INGENIA COMMUNITIES GROUP — Annual Report 2007

Sep 19, 2007

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ING REAL ESTATE COMMUNITY LIVING GROUP

FINANCIAL & ASSOCIATED REPORTS

YEAR ENDED 30 JUNE 2007

ING Real Estate Community Living Group Financial & associated reports Year ended 30 June 2007

Contents

	Page
Directors’ report	1
Financial report
Income statements	6
Balance sheets	7
Cash flow statements	8
Statements of changes in unitholders’ interest	9
Note 1 Summary of significant accounting policies	10
Note 2 Accounting estimates and judgements	17
Note 3 Distributions	18
Note 4 Earnings per unit	19
Note 5 Finance costs	19
Note 6 Income tax expense	20
Note 7 Cash and cash equivalents	20
Note 8 Trade and other receivables	20
Note 9 Derivatives	21
Note 10 Property investments	21
Note 11 Investments in associates	26
Note 12 Payables	26
Note 13 Borrowings	27
Note 14 Deferred tax liabilities	27
Note 15 Issued units	28
Note 16 Reserves	29
Note 17 Retained earnings	29
Note 18 Commitments	30
Note 19 Financial instruments	30
Note 20 Auditor's remuneration	34
Note 21 Related parties	34
Note 22 Subsidiaries	37
Note 23 Segment information	40
Note 24 Notes to the cash flow statements	42
Directors’ declaration	43
Auditor’s report	44

The ING Real Estate Community Living Group (“the Group”) has been formed by the stapling of the units in two Australian registered schemes, ING Real Estate Community Living Fund (ARSN 107 459 576) and ING Real Estate Community Living Management Trust (ARSN 122 928 410). ING Management Limited, the Responsible Entity of both schemes, is incorporated and domiciled in Australia.

A description of the nature of the Group's operations and its principal activities is included in the accompanying directors’ report.

The registered office and principal place of business of the Responsible Entity is located at level 6, 345 George Street, Sydney, New South Wales.

The financial report was authorised for issue by the directors of the Responsible Entity on 31 August 2007. The Fund has the power to amend and reissue the financial report.

Page 1

ING Real Estate Community Living Group Directors’ report Year ended 30 June 2007

The ING Real Estate Community Living Group (“the Group”) was formed on 11 January 2007 by the stapling of the units in two property trusts, ING Real Estate Community Living Fund and ING Real Estate Community Living Management Trust (collectively the “Trusts”). The Responsible Entity for both Trusts is ING Management Limited, which now presents its report together with the Trusts’ financial report for the year ended 30 June 2007 and the auditor’s report thereon.

In accordance with AASB Interpretation 1002 Post-Date-of-Transition Stapling Arrangements , the stapling arrangement discussed above is regarded as a business combination and ING Real Estate Community Living Fund has been identified as the parent for preparing consolidated financial reports. Consequently, the consolidated financial statements of the ING Real Estate Community Living Fund present the combined financial results of both Trusts.

The directors’ report is a combined directors’ report that covers both Trusts. The financial information given for the ING Real Estate Community Living Group is taken from the consolidated financial statements and notes of the ING Real Estate Community Living Fund.

Directors

The directors of the Responsible Entity at any time during or since the end of the financial year were:

Richard Colless AM	Chairman
David Blight
Philip Clark AM
Michael Easson AM
Phillip Redmond	Appointed 17 August 2006
Paul Scully
Hugh Thomson	Alternate director for David Blight
Adrian Astridge	Alternate director for David Blight

Except as noted, these persons were directors of the Responsible Entity during the whole of the financial year and up to the date of this report.

Principal activity

The principal activity of the ING Real Estate Community Living Fund is investment in real estate. The principal activities of the ING Real Estate Community Living Management Trust are the development, management and operation of the Fund’s real estate assets. There was no significant change in the nature of either Trust’s activities during the financial year.

Review and results of operations

A summary of the Trusts’ results for the financial year is:

Distributable income ($'000) Distributions per stapled unit (cents) Earnings per unit - basic and diluted Per stapled unit (cents) Distributable income per unit Per stapled unit (cents) Net profit for year ($'000)	ING Real Estate Community Living Group ING Real Estate Community Living Management Trust 2007 2006 2007 2006
	86,798 40,270 605 - 34,358 16,232 605 - 10.70 9.78 - - 27.0 24.2 10.7 9.8

Page 2

ING Real Estate Community Living Group Directors’ report Year ended 30 June 2007

The Responsible Entity uses the Trusts’ distributable income as a guide to the level of distributions to be paid to unitholders. Distributable income does not take into account certain items recognised in the income statement including unrealised gains or losses on the revaluation of the Group’s properties and derivative financial instruments.

Distributable income for the financial year has been calculated as follows:

Net profit for year Adjusted for: Lease revenue received from property under construction Gain on revaluation of newly constructed retirement villages (Gain)/loss on change in fair value of: Investment properties Derivatives Gain on change in fair value of investment properties included in share of associates' net profit Borrowing costs amortisation returned Net foreign exchange loss Deferred income tax expense Distributable income Attributable to unitholders of: ING Real Estate Community Living Fund ING Real Estate Community Living Management Trust	ING Real Estate Community Living Group ING Real Estate Community Living Management Trust 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	86,798 40,270 605 - 508 1,936 - - 1,022 - 601 1,217 (4,447) (601) - (28,882) 1,421 - - (63,285) (31,013) - - 555 811 - - 94 535 - - 36,331 6,719 - -
	34,358 16,232 605 -
	33,753 16,232 - - 605 - 605 -
	34,358 16,232 605 -

Distributable income for the Trusts for the 2007 financial year increased by 112% to $34,358,000 from $16,232,000 for the 2006 financial year. Distributable income per stapled unit was up 9.2% to 10.7 cents, compared to 9.8 cents per unit previously. The increase is due mainly to net property income derived from investment properties and associates acquired during the 2006 financial year.

The Group has delivered distribution growth of 9.4% with distributions per stapled unit of 10.70 cents for the financial year, compared with 9.78 cents in 2006.

Earnings per stapled unit of the Trusts as calculated under accounting standards for the year ended 30 June 2007 were up 11.6% to 27.0 cents, compared to 24.2 cents per stapled unit for the previous financial year.

Total assets increased by $361,286,000 or 65.7% to $911,427,000 over the year primarily due to acquisitions in the US seniors, US students and Australian seniors portfolios. Asset revaluation increases and acquisitions contributed $62,068,000 and $338,352,000 respectively to the increase. The basis of the valuations is described in note 1 in the financial report.

Revaluations during the 2007 financial year added $62,068,000 (including share of associates’ revaluations), increasing net asset value per stapled unit by 8.0% to $1.22.

Page 3

ING Real Estate Community Living Group Directors’ report Year ended 30 June 2007

A total of $163,276,000 of new equity (after costs) was raised by the Trusts during the year. As a result, issued units increased by 125,894,000 to 430,267,000.

Distributions

Details of distributions are given in note 3 in the financial report.

Significant changes in the state of affairs

The Group was formed on 11 January 2007 by the stapling of the units in the Trusts. ING Real Estate Community Living Management Trust was constituted on 24 November 2006.

The stapling was effected by a distribution of capital of $2,500,000 from ING Real Estate Community Living Fund made on 11 January 2007 that was applied in subscription for units in ING Real Estate Community Living Management Trust.

In the opinion of the directors of the Responsible Entity, there were no other significant changes in the state of affairs of either Trust that occurred during the financial year.

Events subsequent to reporting date

There has not arisen in the interval between the end of the financial year and the date of this report any matter or circumstance that has significantly affected, or may significantly affect, the operations of the Trusts, the results of those operations, or the state of affairs of the Trusts, in future financial years.

Likely developments

The Responsible Entity will continue to actively manage the existing portfolio. New acquisitions, including overseas acquisitions, will be considered on the relative value they may add to the Trusts. Where appropriate the Trusts may raise additional capital to fund new acquisitions. The Responsible Entity will continue to review the property portfolio and dispose of non-core assets.

Environmental regulation

The Trusts’ operations are not subject to any particular and significant environmental regulation under a law of the Commonwealth or of a State or Territory.

Indemnities

The Trusts have not indemnified, nor paid any insurance premiums for, a person who is or has been an officer of the Responsible Entity or an auditor of the Trusts.

Interests of directors of the Responsible Entity

Units in the Group held by directors of the Responsible Entity as at 30 June 2007 were:

	Number of units
Paul Scully	19,076
Adrian Astridge (alternative for David Blight)	20,375

The other directors of the Responsible Entity did not hold any units in the Group at that date.

Other information

Fees paid to the Responsible Entity and its associates, and the number of units in the Trusts held by the Responsible Entity and its associates as at the end of the financial year are set out in note 21 in the financial report.

Auditors’ independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 5.

Page 4

ING Real Estate Community Living Group Directors’ report Year ended 30 June 2007

Rounding of amounts

The Trusts are of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the ''rounding off'' of amounts in this report and in the financial report. Amounts in this report and in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, unless stated otherwise.

Signed in accordance with a resolution of the directors of the Responsible Entity.

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Hugh Thomson Director Sydney 19 September 2007

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Auditor’s Independence Declaration to the Directors of ING Management Limited as Responsible Entity for the ING Real Estate Community Living Fund and ING Real Estate Community Living Trust

In relation to our audit of the financial report of the ING Real Estate Community Living Fund and its controlled entities and the ING Real Estate Community Living Management Trust and its controlled entities for the financial year ended 30 June 2007, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

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Ernst & Young

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Douglas Bain Partner 19 September 2007

Liability limited by a scheme approved under Professional Standards Legislation.

