GOODMAN GROUP — Investor Presentation 2005

Jul 18, 2005

Macquarie Goodman

19 July 2005

The Manager Company Notices Section Australian Stock Exchange Limited Exchange Centre 20 Bridge Street SYDNEY NSW 2000

Dear Sir

MACQUARIE GOODMAN GROUP

We confirm that the attached 'Perspective Newsletter' which was prepared in conjunction with Macquarie Property, was dispatched to Securityholders today. The newsletter overviews current trends, topics and factors influencing the listed property trust sector.

We also confirm that Macquarie Goodman Industrial Trust's constitution was amended by supplemental deed poll on 30 June 2005. The attached page setting out the reason for, and the effect of, the amendments to the constitution was also dispatched to Securityholders today.

Please do not hesitate to contact the undersigned if you require further information.

Yours faithfully

Carolyn Scobie Company Secretary

enc

Level 10, 60 Castlereagh Street Sydney NSW 2000 GPO Box 4703 Sydney NSW 2001

(02) 9230 7400 Telephone Facsimile (02) 9230 7444 info@macquariegoodman.com.au www.macquariegoodman.com

19 July 2005

Dear Securityholder

MACQUARIE GOODMAN GROUP (MACQUARIE GOODMAN)

We are pleased to enclose the inaugural 'Perspective Newsletter', insights into property. The newsletter was prepared in conjunction with Macquarie Property and overviews current trends, topics and factors influencing the listed property trust sector.

Specifically, the newsletter provides insights into the global economy, discusses current trends in the US market, overviews the various property markets and discusses an insider's view to the workings of a listed property trust.

New distribution payment date

On 21 June 2005, Macquarie Goodman announced that a new distribution payment date is scheduled for 19 August 2005. It is anticipated that Macquarie Goodman's June 2005 distribution will be 6.475 cents per security.

Recent Amendments to Macquarie Goodman Industrial Trust's (MGI) Constitution

On 30 June 2005, MGI's constitution was amended by supplemental deed poll. The following page sets out the reason for, and the effect of, the amendments to the constitution.

Should you have any questions relating to the newsletter or any other matter, please call our dedicated information line on 1300 723 040 (within Australia) or +61 3 9415 4000 (outside Australia) or visit our website at www.macquariegoodman.com.

Yours faithfully

Gregory Goodman CHIEF EXECUTIVE OFFICER

Level 10, 60 Castlereagh Street Sydney NSW 2000 GPO Box 4703 Sydney NSW 2001

MACQUARIE GOODMAN GROUP ("MACQUARIE GOODMAN") MACQUARIE GOODMAN FUNDS MANAGEMENT LIMITED (MGFM) AS RESPONSIBLE ENTITY OF MACQUARIE GOODMAN INDUSTRIAL TRUST (MGI) (ARSN 091 213 839)

NOTICE GIVEN TO MEMBERS PURSUANT TO ASIC CLASS ORDER [CO 05/566]

On 30 June 2005 MGFM amended the Constitution of MGI by Supplemental Deed Poll.

The amendments were made due to concerns that the "perpetuity clause" in the Constitution of MGI would mean that members' funds would be treated as a liability rather than equity in financial statements prepared under new accounting standards. Registered schemes such as MGI are required to comply with Australian equivalents to the International Financial Reporting Standards (AIFRS) for reporting periods beginning on or after 1 January 2005.

Under accounting standard AASB 132 "Financial Instruments: Disclosure and Presentation" members' funds may be regarded as liabilities as there is no unconditional right to avoid settling a contractual obligation to pay out the schemes' equity to members at the end of the life of the scheme. The effect of this interpretation would be to reduce net assets as disclosed in MGI's statement of financial position by the amount of equity currently on issue and to represent distributions to members as interest. Accordingly, the amendments to the Constitution of MGI were made in order to eliminate the prospect of confusing financial information being presented to the holders of the stapled securities in Macquarie Goodman.

The amendments insert an amended definition of "Liabilities" and insert a new clause dealing with the issue of units after the 80^th anniversary from the day before the trust commenced. The effect of the amendments is that the Constitution of MGI will no longer be limited to a finite life and will become "perpetual" subject to the other provisions of the Constitution and general trust law. The amendment to the definition of "Liabilities" is designed to ensure that accounting treatment for liabilities which applied pre-AIFRS will continue to apply for the purpose of calculating net asset value, and other aspects of trust administration.

