Explanatory Memorandum for Recommended Cash … Announcement REAL ESTATE INVESTMENT MANAGEMENT Date 10 February 2011 Fund ING Industrial Fund Explanatory Memorandum for Recommended

ASX Announcement REAL ESTATE INVESTMENT MANAGEMENT

Date

10 February 2011

Fund

ING Industrial Fund

Explanatory Memorandum for Recommended Cash Proposal Attached is a copy of the ING Industrial Fund Explanatory Memorandum for a recommended proposal by Goodman Industrial Funds Management Limited as trustee of Goodman Trust Australia to acquire all of the ordinary units of ING Industrial Fund. A copy of the Explanatory Memorandum will be despatched to unit holders by 16 February 2011. The meeting to vote on the Proposal will be held on 17 March 2011 at 2.30pm.

For further information, please contact

Paul Toussaint Chief Executive Officer - ING Industrial Fund ING Real Estate Investment Management Australia T: +61 2 9033 1000

Johanna Keating Head of Investor Relations & Marketing ING Real Estate Investment Management Australia T: +61 2 9033 1096 M:+61 409 168 848

About ING Industrial Fund ING Industrial Fund (ASX code: IIF) is an externally managed ASX listed real estate investment trust that owns, develops and manages a diversified portfolio of 61 industrial properties and campus facilities. The Fund’s quality industrial properties are located near major infrastructure networks and are highly sought after by blue chip tenants from the logistics, consumer durables and fast moving consumer good sectors. IIF has total assets under management of $2.9 billion with investments located across Australia and Europe.

About the ING Real Estate Investment Management ING Industrial Fund is one of five listed real estate investment trusts that are managed by ING Real Estate Investment Management Australia on behalf of 60,000 investors. Globally, ING Real Estate Investment Management focuses on the investment management of quality real estate in all major global markets with a total portfolio of more than A$95 billion. ING Real Estate Investment Management is one of the leading investment management companies and serves a broad client base from five continents, Europe, North America and South America, Asia and Australia. ING Real Estate Investment Management is part of ING Group, a global financial institution of Dutch origin offering banking, investments, life insurance and retirement services to over 85 million private, corporate and institutional clients in more than 40 countries.

www.ingrealestate.com.au 1

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For a recommended proposal by Goodman Industrial Funds Management Limited ACN 147 891 487 as trustee of Goodman Trust Australia to acquire all of the ordinary units in ING Industrial Fund.

This is an important document and requires your immediate attention. You should read this document in its entirety before deciding whether to vote in favour of the resolutions to approve the Proposal and, if necessary, consult your investment, tax, legal or other professional adviser. You may call the Unitholder information line on 1300 653 497 (within Australia) or +61 2 8280 7057 (outside Australia) if you have any questions.

ING Management Limited (ABN 15 006 065 032; AFSL 237534) as responsible entity of ING Industrial Fund (ARSN 089 038 175)

ING Industrial FundExplanatory Memorandum

real estate investment management

www .ingrealestate.com.au

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ING Industrial Fund

Chairman’s letter

10 February 2011

Dear Unitholder

On 24 December 2010, ING Management Limited (IML), the responsible entity of ING Industrial Fund (IIF), entered into an Implementation Agreement with Goodman Industrial Funds Management Limited (GTA Trustee) in its capacity as trustee of Goodman Trust Australia (GTA), a unit trust which upon implementation of the Proposal will be owned by the Goodman Group and three major pension/sovereign wealth funds (together the Consortium Members) to acquire all of the ordinary units in IIF (Units) under a trust scheme (Proposal).

The Proposal requires the approval of IIF Members at a meeting to be held on 17 March 2011.

CoNSIdeRATIoNUnder the Proposal, Unitholders are being offered 54.6 cents per Unit in cash (the offer Price) less any distributions Unitholders become entitled to from 24 December 2010 until implementation of the Proposal (the Consideration). Following payment of the December quarter 2010 distribution of 0.8025 cents per Unit, Unitholders will therefore receive Consideration of 53.7975 cents per Unit if the Proposal proceeds. If the Proposal is implemented, Unitholders are not expected to become entitled to any additional distributions in addition to the December quarter 2010 distribution. If Unitholders become entitled to any future distributions, the Consideration will be reduced by the amount received.

The Independent expert has concluded the Proposal is fair and reasonable and in the best interests of Unitholders.The Independent Expert, Deloitte Corporate Finance, has reviewed the Proposal and has concluded that the Proposal is fair and reasonable and in the best interests of Unitholders. The Consideration is within the Independent Expert’s valuation range of A$0.534 and A$0.550 per Unit (which takes the December quarter 2010 distribution into account).

Further detail on the reasons for its opinion and issues considered by the Independent Expert is contained in the Independent Expert’s Report set out as Appendix A of this Explanatory Memorandum.

The IML Independent directors unanimously recommend that you vote in favour of the Proposal.The Board of IML, as responsible entity of IIF, undertook a strategic review of IIF and examined a range of initiatives to maximise value for Unitholders before deciding to unanimously recommend the Proposal. Section 2.3 of this Explanatory Memorandum describes the alternatives considered.

CoNTeNTS

Chairman’s letter IFC

Key dates 2

What you need to do 3

Proposal at a glance 4

Disclaimers and important notices 6

1 Questions and answers 8

2 Details of the Proposal 13

3 Evaluation of the Proposal 20

4 Meeting/Voting details 25

5 Profile of IIF 28

6 Profile of Goodman Trust Australia 34

7 Tax consequences for Unitholders 37

8 Additional information 42

9 Glossary 51

Appendix A Independent Expert’s Report 58

Appendix B Supplemental Deed 153

Appendix C Deed Poll 171

Appendix D Notice of Meeting 180

Corporate Directory IBC

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1explanatory memorandum

In undertaking the strategic review of IIF, an Independent Board Committee (IBC) was established given potential conflicts of interest between ING Real Estate B.V. (INGRe), INGRE’s global real estate investment management platform (ReIM) and IML on behalf of Unitholders. The IBC comprised those IML Directors who are independent from INGRE. To further ensure that the best interests of Unitholders were advanced on an independent basis, the Board of IML also adopted IBC management protocols to govern its conduct. Refer to section 2.2 for a discussion on the IBC management protocols adopted.

The IBC concluded that the Proposal was the preferred option to maximise Unitholder value. After a number of proactive approaches to other parties seeking alternative offers, and careful consideration of the Proposal, the IML Independent Directors unanimously recommend that IIF Members vote in favour of each Resolution to approve the Proposal, subject to there being no superior competing proposal and the Independent Expert not changing or withdrawing its conclusion that the Proposal is in the best interests of Unitholders. A summary of the IML Independent Directors’ evaluation of the Proposal is set out in section 3.

BASIS FoR The IML INdePeNdeNT dIReCToRS’ ReCoMMeNdATIoNThe IML Independent Directors believe that the Proposal provides Unitholders with an opportunity to immediately realise a price for their investment in IIF at a premium to IIF’s trading history prior to the emergence of the Proposal, with the Consideration of 53.7975 cents per Unit representing:

– A premium of 17.0% to the closing price of 46.0 cents on 27 October 2010, the day prior to the announcement that IML had received an indicative proposal; and

– A premium of 23.4% to the six month volume weighted average price prior to 27 October 2010 of 43.6 cents.

In making their recommendation, the IML Independent Directors had regard to a number of factors, including:

– The proximity of the Consideration of 53.7975 cents per Unit to Adjusted NTA of 54.608 cents per Unit;

– The recent trading price of IIF Units and the recent trading of the Australian real estate investment trust sector following the announcement of the Proposal; and

– That after proactive approaches to other parties no superior competing proposal has emerged to date.

These considerations have resulted in the unanimous recommendation of the Proposal by the IML Independent Directors.

MeeTING dATeSThe Proposal is subject to a number of conditions, including the approval of IIF Members. The key conditions and their current status in being satisfied are set out in section 2.5(c) of this Explanatory Memorandum.

The Meeting to consider the Proposal will be held on 17 March 2011 at Swissôtel Sydney, Level 8, 68 Market Street, Sydney NSW 2000, commencing at 2.30pm (AEDST).

If the Proposal is approved by IIF Members and all remaining conditions to implementation of the Proposal are satisfied or otherwise waived (if permitted), it is expected that the Consideration for your Units will be sent to you on or about 30 March 2011.

YoUR voTe IS IMPoRTANTIn order for the Proposal to proceed, IIF Members must pass all of the Resolutions to be proposed at the Meeting.The Resolutions include a special resolution which must be passed by at least 75% of the votes cast being voted in favour. ING Group entities, the Consortium Members and their associates are not permitted to vote on the Resolutions.

This Explanatory Memorandum contains important information in relation to the Proposal, including the reasons for the IML Independent Directors’ recommendation and a summary of certain reasons why you might vote for or against the Proposal. Please read this Explanatory Memorandum carefully and in its entirety before making your decision and voting (whether in person, by corporate representative or by proxy) at the Meeting.

If you have any questions in relation to the Proposal, please call the Unitholder information line on 1300 653 497 (within Australia) or +61 2 8280 7057 (outside Australia) Monday to Friday between 8.30am to 5.30pm (AEDST). Alternatively, contact your investment, tax, legal or other professional adviser.

I look forward to your participation at the Meeting on 17 March 2011 and encourage you to vote in favour of the Proposal.

Yours sincerely

Kevin McCann AM Chairman and Independent Director ING Management Limited

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ING Industrial Fund 2

Key dates

event date

Last date and time to lodge Proxy Forms 15 March 2011 at 2.30pm

Meeting Record Date – Date and time to determine your eligibility to vote at the Meeting

15 March 2011 at 7.00pm

Meeting date 17 March 2011 at 2.30pm

IF The PRoPoSAL IS APPRoved BY IIF MeMBeRS:

Second Court Hearing – Court judicial advice provided that the Resolutions have been approved at the Meeting

18 March 2011

Effective Date 18 March 2011

Last day of trading of Units on ASX 21 March 2011

Implementation Record Date – All Unitholders who hold Units on the Implementation Record Date will be entitled to receive the Consideration for your participation in the Proposal

28 March 2011

Implementation Date – Date on which the Proposal will come into effect 29 March 2011

Date on which the Consideration is expected to be paid to Participants 30 March 2011

Note:Dates and times are indicative only and subject to change. Unless otherwise specified, all times and dates refer to AEDST. Any changes to the timetable will be notified to ASX and posted on IIF’s website at www .ingrealestate.com.au.

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What you need to do

Step 1 – read the explanatory memorandumThis Explanatory Memorandum sets out information relating to the Meeting of IIF Members to be held at 2.30pm (AEDST) on 17 March 2011 at Swissôtel Sydney, Level 8, 68 Market Street, Sydney NSW 2000 to consider the Proposal, and includes the Notice of Meeting.

The information contained in this Explanatory Memorandum and the Notice of Meeting is important. You should read this document carefully and if necessary seek your own independent advice on any aspects about which you are not certain.

If prior to 7.00pm (AEDST) on 15 March 2011 you have sold all of your Units, please disregard this document.

Step 2 – voteThe Meeting is scheduled for 17 March 2011 at:

Swissôtel Sydney, Level 8, 68 Market Street, Sydney NSW 2000 commencing at 2.30pm (AEDST).

You can vote on the Resolutions either by attending the Meeting (or having your attorney, or in the case of a body corporate, a corporate representative attend) or by completing and returning the Proxy Form accompanying the Explanatory Memorandum. Proxy Forms must be received by 2.30pm (AEDST) on 15 March 2011.

For details on how to complete and lodge the Proxy Form, please refer to the instructions on your Proxy Form. For details on having your attorney or corporate representative attend the Meeting, please refer to section 4.

For a recommended proposal by Goodman Industrial Funds Management Limited ACN 147 891 487 as trustee of Goodman Trust Australia to acquire all of the ordinary units in ING Industrial Fund.

This is an important document and requires your immediate attention. You should read this document in its entirety before deciding whether to vote in favour of the resolutions to approve the Proposal and, if necessary, consult your investment, tax, legal or other professional adviser. You may call the Unitholder information line on 1300 653 497 (within Australia) or +61 2 8280 7057 (outside Australia) if you have any questions.

ING Management Limited (ABN 15 006 065 032; AFSL 237534) as responsible entity of ING Industrial Fund (ARSN 089 038 175)

ING Industrial FundExplanatory Memorandum

*X99999999999*X99999999999

I/We, being a member(s) of ING Industrial Fund (IIF) are entitled to attend and vote at the Meeting, so hereby appoint:

Resolution 1Approval of amendments to IIF Constitution

Resolution 2Approval of the Proposal

Resolution 3Approval of the change of responsible entity of IIF

For Against Abstain*

If you would like to attend and vote at the Meeting, please bring this form with you. This will assist in

registering your attendance.

Proxies will only be valid and accepted by the responsible entity of IIF if they are signed and received no later than 48 hours before the Meeting.Please read the voting instructions overleaf before marking any boxes with an X

UnITHOLDER VOTInG FORM

or failing the person/body corporate named, or if no person/body corporate is named, the Chairman of the Meeting, as my/our proxy and to vote for me/us on my/our behalf at the Meeting of IIF members to be held at 2:30pm on Thursday, 17 March 2011, at Swissotel Sydney, 68 Margaret Street, Sydney, nSW and at any adjournment or postponement of the meeting.If the Chairman of the Meeting is your proxy and you do not specifically direct how your proxy is to vote on a Resolution, you will be taken to have directed the Chairman of the Meeting to vote in favour of the Resolution and the Chairman will exercise your votes in favour of the Resolution.

APPOInT A PROXY

OR if you are nOT appointing the Chairman of the Meeting as your proxy, please write the name of the person or body corporate (excluding the registered unitholder) you are appointing as your proxy

the Chairman of the Meeting (mark box)

STEP 1

* If you mark the Abstain box for a particular Item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll or a show of hands.

This form should be signed by the member. If a joint holding, either member may sign. If signed by the member’s attorney, the power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must be executed in accordance with the company’s constitution and the Corporations Act 2001 (Cth).

SIGnATURE OF UnITHOLDERS – THIS MUST BE COMPLETED

Unitholder 1 (Individual) Joint Unitholder 2 (Individual) Joint Unitholder 3 (Individual)

Sole Director and Sole Company Secretary Director/Company Secretary (Delete one) Director

*IIF PRX101*

IIF PRX101

VOTInG DIRECTIOnSSTEP 2

STEP 3

LODGE YOUR VOTE

www.linkmarketservices.com.auOnLInE

By mail:ING Industrial FundC/- Link Market Services LimitedLocked Bag A14Sydney South NSW 1235 Australia

By fax: +61 2 9287 0309

All enquiries to: Telephone: 1300 653 497 Overseas: +61 2 8280 7057

ING Industrial FundARSN 089 038 175Responsible Entity: ING Management Limited ABN 15 006 065 032AFSL: 237534

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Proposal at a glance

WhAT IS The PRoPoSAL? – The Proposal is for GTA to acquire all of your Units.

– Under the Proposal as announced on 24 December 2010, the Offer Price is 54.6 cents cash per Unit (less any distributions Unitholders become entitled to or are paid from the date of the Implementation Agreement (24 December 2010) until implementation of the Proposal), with the total amount payable to each Unitholder rounded to the nearest whole cent.

– As a consequence of becoming entitled to the December quarter 2010 distribution of 0.8025 cents per Unit, Unitholders will receive Consideration of 53.7975 cents cash per Unit if the Proposal is implemented.

– IML Directors do not expect that any further distributions will be paid in addition to the December 2010 distribution prior to the implementation of the Proposal. If Unitholders become entitled to any future distributions, the Consideration will be reduced by the amount received.

Separately, ING Group will be paid $22.5 million (plus applicable GST) by Goodman under the Facilitation Deed if the Proposal proceeds for, among other things, ING Group giving up its opportunity to receive revenue in respect of IIF arising out of IML’s ongoing management of IIF (Ancillary Transaction). For further details see sections 2.6 and 8.5.

IMPLeMeNTATIoN oF The PRoPoSALIf the Resolutions are passed, you will not be required to do anything further in order for the Proposal to be implemented. The Proposal is subject to certain Conditions Precedent in addition to IIF Member approval (see sections 2.5(c) and 8.1). IIF will announce to the ASX when all Conditions Precedent to the Proposal have been satisfied or waived and will report on the satisfaction of the Conditions Precedent at the Meeting.

It is expected that Unitholders will be sent the Consideration on or about 30 March 2011.

WhAT ARe The ReASoNS To voTe IN FAvoUR oR AGAINST The PRoPoSAL?This section is a summary only and is not intended to address all of the relevant issues for IIF Members. IIF Members should read all of the Explanatory Memorandum, and in particular section 3.

Reasons to vote in favour of the Proposal and receive the Consideration

Reasons to vote against the Proposal

The Consideration under the Proposal is a significant premium to recent trading prices of Units prior to the initial approach by the Consortium Members

The Consideration under the Proposal represents a small discount to 31 December 2010 NTA per Unit

The Consideration under the Proposal offers immediate certain value to Unitholders in cash

You may not consider it to be the right time to exit your investment in IIF or you may wish to maintain your current investment profile

The Independent Expert has concluded that the Proposal is fair and reasonable and in the best interests of Unitholders

Tax consequences for Unitholders may not be optimal for your financial position

The market price of Units may fall if the Proposal is not implemented

You may disagree with the conclusion or valuation of the Independent Expert

No superior competing proposal has emerged You may believe that there is the possibility of a superior competing proposal emergingF

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WhAT IF The PRoPoSAL doeS NoT PRoCeed?If the Proposal does not proceed, Unitholders will continue to hold their Units and no Consideration will be received under the Proposal. IIF will continue to be quoted on the ASX.

In the absence of the Proposal, there is a risk that Units will trade at a lower price than the price at which they have traded since the Proposal was announced, having regard to the trading price of Units prior to the announcement of the receipt of the indicative proposal on 28 October 2010.

Depending on the reasons for the Proposal not proceeding, IML as the responsible entity of IIF may be liable to pay $14 million to GTA Trustee as a break fee or receive a break fee of $25 million from GTA Trustee. The break fees will not be payable solely because Unitholders do not approve the Proposal. Details of the break fees and the circumstances in which the break fee is payable to, or may be received from, GTA Trustee are described in sections 8.1 and 8.3.

If the Proposal does not proceed, the Board of IML will assess available options at the relevant time. This may involve consideration of a number of options, including those outlined in section 2.3.

INdePeNdeNT exPeRT’S RePoRTThe IBC engaged the Independent Expert to provide an independent expert’s report in relation to the Proposal and the Ancillary Transaction (refer to section 2.6 for further information). A copy of the Independent Expert’s Report is set out as Appendix A to this Explanatory Memorandum.

The Independent Expert’s Report provides an assessment of the Proposal. The conclusion reached by the Independent Expert is that the Proposal is fair and reasonable and in the best interests of Unitholders.

The Independent Expert has reviewed the Ancillary Transaction and has concluded that nothing has come to its attention that causes it to believe that the consideration payable to ING Group is not on arm’s length terms or constitutes the receipt of a collateral benefit by ING Group.

IML INdePeNdeNT dIReCToRS’ ReCoMMeNdATIoNFor the reasons set out in this Explanatory Memorandum, subject to there being no superior competing proposal and the Independent Expert not changing or withdrawing its conclusion that the Proposal is in the best interests of Unitholders, each IML Independent Director recommends that IIF Members vote in favour of the Resolutions. Christophe Tanghe, the only non-independent director of IML, has made no recommendation due to his role as a senior executive of INGRE.

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This Explanatory Memorandum is issued by ING Management Limited (ABN 15 006 065 032) as responsible entity of ING Industrial Fund (ARSN 089 038 175).

ThIS exPLANAToRY MeMoRANdUMThis Explanatory Memorandum provides IIF Members with information about the proposed acquisition of all Units on issue by GTA. The Notice of Meeting is included as Appendix D and a copy of the proposed Supplemental Deed (to implement the Proposal) is included as Appendix B.

You should read this Explanatory Memorandum in its entirety before making a decision as to how to vote on the Resolutions to be considered at the Meeting and, if necessary, consult your investment, tax, legal or other professional adviser.

deFINed TeRMSCapitalised terms used in this document have the meaning given to them in the Glossary.

dISCLAIMeRNone of the entities noted in this document is an authorised deposit-taking institution for the purposes of the Banking Act.

The historical information is derived from sources believed to be accurate at the date of this Explanatory Memorandum. However, no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of any information, opinion or conclusion contained in this Explanatory Memorandum. To the maximum extent permitted by law, neither IML nor any of its directors, officers, employees, agents, advisers or intermediaries, nor any other person accepts any liability for any loss arising from the use of this Explanatory Memorandum or its contents or otherwise arising in connection with it, including, without limitation, any liability from fault or negligence on their part.

The historical information in this Explanatory Memorandum is, or is based upon, information that has been released to the market. It should be read in conjunction with IIF’s other periodic and continuous disclosure announcements, including the IIF full year financial results for the year ended 30 June 2010 lodged with ASX Limited (ASx) on 30 August 2010, the IIF half year financial results for the period ended 31 December 2010 lodged with ASX on 10 February 2011 and announcements to the ASX available at www .asx.com.au.

The information in this Explanatory Memorandum remains subject to change without notice. IML reserves the right to withdraw or vary the timetable for the Proposal without notice. The pro forma financial information provided in this Explanatory Memorandum is for illustrative purposes only and is not represented as being indicative of IIF’s views on its future financial condition and/or performance.

No INveSTMeNT AdvICeThis Explanatory Memorandum does not constitute financial product advice and does not and will not form any part of any contract for the acquisition of Units.

This Explanatory Memorandum has been prepared without taking account of any person’s investment objectives, financial situation or particular needs. IIF Members should seek independent financial and taxation advice before making any investment decision in relation to the Proposal or how to vote in respect of the Proposal.

ASIC ANd ASx INvoLveMeNTA copy of this Explanatory Memorandum (including the Independent Expert’s Report) has been provided to ASIC for the purpose of Regulatory Guide 74. Neither ASIC nor any of its officers takes any responsibility for the contents of this Explanatory Memorandum.

A copy of this Explanatory Memorandum will be lodged with the ASX. Neither the ASX nor any of its officers takes any responsibility for the contents of this Explanatory Memorandum.

CoURT INvoLveMeNTThe First Court Hearing in respect of the convening of the Meeting is not and should not be treated as an endorsement by the Court of, or any other expression of opinion by the Court on, the Proposal. In particular, that hearing does not mean that the Court:

– has formed any view as to the merits of the Proposal or as to how Unitholders should vote (on this matter, Unitholders must reach their own decision); or

– has prepared, or is responsible for, the content of this Explanatory Memorandum.

ReSPoNSIBILITY FoR INFoRMATIoNExcept as outlined below, the information contained in this Explanatory Memorandum has been provided by IML and is the responsibility of IML. Except as outlined below, neither GTA Trustee nor any of its respective directors, employees, officers or advisers assume any responsibility for the accuracy or completeness of any such information.

GTA Trustee has provided and is solely responsible for the GTA Information, including information as to the funding arrangements it has made to provide the Consideration and information as to GTA’s opinions, views and intentions in relation to IIF (except to the extent that information is based on information about IIF, for which IML takes responsibility). None of IML or any of its respective directors, officers or advisers assume any responsibility for the accuracy or completeness of the GTA Information.

Disclaimers and important notices

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The Independent Expert, Deloitte Corporate Finance, has provided and is responsible for the information contained in Appendix A of this Explanatory Memorandum. Neither IML, GTA Trustee, nor any of their respective directors, officers, employees, agents, advisers or intermediaries assumes any responsibility for the accuracy or completeness of the information contained in Appendix A. The Independent Expert does not assume any responsibility for the accuracy or completeness of the information contained in this Explanatory Memorandum other than that contained in Appendix A.

Ernst & Young has provided and is responsible for the information contained in the Tax Opinion. Neither IML, GTA Trustee, nor any of their respective directors, officers, employees, agents, advisers or intermediaries assumes any responsibility for the accuracy or completeness of the information contained in the Tax Opinion included in this Explanatory Memorandum.

PRIvACY ANd PeRSoNAL INFoRMATIoNIML will need to collect personal information in connection with the Meeting. The personal information may include the names, contact details and details of holdings of Unitholders, plus contact details of individuals appointed by IIF Members as proxies, corporate representatives or attorneys at the Meeting. The collection of some of this information is required or authorised by the Corporations Act. Unitholders who are individuals, and other individuals in respect of whom personal information is collected about them, may have certain rights to access personal information about them which is collected. You can contact the IML company secretary if you wish to exercise those rights. The information may be disclosed to print and mail service providers, and to IML, GTA Trustee, the Consortium Members and their advisers to the extent necessary to effect the Proposal. If the information outlined above is not collected, IML may be hindered in, or prevented from, conducting the Meeting or implementing the Proposal effectively or at all. IIF Members who appoint an individual as their proxy, corporate representative or attorney to vote at the Meeting should inform that individual of the matters outlined above. It is noted that all persons are entitled, under section 173 of the Corporations Act, to inspect and copy the IIF register. The IIF register contains personal information about Unitholders.

dISCLoSUReS ReGARdING FoRWARd LooKING STATeMeNTSThis Explanatory Memorandum contains certain “forward looking statements”. Forward looking statements can generally be identified by the use of forward looking words such as “anticipate”, “believe”, “expect”, “project”, “forecast”, “estimate”, “likely”, “intend”, “should”, “will”, “might”, “could”, “may”, “target”, “plan” and other similar expressions within the meaning of securities laws of applicable jurisdictions. Indications of, and guidance or outlook on future earnings, distributions or financial position or performance are also forward looking statements. The forward looking statements contained in this Explanatory Memorandum involve known and unknown risks and uncertainties and other factors, many of which are beyond the control of IIF, and may involve significant elements of subjective judgment and assumptions as to future events which may or may not be correct. There can be no assurance that actual outcomes will not differ materially from these forward looking statements and IIF Members are cautioned not to place undue reliance on such forward looking statements.

CURReNCY ANd FINANCIAL dATAUnless stated otherwise, all dollar values are in Australian dollars (A$) and financial data is presented as at the date stated.

TIMeUnless stated otherwise, all references to time are to Australian Eastern Daylight Saving Time (AedST).

dATeThis Explanatory Memorandum is dated 10 February 2011.

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Questions and answers

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This section provides summary answers to some questions you may have and will assist you to locate further detailed information in this Explanatory Memorandum. This section is not intended to comprehensively address all issues that may be relevant to you and should be read in conjunction with the remainder of this Explanatory Memorandum.

Question Answer

Reference for further information

Why have I received this explanatory Memorandum?

This Explanatory Memorandum has been sent to you because you are an IIF Member and IIF Members are asked to vote on the Proposal which, if approved and implemented, will result in GTA acquiring all Units on issue.

This Explanatory Memorandum is intended to help you to decide how to vote on the Resolutions which need to be passed at the Meeting to allow the Proposal to proceed.

The IML Directors recommend that you read the Explanatory Memorandum and, if necessary, consult your investment, tax, legal or other professional adviser before voting on the Resolutions.

Section 2

What is the Proposal? The Proposal is an arrangement between IML, as responsible entity of IIF, and GTA Trustee that, if approved, will effect the acquisition of all Units by GTA.

On 24 December 2010, IML and the Goodman Group announced the Proposal to the ASX.

Section 2

When and where is the Meeting to be held?

The Meeting will be held on 17 March 2011 at 2.30pm (AEDST) at Swissôtel Sydney, Level 8, 68 Market Street, Sydney NSW 2000.

Details for proxy voting are set out in section 4 and the Proxy Form.

Section 4, Proxy Form

Who are GTA, GTA Trustee and the Consortium Members?

GTA is a unit trust established by the Consortium Members for the purpose of acquiring the Units under the Proposal.

The Consortium Members are APG, CPPIB (or its wholly owned trust or nominee), Leader (or its wholly owned trust or nominee) and the Goodman Group.

GTA Trustee is Goodman Industrial Funds Management Limited.

Further details on GTA, GTA Trustee and the Consortium Members are provided in section 6.

Section 6

What is the Consideration?

Under the Proposal, Unitholders will receive Consideration of 53.7975 cents per Unit (with the total amount payable to each Unitholder rounded to the nearest whole cent).

IML Directors do not expect that any further distributions will be paid in addition to the December quarter 2010 distribution Unitholders have become entitled to prior to the implementation of the Proposal. If Unitholders become entitled to any future distributions, the Consideration will be reduced accordingly.

Section 2.5

What is the Independent expert’s opinion on the Proposal?

The Independent Expert has valued Units at A$0.534 to A$0.550 per Unit (which takes the December quarter 2010 distribution into account), and concluded that the Proposal is fair and reasonable and in the best interests of Unitholders.

The full Independent Expert’s Report is set out in Appendix A.

Appendix A

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Question Answer


do the IML Independent directors recommend the Proposal?

The IML Independent Directors unanimously recommend that you vote in favour of each Resolution to approve the Proposal in the absence of a superior competing proposal and subject to the Independent Expert not changing or withdrawing its conclusion that the Proposal is in the best interests of Unitholders.

The reasons for the IML Independent Directors’ unanimous recommendation are set out in section 3.

Section 3

Why might I vote against the Proposal?

Please refer to section 3.2 “Why you might vote against the Proposal” for some of the reasons why you may elect to vote against the Proposal.

Section 3.2

What is the Ancillary Transaction?

ING Group entities and Goodman Limited (Goodman) have entered into a facilitation deed dated 24 December 2010 (Facilitation deed) pursuant to which the ING Group entities have agreed to use their reasonable endeavours to assist Goodman with, among other things:

– implementing the Proposal;

– the appointment of Goodman RE as the responsible entity of IIF;

– obtaining certain consents or waivers in connection with, among other things, the ING Asset Management Agreements and ING Facilities;

– the transition of a number of employees engaged by IIF to Goodman (or as it directs); and

– the transfer of various know-how, books and records of IML as they relate to, and the vesting of assets of IIF in, Goodman RE (or as it directs).

In addition, if the Proposal proceeds, Goodman will pay ING Group A$22.5 million (plus applicable GST) in consideration for, among other things, ING Group giving up its opportunity to receive revenue in respect of IIF arising out of IML’s ongoing management of IIF.

Section 2.6

What do I have to do to receive the Consideration?

If the Proposal is approved by IIF Members at the Meeting, you do not need to do anything to receive the Consideration.

Section 2.5

When will I receive the Consideration?

If the Proposal becomes Effective, the Consideration will be paid within one Business Day after the Implementation Date. On the current indicative timetable, the Implementation Date is expected to be 29 March 2011.

The Consideration will be paid by making a payment into your nominated bank account with the Registry. If you do not have a nominated bank account with the Registry as at the Implementation Record Date, you will be sent a cheque for the Consideration.

Section 2.5(F)

Can I keep my Units? If the Proposal becomes Effective, GTA will acquire all Units on issue, including those of Unitholders who voted against the Proposal or did not vote at the Meeting.

Section 2

What will be the tax consequences of receiving the Consideration?

The taxation consequences of the Proposal will depend on your personal taxation and financial circumstances.

However, general information about the likely Australian capital gains tax consequences of the Proposal is set out in section 7.

IML recommends that Unitholders seek their own tax advice in relation to the tax consequences of the Proposal.

Section 7

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Question Answer


What are the Conditions Precedent of the Proposal?

The Conditions Precedent to be either satisfied or (where applicable) waived before the Second Court Date are set out in section 8.1 of this Explanatory Memorandum. The key conditions and the current status of the satisfaction of those conditions are set out in section 2.5(c) and include:

– approval of the Resolutions by the IIF Members;

– the Implementation Agreement not having been terminated;

– ASIC relief being obtained;

– notice of no objection from the Foreign Investment Review Board (FIRB); and

– no IIF Prescribed Event or IIF Material Adverse Change having occurred.

IML will make an announcement to ASX when all Conditions Precedent are satisfied or waived and will report on the satisfaction of the Conditions Precedent at the Meeting.

Sections 2.5(C) and 8.1

What are the Resolutions proposed at the Meeting?

IIF Members are required to approve:

– amendments to the IIF Constitution which will allow the Proposal to be implemented;

– the Proposal including the acquisition of all Units by GTA; and

– a change of the responsible entity of IIF which would be effected at the time of implementation of the Proposal.

Section 2.5(A)

What is the required majority to approve the Proposal?

The approval threshold is different for each Resolution but the Resolutions are interconditional. The Resolution to approve the amendments to the IIF Constitution requires the approval by at least 75% of the votes cast on the Resolution. The Resolution to approve the Proposal and the change of IIF responsible entity are ordinary resolutions, and will be passed if more than 50% of the votes cast are in favour.

Sections 2.5(A) and 4

Who is entitled to vote? Every IIF Member on the register at 7.00pm (AEDST) on 15 March 2011, unless excluded in accordance with the Notice of Meeting.

No ING Group entities, GTA Trustee or Consortium Members or their associates can vote on the Resolutions as they have an interest in the Proposal different to other IIF Members.

Sections 4.1, 4.4 and 4.6

Is voting compulsory? No, although your vote is important and the IML Independent Directors encourage you to exercise your right to vote. Each Unit is equally important in determining whether the Proposal will be approved.

Your IML Independent Directors unanimously recommend that you vote in favour of the Proposal in the absence of a superior competing proposal and the Independent Expert not changing or withdrawing its conclusion that the Proposal is in the best interests of Unitholders.

In the event you cannot attend the Meeting, we encourage you to complete the enclosed personalised Proxy Form and return it to the Registry as per the instructions on the form so that it is received by no later than 15 March 2011 at 2.30pm (AEDST).

Section 4

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Question Answer


how can I vote? You can vote at the Meeting:

– in person;

– by completing and returning the Proxy Form that is enclosed with this Explanatory Memorandum in accordance with the instructions on the Proxy Form; or

– by attorney or, in the case of a body corporate, by corporate representative.

Section 4

When will the results of the Meeting be known?

The results of the Meeting will be available shortly after the conclusion of the 17 March 2011 meeting and will be announced to the ASX as soon as practicable.

However, before the Proposal can be implemented (assuming the Resolutions are passed), IML will apply for further Judicial Advice at the Second Court Hearing to the effect that it would be justified in implementing the Proposal in accordance with the Resolutions as approved by IIF Members. IML intends to act in accordance with such Judicial Advice in proceeding to implement the Proposal.

Could I be bound by the Proposal if I do not vote or if I vote against the Proposal?

Yes, if the Proposal is approved by IIF Members at the Meeting and becomes Effective, then any Units held by you on the Implementation Record Date will be transferred to GTA and you will receive the Consideration, notwithstanding that you did not vote, or that you voted against the Proposal.

What happens if the Proposal does not proceed?

If the Proposal does not proceed:

– Unitholders will not receive the Consideration;

– Unitholders will retain their Units and IIF will remain listed on ASX; and

– the Board of IML will consider a number of potential alternatives available to IIF under the strategic review. Details of the key alternatives considered under the strategic review are provided in section 2.3.

Depending on the reasons for the Proposal not proceeding, IML as responsible entity of IIF may have to pay a break fee to GTA Trustee or receive a break fee from GTA Trustee. No break fee is payable if the Proposal does not proceed solely because the Resolutions are not passed.

Sections 2.3, 3.3 and 8

Where can I find further information?

If you have any questions in relation to the Proposal, or would like additional copies of this Explanatory Memorandum or the Proxy Form, please call the Unitholder information line on:

– 1300 653 497 (from within Australia); or

– +61 2 8280 7057 (from outside Australia).

This Explanatory Memorandum is also available electronically at www .ingrealestate.com.au.

For information about your individual financial or taxation circumstances, please consult your investment, tax, legal or other professional adviser.

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Details of the Proposal

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2.1 BACKGRoUNdThe global financial crisis severely disrupted capital markets worldwide and fundamentally changed the landscape in which global financial institutions operate and structure their businesses. It was within this context that ING Group announced to the market that it was conducting a strategic evaluation of its global real estate investment management platform, REIM and its position within the broader ING Group banking business. This review included the Australian real estate investment management platform, REIMA, and the potential impact on Unitholders.

In light of the ING Group review of its global real estate investment management platform, in May 2010 the Board of IML, as responsible entity for IIF, commenced a strategic review of IIF and examined a range of initiatives to maximise value for Unitholders.

2.2 eSTABLIShMeNT oF The INdePeNdeNT BoARd CoMMITTee

In addition to IML being the responsible entity of IIF, ING Group entities, acting through IML, are sub trustees of certain IIF sub trusts, are co-owners with IIF, provide finance to IIF and manage certain IIF assets. Recognising the potential for conflicts to arise in the course of undertaking the IIF strategic review, the Board of IML established an Independent Board Committee (IBC) and adopted protocols and procedures to ensure that the development and consideration of any proposal for IIF was undertaken independently from the ING Group.

The IBC comprised the IML Directors who are independent of INGRE, namely Richard Colless until his retirement on 23 September 2010, following which Kevin McCann was appointed to the IBC, Paul Scully, Michael Easson and Philip Clark. To ensure that the best interests of Unitholders were advanced on an independent basis of INGRE, the Board of IML also adopted IBC management protocols to govern its conduct and manage any potential conflicts during the strategic review process.

Specific procedures adopted by the IBC included:

– Christophe Tanghe, who has a potential conflict of interest due to his role as a senior executive of INGRE, has made his knowledge available to the IBC, however, he has not voted in relation to proposals affecting IIF, including the Proposal;

– The IBC appointed Mallesons Stephen Jaques to act on behalf of IML in relation to the strategic review. The ING Group was represented by separate legal advisers;

– The IBC appointed Goldman Sachs and UBS AG to act on behalf of IML as financial advisers;

– The IBC took responsibility for the negotiation of the terms of the Proposal, and the decision to enter into the Implementation Agreement and commit IML to propose the Proposal to IIF Members; and

– The IBC and its advisers were not involved in the Ancillary Transaction.

2.3 IIF STRATeGIC RevIeWIn addition to the ING strategic review referred to above, independently the Board of IML has undertaken a separate strategic review of IIF. The strategic review involved an extensive assessment of a number of options and included discussions with a number of parties about potential transactions. All the strategic review outcomes were evaluated and assessed with a focus on maximising value for Unitholders and closing the gap between the trading price of Units and underlying NTA.

In undertaking its strategic review, the Board of IML considered a number of options for IIF, including the following:

– Maintaining the same business and operating model of IIF and refining and refocusing the strategic direction of IIF;

– A sale of the management rights to IIF to a third party;

– Restructuring the manager and internalising the management of IIF;

– A merger of IIF with another fund; and

– Disposal of all of IIF’s assets over time.

Prior to the completion of the strategic review, the Board of IML commenced discussions with the Goodman Group which led to the development of the Proposal.

2.4 deveLoPMeNT oF The PRoPoSALFollowing an announcement by ING Group that the strategic review of its global real estate investment management platform included a strategic review of the Australian platform in July 2010, Goodman Group confirmed to the market its interest in obtaining the management rights to IIF. Goodman Group increased its stake in IIF from 4.4% to 7.1% in September 2010. On 28 October 2010, Goodman Group submitted a conditional incomplete offer to the Board of IML, on behalf of the Consortium Members, to acquire the ordinary IIF Units for cash consideration reflecting a price equivalent to the NTA at 30 June 2010 adjusted for items post that date and costs of implementing the proposal. Goodman Group subsequently submitted a conditional and incomplete revised proposal of 54.0 cents per Unit. On 15 November 2010, after considering the merits of the revised proposal, the Board of IML agreed to grant the Consortium Members non-exclusive access to due diligence and to engage with

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the Consortium Members, in order to determine whether an acceptable transaction could be agreed which maximised value to Unitholders.

During the Consortium Members’ due diligence period, the Board of IML continued to actively approach other parties; however, no other competing proposals emerged.

On 24 December 2010, following negotiations between the IBC and GTA Trustee, the Board of IML announced that:

(a) IML had entered into an Implementation Agreement with GTA with cash consideration of 54.6 cents per Unit less any distributions Unitholders become entitled to from 24 December 2010 until implementation of the Proposal;

(b) It believed the Proposal was in the best interests of Unitholders; and

(c) IML Independent Directors would recommend the Proposal in the absence of a superior competing proposal and subject to an Independent Expert concluding that the Proposal is in the best interests of Unitholders.

In concluding that the Proposal is in the best interests of Unitholders, the IML Independent Directors took the view that the cash Consideration offered under the Proposal is superior to the other alternatives considered for the following reasons:

(a) Under the same business and operating model, the market price of Units is unlikely to equal or exceed the Consideration in the short to medium term. IIF’s ability to grow its investment portfolio may be limited due to a higher cost of capital relative to its peers;

(b) A sale of the management rights for IIF to a third party or a restructure of the responsible entity and internalisation of management is not expected to have a significant positive impact on IIF’s earnings and the market value of Units relative to the Proposal;

(c) A merger of IIF with another entity may not result in the units in the merged entity trading at a market price which exceeds the Consideration offered under the Proposal nor does it offer the immediate price and cash certainty delivered by the Proposal. In addition, any merger entails various risks, including potential diversification away from IIF’s current strategy to invest only in high-quality Australian industrial real estate, implementation and general market-related risks;

(d) A sale of IIF’s assets on an individual basis is expected to take significant time and expose Unitholders to market risk at a time when it would be a known seller of assets. There is no certainty that Unitholders would realise more than the Consideration offered under the Proposal; and

(e) The Board of IML proactively approached other parties seeking alternative offers for Units; however, no other competing proposals have emerged to date.

2.5 deTAILS oF The PRoPoSALThe Proposal is a trust scheme which is an arrangement which, if implemented, will result in all Units on issue being transferred to GTA and GTA Trustee paying the Consideration to Participants.

(a) ResolutionsThe transfer of all Units on issue to GTA requires IIF Members to consider and, if considered appropriate, to approve the following Resolutions:

Resolution 1: amendment resolutionIIF Members must approve an amendment to the IIF Constitution to authorise all actions necessary or desirable for the transfer of the Units to GTA. These amendments are set out in the Supplemental Deed in Appendix B.

These amendments must be approved by a special resolution which requires approval by at least 75% of the votes cast on the resolution at the Meeting by IIF Members entitled to vote on the resolution.

Resolution 2: acquisition resolutionIn addition to the amendment resolution, IIF Members must approve the acquisition by GTA of all the Units on issue by an ordinary resolution of IIF Members for the purposes of item 7 of section 611 of the Corporations Act, which requires approval by more than 50% of the votes cast on the resolution at the Meeting by the IIF Members entitled to vote on the resolution.

Resolution 3: Change of responsible entity of IIFIIF Members must also approve a change in the responsible entity of IIF from IML to Goodman RE by ordinary resolution of IIF Members, which requires approval by more than 50% of the votes cast on the resolution at the Meeting by the IIF Members entitled to vote on the resolution, such change to take effect on the Implementation Date.

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Resolutions interconditionalEach of the Resolutions is interconditional and the Proposal will only proceed if all the Resolutions are passed at the Meeting by the requisite majorities. If any of the Resolutions are not approved, the Proposal will not be implemented. Please refer to section 3.3 for the consequences if the Proposal does not proceed.

Judicial AdviceOn 10 February 2011, IML applied for Judicial Advice from the Court in relation to whether it may take the steps required to despatch the Explanatory Memorandum and convene a Meeting of IIF Members to consider the Proposal. On that date, the Court indicated that IML is justified in:

– proceeding on the basis that amendments to the IIF Constitution as set out in the Supplemental Deed would be within the powers of IML contained in the IIF Constitution and consistent with section 601GC(1) of the Corporations Act; and

– convening a Meeting of IIF Members to consider and, if thought fit, approve the Resolutions.

(b) ConsiderationIf the Proposal becomes Effective, GTA Trustee will provide the Consideration to each Unitholder (or to IML on trust for each Unitholder) who is on the register at the Implementation Record Date, which is expected to be 28 March 2011.

The Consideration is 53.7975 cents cash per Unit. If the Proposal is implemented IIF Unitholders are not expected to become entitled to any future distributions in addition to the December quarter 2010 distribution. If Unitholders become entitled to any future distributions, the Consideration will be reduced by the amount received. If a Unitholder would have a fractional entitlement to part of a cent in cash arising from the calculation of the total amount payable to the Unitholder, then their fractional entitlement will be rounded to the nearest whole cent and the fractional entitlement will be disregarded.

