DB RREEF Trust
annual report 2007
contents
highlights
building value
international reach
portfolio highlights
letter from the chair
chief executive offi cer’s report
our portfolio
2
4
6
8
10
14
funds management report
about DB RREEF
corporate responsibility and sustainability
corporate governance statement
fi nancial reports
investor information
directory
30
33
38
58
66
128
132
FRONT COVER: Sydney aerial view featuring DB RREEF assets – 30 The Bond, Gateway, 45 Clarence Street, One Margaret Street,
Governor Phillip Tower and Governor Macquarie Tower, Australia Square, 309–321 Kent Street
ABOVE: View from Governor Phillip Tower and Governor Macquarie Tower to Australia Square, Sydney NSW
DB RREEF Trust (ASX: DRT) comprising DB RREEF Diversified Trust ARSN 089 324 541 (DDF), DB RREEF Industrial Trust ARSN 090 879 137 (DIT),
DB RREEF Office Trust ARSN 090 768 531 (DOT) and DB RREEF Operations Trust ARSN 110 521 223 (DRO). The DB RREEF group refers to the
business as a whole and includes the Responsible Entity of each of the Trusts, DB RREEF Funds Management Limited ABN 24 060 920 783.
DB RREEF Trust is referred to as DB RREEF Trust. DB RREEF group is referred to as DB RREEF. DB RREEF Funds Management Limited is referred
to as the Responsible Entity.
USD/AUD conversion rate US$0.8487 as at 30 June 2007. €/AUD conversion rate €0.6311 as at 30 June 2007. All amounts are in Australian dollars
unless otherwise stated.
delivering solid
performance
and leveraging our
integrated platform
building value
March
Completes 30 The Bond, Sydney NSW, a winner of
over 30 design and sustainability awards including
Australia’s first 5 Star ABGR energy rating.
2004
2005
September
Stapling of DDF, DIT, DOT and DRO to form DB RREEF Trust.
June
Underwrites $99 million DRP.
Enters into $1.6 billion retail joint venture with the Westfield Group.
Issues $204 million of RENTS securities.
Acquires $1.0 billion US industrial portfolio.
December
Secures US$200 million debt private placement.
September
Enters New Zealand with the acquisition of a premium grade office
tower in Auckland.
2 DB RREEF Trust Annual Report 2007
June
Winner of the FMA Environmental Achievement Award.
Enters Europe with the acquisition of $120 million
French industrial portfolio.
July
Achieves Standard & Poor’s long-term corporate credit
rating of BBB+.
Acquires additional land to expand Laverton North
Industrial Estate VIC.
Completes $250 million MTN issue into Australian
debt capital market.
February
Successfully completes $200 million MTN issue into Australian debt
capital market.
Completes $100 million Coles Distribution Centre at Laverton North VIC.
April
Development application lodged for new premium office tower
in Brisbane QLD.
June
Acquires the first industrial asset under the Whirlpool investment
program in Orlando, Florida USA.
2006
2007
August
Announces $600 million international investment program
for Whirlpool logistics facilities.
December
Expands into Germany with $244 million logistics property
portfolio acquisition.
Secures 92 percent interest in Summit Oaks, California USA
a $65 million suburban office development project.
July 2007
Acquires $190 million industrial portfolio and development options in San Antonio, Texas USA.
Stage 2 DA lodged for 42,000 square metre development of Space 1 Bligh û Sydney NSW.
August 2007
Announces disposal of five retail properties to DWPF.
Announces 50 percent disposal of Coles chilled distribution
centre to the AXA Mandate.
DB RREEF Trust Annual Report 2007 3
international reach
delivering on strategy
$5.7bn
$4.1bn
$3.7bn
market
capitalisation
2005
2006
2007
distributions
cents per security
11.3cents
up 2.7 percent
5 countries
3 continents
delivering on
STRATEGY
with selected international
ACQUISITIONS
developing a
DIVERSIFIED
PORTFOLIO
expanding into
EUROPE
4 DB RREEF Trust Annual Report 2007
$1.97
$1.47
$1.37
security price
growth
2005
2006
2007
total
shareholder return
42.6%
year ending 30 June 2007
growing
NORTH AMERICAN
portfolio
new acquisitions
$457 MILLION
24 ASSETS
4.23 MILLION
SQUARE METRES
of net lettable area
Top to bottom: Governor Phillip Tower and Governor Macquarie Tower, Sydney NSW; 30 The Bond, Sydney NSW; Duisburg, Germany
DB RREEF Trust Annual Report 2007 5
portfolio highlights
INDUSTRIAL PROPERTIES (162)
OFFICE PROPERTIES (30)
RETAIL PROPERTIES (6)
United States of America
Australia
New Zealand
View from Governor Phillip Tower and Governor Macquarie Tower, Sydney NSW
6 DB RREEF Trust Annual Report 2007
$9.5bn
$8.3bn
$7.0bn
2005
2006
2007
Total assets
$9.5 billion
n
198 properties
n
$9 BILLION portfolio value
n
96.7% portfolio occupancy
n
5.3 YEARS average lease duration
France
Germany
n
$864.6 MILLION valuation increases
n
1,152,000 square metres leased
n
4,992 tenants
DB RREEF Trust Annual Report 2007 7
letter from
the chair
DB RREEF Head Office, 343 George Street, Sydney NSW
I AM PLEASED TO PRESENT THE THIRD
ANNUAL REPORT FOR DB RREEF TRUST
FOR THE YEAR ENDED 30 JUNE 2007
Dear Investor
DB RREEF Trust has continued to deliver strong performance, adding value and creating future
income streams across the portfolio. The DB RREEF group is one of Australia’s largest integrated
property groups with total funds under management at 30 June 2007 of approximately
$13.6 billion, an increase of 15 percent during the period. DB RREEF Trust comprises over
$9 billion of direct property assets in Australia, New Zealand, the United States and Europe.
The third party portfolio comprises $4.6 billion of assets in Australia and New Zealand.
Key highlights for the year included:
n
n
n
n
n
continued active management of the portfolio leading to excellent results in operating
income, occupancy, lease durations and revaluations
further expansion of the portfolio with strategic acquisitions and commitments in Australia,
North America and Europe for a total of $1.1 billion
creation of significant development opportunities in Australia and internationally
with $2.2 billion in the development pipeline
solid growth in third party funds under management, up $667 million
subsequent to year end, the Trust announced its intention to dispose of the 50 percent
interest in five retail properties to the group’s unlisted platform, allowing DB RREEF Trust
to concentrate on office and industrial
On behalf of the Board, I would like to thank you for your support over the past 12 months,
which delivered total shareholder return of 42.6 percent, comparing favourably to the industry
benchmark1 of 25.9 percent. I look forward to reporting back to you next year on the continuing
growth and development of DB RREEF Trust.
Yours sincerely
Christopher T Beare
Chair
17 September 2007
1 S&P/ASX 200 Property Accounting Index.
DB RREEF Trust Annual Report 2007 9
chief
executive
officer’s report
View from Governor Phillip Tower and Governor Macquarie Tower, Sydney NSW
THE YEAR ENDING 30 JUNE 2007 HAS BEEN ANOTHER STRONG
YEAR FOR DB RREEF TRUST WITH FURTHER IMPROVEMENTS
IN ALL KEY FINANCIAL AND PORTFOLIO INDICATORS
delivering on strategy – a solid group
performance
DB RREEF Trust has two core activities: the management
of its direct property portfolio and its third party funds
management business. During the year, we continued to
actively manage and develop these activities to maximise
and improve total returns to security holders.
Our quality portfolio continued to deliver excellent results
with further increases in property operating income to
$693 million, occupancy levels strong at 96.7 percent
and average lease durations at 5.3 years overall, which
contributed to significant valuations uplift of $864.6 million.
We have secured $1.1 billion of domestic and international
property portfolio acquisitions and commitments in Australia,
France, Germany and North America. In addition, we have
continued to grow the development pipeline in Australia and
North America with more than 1,340,000 square metres of
new space currently planned for development or under
construction, providing substantial new lettable area for
future growth.
In total, assets under management grew by 15 percent to
$13.6 billion maintaining DB RREEF Trust’s position as the
sixth largest listed property trust, the market leader in office
space, and the third largest provider of industrial space
in Australia.
DB RREEF Trust portfolio at a glance
financial results
Financial results improved over the period. Net profit for
the year was $1,211 million (up 13.5 percent). This was
based on total property revenue of $693 million, representing
a 4.5 percent increase and $864 million in revaluations of
property investments. Total assets at 30 June 2007 were
$9,487 million, an increase of 14.5 percent over last year.
Net tangible assets (NTA) per stapled security was $1.82
representing an increase of 29 cents per security or
19 percent since 30 June 2006.
Total distributions for the year were 11.3 cents per stapled
security (as forecast), of which 35.9 percent represents tax
deferred income.
Key financial results are summarised in the table below:
30 June
2007
30 June
2006
30 June
2005
Total income ($ million)
EBIT ($ million)
Profit after tax ($ million)
Net profit attributable to
security holders ($ million)
Funds under management
($ million)
NTA per security ($)
Gearing ratio (%)
Distribution ($ million)
Distribution (cents/security)
1,648
1,420
1,211
1,463
1,253
1,066
1,169
1,010
9,027
1.82
35.6
324.6
11.3
7,995
1.53
38.3
306.3
11.0
810
605
467
396
6,597
1.28
39.0
281.3
10.5
Funds under management
($ billion)
Area leased during year
(‘000 square metres)
Occupancy (%)
Development pipeline
($ billion)
30 June
2007
30 June
2006
30 June
2005
acquisitions
9.0
7.9
7.0
1,152
96.7
730
96.1
470
93.1
2.2
1.3
0.9
DB RREEF has expanded its domestic and international
portfolio through acquisitions in Australia, North America
and Germany of approximately $457 million, as well as future
commitments for properties of approximately $633 million.
DB RREEF Trust Annual Report 2007 11
chief executive officer’s report (continued)
L–R: DB RREEF Industrial Estate, Laverton North VIC; Space 1 Bligh Street û Sydney NSW; 45 Clarence Street, Sydney NSW; 13755 Hutton Drive, Dallas TX
Consistent with our international expansion strategy and
following on from DB RREEF Trust’s entry into Europe in
July 2006, we expanded into Germany in December 2006
with the acquisition of a $244 million portfolio of 14 logistics
properties. In December 2006, DB RREEF secured a
92 percent interest in Summit Oaks, an office development
project in California USA, with an estimated value
on completion of $59 million.
In June 2007, DB RREEF Trust acquired in Orlando, Florida,
the first distribution centre completed under the Whirlpool
investment program for $30 million.
Since year end, DB RREEF Trust continued its acquisition
activity in the US acquiring an industrial portfolio for $70 million
and a $121 million development program in San Antonio,
Texas. In doing so, DB RREEF entered into a joint venture
with an experienced local developer which includes an option
to access future development opportunities in the area.
These international acquisitions were secured with assistance
from our strategic partner RREEF and take our international
weighting to 20 percent. These acquisitions are also in line
with DB RREEF Trust’s strategy to further enhance our
industrial and office development pipeline – building and
delivering quality properties for our tenants.
development pipeline
DB RREEF Trust completed a number of developments
in the period and six developments were underway as at
30 June 2007. When completed, these developments will
add more than 167,457 square metres of net lettable area
to DB RREEF Trust’s portfolio with an estimated value of
approximately $393 million over the next five years.
In addition, DB RREEF Trust has 11 future developments
planned, with a combined estimated value of more than
$1.8 billion, bringing the total development pipeline to
approximately $2.2 billion.
DB RREEF Trust will, where appropriate, seek to realise
development value created and return an appropriate
portion to investors.
funds management
As at 30 June 2007, DB RREEF managed more than
$13.6 billion of assets, an increase of $1.8 billion or
15 percent since 30 June 2006. DB RREEF’s third party
funds under management increased by 18 percent or
$667 million to $4.6 billion.
Third party funds management continued to deliver a strong
investment performance, with the combined total return
over five years ending 30 June 2007 of 14.5 percent, as
compared to the benchmark of 14.2 percent.
disposal of retail portfolio
Subsequent to 30 June 2007, DB RREEF Trust announced
its intention to dispose of five of six retail properties to its third
party funds management business. This transaction is expected
to complete in October 2007 and will enable DB RREEF Trust to
concentrate on the industrial and office sectors, both in Australia
and internationally. It provides significant balance sheet strength
by recycling capital to deliver improved and increasing value for
security holders into the future.
diversified and actively managed debt profile
DB RREEF Trust continues to maintain a strong balance sheet
and diversified debt profile, which is supported by a Standard
& Poors long-term corporate credit rating of BBB+.
DB RREEF Trust’s overall level of debt is $3.4 billion, which
represents gearing of 35.6 percent. This is a reduction from
38.3 percent at 30 June 2006 and continues to be below
DB RREEF Trust’s long-term targeted gearing range of
12 DB RREEF Trust Annual Report 2007
2008 strategic focus
Looking forward, the primary objective of DB RREEF Trust
is to continue to deliver superior performance and enhanced
returns to security holders. We plan to achieve this through
focusing on our core areas of operation and expertise in the
office and industrial sectors.
We plan to further expand in Australia and overseas through
acquisitions and the expansion of our $2.2 billion development
pipeline. This will primarily be undertaken in markets where
we can:
n
n
n
build scale
take advantage of favourable market conditions
deliver value and increased returns
DB RREEF operates an integrated platform as an owner,
manager and developer of quality properties. We have an
experienced team of property professionals offering property
management, asset management and development services
to our tenants.
Our strategy is to continue to deliver properties and services
that meet and exceed our tenants’ needs while leveraging
our integrated platform to recycle assets, maximise
occupancy, increase rental income and grow fees and profits
from development activities and funds management.
In summary, we made great progress last year and now have
an even stronger platform from which to deliver future growth
and increased returns to security holders.
Based on our strategy, we expect that distribution growth
in 2008 will be in excess of five percent.
Victor P Hoog Antink
Chief Executive Officer
17 September 2007
40 to 45 percent, providing the Trust with substantial
capacity to fund future investment opportunities.
During the 12 month period, DB RREEF Trust further
diversified its sources of debt by successfully issuing a total
of $450 million medium term notes (MTNs) into the domestic
debt capital market. The two issues received a strong
response from investors and each was subsequently
increased from the original offer size to meet investor
demand. Over the year, DB RREEF Trust took the opportunity
to renegotiate the majority of its unsecured bank debt
facilities. This initiative has significantly reduced DB RREEF
Trust’s refinancing risk.
strong financial risk management profile
DB RREEF Trust continues to maintain a prudent financial
risk management profile. A high proportion of DB RREEF
Trust’s debt is hedged (over 90 percent at the 2007 financial
year end) and the weighted average duration of these hedges
is approximately six years with the weighted average cost of
debt at 5.7 percent, inclusive of margins and fees.
This profile provides significant protection to security holders
in a rising interest rate environment. DB RREEF Trust seeks
to match the currency of its investments with the currency
of its debt, providing substantial protection to security holders
from adverse movements in net tangible assets due to
changes in foreign exchange rates.
Residual net foreign currency earnings are substantially
hedged for periods up to five years.
corporate responsibility and sustainability
Sustainability and climate change issues are increasingly
at the forefront of the property sector and wider business
community. It has been almost a decade since the group
commenced its first environmental management programs
and over the years we have invested substantial financial
and management resources to improve our understanding
of and develop initiatives to address sustainability on a
group-wide basis.
DB RREEF continues to lead the way in corporate
responsibility and sustainable practices and we have
progressed a number of new initiatives over the year.
We recognise that there is always more to do and we
are committed to continually reviewing and improving our
activities, maximising resource efficiencies, minimising our
environmental footprint and future-proofing our properties.
This year, in order to be more transparent in our reporting
and communications in this area, we have adopted the Global
Reporting Initiative (GRI) G3 reporting framework and, for the
first time, we have prepared a stand alone Corporate
Responsibility and Sustainability report. A summary of this
report can be found on pages 38 to 57.
DB RREEF Trust Annual Report 2007 13
our
portfolio
portfolio overview
australia/new zealand – office, retail, industrial
north america – industrial
europe – industrial
Australia Square, George Street, Sydney NSW
ACTIVE PORTFOLIO MANAGEMENT DELIVERING
CONSISTENTLY STRONG PERFORMANCES
portfolio overview
During the year, DB RREEF Trust’s direct property portfolio
has delivered strong results across all sectors: office,
industrial and retail.
In the period, we continued to actively manage the portfolio
and build stronger relationships with our customers,
increasing tenant retention and improving occupancy to
a record high of 96.7 percent.
A number of refurbishments and upgrades have been
completed to ensure the portfolio meets the needs of our
customers now and into the future. This has resulted in
significant leasing success in the period with total new leases,
lease renewals and heads of agreement of 1,152,000 square
metres which represents more than 36 percent of the
portfolio.
This active approach to managing the portfolio, together with
sound market fundamentals, ensured our portfolio continued
to deliver value with an increase in valuations of
$864.6 million, taking the total portfolio value to $9 billion.
looking forward
The outlook is positive for both the office and industrial
sectors of the markets in which we operate. The disposal of
our retail portfolio to the unlisted platform enables continued
focus on growing our traditional asset classes of office and
industrial and maximises the benefits of our integrated
platform. The retail transaction will increase the third party
funds under management by approximately $1 billion.
direct property portfolio as at 30 June 2007
Property type
Property
value
Area
occupied
Office/Car parks – AUS
Retail – AUS
Industrial – AUS
Industrial – USA
Industrial – Europe
Total
($ million)
4,045.8
1,204.5
1,760.9
1,452.9
344.0
8,808.0
(%)
99.0
99.9
98.3
95.2
92.8
96.7
Average
lease term
by income
(years)
6.2
5.5
4.7
3.4
4.1
5.3
direct property portfolio value by sector and geography
as at 30 June 2007
$8,808 million*
Office AUS/NZ
Industrial AUS
Industrial US
Retail AUS
Industrial Europe
46%
20%
16%
14%
4%
* excludes cash
net property income as at 30 June 2007
Ben Lehmann
Fund Manager, DB RREEF Trust
$693 million*
Office AUS/NZ
Industrial AUS
Industrial US
Retail AUS
Industrial Europe
45.2%
21.5%
20.1%
10.5%
2.7%
* excludes cash
DB RREEF Trust Annual Report 2007 15
our portfolio – australia/new zealand
office
47,167m2
2.3% port/area
$390m value
5.6% portfolio
1 property
industrial
4,703m2
0.2% port/area
$11m value
0.2% portfolio
1 property
retail
79,992m2
4.0% port/area
$277m value
4.0% portfolio
1 property
office/carpark
0m2
0.0% port/area
$39m value
0.6% portfolio
1 property
industrial
29,059m2
1.4% port/area
$49m value
0.7% portfolio
2 properties
retail
23,422m2
1.2% port/area
$165m value
2.4% portfolio
1 property
office/carpark
453,756m2
22.4% port/area
$2,710m value
39.0% portfolio
18 properties
industrial
508,019m2
25.1% port/area
$1,032m value
14.8% portfolio
26 properties
retail
126,341m2
6.2% port/area
$523m value
7.5% portfolio
2 properties
office
22,524m2
1.1% port/area
$109m value
1.6% portfolio
2 properties
industrial
72,115m2
3.6% port/area
$26m value
0.4% portfolio
1 property
retail
62,650m2
3.1% port/area
$174m value
2.5% portfolio
1 property
office/carpark
108,654m2
5.4% port/area
$607m value
8.7% portfolio
6 properties
industrial
460,543m2
22.7% port/area
$646m value
9.3% portfolio
9 properties
retail
5,859m2
0.3% port/area
$67m value
1.0% portfolio
1 property
office portfolio
The Australian office markets are well into the growth phase
of the cycle. The portfolio has been positioned, both in its
stabilised assets and its development pipeline, to take
advantage of this growth.
The office portfolio contributed $239 million
(2006: $231 million) in net property income to DB RREEF
Trust, an increase of 3.4 percent over the year to 30 June
2006 including comparable property income growth of
5.3 percent. This contribution represents 45.2 percent
(2006: 44.3 percent) of total net property income for the year.
The office portfolio is valued at $4 billion, an increase of
11 percent over the 2006 book value of $3.6 billion. This is
due to increased valuations, capital expenditure and the
disposal of a 50 percent share in The Zenith, Chatswood NSW.
The office portfolio comprises over 508,000 square metres
of lettable area with 685 tenants in 24 properties and five
car parks.
As the market leader in high quality offices in Australia, our
customers are predominantly major Australian and
international companies and government bodies. Premium
grade accommodation comprised 22 percent of the office
portfolio by area, 64 percent A-grade, and the remainder
B-grade and associated retail.
Leases totalling 11 percent (72,000 square metres) of the
office portfolio were secured during the period. All office
portfolio fundamentals are tracking well with occupancy and
lease durations increasing.
Our high quality portfolio continued to deliver value with an
increase in valuations of 12.8 percent, up $452 million.
16 DB RREEF Trust Annual Report 2007
POSITIONED TO TAKE
ADVANTAGE OF GROWTH
disposals
The following disposal was completed during the year:
n
The Zenith, Chatswood NSW – A 50 percent interest was
sold for $126.3 million in January 2007. The Zenith was
valued at 31 December 2006 at $250 million resulting in
a valuation uplift of $31.5 million. This disposal further
diversifies the portfolio’s assets on Sydney’s North Shore.
developments and refurbishments
The office portfolio has four developments in planning with an
estimated value on completion of more than $1 billion. These
developments are consistent with DB RREEF Trust’s strategy
to develop, own and manage premium and A-grade office
buildings across Australia, designed to meet the exacting
needs of our major corporate and government tenants.
DB RREEF made significant progress with its major office
developments during the year. These include:
n
123 Albert Street, Brisbane QLD – In April 2007,
DB RREEF lodged a development application with
the Brisbane City Council for a 38,600 square metre,
high-quality, A-grade office tower in the heart of the
Brisbane CBD. The proposed development will replace
the existing car park on the corner of Albert and
Charlotte Streets.
The proposed building will have 515 car spaces and
23 levels of office space with some of the largest floor
plates in the Brisbane CBD, with the low rise floors of
about 1,570 square metres and high rise floors up to
1,630 square metres.
Consistent with DB RREEF Trust’s long-term commitment
to sustainability, the building will deliver a 5 to 6 Star
Green Star rating and an ABGR of 4.5 to 5 Star. The
office tower is estimated to be valued at $390 million on
completion in 2010 and construction could commence
later this year.
n
Victoria Cross, North Sydney NSW – Development
approval was received in May 2007 for an extension to the
lower five levels of the building to provide an additional
4,700 square metres. Completion is expected in late 2008
at an estimated value on completion of $29 million.
office
19,851m2
1.0% port/area
$132m value
1.9% portfolio
1 property
The main contributors to the valuation increase were:
n
n
n
240 St George’s Terrace, Perth WA (up 24 percent)
201 Elizabeth Street, Sydney NSW (up 29 percent)
Garema Court, Canberra ACT (up 21 percent)
The weighted average capitalisation rate of the office portfolio
now stands at 6.05 percent.
In terms of geographical spread, 70 percent of properties by
value are located in New South Wales, 14 percent in Victoria,
10 percent in Western Australia and the remainder in the
Australian Capital Territory, Queensland and New Zealand.
Top to bottom: One Margaret Street, Sydney NSW; Westfield Mount Druitt, Mount Druitt NSW;
145–151 Arthur Street, Flemington NSW
DB RREEF Trust Annual Report 2007 17
our portfolio – australia/new zealand (continued)
case study
Space 1 Bligh û Sydney
In July 2007 we lodged the Stage 2 development application for Space 1 Bligh, progressing plans to
develop Australia’s first double-skin façade high rise office building on one of the nations most
prominent sites near Sydney’s Circular Quay. The transparent, elliptical-shaped premium grade office
building combines world leading design, innovation, technology and sustainability features that will
provide occupants with the very latest in high quality workplace amenity. Large, flexible floor plates of
approximately 1,600 square metres will provide the highest levels of access to natural light and cater to
the most exacting of major corporate tenant needs. Twin off-set cores, a full height atrium and ceilings
of 2.85 metres will enhance the space and air flow, providing horizontal and vertical connectivity.
The building has been designed to achieve a world’s best practice 6 Star Green Star rating and a
5 Star Australian Building Greenhouse Rating (ABGR). The key sustainability feature of the building
is the fully glazed double-skin façade – a first in Australia – which will also maximise the panoramic
Sydney Harbour views and access to sunlight.
Space 1 Bligh is estimated to be valued at $700 million1 on completion in late 2010/early 2011 and
construction is expected to commence in early in 2008.
1 DB RREEF Trust’s interest is 68 percent, the balance is owned by DB RREEF Wholesale Property Fund (DWPF).
n
105 Phillip Street, Parramatta NSW – Following approval
of the development application in August 2006, DB RREEF
Trust commenced pre-commitment marketing, targeting
larger corporate tenants. The office development is
expected to take two years to complete and is estimated
to be valued at approximately $120 million.
n
Space 1 Bligh û Sydney NSW – See case study above.
As a result, the office portfolio occupancy increased to
99.0 percent at 30 June 2007 (2006: 98.2 percent),
with an average lease duration by income of 6.2 years
(2006: 6.0 years), excluding Space 1 Bligh û Sydney.
The office lease expiry profile is well diversified and the
strategy to extend lease duration without concentration of
expiries in any given year is being successfully implemented.
leasing
rent reviews
New leases and renewals including heads of agreement
were negotiated on more than 72,000 square metres,
or 11 percent of the total office portfolio in the year.
australian/new zealand office lease expiry profile
as at 30 June 2007
Leases covering 78 percent of the office portfolio’s property
income were subject to rent reviews, achieving an average
fixed rental increase of four percent. In the coming year to
30 June 2008, approximately 20 percent of the office
portfolio’s income will be exposed to the market and another
73 percent will be subject to defined increases.
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8
.
7
%
4
.
6
%
0
.
1
%
5
0
.
Vacant
< 1 year
< 2 years
< 3 years
< 4 years
< 5 years
< 6 years
< 7 years
< 8 years
< 9 years
< 10 years
> 10 years
Area
Income
18 DB RREEF Trust Annual Report 2007
retail portfolio – australia
The retail portfolio contributed $55 million in net property
income to DB RREEF Trust providing comparable growth of
6.7 percent on a like for like basis. This contribution
represents 10.4 percent (2006: 10.9 percent) of total
net property income for the year to 30 June 2007.
Moving Annual Turnover (MAT) for the 12 months was up
7.6 percent to $1.6 billion. Occupancy remains robust at
99.9 percent (2006: 99.4 percent) and the average lease duration
by income is 5.5 years (2006: 5.1 years).
The retail portfolio is valued at $1.2 billion (2006: $915 million),
an increase of 31.6 percent over 2006 book value with an
increase in valuations of $214 million being a major contributor
to this result.
At 30 June 2007, the retail portfolio comprised in total
approximately 291,930 square metres of net lettable area in
six properties with over 1,124 tenants. The retail portfolio is
diversified across Australia with properties in New South
Wales, Victoria, Queensland, South Australia and Western
Australia, and provides a balance of secure income streams
and development potential.
developments and refurbishments
There are two major development projects currently in the
construction phase:
n
North Lakes, Brisbane QLD – The extension of North
Lakes commenced in September 2006 with the addition
of Myer, Woolworths, Big W, 80 specialty shops and
ancillary car parking, increasing the existing centre to
60,931 square metres of gross lettable area. The
expansion takes advantage of an increasing population in
one of the fastest growing areas in South East Queensland.
Phase 1 is due for completion in November 2007 and
phase 2 (Myer) is due for completion in June 2008.
n
Plenty Valley Town Centre, VIC – Construction of the new
Plenty Valley Town Centre commenced in November 2006
and includes the addition of Target, Safeway, Kmart and
ALDI, as well as an additional 135 specialty shops and
ancillary car parking. The project will add approximately
47,720 square metres of retail space, creating a total centre
of 53,862 square metres and is estimated to be completed
in June 2008.
revaluations
Revaluations resulted in an increase in asset value of the retail
portfolio of $215 million or 22 percent over book value.
Valuations of Plenty Valley and North Lakes increased
significantly due to the current development programs.
The weighted average capitalisation rate of the retail portfolio
now stands at 5.6 percent.
rent reviews
Renewals over existing tenancies totalled 90 deals achieving
37 percent above passing rental.
New leases over existing vacancies and newly created
tenancies totalled 179 deals and achieved nine percent
above budget.
leasing
During the year, new leases, lease renewals and heads
of agreement were secured on 269 leases, accounting for
over 28,681 square metres.
visitations
More than 49.1 million visitations were made to the centres
representing a 0.6 percent increase over the previous year.
Spend per visit averaged $33.44 across the six centres, an
increase from $31.27 in 2006. Occupancy cost ratios for all
centres are at acceptable levels.
Westfield Mount Druitt, Mount Druitt NSW
DB RREEF Trust Annual Report 2007 19
our portfolio – australia (continued)
australian retail lease expiry profile
as at 30 June 2007
%
9
.
2
1
%
8
.
6
%
3
.
2
1
%
0
.
7
%
8
.
1
1
%
9
.
5
%
9
.
2
1
%
0
.
7
%
5
.
1
1
%
4
.
0
1
%
6
.
6
%
3
.
6
1
%
1
.
0
%
4
.
0
%
3
.
8
%
1
.
8
%
3
.
4
%
2
.
4
%
6
.
1
%
4
.
2
%
4
.
3
%
7
.
1
%
1
.
1
3
%
0
.
3
1
Area
Income
Vacant
< 1 year
< 2 years
< 3 years
< 4 years
< 5 years
< 6 years
< 7 years
< 8 years
< 9 years
< 10 years
> 10 years
turnover
The moving annual turnover (MAT) in the retail portfolio for the year is summarised in the table below:
Westfield West Lakes Shopping Centre, West Lakes SA
Total centre MAT
Whitford WA
West Lakes SA
North Lakes QLD
Plenty Valley VIC
Mt Druitt NSW
Hurstville NSW
Total
MAT
($ per annum)
Change
(%)
MAT ($ per
square metre)
Change
(%)
Specialty occupancy
cost ratio (%)
418,174,847
10.2
302,259,878
144,768,865
58,934,742
329,000,541
390,932,650
1,644,071,523
5.1
6.0
8.4
11.6
4.1
7.6
6,724
5,391
6,464
9,992
5,928
6,386
6,243
5.8
5.0
11.6
7.2
–2.0
3.4
4.2
13.2
13.7
11.0
8.4
16.0
18.4
15.1
post-balance date event
disposal of retail assets to DWPF
In August 2007, DB RREEF Trust entered into a conditional
agreement to dispose of its 50 percent interest in five retail
shopping centres to DB RREEF Wholesale Property Fund
(DWPF), for an estimated consideration of $927.75 million
and an average market cap rate of 5.6 percent.
Estimated value
($ million)
Westfield North Lakes Shopping Centre QLD
Westfield Hurstville NSW
Westfield Mt Druitt NSW
Westfield West Lakes Shopping Centre SA
Plenty Valley Town Centre VIC
Total
164.50
307.50
215.00
174.00
66.75
927.75
The consideration reflects the market value of the properties
as at 30 June 2007, assuming those properties that are in
development were completed and adjusted for development
cost that has not been incurred before 30 June 2007.
Development expenditure incurred since 30 June 2007 to
settlement date will be added to the purchase consideration.
The disposal to DWPF represents the realisation of a strategic
initiative to concentrate DB RREEF Trust’s Balance Sheets on
developing and expanding its industrial and office activities in
Australia and internationally.
Consistent with strategy, the transaction also grows
DB RREEF Trust’s third party funds under management and
demonstrates the benefits of operating an integrated platform.
20 DB RREEF Trust Annual Report 2007
industrial portfolio – australia
STABLE INDUSTRIAL MARKETS SUPPORTING
STRONG OCCUPANCY AND LEASING ACTIVITY
The Australian industrial portfolio contributed $114 million
(2006: $110 million) or 21.5 percent (2006: 21.9 percent)
to total net property income. As a result of significant leasing
activity, occupancy remains strong at 98.3 percent
(2006: 99 percent) with the average lease duration at
4.7 years by income (2006: 4.8 years). The Australian
industrial portfolio is valued at $1.8 billion following
revaluations through the year of $82 million.
acquisitions
The Australian industrial portfolio acquired two industrial
development sites in the year further increasing the
DB RREEF Trust development pipeline.
n
Wicks Road, North Ryde NSW – In November 2006,
DB RREEF Trust acquired a 50 percent interest in a
development site in North Ryde for $27 million, plus
acquisition costs, in partnership with the DB RREEF
Wholesale Property Fund.
The acquisition takes advantage of a lift in the investment
potential of North Ryde and forms part of DB RREEF
Trust’s strategy to capitalise on this growing North Shore
market while further enhancing our development pipeline.
Development options are being considered to transform
the site into a state-of-the-art office park over a number
of stages.
n
Doherty’s Road, Laverton North VIC – DB RREEF Trust
acquired a $32 million land parcel adjacent to DB RREEF
Industrial Estate, Laverton North, on 1 November 2006.
This acquisition provides a strategic extension to the
estate and will enable DB RREEF to leverage off the
infrastructure already developed at Laverton North.
disposals
During the year DB RREEF Trust sold three industrial assets:
n
n
n
121 Evans Road, Salisbury QLD for $24 million
27–33 Frank Street, Wetherill Park NSW for $16 million
706 Mowbray Road, Lane Cove NSW for $29 million
Subsequent to year end, DB RREEF Trust entered into a
contract to sell 50 percent of the completed Coles Chilled
Distribution Centre at Laverton North to the AXA Mandate,
enabling DB RREEF Trust to capitalise on value created
through the development process.
developments
During the year, six developments were completed in the
Australian industrial portfolio at a value of approximately
$173 million. An additional development valued at
$34 million is currently under construction. A further five
future developments are planned with an estimated value
on completion of $645 million, bringing the total industrial
development pipeline to approximately $680 million.
L–R: 1 Foundation Place, Greystanes NSW; Axxess Corporate Park, Mount Waverly VIC
DB RREEF Trust Annual Report 2007 21
our portfolio – australia (continued)
australian industrial lease expiry
profile as at 30 June 2007
%
4
.
9
2
%
2
.
9
1
%
6
.
3
1
%
6
.
2
1
%
8
.
4
1
%
1
.
2
1
%
8
.
1
1
%
3
.
8
%
9
.
8
%
2
.
8
%
7
.
1
%
4
.
1
%
2
.
1
1
%
0
.
0
1
%
7
.
7
%
6
.
5
%
5
.
5
%
7
.
3
%
8
.
2
%
9
.
2
%
0
.
2
%
9
.
0
%
4
.
2
%
1
.
3
Vacant
< 1 year
< 2 years
< 3 years
< 4 years
< 5 years
< 6 years
< 7 years
< 8 years
< 9 years
< 10 years
>10 years
Area
Income
Pound Road West, Dandenong VIC
completed
future developments
Pound Road West, Dandenong South VIC
n
L’Oréal Australia – expansion work of 7,224 square
metres was completed in August 2006 and is valued
at $9 million.
DB RREEF Industrial Estate, Laverton North VIC
n
n
Wrightson Seeds Australia Pty Limited – construction of a
purpose built distribution centre valued at $7 million was
completed in October 2006.
Coles Group Limited – construction of a $116 million
42,954 square metre chilled distribution centre was
completed in April 2007. (Subsequent to balance date,
a 50 percent interest was sold to the AXA Mandate for
$58 million).
underway
n
DB RREEF Industrial Estate, Laverton North VIC –
Construction is underway for a 53,000 square metre
distribution centre with an estimated value of $34 million.
The asset is pre-leased to Fosters Limited for 10 years
and is scheduled for completion in September 2007.
n
n
n
Doherty’s Road, Laverton North VIC – Master planning
has commenced on this staged development project
including density analysis, infrastructure planning and
preliminary marketing. Rezoning of the site for industrial
use was approved by Council and it is expected the
rezoning will be completed by the end of this year.
Estimated value on completion is $280 million.
Wicks Road, North Ryde NSW – This site is currently
undergoing a Development Control Plan review through
Ryde Council and tenders have been received for a staged
development, estimated to be valued at $200 million.
Pound Road, West Dandenong VIC – Development of a
purpose built powder coating facility for Orica commenced
construction in July 2007 with completion expected in
December 2007. Estimated value on completion is
$10 million.
In addition, we have two future development projects
located at Axxess Corporate Park, Mount Waverley VIC
and 3 Brookhollow Avenue, Baulkham Hills NSW.
22 DB RREEF Trust Annual Report 2007
L–R: DB RREEF Industrial Estate, Laverton North VIC; 11 Talavera Road, Macquarie Park NSW;
114–120 Pittwater Road, Brookvale NSW
refurbishments
revaluations
Revaluations resulted in an increase in asset value of the
Australian industrial portfolio of $82 million or five percent
over book value. Contributors to the uplift were:
n
n
n
n
114–120 Pittwater Road, Brookvale NSW (up 12.6 percent)
3 Brookhollow Avenue, Baulkham Hills NSW
(up 21.1 percent)
Pound Road West, Dandenong VIC (up 18.8 percent)
25 Donkin Street, South Brisbane QLD (up 11 percent)
The weighted average capitalisation rate of the Australian
industrial portfolio now stands at 7.25 percent.
Refurbishments are underway at 2 Minna Close, Belrose NSW
and 114–120 Old Pittwater Road, Brookvale NSW. Plans
have been approved to refurbish tenancies on expiry at
10–16 South Street, Rydalmere NSW.
leasing
The Australian industrial portfolio has 1,162,586 square
metres of net lettable area. New leases and renewals
including heads of agreements were negotiated over more
than 199,437 square metres or 17 percent of the Australian
industrial portfolio in the year to 30 June 2007.
The Australian industrial portfolio occupancy remained strong
at 98.3 percent (2006: 99.2 percent), with an average lease
duration (by income) of 4.7 years (2006: 4.8 percent).
rent reviews
Leases covering 7.6 percent of the Australian industrial
portfolio’s property income were subject to market rent
reviews in the period, achieving an average rental increase
of 4.8 percent. Defined rent reviews accounted for
60.9 percent of the industrial portfolio’s property income
with an average rental increase of 3.5 percent.
In the coming year to 30 June 2008, approximately
20.8 percent of the Australian industrial portfolio’s income
will be exposed to the market and another 75.7 percent
will be subject to defined increases.
DB RREEF Trust Annual Report 2007 23
our portfolio – north america
Seattle
Washington
California
Valencia
Los Angeles
Riverside
San Diego
Arizona
Phoenix
Seattle
531,032sf
2.5% port/area
US$38m value
3.1% port/value
3 properties
Valencia
0sf
0.0% port/area
US$8m value
0.6% port/value
1 property
Los Angeles
1,050,442sf
5.0% port/area
US$109m value
8.9% port/value
4 properties
Riverside
1,543,375sf
7.3% port/area
US$112m value
9.1% port/value
6 properties
Minneapolis
1,118,468sf
5.3% port/area
US$65m value
5.3% port/value
8 properties
Cincinnatti/
Nth Kentucky
2,706,365sf
12.9% port/area
US$75m value
6.1% port/value
10 properties
Columbus
1,610,240sf
7.7% port/area
US$50m value
4.1% port/value
4 properties
Minnesota
Minneapolis
Massachusetts
Boston
Pennsylvania
Ohio
Harrisburg
Columbus
Baltimore
Nth Virginia
Cincinnati/
Nth Kentucky
Maryland
Kentucky
Tennessee
Memphis
North Carolina
Charlotte
Atlanta
Georgia
Florida
Orlando
Sth Florida
Dallas
Texas
San Antonio
San Diego
353,782sf
1.7% port/area
US$38m value
3.1% port/value
3 properties
Phoenix
1,782,758sf
8.5% port/area
US$90m value
7.3% port/value
11 properties
Dallas
2,271,337sf
10.8% port/area
US$110m value
9.0% port/value
18 properties
Memphis
336,080sf
1.6% port/area
US$8m value
0.6% port/value
1 property
Orlando
1,894,034sf
9.0% port/area
US$91m value
7.4% port/value
3 properties
Sth Florida
415,321sf
2.0% port/area
US$42m value
3.4% port/value
2 properties
Boston
153,369sf
0.7% port/area
US$10m value
0.8% port/value
1 property
Harrisburg
1,058,200sf
5.0% port/area
US$43m value
3.5% port/value
3 properties
Baltimore
1,419,394sf
6.8% port/area
US$102m value
8.3% port/value
9 properties
Nth Virginia
1,101,500sf
5.2% port/area
US$172m value
13.9% port/value
8 properties
Charlotte
883,176sf
4.2% port/area
US$30m value
2.4% port/value
3 properties
Atlanta
775,832sf
3.7% port/area
US$38m value
3.1% port/value
5 properties
industrial portfolio
Overall the North American industrial portfolio is performing well,
contributing $107 million (2006: $114.7 million) of net property
income to DB RREEF Trust, including comparable growth of
6.2 percent on a like for like basis. This represents 20.1 percent
(22.9 percent) of total net property income for the year to
30 June 2007.
The North American industrial portfolio is valued at $1.45 billion
(2006: $1.46 billion) following revaluations through the year
of $123 million – up 9.5 percent over book value.
