3. Survey background...12 Participants...14 Ranking Criteria...15 Survey Period Overview...18 Returns...19 Volatility...21

Transcription

1 A-REIT Survey 2012

2 2 CONTENTS Contents 1. Getting the inside information top 3 ranked A-reits Survey background...12 Participants...14 Ranking Criteria...15 Survey Period Sector review Overview...18 Returns...19 Volatility survey findings Results Financial Ranking Metrics Results Investment Ranking Metrics Sector Composition Property Valuations Merger and Acquisition Activity Sector Gearing Sources of Debt Funding Cost of Borrowings Location of Property Assets...30 Weighted Average Lease Expiry overall rankings detailed survey results EXPLANATION OF CRITERIA AND RANKINGS...44 Financial Criteria...44 Investment Criteria...44 Method of Ranking corporate finance at BDO Key Contacts Achievements...48 About BDO Disclaimer glossary...51

3 GETTING THE INSIDE INFORMATION 3 1. Getting the inside information The BDO Corporate Finance Team is pleased to present the 18th edition of the BDO A-REIT Survey. The 2012 Survey covers the 12 month period ending 30 June 2012, a year in which the A-REIT sector recorded an 11% total return and outperformed the broader market following a long period of underperformance. The risk profile of the Sector has reduced significantly since the GFC which saw the Sector lose 70% of its value. A-REIT managers have repaired the balance sheets and reduced the gearing of a number of entities, exited many risky investments, reduced their exposure to offshore assets and restored distribution payout ratios to more appropriate levels. In an uncertain investment environment, those A-REITs that have de-risked themselves are an attractive investment proposition, given the quality of the assets that they own, and the visibility they offer around future earnings and distributions. The major A-REITs are well positioned to withstand any future economic downturn, and should perform strongly if and when a sustained property recovery eventuates. However, at the smaller end of the spectrum, a number of A-REITs have yet to adequately resolve issues around gearing and underperforming assets. These A-REITs will continue to be subject to investor uncertainty and remain marked down by the market. KEY FINDINGS 29 of 36 entities surveyed recorded a positive total return for the year The Property Index outperformed the All Ordinaries by 18% in FY12 Volatility of the Property Index was lower than the All Ordinaries at 30 June 2012 Average increase in property values of 0.5% Entities are still on average trading at a discount to NTA (22%) but this discount has decreased since 2011 (23%) and 2010 (32%) The year ahead therefore represents another interesting (and hopefully positive) year for the Sector. On behalf of our national Corporate Finance team, we congratulate the winner of the 2012 Survey, Ingenia Communities Group. We hope you enjoy reading the 2012 Survey and we wish you all the best for Best regards Sebastian Stevens Partner, Corporate Finance

4 4 TOP 3 RANKED A-REITs 2. top 3 ranked A-reits

5 TOP 3 RANKED A-REITs 5 Top 3 Ranked entities highlight the diversity of the sector ingenia Ingenia Communities Group ranked number one on the back of a strong increase in NTA growthpoint Growthpoint Properties Australia ranked number two following a period of solid operating performance westfield The high quality global portfolio of Westfield Group saw it ranked number three

6 6 TOP 3 RANKED A-REITs Ingenia Communities Group Ingenia Communities Group (INA formerly ING Real Estate Community Living Group) owns, manages and develops a diversified portfolio of seniors housing communities. The stapled group has total look-through assets under management of $429m with operations located predominately in Australia and the United States. INA s securities performed strongly in the 12 months to 30 June 2012, with a total one year return of 74%. Included in this total return was a distribution of 0.5 cents per security the first time INA has declared a distribution since Overall look-through gearing for INA has reduced from 69% in FY11 to 52% in FY12. This was largely driven by the sale of INA s highly geared US non-new York assets in November 2011, coupled with the positive impact of a substantial valuation uplift from INA s New York portfolio. The valuation uplift of $30m in INA s New York portfolio was principally driven by increased investor demand for quality, yield-driven seniors housing assets as well as the strong increase in occupancy rates over the year. Key highlights of INA s performance in FY12 include: INA s net profit increased to $34m from $13m in FY11 A 31% increase in its net asset value A one year return of 74%, the second highest one year return in the Survey, and a 67% return over the last three years, the second highest three year return in the Survey.

7 TOP 3 RANKED A-REITs 7 Having rebuilt the Group from the precarious position of several years ago, security holders can be assured that the Board and management will continue to exercise extreme diligence in the allocation of capital. We will continue our rigorous assessment of internal and external growth opportunities while maintaining a balance with a possible buyback to security holders. Simon Owen CEO 74% One year return 100% Tax deferred distribution 11 Years WALE 31% increase in NTA per security

8 8 TOP 3 RANKED A-REITs Growthpoint Properties Australia Growthpoint Properties Australia (GOZ) owns a diversified portfolio of 41 modern, well leased office and industrial properties with a book value of $1.4b. During FY12 GOZ acquired, or contracted to acquire, six properties, for a total price of $346m (before transaction costs), at an average initial yield of 8.9%. Key highlights of growthpoint s performance in FY12 include: A very high portfolio occupancy of 99% and a WALE of 7.2 years A total return of 21.6% for FY12 and 19.7% for the three years to 30 June 2012 The GOZ security price has traded at a premium to its NTA since January By continuing its steady growth and providing a stable and growing distribution yield, Growthpoint Properties Australia has further established itself as a consistent, income producing investment, despite turbulent financial markets. Timothy Collyer Managing Director

9 TOP 3 RANKED A-REITs 9 22% One year return 17.6 Cents full year distribution 100% Tax deferred distribution 7.2 years wale

10 10 TOP 3 RANKED A-REITs Westfield Group Westfield Group (WDC) is Australia s largest REIT, with total assets as at 30 June 2012 of $34b. WDC has interests in 109 shopping centres across Australia (42), the United States (47), the United Kingdom (5), Brazil (4) and New Zealand (11), containing approximately 24,000 individual retail outlets. FY12 was a period of strong operating performance for WDC with income growth and comparable specialty sales growth in each of its operating regions, reflecting the high quality of WDC s portfolio globally. Global occupancy levels increased to 97.5%. We are confident in the future of the Group s business model and opportunities for growth. We continue to pursue our strategic plan focussed on investing and developing world class iconic retail destinations in major cities globally. Peter Lowy and Steven Lowy AM co-ceos

11 TOP 3 RANKED A-REITs 11 16% One year return Cents full year distribution 24% premium to nta 32% gearing Key highlights of westfield group s performance in FY12 include: Being one of three entities that traded at a premium to NTA through FY12 (24%) Maintaining a strong balance sheet with gearing at 32% and available liquidity of $7b Reporting a small increase of 1% in its NTA through the year.