Page 6

ING Real Estate Community Living Group Income statements Year ended 30 June 2007

Rental income Deferred management fee Other property income Distribution receivable from subsidiaries Interest income Net foreign exchange gain Gain on change in fair value of Investment properties Derivatives Property expenses Finance costs Responsible Entity's fees Loss on change in fair value of: Investment properties Derivatives Net foreign exchange loss Other Share of associates' net profit Income tax expense Distributions per unit Earnings per unit - basic and diluted Per unit of the Parent Per stapled unit Distributable income per unit Per unit of the Parent Per stapled unit Net profit for the year Net profit attributable to unitholders of the Fund Revenue Other income Expenses Profit before income tax Net profit attributable to unitholders of ING Real Estate Community Living Management Trust	Note	Consolidated Parent 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	5 21(b) 11 6 3 4 4 4 4	38,158 10,898 10,243 7,042 481 - - - 21 139 - 8 - - 25,517 9,412 2,590 1,366 2,505 1,366
		41,250 12,403 38,265 17,828 277 - 277 - - 4,447 - 494 28,882 - 28,882 - (9,759) (874) (15) (10) (13,347) (5,362) (4,402) (4,982) (917) - (917) - (1,217) - (1,335) - - (761) - (761) - (82) - (82) (1,324) (464) (1,032) (464) 79,284 37,682 - -
		123,129 46,989 59,723 12,023 (36,331) (6,719) - -
		86,798 40,270 59,723 12,023 (605) - - -
		86,193 40,270 59,723 12,023
		Cents Cents 10.70 9.78 26.8 24.2 27.0 24.2 10.5 9.8 10.7 9.8

Page 7

ING Real Estate Community Living Group Balance sheets As at 30 June 2007

Current assets Cash and cash equivalents Trade and other receivables Derivatives Non-current assets Trade and other receivables Investments in subsidiaries Investment properties Properties under construction Investments in associates Other Total assets Current liabilities Payables Retirement village residents' loans Borrowings Derivatives Provision for distribution Non-current liabilities Borrowings Deferred tax liabilities Total liabilities Net assets Unitholders' interest Issued units Reserves Retained earnings Total unitholders' interest Net asset value per stapled unit Attributable to unitholders of ING Real Estate Community Living Fund Attributable to unitholders of ING Real Estate Community Living Management Trust	Note	Consolidated Parent 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	7 8 9 8 22 10 10 11 12 1(r) 13 9 3 13 14 15 16 17	20,061 52,019 12,849 36,233 13,899 7,166 5,076 4,901 28,448 2,269 28,448 2,269
		62,408 61,454 46,373 43,403
		17,080 15,272 17,080 15,272 - - 438,099 245,066 491,785 271,647 113,991 105,455 18,972 24,701 1,509 10,100 321,182 172,042 9,899 6,344 - 5,025 - 67
		849,019 488,687 580,578 382,304
		911,427 550,141 626,951 425,707
		20,475 13,217 4,954 10,153 84,428 - - - - 91,711 - 91,711 1,173 4,983 1,173 4,983 11,510 7,548 11,510 7,548
		117,586 117,459 17,637 114,395
		228,082 83,373 114,600 - 42,658 6,719 - -
		270,740 90,092 114,600 -
		388,326 207,551 132,237 114,395
		523,101 342,590 494,714 311,312
		473,793 316,350 473,793 316,350 (30,174) 3,031 - - 75,638 23,209 20,921 (5,038)
		519,257 342,590 494,714 311,312 3,844 - - -
		523,101 342,590 494,714 311,312
		$1.22 $1.13

Page 8

ING Real Estate Community Living Group Cash flow statements Year ended 30 June 2007

Cash flows from operating activities Rental and other property income Property and other expenses Distributions received from associates Distributions received from subsidiaries Interest received Borrowing costs paid Goods and services taxes paid from investing and financing activities Cash flows from investing activities Purchase of and additions to investment properties and properties under construction Investment in subsidiaries Investment in associates Loans to subsidiaries Loans to associates Other loans made Cash flows from financing activities Proceeds from issue of units Unit issue costs Distributions to unitholders Proceeds from borrowings Repayment of borrowings Net increase/(decrease) in cash Cash at the beginning of the year Effects of exchange rate changes on cash Cash at the end of the year	Note	Consolidated Parent 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	24 22 3 7	42,062 8,622 12,408 4,636 (12,109) (1,340) (597) (475) 6,003 5,628 - - - - 25,518 9,689 1,429 2,197 1,344 2,197 (13,556) (6,166) (5,098) (4,328) 639 17 639 17
		24,468 8,958 34,214 11,736
		(156,422) (184,866) (11,326) (32,798) - - (193,153) (217,631) (96,410) (137,489) (3,555) (6,344) - - (814) - (2,100) (14,980) (2,100) (14,980) 110 - 3,371 -
		(254,822) (337,335) (207,577) (271,753)
		155,048 264,062 151,611 264,062 (4,046) (9,063) (3,870) (9,064) (20,162) (8,553) (20,162) (8,552) 174,860 185,824 105,026 101,678 (106,558) (56,876) (82,626) (56,876)
		199,142 375,394 149,979 291,248
		(31,212) 47,017 (23,384) 31,231 52,019 5,002 36,233 5,002 (746) - - -
		20,061 52,019 12,849 36,233

Page 9

ING Real Estate Community Living Group Statements of changes in unitholders’ interest Year ended 30 June 2007

Total unitholders' interest at the beginning of the year Adjustment on adoption of financial instruments accounting standards AASB 132 and AASB 139 Net gain on available-for-sale financial assets(a) Exchange differences on translation of foreign operations Net income recognised directly in unitholders' interest Profit for the year Transactions with unitholders in their capacity as equity holders: Issue of units: ING Real Estate Community Living Fund ING Real Estate Community Living Management Trust Distributions paid or payable Distribution of capital Total recognised income and expense for the year is attributable to: ING Real Estate Community Living Fund ING Real Estate Community Living Management Trust Restated unitholders' interest at the beginning of the year Total recognised income and expense for the year end of the year Total unitholders' interest at the	Note	Consolidated Parent 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	17(a) 16 15 3 1(a)	342,590 60,545 311,312 60,545 - (1,292) - (1,292)
		342,590 59,253 311,312 59,253
		- - - - (33,205) 3,031 - -
		(33,205) 3,031 - - 86,798 40,270 59,723 12,023
		53,593 43,301 59,723 12,023
		162,537 258,033 162,537 258,033 3,239 - - - (36,358) (17,997) (36,358) (17,997) (2,500) - (2,500) -
		126,918 240,036 123,679 240,036
		523,101 342,590 494,714 311,312
		52,988 43,301 59,723 12,023 605 - - -
		53,593 43,301 59,723 12,023

(a) The net gain on available-for-sale financial assets of nil for the Parent Entity for the 2006 financial year is after adjusting for the change in accounting policy described in note 1(x), by reducing the amount shown in the 2006 financial statements by $34,968,000.

Page 10

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

1. Summary of significant accounting policies

(a) The Group

The ING Real Estate Community Living Group (“the Group”) was formed on 11 January 2007 by the stapling of the units in two property trusts, ING Real Estate Community Living Fund and ING Real Estate Community Living Management Trust (collectively the “Trusts”). ING Real Estate Community Living Fund and ING Real Estate Community Living Management Trust were constituted on 22 November 2003 and 24 November 2006, respectively.

The Responsible Entity for both Trusts is ING Management Limited. ING Management Limited is an Australian domiciled company and is a wholly owned company within the ING Groep NV group of companies.

The two Trusts have common business objectives and operate as an economic entity collectively known as ING Real Estate Community Living Group.

The stapling was effected by a distribution of capital of $2,500,000 from ING Real Estate Community Living Fund made on 11 January 2007 that was applied in subscription for units in ING Real Estate Community Living Management Trust.

The constitutions of the Trusts ensure that, for as long as the Trusts remain jointly quoted on the Australian Stock Exchange, the number of units in each trust shall remain equal and that unitholders in each trust shall be identical.

The stapling structure will cease to operate on the first to occur of:

(a) either of the Trusts resolving by special resolution in accordance with its constitution to terminate the stapling provisions; or

(b) the commencement of the winding up of either of the Trusts.

(b) Basis of preparation

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards ("AASB"), Australian Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (the “Board”) and the Corporations Act 2001.

In accordance with AASB Interpretation 1002 Post-Date-of-Transition Stapling Arrangements , the stapling arrangement discussed above is regarded as a business combination and ING Real Estate Community Living Fund (the “Parent” or “Parent Entity”) has been identified as the parent for preparing consolidated financial reports. The consolidated financial statements present the combined financial results of both Trusts.

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (“AIFRS”). Compliance with AIFRS ensures that the consolidated financial statements and notes of the Group comply with International Financial Reporting Standards (“IFRS”).

The Parent's financial statements and notes also comply with IFRS, except that it has elected to apply the relief provided to parent entities in respect of certain disclosure requirements contained in AASB 132 Financial Instruments: Presentation and Disclosure .

The financial report is presented in Australian dollars.

The financial report is prepared on the historical cost basis, except for investment properties and derivative financial instruments, which are measured at fair value.

Page 11

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

1. Summary of significant accounting policies (continued)

(c) Principles of consolidation

The consolidated financial statements comprise the Parent and its subsidiaries as at 30 June 2007 (the “Group”). Subsidiaries are all those entities (including special purpose entities) whose financial and operating policies the Group has the power to govern, which generally accompanies a shareholding of more than one-half of the voting rights.

Subsidiaries have been consolidated for the same reporting period as the Parent, using consistent accounting policies. Adjustments are made to bring into line dissimilar accounting policies. Intercompany balances and transactions including unrealised profits have been eliminated.

Subsidiaries are consolidated from the date on which control is transferred to the Parent. They are de-consolidated from the date that control ceases.

Minority interests represent the interest in ING Real Estate Community Living Management Trust held

by unitholders.

Investments in subsidiaries are carried at cost in the Parent’s financial statements. For details of a change in accounting policy on this topic, please refer to note 1(x).

(d) Distribution policy

Distributions are paid to unitholders each quarter out of distributable income, which includes realised income available for distribution and transfers from equity. A provision for distribution for any distribution declared on or before the end of the reporting period is recognised on the balance sheet in the reporting period to which the distribution pertains.

(e) Investment property

Land and buildings have the function of an investment and are regarded as composite assets. In accordance with applicable accounting standards, the buildings, including plant & equipment, are not depreciated.

It is the Group’s policy to have all investment properties externally valued at intervals of not more than three years and that such valuation be reflected in the financial reports of the Group. It is the policy of the Responsible Entity to review the fair value of each investment property every six months and to cause investment properties to be revalued to fair values whenever their carrying value in aggregate differs materially to their fair values.

