthLimited 34th,36thand37thFloorsofCitibankTower.

Privateparkingspacenos.39to41onBasement2ofthedevelopment.


REPORTS

VALUATIONREPORT

(3) TheportionofthePropertyheldbyShineHillDevelopmentLimited(seeNote2),exceptpartof3rdFloorandwholeof4thto6thFloorsofCitibankTower,issubjecttoanAgreementforSaleandPurchaseinfavourofCP(SH)LimitedataconsiderationofHK$16,117,000,000dated26April2006.

(4) TheportionofthePropertyheldbyMapleCourtLimited(seeNote2)issubjecttoanAgreementforSaleandPurchaseinfavourofCP(MC)LimitedataconsiderationofHK$860,000,000dated26April2006.

(5) TheportionofthePropertyheldbyPanhyLimited(seeNote2)issubjecttoanAgreementforSaleandPurchaseinfavourofCP(PH)LimitedataconsiderationofHK$885,000,000dated26April2006.

(6) TheportionofthePropertyheldbyWellCharmDevelopmentLimited(seeNote2)issubjecttoanAgreementforSaleandPurchaseinfavourofCP(WC)LimitedataconsiderationofHK$363,000,000dated26April2006.

(7) TheportionofthePropertyheldbyCP(PortionA)Limited(seeNote2)issubjecttoanAgreementforSaleandPurchaseinfavourofCP(A1)LimitedataconsiderationofHK$3,841,000,000dated26April2006.

(8) TheportionofthePropertyheldbyCP(PortionB)Limited(seeNote2)issubjecttoanAgreementforSaleandPurchaseinfavourofCP(B1)LimitedataconsiderationofHK$604,000,000dated26April2006.

(9) TheportionofthePropertyheldbyShineHillDevelopmentLimited,exceptpartof3rdFloor,wholeof4thto6thFloorsofCitibankTowerand5thto40thFloorsofICBCTower,theportionofthePropertyheldbyMapleCourtLimitedandtheportionofthePropertyheldbyCP(PortionA)LimitedaresubjecttoalegalchargeinfavourofHangSengBankLimited.

(10)5thto40thFloorsofICBCTowerheldbyShineHillDevelopmentLimitedaresubjecttoalegalchargeinfavourofHangSengBankLimited.

(11)TheportionsofthePropertyheldbyPanhyLimited,WellCharmDevelopmentLimited,CP(PortionB)LimitedandElegantWealthLimitedaresubjecttoalegalchargeanddebentureinfavourofTheHongkongAndShanghaiBankingCorporationLimited.

(12)ThePropertylieswithinanareazoned“Commercial”underCentralDistrictOutlineZoningPlan.

(13)PursuanttoOccupationPermitNo.H63/92andasetofapprovedbuildingplansofCitibankPlaza,eachthe3rdFloorandthe4thFloorofCitibankTowerismainlydesignatedasarestaurantwithkitchen.Nevertheless,inaccordancewiththespecificinstructionsfromtheinstructingparty,wehavevaluedthesaidportionsofthePropertyonofficeusebasisandhaveassumedallnecessaryapprovalsandlicenceshavebeenobtainedfromtherelevantGovernmentauthoritiesforofficeuse.

(14)Therentalsreportedhereinarethetotalofthefacerentalswithouttakingintoaccountanyrentfreeperiodsortheturnoverrentsreceived,ifany.

(15)Thenotionalbreakdownofourvaluationinrespectofdifferentusesissetoutbelow:–

USE

MARKETVALUEASAT31DECEMBER

2014 Retail HK$441,000,000

Office HK$35,071,000,000

Carpark HK$410,000,000

Miscellaneous HK$410,000,000

TOTAL: HK$36,332,000,000


(16)BasedonthetenancyinformationprovidedbytheManager,ouranalysisoftheexistingtenancyprofilefortheofficeportionoftheProperty(includingShop5butexcludingthelicensedmiscellaneousareas)asat31December2014issetoutbelow:–

Occupancy Profile

TYPEGROSSRENTABLE

AREA(SQ.FT.) %OFTOTAL Leased 923,804 75.4

Vacant 301,763 24.6

TOTAL 1,225,567 100

Lease Commencement Profile

YEAR

GROSSRENTABLE

AREA(SQ.FT.) %OFTOTALMONTHLY

RENTAL(HK$) %OFTOTALNO. OF

TENANCY %OFTOTAL 2010 227,655 24.6 16,182,383 21.6 5 4.3

2011 122,782 13.3 12,364,970 16.5 7 6.0

2012 66,418 7.2 5,988,143 8.0 19 16.2

2013 229,317 24.8 18,278,058 24.4 33 28.2

2014 277,632 30.1 22,055,423 29.5 53 45.3 TOTAL 923,804 100 74,868,977 100 117 100

Lease Expiry Profile

YEAR

GROSSRENTABLE



TENANCY %OFTOTAL 2015 120,763 13.1 11,861,781 15.8 29 24.8

2016 336,268 36.4 25,167,137 33.6 44 37.6

2017 226,066 24.5 19,178,015 25.6 32 27.3

2018 23,052 2.5 1,846,560 2.5 3 2.6

2019 31,976 3.4 2,594,605 3.5 2 1.7

2020 154,010 16.7 11,750,780 15.7 5 4.3

2021 31,669 3.4 2,470,100 3.2 2 1.7 TOTAL 923,804 100 74,868,977 100 117 100

Lease Duration Profile

YEAR

GROSSRENTABLE



TENANCY %OFTOTAL 1 2,656 0.3 216,257 0.3 2 1.7

2 40,196 4.3 3,311,489 4.4 19 16.2

3 289,506 31.3 24,197,223 32.3 72 61.5

4 45,026 4.9 4,956,350 6.6 5 4.3

5 43,107 4.7 3,474,988 4.6 2 1.7

6 371,294 40.2 28,569,950 38.2 14 12.0

7 132,019 14.3 10,142,720 13.6 3 2.6 TOTAL 923,804 100 74,868,977 100 117 100

Note:Theabovetenancyprofileincludesashopwithanareaof382sq.ft.whichisletunderasingletenancywithPortionAof40/Fand43/Fto50/FofCitibankTowerbutexcludes1tenancyrenewalforatermof1yearand9monthscommencinginAugust2015and6committednewlettingsfortermsof2to6yearscommencingintheperiodfromJanuary2015toJuly2015.


REPORTS

VALUATIONREPORT

(17)BasedonthetenancyinformationprovidedbytheManager,ouranalysisoftheexistingtenancyprofilefortheretailportionoftheProperty(excludingShop5andthelicensedmiscellaneousareas)asat31December2014issetoutbelow:–

Occupancy Profile

TYPEGROSSRENTABLE


Vacant 0 0.0

TOTAL 42,211 100


YEAR

GROSSRENTABLE



TENANCY %OFTOTAL

2012 1,482 3.5 186,732 12.7 1 16.7

2013 40,729 96.5 1,289,197 87.3 5 83.3

TOTAL 42,211 100 1,475,929 100 6 100


YEAR

GROSSRENTABLE



TENANCY %OFTOTAL

2015 1,482 3.5 186,732 12.7 1 16.7

2016 40,729 96.5 1,289,197 87.3 5 83.3

TOTAL 42,211 100 1,475,929 100 6 100


YEAR

GROSSRENTABLE



TENANCY %OFTOTAL

3 42,211 100.0 1,475,929 100.0 6 100.0

TOTAL 42,211 100 1,475,929 100 6 100

Note:Theabovetenancyprofileexcludesashopwithanareaof382sq.ft.whichisletunderasingletenancywithPortionAof40/Fand43/Fto50/FofCitibankTower.


OFFICEMARKETOVERVIEW

SERVICES-SECTOROFFICEDEMAND

HongKong’sofficemarkethasgrownrapidlysincetheearly1980sreflectingtheemergenceofamoreservices-orientedeconomy.AsmanufacturingprocesseshavebeenrelocatedtothePearlRiverDeltawiththeopening-upoftheChineseeconomy,HongKong-basedcompanieshavefocusedmoreontheprovisionofservicesinthefieldsoffinance,logisticsandmanagement.

BeinglocatedinatimezonebetweenAsiaandEuropehasalsohelpedHongKongtobecomeaglobalfinancialcentre.Thesecharacteristicshavegivenrisetodemandforhigh-qualityofficespacetoaccommodateanincreasinglysophisticatedservices-driveneconomy.

OFFICESTOCK

ProximitytomainlandChinahasbenefitedHongKonggreatlywithitsabilitytotapintothevastresourcesandpopulationonitsdoorstep.AccordingtotheRatingandValuationDepartment,HongKong’stotalofficestockgrew3.5timesbetween1980and2013.

Attheendof2013,GradeAofficespace(75.3millionsq.ft.)accountedforapproximately64%ofallofficestock,whiletheremaining36%wasaccountedforbyGradesBandCspace.

Centralisthecentralbusinessdistrict(CBD)ofHongKong,andisalsothecentreofgovernment.Centralrepresentsapproximately30%oftotalofficestockofallgradesand27%ofthetotalstockofGradeAoffices.Central,togetherwiththeothertraditionalbusinessdistrictsofWanchai/CausewayBayandTsimShaTsui,representedmorethan52%oftotalGradeAofficestockattheendof2013.

RENTALTRENDS

AstrongreboundwasexperiencedbytheHongKongeconomyafterthesuccessfulcontainmentofSARSin2003andthisgrowthwasreflectedintheHongKongofficemarketwhenGradeAofficerentsreversedtheirdownwardtrendandroseconsistentlyfromQ4/2003.Aboomingfinancial-servicessectorhas,inturn,stimulateddemandfromprofessionalservicesfirms,whilethetradingandmanufacturingeconomyhasalsorecordedrobustgrowthovertheperiod.

AccordingtotheRatingandValuationDepartment,theaverageGradeAofficerentrosebyaround145%fromtheendofSeptember2003totheendofSeptember2008andadramaticgrowthofaround329%wasnotedinCentral.

WiththeoutbreakoftheglobalfinancialcrisisinQ3/2008,manyinthefinanceindustryexperiencedlayoffsanddownsizing,reducingdemandforprimeofficespaceandpullingoverallrentsdownby21%inJune2009,whilerentsinCentralfellby37%inthesameperiod.RentsquicklyturnedaroundfromQ3/2009onthebackofquantitativeeasingandthesubsequentreboundintheglobaleconomy,withnewleasingdemandfromoverseasfundsandfinance-relatedcompaniesfromthemainland.GradeAofficerentswentupby35%andofficerentsinCentralgrewby71%untilSeptember2011.


REPORTS

VALUATIONREPORT

WiththeintensifyingEuropeandebtcrisis,slowingeconomicconditionsandaweakeningIPOpipelineinthesecondhalfof2011,mainlandcompaniesweremorehesitanttopayaggressiverentsforprimeCentralspaces.Coupledwithinvestmentbanksandfundhouseseitherdownsizingoratleasthaltingexpansionplans,GradeAofficerentsinCentralfellby4%fromQ4/2011toQ3/2014.TherecentOccupymovementinCentralisanotherfactorbehindtheCentralofficedownturn,althoughtheimpactwasonlylimitedtothefewofficebuildingswithinthevicinityofOccupy.

Rentselsewhere(exceptCentral)showedmoreresilienceasthislatestcrisisismorefinancial-industryrelated,andaidedbytherobustretailsectorandinformationtechnologysectorlookingforofficespaceoutsideCentral,andlowvacancylevels,gradeAofficerentsintheoverallmarketgrowby17%fromQ4/2011toQ3/2014.

PRICE TRENDS

AdramaticturnaroundwaswitnessedintheGradeAofficesalesmarketin2003,withpricesdroppingoverthefirsthalfoftheyearandreboundingoverthesecondhalf,resultinginanaggregatewhole-yearincrease,thefirstyeartorecordayear-on-yearincreaseinGradeAofficevaluessince1996.

Positiveinvestmentsentimentcontinuedin2004whenpricesnearlydoubledonthebackofthestrongeconomicrecoveryandrisingrents.Althoughsomesignsofaslowdownwereobservedin2H/2005,whentheprimelendingrateincreasedfrom5.75%to7.75%,theoverallgrowthmomentumremainedstrongin2005.Furtherpriceincrementswererecordedin2006andthefirsteightmonthsof2007,withinvestmentsentimentheating-upagainasinterestratestrendeddownwards(theprimelendingratedecreasedto7.5%).FromthetroughinMay2003tothepeakattheendofMay2008,overallGradeAofficepricesincreasedby287%1andGradeAofficepricesinCentralgrewby423%beforetheglobalfinancialcrisis.

Tightenedliquiditycausedbythecreditcrunchandanegativeeconomicoutlookinstigatedthepessimisticinvestmentsentimentin2008and2009,andoverallandCentralGradeAofficepricesfellby36%and39%fromMay2008toMarch2009respectively.Loosenedmonetarypolicyandquantitativeeasingimprovedmarketliquidity,andtheonce-againactivestockmarketandrevitalisedleasingmarketinducedgoodinvestmentsentiment.OverallGradeAandCentralofficepricesroseby62%and179%respectivelyfromJune2009toSeptember2011.However,thespreadinganddeterioratingdebtcrisisintheeurozone,andthedowngradingofUScreditratingscausedfluctuationsintheglobalequitymarketanddampenedexpectationsofeconomicgrowthinthesecondhalfof2011.Thiscausedsomeshort-termfluctuationsinofficepricesovertheperiod.

Nevertheless,thegradualrelaxationofmacroeconomiccontrolsinChina,aswellastheannouncementofQE3inmid-2012,injectedrenewedoptimismintothepropertyinvestmentmarket,andoverallGradeAofficepricesgrewby18%fromQ4/2011toQ3/2014,whileCentral,withitsgrimleasingmarketoutlookandalreadyhighpricelevels,recordedamoremoderate3%increaseoverthesameperiodbasedonSavillsestimates.

Affectedbyaseriesofstampdutypolicymeasuresandnegativeinvestmentsentiment,GradeAofficepricesinCentralfellbyapproximately3%in2013.However,thelowinterestrateenvironmentandthereturnofenduserspurchasingledtopricesintheareareboundingbynearly3%inthefirstthreequartersof2014,basedonSavillsestimates.

1 Source:RatingandValuationDepartment


SUPPLY2

TheAsianfinancialcrisisin1997andagenerallackofsitesincoreofficelocationsactedtoconstraindevelopmentactivityinthelatterpartofthe1990sandthesupplyofofficeshadfallentolowlevelsby2000.TheaveragesupplyofGradeAofficespacebetween2001and2010stoodat1.8millionsq.ft.perannum,significantlybelowthe1991to2000averageof3.1millionsq.ft.perannum.ForecastsupplyofGradeAofficesbetween2014and2018isexpectedtoreachapproximately8.4millionsq.ft.,or1.7millionsq.ft.perannum,belowtheten-yearaveragesupplyof1.7millionsq.ft.recordedbetween2004and2013andbelowtheten-yearaveragetake-upof1.9millionsq.ft.perannumoverthesameperiod.

Newsupplyisexpectedtoremainatlowlevelsoverthenextfewyears,particularlyforGradeAofficesinthecoreareasofCentral,Wanchai/CausewayBay,TsimShaTsuiandtheemergingKowloonStationarea.GradeAofficesupplyincoreareasbetween2014and2018isexpectedtoreachapproximately1.4millionsq.ft.,or283,800sq.ft.perannum,whichisbelowtheten-yearaveragetake-upof0.4millionsq.ft.perannumrecordedbetween2004and2013.

LandforofficedevelopmentinCentralisscarce,andtherecentlycompletedLHTTower(theredevelopmentofLokHoiTongBuilding)and50CRC(theredevelopmentofCrocodileHouseIandII)arerelativelysmallprojects,providingonly133,700sq.ft.netand129,000sq.ft.netrespectively.TheredevelopmentofTheForumbyHongkongLandonlyprovidedanother49,438sq.ft.netin2013andisleasedtoStandardCharteredBank.

ExpectedGradeAofficesupplyinCentralfrom2014to2018includedonlyoneredevelopmentprojectat10–12Queen’sRoadCentral(113,267sq.ft.),tobecompletedin2016,willbeentirelyowneroccupied.

Itisnoteworthythatmostofthenewsupply(around83%from2014to2018or6.9millionsq.ft.)willcomeon-streamoutsidethecorebusinessdistricts,withthelargestsupplytobereleasedintheKowloonEastarea,whichwilltotal3.8millionsq.ft.overthenextfiveyears.

Giventhetightavailability,tenantsincorelocationsareexpectedtolookatoptionssuchassplittingoperations,decentralisingordowngradinginordertoaccommodatetheirchangingbusinessneeds.Nevertheless,thesubstantialsupplycomingon-streaminKowloonEastandKowloonWestmayprovidemorechoicesfortenantscurrentlylocatedincoreareasoutsideCentral,especiallyTsimShaTsuiandIslandEast,giventheirproximity.

VACANCY

Location-sensitivefinancial-servicestenantsaregenerallyreluctanttoleavetheCBD,andmanyhavecontinuedtoexpandinCentral,butthesetenantsarenowfacedwithafarmorelimitedchoiceofsuitableaccommodation.

Duringtheglobalfinancialcrisis,thevacancyrateinCentralwasrecordedatahighof7.5%inOctober2009.Officestockwasthenabsorbedbyrobustdemandfrommainlandandinternationalfinance-relatedcompanies,helpingtopullthevacancyratedownto2.2%uptoMay2011.WithhigherrentalofficecostsinCentral,tenantsacceleratedrelocationplansandmovedoperatingdepartmentstonon-coreareas.ThisledtotheofficevacancyrateinCentralrisingto5.3%inSeptember2012,whilevacancyintheCentralGradeAAAofficesectoralsoincreasedtoanhistoricalhighofaround6%inthesamemonth.Nevertheless,therevitalisedstockandIPOmarketshaveinducedsomerehiringinthefinancialsectorsincethelastquarterof2012,andvacancyratesofbothoverallCentralandGradeAAACentralofficesdeclinedto5.0%and1.8%inDecember2014respectively3.

2 Allareasareinsq.ft.netunlessotherwisestated.3 Source:Savillsestimates


REPORTS

VALUATIONREPORT

OUTLOOK

Althoughthestructuralshiftofthedomesticeconomyfrommanufacturingtoservicesisnowlargelycompleted,manufacturersinHongKongwillcontinuetotakeadvantageofthelowoperatingcostsinthePearlRiverDeltaregionandleverageHongKong’sadvancedbusiness-servicesskills,itsinfrastructureandexperienceininternationaltradetoexpandtheirbusinesses.

Meanwhile,thefinancesector,andrelatedbusinessservices,isexpectedtobenefitfromthegrowingstrengthoftheeconomyandtherapiddevelopmentofmainlandChina.Increasingdemandforhigher-endservicessuchaspersonalbanking,tradefinance,fundraising,andoffshorerenminbibusinessisexpectedfromtheregion.

Thecontinuousexpansionofluxuryretailbrandsinthecitymeanstheyarestillactivelypursuingofficespacesfortheirexpandedoperations,andalthoughmanyofthemmaysettleinnon-coreareasduetoavailabilityandcostissues,wedeemthisasanotherpositivedrivefortheofficesectoroverthenextfewyears.

Throughout2015,whileweexpectdemandtoreviveinmostsubmarkets,thefuturerelationshipbetweenHongKongandChina,aswellashowmajorinvestorsperceiveHongKong,couldbecomekeyfactorsdictatingmovementintheofficemarket.OverseasinvestorsmaydemandanincreasedriskpremiumforHongKongifthecurrentdisruptionworsens,resultinginhigherhurdlestosetupbusinessoperations.Todate,wenoteverylittledirectimpactonrentalvalues,althoughsomeincreaseinleasingbymainlandfinancialcompanieshavebeennotedduetotheHongKong-ShanghaiStockConnect.WithavailablespacestartshrinkingincoreCentralandfuturesupplylevelsremainingextremelylow,weexpecttheCentralleasingmarkettobottomoutin2015.


EagleAssetManagement(CP)LimitedSuite3008,30/F,GreatEagleCentre23HarbourRoadWanchai,HongKong(theManagerforChampionRealEstateInvestmentTrust“ChampionREIT”)

HSBCInstitutionalTrustServices(Asia)Limited17/F,Tower2&3,HSBCCentre1ShamMongRoad,KowloonHongKong(theTrusteeforChampionREIT)

SavillsValuationandProfessionalServicesLimited

23/FTwoExchangeSquareCentral,HongKong

EALICENCE:C-023750T:(852)28016100

savills.com

6February2015

DearSirs

RE:(1)HIGHBLOCK(EXCEPTHBCAF(ASDEFINEDINTHESUB-DEEDOFMUTUALCOVENANTAFFECTINGTHEHIGHBLOCKDATED8JULY2005)ANDSUITESNOS.01,02,03,05,06,07,08,09,10,11,12AND15ONLEVELS35,36,37AND55),8ARGYLESTREET,(2)RETAILBLOCK,LANGHAMPLACE,8ARGYLESTREET,(3)CARPARK,8ARGYLESTREETAND555AND557SHANGHAISTREET,AND(4)RESERVEDAREA,8ARGYLESTREETAND555AND557SHANGHAISTREET,MONGKOK,KOWLOON(“THEPROPERTY”)

InaccordancewiththerecentinstructionsoftheManageronbehalfofChampionREITtovaluetheProperty,weconfirmthatwehavecarriedoutinspections,maderelevantenquiriesandsearchesandobtainedsuchfurtherinformationasweconsidernecessaryforthepurposeofprovidingyouwithouropinionofthemarketvalueofthePropertyasat31December2014(referredtoasthe“ValuationDate”)foraccountingpurposes.

BASISOFVALUATION

OurvaluationisouropinionofthemarketvalueofthePropertywhichwewoulddefineasintendedtomean“theestimatedamountforwhichasassetorliabilityshouldexchangeonthevaluationdatebetweenawillingbuyerandawillingsellerinanarm’slengthtransactionafterpropermarketingandwherethepartieshadeachactedknowledgeably,prudentlyandwithoutcompulsion”.

Marketvalueisunderstoodasthevalueofanassetorliabilityestimatedwithoutregardtocostsofsaleorpurchase(ortransaction)andwithoutoffsetforanyassociatedtaxesorpotentialtaxes.

WeareindependentofChampionREITandhavecarriedoutthevaluationindependentlyandimpartially.OurvaluationispreparedinaccordancewithChapter6.8oftheCodeonRealEstateInvestmentTrustpublishedbytheSecuritiesandFuturesCommissionofHongKongandTheHKISValuationStandards(2012Edition)publishedbytheHongKongInstituteofSurveyors.


REPORTS

VALUATIONREPORT

VALUATIONMETHODOLOGIES

WehavevaluedthePropertyonthebasisofcapitalizationofthenetincomeshownonscheduleshandedtousandalsobyreferencetosalesevidenceavailableinthemarket.

Inarrivingatouropinionofvalue,wehaveconsideredrelevantgeneralandeconomicfactorsandinparticular,wehaveinvestigatedrecentsalesandleasingtransactionsofcomparableproperties.Inthecourseofourvaluationanalysis,wehaveprincipallyadoptedtheIncomeCapitalizationApproachandcounter-checkedbytheDirectComparisonApproach.Forthepurposesofthisvaluation,weconsidertheIncomeCapitalizationApproachtobethemostappropriatevaluationmethodforassessingthemarketvalueofthePropertywithregardtotheincome-drivennatureoftheProperty.WehaveassumedthatnosignificantcapitalexpenditurebytheownersofthePropertywillberequiredintheforeseeablefuture.

INCOMECAPITALIZATION

TheIncomeCapitalizationApproachisamethodofvaluationwherebytheexistingrentalincomeofalllettableunitsofthePropertyarecapitalizedfortheirrespectiveunexpiredtermsofcontractualtenancieswhilstvacantunitsareassumedtobeletattheirrespectivemarketrentsasattheValuationDate.Uponexpiryoftheexistingtenancies,eachunitisassumedtobeletatitsmarketrentasattheValuationDate,whichisinturncapitalizedatthemarketyieldasexpectedbyinvestorsforeachtypeofproperty.DueconsiderationhasbeengiventoexpectationsoftherenewalofGovernmentleaseuponitsexpiry.Thesummationofthecapitalizedvalueofthetermincomefortheleasedportion,thecapitalizedvalueofthereversionincomeasappropriatelydeferredfortheleasedportionandthecapitalizedvalueforthevacantportionprovidesthemarketvalueoftheProperty.

Themarketrentalsofalllettableunitsaremade(a)byreferencetotherentalsfetchedinthePropertyand(b)byreferencetothelettingsofsimilarpropertiesintheneighbourhood.Thecapitalizationrateadoptedismadebyreferencetotheyieldsachievedinanalysedmarketsalestransactionsandourknowledgeofthemarketexpectationfrompropertyinvestors.Thisexpectedreturnreflectsimplicitlythequalityoftheinvestment,theexpectationofthepotentialforfuturerentalgrowthandcapitalappreciation,operatingcosts,riskfactorandthelike.Ouradoptedcapitalizationrateforboththeretailandofficeaccommodationsis4.00%.

DIRECTCOMPARISON

Asasupportingapproachtothevaluation,wehavealsoconsideredtheDirectComparisonApproachasacheckforthevaluationarrivedatfromusingtheIncomeCapitalizationApproach.Inthisregard,comparablesalestransactionsofbothen-blocandstrata-titleGradeAofficepremisesinbusinessdistrictsoftheKowloonPeninsulaaroundtheValuationDatearecollectedandanalyzedeachintermsofapricepersquarefootage.Moreover,comparablesalestransactionsofretailpropertiesinMongKokDistrictarecollectedandanalyzedeachintermsofapricepersquarefootage.ThecollectedcomparablesarethenadjustedtotakeaccountofthediscrepanciesbetweenthePropertyandcomparablesintermsoftime,location,age,buildingqualityandthelike.

TITLEINVESTIGATIONS

WehavenotbeenprovidedwithextractsfromtitledocumentsrelatingtothePropertybutwehavecausedsamplesearchestobemadeattheLandRegistry.Wehavenot,however,searchedtheoriginaldocumentstoverifyownershiportoascertaintheexistenceofanyamendmentwhichdoesnotappearonthecopieshandedtous.Wedonotacceptaliabilityforanyinterpretationwhichwehaveplacedonsuchinformationwhichismoreproperlythesphereofyourlegaladvisers.


VALUATIONCONSIDERATION

Wehavereliedtoaveryconsiderableextentoninformationgivenbytheinstructingpartyandhaveacceptedinformationgiventousonsuchmattersasplanningapprovalsorstatutorynotices,easements,tenure,lettings,incomes,floorareasandallotherrelevantmatters.Wehavenoreasontodoubtthetruthandaccuracyoftheinformationprovidedtousbytheinstructingparty,andhavebeenadvisedbytheinstructingpartythatnomaterialfactshavebeenomittedfromtheinformationprovided.

Wehavenotcarriedoutdetailedon-sitemeasurementstoverifythecorrectnessofthefloorareasinrespectofthePropertybuthaveassumedthatthefloorareasshownonthedocumentshandedtousarecorrect.Dimensions,measurementsandareasincludedinthevaluationreportarebasedoninformationcontainedinthedocumentsprovidedtousbytheinstructingpartyandarethereforeonlyapproximations.

WehaveinspectedtheexteriorofthePropertyvaluedand,wherepossible,wehavealsoinspectedtheinteriorofthepremises.However,nostructuralsurveyhasbeenmade,butinthecourseofourinspection,wedidnotnoteanyseriousdefect.Wearenot,however,abletoreportthatthePropertyisfreeofrot,infestationoranyotherstructuraldefect.Notestswerecarriedouttoanyoftheservices.OurinspectionwasundertakenbyMr.VictorChow,MHKIS,on31December2014.

Noallowancehasbeenmadeinourreportforanycharge,mortgageoramountowingonthePropertynorforanyexpenseortaxationwhichmaybeincurredineffectingasale.Unlessotherwisestated,itisassumedthatthePropertyisfreefromencumbrances,restrictionsandoutgoingsofanonerousnaturewhichcouldaffectitsvalue.

Thereportedanalyses,opinionsandconclusionsaresubjecttotheassumptionsandlimitingconditionsstatedinourvaluationcertificateandareourpersonal,unbiasedprofessionalanalyses,opinionsandconclusions.WehavenopresentorprospectiveinterestinthePropertyandarenotarelatedcorporationofnordowehavearelationshipwiththeTrustee,theManagerorotherparty/partieswhoChampionREITiscontractingwith.Thevaluer’scompensationisnotcontingentuponthereportingofapredeterminedvalueordirectioninvaluethatfavoursthecauseoftheVendor,theamountofthevalueestimate,theattainmentofastipulatedresult,ortheoccurrenceofasubsequentevent.

Inaccordancewithourstandardpractice,wemuststatethatthisvaluationreportisfortheuseonlyofthepartiestowhomitisaddressedandnoresponsibilityisacceptedtoanyotherpartyforthewholeoranypartofitscontents.

Weencloseherewithourvaluationandmarketoverview.

YoursfaithfullyForandonbehalfofSavills Valuation and Professional Services LimitedCharles C K ChanMScFRICSFHKISMCIArbRPS(GP)Managing Director

* MrCharlesCKChan,charteredestatesurveyor,MSc,FRICS,FHKIS,MCIArb,RPS(GP),hasbeenaqualifiedvaluersinceJune1987andhasabout30yearsexperienceinthevaluationofpropertiesinHongKong.


REPORTS

VALUATIONREPORT

VALUATIONCERTIFICATE

PROPERTY

(1)HighBlock(exceptHBCAF(asdefinedintheSub-DeedofMutualCovenantaffectingtheHighBlockdated8July2005)andSuitesNos.01,02,03,05,06,07,08,09,10,11,12and15onLevels35,36,37and55),8ArgyleStreet,(2)RetailBlock,LanghamPlace,8ArgyleStreet,(3)Carpark,8ArgyleStreetand555and557ShanghaiStreet,and(4)ReservedArea,8ArgyleStreetand555and557ShanghaiStreet,MongKok,Kowloon.

1,075,082/1,963,066thundividedpartsorsharesofandinKowloonInlandLotNo.11099.

DESCRIPTIONANDTENURE

LanghamPlaceisaretail/office/hotel/carparkcomplexerectedontworectangularsites,separatedbyShanghaiStreet,havingaregisteredtotalsiteareaof11,976sq.m.(128,910sq.ft.).Thedevelopmentwascompletedin2004.

Currentlystandingontheeasternsiteisa59-leveltower(Comprising46levelsofoffice,fourlevelsofshop,fivemechanicalfloors,tworefugefloorsandtworooffloors)anda15-storeyretailbuilding(includingtwobasementlevels)erectedoverthreelevelsofbasementcarpark.

Currentlystandingonthewesternsiteisahotelbuiltovertwolevelsofbasementcarpark.Inaddition,government,institutionandcommunityfacilitiesaswellaspublicopenspaceareprovidedonthesite.

TwocoveredfootbridgesandanundergroundvehicletunnelacrossShanghaiStreetareconstructedtointer-connectthedevelopmentbetweenthetwoseparatesites.

ThePropertycomprisestheofficefloorsfromLevel6toLevel60(Levels13,14,24,34,44and58areomittedfromfloornumbering)oftheHighBlock,8ArgyleStreetexceptHBCAF(asdefinedintheSub-DeedofMutualCovenantaffectingtheHighBlockdated8July2005)andSuitesNos.01,02,03,05,06,07,08,09,10,11,12and15onLevels35,36,37and55withaGrossRentableAreaofapproximately65,302.03sq.m.(702,911sq.ft.).

ThePropertyalsocomprisestheRetailBlock,LanghamPlace,8ArgyleStreetfromBasement2toLevel13withaTotalFloorAreaofapproximately54,797.84sq.m.(589,844sq.ft.)andaGrossRentableAreaofapproximately29,648.18sq.m.(319,133sq.ft.).

ThePropertyalsocomprisesacarparkatthebasementlevels,8ArgyleStreet,and555and557ShanghaiStreetaccommodatingatotalof250carparkingspaces.

KowloonInlandLotNo.11099isheldfromtheGovernmentunderConditionsofExchangeNo.UB12557from18February2000to30June2047atanannualGovernmentrentequivalentto3%oftherateablevalueforthetimebeingofthelot.


PARTICULARSOFOCCUPANCY

TheofficeportionofthePropertyisletundervarioustenanciesmostlyfortermsoftwoorthreeyearswiththelastexpirydateinNovember2021yieldingatotalmonthlyrentalofapproximatelyHK$26.12millionexclusiveofratesandmanagementfees.Threetenanciescontainanoptiontorenewforafurthertermatthethenprevailingmarketrent.

TheretailportionofthePropertyisletundervarioustenanciesmostlyfortermsoftwoorthreeyearswiththelastexpirydateinJuly2024atatotalmonthlybasicrentofapproximatelyHK$53.46millionexclusiveofratesandmanagementfees.Mostofthetenanciesaresubjecttoturnoverrent.TheaveragemonthlyturnoverrentreceivablefromJanuary2014toNovember2014isaboutHK$6.9 million.

Thecurrentoccupancyratesoftheofficeandretailportionsarebothapproximately100%.

