INGENIA COMMUNITIES GROUP — Annual Report 2006

Dec 20, 2006

DECEMBER 2006

INC Real Excite Investment Management Australia

Creating value through
innovative new investment

FUND OVERVIEW

ING Industrial Fund (IIF) is a publicly listed property trust in Australia and is included in the S&P/ASX 100 index. IF invests in prime industrial properties and business parks in key global markets and its operations include property investment, property development and property services. The Fund presently owns a highly diversified industrial property portfolio located throughout Australia, Canada and Western Europe, and is the largest industrial property trust listed in Australia with investments in excess of A\$4.7 billion.

PERFORMANCE

The chart below illustrates IF's total return to investors (income and price appreciation) to 30 November 2006.

Source: UBS 1 Dec. 2006

IIF has provided strong returns to investors over the long term whilst providing security of income, underpinned by the Fund's highly diversified portfolio.

ACQUISITIONS

Summit REIT

On 31 August 2006 ING Industrial Fund announced it had formed a Joint Venture with ING Real Estate BV (headquartered in The Netherlands) to establish ING Real Estate Canada Trust (INGREC) to acquire the Canadian listed Summit REIT on a 50/50 basis.

Summit REIT is Canada's largest owner of industrial property by Gross Lettable Area, with a portfolio of over 33 million square feet (three million square metres) across six Canadian provinces.

IIF's investment in Summit REIT marked not only the Fund's movement into a new market and a significant expansion to IIF's portfolio, but also marked a record close to IIF's unit price.

The Fund's unit price increased from \$2.37 on August 31 (the announcement date) to a record close of \$2.45 on October 10. During this period IIF also outperformed the S&P/ ASX 200 Property Accumulation Index, demonstrating strong investor support for the transaction.

The strong support for this acquisition was also shown by the response to the Entitlement Offer which raised \$213.7 million from institutional investors, and a further \$86.3 million raised under the Retail Eptitlement Offer

These results highlight the support of IIF's global investment strategy and Management's strategic investment which will provide a significant return to unitholders.

The benefits of the acquisition will include:

• Investment in a new market which is stable, well established and with sound fundamentals:
• The Summit portfolio is diversified by property type including business parks, suburban office, industrial estates, light industrial, warehouse storage and distribution centres:
• Large portfolio provides the ability to cater for tenant expansion;
• Access to a broader pool of existing tenants with greater range of development opportunities;
• The Summit acquisition is forecast to provide IIF with 7.4% growth in distributions for the half year to 30 June 2007 and 10.2% growth in the first full year to 30 June 2008.

The acquisition of Summit marks IIF's entry into the Canadian market and is in line with the Fund's international investment. strategy to secure quality properties in key global markets. INGREC now owns 89% of Summit REIT with the remaining 11% to be acquired and the transaction completed in early 2007.

Geographic diversification by Country -Post Summit Acquisition

51% Australia
40% Canada_
6% Germany
2% Spain
1% France

IIF ENVIRONMENTAL INITIATIVES

With Australia's worst drought in a century, IIF has been implementing a number of initiatives to reduce the usage of scarce water resources.

For the past two years, the ING Industrial Fund has been implementing water saving initiatives across the portfolio by conducting a rollout of native planting and rain water tank installation.

Seven Hills Industrial Estate was the first IIF property to undergo native planting in August 2004. Currently, 74% of IIF's Australian property portfolio has undergone, or is currently in the process of being landscaped with drought hardy natives.

By planting low-maintenance, drought hardy native species, water usage and operational expenditure is significantly reduced. In addition, the planting and resultant improved appearance of the properties has met with a positive response from tenants.

The planting was undertaken with a focus on varieties that are native to the property locations, and was consistent with local authority initiatives to rejuvenate public lands and provide improved habitats for native birds and wildlife. IF has worked closely with local councils to maintain and develop wildlife corridors.

