First Real Estate Investment Trust : Response To Questions Received From Sias-First REIT Virtual Dialogue Session

(Constituted in the Republic of Singapore pursuant to a trust deed dated 19 October 2006 (as amended))

RESPONSE TO SUBSTANTIAL AND RELEVANT QUESTIONS RECEIVED FROM

SIAS-FIRST REIT VIRTUAL DIALOGUE SESSION

The Board of Directors (the "Board") of First REIT Management Limited, in its capacity as manager of First Real Estate Investment Trust ("First REIT", and as manager of First REIT, the "Manager"), refers to the Securities Investors Association (Singapore)-First REIT Virtual Dialogue Session ("Virtual Dialogue") held on 7 January 2021.

A recording of the Virtual Dialogue can be found at the following URL: https://www.first-reit.com/ir_egm.html.

The Manager would like to thank unitholders of First REIT ("Unitholders") for submitting their questions, please refer to Annex A attachedhereto for the list of substantial and relevant questions received from unitholders, and the Management and the Board's responses to these questions.

By Order of the Board

Tan Kok Mian Victor

Executive Director and Chief Executive Officer First REIT Management Limited

(Company registration no. 200607070D)

As Manager of First Real Estate Investment Trust

8 January 2021

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ANNEX A

RESPONSES TO QUESTIONS RAISED DURING THE VIRTUAL DIALOGUE

For full details of the Proposed Transactions by First REIT, please refer to the Circular to Unitholders dated 28 December 2020. Capitalised terms used herein, unless otherwise defined, shall have the

meanings ascribed to them in the Circular dated 28 December 2020 (the "Circular") in relation to, among

others, the proposed restructuring of certain master leases of First REIT.

Questions

Responses

1. Why don't you go after LPKR PT Lippo Karawaci Tbk ("LPKR") is facing significant liquidity and enforce the current plan? pressure and this is confirmed by the three rating agencies in
   Also, how can we be sure their most recent reports; the Covid-19 pandemic also played

LPKR will honour the	a significant role in worsening their financial condition.
restructured plan? If they
have unilaterally walked	If the terms of the existing LPKR master lease agreements
away from the obligation	("MLA") are enforced, there is a real risk and high probability
once, they can do it again.	that LPKR will default and there are severe consequences in
How are you protecting	such a scenario; these are listed as follows:
Unitholder interest?	• First REIT will be faced with a loss of approximately 72.1%
	of rental income represented by the LPKR MLAs that are
	within the scope of the Proposed LPKR MLA
	Restructuring;
	• There will be lengthy, costly and cumbersome legal
	disputes, during which, First REIT will be incurring
	operating and capital expenditures with limited visibility on
	the rental income stemming from the LPKR MLAs;
	• Consequently, friction costs will be incurred to identify a
	new tenant for a large proportion of the Indonesian
	portfolio. At the end of 2019, the Manager conducted a
	similar process on a smaller scale without success. This is
	a highly complex process as there are attributes unique to
	the healthcare asset class, one of which being the
	licencing and regulatory requirements of operating a
	hospital in Indonesia. This will therefore be a difficult,
	uncertain and lengthy leasing exercise to secure an
	alternative tenant-cum-operator, that will be doubly
	challenging to administer during the current Covid-19
	pandemic; and
	• First REIT will breach its existing debt covenants.
	The Board together with the Management took a proactive
	approach as it was critical to move resolutely to renegotiate a
	new plan to restructure all the MLAs with LPKR following
	LPKR's unilateral announcement in June 2020.
	Given that the Proposed LPKR MLA Restructuring constitutes
	an interested party transaction, an independent board
	committee (the "Independent Committee") comprising the
	Independent Directors of the Board was set up and together
	with our appointed advisors, negotiated and evaluated the
	proposals from LPKR rigorously, with the intention of
	protecting Unitholder interest.

