DEXUS RENTS Trust - ASX release

24 September 2010 DEXUS RENTS Trust (ASX:DXRPA) 2010 Annual Report

DEXUS RENTS Trust provides a copy of its 2010 Annual Report and a letter to security holders who have elected not to receive printed communications.

For further information contact:

Media Relations Investor Relations Emma Parry T: (02) 9017 1133 Daniel Rubinstein T: (02) 9017 1336 M: 0421 000 329 M: 0466 016 725 E: [email protected] E: [email protected] Fiona Tyndall T: (02) 9017 1199 Alex Gray T: (02) 9017 1343 M: 0468 988 420 M: 0466 136 436 E: [email protected] E: [email protected]

About DEXUS DEXUS is one of Australia’s leading property groups specialising in owning, managing and developing superior quality office, industrial and retail properties, with total assets under management of $13.3 billion. In Australia, DEXUS is the number 1 owner/manager of office, number 3 in industrial and, on behalf of third party clients, a leading manager and developer of shopping centres.

DEXUS is committed to being a market leader in Corporate Responsibility and Sustainability and has been recognised for the second year running as one of the Global 100 Most Sustainable Corporations at the World Economic Forum in Davos. www.dexus.com

DEXUS Funds Management Ltd ABN 24 060 920 783, AFSL 238163, as Responsible Entity for DEXUS RENTS Trust (ASX: DXRPA)

DEXUS Funds Management Limited ABN 24 060 920 783 24 September 2010 AFSL: 238163

Level 9, 343 George Street Sydney NSW 2000 PO Box R1822 Royal Exchange NSW 1225

Telephone 61 2 9017 1100

Direct 61 2 9017 1330

Facsimile 61 2 9017 1101

Email: [email protected]

Dear Investor

We are pleased to advise that the DEXUS RENTS Trust 2010 Annual Report is now available on our website at www.dexus.com The performance of DEXUS Property Group (ASX: DXS) underlies the performance of DEXUS RENTS Trust. DEXUS’s annual reports are also available on our website and include the 2010 Security Holder Review, Annual Report and Combined Financial Statements. If you have any questions or queries about DEXUS RENTS Trust or DEXUS Property Group please contact Investor Relations on 02 9017 1330. For queries regarding your security holding please contact Link Market Services on 1800 819 675 or access your holding details at www.dexus.com

I would like to thank you for your support during the year.

Yours sincerely

Victor P. Hoog Antink Chief Executive Officer

y:\drt investor relations\security holder communications\investor packs and ongoing forms\email notifications\2010 dxr annual report notification letter.doc

2010 DEXUS RENTS Trust Annual REPORT Results highlights 1 Letter from the Chair 2 Chief Executive Officer’s report 3 Board of Directors 6 About DEXUS 8 Corporate governance statement 10 Financial statements 16 Investor Relations 37 Additional information 39 Directory

distributions net assets MARKET Capitalisation $10.3m $204.2m $169.3m

Cover: Australia Square Complex, 264-278 George Street and 309-321 Kent Street, Sydney, NSW This page: Governor Phillip & Macquarie Tower Complex, 1 Farrer Place, Sydney, NSW II DEXUS RENTS TRUST 2010 ANNUAL REPORT RESULTS HIGHLIGHTS

DEXUS rents Trust’s objective is to provide quarterly income payments at an attractive yield.

$208.8m $8.39 $207.9m $208.2m $7.57 $7.25 $207.2m $6.74 $206.3m distribution $5.05 per security total assets $ $ 5.05 2 07. 2m 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

DEXUS RENTS TRUST 2010 ANNUAL REPORT 1 LETTER FROM THE CHAIR

Further information on the Board of Directors and our corporate governance policies follow in this report and can be found on the DEXUS website at www.dexus.com Our annual Employee Opinion Survey reflected improved results across the board and continued strength in employee satisfaction and engagement. It is pleasing to report that DEXUS out‑performed 18 of the top 19 categories of the Towers Watson Australian National Norm and several categories of the Global High Performing Norm. Detailed information on our Employee Opinion Survey results and associated initiatives will be available in our 2010 Corporate Responsibility and Sustainability (CR&S) Report to L to R: Chair, Christopher Beare and CEO, Victor Hoog Antink be released in late October. On behalf of the Board, I wish to thank you for your continued investment in Dear Investor Board and Governance RENTS and I look forward to reporting our activities to you next year. I am pleased to present the DEXUS The Board has remained unchanged RENTS Trust annual report for the year during the financial year to June 2010. Yours sincerely, ended 30 June 2010. The Board comprises eight Directors, DEXUS RENTS Trust (RENTS) paid seven of whom are independent. Specific distributions totalling $5.05 per security for skills the Directors bring to the Board the year (2009: $6.74 per security) with include strategy, property investment, 90% of that income being tax deferred. funds management, capital markets, financial and risk management. Christopher T Beare In 2009, the 90 day bank bill rate Chair declined as the Reserve Bank of Australia During the year we reviewed the 23 September 2010 sought to cushion the Australian economy membership of Board Committees and from a contraction in the global economy. rotated the chairs of each Committee In the 12 months to 30 June 2010, to take full advantage of the Board’s the Reserve Bank of Australia raised the knowledge and expertise. official cash rate resulting in the 90 day The Board is committed to the early bank bill rate increasing from 3.16% adoption of ASX Corporate Governance to 4.42%. Principles and Recommendations. As a The security price closed at $83.00 result we have established new policies, on 30 June 2010, resulting in a market such as a new Diversity Policy and have capitalisation of $169.3 million, a 15% reviewed and updated existing policies increase on 2009. The net tangible asset where required to meet new and revised per security is $100.10 (2009: $100.01). principles and recommendations.

2 DEXUS RENTS TRUST 2010 ANNUAL REPORT CHIEF EXECUTIVE OFFICER’S REPORT

Australia Square Complex, 264-278 George Street, 30 The Bond, 30-34 Hickson Road, Sydney, NSW Sydney, NSW

During the year RENTS paid distributions The 90 day bank bill rate increased from DEXUS Property Group of $5.05 per security (2009: $6.74 per 3.16% at the beginning of the year and The assets of RENTS are invested in security) which were 90% tax deferred. ended at 4.42% for the June 2010 a sub-trust of DEXUS Property Group. quarter. Accordingly, income from ordinary RENTS pays quarterly distributions into In 2012, RENTS may be converted into activities and distributions to security investors’ nominated Australian bank DEXUS Property Group stapled securities holders increased during the year in line accounts. The distribution rate for (DEXUS) (refer to RENTS structure on with this movement. The movements RENTS is determined on the first page 37 of this report). Consequently, in interest rates broadly reflected the business day of each quarter. Until it is the performance of DEXUS that movement in the Australian official cash 1 July 2012, the distribution rate will be supports the performance of RENTS. equal to the 90 day bank bill rate plus rate over the period as the Reserve Bank DEXUS’s portfolio comprised $7.4 billion 1.3% per annum. Investors who held of Australia adjusted policy in response (including cash and other assets) at RENTS for the 2010 year received the to strengthening economic activity. 30 June 2010 of direct property in following income: Financial results Australia, New Zealand, the United States and Europe. In challenging market Quarter ending Distribution Rate per Total revenue for the year was conditions the active management focus rate rents $10.7 million and profit attributable to of the DEXUS team delivered operating % $ investors was $10.5 million. Distributions earnings before interest and tax of 30 September 2009 4.4600 1.12 totalling $10.3 million were paid to $461.3 million, down 10.3% on 2009. investors for the year ended 30 June 31 December 2009 4.6533 1.17 Net profit after tax attributable to DEXUS 2010 (2009: $13.7 million). Total 31 March 2010 5.4100 1.33 security holders was $31.4 million up assets of RENTS were $207.2 million significantly on the previous year’s net 30 June 2010 5.7183 1.43 (2009: $206.3 million) and net assets loss of $1.5 billion. This result reflects Total 5.05 were $204.2 million (2009: $204 million) the underlying quality of DEXUS’s or $100.10 per security. The Financial Australian office and industrial portfolios, Statements start on page 16 of this which delivered like‑for‑like income report and provide more detailed growth of 0.4% and 1.6% respectively. information.

DEXUS RENTS TRUST 2010 ANNUAL REPORT 3 Chief Executive Officer’s Report continued

Victoria Cross, 60 Miller Street, North Sydney, NSW 44 Market Street, Sydney, NSW 12-18 Distribution Drive, Laverton North, VIC

The economic downturn has resulted in nn The Australian industrial portfolio Capital management a slight decline in overall occupancy levels delivered steady like for like portfolio DEXUS continues to maintain a strong to 89.9% (2009: 91.5%), while average income growth in challenging market balance sheet with the diversification and lease duration remains strong at 5.1 years conditions. The quality of the portfolio average maturity of its funding sources (2009: 4.8 years). was improved through the sale of further improving to 3.2 years. In non‑core properties and the DEXUS’s full-year result reflects 12 months September 2009, DEXUS issued debt reinvestment of proceeds into of focus on its core business of office and into the US public bond market, securing a core markets. Several pre-lease industrial property ownership, management new source of funding in one of the world’s commitments were secured at two and development. This activity, its strong largest bond markets. In total during the major industrial estates at Laverton, financial position and improved market year, $700 million of debt was successfully Vic and Greystanes, NSW conditions will enable DEXUS to drive issued in the Australian and US debt property returns during the property nn In the United States significant capital markets on competitive terms, with recovery cycle. Portfolio highlights during progress was made repositioning the a weighted average maturity of greater than 2010 included: portfolio and establishing a DEXUS five years. Gearing at 29.8% was below team with local knowledge and nn The office portfolio out‑performed DEXUS’s policy maximum level of 40% market benchmarks for occupancy a strong track record to continue and DEXUS continues to maintain stable and incentive costs and achieved the repositioning plans credit ratings of Standard & Poor’s BBB+ leasing success despite weaker and Moody’s Baa1. tenant demand during the year. For further information on DEXUS DEXUS’s two premium office Property Group, its Security Holder developments, Albert Street, Brisbane Review and Annual Report are located and Bligh Street, Sydney will be on our website at www.dexus.com delivered into improving markets in 2011

4 DEXUS RENTS TRUST 2010 ANNUAL REPORT Kent West Corporate Park, 21902 64th Avenue S, Kent, WA

DEXUS US management team Corporate Responsibility Further information on DEXUS’s efforts in CR&S will be published As part of DEXUS’s long-term objective and Sustainability in the 2010 Corporate Responsibility to build critical mass and become a DEXUS continued to drive sustainable and Sustainability Report which will market leader in industrial property performance achieving ongoing be available on request or at on the west coast of the United States, improvements in energy efficiency www.dexus.com in late October. DEXUS opened a new US management and resource consumption. office in Newport Beach, California. Thank you for your support during DEXUS was awarded more than the year. We look forward to reporting The US management team is lead by $3 million of Green Building Fund continued strong performance in the Jane Lloyd along with Bruce McDonald grants which will support the cost of coming period. and Bryan Bentrott and their highly sustainability upgrades in key properties. regarded team. DEXUS continued to progress its The appointments bring to DEXUS NABERS Energy 4.5 star rating program extensive US industrial property with its portfolio rating average increasing management, leasing and development to 3.3 stars and further progressed its expertise, together with established sustainable developments at 1 Bligh Street, Sydney and 123 Albert Street, relationships with capital partners, Victor P Hoog Antink particularly in DEXUS’s preferred Brisbane, which are due to complete Chief Executive Officer west coast markets. in the coming financial year. 23 September 2010 The US team is currently managing our DEXUS was again named one of the US$300 million Whirlpool portfolio and world’s most sustainable corporations $300 million of new third party property in the 2010 “Global 100” list announced mandates. After we assume direct at the Davos World Economic Forum, management of all our west coast the only A-REIT to achieve listing in properties later in the 2011 financial two consecutive years. year, DEXUS will be directly managing approximately US$840 million of properties in the US. Further information is available on DEXUS’s US website at www.dexus.com/us