Thecarparkisoperatedasafee-payingpubliccarparkletonmonthlyandhourlybases.TheaveragetotalmonthlyincomefromJanuary2014toDecember2014isapproximatelyHK$1,562,000.

Miscellaneousincomesaregeneratedfromlightboxes,signagespacesandothermiscellaneousitemsatanaveragemonthlytotallicencefeeofapproximatelyHK$1,402,000fromJanuary2014toDecember2014.

MARKETVALUEINEXISTINGSTATEASAT31DECEMBER2014

HK$26,106,000,000

ESTIMATEDNETPROPERTYYIELD

4.1%


REPORTS

VALUATIONREPORT

Notes:

(1) TheregisteredownerofthePropertyasattheValuationDateisBeningtonLimited.

(2) ThePropertyalsocomprisestheReservedAreadefinedintheDeedofMutualCovenantandManagementAgreementdated27June2005asthosepartsoftheDevelopmentnotspecificallyincludedintheGovernmentAccommodationoranyComponent,theDevelopmentCAForHB/RetailCAF(alltermsasdefinedinthesaidDeedofMutualCovenantandManagementAgreement)andreservedfortheexclusiveuseandenjoymentofBeningtonLimited.

(3) TheofficeportionofthePropertyissubjecttoaLegalChargeinfavourofHangSengBankLimited(onitsownbehalfandasagentforthelenders).

(4) FortheofficeportionoftheProperty,theGrossRentableAreaisequaltotheTotalFloorArea.

(5) ThePropertylieswithinanareazoned“Commercial(2)”underMongKokOutlineZoningPlan.

(6) Thebreakdownofourvaluationinrespectofdifferentusesissetoutbelow:

USEMARKETVALUE

ASAT31DECEMBER2014 Retail HK$17,702,000,000

Office HK$7,869,000,000

Carpark HK$315,000,000

Miscellaneous HK$220,000,000 TOTAL: HK$26,106,000,000

(7) BasedonthetenancyinformationprovidedbytheManager,ouranalysisoftheexistingtenancyprofilefortheofficeportionoftheProperty(excludingthelicensedmiscellaneousareas)asat31December2014issetoutbelow:–

Occupancy Profile

TYPEGROSSRENTABLE

AREA(SQ.FT.) %OFTOTAL Leased 702,911 100

Vacant 0 0 TOTAL 702,911 100


YEAR

GROSSRENTABLE



TENANCY %OFTOTAL

2010 76,735 10.9 2,572,408 9.8 3 4.5

2012 61,497 8.7 2,269,353 8.7 11 16.7

2013 291,364 41.5 10,725,132 41.1 23 34.8

2014 273,135 38.9 10,553,797 40.4 29 44.0

TOTAL 702,911 100 26,120,689 100 66 100


YEAR

GROSSRENTABLE



TENANCY %OFTOTAL

2015 104,149 14.8 3,732,523 14.3 17 25.8

2016 373,205 53.1 13,584,226 52.0 25 37.9

2017 86,339 12.3 3,180,133 12.2 15 22.7

2018 36,171 5.1 1,447,289 5.5 3 4.5

2019 58,910 8.4 2,276,702 8.7 4 6.1

2020 26,739 3.8 1,229,994 4.7 1 1.5

2021 17,398 2.5 669,823 2.6 1 1.5

TOTAL 702,911 100 26,120,689 100 66 100



YEAR

GROSSRENTABLE



TENANCY %OFTOTAL

2 73,561 10.5 2,576,483 9.9 12 18.2

3 410,646 58.4 15,257,208 58.4 41 62.1

4 17,398 2.5 704,619 2.7 1 1.5

5 80,434 11.4 3,110,155 11.9 7 10.6

6 103,474 14.7 3,802,402 14.5 4 6.1

8 17,398 2.5 669,823 2.6 1 1.5

TOTAL 702,911 100 26,120,689 100 66 100

Note:Theabovetenancyprofileexcludes5tenancyrenewalsfortermsof2or3yearscommencingintheperiodfromJanuary2015toMarch2015and2committednewlettingsfortermsof2to3yearscommencingintheperiodfromApril2015toMay2015.

(8) BasedonthetenancyinformationprovidedbytheManager,ouranalysisoftheexistingtenancyprofilefortheretailportionoftheProperty(excludingthelicensedmiscellaneousareas)asat31December2014issetoutbelow:–

Occupancy Profile

TYPEGROSSRENTABLE


Vacant 54 0.0

TOTAL 319,133 100


YEAR

GROSSRENTABLE

AREA(SQ.FT.) %OFTOTAL

MONTHLYBASICRENTAL

(HK$) %OFTOTALNO. OF

TENANCY %OFTOTAL

2010 21,885 6.9 2,041,260 3.8 5 2.5

2011 7,605 2.4 720,860 1.3 2 1.0

2012 65,088 20.4 11,042,632 20.7 42 20.9

2013 109,867 34.4 24,406,813 45.7 87 43.3

2014 114,634 35.9 15,244,452 28.5 65 32.3

TOTAL 319,079 100 53,456,017 100 201 100


REPORTS

VALUATIONREPORT


YEAR

GROSSRENTABLE


MONTHLYBASICRENTAL


TENANCY %OFTOTAL

2014 136 0.0 28,880 0.1 1 0.5

2015 82,352 25.8 11,455,556 21.4 68 33.8

2016 76,791 24.1 15,169,076 28.4 82 40.8

2017 55,518 17.4 10,568,386 19.8 37 18.4

2018 45,019 14.1 10,391,571 19.4 10 5.0

2019 14,523 4.6 1,009,215 1.9 2 1.0

2024 44,740 14.0 4,833,333 9.0 1 0.5

TOTAL 319,079 100 53,456,017 100 201 100


YEAR

GROSSRENTABLE


MONTHLYBASICRENTAL


TENANCY %OFTOTAL

1 5,428 1.7 896,249 1.7 5 2.5

2 14,846 4.7 2,624,487 4.9 40 19.9

3 135,275 42.4 25,928,200 48.5 129 64.1

4 31,611 9.9 3,336,409 6.2 13 6.5

5 87,179 27.3 15,837,339 29.6 13 6.5

10 44,740 14.0 4,833,333 9.1 1 0.5

TOTAL 319,079 100 53,456,017 100 201 100

Note:Theabovetenancyprofileexcludes11tenancyrenewalsfortermsof1to3yearscommencingintheperiodfromJanuary2015toJuly2015and16committednewlettingsfortermsof2to5yearscommencingintheperiodfromMarch2015toNovember2015.


OFFICEMARKETOVERVIEW

SERVICES-SECTOROFFICEDEMAND

HongKong’sofficemarkethasgrownrapidlysincetheearly1980sreflectingtheemergenceofamoreservices-orientedeconomy.AsmanufacturingprocesseshavebeenrelocatedtothePearlRiverDeltawiththeopening-upoftheChineseeconomy,HongKong-basedcompanieshavefocusedmoreontheprovisionofservicesinthefieldsoffinance,logisticsandmanagement.

BeinglocatedinatimezonebetweenAsiaandEuropehasalsohelpedHongKongtobecomeaglobalfinancialcentre.Thesecharacteristicshavegivenrisetodemandforhigh-qualityofficespacetoaccommodateanincreasinglysophisticatedservices-driveneconomy.

OFFICESTOCK1

ProximitytomainlandChinahasbenefitedHongKonggreatlywithitsabilitytotapintothevastresourcesandpopulationonitsdoorstep.AccordingtotheRatingandValuationDepartment,HongKong’stotalofficestockgrew3.5timesbetween1980and2013.

Attheendof2013,GradeAofficespace(75.3millionsq.ft.)accountedforapproximately64%ofallofficestock,whiletheremaining36%wasaccountedforbyGradesBandCspace.

YauMaTei/MongKokisadecentralisedbusinessdistrictinfringeKowloonandisapopularofficelocationfortrading,consumergoodsandinsurancecompanies.YauMaTei/MongKokrepresentedapproximately8%oftotalofficestockofallgrades(9.1millionsq.ft.)and5%ofthetotalstockofGradeAoffices(3.6millionsq.ft.)in2013.YauMaTei/MongKok,togetherwiththeotherdecentralisedofficeareasofIslandEast,KowloonEastandKowloonWest2,representedaround37%oftotalGradeAofficestockattheendof2013.

RENTALTRENDS

Financialturmoilbeganinearly2008andintensifiedinSeptemberaftertheLehmanBrothersbankruptcydisruptedthestockmarketandaffectedpropertymarketsentiment,bothofwhichhadprovedfairlyrobustsincethecontainmentofSARSin2003.Theofficesectorwasthefirsttoexperiencetheeffects,withroundsoflayoffsinthefinancialindustrycausinganacutedeclineindemandforofficespace,particularlyincoreareas.Nevertheless,nolarge-scalesurrendersorhand-backsofspacehavebeennotedfrominvestmentbanksandassetmanagementhousesthusfar.

AccordingtodatafromtheRatingandValuationDepartment,theaverageGradeAofficerentrosebyaround145%fromtheendofSeptember2003totheendofSeptember2008,withariseofaround122%notedinYauMaTei/MongKok.DuringtheglobalfinancialcrisisperiodinQ3/2008toQ2/2009,manyinthetradingindustryexperiencedlayoffsanddownsizing,reducingdemandforofficespaceandpullingrentsdownby21%inJune2009,whilerentsinYauMaTei/MongKokfellby23%inthesameperiod.RentsquicklyturnedaroundinQ3/2009onthebackofinternaldemandstimulationduetothemainland’sfiscalpoliciesandthesubsequentreboundintheglobaltradingmarket.GradeAofficerentswentupby35%andrentsinYauMaTei/MongKokgrewby71%untilSeptember2011.

1 Allareasareinternalfloorareas(IFA)unlessotherwisestated.2 IslandEastincludesNorthPoint/QuarryBay;KowloonEastIncludesKwunTongandKowloonCity;andKowloonWestincludesYauMaTei/MongKok,ShamShuiPo,

KwaiTsingandTsuenWan.


REPORTS

VALUATIONREPORT

WiththeintensifyingEuropeandebtcrisis,slowingeconomicconditionsandweakeningexternalexportdemandsintheeurozoneandUSinthesecondhalfof2011,tradingcompanieswerefacinganotherdownturninexternaltrading.Nevertheless,thestronglocalretaildemandhasmorethanpickeduptheslack,withretailersactivelylookingforexpansion.Asaresult,GradeAofficerentsroseby17%fromQ4/2011toQ3/2014.RentsinYauMaTei/MongKokfellonly1%overthesameperiodonthebackofaweakeningexternaltradingsector.Moreover,ICC,whichislocatedinYauMaTeidistrict,accommodatedmanyfinancialtenantsandhadexperiencedadeclineinrentsduetorecentfinancialinstability,whichinturnrestrictedtherentalgrowthinYauMaTei/MongKokdistrict.TherecentOccupymovementinMongkokwasanothernegativefactorontheofficesectorinthissubmarket.

PRICE TRENDS

Thepropertymarketdownturnduringtheglobalfinancialcrisishitthesalesmarketfarmoreseverelythantheleasingmarket,asspeculators,whoenteredthemarketin2007,soldtheirholdingsthroughout2008inthefaceofdampenedmarketsentimentandtightenedcreditavailability.Afterrisingbymorethan287%fromthetroughinMay2003tothepeakinMay2008,GradeAofficepricesfellby36%fromthepeakofMay2008tothetoughofMarch20093.

Loosenedmonetarypolicyandquantitativeeasingimprovedmarketliquidity,andtheonce-againactivestockmarketandrevitalisedleasingmarketinducedgoodinvestmentsentiment.Withimprovingexternaldemandduetoaquickrecoveryoftheglobaleconomy,GradeAofficepricesroseby62%fromQ2/2009toSeptember2011.However,thespreadinganddeterioratingdebtcrisisintheeurozoneandthedowngradingofUScreditratingscausedfluctuationsintheglobalequitymarketanddampenedexpectationsofeconomicgrowthinthesecondhalfof2011.Thiscausedsomeshort-termfluctuationsinofficepricesovertheperiod.

Nevertheless,thegradualrelaxationofmacroeconomiccontrolsinChina,aswellastheannouncementofQE3inmid-2012,injectedrenewedoptimismintothepropertyinvestmentmarket,andoverallGradeAofficepricesgrewby8%fromQ4/2011toQ3/2012.

VariousmeasureshavebeenimplementedbythegovernmentsinceQ4/2012tohelpcurbspeculationinthepropertymarket,includingtheBuyer’sStampDutyandDoubleStampDuty,thelatterbeingthefirstrestrictivemeasureonthecommercialmarket.Nevertheless,despitesuccessfullysuppressingtransactionvolumes,GradeAofficepriceshavebeenmoderateinthethirdquarterthisyearandrecordedagrowthof6.6%fromQ4/2012toQ3/2014accordingtotheRatingandValuationDepartment.

SUPPLY4

TheAsianfinancialcrisisin1997,combinedwithagenerallackofsitesincoreofficelocations,actedtoconstraindevelopmentactivityinthelatterpartofthe1990s,andthesupplyofofficeshadfallentolowlevelsby2000.TheaveragesupplyofGradeAofficespacebetween2001and2012stoodat1.7millionsq.ft.perannum,significantlybelowthe1991to2000averageof3.1millionsq.ft.perannum.

Lookingahead,thenewsupplyofGradeAofficesisexpectedtoremainatlowlevels,particularlyinthecoreareasofCentral,Wanchai/CausewayBay,TsimShaTsuiandtheYauMaTei/MongKokarea.GradeAofficesupplyincoreareasbetween2014and2018isexpectedtoreachapproximately1.4millionsq.ft.,or283,800sq.ft.perannum,whichisbelowtheten-yearaveragetake-upof0.4millionsq.ft.perannumofcoreareasrecordedbetween2004and2013.Notably,noneofthenewsupplywillbeinYauMaTei/MongKok.

3 Source:RatingandValuationDepartment4 Allareasareinsq.ft.netunlessotherwisestated.


Itisnoteworthythatmostofthenewsupply(around83%from2014to2018or6.9millionsq.ft.)willcomeon-streamoutsidethecorebusinessdistricts,withthelargestsupplytobereleasedintheKowloonEastarea,whichwilltotal3.8millionsq.ft.overthenextfiveyears.

Giventhetightavailability,tenantsincorelocationsareexpectedtolookatoptionssuchassplittingoperations,decentralisingordowngradinginordertoaccommodatetheirchangingbusinessneeds.Nevertheless,thesubstantialsupplycomingon-streaminKowloonEastandKowloonWestmayprovidemorechoicesfortenantscurrentlylocatedincoreareasoutsideCentral,especiallyTsimShaTsuiandIslandEast,giventheirproximity.

VACANCY

Thelayoffsandbelt-tighteningmeasureswhichtookplaceduringthefinancialcrisishavenotyetresultedinalargenumberofsurrendercasesintheofficemarket.OfficevacancyinKowloonWestwasat11.9%inDecember2008asnewsupplygraduallyenteredthemarket,KowloonEastvacancywasat28.5%,whilevacancyinMongKokstoodat4.6%inthesameperiod5.

WiththequickeconomicrecoverystartinginQ2/2009,tenantshavebeenacceleratingdecentralisationplans,shiftingoperationdepartmentsfromcoredistrictstoKowloonEast,KowloonWestandMongKok,whichsignificantlyhelpstopulldownvacancyratesinthedecentralisedareas.Vacancyratesrecordedlowlevelsof1.5%inKowloonWest,2.7%inKowloonEastand0.8%inMongKokinDecember2014.

OUTLOOK

Demandforofficespacefromthetradingsectorisexpectedtoremainlowastheeurozonedebtcrisiscontinuestotroubletheconsumermarketthere,withmanymultinationalsholding-upexpansionplans.

Thecontinuousexpansionofinternationalretailbrandsinthecitymeanstheyarestillactivelypursuingofficespacesfortheirexpandedoperations,andalthoughmanyofthemmaysettleinnon-coreareasduetoavailabilityandcostissues,wedeemthisasapositivedrivefortheofficesectoroverthenextfewyears.

Therefore,withfutureofficesupplyremainingtight,theretailsectorstillactivelylookingforbothretailandofficespaceinnon-coreareas,andnonewsupplyatallexpectedtocomeon-streamintheMongKokarea,bothrentsandvaluesshouldbewellsupported.

5 Source:Savillsestimates


REPORTS

VALUATIONREPORT

RETAILMARKETOVERVIEW

RETAILSTOCK

Thetotalstockofprivatecommercialpremises6inHongKongincreasedby141%between1980and2013,tototal117millionsq.ft.attheendof20137.Forty-onepercentofprivatecommercialstockislocatedinKowloonwhileHongKongIslandandtheNewTerritoriesaccountedforaround30%and29%oftheremainingcommercialstockrespectively,in2013.

Asthetotalstockofprivatecommercialpremiseshasincreasedovertime,percapitastock8hasalsorisenalongwithincreasingincomelevels.Percapitastockstoodat16.2sq.ft.perpersonattheendof2013,representinganincreaseof6.4sq.ft.perpersonsince1981.

Beingapopulartouristspotaswellasaretailandentertainmentcentreforlocals,YauTsimMongplayshosttoanumberofhigh-profileshoppingmalls,includingHarbourCity,K11,isquare,GrandCenturyPlaceandLanghamPlace.Totalprivatecommercialstockintheareaamountedto22.4millionsq.ft.attheendof2013,representing47%oftotalstockinKowloon.

MongKokisaretailhubpopularamonglocalyoungsters.Besideslarge-scaleshoppingmalls,theareaisalsocharacterisedbyclustersofstreetshopswithabalancedmixoftradescateringforbothlocalsandtourists.

RENTALTRENDS

Thestrongreboundinthelocaleconomy,aswellastheimplementationoftheIndividualVisitScheme,inducedasolidrecoveryintheretailmarket,withprivateretailrentsincreasingbyaround40%fromJune2003toJuly2008.DuringthefinancialcrisisbetweenQ3/2008toQ2/2009,theglobaleconomicdownturnhitlocalconsumerconfidence,withescalatingunemploymentratesanddecliningincomes.Retailsales,particularlyintouristareas,wereadverselyaffected;privateretailrentsdeclinedby9%fromthepeakofQ3/2008toApril2009,reflectingtheshort-termnatureofthesubduedretailsentiment.However,therobusttouristmarketandimprovinglocalconsumersentimentcontinuedtosupportthegrowthofretailsalesandrents.Inaddition,internationalbrandshavebeenestablishingtheirflagshipstoresintouristareas.Privateretailrentsrecoveredandroseby65%uptoNovember2014,accordingtoprovisionalfiguresfromtheRatingandValuationDepartment.Althoughtheoverallretailrenthasnotrecordedanydecline,therecentOccupymovementinMongkok,CentralandCausewayBayshouldhaveanegativeimpactontheindividualsubmarket,manyretailershavealreadyannouncedafallinretailsales,accordingtotheCensusandStatisticsDepartment,Jewellery,watchesandclocks,andvaluablegiftsfell11.3%inVolume(Jan–Nov2014overJan–Nov2013).

6 DefinedbytheRatingandValuationDepartment,privatecommercialpremisesincluderetailpremisesandotherpremisesdesignedoradoptedforcommercialuse,withtheexceptionofpurpose-builtoffices.Carparkingspacesareexcluded.

7 AccordingtotheRatingandValuationDepartment,from2006onwardsprivatecommercialstockfiguresincludepropertiesownedbyTheLinkREIT,whichhadatotalIFAof10.3millionsq.ft.in2006.

8 Totalyear-endprivatecommercialstockdividedbytotalyear-endpopulation.


PRICE TRENDS

Theinfluxofmainlandvisitorschangedthelandscapeoftheretailmarketfrom2003onwardsandretailpricesincreasedmuchfasterthanretailrents,reflectingtheoptimisticoutlookofinvestorsgiventheimplicationsofthisnewdemanddriverforthebusinessgrowthofretailers.Nevertheless,thedampeningofinvestmentsentimentfromthemiddleof2008,togetherwiththeshrinkingcreditavailability,putpressureonlessaffluentlandlordstosellofftheirholdingsatdiscountedprices.Privateretailprices,afterrisingbymorethan145%fromatroughinQ2/2003toJuly2008,declinedby17%uptoApril20099.

Withtheavailabilityofliquidity,ashortageofnewsupplyandapositiveinvestmentsentimentintheretailsector,theretailinvestmentmarketwasveryactivefrom2010to2012,aidedbytheQE3bytheUSFederalReservesinmid2012,withprivateretailpricesrisingby214%fromApril2009tothepeakinNovember2014.

SUPPLY10

Between1980and2013,privatecommercialsupplyaveragedapproximately1.9millionsq.ft.perannum.However,supplylevelsweresignificantlylowerinthe2000scomparedwiththeprevioustwodecades.In2006,shoppingcentresupplyreachedarecentpeakwhensome2.0millionsq.ft.wascompleted,includingsomelargerscalemallssuchasElementslocatedinTsimShaTsuiandMegaBoxlocatedinKowloonBay.

Only884,990sq.ft.ofmajorshoppingcentresupplyisexpectedperyearbetween2014and2018,withthehighestproportionofnewcentreslocatedintheNewTerritories,representing84%oftotalfuturesupply.

Allofthenewshoppingcentresforecastedforcompletionby2014aresmallinscale,withGFAsoflessthan130,000sq.ft..Thisisincomparisonwithsomelargershoppingcentres,suchasHysanPlace(400,000sq.ft.)inCausewayBayandVCity(269,000sq.ft.)inTuenMunwhichwerecompletedin2012.

RetailspaceoftheNewWorldCentreredevelopmentwillbethespotlightinTsimshatsuiuponcompletionin2018,however,theretailscaleinthisprojectisnotyetdetermined.Notably,mostofthelarge-scaleshoppingcentresupplyintheNewTerritoriescomprisestheretailpodiumsoflargeresidentialestates.

TAKE-UPANDVACANCY

Take-upaveragedapproximately1.5millionsq.ft.perannumbetween1980and2013,whilethevacancyrateaveragedapproximately8.1%overthesameperiod.Averagetake-upbetween1980and1989,between1990and1999,andbetween2000and2009stoodatapproximately2.3millionsq.ft.,1.3millionsq.ft.and827,000sq.ft.respectively.Besidesthematuringnatureofthemarket,thefallingtake-upisalsoattributabletofallingsupplylevels.Theaveragetake-upbetween2004and2013was1.1millionsq.ft.perannum.

Thenegativetake-upofretailspacein2008istheresultofdemandcontractiononthebackoftheglobalfinancialcrisis,whenanumberofchainretailersclosedinHongKong,includingTaiLamandU-Right,whichbothclosedtowardstheendofthatyear.Vacancyratesincreasedto8.7%in2008asaresult.Withstrongtourismspendingfrommainlandersandinternationalretailersoccupyingmoreretailspaceforflagshipstores,thevacancyratedroppedto7.2%in2013.

9 Source:RatingandValuationDepartment10 Allareasareinsq.ft.netunlessotherwisestated.


REPORTS

VALUATIONREPORT

OUTLOOK

Inlightofthefiercecompetitionamonginternationalbrandsforprimespacesincoreareasortraditionalshoppingdistricts,suchasCentral,CausewayBay,TsimShaTsuiandMongKok,someareexpandingintonon-corelocationsalongtherailwaylines,especiallythoseseeingincreasingmainlandfootfall.

Therecentslowdowninretailsales,inparticularintheluxurysector,isduemainlytoslowerMainlandluxuryspending,andwitharevisionofIVSonthecards(mostlikelyimplyingmorerestrictionsonthecurrentmultiple-entrypolicy)andapossibledeclineinMainlandspendinginresponsetoanti-corruptionmeasuresandslowergrowth,weexpectluxuryretailsalestocontinuetoslow.Nevertheless,thepossibleslowdowninluxurysalesmaybecounteredbymorerobustmid-endspendingaswellasnecessitiesspendingbybothlocalsandtourists.


REPORTS

TRUSTEE’SREPORT

TO THE UNITHOLDERS OFCHAMPION REAL ESTATE INVESTMENT TRUST

(aHongKongcollectiveinvestmentschemeauthorizedundersection104oftheSecuritiesandFuturesOrdinance(Chapter571oftheLawsofHongKong))

Weherebyconfirmthat,inouropinion,theManagerofChampionRealEstateInvestmentTrusthas,inallmaterialrespects,managedChampionRealEstateInvestmentTrustinaccordancewiththeprovisionsoftheTrustDeeddated26April2006,asamendedbythefirstsupplementaldeeddated5December2006,thesecondsupplementaldeeddated4February2008,thethirdsupplementaldeeddated9March2009,thefourthsupplementaldeeddated23July2010,thefifthsupplementaldeeddated13March2012andthesixthsupplementaldeeddated23January2015forthefinancialyearended31December2014.

HSBC Institutional Trust Services (Asia) Limitedin its capacity as the trustee of Champion Real Estate Investment Trust

HongKong,27February2015


REPORTS

CORPORATE GOVERNANCEREPORT

ChampionREITiscommittedtoattainingglobalbestpracticesandstandardsforallactivitiesandtransactionsconductedinrelationtotheTrustandanymattersarisingoutofitslistingortradingonTheStockExchangeofHongKongLimited(“StockExchange”).ThecurrentcorporategovernanceframeworkadoptedbytheREITManageremphasizesaccountabilitytoallUnitholders,resolutionofconflictofinterestissues,transparencyinreporting,compliancewithrelevantregulationsandsoundoperatingandinvestingprocedures.TheREITManagerhasinplaceacomprehensivesetofcomplianceproceduresandguidelineswhichsetoutthekeyprocesses,systemsandmeasuresusedtoimplementthiscorporategovernanceframework.Themajoractivitiesin2014aresetoutbelow:

• EXPANSIONOFTHEINVESTMENTSCOPEOFCHAMPIONREIT’SINVESTMENTSTRATEGYTOINCLUDEPROPERTYDEVELOPMENTANDRELATEDACTIVITIESANDINVESTMENTSINCERTAINFINANCIALINSTRUMENTS

On27January2014,theSecuritiesandFuturesCommission(“SFC”)issuedaconsultationpaperonamendmentstotheCodeonRealEstateInvestmentTrusts(“REITCode”)invitingpubliccommentsonproposedamendmentstotheREITCodetoallowREITstoundertakepropertydevelopmentactivitiesandinvestincertainfinancialinstruments(“REITCodeAmendments”).TheabilityofaREITtodosoissubjecttocertainrestrictionsincluding(butnotlimitedto)thefollowinginvestmentcaps:

1. theAggregateDevelopmentCostsshallnotexceed10%oftheREIT’sgrossassetvalueatanytime;and

2. thetotalsumof(1)theAggregateDevelopmentCosts,(2)thecombinedvalueoftheRelevantInvestmentsand (3)othernon-realestateassetsshallnotexceed25%oftheREIT’sgrossassetvalueatanytime.

Theproposalsgainedmajoritysupport,andtheREITCodeAmendmentsbecameeffectivefrom29August2014.

WeconsideredthenewflexibilityprovidedbytheREITCodeAmendmentstobebeneficialtoChampionREITassuchflexibilitywillsupportitslong-termandsustainablegrowthandaccordingly,hasconvenedanExtraordinaryGeneralMeeting(“EGM”)on23December2014toseekUnitholders’approvalto,amongotherthings,expanditsinvestmentscopeofChampionREIT’sinvestmentsstrategytoinclude(1)propertydevelopmentandrelatedactivitiesand(2)investmentsincertainfinancialinstruments.DetailsofwhichweresetoutinthecirculartoUnitholdersdated26November2014.99.89%and90.75%ofthevoteswerecastinfavouroftheabovetwochangesrespectively.Aftertheyearend,wehavealsoupdatedthecompliancemanualoftheREITManagertocontainmeasurestomitigatetherisksrelatingtotheundertakingoftheaboveactivitiesandensurecomplianceoftheREITCode.

• PROPOSEDAMENDMENTSTODISTRIBUTIONFORMULA

TheREITCoderequiresthataREITshalldistributetoUnitholderseachyearanamountnotlessthan90%ofitsauditedannualnetincomeaftertax.AsthecurrentminimumannualdistributionamountrequiredundertheDeedofTrustconstitutingChampionREIT(“TrustDeed”)exceededtheamountrequiredundertheREITCode,weconsidereditprudenttoreconciletheminimumannualdistributionstatedintheTrustDeedwiththeminimumannualdistributionrequiredundertheREITCodeinordertoprovidetheREITManagerwithmaximumflexibilitytomanagecashandachieveitskeyobjectivesforChampionREIT(beingtheprovisionofstableandsustainabledistributionsperUnitandtheachievementoflong-termgrowthinnetassetvalueperUnit).Accordingly,wehavealsosoughttheapprovaloftheUnitholdersattheEGMtoamendthedistributionformulasoastoreflecttheformularegardingminimumannualdistributionrequirementundertheREITCodewitheffectfromthedistributionperiodending31December2017.99.89%ofthevoteswerecastinfavouroftheresolution.


• AMENDMENTSTOTHETRUSTDEED

TheTrustDeedwasamendedtoreflecttheexpandedinvestmentscopeofChampionREIT’sinvestmentstrategytoincludepropertydevelopmentandrelatedactivitiesandinvestmentsincertainfinancialinstrumentsaswellastheamendmentstodistributionformulaasmentionedabove.Inaddition,certainmiscellaneousamendmentswerealsomadetotheTrustDeedtoclarifythattheprovisionsassetoutintheTrusteeOrdinancewhichprovidethatatrusteeofatrustisnotliableforanyactoromissionofanagent,nomineeorcustodianactingforthetrustifthetrusteehasdischargedthestatutorydutyofcareapplicabletothetrusteeimposedundertherevisedTrusteeOrdinance,isnotapplicabletoChampionREIT.

• RE-DESIGNATIONOFDIRECTORS

Mr.ChengWaiChee,ChristopherwasappointedaNon-executiveDirectoroftheREITManagerin2006.Hehasbeenre-designatedasanIndependentNon-executiveDirectorwitheffectfrom16May2014.Mr.ChengisindependentandhassatisfiedtheindependencecriteriacontainedintheREITManager’scorporategovernancepolicyassetoutintheComplianceManualofChampionREITandRule3.13oftheRulesGoverningtheListingofSecuritiesontheStockExchange(“ListingRules”),saveandexceptforonecriterionashehasbeenaNon-executiveDirectoroftheREITManageruntil16May2014.WeconsiderthatthedesignationofIndependentNon-executiveDirectorbetterdescribedtheroleandinvolvementofMr.ChengintheBoard.

Mr.IpYukKeung,AlbertwasappointedanIndependentNon-executiveDirectoroftheREITManagerin2011.Hehasbeenre-designatedasaNon-executiveDirectoroftheREITManagerwitheffectfrom9June2014asMr.IphasbeenappointedasExecutiveDirectorandChiefExecutiveOfficerofLHILManagerLimited(astrustee-managerofLanghamHospitalityInvestments)andLanghamHospitalityInvestmentsLimited(collectivelyas“Langham”)witheffectfrom9June2014.LanghamiscontrolledbyGreatEagleHoldingsLimited(“GreatEagle”),thecontrollingunitholderofChampionREIT,andislistedontheMainBoardoftheStockExchangeofHongKong.There-designationensuresChampionREITisincompliancewiththeREITManager’scorporategovernancepolicyascontainedintheComplianceManualofChampionREIT.

• GENERALMANDATE

Ageneralmandateforbuy-backnomorethan10%ofUnitsintheopenmarketwasgrantedbyUnitholdersattheannualgeneralmeetingheldon26May2014.

TheBoardofDirectorsoftheREITManagerplaysacentralsupportandsupervisoryroleinthecorporategovernanceduties.ItwillregularlyreviewtheComplianceManualandotherpoliciesandproceduresoncorporategovernanceandonlegalandregulatorycompliance,approvingchangestogovernancepoliciesinlightofthelateststatutoryregimeandinternationalbestpractices,andreviewingcorporategovernancedisclosures.


REPORTS


AUTHORISATIONSTRUCTURE

ChampionREITisacollectiveinvestmentschemeconstitutedasaunittrustandauthorisedbytheSFCundersection104oftheSecuritiesandFuturesOrdinance(Chapter571ofthelawsofHongKong)(“SFO”)andregulatedbytheSFCpursuanttotheprovisionsoftheSFOandtheREITCodeandtheListingRules.

TheREITManagerhasbeenauthorisedbytheSFCundersection116oftheSFOtoconducttheregulatedactivityofassetmanagement.Mr.LeeChingMing,Adrian,theExecutiveDirectorandChiefExecutiveOfficer,Ms.WongKaKi,Ada,theDeputyChiefExecutiveOfficer,Mr.ChooChongYao,Patrick,theChiefInvestmentOfficerandMr.KwongChiKwong,theChiefOperatingOfficeraretheresponsibleofficersoftheREITManagerpursuanttotherequirementsofsection125oftheSFOandparagraph5.4oftheREITCode.TheResponsibleOfficershavecompletedtheContinuousProfessionalTrainingasrequiredbytheSFOforeachcalendaryear.

HSBCInstitutionalTrustServices(Asia)Limited(the“Trustee”)isregisteredasatrustcompanyundersection77oftheTrusteeOrdinance(Chapter29ofthelawsofHongKong)andisqualifiedtoactasatrusteeforcollectiveinvestmentschemesauthorisedundertheSFOpursuanttotheREITCode.