(c) Conditions and termination rights The Proposal is subject to a number of conditions. Set out below are the key conditions to implementation of the Proposal, together with a brief description of the status of these conditions. The conditions are included in the Implementation Agreement and an explanation of them is contained in section 8.

Key condition Status of conditions

IIF Member approval: IIF Members approving by special resolution the amendment to the IIF Constitution and by ordinary resolution the approval of the Proposal and the change of the responsible entity of IIF.

A Meeting of IIF Members is to be held on 17 March 2011 at 2.30pm (AEDST) at Swissôtel Sydney, Level 8, 68 Market Street, Sydney NSW 2000.

The Implementation Agreement not having been terminated: The Implementation Agreement can be terminated for certain reasons outlined in section 8 “Additional information”, including if a party materially breaches any clause of the Implementation Agreement or if any IML Independent Director changes their recommendation to IIF Members to vote in favour of the Proposal.

IML is not aware of any such action or event.

Regulatory approvals: The Proposal will not be implemented unless the regulatory approvals necessary and desirable to implement the Proposal are received from ASIC and ASX as outlined in the Implementation Agreement.

All ASIC relief and ASX confirmations have been received.

FIRB no objection: The Proposal will not be implemented unless the regulatory approvals necessary from FIRB to implement the Proposal are satisfied as outlined in the Implementation Agreement.

The application for FIRB review has been submitted by GTA Trustee and approval is expected to be obtained prior to the Second Court Date.

No IIF Prescribed event or IIF Material Adverse Change: No IIF Prescribed Event or IIF Material Adverse Change occurs or becomes apparent between the date of the Implementation Agreement (being the 24 December 2010) and 8.00am (AEDST) on the date of the Second Court Hearing.

IML is not aware of any such event or change.

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IML and GTA Trustee have agreed in the Implementation Agreement to use all reasonable endeavours to procure that each of these key conditions is satisfied as soon as practicable after the date of the Implementation Agreement (being 24 December 2010) and that they continue to be satisfied at all times until the last time they are required to be satisfied under the Implementation Agreement.

TerminationIML and GTA Trustee may terminate the Implementation Agreement if:

– the Proposal has not become Effective on or before the End Date;

– the Resolutions are not approved by the requisite majority of Eligible IIF Members at the Meeting;

– the other party materially breaches any clause of the Implementation Agreement and, to the extent that breach is capable of remedy, that party does not remedy the breach by the required date;

– a Regulatory Authority has issued a final and non-appealable order, decree or ruling or taken any other action which permanently restrains or prohibits the Proposal;

– the Court does not provide the Judicial Advice and an expert opinion is obtained that an appeal is unlikely to be successful;

– either GTA Trustee or a Consortium Member, or IML or any of IML’s subsidiaries, respectively becomes insolvent;

– any of the Conditions Precedent are not satisfied or waived by the requisite date (if any) and the parties cannot agree to extend that date; or

– the termination is agreed to in writing by GTA Trustee and IML.

In addition:

– GTA Trustee may terminate the Implementation Agreement:

– if any IML Independent Director changes their recommendation to IIF Members that they vote in favour of the Resolutions, including any adverse modification to their recommendation or otherwise makes a public statement that they no longer support the Proposal; or

– if a person other than GTA Trustee and its associates has a Relevant Interest in more than 50% of the Units; or

– IML may terminate if GTA Trustee or a Consortium Member is in breach of its obligations under the Deed of Undertaking.

(d) Second Judicial AdviceIf:

– the Resolutions are approved by the requisite majorities; and

– all Conditions Precedent to the Proposal have been satisfied or remain capable of being satisfied, or (where applicable) waived,

IML will apply for further judicial advice (the Second Judicial Advice) to the effect that it is justified in acting upon the Resolutions and in doing all things and taking all necessary steps to implement the Proposal. If the Court does not advise that IML is so justified, the Proposal will not become Effective.

Each IIF Member has the right to appear at this court hearing seeking the Second Judicial Advice. The date for the Second Court Hearing is currently scheduled for 18 March 2011, although this date is subject to change.

(e) Implementation steps & timingIf the Court provides the Second Judicial Advice following approval of all Resolutions by IIF Members at the Meeting by the requisite majorities and the satisfaction or waiver of all other Conditions Precedent to implementation, IML and GTA Trustee will take or procure the taking of the steps required for the Proposal to be implemented, including lodging with ASIC a copy of the Supplemental Deed to give effect to the amendments to the IIF Constitution at which time the Proposal will become Effective.

It is anticipated that these steps will occur on or about 18 March 2011.

If the Proposal becomes Effective:

– IML will become bound to take the steps required for GTA to become the holder of all Units held by the Participants; and

– GTA Trustee will become bound to deposit the Consideration into a trust account operated by IML in cleared funds on the Implementation Date.

On the Implementation Date, following receipt by IML on behalf of all Unitholders of the Consideration, IML will execute a master transfer on behalf of all Participants to transfer all of their Units to GTA and deliver the master transfer to GTA Trustee or otherwise effect a transfer of such Units in CHESS and enter the name of GTA Trustee in the register in respect of all Units.

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(f) Payment of the ConsiderationIML will receive the Consideration on behalf of Unitholders on the Implementation Date. Payment of the Consideration to Participants will be made within one Business Day after the Implementation Date. The Implementation Date is currently expected to be 29 March 2011.

The Consideration will be paid by making a payment into your nominated bank account with the Registry. If you have not previously notified the Registry of your nominated bank account or would like to change your existing nominated bank account, you should contact the Registry on 1300 653 497 (within Australia) or +61 2 8280 7057 (outside Australia) before the Implementation Record Date.

If you do not have a nominated bank account with the Registry as at the Implementation Record Date, you will be sent a cheque for the Consideration. If your whereabouts are unknown as at the Implementation Record Date, the Consideration will be paid into a separate bank account and held by the then responsible entity of IIF until claimed or applied under laws dealing with unclaimed money.

(g) Warranty by Participants about their UnitsThe effect of schedule 6 of the IIF Constitution as inserted by the Supplemental Deed is that all Participants, including those who do not vote and those who vote against the Proposal, will be deemed to have warranted to IML in its own right, and on behalf of GTA Trustee, that their Units are fully paid up and are not subject to any encumbrances or interests of third parties or restrictions on transfer of any kind and that they have full power and capacity to sell and transfer the Units registered in their name.

If the warranty is breached, Participants may be liable to pay to GTA Trustee any amounts GTA Trustee pays to acquire clear title to its Units.

2.6 ARRANGeMeNTS BeTWeeN The ING GRoUP ANd GoodMAN GRoUP

IML is a wholly owned subsidiary of ING Real Estate Investment Management Asia/Pacific BV (ReIM AP), which in turn is ultimately wholly owned by ING Groëp NV (ING Group). ING Real Estate International Investment III BV (ReI III), also ultimately wholly owned by ING Group, holds a total of 202,174,232 units in IIF as at 4 February 2011.

IIF currently has in place a number of asset management agreements with members of the ING Group in respect of certain of its properties situated in Europe (ING Asset Management Agreements) pursuant to which an ING Group member provides asset management services to IIF. There are also a number of finance facilities in place with various members of the ING Group (ING Facilities) pursuant to which an ING Group member has provided financing to IIF and/or a subsidiary of IIF.

In addition, as contemplated by the change of responsible entity resolution described in section 2.5(a), it is proposed that IML will be replaced as responsible entity of IIF by Goodman Funds Management Limited ACN 067 796 641 (Goodman Re). Such replacement would take effect on implementation of the Proposal.

In order to facilitate the Proposal and assist in the orderly transition in the replacement of the responsible entity of IIF, ING Group entities have separately entered into the Facilitation Deed pursuant to which they have agreed to use their reasonable endeavours to assist Goodman with, among other things:

– implementing the Proposal;

– the appointment of Goodman RE as the responsible entity of IIF;

– obtaining certain consents or waivers in connection with, among other things, the ING Asset Management Agreements and ING facilities;

– the transition of a number of IIF employees to Goodman (or as it directs); and

– the transfer of know-how, books and records of IML as they relate to IIF to, and the vesting of assets of IIF in, Goodman RE (or as it directs).

Together, the arrangements referred to above, and as more fully set out in the Facilitation Deed, are described as the Ancillary Transaction.

The Facilitation Deed provides, if the Proposal proceeds, for an amount of $22.5 million (plus any applicable GST) to be paid to ING Group in consideration for, among other things, ING Group giving up its opportunity to receive revenue in respect of IIF arising out of IML’s ongoing management of IIF. This amount will become payable shortly after implementation of the Proposal.

For more information about the Facilitation Deed, see section 8.5.

2.7 GTA’S INTeNTIoNS FoR IIFThe intentions set out in this section are statements of current intention only and are based on facts and circumstances that are known to GTA as at the date of preparing this Explanatory Memorandum. Final decisions will only be made by GTA after having conducted a detailed review of IIF. Accordingly, the intentions set out in this section may change as new information becomes available or circumstances change.

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If the Proposal is implemented, GTA will hold all of the Units in IIF. In particular, GTA intends to:

– have IIF removed from the official list of the ASX;

– establish an investment committee that will be responsible for the review, endorsement or approval of key investment decisions and related party matters;

– maximise the value of IIF by applying Goodman Group’s integrated own, develop and manage customer service model to drive portfolio organic value and enhance it by developing IIF’s existing development pipeline;

– manage the divestment of IIF’s European portfolio over the short to medium term with proceeds used to repay debt and re-invest in Australian development opportunities;

– reposition IIF’s Australian portfolio to improve portfolio value and redirect capital to more attractive investment in Australian developments; and

– refinance IIF’s existing A$920 million Australian syndicated facility using a new A$1.1 billion syndicated facility.

The implications of the implementation of the Proposal on the Exchangeable Notes are set out in section 8.15 and include the trigger of a right for Exchangeable Noteholders to request the redemption of their Exchangeable Notes. Implementation of the Proposal does not provide the responsible entity of IIF with any right to redeem the IIF Subordinated Bonds underlying the Exchangeable Notes without such a request. Goodman RE has not yet formed any intention as to whether (in its capacity as responsible entity of IIF following implementation of the Proposal) it will, following redemption requests, redeem the IIF Subordinated Bonds underlying the Exchangeable Notes. Until Goodman RE is able to consider what redemption requests, if any, are made by Exchangeable Noteholders following implementation of the Proposal, it is not able to form any intention in that respect, which may be influenced by the number of Exchangeable Notes in respect of which redemption requests are made and other relevant factors at that time.

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Evaluation of the Proposal

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3.1 WhY YoU MIGhT voTe IN FAvoUR oF The PRoPoSALThis section is a summary only and is not intended to address all the relevant issues for IIF Members in respect of the Proposal. IIF Members should read the Explanatory Memorandum in its entirety. This section should be read in conjunction with the other sections of this Explanatory Memorandum.

In reading this section you should note that the IML Independent Directors unanimously recommend that IIF Members vote in favour of the Proposal, in the absence of a superior competing proposal and the Independent Expert not changing or withdrawing its conclusion that the Proposal is in the best interests of Unitholders.

The Consideration of 53.7975 cents cash per Unit is a significant premium to the recent trading prices of Units – The Consideration is a premium of 17.0% to the closing price of 46.0 cents on 27 October 2010, the day prior to the

announcement that IML had received an indicative proposal.

– The Consideration is a premium of 23.4% to the six month volume weighted average price prior to 27 October 2010 of 43.6 cents.

In comparison, as at 20 January 2011, the S&P/ASX200 A-REIT index closed 0.6% higher relative to the level it closed at on 27 October 2010.

PROPOSAL CONSIDERATION PREMIUM TO RECENT TRADING PRICES OF UNITS (CENTS PER UNIT)

27 Oct 2010GTA Consideration 6-month VWAP to 27 Oct 2010

17.0%

53.797546.0

43.6

23.4%

Source: IRESS

The Consideration under the Proposal offers immediate certain value to Unitholders in cash – Units continued to trade at a significant discount to NTA prior to the announcement of the initial proposal by the

Consortium Members on 28 October 2010.

– The Consideration under the Proposal delivers the certainty of cash and provides Unitholders with an opportunity to immediately realise a price at a premium to its trading history prior to the receipt of the indicative proposal.

The IML Independent directors unanimously recommend that IIF Members vote in favour of the Proposal, in the absence of a superior competing proposal and the Independent expert not changing or withdrawing its conclusion that the Proposal is in the best interests of Unitholders – The IML Independent Directors’ recommendation has been provided following a thorough review of strategies to enhance

value for Unitholders (see sections 2.4 and 3). There is no certainty that any of the alternative strategies can deliver a superior value outcome within an acceptable timeframe relative to the Proposal. The all-cash Consideration provides Unitholders with an opportunity to realise a price for their investment in IIF at a premium to its trading history prior to the emergence of the Proposal, albeit at a slight discount to NTA per Unit.

– After discussions with other parties no superior competing proposal has emerged to date nor have Units traded at a price which is higher than the Consideration under the Proposal since the announcement of the initial proposal by the Consortium Members.

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The Independent expert has concluded that the Proposal is fair and reasonable and in the best interests of Unitholders – The IML Independent Directors appointed Deloitte Corporate Finance as an Independent Expert to provide a report

for Unitholders expressing an opinion as to whether the Proposal is fair and reasonable and in the best interests of Unitholders.

– The Independent Expert has concluded that the Proposal is fair and reasonable and in the best interests of Unitholders.

– The Consideration of 53.7975 cents per Unit falls within the Independent Expert’s valuation range of A$0.534 to A$0.550 per Unit (which takes the December quarter 2010 distribution into account).

The trading price of Units may fall if the Proposal is not implemented – Prior to the announcement of the initial proposal from the Consortium Members, Units traded at a price which

represented a significant discount to stated NTA.

– If the Proposal is not implemented Units may trade at a lower price than the:

– Price at which they have traded since the initial proposal from the Consortium Members was announced on 28 October 2010; and

– The Proposal Consideration of 53.7975 cents per Unit in the absence of a superior competing proposal.

IIF UNIT TRADING PRICE PERFORMANCE

30.0

35.0

40.0

45.0

50.0

55.0

60.0

1 Jan 111 Oct 101 Jul 101 Apr 101 Jan 10

65.0

GTA Consideration

IIF trades ex December2010 quarter distributionof 0.8025c per unitU

nit

pri

ce (

cen

ts)

Close Price NTA

Initial approach byConsortium Members

Note: NTA backing represents the NTA backing per IIF Unit disclosed in IIF’s financial results for the periods ending 31 December 2009, 30 June 2010 and 31 December 2010.

The future trading price of Units is uncertain – The future trading price of Units will continue to be subject to market volatility, including general stock market

movements, general economic conditions and the demand for listed securities.

– The trading price of Units will continue to be subject to changes in NTA and earnings as a result of movements in foreign exchange rates given IIF continues to hold a number of properties in Europe.

– IIF will continue to be subject to risks associated with any potential disposal of IML or REIMA by INGRE as part of the global review process of REIM being undertaken by ING Group.

No superior competing proposal has emerged – No superior competing proposal has emerged following the announcement of the initial approach from the Consortium

Members on 28 October 2010.

No brokerage – There is no brokerage payable by Unitholders under the Proposal.

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3.2 WhY YoU MIGhT voTe AGAINST The PRoPoSALYou may disagree with the conclusions of the IML Independent directors and the Independent expert – You may consider that the trading price of Units may improve over time to a point above the Consideration. In this case,

you may consider that the Consideration offered under the Proposal is inadequate.

– You may consider that an internalisation of IIF’s management or a merger with another entity, may realise greater value than the Consideration.

The Consideration of 53.7975 cents cash per Unit is at a discount to the 31 december 2010 net tangible asset backing – The Consideration represents a discount of 1.5% to the Adjusted NTA of 54.608 cents per Unit as at 31 December 2010

(refer to chart below).

– When adjusted for the expected March 2011 quarter distribution of 0.8025 cents, the adjusted Consideration of 52.9950 cents is a discount of 3.0% to the Adjusted NTA of 54.608 cents per Unit as at 31 December 2010.

IIF’s NTA at 31 December 2010 was 55.518 cents per Unit. However, for the purposes of the Proposal, NTA is adjusted for the redemption of the Exchangeable Notes, being the difference between the face value ($395 million) and the accounting carrying amount ($371 million) of the Exchangeable Notes. This results in an Adjusted NTA of 54.608 cents per Unit.

IMPLIED PREMIUM/(DISCOUNT) OF CONSIDERATION UNDER THE PROPOSAL TO THE ADJUSTED NTA BACKING OF UNITS AT 31 DECEMBER 2010

GTA Consideration Adjusted net tangible asset backing at 31 Dec 2010

53.7975 54.608

(1.5)%

You may not consider it to be the right time to exit your investment in IIF or you may wish to maintain your current investment profile – Depending on your views on market cycles and the current state of Australian and international equity, debt and real

estate markets, you may not consider it to be the right time to exit your investment in IIF.

– You may wish to retain an investment in IIF as a standalone ASX listed entity.

– If the Proposal becomes Effective, you will not participate in any potential future increase in value of IIF’s portfolio.

You may believe that a superior competing proposal may emerge – After proactive approaches to other parties, no superior competing proposal has emerged. However, you may consider

that a superior competing proposal may emerge.

Tax consequences for Unitholders may not be optimal for your financial position – Implementation of the Proposal may trigger tax consequences for Unitholders earlier than may otherwise have been the

case (see section 7).

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3.3 IMPLICATIoNS FoR IIF ANd UNIThoLdeRS IF The PRoPoSAL IS NoT IMPLeMeNTed(a) Implications for UnitholdersIf the Proposal is not implemented, Unitholders will continue to hold their Units and will not receive the Consideration. Also, Unitholders would receive the March 2011 quarterly distribution (which would have been made if the Proposal had not occurred) which is expected to be approximately 0.8025 cents per Unit.

(b) Implications for IIFIf the Proposal is not implemented, IIF will continue to be listed on ASX.

The Board of IML will continue to consider a number of alternatives for IIF under the strategic review. Details of the key alternatives considered under the strategic review are provided in section 2.3. The Board of IML would look to pursue the best alternative strategy at the time that is best able to maximise Unitholder value having regard to, among other things, the relatively high leverage in the fund and its potential constraint on funding developments and acquisitions, IIF’s exposure to offshore assets and the size of IIF.

Depending on the reasons for the Proposal not proceeding, IML as responsible entity of IIF may have to pay a break fee of $14 million to GTA, or receive a break fee of $25 million from GTA. IML will not have to pay a break fee if the Proposal does not proceed solely because the Resolutions are not passed. Further detail on the break fees is set out in section 8.1.

IML as responsible entity of IIF would look to expedite the refinancing of IIF’s existing debt facilities on favourable terms and with sufficient tenor, and headroom for the repayment of the Exchangeable Notes. Thus far, the refinancing of IIF’s debt facilities has been delayed as a consequence of the Proposal. IIF’s $870.1 million syndicated debt facility matures in December 2011 and its $395 million Exchangeable Notes mature in two tranches in June 2011 ($200 million) and June 2012 ($195 million).

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Meeting/Voting details

4

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Meeting/Voting details


4.1 eLIGIBLe IIF MeMBeRSAll Eligible IIF Members on the IIF register at 7.00pm on 15 March 2011 (eligible IIF Members) are entitled to vote unless they are otherwise excluded in the manner set out in the Notice of Meeting.

In order for the Proposal to proceed, all Resolutions must be approved by the requisite majorities of Eligible Members. If any of the Resolutions are not passed by the requisite majority, the Proposal will not proceed.

The IML Independent Directors unanimously recommend that you vote in favour of the Resolutions to approve the Proposal, in the absence of a superior competing proposal and the Independent Expert not changing or withdrawing its conclusion that the Proposal is in the best interests of Unitholders. If you are unable to attend the Meeting, the IML Independent Directors urge you to complete and return, in the enclosed reply-paid envelope, the Proxy Form that accompanies this Explanatory Memorandum.

4.2 deTAILS oF The MeeTINGDetails of the Meeting to consider the Resolutions are as follows:

Date: 17 March 2011

time: 2.30pm (AEDST)

location: Swissôtel Sydney Level 8 68 Market Street Sydney NSW 2000

The Notice of Meeting is set out in Appendix D of this Explanatory Memorandum. There is a personalised Proxy Form (enclosed with this Explanatory Memorandum) for the Meeting.

4.3 ReSoLUTIoNSSection 2.5(a) provides details of the Resolutions and the requisite voting majorities that are required for the Resolutions to be approved.

4.4 voTING IN PeRSoN, BY ATToRNeY oR BY CoRPoRATe RePReSeNTATIve

Different voting thresholds apply to the relevant Resolutions. If the Resolutions are approved by the requisite majorities of Eligible IIF Members and all other Conditions Precedent are satisfied or waived, the Proposal will be implemented.

If you wish to vote in person, you must attend the Meeting.

If you cannot attend the Meeting, you may vote by proxy, attorney or, if you are a body corporate, by appointing a corporate representative.

Attorneys who plan to attend the Meeting should bring with them the original or a certified copy of the power of attorney under which they have been authorised to attend and vote at the Meeting.

A body corporate which is a Unitholder may appoint an individual to act as its corporate representative. The appointment must comply with the requirements of section 253B of the Corporations Act. The representative should bring to the Meeting evidence of his or her appointment, including any authority under which it is signed.

4.5 voTING BY PRoxYIf you cannot attend the Meeting in person, you should complete the enclosed Proxy Form and return it to Link Market Services as set out in the Proxy Form or IML’s registered office as soon as possible and in any event by 2.30pm (AEDST) on 15 March 2011.

You may complete the Proxy Form in favour of the Chairman of the Meeting or appoint up to two proxies to attend and vote on your behalf at the Meeting. If two proxies are appointed, and the appointment does not specify the proportion or number of the IIF Member’s vote each proxy may exercise, each proxy may exercise half of the votes. If a proxy appointment is signed by or validly authenticated by the IIF Member but does not name the proxy or proxies in whose favour it is given, the Chairman of the Meeting will act as proxy.

To be valid, proxy forms must be received by no later than 2.30pm (AedST) on 15 March 2011.

4.6 voTING exCLUSIoNS ANd INTeNTIoNSUnder the Corporations Act, GTA Trustee and its associates (including the Consortium Members) and IML and its associates (including other ING Group entities and IML Directors) are excluded from voting on the Resolutions as they have interests in the Proposal different to other IIF Members.

The ING Group has an interest in the outcome of the Proposal in addition to its interest as an IIF Member because of the Ancillary Transaction as outlined in section 2.6.

Consequently, none of GTA Trustee, the Consortium Members or any member of the ING Group and their associates will vote on the Resolutions.

However, the responsible entity need not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form.

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4.7 voTING INTeNTIoNS oF The ChAIRMANIML has appointed Kevin McCann, Chairman of IML, to chair the Meeting. If the Chairman of the Meeting is your proxy and you do not specifically direct how your proxy is to vote on a Resolution, you will be taken to have directed the Chairman of the Meeting to vote in favour of the Resolution and the Chairman of the Meeting will exercise your votes in favour of the Resolutions.

4.8 AddITIoNAL INFoRMATIoNIf, after reading this Explanatory Memorandum, you have any questions about the Proposal, please call the Unitholder information line on 1300 653 497 (within Australia) or +61 2 8280 7057 (outside Australia) Monday to Friday between 8.30am and 5.30pm (AEDST).

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Profile of IIF

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5.1 IIF BACKGRoUNd ANd hISToRYIIF is an externally managed ASX listed real estate investment trust that develops, owns and manages a diversified portfolio of 61 industrial properties and business parks.

IIF was formed in 2000 through the merger of Prime Industrial Property Trust and Armstrong Jones Industrial Fund.

IIF is characterised by a portfolio well diversified by location, tenant and lease maturity. IIF’s properties are located near major infrastructure networks and are highly sought after by blue chip tenants from the logistics, consumer durables and fast moving consumer goods sectors.

IIF has total property assets under management of A$2.5 billion with investments located across Australia and Europe.

5.2 STRATeGYIIF invests in well-located industrial properties, focusing on assets with income and capital growth potential over the medium to long term. Management is focused on driving strong performance through astute investment, development and asset management activities supported by a high quality tenant base.

IIF’s strategy is to invest in the Australian industrial market with an emphasis on key east coast markets. As a result IML has reviewed IIF’s European assets and expects to begin a phased withdrawal from Europe as European markets improve over the next 2–3 years.

Development is a key strategy for IIF. Over 60% of IIF’s current asset base has been developed internally and held as investments in the core portfolio. When undertaking developments, IIF seeks tenancy pre-commitments from investment grade tenants for suitable properties. This strategy benefits IIF by way of higher investment yields, lower acquisition costs, and newly constructed quality buildings typically having long-term leases and taxation benefits.

5.3 IIF PoRTFoLIoIIF wholly owns a portfolio of 61 industrial assets in Australia and Europe with a total net lettable area of 2.1 million square metres and a total value of A$2.5 billion, with A$2.2 billion (86% by value) invested in Australia and A$0.3 billion invested in Europe (14% by value). IIF’s Australian portfolio includes an industrial development pipeline with a current book value of A$151 million and an end value of approximately A$1 billion as at 31 December 2010.

The investment portfolio has 98% occupancy (by income) with a weighted average lease expiry of 4.5 years as at 31 December 2010. Over the past five years IIF has had a high level of tenant retention and is 77% (by income) as at 31 December 2010.

PORTFOLIO SNAPSHOT (AS AT 31 DECEMBER 2010)

Geography Australia europe Total

Number of properties 45 16 61

Net lettable area (thousand sqm) 1,539 512 2,051

Total value (A$m) 2,154 338 2,492

Capitalisation rate (%) 8.5% 8.2% 8.4%

Occupancy (by income) 97% 100% 98%

Tenant retention (by income) 75% 100% 77%

WALE (years) 4.5 4.8 4.5

Note:As at 31 December 2010, based on FX rate at 31 December 2010 of €0.7643 per A$1.* six months to December 2010

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Profile of IIF


PORTFOLIO LEASE EXPIRY (BY INCOME)

FY21+FY19FY16FY13 FY18FY15FY12Vacant FY20FY17FY14FY11

2.2%3.1%

7.0%

13.9%

11.4%

13.3%

19.4%

11.5%

6.2%

1.2%

4.9%5.9%

Note:As at 31 December 2010, based on average HY2011 FX rate of €0.7122 per A$1.

TOP 10 INDUSTRIAL TENANTS (BY INCOME)

10%4% 8%2%

Fiege

Metcash

Linfox

Neckermann DE

Ingram Micro

DHL

Housewares International

Microsoft

Unisys

Coles

6%0%

8.2%

8.1%

3.5%

3.1%

2.8%

2.6%

2.6%

2.4%

1.9%

1.9%

Note:As at 31 December 2010, based on average HY2011 FX rate of €0.7122 per A$1.

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Australian investment portfolioThe Australian industrial portfolio has a total value of A$2.2 billion and a weighted average capitalisation rate of 8.5% as at 31 December 2010. The portfolio consists of industrial assets located in the key east coast Australian markets of Sydney, Melbourne and Brisbane.

IIF’s high quality industrial properties are generally located near major infrastructure networks which are highly sought after by a diverse range of blue chip companies. Total net lettable area for the Australian industrial portfolio is approximately 1.5 million square metres.

The portfolio has 97% occupancy (by income), 75% tenant retention (by income) and a weighted average lease expiry of 4.5 years as at 31 December 2010.

Australian development portfolioIIF has a development book with a value of A$151 million with an end value of approximately A$1 billion and a gross lettable area potential of approximately 942,000 square metres as at 31 December 2010. Recent tenant pre-commitments have resulted in an additional 59,000 square metres of development expected to commence shortly.

european portfolioIIF’s offshore portfolio represents 14% of IIF’s total portfolio by value and consists of A$0.3 billion of assets invested across key industrial markets in Europe with a weighted average capitalisation rate of 8.2% as at 31 December 2010.

The portfolio has 100% occupancy (by income), 100% tenant retention (by income) and a weighted average lease expiry of 4.8 years as at 31 December 2010.

5.4 FINANCIAL ReSULTS FoR The hALF YeAR eNdING 31 deCeMBeR 2010Operating income increased by 88% to $54.0 million for the half year ended 31 December 2010 from $28.7 million (before debt establishment costs of $47.5 million) for the half year ended 31 December 2009. The increase is largely attributable to lower debt levels, which decreased finance costs, and stabilised property portfolio occupancy.

The statutory net loss attributable to Unitholders of IIF of $92.9 million for the half year was driven by:

– A loss on transfer of the foreign currency translation reserve of $161.6 million to the income statement on disposal of the Canadian operations;

– Net gain on change in fair value of derivatives of $15.8 million; and

– Net foreign exchange gain of $13.7 million.

Other key financial metrics as at 31 December 2010 include:

– Operating income for the half year per Unit of 2.1 cents;

– Distributions per Unit for the half year of 1.605 cents;

– Net debt to total assets1 of 27.3%; and

– NTA of 55.52 cents per Unit (Adjusted NTA per Unit of 54.608 cents).

Further details on the results for the half year ended 31 December 2010 are in IIF’s interim financial report for the half-year ended 31 December 2010, which has been lodged with the ASX and is available on IIF’s website at www .ingrealestate.com.au.

Note:1. Net of cash.

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Profile of IIF


5.5 PRo FoRMA 31 deCeMBeR 2010 BALANCe SheeT

Reviewed

31 dec 2010

$ million

Adjustments

$ million

Adjusted

31 dec 2010

$ million

Property investments 2,492.1 – 2,492.1

Derivatives 3.8 – 3.8

Cash 350.6 (300.6) 50.0

Other 100.0 – 100.0

Total assets 2,946.5 (300.6) 2,645.9

Borrowings 1,058.9 94.4 1,153.3

Derivatives 26.1 – 26.1

Other 50.9 – 50.9

Total liabilities 1,135.9 94.4 1,230.3

Net assets 1,810.6 (395.0) 1,415.6

Preference units 371.4 (371.4) –

Net assets – ordinary units 1,439.2 (23.6) 1,415.6

Unit on issue (m) 2,592.3 – 2,592.3

NTA per Unit (cents) 55.5 (0.9) 54.6

Note:The adjustments reflect the repayment of the IIF Subordinated Bonds at their face value, which is different to their carrying amount in IIF’s financial statements which takes into account the value of the associated Equity Linked Options and issue costs. The preference units previously issued by IIF were replaced with the IIF Subordinated Bonds after 31 December 2010.

IIF’s balance sheet as at 31 December 2010 has been reviewed by IIF’s auditor, Ernst & Young. Their report is attached to IIF’s interim financial report for the half-year ended 31 December 2010, which has been lodged with the ASX and is available on IIF’s website at www .ingrealestate.com.au.

5.6 IIF TRAdING PRICe PeRFoRMANCeIIF UNIT TRADING PRICE PERFORMANCE

30.0

35.0

40.0

45.0

50.0

55.0

60.0

1 Jan 111 Oct 101 Jul 101 Apr 101 Jan 10

65.0

GTA Consideration

IIF trades ex December2010 quarter distributionof 0.8025c per unitU

nit

pri

ce (

cen

ts)

Close Price NTA

Initial approach byConsortium Members

Source: Company filings, IRESS

Note:NTA represents the NTA backing per IIF Unit disclosed in IIF’s financial results for the periods ending 31 December 2009, 30 June 2010 and 31 December 2010.

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5.7 IML dIReCToR PRoFILeS

Name Biography

Kevin McCann AM Independent Director

Mr McCann was appointed to the Board of IML in September 2010.

Mr McCann is an Independent Director and Chairman of the Board of IML, and Chairman of Origin Energy Limited, Lead Independent Director of Macquarie Group Limited and Director of BlueScope Steel Limited. Mr McCann is also a Director of the Australian Institute of Company Directors (AICD), Chairman of the Corporate Governance Committee of the AICD and a past member of the Takeovers Panel.

Philip Clark AM Independent Director

Mr Clark was appointed to the Board of IML in February 2006.

Mr Clark is an Independent Director of the Board of IML and Chairman of the Audit Committee, and also sits on a number of public and private boards.

Michael easson AM Independent Director

Mr Easson was appointed to the Board of IML in November 2004.

Mr Easson is an Independent Director of the Board of IML, and also sits on a number of public and private boards. He is also co-founder and Executive Chairman of EG Property Group.

Paul Scully Independent Director

Mr Scully was appointed to the Board of IML in May 2002.

Mr Scully is an Independent Director of the Board of IML and Chairman of the Board Compliance Committee. He also sits on a number of other boards, is a visiting lecturer at Macquarie University and provides a broad range of consulting services.

Christophe Tanghe Director

Mr Tanghe was appointed to the Board of IML as Director in 2009.

Mr Tanghe joined ING in 2007 as Head and Managing Director of ING Real Estate Capital Advisors. In 2008 Mr Tanghe joined the Management Board of ING Real Estate Investment Management with responsibility for Corporate Strategy as well as the Australian and Canadian Real Estate Investment Management businesses.

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Profile of Goodman Trust Australia

6

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6.1 GoodMAN TRUST AUSTRALIAGoodman Trust Australia (GTA) is an unlisted unit trust that has been established for the purpose of acquiring the Units in accordance with the Proposal. GTA has been formed as a vehicle for a consortium of investors comprising APG, CPPIB, Leader and the Goodman Group (together, the Consortium Members).

Upon completion of the Proposal each Consortium Member will have the following interest in GTA:

APG 25.2%

CPPIB 42.5%

Leader 12.4%

Goodman Group 19.9%

Goodman Industrial Funds Management Limited (GTA Trustee), a wholly owned subsidiary of the Goodman Group, has been appointed as trustee of GTA. The directors of GTA are Mr Gregory Goodman, Mr Anthony Rozic and Mr Nicholas Kurtis, being respectively the Chief Executive Officer, Chief Operating Officer and Global Head of Equities of the Goodman Group.

6.2 BACKGRoUNd To The CoNSoRTIUM MeMBeRS

APG APG is a pooled investment vehicle established in the Netherlands, in which investments, in both Australia and other countries, are held for the purpose of collective investment. As at 30 September 2010, APG Algemene Pensioen Groep NV, the manager of APG, had approximately €266 billion of assets under management.

Please visit www .apg.nl to find out more about APG.

Canada Pension Plan Investment BoardCPPIB is a professional investment management organisation that invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits on behalf of 17 million Canadian contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, CPPIB invests in public equities, private equities, real estate, inflation-linked bonds, infrastructure and fixed income instruments.

Headquartered in Toronto, with offices in London and Hong Kong, CPPIB is governed and managed independently of the CPP and at arm’s length from governments. At 30 September 2010, the CPP fund had assets totalling C$138.6 billion, of which C$4.2 billion is invested in private equity funds, infrastructure and real estate assets in the Asia Pacific region.

Please visit www .cppib.ca to find out more about CPPIB.

Leader Investment CorporationLeader is a wholly owned subsidiary of China Investment Corporation (CIC) established under the Company Law of the People’s Republic of China. CIC is an investment institution established as a wholly state-owned company under the Company Law of the People’s Republic of China in September 2007. It seeks stable and long-term risk-adjusted financial return and it is operated strictly on a commercial basis. As at 31 January 2011, CIC had registered capital of US$200 billion.

Please visit www .china-inv.cn to find out more about Leader.

Goodman GroupThe Goodman Group is an integrated property group with operations throughout Australia, New Zealand, Asia, Europe and the United Kingdom. Goodman Group, comprised of the stapled entities Goodman Limited and Goodman Industrial Trust, is the largest industrial property group listed on the Australian Securities Exchange and one of the largest listed specialist fund managers of industrial property and business space globally with total assets under management of approximately $16.2 billion as at 30 June 2010.

Goodman’s global property expertise, integrated own, develop, manage customer service offering and significant fund management platform ensures it creates innovative property solutions that meet the individual requirements of its customers, while seeking to deliver long-term returns for investors.

Please visit www .goodman.com to find out more about the Goodman Group.

6.3 The CoNSoRTIUM STRUCTUReThe relationship between each Consortium Member and GTA Trustee will be governed by a Unitholders Agreement to be entered into prior to the Implementation Date.

A subsidiary of the Goodman Group will be appointed to manage the properties acquired by GTA as a result of the Proposal, and will be responsible for day to day management and decision making. The Goodman Group will acquire the right to solely manage the IIF property portfolio from the current managers, REIM AP and REI III, in consideration for the payment of $22.5 million in cash.F

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Profile of Goodman Trust Australia


6.4 FUNdING oF The CoNSIdeRATIoNThe total consideration payable to Unitholders under the Proposal is approximately $1.4 billion. In addition, GTA will be required to refinance IIF’s existing $870.1 million Australian syndicated finance facility. GTA has the right to sufficient funds from the Consortium Members and its banks to fund the Consideration for the Proposal and to refinance IIF’s existing syndicated finance facility. The Proposal is not subject to a condition that IIF’s existing $870.1 million syndicated finance facility be refinanced.

GTA intends to fund the Consideration out of cash contributions received from each of the Consortium Members. GTA Trustee and each of the Consortium Members has entered into a Subscription Agreement dated 24 December 2010 under which each Consortium Member agrees to pay to GTA Trustee their specified proportion of the Consideration. Each of the Consortium Members intends to fund its proportion of the Consideration from its internal or parent cash resources.

GTA also has commitments from financiers for a new $1.1 billion syndicated finance facility. Further information about the consequences of GTA Trustee failing to pay the Consideration when due is set out in section 8.3.

This equity and debt funding is conditional upon termination rights that largely mirror those set out in the Implementation Agreement.

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Tax consequences for Unitholders

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Liability limited by a scheme approved under Professional Standards Legislation

10 February 2011 The Directors ING Management Limited, as Responsible Entity for the ING Industrial Fund (“IIF’) Level 6, 345 George St Sydney NSW 2000

Dear Sirs

Tax aspects of the Proposal for IIF Unitholders

This report has been prepared at the request of ING Management Limited (“IML”) as Responsible Entity for ING Industrial Fund (“IIF”). This report is for inclusion at section 7 of the Explanatory Memorandum (“EM”) for Investors in relation to the proposal by Goodman Consortium through Goodman Industrial Funds Management Limited to acquire all of the IIF Units from the IIF Unitholders (“the Proposal”). This report provides information of a general nature only, in relation to the potential Australian income tax implications arising to existing Investors in IIF, following the implementation of the Proposal who are individual natural persons and who are residents of Australia for Australian taxation purposes (“Investors”). Further, the information relates only to such Investors who hold their existing units in IIF on capital account and not as trading stock or otherwise on revenue account. The individual circumstances of each Investor may affect the taxation implications of the investment of that Investor. The information in this report, being of a general nature only, does not constitute taxation advice and cannot be relied upon as such. Investors should seek appropriate independent professional advice that considers the taxation implications in respect of their own specific circumstances. All legislative references are to the Income Tax Assessment Act 1936 (the “1936 Act”) or the Income Tax Assessment Act 1997 (the “1997 Act”), as appropriate. Capitalised terms used in this opinion are defined in accordance with this letter, or otherwise in accordance with the EM. The information in this report is based upon Australian income tax law contained in the 1936 Act and the 1997 Act as at the date of this report. The Australian income tax law is subject to change at any time and any such changes could adversely affect the information provided herein. We have not been retained, nor are we obliged, to monitor or update the information in this report for any future legislative changes which may affect the correctness of the information after the date of this report.

1. Background

Details of the Proposal are set out in Sections 1 and 2 of the EM and are not repeated in detail here. For present purposes, the salient facts are broadly as follows:

Tax consequences for UnitholdersING Industrial Fund 38

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IIF Tax Experts Letter 100111_3.docx

2

1. Implementation of the Proposal will involve on the implementation date:

a. All of the IIF Units being transferred to Goodman Industrial Funds Management Limited as trustee or responsible entity for the Goodman Consortium;

b. Each Investor being entitled to receive the Proposal Consideration;

c. GTA Trustee will pay to the IIF RE (as agent for each investor) the Proposal Consideration of 54.6c per unit less any distributions IIF Unitholders become entitled to from the date of the Implementation Agreement (24 December 2010) until completion. Following the payment of the December 2010 distribution of 0.8025 cents per Unit, the Proposal Consideration is 53.7975 cents per IIF Unit.

Investors should review Section 1 of the EM to obtain an overview of the Proposal.

2. Taxation Implications to Investors in respect of the Proposal

2.1 Disposal of IIF Units

An Investor will make a capital gain to the extent that the capital proceeds of 53.7975 cents per unit received from the disposal of the IIF units exceeds the tax cost base of those units. Alternatively, the Investor may make a capital loss to the extent that the capital proceeds received from the disposal of the IIF units is less than the respective reduced cost base. If IIF Unitholders become entitled to any future distributions, the Consideration will be adjusted accordingly. The capital proceeds and the resulting capital gain or loss will likewise be adjusted. The tax implications of additional trust distributions is discussed below. In determining the cost base or reduced cost base of their units, Investors will need to take into account any returns of capital and tax deferred distributions received in respect of their units. Certain Investors may be entitled to apply the 50% CGT discount percentage to any capital gain to the extent that it is included in their net capital gain for the income year provided that they have held their units or shares for more than 12 months. The discount percentage of 50% is applicable to an individual Investor that is a natural person.

2.2 Trust Distributions

Investors will include their share of the net income of IIF in their assessable income in the year in which they become presently entitled to their share of the income of IIF. The net income of IIF will be calculated in accordance with the relevant provisions of the Australian income tax legislation. Investors may become presently entitled to a share of the net income of IIF for the period up to the Implementation Date. However, IML Directors do not expect that any distributions will be paid in addition to the December 2010 declared distribution. To the extent that an Investor’s share of the net income is attributable to a capital gain made by IIF, the Investor will be treated as having made a capital gain equal to that amount.


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Tax consequences for Unitholders


3

Where such a capital gain is a discount capital gain, the Investor is treated as making a discount capital gain equal to twice the amount that is attributable to the discount capital gain. Investors may be entitled to apply the 50% CGT discount percentage to any distributed capital gain to the extent that it is included in their net capital gains for the income year. The rate of tax payable by each Investor will depend on the individual circumstances of the Investor. Where the cash distribution that an Investor receives or reinvests exceeds its share of the net income of IIF, the excess should not be included in their assessable income. A part of the non-assessable cash distribution is commonly referred to as a tax deferred distribution, unless it relates to a discount capital gain that has been made by the relevant trust. A tax deferred distribution received in respect of trust units should result in a reduction in the cost base of those units. An Investor will make a capital gain equal to the amount by which the tax deferred distributions received for an income year exceeds the Investor’s remaining cost base in those units. Investors will be considered to have received a distribution when it is applied on their behalf (e.g. where the amount is reinvested). Certain Investors may be entitled to apply the relevant discount percentage to any capital gain to the extent that it is included in their net capital gain for the income year provided that they have held their units in the trust for a continuous period of at least 12 months. Investors may receive a distribution which is a return of capital in respect of their existing units. A capital return to Investors on their existing units should not constitute ordinary income to those Investors. However, the cost base of an Investor’s existing units should be reduced by the amount of the capital returned on those units. In determining the cost base of existing units, the Investor will need to take into account any returns of capital or tax deferred distributions received in respect of the IIF Units to date. An Investor will make a capital gain to the extent that the amount of capital returned on their existing units exceeds the cost base of those units. Thereafter, the Investor will make further capital gains in respect of all tax deferred distributions, capital returns and capital proceeds received in respect of those units. Provided that the existing units have been held for a continuous period of at least 12 months, an Investor may be entitled to apply a CGT discount to any resultant capital gain included in a net capital gain for an income year where the Investor is an individual. The relevant CGT discount percentage to be applied would be 50% for an Investor who is a natural person.

2.3 Tax File Numbers and Australian Business Numbers

Investors are not required by law to provide a Tax File Number (“TFN”) to the responsible entity of IIF. However, if a TFN is not quoted, or no appropriate TFN exemption information is provided, the responsible entity of the relevant trust is required to deduct from any income distribution entitlement, tax at the highest marginal tax rate plus Medicare levy (currently 46.5%). For an entity that made the investment in the IIF Units in the course of an enterprise carried on by it, it may quote their Australian Business Number (“ABN”) rather than their TFN.