Level 10, 60 Castlereagh Street Sydney NSW 2000 GPO Box 4703 Sydney NSW 2001

Macquarie Goodman

Race around the world

Making sense of global economies

United States the land of opportunity

Insider view: the workings of an LPT

Looking for income

over the long-term?

Property is the answer

Directory

O&As

Chasing higher vields offshore

Savvy Australian property investors are attracted by global diversification and continue to chase higher yields. While opportunities are scarce at home, this trend will continue.

On a world map investors will find landmarks reminiscent of property markets in Australia. The scarcity of assets; climbing demand for high yielding property investments; the weight of moneyaccurridited by ageing global villagers. preparing to retire; increasingly sophisticated and numerous property investment products. and greater securitisation of property. The major difference of course is larger property markets.

The Australian landscape

Housing marked by uncertainty

Residential property has been in a downturn for around 18 months to two years in some. cities, but this downturn is unlike any other in-Australia's history. Confidence has driven the current cyclical changes and without a sharp interest rate rise, price falls have been moregraduaí than in a typical Australia-wide. recessionary collapse.

House prices are vulnerable to interest rate rises and changes to employment. With this being the backdrop to residential properly in the next 12-18 months we can expect continued uncertainty, moderate capital city price movements and continued price drops. in weak areas – particularly generic. investment apartments.

Office sector on the upswing

Office property, by contrast, is picking up momentum. Last year we predicted a turnaround in office market conditions. signalled by strong leading indicators.

This year that turnaround has commenced and a synchronised global office recovery. is underway. Leasing demand is finally onthe way up and is at its strongest in up to 15 years in Australia's major capital cities.

Industrial growth steadies

industrial property values continue to be underpianed by proximity to infrastructure. industrial land value growth around infrastructure has been exceptional (up to 23% in Sydney, 27% to 40% in Melbourne. and 40% in Brisbane). The growing land value and construction costs are impacting on development feasibilities. The same rate of growth cannot be expected in the next year.

Nevertheless, there are still opportunities for developers and investors to take advantage. of continued demand for super-sites.

Retail at the crest of the wave

Retail has always been a safe destination in property investment. While not offering the thrists of some of the more volatile asset classes, it has avoided many of the spills. and provided solid returns, even in the fean years.

Retail is now approaching the top of its cycle. Discretionary spending has peaked and levelled off from 18-year highs, with the impact to be felt on retail returns in the latter. half of 2005. We expect a soft landing as expenditure and returns level.

Food-based retail property (including supermarket-based convenience centres) is expected to provide solid total returns with low volatility, as it did last year. As these centres draw most of their income from non-discretionary. spending, they have the lowest exposure to any volatility in spending patterns.

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• Contract price weakness in Malbourne and Sydney The Tennes
• 3 A Weaker Adelaide markety
• Existiene has beaked. 35

• Slower growth but solid performance in Penhul

• Morst falls will be in generic investment apartments, particularly in oversupplied locations ett inner Melbourne (Docklands, Southbank, OBD), parts of South Sydney and suburban areas with an over-supply. of fower end property.

Office assessments

• » Brisbane should do well in the short term but Gueensland population growth has peaked.
• is Sydney will do well in the medium term, although the NSW economy is a key factor in this

• Sydney CBD will benefit from the stronger global economy and the city's links with the Asia Pacific region.

• Suburban regions will benefit from nureasing demand as GBD rents nse and push some tenants out.

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Svenske konstantinelle skillet skrivligge flyrer

Infrastructure, land banking and tenant relationships are the keys to investment performance.

» Infrastructure and the distribution and logistics sector are working to ensure continued growth. Rising interest rates in Australia and abroad and a plateauing of the manufacturing sector. will have a dampening effect.

• Food-based retail centres, including supermarkets and neighbourhood convenience centres, will do well.

• Yields are expected to be stable. Rental arowth can be expected to continue until late this year because of the previous retail turnover and the 12-month lag.

• Sub-regionals will try to win back market share from large shopping centres.

Richard Gibbs, Chief Economist and Head of Economics at Macquarie Bank shares his insights into the state of the world economy.

As we rapidly approach the halfway mark for 2005, it's clear the dicbal economic recovery is continuing, despite linuering concerns about the impact of high crude oil prices and simmering tensions on the world trade fromt. Although olobal orowth will be less hectic this year than in 2004. the current profile suggeests the world economy will grow at an above average rate.