Leases were agreed for 26 percent of the North American
industrial portfolio increasing occupancy to 95.2 percent
(2006: 92.5 percent) which compares favourably to the
industry benchmark of 90.7 percent.
At 30 June 2007, the North American industrial
portfolio covered more than 21,502,250 square feet
(1,997,515 square metres) of net lettable area in 98 properties,
three development sites and two land parcels throughout
18 metropolitan areas across the US with 522 tenants.
The North American industrial portfolio consists of
approximately 22.3 percent business parks, 37.2 percent
warehouse/distribution centres, 38.5 percent industrial estates,
1.4 percent office parks, and 0.6 percent land, by market value.
disposals
As indicated previously, we have now sold the Oak Park
Business Centre in Minneapolis for US$3 (A$4) million.
24 DB RREEF Trust Annual Report 2007
FURTHER EXPANSION THROUGH
DEVELOPMENTS AND ACQUISITIONS
The Whirlpool Investment Program will see DB RREEF Trust
progressively acquire 11 state-of-the-art industrial distribution
facilities in the US, Canada and Poland. Each of these
centres will be constructed on sites selected by Whirlpool,
RREEF and DB RREEF, and will be fully leased to Whirlpool
for 10 years, with four, five year options. DB RREEF Trust will
acquire each facility after Whirlpool takes occupation and the
development is complete.
In Toronto, Ontario, construction has commenced on a
750,000 square foot (69,675 square metre) distribution
centre with completion expected by early 2008. The
estimated cost of the acquisition is US$63 (A$71) million.
Site selection for further sites in the US and one in Poland
is well advanced. It is anticipated that these facilities will be
acquired by DB RREEF Trust in 2008 and 2009.
post-balance date event
n
San Antonio, Texas – DB RREEF Trust exchanged
contracts in July 2007 to acquire a portfolio of high
quality, newly constructed industrial properties for US$60
(A$70) million. In addition, the Trust entered into a joint
venture with Santa Barbara Development Services
(DB RREEF Trust 96.5 percent and Santa Barbara
Development Services 3.5 percent) to develop an
additional 95 acres (38.4 hectares) of industrial land in
two stages, valued at approximately US$101 (A$121) million.
The existing portfolio comprises seven properties
containing 10 buildings totalling approximately 1,047,000
square feet (97,269 square metres) in various locations in
San Antonio. Stage 1 of the development phase will see
eight buildings totalling approximately 660,000 square feet
(61,316 square metres) being developed over the next two
years. The land for this development phase was purchased
in July 2007. Stage 2 is an option to purchase additional
land and develop another eight buildings totalling
approximately 890,000 square feet (82,683 square metres).
This acquisition is consistent with DB RREEF Trust’s plans
to expand its international portfolio further in the industrial
and office sectors. The joint venture partnership also
provides DB RREEF Trust with exclusive access to our
joint venture partner’s development land pipeline and
provides the potential to grow through select new
developments and portfolio acquisitions with an
experienced local developer in an attractively located
growing market.
acquisitions
The North American industrial portfolio acquired a number
of properties and development sites valued at US$65 million
(A$100 million), further enhancing the DB RREEF Trust
development pipeline. The acquisitions include:
n
Orlando, Florida – DB RREEF Trust acquired the first
property through the Whirlpool program in Orlando,
Florida. This 503,504 square foot (46,776 square metre)
distribution centre has been acquired for approximately
US$25 (A$30) million plus acquisition costs on a yield
of seven percent. It has been leased to Whirlpool
Corporation for 10 years.
DB RREEF Trust also has an option to acquire an
additional 11 acres (4.5 hectares) of land that will
enable the facility to be expanded by approximately
250,000 square feet (23,225 square metres).
Top to bottom: 5823 Newton Drive, San Diego CA; 2055 Diplomat Drive Dallas TX;
Cornerstone Building, 1228 Cornerway Boulevard San Antonio TX
DB RREEF Trust Annual Report 2007 25
our portfolio – north america (continued)
case study
Atlantic Corporate Park, Sterling, Virginia
The construction of a 220,022 square foot (20,440 square metre) Class A office development
featuring two, four level office buildings with a one acre centre landscaped courtyard to connect
the two buildings, commenced in August 2006. Construction is scheduled for completion in the
first half of 2008 and its estimated value on completion is US$56 (A$66) million. DB RREEF Trust
has an 80 percent interest in this property.
Through the development of this office park we have committed to obtaining a US Green Building
Council Shell & Core Silver LEED certification. Leadership in Energy and Environmental Design
Green Building Rating System™ is the US accepted benchmark for the design, construction and
operation of high performance green buildings. LEED gives building owners and operators the tools
they need to have an immediate and measurable impact on the performance of their buildings.
LEED promotes a whole-building approach to sustainability by recognising performance in five key
areas of human and environmental health: sustainable site development, water savings, energy
efficiency, materials selection and indoor environmental quality.
For further information on this development and its sustainability features, see case study on page 55.
developments
During the year, one development was completed in our
North American industrial portfolio and three development
projects were underway, creating additional lettable area of
approximately 496,545 square feet (46,131 square metres)
with a total estimated value on completion of approximately
US$114 (A$134) million. In addition, the North American
industrial portfolio has two land parcels providing a further
39 acres (15.9 hectares) of development potential.
completed
n
Turnpike Distribution Centre, Medley, Florida – Located
in Miami, on the Florida Turnpike, this US$21 (A$25)
million development of a 268,119 square foot (24,908
square metre) distribution centre was completed in
May 2007. The centre is 100 percent leased.
underway
n
n
Atlantic Corporate Park, Sterling, Virginia – See case
study above.
Summit Oaks, Valencia, California – Construction on this
139,392 square foot (12,949 square metre) five storey
Class A office building is progressing and is expected to be
completed in the third quarter of 2008 with an estimated
value on completion of US$51 (A$59) million. DB RREEF
Trust has a 78 percent interest in this property.
The property is located in the Santa Clarita area, north
east of Los Angeles at the intersection of State Route 126
and the Interstate 5 Freeway, and is within a strong
growth market, close to Valencia Town Centre, 25 minutes
drive to Burbank Airport and 40 minutes to downtown
Los Angeles.
n
Beaumeade, Ashburn, Virginia – DB RREEF Trust is
undertaking a development of approximately 137,131
square feet (12,740 square metres) with an estimated
value on completion of US$18 (A$22) million and an
expected yield on the cost of approximately eight percent.
The development, which is held in the US joint venture
with CalWest, will comprise two flex-office buildings.
Building 1 will be a 78,822 square foot (7,323 square
metre) flex industrial building with a 24-foot clear height
and rear loading docks. Building 2 will be a 58,309
square foot (5,416 square metre) flex office building with
a 20-foot clear height and rear drive-in loading.
The Beaumeade development site is a 10.7 acre
(4.3 hectare) infill development site in the Beaumeade
Corporate Park in Ashburn, Virginia, and is approximately
27 miles from Washington DC. Construction is scheduled
to commence in December 2007 with completion in
early 2009.
26 DB RREEF Trust Annual Report 2007
leasing
rent reviews
Leases covering 4.5 percent of the North American industrial
portfolio’s property income were subject to market rent
reviews. Fixed rent reviews accounted for 69.1 percent of the
North American industrial portfolio’s property income and
leases with no rent reviews accounted for 26.4 percent.
In the coming year to 30 June 2008, approximately
72.3 percent of the North American industrial portfolio
will be subject to defined increases.
In the year to 30 June 2007, new leases were entered into
for over 1,772,000 square feet (164,638 square metres),
while lease renewals represented 3,558,000 square feet
(330,544 square metres). Lease expansions totalled
approximately 5,330,000 square feet (495,183 square
metres). This resulted in an increase in the occupancy rate
to 95.2 percent from 92.5 percent last year. The average
lease term to expiry is 3.4 years.
revaluations
At 30 June 2007, the North American industrial portfolio was
independently revalued totalling A$1.45 billion resulting in an
increase of A$123 million or 9.5 percent over book value.
The weighted average capitalisation rate of the North
American industrial portfolio now stands at 6.5 percent.
north american industrial lease expiry profile
as at 30 June 2007
%
2
.
4
2
%
4
.
2
2
%
2
.
4
1
%
6
.
2
1
%
7
.
6
%
8
.
4
%
6
.
5
1
%
2
.
5
1
%
5
.
2
1
%
1
.
2
1
%
6
.
0
1
%
1
.
0
1
%
8
.
5
%
0
.
5
%
1
.
3
%
7
.
3
%
1
.
3
%
0
.
3
%
3
.
5
%
6
.
4
%
3
.
1
%
2
.
1
%
5
.
1
%
4
.
1
Area
Income
Available
< 1 year
< 2 years
< 3 years
< 4 years
< 5 years
< 6 years
< 7 years
< 8 years
< 9 years
< 10 years
> 10 years
L–R: 7100 Highlands Parkway, Atlanta GA; 2210 Oak Ridge Way, San Diego CA
DB RREEF Trust Annual Report 2007 27
our portfolio – europe
Duisburg
27,072m2
7.3% port/area
¤21m value
9.5% portfolio
1 property
North Sea
Paris
FRANCE
Paris
82,700m2
22.2% port/area
¤55m value
25.5% portfolio
5 properties
Baltic Sea
Unna
27,444m2
7.4% port/area
¤17m value
8.1% portfolio
1 property
Langenweddingen
21,265m2
5.7% port/area
¤8m value
3.5% portfolio
1 property
GERMANY
Berlin
Langenweddingen
Unna
Duisburg
Düsseldorf
Langenfeld
Friedewald
Löbau
Knetzgau
Worms
Ellhofen
Berlin
10,141m2
2.7% port/area
¤11m value
5.2% portfolio
1 property
Löbau
8,950m2
2.4% port/area
¤1m value
0.6% portfolio
1 property
Friedewald
15,539m2
4.2% port/area
¤5m value
2.5% portfolio
1 property
Knetzgau
21,361m2
5.7% port/area
¤11m value
4.8% portfolio
1 property
Elhofen
67,393m2
18.1% port/area
¤38m value
17.3% portfolio
3 properties
Bay of Biscay
Lyon
Lyon
27,350m2
7.4% port/area
¤12m value
5.6% portfolio
1 property
Düsseldorf
13,781m2
3.7% port/area
¤17m value
7.9% portfolio
1 property
Langenfeld
37,314m2
10.0% port/area
¤17m value
7.6% portfolio
2 properties
Worms
11,766m2
3.2% port/area
¤4m value
1.9% portfolio
1 property
industrial portfolio
acquisitions
The European industrial portfolio contributed more than
A$14 million in net property income to DB RREEF Trust.
This contribution represents 2.7 percent of total net property
income for the year to 30 June 2007. The European industrial
portfolio is valued at A$344 million.
During the year DB RREEF Trust expanded further into
Europe through the acquisition of a German industrial
portfolio of 14 assets. This included the acquisition of the
last industrial property in the German portfolio in Düsseldorf
for €16.2 (A$27) million in June 2007.
Leases were agreed for seven percent of the European
industrial portfolio with occupancy reaching 92.8 percent
and an average lease duration of 4.1 years.
At 30 June 2007, the European industrial portfolio comprised
more than 372,209 square metres of net lettable area in 20
properties with 30 tenants. Distribution centres accounted for
100 percent of the portfolio.
revaluations
Revaluations resulted in a decrease in asset value of
$7 million or 2.3 percent over portfolio book value.
The weighted average capitalisation rate of the industrial
portfolio now stands at 7.1 percent.
28 DB RREEF Trust Annual Report 2007
ESTABLISHING OUR
EUROPEAN PRESENCE
leasing
The French industrial portfolio occupancy remains at
87.7 percent with an average lease duration of 2.2 years
(by income).
In Germany, a new lease was secured accounting for more
than 13,781 square metres or 5.3 percent of the German
industrial portfolio.
As a result, the German industrial portfolio occupancy
remains high at 94.9 percent with an average lease
duration of 5.1 years (by income).
rent reviews
Leases covering 100 percent of the French industrial
portfolio’s property income were subject to fixed rent
reviews based on the Construction Cost Index (CCI).
In the coming year to 30 June 2008, approximately
88 percent of the French industrial portfolio’s income
will be subject to a CCI review.
european industrial lease expiry profile
as at 30 June 2007
%
1
.
2
2
%
2
.
8
1
%
3
0
2
.
%
5
.
9
1
%
1
.
6
1
%
6
5
1
.
%
2
7
.
%
8
.
6
%
0
.
4
1
%
1
1
1
.
%
6
7
.
%
4
.
7
%
5
3
.
%
6
.
1
%
5
7
.
%
9
.
6
%
0
8
.
%
4
6
.
%
0
.
0
%
0
.
0
%
0
.
0
%
0
.
0
%
0
.
0
%
0
.
0
Area
Income
Available
< 1 year
< 2 years
< 3 years
< 4 years
< 5 years
< 6 years
< 7 years
< 8 years
< 9 years
< 10 years
>10 years
Top to bottom: Duisburg Germany; 21 rue du Chemin Blanc, Champlan France; Straße 6, Unna Germany
DB RREEF Trust Annual Report 2007 29
funds
management
report
overview
DB RREEF wholesale property fund
Direct mandates
DB RREEF property syndicates
Gateway, Sydney NSW
GROWTH IN FUNDS UNDER MANAGEMENT
THROUGH ACQUISITIONS AND DEVELOPMENTS
overview
DB RREEF’s funds management business has a number of
listed and unlisted property trusts, including DB RREEF Trust,
DB RREEF RENTS Trust, DB RREEF Wholesale Property
Fund (DWPF) and three property syndicates. It is also
the investment manager for two direct property mandates,
SAS Trustee Corporation (STC) and the AXA Group (AXA).
DB RREEF’s listed property portfolio comprises approximately
$9 billion of direct property assets in Australia, New Zealand,
the United States and Europe, and the unlisted property
portfolio comprises approximately $4.6 billion of
domestic assets.
In the year to 30 June 2007, the unlisted funds acquired
approximately $359 million of new assets in the office,
industrial and retail sectors. In addition, revaluations of the
assets resulted in an increased value of $330 million.
DB RREEF has established a strong presence in the Australian
unlisted property sector with over $4.6 billion of unlisted
funds under management. DB RREEF’s unlisted funds have
a strong track record of performance with average returns of
14.5 percent per annum over the five years to 30 June 2007.
DB RREEF wholesale property fund
DB RREEF Wholesale Fund (DWPF) is an open-ended,
unlisted property fund with total gross assets of approximately
$2.0 billion as at 30 June 2007. In October 2006, the
ownership of the Responsible Entity of DWPF was transferred
to DB RREEF Holdings Pty Ltd and a new independent Board
was created.
DWPF’s objective is to provide wholesale investors
(predominantly superannuation fund, life company and
non-profit group investors) with a balanced return of capital
growth and income over the medium to long-term, derived
from a diversified portfolio of high quality property assets.
DWPF’s portfolio comprises interests in 10 properties, and
on a sectoral basis, the portfolio is split 53 percent office,
42 percent retail and five percent industrial.
There are more than 120 investors in DWPF, with the top 10
unitholders representing approximately 71.4 percent of the
register. DWPF’s strategy is to invest in a portfolio of
diversified core and core plus property assets in Australia to
reduce the volatility of returns while simultaneously enhancing
returns through active asset management. For the year to
30 June 2007, DWPF delivered a total gross return of 15.00
percent. Over a three, five and 10 year period, annualised
gross returns were 17.17 percent, 14.95 percent and 12.74
percent respectively.
DB RREEF composite direct property returns
DB RREEF unlisted funds split
%
9
6
1
.
%
9
5
1
.
%
5
4
1
.
%
2
.
4
1
DB RREEF
Benchmark
3 years
5 years
Benchmark: Mercer Unlisted Property Funds Index (Median Return).
DWPF
Direct Mandates
Syndicates
55%
42%
3%
DB RREEF Trust Annual Report 2007 31
funds management report (continued)
DB RREEF property syndicates
The syndicate business consists of three unlisted trusts
representing assets valued at approximately $196 million as
at 30 June 2007. The syndicates have over 900 unitholders
and are closed ended, fixed term products.
gordon property syndicate
This syndicate owns two retail assets, the Gordon Centre
and the Gordon Village Arcade located in Gordon, NSW.
At 30 June 2007 total assets of the syndicate were
approximately $86.3 million.
northgate property syndicate
This syndicate owns the Northgate Shopping Centre at
Glenorchy in Hobart, Tasmania. At 30 June 2007 total assets
of the syndicate were approximately $91.4 million.
abbotsford property syndicate
This syndicate owns an office building in Abbotsford, Victoria.
At 30 June 2007 total assets of the syndicate were
approximately $18.5 million.
DWPF sector allocation by book value
at 30 June 2007
Office 52.9%
Retail 41.9%
Industrial 5.2%
DWPF portfolio diversification by book value
at 30 June 2007
Sydney Office 36.2%
Melbourne Office 29.6%
Brisbane Office 12.8%
Neighbourhood Retail 9.5%
Super Regional Retail 5.2%
Sub-regional Retail 3.9%
Sydney Industrial 2.7%
post-balance date event
acquisition of retail portfolio
DB RREEF Wholesale Property Fund entered into a
conditional contract to acquire five of DB RREEF Trust’s
shopping centres for an estimated consideration of
$927.75 million.
The disposal to DWPF highlights the benefits of operating an
integrated platform and is consistent with DB RREEF Trust’s
plans to expand its third party funds management platform
and expand the unlisted platform’s exposure to retail property.
direct mandates
Direct mandates comprise $2.39 billion of direct
property assets at 30 June 2007, managed on behalf of
SAS Trustee Corporation (STC) and the AXA Group (AXA)
by DB RREEF Funds Management Limited. In total the
two portfolios comprise 31 assets.
32 DB RREEF Trust Annual Report 2007
about
DB RREEF
DB RREEF Head Office, 343 George Street, Sydney NSW
DB RREEF group
30 The Bond Gateway 45 Clarence Street One Margaret Street Australia Square GPT and GMT 309–321 Kent Street
DB RREEF is one of Australia’s largest integrated property
groups, with properties in Australia, New Zealand, the
United States and Europe. DB RREEF Trust is currently the
sixth largest listed property trust and a Top 60 listed entity
on the ASX, with a total market capitalisation of approximately
$5.7 billion as at 30 June 2007.
The DB RREEF group is an integrated real estate platform
with two core operating activities:
n
a direct property portfolio of approximately $9 billion
as at 30 June 2007 and 198 properties
n
a 50 percent share in DB RREEF Funds Management
Limited, a property funds management business, the
remaining 50 percent being owned by a wholly owned
Deutsche Bank subsidiary
DB RREEF Funds Management Limited is responsible
for managing the group’s entire direct property portfolio,
as well as approximately $4.6 billion of funds under
management through three property syndicates, two
direct property mandates for STC and AXA and a
wholesale property fund (DB RREEF Wholesale
Property Fund).
DB RREEF group structure
DB RREEF Trust
Deutsche Bank
3rd Party Investors
DOT
DIT
DDF
DRO
DB RREEF
RENTS Trust
DB RREEF Finance
DB RREEF Holdings
100%
50%
50%
AXA Mandate
STC Mandate
100%
Syndicates
RENTS Investors
DRFM1
DBPS
DWPL2
DWPF
1 DRFM is the Responsible Entity of DB RREEF Trust, DB RREEF RENTS Trust and the Syndicates.
2 DWPL is the Responsible Entity of DB RREEF Wholesale Property Fund (DWPF).
34 DB RREEF Trust Annual Report 2007
DB RREEF IS ONE OF THE LARGEST
INTEGRATED PROPERTY GROUPS IN
AUSTRALIA WITH $13.6 BILLION
IN FUNDS UNDER MANAGEMENT
Above and left: DB RREEF Head Office, 343 George Street, Sydney NSW
These combine to give DB RREEF total funds under
management of approximately $13.6 billion.
At 30 June 2007, the Australian and New Zealand assets
represented approximately 81 percent of the value
of DB RREEF’s property portfolio, with US and European
assets making up the remainder.
DB RREEF’s investments are undertaken on both a wholly
owned basis and through joint ventures with co-owners.
DB RREEF has a strategic partnership with RREEF that
provides access to global real estate investment opportunities
and research expertise.
The group is committed to the long-term integration of
sustainability practices throughout its property portfolio.
DB RREEF Trust’s operating model
DB RREEF Trust Security Holders
Deutsche Bank
100%
Direct property ownership
Australia
($7.0bn)
International
($1.8bn)
Office
($4.0bn)
Industrial
($1.8bn)
Retail
($1.2bn)
US Industrial
($1.4bn)
European Industrial
($0.4bn)
100%
Developments
($2.2bn)
Australian Office
($1.0bn)
Australian
Industrial ($679m)
US Industrial
($268m)
Australian Retail
($225m)
50%
50%
Funds, asset & development
management
Direct
($9.0bn)
3rd Party
($4.6bn)
DWPF
($2.0bn)
Private Client
mandates ($2.4bn)
Syndicates
($200m)
Total Assets $9.0bn
Developments $2.2bn
(plus 3rd party development management of $800m)
FUM $13.6bn
DB RREEF Trust Annual Report 2007 35
board of directors
Christopher T Beare BSc, BE (Hons), MBA, PhD, FAICD
Chair and Independent Director Age 56
Chris Beare has a wealth of experience in technology, finance and investment. He joined investment bank Hambros
Australia in 1991, becoming head of corporate finance in 1994 and joint Chief Executive in 1995, serving until
Hambros was acquired by Société Générale in 1998. During that period Hambros was active in infrastructure, telecoms
and media. Chris remained a Director of SG Australia until 2002. From 1998, he helped form Radiata (a technology
start-up spanning Sydney and Silicon Valley). As Chair and Chief Executive Officer, he then steered it to a successful
sale to Cisco Systems in 2001. For four years prior to joining Hambros, Chris was Executive Director of the Melbourne-
based Advent Management venture capital firm. Chris has been a director of a number of companies in the finance,
infrastructure and technology sectors. Chris is both the Chair and an Independent, Non-Executive Director of
DB RREEF Funds Management Limited. He is also the Chair of the Board Nomination and Remuneration Committee
and a member of the Board Treasury Policy Committee.
Elizabeth A Alexander AM BComm, FCA, FAICD, CPA
Independent Director Age 64
Elizabeth Alexander was formerly a partner with PricewaterhouseCoopers and is currently Chairman of CSL Limited
and a Director of Boral Limited, Deputy Chair of the Financial Reporting Council, and a member of the Takeovers Panel.
Elizabeth’s previous appointments include National Chair of the Australian Institute of Company Directors, National
President of the Australian Society of Certified Practising Accountants and a member of the Australian Accounting
Standards Board. Elizabeth is also Chair of a number of Board audit committees. Elizabeth is an Independent,
Non-Executive Director of DB RREEF Funds Management Limited and Chair of the Board Audit Committee.
Barry R Brownjohn BComm
Independent Director Age 56
Barry Brownjohn is a senior consultant with Pacific Road Corporate Finance where he focuses on advising companies
on strategic acquisitions and divestments in the financial services and related technology sectors. He was formerly the
Australian Managing Director of the Bank of America. While with the Bank of America, Barry held a range of senior
management roles in various overseas locations. He is currently an Advisory Board Member of the South Australia
Financing Authority, and a Director of Citigroup Pty Limited and Bakers’ Delight Holdings Limited. Barry’s previous
appointments include Chair of the International Banks and Securities Association, and the Asia Pacific Managed
Futures Association. Barry is an Independent, Non-Executive Director of DB RREEF Funds Management Limited,
Chair of the Board Treasury Policy Committee and a member of the Board Audit Committee.
Stewart F Ewen OAM FILE
Independent Director Age 58
Stewart Ewen has had over 40 years of extensive property experience, commencing with the Hooker Corporation in
1966 where he worked throughout Australia and South East Asia. In 1983 he established Byvan Limited which, by
2000, managed $8 billion in shopping centre assets in Australia, Asia and North America. In 1999, he sold his interest
in Byvan to the Savills Group in London, remaining as Chair until 2001. As the major partner of NavyB Pty Ltd he has
completed numerous residential and commercial property projects. He has also held the position of Managing Director
of Enacon Ltd, was previously a Director of Abigroup Ltd, and was instrumental in the establishment of Converting
Technology Pty Ltd. Stewart has previously served as President of the Property Council of NSW and is a Director of the
Cure Cancer Australia Foundation and assisted in the establishment of Cell Bank Australia. Stewart is also a Director of
CapitaCommercial Trust Management Limited, Singapore. Stewart is an Independent, Non-Executive Director of
DB RREEF Funds Management Limited and a member of the Board Nomination and Remuneration Committee.
36 DB RREEF Trust Annual Report 2007
Andrew J Fay BAg Econ (Hons), ASIA
Alternate Director to Charles B Leitner III Age 42
Andrew Fay is Head of Deutsche Asset Management Australia Limited (DeAM), as well as its Chief Investment Officer
for Australia. Andrew is dually responsible for the operation of DeAM’s Australian business and the consistency of the
investment process for all asset classes within Australia. Andrew joined DeAM in 1994 after six years with the
investment division of AMP Global Investors. Andrew sits on the Investment and Financial Services Association (IFSA)
Investment Board in Australia. Andrew holds an Honours degree in Agricultural Economics from the University of
Sydney and has completed a graduate diploma with the Securities Institute of Australia. Andrew is Deutsche Bank’s
nominated Alternate Director to Charles Leitner.
Victor P Hoog Antink BComm, MBA, FCA, FAPI, MAICD
Executive Director Age 53
Victor Hoog Antink joined DB RREEF after almost nine years at Westfield Holdings where he was the Director of Funds
Management, responsible for both the Westfield Trust and the Westfield America Trust. Victor has a commerce degree
from the University of Queensland, an MBA from the Harvard Business School, is a fellow of the Australian Property
Institute, a fellow of the Institute of Chartered Accountants in Australia, and a member of the Institute of Company
Directors. Victor has over 25 years of experience in property and finance and is the immediate past president of the
Property Council of Australia. Victor is CEO and an Executive Director of DB RREEF Funds Management Limited and
a member of the Board Treasury Policy Committee. Victor is a Deutsche Bank nominated Director.
Charles B Leitner III BA
Non-Executive Director Age 47
Charles Leitner is the Global Head of RREEF, the global alternative investments operation of Deutsche Asset
Management, which manages €65.3 billion of real estate, infrastructure, private equity and hedge fund investments
worldwide. With 23 years of real estate investment experience, Charles joined RREEF in 1988 and became a partner in
the firm in 1996. In 2001 he assumed overall responsibility for RREEF’s US property acquisition business and in 2004
was appointed Global Head of RREEF. Based in New York, Charles graduated from the University of Pennsylvania with
a BA in Urban Studies/Regional Science. He is a Trustee of the Urban Land Institute, and a member of the Real Estate
Roundtable, the National Association of Office and Industrial Parks, and the Pension Real Estate Association (PREA).
Charles is a Non-Executive Director of DB RREEF Funds Management Limited and is a Deutsche Bank nominated Director.
Brian E Scullin BEc
Non-Executive Director Age 56
Following a career in government and politics in Canberra, Brian Scullin was appointed the inaugural Executive Director
of the Association of Superannuation Funds of Australia (ASFA) in 1987. He joined Bankers Trust in Australia in 1993
and held a number of senior positions, becoming President of Japan Bankers Trust in 1997. In 1999 he was appointed
Chief Executive Officer – Asia/Pacific for Deutsche Asset Management and retired from this position in 2002. Brian is a
panel member of the Financial Industry Complaints Service Limited and a Director of State Super Financial Services
Limited. Brian is a Non-Executive Director of DB RREEF Funds Management Limited, Chair of the Board Risk and
Compliance Committee and is a member of the Board Nomination and Remuneration Committee. Brian is a Deutsche
Bank nominated Director.
DB RREEF Trust Annual Report 2007 37
corporate
responsibility and
sustainability
our approach
achievements
about DB RREEF
our people
our community
our properties
our environmental program
looking forward
30 The Bond, Sydney NSW
AT DB RREEF WE ARE COMMITTED TO CORPORATE
RESPONSIBILITY AND THE LONG-TERM INTEGRATION OF
SUSTAINABILITY PRACTICES THROUGHOUT OUR BUSINESS
our approach
At DB RREEF we strive to be a market leader in sustainability.
For almost a decade, the group has been implementing
programs which promote environmentally sustainable
management practices and appropriate corporate social
responsibility. In 1998, the group commenced a program
to review our environmental impact, and we have been
measuring and reporting on this ever since.
As one of Australia’s largest property owners, managers and
developers, we take our responsibilities seriously with regards to
sustainability and corporate responsibility. This is in line with our
commitment to the highest standards of ethics and integrity, as
well as acting responsibly as a good corporate citizen.
Our group-wide, holistic approach aims to fulfil the
environmental, social and economic requirements of our
properties, while meeting and striving to exceed the needs
of our people, tenants, investors and the wider community.
We aim to minimise the overall environmental impact of our
operations, both in the development of new properties, and
the management and refurbishment of existing properties.
Our sustainability management programs are tailored to each
property in accordance with best practice principles.
Sustainability strategies are increasingly being demanded
by tenants, employees, investors, analysts, regulators and
the wider community. This is particularly evident at DB RREEF
where our tenants are predominantly major corporate and
government organisations with exacting sustainability
requirements of their own.
At DB RREEF we also take a pragmatic approach: all
sustainability initiatives are undertaken after identifying a
positive return under appropriate social, environmental and
financial criteria. We focus on reducing the environmental and
social impact of our operations without compromising
economic viability or investor returns.
We believe that security holders’ value is enhanced by creating
a sustainable working environment at our properties that is
attractive to tenants and, in turn, enables them to increase
business productivity and lower operational costs by becoming
more resource-efficient. In the longer term, we believe this
approach will see increased demand for DB RREEF properties,
thereby contributing to further earning increases to investors.
Our strength lies not only in our track record, but in our
holistic approach to sustainability. We apply triple bottom line
reporting, that is, we consider the environmental, social and
economic impact of our operations, not just resource
efficiency. To reflect this approach, we have decided to
expand our third sustainability report this year to a new
Corporate Responsibility and Sustainability (CR&S) report.
At the time of writing this report, we had achieved, or were
progressing on schedule, all target initiatives detailed in our
2006 sustainability report. These achievements are listed
on page 40.
The DB RREEF Board, management team and employees
are proud of our CR&S achievements to date. These were
accomplished with the support of our entire team and
through engaging our tenants, contractors, suppliers and
corporate partners to support sustainable business practices.
Looking ahead, we have committed further resources to
ensure that we remain at the forefront of the property sector
in sustainability management practices. Key challenges and
targets for 2008 include:
n
n
n
implementation of portfolio-wide resource
consumption targets
green project opportunities to be implemented at every
office property including waste reduction, energy saving
and water efficiencies
expanding our market leading office sector initiatives
to our industrial and retail sectors
We look forward to reporting back to you on our progress
in next year’s CR&S report.
Christopher T Beare
Chair
Victor P Hoog Antink
Chief Executive Officer
DB RREEF Trust Annual Report 2007 39
cr&s – achievements
achievements
DB RREEF’s Corporate Responsibility and Sustainability achievements over the last year include:
corporate reporting and ratings
Improving standards
and transparency of our
reporting and achieving
external rating recognition
our people
Reinforcing CR&S as
an integral part of our
business and rolling out
employee engagement
initiatives
our community
Improving our participation
with engagement of and
communications to our
tenants, investors and the
wider community
our properties
Greening up and
future-proofing our existing
stock and developments
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
Completed our new Corporate Responsibility and Sustainability Report,
in alignment with the GRI G3 framework
Completed our second annual Carbon Disclosure Project (CDP) report
Achieved our second year of constituency listing on the FTSE4Good Index
Developed a new Climate Change Strategy
Received recognition for our progress on climate change: DB RREEF was
named a Top 10 winner in a Citigroup Research report on Climate Change
Recorded GHG1 emissions resulting from the group’s operations, including
flights and waste disposal
Continued to improve the green credentials, operational and environmental
performance of the DB RREEF workplace
Rolled out a new DB RREEF Green Leaders program to our office sector
Rolled out our first Employee Opinion Survey and subsequent action plan
Launched our new online Sustainability Portal including interactive Environmental
and OHS&L manuals and toolkits for Property Management teams
Formed a new Sustainability Working Group with cross sector representation
to develop and promote initiatives group-wide
Developed a Tenant Sustainability Guide to assist tenants to integrate sustainable
practices into their businesses
Improved the availability and transparency of CR&S information via a new
Sustainability section on the DB RREEF website
Incorporated Principles for Fair Contracting into all new service agreements
Initiated community support activities across the portfolio
Participated in and encouraged tenants to join the Earth Hour lights off event
in March 2007 (over 600 tenants in 25 of our Sydney office buildings took part)
Joined 3CBDs Greenhouse initiative, committing to obtaining a 4 Star ABGR2 rating
for our head office tenancy
Collected 100 percent of environmental data for all properties in our portfolio
through the rollout of our Global Resource Reporting Initiative
On track for early completion of Green Star rating assessments for all existing office
properties in Australia (target December 2007)
On track for early completion of GHG emissions/ABGR benchmarking for all office
properties within the Australian portfolio (target December 2007)
Purchased 15 percent Green Power for the Australian office portfolio’s
electricity consumption – one of the single largest allotments in the Australian
property industry
Integrated sustainability considerations into all new developments and capital
projects, for example: Space 1 Bligh û Sydney – 5 Star ABGR and 6 Star Green Star
All properties are fully compliant with our Environmental and Occupational Health
Safety and Liability Risk management programs
Commenced rollout of new Green Cleaning contracts as new contracts are
tendered (eight office properties to date)
Commenced smart metering (electricity, gas and water) across our office
properties in Australia
Established targets for resource3 consumption, GHG emissions and
property-specific improvements to environmental performance ratings
Commenced an environmentally sound procurement project with preference
given to cost-effective products which have superior environmental performance
1 GHG = Greenhouse Gas.
2 ABGR = Australian Building Greenhouse Rating.
3 DB RREEF defines resources as energy, water and waste to landfill.
40 DB RREEF Trust Annual Report 2007
about DB RREEF
connecting with stakeholders
DB RREEF is one of Australia’s largest diversified property
groups with over 245 industrial, office and retail properties
in Australia, New Zealand, the United States, Germany
and France.
values and vision
DB RREEF’s corporate values of Customer Focus, Trust,
Innovation, Teamwork and Performance reflect our heritage
from one the world’s most recognised and reputable
companies – Deutsche Bank – combined with the
entrepreneurial qualities of this dynamic property group.
Our corporate vision is to be the leading, integrated property
group in Australia. Our sustainability vision is to be the market
leader in sustainability – both in the property sector and
communities in which we operate.
This vision is based on our ability to identify risks and
opportunities and develop individual best practice
management programs, which satisfy and exceed the
environmental, social and economic requirements of the
properties we own and manage. An integral part of our
success is our considered, yet active engagement with our
tenants, employees, investors and service providers.
Our commitment is to ensure that sustainability is a constant
and visible consideration in all aspects of our business and we
will continually explore and develop initiatives to achieve this.
Increasing transparency in our public reporting is an integral
part of this commitment, such as the creation of this extended
CR&S report aligned to the Global Reporting Initiative (GRI)
G3 framework.
report scope
The following pages are an extract from the 2007 DB RREEF
Corporate Responsibility and Sustainability (CR&S)
report which is available separately via our website
www.dbrreef.com/sustainability
This report represents an annual review of the corporate
responsibility and sustainability practices and achievements
of the DB RREEF group for the 12 months ending
30 June 2007.
The report covers the operations of DB RREEF Trust in
Australia and, where possible, our property portfolios in
the United States and Europe, across our office, industrial
and retail sectors. This covers the employer practices of
DB RREEF Holdings Limited only, as statistics for DB RREEF
Retail Property Services employees were not available at
the time of writing.
As one of Australia’s largest property groups, we understand
the potential impact our business operations may have on
the wider community and believe our responsibility is to
ensure our impact is positive. Our CR&S programs are
designed to engage our key stakeholders – tenants,
employees and investors – as well as the wider community,
including our business partners, service providers and the
general public.
DB RREEF’s approach to CR&S engagement
C o m munity
ants
n
e
T
In
v
e
s
t
o
r
s
Properties
Emplo y e e
s
Our CR&S report follows the GRI G3 framework reporting on
economic, environmental and social performance. We have
developed a matrix to demonstrate and explain transparently
how our activities and programs meet all G3 standards. This
is available in the long-form version of this report.
If you have any questions relating to this report, or DB RREEF’s
CR&S activities, please contact us at crs@dbrreef.com
For further information on DB RREEF, visit www.dbrreef.com
For more information on GRI visit www.globalreporting.org
DB RREEF Trust Annual Report 2007 41
cr&s – our people
Members of the DB RREEF team at 30 The Bond, Sydney NSW
our people
diversity and equal opportunity
At DB RREEF, our people are fundamental to our success.
In our operations, it is our people who source, develop, lease
and manage our property portfolio, and work with our key
stakeholders – tenants, suppliers, corporate partners and
the local community – day in and day out to meet and
exceed their expectations.
working at DB RREEF
Creating a harmonious workplace is fundamental to our success
and we strive to create a working environment where our people
can thrive and develop.
We are committed to providing a working environment that
supports diversity, equal opportunity, teamwork, trust and
integrity, having fun at work and one that is safe and free
from discrimination or harassment of any kind.
DB RREEF aims to attract and retain people who are of the
highest calibre and have the skills required to carry out their
role, irrespective of gender, race or religion.
As at 30 June 2007, our team consisted of 53.5 percent female
and 46.5 percent male employees. 91 percent of our people
worked full-time, while nine percent were part -time or casual.
We pride ourselves on being an equal opportunity employer and
our policies and procedures comply with Equal Employment
Opportunities (EEO) and anti-discrimination legislation. We run
an Employee Compliance Induction session for all new
employees which covers appropriate workplace behaviour.
We have in place a recruitment policy to ensure an effective
and fair recruitment process, whereby selection decisions are
free from bias and comply with EEO principles and vacancies
are advertised internally to ensure existing team members
have the opportunity to progress their career paths.
42 DB RREEF Trust Annual Report 2007
DB RREEF executive team at Governor Phillip Tower, Sydney NSW
Employment category by gender
%
1
6
%
2
4
%
6
3
%
4
1
%
9
3
%
8
5
%
4
6
%
6
8
Workforce by employment category
Workforce by age
G
e
n
M
li
n
i
d
e
d
le
E
x
e
c
S
e
d
e
p
c
t
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rt
h
e
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tiv
e
e
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al
e
m
a
a
n
m
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d
p
lo
y
a
g
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a
e
d
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o
r
e
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a
d
C
o
m
m
itt
e
e
General employee
Middle and line management
Sector head or head of department
Executive Committee
47%
32%
14%
7%
less than 30 years
30 to 40 years
40 to 50 years
over 50 years
27%
43%
21%
9%
Male
Female
Currently 100 percent of our employees are based in Australia
and we source and recruit our employees using the resources
of local, experienced recruitment providers.
We also conduct six monthly performance reviews where
employees receive performance feedback, set objectives and
training needs and discuss career paths and ambitions.
DB RREEF also has an agreement in place for business
sponsorship of overseas nationals.
To meet the needs of our growing business overseas, and
to expand opportunities for our employees, we are in the
process of implementing an international secondment program.
reward and performance
DB RREEF’s remuneration policy is closely linked to the
performance of individual employees and overall business
results. We conduct annual salary reviews to ensure equality
in remuneration and that all employee remuneration and
incentive awards are competitive with market rates and overall
business performance.
In June 2007 we introduced a new Service Awards program
to recognise the loyalty and commitment of our long-serving
employees. The awards are presented monthly to employees
who have been at the company for 5, 10 and 20 years.
In August 2007 we launched a long-term incentive plan
for all permanent employees to further reward performance
and enable our employees to share in the future growth
of DB RREEF.