In determining fair values, expected net cash flows are discounted to their present value using a market determined risk adjusted discount rate. The assessment of fair value of investment properties does not take into account potential capital gains tax assessable. Changes in the fair value of an investment property are recorded in the income statement.

The expected net cash flows of retirement villages include deferred management fees receivable and the receipt and repayment of residents’ incoming contributions.

All property interests held under operating leases are classified and accounted for as investment property.

(f) Property under construction

Property under construction is carried at historical cost. Cost includes the cost of acquisition and additions and, during development, includes financing charges, related professional fees incurred and other directly attributable costs.

Page 12

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

1. Summary of significant accounting policies (continued)

Property under construction is transferred to investment property on completion of the construction. Any difference between the fair value of the property at that date and its previous carrying amount is recognised in profit or loss.

(g) Leases

Leases where the lessor retains substantially all the risk and benefits of ownership are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised as an expense over the term of the lease on the same basis as the lease income. Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the term of the lease.

(h) Foreign currency

(i) Functional and presentation currencies

The functional currency and presentation currency of the Group (with the exception of its foreign subsidiaries) is the Australian dollar.

(ii) Translation of foreign currency transactions

Transactions in foreign currency are initially recorded in the functional currency at the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are retranslated at the rate of exchange prevailing at the balance date. All differences in the consolidated financial report are taken to the income statement with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment at which time they are recognised in the income statement.

A non-monetary item that is measured at fair value in a foreign currency is translated using the exchange rates at the date when the fair value was determined.

(iii) Translation of financial statements of foreign subsidiaries

The functional currency of certain subsidiaries is not the Australian dollar. At reporting date, the assets and liabilities of these entities are translated into the presentation currency of the Group at the rate of exchange prevailing at balance date. Financial performance is translated at the average exchange rate prevailing during the reporting period. The exchange differences arising on translation are taken directly to the foreign currency translation reserve in equity.

On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that foreign operation is recognised in the income statement.

(i) Revenue

Revenue from rents, interest and distributions is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. Revenue brought to account but not received at balance date is recognised as a receivable.

Rental income from operating leases is recognised on a straight-line basis over the lease term. Contingent rentals are recognised as income in the financial year that they are earned. Fixed rental increases that do not represent direct compensation for underlying cost increases or capital expenditures are recognised on a straight-line basis until the next market review date.

Reflecting this accounting policy, deferred management fee income is calculated as the expected fee to be earned on a resident’s ingoing loan, allocated pro-rata over the resident’s expected tenure, together with any share of capital appreciation that has occurred at reporting date.

Page 13

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

1. Summary of significant accounting policies (continued)

Revenue derived from a property undergoing construction or development, which directly relates to bringing the asset to the location and working condition of an investment property, is recognised as a reduction in the purchase price of that asset. If the revenue is not directly related to bringing the asset to the location and working condition of an investment property, it is recognised in the income statement as it is earned.

Interest income is recognised as the interest accrues using the effective interest method.

(j) Income tax

(i) Current income tax

Under the current tax legislation, the Parent and its subsidiaries are not liable to pay Australian income tax provided that its taxable income (including any assessable capital gains) is fully distributed to unitholders each year. Tax allowances for building and fixtures depreciation are distributed to unitholders in the form of the tax deferred component of distributions.

However, ING Real Estate Community Living Management Trust is subject to Australian income tax.

The subsidiaries that hold foreign properties may be subject to corporate income tax and withholding tax in the countries in which they operate. Under current Australian income tax legislation, unitholders of the Parent may be entitled to receive a foreign tax credit for these taxes.

(ii) Deferred income tax

Deferred income tax represents tax (including foreign withholding tax) expected to be payable or recoverable by taxable entities on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised through continuing use or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at reporting date. Income taxes related to items recognised directly in equity are recognised in equity and not against income.

(k) Earnings per unit

Basic earnings per unit is calculated as net profit attributable to unitholders of the Group divided by the weighted average number of issued units. As there are no potentially dilutive units on issue, diluted earnings per unit is the same as basic earnings per unit.

(l) Derivative financial instruments

The Group uses derivative financial instruments such as foreign currency contracts and interest rate swaps to hedge its risks associated with foreign currency and interest rate fluctuations. The Group may also invest in derivatives related to listed property equities and indices and may issue derivatives related to its own units. Such derivative financial instruments are stated at fair value and recognised as an asset or liability in the balance sheet.

The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The fair value of interest rate swap contracts is determined by reference to market values of similar instruments. The fair value of derivatives related to listed property equities and indices (including those related to the Group’s own units) is calculated by reference to the market value of the underlying equities or indices.

For hedge accounting, hedges are classified as a fair value hedges when they hedge the exposure to changes in the fair value of a recognised asset or liability; cash flow hedges where they hedge exposure to variability in cash flows that is attributable either to a particular risk associated with a recognised asset or liability or to a forecast transaction; or hedges of a net investment in a foreign operation.

Page 14

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

1. Summary of significant accounting policies (continued)

Any gain or loss arising from measuring fair value hedges that meet the conditions for hedge accounting is recognised in the income statement. Any gain or loss on the hedged item attributable to the hedged risk is adjusted against the carrying amount of the relevant financial instrument.

Any gain or loss arising on cash flow hedges which hedge firm commitments and which qualify for hedge accounting are recognised directly in equity.

For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are recognised in the income statement.

Hedge accounting is discontinued when the hedge instrument expires, is sold, exercised, terminated or no longer deemed effective. Any cumulative gains or losses relating to the hedge that were previously recognised in equity are transferred to the Income Statement.

(m) Business combinations

Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities acquired. Subsequently, goodwill is measured at cost less any accumulated impairment losses and is not amortised.

Impairment is determined by assessing the recoverable amount of the cash-generating unit or group of units (“CGU”) to which the goodwill relates. When the recoverable amount of the CGU is less than the carrying amount, an impairment loss is recognised. When goodwill forms part of a CGU and an operation within that CGU is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation.

Impairment losses recognised for goodwill are not subsequently reversed.

(n) Cash and cash equivalents

Cash at bank and short-term deposits are stated at their nominal values.

For the purposes of the cash flow statement, cash includes cash on hand and in banks, and money market investments readily convertible to cash, net of outstanding bank overdrafts.

(o) Trade and other receivables

Receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified. Receivables from related parties are initially recognised at original invoice amount and are subsequently carried at amortised cost using the effective interest method.

(p) Investment in associates

Associates are those entities over which the Group has significant influence, but not control. Investments in associates are accounted for in the consolidated financial statements using the equity method. The share of the associates’ net profit is recognised in the consolidated income statement and the share of the movement in reserves is recognised in reserves in the consolidated balance sheet. The accumulation of post-acquisition movements in the Group’s share of net assets of the associate is adjusted against the carrying value of the investment. Distributions from associates are recognised in the Parent’s income statement and reduce the carrying value of the investment in the consolidated financial statements.

Page 15

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

1. Summary of significant accounting policies (continued)

Investments in associates are accounted for in the Parent’s financial statements using the cost method.

(q) Payables

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed to the Group. The amounts are unsecured and are usually paid within 60 days of recognition.

(r) Retirement village residents’ loans

These loans, which are repayable on the departure of the resident, are classified as financial liabilities at fair value through profit and loss with resulting fair value adjustments recognised in the income statement. The fair value of the obligation is measured as the ingoing contribution plus the resident's share of capital appreciation to reporting date. Although the expected average residency term is around eleven years, these obligations are classified as current liabilities, as required by Accounting Standards, because the Group does not have an unconditional right to defer settlement to more than twelve months after reporting date.

This liability is stated net of deferred management fee accrued to reporting date, because the Group’s contracts with residents require net settlement of those obligations.

(s) Borrowings

Borrowings are initially recorded at the fair value of the consideration received net of issue and other transaction costs associated with the borrowings. After initial recognition, borrowings are subsequently measured at amortised cost using the effective interest rate method. Under this method fees, costs, discounts and premiums directly relating to the financial liability are amortised over its expected life.

Borrowing costs are expensed as incurred except where they are directly attributable to the acquisition, construction or production of a qualifying asset. When this is the case, they are capitalised as part of the acquisition cost of that asset.

(t) Financial assets and liabilities

Current and non-current financial assets and liabilities are classified as fair value through profit or loss; loans and receivables; held-to-maturity investments; or as available-for-sale. The Group determines the classification of its financial assets and liabilities at initial recognition and these are subsequently held at fair value or amortised cost. Changes in fair value of available-for-sale financial assets are recorded directly in equity. Changes in fair values of financial assets and liabilities classified as fair value through profit or loss are recorded in the income statement.

The fair value of available-for-sale financial assets is calculated by reference to quoted market prices.

(u) Issued units

Issued and paid up units are recognised at the fair value of the consideration received by the Group. Any transaction costs arising on issue of ordinary units are recognised directly in unitholders’ interest as a reduction of the units proceeds received.

(v) Goods and services tax (“GST”)

Revenue, expenses and assets (with the exception of receivables) are recognised net of the amount of GST to the extent that the GST is recoverable from the taxation authority. Where GST is not recoverable, it is recognised as part of the cost of the acquisition, or as an expense.

Page 16

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

1. Summary of significant accounting policies (continued)

Receivables and payables are stated inclusive of GST. The net amount of GST recoverable from or payable to the tax authority is included in the balance sheet as an asset or liability.

Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing activities, which is recoverable from or payable to the tax authorities, is classified as an operating cash flow.

(w) Pending Accounting Standards

Accounting Standards AASB 7 Financial Instruments: Disclosures and AASB 2006-10 Amendments to Australian Accounting Standards are applicable to annual reporting periods beginning on or after 1 January 2007. In addition, AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 are applicable to annual reporting periods beginning on or after 1 January 2009. The Group has not adopted these standards early. Application of the standards will not affect any of the amounts recognised in the financial statements, but will affect the type of information disclosed.

Other new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for the current reporting period. These are not expected to have any material impact on the Group’s financial report in future reporting periods.

