Summer 2013/2014

The hunt for sustainable income Direct property a great SMSF diversier The potential advantages of tax-deferred income

In this edition
03 Introduction 05 08 10 12 14 The hunt for sustainable income (with low volatility) Direct property a great diversier for SMSFs The potential advantages of tax-deferred income from property funds Property Sector 2014 Outlook Statements Our property experience

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Our Property Insights

Mark Lumby Head of Property FundsRetail Australian Unity Real Estate Investment

Real estate pushes a strong case for 2014

In 2013, unlisted property once again started turning investors heads. And for many people it is presenting as a compelling investment for 2014.
After several years of consolidation, direct commercial property is back on investors radars. The balance sheets of many property managers have been strengthened; listed property appears to have completed somewhat of a U-turn, with prices back to fair value; property valuations have broadly stabilised; tenant demand is subdued but vacancies are consistent with long-term averages; business condence is on the rise; interest rates remain at historic lows; new commercial property supply continues to be low; and international investors continue to show strong interest in purchasing quality Australian property assets. Three things emerged as trends for direct property in 2013: 1. The increasing appeal of property as a yield investment. In a low interest rate environment, direct property presents as an attractive asset class, particularly for pensioners and selfmanaged superannuation funds (SMSFs) who typically seek long-term, consistently high-yielding, investments. 2. Solid underlying Australian economic fundamentals. Australias economic growth predictions were trimmed during the year, but interest rates hit historic lows, commercial property supply was low, and consumer and business condence surged into positive territory. 3. Strong institutional interest in Australian property. Demand for good quality Australian property was hotly contested by domestic superannuation funds, wholesale funds, oshore sovereign funds and listed property trusts. This activity provided broad support for property valuations. Risks remain, as always, but our view is that 2014 and beyond is shaping as positive for property. In this issue we look specically at the appeal of direct, unlisted property as an investment for SMSFs and pensioners. Very few investment options can oer the stability of long-term income and the potential for capital growth that property can provide. We also look at some of the potential tax advantages that investment in a property fund can provide. We were also pleased to announce in October 2013 that Australian Unity Investments won the Professional Planner / Zenith Investment Partners Direct Property Fund Manager of the Year award for 2013. The award aims to recognise organisational strength, investment philosophy and process, risk management and performance. Just one week after this award, the Australian Unity Healthcare Property Trust won the API Commonwealth Bank of Australia Property Trust Industry Award for 2013. This award recognised the Trusts superior industry performance and its considerable attributes, including innovation, nancial performance and public accountability.

We hope you enjoy this edition of Property Insights.

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Australian Unity InvestmentsProperty Insights

The hunt for sustainable income (with low volatility)

Since the global nancial crisis (GFC), most of the worlds central banks have sought to drive down ocial interest rates to reignite growth in their own economies. One of the results of the subsequent low-yielding investment environment is that investors have increasingly sought out income-producing investments that have returns greater than cash and term deposits.
Globally, this has been referred to as the hunt for yield. Locally, the focus on income-producing investment assets is perhaps not surprising. As the Australian population gradually ages, the goal of paying everyday living expenses out of the income produced from a pension fund is increasingly attractive. As well, many of those who are planning for retirement by investing through self-managed superannuation funds (SMSFs) are also keen to invest in long-term, income-producing investments. Stable income over the long term Increasingly, Australian investors are seeking out investments in unlisted property funds because of the sectors proven ability to deliver stable and sustainable income distributions. Chart 1 below highlights the annual rolling income, capital and total returns for Australian unlisted property funds for eight years to 30June 2013. As demonstrated, the change in total return is primarily driven by change in property capital values. Income returns were impressively stable over the period, even during the recession in the 1990s and during the GFC. CHart 1: Returns for Unlisted Property Funds (PCA/IPD Pooled Property Fund Index Unlisted Retail)
Income, Capital and Total Returns (June 2005 to June 2013)
Source: IPD, September 2013
50.0

