MIRVAC GROUP — M&A Activity 2009

Oct 11, 2009

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12 October 2009

ASX ANNOUNCEMENT

MIRVAC REAL ESTATE INVESTMENT TRUST ANNOUNCES RECOMMENDED OFFER FROM MIRVAC

Offer highlights

• Mirvac Real Estate Investment Trust (ASX:MRZ) to merge with Mirvac (ASX:MGR) via a trust scheme of arrangement, subject to MRZ Unitholder approval

• Mirvac is offering MRZ Unitholders consideration of either:

• $0.50 per MRZ Unit up to 20,000 MRZ Units, plus 1 Merged Mirvac Security for every 3 MRZ Units in excess of 20,000 MRZ Units; OR

• 1 Merged Mirvac Security for every 3 MRZ Units, equating to an implied value of $0.54 per MRZ Unit[1]

• MRZ Unitholders entitled to a one-off special distribution of 1.00 cent per MRZ Unit

• Based on an implied value of $0.54 per MRZ Unit[1] , the consideration offers a 56.0 per cent premium to the 1 month VWAP of MRZ Units of $0.35 up to 12 August 2009, the day prior to Mirvac announcing that it had held preliminary discussions with MRZ in relation to a potential offer

• Merged entity provides MRZ Unitholders with considerable benefits: o Improved gearing, including considerable headroom to debt covenants; o Improved cost of capital and financial flexibility;

• Enhanced growth profile;

• Enhanced liquidity;

• Broader geographic, asset and business diversification;

• Increased market capitalisation; and

• Inclusion in key property indices

• Independent Directors recommend the offer, in the absence of a superior offer

• Independent Expert’s opinion is that the offer is in the best interests of MRZ Unitholders, in the absence of a superior proposal

Mirvac REIT Management Limited (MRML), the responsible entity of Mirvac Real Estate Investment Trust (MRZ), today announced that it has entered into a Merger Implementation Deed with Mirvac Group (Mirvac) in relation to a recommended merger between Mirvac and MRZ. Under the offer, MRZ

1 Based on Mirvac’s 1 month VWAP of $1.63 to close of business on 9 October 2009.

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Unitholders will receive consideration of either $0.50 cash per MRZ Unit up to 20,000 MRZ Units, plus 1 Merged Mirvac Security for every 3 MRZ Units in excess of 20,000 MRZ Units (Cash and Scrip Option) or 1 Merged Mirvac Security for every 3 MRZ Units held on 2 December 2009 (Scrip Option).

Based on the 1 month VWAP of Mirvac Securities of $1.63 on 9 October 2009, the trading day prior to announcement, the scrip component of the Scheme Consideration represents an implied value of $0.54 per MRZ Unit. This represents a premium of:

• 39.2 per cent to the closing price of MRZ Units of $0.39 on 12 August 2009[2] ;

• 56.0 per cent to the 1 Month VWAP of MRZ Units of $0.35 to 12 August 2009[2] ; and

• 60.6 per cent to the 3 Month VWAP of MRZ Units of $0.34 to 12 August 2009[2] .

If MRZ Unitholders approve the trust scheme, MRZ Unitholders who receive Merged Mirvac Securities will benefit from improved gearing and considerable headroom to debt covenants, improved cost of capital and financial flexibility, enhanced growth profile and liquidity, broader geographic, asset and business diversification, an increased market capitalisation and inclusion in key property indices.

If approved by MRZ Unitholders, the transaction will be effected via a trust scheme of arrangement under which all Units in MRZ will be transferred to Mirvac. MRZ will become a wholly owned sub-trust of Mirvac Property Trust.

Distribution entitlement

MRZ’s distribution for the year ending 30 June 2010 is expected to be 3.20 cents per MRZ Unit. Provided the offer is implemented, MRZ Unitholders who receive Merged Mirvac Securities will be entitled to receive distributions from Mirvac, including the distribution for the three months to 31 December 2009, provided they are the registered holder of Merged Mirvac Securities on the distribution record date. Mirvac has provided a distribution forecast range of 8.00 – 9.00 cents per Merged Mirvac Security for the year ending 30 June 2010. The total forecast distributions from Merged Mirvac per equivalent MRZ Unit for the period to 30 June 2010 is 2.33 cents per Merged Mirvac Security[3] .

In addition, MRZ Unitholders will receive a special distribution of 1.00 cent per MRZ Unit if the offer proceeds. Therefore, total distributions to MRZ Unitholders participating in the offer are forecast to be 3.33 cents per unit for the year ending 30 June 2010, representing a 4.1 per cent increase on the MRZ stand alone guidance of 3.20 cents per unit[3] .

2 The day prior to Mirvac’s announcement of preliminary discussions with MRZ in relation to a potential merger.

3 Based on the high-end of the Merged Mirvac forecast distribution range of 9.0 cents per Merged Mirvac Security.

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Independent Directors’ recommendation

Given the interests of Mirvac in the offer, a sub-committee comprised solely of Independent Directors of MRML was established to consider the offer (Independent Directors Committee).