DB RREEF Trust Annual Report 2007 43
cr&s – our people (continued)
open communications and employee engagement
We believe that engaging our people in the business and in
key initiatives such as corporate responsibility and sustainability
is critical to our success. We have developed a number of
training tools and communication forums to increase the
knowledge and involvement of our teams.
At DB RREEF, we strive to actively engage our people and we
have rolled out a number of initiatives to improve communication,
better understand our people, gather feedback and exchange
ideas. We have in place a management culture which
promotes open communication through a flat management
structure, open door policy and open plan offices. We have
an active intranet to share news and information and an
online feedback system to encourage idea sharing, best
practice and suggestions for improvement.
In December 2006, we conducted our first Employee Opinion
Survey (EOS) to measure engagement and receive feedback
from our employees (see case study below).
In response to survey feedback, we introduced in 2007 a new
quarterly newsletter and monthly Business Update Sessions
to increase information sharing and networking across our
multi-site teams. In 2007/2008 we will be investigating more
team building activities and forums.
The property industry is a dynamic and fast-paced sector.
To address this, and maintain the highest levels of employee
satisfaction, we continually monitor and review our HR
policies and engagement programs to retain and attract
talent. We also actively review the marketplace to ensure
we offer competitive and attractive remuneration packages.
We complete exit interviews to learn from each departure
and report findings to our Executive Committee monthly.
In August 2007 we launched a new succession and talent
pipeline program.
having fun at work
We believe that for our people to succeed and thrive they
need a balance and so, as part of our commitment to “having
fun at work”, we have in place a Social Committee which runs
regular social functions. The Social Committee also organises
events that include families, such as our annual Family Day
and a visit from Santa in December.
case study 1
annual employee opinion survey
In December 2006, we conducted the inaugural DB RREEF Employee Opinion Survey and received an overwhelming response
with 70 percent of employees taking part – an excellent result for a first-time survey. The survey covered topics such as my role,
my manager, leadership, training and communication. Employees were given the option of completing the survey anonymously
and responses were collated by an independent service provider to ensure data integrity.
Stand-out results from the survey show that our people are proud to work for DB RREEF (98 percent) and would recommend
DB RREEF as an employer (80 percent).
The results also indicated that employees enjoyed their roles and responsibilities, valued the group’s professionalism, believe
innovation is encouraged within teams, that there is cohesiveness between teams and managers, and that the company has good
growth potential. In addition, our working environment rated highly as one of the most satisfying elements of working at DB RREEF.
We attribute this in part to the redevelopment of our heritage head office into a modern, light-filled and sustainable workspace.
The survey results indicated areas for improvement in training, career development, communication and work-life balance initiatives.
In response we developed, and began rolling out, a number of initiatives in the first half of 2007:
n
n
n
n
n
multi-million dollar financial and document management systems to improve workflows, business productivity and
work-life balance
internal newsletter, monthly business update presentations and an intranet feedback/ideas system to facilitate information
sharing and communication
new training programs and an increased training budget to further develop the careers of our people
succession planning program
option to purchase 10 days additional leave annually
44 DB RREEF Trust Annual Report 2007
employee wellbeing and benefits
At DB RREEF we are committed to the health and wellbeing
of our employees, as it is vital to our success as an
organisation. We offer flexible work practices, including
flexible working hours and sabbaticals. In July 2007 we
introduced a policy to enable full-time employees to purchase
up to 10 additional annual leave days each year as part of our
commitment to improving work-life balance.
All permanent, full-time and part-time employees are entitled
to the same benefits, including:
n
n
n
n
n
n
paid maternity and paternity leave
access to an external Employee Assistance Program
(EAP) – a free, confidential counselling and advisory
service for employees and their families
annual study allowance and study/exam leave
annual allowance for professional memberships
and professional magazine subscriptions
private health insurance discounts
travel discounts
n
n
n
n
n
Death and Total and Permanent Disablement (TPD)
insurance
incentivised Employee Referral Scheme
salary packaging options
annual flu immunisations
regular in-chair massages
Our head office in Sydney, a heritage building, was refurbished
in 2005 to offer the best in workplace amenity, with:
n
n
n
n
large open floor space
floor-to-floor connectivity via an internal staircase spanning
three levels
maximised access to natural light
100 percent fresh air supply through our chilled
beam system
n
café and breakout spaces
Our head office has received external recognition, including a
Master Builders Association Excellence in Construction award
for Refurbishment, Renovation, Extension. The results of our
Employee Opinion Survey showed that our people also value the
high quality of our head office workspace.
case study 2
green leaders program
As part of our policy to actively engage our people and deliver successful
sustainability initiatives, we created a Green Leaders program which we
rolled out across the Sydney office portfolio in March 2007 and plan to
implement in the retail and industrial portfolios in 2007/2008.
Under the Green Leaders program, we nominate one employee at each
of our buildings to help meet DB RREEF’s sustainability aspirations by
engaging tenants in environmental and sustainability programs, and
helping make our buildings more resource efficient.
The Green Leaders’ role involves:
n
n
n
n
n
acting as the key point of contact for green/sustainability initiatives within each property
management team
managing and assisting with the rollout of sustainability projects, for example, Resource
Efficiency and Earth Hour
assisting property management teams with monthly reporting of resource consumption
and green projects
reporting to DB RREEF on green/sustainability initiatives and case studies
networking with other Green Leaders
As a symbolic gesture of our green credentials and true to our belief in sourcing
environmentally friendly materials where viable, our new Green Leaders are presented
with a DB RREEF Green Leader t-shirt made from Australian organic cotton.
DB RREEF Trust Annual Report 2007 45
cr&s – our people (continued)
training, learning and professional development
occupational health and safety programs
At DB RREEF we recognise a duty of care to all stakeholders
including employees, clients, tenants, managing agents,
contractors and visitors, and we ensure our obligations are met
in relation to Occupational Health, Safety and Liability (OHS&L).
DB RREEF is pleased to report that our rate of incidents, injury
and lost days are very low with only one employee suffering a
minor injury in the full-year period. Overall responsibility for
OHS&L lies with the Risk Management Committee (see
committee structure diagram on page 47).
We currently have two OHS&L systems in place:
corporate OHS&L
The Corporate OHS&L management system requires all
DB RREEF employees to undertake a compulsory general
induction and provides further information in the Employee
Handbook to ensure full awareness of employee OHS&L
responsibilities.
property OHS&L
DB RREEF also has a Property OHS&L management system
in place that identifies, manages and monitors OHS&L
practices to mitigate against the potential for harm within
our properties. Each year, external auditors assess each
property’s OHS&L performance according to a 5 Star
performance rating system and key criteria, including:
n
n
n
n
n
fire systems and management
hazard and contractor management
first aid
building design and operation
emergency response plans
Each property is awarded a performance scorecard, a
corresponding star rating and an improvement plan. This
system enables DB RREEF to significantly minimise the
OHS&L risk associated with each property, identify key areas
that require additional resources and strive for best practice
in this critical area of property management and operations.
Each year we also reward properties for best practice in the
OHS&L area, such as in 2006:
n
n
Riverside Corporate Park, 25 Donkin Street, South
Brisbane won Best Individual/Team Award for their
demonstrated commitment to the OHS&L program,
proactive approach and the improvement to their
performance score.
88 Shortland Street, Auckland, New Zealand won the
Most Improved Property Award for the team’s focus on
enhancing contractor management and addressing all
issues raised in their first OHS&L audit in 2005.
DB RREEF supports our employees in their roles and
encourages professional development to ensure our people
have the most up-to-date industry knowledge and skills.
All DB RREEF employees are encouraged to undertake
internal and external training each year, supported by a
training budget, and take ownership of their professional
development through the completion of annual personal
development plans.
Currently our employees complete on average 30 hours
training each year, the results of which are reported monthly
to the Executive Committee.
average training hours per employee per category
Executive Committee
55 hours
Sector heads
Management
General employees
27 hours
20 hours
17 hours
Our Study Assistance Policy provides an annual allowance
for employees to undertake formal qualifications such as
undergraduate and postgraduate university study and
specialist programs provided by recognised educational
institutions and industry associations. The aim of this policy is
twofold – to support our people in their ongoing personal and
professional development, and to contribute to DB RREEF’s
ongoing success. Employees are also entitled to claim the
cost of one professional membership each year that is
relevant to their role.
We also run training and information awareness events
to improve employee understanding of key issues and
business functions. In the area of sustainability and risk
management, for example, we run annual Sustainability
and Risk Management seminars for our Australian and
New Zealand property management teams.
46 DB RREEF Trust Annual Report 2007
corporate responsibility
sustainability reporting lines and governance structure
At all times we endeavour to act in accordance with
corporate responsibility and governance principles, through
our commitment to the highest standards of ethics and
integrity in our business and acting responsibly as a good
corporate citizen.
DB RREEF, its business and practices are monitored by the
Board of Directors. Sustainability considerations are
embedded in our management forums and corporate
governance, for example, our cross-divisional sustainability
working group reports to the Risk Management Committee.
For further information on DB RREEF’s corporate
governance structure, please refer to our Corporate
Governance Statement on page 58 or visit our website
at www.dbrreef.com/governance
Board
Board Risk & Compliance Committee
Risk Management Committee
– COO
– Fund Manager, DB RREEF Trust
– Head of Unlisted
– Head of Compliance
– General Counsel
– Manager, Building Services
– Business Operations Manager
Compliance & Internal
Audit Committee
– COO
– Head of Compliance
– General Counsel
– Chief Financial Officer
– Head of Unlisted Funds
– Fund Manager, DB RREEF Trust
Sustainability Working Group
– Head of Retail
– Head of Industrial
– Head of Office
– Manager, Building Services
– Development Manager
– Fund/Trust Manager
– Marketing & Communications Manager
Health and Safety Working Group
– Health and Safety officers from each office
At DB RREEF we believe a reputation of honesty and integrity
is essential. We have a Code of Conduct that sets out
guidelines to assist employees in ensuring that their conduct
meets the highest ethical and professional standards.
In addition, DB RREEF has the following compliance policies
and procedures in place, applicable to all employees:
n
n
n
n
n
Employee Trading
Gifts, Benefits & Entertainment
Inside Information and Insider Trading
Suspect Transactions and Anti-Money Laundering
Transaction Registration, Conflict Clearance and
Related Party Dealings
All new DB RREEF employees attend a face to face
Compliance Induction session, which is supplemented by
refresher training. All policies are reviewed and updated
annually and new training is provided as required. Adherence
to policies is recorded by business units on a quarterly basis,
is subject to ongoing monitoring by Compliance and is
supported by an internal audit program.
public policy
DB RREEF does not currently have a formalised policy on
participation in public policy development and lobbying,
however, all employees are required to conduct themselves in
an appropriate manner that does not bring DB RREEF’s
reputation into disrepute. We do have strict rules regarding
the payment or acceptance of gifts or benefits to third
parties, as set out in our Gifts, Benefits & Entertainment
Compliance Policy. This policy prohibits financial or in-kind
contributions to political parties and politicians and there have
been no gifts, benefits or donations made to political parties
or politicians in 2006/2007.
product and customer privacy compliance
DB RREEF has numerous policies in place to ensure
customer privacy and compliance with applicable
regulations and laws.
To ensure appropriate and accurate customer communications,
all marketing and communications materials are reviewed and
signed off by the respective Heads of Marketing and
Communications, Legal, Compliance and the relevant Property
department. We also have in place a unique, online Marketing
Approval Database to facilitate this sign-off process, which
also acts as a database and audit trail for all external
marketing and communications materials.
DB RREEF Trust Annual Report 2007 47
cr&s – our community
our community: connecting with
our stakeholders
community involvement
Simple, imaginative initiatives that engage and inspire our
stakeholders provide ideal opportunities to raise awareness
of social and environmental issues. An example of such an
initiative is our support of the Earth Hour event in March 2007
(see case study below).
In May 2007, we signed up to 3CBDs Greenhouse Initiative (a
partnership of City of Sydney, North Sydney and Parramatta
Councils) joining more than 30 corporate participants in the
challenge to reduce GHG emissions and tackle climate
change. Under the 3CBDs initiative, DB RREEF has
committed to achieve an accredited 4 Star or higher
NABERS1 Energy/ABGR tenancy rating for our head office.
This is in line with our commitment to reduce our
environmental footprint.
community giving program
During the 2006/2007 financial year, DB RREEF supported
a number of community initiatives at an individual, team and
corporate level. These included:
n
n
n
n
n
n
Legacy
Landcare
Red Cross
St. Vincent De Paul
The Cancer Council
State Emergency
Services (SES)
n
n
n
n
n
n
n
Think Pink Day
Leukaemia Foundation
Movember
Salvation Army
Jeans for Genes Day
St Johns Ambulance
Cure Cancer Australia
Foundation
case study 3
Earth Hour
The community and charitable organisations we support are
determined by our teams who work with, live in and
understand the local community’s needs best. In addition
to financial donations, we donate our time and provide space
in our properties for charities and community groups
to fund raise and profile their activities.
DB RREEF recognises that community participation is an
integral part of its business and is in the process of reviewing
its policies to ensure greater community participation is
undertaken in the coming years. The progress of this review
will be the subject of future CR&S reporting. Key objectives
anticipated include the alignment of our community
engagement strategy with our CR&S strategy to achieve
maximum community engagement in the areas in which
we operate, leveraging the size and reach of our business.
tenant engagement
Our tenants are our customers, and in order to improve our
communication with them, we have created an online portal
with a secure login system providing:
n
n
a Tenant Document Library with access to all tenant
related documents including tenant information packs,
fit-out conditions and emergency procedures
a Tenant Service Request (TSR) System where tenants
can lodge service requests and track the property
management team’s performance in actioning and
resolving their requests. At the time of writing this report,
a total of 197,402 TSRs had been submitted, demonstrating
the popularity of this tenant communications tool
n
a Tenant Notice Board and email broadcast service to
communicate building related events
“As environmental issues come to the forefront of the national and international political
agenda, it’s time for businesses to step up and take the lead on sustainability initiatives.
By taking part in Earth Hour in our offices and encouraging our 600-plus corporate
tenants in the 25 buildings we own and manage in Sydney to participate, DB RREEF hopes
to raise awareness about how the property industry can make a lasting commitment to
the environment and sustainability practices.”
DB RREEF CEO, Victor Hoog Antink
On 31 March 2007, DB RREEF took part in Earth Hour, a joint initiative of the World Wildlife Fund and the Sydney Morning
Herald to promote awareness of energy efficiency and reduction in lighting usage. Companies, government departments
and households in Sydney were invited to turn off their lights for one hour between 7.30 and 8.30pm.
DB RREEF signed up to the initiative as a corporate participant at our George Street head office. We also committed our entire
Sydney office portfolio (25 properties) and encouraged our office tenants to take part. With more than 600 tenants participating,
this event was a resounding collaborative success.
1 National Australian Built Environment Rating System, formerly ABGR.
48 DB RREEF Trust Annual Report 2007
security and emergency management (SEM) program
DB RREEF has adopted a balanced and realistic approach to
security, terrorist threats and emergency risk management
and our SEM program aims to identify, manage and monitor
risks at each property. Key initiatives for the SEM program
this year have been:
n
n
n
n
n
working with the Shopping Centre Council of Australia on
ATM ram raids within shopping centres
planning for major dignitary visits and assessing their
effect on commercial business districts and specifically
our office portfolio
planning for CBD mass evacuation programs
planning for major events such as the APEC 2007
forum in Sydney
development and implementation of a monthly Security
eNewsletter to our property management teams
DB RREEF works closely with the authorities, our security
consultants, our tenants and the wider community to ensure
security risks and issues are managed and communicated
appropriately.
As at 30 June 2007, the online portal was available to over 60
of our office and industrial properties. The system effectively
engages tenants and assists us in providing efficient, high
quality property management services.
investor engagement
DB RREEF has dedicated Investor Relations teams for its
property funds to ensure investors are adequately informed
and updated regarding their investments. In addition, we have
an investor relations program in place to maintain regular and
timely contact. In order to gain a better understanding of our
investors’ requirements and improve our investor
communications, DB RREEF engaged an independent
consultant to complete an Investor Perception Survey in
2006. We used the findings of this survey to enhance our
existing investor relations communications.
industry engagement
As a leading property company, we actively engage in the
property industry and are members of local, regional, state
and national industry bodies including the Property Council
of Australia, Facilities Management Association of Australia,
Green Building Council and the Australian Property Institute.
As part of our commitment to industry engagement, we are
proud to support the development and enhancement of
environmental rating tools. For example, we are currently
trialling the re-released Green Star Office Existing and the
Green Star Shopping Centre tools, developed by the Green
Building Council. These tools rate each property on their
environmental performance and provide direction about what
improvements are required now and into the future to meet
market, tenant and investor expectations.
case study 4
Laverton North – developing buildings in
partnership with our clients
Coles Distribution Centre (CDC) in Laverton North, Victoria is a 42,000 square metre chilled
distribution centre. It includes a 10,000 square metre (-25ºC) freezer and a 25,000 square
metre (-2ºC) chilled room and supplies all of Coles’ Victorian supermarkets. Completed in
February 2007, it forms part of DB RREEF’s 160 hectare Laverton North Industrial Estate.
The design of the centre was driven by a detailed brief provided by the customer at the
commencement of the project. DB RREEF together with its design and construction contractor
and Coles’ Project Manager, developed and improved the brief to a fit-for-purpose design. This
design brief incorporated spatial requirements, down to the smallest details.
Coles and DB RREEF’s development team worked closely together from commencement
through to completion, to ensure delivery of a building that was perfectly suited for Coles’
long-term operational requirements.
DB RREEF Trust Annual Report 2007 49
cr&s – our properties
our properties
At DB RREEF we aim to minimise the overall environmental
impact of our operations, both in the development of new
properties, and the management and refurbishment of
existing properties.
investing in sustainability
DB RREEF recognises that investment in environmental
management not only reduces our footprint, but adds
value to the services we offer and attracts potential tenants
and employees. It also brings direct commercial advantage
via reduced resource consumption and competitive insurance
premiums, bringing financial savings to our tenants as well as
environmental benefits. In addition, our investment in
sustainability can bring positive social benefits such as a
reduced environmental footprint, tenant and employee
satisfaction and positive corporate citizenship.
At DB RREEF we believe the greatest challenge and
opportunity facing the property industry is future-proofing.
Significant resources have been applied to determining how
and what needs to be done to our existing properties to
ensure they meet the demands of future tenants, the
challenges of climate change and appropriate
resource management.
We have already started the future-proofing process through
the refurbishment of our corporate headquarters in Sydney.
We transformed a heritage listed building into a state-of-the-art,
resource efficient, highly functional and productive work space.
Our approach to future-proofing our existing properties is
explained in Case Study 5.
sustainability initiatives for acquisitions and developments
DB RREEF assesses each new development and acquisition
to ensure they meet and exceed the expectations of our
stakeholders via:
n
n
identifying and understanding each project’s sustainability
and green credentials
identifying opportunities to improve these credentials
while taking into consideration the cost and social and
environmental benefits
n
ensuring the development is future-proofed
DB RREEF is a leader in developing properties to world best
practice standards in sustainability and green credentials.
For example:
n
n
n
30 The Bond, Sydney, Australia’s first 5 Star office
building, is owned and managed by DB RREEF and
so far has won over 30 sustainability, environmental
and design awards
Space 1 Bligh Street û Sydney (see Case Study 6)
123 Albert Street, Brisbane, a 5 to 6 Green Star Rating
and a 4.5 to 5 Star ABGR
50 DB RREEF Trust Annual Report 2007
case study 5
existing buildings on life-cycle
assessments
A vital step in future-proofing our existing properties is
determining where they are within their life-cycle. To achieve
this, DB RREEF commenced a “Technical Asset Management”
project which addresses:
n
n
n
n
n
n
a detailed and up to date asset registers
life-cycle assessment on all assets
condition assessment on all assets
capital expenditure forecasts
replacement cost assessments
tax and depreciation schedules
case study 6
sustainability in developments:
Space 1 Bligh û Sydney
“Space 1 Bligh û Sydney will revolutionise the way people
are able to work together. It will bring a completely new
perspective to workspace design, sustainability and energy
efficiency, and create a working space that people will enjoy
experiencing day by day.”
DB RREEF CEO, Victor Hoog Antink
Space 1 Bligh û Sydney is our latest and most prominent
development in Australia and marks the next generation in office
design and sustainability. The transparent, elliptical-shaped
premium grade office building will be constructed on the corner
of Bligh, Bent and O’Connell Streets, in the heart of Sydney’s
financial district and will make a profound impact on the CBD
skyline and enhance the existing streetscape.
The 42,000 square metre building has
been designed to achieve a world’s best
practice 6 Star Green Star rating and a
5 Star ABGR rating. The key sustainability
feature of the building, and one which
will maximise Sydney Harbour views and
access to sunlight, is the fully glazed
double-skin façade – a first in Australia.
This project is being rolled out to all properties in Australia.
The benefits of the program include:
n
n
n
n
providing consistent and independent capital expenditure forecasting,
life-cycle costing and condition assessments
enabling asset and property management teams to determine with greater
accuracy when major works and refurbishments should be planned
ensuring assets reach their effective lives by tracking their condition more closely
enabling a better understanding of the impact of the asset’s maintenance and
service delivery, ensuring we maximise each asset’s performance physically
and financially
n
optimising tenant and leasing strategies.
This information is then coupled with the properties overall strategic asset plan
including its leasing profile to quickly and holistically determine an appropriate
repositioning strategy for each property. This is true life-cycle based asset
management at work.
The double-skin façade comprises two layers of glass; an outer glass skin separated by
a large ventilated cavity from an inner double glazed skin. The cavity contains adjustable
and retractable automatic horizontal blinds which shade the internal skin and
dramatically reduce solar heat gain while maintaining the harbour views.
Other sustainability features contributing to the 6 Star Green Star rating include black
water recycling for the bathroom flushing systems and recycled rain water for irrigation.
An innovative tri-generation system will use gas to generate energy for the building’s
cooling, heating and electricity, and roof-mounted evacuated tube solar panels will
produce heat for electricity.
A full height atrium provides high quality access to daylight and fresh air and dynamic
views throughout the building, from each floor up, across and down, through the
building. Glass lifts travelling through the atrium core will further enhance the
experience. Twin off-set cores, a full height atrium and ceilings of 2.85 metres
enhance space and air flow and provide horizontal and vertical connectivity.
Large, flexible floor plates of approximately 1,600 square metres, and a lack of perimeter
columns will further enhance the lightness and transparency of the façade. The innovative
design offers any tenant, large or small, the utmost flexibility in terms of maximising
floor space.
Naturally ventilated space in the atrium for reception, break-out and meeting rooms
provides a spectacular working environment. The development also incorporates a large,
sun-filled forecourt and entry hall, accessible to the public during working hours and
enhancing the public space of Farrer Place.
DB RREEF Trust Annual Report 2007 51
cr&s – our environmental program
our environmental program
measuring our biodiversity impact
DB RREEF’s commitment to environmental best practice
is demonstrated through our Environmental Management
Program which has been developed to the international
standard for Environmental Management Systems (ISO
14001: 2004) and complies with relevant legislation.
Through this program we identify and control environmental
impacts on our properties with the objective of reducing or
eliminating environmental impact caused by the property or
DB RREEF’s associated operational activities. Our properties
are subject to an annual independent audit carried out by our
environmental consultants to measure their performance
against environmental benchmarks.
We promote best practice to our stakeholders by ensuring
that all employees, managing agents, contractors, service
providers and tenants are made aware of the impact of their
actions on the environment and conduct their activities in an
environmentally responsible manner. This is supported by
training and communication tools.
our environmental footprint
At DB RREEF we take an integrated approach to minimising
our environmental footprint. We have followed the GRI G3
guidelines to assess our environmental footprint which we
define as the consumption and use of resources, and our
impact on the environment at a corporate and property level,
as shown below.
DB RREEF’s environmental footprint
Scope 1:
Direct fuel consumption
and onsite fuel use
6,403 tCO2e
DB RREEF operates primarily in metropolitan areas and our
developments are generally on brown-field sites, thereby
limiting our biodiversity footprint and impact on ecosystem
services (such as water, air, soil, flora and fauna).
We have assessed our interaction with ecosystem services
and perceive our greatest impact is through our organisational
activities in the areas of:
n
n
land use (our property portfolio and infrastructure)
extraction (our use of natural resources for
building materials)
n
outputs (our emissions, including GHG emissions)
We measure and report on our performance in regard
to biodiversity principally via:
n
n
n
internal and external reporting
the Carbon Disclosure Project (CDP) – our second report
is available on our website
the requirements under the Energy Efficiency
Opportunities Act
Electricity Total Electricity Purchased
211,175,069.1 kWh
Gas
Total Onsite Consumption
118,598,720.7 MJ
Air Travel
Total Air Travel
Short Haul (less than 500 km)
Medium Haul (less than 1,600 km)
Long Haul (more than 1,600 km)
GHG Emissions
Total Paper Consumed
2,105,251 km
37,837 km
735,663 km
1,331,751 km
240.5 tCO2e
13,792.8 kg
Total Water Consumption
113,323,845 KL
Total Waste Generated
Total Waste Recycled
Waste Diversion Rate
85,000 m3
15,694 m3
18.5%
Scope 2:
Indirect emissions
from electricity
consumption
194,539 tCO2e
Total Greenhouse Gas
(GHG) Emissions*
251,042 tCO2e
Air Travel
(Head Office
employees)
240.5 tCO2e
Paper
Water
Waste
Scope 3:
Indirect emissions from fuel extraction,
production transport and
transmission loss
49,858 tCO2e
* GHG emissions arising from the global portfolio represent properties located
within the United States, Australia and New Zealand. The Global Resource
Reporting Initiative captures emissions arising from DB RREEF controlled
aspects of the portfolio (100 percent of the portfolio within our scope of control).
Throughout this report, tCO2e represents tonnes of carbon dioxide equivalent.
52 DB RREEF Trust Annual Report 2007
annual GHG emissions
by sector and by
emission scope
Scope 1
emissions
AUS/NZ emissions (tCO2e)
Scope 3
emissions
Scope 2
emissions
Scope 1
emissions
USA emissions (tCO2e)
Scope 3
emissions
Scope 2
emissions
Totals
Office
Retail
Industrial
Car Parks
4,556.0
114,255
29,489.3
1,585.3
57,563.3
16,332.4
0*
0*
0*
0*
0* 148,300.3
0*
75,481.0
250.6
16,520.6
3,611.6
11.9
6,059.3
156.5
26,610.5
0*
141.7
268.22
0*
0*
0*
409.92
Totals
6,391.9 188,480.6 49,701.52
11.9
6,059.3
156.5 250,801.7
All emissions are base building (i.e. common areas) unless marked * in which case there are no base building emissions.
our carbon footprint
emissions and CDP global reach
Since our last Sustainability Report we have implemented
programs that allow us to estimate our entire portfolio’s total
GHG emissions. The table above shows our carbon footprint
for the 2006 calendar year. This has been calculated following
methodologies within the Greenhouse Gas Protocol: A Corporate
Accounting and Reporting Standard (Revised Edition),
developed by the World Resources Institute (WRI) and the World
Business Council for Sustainable Development (WBCSD).
climate change risks, opportunities and strategy
Climate change presents an array of risks to the property
industry, including commercial, regulatory and physical risks.
At DB RREEF we recognise the need to proactively consider,
understand and address the risks presented by climate
change and as such, we address climate change within our
risk management framework and our sustainability program.
The indirect risks associated with climate change are
generally related to rising energy, fuel and water costs.
Accordingly we have implemented a suite of proactive
measures, with the aim of achieving greater building
efficiencies, positive stakeholder relations and reduced
environmental impact.
Through our operations DB RREEF has already gained
valuable experience in responding to resource shortages,
whether imposed by regulation or natural processes.
The progressive implementation of the Green Building and
Resource Management System is establishing a structured
platform and management system from which to continue to
proactively manage future resource shortages. Stakeholder
education has been shown to be critical to success, and we
provide considerable information and training to tenants and
property management teams to enable skills and knowledge
to be enhanced.
We are pleased to report that in acknowledgement of our ability
to respond to climate change, DB RREEF was listed as a Top
10 “winner” in a Citigroup Research report covering climate
change in ASX Top 100 companies, released in November 2006.
DB RREEF’s Global Resource Reporting initiative was
established in late 2006 and our property management
teams began capturing the following emissions data for
DB RREEF controlled aspects of the portfolio in 2007
(see table above).
n
n
n
Scope 1: Emissions from direct fuel consumption at our
properties. Fuels include natural gas, diesel, and distillate
oil used to power combustion engines, boilers and
stand-by generators. It should be noted that emissions
arising from hydrofluorocarbons (HFCs) in refrigeration
and air conditioning equipment are not currently included,
however, a key action for next year is to establish
a baseline for these emissions.
Scope 2: Indirect emissions from the consumption of
electricity purchased by DB RREEF for use within
properties.
Scope 3: Emissions from fuel extraction, production,
transport and transmission loss arising from our energy
purchases. Scope 3 emissions from Australian properties
are included. Other countries of operation will be included
as relevant emissions factors become available.
This data capture and analysis mechanism enables the global
portfolio to identify and report on GHG emissions from our
properties in the United States, Australia and New Zealand.
The industrial properties acquired in France and Germany
will be accounted for in future reporting periods.
GHG calculations for 2006 are based on the consumption
of resources managed by DB RREEF in the “base building”,
but excludes GHG emissions arising from tenant activities.
Further analysis of our emissions is presented in our
2007 Carbon Disclosure Project (CDP) report, available
at www.dbrreef.com/sustainability
DB RREEF Trust Annual Report 2007 53
cr&s – our environmental program (continued)
our response to managing our environmental footprint
Phase 2: Green Project Opportunities
We have developed a Green Building and Resource
Management System (GBRMS) to manage our environmental
footprint. This system is currently being rolled out across our
Australian office portfolio, where the greatest efficiency gains
can be made.
The GBRMS involves three phases, as detailed below, and we
are currently on track to complete Phase 1 for all Australian
office buildings by the end of 2007.
Phase 1: Green Profiling
The initial phase measures each property’s green building
and resource performance and establishes its environmental
performance rating under:
n
n
NABERS/Water
Green Star/Office Existing Ratings
Under Phase 2, we identify opportunities to improve the
environmental performance of our buildings by developing
a “Property-specific Green List” of projects to action.
As part of this process we assess each project’s impact on
the building’s environmental performance rating and resource
efficiency, and calculate its cost-benefit.
Phase 3: Implementing Tailored Projects
The GBRMS helps our property asset and management
teams to develop tailored and comprehensive environmental
management projects for each property. Having identified
a list of projects to action in Phase 2, each project is then
considered against the overall strategic asset plan of each
property and then progressively implemented.
DB RREEF plans to roll out the GBRMS across the industrial
and retail sectors in future reporting periods.
Post-implementation, our property and asset managers will
continue to monitor, manage and improve each property’s
environmental management performance.
The Green Building and Resource Management System
Target Green Building
Healthy, safe and productive workplace
Energy, water and waste efficient
Low carbon footprint
Environmentally compliant
Target Green Ratings
Monitor,
Manage and
Improve
Phase 3:
Implementing Tailored
Programs
Phase 2: Green Project Opportunities
Phase 1: Green Profiling
Entry level to Green Building and
Resource Management System
Initial Green Ratings
Green Star & NABERS
54 DB RREEF Trust Annual Report 2007
resource efficiency
We take a three tiered approach to resource efficiency:
The following graph shows DB RREEF’s total annual energy
consumption, broken down by energy type and property sector.
reduce our use of resources
DB RREEF’s total annual energy consumption in 2006
n
n
n
reuse resources through projects such as water
harvesting and recycling
offset our use of resources through projects such as our
purchase of Green Power
To assist in the environmental monitoring and management
process, we are progressively installing smart meters
throughout our office portfolio for real time monitoring of all
electricity, gas and water use. We produce Monthly Resource
Management Reports to enable our property management
teams to monitor resource usage (electricity, gas, water and
waste) and to track the rollout of initiatives against targeted
reductions at a portfolio-wide and property-specific level.
energy consumption
DB RREEF’s office buildings consume the greatest amount
of energy of the property sectors in which we operate. A large
amount of energy is consumed in providing base building
services, such as heating, ventilation, air conditioning, lifts and
underground car parks. Consequently, the office sector is the
focus of our energy efficiency initiatives.
case study 7
Atlantic Corporate Park –
US Silver LEED
DB RREEF is currently developing two, Class A, multi-tenant
office buildings totalling 220,000 square feet in Virginia US.
To be known as Atlantic Corporate Park, the buildings have
been designed to achieve a US Green Building Council Core
and Shell Silver LEED certification (equivalent to an Australian
Rating of a 4 Star Green Star Rating).
The Leadership in Energy and Environmental Design (LEED)
Green Building Rating System™ is the accepted benchmark
in the US for the design, construction and operation of high
performance green buildings. LEED gives building owners
and operators the tools they need to have an immediate and
measurable impact on their buildings’ performance. LEED
promotes a whole-building approach to sustainability and
recognises performance in five key areas: sustainable site
development; water savings; energy efficiency; materials
selection; and indoor environmental quality.
)
J
G
(
n
o
i
t
p
m
u
s
n
o
c
y
g
r
e
n
E
400,000
300,000
200,000
100,000
0
Electricity
Natural gas
Deisel
Office
Retail
Industrial
We are proud to report that many of our property
management teams have already identified and implemented
a number of opportunities for energy reduction. We expect
the portfolio’s footprint will decline steadily with the continued
expansion of the GBRMS.
To obtain the LEED certification we have designed Atlantic
Corporate Park with the following sustainable aspects as
per LEED defined criteria:
n
n
n
n
n
n
n
n
Sustainable sites – white roof, inclusion of bus stops
and developing tenant guidelines on sustainability
Water efficiency – recycled water for water features and
landscaping, water free urinals, dual flush toilets
Optimise energy performance – energy efficient HVAC
and electrical systems
Materials and recyclables – using regional/local materials,
dedicated recycling areas, recycling manual for tenants
Indoor air quality – increased ventilation, construction IAQ
plan, low emitting materials, thermal control
Innovation and design process – use of LEED accredited
professionals providing education to all stakeholders on
the design process and green housekeeping
Supporting alternative transportation via the inclusion of
bike storage, showers and locker facilities
Construction waste management –
reviewing best practice policies
DB RREEF Trust Annual Report 2007 55
cr&s – our environmental program (continued)
water
DB RREEF operates in regions facing challenging water
shortages and to address this we combine portfolio-wide
water-saving initiatives with industry and regulatory schemes.
DB RREEF is currently piloting water-saving projects such as
rainwater harvesting at our industrial business parks and
waterless urinals in our office properties. We are also working
in partnership with a number of our major tenants to evaluate
options for converting existing office buildings to grey and
black water recycling.
We are currently finalising our Eco and Water Wise
Landscaping Guidelines, to be rolled out across the
portfolio in 2007/2008. These guidelines specify native and
drought-tolerant plant species to be used for landscaping,
and promote water saving initiatives such as the use of
harvested rainwater for irrigation across the portfolio.
We take an active role in industry engagement and we are a
member of Sydney Water’s Every Drop Counts program, and
have completed Water Savings Action Plans (NSW) and Water
Efficiency Management Plans (QLD) on our water-intensive
properties.
water discharges and pollutants
Water discharges from our properties typically emanate from
cooling towers, storm water runoff and manufacturing
processes conducted by our tenants. Our Environmental
Management Program recognises water discharge as a
potential risk and we undertake annual site inspections and
audits to ensure that all water leaving our properties complies
with regulatory requirements as a minimum.
In addition, we require that any potential pollutants used at
our properties, such as chemicals and fuels, are stored within
secondary containment, ensuring that storm water pollution
and associated ecosystem degradation is prevented.
waste
In 2006, we commenced profiling of current waste
performance and associated emissions across the portfolio.
As at December 2006, our total waste to landfill for the year
was 85,000 cubic metres, representing 19,379 tCO2e. A total
of 15,694 cubic metres of waste was recycled, representing
an 18.5 percent diversion rate.
DB RREEF is committed to continually improving our waste
management and recognises the importance of “reducing,
reusing and recycling”. Accordingly, we are investigating a
number of waste monitoring and recycling programs for the
industrial, retail and office sectors to ensure every property
reduces their waste generation.
Our property management teams access waste management
procedures via our online Environmental Manual and seek the
specialist advice of our external auditors, ensuring waste is
disposed of in accordance with applicable legislation.
In addition, we require that all our waste management
contractors are licensed and all waste management
documentation is reviewed annually by external auditors.
business travel
Each year, DB RREEF employees travel considerable
distances by air to manage and service our national and
international portfolio. While our property management teams
are locally based, head office staff accumulated a total of
2,105,251 kilometres (1,308,097 miles) between May 2006
and April 2007 (12 month period).
This year, we have focused on establishing a baseline for air
travel emissions, and going forward, we will investigate our
options for offsetting these emissions.
Annual emissions arising from business travel
Flight type
Definition
Short haul
Medium haul
Long haul
less than 500 km
less than 1,600 km
more than 1,600 km
Total
distance
(km)
37,837
735,663
1,331,751
Scope 3
emissions
(tCO2e)
5.7
88.3
46.5
Totals
2,105,251
240.5
Notes: Based on GHG Protocol (2007) and a workforce of 240 employees.
Source: GHG Protocol, Greenhouse Gas Protocol (2007).
Calculation Tools – CO2 Emissions from Business Travel – www.ghgprotocol.org
supply chain strategy
A further way to reduce our environmental footprint is through
the selection of environmentally friendly suppliers. Intelligent
procurement is essential to reducing the amount of waste
generated by our business operations and we work closely
with suppliers to specify, where possible, products that are
environmentally sound. For example, in the past 12 months
we have appointed a supplier who provides environmentally
sound toilet requisites.
long-term performance
Our goal is to anticipate and respond to the environmental
impacts arising from our business operations and properties to
continue to lead the way in sustainability initiatives in the built
environment.
We will continue to optimise the performance of our new
developments and existing buildings to ensure they are
responsive to climate change and meet regulatory requirements
and market expectations of sustainability best practice.
56 DB RREEF Trust Annual Report 2007
looking forward – future plans
At DB RREEF we are always looking to improve our performance – whether that is seeking to deliver better services to our tenants, driving value
to our shareholders, improving the wellbeing of our employees or minimising the environmental impact of our operations.
We have extensive plans for the future and are looking at a number of areas as a priority in 2007/2008:
corporate operations
n
n
Implementing our new Climate Change Strategy.
Implementation of our new group-wide Corporate Responsibility and Sustainability (CR&S) Action Plan including:
–
–
establishing sector specific action plans including Key Performance Indicators
reinforcing CR&S as an integrated part of our operations
reinforcing the monitoring and reporting on CR&S
–
Continuing to improve the Green credentials of our workplaces including:
–
obtaining Head Office tenancy ABGR striving towards 4 Star
increasing environmentally friendly procurement purchases
–
Offset GHG emissions associated with business travel, where such emissions can be reduced
n
n
corporate reporting and ratings
n
n
Build on 2007 Corporate Responsibility and Sustainability Report and continue to align with GRI G3 framework
for 2008 CR&S Report
Proactive participation in Sustainability Ratings and Indices including:
–
–
ongoing commitment to Carbon Disclosure Project
maintaining our constituency listing on FTSE4Good Index
establish listing on the Dow Jones Sustainability Index
–
Maintain transparency of CR&S information via DB RREEF website
n
our people: employee engagement
n
n
n
n
n
Rollout Green Leaders program to industrial and retail sectors
Rollout second annual Employee Opinion Survey
Include Sustainability and Corporate Responsibility objectives in the performance objectives of our senior managers
Continue to maintain CR&S as a key strategic issue and continually communicate the importance of being green
to all employees
Appoint EEO officers to monitor and promote equal opportunity
our community: stakeholder engagement
n
n
n
Continue to engage tenants on sustainability including the rollout of our Tenant Sustainability Guide
Redefining and enhancing our corporate and property level community engagement strategies and programs
Developing new and enhanced Corporate Responsibility initiatives such as:
–
–
community engagement day for employees
community giving programs
property portfolio initiatives
existing properties
n
n
n
n
n
n
n
Reviewing our options to increase green power across the other sectors within the portfolio
Reducing resource consumption by established targets
Completing Phase 1 Green Profiling project for every office property within the portfolio by December 2007
Completing Phase 2 Green Project Opportunities project for every office property within the portfolio by June 2008
Rollout of Waterless urinals project to office, retail and industrial properties
Rollout of Rainwater harvesting project to industrial properties
Rollout of Eco and Water Wise Landscaping Guidelines to industrial properties
developments
n
n
Continue to integrate sustainability into all capital projects ensuring all projects incorporate sustainability measures
Continue to ensure our new developments achieve best practice environmental ratings and contain
the highest level of sustainability features
DB RREEF Trust Annual Report 2007 57
corporate
governance
statement
Governor Phillip Tower and
Governor Macquarie Tower, Sydney NSW
DB RREEF FUNDS MANAGEMENT IS THE RESPONSIBLE ENTITY
OF EACH OF THE FOUR TRUSTS THAT COMPRISE DB RREEF TRUST
The Shareholders’ Deed between DB RREEF Operations
Trust and First Australian Property Group Holdings Pty
Limited (Deed) prescribes the composition of the Boards
of DB RREEF Funds Management and DB RREEF Holdings
and requires agreement of the shareholders regarding the
management of personnel in the Human Resources, Internal
Audit, Legal and Compliance functions. Further, the Deed
prescribes a number of matters that require an ordinary
resolution of shareholders, rather than a resolution of the
Board. The Board has considered the provisions of the Deed
and concluded that the Deed does not compromise the ability
of the Board to act independently and in the best interests of
investors. The Board’s committee structure is outlined at
www.dbrreef.com/governance
1.1 role of the board
The Board is responsible for establishing objectives and
ensuring strategies for their achievement are in place and
their achievement monitored. The Board also carries ultimate
responsibility for the approval of property acquisitions,
divestments and major developments. The Board ensures
that the fiduciary and statutory obligations of each Trust to its
investors are met, and that such duties have priority over all
other duties including the interests of DRFM’s shareholders.
