APN & Real estate securities investing in Australia - Michael Doble CEO Real Estate Securities Pete Morrissey Fund Manager March 2014

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APN & Real estate securities investing in Australia - Michael Doble CEO Real Estate Securities Pete Morrissey Fund Manager March 2014
APN & Real estate securities
investing in Australia
Michael Doble CEO Real Estate Securities
Pete Morrissey Fund Manager

March 2014
APN & Real estate securities investing in Australia - Michael Doble CEO Real Estate Securities Pete Morrissey Fund Manager March 2014
Outline

 APN – about the manager
 Real estate investment trusts (REITs) features
 Why AREITs?
 Reporting season round up
 APN AREIT Fund – features & return profile
 Currency factor
 Conclusion & Market outlook

                                                   2
APN & Real estate securities investing in Australia - Michael Doble CEO Real Estate Securities Pete Morrissey Fund Manager March 2014
APN Property Group
is a specialist Asia Pacific
real estate investment manager

                             3
APN & Real estate securities investing in Australia - Michael Doble CEO Real Estate Securities Pete Morrissey Fund Manager March 2014
APN investment philosophy

 Specialist real estate investment manager

 Income focus

 Active investment management - index unaware

 Capital growth aligned to CPI increases

 Tax effective income

 Fundamentals of real estate core focus

 Quality AREITs purchased at the best price

 Regular monthly income

  Proven investment philosophy well suited to investors seeking a high level of
                        income with inflation proofing

                                                                                  4
APN & Real estate securities investing in Australia - Michael Doble CEO Real Estate Securities Pete Morrissey Fund Manager March 2014
Asia Pacific real estate securities specialists

 Australian platform with an experienced                                                                       Established Asian platform with vast local
                                                                Chief Investment
  investment team and highly disciplined                                                                       networks, expert real estate skills, proven
                                                                     Officer
investment approach established in 1998               Diversification
                                                                Howard BrenchleyCapital growth
                                                                                                                   platforms and research capability

                              Melbourne office                                                               Singapore office

                          CEO Real Estate                                                                CEO Real Estate
                        Securities (Australia)                                                           Securities (Asia)
                                  Liquidity                                                             Tax effective
                           Michael Doble                                                                  Stephen  Finch

        Fund Analyst             Fund Manager             Fund Manager
                                                                            REITs      Fund Manager               Fund Analyst      Operations & Compliance
         Steven Chai          Damian Diamantopoulos       Peter Morrissey             Manish Bhargava               Anyu Tan               Francis Tan
         (Melbourne)               (Melbourne)             (Melbourne)                  (Singapore)                (Singapore)             (Singapore)

                                                                                                        Comparatively
                                  Expertise                                                               low costs

                       Supported by a disciplined, scalable and well resourced operations platform

                                                                                     Low entry
                                                       High yields
        IT                   Client services             Compliance                  threshold
                                                                                    Finance                   Marketing               Distribution

                                                                                                                                                              5
APN & Real estate securities investing in Australia - Michael Doble CEO Real Estate Securities Pete Morrissey Fund Manager March 2014
Australian Real Estate Investment Trusts (AREITs)

                                                    6
APN & Real estate securities investing in Australia - Michael Doble CEO Real Estate Securities Pete Morrissey Fund Manager March 2014
Fundamental features of REITs

  Exposure to a wide ranging portfolio of underlying                                                           Growth is generally consistent with
                                                           Diversification              Capital growth
      (generally) high quality commercial property                                                             CPI over the medium to long term

      Ability to invest (or divest)
         at anytime – can trade          Liquidity                                                           Tax effective        Part of the income received
          REITs just like shares                                                                                                  may be tax advantaged

                                                                          REITs
Managed by teams of specialist                                                                              Comparatively No direct rates, levies,
                                        Expertise                                                                         maintenance, stamp
     property and investment                                                                                  low costs
                      experts                                                                                                     duties etc

               Relative to residential returns/other                                                           Small capital investment required (compared
       investments REITs generally pay out a high                                           Low entry          to large capital commitment required when
                                                             High yields
     percentage of earnings as distributions due to                                         threshold          directly purchasing a commercial property
                 their trust and / or legal structure                                                          investment).