In addition to the native planting initiative, IIF has installed rain water tanks at 25 properties which offer a total capacity to retain 1,117,800 litres of water runoff from roofs. The benefits of this programme include the tank water being used for irrigation of the gardens, reducing the usage of the town water supply, and reducing the demand on onsite stormwater detention and public stormwater systems.

Existing conventional sprinkler systems have been replaced with drip irrigation systems, further reducing water usage.

ING Industrial Fund will continue with the rollout of native planting and rain water tank installation. The Fund is continually looking for proactive measures to conserve energy and water, and has commenced a new project with the replacement of lights controlled by analogue time clocks which needed to be manually reset a number of times throughout the year with light sensor units. These new units activate the external lights when the sun goes down and subsequently turn off when the suncomes up. This considerable energy saving initiative will continue. to be implemented across the Fund's portfolio.

AT A GLANCE

30 November 2006

ASX Code. And the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of
Total assets * 2000 and 2000 and 34.7 billion
No of Properties* All Properties and the Second Second 13 Co
Portfolio occupancy and the contract of the Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second Second S
Average lease term All Accept Manual State State State State
Unit price National Charles and National Contract of \$2.36 in
Annualised yield on closing price	$-6.78\%$
Net tangible asset backing per unit S2.08
DRP new units issued	4.3 million

*Includes all properties held at 30 November 2006.

FUND OVERVIEW

ING Office Fund (IQF) aims to provide investors with highly competitive investment returns through astute acquisition and management of investment grade office properties in established global real estate markets.

In assessing acquisitions, the Fund targets assets which are able to provide attractive occupancy solutions for tenants and the flexibility to accommodate a wide range of users over the long term.

SUCCESSFUL PERFORMANCE OF OFFSHORE INVESTMENTS

Since acquiring its first asset in New York in 2003, the performance of IOF's offshore investments has been strong, reinforcing the Fund's strategy of diversification through global expansion.

The table below shows that over the past three years, the Fund's offshore assets have experienced material capital appreciation since acquisition. The Fund's offshore expansion has also enhanced the diversification of its portfolio and has given the Fund a weighting to some of the world's best performing office markets

IOF has been able to achieve these results by drawing on ING Real Estate's global platform, which utilises local market expertise to source, secure and manage investments on its behalf.

IOE'S OFFSHORE ASSETS HELD FOR 12 MONTHS OR LONGER

PERFORMANCE

The chart below illustrates IOF's total return to investors (income and price appreciation) to 30 November 2006.

ING Office Fund Total Return (30 November 2006)

While performing very strongly in the short term, IOF has also provided strong returns to investors over the past three to five years.

Property/location	Acquisition date	Acquisition price	Current value*	% increase
900 Third Avenue, New York (49%)	August 2003	US\$107.7 million.	≅US\$157.0 million	45.8%
Computer Associates Plaza, Plano, Texas	August 2004	US\$53.5 million.	US\$57.0 million	6.5%
Mitretek Systems Headquarters, Falls Church, Virginia (Washington DC)	August 2004 -	US\$92.8 million.	US\$105.0 million	13.1%
The Homer Building, Washington DC (80%)	November 2005	US\$168.2 million**	:US\$190.6 million	13.3% 1
Waltham Woods, Massachusetts (50%)	November 2005	US\$65.0 million	US\$68.5 million	5.4%

* based on 30 June 2006 fair values ** adjusted for current 80% ownership

Note: IOF has also purchased the Budejovicka Alej Building, Prague and the NVH Building, Paris within the last 12 months

INCREASED GLOBAL CAPITAL FLOWING INTO PROPERTY

The popularity of property as an asset class is increasing as property markets around the world continue to perform strongly compared with other asset classes. The amount of international capital flowing into international property markets is also increasing. International property transactions totalled US\$89 billion for the first half of 2006. This level of investment represents a 24% increase when compared with the first half of 2005.

Summarised below are the countries that have experienced the greatest in-flow of foreign capital through property investment.

The majority of foreign capital has flowed into the world's largest real estate markets, including the US, Germany and the UK.

