DB RREEF Funds Management Limited 26 September 2006 ABN 24 060 920 783 Australian Financial Services Licence Holder Level 9 343 George Street Sydney NSW 2000

The Manager PO Box R1822 Australian Stock Exchange Limited Royal Exchange NSW 1225 20 Bridge Street Telephone 61 2 9017 1100 Sydney NSW 2000 Direct 61 2 9017 1136 Facsimile 61 2 9017 1132

Email: [email protected] Dear Sir / Madam

DB RREEF Trust (ASX: DRT) – Annual Report 2006

DB RREEF Funds Management Limited, as responsible entity for DB RREEF Trust (DRT), confirms the lodgement of the following documents with the Australian Stock Exchange today:

• DB RREEF Trust Annual Report 2006

For further information, please contact

• DRT Fund Manager: Tony Dixon (02) 9017 1136

• Investor Relations: Karol O’Reilly (03) 8611 2930

Yours sincerely

Tanya Cox Company Secretary

DB RREEF Trust annual report 2006 contents

key financial data and results summary 2 highlights 3 letter from the chair 4 chief executive officer’s report 6 DB RREEF Trust overview 12 commercial portfolio – australasia 20 industrial portfolio – australia 22 retail portfolio – australia 24 industrial portfolio – united states 26 third party funds under management 28 sustainability report 30 corporate governance statement 35 directors 42 executive committee 44 management team 45 financial reports 46 registry information 118 investor information 119 directory

Capitalising on global strength

FRONT COVER AND ABOVE: Governor Phillip Tower and Governor Macquarie Tower Office Complex, 1 Farrer Place, Sydney NSW (Photos provided by Hamilton Lund of Visual Eyes International)

DB RREEF Trust (ASX: DRT) comprising DB RREEF Diversified Trust ARSN 089 324 541 (DDF), DB RREEF Industrial Trust ARSN 090 879 137 (DIT), DB RREEF Office Trust ARSN 090 768 531 (DOT) and DB RREEF Operations Trust ARSN 110 521 223 (DRO). Also referred to in this annual report as “DB RREEF”, “the Trust”, “or “the Trusts”. “DAL” means Deutsche Australia Limited. The DB RREEF group “the Group” refers to the business as a whole and includes the Responsible Entity of each of the Trusts, DB RREEF Funds Management Limited ABN 24 060 920 783. EM or Explanatory Memorandum means Explanatory Memorandum and Product Disclosure Statement dated 30 August 2004 DB refers to Deutsche Bank AG. All amounts are in Australian dollars unless otherwise stated. key financial data and results summary

30 June 2006 Security price Highest $1.55 Low $1.30 Closing price $1.46 Number of securities on issue 2.802 billion Number of security holders 25,925 Net tangible assets per security (NTA) $1.53 Total assets $8.3 billion Market capitalisation $4.1 billion Distributions (cents per security) December 2005 5.45 cents June 2006 5.55 cents Total 11.00 cents Tax-deferred percentage 51 percent Distributions $306.3 million Borrowings $3.2 billion Gearing as percent of total assets (net of cash) 38.3 percent Average duration of interest hedges 6.5 years Number of property investments 178 Portfolio occupancy rate 96.1 percent Portfolio average lease duration 5.3 years Third party funds under management $3.95 billion Total funds under management $11.8 billion

Pound Road West, Dandenong VIC

 DB RREEF Trust Annual Report 2006 highlights

Distribution to security holders

$306.3million up 8.9 percent 05 06

n Total property income $659.7 million n Distribution per security of 11 cents – up 4.8 percent n Total assets $8.3 billion – up 18.6 percent n Total security holders’ equity $4.7 billion – up 21.9 percent n NTA per security $1.53 – up 19.5 percent n High quality portfolio with strong fundamentals n Crystallising value offshore – through RREEF n Strong balance sheet

n gearing 38.3 percent

n S&P credit rating BBB+

DB RREEF Trust Annual Report 2006  letter from the chair

Governor Phillip Tower and Governor Macquarie Tower Office Complex, 1 Farrer Place, Sydney NSW (Photo provided by Hamilton Lund of Visual Eyes International)

 DB RREEF Trust Annual Report 2006 dear investor

I am pleased to present the second Annual Report for DB RREEF Trust (DB RREEF) for the year ended 30 June 2006. This year DB RREEF delivered on the objectives outlined in the Explanatory Memorandum and Product Disclosure Statement dated 30 August 2004 (EM), enhancing security holder value through the creation of a major diversified property group. The key highlights for the year were:

n delivering on the EM distribution forecast;

n consolidating DB RREEF’s strong property portfolio;

n developing a global capability through a strategic relationship with RREEF; and

n further expanding the global industrial portfolio through selective international acquisitions. The strength of DB RREEF’s property portfolio continued to improve over the year. DB RREEF has been actively managing the portfolio, increasing occupancy, expanding lease durations and also creating substantial development opportunities both in Australia and internationally. The DB RREEF group (the Group) is now one of Australia's largest property fund managers, with total funds under management as at 30 June 2006 of approximately $11.8 billion. The property portfolio comprises assets in Australia, New Zealand and the United States. Through our strategic relationship with RREEF, we have acquired properties in the US, France and recently announced the $600 million Whirlpool Investment Program in the US, Canada and Poland. On behalf of the Board, I would like to express our committment to the continuing growth and development of DB RREEF, and thank you for your support over the past 12 months. Yours sincerely

Christopher T Beare Chair 15 September 2006

DB RREEF Trust Annual Report 2006  chief executive officer’s report

The Zenith, 821–843 Pacific Highway, Chatswood NSW

 DB RREEF Trust Annual Report 2006 I am pleased to present DB RREEF’s results for the year to 30 June 2006 which clearly demonstrate that we have delivered against the objectives outlined in the Explanatory Memorandum and Product Disclosure Statement dated 30 August 2004 (EM).

Our clear goal has been and continues to be to enhance financial results security holder value by creating a major, diversified property group – we are now doing this. Distributions for the six months ended 30 June 2006 of 5.55 cents per stapled security were paid on 29 August 2006. It has been a strong year for DB RREEF, with performance This brings the total distributions for the year to 11 cents per reflecting the consolidation of DB RREEF’s domestic portfolio, stapled security or $306.3 million, of which 51 percent significant success in increasing the portfolio’s occupancy represents tax advantaged income. and lengthening lease durations whilst growing net lettable area through our development program. Net profit for the year was $1,066 million, including a $686.5 million revaluation of investments and a Internationally, we have expanded DB RREEF’s portfolio $76.2 million unrealised gain on financial instruments through recent acquisitions in the US, France, and (and foreign exchange). Total property income was developments currently under construction in Florida and $659.7 million, representing a 29.7 percent increase Dulles, Northern Virginia. More recently we announced the on the previous 12 months’ property income. $600 million Whirlpool investment program in the US, Canada and Poland. These industrial opportunities have been Total revenue from the funds management business for the facilitated through our global strategic partner, RREEF. year was $57.8 million and DB RREEF’s 50 percent interest in the net profit after tax at the DB RREEF Holdings Pty Nationally and internationally, all key indicators have improved. Limited level was $9.9 million. The average lease duration is up, as are the occupancy levels for properties in each sector. DB RREEF has more than Total assets at 30 June 2006 were $8,288 million, an 300,000 square metres of new space currently under increase of 18.6 percent over last year. Net tangible assets development, providing us with a substantial pipeline of (NTA) per stapled security are $1.53, which is an increase new lettable area into the future. of 25 cents per security or 19.5 percent since 30 June 2005. The key financial results are summarised in the table below: the Group at a glance 30 June 2006 30 June 20051 Year ended Year ended Total income ($ million) 1,463 810 30 June 2006 30 June 2005 EBIT ($ million) 1,250 605 Funds under management ($ billion) 11.80 10.30 Profit after tax ($ million) 1,066 467 Portfolio value ($ billion) 8.0 6.80 Net profit attributable to security holders ($ million) 1,010 396 Occupancy (%) 96.1 93.1 Portfolio value ($ million) 7,995 6,597 Development pipeline ($ billion) 1.30 0.90 NTA per security ($) 1.53 1.28 Area leased during year (square metres) 730,000 470,000 Gearing ratio (%) 38.3 39.0 Distribution ($ million) 306 281 Distribution (cents/unit) 11.0 10.5

1 The results reflect the performance of the parent DDF from 1 July 2004 and the addition of DIT, DOT and DRO from the date of consolidation, being 1 October 2004.

DB RREEF Trust Annual Report 2006  chief executive officer’s report (continued)

capital management portfolio performance – Australia DB RREEF continues to maintain a strong balance sheet. This is supported by the assignment of a Standard & Poor’s commercial portfolio long-term corporate credit rating of BBB+, with positive Net income from the commercial portfolio increased to outlook. The release of the rating will aid DB RREEF’s $222.3 million (9.5 percent) over the corresponding period continued commitment to achieve funding flexibility and to June 2005. The commercial portfolio was valued at capacity for active capital management. $3.59 billion providing an increase in value of 9.1 percent DB RREEF’s overall level of debt is $3.2 billion, which ($307 million) over book value. represents a level of gearing of 38.3 percent, as measured by New leases, lease renewals and heads of agreement interest bearing debt (net of cash) to total assets (net of cash). accounting for more than 62,000 square metres, or The duration of DB RREEF’s overall debt portfolio is 11.8 percent of the commercial portfolio area, were secured. approximately three years, close to 90 percent of the debt is The commercial portfolio’s overall occupancy has increased hedged with a hedge duration of approximately seven years. to 98 percent from 93.6 percent with its average lease term The weighted average cost of debt for DB RREEF was to expiry by income increasing to 6.3 years, compared to 5.71 percent, inclusive of margins and fees. 5.9 years as at 30 June 2005. Subsequent to balance date, DB RREEF successfully DB RREEF completed a number of key refurbishments, completed a $250 million issue of medium term notes resulting in significant leasing success. In addition, significant (MTNs) into the domestic debt capital market. progress has been made with major commercial developments This transaction was DB RREEF’s first entrée into the MTN at 105 Phillip Street, Parramatta NSW, Bent Street, Sydney market and further diversifies DB RREEF’s capital sources. NSW and Charlotte Street, Brisbane QLD. When completed, these developments will add more than 103,000 square metres of commercial space to DB RREEF’s portfolio with equity an estimated completion value in excess of $900 million The average take up of DB RREEF’s Distribution over the next five to 10 years. Reinvestment Plan (DRP) for the year was 40 percent or $121 million, which resulted in the issue of approximately industrial portfolio 85 million securities. Securities issued in the December 2005 Net income from the Australian industrial portfolio increased DRP were issued at $1.3477 per stapled security and for to $110 million over the 12 months to 30 June 2006 June 2006 will be issued at $1.4746 per stapled security. (5.2 percent). The industrial portfolio was valued at $1.56 billion providing an increase in value of $134 million (9.2 percent) over book value. New leases, lease renewals and heads of agreement, accounting for more than 213,000 square metres or 18.4 percent of the industrial portfolio area were secured. The industrial portfolio’s overall occupancy increased from 98 percent to 99 percent, with the average lease term to expiry, by income at 4.8 years.

 DB RREEF Trust Annual Report 2006 45 Clarence Street, Sydney NSW

DB RREEF completed nine developments (with eight tenant portfolio performance – international pre-commitments) of approximately 49,002 square metres for a total cost of approximately $82.1 million. DB RREEF US industrial portfolio has three developments currently underway for approximately 108,000 square metres with an estimated cost of $133 million Net income from the US industrial portfolio increased by and an overall forecast yield on completion of approximately 2.3 percent to US$85.8 million (A$114.7 million) compared eight percent. to the corresponding 12 month period to June 2005. The US industrial portfolio was valued at A$1.46 billion providing an DB RREEF also completed a key acquisition of 65 hectares increase in value of 11 percent (A$168 million) over the of vacant land, adjacent to its existing industrial estate at book value. Laverton, for $32 million. This acquisition provides a strategic extension to the industrial estate and will enable DB RREEF to Leasing activity in the US industrial portfolio has remained leverage off the infrastructure already developed at Laverton. strong with new leases, lease renewals and heads of agreement accounting for more than 4.6 million square feet retail portfolio or 23 percent of the US industrial portfolio by area. The US industrial portfolio’s occupancy improved to finish the year at Net income from the retail portfolio increased to $54.8 million 92.5 percent, compared to 88.5 percent as at 30 June 2005. (26.3 percent) over the corresponding 12 month period to The US industrial portfolio’s average lease term to expiry, by June 2005. The retail portfolio was valued at $915 million income, is 3.5 years and compares favourably to 3.4 years providing an increase in value of 8.9 percent ($77 million) at 30 June 2005. over book value. The US joint venture with Calwest exercised its options to Following the completion of the West Lakes and Mt Druitt acquire five additional development land sites for a total cost developments, planning for the expansion of Plenty Valley $US22 million (A$27.3 million). The development of two of VIC and North Lakes QLD is on schedule for each project these properties, Turnpike Distribution Centre, Medley Florida to commence this financial year. Plenty Valley will see the and Dulles Town Crossing, Stirling, Northern Virginia has addition of approximately 40,000 square metres at an commenced for a total cost of approximately $US69 million estimated cost of $79 million. North Lakes will see the (A$93 million). addition of approximately 25,000 square metres at an estimated cost of $75 million. Both projects are scheduled to be complete by mid 2008.

DB RREEF Trust Annual Report 2006  chief executive officer’s report (continued)

601 South 55th Avenue, Phoenix USA international acquisitions In November 2005, DB RREEF acquired four properties totalling 450,000 square feet in Minneapolis Minnesota During the year, DB RREEF focused on expanding the for US$28 million (A$38 million). international portfolio in line with our strategy and considerable time was invested pursuing acquisition opportunities. In July 2006, DB RREEF acquired a French portfolio comprising six fully leased industrial properties of 110,000 The groundwork has been laid to continue building our square metres in Paris and Lyon at a cost of A$119.6 million international portfolio and we are actively and confidently on an initial yield of 6.9 percent. looking for further opportunities. All international opportunities have been scrutinised in close consultation Most recently, DB RREEF, utilising the resources of RREEF with RREEF. in the US, secured a A$600 million property investment program with Whirlpool, the world’s largest manufacturer and DB RREEF’s international focus during the year has been to marketer of household appliances. Under the program new acquire property portfolios in its more traditional asset sectors facilities will be built in the USA, Canada and Poland and will of commercial and industrial. This international focus is be acquired by DB RREEF when construction completes in complementary with the key strengths and core skills of approximately three years. RREEF globally and with DB RREEF in Australia. DB RREEF’s strategy in acquiring international properties is divisional performance – unlisted funds to “invest” overseas, not “spend” overseas, and never lose sight of the investment fundamentals. At 30 June 2006 the Group managed more than $11.8 billion of assets of which $3.95 billion is managed on behalf of third DB RREEF is uniquely positioned through its relationship party investors. with RREEF. We are able to focus on markets that have been identified by RREEF Research – globally recognised as a Total return for DWFP was 22.98 percent for the year market leader in research. Beyond the US, these markets ended 30 June 2006. This result is significantly higher than include Europe and Asia. the Fund’s benchmark. DWFP returns over three, five and 10 years were 16.27 percent, 13.65 percent and 12.46 percent respectively.

10 DB RREEF Trust Annual Report 2006 Overall, the outlook is good. We have a strong balance sheet, low vacancies and a good lease expiry profile, a growing development pipeline and a global platform from which to access opportunities for all investor groups.

sustainability looking forward The Group has taken the view that appropriate action to In 2007, DB RREEF will seek to: promote sustainability enhances security holder value over n expand and manage our high quality portfolio; time and accordingly, this is now a constant consideration n deliver income growth in; in our business. – commercial by actively participating in the growth cycle; The Group was the winner of the Facilities Management – industrial by replenishing and growing our pipeline; Environmental Achievement Award for 2006, in recognition of continual improvement in the field of environmental – retail by working with Westfield to maximise management and sustainability. portfolio value; – international markets by leveraging RREEF’s global 2007 strategic focus platform; and – third party funds under management by generating The primary objective of DB RREEF for 2007 is to deliver new investment opportunities; consistent superior performance to its investors, through the: n manage capital prudently; and n expansion of DB RREEF’s direct property portfolio, n continue to increase distributions. specifically in the industrial and commercial sectors; n extraction of synergies through the integration of property In summary, we have a strong balance sheet, a high quality investment, development and management expertise; and property portfolio with low vacancies, a good lease expiry profile, a growing development pipeline and a global platform n unique relationship with RREEF, one of the world’s leading from which to access opportunities for all investor groups. property funds managers, enabling DB RREEF to continue working towards achieving its target international This positions DB RREEF for future growth and increased asset mix of 35 to 50 percent. returns to security holders.

Victor P Hoog Antink Chief Executive Officer 15 September 2006

DB RREEF Trust Annual Report 2006 11 DB RREEF Trust overview

One Margaret Street, Sydney NSW

12 DB RREEF Trust Annual Report 2006 DB RREEF is a major diversified listed property trust with investments in Australia, New Zealand and the United States.

DB RREEF is currently the sixth largest listed property trust The Group believes it is vital to have a dedicated team and a top 60 listed corporate on the ASX with a total market representing DB RREEF in the markets it invests. DB RREEF capitalisation of approximately $4.1 billion as at 30 June 2006. will continue to utilise RREEF to source opportunities and manage the assets acquired in international markets. The Group is an integrated real estate platform with DB RREEF has the ability to undertake “value-add” activity, two core operating activities: with RREEF managing developments on the ground. We also n a listed direct property portfolio of approximately have the potential to undertake co-investment in core and $7.85 billion as at 30 June 2006; and value-add opportunities with RREEF. n a 50 percent share in DB RREEF Funds Management DB RREEF is RREEF’s third largest US core property client. Limited, a property funds management business, the remaining 50 percent being owned by a wholly owned Deutsche Bank subsidiary. DB RREEF Funds Management DB RREEF composition Limited is responsible for managing the Group’s entire At 30 June 2006, the Australian and New Zealand assets direct property portfolio, as well as approximately accounted for approximately 81 percent of the value of $3.95 billion of funds under management through DB RREEF’s property portfolio. The remaining 19 percent three property syndicates, two direct property mandates were accounted for by US assets. DB RREEF’s investments and a wholesale property fund (under delegation). are undertaken on both a wholly owned basis and through These combine to give the Group total funds under joint ventures with co-owners. Overall portfolio leases have management of approximately $11.8 billion, making it one an average of 5.3 years (by income) to maturity with an of Australia’s largest property fund managers. The Group average occupancy of 96.1 percent by area. has access to global real estate investment opportunities and expertise through its strategic relationship with RREEF.

RREEF relationship The Group has a strategic partnership with RREEF, Deutsche Bank’s global property and infrastructure division, which manages over US$66.2 billion of assets. In the US alone, RREEF manages over 705 assets which comprise in excess of 178 million square feet of commercial space and 24,673 apartment units. These US assets total US$25.7 billion. DB RREEF is uniquely positioned through its relationship with RREEF to focus on markets that have been identified by RREEF Research – a team with research capabilities that are globally recognised as market leaders. Beyond the US, these markets include Europe and Asia.

DB RREEF Trust Annual Report 2006 13 DB RREEF Trust overview (continued)

The overall portfolio leases have an average of 5.3 years (by income) to maturity with an average occupancy of 96.1 percent by area.

direct property portfolio value by geography direct property portfolio at 30 June 2006 as at 30 June 2006

Property type Book value Area Average occupied lease term NSW 51% by income United States 19% ($ million) (%) (years) Victoria 15% West Australia 8% Commercial 3,415.5 98.2 6.0 Queensland 3% Industrial 1,564.3 99.2 4.8 South Australia 2% New Zealand 1% US industrial 1,461.9 92.5 3.3 ACT 1% Retail 915.4 99.4 5.1 Car parks 207.5 – 10.0

Total 7,564.6 96.1 5.3 direct property portfolio value by sector at 30 June 2006

Office 45% Industrial 21% US industrial 19% Retail 12% Car parks 3%

14 DB RREEF Trust Annual Report 2006 Property portfolio value by sector at 30 June 2006

Sector Location Number Book value Net income Area leased of property assets 30 June 2006 12 months to 30 June 2006 ($ million) ($ million) (%) Office NSW 17 2,403.4 133.6 97 VIC 3 506.0 38.4 98 WA 1 315.0 17.9 100 ACT 2 90.0 7.4 100 QLD – – – NZ 1 101.2 7.2 100 Sub-total1 24 3,415.5 204.52 98 Car parks NSW 1 60.0 4.0 100 VIC 3 109.0 10.9 100 QLD 1 38.5 2.8 100 Sub-total 5 207.5 17.7 100 Industrial NSW 27 973.0 74.0 99 VIC 9 490.9 28.8 99 WA 1 9.5 0.6 100 QLD 3 66.3 4.5 99 SA 1 24.6 2.0 100 Sub-total 41 1,564.3 110.0 99 US industrial3 102 1,461.9 89.4 93 Retail NSW 2 442.5 28.1 100 VIC 1 20.2 0.9 100 WA 1 232.5 13.5 99 QLD 1 77.2 3.4 100 SA 1 143.0 8.9 99 Sub-total1 6 915.4 54.8 99 Total 178 7,564.6 476.5 96

1 Including equity accounted assets. 2 Commercial portfolio income excludes rent straight-lining AIFRS adjustments. 3 Data based on DB RREEF ownership of 80 percent. Net income excludes rent adjustment and income support.

DB RREEF Trust Annual Report 2006 15 DB RREEF Trust overview (continued)

Australia and New Zealand property portfolio office/car park industrial retail 0m2 53,738m2 25,664m2 0.0% port/area 2.6% port/area 1.2% port/area $39m value $66m value $77m value 0.6% portfolio 1.1% portfolio 1.3% portfolio 1 property 3 properties 1 property

office/car park 454,153m2 22.1% port/area $2,461m value 40.3% portfolio 18 properties

office 47,189m2 industrial 2.3% port/area 534,127m2 office $315m value 26.0% port/area 19,851m2 5.2% portfolio $973m value 1.0% port/area 1 property 15.9% portfolio $101m value 27 properties 1.7% portfolio 1 property industrial 4,703m2 retail 0.2% port/area 125,464m2 $10m value 6.1% port/area 0.2% portfolio $443m value 1 property 7.3% portfolio 2 properties

retail 76,326m2 3.7% port/area $233m value 3.8% portfolio 1 property office/car park 22,314m2 1.1% port/area $90m value 1.5% portfolio 2 properties

industrial retail office/car park industrial retail 72,115m2 61,296m2 108,639m2 445,455m2 6,230m2 3.5% port/area 3.0% port/area 5.3% port/area 21.7% port/area 0.3% port/area $25m value $143m value $615m value $491m value $20m value 0.4% portfolio 2.3% portfolio 10.1% portfolio 8.0% portfolio 0.3% portfolio 1 property 1 property 6 properties 9 properties 1 property

16 DB RREEF Trust Annual Report 2006 office/car park industrial retail 0m2 53,738m2 25,664m2 0.0% port/area 2.6% port/area 1.2% port/area $39m value $66m value $77m value 0.6% portfolio 1.1% portfolio 1.3% portfolio 1 property 3 properties 1 property

office/car park 454,153m2 22.1% port/area $2,461m value 40.3% portfolio 18 properties office 47,189m2 industrial 2.3% port/area 534,127m2 office $315m value 26.0% port/area 19,851m2 5.2% portfolio $973m value 1.0% port/area 1 property 15.9% portfolio $101m value 27 properties 1.7% portfolio 1 property industrial 4,703m2 retail 0.2% port/area 125,464m2 $10m value 6.1% port/area 0.2% portfolio $443m value 1 property 7.3% portfolio 2 properties retail 76,326m2 3.7% port/area $233m value 3.8% portfolio 1 property office/car park 22,314m2 1.1% port/area $90m value 1.5% portfolio 2 properties

industrial retail office/car park industrial retail 72,115m2 61,296m2 108,639m2 445,455m2 6,230m2 3.5% port/area 3.0% port/area 5.3% port/area 21.7% port/area 0.3% port/area $25m value $143m value $615m value $491m value $20m value 0.4% portfolio 2.3% portfolio 10.1% portfolio 8.0% portfolio 0.3% portfolio 1 property 1 property 6 properties 9 properties 1 property

DB RREEF Trust Annual Report 2006 17 DB RREEF Trust overview (continued)

US property portfolio Minneapolis Cincinnatti/ Columbus 1,159,933sf Nth Kentucky 1,609,599sf 5.7% port/area 2,704,023sf 7.9% port/area $65m value 13.2% port/area $47m value 6.1% port/value $68m value 4.3% port/value 9 properties 6.3% port/value 4 properties 10 properties Boston 153,369sf 0.8% port/area $9m value 0.8% port/value 1 property

Harrisburg Seattle 1,058,200sf 531,032sf 5.2% port/area 2.6% port/area $42m value $33m value 3.9% port/value 3.1% port/value 3 properties 3 properties

Baltimore Los Angeles 1,419,460sf 1,050,011sf 6.9% port/area 5.1% port/area $99m value $94m value 9.2% port/value 8.7% port/value 9 properties 4 properties

Nth Virginia Riverside 1,083,507sf 1,543,375sf 5.3% port/area 7.6% port/area $149m value $100m value 13.8% port/value 9.3% port/value 6 properties 6 properties

Charlotte 883,176sf 4.3% port/area $24m value 2.3% port/value 3 properties

Atlanta 775,832sf 3.8% port/area $32m value 3.0% port/value 5 properties San Diego Phoenix Dallas Memphis Orlando Sth Florida 356,126sf 1,782,758sf 2,186,907sf 336,080sf 1,390,530sf 415,550sf 1.7% port/area 8.7% port/area 10.7% port/area 1.6% port/area 6.8% port/area 2.0% port/area $33m value $82m value $101m value $8m value $59m value $29m value Notes: 3.1% port/value 7.7% port/value 9.4% port/value 0.7% port/value 5.5% port/value 2.7% port/value 1 All values are in US dollars and adjusted for ownership. 3 properties 11 properties 16 properties 1 property 2 properties 2 properties 2 All areas represent 100 percent of the property. 3 Data does not include vacant land parcels.

18 DB RREEF Trust Annual Report 2006 Minneapolis Cincinnatti/ Columbus 1,159,933sf Nth Kentucky 1,609,599sf 5.7% port/area 2,704,023sf 7.9% port/area $65m value 13.2% port/area $47m value 6.1% port/value $68m value 4.3% port/value 9 properties 6.3% port/value 4 properties 10 properties Boston 153,369sf 0.8% port/area $9m value 0.8% port/value 1 property

Harrisburg Seattle 1,058,200sf 531,032sf 5.2% port/area 2.6% port/area $42m value $33m value 3.9% port/value 3.1% port/value 3 properties 3 properties

Baltimore Los Angeles 1,419,460sf 1,050,011sf 6.9% port/area 5.1% port/area $99m value $94m value 9.2% port/value 8.7% port/value 9 properties 4 properties

Nth Virginia Riverside 1,083,507sf 1,543,375sf 5.3% port/area 7.6% port/area $149m value $100m value 13.8% port/value 9.3% port/value 6 properties 6 properties

Charlotte 883,176sf 4.3% port/area $24m value 2.3% port/value 3 properties

Atlanta 775,832sf 3.8% port/area $32m value 3.0% port/value 5 properties San Diego Phoenix Dallas Memphis Orlando Sth Florida 356,126sf 1,782,758sf 2,186,907sf 336,080sf 1,390,530sf 415,550sf 1.7% port/area 8.7% port/area 10.7% port/area 1.6% port/area 6.8% port/area 2.0% port/area $33m value $82m value $101m value $8m value $59m value $29m value 3.1% port/value 7.7% port/value 9.4% port/value 0.7% port/value 5.5% port/value 2.7% port/value 3 properties 11 properties 16 properties 1 property 2 properties 2 properties

DB RREEF Trust Annual Report 2006 19 commercial portfolio – australasia

DB RREEF purchased a premium commercial tower in New Zealand for NZ$110.4 million and completed refurbishments on two properties valued at $38.2 million.

Leases totalling 11.8 percent of the commercial portfolio developments and refurbishments were secured during the period. All commercial portfolio fundamentals are tracking well with occupancy now at DB RREEF has achieved significant progress on its major 98 percent and an increase in valuations of 9.1 percent. commercial developments. These include: n Bent Street Sydney NSW – a Stage 1 Development portfolio attributes Application was approved by Council for a 37,500 square metre development on the site bounded by Bent, Bligh The commercial portfolio comprising office and car parks, and O’Connell Streets (which is co-owned by Deutsche contributed $222.3 million in net income to DB RREEF, Wholesale Property Fund). A design competition is an increase of 9.5 percent over the year to 30 June 2005. currently being undertaken prior to lodging a Stage 2 This contribution represents 44.3 percent of total property Development Application later this year; income for the year. n 105 Phillip Street Parramatta NSW – a Development At 30 June 2006, the commercial portfolio comprised Application has been approved for construction of a almost 530,000 square metres of lettable area (adjusted 19,400 square metre office building. Substantial work for ownership) in 24 properties and five car parks with over on this project has been completed including the 590 tenants. Premium grade accommodation comprised basement car park levels. DB RREEF is ready to 20.2 percent of the commercial portfolio by area with commence development, subject to obtaining 65.9 percent being A-grade and the remainder being appropriate tenant pre-commitments; and B-grade and associated retail. n Charlotte Street Brisbane QLD – development options are being reviewed for a proposed office tower and car In terms of geographical spread, 62.6 percent of properties park development. by area is located in New South Wales, 20.6 percent in Victoria and the remainder in the Australian Capital Territory, Refurbishment of a number of commercial properties were Queensland, Western Australia and New Zealand. completed including: n a $17 million refurbishment of 321 Kent Street, acquisitions and disposals Sydney NSW was completed by 30 April 2006. Sparke Helmore has occupied approximately 10,500 square DB RREEF purchased the Lumley Centre in Auckland, metres since January 2006. In addition, Urbis, Asteron New Zealand for approximately NZ$110.4 million. and Sydney IVF have executed leases. The office This premium commercial tower was completed in component is now fully occupied; September 2005 and includes 15 office levels, seven car parking levels. The premium accommodation has been n a $21.2 million refurbishment of 130 George Street, fully let to Simpson Grierson, Lumley and Minter Ellison Parramatta NSW was completed in April 2006. The office Rudd Watts. component of this building is now fully let to Medicare, NSW Police and Child Support Agency; and There were no disposals within the commercial portfolio n the refurbishment of three floors at 343 George Street, during the 2006 financial year. Sydney NSW was completed in April 2006 and a Development Application to strata title the building was lodged in June 2006 with Sydney City Council.

20 DB RREEF Trust Annual Report 2006 Lumley Centre, 88 Shortland Street, Auckland NZ leasing commercial lease expiry profile as at 30 June 2006 New leases, lease renewals and heads of agreement accounting for more than 62,000 square metres, or The commercial lease expiry profile is now well diversified 11.8 percent of the total commercial portfolio, were secured. and the strategy to extend duration without concentration of expiries in any given year is being successfully implemented. As a result, the commercial portfolio occupancy increased to 98 percent at 30 June 2006, up from 94 percent the previous year, with an average lease term to expiry (by income) 14 of 6.3 years. 12.79% 12 12.26% % 10.57% 10.13% rent reviews 10.06%

10 % 8.91 Leases covering 80 percent of the commercial portfolio’s 7.73% % 8 7.37 6.79% property income were subject to rent reviews, achieving an 6.73% average rental increase of four percent. In the coming year

6 5.39 to 30 June 2007, approximately 78 percent of the commercial 4 portfolio’s income will be reviewed, with around 80 percent of % those reviews being either fixed or CPI, incorporating 2 minimum percentage increases. 1.28 0

cant revaluations years Va < 1 year < 2 years < 3 years < 4 years < 5 years < 6 years < 7 years < 8 years < 9 years Revaluations resulted in an increase in asset value of < 10 >10 years Income $307 million or 9.1 percent over book value. The weighted average capitalisation rate of the commercial portfolio now stands at 6.7 percent.

DB RREEF Trust Annual Report 2006 21 industrial portfolio – australia

DB RREEF exchanged contracts on a parcel of land adjoining the DB RREEF Industrial Estate at Laverton North for $32.0 million and completed work on nine development projects for a total value of $82.1 million.

Leases were agreed for 18.4 percent of the industrial portfolio These projects include: and occupancy reached 99 percent. Overall the industrial n Axxess Corporate Park, Mount Waverley VIC portfolio is performing well with a 9.2 percent increase – construction of a 7,880 square metre office building in valuations. was completed for Alinta Limited in September 2005 costing $28.6 million, including construction of a portfolio attributes multi-deck car park; The industrial portfolio contributed more than $110 million – development of 400 square metres of additional office in net income to DB RREEF, an increase of 5.2 percent over space was completed for GS1 in December 2005 the year to 30 June 2005, including comparable growth of costing $1.1 million; 2.5 percent. This contribution represents 21.9 percent of – development of a 1,200 square metre office/warehouse total property income for the year to 30 June 2006. facility costing $2.5 million for Omron Electronics Pty At 30 June 2006 the industrial portfolio comprised more than Ltd was completed in March 2006; and 1.1 million square metres of lettable area in 41 properties – development of a 6,700 square metre office facility for with over 320 tenants. the Fonterra Group was completed on 28 July 2006 costing $19.4 million. acquisitions and disposals n Kings Park Industrial Estate, Marayong NSW – warehouse expansion works of 1,365 square metres DB RREEF exchanged contracts on 65.4 hectares of land were completed for Harper Collins in November 2005 adjacent to the DB RREEF Industrial Estate, Laverton North for a cost of $1.3 million; VIC, for $32.0 million. Settlement is due in November 2006. This acquisition provides a strategic extension to the Estate – construction of a 5,680 square metre office/warehouse and will enable DB RREEF to leverage off the infrastructure speculative development at 1 Coronation Avenue, already developed at Laverton. DB RREEF has achieved Kings Park was completed in April 2006 at a cost several recent pre-commitments that have utilised a number of $5.2 million; and of major lots at the Estate, including an agreement with – an expansion development of 2,900 square metres for Fosters Australia to build a major distribution centre Geoff Penney is due for completion on 14 August 2006 costing approximately $30.9 million. This is the largest for an estimated cost of $3.1 million. pre-commitment ever secured in the Laverton market n Pound Road West, Dandenong South VIC and will provide a 7.4 percent yield on total costs. – expansion works of 7,000 square metres for L’Oréal DB RREEF sold 2a Birmingham Street, Villawood NSW, for a Australia were completed on 4 August 2006 costing total consideration of $10.3 million, representing an overall gain $7.1 million. of $374,432. DB RREEF also exchanged contracts for the sale An additional 104,555 square metres is currently of 121 Evans Road, Salisbury QLD for $24.0 million, with under construction at the DB RREEF Industrial Estate, settlement in August 2006. Laverton North. The estimated cost of this development is $132.7 million and the forecast yield on completion developments and refurbishments is 7.7 percent. DB RREEF completed nine development projects creating n DB RREEF Industrial Estate, Laverton North VIC additional lettable area of over 49,002 square metres with – construction of a 43,705 square metre chilled distribution a total value of approximately $82.1 million. centre for Coles Myer is due for completion in February 2007 with an estimated cost of $96.4 million;

22 DB RREEF Trust Annual Report 2006 Axxess Corporate Park, Mount Waverley VIC

– construction has commenced on a 7,850 square industrial (australia) lease expiry profile metre warehouse facility for Wrightson Seeds due for as at 30 June 2006 completion in October 2006 with an estimated cost of $5.7 million; and – construction of a 53,000 square metre distribution 20 centre for Fosters Australia with an estimated cost 16.6% of $30.9 million due for completion late 2007. 16 14.2% 13.7% leasing 12 10.8% 10.5% 10.0% New leases, lease renewals and heads of agreement, 9.8% accounting for more than 213,000 square metres or 8 18.4 percent of the industrial portfolio area, were secured. 4.9% 4 4.0%

As a result, the industrial portfolio occupancy increased to 2.8% 1.6%

99 percent at 30 June 2006 compared to 98 percent in 1.1% the previous year, with an average lease term to expiry 0 M (by income) at 30 June 2006 of 4.8 years. cant MT years Va & < 2 years < 3 years < 4 years < 5 years < 6 years < 7 years < 8 years < 9 years < 10 >10 years rent reviews < 1 year Income This year, leases equal to 71 percent of the industrial portfolio’s property income were subject to a rent review revaluations and consequently achieved an average rental increase of 3.4 percent. In the coming year, approximately 75 percent Revaluations resulted in an increase in asset value of of the industrial portfolio’s income will be reviewed, with $134 million, or 9.2 percent over book value. The industrial 77 percent of those reviews being either fixed or CPI, portfolio’s weighted average capitalisation rate now stands incorporating minimum percentage increases. at 7.7 percent.

DB RREEF Trust Annual Report 2006 23 retail portfolio – australia the retail portfolio’s positive performance was reflected with an increase in Moving Annual Turnover (MAT) of 8.9 percent and higher customer visitations.