(x) Change in accounting policy

Up until 1 July 2006, investments in subsidiaries in the Parent’s financial statements were accounted for as available-for-sale financial assets. They were carried at fair value in the balance sheet, with changes in fair value taken to unrealised gains reserve. From that date, these investments are accounted for at cost in the Parent’s financial statements. Distributions received are taken to the income statement. This voluntary change in accounting policy produces more reliable and relevant information.

This change has been accounted for retrospectively, with the comparative amounts disclosed for the 2006 financial year presented as if the new accounting policy had always been applied. There was no effect on total equity as at 1 July 2005. The effects of the change were:

Reduction in movement in unrealised gains reserve Reduction in closing balance of unrealised gains reserve as at 30 June 2006 Reduction in carrying amount of investment in subsidiaries as at 30 June 2006	Parent 2006 $'000
	34,968 34,968 34,968

There was no effect on the consolidated financial statements.

Page 17

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

2. Accounting estimates and judgements

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires the Responsible Entity to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed below.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

(a) Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates, by definition, will seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

The Group had investment properties with a carrying amount of $491,785,000 (2006: $271,647,000), representing estimated fair value. In addition, the carrying amount of the Group’s investment in associates of $321,182,000 (2006: $172,042,000) also reflects investment properties carried at fair value. These carrying amounts reflect certain assumptions about expected future rentals, rent-free periods, operating costs and appropriate discount and capitalisation rates. In forming these assumptions, the Responsible Entity considered information about current and recent sales activity, current market rents, and discount and capitalisation rates, for properties similar to those owned by the Group, as well as independent valuations of the Group’s property.

(b) Critical judgements in applying the entity’s accounting policies

There were no judgements, apart from those involving estimations, that management has made in the process of applying the entity’s accounting policies that had a significant effect on the amounts recognised in the financial report.

Page 18

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

3. Distributions

(a) Rates and amounts of distributions Distributions have been paid or are payable in respect of the following periods at the following rates (in cents per unit): Quarter ended 30 September Quarter ended 31 December Quarter ended 31 March Quarter ended 30 June The total amounts of these distributions were: Quarter ended 30 September Quarter ended 31 December Quarter ended 31 March Quarter ended 30 June (b) Distributable income Net profit for the year Adjusted for: Lease revenue received from property under construction Gain on revaluation of newly constructed retirement villages (Gain)/loss on change in fair value of: Investment properties Derivatives Gain on change in fair value of investment properties included in share of associates' net profit Borrowing costs amortisation returned Loss on change in fair value of derivatives Net foreign exchange loss Deferred income tax expense Distributable income Distributable income is attributable to unitholders of: ING Real Estate Community Living Fund ING Real Estate Community Living Management Trust Distributable income for the Group is calculated as follows:	Consolidated Parent 2007 2006 2007 2006
	Cents Cents Cents Cents 2.675 2.35 2.675 2.35 2.675 2.47 2.675 2.47 2.675 2.48 2.675 2.48 2.675 2.48 2.675 2.48
	10.70 9.78 10.70 9.78
	$'000 $'000 $'000 $'000 8,201 1,540 8,201 1,540 8,279 3,512 8,279 3,512 8,360 5,397 8,360 5,397 11,518 7,548 11,518 7,548
	36,358 17,997 36,358 17,997
	86,798 40,270 59,723 12,023 508 1,936 508 1,936 1,022 - 420 - 1,217 (4,447) 1,335 (494) (28,882) - (28,882) - (63,285) (31,013) - - 555 811 555 811 - 1,421 - 1,421 94 535 94 535 36,331 6,719 - -
	34,358 16,232 33,753 16,232
	33,753 16,232 33,753 16,232 605 - - -
	34,358 16,232 33,753 16,232

Page 19

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

3. Distributions (continued)

Distributable income brought forward Transfer from issued units Transfer from retained profits Distributions paid or payable Distributable income carried forward Distributable income for the year Distributable income - ING Real Estate Community Living Fund:	Note	Consolidated Parent 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	15(d) (i)	33,753 16,232 33,753 16,232 145 100 145 100 2,039 1,810 2,039 1,810 605 - 605 - (36,358) (17,997) (36,358) (17,997)
		184 145 184 145

• (i) The transfer from retained profits represents distributable income earned by the ING Real Estate Community Living Management Trust and distributed by the Fund.

• (ii) The distribution for the quarter ended 30 June 2006 was recognised in the 2006 financial year and paid on 27 July 2006. The distribution for the quarter ended 30 June 2007 was recognised in the 2007 financial year and will be paid on 31 August 2007.

4. Earnings per unit

4. Earnings per unit
(a) Per unit of the Parent Distributable income - $'000 Profit attributable to unitholders - $'000 Weighted average number of units outstanding - thousands Distributable income per unit - cents Basic and diluted earnings per unit - cents (b) Per stapled unit Distributable income - $'000 Profit attributable to unitholders - $'000 Weighted average number of units outstanding - thousands Distributable income per unit - cents Basic and diluted earnings per unit - cents	Note Consolidated 2007 2006
	3(b) 33,753 16,232 86,193 40,270 321,957 166,310 10.5 9.8 26.8 24.2 3(b) 34,358 16,232 86,798 40,270 321,957 166,310 10.7 9.8 27.0 24.2

5. Finance costs

Interest paid or payable Less interest capitalised	Consolidated Parent entity 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	13,518 5,362 4,573 4,982 (171) - (171) -
	13,347 5,362 4,402 4,982

The rate used to capitalise finance costs to qualifying assets was 6.81% (2006: nil).

Page 20

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

6. Income tax expense

6. Income tax expense
(a) Income tax expense Deferred tax - increase in deferred tax liabilites (b) Reconciliation between tax expense and pre-tax net profit Profit before income tax Income tax at the Australian tax rate of 30% (2006: 30%) Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: Australian income Difference between Australian and foreign tax rates Income tax expense	Note	Consolidated Parent 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	14	36,331 6,719 - -
		123,129 46,989 59,723 12,023
		36,939 14,097 17,917 3,607 (12,592) (14,097) (17,917) (3,607) 11,984 6,719 - -
		36,331 6,719 - -

7. Cash and cash equivalents

7. Cash and cash equivalents
Cash at bank and in hand Short term deposits	Note	Consolidated Parent entity 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	19 19	4,479 5,211 795 3,149 15,582 46,808 12,054 33,084
		20,061 52,019 12,849 36,233

8. Trade and other receivables

8. Trade and other receivables
Current Rental and other amounts due Amounts receivable from subsidiaries Accrued income, prepayments and deposits Non-current Loan to associate	Note	Consolidated Parent 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	21(f)	12,119 4,227 757 4,227 - - 3,219 - 1,780 2,939 1,100 674
		13,899 7,166 5,076 4,901
		17,080 15,272 17,080 15,272

Rental and other amounts due are receivable within 30 days.

Page 21

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

9. Derivatives

9. Derivatives
Current assets Forward foreign exchange contracts Cross currency swap contracts Interest rate swap contracts Current liabilities Forward foreign exchange contracts Cross currency swap contracts	Note	Consolidated Parent entity 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	19 19	4,317 - 4,317 - 24,131 - 24,131 - - 2,269 - 2,269
		28,448 2,269 28,448 2,269
		1,173 1,942 1,173 1,942 - 3,041 - 3,041
		1,173 4,983 1,173 4,983

10. Property investments

(a) Summary of carrying amounts

		Consolidated	Consolidated	Parent	Parent
		2007	2006	2007		2006
		$'000	$'000	$'000		$'000
Investment properties		491,785	271,647	113,991	105,455
Properties under construction		18,972	24,701	1,509		10,100
		510,757	296,348	115,500	115,555
(b) Individual valuations and carrying amounts
Property	Cost	Latest external		Carrying	amount
	to date	valuation		2007		2006
		Date	Valuation
	$'000		$'000	$'000		$'000
Investment property
Parent
Unit 51, 107-115 Condon Street,
Bendigo, Vic	347	1 Oct 06	325	325		347
Unit 71, 104 Country Club Drive,
Safety Beach, Vic	486	1 Oct 06	425	425		486
Unit 43, 134-136 King Street,
Caboolture, Qld	251	1 Oct 06	305	305		251
Unit 102, 107-115 Condon Street,
Bendigo, Vic	347	1 Oct 06	325	325		347
Unit 49, 55-59 Drayton Road,
Toowoomba, Qld	335	1 Oct 06	340	340		335
Unit 54, 6-12 Matthews Street,
Grovedale, Vic	368	1 Oct 06	355	355		368
Unit 41, 10 Federation Street,
Wynnum, Qld	280	1 Oct 06	360	360		280
Unit 51, 11 - 15 Hollywood Blvd,
Salisbury Downs, SA	338	1 Oct 06	280	280		338
44 Grange Rd, Ipswich, Qld	4,780	1 Oct 06	4,175	4,176		4,779

Page 22

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

10. Property investments (continued)

Property

Cost Latest external Carrying amount to date valuation 2007 2006 Date Valuation $'000 $'000 $'000 $'000

35 Landsborough Ave, Newstead, Launceston, Tas 52 Chatsbury Street, Goulburn, NSW 15 Brechin Retreat, Seville Grove, WA 15 Coburns Road, Brookfield, Vic 37 Alexandra Street, Sebastopol, Vic 94 Taloumbi Road, Coffs Harbour, NSW 38 Hickey Street, Cessnock, NSW 12 Sheriff Way, Port Macquarie, NSW 16 Dove Court, Claremont, Tas 10 Barnesby Drive, Yakamia, WA 130 Forrest Avenue, Bunbury, WA 142-152 Townsend Road, St Albans Park 1, Vic 142-152 Townsend Road, St Albans Park 2, Vic 19 Kingston View Drive, Kingston, Tas 23-29 Coburns Road, Brookfield, Vic 11 - 23 River Road, Horsham, Vic 490 Wheelers Lane, Dubbo, NSW 477 Union Road Lavington, NSW 26 Vieste Drive, Glenorchy, Tas 3 Church Street, Grovedale, Vic Lot 15 & 16 Morrison Road, Swan View, WA 26-28 Freesia Crescent, Kingston, Tas(2) 425 Anakie Road, Lovely Banks 1, Vic(2) Subsidiaries 279 Bridge Street, Toowoomba, Qld 2 Bower Drive, Erskine, WA 93 Lovett Street, Devonport, Tas 1 Village Court, Toowoomba, Qld 2 Village Court, Toowoomba, Qld 100 Edinburgh Drive, Taree, NSW 55 Jefferis St, Bundaberg North, Qld 33-41 High Street, Forest Lake, Qld 586-594 Browns Plains Road, Marsden Qld(2) 5 french St, South Gladstone, Qld(2)

