Ing Real Estate Investment Management Australia by hki87037

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									ing Real estate
entertainment Fund   investing

Annual Report




                     30 june 2010
$323.4m totAl Assets

$30.1m Fund Revenue

$9.5m opeRAting income

$0.49 net tAngible Assets peR unit




ING real estate eNtertaINmeNt FuNd aNNual report 2010
                                     01   ing ReAl estAte enteRtAinment Fund
                                     02   ieF’s investment stRAtegy
                                     03   Results
                                     04   letteR FRom chieF eXecutive oFFiceR
                                     06   Fund updAte
                                     09   senioR mAnAgement pRoFile
                                     10   coRpoRAte goveRnAnce
                                     19   FinAnciAl inFoRmAtion
                                     67   unitholdeR inFoRmAtion
                                     68   investoR RelAtions
                                     69   coRpoRAte diRectoRy




ing Real estate entertainment Fund (AsX code: ieF)
is an externally-managed, AsX-listed real estate
investment trust that invests in the freehold of
a diversified portfolio of entertainment and leisure
venues. the Fund receives income through leases
of the licensed real estate to a range of operators.
ieF has total assets under management of $323 million
with investments located throughout Australia
and new Zealand.




                       About ING ReAl estAte INvestmeNt mANAGemeNt

                       ing Real estate entertainment Fund is one of
                       five listed real estate investment trusts (A-Reits)
                       that are managed by ing Real estate investment
                       management Australia (ing ReimA) on behalf
                       of 60,000 investors. the Funds operate in key real
                       estate sectors including office, industrial, seniors
                       housing, entertainment and healthcare property.
                       globally, ing Real estate investment management
                       focuses on the investment management of quality
                       real estate in all major global markets with a total
                       portfolio of more than A$100 billion. ing Real
                       estate investment management is one of the
                       leading investment management companies and
                       serves a broad client base from five continents,
                       europe, north America, south America,
                       Asia and Australia.




                                                       www.ingrealestate.com.au   01
 ieF’s investment strategy

the long term strategy of the Fund is principally to:
n	 maintain considered investment in profitable hotels in strong trading locations;

n	 own the freehold interest of the hotels and lease the licensed real estate
     to experienced operators within the hospitality and leisure sector; and
n	 Combine the capability and experience of IeF with the trading experience of
     a variety of operators. management is working closely with the Fund’s operators
     to meet the challenges of the current environment which will assist to underpin
     long term Fund earnings.




02      ING real estate eNtertaINmeNt FuNd aNNual report 2010
                              woolwIch pIeR hotel, sydNey, Nsw




Financial position
                                       30 june 2010              30 june 2009

  total Assets                          $323.4m                    $413.3m
  total liabilities                     $237.5m                    $274.6m
  secured debt/total Assets                 61.6%                       57.1%
  number of units on issue                175.7m                      175.7m
  net Asset value per unit                   $0.49                       $0.79




Financial performance
                                       30 june 2010              30 june 2009

  statutory profit/(loss)               ($52.7m)                    ($54.1m)
  property income                         $23.6m                      $27.0m
  operating income                          $9.5m                     $12.5m
  operating income per unit                     5.4c                           7.3c
  distributions per unit                           —                      2.75c
  tax deferred component                           —                   44.7%




                                                    www.ingrealestate.com.au     03
letter from chief executive officer




Capital stability has been a key
objective, and management
has been actively working to
deleverage IEF and improve the
Fund’s balance sheet position.




                                       daniel hargraves
                                       chief executive officer
                                       ing Real estate entertainment Fund




04   ING real estate eNtertaINmeNt FuNd aNNual report 2010
                the dolphIN hotel, sydNey, Nsw                                  couRthouse hotel, cAIRNs, qld



dear unitholder,                                                 operator stability, and its impact on Fund revenue and
                                                                 performance, is also a key focus for management at this
the last 12 months have proven challenging for the sector
                                                                 time with conditions likely to remain challenging in the next
and as a consequence IeF’s investment performance has
                                                                 6-12 months. IeF management has undertaken a strategic
been impacted. the Fund’s tenants have faced difficult
                                                                 review of the business to identify potential outcomes that
operating conditions and in several cases, performance
                                                                 will assist in stabilising and subsequently improving the
has not met expectations, which has led to a decline in the
                                                                 underlying operating businesses. as a result of this review, IeF
Fund’s asset values and contributed to a reduction in net
                                                                 is considering options to invest for growth via a restructure
operating income.
                                                                 of the Fund’s management and operating base, this includes:
IeF has faced core challenges, particularly in relation to
                                                                 n   Internalisation of the Fund
refinancing senior debt facilities and meeting the redemption
                                                                     allows for a revised corporate structure tailored to the
of the $19.6 million convertible loan securities which expired
                                                                     future of the Fund; and
in July 2010. Capital stability has been a key objective,
and management has been actively working to deleverage           n   establishing a stapled entity
IeF and improve the Fund’s balance sheet position.                   allows the Fund to take a more direct interest in
                                                                     the underlying operational performance of the assets
Working closely with our lenders, we completed some
                                                                     and reduces reliance on tenant performance over
key achievements:
                                                                     the long term.
n refinanced of $182.5 million in senior debt;
                                                                 rather than continuing to primarily focus on asset sales in
n Credit approved terms for refinancing IeF’s second             a distressed environment, a restructure would enable greater
  debt facility;                                                 control over our cornerstone assets, and improve prospects
n realised $39.0 million in asset sales; and                     for earnings growth. In addition, having the ability to directly
n reduced total debt by 14% in the 12 months                     operate the venues allows for more effective management
  to 30 June 2010.                                               of existing tenant risks and reduces the potential for further
                                                                 value declines.
For the year to 30 June 2010, total revenue was $30.1 million
which was slightly down on the prior corresponding period.       I would like to thank unitholders for their continued support
the Fund’s net operating income declined by 24% to               over the past 12 months and look forward to providing
$9.5 million as a consequence of asset sales and higher          further updates as these short term strategies progress.
debt margins following refinancing. Net asset value fell         Further information about ING real estate entertainment
to $0.49 per unit primarily as a result of declines in the       Fund can be found in the Fund report which follows.
market values of investment properties.                          additionally, ING real estate entertainment Fund’s
during FY2010 IeF sought the opportunity of an injection of      annual results presentation is also available to view
new capital. a capital raising of $38.8 million was completed    at www.ingrealestate.com.au
via a placement of $2.4 million and a $36.4 million 2-for-1      Yours sincerely,
rights issue. the combination of the capital raising and the
asset sales has assisted IeF with reducing its debt. these
initiatives also enable management to review opportunities
for portfolio growth to restore long term value.