                                                        Risks, such as investment risk, liquidity risk and re-financing risk, apply to an investment in REITs.

                                                                                                                                                             7
APN & Real estate securities investing in Australia - Michael Doble CEO Real Estate Securities Pete Morrissey Fund Manager March 2014
Why Australian REITs?

                  Transparent and secure property markets                          Australia
 Fundamentals     High occupancy and rental growth
                                                                                     Robust banking system
                                Diversification       Capital growth
                                                                                     Underlying inflation
                                                                                      under control
                  Strong GDP growth and economy still expanding
 GDP growth
                  Forecast1 2014 GDP growth: 2.25% - 3.25%                          Steady interest rates

                   Liquidity                                                         Strong fiscal position
                                                                      Tax effective   (relatively)
                  7.5%+2 forecast 2014 dividend yield for APN AREIT Fund
  High yields     Healthy spread to risk free rate of 330 bps                       Improving business and

                                            REITs                                     consumer sentiment

                                                                                     Low unemployment rate
                  Valuations are attractive, discount to NAV                         6.0%³
Capital growth    Favourable credit spreads make acquisitions accretiveComparatively
                   Expertise                                              low costs  Economy relatively
                                                                                      resilient compared to
                  Strong balance sheets                                              the protracted
  Defensive       Conservatively geared up to ~30%                                   slowdowns in the US
                  Diversified and intensively managed borrowings                     and much of Europe

                                                        Low entry
                                  High yields
                                                        threshold
                  Post GFC gearing, earnings and “management” risks have
  Structure        been substantially eliminated                                                 1. RBA
                                                                                                 2. APN models
                                                                                                 3. ABS Dec 13

                                                                                                             8
APN & Real estate securities investing in Australia - Michael Doble CEO Real Estate Securities Pete Morrissey Fund Manager March 2014
Key indicators for value

           Fair value estimates vs AREIT prices (premium/discount)
                                                                     6.6% discount
                                                                        to NAV

                                                                                      Source: UBS estimates;
                                                                                            31 January 2014

                AREIT yield at premium to 10yr bonds
                                                                  Yield remains
                                                                 attractive with a
                                                                 healthy spread
                                                                      ~1.5%

                                                                           Source: IRESS, UBS estimates;
                                                                                        31 January 2014

                                                                                                      9
APN & Real estate securities investing in Australia - Michael Doble CEO Real Estate Securities Pete Morrissey Fund Manager March 2014
Key indicators for value

             Property Trust Sector Premium/ Discount to NTA
                                                                          11.7%
                                                                         premium

                                                              Source: Bloomberg, J.P.Morgan
                                                                           31 January 2014

                                                                                              10
AREITs have returned to the traditional model

                       AREIT 1 month rolling standard deviation
                                                                                      AREITs are
                                                                                       lower risk
                                                                                         again

                                                                     Source: APN FM

                                                                                                       Returned
FY13 - corporate earnings versus rental
                                                                  AREIT sector gearing                  to long
                                                                                                          term
                                                                                                       average
                                                       Focus on                                          ≈30%
                                                        passive
                                                        income
                                                       streams

                          Source: Morgan Stanley; August 2013                   Source: J.P.Morgan 31 December 2013

                                                                                                              11
Australian commercial property sector

           Retail                             Office                         Industrial                                Other

 Retail sales slowly recovering    Business confidence and           GDP supportive                   Healthcare
 Households still repairing         conditions choppy (NAB            AUD should aid Australian         Defensive sector, high demand
  balance sheets                     Survey)                            manufacturers’ and exporters’      for services and long weighted
                                    Slow white collar employment       competitiveness                    lease terms underscore excellent
 Savings ratios still elevated                                                                            fundamentals
                                     growth (Syd/Melb/Perth)           E-retailing continues to
 Vacancy levels stabilised in
  some sectors                      Low unemployment 6.0%¹             support demand for logistics
                                                                                                         Retirement
                                                                        accommodation
 Consumer confidence               Improving transaction activity                                       Strong demographics support
                                                                       Cap rates and land values          long term
  stabilising albeit choppy         Rent growth slowing
                                                                        have troughed; positive rental
 Slowing rates of rent growth      Elevated incentives                                                  Stronger housing market a
                                                                        growth
  some negative reversions                                                                                 positive
                                    National CBD vacancy at           Prime asset valuations to         Sector still maturing
 Stable non-discretionary           11.8%² - Q4 2013                   increase due to increased
  spending                                                              demand and limited supply
                                    Lower barriers to entry (GFC                                        Residential
 Highest barriers to entry          capped supply this cycle)
                                                                                                          Price appreciation
                                                                                                          Cost of debt low
                                                                                                          Structural undersupply