4,514 1 Oct 06 4,250 4,250 4,514 4,962 1 Oct 06 4,700 4,700 4,962 4,011 1 Oct 06 4,400 4,400 4,011 4,272 1 Oct 06 4,200 4,200 4,272 3,669 1 Oct 06 3,950 3,950 3,669 4,897 1 Oct 06 4,900 4,900 4,857 5,379 1 Oct 06 5,500 5,500 5,379 4,559 1 Oct 06 4,325 4,325 4,559 4,631 1 Oct 06 4,150 4,150 4,631 5,876 1 Oct 06 5,300 5,303 5,873 4,821 1 Oct 06 4,775 4,775 4,821 4,948 1 Oct 06 4,675 4,675 4,948 4,948 1 Oct 06 4,975 4,975 4,948 1,064 1 Oct 06 1,825 1,825 1,064 4,210 1 Oct 06 4,100 4,100 4,210 4,574 1 Oct 06 4,350 4,350 4,574 4,596 1 Oct 06 4,275 4,275 4,596 5,557 1 Oct 06 5,525 5,525 5,557 4,336 1 Oct 06 4,100 4,102 4,258 5,366 1 Oct 06 4,875 4,877 5,143 7,079 1 Oct 06 7,650 7,651 7,078 4,464 1 Oct 06 4,750 4,767 - 5,871 1 Oct 06 5,525 5,525 - 116,136 113,965 113,991 105,455 4,348 1 Oct 06 4,250 4,250 4,348 4,443 1 Oct 06 4,350 4,350 4,414 4,174 1 Oct 06 3,900 3,900 4,174 3,936 1 Oct 06 4,075 4,075 3,936 3,957 1 Oct 06 3,825 3,825 3,957 4,628 1 Oct 06 4,525 4,529 4,423 5,021 1 Oct 06 4,850 4,850 4,936 13,415 26 Apr 07 12,805 13,415 13,357 8,589 1 Oct 06 9,825 9,998 - 7,912 26 Apr 07 7,650 7,912 -

Page 23

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

10. Property investments (continued)

Property	Cost	Latest	external	Carrying	amount
	to date	valuation		2007	2006
		Date	Valuation
	$'000		$'000	$'000	$'000
95 Varga Road, Ashford, CT, USA	4,851	31 Jan 06	4,357	4,398	4,953
52 Perry Hill Road, Ashford, CT, USA	5,587	31 Jan 06	5,181	6,546	5,890
Cheney and Ball Hill Drives, Storrs
Mansfield, CT, USA	9,784	31 Jan 06	9,773	9,006	11,111
Dartmouth, Cornell & Yale Rds. Storrs
Mansfield, CT, USA	8,016	31 Jan 06	8,007	8,640	9,103
16 Hunting Heights Drive, Storrs
Mansfield, CT USA	4,824	31 Jan 06	7,889	7,946	8,996
188-192 Allen Street, New Britain, CT,
USA	4,640	31 Jan 06	4,592	4,710	5,221
East Street & Paul Manafort Drive,
New Britain, CT, USA	6,242	31 Jan 06	7,418	7,615	8,433
172-184 Allen Street, New Britain, CT,
USA	7,216	31 Jan 06	6,358	6,436	7,229
45 Oakwood Avenue, West Hartford,
CT, USA	1,420	31 Jan 06	1,531	1,388	1,740
34 Fairview Street, West Hartford, CT,
USA	1,966	31 Jan 06	2,119	2,287	2,410
317, 357 & 379 Roanoak Avenue,
Willimantic, CT, USA	3,418	31 Jan 06	3,415	3,685	3,882
456 Tolland Turnpike, Willington, CT,
USA	5,079	31 Jan 06	4,710	5,082	5,355
1301 West Broad Street, City of
Richmond, VA, USA	7,380	31 Jan 06	7,653	7,690	8,701
933 West Broad Street, City of
Richmond, VA, USA	18,339	31 Jan 06	18,604	18,709	21,150
5651 East Fletcher Ave, Tampa, FL,
USA	15,752	1 Jun 06	16,249	16,320	18,473
101 S Eagleville Road, Storrs
Mansfield, CT, USA	16,710	9 Jan 06	15,424	14,722	-
3 Clubhouse Circle, Storrs Mansfield,
CT, USA	5,612	9 Jan 06	5,181	5,590	-
1 Carlton Rd, Storrs Mansfield, CT,
USA	4,464	9 Jan 06	4,121	4,447	-
170 Spring Hill Road, Storrs Mansfield,
CT, USA	1,531	9 Jan 06	1,413	1,525	-
114 S. Eagleville Road, Storrs
Mansfield, CT, USA	893	9 Jan 06	824	889	-
380 Daleville Road, Willington, CT,
USA	17,092	9 Jan 06	15,778	15,842	-
1560 San Luis Road, Tallahasse,
FL, USA	27,581	22 Apr 06	31,555	31,341	-

Page 24

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

10. Property investments (continued)

Property

Cost Latest external Carrying amount to date valuation 2007 2006 Date Valuation $'000 $'000 $'000 $'000

Lot 11 Campbell Street, Rockhampton, Qld (1) 5 Martens Street Mount Warren Park, Qld(3) Ridgewood Blvd & Whitsunday Ave, Ridgewood, WA(3) Lot 601 Old Mandurah Road, Ravenswood, WA(3) 21& 43 Oakmont Avenue, Meadow Springs, WA(3) Total investment properties Property under construction Parent 26-28 Freesia Crescent Kingston, Tas(2) 425 Anakie Road, Lovely Banks 1, Vic(2) 425 Anakie Road, Lovely Banks 2, Vic(1) Lot 1, 18-20 Handley Street, Wangaratta, Qld(1) Subsidiaries 586-594 Browns Plains Road, Marsden, Qld(2) Lot 11 Campbell Street, Rockhampton, Qld (2) 5 French St, South Gladstone, Qld(2) 5 Martens Street Mount Warren Park, Qld(3) Ridgewood Blvd & Whitsunday Ave, Ridgewood, WA(3) Lot 601 Old Mandurah Road, Ravenswood, WA(3) 21& 43 Oakmont Avenue, Meadow Springs, WA(3) Total properties under construction Total all property investments

10,142 26 Apr 07 17,381 10,142 - 2,366 1 Mar 07 7,001 2,366 - 43,739 1 Mar 07 49,526 43,739 - 57,604 1 Mar 07 56,409 57,604 - 18,025 1 Mar 07 20,390 18,025 - 370,696 392,914 377,794 166,192 486,832 506,879 491,785 271,647 - na na - 3,824 - na na - 5,012 862 1 Oct 06 5,525 862 777 647 1 Oct 06 4,600 647 487 1,509 10,125 1,509 10,100 - na na - 7,206 - na na - 1,325 - na na - 6,070 506 1 Mar 07 - 506 - 8,405 1 Mar 07 2,509 8,405 - 3,998 1 Mar 07 1,124 3,998 - 4,554 1 Mar 07 1,855 4,554 - 17,463 5,488 17,463 14,601 18,972 15,613 18,972 24,701 505,804 522,492 510,757 296,348

Page 25

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

10. Property investments (continued)

• (1) These properties are currently being developed. The external valuations shown are for value on completion, while the carrying amount shows costs incurred to date.

• (2) Development of this property was substantially completed during the year. The property is now included in investment properties.

• (3) Valuations of retirement villages are provided to the Group net of residents’ loans (after deducting any accrued deferred management fees). For presentation in this note, the external valuations shown are stated before deducting this liability to reflect its separate balance sheet presentation.

(c) Details of valuations

Investment property that has not been valued by external valuers at reporting date is carried at the Responsible Entity’s estimate of fair value in accordance with the accounting policy detailed at note 1(e). Properties acquired during the period are held at cost, which is reflective of the estimate of fair value.

Valuations made in a foreign currency have been converted at the rate of exchange ruling at reporting date.

(d) Movements in carrying amounts

d) Movements in carrying amounts
Investment property Carrying amount at beginning of year Exchange rate fluctuations Additions - initial acquisitions Additions - to existing property Transferred from property under construction Net change in fair value Carrying amount at end of year Property under construction Carrying amount at beginning of year Additions Transferred to investment property Carrying amount at end of year	Consolidated Parent 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	271,647 104,032 105,455 81,892 (26,481) - - - 212,783 161,007 - 20,860 2,799 7 1,455 7 32,254 6,601 8,836 2,696 (1,217) - (1,755) -
	491,785 271,647 113,991 105,455
	24,701 10,685 10,100 4,932 26,525 20,617 245 7,864 (32,254) (6,601) (8,836) (2,696)
	18,972 24,701 1,509 10,100
	510,757 296,348 115,500 115,555

(e) Leasing arrangements

The investment properties are leased to tenants under long-term operating leases. Lease terms vary between tenants. Future minimum rentals receivable under these leases are:

Within one year Later than one year but not later than five years Later than five years	Consolidated Parent 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	30,855 12,823 10,066 9,548 11,959 12,823 960 9,548 13,804 5,329 588 -
	56,618 30,975 11,614 19,096

Page 26

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

11. Investments in associates

(a) Details of associates

11. Investments in associates (a) Details of associates
Name	Principal activity	Ownership	interest
		2007	2006
ING Real Estate CC Trust No 1(1)	Real estate investment	90%	90%
CSH - INGRE LLC	Real estate investment	49%	49%
ING NZ Subsidiary Trust No 1(1)	Real estate investment	90%	90%
SCV Group Limited(2)	Real estate investment	10%	-
Chartwell ING Regency Master LP	Real estate investment	50%	-

• (1) Although the Group has the economic interest shown, it does not hold a controlling interest in the voting rights of these entities. Consequently, the Responsible Entity has determined that the Group’s ownership interest does not give the Group the capacity to control these entities but rather the power to exercise significant influence.