                                                                 dAniel hARgRAves
                                                                 chief executive officer
                                                                 ING real estate entertainment Fund




                                                                                                      www.ingrealestate.com.au   05
Fund update




FinAnciAl peRFoRmAnce                                                     the Fund did not pay distributions for the period as free
the Fund’s financial performance for the 12 months ended                  cash from the business was applied to debt reduction and
30 June 2010 reflects the challenges in the operating                     maintaining compliance with debt covenants. We understand
environment and wider pub sector. management reported                     this impacts our unitholders’ investment performance
a statutory loss for the year of $52.7 million. the main driver           however, focusing on balance sheet improvement and
of this result was the negative investment property valuation             stabilising the Fund’s capital position is in the best long
movement caused by an expansion in capitalisation rates                   term interests of all stakeholders. reinstating distributions
resulting from tenant covenant and sector risks.                          remains a key priority for management.

operating income for the year was $9.5 million, down                      the impact of negative property valuations in the period
24% on the year prior. the fall in income was largely a                   resulted in a net asset value (NaV) per unit of 49 cents
consequence of capital management initiatives including                   compared to 79 cents in the year prior. market evidence
asset sales and an increase in interest costs (associated                 is indicating pub sector valuations still face some further
with the refinance of the senior debt facility on terms                   downside risk before reaching the bottom of the
reflective of the current environment).                                   valuation cycle.
                                                                          management conducted an equity raising post the
                                                                          30 June 2010 reporting date with proceeds applied
                                                                          to resolving near term debt expiries. the impact of
                                                                          increasing the units on issue has resulted in a proforma
                                                                          NaV of 20 cents per unit.




opeRAting income compARison to pRioR yeAR
capital management initiatives required to stabilise the Fund

14.0 $000’s

12.0            12.5            (1.2)
                                                  (1.1)

10.0                                                              (0.6)             (0.9)           0.5             0.3               9.5

8.0                         CAPITAL MANAGEMENT INITIATIVES

6.0

4.0

2.0

0
              FY2009         NET IMPACT       INCREASE IN      INCREASE IN         OTHER        REDUCTION IN    REDUCTION IN         FY2010
                            OF ASSET SALES     FINANCING         RE FEES                        CLS INTEREST     IMPAIRMENT
                                                MARGINS                                                        OF RECEIVABLES




06     ING real estate eNtertaINmeNt FuNd aNNual report 2010
Active capital management has assisted in strengthening
ieF’s balance sheet and stabilised the Fund’s capital position.




                                                                                        bRIsbANe hotel, peRth, wA




cApitAl mAnAgement                                                 as at 30 June 2010 IeF’s net borrowings were $219.3 million
Capital stability has been a key priority for the Fund during      representing 68% of the Fund’s total assets, however,
the past 12 months. management has been very active                adjusting for post 30 June 2010 initiatives net borrowings
in deleveraging the Fund and improving the balance sheet           are expected to reduce to $156.5 million, or 53.4%
position. Key steps in meeting this objective included:            of total assets.

n refinancing the $182.5 million senior debt facility
  for a further three years;                                       debt mAtuRity pRoFile
n achieving credit approved terms for refinancing the              the Fund’s near-term debt expiries have been addressed
  second secured debt facility. this facility extension has
  recently been finalised and executed; and                        200.0 $m
n Completing $39.0 million asset sales.
                                                                   160.0
post reporting period additional initiatives included:
n a capital raising of $38.8 via a placement and 2-for-1
                                                                   120.0
  rights issue; and
n Contracted additional divestment for the NZ portfolio
                                                                   80.0
  for a$26.3 million.
proceeds from the equity raising and sale of the NZ portfolio      40.0      CLS REPAID
were used to repay the $19.6 million Convertible loans
                                                                                    FACILITY 2 EXTENDED
securities (Cls) and are expected to reduce the Fund’s             0.0
secured debt by $42.9 million, significantly improving the                 JUL–SEP 10                     SEP 12                              FEB 15
debt position of the Fund.
                                                                         30 JUNE POSITION
as a result of these initiatives, the weighted average debt term
is 3.8 years compared to 0.8 years 12 months ago. the Fund
is also compliant with all its debt covenants and expected
to have further headroom as contracted sales are completed.