China - the giant is awake

China has the largest population in the world. Its population of just over 1.3 billion is more than four times that of the US. Population size means China is having and will continue. to have a significant influence on the world. markets. Because its average salary per personis less than other countries at US\$5,600 perannum, other countries can buy its products. cheaply - a key factor driving China's growth. In fact, China has grown close to 10% peransum for the past 14 years and is showing. little sign of abating.

Some investors are worried whether this level of growth can be sustained and others are worried about the way China manages its currency. China has fixed its currency, the yuan. to the US dollar and if this were to be removed, the value of the yuan may soar. This would make it more expensive for other countries to bay its products, creating problems for China.

in an effort to keep the rate of growth at a manageable level, official interest rates were raised in 2004. Despite the interest rate rise, analysts expect Chinese growth to remain very strong in 2005 at 8.25%.

Can the US keep performance on track?

Moving across the Pacific, lef's examine the big blue-chip player in the market. The USseems small in comparison to China but it still has the third largest population in the world and the second highest average annual salary, at US\$40.100 per person. People in the US like to spend, especially onhouses, which has led to four years of good. growth. With inflationary pressures building, the central bank has increased interest rates in an effort to steady this growth, unfortunately, the people who are buying houses and consumer goods still aren't taking a greatdeal of notice.

Despite these challenges, the US is expected to grow at 3.5% this year (down from 4.5%) in 2004).

Contribution to Australian annual GDP growth $(%$ points)

So what does this mean for property?

This shift in Australia's economy is having an impact on property sectors, with the officesector being one of the top destinations for money as businesses seek space ahead of expected employment growth. Retail is expected to slow as consumers out back on consumer goods spending due to a combination of interest rate rises and a slowing housing market.

Other drivers include infrastructure developments, which are having an impact onindustrial property as distributors use new road networks to consolidate their activities.

And the outlook for Australian interest rates?

Skills shortages in some areas might lead to an increase in pay levels. leading to a slight increase in inflation as overall costs rise. If that happens, interest rates may rise from 5.5% to 5.75%. But without any evidence that wages growth has accelerated and with the housing sector undergoing an orderly downturn, there is no urgency for higher interest rates at present.

European Union in need of reinvention

The European Union (EU) still has some issues to iron out as the region struggles. to improve its economic performance after mercino with the eastern European states. This coupled with the EU's rapid growth suggests it may be experiencing teething problems.

The average salary is less than the US $$ in fact the average for the whole region is lower than all but four states of the US. With rising unemployment giving way to increasing political instability we should expect to see the region continue its lacklustre economic growth.

Australia continues to be the 'lucky country'

Back home, the outlook is bright. Banked around 37th in the world in terms of copulation. Australia is around 14th in terras. of annual salary per person at US\$30,700.

Australia's growth prospects are estimated to stabilise at around 2.5% after a period of rapid expansion.

Australia has experienced an interest rate rise which was intended to tighten consumer. spending, stem inflation and dampen the demand for housing, household goods and construction.

As a result, the slower construction activity is expected to reduce overall employment dernand, however a number of other industries. are opfimistic about future activity - in particular the mining sector which has close commercial ties with China. This suggests a modest increase in the unemployment rate, potentially rising from 5.1% at present to around 5.5%.

Kev points

• The global economy is still strong overall.

• China and US lead growth, while Europe struggles.

• Australia steady but wages and inflation levels may still warrant a rate rise.

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A sophisticated Australian listed property thest market has made it possible for Australian investors, totao das l'Adopto duntitas, sur l'instrucció l'initiate investing
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Hey big spender

Consider the spending habits of the largest consumers in the world. The average American drinks 216 litres of soft drink each year more than double the average Australian. There are more personal computers in the US than in Japan, Germany, China, UK, South Korea, France and Canada combined.

This heavy consumer spending feeds into a strong retail property market and community shopping centres have been. one of the major boneficiaries.

Shop until you drop

David Dix, General Manager of Macquarie DDR Trust (MDT), explains shopping habits in the US have changed over the past 15 years. Department stores used to capture more spending then discount retains. Alow the in its have bured on a that conduct un die school (outerwerk

MDT is captured this trend by rivesting incommunity shapping contros. These contros house major discount stores such as WallMart which employs the equivalent population of Adalaide and walcomes similar numbers to agrams population through its doors every week - together with up to 30 specialty. retailers. The formal is called open-air where each retailer has its own Your built around a bg carpak. That means shoup or can pull up to the door, shop, hop back in their cars. and be on their way.