• (2) Notwithstanding that the group’s interest in this company is less than 20%, the Responsible Entity concluded that the Group has significant influence because the Group has board representation and because it provides a significant proportion of the properties managed by the company.

(b) Share of associates' assets and liabilities Total assets Total liabilities Net assets (c) Share of results of associates Revenue Gain on change in fair value of investment properties Expenses Profit before income tax Income tax expense Profit for the year	Consolidated 2007 2006 $'000 $'000
	748,847 506,742 (427,665) (334,700)
	321,182 172,042
	91,346 35,445 63,285 31,013 (75,347) (28,776)
	79,284 37,682 - -
	79,284 37,682

12. Payables Current liabilities Trade payables Other payables	Consolidated Parent entity 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	18,568 3,649 4,494 1,371 1,907 9,568 460 8,782
	20,475 13,217 4,954 10,153

Page 27

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

13. Borrowings

13. Borrowings
Current liabilities Bank debt Non-current liabilities Bank debt	Note	Consolidated Parent 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	19(a) 19(a)	- 91,711 - 91,711
		228,082 83,373 114,600 -

The bank debt of the Group is denominated in Australian and United States dollars.

The Australian dollar denominated debt of $114,600,000 is a variable rate facility expiring in December 2009, and has a facility limit of $155,000,000. The principal loan to value ratios to be maintained are 65% of completed properties and 55% for properties under construction. The carrying value at 30 June 2007 of the Group’s Australian investment properties and properties under construction pledged as security is $231,780,000 (2006: $173,701,000).

The United States dollar denominated debt of $113,482,000 is comprised of a number of fixed rate facilities which are fully drawn and whose terms exceed 5 years. The facilities are secured against the Group’s United States investment properties, which have a carrying value at 30 June 2007 of $184,813,000 (2006: $122,647,000).

14. Deferred tax liabilities

The balance comprises temporary differences attributable to: Investment properties Investment in associate Deferred tax expense recognised in the income statement in respect of deferred tax liabilities is attributable to temporary differences arising from: Investment properties Investment in associate	Consolidated Parent entity 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	2,121 - - 40,537 6,719 - -
	42,658 6,719 - -
	1,869 - - 34,462 6,719 - -
	36,331 6,719 - -

Page 28

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

15. Issued units

(a) Carrying amounts

15. Issued units a) Carrying amounts
Issued units of ING Real Estate Community Living Fund At beginning of year Issued during the year: Placements and rights issues Distribution reinvestment plan Unit issue costs Distribution of capital Transfer to distributable income Borrowing cost amortisation returned At end of year Issued units of ING Real Estate Community Living Management Trust At beginning of year Issued during the year: Placements and rights issues Unit issue costs Distribution of capital At end of year (b) Number of issued units At beginning of year Issued during the year: Placements Distribution reinvestment plan At end of year	Note	Consolidated Parent 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	1(a) 15(d) 15(e) 1(a)	316,350 60,938 316,350 60,938 154,111 264,062 154,111 264,062 12,274 3,036 12,274 3,036 (3,848) (9,065) (3,848) (9,065) (2,500) - (2,500) - (2,039) (1,810) (2,039) (1,810) (555) (811) (555) (811)
		473,793 316,350 473,793 316,350
		- - - - 937 - - - (198) - - - 2,500 - - -
		3,239 - - -
		Consolidated Parent 2007 2006 2007 2006 thousands thousands thousands thousands
		304,373 65,220 304,373 65,220 115,707 236,407 115,707 236,407 10,187 2,746 10,187 2,746
		430,267 304,373 430,267 304,373

(c) Terms of units

All units are fully paid and rank equally with each other for all purposes. Each unit entitles the holder to one vote, in person or by proxy, at a meeting of unitholders.

(d) Transfer to distributable income

The transfer to distributable income represents the portion of distributions paid to holders of new units for that part of the period to which the distribution relates that occurred before the issue of the units.

(e) Borrowing cost amortisation

As set out in the Product Disclosure Statement lodged with the Australian Securities and Investments Commission on 21 May 2004, the Group has distributed amortisation of debt issue costs as shown.

Page 29

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

16. Reserves – Foreign currency translation

Balance at beginning of year Translation differences arising during the year Balance at end of year	Consolidated Parent 2007 2006 2007 2006 $'000 $'000 $'000 $'000
	3,031 - - - (33,205) 3,031 - -
	(30,174) 3,031 - -

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. It is also used to record the effect of hedging net investments in foreign operations.

17. Retained earnings

Note Balance at beginning of year Adjustment on adoption of financial instruments accounting standards AASB 132 and AASB 139 (a) Net profit for the year Transfer from issued units 15(d) Borrowing cost amortisation returned 15(e) Distributions paid or payable 3 Balance at end of year The balance at the end of the year comprises: Lease revenue received from property under construction Gain/(loss) on change in fair value of: Investment properties Derivatives Gain on change in fair value of: investment properties included in share of associates' net profit Net foreign exchange loss Deferred income tax expense Transfer to distributable income 3(b)(i) Distributable income	Note	Consolidated Parent 2007 2006 2007 2006 $'000 $'000 $'000 $'000
		23,209 (393) (5,038) (393) - (1,292) - (1,292) 86,193 40,270 59,723 12,023 2,039 1,810 2,039 1,810 555 811 555 811 (36,358) (17,997) (36,358) (17,997)
		75,638 23,209 20,921 (5,038)
		(4,591) (4,083) (4,591) (4,083) 3,862 6,101 393 2,148 26,169 (2,713) 26,169 (2,713) 94,298 31,013 - - (629) (535) (629) (535) (43,050) (6,719) - - (605) - (605) -
		75,454 23,064 20,737 (5,183) 184 145 184 145
		75,638 23,209 20,921 (5,038)

(a) Change in accounting policy

Under the accounting policies that applied before 1 July 2005, the fair values of derivative financial instruments were not recognised. Under present accounting policies, these instruments are included in the balance sheet at their fair value, with changes in fair value recognised in the income statement. The effect of this change was recognised in retained profits at 1 July 2005.

Page 30

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

18. Commitments

Commitments for capital expenditure on investment property contracted but not provided for at reporting date amounted to $30,408,000, $21,403,000 payable within one year and $9,005,000 payable between one and two years.

19. Financial instruments

The Group's activities expose it to a variety of financial risks including currency risk, interest rate risk and credit risk. The Group uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge these risk exposures.

(a) Foreign currency risk

Foreign currency risk arises from the value of investment properties located offshore and from the future income flows derived from these properties. The Group’s policy is to hedge up to 100% of the value of these properties using borrowings denominated in local currency. In addition, up to 100% of the forecast future income flows for up to six years are hedged using forward foreign exchange contracts.

Cross currency swap contracts to receive Australian dollars and pay United States dollars contracted at reporting date were:

Maturing Weighted average exchange rate 2007 2006	Consolidated Principal amount 2007 2007 2006 2006 A$'000 US$'000 A$'000 US$'000
Within one year - 0.7596 Later than one year but not later than five years 0.8068 0.7577 Later than five years 0.8243 -	- - 60,473 45,934 243,470 196,433 130,178 98,640 48,293 39,806 - -
	291,763 236,239 190,651 144,574

Cross currency swap contracts to receive Australian dollars and pay Canadian dollars contracted at reporting date were:

Maturing Weighted average exchange rate 2007 2006	Consolidated Principal amount 2007 2007 2006 2006 A$'000 C$'000 A$'000 C$'000
Later than five years 0.9060 -	46,268 41,919 - -

Forward foreign exchange contracts to receive Australian dollars and pay United States dollars contracted at reporting date were:

Maturing Weighted average exchange rate 2007 2006	Consolidated Principal amount 2007 2007 2006 2006 A$'000 US$'000 A$'000 US$'000
Within one year 0.7606 0.7428 Later than one year but not later than five years 0.7606 0.7456	10,257 7,801 8,456 6,281 58,537 44,523 43,651 32,545
	68,794 52,324 52,107 38,826

Page 31

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

19. Financial instruments (continued)

Forward foreign exchange contracts to receive Australian dollars and pay New Zealand dollars contracted at reporting date were:

Maturing Weighted average exchange rate 2007 2006	Consolidated Principal amount 2007 2007 2006 2006 A$'000 NZ$'000 A$'000 NZ$'000
Within one year 1.2355 1.2355 Later than one year but not later than five years 1.2436 1.2432	576 712 506 626 9,799 12,187 10,376 12,899
	10,375 12,899 10,882 13,525

Forward foreign exchange contracts to receive Australian dollars and pay Canadian dollars contracted at reporting date were:

Maturing Weighted average exchange rate 2007 2006	Consolidated Principal amount 2007 2007 2006 2006 A$'000 C$'000 A$'000 C$'000
Within one year 0.8693 - Later than one year but not later than five years 0.8693 -	3,332 2,896 - - 14,198 12,343 - -
	17,530 15,239 - -

(b) Interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to its borrowings. The Group’s policy is to manage its interest cost using a mix of fixed and variable rate debt and using interest rate swaps.

