ING OFFICE FUND Annual Results Presentation 30 June 2005 CREATING - - PowerPoint PPT Presentation

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ING OFFICE FUND Annual Results Presentation – 30 June 2005

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ING REAL ESTATE

Gables Residential Trust

– US$2.8 billion US multi family portfolio

Abbey Portfolio (UK)

– £1.2 billion of diversified assets

Rodamco acquisition completed

– €832 million platform in Asia

ING Real Estate FUM - $A86 billion

Global update

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ING REAL ESTATE (AUSTRALIA)

Listed $1.9 b ING Industrial Fund Unlisted (retail) $16 m ING Real Estate Income Fund Unlisted (retail) $26 m ING Real Estate Direct Office Fund Unlisted (wholesale) $1.2 b ING Retail Property Fund Australia Listed $200 m ING Real Estate Entertainment Fund Listed $300 m ING Real Estate Community Living Fund Listed $2.0 b ING Office Fund Type Size

Increased investment offering

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AGENDA

12 months of value Results Portfolio summary Office markets Outlook & strategy

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12 MONTHS OF VALUE

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12 MONTHS OF VALUE

Net profit 16% to $106.4m EPU 5% to 10.85 cpu (normalised 1.7% to 10.51) Retained earnings $6.3m to $8.5m NPI

4.4% like for like

NTA 6 cents or 5% to $1.18

Performed

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12 MONTHS OF VALUE

11.3% 11.3% 5 years* 9.6% 11.2% 3 years* 19.9%

• 1.1%

UBS Comm 200 17.4% 0.2% IOF 12 mths 6 mths

Returned

Source: UBS * Annualised compound return

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12 MONTHS OF VALUE

• Leased 74,866sqm, representing 16% of the portfolio & $19.5m of income
• Repositioned 1 Adelaide Tce to lengthen WALE and diversify tenant base
• Extended ATO at Box Hill for 7 yrs until 2014
• Secured Telstra & Air New Zealand over 9,564sqm at 151 Clarence Street
• Achieved high retention and 10% NPI growth from Brisbane portfolio
• Maintained long WALE at 5.4 years and high portfolio occupancy of 99%

Leased & asset managed

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12 MONTHS OF VALUE

Acquired

7.4% AUD 29.3m Freehold interest – 347 Kent Street, Sydney 8.0% USD 53.5m Computer Associates Plaza, Dallas metro 6.5% USD 92.8m Mitretek Systems HQ, Washington DC metro 6.5%1 USD 105.2m Homer Building, Washington DC (50%) Yield Purchase price

1 minimum yield for first 3 yrs

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RESULTS

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RESULTS SUMMARY

10.33 10.85 EPU (cents) 10.33 10.51* EPU normalised (cents) 10.20 10.20 DPU (cents) 91.6 106.4 Net profit (1.2) (1.4) Other costs (7.6) (7.9) RE fee (31.4) (35.9) Net interest 131.8 151.6 Net property income Jun 04 ($m) Jun 05 ($m)

Net profit

* Excludes $3.4m ATO lease termination at Cheltenham

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RESULTS SUMMARY

5.6 yrs 5.4 yrs Avg lease duration 32,657 30,873

• No. of unitholders

901.9m 999.1m Units on issue $1.12 $1.18 NTA (per unit) $2.2m $8.5m Retained earnings 36.8% 40.5% Gearing (look through) $1.65b $2.05b Total assets (look through) Jun 04 Jun 05

Key financials

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RESULTS SUMMARY

Revaluations June 2005

7.5% 7.8% 7.0% 6.4% Cap rate $68.0m $58.2m 151 Clarence Street Sydney $47.0m $45.0m 1 Adelaide Tce Perth $208.0m $168.0m 347 Kent Street Sydney* $142.1m $114.7m 900 Third Ave New York - 49% (USD) Current Previous

• Revaluation increment of $45.7m on book values
• Weighted average portfolio capitalisation rate 7.6%

