Active Asset Management Strategy

The Manager plans to maximise returns from the Properties by implementing the following strategies:

• raise occupancy and rental rates;
• diversify the tenant base across different industries;
• implement pro-active marketing plans; and
• continue to rationalise operating costs.

Raise occupancy and rental rates

The Manager plans to improve the occupancy rates in the Properties by working closely with the Property Manager to pursue new rental opportunities and pro-actively engaging tenants whose tenancies are about to expire in advance negotiations. Additionally, the Manager with the Property Manager plan to manage lease renewals effectively in order to minimise void periods due to either lease expiries or pre-mature terminations. This could be achieved through:

• establishing and working towards optimal rental benchmarks for each Property;
• pro-actively engage tenants whose leases are about to expire in early negotiations;
• endeavour to line up new tenants in preparation for vacant space; and
• actively manage overdue rentals to minimise bad debt.

Tenant retention programme initiatives will be initiated by the Manager to further strengthen tenant relationships. Such efforts are expected by the Manager to maintain high tenant retention levels, minimising vacancy levels (and reduction in rental income), as well as the associated costs of securing new tenants.

Diversify tenant base across different industries

The Manager will constantly monitor exposure of its total rental income to any one business sector and as such seek to maintain the diversity of its tenant base so that K-REIT Asia's revenue stream is not overly exposed to certain business sectors that are more susceptible to general economic cycles. The Manager also intends to continually improve its tenant mix and manage specific business sector risks in order to achieve more consistent cash flows.

Implement pro-active marketing plans

The Manager will develop customised pro-active marketing plans for each of the Properties. Each plan will focus on property-specific needs to maximise tenant interest and enhance the public profile and visibility of the Properties with a view to increase the value of the Properties.

Continue to rationalise operating costs

In order to deliver optimal returns to Unitholders, the Manager will work closely with the Property Manager to keep property operating expenses low while maintaining quality of services. To rationalise cost, the Manager together with the Property Manager plan to exploit the economies of scale of operating a portfolio of properties by, for example, bulk purchasing of supplies and cross implementation of successful cost-saving programmes among the Properties.