Challenger Diversified Property Group (ASX: CDI) Investor presentation metrics updated for the acquisition of 31 Queen St and buyback

Transcription

1 Challenger Diversified Property Group (ASX: CDI) Investor presentation metrics updated for the acquisition of 31 Queen St and buyback Trevor Hardie, Fund Manager Tim Evans, Asset Fund Manager April

2 Important notice Information contained in this publication is current as at 8 April 2011 unless otherwise specified and is provided by Challenger Listed Investments Limited (ABN ) (AFSL ) ( Challenger ), as Responsible Entity of the Challenger Diversified Property Trust 1 (ARSN ) and the Challenger Diversified Property Trust 2 (ARSN ) which together comprise the Challenger Diversified Property Group ( Group ). This document has been prepared for general information purposes only and not with regard to any particular recipient s financial situation, objectives or needs nor to solicit offers or invitations for the Group's securities. Nothing contained in this document constitutes investment, legal, tax or other advice. Accordingly, recipients should, before acting on any information in this document, consider its appropriateness, having regard to their objectives, financial situation and needs, and seek the assistance of their financial or other licensed professional adviser before making any investment decision. Challenger makes no representation, gives no warranty and does not accept any responsibility for the accuracy or completeness of any recommendation, information or advice contained herein. To the maximum extent permitted by law, the recipient releases Challenger, each member of the Challenger Group, their directors, officers, employees, representatives and advisors from any liability (including, without limitation, in respect of direct, indirect or consequential loss or damage or loss or damage arising by negligence) arising in relation to any recipient relying on anything contained in or omitted from this document. Past performance is no guarantee or assurance as to the future performance, profitability or capital value of the Group or its securities. Any forward looking statements included in this document are by nature subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to, Challenger, so that actual results or events may vary from those forward looking statements, and the assumptions on which they are based. Challenger, or persons associated with it, may have an interest in the securities or financial products mentioned in this document and may earn fees including as a result of transactions in any such securities or financial products. 2

3 Agenda Introduction and Strategy Updated for buyback announcement Highlights for the updated pro-forma half-year ended 31 December 2010 Portfolio performance Appendix 3

4 Introduction and strategy The Forum, Cisco St Leonards NSW 4

5 Challenger Diversified Property Group ASX: CDI Back-to-basics LPT with passive rental income High yielding quality earnings underpinned by sound property fundamentals FY11 guidance: EPU of 4.9 cents; DPU of 4.0 cents Conservative capital position; pro forma balance sheet gearing: 27.8% 1 Continuing domestic (Australian) focus Built-in development potential Alignment with Challenger KEY DATA CDI Pro-forma 31 December 2010 Unit price As at 7 April 2011 $0.50 Market capitalisation $461 million Total assets As at 7 April 2011 $867 million Net tangible assets As at 31 December 2010 $0.67 Discount to NTA Based on 7 April 2011 unit price 25.4% Distribution guidance FY11 (per unit) $0.04 DPU yield Based on 7 April 2011 unit price and FY11 DPU guidance 8.0% Notes: 1. Post payment of 1H11 distribution in February 2011 and acquisition of 31 Queen St 5

6 CDI strategic objectives Fund objective to provide investors with exposure to a diversified portfolio of properties generating stable income returns and potential for capital growth Strategic objectives Grow earnings Return occupancy to long-term levels Maintain low cost of capital Close the price-to-nta gap Enhance the composition of the property portfolio Secure property sales Execute portfolio enhancing acquisition opportunities Move to Australian-only property exposure Further implement green initiatives Enhance relevance with inclusion in S&P/ASX200 A-REIT index 6

7 On market unit buy-back What? On market buy-back of up to 10% of issued capital (circa 91 million units) under the 10/12 limit rule Why? Management believe CDI is being undervalued by the market Work to close the gap between NTA per unit and unit price Assists in addressing the proposed dilutive strategic sale of French assets Impact Both NTA and earnings cents per unit accretive Balance sheet gearing is forecast to remain under 30% post buy-back Funding The buy-back will be funded from a combination of debt from current undrawn facilities and asset sales 7