                                                                                                         Hotel (Accommodation)
                                                                                                          Not structured like traditional
                                                                                                           property
                                                                                                          Landlords exposed to business
                                                                                                           risk
                                                                                                          Higher risk sector
                                                                                                               1. Source: ABS January 2014
                                                                                                               2. Source: JLL December 2013

                                                                                                                                              12
Why Australian REITs

                   Upside                                Downside
                            Diversification   Capital growth
                 indicators                                risks

         Steady domestic macro                  US and Euro region fragility
          environment
                  Liquidity
                                                 China – pullback
                                                             Tax effective
         Steady capital values and              Geopolitical tensions (Middle
          property fundamentals                   East/ Korean Peninsula)
                                                 Capital values stagnate
         Lower debt margins and
          steady base rates mean
                                        REITs    Rising white collar
          debt cost reversion for                 unemployment
          some AREITs (albeit                    Choppy consumer
                                                           Comparatively
                                                                       and
                 Expertise
          diminishing)                                        low costs
                                                  business sentiment
         Accretive acquisitions                 Excess equity from capital
          possible                                raising
         Strong demand for assets
          from offshore investors to            Low entry
                               High yields
          push up values                        threshold

                                                                                  13
Reporting season roundup

 Overall:
  Earnings tailwinds from lower debt costs (Ave debt levels steady).
  NTA was up 2.5% on the half year and 3.7% over the past year.
  Net Operating Income (NOI) growth was up (avg) 2.3% over the six months
  EPS / DPS growth was 3.3% & 5.7% respectively (DPS driven by higher payout to 83%)
  Occupancy rates reduced marginally
 Retail:
  Releasing spreads remain negative, non-discretionary remain positive.
  Strong Q4 2013 and January 2014 – lead to an optimistic outlook for 2014.
 Office:
  Soft demand, higher vacancy rates and incentives.
  Brisbane and Perth weak, Melbourne and Sydney retain stronger outlooks.
  NOI growth remains robust at 2.7% - the strongest in the AREIT sector.
  Positive tailwinds: residential conversions and modest new supply levels.
 Industrial:
  NOI growth around 1.8% however vacancy levels increased across AREIT industrial
 portfolios to around 4.9%.
  Stronger GDP is supportive.
                                                                                 14
APN AREIT Fund key features

                              15
APN AREIT Fund: Key features

        Strategy                              Objective                       Differentiation
 Strategy                       Objective                    Benefits
  Invests in Australian              Gross income that                 Monthly distributions
   listed property securities          equates to approximately
                                                                         Tax advantaged
   and cash/fixed interest             110% of the average yield
                                                                          income
                                       of the S&P/ASX 200
  APN continually review              Property Trusts Dividend          Lower volatility
   and, if appropriate,                Yield series
   re-weight the Australian                                              Index unaware
                                      Tax advantaged income
   Securities Fund’s                                                     Focus on Australian
   investments within its             Capital growth at least
                                                                          rental income
   asset allocation                    matching CPI over
   parameters with the                 investment horizon 5-7
   objective of optimising             years
   the AREIT Fund’s                   Minimise volatility
   distributable income

The Funds aim to provide a consistent, relatively high level of income with some capital
                      growth sourced from a variety of AREITs.