12 12 SURVEY BACKGROUND 3. Survey background

13 SURVEY BACKGROUND Participants included in the 2012 Survey $138B Combined assets of participants 56% Of the entities surveyed are classified as diversified

14 14 SURVEY BACKGROUND Participants The 2012 Survey incorporates entities within the A-REIT sector and listed on the Australian Securities Exchange as at 30 June Thirty-six entities with combined total assets of $138b have been included in the 2012 Survey. Entities that have been classified as property developers, or have market capitalisations of less than $20m, have been excluded from the 2012 Survey. Each year the eligibility of participants for inclusion in the BDO A-REIT Survey is reassessed. ENTITY NAME SIZE 1 SUB-SECTOR Abacus Property Group 2,107 Diversified ALE Property Group 848 Diversified Aspen Group 587 Diversified Astro Japan Property Group 1,322 Diversified Australand Property Group 3,997 Diversified Australian Education Trust 358 Office Brookfield Prime Property Fund 843 Office Bunnings Warehouse Property Trust 1,335 Retail Carindale Property Trust 673 Retail Centro Retail Australia 5,097 Retail CFS Retail Property Trust 8,434 Retail Challenger Diversified Property Group 880 Diversified Charter Hall Group 878 Diversified Charter Hall Retail REIT 1,945 Retail Commonwealth Property Office Fund 3,714 Office Cromwell Property Group 1,838 Diversified Dexus Property Group 7,364 Diversified Galileo Japan Trust 792 Diversified Generation Healthcare REIT 208 Diversified Goodman Group 8,220 Industrial GPT Group 9,001 Diversified Growthpoint Properties Australia 1,607 Diversified IEF Real Estate Entertainment Group 239 Diversified Ingenia Communities Group 458 Diversified Investa Office Fund 2,503 Office Mirvac Group 8,411 Diversified Mirvac Industrial Trust 227 Industrial Multiplex European Property Fund 337 Retail Real Estate Capital Partners USA Property Trust 129 Retail RNY Property Trust 474 Office Stockland Property Group 14,534 Diversified Thakral Holdings Group 1,064 Diversified Trafalgar Corporate Group 97 Office Trinity Limited 124 Diversified Westfield Group 33,670 Retail Westfield Retail Trust 13,340 Retail 1. Total reported assets as at 30 June 2012 (millions)

15 SURVEY BACKGROUND 15 Ranking Criteria Explanation of the criteria used in the 2012 Survey together with the methods of weighting and ranking is included at Section 8. A summary of the criteria and their weightings for the 2012 Survey is provided below. Ranking Criteria Weighting % Operating Cash Yield (on net assets) 15 Distribution Yield 10 Tax Deferred Distribution Percentage 10 Movement in NTA 15 Premium/Discount to NTA 15 Total Financial Criteria 65 Survey Period The 2012 Survey only takes into account information disclosed in each entity s annual report for the year ended 30 June For those entities with 31 December year ends, half year reports to 30 June 2011 and 2012 have been used together with the annual report to 31 December 2011 to create comparable results for the year ended 30 June Total Return (One Year) 20 Total Return (Three Year) 10 Volume of Trading on ASX 5 Total Investment Criteria 35 TOTAL OVERALL 100

16 16 SECTOR REVIEW 4. Sector review

17 SECTOR REVIEW 17 11% Total return of Property Index for FY12 67% Property Index remains 67% off its 2007 highs 81% of Entities recorded positive one year returns

18 18 SECTOR REVIEW Overview The A-REIT sector performed strongly in the 12 months to 30 June Following the GFC, the risk profile of the Sector has now been significantly reduced. Capital management initiatives have helped repair many of the previously over-extended balance sheets, while many A-REITs have now exited their more risky operations and reduced their exposure to offshore investments. Distribution payout ratios have been restored to more appropriate levels. Those A-REITs that have de-risked themselves now represent an attractive defensive investment proposition, given their focus on high quality property assets and their improving distributions. As noted on page 31 of the Survey, the weighted average lease expiry for the A-REITs surveyed is 6.2 years, which provides a high level of certainty around future cash flows and distributions. Several entities are now trading at a premium to their NTA, including Goodman Group, which traded at an average premium over its NTA of 31% throughout FY12, and Westfield Group at 24%. During the 12 months to 30 June 2012, a number of A-REITs undertook security buy-backs, often at large discounts to NTA. This has had the impact of increasing earnings and distributions per security, and has generally been looked on favourably by the market. Following on from the significant acquisition activity detailed in the 2011 Survey, 2012 saw a number of corporate acquisitions announced and completed. Again, offshore acquirers were at the forefront, taking advantage of the opportunity to acquire high quality assets at less than NTA. In particular, we farewell the winner of our 2011 Survey, Charter Hall Office REIT, which was acquired by a consortium led by Reco Ambrosia Pte Ltd (an affiliate of the Government of Singapore Investment Corporation Pte Ltd) and delisted from the ASX on 1 May The lack of property development activity undertaken during and since the GFC has resulted in limited new property supply entering the market place. With interest rates falling, and potentially trending lower still, and A-REITs forecasting increasing distributions, the near term future of the Sector looks positive.

19 SECTOR REVIEW 19 returns The performance of the A-REIT sector (based on the Property Index) relative to the All Ordinaries for the period between February 2007 (the date when the Property Index reached its all time high) and 30 June 2012, is set out below. Capital Returns of Property Index and All Ordinaries Index February 2007 to June 2012 ALL ORDINARIES S&P/ASX 200 PROPERTY INDEX 100% Source: Bloomberg

20 20 SECTOR REVIEW The one, three and five year total annual (capital and dividend) returns to 30 June 2012 for each of the A-REITs that are members of the Property Index are set out in the table below. TOTAL ANNUAL RETURNS FOR PROPERTY INDEX MEMBERS TO 30 JUNE 2012 A-REIT Name ASX Code 1 year return 3 year return 5 year return Stockland Trust Group SGP -2.8% 5.3% -10.5% GPT Group GPT 10.3% 17.0% -24.7% Mirvac Group MGR 9.4% 12.5% -19.4% Dexus Property Group DXS 12.2% 14.1% -6.8% Australand Property Group ALZ -6.2% 12.3% -12.4% Charter Hall Group CHC 14.6% 11.6% -20.0% Abacus Property Group ABP -4.4% 10.7% -19.7% Westfield Group WDC 16.3% 8.8% -3.5% Westpac Retail Trust WRT 12.8% n.a. n.a. CFS Retail Property Trust CFX 14.8% 13.0% 4.6% Centro Retail Australia CRF n.a. n.a. n.a. Charter Hall Retail REIT CQR 11.8% 15.8% -10.1% Bunnings Warehouse Property Trust BWP 10.3% 12.6% 3.4% Commonwealth Property Office Fund CPA 14.9% 13.6% -3.3% Investor Office Fund IOF 12.5% 21.5% -8.6% Goodman Group GMG 10.0% 36.8% -29.2% S&P/ASX 200 (GICS) Property Accumulation Index 11.0% 12.3% -12.3% Source: UBS The total return (capital and dividends) for the Property Index for the 12 months to 30 June 2012 was 11.0%. The equivalent return for the S&P/ASX 200 All Ordinaries Index was negative 6.7%. Despite the strong performance during FY12, the Sector has not recovered relative to other equity indices since the GFC. Whilst the Property Index has somewhat recovered from its lows of March 2009 (when it was approximately 80% below its February 2007 high), at 30 June 2012 it remained 67% off its high. The Property Index has averaged a total annual return of negative 12.3% over the last five years (being the period 1 July 2007 to 30 June 2012). Only two of the A-REITs that comprise the Property Index (CFS Retail Property Trust and Bunnings Warehouse Property Trust) have recorded a positive return over this period. Westfield, Australia s largest REIT (which comprises 29% of the Property Index) recorded a strong 16.3% return for the year ending 30 June 2012, outperforming the Property Index. Seven entities recorded negative returns for the period (2011 Survey: 10).