Occupancy is strong at 99.4 percent and the retail portfolio development cost to DB RREEF of $75 million, will take increased in asset value by 11.4 percent. The redevelopment advantage of the increasing population in one of the of the Mount Druitt centre in NSW was successfully completed, highest growth areas in south-east Queensland. The and two major developments, North Lakes QLD and Plenty estimated completion date is December 2007; and Valley VIC are planned to commence in late 2006. n development at Plenty Valley will commence in late 2006 and will increase the net lettable area from 6,179 square portfolio attributes metres to 46,510 square metres. The additional 40,000 square metres in space will include Target, Safeway, The retail portfolio contributed $54.8 million in net income Kmart, Aldi and more than 20,000 square metres to DB RREEF, an increase of 26.3 percent over the year to of specialty space. This project is estimated to cost 30 June 2005. This represents 10.9 percent of total property DB RREEF $79 million and to be completed mid 2008. income for the year. At 30 June 2006, the retail portfolio comprised more than leasing turnover and visitations 294,000 square metres of lettable area in six properties with over 1,100 tenants. The retail portfolio is diversified During the year, new leases, lease renewals and heads across Australia with properties in New South Wales, Victoria, of agreement were secured equating to 228 deals and Queensland, South Australia and Western Australia. The retail accounting for over 24,238 square metres. portfolio provides a balance of secure income streams and development potential. retail lease expiry profile as at 30 June 2006 acquisitions and disposals Occupancy of the retail portfolio was 99.4 percent as at There were no retail acquisitions or disposals during the 30 June 2006. 2006 financial year. 20

developments and refurbishments 15.9% 15.7% 15.5%

15 14.8% During the year, DB RREEF completed a $65 million Mt Druitt refurbishment project. This involved the 11.3% underperforming Myer and Bi-Lo stores leaving the centre 10 10.2% and being replaced by Coles, Target, 50 new specialty stores %

and associated car park works. This has been a successful % 6.4 repositioning of this asset and it continues to trade well in % 5 4.3 % %

the stabilisation phase. % 2.3 1.5 1.3 There are two major projects currently in the planning and 0.9 0 pre-construction phase: + 12 n North Lakes will commence in September 2006 and will n vailable A involve the addition of a Woolworths Supermarket, Big W, 30 Jun 06 30 Jun 07 30 Jun 08 30 Jun 09 30 Jun 10 30 Jun 11 30 Ju 30 Jun 13 30 Jun 14 30 Jun 15 30 Jun 16 80 specialty stores and an ancillary car park. The current Income net lettable area of 22,252 square metres will increase to 45,129 square metres, creating an additional 22,877 square metres of space. This project, with an estimated

24 DB RREEF Trust Annual Report 2006 Westfield Mount Druitt, Corner Carlisle and Luxford Roads, Mount Druitt NSW

MAT for all centres was up 8.9 percent on the previous year rent reviews to $1.5 billion. Renewals over existing tenancies totalled 95 deals and North Lakes and Plenty Valley continue to exhibit strong achieved five percent above passing and two percent above growth in sales which will underpin the proposed budget. Whitford and West Lakes performed well achieving redevelopments of these centres. Whitford and West Lakes 17 percent and 12 percent respectively over passing. New have shown strong growth over the past 12 months, with leases over existing vacancies and newly created tenancies 10.1 percent and 14.5 percent increase in sales respectively. totalled 133 deals and achieved two percent above budget, This indicates the centres are stabilising after redevelopment. with North Lakes achieving 25 percent over budget. More than 48.5 million visitations were made to the centres, representing a 2.3 percent increase over the previous year. revaluations Spend per visit averaged $30.78 across the six centres, an During the year, revaluations resulted in an increase in asset increase from $28.92 in the previous year. Occupancy cost value of $75 million or 11.4 percent of book value. ratios for all centres are at acceptable levels. The MAT in the retail portfolio for the year is summarised in the table below:

Centre MAT Change MAT Change Specialty occupancy ($ per ($ per cost ratio annum) (%) square metre) (%) (%) Whitford total 377,729,353 10.14 6,344 5.55 Majors 150,333,904 (0.39) 5,949 (0.39) Specialties 158,511,560 9.26 8,040 3.9 13.6 West Lakes total 287,403,932 14.37 5,132 (1.93) Majors 142,913,648 4.62 4,563 3.97 Specialties 109,449,767 21.2 7,698 (6.22) 14.1 North Lakes total 130,037,109 10.54 5,845 10.81 Majors 67,700,774 13.35 6,288 13.35 Specialties 41,130,999 6.82 6,823 7.89 12.3 Plenty Valley total 54,362,905 13.74 9,317 9.07 Majors 40,576,845 9.9 11,271 9.9 Specialties 10,052,153 24.44 7,516 11.21 9.4 Mount Druitt total 294,694,673 9.14 6,052 0.68 Majors 129,785,703 7.53 6,072 (0.13) Specialties 118,122,780 17.09 7,535 (3.99) 16.9 Hurstville total 359,713,995 2.24 6,061 1.61 Majors 169,015,850 2.35 4,694 2.35 Specialties 149,057,290 1.3 8,503 1.47 18.2 Total 1,503,941,967 8.9 5,970 2.7

DB RREEF Trust Annual Report 2006 25 industrial portfolio – united states

During the year, the us Industrial portfolio grew through the acquisition of four properties in Minnesota and the exercising of options to acquire five parcels of development land in Texas, florida and North Virginia.

Overall the US industrial portfolio is performing well with During the year, the US Joint Venture exercised its options a 9.6 percent increase in valuations and a significant to acquire five parcels of development land totalling improvement in the occupancy levels. A 270,000 square feet 81.5 acres with an aggregate exercise price of approximately development is underway in Medley, Florida and a further US$22 million (A$27.3 million). Details of the five sites are 220,000 square feet of development in Dulles Town Crossing, set out in the table below. Stirling, Northern Virginia is scheduled for completion in 2008. Metropolitan Location Area Price portfolio attributes area (acres) (US$ million) Miami, FL Medley, Miami 17.7 8.5 The US industrial portfolio has contributed US$85.8 million (A$114.7 million) in net income to DB RREEF, an increase Stirling, VA Dulles Town 14.0 5.1 of 2.3 percent over the prior nine months annualised. This Crossing, Stirling represents 22.9 percent of total property income for the year. Ashburn, VA Beaumeade, 10.7 3.1 The US industrial portfolio consists of properties held by a Ashburn joint venture owned 80 percent by DB RREEF and 20 percent by CalWest Industrial Properties, LLC, a subsidiary of Dallas, TX Plano Parkway, 13.5 2.0 CalPERS, and properties owned 100 percent by DB RREEF. Plano At 30 June 2006, the US industrial portfolio covered more Dallas, TX Garland Jupiter, 25.6 3.3 than 20.3 million square feet of lettable area in 97 properties Garland throughout 18 metropolitan areas across the United States. 22.0 The US industrial portfolio consists of approximately 58 percent warehouse/distribution and 42 percent “flex” type properties, by market value. Average office content developments is 17 percent, with income generated from approximately DB RREEF has two land parcels currently under development 560 tenants. – the Turnpike Distribution Centre, Medley, Florida and Dulles Town Crossing, Stirling, Northern Virginia. acquisitions and disposals The Turnpike Distribution Centre in Medley, Florida is In November 2005, DB RREEF acquired a 100 percent a 268,120 square feet distribution facility with a total cost interest in four properties, totalling approximately 450,000 forecast of US$17.2 million (A$23 million). The project is square feet, in Minneapolis, Minnesota for US$28 million already 61 percent pre-leased and schedule for completion (A$38 million). These assets were 83 percent leased with in early 2007. an initial yield of 7.3 percent.

26 DB RREEF Trust Annual Report 2006 5823 Newton Drive, San Diego CA

A 220,000 square feet Class A suburban office development industrial (united states) lease expiry profile at Dulles Town Crossing, Stirling, Northern Virginia is due to as at 30 June 2006 commence by the end of the year following receipt of approval from the local authority. Dulles Town Crossing 25 is one of the country’s fastest growing and most affluent 21.0% suburban areas. The current site plan features two four 20

level office buildings with a one acre landscaped courtyard 17.4%

to connect the two buildings. Total cost is expected to be 15.2% 15 US$52.0 million (A$70.0 million), with an expected yield 11.7%

on the cost of the development of eight percent. RREEF will 11.0% provide development management services to DB RREEF 10 and will undertake asset and property management services 7.3% following the completion of the development in the 5.6% 4.1%

5 3.8% 3.4% first half of 2008. 2.9%

0 0.2% leasing M cant MT years Va & The US industrial portfolio’s occupancy increased from < 2 years < 3 years < 4 years < 5 years < 6 years < 7 years < 8 years < 9 years < 10 >10 years 88.5 percent to 92.5 percent, including 90 new leases Income totalling 1,938,906 square feet and 66 renewal leases < 1 year totalling 2,718,792 square feet. The average lease term to expiry is now 3.5 years. revaluations At 30 June 2006, the US industrial portfolio was independently revalued totalling US$1.35 billion resulting in an increase of US$118.6 million or 9.6 percent of book value. The weighted average capitalisation rate of the US industrial portfolio now stands at 7.4 percent.

DB RREEF Trust Annual Report 2006 27 third party funds under management the group is one of Australia’s largest property fund managers with total funds under management as at 30 June 2006 of approximately $11.8 billion.

The listed property portfolio comprises in excess sector allocation at 30 June 20061 of $7.85 billion of direct property assets in Australia, New Zealand, the United States and France, and the unlisted property portfolio comprises approximately $3.95 billion of domestic assets. DB RREEF Funds Management Limited is the Responsible Entity for a number of listed and unlisted property trusts, Commercial 52% including DB RREEF Trust, DB RREEF RENTS Trust and Retail 42% three property syndicates. DB RREEF Funds Management Industrial 6% Limited is also the investment manager for the Deutsche Wholesale Property Fund (DWPF) (managed under delegation from DB Real Estate Australia Limited) and two direct property mandates. deutsche wholesale property fund portfolio diversification at 30 June 20061 DWPF is an unlisted, open-ended property fund with total gross assets of approximately $1.76 billion as at 30 June 2006. DWPF is managed by DB RREEF Funds Management Limited under delegated authority from DB Real Estate Australia Limited. Sydney Office 38% DWPF’s objective is to provide wholesale investors Melbourne Office 14% (predominantly superannuation fund, life company and Super Regional Retail 31% non-profit group investors) with a balanced return of capital Sub-Regional Retail 11% growth and income over the medium to long term, derived Sydney Industrial 6% from a diversified portfolio of high quality property assets. DWPF’s portfolio comprises interests in 11 properties. On a sectoral basis, the portfolio is split 52 percent office, 42 percent retail and six percent industrial. 1 Based on book values at 30 June 2006. There are more than 120 investors in DWPF, with the top 10 unitholders representing approximately 72 percent of the register. For the year to 30 June 2006, DWPF produced an annual gross return of 22.98 percent. Over a three, five and 10 year period annualised gross returns were 16.27 percent, 13.65 percent and 12.46 percent respectively.

28 DB RREEF Trust Annual Report 2006 direct mandates gordon property syndicate The direct mandates comprise $1.9 billion of direct property This syndicate owns two retail assets, the Gordon Centre assets at 30 June 2006 managed on behalf of SAS Trustee and the Gordon Village Arcade located in Gordon NSW. Corporation (STC) and the AXA Group (AXA). As at At 30 June 2006 total assets of the syndicate were 30 June 2006, STC owned a portfolio of direct property approximately $82.4 million. assets comprising 13 properties with a market value of northgate property syndicate approximately $1.6 billion. This syndicate owns the Northgate Shopping Centre at DB RREEF Funds Management Limited manages a portfolio Glenorchy in Hobart TAS. At 30 June 2006 total assets of direct property for AXA’s New Zealand Statutory Funds of the syndicate were approximately $89.3 million. and the AXA Wholesale Australian Property Fund. The AXA mandates are in respect of 13 properties that have, as at abbotsford property syndicate 30 June 2006, a market value of approximately $320 million. This syndicate owns a commercial building in Abbotsford VIC. At 30 June 2006 total assets of the syndicate were syndicates approximately $17.4 million. The syndicate business consists of three unlisted trusts representing assets valued at approximately $190 million as at 30 June 2006. The syndicates have over 975 unitholders and are closed ended, fixed term products.

Gordon Centre, Gordon NSW

DB RREEF Trust Annual Report 2006 29 sustainability report

343 George Street, Sydney NSW (Photo provided by Tyrone Branigan Productions)

The group is committed to the long term integration of sustainability 1 sustainability practices throughout its business. Over a number of years, the The Group’s sustainability strategy is based on its ability to identify Group has implemented sustainability strategies that promote both risks and develop individual management programs which satisfy the environmentally sustainable property management practices and social and environmental requirements of each property and its appropriate corporate social responsibility. The Group believes that operations. appropriate sustainability strategies are increasingly being demanded by tenants, regulators, employees and security holders. The Group’s most visible commitment to sustainability is reflected in its implementation of environmental sustainability projects across the Security holders’ value is enhanced over time through the creation property portfolio. However, the Group also recognises the of working environments that are attractive to tenants, which enable opportunity to create a positive social impact and has implemented them to improve their business productivity. This outcome improves a number of initiatives aimed at tenants, contractors, employees and the demand for DB RREEF properties and at the same time benefits the wider community. the wider community. This increased demand will enable DB RREEF properties to command higher rents while obtaining efficiencies that During the year to June 2006, the Group has achieved a number of will lower the operational cost of its buildings, increasing earnings. milestones in relation to its sustainability initiatives, including: The Directors and employees of the Group are proud of its n winning the Facilities Management Environmental Achievement sustainability performance. The 2006 Sustainability Report outlines Award for 2006 in recognition of continual improvement in the many of its key achievements and outlines its objectives for field of environmental management and sustainability; the coming year. This report builds on the first sustainability n launching its Resource Efficiency and Sustainability Initiative report released in 2005 and forms an integral part of the Group’s program; regular reporting to security holders on this important activity. n completing its own corporate fit-out, incorporating leading design Further information on the sustainability program is located at and environmental initiatives to achieve high standards of www.dbrreef.com. sustainability; and n 5 Star rating awarded to 30 The Bond under the Green Star – Office as Built rating tool.

30 DB RREEF Trust Annual Report 2006 The Group’s target initiatives for 2007 include: Recycling bins were installed in all breakout areas and toner n Australian Building Greenhouse Rating (ABGR) assessments for cartridges are collected for recycling at regular intervals. all commercial properties in the Australian portfolio; Overall, 343 George Street, Sydney is now a leading example n Green Star rating assessments on existing commercial properties of building for sustainability in the office environment. in the Australian portfolio; n recording and monitoring energy, waste and water consumption 3 environmental management policy data, captured for all commercial properties in the Australian The Group communicates its commitment to environmental best and New Zealand portfolio; and practice through its Environmental Management Policy by: n establishing resource efficiency project opportunities for n identifying and controlling environmental impacts via one-third of all commercial properties in the Australian and a comprehensive management system; New Zealand portfolio. n ensuring compliance with legislation; and All sustainability initiatives are undertaken after identifying a positive n promoting best practice to stakeholders. return under appropriate social, environmental or economic criteria. The Group has demonstrated its ability to reduce the impact of its The policy embodies the precautionary principle and commits to activities on the environment and society without compromising continual improvement facilitated by annual environmental auditing, economic viability. training, teamwork and communication. The Group leads the market in sophisticated environmental 2 The Group corporate fit-out management and has implemented a range of systems and initiatives to ensure environmental management is incorporated within the daily The Group’s commitment to environmentally sustainable principles responsibilities of employees, property managers and tenants. was demonstrated through its new head office fit-out at 343 George Street, Sydney. The fit-out applied leading design and 3.1 environmental management program environmental initiatives to create a functional, attractive and healthy workplace for its employees. The foundation of the Group’s environmental commitment is its Environmental Management Program which has been operational The Group was keen to preserve the heritage features of the 81 year since 1999. Developed and modelled around the international old building while bringing the interior into the twenty-first Century. standard for Environmental Management Systems (ISO 14001), Reducing energy consumption was a core objective in designing the the Environmental Management Program ensures the identification, fit-out. A revolutionary chilled-beam cooling system was installed management, monitoring and an annual external audit of all resulting in significant indoor ecology improvements and energy environmental issues associated with the physical property savings. Sophisticated lighting control and an after-hours and any activities conducted at the property. air-conditioning system further reduce energy demand. Energy The Group won the Facilities Management Environmental efficient T5 fluorescent lamps were installed in office areas, while Achievement Award for 2006 in recognition of its continual compact fluorescent light fittings were used for fixed ceiling areas. improvement in the field of environmental management and The Group chose energy efficient office equipment including fridges sustainability. with a 3 Star energy rating, chilled and boiled water units with automatic shutdown modes and flat-screen PC monitors, significantly The Environmental Management Program demonstrated how the reducing heat loads and demands on the HVAC System. company has reduced the environmental impacts associated with its activities and services. The award recognised the culture of In designing the fit-out, the Group was mindful of the link between responsible environmental management and the judges valued the employee productivity and indoor environmental quality. In addition company’s commitment to enhancing environmental performance to the chilled-beam cooling system, access to natural light was also and knowledge across the facilities management sector, through improved. All desks are within eight metres of external windows and communication and stakeholder engagement. an atrium skylight further reduces the reliance on artificial lighting. The internal staircase adds connectivity to the workspace and work is continuing on an outdoor garden and patio area. Indoor air quality was improved by choosing paint finishes with low volatile organic compounds. Indoor plants are used to improve air quality and indoor ecological benefits. Significant water savings were possible through the installation of AAA tap ware which were fitted with water restrictors. The toilets have a dual flush/smart flush system and the chilled/boiled water units are designed to eliminate water wastage. Dishwashers are AAA energy rated. The Group’s commitment to waste minimisation and recovery was reflected in its choice of office furniture, which was recyclable or part of a take-back scheme. The company’s old furniture was donated to charity, a policy which will continue in the future for disused office furniture.

DB RREEF Trust Annual Report 2006 31 sustainability report (continued)

Southgate Complex, Southbank, Melbourne VIC Governor Phillip and Macquarie Tower Complex Winner of Most Improved Property – Environment 2005 1 Farrer Place, Sydney NSW Each year the Group presents two if its properties with 1 Farrer Place is located in the heart of Sydney’s central business Environmental Achievement Awards to encourage best practice district and demonstrates excellence in property environmental and acknowledge the management teams’ initiatives. The Southgate management. This premium-grade commercial office building Complex in Southbank, Melbourne, was named winner of the consistently outperforms similar properties. A number of innovative “Most Improved Property Environment 2005”. The Southgate solutions have contributed to the sustainability of the building, Complex presents challenging environmental management issues including: due to the mix of commercial office space, dining and retail outlets, n implementation of resource-efficient initiatives such as energy and on-site parking. Highlights of its environment management reduction; program include: n development of a Water Savings Action Plan for the Department n integrated environmental management across commercial and of Energy, Utilities and Sustainability NSW; and retail sectors; n demonstration of excellence in best practice in all areas of n greater resource efficiency resulting in reduced utility bills for property environmental management, reflected in consistently tenancies; high scores in annual environmental audits. n significant reduction in insurance premiums in recognition of 83 Clarence Street, Sydney NSW environmental risk mitigation; and On behalf of the owners of 83 Clarence Street Sydney, a program n Southgate’s high-quality management team has delivered was initiated to increase the building’s energy efficiency. continual performance improvement to the complex. As a result of a focused commitment to energy reduction and cost 3.2 environmental initiatives effective upgrades, as well as the building owner’s commitment to its tenants, the property achieved a 3.5 Star ABGR. This represents a The Environmental Management Program combines a number of 1.5 Star increase in just 12 months. The higher rating was achieved specific environmental initiatives in order to achieve environmental through strategic investment in the building’s essential services and best practice. These include: an upgrade to major services such as lifts, bathrooms and the foyer. 3.2.1 Resource Efficiency and Sustainability Initiative Program 3.2.2 Carbon emission reduction project The Resource Efficiency and Sustainability Initiative Program was The Group is currently implementing a number of carbon emission launched in 2005 and aims to reduce each property’s environmental reduction initiatives, including: impact and safeguard its asset value. The program works towards reducing consumption of energy and water, minimising waste and n expanding the Resource Efficiency and Sustainability Program identifying industry based environmental ratings (such as ABGR and across the property portfolio and capturing data in key areas of Green Star ratings) for each property across the commercial portfolio energy, electricity, natural gas and diesel fuel consumption; through: n expanding the Environmental Management Program to collect n collation of baseline data and identification of potential and centralise information about the type of air conditioning inefficiencies in plant and/or operations; equipment and the type and amount of refrigerant used in buildings; n identification of project opportunities that enhance resource efficiency and offer acceptable pay-back periods; n developing a greater understanding of the US property portfolio in terms of emission data and potential regulation of Green n implementation of these projects through stakeholder House Gas (GHG) emissions; consultation and specialist support; and n ensuring property managers include the risks associated with n continuous monitoring to quantitatively establish project benefits climate change – such as flood, bush fire, rising sea levels and and identifying ongoing opportunities for improvement. increased storm intensity – when preparing risk plans for Throughout the year, DB RREEF has implemented a portfolio-wide, properties; resource-efficiency program. In addition, action plans for waste n capturing and reporting on the number of maintenance supplies management and reduced water and energy consumption have been purchased with preference given to those products with superior completed at 1 Farrer Place, Sydney and 201 Elizabeth Street, Sydney. environmental performance; n monitoring and reporting on the number of buildings with green cleaning contracts in place, including the amount of waste diverted from landfill; n establishing emission reduction targets across the portfolio; n greater resource efficiency and therefore reduced utility bills for tenancies; and n examining GHG emissions resulting from the Group’s operations, such as the use of company vehicles, business flights, waste disposal and disposal of office consumables.

32 DB RREEF Trust Annual Report 2006 3.2.3 Water saving programs 3.2.7 Participating in industry innovation The Group developed Water Savings Action Plans for the following Through participation in industry organisations, the Group is able to three properties: share its knowledge and experience in environmental sustainability n Governor Phillip and Governor Macquarie Towers, and ensure access to the latest developments in sustainable 1 Farrer Place, Sydney NSW property management. n Zenith Centre, 821–843 Pacific Highway, Chatswood NSW The Group is active in the following industry groups: n Gateway, 1 Macquarie Place, Sydney NSW n Property Council of Australia’s Sustainability Committee; The plans identified potential water savings of 78ML per annum n Green Building Council; across the three sites. The associated projects will undergo feasibility n Facility Management Association; consideration prior to implementation over the next 12 months. n City of Sydney Clean Harbour Partners network; and Further information on the water savings program can be found n Sydney Water Every Drop Counts network. in the full sustainability report at www.dbrreef.com.

3.2.4 Supply chain leadership 4 social The Group purchases large quantities of maintenance supplies for As one of the largest property fund managers in Australia, the Group commercial properties under its management and has identified understands its potential impact on the lives of many people and the opportunity to use its significant purchasing power to achieve appreciates it has a responsibility to make that impact a positive one. an improved environmental outcome. Further information on supply The Group’s social program benefits tenants and contractors, chain leadership initiatives can be found in the full report at employees and the greater community. www.dbrreef.com. 4.1 occupational health safety and liability risk 3.2.5 Green cleaning contracting management program The Group is committed to implementing green cleaning methods The Group recognises it has a duty of care to clients, tenants, across the property portfolio. Cleaning contract specifications have employees, managing agents and contractors to meet its obligations been updated to include specific environmental requirements. in relation to Occupational, Health, Safety and Liability (OHS&L). Tenderers are encouraged to put forward innovative cleaning To meet these obligations, the Group has implemented a rigorous methods, with the most appropriate selected and applied to each portfolio-wide OHS&L program. The OHS&L management program new cleaning contract. This system allows for the application of the identifies, manages, monitors and annually audits mitigating practices most up to date products and cleaning methods. Initiatives against the potential for harm, including fire systems, hazard undertaken in green cleaning contracting can be found in the management, first aid, building design and operation and emergency full report at www.dbrreef.com. response. Each year external auditors assess each property 3.2.6 Industry rating tools according to a 5 Star rating system. A property must receive a score of 90 percent or greater in order to achieve 5 Star status. Through a pilot program, the Group assessed the environmental performance of a selection of commercial properties using the Woodside Plaza, Perth WA ABGR and the Green Building Council of Australia’s Green Star Office Winner of Most Improved Property – OHS&L, 2005 Rating (Green Star rating). Both programs award star ratings based Similar to the Environmental Management Program, the Group on the environmental performance of existing commercial properties. presents two awards annually to the highest performers in OHS&L As a result of the pilot, the Group will conduct ABGR and Green Star Management. rating assessments on its commercial properties as part of its Woodside Plaza in Perth was awarded the “Most Improved Property Resource Efficiency Program. This strategy will establish – OHS&L” in 2005 following its adoption of DB RREEF Funds environmental performance and facilitate comparison and Management’s OHS&L procedures. In addition to these procedures, benchmarking across the portfolio. the management team also introduced a number of their own 5 Star – Green Star rating for 30 The Bond property-specific risk-management initiatives. These initiatives improved Woodside’s score from 66 to 87 per cent. The initiatives 30 The Bond, Hickson Road, Sydney was awarded a 5 Star rating undertaken by the management at Woodside Plaza can be found under the Green Star – Office as Built rating tool earlier this year. in the full report located at www.dbrreef.com. This is the first project in Australia to achieve this rating which represents Australian Excellence. 30 The Bond, which opened in 4.2 security and emergency management March 2005, was built to an environmentally sustainable design and developed within strict commercial parameters. The building emits Following the terrorist attacks in the US on 11 September 2001, the Group has adopted a balanced and realistic approach across its 30 per cent less carbon dioxide (CO2) than a typical office building due to the use of natural ventilation, passive chilled beam cooling portfolio in terms of security and terrorism threat and emergency risk and fully operable shading on the building façade. management. Similar to the Environmental Management Program, the Security and Emergency Management program aims to identify, manage and monitor the security and emergency management risks at each property and endeavours to minimise, remove or manage that risk.

DB RREEF Trust Annual Report 2006 33 sustainability report (continued)

30 The Bond, Hickson Road, Sydney NSW

4.3 fair contracting principles 4.5 employee welfare programs The property industry is a significant employer which seeks to The Group recognises that the health and well-being of its provide best practice work environments for its employees and those employees is vital to the company’s success. Employees have the of its service providers. Services such as cleaning, maintenance and opportunity to access preferential plan arrangements for private security are essential to good management and property owners health insurance through a Group Heath Insurance plan, with the expect contractors to recognise and commit to principles of option of deducting premiums from salary payments. corporate responsibility. In doing so, contractors demonstrate they Additionally, the Group offers an Employee Assistance Program understand the values and high standards of corporate responsibility enabling employees and their families to access a confidential adopted by their clients, and commit to safe, fair and equitable counselling and advisory services for personal or work related issues. working conditions for their employees. In response to this objective, the Property Council of Australia (PCA) 4.6 community participation formed a committee of corporate leaders, of which the Group is an The Group supports a range of charitable organisations including: active member, to steer this important project. This committee has n Property Industry Foundation – as a Gold Corporate Sponsor of developed, in consultation with major members, the “Principles for the Property Industry Foundation (PIF), the Group contributes to Fair Contracting” (Principles). the support of “at risk” young people. The Principles represent an industry standard that applies to all n Australian Athletes with a Disability – the contributions of the service providers including security, cleaners and maintenance Group to Australian Athletes with a Disability assist in the across all sectors within the property industry. The Principles development, promotion and co-ordination of sport for athletes contain obligations for both the property industry and its contractors. with a disability. The Group supports these Principles and has since adapted these n Cure Cancer Australia Foundation – a group of keen “sand Principles across its business. engineers” participate in the annual Castles in the Sand event. 4.4 employee training, education and professional This event is a key fundraiser for the Cure Cancer Australia Foundation, with funds going towards innovative, development ground-breaking cancer and leukaemia research projects. The Group offers a range of learning and development programs to ensure its employees have the most up to date knowledge and skills. The Group’s Study Assistance Policy encourages employees to undertake formal study that will contribute to professional development and the achievement of the Group’s overall success. Employees are also entitled to claim costs for one professional membership per annum.

34 DB RREEF Trust Annual Report 2006 corporate governance statement

View from 1 Farrer Place, Sydney NSW (Photo provided by Hamilton Lund of Visual Eyes International)

DB RREEF Funds Management Limited (DB RREEF Funds and management in order to facilitate Board and management Management) is the Responsible Entity of each of the four trusts that accountability and ensure a balance of authority. The Board, comprise DB RREEF Trust. DB RREEF Funds Management is also management committees and committee structure are detailed the Responsible Entity of three property syndicates and DB RREEF at www.dbrreef.com/governance. RENTS Trust, and is the investment manager for two private client DB RREEF Funds Management is a wholly owned subsidiary property mandates. DB RREEF Funds Management is also the of DB RREEF Holdings Pty Limited (DB RREEF Holdings). investment manager of the Deutsche Wholesale Property Fund DB RREEF Holdings is 50 percent owned by DB RREEF Operations (DWPF) appointed by DB Real Estate Australia Limited, the Trust (DB RREEF Operations) and 50 percent owned by First Responsible Entity of DWPF. The above trusts, syndicates and client Australian Property Group Holdings Pty Limited, a subsidiary of mandates are collectively referred to in this corporate governance Deutsche Bank AG (DB). DB RREEF Funds Management and DB statement as the Trusts. RREEF Holdings share a common Board of Directors. the governance framework The shareholders of DB RREEF Holdings, namely DB RREEF Funds Management as Responsible Entity of DB RREEF Operations and The corporate governance framework is designed to support the First Australian Property Group Holdings Pty Ltd entered into a strategic objectives of each of its Trusts by defining accountability Shareholders’ Deed on 1 October 2004 (Deed). The Deed and creating control systems appropriate to mitigate the risks prescribes the composition of the Boards of DB RREEF Funds inherent in the day-to-day operations of the Trusts. Management and DB RREEF Holdings (see Principle 2) and requires To achieve this objective, the Group has implemented a corporate the agreement of the shareholders regarding the management of governance framework that meets each of the ASX Principles of personnel in the Human Resources, Internal Audit, Legal and Good Corporate Governance (ASX Principles). The Group has Compliance functions. Further, the Deed prescribes a number of prepared a reconciliation of the ASX Principles against its own matters that require an ordinary resolution of shareholders, rather governance framework. This reconciliation can be found on the than a resolution of the Board. The Board has considered the web page www.dbrreef.com/governance. provisions of the Deed and concluded that the Deed does not compromise the ability of the Board to act independently and principle 1. a solid foundation for oversight and is in the best interests of investors. management 1.1 role of the board The Group is committed to maintaining, through both the Executive management and the Board, a balance of skills, experience and The Board is responsible for ensuring that the fiduciary and statutory independence appropriate to the nature and extent of its operations. obligations of each Trust to its investors are met, and that such duties have priority over all other duties including the interests The governance framework enables the Board to provide strategic of shareholders. guidance, while exercising effective oversight of management. The framework also defines the roles and responsibilities of the Board

DB RREEF Trust Annual Report 2006 35 corporate governance statement (continued)

Having regard to these responsibilities, the Board ensures that: 2.2 director independence n compliance with its fiduciary and statutory obligations are met; Independent Directors are independent of management and free of n conflict identification and management practices are in place; any business or other relationship that could materially interfere with n the goals of the Group and each Trust are clearly established, the exercise of their unfettered and independent judgement. and that strategies are in place for their achievement; Independent Directors are active in areas which enable them to n budgets are in place and performance is monitored; relate to the strategies of the company and to make a meaningful contribution to the Board’s deliberations. The Board regularly n each Trust’s financial statements are true and fair and otherwise assesses the independence of its Independent Directors, conform with law; in light of interests disclosed to it. n appropriate risk management, internal control and regulatory compliance policies are in place; and Directors identified as independent: n n management adheres to high standards of ethics and corporate are not substantial shareholders of the company, or an officer of, governance. or otherwise associated directly with a substantial shareholder of the company; In addition, the Board is responsible for appointing and removing the n have not been, within the last three years, employed in an Chief Executive Officer (CEO), ratifying the appointment of the Chief executive capacity by the company, DB or any other group Financial Officer (CFO), Chief Operating Officer (COO) and Company member, or been a Director after ceasing to hold such Secretary, and monitoring the performance of the senior employment; management team. The Board also carries ultimate responsibility for the approval of property acquisitions, divestments and major n have not been, within the last three years, a principal of a developments. A copy of the Board Terms of Reference is available material professional adviser or a material consultant to the on www.dbrreef.com/governance. company, DB or any other group member, or an employee associated with a service provider; 1.2 role of management n have not been a material supplier or customer of the company, The day-to-day management of each of the Trusts rests in the hands DB or any other group member, or an officer of or otherwise of the management team. To assist this team in the direction, associated directly or indirectly with a material supplier or implementation and monitoring of its plans and strategies, a number customer; of management committees have been established and n have no material contractual relationship with the company, responsibilities delegated. The management committees include: DB or any other group member, other than as a Director of n Executive Committee the company; n Investment Committee n have not served on the Board for a period which could, or could reasonably be perceived to, materially interfere with n Portfolio Review Committee the Director’s ability to act in the best interests of the company; n Capital Markets Committee n are free from any interest and any business or other relationship Other management committees have been set up to assist the Board which could, or could reasonably be perceived to, interfere with and details of these committees are available on www.dbrreef.com/ the director’s ability to act in the best interests of the company; governance. and n are free from family ties or cross-directorships that may principle 2. structuring the board to add value compromise Director independence. 2.1 structure of the board For the purpose of assessing independence, the Board has determined that affiliation with a business which accounts for greater The composition of the Board reflects the duties and responsibilities than 2.5 percent of the Group’s, or the supplier’s revenue would be, it discharges as the representative of investors, and in setting each as a category, material. Trust’s strategy and overseeing its implementation. Independent Directors hold office for three years, following their first The qualifications for Board membership are the ability and appointment (or, if appointed by the Board between annual competence to make appropriate business recommendations and meetings, from the date of the Annual General Meeting immediately decisions, an entrepreneurial talent for contributing to the creation of succeeding this appointment). It is not generally expected that an investor value, relevant experience in the industry sector, high ethical Independent Director would hold office for more than ten years, or standards, sound practical sense and a total commitment to the be nominated for more than three consecutive terms, whichever is fiduciary and statutory obligations to further the interests of investors the longer. For a description of the procedure for the selection and and achieve each Trust’s objectives. appointment of new Directors to the Board please refer to The Board currently comprises seven members, four of whom are www.dbrreef.com/governance. independent and three of whom are appointed by DB, including Although the Board is advised by internal Legal Counsel and the the CEO. Company Secretary, Independent Directors are encouraged to take The members of the Board as at the date of this Annual Report are independent professional advice, at the Group’s expense, as detailed in the Directors section of this Annual Report and details of required. Independent Directors also confer regularly, outside the Alternate Director who resigned during the year are set out in the Board meetings, without the involvement of management and Directors’ Report. Executive Directors.

36 DB RREEF Trust Annual Report 2006 2.3 role of the chair The Code of Conduct includes standards relating to: The Chair is an Independent Director, and is responsible for the n acting efficiently, honestly and fairly at all times; leadership of the Board, for the efficient organisation and conduct of n acting with due skill and competence; the Board’s functions, and for the briefing of Directors in relation to n complying with the law and internal group policies; issues arising pertinent to the Board. The Board has also clearly n reporting possible inappropriate activity and breaches; defined, and the Chair monitors, the responsibilities of the CEO. n acting in accordance with the responsibilities of managers 2.4 board nomination and remuneration committee and supervisors, if applicable; n managing potential conflicts of interest; A Board Nomination and Remuneration Committee has been established by the Board to assist in the fulfilment of its n handling information and property appropriately; responsibilities, by overseeing all aspects of Director and Executive n misuse of the group’s assets or position within the group; remuneration, performance evaluation and Board nominations. n creating and maintaining correct records; It comprises two Independent Directors (one of whom is the Chair) n communicating with clients and public appropriately; and two DB appointed members. n being aware of market conduct requirements; and The members of the Board Nomination and Remuneration n ensuring employment matters are addressed. Committee are as follows: All employees receive regular Code of Conduct training, other Committee member Status compulsory training, including anti-money laundering and routine refresher training. The Employee Code of Conduct is available on Christopher T Beare (Chair) Independent Director www.dbrreef.com/governance. Stewart F Ewen (OAM) Independent Director Brian E Scullin DB appointed Non-Executive Director 3.2 insider trading and trading in DB RREEF securities Patricia A Daniels DB appointed Member The Group has implemented a trading policy that sets out the The Committee’s nomination and remuneration responsibilities requirements applying to Directors and employees who wish to trade are set out in its Terms of Reference which is available on or invest in any of the Group’s financial products for their personal www.dbrreef.com/governance. account or on behalf of an associate. The Board Nomination and Remuneration Committee composition The principle objectives of the trading policy are to: of two Independent Directors, one of whom is the Chair, one DB appointed Non-Executive Director and one DB appointed member n avoid insider trading; is in line with the ASX Principles. However, it differs from the ASX n avoid conflicts of interest with the Trusts, the Group or its Principles commentary and guidance in that it does not comprise a investors; majority of Independent Directors. This departure reflects the unique n ensure that the interests of the Trusts and investors take priority shareholding of DR RREEF Funds Management, being 50 percent over those of the Group and its employees; owned by DB RREEF and 50 percent owned by DB and enables n impose limitations on short term trading and on highly DB to bring to deliberations its experience as a global financial speculative deals; institution, as well as recognising the materiality of its shareholding. n discourage staff members from engaging in periodic trading on The Board has considered this departure from ASX guidelines a scale that would distract them from their responsibilities to the and has determined that the departure does not compromise Trusts, the Group and investors; and the objectives of the Committee. n raise awareness and minimise any potential breach of the Reporting to the Executive Committee and the Board Nomination prohibitions on insider trading in the Corporations Act. and Remuneration Committee, the management Compensation Committee oversees the development and implementation of all human resource management systems, including compensation and The policy specifies any Director or employee who wishes to trade in recruitment, and advises the Board Nomination and Remuneration any Trust must obtain written approval before entering into any trade. Committee. Approval will not be given during defined blackout periods. These periods commence at the end of the Trusts’ half-year or full-year principle 3. promoting ethical and responsible reporting periods and end on the day the Trusts’ results are decision-making announced. In addition, if Compliance or the Chief Executive Officer considers 3.1 code of conduct that there is the potential that inside information may be held or the To ensure the satisfaction of statutory and fiduciary obligations to potential that a significant conflict of interest could arise, additional each of its investor groups and to maintain confidence in its integrity, blackout periods may be imposed on Directors and employees at the Board has implemented a series of clearly articulated compliance any time. policies and procedures by which it requires all employees to abide. A summary of the Employee Trading policy is available on Policies relating to employee conduct are summarised in the www.dbrreef.com/governance. Employee Code of Conduct, and assist employees in ensuring that their conduct meets the highest ethical and professional standards.

DB RREEF Trust Annual Report 2006 37 corporate governance statement (continued) principle 4. safeguarding the integrity of principle 5. timely and balanced disclosure financial reporting 5.1 continuous disclosure 4.1 review and authorisation To promote the timely and balanced disclosure of all material matters The Group has put in place a structure of review and authorisation that impact the Trusts, the Board has put in place mechanisms designed to ensure the truthful and factual presentation of each designed to ensure compliance with ASX Listing Rules and ASIC’s Trust’s financial position. disclosure requirements such that: This structure includes: n all investors have equal and timely access to material information, including the financial situation, performance, n the establishment of a Board Audit Committee to review the ownership and governance of the Trusts; and financial statements of each entity and review the independence and competence of the external auditor; and n all announcements are factual and presented in a clear and balanced way. n semi-annual management representations to the Board Audit Committee, affirming the veracity of each entity’s financial To achieve this objective the Group has the following policies in statements. place: n Continuous Disclosure and Analyst Briefing Policy, which 4.2 board audit committee includes consideration of: A Board Audit Committee has been established by the Board, – the type of information that requires disclosure; including only Directors who are financially literate and have an – internal notification and decision-making concerning its understanding of the industry in which the Group operates, and disclosure obligations; one or more of whom have financial expertise. The Board Audit – the delegation of responsibility to ensure that the Group Committee currently comprises two Independent Directors, complies with its disclosure obligations and to identify the including the Chair and one DB appointed Director. The Board Audit employee responsible for determining what will be disclosed; Committee operates under formal Terms of Reference, has access to management, and internal and external auditors without – measures designed to avoid the emergence of a false market management present, and has the right and opportunity to seek in any Trust’s securities; and explanations and additional information. In addition, the external – external communications such as analysts briefings and auditor is invited to attend all Board Audit Committee meetings. responses to investor queries. The Committee may also obtain independent professional advice in n The Employee Code of Conduct which includes consideration of: the satisfaction of its duties at the cost of the Group. The Committee – media contact and comment; and meets as frequently as required to undertake its role effectively and – safeguarding the confidentiality of corporate information to not less than four times per annum. avoid premature disclosure. The membership of the Board Audit Committee is as follows: The Group has also established a segregated Compliance function Committee member Status to assist management in the promotion of an effective compliance culture. Compliance responsibilities include the provision of Elizabeth A Alexander (Chair) Independent Director compliance advice, the drafting and updating of relevant compliance Barry R Brownjohn Independent Director policies and procedures, conducting compliance training and Brian E Scullin DB appointed Non-Executive Director monitoring adherence to key compliance policies and procedures. The Board Audit Committee also has responsibility for approval of For a description of these Policies please refer to the Employee Code the engagement of the external auditor to perform any non-audit of Conduct and the Continuous Disclosure and Analyst Briefings service for a fee greater than $100,000. The external auditor will not Policy – which are both available on www.dbrreef.com/governance. provide services that have the potential to impair the independence of their audit role. Generally such services include those where the external auditor: n participates in activities that are normally undertaken by management; n is remunerated on a “success fee” basis; n may be required to review or audit their own work, including: – the preparation of accounting records; – the design and implementation of technology systems; – conducting valuation, actuarial or legal services; – promoting, dealing in or underwriting securities; or – providing internal audit services. The Board Audit Committee’s Terms of Reference, the Committee’s procedure for the selection and appointment of the external auditor and for the rotation of external audit engagement partners are available on www.dbrreef.com/governance.

