Knight Frank Valuations · Knight Frank Valuations again have pleasure in providing our compiled national commercial transactions booklet for your reference. The transactions enclosed

Knight Frank Valuations National Commercial Transactions Autumn 2013

Commercial Team

David Castles State Director [email protected] D +61 (0)2 9036 6648 States serviced: New South Wales / National Office based: Sydney

Tom Phelan Divisional Director [email protected] D +61 (0)2 9028 1131 States serviced: New South Wales Office based: North Sydney

Adam Elias Associate Director [email protected] D +61 (0)2 9036 6771 States serviced: New South Wales Office based: Sydney

Lachlan Graham Divisional Director [email protected] D +61 (0)2 9028 1132 States serviced: New South Wales Office based: North Sydney

Tim Miles Associate Director [email protected] D +61 (0)2 9036 6701 States serviced: New South Wales Office based: Sydney

Greg Cummins Director [email protected] D +61 (0)2 6221 7885 States serviced: ACT Office based: Canberra

Peter Zischke Associate Director [email protected] D +61 (0)7 3246 8811 States serviced: Queensland Office based: Brisbane

Michael Schuh Director [email protected] D +61 (0)3 9604 4726 States serviced: Victoria Office based: Melbourne

Joseph Perillo Joint Managing Director [email protected] D +61 (0)3 9604 4617 States serviced: Victoria Office based: Melbourne

Alex Smithson Consultant Valuer [email protected] D +61 (0)8 8233 5281 States serviced: South Australia & Northern Territory Office based: Adelaide

Nick Bell Director [email protected] D +61 (0)8 8233 5242 States serviced: South Australia & Northern Territory Office based: Adelaide

Marc Crowe Director Consultancy [email protected] D +61 (0)8 9325 2533 States serviced: Western Australia Office based: Perth

Introduction

Knight Frank Valuations again have pleasure in providing our compiled national commercial transactions booklet for your

reference.

The transactions enclosed cover an analysis of major commercial investment grade sales occurring over 2012 and into 2013.

Whilst these analyses are always available singularly on request as and when they occur, we believe it is important to collate these

sales in one document in order to provide an overall picture on the national commercial investment market. Also, whilst we

recognise that these sales are analysed by a range of companies and practitioners (including sales agents), the analyses within

reflect a consistent methodology and are not countersigned or in any way influenced by parties outside of Knight Frank

Valuations. We also note that where details are confidential at the request of clients, we have not disclosed within and

hence, some known sales may not be included (however, details are generally held by Knight Frank Valuations).

Following a return to confidence in the investment market in 2011, there was a slowing in investment activity in early to mid 2012.

However late 2012/early 2013 saw an increase in transaction volumes, particularly from the A-REITS’s and superannuation funds

and this activity is expected to continue into 2013/2014.

As alluded to in our last publication of this document, it appears that purchaser depth has now increased due to a number of

factors including the favourable weighted average cost of capital and a closing of the NTA gap for many A-REITS. This has

increased competitive pressures in “core” markets and recent sales within the prime market for select assets (ie. typically upper A-

Premium Grade with secure and stabilised tenancy profiles – ie. “upper prime”) have tended to indicate compression of say 0.25%

(25 basis points) over the past 6 months. This follows on from earlier compression reflected by select sales over 2010-2011 of

approximately 25 basis points. On average, the market for these “select” assets is considered to have recovered 0.50% (50 basis

points) since the market trough. Whilst many of the market leading sales have recently occurred in Melbourne, the Sydney graph

below provides an example of yield compression in the prime market relative to the longer term average.

Introduction

A further comparison of some benchmark sales within the “upper prime” market is noted in the graph following. These sales are

not intended to be in date order, and provide only a snapshot of the analysed core market yields and WALE’s for each asset.

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400 GeorgeSt, Bris

150 CollinsSt, Melb

850 CollinsSt, Melb

242Exhibition St,

Melb

8 ExhibitionSt, Melb

GrosvenorPlace, Syd

126 PhillipSt, Syd

161Castlereagh

St, Syd

WA

LE (

yrs)

CM

Y %

Core Market Yield AnalysisNational Prime Sales

Whereas the “prime” market has reverted back to its 10 year average, the analysis below indicates that the “secondary” market has

remained above its 10 year average (ie. 80 basis points as per the graph below). This is considered to be largely associated with

the more limited buyer depth for secondary assets unlike the “prime” market which has been supported to a degree from off-

shore investors and local funds. Please note that for example purposes the data below is based upon Sydney CBD sales and

averages only.

6.7%

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Prime (Premium & A) Secondary

Prime - 10yr Average Secondary - 10yr Average

The above chart reflects general yield trends based upon representative benchmark transactions within the CBD as is not meant to represent exact yield levels

Historic Yield Trends - Prime v Secondary (Sydney CBD)

-80 bp

Introduction

The yield premium/margin above the 10 year average is also particularly notable within “non-core” suburban locations making

pricing within these markets look particularly attractive versus historical averages. This margin / premium is however unlikely to be

redressed to any notable extent until greater institutional and mid-tier /smaller fund support again emerges for these locations.

There is evidence of this emerging over the past 6 months, however, activity remains patchy and selective. Some sales that are also

occurring are complicated by the nature of the sale (eg. distressed sales; pre-emptive rights being exercised) and these need to be

distinguished from other sales in the market. Accordingly, pricing within these markets remains difficult given the wide trading

band and differing vendor/purchaser motivations.

A historical analysis of sales within the Sydney CBD secondary, North Sydney and Metropolitan Markets is below and

demonstrates the relative yield margin versus historical averages. Please note that the analysis below does not include all sales,

only representative trend sales in each market.

Introduction

We hope the analysis within is of assistance to you as we move into 2013.

Regards

KNIGHT FRANK VALUATIONS

DAVID M CASTLES

Director

Sydney Commercial Sales Analysis

Knight Frank Valuations

Sales AnalysisSales Analysis

9 Castlereagh Street, Sydney, NSW Sale Date February 2013Sale Price $172,500,000 (headline price)Vendor StocklandPurchaser Charter Hall GroupDescription 32 level, Seidler designed, A –grade office tower (circa 1989) providing a central atrium

extending up through the building. Full lobby refurbishment recently completed at a cost of circa $8.5 million. The building provides ground level retail, atrium level childcare facilities and 31 levels of office accommodation with four differing floor plates ranging from circa 580m² to 750m² and expansive CBD and harbour views from the upper levels. Parking provided for 79 vehicles.

NABERS Rating Energy: 3.5 StarsLand Area 1,824m2

NLA Office 20,055m²Retail 844m²Total 20,899m2

Parking 79 spacesVacancy 19.6% of NLA (albeit vendor providing $4.2 million in income support)No of Tenants 31 tenantsNet Passing Income $11,431,791 (before income support)

Inputs AnalysisMarket Rentals Office: $ 630 - $1,075/m² gross ($770/m² gross avg) Passing Initial Yield 6.8%

Avg Cmpd Mkt Growth 3.9% (5 year) 4.1% (10 year) Core Market Yield* 7.6%

Outgoings $159/m² pa IRR (after costs) 8.6 % (5yr) 9.3% (10yr)

Terminal Yield

Capitalisation Adjustment period

7.75%

24 months

Passing v Market Rent Relativity

Rate/m² NLA

106.9%

$8,254/m²

Leasing Allowance Downtime - 6-9 months. Incentives – 17.5% to 27.5%

Weighted Average Lease Expiry (Yrs) Income 2.5 years**Area 2.4 years**

Capital Expenditure Ongoing - $30/m² pa Immediate - $3,000,000NPV (10 yrs) - $9.5 million

*Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been adjusted to account for property specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc).** Calculated before income support payments. Reflects circa 3 years after income support.

CommentsWell presented, A-grade asset positioned within the CBD core and providing a multi tenanted income profile comprising a mixture of whole floor and part floor tenancies primarily on gross or semi-gross leases. The building has a staggered expiry profile with a WALE of 2.4 years albeit increasing to circa 3 years, subject to income support payments by the vendor of $4.2 million. As advised the property was purchased for a headline price of $172,500,000 however our calculations account for the payment of all outstanding incentives by the vendor (circa $5.6 million) plus the provision by the vendor of $4.2 million in income support.

The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.



9 Hunter Street, Sydney, NSW Sale Date December 2012

Sale Price $72,259,092 (GST Exclusive)

Vendor Colonial First State (DPIF and Commonwealth Bank Officers Superannuation Corp)

Purchaser Corval Partners

Description Progressively refurbished circa 1983 B-grade commercial office building (Stratum Titled) comprising ground level foyer and café, office accommodation over Levels 3-19 and rooftop plant area.

NABERS Rating Energy: 3.5 star

Water: 4.0 star

NLA 15,623m²

Parking Nil

Vacancy 9.4% of NLA

No of Tenants 1 retail tenant (café)

17 office tenants

Net Passing Income $6,554,789

Inputs AnalysisMarket Rentals Office: $570-$650/m² gross (avg $606/m² gross)

Retail: $400/m² gross (foyer cafe)

Passing Initial Yield 9.07%

Avg Cmpd Mkt Growth 4.0% pa (10 yrs); 3.8% (5 yrs) Core Market Yield* 8.76%

Outgoings $160/m² IRR (after costs) 9.44%

Terminal Yield 9.0% Passing v Market Rent Relativity 105.1%

Leasing Allowance 6-12 months and 17.5%-25% incentive over 10 year horizon (avg 20.5%) with retention factors applied.

Rate/m² NLA $4,625/m²

Capital Expenditure $30/m² per annum and $200/m² at each expiry at 50% retention.

Weighted Average Lease Expiry (Yrs) Income 4.0 years Area 3.6 years

*Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been adjusted to account for property specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc).

Macquarie Group30%

Diamond Conway

8%

Whole Floor Tenancies

35%

Subdivided Tenancies

27%

Vacant0%

Tenant Composition by Passing Income

0%

20%

40%

60%

80%

100%

Current Yr 2 Yr 4 Yr 6 Yr 8 Yr 10

% o

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Lease Expiry Schedule

Vacant Future Expiries

Comments

The property comprises a progressively refurbished Stratum Titled B-grade asset which has a tenancy profile comprising 17 commercial tenants, 1 retail tenant and with 9.4% vacancy at the date of sale. Macquarie Bank Group (28% of NLA) forms the major building tenancy with a lease expiry in December 2017. Located within an infill position within the Core Precinct of the Sydney CBD in close proximity to Wynyard Station. The WALE is relatively short term, however, reasonably typical for an asset with a smaller, multi-tenant profile. The property was sold after a full marketing campaign. Purchase Price reflects outstanding incentives (not paid out by vendor) of circa $6.1 million whilst income support of circa $1.25 million has been provided by the vendor over vacant areas (9.4% of NLA).




10 Barrack Street, Sydney, NSW Sale Date December 2012 Sale Price $61,428,104 (GST Exclusive) – advised adjusted price at settlementVendor Blackrock Purchaser Bright Ruby Description Circa 1980 upper B-grade commercial office building (foyer refurbishment undertaken

recently) comprising basement parking, ground floor foyer and retail, mezzanine office area and 12 upper office levels. The building enjoys a prominent corner position overlooking Wynyard Park and Barrack Street plaza and positioned at the western end of Martin Place.

NABERS Rating Energy: 3.0 star Land Area 1,040m² NLA 9,540.7m² Parking 15 spaces Vacancy 0% of NLA No of Tenants 3 retail tenants

12 office tenants Net Passing Income $4,509,742


Retail: $1,500-$1,900/m² gross (avg $1,750/m² gross)


Avg Cmpd Mkt Growth Office 4.1% pa (10 yrs); 4.0% (5 yrs) Core Market Yield* 7.7%



Leasing Allowance 6-9 months and 15%-25% incentive over 10 year horizon (avg 17.7%) with retention factors applied.


Capital Expenditure $30/m² per annum and $150/m² at each expiry at 50% retention.

Weighted Average Lease Expiry (Yrs)

Weighted Average Term to Reversion

Income 3.1 years Area 3.1 years

Income 2.1 years


4%

24%

16%

8%

7%

10%

8%9%

8%

6%


Retail tenants Credit Corp Part floor tenants Pigott Stinson

CPA Software United Airlines Mitchell & Partners Bank of QLD

Patria Northern Capital Telco

Comments

The property comprises a lower A-grade asset which has a tenancy profile comprising 12 commercial tenants and 3 retail tenants and fully leased at the date of sale. Located in a prominent corner position overlooking Wynyard Park and at the western most end of the Martin Place spine. Overall provides good quality office accommodation primarily leased on a whole floor basis. The WALE is relatively short term, however, reasonably typical for an asset with a smaller, multi-tenant profile. The property was sold after a full marketing campaign. The property was sold after a full marketing campaign and we are advised the above price reflects a negotiated headline figure less the Present Value (PV) of outstanding incentives at settlement.




107 Pitt Street, Sydney, NSW Sale Date December 2012 Sale Price $22,936,075 (GST Exclusive) – advised adjusted price at settlementVendor Blackrock Purchaser IOOF Description A 9 level boutique office building originally constructed circa 1960 and comprehensively

retro-fit in late 2002. Comprises basement car parking (7 spaces), ground and mezzanine level retail (Jamie’s Italian Restaurant) and eight upper levels of office space.

NABERS Rating Energy: 3.5 star Land Area 499.5m² NLA 3,171.8m² (retail 13.2% of NLA) Parking 7 spaces Vacancy 0.0% of NLA No of Tenants 1 retail tenant



Retail: $870/m² gross (avg $870/m² gross)







Capital Expenditure $25/m² per annum and $150/m² at each expiry at 50% retention



Italian 1 P/L18%

Gallagher Jeff's P/L11%

IPA Personnel P/L11%

Next Step Recruitment

11%

Staite Henningsen12%

Turner International10%

Radar Group17%

NAB10%


0%10%20%30%40%50%60%70%80%90%

100%


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CommentsThe property comprises a well presented boutique office building located within an infill position within the Core Precinct of the Sydney CBD in close proximity to Martin Place and Wynyard Railway Station. Jamie’s Italian restaurant occupies the Ground and Mezzanine level under a lease expiring January 2021 whilst the major office tenant, The Radar Group occupies interconnected Levels 7 and 8 under a lease expiring July 2015. The remainder of office tenants occupy a single Level each with varying expiry profiles. The WALE is 3.5 years relatively short term, however, reasonably typical for an asset with a smaller, multi-tenant profile. The property was sold after a full marketing campaign and we are advised the above price reflects a negotiated headline figure less the Present Value (PV) of outstanding incentives at settlement.




Grosvenor Place, 225 George Street, Sydney Sale Date December 2012 Sale Price $271,250,000 (25% interest) - $1,085,000,000 (100% equivalent interest) Vendor Direct Property Investment Fund (CFSGAM) Purchaser Dexus Property Group Description Landmark 44-level Premium Grade office tower with basement parking (554 cars),

completed in mid 1988, together with four refurbished older style heritage buildings along Grosvenor and George Streets, a semi-circular plaza building on the corner of Essex and Harrington Streets and an enclosed Solarium Foodcourt.

NABERS Rating Energy: 4 star Water: 4 star Land Area 7,675m² (Leasehold title – 85 years remaining) NLA Office Tower 78,866.2m²

Exchange Courtyard /Royal Naval House 3,958.5m² Johnsons Building 1,706.9m² Plaza Building & Ancillary 747.6m² Solarium Foodcourt 236.6m² Total 85,515.8m² (as subdivided)

Parking 554 single spaces Vacancy 12.7% of NLA No of Tenants 23 (office), 7 (retail) Net Passing Income $63,011,192 pa (post commencement of the new Deloittes lease in April 13)

Inputs AnalysisAverage Market Rentals Office: $950/m² gross (Levels 1-20)

$1,065/m² gross (Levels 21-30) $1,185/m² gross (Levels 31-44)

Passing Initial Yield Year 1 Passing Yield

5.3% 5.8%

Avg Cmpd Mkt Growth 4.2% pa 10 year CAGR Core Market Yield* 6.48% Outgoings $167/m² IRR (after costs) 8.92% Terminal Yield 6.50% Passing v Market Rent Relativity 97.3% Leasing Allowance Varies 6-12 mths @ 60% retention over 10 yrs

Incentives vary 17.5%-27.5% @ 80% applied over 10 yrs Rate/m² NLA $12,688/m²

Capital Expenditure $40/m² pa (inflated); $150/m² at expiries (60% retention) Weighted Average Lease Expiry (Yrs) Income 6.4 years Area 5.9 years


Office 94%

Retail2%

Parking4%

Passing Income Contribution (by % rental)

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CommentsOff market transaction from DPIF (managed by CFSGAM) and reportedly purchased at the December 2012 book value. Grosvenor Place was purchased as part of a larger portfolio including a second CBD office building and retail arcade and a suburban office building with a reported combined price of $503.7 million. Grosvenor Place is a landmark, Premium Grade commercial office building with the major tenant being Deloittes who have recently extended their lease term until November 2023. In addition to current vacancy within the main tower of circa 10,700m² (post the expiry of the Bell Potter and JP Morgan), we note that Ashurst/Blake Dawson (16.1% of NLA) will vacate at lease expiry in March 2015 and this expiry has been accounted for in our analysis. The passing initial yield is impacted by the current vacancy and below market rents across several tenancies, whilst the Year 1 Initial Yield reflects the new base rental for Deloittes extension which commences in April 2013.




6-10 O’Connell Street, Sydney NSW Sale Date September 2012 Sale Price $105,100,000 (GST Exclusive) Vendor Colonial (DPIF) Purchaser MPGA and PPS Description Circa 1970 B-grade commercial office building (retail and foyer further refurbished in

1988/9 and 2010) comprising two basement parking levels (108 spaces), ground floor foyer and retail, and 25 office levels. Strata titled asset (2 lots) albeit all strata lots are held by a single entity.

NABERS Rating Energy: 4.5 star Water: 3.5 star

Land Area 1,767m² NLA 16,315m² (retail 10.3% of NLA) Parking 108 spaces Vacancy 3.4% of NLA No of Tenants 6 retail tenants



Retail: $450-$1,270/m² gross (avg $587/m² gross)







Capital Expenditure $40/m² per annum and $250/m² at each expiry at 50% retention




< 250/m2 tenants < 500/m2 tenants > 500/m2 tenants Parking/Telco Retail tenants Vacant

0%10%20%30%40%50%60%70%80%90%

100%

% o

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Let

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CommentsThe property comprises a freestanding upper B-grade strata asset which has a relatively management intensive tenancy profile, although has demonstrated good tenant retention over the years. Located within an infill position within the Core Precinct of the Sydney CBD in close proximity to 1 Bligh Street and 1 O’Connell Street, both being prominent assets. The WALE is relatively short term, however, reasonably typical for an asset with a smaller, multi-tenant profile. The property was sold after a full marketing campaign. Secure Parking operate the 108 basement car spaces under a management agreement expiring December 2014.




50 Carrington Street, Sydney, NSW Sale Date August 2012 Sale Price $58,500,000 (GST Exclusive) Vendor RESTPurchaser Dexus Description Circa 1992 B-grade commercial office building (ground level façade and foyer

refurbished in 2008) comprising basement parking levels (20 spaces), ground floor foyer and retail and 14 office levels.

NABERS Rating Energy: 3.0 star Land Area 980m²NLA 11,261m² (retail 3.3% of NLA) Parking 20 spaces Vacancy 25.1% of NLA No of Tenants 2 retail tenants



Retail: $720-$1,230/m² gross (avg $905/m² gross)







Capital Expenditure $35/m² per annum and $250/m² at each expiry at 50% retention. Additional capex applied for general refurb allowances to vacant areas.




Retail tenants Kann Finch Taiwan Co-op VacantSPBF REST Aust Direct Mkting O'Connell LeasingTPD Nominees Aust Comp Society WHAM Pty Telcos

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Comments

The property comprises an upper B-grade asset which has a tenancy profile comprising 10 commercial tenants and 2 retail tenants with 25% vacancy at the date of sale (3 whole floors and one commercial suite) albeit good tenant retention has been demonstrated over the years. Located within an infill position within the Core Precinct of the Sydney CBD opposite Wynyard Park. The WALE is relatively short term, however, reasonably typical for an asset with a smaller, multi-tenant profile. The property was sold after a full marketing campaign. Purchase Price reflects outstanding incentives (not paid out by vendor) of circa $1.6 million.




60 Clarence Street, Sydney, NSW Sale Date July 2012 Sale Price $14,250,000 Vendor Harbour & Co Purchaser Private investor Description An eight-level boutique (part heritage) office building located within the Western Corridor

of the Sydney CBD, being a consolidation of 60 & 62 Clarence Street. The buildings were substantially refurbished in 2009 to provide consolidated floorplates, an additional two commercial levels, a new façade to the western elevation (60 Clarence Street) and the retention of the heritage façade (62 Clarence Street – John Sands Building circa 1910). The property comprises a single ground level retail tenancy, seven upper commercial levels.

