ING OFFICE FUND Annual General Meeting 31 October 2005 CREATING - PowerPoint PPT Presentation

ING OFFICE FUND Annual General Meeting 31 October 2005 CREATING VALUE

ING REAL ESTATE Global network – A$97billion assets under management Asia / Australia Asia / Australia Beijing Beijing North China Europe America Shanghai Shanghai Europe Hong Kong Hong Kong The Hague Singapore Singapore Budapest Seoul Seoul Brussels Sydney Sydney USA USA Frankfurt Melbourne Melbourne Boston Boston London Brisbane Brisbane Philadelphia Philadelphia Madrid South East Perth Perth New York New York Asia Milan Seattle Seattle Paris Washington DC Washington DC Prague 14 smaller offices 14 smaller offices Warsaw Australia ING Real Estate Offices CREATING VALUE PAGE 2

ING REAL ESTATE INVESTMENT MANAGEMENT The global business Country No. of funds USA 12 Europe 16 Australia 7 Asia 4 Total 39 CREATING VALUE PAGE 3

ING REAL ESTATE INVESTMENT MANAGEMENT Australia Assets under management of over A$5.6 billion ING Office Fund $2.1 billion (listed) ING Industrial Fund $2.0 billion (listed) ING Retail Property Fund Australia $1.1 billion (wholesale) ING Real Estate Community Living Fund $300 million (listed) ING Real Estate Entertainment Fund $185 million (listed) ING Real Estate Direct Office Fund $ 27 million (unlisted) ING Real Estate Income Fund $ 20 million (unlisted) CREATING VALUE PAGE 4

12 MONTHS OF VALUE CREATING VALUE PAGE 5

12 MONTHS OF VALUE Key Fund data Jun 05 Jun 04 Total assets $2.1 billion $1.6 billion Properties 22 19 Portfolio occupancy rate 99% 99% Average lease term 5.4 yrs 5.6 yrs Tax advantaged income 39.4% 37.2% Gearing 39.0% 32.3% Number of unitholders 30,873 32,657 Unit price $1.28 $1.18 CREATING VALUE PAGE 6

12 MONTHS OF VALUE Returned – 30 June 2005 17.4% 18 Income return 16 Capital growth 14 11.2% 11.3% 12 10 8 8.9% 9.0% 9.2% 6 4 2 0 Source: UBS * Annualised compound return 1 yr 3 yrs* 5 yrs* CREATING VALUE PAGE 7

12 MONTHS OF VALUE Performed � Net profit 16% to $106.4m � Earnings per unit 5% to 10.85 cpu � Retained earnings $6.3m to $8.5m � NTA 6 cents or 5% to $1.18 CREATING VALUE PAGE 8

12 MONTHS OF VALUE Acquired Purchase price Yield Homer Building, Washington DC (50%) US$ 105.2m 6.5% 1 Mitretek Systems HQ, Washington DC metro US$ 92.8m 6.5% Computer Associates Plaza, Dallas metro US$ 53.5m 8.0% Freehold interest – 347 Kent Street, Sydney A$ 29.3m 7.4% 1 minimum yield for first 3 yrs CREATING VALUE PAGE 9

12 MONTHS OF VALUE Leased & asset managed Leased 74,866sqm, representing 16% of the portfolio & $19.5m of income Repositioned 1 Adelaide Tce to extend lease term 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 Maintained long lease term of 5.4 years and high portfolio occupancy of 99% CREATING VALUE PAGE 10

12 MONTHS OF VALUE Earnings per unit 10.85 11.0 10.8 10.51 10.6 10.33 10.4 10.12 10.2 Cents 9.98 10.0 9.8 9.6 5.21 9.4 9.2 9.0 Jun-02 Jun-03 Jun-04 Jun-05 Jun-05 Normalised CREATING VALUE PAGE 11

PROPOSED ACQUISITIONS CREATING VALUE PAGE 12

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 CREATING VALUE PAGE 13

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% CREATING VALUE PAGE 14

THE TRANSACTION Qualitative benefits � Attractive acquisition yield in an international context � Solid rental growth underway and forecast to continue � Total return expectations in Boston/Washington DC amongst highest in US � Assets amongst the highest quality within their respective markets � Continues strategic expansion into key US markets with sound long term fundamentals CREATING VALUE PAGE 15