                                                                                                  16
APN AREIT Fund

                                 APN AREIT Fund                                 Range            Target           Current¹

                                 AREITs                                        90-100%             98%              96.8%

                                 Cash²/fixed interest                           0-10%               2%              3.2%
                                                                                                  1. As at 28 February 2014
                                                                     2. Cash includes accrued income and accrued expenses

                                                                                                                                      APN AREIT Fund
  Income objective                                                                                            110% of S&P / ASX 200 Dividend series

  Capital growth objective                                                                                                                                   CPI

  Risk philosophy                                                                                                                                      Low risk

  Stock exposure – corporate earnings3                                                                                                                  20-30%

  Stock exposure – international assets                                                                                                            Up to 100%

  Portfolio exposure – corporate earnings                                                          Max 15% of total income from corporate earnings

  Portfolio exposure – international assets                                                       Max 50% of S&P / ASX 300 Property Index weight

  Look through gearing estimates                                                                                                                    Circa 30%

  MER4                                                                                                                                                   0.85%

  Liquidity                                                                                                                           Sell < 20 trading days

                  3. Denotes upper limit applies if substantially annuity style earnings, can invest up to 50% of index weight irrespective of corporation earnings
                                                                                                                         4. Where no adviser remuneration is paid

                                                                                                                                                                      17
NZ REITs vs. Australia & the APN AREIT Fund

New Zealand Real Estate                Price      NZ$m         Index %
Trusts                                13/03/14     Cap                                                  NZ REITs vs. AREITs
ARG      ARGOSY PROP                   $0.91         $716      13.7%
AUG      AUGUSTA CAPITAL               $0.78             $63    1.0%                                     High concentration
                                                                                                                 Commercial  risk
CDI      CDL INVESTMENTS               $0.55         $151       1.1%                                             property
                                                                                                         Small number     sectors:
                                                                                                                       of stocks
DNZ      DNZ PROPERTY                  $1.53         $452       8.6%
GMT      GOODMAN PROP                  $0.97       $1,172      18.4%
KIP      KIWI INCOME PT                $1.14       $1,157      22.1%                                     Very low liquidity
NPT      NPT LTD                       $0.62         $100       1.9%
PFI      PROPERTY FOR IND              $1.28         $527      10.1%                                     Mkt Cap NZ$6b vs. NZ$93b
PCT      PRECINCT PROPs                $1.02       $1,076      16.7%
VHP      VITAL HEALTHCARE              $1.29         $437       6.5%
10       Total/Average                             $5,850       100%

Comparison (NZD)                        NZ^       Aust*         APN~     A$/NZ$ Cross           $0.95
         Yield
         Market Cap/Size ($m) #
                                       5.9%
                                      $5,845
                                                   5.7%
                                                 $92,586
                                                                7.7%
                                                                $536
                                                                         ^ = NZX Property Index
                                                                         * = S&P/ASX 200 AREIT Index
                                                                                                        NZ REITs vs. APN AREIT Fund
         No of Constituents
         Top 3
                                        10
                                       57%
                                                    17
                                                   47%
                                                                 29
                                                                3.0%
                                                                         ~ = APN AREIT Fund
                                                                         # = APN as at Feb 14
                                                                                                         Less diversification
         Top 5
         6mnth Avg T/O (Shares)
                                       79%
                                      802,530
                                                   63%
                                                 4,927,430
                                                               11.8%
                                                                 n/a
                                                                         + = 19 Jan 2009
                                                                         Source: Bloomberg/APN
                                                                                                         Lower yield
         Daily T/O Total Value ($m)
Returns 1 Year
                                        $6
                                       2.3%
                                                   $321
                                                   3.9%
                                                                 n/a
                                                                5.7%
                                                                                                         Less liquid market
         3 Years
         Since Inception
                                       12.6%
                                       11.4%
                                                  11.5%
                                                  11.2%
                                                               13.3%
                                                               15.8%
                                                                                                         Competitive risk-adjusted
Risk     Since Inception+              9.2%       15.7%        12.8%                                      returns

                                                                                                                                      18
APN AREIT Fund risk & return profile; AUD:NZD factor

                                                       19
APN AREIT Fund risk return analysis

         APN AREIT Fund vs Benchmark over 5 yrs to 31 January 2014

              Performance (%)

                                                                   APN AREIT Fund
                                                                   S&P/ASX 300 Property
                                                                   Trusts Accumulation Index
                                                                   Australian listed property
                                                                   peer group*