21 SECTOR REVIEW 21 Volatility The volatility of the Property Index compared to the All Ordinaries (for the period between February 2007 and 30 June 2012) is set out below. Volatility has been calculated on an annualised rolling one month Close-Close basis. Between February 2007 and November 2008, the Sector s volatility increased measurably as the real risks of the Sector became apparent and it was exposed to the full impact of the GFC. Volatility reached its peak in October 2008 when the Property Index moved more than 5% in a day on 13 occasions out of 23 trading days, exhibiting significantly more volatility than the All Ordinaries. Volatility has subsequently declined as recapitalisations and other capital management initiatives have reduced the Sector s perceived risk, although there was an uptick in volatility during the middle of The volatility of the Sector is now generally consistent with the volatility of the All Ordinaries. Volatility of All Ordinaries and Property Index ASX PROPERTY 200 INDEX ASX ALL ORDINARIES 120% 80% 40%

22 22 SURVEY FINDINGS 5. survey findings

23 SURVEY FINDINGS 23 22% Median discount to NTA 0.5% Average increase in property values 40% Average gearing of survey entities seven Entities did not pay a distribution during FY12

24 24 SURVEY FINDINGS Results Financial Ranking Metrics Ranking Criteria High FY12 Low FY12 Median FY12 Median FY11 Cash Yield on Weighted Average Net Assets 25.8% -11.1% 6.5% 6.7% Distribution Yield 106.3% 0% 6.9% 6.2% Tax Deferred Distributions 100.0% 0% 34.0% 26.6% Movement in NTA 36.7% -68.6% -1.8% 0.5% Premium/(Discount) to NTA 30.9% -94.9% -22.3% -23.3% The 2012 Survey has again presented some very interesting results in the financial criteria: The median operating cash yield has remained relatively steady compared to FY11. Managers continue to undertake active portfolio management to improve rental yields. Seven entities did not pay a distribution during FY11 (compared with 12 from the previous year), resulting in an increase in the median distribution return. Following an increase in the NTA in FY11, the median NTA has fallen slightly in FY12. A major contributor to this fall in NTA was the impact of lower interest rates which in many instances generated a non-cash mark-to-market loss on the interest rate swaps (derivatives) held by entities. This also had the effect of increasing the balance sheet liability for derivatives, resulting in a lower NTA. The Sector continues to trade at a substantial discount to NTA (median discount of 22%). As security prices have increased, this discount has reduced slightly compared to the FY11 discount (23%). Results Investment Ranking Metrics Ranking Criteria High FY12 Low FY12 Median FY12 Median FY11 Total Return (One Year) 189.5% -44.1% 12.3% 12.5% Total Return (Three Year) 69.2% -41.4% 14.7% -10.2% Volume of Trading on ASX 292.8% 1.8% 35.8% 43.3% The median total return (capital and dividends) for FY12 of the entities surveyed was 12.3%, extending the recovery in Sector returns following a 12.5% median return for surveyed entities in FY11. This reflects the increasing confidence in the Sector after initiatives undertaken to reduce the Sector s perceived risk. A-REITs are an attractive investment proposition, given the quality of the assets that they own, and the visibility they offer around future earnings and distributions. 29 entities out of 36 achieved positive returns in FY12 (81%), with 75% of entities achieving positive returns in FY11. Mirvac Industrial Trust (MIX) achieved the highest return for the year (190%), with its unit price rising from 3.8 cents at 30 June 2011 to 11.0 cents at 30 June 2012 in recognition of management s stabilisation of MIX s capital base. Ingenia Communities Group (74% one year return) also performed strongly in FY12. The median three year return has increased from negative 10.2% to 14.5%, while 34 entities recorded positive three year returns, a large increase from only ten entities in FY11. In 2012, liquidity was at a more historically consistent level. Trading volumes evident in previous periods, associated with a high number of sellers in the market and an increased number of capital raisings, no longer had an impact on liquidity.

25 SURVEY FINDINGS 25 Sector Composition The combined market capitalisation of all 36 Sector participants totalled $79b at 30 June The 16 entities that comprise the leading A-REIT Property Index (the S&P/ASX200 Property Index) make up 94% ($75b) of this total. The Sector continues to be dominated by Westfield Group which represented nearly 29% of the Property Index as at 30 June However, we note that this is a substantial reduction from 30 June 2009 when Westfield Group represented almost 46% of the Property Index. The reduction in Westfield Group s weighting is due to the divestment by Westfield Group of various assets into the Westfield Retail Trust, as well as the strong recovery in the security prices of other Property Index members. The next largest entities were Westfield Retail Trust, which comprised 12% of the Property Index, and Stockland Trust Group, which comprised 9%. The 20 non-property Index members contribute $4b (6%) to the combined market capitalisation of the Sector at 30 June Set out below is the proportion of the Sector s total market capitalisation that each sub-sector (retail, industrial, commercial and diversified) comprises. Given that the retail sub-sector has Westfield Group and Westfield Retail Trust as members, this sub-sector contributes $41b (51%) to the Sector s market capitalisation. Composition of Property Index by Entity other westfield group mirvac group dexus property group CFS retail property trust GPT GROUP goodman group westfield retail trust stockland trust group Composition of Sector by Sub-sector industrial diversified Retail Office