The Board is responsible for appointing and removing the
Chief Executive Officer (CEO), ratifying the appointment of
the Chief Financial Officer (CFO), Chief Operating Officer
(COO) and Company Secretary, and monitoring the
performance of the senior management team. A copy of
the Board’s Terms of Reference and the Directors’ Code
of Conduct is available at www.dbrreef.com/governance
DB RREEF Funds Management is also the Responsible Entity
of three property syndicates and DB RREEF RENTS Trust,
and is the investment manager for two private client property
mandates. To ensure consistency of governance across
DB RREEF’s funds and mandates, the Board has determined
that the following corporate governance framework will apply
to these funds and mandates. These trusts, syndicates and
client mandates are collectively referred to in this corporate
governance statement as the Trusts.
the governance framework
The corporate governance framework is designed to support
the strategic objectives of each of its Trusts by defining
accountability and creating control systems appropriate
to mitigate the risks inherent in the day to day operations
of the Trusts.
To achieve this objective, DB RREEF has implemented a
corporate governance framework that meets each of the
ASX Principles of Good Corporate Governance (ASX Principles).
A reconciliation of the ASX Principles against DB RREEF’s
own governance framework can be found on the web page
www.dbrreef.com/governance
principle 1. a solid foundation for oversight
and management
DB RREEF is committed to maintaining, through both the
Executive management and the Board, a balance of skills,
experience and independence appropriate to the nature and
extent of its operations. The governance framework enables
the Board to provide strategic guidance, while exercising
effective oversight of management. The framework also
defines the roles and responsibilities of the Board and
management in order to facilitate Board and management
accountability and ensure a balance of authority.
DB RREEF Funds Management is a wholly owned subsidiary
of DB RREEF Holdings. DB RREEF Holdings is 50 percent
owned by DB RREEF Operations Trust and 50 percent owned
by First Australian Property Group Holdings Pty Limited, a
subsidiary of Deutsche Bank AG (DB). DB RREEF Funds
Management and DB RREEF Holdings share a common
Board of Directors.
DB RREEF Trust Annual Report 2007 59
corporate governance statement (continued)
1.2 role of management
2.2 director independence
The day to day management of each of the Trusts rests in
the hands of the management team. To assist this team in
the direction, implementation and monitoring of its plans and
strategies, a number of management committees have been
established and responsibilities delegated. The management
committees include the Executive Committee, Investment
Committee, Portfolio Review Committee, Risk Management
Committee, Compliance and Internal Audit Committee and
the Capital Markets Committee.
A summary of the responsibilities of DB RREEF’s management
committees is available at www.dbrreef.com/governance
principle 2. structuring the board to add value
2.1 structure of the board
The composition of the Board reflects its role and the duties
and responsibilities it discharges. It reflects the need for the
Board to work together as a team with each Director making
their own contribution to the Board’s decision making
process. General qualifications for Board membership include
the ability and competence to make appropriate business
recommendations and decisions, an entrepreneurial talent
for contributing to the creation of investor value, relevant
experience in the industry sector, high ethical standards,
sound practical sense and a total commitment to the fiduciary
and statutory obligations to further the interests of investors
and achieve each Trust’s objectives.
The Board currently comprises seven members, four of whom
are independent and three of whom are appointed by DB,
including the CEO. Specific skills the incumbent Directors
bring to the Board include strategy, property management,
funds management, capital markets and financial
management.
The members of the Board as at the date of this
Annual Report are detailed in the Directors section
of this Annual Report.
The Board meets regularly throughout the year therefore
ensuring sufficient time is available to deal with Board related
matters and when required Directors also meet to consider
specific business. At each regular Board meeting the
Independent Directors also meet without Executive Directors.
Each year the Directors also meet to specifically consider
strategy in conjunction with senior management.
Independent Directors are independent of management and
free of any business or other relationship that could materially
interfere with the exercise of their unfettered and independent
judgement. Independent Directors are active in areas which
enable them to relate to the strategies of DB RREEF and to
make a meaningful contribution to the Board’s deliberations.
The Board regularly assesses the independence of its
Independent Directors, in light of interests disclosed to it.
Independent Directors hold office for three years, following
their first appointment (or, if appointed by the Board between
annual meetings, from the date of the Annual General
Meeting immediately succeeding this 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.
Although the Board is advised by internal Legal Counsel
and the Company Secretary, Independent Directors are
encouraged to take independent professional advice, at the
group’s expense, as required. Independent Directors also
confer regularly, outside Board meetings, without the
involvement of management and Executive Directors.
Please refer to www.dbrreef.com/governance for a description
of the procedure for the selection and appointment of new
Directors to the Board which includes specific criteria
used in the determination of Director independence.
2.3 role of the chair
The Chair is an Independent Director, and is responsible
for the leadership of the Board, for the efficient organisation
and conduct of the Board’s functions, and for the briefing of
Directors in relation to issues arising pertinent to the Board.
The Board has also clearly defined, and the Chair monitors,
the responsibilities and performance of the CEO.
2.4 board nomination and remuneration committee
A Board Nomination and Remuneration Committee has
been established by the Board to assist in the fulfilment
of its responsibilities, by overseeing all aspects of Director
and Executive remuneration, performance evaluation,
training, succession planning and Director nominations.
It comprises two Independent Directors (one of whom is the
Chair) and two DB appointed members. The members of the
Board Nomination and Remuneration Committee are as follows:
Committee member
Status
Christopher T Beare (Chair)
Stewart F Ewen OAM
Brian E Scullin
Andrew J Fay
Independent Director
Independent Director
DB appointed representative
and Non-Executive Director
DB appointed representative
and Alternate Director
60 DB RREEF Trust Annual Report 2007
The Board Nomination and Remuneration Committee’s
composition of two Independent Directors, one of whom
is the Chair, one DB appointed Non-Executive Director
and one DB appointed Alternate Director is in line with the
ASX Principles. However, it differs from the ASX Principles
commentary and guidance in that it does not comprise a
majority of Independent Directors. This departure reflects
the unique shareholding of DB RREEF Funds Management,
being 50 percent owned by DB RREEF and 50 percent
owned by DB and enables DB to bring to deliberations
its experience as a global financial institution, as well as
recognising the materiality of its shareholding. The Board
has considered this departure from ASX guidelines and
has determined that the departure does not compromise
the objectives of the Committee.
Reporting to the Board Nomination and Remuneration
Committee and the Executive Committee, the management
Compensation Committee oversees the development and
implementation of all DB RREEF’s human resource
management systems, including compensation and
recruitment, and advises the Board Nomination and
Remuneration Committee.
A copy of the Board Nomination and Remuneration
Committee’s Terms of Reference is available at
www.dbrreef.com/governance
principle 3. promoting ethical
and responsible decision-making
3.1 code of conduct
To ensure the satisfaction of statutory and fiduciary
obligations to each of its investor groups and to maintain
confidence in its integrity, the Board has implemented
a series of clearly articulated compliance policies and
procedures by which it requires all employees to abide.
In addition, it considers that it is important that its employees
meet the highest ethical and professional standards and
consequently has established an Employee Code of
Conduct for all employees.
Please refer to www.dbrreef.com/governance for a
copy of DB RREEF’s Employee Code of Conduct.
DB RREEF is committed to and strongly supports disclosure
being made by employees of corrupt conduct, illegality or
substantial waste of company assets. DB RREEF aims to
provide protection to employees who make such disclosures
from any detrimental action or reprisal.
Please refer to www.dbrreef.com/governance for
a copy of DB RREEF’s whistle-blowing policy.
3.2 insider trading and trading in DB RREEF securities
The group has implemented a trading policy that sets out the
requirements applying to Directors and employees who wish
to trade or invest in any of the group’s financial products for
their personal account or on behalf of an associate.
The policy specifies any Director or employee who wishes
to trade in any security issued by or managed by DB RREEF
must obtain written approval before entering into a trade.
Generally, approval will not be granted during defined
blackout periods. These periods commence at the end
of the Trusts’ half-year or full-year reporting periods and
end on the day the Trusts’ results are announced. In addition,
if Compliance or the Chief Executive Officer considers that
there is the potential that inside information may be held or
the potential that a significant conflict of interest may arise,
additional blackout periods will be imposed.
While the trading policy described above applies to
Directors and Senior Executives, the Board has determined
that Directors will not trade in any security managed by
DB RREEF.
Directors have made this decision because the Board of
DB RREEF has responsibility for DB RREEF Trust as well
as the third party business. Directors are obliged to act in
the best interests of each group of investors independently
of each other. Therefore, to minimise the appearance of
conflict that may arise by being a Director of multiple funds,
the Board has determined that it will not invest in any fund
managed by DB RREEF, including DB RREEF Trust. While
this decision may fail to achieve the desired alignment of
interest between investors and the Board, the Directors
consider it to be of greater importance to demonstrate that
they are not motivated to act in the interests of any one
fund over another. This position is periodically reviewed
by the Board.
With regard to aligning Senior Executives’ interests with
DB RREEF Trust investors, the Board has put in place a
long-term incentive scheme that it considers ensures an
alignment of their interests with all investors. A description
of Senior Executives’ long-term incentive scheme is
contained in the Directors’ Report.
Please refer to www.dbrreef.com/governance for
a copy of the Employee Trading Policy.
DB RREEF Trust Annual Report 2007 61
corporate governance statement (continued)
3.3 related party dealings
4.2 board audit committee
The group has implemented a policy covering the
management of related party dealings. Where a related
party dealing has been identified, the following occurs:
n
n
n
n
n
n
n
at management level, the interests of both parties are
represented by dedicated teams, each headed by
a DB RREEF executive;
when required, at Board level the interests of both
parties are represented by dedicated Board members;
information barriers are established with dedicated
team members operating on either side of the “barrier”;
team members are briefed by Compliance of their
obligations and responsibilities while working on the
transaction;
a clean desk policy applies while the transaction
is in progress;
documentation resulting from the transaction is maintained
on a restricted access database; and
ongoing training is conducted for dedicated employees in
relation to management of conflicts of interest during the
life of the transaction.
On a monthly basis, Compliance reports to the Board on
related party transactions that have been managed in the
previous period. During the last financial year, related party
transactions have included:
n
n
n
n
the lease of commercial premises at 343 George Street
Sydney, an asset of DB RREEF Trust, to DB RREEF Funds
Management Limited;
the acquisition by DB RREEF Holdings of DB RREEF
Wholesale Property Limited, the Responsible Entity of
DB RREEF Wholesale Property Fund;
the disposal of assets from DB RREEF Trust to various
clients/mandates managed by DB RREEF; and
the disposal of 50 percent of five retail assets to
DB RREEF Wholesale Property Fund.
principle 4. safeguarding the integrity
of financial reporting
4.1 review and authorisation
To ensure the truthful and factual presentation of each Trust’s
financial position, DB RREEF has put in place a structure of
review and authorisation for each of the Trust’s financial
records and reports. This structure includes:
n
n
the establishment of a Board Audit Committee to review
the Financial Statements of each entity and review the
independence and competence of the external auditor; and
semi-annual management representations to the Board
Audit Committee, affirming the veracity of each entity’s
Financial Statements.
A Board Audit Committee has been established by the Board,
and its charter requires that all members are financially
literate and have an understanding of the industry in which
the group operates, and one or more members have specific
financial expertise. The Board Audit Committee currently
comprises two Independent Directors, including the Chair,
and one DB appointed Director. The Board Audit Committee
operates under formal Terms of Reference, has access to
management, and internal and external auditors without
management present, and has the right and opportunity to
seek explanations and additional information. In addition, the
external auditor is invited to attend all Board Audit Committee
meetings. The Committee may also obtain independent
professional advice in the satisfaction of its duties at the cost
of the group. The Committee meets as frequently as required
to undertake its role effectively and not less than four times
per annum.
The membership of the Board Audit Committee is as follows:
Committee member
Status
Elizabeth A Alexander AM
(Chair)
Barry R Brownjohn
Brian E Scullin
Independent Director
Independent Director
DB appointed Non-Executive Director
In order to ensure review of non-audit services by the external
auditor, the Board Audit Committee has responsibility for
approving the engagement of the auditor for any non-audit
service of fee greater than $100,000.
A copy of the Board Audit Committee’s Terms of Reference
including the Committee’s procedure for the selection and
appointment of the external auditor and for the rotation of
external audit engagement partners, is available at
www.dbrreef.com/governance
principle 5. timely and balanced disclosure
5.1 continuous disclosure
In order to promote an informed and orderly market
in DB RREEF’s securities, DB RREEF has implemented
a process to ensure timely and balanced continuous
disclosure for all material matters that impact the Trusts.
The process puts in place mechanisms designed to ensure
compliance with ASX Listing Rules and ASIC’s disclosure
requirements such that:
n
n
all investors have equal and timely access to material
information, including the financial situation, performance,
ownership and governance of the Trusts; and
all announcements are factual and presented
in a clear and balanced way.
Please refer to www.dbrreef.com/governance for a copy
of the Continuous Disclosure and Analyst Briefings Policy.
62 DB RREEF Trust Annual Report 2007
principle 6. respecting the rights
of security holders
6.1 annual general meeting
DB RREEF respects the rights of investors and to facilitate the
effective exercise of those rights, the Board has committed to
the conduct of an annual general meeting for DB RREEF Trust.
Each annual general meeting is designed to:
n
n
n
n
supplement effective communication with investors;
provide investors ready access to balanced and
understandable information about their fund;
increase the opportunities for investor participation; and
facilitate investors’ rights to ratify the appointment of
Independent Directors.
The external auditor of the Trust attends each annual general
meeting and will be available to answer investor questions
about the conduct of the audits of both the Trusts’ financial
records and their Compliance Plans and the preparation and
content of the auditor’s report.
6.2 communications with investors
In addition to conducting an Annual General Meeting,
the group has a communications and investor relations
strategy that promotes an informed market and encourages
participation with each Trust’s investors. This strategy
includes the use of DB RREEF’s website to enable ready
access to DB RREEF announcements, annual and half-year
reports, presentations and analyst support material.
DB RREEF also has available significant historical
information on announcements, distributions and other
related information on the website at www.dbrreef.com
principle 7. recognising and managing risk
DB RREEF has a risk management system designed to
identify, assess, monitor and manage risk and to report
on its risk profile.
A copy of DB RREEF’s Risk Management Policy
is available at www.dbrreef.com/governance
7.1 risk management
Board Risk and Compliance Committee
The Board has established a Board Risk and Compliance
Committee to review risk and compliance matters and
monitor the group’s conformance with the requirements of the
Managed Investments Act, as specified in Section 601JC of
the Corporations Act. The Committee includes only members
who are familiar with the requirements of the Managed
Investments Act and have extensive risk and compliance
experience. The Committee is also encouraged to obtain
independent professional advice in the satisfaction of its
duties at the cost of the group.
As at 30 June 2007, the Committee comprised five members,
three of whom are external members (i.e. members who
satisfy the requirements of Section 601JB(2) of the
Corporations Act) and two of whom are executives of the
group. The scope of the Committee includes all Trusts,
including the group’s investment mandates. The Committee
reports to the Responsible Entity any breach of the
Corporations Act or breach of the provisions contained in
any Trust’s Constitution, and further reports to ASIC if the
Committee is of the view that the Responsible Entity has not
taken appropriate action to deal with a matter reported to it.
The membership of the Board Risk and Compliance
Committee, as at 30 June 2007, was as follows:
Committee member
Status
Brian E Scullin (Chair)
Elizabeth A Alexander AM
Andy P Esteban
Tanya L Cox
John C Easy
Independent Member
Independent Member
Independent Member
Executive Member and Chair
of the Risk Management Committee
Executive Member and Chair
of the Compliance and Internal
Audit Committee
In addition to its responsibilities under the Act, the Board Risk
and Compliance Committee is responsible for the oversight of
DB RREEF’s risk management systems, including its internal
compliance and control environment. The Committee’s Terms
of Reference are available at www.dbrreef.com/governance
To enable the Board Risk and Compliance Committee to
effectively fulfil its obligations, the Management Compliance,
Internal Audit Committee and Risk Management Committee
have been established to monitor the effectiveness of the
group’s risk management, internal compliance and
control systems.
Board Treasury Policy Committee
DB RREEF has significant interest rate and foreign exchange
exposures. To assist in the effective management of these
exposures the Board has established a number of committees
to specifically manage DB RREEF’s financial risks. These
committees are the Board Treasury Policy Committee and
management Capital Markets Committee. The Board Treasury
Policy Committee’s role is to review and recommend for
approval to the Board financial risk management policies and
hedging and funding strategies, and to monitor overall financial
risk management exposures.
DB RREEF Trust Annual Report 2007 63
corporate governance statement (continued)
The membership of the Board Treasury Policy Committee is:
Committee member
Status
Barry R Brownjohn (Chair)
Christopher T Beare
Victor P Hoog Antink
Peter C Roberts1
Independent Director
Independent Director
Chief Executive Officer
and Executive Director
Executive Member and Chair
of Capital Markets Committee
1 Peter C Roberts resigned on 8 June 2007.
A copy of the Board Treasury Policy Committee’s Terms
of Reference is available at www.dbrreef.com/governance
7.2 management representations
In addition to the operation of the above management
committees, the Chief Executive Officer makes the following
representations in relation to risk management:
n
n
at least quarterly to the Head of Compliance, regarding
conformance with compliance policies and procedures.
Any exceptions are reported by Compliance to the Board
Risk and Compliance Committee quarterly; and
on a semi-annual basis to the Board Audit Committee
regarding the veracity of DB RREEF’s Financial Statements.
7.3 compliance
Compliance is an important aspect in DB RREEF’s activities,
consequently the group has a segregated Compliance
function reporting to the General Counsel on a day to day
basis and ultimately to the Board Risk and Compliance
Committee. Compliance’s responsibility is to promote an
effective compliance culture including the provision of
compliance advice, the drafting and updating of relevant
compliance policies and procedures, conducting compliance
training and monitoring and reporting adherence to key
compliance policies and procedures.
principle 8. encouraging enhanced
performance
The Board is committed to enhancing both its own and
management’s effectiveness. To achieve this objective the
group has implemented a training and education regime
that facilitates increased performance through increasing all
DB RREEF Directors and employees skills bases. DB RREEF
has also implemented a comprehensive performance
evaluation program for its employees to support the
effectiveness of its education and training programs.
8.1 board education, independent advice
and performance evaluation
The Board Nomination and Remuneration Committee is also
responsible for ensuring the effectiveness of the induction
process and overseeing the regular performance evaluation
of the Board, its committees and individual Directors.
DB RREEF is subject to a variety of regulatory
and legal obligations, arising from:
n
n
n
the Corporations Act (including specifically
the provisions of the Managed Investments Act);
the Australian Stock Exchange listing rules
and governance requirements;
the requirements of an Australian Financial
Services Licence holder; and
n
the group’s governance and compliance framework.
To ensure that new Directors are able to meet their
responsibilities effectively, Directors receive an induction
briefing and an information pack which includes the corporate
governance framework, committee structures and their terms
of reference, any governing documents and Directors’ and
Officers’ insurance details, along with background reports.
In addition, Directors undertake training, through regular
presentations by management and external advisers on
sector, fund and industry specific trends and conditions.
Directors are also encouraged to:
n
n
n
take independent professional advice,
at the group’s expense;
seek additional information from management; and
directly access the Company Secretary,
General Counsel and Head of Compliance.
The Board Nomination and Remuneration Committee has
implemented a Board performance evaluation program which
extends over a two year period. The process is designed to
identify opportunities for performance improvement.
In 2006, the evaluation process looked at the performance
of the whole Board and its Committees and in 2007,
individual Director performance was evaluated. In each
alternate year the Board also reviews the progress of
findings of the previous year’s evaluation. The evaluation
is undertaken through the use of questionnaires and
face to face interviews on a broad range of issues.
A copy of the Board, committee and Director performance
evaluation process including Directors’ Code of Conduct is
available at www.dbrreef.com/governance
64 DB RREEF Trust Annual Report 2007
principle 9. remunerating fairly
and responsibly
Details of the group’s remuneration framework for
Non-Executive Directors and employees are set out
in the Remuneration Report that forms part of the
Directors’ Report contained in this Annual Report.
principle 10. recognising the legitimate
interests of stakeholders
The group is aware that the creation of value through the better
management of natural, human, social, financial and other
resources is essential to the development of its reputation,
and acknowledges the interests of its stakeholders including
investors, employees, tenants, bankers/financiers and the
broader community, in the further pursuit of this objective.
To address these objectives the group has in place a
Directors’ Code of Conduct, which addresses Directors’
duties and responsibilities, conflicts of interest, use and
confidentiality of information and Director independence.
The Directors’ Code of Conduct is available at
www.dbrreef.com/governance
DB RREEF has also developed a Corporate Responsibility
and Sustainability strategy which can be found at
www.dbrreef.com/sustainability
website
Further information and documents are available at
www.dbrreef.com/governance including a full description
of the group’s Governance Framework along with various
Committee Terms of Reference, Policies and Codes of
Conduct, along with reconciliation to the ASX Principles.
8.2 employee education and performance evaluation
DB RREEF requires all employees to undertake and maintain a
minimum level of ongoing training and professional
development. The specific type and amount of training is
determined by the employee’s job function and professional
skills. Managers and supervisors have the day to day
responsibility for ensuring all employees reporting to them
have undertaken the required training. The Human Resources
division is responsible for monitoring all DB RREEF employee
training requirements and reporting on all training activities
regularly to the Executive Committee.
In addition, employees considered “advisers” are required
to have in place an annual training plan and to undertake a
specified number of hours of training per annum. Employees
who provide financial product advice to retail investors are
also required to maintain accreditation pursuant to ASIC
Regulatory Guide RG146.
8.3 employee performance evaluation
To foster continuous improvement and to ensure the
effectiveness of its education and training programs,
the group conducts an annual performance evaluation
of all employees.
Each year the Board ensures that the goals of the group
are clearly established and that strategies are in place for the
achievement of those goals. Goals are reviewed periodically to
ensure they remain consistent with the group’s priorities and
the changing nature of its business. These goals become the
performance targets for the CEO and Executive Committee.
Performance against these goals is reviewed annually by the
Board Nomination and Remuneration Committee and is taken
into account in the remuneration review of Executive
Committee members.
Cascading goals and objectives are established for all other
employees and their performance is reviewed annually by the
Executive Committee. Remuneration and incentive payments
are considered by the Compensation Committee and
recommended to the Board Nomination and Remuneration
Committee, based on the achievement of approved
performance objectives and market comparatives.
DB RREEF Trust Annual Report 2007 65
financial
reports
DB RREEF DIVERSIFIED TRUST (ARSN 089 324 541)
ANNUAL FINANCIAL REPORT 30 JUNE 2007
notes to the fi nancial statements
directors’ declaration
independent auditor’s report
83
125
126
directors’ report
auditor’s independence declaration
fi nancial statements
–
–
–
–
income statements
balance sheets
statements of changes in equity
cash fl ow statements
ABOVE: Pound Road West, Dandenong VIC
67
78
79
80
81
82
DB RREEF Trust (DRT) (ASX Code: DRT), consists of DB RREEF Diversified Trust (DDF), DB RREEF Industrial Trust (DIT), DB RREEF Office
Trust (DOT) and DB RREEF Operations Trust (DRO), (the Trusts).
Under Australian equivalents to International Financial Reporting Standards (AIFRS), DDF has been deemed the parent entity for accounting purposes.
Therefore the DDF consolidated Financial Statements include all entities forming part of DRT.
66 DB RREEF Trust Financial Reports 2007
All press releases, financial reports and other information are available on our website: www.dbrreef.com
directors’ report
FOR THE YEAR ENDED 30 JUNE 2007
The Directors of DB RREEF Funds Management Limited (DRFM) as Responsible Entity of DB RREEF Diversified Trust (the Trust) and its
consolidated entities (DB RREEF Trust or DRT) present their Directors’ Report together with the consolidated Financial Statements for the year
ended 30 June 2007.
The Trust together with DB RREEF Industrial Trust, DB RREEF Office Trust and DB RREEF Operations Trust form the DB RREEF Trust stapled
security (DB RREEF Trust).
1. directors and secretaries
1.1 directors
The following persons were Directors or Alternate Directors of DRFM at all times during the year, and to the date of this Directors’ Report.
Directors
Christopher T Beare
Elizabeth A Alexander AM
Barry R Brownjohn
Stewart F Ewen OAM
Victor P Hoog Antink
Charles B Leitner III
Brian E Scullin
Alternate Director
Andrew J Fay for Charles B Leitner
Appointed
4 August 2004
1 January 2005
1 January 2005
4 August 2004
1 October 2004
10 March 2005
1 January 2005
30 January 2006
Particulars of the qualifications, experience and special responsibilities of current Directors and alternate Directors at the date of this Directors’
Report are set out in the Directors section of the Annual Report and form part of this Directors’ Report.
1.2 company secretaries
The names and details of the Company Secretaries of DRFM as at 30 June 2007 are as follows:
Tanya L Cox MBA MAICD (Company Secretary)
Appointed: 1 October 2004
Tanya Cox joined DB Real Estate in July 2003 as Chief Operating Officer, responsible for the overall operational efficiency of the real estate
business in Australia. Tanya has held various general management positions over the past 15 years, including Director and Chief Operating
Officer of NM Rothschild & Sons (Australia) Ltd and General Manager – Finance, Operations and IT of Bank of New Zealand (Australia).
Tanya is Chief Operating Officer and Company Secretary of DRFM, DB RREEF Holdings Pty Limited and DB RREEF Wholesale Property Limited
and is a member of the Board Risk and Compliance Committee.
John C Easy B Comm LLB ACIS (Company Secretary)
Appointed: 1 July 2005
John Easy joined Deutsche Asset Management as a senior lawyer in 1997 and has been involved in the listing of Deutsche Office Trust and a
number of major acquisition, disposal and leasing transactions for the group. John has responsibility for legal issues affecting the property
portfolio. John was formerly a senior associate with law firms Allens Arthur Robinson and Gilbert & Tobin. John is General Counsel and Company
Secretary for DRFM, DB RREEF Holdings Pty Limited and DB RREEF Wholesale Property Limited and is a member of the Board Risk and
Compliance Committee.
2. attendance of directors at board meetings and board committee meetings
The number of Directors’ meetings held during the year and each Director’s attendance at those meetings is set out in the table below.
The Directors met 17 times during the year. Eight Board meetings were main meetings, seven meetings were held to consider specific business.
In April 2007, several Directors went as a group to Japan and China to gain an insight into these markets. While the Board continuously
considers strategy, in March 2007, they met with senior management to consider business plans and strategy.
Board meetings
Main meetings held1
Main meetings attended1
Special meetings held1
Special meetings attended1
Directors
Christopher T Beare
Elizabeth A Alexander AM
Barry R Brownjohn
Stewart F Ewen OAM
Victor P Hoog Antink
Charles B Leitner III2
Brian E Scullin
8
8
8
8
8
8
8
8
8
8
8
8
8
7
7
7
7
7
7
7
7
7
6
6
5
7
6
7
1 Indicates where a Director attended either personally or an Alternate was in attendance.
2 Based in New York, USA.
DB RREEF Trust Financial Reports 2007 67
directors’ report (continued)
Special meetings are held at a time to enable the maximum number of Directors to attend and are generally held to consider specific items that
cannot be held over to the next scheduled main meeting.
The number of Board Committee meetings held during the year and each Director’s attendance at those meetings is set out in the table below.
Board Audit Committee
Board Risk and
Compliance Committee
Board Nomination and
Remuneration Committee
Board Treasury Policy
Committee
Meetings
held
Meeting
attended
Meetings
held
Meetings
attended
Meetings
held
Meetings
attended
Meetings
held
Meetings
attended
Directors
Christopher T Beare
Elizabeth A Alexander AM1
Barry R Brownjohn
Stewart F Ewen OAM
Andrew J Fay2
Victor P Hoog Antink
Charles B Leitner III
Brian E Scullin
–
6
6
–
–
–
–
6
–
6
6
–
–
–
–
6
–
–
–
–
–
–
–
4
–
–
–
–
–
–
–
4
5
–
–
5
1
–
–
5
5
–
–
5
1
–
–
5
2
–
2
–
–
2
–
–
2
–
2
–
–
2
–
–
1 Appointed to the Board Risk and Compliance Committee on 31 May 2007.
2 Appointed to the Board Nomination and Remuneration Committee on 23 May 2007.
3. remuneration report
The Directors of DRFM as Responsible Entity of the Trust and its consolidated entities (DB RREEF Trust or DRT) and DB RREEF Holdings Pty
Limited (DRH) present the Remuneration Report. Sections 3.1, 3.2, 3.3, 3.4, 3.6, 3.7 and 3.8 of this Remuneration Report for the year ended
30 June 2007 have been prepared by the Board Nomination and Remuneration Committee and adopted by the Board in accordance with
AASB 124: Related Party Disclosures which has been transferred from the financial report and has been audited. The remaining disclosures
required by the Corporations Law have not been audited.
Please note that a reference to remuneration in this report has the same meaning as compensation for the purposes of AASB 124.
3.1 board nomination and remuneration committee
The Board Nomination and Remuneration Committee oversees the remuneration of Directors and Senior Executives. The role and membership
of the Board Nomination and Remuneration Committee is set out in the Corporate Governance Statement in this Annual Report. The terms of
reference of the Board Nomination and Remuneration Committee can be found on the web page www.dbrreef.com/governance
3.2 non-executive director remuneration
The disclosures in this section of the report relate to the Non-Executive Directors of DRFM who held office during the year ended 30 June 2007.
3.2.1 Non-Executive Directors’ remuneration framework
The objective of the Non-Executive Directors’ remuneration framework is to ensure Non-Executive Directors’ fees reflect the responsibilities
of Directors and the demands which are made on them, as well as ensuring they are in line with market.
Non-Executive Directors’ fees are reviewed annually by the Board Nomination and Remuneration Committee. The Committee also obtains
advice from independent remuneration consultants from time to time. Non-Executive Directors, other than the Chair, receive a base fee plus
an additional fee for membership of a Board Committee. The Chair receives no Board Committee fees. Taking into account the greater time
commitment required, the Chair receives a higher fee than other Directors, which is benchmarked to market. The Chair is not present during
any discussion relating to the determination of his own fees.
Fees paid to Non-Executive Directors are paid from a remuneration pool of $1,250,000 per annum, which was approved by DB RREEF Trust
investors at the Annual General Meeting held on 25 November 2005.
68 DB RREEF Trust Financial Reports 2007
Board and Committee fees paid to Non-Executive Directors for the years ended 30 June 2006 and 30 June 2007 are set out in the table below:
Directors’ fees
Board Chair DWPL
($)
($)
Committee fees
Board
Audit
Committee
($)
Board Risk and
Compliance
Committee
($)
Board Nomination
and Remuneration
Committee
($)
Board Treasury
Policy
Committee
($)
Name
Christopher T Beare
2007
2006
Elizabeth A Alexander AM1
2007
2006
Barry R Brownjohn
2007
2006
Stewart F Ewen OAM
2007
2006
Brian E Scullin
2007
2006
Total
2007
2006
272,500
250,000
110,000
110,000
110,000
110,000
110,000
110,000
110,000
110,000
–
–
–
–
–
–
–
–
15,000
–
–
–
20,000
20,000
10,000
10,000
–
2,500
10,000
7,500
712,500
690,000
15,000
–
40,000
40,000
–
–
833
–
–
–
–
–
20,000
20,000
20,833
20,000
Cash salary
and fees total
($)
272,500
268,125
130,833
130,000
135,000
135,000
117,500
120,000
162,500
145,000
–
10,625
–
–
–
–
7,500
7,500
7,500
7,500
–
7,500
–
–
15,000
15,000
–
–
–
–
15,000
25,625
15,000
22,500
818,333
798,125
1 Appointed to the Board Risk and Compliance Committee on 31 May 2007.
2 Appointed Chair DWPL commencing 1 Jan 2007 following its acquisition by DB RREEF Holdings Pty Limited in Dec 2006.
All Non-Executive Directors also receive reimbursement for reasonable travel, accommodation and other expenses incurred whilst undertaking
DB RREEF Trust business.
During the year ended 30 June 2007, Charles B Leitner, Non-Executive Director and his Alternate Director Andrew J Fay, were employees of
Deutsche Bank or a related company (including RREEF America Inc.), and were not paid fees or any other remuneration by DRFM or DRH
or any of their subsidiaries.
The Chief Executive Officer, Victor P Hoog Antink, does not receive fees in respect of his role as a Director, but does receive remuneration
as a Senior Executive of DRFM.
3.2.2 Remuneration paid
Details of the nature and amount of each element of remuneration for each Non-Executive Director of DRFM for the years ended 30 June 2006
and 30 June 2007 are set out in the following table.
Name
Christopher T Beare
2007
2006
Elizabeth A Alexander AM
2007
2006
Barry R Brownjohn
2007
2006
Stewart F Ewen OAM
2007
2006
Brian E Scullin
2007
2006
Total
2007
2006
Short-term employee benefits
($)
Post-employment benefits1
($)
Other long-term benefits
($)
Total
($)
259,814
255,986
25,720
29,413
29,887
34,413
107,798
110,092
119,797
132,861
543,016
562,765
12,686
12,139
105,113
100,587
105,113
100,587
9,702
9,908
42,703
12,139
275,317
235,360
–
–
–
–
–
–
–
–
–
–
–
–
272,500
268,125
130,833
130,000
135,000
135,000
117,500
120,000
162,500
145,000
818,333
798,125
1 Post-employment benefits represent compulsory and salary sacrificed superannuation benefits.
DB RREEF Trust Financial Reports 2007 69
directors’ report (continued)
3.3 DB RREEF remuneration framework
Performance incentive pool
The objective of DRFM’s remuneration framework is to ensure
remuneration for performance is competitive and appropriate for
the results delivered. The framework aligns each employee’s
remuneration with the achievement of strategic objectives and the
creation of value for investors, and conforms to market best practice.
The remuneration framework is designed to attract and retain
talented and motivated employees and to encourage enhanced
performance. The remuneration framework provides employees
with a remuneration structure that encourages capability and
performance by:
n
n
providing clear performance objectives;
delivering competitive remuneration for contributing to the
creation of value; and
n
providing recognition for contribution.
DRFM’s annual performance management program incorporates the
establishment of specific, measurable, financial and non-financial
objectives for all employees, which are then monitored throughout
the year. Each of these individual objectives contributes to the
achievement of DB RREEF’s overall plans and objectives. At each
year end the degree of an employee’s achievement against the
objectives is assessed and the results reflected in their “at risk”
performance incentive allocation.
Employee remuneration structure is a mix of:
n
n
fixed salary subject to annual review; and
variable “at risk” pay through short-term and long-term
performance incentive plans.
The balance of an employee’s remuneration between these
components changes to reflect the employee’s accountability and
responsibility for results. As an employee’s accountability and
responsibility increases the lower will be the fixed component and
the greater the “at risk” incentive component of their remuneration.
No employee receives DB RREEF Trust securities or securities in any
other DB RREEF product as part of their remuneration package. This
is in line with DB RREEF’s trading policy as outlined in the Corporate
Governance Statement. The Board has made this decision because
DRFM has responsibility for DB RREEF Trust as well as a number of
third party funds and mandates. To minimise any appearance of
conflict that may arise by being a manager of multiple funds, the
Directors have determined that they will not invest in any fund
managed by DB RREEF including DRT. This action ensures that the
Directors are not motivated to act in the interests of any one group of
investors over another.
Recognising the need to achieve an alignment of interest with all
DB RREEF’s investors and the contribution DB RREEF’s managed
funds make to DB RREEF Trust’s performance, the Board has
implemented a long-term incentive scheme based on the combined
performance of DB RREEF Trust and each fund managed by
DB RREEF. A detailed description of the long-term incentive plan
is outlined below.
Fixed remuneration
To ensure that the fixed component of an employee’s remuneration
is competitive, external remuneration consultants are retained to
provide analysis and advice regarding market remuneration for
comparable roles, responsibility and accountability. The fixed pay
for all employees is reviewed annually. However, there are no
guaranteed fixed pay increases for any employee.
70 DB RREEF Trust Financial Reports 2007
All short-term incentive payments and long-term incentive allocations
are taken from a single performance incentive pool. The size of the
performance incentive pool in any year is determined after
reference to the group’s performance against certain financial
and non-financial targets determined by the Board. Should these
predetermined performance targets be achieved, an incentive pool,
approved by the Board following the recommendation of the Board
Nomination and Remuneration Committee, is made available for
allocation to all employees, including Senior Executives and the
Chief Executive Officer, for the financial year.
Short-term performance incentive
At the end of each year, performance against set targets is assessed
and the results reflected in the short-term performance incentive
allocation from the incentive pool to each employee. The performance
assessment is weighted to non-financial measures that vary between
positions but include matters such as achieving delivery of projects,
operational improvements, performance enhancements, leadership
and team work.
Where performance falls below minimum threshold levels, no
short term performance incentive is paid. Short-term performance
incentives are payable in cash in August/September each year.
Long-term incentive scheme
In 2005 the Board implemented a long-term incentive scheme,
which has operated without change. The scheme is designed to
achieve the following outcomes:
n
n
to more closely align participants’ interests with those
of investors;
to give participants an incentive to create long-term, sustainable
value for investors by enabling them to benefit from the
long-term success of DB RREEF activities; and
n
to assist in attracting and retaining high quality executives.
At the end of each year, performance against set targets is assessed
and the results reflected in the long-term performance incentive
allocation from the incentive pool to each participant. The performance
assessment is weighted to financial measures that vary between
positions but include matters such as DRT’s total return, earnings and
distribution growth, net tangible asset backing and third party fund
performance. No long-term performance incentive allocation is granted
for less than satisfactory performance. The Nomination and
Remuneration Committee recommends to the Board the employees,
including executives, who will be eligible to participate in the long-term
incentive scheme and the amount of long term incentive that should
be allocated to each participant.
In 2007, the Board determined that all employees who were
employed as at 30 June 2007 will have a minimum participation
of $1,000 per employee.
The long-term incentive scheme employs the following concepts:
n
n
the “Composite Total Return” is 50 percent of the total return
of DB RREEF Trust, plus 50 percent of the combined asset
weighted total return of DB RREEF’s unlisted funds and
mandates; and
the “Performance Benchmark” is 50 percent of the S&P/ASX
200 Property Accumulation Index for DB RREEF Trust and
50 percent of the Mercers Unlisted Property Fund Index for
the unlisted funds and mandates.