                                                                                                                   www.ingrealestate.com.au     07
Fund update




RevAluAtions                                                             management has undertaken a number of key initiatives
Consistent with prior reporting periods management has                   over the past 12 months to focus on operating performance.
revalued all investment properties to market levels at                   Key priorities have included:
30 June 2010.                                                            n   Improving Icon tenanted venues
the Fund’s property portfolio has a 30 June 2010 book value                  earlier in the year, management announced an Icon ‘profit
of $310.7 million and reflects a decline on a like for like                  Improvement plan’ (pIp) in conjunction with the refinancing
basis by 12% during the period.                                              of the Fund’s senior debt facility. this includes investing
                                                                             up to $8m in upgrading Icon tenanted venues, and rental
Revalued within           book value weighted Ave      cap Rate              restructuring. the investment will ensure the venues
last 12 months           30 June 2010 30 June 2010 30 June 2009              are positioned as competitively as possible and assist
                                                                             in improving venue operations and asset values.
externally revalued          $237.5m                9.1%          8.6%
externally valued (NZ)        $25.7m                12.1%         9.8%       management recently provided an update to the market
                                                                             announcing the deferral by Icon of two $1.5m equity
Internally revalued           $47.5m                9.8%          8.7%
                                                                             payments which were agreed to under the terms of
total                        $310.7m                9.4%          8.8%       the pIp. an arrangement has been reached with Icon’s
                                                                             financiers to capitalise the interest and defer the payments
poRtFolio/tenAnt updAte                                                      from the directors and a proportion of Icon’s rent until
                                                                             31 december 2010.
the Fund has 29 pubs and 15 clubs across australia and
New Zealand. the most significant exposure is to the NsW                 n   the exchange hotel and Gpo hotel
market with a small exposure to Qld and Wa.                                  lease obligations continue to be met since the
                                                                             appointment of receivers and managers to the allied
despite the challenging market conditions that have affected                 Hospitality Group in July 2010. IeF intends to work
the underlying operating performance of the Fund, future                     with the receivers and managers in order to find an
performance is supported by a diversity of assets in both                    experienced operator to assume tenant operations
metropolitan and regional locations.                                         of these assets. IeF has the benefit of a bank guarantee
                                                                             to minimise any revenue impacts on the Fund.
                                                                         n   evaluation of club swans
                                                                             performance continues to be evaluated and management
                                                                             is exploring a number of options including potential
                                                                             divestment of the site.




Rent by geogRAphy (%)                                                    Rent by opeRAtoR (%)

                                         NSW 76%                                                            ICON HOSPITALITY 42%
                                         QLD 10%                                                            PANTHERS ENTERTAINMENT
                                         WA 3%                                                              GROUP 30%
                                         NZ 1 11%                                                           ALLIED HOSPITALITY 8%
                                                                                                            OTHER 20%




1) NZ portfolio contracted for sale.
2) Based on aud/NZ exchange rate of $1.2276 as at 30 June 2010.

08      ING real estate eNtertaINmeNt FuNd aNNual report 2010
                                                                 senior management profile




stRAtegy updAte                                                  key Fund eXecutives
the Fund has improved the stability of the capital
structure having met its near term debt expiries. For
the period ahead management will continue to focus
on deleveraging the Fund. When appropriate, and when
sustainable gearing levels are achieved, management
will look to reinstate distributions to unitholders.
management will also evaluate avenues to diversify income
sources, reduce tenant concentration risk and best position
the Fund for medium to long term growth. this objective
has already advanced via a strategic review with a number
of considerations identified including:                          1                               2

n   establishing a stapled entity – to create a corporate
    structure that could allow the Fund to take an operational   1 daniel hargraves
    exposure and participation in operating income; and
                                                                 Chief Executive Officer
n   Internalisation – provides a corporate structure which       daniel has over 15 years experience in asset management,
    is better suited to a stapled entity.                        property development and funds management. as Ceo
executing either of the above strategies must be endorsed        of IeF, daniel has responsibility for all aspects of the
by the Independent Board of directors and approved by            management and operations of the Fund and its assets.
the Fund’s unitholders.                                           2 Gavin saunders

IeF remains focused on building and managing a diversified       General Manager
portfolio of leisure and entertainment assets that deliver       Gavin has been with ING real estate Investment
sustainable growth in the long term.                             management for over ten years during which time he has
                                                                 held various roles including corporate accountant, financial
                                                                 controller and asset manager. as General manager for
                                                                 IeF, Gavin has overall responsibility for the daily operation,
                                                                 management and financial reporting functions of the Fund.