26 26 SURVEY FINDINGS Property Valuations In our 2011 Survey we noted that following two years of downward pressure on property valuations, there was increasing evidence to suggest that valuations and capitalisation rates had stabilised. The findings from our 2012 Survey indicate that this period of stabilisation has continued with values increasing on average by 0.5% during the 12 months to 30 June The figure below illustrates the distribution of valuation movements of the entities surveyed. Of the 36 entities surveyed, 22 entities recorded valuation increases with ten experiencing valuation decreases (four had no movements in their property valuations). Retail and diversified properties performed the strongest throughout FY12. Aspen Group recorded a 12% increase in the value of its investment portfolio during the financial year (a revaluation increase of $42m) resulting from strong rental revisions and new leasing initiatives. Carindale Property Trust s main asset, a 50% interest in the Westfield Carindale shopping centre in Brisbane, was independently valued as at 30 June 2012 at $669m, reflecting a revaluation surplus of approximately $65m (11%). The property was redeveloped during FY12 with the valuation undertaken on the basis that the redevelopment had been completed by year end the redevelopment was expected to reach practical completion on 9 August Number of Entities by Valuation Increments with Prior Year Comparison < -10% -10% > -5% -5% > = 0% 0% > 5% > 5% 1.5% AVERAGE PROPERTY RE-VALUATION RETAIL (2011: -6%) 0% AVERAGE RE-VALUA

27 SURVEY FINDINGS 27 Merger and Acquisition Activity We noted in the FY11 Survey the large discounts to NTA experienced by the smaller capitalised REITs contributed to an increase in acquisition activity and consolidation at that end of the Sector. During FY12, the number of merger and acquisition transactions within the Sector declined, however the overall average transaction size increased as the transaction activity focussed primarily on mid-cap REITs. Despite the sustained impact of the high Australian dollar, acquisitions were again led by foreign investment, in particular from North America. Overseas buyers have been attracted to Australian REITs for two reasons. Firstly, some buyers have capitalised on depressed Security prices in order to acquire foreign real estate in recovering markets at below asset valuation. Secondly, Australian real estate remains attractive to overseas investors due to the stable economy, and the underlying quality of assets with high occupancies and strong tenant registers. Major Sector acquisitions announced and/or completed during FY12 are detailed below. In addition to those acquisitions listed, we note the merger of Centro Properties Group and Centro Retail Trust into a new entity, Centro Retail Australia. This merger resulted in a resolution to the debt re-financing issues that had been facing the Centro entities. Target Acquirer Location of Acquirer Date Announced Date Completed Discount to NTA EDT Retail Trust EPN Group US May 2011 September % Charter Hall Office REIT Reco Ambrosia Pte Ltd & other investors Singapore August 2011 April % Tishman Speyer Office Fund US Office Holdings US February 2012 March % Thakral Holdings Group Brookfield Asset Management Canada April 2012 September % PROPERTY TION OFFICE (2011: 2.3%) -0.5% AVERAGE PROPERTY RE-VALUATION DIVERSIFIED (2011: 0.3%) -0.5% AVERAGE PROPERTY RE-VALUATION INDUSTRIAL (2011: 3.9%)

28 28 SURVEY FINDINGS Sector Gearing Average gearing across all 2012 Survey participants has decreased substantially during FY12 with the average gearing falling to 40% from the FY11 level of 47%. The primary reason for such a large decrease is the removal of a number of highly geared entities from the FY12 Survey (including Tishman Speyer Office Fund, EDT Retail Trust and the Centro entities) that had skewed the average level of gearing in recent years. There remains a clear distinction between the gearing levels of the larger and smaller REITs. Through a combination of capital raisings, asset sales and other capital management initiatives, a number of the more established entities in the Sector took the opportunity to repair their balance sheets during 2009 and 2010 and reduce gearing levels. Sector Gearing History (Average of Participants) 50% 40% 30% 20% 10% REITs with market capitalisations of over $1b now have average gearing levels of 25%. (Gearing is defined as net debt (interest bearing liabilities less cash) divided by total assets). 0% However, smaller entities in the Sector found accessing liquidity (both equity and debt) more difficult, and a number of these entities continue to have very leveraged balance sheet positions. A-REITs with market capitalisations of less than $1b now have average gearing levels of 47%. Average Gearing by Sub-Sector with Prior Year Comparison The smaller entities have not been able to raise sufficient equity capital, or had lower quality assets that were not easily able to be offloaded (or were sold at a large discount to valuation), to offset the effect of declining asset values on gearing. This level of gearing is simply not sustainable in the medium to long term, given current investor and bank sentiment. 53.6% 35.4% 47.8% 42.5% 43.1% 40.5% 50.8% 44.7% RETAIL OFFICE DIVERSIFIED INDUSTRIAL

29 SURVEY FINDINGS 29 Sources of Debt Funding A variety of debt funding sources are important to A-REITs in order to diversify their sources of debt, and to lower their reliance on mainstream banks. However, many sources of funding are only accessible to the larger REITs. As set out in the figure below, the majority of debt is bank funded. For many of the smaller REITs, this represents the only source of funding available. Rated medium term notes continue to be an increasingly popular debt source, but are limited to a minority of A-REITs that have been able to secure suitable institutional ratings. Westfield Group and Stockland Trust Group are two of the larger holders of medium term notes. CMBS (mortgage backed securities that are then pooled) funding is limited to only four REITs (primarily with US asset exposure), and has been reducing in size over recent years. Major Funding Source with Prior Year Comparison Cost of Borrowings The cost of an entity s borrowings reflects a number of factors, including the lender s assessment of the borrower s risk and of the quality and location of assets securing the borrowings, and the borrower s gearing and interest coverage. Overall, during FY12 the Sector s average weighted average interest rate (being a weighted average of the cost of all finance facilities of an entity) reduced to 6.1%, reflecting the lower funding cost environment. Entities with operations in the United States and Japan continue to access borrowing facilities at a far cheaper cost than Australian based A-REITs. The retail and diversified sub-sectors recorded the highest weighted average interest rates of 6.2%. The industrial sub-sector had the lowest result of 4.5%. Weighted Average Interest Rate by Sub-Sector with Prior Year Comparison % 50.5% 28.5% 34.8% 4.6% 1.4% 9.2% 13.3% 6.6% 6.2% 6.3% 6.1% 6.1% 6.2% 5.7% 4.5% RETAIL OFFICE DIVERSIFIED INDUSTRIAL BANK DEBT MEDIUM TERM NOTES CMBS OTHER

30 30 SURVEY FINDINGS Location of Property Assets Following a strong period of global expansion up to 2007, the GFC has resulted in a retreat from abroad by the sector, as many REITs suffered large declines in the values of their overseas investments. However, two large-cap REITs, Westfield Group and Goodman Group, have retained a global model and continue to have significant exposures in America, Europe and Asia. Location and Value of Property Assets US 11% Europe 5% Asia 3% New Zealand 1% Australia 81% Detailed opposite is a breakdown of property assets by location over the five years to 30 June The proportion of property assets located in Australia has increased significantly in recent years to 81% at 30 June This compares with only 64% of assets being located in Australia at 30 June There was again a decline in the proportion of international assets during FY12, reflecting both the scaling back of international operations (and in particular US assets) and the takeovers of a number of entities with US assets (Tishman Speyer Office Fund, EDT Retail Trust and Charter Hall Office REIT). Notwithstanding this decline, approximately 11% of property assets remain located in the US. Ten entities continue to own property assets in the US, totalling almost $9b. 100% 0% AUSTRALIA US EUROPE ASIA NZ FY12 FY11 FY10 FY09 FY08 FY07