*Freehold acquired on 30 November 2004 for $29.3m

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RESULTS SUMMARY

Cents

5.21

Earnings per unit

9.0 9.2 9.4 9.6 9.8 10.0 10.2 10.4 10.6 10.8 11.0

10.33 10.12 10.85 9.98

Jun-02 Jun-03 Jun-04 Jun-05

5.21 5.64 10.51

Jun-05 Normalised

5.21 5.30

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PORTFOLIO SUMMARY

Dallas 3% Washington DC 13% New York 9% Sydney 44% Canberra 5% Brisbane 13% Perth 3% Melbourne 16%

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PORTFOLIO SUMMARY

• Short term expiry reduced
• Long term expiry improved

1 % 44% 9% 1 5% 1 6% 1 5% 1 0% 32% 1 % 1 3% 1 4% 1 1 % 1 0% 8%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Vacant FY06 FY07 FY08 FY09 FY10 FY10+ Jun-04 Jun-05

Average lease term (by income)

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PORTFOLIO SUMMARY – LEASING FOCUS

14% 10% 8% Total expiries 9% 8% 7% Major expiries 1% Homer Building Jenner & Block 1% 900 Third Ave Kroll Associates 3% 16 – 18 Mort St DEST 4% Campus MLC MLC 1% 900 Third Ave Zweig Advisors 2% Terrica Place ATO 2% Royal Mint Centre AFP 3% 40 Cameron Ave ATO 2% George St, Third Ave, Bourke St Various 1% 295 Ann St Dept Main Roads & Q-Build 2% 111 Pacific Hwy AGL 2% Homer Building White & Case

FY08 FY07 FY06 Property Tenant

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PORTFOLIO SUMMARY

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Percentage Debt Hedged 5.0% 5.5% 6.0% 6.5% 7.0% Average Hedged Cost of Fund % of Debt Hedged Hedged Rate

AUD interest rate hedging USD interest rate hedging

• 95% hedged for average of 2.3 yrs @ 5.9%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Percentage Debt Hedged 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% Average Hedged Cost of Fund % of Debt Hedged Hedged Rate

• 96% hedged for average of 3.3 yrs @ 3.8%

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PORTFOLIO SUMMARY

USD FX hedging

100% 100% 100% % of forecast revenue hedged 0.70c 0.67c 0.66c Avg forward FX rate Jun 10 Jun 09 Jun 05 – Jun 08 Income hedging USD

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OFFICE MARKETS

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OFFICE MARKETS - GLOBAL

• Low inflation expectations a

key driver of low bond rates

• Net office yields offer attractive

spread to bonds in most major markets

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% UK Australia US Japan Canada EURO

Real 10-yr bond Real office property net yields

Source: ING Real Estate Note: Real returns are calculated by subtracting financial market implied 10-yr inflationary expectations. JPN inflation est. normalised.

Real yields for 10-yr bonds and office property

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OFFICE MARKETS - GLOBAL

• Large variation in leveraged yields

across major office markets

• Leveraged yields most attractive in

Europe, Canada, Japan & USA; least in UK & AUS

After cost unleveraged v leveraged yields

Source: ING Real Estate Note: Leveraged returns use 5 year swap rate plus margins

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% UK AUS USA CAN JPN EURO Unleveraged yield Leveraged yield assuming 60% debt

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OFFICE MARKETS - AUSTRALIA

• Unemployment rate of 5.0% lowest in 30

years

• Reductions in U/E rate primarily in blue

collar sector; little change in white collar

• Increased productivity and decreased

WSR mean business at full capacity

Output gap in labour market

Unemployment rate

Source: ABS, Borland and Kennedy (1998), Crosby and Olekalns (1996), Westpac Economics & ING Real Estate 0% 2% 4% 6% 8% 10% 12% 14% Jan-79 Jan-81 Jan-83 Jan-85 Jan-87 Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05