                                                                                                     www.ingrealestate.com.au   09
corporate governance




1                          2                           3                   4                         5




diRectoR inFoRmAtion                                            4 paul scully
 1 Richard colless Am                                           Independent Director,
Independent Director and Chairman                               Chairman of the Board Compliance Committee
Appointed 30 May 2002                                           Appointed 30 May 2002
richard is the Chairman of the ING management limited           paul has over 30 years’ experience in investment
Board. He has considerable experience in funds management       management and many aspects of financial services. paul
and property sectors. He sits on a number of public and         now maintains a portfolio of non-executive directorships
private company, sporting and government boards including       and related activities, is a visiting lecturer at macquarie
events NsW.                                                     university and provides a broad range of consulting services.
2 philip clark Am                                               5  christophe tanghe
Independent Director, Chairman of the Audit Committee           Director
Appointed 21 February 2006                                      Appointed 1 September 2009
acting most recently as managing partner and Ceo of             Christophe has more than 25 years’ of experience in real
minter ellison, philip has experience in a wide variety of      estate investment, development and advisory work in
sectors including: legal, funds management, property, and       europe, us and asia. Christophe joined ING in 2007 and is a
education. during his career philip led the successful growth   member of the Global management Board of ING real estate
and development of minter ellison and mallesons stephen         Investment management as Head of strategy. Christophe has
Jaques, australia’s two largest law firms. philip also sits     management responsibility for ING’s australian and Canadian
on a number of public and private boards.                       real estate investment management businesses.
 3 michael easson Am                                            mark lamb
Independent Director                                            Company Secretary, General Counsel
Appointed 11 November 2004                                      Appointed 23 October 2009
michael is co-founder and executive Chairman of                 as well as Company secretary, mark is General Counsel
eG property Group. michael has a wealth of experience           for ING real estate Investment management australia
in high–level strategic consulting in both the private          and is responsible for all property investment and funds
ector and government. michael also sits on a number             management legal activities. mark has over 20 years’
of public and private boards.                                   legal and property experience.
                                                                sarah wiesener
                                                                Company Secretary
                                                                Appointed 23 October 2009
                                                                sarah is the Company secretary for ING real estate
                                                                Investment management australia. sarah is a practicing
                                                                solicitor and has over 15 years’ experience within the
                                                                Banking and Finance sector.




10     ING real estate eNtertaINmeNt FuNd aNNual report 2010
ResignAtions                                                   constitution FoR ing ReAl estAte
George Jautze                                                  enteRtAinment Fund
Director                                                       the corporate governance structure that has been
Appointed 1 September 2009                                     established by Iml reflects its role as the responsible entity
George resigned as director effective 31 may 2010 upon his     of a listed property trust. this is different to the corporate
retirement from ING real estate Investment management.         governance structure adopted for a listed company. Iml’s
                                                               primary responsibility is to operate the Fund and perform
philip Redmond
                                                               functions conferred on it by the Fund Constitution, the asX
Independent Director
                                                               listing rules and Corporations act 2001 (Cth) (the law).
Appointed 17 August 2006
                                                               most importantly, Iml must ensure it acts in the best interests
philip resigned as a director effective 12 april 2010
                                                               of unitholders and ensure that the activities of the Fund are
hugh thomson                                                   conducted in a proper and efficient manner.
Company Secretary
                                                               the Fund is governed by a Constitution dated 20 april 2000,
Appointed 20 December 2002
                                                               as amended. the Fund has been registered with the
Hugh resigned as Company secretary effective
                                                               australian securities and Investments Commission (asIC)
23 october 2009.
                                                               as a managed investment scheme under Chapter 5C of the
this statement outlines the main corporate governance          Corporations act. the constitution has been lodged with
practices currently in place for ING management limited        asIC and a copy may be obtained from Iml upon request.
(Iml), the responsible entity of the ING real estate
                                                               the following is a summary of the key features of the
entertainment Fund (the Fund) and addresses the asX
                                                               Constitution of the Fund.
Corporate Governance Council Corporate Governance
principles and recommendations, 2nd edition and the extent     Responsible Entity
of compliance with these recommendations. the Board of the     as the responsible entity of the Fund, Iml is responsible
responsible entity has followed all of the recommendations,    to unitholders for its operation and owes duties under
except that it has not established a nomination committee or   Chapter 5C of the Corporations act and also fiduciary duties
a remuneration committee or other recommendations related      as trustee of the Fund. Iml may retire as the responsible
to disclosure of remuneration or executive performance, for    entity of the Fund if it complies with section 601Fl of
the reasons set out in this Corporate Governance statement.    the Corporations act, and must retire when required by
                                                               law. unitholders may remove Iml by complying with the
                                                               procedures set out in section 601Fm of the Corporations act.
                                                               Powers of the Responsible Entity
                                                               as the responsible entity, Iml has all the powers in respect
                                                               of the Fund that it is possible under the law to confer on a
                                                               trustee as though it were the absolute owner of the assets of
                                                               the Fund and acting in its personal capacity. Iml may appoint
                                                               a person, including an associate of Iml, as its delegate,
                                                               attorney or agent to exercise its powers and perform
                                                               its obligations.
                                                               Remuneration of the Responsible Entity
                                                               Iml is entitled under the Constitution to receive fees for
                                                               acting as the responsible entity of the Fund and to be paid
                                                               or reimbursed for certain expenses, out of the assets of the
                                                               Fund, incurred by Iml in the proper performance of its duties
                                                               in relation to the Fund.