International property investment destinations (first half 2006)

Source: Jones Lang LaSalle

Global funds, comprised of capital from different countries pooled by institutional fund managers or private equity firms, dominated international property transactions for the first half of 2006, accounting for over 40% of all capital invested. Investors from the US, Middle East and Australia were also large international property investors. In total, these six groups accounted for over 85% of all international property transactions for the first half of 2006.

International Property Investors (first half 2006)

Geographic Diversification

As a result of further offshore expansion throughout 2006, IOF has a 7% weighting to Europe, including the office markets of Paris and Prague.

Note: Paris acquisition due to settle April 2007. Does not include the proposed acquisition of a 20% interest in the ING Dutch Office Fund.

AT A GLANCE	30 November 2006
ASX code (A) High Alberta and Alberta Alberta and Alberta Alberta Alberta Alberta Alberta Alberta A
Total assets No of properties
Portfolio occupancy Community Community 199%
Average lease term Automobile Service Services 5.9 years
Unit price Commission Commission Commission \$1.53
Annualised yield on closing price. New York 16.8%

Unit price and MacMarch and Mac (1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1
Annualised yield on closing price. 2008. [6.8%]
Net tangible assets
including the contractive contractive in the contractive contractive contractive of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contra DRP

* Includes Paris acquisition

24

REINGIRGE Community/Living Fund

FUND OVERVIEW

ING Real Estate Community Living Fund (ILF) is focused on creating value for investors by delivering sustainable and growing distributions through investing in seniors and student housing.

Currently, ILF is the only Australian listed property trust that specifically services the growing 'baby boomers' seniors market and the fecho boomers' student market.

Age Profile for Australia, Canada, UK, US ('000s)

Source: United Nations Population Division

Since ING Real Estate assumed management of ILF in June 2005, the Fund has broadened its asset base by location. tenant and type. ILF is now geographically diversified across Australia, the United States and New Zealand, with a portfolio comprising 104 properties and gross asset value exceeding \$1 billion.

PERFORMANCE

During the period 1 July to 30 November 2006. ILF's unit price increased by 13% from \$1.15 to \$1.30. Since ING Real Estate assumed management, the Fund's unit price has increased by 60.5% from \$0.81 to \$1.30.

ILF Total Return (income and price appreciation) to 30 November 2006

Source: UBS 1 Dec. 2006

The Fund continues to present a long term value proposition for investors. With a diversified global investment platform in key markets possessing attractive growth attributes, the Fund is well positioned to deliver superior returns. Management continues to seek value creation initiatives which will further enhance the Fund's return prospects.

MARKET EXPOSURE

US Seniors market

The demographic fundamentals underpinning the growth of the seniors housing market in the United States are attractive. The number of people aged 65 years and over has grown significantly and this growth is set to continue.

In 2003, nearly 36 million seniors lived in the United States, accounting for just over 12% of the total US population. Individuals born between 1946 and 1964 (Baby Boomers) will start reaching 65 years in 2011. As a result, the number of seniors will increase dramatically during the 2010 - 2030 period. The seniors population in 2030 is projected to be twice as large as in 2000, growing from 35 million to approximately 72 million and representing nearly 20% of the total US population.

US Students market

The 'Echo Boom' generation (children of the 'Baby Boomers') are approaching college age. In 2004 there were 27.8 million Americans in the 18-24 age group and by 2010 this figure is projected to rise to over 30.4 million.

As a result of demographic change, college enrolment levels are expected to continue to increase. In 2004 there were 17.4 million students enrolled into college and by 2014 there are 19.5 million students expected to be attending college.

NZ Students

There was a 1.6% increase in the number of students enrolled in the top eight universities in New Zealand from 2004 to 2005. However, Victoria University of Wellington (VUW), which the Fund's assets service, has experienced the strongest growth of the top eight universities with 6.3% growth over this period. As a consequence there were 500 applicants on VUW waiting lists for hostel style accommodation in January 2006. Further growth in enrolments in 2006 will add to the waiting lists and ensure 100% occupancy during the university term in 2007.