NABERS Rating N/A Land Area 372.2m² NLA 1,846m² Parking NilVacancy Nil – fully leased No of Tenants Retail: 1 tenant

Commercial 6 tenants

Inputs AnalysisOffice: $600/m² - $660/m² pa gross Passing Initial Yield 6.7%Market Rentals

Retail: $900/m² - pa gross Fully Leased Initial Yield 6.8%

Avg Cmpd Mkt Growth 4.0% pa gross (10 year) @ 19% avg incentive 3.7% pa gross (5 year)

Core Market Yield** 6.8%

Outgoings $122/m² pa IRR (after costs) 7.9%


Leasing Allowance 6-9 months downtime 17.5%-25% incentives over 10 year horizon @ 50% retention.


Capital Expenditure $20/m² pa ongoing and $150/m² make good at lease expiry.


**Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been adjusted to account for property specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc).

Use Composition by Lettable Area

Office 90%

Retail10%

0%

20%

40%

60%

80%

100%

% o

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rea




CommentsAn eight-level boutique (part heritage) office building located within the Western Corridor of the Sydney CBD, being a consolidation of 60 & 62 Clarence Street comprising a single ground level retail tenancy, seven upper commercial levels with the property sold on a fully leased basis with all outstanding incentives paid out by the vendor. Included within the sale price was 734m² of transferable Heritage Floor Space (HFS) rights granted by City of Sydney Council as part of the approval process (substantial refurbishment in 2010) with an assessed value of circa $265,000.




48 Martin Place, Sydney, NSW Sale Date March 2012 Sale Price $134,000,000 (advised apportionment of total price of $150m with 9-19 Elizabeth St) Vendor Commonwealth Bank of Australia (CBA) Purchaser Macquarie Description Historic circa 1928 heritage listed office building comprising basement, ground floor

retail banking chamber, mezzanine level and nine upper levels of office accommodation.

NABERS Rating Not rated Land Area 2,719m² NLA 18,899.8m² - Às Is’

21,443.0m² - `subject to existing DA’ Parking Basement parking for 15 cars. Vacancy 83.6% of NLA No of Tenants Retail: 1 (10yr leaseback to CBA of basement/ground bank chamber)

Commercial: Nil

Inputs AnalysisMarket Rentals Office: $840/m² pa gross (avg) Passing Initial Yield -0.5%

Retail: $450/m² - $1,250/m² pa gross Fully Leased Initial Yield (Post Refurb) 7.4%



Outgoings $160/m² pa IRR (after costs) N/A

Terminal Yield N/A Passing v Market Rent Relativity N/A

Leasing Allowance 24 months downtime and 25% incentive for utilised for post refurbishment office space.


Capital Expenditure Circa $70 million refurbishment/extension budgeted. Weighted Average Lease Expiry (Yrs) N/A



Office 84%

Retail16%

0%10%20%30%40%50%60%70%80%90%

100%

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CommentsCirca 1928 heritage listed asset being well located in the City Core of the CBD purchased by the Macquarie Group for owner occupation (office component) in conjunction with adjoining 9-19 Elizabeth Street. The purchase price of $134 million noted above represents the advised price apportioned to this asset as part of the total purchase price of $150 million reported for the two assets. Sold subject to a 10 year leaseback (4 x 5 year options) to CBA over the basement and ground level banking chamber, and vacant possession of the office component. Sold with Development Approval permitting substantial refurbishment of existing improvements (inc rooftop addition) and the awarding of 9,986m² of transferrable Heritage Floor Space. We are advised Macquarie intend owner occupy both this property and adjoining 9-19 Elizabeth Street and whilst our assessment considers 48 Martin Place as a `stand alone’ investment, the nature of the consolidated purchase should be noted when considering the metrics demonstrated by this sale. Given the owner occupied nature of the purchase, the fully leased initial yield is considered to better demonstrate the true market return for an asset of this nature.




149 Castlereagh Street, Sydney, NSW Sale Date March 2012 Sale Price $40,600,000 Vendor Ernst & Young (appointed receivers) Purchaser Blackstone (Acorn II Subtrusco 1 Pty Limited) Description A 13-level office tower originally constructed circa 1935 being extended and fully

retrofitted in 2009 to comprising, lower ground, ground and part 1st level retail, ground floor foyer, 11 upper levels of office accommodation and 1 plant level. The property is located within the Midtown precinct of the CBD and was sold substantially with vacant possession.

NABERS Rating Not yet rated (due to vacant possession status) Land Area 1,325m² NLA 2,327.5m² - retail

10,728.5m² - commercial 13,056.0m²

Parking NilVacancy Sold substantially with vacant possession.

Inputs AnalysisMarket Rentals Office: $500/m² - $620/m² pa gross Passing Initial Yield N/A

Retail: $550/m² - $1,500/m² pa gross Fully Leased Initial Yield 10.4%

Avg Cmpd Mkt Growth N/A Core Market Yield** N/A

Outgoings $140/m² pa (est.) IRR (after costs) N/A

Terminal Yield N/A Passing v Market Rent Relativity N/A

Leasing Allowance 18 months average downtime is considered reasonable to lease the largely vacant asset at market incentives of circa 25% to 27.5%.


Capital Expenditure N/A – DCF not utilised in this instance Weighted Average Lease Expiry (Yrs) (after allowance for income support)

Income N/A Area N/A


Office 82%

Retail18%


0%

20%

40%

60%

80%

100%


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CommentsFully retro-fitted and extended (circa 2009) commercial asset located in the Midtown precinct of the CBD sold via an Expressions of Interest campaign (under instructions from receiver managers Ernst & Young) largely with vacant possession. Reported refurbishment cost of circa $30 million with the commercial floor plates varying in size from circa 995m² to 1,125m² providing non column free slightly irregular shaped accommodation with central services core. The retail component is located over part basement, ground and first floor whilst no on-site parking is available. Given the substantially vacant nature of the asset, the fully leased initial yield is considered to better demonstrate the true market return for the asset, representing an appropriate margin over more traditional leased investment stock and further reflected in the improved rate of $3,110/m² of NLA. Our market rentals reflect the market Às Is’ albeit we recognise that due to the proximity of the 161 Castlereagh Street development the asset has the potential to benefit from short term market rental upside.




9-19 Elizabeth Street, Sydney, NSW Sale Date March 2012 Sale Price $16,000,000 (advised apportionment of total price of $150m with 48 Martin Place) Vendor Commonwealth Bank of Australia (CBA) Purchaser MacquarieDescription A circa 1967 C-grade commercial office building consisting of basement level plant

rooms and storage areas, ground level entry foyer, ground level retail, and 11 upper office levels with rooftop terrace and plant room.

NABERS Rating Not rated Land Area 474.2m² NLA 4,466.7m² Parking No on-site parking is provided. Vacancy 100% of NLA No of Tenants Retail: Nil

Commercial: Nil

Inputs AnalysisOffice: $530/m² pa gross (avg) Passing Initial Yield N/AMarket Rentals

Retail: $650/m² pa gross Fully Leased Initial Yield 8.5%



Outgoings $130/m² pa IRR (after costs) 9.1%

Terminal Yield 8.75% Passing v Market Rent Relativity N/A

Leasing Allowance 6-9 months downtime 17.5%-25% incentives over 10 year horizon @ 50% retention.


Capital Expenditure $30/m² pa ongoing and $200/m² make good at lease expiry. $700/m² Yr 1 refurbishment allowance.

Weighted Average Lease Expiry (Yrs) Income 0.0years Area 0.0 years



Office 94%

Retail6% 0%

20%

40%

60%

80%

100%

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CommentsC-grade asset being well located in the City Core of the CBD towards purchased with vacant possession by the Macquarie Group in conjunction with adjoining 48 Martin Place. The purchase price of $16 million noted above represents the advised price apportioned to this asset as part of the total purchase price of $150 million reported for the two assets. Our calculations reflect the vacant possession status of the asset with 9 month leasing allowance, full 25% incentive (on a notional 4 year lease) and general plant/base building refurbishment costs of $700/m² of NLA. We are advised Macquarie intend owner occupy both this property and adjoining 48 Martin Place and whilst our assessment considers 9-19 Elizabeth Street as a `stand alone’ investment, the nature of the consolidated purchase should be noted when considering the metrics demonstrated by this sale.




Deutsche Bank Place, 126 Phillip Street, Sydney Sale Date March 2012 (internal transfer) Sale Price $176,250,000 (approx. 25% interest) - $705,000,000 (100% equivalent interest) Vendor Investa Property Group Purchaser Investa Commercial Property Fund (ICPF) / Investa Office Fund (IOF) Description A 37 level Premium-grade office tower constructed in 2005 and comprising four ground

floor retail tenancies, 31 upper office levels and three rooftop plant levels. A podium provided to the southern alignment of the site comprises a 4 level building which houses staff amenities and change rooms, building management, 3 retail tenancies and a child care centre. Positioned within the Core/Financial Hill precinct and is an award winning building designed by Norman Foster.

NABERS Rating Energy: 4.5 star Water: 3.5 star Land Area 3,936 m² NLA Retail: 466.7m²

Pavillion Child Care Centre: 262.9m²

Offices: 41,526.1m²

Total 42,255.7m² Parking 78 single spaces Vacancy 0.0% of NLA and 3 car spaces vacant. No of Tenants 16 (office), 4 (retail), 1 (childcare) Net Passing Income $43,473,824 pa

Inputs AnalysisMarket Rentals Office: $970/m² gross (Levels 1-13)

$1,350/m² gross (Levels 13-34) Passing Initial Yield Year 1 Passing Yield

6.16%6.26%

Avg Cmpd Mkt Growth 4.2% pa 10 year CAGR Core Market Yield* 6.35%Outgoings $179/m² IRR (after costs) 8.75%Terminal Yield 6.375% Passing v Market Rent Relativity 95%Leasing Allowance Varies 6-12 mths @ 60% retention over 10 yrs

Incentives vary 15%-22.5% @ 75% applied over 10 yrs Rate/m² NLA $16,684/m²

Capital Expenditure $25/m² pa (inflated); $250/m² at expiries (60% retention) Weighted Average Lease Expiry (Yrs) Income 4.8 years Area 4.8 years



Office 94.6%

Retail1.1%

Parking2.3%

Other1.9%

0%10%20%30%40%50%60%70%80%90%

100%

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CommentsRelated party transaction of asset after pre-emptive rights exercised by ICPF and IOF. Premium Grade commercial office building completed 2005 within the “financial hill” precinct of the Sydney CBD with a quality tenancy profile with 0.0% vacancy, low sub-lease occupancy, favourable 1-3 year expiry profile and WALE of 4.8 years. The tenancy profile is dominated by Deutsche (33.1% of NLA; expiry October 2015) and Allens Arthur Robinson (31.6% of NLA; expiry June 19). The initial and running yield is impacted by the below market rents (partial effective rents) and deferred reversions over parts of the Deutsche and AAR tenancies.




333 Kent Street, Sydney, NSWSale Date February 2012

Sale Price $47,750,000

Vendor AMB Property Pty Limited

Purchaser Maville Group Australia Pty Limited

Description 9 level B-grade commercial office building completed circa 1985 with heritage masonry façade to the lower four levels at the Kent Street frontage.

NABERS Rating Nil (exemption due to current educational use).

Site Area 1,518m²

NLA Retail 254.5m²

Office 8,683.5m²

Total 8,938.0m²

Parking 41 spaces

Vacancy 0.0% vacant (by NLA)

No of Tenants 1

Major Tenants Central Queensland University (100% NLA)

Net Passing Income $3,927,659 p.a. net

$4,128,383 p.a. net at settlement (fixed 4% increase between exchange & settlement)

Inputs AnalysisMarket Rentals Office: $540/m² p.a. gross (average)

Retail: $540/m² p.a. gross (average) Passing Initial Yield

Core Market Yield*

8.2%8.56% (at settlement) 8.4%*

10 Year IRR (after costs) 9.3%Avge. Compound Market Rental Growth

4.0% p.a. (10 years)

3.7% p.a. (5 years) Rate/m² NLA $5,342/m²

Outgoings $122/m² p.a. Passing v Market Rent Relativity 98.0%

Terminal Yield 8.5% Weighted Average Lease Expiry (Yrs) Income 5.2 years

Leasing Allowance 6-9 months over 10 year horizon and incentives averaging 18.2% over the 10 yr horizon.

Area 5.2 years

Capital Expenditure $35/m² per annum sinking fund and capital expenditure of $275/m² at Yr 6 lease expiry.



Central Qld University100%

0%10%20%30%40%50%60%70%80%90%

100%

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CommentsB-grade building located in the Western corridor of the Sydney CBD sold fully leased to Central Queensland University (CQU) until April 2017 with sub-leases in place over the majority of floors. The property was purchased òff market’ by a private off-shore Chinese investor. Previously sold in August 2010 for $41.5 million, with the 14.5% increase demonstrated by the current purchase being primarily attributable to the removal of a Break Clause able to be exercised by the tenant on or prior to April 2012 and interim fixed rental reviews. Fixed 4% increase scheduled at 1 May 2012 falls before settlement resulting in a post settlement initial yield of 8.56%. Remaining reviews under the existing lease comprise fixed annual 4% increases and a face market review (minimum 4% increase and maximum 10% increase) in 2014. The property is considered to have longer term re-development potential with the current FSR being in the order of 6.5:1.




Wharf 10, 56 Pirrama Rd, Pyrmont, NSW 94 Year Leasehold Interest Sale Date April 2012 Sale Price $31,800,000 Vendor Charter Hall Holdings Limited Purchaser Abacus Description A low rise commercial office building constructed on a redeveloped finger wharf over

Pyrmont Bay, known as ‘Wharf 10’. The building was constructed circa 2001 and provides low rise, A-grade accommodation over ground level, 2 upper levels and a small mezzanine level. 40 car spaces are provided within a single basement level in addition to various storage units.

Land Area 5,764m2 (leasehold) NLA 4,346.9m²NABERS Rating 2.5 stars Parking 40 car spaces ( 1 space per 109m2 of NLA) Vacancy 0.0% No of Tenants 4 office tenants Net Passing Income $2,739,596

Inputs AnalysisAverage Market Rentals Office: $680/m² gross (avg)

$400 per car space per month ($4,800pspa) Passing Initial Yield 8.6%

Avg Cmpd Mkt Growth 3.7% pa gross (10 year) Core Market Yield* 8.7%

Outgoings $499,894 ($115/m2) IRR (after costs) 9.6%

Terminal Yield 9.0% Passing v Market Rent Relativity 100%

Leasing Allowance 6-9 months downtime 17.5%-22.5% incentives over 10 year horizon @ 50% retention.


Capital Expenditure $30/m² pa ongoing and $150/m² make good at lease expiry (50% retention).




Hapag Lloyd36%

Axciom P/L35%

Mood Media12%

Activision Blizzard16%

Other1%

0%

20%

40%

60%

80%

100%

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CommentsLow rise commercial office accommodation constructed circa 2001 and provides A-grade accommodation over ground level, 2 upper levels and a small mezzanine level. Sold fully leased to 4 tenants, the major of which being Hapag Lloyd (36% of NLA) and Axciom Pty Limited (35% of NLA) with lease expiries of July 2017 and April 2019 respectively, and fixed 4% annual increases for both tenants. All outstanding incentives were reportedly paid out by the vendor. Leasehold interest (expiring July 2106) with annual peppercorn rent payable.




Bond Store 3 - 30 Windmill Street, Walsh Bay NSWSale Date February 2012


Vendor PPB Advisory (as Receivers & Managers)

Purchaser Private Investor

Description A 4 level boutique office building comprising a refurbished heritage wool bond store

building with parking for 18 vehicles. The building provides refurbished, boutique office

accommodation incorporating numerous period features being fully let to major

advertising firm Publicis Mojo. Located in the Walsh Bay Precinct and in close proximity

to the Barangaroo redevelopment area, subject to a 99 year ground lease.

NABERS Rating N/A - exempt

Land Area 1,441m2

NLA 3,652.5m2

Parking 18 spaces (9 stacked)

Vacancy Nil – fully leased to Publicis Mojo

No of Tenants 1 tenant

Net Passing Income $1,824,956

Inputs AnalysisOffice: $550/m2 gross pa Passing Initial Yield 10.7%Market Rentals

Retail: N/A Core Market Yield* 9.0%

Avg Cmpd Mkt Growth 3.8% (10 years) IRR (after costs) 10.0%

Outgoings $273,919 ($75/m2) Passing v Market Rent Relativity 100%

Terminal Yield 9.25% Rate/m² NLA $4,655/m²

Leasing Allowance 6-12 months downtime 17.5%-25.0% incentives over 10 year horizon @ 50% retention.


Capital Expenditure $40/m² p.a. ongoing and $250/m² make-good at lease expiry (16% of value).



Parking4%

Office 96%

0%10%20%30%40%50%60%70%80%90%

100%

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CommentsWell presented, heritage office building (albeit leasehold), providing boutique office accommodation and typical floor plates of circa 1,140m2 with onsite parking. The building is fully occupied by Publicis Mojo with a lease expiry of October 2013 however a further 5 year option remains. The property was sold under receivership conditions with the purchase price reflecting an attractive initial yield. The resultant core market yield accounts for forecast short term capital expenditure requirements and the potential whole building expiry in 2013, albeit at 50% tenant retention, and accordingly represents a risk adjusted yield. We understand that negotiations have commenced with the sitting tenant regarding lease renewal, albeit as at the date of sale the option period had not been exercised.




140 Arthur Street, North Sydney, NSW Sale Date December 2012 Sale Price $39,096,000 (GST Exclusive) Vendor AMP Capital Investors Limited Purchaser CorVal Partners on behalf of 3rd Party Investment Mandate. Description A circa 1973 completed, multi-level B-grade commercial building comprising 3

levels of basement parking (84 spaces), a ground floor café and commercial tenancy, 13 upper levels of office accommodation and roof-top plant rooms. The building has undergone some refurbishment since 2007 including refurbishment of the foyer, most common lobby areas and some amenities. We understand the last major refurbishment (including the façade & lifts) was undertaken in 1996.

NABERS Rating Energy: 3.5 Star Water: 4.5 Star

Land Area 1,119m2

NLA 8,374.1m2

Parking 84 cars reflecting 1 space/100m2 of NLA Vacancy 3.2% (NLA) No of Tenants 16 (major tenant NSW Business Chamber – 49.5% of NLA) Net Passing Income $3,941,604pa (before rebates)

Inputs AnalysisMarket Rentals Office: $390/m2 to $460/m2 net Passing Initial Yield 10.1%

Parking $500pcm (single) & $400pcm (tandem) Equated (fully leased) Initial Yield 9.4%

Avg Cmpd Mkt Growth 3.7% (10 years) Core Market Yield* 9.4% Outgoings $119.26/m2 Adopted $120/m2 IRR (after costs) 9.5% Terminal Yield 9.5% Passing v Market Rent Relativity 100.0% Leasing Allowance We have allowed 12 months for current vacancies and

between 6 and 18 months for future expiries. Incentives range from 20% to 25% (gross) of the lease term.


Capital Expenditure An ongoing allowance of $25/m2 pa, linked to tenant retention, plus $200/m2 at each lease expiry. We have allowed $500/m2 in Year 6 for upgrading the NSW Business Chamber tenancy area.



7%

0.8%

49%

43%


Active International Blue Chair Café NSW Business Chamber Vacant Sub 500m² tenants

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Current Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 11

% o

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Expiry Profile - by NLA

Future Expiries Vacant

Comments The subject sold after an Expressions of Interest marketing campaign which closed 6 September 2012. We understand that the purchaser takes on the outstanding incentives which are advised to be in the order of $750,000 and are a mixture of capital

contribution and rental rebates. The purchaser also takes on the leasing risk of current vacancies. It is understood the purchaser had provisioned for approximately $1.5 mil for capital expenditure over the first 3 years. We have made a similar allowance

within our calculations. Total capex over the 10 year horizon is approx. $6.6 million, while the NPV of the capex is approx. $4.8 million. The major tenant in the building is the NSW Business Chamber with 4,146m2 or 49.5% of the NLA. Their lease expiry is 31 January 2018. They do not

have a make good obligation. We have accounted for this within our calculations. The property sold previously in December 2005 for $44,687,500.




54 Miller Street, North Sydney, NSW Sale Date October 2012 Sale Price $24,200,000 (GST Exclusive) Vendor Investa Nominees P/L Purchaser Australian Development Corporation Group Description A multi-level commercial building comprising 5 split levels of basement parking, 2

ground floor retail tenancies, plus foyer and lift lobby, together with 13 upper levels of office accommodation and roof-top plant rooms.