8 CDI portfolio enhancement strategy Objective: to refresh the overall quality of the portfolio and enhance sustainable property income to allow more predictable and stable capital growth Move portfolio to 100% domestic Implementation: Analyse opportunities, ensuring that diversification across geography and sectors is maintained Recycle out of identified properties to acquire assets that display more of the following characteristics: more established markets with deep and transparent leasing properties with multiple and staggered tenant expiries generic construction not specialised or purpose built - more reflective of market demand larger assets - $50m to $80m in size, better quality with more strategic asset management opportunities eastern seaboard 8

9 Delivering on strategy 31 Queen St Melbourne Aligned to CDI s portfolio enhancement strategy Follows on from successful sale of 4 properties Provides Melbourne CBD exposure Reduces reliance on single-tenanted occupancies Lifts asset quality and diversification of income Provides a re-leasing opportunity strongly-placed Melbourne office market KEY METRICS Net lettable area 19,223 sqm Car spaces 172 Occupancy 87% WALE 3.8 years Tenancy Multi-tenanted Purchase price $81.0 million Equivalent yield 8.17% 9

10 CBD location 31 Queen St Melbourne 31 Queen St Melbourne Cnr Queen St & Flinders Lane Within western core precinct of Melbourne CBD Exposed to 3 street frontages Close to transport links Extensive views across Yarra to SE Melbourne 10

11 Results highlights Taylors House Waterloo NSW 11

12 Key points Operating profit on target Operating profit: $25.3 million; net property income: $30.9 million Statutory net profit after tax: $30.1 million versus pcp $13.7 million loss 1H11 distribution: 2.0 cents per unit (cpu) Net tangible assets (NTA): 67 cpu, up 1 cent from 30 June 2010 Pro forma balance sheet gearing 1 at 27.8% No change to FY11 guidance: EPU 2 : 4.9 cents; DPU: 4.0 cents Property valuations up; leasing market remains challenging Investment property valuations up $6.4 million (0.8%) 3 in 1H11 Occupancy: 91%; WALE 4.7 years Portfolio enhancement strategy progressing Objective: improve portfolio fundamentals, increase earnings & bridge NTA/price gap 4 properties sold during half-year 4 Settlement of 31 Queen St, Melbourne A grade CBD office building Low gearing; borrowings at $241 million, unused capacity $20 million Remaining assets in French portfolio targeted for disposal in second-half CY11 Notes: 1. Post payment of 1H11 distribution in February 2011 and acquisition of 31 Queen St 2. Profit from operating activities before development property write downs and disposals. Excludes net gains or losses on revaluation of financial derivatives, foreign exchange and investment properties 3. Valuation-to-valuation. Investment properties excludes development property (The Junction stage 2&3) and 31 Queen St 4. Pacific Brands property to settle in July

13 Operating profit steady Profit from operating activities: $25.3 million (1H10: $24.7m) NPAT: $30.1 million compared to $13.7 million loss in 1H10 Half-year distribution of 2.0 cpu Distribution payout ratio 2 for 1H11: 76% Notes: 1. Profit from operating activities (before write-downs, disposals and straight lining)/ units on issue at 30 June 2. Distribution to unitholders / profit from operating activities (before write-downs, disposals and straight lining) 3. AFFO: available funds from operations 1H11 1H10 $ million $ million Net property income Other income Straight lining of rent (1.4) (0.8) Financing costs (3.7) (6.4) Responsible Entity s and Manager s fees (2.0) (1.4) Operating expenses (0.6) (0.7) Profit from operating activities (before write-downs, disposals and straight lining) Write-downs, disposals and straight lining of rent Profit from operating activities Fair value movements (investment properties and derivatives) 4.7 (38.6) Foreign exchange gain/(loss) Net profit/(loss) after tax (including unrealised impacts) 30.1 (13.7) Earnings per unit (cents) Cash flow from operating activities Distribution to unitholders Distribution per unit (cents) Operating profit distribution payout ratio % 73.9% AFFO 3 distribution payout ratio 87.2% 80.7% 13

