International Bar Association Conference Real Estate Investment Trusts Panel 2 - REIT formation

1. International Bar Association ConferenceReal Estate Investment TrustsPanel 2 - REIT formation 17 October 2007 Singapore 9142562_1

2. REITs • Growth in global REIT market in last 5 years = 350% 1 • Proportion of value of global real estate currently in listed form = 8.8% • Number of countries which now have REIT-type legislation = 25+ • Proportion of Australian REIT asset base which is offshore = 40%+ Sources: NAREIT, ASX Note (1): Jan 2002, 237 REITs with combined value of USD270.7B; Jan 2007, 334 REITs combined value USD 944.6B

3. REITs Worldwide Dubai (2006) Germany (2007E) UK (2007E) Finland (2007E) India (2007E) Bulgaria (2004) The Netherlands (1969) Israel (2006) Belgium (1995) Turkey (1998) France (2003) Singapore (2002) Canada (1994) South Korea (2001) USA (1960) Taiwan (2003) Mexico (2004) Hongkong (2005) Brasil (1993) Malaysia (1989/2005) Australia (1971) Japan (2000) Luxembourg (1988/2002) Spain (2003) Italy (1994) New Zealand (1956) South Africa (1981) Greece (1999) Countries in which REIT structures already exist Countries in which structures similar to REIT structures already exist Countries in which the introduction of REITs is already planned

4. REIT Formation – Discussion Points • What are typical structures for REITs and why have they developed? • Tax is an important factor. What are the key considerations? • A regulator perspective. What are regulators focussed on? • REIT IPOs. Why list a REIT? What are key trends in major markets? How does the process differ to a corporate float?

5. REIT Formation - Panel • John Sullivan, Partner, Mallesons Stephen Jaques (Chair) • Michael Blair, Partner, Mayer Brown LLP • Scott Newman, Partner, K&L Gates • Jan Peeters, Partner, Stibbe • Mark Berman, Principal, CompliGlobe Ltd • Peter de Ridder, Partner, Loyens & Loeff

6. REIT – basic structure • Trust or corporate structure • REIT buys property (diversified or sector focus - offices, shopping centres, logistics) • Issues securities which are listed on stock exchange • Professional manager (and in some cases trustee) • Income fully distributed to investors Investors Dividend/ distribution Securities REIT (trust structure) Fees Fees Management services Services Manager Trustee Property income Holds property (directly or through SPV)

7. Structures: North America

8. United States – UPREIT Structure Public 100% REIT LimitedPartners OperatingPartnership Assets

9. Structures: Asia Pacific Regulatory Requirements Hong Kong Singapore Australia Structure/Name REIT (trust) S-REIT (trust) LPT (A-REIT) First REIT listed 2005 2002 1971 Number of REITS/Capitalisation 7 / US$8.7Bn 18 / US$17.8Bn (incl bus trusts) 69 / US$ 115Bn Main regulatory body SFC MAS/SGX ASIC/ASX Securities and Futures Act and Property Funds Guidelines Corporations Act Main Regulation Securities and Futures Ordinance and Code on REITS External or Internal External External Management Local listing required Yes Yes No 400 + holders with A$2,000 holdings 25% units held publicly 25% units by 500 + holders Shareholder base

10. Structures: Europe

11. Belgium – Corporate Structure with General Partner Public GeneralPartner Commanditaire Vennootschapop aandelen (CVA) Assets

12. Tax considerations • Trust, Limited Partnership or Limited Liability Company in order to achieve tax neutrality concept of the REIT? • Capitalisation of the REIT: equity and debt/borrowings – does it matter for tax purposes? • Investor home tax considerations and structuring opportunities

13. REIT Formation – U.S. Tax Requirements • REIT provisions initially enacted by the U.S. in 1960 • Designed to allow individual investors to invest in real estate through a public, liquid vehicle as if such investors had invested directly in the underlying real estate • If properly structured and operated, REIT is a “conduit” for purposes of U.S. income taxation (i.e., no corporate level tax and only one level of tax imposed at the shareholder level) • U.S. REITs: Equity versus Mortgage • Can be a corporation, trust or association, provided the following conditions are met: • Managed by one or more trustees or directors • Beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest • Would be taxable as a domestic corporation if not a REIT

14. REIT Formation – U.S. Tax Requirements • Not a financial institution such as a bank, savings bank, domestic building and loan associations or an insurance company • Beneficial ownership of which is held by 100 or more persons • Not closely-held (i.e., not more than 50% of the value of the stock of the REIT may be owned, actually or constructively, by or for not more than 5 individuals • Elects to be taxed as a REIT • Satisfies certain gross income, asset and distribution tests to be discussed in connection with “REIT Operating Considerations” and which are generally designed to insure that the REIT operates as a “passive” investment vehicle

15. REIT Formation - Canada • Many jurisdictions, including Canada, have adopted legislation designed to accomplish the same or substantially similar objectives as prompted the U.S. to enact legislation authorizing REITs • Although Canada’s REIT legislation, which was initially enacted in 1994 and has recently been amended, is in many respects similar to that of the U.S., there are significant differences.

16. Regulatory Issues • Disclosure: fees, transactions with affiliates/interested party transactions, valuations, projections and forecasts, materiality threshold for disclosure, restatements and decisions on impairment, leverage • Operational issues: caps on holdings (concentrations) and on non-real estate investments, uses of guarantees and cross-suretyships, paying dividends in excess of current income • Enforcement issues: misuse of material non-public information, restatements, options grants, timing of revenue recognition, suitability (via regulatory inspections), failure to disclose adequately interested party transactions, misrepresentation (of listing/market), failure to disclose commissions/fees • Valuations: assumptions, exposure to “sub-prime” issues • Significant transactions: M&A activity, fairness opinions in LBOs, proxy contests

17. Hot topics for regulators • Disclosure of forecasts and projections of distributions, including assumptions and risks • Short-term yield enhancing arrangements/financial engineering (more on this in panel 3) • Funding distributions through debt or return of capital • Manager entrenchment and disincentives to removal: rights in trust deeds vs regulatory/legal requirements • Gearing levels and related risks • Clear, concise and effective disclosure • Approach varies between jurisdictions – regulation v disclosure

18. Key Benefits of Listing a REIT

19. REIT IPOs • Market trends • strong deal flow in some markets, less in others – cost of capital is a key driver; property capitalisation rates another factor • off-shore and cross-border REITs • broader asset classes – hotels, tourism, retirement villages etc • subsidiary wholesale funds/private real estate funds • Offering process and disclosure • relatively highly regulated • speed to market varies between jurisdictions • offer document: • length and regulatory involvement varies • incorporation by reference • related party aspects important – like other spin off transactions

20. REIT IPOs • Regulatory requirements • listing (spread, scale and suitability) or means to sell if not listed • collective investment authorisation required? • ongoing reporting and disclosure obligations • future acquisitions, capital raising and takeovers • Key design factors • tax efficiency • pipeline of properties to underpin future growth • management structure and protections • ownership of assets (including co-ownership and pre-emptive rights)

21. Example Australian REIT IPO Structure Public Investors Sponsor/Vendor Often sponsor is also spinning off properties - related party considerations Extra layer of collective investment regulation as well as securities law and stock exchange rules Units Units REIT Trust 1 Trust 2 Responsible Entity (RE) Stapled Co-owner of asset Management agreement External manager – fixed term management contract as protection feature Passive Assets Active (development) Assets Manager Often sponsor has pre-emptive rights to take assets back if RE removed

22. International Bar Association ConferenceReal Estate Investment TrustsPanel 2 - REIT formation 17 October 2007 Singapore 9142562_1