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US industrial property on the rise

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in Macquarie ProLogis Trust (MPR). Geoff Lovell, General Manager of MPR, explains how MPB investors benefit from larger properties. "Larger warehouse centres tend to house global investment grade corporates like Unifever or General Bectric, providing greater income security."

Warehouse facilities often store imported goods, so the value of US imports is onedriver of demand. Goods valued at over-US\$1.4 trillion enter the US each year. That's equivalent to buving the total exports of Japan, China and Francet.

Office market vacancies falling

There is also good news in the US office market. According to Simon Jones, CEO. of Macquarie Office Trust (MOF), average office rents are on the rise for the first time in four years as businesses continue to addjobs and take new space. "The vacancy rate in the office market is at its lowest level in nine quarters," he says.

When it comes to the size of the US office market, comparisons can be mind boggling. For example, one of the largest buildings in Sydney is the Citigroup Centre, which is around 75,000 square metres. Compared to MOF's Chicago building, 10 & 30 South Wacker, which is more than twice the sizeat 186,000 square metres. And New York alone has almost three times the amount of CBD office space available than across the whole of Australia.⁸

Invest where you work. play and shop

Investing offshore doesn't need to be daunting when you've got experts like Macquarie Property and its joint venture. partners behind the deal.

In fact, your trusts now make a differencein the day-to-day lives of US consumers. If you lived in the US, a typical day might go something like this; you wake up in the morning and shower using products you.

bought in a Macciuarie CountryWide Trust shopping centre: those products may have been stored in and distributed throughout. the country via a Macquarie ProLogis Trust distribution centre; and after working in a Macquarie Office Trust building, you stop off at Wal-Mart in a Macquarie DDR Trust community. shopping centre on your way home.

If you're still wondering 'why invest' when it comes to overseas property opportunities, perhaps a better question is 'why not?'

1, 2001 foures from NationMaster.com, based on various sources. (Global Merket Information Database, CA World Fact Book)

1. Grund & ENs 2005 Real estate forecast December 2004 and .
   Property Council of Australia, Action needed to stop CSD running. out of space S/6/05

And on this side of the world...

Macquarie Goodman Group see the Hong Kong industrial property market as an attractive opportunity for its investors because:

• Hong Kong's economy has an average expected growth rate of 1.4% pa higher than the OECD average (2005).

• Hong Kong has a shortage of premium industrial assets and high occupancy levels.

• Hong Kong has recently introduced legislation allowing the creation of REITs similar to the A-REIT in Singapore.

• high ownership of property by government, developers and corporates translates to opportunities to purchase property.

• there is potential to give many Macquarie Goodman customers in the region (such as DHL International, Exel, FedEx and TNT Express Worldwide) additional space.

Looking for income
over the long temp?

You may have read the media and market commentary suggesting returns from listed property trusts (LPTs) will be subdued this year, tempting investors to reduce their property allocations. But what exactly does subdued mean in the context of the 32% average return for last year? And what advice do the experts have for LPT investors?

The financial adviser's opinion

Tony Gilham, of Gilham Financial Management in Victoria, has been a great fan of EPT investments since at least 1999. Tony sees the main attraction as the relatively high distribution available from LPTs, currently around 7% per annum.

"Traditionally, yields from LPTs have been significantly higher than cash rates and certainly higher than bond and fixed interest. rates", he points out.

Doug Webber, an adviser with Macquarie Financial Services, agrees. "Historically, the main reason I've included LPTs in portfolios. is their ability to provide income with some degree of tax efficiency. Occasionally they also make sense from a growth perspective, but in my opinion, yield is the main game."

Are LPTs still on the recommended list?

Tony says over the past year he has become more cautious towards the sector but still believes they are excellent medium to long term investments. "Last year prices for some LPT securities were 'bid up' as a result of the takeover activity in the sector." He concedes some trusts are a touch overpriced and suspects some will underperform during 2005. But he also believes you can still find income.

"With an expectation of continued economicgrowth in Australia, it's foreseeable that the high yields should continue." Tony said. He expects reasonable value would be restored to the sector by the end of the year, with a return to strong performance from 2006.