31 SURVEY FINDINGS 31 Weighted Average Lease Expiry The weighted average term to expiry for leases is a measure of the security and stability of future tenure and income; however a shorter term to expiry in some situations may be viewed as a positive, as it allows for earlier rental re-negotiations to take advantage of any market movements. The average WALE of those entities surveyed increased in FY12 to 6.2, up from 5.6 in FY11. The retail sub-sector had the highest average lease expiry of 6.9 years, as a result of trusts such as Charter Hall Retail Fund (11 years), Bunnings Warehouse Property Trust (eight years) and Multiplex European Property Fund (eight years) having WALEs significantly above the Sector average. The sub-sector with the shortest WALE is industrial at 4.9 years. WALE BY SUB-SECTOR WITH PRIOR YEAR COMPARISON RETAIL OFFICE DIVERSIFIED INDUSTRIAL

32 32 OVERALL RANKINGS 6. overall rankings ingenia Ingenia Communities Group ranked number one on the back of a strong increase in NTA growthpoint Growthpoint Properties Australia ranked number two following a period of solid operating performance westfield The high quality global portfolio of Westfield Group saw it ranked number THREE

33 OVERALL RANKINGS OVERALL RANKINGS rank Entity 1 Ingenia Communities Group 2 Growthpoint Properties Australia 3 Westfield Group 4 Australian Education Trust 5 Charter Hall Group 6 GPT Group 7 Multiplex European Property Fund 8 Trafalgar Corporate Group 9 ALE Property Group 10 Cromwell Property Group 11 Goodman Group 12 Mirvac Industrial Trust 13 Generation Healthcare REIT 14 Astro Japan Property Group 15 Charter Hall Retail REIT 16 Investa Office Fund 17 CFS Retail Property Trust 18 Carindale Property Trust 19 Abacus Property Group 20 Dexus Property Group 21 Westfield Retail Trust 22 Commonwealth Property Office Fund 23 Thakral Holdings Group 24 Aspen Group 25 Australand Property Group 26 Centro Retail Australia 27 Bunnings Warehouse Property Trust 28 Trinity Limited 29 Challenger Diversified Property Group 30 Mirvac Group 31 RNY Property Trust 32 Stockland Property Group 33 Brookfield Prime Property Fund 34 Galileo Japan Trust 35 IEF Real Estate Entertainment Group 36 Real Estate Capital Partners USA Property Trust 33

34 34 DETAILED SURVEY RESULTS 7. detailed survey results 189% Highest one year return achieved by mirvac industrial trust 69% Highest three year return achieved by Australian Education Trust three Entities traded at a premium to NTA 16 Entities recorded positive nta movements

35 DETAILED SURVEY RESULTS 35 OPERATING CASH YIELD rank Entity 1 Multiplex European Property Fund 2 Galileo Japan Trust 3 Westfield Group 4 Astro Japan Property Group 5 Australand Property Group 6 Cromwell Property Group 7 Charter Hall Group 8 Growthpoint Properties Australia 9 RNY Property Trust 10 Charter Hall Retail REIT 11 Australian Education Trust 12 Thakral Holdings Group 13 Abacus Property Group 14 ALE Property Group 15 Bunnings Warehouse Property Trust 16 Westfield Retail Trust 17 Challenger Diversified Property Group 18 Dexus Property Group 19 Commonwealth Property Office Fund 20 GPT Group 21 Generation Healthcare REIT 22 CFS Retail Property Trust 23 Mirvac Group 24 Aspen Group 25 Goodman Group 26 Mirvac Industrial Trust 27 Stockland Property Group 28 Carindale Property Trust 29 Investa Office Fund 30 Ingenia Communities Group 31 Trafalgar Corporate Group 32 IEF Real Estate Entertainment Group 33 Centro Retail Australia 34 Trinity Limited 35 Real Estate Capital Partners USA Property Trust 36 Brookfield Prime Property Fund -10% 0% 10% 20% 30% 25.8% 15.8% 13.6% 13.2% 12.5% 10.7% 10.3% 8.9% 8.8% 8.5% 8.5% 8.0% 7.7% 7.6% 7.3% 7.1% 6.6% 6.5% 6.5% 6.1% 5.8% 5.7% 5.6% 5.5% 5.2% 4.8% 4.7% 4.5% 4.2% 3.9% 3.7% 2.1% 1.0% 0.4% -5.3% -11.1%

36 36 DETAILED SURVEY RESULTS DISTRIBUTION RETURN ON INVESTMENT rank Entity 1 Multiplex European Property Fund 2 Trafalgar Corporate Group 3 Australian Education Trust 4 Cromwell Property Group 5 Growthpoint Properties Australia 6 Charter Hall Group 7 Generation Healthcare REIT 8 Australand Property Group 9 Abacus Property Group 10 Bunnings Warehouse Property Trust 11 Charter Hall Retail REIT 12 Challenger Diversified Property Group 13 ALE Property Group 14 Stockland Property Group 15 Centro Retail Australia 16 CFS Retail Property Trust 17 Aspen Group 18 Investa Office Fund 19 Mirvac Group 20 Carindale Property Trust 21 Commonwealth Property Office Fund 22 Astro Japan Property Group 23 Dexus Property Group 24 GPT Group 25 Westfield Group 26 Goodman Group 27 Westfield Retail Trust 28 Ingenia Communities Group 29 Brookfield Prime Property Fund 30 Galileo Japan Trust 31 Trinity Limited 32 Thakral Holdings Group 33 RNY Property Trust 34 Real Estate Capital Partners USA Property Trust 35 Mirvac Industrial Trust 36 IEF Real Estate Entertainment Group 10.7% 10.2% 8.9% 8.8% 8.6% 8.5% 8.4% 8.3% 8.1% 8.1% 8.0% 7.6% 7.5% 7.3% 7.2% 6.9% 6.9% 6.7% 6.4% 6.3% 6.2% 5.8% 5.8% 5.5% 3.7% 3.0% 2.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0% 20% 40% 60% 80% 100% 120% 106.3% 73.1%