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Questions	Responses
	Given the numerous meetings and length of time in which the
	Independent Committee had worked to deliver a viable
	restructured plan, the Independent Committee is confident that
	LPKR has been sincere and professional in the negotiation
	process and this new plan is sustainable for LPKR and in turn,
	for First REIT.
2) Is there a bigger problem	The Covid-19 pandemic was not the sole challenge.
than just a Covid-19 induced
revenue decline in the	LPKR is facing severe liquidity pressure due to its significant
hospitals?	recurring expenses, weak operating cash flows and inability to
	divest assets and generate sufficient sales from its
	development projects.
	For the purpose of illustration, LPKR has been generating
	negative operating cash flows since 2015 with an aggregate
	negative cash flow of approximately S$1.5 billion. The
	situation is exacerbated by the depreciation of the Indonesian
	Rupiah against the Singapore Dollar by approximately 45%
	since the IPO of First REIT which adds further pressure to
	LPKR as the rent payment under the existing MLAs are paid
	in Singapore Dollars.
	The Covid-19 pandemic further exacerbated the problem,
	further weakening the operating performance of LPKR's
	business and is likely to have implications through the medium
	term.
	As at 9M2020, LPKR continues to have negative operating
	cash flows.
3) Based on the revised base	The Proposed Base Rent is in the range of 40 to 45% of the
rent amount for Indonesia	hospitals' EBITDAR for LPKR and MPU, and is in line with the
($56.7m), how many % of the	percentage range of other healthcare REITs in ASEAN and
gross operating revenue	North America as observed by the Independent Valuer,
does this represent on a pro-	Cushman & Wakefield.
forma basis for FY 2019 and
1H 2020?	With reference to FY2019's figures, the Proposed Base Rent
	in aggregate is in the range of 10 to 15% of the LPKR hospitals'
	gross operating revenue.
4) What happens if you don't	Given the numerous meetings and length of time in which the
get Unitholder approval at	Independent Committee had worked to deliver a viable
the EGM. What is plan B?	restructured plan, the Independent Committee is confident that
	this new plan is sustainable for LPKR and in turn, for First
	REIT. The Proposed LPKR MLA Restructuring is the best plan
	that the Independent Committee and Management have
	negotiated with LPKR. There is no alternative plan at this
	stage.
	First REIT faces a significant refinancing wall and the
	Proposed Rights Issue, together with the S$260 million
	refinancing facility which was announced on 24 December
	2020 is the most viable solution to meet upcoming repayment
	obligations, in particular, S$196.6 million of debt which is
	coming due in 1 March 2021.
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Questions	Responses
	Without Unitholders' support for both resolutions, there is a
	real risk and high probability that LPKR may default on the
	current MLAs.
	Without the approval on Resolution 2, being the Proposed
	Whitewash Resolution, the Manager will not be able to
	proceed with the Rights Issue. The S$260 million Refinancing
	Facility will also be at risk, since implementing the Rights Issue
	is a condition of this facility.
	Under these circumstances, First REIT will face an urgent
	need to re-evaluate alternative funding sources or face
	financial default.
5) Why don't you consider	The Manager has explored other funding sources including
asset divestment or	potential asset divestments; the Rights Issue is the only viable
liquidating the REIT? Isn't	option at this stage.
this better than dilutive
Rights Issue?	Asset divestment is not a viable alternative in the current
	climate, having considered the practical difficulty of conducting
	a sale process of First REIT's assets amidst the well-
	publicised financial difficulty of First REIT, which will likely
	result in a suboptimal price discovery process for First REIT's
	assets.
	Further, it is difficult for First REIT to sell hospital assets (land
	and buildings only) to third party operators as the underlying
	hospitals are already master-leased to LPKR and subleased
	to Siloam. Hospitals are specialised properties that require
	very strict local licensing procedures and regulations.
	Additionally, in view of the Proposed LPKR MLA Restructuring
	and MPU MLA Restructuring, any consideration to potential
	asset divestments will be limited to First REIT's Singapore and
	South Korean assets only. As at 31 December 2019, the
	aggregate value of the Singapore and Korean assets held by
	First REIT was valued at approximately S$42.6 million which
	is significantly lower than the S$140.0 million repayment
	requirement imposed by the lending banks.
6) Why such a steep discount	The Rights Issue size of S$158.2 million was determined
on your Rights Price? How	based primarily on the S$140.0 million repayment requirement
was the proposed rights	which is the difference between the S$400 million 2018
issue price of $0.20	Secured Loan Facilities and the S$260 million Refinancing
determined? Given that the	Facility announced on 24 December 2020. It is a condition of
NAV per share after the	the Refinancing Facility that First REIT undertakes an equity
rights issue is $0.36 per unit	fund raising exercise. This recapitalisation plan is necessary in
and unitholders are	order to meet the S$196.6 million repayment obligation on 1
complaining that this has	March 2021 and avoid a default.
caused the price to drop
further.	To address the question on the indicative Rights Price, this is
	a function of the size of funds required, the number of units
	First REIT can issue based on its general mandate and the
	discounts to the theoretical ex rights price ("TERP") based on
	market precedents.
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