14 NTA at 67 cpu Net tangible assets per unit (NTA) up 1 cpu in 1H11 primarily due to upward movement in property valuations, sales above NTA and derivative valuations 31 Dec 2010 Pro-forma 31 Dec June 2010 Total assets $m Total liabilities $m Net tangible assets $m Units on issue million NTA per unit cents Unit price cents Discount to NTA 25% 25% 23% Notes: 1. Based on $0.50 unit price at close 7 April

15 $m Facility expiry profile One multi-currency facility of $261 million with 2 major domestic banks Current short-term profile reflects strategy of maintaining low cost debt $241 million drawn 1 with undrawn capacity of $20 million 200 Pro forma expiry profile Aug-11 Oct-11 Aug-12 Aug-13 Expiry Drawn Undrawn Notes: 1. Post payment of the final 1H11 distribution in February 2011 and acquisition of 31 Queen St 15

16 Debt metrics; low cost of debt Average cost of current drawn debt 6.2% expect to increase on debt rollover in Aug & Oct11 includes average margin of 129 basis points on drawn debt Weighted average undrawn commitment fee: 132 basis points Pro forma 31 December 2010 (2) AUD denominated borrowings Euro denominated borrowings Total Borrowings A$191m A$50m 1 A$241m Gearing (debt to total assets) (%) Covenant gearing (total liabilities to total tangible assets) (%) Proportion hedged (%) Weighted average hedged term 3 (yrs) Average cost of drawn debt (including margin) (%) Weighted average undrawn commitment fee (%) 1.32 Notes: 1. A$ / spot rate of as at 31 December 2010; net of deferred borrowing costs 2. Post payment of the final 1H11distribution in February 2011 and acquisition of 31 Queen St 16

17 Portfolio Performance DIAC Building Belconnen ACT Discovery House Woden ACT 17

18 State of play 2011: the year of recovery Australian Office Leasing and tenant enquiry levels have increased, however still subdued in some non-cbd markets Vacancies have mostly peaked with limited supply overhang from the previous construction cycle Incentive levels have likely peaked in most markets; forecast to commence decline in 2011 & 2012 Lower incentives and moderate face rent growth should result in effective rental growth returning in most markets through late 2011 and 2012 Yields are expected to firm further, albeit slightly Australian Industrial 2010 has seen a number of significant pre-commitment deals entered into for major distribution facilities in both Sydney and Melbourne, albeit that supply is down from 2009 Limited speculative development being undertaken but showing signs of returning Limited prime industrial stock available and prime yields are expected to firm further Cinema & Retail Strong cinema performance continues; 2010 box office in Australia a record $1.13 billion up 4% Underpinned by the growing popularity of 3D content New digital technology is helping exhibitors create new price points Yields expected to tighten over coming months 18

19 Portfolio overview 31 December 2010 Key portfolio metrics Occupancy 91.0% (Jun 10: 94.7%); WALE 4.7 years (Jun 10: 5.1 years) Domestic focus 94% Australian; orderly disposal of French portfolio still scheduled for second half CY11 Australian portfolio French portfolio Total portfolio Total property portfolio $m Number of properties Portfolio weighting (by value) % Net lettable area 2 sqm 345,593 41, ,264 Average age of properties years Occupancy % WALE years Weighted average capitalisation rate % NABERS energy rating 3.4 star weighted average (applicable to office buildings) Notes: 1. Excludes stamp duty and acquisition costs for 31 Queen St 2. Excludes development property - The Junction stages 2 & 3 19

20 Portfolio revaluations at 31 December 2010 All properties revalued as at 31 Dec; 70% (by value) independently revalued Valuations 1 up $6.4 million (0.9% across total investment portfolio) Market capitalisation rates firmed from 8.29% to 8.19% French portfolio value up 1.6% 3. Market capitalisation rates average 7.73% Implied cap rate of 10.4% (based on current market price of CDI units) Carrying value ($m) As at 31 Dec 10 Market cap rate As at 31 Dec 10 Market cap rate As at 30 Jun 10 Domestic office portfolio % 8.09% Domestic retail portfolio % 8.39% Domestic industrial (distribution centres) % 9.23% Domestic industrial (High tech) % 8.85% TOTAL DOMESTIC PORTFOLIO % 8.32% French portfolio % 7.87% TOTAL % 8.29% Notes: 1. Valuation-to-valuation. Excludes development property 2. Converted at 31 December 2010 spot rate (0.764) 3. Excludes impact of currency movements 20