DEXUS RENTS TRUST 2010 ANNUAL REPORT 5 BOARD OF DIRECTORS

Christopher T Beare Elizabeth A Alexander a m Barry R Brownjohn John C Conde a o BSc, BE (Hons), MBA, PhD, FAICD BComm, FCA, FAICD, FCPA BComm BSc, BE (Hons), MBA Chair and Independent Director Independent Director Independent Director Independent Director Age 60 Age 67 Age 59 Age 62 Chris Beare is the Chair and an Elizabeth Alexander is an Barry Brownjohn is an John Conde is an Independent Independent Director of DEXUS Independent Director of DEXUS Independent Director of DEXUS Director of DEXUS Funds Funds Management Limited Funds Management Limited Funds Management Limited Management Limited (appointed 21 September 2004). (appointed 1 January 2005), (appointed 1 January 2005), (appointed 29 April 2009), He is also a member of the Board Chair of DEXUS Wholesale Chair of the Board Audit and Chair of the Board Nomination Nomination and Remuneration Property Limited and a member Board Risk and Sustainability and Remuneration Committee Committee and the Board of the Board Audit and Board Committees and a member of and a member of the Board Finance Committee. Risk and Sustainability the Board Finance Committee. Compliance Committee. Committees. Chris has significant experience Barry has more than 20 years John brings to the Board in international business, Elizabeth brings to the Board experience in Australia, Asia and extensive experience across technology, strategy, finance extensive experience in North America in international diverse sectors including and management. accounting, finance, corporate banking. He previously held commerce, industry and governance and risk management. numerous positions with the government. John was previously Previously Chris was Executive She was formerly a partner with Bank of America including a Director of BHP Billiton and Director of the Melbourne based PricewaterhouseCoopers. heading global risk management Excel Coal Limited, Managing Advent Management venture Elizabeth’s previous appointments for the Asia capital markets Director of Broadcast Investment capital firm, prior to joining include National Chair of the business and was the Holdings Pty Limited, Director of investment bank Hambros Australian Institute of Company Australasian CEO between Lumley Corporation and Australia in 1991. At Hambros, Directors, National President of 1991 and 1996. Following his President of the National Heart Chris became Head of the Australian Society of Certified career with Bank of America, Foundation of Australia. Corporate Finance in 1994 Practising Accountants and Barry has been active in advising and joint Chief Executive in John is Chairman of Energy Deputy Chairman of the Financial companies in Australia and 1995, until Hambros was Australia. He is also Chairman Reporting Council. Elizabeth was overseas on strategic expansion, acquired by Société Générale of the Bupa Australia Group and also on the Boards of Boral venture capital, M&A and capital in 1998. Chris remained a Whitehaven Coal Limited. John is Limited and AMCOR Limited. raising strategies, with particular Director of SG Australia until President of the Commonwealth emphasis on the financial 2002. From 1998 onwards, Elizabeth is currently Chair of Remuneration Tribunal and services industry. Barry has Chris helped form Radiata – CSL Limited and a Director of Chairman of the Sydney also held numerous industry a technology start-up in Sydney Medibank Private. Symphony. John is Chairman positions including Chair of and Silicon Valley. As Chair and of the Australian Olympic the International Banks and Chief Executive Officer, Chris Committee (NSW) Fundraising Securities Association in Australia steered Radiata to a successful Committee, Chairman of the and the Asia Pacific Managed sale to Cisco Systems in 2001 Homebush Motor Racing Futures Association. and then continued part time for Authority Advisory Board, four years as Director Business Barry is an Independent Director Chairman of Events NSW and a Development for Cisco. Chris of Citigroup Pty Limited, an member of the Bond University has previously been a director Advisory Board Member of the Board of Trustees. of a number of companies in South Australian Financing the finance, infrastructure and Authority and a Director of Bakers technology sectors. Delight Holdings Pty Limited. Chris is currently Chair of Mnet Group which was recently listed on the ASX.

6 DEXUS RENTS TRUST 2010 ANNUAL REPORT Stewart F Ewen o a m Victor P Hoog Antink Brian E Scullin Peter B St George Independent Director BComm, MBA, FCA, FAPI, FRICS, BEc CA(SA), MBA Age 61 MAICD Independent Director Independent Director Stewart Ewen is an Independent Executive Director and Chief Age 59 Age 64 Executive Officer Director of DEXUS Funds Brian Scullin is an Independent Peter St George is an Age 57 Management Limited (appointed Director of DEXUS Funds Independent Director of 21 September 2004) and a Victor Hoog Antink is CEO and Management Limited DEXUS Funds Management member of the Board Nomination an Executive Director of DEXUS (appointed 1 January 2005), Limited (appointed 29 April and Remuneration Committee. Funds Management Limited DEXUS Wholesale Property 2009), Chair of the Board Stewart has extensive property (appointed 1 October 2004). Limited and Chair of the Board Finance Committee and a sector experience and started his Victor has more than 29 years Compliance Committee. member of the Board Audit and Board Risk and property career with the Hooker of experience in property and Brian brings to the Board Sustainability Committees. Corporation in 1966. In 1983, finance. Prior to joining DEXUS extensive domestic and Stewart established Byvan Limited in November 2003, Victor held international funds management Peter has more than 20 years which, by 2000, managed Executive positions at Westfield knowledge as well as finance, experience in senior corporate $8 billion in shopping centres in Holdings where he was the corporate governance and risk advisory and finance roles within Australia, Asia and North America. Director of Funds Management, management experience. NatWest Markets and Hill Samuel In 2000, Stewart sold his interest responsible for both the Westfield & Co in London. Peter acted as Following a career in government in Byvan to the Savills Group. In Trust and the Westfield America Chief Executive/Co-Chief Executive and politics in Canberra, Brian 1990 he started NavyB Pty Ltd, Trust. Prior to joining Westfield Officer of Salomon Smith Barney was appointed the inaugural which has completed in excess in 1995, Victor held Executive Australia/NatWest Markets Executive Director of the of $600 million of major management positions in a Australia from 1995 to 2001. Peter Association of Superannuation residential and commercial number of financial services and was previously a Director of Spark Funds of Australia (ASFA) in 1987. property projects in Australia and property companies in Australia. Infrastructure Group and Chedha He joined Bankers Trust in New Zealand. Stewart was Victor has an MBA from the Holdings (Powercor and Citipower, Australia in 1993 and held previously Managing Director of Harvard Business School, is a Victoria). Peter was also Chairman a number of senior positions, Enacon Ltd, a Director of the fellow of the Institute of Chartered of Walter Turnbull Chartered becoming President of Japan Abigroup and Chairman of Tuscan Accountants in Australia, a fellow Accountants and a Director of Bankers Trust in 1997. In 1999 Pty Ltd, which developed and of the Australian Property SFE Corporation Limited. Brian was appointed Chief operated the Sydney University Institute, a fellow of the Royal Executive Officer, Asia/Pacific for Peter is currently a Director of First Village. Stewart was also a Director Institute of Chartered Surveyors, Deutsche Asset Management and Quantum Minerals Limited (listed of CapitaCommercial Trust a member of the Australian retired from this position in 2002. on the Toronto Stock Exchange) Management Limited in Singapore Institute of Company Directors and Boart Longyear Limited. from 2004 to 2008. Stewart was and a licensed Real Estate Agent. Brian was appointed Chair of previously President of the BT Investment Management Victor is a director and immediate Property Council of NSW, a Limited in 2007. member of the NSW Heritage past President of the Property Council and Chair of the Cure Council of Australia and the Cancer Australia Foundation. national Chairman of the Property Industry Foundation.

DEXUS RENTS TRUST 2010 ANNUAL REPORT 7 about DEXUS

Members of the DEXUS team at Gateway, 1 Macquarie Place, Sydney, NSW

8 DEXUS RENTS TRUST 2010 ANNUAL REPORT DEXUS is one of Australia’s leading property groups specialising in world-class office, industrial and retail properties with total assets under management of $13.3 billion.

In Australia, DEXUS is the largest listed nn A $5.9 billion property funds management owner/manager of office and one of the business, one of the largest in Australia, largest in industrial. which manages and develops office, On behalf of third party clients, DEXUS industrial and retail properties on behalf is a leading manager and developer of of third party investors. In Australia, shopping centres. this includes the DEXUS Wholesale Property Fund, two blue‑chip private client Operating in the United States since mandates, a retail property syndicate and, 2004, DEXUS owns 98 industrial properties in the US, industrial property mandates totalling more than 24 million square feet in 17 industrial and logistics markets. DEXUS is committed to the long-term integration of Corporate Responsibility and Listed on the ASX, DEXUS has a track record Sustainability (CR&S) practices into our of financial strength and prudent capital business and we are proud to be recognised management. as a market leader in this important area. The Group has two areas of operation: The Group’s overall strategy is to deliver nn A $7.4 billion direct property portfolio – superior results for our stakeholders by: one of Australia’s largest listed property nn Offering world-class sustainable property trusts – which owns, manages and solutions to our tenants develops high quality office and industrial nn Being a preferred employer properties primarily in Australia and the US nn Ensuring we have a positive impact on the environment and the communities in which we operate nn Maximising returns for our investors

Group Management Committee (L to R): John Easy – General Counsel, Paul Say – Chief Investment Officer, Victor Hoog Antink – Chief Executive Officer, Craig Mitchell – Chief Financial Officer, Tanya Cox – Chief Operating Officer

DEXUS RENTS TRUST 2010 ANNUAL REPORT 9 CORPORATE GOVERNANCE STATEMENT

DEXUS Funds Management Limited (DXFM) The Board is responsible for reviewing and Composition is the Responsible Entity of DEXUS RENTS approving DEXUS’s business objectives and The composition of the Board reflects its Trust (RENTS). DXFM is also the Responsible ensuring strategies for their achievement are role and the duties and responsibilities it Entity of each of the four Trusts that comprise in place and monitored. Objectives are discharges. It reflects the need for the Board DEXUS Property Group (DEXUS) and is reviewed periodically to ensure that they to work together as a team with each Director responsible for the management of a number remain consistent with the priorities and making his or her own contribution to the of third party funds and mandates. the changing nature of its business. These Board’s decision making process. objectives become the performance targets This corporate governance framework applies to for the Chief Executive Officer and Group General qualifications for Board membership RENTS and all DXFM funds and mandates, and Management Committee (previously the include the ability and competence to make is designed to support the strategic objectives Executive Committee). Performance against appropriate business recommendations and of the Group by defining accountability and these objectives is reviewed annually by the decisions, an entrepreneurial talent for creating control systems to mitigate the risks Board Nomination and Remuneration contributing to the creation of investor value, inherent in its day to day operations. Committee and is taken into consideration relevant experience in the industry sector, To achieve this objective, DXFM has during the remuneration review of Group high ethical standards, exposure to emerging implemented a corporate governance Management Committee members. issues, sound practical sense and a total framework that meets the requirements commitment to the fiduciary and statutory The Board carries ultimate responsibility of ASX Corporate Governance Principles and obligations to further the interests of all for the approval and monitoring of annual Recommendations (2nd edition) as amended investors and achieve the Group’s objectives. business plans, the approval of acquisitions, 30 June 2010, and addresses additional divestments and major developments. The At 30 June 2010, the Board comprised eight aspects of governance that the Board Board also ensures that the fiduciary and members, seven of whom are independent and considers appropriate. The Board is statutory obligations owed to security holders, the eighth member is the DEXUS CEO. All eight committed to the early adoption of new and third party clients and investors are met. Directors held office for the full financial year. revised principles and recommendations. A reconciliation of the ASX Principles against The Board is directly responsible for Specific skills the incumbent Directors bring DXFM’s governance framework can be found appointing and removing the Chief Executive to the Board include strategy, property on the web page www.dexus.com/ Officer (CEO), and Company Secretary, investment, funds management, capital Corporate‑Governance ratifying the appointment of the Chief markets, financial and risk management. Financial Officer (CFO) and monitoring the Independent Directors are independent The Board performance of the Group Management team. of management and free of any business or other relationship that could materially Roles and responsibilities The Board meets regularly throughout the year and, when required, Directors also meet interfere with the exercise of his or her DEXUS’s corporate governance practices to consider specific business. At each regular unfettered and independent judgement. satisfy the requirements relevant to unit Board meeting the Independent Directors Independent Directors have expertise in areas trusts. The Board has determined that its meet without the CEO. Each year the which enable them to relate to the strategies governance framework will also satisfy the Directors also meet with senior management of DEXUS and to make a meaningful highest standards of a publicly listed to specifically consider strategy. contribution to the Board’s deliberations. company. These additional governance The Board regularly assesses the aspects include the conduct of an annual In addition to these responsibilities, DXFM independence of its Directors, in light of general meeting, the appointment of is committed to maintaining, through both interests disclosed to it. Directors of the Directors by DEXUS security holders and the Group Management Committee and the Responsible Entity are not technically subject additional disclosure, such as the Board, a balance of skills, experience and to the approval of security holders. However, remuneration report. independence appropriate to the nature and extent of its operations. the Board has determined that all Directors The governance framework enables the other than the CEO, will stand for election by Board to provide strategic guidance, while DEXUS stapled security holders. If a nominated exercising effective oversight of management. Director fails to receive a majority vote that The framework also defines the roles and Director will not be appointed to the Board of responsibilities of the Board and executive DXFM. DXFM Directors, other than the CEO, management in order to clearly communicate will hold office for three years, following his or accountability and ensure a balance her first appointment (or, if appointed by the of authority. Board between DEXUS Property Group Annual General Meetings, from the date of the Annual General Meeting immediately succeeding the initial appointment). It is not generally expected that an Independent Director would hold office for more than ten years, or be nominated for more than three consecutive terms, whichever is the longer.