The benets of investing in unlisted property

Consistent income Regular income distributions are generally sourced from tenant rental payments. Tax-eective income Distributions can include a tax-deferred component, typically as result of the unlisted fund claiming depreciation on buildings and a deduction for interest borrowing expenses. Not only can investors benet from deferring the payment of tax on this income to when their investment is sold, the total tax treatment can result in paying less tax. Capital stability and potential capital growth The capital values of commercial properties are determined periodically by independent expert property valuers. As a result, direct property has historically exhibited lower volatility than other types of investments, such as Australian or global shares. Natural inationary hedge Rental agreements with commercial tenants often contain provisions for increases in line with ination or by a set percentage each year. Further, because valuations are inuenced by the level of rent paid, over the longer term commercial property values will also tend to rise. Low correlation to equities Compared to other growth assets, such as Australian and international shares and listed property securities (or REITs), direct property has been historically less volatile and demonstrates dierent return characteristics.

40.0

30.0

Level of Return

20.0

10.0

0.0 Sep-05 Dec-05 Mar-06 Sep-06 Dec-06 Mar-07 Sep-07 Dec-07 Mar-08 Sep-08 Dec-08 Mar-09 Sep-09 Dec-09 Mar-10 Sep-10 Dec-10 Mar-11 Sep-11 Dec-11 Mar-12 Sep-12 Dec-12 Mar-13 Sep-13 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13

-10.0

-20.0

-30.0 Total Return (%p.a.) Capital Return (% p.a.) Distributed Income Return (% p.a.)

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An unlisted property perspective Comparing dierent types of property investment is a dicult task. Each investment will have its own unique attributes and each will hold diering levels of appeal to dierent investors. Many investors automatically think residential property when they think of an investment in property. However, this may not be the best option, particularly if the family home is a signicant asset and therefore already a substantial residential property exposure. It is well known that residential property values have enjoyed something of a renaissance over the past year. Auction rates, in particular have been much higher in 2013 than in previous years, as buyer demand increased substantially. RP Datas research on auction clearance rates in major Australian capital cities during 2013 was recorded at around 70 per cent, the highest level since May 2010.1 But one of the consequences of the run up in values for residential property is that it has the eect of depressing rental yields. Chart 2 below highlights the decline and plateau of gross residential rental yields across Australian capital cities. Further, as a result of the continued strength in the residential market through Spring 2013, we expect this graph will again dip lower. CHart 2: Capital City Rental Rates and Gross Yields Jun-97 to Jun-13
Source: RP Data
8% 7% 6%
6%

On a purely income basis, Chart 3 below compares the historical income return over the eight-year period to June 2013 of Australian shares, listed property and unlisted property funds. Chart 3 highlights the eect of the GFC, particularly on the listed property sector, which saw values decline dramatically. One of the eects of the rapid slide in listed property stock prices was the bounce in the percentage of income distributed to investors, relative to the market value of the sector. The same eect can be seen across the broader Australian share market, although to a lesser extent. As previously demonstrated, the income from unlisted property funds has been less volatile and, except for a brief period during the height of the GFC after the Australian share market had fallen considerably, it has generally outperformed Australian shares on an income distribution basis. This is noteworthy considering the large numbers of share market investors who devote much of their portfolio to investing in high dividend-paying companies. CHart 3: Unlisted Property Funds v Australian Shares v A-REITs
Source: Australian Unity Investments, IPD
12 month rolling distribution (%)

18% 16% 14% 12% 10% 8%

5% 4% 3% Jun-97 Jun-99 Jun-01 Jun-03 Jun-05 Jun-07 Jun-09 Jun-11 Jun-13 Gross rental yield (RHS)

4% 2% 0% Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13

S&P ASX200 Index

S&P ASX200 AREIT Index

PCA/IPD Pooled Property Fund Index - Unlisted Retail

As shown in Chart 1, unlisted property over a similar period has generally demonstrated an ability to provide consistent, low volatility income. The PCA/IPD Pooled Property Fund Index Unlisted Retail has returned an average of 7.04% income return from June 2004 to June 2013. (Total return over the period was 9.98%.)