38 DB RREEF Trust Annual Report 2006 principle 6. respecting the rights of 7.2 board risk and compliance committee security holders Although not required by ASIC due to the appointment of a majority independent Board, the Board has established a Board Risk and 6.1 annual general meeting Compliance Committee to review risk and compliance matters and The Group respects the rights of investors and to facilitate the monitor the Group’s conformance with the requirements of the effective exercise of those rights the Board has committed to Managed Investments Act, as specified in Section 601JC of the the conduct of an annual general meeting for DB RREEF. Corporations Act. The Committee includes only members who are familiar with the requirements of the Managed Investments Act and Each annual general meeting will seek to: have extensive risk and compliance experience. The Committee is n supplement effective communication with investors; also encouraged to obtain independent professional advice in the n provide investors ready access to balanced and understandable satisfaction of its duties at the cost of the Group. information about their fund; and The Committee currently comprises five members, three of whom n increase the opportunities for investor participation. are external members (ie. members that satisfy the requirements Investors of DB RREEF will also ratify the appointment of of Section 601JB(2) of the Corporations Act) and two of whom are Independent Directors as outlined in Section 2.2 of this statement. executives of the Group. The scope of the Committee includes all Trusts, including the Group’s investment mandates. The Committee 6.2 communications with investors reports to the Responsible Entity any breach of the Corporations Act In addition to conducting an AGM, the Group has designed a or breach of the provisions contained in any Trust’s Constitution, and communication strategy to promote effective communication and further reports to ASIC if the Committee is of the view that the encourage participation with each Trust’s investors. This strategy Responsible Entity has not taken appropriate action to deal with a includes: matter reported to it. n the placement of all relevant announcements made to investors The membership of the Board Risk and Compliance Committee and the market, and related information, on the DB RREEF is as follows: website; Committee member Status n the practice of teleconferencing analyst and media briefings and general meetings, and posting a transcript of and/or presentation Brian Scullin (Chair) Independent Member materials on the DB RREEF website; Peter Carrigy-Ryan Independent Member n placing the full text of notices of meetings and explanatory Andy Esteban Independent Member material on the DB RREEF website; and Tanya Cox Executive Member and Chair of the Risk n providing information about historic press releases/ Management Committee announcements and historic financial data on the DB RREEF John Easy Executive Member and Chair of the website. Compliance and Internal Audit Committee In addition to its responsibilities under the Act, the Board Risk and 6.3 audit attendance at AGM Compliance Committee is responsible for oversight of the DB RREEF The Group will request the external auditor of the Trust to attend Funds Management risk management system, including its internal each annual general meeting and be available to answer investor compliance and control environment. The Committee’s Terms of questions about the conduct of the audits of both the Trusts’ Reference are available on www.dbrreef.com/governance. financial records and their Compliance Plans and the preparation To enable the Board Risk and Compliance Committee to effectively and content of the auditor’s report. fulfil its obligations, two management committees have been principle 7. recognising and managing risk established to monitor the effectiveness of the Group’s risk management, internal compliance and control systems. These 7.1 risk management management committees are the Compliance and Internal Audit Committee and the Risk Management Committee. The Group has designed a system of risk oversight, management and internal control to identify, assess, monitor and manage risk, and 7.3 management representations to keep investors informed of material changes in each Trust’s risk In addition to the operation of the above management committees, profile. This system includes the establishment of a Board Risk and the Chief Executive Officer makes the following representations in Compliance Committee. relation to risk management: n at least quarterly to the Head of Compliance, regarding conformance with compliance policies and procedures. Any exceptions are reported by Compliance to the Board Risk and Compliance Committee quarterly; and n on a semi-annual basis to the Board Audit Committee regarding the veracity of the company’s financial statements.

DB RREEF Trust Annual Report 2006 39 corporate governance statement (continued)

11 Talavera Road, Macquarie Park NSW

7.4 board treasury policy committee principle 8. encouraging enhanced performance The Board has established a Board Treasury Policy Committee The Board is committed to enhancing both its own and to review and recommend for approval financial risk management management’s effectiveness. To achieve this objective the Group has policies and hedging and funding strategies, and to monitor overall implemented a training regime to facilitate performance by education financial risk management exposures. The Board Treasury Policy for Directors and employees. The Group has also implemented a Committee includes only members who are familiar with financial comprehensive performance evaluation program for its employees risk management concepts. The scope of the Committee includes to ensure the effectiveness of its education and training programs. all Trusts. The Board Nomination and Remuneration Committee has implemented The membership of the Board Treasury Policy Committee an annual performance evaluation program for the Board. is as follows: 8.1 board education and performance evaluation Committee member Status The Group is subject to various regulatory and legal obligations, Barry R Brownjohn (Chair) Independent Director arising from: Christopher T Beare Independent Director n the Corporations Act (including specifically the provisions Adviser Independent Member of the Managed Investments Act); Victor P Hoog Antink Chief Executive Officer and n the Australian Stock Exchange listing rules and governance Executive Director requirements; Peter C Roberts Executive Member and Chair of the n the requirements of an Australian Financial Services Licence Capital Markets Committee holder; and The Committee’s Terms of Reference are available on n The Group’s governance and compliance framework. www.dbrreef.com/governance. To assist the Board Treasury Policy Committee in effectively fulfilling its obligations a management Capital Markets Committee has been established.

40 DB RREEF Trust Annual Report 2006 To ensure that Directors have the most current information to meet 8.3 employee performance evaluation the above obligations to discharge their responsibilities effectively Each year the Board ensures that the goals of the Group are clearly and to allow new Directors to participate fully and actively in Board established and that strategies are in place for the achievement of decision-making at the earliest opportunity, Board members receive: those goals. Goals are reviewed periodically to ensure they remain n a Director’s Information Pack, including corporate governance consistent with the Group’s priorities and the changing nature of its framework, committee structures, membership and terms of business. These goals become the performance targets for the CEO reference, governing documents, Directors and Officers and Executive Committee. Performance against these goals is insurance details, current annual reports and Trust constitutions; reviewed annually by the Board Nomination and Remuneration n a Director’s induction briefing, including explanation of each Committee and is taken into account in the remuneration review Trust’s financial, strategic, operational and risk management of Executive Committee members. position; and Cascading goals and objectives are established for all other n Director training, where required, including Corporations Act employees and their performance is reviewed annually by the (general duties of a Director, Managed Investment Act duties of Executive Committee. Remuneration and incentive payments are a Director), Australian Stock Exchange (governance and listing considered by the Compensation Committee and recommended rules), Australian Financial Services Licence (authorisations, to the Board Nomination and Remuneration Committee, based on financial and general requirements) and Governance and the achievement of approved performance objectives and market Compliance Framework (compliance plan, compliance policies comparatives. and procedures, monitoring program). Directors are also encouraged to: principle 9. remunerating fairly and responsibly n take independent professional advice, at the Group’s expense; Details of the Group’s remuneration framework for Non-Executive n seek additional information from management; and Directors and employees are set out in the Remuneration Report that n directly access the Company Secretary, General Counsel and forms part of the Directors’ Report contained in this Annual Report. Head of Compliance. principle 10. recognising the legitimate interests The Board Nomination and Remuneration Committee is also of stakeholders responsible for ensuring the effectiveness of the induction process and overseeing the annual performance evaluation of the Board, its 10.1 stakeholder interests committees and individual Directors. The Group is aware that the creation of value through the better A description of the process for the performance evaluation of the management of natural, human, social, financial and other resources Board is available on our website at www.dbrreef.com/governance. is essential to the development of its reputation, and acknowledges the interests of its stakeholders including investors, employees, 8.2 employee education and performance evaluation tenants, bankers/financiers and the broader community, in the The Code of Conduct requires all employees to undertake and further pursuit of this objective. maintain a specific type and/or amount of training determined by To address these objectives the Group has in place a Directors’ Code their job function (eg. to meet licence requirements, to meet the of Conduct, which addresses Directors’ duties and responsibilities, requirements of ASIC Policy Statement PS146 and PS164 or to meet conflicts of interest, use and confidentiality of information and specific industry or professional body accreditation requirements). Director independence. The Director’s Code of Conduct is available Managers and supervisors also have a responsibility to ensure that on www.dbrreef.com/governance. employees reporting to them have undertaken the required training. In addition, employees deemed “advisers” are required to have in website place an annual training plan and to undertake a specified number You will find in this Corporate Governance Statement numerous of hours’ training per annum. Employees who provide financial references to information and documents available on product advice to retail investors are also required to become www.dbrreef.com/governance or follow the links to Investments accredited pursuant to ASIC Policy Statement PS146. and then Governance). The governance web page includes a full Specific minimum compulsory compliance training is provided or description of the Group’s Governance Framework along with various co-ordinated by Compliance for all employees and adherence to Committee Terms of Reference, Policies and Codes of Conduct, the training regime is monitored by the Executive Committee. along with a reconciliation to the ASX Principles. To foster continuous improvement and to ensure the effectiveness of its education and training programs, the Group conducts an annual performance evaluation of all employees.

DB RREEF Trust Annual Report 2006 41 directors

Christopher T Beare BSc, BE (Hons), MBA, PhD, FAICD Chair and Independent Director Age 55 Chris Beare possesses a wealth of experience in technology, finance and investment. He joined investment bank Hambros Australia in 1991, becoming head of corporate finance in 1994 and joint Chief Executive in 1995, serving until Hambros was acquired by Société Générale in 1998. During that period Hambros was active in infrastructure, telecoms and media. Chris remained a director of SG Australia until 2002. From 1998, he helped form Radiata (a technology start-up spanning Sydney and Silicon Valley). As Chair and Chief Executive Officer, he then steered it to a successful sale to Cisco Systems in 2001. For four years prior to joining Hambros, Chris was Executive Director of the Melbourne-based Advent Management venture capital firm. Chris has been a director of a number of companies in the finance, infrastructure and technology sectors. Chris is both the Chair and an Independent, Non-Executive Director of DB RREEF Funds Management Limited. He is also the Chair of the Board Nomination and Remuneration Committee and a member of the Board Treasury Policy Committee.

Elizabeth A Alexander AM BComm, FCA, FAICD, CPA Independent Director Age 63 Elizabeth Alexander was formerly a partner with PricewaterhouseCoopers and is currently a Director of Boral Limited and CSL Limited, deputy chair of the Financial Reporting Council, and a member of the Takeovers Panel. Elizabeth's previous appointments include National Chair of the Australian Institute of Company Directors, National President of the Australian Society of Certified Practising Accountants and a member of the Australian Accounting Standards Board. Elizabeth is also Chair of a number of Board audit committees. Elizabeth is an Independent, Non-Executive Director of DB RREEF Funds Management Limited and Chair of the Board Audit Committee.

Barry R Brownjohn BComm Independent Director Age 55 Barry Brownjohn is a senior consultant with Pacific Road Corporate Finance where he focuses on advising companies on strategic acquisitions and divestments in the financial services and related technology sectors. He was formerly the Australian Managing Director of the Bank of America. While with the Bank of America, Barry held a range of senior management roles in various overseas locations. He is currently an Advisory Board Member of the South Australia Financing Authority, a Director of Citigroup Pty Limited and Bakers' Delight Holdings Limited. Barry's previous appointments include Chair of the International Banks and Securities Association and the Asia Pacific Managed Futures Association. Barry is an Independent, Non-Executive Director of DB RREEF Funds Management Limited, is the Chair of the Board Treasury Policy Committee and a member of the Board Audit Committee.

Stewart F Ewen OAM FILE Independent Director Age 57 Stewart Ewen has extensive property experience, commencing with the Hooker Corporation in 1966 where he worked throughout Australia and South East Asia. In 1983 he established Byvan Limited which, by 2000, managed $8 billion in shopping centre assets in Australia, Asia and North America. In 1999, he sold his interest in Byvan to the Savills Group in London, remaining as Chair until 2001. As the major partner of NavyB Pty Ltd he has completed numerous residential and commercial property projects. He has also held the position of Managing Director of Enacon Ltd, and was instrumental in the establishment of Converting Technology Pty Ltd. Stewart has previously served as President of the Property Council of NSW and is a Director of the Cure Cancer Australia Foundation and Cell Bank Australia. Stewart is also a Director of CapitaCommercial Trust Management Limited, Singapore. Stewart is an Independent, Non-Executive Director of DB RREEF Funds Management Limited and a member of the Board Nomination and Remuneration Committee.

42 DB RREEF Trust Annual Report 2006 Andrew J Fay BAg Econ (Hons), ASIA Alternate Director to Charles B Leitner III Age 41 Andrew Fay is Head of Deutsche Asset Management Australia Limited (DeAM), as well as its Chief Investment Officer for Australia. Andrew is dually responsible for the operation of DeAM's Australian business and the consistency of the investment process for all asset classes within Australia. Andrew joined DeAM in 1994 after six years with the investment division of AMP Global Investors. Andrew sits on the Investment and Financial Services Association (IFSA) Investment Board in Australia. Andrew holds an Honours degree in Agricultural Economics from the University of Sydney and has completed a graduate diploma with the Securities Institute of Australia. Andrew is Deutsche Bank's nominated alternate Director to Charles Leitner.

Victor P Hoog Antink BComm, MBA, FCA, FAPI, MAICD Executive Director Age 52 Victor Hoog Antink joined DB Real Estate after almost nine years at Westfield Holdings where he was the Director of Funds Management, responsible for both the Westfield Trust and the Westfield America Trust. Victor has a commerce degree from the University of Queensland, an MBA from the Harvard Business School, is a fellow of the Australian Property Institute, a fellow of the Institute of Chartered Accountants in Australia, and a member of the Institute of Company Directors. Victor has over 25 years’ experience in property and finance and is the National President of the Property Council of Australia. Victor is CEO and an Executive Director of DB RREEF Funds Management Limited and a member of the Board Treasury Policy Committee. Victor is a Deutsche Bank nominated Director.

Charles B Leitner III BA Executive Director Age 47 Charles Leitner is the Global Head of RREEF, the global real estate and infrastructure investment operation of Deutsche Asset Management, which manages Euros €56.2 billion of real estate investments worldwide. With 23 years’ real estate investment experience, Charles joined RREEF in 1988 and became a partner in the firm in 1996. In 2001 he assumed overall responsibility for RREEF's US property acquisition business and in 2004 was appointed Global Head of RREEF. Based in New York, Charles graduated from the University of Pennsylvania with a BA in Urban Studies/Regional Science. He is a member of the Urban Land Institute, the Real Estate Roundtable and the National Association of Office and Industrial Parks. Charles is an Executive Director of DB RREEF Funds Management Limited and is a Deutsche Bank nominated Director.

Brian E Scullin BEc Non-Executive Director Age 55 Following a career in government and politics in Canberra, Brian Scullin was appointed the inaugural Executive Director of the Association of Superannuation Funds of Australia (ASFA) in 1987. He joined Bankers Trust in Australia in 1993 and held a number of senior positions, becoming President of Japan Bankers Trust in 1997. In 1999 he was appointed Chief Executive Officer – Asia/Pacific for Deutsche Asset Management and retired from this position in 2002. Brian is a panel member of the Financial Industry Complaints Service Limited and a Director of State Super Financial Services Limited. Brian is a Non-Executive Director of DB RREEF Funds Management Limited, Chair of the Board Risk and Compliance Committee and is a member of the Board Nomination and Remuneration Committee. Brian is a Deutsche Bank nominated Director.

DB RREEF Trust Annual Report 2006 43 executive committee

L– R: Tanya L Cox, Chief Operating Officer; Ben Lehmann, Head of Portfolio Services; Mark Turner, Head of Unlisted Funds; Victor Hoog Antink, Chief Executive Officer; John Easy, General Counsel; Peter Roberts, Chief Financial Officer.

44 DB RREEF Trust Annual Report 2006 management team

L– R: Graham Pearson, DWPF Fund Manager; Tony Gulliver, Head of Development and Building Services; John Swadling, Head of Commercial; Bill Reynolds, Senior Investments Manager; Tony Martin, Co-Head of Capital Transactions; Louise Martin, Head of Retail; Andrew Whiteside, Head of Industrial; Tony Dixon, Co-Head of Capital Transactions. Absent: Robyn Scott, AXA Fund Manager.

DB RREEF Trust Annual Report 2006 45 financial reports

DB RREEF Diversified Trust (ARSN 089 324 541) Annual Financial Report 30 June 2006

directors’ report 47 auditor’s independence declaration 58 financial statements income statements 59 balance sheets 60 statements of changes in equity 61 cash flow statements 62 notes to the financial statements 63 directors’ declaration 115 independent auditor’s report 116

The Stapled Entity, DB RREEF Trust (DRT) (ASX Code: DRT), consists of DB RREEF Diversified Trust (DDF), DB RREEF Industrial Trust (DIT), DB RREEF Office Trust (DOT), and DB RREEF Operations Trust (DRO), (the Trusts or the Stapled Entities). Under Australian equivalents to International Financial Reporting Standards (AIFRS), DDF has been deemed the parent entity for accounting purposes. Therefore the DDF consolidated financial statements include all entities forming part of DRT. All press releases, financial reports and other information are available on our website: www.dbrreef.com.

46 DB RREEF Trust Financial Reports 2006 directors’ report

The Directors of DB RREEF Funds Management Limited (DRFM) as Responsible Entity of DB RREEF Diversified Trust (the Trust) and its consolidated entities (DB RREEF Trust or Stapled Entity) present their Directors’ Report together with the consolidated financial statements for the year ended 30 June 2006. The Trust together with DB RREEF Industrial Trust, DB RREEF Office Trust and DB RREEF Operations Trust form the DB RREEF Trust stapled security.

1. directors and secretaries

1.1 directors The following persons were Directors or Alternate Directors of DRFM at any time during the year, and to the date of this Directors’ Report:

Directors Appointed Resigned Christopher T Beare 4 August 2004 Elizabeth A Alexander AM 1 January 2005 Barry R Brownjohn 1 January 2005 Stewart F Ewen OAM 4 August 2004 Victor P Hoog Antink 1 October 2004 Charles B Leitner III 10 March 2005 Brian E Scullin 1 January 2005 Alternate Director for Charles B Leitner III Shaun A Mays 10 March 2005 30 January 2006 Andrew J Fay 30 January 2006

Particulars of the qualifications, experience and special responsibilities of current Directors and Alternate Directors at the date of this Directors’ Report are set out in the Directors section of the Annual Report and form part of this Directors’ Report. Particulars of the qualifications, experience and special responsibilities of the Alternate Director who resigned during the period are as follows:

Shaun A Mays BSc (Hons), MSc, MBA (Alternate Director to Charles B Leitner III) Shaun Mays was appointed the Global Head of RREEF Infrastructure Investments in May 2005 and is now based in New York. Prior to this appointment Shaun joined Deutsche Asset Management (Australia) Limited as Australian Chief Executive Officer. Previously Shaun was Managing Director of Westpac Financial Services. He was also Chief Investment Officer of Commonwealth Financial Services and Managing Director and Chief Investment Officer of Mercury Asset Management. He has more than 19 years’ experience in the funds management industry, in both executive management and investment positions, gained in Australia, the United Kingdom and the USA. In addition to his traditional asset management expertise, Shaun has experience in the property and private equity sectors. Shaun was Deutsche Bank’s nominated Alternate Director for Charles Leitner until January 2006.

1.2 company secretaries The names and details of the Company Secretaries of DRFM as at 30 June 2006 are as follows:

Tanya L Cox MBA MAICD (Company Secretary) Appointed: 1 October 2004 Tanya Cox joined DB Real Estate in July 2003 as Chief Operating Officer, responsible for the overall operational efficiency of the real estate business in Australia. Tanya has held various general management positions over the past 15 years, including Director and Chief Operating Officer of NM Rothschild & Sons (Australia) Ltd and General Manager – Finance, Operations and IT of Bank of New Zealand (Australia). Tanya is Chief Operating Officer and Company Secretary of DRFM and DB RREEF Holdings Pty Limited and is a member of the Board Risk and Compliance Committee.

John C Easy B Comm LLB (Company Secretary) Appointed: 1 July 2005 John Easy joined Deutsche Asset Management as a senior lawyer in 1997 and has been involved in the listing of Deutsche Office Trust and a number of major acquisition, disposal and leasing transactions for the group. John has responsibility for legal issues affecting the property portfolio. John was formerly a senior associate with law firms Allens Arthur Robinson and Gilbert & Tobin. John is currently undertaking the Graduate Diploma in Applied Corporate Governance with Chartered Secretaries Australia. John is General Counsel and Company Secretary for DRFM and DB RREEF Holdings Pty Limited and is a member of the Board Risk and Compliance Committee.

DB RREEF Trust Financial Reports 2006 47 directors’ report (continued)

2. attendance of directors at board meetings and board committee meetings The number of Directors’ meetings held during the year and each Director’s attendance at those meetings is set out in the table below. During the year the Directors met formally five times to consider general business and 11 times to consider specific business. The Directors also met on one additional occasion to consider strategy in conjunction with senior management.

Board Meetings Main meetings Main meetings Special meetings Special meetings held1 attended1 held1 attended1 Directors Christopher T Beare 5 5 12 11 Elizabeth A Alexander AM 5 5 12 11 Barry R Brownjohn 5 5 12 11 Stewart F Ewen OAM 5 5 12 10 Victor P Hoog Antink 5 5 12 12 Charles B Leitner III 2 5 4 12 7 Brian E Scullin 5 4 12 10

1 While a Director or Alternate Director. 2 Based in New York, USA. Special meetings are held at a time to enable the maximum number of Directors to attend and are generally held to consider specific items that cannot be held over to the next scheduled main meeting. The number of Board Committee meetings held during the year and each Director’s attendance at those meetings is set out in the table below.

Board Audit Board Risk and Compliance Board Nomination and Board Treasury Policy Committee Committee Remuneration Committee Committee Meetings Meetings Meetings Meetings Meetings Meetings Meetings Meetings held1 attended1 held1 attended1 held1 attended1 held1 attended1 Directors Christopher T Beare 5 5 2 2 Elizabeth A Alexander AM 9 9 Barry R Brownjohn 9 9 2 2 Stewart F Ewen OAM2 4 4 5 3 Victor P Hoog Antink 2 2 Charles B Leitner III Brian E Scullin2 5 4 4 4 5 5

1 While a member. 2 stewart F Ewen resigned from the Board Audit Committee and Brian E Scullin was appointed to the Board Audit Committee effective 1 October 2005.

3. directors’ and executive remuneration report The Directors of DB RREEF Funds Management Limited (DRFM) as Responsible Entity of DB RREEF Diversified Trust (the Trust) and its consolidated entities (DB RREEF Trust or Stapled Entity) and DB RREEF Holdings Limited (DRH) present the Remuneration Report prepared in accordance with AASB 124 for the year ended 30 June 2006. Please note that a reference to remuneration in this report has the same meaning as compensation for the purposes of AASB 124.

3.1 board nomination and remuneration committee The Board Nomination and Remuneration Committee oversees the remuneration of Directors and executives. The role and membership of the Board Nomination and Remuneration Committee is set out in the Corporate Governance Statement in this Annual Report. The terms of reference of the Board Nomination and Remuneration Committee can be found on the web page www.dbrreef.com/governance.

3.2 non-executive director remuneration The disclosures in this section of the report relate to the Non-Executive Directors of DRFM who held office during the year ended 30 June 2006. Particulars of the skills, qualifications and experience of the Directors who held office during the year are set out in the Directors section of this Annual Report.

3.2.1 Non-Executive Directors’ remuneration framework Non-Executive Directors’ fees reflect the demands which are made on, and the responsibilities of Directors. Non-Executive Directors’ fees are reviewed annually by the Board Nomination and Remuneration Committee. The Committee also obtains advice from independent remuneration consultants to ensure Non-Executive Directors’ fees are appropriate and in line with the market. Non-Executive Directors receive a base fee plus an additional fee for membership of a Board Committee. The Chair, taking into account the greater time commitment required, receives a higher fee, which is market benchmarked. The Chair is not present at any discussion relating to the determination of his own fees. Fees paid to Non-Executive Directors are paid from a remuneration pool of $1,250,000 per annum, which was approved by DB RREEF Trust investors at the 2005 Annual General Meeting held on 25 November 2005.

48 DB RREEF Trust Financial Reports 2006 Board and Committee fees paid to Non-Executive Directors for the year ended 30 June 2006 are set out in the table below:

Directors’ fees Committee fees Cash salary and fees Board Board Audit Board Risk and Board Nomination Board Treasury total Committee Compliance and Remuneration Policy Committee Committee Committee ($) ($) ($) ($) ($) ($) Christopher T Beare 250,000 – – 10,625 7,500 268,125 Elizabeth A Alexander AM 110,000 20,000 – – – 130,000 Barry R Brownjohn 110,000 10,000 – – 15,000 135,000 Stewart F Ewen OAM 110,000 2,500 – 7,500 – 120,000 Brian E Scullin 110,000 7,500 20,000 7,500 – 145,000 Total 690,000 40,000 20,000 25,625 22,500 798,125

All Non-Executive Directors also receive reimbursement for reasonable travel, accommodation and other expenses incurred whilst undertaking DB RREEF Trust business. During the year ended 30 June 2006, Charles B Leitner, Executive Director and his Alternate Directors, Shaun A Mays and Andrew J Fay, were employees of Deutsche Bank or a related company (including RREEF America Inc), and were not paid fees or any other remuneration by DRFM or DRH or any of their subsidiaries. The Chief Executive Officer, Victor P Hoog Antink, does not receive fees in respect of his role as a Director, but does receive remuneration as a Senior Executive of DRFM.

3.2.2 Remuneration paid Details of the nature and amount of each element of remuneration for each Non-Executive Director of DRFM for the years ended 30 June 2005 and 30 June 2006 are set out in the following table.

Short–term employee benefits Post–employment benefits Total Total cash fees Super contributions ($) ($) ($) Christopher T Beare 2006 255,986 12,139 268,125 2005 commence 1 Oct 2004 193,125 – 193,125 Elizabeth A Alexander AM 2006 29,413 100,587 130,000 2005 commence 1 Jan 2005 65,000 – 65,000 Barry R Brownjohn 2006 34,413 100,587 135,000 2005 commence 1 Jan 2005 60,000 – 60,000 Stewart F Ewen OAM 2006 110,092 9,908 120,000 2005 commence 1 Oct 2004 92,701 2,924 95,625 Brian E Scullin 2006 132,861 12,139 145,000 2005 commence 1 Jan 2005 68,750 – 68,750 Total 2006 562,765 235,360 798,125 2005 479,576 2,924 482,500

DB RREEF Trust Financial Reports 2006 49 directors’ report (continued)

3.3 senior executive remuneration The disclosures in this section of the report relate to the executives listed below, being the Chief Executive Officer and the Senior Executives with authority and responsibility for planning, directing and controlling the activities of DB RREEF Trust during the financial year.

Name Title Qualification date of Senior Executives during the 12 months ended 30 June 2006 Tanya L Cox Chief Operating Officer John C Easy General Counsel Victor P Hoog Antink Chief Executive Officer Greg T Lee Head of Transaction Services Qualified until 31 January 2006 Ben J Lehmann Head of Portfolio Services Peter C Roberts Chief Financial Officer Qualified from 5 December 2005 Mark F Turner Head of Unlisted Funds

3.3.1 Senior Executive remuneration framework The Nomination and Remuneration Committee has adopted a framework for Senior Executive remuneration (including the remuneration of the Chief Executive Officer) which is based on the following key criteria: n transparency, competitiveness and reasonableness; n linked to performance; n has the ability to attract and retain high quality executives; and n aligns executives and investor interests. The objective of DRFM’s remuneration framework is to ensure remuneration for performance is competitive and appropriate for the results delivered. The framework aligns each executive’s remuneration with the achievement of strategic objectives and the creation of value for investors, and conforms to market best practice. In consultation with external remuneration consultants, DRFM has structured a remuneration framework that is market competitive and complementary to its remuneration strategy. Alignment to investors’ interests is achieved by a substantial proportion of executive remuneration being dependent upon performance. This ensures that remuneration for Senior Executives, including the Chief Executive Officer, is closely linked to: n delivery of forecast returns; and n achievement of key non-financial value drivers. The remuneration framework is designed to attract and retain talented and motivated executives, and to encourage enhanced performance. The framework provides executives with a remuneration structure that encourages capability and performance by: n providing a clear remuneration structure; and n delivering competitive remuneration for contributing to the creation of value.

3.3.2 Components of Senior Executive remuneration Senior Executive remuneration comprises the following components: n fixed remuneration; and n variable pay through the short term and long term performance incentives. The more senior the executive the higher the proportion of remuneration “at risk” through short and long term incentives. Prior to DRFM’s corporate restructure in September 2004 the target remuneration mix for Senior Executives was 50 percent base salary and 50 percent short term incentive. Subsequent to the restructure and following consideration of guidance from external advisors the Board Nomination and Remuneration Committee: n commissioned the development of a long term incentive scheme; and n revised the target remuneration mix for the Chief Executive Officer and Other Senior Executives to more closely reflect the remuneration structure of DRFM’s peer group. Application of this target mix to the remuneration of the Chief Executive Officer and new recruits was implemented immediately. Application of the target mix to other Senior Executives is being progressively introduced. DRFM’s current target remuneration mix between fixed, short term and long term incentives for the Chief Executive Officer and Other Senior Executives is outlined below:

Fixed Short term incentive Long term incentive (%) (%) (%) Chief Executive Officer 50 25 25 Other Senior Executives 60 25 15

The Board Nomination and Remuneration Committee continue to review the target remuneration mix for all Senior Executives.

50 DB RREEF Trust Financial Reports 2006 3.3.2a Fixed remuneration To ensure that base pay is competitive, external remuneration consultants provide analysis and advice regarding market remuneration for comparable roles. Base pay for executives is reviewed annually. There are no guaranteed base pay increases for executives.

3.3.2b Performance management DRFM has in place an annual performance management program which incorporates the establishment of specific, measurable, financial and non-financial targets for all executives. Performance targets are utilised to ensure that incentives are only available when value has been created for investors. Key performance indicators are typically a combination of financial and non-financial indicators which reflect the executive’s role within DRFM and their personal objectives, and may include one or more of the following measures:

Performance indicators Reason for use Fund performance indicators Total return to ensure focus on an improving security price and delivering income to investors Earnings growth to ensure focus on improving earnings Distributions growth to ensure focus on investor distributions Net tangible asset growth to ensure the value of assets is maintained and improved Property performance indicators Net property income per property to ensure focus on target income returns to investors Percentage of vacant space per property to ensure focus on target income returns to investors Expenses against budget to ensure focus on appropriate cost model Non-financial indicators Delivery to ensure focus on achievement of non-financial drivers of performance Team work to ensure focus on achievement of non-financial drivers of performance Employee turnover to ensure focus on achievement of non-financial drivers of performance

3.3.2c The incentive pool Should DRFM achieve predetermined performance targets, an incentive pool, approved by the Board following the recommendation of the Board Nomination and Remuneration Committee, is available for allocation to executives for the financial year. The size of the incentive pool may be increased for performance above targets to provide an incentive for out-performance. The allocation each executive receives from the incentive pool is based on the particular executive’s performance against individual key performance indicators.

3.3.2d Short term performance incentive At the end of each year, performance against set targets is assessed and the results reflected in the short term performance incentive allocation to each executive. The performance assessment is weighted to non-financial measures that vary between positions but include matters such as achieving delivery of projects, operational improvements, performance enhancements, leadership and team work. Where performance falls below minimum threshold levels, no short term performance incentive is paid. Short term performance incentives are payable in cash in August/September each year.

3.3.2e Long term incentives During the 2005/06 year, the Board introduced a long term incentive scheme designed to achieve the following outcomes: n to more closely align Senior Executives’ interests with those of investors; n to give Senior Executives an incentive to create long term, sustainable value for investors by enabling them to benefit from the long term success of DB RREEF Trust’s activities; and n to assist in attracting and retaining high quality executives. Executives who are eligible to participate in the long term incentive scheme are each of DRFM’s executive committee members, and any other Senior Executive who has been approved by the Nomination and Remuneration Committee. Eligible executives may only participate in the long term incentive scheme if they achieve key performance indicators to a satisfactory level. No participation is granted for less than satisfactory performance. The long term incentive scheme employs the following concepts: n the “Composite Total Return” is 50 percent of the total return of DB RREEF Trust, plus 50 percent of the combined asset weighted total return of DRFM’s unlisted funds and mandates; and n the “Performance Benchmark” is 50 percent of the S&P/ASX 200 Property Accumulation Index for DB RREEF Trust and 50 percent of the Mercers Unlisted Property Fund Index for the unlisted funds and mandates.

DB RREEF Trust Financial Reports 2006 51 directors’ report (continued)

DRFM’s long term incentive scheme operates as follows: n each year the Board, following a recommendation from the Nomination and Remuneration Committee, allocates eligible executives a long term incentive value. The long term incentive value allocated varies depending on the role of the executive and the executive’s performance against key performance indicators; n the long term incentive value is held by DRFM until the end of the three year vesting period, and is notionally reinvested during the vesting period in the DB RREEF Trust (50 percent of long term incentive value) and DRFM’s unlisted funds and mandates (50 percent of long term incentive value). This means that the “banked value” of the long term incentive fluctuates up and down in line with changes in the Composite Total Return; n at the end of the three year vesting period the final long term incentive payment is determined by grossing up the final “banked value” by the Performance Multiplier; n the relevant Performance Multiplier is determined by comparing the Composite Total Return over the three year vesting period against the Benchmark. The table below sets out the appropriate Performance Multiplier based on the comparison of Composite Total Return against the relevant Benchmark performance groups:

Performance hurdle Less than 95% Up to 100% Up to 115% Up to 130% Greater than 130% of benchmark of benchmark of benchmark of benchmark of benchmark Performance Multiplier 100% 110% 120% 140% 150% n consequently, the long term incentive payment made to each Senior Executive at the end of the vesting period is determined by the overall return received by all DRFM’s investors compared to the benchmark group, with performance exceeding the benchmark group being recognised by a greater long term incentive payment. In determining the construction of the Composite Total Return the DRFM Board considered the obligations Senior Executives have to all DRFM’s investors in DB RREEF Trust and the unlisted funds and mandates. Following due consideration the Board determined that the appropriate measure for DB RREEF Trust and the unlisted funds and mandates should be the total return of each of the funds. The Board further determined that the performance Benchmark should be the S&P/ASX 200 Property Accumulation Index for DRT and the Mercers Unlisted Property Fund Index for unlisted funds and mandates. Participants in the long term incentive scheme will only receive cash payments and have no entitlement to DB RREEF Trust securities or securities in any other DRFM product. In addition, if an executive terminates their employment during the vesting period their long term incentive grant is forfeited, unless otherwise determined by the Nomination and Remuneration Committee. The table below sets out the movement in long term incentive values for each Senior Executive during the year.

Name Opening long term incentive Fluctuation due to Additional long term Closing balance of long term value outstanding movement in DRFM’s incentive value granted incentive value outstanding as at 30 June 2005 Composite Total Return during the year as at 30 June 20061 Victor P Hoog Antink 187,500 39,263 250,000 476,763 Tanya L Cox 10,000 2,094 60,000 72,094 John C Easy 12,500 2,618 50,000 65,118 Greg T Lee 2 12,500 – – – Ben J Lehmann 50,000 10,470 120,000 180,470 Peter C Roberts – – 75,000 75,000 Mark F Turner 10,000 2,094 70,000 82,094 Total 282,500 56,539 625,000 951,539

1 No amounts vested under the LTI scheme during the year. 2 Amounts forfeited during the year. The table below sets out the achievement of an Executive’s long term incentive value for the year. The potential future value of an executive long term incentive entitlement cannot be estimate as it is based on the movements of the Composite Total Return measure which cannot be forecast.

3.3.2f Equity plans and loans DRFM does not operate a security or option participation scheme or loan scheme for any Director or Senior Executive.

3.3.3 DB RREEF Trust performance DB RREEF Trust was created as a single stapled security in September 2004. Since stapling DB RREEF Trust’s operational and financial performance has been in line with expectations. As stapling occurred in September 2004, DB RREEF Trust has no directly comparable information for prior years.

52 DB RREEF Trust Financial Reports 2006 The following tables detail DB RREEF Trust’s financial performance since stapling.

DB RREEF Trust Security Price Performance DRT monthly volume weighted average price

1.60

1.50

1.40 unit price (dollars)

1.30

1.20

1 05 06

ct 04 Jul 05 Oct 05 O Nov 04 Dec 04 Jan 05 Feb 05 Mar 05 Apr 05 May Jun 05 Aug 05 Sep 05 Nov 05 Dec 05 Jan 06 Feb 06 Mar 06 Apr 06 May Jun 06

Source: IRESS. 1 Trading in DB RREEF Trust commenced 6 October 2004.

DB RREEF Trust Earnings and Distributions Paid per stapled security and Net Tangible Assets (NTA) per stapled security

Year to 30 June Earnings per security Distribution per security NTA per security 2006 36.44 11.0 1.53 2005 18.25 10.5 1.28

Total return analysis n Composite Total Return – 50 percent of the total return of DB RREEF Trust, plus 50 percent of the combined asset weighted total return of DRFM’s unlisted funds and mandates. n Composite Performance Benchmark – 50 percent of the Mercers Unlisted Property Fund Index and 50 percent of the S&P/ASX 200 Property Accumulation Index.

12 months to 30 June 2006 Return since 1 October 20041 (%) (%) Composite Total Return 20.9 17.6 Composite Performance Benchmark 16.6 15.6 DB RREEF Trust 20.6 17.2 S&P/ASX 200 Property Accumulation Index 18.1 16.3

1 inception date is 1 October 2004.

Capital returns During the year DB RREEF Trust did not buy back any of its securities.

3.3.4 Remuneration paid Details of the nature and amount of each element of remuneration for the Chief Executive Officer and Other Senior Executives for the years ended 30 June 2005 and 30 June 2006 are set out in the following table.

DB RREEF Trust Financial Reports 2006 53 directors’ report (continued)

Short term employee benefits Post-employment benefits Other long term benefits Total Cash salary Short term Other Pension Long term Other and fees incentive short term and super incentive long term benefit benefits amount 2 benefits ($) ($) ($) ($) ($) ($) ($) Victor P Hoog Antink 2006 907,714 500,000 – 92,286 250,000 – 1,750,000 20051 681,200 375,000 – 68,800 187,500 – 1,312,500 Tanya L Cox 2006 237,861 175,000 – 12,139 60,000 – 485,000 20051 178,811 150,000 – 8,689 10,000 – 347,500 John C Easy 2006 287,861 100,000 – 12,139 50,000 – 450,000 20051 163,811 75,000 – 8,689 12,500 – 260,000 Greg T Lee 2006 3 185,419 – – 7,081 – – 192,500 20051 216,311 187,500 – 8,689 12,500 – 425,000 Ben J Lehmann 2006 387,861 230,000 – 12,139 120,000 – 750,000 20051 216,311 200,000 – 8,689 50,000 – 475,000 Peter C Roberts 2006 4 150,469 125,000 130,000 22,350 75,000 25,000 527,819 2005 – – – – – – – Mark F Turner 2006 274,900 180,000 – 25,100 70,000 – 550,000 20051 178,811 150,000 – 8,689 10,000 – 347,500 Total 2006 2,432,085 1,310,000 130,000 183,234 625,000 25,000 4,705,319 20051 1,635,255 1,137,500 – 112,245 282,500 – 3,167,500

1 Actual 2005 remuneration received from DRFM was for the nine month period commencing 1 October 2004. Remuneration paid during the three month period to 30 September 2004, the stapling implementation date, was paid by Deutsche Bank and was not a cost of DB RREEF Trust. In addition, the 2005 short term incentive values have been restated to reflect actual incentive values granted to executives in September 2005 which related to the period ended 30 June 2005. Consequently, the 2005 short term incentive amounts and corresponding line totals will differ from those published in the 2005 Annual Report. 2 A long term incentive scheme for other Key Management Personnel was introduced in July 2005, with an effective date of 1 January 2005. The above 2005 long term incentive values were therefore granted for the six month period to 30 June 2005. 3 The Board determined that Greg T Lee qualified as Key Management Personnel for part of the period to 31 January 2006. 4 other short and long term benefits represent recruitment incentives and the pay out of retained incentives from previous employers. Peter Roberts commenced with DRFM on 5 December 2005.