21 Diversification enhances portfolio quality Sector diversification (by value) As at 31 December 2010 Geographic diversification (by value) 17% 14% 6% 63% Office Retail Industrial - Distr'n Centre Industrial - High Tech 3% 3% 3% 6% 4% 28% 26% 27% NSW ACT VIC QLD SA WA TAS France Tenant diversification by corporate type (by income) Tenant credit rating (by gross income) (Challenger internal ratings based on rating agency methodology) 2% 23% 34% Government Listed Multi international Private 32% 2% 8% 26% AAA AA+ to A- BBB+ to BBB- BB+ to B- CCC+ to D 41% 16% 16% Not rated 21

22 % of gross income Tenant industry diversification 36% of CDI portfolio leased to government tenants Well diversified across industries Top 20 tenants 1 Industry representation Ranking Tenant Name Tenant Industry Asset(s) % Of Total Contracted Portfolio Contracted Gross Income 1 ABS Government ABS House 10.1% 2 DIAC Government DIAC 6.5% 3 Village Cinemas International Cinema Jam Factory 6.2% 4 IP Australia Government Discovery House 6.0% 5 The Greater Union Organisation Cinema Jam Factory, CCW, Innaloo 3.4% 6 Futuris Corporation Limited Diversified Elder House 3.0% 7 Toll Transport Pty Ltd Distribution 1-9 Toll Drive 3.0% 8 State of Tasmania (CP) Government Executive Building 2.8% 9 Taylors Institute of Advanced Studies Education Taylors House 2.8% 10 Cisco Systems IT The Forum, Cisco 2.7% 11 KW Doggett & Co Pty Limited Distribution Enfield, Stage 1 2.2% 12 Rexel Australia Limited Retail Rexel 1.9% 13 QLD Police Government Makerston House 1.9% 14 Spotlight Stores Pty Ltd Retail Spotlight 1.8% 15 Arvinmeritor Manufacturing Arvinmeritor 1.8% 16 FlexiRent Financial The Forum, Cisco 1.8% 17 Pacific Brand Sports & Leisure Pty Ltd Manufacturing Pacific Brands 1.5% 18 Tourism Queensland - Storage Government Makerston House 1.5% 19 Luxottica Retail 75 Talavera 1.4% 20 Verizon IT The Forum, Verizon 1.4% 40% 35% 30% 25% 20% 15% 10% 5% 0% 34.3% 18.4% 10.6% 8.8% 4.6% 3.6% Industry 5.6% 3.6% 4.6% 5.8% 0.0% 63.9% Notes: 1. By industry by 31 Dec 10 rent annualised 22

23 % Expiry Lease expiries Investment portfolio 91% occupied WALE 4.7 years Lease expiry profile (by income) 59.5% 9.0% 2.2% 9.6% 11.5% 6.7% Vacant Jun-11 Jun-12 Jun-13 Jun-14 FY 2015 Beyond Period 23

24 Refurbishments enhance leasing prospects A. Forum Verizon, St Leonards Ownership 60% Portfolio income Vacancy Refurbishment Leasing status 2.9% (based on current market rent) 59% (area: 7,721 sqm) Circa $1.6 million spent Foyer upgraded Floors returned to as-new condition T5 Lighting installed Levels 4-10 remain available to lease (top floors) Vacancy rates in St Leonards / Crows Nest remain high Limited comparable A grade space available within the lower North Shore. 24

25 Refurbishments enhance leasing prospects B. 187 Todd Road, Port Melbourne: Ownership 60% Portfolio income Vacancy Refurbishment Leasing status 2.2% (based on current market rent) 100% (9,722 sqm) Circa $2.3 million spent Building façade enhanced Floors returned to as-new condition BMS upgraded Whole building available 25

