KPMG - IERE

Where properties have achieved their objectives set out in the asset level business plans, or where
market conditions are favourable, or the Company’s plans or needs require, the Investment Manager
may consider realising value through a sale of the property. Such a strategy would only be adopted
where the investment market is considered by the Board to be sufficiently strong and liquid to ensure
value is generated for the Company.
Competitive strengths of the Investment Manager
Invista REIM is a wholly-owned subsidiary of Invista, a company recently formed from the
extraction and listing of the property fund management business of Insight Investment Management
Limited which itself is the fund management business of HBOS.
Invista is a business focussed solely on real estate investment management. It has established itself as
one of the UK’s largest real estate fund management businesses, managing the real estate assets in 15
funds representing £8.6 billion as at 30 September 2006.
Funds with a minimum 12 month track record as at 31 December 2005 were assessed against an
independent, bespoke IPD benchmark set by clients. As at that date, 100 per cent. and 59 per cent.
of total assets under management met or outperformed their IPD benchmarks, over the last 1 and 3
calendar years respectively. Invista’s funds in aggregate outperformed the IPD Universe on both the
same 1 year and 3 year basis as above.
The Invista team comprises approximately 80 members, 40 of which are investment professionals with
an average of over 10 years professional experience each. The Continental European team was formed
in July 2005 to develop the Continental European investment platform. The current members of the
team have selected each asset in the Property Portfolio and have a thorough knowledge of them. The
team currently comprises 10 members, 7 of whom are investment professionals who have previously
worked in the Continental European real estate markets; half of this team have also lived in Continental
Europe or are Continental European nationals. Although the investment management team is currently
based in London, Invista intends to develop a network of offices across Continental Europe. It is
expected that offices in France and Germany will be established during the next 12 months.
The team has extensive knowledge of the Continental European real estate markets. The Investment
Manager believes that detailed knowledge of and experience of working in the Continental European
real estate markets is critical to the success of the Company. The Investment Manager considers that
it has built a strong reputation for executing transactions in an effective and timely manner. This has
been an important factor in developing the visibility of the Group in Continental Europe and has
contributed to a significant increase in deal flow providing access to attractive investment
opportunities through an extensive network of contacts with property owners and intermediaries.
Introductions of Continental European real estate investment opportunities to Invista by independent
third party brokers and direct owners averaged A1.75 billion per month in the last 12 months to
September 2006. These investment opportunities are sourced in both on and off market situations
using the contacts of Invista in the local Continental European markets. Invista has also leveraged off
established business contacts and has capitalised upon relationships developed through the Bank of
Scotland offices in Paris, Madrid, Amsterdam and Frankfurt. Invista believes that the development of
its own network of offices will provide enhanced access to investment opportunities and improve its
ability to deliver asset management initiatives.
The Property Portfolio
The properties owned by the Group have been, and the Committed to be Acquired properties are
expected to be, acquired through both individual asset and portfolio transactions.
The Property Portfolio has been constructed using a combination of ‘‘top down’’ and ‘‘bottom up’’
analysis. From a ‘‘top down’’ perspective the Investment Manager has selected the assets having
regard to the current and future expected growth potential of that sector in that particular market
and country. At the local level, from a ‘‘bottom up’’ perspective, the Investment Manager has
focussed on fundamental real estate characteristics such as location, building quality, flexibility,
suitability for the market, past and expected future rental/capital performance, lease length and tenant
quality/credit risk. Such analysis is undertaken by the Investment Manager’s in-house research team,
supported by external pan-European and local research and advisory specialists including, for
example, Property Market Analysis LLP, an independent property research company.
The Investment Manager believes that the Group’s investments provide well diversified exposure to
established, liquid real estate markets in Continental Europe and are capable of producing an
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