Australian Seniors

There were 2.5 million people aged 65 years or over in Australia in 2003 and this cohort is forecast to grow at 3% p.a. until 2023, to 4.5 million. Life expectancy at birth increased from 66.1 years in 1947 to 76.2 years in 1999 for men and from 70.6 to 81.8 for women. The peak of the 'Baby Boomer' generation entering the over 65 age group between 2011 and 2031 and the number of people aged over 65 years is expected to grow from 2.3 million in 1999 to 6.2 - 7.9 million by 2051. The proportion of people aged over 65 years is expected to grow from 12% of the population in 1999 to approximately 25% by 2051, due to further declines in birth rates and increases in life expectancy.

GEOGRAPHIC DIVERSIFICATION

The Fund's assets currently comprise 25 student buildings and 79 seniors villages. Over the last year, the Fund has successfully pursued a geographic diversification strategy. As a result of this strategy the Fund's assets are spread geographically across Australia, New Zealand and the United States.

Geographic diversification

AT A GLANCE

30 November 2006

arthur ann an 1999. Na cheanglaichean an Chuid ILE an ASX code
Total assets $\sim$ \$1 billion
No of properties $\sim$ $\sim$ 104 $^{\circ}$
on the supervis 96% Portfolio occupancy
atta tanggal Selbagai Unit price Community $-$ \$1.30 $-$
Forecast distribution yield (FY2007) [1111111111111118.2%pa
Net tangible assets $-51.14$
active DRP

INCIROS Estate

FUND OVERVIEW

ING Real Estate Entertainment Fund (IEF) is a listed property trust which invests in the freehold of hotels, clubs and entertainment venues in key markets both in Australia and overseas.

The Fund's strategy is to acquire the licensed real estate assets of entertainment venues that demonstrate a sound trading history and the potential to provide superior growth for the operator and the Fund. Since listing in July 2004 IEF has grown from five hotels to a diverse portfolio of 28 hotels across New South Wales and Oueensland, with 12 operators and total assets of \$305 million.

PERFORMANCE

Since listing in July 2004 IEF has delivered competitive investment returns to unitholders with a total compound return (income and price movement) of 12.5%p.a. for the period to 30 November 2006.

In addition the Fund's activities have doubled distribution growth compared to the initial IPO forecast, which highlights Management's success in securing value-enhancing assets for the Fund's portfolio.

The Fund's distributions are paid half yearly and have shown steady growth. The forecast FY2007 distribution is 9.70cpu, a 2.1% increase on the FY2006 annual result, and a vield of 8.6% on the 30 November unit price of \$1.13.

TENANT SUMMARY

Since listing. IEF has been successful in increasing the number of operators within the portfolio to provide depth of operational expertise and income diversification benefits.

As at 30 November the Fund has 12 operators in its portfolio as per the chart below.

Tenant diversification by income

ASSET MANAGEMENT

The IEF platform successfully combines the entrepreneurial flair and commitment of independent operators with the experience and financial strength of the Fund. Management works closely with the operators in the Fund to identify assets offering significant potential for growth and enhanced returns.

The formula successfully unlocks the potential of each site, which is highlighted by revaluations undertaken during 2006 which contributed an additional \$19 million to the underlying asset value of the Fund.

Major refurbishments to date have included the highly successful renovation of the Dolphin Hotel in Surry Hills and the significant redevelopment currently underway at the Aussie Rules Club in Kings Cross.

For 2007, the Fund is working with the Feros Group, in respect of three NSW hotels: the Terrey Hills Tavern, Empire Hotel and the Bowral Hotel. These well established, profitable businesses were identified as having excellent potential for arowth.

The first stage of works has commenced on the above hotels and is scheduled to be completed in June 2007.

