KPMG - IERE

The Group’s diversification by market in Continental Europe is summarised in the table below based
on the rental income generated during the period ended 30 September 2006.
Country
Period ended 30 September 2006
Number of
properties
Rental
income
% of total
rental
income
Germany 2 A4,696,163 47.0%
France 3 A2,628,851 26.3%
Spain 1 A966,967 9.7%
Belgium 1 A1,696,029 17.0%
Total 7 A9,988,010 100%
The acquisition dates and lease terms for the properties that contributed to rental income during the
period ended 30 September 2006 affect the amount of income actually received for this period and do
not reflect rental income on an annualised basis. Accordingly, rental income by sector and rental
income by country may differ substantially in future periods. Net Annual Rent and estimated Net
Annual Rent, as determined by the Independent Valuer, for these properties are set out in Part V
and Part VI of this Prospectus.
Rental income
Total rental income for the period ended 30 September 2006 was A10.0 million. Rental income in
future periods is expected to differ significantly due to expansion of the Group’s portfolio. The
Company also expects that future movements in rental income may be the result of active asset
management initiatives or lease indexation provisions. Indexation provisions had a positive impact on
rental income during the period ended 30 September 2006.
Property operating expenses
Property operating expenses for the period ended 30 September 2006 were A0.4 million. Property
operating expenses consist of property management fees and other non-recoverable expenses, including
taxes and insurance. The Company expects that property operating expenses will be higher in future
periods due to the expansion of the Group’s portfolio.
Net valuation gains on investment property
Net valuation gains on investment property for the period ended 30 September 2006 were A17.9
million.
Net valuation gains on investment property are primarily due to the increase in valuation of a
property, based on factors such as the relative attractiveness of real estate as an asset class and
associated yield compression together with rental adjustments during ownership. Net valuation gains
are based on quarterly valuations prepared by DTZ Debenham Tie Leung Limited as the
Independent Valuer. Characteristics such as the location and condition of the property, tenant
creditworthiness and lease terms are considered in assessing fair value. Investor demand for particular
markets in Continental Europe or particular sectors also affect the fair value of a property.
Historically, valuation adjustments have not been characterised by regular movements and the
Company expects that future valuation adjustments will continue to occur unevenly from financial
period to financial period.
Professional fees
Professional fees for the period ended 30 September 2006 were A2.5 million relating principally to fees
incurred in connection with the initial organisation of the Group. Professional fees consist of legal,
tax advisory, notarial, accounting and audit fees, including fees paid to advisers in respect of aborted
property transactions. Fees that are related to property acquisitions are initially capitalised. The
amount of professional fees for the period ended 30 September 2006 is due to fees associated with the
Group’s property acquisitions, assessments of properties that the Group may not ultimately acquire,
property management and organisational and regulatory compliance costs for each entity within the
Group. Professional fees are likely to increase as the number and value of the properties owned by
the Group increases. However, as professional fees are not linked to the value of the properties the
Group considers for acquisition, the fees are not expected to decrease if property purchase prices
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