37 DETAILED SURVEY RESULTS 37 TAX ADVANTAGED DISTRIBUTION rank Entity 1 ALE Property Group 2 Trafalgar Corporate Group 3 Ingenia Communities Group 4 Growthpoint Properties Australia 5 GPT Group 6 Generation Healthcare REIT 7 Astro Japan Property Group 8 Aspen Group 9 Charter Hall Group 10 Brookfield Prime Property Fund 11 Cromwell Property Group 12 Abacus Property Group 13 Carindale Property Trust 14 Charter Hall Retail REIT 15 Westfield Group 16 CFS Retail Property Trust 17 Australian Education Trust 18 Australand Property Group 19 Investa Office Fund 20 Westfield Retail Trust 21 Dexus Property Group 22 Commonwealth Property Office Fund 23 Bunnings Warehouse Property Trust 24 Challenger Diversified Property Group 25 Multiplex European Property Fund 26 Goodman Group 27 Centro Retail Australia 28 Trinity Limited 29 Thakral Holdings Group 30 Stockland Property Group 31 RNY Property Trust 32 Real Estate Capital Partners USA Property Trust 33 Mirvac Industrial Trust 34 Mirvac Group 35 IEF Real Estate Entertainment Group 36 Galileo Japan Trust 10.6% 8.7% 8.0% 6.9% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0% 20% 40% 60% 80% 100% 100% 100% 100% 100% 100% 100% 100% 100% 85.3% 75.0% 73.1% 71.6% 58.0% 48.8% 43.7% 40.9% 40.6% 35.2% 32.8% 27.5% 26.2% 14.9%

38 38 DETAILED SURVEY RESULTS MOVEMENT IN NTA PER SECURITY rank Entity 1 RNY Property Trust 2 Trinity Limited 3 Ingenia Communities Group 4 Carindale Property Trust 5 Investa Office Fund 6 Westfield Retail Trust 7 Commonwealth Property Office Fund 8 Goodman Group 9 Australian Education Trust 10 Mirvac Group 11 Thakral Holdings Group 12 GPT Group 13 Challenger Diversified Property Group 14 CFS Retail Property Trust 15 Westfield Group 16 Stockland Property Group 17 Centro Retail Australia 18 Dexus Property Group 19 Australand Property Group 20 Bunnings Warehouse Property Trust 21 Charter Hall Group 22 Growthpoint Properties Australia 23 Charter Hall Retail REIT 24 Generation Healthcare REIT 25 Mirvac Industrial Trust 26 Astro Japan Property Group 27 Abacus Property Group 28 Cromwell Property Group 29 Brookfield Prime Property Fund 30 ALE Property Group 31 Galileo Japan Trust 32 IEF Real Estate Entertainment Group 33 Aspen Group 34 Trafalgar Corporate Group 35 Real Estate Capital Partners USA Property Trust 36 Multiplex European Property Fund -80% -60% -40% -20% 0% 20% 40% 36.7% 34.3% 30.8% 15.1% 7.5% 5.0% 4.5% 3.7% 2.7% 2.5% 2.1% 1.7% 1.5% 0.9% 0.8% 0.8% 0.0% -1.0% -2.5% -2.6% -3.6% -4.0% -4.5% -4.8% -5.0% -6.4% -6.8% -8.2% -11.9% -12.1% -17.7% -35.3% -38.8% -41.1% -51.8% -68.6%

39 PREMIUM / (DISCOUNT) TO NTA rank Entity 1 Goodman Group 2 Westfield Group 3 Growthpoint Properties Australia 4 Cromwell Property Group 5 ALE Property Group 6 Charter Hall Group 7 Bunnings Warehouse Property Trust 8 Charter Hall Retail REIT 9 CFS Retail Property Trust 10 Dexus Property Group 11 GPT Group 12 Stockland Property Group 13 Commonwealth Property Office Fund 14 Investa Office Fund 15 Aspen Group 16 Abacus Property Group 17 Centro Retail Australia 18 Australian Education Trust 19 Westfield Retail Trust 20 Challenger Diversified Property Group 21 Generation Healthcare REIT 22 Brookfield Prime Property Fund 23 Mirvac Group 24 Australand Property Group 25 Trafalgar Corporate Group 26 Carindale Property Trust 27 Trinity Limited 28 Multiplex European Property Fund 29 Thakral Holdings Group 30 Ingenia Communities Group 31 Astro Japan Property Group 32 Mirvac Industrial Trust 33 Real Estate Capital Partners USA Property Trust 34 RNY Property Trust 35 IEF Real Estate Entertainment Group 36 Galileo Japan Trust DETAILED SURVEY RESULTS % -80% -60% -40% -20% 0% 20% 40% -17.0% -18.5% -18.9% -21.3% -22.2% -22.4% -23.5% -24.1% -25.6% -26.0% -27.5% -27.8% -30.6% -34.4% -35.6% -38.5% -45.3% -47.4% -58.0% -59.7% -66.9% -69.4% -94.9% 30.9% 24.4% 0.1% -1.9% -4.6% -5.0% -5.9% -7.3% -13.1% -13.6% -13.8% -14.5% -15.5%

40 40 DETAILED SURVEY RESULTS 1 Year RETURN rank Entity 1 Mirvac Industrial Trust 2 Ingenia Communities Group 3 Trinity Limited 4 Australian Education Trust 5 Thakral Holdings Group 6 Multiplex European Property Fund 7 Brookfield Prime Property Fund 8 Growthpoint Properties Australia 9 ALE Property Group 10 Centro Retail Australia 11 Westfield Group 12 Commonwealth Property Office Fund 13 CFS Retail Property Trust 14 Charter Hall Group 15 Carindale Property Trust 16 Westfield Retail Trust 17 Investa Office Fund 18 RNY Property Trust 19 Dexus Property Group 20 Charter Hall Retail REIT 21 Generation Healthcare REIT 22 Bunnings Warehouse Property Trust 23 GPT Group 24 Goodman Group 25 Cromwell Property Group 26 Mirvac Group 27 Astro Japan Property Group 28 Challenger Diversified Property Group 29 Trafalgar Corporate Group 30 Aspen Group 31 Stockland Property Group 32 Abacus Property Group 33 Australand Property Group 34 Galileo Japan Trust 35 IEF Real Estate Entertainment Group 36 Real Estate Capital Partners USA Property Trust -50% 0% 50% 100% 150% 200% 21.6% 20.3% 19.1% 16.3% 14.9% 14.8% 14.6% 13.0% 12.8% 12.5% 12.5% 12.2% 11.8% 10.6% 10.3% 10.3% 10.0% 9.9% 9.4% 8.8% 8.4% 7.0% -35.3% -44.1% 189.5% 74.0% 41.7% 41.6% 40.7% 38.5% 28.6% -2.0% -2.8% -4.4% -6.2% -17.2%