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4

2.4 GST

No GST should generally be payable in respect of the transactions outlined above. These dealings with the individual units should be considered input taxed supplies for GST purposes. Each Investor who is registered for GST should consider the recoverability of any GST charged on services provided to them in relation to the transactions (eg advisers fees) outlined above to confirm their recoverability of that GST.

2.5 Stamp duty

No stamp duty should be payable by an IIF Unitholder in respect of the Proposal based on our understanding that at the Implementation Date the units IIF will be quoted on the ASX.

2.6 Non-residents for Australian tax purposes

We have not considered the Australian income tax implications for non-resident Investors. However, it is noted that the Australian tax law imposes obligations on the responsible entity of IIF to pay income tax or withhold tax on distributions made by the trusts that are paid to non-residents for Australian tax purposes. Yours faithfully

Ernst & Young


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Additional information

8

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8.1 IMPLeMeNTATIoN AGReeMeNTThe Implementation Agreement was entered into by IML as responsible entity of IIF and GTA Trustee on 24 December 2010.

The key terms of the Implementation Agreement are summarised below. Unless otherwise defined in this Explanatory Memorandum, capitalised terms in this summary have the meaning given to them in the Implementation Agreement. To the extent of any inconsistency, capitalised terms have the meanings given to them in the Implementation Agreement. A full copy of the Implementation Agreement was lodged with the ASX on 24 December 2010 and may be obtained by contacting the Registry on 1300 653 497 (within Australia) or +61 2 8280 7057 (outside Australia) or from IIF’s website: www .ingrealestate.com.au or from ASX’s website: www .asx.com.au.

Conditions PrecedentA number of Conditions Precedent contained in the Implementation Agreement need to be satisfied or (where applicable) waived before the Proposal can be implemented.

In particular, the Conditions Precedent include the following:

– Regulatory approvals: before the meeting, ASIC, ASX and FIRB have granted the relevant approvals and relief that are reasonably necessary or desirable to implement the Proposal;

– Unitholder approval: IIF Members approve the Resolutions at the Meeting;

– Judicial Advice: the Court provides the Judicial Advice;

– Third party consents: all third party consents (if any) which are necessary or desirable to implement the Proposal are obtained before 8.00am (AEDST) on the Second Court Date;

– Independent expert’s Report: IML receives the Independent Expert’s Report stating that the Proposal is in the best interests of IIF Unitholders, and the Independent Expert does not change or withdraw that conclusion prior to the Meeting;

– No IIF Prescribed event: no IIF Prescribed Event occurs between the date of the Implementation Agreement and 8.00am (AEDST) on the Second Court Date;

– No IIF Material Adverse Change: No IIF Material Adverse Change occurs or becomes apparent between the date of the Implementation Agreement and 8.00am (AEDST) on the Second Court Date;

– No termination: the Implementation Agreement has not been terminated before 8.00am (AEDST) on the Second Court Date;

– deed of Retirement and Appointment: each of GTA Trustee and IML signs and delivers the Deed of Retirement and Appointment between the date of the Implementation Agreement and the date of sending the Explanatory Memorandum to IIF Members;

– deed Poll: GTA Trustee signs and delivers the Deed Poll between the date of the Implementation Agreement and the date of sending the Explanatory Memorandum to IIF Members;

– Representations and warranties: certain representations and warranties of IML and GTA Trustee set out in the Implementation Agreement remain true and correct in all respects at given times;

– No restraints: as at 8.00am (AEDST) on the Second Court Date or 8.00am (AEDST) on the Effective Date, no temporary restraining order, preliminary or permanent injunction or other legal restraint or prohibition restraining or prohibiting the Proposal, which has been enacted, enforced or issued by a Regulatory Authority, is in effect;

– IML Independent directors: the IML Independent Directors unanimously recommend that IIF Members approve the proposed Resolutions and do not change that recommendation or support a superior competing proposal at or before the Meeting; and

– Material breach: before 8.00am on the Second Court Date, neither IML nor GTA Trustee have breached any material provision of the Implementation Agreement which remains unremedied.

If a Condition Precedent is not satisfied or waived by the date specified for its satisfaction, then the parties will consult in good faith to determine whether the Proposal may proceed by way of alternative means or methods or may agree (but shall not be obliged to) extend the relevant dates for satisfaction of the Conditions Precedent.

exclusivityThe Implementation Agreement contains exclusivity provisions that prohibit IML and its Related Bodies Corporate and its representatives, subject to certain exceptions, from directly or indirectly soliciting, inviting, facilitating, encouraging or initiating any enquiries, negotiations or discussions, or communicating an intention to do any of these things, with a view to obtaining any offer, proposal or expression of interest from any person in relation to a Competing Transaction during the Exclusivity Period.

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Except where the below paragraphs would restrict IML or the Board of IML from taking or refusing to take any action with respect to a bona fide Competing Transaction (which was not solicited, invited, facilitated, encouraged or initiated by IML), and provided that the Board of IML has determined, in good faith and acting reasonably, that after consultation with its financial advisers it could reasonably be considered a superior competing proposal, and has received legal advice that failing to respond to such a bona fide Competing Transaction would be reasonably likely to constitute a breach of the Board of IML’s fiduciary or statutory obligations, IML and its Related Bodies Corporate and representatives must not during the Exclusivity Period:

– negotiate or enter into, or participate in negotiations or discussions with any other person regarding a Competing Transaction or any agreement, understanding or arrangement that may be reasonably expected to lead to a Competing Transaction, even if the Competing Transaction was not directly or indirectly solicited, invited, facilitated or encouraged or initiated by IML or any of its Related Bodies Corporate or Representatives or the person has publicly announced the competing transaction; and

– solicit or enable any person without the prior written consent of GTA Trustee to undertake due diligence investigations on IIF or IML for the purposes of obtaining, or which may reasonably be expected to lead to, a Competing Transaction.

IML must promptly inform GTA Trustee if it receives any approach with respect to any actual or potential Competing Transaction and must disclose, subject to any obligations of confidentiality, the identity of the relevant person or persons involved and the nature of any Competing Transaction (to the extent known).

Payment of break feeIML may become liable to pay GTA Trustee a break fee of A$14 million, in circumstances where:

– a Competing Transaction completes or is recommended by all the IML Independent Directors and it has been the subject of a public announcement;

– an IML Independent Director fails to recommend the Resolutions, withdraws or changes their recommendation, except if they do so:

– after the receipt of the final report of the Independent Expert where that report states that in the opinion of the Independent Expert the Proposal is not in the best interests of Unitholders; or

– where a superior competing proposal has been proposed or announced before the Independent Expert’s Report has been issued, which the Independent Expert may reasonably regard to be on more favourable terms than the Proposal;

– GTA Trustee validly terminates the Implementation Agreement due to a material breach by IML; or

– GTA Trustee terminates the Implementation Agreement due to an IIF Prescribed Event or IIF Material Adverse Change occurring and that event or change was within the control of IML and was not rectified by IML within the time required under the Implementation Agreement.

In such circumstances the break fee represents the sole and absolute liability of IML under and in connection with the Implementation Agreement (other than the payment of interest due to late payment) and no further damages, fees, expenses or reimbursements of any kind will be payable by IML in connection with the Implementation Agreement.

TerminationIML and GTA Trustee may terminate the Implementation Agreement if:

– the Proposal has not become Effective on or before the End Date;

– the Resolutions are not approved by the requisite majority of IIF Members at the Meeting;

– the other party materially breaches any clause of the Implementation Agreement and, to the extent that the breach is capable of remedy, that party does not remedy the breach by the required date;

– a Regulatory Authority has issued a final and non-appealable order, decree or ruling or taken other action which permanently restrains or prohibits the Proposal;

– the Court does not provide the Judicial Advice and an expert opinion is obtained that an appeal is unlikely to be successful;

– either GTA Trustee or a Consortium Member, or IML or any of IML’s subsidiaries, respectively becomes insolvent;

– any of the Conditions Precedent are not satisfied or waived by the requisite date (if any) and the parties cannot agree to extend that date; or

– the termination is agreed to in writing by GTA Trustee and IML.

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In addition:

– GTA Trustee may terminate the Implementation Agreement:

– if any IML Independent Director changes their recommendation to IIF Members that they vote in favour of the Resolutions, including any adverse modification to their recommendation or otherwise makes a public statement that they no longer support the Proposal; or

– if a person other than GTA Trustee and its associates has a Relevant Interest in more than 50% of the Units; or

– IML may terminate if GTA Trustee or a Consortium Member is in breach of its obligations under the Deed of Undertaking.

8.2 deed PoLLOn 9 February 2011, GTA Trustee executed the Deed Poll in favour of each Participant pursuant to which GTA Trustee undertakes:

– to comply with its obligations under the Implementation Agreement and do all things necessary or desirable on its part to give full effect to the Implementation Agreement; and

– subject to the Proposal becoming Effective, to provide to each Participant the Consideration to which each Participant is entitled under the terms of the Proposal.

The Deed Poll automatically terminates if the Implementation Agreement is terminated in accordance with its terms. A copy of the Deed Poll is included in this Explanatory Memorandum in Appendix C.

8.3 ReveRSe BReAK Fee ARRANGeMeNTSOn 24 December 2010 each of IML as responsible entity of IIF, GTA Trustee and each Consortium Member entered into a Deed of Undertaking and Reverse Break Fee Escrow Deed (together the Reverse Break Fee deeds) under which the Consortium Members severally agreed, and GTA Trustee agreed:

– to pay IML a reverse break fee of A$25 million if:

– GTA Trustee fails to pay the Consideration to IML on the Implementation Date;

– GTA Trustee is in material breach of the Implementation Agreement;

– GTA Trustee or a Consortium Member becomes insolvent; or

– GTA Trustee or a Consortium Member is in breach of its obligations under the Deed of Undertaking;

– to deposit in aggregate A$25 million in an escrow account held by Allens Arthur Robinson. This escrow account has been established and funded;

– to subscribe for units in GTA prior to the Implementation Date in accordance with the Subscription Agreement; and

– not to terminate, or amend in a manner that is materially prejudicial to IIF or waive any rights in a manner that is materially prejudicial to IIF under the Subscription Agreement between the Consortium Members and GTA Trustee under which each Consortium Member agreed to contribute their proportion of the equity funding required by GTA Trustee to undertake the Proposal. without the prior written consent of IML.

8.4 SUPPLeMeNTAL deed ANd AMeNdMeNTS To IIF CoNSTITUTIoN

If the Proposal is approved by IIF Members at the Meeting, IML will execute the Supplemental Deed to amend the IIF Constitution in order to facilitate the implementation of the Proposal.

Under the IIF Constitution (as amended by the Supplemental Deed with effect from the Effective Date):

– IML will have the power to do all things which it considers necessary or desirable to give effect to the Proposal and the transactions contemplated by it; and

– Unitholders appoint IML as their attorney with the power to do all things on their behalf which it considers necessary or desirable to give full effect to the terms of the Proposal and the transactions contemplated by it.

Also, the obligation to pay distributions quarterly will be removed. While the responsible entity will have flexibility to pay distributions more regularly, it will only be required to calculate a distribution at the end of each financial year.

In addition, the Supplemental Deed will make other amendments to the IIF Constitution with effect from the implementation of the Proposal. These changes therefore will not affect Unitholders should the Proposal be implemented and relate to the continuing operation of IIF after implementation when it is wholly owned by GTA. The changes include:

– the introduction of provisions for the withdrawal of Units by Unitholders while IIF is not listed or no longer a registered scheme; and

– not requiring the trustee to maintain IIF as a listed trust.

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8.5 FACILITATIoN deed FoR ANCILLARY TRANSACTIoN

REIM AP, REI III (together, the ING Parties) and Goodman have entered into the Facilitation Deed dated 24 December 2010 in respect of the Ancillary Transaction.

(a) obligations of the ING PartiesUnder the Facilitation Deed, the ING Parties agreed to do certain things, including obtaining certain consents or waivers and in the transfer of various know-how, books and records of IML as they relate to IIF and generally to provide as much assistance as is reasonably requested by Goodman to assist GTA to implement the Proposal in accordance with the Implementation Agreement. The ING Parties also agreed to use their reasonable endeavours to assist Goodman in connection with, among other things:

– its due diligence enquiries relating to, and communicating with, IIF employees;

– facilitating the transfer of know-how, books and records of IML as they relate to IIF and the transition of certain IIF employees;

– obtaining any consents or waivers required in respect of the ING facilities and any other facilities or derivative contracts under which IML as responsible entity of IIF, or the trustee of any sub-trust of IIF, is a borrower for any change of control arising from or in connection with the Proposal; and

– obtaining any waivers required in respect of any change of control arising from or in connection with implementing the Proposal under the Redbank Joint Venture or the asset management agreement with CB Richard Ellis.

The ING Parties have also agreed to use their reasonable endeavours to assist IML to implement the Proposal the subject of this Explanatory Memorandum and to perform all of their obligations under any documents relating to the Proposal to which they are a party.

In addition, if the Proposal is implemented, the ING Parties have agreed to assist Goodman with, among other things:

– procuring the termination of the ING Asset Management Agreements;

– the transfer of shares held by members of the ING Group in each IIF Investment and Custodian Vehicle and the interest in the Redbank Joint Venture to a member of the Goodman Group;

– the preparation of financial reports, taxation returns, tax statements and other taxation reporting requirements relating to IIF for the financial year ended 30 June 2011;

– the appointment of Goodman RE as responsible entity of IIF including the transfer of books and records from IML to Goodman RE; and

– the employment of those IIF employees selected by Goodman to take up employment with a member of the Goodman Group.

(b) obligations of GoodmanGoodman has agreed to do all things reasonable to facilitate the transfer of:

– those IIF employees selected by Goodman to take up employment with a member of the Goodman Group; and

– the relevant shares in each IIF Investment and Custodian Vehicle and the Redbank Joint Venture to a member of the Goodman Group.

Goodman has also agreed to perform, and procure that each Goodman Party performs, all of its obligations under any documents relating to the Proposal to which they are a party.

(c) ConsiderationA$22.5 million (plus any applicable GST) is payable by Goodman to REIM AP (or as it directs) within 10 Business Days of implementation of the Proposal.

(d) Termination rightsThe Facilitation Deed will terminate on the earliest to occur of:

– a party is in material breach of the Facilitation Deed and, to the extent that breach is capable of remedy, the defaulting party does not remedy the breach by the date specified;

– a superior competing proposal is made by a third party and the relevant Goodman Party does not announce, within the time specified in the Facilitation Deed, an improvement to the Consideration offered under the Proposal so that it is no less than that offered under the superior competing proposal; and

– 30 June 2011 or such later date being no later than 30 September 2011 as is specified by the ING Parties.F

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8.6 INTeReSTS IN IIF heLd BY IML dIReCToRSThe IML Directors and the number of Units in which they have a relevant interest as at the date of this Explanatory Memorandum are set out in the table below:

directorNumber of

Units

Units held through

associates

Kevin McCann AM 0 0

Philip Clark AM 0 15,000

Michael Easson AM 0 0

Paul Scully 16,848 23,146

Christophe Tanghe 0 0

8.7 INTeReSTS IN GTA oR CoNSoRTIUM MeMBeRS heLd BY IML dIReCToRS

Kevin McCann has an interest in 73,947 Goodman Group stapled securities through his personal superannuation fund. No other securities or any other interests in GTA or the Consortium Members are held by, or on behalf of, any IML Director.

8.8 CoNTRACTS BeTWeeN GTA oR CoNSoRTIUM MeMBeRS ANd IML dIReCToRS

There are no contracts or arrangements between any IML Director and GTA. No IML Director has any interest in any contract entered into by GTA (other than in their capacity as a Unitholder).

8.9 AGReeMeNTS oR ARRANGeMeNTS WITh IML dIReCToRS

There is no agreement or arrangement made between any IML Director and any other person, including GTA, in connection with or conditional upon the outcome of the Proposal.

8.10 oTheR INTeReSTS oF IML dIReCToRS ANd oFFICeRS

Christophe Tanghe is an employee of the ING Group and receives performance-based bonuses based on, among other things, the performance of the REIMA business, including the management of IIF, and ING Group’s interests in funds it manages, such as IIF. As a senior executive of INGRE Mr Tanghe makes no recommendation in relation to the Proposal and has not participated in the IBC’s consideration of proposals affecting IIF, including the Proposal.

No IML Director or officer has any other interest, whether as a director, officer, member or creditor of IIF, IML or otherwise, material to the Proposal.

No directors, secretaries or executive officers of IML will receive any other payment or other benefit as compensation for the loss of, or in consideration for or in connection with his or her retirement from, office in IML or any related body corporate as a result of the Proposal.

8.11 IIF’S SUBSTANTIAL UNIThoLdeRSThe substantial holders of Units as at 4 February 2011 are as follows:

Substantial Unitholders

Number of ordinary

Units

Percentagevotingpower

%

Goodman Group 405,258,590 15.63 1

ING Group NV 388,458,590 14.98 2

UBS AG and its Related Bodies Corporate

287,912,313 11.11

Credit Suisse Holdings (Australia) Limited

269,394,927 10.39

CPPIB US RE-3 Inc 200,605,140 7.74 3

Leader Investment Corporation

200,605,140 7.74 3

Stichting Depositary APG Strategic Real Estate Pool

200,605,140 7.74 3

Centaurus Capital Limited 175,705,096 6.78

The Vanguard Group Inc. 130,243,867 5.02

Notes:1. Goodman Group’s direct interest is 7.09% however its total

interest includes ING Group’s 7.89% interest as ING Group has become an associate of Goodman Group under the Ancillary Transaction and APG’s 0.65% interest as APG has become an associate of Goodman Group by virtue of entry into the Subscription Agreement.

2. ING Group’s direct interest is 7.89% however its total interest includes Goodman Group’s 7.09% interest as Goodman Group has become an associate of ING Group under the Ancillary Transaction.

3. The voting power of each of the Consortium Members (other than Goodman Group) includes Goodman Group’s 7.09% interest and APG’s 0.65% interest as each Consortium Member has become an associate of the other Consortium Members by virtue of entry into the Subscription Agreement.

IIF has relied on the substantial holder notices provided to it up to 4 February 2011, which are available on the ASX website, to compile the above table.

Information in regard to substantial holdings arising, changing or ceasing before this time or in respect of which the relevant announcement is not available on the ASX website is not included above.

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8.12 CoNSoRTIUM MeMBeR’S ANd ASSoCIATeS’ INTeReST IN UNITS

As at the date of this Explanatory Memorandum, the Consortium Members and their associates together hold relevant interests in aggregate of 405,258,590 Units. Accordingly, the Consortium Members and their associates have 15.63% of voting power in IIF.

Goodman Group holds a relevant interest in 183,805,140 Units.

ING Group holds a relevant interest in 204,653,450 Units.

APG holds a relevant interest in 16,800,000 Units.

Equity Linked Options are interests in IIF which carry voting rights under the Corporations Act that are determined by reference to the value of the Equity Linked Options which is expected to give them voting power in IIF of less than 0.01%. Accordingly, if the Proposal is approved, GTA Trustee and its associates will have voting power in IIF of approximately 100%.

8.13 ACQUISITIoNS oF UNITS ANd INdUCING BeNeFITS BY The CoNSoRTIUM MeMBeRS oR ITS ASSoCIATeS

Neither GTA Trustee nor any of the Consortium Members acquired, or agreed to acquire, any Units in the four months prior to the date of this Explanatory Memorandum.

8.14 PRe-PRoPoSAL BeNeFITSIn the four months prior to the date of this Explanatory Memorandum, neither GTA Trustee, nor any of its associates have provided any benefit, or agreed to provide any benefit, to a person that is not available under the Proposal to induce them to vote in favour of the Proposal or to dispose of their Units, other than the agreement under the Deed Poll for GTA Trustee to pay the Consideration under the Proposal, if it becomes Effective, and the Facilitation Deed.

8.15 IMPLICATIoNS oF PRoPoSAL oN exChANGeABLe NoTehoLdeRS

The Proposal will not affect the terms of the Exchangeable Notes. However, if approved, the Proposal will trigger a right for the Exchangeable Noteholders to request the early redemption of their Exchangeable Notes as it will result in a change of control and the delisting of IIF. The responsible entity of IIF has discretion as to whether it redeems the IIF Subordinated Bonds underlying the Exchangeable Notes for which redemption is requested.

However, if the issuer of the Exchangeable Notes (eN Issuer) does not receive any or all of the early redemption amount or the required number of Units, if the securities settlement option is exercised, for those Exchangeable Notes (Missed Redemption event) the EN Issuer must deliver the IIF Subordinated Bonds to the Exchangeable Noteholders and the EN Issuer will hold the Equity Linked Options on trust for the Exchangeable Noteholders which will constitute the redemption in full of the Exchangeable Notes.

If a Missed Redemption Event occurs, holders of IIF Subordinated Bonds will have limited consent rights to replicate the voting rights of the preference units in IIF which they would otherwise have had following a Missed Redemption Event. In addition, IIF will not be permitted to pay distributions on or redeem Units until the IIF Subordinated Bonds have been redeemed in full and the responsible entity’s obligations under the Equity Linked Options have been satisfied or the Equity Linked Options have expired. The responsible entity of IIF may then redeem all (but not some) of the IIF Subordinated Bonds on 5 Business Days notice.

As stated in section 2.7, Goodman RE has not formed any intention as to whether (in its capacity as responsible entity of IIF after implementation of the Proposal) it will redeem the IIF Subordinated Bonds underlying the Exchangeable Notes for which redemption is requested as a result of the redemption right triggered by the Proposal.

A$200 million of the Exchangeable Notes have a maturity date of 30 June 2011 and A$195 million of the Exchangeable Notes have a maturity date of 30 June 2012. At the maturity date, the IIF responsible entity may elect to redeem the underlying IIF Subordinated Bonds for either cash or by issuing Units at a discount to the volume weighted average price of Units on the relevant business day. If the IIF Subordinated Bonds are not redeemed at maturity an increased coupon of 2% per annum over the existing rates will apply in respect of the outstanding IIF Subordinated Bonds from the final maturity date.

The responsible entity may pay interest on the IIF Subordinated Bonds in its absolute discretion. In addition, a Missed Redemption Event will have occurred if the IIF Subordinated Bonds are not redeemed at maturity and the consequences of a Missed Redemption Event outlined above will apply.

The implications of the Proposal on Exchangeable Noteholders do not affect the position of Unitholders under the Proposal.

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8.16 INFoRMATIoN dISCLoSed To ASx ANd doCUMeNTS LodGed WITh ASIC

IIF is a disclosing entity for the purposes of the Corporations Act and as such is subject to periodic reporting and continuous disclosure obligations. Publicly disclosed information about all listed entities, including IIF, is available on the ASX website at www .asx.com.au.

IIF is also required to lodge various documents with ASIC. Copies of documents lodged with ASIC by IIF may be obtained from, or inspected at, ASIC offices.

IIF will provide free of charge, to any Unitholder who requests it before the Effective Date, a copy of:

– the audited financial report of IIF and its controlled entities for the year ended 30 June 2010 (being the annual financial report most recently lodged with ASIC before this Explanatory Memorandum was lodged with ASIC);

– the Implementation Agreement; and

– each announcement to ASX made by IIF after lodgement with ASIC of the annual report referred to above and before the Meeting.

8.17 CoNSeNTSThe following parties have given, and have not withdrawn, their written consent to be named in this Explanatory Memorandum in the form and context in which they are named:

– GTA Trustee;

– Mallesons Stephen Jaques as legal advisers to IML;

– Goldman Sachs and UBS AG, Australia Branch as financial advisers to IML;

– Link Market Services as the Registry;

– Ernst & Young as the author of the Tax Opinion in section 7;

– Deloitte Corporate Finance Pty Limited as the Independent Expert; and

– Allens Arthur Robinson as the escrow agent.

Ernst & Young has given, and has not withdrawn, its written consent to the inclusion of the Tax Opinion in section 7 of this Explanatory Memorandum and the references to that opinion in the form and context in which they are included in this Explanatory Memorandum.

Deloitte Corporate Finance Pty Limited has given, and has not withdrawn, its written consent to the inclusion of the Independent Expert’s Report and the references to that report in the form and context in which they are included in this Explanatory Memorandum.

GTA Trustee has given, and has not withdrawn, its written consent to the inclusion of the GTA Information and the references to that information in the form and context in which they are included in this Explanatory Memorandum.

Each party referred to in this section 8.17:

– does not make, or purport to make, any statement in this Explanatory Memorandum or any statement on which this Explanatory Memorandum is based other than statements and references included in this Explanatory Memorandum with the consent of that party (as set out above); and

– to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Explanatory Memorandum, other than with respect to the statements and references included in this Explanatory Memorandum with the consent of that party (as set out above).

8.18 SUPPLeMeNTARY INFoRMATIoNIML will issue a supplementary document to this Explanatory Memorandum if it or GTA Trustee becomes aware of any of the following between the date of lodgement of this Explanatory Memorandum with ASIC and the Effective Date:

– a material statement in this Explanatory Memorandum is misleading or deceptive;

– a material omission from this Explanatory Memorandum;

– a significant change affecting a matter in this Explanatory Memorandum; or

– a significant new matter has arisen and it would have been required to be included in this Explanatory Memorandum if known at the date of lodgement with ASIC.

A copy of the supplementary document will also be provided to ASIC and/or ASX (as appropriate).

Depending on the nature of the timing of the changed circumstances and subject to obtaining any relevant approvals, IML may circulate and publish any supplementary document by:

– placing an advertisement in a prominently placed newspaper which is circulated generally throughout Australia;

– posting the supplementary document on IIF’s website, www .ingrealestate.com.au; or

– posting the supplementary document to all Unitholders.

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8.19 oTheR MATeRIAL INFoRMATIoNOtherwise than as contained or referred to in this Explanatory Memorandum, including the Independent Expert’s Report and the other information that is contained in the appendices to this Explanatory Memorandum, in the opinion of the Board of IML there is no other information that is material to the making of a decision by an IIF Member whether or not to vote in favour of the Resolutions to approve the Proposal, being information that is known to any IML Director and which has not been previously disclosed to IIF Members.

8.20 MATeRIAL ChANGeS SINCe FULL YeAR 30 JUNe 2010 AUdITed FINANCIAL STATeMeNTS

The last annual financial statements sent to Unitholders were the audited financial statements for the year ended 30 June 2010 as lodged with the ASX on 30 August 2010. So far as is known by IML Directors, the only material change to the financial position of IIF since the date of those annual financial statements is that in November 2010, IIF completed the divestment of its interest in the Summit Industrial Fund (Summit) in Canada. IIF contracted to sell its interest in Summit on 27 August 2010. The divestment value was C$339 million and IIF’s interest in its Canada investment was disclosed in IIF’s 30 June 2010 audited financial statements under current assets.

8.21 ASIC ReLIeFASIC has granted the following exemptions and modifications in connection with this Explanatory Memorandum and the Proposal:

– a modification of section 611 item 7 of the Corporations Act to permit IIF Unitholders (other than GTA and its associates) to vote on the Proposal;

– an exemption from Division 5A of Part 7.9 of the Corporations Act relating to unsolicited offers in respect of the offer by GTA under the Proposal to acquire all the Units;

– an exemption from the requirement for IML to provide a financial services guide in connection with this Explanatory Memorandum and implementation of the Proposal;

– an exemption from Part 7.6 of the Corporations Act in relation to any general financial product advice by GTA contained in this Explanatory Memorandum; and

– a modification of section 601FL(2) of the Corporations Act to expand the period for lodging a notice with ASIC in relation to the change of responsible entity of IIF until the Implementation Date.

8.22 CoSTS oF The PRoPoSALThe costs of the Proposal for IIF include advisory costs, legal fees, independent expert fees and other costs. If the Proposal is implemented, these costs for IIF will be approximately A$17.5 million. If the Proposal is not implemented these costs for IIF will be approximately A$2.5 million.

8.23 UNdeRTAKINGS BY GTAScheme ImplementationGTA Trustee will observe and perform all obligations contemplated of it under the Proposal and the Implementation Agreement including, without limitation, the obligation to provide the Consideration in accordance with the terms of the Proposal.

Acquisition of UnitsGTA Trustee will not, and will procure that its Related Bodies Corporate, the GTA directors and any director of its Related Bodies Corporate will not, acquire Units other than under the Proposal until the earlier of:

– the Proposal being implemented;

– one or more of the Resolutions not being approved by Unitholders at the Meeting; or

– the termination of the Implementation Agreement.

Compliance with various takeover provisions of the Corporations ActGTA undertakes that subject to any differential treatment of Unitholders which is inherent in the Proposal, the Proposal will, as far as practical comply with the following sections of the Corporations Act, as they would apply if GTA were making a takeover bid of IIF on similar terms:

– subsection 618(1) and section 619 (scheme relating to all securities in the relevant class or the same proportion of each holding, on the same terms);

– subsections 621(3), (4), (5) as modified by ASIC class order 00/2338 (4 month price rule); and

– sections 622, 623, 627, 628 and 651A.

For this purpose the date on which the Explanatory Memorandum is sent to Unitholders will be the date of the bid for the purposes of applying subsections 621(3), (4) and (5) of the Corporations Act and the first date of the bid period (which will end immediately after the Meeting) for the purposes of applying section 623 of the Corporations Act.

GTA has entered into a Deed Poll in respect of the undertakings set out above and in section 8.18.

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Glossary

9

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A$ means Australian dollars.

Adjusted NTA means 54.608 cents per Unit being the NTA of IIF per Unit as at 31 December 2010 adjusted to reflect the repayment of the IIF Subordinated Bonds at their face value and not their carrying value in IIF’s financial statements which takes into account the value of the associated Equity Linked Options and issue costs.

AedST means Australian Eastern Daylight Saving Time.

AFSL means an Australian Financial Services Licence.

Ancillary Transaction means the arrangement between ING Group and Goodman as set out in the Facilitation Deed, a summary of which is provided at sections 2.6 and 8.5 of this Explanatory Memorandum.

APG means Stichting Depositary APG Strategic Real Estate Pool, as depositary of APG Strategic Real Estate Pool.

ASIC means the Australian Securities and Investments Commission.

Associate has the same meaning as in the Corporations Act.

ASx means ASX Limited (ACN 008 624 691) or the market operated by it, as the context requires.

Banking Act means the Banking Act 1959 (Cth).

Board of IML means the board of directors of IML.

Business day means a business day as defined in the Listing Rules.

C$ means Canadian dollars.

Chairman of the Meeting means Kevin McCann, who will act as the chair of the Meeting or any replacement appointed by IML to chair the Meeting.

CheSS means the system known as the Clearing House Electronic Subregister System and operated by the ASX Settlement Corporation, a wholly owned subsidiary of ASX.

CIC means China Investment Corporation.

Competing Transaction means a proposed transaction or arrangement which, if entered into or completed substantially in accordance with its terms, would mean a person (other than GTA Trustee, the Consortium Members or their Related Bodies Corporate or Representatives) would:

(a) directly or indirectly, acquire, have a right to acquire or otherwise acquire, an interest or Relevant Interest in or become the holder of:

(i) 50% or more of the Units; or

(ii) all or a substantial part or a material part of the assets or business of IIF,

including by way of takeover bid, informal trust scheme, capital or income distribution, sale of assets, sale of units or joint venture, but not as a custodian, nominee or bare trustee;

(b) acquire Control of IIF or a member of the IIF Group; or

(c) otherwise acquire or merge (including by a reverse takeover bid or dual listed entity structure) with, or be stapled to, IIF.

Conditions Precedent means the conditions precedent set out in schedule 2 of the Implementation Agreement, and set out in section 8.1 of this Explanatory Memorandum.

Consideration means the Offer Price less any distributions Unitholders become entitled to from the date of the Implementation Agreement (24 December 2010) until completion of the Proposal.

Consortium Members means each of Goodman Group, APG, Leader and CPPIB. Further information on the Consortium Members is set out in section 6 of this Explanatory Memorandum.

Control has the meaning given in section 50AA of the Corporations Act.

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Corporations Act means the Corporations Act 2001 (Cth) including any Regulations made under the Corporations Act and any modifications to the Corporations Act made under ASIC relief.

Court means the Supreme Court of New South Wales.

CPP means Canada Pension Plan.

CPPIB means CPPIB US RE-3, Inc, or its wholly owned trust or nominee.

deed of Retirement and Appointment

means the Deed in connection with retirement, appointment and consent between IML and Goodman RE dated 7 February 2011.

deed of Undertaking means the Deed of Undertaking between GTA Trustee, the Consortium Members and IML dated 24 December 2010.

deed Poll means the Deed Poll dated 9 February 2011 declared by GTA Trustee as set out in Appendix C of this Explanatory Memorandum.

deloitte Corporate Finance means Deloitte Corporate Finance Pty Limited (ABN 19 003 833 127).

effective means when the Supplemental Deed takes effect pursuant to section 601GC(2) of the Corporations Act.

effective date means the date on which the Proposal becomes Effective, which is expected to be on or about 18 March 2011.

eligible IIF Members means, in relation to the Proposal, those persons who are registered holders of Units as at the Meeting Record Date.

eN Issuer means the issuer of the Exchangeable Notes.

end date means 30 April 2011 or such other date as is agreed by GTA Trustee and IML.

entity includes a natural person, a body corporate, a partnership, a trust and the trustee of a trust.

equity Linked options means the tranche 1 and tranche 2 IIF equity-linked options having the terms set out in schedules 1 and 2 respectively of the IIF Constitution.

exchangeable Noteholder means a holder of an Exchangeable Note.

exchangeable Notes means the two tranches of secured exchangeable notes issued by JP Morgan Australia ENF Nominees No. 2 Pty Ltd in its capacity as trustee of the JP Morgan Australia Exchangeable Note Funding Trust No. 2.

exclusivity Period means the period from and including the date of the Implementation Agreement (being 24 December 2010) to the earlier of:

(a) the termination of the Implementation Agreement in accordance with its terms; and

(b) the End Date.

explanatory Memorandum means this document, including the appendices.

Facilitation deed means the Scheme Facilitation Deed dated 24 December 2010 between REIM AP, REII III and Goodman.

FIRB means Foreign Investment Review Board.

First Court hearing means a hearing before the Court under section 63 of the Trustee Act 1925 (NSW) as to whether IML would be justified in convening the Meeting and proceeding on the basis that amending the IIF Constitution as set out in the Supplemental Deed is in accordance with the power of alteration conferred by the IIF Constitution and section 601GC of the Corporations Act.

First Judicial Advice means confirmation from the Court under section 63 of the Trustee Act 1925 (NSW) that IML would be justified in convening the Meeting and proceeding on the basis that amending the IIF Constitution as set out in the Supplemental Deed would be within the power of alteration conferred by the IIF Constitution and section 601GC of the Corporations Act.

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Glossary


Fx means foreign exchange.

Goldman Sachs means Goldman Sachs & Partners Australia Pty Ltd (ABN 21 006 797 897).

Goodman means Goodman Limited (ABN 69 000 123 071).

Goodman Group means Goodman Funds Management Limited (ACN 113 249 595) in its capacity as responsible entity of Goodman Industrial Trust (ARSN 091 213 839) and Goodman.

Goodman Re means Goodman Funds Management Limited (ACN 067 796 641).

GTA means Goodman Trust Australia, or where the context requires, GTA Trustee as trustee of Goodman Trust Australia.

GTA Information means the information provided by GTA Trustee to IML for inclusion in this Explanatory Memorandum regarding GTA Trustee and the Consortium Members. For the avoidance of doubt, GTA Information does not include information about IIF (except to the extent it relates to any statement of intention relating to IIF following the Effective Date).

GTA Trustee means Goodman Industrial Funds Management Limited (ACN 147 891 487) in its capacity as trustee of GTA.

IBC means the independent board committee of IML as the responsible entity of IIF, comprising the IML Independent Directors.

IIF means ING Industrial Fund (ARSN 089 038 175).

IIF Constitution means the constitution of IIF as amended from time to time.

IIF Investment and Custodian vehicles

means an investment or custodian company owned or controlled by the ING Parties that holds directly or indirectly assets of IIF or is required for an IIF investment structure and includes the Redbank Joint Venture.

IIF Material Adverse Change means any Specified Event or Specified Events which when aggregated with all such events, has or is reasonably likely to:

(a) reduce the annualised operating income of IIF as set out in the earnings forecast disclosure for the year ending 30 June 2011 made to ASX on 30 August 2010 (excluding mark-to-market movements relating to investment properties and financial derivatives and the effect of any earnings decreation arising from delaying the refinancing of certain facilities as assumed in preparing that earnings forecast disclosure), by at least $5.4 million over the 12 month period following the date of execution of this agreement; or

(b) reduce the value of total net tangible assets of IIF by at least 5% of the value shown in the consolidated balance sheet as at 30 June 2010, excluding mark-to-market movements relating to investment properties, financial derivatives and foreign exchange rates,

but does not include:

(c) any matter fairly disclosed to GTA Trustee or its Representatives prior to the signing of this agreement (including as a result of disclosures made to ASX);

(d) any change in taxation, interest rates or foreign exchange rates which impact on IIF and GTA Trustee in a similar manner;

(e) any change in accounting policy required by law or applicable accounting standards; or

(f) any change occurring directly or indirectly as a result of any matter, event or circumstance required by this agreement, the Proposal or the transactions contemplated by them.

IIF Members means Unitholders and holders of Equity Linked Options.

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IIF Prescribed event means, except to the extent contemplated by this agreement or the Proposal, any of the events listed in schedule 1 of the Implementation Agreement provided that an IIF Prescribed Event listed in items (1) to (13) of schedule 1 of the Implementation Agreement will not occur where:

(a) IML has first consulted with GTA Trustee in relation to the event and GTA Trustee has approved the proposed event or has not objected to the proposed event within 5 Business Days of having being so consulted (noting that the parties agree in the case of IML seeking an approval under schedule 1 paragraph 11 of the Implementation Agreement, IML is not required to disclose tenant specific information but must provide sufficient information to determine the credit worthiness of the proposed tenant); or

(b) IML has fairly disclosed the event to GTA Trustee prior to the signing of the Implementation Agreement.

IIF Subordinated Bonds means the tranche 1 subordinated bonds and tranche 2 subordinated bonds issued by IML to the issuer of the Exchangeable Notes.

IML means ING Management Limited (ACN 006 065 032; AFS licence 237534) as the responsible entity of ING Industrial Fund (ARSN 089 038 175).

IML directors means the directors of IML as the responsible entity of IIF.

IML Independent director means each director identified as an independent director (or independent chairman) in section 5.7 of this Explanatory Memorandum.

Implementation Agreement means the implementation agreement entered into between IML and GTA Trustee on 24 December 2010.

Implementation date means the date upon which the Proposal will come into effect, being the Business Day after the Implementation Record Date, which is expected to be 29 March 2011.

Implementation Record date means the date upon which those IIF Unitholders who hold Units as registered in the register will be entitled to receive the Consideration, being the sixth Business Day following the Effective Date or such other date as IML and GTA Trustee agree, which is expected to be 28 March 2011 at 5.00pm (AEDST).

Independent Board Committee

means the independent board committee of IML as the responsible entity of IIF, comprising the IML Independent Directors.

Independent expert means Deloitte Corporate Finance Pty Limited (ABN 19 003 833 127).

Independent expert’s Report means the report prepared by the Independent Expert set out in Appendix A to this Explanatory Memorandum.

ING Asset Management Agreements

means the asset management agreements between Related Bodies Corporate of ING and IIF in respect of IIF’s European assets.

ING Facilities means finance facilities in place with various members of the ING Group pursuant to which an ING Group member has provided financing to IIF and/or a subsidiary of IIF.

ING Group means ING Groëp NV and each of its Related Bodies Corporate.

ING Industrial Fund means ING Industrial Fund (ARSN 089 038 175).

ING Parties means REIM AP and REII III.

INGRe means ING Real Estate B.V., which was incorporated and is domiciled in The Netherlands and is the parent company of REIM AP.

Judicial Advice means the First Judicial Advice and the Second Judicial Advice.

Leader means Leader Investment Corporation, or its wholly owned trust or nominee.

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Listing Rules means the ASX Listing Rules and any other rules of ASX which are applicable while the Units are admitted to the official list of ASX, each as amended or replaced from time to time, except to the extent of any express written waiver by ASX.

Meeting means the meeting of IIF Members for which a Notice of Meeting is contained in Appendix D of this Explanatory Memorandum.

Meeting Record date means the time and date upon which the eligibility of IIF Members to vote at the Meeting is determined, being 15 March 2011 at 7.00pm (AEDST).

Missed Redemption event has the meaning in section 8.15.

Notice of Meeting means the notice of Meeting for IIF to be held at 2.30pm (AEDST) on 17 March 2011 at Swissôtel Sydney, Level 8, 68 Market Street, Sydney NSW 2000 for which a Notice of Meeting is contained in Appendix D of this Explanatory Memorandum.

NTA means net tangible assets.

offer Price means 54.6 cents per Unit in cash.

Participant means each person, including each Consortium Member, who is an IIF Unitholder at the Implementation Record Date.

Preference Units means a preference unit in IIF, the terms of which are set out in schedules 3 and 4 of the Constitution.

Proposal means the proposal by GTA to acquire all of IIF’s ordinary units via a trust scheme.

Proxy Form means the personalised proxy form included with this Explanatory Memorandum which allows IIF Members to vote on Resolutions without attending the Meeting.

Redbank Joint venture means ING Real Estate Redbank River Park Pty Ltd (ACN 114 031 284).

Registry means Link Market Services Limited.

Regulatory Authority includes:

(a) ASX, ACCC, FIRB and ASIC (and any relevant European equivalent);

(b) an Australian or European government or governmental, semi-governmental or judicial entity or authority;

(c) an Australian or European minister, department, office, commission, delegate, instrumentality, agency, board, authority or organisation of any government; and

(d) any Australian or European regulatory organisation established under statute.

Regulatory Guide 74 means the document titled Regulatory Guide 74: Acquisitions agreed to by shareholders issued by ASIC.

ReII III means ING Real Estate International Investments III B.V. which was incorporated and is domiciled in The Netherlands and is a wholly owned subsidiary of INGRE.

ReIM means INGRE’s global real estate investment management.

ReIM AP means ING Real Estate Investment Management Asia/Pacific B.V.

ReIMA means ING Real Estate Investment Management Australia Pty Ltd (ABN 91 096 136 202).

Related Body Corporate has the meaning it has in the Corporations Act, but with “subsidiary” in that meaning having the meaning given in this section 9 and body corporate in that meaning including any entity or trust.

Relevant Interest has the same meaning as given by sections 608 and 609 of the Corporations Act.

Representative means any person acting for or on behalf of a party including any director, officer, employee, agent or professional advisor of a party.

Resolutions means the resolutions proposed to be put to IIF Members as set out in the Notice of Meeting.

Second Court date means the day on which the Second Judicial Advice is received.

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Second Court hearing means a hearing before the Court under section 63 of the Trustee Act 1925 (NSW) as to whether IML would be justified in implementing the Resolutions, giving effect to the provisions of the IIF Constitution (as amended by the Supplemental Deed) and in doing all things and taking all necessary steps to put the Proposal into effect.

Second Judicial Advice means confirmation from the Court under section 63 of the Trustee Act 1925 (NSW) that IML would be justified in acting upon the Proposal Resolutions in doing all things and taking all necessary steps to put the Proposal into effect.

Specified events means an event, occurrence or matter that:

(a) occurs after the date of the Implementation Agreement (being 24 December 2010);

(b) occurs before the date of the Implementation Agreement but has not been publicly announced before the date of the Implementation Agreement (being 24 December 2010); or

(c) will or is likely to occur after the date of the Implementation Agreement and which has not been publicly announced prior to the date of the Implementation Agreement (being 24 December 2010).

Subscription Agreement means the Subscription Agreement between GTA Trustee and the Consortium Members dated 24 December 2010.

Subsidiary has the meaning given in the Corporations Act, but so that:

(a) an Entity will also be taken to be a Subsidiary of another Entity if it is controlled by that Entity (as “control” is defined in section 50AA of the Corporations Act);

(b) a trust may be a Subsidiary, for the purposes of which a unit or other beneficial interest will be regarded as a share; and

(c) an Entity may be a Subsidiary of a trust if it would have been a Subsidiary if that trust were a corporation.

Supplemental deed means the supplemental deed as set out in Appendix B of this Explanatory Memorandum.