7 reasons why Tony recommends LPTs:

• 1. A higher distribution yield than most other asset classes.
• 1. Some tax efficiency via the receipt of tax deferred income.
• 1. A generally stable income distribution, which varies somewhere between 6.5% and 8.0% per annum.
• 1. Potential protection against inflation: most rents are linked to the CPI and property values tend to move in line with inflation.
• 1. Highly liquid.
• 1. While LPT distributions generally don't come with franking credits, an LPT distribution of say 7% (with some tax deferred component) is generally better than a franked dividend of around 5%.
• 1. Owning LPTs via a self managed super fund is attractive because the income is taxed at a fairly low rate.

Doug's long-term view also remains largely unchanged.

"I would be investing in LPTs with reliable income streams and avoiding stocks whose prices have increased significantly. High occupancy rates, long lease terms and quality tenants are all indicators of steady income."

Compiling a portfolio with LPTs

There are many considerations when creating portiolios - an investor's objectives, timeframes and risk tolerance to mention a few.

Doug would recommend a greater LPT allocation to investors whose primary need is to generate income over the long term.

Tony tends to recommend strong positions. in property trust investments in all portfoliosand recognises that his figures are probably above the industry average. For conservative investors, Tony suggests around 30%, for moderate risk investors up to 20% and for aggressive high growth investors, he recommends around 10%.

Whatever the exact allocation to property, most advisers will tell you a balanced approach is important.

Who benefits most from an LPT?

"Because property trusts usually generate a relatively high income distribution each year. they're most suited to superannuation fundinvestors or retirees," says Tony.

Doug agrees but says most investors should also focus on growth. Other assets such as equities, as part of a diversified portfolio, will be likely to provide greater pure growth prospects over the fong term.

But once drawing a pension, LPTs are invaluable. According to Tony, owning LPTs in the pension phase is extremely attractive.

"A 65 year old on an allocated pension, for example, needs to generate investment incomeof around 6.4% to fund their pension payments," he explains. "A well diversified portfolio of quality LPT investments should generate this."

Tony points to the general stability of income and probability of rental incomearowth as evidence.

While both advisers agree that LPTs won't continue their extraordinary run of the last few years, they should still perform stronoly. And when you consider market estimates for LPT returns are around 10% for 2005. compared to 8.6% for Australian shares and 8.2% for clobal shares, you can't help but agree.

Have you ever wondered what drives the decisions behind the purchase and sale of an asset? How do property trusts aim to grow your income? We spoke with Macquarie Property and Macquarie Goodman to give you an inside look at how a listed property trust (LPT) operates.

When you look at the size of some EPTs. if's hard to believe many started with just a few properties. In fact, the LPT sector has arown from almost \$11 billion in 1995 to over \$84 billion in 2005. LPTs now oive investors access to billions of dollars worth of investment property that would otherwise be well bevond the reach of most people.

Brick by brick

When building a property portfolio, 'location, location, location' is true whether you're looking at a multi-million dollar commercial park or the house down the road.

Kylie Rampa is CEO of Macquarie CountryWide Trust (MCW), which invests in grocery anchored shopping centres. For Kylie there are several ways to look. at location.

"We look for properties where there are strong demographics, firnited competition. and easy road access to our centres."

Tony D'Addona, Investment Manager of Macquarie Goodman Group (MGQ) explains, "We consider properties based on a number of

criteria including access to quality infrastructure. like roads, rail and sea port, which usually goes hand in hand with customers' requirements for efficient storage and distribution facilities".

The agency network also provides valuable assistance to LPTs. In addition to finding suitable tenants, agents source properties for EPTs before releasing to the general market.

Growing income

EPTs own portfolios of commercial, retail, feisure and industrial properties. The manager of the trust uses a mix of equity and debt to buy, sell, hold, refurbish, and redevelopproperties on behalf of investors.

MCW for example has an active redevelopment program that regularly reviews the portfolio to assess the viability of redeveloping or refurbishing properties. to enhance returns.

"Revitalised and modern retail facilities attract more shoppers, which in turn improves sales. turnover for tenants. Investors benefit from higher returns as a result of rental growth and asset appreciation," Kylie explains.

MGQ refurbishes existing properties according to customer requirements and acquiring landto expand the development pipeline.

"By focusing on development opportunities, sustaining high occupancy levels and maintaining the underlying assets to a highstandard. MGQ is able to deliver strongreturns to investors" Tony explains.

When is the best time to sell?