Because listed property prices have retraced over the past two years, unlisted property funds have eectively outperformed this sector on an income basis since late 2011.

1 RP Data, Property capital markets report, Spring 2013

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Lower volatility and impressive growth Widening the scope of the comparative analysis, Table 1 shows the annual performance for six broad asset classes over the eight years to 30 June 2013 and their standard deviation, which is a typical measure of volatility. TABLE 1: Annual performance for various investments (June 2005 to June 2013)
Unlisted Property PCA/IPD Pooled Property Fund Index Unlisted Retail Australian Shares S&P/ASX 200 Accumulation Index Global Shares MSCI World ex Australia ($A) Unhedged (Net) Listed A-REITs S&P/ASX 200 A-REIT Accumulation Index Fixed Interest UBS Composite Bond Index Cash Bank term deposits ($10,000) Source RBA

Date (Year ending)

June 2005 June 2006 June 2007 June 2008 June 2009 June 2010 June 2011 June 2012 June 2013 Average annual return Standard deviation

19.2% 33.1% 27.8% 15.0% -20.1% 2.8% 8.8% 7.4% 7.0% 11.22% 15.50%

26.35% 23.93% 28.66% -13.40% -20.14% 13.15% 11.73% -6.71% 22.75% 9.59% 18.43%

0.06% 19.88% 7.77% -21.26% -16.24% 5.22% 2.66% -0.50% 33.10% 3.41% 16.57%

18.10% 18.05% 25.87% -36.35% -42.27% 20.41% 5.84% 11.04% 24.22% 4.99% 25.90%

7.79% 3.41% 3.99% 4.42% 10.82% 7.86% 5.55% 12.41% 2.75% 6.56% 3.40%

4.55% 5.40% 5.90% 7.60% 3.55% 6.00% 6.00% 4.60% 3.85% 5.27% 1.27%

Past performance is not a reliable indicator of future performance.

On average, over each of the past eight years, unlisted property funds have produced higher total returns with lower volatility than Australian shares, international shares and listed property. As might be expected, the defensive asset classes of cash and xed interest delivered returns with much lower volatility, but with signicant underperformance relative to the other growth sectors. Unlisted property funds, then, as part of a diversied portfolio, can play a signicant role in answering some of the challenges involved in helping Australians to source consistent, low-volatility income.

How to invest in direct property Australian Unity Investments oers investors a variety of diversied and sectorspecic unlisted property funds. These cover assets including healthcare, oce, retail and industrial property. In October 2013, we were named Professional Planner/Zenith Investment Partners Direct Property Fund Manager of the Year for 2013. For more information about our unlisted property investments, refer to australianunityinvestments.com.au.

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Unlisted property a great SMSF diversier

Ryan Banting Head of Portfolio Management, Australian Unity Real Estate Investment

For self-managed superannuation fund (SMSF) investors, getting the right balance of growth and defensive investments is a dynamic challenge. Importantly, with careful consideration, the right portfolio mix can achieve both higher returns and create lower overall risk.
As markets around the world continue to present a low growth outlook, investing in direct unlisted property is increasingly pushing acase for inclusion in SMSF portfolios as a relatively high yieldinginvestment. Many SMSF investors automatically think residential property or their business premises when they think of an investment in property. Increasingly, however, SMSFs are looking at property investing through unlisted, pooled managed funds. Under this scenario, the managed fund will typically own and lease commercial real estate assets, such as oce buildings, industrial warehouses, retail shoppingcentres or private hospitals. When it comes to structuring an SMSF investment portfolio particularly in the later years as trustees contemplate the critical stage oftransitioning to pension phase an investment into unlisted property can complement other investments and help to mitigate risk. Investment into unlisted property can also increase the probability ofmore predictable, more consistent returns. The longevity dilemma its no longer safe to be conservative Looking towards retirement, one of the biggest concerns held by SMSF investors is typically whether their savings will be enough toadequately support their lifestyle in retirement. Longevity risk is well known as the risk that a retirees funds will runout early. Traditionally, as SMSF investors approached retirement, many automatically adopted a strategy of moving their portfolio away fromgrowth investments such as shares and property into defensive assets such as xed interest and cash. Prior to the GFC, this was often viewed as practical because nominal economic growth rates, as well as cash and bond rates, were generally high enough that investors could expect a reasonable investment return to endure a long and sustainable retirement. Today, investors are faced with a new reality. Following a 30-year bull market in xed income and the Reserve Bank of Australia pursuing a strategy of historically low interest rates, the risk versus return dynamic onbonds is emerging as decidedly negative. This has created a signicant yield premium for unlisted property. Chart1 below shows the dramatic spread between various commercial property sectors and the 10-year Australian Commonwealth Government bond at 30 June 2013. As the chart displays, the yield premium for the past year has increased dramatically compared to the ve-year time period. cHart 1: Income return premium across property relative spread against 10-year bond rate as at June 2013
Source: RBA & IPD Research