DRFM’s long-term incentive scheme operates as follows:
n
n
n
n
each year the Board, following a recommendation from the Board Nomination and Remuneration Committee, allocates participants a long-
term incentive value. The long-term incentive value allocated varies depending on the role of the participant and the participant’s
performance against key performance indicators;
the long-term incentive value is held by DRH until the end of the three year vesting period, and is notionally reinvested during the vesting
period in DB RREEF Trust (50 percent of long-term incentive value) and DB RREEF’s other unlisted funds and mandates (50 percent of
long-term incentive value). This means that the “banked value” of the long-term incentive fluctuates up and down in line with changes in the
Composite Total Return;
at the end of the three year vesting period the final long-term incentive payment is determined by grossing up the final “banked value”
by the Performance Multiplier;
the relevant Performance Multiplier is determined by comparing the Composite Total Return over the three year vesting period against the
Benchmark. The table below sets out the appropriate Performance Multiplier based on the comparison of Composite Total Return against
the relevant Benchmark performance groups:
Performance hurdle
Less than 95% of
benchmark
Up to 100% of
benchmark
Up to 115% of
benchmark
Up to 130% of
benchmark
Greater than 130%
of benchmark
Performance Multiplier
100%
110%
120%
140%
150%
n
and consequently, the long-term incentive payment made to each participant at the end of the vesting period reflects the overall return
received by DB RREEF investors, with performance exceeding the benchmark being recognised by a greater long-term incentive payment.
In determining the construction of the Composite Total Return the DRFM Board considered the obligations participants have to investors in
DB RREEF Trust and the unlisted funds and mandates. Following due consideration the Board determined that the appropriate measure for
DB RREEF Trust and the unlisted funds and mandates should be the total return of each fund. The Board further determined that the
Performance Benchmark should be the S&P/ASX 200 Property Accumulation Index for DRT and the Mercers Unlisted Property Fund Index
for unlisted funds and mandates.
Participants in the long-term incentive scheme will only receive cash payments. In addition, if a participant terminates their employment during
the vesting period their long-term incentive grant is forfeited, unless otherwise determined by the Nomination and Remuneration Committee.
Performance indicators
Key performance indicators are typically a combination of financial and non-financial indicators which reflect the employee’s role, seniority,
accountability and responsibility and their personal objectives, and may include one or more of the following measures:
Performance indicators
Reason for use
Financial performance indicators
Total return
Earnings growth
Distributions growth
Net tangible asset growth
Third party funds performance
Property performance indicators
Net property income per property
Percentage of vacant space per property
Expenses against budget
Non-financial indicators
Project delivery
Team work
3.4 senior executive remuneration
to ensure focus on an improving security price and delivering income to investors
to ensure focus on improving earnings
to ensure focus on investor distributions
to ensure the value of assets is maintained and improved
to ensure focus on achieving each fund’s objectives
to ensure focus on target income returns to investors
to ensure focus on target income returns to investors
to ensure focus on appropriate cost model
to ensure focus on achievement of non-financial drivers of performance
to ensure focus on achievement of non-financial drivers of performance
The disclosures in this section of the report relate to the executives listed below, being the Chief Executive Officer and the Senior Executives
with authority and responsibility for planning, directing and controlling the activities of DB RREEF Trust during the financial year.
Name
Title
The date they qualified or ceased to qualify as a Senior Executive
during the 12 months ended 30 June 2007
Victor P Hoog Antink
Tanya L Cox
John C Easy
Ben J Lehmann
Peter C Roberts1
Paul G Say
Mark F Turner
1 Resigned 8 June 2007.
Chief Executive Officer
Chief Operating Officer
General Counsel
Fund Manager, DB RREEF Trust
Chief Financial Officer
Head of Corporate Development
Head of Unlisted Funds
Ceased to qualify 8 June 2007
Qualified 19 March 2007
DB RREEF Trust Financial Reports 2007 71
directors’ report (continued)
3.4.1 Senior Executive remuneration framework
The Nomination and Remuneration Committee, in consultation
with external remuneration consultants, has implemented a specific
framework for Senior Executive remuneration (including the
remuneration of the Chief Executive Officer) that is market competitive
and is line with DB RREEF’s overall remuneration framework.
The framework for Senior Executive remuneration is based on the
following key criteria:
n
n
n
n
transparency, competitiveness and reasonableness;
linked to performance;
the ability to attract and retain high quality executives; and
aligns executives’ and investors’ interests.
Alignment to investors’ interests is achieved by a substantial
proportion of Senior Executive remuneration being dependent upon
performance. This ensures that remuneration for Senior Executives,
including the Chief Executive Officer, is closely linked to:
n
n
delivery of forecast returns; and
achievement of key non-financial value drivers.
3.4.2 Components of Senior Executive remuneration
Each Senior Executive’s remuneration package comprises
the following components:
n
n
n
fixed remuneration;
short-term performance incentives; and
long-term performance incentives.
Subsequent to DRFM’s corporate restructure in September 2004
and following consideration of guidance from external advisors, the
Board Nomination and Remuneration Committee commissioned the
development of a long-term incentive scheme and revised the target
remuneration mix for the Chief Executive Officer and other Senior
Executives to more closely reflect the remuneration structure of
DRFM’s peer group.
Application of the target mix to the remuneration of the Chief
Executive Officer and new Senior Executives was effected
immediately. The target mix for other Senior Executives is being
progressively introduced and will be fully implemented by 2008.
DB RREEF Trust Security Price Performance
DRFM’s target remuneration mix between fixed, short-term and long-
term incentives for the Chief Executive Officer and other Senior
Executives is outlined below:
Fixed
remuneration
At risk –
short-term
At risk –
long-term
2007
(%)
2006
(%)
2007
(%)
2006
(%)
2007
(%)
2006
(%)
Chief Executive Officer
Other Senior Executives
45
50
50
60
25
25
25
25
30
25
25
15
The Board Nomination and Remuneration Committee continues
to review the target remuneration mix for all Senior Executives.
3.5 DB RREEF performance
DB RREEF Trust was created as a single stapled security in
September 2004. Since stapling DB RREEF Trust’s operational and
financial performance has been in line with expectations.
Funds under management performance
As at 30 June
DRT funds
under
management
($ billion)
Third party
funds under
management
($ billion)
2007
2006
2005
9.03
7.85
7.00
4.63
3.90
3.50
DB RREEF Trust – ASX Market Capitalisation
Total
DB RREEF
funds under
management
($ billion)
13.66
11.75
10.50
Year to 30 June
2007
2006
20051
Market capitalisation
($ billion)
5.69
4.10
3.70
Source: IRESS.
1 Trading in DB RREEF Trust commenced 6 October 2004.
)
$
(
e
c
i
r
P
2.20
2.00
1.80
1.60
1.40
1.20
1.00
Dec 05
Mar 05
Jun 05
Sep 05
Dec 05
Mar 06
Jun 06
Sep 06
Dec 06
Mar 07
Jun 07
Weekly volume weighted average price
Source: IRESS/DB RREEF Estate.
72 DB RREEF Trust Financial Reports 2007
DB RREEF Trust – Earnings, Distributions and Net Tangible Assets (NTA) performance
Year to 30 June
Earnings per security
Distribution per security
NTA per security
2007
2006
2005
Total return analysis
40.90 cents
36.44 cents
18.25 cents
11.3 cents
11.0 cents
10.5 cents
$1.82
$1.53
$1.28
n
n
Composite Total Return – 50 percent of the total return of DB RREEF Trust, plus 50 percent of the combined asset weighted total return
of DB RREEF’s unlisted funds and mandates.
Composite Performance Benchmark – 50 percent of the Mercers Unlisted Property Fund Index and 50 percent of the S&P/ASX 200
Property Accumulation Index.
Period to 30 June 2007
Composite Total Return
Composite Performance Benchmark
DB RREEF Trust
S&P/ASX 200 Property Accumulation Index
1 Inception date is 1 October 2004.
1 year
(% per annum)
2 years
(% per annum)
Since 1 October 20041
(% per annum)
29.0
23.0
42.6
25.9
25.0
20.0
22.3
23.7
22.0
20.0
25.5
19.8
During the year DB RREEF Trust did not buy back or cancel any of its securities.
3.6 details of senior executive remuneration paid
Details of the nature and amount of each element of remuneration for the Chief Executive Officer and other Senior Executives for the years
ended 30 June 2006 and 30 June 2007 are set out in the following table.
Name
Short-term employee benefits
Post-employment
benefits
Other long-term benefits
Total
Cash salary
and fees
($)
Short-term
incentive
($)
Other short-
term benefit
($)
Pension and
superannuation benefits3
($)
Long-term
incentive value
($)
Other long-
term benefit
($)
Victor P Hoog Antink
2007
2006
Tanya L Cox
2007
2006
John C Easy
2007
2006
Ben J Lehmann
2007
2006
Peter Roberts1
2007
2006
Paul G Say2
2007
2006
Mark F Turner
2007
2006
Total
2007
2006
907,167
907,714
311,828
237,861
286,314
287,861
407,314
387,861
292,438
150,469
122,438
–
297,615
274,900
550,000
500,000
175,000
175,000
110,000
100,000
250,000
230,000
–
125,000
20,000
–
200,000
180,000
–
–
–
–
–
–
–
–
–
130,000
280,000
–
–
–
92,833
92,286
3,172
12,139
28,686
12,139
12,686
12,139
650,000
250,000
110,000
60,000
75,000
50,000
250,000
120,000
–
–
–
–
–
–
–
–
($)
2,200,000
1,750,000
600,000
485,000
500,000
450,000
920,000
750,000
539,206
22,350
–
75,000
–
25,000
831,644
527,819
4,229
–
42,385
25,100
–
–
180,000
70,000
–
–
–
–
426,667
–
720,000
550,000
2,625,114
2,246,666
1,305,000
1,310,000
280,000
130,000
723,197
176,153
1,265,000
625,000
–
25,000
6,198,311
4,512,819
1 Peter Roberts resigned 8 June 2007.
2 Paul Say commenced 19 March 2007.
3 Some employees elected to salary sacrifice prior year short-term incentive which restricted their ability to contribute to superannuation in 2007.
DB RREEF Trust Financial Reports 2007 73
directors’ report (continued)
3.7 details of senior executive long-term incentive scheme
The table below sets out the movement in long-term incentive values for each Senior Executive during the year.
Name
Opening long-term
incentive value
outstanding as at
30 June 2006
Less – long-term
incentive value
forfeited during
the year
Less – long-term
incentive value
vested during
the year
Victor P Hoog Antink
Tanya L Cox
John C Easy
Ben J Lehmann
Peter C Roberts2
Paul G Say3
Mark F Turner
Total
($)
476,763
72,094
65,118
180,470
75,000
–
82,094
951,539
($)
–
–
–
–
75,000
–
–
75,000
1 No long-term incentive amounts were vested during the year.
2 Peter Roberts resigned 8 June 2007.
3 Paul Say commenced 19 March 2007.
($)
–
–
–
–
–
–
–
–
Plus – fluctuation
due to movement
in DRFM’s
Composite Total
Return
($)
138,261
20,907
18,884
52,336
–
–
23,807
Plus – additional
long term incentive
value granted
during the year
($)
650,000
110,000
75,000
250,000
–
–
180,000
Closing balance
of long-term
incentive value
outstanding as at
30 June 20071
($)
1,265,024
203,001
159,002
482,806
–
–
285,901
254,195
1,265,000
2,395,734
The potential future value of an executive’s long-term incentive entitlement cannot be estimate as it is based on the movement of the Composite
Total Return measure which cannot be forecast.
3.8 equity plans and loans
DRFM does not operate a security or option participation scheme or loan scheme for any Director or Senior Executive.
3.9 employment agreements
The table below outlines employment arrangements for the Chief Executive Officer and other Senior Executives:
Name and title
Commencement date
Term
Termination provisions/benefits
Victor P Hoog Antink
Chief Executive Officer
1 October 2004
Unlimited in term In the event of early termination, DRFM is required to give 12 months’
notice and may elect to pay out all or part of this notice period. The
provision of this payment constitutes full satisfaction of the Company’s
obligations in respect of notice of termination.
Other Senior Executives
Various
Unlimited in term In the event of early termination, DRFM is required to give three
months’ notice and may elect to pay out all or part of this notice period.
All other DRH and DB RREEF Property Services Pty Limited (DRPS) employees have a standard service contract with DRH or DRPS as applicable.
These agreements are unlimited in term and provide for one months notice of termination by either party. However, no notice period is required if
termination is for misconduct or serious or persistent breach of the agreement.
Where termination is outside the control of the executive, including Senior Executives, or the executive is made redundant, the termination
payment will vary between executives. Where a termination payment is to be made it will be determined:
n
n
in the case of Senior Executives, by the Board on the recommendation of the Board Nomination and Remuneration Committee; and
in the case of all other executives, by the Chief Executive Officer on the recommendation of the Compensation Committee.
In both situations the payment will take into account the seniority of the executive, the length of service, the performance of the executive,
the reasons for termination and the statutory and other rights (if any) of the executive and DRH.
74 DB RREEF Trust Financial Reports 2007
4. directors’ interests
The Board’s policy on insider trading and trading in DB RREEF Trust securities or securities in any of the funds managed by DB RREEF
by any Director or employee is outlined in the Corporate Governance Statement.
While the trading policy described in the Corporate Governance Statement applies to Directors and Senior Executives, the Board has determined
that Directors will not trade in any security managed by DB RREEF.
Directors have made this decision because the Boards of DB RREEF have responsibility for DB RREEF Trust as well as the third party
businesses. Directors are obliged to act in the best interest of each group of investors independently of each other. Therefore, to minimise the
appearance of conflict that may arise by being a Director of multiple funds, the Directors have determined that they will not invest in any fund
managed by DB RREEF including DRT. While this decision may fail to achieve the desired alignment of interests between investors and the
Board, the Directors consider it to be of greater importance to demonstrate that they are not motivated to act in the interests of any one fund
over another. This position is periodically reviewed by the Board.
As a direct result of DB RREEF’s policy regarding Directors holding DRT securities, or securities in any of the funds managed by DB RREEF,
as at the date of this Directors’ Report no Director or Alternate Director directly or indirectly held:
n
n
n
securities in DB RREEF Trust; or
options over, or any other contractual interest in, securities in DB RREEF Trust; or
an interest in any other fund managed by DRFM or any other entity that forms part of DB RREEF Trust.
5. directors’ directorships in other listed entities
The following table sets out directorships of other listed entities, not including DRFM, held by the Directors at any time in the three years
immediately prior to the end of the year, and the period for which each directorship was held.
Director
Company
Date appointed Date resigned or ceased being
a Director of a listed security
Elizabeth A Alexander AM
Brian E Scullin
Alternate Director
Andrew J Fay
CSL Limited
Boral Limited
AMCOR Limited
Deutsche Asset Management (Australia) Limited1
IYS Instalment Receipt Limited1
SPARK Infrastructure RE Limited2
Deutsche Asset Management (Australia) Limited1
IYS Instalment Receipt Limited1
SPARK Infrastructure RE Limited2
July 1991
September 1994
April 1994
20 December 1999
24 October 2005
1 January 2006
4 May 2005
4 May 2005
1 January 2006
October 2005
17 October 2006
17 October 2006
17 October 2006
17 October 2006
1 IYS Instalment Receipt Limited had until 29 November 2006 issued ASX listed instalment receipts over units in the Deutsche Retail Infrastructure Trust, a managed
investment scheme that was until 17 October 2006 listed but not quoted on ASX and whose responsible entity was Deutsche Asset Management (Australia) Limited.
2 SPARK Infrastructure RE Limited has issued ASX listed stapled securities trading as SPARK Infrastructure Group (ASX: SKI)
6. principal activities
During the year the principal activity of DB RREEF Trust was real estate funds management and investment in real estate assets. There were
no significant changes in the nature of DB RREEF Trust’s activities during the year.
The number of employees of DB RREEF Trust at the end of the reporting period being 30 June 2007 was 227 (2006: 132). The increase
in 2007 is primarily due to the internalisation of retail property management.
7. total value of trust assets
The total value of the assets of DB RREEF Trust as at 30 June 2007 was $9,486.8 million (2006: $8,287.5 million). Details of the basis
of this valuation are outlined in note 1 of the Notes to the financial statements and form part of this Directors’ Report.
8. review and results of operations
A review of the results, financial position, operations including business strategies and the expected results of operations of DB RREEF Trust,
is set out in the Chief Executive Officer’s Report in this Annual Report and forms part of this Directors’ Report.
9. likely developments and expected results of operations
In the opinion of the Directors, disclosure of any further information regarding business strategies and the future developments or results of
DB RREEF Trust, other than the information already outlined in this Directors’ Report or the Financial Statements accompanying this Directors’
Report would be unreasonably prejudicial to DB RREEF Trust.
DB RREEF Trust Financial Reports 2007 75
directors’ report (continued)
10. significant changes in the state of affairs
17. audit
The Directors of DRFM are not aware of any matter or circumstance,
not otherwise dealt with in this Directors’ Report or the Financial
Statements that has significantly or may significantly affect the
operations of DB RREEF Trust, the results of those operations,
or the state of DB RREEF Trust’s affairs in future financial years.
11. matters subsequent to the end of the
financial year
Since the end of the year the Directors of DRFM are not aware
of any matter or circumstance not otherwise dealt with in this
Directors’ Report or the Financial Statements that has significantly
or may significantly affect the operations of DB RREEF Trust, the
results of those operations, or the state of DB RREEF Trust’s affairs
in future financial years.
12. distributions
Distributions paid or payable by DB RREEF Trust for the year ended
30 June 2007 were 11.3 cents per security (2006: 11.0 cents per
security) as outlined in note 31 of the Notes to the financial statements.
13. DRFM’s fees and associate interests
Details of fees paid or payable by DB RREEF Trust to DRFM for the
year ended 30 June 2007 are outlined in note 35 of the Notes to the
financial statements and form part of this Directors’ Report.
The number of interests in DB RREEF Trust held by DRFM or its
associates as at the end of the financial year are nil (2006: nil).
14. interests in DB RREEF Trust
The movement in securities on issue in DB RREEF Trust during the
year and the number of securities on issue as at 30 June 2007 are
detailed in note 28 of the Notes to the financial statements and form
part of this Directors’ Report.
DB RREEF Trust did not have any options on issue as at
30 June 2007 (2006: nil).
15. environmental regulation
The Directors of DRFM are satisfied that adequate systems are in
place for the management of its environmental responsibilities and
compliance with its various licence requirements and regulations.
Further, the Directors are not aware of any breaches of these
requirements and to the best of their knowledge all activities have
been undertaken in compliance with environmental requirements.
16. indemnification and insurance
The insurance premium for a policy of insurance indemnifying
Directors, officers and others (as defined in the relevant policy of
insurance) is paid by DRH. The auditors are in no way indemnified
out of the assets of DB RREEF Trust.
17.1 auditor
PricewaterhouseCoopers (PwC or the Auditor) continues in office
in accordance with section 327 of the Corporations Act 2001.
17.2 non-audit services
Details of the amounts paid to the Auditor, which include amounts
paid for non-audit services are set out in note 7 of the Notes to the
financial statements.
The Board Audit Committee is satisfied that the provision of
non-audit services provided during the year by the Auditor (or by
another person or firm on the Auditor’s behalf) is compatible with
the general standard of independence for auditors imposed by the
Corporations Act 2001. The reasons for the Directors being
satisfied are:
n
n
n
Board Audit Committee has determined that the external auditor
will not provide services that have the potential to impair the
independence of its audit role, including:
– participating in activities that are normally undertaken
by management; and
– being remunerated on a “success fee” basis.
Board Audit Committee has determined that the Auditor will not
provide services where the Auditor may be required to review or
audit its own work, including:
–
the preparation of accounting records;
–
the design and implementation of information
technology systems;
– conducting valuation, actuarial or legal services;
– promoting, dealing in or underwriting securities; or
– providing internal audit services.
Board Audit Committee regularly reviews the performance and
independence of the Auditor and whether the independence of
this function has been maintained having regard to the provision
of non-audit services. The Auditor has provided a written
declaration to the Board regarding its independence at each
reporting period and Board Audit Committee approval is required
before the engagement of the Auditor to perform any non-audit
service for a fee in excess of $100,000.
The above Directors’ statements are in accordance with the advice
received from the Board Audit Committee.
17.3 audit independence declaration
A copy of the Auditors’ Independence Declaration as required under
section 307C of the Corporations Act 2001 is set out in the Financial
Statements and forms part of this Directors’ Report.
76 DB RREEF Trust Financial Reports 2007
18. corporate governance
DRFM’s Corporate Governance Statement is set out in a separate
section of the Annual Report.
19. rounding of amounts and currency
DB RREEF Trust is a registered scheme of a kind referred to in Class
Order 98/0100, issued by the Australian Securities & Investments
Commission, relating to the “rounding off” of amounts in this
Directors’ Report and the Financial Statements. Amounts in this
Directors’ Report and Financial Statements have been rounded off
in accordance with that Class Order to the nearest thousand dollars,
unless otherwise indicated. All figures in this Directors’ Report and
the Financial Statements, except where otherwise stated, are
expressed in Australian dollars.
20. management representation
The Chief Executive Officer and Chief Operating Officer,
the person who effectively holds the role of Chief Financial Officer,
have reviewed DB RREEF Trust’s financial reporting processes,
policies and procedures together with its risk management and
internal control and compliance policies and procedures. Following
that review it is their opinion that DB RREEF Trust’s financial records
for the financial year have been properly maintained in accordance
with the Corporations Act 2001 and the Financial Statements and
their notes comply with the accounting standards and give a true
and fair view.
21. directors’ authorisation
This Directors’ Report is made in accordance with a resolution
of the Directors.
Christopher T Beare
Chair
27 August 2007
Victor P Hoog Antink
Chief Executive Officer
27 August 2007
DB RREEF Trust Financial Reports 2007 77
auditor’s independence declaration
78 DB RREEF Trust Financial Reports 2007
income statements
FOR THE YEAR ENDED 30 JUNE 2007
Consolidated
Parent Entity
Note(s)
2007
$’000
2006
$’000
2007
$’000
2006
$’000
2
18
35
3
4
6
693,430
–
8,106
663,496
–
8,153
153,063
33,400
560
145,763
40,647
627
701,536
671,649
187,023
187,037
52,715
3,959
3,355
831,330
–
52,458
1,349
1,672
26,911
–
1,490
686,490
–
73,271
2,903
519
–
–
15
217,847
89,559
11,687
33,322
87
–
–
112
186,002
99,488
15,349
(3,154)
190
1,648,374
1,463,233
539,540
485,024
(170,120)
(33,650)
(184,786)
(3,478)
(2,488)
–
–
(10,588)
(159,295)
(28,695)
(166,116)
–
(1,023)
(480)
(3,287)
(8,829)
(39,470)
(11,961)
(42,672)
–
–
–
–
(1,580)
(36,211)
(10,534)
(35,377)
–
–
(160)
–
(1,523)
(405,110)
(367,725)
(95,683)
(83,805)
1,243,264
1,095,508
443,857
401,219
5(a)
5(d)
1,110
(33,583)
(1,169)
(27,954)
(32,473)
(29,123)
–
–
–
–
–
–
1,210,791
1,066,385
443,857
401,219
446,378
722,441
398,925
611,417
1,168,819
41,972
1,010,342
56,043
443,857
–
443,857
–
401,219
–
401,219
–
1,210,791
1,066,385
443,857
401,219
Cents
Cents
Cents
Cents
40
40
15.62
15.62
14.39
14.39
15.53
15.53
14.47
14.47
Revenue from ordinary activities
Property revenue
Distribution revenue
Interest revenue
Total revenue from ordinary activities
Share of net profits of associates accounted for
using the equity method
Proceeds from sale of inventory
Net gain on sale of investment properties
Net fair value gain of investment properties
Net fair value gain of investments
Net fair value gain of derivatives
Net foreign exchange gain/(loss)
Other income
Total income
Expenses
Property expenses
Responsible Entity fees
Finance costs
Carrying value of inventory sold
Depreciation
Costs associated with the Transaction
Impairment of goodwill
Other expenses
Total expenses
Profit before tax
Tax expense
Income tax benefit/(expense)
Withholding tax expense
Total tax expense
Profit after tax
Profit attributable to:
Equity holders of the parent entity
Equity holders of other stapled entities (minority interest)
Stapled security holders
Net profit attributable to other minority interests
Net profit
Earnings per unit
Basic earnings per unit on profit attributable to equity
holders of the parent entity
Diluted earnings per unit on profit attributable to equity
holders of the parent entity
The above Income Statements should be read in conjunction with the accompanying notes.
DB RREEF Trust Financial Reports 2007 79
balance sheets
AS AT 30 JUNE 2007
Current assets
Cash and cash equivalents
Receivables
Held for sale investment properties
Inventories
Derivative financial instruments
Other financial instruments
Current tax assets
Other
Total current assets
Non-current assets
Investment properties
Property plant and equipment
Other financial assets at fair value through profit and loss
Investments accounted for using the equity method
Investments in associates
Deferred tax assets
Other
Total non-current assets
Total assets
Current liabilities
Payables
Interest bearing liabilities
Loans with related parties
Current tax liabilities
Provisions
Derivative financial instruments
Other
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Deferred tax liabilities
Financial liability with other minority interest
Other
Total non-current liabilities
Total liabilities
Net assets
Equity
Equity attributable to equity holders of the parent entity
Contributed equity
Reserves
Undistributed income
Parent entity security holders’ interest
Equity attributable to equity holders of other entities
stapled to DDF (minority interest)
Contributed equity
Reserves
Undistributed income
Other stapled security holders’ interest
Stapled security holders’ interest
Other minority interest
Total equity
Consolidated
Parent Entity
Note(s)
2007
$’000
2006
$’000
59,603
36,389
–
–
145,425
51,936
112
9,664
106,428
35,254
24,000
3,344
92,478
45,092
289
6,050
2007
$’000
9,096
19,495
–
–
33,124
–
–
2,439
2006
$’000
15,743
22,109
–
–
26,054
–
–
1,227
65,133
303,129
312,935
64,154
8,585,703
314,021
–
270,155
–
3,921
9,907
7,558,945
173,468
–
235,062
–
116
7,012
1,987,034
–
294,901
–
481,712
–
803
1,673,804
–
247,172
–
454,398
–
750
9,183,707
7,974,603
2,764,450
2,376,124
9,486,836
8,287,538
2,828,604
2,441,257
124,509
18,443
–
1,930
164,992
21,333
3,150
100,901
244,553
–
3,156
155,523
20,477
5,452
24,129
–
34,332
–
68,470
7,861
–
15,671
–
34,332
–
54,178
9,052
–
334,357
530,062
134,792
113,233
3,334,884
73,809
28,305
10,538
2,950,494
48,726
29,105
13,638
3,447,536
3,041,963
3,781,893
3,572,025
702,914
–
–
1,210
704,124
838,916
706,986
–
–
1,084
708,070
821,303
5,704,943
4,715,513
1,989,688
1,619,954
1,151,526
(925)
839,248
1,094,144
739
524,375
1,151,526
–
838,162
1,094,144
–
525,810
1,989,849
1,619,258
1,989,688
1,619,954
2,182,833
3,054
1,091,034
2,094,887
(561)
574,078
3,276,921
2,668,404
–
–
–
–
–
–
–
–
5,266,770
438,173
4,287,662
427,851
1,989,688
–
1,619,954
–
5,704,943
4,715,513
1,989,688
1,619,954
8
9
15
10
12
13
14
15
16
17
18
18
19
20
21
22
11
23
12
24
22
25
26
27
28
29
29
28
29
29
30
The above Balance Sheets should be read in conjunction with the accompanying notes.
80 DB RREEF Trust Financial Reports 2007
statements of changes in equity
FOR THE YEAR ENDED 30 JUNE 2007
Total equity at the beginning of the year
Adjustment on adoption of AASB 132 and AASB 139,
net of tax:
Undistributed income
Exchange differences on translation of foreign operations
Net income recognised directly in equity
Net profit
Total recognised income and expense for the year
Transactions with equity holders in their capacity as equity holders:
Contributions of equity, net of transaction costs
Distributions provided for or paid
Transactions with other minority interest:
Contributions of equity, net of transaction costs
Distributions provided for or paid
Foreign currency translation reserve
Total transactions with equity holders
Total equity at the end of the year
Consolidated
Parent Entity
Note(s)
2007
$’000
2006
$’000
2007
$’000
2006
$’000
4,715,513
3,865,712
1,619,954
1,288,981
29
28
31
31
–
1,951
1,951
3,443
1,301
4,744
–
–
–
2,165
–
2,165
1,210,791
1,066,385
443,857
401,219
1,212,742
1,071,129
443,857
403,384
145,328
(324,638)
94,776
(306,259)
57,382
(131,505)
34,278
(106,689)
4,130
(19,045)
(29,087)
7,649
(21,964)
4,470
–
–
–
–
–
–
(223,312)
(221,328)
(74,123)
(72,411)
5,704,943
4,715,513
1,989,688
1,619,954
Total recognised income and expense for the year is attributable to:
Equity holders of the parent entity – DDF unitholders
Equity holders of other entities stapled to DDF
(minority interest)
444,714
403,377
443,857
403,384
726,056
611,428
–
–
Security holders of DB RREEF Diversified Trust
1,170,770
1,014,805
443,857
403,384
Other minority interest
41,972
56,324
–
–
Total recognised income and expense for the year
1,212,742
1,071,129
443,857
403,384
The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.
DB RREEF Trust Financial Reports 2007 81
cash flow statements
FOR THE YEAR ENDED 30 JUNE 2007
Cash flows from operating activities
Receipts in the course of operations (inclusive of GST)
Payments in the course of operations (inclusive of GST)
Interest received
Finance costs paid to financial institutions
Distributions received
Dividends received
Income and withholding taxes paid
Consolidated
Parent Entity
Note(s)
2007
$’000
2006
$’000
2007
$’000
2006
$’000
768,804
(280,014)
9,702
(191,047)
13,177
4,750
(5,637)
733,609
(252,829)
9,295
(171,697)
12,165
1,500
(4,018)
178,475
(81,829)
560
(11,015)
49,050
–
–
154,091
(60,182)
581
(7,796)
35,750
–
–
Net cash inflow from operating activities
38
319,735
328,025
135,241
122,444
Cash flows from investing activities
Proceeds from sale of investment properties
Proceeds from sale of inventory
Payments for capital expenditure on investment properties
Payments for investment properties
Payments for investments accounted for using the equity method
Payments for inventories
Payments for property plant and equipment
Payments for capital expenditure on property plant and equipment
Proceeds from repayment of third party loan
Net cash outflow from investing activities
Cash flows from financing activities
Increase in other minority interests
Borrowings provided to the Trusts
Borrowings provided by the Trusts
Establishment expenses and unit issue costs
Proceeds from borrowings
Repayment of borrowings
Distributions paid to security holders
Distributions paid to other minority interests
194,160
3,959
(167,233)
(393,627)
(8,897)
–
(69,683)
(96,591)
–
11,221
–
(218,013)
(155,597)
(16,269)
(3,362)
(7,712)
(70,542)
5,049
–
–
(84,637)
–
(1,131)
–
–
–
–
109
–
(85,722)
–
(60,131)
–
–
–
(537,912)
(455,225)
(85,768)
(145,744)
2,343
–
–
–
2,053,575
(1,693,134)
(169,841)
(18,577)
7,814
–
–
(267)
977,813
(602,066)
(200,900)
(18,918)
–
(141,644)
80,165
–
111,340
(46,150)
(59,831)
–
–
(85,963)
126,582
–
77,509
(3,341)
(85,982)
–
Net cash inflow/(outflow) from financing activities
174,366
163,476
(56,120)
28,805
Net (outflow)/inflow in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
(43,811)
106,428
(3,014)
36,276
68,959
1,193
Cash and cash equivalents at the end of the year
8
59,603
106,428
(6,647)
15,743
–
9,096
5,505
10,238
–
15,743
The above Cash Flow Statements should be read in conjunction with the accompanying notes.
82 DB RREEF Trust Financial Reports 2007
notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2007
note 1. summary of significant accounting policies
(a) basis of preparation
In accordance with AASB Interpretation 1002: Post-Date-of-
Transition Stapling Arrangements, the Trusts must be consolidated.
The parent entity and deemed acquirer of the Trusts is DDF.
The DDF Consolidated column represents the consolidated result of
DDF, which comprises DDF and its controlled entities, DIT and its
controlled entities, DOT and its controlled entities and DRO and its
controlled entities. Equity attributable to other trusts stapled to DDF
is a form of minority interest in accordance with AASB 1002 and, in
the DDF consolidated column, represents the equity of DIT, DOT and
DRO. Other minority interests represent the equity attributable to
parties external to the Trusts.
DB RREEF Trust stapled securities are quoted on the Australian
Stock Exchange under the code “DRT” and comprise one unit in
each of DDF, DIT, DOT and DRO. Each entity forming part of DRT
continues as a separate legal entity in its own right under the
Corporations Act 2001 and is therefore required to comply with the
reporting and disclosure requirements under the Corporations Act
2001 and Australian Accounting Standards.
DB RREEF Funds Management Limited as Responsible Entity for
each of the Trusts may only un-staple the Trusts if approval is
obtained by special resolution of the stapled security holders.
This general purpose financial report for the year ended 30 June 2007
has been prepared in accordance with the requirements of the Trusts’
Constitutions, the Corporations Act 2001 and Australian Equivalents to
International Financial Reporting Standards (AIFRS). Compliance with
AIFRS ensures that the consolidated Financial Statements and notes
comply with International Financial Reporting Standards (IFRS). The
Trusts changed their accounting policies on 1 July 2005 to comply
with AIFRS.
This financial report is prepared on the going concern basis and
in accordance with historical cost conventions and has not been
adjusted to take account of either changes in the general purchasing
power of the dollar or changes in the values of specific assets,
except for the revaluation of certain non-current assets and financial
instruments (refer notes 1(f), 1(n), 1(p) and 1(r)).
The accounting policies adopted are consistent with those of the
previous financial year and corresponding interim reporting period,
unless otherwise stated.
Critical accounting estimates
The preparation of Financial Statements in conformity with AIFRS
may require the use of certain critical accounting estimates and
management to exercise its judgement in the process of applying the
Trusts’ accounting policies. Other than the estimation of fair values
described in notes 1(f) and 1(p), no key assumptions concerning the
future or other estimation of uncertainty at the reporting date have a
significant risk of causing material adjustments to the Financial
Statements in the next annual reporting period.
(b) principles of consolidation
Controlled entities
The Financial Statements have been prepared on a consolidated
basis in recognition of the fact that while the securities issued by
the Trusts are stapled into one trading security and cannot be
traded separately, the Financial Statements must be presented on
a consolidated basis. The parent entity and deemed acquirer of the
Trusts is DDF. The accounting policies of the subsidiary trusts are
consistent with those of the parent.
The Financial Statements incorporate an elimination of inter-entity
transactions and balances to present the Financial Statements on
a consolidated basis. Net profit and equity in controlled entities,
which is attributable to the unit holdings of minority interests, are
shown separately in the Income Statements and Balance Sheets
respectively. Where control of an entity is obtained during a financial
year, its results are included in the Income Statements from the date
on which control is gained. The Financial statements incorporate all
the assets, liabilities and results of the parent and its
controlled entities.
Partnerships and joint ventures
Where assets are held in a partnership or joint venture with another
entity directly, the Trusts’ share of the results and assets of this
partnership or joint venture are consolidated into the Income
Statements and Balance Sheets of the Trusts. Where assets are
jointly controlled via ownership of units in single purpose unlisted unit
trusts or shares in companies, the Trusts apply equity accounting to
record the operations of these investments (refer note 1(s)).
(c) other financial assets at fair value through profit
and loss
Interests held by the Trust in controlled entities and associates are
measured at fair value with changes in fair value recognised
immediately in the Income Statements.
(d) revenue recognition
Rent
Rental income is brought to account on a straight-line basis over
the lease term for leases with fixed rent review clauses. In all other
circumstances rental income is brought to account on an accruals
basis. If not received at balance date, rental income is reflected in
the Balance Sheets as a receivable. Recoverability of receivables is
reviewed on an ongoing basis. Debts which are known to be not
collectable are written off.
Interest income
Interest income is brought to account on an accruals basis using
the effective interest rate method and, if not received at the balance
date, is reflected in the Balance Sheets as a receivable.
Dividends and distribution income
Income from dividends and distributions are recognised when
declared. Amounts not received at balance date are included as
a receivable in the Balance Sheets.
(e) expenses
Expenses are brought to account on an accruals basis and, if not paid
at the balance date, are reflected in the Balance Sheets as a payable.
Property expenses
Property expenses include rates, taxes and other property outgoings
incurred in relation to investment properties and property plant and
equipment where such expenses are the responsibility of the Trusts.
Financing costs to financial institutions
Financing costs include interest expense and other costs incurred
in respect of obtaining finance. Other transaction costs incurred
including loan establishment fees in respect of obtaining finance are
applied against the related financings with the amortisation of such
costs being recognised through the effective interest rate on the
financing over the term of the respective agreement.
DB RREEF Trust Financial Reports 2007 83
notes to the financial statements (continued)
note 1. summary of significant accounting
policies (continued)
Contingent Assets and the amount initially recognised less
cumulative amortisation, where appropriate.
(e) expenses (continued)
Financing costs are expensed unless they relate to qualifying assets.
Qualifying assets are assets which take a substantial period of time
to prepare for their intended use or sale. Where funds are borrowed
specifically for the acquisition or construction of a qualifying asset,
financing costs capitalised are those incurred in relation to that
financing, net of any interest earned on those financings. Where
funds are borrowed generally, financing costs are capitalised using
a weighted average capitalisation rate.
(f) derivatives and other financial instruments
(i) Derivatives
The Trusts’ activities expose it to changes in interest rates and
foreign exchange rates. Accordingly, the Trusts enter into various
derivative financial instruments to manage its exposure to the
movements in interest rates and foreign exchange rates. Policies
and limits are approved by the Board of Directors of the Responsible
Entity in respect of the usage of derivatives and other financial
instruments to hedge those cash flows and earnings which are
subject to interest rate risks and foreign currency risks respectively.
In conjunction with its advisers, the Responsible Entity continually
reviews the Trusts’ exposures and updates its treasury policies and
procedures. The Trusts do not trade in derivative instruments for
speculative purposes.
Even though the derivatives entered into aim to provide an economic
hedge to interest rate and foreign currency risks, the Trusts have
elected not to apply hedge accounting under AASB 139: Financial
Instruments – Recognition and Measurement. Accordingly, derivatives
including interest rate swaps and foreign exchange contracts, are
measured at fair value with any changes in fair value recognised
immediately in the Income Statements.
(ii) Embedded derivatives
Derivatives embedded in other financial instruments or other host
contracts are treated as separate derivatives when their risks and
characteristics are not closely related to those of host contracts and
the host contracts are not measured at fair value with changes in fair
value recognised in the Income Statements.
(iii) Debt and equity instruments issued by DRT
Financial instruments issued by DRT are classified as either liabilities
or as equity in accordance with the substance of the contractual
arrangements. Accordingly, ordinary units issued by DDF, DIT, DOT
and DRO are classified as equity.
Interest and distributions are classified as expenses or as
distributions of profit consistent with the balance sheet classification
of the related debt or equity instruments. Transaction costs arising
on the issue of equity instruments are recognised directly in equity
(net of tax) as a reduction of the proceeds of the equity instruments
to which the costs relate. Transaction costs are the costs that are
incurred directly in connection with the issue of those equity
instruments and which would not have been incurred had those
instruments not been issued.
(iv) Financial guarantee contracts
Financial guarantee contracts are recognised as a financial liability at
the time the guarantee is issued. The liability is initially measured at
fair value and subsequently at the higher of the amount determined
in accordance with AASB 137 Provisions: Contingent Liabilities and
84 DB RREEF Trust Financial Reports 2007
The fair value of financial guarantees is determined as the present
value of the difference in the net cash flows between the contractual
payments under the debt instrument and the payments that would
be required without the guarantee, or the estimated amount that
would be payable to a third party for assuming the obligations.
Where guarantees in relation to loans or other payables of
subsidiaries or associates are provided for no compensation, the fair
values are accounted for as contributions and recognised as part of
the cost of the investment.
Change in accounting policy
The policy of recognising financial guarantee contracts as financial
liabilities was adopted for the first time in the current financial year.
In previous reporting periods, a liability for financial guarantee
contracts was only recognised if it was probable that the debtor
would default and a payment would be required under the contract.
The change in policy was necessary following the change to AASB
139: Financial Instruments – Recognition and Measurement. The
new policy has been applied retrospectively. There were no
adjustments to current and prior period numbers as the fair value
calculated by management was not material.
(v) Loans and receivables
Loans and other receivables are measured at amortised cost using
the effective interest rate method less impairment.
(g) goods and services tax/value added tax
Revenues, expenses and capital assets are recognised net of the
amount of Australian/New Zealand goods and services tax (GST)
or French and German value added tax (VAT), except where the
amount of GST/VAT incurred is not recoverable. In these
circumstances the GST/VAT is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Cash flows are included in the Cash Flow Statements on a gross
basis. The GST component of cash flows arising from investing and
financing activities which is recoverable from or payable to the ATO
is classified as operating cash flows.