10 DEXUS RENTS TRUST 2010 ANNUAL REPORT The Chair is an Independent Director, and Governance Board Audit Committee is responsible for the leadership of the Board, The Board has established a number To ensure the factual presentation of RENTS’ for the efficient organisation and conduct of of committees to assist in the fulfilment financial position, DXFM has put in place a the Board’s functions, and for the briefing of of its responsibilities. Committee Chairs structure of review and authorisation. This Directors in relation to issues arising relevant were rotated in August 2009. The Board structure includes the establishment of to the Board. The Board has clearly defined and Board Committee Terms of Reference a Board Audit Committee to: the responsibilities and performance of the are reviewed at least annually, and nn review the Financial Statements of CEO. The performance of the CEO is copies can be found on the web page RENTS and review the independence and monitored by the Chair. www.dexus.com/Corporate-Governance competence of the external auditor; and Biographies outlining the skills and nn review semi-annual management experience of each Director are set out Board Nomination and Remuneration Committee representations to the Board Audit on pages 6 to 7 of this report. Please refer Committee, affirming the veracity of A Board Nomination and Remuneration to www.dexus.com/Corporate-Governance RENTS’ Financial Statements. for a description of the procedure followed Committee oversees all aspects of Director to select and appoint new Directors to the and Executive remuneration, Board renewal, The Board Audit Committee’s Terms of Board, which includes specific criteria Director, CEO and management succession Reference require that all members have applied to determine Director independence. planning, Board and Committee performance specific financial expertise and have an evaluation and Director nominations. It understanding of the industry in which Performance comprises three Independent Directors: the Group operates. To ensure that each new Director is able nn John C Conde AO, Chair, Independent The Board Audit Committee operates to meet his or her responsibilities effectively, Director under formal Terms of Reference, has access newly appointed Directors receive an nn Christopher T Beare, Independent Director to management, and internal and external information pack and induction briefing, nn Stewart F Ewen OAM, Independent Director auditors without management present, and which addresses the corporate governance has the right and opportunity to seek framework, committee structures and their Reporting to the Board Nomination and explanations and additional information as terms of reference, governing documents Remuneration Committee and the Group it sees fit. Board Audit Committee members and background reports. New Directors also Management Committee, the Compensation have unrestricted access to external auditors. attend briefings by DEXUS management on Committee oversees the development and business strategy and operations. In addition, implementation of human resource The external auditor is invited to attend all Board Directors undertake training, through regular management systems and provides advice Audit Committee meetings. The Committee may presentations by management and external to the Board Nomination and Remuneration also obtain independent professional advice in advisers on sector, fund and industry specific Committee. The Board Nomination and the satisfaction of its duties at the cost of the trends and conditions throughout the year. Remuneration Committee also has the power Group and independent of management. The Directors are also encouraged to: to engage external consultants independently Committee meets as frequently as required to undertake its role effectively and meets not less nn take independent professional advice, of management. than four times a year. at the Group’s expense and independent Remuneration and incentive payments of management; for employees are considered by the The members of the Board Audit Committee are: nn seek additional information from Compensation Committee following guidance management; and from the Board Nomination and Remuneration nn Barry R Brownjohn, Chair, Independent Director nn directly access the Company Secretary, Committee. Recommendations to the Board General Counsel, Head of Risk and Nomination and Remuneration Committee nn Elizabeth A Alexander AM, Independent Governance and other DEXUS Executives are based on the achievement of approved Director as required. performance objectives and comparable nn Peter B St George, Independent Director market data. Details of the Group’s The Board Nomination and Remuneration remuneration framework for Executives, In order to ensure the independence of Committee oversees the Board performance Independent Directors and employees are the external auditor, the Board Audit evaluation program which extends over set out in the Remuneration Report that forms Committee has responsibility for approving a two year period. Board and Committee part of the Directors’ Report contained in the the engagement of the auditor for any performance is evaluated one year, and DEXUS Property Group’s Annual Report. non‑audit service of greater than $100,000. individual Director performance is evaluated In 2009/10 there were no base salary the following year. The process is designed increases for DEXUS senior management and to identify opportunities for performance no fee increases for Directors. There are no improvement. In 2009 individual Director schemes for retirement benefits (other than performance was evaluated. Evaluations are superannuation) for Independent Directors. undertaken using questionnaires and face to face interviews on a broad range of issues.

DEXUS RENTS TRUST 2010 ANNUAL REPORT 11 CORPORATE GOVERNANCE STATEMENT Continued

Board Audit Committee (continued) The scope of the Committee includes all John Easy is the General Counsel and Both the CFO and the CEO, on a semi annual Trusts, including the Group’s investment Company Secretary of DXFM. During his basis, make representations to the Board Audit mandates. The Committee reports to the time with the Group he has been involved Committee regarding the veracity of the financial Board of the Responsible Entity, breaches in the establishment and public listing of the statements and the financial risk management of the Corporations Act 2001 or breaches Deutsche Office Trust, the acquisition of the systems. The CEO makes a representation of the provisions contained in any Trust’s Paladin and AXA property portfolios, and in relation to risk management at least quarterly Constitution or Compliance Plan, and further subsequent stapling and creation of DXS. to the Head of Risk and Governance, regarding reports to ASIC in accordance with legislative Prior to joining DXS in November 1997, conformance with compliance policies and requirements. DEXUS employees also have John was employed as a senior associate in procedures. Any significant exceptions are access to Board Compliance Committee the commercial property/funds management reported by Risk and Governance to the Board members to raise any concerns including practices of law firms Allens Arthur Robinson Compliance Committee. Furthermore, on a regarding unethical business practices. and Gilbert & Tobin. John graduated from the University of New South Wales with Bachelor quarterly basis, the CFO provides certification The members of the Board Compliance of Laws and Bachelor of Commerce (Major to the Board Compliance Committee as to the Committee are: continued adequacy of financial risk in Economics) degrees. He is a member of nn Brian E Scullin (Chair), external member management systems. Chartered Secretaries Australia (CSA) and nn John C Conde AO, external member holds a Graduate Diploma in Applied Board Compliance Committee nn Andrew P Esteban, external member Corporate Governance. The Corporations Act 2001 does not require nn Tanya L Cox, executive member John is General Counsel and Company DXFM to maintain a Compliance Committee nn John C Easy, executive member Secretary for DXFM, DXH and DWPL and is a while more than half its Directors are external member of the Board Compliance Committee. Directors. However, the Board of DXFM has The skills, experience and qualifications of determined that the Board Compliance Mr Scullin and Mr Conde AO are contained Andrew Esteban holds a Bachelor of Business Committee provides additional control, oversight in this Annual Report. majoring in Accounting. He is an Associate of the Australian Society of CPAs and a member and independence of the compliance function The skills, experience and qualifications of the Australian Institute of Company and therefore will be continued. of Ms Cox, Mr Easy and Mr Esteban are Directors. Andrew has over 30 years outlined below. The Board Compliance Committee reviews experience in the financial services industry, compliance matters and monitors DXFM Tanya Cox is the Chief Operating Officer 21 years of which were with Perpetual conformance with the requirements of its and Company Secretary of DXFM and is Trustees. In December 1999 he established Australian Financial Services Licence and responsible for the delivery of company FP Esteban and Associates, which specialises of the Corporations Act 2001 as it relates secretarial, operational, information in implementing and monitoring risk to Managed Investment Schemes. technology, communications and management and compliance frameworks The Committee includes only members who administration services, as well as operational in the financial services industry. Andrew has are familiar with the requirements of Managed risk management systems and practices provided compliance consulting services to Investments Schemes and have extensive risk across the Group. Prior to joining DXS in organisations including UBS Global Asset and compliance experience. The Committee July 2003, Tanya held various general Management in Australia, Hong Kong, is also encouraged to obtain independent management positions over the past 16 years, Singapore, Taiwan and China. Andrew is Chair professional advice in the satisfaction of including Director and Chief Operating Officer of Certitude Global Investments Ltd (formerly its duties at the cost of the Group and of NM Rothschild & Sons (Australia) Ltd and HFA Asset Management Ltd) and a Director independent of management. General Manager – Finance, Operations and of HFA Holdings Ltd; Chair of the Compliance IT for Bank of New Zealand (Australia). Committees of Aberdeen Fund Managers As at 30 June 2010, the Committee Tanya is Chair of the Property Council of Australia Ltd, Deutsche Asset Management comprised five members, three of whom are Australia National Risk Committee and is Australia Ltd, Equitable Asset Management external members (i.e. members who satisfy a non‑executive director of a number of (Australia) Limited, Grant Samuel, and the requirements of Section 601JB(2) of the not-for-profit organisations. Tanya is a SPARK Infrastructure RE Ltd; a member Corporations Act 2001), and two of whom member of the Australian Institute of of the Compliance Committees of Australian are Executives of the Group. Company Directors and a fellow of the Unity Funds Management Ltd, Map Airports Institute of Chartered Secretaries and Ltd, and Schroder Investment Management Administrators (ICSA) and Chartered Australia Ltd; and an Independent Member Secretaries Australia (CSA). Tanya has an of the Alliance Burnstein Compliance MBA from the Australian Graduate School Committee; and a Responsible Manager of Management and a Graduate Diploma of Longreach Global Capital Pty Ltd. in Applied Corporate Governance. Tanya is Chief Operating Officer and Company Secretary of DXFM, DEXUS Holdings Pty Limited (DXH) and DEXUS Wholesale Property Limited (DWPL) and is a member of the Board Compliance Committee.