Natural rate of unemployment Unemployment rate

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OFFICE MARKETS - AUSTRALIA

20 - 25% 3.5% Avg 10 – 15% 2.5% Canberra 10 – 20% 7.5% Brisbane 20 – 25% 2.5% Melbourne 30 – 35% 1.0% North Sydney 25 – 30% 3.0% Sydney Incentives Jun 05* Rental growth 3 yrs*

• Moderate face rental growth expected for most markets
• Better effective rental growth expected

Source: ING Real Estate * average annual compound growth rate and gross face incentives

Face rental growth outlook

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OFFICE MARKETS - US

• 4%
• 2%

0% 2% 4% 6% 8% 10% 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Real GDP Growth Productivity Growth Job Growth

• ‘Jobless recovery’ has now

passed

• Job growth to accelerate
• ffice market recovery

GDP and job growth

Source: Economy.com

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OFFICE MARKETS - US

• Office sector vacancy showing

continued downward momentum

• National ave. 2.3% to 14.7%
• Washington DC 3.5% to 9.8%
• New York 1.9% to 8.4%

YoY change in vacancy

Source: Torto Wheaton

• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 National ave. Washington DC New York Dec-03

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OFFICE MARKETS - US

1.0% 6.5% - 7.5% Dallas 4.5% 6.5% - 7.5% Boston 4.0% 5.5% - 6.5% LA 2.1% 6.0% - 7.0% Chicago 5.0% 5.5% - 6.5% Washington DC 5.6% 5.5% - 6.5% New York Rental growth 3 yrs* Avg cap rate

• Total return outlook most attractive in New York, Washington DC, LA and Boston

Cap rates and face rental growth outlook

Source: ING Real Estate * Average annual compound growth rate

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OFFICE MARKETS - EUROPE

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%

G e r m a n y F r a n c e I t a l y S p a i n H

• l

l a n d B e l g i u m A u s t r i a G r e e c e I r e l a n d P

• r

t u g a l F i n l a n d L u x e m b

• u

r g

Inflation Euro 10-yr bond

• Blanket cost of debt advantages

higher growth economies

Inflation across Euro zone

Source: European Central Bank Note: inflation for 12 months previous

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OFFICE MARKETS - EUROPE

6.0% - 7.0% 5.5% - 6.5% 5.5% - 6.5% 6.0% - 7.0% 5.5% - 6.5% Avg cap rates** 13m Brussels, Antwerp Belgium 18m Milan, Rome Italy 18m Madrid, Barcelona Spain 10m The Hague, Amsterdam Netherlands 52m Paris, Lyon France Market size* (sqm) Major markets Country

• Markets offer diversification across Euro zone

Cap rates and market size

Source: *Jones Lang LaSalle & PMA, **ING Real Estate

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OVERVIEW – OFFICE MARKETS

• Australian office market rental growth expected to be moderate
• Improved US job growth to drive US office markets
• Total return outlook most attractive in New York, Washington DC, LA & Boston
• European office markets provide attractive opportunities and returns

Summary

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OUTLOOK & STRATEGY

Solid EPU and NTA growth Portfolio well positioned with little risk Commitment to drive earnings;

• Active asset management / retention / leasing
• Value add opportunities
• Further offshore expansion

Deliver distribution growth

Summary

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OUTLOOK & STRATEGY

ING Real Estate Offices

China South East Asia Europe North America Australia

Europe The Hague Budapest Brussels Frankfurt London Madrid Milan Paris Prague Warsaw

Global network

Asia / Australia Asia / Australia Beijing Beijing Shanghai Shanghai Hong Kong Hong Kong Singapore Singapore Seoul Seoul Sydney Sydney Melbourne Melbourne Brisbane Brisbane Perth Perth USA USA Boston Boston Philadelphia Philadelphia New York New York Seattle Seattle Washington DC Washington DC 14 smaller offices 14 smaller offices