(h) taxation
Under current Australian income tax legislation DDF, DIT and DOT,
are not liable for income tax provided they satisfy certain legislative
requirements. These Trusts may be liable for income tax in
jurisdictions where foreign property is held (i.e. USA, France,
Germany or New Zealand).
DRO is a trading trust and is subject to Australian income tax
as follows:
n
n
the income tax expense for the year is the tax payable on the
current year’s taxable income based on a tax rate of 30 percent
adjusted for changes in deferred tax assets and liabilities and
unused tax losses;
deferred tax assets and liabilities are recognised for temporary
differences arising from differences between the carrying
amount of assets and liabilities and the corresponding tax base
of those items. The relevant tax rates are applied to the
cumulative amounts of deductible and taxable temporary
differences to measure the deferred tax assets or liabilities. An
exception is made for certain temporary differences arising from
the initial recognition of an asset or a liability (where they do not
arise as a result of a business combination and did not affect
either accounting profit/loss or taxable profit/loss);
n
n
deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those
temporary differences and losses;
deferred tax assets and liabilities are not recognised for
temporary differences between the carrying amount and tax
bases of investments in controlled entities where the parent
entity is able to control the timing of the reversal of the
temporary differences and it is probable that the differences
will not reverse in the foreseeable future; and
n
current and deferred tax balances attributable to amounts
recognised directly in equity are also recognised directly in equity.
Withholding tax payable on distributions received by DRT from
DB RREEF Industrial Properties Inc (US REIT) and DB RREEF
Properties Inc (US REIT II) are recognised as an expense when
tax is withheld.
In addition, a deferred tax liability or asset and related deferred tax
expense/benefit is recognised on differences between the tax cost
base of US assets and liabilities in DRT (held by US REIT and US
REIT II) and their accounting carrying values at balance date.
Any deferred tax liability or asset is calculated using a blend of the
current withholding tax rate applicable to income distributions and
the applicable US federal and state taxes.
Under current Australian income tax legislation, the security holders
will generally be entitled to receive a foreign tax credit for US
withholding tax deducted from distributions paid by the US REIT
and US REIT II.
DIT France Logistique SAS (DIT France), a wholly owned sub-trust of
DIT, is liable for French corporation tax on its taxable income at the
rate of 34.43 percent. In addition a deferred tax liability or asset and
its related deferred tax expense/benefit is recognised on differences
between the tax cost base of the French real estate assets and their
accounting carrying value at balance date.
DB RREEF GLOG Trust, a wholly owned Australian sub-trust of DIT,
is liable for German income tax on its German taxable income at the
rate of 26.375 percent (note that this rate is reduced to 15 percent
from 1 January 2008). In addition a deferred tax liability or asset
and its related deferred tax expense/benefit is recognised on
differences between the tax cost base of the German real estate
assets and their accounting carrying value at balance date.
DOT NZ Sub-Trust No. 1, a wholly owned Australian sub-trust of DOT
is liable for New Zealand corporate tax on its New Zealand taxable
income at the rate of 33 percent. In addition, a deferred tax liability
or asset and its related deferred tax expense/benefit is recognised
on differences between the tax cost base of the New Zealand real
estate assets and their accounting carrying value at balance date.
(i) distributions
In accordance with the Trust’s Constitution, the Trust distributes
its distributable income to unitholders by cash or reinvestment.
Distributions are provided for when they are approved by the Board
of Directors and declared.
(j) repairs and maintenance
Plant is required to be overhauled on a regular basis and is managed
as part of an ongoing major cyclical maintenance program. The costs
of this maintenance are charged as expenses as incurred, except
where they relate to the replacement of a component of an asset,
in which case the replaced component will be derecognised and the
replacement costs capitalised in accordance with note 1(p). Other
routine operating maintenance, repair costs and minor renewals are
also charged as expenses as incurred.
(k) cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held
at call with financial institutions and other short-term, highly liquid
investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
(l) receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost, which is based on the
invoiced amount less provision for doubtful debts. Trade receivables
are required to be settled within 30 days and are assessed on an
ongoing basis for impairment. Receivables which are known to be
uncollectable are written off. A provision for doubtful debts is
established when there is objective evidence that the Trusts will not
be able to collect all amounts due according to the original terms of
the receivables.
(m) inventories
Properties undergoing or having completed construction or
development for ultimate sale are classified as inventory and
are measured at the lower of cost or net realisable value. Cost
is assigned by specific identification and includes the cost of
acquisition, development and finance costs during development.
When development is completed, finance costs and other holding
charges are expensed as incurred.
(n) property plant and equipment
All property plant and equipment is initially recognised at cost
including transaction costs. Land and freehold buildings are
accounted for using the cost method. Construction in progress
is subsequently recognised at fair value in the Financial Statements.
Revaluation increments are credited directly to the asset revaluation
reserve, unless they are reversing a previous decrement charged as
an expense in the Income Statements, in which case they are
credited directly to the Income Statements.
Revaluation decrements are recognised directly as an expense
in the Income Statements, unless they are reversing a revaluation
increment previously credited to, and still included in the balance of
the asset revaluation reserve, in which case they are debited directly
to the asset revaluation reserve.
(o) depreciation of property plant and equipment
Land is not depreciated. Depreciation on buildings (including fit-out)
is calculated on a straight-line basis so as to write off the net cost
of each non-current asset over its expected useful life. Buildings
(including fit-out) have estimated useful lives of between five and
50 years. Estimates for useful lives are reviewed on a regular basis.
(p) investment properties
Investment properties consist of properties held for long-term rental
yields, capital appreciation or both. Investment properties are initially
recognised at cost including transaction costs. Investment properties
are subsequently recognised at fair value in the Financial Statements.
The basis of valuations of investment properties is fair value being
the amounts for which the assets could be exchanged between
knowledgeable willing parties in an arm’s length transaction, based
on current prices in an active market for similar properties in the
same location and condition and subject to similar leases. Where this
is not available, an appropriate valuation method is used, which may
include the discounted cashflow and the capitalisation method.
DB RREEF Trust Financial Reports 2007 85
notes to the financial statements (continued)
note 1. summary of significant accounting
policies (continued)
(p) investment properties (continued)
Discount rates and capitalisation rates are determined based on
industry expertise and knowledge, and where possible a direct
comparison to third party rates for similar assets in a comparable
location. Rental income from current leases and assumptions about
future leases, as well as any expected operational cash outflows in
relation to the property, are also reflected in fair value.
External valuations of the individual investments are carried out in
accordance with the Trusts’ Constitutions, or may be earlier where
the Responsible Entity believes there is a potential for a material
change in the fair value of the property.
Changes in fair values are recorded in the Income Statements.
The gain or loss on disposal of an investment property is calculated
as the difference between the carrying amount of the asset at the
date of disposal and the net proceeds from disposal and is included
in the Income Statements in the year of disposal.
Subsequent redevelopment and refurbishment costs (other than
repairs and maintenance) are capitalised to the investment property
where they result in an enhancement in the future economic benefits
of the property. Repairs and maintenance are accounted for in
accordance with note 1(j).
(i) Held for sale investment properties
Investment properties intended for sale are separately disclosed on
the Balance Sheets as “Held for sale investment properties”. Such
properties are measured using the same methodology as investment
properties.
(q) leasing fees
Leasing fees incurred are capitalised and amortised over the lease
periods to which they relate.
(r) lease incentives
Prospective lessees may be offered incentives as an inducement to
enter into operating leases. These incentives may take various forms
including cash payments, rent free periods, or a contribution to
certain lessee costs such as fit-out costs or relocation costs.
The costs of incentives are recognised as a reduction of rental
income on a straight-line basis from the earlier of the date which the
tenant has effective use of the premises or the lease commencement
date to the end of the lease term. The carrying amount of the lease
incentives is reflected in the fair value of investment properties.
(s) investments accounted for using the equity method
Some property investments are held through the ownership of units
in single purpose unlisted trusts or shares in unlisted companies
where the Trusts exert significant influence or joint control but does
not have a controlling interest. These investments are considered to
be associates and the equity method of accounting is applied in the
consolidated Financial Statements.
Under this method, the entity’s share of the post-acquisition profits
of associates is recognised as revenue in the Consolidated Income
Statements. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment. Dividends or
distributions receivable from associates are recognised in the parent
entity’s Income Statements, while in the consolidated Financial
Statements they reduce the carrying amount of the investment.
86 DB RREEF Trust Financial Reports 2007
When the Trust’s share of losses in an associate equal or exceed its
interest in the associate (including any unsecured receivables) the
Trusts do not recognise any further losses unless it has incurred
obligations or made payments on behalf of the associate.
(t) acquisition of assets
The purchase method of accounting is used for all acquisitions
including business combinations. Cost is measured as the fair value
of the assets given up, shares issued or liabilities assumed at the
date of exchange plus costs directly attributable to the acquisition.
Where equity instruments are issued in an acquisition, the value of
the instruments is their published market price as at the date of
exchange unless, in rare circumstances, it can be demonstrated that
the published price at the date of exchange is an unreliable indicator
of fair value and that other evidence and valuation methods provide a
more reliable measure of fair value. Transaction costs arising on the
issue of equity instruments are recognised directly in equity.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their
fair values. The excess of the acquisition cost over the fair value of
the assets and liabilities acquired is recorded as goodwill (refer note
1(u)). If the cost is less than the fair value of the net assets acquired,
the difference is recognised directly in the Income Statements.
Where settlement of any part of cash consideration is deferred,
the amounts payable in the future are discounted to their present
value as at the date of exchange at the entity’s incremental
financing rate.
(u) goodwill
Where a business combination is acquired, the identifiable net assets
acquired are measured at fair value. The excess of the acquisition
costs over the fair value of the identifiable net assets is brought to
account as goodwill in the Balance Sheets. The carrying value of
the goodwill is tested for impairment at each reporting date with any
decrement in value taken to the Income Statements as an expense.
(v) fair value estimation of financial assets and liabilities
The fair value of financial assets and financial liabilities must be
estimated for recognition and measurement and for disclosure
purposes. The fair value of financial instruments traded in active
markets (such as publicly traded derivatives and available for sale
securities) is based on quoted market prices at the balance sheet
date. The appropriate quoted market price used for financial assets
held by the Trusts is the current bid price, the appropriate quoted
market price for financial liabilities is the current ask price.
The fair value of financial instruments that are not traded in an active
market (for example, over-the-counter derivatives) is determined
using valuation techniques including dealer quotes for similar
instruments and discounted cash flows. In particular, the fair
value of interest rate swaps is calculated as the present value of the
estimated future cash flows and the fair value of forward exchange
rate contracts is determined using forward exchange market rates
at the balance sheet date.
(w) payables
These amounts represent liabilities for amounts owing at balance
date. The amounts are unsecured and are usually paid within 30
days of recognition.
(x) interest bearing liabilities
(aa) segment reporting
All loans and borrowings are initially recognised at fair value net of
issue costs associated with the borrowing. After initial recognition,
interest bearing loans and borrowings are subsequently measured at
amortised cost using the effective interest method. Amortised cost is
calculated by taking into account any issue costs and any discount
or premium on settlement.
A business segment is a group of assets and operations engaged
in providing services that are subject to risks and returns that are
different to those of other business segments. A geographical segment
is engaged in providing services within a particular geographic
environment and is subject to risks and returns that are different from
those of segments operating in other geographic environments.
(y) earnings per unit
(ab) rounding of amounts
Basic and diluted earnings per unit are determined by dividing the
net profit attributable to equity holders of the parent entity (DDF) by
the weighted average number of ordinary units outstanding during
the year.
(z) foreign currency
Items included in the Financial Statements of the Trusts are
measured using the currency of the primary economic environment
in which the entity operates (the functional currency). The Financial
Statements are presented in Australian dollars, which is the
functional and presentation currency of the Trusts.
(i) Foreign currency transactions
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period
end exchange rates of financial assets and liabilities denominated
in foreign currencies are recognised in the Income Statements.
(ii) Foreign operations
Foreign operations are located in the United States of America, New
Zealand, France and Germany. These operations have a functional
currency of US Dollars, NZ Dollars and Euros respectively, which are
translated into the presentation currency.
The assets and liabilities of the foreign operations are translated at
exchange rates prevailing at the reporting date. Income and expense
items are translated at the average exchange rates for the period
unless exchange rates fluctuate significantly. Exchange differences
arising, are recognised in the foreign currency translation reserve
and recognised in profit or loss on disposal of the foreign operation.
Goodwill and fair value adjustments arising on the acquisition of
a foreign operation on or after the date of transition to AIFRS are
treated as assets and liabilities of the foreign operation and
translated at exchange rates prevailing at the reporting date.
note 2. property revenue
Rent and recoverable outgoings
Incentive amortisation
Other revenue
Total property revenue
The Trusts are the kind referred to in Class Order 98/0100, issued
by the Australian Securities & Investments Commission, relating to
the rounding off of amounts in the financial report. Amounts in the
financial report have been rounded off in accordance with that Class
Order to the nearest thousand dollars, or in certain cases, the
nearest dollar.
(ac) new accounting standards and UIG interpretations
Certain new accounting standards and UIG interpretations have been
published that are not mandatory for the 30 June 2007 reporting
period. Our assessment of the impact of these new standards and
interpretations is set out below:
(i) AASB 7: Financial Instruments Disclosure and AASB 2005-10:
Amendments to Australian Accounting Standards (AASB 132,
AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB
1, AASB 4, AASB 1023 and AASB 1038).
AASB 7 and AASB 2005-10 are applicable to annual reporting
periods beginning on or after 1 January 2007. AASB 7 requires
qualitative information about exposure to risks arising from
financial instruments, including specific minimum disclosures
about credit risk, liquidity risk and market risk. The Trust has
elected not to adopt the standard early. Application of this
standard will not affect any of the amounts recognised in the
Financial Statements.
(ii) AASB 8: Operating Segments and AASB 2007-3 Amendments to
Australian Accounting Standards arising from AASB 8 (AASB 5,
AASB 6, AASB 102, AASB 107, AASB 119, AASB 127, AASB
134, AASB 136, AASB 1023 and AASB 1038), are applicable to
annual reporting periods beginning on or after 1 January 2009.
It requires segment information disclosure based on segments
monitored by the chief operating decision maker in allocating
resources and in assessing their performance rather than on a
business/geographical basis. This will require more qualitative
disclosure for single segment entities. Application of this
standard will not affect the amounts recognised in the
Financial Statements.
Consolidated
Parent Entity
2007
$’000
705,205
(37,661)
25,886
2006
$’000
661,205
(26,069)
28,360
2007
$’000
155,332
(6,220)
3,951
2006
$’000
143,818
(5,487)
7,432
693,430
663,496
153,063
145,763
DB RREEF Trust Financial Reports 2007 87
notes to the financial statements (continued)
note 3. finance costs
Interest paid/payable
Interest paid to related party
Amount capitalised
Other finance costs
Total finance costs
Consolidated
Parent Entity
2007
$’000
197,462
–
(14,639)
1,963
2006
$’000
176,604
–
(10,488)
–
2007
$’000
97
46,321
(3,746)
–
2006
$’000
(26)
41,030
(5,627)
–
184,786
166,116
42,672
35,377
The average capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 6.58 percent (2006: 6.23 percent).
note 4. costs associated with the transaction
Costs incurred in the prior year relate to the fees and expenses arising from the stapling of the Trust, DIT, DOT and DRO, the acquisition of the
US REIT, and the associated debt arranging and interest rate hedging (together referred to as the Transaction).
note 5. income tax
(a) income tax expense
Current tax
Deferred tax
Income tax expense/(benefit)
Deferred income tax (revenue)/expense included in income tax expense comprises:
(Increase)/decrease in deferred tax assets
Increase in deferred tax liabilities
(b) reconciliation of income tax expense to net profit
Profit before tax
Profit not subject to income tax (note 1(h))
Prima facie tax at the Australian tax rate of 30 percent (2006: 30 percent)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Depreciation and amortisation
Share of net profits of associates
Revaluation of investment properties
Difference in overseas tax rates
Previously unrecognised tax losses now recognised
Tax offset for franked dividends
Sundry items
Over provision in prior year
Income tax expense/(benefit)
88 DB RREEF Trust Financial Reports 2007
Consolidated
2007
$’000
2,241
(3,351)
(1,110)
(3,729)
378
(3,351)
2006
$’000
936
233
1,169
207
26
233
Consolidated
2007
$’000
2006
$’000
1,243,264
(1,241,409)
1,095,508
(1,087,056)
1,855
557
(430)
47
1,628
(194)
(390)
(1,950)
(3)
(1,292)
(375)
(1,110)
8,452
2,535
88
(1,454)
–
–
–
–
–
(1,366)
–
1,169
(c) amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not recognised
in net profit or loss but directly debited or credited to equity:
Net deferred tax – credited directly to equity
Consolidated
2007
$’000
2006
$’000
–
–
(196)
(196)
(d) withholding tax expense
Withholding tax expense of $33,583,000 (2006: $27,954,000) includes $31,178,000 (2006: $24,727,000) of deferred tax expense which
is recognised on differences between the tax cost base of the US assets and liabilities and their accounting carrying value at balance date.
The majority of the deferred tax expense arises due to the tax depreciation and revaluation of US investment properties.
note 6. other expenses
Audit and advisory fees
Custodian fees
Legal and other professional fees
Bad and doubtful debts
Registry costs and listing fees
Other expenses
Total other expenses
note 7. audit and advisory fees
Note(s)
7
Consolidated
Parent Entity
2007
$’000
3,025
515
448
2,083
443
4,074
10,588
2006
$’000
2,672
518
415
1,654
377
3,193
8,829
2007
$’000
2006
$’000
600
172
1
644
142
21
586
165
–
95
47
630
1,580
1,523
During the year the auditor of the parent entity, its related practices and non-related audit firms earned the following remuneration:
(a) assurance services
Audit Services
PwC audit and review of financial reports and other audit work
under the Corporations Act 2001
PwC fees paid in relation to outgoings audit
Fees paid to non-PwC audit firms
Consolidated
Parent Entity
2007
$
2006
$
1,111,630
194,627
691,626
1,299,465
72,155
597,323
2007
$
426,183
38,250
22,941
2006
$
457,000
–
–
Total remuneration for assurance services
1,997,883
1,968,943
487,374
457,000
(b) taxation services
Fees paid to PwC Australia
Fees paid to PwC US
Fees paid to non-PwC audit firms
Consolidated
Parent Entity
2007
$
318,843
443,588
263,815
2006
$
370,690
213,160
109,975
2007
$
112,307
–
–
2006
$
126,000
–
Total remuneration for taxation services1
1,026,246
693,825
112,307
126,000
1 These services include general compliance work, one off project work and advice with respect to the management of day to day tax affairs of the Trusts.
DB RREEF Trust Financial Reports 2007 89
notes to the financial statements (continued)
note 7. audit and advisory fees (continued)
(c) advisory services
Fees paid to PwC Australia in relation to IFRS project
Total remuneration for advisory services
Consolidated
Parent Entity
2007
$
–
–
2006
$
8,950
8,950
2007
$
–
–
2006
$
3,000
3,000
Total remuneration for assurance, taxation and advisory services
3,024,129
2,671,718
599,681
586,000
note 8. current assets – cash and cash equivalents
Cash at bank1
Total current assets – cash and cash equivalents
Consolidated
Parent Entity
2007
$’000
59,603
59,603
2006
$’000
106,428
106,428
2007
$’000
9,096
9,096
2006
$’000
15,743
15,743
1 Consolidated cash at bank at 30 June 2006 includes $28,933,000 held for the purchase of DIT France Logistique SAS.
note 9. current assets – receivables
Rent receivable
Less: Provision for doubtful debts
Total rental receivables
Distribution receivable from controlled entities
Dividend receivable
Other receivables from controlled entities
GST receivable
Interest receivable
Settlement adjustments receivable
Other receivables
Total other receivables
Total current assets – receivables
other receivables from controlled entities
Consolidated
Parent Entity
2007
$’000
17,671
(2,232)
2006
$’000
24,108
(1,783)
15,439
22,325
–
6,500
–
1,513
6
–
12,931
20,950
36,389
–
4,750
–
954
8
1,367
5,850
12,929
35,254
2007
$’000
2,840
(681)
2,159
–
–
12,559
891
–
–
3,886
17,336
19,495
2006
$’000
5,424
(273)
5,151
3,100
–
10,778
405
–
1,367
1,308
16,958
22,109
Other receivables from controlled entities are an inter-entity loan, which is a non-interest bearing loan between the Trust and its controlled entities.
note 10. current assets – inventories
Land and buildings
Total current assets – inventories
Oak Park Business Centre, Minnesota
Consolidated
Parent Entity
2007
$’000
–
–
2006
$’000
3,344
3,344
2007
$’000
–
–
2006
$’000
–
–
On 23 August 2006, DB RREEF Industrial Properties, Inc. sold Oak Park Business Centre, Minnesota for $4.0 million (US$3.0 million).
90 DB RREEF Trust Financial Reports 2007
note 11. loans with related parties
Current liabilities – loans with related parties
Non-interest bearing loans with the Trusts1
Total current liabilities – loans with related parties
Consolidated
Parent Entity
2007
$’000
2006
$’000
–
–
–
–
2007
$’000
34,332
34,332
2006
$’000
34,332
34,332
1 Non-interest bearing loans with the Trusts were created to effect the stapling of the Trust, DIT, DOT and DRO. These loan balances eliminate on consolidation.
note 12. derivative financial instruments
Current assets
Interest rate swap contracts
Forward foreign exchange contracts
Total current assets – derivative financial instruments
Current liabilities
Interest rate swap contracts
Forward foreign exchange contracts
Total current liabilities – derivative financial instruments
Net current derivative financial instruments
Refer note 32 for further discussion regarding derivative financial instruments.
note 13. current assets – other financial assets
Loan notes receivable from DB RREEF Holdings Pty Limited
Total current assets – other financial assets
Consolidated
Parent Entity
2007
$’000
136,160
9,265
145,425
21,196
137
21,333
124,092
2006
$’000
89,366
3,112
92,478
19,979
498
20,477
72,001
2007
$’000
28,961
4,163
33,124
7,861
–
7,861
2006
$’000
24,498
1,556
26,054
8,870
182
9,052
25,263
17,002
Consolidated
Parent Entity
2007
$’000
51,936
51,936
2006
$’000
45,092
45,092
2007
$’000
–
–
2006
$’000
–
–
On 27 September 2004, DB RREEF Holdings Pty Limited (DRH) issued an equal amount of loan notes to its two owners – First Australian
Property Group Holdings Pty Limited (FAP) and DRO, in order to fund its 100 percent acquisition of DB RREEF Funds Management Limited
(the Responsible Entity of DRO). On 31 October 2006, DRH issued further loan notes of equal amounts to its two owners to fund the acquisition
of DB RREEF Wholesale Property Limited (the Responsible Entity of DB RREEF Wholesale Property Fund). These loan notes pay a coupon of
11 percent per annum, mature on 1 October 2024 and may be redeemed at any time prior to maturity. It is not currently the intention of either
the issuer or the holder to redeem the notes.
note 14. current assets – other
Prepayments
Tenant bonds
Total current assets – other
Consolidated
Parent Entity
2007
$’000
9,651
13
9,664
2006
$’000
6,030
20
6,050
2007
$’000
2,439
–
2,439
2006
$’000
1,227
–
1,227
DB RREEF Trust Financial Reports 2007 91
notes to the financial statements (continued)
note 15 (a). current assets – held for sale investment properties
Property
121 Evans Road, Salisbury QLD
Total held for sale investment properties
note 15 (b). non-current assets – investment properties
Property
Held by parent entity
Kings Park Industrial Estate, Bowmans Road, Marayong NSW
Target Distribution Centre, Lot 1 Taras Avenue, Altona North VIC
Axxess Corporate Park, 164–180 Foster Road, 11 & 21–45 Gilby Road
307–355 Ferntree Gully Road, Mount Waverley VIC
Knoxfield Industrial Estate, 20 Henderson Road, Knoxfield VIC
12 Frederick Street, St Leonards NSW
40 Talavera Road, North Ryde NSW
2 Alspec Place, Eastern Creek NSW
Redwood Gardens Industrial Estate Stages 3,5,6 & 7 and Lot 4, Dingley VIC 1
44 Market Street, Sydney NSW
8 Nicholson Street, Melbourne VIC
Ferguson Centre, 130 George Street, Parramatta NSW
Flinders Gate Complex, 172 Flinders Street and 189 Flinders Lane, Melbourne VIC
383–395 Kent Street, Sydney NSW
14 Moore Street, Canberra ACT**
Sydney CBD Floor Space2
Whitford City Shopping Centre Marmion and Whitfords Avenue, Hillarys WA3
Whitfords Avenue Lot 6 Endeavour Road, Hillarys WA3
West Lakes Shopping Centre, West Lakes SA
Plenty Valley Town Centre, 330–464 McDonalds Road, South Morang VIC3
North Lakes Shopping Centre, Mango Hill QLD3
Albert & Charlotte Streets Carpark, Brisbane QLD
34–60 Little Collins Street, Melbourne VIC**
32–44 Flinders Street, Melbourne VIC
Flinders Gate Carpark, 172–189 Flinders Street, Melbourne VIC
383–395 Kent Street, Sydney NSW
John Martin’s Carpark and Retail Plaza Joint Venture
Total parent entity
Ownership
(%)
Acquisition date
100
Jun 1997
Ownership
(%)
Acquisition date
100
100
100
100
100
100
100
76
100
100
100
100
100
100
100
50
50
50
50
50
100
100
100
100
100
1
May 1990
Oct 1995
Oct 1996
Aug 1996
Jul 2000
Oct 2002
Mar 2004
Dec 1994
Sep 1987
Nov 1993
May 1997
Mar 1999
Sep 1987
May 2002
Jul 2000
Oct 1984
Dec 1992
Nov 1998
Nov 1999
Aug 2004
Oct 1984
Nov 1984
Jun 1998
Mar 1999
Sep 1987
Sep 1994
1 The valuation reflects 76 percent of the independent valuation, as 24 percent of the property was disposed.
2 This relates to heritage floor space retained following the disposal of 1 Chifley Square, Sydney NSW.
3 The valuation reflects 50 percent of the independent valuation amount.
The title to all properties is freehold, with the exception of the properties marked ** which are leasehold.
92 DB RREEF Trust Financial Reports 2007
Cost including all
additions
($’000)
Independent
valuation date
Independent
valuation amount
($’000)
Independent valuer
n/a
–
n/a
n/a
–
n/a
Consolidated
book value
30 June 2007
($’000)
–
–
Consolidated
book value
30 June 2006
($’000)
24,000
24,000
Cost including all
additions
($’000)
Independent
valuation date
Independent
valuation amount
($’000)
Independent valuer
Consolidated
book value
30 June 2007
($’000)
Consolidated
book value
30 June 2006
($’000)
79,432
25,442
156,675
30,188
25,575
33,326
23,567
23,678
172,185
69,421
99,562
14,014
105,791
37,391
–
129,613
5,506
119,088
38,138
121,467
14,636
16,164
21,319
47,043
30,257
–
Jun 2006
Jun 2005
Dec 2005
Jun 2006
Jun 2007
Dec 2006
Dec 2006
Jun 2006
Jun 2006
Jun 2005
Jun 2006
Jun 2006
Jun 2006
Apr 2005
n/a
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2006
Jun 2006
Jun 2006
Jun 2006
Jun 2006
–
93,000
35,000
147,750
37,050
38,000
31,200
26,000
28,850
185,000
91,800
80,000
18,000
115,000
36,250
–
252,350
24,650
174,000
66,750
164,500
38,500
37,500
32,500
39,000
60,000
–
(f)
(c)
(f)
(f)
(f)
(d)
(a)
(e)
(f)
(g)
(d)
(d)
(d)
(e)
n/a
(d)
(d)
(c)
(c)
(c)
(e)
(d)
(d)
(d)
(d)
–
101,000
36,512
184,000
37,098
38,000
33,800
26,010
29,950
220,000
98,000
93,059
18,265
131,378
45,000
2,173
252,350
24,650
174,000
66,750
164,500
39,354
39,500
32,585
39,000
60,000
100
93,000
36,500
170,000
37,050
35,700
32,500
23,555
28,850
185,000
98,000
80,000
18,000
115,000
38,000
2,173
221,500
11,000
143,000
20,200
77,176
38,500
37,500
32,500
39,000
60,000
100
1,439,478
1,852,650
1,987,034
1,673,804
DB RREEF Trust Financial Reports 2007 93
notes to the financial statements (continued)
note 15 (b). non-current assets – investment properties (continued)
Property
Ownership
(%)
Acquisition date
Other consolidated investment properties – non-current
Westfield Hurstville, 262–264 Forest Road and 292 Forest Road, Hurstville NSW
3765 Atlanta Industrial Drive, Atlanta
7100 Highlands Parkway, Atlanta
Town Park Drive, Atlanta
Williams Drive, Atlanta
Stone Mountain, Atlanta
MD Food Park, Baltimore
West Nursery, Baltimore
Cabot Techs, Baltimore
9112 Guildford Road, Baltimore
8155 Stayton Drive, Baltimore
Patuxent Range Road, Baltimore
Bristol Court, Baltimore
NE Baltimore, Baltimore
1181 Portal, 1831 Portal and 6615 Tributary, Baltimore
10 Kenwood Circle, Boston
Commerce Park, Charlotte
9900 Brookford Street, Charlotte
Westinghouse, Charlotte
Airport Exchange, Cincinnati
Empire Drive, Cincinnati
International Way, Cincinnati
Kentucky Drive, Cincinnati
Spiral Drive, Cincinnati
Turfway Road, Cincinnati
124 Commerce, Cincinnati
Kenwood Road, Cincinnati
Lake Forest Drive, Cincinnati
World Park, Cincinnati
Equity/Westbelt/Dividend, Columbus
2700 International Street, Columbus
3800 Twin Creeks Drive, Columbus
SE Columbus, Columbus
Arlington, Dallas
1900 Diplomat Drive, Dallas
2055 Diplomat Drive, Dallas
1413 Bradley Lane, Dallas
North Lake, Dallas
555 Airline Drive, Dallas
455 Airline Drive, Dallas
Hillguard, Dallas
11011 Regency Crest Drive, Dallas
East Collins, Dallas
3601 East Plano/1000 Shiloh, Dallas
East Plano Parkway, Dallas
820–860 Avenue F, Dallas
10th Street, Dallas
Capital Avenue, Dallas
CTC @ Valwood, Dallas
Brackbill, Harrisburg
Mechanicsburg, Harrisburg
181 Fulling Mill Road, Harrisburg
94 DB RREEF Trust Financial Reports 2007
50
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
May 2005
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Jun 2005
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Cost including all
additions
($’000)
Independent
valuation date
Independent
valuation amount
($’000)
Independent valuer
Consolidated
book value
30 June 2007
($’000)
Consolidated
book value
30 June 2006
($’000)
247,092
6,058
16,523
7,777
11,731
8,586
21,945
9,279
24,550
9,599
8,190
13,913
12,251
8,768
12,374
12,670
8,593
4,462
23,445
4,574
6,522
12,188
13,109
7,021
6,014
2,666
21,457
14,161
14,976
43,256
5,259
5,430
15,355
10,353
5,336
4,250
3,645
11,353
7,654
3,660
10,215
8,409
4,225
14,732
24,731
7,877
10,871
7,025
3,989
24,762
21,178
10,562
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
307,500
5,302
18,735
10,015
13,904
7,305
28,514
10,015
32,874
12,608
9,780
15,789
13,197
10,487
13,786
14,139
10,251
5,302
27,218
4,566
7,070
13,668
15,612
6,716
6,245
3,181
22,387
16,025
15,435
48,780
4,961
5,950
14,139
10,840
5,420
4,507
3,535
15,671
8,012
4,595
10,958
8,955
4,419
17,262
27,807
7,729
11,253
7,859
5,184
28,632
23,801
11,311
(d)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(i)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
307,500
5,302
18,735
10,015
13,904
7,305
31,187
10,015
32,874
12,608
9,780
15,789
13,197
10,487
13,786
14,774
10,251
5,302
28,541
4,566
7,070
13,668
15,612
6,716
6,245
3,181
22,387
16,025
15,435
48,780
4,961
5,950
14,139
10,840
5,420
4,507
3,535
15,671
8,012
4,595
10,958
8,955
4,419
18,282
27,807
7,729
11,841
7,859
5,184
28,632
23,801
11,311
260,000
4,978
18,835
10,628
13,302
6,592
33,798
11,570
37,401
13,454
10,628
17,355
15,945
11,301
15,355
14,933
9,754
5,045
26,267
4,978
8,486
14,463
16,279
6,054
6,390
3,363
22,723
16,548
15,337
50,081
5,281
6,794
16,279
12,243
6,189
4,843
3,807
17,355
9,296
5,112
12,088
9,046
4,978
20,030
28,387
9,687
13,304
7,601
6,054
33,634
25,696
12,108
DB RREEF Trust Financial Reports 2007 95
notes to the financial statements (continued)
note 15 (b). non-current assets – investment properties (continued)
Property
Ownership
(%)
Acquisition date
Other consolidated investment properties – non-current (continued)
Glendale, Los Angeles
14489 Industry Circle, Los Angeles
14555 Alondra/6530 Altura, Los Angeles
San Fernando Valley, Los Angeles
Memphis Industrial, Memphis
2950 Lexington Avenue South, Minneapolis
Mounds View, Minneapolis
6105 Trenton Lane, Minneapolis
8575 Monticello Lane, Minneapolis
7401 Cahill Road, Minneapolis
CTC @ Dulles, Northern Virginia
Alexandria, Northern Virginia
Nokes Boulevard, Northern Virginia
Guildford, Northern Virginia
Beaumeade Telecom, Northern Virginia
Orlando Central Park, Orlando
7500 Exchange Drive, Orlando
105–107 South 41st Avenue, Phoenix
1429–1439 South 40th Avenue, Phoenix
10397 West Van Buren Street, Phoenix
844 44th Avenue, Phoenix
220 South 9th Street, Phoenix
431 North 47th Avenue, Phoenix
601 South 55th Avenue, Phoenix
1000 South Priest Drive, Phoenix
1120–1150 West Alameda Drive, Phoenix
1858 East Encanto Drive, Phoenix
3802–3922 East University Drive, Phoenix
Chino, Riverside
Mira Loma, Riverside
Ontario, Riverside
4190 East Santa Ana Street, Riverside
Rancho Cucamonga, Riverside
12000 Jersey Court, Riverside
Airway Road, San Diego
5823 Newton Drive, San Diego
2210 Oak Ridge Way, San Diego
Kent West, Seattle
26507 79th Avenue South, Seattle
8005 South 266th Street, Seattle
West Palm Beach, South Florida
Calvert/Murry’s, Northern Virginia
Turnpike Distribution Center
7700 68th Avenue, Brooklyn Park
7500 West 78th Street, Bloomington
1285 & 1301 Corporate Center Drive, 1230 & 1270 Eagan Industrial Road, Eagan
79–99 St Hilliers Road, Auburn NSW
3 Brookhollow Avenue, Baulkham Hills NSW
1 Garigal Road, Belrose NSW
2 Minna Close, Belrose NSW
114–120 Old Pittwater Road, Brookvale NSW
145–151 Arthur Street, Flemington NSW
96 DB RREEF Trust Financial Reports 2007
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
80
100
100
100
100
100
100
100
100
100
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2005
Nov 2005
Nov 2005
Nov 2005
Sep 1997
Dec 2002
Dec 1998
Dec 1998
Sep 1997
Sep 1997
Cost including all
additions
($’000)
Independent
valuation date
Independent
valuation amount
($’000)
Independent valuer
Consolidated
book value
30 June 2007
($’000)
Consolidated
book value
30 June 2006
($’000)
59,721
8,064
20,355
17,114
11,039
10,436
24,524
8,764
2,043
3,944
28,913
52,668
23,664
20,490
37,943
69,683
6,418
16,241
10,563
9,160
7,213
8,294
7,059
5,371
5,776
8,988
4,718
11,185
6,901
12,245
33,913
5,701
25,436
4,900
10,921
19,343
5,899
32,904
3,094
8,138
24,873
6,246
23,053
6,492
5,632
19,739
38,296
45,096
23,362
35,089
35,265
24,383
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Nov 2005
Nov 2005
Nov 2005
Jun 2007
Dec 2005
Jun 2007
Jun 2007
Jun 2006
Jun 2005
85,425
13,079
33,109
28,868
11,429
11,488
25,333
9,544
2,828
3,653
37,704
67,751
40,061
30,635
49,487
88,370
8,248
22,034
15,612
16,142
9,780
10,958
10,015
6,775
8,248
12,608
6,952
12,254
11,783
24,979
61,624
11,488
46,660
9,132
15,612
31,224
8,484
41,829
4,124
10,133
30,753
7,470
30,635
6,278
7,441
17,741
45,250
42,400
31,000
35,000
45,500
31,000
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(a)
(f)
(d)
(d)
(f)
(f)
85,425
13,079
33,109
28,868
11,429
12,496
26,255
9,544
2,828
3,653
37,704
69,384
40,061
30,635
49,487
88,962
8,248
22,479
15,612
16,142
9,780
10,958
10,015
6,775
8,248
12,608
6,952
12,254
11,783
24,979
61,624
11,488
46,660
9,132
15,612
31,224
8,484
41,829
4,124
10,133
30,753
7,470
30,635
6,007
7,116
20,178
45,250
54,700
31,000
35,000
52,900
36,900
86,725
12,983
31,347
26,234
12,915
13,363
29,173
10,763
3,094
4,036
40,361
74,181
39,015
33,634
55,159
91,485
8,476
24,115
16,144
17,624
10,897
11,570
10,359
7,265
8,072
11,570
7,265
13,739
11,974
27,311
61,886
10,763
47,491
9,518
16,817
30,270
9,014
40,901
4,036
10,494
32,356
7,399
–
6,949
8,429
20,987
41,749
43,251
31,900
33,707
45,500
34,135
DB RREEF Trust Financial Reports 2007 97
notes to the financial statements (continued)
note 15 (b). non-current assets – investment properties (continued)
Property
Ownership
(%)
Acquisition date
Other consolidated investment properties – non-current (continued)
436–484 Victoria Road, Gladesville NSW
1/ Foundation Place, Greystanes NSW
706 Mowbray Road, Lane Cove NSW
5–13 Rosebery Avenue & 1–55 Rothschild Avenue, Rosebery NSW
10–16 South Street, Rydalmere NSW
19 Chifley Street, Smithfield NSW
Pound Road West, Dandenong VIC
352 Macaulay Road, Kensington VIC
DB RREEF Industrial Estate, Boundary Road, Laverton North VIC
250 Forest Road, South Lara VIC
15–23 Whicker Road, Gillman SA
25 Donkin Street South, Brisbane QLD
52 Holbeche Road, Arndell Park NSW
3–7 Bessemer Street, Blacktown NSW
30–32 Bessemer Street, Blacktown NSW
27–29 Liberty Road, Huntingwood NSW
154 O’Riordan Street, Mascot NSW
11 Talavera Road, North Ryde NSW
DB RREEF Industrial Estate, Egerton Street, Silverwater NSW
239–251 Woodpark Road, Smithfield NSW
40 Biloela Street, Villawood NSW
27–33 Frank Street, Wetherill Park NSW
114 Fairbank Road, Clayton VIC
30 Bellrick Street, Acacia Ridge QLD
68 Hasler Road, Herdsman WA
Zone industrielle Epône II, Epône
19 rue de Bretagne, Saint-Quentin Fallavier
21 rue du Chemin Blanc, Champlan
32 avenue de l’Océanie, Villejust
RN 19 ZAC de L’Ormes Rond, Servon (1)
RN 19 ZAC de L’Ormes Rond, Servon (2)
Im Holderbusch 3, Industriestraße, Sulmstraße, Ellhofen-Weinsberg
Schillerstraße 51, Ellhofen
Schillerstraße 42, 42a & Bahnhofstraße 44, 50, Ellhofen
Im Gewerbegebiet 18, Friedewald
Im Steinbruch 4, 6, Knetzgau
Carl-Leverkus-Straße 3–5 & Winkelsweg 182–184, Langenfeld
Schneiderstraße 82, Langenfeld 3
Über der Dingelstelle, Langenweddingen
Nordstraße 1, Löbau
Former Straße 6, Unna
Niedesheimer Straße 24, Worms
Liverpooler/Kopenhagener/Osloer Straße, Duisburg
Bremer Ring, Hansestraße, Berlin-Wustermark
Theodorstraße, Düsseldorf
Orange Street, Orlando FL
Governor Phillip Tower & Governor Macquarie Tower Office Complex, 1 Farrer Place, Sydney NSW
45 Clarence Street, Sydney NSW
309–321 Kent Street, Sydney NSW
1 Margaret Street, Sydney NSW
Victoria Cross, 60 Miller Street, North Sydney NSW
Zenith Centre, 821–843 Pacific Highway, Chatswood NSW
98 DB RREEF Trust Financial Reports 2007
Sep 1997
100
Dec 2002
100
100
Sep 1997
100 Apr 1998 + Oct 2001
Sep 1997
100
Dec 1998
100
Jan 2004
100
Oct 1998
100
Jul 2002
100
Dec 2002
100
Dec 2002
100
Dec 1998
100
Jul 1998
100
Jun 1997
100
May 1997
100
Jul 1998
100
Jun 1997
100
Jun 2002
100
May 1997
100
May 1997
100
Jul 1997
100
Jul 1998
100
Jul 1997
100
Jun 1997
100
Jul 1998
100
Jul 2006
100
Jul 2006
100
Jul 2006
100
Jul 2006
100
Jul 2006
100
Jul 2006
100
Dec 2006
100
Dec 2006
100
Dec 2006
100
Dec 2006
100
Dec 2006
100
Dec 2006
100
Dec 2006
100
Dec 2006
100
Dec 2006
100
Dec 2006
100
Dec 2006
100
Dec 2006
100
Dec 2006
100
Dec 2006
100
Jun 2007
100
Dec 1998
50
Dec 1998
100
Dec 1998
50
Dec 1998
100
Dec 1998
100
Dec 1998
50
Cost including all
additions
($’000)
Independent
valuation date
Independent
valuation amount
($’000)
Independent valuer
Consolidated
book value
30 June 2007
($’000)
Consolidated
book value
30 June 2006
($’000)
28,861
39,216
–
73,831
36,601
12,072
60,968
7,616
22,614
33,757
19,783
19,345
11,335
11,139
11,946
8,199
11,038
134,359
36,600
5,102
6,849
–
11,140
13,166
9,722
12,157
21,954
21,775
16,929
30,602
10,499
25,319
20,972
13,168
8,492
16,654
16,675
9,564
12,112
2,045
27,708
6,582
32,840
17,747
27,152
29,867
482,256
222,878
169,336
142,650
90,951
98,506
Jun 2007
Jun 2006
n/a
Dec 2005
Dec 2006
Dec 2005
Jun 2005
Dec 2005
Jun 2004
Jun 2005
Dec 2006
Jun 2005
Dec 2005
Sep 2006
Jun 2006
Jun 2006
Dec 2006
Jun 2006
Dec 2005
Jun 2006
Jun 2006
n/a
Jun 2006
Dec 2005
Dec 2006
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Jun 2007
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
n/a
Dec 2006
Jun 2007
Dec 2006
Jun 2005
Dec 2005
Jun 2007
53,000
46,000
–
92,800
47,000
17,200
56,250
8,900
23,700
34,600
25,500
20,700
12,500
10,250
17,850
9,000
16,000
145,500
42,000
6,450
8,750
–
12,800
17,375
9,750
12,629
19,315
15,845
14,498
33,038
10,918
23,942
19,839
12,455
8,034
15,750
15,639
9,048
11,456
1,933
26,208
6,227
30,803
16,780
25,828
–
638,750
265,000
183,500
139,000
90,000
130,000
(e)
(e)
n/a
(f)
(f)
(a)
(c)
(g)
(c)
(e)
(d)
(e)
(d)
(d)
(f)
(e)
(a)
(d)
(f)
(f)
(a)
n/a
(c)
(e)
(f)
(h)
(h)
(h)
(h)
(h)
(h)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
n/a
(f)
(e)
(a)
(c)
(f)
(a)
53,000
48,055
–
98,438
47,425
18,500
74,000
9,300
26,900
43,700
25,500
28,000
14,000
10,800
19,000
9,228
16,065
152,000
47,583
7,100
8,797
–
12,800
20,650
10,800
12,629
19,343
15,845
15,160
33,038
10,917
25,319
20,972
13,168
8,492
16,654
16,675
9,564
12,112
2,045
27,708
6,582
32,840
17,747
27,152
29,867
646,710
265,000
194,000
181,000
103,101
130,000
48,500
46,000
26,200
93,158
44,682
17,499
58,000
8,900
17,500
40,900
24,600
23,614
12,500
10,209
17,850
9,000
14,600
145,500
43,900
6,450
8,750
13,200
12,800
18,700
9,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
575,000
228,000
165,000
152,000
95,000
217,000
DB RREEF Trust Financial Reports 2007 99
notes to the financial statements (continued)
note 15 (b). non-current assets – investment properties (continued)
Property
Other consolidated investment properties – non-current (continued)
Woodside Plaza, 240 St George’s Terrace, Perth WA
30 The Bond, 30–34 Hickson Road, Sydney NSW
Southgate Complex, 3 Southgate Avenue, Southgate VIC
O’Connell House, 15–19 Bent Street, Sydney NSW
201–217 Elizabeth Street, Sydney NSW
Garema Court, 140–180 City Walk, Civic ACT**
Australia Square Complex, 264–278 George Street, Sydney NSW
Lumley Centre, 88 Shortland Street, Auckland, New Zealand1
Total other consolidated investment properties – non-current
Total investment properties – non-current
Ownership
(%)
Acquisition date
100
100
100
100
50
100
50
100
Jan 2001
May 2002
Aug 2000
Aug 2000
Aug 2000
Aug 2000
Aug 2000
Sep 2005
1 The property was internally valued at NZ$145,000,000 at 30 June 2007. This valuation has been translated into Australian dollars at the spot rate on 30 June 2007.