Tax opinion means the tax opinion provided by Ernst & Young.

UBS AG means UBS AG, Australia Branch (ABN 47 088 129 613).

Unit means an ordinary unit in IIF.

Unitholder means a person who is registered in the register as the holder of Units, and Unitholders means all of them.

WALe means weighted average lease expiry.

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A

Appendix A: Independent Expert’s Report

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ING Industrial Fund Independent expert’s report and Financial Services Guide 10 February 2011

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What is a Financial Services Guide? This Financial Services Guide (FSG) provides important information to assist you in deciding whether to use our services. This FSG includes details of how we are remunerated and deal with complaints.

Where you have engaged us, we act on your behalf when providing financial services. Where you have not engaged us, we act on behalf of our client when providing these financial services, and are required to give you an FSG because you have received a report or other financial services from us. What financial services are we licensed to provide? We are authorised to provide general financial product advice or to arrange for another person to deal in financial products in relation to securities, interests in managed investment schemes and government debentures, stocks or bonds. Our general financial product advice Where we have issued a report, our report contains only general advice. This advice does not take into account your personal objectives, financial situation or needs. You should consider whether our advice is appropriate for you, having regard to your own personal objectives, financial situation or needs. If our advice is provided to you in connection with the acquisition of a financial product you should read the relevant offer document carefully before making any decision about whether to acquire that product. How are we and all employees remunerated? Our fees are usually determined on a fixed fee or time cost basis and may include reimbursement of any expenses incurred in providing the services. Our fees are agreed with, and paid by, those who engage us. Other than our fees, we, our directors and officers, any related bodies corporate, affiliates or associates and their directors and officers, do not receive any commissions or other benefits. All employees receive a salary and while eligible for annual salary increases and bonuses based on overall performance they do not receive any commissions or other benefits as a result of the services provided to you. The remuneration paid to our directors reflects their individual contribution to the organisation and covers all aspects of performance. We do not pay commissions or provide other benefits to anyone who refers prospective clients to us. Neither Deloitte Corporate Finance Pty Limited (Deloitte), Deloitte Touche Tohmatsu, nor any partner or executive or employee thereof has any financial interest in the outcome of the Proposed Transaction which could be considered to affect our ability to render an unbiased opinion in this report. Deloitte will receive a fee of $155,000 exclusive of GST in relation to the preparation of this report. This fee is based upon time spent at our normal hourly rates and is not contingent upon the success or otherwise of the Proposed Transaction.

In addition to the preparation of this report Deloitte was engaged to perform a familiarisation exercise for a potential independent expert’s report for an alternate transaction contemplated by ING Management Limited in respect of IIF.This transaction never completed and we did not release any valuation conclusions during this process. We received fees based on the time spent on this familiarisation exercise.

In the previous two years we have also provided the following services for ING Management Limited and related parties: p

a review of the process adopted by the independent directors of the responsible entity for ING Real Estate Healthcare Fund to assess whether the process, path and documentation adopted was reasonable advice to the responsible entity of ING Real Estate Entertainment Fund in respect of two potential scenarios for the fund. In particular we were asked to comment on the fiduciary duty of the receiver, the possible actions of receivers and managers, and the potential impact on the fund of these actions under both scenarios.

In addition, in 2010 Deloitte prepared an independent expert’s report in respect of the acquisition of all of the equity in Moorabbin Airport Corporation Pty Limited by Goodman Group. Deloitte Touche Tohmatsu has also undertaken limited forensic and risk services work for Goodman Group in the previous two years. Associations and relationships We are ultimately owned by the Deloitte member firm in Australia (Deloitte Australia). Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms. We and Deloitte Australia (and other entities related to Deloitte Australia):

do not have any formal associations or relationships with any entities that are issuers of financial products; and may provide professional services to issuers of financial products in the ordinary course of business.

What should you do if you have a complaint? If you have any concerns regarding our report or service, please contact us. Our complaint handling process is designed to respond to your concerns promptly and equitably. All complaints must be in writing to the address below. If you are not satisfied with how we respond to your complaint, you may contact the Financial Ombudsman Service (FOS). FOS provides free advice and assistance to consumers to help them resolve complaints relating to the financial services industry. FOS’ contact details are also set out below. The Complaints OfficerPO Box N250Grosvenor PlaceSydney NSW [email protected]: +61 2 9255 8434

Financial Ombudsman ServiceGPO Box 3Melbourne VIC [email protected]: 1300 780 808Fax: +61 3 9613 6399

What compensation arrangements do we have? Deloitte Australia holds professional indemnity insurance that covers the financial services provided by us. This insurance satisfies the compensation requirements of the Corporations Act 2001 (Corporations Act).

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Member of Deloitte Touche Tohmatsu

Deloitte Corporate Finance Pty LimitedA.B.N. 19 003 833 127

AFSL 241457

Grosvenor Place225 George Street

Sydney NSW 2000PO Box N250 Grosvenor Place

Sydney NSW 1220 Australia

DX 10307SSETel: +61 (0) 2 9322 7000Fax: +61 (0) 2 9322 7001

www.deloitte.com.au

The Directors ING Management Limited as the Responsible Entity for ING Industrial Fund Level 6, 345 George Street Sydney NSW 2000

10 February 2011

Dear Directors

Independent expert’s report1 Introduction ING Industrial Fund (IIF or the Fund) is an Australian real estate investment trust (A-REIT) listed on the Australian Stock Exchange (ASX) which develops, owns and manages a diversified portfolio of industrial properties and business parks. IIF has total property funds under management (FUM) of approximately $2.5 billion and direct investments in properties in Australia, Germany, Spain and Belgium. ING Management Limited (IML) is the responsible entity (Responsible Entity) of IIF, and the Fund is externally managed by ING Real Estate Investment Management Australia Pty Limited (REIMA), a wholly-owned subsidiary of ING Real Estate Investment Management Asia/Pacific B.V. (REIM AP). IIF has recently divested an indirect interest in over 400 properties in Canada through the sale of a 50% equity interest in the ING Summit Industrial Fund LP (Summit).

On 28 October 2010 (Conditional Offer Announcement Date), the Board of Directors of IML (Directors)announced a conditional proposal under which a consortium led by Goodman Group (Goodman) which includes Goodman and three major pension/sovereign wealth funds, Leader Investment Corporation (Leader) (a wholly-owned subsidiary of China Investment Corporation (CIC)), Canadian Pension Plan Investment Board (CPPIB) and the Dutch pension fund All Pensions Group as manager of APG Strategic Real Estate Pool (APG)(collectively the Consortium Members), would acquire all the ordinary units of IIF.

On 24 December 2010 (Announcement Date) the Board of Directors of IML announced that IML and Goodman Industrial Funds Management Limited (GTA Trustee), in its capacity as trustee of Goodman Trust Australia (GTA) and on behalf of the Consortium Members, had entered into an implementation agreement to acquire all the units in IIF for cash consideration equal to 54.6 cents per unit (cpu) less any distributions IIF Unitholders become entitled to from the date of the Implementation Agreement (24 December 2010) until implementation (Consideration), via a trust scheme of arrangement (the Proposal).

If the Proposal is implemented, GTA Trustee will provide the Consideration to IML on trust for each IIF unitholder) on the implementation date, which is expected to be on 30 March 2011 (Implementation Date). IML will then pay the Consideration to IIF Unitholders within 3 business days.

The Consideration will be reduced by any distributions which IIF Unitholders become entitled to subsequent to the Announcement Date and prior to the Implementation Date, which are 0.8025 cpu for the 31 December 2010 quarter resulting in unitholders receiving 53.7975 cpu if the Proposal proceeds.

GTA is an unlisted, special purpose investment vehicle with a mandate to hold the IIF portfolio and enhance it by developing IIF’s existing development pipeline.

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2

Deloitte: ING Industrial Fund Independent expert’s report

Separate to the Proposal negotiated between IML and GTA Trustee, REIM AP and ING Real Estate International Investment III B.V (REI III) (together ING) have entered into a facilitation deed (Facilitation Deed) with Goodman whereby ING have agreed to use their reasonable endeavours to assist Goodman with obtaining certain consents and in the transfer of certain know-how and records of IML as they pertain to IIF including transfer of management rights for the Australian assets of IIF (Ancillary Transaction) in return for a facilitation payment to REIM AP of $22.5 million to (the Ancillary Consideration).

The Proposal and the Ancillary Transaction are collectively referred to as the (Proposed Transaction).

The Directors have prepared an explanatory memorandum containing the detailed terms of the Proposed Transaction (Explanatory Memorandum) and an overview of the Proposed Transaction is provided in Section 1 of our detailed report.

2 Purpose of the report 2.1 Proposal The Proposal will be implemented by a trust scheme of arrangement and will require approval by Unitholders.

The Independent Directors have requested us to prepare an independent expert’s report (IER) advising whether, in our opinion, the Proposal is fair and reasonable to unitholders of IIF excluding Goodman Group and ING (Non-Associated Unitholders) for the purpose of item 7 of section 611 (Section 611) of the Corporations Act and the Takeovers Panel Guidance Note 15 (GN15).

In exercising its powers and carrying out its duties as responsible entity of IIF, IML is required to act in the best interest of IIF unitholders. In order to assist in discharging their fiduciary obligations, the Independent Directors have also requested that Deloitte provide an opinion as to whether the Proposal is in the best interests of Non-Associated Unitholders.

2.2 Ancillary Transaction The Independent Directors have requested that Deloitte provide an opinion as to whether:

the Ancillary Transaction is on arm’s length terms, and

the consideration payable under the Ancillary Transaction constitutes the receipt by REIM AP of a collateral benefit for the purposes of the Corporations Act as interpreted by the Takeovers Panel Guidance Note 21: Collateral Benefits (GN21).

This opinion has been commissioned by the Independent Directors to assess the Ancillary Transaction for thepurpose of assisting them in forming their opinion as to whether the Proposed Transaction is in the best interests of Non-Associated Unitholders. The purpose of our opinion with respect of the Ancillary Transaction is to assist the Independent Directors in making their assessment, taking into account, amongst other things, those matters which we have been asked to opine upon in our IER.

3 Basis of evaluation We have prepared this report having regard to the relevant aspects of the Corporations Act, GN15, GN21 and the relevant regulatory guides issued by ASIC. We have also had regard to ASIC Consultation Paper 143 which includes proposed updates and amendments to RG 111 in our assessment where relevant.

4 Summary of opinion – Proposal 4.1 Summary In our opinion the Proposed Transaction is fair and reasonable and in the best interests of Non-Associated Unitholders. In order to assess the fairness of the Proposal, we have compared our estimate of the fair market value of IIF to the value of the Consideration. In order to assess whether the Proposal is reasonable, we considered whether the advantages of the Proposal sufficiently outweigh its disadvantages.

To assess whether the Proposal is in the best interests of Non-Associated Unitholders, we have adopted the test of whether the Proposal is either fair and reasonable, not fair but reasonable, or neither fair nor reasonable, as set out in RG 111, after considering whether there are sufficient reasons for Non-Associated Unitholders to vote in favour of the Proposal.

A summary of our analysis is discussed in further detail below.

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3


4.2 Assessment of fairness We have assessed whether the Proposal is fair by comparing the fair market value of an IIF unit (assuming 100% control) to the value of the Consideration.

For the purposes of estimating the fair market value of an IIF unit, we have defined fair market value as the amount at which the units would be expected to change hands between a knowledgeable willing buyer and a knowledgeable willing seller, neither of whom is under any compulsion to buy or sell. Special purchasers may be willing to pay higher prices to reduce or eliminate competition, to ensure a source of material supply or sales, or to achieve cost savings or other synergies arising on business combinations, which could only be enjoyed by the special purchaser. Our valuation of IIF has not been premised on the existence of a special purchaser.

Moreover, in our assessment of the fairness of the Proposal we did not consider any potential impact on the current value of a unit in IIF that may arise as a consequence of the existing capital structure of the fund. Instead we have considered such factors in our assessment of the reasonableness of the Proposal.

In our estimate of the fair market value of an IIF unit we have assessed the fair market value using the net assets on a going concern valuation approach. We have used the net assets on a going concern basis to estimate the fair market value of a unit in IIF. We have estimated the fair market value of IIF by aggregating the fair market value for the investment property assets as well as any other related assets and liabilities. In applying this approach we have taken account of the ongoing management and other costs associated with realising the value of the assets on a going concern basis over the medium term. In our assessment of the fair market value of IIF we have utilised the carrying value of IIF’s portfolio as at 31 December 2010 and considered any adjustments required to reflect the difference between our estimate of the fair market value and the book value of these assets at the Implementation Date. In making this assessment we have undertaken an analysis of the valuation of IIF’s investment properties which has included independent analysis of a sample of IIF’s internal and external valuations noting that independent valuations of 100% ofIIF’s properties have been undertaken during the 12 months to 31 December 2010.

We have estimated the fair market value of an IIF unit as at the Implementation Date on an ex-distribution basis to be between $0.534 per unit and $0.550 per unit as set out in Section 5.2.2 below.

The Ex-Dividend Consideration is within our assessed fair market value range of an IIF unit as set out in the table below:

Table 1: Fair market value of IIF compared to the Consideration

Low value ($) High value ($)

Fair market value of IIF per unit $0.534 $0.550

Consideration $0.538 $0.538

Premium/(discount) to assessed value implied by the Consideration 0.7% -2.2%

Source: Deloitte analysis

We have therefore concluded that the Proposal is fair.

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Given the relatively high level of gearing within IIF, our valuation is sensitive to relatively small movements in the underlying value of IIF’s properties. Our estimate of the impact of movements in the underlying valuations of the properties on the fair market value of an IIF unit is set out below.

Figure 1: Valuation of a unit in IIF– sensitivity to movements in the value of the properties


Broadly speaking, a +/- 5% movement in the value of IIF’s properties would equate to an approximate impact of -/+9% on the value of an IIF unit on average, after taking into account the impact of the existing leverage of the fund.

4.3 Assessment of reasonableness In accordance with RG 111 an offer is reasonable if it is fair. An offer might also be reasonable if, despite being ‘not fair’, the expert believes that there are sufficient reasons for Non-Associated Unitholders to accept the offer in the absence of any higher offer.

We have assessed whether the Proposed Transaction is reasonable having regard to whether the advantages of the transaction outweigh the disadvantages. In particular, we have considered:

the current status and future prospects of IIF on a stand-alone basis and the alternatives considered

advantages and disadvantages of the Proposed Transaction including any potential tax implications to Non-Associated Unitholders.

Background to the transaction The global financial crisis (GFC) resulted in a number of adverse consequences for the A-REIT sector, which was particularly exposed to the decline in liquidity in debt and equity markets due to the relatively high levels of gearing employed and cyclical nature of the underlying asset values.

As a consequence, the A-REIT sector went from trading at a premium to NTA in early 2007 to trading at a significant discount to NTA throughout 2009 and into 2010. In response to these conditions, a number of A-REITs undertook significant capital management initiatives including refinancing, large-scale emergency equity raisings, asset disposals, and reducing/delaying distributions. Whilst the implementation of these measures significantly strengthened balance sheets, reduced gearing levels and provided liquidity to meet upcoming debt expiries, the sector on average continues to trade at a discount to NTA.

$0.30

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$0.59

$0.64

$0.69

$0.73

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In order to narrow this gap between traded prices and the NTA backing of an IIF unit, a number of initiatives were undertaken by the Directors, which included property sales and the divestment of non-core assets including IIF’s interest in the Summit portfolio in Canada for net proceeds of approximately $300 million.

Whilst these initiatives reduced the gap between trading prices and NTA backing, IIF continued to trade at a discount to NTA prior to the announcement of the Proposal in October 2010. The ability for Non-Associated Unitholders to access the underlying NTA value for the Fund through any specific re-rating in the unit price of IIF on a stand-alone basis is unlikely in the short to medium term as a number of risks and uncertainties remain for the Funds including:

relatively high leverage: IIF has $395 million in Exchangeable Notes maturing in June 2011 and June 2012. Whilst the divestment of Summit has provided additional financial flexibility for IIF, funding the repayment of the Exchangeable Notes may require further asset divestments. In addition, IIF’s gearing levels are at the higher end of entities in the A-REIT sector. Even after utilising the proceeds of the Summit sale to pay down existing facilities, IIF’s book value gearing as at 31 December 2010 was approximately 42%(inclusive of the Exchangeable Notes). IIF’s current capital structure therefore creates additional uncertainty in respect of near term growth prospects of the Fund due to the uncertainty in respect to the funding of the development pipeline and/or any accretive acquisitions.

exposure to offshore assets: IIF has investments in offshore assets, while investors were increasingly wanting A-REITs to focus on domestic markets. Notwithstanding IIF’s offshore exposure has been reduced following the divestment of Summit, IIF’s European assets comprise approximately 12% of total assets as at 31 December 2010

lack of scale: following the GFC, investors were showing increased appetite for scale and liquidity in securities. In particular, global investors were placing greater focus on the largest and most liquid stocks.

As a consequence, the Directors implemented a strategic review to identify alternatives available to increase value for Non-Associated Unitholders. This strategic review was undertaken against a backdrop in which ING Group had also indicated to the market that it was undertaking a review of the global Real Estate Investment Management (ING REIM) business, and accordingly was considering the divestment of this business. During this strategic review process, the Directors engaged a number of external advisors to investigate the alternatives which included maintaining the status quo for the Fund, liquidating the portfolio, a merger with another fund as well as the sale and internalisation of the management rights of the Fund.

During this process Goodman Group confirmed to the market its interest in obtaining the management rights to IIF and increased its stake in IIF from 4.4% to 7.1% in September 2010. On 28 October 2010, Goodman Group, on behalf of the Consortium Members, submitted a conditional incomplete offer to the Board of IML to acquire the ordinary units of IIF. On 15 November 2010, after considering the merits of the revised proposal, the Board of IML agreed to grant the Consortium Members access to due diligence and to engage with the Consortium Members, in order to determine whether an acceptable transaction can be agreed which maximises value to IIF unitholders. On the 24 December 2010, following negotiations between IML and GTA Trustee, the Board of IML announced that it had entered into an Implementation Agreement with GTA Trustee.

Following the strategic review and the discussions with the Goodman Group, on behalf of the Consortium Members, the Independent Directors concluded that the Proposal was the best alternative currently available to IIF unitholders.

Advantages of the Proposal The likely advantages to Non-Associated Unitholders if the Proposal is approved include the following:

No superior alternative has been identified or is currently available As discussed above, IML undertook a strategic review that encompassed strategic options with the capacity to address the valuation gap existing between the NTA and the unit price of IIF as well as creating long term value for IIF unitholders. This review included a number of alternative scenarios for IIF including maintaining the fund, a sale or internalisation of the management rights, winding up the fund as well as a merger with another fund. F

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However, we do not consider that any of the alternatives identified provide a superior outcome for Non-Associated Unitholders relative to the Proposal. In particular:

maintaining the status quo and refining and refocusing the strategic direction of IIF is unlikely to result in additional value relative to the Proposal in the near term due to the uncertainty arising from ING Groups’ intentions for ING REIM coupled with IIF’s lack of scale, funding requirements and a range of market and general risk factors which combined are likely to limit any near-term re-rating for IIF closer to NTA

any liquidation of the underlying assets of IIF is likely to take considerable time (i.e. over 12 months), could result in assets being realised at values less than the current NTA of the fund and is subject to significant execution risk

in regards to the merger alternatives, there are only a limited number of potential merger partners in the industrial sector and any merger would entail various risks which may include a diversification of the sector specific nature of the fund as well as significant implementation risks which would be borne by unitholders.Mergers into other asset classes were not seen as attractive to the investor base of IIF based on discussions held throughout this process. Furthermore, in the absence of a significant re-rating, a merger of IIF with another fund is unlikely to result in trading prices for IIF unitholders greater than that offered by the Proposal

alternatives that involve a restructure of the manager and either the internalisation of the management of IIF or selling it to a to a third party are unlikely to generate immediate value for Non-Associated Unitholders as there would be no material change to IIF’s earnings or growth prospects and would not likely alleviate the above concerns.

Furthermore, despite proactive approaches with other parties by IML, no superior competing proposal has been received by IML to date.

Given the above and the lack of a superior competing proposal, we consider that the Proposal is the best alternative available to Non-Associated Unitholders.

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The Consideration represents a premium to recent trading in IIF units Whilst the Consideration represents a 0.8% discount to the mid-point of our assessed fair market value of an IIF unit, it represents a premium to the recent trading in IIF units, as indicated in the following figure.

Figure 2: Comparison of Consideration to the fair value and trading in IIF units prior the Announcement Date


Note: 1. The assessed fair market value of an IIF unit is between $0.534 and $0.550 (thus the midpoint is $0.542)

As set out above, the Consideration represents a premium of 16% to the one day VWAP of IIF as at 28 October 2010, the day that the initial conditional proposal was received from Goodman Group on behalf of the Consortium Members (Conditional Offer Announcement Date) and a premium of 24% to the 6 month VWAP of IIF as at this date.

0.542 0.538

0.4650.481 0.481 0.470

0.436

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Consideration 1-day VWAP 1-week VWAP 1-month VWAP 3-month VWAP 6-month VWAP

0.8% discount Consideration = $0.538

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IIF units would likely trade below the Consideration in the absence of the Proposal As set out below, the IIF unit price has appreciated by 21.8% since speculation regarding a transaction was acknowledged by IIF management on 23 July 2010 and 15.2% since the Conditional Offer Announcement Date.

Figure 3: IIF unit trading post speculation of a transaction involving the sale of IIF’s units

Source: Reuters, Deloitte analysis

It is likely that in the absence of the Proposal that the IIF unit price will decline, potentially more in line with prices observed prior to the Conditional Offer Announcement Date in the absence of any specific re-rating of IIF or the A-REIT sector.

Whilst the Consideration represents a slight discount to the existing NTA of IIF, it is unlikely that the unit price of IIF will trade at or near NTA in the near future since:

the A-REIT sector is generally trading at a discount to NTA as discussed in Section 3.2 below and there is no indication that this will change in the near term

IIF’s gearing as at 31 December 2010 was 42% including the Exchangeable Notes. In the absence of the Proposal, IIF may be required to sell assets or raise equity or a combination of the two in order to reduce its gearing. These measures would reduce the scale of the fund and have dilutive impacts for Non-Associated Unitholders

IIF’s capital structure and higher cost of capital relative to its peers may constrain the growth prospects of IIF. This may limit any growth in the distribution profile of IIF which may not be attractive relative to other comparable investments in the sector which is likely to limit any short term re-rating closer to NTA for IIF.

The Proposed Transaction allows Non-Associated Unitholders to immediately realise their investment in IIFThe Proposed Transaction will allow Non-Associated Unitholders to immediately realise their investment in IIF at a premium to the price at which IIF units traded prior to the Conditional Offer Announcement Date as set out above. The uncertainty in relation to the timing and quantum of the proceeds to be received in the event that the IIF assets were realised on a piecemeal basis is therefore removed.

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Speculation of a potential transaction acknowledged on 23 July 2010

Proposed Takeover announced on 28October 2010

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There may be adverse implications if the Proposal does not proceed In the event that the Proposal does not proceed:

the IIF unit price would most likely fall closer to levels at which it was trading prior to the Conditional Offer Announcement Date (ie. approximately $0.46 per unit as at 27 October 2010) as discussed above

IIF will incur total costs of approximately $2.5 million. Additional advisory and transaction fees are likely to be incurred as the Fund will need to determine an appropriate action plan in order to exit the European investments and to assess the implications of ING divesting their real estate platform in Australia

IML may be required to pay the GTA Trustee a break fee of $14 million

the refinancing of IIF’s debt facilities has been delayed as a consequence of the Proposal. In the absence of the Proposal, if the refinancing of IIF’s syndicated debt facility and the Exchangeable Notes is not successfully completed ahead of maturity, it would likely have an adverse impact on the value of an IIF unit

in the absence of the Proposal, IIF will face other challenges which include:

o gearing levels at the high end of IIF’s peer group and what IML considers desirable which is likely to constrain debt funded developments or acquisitions. Equity funding for growth projects may also be limited due to IIF’s relatively higher cost of capital relative to its peers

o the distribution profile of IIF may not be attractive relative to other comparable investments in the sector which will likely limit any re-rating closer to NTA for IIF

o the orderly disposal of European assets within a reasonable time period and on terms acceptable to IIF. Due to the current economic climate in Europe, the ultimate net proceeds which could be realised are uncertain and any such disposal could be dilutive to earnings

o IIF’s ability to divest non-core assets in order to fund its development pipeline and grow its investment portfolio.

Disadvantages of the Proposal

The likely disadvantages to Non-Associated Unitholders if the Proposal is approved include the following:

Non-Associated Unitholders will miss the opportunity to participate in any specific appreciation of IIF’s propertiesWhilst there is no certainty that the value of IIF’s properties will appreciate, general market sentiment indicates that the industrial property sector has passed the low point in the economic cycle and that property valuations should start to improve from this point in time.

Due to the relatively high financial leverage of IIF, any appreciation in the properties portfolio over time would be likely to translate to a more significant improvement in the NTA value of IIF. Non-Associated Unitholders will forgo the opportunity to participate in this leveraged exposure to any medium term upside in the values of properties.

Tax consequencesApproval of the Proposal may result in adverse tax consequences for some Non-Associated Unitholders. Whilst we note that the tax implications will vary depending on the circumstances of each unitholder, possible tax consequences for Australian unitholders include capital gains.

The approval of the Proposal may therefore accelerate tax payable for Non-Associated Unitholders as it may crystallise a tax liability on that gain in the short-term, which would otherwise have been deferred until the time the units would otherwise have been disposed of. Non-Associated Unitholders should evaluate the capital gains or other tax consequences of acceptance in assessing whether to approve the Proposal.

For further details of the tax consequences of accepting the Proposal to Australian and non-Australian resident unitholders, you should refer to the Explanatory Memorandum.

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Conclusion on reasonableness From our analysis above we consider that the advantages of the Proposal sufficiently outweigh the disadvantages and therefore, we conclude that the Proposal is reasonable for Non-Associated Unitholders.

Best interests opinion In our opinion the Proposal is fair and reasonable and in the best interests of Non-Associated Unitholders. In forming our opinion we have had regard to the following:

we have concluded that the value of the Consideration is within the range of our estimate of the fair market value of IIF. Accordingly, we concluded that the Proposal is fair

the Proposal is reasonable since, on balance, the advantages outweigh the disadvantages of the Proposal. In particular:

o while the Consideration under the Proposal is slightly below IIF’s NTA as at 31 December 2010 it is within the range of our estimate of the fair market value of IIF on a control basis. Furthermore, the Consideration represents a premium to recent trading in IIF units. Given the risks relating to IIF’s discussed above, it likely that IIF units would continue to trade at a discount to NTA and below the Consideration for the near future in the absence of the Proposal

o given the lack of superior alternative offers, the Proposal represents the best alternative available for Non-Associated Unitholders to immediately realise the value of their investment in IIF

o while Non-Associated Unitholders will miss the opportunity to participate in any specific appreciation of IIF’s properties under the Proposal, the Proposal removes any uncertainty associated with potential risks associated with IIF, including high levels of gearing and exposure to offshore assets.

After considering the factors discussed above, we are of the opinion that the Proposal is fair and reasonable and in the best interests of Non-Associated Unitholders. An individual Unitholder’s decision in relation to the Proposal may be influenced by his or her particular circumstances. If in doubt the Unitholder should consult an independent adviser.

5 Summary of opinion – Ancillary Transaction 5.1 Approach In determining whether the terms and the consideration payable to REIM AP under the Ancillary Transaction is on arm’s length terms, we have assessed whether the parties are dealing with each other at arm’s length in negotiating the Facilitation Deed. In particular we have considered:

the negotiation process for the Proposal and the Ancillary Transaction and any relationship which exists between the parties

ING Group’s review of the ING REIM business, which may include divestment, regardless of whether the Proposal is successful

the links between the Proposal and the Ancillary Transaction.

We have also considered whether the consideration to be received for the Ancillary Transaction represents an arm’s length price. In particular, since the Ancillary Consideration is principally in consideration for ING forgoing the opportunity to receive revenue in respect of IML’s ongoing management of IIF we have considered whether the financial terms of the Ancillary Transaction is arm’s length having regard to:

a comparison of the percentage of AUM and earnings/revenue multiples implied by the Ancillary Consideration to asset and earnings multiples observed in other transactions involving the internalisation or the sale of management rights in the property sector

an estimate of the fair market value of the IIF management rights having regard to a discounted cash flow analysis of the benefits forgone by ING from managing IIF compared to the consideration received by ING Group.

In determining whether there is a collateral benefit to ING Group, consistent with our understanding of the principles outlined in GN21 requiring an overall view of the transaction, we have:

considered the process undertaken in negotiating the Proposal and the Ancillary Transaction and the financial terms of the Ancillary Transaction

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the substance and commercial reality of the transaction including the overall effect of the transaction

the price to be paid for ING’s existing interest in IIF

Any other relevant considerations.

5.2 Key findings We have considered the following in our assessment:

the Proposal and the Ancillary Transaction were separately negotiated transactions between Goodman and REIM AP and REI III in respect of the Ancillary Transaction and GTA Trustee and IML in respect of the Proposal

based on the negotiation process undertaken for the Proposed Transaction and the relationships that exist between the parties nothing has come to our attention which would cause us to believe that the parties are not dealing at arm’s length

the consideration payable to REIM AP of $22.5 million represents approximately 1.0% of IIF’s AUM. This is consistent with the metrics observed in recent comparable market transactions involving management rights and internalisation transactions in the property sector. Furthermore, this value is in the range of the discounted cash flow analysis prepared to estimate the benefits forgone by REIM AP from managing IIF compared to the consideration received by REIM AP

ING Group and related entities currently have a beneficial interest in IIF of approximately 7.9%. If the Proposal is implemented, ING's holding of IIF units will be transferred to GTA as part of the Proposal and ING will receive the same Consideration as other Non-Associated Unitholders. The Ancillary Transaction does not provide any requirement on the disposal or voting of the units in IIF held by ING and ING retains absolute discretion on the exercise of the voting rights and disposal of these units. Moreover, as discussed in Section 1.1.1, ING Group entities are not entitled to vote on the resolutions pertaining to the approval ofthe Proposal

the Proposed Ancillary Transaction allows REIM AP to realise value for the existing management agreements at a time when ING Group is undertaking a strategic review of the global ING REIM platform which could include the divestment of the REIMA platform (inclusive of the IIF management rights).

5.3 ConclusionHaving regard to the basis of our evaluation, the limitations set out in this report and the results of our analysis, nothing has come to our attention to cause us to believe that the consideration payable to REIM AP under the Ancillary Transaction:

is not on arm’s length termswould constitute the receipt by REIM AP of a collateral benefit.

Moreover, nothing has come to our attention in respect of the Ancillary Transaction that would cause us to change the conclusions we have reached in relation to the Proposal.

This opinion should be read in conjunction with our detailed report which sets out our scope and findings.

Yours faithfully

DELOITTE CORPORATE FINANCE PTY LIMITED

Mark Pittorino Rachel Foley-Lewis

Director Director

Note: All amounts stated in this report are AUD unless otherwise stated, and may be subject to rounding.

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Contents 1 Terms of the Proposed Transaction 14

1.1 Summary 14

1.2 Background to the Consortium 15

1.3 The acquirer’s intentions 16

2 Scope of the report 17

2.1 Purpose of the report 17

2.2 Basis of evaluation 17

2.3 Limitations and reliance on information 20

3 A-REITs and the industrial property market 21

3.1 Introduction 21

3.2 Recent trends in the A-REIT sector 21

3.3 Sub-sector outlook 24

4 Profile of IIF 28

4.1 Introduction 28

4.2 IIF’s History 29

4.3 Overview of the IIF property portfolio 29

4.4 Development projects 33

4.5 Legal structure 34

4.6 Key fee arrangements 34

4.7 Capital structure and unitholders 35

4.8 Unit price performance 36

4.9 Debt profile 38

4.10 Hedging Profile 39

4.11 Financial performance 40

4.12 Financial position 42

4.13 Strategy and Outlook 43

5 Evaluation of the Proposal 44

5.1 Overview 44

5.2 Fairness 44

5.3 Other considerations 57

6 Evaluation of the Ancillary Transaction 58

6.1 Approach 58

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6.2 Overview of the management arrangements 59

6.3 Arm’s length considerations 60

6.4 Collateral Benefit considerations 68

6.5 Conclusion 69

Appendices Appendix 1: Glossary 70

Appendix 2: Summary of IIF’s property portfolio 72

Appendix 3: Valuation methodology 75

Appendix 4: Discount rate 77

Appendix 5: Descriptions of industrial A-REITs, diversified A-REITs and property fund managers 85

Appendix 6: Sources of information 89

Appendix 7: Qualifications, declarations and consents 90

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1 Terms of the Proposed Transaction 1.1 Summary

1.1.1 Proposal On 24 December 2010, the Board of Directors of IML announced a proposal under which Goodman Trust Australia (GTA), an unlisted special purpose investment vehicle, would acquire all the ordinary units of IIF, for cash consideration equal to 54.6 cpu less 0.8025 cpu in distributions for the 31 December 2010 quarter to be declared by IML, via a trust scheme of arrangement. GTA’s mandate would be to hold the IIF portfolio and enhance it by developing IIF’s existing development pipeline.

If the Proposal becomes effective, GTA Trustee will provide the Consideration to IML on trust for each IIF unitholder on the Implementation Date, which is expected to be on 30 March 2011. IML will then pay the Consideration to IIF unitholders within 3 business days. .

As part of the Proposal, IML must pay to GTA Trustee a break fee equal to $14 million in the event that the Proposal is terminated as a consequence of certain events as defined in the related Implementation Agreement, which include a superior competing proposal being recommended by the Directors before 30 April 2011 or if any or all of the Directors fail to recommend the Proposal or otherwise withdraw or change their recommendations except in certain permitted circumstances.

IML is entitled to a ‘reverse break fee’ equal to $25 million if certain events occur, as defined in the related Deed of Undertaking and Reverse Break Fee Escrow Deed, including the GTA Trustee failing to pay the Consideration on the Implementation Date and cases where IML is determined to have validly terminated the implementation agreement relating to the Proposal due to a breach by GTA Trustee.

The Proposal is subject to a number of conditions precedent including Non-Associated Unitholder approval, Foreign Investment Review Board (FIRB) approval and that no material adverse change (as defined in the Explanatory Memorandum) occurs up until the date the second judicial advice is obtained.

In order for the Proposal to be implemented, the following resolutions must be approved:

a special resolution to amend the Constitution of IIF in order to allow the Proposal to be implemented.This resolution must be approved by at least 75% of the total number of votes cast by unitholders entitled to vote on this resolution. GTA Trustee, the Consortium Members and their related entities and ING Group entities are not entitled to vote on this resolution

an ordinary resolution to approve the Proposal for the purpose of item 7 of section 611 of the Corporations Act, including the acquisition of all IIF Units by the Consortium Members. This resolution must be approved by at least 50% of the total number of votes cast by unitholders entitled to vote on this resolution.GTA Trustee, members of the Consortium Members and their related entities and ING Group entities are not entitled to vote on this resolution

an ordinary resolution for the purposes of section 601FL of the Corporations Act to approve the retirement of IML as responsible entity of IIF and approve the appointment of Goodman Funds Management Limited as the responsible entity of ING Industrial Fund. This resolution must be approved by at least 50% of the total number of votes cast by unitholders.

1.1.2 Ancillary Transaction Separate to the Proposal negotiated between IML and GTA Trustee, REIM AP and REI III entered into a facilitation deed with Goodman Limited whereby ING have agreed to use their reasonable endeavours to assist Goodman with obtaining certain consents and in the transfer of certain know-how and records of IML as they pertain to IIF including transfer of management rights for the Australian assets of IIF (Ancillary Transaction)in return for a facilitation payment to REIM AP (or as it directs) of $22.5 million (the Ancillary Consideration). F

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Under the terms of the Facilitation Deed:

ING must use its reasonable endeavours to assist IML to propose and implement the Proposal including obtaining required consents and waivers, transfer of records and know how, assistance with IIF’s tax return and financial reports for the period ending 30 June 2011 and transition of the management of IIF to Goodman

ING must procure the termination of the existing management agreements of IIF at no additional cost to Goodman.

REIM AP and REI III are both subsidiaries of ING Groep N.V. (together with all such subsidiaries, ING Group). ING Group currently hold approximately 7.9% of the IIF units on issue. If the Proposal is implemented, ING's holding of IIF units will be transferred to GTA as part of the Proposal and ING will receive the same Consideration as other Non-Associated Unitholders. The Ancillary Transaction does not include any requirements in relation to the disposal of, or voting rights attached to, the units in IIF held by ING and ING retains absolute discretion on the exercise of the voting rights and disposal of these units.

The Proposal and the Ancillary Transaction are collectively referred to as the (Proposed Transaction).

1.2 Background to the Consortium

1.2.1 Background to GTA GTA is an unlisted unit trust that has been established for the purpose of acquiring the units of IIF in accordance with the Proposal. GTA has been formed for a consortium of investors comprising APG, CPPIB, Leader and the Goodman Group.

Upon completion of the Proposal each Consortium Members will have the following interest in GTA:

APG 25.2%

CPPIB 42.5%

Leader 12.4%

Goodman 19.9%.

Goodman Industrial Funds Management Limited, a wholly-owned subsidiary of the Goodman Group, has been appointed as trustee of GTA. The directors of GTA Trustee are Mr. Gregory Goodman, Mr. Anthony Rozic and Mr. Nicholas Kurtis, being respectively the Chief Executive Officer, Chief Operating Officer and Global Head of Equities of the Goodman Group.

1.2.2 Background to the Goodman Group The Goodman Group is an integrated property group with operations throughout Australia, New Zealand, Asia, Europe and the United Kingdom. Goodman Group, comprised of the stapled entities Goodman Limited and Goodman Industrial Trust, is the largest industrial property group listed on the Australian Securities Exchange and one of the largest listed specialist fund managers of industrial property and business space globally.

1.2.3 Background to Leader Leader is a wholly-owned subsidiary of CIC. CIC is an investment institution established under the Company Law of the People's Republic of China on September 2007. It seeks stable and long term risk adjusted financial returns and it is operated strictly on a commercial basis.

1.2.4 Background to CPPIB CPPIB is a professional investment management organisation that invests funds on behalf of the Canada Pension Plan (CPP) and its 17 million Canadian contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, the CPPIB invests in public equities, private equities, real estate, inflation-linked bonds, infrastructure and fixed income instruments.

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Headquartered in Toronto, with offices in London and Hong Kong, the CPPIB is governed and managed independently of the CPP and at arm's length from governments. At 30 September 2010, the CPP Fund had assets totalling C$138.6 billion, of which C$4.2 billion is invested in private equity funds, infrastructure and real estate assets in the Asia Pacific region.

1.2.5 Background to APG APG is the manager of APG Strategic Real Estate Pool (the Pool). The Pool is a pooled investment vehicle established in the Netherlands, in which investments, in both Australia and other countries, are held for the purpose of collective investment.

1.3 The acquirer’s intentions If the Proposal is implemented, IIF will become a wholly-owned subsidiary of GTA. In particular, GTA intends to:

de-list IIF

establish an investment committee that will be responsible for the review, endorsement and approval of key investment decisions and related party matters with respect to IIF

maximise the value of IIF by applying Goodman Group's integrated models to drive portfolio value and enhance it by developing IIF's existing development pipeline

manage the divestment of IIF's European portfolio over the short to medium term with proceeds used to repay debt and reinvest in Australian development opportunities

reposition IIF's Australian portfolio to improve portfolio value and redirect capital to more attractive investment in Australian developments

refinance IIF's $920 million Australian syndicated facility using a new $1.1 billion syndicated facility.

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2 Scope of the report 2.1 Purpose of the report

2.1.1 Proposal The Proposal will be implemented by a trust scheme of arrangement and will require approval by Non-Associated Unitholders.

The Directors have requested us to prepare a report advising whether, in our opinion, the Proposal is fair and reasonable to Non-Associated Unitholders for the purpose of Section 611 of the Corporations Act and the Takeovers Panel Guidance Note 15 (GN15). In exercising its powers and carrying out its duties as responsible entity of IIF, IML is required to act in the best interest of IIF unitholders. In order to assist in discharging their fiduciary obligations, the Independent Directors have also requested that Deloitte provide an opinion as to whether the Proposal is in the best interests of Non-Associated Unitholders.

2.1.2 Ancillary Transaction IML has requested that Deloitte provide an opinion as to whether:


the consideration payable under the Ancillary Transaction constitutes the receipt by REIM AP of a collateral benefit for the purposes of the Corporations Act as interpreted by the Takeovers Panel Guidance Note 21: Collateral Benefits (GN21).

This opinion has been commissioned by the Independent Directors to assess the Ancillary Transaction for the purpose of assisting them in forming their opinion as to whether the Proposed Transaction is in the best interests of Non-Associated Unitholders. The purpose of our opinion with respect to the Ancillary Transaction is to assist the Independent Directors in making their assessment, taking into account, amongst other things, those matters which we have been asked to opine upon in our IER.

We have prepared this report having regard to the relevant aspects of the Corporations Act, GN15, GN21 and the relevant regulatory guides issued by ASIC. We have also had regard to ASIC Consultation Paper 143 which includes proposed updates and amendments to RG111 in our assessment where relevant.

2.1.3 Other matters This report is to be included in the Explanatory Memorandum to be sent to Non-Associated Unitholders and has been prepared for the exclusive purpose of assisting them in their consideration of the Proposal. We understand that the Independent Directors will also take our opinion into account in determining whether to recommend the proposal to Non-Associated Unitholders. We are not responsible to you, or anyone else, whether for our negligence or otherwise, if the report is used by any other person for any other purpose.

2.2 Basis of evaluation

2.2.1 Proposal Guidance The basis of evaluation selected by the expert must be appropriate for the nature of each specific transaction. The Proposal is in substance a takeover offer by the Consortium Members for all the units in IIF. In determining whether the Proposal is fair and reasonable and in the best interests of Non-Associated Unitholders,we have therefore considered the relevant regulatory guidelines in respect of takeover offers.

Sections 636(2) and 640 of the Corporations Act 2001 (Cth) require an independent expert’s report (IER) in connection with a takeover offer in certain circumstances. These sections require the IER to state whether, in the expert’s opinion, the takeover offer is fair and reasonable.

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GN15 requires that the form of analysis used to assess whether a proposal is fair and reasonable in these situations be substantially the same as for a takeover bid. In assessing whether the Proposal is in the best interests of Non-Associated Unitholders we have considered ASIC guidance and general market practice.

Fairness RG111 defines an offer as being fair if the value of the offer price is equal to or greater than the value of the securities the subject of the offer. The comparison must be made assuming 100% ownership of the target company (i.e. on a control basis).

Accordingly, we have assessed whether the Proposal is fair by estimating the fair market value of an IIF unit (assuming 100% control) and comparing that value to the value of the Consideration.

The units in IIF have been valued at fair market value, which we have defined as the amount at which the units would be expected to change hands between a knowledgeable willing buyer and a knowledgeable willing seller, neither of whom is under any compulsion to buy or sell. Special purchasers may be willing to pay higher prices to reduce or eliminate competition, to ensure a source of material supply or sales, or to achieve cost savings or other synergies arising on business combinations, which could only be enjoyed by the special purchaser. Our valuation of IIF has not been premised on the existence of a special purchaser.

Based on our understanding of ASIC’s policy intent on the appropriate interpretation of the “fair” and “reasonable” tests in RG111, we note the following:

in assessing the fairness of a transaction, an expert should not have regard to any entity specific or structural issues, such as excess gearing, which may temporarily impair an entity’s ability to realise full fair market value for its assets. Instead, in assessing fairness, an orderly market for the underlying assets of the entity should be assumed

entity specific factors or structural issues may be appropriate matters to be taken into account when assessing the reasonableness of the transaction.

Reasonableness RG111 considers an offer in respect of a control transaction to be reasonable if either:

the offer is fair

despite not being fair, but considering other significant factors, unitholders should accept the offer in the absence of any higher bid before the close of the offer.