PursuanttothePropertyManagementAgreement,EaglePropertyManagement(CP)Limited(the“PropertyManager”)willprovidepropertymanagementservices,leasemanagementservicesandmarketingservicesforthepropertiesofChampionREITlocatedinHongKongonanexclusivebasissubjecttotheoverallmanagementandsupervisionoftheREITManager.ThePropertyManagerhasateamofwell-experiencedoperationalstaffexclusivelydedicatedtoprovidingpropertymanagementservicestoChampionREIT.


GOVERNANCEPRACTICES

ROLESOFTHETRUSTEEANDTHEREITMANAGER

TheTrusteeandtheREITManagerareindependentofeachother.TheTrusteeisresponsibleforthesafecustodyoftheassetsofChampionREITonbehalfofUnitholders,whereastheREITManagerisresponsibleformanagingChampionREITinaccordancewiththeTrustDeedandensuringthatthefinancialandeconomicaspectsofChampionREIT’sassetsareprofessionallymanagedinthesoleinterestofUnitholders.TherelationshipbetweentheTrustee,theREITManagerandtheUnitholdersissetoutintheTrustDeedenteredintobetweentheREITManagerandtheTrusteeon26April2006asamendedbyaFirstSupplementalDeeddated5December2006,aSecondSupplementalDeeddated4February2008,aThirdSupplementalDeeddated9March2009,aFourthSupplementalDeeddated23July2010,aFifthSupplementalDeeddated13March2012andSixthSupplementalDeeddated23January2015.

ORGANISATIONANDREPORTINGSTRUCTUREOFTHEREITMANAGER

CHIEFINVESTMENT

OFFICER

INTERNALAUDITOR

CHIEFEXECUTIVE

OFFICER

CHIEFOPERATING

OFFICER

THEMANAGER BoardofDirectors

ExecutiveDirectorNon-executiveDirectors

IndependentNon-executiveDirectorsCompanySecretary

AUDITCOMMITTEE

DISCLOSURESCOMMITTEE

COMPLIANCEMANAGER

SENIORFINANCEANDOFFICEADMINISTRATION

MANAGER


REPORTS


BOARDCOMPOSITION

Withtheaimofcreatingaboardstructurethatisbotheffectiveandbalanced,thesizeoftheBoardhasbeensettoprovideforaminimumof5Directorsandamaximumof13Directors.TheBoardcurrentlycomprises8members,with1ExecutiveDirectorand7Non-executiveDirectors(including3IndependentNon-executiveDirectors).ThepositionsofChairmanandChiefExecutiveOfficerareheldbytwodifferentpersonsinordertomaintainaneffectivesegregationofduties.TheChairmanoftheBoardisDr.LoKaShuiwhoisaNon-executiveDirector.TheChiefExecutiveOfficerisMr.LeeChingMing,AdrianwhoisanExecutiveDirector.ThecompositionoftheBoardoftheREITManagerduringtheyearissetoutbelow:

50%Non-executive

Director

37.5%IndependentNon-executiveDirectors

12.5%ExecutiveDirector

BiographicaldetailsoftheDirectorsaresetoutonpages10to13ofthisAnnualReportandpublishedontheTrust’swebsiteatwww.ChampionReit.com.AllDirectorsshallretirefromofficeateveryannualgeneralmeetingoftheREITManagerbutshallbeeligibleforre-electioninaccordancewiththearticlesofassociationoftheREITManager.IfanIndependentNon-executiveDirectorservesmorethan9years,hisfurtherappointmentwillbesubjecttoaseparateresolutiontobeapprovedbyUnitholdersatAnnualGeneralMeeting.Mr.LoKaShui,theChairmanandNon-executiveDirectorisanelderbrotherofMr.LoKaiShui,aNon-executiveDirectoroftheREITManager.Mr.IpYukKeung,AlbertistheExecutiveDirectorandChiefExecutiveOfficeroftheManagerofthepubliclylistedtrust,LanghamHospitalityInvestments,ofwhichGreatEagleHoldingsLimitedhas58.22%interestsandMr.LoKaShuiistheChairmanandaNon-executiveDirector.Apartfromthat,therearenootherfinancial,business,familyorothermaterialorrelevantrelationshipsbetweenboardmembers.

BOARDDIVERSITY

OurDirectorsaredrawnfromabroadrangeofcommercialbackgroundandexperienceincludingexpertiseinpropertyandfinancialservices.InreviewingBoardcomposition,theREITManagerwilltakeintoaccounttheCompany’sstrategicprioritiestodeterminetheappropriaterangeandbalanceofskills,experience,knowledgeandindependence.AppointmentstotheBoardareonmeritandagainstobjectivecriteriaandwithdueregardforthebenefitsofdiversity.Considerationsthatfactorintothecandidateshort-listingprocessincludebutnotlimitedtolegalrequirements,bestpractices,skillsrequiredtocomplementtheBoard’sskillsetandthenumberofDirectorsneededtodischargethedutiesoftheBoardanditsCommittees.Restrictionslikegender,age,culturaloreducationalbackgroundwillnotbesetwhenshort-listingcandidates.TheChairmanoftheBoardshouldbeaNon-executiveDirectoroftheREITManagerandatleastone-third,andaminimumofthreemembersoftheBoardshouldbeIndependentNon-executiveDirectors.

Non-executive DirectorsLoKaShui(Chairman)HoShutKanIpYukKeung,Albert*LoKaiShui

Executive DirectorLeeChingMing,Adrian(Chief Executive Officer)

Independent Non-executive DirectorsChaMouSing,PaysonChengWaiChee,Christopher**ShekLaiHim,Abraham

* Re-designatedfromIndependentNon-executiveDirectortoNon-executiveDirectoron9June2014

** Re-designatedfromNon-executiveDirectortoIndependentNon-executiveDirectoron16May2014


BOARDRESPONSIBILITIES

TheBoardoftheREITManagerisresponsibleforensuringthattheREITManagerdischargesitsdutiesundertheTrustDeed,whichincludebutnotlimitedtomanagingtheTrustinaccordancewiththeTrustDeedinthesoleinterestoftheUnitholders,ensuringsufficientoversightofthedailyoperationsandfinancialconditionsoftheTrustwhenmanagingtheTrustandensuringcompliancewiththelicensingandauthorizationconditionsoftheREITManagerandtheTrustandwithanyapplicablelaws,rules,codesorguidelinesissuedbygovernmentdepartments,regulatorybodies,exchangesoranyotherorganisationsregardingtheactivitiesoftheTrustoritsadministration.SubjecttothemattersspecificallyreservedtotheBoardassetoutintheComplianceManual,theBoarddelegatescertainmanagementandsupervisoryfunctionstotheBoardcommittees.TheBoardalsohasappointedexperiencedandwell-qualifiedmanagementtohandletheday-to-dayoperationsoftheREITManagerandChampionREIT.

KEYRESERVEDMATTERSTOTHEBOARD treasury,taxes,financialriskmanagementandcapitalpoliciesandsignificantchangesinaccountingpolicy

saleandacquisitionofproperties

issueofnewUnits

changestotheCorporateGovernancePolicy

distributionsofChampionREITtoUnitholders

annual,interimreportsandcircularstoUnitholders

appointmentandremovalofDirectorstotheREITManager

changestotheprovisionsintheTrustDeed

appointmentandremovalofauditorsofChampionREITandapprovaloftheauditfee

materialcontractsnotintheordinarycourseofbusiness

potentialareasofpossibleconflict

INDEPENDENCE

PursuanttotheREITManager’scorporategovernancepolicy,IndependentNon-executiveDirectorsmustbeindividualswhofulfilltheindependencecriteriasetoutintheComplianceManualthatarenolessexactingthanthosesetoutinrule3.13oftheListingRulesforassessingtheindependenceofanindependentnon-executivedirector.EachoftheIndependentNon-executiveDirectorsoftheREITManagerhasprovidedawrittenannualconfirmationofindependencetotheREITManager.

Mr.ChaMouSing,Payson,Mr.ChengWaiChee,ChristopherandMr.ShekLaiHim,Abraham,theIndependent Non-executiveDirectorsoftheREITManager,haveservedontheBoardsince2006.Notwithstandingtheirlengthofservice,theBoardisoftheviewthattheydemonstratecompleteindependenceincharacterandjudgmentbothasBoardmembersandintheirdesignatedroles.TheBoardalsobelievesthattheycontinuetobringindependentviewoftheaffairsofChampionREITtotheBoardandtheirin-depthknowledgeoftheTrust’sbusinessandtheirextensiveexperiencecontinuetoprovideinvaluablecontributiontotheBoard.


REPORTS


CONTINUINGPROFESSIONALDEVELOPMENT

TokeepDirectorsabreastoftheirresponsibilitiesandinfusethemwithnewknowledgerelevanttotheTrust’sbusinessandoperatingenvironment,informationpackagescomprisingthelatestdevelopmentsinthelegislations,industrynewsandmaterialsrelevanttotheroles,functionsanddutiesasadirectorareprovidedtoeachDirectorbytheCompanySecretaryperiodicallytofostertherefreshingandongoingupdatingofBoardmembers’skillsandknowledge.

Duringtheyearended31December2014,theDirectorsreceivedinformationpackageswithfocusonthetopicsofthenewCompaniesOrdinanceandCompetitionOrdinance,latestupdateofstatutoryandregulatoryrequirementsrelevanttotheDirectors.EachoftheDirectorsparticipatedinnolessthan10traininghoursduring31December2014,andalltheDirectorshadprovidedconfirmationontheirrespectivetrainingrecordstotheREITManager.

SUPPLYOFANDACCESSTOINFORMATION

InadditiontothemonthlyreportscoveringoperatinghighlightsoftheTrust’sbusiness,thoroughandcomprehensivemanagementandfinancialupdatesareprovidedtoallBoardmembersonaquarterlybasistoensureeachmemberisinformedofthestateofthebusinessandenablethemtomakeproperresponseandfollowup.IftherearematerialmattersworththeimmediateattentionoftheBoardmembers,theREITManagerwillprovidetheDirectorswiththenecessaryinformationintheformofexceptionalreports.Also,additionalinformationwillalwaysbeprovidedtotheDirectorsuponrequest.

INDUCTION

EachnewlyappointedDirectorwillreceiveaninductionpacktofamiliarisehimselfwiththebusinessandoperationsofChampionREITandthelegalframeworkunderwhichChampionREITisgoverned.TheinductionpackincludesbutnotlimitedtotheTrustDeed,REITCode,ComplianceManual,OperationsManual,memorandumandarticlesofassociationoftheREITManager,andrecentpublicationsofChampionREIT.TheCompanySecretaryalsoprovidesallDirectorswithmaterialsfromtimetotimetokeepthemabreastofthelatestdevelopmentsintheindustryandthelegalframeworkthatarerelevanttotheaffairsofChampionREIT.

INDEPENDENTPROFESSIONALADVICE

Forthepurposesofdischargingtheirdutiesandresponsibilities,theBoardmembersmayobtainindependentprofessionaladviceattheREITManager’sexpenseuponreasonablerequest.TheCompanySecretaryoftheREITManagerisresponsibleformakingallnecessaryarrangement.

INSURANCE

Duringtheyearended31December2014,appropriatedirectors’andofficers’liabilitiesinsuranceandprofessionalindemnityinsurancehavebeenarrangedinrespectoflegalactionagainsttheDirectorsandofficersoftheREITManagerandtheprovisionofprofessionalservicesbytheREITManagertotheTrust.


DISCLOSUREONREMUNERATION

AccordingtotheTrustDeed,theREITManagershallbeentitledtoaManager’sFeeof12%ofthenetpropertyincomeandbepayablesemi-annuallyinarrearsafterthepublicationofthesemi-annualfinancialstatementsoftheTrustprovidedthatthenetpropertyincomeasshowninthepublishedsemi-annualfinancialstatementsisequaltoormorethanHK$200 million.

PursuanttotheannouncementofChampionREITdated30November2012andaccordingtoClause11.1.2oftheTrustDeedinrelationtothenotificationfromtheREITManagertotheTrusteeinwriting,theREITManagerelectedtoreceive50%oftheManager’sFeearisingfromtherealestatecurrentlyownedbyChampionREITforthefinancialyear2014intheformofUnitsandtheremaining50%incash.TheManager’sFeefortheyearended31December2014amountedtoapproximatelyHK$216million,being12%ofthenetpropertyincomeofChampionREITforsuchservicesrenderedduringtheyear.

ThepaymentoftheManager’sFeebywayofUnitsisinaccordancewiththetermsoftheTrustDeedanddoesnotrequirespecificpriorapprovaloftheUnitholderspursuanttoawaivergrantedbytheSFC.

TheremunerationofDirectorsandstaffoftheREITManagerispaidbytheREITManager,andnotbyChampionREIT.TheREITManageradoptstheremunerationpoliciesandpracticesofitsholdingcompany,whichhasaremunerationcommitteethatdeterminespolicyandstructureforallremunerationofseniorexecutivesoftheREITManager,whichincludetheChiefExecutiveOfficeroftheREITManagerandmembersofitsseniormanagementteam.NoneoftheDirectorshasaservicecontractwiththeREITManagerwhichisnotterminablebytheemployerwithinoneyearwithoutpaymentofcompensation(otherthanstatutorycompensations).SinceChampionREITdoesnotbeartheremunerationoftheREITManager’sBoardandstaff,theREITManagerdoesnotconsideritnecessarytoincludetheinformationabouttheremunerationofitsDirectorsanditskeyexecutivesinthisreport.

DELEGATION

TheBoardoftheREITManagermayestablishBoardcommitteeswithcleartermsofreferencetoreviewspecificissuesoritems.ThetwostandingBoardcommitteesestablishedaretheAuditCommitteeandtheDisclosuresCommittee.

Audit Committee

TheREITManagerestablishedanAuditCommitteeandadoptedthetermsofreferencein2006.ThewrittentermsofreferenceoftheAuditCommitteeareavailableuponrequest.TheroleoftheAuditCommitteeistomonitorandevaluatetheeffectivenessoftheREITManager’sinternalcontrols.TheAuditCommitteealsoreviewsthequalityandreliabilityofinformationpreparedforinclusioninfinancialreportsissuedbytheREITManager.TheAuditCommitteeisresponsibleforthenominationofexternalauditorsandreviewingtheadequacyofexternalauditsinrespectofcost,scopeandperformance.Duringtheyear,aformalmeetingbetweentheChairmanoftheAuditCommitteeandtheInternalAuditorwasheldwithoutthepresenceofthemanagementoftheREITManager.


REPORTS


AUDITCOMMITTEE’SPRINCIPALRESPONSIBILITIES

TheprincipaldutiesoftheAuditCommitteeareasfollows:

reviewingexternalauditreportstoensurethat,wheredeficienciesininternalcontrolshavebeenidentified,appropriateandpromptremedialactionistakenbythemanagement;

monitoringtheproceduresinplacetoensurecompliancewithapplicablelegislation,theREITCodeandtheListingRules;

reviewingallfinancialstatementsandallinternalauditreports;

monitoringtheproceduresestablishedtoregulateconnectedpartytransactions,includingensuringcompliancewiththeprovisionsoftheREITCoderelatingtotransactionsbetweenChampionREITanda“connectedperson”(asdefinedintheREITCode);and

makingrecommendationstotheBoardonpersonsforappointmentandre-appointmentasDirectorsto,andpersonsforremovalasDirectorsfrom,thefullBoard.

TheAuditCommitteecurrentlycomprises2IndependentNon-executiveDirectors(namely,Mr.ShekLaiHim,AbrahamandMr.ChengWaiChee,Christopher)andaNon-executiveDirector(namely,Dr.LoKaShui).Mr.ShekistheChairmanoftheAuditCommittee.ThemembersoftheAuditCommitteeareappointedbytheBoardofDirectorsfromamongtheNon-executiveDirectorsoftheREITManagerandamajorityofthemembersoftheAuditCommitteearerequiredtobeIndependentNon-executiveDirectors.

Pursuanttothewaiverfromstrictcompliancewiththerequirementunderparagraph9.13oftheREITCodegrantedbytheSFC,theAuditCommitteeoftheREITManagerconfirmedthattheroadshowandpublicrelations-relatedexpenses(“PRExpenses”)wereincurredinaccordancewiththeinternalcontrolproceduresoftheREITManagerandthenatureofthesePRExpenseswassolelyforthepurposesassetoutinClause2.4.13oftheTrustDeed.


SUMMARYOFMAJORWORKDONEOFTHEAUDITCOMMITTEEIN2014

Duringtheyear2014,twophysicalmeetingsoftheAuditCommitteewereheld,andtwoseparatewrittenresolutionswerepassedbyallmembersoftheAuditCommittee.ThefollowingisasummaryofthemajorworkdoneoftheAuditCommitteeduringtheyear2014:

reviewedtheReportsoftheInternalAuditor;

reviewedtheauditedfinancialstatements,theAnnualReportandtheFinalResultsAnnouncementfortheyearended31December2013;

reviewedtheunauditedfinancialstatements,theInterimReportandtheInterimResultsAnnouncementforthesixmonthsended30June2014;

reviewedtheReportsfromtheExternalAuditor;

consideredandrecommendedtotheBoardonthere-appointmentofExternalAuditorandapprovedthetermsofengagement;

reviewedthelegalandregulatorycompliancemattersfortheyearended31December2013andforthesixmonthsended30June2014,whichincluded,amongothers,theReportsonConnectedPartyTransactions;

reviewedandrecommendedtotheBoardonthere-designationofMr.ChengWaiChee,ChristopherasanIndependentNon-executiveDirectoroftheREITManager;

reviewedandrecommendedtotheBoardonthere-designationofMr.IpYukKeung,AlbertasaNon-executiveDirectoroftheREITManagerandthechangeincompositionoftheAuditCommitteeoftheREITManager;and

reviewedandapprovedthe2014annualbudget/forecastsandannualbusinessplanpreparedbytheREITManager.

Disclosures Committee

TheREITManagerestablishedaDisclosuresCommitteeandadoptedthetermsofreferencein2006.ThewrittentermsofreferenceoftheDisclosuresCommitteeareavailableuponrequest.TheroleoftheDisclosuresCommitteeistoreviewmattersrelatingtothedisclosureofinformationtoUnitholdersandpublicannouncements.


REPORTS


DISCLOSURESCOMMITTEE’SPRINCIPALRESPONSIBILITIESTheDisclosuresCommitteeworkswiththemanagementoftheREITManagertoensurethedisclosureofinformationisaccurateandcomplete.TheDisclosuresCommittee’sresponsibilitiesalsoinclude:

reviewingandrecommendingtotheBoardonmattersofcorporatedisclosureissuesandannouncements,financialreporting,connectedpartytransactions,andpotentialareasofconflictofinterests;

overseeingcompliancewithapplicablelegalrequirementsandthecontinuity,accuracy,clarity,completenessandcurrencyofinformationdisseminatedbyoronbehalfofChampionREITtothepublicandapplicableregulatoryagencies;

reviewingandapprovingallmaterialnon-publicinformationandallpublicregulatoryfilingsoforonbehalfofChampionREITpriortosuchinformationbeingdisseminatedtothepublicorfiledwithapplicableregulatoryagencies,asapplicable;and

reviewingperiodicandcurrentreports,proxystatements,informationstatements,registrationstatementsandanyotherinformationfiledwithregulatorybodies.

ThemembersoftheDisclosuresCommitteeareappointedbytheBoardofDirectorsfromamongtheDirectors.ItcomprisesaNon-executiveDirector(namely,Dr.LoKaShui),anIndependentNon-executiveDirector(namely,Mr.ShekLaiHim,Abraham)andanExecutiveDirector(namely,Mr.LeeChingMing,Adrian).Mr.LeeistheChairmanoftheDisclosuresCommittee.

SUMMARYOFMAJORWORKDONEOFTHEDISCLOSURESCOMMITTEEIN2014

Duringtheyear2014,twophysicalmeetingsoftheDisclosuresCommitteewereheld,andthreeseparatewrittenresolutionswerepassedbyallmembersoftheDisclosuresCommittee.ThefollowingisasummaryofthemajorworkdoneoftheDisclosuresCommitteeduringtheyear2014:

reviewedandapprovedthe2013AnnualReportofChampionREITandannouncementsinrelationtothefinalresultsfortheyearended31December2013,thepaymentofManager’sfeeincashandUnitsandthefinaldistribution;

reviewedandapprovedthedraftCirculartoUnitholdersinrelationtotheGeneralMandatetoBuy-backUnitsofChampionREITandtheNoticeconveningthe2014AnnualGeneralMeeting;

reviewedandapprovedthe2014InterimReportofChampionREITandannouncementsinrelationtothe2014interimresults,thepaymentofManager’sfeeincashandUnitsandtheinterimdistribution;

reviewedandapprovedthedraftannouncementinrelationtotherefinancingofexistingbankloansofHK$7,500million;

reviewedandapprovedthedraftannouncementinrelationtore-designationofMr.ChengWaiChee,ChristopherasanIndependentNon-executiveDirectoroftheREITManager;

reviewedandapprovedthedraftannouncementinrelationtothere-designationofMr.IpYukKeung,AlbertasaNon-executiveDirectoroftheREITManagerandthechangeincompositionoftheAuditCommitteeoftheREITManager;and

reviewedandapprovedthedraftannouncementsinrelationtotheChangeinInformationofREITManager’sDirector.


BOARDANDBOARDCOMMITTEEMEETINGS

Directorsmakefruitfulcontributionbyattendingmeetingsandsharingviews,adviceandexperienceonmattersmaterialtotheTrust’saffairs,withthecommongoaloffurtherenhancingtheinterestsoftheTrustandtheUnitholders.BoardmeetingsoftheREITManagerareheldregularlyatleastfourtimesayearatapproximatelyquarterlyintervals.ProposeddatesoftheregularBoardandBoardCommitteemeetingsforeachnewcalendaryeararesetoutinascheduleandnotifiedtoallBoardmembersbeforethebeginningoftheyearconcernedwithaviewtofacilitatingtheirattendance.Additionalmeetingsareconvenedasandwhencircumstanceswarrant.

PROCEEDINGSOFTHEBOARDANDBOARDCOMMITTEES Atleast14days’formalnoticeofregularBoardandBoardCommitteemeetingswillbegivenbytheCompanySecretarytoallDirectors,andallDirectorsaregiventheopportunitytoincludeanymattersfordiscussionintheagenda.ForspecialBoardandBoardCommitteemeetings,reasonablenoticewillbegiven.

AnagendaandaccompanyingBoardpaperswillbesenttoallDirectorsatleastthreedaysinadvanceofeveryregularBoardmeetingorBoardCommitteemeeting.

TheCompanySecretaryassiststheChairmaninpreparingtheagendaforthemeetingandensuresthatallapplicablerulesandregulationsregardingthemeetingsarefollowed.

IfasubstantialunitholderoraDirectorhasaconflictofinterestinamattertobeconsideredbytheBoardwhichtheBoardhasdeterminedtobematerial,thematterwillnotbedealtwithbywayofresolutioninwritingorbyaCommittee(exceptanappropriateBoardCommitteesetupforthatpurposepursuanttoaresolutionpassedinaBoardmeeting)butafullBoardmeetingwillbeheld.

MinutesofallBoardandBoardCommitteemeetingsarekeptbytheCompanySecretaryandareavailableforDirectors’inspection.DraftandfinalversionsofminutesaresenttoallDirectorsinatimelymannerfortheircommentandrecord.


REPORTS


TheattendanceofindividualDirectorsandcommitteemembersin2014issetoutinthetablebelow:

NO.OFMEETINGSATTENDED/NO.OFMEETINGSELIGIBLETOATTEND

MEMBERBOARD

MEETING

AUDITCOMMITTEE

MEETING

DISCLOSURESCOMMITTEE

MEETING

No.ofMeetingsheldintheyear 4 2 2

Non-executive Directors

LoKaShui(Chairman) 4/4 2/2 2/2

HoShutKan 3/4 – –

IpYukKeung,Albert 4/4 1/11 –

LoKaiShui 4/4 – –

ATTENDANCE RATE 94% 100% 100%

Executive Director

LeeChingMing,Adrian(Chief Executive Officer) 4/4 – 2/2

ATTENDANCE RATE 100% – 100%

Independent Non-executive Directors

ChaMouSing,Payson 2/4 – –

ChengWaiChee,Christopher 4/4 1/12 –

ShekLaiHim,Abraham 4/4 2/2 2/2

ATTENDANCE RATE 83% 100% 100%

OVERALL ATTENDANCE RATE 92% 100% 100%

Notes:

1 MrIpYukKeung,Albertwasre-designatedasaNon-executiveDirectorandresignedasthechairmanandmemberofAuditCommitteeon9June2014.

2 MrChengWaiChee,Christopherwasre-designatedasanIndependentNon-executiveDirectoron16May2014andwasappointedasthememberofAuditCommitteeon9June2014.


COMPANYSECRETARY

TheREITManagerhasengagedG.E.SecretariesLimitedasitsCompanySecretary.TheprimarycontactpersonoftheCompanySecretaryisMs.WongMeiLing,MarinawhoisafellowofTheHongKongInstituteofCharteredSecretaries.TheCompanySecretaryoftheREITManagercomprisesateamofqualifiedcompanysecretarialprofessionalswhoprovideafullrangeofcompanysecretarialsupporttotheREITManageranditsDirectors.MembersoftheseniormanagementoftheREITManagermaintainday-to-daycontactwiththeCompanySecretarytoensuretheCompanySecretaryhasknowledgeoftheaffairsoftheTrust.TheCompanySecretaryreportstotheChairmanoftheBoardandtheChiefExecutiveOfficer.AlldirectorshaveaccesstotheadviceandservicesoftheCompanySecretarytoensurethatboardprocedures,andallapplicablelaw,rulesandregulations,arefollowed.

MANAGEMENTOFBUSINESSRISK

TheBoardoftheREITManagerwillmeetquarterlyormoreoftenifnecessaryandwillreviewthefinancialperformanceoftheREITManagerandChampionREITagainstapreviouslyapprovedbudget.TheBoardwillalsoreviewanyriskstoassetsofChampionREIT,examineliabilitymanagementandactuponanyrecommendationsfromtheauditorsofChampionREIT.Inassessingbusinessrisk,theBoardwillconsidertheeconomicenvironmentandthepropertyindustryrisk.Itwillreviewmanagementreportsandfeasibilitystudiesonindividualdevelopmentprojectspriortoapprovingmajortransactions.

TheREITManagerhasappointedexperiencedandwell-qualifiedmanagementtohandletheday-to-dayoperationsoftheREITManagerandChampionREIT.ThemanagementteamcomprisestheChiefExecutiveOfficer,theDeputyChiefExecutiveOfficer,theChiefInvestmentOfficer,theChiefOperatingOfficer,theSeniorFinanceandOfficeAdministrationManager,theComplianceManagerandtheInternalAuditor.Apartfromtheday-to-dayinteractions,themanagementteam,chairedbytheChiefExecutiveOfficer,meetsregularlyforoperationupdatesandsharingamongtheteammembers.In2014,twelvemeetingswereheldbythemanagementteam.

WHISTLE-BLOWING

TheREITManagerhasputinplaceprocedurestoensurewelldefinedandaccessiblechannelstoreportonsuspectedfraud,corruption,dishonestpractices,andfortheindependentinvestigationofanyreportsandappropriatefollowupaction.Theaimofthewhistle-blowingpolicyistoencouragethereportingofsuchmattersingoodfaith,withtheconfidencethatpersonsmakingsuchreportswillbetreatedfairly,andtotheextentpossible,beprotectedfromreprisal.

CONFLICTSOFINTERESTSANDBUSINESSCOMPETITIONWITHGREATEAGLEHOLDINGSLIMITED

TheREITManager,thePropertyManager,LongworthManagementLimited(“Longworth”)andTheGreatEaglePropertiesManagementCompany,Limited(“GEPM”)takeuptheroleofManagerandPropertyManagerofChampionREIT,DMCManagerandDMCSub-managerofCitibankPlaza,DMCManagerandCAFManagerofLanghamPlace,Sub-DMCManagerofLanghamPlaceOfficeTowerandEstateManageroftheLanghamPlaceMall(asthecasemaybe).Eachoftheabovecompaniesisawholly-ownedsubsidiaryofGreatEagleHoldingsLimited(“GreatEagle”).Moreover,threemembersoftheBoardaredirectorsofGreatEagleand/oritsaffiliatedcompanies.TheremaybepotentialconflictsofinterestsbetweenGreatEagleandChampionREITinrespectoftheperformanceofestatemanagementservicesinrelationtoCitibankPlazaandLanghamPlaceorotherproperties.


REPORTS


Business Competition

GreatEagle,headquarteredinHongKong,isengagedprincipallyinthedevelopment,managementandinvestmentinthehighqualityoffice,retail,residentialandhotelpropertiesinAsia,Australasia,NorthAmericaandEurope.TheremaybecircumstanceswhereChampionREITcompetesdirectlywithGreatEagleand/oritssubsidiariesorassociatesforacquisitionsordisposalsofpropertiesaswellasfortenantswithintheHongKongmarketasGreatEagle,itssubsidiariesandassociatesareengagedinand/ormayengagein,amongstotherthings,investmentin,andthedevelopmentandmanagementof,propertiesintheoffice,retail,residentialandhotelsectorsinHongKongandoverseas.

Conflict of Interest

InrespectofmattersinwhichaDirectorhasaninterest,directorindirect,inanycontractorarrangementtowhichChampionREIT(whetherthroughtheREITManagerortheTrustee)isaparty,suchinterestedDirectorshalldisclosehisinteresttotheBoardandabstainfromvotingatameetingoftheDirectorsatwhichtherelevantmattersaretobedecided.

Estate Management Services

Withrespecttoestatemanagementservices,theREITManagerdoesnotanticipateanysignificantlikelihoodofconflictsofinterestsarisingbetweenGreatEagleandChampionREIT.Furthermore,giventheextensiveexperienceofLongworthandGEPMintheestatemanagementofCitibankPlazaandLanghamPlace,theREITManagerconsidersthatitisintheinterestofChampionREITfortheexistingestatemanagementarrangementstocontinue.Currently,LongworthandGEPMtogetherhaveemployedmorethan200full-timestaffexclusivelydedicatedtocarryingoutpropertymanagementservicesinrespectofCitibankPlazaandLanghamPlacewithaseparateofficelocationandITsystem.

Leasing & Marketing

Withrespecttoleasingandmarketingfunctions,theREITManagerdoesnotanticipateanysignificantlikelihoodofconflictsofinterestsarisingbetweenGreatEagleandChampionREITbecausethePropertyManagerprovidespropertymanagementservices(includingleasingandmarketingfunctions)inrespectofCitibankPlazaandLanghamPlaceexclusivelyandwillnotperformanypropertymanagementfunctionsinrespectofGreatEagle’sproperties.ThePropertyManagerhasanofficelocationthatisseparatefromtheotherGreatEagleentitiesthatperformleasingandmarketingfunctionsinrespectofotherpropertiesheldbyGreatEagle.ToensurethatthereissegregationofinformationbetweenthePropertyManagerandotherGreatEagleentities,thePropertyManagerhasitsowndatabasewithaccessandsecuritycodesdifferentfromthoseofGreatEagle.


PROCEDURESTODEALWITHCONFLICTSOFINTERESTS

TheREITManagerhasinstitutedthefollowingprocedurestodealwithconflictsofinterestsissues:

TheREITManagerisadedicatedmanagertoChampionREITandwillnotmanageanyotherrealestateinvestmenttrustorbeinvolvedinanyotherrealpropertybusiness.

ThemajorityoftheBoardisnotrelatedtoGreatEagleandtheIndependentNon-executiveDirectorswillactindependentlyfortheinterestsofChampionREIT.

ThemanagementstructureoftheREITManagerincludestheAuditCommitteeandtheDisclosuresCommitteetopromoteahighlevelofcorporategovernanceandaddressanypotentialconflictsofinterestswithGreatEagle.

TheREITManagerhasadoptedtheComplianceManualandOperationsManualwhichsetoutdetailedcomplianceproceduresinconnectionwithitsoperations.

TheREITManagerhasateamoffull-timeseniormanagementandemployeesthatoperatesindependentlyofGreatEagle.

AllconnectedpartytransactionsaremanagedinaccordancewiththerequirementssetoutintheREITCode,theComplianceManualandotherrelevantpoliciesandguidelinesissuedforandadoptedbyChampionREIT.

REPORTINGANDTRANSPARENCY

ChampionREITwillprepareitsaccountsinaccordancewithHongKongGAAPwithafinancialyearendof31Decemberandafinancialhalf-yearendof30June.WhileitisarequirementundertheREITCodethattheannualreportandaccountsforChampionREITshallbepublishedandsenttoUnitholdersnolaterthanfourmonthsfollowingeachfinancialyearendandtheinterimreportnolaterthantwomonthsfollowingeachfinancialhalf-yearend,inaccordancewiththeListingRules,full-yearfinancialresultsshallbereleasedbytheTrustnotlaterthanthreemonthsaftertheendofthefinancialyear.