The title to all properties is freehold, with the exception of the properties marked ** which are leasehold.
(a) Colliers International
(b) Landmark White
(c) CB Richard Ellis
(d) Jones Lang LaSalle
(e) Knight Frank Valuations
(f) FPD Savills
(g) M3 Property
(h) Catella
(i) Weiser Realty Advisors
The basis of valuation of investment properties is fair value, being the amounts for which the assets could be exchanged between
knowledgeable willing parties in an arm’s length transaction, based on current prices in an active market for similar properties in the
same location and condition and subject to similar leases. Properties independently valued in the last 12 months were based on independent
assessments by a member of the Australian Property Institute, the New Zealand Institute of Valuers, the Appraisal Institute in the United States
of America, the French Real Estate Valuation Institution or the Society of Property Researchers, Germany.
100 DB RREEF Trust Financial Reports 2007
Cost including all
additions
($’000)
Independent
valuation date
Independent
valuation amount
($’000)
Independent valuer
Consolidated
book value
30 June 2007
($’000)
Consolidated
book value
30 June 2006
($’000)
240,854
118,100
356,454
49,382
114,374
43,665
206,825
92,187
5,226,383
6,665,861
Jun 2006
Jun 2006
Jun 2007
Sep 2004
Jun 2007
Jun 2006
Jun 2005
Dec 2006
315,000
150,000
380,000
55,500
158,750
52,000
184,000
123,356
6,184,052
8,036,702
(c)
(e)
(c)
(e)
(d)
(f)
(d)
(d)
390,000
170,000
380,000
54,464
158,750
63,500
261,739
131,519
6,598,669
8,585,703
315,000
150,000
390,000
54,400
122,000
52,000
226,000
101,173
5,885,141
7,558,945
DB RREEF Trust Financial Reports 2007 101
notes to the financial statements (continued)
note 15 (c). non-current assets – investment
properties (continued)
developments
105 Phillip St, Parramatta NSW
Approval has been received to construct a thirteen level office tower
with approximately 19,400 square metres of floorspace at 105 Phillip
Street, Parramatta, a site at the rear of the existing building at 130
George Street, Parramatta. No decision has been made to proceed
with the development at this stage, however the manager is
marketing the potential development to tenants.
North Lakes Shopping Centre, Mango Hill QLD
In September 2006 construction began on the expansion of North
Lakes Shopping Centre with an estimated project cost of $101.3
million (50 percent share). The redevelopment of North Lakes phase
1 is scheduled to be completed by the end of November 2007 with
any residual leasing to be completed within the subsequent six
months. Phase 2 (Myer) is due for completion in June 2008.
Plenty Valley Town Centre, South Morang VIC
Construction began in November 2006 for the expansion of Plenty
Valley Town Centre. Project costs are estimated to be $101.4 million
and the project is due to complete in June 2008.
Boundary Road, North Laverton VIC
In February 2006, DIT entered into an agreement to lease and build
a warehouse and distribution facility for Wrightson Seeds Australia
Limited. Practical completion was achieved on 31 October 2006 with
a development cost of $6.1 million.
Turnpike Distribution Center, Medley, Florida
Development of a single 268,119 square foot industrial building was
completed as of May 31, 2007, and the property is currently 100
percent leased. This property has been transferred to investment
properties from property plant and equipment during the year.
acquisitions
Prologis France I SAS, France
On 11 July 2006, DIT France Logistique, a wholly owned subsidiary
of DIT, acquired all the shares in Prologis France I SAS.
This company has investment properties with a market value of
approximately $73.4 million (€42.9 million) on acquisition: Zone
Industrielle Epône II, Epône; 19 rue de Bretagne, Saint-Quentin
Fallavier; 21 rue du Chemin Blanc, Champlan; and 32 avenue de
l’Océanie, Villejust.
Prologis France XXXII EURL, France
On 11 July 2006, DIT France Logistique, a wholly owned subsidiary
of DIT, acquired all the shares in Prologis France XXXII EURL.
This company has investment properties with a market value of
approximately $42.7 million (€24.9 million) on acquisition: RN
19 ZAC de L’Ormes Rond, Servon (1) and RN 19 ZAC de L’Ormes
Rond, Servon (2).
DB RREEF GLOG Trust, Germany
On 31 December 2006, DIT via a newly created sub-trust,
DB RREEF GLOG Trust, acquired 13 properties located in Germany
for $208.0 million (€125.1 million). On 29 June 2007, the final
property in Düsseldorf was acquired for $25.6 million (€16.2
million). Registration of the transfer of title with the Land Registry
in Germany has occurred progressively since December with the
transfer of the final two properties still to occur at 30 June 2007
although DB RREEF GLOG Trust had possession and beneficial title
to the properties from 31 December 2006.
DRT US Whirlpool Trust, Orlando, Florida
On 22 August 2006, DIT, DDF and DB RREEF US Properties,
LLC (DRUS, and together with DIT and DDF, collectively, Investor)
entered into an investor agreement (Investor Agreement) with
Whirlpool Corporation (Whirlpool), the world’s largest maker of home
appliances. Under this agreement, the Investor or its affiliate has
committed to investing up to $489 million (US$415 million) to
acquire certain facilities across the US, Canada and Europe, to be
built over the next three years, and leased long-term to Whirlpool or
its affiliates for the warehousing and distribution of Whirlpool finished
products. Subsequently, Panattoni Development Company, LLC
(Developer), and Whirlpool entered into the Development Agreement.
Under this agreement, the Developer would acquire real property,
develop and construct regional distribution centers (each, an RDC)
and sell the completed RDC to the Investor for lease to Whirlpool
pursuant to the Investor Agreement. This build-to-suit program is
anticipated to comprise the development of approximately
10,000,000 square feet of 10 to 12 Class A, state-of-the-art
distribution facilities in the US, Canada and Europe. The acquisition
of the first facility in Orlando, Florida was completed in June 2007
with a purchase price of $28.6 million (US$24.3 million). The
acquisition of the facility in Toronto, Canada is estimated to be
completed in December 2007 with an estimated cost of $76.2
million (US$64.7 million). The acquisition of the additional facilities
will occur following construction completion and occupancy by
Whirlpool. In connection with the June acquisition of the Orlando
property, DDF sold its interest in DRUS to DIT and accordingly,
DDF is no longer an Investor in this program.
disposals
121 Evans Road, Salisbury QLD
In June 2006, DIT entered into an agreement for sale of 121 Evans
Road, Salisbury for $24.0 million. Settlement occurred on
25 August 2006.
706 Mowbray Road, Lane Cove NSW
On 31 January 2007, DIT sold 706 Mowbray Road, Lane Cove
for $29.3 million.
27–33 Frank Street, Wetherill Park NSW
On 20 June 2007, DIT sold 27–33 Frank Street, Wetherill Park
for $16.0 million.
The Zenith, 821–843 Pacific Highway, Chatswood NSW
On 31 January 2007, DOT sold 50 percent of The Zenith,
821–843 Pacific Highway, Chatswood NSW for $126.2 million.
102 DB RREEF Trust Financial Reports 2007
reconciliation
Carrying amount at 1 July 2006
Additions
Acquisitions
Transfer from property plant and equipment
Transfer to held for sale investment properties
Lease incentives
Amortisation of lease incentives
Rent straight lining
Disposals
Net gain from fair value adjustments
Foreign exchange difference on foreign currency translation
Consolidated
Parent Entity
2007
$’000
7,558,945
132,479
396,178
30,328
–
59,655
(37,702)
9,986
(165,918)
831,330
(229,578)
2006
$’000
6,520,919
115,038
155,793
–
(24,000)
87,943
(26,443)
14,484
(8,277)
695,666
27,822
2007
$’000
1,673,804
94,638
–
–
–
6,965
(6,220)
–
–
217,847
–
2006
$’000
1,398,751
84,483
–
–
–
10,055
(5,487)
–
–
186,002
–
Carrying amount as at 30 June 2007
8,585,703
7,558,945
1,987,034
1,673,804
note 16. non-current assets – property plant and equipment
(a) property plant and equipment
2007
Consolidated
Parent Entity
Construction
in progress
$’000
Freehold land
and buildings
$’000
Total
$’000
173,468
180,249
(6,880)
(2,488)
(30,328)
314,021
317,532
(3,511)
Construction
in progress
$’000
Freehold land
and buildings
$’000
Total
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
69,278
65,312
–
(2,488)
–
132,102
135,613
(3,511)
132,102
314,021
Opening balance as at 1 July 2006
Additions
Foreign exchange differences on foreign
currency translation
Depreciation charge
Transfer to investment properties
Closing balance as at 30 June 2007
Cost
Accumulated depreciation
Net book value as at 30 June 2007
2006
104,190
114,937
(6,880)
–
(30,328)
181,919
181,919
–
181,919
Construction
in progress
$’000
Freehold land
and buildings
$’000
Consolidated
Parent Entity
Total
$’000
27,913
146,578
(1,023)
173,468
174,491
(1,023)
Construction
in progress
$’000
Freehold land
and buildings
$’000
Total
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12,806
57,495
(1,023)
69,278
70,301
(1,023)
69,278
173,468
Opening balance as at 1 July 2005
Additions
Depreciation charge
Closing balance as at 30 June 2006
Cost
Accumulated depreciation
Net book value as at 30 June 2006
(b) basis of valuation
15,107
89,083
–
104,190
104,190
–
104,190
Freehold land and buildings are accounted for using the cost method (refer note 1(n)). Construction in progress is recognised at fair value.
As at 30 June 2007, the fair value of construction in progress is equal to cost.
(c) non-current assets pledged as security
Refer to note 22 for information on non-current assets pledged as security by the parent entity and its controlled entities.
DB RREEF Trust Financial Reports 2007 103
notes to the financial statements (continued)
note 16. non-current assets – property plant and
equipment (continued)
developments
Boundary Road, North Laverton VIC
(d) acquisitions and developments
acquisitions
144 Wicks Road, North Ryde NSW
On 20 November 2006, DOT (through its sub-trust Wicks Road
Trust), acquired a 50 percent ownership interest in the former Peter
Board High School site, 144 Wicks Road, North Ryde NSW for a
consideration of $25.9 million.
Dohertys Road, North Laverton VIC
In November 2006, DIT purchased 440 Dohertys Road, North
Laverton VIC, a land parcel adjacent to DB RREEF Industrial Estate,
Laverton North for $32.0 million.
Summit Oaks, Valencia, California
On December 13, 2006, DB RREEF Industrial Properties Sub A Inc.
(DB RREEF Sub A) formed a joint venture (Summit Oaks RP-V2,
LLC, Summit Oaks) with Parker Oaks, LLC to acquire a property
located in Santa Clarita, California. DB RREEF Sub A is owned
100 percent by US REIT. At closing, Parker Oaks, LLC (Parker)
contributed land with an agreed upon value of $1.8 million (US$1.4
million) (net of reimbursement for carrying costs incurred prior to the
acquisition) which represents the only scheduled contribution that
will be made by Parker to the Joint Venture. US REIT contributed
$2.1 million ($US1.7 million) in cash and also funded $3.5 million
(US$2.8 million) in the form of a land loan that repaid the existing
bank land loan. At closing, the ownership percentage is 54 percent
and 46 percent for DB RREEF Sub A and Parker respectively.
After funding 100 percent of the remaining equity contributions,
the ownership percentage is expected to become 91.6 percent and
8.4 percent for DB RREEF Sub A and Parker respectively.
In June 2005, DIT entered into agreements to lease and build a
major distribution centre for Coles Myer Limited. Practical completion
was achieved on 15 February 2007. In August 2006, DIT entered
into agreement to lease and build a distribution centre (including
external canopy areas) for Fosters Limited. Construction of this
building has commenced and completion is expected in July 2007.
Turnpike Distribution Center, Medley, Florida
Development of a single 268,119 square foot industrial building was
completed as of May 31, 2007, and the property is currently 100
percent leased. This has been transferred to investment properties
at 30 June 2007.
Dulles Town Crossing, Herndon, Virginia
The development of this land parcel consists of two, four storey
office buildings comprising 220,000 square feet in a rapidly growing
area of Virginia. The total budgeted cost for the project is $56.1
million (US$47.6 million), including the initial cost of the land. The
current plan calls for construction completion in early 2008 with
stabilisation occurring approximately 12 to 15 months thereafter.
Total costs incurred to June 30, 2007 are $12.8 million (US$10.9
million).
Summit Oaks, Valencia, California
The development of this land consists of a five storey office building
comprising 139,392 square feet in Santa Clarita, California. The total
budgeted cost for the project is $53.3 million (US$45.2 million).
The current plan calls for construction completion in August 2008 with
stabilisation occurring approximately 12 to 15 months thereafter. Total
costs incurred to June 30, 2007 are $12.4 million (US$10.5 million).
note 17. non-current assets – other financial assets at fair value through profit or loss
Investments are adjusted to their fair value through the Income Statements.
Name of entity
Principal activity
Ownership interest
Parent Entity
Controlled entities
DB RREEF Hurstville Trust
DB RREEF Industrial Trust1
DB RREEF Office Trust1
DB RREEF Operations Trust1
Retail property investment
Industrial property investment
Commercial property investment
Financial services
2007
(%)
100
100
100
100
2006
(%)
100
100
100
100
2007
$’000
294,901
–
–
–
2006
$’000
247,172
–
–
–
Total non-current assets – other financial assets at fair value through profit or loss
294,901
247,172
reconciliation
Opening balance as at 1 July 2006
Distributions
Fair value gain
Closing balance as at 30 June 2007
Parent Entity
2007
$’000
247,172
(15,650)
63,379
2006
$’000
233,867
(16,800)
30,105
294,901
247,172
1 In accordance with AASB Interpretation 1002, DDF is the deemed acquirer of DIT, DOT and DRO and therefore they are reflected in the Financial Statements as controlled
entities of DDF.
All controlled entities are wholly owned by the Trust. Both the parent entity and the controlled entities were formed in Australia.
104 DB RREEF Trust Financial Reports 2007
note 18. non-current assets – investments accounted for using the equity method
Investments are accounted for in the consolidated Financial Statements using the equity method of accounting (refer note 1).
Information relating to these entities is set out below.
Name of entity
Principal activity
Ownership interest
Consolidated
Parent Entity
2007
(%)
2006
(%)
2007
$’000
2006
$’000
2007
$’000
2006
$’000
Held by parent entity
Mt Druitt Shopping
Centre Trust
DB RREEF Industrial
Properties, Inc.1
Held by controlled entities
2 O’Connell Street Trust
4 O’Connell Street Trust
Bligh Street Trust
DB RREEF Holdings
Pty Limited (DRH)
Total
Retail property
investment
Asset, property and
funds management
Commercial
property investment
Commercial
property investment
Commercial
property investment
Asset, property and
funds management
50
50
50
50
50
50
50
50
50
50
50
50
211,517
182,500
211,517
182,500
–
–
270,195
271,898
8,565
9,702
16,054
15,197
16,133
11,902
17,886
15,761
–
–
–
–
–
–
–
–
270,155
235,062
481,712
454,398
1 The remaining 50 percent of this entity is owned by DIT. As a result, this entity is classed as controlled on a DDF consolidated basis.
These entities were formed in Australia with the exception of DB RREEF Industrial Properties, Inc. which was formed in the United States.
Movements in carrying amounts of investments accounted for using the equity method
Opening balance as at 1 July 2006
Interest acquired during the year
Share of net profits after tax
Distributions/Dividends received
Closing balance as at 30 June 2007
Results attributable to associates
Operating profits before income tax
Income tax expense
Operating profits after income tax
Less: Distributions/Dividends received
Undistributed income attributable to associates as at 1 July 2006
Undistributed income attributable to associates as at 30 June 2007
Summary of the performance and financial position of investments accounted for using the equity method
The Trusts’ share of aggregate profits, assets and liabilities of investments
accounted for using the equity method are:
Profits from ordinary activities after income tax expense
Assets
Liabilities
Share of associates’ expenditure commitments
Capital commitments
Consolidated
2007
$’000
2006
$’000
235,062
2,053
52,715
(19,675)
208,732
18,335
26,911
(18,916)
270,155
235,062
55,550
(2,835)
52,715
29,187
(2,276)
26,911
(19,675)
(18,916)
33,040
13,299
46,339
7,995
5,304
13,299
52,715
534,997
190,754
26,911
274,809
66,294
–
–
contingent event of investments accounted for using the equity method
Upon satisfaction of certain conditions, the Trust may elect to exercise a call option granted to it in relation to the purchase of the remaining
50 percent interest in DRH.
Upon satisfaction of certain conditions, FAP may elect to exercise a put option granted to it in relation to the sale of its 50 percent investment
in DRH.
DB RREEF Trust Financial Reports 2007 105
notes to the financial statements (continued)
note 19. non-current assets – deferred tax assets
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Derivative financial instruments
Tax losses
Other
Net deferred tax assets
Movements
Opening balance at 1 July 2006
Change on adoption of AASB 132 and AASB 139
Credited/(charged) to the Income Statements
Closing balance at 30 June 2007
note 20. non-current assets – other
Tenant and other bonds
Other
Total non-current assets – other
note 21. current liabilities – payables
Trade creditors
Accruals
Amount payable to other minority interest
Accrued capital expenditure
Prepaid income
Responsible Entity fee payable
GST payable
Accrued interest
Deferred settlement of property acquisition
Other
Total current liabilities – payables
Consolidated
Parent Entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
2,140
1,497
284
3,921
116
–
3,805
3,921
46
–
70
116
127
196
(207)
116
–
–
–
–
–
–
–
–
Consolidated
Parent Entity
2007
$’000
2,631
7,276
9,907
2006
$’000
1,819
5,193
7,012
2007
$’000
803
–
803
Consolidated
Parent Entity
2007
$’000
41,554
9,646
3,978
24,284
4,944
3,375
2,797
33,931
–
–
2006
$’000
51,964
6,938
3,509
2,117
7,727
2,692
1,350
24,095
475
34
2007
$’000
6,423
879
–
13,204
690
1,342
–
1,591
–
–
–
–
–
–
–
–
–
–
2006
$’000
750
–
750
2006
$’000
10,394
1,042
–
–
1,409
1,093
–
1,258
475
–
124,509
100,901
24,129
15,671
106 DB RREEF Trust Financial Reports 2007
note 22. interest bearing liabilities
current
Secured
Bank loans
Total secured
Unsecured
Bank loans
Total unsecured
Deferred borrowing costs
Total current liabilities – interest bearing liabilities
non-current
Secured
Commercial paper
Commercial mortgage backed securities
Bank loans
Total secured
Unsecured
Commercial notes
Bank loans
Medium term notes
Intercompany loan1
Preference shares
Total unsecured
Deferred borrowing costs
Consolidated
Parent Entity
2007
$’000
12,828
12,828
7,070
7,070
2006
$’000
29,402
29,402
217,000
217,000
(1,455)
(1,849)
18,443
244,553
2007
$’000
2006
$’000
–
–
–
–
–
–
–
–
–
–
–
–
Consolidated
Parent Entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
344,500
684,693
357,195
452,449
710,883
422,508
1,386,388
1,585,840
–
–
–
–
–
–
–
–
471,309
1,026,957
456,153
–
109
538,140
825,449
7,025
–
125
–
–
–
703,442
–
–
–
–
707,039
–
1,954,528
1,370,739
703,442
707,039
(6,032)
(6,085)
(528)
(53)
Total non-current liabilities – interest bearing liabilities
3,334,884
2,950,494
702,914
706,986
1 The intercompany loan represents a loan from DB RREEF Finance Pty Limited to the Trust. These loan balances eliminate on consolidation.
financing arrangements
The Trusts have access to the following lines of credit:
Borrowing facilities
Commercial paper
Commercial mortgage backed securities
Commercial notes
Bank loans
Medium term notes
Bank guarantee facility utilised at balance date
Used at balance date
Unused at balance date
Consolidated
Parent Entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
346,000
684,693
471,309
1,818,854
456,153
453,300
710,883
538,140
1,794,434
7,025
3,777,009
3,503,782
(3,306)
(3,360,705)
(5,000)
(3,202,856)
412,998
295,926
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
DB RREEF Trust Financial Reports 2007 107
notes to the financial statements (continued)
note 22. interest bearing liabilities (continued)
fair value
The carrying amounts and fair values of borrowings at balance date are:
Commercial paper
Commercial mortgage backed securities
Commercial notes
Bank loans
Medium term notes
None of the classes of borrowings is readily traded on organised
markets in standardised form.
The fair value of borrowings is based upon market prices where a
market exists or by discounting the expected future cash flows by
the current interest rates for liabilities with similar risk profiles.
bank loans
DB RREEF Finance Pty Limited, a wholly-owned subsidiary of DRO,
has syndicated bank debt facilities which comprises a $300.0 million
multi-currency revolving credit facility maturing in September 2008,
a $300.0 million multi-currency revolving credit facility maturing in
March 2010 and a US$210 million ($247.437 million) multi-currency
revolving credit facility maturing in September 2010. In addition,
DB RREEF Finance Pty Limited has bilateral bank debt facilities
comprising multi-currency revolving credit facilities of $360.0 million,
US$120.0 million ($141.393 million) and $100.0 million maturing in
December 2010, December 2013 and December 2007 respectively.
Of the $100.0 million facility, $1.496 million and US$1.536 million
($1.810 million) is utilised as bank guarantees for developments (refer
note 34). These bank debt facilities are supported by the Trusts’
guarantee arrangements. These facilities have negative pledge
provisions which limit the amount and type of encumbrances that the
Trusts can have over their assets and ensure that all senior unsecured
debt ranks pari passu. DB RREEF Industrial Properties, Inc may
borrow under the US$210.0 million, $360.0 million, $100.0 million
and US$120.0 million multi-currency revolving credit facilities.
The current debt facilities will be refinanced as at/or prior to
their maturity.
The consolidated accounts of the Trusts include the debt facilities of
the US joint venture. The facilities include a total of US$89.039
million ($104.913 million) of secured bank debt facilities that
amortise through monthly principal and interest payments with a
weighted average maturity date of March 2009 and a US$225.0
million ($265.111 million) secured interest only bank loan maturing
in September 2009. These facilities are secured by mortgages over
investment properties of the US joint venture totalling $331.2 million
and $696.4 million respectively as at 30 June 2007.
Consolidated 2007
Consolidated 2006
Carrying
amount
$’000
Fair value
$’000
Carrying
amount
$’000
Fair value
$’000
344,500
684,693
471,309
1,404,050
456,153
344,500
683,511
460,740
1,389,849
451,185
452,449
710,883
538,140
1,494,359
7,025
452,449
711,550
514,989
1,473,107
7,585
3,360,705
3,329,785
3,202,856
3,159,680
DB RREEF Industrial Properties, Inc has on issue US$200.0 million
($235.654 million) of notes which were privately placed with
investors on terms to maturity ranging from February 2011 to
February 2016.
These notes are supported by the Trusts’ guarantee arrangements.
These notes have negative pledge provisions which limit the amount
and type of encumbrances that the Trusts can have over their assets
and ensures that all senior unsecured debt ranks pari passu.
commercial paper and commercial mortgage
backed securities
DOT has liabilities resulting from the issuance of $344.5 million
(facility limit of $346.0 million) asset backed commercial paper (CP)
and $500.0 million commercial mortgage backed securities (CMBS).
The CMBS has an anticipated maturity date of April 2009. The CP
and CMBS are both secured by mortgages over eight investment
properties of DOT with a total value of $2,437.5 million as at
30 June 2007.
The US joint venture has liabilities resulting from a US$156.8 million
($184.693 million) CMBS issue, maturing in September 2008
(inclusive of a one year extension option beginning September
2007). This is secured by investment properties of the US joint
venture totalling $549.8 million as at 30 June 2007.
medium term notes
The US joint venture has liabilities resulting from US$5.222 million
($6.153 million) unsecured medium term notes maturing in
September 2010.
On 4 August 2006, DB RREEF Finance Pty Limited issued $250.0
million of unsecured medium term notes, maturing in February
2010. On 8 February 2007, DB RREEF Finance Pty Limited issued a
further $200.0 million of unsecured medium term notes, maturing in
February 2011. These notes are supported by the Trusts’ guarantee
arrangements. These notes have negative pledge provisions which
limit the amount and type of encumbrances that the Trusts can have
over their assets and ensure that all senior unsecured debt ranks
pari passu.
commercial notes – USA private placement
preferred shares
DB RREEF Finance Pty Limited has on issue US$200.0 million
($235.655 million) of notes which were privately placed with
investors on terms to maturity ranging from December 2011 to
March 2017.
DB RREEF Industrial Properties, Inc has issued US$92,550
($109,049) of preferred shares as part of the requirement to be
classified as a Real Estate Investment Trust (REIT) under US tax
legislation. These preferred shares will remain on issue until such
time that the Board decides that it is no longer in the company’s
interest to qualify as a REIT.
108 DB RREEF Trust Financial Reports 2007
note 23. current liabilities – provisions
Provision for distribution
Opening balance as at 1 July 2006
Additional provisions
Payments and reinvestment of distributions
Closing balance as at 30 June 2007
provision for distribution
Consolidated
Parent Entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
155,523
324,638
(315,169)
144,800
306,259
(295,536)
54,178
131,505
(117,213)
67,756
106,689
(120,267)
164,992
155,523
68,470
54,178
Provision is made for distributions to be paid for the period ending 30 June 2007 payable on 29 August 2007.
note 24. current liabilities – other
Tenant bonds
Other borrowing costs
Total current liabilities – other
note 25. non-current liabilities – deferred tax liabilities
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Investment property
Other
Total non-current liabilities – deferred tax liabilities
movements
Opening balance at 1 July 2006
Credited/(charged) to income tax benefit/(expense)
Credited/(charged) to withholding tax expense
Closing balance at 30 June 2007
Consolidated
Parent Entity
2007
$’000
13
3,137
3,150
2006
$’000
20
5,432
5,452
2007
$’000
2006
$’000
–
–
–
–
–
–
Consolidated
Parent Entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
73,360
449
73,809
48,652
74
48,726
–
–
–
–
–
–
Consolidated
Parent Entity
2007
$’000
48,726
378
24,705
73,809
2006
$’000
23,685
26
25,015
48,726
2007
$’000
2006
$’000
–
–
–
–
–
–
–
–
note 26. non-current liabilities – financial liabilities with minority interest
DB RREEF Industrial Properties, Inc. (US REIT) owns 80 percent of DB RREEF Industrial, LLC, a joint venture with Calwest Industrial
Properties, LLC (Calwest), the 20 percent owner. The joint venture agreement entitles Calwest to receive 40 percent of certain cashflows
arising from the joint venture, rather than the 20 percent that it would be entitled to in terms of its ownership interest, up until 30 June 2014,
after which time the rights to the cashflows revert to the ownership percentages. This additional entitlement is known as the “special interest”
or “Calwest promote”.
The joint venture agreement entitles US REIT to purchase the special interest from Calwest at any time up until 30 June 2014 at an agreed
predetermined price (which increases over time) (the agreed price). Calwest has a right to sell the special interest to the US REIT, from
1 July 2009 to 30 June 2014, at a price not exceeding the agreed price.
The agreed price at 30 June 2007 was $28,305,000 (2006: $29,105,000), which is the value recognised in the Financial Statements.
DB RREEF Trust Financial Reports 2007 109
notes to the financial statements (continued)
note 27. non-current liabilities – other
Consolidated
Parent Entity
Tenant bonds
Other borrowing costs
Other
2007
$’000
7,975
2,541
22
2006
$’000
7,982
5,634
22
Total non-current liabilities – other
10,538
13,638
note 28. contributed equity
(a) contributed equity of equity holders of the parent entity
2007
$’000
1,210
–
–
1,210
2006
$’000
1,084
–
–
1,084
Opening balance as at 1 July 2006
Distributions reinvested
Cost of distributions reinvested
Consolidated
Parent Entity
2007
$’000
1,094,144
57,382
–
2006
$’000
1,059,867
34,284
(7)
2007
$’000
1,094,144
57,382
–
2006
$’000
1,059,866
34,284
(6)
Closing balance as at 30 June 2007
1,151,526
1,094,144
1,151,526
1,094,144
(b) contributed equity of equity holders of other entities stapled to DDF (minority interest)
Consolidated
Parent Entity
Opening balance as at 1 July 2006
Distributions reinvested
Cost of distributions reinvested
2007
$’000
2,094,887
87,946
–
2006
$’000
2,034,388
60,509
(10)
Closing balance as at 30 June 2007
2,182,833
2,094,887
(c) number of securities on issue
2007
$’000
2006
$’000
–
–
–
–
–
–
–
–
Opening balance as at 1 July 2006
Distributions reinvested
Consolidated
Parent Entity
2007
Number
of securities
2006
Number
of securities
2007
Number
of units
2006
Number
of units
2,802,209,393
92,390,613
2,732,082,389
70,127,004
2,802,209,393
92,390,613
2,732,082,389
70,127,004
Closing balance as at 30 June 2007
2,894,600,006 2,802,209,393 2,894,600,006 2,802,209,393
Terms and conditions
Each stapled security ranks equally with all other stapled securities for the purposes of distributions and on termination of the Trust.
Each stapled security entitles the holder to one vote, either in person or by proxy, at a meeting of each of the Trusts.
Distribution reinvestment plan
Under the distribution reinvestment plan (DRP), stapled security holders may elect to have all or part of their distribution entitlements satisfied
by the issue of new stapled securities, rather than being paid in cash.
On 29 August 2006, 48,611,675 units were issued at a unit price of $1.4746 in relation to the June 2006 distribution period. On 28 February 2007,
43,778,938 units were issued at a unit price of $1.6822 in relation to the December 2006 distribution period.
110 DB RREEF Trust Financial Reports 2007
note 29. reserves and undistributed income
(a) reserves
Foreign currency translation reserve
Total reserves
Movements:
Foreign currency translation reserve
Opening balance as at 1 July 2006
Exchange difference arising from the translation of the financial statements
of foreign operations
Total movement in foreign currency translation reserve
Closing balance as at 30 June 2007
(b) nature and purpose of reserves
Foreign currency translation reserve
Consolidated
Parent Entity
2007
$’000
2,129
2,129
2006
$’000
178
178
178
(1,123)
1,951
1,951
2,129
1,301
1,301
178
2007
$’000
2006
$’000
–
–
–
–
–
–
–
–
–
–
–
–
The foreign currency translation reserve is used to record exchange differences arising from the translation of the Financial Statements
of foreign operations.
(c) undistributed income
Undistributed income as at 1 July 2006
Net profit attributable to security holders
Transfer of capital reserve of other minority interest
Distributions provided for or paid
Adjustment on adoption of AASB 132 and 139
Consolidated
Parent Entity
2007
$’000
1,098,453
1,168,819
(12,352)
(324,638)
–
2006
$’000
407,222
1,010,342
(16,014)
(306,259)
3,162
2007
$’000
525,810
443,857
–
(131,505)
–
2006
$’000
229,115
401,219
–
(106,689)
2,165
Undistributed income as at 30 June 2007
1,930,282
1,098,453
838,162
525,810
note 30. other minority interests
Interest in
Contributed equity
Reserves
Undistributed income
Total other minority interests
Consolidated
Parent Entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
348,062
(1,119)
91,230
343,932
15,616
68,303
438,173
427,851
–
–
–
–
–
–
–
–
DB RREEF Trust Financial Reports 2007 111
notes to the financial statements (continued)
note 31. distributions paid and payable
(a) distribution to security holders
31 December (paid 28 February 2007)
30 June (payable 29 August 2007)
Total distributions
(b) distribution to other minority interests
DB RREEF Industrial Holdings, LLC (paid)
DB RREEF RENTS Trust (paid 17 October 2006)
DB RREEF RENTS Trust (paid 17 January 2007)
DB RREEF RENTS Trust (paid 18 April 2007)
DB RREEF RENTS Trust (payable 16 July 2007)
Total distributions
(c) distribution rate
31 December (paid 28 February 2007)
30 June (payable 29 August 2007)
Total distributions
Consolidated
Parent Entity
2007
$’000
159,646
164,992
2006
$’000
150,736
155,523
2007
$’000
63,035
68,470
2006
$’000
52,511
54,178
324,638
306,259
131,505
106,689
Consolidated
Parent Entity
2007
$’000
3,599
3,737
3,856
3,876
3,977
2006
$’000
7,178
4,223
3,566
3,488
3,509
19,045
21,964
2007
$’000
2006
$’000
–
–
–
–
–
–
–
–
–
–
–
–
343,683
328,223
131,505
106,689
Consolidated
Parent Entity
2007
Cents
per security
2006
Cents
per security
5.60
5.70
11.30
5.45
5.55
11.00
2007
Cents
per unit
2.21
2.37
4.58
2006
Cents
per unit
1.93
1.96
3.89
(d) franked dividends
The franked portions of the final dividends recommended after 30 June 2007 will be franked out of existing franking credits or out of franking
credits arising from the payment of income tax in the year ending 30 June 2007.
Franking credits
Opening balance as at 1 July 2006
Franking credits arising during the year on payment of tax at 30 percent
Franking debits arising from payment of interim dividend
Closing balance as at 30 June 2007
Consolidated
Parent Entity
2007
$’000
744
3,261
(493)
3,512
2006
$’000
–
1,564
(820)
744
2007
$’000
2006
$’000
–
–
–
–
–
–
–
–
112 DB RREEF Trust Financial Reports 2007
note 32. financial risk management
The Trust’s activities expose it to a variety of financial risks: credit
risk, market risk (including currency risk, fair value interest rate risk
and price risk), liquidity risk and cash flow interest rate risk.
The Trust’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the Trust.
Accordingly, the Trust enters into various derivative financial
instruments to manage its exposure to the movements in interest rates
and foreign exchange rates. There are policies and limits approved by
the Board of Directors of the Responsible Entity in respect of the
usage of derivatives and other financial instruments to hedge those
cash flows and earnings which are subject to interest rate risks and
foreign currency risk respectively. In conjunction with its advisers, the
Responsible Entity continually reviews the Trust’s exposures and
updates its treasury policies and procedures. The Trust does not trade
in derivative instruments for speculative purposes.
(a) credit risk
Credit risk represents the loss that would be recognised if
counterparties failed to perform as contracted.
Concentrations of credit risk are minimised primarily by:
n
n
ensuring tenants, together with the respective credit limits, are
approved and ensuring that leases are undertaken with a large
number of tenants; and
ensuring derivative counterparties and cash transactions are
limited to high credit quality financial institutions. The Trust has
policies that limit the amount of credit exposure to any one
financial institution. Credit risk is further minimised by spreading
transactions amongst approved counterparties.
As such, the Trust does not have a concentration of credit risk that
arises from an exposure to a single tenant or financial institution.
Furthermore, the Trust does not have a material exposure to a group
of counterparties which are expected to be affected similarly by
changes in economic or other conditions.
On-balance sheet financial instruments
The Trust’s exposure to credit risk on its financial assets is the
carrying amount of its financial assets, as recognised in the
Balance Sheets.
(b) market risk
(i) Foreign exchange risk
Foreign exchange risk is the risk that movements in exchange rates
used to convert foreign currency revenues, expenses, assets, or
liabilities to the Trust functional currency will have an adverse affect
on DRT.