12 DEXUS RENTS TRUST 2010 ANNUAL REPORT To enable the Board Compliance Committee The Group has in place a range of policies Management to effectively fulfil its obligations, an Internal supporting the risk and compliance The day to day management of each of the Compliance Committee has been established framework including: Trusts rests in the hands of the management to monitor the effectiveness of the Group’s nn Anti-money Laundering and Counter team. To assist this team in the direction, internal compliance and control systems. Terrorism Financing implementation and monitoring of its plans and strategies, a number of management Board Risk and Sustainability Committee nn Workplace safety – Occupational Health, Safety and Liability committees have been established and To oversee risk management, the Board has responsibilities delegated. established a Board Risk and Sustainability nn Environmental Management Committee responsible for reviewing the nn Fraud Control and Awareness The management committees in place at 30 June 2010 are: Group’s operational risk management, Further information is available at environmental management, sustainability www.dexus.com/Corporate-Governance nn Executive Committee (replaced in July 2010 initiatives, internal audit practices and any with a new Group Management Committee) While Internal Audit is resourced internally, incidents of fraud. The Committee also nn Investment Committee oversees the effectiveness of the Group’s DEXUS has adopted a co-sourcing nn Fund Performance Review Committee Risk Management Framework. arrangement. The appointment of an external firm as co-source service provider has the (formerly the Trust Planning Committee) The Board Risk and Sustainability Committee advantage of ensuring DXFM is informed nn Internal Risk Committee and Board Audit Committee share common of broader industry trends and experience. nn Internal Audit Committee membership to ensure that a comprehensive nn Internal Compliance Committee understanding of control systems is The internal audit program has a three year maintained by both committees. cycle. The results of all audits are reported nn Capital Markets Committee to the Internal Audit Committee and the nn Environmental, Social and Governance The members of the Board Risk and Board Risk and Sustainability Committee Committee (formerly the Corporate Sustainability Committee are: on a quarterly basis, and the internal audit Responsibility and Sustainability nn Barry R Brownjohn, Chair, Independent function has a dual reporting line to the Committee) Director Internal Audit Committee and the Board Risk nn Project Steering Committee nn Elizabeth A Alexander AM, Independent and Sustainability Committee. nn Compensation Committee Director The Board Risk and Sustainability nn Continuous Disclosure Committee nn Peter B St George, Independent Director Committee is empowered to engage In June 2010, DEXUS opened an office in The management of risk is an important aspect consultants, advisers or other experts Newport Beach, California. These operations of the Group’s activities. Consequently the independently of management. are subject to DEXUS’s corporate governance Group has created a segregated risk function Board Finance Committee framework, and have their own policies and reporting to the Chief Operating Officer on a day The Group experiences significant financial procedures which replicate the Australian to day basis, as well as an Internal Compliance risk, including interest rate and foreign governance model. Committees include Committee, and an Internal Risk Committee, exchange exposures. To assist in the effective a US Management Committee and a all of whom have independent reporting lines management of these exposures, the Board US Investment Committee. US employees to corresponding Board Committees. has established a committee to specifically also participate in Australian management The Risk and Governance team’s manage these financial risks. The Board committees as appropriate. responsibility is to promote an effective Finance Committee’s role is to review and risk and compliance culture including the recommend for approval to the Board, provision of advice, the drafting and updating financial risk management policies, hedging of relevant risk and compliance policies and and funding strategies, to review forward procedures, conducting training, monitoring looking financial management processes and reporting adherence to key policies and and recommend periodic market guidance. procedures. Frameworks have been Supporting this Committee, management has developed and implemented in accordance established a Capital Markets Committee. with Australian Standards AS 31000: 2009 (Risk Management) and AS 3806: 2006 Members of the Board Finance (Compliance Programs). Committee are: nn Peter B St George, Chair, Independent Director nn Barry R Brownjohn, Independent Director nn Christopher T Beare, Independent Director

DEXUS RENTS TRUST 2010 ANNUAL REPORT 13 CORPORATE GOVERNANCE STATEMENT Continued

Ethical behaviour DEXUS currently publishes annual statistics All employees are required to provide on the diversity profile of its Board and senior an annual declaration confirming his or Code of Conduct management, including a breakdown of the her understanding and compliance with To ensure the satisfaction of statutory and type and seniority of roles undertaken the Employee Trading Policy. Risk and fiduciary obligations to each of its investor by women. Governance undertakes regular monitoring groups and to maintain confidence in its of the security registers. Please refer to integrity, the Board has implemented a series Insider trading and trading www.dexus.com/Corporate-Governance of clearly articulated compliance policies and in DEXUS securities for a copy of the Trading Policy – Directors procedures to which it requires that all The Board has determined that Directors and Employees. employees adhere. In addition, the Board will not trade in any security managed by considers it important that its employees meet the Group, including RENTS and the Senior Conflicts of interest and related the highest ethical and professional standards Executive team has similarly determined that party dealings and consequently has established both an they will not trade in any security managed The Group has implemented policies Employee Code of Conduct, for all employees, by the Group. This decision has been made covering the management of conflicts and a Directors’ Code of Conduct. Codes because the Board of DXFM has responsibility of interest which include: of Conduct are approved by the Board for the performance of DEXUS as well as the Compliance Committee. Please refer to third party business. Directors are obliged to (a) Personal conflicts www.dexus.com/Corporate-Governance act in the best interests of each group of These may arise where the interests of clients for a copy of the Group’s Codes of Conduct. investors independently of each other. are in conflict with the interests of employees, or where the interests of DEXUS is in conflict Management has adopted a policy of not Therefore, to minimise the appearance with the interests of its employees. contributing donations to any political party. of conflict that may arise, the Board has determined that it will not invest in any fund The policies which deal with personal The Group is committed to and strongly managed by the Group, including RENTS. This conflicts are the: supports disclosure being made of corrupt position is periodically reviewed by the Board. nn Code of Conduct; conduct, illegality or substantial waste of nn Inside Information and Employee Trading company assets. The Group aims to provide The Group has implemented a trading policy Compliance Policies and Procedures protection to employees who make such that applies to employees who wish to invest (“CPP”); and disclosures from any detrimental action in any of the Group’s financial products for or reprisal. Please refer to www.dexus.com/ his or her personal account or on behalf of nn Gifts and Entertainment CPP. an associate. The policy requires any employee Corporate-Governance for a copy of the (b) Business conflicts Good Faith Reporting Policy. who wishes to trade in any security issued or managed by DXFM to obtain written approval These may arise in the following ways: Diversity before entering into a trade. Generally, approval nn Conflicts arising from allocating property DEXUS comprises a socially and culturally will not be granted during defined blackout transactions, where there may be conflicts diverse workplace which helps create a periods. These periods commence at the end between the interests of different DEXUS culture that is tolerant, flexible and adaptive of the financial half‑year and full‑year reporting clients when allocating a limited investment to the changing needs of our environment. periods and end on the day RENTS’ results are opportunity between a number of clients; released. In addition, if Risk and Governance nn Tenant conflicts, where a prospective DEXUS believes that Boards should be small or the CEO considers that there is the potential tenant has two similar properties to chose enough to be able to act decisively, but large that inside information may be held or that a from both owned or managed by DEXUS; enough that a diverse range of views is heard significant conflict of interest may arise, nn Conflicts arising from related party dealings on any issue. DEXUS also believes that additional blackout periods will be imposed. Boards need to have continuity and involving more than one of DEXUS’s clients, experience with DEXUS, as well as bringing With regard to aligning Senior Executives’ where those clients are on opposite sides fresh perspectives, and the DEXUS Board interests with the interests of DEXUS’s of the transaction; and continually reviews these two factors. investors, the Board has put in place nn Conflicts arising from transfer of assets a deferred performance scheme that it involving the interests of DEXUS clients DEXUS is committed to diversity and considers ensures an alignment of Senior when transferring real estate between promotes an environment conducive to Executives’ interests with all investors. schemes and/or accounts which a the merit-based appointment of qualified A description of the Senior Executives’ DEXUS entity manages. employees, senior management and directors. payment scheme is contained in the Where professional intermediaries are used to Remuneration Report in the DEXUS Where a conflict of interest has been identify or assess candidates, they are made Property Group’s Annual Report. identified, Risk and Governance liaises with aware of the Group’s commitment to diversity. the parties concerned to ensure the effective and timely management of the conflict.

14 DEXUS RENTS TRUST 2010 ANNUAL REPORT On a monthly basis, the General Counsel Annual General Meeting reports to the Board on related party DEXUS respects the rights of security holders transactions that have been managed in and to facilitate the effective exercise of those the previous period. On a quarterly basis, rights, the Board has committed to the the Head of Risk and Governance reports conduct of an Annual General Meeting related party transactions to the Board (“AGM”) for DEXUS Property Group stapled Compliance Committee. security holders. RENTS security holders are nn During the 2010 financial year, there was also invited to attend this meeting. one related party transaction where DXFM Each AGM is designed to: sold a 1.5% interest in the Bent Street Trust to the DEXUS Wholesale Property Fund to nn supplement effective communication with equalise the holdings of both DEXUS parties. security holders; nn provide security holders ready access to Continuous disclosure balanced and understandable information; DXFM has established a Committee to ensure nn increase the opportunities for security timely and accurate continuous disclosure for holder participation; and all material matters that impact the Group. nn facilitate security holders’ rights to appoint The Committee meets regularly to consider Directors to the Board of DXFM. the activities of the Group and whether any The Group has adopted a policy which disclosure obligation is likely to arise as a requires Directors to attend its AGM. result of those activities. This Committee In October 2009 all Directors attended has been established to ensure that: the AGM. nn all investors continue to have equal and timely access to material information, The external auditor of the Trusts also attends including the financial status, performance, each AGM and is available to answer investor ownership and governance of the Trusts; and questions about the conduct of the audit of the Trust’s financial records and their Compliance nn all announcements are factual and Plans, and the preparation and content of the presented in a clear and balanced way. Auditor’s Report. In addition to conducting an Please refer to www.dexus.com/ AGM, the Group has a communications and Corporate‑Governance for a copy investor relations strategy that promotes an of the Continuous Disclosure and Analyst informed market and encourages participation Briefings Policy. with its investors. Training This strategy includes use of the Group’s website to enable access to RENTS Newly appointed members of the announcements, annual and half-year reports, Senior Executive team undertake induction presentations and analyst support material. training soon after commencing employment. The website also contains significant historical Induction training in relation to the operations information on announcements, distributions of DEXUS takes the form of a half day, and other related information at interactive training session presented by the www.dexus.com/Investor-Centre/RENTS heads of various business units. The Head of Risk and Governance conducts a one-to-one DEXUS Property Group engages Link Market Compliance Induction session with each Services to independently conduct any vote newly appointed Senior Executive outlining undertaken at the AGM of security holders. DEXUS’s approach to risk management and compliance. In addition, all new employees attend face-to-face Compliance Induction training facilitated by the Head of Risk and Governance, which covers key compliance issues.

