Presentation map

A brief history of securitised real estate What defines a REITThe benefits of investment through REITsDemand drivers and investment trends

A Brief History of Securitised Real Estate

Post WW2 real estate investment by life companies

1960’s & 70’s: Pension fund appetite for real estate emerges

1980’s: RE recognised as a fully fledged asset classIncreased familiarity of investors Availability of industry performance data (NCREIF) Risk characteristics (low correlation)

1990’s – today: RE performance as an asset class rewarded Total (risk adjusted) returns Low volatility Inflation hedging potential Portfolio diversification benefits

A Brief History Continued: The REIT Phenomenon

In the 1960’s & 70’s the first Dutch (FBI), US (REIT) and Australian (LPT) securitised vehicles emerged

Many countries have since adopted a REIT-type structure:

Malaysia (1986) REIT Canada (1993) REITBelgium (1995) REITs Singapore (1999) S-REITJapan (2000) J-REIT Korea (2001) K-REIT France (2003) SIIC Taiwan (2003) REIT Hong Kong (2003) REIT Bulgaria (2005) REIT

And more to come :United Kingdom to commence from 2007 Germany – Enabling legislation expected in 2006

A proposed definition of REITs

A REIT is a widely held company or trust that:derives its income primarily from long term investment in real estate,

distributes the majority of that income annually, and

does not pay on tax the distributed income.

Notes:

The definition assumes that:1. REITs satisfy all applicable domestic law; and,2. the concept of "widely held" and 'long-term investment‘ is determined domestically.

Five reasons for REITs

Diversification

Distributions

Liquidity

Performance

Transparency

The REIT market is big … and will get bigger

Tradableinvestments

US $ 6.3 trillion

50% Americas 27% Asia-Pacific

23% Europe

All CommercialReal Estate

US $ 15 trillion

39% Americas21% Asia-Pacific

37% Europe

Sources: EPRA/NAREIT, LaSalle Investment ManagementEstimates are as at Q4 2005

Listed Real Estate

US $ 1.3 trillion

Investor demand to remain strong

Increased allocations to real estate & strong inflows tied to long term demographic changes:

• Aging of the population & demand for annuity style, low risk income streams

• Increased savings – pension and superannuation funds (15%/year)

Percentage of population 65+ years

2000 2010 2020

US 12.50% 13.20% 16.60%

Japan 17.10% 21.50% 26.20%

Germany 16.40% 19.80% 21.30%

Italy 18.20% 20.80% 24.10%

Britain 16.00% 17.10% 19.80% Source: OECD estimates

Demand & allocations are on the rise everywhere

Asia

Europe

US

Australia

free cash flow to be invested

$$$

Investor allocations

to real estate

Source: Pinnacle Property Group

Domestic supply is constrained in mature markets

Cross border investment growing fastest

0 10 20 30 40 50 60

Domestic

Intra-regional

Inter-regional

Overall

2005 investment growth (%)Source: Jones Lang Lasalle

Inter-regional capital flows of US$114bn in 2005

Source: Jones Lang Lasalle

Inter-regional capital flows of US$114bn in 2005

24.225.1

3.8

3.2

Global Source

of Funds

Global

5.30.9

Source: Jones Lang Lasalle

Source: Jones Lang Lasalle

Inter-regional capital flows of US$114bn in 2005

5.3

24.225.1

3.8

3.2

Global Source

of Funds

Global

3.7

1.3

Asia Pacific

11.1

2.7

0.9

Source: Jones Lang Lasalle

Inter-regional capital flows of US$114bn in 2005

5.3

24.225.1

3.8

3.2

Global Source

of Funds

Global

3.7

1.3

Asia Pacific North America

2.7

1.4

9.2

6.2

11.1

2.7

0.9

Source: Jones Lang Lasalle

Inter-regional capital flows of US$114bn in 2005

5.3

24.225.1

3.8

3.2

Global Source

of Funds

Global

3.7

1.3

Asia Pacific North America

2.7

1.4

9.2

6.2

11.1

2.7

Europe

0.5

0.86.5

5.9

0.9

Source: Jones Lang Lasalle

Inter-regional capital flows of US$114bn in 2005

0.95.3

24.225.1

3.8

3.2

Global Source

of Funds

Global

3.7

1.3

Asia Pacific North America

2.7

1.4

9.2

6.2

11.1

2.7

Europe

0.5

0.86.5

2.48.4

2.91.5 0.30.0

Middle East

5.9

Source: Jones Lang Lasalle

Discussion points

Real estate is an established and expansive asset class:

Is this appropriately reflected under tax treaty arrangements?

Investor demand for real estate will remain strong. Investors want access to international options.

What tax distortions should be eliminated?

REITs are key to meeting investor demand. What is an appropriate withholding rate on all REIT distributions?Should there be a different withholding tax rate for portfolio investors? REIT investors in REITs? Others?