26 Refurbishments enhance leasing prospects C. 75 Talavera Rd, North Ryde: Ownership 60% Portfolio income 1.4% Vacancy 40.1% (5,578 sqm) Refurbishment Circa $2.0 million spent Foyer upgraded Floors returned to as-new condition T5 lighting installed Leasing status 843sqm leased to the NSW Gov t in late 2010 Ground, L1, Part L2, Part L3 remain available for lease 26

27 Value enhancing redevelopment projects Jam Factory (60% CDI) Repositioning centre Heads of Agreement with Target Urban for 1,200 sqm Village to undertake a refurbishment Tenancy remix 18 month project to completion in FY12 Domain car park (100% CDI) Refurbishment to commence March 2011 ($8m) Forecourt potential for 9,000sqm NLA subject to approvals Innaloo Cinema Centre (60% CDI) Excess land available for expansion Master planning progressing for extension of 4,000 sqm GLA The Junction stages 2&3 (100% CDI) Sourcing tenant pre-commitment Total of 32,934 sqm warehouse office facility 27

28 Summary DIAC Building Belconnen ACT 28

29 Summary Operating profit on target 1H11 distribution: 2.0 cents per unit (cpu) Net tangible assets (NTA): 67 cpu, up 1 cent on 30 June 2010 Pro forma balance sheet gearing at 27.8% Maintained FY11 guidance: EPU: 4.9 cents; DPU: 4.0 cents Property valuations up; leasing market remains challenging Investment property valuations up $6.4 million (0.8%) in 1H11 Occupancy: 91%; WALE 4.7 years Portfolio enhancement strategy progressing Objective: improve portfolio fundamentals, increase earnings & bridge NTA/price gap 4 properties sold during half-year. Melbourne office acquisition settled 31 Queen St Low gearing; borrowings at $241 million, unused capacity $20 million Remaining assets in French portfolio targeted for disposal in second-half CY11 29

30 Contacts Trevor Hardie Fund Manager Tel: + 61 (0) thardie@challenger.com.au Tim Evans Assistant Fund Manager Tel: + 61 (0) tevans@challenger.com.au Website 30

31 Appendices

32 CDI outperforms the index CDI ranked 3 rd best performing A-REIT in CY10 1 Unitholder return of 16.45% CDI Accumulation Index Relative Performance Calendar Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec- 10 CDI Accumulation index S&P/ASX200 Property Accumulation index Note: 1. Source: IRESS 32

33 Distribution policy CDI s distribution policy is to distribute accounting profit earned from operating activities adjusted for non-cash expenses, straight-line rent, incurred and expected: leasing costs, debt establishment fees and capital expenditure to maintain the investment properties, subject to the ongoing objective to distribute an amount which results in CDI not being subject to income tax. Realised impacts from the sale of assets will be distributed on a discretionary basis which will be determined with regard to capital management strategies, market conditions and tax consequences. On average in any year, the income distributed will represent approximately 80-85% of operating profit earned before write downs. 33

34 Management Management agreements published on website Base management fee expense ratio: 66 bps 1 Management fees: Fee type Base management fee Calculation From 1 July 2010, 0.5% of gross assets of CDPG per annum, payable in cash. Performance fees 5% of first 2% out performance against S&P/ASX200 property accumulation index, and 15% of any out-performance thereafter, capped at 0.25% of gross assets per annum (capped with no carry forward) Transactional fees are payable only for offshore acquisitions as detailed in the PDS. No transaction fees are payable on domestic transactions For full details refer to the CDI PDS, Constitution and Management Agreement at www/challenger.com.au/cdi Note: 1. 1H11 annualised 34

35 $m Hedge profiles Interest rate hedges $A denominated hedges Notional Hedge rate Maturity date CDI AUD hedge profile 8.0% 7.0% $25m 4.57% Oct % $15m 4.83% April 2012 $40m 5.37% Feb 2014 $25m 5.11% April % 4.0% 3.0% 2.0% $12.5m % Oct % $12.5m % Oct Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun % $40m 5.07% Feb 2016 $10m 7.40% Jul 2018 Hedged debt Weighted average hedge rate Income hedges Euro denominated hedges Half year ending AUD/EUR Notional Hedge rate Maturity date 30 June m 4.30% May December m 4.08% Sep 2012 Note: 1. Forward start hedges commence October