DEXUS RENTS TRUST 2010 ANNUAL REPORT 15 Financial statements

Directors’ Report 17 Auditor’s Independence Declaration 19 Statement of Comprehensive Income 20 Statement of Financial Position 21 Statement of Changes in Equity 22 Statement of Cash Flows 23 Notes to the Financial Statements 24 Directors’ Declaration 34 Independent Auditor’s Report 35

16 DEXUS RENTS TRUST 2010 ANNUAL REPORT Financial statements Directors’ Report For the year ended 30 June 2010

The Directors of DEXUS Funds Management Limited (DXFM) as 4. Principal activities Responsible Entity of DEXUS RENTS Trust (the Trust) present their During the year the principal activity of the Trust consisted of an Directors’ Report together with the Financial Statements for the year investment in preference units of DOT Commercial Trust (DCT), a ended 30 June 2010. sub‑trust of DEXUS Office Trust (DOT). DOT forms part of the DEXUS Property Group (DXS) stapled security. There were no significant 1. Directors and other Key Management Personnel changes in the nature of the Trust’s activities during the year. 1.1 Directors The following persons were Directors of DXFM at all times during the 5. Total value of Trust assets financial year and to the date of this Directors’ Report: The total value of the assets of the Trust as at 30 June 2010 was $207.2 million (2009: $206.3 million). Details of the basis of the Directors Appointed valuation are outlined in note 1 of the Notes to the Financial Christopher T Beare 4 August 2004 Statements and form part of this Directors’ Report. Elizabeth A Alexander AM 1 January 2005 6. Review and results of operations Barry R Brownjohn 1 January 2005 The Trust’s results for the year ended 30 June 2010 was: John C Conde AO 29 April 2009 nn profit attributable to unitholders was $10.5 million (2009: $13.7 million); Stewart F Ewen OAM 4 August 2004 nn distributions paid and payable to unitholders was $10.3 million (2009: $13.7 million); Victor P Hoog Antink 1 October 2004 nn total assets were $207.2 million (2009: $206.3 million); and Brian E Scullin 1 January 2005 nn net assets were $204.2 million (2009: $204.0 million). Peter B St George 29 April 2009 7. Likely developments and expected results 1.2 Other Key Management Personnel of operations In addition to the Directors listed above the following persons were In the opinion of the Directors, disclosure of any further information deemed by the Board Nomination and Remuneration Committee to be regarding business strategies and the future developments or results Key Management Personnel (KMP) at all times during the financial year. of the Trust, other than the information already outlined in this Directors’ Report or the Financial Statements accompanying this Directors Title Directors’ Report would be unreasonably prejudicial to the Trust. Victor P Hoog Antink Chief Executive Officer 8. Significant changes in the state of affairs Tanya L Cox Chief Operating Officer The Directors are not aware of any matter or circumstance, not Patricia A Daniels Head of Human Resources otherwise dealt with in this Directors’ Report or the Financial John C Easy General Counsel Statements that has significantly or may significantly affect the operations of the Trust, the results of those operations, or the state Jane Lloyd Head of US Investments of the Trust’s affairs in future financial years. Louise J Martin Head of Office Craig D Mitchell Chief Financial Officer 9. Matters subsequent to the end of the financial year Since the end of the financial year the Directors of DXFM are not aware Paul G Say Head of Corporate Development of any matter or circumstance not otherwise dealt with in this Directors’ Mark F Turner Head of Funds Management Report or the Financial Statements that has significantly or may significantly affect the operations of the Trust, the results of those Andrew P Whiteside Head of Industrial operations, or the state of the Trust’s affairs in future financial years.

2. Remuneration Report 10. Distributions Remuneration received by the KMP of the Trust is a cost of Distributions paid and payable by the Trust for the year ended DEXUS Holdings Pty Limited (DXH) and not the Trust. DXH does 30 June 2010 are outlined in note 10 of the Notes to the Financial not recover any proportion of KMP remuneration from the Trust. Statements and forms part of this Directors’ Report.

3. Directors’ interests 11. DXFM’s fees and associate interests As at the date of this Directors’ Report, no Director directly Details of fees paid or payable by the Trust to DXFM and its associates or indirectly held: for the year ended 30 June 2010 are outlined in note 14 of the Notes nn RENTS securities; or to the Financial Statements and form part of this Directors’ Report. nn options over, or any other contractual interest in, RENTS securities; or The number of units in the Trust held by DXFM or its related entities nn an interest in any other fund managed by DXFM or any other entity as at the end of the financial year were nil (2009: nil). that forms part of the DEXUS Property Group.

DEXUS RENTS TRUST 2010 ANNUAL REPORT 17 FINANCIAL statements Directors’ Report For the year ended 30 June 2010 continued

12. Interests in the Trust –– investment banking, borrowing, dealing or advisory services; The movement in units on issue in the Trust during the year and the –– acting as trustee, executor or administrator of trust or estate; number of units on issue as at 30 June 2010 are detailed in note 8 of the –– prospectus independent expert reports and being a member Notes to the Financial Statements and form part of this Directors’ Report. of the due diligence committee; and The Trust did not have any options on issue as at 30 June 2010 –– providing internal audit services. (2009: nil). nn Board Audit Committee regularly reviews the performance and independence of the Auditor and whether the independence 13. Environmental regulation of this function has been maintained having regard to the The Trust’s senior management, through its Board Risk Committee, provision of non-audit services. The Auditor has provided oversee the policies, procedures and systems that have been a written declaration to the Board regarding its independence implemented to ensure the adequacy of its environmental risk at each reporting period and Board Audit Committee approval management practices. It is the opinion of this Committee that is required before the engagement of the Auditor to perform adequate systems are in place for the management of its environmental any non‑audit service for a fee in excess of $100,000. responsibilities and compliance with its various licence requirements The above Directors’ statements are in accordance with the advice and regulations. Further, the Committee is not aware of any breaches received from the Board Audit Committee. of these requirements and to the best of its knowledge all activities have been undertaken in compliance with environmental requirements. 15.3 Auditor’s Independence Declaration A copy of the Auditor’s Independence Declaration as required under 14. Indemnification and insurance section 307C of the Corporations Act 2001 is set out in the Financial The insurance premium for a policy of insurance indemnifying Statements and forms part of this Directors’ Report. Directors, officers and others (as defined in the relevant policy of insurance) is paid by DXH. 16. Rounding of amounts and currency The Auditor, PricewaterhouseCoopers (“PwC”), is indemnified out The Trust is a registered scheme of the kind referred to in Class Order of the assets of the Trust pursuant to the DEXUS specific Terms of 98/0100, issued by the Australian Securities & Investments Commission, Business agreed for all engagements with PwC, to the extent that the relating to the “rounding off” of amounts in this Directors’ Report and the Trust inappropriately uses or discloses a report prepared by PwC. The Financial Statements. Amounts in this Directors’ Report and Financial Auditor, PwC, is not indemnified for the provision of services where Statements have been rounded off in accordance with that Class Order such an indemnification is prohibited by the Corporations Act 2001. to the nearest thousand dollars, unless otherwise indicated. All figures in this Directors’ Report and the Financial Statements, except where 15. Audit otherwise stated, are expressed in Australian dollars. 15.1 Auditor 17. Management representation PricewaterhouseCoopers (PwC or the Auditor) continues in office The Chief Executive Officer and Chief Financial Officer have reviewed in accordance with section 327 of the Corporations Act 2001. the Trust’s financial reporting processes, policies and procedures 15.2 Non-audit services together with its risk management, internal control and compliance policies and procedures. Following that review it is their opinion that Details of the amounts paid or payable to the Auditor, for audit and the Trust’s financial records for the financial year have been properly non-audit services provided during the year are set out in note 3 maintained in accordance with the Corporations Act 2001 and the of the Notes to the Financial Statements. Financial Statements and their notes comply with the accounting The Board Audit Committee is satisfied that the provision of non-audit standards and give a true and fair view. services provided during the year by the Auditor (or by another person or firm on the Auditor’s behalf) is compatible with the standard of 18. Directors’ authorisation independence for auditors imposed by the Corporations Act 2001. The Directors’ Report is made in accordance with a resolution of the The reasons for the Directors being satisfied are: Directors. The Financial Statements were authorised for issue by the nn A Charter of Audit Independence was adopted during the year that Directors on 17 August 2010. The Directors have the power to amend provides guidelines under which the Auditor may be engaged to and reissue the Financial Statements. provide non-audit services without impairing the Auditor’s objectivity or independence. nn The Charter states that the Auditor will not provide services where the Auditor may be required to review or audit its own work, including: –– the preparation of tax provisions, accounting records and financial statements; Christopher T Beare Victor P Hoog Antink –– the design, implementation and operation of information Chair Chief Executive Officer technology systems; 17 August 2010 17 August 2010 –– the design and implementation of internal accounting and risk management controls; –– conducting valuation, actuarial or legal services; –– consultancy services that include direct involvement in management decision making functions;

18 DEXUS RENTS TRUST 2010 ANNUAL REPORT Financial statements Auditor’s Independence Declaration For the year ended 30 June 2010

DEXUS RENTS TRUST 2010 ANNUAL REPORT 19 Financial statements Statement of Comprehensive Income For the year ended 30 June 2010

Notes 2010 2009 $’000 $’000 Revenue Distribution revenue 10,652 13,850 Interest revenue 11 28 Total revenue 10,663 13,878 Expenses Other expenses 2 (185) (175) Total expenses (185) (175) Net profit attributable to unitholders of DEXUS RENTS Trust 10,478 13,703 Total comprehensive income attributable to unitholders of DEXUS RENTS Trust for the year 10,478 13,703

Earnings per unit1 Cents Cents Basic earnings per unit 18 – – Diluted earnings per unit 18 – –

1 Earnings per unit represents the earnings attributable to the ordinary unitholder, DEXUS Office Trust. Details of earnings per unit attributable to preference unitholders are included in note 18 of the Notes to the Financial Statements. The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

20 DEXUS RENTS TRUST 2010 ANNUAL REPORT Financial statements Statement of Financial Position As at 30 June 2010

Notes 2010 2009 $’000 $’000 Current assets Cash and cash equivalents 3,185 2,330 Receivables 4 2 3 Total current assets 3,187 2,333 Non-current assets Financial assets at fair value through profit or loss 5 204,000 204,000 Total non-current assets 204,000 204,000 Total assets 207,187 206,333 Current liabilities Payables 6 68 63 Provisions 7 2,917 2,244 Total current liabilities 2,985 2,307 Total liabilities 2,985 2,307 Net assets 204,202 204,026 Equity Contributed equity 8 197,705 197,705 Retained profits 9 6,497 6,321 Total equity 204,202 204,026

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

DEXUS RENTS TRUST 2010 ANNUAL REPORT 21 Financial statements Statement of Changes in Equity For the year ended 30 June 2010

Notes Contributed Retained Total equity profits equity $’000 $’000 $’000 Balance at 1 July 2008 197,705 6,367 204,072 Total comprehensive income for the year – 13,703 13,703 Transactions with owners in their capacity as owners Distributions paid or provided for 10 – (13,749) (13,749) Balance at 30 June 2009 197,705 6,321 204,026 Balance at 1 July 2009 197,705 6,321 204,026 Total comprehensive income for the year – 10,478 10,478 Transactions with owners in their capacity as owners Distributions paid or provided for 10 – (10,302) (10,302) Balance at 30 June 2010 197,705 6,497 204,202

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

22 DEXUS RENTS TRUST 2010 ANNUAL REPORT Financial statements Statement of Cash Flows For the year ended 30 June 2010

Notes 2010 2009 $’000 $’000 Cash flows from operating activities Payments in the course of operations (inclusive of GST) (179) (172) Interest received 11 28 Distributions received 10,652 13,850 Net cash inflow from operating activities 17 10,484 13,706 Cash flows from financing activities Distributions paid (9,629) (16,136) Net cash outflow from financing activities (9,629) (16,136) Net increase/(decrease) in cash and cash equivalents 855 (2,430) Cash and cash equivalents at the beginning of the year 2,330 4,760 Cash and cash equivalents at the end of the year 3,185 2,330

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

DEXUS RENTS TRUST 2010 ANNUAL REPORT 23 Financial statements Notes to the Financial Statements For the year ended 30 June 2010

