ING OFFICE FUND Acquisition of Waltham Woods Corporate Center (50%) - - PowerPoint PPT Presentation

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ING OFFICE FUND

Acquisition of Waltham Woods Corporate Center (50%) & The Homer Building (30%)

28 September 2005

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PRESENTATION Speakers

Valentino Tanfara, CEO ING Office Fund Craig Tagen, US Portfolio Management Deke Schultze, Asset Management / Acquisitions, Boston Marc Deluca, Acquisitions, Washington DC

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THE TRANSACTION Summary

• 50% interest in “Waltham Woods Corporate Center” – Boston Metro
• Additional 30% interest in “The Homer Building” – Washington DC
• Average acquisition yield of 7.1% (before costs)
• Total acquisition price of US$128m (A$ 170.7m) before costs
• Acquired from ING Group – related party transaction

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THE TRANSACTION Quantitative benefits

• DPU 2% from 1 October 05
• EPU 1% in first full year
• Introduces Boston to 4%
• Washington DC weighting to 16%
• US weighting to 31%

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THE TRANSACTION Qualitative benefits

• Attractive acquisition yield in an international context
• Solid rental growth underway and forecast to continue
• Total return expectations in Boston and Washington DC amongst the highest in the US
• Assets amongst the highest quality within their respective markets
• Continues strategic expansion into key US markets with sound long term fundamentals

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THE TRANSACTION Acquisition funding

Source of funds US$ A$* Equity from institutional placement 52.6m 70.2m** US$ borrowings - property level Waltham Woods 39.0m 52.0m

• property level Homer Building

40.6m*** 54.1m 132.2m 176.3m Application of funds Property acquisitions 128.0m 170.7m Acquisition costs 2.6m 3.5m Debt retirement 1.6m 2.1m 132.2m 176.3m

* A$/US$ spot = 0.75 ** Assumes floor price of A$1.30 per unit *** Includes participation loan estimate of US$14.8m based on 30/06/07 value

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THE TRANSACTION Property details – Waltham Woods Corporate Center

Location: 880, 890 Winter Street, Waltham, Massachusetts Interest: 50% (freehold) Purchase price: US$65.0m (US$332sqf) Year 1 yield: 7.6% Occupancy: 99% Passing rent: US$38sqf (gross) Market rent: US$32sqf (gross) Economic rent: US$40sqf

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THE TRANSACTION Property details – The Homer Building

Location: 601 13th Street, Washington DC Interest: Additional 30% (leasehold) Ground lease: 99 years Purchase price (30%): US$63.0m ($503sqf) Year 1 yield*: 6.5% Occupancy: 100% Passing rent: US$50sqf (gross) Market rent: US$58sqf (gross) Economic rent: US$75sqf

* Guaranteed NOI yield for 3 years from April 2005

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THE TRANSACTION Locations

Dallas Washington DC Existing IOF Assets

• incl. Homer Building

Waltham Woods Corporate Center Boston New York

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THE TRANSACTION

Size (mill sqf) New York 421 Washington DC 254 Chicago 216 Los Angeles 174 Boston 152 Dallas 142 Houston 136 Atlanta 124 Philadelphia 101 Total 1,720

Focus on largest US markets and gateway cities

• Further expands the Fund into

4 of the largest 6 US office markets

• Forecast total returns most attractive in

New York, Washington DC, Los Angeles and Boston

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WALTHAM WOODS CORPORATE CENTER

Waltham Woods Corporate Center Skylight atrium

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WALTHAM WOODS CORPORATE CENTER Property details

• Type:

Class A

• Tenants:

19 office

• Average lease expiry

3.9 years

• Net rentable area:

391,654

• Layout:

Two buildings

• Height:

3 storeys

• Land area:

36.7 acres

• Completion date:

1999

• Parking:

1,308 spaces (201 undercover)

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WALTHAM WOODS CORPORATE CENTER The asset

• Attractive initial yield of 7.6%
• Achieves highest market rents in submarket
• Waltham Woods is regarded as “one of the premier office parks on the eastern seaboard”*
• Diversified base of investment grade tenants
• High average historic occupancy of 98% since 2000**
• Well located with access to major arterial roads and proximity to downtown Boston
• Property and asset management conducted by ING Real Estate since 2000

Source * Independent Appraisal, ** ING Real Estate

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WALTHAM WOODS CORPORATE CENTER Major tenants