Land Area 1,011.8m2

NLA 7,056.7m2

Parking 77 cars reflecting 1 space/92m2 of NLA Vacancy 13.2% No of Tenants 18 Net Passing Income $2,113,146pa (Including rebates)

$2,432,779pa (Excluding rebates)

Inputs AnalysisMarket Rentals Office: $340/m2 to $410/m2 net Passing Initial Yield 8.7%

Parking $450/space/mth & $500/space/mth Equated (fully leased) Initial Yield 10.7%Avg Cmpd Mkt Growth 3.7% (10 years) Core Market Yield* 11.1% Outgoings $120.78/m2 IRR (after costs) 9.4% Terminal Yield 11.0% Passing v Market Rent Relativity 96.6% Leasing Allowance We have allowed 12 months for current vacancies and

between 6 and 18 months for future expiries. Incentives range from 20% to 30% (gross) of the lease term.


Capital Expenditure An ongoing allowance of $25/m2 pa, linked to tenant retention, plus $150/m2 at each lease expiry.



2%

3%

7%

8%35%

35%

0%8%

2%


Kwik Kopy Café Niche Whole Floor 0m2 to 200m2 201m2 to 400m2 Multiple floor Vacant Parking Wilson

Comments The subject sold after an Expressions of Interest marketing campaign which closed 16 August 2012. The purchase price of $24.2 million reflects that fact that the purchaser takes on outstanding incentives to Nationwide News, SN Pacific, Patni

Computers, Oxygen IT, Payam Data Recovery, Pike Abrahams Brailey, Hones LaHood, Stewart Title, NEXTDC, Keystone Management, Chick St Clair and White Ribbon.

The purchaser also takes on the leasing risk of current vacancies. It is understood the vendor had provision for substantial capital expenditure (façade, boiler etc) over the short to medium term. However the purchasers

intentions are unknown and accordingly, we have adopted an ongoing capital expenditure allowance (see above) and a make good allowance. Total capex over the 10 year horizon is approx. $3.25 million, while the NPV of the capex is approx. $2.1 million.

The major tenant in the building is UGL with 1,611m2 or 23% of the NLA, followed by Inchcape with 765m2 or 11% of the NLA. The property sold previously in February 2007 for $33,715,000.




“NCR House”, 8-20 Napier St, North Sydney, NSW Sale Date July 2011 Sale Price $57,300,000Vendor Charter Hall Office REIT Purchaser Australian Catholic University Description A good quality B grade 23 level commercial building comprising 3 levels of

basement parking, ground floor foyer & lift lobby, plus small commercial suite, with 19 upper levels of office accommodation, together with Level 23 (vacant/potential storage) and roof-top plant rooms.


Land Area 1,503m2

NLA 10,607.3m2

Parking 124 spaces reflecting 1 space/86m2 (a high percentage of tandem spaces) Vacancy 0% (see comment section) No of Tenants 12Net Passing Income $5,302,911pa

Inputs AnalysisOffice: $390/m2 to $480/m2 net Passing Initial Yield 9.3%Market Rentals

Parking: $450pcm–tandem & $550pcm–single. Core Market Yield* 8.7%

Av Cmpd Mkt Growth 4.0% IRR (after costs) 9.0%

Outgoings $1,070,846, reflecting $100.95/m2 of NLA Passing v Market Rent Relativity 101.0%


Leasing Allowance Between 6 & 18 months, depending on the level of expiry in the relevant lease year.



Capital Expenditure $1,224,000 in the 1st 4 years, $20/m2 pa ongoing, linked to CPI (commencing in Year 5), plus $150/m2 at each lease expiry (linked to tenant retention).



ACU27.8%

VMWare11.2%

IDG Communications11.3%

IDC2.8%

Teradata9.2%

NCR Australia21.9%

Multi Secure0.8%

Stora Enso2.8%

(Confidential)4.0%

NRS Media3.2%

Customw are 3.7%

0%

20%

40%

60%

80%

100%

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Comments The property was purchased off-market by a partial owner occupier, looking to take more space within the building as it becomes available. The asset is situated on the north western fringe of North Sydney CBD close by the ACU main North Sydney campus. Our analysis is based and conditional upon three confidential leasing agreements HOA to ACU and others, proceeding to lease execution

on the terms and conditions adopted.




182 Blues Point Rd, McMahons Point, NSW Sale Date November 2012 Sale Price $22,900,000 (GST Exclusive) Vendor EFM P/L Purchaser Centennial Property Group Description A multi-level commercial building comprising three retail and two office tenancies on the

ground floor, four office tenancies on Level 1, 27 car spaces on Level 2 and six upper levels of office accommodation, plus roof-top plant rooms.


Land Area 1,176.2m2

NLA 4,295.6m2

Parking 27 spaces reflecting 1 space/159m² Vacancy 18.6% (Level 1 plus 2 car spaces) No of Tenants 10Net Passing Income $1,889,584pa

$210,000 in income support was provided by the vendor.

Inputs AnalysisMarket Rentals Office: $400 to $550/m2 net Passing Initial Yield 8.25%

Retail: $550 to $800/m2 net Core Market Yield* 10.2%

Avg Cmpd Mkt Growth 3.7% (10 year horizon) IRR (after costs) 10.2%

Outgoings $105.72/m2 Passing v Market Rent Relativity 96%


Leasing Allowance Current vacancies – 6 months letting up and 25% incentive. Future expiries – 6 to 12 months at 50% tenant retention and incentives at 20% to 25% @ 75% probability


Capital Expenditure Zero is Years 1 & 2, then $20/m² linked to CPI and $150/m² at each lease expiry linked to tenant retention.


3%

3%

5%

7%

0%11% 12%

13%

13%

15%13%

5%


Newsagent Grocer Nippon Ent. Anytime Fitness Vacant Self Care Corp

Software AG Nuplex Getty Images IPCA Seymour White Other Income

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


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Comments This property is subject to a long term ground lease (Head Lessor – Trustees of the Roman Catholic Church for the Archdiocese of Sydney), expiring 28 June 2106.

The interest transferred in this sale is therefore a leasehold interest. Subsequent to exchange of contracts Level 1 (and 2 car spaces) was leased to “Only About Children” for a 7 year lease term. This transaction increased the

passing initial yield to 9.86% and the core market yield to 10.3%. It is understood the vendor paid out the existing incentives, however having provided the income support ($210,000), the purchaser took on responsibility for the

incentive to Only About Children. Subsequent to purchasing the asset for $26.2 million in June 2007, EFM had spent approximately $8,250,000 on capital expenditure. Following the leasing up of Level 1 this became a fully lease asset.




162 Blues Point Rd, McMahons Point, NSW Sale Date November 2012 Sale Price $20,000,000 (GST Exclusive) Vendor Queensland Local Government Superannuation Board Purchaser KingsmedeDescription An extensively refurbished three storey B-grade office building with

basement parking for 59 cars. Originally constructed in the 1970’s as an office / warehouse building, it was refurbished for office usage in 1999.

NABERS Rating Energy: 3.5 star Water: 4.5 star

Land Area 2,251m2

NLA 4,056m2

Parking 59 spaces reflecting 1 space/69m2

Vacancy 0% No of Tenants 1Net Passing Income $1,580,393pa (including rebate)

$2,004,764pa (excluding rebate) Inputs Analysis

Market Rentals Office: $300 - $400/m2 net Passing Initial Yield (incl rebate) 7.9%

Parking: $425/space/month Passing Initial Yield (excl rebate) 10.0%

Avg Cmpd Mkt Growth

3.8% Core Market Yield* 8.4%

Outgoings $100.92/m2 IRR (after costs) 8.4%


Leasing Allowance 18 months in Year 6 @ 50% retention. Rate/m² NLA $4,931/m²

Capital Expenditure Ongoing allowance of $20/m2 pa linked to CPI, plus $150/m2 at lease expiry, linked to tenant retention.




Office 79.5%

Parking20.5%


0%

20%

40%

60%

80%

100%


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Comments The subject property was purchased following an Expressions of Interest campaign. We are advised that the purchaser takes on the outstanding incentive to Diageo. The incentive is in the form of a rental rebate of

$35,364.23/month for the term of the lease. Our analysis acknowledges the outstanding incentive. The whole of the property is leased to Diageo Australia for 8 years from 1 November 2010 (there is a 4 year option) Reviews are fixed

increases of 3.75%pa and for analysis purposes, we have activated the 1 November 2012 review. The property has a WALE of 6.0 years at date of sale. The property previously sold in June 1999 for $16million. Seemingly a passive investment with the running yield increasing to 9.5% in Year 5. Although the current zoning precludes high density residential development of the site, it is unknown if the purchasers longer term intentions

are to persue high-density development. The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.



465 Victoria Avenue, Chatswood NSW Sale Date February 2013 Sale Price $92,000,000 (GST Exclusive) Vendor BNY Trust Company of Australia on behalf of FKP Property Trust. Purchaser Hines Global REIT Description An A-grade asset completed in 1995 and extensively refurbished in 2012. It comprises a

2 storey retail podium, 15 levels of office accommodation and 3 levels of basement parking for 220 cars.

NABERS Rating Designed to achieve a 5 Star NABERS energy rating and 4 Star Green Star rating. A rating is not yet available for this property.

Land Area 3,198m2

NLA 15,824.9m2 (includes outdoor seating of 197.2m2, but excludes storage of 125.6m2).Parking 220 spaces reflecting 1 space/72m2 of NLA). Vacancy 4.5% No of Tenants 10Net Passing Income $7,265,179pa

Inputs AnalysisMarket Rentals Office: $380 - $470/m2 net Passing Initial Yield 7.9%

Retail: $400 - $1,020/m2 net Core Market Yield* 8.4%

Avg Cmpd Mkt Growth 3.3% (10 year horizon) IRR (after costs) 9.56%

Outgoings Advised - $87.87/m2 Adopted - $100/m2 Passing v Market Rent Relativity 100%


Leasing Allowance Average term of 9 months for existing vacancies, with 10% (gross) incentives. 6 to 18 months for future expiries and incentive ranging from 20% to 27.5%.


Capital Expenditure Ongoing allowance of $25/m² linked to CPI, commencing in Year 4, plus $150/m² at each lease expiry, linked to tenant retention.


2%

30%5%

30%

19%1%9%0%1%

1%1%1%


Treehouse Vodafone Tech Mahrinda Real Insurance Lend Lease Other Income

Car Park Vacant Korean BBQ Drycleaner Jamaica Blue Salon

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


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Comments The asset has sold after an extensive marketing campaign via Expressions of Interest, which closed 13 September 2012. It was purchased by FKP in 2007 for $98 million, and refurbished in 2012 at a cost of $13 million (per Cityscope). We understand the vendor will pay out all existing incentives at settlement. The vacancies are all in the retail component and the purchaser takes on the leasing risk with current vacancies. It has an excellent tenancy profile with the tenant list including Vodafone, Real Insurance, Tech Mahrinda and Lend Lease. The car park is leased to operator Enacon.




The Clemenger Building,118-120 Pacific Highway, St Leonards, NSW Sale Date December 2012 Sale Price $24,200,000 (GST Exclusive) Vendor Stockland Purchaser Private Investor Description A B-grade, 1987 completed multi-level commercial office building comprising 3 levels of

basement parking for 151 secure parking spaces, foyer and lift lobby, together with 7 levels of office accommodation and roof-top plant rooms. Recent upgrades have been conducted to the lifts, bathrooms/kitchenettes, external building works, the main entrance in 2008 and a foyer refurbishment in 2009.


Land Area 1,792m2

NLA 5,130.7m2

Parking 151 cars reflecting 1 space/34m2 of NLA Vacancy 0%No of Tenants 2 (Clemenger – 100% office & Secure Parking – 151 spaces) Net Passing Income $2,177,455pa

Inputs AnalysisMarket Rentals Office: $450/m2 to $510/m2 gross Passing Initial Yield 9.0%

Parking $300/space/mth (applied with ongoing vacancy) Equated (fully leased) Initial Yield 9.0% Avg Cmpd Mkt Growth 3.6% (10 years) Core Market Yield* 9.3% Outgoings $139.88/m2 IRR (after costs) 9.3% Terminal Yield 9.25% Passing v Market Rent Relativity 97.6% Leasing Allowance We have allowed 18 months downtime (at 50% retention) & 25%

gross incentive (75% application) in year 6 of the cash flow. Rate/m² NLA $4,717/m²

Capital Expenditure An ongoing allowance of $15/m2 pa, linked to tenant retention, plus $150/m2 at each lease expiry.



90%

9%

1%


Clemenger Secure Parking Optus

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


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Comments The subject sold via an expressions of interest marketing campaign and subsequent extended due diligence/negotiation period. The vendor will cover any outstanding incentives. Clemenger have been long term tenants within the building and have recently extended their leasing commitment over 100% of the office component via several new

leases to 30 September 2018. We understand the car parking lease to Secure Parking does not incorporate a provision for the recovery of parking levies. We are also advised that this amount is

currently $115,500pa and we have accounted for this within our calculations. We consider the outgoings are somewhat high relative to surrounding St Leonards assets. However they are reflective of current budged outgoings and past actuals. If

the new owner is able to reduce the outgoings (operating costs), then the passing/core market yields would increase relatively, due to the gross nature of the leases. We understand that a capital works/incentive was provided to Clemenger and that part of this has been utilised and the remaining portion is sitting in trust which Clemenger may draw upon. This is not a cost/negotiation that burdens the purchaser and therefore does not form part of our assessment.




100 Christie Street, St Leonards NSW Sale Date December 2012 Sale Price $42,000,000 (GST Exclusive) Vendor LIF P/L Purchaser Altis Property Description A multi-storey commercial building comprising two levels of basement parking, a ground

floor retail and ground floor commercial tenancy, eleven upper levels of office accommodation, plus roof top plant rooms.

NABERS Rating Energy: 4 Star Land Area 2,413m2

NLA 9,994.4m2

Parking 80 spaces reflecting 1 space/125m2 of NLA Vacancy 0% by NLA, however there are 12 vacant car spaces. No of Tenants 5Net Passing Income $4,459,308pa (Reflects fixed review of 3.5% for SKM as at 1 November 2012).

Inputs AnalysisMarket Rentals Office: $490/m2 gross Passing Initial Yield 10.6%

Parking: $390/space/month ++ Core Market Yield* 10.7%

Avg Cmpd Mkt Growth 3.6% IRR (after costs) 9.4%

Outgoings $824,388 reflecting $82.48/m2 (adopted) Passing v Market Rent Relativity 100.8%%


Leasing Allowance 18 months vacancy/downtime allowance in Year 4 coinciding with the SKM lease expiry. 50% tenant retention.


Capital Expenditure Ongoing allowance of $20/m² (except in Years 4 & 5), make good allowance of $120/m² linked to tenant retention (except in Year 4), plus $500/m² (of SKM tenancy area) refurb allowance at SKM lease expiry. NPV of capex = $4,963,603.


95%

3%1%

1%


SKM ALF Import Mojarra HCT (Bridges) Vacant0%

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Comments The subject property was sold by private treaty after an extensive marketing campaign which commenced in 2011. We understand the vendor paid out any outstanding incentives at date of sale. Sinclair Knight Merz (SKM) are the majority tenant with 95.5% of the NLA. Their lease expires 30 June 2016. The relatively high passing initial and core market yields are a product of the risk associated with the SKM lease expiry in June 2016. Market speculation has

SKM anchoring the Winten development on the southern side of the Pacific Highway when their lease expires in the subject property. We have allowed for a $500/m2 refurbishment of the SKM tenancy at lease expiry. The exit strategy for this asset is potentially a residential conversion/redevelopment.




Building B1, Gore Hill Business Park 219-247 Pacific Highway, Artarmon NSW Sale Date December 2011 Sale Price $60,000,000 GST Exclusive Vendor Lindsay Bennelong Developments Purchaser Securus Guernsey 2 Limited Description A Tier 3 designed and purpose built, four and part five level data centre constructed

in 2011 within the developing Gore Hill precinct. It will comprise 2 levels of data storage halls, office and specialised plant areas, as well as on grade parking for 34 cars. The building will offer large floor plates in the order of 3,250m2.

Land Area 6,692m2

GLA 11,463m2


Vacancy Nil. No of Tenants 1 – Fully leased to the Australian Stock Exchange for 15 years at a net face rent of $385/m2 with 3.5% annual reviews. 34 on grade car

spaces are also provided at $3,500 pa. Net Passing Income $4,532,255 pa (fully leased).

Inputs AnalysisData Centre: $385/m² net Passing Initial Yield 7.6%Market Rentals

Parking: $3,500pa/space Core Market Yield * 7.6%Avg Cmpd Mkt Growth 3.5% IRR (after costs) 9.6%Outgoings $47.37/m² Passing v Market Rent Relativity 100%Terminal Yield 8.0% Rate/m² NLA $5,234/m² Leasing Allowance There is no leasing downtime throughout the 10 year cash flow. Weighted Average Lease Expiry (Yrs) 12.0 years **

Capital Expenditure $25/m² ongoing linked to CPI.

*Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been adjusted to account for property specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc). **Reflects the break clause at the end of Year 12.


Data Centre100%

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Comments The property has been sold on the basis of being fully leased to the ASX for a 15 year lease term in shell form. The ASX (top 50 ASX listed company) has the right to break the lease at the end of year 12, subject to 2 years notice. The property has been designed and purposes built to data centre specialised specifications and is provided in a core and shell form. It is reported that the ASX will spend approximately $35,000,000 on their specialised tenant fit-out and infrastructure. At the expiration of the lease the tenant may make good back to core and shell or may be permitted to leave all plant and machinery in place for future use. Although the purchase price was negotiated subject to the ASX fully occupying the asset, we are of the understanding that the ASX is to surrender approximately

45% (GLA) of the data centre to the purchaser who will then fit-out, operate and manage that component of the data centre within their own data centre fund. Notwithstanding, the purchase price reflects fully leased to the ASX.




Building C, Gore Hill Business Park 219-247 Pacific Highway, Artarmon NSW Sale Date December 2011 Sale Price $82,700,000 GST Exclusive (approx) Vendor Lindsay Bennelong Developments Purchaser Growthpoint Properties Australia Limited Description An A–grade commercial building under construction within the developing Gore Hill

precinct having Pacific Highway frontage and due for practical completion in late 2012. It will comprise 2 levels of basement parking for 182 cars, lower ground floor, ground floor and café, plus 5 upper levels of office accommodation. The building will offer large floor plates in the order of 1,600m2 up to 2,300m2.

NABERS Rating A 5 Star NABERS rating and 5 Star Green Star rating are being targeted. Land Area 5,061m2

NLA 14,136m2


Vacancy 48% pre-commitment (52% of the NLA is subject to a 5 year rental guarantee). No of Tenants 1 – Fox Sports (Premier Media Group) have pre leased 48% of the NLA (6,790m2) for

10 years (from practical completion) at a net face rent of $430/m2 with 3.5% annual reviews.

Net Passing Income $6,720,730 pa (fully leased subject to rental guarantee).

Inputs AnalysisOffice: $430/m² net Café: $500/m² net

Passing Initial Yield 8.1%Market Rentals

Parking: $3,500pa/space Core Market Yield* 8.1%Avg Cmpd Mkt Growth 3.5% (post completion) IRR (after costs) 9.2%Outgoings $55.45/m² Passing v Market Rent Relativity 100%Terminal Yield 8.25% Rate/m² NLA $5,850/m² Leasing Allowance 12 months in years 5 and 10 (50% retention) plus associated

incentives. We have not accounted for any secondary expiry of the 52% of NLA within the cash flow or terminal value calculation.

Weighted Average Lease Expiry (Yrs) 7.4 years **

Capital Expenditure $25/m² ongoing linked to CPI (commencing in Year 5)

*Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been adjusted to account for property specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc). **Reflects the 5 year rental guarantee period only. The WALE is likely to improve upon leasing vacant areas.


Rental GuaranteeCafé 1%

Rental GuaranteeOffice 51%

Fox Sports48%

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Comments The property is being purchased “off market” on a structured fund through basis, noting that the developer will provide a coupon rate of 8.75% on payments

made through the construction period, with Growthpoint Properties not being exposed to any development risk. There are also stamp duty savings involved with the purchase.

The developer will provide a 5 year rental guarantee for all vacant space (52% of the NLA) from practical completion. All outstanding incentives are the responsibility of the vendor. On completion the property will have a strong WALE of 7.4 years (minimum) subject to the 5 year rental guarantee, although this is likely to improve upon

leasing vacancies. There is potential for the price to increase to reflect a higher initial and core market yield up to 8.0%, subject to certain leasing benchmarks being met, with an

achieved fully leased building having a WALE of 10 years or more being the upper benchmark.