To assess the reasonableness of the Proposal we considered the following significant factors in addition to determining whether the Proposal is fair:

the current status and future prospects of IIF on a stand-alone basis and the alternatives considered to the Proposal

the existing unitholding structure of, and any other significant unitholding blocks in, IIF

the impact on IIF if the Proposal does not proceed

other advantages and disadvantages of the Proposal.

Best interests To assess whether the Proposal is in the best interests of Non-Associated Unitholders, we have adopted the test of whether the Proposal is either fair and reasonable, not fair but reasonable, or neither fair nor reasonable, as set out in RG111. RG111 provides guidance in relation to the content of independent expert’s reports prepared for transactions under Chapters 5, 6 and 6A of the Corporations Act, in relation to takeover bids, schemes of arrangement and other transactions. F

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If an expert were to conclude that a proposal was ‘fair and reasonable’ if it was in the form of a takeover bid, it will also be able to conclude that the proposal is in the best interests of unitholders. If an expert was to conclude that the proposal is ‘not fair but reasonable’ it would be open to the expert to conclude whether the proposal is in the best interests of unitholders based on whether there are sufficient reasons for unitholders to vote in favour of the proposal in the absence of a higher offer, however, the expert should clearly state that the consideration is not equal to or greater than the value of the securities subject to the proposal.

We have assessed whether the Proposal is in the best interests of Non-Associated Unitholders after considering whether the advantages of the Proposal outweigh the disadvantages for Non-Associated Unitholders.

Individual circumstances We have evaluated the Proposal for Non-Associated Unitholders as a whole and have not considered the effect of the Proposal on the particular circumstances of individual investors. Due to their particular circumstances, individual investors may place a different emphasis on various aspects of the Proposal from the one adopted in this report. Accordingly, individual unitholders may reach different conclusions to ours on whether the Proposal is in the best interest of Non-Associated Unitholders. If in doubt Non-Associated Unitholders should consult an independent adviser, who should have regard to their individual circumstances.

2.2.2 Ancillary Transaction We set out below the framework we have adopted in forming our opinion in respect of whether the Ancillary Transaction is on arm’s length terms and whether the Ancillary Transaction confers a collateral benefit to ING in accordance with GN21.

In our opinion, the analysis of whether the consideration payable to REIM AP is on arm’s length terms and whether there is collateral benefit are interrelated issues. Whilst our analysis addresses each aspect separately, our conclusions have regard to the interrelationship between the issues.

Arm’s length termsIn determining whether the consideration payable to REIM AP under the Ancillary Transaction is on arm’s length terms, we have assessed whether the parties are dealing with each other at arm’s length in negotiating the Facilitation Deed. In particular we have considered:



We have also considered whether the consideration to be received for the Ancillary Transaction is on arm’s length terms. In particular, since the Ancillary Consideration is principally compensation for the management rights of IIF we have considered whether the financial terms of the Ancillary Transaction are arm’s length terms having regard to:

a comparison of the percentage of assets under management (AUM) and earnings/revenue multiples implied by the Ancillary Consideration to asset and earnings multiples observed in other comparable transactions involving the internalisation or the sale of management rights in the property sector

an estimate of the fair market value of the IIF management rights having regard to a discounted cash flow analysis of the benefits forgone by ING arising from the management of IIF compared to the consideration to be received by ING.

Collateral Benefit Chapter 6 of the Corporations Act imposes various constraints on the terms of a takeover bid, including a prohibition on providing collateral benefits. Section 602(c) of the Corporations Act states the purpose of Chapter 6 includes ensuring security holders have a reasonable and equal opportunity to participate in any benefits accruing to security holders under a proposal. In particular, Section 623 prohibits a benefit that is likely to induce an acceptance and is not offered to all holders in a bid class.

In the absence of any regulatory guidance, we have had regard to GN21 in assessing whether anything has come to our attention to cause us to believe the consideration payable to REIM AP under the Ancillary Transaction would constitute the receipt of a collateral benefit.

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GN21 states as its premise that unacceptable circumstances will be likely to exist whenever a bidder provides a security holder something of value which it does not offer to other security holders. Whilst GN 21 articulates factors that the Takeovers Panel will take into account, there is no explicit framework which must be utilised to undertake an evaluation of these factors.

Under GN21, a collateral benefit exists if it violates the equity principle, which states that if the bidder provides a security holder (in this instance an ING party) something of value which it does not offer to other security holders, the Takeovers Panel may conclude that a collateral benefit has been given which gives rise to unacceptable circumstances.

The potential collateral benefit should be considered on a holistic basis, by assessing any potential benefit by reference to the commercial balance of advantages flowing to and from the security holder. In accordance with GN21, factors that influence the view of the balance of advantages include:

the substance and commercial reality of the transaction

the context in which the benefit is given or the consideration is given up

the overall effect of the transaction

an objective assessment of the transaction (rather than the parties’ intentions).

GN21 provides a number of ways in which a party may seek to establish that there is no net benefit, including:

market testing of the transaction, for example, by a public sale process

an independent valuation of the transaction

an expert’s opinion about whether there is a net benefit.

In determining whether there is a net benefit to ING Group, consistent with our understanding of the principles outlined in GN21 requiring an overall view of the transaction, we have undertaken both a quantitative and a qualitative analysis of the Ancillary Transaction which has included:

consideration of whether the Ancillary Transaction is on arm’s length terms as set out above having regard to the process undertaken in negotiating the Proposal and the Ancillary Transaction and the financial terms of the Ancillary Transaction


the price to be paid for ING’s existing interest in IIF, in particular that, if the Proposal proceeds, this interest will be sold on the same terms and conditions as these applying to other IIF unitholders.

This analysis is set out in Section 6 of this report.

2.3 Limitations and reliance on information The opinion of Deloitte is based on economic, market and other conditions prevailing at the date of this report. Such conditions can change significantly over relatively short periods of time. This report should be read in conjunction with the declarations outlined in Appendix 7.

This engagement has been conducted in accordance with professional standard APES 225 Valuation Services issued by the Accounting Professional and Ethical Standards Board Limited (APESB).

Our procedures and enquiries did not include verification work nor constitute an audit or a review engagement in accordance with standards issued by the Auditing and Assurance Standards Board (AUASB) or equivalent body and therefore the information used in undertaking our work may not be entirely reliable.

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3 A-REITs and the industrial property market 3.1 Introduction IIF is an A-REIT that operates in the property sector with a focus on investment in industrial properties across Australia and Europe.

A-REITs are investment vehicles which allow investors to purchase a tradeable interest in a diversified and professionally managed portfolio of real estate and in general, adopt one of two structures:

stand-alone funds which provide investors exposure limited to the underlying real estate portfolio; or

stapled securities which provide investors exposure to funds management, property development and/or other corporate activities in addition to passive investment in real estate. The overwhelming trend in recent years is towards stapled structures with internalised management.

Australia has the most securitised property market in the world with almost half of Australia’s institutional grade real estate held by listed public entities. However, the proportion varies by sub-sector with retail assets having the highest degree of institutional ownership (approximately 90%), followed by office (approximately 60%) and industrial (approximately 40%).

The Standard and Poor’s (S&P)/ASX 200 A-REIT index (A-REIT Index), the primary industry indicator, includes 18 A-REITs which trade on the ASX. As at 7 January 2011, the market capitalisation of the A-REIT Index was approximately $67 billion, which represents approximately 6.1% of the market capitalisation of the S&P/ASX 200 Index at the same date.

The performance of A-REITs can provide insights into the outlook for the real estate sector as a whole. In this section we set out an overview of the A-REIT sector in the locations in which IIF operates, with an emphasis on the Australian market where the majority of IIF’s properties are located.

3.2 Recent trends in the A-REIT sector The A-REIT market emerged during the 1990s following a collapse in the commercial property market which highlighted certain limitations of direct investment at the time including insufficient liquidity and lack of regular independent property valuations. This resulted in a wave of A-REIT listings during the 1990s, offering investors liquidity, market-based unit pricing and more regular valuations. In the late 1990s to early 2000s, transaction activity accelerated with significant consolidation occurring within the sector.

Over the period from 2000 to 2007 the A-REIT sector performed strongly with the A-REIT Index experiencing a compound annual growth rate (CAGR) of 10%, slightly outperforming the broader equities market with a lower level of volatility during the period. As a result of the GFC, however, the sector experienced a significant decline from July 2008 performing well below the S&P/ASX 200 index as shown in the figure below.

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Figure 4: Performance of A-REIT Index relative to ASX200 Index (1 July 2008 to 7 January 2011)

Source: Thomson Reuters

In 2007 the A-REIT market experienced a record year of capital raisings with approximately $13 billion of equity capital raisings as REITs pursued growth strategies. However, the GFC resulted in a number of adverse consequences for equity markets, with A-REITs being particularly exposed due to the relatively high levels of gearing employed and the cyclical nature of the underlying asset values which resulted in market capitalisations falling by approximately 60% in the 12 month period to December 2008 (compared with 40% for the general market over the same period). In general, the GFC had the following consequences for A-REITs:

declining asset values: the lack of liquidity in debt and equity markets combined with adverse economic prospects in the short term contributed to a widespread fall in real estate asset prices in the Australian and European real estate sectors. The substantial decline in asset values put pressure on debt covenants and resulted in financiers threatening to force real estate vehicles into either aggressive asset sales or significant equity raisings to repay debt. In addition, smaller A-REITs and those with higher gearing levels traded at greater discounts to NTA than other A-REITS as outlined in the figure below.

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Figure 5: Gearing and discounts to NTA for industrial and large diversified A-REITs and companies as at 7 January

2011

ALZ Australand Property GOZ Growthpoint Properties AustraliaBWP Bunnings Warehouse Property Trust GPT GPT GroupDXS Dexus Property Group MGR Mirvac Group GMG Goodman Group SGP Stockland Group

Source: Thomson Reuters, Deloitte analysis

Notes: 1. The size of the bubbles represents the market capitalisation

emergency recapitalisations: a large number of equity capital raisings were undertaken during the GFC. A-REITs raised equity capital primarily to satisfy short-term debt commitments, reduce balance sheet gearing to prevent debt covenant breaches and meet capital expenditure and/or working capital obligations. Furthermore, A-REITs with significant debt and interest costs denominated in foreign currencies were also required to raise capital to meet debt covenants which were breached as a result of the depreciation of the Australian dollar and lower interest rates. Since January 2008 A-REITs have raised approximately $19 billion in equity which has been significantly dilutive due to the magnitude of these raisings and these having largely occurred at substantial discounts to NTA and volume weighted average price (VWAP) prior to the announcement of the capital raising

lower debt capacity and higher funding costs: the debt market has changed considerably since late 2007 with increasing interest rate margins, more stringent covenants and reduced liquidity available as financiers, particularly in the real estate sector, have repriced risk and have been more selective in their lending criteria. In some instances the higher rate at which debt can be refinanced has led to some assets and projects becoming unviable

lower distributions: following the onset of the GFC, A-REITs restricted distributions in order to repay debt and improve gearing levels. In addition, many A-REITS changed their distribution policies from paying out all operating income to a target payout ratio based on a proportion of adjusted funds from operation (AFFO) or other cash flow measures. As a result of the recent recapitalisations undertaken in the sector, most A-REITs have resumed distributions to unitholders.

As a consequence of the above factors, the A-REIT sector went from trading at a premium to NTA in early 2007 to trading at a significant discount to NTA since late 2007.

More recently A-REITs have:

reduced leverage and refinanced near term maturities: due to the large scale recapitalisations discussed above, average gearing for the A-REIT sector has substantially reduced with many A-REITs targeting gearing in the order of 30% whereas historically these same vehicles have been geared in excess of 50%. Furthermore, few A-REITs have major debt expiries before the 2012 financial year.

experienced stabilising property fundamentals and capitalisation rates: as the Australian economy is improving, underlying rental demand and occupancy metrics have begun to stabilise, and investment

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demand for real estate, albeit at the prime end of the market, has increased. As a result many A-REITs have announced stable and/or increasing values for the period ended 31 December 2010

recommenced distributions: as property cash flows begin to improve, A-REITs have recommenced distributions to unitholders, often at lower payout ratios than has historically been the case

focused on growth options: until recently there have been few transactions in the Australian, European or North American real estate sectors due to the limited availability of both senior bank debt and mezzanine finance and significant divergence between vendor and buyer price expectations. However, there have been some positive signs emerging in respect of the appetite for pursuing growth options, through recommencement of large scale development activity as well as corporate activity in the sector. The corporate activity over the second half of 2010 was largely a combination of portfolio sales at or close to NTA or independent valuations with limited takeovers of A-REITs other than in distressed or quasi distressed situations.

Despite the positive trends above, a number of A-REITs continue to trade at substantial discounts to NTA, with the median discount to NTA for the sector as at 7 January 2011 being approximately 15%. Whilst some A-REITs are trading at or above NTA, they are generally entities that earn active income from funds management, development and other activities (such as Goodman) in addition to income from passive property investment. Furthermore, a number of REITs with offshore assets attract higher discounts to NTA due to the relative uncertainty of asset prices offshore, particularly in the United States (US) and Europe.

A-REITs continue to trade at discounts to NTA due to a number of factors including:

the listed market remains sceptical of NTA values despite a rising number of transactions occurring at or close to NTA and independent valuations supporting the NTA

continuing negative market sentiment and uncertainty around the global economic outlook and the impact on property values

limited near term growth prospects in respect of:

o rental growth expectations across most geographic regions and property sub-markets

o high funding costs at present make accretive acquisitions difficult, even for vehicles with funding capacity

o distributions due to the above factors and lower payout ratios as a consequence of more prudent distribution policies amongst most A-REITs

whilst capitalisation rates are generally firming in Australia, they are not expected to reflect capital growth prospects in the near term

retail investors typically evaluate A-REITs with regard to the income yield prospects and in recent periods there has been a lack of a substantial yield differential between A-REITs and alternative relatively lower risk investments including term deposits.

3.3 Sub-sector outlook

3.3.1 Economic drivers of demand Economic and demographic fundamentals are the main drivers of the property sector.

As the GFC slowly dissipates, the rate of recovery varies considerably around the world with many analysts expecting slow and uneven growth in global markets, with China and Australia currently outperforming other economies and expected to continue to do so in the near term.

Economic conditions also vary markedly around the world. Whilst the US is beginning to show some signs of improvement, there remains significant uncertainty in respect of the timing and rate of the recovery. Whilst Europe had previously shown some positive signs, recent sovereign debt issues in Greece, Ireland, Spain and Portugal have injected uncertainty into financial markets in the region due to the relative economic integration of these economies. In particular rising government deficits and debt levels together with a number of downgrades to the debt of certain European Governments has resulted in declining consumer and investor confidence as well as the widening of bond yield spreads and risk insurance on credit default swaps, particularly in Europe.

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The key fundamentals in the geographic regions in which IIF operates are summarised in the following table.

Table 2: Economic indicators

GDP Growth CPI UnemploymentCountry /region 2009 2010

Average 2011-2015 2009 2010

Average 2011-2015 2009 2010

Average 2011-2015

Australia 1.2% 3.2% 3.1% 2.1% 2.8% 2.5% 5.6% 5.1% 4.4%Europe (4.2)% 1.4% 1.1%1 0.5% 1.8% 1.6%1 9.2% 9.8% 9.4%1

Source: Economist Intelligence Unit (EIU) – November 2010 reports Note: 1. EIU forecast for 2011

As set out above, we note that:

economic growth in Australia is expected to outpace that in Europe in at least the medium term due largely to low levels of unemployment underpinned by an expectation of sustained demand for resource exports toChina

economic growth in the Euro region is expected to lag Australia and North America due largely to the uncertainty in at least the short term regarding the economic impact of relatively large budget deficits and sovereign debt issues within the Euro zone which will constrain gross domestic product (GDP) growth and any increases in employment in the near term.

3.3.2 The industrial property market Overview The major asset classes within the industrial property market are graded according to the size, quality and potential usages of the property amongst other factors with prime grade representing the highest grade.

Consistent with other property sectors, the larger prime grade industrial properties are regarded as having a more stable income stream than secondary industrial properties and are characterised by blue chip tenants with long-term lease profiles. As a consequence, these properties have historically been keenly sought after by listed property trusts, institutional investors and high net worth investors, resulting in correspondingly lower valuation income yields. IIF primarily holds prime grade industrial properties.

Demand and supply of industrial property is primarily affected by the following key factors:

consumer spending: increases in spending levels lead to the requirement for many business to re-stock and maintain inventory, increasing the demand for industrial/warehousing space

changes in infrastructure availability: in particular new road networks can alter the underlying dynamics of existing markets and will impact the attractiveness of industrial properties

changes in production technologies: can lead to demand for new industrial and in particular warehousing space

container movements: in particular imports represent a lead indicator for industrial activity

land value and availability: the availability and attractiveness of new supply opportunities impacts land pricing and end-user demand

changes in real interest rates: falling real interest rates support consumer spending and also encourage investment and expansion by businesses

availability of credit: availability of credit impacts the ability of participants to invest in additional properties and land to support future demand. F

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Australian industrial property market Since the onset of the GFC, valuation yields across the Australian industrial property market are generally considered to have passed the bottom of the cycle in all major markets with property values falling approximately 15% to 20%. Over the first half of 2010, the industrial property market in Australia has experienced increasing tenant demand and inquiries as a result of stabilising economic conditions and limited speculative development of new properties. Combined with a lack of supply of higher quality properties, this increase in demand has held rents steady so far in the current period. The Australian economy is expected to experience increased growth going forward which is in turn likely to further stabilise the industrial property market. Further, the higher Australian dollar is also expected to drive a recovery in import levels, another key driver of demand for industrial properties.

Rents are expected to experience slow growth from late 2010 through 2011, however, industrial rents in Australia should be favourably impacted by recent employment growth figures as well as the expectation that export volumes will continue to grow, largely driven by economic growth from Asia, in particular China. Furthermore, incentives, which grew to a high of 22% of annual rentals in some cases1 during 2009, are expected to reduce to normal historical levels. Pre-lease rents, however, are forecast to decline until the second half of 2011 as larger developers re-commence projects that were put on hold during the GFC. This will result in an increase in the competition between developers for pre-lease tenants.

Valuation yields are expected to remain steady for prime grade properties, averaging between 8.0% to 8.5% for prime properties in both Sydney and Melbourne. According to ANZ, industrial yields will continue to tighten during the next few years, although it is unlikely that the industrial property market will see the low yields achieved in 2007 and 2008 as transaction activity is likely to remain low for some time thus constraining capital growth.

The supply of industrial properties in Australia remains subdued with little new construction to replace completed projects. Limited stock is beginning to put upward pressure on rents and capital values in the larger industrial markets of Sydney and Melbourne. In addition, the number of high quality assets available for purchase has been limited as A-REITs that have recapitalised are no longer undertaking asset sales to reduce debt. As a result of this limited availability, the industrial property market has recently been undersupplied and is expected to continue as such in 2011, which should result in increased development activity.

Reinvestment in the industrial market by A-REITs is expected to pick up driven in the short-term by inventory restocking and the leasing and sale of existing buildings. Over the medium term, the low levels of high quality assets available provide opportunities for land owners to enter the development market. Speculative development will remain constrained due to continued tight lending conditions and an increasing interest rate environment.

These factors are likely to prompt a broad stabilisation of capital values and rents through much of the sector with a more sustained recovery to continue into 2011. Overall, economic growth in Australia is likely to be the strongest driver of growth in the industrial property market.

European industrial property market Market evidence indicates that the European industrial property market is currently close to, if not at, the bottom of its cycle. Industrial valuation yields have begun to stabilise across Europe and in larger markets, began to compress from late 20092. Leasing activity remains low as vacancy levels increase and tenant demand is focused on cost control and increasing efficiency as opposed to expansion or relocation.

Industrial yields fell marginally during the first quarter of 2010 with falling yields in some locations being offset by increases in other locations. The market recovered slowly from late 2010 as GDP growth in most European economies will be low, unemployment is expected to remain relatively high and consumer spending and sentiment remains constrained. As governments begin to withdraw stimulus packages and sovereign debt risks increase, there is an increasing fear that Europe may relapse into recession.

Increased supply levels and growing competition between landlords to attract tenants has placed downward pressure on industrial rents across Europe. Overall in 2011, rents are expected to remain steady in markets with a high supply of modern properties and decline across other regions.

1 Sydney Industrial – Colliers International Market Indicators Report, Autumn 20102 On Point, Jones Lang LaSalle, Spring 2010

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New developments continue to be put on hold as developers face uncertain economic conditions and difficulties in obtaining finance. Furthermore, developers are unable to match growing requests from tenants for shorter lease lengths with the long-term requirements of their investors. Development activity is likely to remain restricted in 2011 due to constrained credit conditions.

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4 Profile of IIF 4.1 Introduction IIF is an externally managed A-REIT which performs property investment, property services and property development activities in the industrial property sector. Its property portfolio consists of 61 properties located in Australia and Western Europe. IIF is externally managed by REIMA.

On 27 August 2010, IIF entered into an agreement to divest its 50% interest in Summit, the entity through which IIF held an ownership interest in 406 properties in Canada. The sale of Summit was settled in November 2010, with proceeds to IIF, net of transaction costs, being C$300.5 million. Moreover, ING Group sold 100% of its interest in the management rights related to Summit.

The following figures summarise the geographic distribution of IIF’s property portfolio by value and by area as at 31 December 2010.

Figure 6: Geographic mix by value (31 December 2010) Figure 7: Geographic mix by area (31 December 2010)

Source: IIF Source: IIF

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4.2 IIF’s History An overview of IIF’s history is provided in Figure 8 below.

Figure 8: IIF’s history

1985 Heine Property Trust established in Victoria1991 First listing on the ASX following the merger of Heine Property Trust and Heine

Split Property Trust 1994 Heine Property Trust renamed Heine Industrial Property Trust1996 Heine Industrial Property Trust renamed Prime Industrial Property Trust2000 Prime Industrial Property Trust merged with Armstrong Jones Industrial Fund 2001 Prime Industrial Property Trust renamed ING Industrial Fund2005 IIF expanded internationally, acquiring properties in Europe20062009

2010

IIF expanded into Canada through the acquisition of a 50% interest in SummitIn August 2009, IIF completed the refinancing of its $1.6 billion debt facilityIn December 2009, IIF completed a $700 million equity capital raisingOn 27 August 2010, IML announced the disposal of its 50% interest in SummitOn 28 October 2010, IML announced the proposal by Goodman Group to acquire all of the ordinary units in IIF, for a consideration of $0.54 per unitOn 24 December 2010, IML announced it had entered into an implementation agreement with GTA Trustee to acquire all the ordinary units of IIF for $0.546 per unit less any distributions

Source: IIF

4.3 Overview of the IIF property portfolio

4.3.1 Overview The following figure summarises the key statistics of IIF’s portfolio as at 31 December 2010.

Table 3: Property portfolio summary as at 31 December 2010

Australia Europe Total

Number of properties 45 16 61Total lettable area (thousand sqm) 1,539 512 2,051Book value (million) 2,154 338 2,492Number of tenancies 256 20 276Weighted average lease expiry (WALE) (years) 4.5 4.8 4.5Occupancy 97% 100% 98%Weighted average capitalisation rate (WACR) 8.5% 8.2% 8.4%

Source: IIF

All Australian properties are located in the east coast capital cities, with 34 properties in Sydney, 7 properties in Melbourne and 4 properties in Brisbane. The Australian portfolio is characterised by high quality industrial estates, warehouse distribution facilities and business parks, with approximately 80% of the properties (by value) classified by IIF Management as prime properties. The average building age for the portfolio is approximately 13 years. The European properties are located in Belgium (1 property), Germany (11 properties) and Spain (4 properties). The portfolio consists of warehouse distribution facilities (94% by value) and industrial estate (6% by value). The average building age for the European portfolio is 16 years.

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4.3.2 Weighted average capitalisation rate (WACR) The following figure summarises IIF’s historical WACR by region.

Figure 9: Weighted Average Capitalisation Rate

Source: IIF Note: Portfolio WACR includes the investment in Summit which has since been sold

The WACR across the property portfolio as at 31 December 2010 was 8.4%, an increase of 1.4% since 30 June 2008. Since 30 June 2010 market capitalisation rates and discount rates have continued to stabilise across the majority of the portfolio. In particular prime industrial capitalisation rates in Australia have stabilised since June 2010 with limited evidence of compression, however, secondary assets continue to be discounted. This stabilisation, combined with some rental growth resulted in a slight uplift in the valuation of Australian properties since 30 June 2010. This uplift was offset by write-downs in two properties, one in Silverwater and one in Blacktown, NSW, due to their upcoming vacancies and required capital expenditures for refurbishments.

Despite stabilisation of yields across most of the portfolio, underlying weakness in property fundamentals particularly in Spain has contributed to the fall in overall value in Europe.

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4.3.3 Occupancy and tenancy The fund receives rental income from a tenant register comprised predominantly of industrial tenants. At 31 December 2010, IIF’s occupancy rate for the portfolio was 98% following the disposal of Summit.

The following table sets out the top ten tenants of IIF based on net operating income as at 31 December 2010.

Table 4: IIF top 10 tenants as at 31 December 2010

Tenants

Percentage of portfolio income

(%)

Fiege 8.2%Metcash 8.1%Linfox 3.5%Neckermann Versand 3.1%Ingram Micro 2.8%DHL 2.6%Houseware International 2.6%Microsoft 2.4%Unisys 1.9%Coles 1.9%

Total top 10 tenants 37.1%

Other tenants 63.0%

Total tenants 100.0%

Source: IIF

As set out above the top 10 tenants account for 37% of the portfolio income.

The Australian properties contribute approximately 84% of the net property income. The top five Australian tenants account for approximately 20% of the Australian net property income with Metcash being the highest contributor (8.1%), followed by Linfox (3.5%), Ingram Micro (2.8%), Houseware International (2.6%) and DHL (2.6%).

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4.3.4 Lease expiry profile The following figure sets out the lease expiry profile of IIF.

Figure 10: Lease expiry profile of IIF by income

Source: IIF

The WALE of the portfolio is approximately 4.5 years following the sale of Summit, which reflects certain near term expiries. Within the next two financial years, 7.8% of the European leases and 13.2% of the Australian leases will expire.

IIF is exposed to a number of significant lease expiries in Spain with Carrefour likely to vacate 32,636 sqm at Great Northern Distribution Centre in January 2011. Management has leased the remaining 34,805 sqm of this property to DHL until 30 June 2012 and is currently in discussions with DHL to take a lease over the entire property.

IIF also faces some major lease expiries in Australia, with 10,800 sqm in The Park becoming vacant from December 2010 to October 2012.

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4.4 Development projects Whilst IIF has historically undertaken property development activities in Australia, these activities were substantially suspended with the onset of the GFC. IIF has communicated its intentions to selectively re-commence investing in development projects and currently holds a land bank capable of delivering approximately 942,383 sqm for this purpose. The following table summarises the existing development pipeline for IIF.

Table 5: IIF development projects as at 31 December 2010

Estate Name State

Lettable area available

(sqm)

Indicative value ($m)

Current industrial development sitesInterchange Park NSW 126,117 166Ingram Micro NSW 38,618 54Goodyear & Dunlop Tyres NSW 16,010 21Westpark Industrial Estate NSW 31,287 38Moorebank Business Park NSW 27,390 37Southgate Industrial Estate NSW 8,530 17Keylink Industrial Centre 80,195 80West Industry Park VIC 288,428 227

Future industrial development sitesRedbank River Park QLD 325,808 387

Total industrial developments 942,383 1,027

Source: IIF

The development pipeline, whilst capital intensive, can provide benefits in the form of higher returns through capturing the development margin and minimising stamp duty costs as well as enhancing the portfolio age and quality.

IIF had previously entered into a number of joint venture agreements with a subsidiary of REIMA to develop properties at Wyndham Industrial Estate, Ricketts Road (Mount Waverley), West Industry Park, Redbank and Banksmeadow. Due to the prevailing market conditions in 2009, the parties to the joint venture decided to cease development and sell off the underlying real estate. Currently only Redbank is held via the joint ventures. IIF owns 100% of West Industry Park following a transfer of the remaining interest to IIF in September 2010.

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4.5 Legal structure The simplified group structure of IIF is set out in Figure 11 below.

Figure 11: IIF group structure

Source: IIF

Notes: 1. IIF disposed of its 50% interest in Summit on 1 November 2010

IML has outsourced the property and asset management functions in respect of IIF to external managers under various property management and asset management agreements. IML is entitled to be paid certain fees for its services, as discussed in further detail below.

4.6 Key fee arrangements

4.6.1 Responsible Entity and management fees IML is entitled to receive the following remuneration for its services:

base management fee and custody fee: IML is entitled to a fee as Responsible Entity amounting to the lesser of 0.675% of the total balance sheet assets and 9% of the net income for the distribution period. The fee is payable in arrears on a quarterly basis. Moreover, IML is also entitled to a custody fee of 0.09% per annum of Australian and European assets. These fees are payable in arrears on a quarterly basis.

Other fees: IML is entitled to acquisition and development and project management fees on normal commercial terms as follows:

o acquisition fee: IML charges an acquisition fee of 1% of the total consideration payable in respect of any acquisition of an overseas assets

o development management and project management fees: IML is entitled to charge development management fees which are to be determined on a project-by-project basis. These fees are typically in the region of 2% to 3% of development cost.

In addition, all expenses reasonably and properly incurred by IML in relation to the proper performance of its duties in respect of IIF are payable or reimbursable with the exception of any fees paid to an agent or delegate to hold title to any asset and fees paid by the Responsible Entity to compliance committee members. IML’s entitlements to receive remuneration and be reimbursed for expenses are set out in the constitution of IIF.

ING Industrial Fund

Australian assets

IML

European assets

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Unitholders

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4.6.2 Third party fees For the European assets asset management fees are payable to ING Group in respect of the asset management function in Europe. The net fees payable are 60 bps of total investment property under management.

Other key terms of these agreements include the following:

the agreement has a duration of five years which is automatically renewable for an additional five years each time upon expiry

the agreement can be terminated via written notice given by any of the parties at least twelve months prior to each five-year anniversary. IML gave such a notice in December 2010, so that the agreements will terminate in December 2011.

4.7 Capital structure and unitholders As at the date of this report, IIF had 2,592 million units on issue. The following table summarises unitholders with ownership of 5% or more of IIF’s units and their respective unitholdings in IIF as at 7 January 2011.

Table 6: IIF top unitholders as at 7 January 2011

InvestorNumber of units

held (m)Percentage of total

issued units

ING Real Estate International Investments III Bv 202.2 7.8%Credit Suisse 198.2 7.6%Goodman Group 183.8 7.1%Centaurus Capital 160.1 6.2%Vanguard Investments Australia 130.7 5.0%Other unitholders 1,717.3 66.2 %Total unitholders 2,592.3 100%

Source: Orient Capital

Notes: 1. Subsidiary of the ING Groep NV

As set out above the top 5 unitholders hold approximately 34% of the issued capital of IIF. Moreover, the 10 largest unitholders collectively hold approximately 52% of the issued capital of IIF.

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4.8 Unit price performance In the six month period to 31 December 2010, weekly trading volume averaged approximately 96.3 million IIF units. This equates to an average weekly trading volume of approximately 3.7% of IIF’s total issued capital.Furthermore, a number of brokers follow this stock. Given this level of trading and the information available about the trust, we consider units in IIF to be relatively liquid.

These unit price movements, trading volumes and NTA are presented graphically in the figure below.

Figure 12: IIF unit price, NTA per unit and discount to NTA

Source: Reuters, ASX company announcements

The significant decline in IIF’s unit price between October 2008 and April 2009 was largely due to the impact of the GFC on the A-REIT sector as a whole. IIF has traded at a significant discount to NTA since July 2008, with the fund’s unit price declining to a low in March 2009 of $0.06, a discount to NTA of 96%. While this can be partially attributable to the impact of the GFC on the A-REIT sector as a whole, this was compounded by speculation that IIF would breach its debt covenants. The divergence between NTA and unit price decreased following a $700 million capital raising in late 2009, before stabilising at a discount of approximately 25%. Prior to the announcement of the disposal of Summit, this sustained discount was largely due to the following:

uncertainty around IIF’s strategy and ultimate proceeds to be realised from the investment in Summit

uncertainty regarding the refinancing of the Exchangeable Notes, the first tranche of which is due to mature in June 2011 as discussed in Section 4.9 below

IIF’s look-through gearing was 47% prior to the sale of Summit, which was significantly above the current average gearing of comparable listed REITs. IIF’s look-through gearing as at 31 December 2010 was 27%or 42% including the Exchangeable Notes

negative market sentiment regarding the performance of IIF compared to other A-REITs. No unit distribution was paid in the second half of the 2009 financial year (FY09). Although distributions recommenced in FY10, total distributions for FY10 were 1.6 cpu compared to 5.3 cpu for the first half of FY09 and 8.9 cpu for the first half of FY08

market sentiment regarding the A-REIT sector in general which is likely to have negatively affected the unit price of IIF. The GFC resulted in significant capital constraints, in particular, the availability of debt financing which is critical to the industry and has resulted in a significant decline in security prices across the sector.

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IIF completed Retail Entitlement Offer raising $226 million on 8 December 2009. 443 million units were alloted to Institutional and Retail unitholders

Rumors on breach of covenants. ASX price query on price and response to ASX query on 24 October 2008

Suspension from official quotation 5 until 11 December 2008

Placement and Institutional Entitlement Offer completed raising approximately $474 million on 28 October 2009 IIF announces the sale of

Summit on 27 August 2010

IML confirms discussions with Goodman Group regarding the sale of IIF

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Whilst the performance of IIF was generally in line with the overall performance of the A-REIT Index as a whole until October 2008, due largely to the above factors, IIF’s unit price significantly underperformed the index from October 2008 until mid 2009 as set out below:

Figure 13: IIF unit price against A-REIT index

Source: Reuters

Prior to IML confirming that it was in discussions with Goodman in respect of a potential transaction on 28 October 2010, IIF was trading at a discount to NTA of approximately 20% which was an improvement relative to previous trading in IIF units due to:

a re-rating of IIF following the announcement of the sale of Summit on 27 August 2010 at close to the carrying value of the investment, which was seen as a positive outcome by market participants

takeover speculation for IIF as a consequence of ING Group announcing its intention to exit its Australian real estate funds management platform (which includes IIF) as well as Goodman Group announcing that it had increased its stake in IIF to 7.1% on 30 September 2010 at a price of $0.47) per unit.

Since 28 October 2010, the date that IML confirmed that it was in discussions with Goodman, units of IIF have largely traded in line with the offer price for the units.

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4.9 Debt profile As at 31 December 2010, IIF had an implied look-through gearing of approximately 27%, or 42% inclusive of the Exchangeable Notes. The table below summarises the key terms of IIF’s pro-forma debt facilities following the disposal of Summit.

Table 7: IIF pro-forma debt summary as at 31 December 2010

Facility UnitFacility

sizeAmount drawn1 Expiry date Interest rate

Fund levelSyndicated $ million 870 870 Dec-11 BBSW + 3.00%Unsecured loan $ million 13 13 Oct-14 5.1%

Asset levelLahr EUR million 17 17 Sep-13 Euribor + 0.80%TTS EUR million 38 38 Sep-13 Euribor + 0.80%Fiege EUR million 53 53 Nov-14 Euribor + 2.00%Tacormissol EUR million 10 10 Nov-16 Euribor + 0.95%Puurs EUR million 17 17 Dec-16 Euribor + 0.75%Total asset level EUR million 135 135

Combined total1 $ million 1,060 1,060

Source: IIF

Notes: 1. Total is calculated based on an AUD/EUR exchange rate of 0.7643 as at 31 December 2010

In August 2009, IIF refinanced its $1.6 billion syndicated loan facility, drawing down the full amount. The facilities were refinanced prior to IIF raising equity in November 2009, at which time look-through gearing was over 60% and there was market speculation that IIF would breach its debt covenants. As a result, and coupled with tightening of capital markets following the GFC, the syndicated loan facility was refinanced at a relatively expensive interest rate margin of 300 bps over BBSW.

Since refinancing, IIF has raised $700 million in new equity and sold assets (including IIF’s interest in Summit) the proceeds of which were largely used to pay down debt. As a result, IIF’s look-through gearing (including the Exchangeable Notes) declined to approximately 42% as at 31 December 2010. Furthermore, the contraction in global debt markets has eased, with increased availability of credit and reduced credit spreads.

Interest margins on debt currently being paid by IIF are above the spreads that IIF could obtain in the current environment. IIF Management estimate that spreads on the syndicated facility would decline from 300 bps to approximately 225 bps if refinanced today.

The syndicated loan shown in the table above is subject to the following covenants from 30 June 2010:

a loan to value ratio of 69% (syndicated loan to Australian secured property) declining to 60% by 31 December 2011

look-through total liabilities less cash to look-through total tangible assets less cash of 71%, declining to 67% by 31 December 2011

first ranking interest cover ratio of 1.4 times.

In addition, the syndicated facility is subject to a number of restructure provisions, which include change of control clauses. If IIF fails to obtain the pre-consent of the syndicated lenders, and the Proposed Transaction is approved by Non-Associated Unitholders and becomes effective, a number of these provisions will be triggered, but this will not give the syndicated financiers an automatic right to place the facility in default.

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The syndicated loan facility is due to mature in December 2011 and will trigger a need for IIF to undertake a major refinancing. The debt at the asset level, which relates to the European properties, has a longer maturityprofile.

Exchangeable Notes and IIF Subordinated Bonds In May 2007, IML, as the Responsible Entity of IIF, raised $400 million by issuing partly paid preference securities and equity-linked options, and two subsidiary trusts of IIF issuing fully paid preference units (together, the Preference Units) to JPMorgan Australia ENF Nominees No. 2 Pty Limited in its capacity as trustee of the JPMorgan Australia Exchangeable Note Funding Trust No. 2 (JPM ENF). ENF in turn issued the A$200 million Tranche 1 7.000% Secured Exchangeable Notes due 30 June 2011 and A$200 million Tranche 2 7.125% Secured Exchangeable Notes due 30 June 2012 (together, the Exchangeable Notes) in the international capital markets. The Exchangeable Notes are listed on the Channel Islands Stock Exchange and were issued in two tranches of $200 million each. $5 million of the Tranche 2 Exchangeable Notes were exchanged for ordinary units in IIF in 2007.

At the time of issue, the constitution of IIF did not cater for the issuance of preference units with the specific terms required. Accordingly, the Preference Units were initially partly paid perpetual, subordinated, deferrable and non-cumulative bonds issued by IML (Original IIF Subordinated Bonds), as the responsible entity of IIF which were subsequently substituted by partly paid preference units in IIF in August 2007 following receipt ofthe required approvals.

The IIF Preference Units were redeemed in January 2011 for the issue of the new partly paid securities on substantially the same terms as the Original IIF Subordinated Bonds (IIF Subordinated Bonds). In accordance with the terms of the IIF Subordinated Bonds, the IIF Subordinated Bonds are now fully paid to $100,000 each and the IIF Subsidiary Trust Preference Units are held on trust for IIF by the trustee of the ENF trust. The IIF Subordinated Bonds are exchangeable into IIF units.

Upon maturity, or any time before maturity if the price of IIF units exceeds 130% of the exchange price of Exchangeable Notes of $1.8121 (the original exchange price was $2.8342), IIF has the option to either redeem the Exchangeable Notes for cash, or convert them to ordinary IIF units. The number of ordinary IIF units to be issued on exchange is calculated by reference to the volume weighted average market price at which ordinary units trade at the time less a discount of up to 10% depending on the percentage of IIF’s market capitalisation that the face value of the preference units outstanding represents. In certain circumstances if a change of control is triggered, the exchange price is reduced by 15% times the fraction of the issue period that remains between the change of control date and the expiry date.

4.10 Hedging Profile IIF has entered into a number of forward foreign exchange swaps designed to hedge the fund against fluctuations in income caused by movements in foreign exchange rates. These hedge contracts are denominated in € with maturities extending up to July 2012. Of IIF’s foreign earnings, 100% are hedged until December 2011. IIF’s strategy is to target a hedging range of a minimum of 50% and maximum of 90%.

To hedge against adverse movements in interest rates, IIF has entered into a number of fixed-for-floating interest rate swaps, with approximately 84% of total debt being hedged.

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4.11 Financial performance The audited income statement of IIF for the financial years ended 30 June 2008, 30 June 2009 and 30 June 2010 are summarised in the table below.

Table 8: Financial performance

Audited2008

($ million)

Audited2009

($ million)

Audited2010

($ million)1

Rental income 244 243 225Other property income 32 35 37Interest income 16 15 4Total operating income 292 293 266

Fees and other expenses (53) (58) (59)Net foreign exchange gain/(loss) 31 (19) 1Interest expense (79) (107) (176)Total expenses (101) (184) (234)

Operating profit before fair value movements and tax 191 109 32

Fair value movement of investment properties held 64 (682) (70)Fair value movement of derivatives (50) (154) 2Impairment (loss)/ gain (22) (45) (8)Total non-operating items (8) (881) (76)

Net profit/loss before income tax 183 (772) (44)Income tax (expense)/benefit (3) 48 12Net profit/loss for the year from continuing operations 180 (724) (32)Loss from discontinued operations (113) (422) (200)Net profit/loss for the year 67 (1,146) (232)Net profit/loss attributable to preference unitholders (28) (28) (28)Net profit/loss after tax attributable to unitholders 39 (1,174) (260)

Other metrics:EPU from continuing operations (cents) 13.6 (66.5) (3.0)EPU from discontinuing operations (cents) (10.1) (37.3) (10.0)Total EPU (cents) 3.5 (103.8) (13.0)DPU (cents) 17.9 5.3 1.6Distribution (millions) 200.3 59.8 41.6Distribution yield % (NTA) 8.5% 5.5% 2.8%

Source: IIF

We note the following in respect of the performance of IIF:

operating income declined in FY10 due to the following:

o Australia: FY10 revenues were impacted by the disposal of eight directly held properties during the year, including Knoxfield Distribution Centre and Westland Industrial Estate

o Europe: revenues were largely impacted by foreign exchange movements, as well as the subdued economic environment

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fees and other expenses: consist of general property expenses and Responsible Entity fees payable to IML

interest expense: the rise in interest expense between 2008 and 2009 resulted from the refinancing of IIF’sdebt facilities. The impact that the GFC had on the availability of funding and debt interest rate spreads resulted in a significant increase in the fund’s financing costs. The FY10 result also includes debt establishment costs of $47.5 million which were expensed

fair value movements – investment properties: the fair value adjustment of $682 million for FY09 and $70 million in FY10 reflects the write-down of the carrying value of investment properties following independent valuations of the property portfolio, reflecting the negative impact of the GFC. Independent valuations were carried out for 100% of IIF’s portfolio during the 2010 financial year

fair value movements – derivatives: reflects the marked-to-market movement in the value of interest rate swaps, whereby IIF paid a fixed rate of interest in exchange for a floating rate, coupled with losses on foreign exchange contracts

tax: IIF incurs income tax on its properties held in Europe. All other properties are classified as flow through for tax purposes. IIF recognises deferred tax on its foreign investments and derivative contracts. No capital gains tax liabilities are anticipated on the disposal of any properties in the IIF portfolio for the foreseeable future

loss from discontinued operations: reflects write-downs in the carrying value of properties held in Summit due to a softening of capitalisation rates coupled with marked-to market losses on exchange rate hedges.

Expectations for IIF for FY11 are based on the following:

rental income is forecast to decline marginally in FY11 due to the impact of the sale of a number of properties largely in Australia. Occupancy is expected to remain stable on comparable levels in Australia and Europe. European net property income is likely to be negatively affected by the negotiation of new lease terms on properties in Germany and Spain

a reduction in debt outstanding is forecast for FY11 due to the impact of the Summit transaction on the debt profile of IIF which will contribute to a significant reduction in the interest expense for the period

higher management fees are forecast for FY11, mainly as a result of the resumption of distributions to unitholders since management fees for IIF are calculated with reference to net income available for distribution.

Distribution policy IIF’s policy is to distribute 70% to 90% of net operating income or taxable income, whichever is greater in each financial year. Distributions to unitholders are paid on a quarterly basis. No distributions can be paid to IIF unitholders in the event that distributions to holders of Exchangeable Notes remain outstanding.

Distributions have declined significantly since 2008, with no distribution being paid in the second half of FY09 and total distributions of 1.61 cpu for FY10 compared to a 8.9 cpu for the first half of FY08.