3.4 employment agreements The table below outlines employment arrangements for the Chief Executive Officer and Other Senior Executives:

Name and title Commencement date Term Termination provisions/benefits Victor P Hoog Antink 1 October 2005 Unlimited in term In the event of early termination, DRFM is Chief Executive Officer required to give 12 months’ notice and may elect to pay out all or part of this notice period. The provision of this payment constitutes full satisfaction of the Company’s obligations in respect of notice of termination. Other Senior Executives Unlimited in term In the event of early termination, DRFM is required to give three months’ notice and may elect to pay out all or part of this notice period.

All other DRH executives have a standard service contract with DRH. These agreements are unlimited in term and provide for one month’s notice of termination by either party. However, no notice period is required if termination is for misconduct or serious or persistent breach of the agreement. Where termination is outside the control of the executive, including Senior Executives, or the executive is made redundant, the termination payment will vary between executives. Where a termination payment is to be made it will be determined: n in the case of Senior Executives, by the Board on the recommendation of the Board Nomination and Remuneration Committee; and n in the case of all other executives, by the Chief Executive Officer on the recommendation of the Compensation Committee. In both situations the payment will take into account the seniority of the executive, the length of service, the performance of the executive, the reasons for termination and the statutory and other rights (if any) of the executive and DRH.

54 DB RREEF Trust Financial Reports 2006 4. directors’ interests

4.1 interest in DB RREEF Trust’s securities As at the date of this Directors’ Report, the interests of each Director in the securities of DB RREEF Trust are:

Name Held personally Held indirectly Christopher T Beare Nil Nil Elizabeth A Alexander AM Nil Nil Barry R Brownjohn Nil Nil Stewart F Ewen OAM Nil Nil Andrew J Fay (alternate to Charles B Leitner III) Nil Nil Victor P Hoog Antink Nil Nil Charles B Leitner III Nil Nil Brian E Scullin Nil Nil

As at the date of this Directors’ Report, no Director, Alternate Director or any officer of DRFM held options over, or any other contractual interest in, securities in DB RREEF Trust.

4.2 other interests As at the date of this report, no Director or Alternate Director held an interest in any other fund managed by DRFM, or any other entity that forms part of DB RREEF Trust.

5. directors’ directorships in other listed entities The following table sets out directorships of other listed entities, not including DRFM, held by the Directors at any time in the three years immediately prior to the end of the year, and the period for which each directorship was held:

Director Company Date appointed Date resigned CSL Limited Jul 1991 Boral Limited Sep 1994 Elizabeth A Alexander AM AMCOR Limited Apr 1994 Oct 2005 Brian E Scullin Deutsche Asset Management (Australia) Limited1 20 Dec 1999 IYS Instalment Receipt Limited1 24 Oct 2005 Alternate Director Andrew J Fay (alternate to Charles B Leitner III) Deutsche Asset Management (Australia) Limited1 4 May 2005 IYS Instalment Receipt Limited1 4 May 2005

1 iYS Instalment Receipt Limited has issued ASX listed instalment receipts over units in the Deutsche Retail Infrastructure Trust, a managed investment scheme that is listed but not quoted on ASX and whose Responsible Entity is Deutsche Asset Management (Australia) Limited.

6. principal activities During the year the principal activity of DB RREEF Trust was real estate funds management and investment in real estate assets. There were no significant changes in the nature of the Stapled Entity’s activities during the year. The number of employees of the Stapled Entity during the reporting period to 30 June 2006 was 132 (2005:123).

7. total value of trust assets The total value of the assets of DB RREEF Trust as at 30 June 2006 was $8,287.5 million (2005:$6,985.0 million). Details of the basis of this valuation are outlined in note 1 of the Notes to the financial statements and form part of this Directors’ Report.

8. review and results of operations A review of the results, financial position, operations including business strategies and the expected results of operations of DB RREEF Trust, is set out in the Chief Executive Officer’s Report in this Annual Report.

9. likely developments and expected results of operations In the opinion of the Directors, disclosure of any information regarding business strategies and the future developments or results of DB RREEF Trust, other than the information already outlined in this Directors’ Report or the financial statements accompanying this Directors’ Report, would be unreasonably prejudicial to DB RREEF Trust.

DB RREEF Trust Financial Reports 2006 55 directors’ report (continued)

10. significant changes in the state of affairs 17. audit

The Directors of the Responsible Entity are not aware of any matter 17.1 auditor or circumstance, not otherwise dealt with in this Directors’ Report or the Financial Statements that has significantly or may significantly PricewaterhouseCoopers (PwC or the Auditor) continues in office affect the operations of DB RREEF Trust, the results of those in accordance with section 327 of the Corporations Act 2001. operations, or the state of DB RREEF Trust’s affairs in future 17.2 non-audit services financial years. Details of the amounts paid to the Auditor, which include amounts 11. matters subsequent to the end of the paid for non-audit services are set out in note 7 of the Notes to the financial year Financial Statements. Since the end of the year the Directors of the Responsible Entity are The Board Audit Committee is satisfied that the provision of non-audit not aware of any matter or circumstance not otherwise dealt with in services provided during the year by the Auditor (or by another this Directors’ Report or the Financial Statements that has person or firm on the Auditor’s behalf) is compatible with the general significantly or may significantly affect the operations of DB RREEF standard of independence for auditors imposed by the Corporations Trust, the results of those operations, or the state of DB RREEF Act 2001. The reasons for the Directors being satisfied are: Trust’s affairs in future financial years. n Board Audit Committee has determined that the external auditor will not provide services that have the potential to impair the 12. distributions independence of its audit role, including: Distributions paid or payable by DB RREEF Trust for the year ended – participating in activities that are normally undertaken by 30 June 2006 were 11.0 cents per security (2005:10.5 cents per management; and security) as outlined in note 32 of the Notes to the Financial Statements. – being remunerated on a “success fee” basis. n Board Audit Committee has determined that the Auditor will not 13. responsible entity fees and associate interests provide services where the Auditor may be required to review or Details of fees paid or payable by the Trust to the Responsible Entity audit its own work, including: for the year ended 30 June 2006 are outlined in note 36 of the – the preparation of accounting records; Notes to the Financial Statements and form part of this Directors’ – the design and implementation of information technology Report. systems; The number of interests in DB RREEF Trust held by the Responsible – conducting valuation, actuarial or legal services; Entity or its associates as at the end of the financial year are – promoting, dealing in or underwriting securities; or disclosed in note 36 of the Notes to the Financial Statements and – providing internal audit services. form part of this Directors’ Report. n Board Audit Committee regularly reviews the performance and 14. interests in DB RREEF Trust independence of the Auditor and whether the independence of this function has been maintained having: The movement in securities on issue in DB RREEF Trust during the – regard to the provision of non-audit services; year and the number of securities on issue as at 30 June 2006 are – the Auditor has provided a written declaration to the Board detailed in note 29 of the Notes to the Financial Statements and regarding its independence at each reporting period; and form part of this Directors’ Report. n Board Audit Committee approval is required before the engagement DB RREEF Trust did not have any options on issue as at of the Auditor to perform any non-audit service for a fee in excess of 30 June 2006 (2005: nil). $100,000. 15. environmental regulation The above Directors’ statements are in accordance with the advice received from the Board Audit Committee. The Directors of the Responsible Entity are satisfied that adequate systems are in place for the management of its environmental 17.3 audit independence declaration responsibilities and compliance with its various licence requirements A copy of the Auditors’ Independence Declaration as required under and regulations. Further, the Directors are not aware of any breaches section 307C of the Corporations Act 2001 is set out in the financial of these requirements and to the best of their knowledge all activities statements and forms part of this Directors’ Report. have been undertaken in compliance with environmental requirements.

16. indemnification and insurance The insurance premium for a policy of insurance indemnifying Directors, officers and others (as defined in the relevant policy of insurance) is paid by the Responsible Entity. The auditors are in no way indemnified out of the assets of the Stapled Entity.

56 DB RREEF Trust Financial Reports 2006 18. corporate governance The Responsible Entity’s Corporate Governance Statement is set out in a separate section of this Annual Report.

19. rounding of amounts and currency DB RREEF Trust is a registered scheme of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission, relating to the “rounding off” of amounts in this Directors’ Report and the financial statements. Amounts in this Directors’ Report and financial statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, unless otherwise indicated. All figures in this Directors’ Report and the financial statements, except where otherwise stated, are expressed in Australian dollars.

20. management representation The Chief Executive Officer and the Chief Financial Officer have reviewed DB RREEF Trust’s financial reporting processes, policies and procedures together with its risk management and internal control and compliance policies and procedures. Following that review it is their opinion that DB RREEF Trust’s financial records for the financial year have been properly maintained in accordance with the Corporations Act 2001 and the financial statements and their notes comply with the accounting standards and give a true and fair view.

21. directors’ authorisation This Directors’ Report is made in accordance with a resolution of the Directors.

Christopher T Beare Chair 22 August 2006

Victor P Hoog Antink Chief Executive Officer 22 August 2006

DB RREEF Trust Financial Reports 2006 57 auditor’s independence declaration

58 DB RREEF Trust Financial Reports 2006 income statements FOR THE YEAR ENDED 30 JUNE 2006

Consolidated Parent Entity Note(s) 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Revenue from ordinary activities Property revenue 2 659,749 508,795 145,763 153,263 Distribution revenue – – 10,425 8,102 Dividend revenue – – 30,222 – Interest revenue 11,900 5,932 627 600 Total revenue from ordinary activities 671,649 514,727 187,037 161,965 Share of net profits of associates accounted for using the equity method 16 26,911 12,544 – – Net gain on sale of investment properties 1,490 25,707 112 21,765 Net fair value gain of investment properties 686,490 256,607 186,002 43,935 Net fair value gain of investments – – 99,488 41,185 Net fair value gain of derivatives 73,271 – 15,349 – Net foreign exchange gain/(loss) 2,903 42 (3,154) 9,461 Other income 519 260 190 – Total income 1,463,233 809,887 485,024 278,311 Expenses Property expenses (160,651) (126,485) (36,211) (40,070) Responsible Entity fees 36 (28,695) (21,141) (10,534) (8,690) Finance costs 3 (166,116) (117,265) (35,377) (21,399) Depreciation (1,023) – – – Costs associated with the Transaction 4 (480) (42,281) (160) (14,795) Impairment of goodwill 20 (3,287) – – – Other expenses 6 (7,473) (9,206) (1,523) (1,753) Total expenses (367,725) (316,378) (83,805) (86,707) Profit before tax 1,095,508 493,509 401,219 191,604 Tax expense Income tax expense 5 (1,169) (990) – – Withholding tax expense 5 (27,954) (25,586) – – Total tax expense (29,123) (26,576) Profit after tax 1,066,385 466,933 401,219 191,604 Profit attributable to: Equity holders of the parent entity 398,925 191,565 401,219 191,604 Equity holders of other stapled entities (minority interest) 611,417 204,466 – – Stapled security holders 1,010,342 396,031 401,219 191,604 Net profit attributable to other minority interests 56,043 70,902 – – Net profit 1,066,385 466,933 401,219 191,604

Earnings per unit Cents Cents Cents Cents Basic earnings per unit on profit attributable to equity holders of the parent entity 41 14.39 8.83 14.47 8.83 Diluted earnings per unit on profit attributable to equity holders of the parent entity 41 14.39 8.83 14.47 8.83

The above Income Statements should be read in conjunction with the accompanying notes.

DB RREEF Trust Financial Reports 2006 59 balance sheets AS AT 30 JUNE 2006

Consolidated Parent Entity Note(s) 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Current assets Cash and cash equivalents 8 106,428 68,959 15,743 10,238 Receivables 9 35,254 29,859 22,109 8,883 Held for sale investment properties 13 24,000 – – – Inventories 10 3,344 48,469 – – Derivative financial instruments 11 92,478 – 26,054 – Loans and receivables 18 45,092 45,092 – – Current tax assets 289 – – – Other 12 6,050 15,956 1,227 2,072 Total current assets 312,935 208,335 65,133 21,193 Non-current assets Investment properties 13 7,579,447 6,520,919 1,673,804 1,398,751 Property, plant and equipment 14 152,966 27,913 – – Other financial assets at fair value through profit or loss 15 – – 247,172 233,867 Investments accounted for using the equity method 16 235,062 208,732 – – Investments in associates 16 – – 454,398 332,615 Deferred tax assets 17 116 127 – – Goodwill 20 – 3,215 – – Other 21 7,012 15,762 750 3,647 Total non-current assets 7,974,603 6,776,668 2,376,124 1,968,880 Total assets 8,287,538 6,985,003 2,441,257 1,990,073 Current liabilities Payables 22 100,901 118,479 15,671 12,880 Interest bearing liabilities 23 244,553 369,836 – – Loans with related parties 19 – – 34,332 34,332 Current tax liabilities 3,156 2,547 – – Provisions 24 155,523 144,800 54,178 67,756 Derivative financial instruments 11 20,477 – 9,052 – Other 25 5,452 8,673 – 1,121 Total current liabilities 530,062 644,335 113,233 116,089 Non-current liabilities Interest bearing liabilities 23 2,950,494 2,421,728 706,986 581,077 Deferred tax liabilities 26 48,726 23,685 – – Financial liability with minority interest 27 29,105 – – – Other 28 13,638 29,543 1,084 3,926 Total non-current liabilities 3,041,963 2,474,956 708,070 585,003 Total liabilities 3,572,025 3,119,291 821,303 701,092 Net assets 4,715,513 3,865,712 1,619,954 1,288,981 Equity Equity attributable to equity holders of the parent entity Contributed equity 29 1,094,144 1,059,867 1,094,144 1,059,866 Reserves 30 739 (649) – – Undistributed income 30 524,375 229,075 525,810 229,115 Parent entity security holders’ interest 1,619,258 1,288,293 1,619,954 1,288,981 Equity attributable to equity holders of other entities stapled to DDF (minority interest) Contributed equity 29 2,094,887 2,034,388 – – Reserves 30 (561) (474) – – Undistributed income 30 574,078 178,147 – – Other stapled security holders’ interest 2,668,404 2,212,061 – – Stapled security holders’ interest 4,287,662 3,500,354 1,619,954 1,288,981 Other minority interest 31 427,851 365,358 – – Total equity 4,715,513 3,865,712 1,619,954 1,288,981

The above Balance Sheets should be read in conjunction with the accompanying notes.

60 DB RREEF Trust Financial Reports 2006 statements of changes in equity FOR THE YEAR ENDED 30 JUNE 2006

Consolidated Parent Entity Note(s) 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Total equity at the beginning of the year 3,865,712 1,192,652 1,288,981 1,192,652 Adjustment on adoption of AASB 132 and AASB 139, net of tax: Undistributed income 3,443 – 2,165 – Exchange differences on translation of foreign operations 30 1,301 (1,250) – – Net income recognised directly in equity 4,744 (1,250) 2,165 – Net profit 1,066,385 466,933 401,219 191,604 Total recognised income and expense for the year 1,071,129 465,683 403,384 191,604 Transactions with equity holders in their capacity as equity holders: Contributions of equity, net of transaction costs 29 94,776 143,033 34,278 57,558 Net capital contributions/(distributions) to staple, net of transaction costs – 54,472 – (25,720) Distributions provided for or paid 32 (306,259) (281,303) (106,689) (127,113) Transactions with minority interest: – – – – Contributions of equity, net of transaction costs 7,649 262,012 – – Distributions provided for or paid 32 (21,964) (461) – – Minority interest on acquisition of subsidiary – 37,773 – – Foreign currency translation reserve 4,470 (4,868) – – Additional equity acquired on stapling – 1,868,722 – – Foreign currency translation reserve acquired on stapling – 127 – – Undistributed income acquired on stapling – 127,870 – – Total transactions with equity holders (221,328) 2,207,377 (72,411) (95,275) Total equity at the end of the year 4,715,513 3,865,712 1,619,954 1,288,981 Total recognised income and expense for the year is attributable to: Equity holders of the parent entity – DDF unitholders 403,377 190,916 403,384 191,604 Equity holders of other stapled entities (minority interest) 611,428 203,865 – – Security holders of DB RREEF Diversified Trust 1,014,805 394,781 403,384 191,604 Other minority interest 56,324 70,902 – – Total recognised income and expense for the year 1,071,129 465,683 403,384 191,604

The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.

DB RREEF Trust Financial Reports 2006 61 cash flow statements FOR THE YEAR ENDED 30 JUNE 2006

Consolidated Parent Entity Note(s) 2006 2005 2006 2005 $’000 $’000 $’000 $’000

Cash flows from operating activities Receipts in the course of operations (inclusive of GST) 733,609 540,713 154,091 196,488 Payments in the course of operations (inclusive of GST) (252,829) (174,785) (60,182) (51,492) Interest received 9,295 3,373 581 600 Finance costs paid to financial institutions (171,697) (135,504) (7,796) (9,509) Distributions received 12,165 8,212 35,750 9,026 Dividends received 1,500 – – – Income and withholding taxes paid (4,018) (760) – – Net cash inflow from operating activities 39 328,025 241,249 122,444 145,113 Cash flows from investing activities Proceeds from sale of investment properties 11,221 505,117 109 463,446 Payment for purchase of controlled entity, net of cash acquired – (485,165) – (231,290) Cash acquired on stapling – 14,285 – – Payments for capital expenditure on investment properties (218,013) (176,787) (85,722) (90,379) Payments for investment properties (155,597) (124,376) – (61,927) Payments for investments accounted for using the equity method (16,269) (157,437) (60,131) – Payments for inventories (3,362) – – – Payments for property, plant and equipment (7,712) – – – Payments for capital expenditure on property plant and equipment (70,542) – – – Loan to/from controlled entities – – – 3,793 Proceeds from repayment of third party loan 5,049 – – – Payments for other financial assets at fair value through profit or loss – – – (290,254) Net cash outflow from investing activities (455,225) (424,363) (145,744) (206,611) Cash flows from financing activities Proceeds from issue of RENTS units – 204,000 – – Increase in minority interest 7,814 64,125 – – Borrowings provided to the Trusts – – (85,963) (162,338) Borrowings provided by the Trusts – – 126,582 276,978 Establishment expenses and unit issue costs (267) (6,566) – – Proceeds from borrowings 977,813 1,774,507 77,509 136,000 Repayment of borrowings (602,066) (1,768,391) (3,341) (165,200) Distributions paid to security holders (200,900) (16,191) (85,982) (16,191) Distributions paid to other minority interests (18,918) (461) – – Net cash inflow from financing activities 163,476 251,023 28,805 69,249 Net inflow in cash and cash equivalents 36,276 67,909 5,505 7,751 Cash and cash equivalents at the beginning of the year 68,959 2,487 10,238 2,487 Effects of exchange rate changes on cash and cash equivalents 1,193 (1,437) – – Cash and cash equivalents at the end of the year 106,428 68,959 15,743 10,238

The above Cash Flow Statements should be read in conjunction with the accompanying notes.

62 DB RREEF Trust Financial Reports 2006 notes to the financial statements FOR THE YEAR ENDED 30 JUNE 2006 note 1. summary of significant accounting policies The Stapled Entity has taken the exemption available under AASB 1 to only apply AASB 132: Financial Instruments – Disclosure and (a) basis of preparation Presentation and AASB 139: Financial Instruments – Recognition and Measurement from 1 July 2005. On 30 September 2004, DB RREEF Diversified Trust (the Trust) and its subsidiaries (the Stapled Entity) was formed by the stapling The Stapled Entity has elected not to apply AASB 3: Business together of DDF, DIT, DOT and DRO (the Trusts). In accordance Combinations retrospectively to business combinations that occurred with AASB Interpretation 1002 Post-Date-of-Transition Stapling prior to the transition date of 1 July 2004. Arrangements, the Stapled Entity reflects a consolidated group. The parent entity and deemed acquirer of the trusts is DDF. (b) principles of consolidation The consolidated results reflect the performance of the parent, DDF, Controlled entities from 1 July 2004 and the additions of DIT, DOT and DRO from the The financial statements have been prepared on a consolidated date of consolidation, being 1 October 2004. Equity attributable to basis in recognition of the fact that while the securities issued other stapled entities is a form of minority interest in accordance by the Trusts are stapled into one trading security and cannot be with AASB 1002 and in the DDF consolidated column, represents traded separately, the financial statements must be presented on the equity of DIT, DOT and DRO. Other minority interests represent a consolidated basis. The parent entity and deemed acquirer of the equity attributable to parties external to the Stapled Entity. the Trusts is DDF. The DDF Consolidated column represents the consolidated financial On 30 September 2004, DDF was deemed to have acquired the report of DDF, which comprises DDF and its controlled entities, DIT other Trusts and as a result, the underlying assets and liabilities and its controlled entities, DOT and its controlled entities and DRO of the other Trusts were adjusted to fair value as at this date. and its controlled entities. Information from the financial statements of the subsidiaries DRT stapled securities are quoted on the Australian Stock Exchange has been included from 1 October 2004. It should be noted under the code DRT and comprise one unit in each of the Trust, DIT, that investors in DRT have been entitled to the returns from DOT and DRO. These units can not be traded separately. Each entity the underlying Trusts from 1 July 2004. The accounting policies forming part of DRT continues as a separate legal entity in its own of the subsidiary Trusts are consistent with those of the parent. right under the Corporations Act 2001 and is therefore required to The financial statements incorporate an elimination of inter-entity comply with the reporting and disclosure requirements under the transactions and balances to present the financial statements on Corporations Act 2001 and Australian Accounting Standards. a consolidated basis. This financial report for the year ended 30 June 2006 has been Net profit and equity in controlled entities, which are attributable prepared in accordance with the requirements of the Trusts’ to the unit holdings of minority interests are shown separately in Constitutions, the Corporations Act 2001 and Australian Equivalents the Income Statements and Balance Sheets respectively. to International Financial Reporting Standards (AIFRS). Where control of an entity is obtained during a financial year, its This financial report is prepared on the going concern basis and results are included in the Income Statements from the date on historical cost conventions and has not been adjusted to take which control is obtained. account of either changes in the general purchasing power of the dollar or changes in the values of specific assets, except for the The financial statements incorporate all the assets, liabilities and revaluation of certain non-current assets and financial instruments results of the parent and its controlled entities. (refer notes 1(f), 1(n), 1(p) and 1(r)). Partnerships and joint ventures This is the first financial report prepared in accordance with AIFRS. Where assets are held in a partnership or joint venture with another The Stapled Entity changed its accounting policies on 1 July 2005 entity directly, the Stapled Entity’s share of the results and assets to comply with AIFRS. The transition to AIFRS has been accounted of this partnership or joint venture is consolidated into the Income for in accordance with AASB 1: First Time Adoption of Australian Statements and Balance Sheets of the Stapled Entity. Where assets Equivalents to International Financial Reporting Standards, with 1 July are jointly controlled via ownership of units in single purpose 2004 as the date of transition. Reconciliations and descriptions of unlisted unit trusts or shares in companies, the Stapled Entity the effects of transition from previous AGAAP to AIFRS are provided applies equity accounting to record the operations of these in note 43. investments (refer note 1(s)). Critical accounting estimates (c) other financial assets at fair value through profit or loss The preparation of financial statements in conformity with AIFRS may require the use of certain critical accounting estimates and Interests held by the Trust in controlled entities and associates are management to exercise its judgement in the process of applying the measured at fair value with changes in fair value recognised Trust’s accounting policies. Other than the estimation of fair values immediately in the Income Statements. described in notes 1(f) and 1(p), no key assumptions concerning the (d) revenue recognition future, or other estimation of uncertainty at the reporting date, have a significant risk of causing material adjustments to the financial Rent statements in the next annual reporting period. Rental income is brought to account on a straight-line basis over The accounting policies set out below have been applied in the lease term for leases with fixed rent review clauses. In all other preparing the financial statements for the year ended 30 June 2006. circumstances rental income is brought to account on an accruals With the exception of financial instruments, the comparative basis. If not received at balance date, rental income is reflected in information presented in these financial statements has been the Balance Sheets as a receivable. Recoverability of receivables restated to reflect these adjustments. is reviewed on an ongoing basis. Debts which are known to be not collectable are written off.

DB RREEF Trust Financial Reports 2006 63 notes to the financial statements (continued) note 1. summary of significant accounting The accounting policies adopted prior to 1 July 2005 in relation policies (continued) to material financial instruments are detailed below: (i) Debt instruments (d) revenue recognition (continued) Debt instruments are carried at face value. Interest is brought Interest income to account on an accruals basis. Interest income is brought to account on an accruals basis using (ii) Interest rate swaps the effective interest rate method and, if not received at the balance date, is reflected in the Balance Sheets as a receivable. The Stapled Entity enters into interest swap agreements with the objective of hedging the risk of interest rate fluctuations in respect Dividends and distribution income of underlying borrowings. Net receipts and payments in relation to Income from dividends and distributions is recognised when interest rate swaps are recognised in the Income Statements on an declared. Amounts not received at balance date are included accruals basis over the life of the hedges. as a receivable in the Balance Sheets. (iii) Forward exchange contracts (e) expenses Forward exchange contracts are entered into by the Stapled Entity to hedge its earnings exposure in relation to foreign investments. Expenses are brought to account on an accruals basis and, if not This currency hedge rate is used to translate items in the paid at the balance date, are reflected in the Balance Sheets as Income Statements. a payable. The unrealised gains receivable/losses payable in respect of all Property expenses currency hedges are recorded on the Balance Sheets. Property expenses include rates, taxes and other property outgoings incurred in relation to investment properties where such expenses The accounting policies set out below are applicable from are the responsibility of the Trusts. 1 July 2005.

Financing costs to financial institutions (i) Derivatives Financing costs include interest expense and other costs incurred The Stapled Entity’s activities expose it to changes in interest rates in respect of obtaining finance. Other transaction costs incurred and foreign exchange rates. Accordingly, the Stapled Entity enters including loan establishment fees in respect of obtaining finance are into various derivative financial instruments to manage its exposure applied against the related financings with the amortisation of such to the movements in interest rates and foreign exchange rates. costs being recognised through the effective interest rate on the Policies and limits are approved by the Board of Directors of the financing over the term of the respective agreement. Responsible Entity in respect of the usage of derivatives and other financial instruments to hedge those cash flows and earnings which Financing costs are expensed unless they relate to qualifying assets. are subject to interest rate risks and foreign currency risks. Qualifying assets are assets which take a substantial period of time In conjunction with its advisers, the Responsible Entity continually to prepare for their intended use or sale. Where funds are borrowed reviews the Stapled Entity’s exposures and updates its treasury specifically for the acquisition or construction of a qualifying asset, policies and procedures. The Stapled Entity does not trade in financing costs capitalised are those incurred in relation to that derivative instruments for speculative purposes. financing, net of any interest earned on those financings. Where funds are borrowed generally, financing costs are capitalised using Even though the derivatives entered into aim to provide an economic a weighted average capitalisation rate. hedge to interest rate and foreign currency risks, the Stapled Entity has elected not to apply hedge accounting under AASB 139: (f) derivatives and other financial instruments Financial Instruments – Recognition and Measurement. Accordingly The Stapled Entity has adopted the exemption available under derivatives, including interest rate swaps and foreign exchange AASB 1 to apply AASB 132 and AASB 139 from 1 July 2005. forward contracts, are measured at fair value with any changes Therefore, the Stapled Entity has applied superseded AGAAP in in fair value recognised immediately in the Income Statements. the comparative information on financial instruments within the (ii) Embedded derivatives scope of AASB 132 and AASB 139. Derivatives embedded in other financial instruments or other host Under AGAAP, the accounting policies were as follows: contracts are treated as separate derivatives when their risks and The Stapled Entity’s activities expose it to changes in interest rates characteristics are not closely related to those of host contracts and and foreign exchange rates. There are policies and limits approved the host contracts are not measured at fair value with changes in fair by the Board of Directors of the Responsible Entity in respect of the value recognised in the Income Statements. usage of derivatives and other financial instruments to hedge those (iii) Debt and equity instruments issued by the Stapled Entity cash flows and earnings which are subject to interest rate risk and Financial instruments issued by the Stapled Entity are classified as foreign currency rate risk respectively. In conjunction with its either liabilities or as equity in accordance with the substance of the advisers, the Responsible Entity continually reviews the Stapled contractual arrangements. Accordingly, ordinary units issued by DDF, Entity’s exposures and updates its treasury policies and procedures. DIT, DOT and DRO are classified as equity. The Stapled Entity does not trade in derivative instruments for speculative purposes. Further securities issued by RENTS, a controlled entity, are classified as equity and are treated as minority interest. Changes in the net market values of hedging instruments are matched and brought to account with the carrying values and Interest and distributions are classified as expenses or as income streams of the underlying assets or liabilities. distributions of profit consistent with the balance sheet classification of the related debt or equity instruments.

64 DB RREEF Trust Financial Reports 2006 Transaction costs arising on the issue of equity instruments are Under current Australian income tax legislation the security holders recognised directly in equity (net of tax) as a reduction of the proceeds will generally be entitled to receive a foreign tax credit for US of the equity instruments to which the costs relate. Transaction costs withholding tax deducted from dividends paid by the US REIT. are the costs that are incurred directly in connection with the issue of those equity instruments and which would not have been incurred (i) distributions had those instruments not been issued. In accordance with the Trust’s Constitution, the Trust distributes its distributable income to unitholders by cash or reinvestment. (iv) Loans and receivables Distributions are provided for when they are declared. Loans and other receivables are measured at amortised cost using the effective interest rate method less impairment. (j) repairs and maintenance (g) goods and services tax Plant is required to be overhauled on a regular basis and is managed as part of an ongoing major cyclical maintenance program. The costs Revenues, expenses and capital assets are recognised net of the of this maintenance are charged as expenses as incurred, except amount of goods and services tax (GST), except where the amount where they relate to the replacement of a component of an asset, of GST incurred is not recoverable from the Australian Tax Office in which case the replaced component will be derecognised and the (ATO). In these circumstances the GST is recognised as part of the replacement costs capitalised in accordance with note 1(p). Other cost of acquisition of the asset or as part of the expense. routine operating maintenance, repair costs and minor renewals are Cash flows are included in the Cash Flow Statements on a gross also charged as expenses as incurred. basis. The GST component of cash flows arising from investing and financing activities which is recoverable from or payable to the ATO (k) cash and cash equivalents is classified as operating cash flows. Cash and cash equivalents include cash on hand, deposits held at call with financial institutions and other short term, highly liquid (h) taxation investments with original maturities of three months or less that are Under current Australian income tax legislation DDF, DIT and DOT readily convertible to known amounts of cash and which are subject are not liable for income tax provided they satisfy the requirements to an insignificant risk of changes in value. of the ATO. However, DRO as a trading trust is subject to tax as follows: (l) receivables n the income tax expense for the year is the tax payable on the Trade receivables are recognised initially at fair value and current year’s taxable income based on a tax rate of 30 percent subsequently measured at amortised cost, which is based on the adjusted for changes in deferred tax assets and liabilities and invoiced amount less provision for doubtful debts. Trade receivables unused tax losses; are required to be settled within 30 days and are assessed on an n deferred tax assets and liabilities are recognised for temporary ongoing basis for impairment. Receivables which are known to be differences arising from differences between the carrying uncollectable are written off. A provision for doubtful debts is amount of assets and liabilities and the corresponding tax established when there is objective evidence that the Stapled Entity base of those items. The relevant tax rates are applied to will not be able to collect all amounts due according to the original the cumulative amounts of deductible and taxable temporary terms of the receivables. differences to measure the deferred tax assets or liabilities; (m) inventories n deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that Properties undergoing or having completed construction or future taxable amounts will be available to utilise those development for ultimate sale, are classified as inventory and temporary differences and losses; are measured at the lower of cost or net realisable value. Cost is assigned by specific identification and includes the cost of n deferred tax assets and liabilities are not recognised for acquisition, development and finance costs during development. temporary differences between the carrying amount and tax After development is completed, finance costs and other holding bases of investments in controlled entities where the parent charges are expensed as incurred. entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences (n) property, plant and equipment will not reverse in the foreseeable future; and All property, plant and equipment is initially recognised at cost n current and deferred tax balances attributable to amounts including transaction costs. Land and freehold buildings are recognised directly in equity are also recognised directly accounted for using the cost method. Construction in progress in equity. is subsequently recognised at fair value in the financial statements. Withholding tax payable on dividends received by the Stapled Entity Revaluation increments are credited directly to the asset revaluation from DB RREEF Industrial Properties Inc (US REIT) is recognised reserve, unless they are reversing a previous decrement charged as as an expense as incurred. In addition, a deferred tax liability or an expense in the Income Statements, in which case they are asset and related deferred tax expense/benefit is recognised on credited directly to the Income Statements. differences between the tax cost base of US assets and liabilities in the Trust (held by US REIT) and their accounting carrying values at Revaluation decrements are recognised directly as an expense in the balance date. Any deferred tax liability or asset is calculated using Income Statements, unless they are reversing a revaluation increment a blend of the current withholding tax rate applicable to income previously credited to, and still included in the balance of the asset distributions and the applicable US federal and state taxes. revaluation reserve, in which case they are debited directly to the asset revaluation reserve.

DB RREEF Trust Financial Reports 2006 65 notes to the financial statements (continued) note 1. summary of significant accounting The costs of incentives are recognised as a reduction of rental policies (continued) income on a straight-line basis from the earlier of the date which the tenant has effective use of the premises or the lease commencement (o) depreciation of property, plant and equipment date to the end of the lease term. The carrying amount of the lease incentives is reflected in the fair value of investment properties. Land is not depreciated. Depreciation on buildings (including fit-out) is calculated on a straight-line basis so as to write off the net cost of (s) investments accounted for using the equity method each non-current asset over its expected useful life. Buildings (including fit-out) have estimated useful lives of between five and Some property investments are held through the ownership of units 50 years. Estimates for useful lives are reviewed on a regular basis. in single purpose unlisted trusts or shares in unlisted companies where the Stapled Entity exerts significant influence or joint control (p) investment properties but does not have a controlling interest. These investments are considered to be associates and the equity method of accounting Investment properties consist of properties held for long term rental is applied in the financial statements. yields, capital appreciation or both. Investment properties are initially recognised at cost including transaction costs. Investment properties Under this method, the entity’s share of the post-acquisition profits are subsequently recognised at fair value in the financial statements. of associates is recognised as income in the Consolidated Income Statements. The cumulative post-acquisition movements are The basis of valuation of investment properties is fair value, being adjusted against the carrying amount of the investment. Dividends or the amount for which the assets could be exchanged between distributions receivable from associates are recognised in the parent knowledgeable willing parties in an arm’s length transaction, based entity’s Income Statements, while in the consolidated financial on current prices in an active market for similar properties in the statements they reduce the carrying amount of the investment. same location and condition and subject to similar leases. Where this is not available, an appropriate valuation method is used, which may When the Stapled Entity’s share of losses in an associate equals or include the discounted cash flow and the capitalisation method. exceeds its interest in the associate (including any unsecured Discount rates and capitalisation rates are determined based on the receivables) the Stapled Entity does not recognise any further losses Trust’s expertise, knowledge of the industry and where possible a unless it has incurred obligations or made payments on behalf of the direct comparison to third party rates for similar assets in a associate. comparable location. Rental income from current leases and assumptions about future leases, as well as any expected operational (t) acquisition of assets cash outflows in relation to the property, are also reflected in fair value. The purchase method of accounting is used for all acquisitions External valuations of the individual investments are carried out in including business combinations. Cost is measured as the fair value accordance with the Trusts’ Constitutions, or may be earlier where of the assets given up, shares issued or liabilities assumed at the the Responsible Entity believes there is a potential for a material date of exchange plus costs directly attributable to the acquisition. change in the fair value of the property. Where equity instruments are issued in an acquisition, the value of the instruments is their published market price as at the date of Changes in fair values are recorded in the Income Statements. exchange unless, in rare circumstances, it can be demonstrated that The gain or loss on disposal of an investment property is calculated the published price at the date of exchange is an unreliable indicator as the difference between the carrying amount of the asset at the of fair value and that other evidence and valuation methods provide date of disposal and the net proceeds from disposal and is included a more reliable measure of fair value. Transaction costs arising on in the Income Statements in the year of disposal. the issue of equity instruments are recognised directly in equity. Subsequent redevelopment and refurbishment costs (other than Identifiable assets acquired and liabilities and contingent liabilities repairs and maintenance) are capitalised to the investment property assumed in a business combination are measured initially at their where they result in an enhancement in the future economic benefits fair values. The excess of the acquisition cost over the fair value of of the property. Repairs and maintenance are accounted for in the assets and liabilities acquired is recorded as goodwill (refer note accordance with note 1(j). 1(u)). If the cost is less than the fair value of the net assets acquired, Held for sale investment properties the difference is recognised directly in the Income Statements. Investment properties intended for sale are separately disclosed Where settlement of any part of the cash consideration is deferred, on the Balance Sheets as “Held for sale investment properties”. the amounts payable in the future are discounted to their present Such properties are measured using the same methodology as value as at the date of exchange at the entity’s incremental investment properties. financing rate.

(q) leasing fees (u) goodwill Leasing fees incurred are capitalised and amortised over the lease Where an operation or entity is acquired, the identifiable net assets periods to which they relate. acquired are measured at fair value. The excess of the acquisition costs over the fair value of the identifiable net assets is brought to (r) lease incentives account as goodwill in the Balance Sheets. The carrying value of the Prospective lessees may be offered incentives as an inducement to goodwill is tested for impairment at each reporting date with any enter into operating leases. These incentives may take various forms decrement in value taken to the Income Statements as an expense. including cash payments, rent free periods, or a contribution to certain lessee costs such as fit-out costs or relocation costs.

66 DB RREEF Trust Financial Reports 2006 (v) fair value estimation of financial assets and liabilities The assets and liabilities of the foreign operations are translated at exchange rates prevailing at the reporting date. Income and expense The fair value of financial assets and financial liabilities must be items are translated at the average exchange rates for the period estimated for recognition and measurement and for disclosure unless exchange rates fluctuate significantly. Exchange differences purposes. arising are recognised in the foreign currency translation reserve and The fair value of financial instruments traded in active markets recognised in profit or loss on disposal of the foreign operation. (such as publicly traded derivatives and available for sale securities) Goodwill and fair value adjustments arising on the acquisition of is based on quoted market prices at the balance sheet date. a foreign operation on or after the date of transition to AIFRS are The quoted market price used for financial assets held by the treated as assets and liabilities of the foreign operation and Stapled Entity is the current bid price. The appropriate quoted translated at exchange rates prevailing at the reporting date. market price for financial liabilities is the current ask price. The fair value of financial instruments that are not traded in an active (aa) segment reporting market (for example, over-the-counter derivatives) is determined A business segment is a group of assets and operations engaged using valuation techniques including dealer quotes for similar in providing services that are subject to risks and returns that are instruments and discounted cash flows. In particular, the fair value different to those of other business segments. A geographical of interest rate swaps is calculated as the present value of the segment is engaged in providing services within a particular estimated future cash flows and the fair value of forward exchange geographic environment and is subject to risks and returns that are rate contracts is determined using forward exchange market rates different from those of segments operating in other geographic at the balance sheet date. environments.