7%

6%

5%

4%

3%

2%

1%

0% Composite 1 year 5 years Retail Oce Industrial Healthcare

Australian Unity InvestmentsProperty Insights

Direct property can lessen portfolio risk and enhance return In todays investment environment, a direct property investment can also work as part of a diverse SMSF portfolio to maintain exposure to growth assets and simultaneously reduce the impact of prospective negative returns. A study by Property Funds Australia2 found there was a relatively weak correlation between returns ofAustralian shares and direct property. One of the benets of this low correlation for SMSF investors, particularly those looking to extend their exposure to growth assets into retirement, is that they can lower the probability of negative annual returns by including and potentially increasing their allocation to direct property as part of a diversied investment portfolio (see Chart 2). Support for the inclusion of greater allocations to direct property over time in SMSFs is also found in the ASXs Five-star super strategies,3 which was rolled out as part of the exchanges major SMSF roadshow in June 2011. As portfolio allocations evolved over time from high growth to a more conservative investment style, the allocation to direct Australian property increased while the allocation to other growth assets such as Australian and international shares declined.

CHart 2: Inclusion of direct property in a diversied investment portfolio

Source: RBA & IPD Research
Probabilioty of Negative Annual Return 25%

20%

15%

10%

5%

0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Proportion of Direct Property in a Diversied Portfolio

More information about SMSFs and the benets ofinvesting in direct property Australian Unity Investments oers investors a variety of unlisted property funds. These cover assets including healthcare, oce, retail and industrial property. For more information about our unlisted property funds, refer to australianunityinvestments.com.au. To nd out whether an SMSF is right for your investment circumstances, please consult a professional nancial adviser.

2 PFA Investment Report, Property Performance Research (Atchison Consultants), September 2012 3 Five-star super strategies, Ian Irvine and Graham OBrien, Australian Securities Exchange (ASX), www.asx.com.au

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The potential advantages of tax-deferred income from property funds

Property funds typically make regular income distribution payments to investors. These distributions are primarily the result of rental income received from tenants in properties that are directly held by the funds. Part of these distribution payments may contain a tax-deferred component.
Tax-deferred distributions have the potential to provide a number of benets to long-term investors, such as enabling the opportunity for a deferred tax liability and, therefore, enabling greater re-investment. For certain investors, tax-deferred distributions even have the potential to be wholly tax-free. Key benets of tax-deferred income For long-term investors on capital account, income tax may not be payable on the tax-deferred component of the distribution, provided the total tax-deferred components doesnt exceed an investors cost base in the investment. Tax-deferred distributions operate to reduce an investors cost base in the units held and tax-deferred income is, in eect, only brought to account when an investment is sold. Investors holding units in a property fund on capital account for more than 12 months will receive a 50 percent discount on capital gains (i.e. the dierence between the sale proceeds and the cost base in the investment). Superannuation funds receive a one third discount on capital gains if their investment is held for more than 12months on capital account. For superannuation funds in an allocated pension phase, capital gains may be tax-free. As such, gains realised on investments held from the period prior to the allocated pension phase may also be tax-free. Eectively, the result is that tax-deferred distributions can be tax-free.

What are tax-deferred distributions?