TheREITManagerwillfurnishUnitholderswithnoticesofmeetingsofUnitholders,announcementsrelatingtoChampionREIT,circularsinrespectoftransactionsthatrequireUnitholders’approvalorinformationthatismaterialinrelationtoChampionREIT(suchasconnectedpartytransactions,transactionsthatexceedastatedpercentagethreshold,amaterialchangeinChampionREIT’sfinancialforecasts,anissueofnewUnitsoravaluationofrealestateheldbyChampionREIT).UndertheTrustDeed,theREITManagerisrequiredtokeepUnitholdersinformedofanymaterialinformationpertainingtoChampionREITinatimelyandtransparentmannerasrequiredbytheREITCode.

ChampionREITappointsDeloitteToucheTohmatsuasitsexternalauditor.TheresponsibilitiesoftheexternalauditorwithrespecttothefinancialreportingaresetoutintheIndependentAuditor’sReport.Duringtheyear,thefeespayabletotheexternalauditorofChampionREITamountedtoHK$1,940,000(2013:HK$1,930,000)forauditandauditrelatedservices,andHK$560,000(2013:HK$560,000)fornon-auditservices.


REPORTS


GENERALMEETINGS

Attendance

ChampionREITwillineachyearholdageneralmeetingasitsannualgeneralmeetinginadditiontoanyothermeetingsinthatyear.The2014annualgeneralmeetingofChampionREITwasheldon26May2014;Dr.LoKaShui,Mr.LeeChingMing,Adrian,Mr.IpYukKeung,Albert,Mr.ChengWaiChee,ChristopherandMr.ShekLaiHim,AbrahamattendedthemeetingandtheexternalauditorwasalsoavailableatthemeetingtoansweranyquestionsraisedbytheUnitholdersinrespectoftheaudit.ForthepurposeofconsideringtheexpansionoftheinvestmentscopeofChampionREIT’sinvestmentstrategytoincludepropertydevelopmentandrelatedactivitiesandinvestmentsincertainfinancialinstruments,anextraordinarygeneralmeetingwasheldon23December2014.Dr.LoKaShui,Mr.LeeChingMing,Adrian,Mr.IpYukKeung,Albert, Mr.ChengWaiChee,ChristopherandMr.ShekLaiHim,Abrahamattendedthemeeting.

Notice

TheTrusteeortheREITManagermayatanytimeconveneameetingofUnitholders.TheREITManagerwillalsoconveneameetingofUnitholdersifrequestedinwritingbynotlessthantwoUnitholdersregisteredasholdingtogethernotlessthan10%oftheUnitsforthetimebeinginissueandoutstanding.WhileitisarequirementundertheTrustDeedthatatleast14days’noticeofthemeetingshallbegiventoUnitholderswhereanordinaryresolutionisproposedforconsiderationatsuchmeeting,andatleast21days’noticeshallbegiventoUnitholderswhereaspecialresolutionisproposedforconsiderationatsuchmeeting,theREITManagerhasadoptedtherequirementundertheCorporateGovernanceCodeoftheListingRulesthatnoticeofannualgeneralmeetingshouldbesentatleast20clearbusinessdaysbeforethemeetingandnoticeofallothergeneralmeetingsshouldbesentatleast10clearbusinessdaysbeforethemeetings.

Quorum

TwoormoreUnitholderspresentinpersonorbyproxyregisteredasholdingtogethernotlessthan10%oftheUnitsforthetimebeinginissueandoutstandingwillformaquorumforthetransactionofallbusiness,exceptforthepurposeofpassingaspecialresolution.ThequorumforpassingaspecialresolutionwillbetwoormoreUnitholderspresentinpersonorbyproxyregisteredasholdingtogethernotlessthan25%oftheUnitsforthetimebeinginissueandoutstanding.

Voting

ForameetingatwhichUnitholdershaveamaterialinterestinthebusinesstobeconductedandthatinterestisdifferentfromtheinterestsofotherUnitholders(asdeterminedbytheREITManager(wheretheUnitholder(s)concernedis(are)notconnectedpersonsrelatedtotheREITManager)ortheTrustee(wheretheUnitholder(s)concernedis(are)connectedpersonsrelatedtotheREITManager),ifappropriate,initsabsoluteopinion),whichincludesbutnotlimitedtoanissueofnewUnitswhereaUnitholdermayincreasehisholdingsofUnitsbymorethanhisproratashare,suchUnitholdersshallbeprohibitedfromvotingtheirownUnitsatsuchmeetingorbeingcountedinthequorumforsuchmeeting.

Poll Vote

Atanymeeting,aresolutionputtothemeetingshallbedecidedonapoll,exceptwheretheChairman,ingoodfaith,decidestoallowaresolutionwhichrelatespurelytoaproceduraloradministrativemattertobevotedonbyashowofhands,andtheresultofthepollshallbedeemedtobetheresolutionofthemeeting.Onapoll,everyUnitholderwhoispresentinpersonorbyproxyshallhaveonevoteforeveryUnitofwhichheistheUnitholderprovidedthatsuchUnitsarefullypaidup.VotescastbyaUnitholderincontraventionoftheREITCodeorListingRulesshallnotbecounted.


Onapoll,votesmaybegiveneitherpersonallyorbyproxy.TheformoftheinstrumentofproxyusedshallbeinaccordancewiththeformillustratedintheTrustDeedorinanyotherformwhichtheTrusteeshallapprove.AnyUnitholderbeingacorporationmaybyresolutionofitsdirectors(orothergoverningbody)authoriseanypersontoactasitsrepresentativeatanymeetingofUnitholders.ApersonsoauthorisedshallhavethesamerightsandpowersasifhewereanindividualUnitholder.

PROCEEDINGSOFGENERALMEETINGS Ateachgeneralmeeting,eachsubstantiallyseparateissuewillbeconsideredbyaseparateresolution.

Copiesofthecorporatecommunicationsincludingcirculars,explanatorystatementsandrelateddocumentswillbedespatchedtoUnitholdersnolessthan14daysforordinaryresolutionandnolessthan21daysforspecialresolutionpriortothemeeting.Detailedinformationoneachresolutiontobeproposedwillalsobeprovided.

Theexternalauditorwillattendannualgeneralmeetingtoanswerquestionsabouttheconductoftheaudit,thepreparationandcontentoftheauditor’sreport,theaccountingpoliciesandauditorindependenceandanyotherrelatedquestionsasmayberaisedbytheUnitholders.

AllvotesofUnitholdersatgeneralmeetingwillbetakenbypoll.Theproceduresforconductingapollwillbeexplainedatthemeeting.

Independentscrutineerwillbeengagedtoensureallvotesatgeneralmeetingareproperlycounted.

PollvoteresultswillbepostedonthewebsitesofChampionREITandtheStockExchangeonthesamedayafterthemeeting.

COMMUNICATIONWITHUNITHOLDERS

Maintainingtimely,mutualandeffectivecommunicationwithUnitholdersandtheinvestmentcommunityaboutcorporatestrategy,businessdevelopmentandprospectsisanimportantpriorityforChampionREIT.AtimelineofsignificanteventssettingouttheimportantdatesforChampionREITandtheUnitholdersisprovidedonpage2ofthisAnnualReportasaquickreference.TheREITManagermeetsexistingandpotentialinvestors,financialanalystsandmediaatone-on-onegroupmeetings,localandoverseasconferenceandroadshowsregularly.Analystbriefingsandinvestormeetingswereheldduringtheyear.

Toensureefficientcommunication,allcorporatecommunicationsofChampionREIT,includingbutnotlimitedtoannualreports,interimreports,noticesofmeetings,announcements,circularsandotherrelevantinformation,areavailableonthewebsiteofChampionREITatwww.ChampionReit.com.InvestorsandUnitholdersmayvisitthewebsitefordetailsoftherecentpressreleaseandresultsannouncementpresentation.

InordertoreducepaperconsumptionforenvironmentalreasonsandtosaveprintingandmailingcostsforthebenefitofUnitholders,ChampionREIThasprovidedUnitholderswithachoiceofreceivingcorporatecommunications(includingdocumentsissuedortobeissuedbyoronbehalfofChampionREITfortheinformationoractionofUnitholdersasdefinedinRule1.01oftheListingRules)byelectronicmeansthroughChampionREIT’swebsiteorinprintedform.


REPORTS


InaccordancewiththeOperationsManual,itisanon-goingresponsibilityoftheChiefInvestmentOfficertoreceiveandhandleinvestorcomments/feedback.Allcomments/feedbackandcomplaintsaboutChampionREITfromaninvestor’sperspectivemustberecordedinaregister.Sufficientdetailsofthepersonwhomadethecomments/feedbackandthemeasurestodealwiththerequestmustberecorded.Whenrecordingthecomments/feedback,thenextcriticaldateinthecomments/feedbackhandlingproceduremustbenotedandadheredto,untiltherelevantmatterhasbeenresolved.TheDirectorswillbekeptinformedattheBoardmeetingsofthecomplaintsbeingmade(ifany),theproceduresbeingusedtohandlethecomplaints,andanyremedialactiontakenorproposedtobetaken.Anytrendswillbeidentified.

InvestorsandUnitholdersmayatanytimedirecttheirenquiriesabouttheTrusttotheBoardbywritingtotheREITManager’sofficeinHongKongatSuite3008,30thFloor,GreatEagleCentre,23HarbourRoad,Wanchai,[email protected].

DISTRIBUTION

UnitholderswillbeentitledtoreceivedistributionswhendeclaredbytheREITManageroutofassetslegallyavailableforthepaymentofdistributions.UndertheREITCode,theTrustshalldistributetoUnitholdersasdividendseachyearanamountnotlessthan90%ofitsauditedannualnetincomeaftertax.Theeffectivepayoutratiofortheyearended31December2014is94.8%.

MATTERSTOBEDECIDEDBYUNITHOLDERSBYSPECIALRESOLUTION

PursuanttotheTrustDeed,decisionswithrespecttocertainmattersrequirespecificpriorapprovalofUnitholdersbywayofspecialresolution.Suchmattersinclude,amongotherthings:

(a) changeintheREITManager’sinvestmentpolicies/strategiesforChampionREIT;

(b) disposalofanyrealestateinvestmentofChampionREITorsharesinanyspecialpurposevehiclesholdingsuchrealestateinvestmentwithintwoyearsofacquisition;

(c) anyincreaseintherateoftheREITManager’sfeesabovethepermittedlimitorchangingthestructureoftheREITManager’sfees;

(d) anyincreaseintherateoftheTrustee’sfeesabovethepermittedlimitorchangeinthestructureoftheTrustee’sfees;

(e) certainmodificationsoftheTrustDeed;

(f) terminationofChampionREIT;

(g) mergerofChampionREIT;

(h) removalofChampionREIT’sauditorsandappointmentofnewauditors;and

(i) removaloftheTrustee.


Asstatedabove,thequorumforpassingaspecialresolutionistwoormoreUnitholderspresentinpersonorbyproxyregisteredasholdingnotlessthan25%oftheUnitsinissueandoutstanding.Aspecialresolutionmayonlybepassedby75%ormoreofthevotesofthosepresentandentitledtovoteinpersonorbyproxyatdulyconvenedmeetingandthevotesshallbetakenbywayofpoll.

ISSUEOFFURTHERUNITS

TominimizethepossiblematerialdilutionofholdingsofUnitholders,anyfurtherissueofUnitswillneedtocomplywiththepre-emptionprovisionscontainedintheREITCodeandtheTrustDeed.SuchprovisionsrequirethatfurtherissuesofUnitsbefirstofferedonaproratapre-emptivebasistoexistingUnitholdersexceptthatUnitsmaybeissued,oragreed(conditionallyorunconditionally)tobeissued,inanyfinancialyear(whetherdirectlyorpursuanttoanyConvertibleInstruments(asdefinedintheTrustDeed))otherwisethanonaproratabasistoallexistingUnitholdersandwithouttheapprovalofUnitholderssubjecttoconditionsasmoreparticularlysetoutintheTrustDeed.

Incircumstanceswherepre-emptionrightsapply,onlytotheextentthattheUnitsofferedarenottakenupbysuchholdersmaytheybeallottedtoorissuedtootherpersonsorotherwisethanproratatotheirexistingholdings.

Anyissue,grantorofferofUnitsorConvertibleInstrumentstoaConnectedPersonofChampionREITwillrequirespecificpriorapprovalofUnitholdersbywayofanOrdinaryResolutioninrespectofwhichtheconnectedpersonshallbeprohibitedfromvotingorbeingcountedinthequorumforthemeetingoftheUnitholders,unlesssuchissue,grantorofferismadeundercertaincircumstances(where,fortheavoidanceofdoubt,noUnitholders’approvalwillberequired)including:

(a) theConnectedPersonreceivesaprorataentitlementtoUnitsand/orConvertibleInstrumentsinitscapacityasaUnitholder;or

(b) UnitsareissuedtoaConnectedPersonunderClause11.1.1oftheTrustDeedinortowardsthesatisfactionoftheREITManager’sfees;or

(c) UnitsareissuedtoaConnectedPersonpursuanttoareinvestmentofdistributioninaccordancewithClause20.9undertheTrustDeed.

WheretheissueofUnitswouldgiverisetoaconflictofinterestonthepartoftheREITManageroritsConnectedPersons,theREITManageranditsConnectedPersonsshallabstainfromvotinginrelationtoanyissuanceofUnits.


REPORTS


Asat31December2014,thetotalnumberofissuedUnitsofChampionREITwas5,744,851,859.Ascomparedwiththepositionof31December2013,atotalof30,987,212newUnitswereissuedduringtheyearasfollows:

DATE PARTICULARS NO.OFUNITS

1January2014 NumberofissuedUnits 5,713,864,647

11March2014 IssueofnewUnitstotheREITManageratthepriceofHK$3.46 perUnit(beingtheMarketPriceascribedintheTrustDeed)aspaymentof50%ofthemanager’sfeeinrespectoftherealestateheldbyChampionREITofapproximatelyHK$53,358,000payablebyChampionREITforthesixmonthsended31December2013

15,421,450

27August2014 IssueofnewUnitstotheREITManageratthepriceofHK$3.549 perUnit(beingtheMarketPriceascribedintheTrustDeed)aspaymentof50%ofthemanager’sfeeinrespectoftherealestateheldbyChampionREITofapproximatelyHK$55,243,000payablebyChampionREITforthesixmonthsended30June2014

15,565,762

31 December 2014 NUMBER OF ISSUED UNITS 5,744,851,859

INTERNALCONTROLS

TheREITManagerhasageneralpowerofmanagementovertheassetsofChampionREIT.TheBoardisentrustedwiththeoverallresponsibilityformaintainingsoundandeffectiveinternalcontrolsystemstosafeguardtheassetsoftheTrustandensurethesmoothrunningofthebusinessoperations.Thesystemsaredesignedtoprovidereasonableassuranceagainstmaterialmisstatementorloss,andtomitigateriskoffailuretomeetthebusinessobjectives.TheREITManagerhasaninternalauditfunctioninplacetoprovideanindependentassessmentoftheREITManager’sinternalcontrolsystems.Duringtheyear,theInternalAuditorhasconductedarisk-basedreviewofthepoliciesandproceduresdescribedintheComplianceManualtoensuretheyhavebeenoperatedasexpected.

TheBoardisresponsibleforreviewingtheeffectivenessofthesystemsofinternalcontrolonanannualbasisthroughtheAuditCommittee.TheAuditCommitteereportstotheBoardonanymaterialissuesandmakesrecommendationstotheBoard.ThroughtheAuditCommitteeandtheInternalAuditor,theBoardhasconductedanannualreviewontheeffectivenessoftheinternalcontrolsystemsfortheyearended31December2014.Thereviewcoveredallmaterialcontrols,includingfinancial,operationalandcompliancecontrolsandriskmanagementfunctions.

The2-yearauditplanisapprovedbytheAuditCommittee.ResultsoftheauditreviewsintheformofauditreportsaresubmittedtothemembersoftheAuditCommitteeanddiscussedattheAuditCommitteemeetings.TheinternalauditreportsarealsofollowedupbytheInternalAuditortoensurethatfindingspreviouslyidentifiedhavebeenproperlyresolved.

Basedontheresultsoftheinternalauditreviewsfortheyearended31December2014andtheassessmentoftheAuditCommitteethereon,theBoardconsidersthattheinternalcontrolsystemsareeffectiveandadequate.NosignificantirregularityordeficiencyininternalcontrolsthatmayaffectUnitholders’investmentandtheTrust’sassetswereidentified.


INTERESTOF,ANDDEALINGSINUNITSBY,DIRECTORS,THEREITMANAGERORTHESIGNIFICANTUNITHOLDERS

TomonitorandsuperviseanydealingsofUnits,theREITManagerhasadoptedacode(the“GoverningCode”)governingdealingsinthesecuritiesofChampionREITbytheDirectorsoftheREITManagerontermsnolessexactingthantherequiredstandardsetoutintheModelCode(“ModelCode”)forSecuritiesTransactionsbyDirectorsofListedIssuerscontainedintheListingRules.PursuanttothisGoverningCode,anyDirectorswishingtodealintheUnitsmustfirsthaveregardtoprovisionsanalogoustothosesetoutinPartsXIIIandXIVoftheSFOwithrespecttoinsiderdealingandmarketmisconduct.Inaddition,aDirectormustnotmakeanyunauthoriseddisclosureofconfidentialinformationormakeanyuseofsuchinformationfortheadvantageofhimselforothers.TheGoverningCodealsoextendstoseniorexecutivesandofficersoftheREITManager.SpecificenquiryhasbeenmadewiththeREITManager’sDirectors,seniorexecutivesandofficersandtheyhaveconfirmedthattheycompliedwiththerequiredstandardsetoutintheGoverningCodethroughouttheyearended31December2014.

Directorswhoareinpossessionof,awareoforprivytoanynegotiationsoragreementsrelatedtointendedacquisitionsordisposalswhicharesignificanttransactionsoranyunpublishedinsideinformationmustrefrainfromdealingintheUnitsassoonastheypossess,becomeawareoforprivytosuchinformationuntilproperdisclosureoftheinformationinaccordancewiththeREITCodeandanyapplicableprovisionsoftheListingRules.DirectorswhoareprivytorelevantnegotiationsoragreementsoranyinsideinformationshouldcautionthoseDirectorswhoarenotsoprivythattheremaybeunpublishedinsideinformationandthattheymustnotdealinChampionREIT’ssecuritiesuntilproperdisclosureofinformationhasbeenmade.

TheREITManagerhasalsoadoptedproceduresforthemonitoringofdisclosureofinterestsbytheDirectors,theChiefExecutiveOfficeroftheREITManager,andtheREITManager,towhomtheprovisionsofPartXVoftheSFOshallapply.

UndertheTrustDeedandbyvirtueofPartXVoftheSFO,UnitholderswillhaveanotifiableinterestiftheirholdingsofUnitsreachorexceedthenotifiablepercentagelevel(asdefinedintheSFOforthepurposesofPartXVoftheSFO),i.e.5%oftheUnitstheninissue,andwillberequiredtonotifytheStockExchangeandtheREITManageroftheirholdingsinChampionREIT.TheREITManagerkeepsaregisterforthesepurposesandrecordsintheregister,againstaperson’sname,theparticularsprovidedpursuanttothenotificationandthedateofentryofsuchrecord.ThesaidregistershallbeavailableforinspectionbytheTrusteeandanyUnitholderatanytimeduringbusinesshoursuponreasonablenoticetotheREITManager.

BUY-BACK,SALEORREDEMPTIONOFCHAMPIONREIT’SSECURITIES

Ageneralmandateforbuy-backofUnitsintheopenmarketwasgivenbyUnitholdersattheannualgeneralmeetingheldon26May2014.Duringtheyearended31December2014,neithertheREITManagernoranyofChampionREIT’sspecialpurposevehicleshadpurchased,soldorredeemedanyUnitspursuanttothismandate.


REPORTS


REALESTATESALEANDPURCHASEANDOTHERINVESTMENTS

ChampionREITdidnotenterintoany(i)realestatesalesandpurchases;(ii)investmentsinPropertyDevelopmentandRelatedActivities(asdefinedintheTrustDeed);(iii)RelevantInvestments(asdefinedintheTrustDeed)duringtheyearended31December2014.ChampionREIThasinvestedintheRelevantInvestmentssubsequenttotheyearended31December2014.ThefullinvestmentportfoliooftheRelevantInvestmentsasat28February2015issetoutbelow:

Type PrimaryListingCountryofIssuer Currency

TotalCost

Mark-to-marketValue

WeightingofGAVNote Credit

RatingHK$’000 HK$’000 %

KERPRO5⅞04/06/21 Bond Singapore

Exchange

BVI USD 62,913 61,592 0.0976% S&P

BBB-

NANFUN4½09/20/22EMTN Bond Singapore

Exchange

BVI USD 9,797 9,563 0.0152% S&P

BBB-

NANFUN4⅞05/29/24EMTN Bond Singapore

Exchange

BVI USD 2,086 2,028 0.0032% S&P

BBB-

Total 74,796 73,183 0.1160%

Note: Byreferencetotheaccountsfortheyearended31December2014asadjustedforanydistributiondeclaredandanypublishedvaluation.

COMPLIANCEWITHCOMPLIANCEMANUAL

TheREITManagerhascompliedwiththeprovisionsoftheComplianceManualduringtheyear.

PUBLICFLOAT

AsfarastheREITManagerisaware,asatthedateofthisreport,theTrusthasmaintainedasufficientpublicfloatwithmorethan25%oftheissuedandoutstandingUnitsofChampionREITbeingheldbythepublic.

REVIEWOFANNUALREPORT

TheannualreportofChampionREITfortheyearended31December2014hasbeenreviewedbytheAuditCommitteeandDisclosuresCommitteeoftheREITManagerandapprovedbytheBoardoftheREITManager.

TheDirectorsoftheREITManageracknowledgetheirresponsibilityforthepreparationoftheaccountsofChampionREITfortheyearended31December2014.TheconsolidatedfinancialstatementsofChampionREITanditscontrolledentitiesfortheyearended31December2014havebeenauditedbytheIndependentAuditor,Messrs.DeloitteToucheTohmatsu.ThestatementabouttheirresponsibilitiesonthefinancialstatementsofChampionREITfortheyearended31December2014issetoutintheIndependentAuditor’sReport.


CONNECTED PARTY TRANSACTIONS REPORT

REPORTS

CONNECTEDPARTYTRANSACTIONSREPORT

SetoutbelowistheinformationinrespectoftheconnectedpartytransactionsinvolvingChampionREITanditsconnectedpersonsasdefinedinparagraph8.1oftheCodeonRealEstateInvestmentTrusts(“REITCode”):

CONNECTEDPARTYTRANSACTIONSWITHTHEGREATEAGLECONNECTEDPERSONSGROUPAND/ORTHESFKCONNECTEDPERSONSGROUP

ThefollowingtablessetforthinformationontheconnectedpartytransactionsbetweenChampionREITandtheGreatEagleConnectedPersonsGroupand/ortheSFKConnectedPersonsGroupforthe12monthsended31December2014(“Year”).

GreatEagleHoldingsLimited(“GreatEagle”)isaconnectedpersonofChampionREITbyvirtueofbeingtheholdingcompanyoftheREITManagerandalsobeingasignificantholder(asdefinedundertheREITCode)ofChampionREITthroughthedirectunitholdingsofitscontrolledcorporations(includingTopDomainInternationalLimited,KeenFlowInvestmentsLimitedandBrightFormInvestmentsLimited,eachbeingasignificantholderofChampionREIT)asmoreparticularlydescribedunderthesectionheaded“DisclosureofInterests”ofthisReport.TheGreatEagleConnectedPersonsGroupmeansthosewhoareconnectedpersonsofChampionREITbyvirtueoftheirrelationship(includingbutnotlimitedtobeingadirector,seniorexecutive,officerorassociate(asdefinedundertheREITCode))withGreatEagle.

SFKConstructionHoldingsLimited(“SFK”)isaconnectedpersonofChampionREITbyvirtueofbeinganassociate(asdefinedundertheREITCode)ofMr.LoKaiShui,adirectoroftheREITManager,whoisentitledtoexercisecontrolof33%ormoreofthevotingpoweratthegeneralmeetingofSFK.TheSFKConnectedPersonsGroupmeansthosewhoareconnectedpersonsofChampionREITbyvirtueofbeingcompaniesandentitiesheldorcontrolledbySFK.

CONNECTEDPARTYTRANSACTIONS–RENTALINCOME(REVENUE)

NAMEOFCONNECTEDPARTYRELATIONSHIPWITHCHAMPIONREIT

NATUREOFCONNECTEDTRANSACTION

INCOMES FOR THEYEAR

HK$

EagleAssetManagement(CP)Limited SubsidiaryofGreatEagle Carparkingfee 394,000

EaglePropertyManagement(CP)Limited SubsidiaryofGreatEagle Leasingtransaction1 3,050,000

LanghamHotelsInternationalLimited SubsidiaryofGreatEagle Leasingtransaction2 2,853,000

LanghamPlaceHotel(HK)Limited SubsidiaryofGreatEagle3 Leasingtransaction4 4,567,000

StrongDynamicLimited SubsidiaryofGreatEagle Leasingtransaction5 7,680,000

TheGreatEaglePropertiesManagementCompany,Limited

SubsidiaryofGreatEagle Leasingtransaction6 5,690,000


SubsidiaryofGreatEagle Carparkingfee 50,000

ChinaMobileHongKongCompanyLimited

AssociateofaDirector7 Licencefee8 234,000

TOTAL 24,518,000 10


REPORTS


CONNECTEDPARTYTRANSACTIONS–BUILDINGMANAGEMENTFEEINCOME(REVENUE)



INCOMES FOR THEYEAR

HK$

EaglePropertyManagement(CP)Limited SubsidiaryofGreatEagle Buildingmanagementfeeincome1 399,000

LanghamHotelsInternationalLimited SubsidiaryofGreatEagle Buildingmanagementfeeincome2 461,000

LanghamPlaceHotel(HK)Limited SubsidiaryofGreatEagle3 Buildingmanagementfeeincome4 664,000

StrongDynamicLimited SubsidiaryofGreatEagle Buildingmanagementfeeincome5 3,851,000


SubsidiaryofGreatEagle Buildingmanagementfeeincome6 687,000

TOTAL 6,062,000 10

CONNECTEDPARTYTRANSACTIONS–ESTATEMANAGEMENTTRANSACTIONS(EXPENDITURES)



EXPENSESFORTHEYEAR

HK$

KeysenEngineeringCompany,Limited SubsidiaryofGreatEagle Repairandmaintenanceservices 447,000

TheGreatEagleEngineeringCompanyLimited

SubsidiaryofGreatEagle Repairandmaintenanceservices 6,181,000


SubsidiaryofGreatEagle Estatemanagementexpense 97,517,000 9


SubsidiaryofGreatEagle Repairandmaintenanceservices 8,000

LanghamPlaceHotel(HK)Limited SubsidiaryofGreatEagle3 Marketingexpense 23,000

CleverGainInvestmentLimited SubsidiaryofGreatEagle Marketingexpense 188,000

SunFookKongHousingServicesLimited SubsidiaryofSFK Repairandmaintenanceservices 29,000

TOTAL 104,393,000 10


Notes:

1. AsecuritydepositbywayofabankguaranteeofapproximatelyHK$927,000providedbyEaglePropertyManagement(CP)LimitedwasheldbytheTrustasattheYearenddate.

2. AsecuritydepositbywayofabankguaranteeofapproximatelyHK$3,133,000providedbyLanghamHotelsInternationalLimitedwasheldbytheTrustuntiltheterminationoftenancyon7April2014.

3. LanghamPlaceHotel(HK)LimitedisthewhollyownedsubsidiaryofLanghamHospitalityInvestmentsLimited(“Langham”)wherebyGreatEagleindirectlyheldapproximately58.22%interestsinLanghamasattheYearenddate.Accordingly,LanghamPlaceHotel(HK)LimitedistheindirectsubsidiaryofGreatEagle.

4. AsecuritydepositofapproximatelyHK$1,351,000providedbyLanghamPlaceHotel(HK)LimitedwasheldbytheTrustasattheYearenddate.

5. AsecuritydepositbywayofabankguaranteeofapproximatelyHK$2,882,000providedbyStrongDynamicLimitedwasheldbytheTrustasattheYearenddate.

6. AsecuritydepositofapproximatelyHK$1,408,000providedbyTheGreatEaglePropertiesManagementCompany,LimitedwasheldbytheTrustasattheYearenddate.

7. Dr.LoKaShui(directorsofGreatEagleandtheREITManager)isanindependentnon-executivedirectorofChinaMobileLimited,theholdingcompanyofChinaMobileHongKongCompanyLimited.

8. AsecuritydepositofapproximatelyHK$39,000providedbyChinaMobileHongKongCompanyLimitedwasheldbytheTrustasattheYearenddate.

9. OutofthisHK$97,517,000,approximatelyHK$94,651,000representedtheamountofreimbursementofestatemanagementexpensespaidundertheLanghamPlaceMallEstateManagementAgreementandremainingamountofapproximatelyHK$2,866,000representedtheamountofreimbursementofestatemanagementexpensespaidundertheCAFManagementAgreement(inrelationtothecommonareas/facilitiesofLanghamPlace).BothLanghamPlaceMallEstateManagementAgreementandCAFManagementAgreementarePre-ExistingAgreementswithTheGreatEaglePropertiesManagementCompany,Limited.PursuanttotheLanghamPlaceMallEstateManagementAgreement,theMallEstateManagerwasentitledtoretainatalltimesanamountequaltoone-sixthoftheannualexpenditureundertheapprovedbudgetfortheyear31December2014;soastoenabletheMallEstateManagertomakepaymentofestatemanagementexpenses.

10. TheannualvalueoftheConnectedPartyTransactionswerewithintherespectiveannuallimitssetoutinthefollowingtableasapprovedbytheunitholdersintheExtraordinaryGeneralMeetingheldon10December2013:–

ANNUALLIMITFORTHEYEARENDING

31 DECEMBER 2014

HK$ I. Revenue

Rentalincome 50,279,000

Buildingmanagementfee 8,754,000

Total: 59,033,000

II. Expenditure

Estatemanagementtransactions 127,263,000


REPORTS


PRE-EXISTINGAGREEMENTS

Followingtheacquisitionoftheretail,carparkandcertainofficeportionsofLanghamPlace,certainagreements(previouslyenteredintowiththeGreatEagleConnectedPersonsGroupand/ortheSFKConnectedPersonsGroup)inrelationtotheLanghamPlacecontinuetosubsist.

PRE-EXISTINGAGREEMENTSSUBJECTTOWAIVER

ThefollowingPre-ExistingAgreementsareamongtheconnectedpartiestransactionswiththeGreatEagleConnectedPersonsGroupand/ortheSFKConnectedPersonsGroupasdisclosedaboveandtheyaredealtwithasiftheywereconnectedpartytransactionswhicharesubjecttoannuallimitsofthewaiverfromstrictcompliancewiththerequirementsunderChapter8oftheREITCode:

NAME/DESCRIPTIONOFAGREEMENT

NAMEOFCONNECTEDPARTY

RELATIONSHIPWITHCHAMPIONREIT

NATUREOFCONNECTED TRANSACTION

INCOMES/EXPENSESFORTHEYEAR

HK$

LanghamPlaceMallEstateManagementAgreement

TheGreatEaglePropertiesManagementCompany,Limited(astheLanghamPlaceMallEstateManager)

SubsidiaryofGreatEagle Reimbursementofestatemanagementexpense

94,651,000

CAFManagementAgreement(inrelationtothecommonareas/facilitiesofLanghamPlace)

TheGreatEaglePropertiesManagementCompany,Limited(astheCAFEstateManagerofLanghamPlace)

SubsidiaryofGreatEagle Reimbursementofestatemanagementexpense

2,866,000


OTHERPRE-EXISTINGAGREEMENTSANDOTHERTRANSACTIONSSUBJECTTOREPORTINGREQUIREMENTSUNDERPARAGRAPH8.14OFTHEREITCODE

NAME/DESCRIPTIONOFAGREEMENT



NATUREOFCONNECTED TRANSACTION


HK$

DMC(deedofmutualcovenant)forLanghamPlace

TheGreatEaglePropertiesManagementCompany,Limited(asDMCManagerofLanghamPlace)

SubsidiaryofGreatEagle Buildingmanagementfeeexpense1

2,839,000

OfficeSub-DMC(sub-deedofmutualcovenant)fortheLanghamPlaceOfficeTower

LongworthManagementLimited(asOfficeSub-DMCManageroftheLanghamPlaceOfficeTower)

SubsidiaryofGreatEagle Buildingmanagementfeeexpense2

37,459,000

DeedofDelegation TheGreatEaglePropertiesManagementCompany,Limited(asDMCManagerofLanghamPlace)

SubsidiaryofGreatEagle Delegationofmanagementfunctionsofcommonareas/facilities

Nil

PropertyManagementAgreement

EaglePropertyManagement(CP)Limited(asPropertyManagerofChampionREIT)

SubsidiaryofGreatEagle Leasingandmarketingservices

94,140,000

DMC(deedofmutualcovenant)forCitibankPlaza

TheGreatEaglePropertiesManagementCompany,Limited(asDMCSub-managerappointedbytheDMCManagerofCitibankPlaza)

SubsidiaryofGreatEagle Buildingmanagementfeeexpenseandcontribution3

142,615,000 4

Notes:

1. AmanagementfeedepositandsinkingfundofapproximatelyHK$716,000waskeptbyTheGreatEaglePropertiesManagementCompany,LimitedinitscapacityasDMCManagerofLanghamPlaceasattheYearenddate.