(w) payables (ab) rounding of amounts These amounts represent liabilities for amounts owing at balance The Stapled Entity is the kind referred to in Class Order 98/0100, date. The amounts are unsecured and are usually paid within issued by the Australian Securities and Investment Commission, 30 days of recognition. relating to the rounding off of amounts in the financial report. Amounts in the financial report have been rounded off in accordance (x) interest bearing liabilities with that Class Order to the nearest thousand dollars, or in certain All loans and borrowings are initially recognised at fair value net of cases, the nearest dollar. issue costs associated with the borrowing. (ac) new accounting standards and UIG interpretations After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest Certain new accounting standards and UIG interpretations have been method. Amortised cost is calculated by taking into account any published that are not mandatory for the 30 June 2006 reporting issue costs and any discount or premium on settlement. period. Our assessment of the impact of these new standards and interpretations is set out below: (y) earnings per unit (i) AASB 7: Financial Instruments Disclosure and AASB 2005-10: Basic and diluted earnings per unit are determined by dividing the Amendments to Australian Accounting Standards (AASB 132, net profit attributable to equity holders of the parent entity (DDF) by AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, the weighted average number of ordinary units outstanding during AASB 1, AASB 4, AASB 1023 and AASB 1038). the year. AASB 7 and AASB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007. AASB 7 requires (z) foreign currency qualitative information about exposure to risks arising from Items included in the financial statements are measured using the financial instruments, including specific minimum disclosures currency of the primary economic environment in which the entity about credit risk, liquidity risk and market risk. The Trust has operates (the functional currency). The financial statements are elected not to adopt the standard early. Application of this presented in Australian dollars, which is the Trust’s functional and standard will not affect any of the amounts recognised in the presentation currency. financial statements. (ii) AASB 2005-4: Amendments to Australian Accounting Standards (i) Foreign currency transactions (AASB 139, AASB 132, AASB 1, AASB 1023 and AASB 1038). Foreign currency transactions are translated into the functional AASB 2005-4 is applicable to annual reporting periods currency using the exchange rates prevailing at the dates of the beginning on or after 1 January 2006. The amendment restricts transactions. Foreign exchange gains and losses resulting from the the ability to designate financial assets and financial liabilities settlement of such transactions and from the translation at period-end “at fair value through profit or loss”. The amendment will not exchange rates of monetary assets and liabilities denominated in affect the Trust’s financial statements. foreign currencies are recognised in the Income Statements. (iii) AASB 2005-11: Amendments to Australian Accounting Standards (ii) Foreign operations (AASB 101, AASB 112, AASB 132, AASB 133, AASB 139 Foreign operations are located in the United States of America and AASB 141). The amendment deals with the impact of (US) and New Zealand (NZ). These operations have functional contingently issuable shares and contingently returnable shares currencies of US Dollars and NZ Dollars respectively, which are on earnings per share. The Trust does not issue shares of this translated into the presentation currency. type and accordingly, the amendment will not affect the Trust’s financial statements.

DB RREEF Trust Financial Reports 2006 67 notes to the financial statements (continued) note 2. property revenue

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Rent and recoverable outgoings 659,667 510,252 143,818 153,286 Incentive amortisation (25,322) (9,657) (5,487) (2,465) Other revenue 25,404 8,200 7,432 2,442 Total property revenue 659,749 508,795 145,763 153,263 note 3. finance costs

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Interest paid/payable 176,604 130,202 41,004 30,331 Amount capitalised (10,488) (12,937) (5,627) (8,932) Total finance costs 166,116 117,265 35,377 21,399

The average capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 6.23 percent (2005: 6.26 percent). note 4. costs associated with the transaction The costs relate to the fees and expenses arising from the stapling of the Trust, DIT, DOT and DRO, the acquisition of the US REIT, and the associated debt arranging and interest rate hedging (together referred to as “the Transaction”). note 5. tax expense

(a) income tax expense

Consolidated 2006 2005 $’000 $’000 Current tax 936 1,069 Deferred tax 233 (79) Income tax expense 1,169 990 Deferred income tax (revenue)/expense included in income tax expense comprises: (Increase)/decrease in deferred tax assets 207 (127) Increase in deferred tax liabilities 26 48 233 (79)

(b) reconciliation of income tax expense to net profit

Consolidated 2006 2005 $’000 $’000 Profit before tax 1,095,508 493,509 Profit not subject to income tax (note 1(h)) (1,087,056) (487,639) 8,452 5,870 Prima facie Tax at the Australian tax rate of 30 percent (2005: 30 percent) 2,535 1,761 Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Depreciation 88 – Share of net profits of associates (1,454) (771) (1,366) (771) Income tax expense 1,169 990

68 DB RREEF Trust Financial Reports 2006 (c) amounts recognised directly in equity Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss but directly debited or credited to equity:

Consolidated 2006 2005 $’000 $’000 Net deferred tax – credited directly to equity (196) – (196) –

(d) withholding tax expense Withholding tax expense includes $24,727,000 (2005: $23,514,000) of deferred tax expense which is recognised on differences between the tax cost base of the US assets and liabilities and their accounting carrying value at balance date. The majority of the deferred tax expense arises due to the revaluation of US investment properties. note 6. other expenses

Consolidated Parent Entity Note(s) 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Audit and advisory fees 7 2,673 1,807 586 353 Custodian fees 518 415 165 180 Legal and other professional fees 415 1,667 – 515 Bad and doubtful debts 1,654 1,071 95 – Registry costs and listing fees 377 403 47 278 Other expenses 1,836 3,843 630 427 Total other expenses 7,473 9,206 1,523 1,753 note 7. audit and advisory fees During the year the auditor of the parent entity, its related practices and non-related audit firms earned the following remuneration:

(a) assurance services

Audit Services

Consolidated Parent Entity 2006 2005 2006 2005 ($) ($) ($) ($) PwC audit and review of financial reports and other audit work under the Corporations Act 2001 1,299,465 863,563 457,000 309,000 PwC fees paid in relation to outgoings 72,155 72,094 – – Fees paid to non-PwC audit firms for audit of US controlled entity – Deloittes 597,323 394,962 – – Total remuneration for assurance services 1,968,943 1,330,619 457,000 309,000

(b) taxation services

Consolidated Parent Entity 2006 2005 2006 2005 ($) ($) ($) ($) Fees paid to PwC Australia 370,690 461,670 126,000 39,000 Fees paid to PwC US 213,160 – – – Fees paid to non-PwC audit firms 109,975 – – – Total remuneration for taxation services 693,825 461,670 126,000 39,000

DB RREEF Trust Financial Reports 2006 69 notes to the financial statements (continued) note 7. audit and advisory fees (continued)

(c) advisory services

Consolidated Parent Entity 2006 2005 2006 2005 ($) ($) ($) ($) Fees paid to PwC Australia in relation to IFRS project 8,950 15,000 3,000 5,000 Fees paid to PwC Australia in relation to the establishment of the RENTS sub-trust – 235,000 – – Fees paid to PwC Australia in relation to the Transaction – 889,587 – 296,529 Fees paid to related practices of PwC Australia in relation to the Transaction – 354,171 – 118,057 Total remuneration for advisory services 8,950 1,493,758 3,000 419,586 note 8. current assets – cash and cash equivalents

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Cash at bank 1 106,428 68,959 15,743 10,238 Total current assets – cash and cash equivalents 106,428 68,959 15,743 10,238

1 Consolidated cash at bank at 30 June 2006 includes $28,933,000 held for the purchase of DIT France Logistique (refer note 37). note 9. current assets – receivables

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Rent receivable 24,108 14,039 5,424 439 Less: Provision for doubtful debts (1,783) (1,116) (273) (261) Total rental receivables 22,325 12,923 5,151 178 Distribution receivable from controlled entities – – 3,100 3,100 Dividend receivable 4,750 – – – Other receivables from controlled entities – – 10,778 – GST receivable 954 – 405 – Interest receivable 8 1,241 – – Settlement adjustments receivable 1,367 2,626 1,367 1,260 Other receivables 5,850 13,069 1,308 4,345 Total other receivables 12,929 16,936 16,958 8,705 Total current assets – receivables 35,254 29,859 22,109 8,883 other receivables from controlled entities Other receivables from controlled entities is an inter-entity loan, which is a non-interest bearing loan between the Trust and its controlled entities. note 10. inventories

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Land and buildings 3,344 – – – Work in progress – 48,469 – – Total inventories 3,344 48,469 – –

Oak Park Business Centre, Minnesota On 27 June 2006, DB RREEF Industrial Properties, Inc. executed an agreement to sell Oak Park Business Centre in Minnesota. The selling price is $4.0 million.

70 DB RREEF Trust Financial Reports 2006 note 11. derivative financial instruments

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Current assets Interest rate swap contracts 89,366 – 24,498 – Forward foreign exchange contracts 3,112 – 1,556 – Total current assets – derivative financial instruments 92,478 – 26,054 – Current liabilities Interest rate swap contracts 19,979 – 8,870 – Forward foreign exchange contracts 498 – 182 – Total current liabilities – derivative financial instruments 20,477 – 9,052 – Net current derivative financial instruments 72,001 – 17,002 –

Refer note 33 for further discussion regarding derivative financial instruments. note 12. current assets – other

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Prepayments 6,030 4,908 1,227 906 Tenant bonds 20 34 – – Deferred borrowing costs – 3,623 – – Net receivable on currency hedge contracts – 2,341 – 1,121 Loan to third parties – 5,005 – – Other – 45 – 45 Total current assets – other 6,050 15,956 1,227 2,072

DB RREEF Trust Financial Reports 2006 71 notes to the financial statements (continued) note 13. (a) current assets – held for sale investment properties

Property Ownership Acquisition Cost Independent Independent Independent Consolidated Consolidated date including valuation valuation valuer book value book value all additions date amount 30 June 2006 30 June 2005 (%) $’000 $’000 $’000 $’000 121 Evans Road, Salisbury QLD 100 Jun 1997 16,777 Dec 2005 21,000 (d) 24,000 – Total held for sale investment properties 16,777 21,000 24,000 – note 13. (b) non-current assets – investment properties

Property Ownership Acquisition Cost Independent Independent Independent Consolidated Consolidated date including valuation valuation valuer book value book value all additions date amount 30 June 2006 30 June 2005 (%) $’000 $’000 $’000 $’000 Held by parent entity Kings Park Industrial Estate, Bowmans Road, Marayong NSW 100 May 1990 78,194 Jun 2005 93,000 (a) 93,000 78,500 Target Distribution Centre, Taras Road, Altona North VIC 100 Oct 1995 25,430 Jun 2005 35,000 (c) 36,500 35,000 Axxess Corporate Park, 164–180 Forster Road, 11 & 21–45 Gilby Road, 307–355 Ferntree Gully Road, Mount Waverley VIC 100 Oct 1996 141,944 Dec 2005 147,750 (f) 170,000 109,444 Knoxfield Industrial Estate, Henderson Road, Knoxfield VIC 100 Aug 1996 30,139 Jun 2006 37,050 (e) 37,050 31,885 12 Frederick Street, St Leonards NSW 100 Jul 2000 25,437 Jun 2005 31,500 (c) 35,700 31,500 40–50 Talavera Road, North Ryde NSW 100 Oct 2002 32,575 Apr 2005 28,500 (f) 32,500 29,498 Wallgrove, Eastern Creek NSW 100 Mar 2004 23,555 n/a – – 23,555 23,523 Redwood Gardens Industrial Estate Stages 3, 5, 6 & 7 and Lot 4 Boundary Road, Dingley VIC 1 76 Dec 1994 23,599 Jun 2006 28,850 (e) 28,850 23,206 44 Market Street, Sydney NSW 100 Sep 1987 166,037 Jun 2006 185,000 (f) 185,000 149,376 8 Nicholson Street, Melbourne VIC 100 Nov 1993 69,421 Jun 2005 91,800 (g) 98,000 91,800 Ferguson Centre, 130 George Street, Parramatta NSW 100 May 1997 96,956 Jun 2006 80,000 (d) 80,000 49,626 Flinders Gate Complex, 172 Flinders Street (and 189 Flinders Lane), Melbourne VIC 100 Mar 1999 13,749 Jun 2006 18,000 (d) 18,000 15,538 383–395 Kent Street, Sydney NSW 100 Sep 1987 105,351 Jun 2006 115,000 (d) 115,000 105,138 14 Moore Street, Civic, Canberra ACT ** 100 May 2002 37,226 Apr 2005 36,250 (e) 38,000 36,250 Sydney CBD Floor Space 2, Sydney NSW 100 Jul 2000 n/a n/a – – 2,173 2,390 Westfield Whitford City Shopping Centre, Marmion and Whitford Avenue, Hillarys WA 3 50 Oct 1984 128,505 Dec 2005 200,000 (f) 221,500 185,997 Westfield Whitford Avenue and Lot 6 Endeavour Road, Hillarys WA 3 50 Dec 1992 5,506 Dec 2005 10,000 (f) 11,000 8,613 West Lakes Shopping Centre, 11 West Lakes Boulevarde, West Lakes SA 50 Nov 1998 116,792 Dec 2005 131,000 (a) 143,000 122,892 Plenty Valley Town Centre, McDonald’s Road, South Morang VIC 3 50 Nov 1999 19,740 Jun 2004 17,835 (c) 20,200 20,601 Westfield North Lakes Shopping Centre, Corner Anzac Avenue and Northlakes Drive, Mango Hill QLD 3 50 Aug 2004 69,239 Jun 2004 60,250 (c) 77,176 65,049 Albert & Charlotte Streets, Brisbane QLD 100 Oct 1984 13,783 Jun 2006 38,500 (e) 38,500 32,035 34–60 Little Collins Street, Melbourne VIC ** 100 Nov 1984 16,164 Jun 2006 37,500 (d) 37,500 41,522 32–44 Flinders Street, Melbourne VIC 100 Jun 1998 21,239 Jun 2006 32,500 (d) 32,500 24,575 Flinders Gate Car Park, (including air development rights) 172–189 Flinders Street, Melbourne VIC 100 Mar 1999 47,043 Jun 2006 39,000 (d) 39,000 45,275 383–395 Kent Street, Sydney NSW 100 Sep 1987 30,257 Jun 2006 60,000 (d) 60,000 39,418 John Martin’s Car Park and Retail Plaza Joint Venture, Adelaide SA 1 Sep 1994 – – – – 100 100 Total parent entity 1,337,881 1,554,285 1,673,804 1,398,751

72 DB RREEF Trust Financial Reports 2006 note 13. (a) current assets – held for sale investment properties

Property Ownership Acquisition Cost Independent Independent Independent Consolidated Consolidated date including valuation valuation valuer book value book value all additions date amount 30 June 2006 30 June 2005 (%) $’000 $’000 $’000 $’000 121 Evans Road, Salisbury QLD 100 Jun 1997 16,777 Dec 2005 21,000 (d) 24,000 – Total held for sale investment properties 16,777 21,000 24,000 – note 13. (b) non-current assets – investment properties

Property Ownership Acquisition Cost Independent Independent Independent Consolidated Consolidated date including valuation valuation valuer book value book value all additions date amount 30 June 2006 30 June 2005 (%) $’000 $’000 $’000 $’000 Held by parent entity Kings Park Industrial Estate, Bowmans Road, Marayong NSW 100 May 1990 78,194 Jun 2005 93,000 (a) 93,000 78,500 Target Distribution Centre, Taras Road, Altona North VIC 100 Oct 1995 25,430 Jun 2005 35,000 (c) 36,500 35,000 Axxess Corporate Park, 164–180 Forster Road, 11 & 21–45 Gilby Road, 307–355 Ferntree Gully Road, Mount Waverley VIC 100 Oct 1996 141,944 Dec 2005 147,750 (f) 170,000 109,444 Knoxfield Industrial Estate, Henderson Road, Knoxfield VIC 100 Aug 1996 30,139 Jun 2006 37,050 (e) 37,050 31,885 12 Frederick Street, St Leonards NSW 100 Jul 2000 25,437 Jun 2005 31,500 (c) 35,700 31,500 40–50 Talavera Road, North Ryde NSW 100 Oct 2002 32,575 Apr 2005 28,500 (f) 32,500 29,498 Wallgrove, Eastern Creek NSW 100 Mar 2004 23,555 n/a – – 23,555 23,523 Redwood Gardens Industrial Estate Stages 3, 5, 6 & 7 and Lot 4 Boundary Road, Dingley VIC 1 76 Dec 1994 23,599 Jun 2006 28,850 (e) 28,850 23,206 44 Market Street, Sydney NSW 100 Sep 1987 166,037 Jun 2006 185,000 (f) 185,000 149,376 8 Nicholson Street, Melbourne VIC 100 Nov 1993 69,421 Jun 2005 91,800 (g) 98,000 91,800 Ferguson Centre, 130 George Street, Parramatta NSW 100 May 1997 96,956 Jun 2006 80,000 (d) 80,000 49,626 Flinders Gate Complex, 172 Flinders Street (and 189 Flinders Lane), Melbourne VIC 100 Mar 1999 13,749 Jun 2006 18,000 (d) 18,000 15,538 383–395 Kent Street, Sydney NSW 100 Sep 1987 105,351 Jun 2006 115,000 (d) 115,000 105,138 14 Moore Street, Civic, Canberra ACT ** 100 May 2002 37,226 Apr 2005 36,250 (e) 38,000 36,250 Sydney CBD Floor Space 2, Sydney NSW 100 Jul 2000 n/a n/a – – 2,173 2,390 Westfield Whitford City Shopping Centre, Marmion and Whitford Avenue, Hillarys WA 3 50 Oct 1984 128,505 Dec 2005 200,000 (f) 221,500 185,997 Westfield Whitford Avenue and Lot 6 Endeavour Road, Hillarys WA 3 50 Dec 1992 5,506 Dec 2005 10,000 (f) 11,000 8,613 West Lakes Shopping Centre, 11 West Lakes Boulevarde, West Lakes SA 50 Nov 1998 116,792 Dec 2005 131,000 (a) 143,000 122,892 Plenty Valley Town Centre, McDonald’s Road, South Morang VIC 3 50 Nov 1999 19,740 Jun 2004 17,835 (c) 20,200 20,601 Westfield North Lakes Shopping Centre, Corner Anzac Avenue and Northlakes Drive, Mango Hill QLD 3 50 Aug 2004 69,239 Jun 2004 60,250 (c) 77,176 65,049 Albert & Charlotte Streets, Brisbane QLD 100 Oct 1984 13,783 Jun 2006 38,500 (e) 38,500 32,035 34–60 Little Collins Street, Melbourne VIC ** 100 Nov 1984 16,164 Jun 2006 37,500 (d) 37,500 41,522 32–44 Flinders Street, Melbourne VIC 100 Jun 1998 21,239 Jun 2006 32,500 (d) 32,500 24,575 Flinders Gate Car Park, (including air development rights) 172–189 Flinders Street, Melbourne VIC 100 Mar 1999 47,043 Jun 2006 39,000 (d) 39,000 45,275 383–395 Kent Street, Sydney NSW 100 Sep 1987 30,257 Jun 2006 60,000 (d) 60,000 39,418 John Martin’s Car Park and Retail Plaza Joint Venture, Adelaide SA 1 Sep 1994 – – – – 100 100 Total parent entity 1,337,881 1,554,285 1,673,804 1,398,751

DB RREEF Trust Financial Reports 2006 73 notes to the financial statements (continued) note 13. (b) non-current assets – investment properties (continued)

Property Ownership Acquisition Cost Independent Independent Independent Consolidated Consolidated date including valuation valuation valuer book value book value all additions date amount 30 June 2006 30 June 2005 (%) $’000 $’000 $’000 $’000 Other consolidated investment properties – non-current Westfield Hurstville, 262–264 Forest Road and 292 Forest Road, Hurstville NSW 50 May 2005 246,499 Feb 2005 232,500 (d) 260,000 232,730 3765 Atlanta Industrial Drive, Atlanta 80 Sep 2004 6,443 Jun 2006 4,978 (c) 4,978 6,702 7100 Highlands Parkway, Atlanta 80 Sep 2004 18,826 Jun 2006 18,835 (c) 18,835 17,277 Town Park Drive, Atlanta 80 Sep 2004 8,844 Jun 2006 10,628 (c) 10,628 8,701 Williams Drive, Atlanta 80 Sep 2004 12,875 Jun 2006 12,915 (c) 13,302 10,842 Stone Mountain, Atlanta 80 Sep 2004 9,415 Jun 2006 6,592 (c) 6,592 6,711 MD Food Park, Baltimore 80 Sep 2004 25,052 Jun 2006 31,347 (c) 33,799 29,581 West Nursery, Baltimore 80 Sep 2004 9,671 Jun 2006 11,032 (c) 11,570 8,538 Cabot Techs, Baltimore 80 Sep 2004 28,017 Jun 2006 37,401 (c) 37,401 31,414 9112 Guildford Road, Baltimore 80 Sep 2004 10,894 Jun 2006 13,454 (c) 13,454 12,304 8155 Stayton Drive, Baltimore 80 Sep 2004 9,322 Jun 2006 10,628 (c) 10,628 9,734 Patuxent Range Road, Baltimore 80 Sep 2004 15,457 Jun 2006 17,355 (c) 17,355 15,576 Bristol Court, Baltimore 80 Sep 2004 13,368 Jun 2006 15,202 (c) 15,945 13,481 NE Baltimore, Baltimore 80 Sep 2004 9,679 Jun 2006 11,301 (c) 11,301 10,509 1181 Portal, 1831 Portal and 6615 Tributary, Fort Holabird Industrial, Baltimore 80 Jun 2005 14,040 Jun 2006 15,068 (c) 15,355 13,446 10 Kenwood Circle, Boston 80 Sep 2004 14,379 Jun 2006 14,933 (c) 14,933 13,482 Commerce Park, Charlotte 80 Sep 2004 9,361 Jun 2006 9,754 (c) 9,754 8,672 9900 Brookford Street, Charlotte 80 Sep 2004 5,119 Jun 2006 5,045 (c) 5,045 4,843 Westinghouse, Charlotte 80 Sep 2004 25,504 Jun 2006 24,889 (c) 26,267 22,548 Airport Exchange, Cincinnati/North Kentucky 80 Sep 2004 5,260 Jun 2006 4,978 (c) 4,978 4,748 Empire Drive, Cincinnati/North Kentucky 80 Sep 2004 7,305 Jun 2006 7,669 (c) 8,486 8,026 International Way, Cincinnati/North Kentucky 80 Sep 2004 13,711 Jun 2006 14,463 (c) 14,463 13,089 Kentucky Drive, Cincinnati/North Kentucky 80 Sep 2004 14,760 Jun 2006 16,279 (c) 16,279 14,071 Spiral Drive, Cincinnati/North Kentucky 80 Sep 2004 7,146 Jun 2006 6,054 (c) 6,054 6,468 Turfway Road, Cincinnati/North Kentucky 80 Sep 2004 6,424 Jun 2006 6,390 (c) 6,390 6,235 124 Commerce, Cincinnati/North Kentucky 80 Sep 2004 3,042 Jun 2006 3,363 (c) 3,363 2,683 Kenwood Road, Cincinnati/North Kentucky 80 Sep 2004 23,899 Jun 2006 22,333 (c) 22,723 22,423 Lake Forest Drive, Cincinnati/North Kentucky 80 Sep 2004 16,110 Jun 2006 16,548 (c) 16,548 14,763 World Park, Cincinnati/North Kentucky 80 Sep 2004 16,248 Jun 2006 15,337 (c) 15,337 12,958 Equity/Westbelt/Dividend, Columbus 80 Sep 2004 46,818 Jun 2006 50,081 (c) 50,081 49,921 2700 International Street, Columbus 80 Sep 2004 5,140 Jun 2006 5,281 (c) 5,281 5,199 3800 Twin Creeks Drive, Columbus 80 Sep 2004 6,202 Jun 2006 6,794 (c) 6,794 6,283 SE Columbus, Columbus 80 Sep 2004 17,262 Jun 2006 16,279 (c) 16,279 14,673 Arlington, Dallas 80 Sep 2004 11,811 Jun 2006 12,243 (c) 12,243 10,864 1900 Diplomat Drive, Dallas 80 Sep 2004 5,785 Jun 2006 6,189 (c) 6,189 5,628 2055 Diplomat Drive, Dallas 80 Sep 2004 4,527 Jun 2006 4,843 (c) 4,843 4,429 1413 Bradley Lane, Dallas 80 Sep 2004 4,162 Jun 2006 3,807 (c) 3,807 3,534 North Lake, Dallas 80 Sep 2004 12,754 Jun 2006 17,355 (c) 17,355 13,613 555 Airline Drive, Dallas 80 Sep 2004 8,354 Jun 2006 8,745 (c) 9,296 8,115 455 Airline Drive, Dallas 80 Sep 2004 4,179 Jun 2006 5,112 (c) 5,112 4,581 Hillguard, Dallas 80 Sep 2004 11,119 Jun 2006 11,705 (c) 12,088 10,521 11011 Regency Crest Drive, Dallas 80 Sep 2004 8,827 Jun 2006 7,803 (c) 9,046 7,997

74 DB RREEF Trust Financial Reports 2006 note 13. (b) non-current assets – investment properties (continued)

Property Ownership Acquisition Cost Independent Independent Independent Consolidated Consolidated date including valuation valuation valuer book value book value all additions date amount 30 June 2006 30 June 2005 (%) $’000 $’000 $’000 $’000 Other consolidated investment properties – non-current Westfield Hurstville, 262–264 Forest Road and 292 Forest Road, Hurstville NSW 50 May 2005 246,499 Feb 2005 232,500 (d) 260,000 232,730 3765 Atlanta Industrial Drive, Atlanta 80 Sep 2004 6,443 Jun 2006 4,978 (c) 4,978 6,702 7100 Highlands Parkway, Atlanta 80 Sep 2004 18,826 Jun 2006 18,835 (c) 18,835 17,277 Town Park Drive, Atlanta 80 Sep 2004 8,844 Jun 2006 10,628 (c) 10,628 8,701 Williams Drive, Atlanta 80 Sep 2004 12,875 Jun 2006 12,915 (c) 13,302 10,842 Stone Mountain, Atlanta 80 Sep 2004 9,415 Jun 2006 6,592 (c) 6,592 6,711 MD Food Park, Baltimore 80 Sep 2004 25,052 Jun 2006 31,347 (c) 33,799 29,581 West Nursery, Baltimore 80 Sep 2004 9,671 Jun 2006 11,032 (c) 11,570 8,538 Cabot Techs, Baltimore 80 Sep 2004 28,017 Jun 2006 37,401 (c) 37,401 31,414 9112 Guildford Road, Baltimore 80 Sep 2004 10,894 Jun 2006 13,454 (c) 13,454 12,304 8155 Stayton Drive, Baltimore 80 Sep 2004 9,322 Jun 2006 10,628 (c) 10,628 9,734 Patuxent Range Road, Baltimore 80 Sep 2004 15,457 Jun 2006 17,355 (c) 17,355 15,576 Bristol Court, Baltimore 80 Sep 2004 13,368 Jun 2006 15,202 (c) 15,945 13,481 NE Baltimore, Baltimore 80 Sep 2004 9,679 Jun 2006 11,301 (c) 11,301 10,509 1181 Portal, 1831 Portal and 6615 Tributary, Fort Holabird Industrial, Baltimore 80 Jun 2005 14,040 Jun 2006 15,068 (c) 15,355 13,446 10 Kenwood Circle, Boston 80 Sep 2004 14,379 Jun 2006 14,933 (c) 14,933 13,482 Commerce Park, Charlotte 80 Sep 2004 9,361 Jun 2006 9,754 (c) 9,754 8,672 9900 Brookford Street, Charlotte 80 Sep 2004 5,119 Jun 2006 5,045 (c) 5,045 4,843 Westinghouse, Charlotte 80 Sep 2004 25,504 Jun 2006 24,889 (c) 26,267 22,548 Airport Exchange, Cincinnati/North Kentucky 80 Sep 2004 5,260 Jun 2006 4,978 (c) 4,978 4,748 Empire Drive, Cincinnati/North Kentucky 80 Sep 2004 7,305 Jun 2006 7,669 (c) 8,486 8,026 International Way, Cincinnati/North Kentucky 80 Sep 2004 13,711 Jun 2006 14,463 (c) 14,463 13,089 Kentucky Drive, Cincinnati/North Kentucky 80 Sep 2004 14,760 Jun 2006 16,279 (c) 16,279 14,071 Spiral Drive, Cincinnati/North Kentucky 80 Sep 2004 7,146 Jun 2006 6,054 (c) 6,054 6,468 Turfway Road, Cincinnati/North Kentucky 80 Sep 2004 6,424 Jun 2006 6,390 (c) 6,390 6,235 124 Commerce, Cincinnati/North Kentucky 80 Sep 2004 3,042 Jun 2006 3,363 (c) 3,363 2,683 Kenwood Road, Cincinnati/North Kentucky 80 Sep 2004 23,899 Jun 2006 22,333 (c) 22,723 22,423 Lake Forest Drive, Cincinnati/North Kentucky 80 Sep 2004 16,110 Jun 2006 16,548 (c) 16,548 14,763 World Park, Cincinnati/North Kentucky 80 Sep 2004 16,248 Jun 2006 15,337 (c) 15,337 12,958 Equity/Westbelt/Dividend, Columbus 80 Sep 2004 46,818 Jun 2006 50,081 (c) 50,081 49,921 2700 International Street, Columbus 80 Sep 2004 5,140 Jun 2006 5,281 (c) 5,281 5,199 3800 Twin Creeks Drive, Columbus 80 Sep 2004 6,202 Jun 2006 6,794 (c) 6,794 6,283 SE Columbus, Columbus 80 Sep 2004 17,262 Jun 2006 16,279 (c) 16,279 14,673 Arlington, Dallas 80 Sep 2004 11,811 Jun 2006 12,243 (c) 12,243 10,864 1900 Diplomat Drive, Dallas 80 Sep 2004 5,785 Jun 2006 6,189 (c) 6,189 5,628 2055 Diplomat Drive, Dallas 80 Sep 2004 4,527 Jun 2006 4,843 (c) 4,843 4,429 1413 Bradley Lane, Dallas 80 Sep 2004 4,162 Jun 2006 3,807 (c) 3,807 3,534 North Lake, Dallas 80 Sep 2004 12,754 Jun 2006 17,355 (c) 17,355 13,613 555 Airline Drive, Dallas 80 Sep 2004 8,354 Jun 2006 8,745 (c) 9,296 8,115 455 Airline Drive, Dallas 80 Sep 2004 4,179 Jun 2006 5,112 (c) 5,112 4,581 Hillguard, Dallas 80 Sep 2004 11,119 Jun 2006 11,705 (c) 12,088 10,521 11011 Regency Crest Drive, Dallas 80 Sep 2004 8,827 Jun 2006 7,803 (c) 9,046 7,997

DB RREEF Trust Financial Reports 2006 75 notes to the financial statements (continued) note 13. (b) non-current assets – investment properties (continued)

Property Ownership Acquisition Cost Independent Independent Independent Consolidated Consolidated date including valuation valuation valuer book value book value all additions date amount 30 June 2006 30 June 2005 (%) $’000 $’000 $’000 $’000 Other consolidated investment properties – non-current (continued) East Collins, Dallas 80 Sep 2004 4,779 Jun 2006 4,978 (c) 4,978 5,090 3601 East Plano/1000 Shiloh Road, Dallas 80 Sep 2004 17,159 Jun 2006 18,700 (c) 20,030 18,158 East Plano Parkway, Dallas 80 Sep 2004 27,361 Jun 2006 28,387 (c) 28,387 27,016 820–860 Avenue F, Dallas 80 Sep 2004 8,760 Jun 2006 9,687 (c) 9,687 9,234 10th Street, Dallas 80 Sep 2004 12,137 Jun 2006 12,915 (c) 13,304 11,453 Capital Avenue, Dallas 80 Sep 2004 7,524 Jun 2006 7,601 (c) 7,601 6,741 CTC at Valwood, Dallas 80 Sep 2004 4,517 Jun 2006 6,054 (c) 6,054 4,712 Brackbill, Harrisburg 80 Sep 2004 28,286 Jun 2006 33,634 (c) 33,634 30,105 Mechanicsburg, Harrisburg 80 Sep 2004 23,483 Jun 2006 25,696 (c) 25,696 23,822 181 Fulling Mill Road, Harrisburg 80 Sep 2004 11,745 Jun 2006 12,108 (c) 12,108 11,822 Glendale, Los Angeles 80 Sep 2004 66,603 Jun 2006 84,084 (c) 86,725 73,460 14489 Industry Circle, Los Angeles 80 Sep 2004 9,209 Jun 2006 12,983 (c) 12,983 10,916 14555 Alondra/6530 Altura, Los Angeles 80 Sep 2004 23,241 Jun 2006 31,347 (c) 31,347 27,225 San Fernando Valley, Los Angeles 80 Sep 2004 19,561 Jun 2006 26,234 (c) 26,234 23,168 Memphis Industrial, Memphis 80 Sep 2004 12,381 Jun 2006 12,915 (c) 12,915 12,435 2950 Lexington Avenue South, Minneapolis 80 Sep 2004 11,922 Jun 2006 12,377 (c) 13,363 11,126 Mounds View, Minneapolis 80 Sep 2004 26,007 Jun 2006 28,723 (c) 29,173 24,714 6105 Trenton Lane, Minneapolis 80 Sep 2004 10,000 Jun 2006 10,763 (c) 10,763 9,555 8575 Monticello Lane, Minneapolis 80 Sep 2004 2,333 Jun 2006 3,094 (c) 3,094 2,506 7401 Cahill Road, Minneapolis 80 Sep 2004 4,304 Jun 2006 4,036 (c) 4,036 2,901 CTC at Dulles, Northern Virginia/Washington DC 80 Sep 2004 32,952 Jun 2006 40,361 (c) 40,361 34,031 Alexandria, Northern Virginia/Washington DC 80 Sep 2004 59,828 Jun 2006 72,784 (c) 74,181 69,247 Nokes Boulevard, Northern Virginia/Washington DC 80 Sep 2004 27,017 Jun 2006 39,015 (c) 39,015 35,995 Guildford, Northern Virginia/Washington DC 80 Sep 2004 22,705 Jun 2006 33,634 (c) 33,634 27,225 Beaumeade Telecom, Northern Virginia/Washington DC 80 Sep 2004 42,720 Jun 2006 55,159 (c) 55,159 44,503 Orlando Central Park, Orlando 80 Sep 2004 76,731 Jun 2006 91,484 (c) 91,484 76,224 7500 Exchange Drive, Orlando 80 Sep 2004 7,310 Jun 2006 8,476 (c) 8,476 7,235 105–107 South 41st Avenue, Phoenix 80 Sep 2004 18,290 Jun 2006 23,678 (c) 24,115 19,634 1429–1439 South 40th Avenue, Phoenix 80 Sep 2004 11,785 Jun 2006 16,144 (c) 16,144 13,613 10397 West Van Buren Street, Phoenix 80 Sep 2004 9,426 Jun 2006 17,624 (c) 17,624 13,613 844 44th Avenue, Phoenix 80 Sep 2004 7,945 Jun 2006 10,897 (c) 10,897 9,424 220 South 9th Street, Phoenix 80 Sep 2004 8,481 Jun 2006 11,570 (c) 11,570 8,770 431 North 47th Avenue, Phoenix 80 Sep 2004 7,794 Jun 2006 10,359 (c) 10,359 9,031 601 South 55th Avenue, Phoenix 80 Sep 2004 5,611 Jun 2006 7,265 (c) 7,265 6,152 1000 South Priest Drive, Phoenix 80 Sep 2004 6,322 Jun 2006 8,072 (c) 8,072 6,545 1120–1150 West Alameda Drive, Phoenix 80 Sep 2004 9,816 Jun 2006 11,570 (c) 11,570 9,824 1858 East Encanto Drive, Phoenix 80 Sep 2004 5,394 Jun 2006 7,265 (c) 7,265 5,366 3802–3922 East University Drive, Phoenix 80 Sep 2004 12,268 Jun 2006 13,319 (c) 13,739 12,558 Chino, Riverside 80 Sep 2004 7,882 Jun 2006 11,974 (c) 11,974 8,508 Mira Loma, Riverside 80 Sep 2004 13,737 Jun 2006 27,311 (c) 27,311 17,866 Ontario, Riverside 80 Sep 2004 38,378 Jun 2006 61,886 (c) 61,886 46,607 4190 East Santa Ana Street, Riverside 80 Sep 2004 6,314 Jun 2006 10,763 (c) 10,763 7,788