Note 1. Summary of significant accounting policies (c) Revenue recognition (a) Basis of preparation Distribution revenue These general purpose Financial Statements for the year ended Distributions are recognised when declared. Amounts not received 30 June 2010 have been prepared in accordance with the at the end of the reporting period are included as a receivable in requirements of the Trust’s Constitution, the Corporations Act 2001, the Statement of Financial Position. Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and interpretations. Interest revenue Compliance with Australian Accounting Standards ensures that the Interest revenue is brought to account on an accruals basis using the Financial Statements and notes also comply with International Financial effective interest rate method and, if not received at the end of the Reporting Standards (IFRS). reporting period, is reflected in the Statement of Financial Position as a receivable. These Financial Statements are prepared on a going concern basis and in accordance with historical cost conventions and have not been (d) Expenses adjusted to take account of either changes in the general purchasing Expenses are brought to account on an accruals basis and, if not paid power of the dollar or changes in the values of specific assets, except at the end of the reporting period, are reflected in the Statement of for the revaluation of certain non-current assets and financial Financial Position as a payable. instruments (refer note 1(b)). (e) Goods and Services Tax The Trust has applied the revised AASB 101 Presentation of Financial Statements which became effective on 1 January 2009. The revised Revenues, expenses and capital assets are recognised net of the standard requires the separate presentation of a Statement of amount of Goods and Services Tax (GST), except where the amount Comprehensive Income and a Statement of Changes in Equity. of GST incurred is not recoverable from the Australian Tax Office (ATO). Comparative information has been re-presented so that it is also In these circumstances the GST is recognised as part of the cost of in conformity with the revised standard. acquisition of the asset or as part of the expense. The accounting policies adopted are consistent with those of the Cash flows are included in the Statement of Cash Flows on a gross previous financial year and corresponding interim reporting period, basis. The GST component of cash flows arising from investing and unless otherwise stated. financing activities which is recoverable from or payable to the ATO is classified as operating cash flows. Critical accounting estimates (f) Taxation The preparation of Financial Statements requires the use of certain Under current legislation, the Trust is not liable for income tax, provided critical accounting estimates and management to exercise its judgement it satisfies certain legislative requirements. in the process of applying the Trust’s accounting policies. Other than the estimation of fair values described in note 1(b), no key assumptions (g) Distributions concerning the future or other estimation of uncertainty at the reporting In accordance with the Trust’s Constitution, the Trust distributes its date have a significant risk of causing material adjustments to the distributable income to unitholders by cash. Distributions are provided Financial Statements in the next annual reporting period. for when they are approved by the Board of Directors and declared. (b) Financial assets at fair value through profit and loss (h) Cash and cash equivalents The Trust has designated its investment in DCT as a financial asset at Cash and cash equivalents include cash on hand, deposits held at call fair value through profit and loss to reduce a measurement or recognition with financial institutions and other short-term, highly liquid investments inconsistency. The investment is revalued at each reporting date to its fair with original maturities of three months or less that are readily convertible value in accordance with AASB 139 Financial Instruments Recognition and to known amounts of cash and which are subject to an insignificant risk Measurement. Changes in the fair value of the investment are recognised of changes in value. in the Statement of Comprehensive Income for the year. The fair value of the investment is determined using a discounted cash (i) Receivables flow analysis. The discount rate applied in calculating the fair value of Receivables are recognised initially at fair value and subsequently the investment is 1.3% per annum over the 90 day bank bill rate. measured at amortised cost using the effective interest rate method. Receivables which are known to be uncollectible are written-off.

24 DEXUS RENTS TRUST 2010 ANNUAL REPORT (j) Financial assets and liabilities (o) New accounting standards and interpretations (i) Classification Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2010 reporting DEXUS RENTS Trust has classified its financial assets and liabilities period. Our assessment of the impact of these new standards and as follows: interpretations is set out below: Financial Classification Valuation basis Reference (i) AASB 9 Financial Instruments and AASB 2009-11 Amendments asset/ to Australian Accounting Standards arising from AASB 9 (effective liability from 1 January 2013). AASB 9 Financial Instruments addresses Cash Fair value through Fair value Refer note 1(h). the classification and measurement of financial assets. Under the profit and loss new guidance, a financial asset is to be measured at amortised cost only if it is held within a business model whose objective is Receivables Loans and Amortised cost Refer note 1(i). to collect contractual cash flows and the contractual terms of the receivables asset give rise on specific dates to cash flows that are payments Other Fair value through Fair value Refer note 1(b). solely of principal and interest on the principal amount outstanding. financial profit and loss All other financial assets are to be measured at fair value. The assets standard is not applicable until 1 January 2013 but is available for Payables Financial liability at Amortised cost Refer note 1(k). early adoption. The Trust is currently assessing the impact of this amortised cost standard but does not expect it to be significant. (ii) Revised AASB 124 Related Party Disclosures (effective from Financial assets and liabilities are classified in accordance with the 1 January 2011). In December 2009 the AASB issued a revised purpose for which they were acquired. AASB 124 Related Party Disclosures. It is effective for accounting periods beginning on or after 1 January 2011 and must be applied (ii) Fair value estimation of financial assets and liabilities retrospectively. The amendment clarifies and simplifies the definition The fair value of financial assets and financial liabilities must be of a related party. The Trust will apply the amended standard from estimated for recognition and measurement and for disclosure purposes. 1 July 2011. It is not expected to have any impact on the Trust’s (k) Payables Financial Statements. These amounts represent liabilities for amounts owing at the end (iii) AASB 2009-5 Further Amendments to Australian Accounting of the reporting period. The amounts are unsecured and are usually Standards arising from the Annual Improvements Project (effective paid within 30 days of recognition. from 1 January 2010). In May 2010, the AASB issued a number of improvements to existing Australian Accounting Standards. (l) Earnings per unit The Trust will apply the revised standards from 1 July 2010 where Basic and diluted earnings per unit is determined by dividing the net applicable. The Trust is currently assessing the impact of the profit attributable to unitholders of the Trust by the weighted average revised rules but does not expect it to be significant. number of ordinary units outstanding during the year. (iv) AASB 1053 Application of Tiers of Australian Accounting Standards (m) Operating segments and AASB 2010-2 Amendments to Australian Accounting Standards During the current financial year, the Trust adopted AASB 8 Operating arising from Reduced Disclosure Requirements (effective from Segments which replaced AASB 114 Segment Reporting. The new 1 July 2013). On 30 June 2010 the AASB officially introduced standard requires a “management approach”, under which segment a revised differential reporting framework in Australia. Under information is presented on the same basis as that used for internal this framework, a two-tier differential reporting regime applies reporting purposes. This has resulted in a review of the reportable to all entities that prepare general purpose financial statements. segments presented. In addition, the segments are reported in a manner The Trust is listed on the ASX and is therefore not eligible to adopt that is more consistent with the internal reporting provided to the Chief the new Australian Accounting Standards – Reduced Disclosure Operating Decision Maker (CODM). The CODM has been identified as Requirements. As a consequence, the two standards will have the Board of Directors of DXFM as they are responsible for the strategic no impact on the Financial Statements of the Trust. decision making within the Trust. The adoption of AASB 8 has not had an impact on the measurements reflected in the Trust’s Financial Statements. (n) Rounding of amounts The Trust is the kind referred to in Class Order 98/0100, issued by the Australian Securities & Investment Commission, relating to the rounding off of amounts in the Financial Statements. Amounts in the Financial Statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

DEXUS RENTS TRUST 2010 ANNUAL REPORT 25 FINANCIAL statements Notes to the Financial Statements For the year ended 30 June 2010 continued

Note 2. Other expenses

Notes 2010 2009 $’000 $’000 Audit and other fees 3 30 34 Other professional fees 12 – Custodian fees 12 15 Registry costs and listing fees 91 81 Other expenses 14 17 Annual reporting expense 26 28 Total other expenses 185 175

Note 3. Audit and advisory fees During the year the Auditor of the Trust and its related practices and non-related audit firms earned the following remuneration: (a) Assurance services

2010 2009 $ $ Audit Services PwC Australia audit and review of Financial Statements and other audit work under the Corporations Act 2001 28,459 22,485 Total remuneration for audit services 28,459 22,485

(b) Taxation services Fees paid to PwC Australia 1,223 11,126 Total remuneration for taxation services 1,223 11,126 Total remuneration for audit and taxation services 29,681 33,611

Note 4. Current assets – receivables

2010 2009 $’000 $’000 GST receivable 2 3 Total current assets – receivables 2 3

Note 5. Financial assets at fair value through profit and loss

Name of entity Principal activity 2010 2009 $’000 $’000 DOT Commercial Trust (DCT) Office property investments 204,000 204,000 Total financial assets at fair value through profit or loss 204,000 204,000

On 15 June 2005, the Trust purchased 1,976,320 preference units in DCT for $100 each. Preference units do not confer on their holders any rights on the winding up of DCT or any rights to distributions. However, where a distribution is declared to preference unitholders, this distribution must be paid in preference to any distribution declared to ordinary unitholders. Preference units hold no voting rights in relation to DCT, other than where the matter is in relation to the rights of the preference units. In these matters, each preference unit carries 1,000 votes on a poll.

26 DEXUS RENTS TRUST 2010 ANNUAL REPORT Note 6. Current liabilities – payables

2010 2009 $’000 $’000 Accruals 68 63 Total current liabilities – payables 68 63

Note 7. Current liabilities – provisions

2010 2009 $’000 $’000 Provision for distribution Opening balance as at 1 July 2009 2,244 4,631 Additional provisions 10,302 13,749 Payment of distributions (9,629) (16,136) Closing balance as at 30 June 2010 2,917 2,244

Provision for distribution A provision for distribution has been raised for the period ended 30 June 2010. This distribution was paid on 15 July 2010.

Note 8. Contributed equity (a) Value of units on issue

2010 2009 $’000 $’000 Opening balance as at 1 July 197,705 197,705 Closing balance as at 30 June 197,705 197,705

(b) Number of units on issue

2010 2009 No. of units No. of units Opening balance as at 1 July 2,040,001 2,040,001 Closing balance as at 30 June 2,040,001 2,040,001

Terms and Conditions Each preference unit ranks equally with all other preference units for the purposes of distributions and on termination of the Trust. The one ordinary unit holds all the voting rights in the Trust, but has no beneficial interest in the Trust assets. The preference units hold the beneficial interest in the assets of the Trust. Payment of distributions to preference unitholders is at the Directors’ discretion. The preference units entitle holders to receive non-cumulative quarterly floating rate distributions at a margin of 130 basis points above the 90 day bank bill rate. The preference units may be exchanged for cash or stapled securities in DXS 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% per annum unless the preference units are repurchased or exchanged. Payments which become due and payable to holders are guaranteed on an unsecured and subordinated basis by the Responsible Entity of each of the DXS stapled trusts (each a guarantor). This guarantee ranks ahead of the distribution payments on stapled securities, but is subordinated to the claims of senior creditors.

DEXUS RENTS TRUST 2010 ANNUAL REPORT 27 FINANCIAL statements Notes to the Financial Statements For the year ended 30 June 2010 continued

Note 9. Retained profits

2010 2009 $’000 $’000 Retained profits as at 1 July 6,321 6,367 Total comprehensive income attributable to unitholders 10,478 13,703 Distributions provided for or paid (10,302) (13,749) Retained profits as at 30 June 6,497 6,321

Note 10. Distributions paid and payable

2010 2009 $’000 $’000 30 September 2009 (paid 16 October 2009) 2,285 4,651 31 December 2009 (paid 18 January 2010) 2,387 4,243 31 March 2010 (paid 19 April 2010) 2,713 2,611 30 June 2010 (payable 15 July 2010) 2,917 2,244 Total distributions paid and payable 10,302 13,749

2010 2009 Cents per unit Cents per unit 30 September 2009 (paid 16 October 2009) 112.00 228.00 31 December 2009 (paid 18 January 2010) 117.00 208.00 31 March 2010 (paid 19 April 2010) 133.00 128.00 30 June 2010 (payable 15 July 2010) 143.00 110.00 Total cents per unit 505.00 674.00

Note 11. Financial risk management To ensure the effective and prudent management of the Trust’s capital and financial risks, the Trust (as part of DXS), has a well established framework consisting of a Board Finance Committee and a Capital Markets Committee. The Board Finance Committee is accountable to and primarily acts as an advisory body to the DXFM Board and includes three Directors of the DXFM Board. Its responsibilities include reviewing and recommending financial risk management polices and funding strategies for approval. The Capital Markets Committee is a management committee that is accountable to both the Board Finance Committee and the Group Management Committee. It convenes at least quarterly and conducts a review of financial risk management exposures including liquidity, funding strategies and hedging. It is also responsible for the development of financial risk management policies and funding strategies for recommendation to the Board Finance Committee, and the approval of treasury transactions within delegated limits and powers. Further information on the DXS governance structure, including terms of reference, is available at www.dexus.com 1. Capital risk management Capital risk management is not managed at the individual trust level, but rather holistically as part of DXS. DXS manages its capital to ensure that entities within DXS will be able to continue as a going concern while maximising the return to owners through the optimisation of the debt and equity balance. The Trust is not rated by ratings agencies, however, DXS is rated BBB+ by Standard and Poor’s and Baa1 by Moody’s. The Trust considers potential impacts upon the rating when assessing the strategy and activities of the Trust. DXFM has been issued with an Australian Financial Services Licence (AFSL). The licence is subject to certain capital requirements including the requirement to hold minimum net tangible assets (of $5 million), and maintaining a minimum level of surplus liquid funds. Furthermore, the Responsible Entity maintains trigger points in accordance with the requirements of the licence. These trigger points maintain a headroom value above the AFSL requirements and the entity has in place a number of processes and procedures should a trigger point be reached.