75 George Street, Parramatta, NSW Sale Date December 2012 Sale Price $32,550,000 Vendor Stockland Purchaser Corval Description Comprises a circa 1985 (progressively upgraded) 6 level, A-grade office tower located

within the Parramatta CBD. The building provides two ground level retail tenancies (330.9m²) and five upper office levels within a twin tower configuration with linked central services core. Average floor plate size of 1,850m². 104 car spaces are provided over basement and ground levels. The building has achieved a 3.5 Star NABERS rating whilst major tenants include St George Bank and Hanson Construction (3.8 year WALE).

NABERS Rating 3.5 Star energy rating Land Area 2,668m2

NLA 9,535m2

Parking 104 spaces Vacancy 0.0% of NLA (4 car spaces vacant) Major Tenants St George Bank (68.0% of NLA) & Hanson Construction (19.5% of NLA) Net Passing Income $3,275,299

Inputs AnalysisAverage Market Rentals Office: $315/m² net ( $430/m² gross) Passing Initial Yield 9.91%

Parking: $275 per space pcm Core Market Yield* 10.14%

Avg Cmpd Mkt Growth 3.6% pa (5 year) 3.4% pa (10 year) IRR (after costs) 9.85%

Outgoings $114/m² Rate/m² NLA $3,414/m²

Terminal Yield 10.0% Weighted Average Lease Expiry (Yrs) Income 3.8 years Area 3.8 years

Leasing Allowance 6-18 months and an average 17% gross incentive over 10 year horizon at 50% retention and an 85% incentive probability factor.

Capital Expenditure $3,311,562 (10.17%) over 10 year cashflow


66%

21%5%3%

4%1%


St George Bank Hanson Construction Foodoo Investments Chandler Macleod

Reachlocal Australia Macros Accountants Vacant

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CommentsLow rise commercial office accommodation constructed circa 1985 (progressively upgraded) and provides A-grade accommodation over Levels 1-5, two Ground Level shops and 104 car spaces over basement and ground Levels. Sold fully leased (3.8 year WALE) with major building tenants comprising St George Bank (68.0% of NLA) & Hanson Construction (19.5% of NLA) whose respective leases expire in May 2017 and September 2016 with fixed 3.5% annual increases for both tenants. Sold via an Expressions of Interest campaign with provision made by the vendor to cover all outstanding incentives.




18 Smith Street, Parramatta, NSW Sale Date December 2012 Sale Price $47,500,000 Vendor Capital Corporation Purchaser Altis Property Group Description Comprises a modern (completed circa 2001) 12 level, A-grade office tower located

within the Parramatta CBD. The building provides two ground level retail tenancies (590m²) and ten upper office levels (Levels 1 and 4-12) with an average floor plate size of 1,245m². 170 car spaces are provided over basement, ground and Levels 1-2. The building has achieved a 4 Star NABERS rating whilst major tenants include Telstra and Suncorp (3.2 year WALE).

NABERS Rating 4 Star energy rating Land Area 1,921m2

NLA 12,041m2

Parking 170 spaces Vacancy 5.6% of NLA Major Tenants Telstra (50.7% of NLA), Suncorp-Metway (20.8% of NLA), Pepper Aust (9.5% of NLA) Net Passing Income $4,682,860 (reflects 1 Jan 2013 fixed increases to Telstra & Suncorp-Metway)


Parking: $275 per space pcm Core Market Yield* 10.2%







55%

21%

10%5%

2%1%

6%


Telstra Suncorp-Metway Pepper Australia AEC

My Roast CBRE Vacant Employers Mutual

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Comments12 level, A-grade office tower (circa 2001) located within the Parramatta CBD providing two ground level retail tenancies (283m²), ten upper office levels (Levels 1 and 4-12) and 170 car spaces provided over basement, ground and Levels 1-2. Sold 94.4% leased (3.2 year WALE) with major building tenants comprising Telstra (50.7% of NLA), Suncorp-Metway (20.8% of NLA),with respective expiries of December 2015 and December 2014 and fixed annual 3.75% increases to both tenants. Sold via an Expressions of Interest Campaign and we are advised there were no outstanding incentives at the date of sale, nor were any rental guarantees over vacant space provided by the Vendor.




‘Eclipse Tower’ 60 Station Street, Parramatta, NSW Sale Date November 2012 Sale Price $167,500,000 Vendor Grosvenor & Leighton Properties Purchaser RESTDescription ‘Eclipse Tower’ comprises a new (completed September 2012) 20 level, A-grade office

tower located within the Parramatta CBD. The building provides two ground level retail tenancies (590m²) and nineteen upper office levels with an average floor plate size of 1,320m² in addition to two levels of basement parking (145 car spaces). The building has achieved a 5 Star Green Star rating. Major tenant pre-commitments included Deloittes, QBE Insurance and Landcom and provides a WALE of 8.6 years.

NABERS Rating Energy: 5 Star energy rating (targeted level) Green Star: 5 Star Green Star Office Design

Land Area 3,216m2

NLA 25,728m2

Parking 145 spaces Vacancy Nil – subject to rental guarantees over vacant space (circa 17% of NLA) Major Tenants QBE Insurance (46.3% of NLA), Deloittes (20.6% of NLA), Landcom (10.3% of NLA) Net Passing Income $12,145,000


Parking: $275 - $300 per space pcm Core Market Yield* 7.35%







CommentsThis sale represents the largest suburban office transaction in Sydney in recent times and one of the largest investment sales to occur within the Parramatta CBD. The building is circa 85% leased with the balance of three office floors, single retail tenancy and vacant car spaces subject to 18 month rental guarantees. We are also advised that the vendor will be responsible for any incentives relating to vacant areas at the date of sale and accordingly our calculations have reflected these terms. The property was acquired off market post completion and relative to other passive asset sales nationally represents a strong result.



Sales Analysis Sales Analysis

Lang Centre 132 Marsden Street, Parramatta Sale Date August 2012

Sale Price $25,525,000 Vendor Centuria (Strategic Property Holdings No.7 P/L) Purchaser Private Investor (Sandran) Description A strata titled (two lots) 7-storey B-grade commercial building completed in 1986

comprising ground level (retail/service commercial/child care centre), 231 car spaces over Levels 1-2 and four levels of office accommodation over Levels 3-6. Prominently located on the corner of Marsden Street and Hunter Street within the western precinct of Parramatta’s CBD approximately 400 metres from the railway station.

NABERS Rating 3.5 Star Energy Land Area 3,088m² NLA 9,789.2m² Parking 231 spaces (Levels 1 & 2) Vacancy 0% (by NLA) No of Tenants 5 tenants Net Passing Income $2,959,569 p.a.

Inputs Analysis Market Rentals Office: $380/m² - $410/m² p.a. gross Passing Initial Yield 11.6%

Core Market Yield* 10.1%**

Avg Cmpd Mkt Growth 3.6% p.a. gross (10 year) @ 18.5% avg incentive

3.4% p.a. gross (5 year)

**We note that the above Core Market Yield accounts for the potential expiry of the major building tenant (88% of NLA) in 2015 and is therefore risk adjusted to some extent. The sale price reflects a Core Yield closer to 12.5% before accounting for the major tenant expiry.



Leasing Allowance 6-18 months downtime 15%-22.5% incentives over 10 year horizon @ 50% retention.


Capital Expenditure $30/m² p.a. ongoing and $150/m² make good at lease expiry.




All Image Bonsai Rising Glory Childcare OSR Secure Parking Vacant

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Comments

B-grade strata titled building (two lots only) prominently located in the western precinct of Parramatta CBD, being a popular location for Government tenants. The major tenant is the Office of State Revenue (OSR) who occupy approximately 88% of NLA with a lease expiry of November 2015. The building enjoys dual street frontage (Marsden and Hunter Streets) with large circa 1,895m2 floor plates with central core considered well suited to subdivision and is of good base building quality. Secure Parking lease 163 car spaces under a lease expiring November 2015. The property was purchased subsequent to marketing via an Expressions of Interest (EOI) campaign (initially closing March 2012). The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.



7 Murray Rose Avenue, Sydney Olympic Park, NSW Sale Date June 2012 (terms agreed) Sale Price $29,250,000 GST Exclusive Vendor SOP 8B Pty Ltd (FDC Property Pty Ltd & Audley Pty Ltd) Purchaser Folkestone Real Estate Income Fund at Sydney Olympic Park Description A 6 level commercial building “under construction” which will comprise five levels of

office accommodation and ground floor retail, together with two levels of basement parking 53 cars. The building will offer floor plates in the order of 1,050m2 and is centrally within Sydney Olympic Park. This transaction represents the sale of a 99 year leasehold interest to Sydney Olympic Park Authority.

NABERS Rating Targeting a minimum 4.5 Star NABERS rating. Land Area 1,170m2

NLA 5,968.8m2


Vacancy 0% (NLA) – (701.6m2 of retail & 6 car spaces - subject to a 12 month rental guarantee). No of Tenants The 5 office levels (5,267.2m2) & 47 cars are to be fully leased to Thales Australia for 10

years. Net Passing Income $2,330,264 pa (upon completion accounting for 12 month rental guarantee)

Inputs AnalysisMarket Rentals Office: $345/m² net

Retail: $550/m² net Passing Initial Yield 8.0%

Parking: $2,400pa/space (security) Core Market Yield* 8.0% Avg Cmpd Mkt Growth 3.6% (over 10 years) IRR (after costs) 9.2% Outgoings $60/m² (estimated) Passing v Market Rent Relativity 100% Terminal Yield 8.25% Rate/m² NLA $4,900/m² Leasing Allowance No current vacancies.

Between 6 & 12 months throughout the cash flow horizon and incentives 20% (75% incentive probability).

Weighted Average Lease Expiry (Yrs) 8.5 years (income)

Capital Expenditure $1,280,984 throughout the cash flow horizon, reflecting 4.4% of current value.


Thales Australia83%

Rental Guarantee17%


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Comments A 99 leasehold interest purchase, subject to a peppercorn rent of $1 for the entire lease term. Acquired off market. We advised that outstanding incentives and the 12 month retail rental guarantee will be covered by the vendor. The date of practical completion is scheduled to be 24 October 2012 with the Thales lease to commence 1 December 2012. The building is targeting a 5 Star Green Star – Office Design v3 rating. The transaction involves the fund acquiring (land & works) to date, the making progressive payments until practical completion. The entire office component (88% of NLA) will be leased by Thales Australia for 10 years, plus 2 x 5 year options. Rent reviews are 3.5% annual increases. This sale represents the second major commercial office investment transaction to occur in Sydney Olympic Park since Centuria’s acquisition of 8 Australia

Avenue for $30,150,000 in April 2011 which reflected a core market yield of 8.6% and having a WALE of 6 years.




12 Waterloo Road, Macquarie Park NSW Sale Date June 2012 Sale Price $9,100,000 GST Exclusive (approx) Vendor Investa Funds Management Limited Purchaser Centennial Property Group Description A four (4) level office building located at the southern end of Waterloo Road within the

Macquarie Park business precinct. Built in 1999, the property provides conventional floor plates ranging in area from 950.3m² - 1,017.1m² with a centrally located service core. The ground level is currently utilised as a laboratory and levels 1-3 feature balconies. Parking is provided via a secure basement level combined with additional uncovered on-grade parking surrounding the perimeter of the building.

NABERS Rating 1.5 Star NABERS rating Land Area 4,149m2

NLA 3,946.7m2

Parking 90 spaces (reflecting 1 space/44m²) Vacancy 9.0% (NLA) – (Level 1, Suite 2) No of Tenants 5 tenants, with the major tenant (IBS) occupying 25.8% of the NLA (1,017.1m2) and 29

car spaces. Net Passing Income $1,089,475 pa net

Inputs AnalysisOffice: $240 - $250/m² net Passing Initial Yield 12.0%Market Rentals Parking: $1,500pa/space for secure U/C spaces & $1,000pa/space for on-grade parking.

Core Market Yield* 10.8%

Avg Cmpd Mkt Growth 3.5% (over 10 years) IRR (after costs) 9.4%Outgoings $308,227 pa or $78.10/m² of NLA Passing v Market Rent Relativity 111.7%Terminal Yield 10.0% Rate/m² NLA $2,306/m² Leasing Allowance 12 mths for current vacancies & 30.0% (gross)

incentives.

Between 6 & 18 mths throughout the cash flow horizon and incentives ranging from 20% to 30% (75% incentive probability).

Weighted Average Lease Expiry (Yrs) 1.7 years (area)

Capital Expenditure Ongoing allowance of $20/m2 of NLA linked to CPI, plus $150/m2 at each lease expiry.



Oceanlinx14%

Isagenix15%IBS Australia

28%

Marcia Investments29%

Broadland Solutions14%

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Comments Purchased after an Expressions of Interest campaign which closed on 8 March 2012. We understand that the purchaser – Centennial Property Group is a

consortium of private investors. The current purchase price of $9,100,000 (June 2012) reflects a decline in value of approx. 26.6% from the previous sale of the subject in January 2007 for

$12,400,000. Macquarie Park passenger railway station is located approximately 500 metres from the property. Property benefits from a foyer upgrade undertaken in 2005. The analysis assumes the purchaser takes on the leasing risk for current vacancies. It also assumes the vendor paid out any outstanding incentives at sale. The vacant suite on Level 1 has been vacant for an extended period. The suite leased by Broadland Solutions (from 1 September 2011) had been vacant for an

extended period and the majority tenant (IBS Australia) is sub-leasing some of their space.




20 McIntosh Drive, Mayfield West, NSW Sale Date June 2012 Sale Price $18,000,000 (GST Exclusive) Vendor Bradken Resources P/L Purchaser Private investment syndicate. Description Current – Nil, vacant land.

Proposed – A purpose built multi-function building comprising partitioned and open plan office, meeting rooms, conference room, laboratories, commercial cafeteria, amenities, workshop, external multi-purpose building and on-grade parking for 144 cars.

NABERS Rating Energy: Not yet assessed Water: Not yet assessed

Land Area 13,230m2

LA Proposed – 7,163m2

Parking 144 cars reflecting 1 space/50m2 (plus 27 visitor spaces and 7 motorbike spaces).

Vacancy Proposed – 0% No of Tenants 1Net Passing Income $1,526,250pa net (“As If Complete” as at the date of valuation).

Inputs AnalysisMarket Rentals Office: $230/m2 net Passing Initial Yield 8.5%

Laboratory: $200/m2 net Core Market Yield* 8.5%

Avg Cmpd Mkt Growth

3.1% (over 10 years) IRR (after costs) 10.5%

Outgoings $45/m2 of LA Passing v Market Rent Relativity 100%


Leasing Allowance Not applicable. Weighted Average Lease Expiry (Yrs)

Income 15 years Area 15 years

Capital Expenditure $15/m2 of LA ongoing, linked to CPI, plus $150/m2 at lease expiry.


Comments A purpose built facility for Bradken Resources based on a 15 year lease from practical completion, anticipated early 2013. The purchaser has agreed to purchase the completed building for $18,000,000 on a “fund through” basis, whereby they will settle the purchase of the

land for $2,500,000 as a cash transaction on or before 29 June 2012. The purchaser will pay a deposit for the development contract of $1,550,000 (this amount reflects 10% of the outstanding balance of $15,500,000

after settlement of the land purchase). There are no outstanding incentives at date of sale.

Bradken is an ASX listed top 200 company,




7 King Street, Concord West, NSW Sale Date May 2012 Sale Price $52,000,000 (GST Exclusive) Vendor Australian Property Growth Fund Purchaser Parangool P/L Description A modern single level call centre, purpose built for Westpac in 1997. It includes parking

for 480 cars (including 280 tandem spaces). Facilities include a gymnasium, change rooms, cafeteria, basketball court and stand alone child care centre.

NABERS Rating Energy: 3.5 Star

Land Area 31,360m2

NLA 16,580m2 (by survey) Parking 480 cars (including 280 tandem spaces) reflecting 1 space/35m2 of NLA Vacancy 0%No of Tenants 1Net Passing Income $4,108,107pa ($247.77/m2, including parking)

Inputs Analysis

Office: $240/m2 net Passing Initial Yield 7.9%Market Rentals

Parking: Single $1,600pa/space

Tandem $1,100pa/space



Outgoings $65/m2 Passing v Market Rent Relativity 89.2%


Leasing Allowance Not Applicable Weighted Average Lease Expiry (Yrs) Income 10.4 years Area 10.4 years

Capital Expenditure $200/m2 at lease expiry, linked to tenant retention.


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Comments The property previously transacted at $60,750,000 in July 2007. Westpac fully occupy the property and have signed a 10 + 5 + 5 year lease from 2 October 2012. Commencing rental will be $4,620,000pa net (inclusive of

parking), reflecting $278.65/m2, and reviews are annual adjustments in line with CPI + 0.5%. As an inducement to sign the lease, Westpac where given an incentive of $5,000,000 spread evenly over the term and it could be taken in the form of

contribution to fit-out, rental rebate or a combination of the two. We have analysed the sale on the basis of the incentive being taken as a rental rebate of $500,000pa for the term of the lease.

We have adopted outgoings reflecting $65/m2 of NLA, which is at the lower end of suburban outgoings and reflects the single tenant occupancy of the asset. The potential exit strategy for this property is medium density residential redevelopment, with an adjoining site developed for 320 residential units and some

retail/commercial space.




16-18 Wentworth Street, Parramatta, NSW Sale Date April 2012 Sale Price $18,000,000 Vendor LaSalle Australia Core Plus Fund Purchaser Private Investor Description An 8-storey B-grade commercial building with parking for 73 cars on three basement

levels; completed mid-1991. The building has an open terrace to the first level accommodation fronting Wentworth Street and ground floor fronting Valentine Avenue with 7 upper levels of office accommodation. The building is positioned within the southern Parramatta’s CBD precinct about 200 metres from the railway station.

NABERS Rating 3 Star Energy Land Area 1,333m² NLA 6,672.8m² Parking 73 basement spaces Vacancy 0% (by NLA) No of Tenants 8 office tenants Net Passing Income $1,646,380 p.a.

Inputs AnalysisMarket Rentals Office: $350/m² - $375/m² p.a. gross Passing Initial Yield 9.1%

Core Market Yield* 9.5%**

Avg Cmpd Mkt Growth 3.6% p.a. gross (10 year) @ 18.5% avg incentive

3.4% p.a. gross (5 year)

**We note that the above Core Market Yield accounts for the potential expiry of the major building tenant (46% of NLA) in 2014 and is therefore risk adjusted to some extent. The sale price reflects a Core Yield closer to 10.5% before accounting for the major tenant expiry.



Leasing Allowance 6-9 months downtime 15%-22.5% incentives over 10 year horizon @ 50% retention.


Capital Expenditure $25/m² p.a. ongoing and $150/m² make good at lease expiry.



Department of Education

10%

Ministry of Transport47%

Australian Vocational Centre14%

Pentana Solutions7%

State Rail Authority13%

The University of Sydney

5%

Empower IT Solutions

3%


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CommentsB-grade building well located in the southern precinct of Parramatta CBD, being a popular location for Government tenants. The major tenant is the Ministry of Transport who occupy approximately 46% of NLA with a lease expiry of January 2014. The building enjoys dual street frontage (Wentworth and Valentine Streets) with circa 875m2

floor plates and provides reasonable quality office accommodation albeit with slightly irregular/elongated floorplates. We understand the property was purchased by way of a direct offer (not actively marketed) at a level consistent with the vendor’s book value and reflects relatively tight investment parameters.




75 Talavera Road, Macquarie Park NSW Sale Date March 2012 Sale Price $40,500,000 GST Exclusive (approx) Vendor Challenger Listed Investments Limited Purchaser Macquarie University Description A 9 level commercial office building completed in 1999 comprising 2 levels of basement

parking for 250 cars, ground floor lobby and office, with 6 upper levels of office accommodation. It also provides 35 on grade car spaces. The building offers good floor plates in the order of 1,600m2 up to 2,000m2 and is situated within Macquarie University Research Park. This transaction represents the sale of the leasehold interest, being subject to a long term ground lease (circa 87 years remaining) to Macquarie University.

NABERS Rating 2.5 Star NABERS rating Land Area 7,237m2

NLA 13,427.5m2


Vacancy 28.0% (NLA) – (Ground and Level 1) No of Tenants 5 tenants, with the major tenant (Luxottica) occupying 42.5% of the NLA (5,713m2) and

119 car spaces. Net Passing Income $2,233,325 pa (accounting for non recoverable ground rent)

Inputs AnalysisOffice: $280 - 290/m² net Passing Initial Yield 5.5%Market Rentals Parking: $2,100pa/space (security)

$1,100pa/space (on grade) Core Market Yield* 8.8%

Avg Cmpd Mkt Growth 3.6% (over 10 years) IRR (after costs) 9.5%Outgoings $88.26/m² (including non recoverable ground rent) Passing v Market Rent Relativity 90%Terminal Yield 9.0% Rate/m² NLA $3,016/m² Leasing Allowance 9 mths for current vacancies & 27.5% (gross) incentives

(50% retention probability).

Between 6 & 18 mths throughout the cash flow horizon and incentives ranging from 20% to 25% (75% incentive probability).