76 DB RREEF Trust Financial Reports 2006 note 13. (b) non-current assets – investment properties (continued)

Property Ownership Acquisition Cost Independent Independent Independent Consolidated Consolidated date including valuation valuation valuer book value book value all additions date amount 30 June 2006 30 June 2005 (%) $’000 $’000 $’000 $’000 Other consolidated investment properties – non-current (continued) East Collins, Dallas 80 Sep 2004 4,779 Jun 2006 4,978 (c) 4,978 5,090 3601 East Plano/1000 Shiloh Road, Dallas 80 Sep 2004 17,159 Jun 2006 18,700 (c) 20,030 18,158 East Plano Parkway, Dallas 80 Sep 2004 27,361 Jun 2006 28,387 (c) 28,387 27,016 820–860 Avenue F, Dallas 80 Sep 2004 8,760 Jun 2006 9,687 (c) 9,687 9,234 10th Street, Dallas 80 Sep 2004 12,137 Jun 2006 12,915 (c) 13,304 11,453 Capital Avenue, Dallas 80 Sep 2004 7,524 Jun 2006 7,601 (c) 7,601 6,741 CTC at Valwood, Dallas 80 Sep 2004 4,517 Jun 2006 6,054 (c) 6,054 4,712 Brackbill, Harrisburg 80 Sep 2004 28,286 Jun 2006 33,634 (c) 33,634 30,105 Mechanicsburg, Harrisburg 80 Sep 2004 23,483 Jun 2006 25,696 (c) 25,696 23,822 181 Fulling Mill Road, Harrisburg 80 Sep 2004 11,745 Jun 2006 12,108 (c) 12,108 11,822 Glendale, Los Angeles 80 Sep 2004 66,603 Jun 2006 84,084 (c) 86,725 73,460 14489 Industry Circle, Los Angeles 80 Sep 2004 9,209 Jun 2006 12,983 (c) 12,983 10,916 14555 Alondra/6530 Altura, Los Angeles 80 Sep 2004 23,241 Jun 2006 31,347 (c) 31,347 27,225 San Fernando Valley, Los Angeles 80 Sep 2004 19,561 Jun 2006 26,234 (c) 26,234 23,168 Memphis Industrial, Memphis 80 Sep 2004 12,381 Jun 2006 12,915 (c) 12,915 12,435 2950 Lexington Avenue South, Minneapolis 80 Sep 2004 11,922 Jun 2006 12,377 (c) 13,363 11,126 Mounds View, Minneapolis 80 Sep 2004 26,007 Jun 2006 28,723 (c) 29,173 24,714 6105 Trenton Lane, Minneapolis 80 Sep 2004 10,000 Jun 2006 10,763 (c) 10,763 9,555 8575 Monticello Lane, Minneapolis 80 Sep 2004 2,333 Jun 2006 3,094 (c) 3,094 2,506 7401 Cahill Road, Minneapolis 80 Sep 2004 4,304 Jun 2006 4,036 (c) 4,036 2,901 CTC at Dulles, Northern Virginia/Washington DC 80 Sep 2004 32,952 Jun 2006 40,361 (c) 40,361 34,031 Alexandria, Northern Virginia/Washington DC 80 Sep 2004 59,828 Jun 2006 72,784 (c) 74,181 69,247 Nokes Boulevard, Northern Virginia/Washington DC 80 Sep 2004 27,017 Jun 2006 39,015 (c) 39,015 35,995 Guildford, Northern Virginia/Washington DC 80 Sep 2004 22,705 Jun 2006 33,634 (c) 33,634 27,225 Beaumeade Telecom, Northern Virginia/Washington DC 80 Sep 2004 42,720 Jun 2006 55,159 (c) 55,159 44,503 Orlando Central Park, Orlando 80 Sep 2004 76,731 Jun 2006 91,484 (c) 91,484 76,224 7500 Exchange Drive, Orlando 80 Sep 2004 7,310 Jun 2006 8,476 (c) 8,476 7,235 105–107 South 41st Avenue, Phoenix 80 Sep 2004 18,290 Jun 2006 23,678 (c) 24,115 19,634 1429–1439 South 40th Avenue, Phoenix 80 Sep 2004 11,785 Jun 2006 16,144 (c) 16,144 13,613 10397 West Van Buren Street, Phoenix 80 Sep 2004 9,426 Jun 2006 17,624 (c) 17,624 13,613 844 44th Avenue, Phoenix 80 Sep 2004 7,945 Jun 2006 10,897 (c) 10,897 9,424 220 South 9th Street, Phoenix 80 Sep 2004 8,481 Jun 2006 11,570 (c) 11,570 8,770 431 North 47th Avenue, Phoenix 80 Sep 2004 7,794 Jun 2006 10,359 (c) 10,359 9,031 601 South 55th Avenue, Phoenix 80 Sep 2004 5,611 Jun 2006 7,265 (c) 7,265 6,152 1000 South Priest Drive, Phoenix 80 Sep 2004 6,322 Jun 2006 8,072 (c) 8,072 6,545 1120–1150 West Alameda Drive, Phoenix 80 Sep 2004 9,816 Jun 2006 11,570 (c) 11,570 9,824 1858 East Encanto Drive, Phoenix 80 Sep 2004 5,394 Jun 2006 7,265 (c) 7,265 5,366 3802–3922 East University Drive, Phoenix 80 Sep 2004 12,268 Jun 2006 13,319 (c) 13,739 12,558 Chino, Riverside 80 Sep 2004 7,882 Jun 2006 11,974 (c) 11,974 8,508 Mira Loma, Riverside 80 Sep 2004 13,737 Jun 2006 27,311 (c) 27,311 17,866 Ontario, Riverside 80 Sep 2004 38,378 Jun 2006 61,886 (c) 61,886 46,607 4190 East Santa Ana Street, Riverside 80 Sep 2004 6,314 Jun 2006 10,763 (c) 10,763 7,788

DB RREEF Trust Financial Reports 2006 77 notes to the financial statements (continued) note 13. (b) non-current assets – investment properties (continued)

Property Ownership Acquisition Cost Independent Independent Independent Consolidated Consolidated date including valuation valuation valuer book value book value all additions date amount 30 June 2006 30 June 2005 (%) $’000 $’000 $’000 $’000 Other consolidated investment properties – non-current (continued) Rancho Cucamonga, Riverside 80 Sep 2004 28,847 Jun 2006 47,491 (c) 47,491 35,591 12000 Jersey Court, Riverside 80 Sep 2004 5,621 Jun 2006 9,518 (c) 9,518 7,286 Airway Road, San Diego 80 Sep 2004 12,376 Jun 2006 16,817 (c) 16,817 14,765 5823 Newton Drive, San Diego 80 Sep 2004 22,085 Jun 2006 30,270 (c) 30,270 25,131 2210 Oak Ridge Way, San Diego 80 Sep 2004 6,734 Jun 2006 9,014 (c) 9,014 7,853 Kent West, Seattle 80 Sep 2004 35,247 Jun 2006 40,361 (c) 40,901 35,468 26507 79th Avenue South, Seattle 80 Sep 2004 3,524 Jun 2006 4,036 (c) 4,036 3,534 8005 South 266th Street, Seattle 80 Sep 2004 9,278 Jun 2006 10,494 (c) 10,494 9,748 West Palm Beach, South Florida 80 Sep 2004 28,321 Jun 2006 32,356 (c) 32,356 26,831 Calvert/Murry’s, Northern Virginia/Washington DC 80 Sep 2004 7,052 Jun 2006 7,399 (c) 7,399 6,793 Dulles Town Crossing, Stirling, Northern Virginia/Washington DC 80 Jun 2006 7,010 Jun 2006 8,341 (c) 8,341 – Garland Jupiter, Garland, Dallas 80 Jun 2006 4,367 Jun 2006 4,789 (c) 4,789 – Beaumeade Circle 80 Jun 2006 4,212 Jun 2006 4,305 (c) 4,305 – Plano Parkway, Plano, Dallas 80 Jun 2006 2,739 Jun 2006 3,067 (c) 3,067 – 7700 68th Avenue, Brooklyn Park 100 Nov 2005 7,397 Nov 2005 6,890 (c) 6,949 – 7500 West 78th Street, Bloomington 100 Nov 2005 6,302 Nov 2005 8,496 (c) 8,429 – 1285 and 1301 Corporate Center Drive, 1230 and 1270 Eagan Industrial Road, Eagan 100 Nov 2005 21,349 Nov 2005 20,257 (c) 20,987 – 79–99 St Hilliers Road, Auburn NSW 100 Sep 1997 34,712 Jun 2005 41,000 (d) 41,749 41,011 3 Brookhollow Avenue, Baulkham Hills NSW 100 Dec 2002 43,171 Dec 2005 42,400 (f) 43,251 41,753 1 Garigal Road, Belrose NSW 100 Dec 1998 23,340 Dec 2004 27,400 (a) 31,900 27,400 2 Minna Close, Belrose NSW 100 Dec 1998 34,144 Dec 2004 32,400 (a) 33,707 33,119 114–120 Old Pittwater Road, Brookvale NSW 100 Sep 1997 33,794 Jun 2006 45,500 (f) 45,500 42,638 145–151 Arthur Street, Flemington NSW 100 Sep 1997 24,171 Jun 2005 31,000 (f) 34,135 31,000 436–484 Victoria Road, Gladesville NSW 100 Sep 1997 27,939 Dec 2004 43,000 (d) 48,500 43,182 1 Foundation Place, Greystanes NSW 100 Dec 2002 39,162 Jun 2006 46,000 (e) 46,000 41,905 706 Mowbray Road, Lane Cove NSW 100 Sep 1997 22,589 Jun 2006 26,200 (e) 26,200 25,923 1–15 Rosebery Avenue and 1–55 Rothschild Avenue, Rosebery NSW 100 Apr 1998 & Oct 2001 70,506 Dec 2005 92,800 (f) 93,158 81,013 10–16 South Street, Rydalmere NSW 100 Sep 1997 35,868 Jun 2004 42,000 (f) 44,682 42,605 19 Chifley Street, Smithfield NSW 100 Dec 1998 11,820 Dec 2005 17,200 (a) 17,499 13,499 Pound Road West, Dandenong VIC 100 Jan 2004 56,674 Jun 2005 56,250 (c) 58,000 56,250 352 Macaulay Road, Kensington VIC 100 Oct 1998 7,610 Dec 2005 8,900 (g) 8,900 7,300 DB RREEF Industrial Estate, Boundary Road, Laverton North VIC 100 Jul 2002 15,888 Jun 2004 23,700 (c) 17,500 15,888 250 Forest Road South, Lara VIC 100 Dec 2002 33,757 Jun 2005 34,600 (e) 40,900 34,600 15–23 Whicker Road, Gillman SA 100 Dec 2002 19,783 Jun 2005 21,300 (e) 24,600 21,300 25 Donkin Street South, West End, Brisbane QLD 100 Dec 1998 19,031 Jun 2005 20,700 (e) 23,614 20,866 52 Holbeche Road, Arndell Park NSW 100 Jul 1998 11,296 Dec 2005 12,500 (d) 12,500 11,104 3–7 Bessemer Street, Blacktown NSW 100 Jun 1997 11,086 Sep 2003 10,100 (b) 10,209 10,202 30–32 Bessemer Street, Blacktown NSW 100 May 1997 11,844 Jun 2006 17,850 (f) 17,850 14,540 27–29 Liberty Road, Huntingwood NSW 100 Jul 1998 7,971 Jun 2006 9,000 (e) 9,000 7,300 154 O’Riordan Street, Mascot NSW 100 Jun 1997 10,908 Jun 2004 13,650 (a) 14,600 13,697 11 Talavera Road, Macquarie Park NSW 100 Jun 2002 133,005 Jun 2006 145,500 (d) 145,500 134,567 DB RREEF Industrial Estate, Egerton Street, Silverwater NSW 100 May 1997 36,332 Dec 2005 42,000 (f) 43,900 39,601

78 DB RREEF Trust Financial Reports 2006 note 13. (b) non-current assets – investment properties (continued)

Property Ownership Acquisition Cost Independent Independent Independent Consolidated Consolidated date including valuation valuation valuer book value book value all additions date amount 30 June 2006 30 June 2005 (%) $’000 $’000 $’000 $’000 Other consolidated investment properties – non-current (continued) Rancho Cucamonga, Riverside 80 Sep 2004 28,847 Jun 2006 47,491 (c) 47,491 35,591 12000 Jersey Court, Riverside 80 Sep 2004 5,621 Jun 2006 9,518 (c) 9,518 7,286 Airway Road, San Diego 80 Sep 2004 12,376 Jun 2006 16,817 (c) 16,817 14,765 5823 Newton Drive, San Diego 80 Sep 2004 22,085 Jun 2006 30,270 (c) 30,270 25,131 2210 Oak Ridge Way, San Diego 80 Sep 2004 6,734 Jun 2006 9,014 (c) 9,014 7,853 Kent West, Seattle 80 Sep 2004 35,247 Jun 2006 40,361 (c) 40,901 35,468 26507 79th Avenue South, Seattle 80 Sep 2004 3,524 Jun 2006 4,036 (c) 4,036 3,534 8005 South 266th Street, Seattle 80 Sep 2004 9,278 Jun 2006 10,494 (c) 10,494 9,748 West Palm Beach, South Florida 80 Sep 2004 28,321 Jun 2006 32,356 (c) 32,356 26,831 Calvert/Murry’s, Northern Virginia/Washington DC 80 Sep 2004 7,052 Jun 2006 7,399 (c) 7,399 6,793 Dulles Town Crossing, Stirling, Northern Virginia/Washington DC 80 Jun 2006 7,010 Jun 2006 8,341 (c) 8,341 – Garland Jupiter, Garland, Dallas 80 Jun 2006 4,367 Jun 2006 4,789 (c) 4,789 – Beaumeade Circle 80 Jun 2006 4,212 Jun 2006 4,305 (c) 4,305 – Plano Parkway, Plano, Dallas 80 Jun 2006 2,739 Jun 2006 3,067 (c) 3,067 – 7700 68th Avenue, Brooklyn Park 100 Nov 2005 7,397 Nov 2005 6,890 (c) 6,949 – 7500 West 78th Street, Bloomington 100 Nov 2005 6,302 Nov 2005 8,496 (c) 8,429 – 1285 and 1301 Corporate Center Drive, 1230 and 1270 Eagan Industrial Road, Eagan 100 Nov 2005 21,349 Nov 2005 20,257 (c) 20,987 – 79–99 St Hilliers Road, Auburn NSW 100 Sep 1997 34,712 Jun 2005 41,000 (d) 41,749 41,011 3 Brookhollow Avenue, Baulkham Hills NSW 100 Dec 2002 43,171 Dec 2005 42,400 (f) 43,251 41,753 1 Garigal Road, Belrose NSW 100 Dec 1998 23,340 Dec 2004 27,400 (a) 31,900 27,400 2 Minna Close, Belrose NSW 100 Dec 1998 34,144 Dec 2004 32,400 (a) 33,707 33,119 114–120 Old Pittwater Road, Brookvale NSW 100 Sep 1997 33,794 Jun 2006 45,500 (f) 45,500 42,638 145–151 Arthur Street, Flemington NSW 100 Sep 1997 24,171 Jun 2005 31,000 (f) 34,135 31,000 436–484 Victoria Road, Gladesville NSW 100 Sep 1997 27,939 Dec 2004 43,000 (d) 48,500 43,182 1 Foundation Place, Greystanes NSW 100 Dec 2002 39,162 Jun 2006 46,000 (e) 46,000 41,905 706 Mowbray Road, Lane Cove NSW 100 Sep 1997 22,589 Jun 2006 26,200 (e) 26,200 25,923 1–15 Rosebery Avenue and 1–55 Rothschild Avenue, Rosebery NSW 100 Apr 1998 & Oct 2001 70,506 Dec 2005 92,800 (f) 93,158 81,013 10–16 South Street, Rydalmere NSW 100 Sep 1997 35,868 Jun 2004 42,000 (f) 44,682 42,605 19 Chifley Street, Smithfield NSW 100 Dec 1998 11,820 Dec 2005 17,200 (a) 17,499 13,499 Pound Road West, Dandenong VIC 100 Jan 2004 56,674 Jun 2005 56,250 (c) 58,000 56,250 352 Macaulay Road, Kensington VIC 100 Oct 1998 7,610 Dec 2005 8,900 (g) 8,900 7,300 DB RREEF Industrial Estate, Boundary Road, Laverton North VIC 100 Jul 2002 15,888 Jun 2004 23,700 (c) 17,500 15,888 250 Forest Road South, Lara VIC 100 Dec 2002 33,757 Jun 2005 34,600 (e) 40,900 34,600 15–23 Whicker Road, Gillman SA 100 Dec 2002 19,783 Jun 2005 21,300 (e) 24,600 21,300 25 Donkin Street South, West End, Brisbane QLD 100 Dec 1998 19,031 Jun 2005 20,700 (e) 23,614 20,866 52 Holbeche Road, Arndell Park NSW 100 Jul 1998 11,296 Dec 2005 12,500 (d) 12,500 11,104 3–7 Bessemer Street, Blacktown NSW 100 Jun 1997 11,086 Sep 2003 10,100 (b) 10,209 10,202 30–32 Bessemer Street, Blacktown NSW 100 May 1997 11,844 Jun 2006 17,850 (f) 17,850 14,540 27–29 Liberty Road, Huntingwood NSW 100 Jul 1998 7,971 Jun 2006 9,000 (e) 9,000 7,300 154 O’Riordan Street, Mascot NSW 100 Jun 1997 10,908 Jun 2004 13,650 (a) 14,600 13,697 11 Talavera Road, Macquarie Park NSW 100 Jun 2002 133,005 Jun 2006 145,500 (d) 145,500 134,567 DB RREEF Industrial Estate, Egerton Street, Silverwater NSW 100 May 1997 36,332 Dec 2005 42,000 (f) 43,900 39,601

DB RREEF Trust Financial Reports 2006 79 notes to the financial statements (continued) note 13. (b) non-current assets – investment properties (continued)

Property Ownership Acquisition Cost Independent Independent Independent Consolidated Consolidated date including valuation valuation valuer book value book value all additions date amount 30 June 2006 30 June 2005 (%) $’000 $’000 $’000 $’000 Other consolidated investment properties – non-current (continued) 239–251 Woodpark Road, Smithfield NSW 100 May 1997 5,057 Jun 2006 6,450 (f) 6,450 5,756 40 Biloela Street, Villawood NSW 100 Jul 1997 6,801 Jun 2006 8,750 (a) 8,750 7,019 2a Birmingham Street, Villawood NSW 100 Jun 1997 n/a n/a n/a – – 8,900 27–33 Frank Street, Wetherill Park NSW 100 Jul 1998 15,121 Jun 2006 13,200 (a) 13,200 12,685 114 Fairbank Road, Clayton VIC 100 Jul 1997 10,601 Jun 2006 12,800 (c) 12,800 10,913 30 Bellrick Street, Acacia Ridge QLD 100 Jun 1997 13,166 Dec 2005 17,375 (e) 18,700 11,919 121 Evans Road, Salisbury QLD 100 Jul 1997 n/a n/a n/a – – 18,450 68 Hasler Road, Herdsman WA 100 Jul 1998 9,702 Jun 2004 8,000 (e) 9,500 8,379 GPT/GMT Complex and Terraces, 1 Farrer Place, Sydney NSW 50 Dec 1998 471,719 Dec 2004 512,500 (e) 575,000 515,328 45 Clarence Street, Sydney NSW 100 Dec 1998 220,863 Jun 2005 195,000 (f) 228,000 195,000 309–321 Kent Street, Sydney NSW 50 Dec 1998 162,123 Dec 2005 139,250 (a) 165,000 131,655 One Margaret Street, Sydney NSW 100 Dec 1998 142,372 Jun 2005 139,000 (c) 152,000 139,000 Victoria Cross, 60 Miller Street, North Sydney NSW 100 Dec 1998 88,997 Dec 2005 90,000 (f) 95,000 86,805 The Zenith, 821–843 Pacific Highway, Chatswood NSW 100 Dec 1998 193,068 Jun 2004 216,000 (d) 217,000 223,698 Woodside Plaza, 240 St George’s Terrace, Perth WA 100 Jan 2001 240,561 Jun 2006 315,000 (c) 315,000 269,997 30 The Bond, 30–34 Hickson Road, Sydney NSW 100 May 2002 118,098 Jun 2006 150,000 (e) 150,000 123,654 Southgate Complex, 3 Southgate Avenue, Southbank VIC 100 Aug 2000 352,766 Jun 2005 361,000 (g) 390,000 361,002 O’Connell House, 15–19 Bent Street, Sydney NSW 100 Aug 2000 49,318 Sep 2004 55,500 (e) 54,400 56,590 201 Elizabeth Street, Sydney NSW 50 Aug 2000 113,037 Dec 2004 117,000 (e) 122,000 117,190 Garema Court, 140–180 City Walk, Civic ACT ** 100 Aug 2000 43,379 Jun 2006 52,000 (f) 52,000 44,865 Australia Square Complex, 264-278 George Street, Sydney NSW 50 Aug 2000 203,437 Jun 2005 184,000 (d) 226,000 184,269 Lumley Centre, 88 Shortland Street, Auckland, New Zealand1 100 Sep 2005 102,599 Dec 2005 100,008 (d) 101,173 – Total other consolidated investment properties – non-current 5,075,275 – 5,610,118 – 5,905,643 5,122,168 Total investment properties – non-current 6,413,156 7,149,903 7,579,447 6,520,919

1 The property was externally valued at NZ$121,600,000 at 31 December 2005 and internally valued at NZ$123,000,000. These valuations have been translated in to Australian dollars at the spot rate on 30 June 2006. The title to all properties is freehold, with the exception of the properties marked ** which are leasehold. (a) Colliers International (b) Landmark White (c) CB Richard Ellis (d) Jones Lang LaSalle (e) Knight Frank Valuations (f) FPD Savills (g) M3 Property The basis of valuation of investment properties is fair value, being the amounts for which the assets could be exchanged between knowledgeable willing parties in an arm’s length transaction, based on current prices in an active market for similar properties in the same location and condition and subject to similar leases. Properties independently valued in the last 12 months were based on independent assessments by a member of the Australian Property Institute or the Appraisal Institute in the United States of America.

80 DB RREEF Trust Financial Reports 2006 note 13. (b) non-current assets – investment properties (continued)

Property Ownership Acquisition Cost Independent Independent Independent Consolidated Consolidated date including valuation valuation valuer book value book value all additions date amount 30 June 2006 30 June 2005 (%) $’000 $’000 $’000 $’000 Other consolidated investment properties – non-current (continued) 239–251 Woodpark Road, Smithfield NSW 100 May 1997 5,057 Jun 2006 6,450 (f) 6,450 5,756 40 Biloela Street, Villawood NSW 100 Jul 1997 6,801 Jun 2006 8,750 (a) 8,750 7,019 2a Birmingham Street, Villawood NSW 100 Jun 1997 n/a n/a n/a – – 8,900 27–33 Frank Street, Wetherill Park NSW 100 Jul 1998 15,121 Jun 2006 13,200 (a) 13,200 12,685 114 Fairbank Road, Clayton VIC 100 Jul 1997 10,601 Jun 2006 12,800 (c) 12,800 10,913 30 Bellrick Street, Acacia Ridge QLD 100 Jun 1997 13,166 Dec 2005 17,375 (e) 18,700 11,919 121 Evans Road, Salisbury QLD 100 Jul 1997 n/a n/a n/a – – 18,450 68 Hasler Road, Herdsman WA 100 Jul 1998 9,702 Jun 2004 8,000 (e) 9,500 8,379 GPT/GMT Complex and Terraces, 1 Farrer Place, Sydney NSW 50 Dec 1998 471,719 Dec 2004 512,500 (e) 575,000 515,328 45 Clarence Street, Sydney NSW 100 Dec 1998 220,863 Jun 2005 195,000 (f) 228,000 195,000 309–321 Kent Street, Sydney NSW 50 Dec 1998 162,123 Dec 2005 139,250 (a) 165,000 131,655 One Margaret Street, Sydney NSW 100 Dec 1998 142,372 Jun 2005 139,000 (c) 152,000 139,000 Victoria Cross, 60 Miller Street, North Sydney NSW 100 Dec 1998 88,997 Dec 2005 90,000 (f) 95,000 86,805 The Zenith, 821–843 Pacific Highway, Chatswood NSW 100 Dec 1998 193,068 Jun 2004 216,000 (d) 217,000 223,698 Woodside Plaza, 240 St George’s Terrace, Perth WA 100 Jan 2001 240,561 Jun 2006 315,000 (c) 315,000 269,997 30 The Bond, 30–34 Hickson Road, Sydney NSW 100 May 2002 118,098 Jun 2006 150,000 (e) 150,000 123,654 Southgate Complex, 3 Southgate Avenue, Southbank VIC 100 Aug 2000 352,766 Jun 2005 361,000 (g) 390,000 361,002 O’Connell House, 15–19 Bent Street, Sydney NSW 100 Aug 2000 49,318 Sep 2004 55,500 (e) 54,400 56,590 201 Elizabeth Street, Sydney NSW 50 Aug 2000 113,037 Dec 2004 117,000 (e) 122,000 117,190 Garema Court, 140–180 City Walk, Civic ACT ** 100 Aug 2000 43,379 Jun 2006 52,000 (f) 52,000 44,865 Australia Square Complex, 264-278 George Street, Sydney NSW 50 Aug 2000 203,437 Jun 2005 184,000 (d) 226,000 184,269 Lumley Centre, 88 Shortland Street, Auckland, New Zealand1 100 Sep 2005 102,599 Dec 2005 100,008 (d) 101,173 – Total other consolidated investment properties – non-current 5,075,275 – 5,610,118 – 5,905,643 5,122,168 Total investment properties – non-current 6,413,156 7,149,903 7,579,447 6,520,919

1 The property was externally valued at NZ$121,600,000 at 31 December 2005 and internally valued at NZ$123,000,000. These valuations have been translated in to Australian dollars at the spot rate on 30 June 2006. The title to all properties is freehold, with the exception of the properties marked ** which are leasehold. (a) Colliers International (b) Landmark White (c) CB Richard Ellis (d) Jones Lang LaSalle (e) Knight Frank Valuations (f) FPD Savills (g) M3 Property The basis of valuation of investment properties is fair value, being the amounts for which the assets could be exchanged between knowledgeable willing parties in an arm’s length transaction, based on current prices in an active market for similar properties in the same location and condition and subject to similar leases. Properties independently valued in the last 12 months were based on independent assessments by a member of the Australian Property Institute or the Appraisal Institute in the United States of America.

DB RREEF Trust Financial Reports 2006 81 notes to the financial statements (continued) note 13. (c) non-current assets – investment properties (continued) developments

Ferguson Centre, 130 George Street, Parramatta NSW Practical completion was achieved in March 2006, with a development cost of $21.2 million. Office accommodation is now 100 percent occupied following finalisation of leases to Child Support Agency and Medicare totalling 11,867 square metres.

Kings Park Industrial Estate, Marayong NSW Construction on Lot 61 Coronation Avenue reached practical completion in April 2006 at a cost of $5 million. An agreement with Geoff Penney Australia Pty Limited has been entered into for a 2,900 square metre expansion on a current tenancy, costing approximately $3.1 million. Construction has commenced and is scheduled for completion in August 2006.

Axxess Corporate Park, Mount Waverly VIC In January 2006, the Trust entered into an agreement to lease and construct an office building for Omron Electronics Pty Limited. The estimated project cost is $2.5 million and practical completion was reached in March 2006. The Trust entered into an agreement with the Fonterra Group to develop a 6,700 square metre facility costing approximately $19.4 million and is due to complete in July 2006.

Pound Road West, Dandenong VIC In December 2005, DIT entered into an agreement for the extension of L’Oréal Australia Pty Limited tenancy. Construction of this extension has commenced and completion is expected in August 2006.

Dulles Town Crossing, Stirling, Northern Virginia/Washington DC Development of this land parcel is expected to begin during the December 2006. The development will consist of two four story office buildings comprising 220,000 square feet (20,440 square meters) in a rapidly growing area of Virginia. The total budgeted cost for the project is $64 million, including the initial cost of the land. The current plan calls for construction completion in early 2008 with stabilisation occurring approximately 12 to 15 months thereafter. disposals

2a Birmingham Street, Villawood NSW In December 2005, DIT entered into an agreement for sale of 2a Birmingham Street, Villawood for $10.3 million. Settlement occurred on 31 May 2006.

1–55 Rothschild Avenue, Rosebery NSW In February 2005, DIT sold part of Rothschild Avenue, Rosebery. Legal proceedings in relation to interest payable on the settlement sum were heard in the New South Wales Court of Appeal in March 2006. The appeal was granted in favour of DB RREEF Industrial Trust and settlement monies were received in April 2006.

121 Evans Road, Salisbury QLD In June 2006, DIT entered an agreement for sale of 121 Evans Road, Salisbury for $24.0 million. Settlement is expected to occur in August 2006. acquisitions

Lumley Centre, Auckland, New Zealand In September 2005, DOT purchased 88 Shortland Street, Auckland for NZ$110.4 million (AUD$100.2 million).

Minneapolis Industrial Portfolio, Minnesota In November 2005, DB RREEF Industrial Properties, Inc. purchased 7700 68th Avenue, Brooklyn Park, 7500 West 78th Street, Bloomington and 1285 and 1301 Corporate Center Drive, 1230 and 1270 Eagan Industrial Road, located in various cities of Minnesota for $33.9 million. 9955 Valley View Road, Eden Prairie was also acquired for $3.4 million and has been classified as inventory. On 23 June 2006, DB RREEF Industrial, LLC acquired four land parcels from Calwest Industrial Properties, pursuant to its option agreement with Industrial Properties, at predetermined prices as shown below:

Property Purchase price $’000 Plano Parkway, Plano TX 2,762 Garland Jupiter, Garland TX 4,400 Beaumeade, Ashburn VA 4,260 Dulles Town Crossing, Stirling VA 6,982 18,404

82 DB RREEF Trust Financial Reports 2006 reconciliation

Consolidated Parent Entity 30 Jun 2006 30 Jun 2005 30 Jun 2006 30 Jun 2005 $’000 $’000 $’000 $’000 Carrying amount at 1 July 2005 6,520,919 1,635,508 1,398,751 1,635,508 Properties acquired on stapling – 3,280,344 – – Additions 135,540 1,768,366 84,483 163,260 Acquisitions 155,793 – – – Transfer from property, plant and equipment – 15,888 – – Transfer to held for sale investment properties (24,000) – – – Lease incentives 87,943 22,820 10,055 2,160 Amortisation of lease incentives (26,443) (11,958) (5,487) (4,431) Rent straight-lining 14,484 5,743 – – Disposals (8,277) (479,043) – (441,681) Net gain from fair value adjustments 695,666 252,991 186,002 43,935 Foreign exchange difference on foreign currency translation 27,822 30,260 – – Carrying amount as at 30 June 2006 7,579,447 6,520,919 1,673,804 1,398,751 note 14. non-current assets – property, plant and equipment

(a) property, plant and equipment

Consolidated Parent Entity Construction Freehold land Total Construction Freehold land Total in progress and buildings in progress and buildings $’000 $’000 $’000 $’000 $’000 $’000 2006 Opening balance as at 1 July 2005 15,107 12,806 27,913 – – – Additions 68,581 57,495 126,076 – – – Depreciation charge – (1,023) (1,023) – – – Closing balance as at 30 June 2006 83,688 69,278 152,966 – – – Cost 83,688 70,301 153,989 – – – Accumulated depreciation – (1,023) (1,023) – – – Net book value as at 30 June 2006 83,688 69,278 152,966 – – – 2005 Opening balance as at 1 July 2004 10,894 12,806 23,700 – – – Additions 20,101 – 20,101 – – – Transfer from property, plant and equipment (15,888) – (15,888) – – – Closing balance as at 30 June 2005 15,107 12,806 27,913 – – – Cost 15,107 12,806 27,913 – – – Net book value as at 30 June 2005 15,107 12,806 27,913 – – –

(b) basis of valuation Freehold land and buildings are accounted for using the cost method (refer note 1(n)). Construction in progress is recognised at fair value. As at 30 June 2006, the fair value of construction in progress is equal to cost.

(c) non-current assets pledged as security Refer to note 23 for information on non-current assets pledged as security by the parent entity and its controlled entities.

(d) acquisitions and developments

Turnpike Distribution Center, Medley, Florida The total projected investment for Turnpike Distribution Center, including all construction costs, due diligence and closing costs, is estimated at $23 million or $86 per square foot. Development of a single industrial building is on schedule to be completed by the first quarter 2007 and the property is projected to be leased/stabilised by December 2007. Total costs incurred to 30 June 2006 are $16.1 million.

DB RREEF Industrial Estate, Boundary Road, Laverton North VIC In June 2005, DIT entered into agreements to lease and build a major distribution centre for Coles Myer Limited. Construction of this building has commenced and completion is expected in the first quarter of 2007. In February 2006, DIT entered into an agreement to lease and build a warehouse and distribution facility for Wrightson Seeds Australia Limited. Construction of this building has commenced and completion is expected in the last quarter of 2006.

DB RREEF Trust Financial Reports 2006 83 notes to the financial statements (continued) note 15. non-current assets – other financial assets at fair value through profit or loss

Name of entity Principal activity Ownership Parent Entity interest 2006 2005 2006 2005 (%) (%) $’000 $’000 DB RREEF Hurstville Trust Retail property investment 100 100 247,172 233,867 DB RREEF Industrial Trust 1 Industrial property investment 100 100 – – DB RREEF Office Trust 1 Commercial property investment 100 100 – – DB RREEF Operations Trust 1 Financial services 100 100 – – Total non-current assets – other financial assets at fair value through profit or loss 247,172 233,867 reconciliation

Parent Entity 2006 2005 $’000 $’000 Opening balance as at 1 July 2005 233,867 – Additions – 233,867 Distributions (16,800) – Fair value gain 30,105 – Closing balance as at 30 June 2006 247,172 233,867

1 in accordance with AASB Interpretation 1002, DDF is the deemed acquirer of DIT, DOT and DRO and therefore they are reflected in the financial statements as controlled entities of DDF. All controlled entities are wholly owned by the Trust. Both the parent entity and the controlled entities were formed in Australia. note 16. non-current assets – investments accounted for using the equity method Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting (refer note 1). These investments are carried by the parent entity at fair value through the profit and loss. Information relating to these entities is set out below.

Name of entity Principal activity Ownership Consolidated Parent interest 2006 2006 2005 2006 2005 (%) $’000 $’000 $’000 $’000 Held by parent entity Mt Druitt Shopping Centre Trust Retail property investment 50 182,500 154,957 182,500 154,957 DB RREEF Industrial Properties, Inc.1 Asset, property and funds management 50 – – 271,898 177,658 Held by controlled entities 2 O’Connell Street Trust Commercial property investment 50 9,702 7,928 – – 4 O’Connell Street Trust Commercial property investment 50 15,197 12,240 – – Bligh Street Trust Commercial property investment 50 11,902 16,441 – – DB RREEF Holdings Pty Limited (DRH) Asset, property and funds management 50 15,761 17,166 – – Total 235,062 208,732 454,398 332,615

1 The remaining 50 percent of this entity is owned by DIT. As a result, this entity is classed as controlled on a DDF consolidated basis. These entities were formed in Australia with the exception of DB RREEF Industrial Properties, Inc. which was formed in the United States.

84 DB RREEF Trust Financial Reports 2006 Consolidated 2006 2005 $’000 $’000 Movements in carrying amounts of investments accounted for using the equity method Opening balance as at 1 July 2005 208,732 – Interest acquired on stapling – 36,723 Interest acquired during the year 18,335 167,678 Share of net profits after tax 26,911 12,544 Distributions/Dividends received (18,916) (8,213) Closing balance as at 30 June 2006 235,062 208,732 Results attributable to associates Operating profits before income tax 29,187 13,306 Income tax expense (2,276) (762) Operating profits after income tax 26,911 12,544 Less: Distributions/Dividends received (18,916) (8,213) 7,995 4,331 Undistributed income attributable to associates as at 1 July 2005 5,304 – Undistributed income attributable to associates acquired on stapling – 973 Undistributed income attributable to associates as at 30 June 2006 13,299 5,304 Summary of the performance and financial position of investments accounted for using the equity method The Trust’s share of aggregate profits, assets and liabilities of investments accounted for using the equity method is: Profits from ordinary activities after income tax expense 26,911 12,544 Assets 274,809 292,353 Liabilities 66,294 54,150 Share of associates’ expenditure commitments Capital commitments – 17,557 contingent liabilities of investments accounted for using the equity method Upon satisfaction of certain conditions, the Trust may elect to exercise a call option granted to it in relation to the purchase of the remaining 50 percent interest in DRH. note 17. non-current assets – deferred tax assets

Consolidated Parent Entity Note(s) 2006 2005 2006 2005 $’000 $’000 $’000 $’000 The balance comprises temporary differences attributable to: Amounts recognised in profit or loss/Derivative financial instruments 46 – – – Other 70 127 – – Net deferred tax assets 116 127 – – Movements Opening balance at 1 July 2005 127 – – – Change on adoption of AASB 132 and AASB 139 1 196 – – – Credited/(charged) to the Income Statements 5 (207) 127 – – Closing balance at 30 June 2006 116 127 – –

DB RREEF Trust Financial Reports 2006 85 notes to the financial statements (continued) note 18. current assets – loans and receivables

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Loan notes receivable from DB RREEF Holdings Pty Limited 45,092 45,092 – – Total current assets – loans and receivables 45,092 45,092 – –

DRH issued an equal amount of corporate bonds to its two owners – FAP and DRO, in order to fund its 100 percent acquisition of DB RREEF Funds Management Limited (the Responsible Entity of DRO). FAP is a wholly owned subsidiary of Deutsche Bank AG, a related party to the Stapled Entity. These bonds are 20 years in duration and yield 11 percent per annum. note 19. loans with related parties

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Current liabilities – loans with related parties Non-interest bearing loans with the Trusts1 – – 34,332 34,332 Total current liabilities – loans with related parties – – 34,332 34,332

1 The non-interest bearing loans with the Trusts were created to effect the stapling of the Trust, DIT, DOT and DRO. These loan balances eliminate on consolidation. note 20. non-current assets – goodwill

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Opening balance as at 1 July 2005 3,215 – – – Additions – 3,443 – – Impairment charge (3,287) – – – Net exchange differences arising during the year 72 (228) – – Closing balance as at 30 June 2006 – 3,215 – – Cost – 3,443 – – Net exchange difference arising during the year – (228) – Total non-current assets – goodwill – 3,215 – – note 21. non-current assets – other

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Tenant and other bonds 6,298 2,171 750 615 Deferred borrowing costs – 4,293 – – Net receivable on currency hedge contracts – 6,064 – 3,032 Other 714 3,234 – – Total non-current assets – other 7,012 15,762 750 3,647

86 DB RREEF Trust Financial Reports 2006 note 22. current liabilities – payables

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Trade creditors 51,964 32,183 10,394 8,379 Accruals 6,938 6,265 1,042 712 Amount payable to other minority interest 3,509 26,727 – – Accrued capital expenditure 2,117 2,795 – 2,561 Prepaid income 7,727 28,830 1,409 422 Responsible Entity fee payable 2,692 2,142 1,093 682 GST payable 1,350 516 – 124 Accrued interest 24,095 19,021 1,258 – Deferred settlement of property acquisition 47h5 – 475 – Other 34 – – – Total current liabilities – payables 100,901 118,479 15,671 12,880 note 23. interest bearing liabilities current

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Secured Commercial paper – 118,338 – – Commercial mortgage backed securities – 236,000 – – Bank loans 29,402 15,498 – – Total secured 29,402 369,836 – – Unsecured Bank loans 217,000 – – – Total unsecured 217,000 – – – Deferred borrowing costs (1,849) – – – Total current liabilities – interest bearing liabilities 244,553 369,836 – – non-current

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Secured Commercial paper 452,449 452,449 – – Commercial mortgage backed securities 710,883 705,169 – – Bank loans 422,508 439,666 – – Total secured 1,585,840 1,597,284 – – Unsecured Commercial notes 538,140 261,780 – – Bank loans 825,449 555,707 – – Medium term notes 7,025 6,836 – – Intercompany loan1 – – 707,039 581,077 Preference shares 125 121 – – Total unsecured 1,370,739 824,444 707,039 581,077 Deferred borrowing costs (6,085) – (53) – Total non-current liabilities – interest bearing liabilities 2,950,494 2,421,728 706,986 581,077

1 The intercompany loan represents a loan from DB RREEF Finance Pty Limited to DDF, DIT and DOT. These loan balances eliminate on consolidation.

