AUSTRALIAN UNITY OFFICE FUND — AGM Information 2016

Nov 10, 2016

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Australian Unity Office Fund (ASX: AOF) Annual General Meeting, 11 November 2016

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Important notice and disclaimer

The information provided in this presentation has been prepared by Australian Unity Investment Real Estate Limited ABN 86 606 414 368 AFS Licence 477434 (AUIRE), as responsible entity of the Australian Unity Office Fund ARSN 113 369 627 (Fund).

The information provided in this presentation is general information only. It is to be read in conjunction with the Fund’s Annual Report for year ended 30 June 2016 lodged with the ASX on 26 September 2016. It is not intended to be investment or financial product advice and should not be relied upon as such. Investors or potential investors should make their own assessment of, or obtain professional advice about, the information contained in this presentation to determine whether it is appropriate for them. The presentation is not an offer or invitation for subscription or purchase of units in the Fund.

Certain statements in this presentation may constitute forward-looking statements or statements about future matters (including forecast financial information) that are based upon information known and assumptions made as of the date of this presentation. These statements are subject to internal and external risks and uncertainties that may have a material effect on future business. Actual results may differ materially from any future results or performance expressed, predicted or implied by the statements contained in this presentation. As such, undue reliance should not be placed on any forward looking statement. Past performance is no guarantee to future performance. Nothing contained in this presentation nor any information made available to investors or potential investors is, or shall be relied upon as, a promise, representation, warranty or guarantee, whether as to the past, present or future by the Fund, AUIRE or any other person (including any director, officer or any related body corporate of AUIRE), except as required by law.

All information in the presentation is current as at 30 June 2016 unless otherwise stated. Any dollar ($) reference is Australian dollars unless otherwise stated.

• © 2016 Property of Australian Unity Investment Real Estate Limited. All rights reserved. Not to be reproduced without permission.

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Agenda

• 1 Chairman’s Welcome

• 2 Chairman’s Address

• 3 Fund Manager’s Address

• 4 Questions

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30 Pirie Street, Adelaide, South Australia
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Presenters

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(William) Peter Day Chairman

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Grant Nichols Fund Manager

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10 Valentine Avenue, Parramatta, New South Wales
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Chairman’s address

Peter Day

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Report Presentation
 
Aim for a good deal of white 3-4 points of information per
slide
space
 
You have more flexibility in Use graphics and images
the amount of text per slide rather than text

than a presentation
Don’t read your slides. The

Follow the style guide for text and images support your
font sizes spoken presentation.

Use fonts in Bold at 30pt
minimum
5 Eden Park Drive, North Ryde, New South Wales 32 Phillip Street, Parramatta, New South Wales
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The Board Australian Unity Investment Real Estate Limited (AUIRE)

The Board

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(William) Peter Day Independent Chairman; Member - Audit & Risk Committee

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Don Marples Independent Non-executive Director; Chairman – Audit & Risk Committee

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Eve Crestani
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Non-executive Director; Member – Audit & Risk Committee

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Greg Willcock Non-executive Director

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Kirsty Dullahide Executive Director

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Management Australian Unity Office Fund (AOF)

Management of AOF

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Grant Nichols
Fund Manager
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Mark Pratt General Manager, Australian Unity Real Estate Investment

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Simon Beake
Portfolio Manager
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Mark Lumby Head of Commercial Property, Australian Unity Real Estate Investment

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Giovanna Reale
Asset Manager
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Emma Rodgers Company Secretary AUIRE Head of Legal and Business Governance

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Activity since listing Listed 20 June 2016

Activity (20 June 2016 onwards)

Preparation and lodgement of the 1 2016 Annual Report

2 Post listing investor engagement

3

4

Payment of June and September 2016 distributions in line with the Product Disclosure Statement forecast

Board engagement on Fund and property strategies

468 St Kilda Road, Melbourne, Victoria

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Clear well defined investment objective and strategy

Fund objective Fund strategy Invest in quality Australian office properties located in 1 metropolitan and CBD markets To provide Unitholders with 2 Grow net property income (NPI) sustainable income returns via quarterly distributions and the 3 Enhance capital values potential for capital growth over the long term by investing Deliver sustainable and growing income returns via 4 quarterly distributions in a diversified portfolio of Australian office properties. 5 Target gearing below 40% Maintain diversification through investment into 6 existing properties or acquisitions

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FY16 Highlights

Fund highlights	Fund highlights
1	28,916 sqm leased ~30% of the Fund’s portfolio
2	>99% existing unitholder support for initial public offering
3	~30% gearing
4	100% of withdrawal requests met
5	$14.4 million valuation uplift
6	$140 million debt refinancing
7	~8.6% average distribution yield on net tangible assets

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Fund Manager’s address Grant Nichols