                                                                                                  www.ingrealestate.com.au   11
corporate governance




Limitation on liability                                            compliAnce plAn And compliAnce committee
subject to the Corporations act, the liability of the              In accordance with the Corporations act requirements,
responsible entity to a unitholder or any person in respect        the responsible entity has registered a Compliance plan
of the Fund is limited to Iml’s ability to be indemnified          with asIC. the Compliance plan for the Fund describes the
from the assets of the Fund.                                       procedures that the responsible entity will apply in operating
Termination of the Fund                                            the Fund to ensure compliance with the Corporations act
the Fund terminates on the earlier of:                             and the Constitution.

n   the date determined by the responsible entity in a notice      a Board Compliance Committee has been established and
    given to unitholders as the date on which the Fund is to       is responsible for monitoring Iml’s compliance with the
    be terminated; and                                             Compliance plan and reporting on its findings to the Board.
                                                                   Further details are provided in 7.2.
n   the date on which the Fund is terminated in accordance
    with the Constitution or by law.                               Role oF boARd And mAnAgement
                                                                   1.1 Role of the board
Beneficial interest in the Fund
                                                                   ING management limited (Iml) is wholly owned by ING Bank
the beneficial interest in the Fund is divided into units
                                                                   NV. Iml has a Board Charter which details the functions and
which may be fully or partly paid units.
                                                                   responsibilities of the Board and management. a copy of
Issue of units                                                     the Board Charter is available on ING real estate Investment
the power to issue units in the Fund is governed by the            management australia’s website. Iml’s activities are confined
provisions of the Corporations act, the Constitution and           to managing real estate based investment funds in its role
the asX listing rules.                                             as responsible entity.
Redemption                                                         ING real estate Investment management australia is
the responsible entity is not obliged to redeem units              responsible for providing the resources, including experienced
while the Fund is listed.                                          and skilled staff, to enable Iml to appropriately and
                                                                   adequately conduct its funds management operations
Transfer of units
                                                                   and to administer its affairs.
subject only to restrictions imposed by law, the Constitution
and the asX listing rules, units in the Fund may be transferred.   the Board of Iml oversees these activities and provides
                                                                   strategic guidance.
Distribution of income
the distributable income of the Fund is determined by the
responsible entity and allocated to unitholders in accordance
with the Constitution.
Meeting of unitholders
every unitholder is entitled to receive notices of unitholder
meetings, to attend those meetings, and subject to certain
restrictions on voting by interested parties, to vote at
those meetings.
Amendments
subject to the Corporations act, the responsible entity
may by deed amend the Constitution.




12      ING real estate eNtertaINmeNt FuNd aNNual report 2010
Key responsibilities of the Board include:                      the Board assists ING Bank NV in the process of appointing
                                                                new directors by recommending and reviewing candidates
n   assisting ING real estate Investment management
                                                                when vacancies arise and by performing an annual review
    australia in determining the composition and structure
                                                                that covers, among other matters, the adequacy of the Board’s
    of the Iml Board;
                                                                composition and the independence of existing directors.
n   reviewing the performance of management, including
                                                                Board meetings
    the Ceo and the adequacy of resources allocated by ING
                                                                there are 11 scheduled Board meetings each year.
    real estate Investment management australia to Iml;
                                                                the agenda for each meeting is prepared by the Company
n   providing input into and final approval of management’s
                                                                secretary in conjunction with the Chairman and Ceo.
    strategy and performance objectives for the Funds;
                                                                2.2 director Independence
n   reviewing and if appropriate approving
                                                                as at 30 June 2010, four of the directors of the Iml Board
    significant transactions;
                                                                were independent.
n   overseeing the administration of Iml, including risk
                                                                Iml has adopted the following procedures for assessing
    and compliance monitoring functions;
                                                                the independence of each director, with the aim of ensuring
n   reviewing the appropriateness of management’s risk          that the majority of the Iml Board remains independent.
    management processes;
                                                                Test for independence
n   reviewing Iml’s Code of Conduct, unitholder                 the criterion in place for determining independence is
    communications procedures and Continuous disclosure         whether the director is independent of management
    policy annually; and                                        and free of any business or other relationship that could
                                                                materially interfere with, or could reasonably be perceived
n   establishing various formal committees to assist in
                                                                to materially interfere with, the exercise of their unfettered
    discharging its responsibilities, e.g. Compliance and
                                                                and independent judgement.
    audit Committees.
                                                                Materiality
1.2 Role of management
                                                                the Iml Board has determined that where an assessment
management is responsible for all matters not specifically
                                                                of materiality is required to determine whether a director is
the responsibility of the Board and is responsible for
                                                                independent, this will be determined on a case by case basis
implementing the strategy and performance objectives
                                                                taking into account all of the facts available at the time.
of the Fund and the day to day operations of the Fund.
                                                                Annual performance reviews
boARd stRuctuRe
                                                                the Iml Board assesses directors’ independence annually in
2.1 structure of the board                                      conjunction with the Board’s annual performance evaluation
the Constitution of Iml provides for a minimum of               and a review of their register of interests and directorships.
three directors and not more than 12 directors. as at
30 June 2010, the Board comprised four independent              Disclosure of directors who are independent
directors and one non independent executive director.           those directors who are assessed to be independent are
                                                                identified in the Corporate Governance section of the
Directors’ appointment and selection                            annual report. In the event an existing director is assessed
the Board’s policy and procedure for selection and              to no longer be independent, Iml on behalf of the Fund,
appointment of directors is included in the Board Charter.      will disclose this fact to the asX as soon as practicable after
directors are appointed by the sole indirect shareholder        the assessment has been made.
ING Bank NV, with the aim of ensuring the Board has:
n   an appropriate range of skills, experience and expertise;
n   a proper understanding of, and competence to deal with
    current and emerging issues in real estate and the funds
    management industry;
n   the ability to effectively review and challenge the
    performance of management and exercise independent
    judgement; and
n   a majority of independent directors.