Weighted Average Lease Expiry (Yrs) 4.3 years (area)

Capital Expenditure $4,513,813 throughout the cash flow horizon, reflecting 11.1% of current value.



Upstream Print16%

Luxottica57%

Dept of Education8%

Toyota13%

Multilit6%

0%

20%

40%

60%

80%

100%

% o

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Comments The leasehold interest was purchased “off market” by Macquarie University who own the Freehold title. Any outstanding incentives are the responsibility of the purchaser. This sale represents the first major commercial office investment transaction to occur in Macquarie Park/North Ryde since the “on completion” acquisition of 78

Waterloo Road for $67,000,000 in August 2007 by Stockland Trust, prior to the Global Financial Crisis. We understand that Macquarie University intend to owner occupy the existing vacant office area on the ground and Level 1. Macquarie University Hospital is adjacent, whilst Macquarie Shopping centre and Macquarie University Railway Station are within close walking distance.




Sale DateSale PriceVendorPurchaserDescription

Site AreaNLA Office 10,348.5 m²

Retail 460.0 m²Total 10,808.5 m²

ParkingVacancyNo. of TenantsMajor TenantNet Passing Income

Average Market Rentals Office $414/m² pa 8.04%Retail $450/m² pa 8.04%

Office 2.2% 9.38%Retail 2.7% $4,765/m²

Outgoings $48/m² pa Weighted Average Lease Expiry Income 15.1 yrsTerminal Yield 9.00% Area 14.5 yrs

Average 10 yr Office Avg Incentive 8.3% Weighted Average Reversion Term Income 15.1 yrsLeasing allowances Dow ntime 9 mths Area 14.5 yrs

Retail Avg Incentive 5.0%Dow ntime 3 mths Weighted Average Rebate Expiry (WARE) 0.0 yrs

Average 10 yr Tenant Office 75%Retention Assumptions Retail 50%Capital Expenditure At Expiry $300/m²

Sinking Fund $10/m² pa plus $55/m² of the off ice NLA to repaint and recarpet as per the lease% of Value 2.3%

Comments

The property sold via an expressions of interest campaign w ith a sale price of $51,500,000 negotiated in August 2012 w hich w as based on an initial yield of 8.06% w ith the vendor being liable for outstanding incentives. Subsequent negotiations resulted in the purchaser inheriting the outstanding incentives and the original sale price w as consequently adjusted to reflect this, as w ell as liabilities for a delayed settlement. Our analysis is based on the original sale price.

Analysis

The off ice component and 25 car bays w ere leased to the Australian Tax Office for 15 years from completion of the building. Tw o ground floor retail tenancies w ere either leased or subject to a rental guarantee for 5 years. The remaining 31 car bays w ere leased to a neighbouring property ow ner for 50 years.

(before renewal/retention assumptions)

Passing Initial YieldCore Market Yield

10 year IRR (after costs)Rate/m² of NLA

520 Smollett Street, Albury NSWNovember 2012$51,500,000Volt Lane Pty LtdAR Management

The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent o f Knight Frank Valuations.

Average 10 yr Compound Rental Growth

Insert Photo

*Core M arket Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been adjusted to account for property specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc).

A modern 7 level off ice building completed in October 2012 w hich has been designed to achieve a 4.5 Star NABERS energy rating and 5 Star green Star rating. The ground floor accommodates tw o retail tenancies w ith the majority of the building (96%) being high quality off ice accommodation. Basement car parking for 56 vehicles is also provided. Strong CBD location w ithin the NSW regional city of Albury, approximately 300 kilometres from Melbourne.

Commonw ealth of Australia (ATO)

1,989.0 m²

56 Basement Spaces0.0%4

$4,140,418

Inputs

Comm. of Australia

92%

Café4%

Rent Guarantee

3%

Serviced Accom.

1%


0%10%20%30%40%50%60%70%80%90%

100%

% o

f Net

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Canberra Commercial Sales Analysis

Knight Frank Valuations Canberra


10 – 12 Mort Street Canberra, ACT Sale Date June 2012

Sale Price $55,800,000 (exclusive of GST) Vendor GPT Purchaser Growthpoint Properties Description Two adjoining, circa 1990 built six (6) level office buildings situated on the corner of Mort

Street and Bunda Street in the Canberra CBD. The buildings have recently undergone significant refurbishment works designed to achieve a 4.5 Star NABERS rating. Base plant items largely remain unchanged however. Basement parking for 165 vehicles is accessed via a rear laneway.

NABERS Rating Energy: 4.5 star (targeted) Land Area 3,064m² NLA 15,295m² Parking 165 basement bays Vacancy Nil No of Tenants 1 Net Passing Income $5,751,287

Inputs Analysis Market Rentals Office: $400/m² gross face Passing Initial Yield 10.31%

Car Parking: $3,250 per single bay and $4,000 per tandem bay


Avg Cmpd Mkt Growth 2.7% 10 years IRR (after costs) 10.07%

Outgoings $73.53/m² (based on operating costs prior to refurbishment works)

Passing v Market Rent Relativity 103.2%


Leasing Allowance Not applicable Weighted Average Lease Expiry (Yrs) Income 4.7 years Area 4.7 years

Capital Expenditure $100/m² make good allowance, plus ongoing annual allowances throughout the second half of the cash flow.

We have also allowed $200/m² at the expiry of the current lease (Year 6) to upgrade plant items.


Comments The property was subject to a recently commenced 5 year lease to DEEWR, which expires in March 2017. A 5 year option for renewal is also provided. Annual reviews are fixed at 3.75%. An incentive totalling $7,874,563, equivalent to approximately 25%, was provided – though this was paid out by the vendor prior to sale. The property sold via an expressions of interest campaign, after normal marketing period of circa 2 months to national property fund. At the date of sale, there was limited interest in investment assets with sub 10 year WALES which impacted buyer demand. The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.

Office 91%

Retail0%

Parking9%

Other0%


0%

20%

40%

60%

80%

100%


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50 Marcus Clarke Street Canberra, ACT Sale Date 27 February 2012 Sale Price $225,888,000 (exclusive of GST) Vendor Walker Corporation Purchaser CIMB Trust Capital Description Twelve level office building constructed in 2011 with three levels of basement car

parking for 424 cars. The property was designed to achieve modern environmental benchmarks and features include a tri-generation plant, grey water recycling and NABERS energy of 5 stars. The building is currently operating at 5.5 stars with no green power.

NABERS Rating Energy: 5.5 star Land Area 4,801m² NLA 40,861m² Parking 424 basement bays and 22 motor bike spaces Vacancy NilNo of Tenants 1Net Passing Income $16,630,167

Inputs AnalysisMarket Rentals Office: $433/m² gross ex GST Passing Initial Yield 7.36%

Storage: $192/m² gross ex GST Core Market Yield* 7.36%


Outgoings $54.36/m² Passing v Market Rent Relativity 100%


Leasing Allowance 6 months for communications aerials Weighted Average Lease Expiry (Yrs) Income 13.4 years Area 13.4 years

Capital Expenditure $10/m² for repainting in year 7 and $45/m² in year 9 for recarpeting plus $50,000 pa.



Office91%

Retail1%

Parking7%

Other1%

0%

20%

40%

60%

80%

100%

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Va c a nt F uture Expirie s S e c o nda ry Expirie s

CommentsThe property was purpose designed and built to accommodate a Federal Government department (Department of Education, Employment and Workplace Relations, DEEWR) for a 15 year term, 14 years from the expiry of the incentive period (total circa $21 million). A café on the ground floor is occupied under licence to a local operator from the Government at the same terms and conditions as the primary lease. A communication aerial on the roof top is yet to be executed by Optus though documents are drawn up.




2-6 Bowes Street Phillip ACT Sale Date April 2012

Sale Price $14,000,000 Vendor Receivers and Managers on behalf of Australian Public Trustees Limited Purchaser Quintessential Equities Description Penhryn House is a six level office building constructed circa 1986. The complex is

interconnected and is constructed across three blocks. It provides five levels of office accommodation and one podium level of car parking for 131 cars. It is located in the Woden Town Centre with public parking directly opposite. Major Government departments in the precinct include Department of Health, HSA and IP Australia.

NABERS Rating Energy: 0 Stars NABERS Water: N/A

Land Area 4,366m² NLA 12,622m² Parking 131 cars Vacancy 3,987m² No of Tenants 1 Net Passing Income $1,627,150

Crown Lease Covenants Purpose Clause: To use the premises only for the purpose of offices and ancillary thereto one or more of the following – bank bar café restaurant club co-

operative society health centre indoor recreation personal services PROVIDED ALWAYS THAT the area of the building used for other than general offices shall not be more than: (i) 1,500 square metres in respect of the development on Block 34 Section 8 Division of Phillip; (ii) 1,000 square metres in respect of the development on Block 38 Section 8 Division of Phillip; (iii) 1,000 square metres in respect of the development on Block 7 Section 119 Division of Phillip.

Gross Floor Area: Total GFA 13,600 square metres.

Inputs Analysis Market Rentals Office: $375/m² - $380/m², after refurbishment. Passing Initial Yield 11.62%

Car parking: $2,000 Core Market Yield* 12.27%


Outgoings $59/m² Passing v Market Rent Relativity 71.4%


Leasing Allowance 12 months Weighted Average Lease Expiry (Yrs) Income 1.2 years Area 1.2 years

Capital Expenditure $950/m² to refurbish the building to 4.5 NABERS rating at expiry of the existing lease in year 2 of the cash flow


Comments Penhryn House is a D-grade office building currently occupied on short term leases by Department of Human Services until November 2013. Prior to a long term commitment by a tenant it will require a major refurbishment to bring it to a 4.5 star NABERS rating. We have allowed $950/m² and 12 months to complete these works in analysis. It is assumed that these works include preliminaries, full mechanical upgrade, lifts, new foyer, replace single glazed windows, new bathrooms, carpets, ceilings and upgrade fire systems. The Crown Lease permits office uses and a GFA of 13,600m² with a range of ancillary uses with a max of 3,500m² inclusive. The property was sold by expression of interest on behalf of Receivers for Australian Public Trustees Limited by Colliers International. The purchaser is a developer who intends to refurbish the building in order to re-lease. The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations Canberra.



Caroline Chisholm Centre 57 Athllon Drive Greenway, ACT Sale Date 1 March 2012 Sale Price $83,000,000 (50% share) Vendor Allco (in receivership) Purchaser Frasers Property Trust Description Modern contemporary designed office complex completed in 2007. The premises were

purpose built and designed to house the Department of Human Services (formerly Centrelink). The building is 5 levels in height and designed around a “main street” concept that provides shared facilities along a central spine.

NABERS Rating Energy: 4.5 star Land Area 5.35 ha NLA 40,244m² Parking 1,098 bays including 154 undercover Vacancy NilNo of Tenants 1Net Passing Income $14,429,781

Inputs AnalysisMarket Rentals Office: $410/m² gross Passing Initial Yield 8.69%

Car Parking: $1,500 per undercroft space pa $1,000 per on-grade space pa



Outgoings $66.15/m² Passing v Market Rent Relativity 98.5%


Leasing Allowance Nil Weighted Average Lease Expiry (Yrs) Income 13.4 years Area 13.4 years

Capital Expenditure Repainting ($10/m²) in 2013 and recarpeting due in 2016 ($35/m²) and $150,000 pa ongoing *Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been adjusted to account for property specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc).


Other3%

Parking6% Retail

0%

Office91%

0%

20%

40%

60%

80%

100%

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Vac ant Future Expirie s S e c o ndary Expirie s

CommentsSale was for a 50% share of the property after the previous owner went into liquidation. Purchaser was Fraser Commercial Trust, the existing 50% owner who now owns 100% of the asset. The property was subject to an original 18 year lease with annual 3% increases, no market review for the term of the lease. There is a facilities management agreement with Brookfield Multiple, full details are unknown at this stage however, we estimate that there is a shortfall of approximately $320,000 pa.

The building was designed to achieve a 4.5 star NABERS energy rating and is currently achieving a rating of approximately 4.87 stars. The building was sold on market via an expression of interest campaign.


Adelaide Commercial Sales Analysis



101 Grenfell Street, Adelaide Sale Date January 2013 – Under Contract, Subject to Confirmation Sale Price $42,950,000 Vendor Cromwell Properties Purchaser Private Syndicate Description The property comprises a “B” grade, commercial office tower disposed as basement car

park, ground floor and 12 upper levels of office accommodation. The main tower and southern annex were constructed about 1985, and the northern annex was constructed at the same time in the shell of the former Grenfell Street Mail Exchange. This structure is heritage listed. The land is zoned Capital City (Policy Area 13). The building is 100% leased. The major tenant, South Australian Government leases approximately 90% of the building until 2nd August 2018. The balance of the building is leased to four (4) private tenants with expiries ranging from 2015 to October 2017.

NABERS Rating Energy: 4.5 stars Water: 4 stars

Land Area 2,670m² NLA 13,196.40m² Parking 43 basement car parks Vacancy 0No of Tenants 5Net Passing Income $3,908,836 (excluding electricity profit)

$3,993,836 (including electricity profit)

Inputs AnalysisMarket Rentals Office: $368/m² to $417/m² p.a. gross Passing Initial Yield 9.10%


Avg Cmpd Mkt Growth 3.6% over 10 years (including a 7.3% spike in Year 7 following the significant capital expenditure at SA Government lease expiry)

IRR (after costs) 10.2%

Outgoings $1,177,116 p.a. ($89.20/m²) Passing v Market Rent Relativity 100%


Leasing Allowance 9 month let up period and 15% gross incentive on vacancies assuming a 5 year notional lease term.


Capital Expenditure $3,659,411 Structured as $150,000 in Year 1 (Lift Upgrade), $150/m² in Year 6 (SA Govt Expiry), $75/m² at Year 10 and $150/m² at lease expiries subject to 50% renewal probability, which equates to total capital expenditure of 11.4% of purchase price over the 10 year cash flow


SAGovernment

88%

Perpetual4%

AAPT1%

McArthur4%

Tan Consulting

1%


0%

20%

40%

60%

80%

100%


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CommentsSA Government occupies approximately 90% of the building, generating 88.8% of income. The actual purchase price for the property was $43,100,000, however, $150,000 in immediate capital expenditure for the lift upgrade was made as capital contribution from the vendor back to the purchaser. We have adopted an amount of $85,000 in electricity profit, capitalised at 20%. We note that the passing rental for SA Government is considered to be at the low end of market parameters, however we have not allowed for an explicit market reversion as the market rent review for SA Government will occur in excess of five years time, being August 2018. The property sold off market to a locally based private syndicate. The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations



400 King William Street, Adelaide Sale Date October 2012 (Under Contract : Subject to Confirmation)


Vendor Theodoras Samaras

Purchaser Real IS (German Fund)

Description The property comprises a modern “A” grade office tower with large floor plates constructed in late 2009, disposed as basement, ground floor retail and office and 10

upper floors of office. The property is located within the “Frame” precinct, at the southern end of the Adelaide CBD. Approx. 57% NLA of the building is leased to State and Federal Government departments, with the balance being predominantly private

local business.

NABERS Rating Energy: 4.5 Star NABERS

Water: 4 Star NABERS

Land Area 2,606m²

NLA 22,873m² (excluding Basement = 21,643m²)

Parking 0 on site. (However, as vendor owns adjoining property an agreement was entered into

for 170 car parks to be made available at market rates)

Vacancy 0% (833m² of basement space subject to 5 year rental guarantee - 3.9% of NLA)

No of Tenants 10

Net Passing Income $8,031,440 p.a.

Inputs Analysis

Market Rentals Office: $409/m² gross to $457/m² gross Passing Initial Yield 8.20%

Retail: $445/m² gross to $561/m² gross Core Market Yield* 8.20%

Avg Cmpd Mkt Growth 2.7% (average over 10 years) IRR (after costs) 9.12%

Outgoings $1,803,276 Passing v Market Rent Relativity 100%

Terminal Yield 8.75% Rate/m² NLA (incl basement)

Rate/m² NLA (excl basement)

$4,279/m²

$4,525/m²

Leasing Allowance 9 months (15% incentive) Weighted Average Lease Expiry (Yrs) Income 7.2 years By Area 7.2 years

Capital Expenditure $10/m² p.a. $125/m² at lease expiries; $50/m² Yr 5 and $100/m² in Yr 10.


Comments No on-site car parking provided, although as vendor also owns adjoining deck car park, we understand a 99 year agreement was included to secure approximately 170 car parks in this facility to pass with the subject holding. The property is under contract with settlement due 28 December 2012. We have therefore adopted the passing rent as at 1st January 2013. The property is fully leased with the exception of 883m² of the basement, which is subject to a 5 year rental guarantee at $150/m² with fixed annual

increases at 3%.The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The

information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.



169 Pirie Street, Adelaide Sale Date September 2012

Sale Price $22,100,000 plus GST

Vendor Bendigo and Adelaide Bank Ltd

Purchaser Private Investor

Description The property comprises a 6 level commercial office building of rendered masonry and plate glass construction constructed circa 1980’s. It has on-site parking for 107 vehicles.

NABERS Rating Energy: 2.5 Stars

Land Area 3,057m²

NLA 7,920m²

Parking 107

Vacancy The property is under contract subject to vacant possession.

No of Tenants The property is currently owner occupied by Bendigo and Adelaide Bank, who are relocating to new ‘state of the art’ office accommodation now under construction at 80 Grenfell Street, and thus a deferred settlement period is available up to the end of 2013 or early 2014 . We understand that the property has not been pre-committed as yet and that the purchaser intends to spend a significant amount of capital refurbishing the property.




132 Grenfell Street Adelaide, SA Sale Date April 2012


Vendor GDI Funds Management

Purchaser WA syndicate

Description The property comprises character office building that was constructed in 1905, and refurbished circa 2008. The property is currently disposed as ground floor and

basement retail with 3 upper levels of office serviced by a single lift. The property is located on the northern side of Grenfell Street on a corner site also bounded by Twin Street and Hindmarsh Square, within Adelaide’s ‘Core’ Precinct. The major tenant is

Bradford College (part of the Kaplan Group) which occupy approximately 68% of the NLA over levels 1-3 and a portion of the basement.

NABERS Rating Energy: N/A

Land Area 865m²

NLA 3,156m²

Parking Nil

Vacancy 0%

No of Tenants 7

Net Passing Income $937,968 p.a.

Inputs Analysis Market Rentals Office: $404/m² p.a. gross face Passing Initial Yield 8.68%

Retail: $310/m² - $618/m² p.a. gross face Core Market Yield* 8.50%

Avg Cmpd Mkt Growth 2.6% (over 10 years) IRR (after costs) 10.20%

Outgoings $86.85/m² p.a. Passing v Market Rent Relativity 100%


Leasing Allowance 6 months downtime, plus 10% incentive, subject to 50% retention rate.


Capital Expenditure Ongoing allowance of $15/m² p.a. ($47,336 p.a.)


Browns Mensware

4%

Bradford College

71%

Jasmin6%Thai in a Wok

4%

Spurling Formal Wear9%

The Lunch Room

6%

Tenant Composition by passing income

0%

20%

40%

60%

80%

100%


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Comments • The property was on the market for an extended period of time, initially marketed in April 2011. • Income was also derived from the resale of electrics of around $8,000 p.a. which has been capitalised at 20% • The property has a strong retail position with approximately 39% of the total NLA utilised as retail, being located in an area with high foot traffic and in close

proximity to Rundle Mall. The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.

Brisbane Commercial Sales Analysis

Knight Frank Valuations Queensland

Sales AnalysisSale Analysis

160 Ann Street, Brisbane, Queensland Sale Date September 2012 Sale Price $74,920,000 Vendor Investa Enhanced Fund (IEF) Purchaser CorVal Partners Description A 22 level commercial office tower completed in approximately 1972, providing a total Net

Lettable Area (NLA) of 16,060m². The accommodation comprises ground floor retail accommodation totalling 182m² and office accommodation provided within part of the ground floor and Levels 1 and 4 to 21 totalling 15,878m². There is additional storage space provided on Level 22 and 2 levels of car parking for 61 vehicles over Levels 2 and 3.

NABERS Rating Energy: 3-Star Water: 4-Star

Land Area 1,821m² NLA 16,060m² Parking 61 car parking bays (Levels 2 and 3) Vacancy 5.1% (827m² of NLA) No of Tenants 6Net Passing Income $7,077,415 per annum

Inputs AnalysisMarket Rentals Office: $566/m² of NLA gross (average). Passing Initial Yield 9.43%

Retail: $600/m² of NLA gross. Core Market (Equivalent) Yield* 9.06%

Avg Cmpd Mkt Growth Retail & Office: 2.59% per annum. IRR (after costs) 9.91%

Outgoings $1,938,790 per annum ($121/m² of NLA) adopted. Passing v Market Rent Relativity 94.4%


Leasing Allowance $17,223,097 over 10 years. Weighted Average Lease Expiry (Yrs) Income 6.9 years Area 6.8 years

Capital Expenditure $6,471,718 over 10 years.