48 Tavern, NSW, (Artist's Impre

DIVERSIFICATION AND GROWTH

Over the last year IEF has increased its portfolio to 28 pubs offering a diversified asset base in NSW and Queensland, including both metropolitan and regional locations identified as offering strong potential for growth and superior returns for unitholders.

Consistent with this strategy, Management is exploring markets both locally and overseas. Recent acquisitions have seen the Fund's portfolio expand to Rockhampton, Bundaberg and Cairns, all significant commercial centres offering substantial demographic and economic growth.

Similarly the Fund has acquired several hotels in the Newcastle region, part of the NSW government's Metropolitan Strategy, and identified as a region critical to the economic growth of NSW.

These State and Local government initiatives aim to capitalise on Newcastle's regional economic status and its large and growing catchment.

This focus will enhance Newcastle's economy, create new iobs, stimulate further investment and create a vibrant community, with flow-on investment benefits for the Fund's assets.

AT A GLANCE 30 November 2006 ASX code IEF Total assets \$305 million No of properties 28 Portfolio occupancy. 100% 13 years Average lease term Unit price $$1.13$ Forecast distribution yield (FY2007) $8.5%pa$ Net tangible assets \$1.09

DRP

active

MGReal Estate

FUND OVERVIEW

ING Real Estate Healthcare Fund (IHF) listed on the Australian Stock Exchange (ASX) on 15 May 2006 with an initial portfolio comprising the Epworth Freemasons Medical Centre at 320 Victoria Parade, East Melbourne and the Epworth Freemasons Hospital at 166 Clarendon Street. Fast Melbourne.

The Fund seeks to invest in all types of health related real estate including, but not limited to, hospitals, specialist medical office buildings, medical centres, health administration buildings, laboratories and research facilities.

Since its inception IHF has acquired a 74 bed rehabilitation. hospital in Camberwell, Melbourne and has contracted to acquire a purpose built facility for the Australian Red Cross Blood Service and the Queensland University of Technology in Kelvin Grove, Brisbane. To date the Fund has contracted to acquire approximately \$125 million of real estate.

PERFORMANCE

Since listing in May 2006, IHF has delivered an attractive total return to investors (income and price appreciation). The unit price of the Fund has increased to \$1.075 at 30 November 2006 from the issue price of \$1.00 per unit. In addition, IHF remains on track to meet its forecast income distribution to investors of 8.4 cents for the 2006/2007 financial vear. This equates to 8.4% based on the original issue price of \$1.00.

GROWTH OF THE PORTFOLIO

Recent Acquisitions:

Epworth Rehabilitation Camberwell (VIC)

IHF purchased the property assets of the Cedar Court Rehabilitation Hospital, situated in Melbourne's south eastern suburb of Camberwell, from the United States based HealthSouth in October 2006. As part of the sale, Epworth HealthCare purchased the business. The initial lease term of the hospital to Epworth HealthCare is 15 years with three further options of five years each.

Epworth Rehabilitation Camberwell, formerly known as Cedar Court Rehabilitation Hospital, is a long established specialist rehabilitation facility that has an excellent reputation in the provision of rehabilitation services and care. Epworth HealthCare is well placed to build on the existing reputation of this hospital, given that it is already a significant provider in the rehabilitation market. With the addition of this hospital, Epworth now operates approximately 35% of all rehabilitation beds in Australia.

The provision of rehabilitation services are an important component of the health care spectrum as patients are transferred from acute hospitals into environments established for the specific purpose of rehabilitation after major surgery, accident or other illness.

Epworth Rehabilitation Camberwell specialises in neurological, respiratory, cardiac, orthopaedic, muscular skeletal and post surgical rehabilitation and provides associated services in physiotherapy, occupational and speech therapy and psychological services.

The acquisition of this asset diversifies the portfolio into the developing rehabilitation market and strengthens the relationship with Epworth, a market leader in this sector. Management anticipates this asset will enhance prospects for growing the Fund's distributions.