Tax-deferred distributions arise as a result of dierences between the earnings of the fund and its taxable income. These dierences can arise because of tax depreciation deductions available to the fund. Income tax may not be payable on tax-deferred amounts, however these amounts may operate to reduce an investors cost base in their investment. As a result, the tax liability is deferred until a capital gain (if any) is realised.

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CASE STUDY 1: Tom benets from tax-deferred distributions Tom wants to invest $50,000. Tom has a marginal tax rate of 46.5%, including a Medicare levy of 1.5%. He is considering twooptions. For the purposes of the example, it is assumed that both investments in unlisted property funds pay a distribution return of 8% p.a. The only dierence is that one of the investments provides a tax-deferred component of 50% for its distributions. Further, to make calculations simpler, earnings are not re-invested. 1.  Invest in an unlisted property fund that pays income distributions of 8%. 2.  Invest in an unlisted property fund that pays income distributions of 8%, of which 50% of the distributions are tax-deferred. Under the rst investment option, in the rst year Tom receives income of $4,000 ($50,000 x 8%). This amount is included in his taxable income. Based on his tax rate of 46.5%, Tom will pay tax on these earnings of $1,860 p.a., resulting in after tax earnings of $2,140. At the end of a three-year period, Tom will have total after-tax cash earnings of $6,420. Under the second investment option, Tom will receive a distribution of $4,000 from the property fund, of which $2,000 is tax-deferred. Tom will pay tax on the earnings of $930 p.a., resulting in after-tax cash earnings of $3,070. Assuming he holds the investment, at the end of a three-year period Tom will have total after-tax cash earnings of $9,210. At the end of three years Tom decides to dispose of the unlisted property trust investment. To keep things simple, lets assume there is no capital growth of the investment over the three-year period. On disposal, the tax-deferred distributions in the second option will eectively be recouped via a capital gain, due to the taxdeferred distributions reducing Toms cost base in the unlisted property trust investment. As such, he will have a capital gain of $6,000 (3 x tax-deferred income of $2,000). As Tom is holding the investment on capital account, he will be eligible for a 50% discounted capital gains, reducing his capital gain to $3,000. At his marginal tax rate, Tom will have a capital gains tax liability of $1,395.
Toms three-year investment summary
Unlisted property fund (no tax-deferred
component)

Unlisted property fund (with 50% taxdeferred component)

Income received Income tax (46.5%) Capital gains tax Total after-tax return

$12,000 $5,580 Nil $6,420

$12,000 $2,790 $1,395 $7,815

In addition, Toms capital gains tax liability may be lower if he disposes of the unlisted property fund investment in a year in which his marginal tax rate is lower, say, when he ceases full time employment. This could have the eect of further enhancing Toms after-tax return.

The potential advantages for SMSFs moving to pension For self-managed superannuation funds (SMSFs), the tax-deferred component of the income distributions from property funds can have additional potential benets. This can be particularly evident if a SMSF holds an investment into allocated pension phase. Because capital gains in allocated pension phase can be tax-free, the capital gains realised on investments held from the period prior to the allocated pension phase may also be tax-free.

CASE STUDY 2: Sarahs SMSF sees benet from tax-deferred distributions Sarah estimates she will retire in three years and is considering investing $50,000 through her SMSF into an unlisted property fund investment. Sarahs SMSF is a complying superannuation fund, has a 15% rate with a one-third discount for capital gains, and does not re-invest its after-tax earnings. On retirement, Sarahs SMSF plans to move into an allocated pension phase and, as such, will have a tax rate of zero. The unlisted property fund investment would be sold when Sarahs SMSF is in allocated pension phase. Following the same analysis as Case study 1, Sarahs SMSF outcome is shown in the table opposite:
Sarahs SMSF three-year investment summary
Unlisted property fund
(with 50% tax-deferred component)

Income received Income Tax (15%) Capital Gains Tax (0% for allocated pension phase) Total after tax return

$12,000 $900 Nil $11,100

As Sarahs SMSF is in an allocated pension phase at the time of the disposal of the unlisted property fund investment, the taxdeferred distributions received over the life of the investment are eectively tax-free.