36 Lease expiry profile (by gross passing income) Lease Expiry Profile 8.9% 9.6% 1.81% Spot Light 2.90% Verizon 0.00% 1.90% Rexel 1.35% 75 Talavera 1.76% Jam Factory Car Park 2.18% 187 Todd Rd 1.13% 2.2% 0.75% 1.34% 31 Queen Street 0.76% CSR 1.04% 0.27% Retail 1.00% Retail 0.91% Minor Expiry 0.39% 1.24% Minor Expiry Vacant FY 10/11 FY11/12 GDF City Century Entrtainment Retail Minor Expiry 36

37 Rent review profile1 provides built-in growth Significant weighting to fixed and indexed rental reviews over next three years 77% of portfolio subject to rental reviews in FY11 Rent review profile (by income) FY11 FY12 FY13 Review type FY11 rental proportion (%) Rent reviews Fixed 56% Average 3.3% CPI 14% Last CPI 2.7% a French CCI 7% Average 1.75% b Sep 10 CCI: 1.2% Market 0% n/a Total 77% a. December 2010 ABS All Cities b. French Cost of Construction Index average for 12 months to Q Notes: 1. Excludes development property and properties held for sale 37

38 Value ($m) Value ($m) CDI investment portfolio diversification $300 Geographic Sector Diversification $250 $200 26% 27% 28% $150 $100 $50 5% 3% 3% 3% 6% $0 NSW ACT VIC QLD SA WA TAS France Office Retail Industrial-DC Industrial - High Tech $600 $500 $400 63% Sector Geographic Diversification $300 $200 $100 17% 14% 6% $0 Office Retail Industrial-DC Industrial - High Tech NSW ACT VIC QLD SA WA TAS France 38

39 Net property income Australian portfolio 1H11 1H10 Variance ($'000) ($'000) ($'000) % Office ABS Building, Belconnen, ACT 3,593 3, DIAC Building, Belconnen, ACT 2,505 2, The Forum, Cisco, St Leonards, NSW 2,397 2,424 (27) (1) Discovery House, Woden, ACT 2,283 2, The Forum, Verizon, St Leonards, NSW 765 1,963 (1,198) (61) Makerston House, Brisbane, QLD 1,827 1, Elder House, Adelaide, SA 1,328 1, Taylor's House, Waterloo, NSW 1,247 1,255 (8) (1) Executive Building, Hobart, Tas Office total 16,909 17,493 (584) (3) Retail Jam Factory, South Yarra, Vic 2,558 2, Century City Walk, Glen Waverley, Vic. 1,233 1, Innaloo Cinema Centre, Innaloo, WA Kings Langley, Kings Langley, NSW Retail total 5,125 4, Industrial Distribution Centres The Junction Industrial Park Stage 1, Enfield, NSW (75) (8) Spotlight, Laverton North, Vic Toll Drive, Altona North, Vic (30) (5) 478 Freeman Road, Richlands, QLD (144) (24) 2-10 Toll Drive, Altona North, Vic (4) (1) 1-9 Toll Drive, Altona North, Vic (9) (6) 6 Foray Street, Fairfield, NSW 222 (6) large Industrial Distribution Centres Total 3,241 3,257 (16) (0) Industrial High-Tech 187 Todd Road, Port Melbourne, Vic (695) (91) 75 Talavera Road, North Ryde, NSW 402 1,529 (1,127) (74) Rexel, North Ryde, NSW (17) (2) Pacific Brands, Port Melbourne, Vic Heidelberg, Waterloo, NSW (368) (100) Industrial High-Tech Total 1,693 3,881 (2,188) (56) Sold Sold Australia Total 26,968 29,379 (2,411) (8) 39

