KPMG - IERE

The Investment Management Agreement does not prevent the Investment Manager or any other
member of the Invista Group from raising or sponsoring vehicles with similar investment policies to
the Company. The Investment Manager is not otherwise limited or restricted from engaging in any
business or managing any other vehicle that invests in real estate-related investments. Where the
Investment Manager manages vehicles with similar investment policies to the Company, it has
guidelines in place which require it to allocate transactions between its clients in accordance with
rotational principles.
The Investment Manager’s investment strategies may not achieve the Group’s investment objective
The Company’s ability to achieve its investment objective depends primarily on the Investment
Manager’s ability to identify and recommend investments that generate attractive returns. No
assurance can be given that the strategies used, or to be used, by the Investment Manager to achieve
the Group’s investment objective will be successful under all or any market conditions. The failure of
the investment strategies, the failure of the Investment Manager to exercise those strategies effectively
or identify and complete appropriate investments may reduce the Company’s income or Net Asset
Value and adversely impact the Shares. The strategies employed by the Investment Manager may be
modified and altered from time to time, so it is possible that the strategies used by the Investment
Manager to achieve the Group’s investment objective in the future may be different from those
presently expected to be used. Changes in the investment strategy may increase the risks associated
with an investment in the Shares, the volatility of investment returns and cash flow, and the
Company’s ability to make distributions at the targeted rate or at all to Shareholders.
Risks Relating to the Group’s Borrowings
The Group will borrow to fund its future growth and expects to have a relatively high level of gearing
As at Admission, the Group is expected to have A248.7 million of debt drawn down under the Bank
Facility. The Group may be required to borrow to fund investments, through the use of bank
facilities, and aims to use leverage in order to enhance returns to Shareholders. Based on current
capital requirements, the Group intends to have a level of gearing of up to 60 per cent of its gross
assets calculated as at the time of draw down. The extent of the borrowings and the terms thereof
will depend on the Group’s ability to obtain credit facilities and the lenders’ estimate of the stability
of the Group’s cash flow. Any delay in obtaining or failure to obtain suitable or adequate financing
from time to time may impair the Group’s ability to invest in suitable properties and expand the
Property Portfolio within the projected timeframe or at all, which is likely to impact negatively on the
Company’s investment performance and the return on the Shares.
The incurring of additional debt by the Group could have a significant impact by:
* affecting the Group’s ability to satisfy obligations with respect to existing debt;
* increasing the Group’s vulnerability to downturns in the real estate market and the
economy generally;
* increasing the Group’s exposure to interest rate risk;
* requiring the Group to dedicate a substantial portion of cash flow to debt service;
* limiting, through financial and restrictive covenants, the Company’s ability to pay
*
dividends or otherwise make loans within the Group, invest in properties or financial
instruments, sell assets, borrow additional funds, issue equity, engage in transactions with
affiliates;
subjecting the Group’s assets to security interests or creating liens or guarantees; and
* placing the Group at a competitive disadvantage compared to less highly leveraged
competitors.
If the Group’s capital requirements vary materially from its current plans, the Group may be required
to incur further debt. If the Group is unable to obtain further financing as needed, the Group may
be required to alter its strategic plans and reduce its investment activity.
Borrowings could adversely affect the Group’s net asset value
The Group’s current borrowings are secured against its assets. Future borrowings are generally
expected to be secured against some or all of the Group’s assets. The use of borrowings or other
leverage may increase the volatility of returns of the Company, including the risk of total loss of the
amount invested. If income and capital appreciation on investments made with leveraged funds are
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