Retail1%

CQU32%

Xstrata16%

Suncorp31%

Dept. Health & Ageing

15%

Vacant5%

Tenant Composition by NLA

0%5%

10%15%20%25%30%35%40%45%50%55%

% o

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Secondary Expiries Primary Expiries Vacant

CommentsAt the time of sale the property had a vacancy rate of 5.1% (827m²) and a WALE (by passing income) of 6.9 years. Notable tenants included Central Queensland University (5,127m²), Suncorp (4,962m²), Xstrata (2,481m²) and the Department of Health & Ageing (2,481m²). Gross passing office rentals at the time of sale ranged between $556/m² and $772/m² of NLA with gross retail rents of between $727/m² and $929/m² of NLA.

The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations Queensland.


Sales Analysis Sale Analysis

144 Montague Road, South Brisbane, Qld Sale Date January 2012

Sale Price $88,050,000 Vendor Montague Road Property Trust (Empirica) Purchaser Hines Global REIT Description The property was completed in November 2009 and provides an A-Grade standard of

office accommodation over 6 levels. At the date of sale, the building provided a total NLA of 14,742m², with 2 basement levels providing car parking for 75 vehicles. There is an additional 572m² of storage space which has been excluded from our adopted NLA. The property is awaiting confirmation of a NABERS Energy rating; however we understand the building has been designed to achieve a 4.5-Star rating.

NABERS Rating Energy: Unrated – target of 4.5-Stars Land Area 3,257m² NLA 14,742m² Parking 75 car parking bays Vacancy Nil No of Tenants 1 Net Passing Income $7,578,653 per annum

Inputs Analysis Market Rentals Office: $514/m² of NLA gross Passing Initial Yield 8.61%

Avg Cmpd Mkt Growth Office: 2.78% per annum Core Market (Equivalent) Yield* 8.37%

Outgoings $483,452 per annum ($32.79/m² of NLA) adopted IRR (after costs) 10.09%


Leasing Allowance $14,352,699 over 10 years (in year 10) Rate/m² NLA $5,973/m²

Capital Expenditure $5,347,570 over 10 years Weighted Average Lease Expiry (Yrs)



Ausenco62%

Ausenco (sub-lease to Origin)

38%


0%

20%

40%

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80%

100%

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Comments The building was fully leased to Ausenco at the date of sale with a WALE of approximately 9.85 years. The tenant covenant strength is considered good, however Ausenco have sub-leased 38% of the building (5,666m²) to Origin Energy. The passing gross office rental was $514/m² of NLA which was considered to be within market parameters at the date of sale. The current outgoings rate of $32.79/m² of NLA is considerably lower than that of comparable developments; however this reflects the single tenant nature of the property, with the tenant responsible for a number of direct occupancy expenses. We understand the purchaser had regard to this position in their considerations, with any potential “reversion” in building outgoings deferred until lease expiry. The basement of the building suffered minor damage in the January 2011 flood, however the damage was rectified prior to the marketing of the building and there was no further price adjustment for this issue. The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations Queensland.



12 Creek Street, Brisbane, Queensland Sale Date August 2012 (settlement 31 October 2012). Sale Price $241,600,000 Vendor APGF Management Ltd. Purchaser Dexus Wholesale Property Limited (50% interest) and Dexus Funds Management

Limited (50% interest). Description A landmark, 34 level "A" Grade office tower completed in 1984 and located within the

prime "Golden Triangle" commercial precinct of the Brisbane CBD. The property provides an NLA of 32,227m², consisting of a prime office tower with 130m² of ground floor retail accommodation and 31,623m² of office accommodation over 31 upper levels (with 2 dedicated plant levels on Levels 16 & 33) and an additional 2 level annexe building comprising an NLA of 474m². Parking is provided for a total of 308 vehicles over 4 basement levels.

NABERS Rating Energy: 2.5 Star (however, with planned improvements to at least 3.5 Star). Water: 4 Star.

Land Area 3,026m². NLA 32,227m². Parking 308 vehicles (155 single bays, 153 tandem/multi-format bays). Vacancy 2.1% (675m²), excluding areas subject to a 12 month rental guarantee. No of Tenants Approximately 20. Net Passing Income $19,303,937 per annum (excl. year 1 rent abatements).

Inputs AnalysisMarket Face Rentals Office: Average $682/m². Initial Yield (excl. yr 1 rent abatements) 7.92%

Retail: Average $1,258/m². Core Market (Equivalent) Yield* 7.64%

Avg Cmpd Mkt Growth 3.49% p.a. IRR (after costs) 9.65%

Outgoings $3,921,442 p.a. ($121.68/m²). Passing v Market Rent Relativity 97.5%


Leasing Allowance $44,551,776 over 10 years (excl. outstanding incentives).




CommentsThe property was purchased for $241,600,000 (excluding GST), with the purchasers (Dexus Wholesale Property Limited and Dexus Funds Management Limited, each with a 50% interest) to assume responsibility for outstanding incentives at the date of settlement. The contract was finalised in August 2012 with proposed settlement on 31 October 2012. Our analysis has been completed as at the proposed settlement date, which formed the basis of the purchaser’s pricing calculations. Further, our analysis reflects the purchaser’s treatment of a number of variables within their price considerations.


BDO19%

BHP/BMA17%

Jardine Lloyd Thomson

3%

APGF4%Lloyds

International3%

Mindpearl3%

Optus5%

Ashley & Munro

3%

Thynne & Macartney

6%

Fisher Adams Kelly3%

City North Infrastructure

3%

Other Office22%

Retail1%

Vacant/Rent G'tee8%


0%5%

10%15%20%25%30%35%40%45%

% o

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40 Creek Street, Brisbane, Queensland Sale Date August 2012 Sale Price $84,500,000 Vendor Charter Hall Opportunity Fund No. 5 Purchaser PGA Group Description An 18 level commercial office tower completed in 1983, providing ground floor retail

accommodation totalling 583m² and office accommodation totalling 11,770m² over 3 podium levels and 14 upper office levels. The building provides a Net Lettable Area (NLA) of 12,353m² with car parking for 70 vehicles over 2 basement levels. The building underwent a comprehensive refurbishment and upgrade program in 2008/09, including the upgrade or replacement of various plant and equipment and the refurbishment and modernisation of the office accommodation.

NABERS Rating Energy: 4-Star (Target) Land Area 1,257m² NLA 12,353m² Parking 70 car parking bays Vacancy Fully occupied No of Tenants 26 approximately Net Passing Income $6,998,551 per annum

Inputs AnalysisMarket Rentals Office: $601/m² of NLA gross (average). Passing Initial Yield

(at guaranteed minimum year 1 income) 8.28%

Retail: $891/m² - $2,230/m² of NLA gross. Core Market (Equivalent) Yield* 8.01%


Outgoings $1,603,908 per annum ($130/m² of NLA) adopted. Passing v Market Rent Relativity 102.1%





Fitness First25%

Santos10%

Qcoal2%Kentor Gold

3%

Whittaker Macnaught

3%

Other Office53%

Other Retail4%


0%5%

10%15%20%25%30%35%40%45%50%

% o

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CommentsAt the time of sale the property was fully leased and had a WALE (by passing income) of 6 years. Notable tenants included Fitness First (3,136m²), Santos (1,284m²) and Q Coal (827m²). Gross office rentals at the time of sale ranged between $545/m² and $865/m² of NLA with gross retail rents of between $891/m² and $2,230/m² of NLA.




10 Eagle Street, Brisbane, Queensland Sale Date June 2012 Sale Price $195,000,000 Vendor Brookfield Australia Funds Management Limited Purchaser Commonwealth Property Office Fund Description The property is situated on an irregular shaped 3,477m² “island” site which has

frontages to Eagle, Charlotte, Market and Mary Streets. The building is located within the “Golden Triangle” precinct of the Brisbane CBD and has a 4-Star NABERS Energy rating and 4-Star NABERS Water rating, providing a total NLA of 28,098m² at the time of sale. The building provides an “A-Grade” standard of office accommodation comprising ground level foyer and 30 levels of commercial office accommodation, in addition to dedicated plant rooms on Levels 15 and 16. Ancillary improvements include basement car parking provisions for 204 vehicles (166 in single bay format and 38 tandem bays). The property also includes a small 2 level annex building providing 374m² of office accommodation, located towards the Mary Street frontage.

NABERS Rating Energy: 4 Stars Water: 4 Stars

Land Area 3,477m² NLA 28,098m² Parking 204 car parking bays Vacancy 7.4% (2,081m² of NLA) No of Tenants 37 (approximately) Net Passing Income $14,523,670 per annum

Inputs AnalysisMarket Rentals Office: $600/m² - $700/m² of NLA gross. Passing Initial Yield 7.45%

Avg Cmpd Mkt Growth Office: 3.34% per annum. Core Market (Equivalent) Yield* 7.51%

Outgoings $3,933,651 per annum ($140/m² of NLA) adopted. IRR (after costs) 9.28%


Leasing Allowance $36,995,156 over 10 years (incl. current incentives). Rate/m² NLA $6,940/m²

Capital Expenditure $23,119,224 over 10 years. Weighted Average Lease Expiry (Yrs) Income 4.22 years Area 3.87 years


PKF Services10%

Tarong Energy Corporation

8%Sparke

Helmore Solicitors

7%

Other Office55%

Adani Mining5%

Idemitsu Australia

Resources3%

Vacant 7%

Talisman Australia

5%


0%5%

10%15%20%25%30%35%40%45%

% o

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CommentsThe building was sold with a vacancy rate of approximately 7.4% (2,081m² of NLA) and a WALE (by passing income) of approximately 4.22 years. Notable tenants included PKF Services (2,727m²), Tarong Energy Corporation (2,170m²) and Sparke Helmore Solicitors (1,820m²). The passing gross office rentals ranged between $440/m² and $969/m² of NLA at the date of sale with a gross market face rental range of $600/m² to $700/m² of adopted NLA (reflecting an overall average of $664/m² of NLA). The outgoings rate of $140/m² of NLA was considered to be within market parameters and our analysis reflects a 1.5% ongoing vacancy allowance and adjustments for lease expiry costs and capital expenditure within a 36 month period. The purchaser intended to continue the lift upgrade program that was underway at the time of sale and also budgeted to refurbish the building’s foyer over the short term. We understand a new 6 year lease to Secure Parking over the basement car spaces was reflected within the transaction.




150 Charlotte Street, Brisbane, Queensland Sale Date June 2012 Sale Price $71,000,000 (inclusive of vendor income arrangements) Vendor Stockland Trust/Walker Corporation Purchaser CIMB TrustCapital Australian Office Fund No. 1 Description The property is situated on a regular shaped 1,679m² site which has a primary frontage to

Charlotte Street and additional pedestrian access from Elizabeth Street. Recent refurbishment and upgrade works during 2011/12 were designed to achieve a 4.5-Star NABERS Energy rating and 4-Star Green Star rating. At the time of sale the building provided a total NLA of 11,035m², comprising ground level foyer with retail accommodation and 16 levels of commercial office accommodation above. Ancillary improvements included basement car parking provisions for 110 vehicles (in single bay format), single car wash bay and 80 bicycle racks with associated amenities and locker facilities.

NABERS Rating Energy: 4.5-Star (Target) Land Area 1,679m² NLA 11,035m² Parking 110 car parking bays Vacancy 78.2% (8,626m² of NLA). However the building is subject to a minimum net income guarantee. No of Tenants 4 (currently committed to the building) Net Passing Income $6,200,000 per annum (at guaranteed minimum year 1 net income)

Inputs AnalysisMarket Rentals Office: $595/m² of NLA gross. Passing Initial Yield

(at guaranteed minimum year 1 income) 8.73%

Retail: $1,000/m² - $1,645/m² of NLA gross. Core Market (Equivalent) Yield* 8.45%


Outgoings $1,263,956 per annum ($114.54/m² of NLA) adopted. Rate/m² NLA $6,434/m²

Terminal Yield 8.95%

Leasing Allowance $10,017,945 over 10 years. (excl. vendor guaranteed letting up provisions on current vacancies)



StellarossaCafé0.4%

Energex6.2% DFAT

13.5%

Walker Corporation

1.7%

Vacant78.2%


Stellarossa Café1%

Energex5%

DFAT12%

Walker Corporation

2%

Vacant70%

Car Parking10%

Tenant Composition by Income - Market

CommentsAt the date of sale, 78.2% (8,626m² of NLA) of the building was uncommitted, following the relocation of Energex and subsequent refurbishment of the building in 2011/12. Under the terms of the purchase agreement the vendor was responsible for lease up services and rental guarantee provisions over uncommitted space. The proposed lease terms for vacancies forming part of the lease up services included a minimum commencing gross face rental of $595/m² of NLA, minimum lease duration of 5 years and maximum tenant incentive of 25% of the proposed lease term. The vendor was liable for all leasing and incentive costs associated with securing tenants for the vacant areas, including where incentives required to secure tenants exceeded the nominated target incentive of 25%. The agreed terms also included a 5 year initial income guarantee provision, which guaranteed a minimum net income of $6,200,000 in year 1 increasing by 4% per annum. Existing tenants included Energex (686m²) and the Department of Foreign Affairs and Trade (1,492m²). A 2% ongoing vacancy allowance was adopted within our analysis. The total purchase price of $71 million was apportioned by the parties as $56 million for the “property” component and an additional $15 million for the vendor guarantee provisions. As all letting up and vacancy costs for vacancies were to be paid by the vendor, an analysis excluding these provisions would result in an equivalent yield generally in line with that indicated above.



Sales Analysis Sale Analysis

215 Adelaide Street, Brisbane, Qld Sale Date March 2012

Sale Price $134,500,000 Vendor South Hooke Pty Ltd (GIC Real Estate Pte Ltd) Purchaser 215 Adelaide Pty Ltd (Pramerica) Description The property is situated on an irregular 2,838m² site which has frontages to Adelaide

and Edwards Streets and consists of 3 components; 215 Adelaide Street (office tower), Rowes Arcade and Rowes Building (located in the Brisbane City Council Heritage Place Code). The property has a 4.5-Star NABERS Energy rating and provides a total NLA of 29,780m² within the 3 components. The office tower comprises 2 podium levels of retail accommodation with 28 levels of commercial office accommodation above, with Rowes Arcade connecting to the podium level retail component and Post Office Square and Edward Street via a pedestrian access way. Rowes Building also provides multiple levels of office accommodation but of an older standard. At the time of sale the property provided car parking for 141 vehicles.

NABERS Rating Energy: 4.5 Stars Land Area 2,838m² NLA 29,780m² Parking 141 car parking bays Vacancy 12.69% (3,779m² of NLA) No of Tenants 70 (approximately) Net Passing Income $10,919,010 per annum

Inputs Analysis Market Rentals Office: $300/m² - $550/m² of NLA gross. Passing Initial Yield 8.12%

Retail: $370/m² - $2,053/m² of NLA gross. Core Market (Equivalent) Yield* 8.90%


Outgoings $3,631,611 per annum ($121.95/m² of NLA) adopted. Passing v Market Rent Relativity 103.3%





DEEWR17%

CSG International 9%

Santos Ltd10%

Colleges Australia International

2%Other Office

40%

Retail9%

Vacant Office12%

Vacant Retail1%


0%

20%

40%

60%

80%

100%

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Comments The building had a vacancy rate of 12.69% (3,779m² of NLA) at the date of sale and reflected a WALE by passing income of approximately 4.4 years. Overall the tenant covenant strength was sound, with tenants including the Department of Education, Employment, and Workplace Relations (5,048m²), Santos Ltd (2,856m²) and CSG International (2,726m²). The passing office gross rentals ranged from $322/m² to $745/m² of NLA and the passing retail gross rentals ranged from $370/m² to $2,053/m² of NLA at the date of sale. A 2% ongoing vacancy allowance was adopted and capital adjustments for expiries within a 36 month period have been accounted for within the analysis. The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations Queensland.

Perth Commercial Sales Analysis



Optima Centre, 16 Parkland Road, Osborne Park, WA Sale Date October 2012

Sale Price $105,670,000 exclusive of GST Vendor ABN Group and Macquarie Real Estate Capital Purchaser MGPA Asien Spezialfonds Description The property consists of two modern, freestanding, office buildings located in the suburb

of Osborne Park approximately 8 kilometres north west of the Perth CBD within the Herdsman Business Park precinct.

Building A is the smaller of the two office buildings and comprises modern improvements which present to a high standard. This building is located to the northern side of the site fronting Hasler Road and has a net lettable area of 2,611m² over three levels. This building is occupied by ABN Group and Canon Australia.

Building B is over six levels comprising similar, modern improvements and is located on the corner of the Parkland Road and Hasler Road intersection. This building has a net lettable area of 13,339m² and is fully leased to the Western Australian Government with a 167m² Aroma Café at ground level.

Land Area 9,459m² NLA 16,116m2 Parking NABERS

511 car bays (comprising 500 secure tenant bays and 11 visitor bays) 4.5 star (Energy)

Vacancy Nil No of Tenants 4 – Western Australian Government (13,339m²), ABN Group (1,419m²), Canon

Australia (1,191m²) and Aroma Cafe (167m²) Net Passing Income $9,172,636 per annum (Passing office rent $506/m2)

Inputs Analysis Market Rentals Office: $460/m2

Café: $400/m² Car Bays: $175 per bay pcm




Outgoings $1,563,027 per annum (Average Rate: $96.99/m2) Passing v Market Rent Relativity 108.3%


Leasing Allowance 5 year term with 6 months letting up and 6 months rental incentive

Weighted Average Lease Expiry (Yrs) Income 11.9 years

Capital Expenditure Ongoing Capex: $177,276 per annum ($11/m² pa) increased by CPI.


Office 88%

Retail1%

Parking11%

Other0%


0%

20%

40%

60%

80%

100%




Comments

The property was sold in an off market transaction following a marketing campaign in mid 2010.

The lease to the Western Australia Government expires in October 2025 while the leases for ABN Group and Canon Australia are both due to expire May 2019.




45 St Georges Terrace, Perth WA Sale Date September 2012

Sale Price $55,250,000 exclusive of GST Vendor Stockland Purchaser Credit Suisse Description The property is a ‘B’ grade office development completed in 1972 and most recently

refurbished in 1995 with 9 levels of office accommodation with a typical floor plate of 1,086m² and 34 car bays at basement level and 739.6m² of storage at lower basement level. The property is well located along the southern side of St Georges Terrace midway between Barrack Street and Sherwood Court. The ground floor lobby contains a centrally located café tenancy.

NABERS Rating Energy: 2.5 Stars Land Area 1,827m² NLA 10,017.8m² Parking 34 car bays Vacancy Nil No of Tenants 11 – Major tenants include: Worley Parsons (5,945.8m²), Amcom (1,096.0m²),

Computershare Investor Services (765.4m²), SIIWA (511.8m²) and Sentinel Stockbrocking (410.9m²).

Net Passing Income $5,856,026 per annum (Average passing office rent $560/m2 pa net)

Inputs Analysis Market Rentals (net) Office: $475/m2 - $510/m² (Average: $491/m²)

Car Park: $750 pb pcm




Outgoings $1,451,243 per annum ($144.87/m2) Passing v Market Rent Relativity 106.0%


Leasing Allowance 5 year term with 6 months down time and 10% rental incentive and 50% retention rate


Capital Expenditure Ongoing Capex: $250,000 per annum ($25/m2) increased by CPI


Office 87%

Retail1%

Parking4%

Other8%


0%

20%

40%

60%

80%

100%




Comments We understand that the purchaser is also paying an amount of $300,000 to cover outstanding incentives in addition to the purchase price. The property currently derives an electricity profit of $180,000 per annum which has been capitalised at a rate of 20% in the above analysis.




130 Fauntleroy Avenue, Redcliffe, WA Sale Date September 2012 – Under Contract Sale Price $24,525,000 exclusive of GST Vendor Private Investor Purchaser Private Investor Description The property comprises two modern, freestanding, two level office buildings and two

warehouses located in the suburb of Redcliffe approximately 12 kilometres north east of the Perth CBD in the commercial hub adjacent to the Perth Domestic Airport.

The larger of the two office buildings comprises modern improvements which present to a high standard and is located towards the corner of Henderson Avenue and Fauntleroy Avenue. This building has a net lettable area of 5,000.7m².

The second office building is also over two levels comprising similar modern improvements and benefits from undercroft parking to the corner of Kleinig Road and Fauntleroy Avenue. This building has a net lettable area of 1,461.2m² and is fully leased to the Civil Aviation Safety Authority. The two freestanding warehouse buildings have a combined net lettable area of 2,520.3m² and access is provided via Kleinig Road.