The approach to selling assets is the same for MCW and MGQ. While both trusts are long term holders of properties, they conduct formal annual reviews of each property in its portfolio to identify problem assets or opportunities to sell in strong markets.

Regardless of the approach, the objective for investors is the same - to deliver a secure and growing income stream with the potential for capital growth.

ICOCOCY

Trust	Mumber of properties	Assets under stewerdship	Occupancy vara	Distribution viens	Ove year total. 70'NAV	Snapshot
Alexandria (Alexandria)
Macquarie CountryWide Trust (MCW)	249 properties in Australia, New Zealand and the US	\$5.8 billion (including associates)	98.0% (as at 31 March 2005)	8.0%*	25.3%	The foundation of Macquarie Countrywide Trust performance is simple: we all need to eat. The trust's income is underpinned by national grocery retailers, such as Coles and Woolworths.
Macquarie DDR Trust (MDT)	35 properties in the US	\$2.5 billion (including associates)	98.5% (as at 31 May 2005)	8.1%	25.7%	Macquarie DDR Trust invests in the growing sector of US. based community shopping centres matching the consumer's demand for value and convenience.
II TAANA HILAAN TARDII DAGA HALAA HILAAN. ADAD OO DAGA HALAA HILAAN DAGA HALAA HALAA
Macquarie Office Trust (MOF)	35 properties in Australia and the US	\$4.8 billion	95%	8.2%	22.0%	Macquarie Office Trust allows you to invest in 35 modern. office buildings across Australia and the US.
Macquarie Goodman Group (MGQ)	123 properties in Australia, New Zealand and Hong Kong	S6.7 billion	98%	6.3%	n/a	Macquarie Goodman Group invests in industrial property and office parks, delivering complete property solutions to customers.
Macquarie ProLogis Trust (MPR)	122 properties in the US and Mexico	\$2.0 billion (including associates)	98.2%	9.2%	24.8%	Macquarie ProLogis Trust partners with the world's largest warehouse real estate company to invest in North. American industrial properties.
AN AN DE COMMUNES DE LA COMMUNES DE LA COMMUNES DE LA COMMUNES DE LA COMMUNES DE LA COMMUNESCA DE LA COMMUNESC LA COMMUNESCA DE LA COMMUNESCA DE LA COMMUNESCA DE LA COMMUNESCA DE LA COMMUNESCA DE LA COMMUNESCA DE LA COMMU
Macquarie Leisure Trust Group (MLE)	54 properties in Australia	\$322.1 million	n/a.	6.0%	98.3%	When you invest in Macquarie Leisure Trust Group, you invest in some of Australia's greatest leisure assets.
	" FYDS forecast distribution. All figures as at 30 June 2005, unless otherwise stated.
	For further information on any of the above products, please contact:
	Macquarie Property Funds Management Macquarie Goodman Group
	1300 365 585 (within Australia) Tel: + 61 2 8232 6635 (outside Australia)			1300 723 040 (within Australia) Tel: + 61 3 9415 4000 (outside Australia)
	Email: propfunds@macquarie.com www.macquarie.com.au/propertytrusts Web:			Email: info@macquariegoodman.com.au Web: www.macquariegoodman.com

1 Explain the main elements that deternine the price of a listed property trust (LPT)?

There are a number of factors which determine the price of an EPT, with the keybeing the market's assessment of security of earnings and growth potential of those earnings. Pactors relevant to that assessment include:

• quality of the underlying properties and their tenants.

• market factors which influence rental levels.

• an assessment of risk which includes:

• i. management expertise:
• ii. level of gearing:
• iii. competition:
• iv. easity market factors:
• v. figuidity.

• the level of interest rates. For example, if interest rates fall. LPTs generally become relatively more attractive as an investment.

• $\overline{2}$ What criteria do LPTs use to assess overses property investments?

In Macquarie Property and Macquarie Goodman's experience, the most critical aspect is finding the right joint venture (JV). partner and key criteria for selection include:

• local market expertise.

• single asset class focus.

• identifiable and valuable brand in their domestic market.

• growth potential with access to an acquisition pipeline.

• sophisticated operating systems.

• extensive customer relationships.

Macquarie Property and Macquarie Goodman's JV partners are typically listed entities which ensures compatibility of corporate governance standards.

Other factors which help deliver security for investors are a pre-determined investment strategy and robust risk management.