DB RREEF Trust Financial Reports 2006 87 notes to the financial statements (continued) note 23. Interest bearing liabilities (continued) financing arrangements The Stapled Entity has access to the following lines of credit:

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Borrowing facilities Commercial paper 453,300 578,200 – – Commercial mortgage backed securities 710,883 941,169 – – Commercial notes 538,140 261,780 – – Bank loans 1,794,434 1,330,033 – – Medium term notes 7,025 6,835 – – 3,503,782 3,118,017 – – Bank guarantee facility utilised at balance date (5,000) – – – Used at balance date (3,202,856) (2,791,443) – – Unused at balance date 295,926 326,574 – – fair value

2006 2005 Carrying Fair value Carrying Fair value amount amount $’000 $’000 $’000 $’000 The carrying amounts and fair values of borrowings at balance date are: Commercial paper 452,449 452,449 570,787 570,787 Commercial mortgage backed securities 710,883 711,550 941,169 945,212 Commercial notes 538,140 514,989 261,780 267,941 Bank loans 1,494,359 1,473,107 1,010,871 1,010,197 Medium term notes 7,025 7,585 6,836 7,916 3,202,856 3,159,680 2,791,443 2,802,053

None of the classes of borrowings is readily traded on organised These facilities have negative pledge provisions which limit the market in standardised form. amount and type of encumbrances that the Stapled Entity can have over its assets and ensures that all senior unsecured debt ranks Fair value is inclusive of cost which would be incurred on settlement pari passu. DB RREEF Industrial Properties, Inc. may only borrow of a liability. under the US$210 million multi-currency revolving credit facility and The fair value of borrowings is based upon market prices where up to a total of A$240 million of the total $360 million multi-currency a market exists or by discounting the expected future cash flows revolving credit facilities and the A$100 million multi-currency by the current interest rates for liabilities with similar risk profiles. revolving credit facilities. bank loans The current debt facilities will be refinanced as at/or prior to their maturity. Subsequent to 30 June 2005, DB RREEF Finance Pty DB RREEF Finance Pty Limited, a wholly-owned subsidiary of DRO, Limited established a Medium Term Note/Commercial Paper has syndicated bank debt facilities which comprises a $300 million, Programme, supported by the Stapled Entity guarantee multi-currency revolving credit facility maturing in September 2007, arrangements. On 4 August 2006, DB RREEF Finance Pty Limited a $300 million multi-currency revolving credit facility maturing in issued $250 million of unsecured medium term notes, maturing in September 2006 and a US$210 million ($282.524 million) February 2010. In addition, negotiations on the near term maturing multi-currency revolving credit facility maturing in September 2007. facilities are well advanced. This together with the unused borrowing In addition, DB RREEF Finance Pty Limited entered into bilateral facilities provides adequate funding. bank debt facilities in December 2005 mainly to refinance DB RREEF Industrial Trust’s asset backed commercial paper and commercial mortgaged backed securities. The facilities include a total of $360 million multi-currency revolving credit facilities maturing in December 2010 and a total of $100 million multi-currency revolving credit facilities maturing in December 2006, of which $5 million is utilised as a bank guarantee facility for the Coles Myer development (refer note 35). These bank debt facilities are supported by the Stapled Entity guarantee arrangements.

88 DB RREEF Trust Financial Reports 2006 The consolidated accounts of the Stapled Entity include the debt commercial paper and commercial mortgage backed facilities of the US REIT. The facilities include a total of securities US$110.905 million ($149.206 million) of secured bank debt DB RREEF Office Trust (DOT) has liabilities resulting from the facilities that amortise through monthly principal and interest issuance of $452.4 million (facility limit of $453.3 million) asset payments with a weighted average maturity date of September 2008 backed commercial paper (CP) and $500 million commercial and a US$225 million ($302.704 million) secured interest only bank mortgage backed securities (CMBS). The CMBS has an anticipated loan maturing in September 2009. These facilities are secured by maturity date of April 2009. The CP and CMBS are both secured mortgages over investment properties of the US joint venture totalling by mortgages over nine investment properties of DOT with a total $412.834 million and $723.223 million respectively as at value of $2,242 million as at 30 June 2006. 30 June 2006. The US joint venture has liabilities resulting from a US$156.749 commercial notes – US private placement market million ($210.883 million) CMBS issue, maturing in September 2008 DB RREEF Finance Pty Limited has on issue US$200 million (inclusive of a two by one year extension option beginning ($269.070 million) of notes which were privately placed with September 2006). This is secured by investment properties of the investors on terms to maturity ranging from December 2011 US joint venture totalling $577.930 million as at 30 June 2006. to March 2017. medium term notes In February 2006, DB RREEF Industrial Properties, Inc. issued The US joint venture has liabilities resulting from US$5.222 million US$200 million ($269.070 million) of notes which were privately ($7.025 million) unsecured medium term notes maturing in placed with investors on terms to maturity ranging from February September 2010. 2011 to February 2016. These notes are supported by the Stapled Entity guarantee preferred shares arrangements. These notes have negative pledge provisions which DB RREEF Industrial Properties, Inc. has issued US$92,550 limit the amount and type of encumbrances that the Stapled Entity ($124,512) of preferred shares as part of the requirement to be can have over its assets and ensures that all senior unsecured classified as a Real Estate Investment Trust (REIT) under US tax debt ranks pari passu. legislation. These preferred shares will remain on issue until such time that the Board decides that it is no longer in the company’s interest to qualify as a REIT. note 24. current liabilities – provisions

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Provision for distribution Opening balance as at 1 July 2005 144,800 23,171 67,756 23,171 Additional provisions 306,259 284,657 106,689 127,113 Payments and reinvestment of distributions (295,536) (163,028) (120,267) (82,528) Closing balance as at 30 June 2006 155,523 144,800 54,178 67,756

Provision is made for distributions to be paid for the period ending 30 June 2006 payable on 29 August 2006. note 25. current liabilities – other

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Deferred gain on currency hedge contracts – 2,242 – 1,121 Tenant bonds 20 34 – – Other borrowing costs 5,432 6,397 – – Total current liabilities – other 5,452 8,673 – 1,121

DB RREEF Trust Financial Reports 2006 89 notes to the financial statements (continued) note 26. non-current liabilities – deferred tax liabilities The balance comprises temporary differences attributable to:

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Amounts recognised in profit or loss Investment property 48,652 23,685 – – Other 74 – – – Total non-current liabilities – deferred tax liabilities 48,726 23,685 – – Movements Opening balance at 1 July 2005 23,685 – – – Credited/(charged) to the income statement 25,041 23,685 – – Closing balance at 30 June 2006 48,726 23,685 – – note 27. non-current liabilities – financial liabilities with minority interest DB RREEF Industrial Properties, Inc. (US REIT) owns 80 percent of DB RREEF Industrial, LLC, a joint venture with Calwest Industrial Properties, LLC (Calwest), the 20 percent owner. The joint venture agreement entitles Calwest to receive 40 percent of certain cash flows arising from the joint venture, rather than the 20 percent that it would be entitled to in terms of its ownership interest, up until 30 June 2014, after which time the rights to the cash flows revert to the ownership percentages. This additional entitlement is known as the “special interest” or “Calwest promote”. The joint venture agreement entitles US REIT to purchase the special interest from Calwest at any time up until 30 June 2014 at an agreed predetermined price (which increases over time) (the agreed price). Calwest has a right to sell the special interest to the US REIT, from 1 July 2009 to 30 June 2014, at a price not exceeding the agreed price. The agreed price at 30 June 2006 was $29,105,000, which is the value recognised in the financial statements. note 28. non-current liabilities – other

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Other borrowing costs 5,634 15,352 – – Tenant bonds 7,982 8,103 1,084 894 Deferred gain on currency hedge contracts – 6,064 – 3,032 Other 22 24 – – Total non-current liabilities – other 13,638 29,543 1,084 3,926 note 29. contributed equity

(a) contributed equity of equity holders of the parent entity

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Opening balance as at 1 July 2005 1,059,867 1,028,028 1,059,866 1,028,028 Issue of units to staple – 21,101 – 21,101 Issue of stapled securities – 316,263 – 316,263 Capital distribution/(consolidation) to staple – (362,916) – (362,916) Distributions reinvested 34,284 57,558 34,284 57,558 Cost of distributions reinvested (7) (167) (6) (168) Closing balance as at 30 June 2006 1,094,144 1,059,867 1,094,144 1,059,866

90 DB RREEF Trust Financial Reports 2006 (b) contributed equity of equity holders of other stapled entities (minority interest)

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Opening balance as at 1 July 2005 2,034,388 – – – Additional equity acquired on stapling – 1,868,722 – – Placement of units – 33,371 – – Issue of stapled securities – (316,263) – – Capital distribution/(consolidation) to staple – 362,916 – – Distributions reinvested 60,509 85,926 – – Cost of distributions reinvested (10) (284) – – Closing balance as at 30 June 2006 2,094,887 2,034,388 – –

(c) number of securities on issue

Consolidated Parent Entity 2006 2005 2006 2005 Number of Number of Number Number securities securities of units of units Opening balance as at 1 July 2005 2,732,082,389 996,612,986 2,732,082,389 996,612,986 Additional units created on stapling – 1,581,311,602 – – Issue of units to staple – – – 1,581,311,602 Placement of units – 41,521,457 – 41,521,457 Distributions reinvested 70,127,004 112,636,344 70,127,004 112,636,344 Closing balance as at 30 June 2006 2,802,209,393 2,732,082,389 2,802,209,393 2,732,082,389

Terms and conditions Each stapled security ranks equally with all other stapled securities for the purposes of distributions and on termination of the Trust. Each stapled security entitles the holder to one vote, either in person or by proxy, at a meeting of each of the Trusts.

Distribution reinvestment plan Under the distribution reinvestment plan (DRP), stapled security holders may elect to have all or part of their distribution entitlements satisfied by the issue of new stapled securities, rather than being paid in cash. On 29 August 2005, 33,705,917 units were issued at a unit price of $1.3477 in relation to the June 2005 distribution period. On 28 February 2006, 36,421,087 units were issued at a unit price of $1.3555 in relation to the December 2005 distribution period. note 30. reserves and undistributed income

(a) reserves

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Foreign currency translation reserve 178 (1,123) – – Total reserves 178 (1,123) – – Movements: Foreign currency translation reserve Opening balance as at 1 July 2005 (1,123) – – – Foreign currency translation reserve acquired on stapling – 127 – – Exchange difference arising from the translation of the financial statements of foreign operations 1,301 (1,250) – – Total movement in foreign currency translation reserve 1,301 (1,123) – – Closing balance as at 30 June 2006 178 (1,123) – –

(b) nature and purpose of reserves

Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations.

DB RREEF Trust Financial Reports 2006 91 notes to the financial statements (continued) note 30. reserves and undistributed income (continued)

(c) undistributed income

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Undistributed income as at 1 July 2005 407,222 164,624 229,115 164,624 Net profit attributable to security holders 1,010,342 396,031 401,219 191,604 Transfer to capital reserve of minority interest (16,014) – – – Undistributed income acquired on stapling – 127,870 – – Distributions provided for or paid (306,259) (281,303) (106,689) (127,113) Adjustment on adoption of AASB 132 and 139 3,162 – 2,165 – Undistributed income as at 30 June 2006 1,098,453 407,222 525,810 229,115 note 31. minority interests

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Interest in Contributed equity 343,932 336,283 – – Reserves 15,616 (4,868) – – Undistributed income 68,303 33,943 – – Total minority interests 427,851 365,358 – –

On 15 June 2005, DB RREEF Funds Management Limited in its capacity as Responsible Entity of DB RREEF RENTS Trust issued 2,040,000 preference units with a face value of $100 each on the ASX. The securities, known as RENTS, entitle holders to receive non-cumulative quarterly floating rate distributions at a margin of 130 basis points above the 90 day bank bill rateh. RENTS may be exchanged for cash or stapled securities on 30 June 2012 (the Step-up Date). For each distribution period following the Step-up Date, the margin will increase by a once only step-up of 2 percent per annum unless RENTS are repurchased or exchanged. note 32. distributions paid and payable

(a) distribution to security holders

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 31 December (paid 28 February 2006) 150,736 136,503 52,511 59,357 30 June (payable 29 August 2006) 155,523 144,800 54,178 67,756 Total distributions 306,259 281,303 106,689 127,113

(b) distribution to minority interests

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 DB RREEF Industrial Holdings, LLC (paid) 7,178 461 – – DB RREEF RENTS Trust (paid 17 October 2005) 4,223 – – – DB RREEF RENTS Trust (paid 17 January 2006) 3,566 – – – DB RREEF RENTS Trust (paid 21 April 2006) 3,488 – – – DB RREEF RENTS Trust (paid 17 July 2006) 3,509 – – – 21,964 461 – – Total distributions 328,223 281,764 106,689 127,113

92 DB RREEF Trust Financial Reports 2006 (c) distribution rate

Consolidated Parent Entity 2006 2005 2006 2005 Cents Cents Cents Cents per security per security per unit per unit 31 December (paid 28 February 2006) 5.45 5.20 1.93 2.26 30 June (payable 29 August 2006) 5.55 5.30 1.96 2.48 Total distributions 11.00 10.50 3.89 4.74

(d) franked dividends The franked portions of the final dividends recommended after 30 June 2006 will be franked out of existing franking credits or out of franking credits arising from the payment of income tax in the year ending 30 June 2006.

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Franking credits Opening balance as at 1 July 2005 – – – – Franking credits arising during the year on payment of tax at 30 percent 1,069 – – – Franking debits arising from payment of interim dividend (574) – – – Closing balance as at 30 June 2006 495 – – – note 33. financial risk management Furthermore, the Trust does not have a material exposure to a group of counterparties which are expected to be affected similarly by The Trust’s activities expose it to a variety of financial risks: changes in economic or other conditions. credit risk, market risk (including currency risk, fair value interest rate risk and price risk), liquidity risk and cash flow interest rate On-balance sheet financial instruments risk. The Trust’s overall risk management program focuses on the The credit risk on financial assets of the Trust which have been unpredictability of financial markets and seeks to minimise potential recognised in the Balance Sheets is the carrying amount. adverse effects on the financial performance of the Trust. (b) market risk Accordingly, the Trust enters into various derivative financial instruments to manage its exposure to the movements in interest (i) Foreign exchange risk rates and foreign exchange rates. There are policies and limits Foreign exchange risk is the risk that movements in exchange approved by the Board of Directors of the Responsible Entity in rates used to convert foreign currency revenues, expenses, assets, respect of the usage of derivatives and other financial instruments or liabilities to the Trust functional currency will have an adverse to hedge those cash flows and earnings which are subject to interest affect on the Stapled Entity. rate risks and foreign currency risk respectively. In conjunction with its advisers, the Responsible Entity continually reviews the Trust’s The Trust operates internationally with investments in the United exposures and updates its treasury policies and procedures. The States and New Zealand and is exposed to foreign exchange risk Trust does not trade in derivative instruments for speculative arising from currency exposures in US and NZ dollars. purposes. Forward contracts are used to manage foreign exchange risk.

(a) credit risk (ii) Fair value interest rate risk Credit risk represents the loss that would be recognised if Refer to (d) on the following page. counterparties failed to perform as contracted. (iii) Price risk Concentrations of credit risk are minimised primarily by: This is the risk that the value of the Trust’s investment portfolio will n ensuring tenants, together with the respective credit limits, fluctuate as a result of changes in valuations. This risk is managed are approved and ensuring that leases are undertaken with by ensuring that all activities are transacted in accordance with a large number of tenants; and mandates, overall investment strategy and within approved limits. n ensuring derivative counterparties and cash transactions are Market risk analysis is conducted regularly on a total portfolio basis. limited to high credit quality financial institutions. The Trust On-balance sheet financial instruments has policies that limit the amount of credit exposure to any one The net fair value of cash and non-interest bearing monetary financial institution. Credit risk is further minimised by spreading financial assets and liabilities approximate their carrying value. transactions amongst approved counterparties. As such, the Trust does not have a concentration of credit risk that arises from an exposure to a single tenant or financial institution.

DB RREEF Trust Financial Reports 2006 93 notes to the financial statements (continued) note 33. financial risk management (continued)

(c) liquidity risk Liquidity risk is the risk that the Trust will experience difficulty in either realising assets or otherwise raising sufficient funds to satisfy commitments. The risk management guidelines adopted are designed to minimise liquidity risk through maintaining sufficient cash balances and the availability of funding through an adequate amount of committed credit facilities.

(d) cash flow and fair value interest rate risk Interest rate risk for the Trust arises from its borrowings. Borrowings issued at variable rates expose the Trust to cash flow interest rate risk. Borrowings issued at fixed rates expose the Trust to fair value interest rate risk. A portfolio approach to interest rate risk management is adopted whereby generally any fixed rate debt is converted into floating rate exposure via fixed-to-floating interest rate swaps. This mitigates fair value interest rate risk. The Trust then manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Under the interest rate swaps, the Trust agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional principal amounts. Fixed debt and swaps currently in place cover approximately 95 percent (2005: 84 percent) of the loan principle outstanding, with a further $2.7 billion (2005: $1.1 billion) in swaps that are forward starting. The Trust’s exposure to interest rate risk is hedged with interest rate swaps and the weighted average effective interest rate (for each class of financial asset and financial liability, and each maturity bracket including floating rate financial assets and liabilities) is set out in the following table.

30 June 2006

Consolidated Fixed interest maturing in: Note(s) Floating 1 year Over 1 and Over 2 and Over 3 and Over 4 and More than Total interest or less less than less than less than less than 5 years rate 2 years 3 years 4 years 5 years $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Financial assets Cash and cash equivalents 8 106,428 – – – – – – 106,428 Loans and receivables 18 45,092 – – – – – – 45,092 Total 151,520 – – – – – – 151,520 Weighted average interest rate 6.25% – – – – – – Financial liabilities Interest bearing liabilities 23 2,070,961 14,582 21,712 263,290 302,704 146,942 382,790 3,202,981 Interest rate swaps1 (1,919,769) 668,349 180,000 214,572 515,533 290,205 51,110 – Forward start interest rate swaps1 – (707,257) (130,000) (445,465) (468,182) (309,029) (642,884) (2,702,817) Forward start interest rate swaps maturities1 – – – 183,814 – 45,533 2,473,470 2,702,817 Total 151,192 (24,326) 71,712 216,211 350,055 173,651 2,264,486 3,202,981 Weighted average interest rate (including swaps) 5.75% 5.66% 5.66% 5.63% 5.85% 5.96% 6.03% Net financial (liabilities)/assets 328 24,326 (71,712) (216,211) (350,055) (173,651) (2,264,486) (3,051,462)

94 DB RREEF Trust Financial Reports 2006 30 June 2005

Consolidated Fixed interest maturing in: Note(s) Floating 1 year Over 1 and Over 2 and Over 3 and Over 4 and More than Total interest or less less than less than less than less than 5 years rate 2 years 3 years 4 years 5 years $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Financial assets Cash and cash equivalents 8 68,959 – – – – – – 68,959 Loans and receivables 18 45,092 – – – – – – 45,092 Total 114,051 – – – – – – 114,051 Weighted average interest rate 5.64% – – – – – – Financial liabilities Interest bearing liabilities 23 1,832,297 109,453 14,940 23,040 263,189 294,503 254,142 2,791,564 Interest rate swaps1 (1,395,225) 40,000 100,000 180,000 610,000 439,372 25,853 – Forward start interest rate swaps1 – (340,756) (498,534) (50,000) (90,000) (102,094) – (1,081,384) Forward start interest rate swaps maturities1 – – 180,000 80,756 – – 820,628 1,081,384 Total 437,072 (191,303) (203,594) 233,796 783,189 631,781 1,100,623 2,791,564 Weighted average interest rate (including swaps) 5.52% 5.63% 5.61% 5.60% 5.55% 5.88% 6.01% Net financial (liabilities)/assets (323,021) 191,303 203,594 (233,796) (783,189) (631,781) (1,100,623) (2,677,513)

1 Notional principal amounts.

(e) foreign exchange rate risk exposures When hedging its exposures, the Stapled Entity adopts a strategy using both physical and derivative financial instruments. In regard to derivative financial instruments, the Stapled Entity uses forward exchange contracts for hedging purposes.

30 June 2006

Weighted average exchange rate Contracts to sell US$ at an agreed exchange rate: 1 year or less Over 1 and less More than 2 years than 2 years To pay US$ million 17 15 26 To receive A$ million 24 22 36 Weighted average exchange rate 0.7086 0.7015 0.7041

Weighted average exchange rate Contracts to sell NZ$ at an agreed exchange rate: 1 year or less Over 1 and less More than 2 years than 2 years To pay NZ$ million – – – To receive A$ million – – – Weighted average exchange rate – – –

Weighted average exchange rate Contracts to sell € at an agreed exchange rate: 1 year or less Over 1 and less More than 2 years than 2 years To pay € million 18 1 2 To receive A$ million 30 2 5 Weighted average exchange rate 0.5839 0.5626 0.5402

DB RREEF Trust Financial Reports 2006 95 notes to the financial statements (continued) note 33. financial risk management (continued)

(e) foreign exchange rate risk exposures (continued)

30 June 2005

Weighted average exchange rate Contracts to sell US$ at an agreed exchange rate: 1 year or less Over 1 and less More than 2 years than 2 years To pay US$ million 22 16 27 To receive A$ million 31 23 40 Weighted average exchange rate 0.7079 0.6929 0.6878

Weighted average exchange rate Contracts to sell NZ$ at an agreed exchange rate: 1 year or less Over 1 and less More than 2 years than 2 years To pay NZ$ million 5 – – To receive A$ million 5 – – Weighted average exchange rate 1.1134 – –

Weighted average exchange rate Contracts to sell € at an agreed exchange rate: 1 year or less Over 1 and less More than 2 years than 2 years To pay € million – – – To receive A$ million – – – Weighted average exchange rate – – – note 34. contingent liabilities Details and estimates of maximum amounts of contingent liabilities are as follows:

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Bank guarantees by the Stapled Entity in respect of variations and other financial risks associated with the development of: 240 St George’s Terrace, Perth WA 200 2,200 – – Coles Myer development at Boundary Road, Laverton North VIC 5,000 5,000 – – Total contingent liabilities 5,200 7,200 – –

The Trusts are also guarantors of a A$600 million and US$210 million syndicated bank debt facility and a total of A$460 million of bank bilateral facilities and a total of US$400 million of privately placed notes, which have all been negotiated to finance the Stapled Entity. The guarantees have been given in support of debt outstanding and drawn against these facilities. The guarantees are issued in respect of the Stapled Entity and do not constitute an additional liability to those already existing in interest bearing liabilities on the Balance Sheets. The Directors of the Responsible Entity are not aware of any other contingent liabilities in relation to the Stapled Entity, other than those disclosed in the financial statements, which should be brought to the attention of security holders as at the date of completion of this report.

96 DB RREEF Trust Financial Reports 2006 note 35. commitments

(a) capital commitments The following amounts represent capital expenditure on investment properties contracted at the reporting date but not recognised as liabilities payable:

Consolidated Parent Entity Capital expenditure commitments in relation 2006 2005 2006 2005 to development works: $’000 $’000 $’000 $’000 Not longer than one year Ferguson Centre, 130 George Street, Parramatta NSW – 23,821 – 23,821 Axxess Corporate Park, Mount Waverley VIC 7,900 11,375 7,900 11,375 Plenty Valley Town Centre, McDonald’s Road, South Morang VIC 35,000 – 35,000 – Westfield North Lakes Shopping Centre, Mango Hill QLD 50,000 2,276 50,000 2,276 Westfield Mt Druitt Shopping Centre, Mt Druitt NSW – 17,557 – 17,557 DBREEF Industrial Estate, Boundary Road, Laverton North VIC 55,820 35,266 – – Pound Road West, Dandenong VIC 1,957 – – – 1–15 Rosebery Avenue, Rosebery NSW – 114 – – One Margaret Street, Sydney NSW 264 402 – – Zenith Centre, 821–843 Pacific Highway, Chatswood NSW – 1,346 – – 45 Clarence Street, Sydney NSW – 9,828 – – Governor Phillip Tower and Governor Macquarie Tower Office Complex 1 Farrer Place, Sydney NSW 14,534 4,071 – – 309–321 Kent Street, Sydney NSW 5,254 – – – Australia Square, 264–278 George Street, Sydney NSW 2,248 3,406 – – Southgate Complex, 3 Southgate Avenue, Southbank VIC 100 – – – 88 Shortland Street, Auckland, New Zealand – 100,942 – – World Park, Cincinnati/North Kentucky – 805 – – Equity/Westbelt/Dividend, Columbus – 794 – – 2055 Diplomat Drive, Dallas – 914 – – Orlando Central Park, Orlando – 415 – – Williams Drive, Atlanta 398 – – – West Nursery, Baltimore 235 – – – NE Baltimore, Baltimore 215 – – – Kenwood Road, Cincinnati/North Kentucky 124 – – – East Collins, Dallas 180 – – – 10th Street, Dallas 530 – – – Mechanicsburg, Harrisburg 471 – – – Glendale, Los Angeles 124 – – – Memphis Industrial, Memphis 221 – – – 1000 South Priest Drive, Phoenix 410 – – – Kent West, Seattle 573 – – – 176,558 213,332 92,900 55,029 Later than one year but not later than five years Plenty Valley Town Centre, McDonald’s Road, South Morang VIC 40,000 – 40,000 – Westfield North Lakes Shopping Centre, Mango Hill QLD 25,000 – 25,000 – Governor Phillip Tower and Governor Macquarie Tower Office Complex 1 Farrer Place, Sydney NSW – 22,826 – – DB RREEF Industrial Estate, Boundary Road, Laverton North VIC – 50,749 – – 65,000 73,575 65,000 – Total capital commitments 241,558 286,907 157,900 55,029

DB RREEF Trust Financial Reports 2006 97 notes to the financial statements (continued) note 35. commitments (continued)

(b) lease payable commitments

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Commitments in relation to leases contracted for at the reporting date but not recognised as liabilities, payable Within one year 290 290 290 290 Later than one year but not later than five years 1,162 1,162 1,162 1,162 Later than five years 7,550 7,840 7,550 7,840 Total lease payable commitments 9,002 9,292 9,002 9,292

Payments made under operating leases are expensed on a straight line basis over the term of the lease except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property. The Trust has a commitment for ground rent payable in respect of a leasehold property included in property investments. An amount of $290,356 was paid in respect of the year ended 30 June 2006 (2005: $290,356). This commitment was reviewed in 2003 and annual lease payments were increased by a CPI factor as per the lease agreement. This commitment is next subject for review in 2012 and expires in 2037. No provisions have been recognised in respect of non-cancellable operating leases.

(c) lease receivable commitments

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 The future minimum lease payments receivable by the Stapled Entity are Within one year 541,745 573,724 147,352 195,013 Later than one year but not later than five years 1,531,569 1,716,962 423,153 585,208 Later than five years 967,674 1,258,766 273,761 435,459 Total lease receivable commitments 3,040,988 3,549,452 844,266 1,215,680 note 36. related parties responsible entity On 29 September 2004, DB RREEF Funds Management Limited replaced DB Real Estate Australia Limited, a wholly owned subsidiary of Deutsche Bank AG (ABN 13 064 165 162) as the Responsible Entity. responsible entity fees Under the terms of the Trust Constitutions, the Responsible Entity is entitled to receive fees in relation to the management of the Trust. In addition, the Responsible Entity is entitled to property management fees and to be reimbursed for expenses incurred on behalf of the Trust. related party transactions All related party transactions are conducted on normal commercial terms and conditions unless otherwise stated. unitholdings At 30 June 2006 Deutsche Bank AG and its related parties, schemes and portfolios managed by Deutsche Bank AG and its related parties hold 48,480,053 stapled securities (2005:453,322,396) in the Stapled Entity. investments DB RREEF Funds Management Limited, the Responsible Entity, is a wholly owned subsidiary of DRH. DRH is 50 percent owned by DRO and 50 percent owned by FAP, a subsidiary of Deutsche Bank Group. The Trust is the parent entity and deemed acquirer of DRO.

98 DB RREEF Trust Financial Reports 2006 Deutsche Bank AG Up to 29 September 2004 Deutsche Bank AG was the ultimate parent company of the Responsible Entity, Deutsche Asset Management (Australia) Limited. Deutsche Bank continued to be a related party after 29 September 2004 as it continues to own 50 percent of the Manager and new Responsible Entity, DB RREEF Funds Management Limited. Dealings with the bank include not only transactions in its capacity as part owner of the new Responsible Entity, but also in the provision of financial services. There were a number of transactions and balances between the Trust and the Responsible Entity and related entities as detailed below:

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Transactions with DB Real Estate Australia Limited/Deutsche Asset Management (Australia) Limited in its capacity as Responsible Entity of the Trust: Responsible Entity fees paid and payable – 1,894 – 1,894 Administration expenses incurred by the Responsible Entity which are reimbursed in accordance with the Trust’s Constitution – 521 – – Transactions with Deutsche Bank AG in its capacity as a financier: Interest paid and payable on swaps for whom the counterparty was Deutsche Bank AG 13,334 1,126 (467) 583 Interest and financing fees paid and payable on borrowings to Deutsche Bank AG 585 772 – 296 Dealer fees paid and payable to Deutsche Bank AG for the co-management of medium term notes issued during the year – 1,157 – – Borrowings from Deutsche Bank AG 10,103 129,887 – 125,000 Loan repayment to Deutsche Bank AG 5,251 125,000 – 125,000 Interest received and receivable on swaps for whom the counterparty was Deutsche Bank AG (12,834) 72 1 16 Other transactions with Deutsche Bank AG: Underwriting fees paid and payable to Deutsche Bank AG – 6,034 – 167 Financial adviser’s fees paid and payable to Deutsche Bank AG – 8,076 – 2,692 Costs associated with the Transaction 480 – 160 – Interest paid and payable to FAP 566 – – –

DB RREEF Funds Management Limited From 29 September 2004 DB RREEF Funds Management Limited replaced Deutsche Asset Management (Australia) Limited as Responsible Entity of the Trust. There were a number of transactions and balances between the Trust and Responsible Entity and related entities as detailed below:

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Responsible Entity fees paid and payable 28,695 19,247 10,534 6,796 Aggregate amounts payable to the Responsible Entity at reporting date 3,410 3,587 1,093 879

DB RREEF Trust Financial Reports 2006 99 notes to the financial statements (continued) note 36. related parties (continued)

RREEF RREEF (a subsidiary of Deutsche Bank AG), as fund manager of the DB RREEF Industrial Properties, Inc. is entitled to the following fees:

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Investment management fee paid and payable 1,053 738 – – Asset management fee paid and payable 303 211 – – Acquisition fee paid and payable 555 71 – – Disposal fee paid and payable – 82 – – Financing fees paid and payable – 791 – – Property management fees paid and payable 4,758 4,177 – – Leasing fees paid – 1,699 – – Construction supervision fee paid and payable 1,150 605 – – Marketing fees paid – 17 – – Development fee 172 – – – Leasing commissions 3,708 – – – Performance fee 211 – – –

DB RREEF Holdings Pty Limited

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Loan note interest earned from DB RREEF Holdings Pty Limited 4,960 3,696 – – Loan note interest receivable from DB RREEF Holdings Pty Limited – 1,238 – – Loan notes receivable at reporting date 45,092 45,092 – – Property management fees paid and payable to DB RREEF Holdings Pty Limited 6,260 3,363 – – Recovery of administration expenses paid to DB RREEF Holdings Pty Limited 8,589 1,505 1,742 407 directors The following persons were Directors of DRFM during the whole of the financial year and up to the date of this report, unless otherwise stated:

Directors Appointed Resigned C T Beare BSc, BE (Hons), MBA, PhD, FAICD1, 4, 5 E A Alexander AM BComm, FCA, FAICD, FCPA1, 2 B R Brownjohn BComm1, 2, 5 S F Ewen FILE 1, 4 A J Fay BAg Econ (Hons), ASIA (Alternate to C B Leitner) 30 January 2006 V P Hoog Antink BComm, MBA, FCA, FAPI, MAICD 5 C B Leitner BA S A Mays BSc (Hons), MSc, MBA (Alternate to C B Leitner) 30 January 2006 B E Scullin BEc2, 3, 4

1 independent Director. 2 Audit Committee Member. 3 compliance Committee Member. 4 Remuneration Committee. 5 Treasury Committee. No Directors held an interest in the Trust as at 30 June 2006 or at the date of this report.

100 DB RREEF Trust Financial Reports 2006 other key management personnel In addition to the Directors listed above the following persons were deemed by the Board Nomination and Remuneration Committee to be key management personnel during all or part of the financial year and up to the date of this report:

Name Position Qualification date of other key management personnel during the 12 months ended 30 June 2006 Tanya L Cox Chief Operating Officer John C Easy General Counsel Greg T Lee Head of Transaction Services Qualified until 31 January 2006 Ben J Lehmann Head of Portfolio Services Peter C Roberts Chief Financial Officer Qualified from 5 December 2005 Mark F Turner Head of Unlisted Funds

No key management personnel or their related parties held an interest in the Trust for the years ended 30 June 2005 and 30 June 2006 or at the date of this report. There were no loans or other transactions with key management personnel or their related parties during the years ended 30 June 2005 and 30 June 2006 or at the date of this report.

2006 20051 Compensation ($) ($) Short term employee benefits 4,434,850 3,252,331 Post-employment benefits 418,594 115,169 Other long term benefits2 650,000 282,500 5,503,444 3,650,000

1 Actual 2005 remuneration received from DRFM was for the nine month period commencing 1 October 2004. Remuneration paid during the 3 month period to 30 September 2004, the stapling implementation date, was paid by Deutsche Bank and was not a cost of DB RREEF Trust. In addition, the 2005 short term incentive values have been restated to reflect actual incentive values granted to Executives in September 2005 which related to the period ended 30 June 2005. Consequently, the 2005 short term incentive amounts and corresponding line totals will differ from those published in the 2005 Annual Report. 2 A long term incentive scheme for other Key Management Personnel was introduced in July 2005, with an effective date of 1 January 2005. The above 2005 long term incentive values were therefore granted for the six month period to 30 June 2005. The Trust has taken advantage of the relief provided by ASIC Class Order 06/50 and has transferred the detailed remuneration disclosures to the Directors’ Report. The relevant information can be found in section 3 of the Directors Report on pages 48 to 54. note 37. events occurring after reporting date acquisition of Prologis France 1 SAS On 11 July 2006 DB RREEF Industrial Trust incorporated DIT France Logistique, a wholly owned subsidiary, which acquired all of the issued shares in Prologis France 1 SAS on the same date for a cash consideration of $56,158,118. Details of the net assets acquired and goodwill are as follows:

2006 $’000 Purchase consideration Cash paid 56,158 Direct costs related to acquisition 1,906 Total purchase price 58,064 Fair value of net identifiable assets acquired (refer below) (41,259) Goodwill 16,805

DB RREEF Trust Financial Reports 2006 101 notes to the financial statements (continued) note 37. events occurring after reporting date (continued) acquisition of Prologis France 1 SAS (continued)

Assets and liabilities acquired The assets and liabilities arising from the acquisition are as follows:

Provisional fair value Acquiree’s carrying amount $’000 $’000 Investment properties 73,438 29,332 Receivables 808 808 Prepayments 48 48 Cash and cash equivalents 45 45 Payables (945) (945) Deferred revenue (344) (344) Security deposits (101) (101) Group borrowings (16,790) (16,790) Deferred CGT liability (14,900) – Net identifiable assets acquired 41,259 12,053 acquisition of Prologis France XXXII EURL On 11 July 2006, DIT France Logistique, a wholly owned subsidiary, acquired all of the issued shares in Prologis France XXXII EURL for a cash consideration of $23,728,219. Details of the net assets acquired and goodwill are as follows:

2006 $’000 Purchase consideration Cash paid 23,728 Direct costs related to acquisition 572 Total purchase price 24,300 Fair value of net identifiable assets acquired (refer below) (16,812) Goodwill 7,488 assets and liabilities acquired The assets and liabilities arising from the acquisition are as follows:

Provisional fair value Acquiree’s carrying amount $’000 $’000 Investment properties 42,681 18,853 Receivables 1,067 1,067 Prepayments 39 39 Payables (981) (981) Group borrowings (19,079) (19,079) Deferred capital gains tax liability (6,915) – Net identifiable assets acquired 16,812 (101)

The goodwill on consolidation arises because the consideration paid for Prologis France I and Prologis France XXXII exceeds the values at which its net assets are required to be recognised in the financial statements. The differences are primarily attributable to latent CGT liabilities, which arise as a result of the properties’ fair market values exceeding their tax base values. It is unlikely that the CGT liability will ever crystallise. Crystallisation would require that the companies dispose of the properties concerned individually and it is the intention of the companies to hold these properties as long term investments. Should DB RREEF Industrial Trust wish to sell the properties, it would likely sell the structure rather than the properties. However, AASB 112: Income Taxes requires the recognition of a liability in respect of such latent CGT (at an undiscounted amount) even if the entity does not intend to dispose of the asset concerned. The financial effects of the above transactions have not been brought to account at 30 June 2006. The operating results and assets and liabilities of the companies will be consolidated from 11 July 2006. acquisition of additional land In July 2006 DIT exchanged contracts to acquire a 65.4 hectare site at Laverton North, Victoria for $32 million, with settlement due in November 2006. This site is adjacent to DIT’s existing holdings, and provides a strategic extension to this development, in which several recent and pending pre-commitments have utilised a number of major lots.

102 DB RREEF Trust Financial Reports 2006 Since the end of the year, other than the matters discussed above, the Directors of the Responsible Entity are not aware of any matter or circumstance not otherwise dealt with in their report or the financial statements that has significantly or may significantly affect the operations of the Stapled Entity, the results of those operations, or state of the Stapled Entity’s affairs in future periods. note 38. segment information

Business segments The Stapled Entity operates in the following segments: n Retail – investment in the retail property sector. n Commercial and car park – investment in the commercial and car park property sectors. n Industrial – investment in the industrial property sector.

2006

Retail Commercial Industrial Eliminations/ Consolidated and car park unallocated $’000 $’000 $’000 $’000 $’000 Property revenue 64,441 304,249 290,905 154 659,749 Interest revenue 257 837 5,209 5,597 11,900 Share of net profits of associates accounted for using the equity method 19,632 2,434 – 4,845 26,911 84,330 307,520 296,114 10,596 698,560 Net gain on sale of investment properties – 131 1,359 – 1,490 Net fair value gain of investments properties 76,901 307,526 302,063 – 686,490 Net fair value gain of derivatives – – – 73,271 73,271 Net foreign exchange gain/(loss) – 117 2,786 – 2,903 Other income – 329 – 190 519 Total segment revenue/income 161,231 615,623 602,322 84,057 1,463,233 Segment result 140,857 469,881 338,973 60,631 1,010,342 Segment assets 932,720 3,738,259 3,520,817 95,742 8,287,538 Segment liabilities 19,161 115,126 1,385,629 1,052,109 3,572,025 Investments accounted for using the equity method 182,500 36,801 – 15,761 235,062 Acquisition of investment properties – 102,599 53,194 – 155,793 Additions of property, plant and equipment – 57,495 68,581 – 126,076 Amortisation expense 2,157 18,712 4,453 – 25,322 Impairment of goodwill – – 3,287 – 3,287 Other non-cash expenses – 1,023 – – 1,023

2005

Retail Commercial Industrial Eliminations/ Consolidated and car park unallocated $’000 $’000 $’000 $’000 $’000 Property revenue 54,385 227,820 224,875 1,715 508,795 Interest revenue 560 1,209 903 3,260 5,932 Share of net profits of associates accounted for using the equity method 8,298 1,674 – 2,572 12,544 63,243 230,703 225,778 7,547 527,271 Net gain on sale of investment properties 18,077 3,120 4,510 – 25,707 Net fair value gain of investment properties 18,405 60,174 178,028 – 256,607 Net foreign exchange gain/(loss) – – 42 – 42 Other income – 260 – – 260 Total segment revenue/income 99,725 294,257 408,358 7,547 809,887 Segment result 77,980 171,298 218,716 (71,963) 396,031 Segment assets 818,412 3,147,514 2,909,885 109,192 6,985,003 Segment liabilities 535,269 1,016,602 1,724,254 (156,834) 3,119,291 Investments accounted for using the equity method 154,957 36,609 – 17,166 208,732 Amortisation expense 845 7,674 1,138 – 9,657

DB RREEF Trust Financial Reports 2006 103 notes to the financial statements (continued) note 38. segment information (continued) geographical segments The Trust’s investments are located in Australia, New Zealand and the United States of America.