                                                              *Funds with more than 5 years’
                                                              performance. Returns are calculated by
                                                              Morningstar after fees are deducted.
                                                              Past performance in not an indicator of
                                                              future performance.
                                                              Source: Morningstar Direct 6 February
                                                              2014
                                       Risk (%)
APN AREIT Fund consistently offers strong risk-adjusted returns underpinned by
     considerably lower levels of volatility relative to the Index and peers
                                                                                                   20
APN AREIT Fund versus the market

      Metric                                          APN AREIT Fund                                 Index¹

      Current/running yield                                    7.7%²                                 5.7%³

      Number of investments                               29 (cover 30)                                 17

      Offshore exposure                                         8.3%                                 15.7%

      Domestic exposure                                        91.7%                                 84.3%

      Corporation earnings exposure4                            9.9%                                 18.4%

      Look through gearing5                                    28.4%                                 29.0%

      1 year standard deviation6                               10.2%                                 11.7%
                                                                    1. S&P/ASX 200 Property Trust Accumulation Index
                                                                     2. Approx. current monthly distribution (annualised)
                                                                               divided by the latest entry unit price (net of
                                                              management fees and expenses) as at 28 February 2014
                                                                    Distributions may include a capital gains component
                                   3. Approx. S&P/ASX 300 Property Trust Accumulation Index as at 28 February 2014
                                     4. Earnings that are deemed non-passive i.e. development and funds management
                                                                   5. Weighted average gearing as at 28 February 2014
                                                             6. Standard deviation calculation based on monthly returns
                                                                                                   Source: UBS/APN/JPM

       The APN AREIT Fund has a superior running yield and lower
                   risk factors compared to the Index

                                                                                                                                21
APN AREIT Fund | performance history

As at 28 February 2014

Time period            APN AREIT      APN AREIT           APN AREIT                       Index²                Out/ (under
                      Fund Growth¹   Fund Income¹         Fund Total¹                                          performance)

1 month                  3.1%           0.7%                    3.8%                       4.3%                      (0.5%)

3 months                 1.4%           2.0%                    3.4%                       3.4%                       0.0%

6 months                 1.2%           4.0%                    5.2%                       4.2%                       1.0%

1 year                   (2.1%)         7.8%                    5.7%                       3.9%                       1.8%

3 years pa               4.2%           9.2%                   13.3%                      11.5%                     1.8%pa

5 years pa               9.1%           10.0%                  19.1%                      16.1%                     3.0%pa

Since inception³ pa      6.3%           9.5%                   15.8%                      11.2%                     4.6%pa
                                                1. Retail returns (net of all fees). Distributions may include a capital gains component
                                                2. Approx. S&P/ASX 300 Property Trust Accumulation Index as at 28 February 2014
                                                                                                      3. Fund inception 19 January 2009

             The APN AREIT Fund has significantly outperformed the Index return
                           over the same period since inception

                                                                                                                                           22
APN AREIT Fund performance benchmark | yield

Investment objective: 110% of average yield of the S&P/ASX 200 Property Trusts Dividend Yield series

  Date                    APN AREIT Fund    Benchmark Yield²   110% of Benchmark                    Out / (under
                              Yield¹                                 Yield                         performance)

  Year ending June 2013        8.3%              5.6%                    6.1%                             2.2%

  Year ending June 2012        9.7%              6.6%                    7.3%                             2.4%

  Year ending June 2011        9.1%              5.9%                    6.5%                             2.6%

  Year ending June 2010       10.1%              6.4%                    7.0%                             3.1%
                                                               1. Average distributions before management fees and expenses.
                                                                           Distributions may include a capital gains component
                                                                                  2. Source: AREIT 200 Average Dividend Yield

                    Income is the primary objective of the APN AREIT Fund

                                                                                                                            23
Currency Implications for NZ Investors – NZD:AUD FX trends

                               NZD:AUD and Std Dev
           $0.95

           $0.90

           $0.85

           $0.80

           $0.75

           $0.70
                                            Avg $0.83
           $0.65
                   Sep-93

                   Sep-00

                   Sep-07
                   Nov-94

                   Nov-01

                   Nov-08
                   Mar-90

                   Mar-04

                   Mar-11
                   Mar-97
                    Jul-92

                    Jul-06
                    Jul-99

                    Jul-13
                   May-91

                   May-05

                   May-12
                   May-98
                   Jan-89

                   Jan-03

                   Jan-10
                   Jan-96

 NZ$ appreciation vs. A$ has been extreme over past year, the magnitude of this movement only
  being exceeded once since the NZ$ floated.
 Average rate between 1989 and 2014 is $0.83 – $0.94 currently, 14% lower.
 History shows reversion back to the average level will occur at some time.
 Using a Standard Deviation of 1.5 indicates that the NZD has traded at or above A$0.92 less
  than 7% of the time since the NZ$ floated - highlighting the irregularity of this occurrence.
 Strength of NZ$ supports Australian investment thesis.