2. AmanagementfeedepositandsinkingfundofapproximatelyHK$12,759,000waskeptbyLongworthManagementLimitedinitscapacityasOfficeSub-DMCManagerofLanghamPlaceOfficeTowerasattheYearenddate.

3. AmanagementfeedepositofapproximatelyHK$16,384,000waskeptbyTheGreatEaglePropertiesManagementCompany,LimitedinitscapacityasDMCSub-managerofCitibankPlazaasattheYearenddate.

4. OutofthisHK$142,615,000,approximatelyHK$120,860,000representedtheamountofbuildingmanagementfeepaidundertheDMCforCitibankPlazaandremainingamountofapproximatelyHK$21,755,000representedtheamountofbuildingmanagementfeecontributionforchillerreplacementatCitibankPlaza.


REPORTS


OTHERCONNECTEDPARTYTRANSACTIONSWITHTHEGREATEAGLECONNECTEDPERSONSGROUP

REITMANAGER’SFEE

EagleAssetManagement(CP)Limited,awhollyownedsubsidiaryofGreatEagle,wasappointedastheREITManagerofChampionREIT.TheREITManager’sfeeofapproximatelyHK$216millionbeingthe12%ofthenetpropertyincomeofChampionREITforsuchservicesrenderedduringtheYearistobesettledbytheissuanceofnewUnitspursuanttotheTrustDeedandintheformofcash.

TheREITManagerhasnotifiedtheTrusteeinwritingandelectedtoreceive50%ofManager’sFeeintheformofUnitsandthebalanceof50%willbereceivedincashfortheFinancialYear2013.Asnochangehasbeenmade,accordingtoClause11.1.2oftheTrustDeed,thewayofreceiptofManager’sFeeasto50%intheformofUnitsand50%incashremainsapplicabletothefinancialyear2014.Forthetwelve-monthfinancialyearended31December2014,theREITManager’sfeepaidandpayableintheformofUnitsisintheamountofapproximatelyHK$108millionandtheREITManager’sfeepaidandpayableintheformofcashisintheamountofapproximatelyHK$108 million.

CONNECTEDPARTYTRANSACTIONSWITHTHETRUSTEEAND/ORTHETRUSTEECONNECTEDPERSONSGROUP

ThefollowingtablessetforthinformationontheconnectedpartytransactionsbetweenChampionREITandtheTrusteeand/ortheTrusteeConnectedPersonsduringtheYear.

TrusteeConnectedPersonsmeantheTrusteeandcompanieswithinthesamegrouporotherwise“associated”withtheTrusteewithinthemeaninggivenintheREITCode.TheTrusteeConnectedPersonsincludeadirector,aseniorexecutiveoranofficerofanyoftheTrustee,andacontrollingentity,holdingcompany,subsidiaryorassociatedcompanyoftheTrustee.

HSBCGroupmeansTheHongkongandShanghaiBankingCorporationLimited(“HSBC”)anditssubsidiariesand,unlessotherwiseexpresslystatedherein,excludestheTrusteeanditsproprietarysubsidiaries(beingthesubsidiariesoftheTrusteebutexcludingthosesubsidiariesformedinitscapacityasthetrusteeofChampionREIT).


CONNECTEDPARTYTRANSACTIONS–ORDINARYBANKINGANDFINANCIALSERVICES





HK$

HSBCGroup TrusteeConnectedPersons Interestincomefromordinarybankingservices

786,000

HSBCGroup TrusteeConnectedPersons Bankcharge 85,000

HSBC1 TrusteeConnectedPersons Loaninterest/expense 32,209,000

HangSeng2 TrusteeConnectedPersons Loaninterest/expense 134,967,000

ChampionMTNLimited(aspecialpurposevehiclewholly-ownedandcontrolledbyChampionREIT)maintainedcurrencyswapscontractswithHSBCduringtheYear.ThetotalnotionalamountinrespectofsuchswapcontractswithHSBCwasUS$400millionasat31December2014.

On16May2014,CPFinanceLimited(aspecialpurposevehiclewhollyownedandcontrolledbyChampionREIT)concludedaHK$3,700milliontermloanfacility,which,amongothers,includeHSBCandHangSengBankLimited(“HangSeng”).HangSengisalsotheagentofthefinancebanksforthisloanfacility.TheoutstandingbalanceduetothissyndicatedloanwasHK$3,700millionasat31December2014.

On16May2014,CPSuccessLimited(aspecialpurposevehiclewhollyownedandcontrolledbyChampionREIT)concludedaHK$3,800milliontermloanfacility,which,amongothers,includeHSBCandHangSeng.HangSengisalsotheagentofthefinancebanksforthisloanfacility.TheoutstandingbalanceduetothissyndicatedloanwasHK$3,800millionasat31December2014.

Subsequenttotheyearended31December2014,EAM-ChampionREITLimited(aspecialpurposevehiclewholly-ownedandcontrolledbyChampionREIT)haspurchasedvariousslotsofbondsthroughHSBCasbroker.ThetotalcostinrespectofthebondsamountedtoapproximatelyHK$74,796,000.

CONNECTEDPARTYTRANSACTIONS–LEASING/LICENSINGTRANSACTIONS




INCOMES FORTHEYEAR

HK$

HSBC TrusteeConnectedPersons Leasingtransaction3 1,514,000

HSBC TrusteeConnectedPersons Buildingmanagementfeeincome3 243,000

TOTAL 1,757,000

Notes:

1. HSBCisthelenderofthetermloanofHK$1,900millionwhichwasdrawndownon8July2013andoutstandingasat31December2014.

2. HangSengisasubsidiaryofHSBC.ItactsasthefacilityagentforthetermloanofHK$7,000million(whichwasrepaidon26May2014)andalsofor(i)thetermloanandrevolvingcreditfacilitiesofHK$2,500million;and(ii)thetermloansfacilitiesof(a)HK$3,700million;and(b)HK$3,800million,whichbothweredrawndownon26May2014.Thetotaloutstandingloansasat31December2014amountedtoHK$9,700million.SyndicatesoflendersofallthefacilitiesincludeHangSengandHSBC.

3. AsecuritydepositofapproximatelyHK$1,275,000providedbytheHSBCGroupwasheldbytheTrustuntiltheterminationoftenancyon31March2014.


REPORTS


CONNECTEDPARTYTRANSACTIONS–LEASING/LICENSINGTRANSACTIONSWITHANYMEMBEROFHSBCGROUPUNDERWHICHTHEANNUALRENTEXCEEDSHK$1 MILLION

NAMEOFCONNECTED PARTY


NATUREOFCONNECTED TRANSACTION MATERIALTERMS

ANNUALRENTHK$

HSBC TrusteeConnectedPersons LeaseforthewholeofLevel18,OfficeTower,LanghamPlace,8ArgyleStreetand555ShanghaiStreet,Mongkok,Kowloon

ATenancyAgreementwasenteredintowherebybothpartieshaveagreedto extendafurthertermof 3yearsfrom1April2011 to31March2014

6,055,000

CONNECTEDPARTYTRANSACTIONS–CORPORATEFINANCETRANSACTIONWITHHSBCGROUP

BoththeREITManagerandtheTrusteeconfirmthattherewasnocorporatefinancetransactionwiththeHSBCGroupduringtheYear.

CONNECTEDPARTYTRANSACTIONS–OTHERS

DuringtheYear,thetrusteefeeofapproximatelyHK$10,891,000hadbeenincurredforservicesrenderedbyHSBCInstitutionalTrustServices(Asia)LimitedinitscapacityasthetrusteeofChampionREIT.

CONNECTEDPARTYTRANSACTIONSWITHOTHERCONNECTEDPERSONS

DuringtheYear,anamountofapproximatelyHK$2,841,000inaggregatewasrenderedforservicestotheTrustbySavillsValuationandProfessionalServicesLimited(“Savills”)anditsconnectedpersons.Amongthese,approximatelyHK$301,000 wasthevaluationfeeincurredforservicesrenderedbySavillsinitscapacityastheprincipalvaluerofChampionREIT.

CONFIRMATIONBYTHEINDEPENDENTNON-EXECUTIVEDIRECTORSOFTHEREITMANAGER

TheIndependentNon-executiveDirectorsoftheREITManagerconfirmthattheyhavereviewedallrelevantconnectedpartytransactions(includingthoseconnectedpartytransactionswiththeGreatEagleConnectedPersonsGroup,theSFKConnectedPersonsGroup,theTrusteeConnectedPersonsandtheHSBCGroup)duringtheYearasdisclosedaboveandtheyaresatisfiedthatthesetransactionshavebeenenteredinto:

(i) intheordinaryandusualcourseofbusinessofChampionREIT;

(ii) onnormalcommercialterms(totheextentthattherearecomparabletransactions)or,wheretherearenotsufficientcomparabletransactionstojudgewhethertheyareonnormalcommercialterms,ontermsnolessfavorabletoChampionREITthantermsavailabletoorfrom(asappropriate)independentthirdparties;and

(iii) inaccordancewiththerelevantagreementsandtheREITManager’sinternalproceduresgoverningthem,ifany,ontermsthatarefairandreasonableandintheinterestsoftheUnitholdersofChampionREITasawhole.


REPORTFROMAUDITOROFCHAMPIONREIT

Messrs.DeloitteToucheTohmatsu,auditorofChampionREITwasengagedtoreportontheGroup’scontinuingconnectedtransactionsinaccordancewithHongKongStandardonAssuranceEngagements3000“AssuranceEngagementsOtherThanAuditsorReviewsofHistoricalFinancialInformation”andwithreferencetoPracticeNote740“Auditor’sLetteronContinuingConnectedTransactionsundertheHongKongListingRules’issuedbytheHongKongInstituteofCertifiedPublicAccountants.Theauditorhasissuedhisunqualifiedlettercontaininghisfindingsandconclusionsinrespectofthecontinuingconnectedtransactionsonrentalincome,buildingmanagementfeeincome,estatemanagementtransactions,andordinarybankingandfinancialservicesinaccordancewiththewaiverfromstrictcompliancewithdisclosurerequirementsunderChapter8oftheRealEstateInvestmentTrustCodegrantedbytheSecuritiesandFuturesCommissionofHongKong.Acopyofauditor’sletterhasbeenprovidedbytheREITManagertotheSecuritiesandFuturesCommissionofHongKong.

HongKong,27February2015

Note: Allfigurespresentedinthis“CONNECTEDPARTYTRANSACTIONREPORT”havebeenroundedtothenearestthousand.


REPORTS

DISCLOSURE OF INTERESTS

HOLDINGSOFDIRECTORSANDCHIEFEXECUTIVEOFTHEREITMANAGER,THEREITMANAGERANDSUBSTANTIALUNITHOLDERS

Asat31December2014,thefollowingpersonshadinterestsorshortpositionsintheUnits,underlyingUnitsanddebenturesofChampionREIToranyofitsassociatedcorporations(withinthemeaningofPartXVoftheSFO)whichwerenotifiedtotheREITManagerandtheStockExchangepursuanttotheprovisionsofPartXVoftheSFOasdeemedtobeapplicablebyvirtueofSchedule3oftheTrustDeed,orwhichwererecordedintheregisterrequiredtobekeptunderSchedule3oftheTrustDeed,areasfollows:

NAMENUMBEROFUNITSHELD7

NUMBEROFUNDERLYINGUNITSHELD7 TOTAL

PERCENTAGEOFISSUEDUNITS8

Directors and Chief Executive of the REIT Manager

LoKaShui 3,548,593,630 4,454,000 3,553,047,630 1 61.85

ChengWaiChee,Christopher 13,424,730 – 13,424,730 4 0.23

LeeChingMing,Adrian 273,250 – 273,250 5 0.00

REIT Manager (also a Substantial Unitholder)

EagleAssetManagement(CP)Limited 307,829,265 – 307,829,265 5.36

Substantial Unitholders

GreatEagleHoldingsLimited 3,541,564,630 4,454,000 3,546,018,630 2 61.73

HSBCInternationalTrusteeLimited 3,504,999,229 – 3,504,999,229 3 61.01

HKSCCNomineesLimited 2,342,792,797 – 2,342,792,797 6 40.78

TopDomainInternationalLimited 1,420,416,628 – 1,420,416,628 24.73

KeenFlowInvestmentsLimited 913,580,933 – 913,580,933 15.90

BrightFormInvestmentsLimited 680,232,558 – 680,232,558 11.84

Notes:

1. Amongthese3,553,047,630Units:

(a) 589,000Unitsand240,000UnitswererespectivelyheldbyKatherineBLLimitedandElizabethBKLimited,bothofwhicharewholly-ownedbyDr.LoKaShui;

(b) 6,200,000UnitswereheldbyacharitabletrustofwhichDr.LoKaShuiisthesettlorandamemberoftheAdvisoryCommitteeandManagementCommittee;and

(c) 3,546,018,630UnitswereindirectlyheldbyGreatEagleHoldingsLimited(“GreatEagle”)asexplainedinNote2below.Dr.LoKaShuiistheChairmanandManagingDirectorandasubstantialshareholderofGreatEagleholding22.11%votingrightsinitssharecapitalasat31December2014.

TheunitholdingsofDr.LoKaShuiincreasedby60,680,762Unitsascomparedwiththepositionasat30June2014.


2. The3,546,018,630UnitswereindirectlyheldbyGreatEaglethroughitscontrolledcorporationsaslistedinthefollowingtable,whichshowsthenumberofUnitsand/orunderlyingUnitsheldbythesecompaniesasat31December2014and30June2014respectively:

ASAT31DECEMBER2014 ASAT30JUNE2014

NAME

NUMBEROF

UNITSHELD

NUMBEROF

UNDERLYING

UNITSHELD

NUMBEROF

UNITSHELD

NUMBEROF

UNDERLYING

UNITSHELD TopDomainInternationalLimited 1,420,416,628 – 1,420,416,628 –KeenFlowInvestmentsLimited 913,580,933 – 913,580,933 –BrightFormInvestmentsLimited 680,232,558 – 680,232,558 –EagleAssetManagement(CP)Limited 307,829,265 – 292,263,503 –FineNobleLimited 155,325,503 – 116,664,503 –GreatEagleNichemusicLimited 61,345,743 – 61,345,743 –EcobestVenturesLimited 2,834,000 4,454,000 834,000 –

3. ThedisclosurewasbasedonthelatestDisclosureofInterestForm(withthedateofrelevanteventas22September2014)receivedfromHSBCInternationalTrusteeLimited(“HITL”).Whencompared

tothepositionasat30June2014,theunitholdingsofHITLincreasedby56,634,212Unitsanddecreasedby34,307,898underlyingUnitsrespectively.

HITLwasdeemedtobeinterestedinthesameparcelofUnitsandunderlyingUnitsheldbyGreatEagleinitscapacityasatrusteeofadiscretionarytrustwhichheld33.42%interestsinGreatEagleasat31December2014.CertaindirectorsofGreatEagleincludingDr.LoKaShuiandMr.LoKaiShui(whoarealsodirectorsoftheREITManager),MadamLoToLeeKwan,Mr.LoHongSui,Antony,MadamLawWaiDuen,Mr.LoHongSui,VincentandDr.LoYingSuiareamongthediscretionarybeneficiariesofthediscretionarytrust.Dr.LoKaShuiinhisowncapacity,ascontrollingshareholderofcertaincompaniesandasthefounderofanotherdiscretionarytrustheld22.11%votingrightsinthesharecapitalofGreatEagleasat31December2014.

4. TheseUnitswereheldbyatrustofwhichMr.ChengWaiChee,Christopherisabeneficiary.TheunitholdingsofMr.ChengWaiChee,Christopherremainedunchangedascomparedwiththepositionasat30June2014.

5. ThenumberofUnitsheldbyMr.LeeChingMing,Adrianremainedunchangedascomparedwiththepositionasat30June2014.

6. AsfarastheREITManagerisawareof,HKSCCNomineesLimitedheldsuchUnitsasanominee.ThenumberofUnitsheldbyHKSCCNomineesLimiteddecreasedby1,716,102Unitswhencomparedtothepositionasat30June2014.

7. Unlessotherwisestated,theinterestsinUnitsdisclosedaboverepresentlongpositionsinUnits.

8. ThispercentagehasbeencompiledbasedonthetotalnumberofissuedUnitsofChampionREITof5,744,851,859asat31December2014.

Saveasdisclosedabove,sofarasisknowntotheREITManager,noneoftheDirectorsandChiefExecutiveoftheREITManagerandnootherpersonshadanyinterests(orweredeemedtobeinterested)andshortpositionsintheUnits,underlyingUnitsanddebenturesofChampionREITasat31December2014whichwererequiredtobenotifiedtotheREITManagerandtheStockExchangepursuanttotheprovisionsofPartXVoftheSFOasdeemedtobeapplicablebyvirtueofSchedule3oftheTrustDeed,orwhichwererequiredtoberecordedintheregisterkeptunderSchedule3oftheTrustDeed.

HOLDINGSOFOTHERCONNECTEDPERSONSAsat31December2014,inadditiontothedisclosuresintheabovesectionheaded“HoldingsofDirectorsandChiefExecutiveoftheREITManager,theREITManagerandSubstantialUnitholders”,sofarastheREITManagerisawareof,thefollowingpersons,beingalsoconnectedpersons(asdefinedundertheREITCode)ofChampionREIT,heldUnitsand/orunderlyingUnitsofChampionREIT:

NAMENUMBEROFUNITSHELD

NUMBEROFUNDERLYINGUNITSHELD TOTAL

PERCENTAGEOFISSUED

UNITS3

FortuneMegaInvestmentsLimited 163,936,151 – 163,936,151 1 2.85

HSBCGroup 4,299,123 – 4,299,123 2 0.07

Notes:

1. TheseUnitsweredirectlyheldbyFortuneMegaInvestmentsLimited.Itsintermediateholdingcompanies,JulianHoldingsLimited,KerryPropertiesLimited,KerryProperties(HongKong)LimitedandSpringCapitalHoldingsLimited,weredeemedtobeinterestedinthesameparcelofUnits.EachofthemwasaconnectedpersonbyvirtueofbeinganassociateofMr.HoShutKan(adirectoroftheREITManager).Theirunitholdingsremainedunchangedascomparedwiththepositionasat30June2014.

2. TheHongkongandShanghaiBankingCorporationLimitedanditssubsidiaries(excludingtheTrusteeanditsproprietarysubsidiaries,unlessotherwiseexpresslystatedherein)(“HSBCGroup”)areconnectedpersonsbyvirtueofbeingholdingcompany,controllingentities,subsidiariesorassociatedcompanies(asdefinedundertheREITCode)oftheTrusteeofChampionREITaccordingtotheinformationavailabletotheREITManager.ThenumberofUnitsheldbyHSBCGroupdecreasedby292,360Unitsascomparedwiththepositionasat30June2014.

3. ThispercentagehasbeencompiledbasedonthetotalnumberofissuedUnitsofChampionREITof5,744,851,859asat31December2014.

Saveasdisclosedabove,theREITManagerisnotawareofanyotherconnectedpersons(asdefinedundertheREITCode)ofChampionREITholdinganyUnitsand/orunderlyingUnitsofChampionREITasat31December2014.


REPORTS

DISCLOSURE OF INTERESTS

HOLDINGSOFDIRECTORSANDCHIEFEXECUTIVEOFTHEREITMANAGERINGREATEAGLEHOLDINGSLIMITEDANDLANGHAMHOSPITALITYINVESTMENTSANDLANGHAMHOSPITALITYINVESTMENTSLIMITED

GreatEagleistheholdingcompanyofChampionREITandLanghamHospitalityInvestmentsandLanghamHospitalityInvestmentsLimited(“Langham”).Asat31December2014,GreatEagleowned61.76%interestsinChampionREITand58.22%inLangham.Whilethedefinitionof“associatedcorporation”undertheSFOcatersonlytocorporations,forthepurposeofenhancingthetransparencyofChampionREIT,theholdingsofDirectorsandChiefExecutiveoftheREITManagerinGreatEagleandLanghamasat31December2014aredisclosedasfollows:

GREATEAGLE

Dr.LoKaShuihadapersonalinterestin59,370,525shares,7,310,600underlyingsharesand1,888,000shareoptionsandacorporateinterestin3,870,117sharesofGreatEagleasat31December2014.Heisthefounderofadiscretionarytrustwhichowned81,788,219sharesofGreatEagleandisalsoadiscretionarybeneficiaryofanotherdiscretionarytrustwhichowned219,141,330sharesinGreatEagleasat31December2014.

Mr.LoKaiShuihadapersonalinterestin339,508sharesand500,000shareoptionsandacorporateinterestin661,625sharesofGreatEagleasat31December2014.Heisalsoadiscretionarybeneficiaryofadiscretionarytrustwhichowned219,141,330sharesinGreatEagleasat31December2014.

Mr.LeeChingMing,Adrianhadapersonalinterestin37,110sharesand386,000shareoptionsofGreatEagleasat31December2014.

LANGHAM

Dr.LoKaShuihadacorporateinterestin1,000,000sharestapledunitsofLanghamandwasdeemedtobeinterestedin1,177,358,849sharestapledunitsofLanghamheldbyGreatEagleasat31December2014byvirtueofbeingasubstantialshareholder,theChairmanandManagerDirectorofGreatEagle.HeisalsoasettlorandmemberofAdvisoryCommitteeandManagementCommitteeofacharitabletrustwhichowned17,200,000sharestapledunitsinLanghamasat31December2014.

Mr.LeeChingMing,Adrianhadapersonalinterestin10,000sharestapledunitsofLanghamasat31December2014.

Mr.IpYukKeung,Alberthadapersonalinterestin495,000sharestapledunitsofLanghamasat31December2014.

FINANCIALS106 IndependentAuditor’sReport

108 ConsolidatedIncomeStatement

109 ConsolidatedStatementof ComprehensiveIncome

110 ConsolidatedStatementof FinancialPosition

111 ConsolidatedStatementof Changesin

NetAssetsAttributabletoUnitholders

112 DistributionStatement

113 ConsolidatedStatementof CashFlows

114 NotestotheConsolidatedFinancialStatements

155 MajorRealEstateAgentsandContractors

156 PerformanceTable


AUDITOR’SREPORTINDEPENDENT

1. Table字比內文細1pt，即係8.5pt，所以一定要落Table表格樣式/儲存格樣式，先會識得細1pt。但係TableHead就同內文一樣Keep住用9.5pt。

2. 請使用color/colorbold/tablebold字元樣式。3. tablefig.tab入4mm，即係個格27闊，個tab要落23。

TOTHEUNITHOLDERSOFCHAMPIONREALESTATEINVESTMENTTRUST

(a Hong Kong collective investment scheme authorised under section 104 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong))

WehaveauditedtheconsolidatedfinancialstatementsofChampionRealEstateInvestmentTrust(“ChampionREIT”)anditssubsidiaries(collectivelyreferredtoasthe“Group”)setoutonpages108to154,whichcomprisetheconsolidatedstatementoffinancialpositionasat31December2014,andtheconsolidatedincomestatement,consolidatedstatementofcomprehensiveincome,consolidatedstatementofchangesinnetassetsattributabletounitholders,distributionstatementandconsolidatedstatementofcashflowsfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation.

MANAGER’SRESPONSIBILITY FORTHECONSOLIDATED FINANCIALSTATEMENTS

TheManagerofChampionREITisresponsibleforthepreparationofconsolidatedfinancialstatementsthatgiveatrueandfairviewinaccordancewithHongKongFinancialReportingStandardsissuedbytheHongKongInstituteofCertifiedPublicAccountants,therelevantprovisionsofthedeedoftrustdated26April2006,asamendedfromtimetotime(the“TrustDeed”)andtherelevantdisclosurerequirementssetoutinAppendixCoftheCodeonRealEstateInvestmentTrusts(the“Code”)issuedbytheSecuritiesandFuturesCommissionofHongKong,andforsuchinternalcontrolastheManagerdeterminesisnecessarytoenablethepreparationofconsolidatedfinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

AUDITOR’SRESPONSIBILITY

Ourresponsibilityistoexpressanopinionontheseconsolidatedfinancialstatementsbasedonourauditandtoreportouropinionsolelytoyou,asabody,inaccordancewithAppendixCoftheCode,andfornootherpurpose.Wedonotassumeresponsibility towardsoraccept liability toanyotherpersonforthecontentsof thisreport.Weconductedouraudit inaccordancewithHongKongStandardsonAuditingissuedbytheHongKongInstituteofCertifiedPublicAccountants.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhethertheconsolidatedfinancialstatementsarefreefrommaterialmisstatement.

Anaudit involvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosures intheconsolidatedfinancialstatements.Theproceduresselecteddependontheauditor’s judgment, includingtheassessmentoftherisksofmaterialmisstatementoftheconsolidatedfinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationoftheconsolidatedfinancialstatementsthatgiveatrueandfairviewinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebythemanager,aswellasevaluatingtheoverallpresentationoftheconsolidatedfinancialstatements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.




OPINION

Inouropinion,theconsolidatedfinancialstatementsgiveatrueandfairviewofthedispositionoftheassetsandliabilitiesoftheGroupasat31December2014andoftheGroup’sresultsandcashflowsfortheyearthenendedinaccordancewithHongKongFinancialReportingStandardsandhavebeenproperlypreparedinaccordancewiththerelevantprovisionsoftheTrustDeedandtherelevantdisclosurerequirementssetoutinAppendixCoftheCode.

Deloitte Touche Tohmatsu

Certified Public Accountants

HongKong

27February2015


For The Year Ended 31 December 2014



INCOMESTATEMENTCONSOLIDATED

Notes 2014 2013HK$’000 HK$’000

Rentalincome 8 2,054,240 1,961,381Buildingmanagementfeeincome 208,066 190,184Rentalrelatedincome 9 25,933 27,703 Total revenue 2,288,239 2,179,268Propertyoperatingexpenses 10 (487,866) (431,466) Net property income 1,800,373 1,747,802Interestincome 8,209 13,681Manager’sfee 11 (216,045) (209,736)Trustandotherexpenses (16,982) (20,707)Increaseinfairvalueofinvestmentproperties 17 889,935 808,988Changeinfairvalueofderivativecomponentsofconvertiblebonds 23 – 308,236Gainonsettlementofconvertiblebonds 23 – 29,302Financecosts 12 (322,040) (342,700) Profit before tax and distribution to unitholders 13 2,143,450 2,334,866Incometaxes 14 (214,887) (136,212) Profit for the year, before distribution to unitholders 1,928,563 2,198,654Distributiontounitholders (1,170,668) (1,201,226) Profit for the year, after distribution to unitholders 757,895 997,428

Basic earnings per unit 15 HK$0.34 HK$0.39 Diluted earnings per unit 15 HK$0.34 HK$0.30


ForTheYearEnded31December2014



COMPREHENSIVEINCOMECONSOLIDATEDSTATEMENTOF

2014 2013HK$’000 HK$’000

Profit for the year, after distribution to unitholders 757,895 997,428 Other comprehensive income (expense):Itemsthatmaybesubsequentlyreclassifiedtoprofitorloss:Cashflowhedges:Fairvalueadjustmentsoncrosscurrencyswapsdesignatedascashflowhedge 48,888 (41,833)Reclassificationoffairvalueadjustmentstoprofitorloss (4,214) (3,081)

44,674 (44,914) Total comprehensive income for the year 802,569 952,514


AsAt31December2014



FINANCIALPOSITIONCONSOLIDATEDSTATEMENTOF

Notes 2014 2013HK$’000 HK$’000

NON-CURRENTASSETSInvestmentproperties 17 62,438,000 61,509,000Derivativefinancialinstruments 24 3,974 – Totalnon-currentassets 62,441,974 61,509,000 CURRENTASSETSTradeandotherreceivables 18 184,193 185,352Taxrecoverable 17,015 63,634Bankbalancesandcash 19 1,005,090 1,066,437 Totalcurrentassets 1,206,298 1,315,423 Total assets 63,648,272 62,824,423 CURRENTLIABILITIESTradeandotherpayables 20 1,241,780 1,328,295Depositsreceived 542,108 463,122Taxliabilities 15,380 11,437Distributionpayable 573,614 631,026Securedbankborrowings 21 – 6,993,085 Totalcurrentliabilities 2,372,882 9,426,965 NON-CURRENTLIABILITIES,EXCLUDINGNETASSETSATTRIBUTABLETOUNITHOLDERS

Securedbankborrowings 21 11,513,630 4,563,396Mediumtermnote 22 3,070,002 3,065,494Derivativefinancialinstruments 24 – 41,833Deferredtaxliabilities 25 416,628 362,775 Totalnon-currentliabilities,excludingnetassetsattributabletounitholders 15,000,260 8,033,498 Total liabilities, excluding net assets attributable to unitholders 17,373,142 17,460,463 Net assets attributable to unitholders 46,275,130 45,363,960

Number of units in issue (’000) 26 5,744,852 5,713,865 Net asset value per unit 28 HK$8.06 HK$7.94

Theconsolidatedfinancialstatementsonpages108to154wereapprovedandauthorisedforissuebytheBoardofDirectorsofEagleAssetManagement(CP)Limited,astheManagerofChampionRealEstateInvestmentTrust(“ChampionREIT”)on27February2015andweresignedonitsbehalfby:

Lo Ka Shui Lee Ching Ming, AdrianDIRECTOR DIRECTOR





NETASSETSATTRIBUTABLETOUNITHOLDERSCONSOLIDATEDSTATEMENTOFCHANGESIN

Issued units

Hedgingreserve Others

Profit lessdistribution Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000(note 26) (note)

Netassetsattributableto unitholdersasat 1January2013 23,665,120 – 5,757,943 14,829,137 44,252,200

Profitfortheyear, afterdistribution tounitholders – – – 997,428 997,428

Cashflowhedges – (44,914) – – (44,914) Totalcomprehensive incomefortheyear – (44,914) – 997,428 952,514

Issueofunits 159,246 – – – 159,246 Net assets attributable to

unitholders as at 31 December 2013 23,824,366 (44,914) 5,757,943 15,826,565 45,363,960

Profitfortheyear, afterdistribution tounitholders – – – 757,895 757,895

Cashflowhedges – 44,674 – – 44,674 Totalcomprehensive incomefortheyear – 44,674 – 757,895 802,569

Issueofunits 108,601 – – – 108,601 Net assets attributable to

unitholders as at 31 December 2014 23,932,967 (240) 5,757,943 16,584,460 46,275,130

Note: “Others”represent

(i) ExcessoffairvalueofpropertyinterestsacquiredoveracquisitioncostsfromunitholdersamountingtoHK$5,752,658,000inprioryears;and

(ii) PursuanttotheDeedofAmendmentofDistributionEntitlementWaiverDeeddated14February2008,theundertakingsmadebyTopDomainInternationalLimited,awhollyownedsubsidiaryofGreatEagleHoldingsLimited(“GreatEagle”),undertheDistributionEntitlementWaiverDeeddated26April2006inrespectofdistributionperiodsin2008ceasedtobeeffectiveinconsiderationofatotalamountofHK$86,185,000,ofwhichHK$5,285,000wasretained.



STATEMENTDISTRIBUTION



Note 2014 2013HK$’000 HK$’000

INTERIMDISTRIBUTIONPERIODTotaldistributableincome 663,394 633,555Percentageofdistributableincomefordistribution(note(i)) 90% 90% Total distribution amount for Interim Distribution Period 597,054 570,200 FINALDISTRIBUTIONPERIODTotaldistributableincome 16 1,234,403 1,271,340Less:distributableincomepaidinInterimDistributionPeriod (597,054) (570,200) DistributableincomeavailableforFinalDistributionPeriod 637,349 701,140Percentageofdistributableincomefordistribution(note(i)) 90% 90% Total distribution amount for Final Distribution Period 573,614 631,026 Total distribution amounts for the year 1,170,668 1,201,226 DISTRIBUTIONSPERUNITTOUNITHOLDERSInterimdistributionperunitpaid(note(ii)) HK$0.1039 HK$0.0998Finaldistributionperunittobepaid(note(iii)) HK$0.0998 HK$0.1101

HK$0.2037 HK$0.2099

Notes:

(i) ItisthepolicyoftheManagertodistribute90%(2013:90%)ofavailabledistributableincomeasdistributionsforeachofthesixmonthperiodsended30June(the“InterimDistributionPeriod”)and31December(the“FinalDistributionPeriod”).NoadditionalamountsweredistributedatthediscretionoftheManagerforbothyears.

(ii) The interimdistributionperunitofHK$0.1039 for theInterimDistributionPeriod in2014wascalculatedbasedon the interimdistributionpaidofHK$597,054,000fortheperiodand5,744,851,859unitsasof22September2014,whichwastherecorddatefortheperiod.Thedistributionwaspaidtounitholderson9October2014.

The interimdistributionperunitofHK$0.0998 for theInterimDistributionPeriod in2013wascalculatedbasedon the interimdistributionpaidofHK$570,200,000fortheperiodand5,713,864,647unitsasof23September2013,whichwastherecorddatefortheperiod.