2006

Australia New Zealand United States of America Consolidated $’000 $’000 $’000 $’000 Rental and other property income 498,281 8,595 152,873 659,749 Segment assets 6,292,518 102,125 1,892,895 8,287,538 Acquisitions of investment properties – 102,599 53,194 155,793 Additions of property, plant and equipment 109,932 – 16,144 126,076

2005

Australia New Zealand United States of America Consolidated $’000 $’000 $’000 $’000 Rental and other property income 390,029 – 118,766 508,795 Segment assets 5,411,346 5,006 1,568,651 6,985,003 note 39. reconciliation of net profit/(loss) to net cash inflow from operating activities

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Net profit 1,066,385 466,933 401,219 191,604 Capitalised interest (10,488) (12,937) (5,627) (8,932) Capitalised expenses – (1,863) – (1,863) Depreciation 1,023 – – – Net increment on revaluation of investments (686,490) (256,607) (285,490) (82,020) Share of net profits of associates accounted for using the equity method (5,036) (2,458) – – Net increment on revaluation of derivatives (73,271) – (15,349) – Net gain on sale of investment properties (1,487) (25,706) (109) (21,765) Net foreign exchange loss/(gain) 10,772 (545) 3,508 – Provision for doubtful debts 635 466 (11) (218) Impairment of goodwill 3,287 – – – Change in operating assets and liabilities (Increase)/decrease in receivables (1,412) 30,789 (13,205) 49,286 Decrease in prepaid expenses 368 6,036 845 3,710 Decrease in other non-current assets – investments 1,209 17,307 26,828 2,368 Decrease/(increase) in other current assets 3,098 (3,518) – (5,227) (Increase)/decrease in other non-current assets (2,384) 15,127 1,776 (4,713) Increase/(decrease) in payables 6,267 6,360 2,317 (2,849) (Decrease)/increase in deferred tax liabilities – 23,637 – – (Increase)/decrease in other current liabilities (655) 3,359 (1,880) 1,121 Increase/(decrease) in other non-current liabilities 16,204 (25,131) 7,622 24,611 Net cash inflow from operating activities 328,025 241,249 122,444 145,113

104 DB RREEF Trust Financial Reports 2006 note 40. non-cash financing and investing activities

Consolidated Parent Entity Note(s) 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Placement of units 29 – 54,472 – 21,101 Distributions reinvested 29 94,793 143,484 34,284 57,558 note 41. earnings per unit

(a) basic earnings per unit on profit attributable to equity holders of the parent entity

Consolidated Parent Entity 2006 2005 2006 2005 Cents Cents Cents Cents 14.39 8.83 14.47 8.83

(b) diluted earnings per unit on profit attributable to equity holders of the parent entity

Consolidated Parent Entity 2006 2005 2006 2005 Cents Cents Cents Cents 14.39 8.83 14.47 8.83

(c) reconciliation of earnings used in calculating earnings per unit

Consolidated Parent Entity 2006 2005 2006 2005 $’000 $’000 $’000 $’000 Net profit 1,066,385 466,933 401,219 191,604 Net profit attributable to equity holders of other Stapled Entities (minority interest) (611,417) (204,466) – Net profit attributable to other minority interests (56,043) (70,902) – – Net profit attributable to the unitholders of the Trust in calculating basic and diluted earnings per unit 398,925 191,565 401,219 191,604

(d) weighted average number of units used as a denominator

Consolidated Parent Entity 2006 2005 2006 2005 Weighted average number of units outstanding used in the calculation of basic and diluted earnings per unit 2,772,613,360 2,169,736,274 2,772,613,360 2,169,736,274

DB RREEF Trust Financial Reports 2006 105 notes to the financial statements (continued) note 42. business combinations acquisition of DB RREEF Industrial Holdings Ltd

Name of entity Country of incorporation Class of shares Nature of business Equity holding (%) DB RREEF Industrial Holdings LLC United States of America Ordinary Property trust 80

On 30 September 2004, the Stapled Entity (via DDF and DIT) acquired 80 percent of DB RREEF Industrial Holdings, LLC. The operating results of this controlled entity have been included in the Income Statements since the date of acquisition. The acquired business contributed revenues of $268,011,000 and net profit of $102,876,000 to the consolidated result for the period 30 September 2004 to 30 June 2005. If the acquisition had occurred on 1 July 2004, the Stapled Entity’s consolidated revenue and consolidated profit for the year ended 30 June 2005 would have been $809,887,000 and $396,031,000 respectively.

For the year ended 30 June 2006, $326,120,000 of revenues and $129,976,000 of profit have been included in the consolidated result. Details of the acquisition are as follows:

2005 $’000 Fair value of identifiable net assets of controlled entity acquired Investment properties 1,446,780 Other assets 12,400 Cash assets 43,210 Interest bearing liabilities (1,062,279) Payables (44,636) Provisions (28,422) 367,053 Less: Outside equity interests (73,411) 293,642 Goodwill on consolidation 3,443 Cash consideration 297,085 Outflow of cash to acquire controlled entity, net of cash acquired Cash consideration 297,085 Less: Balances acquired Cash assets (43,210) (43,210) Outflow of cash 253,875

Name of entity Country of incorporation Class of shares Nature of business Equity holding (%) DB RREEF RENTS Trust Australia Ordinary Investment in property trust 0 acquisition of controlled entity On 27 January 2005, the Trust acquired one unit in DB RREEF RENTS Trust (RENTS). All units with a beneficial interest in RENTS assets are listed on the Australian Stock Exchange. The Trust owns one unit in RENTS that does not have a beneficial interest in the RENTS assets, but holds all voting rights in relation to RENTS. The results of this newly controlled entity have been included in the Income Statements since the date of acquisition.

Name of entity Country of incorporation Class of shares Nature of business Equity holding (%) DB RREEF Hurstville Trust Australia Ordinary Property trust 100

On 6 May 2005, DDF acquired 100 percent of DB RREEF Hurstville Trust. The operating results of this controlled entity have been included in the consolidated Income Statements since the date of acquisition. The acquired business contributed revenues of $3,332,000 and net profit of $2,402,000 to the consolidated result for the period 6 May 2005 to 30 June 2005. If the acquisition had occurred on 1 July 2004, the Stapled Entity’s consolidated revenue and consolidated profit for the year ended 30 June 2005 would have been $809,887,000 and $396,031,000 respectively. For the year ended 30 June 2006, $35,179,000 of revenues and $30,106,000 of profit have been included in the consolidated result.

106 DB RREEF Trust Financial Reports 2006 Details of the acquisition are as follows:

2005 $’000 Fair value of identifiable net assets of controlled entity acquired Investment properties 232,500 Cash assets 1,210 Receivables 1,387 Other assets 310 Payables (1,609) Other liabilities (1,110) Provisions (188) 232,500 Goodwill on consolidation – Cash consideration 232,500 Outflow of cash to acquire controlled entity, net of cash acquired Cash consideration 232,500 Less: Balances acquired Cash assets (1,210) (1,210) Outflow of cash 231,290 deemed acquisition of controlled entities through stapling

Name of entities Country of Class of Nature of Equity holding incorporation shares business (%) DB RREEF Industrial Trust (formerly Deutsche Industrial Trust) Australia Ordinary Property trust 0 DB RREEF Office Trust (formerly Deutsche Office Trust) Australia Ordinary Property trust 0 DB RREEF Operations Trust Australia Ordinary Public trading trust 0

On 30 September 2004, DDF was deemed to acquire 100 percent of DB RREEF Industrial Trust, DB RREEF Office Trust and DB RREEF Operations Trust as a result of stapling the Trusts. The operating results of these controlled entities have been included in the Income Statements since the date of acquisition. The acquired businesses contributed revenues of $365,448,000 and net profit of $204,327,000 to the consolidated result for the period 30 September 2004 to 30 June 2005. If the acquisition had occurred on 1 July 2004, the Stapled Entity’s consolidated revenue and consolidated profit for the year ended 30 June 2005 would have been $923,744,000 and $470,655,000 respectively. For the year ended 30 June 2006, $800,370,000 of revenues and $615,925,000 of profit have been included in the consolidated result. Details of the acquisition are as follows:

2005 $’000 Fair value of identifiable net assets of controlled entities acquired Investment properties 3,280,343 Investments accounted for using the equity method 37,106 Other assets 23,276 Cash assets 14,285 Interest bearing liabilities (1,319,600) Payables (31,704) Provisions (13,374) Net assets acquired on stapling 1,990,332

DB RREEF Trust Financial Reports 2006 107 notes to the financial statements (continued) note 43. explanation of transition to Australian Equivalents to IFRS

(a) reconciliation of equity reported under previous Australian Generally Accepted Accounting Principles (AGAAP) to equity under Australian Equivalents to International Financial Reporting Standards (AIFRS)

At the date of transition to AIFRS: 1 July 2004

Consolidated Parent Entity Note(s) Previous Effect of AIFRS Previous Effect of AIFRS AGAAP transition to AGAAP transition to AIFRS AIFRS $’000 $’000 $’000 $’000 $’000 $’000 Current assets Cash and cash equivalents 2,487 – 2,487 2,487 – 2,487 Receivables 11,352 – 11,352 11,352 – 11,352 Property sale proceeds receivable 51,760 – 51,760 51,760 – 51,760 Other d(iv) 4,394 (607) 3,787 4,394 (607) 3,787 Total current assets 69,993 (607) 69,386 69,993 (607) 69,386 Non-current assets Investment properties 1,635,508 – 1,635,508 1,635,508 – 1,635,508 Other d(iv) 1,524 (941) 583 1,524 (941) 583 Total non-current assets 1,637,032 (941) 1,636,091 1,637,032 (941) 1,636,091 Total assets 1,707,025 (1,548) 1,705,477 1,707,025 (1,548) 1,705,477 Current liabilities Payables 14,869 – 14,869 14,869 – 14,869 Interest bearing liabilities 474,200 – 474,200 474,200 – 474,200 Provisions 23,171 – 23,171 23,171 – 23,171 Total current liabilities 512,240 – 512,240 512,240 – 512,240 Non-current liabilities Other 585 – 585 585 – 585 Total non-current liabilities 585 – 585 585 – 585 Total liabilities 512,825 – 512,825 512,825 – 512,825 Net assets 1,194,200 (1,548) 1,192,652 1,194,200 (1,548) 1,192,652 Equity Equity attributable to equity holders of the parent: Contributed equity 1,028,028 – 1,028,028 1,028,028 – 1,028,028 Reserves d(v) 153,961 (153,961) – 153,961 (153,961) – Undistributed income 12,211 152,413 164,624 12,211 152,413 164,624 Parent unitholders’ interest d(xi) 1,194,200 (1,548) 1,192,652 1,194,200 (1,548) 1,192,652 Total equity d(xi) 1,194,200 (1,548) 1,192,652 1,194,200 (1,548) 1,192,652

108 DB RREEF Trust Financial Reports 2006 At the end of the last reporting period under previous AGAAP: 30 June 2005

Consolidated Parent Entity Note(s) Previous Effect of AIFRS Previous Effect of AIFRS AGAAP transition to AGAAP transition to AIFRS AIFRS $’000 $’000 $’000 $’000 $’000 $’000 Current assets Cash and cash equivalents 68,959 – 68,959 10,238 – 10,238 Receivables 29,859 – 29,859 8,883 – 8,883 Inventory 48,469 – 48,469 – – – Other d(iv) 18,368 (2,412) 15,956 2,552 (480) 2,072 Total current assets 165,655 (2,412) 163,243 21,673 (480) 21,193 Non-current assets Investment properties d(iv) 6,542,062 (21,143) 6,520,919 1,397,062 1,689 1,398,751 Loan note receivable from associate 45,092 – 45,092 – – – Goodwill 3,215 – 3,215 – – – Property, plant and equipment d(vi) – 27,913 27,913 – – – Investments in controlled entities d(ix) – – – 233,867 – 233,867 Investments accounted for using the equity method d(vii) 208,974 (242) 208,732 – – – Investments in associates d(viii) – – – 347,154 (14,539) 332,615 Deferred tax asset 127 – 127 – – – Other d(iv) 31,852 (16,090) 15,762 4,942 (1,295) 3,647 Total non-current assets 6,831,322 (9,562) 6,821,760 1,983,025 (14,145) 1,968,880 Total assets 6,996,977 (11,974) 6,985,003 2,004,698 (14,625) 1,990,073 Current liabilities Payables 118,479 – 118,479 12,880 – 12,880 Interest bearing liabilities 369,836 – 369,836 – – – Loan with related parties – – – 34,332 – 34,332 Current tax liabilities 2,547 – 2,547 – – – Provisions 144,800 – 144,800 67,756 – 67,756 Other 8,673 – 8,673 1,121 – 1,121 Total current liabilities 644,335 – 644,335 116,089 – 116,089 Non-current liabilities Interest bearing liabilities 2,421,728 – 2,421,728 581,077 – 581,077 Deferred tax liabilities d(iii) 48 23,637 23,685 – – – Other 29,543 – 29,543 3,926 – 3,926 Total non-current liabilities 2,451,319 23,637 2,474,956 585,003 – 585,003 Total liabilities 3,095,654 23,637 3,119,291 701,092 – 701,092 Net assets 3,901,323 (35,611) 3,865,712 1,303,606 (14,625) 1,288,981 Equity Contributed equity 1,059,867 – 1,059,867 1,059,866 – 1,059,866 Reserves d(iii), (v) 236,307 (236,956) (649) 243,740 (243,740) – Undistributed income 6,743 222,332 229,075 – 229,115 229,115 Parent unitholders’ interest 1,302,917 (14,624) 1,288,293 1,303,606 (14,625) 1,288,981 Equity attributable to equity holders of other entities stapled to DDF Contributed equity 2,034,388 – 2,034,388 – – – Reserves d(iii), (v) 187,522 (187,996) (474) – – – Undistributed income 9,844 168,303 178,147 – – – Other stapled security holders’ interest 2,231,754 (19,693) 2,212,061 – – – Stapled security holders’ interest 3,534,671 (34,317) 3,500,354 1,303,606 (14,625) 1,288,981 Other minority interest d(v) 366,652 (1,294) 365,358 – – – Total equity d(xi) 3,901,323 (35,611) 3,865,712 1,303,606 (14,625) 1,288,981

DB RREEF Trust Financial Reports 2006 109 notes to the financial statements (continued) note 43. explanation of transition to Australian Equivalents to IFRS (continued)

(b) reconciliation of profit for the year ended 30 June 2005

Consolidated Parent Entity Note(s) Previous Effect of AIFRS Previous Effect of AIFRS AGAAP transition to AGAAP transition to AIFRS AIFRS $’000 $’000 $’000 $’000 $’000 $’000 Revenue from ordinary activities Property revenue d(i), (iv) 512,709 (3,914) 508,795 155,728 (2,465) 153,263 Distribution revenue d(ix) – – – 11,202 (3,100) 8,102 Interest revenue 5,932 – 5,932 600 – 600 Proceeds from sale of investment properties d(ii) 504,750 (504,750) – 463,446 (463,446) – Total revenue from ordinary activities 1,023,391 (508,664) 514,727 630,976 (469,011) 161,965 Net gain on sale of investment properties d(ii) – 25,707 25,707 – 21,765 21,765 Share of net profits of associates accounted for using the equity method 12,544 – 12,544 – – – Increment on revaluation d(i), (iv), (v), of investments (vii), (ix) – 256,607 256,607 – 85,120 85,120 Net foreign exchange gain 42 – 42 9,461 – 9,461 Other income 260 – 260 – – – Total income 1,036,237 (226,350) 809,887 640,437 (362,126) 278,311 Expenses Property expenses d(iv) (127,991) 1,506 (126,485) (40,500) 430 (40,070) Responsible Entity fees (21,141) – (21,141) (8,690) (8,690) Finance costs (117,265) – (117,265) (21,399) (21,399) Decrement on revaluation of investments d(v) (4,934) 4,934 – – – – Book value of property investments sold d(ii) (479,043) 479,043 – (441,681) 441,681 – Costs associated with the Transaction (42,281) – (42,281) (14,795) – (14,795) Other expenses (9,206) – (9,206) (1,753) – (1,753) Total expenses (801,861) 485,483 (316,378) (528,818) 442,111 (86,707) Profit from before tax 234,376 259,133 493,509 111,619 79,985 191,604 Tax expense Income tax expense (990) – (990) – – – Withholding tax expense d(iii) (2,072) (23,514) (25,586) – – – Profit after tax 231,314 235,619 466,933 111,619 79,985 191,604 Net profit attributable to other minority interests d(v) (11,791) (59,111) (70,902) – – – Net profit attributable to stapled security holders 219,523 176,508 396,031 111,619 79,985 191,604

(c) reconciliation of the statements of cash flows for the trust The adoption of AIFRS has not resulted in any material adjustments to the Statements of Cash Flows.

110 DB RREEF Trust Financial Reports 2006 (d) notes to the reconciliation for the Trust

(i) Rental revenue Under AGAAP, the amount of rental revenue recognised in each reporting period was determined according to the contracted amount owed by each tenant for that reporting period. AASB 117: Leases, requires rental revenues from leases with fixed rent review clauses to be straight-lined over the life of the lease. This will result in changes to rental revenue recognised in each reporting period, and the recognition of a straight-lining asset, which will be included as part of the book value of the property to which it relates. However, these will be offset by a notional fair value adjustment to income and to investment properties to bring the balance of the investment properties back to fair value, resulting in no impact to the net profit and net assets of the Trust.

The effect on the Trust is: For the year ended 30 June 2005 Rental revenue increased by $5,744,000 and increment on revaluation of investments decreased by $5,744,000. The effect on the parent entity is: For the year ended 30 June 2005 There is no effect on the parent entity.

(ii) Revenue disclosures in relation to the sale of non-current assets Under AGAAP, gross proceeds from the sale of non-current assets were recognised as income and the carrying amount of the assets sold was recognised as an expense. Under AIFRS, the revenue recognised in relation to the sale is the net gain on sale.

The effect on the Trust is: For the year ended 30 June 2005 Proceeds from sale of investment properties of $504,750,000, and book value of property investments sold of $479,043,000, are no longer shown in the Income Statements, with the net amount of $25,707,000 being shown instead as net gain on sale of investment properties. The effect on the parent entity is: For the year ended 30 June 2005 Proceeds from the sale of investment properties of $463,446,000, and book value of property investments sold of $441,681,000, are no longer shown in the Income Statements, with the net amount of $21,765,000 being shown instead as net gain on sale of investment properties.

(iii) Tax expense Previously, under AGAAP, depreciation allowances for tax purposes, revaluations of investment properties held in the US REIT and the revaluation of derivatives did not impact on the tax expense in the Income Statements. A liability was only recognised if management intended to dispose of an investment property, without acquiring a replacement asset, within the permitted time frame. Under AASB 112: Income Taxes, deferred tax balances are determined using the balance sheet method. A deferred tax liability is recognised for depreciation allowances for tax purposes, revaluations of investment properties held in the US REIT and the revaluation of derivatives associated with this operation. This change does not impact on Australian assets owned by trusts classed as flow through vehicles under Australian Taxation Law.

The effect on the Trust is: At 1 July 2004 There is no effect on the Trust. At 30 June 2005 Deferred tax liabilities increased by $23,637,000 and foreign currency translation reserve has increased by $123,000. For the year ended 30 June 2005 Withholding tax expense has increased by $23,514,000. The effect on the parent entity is: At 1 July 2004 There is no effect on the parent entity. At 30 June 2005 There is no effect on the parent entity. For the year ended 30 June 2005 There is no effect on the parent entity.

(iv) Lease incentives Under AGAAP, the policy of the Trust was to capitalise rent free incentives and leasing fees and amortise these over the life of the lease with the amortisation expense being shown as part of property expenses. The amortised balances of these incentives were shown as an asset separate to the properties to which they related. Fit-out and cash incentives owned by the lessor were capitalised into the book values of the properties to which they related. Under AASB117: Leases, and UIG 115: Operating Leases – Incentives, all lease incentives are required to be capitalised and amortised against property revenue over the life of lease to which they relate. All incentives will now be incorporated into the property book values. Amortisation recorded on these incentives will be offset by a notional fair value adjustment to the Income Statements and to investment properties to bring the balance of the investment properties back to fair value, resulting in no impact to the net profit of the Trust.

DB RREEF Trust Financial Reports 2006 111 notes to the financial statements (continued) note 43. explanation of transition to Australian Equivalents to IFRS (continued) (iv) Lease incentives (continued)

The effect on the Trust is: At 1 July 2004 Other assets – current decreased by $607,000, other assets – non-current decreased by $941,000 and undistributed income decreased by $1,548,000. At 30 June 2005 Other assets – current decreased by $2,412,000, other assets – non-current decreased by $16,090,000 and investment properties increased by $18,502,000. $11,732,000 of the increase in investment properties has been adjusted through revaluations since the transition date. For the year ended 30 June 2005 Property expenses decreased by $1,506,000, property revenue decreased by $9,658,000 and increment on revaluation of investments increased by $147,000 with the remainder being taken to investment properties. The effect on the parent entity is: At 1 July 2004 Other assets – current decreased by $607,000, other assets – non-current decreased by $941,000 and undistributed income decreased by $1,548,000. At 30 June 2005 For the parent entity other assets – current decreased by $480,000, other assets – non-current decreased by $1,295,000 and investment properties increased by $1,775,000. $86,000 of the increase in investment properties has been adjusted through revaluations since the transition date. For the year ended 30 June 2005 Property expenses decreased by $430,000, property revenue decreased by $2,465,000 and the increment on revaluation of investments increased by $546,000, with the remainder being taken to investment properties.

(v) Investment property Under AGAAP, revaluation increments and decrements on investment properties were recognised in the asset revaluation reserve. Under AASB 140: Investment Property, such revaluation increments and decrements are recognised through the Income Statements. Further on transition to AIFRS, the balance of the asset revaluation reserve was transferred to undistributed income.

The effect on the Trust is: At 1 July 2004 The asset revaluation reserve was decreased by $153,961,000 and undistributed income increased by $153,961,000. At 30 June 2005 The asset revaluation reserve was decreased by $425,217,000, undistributed income increased by $218,816,000 and minority interest decreased by $1,294,000 with the remainder being taken to the Income Statements. For the year ended 30 June 2005 The increment on revaluation of investments has increased by $267,138,000 and net profit attributable to minority interest has increased by $59,111,000. The effect on the parent entity is: At 1 July 2004 The asset revaluation reserve was decreased by $153,961,000 and undistributed income increased by $153,961,000. At 30 June 2005 The asset revaluation reserve was decreased by $189,575,000 and undistributed income increased by $147,717,000, with the remainder being taken to the Income Statements. For the year ended 30 June 2005 The increment on revaluation of investments has increased by $41,849,000.

(vi) Property, plant and equipment Under AGAAP, properties under construction were included in, and accounted for, as investment properties. Under AASB 116: Property, Plant and Equipment, properties under construction have been reclassified in the Balance Sheets as property, plant and equipment.

The effect on the Trust is: At 1 July 2004 There is no effect on the Trust. At 30 June 2005 Investment properties decreased by $27,913,000 and property, plant and equipment increased by $27,913,000. The effect on the parent entity is: At 1 July 2004 There is no effect on the parent entity. At 30 June 2005 There is no effect on the parent entity.

112 DB RREEF Trust Financial Reports 2006 (vii) Investments accounted for using the equity method All investments accounted for using the equity method held by the Trust now apply the AIFRS standards. Under AASB 140: Investment Property, revaluation increments and decrements are now shown in the Income Statements. Also, under AASB 112: Income Taxes, a deferred tax expense is recognised for tax depreciation allowances and revaluations of investment properties held in the US REIT. As a result, these adjustments are now reflected in the share of net profits of associates using the equity method on the Income Statements, and the investments accounted for using the equity method on the Balance Sheets. Further on transition to AIFRS, the balance of the asset revaluation reserve was transferred to undistributed income.

The effect on the Trust is: At 1 July 2004 There is no effect on the Trust. At 30 June 2005 Investments accounted for using the equity method decreased by $242,000 with the adjustment taken to undistributed income. For the year ended 30 June 2005 There is no effect on the Trust. The effect on the parent entity is: At 1 July 2004 There is no effect on the parent entity. At 30 June 2005 There is no effect on the parent entity. For the year ended 30 June 2005 There is no effect on the parent entity.

(viii) Investments in associates Under AGAAP, revaluation increments and decrements on investments in associates were recognised in the asset revaluation reserve. Under AASB 139: Financial Instruments, Recognition and Measurement, such revaluation increments and decrements are recognised through the Income Statements. Further on transition to AIFRS, the balance of the asset revaluation reserve was transferred to undistributed income.

The effect on the Trust is: At 1 July 2004 There is no effect on the Trust. At 30 June 2005 There is no effect on the Trust. For the year ended 30 June 2005 There is no effect on the Trust. The effect on the parent entity is: At 1 July 2004 There is no effect on the parent entity. At 30 June 2005 The asset revaluation reserve decrease by $54,165,000 and investments in associates decreased by $14,539,000. For the year ended 30 June 2005 The increment on revaluation of investments has increased by $39,626,000.

(ix) Investments in controlled entities All investments in controlled entities held by the parent entity now apply the AIFRS standards. This has resulted in a reduction of the net asset value of the underlying sub-trusts. Accordingly, the parent entity has revalued its investment in controlled entities which is now reflected in the increment on revaluation of investments on the Income Statements, and the investments in controlled entities on the Balance Sheets.

The effect on the Trust is: At 1 July 2004 There is no effect on the Trust. At 30 June 2005 There is no effect on the Trust. For the year ended 30 June 2005 There is no effect on the Trust. The effect on the parent entity is: At 1 July 2004 There is no effect on the parent entity. At 30 June 2005 There is no effect on the parent entity. For the year ended 30 June 2005 The distributions received decreased by $3,100,000 and the increment on revaluation of investments has increased by $3,100,000.

(x) Derivatives Under previous AGAAP, derivatives were not recorded on Balance Sheets but disclosed in the notes to the accounts. The Trust has elected not to apply hedge accounting under AASB139: Financial Instruments, Recognition and Measurement. Accordingly, derivatives including interest rate swaps and foreign exchange forward contracts are measured at fair value through the Income Statements and recognised on the Balance Sheets. However, the Trust has adopted the exemption available under AASB 1 to apply AASB 132 and AASB 139 from 1 July 2005. Therefore the Trust has applied previous AGAAP in the comparative information on financial instruments within the scope of AASB 132 and AASB 139.

DB RREEF Trust Financial Reports 2006 113 notes to the financial statements (continued) note 43. explanation of transition to Australian Equivalents to IFRS (continued) (x) Derivatives (continued) At 1 July 2005 for the Trust: n a derivative financial asset of $15,672,000 and a derivative financial liability of $18,521,000 were recorded to recognise the fair value of interest rate swaps; $3,127,000 being taken to undistributed income with the balance of $278,000 being taken to minority interest; n a derivative financial asset of $5,716,000 and a derivative financial liability of $115,000 were recorded to recognise the fair value of foreign exchange contracts, with the net of $5,601,000 being taken to undistributed income; and n an additional deferred tax asset of $689,000 was recorded to recognise the tax impact of the value of derivative financial instruments, with the adjustment taken to undistributed income. At 1 July 2005 for the parent entity: n a derivative financial asset of $4,911,000 and a derivative financial liability of $5,581,000 were recorded to recognise the fair value of interest rate swaps with the balance of $670,000 being taken to undistributed income; and n a derivative financial asset of $2,858,000 and a derivative financial liability of $23,000 were recorded to recognise the fair value of foreign exchange contracts, with the net of $2,835,000 being taken to undistributed income.

(xi) Valuation of sub-trust For the Trust under previous AGAAP, DOT’s sub-trust, DB RREEF RENTS Trust recorded its investment in DOT Commercial Trust at cost. On 1 July 2005, DOT applied AASB 132 and AASB 139, and the basis of valuation of this investment was changed to fair value. The impact of this change at 1 July 2005 was to increase other minority interest by $6,368,000 with a corresponding decrease in undistributed income. There is no effect on the parent entity

(xii) Equity The effect on equity of the changes set out above are as follows:

Consolidated Parent Entity 1 Jul 2004 30 Jun 05 1 Jul 2004 30 Jun 05 $’000 $’000 $’000 $’000 Total equity under AGAAP 1,194,200 3,901,323 1,194,200 1,303,606 AIFRS adjustments to equity: Investment properties – (39,645) – 1,689 Property, plant and equipment – 27,913 – – Investments accounted for using the equity method – (242) – (14,539) Other assets (1,548) – (1,548) (1,775) Deferred tax liabilities – (23,637) – – Total equity under AIFRS 1,192,652 3,865,712 1,192,652 1,288,981

114 DB RREEF Trust Financial Reports 2006 directors’ declaration

The Directors of DB RREEF Funds Management Limited as Responsible Entity of DB RREEF Diversified Trust (the Trust) declare that the financial statements and notes set out on pages 59 to 114: (i) comply with applicable Australian Equivalents to International Financial Reporting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (ii) give a true and fair view of the Trust’s and consolidated entity’s financial position as at 30 June 2006 and of their performance, as represented by the results of their operations and their cash flows, for the year ended on that date. In the Directors’ opinion: (a) the financial statements and notes are in accordance with the Corporations Act 2001; (b) there are reasonable grounds to believe that the Trust and its consolidated entities will be able to pay their debts as and when they become due and payable; and (c) the Trust has operated in accordance with the provisions of the Constitution dated 15 September 1984 (as amended) during the year ended 30 June 2006. The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Directors.

Christopher T Beare Chair Sydney 22 August 2006

DB RREEF Trust Financial Reports 2006 115 independent auditor’s report

116 DB RREEF Trust Financial Reports 2006 DB RREEF Trust Financial Reports 2006 117 registry information top 20 stapled security holders as at 31 August 2006

Rank Investor Current balance Percentage of issued capital (%) 1 J P Morgan Nominees Australia Limited 441,687,891 15.49 2 Westpac Custodian Nominees Limited 425,923,942 14.94 3 National Nominees Limited 362,803,005 12.73 4 Citicorp Nominees Pty Limited 204,901,393 7.19 5 ANZ Nominees Limited 179,229,851 6.29 6 RBC Dexia Investor Services Australia Nominees Pty Limited 145,031,426 5.09 7 ANZ Nominees Limited 66,125,393 2.32 8 Citicorp Nominees Pty Limited 64,829,228 2.27 9 Cogent Nominees Pty Limited 48,523,697 1.70 10 Questor Financial Services Limited 43,292,102 1.52 11 Westpac Financial Services Limited 40,362,098 1.43 12 UBS Nominees Pty Limited <116C a/c> 40,000,000 1.40 13 AMP Life Limited 37,118,502 1.30 14 Victorian Workcover Authority 33,576,337 1.18 15 Cogent Nominees Pty Limited 25,998,941 0.91 16 Bond Street Custodians Limited 21,330,714 0.75 17 Transport Accident Commissions 19,653,292 0.69 18 Australian Executor Trustees Limited 14,957,178 0.52 19 Citicorp Nominees Pty Limited 13,982,071 0.49 20 Suncorp Custodian Service Pty Limited 12,739,275 0.45 Total for top 20 2,242,336,336 78.66 Total other investors 608,484,732 21.34 Grand total 2,850,821,068 100.00 substantial holders as at 31 August 2006 The names of substantial holders who, as at 31 August 2006, have notified the Responsible Entity in accordance with section 671B of the Corporations Act 2001 are:

Name Number of stapled securities Percentage voting (%) Barclays Global Investors Australia Limited 256,479,590 9.27 Commonwealth Bank of Australia 154,356,895 5.65 AMP Limited 147,662,502 5.40 APN Funds Management Limited 138,195,694 5.00 classes of securities DB RREEF has one class of stapled security trading on ASX with, as at 31 August 2006, 25,970 investors holding 2,850,821,068 stapled securities. spread of stapled securities holders as at 31 August 2006

Ranges Investors Stapled securities Percentage of issued capital (%) 1 – 1,000 1,271 509,439 0.02 1,001 – 5,000 4,673 15,204,281 0.54 5,001 – 10,000 6,528 50,086,285 1.76 10,001 – 100,000 13,084 320,098,983 11.23 100,001 and over 414 2,464,886,080 86.46 Total 25,970 2,850,821,068 100.00

As at 31 August 2006, the number of investors holding less than a marketable parcel of 320 securities is 612 and they hold 57,621 securities. voting rights At meetings of the security holders of the DB RREEF Diversified Trust, DB RREEF Industrial Trust, DB RREEF Office Trust and DB RREEF Operations Trust, being the Trusts that comprise DB RREEF, on a show of hands, each security holder of each Trust has one vote. On a poll, each security holder of each Trust has one vote for each dollar of the value of the total interests they have in the Trust. the number and class of securities that are restricted or subject to voluntary escrow There are no stapled securities are restricted or subject to voluntary escrow. on-market buy-back DB RREEF has no on-market buy-back currently in place.

118 DB RREEF Trust Annual Report 2006 investor information

DB RREEF Trust information annual tax statement Investors and other interested people may obtain information on After the end of a financial year you will receive a tax statement. various aspects of DB RREEF’s activities by accessing its website at This statement summarises the distributions paid to you during the www.dbrreef.com and following the links to Investments and DRT or year and includes information required to complete your tax return. alternatively by going directly to www.dbrreef.com/DRT. Information available includes: DB RREEF Trust capital gains taxation cost base n ASX announcements; information n annual reports, property synopsis (containing detailed property A brochure called “Capital Gains Taxation Information” has been information) and product disclosure statements; prepared for DB RREEF stapled security holders and updated for n distribution and tax information; 30 June 2006 that will assist holders determine their capital gains n corporate governance; and tax cost base of their DB RREEF securities and the determination of any capital gains on the disposal of a holders’ stapled securities. n research. Holders may obtain a copy of this brochure by either visiting our security registry website at www.dbrreef.com, or by contacting the InfoLine on 1800 819 675. If you have administrative inquiries such as change of address or the way in which you wish your distributions paid, you can either contact Link Market Services on the InfoLine 1800 819 675 or update your account details via the website at www.dbrreef.com. enquiries, obtaining information or making a complaint The Group has processes in place to deal with security holder questions and complaints. If you have any questions, complaints, or wish to obtain information regarding the stapled securities, please contact our client service InfoLine on 1800 819 675 or from outside Australia +61 2 8280 7126 or email: [email protected]. The Group is a member of the Financial Industry Complaints Service Limited (FICS). This is an independent dispute resolution service and may be contacted through: Financial Industry Complaints Service Limited PO Box 579 Collins Street West Melbourne VIC 8007 Phone: 1300 780 808 Fax: +61 3 9621 2291 stock exchange listing The stapled security (ASX: DRT) is included in the top 200 listed entities in Australia in terms of market capitalisation and currently forms part of the following indices: All Ordinaries; All Industrials; Listed Property Trusts; and the S&P/ASX200.

DB RREEF Trust Annual Report 2006 119 investor information (continued) apportionment percentages of DB RREEF stapled securities since stapling For capital gains tax purposes investors need to apportion the cost of each stapled security and the proceeds on sale of each stapled security over the four Trusts that make up the stapled security. This apportionment should be done on a reasonable basis. One basis of apportionment is to use the relative net tangible assets (NTA) of each of the Trusts. Using NTA as a basis, the following table outlines the apportionment percentages that will apply to any on or off market buying or selling of stapled securities, or the issue of new stapled securities between the dates specified. Please note that the correct allocation percentage to be used depends on the relevant date of the specific transaction. Consequently, the allocation percentage relevant for the acquisition of a parcel of stapled securities, (either on or off market, or through the issue of securities), may differ from their disposal percentage. The Group will periodically release revisions to this table and it will be published on its website. A copy of the schedule can be downloaded by visiting our website at www.dbrreef.com or by contacting the InfoLine on 1800 819 675.

DB RREEF DB RREEF DB RREEF DB RREEF Diversified Trust Industrial Trust Office Trust Operations Trust Dates (%) (%) (%) (%) 6 October 2004 to 30 December 2004 38.15 20.88 40.79 0.18 31 December 2004 to 30 June 2005 37.05 21.27 41.47 0.21 1 July 2005 to 31 December 2005 36.82 21.81 41.13 0.24 1 January 2006 to 30 June 2006 37.37 22.09 40.22 0.32 1 July 2006 to the next announced NTA 36.05 21.03 42.57 0.35

Note: The NTA is reviewed on 30 June and 31 December each year and at other times when required. distribution history and timetable Distribution history schedules for DB RREEF since October 2004 and DDF, DIT, DOT prior to October 2004 can be downloaded by visiting our website at www.dbrreef.com or by contacting the InfoLine on 1800 819 675. With respect to your distributions, you can have your distribution paid directly into your nominated Australian bank, building society or credit union account. DB RREEF’s distribution periods end on 30 June and 31 December each year with distribution being paid no later than two months following each half year. The timetable below shows the anticipated distribution, banking and mailing dates for the next three distributions, please note that these dates are indicative and may change.

Distribution period date Announcement date Ex-distribution date Record date Anticipated date 1 July to 31 December 2006 19 December 2006 22 December 2006 31 December 2006 28 February 2007 1 January to 30 June 2007 21 June 2007 26 June 2007 30 June 2007 29 August 2007 distribution reinvestment plan (DRP) DB RREEF has a distribution reinvestment plan available to security holders providing them the opportunity to purchase additional stapled securities by reinvesting all or part of their periodic income distributions. The amount to be reinvested will be applied to acquire fully paid stapled securities in DB RREEF. Where the amount to be reinvested does not equal a whole multiple of the DRP issue price the residual money will be carried forward and added to the next reinvestment amount. For further information on the DRP please go to our website at www.dbrreef.com. unpresented cheques and unclaimed funds DB RREEF has a number of security holders who have unpresented cheques and/or unclaimed funds. If you believe you have unpresented cheques or unclaimed funds please contact our Share Registry, Link Market Services on 1800 819 675. Link Market Services will be able to do a search for you and assist you in recovering your funds. Link Market Services will be able to do a search going back seven years, after that you should contact the NSW Office of State Revenue on 1300 366 016 or go to their website at www.osr.nsw.gov.au and use their search facility for unclaimed moneys. tax file number You are not required by law to provide your tax file number, Australian Business Number or Exemption. However if you do not provide your TFN, ABN or Exemption, withholding tax at the highest marginal rate, currently 48.5 percent may be deducted from distributions paid to you. If you have not supplied this information and wish to do so, please advise the registry or your sponsoring broker.

120 DB RREEF Trust Annual Report 2006 directory

DB RREEF Diversified Trust auditors ARSN 089 324 541 PricewaterhouseCoopers DB RREEF Industrial Trust Chartered Accountants ARSN 090 879 137 201 Sussex Street DB RREEF Office Trust Sydney NSW 2000 ARSN 090 768 531 security registry DB RREEF Operations Trust Link Market Services Limited ARSN 110 521 223 Level 12, 680 George Street responsible entity Sydney NSW 2000 DB RREEF Funds Management Limited Locked Bag A14 ABN 24 060 920 783 Sydney South NSW 2000 Phone: +61 2 8280 7126 registered office of responsible entity InfoLine: 1800 819 675 Level 9, 343 George Street Fax: +61 2 9261 8489 Sydney NSW 2000 Email: [email protected] Website: www.linkmarketservices.com.au PO Box R1822 Royal Exchange NSW 1225 Phone: +61 2 9017 1100 Fax: +61 2 9017 1101 directors of the responsible entity Christopher T Beare, Chair Elizabeth A Alexander AM Barry R Brownjohn Stewart F Ewen OAM Victor P Hoog Antink Charles B Leitner III (Alternate: Andrew J Fay) Brian E Scullin secretaries of the responsible entity Tanya L Cox John C Easy For inquiries regarding your holding you can either contact the Security Registry, or access your holding details via the investor enquiries web at www.dbrreef.com and follow the links. Email: [email protected] Listed on the Australian Stock Exchange ASX Code: DRT. InfoLine: 1800 819 675 InfoLine 1800 819 675 Monday to Friday between Phone: +61 2 8280 7126 8.30am and 5.30pm (Sydney time). Website: www.dbrreef.com