                                                                                            24
Conclusion

             25
APN AREIT Fund | Benefits at portfolio level

         Income                     Performance                        Growth                   Diversification

  Relatively high               Proven track                  Inflation proofing:          Low correlation with
   income                         record of market               capital growth                equities / equity fund2
                                  outperformance                 generally aligned to         Low correlation with
  Monthly distributions
                                                                 CPI over the longer           global REITs3
                                 Low standard
  Foreign Inv Fund can                                          term
                                  deviation                                                   Active with high
   provide tax benefits
                                  positively                    Strong GDP can be             tracking error
   for NZ investors
                                  contributes to                 a positive force for >        provides
   contributing to overall
                                  overall portfolio              CPI growth                    diversification to
   tax effectiveness
                                  volatility1                                                  passive / index
                                                                                               positions4
Notes
1. Lower volatility than S&P/ASX300 AREIT TR over all periods
2. AREIT Fund focus on passive rental earnings (50% less corporate earnings than S&P/ASX300 AREIT TR index)
    providing superior diversification to equities / equity funds
3. 91.7% of underlying assets are Australian commercial property (incl 2.2% NZ)  low correlation with Global REIT Funds
4. AREIT Fund invests in underlying REITs selected based on property fundamentals aligned to APN philosophy / style
   without reference to the S&P/ASX300 AREIT TR index composition                                   As at 31 December 2013

                                                                                                                      26
Conclusion and AREIT sector outlook

 Global uncertainties set to continue into CY 2014
 Australian property markets in equilibrium (landlord and tenant perspective).
 AREIT valuation metrics:
  -   Yield spread to bonds is attractive
  -   Trading at a modest discount to NAV
  -   ~ 2.6% 5 year DPU growth anticipated
  -   Lower debt costs remain a tailwind
 The APN style to continue to benefit from the overall investment climate
 We remain optimistic and expect the AREIT sector to deliver 9-11% total return for
  CY14

                                                                                       27
APN contact details

          Michael Doble                Pete Morrissey                        Peter Mill
          CEO Real Estate Securities   Fund Manager Real Estate Securities   Head of Channel Development
          +61409023702                 T: +613 8656 1040                     T: +613 8656 1071
          +61386561030                 M: +614 1987 2833                     M: +614 0920 9036
          mdoble@apngroup.com.au        pmorrissey@apngroup.com.au          pmill@apngroup.com.au

Adviser Services Hotline
1300 027 636
APN Property Group
Level 30,101 Collins Street,
Melbourne, Vic 3000
www.apngroup.com.au

                                                                                                      28
New Zealand contact details for APN Funds

                                      Toll free NZ 0508 410 815

  Clayton Coplestone                  David Batty
  Director                            Key Account Executive
  T +6421 410 815                     T +6421 288 0303
   clayton@heathcoteinvestment.com    david@heathcoteinvestment.com

                                                                        29
Appendix

           30
Current running yield above 7.7%pa1

Outperforming the AREIT Index2
by 4.6%pa since inception                                                                              A leading Australian
                                                                                                       property securities fund

                                                                                                        Proven investment philosophy
                                                                                                         established since 1998
                                                                                                        Income focussed
                                                                                                        Monthly distributions
                                                                                                        Actively managed portfolio                                             Fund size
                                                                                                        Lower than market volatility                                           $536.08m
                                                                                                                                                                           As at 28 February 2014

                                                                                                        100% liquid

1. As at 28 February. Current running yield is calculated by dividing the annualised distribution rate divided by the latest entry unit price. Distributions may include a capital gains component. 2.
S&P/ASX 300 Property Trusts Accumulation Index. APN AREIT Fund inception 19 January 2009. Returns are calculated after all fees and expenses are deducted. Assumes distributions are
reinvested. Investors' tax rates are not taken into account when calculating returns.
General risks apply. APN Funds Management Limited is the responsible entity and issuer of the Fund. Before making an investment in the Fund you should consider important information about
risks, costs and fees in the PDS available at www.apngroup.com.au or by contacting APN on 1800 996 456. Past performance is not an indicator of future returns.