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4.12 Financial position The audited balance sheets of IIF as at 30 June 2009 and 30 June 2010 along with the reviewed balance sheets as at 31 December 2009 and 31 December 2010 are summarised in the table below.

Table 9: Consolidated financial position of IIF

June 2009audited

($ million)

December 2009reviewed($ million)

June 2010audited

($ million)

December 2010reviewed($ million)

Cash 75 39 128 351Receivables 13 12 30 41Derivatives - 2 3 3Other 19 88 - -Assets of discontinued operations - - 379 3Total current assets 107 141 540 399

Trade and other receivables 113 102 89 55Investment properties 2,758 2,519 2,500 2,492Equity accounted investments 650 473 2 -Derivatives - 1 1 1Total non-current assets 3,521 3,095 2,592 2,548Total assets 3,628 3,236 3,132 2,947

Payables 30 29 40 26Borrowings 1,781 4 14 883Derivatives 57 24 17 11Distribution Payable - - 21 21Total current liabilities 1,868 57 92 941

Payables - - - 1Borrowings 211 1,196 1,169 176Derivatives 53 25 30 15Deferred tax liabilities 19 10 3 3Total non-current liabilities 283 1,231 1,202 195Total liabilities 2,151 1,288 1,294 1,136

Net assets 1,477 1,947 1,838 1,811

Other metricsNet tangible assets per unit 0.96 0.60 0.57 0.56Book value gearing1 53% 36% 35% 27%Look-through gearing2 70% 59% 57% 42%

Source: IIFNotes:1. Interest bearing debt (net of cash) divided by total assets (net of cash) 2. Look-through gearing includes net debt at the asset level, equity accounted investments and the Exchangeable Notes

We note the following in respect to IIF’s financial position:IIF’s policy is to have all investment properties externally valued at intervals of not more than three yearsand that such valuation be reflected in the financial statements. It is also the policy of IML to revalue each investment property every six months and to cause investment properties to be revalued to fair values whenever their carrying value differs materially to fair value. However, the lending banks require 100% of the property portfolio to be valued every year

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during the year ended 31 December 2010, independent valuations were carried out for 100% of IIF’s portfolio. The portfolio including development assets recorded an overall increase in value of 0.6% during the six month period to 30 June 2010 IIF contracted the disposal of $126 million worth of properties during the 2010 financial year (of which $88 million were recorded as current investment properties as at 31 December 2009) non-current trade receivables comprise loans to associates and third parties for the acquisition of properties. Management has advised that the underlying properties have been independently valued during the last 12 months and the loan balances are expected to be fully recoverable derivatives reflect the marked-to-market value of derivative financial instruments such as foreign currency contracts and interest rate swaps entered into to hedge risks associated with foreign currency and interest rate fluctuations look-through debt to total assets is 48% as at 30 June 2010. Following the sale of Summit, this declined to27% or 42% inclusive of Exchangeable Notes as at 31 December 2010 equity accounted investments, which mainly related to IIF’s 50.0% investment in Summit, were reclassified as a discontinued operation as at 30 June 2010 cash balances as at 31 December 2010 increased predominantly due to the proceeds from the sale of Summit.

4.13 Strategy and Outlook IIF management has communicated a desire to re-focus IIF on its core market in Australia. This strategy is intended to deliver growth to IIF unitholders and reduce the discount to NTA which was reflected in IIF’s unit price prior to the announcement of the Proposal. This will be achieved through:

the phased withdrawal from its European portfolio over the next two to three years as markets improve proceeds from the sale of Summit being used to retire debt and make acquisitions and developments in Australia the continued sale of non-core domestic properties and reinvestment of proceeds in new properties or developments recommencing development activities in Australia. The fund currently has an available land bank capable of developing 650,000 sqm of new facilities and has a history of developing similar land banks repaying the Exchangeable Notes and refinancing the Australian debt facilities in order to reduce the number of counterparties, increasing financial flexibility and extending the maturity profile.

The above strategies provide higher growth potential and exposure to any recovery in the industrial real estate market, particularly in Australia. Furthermore, the potential sale of European assets at or near book value as markets improve would have a positive impact on the discount to NTA at which IIF has historically been trading. Whilst IIF has some positive prospects for future growth, IIF is also exposed to a number of risks which could result in a decline in asset values and/or deterioration in earnings, including:

IIF’s ability to divest non-core assets in order to fund its development pipeline and grow its investment portfolio, competing with listed and unlisted peers who may have a lower cost of capital. IIF management has indicated its intentions to refinance the syndicated loan facility prior to its maturity.Whilst the fund is expected to achieve reduction in financing costs compared to its current cost of funding and additional flexibility, any further tightening of credit markets could put pressure on EPU. Moreover, ifthe refinancing of the Exchangeable Notes is not successfully completed ahead of maturity, IIF would be prevented from paying distributions or returning capital to unitholders unless it issued units at a discount to market prices on exchange of the Subordinated Bonds selling the European properties at a discount to book value will dilute IIF’s NTA other factors which are applicable to the property sector as a whole, such as a softening of capitalisation rates, unfavourable exchange rate movements and increased uncertainty in global economic conditions placing pressure on rental rates and tenant incentives.F

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5 Evaluation of the Proposal 5.1 Overview In order to assist Non-Associated Unitholders with their evaluation of the Proposal, the Independent Directors have requested that Deloitte prepare an IER advising whether, in our opinion, the Proposal is fair and reasonable and in the best interests of Non-Associated Unitholders.

In order to assess the fairness of the Proposal, we have compared our estimate of the fair market value of IIF to the value of the Consideration. In order to assess whether the Proposal is reasonable, we considered whether the advantages of the Proposal sufficiently outweigh its disadvantages.

To assess whether the Proposal is in the best interests of Non-Associated Unitholders, we have adopted the test of whether the Proposal is either fair and reasonable, not fair but reasonable, or neither fair nor reasonable, as set out in RG 111, after considering whether there are sufficient reasons for Non-Associated Unitholders to vote in favour of the Proposal.

Our analysis is discussed in further detail below.

5.2 Fairness

5.2.1 Approach We have assessed whether the Proposal is fair by comparing the fair market value of an IIF unit (assuming 100% control) to the value of the Consideration.

In our selection of an appropriate methodology to estimate the fair market value of an IIF unit we have considered common market practice and the valuation methodologies recommended by RG 111, which are outlined in Appendix 3. In our estimate of the fair market value of an IIF unit we have:

assessed the fair market value using the net assets on a going concern valuation approach cross-checked our estimate of the fair market value of IIF units to the market’s assessment of the value of IIFobserved in recent share trading in the fund, as well as earnings and asset based multiples of transactions comparable to the Proposal.

For the purposes of estimating the fair market value of an IIF unit, we have defined fair market value as the amount at which the units would be expected to change hands between a knowledgeable willing buyer and a knowledgeable willing seller, neither of whom is under any compulsion to buy or sell. Special purchasers may be willing to pay higher prices to reduce or eliminate competition, to ensure a source of material supply or sales, or to achieve cost savings or other synergies arising on business combinations, which could only be enjoyed by the special purchaser. Our valuation of IIF has not been premised on the existence of a special purchaser.

Moreover, in our assessment of the fairness of the Proposal we did not consider any potential impact on the current value of a unit in IIF that may arise as a consequence of the existing capital structure of the fund. Instead we have considered such factors in our assessment of the reasonableness of the Proposal.

Our assessment of the fair market value of IIF is discussed in further detail below.

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5.2.2 Fair market value of the net assets of IIF We have used the net assets on a going concern basis to estimate the fair market value of a unit in IIF. We have estimated the fair market value of IIF by estimating the NTA for IIF by aggregating the fair market value for the investment property assets as well as any other related assets and liabilities. In applying this approach we have considered the ongoing management and other costs associated with realising the value of the assets on a going concern basis over the medium term. In our assessment of the fair market value of IIF we have utilised the NTA of IIF’s portfolio as at 31 December 2010 and considered any adjustments required to reflect the difference between our estimate of the fair market value and the book value of these assets at the Implementation Date. In making this assessment we have undertaken an analysis of the valuation of IIF’s investment properties which has included independent analysis of a sample of IIF’s internal and external valuations noting that independent valuations of 100% of IIF’s properties have been undertaken during the 12 months to 31 December 2010.

We have estimated the fair market value of an IIF unit as to be between $0.534 per unit and $0.550 per unit as set out in the table below.

Table 10: Fair market value of an IIF unit

Low $ Millions

High $ Millions

Book value of net assets of IIF as at 31 December 2010 1,810.6 1,810.6Less: carrying value of Preference Securities / Exchangeable Notes (371.4) (371.4)Adjusted book value of net assets of IIF as at 31 December 2010 1,439.2 1,439.2

Fair market value adjustmentsExpected cash flows up until Implementation Date 5.8 5.8Redemption price adjustment for Preference Securities / Exchangeable Notes (23.6) (23.6)Movement in fair market value of financial instruments (1.0) (1.0)Foreign exchange movements 5.0 5.0Management fees (30.0) 0.0Change of control payments triggered (10.9) 0.0Fair market value of IIF 1,384.5 1,425.4

Number of IIF units 2,592 2,592

Fair market value per unit $0.534 $0.550


Investment properties The main component of IIF’s net assets as at 31 December 2010 is its investment portfolio comprising $2.5 billion invested directly in industrial properties. A full list of IIF’s property portfolio is set out in Appendix 2.

IIF’s policy is to have all investment properties externally valued at intervals of not more than three years and that such valuation be reflected in the financial statements. It is also the policy of IML to revalue each investment property every six months and to cause investment properties to be revalued to fair values whenever their carrying value differs materially to fair value. However, the lending banks require 100% of the property portfolio to be valued every year. For 31 December 2010 reporting purposes, management obtained independent valuations for approximately 44% of Australian investment properties (19 properties) and 44% of European investment properties (7 properties). In addition 5 Australian development properties were independently valued. The remaining properties have been valued internally using external metrics. Under instructions from the lending syndicate of IIF, those Australian properties not externally valued in June 2010 were required to be independently valued for 31 December 2010 reporting purposes. As a result, 100% of the portfolio has been independently valued during 2010.

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A summary of the movements in capitalisation rates and the carrying value of the property portfolio since 30 June 2010 is set out below:

Table 11: Summary of the current value of IIIF investment properties

Carrying value Capitalisation Rates

30 June 2010 ($’m)

31 December 2010 ($’m)

Change ($’m)

30 June 201031 December

2010 Change

Australia 2,123 2,154 31 8.51% 8.48% (0.03)%Europe 378 338 (40)1 8.19% 8.16% (0.03)%

Total 2,501 2,492 (9) 8.46% 8.43% (0.03)%


Notes:

1. No properties were sold during the period however West Industry Park, with a carrying value as at 31 December 2010 of $20.6 million, was transferred to investments properties

2. Includes impact of foreign exchange loss of $38 million for the period

Since 30 June 2010 market capitalisation rates and discount rates have continued to stabilise across the majority of the portfolio. In particular prime industrial capitalisation rates in Australia have stabilised since June 2010 with limited evidence of compression, however, secondary assets continue to be discounted. This stabilisation, combined with some rental growth resulted in a slight uplift in the valuation of Australian properties since 30 June 2010. This uplift was offset by write-downs in two properties, one in Silverwater and one in Blacktown, NSW, due to their upcoming vacancies and required capital expenditures for refurbishments.

Despite stabilisation of yields across most of the portfolio, underlying weakness in property fundamentals particularly in Spain have contributed to the fall in overall value in Europe. The development land portfolio has not witnessed any material movement since June 2010.

In general, there is likely to be upside potential for further revaluations over the medium term due to a number of factors including:

the GFC contributed to a sharp reduction in industrial supply during 2009 and 2010 which may contribute to future supply shortages which should have a favourable impact on rental growth and yields

a potential reduction in the discounts currently observed in the pricing of secondary industrial property (noting that this would only impact a small proportion of IIF’s portfolio)

cyclical recovery in European economies, in particular Spain.

We have undertaken an analysis of a sample of the independent valuations of the properties and have concluded that:

the external property valuers are independent from IIF based upon statements included in the valuation reports and that there were no restrictions on their scope

the reports were prepared by professionals who have sufficient qualifications and competence to provide an informed opinion of the fair market value of assets of this nature

the valuation methods used in the property valuations are not inappropriate and appear to have been correctly applied to estimate the fair market values of the properties

the assumptions and valuation metrics used do not appear unreasonable or inappropriate for the purpose of estimating the fair market values of the properties

nothing has come to our attention that would cause us to make any adjustments for any valuation movements since 31 December 2010. However, we note that, on balance, there is an expectation that capitalisation rates for industrial properties will continue to moderately firm in Australia and may begin to firm in Europe as

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well. Any further firming of capitalisation rates may result in an increase in the value of IIF’s properties in the future.

Expected cash flows from normal operations up until the Implementation Date The net assets of IIF as at 31 December 2010 do not include the cash flow movements expected between 31 December 2010 to the Implementation Date (30 March 2011). We have therefore included the expected distributable earnings to be generated by IIF for this period until the Implementation Date as set out below:

Table 12: Expected cash flows up until Implementation Date

$Millions

Net cash flows from operating activities 23.3Transaction costs (17.5)Expected cash flows up until Implementation Date 5.8


We note the following in respect of the above:

cash flows from operating activities represents rent and operating expenses up to Implementation Date net of withholding taxes and investing activities

transaction costs represent the costs expected to be incurred from 31 December 2010 until the Implementation Date including approximately $17.5 million in costs which are contingent upon the success of the Proposed Transaction.

Preference Securities / Exchangeable Notes As the Preference Securities have been treated as equity for financial reporting purposes, the carrying value has been excluded from the book value of net assets. However, as the Preference Securities represent a financial liability to ordinary unitholders of IIF, it is necessary to adjust the net assets of IIF to reflect this liability. As at 31 December 2010, the Exchangeable Notes had a face value of $395 million ($5 million of notes have been redeemed) and a carrying value of $371 million in the books of IIF.

As discussed in Section 4.9, in 2007, IML raised $400 million by issuing partly paid preference units and equity-linked options with a subsidiary trust of IIF issuing fully paid preference units to ENF. The IIF Preference Units were redeemed in January 2011 for the issue of the partly paid IIF Subordinated Bonds. In accordance with the terms of the IIF Subordinated Bonds, the IIF Subordinated Bonds are now fully paid to $100,000 each and the IIF Subsidiary Trust Preference Units are held on trust for IIF by the trustee of the ENF trust. The IIF Subordinated Bonds are exchangeable into IIF units if the price of an IIF unit exceeds the exchange price of $1.8121 (the original exchange price was $2.8342), IIF has the option to either redeem the IIF Subordinated Bonds for cash, or convert them to ordinary IIF units determined by the market price at which ordinary units trade at the time.

In the event of change of control, holders of IIF Subordinated Bonds have the right to request redemption under certain limited circumstances. Failure to meet this redemption request may result in IIF being prohibited from paying distributions to ordinary unitholders, and as a consequence, the fund could become subject to income tax. Given that the IIF Subordinated Bonds are significantly out of the money, it is likely that IIF will be required to redeem the preference securities at their face value either at maturity or in the event that a change of control event is triggered. Furthermore, whilst the Exchangeable Notes are listed on the Channel Islands exchange, they are not actively traded. However, the most recent pricing for the Exchangeable Notes on this exchange was circa $99,315 for the June 2011 tranche and circa $98,370 for the June 2012 tranche. This implies a current market value in the region of $387 million to $391 million.

Having regard to the likely requirement to redeem these securities at their face value in the future we have adopted the redemption value of $395 million for these instruments for the purpose of determining the fair market value of a unit in IIF on a control basis. This results in a reduction to the 31 December 2010 NTA value of IIF of $23.6 million, being the difference between the redemption value of $395 million and the book value as at 31 December 2010 of $371.4 million.

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Movement in the fair market value of financial instruments IIF has entered into a number of forward foreign exchange swaps and interest rate swaps designed to hedge the fund against fluctuations in income caused by movements in foreign exchange rates and interest rates. We have adjusted the net asset position for the movement in the marked-to-market value of these instruments between 31 December 2010 and 14 January 2011 of $(1.0) million.

Foreign exchange movements IIF holds cash, debt and investment properties denominated in foreign currency, in particular EUR. The NTA as at 31 December 2010 is based on exchange rates prevailing on that date, being an AUD/EUR exchange rate of 0.7643. For the purpose of our valuation we have used the AUD/EUR exchange rate as at 21 January 2011 of0.74. This results in an increase to the 31 December 2010 NTA of $5.0 million.

Management and responsible entity fees Whilst property management fees are included in the property cash flows used by the management and independent valuers in their valuations of the properties as at 31 December 2010, responsible entity and other management fees are not otherwise factored into the property valuations or in the financial position of IIF. Such fees would be payable as long as IIF and its investments are externally managed by ING Group or another responsible entity. These costs would typically be considered in assessing the value of a minority interest of an A-REIT, however, we have considered whether there should be an adjustment to our control net asset valuation range of IIF to reflect the potential leakage of value associated with paying ongoing contracted management fees.

IIF pays base management fees amounting to the lesser of 0.675% of the total assets under management or of 9% of the net income for the distribution period. Given the current asset base and distribution expectations for IIF, it is likely that management fees will be based on 9% of distributable net income for the foreseeable future. IIF’s distribution policy is to have a payout ratio range of 70% to 90% of distributable earnings. As IIF’s management fee arrangements were negotiated in 1985, these arrangements may not be reflective of the current environment as these arrangements are less favourable to IML compared to more recent mandates which are generally asset-based fees. In addition, IIF pays an acquisition fee of 1.0% of total consideration payable in respect of any new overseas assets and is entitled to charge development management fees of 2.0% to 3.0% on new development projects.

There is an argument that such costs would not be factored in at all when assessing the market value of a property holding company since:

investment property management is a highly scalable business model where costs tend to be relatively fixed. A third party buyer considering purchasing IIF would likely be able to achieve economies of scale in managing the portfolio and therefore would be likely to factor in only a portion of these costs when assessing the purchase price to acquire IIF

these arrangements are often able to be terminated through an ordinary resolution of unitholders which may result in the manager not receiving any compensation for these rights

these costs are incurred for the purpose of improving the performance of a fund either by sourcing new investment opportunities or by optimising the existing portfolio thereby increasing the return of the existing portfolio. Accordingly, it can be argued that the ongoing costs associated with such services produce a return equal to or higher than the cost of providing those services.

On the other hand a potential acquirer of IIF may not see value in continuing with the existing management agreements due to the synergies they expect from assuming the role of the investment manager.

In order to remove the responsible entity and asset manager an acquirer may be required to compensate the manager for terminating these management contracts which may include a payment for ensuring a transfer of knowledge from the existing management team to the new management team to minimise disruption for the buyer during implementation. Such compensation is likely to make reference to the net present value of the profit stream associated with the management of the fund. Based on the terms of the Ancillary Transaction, the payment to REIM AP for terminating the existing management agreement for IIF is $22.5 million. As set out in Section 6 below we have concluded that this represents an arm’s length price for the management arrangements of IIF.

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Since our valuation of IIF assumes the portfolio is retained (rather than liquidated) we consider that it is appropriate to allow for ongoing management fees and administration expenses for the fund. In addition to management fees, IIF incurs administrative and overhead costs which would likely be incurred by a potential buyer of IIF of approximately $4 million per annum which include professional fees, compliance costs, etc, some of which would likely be incurred going forward by a potential buyer (reflecting that costs associated with the European assets would only be incurred until these assets are divested). Assuming approximately 25% of these costs would continue to be incurred by a potential buyer and a pre-tax capitalisation multiple of 7 times (having regard to our assessed discount rate for the IIF management rights as set out in Appendix 4 results in a present value for ongoing administration costs applicable to a potential buyer of approximately $7 million.

Based on the above considerations, we have adjusted the net asset position of IIF for future management fees and ongoing administration costs of between $ nil and $30.0 million and consider such a cost would be factored into the overall price payable for IIF as a valuation adjustment.

Change of control implications IIF has a development agreement in respect of one of its properties which has certain provisions requiring the payment of 3 years of ground rents on the property in the event of a change of control of IIF which is estimated at approximately $10.9 million. We understand that this payment would likely be triggered in any change of control event for IIF. In order to estimate the control value of a unit in IIF we consider it is appropriate to reduce the NTA of IIF as at 31 December 2010 for the expected amount of this payment, however, as there may be some uncertainty in respect of whether this payment will be triggered we have only included this in the low end of our range.

Other considerations In assessing the fair market value of a unit in IIF under the net assets approach we have also considered the following:

unfavourable debt funding terms: As detailed in Section 4.9, IIF has a syndicated facility and a series of debt facilities secured against properties in the amount of $1.1 billion, which was fully drawn as at 31 December 2010. The syndicated facility is equal to $870.1 million and has a margin of 300 bps over BBSW. The syndicated facility was secured prior to IIF raising equity in October and December 2009, while look-through gearing was over 60% and there was market speculation that IIF would breach its debt covenants. As a result, the debt spreads currently being paid by IIF are above spreads that IIF could obtain if they refinanced their debt facility in the current environment as discussed in Section 4.9. However, since apotential acquirer would likely be required to refinance the carrying value of these facilities we have made no adjustment to the carrying value for the purpose of our analysis

deferred tax liabilities: at 31 December 2010, IIF holds a number of deferred tax liabilities relating to its property portfolio and European interest rate swaps. These liabilities reflect timing differences, and accordingly, will reverse in future periods. Given the nature of these liabilities, we have made no adjustment in our valuation of IIF. Furthermore, no capital gains tax liabilities are anticipated on the disposal of any properties in the IIF portfolio for the foreseeable future

intangible assets: We are not aware of any intangible assets which are not otherwise identified in the accounts of IIF which should be attributed a fair market value.

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5.2.3 Sensitivity of the value of an IIF unit Given the relatively high level of gearing within IIF, our valuation is sensitive to relatively small movements in the underlying value of IIF’s properties. Our estimate of the impact of movements in the underlying valuations of the properties on the fair market value of an IIF unit is set out below.

Figure 14: Valuation of a unit in IIF– sensitivity to movements in the value of the properties


Broadly speaking, a +/- 5% movement in the value of IIF’s properties would equate to an approximate impact of -/+9% on the value of an IIF unit on average, after taking into account the impact of the existing leverage of the fund.

Furthermore, since a portion of IIF’s assets and liabilities are denominated in Euro, the fair market value of anIIF unit is sensitive to the AUD:EUR exchange rate assumed. Our valuation is based on an AUD:EUR exchange rate of 0.74. Movements in the exchange rate would cause changes to the fair market value of an IIF unit expressed in $ with any variation being relatively linear (excluding the impact of any hedging arrangements in place). For example, a 5% appreciation in the $ against the EUR would result in an approximate 0.4% fall in the fair market value of an IIF unit.

$0.301

$0.349

$0.397

$0.445

$0.494

$0.542

$0.590

$0.639

$0.687

$0.735

$0.784

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

-25% -20% -15% -10% -5% Base value 5% 10% 15% 20% 25%

Fair value per unit (midpoint) NTA

Adjusted NTA

Valu

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5.2.4 Valuation cross-check We have set out below the valuation parameters observed from publicly available market data as a cross-check to our valuation of IIF under the net assets approach. In particular, we have considered:

recent trading in IIF units

premiums/(discounts) to NTA and distribution yields observed in listed securities, as well as earnings and asset based multiples implied by transactions comparable to the Proposal.

Each of these is discussed in further detail below.

Trading in IIF units

Introduction The share market generally provides an objective measure of the market value of an entity’s securities provided that there is an active, well informed market for the securities and that there are no abnormal factors reflected in market prices, such as takeover speculation.

We note prior to the announcement of the Proposal, IIF was trading at a significant discount to its underlying NTA value as discussed above. However, we consider that trading in the units of IIF prior to the announcement of the Proposal is a reasonable cross-check to our assessment of the fair market value of an IIF unit since this discount is likely to persist in at least the near to medium term due to the risk factors for IIF discussed in Section 4.13 above.

Furthermore, we consider recent trading in IIF units to be appropriate for the purpose of assessing the Proposal since:

in the six month period to 31 December 2010, approximately 96.3 million IIF units were traded on a weekly basis. This equates to an average weekly trading volume of approximately 3.7% of IIF’s total issued capital. Furthermore, IIF has a number of research analysts who cover the Fund’s performance. Given this level of trading and the information available on IIF, we consider IIF to be relatively liquid

IIF has recently provided an update to the market in respect of the FY10 results and prospects for the 2011 financial year. Furthermore, the disposal of Summit has reduced an element of uncertainty which was previously reflected in the security price of IIF prior to this date.

We therefore consider recent trading in IIF to be a fair basis for cross-checking our estimate of the fair market value of IIF.

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Analysis of recent trading in IIF units The VWAP per IIF unit ranged from $0.436 to $0.481 for the six months prior to the Conditional Offer Announcement Date. On 28 October 2010, IML announced that a conditional offer for the units of IIF had been received from the Consortium Members. We have therefore considered the prices observed in trading of IIF units prior to and subsequent to the announcement of the Proposal below.

The table below sets out the further details on the recent historical unit trading price of IIF, together with the premium or discount that the IIF units have traded at compared to the Consideration.

Table 13: Analysis of recent trading in IIF units

Closing price Low High VWAP

Volume daily

average (million)

Premium / (discount)

implied by the Proposal

Price as at 28 October 2010 0.530 0.525 0.545 0.530 31.6 3.02%

Price prior to 28 October 2010: 1 day 0.460 0.455 0.480 0.465 22.2 16.11%1 week 0.480 0.480 0.490 0.481 18.8 12.33%1 month 0.480 0.475 0.485 0.481 16.5 12.35%3 months 0.450 0.445 0.450 0.470 13.3 14.90%6 months 0.445 0.440 0.450 0.436 12.7 23.94%


A comparison of recent trading in IIF units to the Consideration is set out below.

Figure 15: Comparison of IIF’s unit trading with fair market value and the Consideration


$0.15

$0.25

$0.35

$0.45

$0.55

$0.65

Jul-2009 Oct-2009 Jan-2010 Apr-2010 Jul-2010 Oct-2010 Jan-2011

Unit market close price Consideration

Valu

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)

Consideration = $0.538

Proposed Takeover announced on 28October 2010

Speculation of a potential transaction acknowledged , as part of the strategic review for IIF

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As set out above, we note that the recent trading in IIF’s units up to the announcement of the Proposal was below the consideration per unit offered under the Proposal. However, we note that this observation is likely due to a number of factors, in particular:

uncertainty and speculation regarding the future of IIF and the wider ING Group’s intention to divest the IREIMA platform

IIF’s current capital structure creates additional uncertainty in respect of near term growth prospects of the fund due to the uncertainty in respect of the funding of the development pipeline and/or any accretive acquisitions due to the relatively high gearing of IIF relative to its peer group and the refinancing risk in respect of the senior debt of IIF. In pricing IIF’s units, the market is likely to have applied a discount to fundamental value to reflect these risks, however, these have not been factored into our assessed value of an IIF unit as discussed in Section 5.2.1

IIF had a material weighting to overseas investments, which are currently perceived to be higher risk than Australian investments. Notwithstanding IIF’s intention to exit these markets over time, the uncertainty in respect of the timing and the proceeds to be realised upon the orderly disposal of these investments is likely to be contributing to the pricing gap between IIF’s unit price and our estimate of the fair market value of an IIF unit. However, we note that the increased certainty following the sale of Summit has resulted in a reduced discount to NTA. This is likely a contributing factor to IIF’s underperformance compared to the broader A-REIT sector (represented by the A-REIT Index) over this period as well as discussed in Section 4.8 above

the Consideration is on a control basis, while security prices from market trading do not generally reflect the market value for control of a company as they are for portfolio holdings, and accordingly, would be expected to trade at a discount to a control value.

Subsequent to the announcement of the conditional offer received from the Consortium Members, the price of IIF units has trended towards the value of the Consideration.

Conclusion As set out in Figure 15 above, IIF’s unit price has largely traded below the Consideration. We do not consider this to be unreasonable given the factors set out above.

In the absence of the Proposal, or an alternate control transaction, we would expect that IIF will continue to trade at a discount to its NTA for at least the near term unless significant improvement occurs in the A-REIT sector and IIF’s risk and return profile as perceived by the market.

Earnings and asset based multiples and other key metrics In our assessment of the fair value of IIF, we have also compared our assessed value and the value implied by the Consideration, to key metrics implied by the share trading of entities that are considered comparable to IIF, as well as earnings and asset based multiples implied by transactions that are considered comparable to the Proposal.

The Consideration of $0.538 results in a lower discount to NTA of 3.1% and a stabilised distribution yield for FY11 of 5.9%, which compares favourably to the yields and discount to NTA observed in recent share trading of comparable industrial A-REITs and diversified A-REITs as set out below:

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Figure 16: IIF metrics relative to comparable A-REITs


Note: 1. Goodman is excluded from the premium/(discount) to NTA analysis as it is not directly comparable to IIF given that a significant portion of its revenue is derived from active income.

We note the following in respect of the entities comparable to IIF:

prior to the announcement of the conditional offer for IIF in October 2010, IIF was trading at a discount to NTA of approximately 15%, which is above the median discount to NTA for industrial A-REITs that are most comparable to IIF of 6.0%. IIF’s overall gearing is currently 42% (inclusive of the Exchangeable Notes). This is above the average gearing for industrial A-REITs that are most comparable to IIF. The Consideration implies a discount to our assessed value of IIF’s net assets of 0.8% which is significantly lower than the discounts to NTA observed amongst comparable A-REITs

prior to the announcement of the conditional offer for IIF in October 2010, trading in IIF units implied acurrent and forward distribution yield of 3.5% and 6.6% respectively. The forward yield is broadly in line with comparable A-REITs. Generally, higher and more volatile distribution yields for A-REITs reflect increased uncertainty regarding earnings of these trusts and NTA valuations. Accordingly, A-REITs with high distribution yields are likely to exhibit higher discounts to NTA relative to the market.

-3.10%

-7.93%-5.99%

-7.93%

-18.83%

5.90% 5.60%7.19%

8.93%

6.32%7.31%

-25.00%

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

IIF Goodman Group Bunnings Warehouse Property Trust

Growthpoint Properties Australia

Dexus Property Group Australand Property Group

%

Premium/(discount) to NTA FY11 distribution yield

n/a

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We have also identified a number of transactions that we consider broadly comparable to the Proposal, as set out in the table below.

Table 14: Transactions comparable to the Proposal

Announcement / Completion Date Target

Fund size ($ billion) Acquirer

Premium / (discount) to

NTA (%)

Oct-10 IIF 2.5 Consortium Member -0.7%1

Nov-10 Summit 2.0 KingSett / Alberta Pension Fund -5%2

Oct-10 Colonial Direct Property Investment Fund 0.2 Dexus Wholesale Property Fund n/a

Sep-10 Austexx Proprietary Limited's DFO centres

0.5 Colonial Retail Property Trust -2%

Jul-10 MacarthurCook Industrial Property Fund 0.1 CommonWealth REIT -34.3%

Apr-10 Westpac Office Trust 1.1 Mirvac Group 2.4%

Feb-10 Certain property funds managed by Macquarie Group

7.2 Charter Hall Group -23.0%

Dec-09 ING Retail Property Fund 1.4 Lend Lease consortium n/a

Dec-09 Challenger Kenedix Japan Trust 0.7 Challenger Life -44.6%

Dec-09 Mirvac REIT 0.8 Mirvac Group -30.1%

Jul-09 Orchard Industrial Property Fund 0.6 Growthpoint Properties Australia -11.1%

Source: ASX announcements, company websites, Deloitte analysis

Notes:

1. Based on the midpoint of IIF’s adjusted NTA of $0.542 per unit as set out above

2. Based on IIF’s carrying value of its 50% interest in Summit as at 30 June 2010

3. n/a: not available

As set out above, with the exception of the Westpac Office Trust transaction, all of the above transactions occurred at significant discounts to NTA and in excess of the discount to NTA implied by the Proposal. Anumber of these transactions were undertaken by entities which were in financial distress or were likely to be in financial distress as a consequence of near term debt covenant issues such as Mirvac Real Estate Investment Trust, Orchard Industrial Property Fund and Challenger Kenedix Japan Trust

Other observations on the above transactions:

as discussed in Section 4, on 27 August 2010, IIF announced the sale of its 50% interest in Summit, which was completed in November 2010. The transaction formed part of IIF’s strategic plans to shift its investment focus to Australia and exit its overseas investments to bridge the discount to NTA and reducegearing

in October 2010, Dexus Wholesale Property Fund completed the acquisition of 13 of Colonial Direct Property Investment Fund’s industrial assets for a purchase price of $230 million. The properties are located in Sydney, Melbourne and Brisbane and were targeted by Dexus Wholesale Property Fund as part of its plan to increase its AUM allocation to industrial property to between 10% and 20%, by constructing a diversified industrial portfolio of properties primarily located near key infrastructure and employment hubs. The Dexus Wholesale Property Fund portfolio pursuant to the transaction would be 11% industrial, 57% retail and 32% office assets

on 27 September 2010 CFS Retail Property Trust completed the acquisition of four retail direct factory outlets (DFOs) from Austexx Proprietary Limited for a total purchase price of $498 million (excluding transaction costs) which represented a discount of 2% to the most recent independent valuation of these assets

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on 23 September 2010, CommonWealth REIT, a publicly traded U.S. REIT listed on the New York Stock Exchange, acquired all of the units of MacarthurCook Industrial Property Fund for $0.44 per unit, which represented a 34% discount to the 31 December 2009 NTA of the fund of $0.67. The fund had significant debt maturing in August 2010

in April 2010, Mirvac announced that it had completed the acquisition of all units in Westpac Office Trust via a scrip and/or cash offer. The implied value of the scrip offer and the cash offer, represented a 2.4% premium to the trust’s stated NTA as at 31 December 2009, which was 6 months prior to the completion of the transaction at a time when office rents and capitalisation rates were beginning to stabilise. At the time Westpac Office Trust had gearing of approximately 62%.

in February 2010, Charter Hall Group effectively acquired Macquarie Group’s real estate management platform, including interests in the underlying investment properties, through acquiring the management rights of Macquarie Office Trust, Macquarie Countrywide Trust and three unlisted funds for $189.0 million. The purchase price represented a 23% discount to NTA as at 31 December 2009

in December 2009, a consortium including Lend Lease managed funds acquired the 14 assets of the $1.4 billion ING Retail Property Fund

in December 2009 Challenger Life Company Limited acquired all the issued units in Challenger Kenedix Japan Trust that it does not already own, for a consideration of $1.00 for each unit in CKT. The transaction implied a discount to NTA of 44.6%. At the time of the transaction the trust had a gearing ratio of approximately 63% and was experiencing debt refinancing and covenant-breach risks, which made it likely that the trust will need to raise capital to address these risks

in December 2009, Mirvac Group acquired all the issued units in Mirvac Real Estate Investment Trust, an externally managed diversified property trust primarily invested directly in commercial, retail, industrial and hotel property Australian property assets. The purchase price represented a 30.1% discount to NTA as at 31 December 2009

in July 2009, Orchard Industrial Property Fund, which holds a portfolio of 23 industrial properties, and Growthpoint Properties Limited entered into an agreement whereby the latter would recapitalise and restructure the trust, through a multi-stage transaction that included a $55.6 million placement and a $144.4 million rights issue underwritten by Growthpoint Properties Limited and an internalisation of the trust’s management. The transaction implied a discount to NTA of 11.1%

The consideration paid relative to NTA in the above transactions range between a premium of 2.4% and a discount of 44.6%.

Whilst any direct comparisons to the above transactions are limited, we consider that the Proposal metrics, in particular the implied discount to IIF’s NTA, compare favourably with other recent transactions in the A-REIT sector.

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5.2.5 Conclusion on fairness Our estimate of the fair market value of an IIF unit on an ex-distribution basis, compared to the value of the Consideration is set out in the table below.

Table 15: Fair market value of a unit in IIF compared to the Consideration

Low value ($) High value ($)

Fair market value of a unit in IIF $0.534 $0.550

Consideration $0.538 $0.538

Premium/(discount) to assessed value implied by the Consideration 0.7% -2.2%


As set out above, the fair market value of the Consideration is within the range of the fair market value of a unit in IIF. Accordingly, we have concluded that the Proposal is fair for Non-Associated Unitholders.

Our assessment of the reasonableness of the Proposal is discussed below.

5.3 Other considerations In accordance with RG 111 an offer is reasonable if it is fair. An offer might also be reasonable if, despite being ‘not fair’, the expert believes that there are sufficient reasons for Non-Associated Unitholders to accept the offer in the absence of any higher offer.

Other considerations in respect of the whether the Proposal is reasonable and in the best interests of Non-Associated Unitholders are set out in the introductory letter of this report.

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6 Evaluation of the Ancillary Transaction 6.1 Approach The Independent Directors have requested that Deloitte provide an opinion as to whether:


constitutes the receipt by REIM AP of a collateral benefit for the purposes of the Corporations Act as interpreted by GN21.

In determining whether the Ancillary Transaction is on arm’s length terms, we have considered:


ING Group’s review of the ING REIM business, which may include divestment, regardless of whether the Proposal is successful


We have also considered whether the consideration to be received for the Ancillary Transaction represents an arm’s length price. In particular, since the Ancillary Consideration as principally in consideration for ING forgoing the opportunity to receive revenue in respect of IML’s ongoing management of IIF we have had regard to:


an estimate of the fair market value of the IIF management rights having regard to a discounted cash flow analysis of the benefits forgone by REIM AP from managing IIF compared to the consideration received by REIM AP.

In determining whether there is a collateral benefit to ING, consistent with our understanding of the principles outlined in GN21 requiring an overall view of the transaction, we have undertaken both a quantitative and a qualitative analysis of the Ancillary Transaction which has included:

consideration of whether the Ancillary Transaction is at arm’s length as set out above having regard to the process undertaken in negotiating the Proposal and the Ancillary Transaction and the financial terms of the Ancillary Transaction


the price to be paid for ING’s existing interest in IIF

any other relevant considerations.

Our assessment of these factors is set out below.

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6.2 Overview of the management arrangements As discussed in Section 4.6, IML is currently entitled to receive a number of fees in respect of services currently provided to IIF which include:

base management fee and custody fee: IML is entitled to a fee as Responsible Entity amounting to the lesser of 0.675% of the total balance sheet assets and 9% of the net income for the distribution period. The fee is payable in arrears on a quarterly basis. Moreover, IML is also entitled to a custody fee of 0.09% of Australian and European assets. These fees are payable in arrears on a quarterly basis

Other fees: IML is entitled to acquisition and development and project management fees on normal commercial terms as follows:

o acquisition fee: IML charges an acquisition fee of 1% of the total consideration payable in respect of any acquisition of an overseas asset

o development management and project management fees: IML is entitled to charge development management fees which are to be determined on a project-by-project basis. These fees are typically in the region of 2% to 3% of development cost.

In addition, all expenses reasonably and properly incurred by IML in relation to the proper performance of its duties in respect of IIF are payable or reimbursable with the exception of any fees paid to an agent or delegate to hold title to any asset and fees paid by the Responsible Entity to compliance committee members. Further information on the remuneration and expenses are defined in the constitution of IIF.

The fees paid by IIF pursuant to these arrangements in recent periods are set out below:

Figure 17: Summary of management fees paid

Actual2008

($ million)

Actual2009

($ million)

Actual2010

($ million)

RE fees 9.9 5.8 5.01

Other fees paid to IML 2.9 3.0 0.5Total 12.8 8.8 5.5

Source: IML, Deloitte analysis

Note:

1. Since net income available for distribution declined significantly over 2009 and 2010 the base management fee over these periods declined. On a normalised basis management fees for FY10 were $7.5 million reflecting the removal of one-off adjustments

The responsible entity of IIF may be removed if an ordinary resolution is passed to terminate the current management arrangement provided at least 50% of the total votes cast vote in favour of the resolution. ING,which has a 7.9% voting interest in IIF would be entitled to vote on such a resolution.

Therefore, so long as investment performance continues to be satisfactory it is less likely that unitholders would seek to terminate the current arrangements. If the responsible entity’s performance falls below the expectations of unitholders at some time in the future, there is a range of possible scenarios including a renegotiation of the fees arrangements or a termination of the arrangements for a negotiated payment. There could also be a termination of the responsible entity for no consideration. However, if the existing responsible entity was removed, there could potentially be adverse consequences on the operations of IIF including change of control implications for IIF’s debt facilities and other arrangements. In addition there are various other challenges associated with replacing the responsible entity such as ensuring a transfer of knowledge from the existing management team to the new management team. F

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6.3 Arm’s length considerations

6.3.1 Introduction In determining whether the Ancillary Transaction is on arm’s length terms, we have considered the qualitative elements of the process, in particular the negotiation process undertaken, the commercial rationale for the transaction and the linkages between the Ancillary Transaction and the Proposal.

We have also considered whether the consideration to be received for the Ancillary Transaction represents an arm’s length price by performing a quantitative analysis of the financial terms of the Ancillary Transaction.

6.3.2 Negotiation process IML is a wholly-owned subsidiary of REIM AP which in turn is ultimately wholly-owned by ING Group. REI III, which is also ultimately wholly-owned by ING Group, which beneficially holds a total of 7.9% of the outstanding units in IIF.

In 2010 the Directors implemented a strategic review of the REIMA platform (as well as the underlying funds including IIF) to identify alternatives available to increase value for IIF unitholders through narrowing the gap to NTA at which the underlying funds traded.

Following an announcement by IREIMA that the strategic review of the global ING REIM business included a strategic review of the Australian platform in July 2010, Goodman Group confirmed to the market, its interest in obtaining the management rights to IIF. Goodman Group increased its stake in IIF from 4.4% to 7.1% in September 2010. On 28 October 2010, Goodman Group submitted a conditional incomplete offer to the Board of IML, on behalf of the Consortium Members. On 15 November 2010, after considering the merits of the revised proposal, the Board of IML agreed to grant GTA Trustee access to due diligence and to engage with the Consortium Members, in order to determine whether an acceptable transaction could be agreed. On 24 December 2010, following negotiations between IML and the GTA Trustee, the Board of IML announced that it had entered into an Implementation Agreement with GTA Trustee in respect of the Proposal.

Concurrently, but separate to the negotiation process for the Proposal REIM AP and REI III separately negotiated the Ancillary Transaction in order to facilitate the Proposal to assist in an orderly transition in the replacement of the responsible entity of IIF. On 24 December 2010 REIM AP and REI III entered into a facilitation deed with Goodman pursuant to which they agreed to use their reasonable endeavours to assist Goodman with certain matters including the following in return for cash consideration of $22.5 million:

obtaining certain consents or waivers in connection with, amongst other things, the ING Asset Management Agreements and ING Facilities

the transition of a number of employees engaged by IIF to Goodman (or as it directs)

the transfer of various know-how, books and records of IML as they relate to IIF to, and the vesting of assets of IIF in, Goodman RE (or as it directs).

The Proposal and the Ancillary Transaction were therefore separately negotiated transactions between Goodman and REIM AP and REI III in respect of the Ancillary Transaction and the GTA Trustee and IML in respect of the Proposal.

6.3.3 Relationship between the parties As discussed in Section 1.1, the Consortium Members are Goodman Group, Leader, CPPIB and APG.

Goodman Group is a property group with $16.2 billion in AUM that owns, develops and manages industrial property and business space globally. Leader is a wholly- owned subsidiary of CIC, a state-owned company based in China, which invests in equity, fixed income and alternative assets in both developed and emerging markets, as well as key state-owned financial institutions in China. F

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CPPIB invests the funds not needed by the CPP to pay current benefits and seeks to manage the plan’s long term liabilities via the acquisition of a diversified portfolio of public equity and private equity and fixed income instruments. APG administers over 30% of all collective pension schemes in the Netherlands and carries out collective pension schemes in a variety of sectors including education, government and construction sectors, cleaning and window-cleaning companies, housing corporations and energy and utility companies.

GTA Trustee is unrelated to ING and, with the exception of APG and the Goodman Group, has no financial interest in IIF. APG owns 0.65% and Goodman Group owns 7.09% of IIF’s units on issue.