Important information: This article is general information only and should not be regarded as tax advice. Investors should seek their own independent tax advice, taking into account their particular circumstances, before investing.

Australian Unity InvestmentsProperty Insights 11

2014 Outlook statements

Healthcare property in 2014

Oce property in 2014

Our outlook for the healthcare property sector continues to be positive. Demand for private health services continues to grow, primarily as a result of Australias gradually ageing and increasing population. Looking ahead, we anticipate leases will continue to be renewed at or slightly above current rentals. Yields for healthcare properties are likely to remain consistent. We also expect valuations to remain consistent, with some upward pressure as a result of strong interest from both domestic and overseas institutional investors. In October, our agship Australian Unity Healthcare Property Trust was named the winner of the 2013 Australian Property Institute NSW Excellence in Property Awards in the Property Trust Industry category. The Trust is expected to further diversify and grow strongly in 2014. New property acquisitions and further expansion projects for existing assets are currently high priorities. We look forward to future announcements over the next year aimed at growing investors distributions and total returns over the long term.

Our view is that Australian oce property valuations in 2014 will begenerally supported by ongoing economic expansion, renewed business condence and the lack of new supply across most oce property markets. In what is presenting as a low interest rate environment for investors, we believe oce property will continue to be an attractive asset class. Importantly, the outlook for the highly occupied oce property portfolios, such as the Australian Unity Oce Property Fund, continues to be positive. This is a result of limited new supply being built and tenants appearing reluctant to incur moving costs. Our view is that the situation will endure as subdued tenant demand makes attracting pre-commitments for leasing dicult for property developers. Ongoing limited supply should also assist in sustaining current occupancy levels. In addition, investment demand for oce property has improved as a result of low interest rates and stronger equity markets. For many institutional investors, both locally and internationally, investing in Australian oce property is presenting as a compelling proposition. This is helping to sustain current property values, and competition for quality assets may lead to some valuation upside over the medium term. Looking ahead to 2014, the Australian Unity Oce Property Fund is well positioned to provide investors with a healthy level of ongoing returns.

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Retail property in 2014

Industrial property in 2014

Despite some challenges that continue to confront the Australian retail property sector, positive signs are emerging. As a result, we maintain a cautiously optimistic outlook for the sector. Our view is based on many factors, including the recent upswing in business condence and consumer sentiment, both of which serve as very long-term leading indicators for the sector. Adding to our positive view is the renewed demand for residential property, which has resulted in sharp property increases, particularly in major capital cities. Sydney, for example, saw average residential house prices increase by 13.4 percent in the rst ten months of 2013.1 Further support is underlined by expected growth in the Australian economy. This gradual expansion means large retail groups, particularly those catering to non-discretionary spending, will likely continue to grow and require expanding retail property assets. Importantly, the retail property investment market has been very active in 2013. Large transaction demand has come from unlisted wholesale funds, superannuation funds and o-shore investors. Adding to this, low levels of new retail development have had the eect of constricting supply, helping to maintain tenant demand and keeping vacancy rates relatively low for existing assets. Looking ahead, we expect the Australian Unity Retail Property Fund will be in a position to increase its level of distributions to investors once the major expansion of the Waurn Ponds Shopping Centre is completed. This major expansion kicked o in 2013 and Stage 1 is due for completion in May 2014. The expansion is expected to be fully complete by August 2014.

Pleasingly, 2013 produced stable conditions and steady performance across the industrial property sector. Industry data in the second half of 2013 indicated some improvement in occupier demand for industrial property and other indicators pointing to a positive 2014.2 In particular, the supply of new industrial property assets continues to broadly balance overall demand, with the result that rents across the sector have generally remained steady. According to Jones Lang LaSalle, existing rents for prime-grade industrial assets have remained stable across Australia. Also, it appears incentives from property owners have not increased. Adding to this broadly positive outlook, investor appetite for industrial assets continues to remain strong, helping tosupport current property valuations.