Land Area 19,302m² NLA 8,982.2m2

Parking NABERS

201 car bays 2.0 star (Energy)

Vacancy NilNo of Tenants 8 – Major tenants include Downer (2,502.3m²), CASA (1,461.2m²), Austmail (1,400m²),

Bristlow Helicopters (1,262.3m²), Recall (1,120.3m²) and Byrnecut Mining (787.3m²) Net Passing Income $2,140,478 per annum (Passing office rent $286/m2, passing warehouse rent $114/m² )

Inputs AnalysisMarket Rentals Office: $350/m2

Industrial: Office: $180/m², Warehouse: $90/m² Car Bays: $75 per bay pcm




Outgoings $817,816 per annum (Average Rate: $91.05/m2) Passing v Market Rent Relativity 78.9%




Capital Expenditure Immediate Capex: $14,861 in 2012/13 Ongoing Capex: $100,000 per annum ($11/m² pa) increased by CPI.


Office 96%

Retail1%

Parking2%

Other1%


0%

20%

40%

60%

80%

100%


% o

f Net

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Comments The property is due to settle in mid-October. The property derives an electricity profit of $25,000 per annum which we have capitalised at a rate of 20% in our analysis.




218 St Georges Terrace, Perth WA Sale Date September 2012

Sale Price $29,500,000 exclusive of GST Vendor Private Investor Purchaser Undisclosed Description The property is a modern ‘A’ grade office building constructed in 1983 and refurbished

in 1989 with 8 levels of office accommodation and a typical floor plate circa 640m². There is basement car parking providing 20 bays.

The building is approximately 100 metres east of the intersection of St Georges Terrace, Mount Street and Milligan Street toward the western entrance of the Perth CBD.

NABERS Rating Energy: 1.5 Stars Land Area 1,166m² NLA 4,674m² Parking 20 car bays Vacancy 5.5% (255.1m²) No of Tenants 12 – Major tenants include: BHP Billiton (1,246m²), Dimension Data (643.2m²),

Minerlology (346.3m²), Theiss (345.3m²) and Westpac (338.7m²) Net Passing Income $2,836,517 per annum (Average office rent $553/m2)

Inputs Analysis Market Rentals Office: $525/m2 - $575/m² Passing Initial Yield 9.62%

Retail: $1,250/m²

Car Bays: $750 pb pcm Core Market Yield* 9.15%


Outgoings $716,793 per annum ($153.34/m2) Passing v Market Rent Relativity 105.0%




Capital Expenditure Immediate Capex: $500,000 Ongoing Capex: $100,000 per annum ($21/m2)


Office 83%

Retail11%

Parking4%

Other2%


0%

20%

40%

60%

80%

100%




Comments New leases have been agreed with Savcorp (commencing January 2013) and NES Global (commencing November 2012) at starting rents of $550/m² on part

Levels 2 & 3. These leases will be commencing immediately following the expiry of existing leases and have been included in the above analysis. The property currently derives an electricity profit of $50,000 per annum which has been capitalised at a rate of 20% in the above analysis. An allowance of $500,000 has been made for immediate capex items plus an additional $425,596 in 2014.




66 St Georges Terrace, Perth WA Sale Date July 2012

Sale Price $82,375,000 exclusive of GST Vendor AMP Capital Investors Purchaser Investa Office Fund Description The property is a modern 'A' grade office development completed in 1990 with 15 levels

of office accommodation with a typical floor place of 1,006.9m2 and 66 car bays over the ground and basement levels.

The building occupies a well located position on the northern side of St Georges Terrace between William Street and Barrack Street and opposite Sherwood Court.

The ground and mezzanine levels are occupied by retail tenancies including a florist, coffee shop and Australia Post.

NABERS Rating Energy: 3.0 Stars Land Area 2,510m² NLA 11,445.80m² Parking 66 single and tandem car bays Vacancy Nil No of Tenants 11 – Major tenants include: Manpower Services (2,412m²), ASIC (2,377.2m²), Suncorp

Corporate Services (2,322.4m²), Subsea 7 Contracting (2,013.1m²), AMEC Engineering (1,006.2m²) and Australia Post (321.8m²)

Net Passing Income $7,207,935 per annum (Average passing office rent $558/m2 pa net)

Inputs Analysis Market Rentals Office: $585/m2 - $625/m²

Retail: $575/m² - $1,890/m²






Leasing Allowance 5 year term with 12 months down time and 10% rental incentive and 50% retention rate


Capital Expenditure Ongoing Capex: $265,000 per annum ($23/m2) increased by CPI


Office 86%

Retail5%

Parking8%

Other1%


0%10%20%30%40%50%60%70%80%90%

100%




Comments The property currently derives an electricity profit of $60,000 per annum which has been capitalised at a rate of 20% in the above analysis. The property has undergone recent capital expenditure upgrades to the BMS and mechanical services to the value of $1.3 million, which has increased the

NABERS Energy Rating from 1.5 stars to 3 stars. There are outstanding incentives to ASIC and Suncorp however the incentives have been excluded from the transaction.




255 & 267 St Georges Terrace, Perth WA Sale Date July 2012

Sale Price $26,700,000 exclusive of GST Vendor Stockland Trust Purchaser Primewest Description Two low-rise CBD office buildings being 255 St Georges Terrace (constructed in 1987)

and 267 St Georges Terrace (constructed in 1981). 255 St Georges Terrace comprises two levels of modern office accommodation with a central atrium and 48 basement car bays. 267 St Georges Terrace comprises four levels of modern office accommodation with a typical floor plate of 950m² and 38 basement car bays. The property is well located on St Georges Terrace being approximately 100 metres west of the intersection with Milligan and Mount Streets. The property also benefits from an elevated position providing an outlook to the Swan River and Kings Park.

NABERS Rating Energy: 255 St Georges Terrace – 1.5 Stars 267 St Georges Terrace – 2.5 Stars

Land Area 2,486m2 (255 St Georges Tce - 697m², 267 St Georges Tce – 1,789m²) NLA 4,131.3m2 (255 St Georges Tce – 625m², 267 St Georges Tce – 3,506.3m²) Parking 86 car bays (255 St Georges Tce – 48 car bays, 267 St Georges Tce – 38 car bays) Vacancy Nil No of Tenants 5 – ProMet Engineers (18.5% of total NLA), ASG (22.8% of total NLA), Advanced Well

Technologies (23.0% of total NLA), Regus (20.5% of total NLA), Allseas Construction Contractors (15.1% of total NLA)

Net Passing Income $2,504,784 per annum (Average office rent $515/m2)

Inputs Analysis Market Rentals Office: $475-$500/m2 Passing Initial Yield 9.38%

Car Bays: $700 per bay pcm Core Market Yield* 10.07%






Capital Expenditure Immediate Capex: $600,000 Ongoing Capex: $100,000 per annum ($24/m2)


Comments At the time of sale, there were 39 vacant car bays on site which were not subject to any licence agreement. The property currently derives an electricity profit of $33,000 per annum which has been capitalised at a rate of 20% in the above analysis. An allowance of $600,000 has been made for immediate capex items.




1 Adelaide Terrace, Perth WA Sale Date June 2012

Sale Price $102,550,000 exclusive of GST Vendor Fortius Funds Management Purchaser GDI Property Group Description A seven level ‘A’ grade office building constructed in 1987 with office floor plates

ranging in size from 1,600m² to 3,300m² and secure basement parking for 176 vehicles. There is also a 200m² café located on Level 2. The property is well located on Adelaide Terrace being approximately 150 metres west of the intersection with Riverside Drive at the eastern entrance to the Perth CBD. The building has a distinctive semi-circular design with a full height central atrium. The roof of the atrium is glazed for natural light and also assists lighting of the office floors.

NABERS Rating Energy: 3.5 star Land Area 6,540m2 NLA 19,825m2 Parking 176 car bays (118 single, 46 tandem and 12 motorcycle) Vacancy 3.6% (710.5m²) No of Tenants 6 – Minister for Works (33% of NLA), Lycopodium Engineering (30% of NLA), Worley

Parsons (20% of NLA), Sandvik Mining (7% of NLA), Amcom (6% of NLA), D Café (1% of NLA)


Inputs Analysis Market Rentals Office: $450 - $475/m2 Passing Initial Yield 9.86%

Car Bays: $550 per bay pcm Core Market Yield* 9.74%






Capital Expenditure Immediate Capex: $3,500,000 Ongoing Capex: $500,000 per annum ($25/m2)


Comments At the time of sale, there were 28 vacant parking bays on site, comprising 2 single car bays, 20 tandem car bays and 6 motorcycle bays which were not subject

to any licence agreement. The property currently derives an electricity profit of $450,000 per annum and after hours air-conditioning income of $266,300 per annum, both of which have

been capitalised at a rate of 20% in the above analysis. An allowance of $3,500,000 has been made for immediate capex items.




10 Ord Street, West Perth WA Sale Date June 2012 Sale Price $13,585,000 exclusive of GST Vendor Private Investor Purchaser Private Investor Description A three level ‘B’ grade office building constructed in 1988 with the office

accommodation over three levels comprising a net lettable area of 1,958m2 and the lower ground level providing basement car parking for 45 vehicles. The property occupies a prominent position on the corner of Ord Street and Emerald Terrace, with access from Emerald Terrace only and egress possible to both streets. The property is of modern construction, comprising reinforced concrete floor plates and external walls consisting of a combination of painted masonry and pre-cast concrete clad panels and glazed frontages.

Land Area 1,370m2

NLA 1,958m2

Parking 45 car bays Vacancy NilNo of Tenants 3 – Strike Energy Ltd (30% of NLA), Apex Minerals (34% of NLA), Lend Lease (36% of

NLA)Net Passing Income $1,132,845 per annum (Average office rent $484/m2)

Inputs AnalysisMarket Rentals Office: $525/m2 Passing Initial Yield 8.34%

Car Bays: $350 per bay pcm undercover, $330 per bay pcm open







Capital Expenditure Immediate Capex: $120,000

Ongoing Capex: $60,000 per annum ($31/m2)


Comments The property was sold in an off market transaction. The building does not have a NABERS Energy Rating as it is under the 2,000m² net lettable area threshold requiring mandatory disclosure.




225 St Georges Terrace, Perth WA Sale Date June 2012

Sale Price $96,000,000 exclusive of GST (50% share) Vendor Wyllie Group Purchaser Charter Hall Description The property is a modern ‘A’ grade office building constructed in 1989 with 20 levels of

office accommodation with a typical floor plate circa 1,200m², plus 3 levels of basement car parking providing 373 bays.

The building occupies a high profile position near the intersection of St Georges Terrace and Mount Street at the western entrance of the Perth CBD.

The site is held on a leasehold from The Perth Diocesan Trustees for a term of 99 years, which commenced in 1986 and will expire in November 2085. There is not any ground rental payment.

NABERS Rating Energy: 3.0 Stars Land Area 4,779m² NLA 21,221m² Parking 373 car bays Vacancy Nil No of Tenants 22 – Major tenants include: BHP Billiton (13,919.8m²), Bendigo Bank (1,454.1m²),

Minister for Works (875.9m²), Hemisphere Corporate Services (489.5m²) and Wyllie Group (365.7m²)


Inputs Analysis Market Rentals Office: $635/m2 - $725/m² Passing Initial Yield 9.17%







Capital Expenditure Immediate Capex: $2,215,000 Ongoing Capex: $500,000 per annum ($24/m2)


Comments The sale of the half share of the leasehold of the property was conducted in an off market transaction from Wyllie Group to Charter Hall, who already owned the

remaining 50% share, and subsequently became the sole owner of the leasehold. The property currently derives an electricity profit of $45,000 per annum which has been capitalised at a rate of 20% in the above analysis. An allowance of $2,215,000 has been made for immediate capex items.


Melbourne Commercial Sales Analysis






Office 3.9% 10.3%

Retail 3.4% $3,924/m²

Outgoings $100/m² pa Weighted Average Lease Expiry Income 6.0 yrs

1988 constructed 9 level office building comprising ground floor retail and basement car parking for 85 vehicles. 100% leased to Powercor Australia Ltd, located in the Western Core of the CBD.

Powercor Australia Ltd

2,309 m2

85 car bays0.0%1

$4,144,207

Inputs

40 Market Street, MelbourneJanuary 2013$46,700,000Entrust Funds ManagementDexus Property Group

Insert Photo

AnalysisPassing Initial YieldCore Market Yield10 year IRR (after costs)

Rate/m² of NLAAverage 10 yr Compound Rental Growth

Sales Analysis

Outgoings $100/m pa Weighted Average Lease Expiry Income 6.0 yrsTerminal Yield 9.00% Area 6.0 yrs

Average 10 yr Office Avg Incentive 17.5% Weighted Average Reversion Term Income 6.0 yrsLeasing allowances Downtime 7 mths Area 6.0 yrs

Retail Avg Incentive 8.0%Downtime 6 mths Weighted Average Rebate Expiry (WARE) 0.0 yrs

Average 10 yr Tenant Office 0%Retention Assumptions Retail 50%

Capital Expenditure At Expiry $150/m²Sinking Fund $1/m² pa% of Value 17.3%

Comments

*Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has beenadjusted to account for property specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc).

Nine level B - grade office building 100% leased to Powercor Australia Ltd. Provides typical floor plate of 1,270 sq.m. with good natural light and central core design,with basement storage of 557 sq.m. The sale followed a successful EOI campaign in August 2012. Our analysis includes capex in the order of $10 million (inaddition to capex at expiries and sinking fund) to reposition the building following expiry of the Powercor lease.


The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. Theinformation contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.

Office85%

Retail3%

Parking9%

Other3%

Passing Income by Component

0%10%20%30%40%50%60%70%80%90%100%

%of

Net

Lettab

leArea Expiry Profile - by NLA





Retail 1,036.0 m²Total 10,116.5 m²

ParkingVacancyNo. of TenantsMajor TenantsNet Passing Income


Office 2.6% 11.4%

Retail 3.6% $3,163/m²


Constructed 2009, comprising ground floor showrooms and café with 4 upper levels of office accommodation and on-site parking via an attached 3 level car parking station. Situated to the corner of Johnston Street and Trenerry Crescent, approximately 4 kilometres north-east of the Melbourne CBD.

Glaxo Smith Kline and Ingram Micro

4,826m2

285 car spaces23.0%4

$2,738,837

Inputs

436 Johnston Street, AbbotsfordFebruary 2013$32,000,000Opus Capital LimitedPrime Value

Insert Photo



Sales Analysis

Outgoings $76/m pa Weighted Average Lease Expiry Income 2.2 yrsTerminal Yield 9.50% Area 2.2 yrs



Average 10 yr Tenant Office 50%Retention Assumptions Retail 50%

Capital Expenditure At Expiry $150/m²Sinking Fund $2/m² pa% of Value 3.3%

Comments


Modern 2009 constructed five level retail and office building (4 Star Green Star Rating), with on-site parking for 285 cars provided via attached three level carparking station. L - shape floor plates providing good natural light. Vacancy at sale 23% by area. Sold following EOI campaign in December 2012.



Trenerry Café2%

IngramMicro22%

Kodak21%

Glaxo SmithKline55%


0%10%20%30%40%50%60%70%80%90%100%

%of

Net

Lettab

leArea









Office 2.6% 7.6%

Retail 3.6% $3,433/m²





Sinking Fund $4/m² pa% of Value 3.6%

Comments


Analysis

A well positioned 1980s office building offering conventional office accommodation. Typical floor plates of 780m2 with excellent natural light. Office space 100%leased to Homesglen Institute of TAFE who carried out their own refurbishment in 2011/2012, with significant works to levels ground, 1, 2, 4 and part 6. Soldfollowing a successful EOI campaign in November 2012. Corner site with high underlying land value suggesting that the sale was not IRR driven.


Passing Initial YieldCore Market Yield10 year IRR (after costs)

Rate/m² of NLA



332 St Kilda Road, MelbourneDecember 2012$18,600,000Overland Properties Private Investor

*Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which hasbeen adjusted to account for property specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies,incentives, etc).

7 level office building, with 3 levels of basement car parking for 67 vehicles, constructed in 1982 providing typical floorplates of 780m2. Office space 100% leased to Homesglen Institute of TAFE. Situated to the western side of St Kilda Road, directly opposite the Shrine of Remembrance and Royal Botanic Gardens, less than 1.5 kilometres to the Melbourne CBD.

Holmesglen Institute of TAFE

957 m2

67 car spaces0.0%1

$1,485,261

Inputs

Office98%

Parking2%

Income Composition by Passing Income

0%10%20%30%40%50%60%70%80%90%

100%

%of

Net

LettableArea



Sales Analysis






Office 3.9% 9.4%

Retail 3.6% $5,400/m²






Comments


2008 constructed A - grade seven level office building with environmentally sustainable features providing views across city skyline and secure above ground car parking for 140 vehicles. Situated to the high profile corner of Docklands Drive and Footscray Road.

Kaplan Carrick

2,800m2

140 car bays0.0%2

$3,128,533

Inputs

370 Docklands Drive, DocklandsDecember 2012$38,500,000YarraCorp Developments Pty LtdPrivate Investor

Insert Photo


Analysis

Environmentally sustainable office building (5 Star Greenstar rating by design) over seven levels with a secure cover above ground car park for 140 vehicles.100% leased with Kaplan Carrick occupying the entire office component plus 10 car bays and Yarra Parking leasing the remainder 130 car bays. The salefollowed a successful EOI campaign in October 2012.



Rate/m² of NLA



Kaplan CarrickPty Ltd94%

Yarra Parking6%


0%10%20%30%40%50%60%70%80%90%

100%

%of

Net

LettableArea



Sales Analysis




ParkingVacancyNo. of TenantsMajor Tenants

Net Passing Income


Office 3.9% 9.8%

Retail 3.6% $2,955/m²






Comments


1990s 12 level strata titled office building with 47 basement car parks. The building is strata titled on a whole floor and individual car space basis, but held 'in one line'. Located in the western sector of the CBD between William and King Streets in close proximity to the major Courts. Floor plates are circa 550m2 with side services core and good natural light to three sides.

Barristers Chambers Limited and Kelly Hazell Lawyers Pty Ltd

Parent title - 910 m2

47 car bays16.3%12

$1,495,367

Inputs

533 Little Lonsdale Street, MelbourneDecember 2012$19,500,000Trilogy Funds Management LimitedLocal Private Syndicate

Insert Photo


Analysis

Conventional B grade office building with the benefit of existing strata title on a floor by floor basis. Leased on both a whole floor and half floor basis to a mix of legalrelated and commercial tenants and was circa 16% vacant at sale. The building is original to construction and our analysis provides for $1.5 million capex to plant& equipment upgrade. The purchaser is a local private syndicate.



Rate/m² of NLA



BarristersChambers

18%

Caason Group11%

RCNTAdministrative

Services11%

Kelly HazzellLawyers12%

Other48%


0%10%20%30%40%50%60%70%80%90%100%

%of

Net

LettableArea



Sales Analysis



Retail 1,045.0 m²Total 16,175.0 m²



Office 3.9% 10.1%

Retail 3.4% $3,555/m²






Comments


Marsh Centre, formerly Sedgwick House. Constructed 1989, comprising a 16 level A - grade office building with 12 upper levels of office, 2 level basement car parking for 76 vehicles and top level two bedroom penthouse. Situated to the Western Core of the Melbourne CBD, within the legal district.

Monash University, Marsh and Barristers Chambers

1,849 m2

76 car bays0.0%11

$5,846,894

Inputs

555 Lonsdale Street, MelbourneDecember 2012$57,500,000BlackRock Investment Management (Australia) LtdLaSalle Australia Core Plus Fund


Analysis

A well positioned 1989 office building offering conventional A-Grade office accommodation. 4-star NABERS Energy rating. Typical floor plates of 1,305m2 withexcellent natural light and views over the city and Docklands. Sold following a successful EOI campaign in November 2012.



Rate/m² of NLA



MonashUniversity

16%

Marsh41%

BarristersChambers

16%

Other27%


0%10%20%30%40%50%60%70%80%90%

100%

%of

Net

LettableArea



Sales Analysis






Office 3.9% 7.4%

Retail 3.6% $3,370/m²






Comments


Analysis

B grade strata office investment located on a prominent corner in the north western core of the CBD, fringing into Carlton. Significant expiry risk associatedwith Telstra. Telstra recently exercised a further 3 year option commencing in May, 2013 at market rental levels. The premises will require a refit once Telstravacate, with no make good and a long term occupancy. Sold after an EOI campaign in late 2012 to an overseas private investor.



Rate/m² of NLA



333 Exhibition Street, MelbourneNovember 2012$22,000,000Quintessential EquitiesOverseas Private Investor

Insert Photo


1986 built strata office and carpark, forming part of the Mantra Suite Hotel. Sale property comprised a ground floor showroom (525 m2) and 5 upper levels of B grade offices with 1,200 m2

floors (6003 m2) fully let to Telstra. The building occupies the corner of Latrobe and Exhibition Street and enjoys excellent natural light.