GTA Trustee has undertaken extensive due diligence in relation to both the Proposal and the Ancillary Transaction, which would suggest that it has carefully considered the merits of the transactions and the consideration to be paid for each aspect of the Proposed Transaction.

Based on the negotiation process undertaken for the Proposed Transaction and the relationships that exist between the parties, nothing has come to our attention which would cause us to believe that the parties are not dealing at arm’s length.

6.3.4 Quantitative analysis

Approach We have also considered whether the consideration to be received for the Ancillary Transaction is on arm’s length terms having regard to:


an estimate of the fair market value of the IIF management rights having regard to a discounted cash flow analysis of the benefits forgone by REIM AP from managing IIF compared to the consideration received by REIM AP.

Our analysis for each of these approaches are set out individually below.

Benchmarking to market transactions Since the Ancillary Consideration is, in effect, compensation to ING for termination of the management rights of IIF, in order to assess whether the financial terms of the Ancillary Transaction are at arm’s length we have compared the Ancillary Consideration as a % of REIMA’s gross AUM related to IIF, as well as the relevant management fee multiple implied by the fair value of the IIF management agreement to recent merger and acquisition activity in the funds management sector, as set out below.

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Table 16: Consideration as a percentage of REIMA’s gross AUM

Unit

IIF property AUM as at 31 December 2010 $m 2,492

Base management fees:FY101 $m 7.5FY11 $m 7.5

Ancillary Consideration $m 22.5

Consideration as a % of IIF AUM % 0.90%

Implied multiple of base management feesFY10 times 3.0FY11 times 3.0

Source: IML, Deloitte analysis

Notes:

1. Management fees for FY10 have been normalised to remove one-off and non-recurring items

As set out above, the Ancillary Transaction implies a ratio of 0.90% of IIF’s AUM as at 31 December 2010 and a multiple of base management fees for FY11 of 3.0 times.

We have considered amounts paid to procure the management rights of A-REITs in comparable transactions involving the internalisation of the property, funds management and responsible entity functions. In addition, we have also identified other recent comparable transactions that include the procurement of management rights of A-REITs as set out below.

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Table 17: Internalisation comparable transactions

Entity DateConsideration

($ million)

Gross asset value

($ million)

Consideration to gross

assets (%)

Historical management fee multiple4

Forecast management fee multiple4

Management internalisationsMacquarie Leisure Trust Jun-09 17.0 623 2.73% 5.5 6.42

GEO Property Trust May-08 2.5 809 0.31% 0.6 0.52

Macquarie ProLogis Trust Jun-07 22.0 1,690 1.30% n/a n/aAverage 1.45%1 3.1 3.5 Other transactions involving management rightsBecton3 Oct-10 n/a n/a n/a n/a n/aWestpac Office Trust Jun-10 15 1,147 1.31% 3.4 3.6Macquarie DDR Trust Jun-10 7 1,562 0.45% 0.7 1.1Macquarie Group (real estate management platform) Feb-10 108 7,186 1.50% 3.6 3.8Orchard Industrial Trust Aug-09 6 642 0.93% 4.3 3.2B&B Japan Property Trust Apr-09 22.1 2,300 0.96% n/a n/aB&B Capital Limited Mar-09 5 6,443 0.08% n/a n/aB&B Wind Partners Dec-08 40 5,619 0.71% n/a n/aB&B Communities Nov-08 17.5 1,519 1.15% 2.2 n/aDB RREEF Feb-08 2605 8,752 2.97% 3.9 n/aLachlan Property Group Dec-07 42.4 450 9.42% n/a n/aRubicon Holdings Dec-07 327.7 5,140 6.38% n/a n/aAverage 2.09%1 3.0 2.9

Source: Mergermarket, Connect4, ASX announcements, transaction disclosures, Deloitte analysis

Notes:

1. Weighted average based on gross asset value

2. Calculated as current AUM times base management fee

3. In October 2010 Becton Property Group Limited entered into a share sale agreement to sell its funds management business, Becton Investment Management Limited, to 360 Capital Group. The acquisition will be executed through an initial cash payment plus an agreed revenue share agreement. Estimation of valuation metrics for the acquisition is not possible since the financial terms of the agreement were not announced

4. Excludes performance fees

5. The consideration paid was $130 million for a 50% stake in DB RREEF. This has been grossed up to 100% for the purpose of comparison.

6. n/a: not available or not applicable

We have not considered any earnings multiples for these transactions as the management vehicle in these transactions was generally internal and therefore separate earnings before interest and tax (EBIT) or net profit after tax (NPAT) information is not publicly available for the estimation of earnings multiples.

The consideration paid to acquire the management and/or responsible entity rights in the comparable transactions averages 1.45% of gross assets under management for the internalisations of fund managers, and 2.09% for transactions involving the acquisition of management rights. The average forecast management fee multiples for the transactions that we consider broadly relevant to our analysis range between 3.5 for the internalisation of fund managers and 2.9 times for transactions involving the acquisition of management rights. F

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We note the following in relation to the above transactions:

the range of percentages of AUM set out above reflects the differing growth prospects and risks of those businesses. Each transaction is driven by a unique combination of factors including asset class, investor base and gearing levels of the funds being managed as well as synergies available and the level of competitive tension at the time of the transaction

we consider that transactions that have occurred prior to 2009 are unlikely to be reflective of current market pricing of transactions involving internalisation of management, and accordingly we have placed less emphasis on these transactions in our analysis. In particular, these transactions reflected a significant expectation of growth in AUM due to rising asset prices and the launching of new funds that is unlikely to exist in the current environment

a number of the transactions identified involved assets or managers either in financial distress or were compelled to deleverage, which likely resulted in the pricing for these transactions not being reflective of a ‘pure’ fair market value. For example:

o the transactions involving the sale of rights in Babcock & Brown was part of a wider group of transactions involving the sale of distressed assets, including the internalisation of Babcock & Brown Japan Property Trust, Babcock & Brown Capital Limited and Babcock & Brown Wind Partners. Furthermore, the majority of the Babcock & Brown’s funds were invested in a variety of sectors, including telecommunications and global directory companies, wind farms, residential property development and retirement and aged care facilities

o Allco Finance Group Limited was placed in administration in November 2008, less than 12 months after the purchase of Rubicon, and was subsequently placed in liquidation. The Rubicon transaction is under investigation in the Federal Court together with other transactions leading up to the collapse of Allco Finance Group Limited

o in June 2010 Macquarie DDR Trust was acquired by EPN GP LLC for the purposes of refinancing outstanding revolver debt facilities, in addition to allowing for increased focus on leasing activities. Macquarie DDR Trust’s activities are largely retail investments in US-based shopping centres

the rationale behind the acquisition of Westpac Office Trust by Mirvac Group in June 2010 was to primarily reduce the group’s relatively high gearing level (approximately 62%), particularly given that its debt facilities were due for refinancing in June 2011. As part of the acquisition Mirvac Group acquired the management rights related to Westpac Office Trust

in February 2010 Charter Hall Group effectively acquired Macquarie Group’s real estate management platform to gain diversification benefits, position itself as one of Australia’s largest specialist real estate fund managers and achieve EPU accretion. The transaction included acquiring the management rights of Macquarie Office Trust, Macquarie Countrywide Trust and three unlisted funds for $108.0 million, which was expected to reduce Charter Hall Group’s look-through gearing from 38.5% to 33.5%

we do not consider the Macquarie Leisure Trust internalisation and GEO Property Trust transactions to be comparable due to the nature of the underlying assets in these funds

As set out above, the Ancillary Consideration as a percentage of AUM and as a multiple of base management fees is within the range, although at the bottom end of the ranges observed in comparable transactions. Weconsider this reasonable since:

we consider the Westpac Office Trust and Macquarie Group’s real estate management platform transactions to be the most comparable to the Ancillary Transaction, given the rationale behind these transactions and the asset classes to which investment managers are exposed. The average consideration to gross AUM ratio for these transactions is 1.4%, while the average forecast management fee multiples for these transactions was 3.7

IIF has limited growth prospects for management fees relative to the majority of the comparable transactions which were either negotiated in a different economic environment or on the assumption that AUM/FUM would grow significantly from the existing levels F

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As discussed above, IIF pays base management fees amounting to the lesser of a range between 0.65% and 0.675% of the total assets under management (depending on the country in which the asset is held) or 9% of distributable net income. Given the current asset base and net income expectations for IIF, it is likely that management fees will be based on 9% of distributable net income for the foreseeable future. As IIF’s management fee arrangements were negotiated in 1985, these arrangements may not be reflective of the current environment as they are less favourable to REIMA compared to more recent mandates which are generally asset-based fees.

Based on the above analysis, is the valuation benchmarks implied by the Ancillary Transaction are not inconsistent with the benchmarks implied by recent market internalisations.

Discounted cash flow analysis

Summary and conclusion In addition to the benchmarking above, in order to assess whether the financial terms of the Ancillary Transaction are at arm’s length we have also compared the benefits received by REIM AP, being the value ofthe Ancillary Consideration, to the benefits provided by REIM AP, which is represented by the net income or cash flow which would otherwise be generated by REIM AP in respect of the IIF management rights in the absence of the Ancillary Transaction.

In undertaking the quantitative analysis, we have also had regard to:

what we consider to be the commercial substance of the Ancillary Transaction

whether the benefits provided have special value to REIM AP.

GN21 recognises that a transaction may confer a collateral benefit even though it is at fair market value and consequently does not require the measurement of net benefit by reference to fair market value.

Having regard to the total benefits provided by REIM AP, compared to the benefits received by REIM AP, on balance there is, prima facie, no net benefit. A summary of our analysis is set out in the table below.

Table 18: Comparison of the fair market value of the IIF management agreement with the Ancillary Transaction Consideration

Unit Low High

Benefits received by REIM APValue of Ancillary Consideration $m 22.5 22.5

Benefits provided by REIM APBenefit to REIM AP of IIF management rights $m 19.3 27.7

Net economic cost (benefit) to REIM AP $m (3.2) 5.2


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We note that the above analysis results in a relatively wide range of values for the net benefits to REIM AP. This is as a consequence of the inherent uncertainty in the future cost structure of REIMA (which includes management of IIF as well as 4 other funds) due to the strategic review of the business by ING Group as any future scenario would require a significant restructure of the platform which would impact the expected cost structure.

Value of the benefits received Under the terms of the Ancillary Transaction, the total consideration payable by Goodman to REIM AP (or as it directs) under the Ancillary Transaction will be a lump sum payment of $22.5 million, payable within 10 business days from the Implementation Date related to the Proposal.

In exchange for the Ancillary Consideration, an entity within the Goodman Group will fully acquire the IIF management rights from REIM AP, and Goodman Group will manage IIF on behalf of GTA Trustee, with IIF becoming a sub-trust of GTA.

Value of the net income/ cash flows forgone by REIM AP In determining the present value of the net income that will be foregone under the management agreements following the sale of the IIF management rights we have had regard to a detailed financial model prepared by IML management which includes discrete projections of cash flows that reflect the operations of IIF over the period from 1 January 2011 to 30 June 2015 (the IIF Model). However, due to ING Group’s review of the ING REIM business, limited information is available in respect of the expected future cost structure of REIMA or for the IIF assets in particular.

As a result, in order to estimate the net benefits to REIM AP as a consequence of the Ancillary Transaction utilising the DCF analysis we have considered the following:

Management fees received IIF pays base management fees amounting to the lesser of 0.675% of the total assets under management or of 9% of net income distributed. Given the current asset base and distribution expectations for IIF, it is likely that management fees will be based on 9% of distributable net income for the foreseeable future. As IIF’s management fee arrangements were negotiated in 1985, these arrangements may not be reflective of the current environment as they are less favourable to IML compared to more recent mandates which are generally asset-based fees.

In order to estimate the future management fees which would likely be earned by REIM AP in the absence of the Ancillary Transaction we have considered the expected net income and distribution profile for IIF having regard to the IIF Model which projects net income for the fund on a property by property basis, taking into account rental income growth in line with expected inflation, which is assumed at 3% per annum, as well as projected expiries. For the purpose of estimating future net income for IIF post-refinancing, we have assumed the current margins on IIF’s facilities up until their assumed refinancing in April 2011, and at 250 bps over the BBSW rate thereafter having regard to the margins observed on recent debt refinancing in the sector.

In addition to the above we have assumed the following for the purpose of our analysis:

an annual custody fee equal to 0.09% of total gross value of IIF’s AUM based on the existing contractual arrangements for the fund.

property management fees of $0.3 million annually

development fee revenue based on 2% of IIF’s development costs.

Cost Structure As discussed above, due to ING Group’s strategic review of the REIMA platform, which may include an exit over the short term, limited information is available in respect of the expected future cost structure of REIMA or for the IIF assets. F

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In assessing the likely cost structure attributable to managing IIF’s assets we have had regard to the current cost structure of REIMA AP noting that these costs are incurred in managing all 5 funds of REIM AP and any specific allocation of costs to managing IIF’s assets with any degree of precision is difficult. In particular, since investment property management is a highly scalable business model a large proportion of costs tend to be relatively fixed in nature and these fixed costs are shared across a number of funds. Therefore, in considering the future cost structure of managing IIF in the absence of the Proposed Transaction we have considered:

an estimate of the costs incurred by IML for FY10 and FY11 in managing IIF based on an allocation of the total costs of REIMA which are likely to be attributable to IIF having regard to an analysis prepared by IML management of head count, nature of assets and relative amount of management time and other resources utilised. Based on this analysis, the allocation of total REIMA costs applicable to managing IIF for FY10 and FY11 was 25%. We have then considered that the variable component of these costs would grow in line with growth in the asset base and earnings of IIF as discussed above

as mentioned above, REIMA is in a period of transition/restructure. In the event that REIMA continued to manage IIF for the foreseeable future a restructure of REIMA would be required which would likely impact the existing cost structure. Therefore we have also considered an estimate of a maintainable or target earnings margin (or cost to income ratio) that REIM AP (or any other manager) would likely target over the longer term. Having regard to discussions with REIMA management and an analysis of current and forecast margins for broadly comparable property fund managers, we have utilised a target earnings before interest and tax, depreciation and amortisation (EBITDA) margin of 35% for the purpose of this analysis.

Term In order to estimate the future management fees payable by IIF to REIMA, we have considered the likely term over which management agreements with REIMA would remain in place, the likelihood of early termination of these agreements and the impact of such potential termination.

Given that Unitholders have the right to terminate the management agreement with REIMA at any point in time, it can be argued that the valuation of management fees related to IIF should be assessed over their legal life or an otherwise relatively short period, due to uncertainty over the timing of any potential terminations. However, historical evidence shows that buyers of comparable management agreements in Australia are likely to price these arrangements assuming they would continue in place for periods longer than their legal life.

We are of the view that it is likely to be extremely difficult for the current arrangements for the Australian assets to be easily terminated without significant pre-planning to address the transition and change of control issues in the event that the manager is replaced. As such, whilst the current management arrangements are not a perpetual right, it is a matter of judgement as to the likely future term under the current arrangements.

Accordingly, we have assessed the cash flows related to management fees relating to IIF and the cost for REIMA to manage these funds assuming the management agreements continue in place indefinitely. We have therefore incorporated a terminal value in our analysis, using a terminal growth rate of 3%.

Other considerations In addition to the above, we have made the following assumptions in respect of estimating the benefits forgone by REIM AP as a consequence of the Ancillary Transaction:

the corporate tax rate of 30% is applicable to the net income of REIM AP a discount rate in the range of 11.5% to 12.5% for the reasons discussed in Appendix 4.

6.3.5 Conclusion We have estimated the fair market value of the IIF management agreement to be in the range of $19.3 million to $27.7 million, as summarised in Table 18 above.

Based on the information made available to us, which included discussions with IML, nothing has come to our attention that would cause us to believe that the Ancillary Transaction is not at arm’s length.F

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6.4 Collateral Benefit considerations

6.4.1 Approach We have had regard to GN21 in assessing whether anything has come to our attention to cause us to believe the consideration payable to REIM AP under the Ancillary Transaction would constitute the receipt by REIM AP or any of its parties of a ‘collateral benefit’ for the purposes of the Corporations Act.

Under GN21, a collateral benefit exists if it violates the equity principle, which states that if the bidder provides a security holder something of value which it does not offer to other security holders, the Panel may conclude that a collateral benefit has been given which gives rise to unacceptable circumstances. In determining whether there is a collateral benefit, the test is one of a ‘net benefit’.

In assessing whether a collateral benefit exists, we have undertaken both a quantitative and a qualitative analysis of the Ancillary Transaction, as set out below.

6.4.2 Quantitative analysis For the purposes of our quantitative analysis in relation to whether the Ancillary Transaction would constitute the receipt by REIM AP or any of its parties of a collateral benefit, we have had regard to our analysis of whether the consideration is on arm’s length terms, as well as whether anything has come to our attention which would indicate that the consideration represents a net benefit to REIM AP as set out Section 6.3 by assessing the benefits received by REIM AP relative to those foregone to Goodman.

As set out in Table 18, the fair market value of the IIF management agreement is in line with the value of the Ancillary Transaction Consideration. Accordingly, we conclude that nothing has come to our attention which would indicate that the consideration payable to REIM AP under the Ancillary Transaction constitutes the receipt by REIM AP or any of its parties of a collateral benefit for the purposes of the Corporations Act.

6.4.3 Qualitative analysis Under the second part of our analysis, we considered other benefits and advantages flowing to and from REIM AP from the Ancillary Transaction.

Commercial advantages flowing from REIM AP The Proposed Ancillary Transaction facilitates the following:

the benefit of rights to certain intellectual property owned by ING (which will be licensed to Goodman Group) and employee records and other know-how related to IIF the provision of services which will assist in the transition of the management of IIF from IML/REIM AP to Goodman Group will result in REIM AP foregoing the opportunity to earn future management, performance and advisory fees.

Moreover, IML must obtain all relevant consents and waivers required in respect of material change of control issues as defined in the IIF Scheme Facilitation Deed related to the Ancillary Transaction.

Commercial advantages flowing to REIM AP The Proposed Ancillary Transaction allows REIM AP to realise value for the existing management agreements at a time when ING Group is undertaking a strategic review of the global ING REIM platform which could include the divestment of the REIMA platform (inclusive of the IIF management rights). ING and related entities currently have a beneficial interest in IIF of approximately 7.9%. If the Proposal is implemented, ING's holding of IIF units will be transferred to GTA as part of the Proposal and ING will receive the same Consideration as the Non-Associated Unitholders. The Ancillary Transaction does not provide any requirement on the disposal or voting of the units in IIF held by ING and ING retains absolute discretion on the exercise of the voting rights and disposal of these units.

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6.5 Conclusion Having regard to the basis of our evaluation, the limitations set out in this report and the results of our analysis, nothing has come to our attention to cause us to believe that the consideration payable to REIM AP under the Ancillary Transaction:

is not on arm’s length termswould constitute the receipt by REIM AP of a collateral benefit.

Moreover, nothing has come to our attention in respect of the Ancillary Transaction that would cause us to change the conclusions we have reached in relation to the Proposal.

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Appendix 1: Glossary

Reference Definition

31 December Distribution A distribution of $0.008 per unit ($21 million in total) to Unitholders, which has been declared for the quarter ended 31 December 2010 and will be paid in February 2011

AFFO Adjusted funds from operation

Amendment Resolution Special resolution for the purpose of Section 601GC(1) of the Corporations Act to approve the amendments to the IIF constitution

Ancillary Consideration $22.5 million, being the amount to be received by REIM AP for, among other things, the giving up by ING of its opportunity to receive revenue in respect of the ongoing management of IIF by IML

Ancillary Transaction A transaction whereby ING would assist Goodman to implement the Proposal and with the orderly transition in the replacement of the responsible entity of IIF

Announcement Date, the 24 December 2010

APESB Accounting Professional and Ethical Standards Board Limited

APG Dutch pension fund Algemene Pensioen Groep

Approval Resolution Ordinary resolution by Unitholders approving for all purposes, including for the purposes of Section 611, the steps required to implement the Proposed Transaction

A-REIT Australian real estate investment trust

A-REIT Index S&P/ASX A-REIT index

ASIC Australian Securities and Investments Commission

ASX Australian Securities Exchange Limited

AUASB Auditing and Assurance Standards Board

AUD Australian dollars

AUM Assets under management

bps Basis points

CAGR Compound annual growth rate

CIC China Investment Corporation

Consideration Cash consideration equal to $0.546 per unit on a cum-distribution basis offered by GTA Trustee under the Proposal

Consortium Member Goodman, Leader, CPPIB and APG

CPPIB CPPIB US RE-3 (Canadian Pension Plan Investment Board )

cpu Cents per unit

Deloitte Deloitte Corporate Finance Pty Limited

Directors, the Board of Directors of IML

EBIT Earnings before interest and tax

EBITDA Earnings before interest, tax, depreciation and amortisation

Exchangeable Notes 3,950 IIF preference securities on issue, with a total face value of approximately $395 million

FIRB Foreign Investment Review Board

FSG Financial Services Guide

FUM Funds under management

Fund, the ING Industrial Fund

FY Financial year

GDP Gross domestic product

GFC Global financial crisis

GN15 Takeovers Panel Guidance Note 15

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Reference Definition

GN21 Takeovers Panel Guidance Note 21: Collateral Benefits

Goodman Goodman Limited

Goodman Group Goodman Funds Management Limited in its capacity as responsible entity for the Goodman Industrial Trust

IER Independent expert’s report

IIF ING Industrial Fund

IIF Model The detailed financial model prepared by IML management which includes discrete projections of cash flows that reflect the operations of IIF over the period from 31 December 2010 to 30 June 2015

IIF Subordinated Bonds IIF preference units that are partly paid, perpetual, subordinated, deferrable and non-cumulative bonds issued by IML

IML ING Management Limited

Implementation Date 30-Mar-11

Independent Directors Independent Directors of IML

ING REIM AP and the REI III

JPM ENF JPMorgan Australia Exchangeable Note Funding Trust No. 2

Kd Cost of debt capital

Ke Cost of equity capital

NPAT Net profit after tax

NTA Net tangible assets

Proposal Proposal under which the Consortium Members would acquire all the ordinary units of IIF, for cash consideration equal to $0.546 per unit on a cum-distribution basis via a trust scheme of arrangement

Proposed Transaction, the The Proposal and the Ancillary Transaction

RE Responsible Entity

REI III ING Real Estate International Investment III B.V

REIM AP ING Real Estate Investment Management Asia/Pacific B.V.

REIMA ING Real Estate Investment Management Australia Pty Limited

Responsible Entity The responsible entity of IIF

Rf Risk free rate of return

Rm Expected return on the market portfolio

RMB Chinese Renminbi

S&P Standard and Poor’s

Section 611 item 7 of section 611 of the Corporations Act

Summit ING Summit Industrial Fund LP

Unitholders IIF’s unitholders

VWAP Volume weighted average price

WACC Weighted average cost of capital

WACR Weighted average capitalisation rate

WALE Weighted average lease expiry For

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App

endi

x 2:

Sum

mar

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73 Del

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G In

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For

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n For

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sona

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Appendix 3: Valuation methodology To estimate the fair market value of the securities the subject of the Proposal, we have considered common market practice and the valuation methodologies recommended by ASIC Regulatory Guide 111, which deals with the content of IERs. These are discussed below.

Market based methods Market based methods estimate a company’s fair market value by considering the market price of transactions in its securities or the market value of comparable companies. Market based methods include:

capitalisation of maintainable earnings (CME)

analysis of a company’s recent security trading history

industry specific methods.

The CME method estimates fair market value based on the company’s future maintainable earnings and an appropriate earnings multiple. An appropriate earnings multiple is derived from market transactions involving comparable companies. The CME method is appropriate where the company’s earnings are relatively stable.

The most recent security trading history provides evidence of the fair market value of the securities in a company where they are publicly traded in an informed and liquid market.

Industry specific methods estimate market value using rules of thumb for a particular industry. Generally rules of thumb provide less persuasive evidence of the market value of a company than other valuation methods because they may not account for company specific factors.

Discounted cash flow methods Discounted cash flow methods estimate market value by discounting a company’s future cash flows to a net present value. These methods are appropriate where a projection of future cash flows can be made with a reasonable degree of confidence. Discounted cash flow methods are commonly used to value early stage companies or projects with a finite life.

Asset based methods Asset based methods estimate the market value of a company’s securities based on the realisable value of its identifiable net assets. Asset based methods include:

orderly realisation of assets method

liquidation of assets method

net assets on a going concern basis.

The orderly realisation of assets method estimates fair market value by determining the amount that would be distributed to unitholders, after payment of all liabilities including realisation costs and taxation charges that arise, assuming the company is wound up in an orderly manner.

The liquidation method is similar to the orderly realisation of assets method except the liquidation method assumes the assets are sold in a shorter time frame. Since wind up or liquidation of the company may not be contemplated, these methods in their strictest form may not necessarily be appropriate. The net assets on agoing concern basis method estimates the market values of the net assets of a company but does not take account of realisation costs.

These asset based methods ignore the possibility that the company’s value could exceed the realisable value of its assets as they ignore the value of intangible assets such as customer lists, management, supply arrangements and goodwill. Asset based methods are appropriate when companies are not profitable, a significant proportion of a company’s assets are liquid, or for asset holding companies. F

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Industry specific methods Industry rules of thumb estimate fair market value by applying an industry specific benchmark to the operating data of a company. Industry rules of thumb are commonly used as a cross-check to consider the reasonableness of the valuations derived using other methods. In the funds management industry, the value of a business is frequently assessed by reference to a percentage of funds under management (“FUM”). The FUM method does not reflect company specific factors such as risk profile, profitability, the perceived ability of the management team and future prospects of a particular business.

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WACC EV

KeDV

Kd* * ( )1 tcWACC EV

KeDV

Kd* * ( )1 tcWACC EV

KeDV

Kd* * ( )1 tc

aRRRK fmfe aRR RR )((R

Appendix 4: Discount rate The discount rate used to equate the future cash flows to their present value reflects the risk adjusted rate of return demanded by a hypothetical investor for the asset or business being valued.

Selecting an appropriate discount rate is a matter of judgement having regard to relevant available market pricing data and the risks and circumstances specific to the asset or business being valued.

Whilst the discount rate is in practice normally estimated based on a fundamental ground up analysis using one of the available models for estimating the cost of capital (such as the Capital Asset Pricing Model (CAPM)), market participants often use less precise methods for determining the cost of capital such as hurdle rates or target internal rates of return and often do not distinguish between investment type or region or vary over economic cycles. Since our definition of fair market value is premised on the estimated value that a knowledgeable willing buyer would attribute to the asset or business, our selection of an appropriate discount rate needs to consider that buyers incorporate other alternatives to the typical CAPM approach in estimating the cost of capital.

For ungeared cash flows, discount rates are determined based on the cost of an entity’s debt and equity weighted by the proportion of debt and equity used. This is commonly referred to as the weighted average cost of capital (WACC).

The WACC can be derived using the following formula:

Ke = cost of equity capital

Kd = cost of debt

tc = corporate tax rate

E/V = proportion of enterprise funded by equity

D/V = proportion of enterprise funded by debt

The adjustment of Kd by (1- tc) reflects the tax deductibility of interest payments on debt funding. The corporate tax rate has been assumed to be 30%, in line with the Australian corporate tax rate and expected tax shield benefit for REIMA.

Cost of equity capital (Ke) The cost of equity, Ke, is the rate of return that investors require to make an equity investment in a firm.

We have used the CAPM to estimate the Ke. CAPM calculates the minimum rate of return that the company must earn on the equity-financed portion of its capital to leave the market price of its shares unchanged. The CAPM is the most widely accepted and used methodology for determining the cost of equity capital.

The cost of equity capital under CAPM is determined using the following formula:

The components of the formula are:

Ke = required return on equity

Rf = the risk free rate of return

Rm = the expected return on the market portfolio

β = beta, the systematic risk of a stock

α = specific company risk premium

Each of the components in the above equation is discussed below.

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Risk free rate (Rf) The risk free rate compensates the investor for the time value of money and the expected inflation rate over the investment period. The frequently adopted proxy for the risk free rate is the long-term government bond rate. The 10-year bond rate is a widely used and accepted benchmark for the risk free rate in Australia. As we have considered the value of the asset cost savings over a period in excess of 10 years we have had primary regard to the 10 year risk-free rule.

Since there is no zero-coupon government bond issued by the Australian Government, we have utilised the zero coupon bond yield calculated by Thomson Reuters, which excludes the coupon payments from the 10-year Australian Government Bond, for the AUD denominated projected cash flows. In determining the risk free rate, we have taken the 5-day average of the zero coupon 10-year Australian Government Bond yield for the period ending 12 January 2011 of 5.69%. This rate represents a nominal rate and thus includes inflation.

Equity market risk premium (EMRP)The EMRP (Rm – Rf) represents the risk associated with holding a market portfolio of investments, that is, the excess return a shareholder can expect to receive for the uncertainty of investing in equities as opposed to investing in a risk free alternative. The size of the EMRP is dictated by the risk aversion of investors – the lower (higher) an investor’s risk aversion, the smaller (larger) the equity risk premium.

The EMRP is not readily observable in the market and therefore represents an estimate based on available data. There are generally two main approaches used to estimate the EMRP, the historical approach and the prospective approach, neither of which is theoretically more correct or without limitations. The former approach relies on historical share market returns relative to the returns on a risk free security; the latter is a forward looking approach which derives an estimated EMRP based on current share market values and assumptions regarding future dividends and growth.

In evaluating the EMRP, we have considered both the historically observed and prospective estimates of EMRP.

Historical approach The historical approach is applied by comparing the historical returns on equities against the returns on risk free assets such as Government bonds, or in some cases, Treasury bills. The historical EMRP has the benefit of being capable of estimation from reliable data; however, it is possible that historical returns achieved on stocks were different from those that were expected by investors when making investment decisions in the past and thus the use of historical market returns to estimate the EMRP would be inappropriate.

It is also likely that the EMRP is not constant over time as investors’ perceptions of the relative riskiness of investing in equities change. Investor perceptions will be influenced by several factors such as current economic conditions, inflation, interest rates and market trends. The historical risk premium assumes the EMRP is unaffected by any variation in these factors in the short to medium term.

Historical estimates are sensitive to the following:

the time period chosen for measuring the average

the use of arithmetic or geometric averaging for historical data

selection of an appropriate benchmark risk free rate

the impact of franking tax credits

exclusion or inclusion of extreme observations.

The EMRP is highly sensitive to the different choices associated with the measurement period, risk free rate and averaging approach used and as a result estimates of the EMRP can vary substantially.

We have considered the most recent studies undertaken by the Centre for Research in Finance at the Australian Graduate School of Management (AGSM), Morningstar Inc (Morningstar), ABN AMRO/London Business School and Aswath Damodaran (Damodaran). These studies generally calculate the EMRP to be in the range of 5% to 8%.

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Prospective approach The prospective approach is a forward looking approach that is current, market driven and does not rely on historical information. It attempts to estimate a forward looking premium based on either surveys or an implied premium approach.

The survey approach is based on investors, managers and academics providing their long term expectations of equity returns. Survey evidence suggests that the EMRP is generally expected to be in the range of 6% to 8%.

The implied approach is based on either expected future cash flows or observed bond default spreads and therefore changes over time as share prices, earnings, inflation and interest rates change. The implied premium may be calculated from the market’s total capitalisation and the level of expected future earnings and growth.

Selected EMRP We have considered both the historically observed EMRP and the prospective approaches as a guideline in determining the appropriate EMRP to use in this report. Australian studies on the historical risk premium approach generally indicate that the EMRP would be in the range of 5% to 8%.

In recent years it has been common market practice in Australia in expert’s reports and regulatory decisions to adopt an EMRP of 6%.

Having considered the estimated EMRP under various approaches and their relative limitations, we consider an EMRP of 6.0% to be appropriate.

Beta estimate (β)

Description The beta coefficient measures the systematic risk or non-diversifiable risk of a company in comparison to the market as a whole. Systematic risk, as separate from specific risk as discussed below, measures the extent to which the return on the business or investment is correlated to market returns. A beta of 1.0 indicates that an equity investor can expect to earn the market return (i.e. the risk free rate plus the EMRP) from this investment (assuming no specific risks). A beta of greater than one indicates greater market related risk than average (and therefore higher required returns), while a beta of less than one indicates less risk than average (and therefore lower required returns).

Betas will primarily be affected by three factors which include:

the degree of operating leverage employed by the firm in that companies with a relatively high fixed cost base will be more exposed to economic cycles and therefore have higher systematic risk compared to those with a more variable cost base

the degree of financial leverage employed by a firm in that as additional debt is employed by a firm, equity investors will demand a higher return to compensate for the increased systematic risk associated with higher levels of debt

correlation of revenues and cash flows to economic cycles, in that companies that are more exposed to economic cycles (such as retailers), will generally have higher levels of systemic risk (i.e. higher betas) relative to companies that are less exposed to economic cycles (such as regulated utilities).

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The betas of various Australian industries listed on the ASX are reproduced below and provide an example of the relative industry betas for a developed market.

Figure 18: Betas for various industries (as at 30 September 2010)

Source: AGSM Risk Management Service

The differences are related to the business risks associated with the industry. For example, the above diagram indicates transportation companies are more correlated to overall market returns with a beta close to 1.0 whereas telecommunications and other infrastructure companies (in particularly those that are regulated) typically have betas lower than 1.0.

The geared or equity beta can be estimated by regressing the returns of the business or investment against the returns of an index representing the market portfolio, over a reasonable time period. However, there are a number of issues that arise in measuring historical betas that can result in differences, sometimes significant, in the betas observed depending on the time period utilised, the benchmark index and the source of the beta estimate. For unlisted companies it is often preferable to have regard to sector averages or a pool of comparable companies rather than any single company’s beta estimate due to the above measurement difficulties.

Market evidence In estimating an appropriate beta for the management rights of IIF we considered the betas of listed property fund managers with similar operations. As this is a limited sample and the nature of the funds managed and the operating characteristics of these companies are not directly comparable. We have also have considered the betas of listed A-REITs operating in the industrial sectors, as well as diversified A-REITs, given that REIMA’s performance is correlated with the underlying performance of the Australian property sector, including the industrial segment. We have calculated betas based on both weekly returns over the last two years as well as monthly returns over the last four years compared to the S&P/ASX 200 index. However, due to the structural deleveraging of the industry which has taken place over the last two years we consider the two year betas to be more relevant to the current structure and risk profile of the Australian properties market. These betas are presented below.

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Table 19: Analysis of betas for listed A-REITs and property fund managers

Comparable companies

Enterprise Average Gearing

(%)Levered

betaUnlevered

beta1value

(million)1

4 14IIF 2,801 84% 2.65 0.58

Industrial REITsGoodman Group 6,613 61% 2.40 1.15Growthpoint Properties Australia Ltd 700 53% 1.28 0.72Bunnings Warehouse Property Trust 912 24% 0.44 0.36Average 46% 1.37 0.74

Diversified A-REITsDexus Property Group 6,333 43% 1.11 0.71Australand Property Group 3,268 63% 1.33 0.55Challenger Diversified Property Group 626 40% 0.83 0.54Abacus Property Group 1,160 45% 0.56 0.31Charter Hall Group 1,714 62% 1.39 0.56Stockland Corporation Ltd 10,316 24% 1.25 1.03Mirvac Group 5,392 35% 1.57 1.16GPT Group 7,302 36% 1.89 1.42Average 44% 1.24 0.78

Property fund managersPeet Ltd 768 29% 0.58 0.45Over Fifty Group Ltd 28 0% 0.33 0.33APN Property Group Ltd 13 0% 2.02 2.02Average 10% 0.98 0.93

Source: Thompson Reuters, Deloitte analysis, Company annual reports and results presentations

Notes:

1. Betas have been unlevered using the two year average gearing

2. Averages and medians calculations exclude IIF

3. n/m: not meaningful

4. n/a: not available

Descriptions for each of the above companies are provided in Appendix 5.

The observed beta is a function of the underlying risk of the cash flows of the company, together with the capital structure and tax position of that company. This is described as the levered beta.

The capital structure and tax position of the entities in the table above may not be the same as those of REIMA. The levered beta is often adjusted for the effect of the capital structure and tax position. This adjusted beta is referred to as the unlevered beta. The unlevered beta is a reflection of the underlying risk of the pre-financing cash flows of the entity.

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Selected beta (β)In selecting an appropriate beta for REIMA we note the following:

as set out above, the average unlevered beta for property fund managers is 0.93

we have given particular consideration to the observed betas of property fund managers. We regard these companies to be most comparable to the management rights of IIF, as their revenues are driven by management fees which are primarily a percentage of total assets, and indirectly related to the performance of the property sector

the performance of the management rights is also likely to be correlated with the underlying performance of the industrial A-REIT sectors, given that IIF represents a significant portion of its core operations, as well as diversified A-REITs. Therefore, we consider it reasonable to select a beta that is broadly supported by observed betas in the A-REIT sector

IIF’s management fee structure is based on distributions which is relatively unique, therefore it is likely that the management fees revenues from IIF may exhibit slightly higher risk compared to other comparable industrial A-REITs and fund managers

the beta of Bunnings Warehouse Property Trust is relatively lower than the range of betas for the comparable A-REITs. This is likely due to the company’s economies of scale and lower revenue cyclicality relative to the market, given that it has 53 warehouses that are well diversified across Australia, average lease expiries of 9.3 years with conditions beyond current expiries that provide a secure stream of income and low levels of committed capital, which reduces cash flow volatility

based on the above, we consider that an unlevered beta range of 0.9 to 1.0 for the IIF management rights to be appropriate

for the purposes of re-levering our selected unlevered beta range we have considered a gearing ratio for REIMA based on that of comparable property fund managers, as unlike A-REITs, fund managers tend to not hold direct property investments and accordingly are likely to exhibit lower gearing levels. We consider a gearing level of 10% to be appropriate having regard to gearing levels of other fund managers and the nature of the earnings of REIMA

assuming an unlevered beta in the range of 0.9 to 1.0, a corporate tax rate of 30% and a debt to equity mix of 10% debt and 90% equity gives a re-levered beta in the range of 0.97 to 1.08.

On this basis we have selected a levered beta of 1.0 to 1.1 for REIMA.

Specific company risk premium (α)The specific company risk premium adjusts the cost of equity for company specific factors, including unsystematic risk factors such as company size, key person risks, customer/supplier dependencies, etc.

The CAPM assumes, amongst other things, that rational investors seek to hold efficient portfolios, that is, portfolios that are fully diversified. One of the major conclusions of the CAPM is that investors do not have regard to specific company risks (often referred to as unsystematic risk). However, there are several empirical studies that demonstrate that the investment market does not ignore specific company risks.

Selection of specific company risk premium We have selected a specific company risk premium in the range of 0.5% to 1.0%. In determining this amount we have had regard to the potential for terminating the management agreements. The management agreement can be terminated by unitholders of IIF through an ordinary resolution at any point in time. There is therefore a risk that IML could lose these management rights with or without receiving compensation and would no longer be entitled to the future stream of management fees. Whilst an element of this risk may be implicit in the beta’s observed for other fund manages, due to the existence of direct investment and other activities in these companies we do not consider this to be fully reflected in the observed beta. F

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Dividend imputation Dividends paid by Australian corporations may be franked, unfranked, or partly franked. A franked dividend is one that is paid out of company profits which have borne tax at the company rate, currently 30%. Where the shareholder is an Australian resident individual or complying superannuation fund, it will generally be entitled to a tax credit (called an imputation credit) in respect of the tax paid by the company on the profits out of which the dividend was paid. If the recipient of the dividend is another company, the dividend will give rise to a credit in that company’s franking account thereby increasing the potential of the company to pay a franked dividend at a later stage.

We have not adjusted the cost of capital or the projected cashflows for the impact of dividend imputation due to the diverse views as to the value of imputation credits and the appropriate method that should be employed to calculate this value. Determining the value of franking credits requires an understanding of shareholders’ personal tax profiles to determine the ability of shareholders to use franking credits to offset personal income. Furthermore, the observed EMRP already includes the value that shareholders ascribe to franking credits in the market as a whole. In our view, the evidence relating to the value that the market ascribes to imputation credits is inconclusive.

Conclusion on cost of equity Based on the above factors we arrive at a cost of equity, Ke, as follows:

Table 20: Ke of REIMA

Input Low High

Risk free rate (%) 5.7% 5.7%EMRP (%) 6.0% 6.0%Beta 1.0 1.1

Specific company risk premium (%) 0.5% 1.0%

Ke – calculated 12.2% 13.3%


Cost of debt capital (Kd) We have estimated REIMA’s cost of debt to be between 8.5% and 9.0%. This has been estimated after consideration of the following:

the syndicated debt facility of IIF is expected to be refinanced at a credit spread of around 225 bps over the Australian risk free rate, which implies a debt cost per annum of approximately 8.0%.

a number of comparable A-REITs have credit ratings of between BBB and A-. The respective average credit spread over the risk free rate for long term corporate bonds issued by these comparable companies range between 200 and 260 basis points. This implies a cost of debt per annum of between 7.6% and 8.3%

given that any debt financing REIMA would secure would be backed by its business cash flows as opposed to physical collateral as in the case of A-REITs, we consider that the cost of debt for REIMA would be between 50 bps to 100 bps higher than that for A-REITs

our selected level of gearing, as discussed below.

Debt and equity mix We consider the optimal debt to equity mix attributable to the management rights of IIF to be 10% debt and90% equity based on the average of comparable companies and the limited capital assets against which it could borrow funds.

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Calculation of WACC Based on the above, we have assessed the nominal post-tax WACC of REIMA to be:

Table 21: WACC applied to the valuation of Net Cost Savings

Low High

Cost of equity capital 12.2% 13.3%After-tax cost of debt capital 6.0% 6.3%Debt to enterprise value ratio 10% 10%Tax rate (%) 30% 30%WACC 11.6% 12.6%

Selected WACC 11.5% 12.5%


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Appendix 5: Descriptions of industrial A-REITs,diversified A-REITs and property fund managers Descriptions of entities that we have considered for the purpose of estimating an appropriate beta for the management rights of IIF (as discussed in Appendix 4) are set out below.

Industrial A-REITs

Goodman Group The profile of Goodman Group is discussed in Section 1.2.1.

Growthpoint Properties Australia Ltd Growthpoint Properties Australia is an Australian company which is engaged in the business of property investment. It invests in leased investment property within Australia and derives rental income from property investments. As of June 30 2010, the company held a portfolio of 24 investment properties. Its portfolio includes 22 single tenant properties and two dual tenant properties. The company's subsidiraries include Wholesale Industrial Property Fund, Rowville Property Trust, Kilsyth 1 Property Trust, Kilsyth 2 Property Trust, Queensland Property Trust, New South Wales Property Trust, Coolaroo Property Trust, Broadmeadows Leasehold Trust and Scoresby 1 Property Trust.

Bunnings Warehouse Property Trust Bunnings Warehouse Property Trust is engaged in property investment, and invests in geographically diversified properties with long-term leases to substantial tenants, in the bulky goods retail sector. The trust comprises warehouse retailing properties, particularly Bunnings Warehouse properties tenanted by Bunnings Group Limited, a wholly-owned subsidiary of Wesfarmers Limited. As of 30 June 2010, the trust owned 60 investment properties, all within Australia. The portfolio comprises 53 established Bunnings Warehouses, one development site, on which a Bunnings Warehouse is to be developed, one Bunnings distribution centre, four office warehouse industrial properties and one bulky goods showrooms complex. Bunnings Property Management Limited is the investment manager of the company.

Diversified A-REITs

Dexus Property Group Dexus Property Group owns, manages and develops real estate assets and manages real estate funds on behalf of third party investors. The company consists of Dexus Diversified Trust, Dexus Industrial Trust, Dexus Office Trust and Dexus Operations Trust. The company has six segments: office-Australia and New Zealand, industrial-Australia, industrial-North America, a management company, financial services and all other segments. The Office-Australia and New Zealand segment comprises office space with any associated retail space, as well as car-parks and office developments in Australia and New Zealand. Industrial-Australia segment comprises domestic industrial properties, industrial estates and industrial developments. Industrial-North America segment comprises industrial properties, industrial estates and industrial developments in the United States, as well as one industrial asset in Canada. All other segments comprise the European industrial and retail portfolios.