The Independent Directors Committee believes that the offer is in the best interests of MRZ Unitholders and recommends that MRZ Unitholders vote in favour of the resolutions, in the absence of a superior offer.

Independent Expert

The Independent Directors Committee appointed Deloitte Corporate Finance Pty Limited as independent expert to advise whether, in their opinion, the offer is in the best interests of MRZ Unitholders.

The Independent Expert’s conclusion is that the Proposal is not fair but reasonable and is in the best interests of MRZ Unitholders, in the absence of a superior proposal.

The Independent Expert has interpreted ASIC Regulatory Guide 111 to mean that in assessing fairness the expert should not have regard to any entity specific or structural issues such as excess gearing which may temporarily impair an entity’s ability to realise full fair market value for its assets which may be reflected in the market price of its securities. Instead, an orderly market should be assumed for the underlying assets.

However, in its assessment of whether the Proposal is reasonable and in the best interests of MRZ Unitholders, the Independent Expert was able to have regard to MRZ’s current circumstances including short term debt maturities, potential covenant breaches and capital constraints which would likely adversely impact the value realisable by MRZ Unitholders on a stand alone basis.

The full Independent Expert’s opinion and report will be contained in the Explanatory Memorandum.

Discussion of offer

MRML Independent Director and Chairman, Paul Barker said today, “Having considered a number of alternatives to maximise Unitholder value, we believe Mirvac's offer is attractive and provides certainty for MRZ Unitholders.”

“The implied value of the scrip component of the Scheme Consideration of $0.54 represents value for Unitholders, being a 56.0 per cent premium to the one month VWAP of $0.35, up to 12 August 2009, the day prior to Mirvac’s announcement of preliminary discussions with MRZ. The offer also allows MRZ Unitholders the opportunity to retain an interest in MRZ’s underlying assets and operations.”

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Mr Garry Wilcox, Director, Mirvac Real Estate Investment Trust said, “The Trust’s portfolio is expected to see a further softening in capitalisation rates which will continue to put pressure on the debt covenants. Operating earnings for the year ending 30 June 2011 are also likely to come under further pressure with the full impact of the vacancy at the Bond Street asset and the likelihood of increased costs associated with the debt refinancing due to occur in September 2010. We believe that the proposed merger with Mirvac, with its strong debt profile, lower cost of capital and increased liquidity, provides the best opportunity to realise value from the MRZ portfolio into the future.”

Nick Collishaw, Mirvac Managing Director, added, “We are pleased to offer this opportunity for MRZ Unitholders to become part of the Mirvac growth story. We believe that the merger provides a strong opportunity for MRZ Unitholders to diversify their property exposure through joining a leading Australian integrated real estate group underpinned by one of the lowest geared balance sheets in the AREIT sector.”

“This transaction would see Mirvac’s income producing assets increase to $4.6 billion, affording Merged Mirvac Unitholders a stronger, more diverse property portfolio, providing stable recurring rental income, with balance sheet gearing of 22.9 per cent,” Mr Collishaw added.

Explanatory Memorandum and Unitholders’ meeting

The offer is subject to approval at a meeting of MRZ Unitholders. It is expected that the notice of meeting and the accompanying Explanatory Memorandum including the Independent Expert report will be sent to Unitholders on 30 October 2009, and that the Unitholders’ meeting will be held on 25 November 2009. If the offer is approved it is expected that it will be implemented on 7 December 2009.

A summary of the key conditions of the Merger Implementation Deed are included in the Appendix. A full summary of the Merger Implementation Deed will be included in the Explanatory Memorandum.

Offer consideration

Mirvac will offer MRZ Unitholders a Cash and Scrip Option under which they receive a guaranteed $0.50 in cash per MRZ Unit up to 20,000 MRZ Units. The Cash and Scrip Option will be offered under the following terms:

• available to all registered MRZ Unitholders;

• the Cash and Scrip Option will guarantee that each participant receives cash in respect of 20,000 MRZ Units and the balance, if any, in Merged Mirvac Securities.

Alternatively MRZ Unitholders can also elect to receive the Scrip Option.

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MRZ Unitholders who do not submit an election to participate in the Scrip Option will automatically receive the Cash and Scrip Option.

Full details of the offer consideration will be available in the Explanatory Memorandum.

Sale Facility

Mirvac is offering MRZ Unitholders who wish to sell their Merged Mirvac Securities the opportunity to enter the Sale Facility either by:

• electing the Scrip Option and then further electing to sell their Merged Mirvac Securities via the sale Facility; or

• participating in the Cash and Scrip Option and then electing to sell any Merged Mirvac Securities received in the Sale Facility.