1 RP Data, November 2013

2 Real Estate Intelligence Service, Preliminary Market Overview, Q3/2013, Jones Lang LaSalle

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13

Our property experience

Over the past 10 years, Australian Unitys Real Estate Investment team has become oneof Australias premier unlisted property fund managers. It oers investors a unique combination of experience and expertise in managing direct property assets across thehealthcare, retail, industrial and oce sectors.
We believe we go further in our insights into Australias commercial property markets, and that we have a deeper perspective into its opportunities and challenges. Importantly, our expertise is complemented by Australian Unitys inuential community of investment and wellbeing experts. Australian Unity Real Estate Investment manages property assets valued at approximately $1.6 billion (at 30 September 2013).

Our property executive team David Bryant Chief Executive Ocer David joined Australian Unity Investments in 2004 and is responsible for all the investment management activities across our nancial and property assets. David has more than 25 years of experience in investment and nancial services. Mark Pratt General Manager Real Estate Investment Mark joined Australian Unity Investments in2004. He is responsible for the commercial management and growth of our in-house real estate investment businesses.

Peter Lambden Head of Property & Asset Management Peter joined Australian Unity Investments in 2001 and has more than 40 years of experience in portfolio and property management. He is responsible for providing key input to fund and property strategies, developing consistent and eective asset and property management processes, and overseeing the operation of all property functions.

Mark Lumby Head of Property Funds Retail Mark joined Australian Unity Investments in 2011, following the acquisition of Investa Funds Management Limited where Mark worked for three years as General Manager of Retail Funds. Mark is responsible for unlisted property funds in the oce, retail and industrial sectors as well as our diversied property funds.

Chris Smith Head of Healthcare & RetirementPropertyFunds Chris joined Australian Unity Investments in 2001 and has more than 20 years of experience in portfolio and property management. Over the past decade, he has played a vital role in shaping our Healthcare Property Trust into one of the largest and highest-rated property funds in Australia.

Ryan Banting Head of Portfolio Management Ryan joined Australian Unity Investments in 2011. He is responsible for managing and monitoring cashows, research, analytics, debt and asset allocations to optimise performance outcome and the risk prole for our unlisted property funds.

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Australian Unity InvestmentsProperty Insights

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Find out more information about our property funds Visit our website at australianunityinvestments.com.au for the latest performance information and updates on all of our investment products. To nd out more about our managed real estate investments, please contact your nancial adviser or Business Development Manager. Alternatively, you can contact us on the details below. Contact us Address Investor Services Adviser Services 114 Albert Road, South Melbourne, VIC 3205 13 29 39 1800 649 033

Website australianunityinvestments.com.au Email investments@australianunity.com.au

Important information Australian Unity Funds Management Limited (ABN 60 071 497 115, AFS Licence No. 234454) is the issuer of the Australian Unity Healthcare Property Trust and the Australian Unity Oce Property Fund. Australian Unity Property Limited (ABN 58 079 538 499, AFS Licence No. 234455) is the issuer of the Australian Unity Retail Property Fund, the Australian Unity Industrial Property Trust (closed to new applications), the Australian Unity Property Income Fund and the Australian Unity Geared Property Income Fund. Australian Unity Property Funds Management Limited (ABN 28 085 352 405, AFS Licence No. 233718) is the issuer of the Australian Unity Diversied Property Fund. The Professional Planner | Zenith Fund Awards are determined using proprietary methodologies. Fund Awards and ratings are solely statements of opinion and do not represent recommendations to purchase, hold, or sell any securities or make any other investment decisions. Ratings are subject to change. The information in this edition of Property Insights is general information only and does not take into account the nancial objectives, situation or needs of any particular investor. Investment decisions should not be made on the basis of past performance. Before deciding whether to acquire, hold or dispose of a product, an investor should refer to the relevant Product Disclosure Statement (PDS). A copy of the PDS can be obtained by calling us on 1800 649 033 or 13 29 39 or visiting www.australianunityinvestments.com. au. The information provided here was current at the time of publication only. Past performance is not a reliable indicator of future performance.