Tenant Leased % of blg. Passing rent Market rent Lease sqf income US$ sqf gross US$ sqf gross expiry BMC Software* 175,584 45% $38 $32sqf Mar-09 Duke Energy 28,341 7% $28 $32sqf Apr-14 Microsoft 21,715 6% $29 $32sqf Jan-10 CMP Media 21,155 5% $39 $32sqf Apr-08

* Subleased to 7 tenants

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WALTHAM WOODS CORPORATE CENTER Tenant credit – BMC Software

• One of the world’s leading software solutions providers
• Fortune 500 company listed on the NYSE
• US $48 billion market capitalisation
• Over 6,000 employees worldwide
• No public debt
• Rated “excellent” by independent credit advisory group*

*Alliance Research

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WALTHAM WOODS CORPORATE CENTER Comparable sales

Address Price (US$) Cap rate US$sqf Date 93 Worcester Street, Wellesley Hills $68.0m 8.6% $252sqf Nov-04 Bay Colony Corporate, Waltham $272.5m 6.6% $281sqf Jan-05 25 Mall Road, Burlington $54.7m 5.6% $198sqf Jul-05 Waltham Woods Corporate Center* $130.0m 7.6% $332sqf Sep-05

* 100% interest

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BOSTON METRO Summary

• Major US gateway city
• Population of 11 million
• Hub of America’s intellectual capital
• 152m sqf of office space (5th largest in US)
• Comprised of 12 established submarkets
• Route 128 West largest submarket located

close to Cambridge and downtown Boston

Source: CBRE

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BOSTON METRO Economic / employment drivers for Boston

• Business capital of New England and highly diverse workforce
• Unemployment rate of 5.0%, below national average
• Healthcare sector accounts for 16% of total employment
• Healthcare and Information Services expected to drive job growth over next 5 years
• Boston metro job growth expected to average 1.5% over the next 12 months
• Strong net absorption of 2.1msqf for Q2 2005 (1.4% of total stock)

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ROUTE 128 WEST SUBMARKET Market summary

• Largest sub-market in Boston metro with 23.7m sqf of office space
• Proximity to desirable residential areas and downtown Boston – executive belt
• Accessibility of transport access to downtown Boston and major arterial roadways
• Net absorption of 1.3m sqf in 2004 equivalent to 5.6% of total stock
• Market rents in upturn phase of cycle and experiencing solid growth

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ROUTE 128 WEST SUBMARKET

• Vacancy under downward pressure

24% at Q4 03 to 16% at Q1 05

• Minimal new construction forecast
• Vacancy forecast to decline further

Vacancy (all classes)

Forecast*

0% 5% 10% 15% 20% 25% 30% 1 9 9 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 2 2 2 4 2 6 2 8

Source: Cushman & Wakefield, * ING Real Estate

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ROUTE 128 WEST SUBMARKET Market rents (all classes)

• Economic rents materially above market rents
• Market well positioned for recovery from low base
• Strong rental growth currently underway

5%** in Q1 2005 for All Classes 12%** in Q1 2005 for Class A

• Market rents forecast to continue to rise

5 10 15 20 25 30 35 40 1 9 9 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 2 2 2 4 2 6 2 8

Forecast* Source: Cushman & Wakefield, * ING Real Estate ** Absolute increases

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THE HOMER BUILDING

Skylight twelve-storey atrium Facade

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THE HOMER BUILDING Property details

Type:

Class A office

Tenants:

26 office tenancies & 6 retail tenancies

Average lease expiry:

3.3 years

Net rentable area:

418,373sqf

Land area:

0.99 acres

Height:

12 storeys

Average office floor size:

38,000sqf

Parking:

282 undercover

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THE HOMER BUILDING The asset

One of Washington DC’s finest office buildings Outstanding location

• 3 blocks from the White House and National Mall
• situated over Metro Center (major rail commuter hub)
• within retail and entertainment precinct

Offers value add / leasing opportunity in short term Attractive guaranteed initial yield with strong growth prospects

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THE HOMER BUILDING Comparable sales

Address Price (US$) Cap rate US$sqf Date 1111 Pennsylvania Ave $160.0m 5.8% $483sqf Aug-04 1900 K Street $219.5m 5.9% $651sqf Dec-04 1001 Pennsylvania Ave $484.2m 5.4% $627sqf Dec-04 1875 K Street $113.1m 5.5% $603sqf Mar-05 701 13th Street $220.0m 6.2% $570sqf Jun-05 The Homer Building (100%) $210.0m 6.5%* $503sqf Sep-05