Under the Sale Facility, MRZ Unitholders will receive a cash amount for their entitlement to Merged Mirvac Securities which are validly accepted into the Sale Facility. The Sale Facility does not guarantee a fixed cash amount and the price achieved under the Sale Facility may be higher or lower than the price under the cash component of the Cash and Scrip Option.

The cash amount to be received as a result of participating in the Sale Facility will be determined by reference to the sale proceeds of Merged Mirvac Securities, through the sale brokers on the ASX or by institutional bookbuild.

Full details of the Sale Facility will be available in the Explanatory Memorandum.

Foreign Unitholders

If the merger is approved, MRZ Unitholders who, on the Record Date (expected to be 2 December 2009), have a registered address which is outside Australia and New Zealand and their respective external territories, will be a Foreign Unitholder for the purposes of the trust scheme of arrangement.

Foreign Unitholders will not be issued with Merged Mirvac Securities under the trust scheme of arrangement. To the extent any Merged Mirvac Securities would have been issued to a Foreign Unitholder, these will be sold by Mirvac under the Sale Facility and the cash proceeds will be paid to the relevant Foreign Unitholder.

Further details regarding Foreign Unitholders will be available in the Explanatory Memorandum.

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Indicative timetable

Transaction announcement 12 October 2009 Explanatory memorandum available 30 October 2009 MRZ scheme meeting 25 November 2009 Record date for determining entitlements to Scheme Consideration and special distribution 2 December 2009 Implementation date 7 December 2009

Put and call option on Furzer Street, Woden

A put and call option agreement has been entered into between MRZ and Mirvac for the sale of the Furzer Street asset (DOHA building). The exercise price of the option agreement is $208.75 million. The put and call option may only be exercised if the Mirvac merger offer is not successful and if such sale is approved by MRZ Unitholders at a subsequent meeting.

Further details on the put and call option will be available in the Explanatory Memorandum.

BG Capital Corporation and Citi are acting as MRZ’s financial advisers for the proposed merger.

MRZ Unitholders who have questions before the Explanatory Memorandum is available, are invited to contact the MRZ Information line on 1800 606 449 (within Australia) and for callers outside Australia: +61 2 8256 3382.

A market briefing by MRZ and Mirvac will be presented today, 12 October 2009 at [10.15am] EST

Dial in details

Conference ID: 35129372 Australia dial in: 1800 148 258 International dial in: +61 2 8524 6650

For more information, please contact:

MRZ Unitholder Enquiries: MRZ Information Line

1800 606 449 (within Australia) +61 2 8256 3382 (outside Australia)

Garry Wilcox

Director, Mirvac Real Estate Investment Trust Mirvac Investment Management +61 2 9080 8241

Media:

Jane O’Connor Marketing & Communications Manager Mirvac Investment Management +61 2 9080 8241

Andrew Butler

Director, Listed and Unlisted Funds Mirvac Investment Management +61 2 9080 8241

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APPENDIX– SUMMARY OF MERGER IMPLEMENTATION DEED

The following is a summary of the key provisions of the Merger Implementation Deed.

The Merger Implementation Deed provides that the Mirvac offer will be implemented by way of a Scheme.

Conditions Precedent

The obligations of MRZ and Mirvac to implement the Scheme under the Merger Implementation Deed are conditional on the satisfaction or waiver of certain conditions including:

• Independent Expert Report: the Independent Expert's Report concludes that the Scheme is in the best interests of MRZ Unitholders;

• MRZ Unitholders approval: MRZ Unitholders approve the Resolutions at the Meeting;

• no MRZ material adverse change: no matters, events or circumstances occur or are announced which, taken together, have, or could reasonably be expected to have, diminished the EBITDA of MRZ by more than $5.0 million or the NTA of MRZ by more than $25.0 million;

• no Mirvac material adverse change: no matters, events or circumstances occur or are announced which, taken together, have, or could reasonably be expected to have, diminished the EBITDA of Mirvac by more than $18.1 million or the NTA of Mirvac by more than $243.6 million; and

• no MRZ or Mirvac prescribed occurrence: no occurrence of an event prescribed in the Merger Implementation Deed (including a capital reorganisation, amendment of constitution, issue of securities and insolvency event) in relation to MRZ or Mirvac;

If a condition is not satisfied or waived, the parties will consult in good faith to determine whether the offer may proceed by way of alternative means or methods and may agree to (but shall not be obliged to) extend the relevant dates for satisfaction of the conditions.

MRZ's or Mirvac obligations

Under the Merger Implementation Deed, MRZ and Mirvac are under a general obligation to use their best endeavours to give effect to the Scheme.

Termination

The Merger Implementation Deed may be terminated prior to commencement of the Meeting if:

• the conditions cannot be satisfied by the time required under the Merger Implementation Deed and have not previously been waived;

• a party is in material breach of a material term of the Merger Implementation Deed and such breach is not remedied within five (5) Business Days after that party is given notice of the breach; or

• the Independent Directors change their recommendation.

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