                                                                                                    www.ingrealestate.com.au     13
corporate governance




Independent decision making                                        2.3 Role of the chair
directors of the Board have individually and collectively the      the role of the Chairman and Ceo are not exercised
right to seek independent professional advice on matters           by the same individual.
relating to the Fund, including matters relating to the
                                                                   ING Bank NV has appointed an independent Chairman,
discharge of their obligations under a Fund’s Constitution
                                                                   mr richard Colless. In selecting the Chairman, due
and the law. the cost of such may be borne by Iml
                                                                   consideration has been given to his expertise and skills
or where permitted by the Fund.
                                                                   to ensure they complement those of the existing Board
directors must notify the Company secretary if they are            as well as reputation and standing in the market.
seeking independent professional advice, and as soon
                                                                   2.4 board Nomination and Remuneration committee
as possible provide an estimate of the likely cost.
                                                                   Nomination Committee
Conflicts of Interest & Directors’ Standing Notice Register
                                                                   the existing size of the Board and the frequency of Board
directors owe a duty to avoid any conflicts of interest that
                                                                   meetings are such that the Board’s role in assisting in the
may arise. a conflict may arise through a personal interest
                                                                   appointment process can be undertaken in an efficient
or a duty to some third party.
                                                                   manner by the Board itself, without the need for a separate
therefore, if faced with a possible conflict of interest i.e.      Nomination Committee.
a material personal interest in a matter, the director should
                                                                   Remuneration Committee
make full disclosure to the directors meeting as soon as
                                                                   the fees of the directors of Iml and the remuneration of its
possible or contact the Company secretary.
                                                                   staff are determined and paid by ING Bank NV and not by
a register of interests is maintained for each director and        the Fund itself. For this reason no remuneration Committee
all directors are required to disclose any personal interests.     has been established.
the Board then considers the register provided and decides
                                                                   the remuneration of Iml in its capacity as responsible entity
on a collective basis whether, the personal interest is material
                                                                   during the year was regulated by the Fund’s Constitution.
or not i.e. whether in the Board’s opinion a reasonable
                                                                   Iml and the management company have a right to be
disinterested party would be considered likely to take it
                                                                   paid a fee or reimbursed an expense from the Fund only
into account in exercising judgement or making a decision.
                                                                   in relation to the proper performance of their duties.
this is noted on the directors’ standing Notice register
which forms a permanent agenda item at all Board meetings.         Executive performance and remuneration
                                                                   as stated above, ING Bank NV, and not the Fund itself,
In the event a conflict or potential conflict situation exists,
                                                                   is responsible for the remuneration and performance of any
the conflicted director is absent from the meeting whilst the
                                                                   staff. However, the Board is responsible for reviewing the
Board discusses the matter and may not vote on the matter,
                                                                   adequacy of the resources, including remuneration and
unless the other directors, who do not have a material
                                                                   incentive structures for key executives, and for making
personal interest in the matter, are satisfied that the interest
                                                                   any recommendations to ING Bank NV it feels necessary.
should not disqualify the director from voting or being present.
                                                                   this process has been followed during the year.
                                                                   associates of Iml are entitled to fees for the provision
                                                                   of property management, development and project
                                                                   management services to the Fund’s properties. Formal
                                                                   arm’s length agreements are in place to regulate these
                                                                   arrangements and these fees are based on normal
                                                                   commercial terms. the fees paid for these services
                                                                   are set out in the Financial report of the Fund.