                                                                                                                                                                                                 31
Investment process overview and risk management

       A detailed, methodical and insightful process that enforces a consistent approach to screen
                                       Diversification
                            for risk and                  Capital
                                         accurately measure       growth reward
                                                              potential

                        Investment process                                                                Risk management

         6. Detailed                        1. Macro factors:                               6. Portfolio                   1. Macro factors:
                                          Economic and property                              construction                   Markets, locations,
            valuations on           Liquidity
                                          Property demand &                                            Tax effective
            majority of Aust                                                                                                 economic influences
                                              supply
            and Asian REITs

                                Valuation:
                              Yield / Multiple        2. Overlay micro  REITs                               Multi disciplined
5. Build a detailed               CAPM                local market
                                                                                   5. Trust analysis                                2. Financial
  Aust and Asian REIT                                  knowledge:                                            approach to risk
knowledge bank                     Beta                Market outlooks                                      management               market risks
                           DCF (broker & APN)          Leverage deep networks                        Comparatively
                                    Expertise            to assess local nuances
                                                                                                         low costs
                                NAV / NTA
                              NOI Forecast

         4. Screen                          3. Assess all
            investment                         factors that will                           4. Manager                      3. Asset assessments
            managers                           impact risk and                               assessment
                                               return
                                                                                        Low entry
                                                         High yields
                                                                                        threshold

                                                                                                                                                   32
Disclaimer

This summary has been prepared by APN Funds Management Limited (APNFM) (ACN 080 674 479 ABN 60 080 674 479, AFSL No 237500) for general
information purposes and whilst every care has been taken in relation to its accuracy, no warranty is given or implied. APNFM is a wholly owned subsidiary of
APN Property Group Limited ACN 109 845 068. APNFM is the responsible entity and issuer of the APN Property Group products. The information in this
document is current only as at 11 March 2014 or as otherwise stated. This document is for information purposes only and only intended for the audience to who it
is presented. This document comprises general financial advice only. The information provided does not constitute investment advice and does not purport to
contain all relevant information necessary for making an investment decision. It is provided on the basis that the recipient will be responsible for making their own
assessment of their financial needs and will seek further advice about the investment as is considered appropriate. Returns shown are for retail investors, net of
fees and costs and are annualised for periods greater than one year. Returns and values may rise and fall from one period to another. Past performance is not an
indication of future performance.

This presentation may contain certain forward-looking statements regarding future events and the future financial performance of APN funds, including
statements regarding forecast earnings and distributions, net tangible asset backing, anticipated gearing and property market fundamentals. Actual outcomes
may differ materially from these forward-looking statements and no representation or warranty is given in relation to these including as to their completeness or
accuracy on the basis on which they were prepared. This presentation contains statements that are subject to risk factors associated with an investment in APN
funds and the industry in which APN operates.

General risks apply to an investment in APN funds and must be considered before making an investment. In deciding whether to invest or continue to hold an
investment in APN funds, a person should obtain a copy of the Product Disclosure Statement for the relevant fund and consider its content. We recommend that
a person obtain financial, legal and taxation advice before making any financial investment decision. A copy of the PDS is available from APN Funds
Management Limited, at Level 30, 101 Collins Street, Melbourne 3000 or by visiting www.apngroup.com.au.

No warranty is made as to the accuracy or reliability of any estimates, opinions, conclusions, recommendations (which may change without notice) or other
information contained in this document and, to the maximum extent permitted by law, APNFM disclaims all liability and responsibility for any direct or indirect loss
or damage which may be suffered by any recipient through relying on anything contained in or omitted from this document. This material shall not be reproduced
or used for any other purpose without the express permission of APNFM.

© APN Property Group Limited

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