41 DETAILED SURVEY RESULTS 41 3 Year RETURN rank Entity -40% -20% 0% 20% 40% 60% 80% 1 Australian Education Trust 2 Ingenia Communities Group 3 Trafalgar Corporate Group 4 Thakral Holdings Group 5 Multiplex European Property Fund 6 Goodman Group 7 Brookfield Prime Property Fund 8 Cromwell Property Group 9 Investa Office Fund 10 Growthpoint Properties Australia 11 RNY Property Trust 12 Aspen Group 13 GPT Group 14 Challenger Diversified Property Group 15 Charter Hall Retail REIT 16 Carindale Property Trust 17 Generation Healthcare REIT 18 Centro Retail Australia 19 Westfield Retail Trust 20 ALE Property Group 21 Dexus Property Group 22 Commonwealth Property Office Fund 23 CFS Retail Property Trust 24 Bunnings Warehouse Property Trust 25 Mirvac Group 26 Trinity Limited 27 Australand Property Group 28 Mirvac Industrial Trust 29 Charter Hall Group 30 Abacus Property Group 31 Westfield Group 32 Stockland Property Group 33 Astro Japan Property Group 34 Galileo Japan Trust 35 IEF Real Estate Entertainment Group 36 Real Estate Capital Partners USA Property Trust 13.6% 13.0% 12.6% 12.5% 12.3% 12.3% 11.7% 11.6% 10.7% 8.8% 5.3% 4.5% -32.1% -32.8% -41.4% 69.2% 67.0% 57.5% 53.1% 51.5% 36.8% 25.2% 21.5% 21.5% 19.7% 19.6% 18.6% 17.0% 16.9% 15.8% 14.9% 14.8% 14.7% 14.7% 14.5% 14.1%

42 42 DETAILED SURVEY RESULTS LIQUIDITY rank Entity 1 Centro Retail Australia 2 Stockland Property Group 3 Investa Office Fund 4 Commonwealth Property Office Fund 5 Dexus Property Group 6 Westfield Retail Trust 7 GPT Group 8 Mirvac Group 9 Westfield Group 10 CFS Retail Property Trust 11 Goodman Group 12 Charter Hall Group 13 Real Estate Capital Partners USA Property Trust 14 Ingenia Communities Group 15 Abacus Property Group 16 Bunnings Warehouse Property Trust 17 Aspen Group 18 Mirvac Industrial Trust 19 Trinity Limited 20 Multiplex European Property Fund 21 Astro Japan Property Group 22 Australand Property Group 23 Galileo Japan Trust 24 ALE Property Group 25 Thakral Holdings Group 26 Generation Healthcare REIT 27 Cromwell Property Group 28 Australian Education Trust 29 Charter Hall Retail REIT 30 RNY Property Trust 31 Trafalgar Corporate Group 32 Carindale Property Trust 33 Growthpoint Properties Australia 34 Challenger Diversified Property Group 35 Brookfield Prime Property Fund 36 IEF Real Estate Entertainment Group % % % % % % % % % 89.45% 87.72% 70.52% 58.31% 54.15% 47.20% 46.27% 42.26% 41.07% 30.5% 29.6% 28.9% 27.4% 22.5% 19.3% 15.7% 15.2% 14.0% 14.0% 11.1% 10.7% 7.3% 6.4% 4.9% 4.8% 3.2% 1.8% 0% 50% 100% 150% 200% 250% 300% 292.8% 127.6% 123.5% 118.1% 114.2% 105.4% 105.2% 102.2% 101.7% 89.4% 87.7% 70.5% 58.3% 54.1% 47.2% 46.2% 42.2% 41.0%

43 DETAILED SURVEY RESULTS 43

44 44 EXPLANATION OF CRITERIA AND RANKINGS 8. EXPLANATION OF CRITERIA AND RANKINGS A brief explanation of each criteria used to rank REITs in the 2012 Survey is provided below. Financial Criteria Operating Cash Yield on Average Net Assets Calculated by dividing operating cashflow (including interest expense); by the average of opening and closing net assets for the period. The financial year end of the entity has been used in all cases, except for 31 December entities where 30 June 2012 figures have been sourced from half year reports. Where accounts have been prepared for a period of less than one year, the operating cash measure has been annualised. Distribution Return on Investment Calculated by dividing the distribution per Security paid for the entity s financial year by the average ASX price of the Security through the year. The average ASX price is calculated on a daily closing price basis, with prices sourced from Bloomberg. Where accounts have been prepared for a period of less than one year, the distribution has been annualised. Tax Deferred Distribution Component The percentage of the total annual distribution from each entity which is tax deferred. Where this information was not disclosed in the annual report, BDO attempted to obtain the detail required from other sources. Movement in NTA Per Security Calculated by assessing the percentage increase (or decrease) in NTA per Security over the entities financial year by using the opening and closing figures for NTA per Security. Where an entity was listed during the year, BDO has assessed the opening NTA as being equal to the issue price. In all cases the financial year end of the entity has been used, except for 31 December year ends where we have used NTA from the 30 June 2011 and 2012 half year reports. Premium/Discount to NTA Calculated by subtracting the average of NTA per Security (being opening NTA plus closing NTA divided by two) from the average ASX price per Security, and dividing this by the average NTA per Security. We have ranked entities trading at a premium to NTA as having the highest ranking in this criteria. Investment Criteria Total Return This measure, over both the one year and three years to 30 June 2012, records both the income return (i.e. distributions) and capital appreciation (i.e. movement in ASX price). Information sourced from UBS and Bloomberg has been used to compile this criteria. Volume of Trading on ASX (Liquidity) This liquidity measure is expressed as a percentage, and is calculated by dividing the total volume of Securities traded in each entity for the year ended 30 June 2012 by the weighted average total number of Securities on issue. This provides an indication of relative liquidity, irrespective of entity size.

45 EXPLANATION OF CRITERIA AND RANKINGS 45 Method of Ranking A total score of 100 (maximum) has been used, comprising 65 points for financial criteria and 35 points for investment criteria. In determining the final rankings, the scores on each component were aggregated (not the rankings) such that relative performances within each criterion are maintained in determining the overall rankings. Financial Criteria The tests used in the financial criteria and assigned weightings are as follows. Financial Criteria Score 2012 Operating Cash Yield (on net assets) 15 Distribution Yield 10 Tax Deferred Distribution Percentage 10 Movement in NTA 15 Premium/Discount to NTA 15 PERFECT SCORE 65 In each of the above tests the scores were scaled so that the top performer in each test received the maximum available score for that criterion. Ranks were then assigned based on the scaled scores. Investment Criteria The tests used in the investment criteria and assigned weightings are as follows. Investment Criteria Score 2012 Total Return (One Year) 20 Total Return (Three Year) 10 Volume of Trading on ASX 5 PERFECT SCORE 35 In each of the above tests, the scores were scaled so that the top performer in each test received the maximum available score for that criterion. Ranks were then assigned based on the scaled scores. The above tests have been ranked using a variable points system for each test, based on the number and importance of aspects taken into account. In each of the tests, the scores were scaled so that the top performer in each test received the maximum available score for that criterion. Ranks were then assigned based on the scaled scores. Median Results For an entity which could not be scored equitably in a particular criteria, due to its recent listing, the unique nature of an entity s activities, or lack of available information for the relevant criteria, that entity was allocated a median result for the purpose of ranking. This ranking was then weighted and scored as usual. For all such instances N/A appears in the result column for the individual criteria tables.