14     ING real estate eNtertaINmeNt FuNd aNNual report 2010
2.5 board education and performance evaluation                    3.2 personal trading policy
Iml undertakes a review of the Board’s performance annually,      a personal trading policy is in place which sets out the
covering among other matters the adequacy of the Board’s          approval procedures to be followed by all ING real estate
composition and the independence of existing directors.           Investment management australia staff members and directors
                                                                  wishing to buy or sell units in the Fund and other listed real
the Board performance evaluation is conducted by way
                                                                  estate securities. the purpose of this policy is to satisfy the
of a questionnaire that assesses:
                                                                  relevant legal requirements and protect the reputation and
n   the performance of the Board and each of its committees       integrity of ING real estate Investment management.
    against the requirements of their respective charters;
                                                                  any director wishing to purchase or sell units in ING real estate
n   the individual performance of the Chairman and each           Investment management listed Funds is required to notify the
    director; and                                                 Board Compliance Committee Chairman (or in his absence the
                                                                  Chairman of Board) prior to the trade taking place.
n   the procedures in place for dealing with the responsible
    entity’s continuous disclosure obligations under the          at the commencement of employment or appointment
    Corporations act and the asX listing rules, as well           each staff member and director must sign a declaration
    as compliance and corporate governance procedures.            that he/she will abide by the policy.
the questionnaire is completed by each director and the           an extract of the personal trading policy for directors and staff
responses collated. the results of the questionnaire are          is available on the ING real estate Investment management
provided to all directors for discussion at the Board meetings.   australia’s website in the Code of Conduct section.
Board education and strategy days                                 FinAnciAl RepoRting
directors have the opportunity to visit the Fund’s                4.1 Review and authorisation
properties and to meet with management to gain a better           In accordance with section 295a of the Corporations act,
understanding of the Fund’s operations. the Board also            the Ceo and CFo have declared in writing to the Board that
conducts Fund strategy days to inform directors about             the financial records of the Fund for the financial year have
current issues concerning the Fund and corporate strategies.      been properly maintained in accordance with section 286
pRomoting Responsible And ethicAl behAviouR                       of the Corporations act and the Fund’s financial reports
                                                                  present a true and fair view of the Fund’s financial position
3.1 code of conduct
                                                                  and performance and are in accordance with relevant
Iml has established a Code of Conduct in accordance with the
                                                                  accounting standards.
ING Business principles which outlines acceptable standards
of behaviour and attitudes expected from staff to promote         4.2 board Audit committee and charter
and maintain the confidence and trust of all those dealing with   the audit Committee operates under a Board approved
ING real estate Investment management australia. the Code         Charter which is available in the corporate governance
of Conduct covers among other matters:                            section of the ING real estate Investment management
                                                                  australia website.
n Insider trading prohibitions and personal trading
n personal conduct                                                the purpose of the Board audit Committee is to verify
                                                                  and safeguard the integrity of the Fund’s financial reporting,
n dealing with conflict of interests
                                                                  oversee the independence of the external auditors and
n Whistleblower procedures                                        maintain the internal control framework.
n privacy
                                                                  the Committee consists of three members, all of which are
n environment                                                     non-executive directors, including an independent Chairman,
In accordance with the Whistleblower procedures set out           who is not the Chairman of the Board. the audit committee
in the ING real estate Investment management australia            meets four times a year, or more frequently if required.
Whistleblower policy, staff are expected to report any serious    as at 30 June 2010, the members of the audit
issues in the knowledge that these will be investigated           Committee were philip Clark (Chairman), richard Colless
fairly. Individuals who report serious issues in good faith are   and michael easson.
appropriately protected. a copy of Iml’s Code of Conduct
is available on ING real estate Investment management
australia’s website.




                                                                                                      www.ingrealestate.com.au   15
corporate governance




4.3 external audit firm guidelines                                 investoR communicAtions
the Board audit Committee is responsible for recommending          6.1 unitholder meetings
the initial appointment of the external auditor, the appointment   Iml may convene a unitholder meeting during the year at a
of a new external auditor when any vacancy arises and removal      time and place that is considered convenient for the majority
of external auditors. the audit Committee is also responsible      of its unitholders.
for maintaining procedures for the rotation of the external
audit engagement partner.                                          the Fund will place a copy of the most recent notice of
                                                                   meeting and any accompanying explanatory memorandum
under the audit Committee Charter, the external audit              on its website, when released to the asX, under the asX
engagement partner must be rotated every five years and            announcements section.
the statutory Fund audit must be tendered at least every
seven years.                                                       the Chairman at the unitholder meeting ensures that a
                                                                   reasonable opportunity exists for unitholders to ask questions
the Fund’s statutory and compliance plan audit was put             relating to the operations of the Fund and if applicable the
out to tender in 2007 and following careful consideration          resolutions being voted on.
of all the proposals and recommendations from the audit
sub Committee, the Board appointed ernst & Young as                unitholders are encouraged to attend all unitholder meetings.
the Fund’s Financial & Compliance plan auditor for the year        Auditor attendance at unitholder meetings
ended 30 June 2008. the next tender process will take              If the responsible entity convenes a unitholder meeting,
place in 2012 or prior.                                            the Company secretary will request the external auditor
continuous disclosuRe                                              or a qualified representative of the auditor to attend the
                                                                   unitholder meeting and be available to answer any investor
5.1 continuous disclosure
                                                                   questions about the conduct of the audit, the auditor’s
as the responsible entity of listed funds, Iml must comply with
                                                                   independence, accounting policies, and the preparation
the continuous disclosure provisions of the asX listing rules.
                                                                   and content of the auditor’s report.
Broadly, Iml is required to immediately notify the asX of any
                                                                   6.2 communication with unitholders
information concerning the Fund of which it is or becomes
                                                                   the asX Corporate Governance guidelines state that listed
aware, which a reasonable person would expect to have a
                                                                   entities must respect the rights of unitholders and facilitate
material effect on the price or value of units in the Fund,
                                                                   the effective exercise of those rights.
subject to certain limited exceptions including but not limited
to confidential information.                                       this means the listed entity should have procedures in
                                                                   place for communicating with its unitholders, give them
Iml has established a written policy document that deals with:
                                                                   access to balanced and understandable information about
n information that needs to be disclosed to the market;            the listed entity and make it easy for them to participate in
n our responsibility for responding to market rumours or           unitholder meetings.
  speculation;                                                     the Fund has procedures in place to ensure that all
n communications with analysts and major investor; and             unitholders and other interested stakeholders have access to
n procedures for dealing with the media.                           balanced, understandable and timely information concerning
                                                                   the operations of the Fund.
the Company secretary has been appointed as the person
responsible for communicating with the asX. the Head               the Head of Investor relations and marketing, in conjunction
of Investor relations and marketing, in conjunction with           with the Company secretary and Ceo, is primarily responsible
the Company secretary, is responsible for ensuring                 for ensuring communications with unitholders are delivered
compliance with the continuous disclosure requirements             in accordance with these procedures and the guidelines
in the asX listing rules.                                          relating to continuous disclosure.