THE HOMER BUILDING Property details Purchase price (30%) US$63.0 million Initial yield 6.5% Type Class A Occupancy 100% Tenants 26 office & 6 retail Avg lease expiry 3.3 years Net rentable area 418,373 square feet CREATING VALUE PAGE 16

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 CREATING VALUE PAGE 17

WALTHAM WOODS CORPORATE CENTER Property details Purchase price (50%) US$65.0 million Initial yield 7.6% Type Class A Occupancy 99% Tenants 19 office Avg lease expiry 3.9 years Net rentable area 391,654 square feet CREATING VALUE PAGE 18

WALTHAM WOODS CORPORATE CENTER The asset � Diversified base of investment grade tenants � Achieves highest rents in submarket � High average historical occupancy of 98% since 2000 � Well located with access to major roads and proximity to Boston � Property asset managed by ING Real Estate since 2000 CREATING VALUE PAGE 19

THE TRANSACTION Portfolio diversification Boston 4% New York 8% Washington DC 16% Dallas 3% Brisbane 11% Perth 2% Sydney 38% Canberra 4% Melbourne 13% CREATING VALUE PAGE 20

THE TRANSACTION Lease expiry by income 50% 42% 45% 40% 35% 30% 25% 15% 20% 13% 12% 10% 15% 8% 10% 1% 5% 0% 6 7 8 9 0 + t n 0 0 0 0 1 0 a Y Y Y Y Y 1 c Y F F F F F a F V Year ended CREATING VALUE PAGE 21

THE TRANSACTION Summary � Boosts earnings per unit and distributions per unit � Introduces Boston Metro – 5 th largest US office market to portfolio � Further consolidates “Homer Building” ownership � High quality and well regarded assets in respective markets � Continues strategic expansion into key US office markets � Increases US weighting to 31% CREATING VALUE PAGE 22

OUTLOOK AND STRATEGY CREATING VALUE PAGE 23

OUTLOOK AND STRATEGY Focus on largest US markets and gateway cities Size (mill sqm) New York 38 Washington DC 23 Chicago 20 Los Angeles 16 Boston 14 Dallas 13 Houston 12 Atlanta 11 Philadelphia 9 CREATING VALUE PAGE 24

OUTLOOK AND STRATEGY Europe offers attractive returns and diversification benefits Country Major markets Size (mill sqm) France Paris, Lyon 52 Netherlands The Hague, Amsterdam 10 Spain Madrid, Barcelona 18 Italy Milan, Rome 18 Belgium Brussels, Antwerp 13 CREATING VALUE PAGE 25

OUTLOOK AND STRATEGY � Australian office market rental growth expected to improve � US job growth to drive US office markets � Total return outlook attractive in selective offshore markets � European office markets provide attractive opportunities and returns CREATING VALUE PAGE 26

SUMMARY � Solid and consistent performance � Portfolio well positioned with little risk � Commitment to drive earnings; - Active asset management / retention / leasing - Value add opportunities - Further offshore and local expansion � Deliver distribution growth CREATING VALUE PAGE 27

FORMAL BUSINESS CREATING VALUE PAGE 28

RESOLUTION ONE Approval of related party acquisitions The acquisitions of a 50% indirect interest in Waltham Woods Corporate Center, Waltham Massachusetts and a further 30% indirect interest in the Homer Building, Washington DC from National Nederlanden Intervest II BV, an ING related company. Benefits of approval � Increase the Fund’s distributions per unit � Improves Fund’s future earnings and growth prospects � Further diversifies the Fund into core US office markets CREATING VALUE PAGE 29

RESOLUTION TWO Approval of the proposed issue of stapled units (“units”) through an institutional placement The proposed placement of units to partly fund the acquisition of the interests in the two properties. Benefits of approval � Maintains the Fund’s 15% placement capacity � Efficient and flexible method of raising capital - smaller discount / lower costs - short time frame � Retail investors can invest through UPP CREATING VALUE PAGE 30

RESOLUTION THREE Approval of the amendments to the Constitutions Amendment of the Fund’s Constitutions to vary the ability of the Funds’ to borrow and to distribute income and to address issues relating to the introduction of Australian equivalents to International Financial Reporting Standards. Benefits of approval � Allows for funding flexibility and consistency � Enables further natural capital hedging � Required to ensure that unitholder equity in the Fund is not treated as debt in the accounts. CREATING VALUE PAGE 31