Page 32

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

19. Financial instruments (continued)

The Group’s exposure to interest rate risk and the effective interest rates on financial instruments at reporting date was:

30 June 2007		Consolidated	Consolidated	Consolidated
	Floating	Fixed interest maturing in:			Total
	**interest **	Less than	1 to 5	More than
	rate	1 year	years	5 years
Principal amounts $'000
Financial assets
Cash at bank	4,479	-	-	-	4,479
Short term deposits	15,582	-	-	-	15,582
Loan to associate	-	-	17,080	-	17,080
Financial liabilities
Bank debt denominated in A$	114,600	-	-		114,600
Bank debt denominated in US$	-	-	-	113,482	113,482
Cross currency swaps - receive A$ floating	(149,567)	-	-	-	(149,567)
Cross currency swaps - receive A$ fixed	-	-	(93,903)	(94,561)	(188,464)
Cross currency swaps - pay US$ fixed	-	-	196,433	39,806	236,239
Cross currency swaps - pay C$ fixed	-	-	-	41,919	41,919
Weighted average interest rates
Financial assets
Cash at bank	2.7%	-	-	-	na
Short term deposits	6.2%	-	-	-	na
Loan to associate	-	9.0%	-	-	na
Financial liabilities
Bank debt denominated in A$	6.8%	-	-	-	na
Bank debt denominated in US$	-	-	-	5.6%	na
Cross currency swaps - receive A$ floating	7.4%	-	-	-	na
Cross currency swaps - receive A$ fixed	-	-	7.0%	6.7%	na
Cross currency swaps - pay US$ fixed	-	-	5.0%	5.1%	na
Cross currency swaps - pay C$ fixed	-	-	-	5.1%	na

The other financial instruments of the Group that are not included in the above tables are non-interest bearing and are therefore not subject to interest rate risk.

Page 33

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

19. Financial instruments (continued)

The Group’s exposure to interest rate risk and the effective interest rates on financial instruments at the end of the previous financial year was:

30 June 2006		Consolidated	Consolidated	Consolidated
	Floating	Fixed interest maturing in:			Total
	**interest **	Less than	1 to 5	More than
	rate	1 year	years	5 years
Principal amounts $'000
Financial assets
Cash at bank	5,211	-	-	-	5,211
Short term deposits	46,808	-	-	-	46,808
Loan to associate	-	-	17,080	-	17,080
Financial liabilities
Bank debt denominated in A$	91,711	-	-	-	91,711
Bank debt denominated in US$	-	-	-	83,373	83,373
Cross currency swaps - receive A$ floating	(190,651)	-	-		(190,651)
Cross currency swaps - pay US$ floating	144,574	-	-	-	144,574
Interest rate swaps:
- denominated in A$; Fund pays fixed rate	(190,651)	60,473	130,178	-	-
- denominated in A$; Fund pays floating rate	(48,803)	-	48,803	-	-
Weighted average interest rates
Financial assets
Cash at bank	5.0%	-	-	-	na
Short term deposits	5.7%	-	-	-	na
Loan to associate	-	9.0%	-	-	na
Financial liabilities
Bank debt denominated in A$	6.8%	-	-	-	na
Bank debt denominated in US$	-	-	-	5.9%	na
Cross currency swaps - receive A$ floating	6.0%	-	-	-	na
Cross currency swaps - pay US$ floating	5.5%	-	-	-	na
Interest rate swaps:
- denominated in A$; Fund pays fixed rate	4.8%	4.5%	5.3%	-	na
- denominated in A$; Fund pays floating rate	5.4%	-	5.4%	-	na

(c) Credit risk

Credit risk arises from the potential failure of counterparties to meet their obligations under the relevant contract or arrangement. The Group’s maximum exposure to credit risk at reporting date in relation to each class of financial instrument is their carrying amount as reported in the balance sheet. The Group minimises credit risk by undertaking transactions with counterparties of sound credit quality.

A significant concentration of credit risk arises in relation to derivative financial instruments. The counterparty maintains a high investment grade rating.

Page 34

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

19. Financial instruments (continued)

(d) Fair values

The carrying amounts of the Group’s financial instruments approximate their fair values, except for fixed rate debt as follows:

Other debt	Consolidated 2007 2006 Fair Carrying Fair Carrying value amount value amount $'000 $'000 $'000 $'000
	111,588 113,482 83,373 83,373

20. Auditor's remuneration

Amounts received or receivable by Ernst & Young for: Audit or review of financial reports of the Fund and any other entity in the consolidated entity Other services - assurance related	Consolidated Parent entity 2007 2006 2007 2006 $ $ $ $
	215,000 73,000 195,000 73,000 106,840 10,300 106,840 10,300
	321,840 83,300 301,840 83,300

21. Related parties

(a) Responsible Entity

The Responsible Entity of the Trusts is ING Management Limited (“IML”), a member of the ING group of companies for which the ultimate holding company is ING Groep NV, a company incorporated in the Netherlands.

(b) Fees of the Responsible Entity and its related parties

ING Management Limited: Asset management fees Property acquisition fees Interest Debt establishment fee		Consolidated Parent 2007 2006 2007 2006 $ $ $ $
		916,939 - 916,939 - 4,341,563 4,563,279 4,341,563 4,563,279 - 438,243 - 438,243 - 350,000 - 350,000
		5,258,502 5,351,522 5,258,502 5,351,522

The asset management fees were calculated on the investment properties in Australia and New Zealand held by the Group for the period 1 October 2006 to 30 June 2007. Asset management fees on United States and Canadian investment properties were waived for the period 1 October 2006 to 30 June 2007. Asset management fees before 1 October 2006 were waived on all investment properties.

Page 35

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

21. Related parties (continued)

(c) Holdings of the Responsible Entity and its related parties

Holdings of the Responsible Entity and its related parties (including managed investment schemes for which a related party is the Responsible Entity) as at 30 June 2007, and distributions receivable for the year then ended, were:

Name	Number Distributions Receivable of units Consolidated Parent held 2007 2007 $ $
ING Community Property Management Pty Ltd ING Investment Management Pty Ltd ING Real Estate International Investments III BV ING Real Estate Investment Management Australia Pty Ltd ING Tax Effective Income Fund	5,104,194 546,149 546,149 - 2,322 2,322 14,590,931 1,338,811 1,338,811 8,325,500 890,829 890,829 - 124,832 124,832
	28,020,625 2,902,943 2,902,943

Holdings of those parties as at 30 June 2006, and distributions receivable for the year then ended, were:

Name	Number Distributions Receivable of units Consolidated Parent held 2006 2006 $ $
ING Community Property Management Pty Ltd ING Investment Management Pty Ltd ING Real Estate International Investments III BV ING Real Estate Investment Management Australia Pty Ltd ING Tax Effective Income Fund	5,104,194 253,168 253,168 106,152 2,633 2,633 11,202,674 879,422 879,422 8,325,500 206,472 206,472 5,731,011 476,453 476,453
	30,469,531 1,818,148 1,818,148

(d) Other transactions with the Responsible Entity and its related parties

The Group received a rental performance fee of $800,000 from the Responsible Entity.

Page 36

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

21. Related parties (continued)

(e) Key management personnel

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director of the Responsible Entity.

The names of the directors of the Responsible Entity, and their dates of appointment or resignation if they were not directors for all of the financial year, are:

Richard Colless AM	Chairman
David Blight
Philip Clark AM
Michael Easson AM
Phillip Redmond	Appointed 17 August 2006
Paul Scully
Hugh Thomson	Alternate director for David Blight
Adrian Astridge	Alternate director for David Blight

The names of other key management personnel, and their dates of appointment or resignation if they did not occupy their position for all of the financial year, are:

Ian Muir Chief Executive Officer David Hunt Chief Financial Officer

Key management personnel do not receive any remuneration directly from the Group. They receive remuneration from the Responsible Entity in their capacity as directors or employees of the Responsible Entity or its related parties. Consequently, the Group does not pay any compensation as defined in Accounting Standard AASB 124 Related Parties to its key management personnel.

Units held directly, indirectly or beneficially in the Group by each key management person, including their related parties, were:

Ian Muir Held at the beginning of the financial year Acquisitions Held at the end of the financial year Adrian Astridge Acquisitions Held at the end of the financial year Paul Scully Acquisitions Held at the end of the financial year David Hunt Acquisitions Held at the end of the financial year	2007 2006
	234,419 9,185 105,964 225,234
	340,383 234,419
	20,375 -
	20,375 -
	19,076 -
	19,076 -
	111,205 -
	111,205 -

Page 37

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

21. Related parties (continued)

Distributions received and receivable from the Group by each key management person were:

Ian Muir Adrian Astridge Paul Scully David Hunt	2007 2006 $ $
	36,421 17,734 1,749 - 1,979 - 7,247 -
	47,396 17,734

In addition to the above persons, key management personnel as defined in the Accounting Standards includes the Responsible Entity. Details of the remuneration of the Responsible Entity are given at note (b) above. Details of its holdings in the Group are given at note (c) above.

(f) Transactions with associates

The Group has a loan receivable with an associate, ING Real Estate CC Trust No.1. The loan is payable on demand and the interest rate is 9% per annum.

Loan balance at reporting date Interest accrued at reporting date Interest charged during the financial year	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
	17,080 14,980 17,080 14,980 1,716 292 1,716 292 1,716 292 1,716 292

22. Subsidiaries

(a) Names of subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1(c):

Name	Country	Ownership	interest
	of residence	2007	2006
		%	%
Subsidiaries of ING Real Estate
Community Living Fund:
Bridge Street Trust	Australia	100	100
Browns Plains Road Trust	Australia	100	100
Casuarina Road Trust	Australia	100	100
Edinburgh Drive Trust	Australia	100	100
ING Community Living Subsidiary Trust No. 1	Australia	100	100
ING Community Living Subsidiary Trust No. 2	Australia	100	100
ING Kiwi Communities Subsidiary Trust No. 1	Australia	100	100
ING Sunny Trust	Australia	100	100
Jefferis Street Trust	Australia	100	100
Lovett Street Trust	Australia	100	100
SunnyCove Gladstone Unit Trust	Australia	100	100
SunnyCove Rockhampton Unit Trust	Australia	100	100

Page 38

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

22. Subsidiaries (continued)

22. Subsidiaries (continued)
Name	Country	Ownership	interest
	of residence	2007	2006
		%	%
Taylor Street (1) Trust	Australia	100	100
Taylor Street (2) Trust	Australia	100	100
ING Community Living LLC	United States of America	100	100
ING US Community Living Fund Inc	United States of America	100	100
ING US Students No. 1, LLC	United States of America	100	100
ING US Students No. 2, LLC	United States of America	100	100
ING US Students No. 3, LLC	United States of America	100	100
ING US Students No. 4, LLC	United States of America	100	100
ING US Students No. 5, LLC	United States of America	100	100
ING US Students No. 6, LLC	United States of America	100	100
ING US Students No. 7, LLC	United States of America	100	100
ING US Students No. 8, LLC	United States of America	100	100
ING US Students No. 9, LLC	United States of America	100	100
ING US Students No. 10, LLC	United States of America	100	100
ING US Students No. 11, LLC	United States of America	100	100
ING US Students No. 12, LLC	United States of America	100	100
ING US Students No. 13, LLC	United States of America	100	100
ING US Students No. 14, LLC	United States of America	100	100
Settlers Co Pty Limited	Australia	100	-
Settlers Subsidiary Trust	Australia	100	-
ING Community Living Oak Tree Pty Limited	Australia	100	-
ING Community Living Oak Tree Subsidiary
Trust No.1	Australia	100	-
ILF Regency Co Pty Limited	Australia	100	-
ILF Regency Subsidiary Trust	Australia	100	-
Subsidiaries of ING Real Estate
Community Living Management Trust:
ING Settlers Management Pty Limited	Australia	100	-
ING Settlers Operations Trust	Australia	100	-
ING Community Living Oak Tree Subsidiary
Trust No.2	Australia	100	-
ING Regency Operations Trust	Australia	100	-

The Group’s voting interest in its subsidiaries is the same as its ownership interest.