46 46 CORPORATE FINANCE AT BDO 9. corporate finance at BDO

47 CORPORATE FINANCE AT BDO 47 Key Contacts The BDO Corporate Finance team consists of over 70 professionals, servicing the corporate and investment sectors. Our dedicated team can assist you in making strategic business decisions through specialist transaction advice, commercially sound valuations, due diligence, effective merger and acquisition strategies, and financial modelling advice. Our international presence gives our Corporate Finance team representation in the world s main commercial and financial centres. This extensive reach enables our clients to take advantage of global opportunities, as well as draw on BDO s experience and resources worldwide. This is of significant benefit in identifying and facilitating opportunities across the globe. Bruce Gordon National Leader, Corporate Finance Tel: bruce.gordon@bdo.com.au Gregory Wiese Partner, Adelaide Tel: gregory.wiese@bdo.com.au Reece Edwards Partner, Brisbane Tel: reece.edwards@bdo.com.au David Krause Partner, Brisbane Tel: david.krause@bdo.com.au Zoran Radosevic Partner, Brisbane Tel: zoran.radosevic@bdo.com.au Steven Sorbello Partner, Brisbane Tel: steven.sorbello@bdo.com.au Chris Mctye Partner, Hobart Tel: chris.mctye@bdo.com.au Fiona Hansen Partner, Melbourne Tel: fiona.hansen@bdo.com.au Jenny Rayner Partner, Melbourne Tel: jenny.rayner@bdo.com.au Sherif Andrawes Partner, Perth Tel: sherif.andrawes@bdo.com.au Simon Cook Partner, Perth Tel: simon.cook@bdo.com.au Adam Myers Partner, Perth Tel: adam.myers@bdo.com.au David McCourt Partner, Sydney Tel: david.mccourt@bdo.com.au Sebastian Stevens Partner, Sydney Tel: sebastian.stevens@bdo.com.au Dan Taylor Partner, Sydney Tel: dan.taylor@bdo.com.au Mark Thomas Partner, Sydney Tel: mark.thomas@bdo.com.au

48 48 ACHIEVEMENTS Achievements Australia s number one provider of Independent Expert s Reports ( )* Australia s leading accounting adviser for IPOs ( ) * *Based on number of transactions. Australian Initial Public Offering 2005 to 2011 BDO 94 BDO 94 ERNST & YOUNG 80 ERNST & YOUNG 80 GRANT THORNTON 74 GRANT THORNTON 74 PWC 70 PWC 70 PKF 65 PKF 65 KPMG 56 KPMG 56 HLB MANN JUDD 48 HLB MANN JUDD 48 STANTON PARTNERS 48 STANTON PARTNERS 48 DELOITTE 43 DELOITTE 43 RSM BIRD CAMERON 32 RSM BIRD CAMERON Australian Independent Expert s Report 2005 to 2011 BDO STANTON PARTNERS LONERGAN EDWARDS DELOITTE KPMG GRANT SAMUEL GRANT THORNTON DMR CORPORATE ERNST & YOUNG PKF Source: CONNECT 4, wholly owned business of Thomson Reuters (Professional) Australia Limited (16/1/12) based on number of transactions

49 ABOUT BDO 49 ABOUT BDO As the fifth largest full service accounting and advisory network nationally and internationally, our deep expertise spans multiple specialist services. We work with many leading brands and companies ranging in size from large corporate organisations, private businesses, families, entrepreneurs and individuals across a wide range of industry sectors. We excel at creating strong relationships with clients who are seeking a combination of technical excellence with a specialised range of services and a desire for outstanding client relationships. Our ability to create and maintain outstanding relationships is based on our understanding that each of our clients is distinctively different, and it is their unique needs that drive our distinctively different approach. Our clients tell us it is the way we listen to them, work with them and how we see them that makes our approach distinctively different. We enjoy outstanding relationships with our clients. We focus on what is important to them; adopting a partnership style approach, being responsive and reliable, keeping our promises and maintaining open and frank communication. We are committed to delivering value for our clients, so we do what it takes to get to know their business and the sector they operate in. This is why we have dedicated teams who have specialist industry knowledge and a deep understanding and appreciation of risks, issues and opportunities in a wide range of sectors, including Property & Construction, and Funds Management. BDO delivers a wide range of services to the property & construction, and funds management sectors including financial audits, trust audits, compliance audits, control audits and outgoing audits. We also advise on real estate investment trusts, fund structuring and corporate governance for funds. Fifth The BDO network is the world s fifth largest accountancy network 1,118 Offices everywhere you need them 48,767 Partners and staff worldwide 135 Present in over 135 countries

50 50 DISCLAIMER 10. Disclaimer This 2012 Survey has been prepared by BDO Corporate Finance (East Coast) Pty Ltd AFS Licence ( BDO ). Although BDO has taken due care to ensure the accuracy of this 2012 Survey, no warranties are given in relation to the statements and information contained herein. Sources of Information A-REIT Annual Reports and Half-year Reports Other reports and presentations lodged with Australian Securities Exchange UBS S&P/ASX Property 200 Index data and S&P/ASX Property 300 Index data Bloomberg Other public data. BDO disclaims all liability arising from any person acting on information and statements made herein. The contents of this 2012 Survey should not be treated as advice to acquire, hold or dispose of securities and readers are advised to obtain professional advice before making any investment decision based on information contained in this 2012 Survey. From time to time BDO partners and staff may hold relevant interests in securities issued by the Entities reported upon. BDO has not received any commission, brokerage or other undisclosed benefit as a result of any statements made. Liability limited by a scheme approved under Professional Standards Legislation. At all times, BDO is committed to protecting the privacy of our clients, contacts, and that of their staff. Any personal information held by BDO for financial or accounting purposes will only be used by BDO to support your relationship with us and to ensure you receive the most appropriate range of information and services. (BDO s Privacy Statement is available upon request).

51 GLOSSARY glossary All Ordinaries Index containing the largest 500 ASX companies by market capitalisation ASX Australian Securities Exchange A-REIT Australian real estate investment trust BDO BDO Corporate Finance (East Coast) Pty Ltd AFS Licence Distribution Either a distribution from a trust or dividend from a company DPS Distribution per Security CMBS Commercial Mortgage-Backed Security FY12 Financial year-ending 30 June 2012 FY11 Financial year-ending 30 June 2011 GFC Global financial crisis NTA Net tangible assets Property Index S&P/ASX Property 200 Index p.a. Per annum REIT Real estate investment trust Security Either an ordinary share in a company or unit in a trust Security Price The price of an ordinary share in a company or unit in a trust the 2012 Survey BDO A-REIT Survey covering the year-ending 30 June 2012 the 2011 Survey BDO A-REIT Survey covering the year-ending 30 June 2011 the Sector A-REIT (Australian listed property) sector Total return Change in Security Price (capital) plus Distributions US United States WALE Weighted Average Lease Expiry