Australian Red Cross Blood Service (ARCBS) and Queensland University of Technology (QUT), Kelvin Grove (OLD)

IHF has contracted to acquire, on completion, this purpose built blood testing, processing and distribution facility for the Queensland operations of the Australian Red Cross Blood Service (ARCBS) which will be co-located with the Biomechanics Department of the Queensland University of Technology (QUT) in Kelvin Grove, Brisbane.

Financial close was reached with all project documentation executed in August 2006 and construction of the basement levels of the building has commenced with an expected date of practical completion of April 2008.

The site, strategically situated just 2kms from Brisbane's CBD, has an area of 7,000 square metres. The building will comprise a floor area of approximately 20,000 square metres over six levels including two levels of basement car parking. The initial lease term to the ARCBS will be 20 years with two further options of five years each.

The ARCBS is a government funded national service with an annual operating fund (2006-07) of approximately \$300 million. It is the national organisation responsible for providing the Australian community with safe, high quality blood products and related services.

This acquisition is very positive for the Fund as it diversifies the portfolio from both a geographical and tenant perspective, adding an 'A' grade tenant covenant to the portfolio.

NEW INITIATIVES

Hospital in the Hotel (HITH) initiative at Epworth Freemasons Maternity Unit

Epworth Freemasons Maternity Unit situated at 320 Victoria Parade. East Melbourne has recently adopted a Hospital in the Hotel (HITH) Outreach Service.

The HITH service involves the provision of beds in a five star hotel, creating additional capacity in-hospital and hence addressing in part the waiting list of patients selecting Epworth Freemasons as their maternity hospital of choice.

The HITH service provides maternity patient care and beds in a hotel environment. This initiative positively responds to a consumer market demand for the provision of this type of luxury accommodation.

Approval for the provision of this service has been granted by both Federal and State government authorities (Departments of Health and Ageing and Human Services respectively).

The Epworth Freemasons Maternity Unit has seven birthing suites and 38 post natal beds plus eight special care nursery beds. The HITH provides an additional six post natal beds. The increase in bed numbers provides the business with a greater capacity and hence has a direct correlation to business income and profitability.

at a glance	30 November 2006
ASX code	$\sim$ 10 $^{\circ}$ HHF, $\sim$
Total assets Security	$\sim$ , $\sim$ 572.2 million $\sim$
No of properties. 2020
Portfolio occupancy Security	$99.72\%$
Average lease term and the state of the 12.2 years in
Unit price.	$\sim$ \$1.08
Forecast distribution yield (FY2007) [10010101011111111111112.8%pa
Net tangible assets .	\$0.97
DRP	not active

DISTRIBUTION TIMETABLE

Fund Executive Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract
ING Real Estate Community Living Fund 2006 29 December 2006 2007 25 January 2007 2007
ING Office Fund All Antiquity Manual Street 2006 (1999) 28 February 2007 - All Antique
ING Industrial Fund All Communication (2006 2006 1999) 28 February 2007 2007 2007
ING Real Estate Entertainment Fund Mathematical 29 December 2006 Mathematical 28 February 2007 Mathematical
ING Real Estate Healthcare Fund	29 December 2006	28 February 2007

ING Real Estate Investment Management Australia manages three unlisted funds:

ING Real Estate Direct Office Fund aims to provide tax effective income and capital growth. ING Real Estate Income Fund is specifically geared for long-term wealth creation. Both funds are currently closed to new investors.

ING Retail Property Fund Australia is a wholesale property fund investing in retail assets and has a diversified \$1.3 billion property portfolio.

For further information on any of our investment products, please visit our website www.ingrealestate.com.au/investment

Disclaimer-

The ING Real Estate Investment Management Australia (INGREIMA) Update has been prepared by INGREIMA. This Update is for information purposes only and does not constitute an offer for sale or investment in any of the aforementioned Funds. It is intended to provide general information concerning INGREIMA's business activities and does not have regard to the investment objectives, financial situation or individual needs of investors. We recommend investors seek professional advice before making any investment decision in relation to any of INGREIMA's products.