3 What are some of the risks associated with oversess property investment?

Sovereign country risk

• transparency of market conditions may be lacking.

• government intervention can be obstructive.

• liquidity may be limited.

Tay rick

tax leakage can impact performance.

Financial risk

foreign currency exposure/fluctuations.

constraints on debt funding may be present in foreian jurisdictions.

Knowledge gaps

• need to understand the local market.

• need to avoid cultural misunderstandings.

• 4 Now can you hedge foreign property investments against exchange rate fluctuations without significantly dephating income stream?

The value of a foreign investment is typically hedged by borrowing offshore to create a natural hedge or by using a range of products. such as; cross currency swaps, forward contracts and options.

The impact of hedding on a trust's incomestream is determined by the forward exchange rates available in the market. The exchange rates are influenced by the difference in the interest rates in the currency of the foreion investment (eq US) and the currency of the home country (eg Australia). This determines whether there is a positive or negative impact from hedging. In the case of Australia and the US, Australia has higher interest rates than the US, causing a positive impact.

Over the last 15 years the average interest. rate differential between the 10 year bond. rates has been 1.58%. As a result. Australian investors are able to hedge their foreign. property investments and future income at a rate that is lower than the current spot rate. This has enabled Australian investors to invest offshore and lock in favourable exchange rates on the income.

5 What is the difference between a dividend and a distribution?

Dividends are paid to shareholders by companies out of their profits. Distributions are paid to unitholders by trusts from income, such as rental income and may also. include a capital payment, eg if a property was sold. A stapled entity may comprise both a dividend on the underlying share and a distribution on the underlying unit.

6 What does tax deferred mean?

Distributions from trusts can consist of many components such as rental income, interest income and tax deferred income. A tax deferred component usually comes from capital allowance deductions.

Tax is not paid directly on the tax deferred portion of the distribution; instead it comes off the cost base for the investment. So, when units are sold, the original purchase

price (cost base) is reduced by the amount of tax deferred distributions received.

For example, say you make a \$10,000 investment in a LPT with a 6% distribution. vield of which 40% is tax deferred. For every year you hold the EPT:

• you receive \$600 in distributions (\$10,000 at 6%).

• tax is payable on \$360 (60% of the distribution).

• the original cost base is reduced by \$240 (40% of the distribution).

• after three vears you decide to sell. the property taust at the market price. of \$11,000.

• the original cost base of \$10,000 has been reduced by \$240 each year for three years resulting in a new cost base of \$9,280.

• the safe price of \$11,000 less the new cost base of \$9,280 results in a capital gain of \$1.720.

• you will pay 50% of the concessional capital gains tax, so you will pay tax on \$860 (50% of \$1,720), 50% concession. may not apply to all types of taxpayers. (eg superfund, companies).

Note: this working example assumes no changes in distributions. or the tax defensed portion of the distribution.

It is possible that over time the tax deferred payments could reduce the cost base to zero. If this happens, then tax becomes assessable on the full amount of distributions. received after the cost base reduces to zero.

IMPORTANT INFORMATION

This newslatter has been prepared by Macquarie Bank Limited
ABN 48 008 583 542 ("Macquarie"). Macquarie has made every reasonable effort to ensure that this regort is accurate and refiable, but does not nor does Macouarie Goodman Group give any warranty of reliability, accuracy or completeness of the information. Any opinions expressed are the author's own and may not reflect the views or opinions of Macquaria or Macquaria. Goodnien Group. The information may be besed on assumptions or market conditions and some facts and coinions may change. without redice and actual results may vary from any forecasts. provided. Past performance is not indicative of future performance.

Maccuaria or Maccuarie Goodman Group has not considered the personal objectives, financial situation or needs of readers, so readers should consider these matters and it recessary, seek professional advice before making any investment decision.

Macquarie emities receive fees for operating the property trusts. nerred in this newsletter, which are calculated by relerence to the value of this assets of their mast and according to performance. Entities within the Macquarie Bank Group may also receive fees for managing the assets of, and providing respurces to the trusts. For more detail on fees, review the theat's fatiest environmental attacks.

Investments in any trust are not deposits with or liabilities of Macquarie Bank Limited nor any other Macquarie Bank Group company and are subject to investment risk including possible delays in repayment and loss of income and principal invested. None of Macquarie Bank Limited, or any other Macquarie Bank Group company quarantees the performance of the trust or the repayment of capital from the trust.