(iii) ThefinaldistributionperunitofHK$0.0998fortheFinalDistributionPeriodin2014iscalculatedbasedonthefinaldistributiontobepaidofHK$573,614,000 fortheperiodand5,744,851,859units.Suchfinaldistributionwillbesubjecttofurtheradjustmentsupontheissuanceofunitsbetween1January2015and22May2015,whichistherecorddatesetforsuchperiod.Thefinaldistributionwillbepaidtounitholderson28May2015.

ThefinaldistributionperunitofHK$0.1101fortheFinalDistributionPeriodin2013wascalculatedbasedonthefinaldistributionpaidofHK$631,026,000fortheperiodand5,729,286,097unitsasof26May2014,whichwastherecorddatefortheperiod.





CASHFLOWSCONSOLIDATEDSTATEMENTOF

2014 2013HK$’000 HK$’000

OPERATINGACTIVITIESProfitbeforetaxanddistributiontounitholders 2,143,450 2,334,866Adjustmentsfor:Increaseinfairvalueofinvestmentproperties (889,935) (808,988)Changeinfairvalueofderivativecomponentsofconvertiblebonds – (308,236)Gainonsettlementofconvertiblebonds – (29,302)Manager’sfeepaidandpayableinunits 108,022 104,868Interestincome (8,209) (13,681)Financecosts 322,040 342,700Exchangedifference (44) 584

Operatingcashflowbeforemovementsinworkingcapital 1,675,324 1,622,811Decreaseintradeandotherreceivables 892 11,220(Decrease)increaseintradeandotherpayables (85,313) 28,678Increaseindepositsreceived 78,986 36,766 Cashgeneratedfromoperations 1,669,889 1,699,475Interestpaid (289,141) (206,231)HongKongProfitsTaxpaid (110,472) (285,246) Net cash from operating activities 1,270,276 1,207,998 INVESTINGACTIVITIESInterestreceived 8,476 13,356Additionstoinvestmentproperties (39,065) (42,531)Acquisitionofinvestmentproperties – (2,268,881) Net cash used in investing activities (30,589) (2,298,056) FINANCINGACTIVITIESBankoriginationfees (73,350) (39,650)Redemptionofconvertiblebonds – (2,406,481)Newbankloanraised 7,500,000 4,100,000Repaymentofbankloan (7,500,000) (2,454,000)Settlementuponconversionofconvertiblebonds – (322,940)Proceedsfromissuanceofmediumtermnote – 3,100,982Transactioncostsforissuanceofmediumtermnote – (39,230)Distributionpaid (1,227,684) (1,179,268) Net cash (used in) from financing activities (1,301,034) 759,413 Net decrease in cash and cash equivalents (61,347) (330,645)Cash and cash equivalents at beginning of the year 1,066,437 1,397,082 Cash and cash equivalents at end of year,representedbybankbalancesandcash 1,005,090 1,066,437


FortheYearEnded31December2014

TOTHECONSOLIDATEDFINANCIALSTATEMENTSNOTES



1. GENERAL

ChampionREITisaHongKongcollective investmentschemeauthorisedundersection104oftheSecuritiesandFuturesOrdinance(Chapter571oftheLawsofHongKong)anditsunitsarelistedonTheStockExchangeofHongKongLimited(the“HKSE”).ChampionREITisgovernedbythedeedoftrustdated26April2006,asamendedfromtimetotime(the“TrustDeed”),enteredintobetweentheManagerandHSBCInstitutionalTrustServices(Asia)Limited(the“Trustee”),andtheCodeonRealEstateInvestmentTrusts (the“Code”) issuedbytheSecuritiesandFuturesCommissionofHongKong.

TheprincipalactivityofChampionREITanditssubsidiaries(the“Group”)istoownandinvestinincome-producingcommercialpropertiesinHongKongwiththeobjectiveofproducingstableandsustainabledistributionstounitholdersandtoachievelongtermgrowthinthenetassetvalueperunit.TheaddressoftheregisteredofficeoftheManagerandtheTrustee,isSuite3008,30thFloor,GreatEagleCentre,23HarbourRoad,HongKong,and1Queen’sRoadCentral,HongKong,respectively.

TheconsolidatedfinancialstatementsarepresentedinHongKongdollars,whichisthesameasthefunctionalcurrencyofChampionREIT.

2. APPLICATIONOF NEW ANDREVISEDHONGKONG FINANCIALREPORTINGSTANDARDS(“HKFRSs”)

Inthecurrentyear,theGrouphasappliedthefollowingnewandrevisedHKFRSsissuedbytheHongKongInstituteofCertifiedPublicAccountants(“HKICPA”).

AmendmentstoHKAS32 OffsettingFinancialAssetsandFinancialLiabilitiesAmendmentstoHKAS36 RecoverableAmountDisclosuresforNon-FinancialAssetsAmendmentstoHKAS39 NovationofDerivativesandContinuationofHedgeAccountingAmendmentstoHKFRS10, HKFRS12andHKAS27

InvestmentEntities

HK(IFRIC)–Int21 Levies

TheapplicationofthenewandrevisedHKFRSsinthecurrentyearhashadnomaterial impactontheGroup’sfinancialperformanceandpositions for thecurrentandprioryearsand/oron thedisclosures setout in theseconsolidatedfinancialstatements.




2. APPLICATIONOF NEW ANDREVISEDHONGKONG FINANCIALREPORTINGSTANDARDS(“HKFRSs”)(CONTINUED)

TheGrouphasnotearlyappliedthefollowingnewandrevisedstandards,amendmentsandinterpretationsthathavebeenissuedbutarenotyeteffective.

AmendmentstoHKAS1 DisclosureInitiative4

AmendmentstoHKAS16andHKAS38 ClarificationofAcceptableMethodsofDepreciationandAmortisation4

AmendmentstoHKAS16andHKAS41 Agriculture:BearerPlants4

AmendmentstoHKAS19 DefinedBenefitPlans:EmployeeContributions1

AmendmentstoHKAS27 EquityMethodinSeparateFinancialStatements4

AmendmentstoHKFRSs AnnualImprovementstoHKFRSs2010-2012Cycle2



AmendmentstoHKFRS10,HKFRS12 andHKAS28

InvestmentEntities:ApplyingtheConsolidationException4

AmendmentstoHKFRS10andHKAS28 SaleorContributionofAssetsbetweenanInvestoranditsAssociateorJointVenture4

AmendmentstoHKFRS11 AccountingforAcquisitionsofInterestsinJointOperations4

HKFRS9 FinancialInstruments6

HKFRS14 RegulatoryDeferralAccounts3

HKFRS15 RevenuefromContractswithCustomers5

1 Effectiveforannualperiodsbeginningonorafter1July20142 Effectiveforannualperiodsbeginningonorafter1July2014,withlimitedexceptions3 EffectiveforfirsttimeannualHKFRSfinancialstatementsbeginningonorafter1January20164 Effectiveforannualperiodsbeginningonorafter1January20165 Effectiveforannualperiodsbeginningonorafter1January20176 Effectiveforannualperiodsbeginningonorafter1January2018




For the Year Ended 31 December 2014

TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES

2. APPLICATIONOF NEW ANDREVISEDHONGKONG FINANCIALREPORTINGSTANDARDS(“HKFRSs”)(CONTINUED)

HKFRS9“FinancialInstruments”

HKFRS9issuedin2009introducesnewrequirements fortheclassificationandmeasurementof financialassets.HKFRS9amendedin2010includestherequirementsfortheclassificationandmeasurementoffinancialliabilitiesandforderecognitionandfurtheramendedin2013to includethenewrequirements forhedgeaccounting.KeyrequirementsofHKFRS9aredescribedasfollows:

• AllrecognisedfinancialassetsthatarewithinthescopeofHKAS39“FinancialInstruments:RecognitionandMeasurement”aresubsequentlymeasuredatamortisedcostorfairvalue.Specifically,debtinvestmentsthatareheldwithinabusinessmodelwhoseobjectiveistocollectthecontractualcashflows,andthathavecontractualcashflowsthataresolelypaymentsofprincipalandinterestontheprincipaloutstandingaregenerallymeasuredatamortisedcostattheendofsubsequentaccountingperiods.Allotherdebtinvestmentsandequityinvestmentsaremeasuredattheirfairvaluesattheendofsubsequentreportingperiods.

• Withregardto themeasurementof financial liabilitiesdesignatedasat fairvalue throughprofitor loss,HKFRS9requiresthattheamountofchangeinthefairvalueofthefinancialliabilitythatisattributabletochangesinthecreditriskofthatliabilityispresentedinothercomprehensiveincome,unlesstherecognitionoftheeffectsofchangesintheliability’screditriskinothercomprehensiveincomewouldcreateorenlargeanaccountingmismatchinprofitorloss.Changesinfairvalueoffinancialliabilitiesattributabletochangesinthefinancial liabilities’creditriskarenotsubsequentlyreclassifiedtoprofitor loss.UnderHKAS39,theentireamountofthechangeinfairvalueofthefinancialliabilitiesdesignatedasatfairvaluethroughprofitorlosswaspresentedinprofitorloss.

• Thenewgeneralhedgeaccountingrequirementsretainthethreetypesofhedgeaccounting.However,greaterflexibilityhasbeenintroducedtothetypesoftransactionseligibleforhedgeaccounting,specificallybroadeningthetypesofinstrumentsthatqualifyforhedgeaccounting.Inaddition,theeffectivenesstesthasbeenoverhauledandreplacedwiththeprincipleofan‘economicrelationship’.Retrospectiveassessmentofhedgeeffectivenessisalsonolongerrequired.Enhanceddisclosurerequirementsaboutanentity’sriskmanagementactivitieshavealsobeenintroduced.

• HKFRS9wasrevised in2014mainly to includea) impairmentrequirements for financialassetsandb)limitedamendmentstotheclassificationandmeasurementrequirementsbyintroducinga‘fairvaluethroughothercomprehensiveincome’(“FVTOCI”)measurementcategoryforcertainsimpledebtinstruments.Debtinstrumentsthatareheldwithinabusinessmodelwhoseobjectiveisachievedbothbycollectingcontractualcashflowsandsellingfinancialassets,andthathavecontractualtermsofthefinancialassetgiveriseonspecifieddatestocashflowsthataresolelypaymentofprincipalandinterestontheprincipalamountoutstanding,aremeasureatFVTOCI.Inaddition,entitiesmaymakeanirrevocableelectiontopresentsubsequentchangesinthefairvalueofanequityinvestment(thatisnotheldfortrading)inothercomprehensiveincome,withonlydividendincomegenerallyrecognisedinprofitorloss.

Inrelationtotheimpairmentoffinancialassets,HKFRS9requiresanexpectedcreditlossmodel,asopposedtoanincurredcreditlossmodelunderHKAS39.Theexpectedcreditlossmodelrequiresanentitytoaccountforexpectedcreditlossesandchangesinthoseexpectedcreditlossesateachreportingdatetoreflectchangesincreditrisksinceinitialrecognition.Inotherwords,itisnolongernecessaryforacrediteventtohaveoccurredbeforecreditlossesarerecognised.

TheManageranticipatesthattheapplicationofHKFRS9maynothavesignificantimpactonamountsreportedinrespectoftheGroup’sfinancialassetsandfinancialliabilities.

TheManageranticipatesthattheapplicationofothernewandrevisedstandards,amendmentsorinterpretationswillhavenomaterialimpactontheresultsandthefinancialpositionoftheGroup.




3. SIGNIFICANTACCOUNTINGPOLICIESStatementofcomplianceTheconsolidatedfinancialstatementshavebeenprepared inaccordancewithHongKongFinancialReportingStandardsissuedbytheHKICPA.Inaddition,theconsolidatedfinancialstatementsincludetherelevantprovisionsoftheTrustDeed,theCodeandtheRulesGoverningtheListingofSecuritiesontheHKSE.

BasisofpreparationofconsolidatedfinancialstatementsTheconsolidatedfinancialstatementshavebeenpreparedonthehistoricalcostbasis,exceptforinvestmentpropertiesandcertainfinancialinstruments,whicharemeasuredatfairvalues,asexplainedintheaccountingpoliciessetoutbelow.

Historicalcostisgenerallybasedonthefairvalueofconsiderationgiveninexchangeforgoodsandservices.

Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliability inanorderlytransactionbetweenmarketparticipantsat themeasurementdate,regardlessofwhetherthatprice isdirectlyobservableorestimatedusinganothervaluationtechnique.Inestimatingthefairvalueofanassetoraliability,theGrouptakesintoaccountthecharacteristicsoftheassetorliabilityifmarketparticipantswouldtakethosecharacteristicsintoaccountwhenpricingtheassetorliabilityatthemeasurementdate.Fairvalueformeasurementand/ordisclosurepurposesintheconsolidatedfinancialstatementsisdeterminedonsuchabasis.

Inaddition,forthefinancialreportingpurposes,fairvaluemeasurementsarecategorisedintoLevel1,2or3basedonthedegreetowhichtheinputstothefairvaluemeasurementsareobservableandthesignificanceoftheinputstothefairvaluemeasurementinitsentirety,whicharedescribedasfollows:

• Level1inputsarequotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilitiesthattheentitycanaccessatthemeasurementdate;

• Level2inputsareinputs,otherthanquotedpricesincludedwithinLevel1,thatareobservablefortheassetorliability,eitherdirectlyorindirectly;and

• Level3inputsareunobservableinputsfortheassetorliability.

Theprincipalaccountingpoliciesaresetoutbelow.

Basisofconsolidation

Theconsolidated financial statements incorporate the financial statementsofChampionREITandtheentitiescontrolledbyChampionREIT.ControlisachievedwhenChampionREIT:

• hasthepowerovertheinvestee;

• isexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeinvestee;and

• hastheabilitytouseitspowertoaffectitsreturns.

TheGroupreassesseswhetherornotitcontrolsaninvesteeiffactsandcircumstancesindicatethattherearechangestooneormoreofthethreeelementsofcontrol.

IncomeandexpensesofcontrolledentitiesacquiredordisposedofduringtheyearareincludedintheconsolidatedincomestatementfromthedatetheGroupgainscontrolsuntilthedatewhentheGroupceasestocontrolthecontrolledentity.

Allintra-grouptransactions,balances,incomeandexpensesareeliminatedonconsolidation.






NOTES

3. SIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)

Investmentproperties

Investmentpropertiesarepropertiesheldtoearnrentaland/orforcapitalappreciation.

Investmentpropertiesare initiallymeasuredatcost, includinganydirectlyattributableexpenditure.Subsequenttoinitialrecognition,investmentpropertiesaremeasuredattheirfairvalues.Gainsorlossesarisingfromchangesinfairvalueofinvestmentpropertiesareincludedinprofitorlossfortheperiodinwhichtheyarise.

Leasing

Leasesareclassifiedasfinanceleaseswheneverthetermsoftheleasetransfersubstantiallyalltherisksandrewardsofownershiptothelessee.Allotherleasesareclassifiedasoperatingleases.

Rentalincomefromoperatingleasesisrecognisedinprofitorlossonastraight-linebasisoverthetermoftherelevantlease.Contingentrentalsarisingunderoperatingleasesarerecognisedas incomeintheperiodinwhichtheyareearned.

Intheeventthatleaseincentives,includingrentfreeperiods,aregiventoenterintooperatingleases,suchincentivesarerecognisedasdeferredrentreceivables.Theaggregatebenefitofincentivesisrecognisedasareductionofrentalincomeonastraight-linebasis,exceptwhereanothersystematicbasis ismorerepresentativeofthetimepatterninwhicheconomicbenefitsfromtheleasedassetareconsumed.

Financialinstruments

Financialassetsandfinancialliabilitiesarerecognisedontheconsolidatedstatementoffinancialpositionwhenagroupentitybecomesapartytothecontractualprovisionsoftheinstrument.Financialassetsandfinancial liabilitiesareinitiallymeasuredatfairvalue.Transactioncoststhataredirectlyattributabletotheacquisitionorissueoffinancialassetsandfinancial liabilities (otherthanfinancialassetsandfinancial liabilitiesat fairvaluethroughprofitor loss)areaddedtoordeductedfromthefairvalueofthefinancialassetsor financial liabilities,asappropriate,oninitialrecognition.Transactioncostsdirectlyattributabletotheacquisitionof financialassetsor financial liabilitiesat fairvaluethroughprofitorlossarerecognisedimmediatelyinprofitorloss.

Financialassets

TheGroup’sfinancialassetsareclassifiedasloansandreceivables.

Effectiveinterestmethod

Theeffectiveinterestmethodisamethodofcalculatingtheamortisedcostofafinancialassetandofallocatinginterestincomeovertherelevantperiod.Theeffective interestrate is theratethatexactlydiscountsestimatedfuturecashreceipts(includingallfeesandpointspaidorreceivedthatformanintegralpartoftheeffectiveinterestrate,transactioncostsandotherpremiumsordiscounts)throughtheexpectedlifeofthefinancialasset,or,whereappropriate,ashorterperiodtothenetcarryingamountoninitialrecognition.





Financialinstruments(continued)

Loansandreceivables

Loansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.Subsequenttoinitialrecognition,loansandreceivables(includingtradeandotherreceivablesandbankbalancesandcash)arecarriedatamortisedcostusingtheeffectiveinterestmethod,lessanyidentifiedimpairmentlosses(seeaccountingpolicyonimpairmentofloansandreceivablesbelow).

Impairmentofloansandreceivables

Loansandreceivablesareassessedfor indicatorsof impairmentat theendofeachreportingperiod.Loansandreceivablesareimpairedwherethereisobjectiveevidencethat,asaresultofoneormoreeventsthatoccurredaftertheinitialrecognitionoftheloansandreceivables,theestimatedfuturecashflowsoftheloansandreceivableshavebeenaffected.

Objectiveevidenceofimpairmentcouldinclude:

• significantfinancialdifficultyoftheissuerorcounterparty;or

• defaultordelinquencyininterestorprincipalpayments;or

• itbecomingprobablethattheborrowerwillenterbankruptcyorfinancialre-organisation.

Forcertaincategoriesof loansandreceivables,suchastradereceivablesandotherreceivables,receivablesthatareassessednottobeimpairedindividuallyare, inaddition,assessedfor impairmentonacollectivebasis.ObjectiveevidenceofimpairmentforaportfolioofreceivablescouldincludetheGroup’spastexperienceofcollectingpayments,anincreaseinthenumberofdelayedpaymentsintheportfoliobeyondtheinvoicedate,observablechangesinnationalorlocaleconomicconditionsthatcorrelatewithdefaultonreceivables.

Animpairmentloss isrecognisedinprofitor losswhenthereisobjectiveevidencethattheasset is impaired,andismeasuredasthedifferencebetweentheasset’scarryingamountandthepresentvalueoftheestimatedfuturecashflowsdiscountedattheoriginaleffectiveinterestrate.

Thecarryingamountisreducedbytheimpairmentlossdirectlyforallloansandreceivableswiththeexceptionoftradereceivablesandotherreceivables,wherethecarryingamountisreducedthroughtheuseofanallowanceaccount.Changesinthecarryingamountoftheallowanceaccountarerecognisedinprofitorloss.Whenatradereceivableorotherreceivableisconsidereduncollectible,itiswrittenoffagainsttheallowanceaccount.Subsequentrecoveriesofamountspreviouslywrittenoffarecreditedtoprofitorloss.

If,inasubsequentperiod,theamountofimpairmentlossdecreasesandthedecreasecanberelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised,thepreviouslyrecognisedimpairmentlossisreversedthroughprofitorlosstotheextentthatthecarryingamountoftheassetatthedatetheimpairmentisreverseddoesnotexceedwhattheamortisedcostwouldhavebeenhadtheimpairmentnotbeenrecognised.






NOTES



Financialliabilitiesandequity

Debtandequityinstrumentsissuedbyagroupentityareclassifiedinaccordancewiththesubstanceofthecontractualarrangementsenteredintoandthedefinitionsofafinancialliabilityandanequityinstrument.

AnequityinstrumentisanycontractthatevidencesaresidualinterestintheassetsoftheGroupafterdeductingallofitliabilities.Instruments,orcomponentsofinstruments,thatimposeontheChampionREITanobligationtodelivertotheholdersapro-ratashareofthenetassetsonlyonliquidationarepresentedasequityonlywhencertainspecificcriteriaaremet.

InaccordancewiththeTrustDeed,ChampionREITisrequiredtodistributetounitholdersnot less than90%ofitsdistributable incomeforeachfinancialperiodandhasa limitedlifeof80years lessonedayfromthedateof itscommencement.Therefore,inadditiontothecontractualdistributiontounitholders,theunitsissuedbyChampionREITcontainacontractualobligationuponitsterminationtodistributeashareofallnetcashproceedsderivedfromthesaleorrealisationofitsassetslessanyliabilitiestoitsunitholdersinaccordancewiththeirproportionateinterestsinChampionREITatthedateofitstermination.Accordingly,theunitsissuedbyChampionREITarecompoundinstrumentsthatcontainbothequityandliabilitycomponents.

Effectiveinterestmethod

Theeffective interestmethodisamethodofcalculatingtheamortisedcostofa financial liabilityandofallocatinginterestexpenseovertherelevantperiod.Theeffectiveinterestrateistheratethatexactlydiscountsestimatedfuturecashpayments(includingallfeesandpointspaidorreceivedthatformanintegralpartoftheeffectiveinterestrate,transactioncostsandotherpremiumsordiscounts) throughtheexpected lifeof the financial liability,or,whereappropriate,ashorterperiodtothenetcarryingamountoninitialrecognition.

Otherfinancialliabilities

Otherfinancial liabilities (includingtradeandotherpayables,distributionpayable,securedbankborrowingsandmediumtermnote)aresubsequentlymeasuredatamortisedcost,usingtheeffectiveinterestmethod.

Unitissuecosts

Thetransactioncostsrelatingtoinitialpublicoffering,listingofunitsofChampionREITandacquisitionofpropertiesareaccountedforasadeductionfromtheproceedsraisedtotheextenttheyareincrementalcostsdirectlyattributabletothetransactionthatotherwisewouldhavebeenavoided.Othertransactioncostsarerecognisedasanexpense.

Derivativefinancialinstrumentsandhedging

Derivativesareinitiallyrecognisedatfairvalueatthedateaderivativecontractisenteredintoandaresubsequentlyremeasuredtotheirfairvalueattheendofthereportingperiod.Theresultinggainorlossisrecognisedinprofitorlossimmediatelyunlessthederivativeisdesignatedasaneffectivehedginginstrument,inwhicheventthetimingoftherecognitioninprofitorlossdependsonthenatureofthehedgerelationship.






Hedgeaccounting

TheGroupusescrosscurrencyswapstohedgeitsexposureagainstchangesinexchangeandinterestrates.Hedgingrelationshipsareclassifiedascashflowhedgeswhensuchrelationshipsareusedtohedgeagainstexposuretovariabilityincashflowsthatareattributabletoaparticularriskassociatedwitharecognisedassetorliabilityandsuchvariabilitycouldaffectprofitorloss.

AttheinceptionofthehedgerelationshiptheGroupdocumentstherelationshipbetweenthehedginginstrumentandhedgeditem,alongwithitsriskmanagementobjectivesanditsstrategyforundertakingvarioushedgetransactions.Furthermore,at theinceptionofthehedgeandonanongoingbasis, theGroupdocumentswhetherthehedginginstrumentthatisusedinahedgingrelationshipishighlyeffectiveinoffsettingchangesincashflowsofthehedgeditem.

Cashflowhedge

Theeffectiveportionofchanges inthefairvalueofderivativesthataredesignatedandqualifyascashflowhedgesarerecognised inothercomprehensive income.Thegainor lossrelatingtothe ineffectiveportion isrecognisedimmediatelyinprofitorlossasothergainsorlosses.

Amountspreviously recognised inothercomprehensive incomeandaccumulated innetassetsattributable tounitholders(hedgingreserve)arereclassifiedtoprofitorlossintheperiodswhenthehedgeditemisrecognisedinprofitorloss.

HedgeaccountingisdiscontinuedwhentheGrouprevokesthehedgingrelationship,thehedginginstrumentexpiresorissold,terminated,orexercised,ornolongerqualifiesforhedgeaccounting.Anygainorlossrecognisedinothercomprehensive incomeandaccumulatedinthehedgingreserveat thattimeremains innetassetsattributabletounitholdersandisrecognisedwhentheforecasttransactionisultimatelyrecognisedinprofitorloss.Whenaforecasttransactionisnolongerexpectedtooccur,thecumulativegainorlossthatwasaccumulatedinnetassetsattributabletounitholdersisrecognisedimmediatelyinprofitorloss.

Derecognition

Financialassetsarederecognisedwhentherightstoreceivecashflowsfromtheassetsexpireor,thefinancialassetsaretransferredandtheGrouphastransferredsubstantiallyalltherisksandrewardsofownershipofthefinancialassets.Onderecognitionofafinancialassetinitsentirety,thedifferencebetweentheasset’scarryingamountandthesumoftheconsiderationreceivedandreceivableandthecumulativegainorlossthathadbeenrecognisedinothercomprehensiveincomeisrecognisedinprofitorloss.

Financialliabilitiesarederecognisedwhentheobligationspecifiedintherelevantcontractisdischarged,cancelledorexpires.Thedifferencebetweenthecarryingamountofthefinancialliabilityderecognisedandtheconsiderationpaidandpayableisrecognisedinprofitorloss.

Cashandcashequivalents

Cashandcashequivalentscomprisecashonhand,demanddepositsandothershort-termhighlyliquidinvestmentsthatarereadilyconvertibletoaknownamountofcashandaresubjecttoaninsignificantriskofchangesinvalue.






NOTES


Revenuerecognition

Revenueismeasuredatthefairvalueoftheconsiderationreceivedorreceivableandrepresentsamountsreceivableforservicesprovidedinthenormalcourseofbusiness.

Rentalincomefromoperatingleaseisrecognisedintheconsolidatedincomestatementonastraight-linebasisoverthetermsoftherelevantleases.Leaseincentivesprovidedtotheleasesareamortisedonastraight-linebasisovertherespectivetermofthelease.

Buildingmanagementfeeincomeisrecognisedwhenbuildingmanagementservicesareprovided.

Interestincomefromafinancialassetisaccruedonatimebasis,byreferencetotheprincipaloutstandingandattheeffectiveinterestrateapplicable,whichistheratethatexactlydiscountstheestimatedfuturecashreceiptsthroughtheexpectedlifeofthefinancialassettothatasset’snetcarryingamountoninitialrecognition.

Borrowingcosts

Allborrowingcostsinrelationtonon-qualifyingassetsarerecognisedinprofitorlossintheperiodinwhichtheyareincurred.

Foreigncurrencies

Inpreparing the financial statementsofeach individualgroupentity, transactions incurrenciesother thanthefunctionalcurrencyofthatentity(foreigncurrencies)arerecognisedattheratesofexchangesprevailingonthedatesofthetransactions.Attheendofthereportingperiod,monetaryitemsdenominatedinforeigncurrenciesareretranslatedattheratesprevailingatthatdate.

Exchangedifferencesonmonetaryitemsarerecognisedinprofitorlossintheperiodinwhichtheyariseexceptforexchangedifferencesontransactionsenteredintoinordertohedgecertainforeigncurrencyrisks.

Taxation

Incometaxexpenserepresentsthesumofthetaxcurrentlypayableanddeferredtax.

Thetaxcurrentlypayableisbasedontaxableprofitfortheyear.Taxableprofitdiffersfromprofitbeforetaxasreportedintheconsolidatedincomestatementbecauseitexcludesitemsofincomeorexpensethataretaxableordeductibleinotherperiodsanditfurtherexcludesitemsthatarenevertaxableordeductible.TheGroup’sliabilityforcurrenttaxiscalculatedusingtaxratesthathavebeenenactedorsubstantivelyenactedbytheendofthereportingperiod.

Deferredtaxisrecognisedontemporarydifferencesbetweenthecarryingamountsofassetsandliabilities intheconsolidatedfinancialstatementsandthecorrespondingtaxbaseusedinthecomputationoftaxableprofit.Deferredtaxliabilitiesaregenerallyrecognisedforalltaxabletemporarydifferences.Deferredtaxassetsarerecognisedtotheextentthatitisprobablethattaxableprofitswillbeavailableagainstwhichdeductibletemporarydifferencescanbeutilised.Suchassetsandliabilitiesarenotrecognisedifthetemporarydifferencearisesfromgoodwillorfromtheinitialrecognition(otherthaninabusinesscombination)ofotherassetsandliabilitiesinatransactionthataffectsneitherthetaxableprofitnortheaccountingprofit.

Thecarryingamountofdeferredtaxassetsisreviewedattheendofthereportingperiodandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitswillbeavailabletoallowallorpartoftheassettoberecovered.





Taxation(continued)

Forthepurposesofmeasuringdeferredtax liabilitiesanddeferredtaxassets for investmentproperties thataremeasuredusingthefairvaluemodelinaccordancewithHKAS40“Investmentproperty”,thecarryingamountsofsuchpropertiesarepresumedtoberecoveredthroughsale,unlessthepresumptionisrebutted.Thepresumptionisrebuttedwhentheinvestmentpropertyisdepreciableandisheldwithinabusinessmodelwhosebusinessobjectiveistoconsumesubstantiallyalloftheeconomicbenefitsembodiedintheinvestmentpropertyovertime,ratherthanthroughsale.

Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplyintheperiodwhentheliabilityissettledortheassetisrealised,basedontaxrate(andtaxlaws)thathavebeenenactedorsubstantivelyenactedbytheendofthereportingperiod.ThemeasurementofdeferredtaxliabilitiesandassetsreflectsthetaxconsequencesthatwouldfollowfromthemannerinwhichtheGroupexpects,attheendofthereportingperiod,torecoverorsettlethecarryingamountofitsassetsandliabilities.

Currentanddeferredtaxarerecognisedinprofitorloss,exceptwhentheyrelatetoitemsthatarerecognisedinothercomprehensiveincomeordirectlyinnetassetsattributabletounitholders,inwhichcase,thecurrentanddeferredtaxarealsorecognisedinothercomprehensiveincomeordirectlyinnetassetsattributabletounitholdersrespectively.

4. CRITICALACCOUNTINGJUDGEMENTSANDKEYSOURCESOFESTIMATIONUNCERTAINTY

IntheapplicationoftheGroup’saccountingpolicies,whicharedescribedinnote3,managementisrequiredtomakejudgements,estimatesandassumptionsaboutthecarryingamountsofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Theestimatesandassociatedassumptionsarebasedonhistoricalexperienceandotherfactorsthatareconsideredtoberelevant.Actualresultsmaydifferfromtheseestimates.

Criticaljudgementinapplyingaccountingpolicies

Thefollowingisthecriticaljudgement,apartfromthoseinvolvingestimations(seebelow),thattheManagerhasmadeintheprocessofapplyingtheGroup’saccountingpoliciesandthathavethemostsignificanteffectontheamountsrecognisedintheconsolidatedfinancialstatements.

Deferredtaxationoninvestmentproperties

Forthepurposesofmeasuringdeferredtax liabilitiesordeferredtaxassetsarisingfrominvestmentpropertiesthataremeasuredusingthefairvaluemodel,theManagerhasreviewedtheGroup’sinvestmentpropertyportfoliosandconcludedthattheGroup’sinvestmentpropertiesarenotheldunderabusinessmodelwhoseobjectiveistoconsumesubstantiallyalloftheeconomicbenefitsembodiedintheinvestmentpropertiesovertime,ratherthanthroughsale.Therefore,inmeasuringtheGroup’sdeferredtaxationoninvestmentproperties,theManagerhasdeterminedthatthepresumptionthatthecarryingamountsofinvestmentpropertiesmeasuredusingthefairvaluemodelarerecoveredentirelythroughsaleisnotrebutted.Asaresult,theGrouphasnotrecognisedanydeferredtaxesonchangesinfairvalueofinvestmentpropertiesastheGroupisnotsubjecttoanyincometaxesondisposalofitsinvestmentproperties.






NOTES

4. CRITICAL ACCOUNTING JUDGEMENTS ANDKEY SOURCESOFESTIMATIONUNCERTAINTY(CONTINUED)

KeysourcesofestimationuncertaintyThefollowingarethekeyassumptionsconcerningthefuture,andotherkeysourcesofestimationuncertaintyattheendofthereportingperiodthatmayhaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyear.

Fairvaluemeasurementsandvaluationprocesses

Inestimatingthefairvalueofanassetoraliability,theGroupusesmarket-observabledatatotheextentitisavailable.WhereLevel1inputsarenotavailable,theGroupengagesthirdpartyqualifiedvaluerstoperformthevaluation.Themanagementworkscloselywiththequalifiedexternalvaluerstoestablishtheappropriatevaluationtechniquesandinputstothemodel.ThemanagementreportsthevaluationreportandfindingstotheManagerhalfyearlytoexplainthecauseoffluctuationsinthefairvalueoftheassetsandliabilities.

Investmentpropertiesarestatedatfairvalueattheendofthereportingperiodbasedonthevaluationperformedbyindependentprofessionalvaluers.Indeterminingthefairvalue,thevaluerhasbasedonamethodofvaluationwhichinvolvescertainestimatesasdescribedinnote17.