Telstra

Strata

Separate licence in adjoining premises.0.0%1

$1,909,209

Inputs

Telstra100%


0%10%20%30%40%50%60%70%80%90%

100%

%of

Net

LettableArea



Sales Analysis






Office 3.9% 10.3%

Retail 3.4% $3,647/m²






Comments


Analysis

A well positioned older style 1970s office building offering conventional B-Grade office accommodation. Constructed circa 1970s, the building has undergonesubsequent refurbishment in the early 2000s. Reversionary risk in 2017 when the major tenant CGU Insurance (49% NLA) expires in February, 2017. Soldafter an EOI campaign in late 2012 to a European Fund.



Rate/m² of NLA



601 Bourke Street, MelbourneDecember 2012$29,100,000Centuria Property TrustOverseas Investor

Insert Photo


Allianz Centre, formerly Forestry House. 11 level office building located to the corner of Bourke and King Streets. 1970s construction and underwent a full shell and core refurbishement in early 2000s. Conventional B grade building with circa 780m2

floor plates with natural light to three sides. 1.5 star NABERS energy rating.

CGU Insurance Limited and AGL Limited

910 m2

26 car bays4.7%9

$2,578,786

Inputs

Lobby Café2%

Sushi Sushi3%

CGUInsurance

50%

AGL26%

Other19%


0%10%20%30%40%50%60%70%80%90%

100%

%of

Net

LettableArea



Sales Analysis






Office 3.3% 9.4%

Retail 3.6% $3,547/m²




Building 3, 658 Church Street, RichmondNovember 2012$29,100,000APGF Management LtdWinehall Proprietary Limited

Insert Photo

Originally constructed in 1981 with extensive refurbishment works in mid 1990s. Comprises a part two and three storey office complex that is 100% leased to three tenants and is the national head office of Country Road Australia, located in the Richmond Corporate Park, less than 2.5 kilometres east from the CBD.

Country Road

10,276m2

228 car bays0.0%3

$2,740,780

Inputs

Sales Analysis

Terminal Yield 8.75% Area 1.2 yrs





Comments


Iconic part two and three storey office complex that sold 100% leased to three tenants. Good location to the fringe of the CBD. Provides ample natural light andviews across the Yarra River. The sale followed a successful EOI campaign in March 2012.




Country Road67%

ClemengerHarvie Edge

32%

Mood Media1%


0%10%20%30%40%50%60%70%80%90%

100%

%of

Net

LettableArea






850 Collins Street, Melbourne Docklands, VIC Sale Date October, 2011.

Sale Price $114,200,000 prior to acquisition savings. Vendor Lend Lease Development Pty Ltd. Purchaser CIMB Trust Capital Aust. Office Fund No. 1 Description Under construction, with an expected completion date of October 2012, nine level

office building 4.5 to 5 star NABERS with 2,000 m2 floors plus a small retail component and a 21 bay car park. The purchase also included a separate 60 bay car park (also let to Aurecon) at 888 Collins Street. Floors have excellent natural light and a side central core with bay views, however the bay views may be built out as the precinct develops further.

Land Area 2,525 m2 NLA 17,185 m2 Parking 21 lower ground level car spaces. Vacancy 45% (levels 1 – 3 plus retail and 9 cars). No of Tenants One. Net Passing Income $4,129,680 per annum (Aurecon only).

Inputs Analysis Market Rentals Office: $415/m2 net face.

Retail: $550/m2 gross face. Parking: $375 pcm plus levy.

Passing Initial Yield 3.62% to 3.8%

Core Market Yield* 6.5% to 6.81%

Avg. Rental Growth 4.49% IRR 8% to 8.68%

Outgoings $100/m2 plus $100k pa for non recov including the separate car park

Passing v Market Rent Relativity 116%

Terminal Yield 7.25% Rate/m² NLA $6,618/m² Overall

Leasing Allowance 6 Month vacancy allowance, 20% Incentive & 12% Agents commission.

$6,250/m2Ex. Cars

Capital Expenditure Ongoing $50k pa rising to $10 psm at Year 10 plus prov for no make good for Aurecon.

WALE Duration (Yrs) 10 years (Aurecon)


Comments Purchase was settled on the land recorded in Nov 2011 at $7m, according a core price after acquisition cost savings of $108.6m. We understand there is no delivery risk to the purchaser, which is guaranteed by the listed Lend Lease. We also understand the vendor took the liability for the Aurecon incentive, but there is no vendor rental guarantee, with the price at $114,200,000 including the additional car park, and the purchasers accepting the costs of letting up and incentives on Levels 1 – 3 (6,450 m2) plus the 9 vacant cars, which we estimate at just over $5m. The core price of $108.6m reflects a 6.81% CMY and 8.68% IRR and the face price reflects a 6.5% CMY and 8% IRR. The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.

Aurecon100.00%


$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 andbeyond

$

$

$

Gros

s Ren

tal p

.a.

Year Ended 30th June

Lease Expiry Calculated by Gross Passing Income



150 Collins Street, Melbourne, VIC Sale Date July, 2012

Sale Price $181,000,000 (approx.) Vendor Grocon and APN Purchaser GPT Wholesale Office Fund Description 13 level new office tower purchased in the very early stages of construction.

Comprises basement parking, ground floor retail and 12 level of high A grade office. Floor plates are 2,000 to 1,500 m2 with a western side central core, and have excellent natural light. Heritage controls protect the surrounding outlook. 5 star NABERS and 6 star Green Star ratings are the target.

Land Area 2,927 m2 (99 year leasehold interest comm 2008) NLA 21,090 m2 Parking 143 Vacancy 0% No of Tenants 12 Net Passing Income $11,854,000 pa approx. after non recoverables prov

Inputs Analysis Market Rentals Office: $550/m2 (net face)

Retail: $1550/m2 (gross effective) Parking: $500 to 550 pcm

Passing Initial Yield 6.55% to 7% approx.

Core Market Yield* 6.46% to 7% approx.

Avg. Rental Growth Office – 4.3% Retail – 3.5% Cars – 3.75% (ave)

IRR (after costs) 8.5% to 9% approx


Outgoings Approximately $115/m2 plus non recoverables prov Rate/m² NLA $8,582/m² $8,005/m2 ex cars

Terminal Yield 6.75% with prov for Westpac expiry risk in the terminal value WALE Duration (Yrs) 9 yrs by Income

Leasing Allowance 9 months downtime prov for major tenant. Gross incentive allowance of 15% and a 50% retention rate at expiries.

10.5 yrs by Area

Capital Expenditure $50k pa ongoing growing to $200k pa, plus make good provisions.


Comments Prime office investment purchased on a fund through basis with the usual guarantees on unlet space. 68% of gross passing income is secured by a 12 year lease to Westpac. The building does sit on the corner of Russell and Little Collins, with a walkway access to Collins Street, however it occupies a strong location in the preferred eastern sector. The title is a ground lease with a ground rent and fixed increases plus a market review structure after 20 years (2028) with a capping arrangement. The higher yields above adjust for achieved acquisition cost savings from the purchase in the early stages of development. As a passive investment, for comparison with established investments, the sale reflects a 6.46% core market yield and an 8.5% IRR As If Complete and fully let, adopting conventional acquisition costs, but no development risk. The actual return to the purchaser at sale is higher (estimated CMY around 7% and the IRR around 9%), which in our opinion reflects an additional return for some reasonably minor short term development risk (all projects apart from turn key settlements have some level of development risk until delivered and let) which is a different basis if one is comparing this transaction to established investments. The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.

Vendor Rental Gaurantee

28.85%

Westpac68.16%

Commercial Car Park

2.99%


$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022and

beyond

$2

$4

$6

$8

$

Gros

s Ren

tal p

.a.

Year Ended 30th June

Lease Expiry Calculated by Gross Passing Income



437 St Kilda Road, Melbourne, VIC Sale Date July, 2012

Sale Price $27,020,000 Vendor Opus Capital Purchaser Private investor Description 1964 built seven level office tower located on a prominent corner location in the St

Kilda Road office precinct on a 3,035 m2 site. The building underwent a shell and core refurbishment in 2003, including new services and a new façade. 3.5 Star NABERS rating. Excellent natural light, but only two lifts, the building has been substantial divided into small tenancies of 100 to 300 m2. Backs onto Fawkner Park.

Land Area 3,035m2 (Approx) NLA 6,518m2 Parking 100 car bays (1.53 cars per 100m2.) Vacancy Nil office (3 cars) No of Tenants 25 Net Passing Income $2,156,034 pa

Inputs Analysis Market Rentals Office: $285/m2 - $358/m2 (net face)

Parking: $280 pcm / car space Passing Initial Yield 8.0%


Avg. Rental Growth Office – 3.1% Cars – 3.6%



Outgoings Approximately $124/m2 Rate/m² NLA $4,146/m² $3,539/m2 ex cars

Terminal Yield 8.5% WALE Duration (Yrs) Income 2.0 years

Leasing Allowance 6 months downtime. Net incentive allowance of 7.5% and a 75% retention rate.

Capital Expenditure $20,000 pa ongoing plus $150 per square metre make good at expiries. $100k amenities/tenancy foyer upgrade in years 2 & 6 and $150k in year 10.


Comments Attractive refurbished B grade corner building with excellent natural light and tenant appeal. Some small areas of say 70 m2 let at $435 psm to $540 psm gross, while 250 m2 plus let at $280 to $295 psm net. Offered for sale by EOI closing 21st June, 2012 and sold shortly after. The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.

0%10%20%30%40%50%60%70%80%90%

100%


% o

f N

et L

etta

ble

Are

a


Vacant Future Expiries Secondary Expiries



13-51 Pelham Street, Carlton, VIC Sale Date July, 2012

Sale Price $20,600,000 Vendor McMullin Investments Pty Ltd Purchaser Forza Capital Description The property comprises two interconnected office buildings. A 1900s two level brick

building and a circa 1991 five level building. Basement car parking is provided for 160 cars. The property is in a popular fringe CBD location, situated on the south side of Pelham Street in Carlton on a 3,772 square metre site 'Mixed Use' zoned site. In 2011 the building underwent a circa $1 million upgrade to air-conditioning, lift lobbies and courtyard. The tenancy profile comprises a mix of State Government Departments and private corporates. 2.5 Star NABERS rating.

Land Area 3,772m2 (Approx) NLA 5,905m2 Parking 160 car bays (2.71 cars per 100m2.) Vacancy Nil No of Tenants 9 Net Passing Income $1,751,598 pa







Outgoings Approximately $83/m2 Rate/m² NLA $3,489/m² overall $3,082/m2 ex cars

Terminal Yield 8.75% WALE Duration (Yrs) Income 5.0 years

Leasing Allowance 6 months downtime. Gross incentive allowance of 10% and a 50% retention rate.

Capital Expenditure $20,000 pa ongoing plus $175 per square metre make good at expiries. $280k PV over the next 10 years.


Comments Appealing city fringe office building with a good mix of Government and private tenants proving a 5 year WALE. Offered for sale by EOI closing 7th December, 2011. The property was in due diligence for some time, went unconditional, 2nd July, 2012 and sold 6th July, 2012. The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.

Office 86%

Retail0%

Parking12%

Other2%


0%10%20%30%40%50%60%70%80%90%

100%


% o

f N

et L

etta

ble

Are

a


Vacant Future Expiries Secondary Expiries



441 St Kilda Road, Melbourne, VIC Sale Date March, 2012

Sale Price $58,000,000 Vendor AXA Wholesale Australian Property Fund. Purchaser Centuria Property Funds (Over 50s Guardian Friendly Society Limited). Description Circa late 1980s built 7 level A grade office building situated to the eastern side of St

Kilda Road, south of its intersection with Toorak Road. The property comprises ground floor lobby and retail accommodation, five upper levels of office accommodation and two lower levels of secure car parking with some 335 car bays. The design of the building creates a north and south tower which are linked by a central core on the northern tower and interlinked by footways across the internal atrium which has a high glass roof. The shape of the floor plates provides ample natural light. Substantially refurbished. The building features a rooftop tennis court. 3.5 star NABERS.

Land Area 6,070m2 (Approx) NLA 16,140m2 Parking 335 Vacancy Nil. (Vendor Guarantee 1.5% NLA) No of Tenants 17 Net Passing Income $5,456,291 pa








Terminal Yield 9.50% WALE Duration (Yrs) Income 3.8 Area 5.4


Capital Expenditure $20,000 pa ongoing plus $200 per square metre make good at expiries. Additional capex of $900,000 to complete refurbishment. (excl. Vendor obligations)


Comments A grade office building with ample natural light. Purchased by Centuria Property Funds on behalf of Over 50s Guardian Friendly Society. Property was acquired in March, 2012 and settled in April. The terms of sale require the Vendor must fund the cost of upgrading services to achieve 4 Star NABERS Energy Rating. At sale, refurbishment to the Level 1 and 3 amenities was underway to be completed by the Vendor prior to settlement. Our analysis incorporates refurbishment costs for the upgrade of all remaining un-refurbished amenities and lobbies. A 12 month rental guarantee is provided over the vacant office accommodation and car spaces at a rate of $260/m² per annum net (office) and $3,300 per car space per annum gross (car spaces). The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.



Defence Plaza, 661 Bourke Street, Melbourne, VIC Sale Date August, 2011 Sale Price $100,000,000 Vendor Brookfield Prime Property Fund Purchaser Real IS Description 1990 constructed, ten level office building including a small historic 1876 single

storey building. The building has recently undergone a $22m refurbishment and plant upgrade works which will be completed by the vendor as part of the condition of sale. A 4.5 star NABERS energy rating is targeted after the completion of the works.

Land Area 3,326m2 (Approx) NLA 18,256m2

Parking 64 basement car spaces. Vacancy Nil.No of Tenants Single Government tenant (Navy). Net Passing Income $7,688,972 per annum.

Inputs Analysis Passing Initial Yield 7.69%Market Rentals Office: $391/m² net face.

Parking: $475 pcm plus levy. Core Market Yield* 7.53%

Avg. Rental Growth 4.49% IRR 9.2%

Outgoings $82.49/m2 Passing v Market Rent Relativity 100%

Terminal Yield 8.0% Rate/m² NLA $5,478/m² Overall

Leasing Allowance 12 Month vacancy allowance at expiry, 20% Incentive & 12% Agents commission.

$5,228/m2Ex. Cars

Capital Expenditure Ongoing $100,000 per annum in years 1-5, $150,000 per annum years 6-8 and $200,000 per annum thereafter. $2,000,000 Capex in year 10 plus $300 psm make good provision at lease expiry. (lessee has no make good)

WALE Duration (Yrs) 9.5 years

Department of Defence 100%


0%

20%

40%

60%

80%

100%


% o

f Net

Let

tabl

e Ar

ea


Future Expiries


CommentsThe building is a 24 hour Navy installation with considerable Navy technology infrastructure and Navy have occupied for 10 yrs prior to this lease. The building has good natural light and 2,000 m2 floor plates and the property holds significant reversionary risk if Navy exit in this location. The current tenant has taken a whole building lease which includes ground floor common area of approximately 770 square metres and our analysis is couched on the reversionary NLA which does not include this area. The lease face rent on the office component, including the common area, is $375 psm net plus parking. The passing rent is at the upper end of the market range for the location. Current income includes after hours air conditioning of $209,159 (net of costs) which we NPV’d at a discount rate of 20%. Our DCF parameters assume a 50% renewal probability at expiry with a 12 months letting up period and a further 12 month rent incentive. $1,000,000 plant upgrade for the air conditioning and $1,000,000 for foyer works at lease expiry have also been provisioned.




607 St Kilda Road, Melbourne, VIC Sale Date April, 2012

Sale Price $28,540,000 Vendor Centuria Funds Management Limited Purchaser Undisclosed private investorDescription The property comprises a modern commercial office building constructed in circa

1990. The building entails two levels of parking, ground floor retail and office and 9 upper levels of office comprising 800 m2 floors with a side central core. The floors have good natural light and 6 floors have been refurbished including the common areas. Most floors have been divided into smaller tenancies.

Land Area 2,144 m2 (Approx) NLA 7,206 m2 Parking 128 car bays Vacancy Nil No of Tenants 10 Net Passing Income $2,346,058 pa

Inputs Analysis Market Rentals Office: $270/m2 pa (net face)







Terminal Yield 8.5% WALE Duration (Yrs) Income 5.9 years Area 5.5 years

Leasing Allowance 6 months downtime. Net incentive allowance of 20% and a 50% retention rate.

Capital Expenditure $20,000 pa ongoing plus $100 psm upgrade capex at expiries plus $750k for lift upgrade


Comments Attractive low A Grade office building with good tenant appeal but located outside the prime area of St Kilda Road. The building has been refurbished following a large vacancy to six floors, which including upgrade of the common areas and new air conditioning plant, with the office floors retaining the original ceilings and lighting and lift plant. The building’s lift plant and tenancy lighting will require an upgrade over time which has been factored into our assessment. Good quality tenant profile, dominated by Alfred Health who occupy 33% of the building with a 2021 expiry. NABERS exemption at sale, as a result of the recent upgrade works. The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.



477 Collins Street, Melbourne, VIC Sale Date February, 2012

Sale Price $67,000,000 Vendor Australian Unity Investments Office Property Trust. Purchaser Aviva Investors Asia Pacific Property Fund. Description Comprises the retained portions of the heritage listed Olderfleet, South Australian

Insurance and Record Chambers buildings originally constructed circa 1890, a modern 8 storey office building constructed circa 1985 and refurbished in 2001 and a 7 level car park completed in two stages during 1977 and 1985, comprising 598 car bays. The property is located to the south of Collins Street between King and William Streets. The property further benefits from rear frontages to Flinders Lane. The property comprises ground and lower ground retail accommodation, with office accommodation located on the ground floor and seven upper levels. A central light core provides ample natural light. A rooftop tennis court and recreational area is located above the car park for the sole use of one tenant occupying two whole office floors, being Cap Gemini Ernst and Young Australia. The property is further considered to be appropriate for future redevelopment.

Land Area 3,899m2 (Approx.) NLA 11,987m2 Parking 598 Vacancy 10.6% No of Tenants 8 Net Passing Income $5,028,045 pa








Terminal Yield 8.75% WALE Duration (Yrs) 3.7


Capital Expenditure $50,000 pa ongoing plus $150 per square metre make good at expiries. .


Comments Substantial car park component representing some 38% of the total income located within a high demand permanent parking precinct. Offered for sale via EOI closing 11th August, 2011. Sale and settlement occurred on 17th February, 2012. The IM referred to redevelopment potential suggesting additional development of approximately 24,000 – 25,000 square metres. The Singapore based investors has established a strong presence in property acquisition in Australia during 2012. The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.

Office Rental55%

Retail Rental7%Car Parking

38%


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100%


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Secondary Expiries Future Expiries Vacant



565 Bourke Street, Melbourne, VIC Sale Date February, 2012

Sale Price $53,500,000 Vendor Eastern Holdings Ltd. Purchaser Shakespeare Property Group Pty Ltd. Description Comprises the former Gollin & Company building encompassing a five storey

historical office building plus basement level, constructed in 1901 and situated to the south western corner of Bourke and Church Streets, and an adjoining 16 level office tower, located on the south eastern corner of Bourke Street and Gallagher Place, constructed circa 1990. The office tower comprises ground floor retail and office accommodation, an atrium foyer up to level 2, 15 upper floors of office accommodation and a car park over two basement levels. The car park is accessed via Gallaghers Place and provides 64 car bays. The building features a central offset service core, ample natural lighting and a 2 Star NABERS rating. Floor plates vary with the majority being approximately 1,000 square metres.

Land Area 1,688m2 (Approx) NLA 15,966m2 Parking 64 Vacancy 5.4% No of Tenants 15 Net Passing Income $4,470,327 pa








Terminal Yield 9.25% WALE Duration (Yrs) 2.2


Capital Expenditure $20,000 pa ongoing plus $125 per square metre make good at expiries. Additional capex in line with vendor TDD report.


Comments Offered for sale via tender closing 25th August, 2011. The property sold in February, 2012 with settlement in March, 2012.B grade office tower with historic elements to the 5 storey corner building constructed in front of the 16 level tower. The building requires significant life cycle capex. Current income accounts for outstanding rent abatements to Thomson Reuters and Commonwealth of Australia. The core market yield analysis incorporates 36 months of adjustments including capex allowances of $3.4 million. The location in the western precinct, is less preferred to the eastern precincts, however the subject enjoys close proximity to public transport including Southern Cross Station. Additional capex of $5.1 million over the cash flow has been provisioned. The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.

Documents

Knight Frank Valuations · Knight Frank Valuations again have pleasure in providing our compiled national commercial transactions booklet for your reference. The transactions enclosed