Report  Aim for a good deal of white space  You have more flexibility in the amount of text per slide than a presentation  Follow the style guide for font sizes 10 Valentine Avenue, Parramatta, New South Wales

Presentation  3-4 points of information per slide  Use graphics and images rather than text  Don’t read your slides. The text and images support your spoken presentation.  Use fonts in Bold at 30pt minimum 2 Eden Park Drive, North Ryde, New South Wales

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Continue to deliver post listing

Fund achievements 1 3.7 CPU September distribution ~4,400 sqm of leases executed 2 (~5% of portfolio) ~4,300 sqm subject to signed heads of 3 agreement (~4% of portfolio) 4 100% leased 2 Eden Park Drive

Asset level strategy

• Single or dominant tenant buildings provide opportunity to obtain long term leases which underpin sustainable income returns.

• Multi-tenant buildings provide continual exposure to market conditions, without significant lease expiry risk, and are suited to attracting sub-1,000 sqm tenants.

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Fund metrics

As at 31 October 2016

Key portfolio metrics ~~Key portfolio metrics~~
Number of properties	8
Independent valuation(1)	$391.1 million
Capitalisation Rate(2)	8.0%
Passing Yield(2)	8.1%
Occupancy(3)	94.6%
WALE(4)	4.6 years
Net Lettable Area	97,615 sqm

Lease expiry profile (by NLA)[(][3) ] 3)

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70%
61%
60%
50%
40%
30%
20% 14%
8%
10% 5% 5% 3% 3%
0%
Vacant FY17 FY18 FY19 FY20 FY21 FY22+
Notes:
(1) As at 30 April 2016.
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(2) As at 30 April 2016, weighted by independent valuation.

• (3) As at 31 October 2016, by NLA.

Geographic diversificationGeographic diversification[(2) ][(2) ]

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64 Northbourne
Ave NSW
241 Adelaide 5% 10 Valentine
Street Avenue (45%)
9% 18%
SA
468 St Kilda
Road (30%)
5 Eden Park
11%
Drive VIC
10% (11%)
32 Phillip
QLD
Street
10% (9%)
30 Pirie Street 2 Eden Park
30% Drive ACT
7%
(5%)
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Top 5 tenants [(4) ]
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Telstra 30%
NSW State Government 16%
GE Capital Finance 9%
Contract Pharmaceutical Services of
5%
Australia
Commonwealth Government 4%
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12 (4) As at 31 October 2016, by Gross Property Income.

2 Eden Park Drive leasing Case study

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Management strategy – maintaining high occupancy

• 1

• The building has historically displayed good capacity for high occupancy given:

  • small to medium size of the units and quality of the office combined with high clearance warehouse is not readily available elsewhere in the market despite ongoing tenant demand

• 2

• 3

• 4

• 30 June 2015 vacancy of ~35% a result of a number of tenants space requirements changing or ceasing operations (did not lose tenants to comparable space)

• Vacancy addressed through : spec fitouts, lift upgrade and a renewed marketing campaign

Significant leasing achievements post low point in occupancy

• unit 4 (701 sqm): New 3 year lease

2 Eden Park Drive, North Ryde, New South Wales

• unit 5 & 6 (1,123 sqm): New 5 year lease

• unit 9 (495 sqm): New 5 year lease

• unit 10 (472 sqm) New 3 year lease

• unit 12 (789 sqm): New 7 year agreement

• units 13 (787 sqm): Renewal of tenant for a further 5 year term

• units 15 & 16 (967 sqm): Renewal of tenant for a further 3 year term

Historical WALE and Occupancy

2 Eden Park Drive, North Ryde, New South Wales

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5 100.0%
4 80.0%
3 2.81 2.66 60.0%
2.26 2.18 WALE (LHS)
2.01
2 1.81 1.72 1.79 40.0% Occupancy (RHS)
1 20.0%
0 0.0%
Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Oct-16
Years
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Market outlook

Historic and forecast vacancyHistoric and forecast vacancy

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25%
Forecast
20%
15%
10%
5%
0%
Sydney CBD Melbourne CBD Brisbane CBD
Adelaide CBD Perth CBD Canberra
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20
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Office transactions (by state) Office transactions (by state)

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$20bn
$15bn
$10bn
$5bn
$0bn
Sydney Melbourne Brisbane
Adelaide Perth Canberra
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016YTD
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Source: CBRE

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AOF is well positioned

• No near term single tenant lease expiry represents more than 5% of income

• Over 90% of leases have fixed increases averaging 3.5%

• Strong tenant covenants with over 50% of the income from investment grade tenants

• ~30% gearing

• FY17 guidance maintained[(1)]

• FFO: 16.4 CPU

• Distribution: 14.8 CPU

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64 Northbourne Avenue, Canberra, Australian Capital Territory
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• (1) Subject to no material change in market conditions

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Questions?

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Health | Wealth | Living

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