Inaddition,asdescribedinnote24,thefairvaluesofderivativefinancial instrumentsthatarenotquotedinactivemarketsaredeterminedbyusingcertainvaluationtechniques.Valuationtechniquescommonlyusedbymarketpractitionersareapplied.Crosscurrencyswapsarevaluedusingadiscountedcashflowanalysisbasedonassumptionssupported,wherepossible,byobservablemarketpricesorrates.

Wheretheactualfuturemarketdatavaries,amaterialadjustmentonthefairvaluesofinvestmentpropertiesandcrosscurrencyswapsmayarise.Inrelyingonthevaluationreports,managementhasexerciseditsjudgementandissatisfiedthatthemethodofvaluationisreflectiveofthecurrentmarketconditions.

5. FINANCIALINSTRUMENTS

(a) Categoriesoffinancialinstruments

2014 2013HK$’000 HK$’000

FINANCIALASSETSDerivative instruments in designated hedge accounting relationshipsCrosscurrencyswaps 3,974 – Loans and receivablesTradeandotherreceivables 22,571 23,895Bankbalancesandcash 1,005,090 1,066,437

1,027,661 1,090,332 FINANCIALLIABILITIESDerivative instruments in designated hedge accounting relationshipsCrosscurrencyswaps – 41,833 Financial liabilities at amortised costsTradeandotherpayables 233,345 225,116Distributionpayable 573,614 631,026Securedbankborrowings 11,513,630 11,556,481Mediumtermnote 3,070,002 3,065,494

15,390,591 15,478,117




5. FINANCIALINSTRUMENTS(CONTINUED)

(b) Financialrisksmanagementobjectivesandpolicies

TheGroup’smajorfinancial instruments includesecuredbankborrowings,mediumtermnote, tradeandotherreceivables,bankbalancesandcash, tradeandotherpayablesandderivativefinancial instruments.Detailsofthefinancialinstrumentsaredisclosedinrespectivenotes.Therisksassociatedwiththesefinancialinstrumentsincludeinterestraterisk,creditriskandliquidityrisk.Thepoliciesonhowtomitigatetheserisksaresetoutbelow.Themanagementmanagesandmonitorstheseexposurestoensureappropriatemeasuresareimplementedonatimelyandeffectivemanner.

(i) Currencyrisk

TheGroup’smediumtermnoteisdenominatedinaforeigncurrency(i.e.US$)whichexposetheGrouptoforeigncurrencyrisk.TheGroupmanagesitsforeigncurrencyriskbyenteringintocrosscurrencyswapstohedgeagainstitsexposurestochangesinforeignexchangerateonitsmediumtermnote.Thecrosscurrencyswapsaredesignatedaseffectivehedginginstrumentsandhedgeaccountingisused(seenote24fordetails).TheGroupreviewedthecontinuingeffectivenessofhedginginstrumentsatleastattheendofeachreportingperiod.TheGroupmainlyusesregressionanalysisandcomparisonofchangeinfairvalueofthehedginginstrumentsandthehedgeditemsforassessingthehedgeeffectiveness.AstheGroup’sforeigncurrencyriskishedged,nosensitivityanalysishasbeenpreparedaccordingly.

(ii) Interestraterisk

TheGroupisexposedtocashflowandfairvalueinterestraterisksinrelationtonon-derivativefinancialassetsandliabilities.TheGroup’scashflowinterestrateriskarisesmainlyfromitsvariable-ratesecuredbankborrowings(seenote21fordetails).TheGroupisalsoexposedtofairvalueinterestrateriskinrelationtoitstimedeposits,mediumtermnoteanddebtportionoftheconvertiblebonds.

TheGroupmanagesitsinterestrateriskforthemediumtermnotebyenteringintocrosscurrencyswapstohedgeagainstitsexposurestointerestrateonitsmediumtermnoteasdetailedabove.

TheGroup’sexposures to interest rateson financial liabilitiesaredetailed in the liquidity riskmanagementsectionofthisnote.TheGroup’scashflowinterestrateriskismainlyconcentratedonthefluctuationsofHongKongInterbankOfferedRate(“HIBOR”)arisingfromtheGroup’svariable-ratetermloans.TheManagerwillcontinuetomonitortheinterestraterisktotheGroupandtakeactionssuchasusinginterestrateswaptohedgeagainstanyforeseeableinterestrateexposure,ifnecessary.

Sensitivityanalysis

Thesensitivityanalysisbelowhasbeendeterminedbasedontheexposureto interestrates fornon-derivativesinstruments.Forvariable-ratetermloans,theanalysisispreparedassumingtheamountofliabilityoutstandingattheendofthereportingperiodwasoutstandingforthewholeyear.A50(2013:50)basispointincreaseordecreaseisusedwhichrepresentsmanagement’sassessmentofthereasonablypossiblechangeininterestrates.






NOTES


(b) Financialrisksmanagementobjectivesandpolicies(continued)

(ii) Interestraterisk(continued)

Sensitivityanalysis(continued)

Iftheinterestrateshavebeenhigherorlowerandallothervariableswereheldconstant,theGroup’sprofitbeforetaxanddistributiontounitholdersfortheyearended31December2014woulddecrease/increasebyHK$58,000,000 (2013:HK$58,000,000).This ismainlyattributable to theGroup’sexposureto interestratesonitssecuredvariable-ratetermloansamountingtoHK$11,600,000,000 (2013:HK$11,600,000,000)whicharenothedged.

(iii) Creditrisk

Asat31December2014,theGroup’smaximumexposuretocreditriskwhichwillcauseafinanciallosstotheGroupduetofailuretodischargeanobligationbythecounterpartiesisarisingfromthecarryingamountoftherespectiverecognisedfinancialassetsasstatedintheconsolidatedstatementoffinancialposition.

TheManagerhasestablishedcreditlimitsfortenantsandmonitorstheirbalancesonanongoingbasis.CreditevaluationsareperformedbythePropertyManageronbehalfof theManagerbefore leaseagreementsareenteredintowithtenants.Inaddition,theManagerreviewstherecoverableamountofeachindividualtradedebtorregularlytoensurethatadequateimpairmentlossesarerecognisedforirrecoverabledebts.Inthisregard,theManagerconsidersthattheGroup’screditrisk issignificantlyreduced.

Thecreditriskonliquidfundsislimitedbecausethecounterpartiesarebankswithhighcreditratingsassignedbyinternationalcredit-ratingagencies.

Otherthanconcentrationofcreditriskonliquidfundswhicharedepositedwithseveralbankswithhighcreditratings, theGrouphasnosignificantconcentrationofcreditrisk,withexposurespreadoveranumberofcounterpartiesandcustomers.

(iv) Liquidityandcapitalriskmanagement

TheManagermonitorsandmaintainsalevelofcashandcashequivalentsdeemedadequatetofinancetheGroup’soperations.Inaddition,theManagerobservestheCodeissuedbytheSecuritiesandFuturesCommissionconcerninglimitsontotalborrowingsandmonitorsthelevelofborrowingstobewithinthepermittedlimit.

TheGrouphascashandcashequivalentsofHK$1,005,090,000asat31December2014 (2013:HK$1,066,437,000).Inadditiontothecashresources, theGrouphasavailableborrowingfacilitiesamountingtoHK$11,900,000,000(2013:HK$11,900,000,000),ofwhichHK$11,600,000,000(2013:HK$11,600,000,000)wasdrawnasat31December2014.TheundrawncommittedfacilityintheformofrevolvingbankloanstotalledHK$300,000,000asat31December2014(2013:HK$300,000,000). Detailsofwhicharesetoutinnote21.






(iv) Liquidityandcapitalriskmanagement(continued)

TheGrouphasestablishedaUS$1billionguaranteedmediumtermnoteprogramme,underwhichunsecurednotesmaybeissuedfromtimetotimeinvariouscurrenciesandamountswithfixedorfloatingratestobesetuponissuanceofnotesandwillbeguaranteedbytheTrustee.Asdetailedinnote22,theGroupissuedanaggregateprincipalamountofUS$400,000,000asat31December2014(2013:US$400,000,000).

TheGroupmanagesliquidityriskbymaintainingadequatebankingfacilitiesaswellasbycontinuouslymonitoringforecastandactualcashflowsandmatchingthematurityprofilesof financialassetsandliabilities.AsaresultoftheundrawncommittedfacilityofHK$300,000,000(2013:HK$300,000,000) andabalanceofUS$600,000,000(2013:US$600,000,000)undertheguaranteedmediumtermnoteprogrammeavailableforissuance,theManagerconsideredthattheliquidityriskoftheGroupcanbereduced.

As at 31December 2014, theGroup’s current l iabilit ies exceeded its current assets byHK$1,166,584,000(2013:HK$8,111,542,000).ManagementreviewstheGroup’s financialpositionandwillnegotiatewithbankstorefinanceanyexistingsecuredtermloanwhichisduewithinoneyear.ManagementconsidersthattheGroupwillbeabletoobtainsufficient financialresources, includingtermloans,tosatisfyitscommitmentsandworkingcapitalforitspresentrequirementswithinoneyearfromtheendofthereportingperiod.Hence,theconsolidatedfinancialstatementshavebeenpreparedonagoingconcernbasis.

TheGroupalsoconsidersthecostofcapitalandtherisksassociatedwiththecapital.TheGrouphastomaintainalevelofborrowingsthatshallnotexceed45%ofthetotalgrossassetvalueasrequiredbytheCode.Asat31December2014,thegearingratiowas23.1%(2013:23.4%).Theratioiscalculatedastotalborrowings(principalamountsofsecuredbankborrowingsandmediumtermnote)dividedbytotalassetsoftheGroup.

Liquidityandinterestrisktables

ThefollowingtablesdetailtheGroup’sexpectedmaturityforitsnon-derivativefinancialassetsaswellastheGroup’sremainingcontractualmaturityforitsnon-derivativefinancialliabilities.






NOTES




Liquidityandinterestrisktables(continued)

The tablesbelowhavebeendrawnup fornon-derivative financial instrumentsbasedon theundiscountedcontractualcashflowsofthefinancialassetsincludinginterestthatwillbeearnedonthoseassets.Theinclusionofinformationonnon-derivativefinancialassetsisnecessaryinordertounderstandtheGroup’sliquidityriskmanagementastheliquidityismanagedonatotalfinancialassetandliabilitybasis.Fornon-derivativefinancial liabilities,thetablesreflecttheundiscounted(outflows)offinancialliabilities(exceptManager’sfeepayabletobesettledbyunitsofChampionREIT)basedontheearliestdateonwhichtheGroupcanberequiredtopay.Thetablesincludebothinterestandprincipalcashflows.Totheextentthatinterestflowsarefloatingrate,theundiscountedamountiscalculatedbasedoninterestrateattheendofthereportingperiod.

Weightedaverage

effectiveinterest

rateLess than

1 year1 to 2years

2 to 5years

Over 5years

Totalamount

Totalcarryingamount

% HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

As at 31 December

2014

Non-interest bearing

Tradeandother

receivables – 22,571 – – – 22,571 22,571

Variable interest rate

Bankbalancesandcash 0.64 1,005,129 – – – 1,005,129 1,005,090

Total 1,027,700 – – – 1,027,700 1,027,661

Non-interest bearing

Tradeandother

payables – (180,565) – – – (180,565) (180,565)

Distributionpayable – (573,614) – – – (573,614) (573,614)

(754,179) – – – (754,179) (754,179)

Variable interest rate

instruments

Securedtermloans 1.56 (180,931) (2,363,205) (9,615,964) – (12,160,100) (11,513,630)

Fixed interest rate

instruments

Mediumtermnote 3.75 (116,352) (116,352) (349,056) (3,509,952) (4,091,712) (3,070,002)

Total (1,051,462) (2,479,557) (9,965,020) (3,509,952) (17,005,991) (15,337,811)







Liquidityandinterestrisktables(continued)

Weightedaverageeffective

interestrateLessthan

1year1to2years

2to5years

Over5years

Totalamount

Totalcarryingamount

% HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

As at 31 December 2013

Non-interest bearingTradeandotherreceivables – 23,895 – – – 23,895 23,895

Variable interest rate Bankbalancesandcash 0.99 1,066,439 – – – 1,066,439 1,066,437 Total 1,090,334 – – – 1,090,334 1,090,332 Non-interest bearingTradeandotherpayables – (171,758) – – – (171,758) (171,758)

Distributionpayable – (631,026) – – – (631,026) (631,026) (802,784) – – – (802,784) (802,784)

Variable interest rate instruments

Securedtermloans 1.29 (7,108,737) (573,845) (4,197,770) – (11,880,352) (11,556,481) Fixed interest rate instrumentsMediumtermnote 3.75 (116,310) (116,310) (348,930) (3,624,995) (4,206,545) (3,065,494) Total (8,027,831) (690,155) (4,546,700) (3,624,995) (16,889,681) (15,424,759)

Thefollowingtablesdetail theGroup’s liquidityanalysis for itsderivativefinancial instruments.Thetablesbelowhavebeendrawnupbasedontheundiscountedcontractualnetcash(inflows)andoutflowsonderivativeinstrumentsthatsettleonanetbasis,andtheundiscountedgross(inflows)andoutflowsonthosederivativesthatrequiregrosssettlement.Whentheamountpayableisnotfixed,theamountdisclosedhasbeendeterminedbyreferencetotheprojectedinterestratesas illustratedbytheyieldcurvesexistingattheendofthereportingperiod.Theliquidityanalysis fortheGroup’sderivativefinancial instrumentispreparedbasedontheexpectedcashflowsastheManagerconsidersthattheexpectedcashflowsareessentialforanunderstandingofthetimingofthecashflowsofthesederivatives,whichhavebeenenteredintoforhedgingpurposes.

Less than1 year

1 to 2years

2 to 5years

Over 5years Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Derivatives – net settlementAs at 31 December 2014Derivativefinancialinstruments 88 (350) 782 3,454 3,974

Lessthan1year

1to2years

2to5years

Over5years Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Derivatives – net settlementAs at 31 December 2013Derivativefinancialinstruments (4,672) (4,751) (14,294) (18,116) (41,833)






NOTES


(c) Fairvalue

Thefairvaluesoffinancialassetsandfinancialliabilitiesaredeterminedinaccordancewithgenerallyacceptedpricingmodelsbasedondiscountedcashflowanalysis.

TheManagerconsiders that thecarryingamountsof financialassetsandfinancial liabilitiesrecordedatamortisedcostintheconsolidatedfinancialstatementsapproximatetheirfairvalues.

6. FAIRVALUEMEASUREMENTSOFFINANCIALINSTRUMENTS

FairvalueoftheGroup’sfinancialassetsandliabilitiesthataremeasuredatfairvalueonarecurringbasis

SomeoftheGroup’sfinancialliabilitiesaremeasuredatfairvalueattheendofthereportingperiod.

Thefollowingtableprovidesananalysisoffinancialinstrumentsthataremeasuredsubsequenttoinitialrecognitionatfairvalue,groupedintoLevels1to3basedonthedegreetowhichthefairvalueisobservable.

Level 1 Level 2 Level 3 TotalHK$’000 HK$’000 HK$’000 HK$’000

As at 31 December 2014Derivative financial assetsCrosscurrencyswaps – 3,974 – 3,974 As at 31 December 2013Derivative financial liabilitiesCrosscurrencyswaps – (41,833) – (41,833)

TherewerenotransfersbetweenLevels1and2inbothcurrentandlastyears.

Thefollowingtablegivesinformationabouthowthefairvaluesofthesefinancialassets/(liabilities)aredetermined(inparticular,thevaluationtechniquesandinputsused).

Fair value as at31 December

Financial assets/(liabilities)

2014HK$’000

2013HK$’000

Fair valuehierarchy Valuation technique and key inputs

Crosscurrencyswapsclassifiedasderivativefinancialassets/(liabilities)intheconsolidatedstatementoffinancialposition

3,974 (41,833) Level2 Discountedcashflow.Futurecashflowsareestimatedbasedonforwardexchangeandinterestrates(fromobservableforwardexchangeandinterestratesattheendofthereportingperiod)andcontractedforwardrates,discountedataratethatreflectsthecreditriskofvariouscounterparties.




7. SEGMENTINFORMATION

TheGroup’soperatingsegments,basedoninformationreportedtothechiefoperatingdecisionmaker(“CODM”),managementoftheManager,areidentifiedforthepurposeofresourceallocationandperformanceassessmentandmorespecificallyfocusedontheoperatingresultsofthethreeinvestmentproperties,namelyCitibankPlaza,LanghamPlaceOfficeTowerandLanghamPlaceMall.

Segmentrevenueandresults

ThefollowingisananalysisoftheGroup’srevenueandresultsbythethreeinvestmentpropertiesfortheyearunderreview.

For the year ended 31 December 2014

CitibankPlaza

LanghamPlace

Office TowerLangham

Place Mall ConsolidatedHK$’000 HK$’000 HK$’000 HK$’000

Revenue 1,171,008 319,879 797,352 2,288,239 Segment results – Net property income 932,169 253,111 615,093 1,800,373 Interestincome 8,209Manager’sfee (216,045)Trustandotherexpenses (16,982)Increaseinfairvalueofinvestmentproperties 889,935Financecosts (322,040) Profit before tax and distribution

to unitholders 2,143,450Incometaxes (214,887) Profit for the year, before distribution

to unitholders 1,928,563Distributiontounitholders (1,170,668) Profit for the year, after distribution

to unitholders 757,895

Amounts regularly provided to the CODM but not included in the measure of segment profit or loss:

(Decrease)increaseinfairvalueof investmentproperties (1,607,065) 488,000 2,009,000 889,935






NOTES

7. SEGMENTINFORMATION(CONTINUED)

Segmentrevenueandresults(continued)

Fortheyearended31December2013

CitibankPlaza

LanghamPlace

OfficeTowerLanghamPlaceMall Consolidated

HK$’000 HK$’000 HK$’000 HK$’000

Revenue 1,201,996 288,933 688,339 2,179,268 Segment results – Net property income 990,022 231,872 525,908 1,747,802 Interestincome 13,681Manager’sfee (209,736)Trustandotherexpenses (20,707)Increaseinfairvalueofinvestmentproperties 808,988Changeinfairvalueofderivativecomponentsofconvertiblebonds 308,236

Gainonsettlementofconvertiblebonds 29,302Financecosts (342,700) Profit before tax and distribution

to unitholders 2,334,866Incometaxes (136,212) Profit for the year, before distribution

to unitholders 2,198,654Distributiontounitholders (1,201,226) Profit for the year, after distribution

to unitholders 997,428

Amounts regularly provided to the CODM but not included in the measure of segment profit or loss:

(Decrease)increaseinfairvalueof investmentproperties (1,036,012) 197,000 1,648,000 808,988




7. SEGMENTINFORMATION(CONTINUED)

Othersegmentinformation

CitibankPlaza

LanghamPlace

Office TowerLangham

Place Mall ConsolidatedHK$’000 HK$’000 HK$’000 HK$’000

For the year ended 31 December 2014Additionstonon-currentassets 39,065 – – 39,065 For the year ended 31 December 2013Acquisitionofnon-currentassets 2,360,481 – – 2,360,481Additionstonon-currentassets 42,531 – – 42,531

2,403,012 – – 2,403,012

Segmentassetsandliabilities

For thepurposeofperformanceassessment, fairvaluesof investmentpropertiesarereviewedby theCODM.Asat31December2014, the fairvalueofCitibankPlaza,LanghamPlaceOfficeTowerandLanghamPlaceMallwasHK$36,332,000,000 (2013:HK$37,900,000,000),HK$7,869,000,000 (2013:HK$7,381,000,000)andHK$18,237,000,000(2013:HK$16,228,000,000),respectively.

Saveasabovementioned,nootherassetsorliabilitiesareincludedinthemeasuresoftheGroup’ssegmentreporting.

Geographicalinformation

TheGroup’sactivitiesareallcarriedoutinHongKong.

TheGroup’srevenuefromexternalcustomersandinformationaboutitsnon-currentassetsareall locatedinHongKong.

Informationaboutmajortenants

Therewerenotenantswhoserevenuecontributedover10%ofthetotalrevenueoftheGroupfortheyearended31December2014.Fortheyearended31December2013,revenuefromtenantscontributingover10%ofthetotalrevenueoftheGroupconsistsofonetenantofCitibankPlazawithrevenueamountingtoHK$224,203,000.

8. RENTALINCOME

2014 2013HK$’000 HK$’000

Rentalincome 2,017,018 1,925,737Carparkincome 37,222 35,644

2,054,240 1,961,381






NOTES

9. RENTALRELATEDINCOME

2014 2013HK$’000 HK$’000

Interestincomefromtenants 126 127Promotionallevyincome 9,958 9,045Surplusonforbearancefee – 2,031Sundryincome 15,849 16,500

25,933 27,703

10. PROPERTYOPERATINGEXPENSES

2014 2013HK$’000 HK$’000

Buildingmanagementexpenses 256,060 224,564Carparkoperatingexpenses 12,078 9,610Governmentrentandrates 68,277 65,863Legalcostandstampduty 6,253 4,924Promotionexpenses 17,564 17,462Propertyandleasemanagementservicefee 61,683 59,565Propertymiscellaneousexpenses 2,462 2,421Rentalcommission 51,567 33,977Repairsandmaintenance 11,922 13,080

487,866 431,466

11. MANAGER’SFEE

PursuanttotheTrustDeed,asthenetpropertyincomeofChampionREITexceedsHK$200millionforeachofthesixmonthsended30June2014and31December2014,theManagerisentitledtoreceive12%ofthenetpropertyincomeforeachofthesixmonthsended30June2014and31December2014asremuneration.

2014 2013HK$’000 HK$’000

MANAGER’SFEE:Intheformofunits 108,022 104,868Intheformofcash 108,023 104,868

216,045 209,736

PursuanttoelectionallowedbytheTrustDeedon30November2012,theManagerhaselected50%oftheManager’sfeeforeachofthesixmonthsended30Juneand31December2014arisingfromthepropertiescurrentlyownedbyChampionREITshallbesettledintheformofunitscalculatedbasedontheissuepriceperunitasdeterminedinaccordancewiththeTrustDeed,andthebalanceof50%willbereceivedincash.




12. FINANCECOSTS

2014 2013HK$’000 HK$’000

FINANCECOSTSREPRESENT:Interestexpenseonbankborrowingswhollyrepayablewithinfiveyears 200,713 159,496Interestexpenseonconvertiblebondswhollyrepayablewithinfiveyears – 71,136Interestexpenseonmediumtermnotenotwhollyrepayablewithinfiveyears 119,827 110,779Otherborrowingcosts 1,500 1,289

322,040 342,700

13. PROFITBEFORETAXANDDISTRIBUTIONTOUNITHOLDERS

2014 2013HK$’000 HK$’000

PROFITBEFORETAXANDDISTRIBUTIONTOUNITHOLDERS HASBEENARRIVEDATAFTERCHARGING/(CREDITING):Auditors’remuneration 1,940 1,920Trustee’sremuneration 10,891 10,534Principalvaluer’sfee 301 299Otherprofessionalfeesandcharges 3,800 7,180Roadshowandpublicrelationsexpenses 43 42Bankcharges 223 189Exchangedifference (44) 584

14. INCOMETAXES

2014 2013HK$’000 HK$’000

HONGKONGPROFITSTAX:CURRENTTAX–Currentyear 161,046 103,053–(Over)Underprovisioninprioryears (12) 10,425

161,034 113,478 DEFERREDTAX(NOTE25)–Currentyear 53,853 32,368–Overprovisioninprioryears – (9,634)

53,853 22,734 214,887 136,212

HongKongProfitsTaxiscalculatedat16.5%oftheestimatedassessableprofitsforbothyears.






NOTES

14. INCOMETAXES(CONTINUED)

Duringtheyearended31December2013,theGrouprevisedthedepreciationallowancesclaimofcertaininvestmentpropertiesandresultedinanunderprovisionofcurrenttaxinprioryearsofHK$10,425,000andoverprovisionofdeferredtaxinprioryearsofHK$9,634,000.

Theincometaxesfortheyearcanbereconciledtotheprofitbeforetaxanddistributiontounitholdersasfollows:

2014 2013HK$’000 HK$’000

Profit before tax and distribution to unitholders 2,143,450 2,334,866 Taxatthedomesticincometaxrateof16.5% 353,669 385,253Taxeffectofincomenottaxablefortaxpurpose (148,247) (191,719)Taxeffectofexpensesnotdeductiblefortaxpurpose 10,657 13,577(Over)Underprovisioninprioryears (12) 791Utilisationoftaxlosspreviouslynotrecognised (1,180) (78,677)Taxeffectoftaxlossesnotrecognised – 6,987 Income taxes for the year 214,887 136,212

15. BASICANDDILUTEDEARNINGSPERUNIT

Thecalculationofthebasicanddilutedearningsperunitbeforedistributiontounitholdersisbasedonthefollowingdata:

2014 2013HK$’000 HK$’000

EARNINGSProfit for the year, before distribution to unitholders for

the purpose of basic earnings per unit 1,928,563 2,198,654Effectofdilutivepotentialunits:Interestonconvertiblebonds(netoftaxeffect) – 71,136Changeinfairvalueofderivativecomponentsofconvertiblebonds – (308,236)Gainonsettlementofconvertiblebonds – (29,302)

Profit for the year, before distribution to unitholders for the purpose of diluted earnings per unit 1,928,563 1,932,252




15. BASICANDDILUTEDEARNINGSPERUNIT(CONTINUED)

2014 2013

NUMBEROFUNITSWeighted average number of units for the purpose of

basic earnings per unit 5,735,432,056 5,699,794,929Effectofdilutivepotentialunits:Convertiblebonds – 669,378,995

Weighted average number of units for the purpose of diluted earnings per unit 5,735,432,056 6,369,173,924

Therewerenodilutivepotentialunitsduringtheyearended31December2014,thereforethedilutedearningsperunitisthesameasthebasicearningsperunit.

16. TOTALDISTRIBUTABLEINCOME

Thetotaldistributableincomeisprofitfortheyear,beforedistributiontounitholdersasadjustedtoeliminatetheeffectsofAdjustments(assetoutintheTrustDeed)whichhavebeenrecordedintheconsolidatedincomestatementfortherelevantperiod.TheAdjustmentstoarriveattotaldistributableincomefortheyeararesetoutbelow:

2014 2013HK$’000 HK$’000

Profit for the year, before distribution to unitholders 1,928,563 2,198,654Adjustments:Manager’sfeepaidandpayableinunits 108,022 104,868Increaseinfairvalueofinvestmentproperties (889,935) (808,988)Changeinfairvalueofderivativecomponentsofconvertiblebonds – (308,236)Non-cashgain – (29,302)Non-cashfinancecosts 33,900 91,610Deferredtax 53,853 22,734

Total distributable income 1,234,403 1,271,340






NOTES

17. INVESTMENT PROPERTIES

2014 2013HK$’000 HK$’000

FAIRVALUEAtthebeginningoftheyear 61,509,000 58,297,000Acquisitionofinvestmentproperties – 2,360,481Additionsduringtheyear 39,065 42,531Increaseinfairvalue 889,935 808,988

62,438,000 61,509,000

On11July2013,theGroupcompletedtheacquisitionofaportionofthethirdfloorandthewholeofthefourth,fifthandsixthfloorsofCitibankTower(the“Acquisition”)foraconsiderationofHK$2,155,302,000.TheAcquisitionwasfundedbythedrawdownofanewbankborrowingsasdisclosedinnote21(iv)andinternalresources.TransactioncostsincurredinrelationtotheAcquisitionincludedastampdutyofHK$183,201,000andacquisitionfeespaidtotheManagerandTrusteeofHK$21,553,000andHK$100,000,respectively.

ThefairvalueoftheGroup’sinvestmentpropertiesat31December2014and31December2013hasbeenarrivedatonthebasisofvaluationcarriedoutbySavillsValuationandProfessionalServicesLimited,anindependentqualifiedprofessionalvaluernotconnectedto theGroup.ThevaluationwasarrivedbyusingtheIncomeCapitalisationApproachwhichisamethodofvaluationwherebytheexistingrentalincomeofalllettableunitsofthepropertyarecapitalisedfortheirrespectiveunexpiredtermsofcontractualtenancieswhilstvacantunitsareassumedtobeletatitscurrentmarketrentasattheendofthereportingperiod.Upontheexpiryoftheexistingtenancy,eachoftheleasedareaisassumedtobeletatthemarketrentasattheendofthereportingperiod,whichisinturncapitalisedatthemarketyieldasexpectedbyinvestors fortheperiodwhichtheproperty isheldwithexpectationsofrenewalofGovernmentleaseuponitsexpiry.Thecapitalisationrateadoptedismadebyreferencetotheyieldsachievedinanalysedmarketsalestransactionsandthevaluer’sknowledgeofthemarketexpectationfromproperty investors.Theexpectedreturnreflectsimplicitlythequalityoftheinvestment,theexpectationofthepotentialforfuturerentalgrowthandcapitalappreciation,operatingcost,riskfactorandthelike.Inestimatingthefairvalueoftheinvestmentproperties,thehighestandbestuseofthepropertiesistheircurrentuse.

TheGroup’spropertyinterestsheldunderfinanceleases,whicharelocatedinHongKongundermedium-termleases,aremeasuredusingthefairvaluemodelandareclassifiedandaccountedforasinvestmentproperties.

Asat31December2014, certain investmentpropertieswith total fair valueofHK$42,746,000,000 (2013:HK$43,778,000,000)havebeenmortgagedassecurityforcreditfacilitiesasdetailedinnote21.




17. INVESTMENTPROPERTIES(CONTINUED)

Thefollowingtablegives informationabouthowthefairvaluesofthese investmentpropertiesaredetermined(inparticular, thevaluationtechniquesandinputsused),aswellasthefairvaluehierarchyintowhichthefairvaluemeasurementsarecategorised(Levels1to3)basedonthedegreetowhichtheinputstothefairvaluemeasurementsisobservable.

Investment properties held by the Group in the consolidated statement of financial position

Fair value hierarchy

Valuation techniques and key inputs

Significant unobservable inputs

Relationship of unobservable inputs to fair value Sensitivity

At 31 December 2014

CitibankPlaza Level3 Incomecapitalisation

approach

Thekeyinputsare:

(i) capitalisationrate;and

(ii) marketrentpersquarefoot

Capitalisationrate,

takingintoaccount

thecapitalisationofrental

incomepotential,nature

oftheproperty,prevailing

marketcondition,of3.3%

forofficeand4.25%for

retail.

Marketrent,takinginto

accountdirectmarket

comparableswithinthe

property.

Thehigherthe

capitalisationrate,the

lowerthefairvalue.

Thehigherthemarket

rent,thehigherthe

fairvalue.

Ifthecapitalisationratetothe

valuationmodelis50basispoints

higher/lower,whilealltheother

variableswereheldconstant,the

carryingvaluewoulddecreaseby

approximatelyHK$4,700 million

(capitalisationrateof3.8%

forofficeand4.75%forretail)

andincreasebyapproximately

HK$6,400million(capitalisation

rateof2.8%forofficeand3.75%

forretail)respectively.

Ifthemonthlyrenttothevaluation

modelis5%higher/lower,while

allothervariableswereheld

constant,thecarryingvalue

wouldincreasebyapproximately

HK$1,800millionanddecrease

byapproximatelyHK$1,800

million,respectively.

LanghamPlace

OfficeTowerand

LanghamPlaceMall

Level3 Incomecapitalisation

approach

Thekeyinputsare:



Capitalisationrate,

takingintoaccountthe

capitalisationofrental




forboththeretailand

office.


accountdirectmarket


property.

Thehigherthe

capitalisationrate,the

lowerthefairvalue.

Thehigherthemarket

rent,thehigherthe

fairvalue.







(capitalisationrateof4.5%)



rateof3.5%)respectively.














NOTES

Investment properties held by the Group in the consolidated statement of financial position

Fair value hierarchy

Valuation techniques and key inputs

Significant unobservable inputs

Relationship of unobservable inputs to fair value Sensitivity

At 31 December 2013

CitibankPlaza Level3 Incomecapitalisation

approach

Thekeyinputsare:



Capitalisationrate,

takingintoaccountthe

capitalisationofrental




forofficeand4.25%for

retail.


accountdirectmarket


property.

Thehigherthe

capitalisationrate,

thelowerthefair

value.

Thehigherthemarket

rent,thehigher

thefairvalue.







(capitalisationrateof3.8%

forofficeand4.75%forretail)



rateof2.8%forofficeand3.75%

forretail)respectively.









LanghamPlace

OfficeTowerand

LanghamPlaceMall

Level3 Incomecapitalisation

approach

Thekeyinputsare:



Capitalisationrate,

takingintoaccount

thecapitalisationofrental



marketcondition,of4.0%for

boththeretailandoffice.


accountdirectmarket


property.

Thehigherthe

capitalisationrate,

thelowerthefair

value.

Thehigherthemarket

rent,thehigherthe

fairvalue.


valuationmodelis50basis

pointshigher/lower,whileall

theothervariableswereheld


woulddecreasebyapproximately


rateof4.5%)andincreaseby


(capitalisationrateof3.5%)

respectively.