28 DEXUS RENTS TRUST 2010 ANNUAL REPORT 2. Financial risk management (i) Interest rate risk The Trust’s activities expose it to a variety of financial risks: credit risk, Interest rate risk is the risk that fluctuating interest rates will cause market risk (interest rate risk), and liquidity risk. Financial risk an adverse impact on interest payable (or receivable), or an adverse management is not managed at the individual trust level, but rather change on the capital value (present market value) of long-term fixed holistically as part of DXS. DXS’s overall risk management program rate instruments. focuses on the unpredictability of financial markets and seeks to Interest rate risk for the Trust arises from distributions on the Trust’s minimise potential adverse effects on the financial performance of DXS. units which are priced based on the 90 day bank bill rate (until Risk management is implemented by a centralised treasury department 1 July 2012). This exposes the Trust to cash flow interest rate risk. (Group Treasury) whose members act under written policies approved The primary objective of DXS’s risk management policy for interest rate by the Board of Directors of the Responsible Entity. Group Treasury risk is to minimise the effects of interest rate movements on the DXS identifies, evaluates and hedges financial risks in close cooperation portfolio of financial assets and liabilities and financial performance. with the Trust’s business units. The treasury policies approved by the The policy sets out the minimum and maximum hedging amounts Board of Directors cover overall treasury risk management, as well as for the Trust which is managed on a portfolio basis. policies and limits covering specific areas such as liquidity risk, interest rate risk, foreign exchange risk, credit risk and the use of derivatives The Trust does not transact derivative financial instruments rather, and other financial instruments. In conjunction with its advisers, as part derivative financial instruments are transacted at the DXS level to of DXS, the Responsible Entity continually reviews the Trust’s exposures hedge the Trust’s cash flow interest rate risk. Cash flow interest rate and (at least annually) updates its treasury policies and procedures. risk on borrowings is managed through the use of interest rate swaps, whereby a floating interest rate exposure is converted to a fixed (a) Liquidity risk interest rate exposure. Liquidity risk is the risk that the Trust will not have sufficient available Sensitivity on interest rates funds to meet financial obligations in an orderly manner when they fall due or at an acceptable cost. An increase of 50bps in interest rates would result in an increase to the Trust’s distribution of $1.0 million (2009: $1.0 million). The sensitivity on The Trust identifies and manages liquidity risk by continually monitoring cash flow arises due to the impact that a change in interest rates will have forecast and actual cash flows. on the Trust’s distribution calculation. The increase or decrease in the Refinancing risk distribution is proportional to the increase or decrease in interest rates. A key liquidity risk is the Trust’s ability to refinance its current facilities (c) Credit risk or alternative forms of capital. As the Trust’s facilities mature, they are Credit risk is the risk of loss to the Trust in the event of usually required to be refinanced with a replacement facility or alternative non‑performance by the Trust’s financial instrument counterparties. form of capital. The Trust distributes the majority of its realised operating Credit risk arises from cash and cash equivalents and loans and income and therefore is not available to be used for funding requirements. receivables. The Trust has exposure to credit risk on all financial assets. The refinancing of existing facilities or alternative forms of capital or the requirement to raise new debt may also result in margin price risk, The Trust manages this risk by: whereby market conditions may result in an unfavourable change nn adopting a process for determining an approved counterparty, in credit margins on the new or refinanced facilities. with consideration of qualitative factors as well as the counterparty’s rating; and (b) Market risk nn regularly monitoring loans and receivables on an ongoing basis. Market risk is the risk that the fair value or future cash flows of the Trust’s financial instruments will fluctuate because of changes in The maximum exposure to credit risk at 30 June 2010 and at market prices. The market risk that the Trust is exposed to is detailed 30 June 2009 is the carrying amount of financial assets recognised further below. on the Statement of Financial Position of the Trust. The Trust does not hold any significant amounts of collateral as security. As at 30 June 2010, there were no loans or receivables that were past due or impaired (2009: nil). The credit quality of financial assets that are neither past due nor impaired is consistently monitored to ensure that there are no adverse changes in credit quality.

DEXUS RENTS TRUST 2010 ANNUAL REPORT 29 FINANCIAL statements Notes to the Financial Statements For the year ended 30 June 2010 continued

Note 11. Financial risk management (continued) 2. Financial risk management (continued) (d) Fair value of financial instruments Fair value interest rate risk is the risk of an adverse change in the net fair (or market) value of an asset or liability due to movements in interest rates. At 30 June 2010, the carrying amounts and fair value of financial assets and liabilities are shown as follows:

Consolidated Consolidated 2010 2010 2009 2009 Carrying amount1 Fair value2 Carrying amount1 Fair value2 $’000 $’000 $’000 $’000 Financial assets Cash and cash equivalents 3,185 3,185 2,330 2,330 Loans and receivables (current) 2 2 3 3 Financial assets at fair value through profit and loss 204,000 204,000 204,000 204,000 Total financial assets 207,187 207,187 206,333 206,333 Financial liabilities Payables 68 68 63 63 Provisions 2,917 2,917 2,244 2,244 Total financial liabilities 2,985 2,985 2,307 2,307

1 Carrying value is equal to the value of the financial instruments on the Statement of Financial Position. 2 Fair value is the amount for which the financial instrument could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction, however, not recognised on the Statement of Financial Position. Refer note 1(b) for the fair value methodology.

Determination of fair value The Trust uses methods in the determination and disclosure of the fair value of financial instruments. These methods comprise: Level 1: the fair value is calculated using quoted prices in active markets. Level 2: the fair value is determined using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: the fair value is estimated using inputs for the asset or liability that are not based on observable data. The following table presents the Trust’s financial assets and liabilities measured and recognised at fair value at 30 June 2010.

Financial assets and liabilities Level 1 Level 2 Level 3 2010 $’000 $’000 $’000 $’000 Financial assets Financial assets at fair value through profit and loss – 204,000 – 204,000 – 204,000 – 204,000

Note 12. Contingent liabilities The Directors of the Responsible Entity are not aware of any contingent liabilities in relation to the Trust, 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.

Note 13. Commitments There are no commitments receivable or payable which have not been recognised at the end of the reporting period.

30 DEXUS RENTS TRUST 2010 ANNUAL REPORT Note 14. Related parties Responsible Entity The Trust was formed on 27 January 2005, at which time DXFM was appointed as the Responsible Entity. Responsible Entity fees Under the terms of the Trust Constitution, the Responsible Entity is not entitled to receive fees in relation to the management of the Trust. However, DXH is entitled to be reimbursed for expenses incurred in relation to administration or management of the Trust. During the year the Trust paid $15,144 (2009: $5,168) to DXH in relation to administration expenses. Related party transactions All related party transactions are conducted on normal commercial terms and conditions unless otherwise stated. Unitholdings The Trust has no investments in the Responsible Entity. The Trust has an investment in DCT, a sub‑trust of DOT, whose Responsible Entity is also DXFM. DOT is part of the DXS stapled security which is listed on the Australian Stock Exchange. Directors The following persons were Directors of DXFM at all times during the year:

C T Beare, BSc, BE (Hons), MBA, PhD, FAICD1,4,5 1 Independent Director 2 Audit Committee Member E A Alexander AM, BComm, FCA, FAICD, FCPA1,2,6 3 Compliance Committee Member B R Brownjohn, BComm1,2,5,6 4 Nomination and Remuneration Committee Member J C Conde AO, BSc, BE (Hons), MBA1,3,4 5 Finance Committee Member 6 Risk and Sustainability Committee Member (name changed from Board Risk S F Ewen OAM1,4 Committee on 2 June 2010) V P Hoog Antink, BComm, MBA, FCA, FAPI, FRICS, MAICD 7 Nomination and Remuneration Committee Member from 1 July 2009 to 31 August 2009 B E Scullin, BEc1,3,7 P B St George, CA(SA), MBA1,2,5,6

No Directors held an interest in the Trust for the years ended 30 June 2010 and 30 June 2009. 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.

Directors Position Victor P Hoog Antink Chief Executive Officer Tanya L Cox Chief Operating Officer Patricia A Daniels Head of Human Resources John C Easy General Counsel Jane Lloyd Head of US Investments Louise J Martin Head of Office Craig D Mitchell Chief Financial Officer Paul G Say Head of Corporate Development Mark F Turner Head of Funds Management Andrew P Whiteside Head of Industrial

DEXUS RENTS TRUST 2010 ANNUAL REPORT 31 FINANCIAL statements Notes to the Financial Statements For the year ended 30 June 2010 continued

Note 14. Related parties (continued) Other Key Management Personnel (continued) Remuneration received by Key Management Personnel of the Trust is a cost of DXH and not the Trust. DXH does not recover any proportion of their remuneration from the Trust. No Key Management Personnel or their related parties held an interest in the Trust for the years ended 30 June 2010 and 30 June 2009. There were no loans or other transactions with Key Management Personnel or their related parties during the years ended 30 June 2010 and 30 June 2009.

Note 15. Events occurring after reporting date Since the end of the year, the Directors of the Responsible Entity are not aware of any matter or circumstance not otherwise dealt with in their Directors’ Report or the Financial Statements that has significantly or may significantly affect the operations of the Trust, the results of those operations, or state of the Trust’s affairs in future financial periods.

Note 16. Operating segments The Chief Operating Decision Maker (CODM) has been identified as the Board of Directors of DXFM as they are responsible for the strategic decision making for the Trust. The CODM monitors the performance and makes decisions on the allocation of resources for the Trust on a stand alone basis. Therefore management has determined that there are no separate operating segments within the Trust. The Trust operates within the property trust investment sector with all investments being located in Australia.

Note 17. Reconciliation of net profit to net cash inflow from operating activities

2010 2009 $’000 $’000 Net profit 10,478 13,703 Change in operating assets and liabilities Decrease in receivables 1 5 Increase/(decrease) in payables 5 (2) Net cash inflow from operating activities 10,484 13,706

32 DEXUS RENTS TRUST 2010 ANNUAL REPORT Note 18. Earnings per unit (a) Basic earnings per unit

2010 2009 cents per unit cents per unit Basic earnings per ordinary unit – – Basic earnings per preference unit 513.63 671.72

(b) Diluted earnings per unit

Diluted earnings per ordinary unit – – Diluted earnings per preference unit 513.63 671.72

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

2010 2009 $’000 $’000 Profit attributable to ordinary unitholders of the Trust used in the calculation of basic and diluted earnings per unit – – Profit attributable to preference unitholders of the Trust used in the calculation of basic and diluted earnings per unit 10,478 13,703 Profit attributable to unitholders of the Trust used in the calculation of basic and diluted earnings per unit 10,478 13,703

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

2010 2009 No. of units No. of units Weighted average number of ordinary units outstanding used in the calculation of basic and diluted earnings per unit 1 1 Weighted average number of preference units outstanding used in the calculation of basic and diluted earnings per unit 2,040,000 2,040,000

DEXUS RENTS TRUST 2010 ANNUAL REPORT 33 Financial statements Directors’ Declaration For the year ended 30 June 2010

The Directors of DEXUS Funds Management Limited as Responsible Entity of DEXUS RENTS Trust (the Trust) declare that the Financial Statements and notes set out on pages 20 to 33: (i) comply with applicable Australian Accounting Standards, the Corporations Act 2001 and other mandatory professional reporting requirements; and (ii) give a true and fair view of the Trust’s financial position as at 30 June 2010 and of its performance, as represented by the results of its operations and its 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 will be able to pay its debts as and when they become due and payable; and (c) the Trust has operated in accordance with the provisions of the Constitution dated 27 January 2005 during the year ended 30 June 2010. Note 1(a) confirms that the Financial Statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. 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 17 August 2010