40 Net property income - continued French portfolio 1H11 1H10 Variance ( '000) ( '000) ( '000) % Inteva, 105 Route d'orleans, Sully sur Loire (23) (4) Bricoman, 54 Avenue Savigny, Aulnay sous Bois (41) (12) Exel, Rue Charles Nicolle, Villeneuve les Beziers (85) (20) GDF, 140 Rue Marcel Paul, Gennevilliers, Paris (20) (6) ATAC, Zl du Papillon, Parcay-Meslay, Tours (4) (2) Primagaz, Zl de Thibaud, 6 Rue Douladoure, Toulouse (45) (40) Sold Europe Total 1,760 1,978 (218) (11) 40

41 Balance sheet Current assets Pro forma 31 December December June 2010 $ 000 $ 000 $ 000 Cash and cash equivalents 2,475 2,475 1,035 Trade and other receivables 1,182 1,182 1,035 Derivative financial instruments 1,327 1,327 1,303 Other assets ,685 Development property - - 6,280 Total current assets 5,756 5,756 11,338 Non-current assets Other financial assets 3,041 3,041 3,026 Derivative financial instruments 2,682 2,682 1,220 Property, plant and equipment 2,605 2,605 2,562 Investment properties under development 19,000 19,000 19,000 Investment properties 832, , ,061 Deferred tax assets Total non-current assets 861, , ,856 Total assets 866, , ,194 Current liabilities Trade and other payables 11,396 11,396 9,517 Provision for distribution - 18,269 19,639 Income tax payable Derivative financial instruments 1,571 1,571 2,160 Interest bearing liabilities 108, ,428 75,231 Total current liabilities 121, , ,576 Non-current liabilities Derivative financial instruments 1,081 1,081 1,914 Interest bearing liabilities 132,121 28,452 90,261 Total non-current liabilities 133,202 29,533 92,175 Total liabilities 254, , ,751 Net assets 612, , ,443 Unitholders equity Contributed equity 676, , ,862 Undistributed income 14,767 14,767 11,368 Reserves (79,421) (79,421) (87,787) Total equity attributable to stapled unitholders 612, , ,443 41

42 Income statement Property income 31 December December 2009 $ 000 $ 000 Rental income 34,375 36,976 Other property income 4,890 4,964 Less: Property related expenses (8,371) (8,394) Net property income 30,894 33,546 Operating business income Revenue from operating business activities 3,658 3,215 Less: Expenses from operating business activities (3,014) (2,911) Net profit/(loss) from operating business Other income Interest income Other trust expenses Finance costs (3,657) (6,358) Responsible Entity s and Manager s fees (1,984) (1,353) Write-down to net realisable value of development property - (804) Loss on sale of development property (110) (80) Operating expenses (627) (716) Profit/(loss) from operating activities 25,336 24,694 Fair value movement of derivatives closed out during the period - (7,787) Fair value movement of derivatives held at the end of the period 2,909 10,892 Fair value movement of investment properties sold during the period (219) (75) Fair value movement of investment properties held at the end of the period 1,947 (41,606) Foreign exchange gain/(loss) Net profit/(loss) before tax 30,042 (13,742) Income tax credit 8 37 Net profit/(loss) after income tax 30,050 (13,705) 42

43 Distribution statement 31 December December 2009 $ 000 $ 000 Net profit/(loss) attributable to unitholders of CDI 30,050 (13,705) Adjusted for transfers (to)/from reserves: Non-operating activities Fair value movement of derivatives closed out during the period - 7,787 Fair value movement of derivatives held at the end of the period (2,909) (10,892) Fair value movement of investment properties held at the end of the period (1,947) 41,606 Foreign exchange (gain)/loss (69) (140) Non-cash expenses Straight-lining of rental (income)/expense (1,476) (881) Property, plant and equipment depreciation 12 Amortisation of borrowing costs Write-down to net realisable value of development property Deferred tax credit (8) (19) Other Debt establishment costs (575) - Loss on sale of development property Fair value movement of investment properties sold during the period Maintenance capital expenditure (1,597) (136) Leasing costs (260) (1,391) Total transfers (to)/from reserves (8,382) 37,032 Total income available for distribution 21,668 23,327 Less: Current period undistributed (income)/loss carried forward (3,399) (5,068) Distribution to unitholders 18,269 18,259 43

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