(b) Acquisition of business

On 27 April 2007 the Group acquired the Settlers retirement villages (“Settlers”) located at:

(a) 5 Martens Street Mount Warren park, QLD;

(b) Ridgewood Blvd & Whitsunday Avenue, Ridgewood, WA;

(c) Lot 601 Old Mandurah Road, Ravenswood, WA; and

(d) 21 & 43 Oakmont Avenue, Meadow Springs, WA.

Page 39

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

22. Subsidiaries (continued)

The fair value of the assets and liabilities arising from the acquisition were:

Cash Property investments Retirement village residents' loans Payables Net assets	Fair values $'000
	3,244 139,179 (82,157) (7,056)
	53,210

The purchase consideration compares to net assets acquired as follows:

Purchase consideration: Cash paid Cash included in net assets Outflow of cash	$'000
	53,210 (3,244)
	49,966

The acquisition of Settlers contributed $900,000 to the net profit attributable to unitholders of the Group for the financial year. The impact of Settlers had it been held for the full financial year has not been disclosed as it would be impractical to determine.

(c) Acquisition of subsidiaries – 2006 financial year

On 20 February 2006 the Group acquired all of the units of SunnyCove Gladstone Unit Trust (“Gladstone”). At the date of acquisition, Gladstone owned land with buildings under construction. Gladstone did not contribute to revenue or profit of the Group for the 2006 financial year as the assets remained under construction at 30 June 2006.

The fair values of the assets and liabilities arising from the acquisition, and their carrying amounts in the financial statements of Gladstone immediately prior to the acquisition were:

Property investments	Fair Carrying values amounts $'000 $'000
	2,951 2,951

The purchase consideration, including acquisition costs, was $2,951,000.

On 30 June 2006 the Group acquired all of the units of SunnyCove Rockhampton Unit Trust (“Rockhampton”). At the date of acquisition, Rockhampton owned land with buildings under construction. Rockhampton did not contribute to revenue or profit of the Group for the 2006 financial year as the assets remained under construction at 30 June 2006.

The fair values of the assets and liabilities arising from the acquisition, and their carrying amounts in the financial statements of Rockhampton immediately prior to the acquisition were:

Property investments	Fair Carrying values amounts $'000 $'000
	1,325 1,325

The purchase consideration, including acquisition costs, was $1,325,000.

Page 40

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

23. Segment information

(a) Description of segments

The Group operates in the one business segment, investment in real estate utilised as social infrastructure, in three geographical areas, Australia, North America and New Zealand.

(b) Segment accounting policies

Segment accounting policies are the same as the Group’s policies described in note 1. During the financial year, there were no changes in segment policies that had a material effect on segment information.

(c) Primary reporting format - geographical segments

Year ended 30 June 2007 Segment revenue Rental income Deferred management fee Other property income Total segment revenue Interest income Total consolidated revenue Segment result Segment result Share of associates' net profit Interest income Gain on change in fair value of derivatives Finance costs Other expenses Consolidated profit before income tax Segment assets Unallocated Consolidated assets Segment liabilities Unallocated Consolidated liabilities Other segment information Acquisition of investment properties and other non-current assets Carrying amount of investment in associates	Australia North America New Zealand Total $'000 $'000 $'000 $'000	Australia North America New Zealand Total $'000 $'000 $'000 $'000
	15,845 22,313 - 481 - - 21 - -	38,158 481 21
	16,347 22,313 -	38,660 2,590
	14,736 12,308 - (208) 79,180 312
		41,250
		27,044 79,284
	14,528 91,488 312	106,328 2,590 28,882 (13,347) (1,324)
	371,718 489,010 11,925
		123,129
		872,653 38,774
	121,422 47,385 -
		911,427
		168,807 219,519
	151,808 90,299 - 12,180 297,077 11,925
		388,326
		242,107 321,182

Page 41

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

23. Segment information (continued)

Year ended 30 June 2006 Segment revenue Rental income Other property income Total segment revenue Interest income Total consolidated revenue Segment result Segment result Share of associates' net profit Interest income Finance costs Loss on change in fair value of derivatives Net foreign exchange loss Other expenses Consolidated profit before income tax Segment assets Unallocated Consolidated assets Segment liabilities Unallocated Consolidated liabilities Other segment information Acquisition of investment properties and other non-current assets Carrying amount of investment in associates	Australia North America New Zealand Total $'000 $'000 $'000 $'000	Australia North America New Zealand Total $'000 $'000 $'000 $'000
	9,209 1,689 - 139 - -	10,898 139
	9,348 1,689 -	11,037 1,366
	9,842 4,768 - 219 37,343 120
		12,403
		14,610 37,682
	10,061 42,111 120	52,292 1,366 (5,362) (761) (82) (464)
	202,551 283,530 9,772
		46,989
		495,853 54,288
	20,765 6,719 -
		550,141
		27,484 180,067
	49,579 127,605 - 6,345 155,925 9,772
		207,551
		177,184 172,042

Page 42

ING Real Estate Community Living Group Notes to the financial statements Year ended 30 June 2007

24. Notes to the cash flow statements

(a) Reconciliation of profit to net cash flows from operations

Adjustments for: Loss/(gain) on change in fair value of: Investment properties Derivatives Excess of share of profits of associates over distributions received Loss on change in fair value of derivatives Borrowing costs amortisation returned Unrealised foreign exchange loss Deferred income tax expense Operating profit for the year before changes in working capital Changes in working capital: (Increase)/decrease in receivables Increase/(decrease) in payables Increase/(decrease) in interest payable Net cash used by operating activities Net profit for the year (b) Non-cash financing and investing activities Re-investment of distributions pursuant to Distribution Investment Plan	Adjustments for: Loss/(gain) on change in fair value of: Investment properties Derivatives Excess of share of profits of associates over distributions received Loss on change in fair value of derivatives Borrowing costs amortisation returned Unrealised foreign exchange loss Deferred income tax expense Operating profit for the year before changes in working capital Changes in working capital: (Increase)/decrease in receivables Increase/(decrease) in payables Increase/(decrease) in interest payable Net cash used by operating activities Net profit for the year (b) Non-cash financing and investing activities Re-investment of distributions pursuant to Distribution Investment Plan	Consolidated Parent 2007 2006 2007 2006 $'000 $'000 $'000 $'000
		86,798 40,270 59,723 12,023 1,217 (4,447) 1,335 (494) (28,882) - (28,882) - (73,281) (31,013) - - - 1,956 - 1,956 555 811 498 811 163 - 163 - 36,331 6,719 - -
		22,901 14,296 32,837 14,296 (4,333) (5,463) 631 (2,685) 4,863 125 254 125 1,037 - 492 -
		24,468 8,958 34,214 11,736
		Consolidated Parent entity 2007 2006 2007 2006 $'000 $'000 $'000 $'000 12,274 3,036 12,274 3,036

Page 43

ING Real Estate Community Living Group Directors’ declaration Year ended 30 June 2007

In accordance with a resolution of the directors of ING Management Limited, I state that:

1. In the opinion of the directors:

2. (a) the financial statements and notes of ING Real Estate Community Living Fund are in accordance with the Corporations Act 2001, including:

   • (i) giving a true and fair view of their financial position as at 30 June 2007 and of their performance for the year ended on that date; and

   • (ii) complying with Accounting Standards and Corporations Regulations 2001; and

3. (b) there are reasonable grounds to believe that ING Real Estate Community Living Fund will be able to pay its debts as and when they become due and payable.

4. This declaration has been made after receiving the declarations required to be made by the chief executive officer and chief financial officer to the directors in accordance with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2007.

On behalf of the directors

==> picture [105 x 41] intentionally omitted <==

Hugh Thomson Director Sydney, 19 September 2007

==> picture [594 x 60] intentionally omitted <==

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Independent auditor’s report to the unitholders of ING Real Estate Community Living Fund

We have audited the accompanying financial report of ING Real Estate Community Living Fund (the Fund) which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in unitholders interest and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration of the consolidated entity (the Group). The consolidated entity comprises of ING Real Estate Community Living Fund and the entities it controlled, at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of ING Management Limited as Responsible Entity of the Fund are responsible for the preparation and fair presentation of the financial report in accordance with the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1 (b), the directors also state that the financial report, comprising the consolidated financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Liability limited by a scheme approved under Professional Standards Legislation.

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Independence

In conducting our audit we have met the independence requirements of the Corporations Act 2001 . We have given to the directors of the Responsible Entity a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report. In addition to our audit of the financial report, we were engaged to undertake the services disclosed in the notes to the financial statements. The provision of these services has not impaired our independence.

Auditor’s Opinion

In our opinion:

1. the financial report of of ING Real Estate Community Living Fund is in accordance with:

2. (a) the Corporations Act 2001 , including:

3. (i) giving a true and fair view of the financial position of ING Real Estate Community Living Fund and the consolidated entity at 30 June 2007 and of their performance for the year ended on that date; and

4. (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations).

5. the consolidated financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1(b).

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Ernst & Young

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Douglas Bain Partner Sydney

19 September 2007