34 DEXUS RENTS TRUST 2010 ANNUAL REPORT Financial statements Independent Auditor’s Report For the year ended 30 June 2010

DEXUS RENTS TRUST 2010 ANNUAL REPORT 35 Financial statements Independent Auditor’s Report For the year ended 30 June 2010 continued

36 DEXUS RENTS TRUST 2010 ANNUAL REPORT Investor relations

DEX US RENTS structure DEX US RENTS information Security registry Real -estate perpetual ExchaNagable Other DEXUS RENTS Trust and DEXUS If you have administrative enquiries, such sTep‑up Securities are fully paid preference Property Group information required to as change of address or the way in which units in RENTS. RENTS are issued by be disclosed under the continuous you wish your distributions to be paid, DEXUS Funds Management Limited disclosure obligations of the ASX Listing you can contact Link Market Services (DXFM) as Responsible Entity of the Trust. Rules may be obtained from our website on the DEXUS Infoline 1800 819 675 The monies raised through the issue of at www.dexus.com or update your account details via the RENTS were used to subscribe for Holders of RENTS are entitled upon website at www.dexus.com preference units in DOT Commercial Trust, request to receive all notices of meetings a sub-trust of DEXUS Office Trust which is of the DEXUS Property Group, and all Enquiries, obtaining information part of the DEXUS Property Group stapled other documents (including annual or making a complaint security. The proceeds of the subscription reports and financial statements) at the The Group has processes in place to have been used within DEXUS Property same time or within a reasonable time, deal with security holder questions and Group to reduce senior debt. as DEXUS Property Group stapled complaints. If you have any questions, RENTS securities are perpetual and security holders. complaints, or wish to obtain information have no maturity date. Investors have If you have any queries in relation regarding RENTS or the DXS stapled the benefit of a subordinated guarantee to your investment in RENTS, please securities, please contact the DEXUS from DXFM as the Responsible Entity contact the DEXUS Infoline on Infoline on 1800 819 675 or from of DEXUS Diversified Trust, DEXUS 1800 819 675 or from outside Australia outside Australia +61 2 8280 7126 Industrial Trust, DEXUS Office Trust and on +61 2 8280 7126 or email to or email [email protected] DEXUS Operations Trust, the four Trusts [email protected] The Group is a member of the that comprise DEXUS Property Group Information available on the DEXUS Financial Ombudsman Service. This (each a Guarantor). The Guarantors website includes: is an independent dispute resolution guarantee, on a subordinated basis, the service and may be contacted through: nn ASX announcements obligations of the issuer and transferee Financial Ombudsman Service (upon the exchange of any RENTS) to nn Reports GPO Box 3 pay money which becomes due and nn Presentations Melbourne VIC 3001 payable to investors. If a distribution nn Distribution Phone: 1300 780 808 amount is not paid in full, while it is not nn Tax information cumulative, a “distribution stopper” will Fax: +61 3 9613 6399 nn Corporate governance prevent DXFM as the Responsible Entity Email: [email protected] of DEXUS Property Group from paying nn Research Website: fos.org.au any distribution or making any return of capital to investors of securities in Stock exchange listing DEXUS Property Group. RENTS are listed on the ASX and the Subject to the direction of DXFM as the ticker code is (ASX:DXRPA). Responsible Entity of DEXUS Office Trust, DXFM as issuer of RENTS, may initiate exchange of RENTS into DEXUS Property Group stapled securities or repurchase RENTS for cash on or after the step-up date, being 1 July 2012, or earlier in certain circumstances. If RENTS are not exchanged or repurchased, the RENTS distribution margin will increase by a once off step‑up of 2% per annum (i.e. become 3.3% per annum) from the step‑up date being 1 July 2012.

DEXUS RENTS TRUST 2010 ANNUAL REPORT 37 Investor relations continued

Payment of distributions N on-resident tax information Distributions Distributions can only be paid directly Estimates that make up the DEXUS RENTS pays quarterly distributions into a nominated Australian bank, building RENTS Trust 2009/2010 distributions are into each investor’s nominated Australian society or credit union account. published on our website in the Investor bank account. The distribution rate for Centre at www.dexus.com RENTS is determined on the first Annual tax statement These estimates are updated for each business day of each quarter. Until After the end of each financial year you distribution period prior to the distribution 1 July 2012, the distribution rate will will receive a tax statement. This statement payment and are for non-resident security be equal to the 90 day bank bill rate plus summarises the distributions paid to you holders and custodians of non‑resident 1.3% per annum. The distribution for the during the year and includes information security holders. quarter ended 30 June 2010 was paid to required to complete your tax return. investors on 15 July 2010. RENTS If you require a replacement 2010 Annual U nclaimed funds distribution history can be found at www.dexus.com/Investor‑Centre/RENTS Tax Statement you can obtain a free RENTS has a number of investors who replacement using the “Investor Login” have unclaimed funds. If you believe you Distribution timetable box on our website at www.dexus.com have unclaimed funds please contact our A charge may be levied if you request Security Registry, Link Market Services The distribution timetable below indicates one to be prepared and sent to you. on 1800 819 675 for assistance in the the anticipated distribution, banking and recovery of unclaimed funds for up to mailing dates for the year to June 2011. Tax file number a seven year period. For outstanding Investors should note that these dates are indicative only and may change. You are not required by law to provide monies after that time, you should your Tax File Number (TFN), Australian contact the: Business Number (ABN) or Exemption. NSW Office of State Revenue However, if you do not provide your Infoline: 1300 366 016 TFN, ABN or Exemption, withholding Email: [email protected] tax at the highest marginal rate, Website: osr.nsw.gov.au currently 46.5%, may be deducted from income distributions paid to you. If you have not supplied this information and wish to do so, please advise the registry or your sponsoring broker.

Distribution period end Announcement date Ex-distribution date Record date Payment date 30 September 2010 21 September 2010 24 September 2010 30 September 2010 18 October 2010 31 December 2010 21 December 2010 24 December 2010 31 December 2010 17 January 2011 31 March 2011 22 March 2011 25 March 2011 31 March 2011 15 April 2011 30 June 2011 21 June 2011 24 June 2011 30 June 2011 15 July 2011

38 DEXUS RENTS TRUST 2010 ANNUAL REPORT Additional information

Top 20 security holders as at 18 August 2010

Rank Investor Current % of balance issued capital 1 J P Morgan Nominees Australia Limited 746,128 36.57 2 Pan Australian Nominees Pty Limited 119,632 5.86 3 RBC Dexia Investor Services Australia Nominees Pty Limited 107,4 0 9 5.27 4 Citicorp Nominees Pty Limited 89,174 4.37 5 M F Custodians Ltd 64,356 3.15 6 Tynong Pastoral Co Pty Ltd 50,000 2.45 7 Questor Financial Services Limited 39,980 1.96 8 Mr John Edward Mytton Barnes 30,289 1.48 9 RBC Dexia Investor Services Australia Nominees Pty Limited 27,973 1.37 10 UBS Wealth Management Australia Nominees Pty Ltd 27,301 1.34 11 Cogent Nominees Pty Limited 26,740 1.31 12 ANZ Nominees Limited 22,264 1.09 13 Avanteos Investments Limited 17,181 0.84 14 National Nominees Limited 13,305 0.65 15 Ginger Max (Australia) Pty Ltd 12,200 0.60 16 Brispot Nominees Pty Ltd 12,150 0.60 17 Australian Executor Trustees Limited 11,774 0.58 18 Questor Financial Services Limited 11,029 0.54 19 Easn Pty Ltd 10,000 0.49 20 Mr Gary Dean Corby & Mrs Helen Corby 8,000 0.39 Total top 20 1,446,885 70.93 Balance of register 593,115 29.07 Total securities 2,040,000 100.00

DEXUS RENTS TRUST 2010 ANNUAL REPORT 39 Additional information continued

Substantial holders The names of substantial holders, who at 18 August 2010, have notified the Responsible Entity in accordance with Section 671B of the Corporations Act 2001 are:

Date Name Number of Voting stapled securities % 30 March 2010 The Goldman Sachs Group, Inc 115,587 5.67 19 December 2006 Deutsche Bank Group 135,916 6.66 1 September 2005 Challenger Financial Services 397,0 6 0 19.43

Class of securities DEXUS RENTS Trust has one class of security trading on the ASX with 1,630 investors holding 2,040,000 securities at 18 August 2010.

Spread of securities at 18 August 2010

Range Securities Percent No. of Holders 100,001 and over 973,169 47.70 3 10,001 to 100,000 455,716 22.34 15 5,001 to 10,000 36,881 1.81 5 1,001 to 5,000 209,832 10.29 99 1 to 1,000 364,402 17.8 6 1,508 Total 2,040,000 100.00 1,630

At 18 August 2010, there are three investors holding unmarketable parcels.

Voting rights In the event that a meeting of RENTS investors is called, each investor has one vote. Voting is conducted by way of a show of hands. On a poll, each investor has one vote for each dollar of the value of the total interests they have in the Trust, for which they are eligible to vote as RENTS investors.

The number and class of securities that are restricted or subject to voluntary escrow There are no securities that are restricted or subject to voluntary escrow.

On-market buy-back DEXUS RENTS Trust has no on-market buy-back currently in place.

40 DEXUS RENTS TRUST 2010 ANNUAL REPORT Directory

DEXUS RENTS Trust Directors of the Investor enquiries ARSN 112 705 852 Responsible Entity Infoline: 1800 819 675 Responsible Entity Christopher T Beare, Chair or +61 2 8280 7126 Elizabeth A Alexander am Investor Relations: +61 2 9017 1330 DEXUS Funds Management Limited Barry R Brownjohn Email: [email protected] ABN 24 060 920 783 John C Conde ao Website: www.dexus.com/ Investor-Centre/RENTS Registered office Stewart F Ewen oam Victor P Hoog Antink, CEO of Responsible Entity Brian E Scullin Security registry Level 9, 343 George Street Peter B St George Link Market Services Limited Sydney NSW 2000 Level 12, 680 George Street Secretaries of the Sydney NSW 2000 PO Box R1822 Locked Bag A14 Royal Exchange Responsible Entity Sydney South NSW 1235 Sydney NSW 1225 Tanya L Cox Registry Infoline: 1800 819 675 Phone: +61 2 9017 1100 John C Easy or +61 2 8280 7126 Fax: +61 2 9017 1101 Fax: +61 2 9287 0303 Email: [email protected] Auditors Email: [email protected] PricewaterhouseCoopers www.dexus.com Website: www.linkmarketservices.com.au Chartered Accountants DEXUS US Office 201 Sussex Street Monday to Friday between Sydney NSW 2000 8.30am and 5.30pm (Sydney time). 4200 Von Karman Avenue Newport Beach CA 92660 For enquiries regarding your holding you can contact the Security Registry, Phone: +1 949 783 2801 or access your holding details at Fax: +1 949 433 9124 www.dexus.com using the Investor Email: [email protected] login link. www.dexus.com/us Australian Stock Exchange ASX Code: DXRPA

Consistent with DEXUS’s commitment to sustainability, this report is printed on an FSC Mixed Sources Certified paper, which ensures that all virgin pulp is derived from well-managed forests and controlled sources. It contains elemental chlorine free (ECF) bleached pulp and is manufactured by an ISO 14001 certified mill. The mill operates a three step, waste water and recycling treatment system. These steps involve chemical treatment; micro-organism treatment; and penton treatment. The mill utilises steam for energy sourced from its own cogeneration plant and has recently concluded a Voluntary Agreement for energy conservation. The printer of this report has Forest Stewardship Council (FSC), Chain of Custody Certification. 2010 DEXUS RENTS Trust ANNUAL REPORT

www.dexus.com