17. INVESTMENTPROPERTIES(CONTINUED)




18. TRADEANDOTHERRECEIVABLES

2014 2013HK$’000 HK$’000

Tradereceivables 22,067 23,032Deferredrentreceivables 112,888 99,808Deposits,prepaymentsandotherreceivables 49,238 62,512

184,193 185,352

Rentalreceivablesfromtenantsarepayableonpresentationofinvoices.Thecollectioniscloselymonitoredtominimiseanycreditriskassociatedwiththesereceivables.

AginganalysisoftheGroup’stradereceivablespresentedbasedontheinvoicedateattheendofthereportingperiodisasfollows:

2014 2013HK$’000 HK$’000

0–3months 22,067 23,032

IncludedintheGroup’stradereceivablebalancearedebtorswithaggregatecarryingamountofHK$22,067,000 (2013:HK$23,032,000)whicharepastdueatthereportingdateforwhichtheGrouphasnotprovidedforimpairmentloss.TheGroupdoesnotholdanycollateraloverthesebalances.

19. BANKBALANCESANDCASH

2014 2013HK$’000 HK$’000

Cashonhand 2 2Cashatbank 344,271 269,655Timedeposits 660,817 796,780

1,005,090 1,066,437

Bankbalancescarryinterestatmarketratesof0.001%to0.31%(2013:0.001%to0.01%)perannum.Timedepositshaveoriginalmaturityoflessthanthreemonthsandcarryinterestatmarketrateswhichrangefrom0.60%to1.10%(2013:0.90%to1.50%)perannum.






NOTES

20. TRADEANDOTHERPAYABLES

2014 2013HK$’000 HK$’000

Tradepayables 64,792 54,408Rentalreceivedinadvance 21,182 16,154Otherpayables 192,331 294,258Accruedstampduty 963,475 963,475

1,241,780 1,328,295

Theaccrualforstampdutyisbasedonthecurrentstampdutyrateof4.25%(2013:4.25%)andthestatedconsiderationofHK$22,670,000,000inthepropertysaleandpurchaseagreements forthe legalassignmentof the investmentpropertieswhichChampionREITacquiredthepropertyinterestinCitibankPlazauponlisting.

Asat31December2013,otherpayables includedanaccrual forstampdutyofHK$91,600,000inregardstotheAcquisition.

Aginganalysisoftradepayablespresentedbasedontheinvoicedateattheendofthereportingperiodisasfollows:

2014 2013HK$’000 HK$’000

0–3months 64,792 54,408

21. SECUREDBANKBORROWINGS

2014 2013HK$’000 HK$’000

Securedbankborrowings 11,600,000 11,600,000Loanfront-endfee (86,370) (43,519)

11,513,630 11,556,481

Thematurityoftheabovesecuredbankborrowingsisasfollows:Withinoneyear – 6,993,085Morethanoneyearbutnotexceedingtwoyears 2,190,677 497,858Morethantwoyearsbutnotexceedingfiveyears 9,322,953 4,065,538

11,513,630 11,556,481Less:amountduewithinoneyearshownundercurrentliabilities – (6,993,085) Amountdueafteroneyear 11,513,630 4,563,396




21. SECUREDBANKBORROWINGS(CONTINUED)

Thesecuredbankborrowingscomprisethefollowing:

(i) InJune2008,theGrouparrangedasyndicatedfacilityofHK$2,954,000,000,comprisingaHK$2,454,000,000 termloanandaHK$500,000,000revolvingcreditfacility.Thefacilityboreinterestatfloatinginterestrateof1-monthHIBORplus0.59%perannumandwasfullyrepaidinJune2013.

The facilitywasrefinanced inJune2013withasyndicated facilityofHK$2,500,000,000,comprisingaHK$2,200,000,000termloanandaHK$300,000,000revolvingcreditfacility.Thefacilitybearsinterestatafloatinginterestrateof1-monthHIBORplus1.35%perannumandisrepayableinfullinJune2016.ThetotalfacilitydrawndownbytheGroupasat31December2014wasHK$2,200,000,000(2013:HK$2,200,000,000).

(ii) InMay2011,theGrouparrangedasyndicatedtermloanofHK$7,000,000,000.Thefacilityboreinterestatafloatinginterestrateof1-monthHIBORplus0.93%perannumandwasfullyrepaidinMay2014.

(iii) InSeptember2012,theGrouparrangedabilateraltermloanofHK$500,000,000.Thefacilitybearsinterestatfloatinginterestrateof1-monthHIBORplus1.85%perannumandwasduetorepayinSeptember2015.InMay2014,theGroupmadeavoluntaryprepaymentandprepaidtheoutstandingamountofHK$500,000,000 infull.

(iv) InJuly2013,theGrouparrangedabilateral termloanofHK$1,900,000,000.Thefacilitybears interestatfloatinginterestrateof1-monthHIBORplus1.48%perannumandisrepayableinfullinJuly2018.

(v) InMay2014,theGrouparrangedtwosyndicatedtermloansofHK$3,700,000,000andHK$3,800,000,000 respectivelyforthepurposeofrefinancingtheloansmentionedin(ii)and(iii)above.

ThetermloanfacilityofHK$3,700,000,000bearsinterestatafloatinginterestrateof1-monthHIBORplus1.20%perannumandisrepayable infull inMay2017.ThetermloanfacilityofHK$3,800,000,000bearsinterestatafloatinginterestrateof1-monthHIBORplus1.36%perannumandisrepayableinfullinMay2019.

Assecurity forthebankborrowingsgrantedtotheGroup, investmentpropertieswithanaggregate fairvalueofHK$42,746,000,000asat31December2014(2013:HK$43,778,000,000)togetherwiththeassignmentsofsalesproceeds,insuranceproceeds,rentalincome,revenueandallotherincomegeneratedfromthesepropertieshavebeenpledgedandmortgagedtothebanks.






NOTES

22. MEDIUMTERMNOTE

2014 2013HK$’000 HK$’000

Mediumtermnote 3,102,720 3,101,600Originationfees (32,718) (36,106)

3,070,002 3,065,494

On6December2012,theGroupestablishedaUS$1billionguaranteedmediumtermnotesprogramme,underwhichunsecurednotesmaybeissuedfromtimetotimeinvariouscurrenciesandamountswithfixedorfloatingratestobesetuponissuanceofnotesandwillbeguaranteedbytheTrustee,initscapacityastrusteeofChampionREIT.On17January2013,theGroupissuedUS$400,000,000.Theissuedmediumtermnotebearsinterestatafixedrateof3.75%perannumandisrepayableinfullon17January2023.Theforeigncurrencyrateandinterestratearefixedbytheuseofcrosscurrencyswaps.

23. CONVERTIBLE BONDS

On3June2008,theGroup,throughasubsidiaryFairVantageLimited(“BondsIssuer”),issuedHK$4,680,000,000 1%guaranteedconvertiblebondsdueJune2013(“Bonds”).

Duringtheyearended31December2013,anaggregateprincipalamountofHK$322,940,000oftheBondswasconvertedataconversionpriceofHK$3.34perunit,whichcameintoeffectsince21May2013asaresultofExcessDistribution(asdefinedinthetermsandconditionsoftheBonds)adjustment.TheBondsIssuersettledtheconversionsby(a)cashpaymentofHK$322,940,000and(b)theissuanceof12,395,029unitsofChampionREITandresultedinagainofHK$29,302,000whichwasrecognisedintheprofitorloss.

On3 June2013, thebondsmaturity date, theBonds Issuer redeemed the thenoutstandingprincipal ofHK$1,941,650,000attheredemptionpriceof123.94%byanaggregateamountofHK$2,406,481,000.Aftertheredemption,certaininvestmentpropertiestogetherwiththeassignmentofinsuranceproceedswhichhavebeengrantedandmortgagedinfavourofthebondholderswerereleasedanddischarged.

TheBondscontainedliabilitycomponentstatedatamortisedcostandderivativecomponentsstatedatfairvalue.Theeffectiveinterestrateoftheliabilitycomponentwas6.375%perannum.




23. CONVERTIBLEBONDS(CONTINUED)

Themovementoftheliabilityandderivativecomponentsoftheconvertiblebondsfortheyearended31December2013issetoutasbelow:

2013HK$’000

LIABILITYCOMPONENTAtthebeginningoftheyear 2,742,781Interestcharged 71,136Interestpaid (7,950)Conversionduringtheyear (399,486)Redemptionduringtheyear (2,406,481) At the end of the year – DERIVATIVECOMPONENTSAtthebeginningoftheyear 308,563Changeinfairvalue (308,236)Conversionduringtheyear (327) At the end of the year – Total convertible bonds –

24. DERIVATIVEFINANCIALINSTRUMENTS

2014 2013HK$’000 HK$’000

Non-current assetCashflowhedge–crosscurrencyswaps 3,974 – Non-current liabilityCashflowhedge–crosscurrencyswaps – 41,833

TheGroupenteredcrosscurrencyswapswithTheHongkongandShanghaiBankingCorporationLimited,aconnectedpersonasdefinedintheCode,tominimisetheexposuretofluctuations inforeigncurrencyandinterestrateofthemediumtermnote,whichisdenominatedinUnitedStatesdollars,inrespectoftheprincipalandfixedrateinterestpayments.

ThecrosscurrencyswapsandthecorrespondingmediumtermnotehavesimilartermsandtheManagerconsideredthatthecrosscurrencyswapswerehighlyeffectivehedginginstruments.






NOTES

24. DERIVATIVEFINANCIALINSTRUMENTS(CONTINUED)

Majortermsofthecrosscurrencyswapsaresetoutbelow:

Notionalamount Maturity Exchange rate

Interestrate Interest period

Total hedged item

US$200,000,000 17January2023 HK$7.7598:US$1 3.75% Semi-annually Mediumtermnoteprincipalandcouponpayments



US$50,000,000 17January2023 HK$7.7541:US$1 3.75% Quarterly Mediumtermnoteprincipalandcouponpayments

Thefairvalueoftheabovederivatives isbasedonthevaluationprovidedbythecounterpartyfinancial institutionandmeasuredatthepresentvalueoffuturecashflowsestimatedanddiscountedbasedontheapplicableyieldcurvesderivedfromquotedinterestrates.

Duringtheyear,thegainonchangesinfairvalueofthecrosscurrencyswapsundercashflowhedgeamountingtoHK$48,888,000(2013: lossonchangesofHK$41,833,000)hasbeenrecognisedinothercomprehensive incomeofwhichthefairvalueofthehedginginstrumentsamountingtoHK$4,214,000(2013:HK$3,081,000)werereclassifiedfromhedgingreservetoprofitor loss inthesameperiodwhenthehedgeditemaffectsprofitor lossanduponthesettlementofcouponpayment.




25. DEFERREDTAXLIABILITIES

Thefollowingsarethemajorcomponentofdeferredtaxliabilitiesandassetsrecognisedandthemovementsthereonduringtheyear:

Accelerated taxdepreciation Tax losses Total

HK$’000 HK$’000 HK$’000

Asat1January2013 350,282 (10,241) 340,041Chargetoconsolidatedincomestatementduringtheyear 40,862 (8,494) 32,368Overprovisioninprioryears (9,634) – (9,634) As at 31 December 2013 381,510 (18,735) 362,775Chargetoconsolidatedincomestatementduringtheyear 39,010 14,843 53,853 As at 31 December 2014 420,520 (3,892) 416,628

Forthepurposesofpresentationintheconsolidatedstatementoffinancialposition,deferredtaxassetsandliabilitieshavebeenoffsetandshownundernon-currentliabilities.

Asat31December2014,theGrouphasunutilisedtaxlossesamountingtoHK$537,267,000(2013:HK$634,377,000) available foroffsetagainst futureprofits.Adeferredtaxassethasbeenrecognised inrespectofHK$23,586,000 (2013:HK$113,547,000)ofsuchlosses.Nodeferredtaxassethasbeenrecognisedinrespectof theremainingofHK$513,681,000(2013:HK$520,830,000)duetounpredictabilityoffutureprofitstream.Taxlossesmaybecarriedforwardindefinitely.

26. ISSUEDUNITS

Number of units HK$’000

Balanceat1January2013 5,671,360,403 23,665,120PaymentofManager’sfeethroughissuanceofnewunitsduringtheyear(note(i)) 30,109,215 111,675Unitsissuedupontheconversionofconvertiblebonds(note23) 12,395,029 47,571 Balance at 31 December 2013 5,713,864,647 23,824,366PaymentofManager’sfeethroughissuanceofnewunitsduringtheyear(note(i)) 30,987,212 108,601 Balance at 31 December 2014 5,744,851,859 23,932,967






NOTES

26. ISSUEDUNITS(CONTINUED)Note:

(i) DetailsofunitsissuedduringtheyearaspaymentofManager’sfeeareasfollows:

Issue date

Payment of theManager’s feesfor the period

Issue price per unitdetermined basedon the Trust Deed

Aggregateissue price

Number ofunits issued

HK$ HK$’000

In 201411March2014 1.7.2013to31.12.2013 3.460 53,358 15,421,45027August2014 1.1.2014to30.6.2014 3.549 55,243 15,565,762

108,601 30,987,212 In 20138March2013 1.7.2012to31.12.2012 3.974 60,165 15,139,75523August2013 1.1.2013to30.6.2013 3.441 51,510 14,969,460

111,675 30,109,215

27. MAJORNONCASHTRANSACTIONS

(i) Duringtheyearended31December2014,30,987,212(2013:30,109,215)unitswereissuedaspaymentfortheManager’sfee,amountingtoHK$108,601,000(2013:HK$111,675,000).

(ii) Duringtheyearended31December2013,12,395,029unitswereissuedupontheconversionoftheBonds.

28. NETASSETVALUEPERUNIT

Thenetassetvalueperunit iscalculatedbydividingthenetassetsattributabletounitholdersasat31December2014ofHK$46,275,130,000(2013:HK$45,363,960,000)bythenumberofunits in issueof5,744,851,859(2013:5,713,864,647)asat31December2014.

29. NETCURRENTLIABILITIES

At31December2014,theGroup’snetcurrentliabilities,calculatedascurrentliabilitieslesscurrentassets,amountedtoHK$1,166,584,000(2013:HK$8,111,542,000).

30. TOTALASSETSLESSCURRENTLIABILITIES

At31December2014, theGroup’s totalassets lesscurrent liabilitiesamountedtoHK$61,275,390,000 (2013:HK$53,397,458,000).




31. OPERATINGLEASECOMMITMENTS

At31December2014,commitmentsinrespectofnon-cancellableoperatingleasesforrentalofinvestmentpropertieswereasfollows:

2014 2013HK$’000 HK$’000

Withinoneyear 1,814,609 1,725,946Inthesecondtofifthyearinclusive 3,165,460 2,511,985Overfiveyears 457,017 385,320

5,437,086 4,623,251

Thepropertiesheldhadcommittedleasesusuallyrunningfortwotosixyearsandrentalsarepredeterminedatfixedamountsexceptforcertainleasesofwhichcontingentrentalsarechargedbasedonthepercentageofsales.ContingentrentalincomeofHK$97,010,000(2013:HK$99,525,000)wasreceivedfortheyear.

Certainfutureminimumleasepaymentsarecalculatedbasedontheestimatedmarketrenttobereceivedfromthecontractedtenantsduringspecifiedtimeintervalsofthecontractedperiodasstipulatedintheleaseagreement.

32. CAPITALCOMMITMENT

2014 2013HK$’000 HK$’000

Capitalexpenditureinrespectoftheimprovementworksofinvestmentpropertiescontractedforbutnotprovidedintheconsolidatedfinancialstatements 43,956 26,589






NOTES

33. CONNECTEDANDRELATEDPARTYTRANSACTIONS

Duringtheyear, inadditiontothosedisclosedinnote24,theGroupenteredintothefollowingtransactionswithconnectedandrelatedparties:

Notes 2014 2013HK$’000 HK$’000

Rental incomeChinaMobileHongKongCompanyLimited (a) 234 234LanghamHotelsInternationalLimited (b) 2,853 10,589LanghamPlaceHotel(HK)Limited (b) 4,567 4,031StrongDynamicLimited (b) 7,680 7,477TheGreatEaglePropertiesManagementCompany,Limited (b) 5,740 5,356EagleAssetManagement(CP)Limited (b) 394 394EaglePropertyManagement(CP)Limited (b) 3,050 3,000HSBCGroup1 (c) 1,514 11,387

Interest incomeHSBCGroup1 (c) 786 2,668

Building management fee incomeStrongDynamicLimited (b) 3,851 3,508TheGreatEaglePropertiesManagementCompany,Limited (b) 687 600LanghamHotelsInternationalLimited (b) 461 1,563LanghamPlaceHotel(HK)Limited (b) 664 606EaglePropertyManagement(CP)Limited (b) 399 364HSBCGroup1 (c) 243 1,422

Building management expenses and car park operating expensesTheGreatEaglePropertiesManagementCompany,Limited (b) 221,217 192,868LongworthManagementLimited (b) 37,459 34,199

Property and lease management service feeEaglePropertyManagement(CP)Limited (b) 61,683 59,565

Rental commissionEaglePropertyManagement(CP)Limited (b) 32,457 25,433Savills(HongKong)Limited (d) 2,540 2,927

Repairs and maintenance feeTheGreatEagleEngineeringCompanyLimited (b) 5,474 5,063ToptechCo.Limited (b) 1,358 519KeysenEngineeringCompany,Limited (b) 321 1,193TheGreatEaglePropertiesManagementCompany,Limited (b) 8 8SunFookKongHousingServicesLimited (e) 23 22




Notes 2014 2013HK$’000 HK$’000

Repairs and maintenance and renovations contracted toTheGreatEagleEngineeringCompanyLimited (b) 6,181 5,417ToptechCo.Limited (b) – 1,335KeysenEngineeringCompany,Limited (b) 447 1,215TheGreatEaglePropertiesManagementCompany,Limited (b) 8 8SunFookKongHousingServicesLimited (e) 29 31

Property miscellaneous expensesLanghamPlaceHotel(HK)Limited (b) 23 27GrowOnDevelopmentLimited (b) – 33CleverGainInvestmentLtd (b) 188 145

Trust and other expensesHSBCInstitutionalTrustServices(Asia)Limited (c) 10,891 10,534HSBCGroup1 (c) 85 100

Manager’s feeEagleAssetManagement(CP)Limited (b)&(f) 216,045 209,736

Acquisition cost of investment propertiesEagleAssetManagement(CP)Limited (b) – 21,553HSBCInstitutionalTrustServices(Asia)Limited (c) – 100SavillsValuationandProfessionalServicesLimited (d) – 50

Finance costsHangSengBankLimited2 (c) 159,145 131,124TheHongkongandShanghaiBankingCorporationLimited (c)&(k) 36,389 17,575

Valuation feeSavillsValuationandProfessionalServicesLimited (d) 301 299

Balanceswithconnectedandrelatedpartiesareasfollows:

Notes 2014 2013HK$’000 HK$’000

Amount due fromTheGreatEaglePropertiesManagementCompany,Limited (b)&(g) 27,383 40,034LongworthManagementLimited (b)&(g) 15,311 15,311ToptechCo.Limited (b)&(g) 213 282

Amount due toEaglePropertyManagement(CP)Limited (b)&(g) 13,555 12,999EagleAssetManagement(CP)Limited (b)&(g) 105,559 106,716TheGreatEagleEngineeringCompanyLimited (b)&(g) 2,693 4,699TheGreatEaglePropertiesManagementCompany,Limited (b)&(g) 12,849 10,344KeysenEngineeringCompany,Limited (b)&(g) 539 1,101TheGreatEagleCompany,Limited (b)&(g) 1 –LanghamPlaceHotel(HK)Limited (b)&(g) 10 10SunFookKongHousingServicesLimited (e)&(g) – 22

33. CONNECTEDANDRELATEDPARTYTRANSACTIONS(CONTINUED)






NOTES

Notes 2014 2013HK$’000 HK$’000

Deposits placed with the Group for the lease of the Group’s propertiesChinaMobileHongKongCompanyLimited (a) 39 39EaglePropertyManagement(CP)Limited (b)&(h) – –TheGreatEaglePropertiesManagementCompany,Limited (b) 1,408 1,408StrongDynamicLimited (b)&(i) – –LanghamHotelsInternationalLimited (b)&(j) – –LanghamPlaceHotel(HK)Limited (b) 1,351 1,351HSBCGroup1 (c) – 1,275

Notes:

(a) Thiscompanyisanassociate3ofDr.LoKaShui(anon-executivedirectorandtheChairmanoftheManagerofChampionREITandadirectorofGreatEagle)byvirtueofDr.Lobeinganindependentnon-executivedirectoroftheultimateholdingcompanyofthiscompany.

(b) ThesecompaniesarethesubsidiariesdirectlyorindirectlyheldbyGreatEagle,asignificantunitholderofChampionREIT.

(c) ThesecompaniesaretheTrusteeorassociates3oftheTrustee.

(d) Thiscompanyis theprincipalvaluerofChampionREITor itsassociates3.AnamountofHK$50,000outofHK$139,000fortheyearended31December2013relatestothevaluationfeeinrespectoftheAcquisitionandwascapitalisedasadirectcostoftheAcquisition.

(e) ThiscompanyisasubsidiaryofSFKConstructionHoldingsLimited(“SFK”),whichisanassociate3ofMr.LoKaiShui,anon-executivedirectoroftheManagerofChampionREITandadirectorofGreatEagle,whoisentitledtoexercisecontrolof33%ormoreofthevotingpoweratthegeneralmeetingofSFK.

(f) TheManager’sfeeiscalculatedat12%ofthenetpropertyincomeprovidedthatChampionREITachievesnetpropertyincomeofHK$200 million foreachofthesixmonthperiodended30June2014and31December2014.

(g) Theamountsduefromandduetoconnectedandrelatedpartiesareunsecured,interest-freeandhavenofixedrepaymentterms.

(h) AbankguaranteeofHK$927,000(2013:HK$859,000)wasreceivedinlieuofdeposit.

(i) AbankguaranteeofHK$2,882,000(2013:HK$2,882,000)wasreceivedinlieuofdeposit.

(j) AbankguaranteeofHK$3,133,000wasreceivedinlieuofdepositasat31December2013.

(k) InJuly2013,theGrouparrangedabilateralloanofHK$1,900millionwithTheHongkongandShanghaiBankingCorporationwithanupfrontfeeofHK$20,900,000.

1 HSBCGroupmeansTheHongkongandShanghaiBankingCorporationLimitedanditssubsidiariesand,unlessotherwiseexpresslystatedherein,excludestheTrusteeanditsproprietarysubsidiaries.

2 On28June2013,thetermloanandrevolvingcredit facilitiesofHK$2,954millionwasrefinancedwithatermloanandrevolvingcredit facilitiesofHK$2,500millionatanupfrontpaymentfeeofHK$18,750,000.On26May2014,thetermloanfacilityofHK$7,000millionwasrefinancedtogetherwiththetermloanfacilityofHK$500millionbytwotermloanfacilitiesofHK$3,700millionandHK$3,800millionatanupfrontpaymentofHK$27,750,000andHK$45,600,000respectively.HangSengBankLimitedisthefacilityagentunderatermloanfacilitiesofHK$3,700millionandHK$3,800millionandtermloanandrevolvingcreditfacilitiesofHK$2,500million(2013:termloanfacilityofHK$7,000millionandtermloanandrevolvingcreditfacilitiesofHK$2,500million).Asat31December2014,totaltermloanoutstandingunderthesethreefacilitiesisHK$9,700 million (2013:twofacilitiesofHK$9,200 million).

3 AsdefinedintheCode.

33. CONNECTEDANDRELATEDPARTYTRANSACTIONS(CONTINUED)




34. PARTICULARSOFPRINCIPALSUBSIDIARIESOFCHAMPIONREIT

Thefollowingprincipalsubsidiariesarewholly-ownedbyChampionREITasat31December2014and2013.

Name Issued and fully paid share capital Principal activity

Incorporated and operating in Hong Kong and indirectly owned and controlled by Champion REIT:

BeningtonLimited HK$1,000being100shareswithnoparvalue (2013:100sharesofHK$10each)

Propertyinvestment

CP(A1)Limited HK$1,being1sharewithnoparvalue (2013:1shareofHK$1)

Propertyinvestment

CP(B1)Limited HK$1,being1sharewithnoparvalue (2013:1shareofHK$1)

Propertyinvestment

CP(MC)Limited HK$1,being1sharewithnoparvalue (2013:1shareofHK$1)

Propertyinvestment

CP(PH)Limited HK$1,being1sharewithnoparvalue (2013:1shareofHK$1)

Propertyinvestment

CP(SH)Limited HK$1,being1sharewithnoparvalue (2013:1shareofHK$1)

Propertyinvestment

CP(WC)Limited HK$1,being1sharewithnoparvalue (2013:1shareofHK$1)

Propertyinvestment

CPFinanceLimited HK$1,being1sharewithnoparvalue (2013:1shareofHK$1)

Financing

CP(PortionA)Limited HK$2,being2shareswithnoparvalue (2013:2sharesofHK$1each)

Propertyinvestment

CP(PortionB)Limited HK$2,being2shareswithnoparvalue (2013:2sharesofHK$1each)

Propertyinvestment

CPGloryLimited HK$1,being1sharewithnoparvalue (2013:1shareofHK$1)

Financing

CPSuccessLimited* HK$1,being1sharewithnoparvalue FinancingCPWealthLimited HK$1,being1sharewithnoparvalue

(2013:1shareofHK$1)Financing

ElegantWealthLimited HK$1,being1sharewithnoparvalue (2013:1shareofHK$1)

Propertyinvestment

MapleCourtLimited HK$2,being2shareswithnoparvalue (2013:2sharesofHK$1each)

Propertyinvestment

PanhyLimited HK$2,being2shareswithnoparvalue (2013:2sharesofHK$1each)

Propertyinvestment

RenaissanceCityDevelopment CompanyLimited

HK$2,being2shareswithnoparvalue (2013:2sharesofHK$10each)

Propertyinvestment

ShineHillDevelopmentLimited HK$1,000,000,being1,000,000shareswith noparvalue (2013:1,000,000sharesofHK$1each)

Propertyinvestment

TrumpTreasureLimited HK$1,being1sharewithnoparvalue (2013:1shareofHK$1)

Financing

WellCharmDevelopmentLimited HK$2,being2shareswithnoparvalue (2013:2sharesofHK$1each)

Propertyinvestment






NOTES

Name Issued and fully paid share capital Principal activity

Incorporated and operating in Cayman Islands and indirectly owned and controlled by Champion REIT:

ChampionMTNLimited 1shareofUS$1 Mediumtermnotesissuer

ErnestLimited 100sharesofUS$1each InvestmentholdingFairVantageLimited 1shareofUS$1 Debtsecuritiesissuer

* Thissubsidiarywasincorporatedandcommenceditsbusinessduringtheyearended31December2014.

TheManagerisoftheopinionthatacompletelistoftheparticularsofallsubsidiarieswillbeofexcessivelengthandthereforetheabovelistcontainsonlytheparticularsofthesubsidiarieswhichprincipallyaffecttheresultsorassetsandliabilitiesoftheGroup.

34. PARTICULARSOF PRINCIPAL SUBSIDIARIESOFCHAMPIONREIT(CONTINUED)


ANDCONTRACTORSMAJORREALESTATEAGENTS



TOPFIVEESTATEAGENTS

Thetopfiverealestateagentsandtheirrespectivecommissionpaidwereasfollows:

REALESTATEAGENTSNATUREOFSERVICE

COMMISSION PAID(HK$)

RELEVANTCOST (%)

EaglePropertyManagement(CP)Limited Leasing 32,457,000 62.9

CBRELimited Leasing 7,551,000 14.6

JonesLangLaSalleLimited Leasing 5,158,000 10.0

Savills(HongKong)Limited Leasing 2,540,000 4.9

CentalinePropertyAgencyLimited Leasing 1,616,000 3.1

Total 49,322,000 95.5

TOPFIVECONTRACTORS

Thetopfivecontractorsandtheirrespectivevalueofservicewereasfollows:

CONTRACTORSNATUREOFSERVICE

VALUEOFCONTRACT(HK$)

RELEVANTCOST (%)


Buildingmanagement 242,981,000 63.4

EaglePropertyManagement(CP)Limited Leasingandmarketing 61,683,000 16.1

LongworthManagementLimited BuildingManagement 37,459,000 9.8

RTwo(HK)Ltd PromotionExpenses 7,828,000 2.0

TheGreatEagleEngineeringCo.Ltd Repairs&Maintenance 6,181,000 1.6

Total 356,132,000 92.9


TABLEPERFORMANCE



2014 2013 2012 2011 2010

ASAT31DECEMBER:Netassetvalue(HK$’000) 46,275,130 45,363,960 44,252,200 38,755,567 33,141,907Netassetvalueperunit(HK$) 8.06 7.94 7.80 7.82 6.72Thehighesttradedpriceduringtheperiod(HK$) 3.83 4.19 3.95 5.01 4.70Thehighestpremiumofthetradedpricetonet assetvalue1 N/A N/A N/A N/A N/A

Thelowesttradedpriceduringtheperiod(HK$) 3.24 3.29 2.91 2.65 3.23Thehighestdiscountofthetradedpricetonet assetvalue 59.80% 58.56% 62.69% 66.11% 51.95%

FORTHEYEARENDED31DECEMBER:Thedistributionyieldperunit2 5.66% 6.12% 5.63% 7.66% 4.71%Thenetprofityieldperunit3 9.33% 11.22% 19.77% 44.86% 23.46%

Notes:

1. Thehighesttradedpriceislowerthanthenetassetvalueperunit.Accordingly,nopremiumofthetradedpricetonetassetvalueispresented.

2. DistributionyieldperunitiscalculatedbasedonthedistributionperunitofHK$0.2037(whichcalculationwassetoutintheDistributionStatement)fortheyearended31December2014overthetradedpriceofHK$3.60asat31December2014.

3. Netprofityieldperunitiscalculatedbasedonprofitfortheyearbeforedistributiontounitholdersperunitfortheyearended31December2014overthetradedpriceofHK$3.60asat31December2014.

TRUST

PROFILE

TRUST

OBJECTIVES

Champion Real Estate Investment Trust is a trust formed to own and invest in income-producing office and retail properties and is one of the 10 largest REITs by market capitalization in the Asia excluding Japan region. The Trust’s focus is on Grade-A commercial properties in prime locations. It currently offers investors direct exposure to 2.93 million sq. ft. of prime office and retail floor area by way of two landmark properties in Hong Kong, Citibank Plaza and Langham Place, one on each side of the Victoria Harbour.

Champion REIT’s key objectives are to provide investors with stable and sustainable distributions and to achieve long-term capital growth. This aim of providing attractive total returns will be achieved by, among other things, proactive management of the properties in the Trust’s portfolio and the selective acquisition of properties that will enhance distributions.

CORPORATE INFORMATION

CHAMPION REITChampion Real Estate Investment Trust (A Hong Kong collective investment scheme authorised under section 104 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong))

REIT MANAGEREagle Asset Management (CP) LimitedSuite 3008, 30th FloorGreat Eagle Centre23 Harbour RoadWanchaiHong KongTEL: (852) 2879 1288FAX: (852) 2827 1338Email: [email protected]

BOARD OF DIRECTORS OF THE REIT MANAGER

Non-executive DirectorsLO Ka Shui (Chairman)HO Shut KanIP Yuk Keung, AlbertLO Kai Shui

Executive DirectorLEE Ching Ming, Adrian (Chief Executive Officer)

Independent Non-executive DirectorsCHA Mou Sing, PaysonCHENG Wai Chee, ChristopherSHEK Lai Him, Abraham

AUDIT COMMITTEE OF THE REIT MANAGERSHEK Lai Him, Abraham (Chairman)CHENG Wai Chee, Christopher LO Ka Shui

DISCLOSURES COMMITTEE OF THE REIT MANAGERLEE Ching Ming, Adrian (Chairman)LO Ka ShuiSHEK Lai Him, Abraham

RESPONSIBLE OFFICERS OF THE REIT MANAGERLEE Ching Ming, AdrianWONG Ka Ki, AdaCHOO Chong Yao, PatrickKWONG Chi Kwong

COMPANY SECRETARY OF THE REIT MANAGERG. E. Secretaries Limited

PROPERTY MANAGEREagle Property Management (CP) Limited

TRUSTEEHSBC Institutional Trust Services (Asia) Limited

PRINCIPAL BANKERSBank of China (Hong Kong) LimitedCitibank, N.A.Hang Seng Bank LimitedThe Hongkong and Shanghai Banking Corporation Limited

LEGAL ADVISORBaker & McKenzie

AUDITORDeloitte Touche Tohmatsu

PRINCIPAL VALUERSavills Valuation and Professional Services Limited

UNIT REGISTRAR AND TRANSFER OFFICEComputershare Hong Kong Investor Services LimitedShops 1712-171617th Floor, Hopewell Centre183 Queen’s Road EastWanchaiHong KongEmail: [email protected]

WEBSITEwww.ChampionReit.com

STOCK CODE2778

3008 Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong

Tel (852) 2879 1288 Fax (852) 2827 1338

www.ChampionReit.com PDF version

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Champion Real Estate Investment Trust (stock code: 2778) is a Hong Kong collective investment scheme authorised under section 104 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

ANNUAL REPORT 2014

annual report 2014 - stg.championreit.com...annual report 2014 35 premium asset, prime location...

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