* Guaranteed NOI yield for 3 years

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THE HOMER BUILDING Economic / employment drivers for Washington DC

• Fifth largest metro area in the US & national HQs for most government organisations
• Unemployment rate of 3.2% among the lowest in the US
• Government sector accounts for 56% of total employment
• Defence and information services sectors expected to drive continued job growth
• Washington D.C. job growth expected to average 2.3%** over the next 12 months
• Continued positive net absorption of 1.9msqf* for Q2 2005 (0.7% of total stock)

Source: * Torto Wheaton, ** Economy.com

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THE HOMER BUILDING East end submarket

Approx 3 blocks from White House Situated above Metro Center High profile East End location Strong gov’t presence Retail and entertainment precinct Consistently high occupancy

Homer Building

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THE HOMER BUILDING East end submarket

• Strong barriers to entry and planning restrictions limit new supply
• Consistent net absorption forecast at 2.5% - 3.0%* p.a. for next 5 years
• Vacancy rate down from 11.1%** in 2004 to 8.7%** in Q2 2005 (all classes)
• Sustained rental growth expected
• Consensus forecast rental growth expected to average 4% - 6% p.a. for next 5 years

Source: * ING Real Estate, ** Torto Wheaton

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IMPACT ON FUND

Dallas 3% Washington DC 16% New York 8% Sydney 38% Canberra 4% Brisbane 11% Perth 2% Melbourne 13% Boston 4%

Portfolio diversification

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IMPACT ON FUND Lease expiry by income

Pre Post

1% 8% 10% 15% 13% 12% 42%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% V a c a n t F Y 6 F Y 7 F Y 8 F Y 9 F Y 1 F Y 1 + Year ended

1% 7% 11% 14% 11% 13% 43%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Vacant FY06 FY07 FY08 FY09 FY10 FY10+ Year ended

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IMPACT ON FUND Balance sheet

30 June 05 Proforma A$ A$* Total Australian assets 1,536m 1,536m Total US assets 515m 688m Total assets 2,051m 2,224m Total entity A$ denominated debt 343m 276m Total entity US$ denominated debt 176m 243m Total US$ property level debt 312m 418m Total debt 831m 937m Gearing ratio (look through) 40.5% 42.1%**

* Assumes 0.75c A$/US$ spot ** Excl. impact of UPP

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IMPACT ON FUND FX & interest rate on acquisition

Amount Rate Years FX Par FWD* 100% 0.74c 5.0 yrs Entity level debt** 100% 5.2% 5.0 yrs Property level debt**

• Waltham Woods

100% 5.9% 5.0 yrs

* Assumes 0.75c A$/US$ spot ** Incl. margins

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IMPACT ON FUND

• EPU & DPU accretive transaction
• Introduces Boston Metro – 5th largest US office market to portfolio
• Further consolidates “Homer” ownership
• High quality and well regarded assets in respective markets
• Continues strategic expansion into key US office markets
• Increases US weighting to 31%
• Delivering growth

Summary

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CONDITIONAL PLACEMENT TERMS

A$1.37 Closing Price 2.3% - 4.5% Discount to 5 day VWAP1 A$1.361 5 day VWAP1 8.0% Annualised yield

• n floor price

A$1.30 - $1.33 Issue price A$70.2m

• Min. amount raised
• Citigroup Global Markets Australia

Pty Limited and JPMorgan are Joint Lead Managers and Joint Bookrunners to the offer

• A placement of 54 m new

securities via a book build to raise a min. of $70.2 million at a floor price of $1.30 per unit

• New securities will rank pari passu

with existing securities 10.4 cpu 10.2 cpu DPU (annualised) A$1,368m Pre Post A$1,438m Market Capitalisation

1 VWAP adjusted for IOF distribution (26 September, 2.55¢pu)

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CONDITIONAL PLACEMENT TERMS

Allotment Thursday 3 November Settlement via DvP Wednesday 2 November Notification of allocations under conditional placement Wednesday 28 September Notice of unit holder meeting dispatched Wednesday 4 October Settle acquisitions Friday 4 November Unit holder meeting Monday 31 October Books open Books close 12:00pm 4:30pm Wednesday 28 September Event Time (Sydney) Date

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DISCLAIMER

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