The Trusts operate internationally with investments in the United
States, New Zealand, France and Germany and are exposed to
foreign exchange risk arising from currency exposures in US dollars,
NZ dollars and Euro.
Exposure to foreign exchange risk is minimised by the way the Trust
manages its borrowing arrangements. The Trust matches the
currency of its investment with the currency of its debt where
practical. Residual foreign exchange risk is managed by the use
of forward foreign exchange contracts.
(ii) Fair value interest rate risk
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. Refer to (d) below.
(iii) Price risk
This is the risk that the value of the Trust’s investment portfolio will
fluctuate as a result of changes in valuations. This risk is managed
by ensuring that all activities are transacted in accordance with
mandates, overall investment strategy and within approved limits.
Market risk analysis is conducted regularly on a total portfolio basis.
On-balance sheet financial instruments
The net fair value of cash and non-interest bearing monetary
financial assets and liabilities is approximated by the carrying value
of that asset or liability, as recognised in the Balance Sheets.
(c) liquidity risk
Liquidity risk is the risk that the Trust will experience difficulty in
either realising assets or otherwise raising sufficient funds to satisfy
commitments. The risk management guidelines adopted are
designed to minimise liquidity risk through maintaining sufficient
cash balances and the availability of funding through an adequate
amount of committed credit facilities.
(d) cash flow and fair value interest rate risk
Interest rate risk for the Trust arises from its borrowings. Borrowings
issued at variable rates expose the Trust to cash flow interest rate
risk. Borrowings issued at fixed rates expose the Trust to fair value
interest rate risk.
Generally, fair value risk on borrowings issued at fixed rates is
mitigated by entering into swaps for equivalent notional amounts and
maturity dates that convert the fixed interest rate obligation on the
borrowing into a variable rate obligation (i.e. fair value risk is
converted to cash flow risk).
Cash flow interest rate risk on borrowings is managed by the use of
interest rate swaps. Under the terms of these interest rate swaps, the
Trust agrees with other parties to exchange, at specified intervals
(mainly quarterly), the difference between fixed contract rates and
floating rate interest amounts calculated by reference to the agreed
notional principal amounts.
Fixed debt and swaps currently in place cover approximately
97 percent (2006: 95 percent) of the loan principal outstanding,
with a further $2.3 billion (2006: $2.7 billion) in swaps that are
forward starting.
The Trust’s exposure to interest rate risk is hedged with interest rate
swaps and the weighted average effective interest rate (for each
class of financial asset and financial liability, and each maturity
bracket including floating rate financial assets and liabilities), and
is set out in the following table.
DB RREEF Trust Financial Reports 2007 113
notes to the financial statements (continued)
note 32. financial risk management (continued)
(d) cash flow and fair value interest rate risk (continued)
30 June 2007
Consolidated
Note(s)
Financial assets
Cash and cash
equivalents
Loans and receivables
8
13
Total
Weighted average
interest rate
Financial liabilities
Interest bearing
liabilities
Interest rate swaps1
Forward start interest
rate swaps1
Forward start interest
rate swaps maturities1
Total
Weighted average
interest rate
(including swaps)
Net financial
(liabilities)/assets
30 June 2006
Consolidated
Note(s)
Financial assets
Cash and cash
equivalents
Loans and receivables
8
13
Total
Weighted average
interest rate
Financial liabilities
Interest bearing
liabilities
Interest rate swaps1
Forward start interest
rate swaps1
Forward start interest
rate swaps maturities1
Total
Weighted average
interest rate
(including swaps)
Net financial
(liabilities)/assets
1 Notional principal amounts.
Fixed interest maturing in:
Floating
interest
rate
$’000
1 year or
less
$’000
Over 1 and
less than
2 years
$’000
Over 2 and
less than
3 years
$’000
Over 3 and
less than
4 years
$’000
Over 4 and
less than
5 years
$’000
More than 5
years
Total
$’000
$’000
59,603
–
59,603
6.21%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
51,936
59,603
51,936
51,936
111,539
11.00%
22
1,925,893
(1,826,934)
12,828
280,000
244,786
326,290
515,803
216,412
329,448
108,432
65,251
225,156
266,805
670,644
3,360,814
–
–
–
(212,479)
(362,173)
(457,170)
(294,068)
(170,696)
(809,136)
(2,305,722)
–
80,000
–
11,086
–
2,214,636
2,305,722
98,959
80,349
288,903
275,045
154,898
119,711
2,342,949
3,360,814
5.75%
5.58%
5.54%
5.75%
5.84%
5.89%
5.90%
(39,356)
(80,349)
(288,903)
(275,045)
(154,898)
(119,711)
(2,291,013)
(3,249,275)
Fixed interest maturing in:
Floating
interest
rate
$’000
1 year or
less
$’000
Over 1 and
less than
2 years
$’000
Over 2 and
less than
3 years
$’000
Over 3 and
less than
4 years
$’000
Over 4 and
less than
5 years
$’000
More than 5
years
Total
$’000
$’000
106,428
–
106,428
6.25%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
45,092
106,428
45,092
45,092
151,520
11.00%
22
2,070,961
(1,919,769)
14,582
668,349
21,712
180,000
263,290
214,572
302,704
515,533
146,942
290,205
382,790
51,110
3,202,981
–
–
–
(707,257)
(130,000)
(445,465)
(468,182)
(309,029)
(642,884)
(2,702,817)
–
–
183,814
–
45,533
2,473,470
2,702,817
151,192
(24,326)
71,712
216,211
350,055
173,651
2,264,486
3,202,981
5.75%
5.66%
5.66%
5.63%
5.85%
5.96%
6.03%
(44,764)
24,326
(71,712)
(216,211)
(350,055)
(173,651)
(2,219,394)
(3,051,461)
114 DB RREEF Trust Financial Reports 2007
(e) foreign exchange rate risk exposures
When hedging its exposures, the Trusts adopt a strategy using both physical and derivative financial instruments. In regard to derivative
financial instruments, the Trusts use forward exchange contracts for hedging purposes.
30 June 2007
Weighted average exchange rate
To pay US$ million
To receive A$ million
Weighted average exchange rate
Weighted average exchange rate
To pay € million
To receive A$ million
Weighted average exchange rate
Weighted average exchange rate
To pay NZ$ million
To receive A$ million
Weighted average exchange rate
30 June 2006
Weighted average exchange rate
To pay US$ million
To receive A$ million
Weighted average exchange rate
Weighted average exchange rate
To pay € million
To receive A$ million
Weighted average exchange rate
Weighted average exchange rate
To pay NZ$ million
To receive A$ million
Weighted average exchange rate
Contracts to sell US$ at an agreed exchange rate:
1 year or less
Over 1 and less
than 2 years
More than 2 years
12.8
18.4
0.6957
13.6
19.5
0.6971
19.6
27.3
0.7170
Contracts to sell Euro at an agreed exchange rate:
1 year or less
Over 1 and less
than 2 years
More than 2 years
2.7
4.8
0.5702
1.7
3.1
0.5560
2.6
4.8
0.5370
Contracts to sell NZ$ at an agreed exchange rate:
1 year or less
Over 1 and less
than 2 years
More than 2 years
7.9
6.9
1.1417
–
–
–
–
–
–
Contracts to sell US$ at an agreed exchange rate:
1 year or less
Over 1 and less
than 2 years
More than 2 years
16.8
23.7
0.7086
15.3
21.8
0.7015
25.7
36.5
0.7041
Contracts to sell Euro at an agreed exchange rate:
1 year or less
Over 1 and less
than 2 years
More than 2 years
17.7
30.3
0.5839
0.9
1.6
0.5626
2.5
4.6
0.5402
Contracts to sell NZ$ at an agreed exchange rate:
1 year or less
Over 1 and less
than 2 years
More than 2 years
–
–
–
–
–
–
–
–
–
DB RREEF Trust Financial Reports 2007 115
notes to the financial statements (continued)
note 33. contingent liabilities
Details and estimates of maximum amounts of contingent liabilities are as follows:
Bank guarantees by the Trusts in respect of variations and other
financial risks associated with the development of:
240 St George’s Terrace, Perth WA
Coles Myer development at Boundary Road, Laverton VIC
60 Miller Street, North Sydney NSW
Dulles Town Crossing, Virginia
Total contingent liabilities
Consolidated
Parent Entity
2007
$’000
–
1,000
496
1,810
3,306
2006
$’000
200
5,000
–
–
5,200
2007
$’000
2006
$’000
–
–
–
–
–
–
–
–
–
–
The Trusts are also guarantors of a A$600 million and US$210 million syndicated bank debt facility and a total of A$460 million and US$120
million of bank bilateral facilities, a total of $450 million of medium term notes and a total of US$400 million of privately placed notes, which
have all been negotiated to finance the Trusts. The guarantees have been given in support of debt outstanding and drawn against these facilities.
The guarantees are issued in respect of the Trusts and do not constitute an additional liability to those already existing in interest bearing
liabilities on the Balance Sheets.
The Directors of the Responsible Entity are not aware of any other contingent liabilities in relation to the Trusts, 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.
116 DB RREEF Trust Financial Reports 2007
note 34. commitments
(a) capital commitments
The following amounts represent capital expenditure on investment properties contracted at the reporting date but not recognised as liabilities payable:
Capital expenditure commitments in relation
to development works:
Not longer than one year
Axxess Corporate Park, Mount Waverley VIC
Plenty Valley Town Centre, 330–464 McDonalds Road, South Morang VIC
North Lakes Shopping Centre, Mango Hill QLD
Boundary Road, Laverton North VIC
Pound Road West, Dandenong VIC
114 Fairbank Road, Clayton VIC
21 rue du Chemin Blanc, Champlan
32 avenue de L’Océanie, Villejust
1 Margaret Street, Sydney NSW
201 Elizabeth Street, Sydney NSW
Governor Phillip Tower & Governor Macquarie Tower Office Complex
1 Farrer Place, Sydney NSW
309–321 Kent Street, Sydney NSW
Australia Square, 264 George Street, Sydney NSW
Southgate Complex, 3 Southgate Avenue, Southgate VIC
Williams Drive, Atlanta
West Nursery Road, Baltimore
Commerce Park, Charlotte
Regency Crest Drive, Dallas
NE Baltimore, Baltimore
Kenwood Road, Cincinnati
East Collins Boulevard, Dallas
10th Street, Dallas
Mechanicsburg, Harrisburg
Glendale, Los Angeles
Memphis Industrial, Memphis
South Priest Drive, Pheonix
Kent West, Seattle
Airport Exchange Boulevard, Cincinnati
E Plano/Shiloh, Dallas
Capital Avenue, Dallas
Mounds View, Minneapolis
Trenton Lane, Minneapolis
Braemar Ridge, Minneapolis
Eagandale Business Campus, Minneapolis
West Alameda Drive, Phoenix
44th Avenue, Phoenix
Westinghouse Boulevard, Charlotte
Later than one year but not later than five years
Plenty Valley Town Centre, 330–464 McDonalds Road, South Morang VIC
North Lakes Shopping Centre, Mango Hill QLD
Governor Phillip Tower & Governor Macquarie Tower Office Complex
1 Farrer Place, Sydney NSW
Australia Square, 264 George Street, Sydney NSW
North Lake Drive, Dallas
10th Street, Dallas
Eq/West/Div, Columbus
Later than five years
Australia Square, 264 George Street, Sydney NSW
Consolidated
Parent Entity
2007
$’000
–
81,576
48,398
3,547
8,539
3,170
339
157
–
215
2,446
2,323
3,115
20
124
–
233
474
6
42
–
–
149
340
13
–
571
390
219
231
229
906
277
2,355
196
274
471
2006
$’000
7,900
35,000
50,000
55,820
1,957
–
–
–
264
–
14,534
5,254
2,248
100
398
235
–
–
215
124
180
530
471
124
221
410
573
–
–
–
–
–
–
–
–
–
–
2007
$’000
–
81,576
48,398
–
–
–
–
–
–
–
2006
$’000
7,900
35,000
50,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
161,345
176,558
129,974
92,900
–
–
40,000
25,000
11,037
176
118
295
353
–
–
–
–
–
11,979
65,000
836
836
–
–
–
–
–
–
–
–
–
–
–
–
40,000
25,000
–
–
–
–
–
65,000
–
–
Total capital commitments
174,160
241,558
129,974
157,900
DB RREEF Trust Financial Reports 2007 117
notes to the financial statements (continued)
note 34. commitments (continued)
(b) lease payable commitments
Commitments in relation to leases contracted for at the
reporting date but not recognised as liabilities payable:
Within one year
Later than one year but not later than five years
Later than five years
Total lease payable commitments
Consolidated
Parent Entity
2007
$’000
290
1,162
7,260
8,712
2006
$’000
290
1,162
7,550
9,002
2007
$’000
290
1,162
7,260
8,712
2006
$’000
290
1,162
7,550
9,002
Payments made under operating leases are expensed on a straight line basis over the term of the lease, except where an alternative basis
is more representative of the pattern of benefits to be derived from the leased property.
The Trust has a commitment for ground rent payable in respect of a leasehold property included in property investments. An amount of
$290,356 was paid in respect of the year ended 30 June 2007 (2006: $290,356). This commitment was reviewed in 2003 and annual lease
payments were increased by a CPI factor as per the lease agreement. This commitment is next subject for review in 2012 and expires in 2037.
No provisions have been recognised in respect of non-cancellable operating leases.
(c) lease receivable commitments
The future minimum lease payments receivable by the Trusts are:
Consolidated
Parent Entity
Within one year
Later than one year but not later than five years
Later than five years
2007
$’000
572,632
1,677,318
1,018,754
2006
$’000
541,745
1,531,569
967,674
2007
$’000
173,502
549,873
435,658
2006
$’000
147,352
423,153
273,761
Total lease receivable commitments
3,268,704
3,040,988
1,159,033
844,266
note 35. related parties
responsible entity
DB RREEF Funds Management Limited is the responsible entity of the Trusts.
responsible entity fees
Under the terms of the Trust Constitutions, the Responsible Entity is entitled to receive fees in relation to the management of the Trust.
In addition, the Responsible Entity is entitled to property management fees and to be reimbursed for expenses incurred on behalf of the Trust.
related party transactions
All related party transactions are conducted on normal commercial terms and conditions unless otherwise stated.
unitholdings
At 30 June 2007 Deutsche Bank AG and its related parties, schemes and portfolios managed by Deutsche Bank AG and its related parties hold
57,302,807 stapled securities (2006: 48,480,053) in DRT.
investments
DB RREEF Funds Management Limited, the Responsible Entity, is a wholly owned subsidiary of DRH. DRH is 50 percent owned by DRO and
50 percent owned by First Australian Property Group Holdings Limited, a subsidiary of Deutsche Bank Group. The Trust is the parent entity
and deemed acquirer of DRO.
118 DB RREEF Trust Financial Reports 2007
DB RREEF Funds Management Limited
DB RREEF Funds Management is the Responsible Entity of the Trust. There were a number of transactions and balances between the Trust
and Responsible Entity and related entities as detailed below:
Responsible Entity fees paid and payable
Aggregate amounts payable to the Responsible Entity at reporting date
DB RREEF Holdings Pty Limited
Loan notes interest earned from DB RREEF Holdings Pty Limited
Loan notes receivable at reporting date
Property management fees paid and payable to DB RREEF Holdings Pty Limited
Recovery of administration expenses paid to DB RREEF Holdings Pty Limited
RREEF
Consolidated
Parent Entity
2007
$’000
33,147
3,375
2006
$’000
28,695
2,692
2007
$’000
11,961
1,342
2006
$’000
10,534
1,093
Consolidated
Parent Entity
2007
$’000
5,461
51,936
9,273
8,511
2006
$’000
4,960
45,092
6,260
8,589
2007
$’000
–
–
728
2,516
2006
$’000
–
–
–
1,742
RREEF (a subsidiary of Deutsche Bank AG), as fund manager of DB RREEF Industrial Properties, Inc. is entitled to the following fees:
Investment management fee paid and payable
Asset management fee paid and payable
Acquisition fee paid and payable
Property management fees paid and payable
Construction supervision fee paid and payable
Development fees
Leasing commissions
Performance fees
Deutsche Bank AG
Consolidated
Parent Entity
2007
$’000
1,561
344
3,549
4,901
792
918
2,841
(10)
2006
$’000
1,053
303
555
4,758
1,150
172
3,708
211
2007
$’000
2006
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Dealings with the bank include not only transactions in its capacity as part owner of the Responsible Entity, but also in the provision of financial
services. There were a number of transactions and balances between the Trust and the Responsible Entity and related entities as detailed below:
Transactions with Deutsche Bank AG in its capacity as a financier:
Interest paid and payable on swaps for whom the counterparty
was Deutsche Bank AG
Interest and financing fees paid and payable on borrowings
to Deutsche Bank AG
Borrowings from Deutsche Bank AG
Proceeds from Borrowings from Deutsche Bank AG
Loan repayment to Deutsche Bank AG
Interest received and receivable on swaps for whom the counterparty
was Deutsche Bank AG
Other transactions with Deutsche Bank AG:
Costs associated with the Transaction
Interest paid and payable to FAP
Consolidated
Parent Entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
14,826
13,334
(295)
(467)
601
13,034
14,688
11,757
585
10,103
–
5,251
16,890
12,834
–
234
480
566
–
–
–
–
–
–
–
–
–
–
–
1
160
–
DB RREEF Trust Financial Reports 2007 119
notes to the financial statements (continued)
note 35. related parties (continued)
directors
The following persons were Directors or Alternate Directors of DRFM during the whole of the financial year and up to the date of this report,
unless otherwise stated.
Directors
C T Beare BSc, BE (Hons), MBA, PhD, FAICD1, 4, 5
E A Alexander AM, BComm, FCA, FAICD, FCPA1, 2, 3
B R Brownjohn BComm1, 2, 5
S F Ewen OAM FILE1, 4
V P Hoog Antink BComm, MBA, FCA, FAPI, MAICD5
C B Leitner III BA
B E Scullin BEc2, 3, 4
A J Fay BAg Ec (Hons), ASIA (Alternate to C B Leitner)4
1 Independent Director.
2 Audit Committee Member.
3 Risk and Compliance Committee Member.
4 Nomination and Remuneration Committee Member.
5 Treasury Policy Committee Member.
No Directors held an interest in the Trust as at 30 June 2007 or at the date of this report.
other key management personnel
In addition to the Directors listed above the following persons were deemed by the Board Nomination and Remuneration Committee
to be key management personnel during all or part of the financial year and up to the date of this report:
Name
Position
Qualification date of other key management personnel
during the 12 months ended 30 June 2007
Tanya L Cox
John C Easy
Ben J Lehmann
Peter C Roberts
Paul G Say
Mark F Turner
Chief Operating Officer
General Counsel
Fund Manager, DB RREEF Trust
Chief Financial Officer
Head of Corporate Development
Head of Unlisted Funds
Qualified until 8 June 2007
Qualified from 19 March 2007
No key management personnel or their related parties held an interest in the Trust for the years ended 30 June 2006 and 30 June 2007
or at the date of this report.
There were no loans or other transactions with key management personnel or their related parties during the years ended 30 June 2006
and 30 June 2007 or at the date of this report.
Compensation
Short-term employee benefits
Post-employment benefits
Other long-term benefits
2007
2006
4,753,130
998,514
1,265,000
4,434,850
418,594
650,000
7,016,644
5,503,444
The Trust has taken advantage of the relief provided by ASIC Class Order 06/50 and has transferred the detailed remuneration disclosures
to the Directors’ Report. The relevant information can be found in section 3 of the Directors’ Report on pages 70 to 76.
120 DB RREEF Trust Financial Reports 2007
note 36. events occurring after reporting date
retail portfolio sale to DWPF
DRFM as Responsible Entity of DRT has entered into a conditional
contract with DB RREEF Wholesale Property Limited (DWPL) as
Responsible Entity of DB RREEF Wholesale Property Fund to sell its
50 percent interest in five shopping centres for an estimated
consideration of $927.75 million (Retail Transaction).
Completion of the Retail Transaction is conditional on:
n
n
DWPF obtaining FIRB approval; and
DWPF raising equity capital to its satisfaction.
Since 30 June 2007, other than the matters discussed above,
the Directors of the Responsible Entity are not aware of any matter
or circumstance not otherwise dealt with in their report or the
Financial Statements that has significantly or may significantly affect
the operations of the Trust, the results of those operations, or state of
the Trust’s affairs.
DIT France Logistique SAS
On 13 July 2007, DIT France Logistique SAS, a wholly owned
subsidiary of DB RREEF Industrial Trust has been acceded as
borrower under the syndicated bank debt facility. The existing
EUR 37 million borrowing of DB RREEF Finance Pty Limited under
this syndicated bank debt facility was transferred to DIT France
Logistique SAS on 31 July 2007.
Sale of Lot 3, Boundary Road, North Laverton VIC
On 23 July 2007, DB RREEF Industrial Trust exchanged contracts to
sell 50 percent of Lot 3, Boundary Road, North Laverton (the Coles
Group Limited chilled distribution centre) for $58 million. Settlement
is conditional upon the registration of plan of subdivision.
The Titan Industrial Portfolio
In July 2007, DB RREEF Industrial Properties, Inc. (US REIT)
entered into a contract to acquire and develop certain real property
commonly known as The Titan Industrial Portfolio (Titan Portfolio)
located in the City of San Antonio, Texas. The Portfolio consists of
1,047,000 square feet of existing assets and 95 acres of land for
development of approximately 1,550,000 square feet. The estimated
purchase price of the existing assets is US$58,050,000 and the
estimated cost to develop the land is US$95,500,000 including the
cost of the land. The acquisition of two existing buildings,
Interchange Park 8151 and Interchange Park 8161 closed on July 3,
2007, as the first acquisition in the Titan Portfolio. The purchase
price of these buildings was US$16,188,730.
The development component will be structured in two phases as
a joint venture, 96.5 percent owned by DB RREEF and 3.5 percent
owned by Santa Barbara Development Services (SBDS). It will
include an initial phase of approximately 660,000 square feet to
be developed immediately. The total estimated cost for Phase I is
US$44,200,000. The contract includes an eight month option from
the initial closing date to purchase the Phase II land, contingent
upon achieving a return on cost equal to or above the pro-forma,
with mutually agreed upon market rents and developer cost
guarantees. It is anticipated that the Phase II option will be exercised
and development commences shortly thereafter. The Phase II
development consists of approximately 890,000 square feet at an
estimated cost of US$51,300,000.
DB RREEF Trust Financial Reports 2007 121
notes to the financial statements (continued)
note 37. segment information
business segments
The Trusts operate in the following segments:
n
n
n
Retail – investment in the retail property sector
Commercial and car park – investment in the commercial and car park property sectors
Industrial – investment in the industrial property sector
2007
Retail
$’000
66,079
264
40,656
106,999
–
–
184,424
–
–
–
291,423
309,610
1,229,217
4,006
211,517
–
–
2,174
–
Retail
$’000
64,441
257
19,632
84,330
–
76,901
–
–
–
161,231
140,857
932,720
19,161
182,500
–
–
2,157
–
–
Commercial
and car park
$’000
318,122
1,159
5,717
324,998
–
(105)
448,406
–
(166)
1,508
774,641
Industrial
$’000
309,229
2,094
–
311,323
3,959
3,460
198,500
–
1,515
–
518,757
Eliminations/
unallocated
$’000
–
4,589
6,342
10,931
–
–
–
52,458
–
164
Consolidated
$’000
693,430
8,106
52,715
754,251
3,959
3,355
831,330
52,458
1,349
1,672
63,553
1,648,374
625,653
284,482
(50,926)
1,168,819
4,104,675
938,666
40,750
–
31,495
24,585
2,488
Commercial
and car park
$’000
304,249
837
2,434
307,520
131
307,526
–
117
329
615,623
469,881
3,678,670
1,054,880
36,801
102,599
57,495
18,712
–
1,023
3,931,679
2,273,561
–
396,178
148,754
10,902
–
Industrial
$’000
294,652
1,462
–
296,114
1,359
302,063
–
2,786
–
602,322
338,973
3,520,817
1,385,629
–
53,194
89,083
5,200
3,287
–
221,265
565,660
17,888
–
–
–
–
9,486,836
3,781,893
270,155
396,178
180,249
37,661
2,488
Eliminations/
unallocated
$’000
154
5,597
4,845
10,596
–
–
73,271
–
190
Consolidated
$’000
663,496
8,153
26,911
698,560
1,490
686,490
73,271
2,903
519
84,057
1,463,233
60,631
1,010,342
155,331
1,112,355
15,761
–
–
–
–
–
8,287,538
3,572,025
235,062
155,793
146,578
26,069
3,287
1,023
Property revenue
Interest revenue
Share of net profits of associates accounted for
using the equity method
Proceeds from sale of inventory
Net gain/(loss) on sale of investment properties
Net fair value gain of investment properties
Net fair value gain of derivatives
Net foreign exchange gain/(loss)
Other income
Total segment income
Segment result
Segment assets
Segment liabilities
Investments accounted for using the equity method
Acquisition of investment properties
Additions to property plant and equipment
Amortisation expense
Other non-cash expenses
2006
Property revenue
Interest revenue
Share of net profits of associates accounted for
using the equity method
Net gain on sale of investment properties
Net fair value gain of investment properties
Net fair value gain of derivatives
Net foreign exchange gain
Other income
Total segment income
Segment result
Segment assets
Segment liabilities
Investments accounted for using the equity method
Acquisition of investment properties
Additions to property plant and equipment
Amortisation expense
Impairment of goodwill
Other non-cash expenses
122 DB RREEF Trust Financial Reports 2007
geographical segments
The Trusts’ investments are located in Australia, New Zealand, the United States of America, France and Germany.
2007
Rental and other property income
Segment assets
Acquisitions of investment properties
Additions to property plant and equipment
2006
Rental and other property income
Segment assets
Acquisitions of investment properties
Additions to property plant and equipment
Australia
New Zealand
$’000
515,435
7,692,110
–
148,632
$’000
10,041
133,617
–
–
United States
of America
$’000
150,173
1,303,064
29,867
31,617
France
Germany
Consolidated
$’000
9,583
112,441
118,856
–
$’000
8,198
245,604
247,455
–
$’000
693,430
9,486,836
396,178
180,249
Australia
New Zealand
$’000
498,281
6,292,518
–
109,932
$’000
8,595
102,125
102,599
–
United States
of America
$’000
156,620
1,892,895
53,194
36,646
France
Germany
Consolidated
$’000
$’000
$’000
–
–
–
–
–
–
–
–
663,496
8,287,538
155,793
146,578
note 38. reconciliation of net profit/(loss) to net cash inflow from operating activities
Net profit
Capitalised interest
Depreciation
Net increment on revaluation of investments
Share of net profits of associates accounted for using the equity method
Net fair value gain of derivatives
Net gain on sale of investment properties
Profit on sale of inventories
Net foreign exchange (gain)/loss
Provision for doubtful debts
Impairment of goodwill
Change in operating assets and liabilities
(Increase)/decrease in receivables
(Increase)/decrease in prepaid expenses
Decrease in other non-current assets – investments
Decrease in other current assets
Decrease/(increase) in other non-current assets
Increase/(decrease) in payables
Decrease/(increase) in other current liabilities
Increase in other non-current liabilities
Increase in deferred tax liabilities
Consolidated
Parent Entity
2007
$’000
1,210,791
(14,639)
2,488
(831,330)
(17,549)
(50,873)
(3,809)
(481)
(1,027)
640
–
(120,872)
(1,853)
41,229
113
30,115
768
351
43,620
32,053
2006
$’000
1,066,385
(10,488)
1,023
(686,490)
(5,036)
(73,271)
(1,487)
–
10,772
635
3,287
(1,412)
368
1,209
3,098
(2,384)
6,267
(655)
16,204
–
2007
$’000
443,857
(3,746)
–
(307,406)
–
(8,260)
(15)
–
(32,301)
408
–
2,203
(1,212)
21,867
–
(53)
(4,748)
–
24,647
–
2006
$’000
401,219
(5,627)
–
(285,490)
–
(15,349)
(109)
–
3,508
(11)
–
(13,205)
845
26,828
–
1,776
2,317
(1,880)
7,622
–
Net cash inflow from operating activities
319,735
328,025
135,241
122,444
DB RREEF Trust Financial Reports 2007 123
notes to the financial statements (continued)
note 39. non-cash financing and investing activities
Distributions reinvested
note 40. earnings per unit
Consolidated
Parent Entity
Note(s)
2007
$’000
28
145,328
2006
$’000
94,793
2007
$’000
57,382
2006
$’000
34,284
(a) basic earnings per unit on profit attributable to equity holders of the parent entity
Consolidated
Parent Entity
2007
Cents
15.62
2006
Cents
14.39
2007
Cents
15.53
(b) diluted earnings per unit on profit attributable to equity holders of the parent entity
Consolidated
Parent Entity
(c) basic earnings per unit on profit attributable to stapled security holders
2007
Cents
15.62
Consolidated
2007
Cents
40.90
(d) diluted earnings per unit on profit attributable to stapled security holders
Consolidated
2007
Cents
40.90
2007
Cents
15.53
2006
Cents
14.39
2006
Cents
36.44
2006
Cents
36.44
2006
Cents
14.47
2006
Cents
14.47
(e) reconciliation of earnings used in calculating earnings per unit
Net profit
Net profit attributable to equity holders of other entities
stapled to DDF (minority interests)
Net profit attributable to other minority interests
Net profit attributable to the unitholders of the Trust
in calculating basic and diluted earnings per unit
(f) weighted average number of units used as a denominator
Consolidated
Parent Entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
1,210,791
1,066,385
443,857
401,219
(722,441)
(41,972)
(611,417)
(56,043)
–
–
–
–
446,378
398,925
443,857
401,219
Consolidated
Parent Entity
2007
2006
2007
2006
Weighted average number of units outstanding used in the calculation
of basic and diluted earnings per unit
2,857,716,193 2,772,613,360 2,857,716,193 2,772,613,360
124 DB RREEF Trust Financial Reports 2007
directors’ declaration
The Directors of DB RREEF Funds Management Limited as Responsible Entity of DB RREEF Diversified Trust (the Trust) declare that the
Financial Statements and notes set out on pages 67 to 124:
(i)
comply with applicable Australian Equivalents to International Financial Reporting Standards, the Corporations Regulations 2001
and other mandatory professional reporting requirements; and
(ii) give a true and fair view of the Trust’s and consolidated entity’s financial position as at 30 June 2007 and of their performance,
as represented by the results of their operations and their cash flows, for the year ended on that date.
In the Directors’ opinion:
(a) the Financial Statements and notes are in accordance with the Corporations Act 2001;
(b) there are reasonable grounds to believe that the Trust and its consolidated entities will be able to pay their debts as and when they become
due and payable; and
(c) the Trust has operated in accordance with the provisions of the Constitution dated 15 August 1984 (as amended) during the year ended
30 June 2007.
The Directors have been given the declarations by the Chief Executive Officer and Acting Chief Financial Officer required by section 295A
of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Christopher T Beare
Chair
Sydney
27 August 2007
DB RREEF Trust Financial Reports 2007 125
independent auditor’s report
126 DB RREEF Trust Financial Reports 2007
DB RREEF Trust Financial Reports 2007 127
investor
information
128 DB RREEF Trust Annual Report 2006
taxation information
annual tax statement
After the end of each financial year you will receive a tax statement.
This statement summarises the distributions paid to you during the
year and includes information required to complete your tax return.
DB RREEF Trust capital gains taxation
cost base information
A brochure called “Capital Gains Taxation Information” has been
prepared for DB RREEF Trust stapled security holders (updated as
at 30 June 2007) that will assist holders to determine the capital
gains tax cost base of their DB RREEF Trust securities and any
capital gains on the disposal of their securities. Holders may obtain a
copy of this brochure by visiting our website at www.dbrreef.com/drt
apportionment percentages of DB RREEF Trust
stapled securities
Apportionment percentages for DB RREEF Trust stapled securities
can be obtained by visiting the tax information page on our website
at www.dbrreef.com/drt
tax file number
You are not required by law to provide your tax file number, Australian
Business Number or Exemption. However if you do not provide your
TFN, ABN or Exemption, withholding tax at the highest marginal rate,
currently 48.5 percent may be deducted from 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.
DB RREEF Trust information
Investors and other interested people may obtain information on
various aspects of DB RREEF Trust’s activities via our website at
www.dbrreef.com/drt
Information available includes:
n
n
n
n
n
ASX announcements;
periodic reports and presentations;
distribution and tax information;
corporate governance; and
research.
security registry
If you have administrative enquiries such as change of address or
the way in which you wish your distributions paid, you can either
contact Link Market Services on the InfoLine 1800 819 675 or
update your account details via our website at www.dbrreef.com/drt
enquiries, obtaining information
or making a complaint
DB RREEF has processes in place to deal with security holder
questions and complaints. If you have any questions, complaints,
or wish to obtain information regarding the stapled securities, please
contact our client service InfoLine on 1800 819 675 or from outside
Australia +61 2 8280 7126, or email: enquiries.drt@dbrreef.com
DB RREEF is a member of the Financial Industry Complaints Service
Limited (FICS). This is an independent dispute resolution service
and may be contacted through:
Financial Industry Complaints Service Limited
PO Box 579
Collins Street West
Melbourne VIC 8007
Phone: 1300 780 808
Fax: +61 3 9621 2291
stock exchange listing
The stapled security (ASX:DRT) is included in the top 200 listed
entities in Australia in terms of market capitalisation and currently
forms part of the following indices:
n
n
n
n
All Ordinaries;
All Industrials;
Listed Property Trusts; and
the S&P/ASX200.
DB RREEF Trust Annual Report 2007 129
investor information (continued)
distribution history and timetable
Distribution history schedules for DB RREEF Trust since October 2004 and DDF, DIT, DOT prior to October 2004 can be downloaded
by visiting our website at www.dbrreef.com/drt
With respect to your distributions, you can have your distribution paid directly into your nominated Australian bank, building society or credit
union account. DB RREEF Trust’s distribution periods end on 30 June and 31 December each year with distributions being paid no later than
two months following each period end.
The timetable below shows the anticipated distribution, banking and mailing dates for the next two distributions. Please note that these dates are
indicative and may change.
Distribution period date
Announcement date
Ex-distribution date
Record date
Anticipated date
1 July 2007 to 31 December 2007
1 January 2008 to 30 June 2008
18 December 2007
19 June 2008
21 December 2007
24 June 2008
31 December 2007
30 June 2008
29 February 2008
29 August 2008
distribution reinvestment plan (DRP)
DB RREEF Trust has a distribution reinvestment plan available to security holders providing them the opportunity to purchase additional
stapled securities by reinvesting all or part of their income distributions. The amount to be reinvested will be applied to acquire fully paid
stapled securities in DB RREEF Trust. Where the amount to be reinvested does not equal a whole multiple of the DRP issue price the residual
money will be carried forward and added to the next reinvestment amount. For further information on the DRP please go to our website at
www.dbrreef.com/drt
unpresented cheques and unclaimed funds
DB RREEF Trust has a number of security holders who have unpresented cheques and/or unclaimed funds. If you believe you have unpresented
cheques or unclaimed funds please contact our Share Registry, Link Market Services on 1800 819 675. Link Market Services will complete a
search for you and assist you in recovering your funds for up to a seven year period. For outstanding monies after that time, you should contact the
NSW Office of State Revenue on 1300 366 016 or go to their website at www.osr.nsw.gov.au and use their search facility for unclaimed moneys.
130 DB RREEF Trust Annual Report 2007
registry information
top 20 stapled security holders as at 31 August 2007
Rank Investor
Balance
Percentage of issued capital (%)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
National Nominees Limited
ANZ Nominees Limited
Citicorp Nominees Pty Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
Merrill Lynch (Australia) Nominees Pty Limited
Cogent Nominees Pty Limited
AMP Life Limited
Citicorp Nominees Pty Limited
Questor Financial Services Limited
Cogent Nominees Pty Limited
ANZ Nominees Limited
Bond Street Custodians Limited
Citicorp Nominees Pty Limited
UBS Nominees Pty Ltd
Suncorp Custodian Services Pty Limited
Queensland Investment Corporation
Bond Street Custodians Limited
Australian Executor Trustees Limited
Total for top 20:
Total other holders
Total all holders
556,060,803
446,930,448
296,898,303
260,643,370
197,042,217
151,831,426
138,838,291
49,734,673
48,599,261
45,044,767
34,808,364
34,638,042
33,499,046
22,701,785
14,160,643
12,174,116
10,936,517
10,630,515
10,157,285
10,156,694
2,385,486,566
546,579,452
2,932,066,018
18.96
15.24
10.13
8.89
6.72
5.18
4.74
1.70
1.66
1.54
1.19
1.18
1.14
0.77
0.48
0.42
0.37
0.36
0.35
0.35
81.36
18.64
100.00
substantial holders as at 31 August 2007
The names of substantial holders, who at 31 August 2007, have notified the Responsible Entity in accordance with Section 671B
of the Corporations Act 2001 are:
Name
Number of stapled securities
Percentage voting (%)
CBA Group
ING and related entities
APN Funds Management Limited
Barclays Global Investors and related entities
class of securities
144,768,443
186,156,424
138,195,694
256,479,590
5.00
6.43
5.00
9.27
DB RREEF Trust has one class of stapled security trading on the ASX with 24,554 investors holding 2,932,066,018 stapled securities
at 31 August 2007.
spread of stapled securities at 31 August 2007
Ranges
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Investors
Securities
Percentage of issued capital (%)
1,423
4,581
6,250
11,928
372
555,781
14,808,762
47,626,331
289,471,199
2,579,603,945
24,554
2,932,066,018
0.02
0.51
1.62
9.87
87.98
100.00
At 31 August 2007, the number of security investors holding less than a marketable parcel of 249 securities ($2.010) is 622 and they hold
47,628 securities.
voting rights
At meetings of the security holders of the DB RREEF Diversified Trust, DB RREEF Industrial Trust, DB RREEF Office Trust and DB RREEF
Operations Trust, being the Trusts that comprise DB RREEF Trust, on a show of hands, each security holder of each Trust has one vote.
On a poll, each security holder of each Trust has one vote for each dollar of the value of the total interests they have in the Trust.
the number and class of securities that are restricted or subject to voluntary escrow
There are no stapled securities that are restricted or subject to voluntary escrow.
on-market buy-back
DB RREEF Trust has no on-market buy-back currently in place.
DB RREEF Trust Annual Report 2007 131
auditors
PricewaterhouseCoopers
Chartered Accountants
201 Sussex Street
Sydney NSW 2000
security registry
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Locked Bag A14
Sydney South NSW 2000
Phone: +61 2 8280 7126
InfoLine: 1800 819 675
Fax: +61 2 9261 8489
Email: registrars@linkmarketservices.com.au
Website: www.linkmarketservices.com.au
For inquiries regarding your holding you can either contact
the Security Registry, or access your holding details via the
web at www.dbrreef.com and follow the links.
Listed on the Australian Stock Exchange ASX Code: DRT.
InfoLine 1800 819 675 Monday to Friday between
8.30am and 5.30pm (Sydney time).
directory
DB RREEF Diversified Trust
ARSN 089 324 541
DB RREEF Industrial Trust
ARSN 090 879 137
DB RREEF Office Trust
ARSN 090 768 531
DB RREEF Operations Trust
ARSN 110 521 223
responsible entity
DB RREEF Funds Management Limited
ABN 24 060 920 783
registered office of responsible entity
Level 9, 343 George Street
Sydney NSW 2000
PO Box R1822
Royal Exchange NSW 1225
Phone: +61 2 9017 1100
Fax: +61 2 9017 1101
directors of the responsible entity
Christopher T Beare, Chair
Elizabeth A Alexander AM
Barry R Brownjohn
Stewart F Ewen OAM
Victor P Hoog Antink
Charles B Leitner III (Alternate: Andrew J Fay)
Brian E Scullin
secretaries of the responsible entity
Tanya L Cox
John C Easy
investor enquiries
InfoLine: 1800 819 675
Phone: +61 2 8280 7126
Email: enquiries.drt@dbrreef.com
Website: www.dbrreef.com
132 DB RREEF Trust Annual Report 2007
Consistent with DB RREEF’s commitment to sustainability, this report is printed with soy inks on an Australian made paper, manufactured
under the highest level of international environmental standards. The paper pulp is Elemental Chlorine Free (ECF) and is sourced from
sustainable forests. The principal energy source (92 percent) of the mill is hydroelectric and wind farm and waste from the mill is recycled
for compost. The mill is certified under ISO14001 environmental management systems.
www.dbrreef.com