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Australand Property Group Australand Property Group is a diversified property group. The company is engaged in investment in income producing commercial, industrial and retail properties; commercial and industrial property development; residential development, including land, housing and apartments; property trust management, and property management. It operates in three divisions: residential, commercial and industrial and investment property. As at 31 December, 2009, the investment property division had a total portfolio of 70 properties, including 2 properties under development and 2 properties held for sale. The portfolio had a total lettable area of 1.2 million square meters and included a total of 169 tenancies. The company’s operations are located in Sydney, Melbourne, South East Queensland and Perth and a sales office in Hong Kong servicing the Asian market.

Valad Property Group Valad Property Group is an Australia-based company that conducts real estate investment management services in Australia and Europe, and real estate ownership primarily in Australia and New Zealand. It also operates in Europe through co-investment in the company’s managed funds. The company operates in four segments: Australia and New Zealand real estate ownership, European real estate ownership, Australia and New Zealand real estate investment management and European funds real estate investment management. The Australia and New Zealand real estate ownership segment consists of income producing properties, properties held for development and resale, property structured finance to external parties and joint ventures, and investments held in funds. The European funds real estate investment management segment establishes and manages listed and unlisted property funds within European region.

Challenger Diversified Property Group Challenger Diversified Property Group is an Australia-based company which consists of two stapled Australian registered investment schemes; Challenger Diversified Property Trust 1 and Challenger Diversified Property Trust 2. The principal activities of the company include investment in office, retail and industrial property portfolios, as well as pursuing property development activities and investment in a car parking operating business. Challenger Listed Investments Limited is the responsible entity of the group.

Abacus Property Group Abacus Property Group is an Australia-based company which, along with its subsidiaries, is engaged in investment in commercial, retail and industrial properties; property funds management; property finance, and participation in property joint ventures and developments. The company operates in four business segments; property, funds management, property finance, and joint venture and developments. The property division comprises the investment in and ownership of commercial, retail and industrial properties. The funds management division develops, originates and manages off balance sheet funds in addition to discharging the company’s responsible entity obligations. Property finance provides mortgage lending and related property financing solutions. The joint ventures and development segment is responsible for the company’s investment in joint venture development and construction projects, as well as in property securities.

Charter Hall Group Charter Hall Group is an Australia-based property fund manager. The company is active within two segments; property investment, with interests in investment properties and unlisted property funds, and funds management and corporate, providing management services, development management services and other property services. Charter Hall Group controls over 30 entities mainly in Australia, the United States and the United Kingdom. The company operates through offices in Sydney, Melbourne, Brisbane, Adelaide, Perth, Chicago and Warsaw.

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Stockland Corporation Ltd Stockland Corporation Limited is an Australia-based company. The principal activities of the company include investment in income producing retail, office, industrial and office park properties; development of retail, office, industrial and office park properties; residential property development; retirement living development and investment; property trust management, and property management. The company operates in Australia with small operations in the United Kingdom. The company operates in four segments; residential, retirement living, commercial property and UK. The residential segment delivers a range of master planned and mixed use residential communities and apartments. The retirement living segment designs, develops, manages lifestyle communities for retirees. The commercial property segment invests in, develops and manages retail, office and industrial properties. The UK segment is the developer and asset manager of retail, office and mixed use properties.

Mirvac Group The principal activity of the Mirvac Group consists of real estate investment, development, hotel management and investment management. The group has two core divisions; development and investment. During the 2010 financial year the company commenced new hotel management contracts bringing the total number of hotel rooms across the portfolio to 5,812.

GPT Group GPT Group comprises General Property Trust and its controlled entities, and GPT Management Holdings Limited and its controlled entities. The company is engaged in investing in income producing retail, office, industrial, business parks and seniors housing properties; development of retail, office, industrial and business park properties; property funds management, and property management. The company operates in five segments: retail, office, industrial, funds management-Australia and United States senior housing. GPT Group operates in Australia, United States and Europe. As of 31 December, 2009, GPT divested all of its resorts, with the exception of the Ayers Rock Resort.

Property fund managers

Peet Ltd Peet Limited is an Australia-based company. The company is engaged in the asset management, funds management and land syndication. The company operates in three segments; funds management/land syndication, company-owned projects and joint ventures. The company is engaged in the development of residential land estates with approximately 80 owned, syndicated and joint venture estates across four states. It is also a residential land syndicator in Australia. The company also invests in industrial, retail and commercial properties in Australia. It has joint venture projects in Western Australia, Victoria, Queensland and New South Wales.

Over Fifty Group Ltd Over Fifty Group Limited is engaged in the marketing and management of investment products (including friendly society investment bonds and property investment funds), general insurance through agency arrangements, mortgage lending and management, property investment, and management of Over Fifty Guardian Friendly Society Limited.

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APN Property Group Ltd APN Property Group Limited is an Australia-based boutique real estate investment manager. The company is principally engaged in the provision of funds management services. The company’s segments include real estate securities funds, which is an open ended properties securities funds; retail funds, which is fixed term Australian funds; real estate private funds, which is wholesale; European real estate funds, which is listed property trust fund and fixed term European funds; registry, which provides registry services to funds, and investment revenue, which include investment income received or receivable from co-investment in funds. The Company’sfunds include APN National Storage Property Trust, APN Regional Property Fund, APN Poland Retail Fund and APN Champion Retail Fund. In August 2010, the company acquired ARA Strategic Capital I Pte. Ltd., the Singapore-based fund manager of the ARA Asian Asset Income Fund.

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Appendix 6: Sources of information In preparing this report we have had access to the following principal sources of information:

copies of the Explanatory Memorandum related to the Proposal

other transaction documents, including the Implementation Agreement, Deed of Undertaking and Scheme Facilitation Deed

audited financial statements for IIF for the years ending 30 June 2008, 30 June 2009, and 30 June 2010

management accounts of IIF for the period ending 31 December 2010 and other company financial information received from management

related company websites

property valuations of IIF’s portfolio, both external and internal, as received from IIF’s management

management documents related to the sale of Summit

financial models related to IIF and REIMA

publicly available information on comparable companies, market transactions and other financial metrics sourced from Thompson Reuters, Mergermarket and OneSource

broker reports

IBIS World and other industry reports

In addition, we have had discussions and correspondence with certain directors and executives of IIF and IML.

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Appendix 7: Qualifications, declarations and consents The report has been prepared at the request of the Independent Directors of IML and is to be included in the Explanatory Memorandum to be given to Non-Associated Unitholders for approval of the Proposal in accordance with Section 611 and GN15. Accordingly, it has been prepared only for the benefit of the Independent Directors and those persons entitled to receive the Explanatory Memorandum in their assessment of the Proposed Transaction outlined in the report and should not be used for any other purpose. We are not responsible to you, or anyone else, whether for our negligence or otherwise, if the report is used by any other person for any other purpose. Further, recipients of this report should be aware that it has been prepared without taking account of their individual objectives, financial situation or needs. Accordingly, each recipient should consider these factors before acting on the Proposed Transaction. This engagement has been conducted in accordance with professional standard APES 225 Valuation Services issued by the APESB.

The report represents solely the expression by Deloitte of its opinion as to whether the Proposed Transaction is fair and reasonable and in the best interests of the Non-Associated Unitholders as a whole. Deloitte consents to this report being included in the Scheme Booklet in the form and context in which it is to be included in the Scheme Booklet.

Statements and opinions contained in this report are given in good faith but, in the preparation of this report, Deloitte has relied upon the completeness of the information provided by IML and its officers, employees, agents or advisors which Deloitte believes, on reasonable grounds, to be reliable, complete and not misleading. Deloitte does not imply, nor should it be construed, that it has carried out any form of audit or verification on the information and records supplied to us. Drafts of our report were issued to IML management for confirmation of factual accuracy.

In recognition that Deloitte may rely on information provided by IML and its officers, employees, agents or advisors, IML has agreed that it will not make any claim against Deloitte to recover any loss or damage which IML may suffer as a result of that reliance and that it will indemnify Deloitte against any liability that arises out of either Deloitte’s reliance on the information provided by IML and its officers, employees, agents or advisors or the failure by IML and its officers, employees, agents or advisors to provide Deloitte with any material information relating to the Proposed Transaction.

To the extent that this report refers to prospective financial information we have considered the prospective financial information and the basis of the underlying assumptions. The procedures involved in Deloitte’s consideration of this information consisted of enquiries of IML personnel and analytical procedures applied to the financial data. These procedures and enquiries did not include verification work nor constitute an audit or a review engagement in accordance with standards issued by the AUASB or equivalent body and therefore the information used in undertaking our work may not be entirely reliable.

Based on these procedures and enquiries, Deloitte considers that there are reasonable grounds to believe that the prospective financial information for IML included in this report has been prepared on a reasonable basis. In relation to the prospective financial information, actual results may be different from the prospective financial information of IML referred to in this report since anticipated events frequently do not occur as expected and the variation may be material. The achievement of the prospective financial information is dependent on the outcome of the assumptions. Accordingly, we express no opinion as to whether the prospective financial information will be achieved.

Deloitte holds the appropriate Australian Financial Services licence to issue this report and is owned by the Australian Partnership Deloitte Touche Tohmatsu. The employees of Deloitte principally involved in the preparation of this report were Mark Pittorino, Director, BComm., MAppFin, CA; Rachel Foley-Lewis, Director, B.Comm., CA, F.Fin; Dave Pearson, Senior Manager, B.Comm., CBV, CFA, CA; and Omar Safadi,Manager, BEc, CFA, CFM/CMA. Each has many years experience in the provision of corporate financial advice, including specific advice on valuations, mergers and acquisitions, as well as the preparation of expert reports.

Neither Deloitte, Deloitte Touche Tohmatsu, nor any partner or executive or employee thereof has any financial interest in the outcome of the proposed transaction which could be considered to affect our ability to render an unbiased opinion in this report. Deloitte will receive a fee of $155,000 exclusive of GST in relation to the

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preparation of this report. This fee is based upon time spent at our normal hourly rates and is not contingent upon the success or otherwise of the Proposed Transaction.

In addition to the preparation of this report Deloitte was engaged to perform a familiarisation exercise for a potential independent expert’s report for an alternate transaction contemplated by ING Management Limited in respect of IIF. This transaction never completed and we did not release any valuation conclusions during this process. We received fees based on the time spent on this familiarisation exercise.

In the previous two years we have also provided the following services for ING Management Limited and related parties:

a review of the process adopted by the independent directors of the responsible entity for ING Real Estate Healthcare Fund to assess whether the process, path and documentation adopted was reasonable

advice to the responsible entity of ING Real Estate Entertainment Fund in respect of two potential scenarios for the fund. In particular we were asked to comment on the fiduciary duty of the receiver, the possible actions of receivers and managers, and the potential impact on the fund of these actions under both scenarios.

In addition, in 2010 Deloitte prepared an independent expert’s report in respect of the acquisition of all of the equity in Moorabbin Airport Corporation Pty Limited by Goodman Group. Deloitte Touche Tohmatsu has also prepared limited forensics and risk services work for Goodman Group in the previous two years.

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About Deloitte In Australia, Deloitte has 12 offices and over 4,500 people and provides audit, tax, consulting, and financial advisory services to public and private clients across the country. Known as an employer of choice for innovative human resources programs, we arecommitted to helping our clients and our people excel. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities.

For more information, please visit Deloitte’s web site at www.deloitte.com.au

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

“Deloitte” is the brand under which tens of thousands of dedicated professionals in independent firms throughout the world collaborate to provide audit, consulting, financial advisory, risk management, and tax services to selected clients. These firms are members of Deloitte Touche Tohmatsu Limited (DTTL), a UK private company limited by guarantee. Each member firm provides services in a particular geographic area and is subject to the laws and professional regulations of the particular country or countries in which it operates. DTTL does not itself provide services to clients. DTTL and each DTTL member firm are separate and distinct legal entities, which cannot obligate each other. DTTL and each DTTL member firm are liable only for their own acts or omissions and not those of each other. Each DTTL member firm is structured differently in accordance with national laws, regulations, customary practice, and other factors, and may secure the provision of professional services in its territory through subsidiaries, affiliates, and/or other entities.

© Deloitte Touche Tohmatsu. February, 2011. All rights reserved.

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Appendix B: Supplemental Deed

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10621351_2

Supplemental Deed –ING Industrial FundDated

ING Management Limited (ABN 15 006 065 032) in its capacity as trustee and responsible entity of ING Industrial Fund (ARSN 089 038 175) (“Responsible Entity”)

Mallesons Stephen JaquesLevel 61Governor Phillip Tower1 Farrer PlaceSydney NSW 2000AustraliaT +61 2 9296 2000F +61 2 9296 3999DX 113 Sydneywww.mallesons.comF

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Supplemental Deed – ING Industrial Fund

Mallesons Stephen Jaques10621351_2

Supplemental Deed – ING Industrial Fund i

Details

Parties Responsible Entity

Responsible Entity

Name ING Management Limited in its capacity as trustee and responsible entity of ING Industrial Fund (ARSN 089 038 175)

ABN 15 006 065 032

Address Level 6, 345 George Street, Sydney NSW 2000

Telephone +61 2 9033 1095

Fax +61 2 9033 1059

Attention Company Secretary

Recitals A The Trust is governed by the Constitution. The Trust is registered as a managed investment scheme under Chapter 5C of the Corporations Act.

B Section 601GC(1) of the Corporations Act provides that the constitution of a registered scheme may be modified, or repealed and replaced with a new constitution:

(a) by special resolution of the members of the scheme; or

(b) by the responsible entity if it reasonably considers the change will not adversely affect members’ rights.

C Under clause 22.1 of the Constitution, the Responsible Entity may by deed amend the Constitution.

D Under clause 22.4 of the Constitution, the Responsible Entity must not exercise any rights it has under clause 22.1 or the Corporations Act to amend or vary the Constitution in a manner which would adversely affect the rights of Preference Unit Members, or Option Holders of Equity-linked Options, without their respective consent by way of special resolution of those Preference Unit Members and Option Holders.

E The Responsible Entity wishes to modify the Constitution, as set out in this deed, to give effect to the special resolution to modify the Constitution that was passed by Members of the Trust at the meeting held on or about 17 March 2011.

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Supplemental Deed – ING Industrial Fund ii

F The Responsible Entity considers that the amendments set out in this deed would not adversely affect the rights of Preference Unit Members, or Option Holders of Equity-linked Options.

Governing law Victoria

Date of deed See Signing page

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Supplemental Deed – ING Industrial Fund 1

General terms

1 Definitions and Interpretation

1.1 DefinitionsTerms used in this deed have the same meaning as in the Constitution unless otherwise defined in this deed or the context requires otherwise.

Constitution means the deed dated 18 February 1985 (as amended from time to time) under which the Trust is governed.

Effective Date has the same meaning as in the Implementation Agreement.

GTA Trustee means Goodman Industrial Funds Management Limited (ACN 147 891 487) in its capacity as trustee of the trust known as Goodman Trust Australia.

Implementation Agreement means the implementation agreement dated 24 December 2010 between the Responsible Entity and GTA Trustee in relation to the Proposal.

Implementation Date has the same meaning as in the Implementation Agreement.

Trust means the registered managed investment scheme ING Industrial Fund (ARSN 089 038 175).

1.2 InterpretationClauses 23 ('Deemed provisions of this Constitution') and 28.3 ('Interpretation') apply to this deed as if set out in this deed.

1.3 Deed supplemental to ConstitutionThis deed is supplemental to the Constitution.

1.4 HeadingsHeadings are inserted for convenience only and do not affect the interpretation of this deed.

2 Modifications to the ConstitutionThe Constitution is modified on and from the Effective Date by inserting a new schedule 6 immediately following schedule 5 as set out in the Schedule and by replacing the definition of “Distribution Calculation Date” in clause 28.1 with:

“Distribution Calculation Date: the last day of each Financial Year and such other days as the Responsible Entity designates.”.

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3 Modifications to the ConstitutionThe Constitution is modified on and from the Implementation Date as follows:

(a) by replacing clause 11.2 ('Contracting Powers') with the following:

'11.2 Without limiting clause 11.1, but subject to the Responsible Entity's duties under the constitution and at law, the Responsible Entity in its capacity as trustee of the Trust has power to borrow or raise money in any manner (whether or not on security) and to incur all types of obligations and liabilities.';

(b) in clause 19.5 ('Expenses'), by deleting the words 'except those specified in clause 19.6';

(c) by deleting clause 19.6 ('Custody and Compliance Expenses');

(d) by deleting clause 26.1 ('Maintenance of Listing');

(e) by deleting clause 20.2 ('If Trust is de-listed');

(f) by inserting a new clause 7A immediately after clause 7 ('Redemption and Exchange of Preference Units') as follows:

'7A Withdrawal of Ordinary Units

7A.1 Withdrawal of Ordinary Units while Trust is Liquid or not a registered scheme

Subject to clause 7A.3, while the Trust is Liquid or is not a registered scheme, any Ordinary Member may request that some or all of their Ordinary Units be withdrawn. Each request must:

(a) satisfy the form and content requirements prescribed by the Responsible Entity; and

(b) be delivered to the Responsible Entity at its registered office (or other place nominated by the Responsible Entity).

Upon making such a request, the Ordinary Member will have no right to deal with the Ordinary Units (unless and until the request is denied by the Responsible Entity). An Ordinary Member may not withdraw a withdrawal request unless the Responsible Entity agrees.

7A.2 Action following request

Within a reasonable time of receiving a withdrawal request under clause 7A.1, the Responsible Entity must consider that request and:

(a) deny the request (but it must then notify the Ordinary Member accordingly); or

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(b) effect the withdrawal by causing the number (or value) of Ordinary Units held by the Ordinary Member referred to in the withdrawal request to be redeemed at the applicable Withdrawal Price out of the Assets; or

(c) subject to the Listing Rules and the Corporations Act, purchase or arrange for another person to purchase the number (or value) of Ordinary Units held by the Ordinary Member referred to in the withdrawal request; or

(d) partially effect the withdrawal in the manner described in clause 7A.2(b) and partially purchase (or arrange for Ordinary Units to be purchased) in the manner described in clause 7A.2(c).

7A.3 Suspension of withdrawal request right

Unless the Responsible Entity determines otherwise, the right to make a withdrawal request under clause 7A.1 is suspended while the Trust is Listed.

7A.4 Withdrawal while Trust is not Liquid

(a) While the Trust is a registered scheme but is not Liquid the Responsible Entity may make a Withdrawal Offer to all Ordinary Members. An Ordinary Member may withdraw from the Trust in accordance with the terms of any current Withdrawal Offer. Otherwise, an Ordinary Member has no right to request that some or all of the Ordinary Member's Ordinary Units be withdrawn. An Ordinary Member may not withdraw an acceptance of a Withdrawal Offer unless the Responsible Entity agrees.

(b) A Withdrawal Offer must contain the information required by the Corporations Act. The Withdrawal Offer may be made by:

(i) publishing it (for example, in a national newspaper or on the internet); or

(ii) giving a copy to all Ordinary Member.

(c) Subject to the Corporations Act and the Listing Rules, the Responsible Entity may determine the terms of a Withdrawal Offer.

(d) The Responsible Entity may cancel a Withdrawal Offer in accordance with the Corporations Act.

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7A.5 Sums owed

The Responsible Entity may deduct from the proceeds of withdrawal of Ordinary Units any money due to the Responsible Entity in relation to the Ordinary Member.

7A.6 Transfer of Assets to effect a withdrawal

Rather than pay cash to effect a withdrawal in whole or in part, the Responsible Entity may transfer Assets to an Ordinary Member (or the Ordinary Member's nominee). The Responsible Entity must satisfy itself that the value of the Assets (with any cash paid) will equal the total amount of cash otherwise payable.

7A.7 Liquid or not Liquid

The Responsible Entity will determine whether or not the Trust is Liquid. Such a determination is binding on Ordinary Members and no Unitholder will challenge it.

7A.8 Order

Unless the Responsible Entity decides otherwise, the first Ordinary Units issued to an Ordinary Member are the first Ordinary Units withdrawn.

7B Withdrawal Price

The Withdrawal Price for any Ordinary Unit will be equal to:

Net Asset Value + Transaction CostsNumber of Ordinary Units in issue

While the Trust is not a registered scheme or is Liquid, each of these variables will be calculated as at the next Valuation Time after the Responsible Entity received (or is taken to have received) the withdrawal request. If the Trust is a registered scheme but is not Liquid, then each such variable will be calculated as at the day the relevant Withdrawal Offer closes.

(g) by inserting the following definitions in clause 28.1 in alphabetical order:

Liquid in relation to the Trust, has the meaning given by section 601KA(4) of the Corporations Act.

Withdrawal Offer means an offer made by the Responsible Entity in accordance with section 601KB of the Corporations Act.

Withdrawal Price in relation to an Ordinary Unit means the price at which that Ordinary Unit is to be withdrawn in accordance with clause 7B.

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4 No redeclaration etcThe Responsible Entity declares that it is not, by this deed:

(a) resettling or redeclaring the Trust declared under this Constitution; or

(b) causing the transfer, vesting or accruing of any property comprising the Assets in any person.

5 Governing lawThis deed will be governed by the laws in force in the place specified in the Details. Each person affected by it must submit to the non-exclusive jurisdiction of the courts of that place and the courts of appeal from them.

EXECUTED as a deed poll.

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Schedule – New schedule 6

Schedule 6 – Proposal

1 Interpretation

1.1 DefinitionsUnless the contrary intention appears, in this schedule capitalised terms not defined have the same meaning as in the constitution or schedule 1, and:

ASX Settlement: ASX Settlement Pty Limited (ABN 49 008 504 532).

ASX Settlement Operating Rules: the operating rules of the settlement facility of ASX Settlement for the purposes of the Corporations Act.

Bid Vehicle: Goodman Industrial Funds Management Limited (ACN 147 891 487) in its capacity as trustee of the trust known as Goodman Trust Australia.

CHESS: the Clearing House Electronic Subregister System for the electronic transfer of securities and other financial products operated by ASX Settlement .

Deed Poll: the deed poll dated 9 February 2011 executed by Bid Vehicle in favour of the Proposal Participants in respect of the Proposal.

Effective: the supplemental deed making amendments to this constitution to facilitate the Proposal, including the insertion of this schedule 6, taking effect pursuant to section 601GC(2) of the Corporations Act.

Effective Date: the date on which the Proposal becomes Effective.

IML: ING Management Limited (ABN 15 006 065 032).

Implementation Agreement: the implementation agreement dated 24 December 2010 between IML (in its capacity as trustee and responsible entity of the Trust) and Bid Vehicle.

Implementation Date: the Business Day after the Record Date.

Meeting: the meeting of Members held on or about 17 March 2011 convened by the Responsible Entity pursuant to clause 15.1 of this constitution to consider the Proposal Resolutions, and includes any adjournment of that meeting.

Proposal: the arrangement under which Bid Vehicle acquires all of the Ordinary Units from Proposal Participants facilitated by the amendments to this constitution under the Supplemental Deed, including the insertion of this schedule 6.

Proposal Business Day: means a Business Day as defined in the Listing Rules.

Proposal Consideration: A$0.546 for an Ordinary Unit held by a Proposal Participant on the Record Date, minus the aggregate value per Ordinary Unit of

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any distributions to which a Proposal Participant becomes entitled, after the date of the Implementation Agreement.

Proposal Participant: each person who is an Ordinary Member as at the Record Date.

Proposal Resolutions: the resolutions of Members set out in the notice of meeting of Members dated 10 February to approve the Proposal, including:

(a) a resolution for the purposes of item 7 of section 611 of the Corporations Act to approve the acquisition of all the Proposal Units by Bid Vehicle;

(b) a resolution for the purposes of section 601GC(1) of the Corporations Act to approve amendments to this constitution to facilitate the Proposal; and

(c) a resolution for the purposes of section 601FL of the Corporations Act to choose a new responsible entity of the Trust following the retirement of the IML as responsible entity of the Trust.

Proposal Transfer: for each Proposal Participant, a proper instrument of transfer of their Proposal Units for the purpose of section 1071B of the Corporations Act, which may be a master transfer of all Proposal Units.

Proposal Units: all of the Ordinary Units on issue as at the Record Date.

Record Date: 7.00pm on the sixth Proposal Business Day following the Effective Date, or such other date (after the Effective Date) as the Responsible Entity and Bid Vehicle may agree in writing.

Registry: Link Market Services Limited (ABN 54 083 214 537) of Level 12, 680 George Street, Sydney NSW 2000, Australia.

1.2 InterpretationUnless the contrary intention appears, in this schedule a reference to a “paragraph” is a reference to a numbered paragraph of this schedule.

2 Proposal

2.1 Recognising dealings in Ordinary Units (a) For the purpose of establishing the persons who are Proposal

Participants, dealings in Ordinary Units will only be recognised if:

(i) in the case of dealings of the type to be effected using CHESS, the transferee is registered in the Register as the holder of the relevant Ordinary Units by the Record Date; and

(ii) in all other cases, registrable transfers or transmission applications in respect of those dealings are received at the Registry by the Record Date.

(b) The Responsible Entity must register registrable transfers or transmission applications of the kind referred to in paragraph 2.1(a)(ii)

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by, or as soon as practicable after, the Record Date. The persons shown in the Register, and the number of Ordinary Units shown as being held by them, after registration of those transfers and transmission applications will be taken to be the Proposal Participants, and the number of Ordinary Units held by them, on the Record Date.

(c) The Responsible Entity must not accept for registration, nor recognise for any purpose (including for the purpose of establishing the persons who are Proposal Participants), any transfer or transmission application in respect of Ordinary Units received after the Record Date (or received prior to the Record Date not in registrable form) nor any transfer or transmission in respect of dealings in Ordinary Units that have occurred on ASX after the close of business on the Business Day after the Effective Date.

(d) The Responsible Entity will maintain or procure the maintenance of the Register in accordance with this paragraph 2.1. The Register immediately after registration of registrable transfers or transmission applications of the kind referred to in paragraph 2.1(a)(ii) will solely determine the persons who are Proposal Participants and their entitlements to the Proposal Consideration.

(e) From the Record Date and until registration of Bid Vehicle in respect of all Proposal Units under paragraph 2.3(c), no Proposal Participant (or any person purporting to claim through any Proposal Participant) may deal with Ordinary Units in any way except as set out in this schedule and any attempt to do so will have no effect.

(f) Other than in respect of Bid Vehicle (after registration of Bid Vehicle in respect of all Proposal Units under paragraph 2.3(c)), from the Record Date, all certificates and holding statements (as applicable) for Proposal Units as at the Record Date will cease to have any effect as evidence of title, and each entry on the Register as at the Record Date will cease to have any effect other than as evidence of the entitlements of Proposal Participants to the Proposal Consideration.

2.2 Proposal Consideration(a) Each Proposal Participant will be entitled to receive for each Proposal

Unit held by that Proposal Participant on the Record Date the Proposal Consideration, which must be paid in the manner referred to in paragraph 2.2.

(b) The Responsible Entity acknowledges that Bid Vehicle has undertaken to pay the Proposal Consideration by 12.00 noon on the Implementation Date by depositing into an account nominated by the Responsible Entity an amount in Australian currency and in immediately available funds equal to the aggregate of all the Proposal Consideration payable to Proposal Participants entitled to receive the Proposal Consideration under the Proposal.

(c) Subject to Bid Vehicle having provided the Proposal Consideration in the manner contemplated by paragraph 2.2(b), the Responsible Entity must procure that:

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(i) the amount received from Bid Vehicle under paragraph 2.2(b) is held on trust for the relevant Proposal Participants; and

(ii) within three Business Days after the Implementation Date such amount is drawn to pay to each applicable Proposal Participant such amount in Australian currency as each Proposal Participant is entitled to receive as Proposal Consideration in accordance with the Proposal, either by:

(A) electronic funds transfer to an account nominated by the Proposal Participant for the purpose of payment of distributions or the Proposal Consideration; or

(B) cheque sent by pre-paid post:

(aa) in the case of Proposal Participants who are registered as holding the Ordinary Units jointly – to the address recorded in the Register at the Record Date of the person whose name appears first in the Register in respect of the joint holding; or

(bb) otherwise – to the Proposal Participant’s address recorded in the Register at the Record Date.

(d) If a fractional entitlement to part of a cent in cash arises from the calculation of the total amount of cash to be paid to a Proposal Participant, then that fractional entitlement will be rounded:

(i) where the fraction is 0.5 or more – up; and

(ii) where the fraction is less than 0.5 – down,

to the nearest whole cent, with any fractional entitlement being disregarded.

(e) If the Responsible Entity believes that a Proposal Participant is not known at the Proposal Participant's address recorded in the Register, and no account has been notified in accordance with clause 2.2(c)(ii)(A), or a deposit into such an account is rejected or refunded, the Responsible Entity may credit the amount payable to the relevant Proposal Participant to a separate bank account of the Responsible Entity to be held until the Proposal Participant claims the amount or the amount is dealt with in accordance with any applicable unclaimed money legislation. If the Responsible Entity elects to proceed in this manner:

(i) the Responsible Entity must hold the amount on trust, but any interest accruing on the amount will be for the account of Bid Vehicle;

(ii) an amount credited to the account is to be treated as having been paid to the Proposal Participant when credited to the account; and

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(iii) the Responsible Entity must maintain records of the amounts paid, the people who are entitled to the amounts and any transfers of the amounts.

(f) If any amount is required under any Australian law or by any Australian government or any Australian governmental, semi-governmental or judicial entity or authority to be:

(i) withheld from an amount payable under clause 2.2(c)(iii) and paid to that entity or authority; or

(ii) retained by the Responsible Entity out of an amount payable under clause 2.2(c)(ii),

its payment or retention by the Responsible Entity will constitute the full discharge of the Responsible Entity’s obligations under clauses 2.2(c)(iii) or 2.2(e) with respect to the amount so paid or retained until, in the case of clause 2.2(f)(ii), it is no longer required to be retained.

2.3 Transfers to Bid VehicleOn the Implementation Date, subject to Bid Vehicle having provided the Proposal Consideration in the manner contemplated by paragraph 2.2(b), the following will occur:

(a) all of the Proposal Units, together with all rights and entitlements attaching to the Proposal Units, will be transferred to Bid Vehicle without the need for any further act by any Proposal Participant (other than acts performed by the Responsible Entity (or its directors, officers or attorneys) as attorney or agent of the Proposal Participants under paragraph 2.6 or otherwise) and must be transferred to Bid Vehicle;

(b) the Responsible Entity will procure:

(i) in the case of Proposal Units in a CHESS holding, a message to be transmitted to ASX Settlement in accordance with ASX Settlement Operating Rules so as to transfer the Proposal Units held by the Proposal Participant from the CHESS sub-register of the Responsible Entity to the issuer sponsored sub-register operated by the Responsible Entity; and

(ii) the delivery to Bid Vehicle of transfers of all the Proposal Units to Bid Vehicle duly completed and executed on behalf of the Proposal Participants in the form of Proposal Transfers which transfer all of the Proposal Securities to Bid Vehicle; and

(c) the Responsible Entity will, immediately following receipt of the executed Proposal Transfers in respect of the Proposal Units from Bid Vehicle, enter the name and address of Bid Vehicle in the Register in respect of all the Proposal Units.

2.4 Implementation of the Proposal(a) The Responsible Entity and each Proposal Participant must do all things

and execute all deeds, instruments, transfers or other documents as may

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be necessary, desirable or reasonably incidental to give full effect to the Proposal and the transactions contemplated by it.

(b) Without limiting the Responsible Entity's other powers under this schedule 6, the Responsible Entity has power to do all things that it considers necessary, desirable or reasonably incidental to give effect to the Proposal, this schedule, the Implementation Agreement and the transactions contemplated by them.

(c) Subject to the Corporations Act, the Responsible Entity or any of its directors, officers, employees or associates, may do any act, matter or thing described in or contemplated by this schedule even if they have an interest (financial or otherwise) in the outcome of such exercise.

2.5 Covenants and representations by the Responsible Entity and Proposal ParticipantsEach Proposal Participant:

(a) irrevocably acknowledges that the Trust Scheme binds the Responsible Entity and all Proposal Participants, including those who do not attend the Meeting, do not vote at the Meeting or vote against the Proposal Resolutions;

(b) irrevocably agrees to the transfer of all of their Ordinary Units held at the Record Date to Bid Vehicle in accordance with this schedule;

(c) irrevocably agrees to the modification or variation (if any) of the rights attaching to their Ordinary Units arising from this schedule; and

(d) irrevocably consents to the Responsible Entity doing all things and executing all deeds, instruments, transfers or other documents as may be necessary or desirable to give full effect to the Proposal, this schedule, the Implementation Agreement and the transactions contemplated by them.

2.6 Appointment of the Responsible Entity as attorney and as agent for implementation of the ProposalEach Proposal Participant, without the need for any further act by that Proposal Participant, irrevocably appoints the Responsible Entity as that Proposal Participant’s attorney and as that Proposal Participant’s agent for the purpose of:

(a) doing all things and executing all deeds, instruments, transfers or other documents as may be necessary or desirable to give full effect to the terms of the Proposal, this schedule, the Implementation Agreement and the transactions contemplated by them, including effecting a valid transfer or transfers of the Proposal Units to Bid Vehicle under paragraph 2.3(b), including executing and delivering any Proposal Transfers; and

(b) enforcing the Deed Poll against Bid Vehicle,

and the Responsible Entity accepts such appointment. The Responsible Entity, as attorney and as agent of each Proposal Participant, may sub-delegate its functions, authorities or powers under this paragraph 2.6 to all or any of its

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directors and officers (jointly, severally, or jointly and severally). Each Proposal Participant indemnifies the Responsible Entity and each of its directors and officers against all losses, liabilities, charges, costs and expenses arising from the exercise of powers under this paragraph 2.6.

2.7 Status of Proposal Units(a) To the extent permitted by law, the Proposal Units transferred to Bid

Vehicle under this schedule will be transferred free from all mortgages, charges, liens, encumbrances and interests of third parties of any kind, whether legal or otherwise.

(b) The Proposal Participants are deemed to have warranted to the Responsible Entity in its own right and on behalf of Bid Vehicle that all their Proposal Units (including any rights and entitlements attaching to those Proposal Units) which are transferred to Bid Vehicle under this schedule will, at the date they are transferred to Bid Vehicle, be fully paid and free from all mortgages, charges, liens, encumbrances and interests of third parties of any kind, whether legal or otherwise, and restrictions on transfer of any kind not referred to in this constitution, and that they have full power and capacity to sell and to transfer such Proposal Units (including any rights and entitlements attaching to those Proposal Units).

(c) Bid Vehicle will be beneficially entitled to the Proposal Units transferred to it under this schedule pending registration by the Responsible Entity of the name and address of Bid Vehicle in the Register as the holder of the Proposal Units.

2.8 Suspension and termination of quotation of Ordinary Units(a) The Responsible Entity must apply to ASX for suspension of trading of

the Ordinary Units on the financial market known as the Australian Securities Exchange conducted by ASX with effect from the close of business on the Effective Date.

(b) The Responsible Entity must apply to ASX for termination of official quotation of Ordinary Units on the financial market known as the Australian Securities Exchange conducted by ASX and the removal of the Trust from the official list of the ASX with effect from the Proposal Business Day immediately following the Implementation Date, or from such later date as may be agreed by Bid Vehicle and the Responsible Entity.

2.9 Effect of this scheduleThis schedule:

(a) binds the Responsible Entity and all Proposal Participants, including those who do not attend the Meeting, those who do not vote at that meeting and those who vote against the Proposal Resolutions at that meeting; and

(b) overrides the other provisions of this constitution to the extent of any inconsistency, other than clause 23 (Deemed provisions of this constitution).

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2.10 Responsible Entity’s limitation of liabilitySubject to the Corporations Act, without derogating from any limitation of the Responsible Entity’s liability in this constitution, the Responsible Entity has no liability of any nature whatsoever to Members beyond the assets of the Trust arising, directly or indirectly, from the Responsible Entity doing or refraining from doing any act (including the execution of a document), matter or thing pursuant to or in connection with the implementation of the Proposal in accordance with this schedule and the Implementation Agreement.

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Supplemental Deed – ING Industrial Fund9 February 2011

14

Signing page

DATED:______________________

EXECUTED by

as attorney for ING MANAGEMENT LIMITED in its capacity as responsible entity of ING INDUSTRIAL FUND under power of attorney dated

in the presence of:

...............................................................Signature of witness

...............................................................Name of witness (block letters)

...............................................................Signature of witness

...............................................................Name of witness (block letters)

)))))))))))))))))))))))

...............................................................By executing this deed the attorney states that the attorney has received no notice of revocation of the power of attorney

...............................................................By executing this deed the attorney states that the attorney has received no notice of revocation of the power of attorney

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Appendix C: Deed Poll

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Appendix C: Deed PollF

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Appendix D: Notice of Meeting

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Notice of MeetingNotice is given by ING Management Limited (ABN 15 006 065 032) (“Responsible Entity”) that a meeting of Members (“Meeting”) of the ING Industrial Fund (ARSN 089 038 175) (“IIF”) will be held at:

Location: Swissôtel SydneyLevel 868 Market StreetSydney NSW 2000

Date: Thursday, 17 March 2011

Time: 2.30pm

AGENDA

The business of the Meeting will consist of the following:

Resolution 1: Approval of amendments to IIF Constitution

To consider and, if thought fit, to pass a special resolution of ING Industrial Fund in the following terms:

“That, subject to the passing of Resolutions 2 and 3 in the Notice of Meeting convening this meeting,the constitution of ING Industrial Fund is amended in accordance with the provisions of the supplemental deed poll in the form tabled at the meeting and initialled by the Chairman of the meeting for the purposes of identification, and the responsible entity of ING Industrial Fund is authorised to execute and lodge with the Australian Securities and Investments Commission a supplemental deed poll to give effect to these amendments to the constitution of ING Industrial Fund.”

Resolution 2: Approval of the Proposal by IIF

To consider and, if thought fit, to pass an ordinary resolution of ING Industrial Fund in the following terms:

“That, subject to the passing of Resolutions 1 and 3 in the Notice of Meeting convening this meeting, the proposal described in the Explanatory Memorandum accompanying the Notice of Meeting convening this meeting as the “Proposal”, under which Goodman Industrial Funds Management Limited as trustee of Goodman Trust Australia will acquire all of the ordinary units in ING Industrial Fund, on the terms and subject to the conditions of the Proposal, is approved for all purposes including for the purposes of item 7 of section 611 of the Corporations Act.”

Resolution 3: Approval of change of responsible entity of IIF

To consider and, if thought fit, to pass an ordinary resolution of ING Industrial Fund in the following terms:

“That, subject to the passing of Resolutions 1 and 2 in the Notice of Meeting convening this Meeting, with effect from the day (“Change Date”) of the implementation of the Proposal described in the Explanatory Memorandum accompanying the Notice of Meeting convening this Meeting as the “Proposal”, ING Management Limited be removed as the responsible entity of ING Industrial Fund and Goodman Funds Management Limited be chosen and appointed as the new responsible entity of ING Industrial Fund, and ING Management Limited is to execute and lodge with ASIC on the Change Date a notice requesting ASIC to record the change of responsible entity of ING Industrial Fund.”

VOTING INFORMATION

Explanatory Memorandum

This Notice of Meeting should be read in conjunction with the Explanatory Memorandum that accompanies this Notice. Section 2 of the Explanatory Memorandum contains an explanation of the resolutions above. The Explanatory Memorandum also provides a summary of the Proposal

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Appendix D: Notice of Meeting

and sets out why you should vote in favour of the Proposal and why you might vote against the Proposal to enable you to make an informed decision as to how to vote on the resolutions.

Unless otherwise defined in this Notice of Meeting, terms used in this Notice of Meeting have the same meaning as set out in section 9 of the Explanatory Memorandum.

Voting exclusion statement

Under the Corporations Act, GTA Trustee and its associates (including the Consortium Members) and IML and its associates (including other ING Group entities and directors of IML) are excluded from voting on the Resolutions as they have interests in the Proposal different to other IIF Members.

The ING Group also has an interest in the outcome of the Proposal in addition to its interest as an IIF Member because of the Ancillary Transaction as outlined in section 2.6 of the Explanatory Memorandum.

Consequently, none of GTA Trustee, the Consortium Members or any member of the ING Group and their associates will vote on the Resolutions.

However, the Responsible Entity need not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form

Required majority

Resolution 1 is a special resolution, and will be passed if at least 75% of the votes cast on the resolution are cast in favour. Resolutions 2 and 3 are ordinary resolutions, and will be passed if more than 50% of the votes cast are in favour.

Appointment of Chairperson

In accordance with the Corporations Act and the constitution of IIF, the Responsible Entity has appointed Kevin McCann, Chairman of IML, to chair the Meeting.

Right to appoint a proxy

A Member has a right to appoint a proxy to attend and vote at the Meeting on their behalf. A proxy does not need to be a Member of IIF, and you may appoint the Chairman of the Meeting as your proxy. A unitholder may appoint two proxies, and if so, the unitholder may specify the proportion or number of votes each proxy is appointed to exercise. The Proxy Form, which accompanies this Notice of Meeting, includes instructions on how to vote and appoint a proxy.

To be valid, Link Market Services Limited (Registry) or the Responsible Entity must receive your Proxy Form no later than 2.30pm AEDST on 15 March 2011, that is, 48 hours before the Meeting. Proxy Forms may be lodged using the reply paid envelope or:

• online at www.linkmarketservices.com.au in accordance with the Proxy Form;

• by mailing it to:

ING Industrial Fundc/- Link Market Services LimitedLocked Bag A14Sydney South NSW 1235Australia

• by faxing it to +61 2 9287 0309;

• by delivering it to Link Market Services Limited, Level 12, 680 George Street, Sydney NSW 2000; or

• by delivering or faxing it to the Responsible Entity’s registered office.

If you appoint the Chairman of the Meeting as your proxy and you do not specifically direct how your proxy is to vote on a Resolution, you will be taken to have directed the Chairman of the

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Meeting to vote in favour of the Resolution and the Chairman of the Meeting will exercise your votes in favour of the Resolution.

Voting entitlement

IIF Unitholders registered as holders of units in IIF and IIF Optionholders registered as the holders of IIF Options issued as at 7.00pm AEDST on 15 March 2011 will be entitled to attend and vote at the meeting (subject to any applicable voting exclusion).

Corporate representatives

A company wishing to appoint a person to act as its representative at the meeting must provide that person with a letter executed in accordance with the company’s constitution and the Corporations Act authorising him or her to act as the member’s representative.

To be effective, the letter or certificate by which a representative is appointed by the company must be received by the Registry at least 48 hours before the Meeting.

Issued by ING Management Limited (ABN 15 006 065 032) as the Responsible Entity of the ING Industrial Fund.

10 February 2011

Mark Lamb

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ReSPoNSIBLe eNTITYING Management Limited (ABN 15 006 065 032; AFSL 237534) Level 6 345 George Street Sydney NSW 2000 Fax +61 2 9033 1060

IML dIReCToRSKevin McCann AM Philip Clark AM Michael Easson AM Paul Scully Christophe Tanghe

SeCReTARIeS oF IMLMark Lamb Sarah Wiesener

LeGAL AdvISeRMallesons Stephen Jaques Level 61 Governor Phillip Tower 1 Farrer Place Sydney NSW 2000

FINANCIAL AdvISeRSGoldman Sachs & Partners Australia Pty Limited Level 42 Governor Phillip Tower 1 Farrer Place Sydney NSW 2000

UBS AG Level 16 Chifley Tower 2 Chifley Square Sydney NSW 2000

TAxATIoN AdvISeRErnst & Young Ernst & Young Centre 680 George Street Sydney NSW 2000

INdePeNdeNT exPeRTDeloitte Corporate Finance Pty Limited Finance (ABN 19 003 833 127; AFS Licence Number 241457) Grosvenor Place 225 George Street Sydney NSW 2000

ReGISTRYLink Market Services Limited Level 12 680 George Street Sydney NSW 2000

INveSToR eNQUIRIeSIn relation to the Proposal 1300 653 497 (within Australia) +61 2 8280 7057 (outside Australia)

Corporate Directory

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real estate investment management

www .ingrealestate.com.au

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Documents

Explanatory Memorandum for Recommended Cash … Announcement REAL ESTATE INVESTMENT MANAGEMENT Date 10 February 2011 Fund ING Industrial Fund Explanatory Memorandum for Recommended