16     ING real estate eNtertaINmeNt FuNd aNNual report 2010
In addition to the formal requirements of half year and annual    In line with the ING Group guidelines, Integrated risk
financial statements, the Fund aims to keep unitholders           assessments sessions are conducted. the purpose of the
informed about new developments within the Fund by                sessions is:
making copies of all asX announcements and presentations
                                                                  n   to identify key risks that could lead to an operational loss,
available on the ING real estate Investment management
                                                                      reputational damage or regulatory sanctions;
australia website, circulating Fund updates and encouraging
participation of unitholders in unitholder meetings.              n   assess the risk and identify any risk exposures; and
Further details on unitholder communication procedures may        n   put in place appropriate mitigation measures to address
be obtained by accessing the ING real estate Investment               the risks including developing adequate procedures.
management australia website at www.ingrealestate.com.au
                                                                  the key risks identified through the workshops are primarily
the website provides information specific to each Fund, as well   risks associated with managing property as well as risks
as information relevant to existing or prospective unitholders.   arising from the general business environment including, but
                                                                  not limited to, general market, capital management, financial
this website is regularly updated and contains recent
                                                                  reporting, operational and compliance risks. management
announcements, webcasts, presentations, past and current
                                                                  puts in place adequate internal controls including specific
reports to unitholders and answers to frequently asked
                                                                  policies and procedure manuals that are in sufficient detail
questions. analyst and investor roadshow presentations
                                                                  for individual staff members to refer to in performing their
released to the asX are included on the website.
                                                                  daily duties.
the website also contains:
                                                                  Compliance Plan
n   a corporate overview on ING real estate Investment            the Fund has a formal Compliance plan in place which has
    management australia;                                         been lodged with asIC. the purpose of the Compliance
                                                                  plan is to set out key processes, systems and measures the
n   Iml’s corporate governance policies;
                                                                  responsible entity will apply to ensure compliance with:
n   profiles of senior management and Iml’s Board; and
                                                                  n the Corporations act (Cth) 2001;
n   other relevant corporate information.                         n Constitution of the Fund;
Risk mAnAgement And compliAnce pRoceduRes                         n industry practice standards relevant to the Fund; and
7.1 Risk management framework                                     n internal policies and procedures.
the Board and management recognise that having a
                                                                  the Compliance plan is a “how to” document and has been
well developed system in place for risk management is
                                                                  designed to meet the responsible entity’s key obligations
an integral part of good management practice. ING real
                                                                  under the act and Constitution.
estate Investment management australia actively promotes
a culture of compliance and risk management awareness             the Compliance plan describes the key obligations that must
with the aim of ensuring all activities comply with laws,         be met by the responsible entity, the measures in place to
regulations, codes and in-house policies and procedures.          comply with these obligations and how compliance with
                                                                  these measures will be monitored. In addition, the Compliance
an operational risk Committee (orC) has been established,
                                                                  plan details the risk of not complying with these obligations,
made up of key management executives and key risk
                                                                  and how breaches are to be reported and addressed.
management personnel, with the objective of promoting
and facilitating the development of effective risk                each year ernst & Young conducts an annual Compliance
management processes.                                             plan audit and reports to asIC on:
the orC meets regularly and assists the Board by identifying,     n   whether the procedures and controls set out in the
measuring and monitoring key risks affecting ING real estate          Compliance plan sufficiently address the requirements
Investment management australia and the Fund, as well                 of the act; and
as taking appropriate action to control and mitigate the
                                                                  n   if the controls and procedures described in the
level of risks.
                                                                      Compliance plan have been in place and operating
                                                                      effectively over the year.




                                                                                                        www.ingrealestate.com.au   17
corporate governance




Risk management review and reporting to the Board                       the Compliance Committee is responsible for:
and its Committees
                                                                        n   monitoring the responsible entity’s compliance with
the orC reports to the Board and its Committees regularly
                                                                            the Compliance plan and reporting on its findings
on the effectiveness of the management of material business
                                                                            to the Board; and
risks. the Board undertakes a review annually on whether
management’s risk management processes and internal                     n   assessing at regular intervals whether the Fund’s
controls are appropriate, including whether management’s                    Compliance plan is adequate to ensure compliance
procedures for monitoring the effectiveness of the risk                     with the law and the Fund’s constitution, and to monitor
management processes are adequate.                                          the extent to which the responsible entity complies
                                                                            with the Fund’s Compliance plan.
the Ceo and the CFo confirm in writing to the Board,
at the time the financial statements are being considered               as at 30 June 2010 the members of the Compliance
for approval by the Board, that in all material respects:               Committee comprised paul scully (Chairman), richard Colless
                                                                        and danny agnoletto. three meetings were held during the
n   the financial statements present a true and fair view;
                                                                        year. the Compliance Committee reports to the Board after
n   that this assertion is founded on a sound system of                 each meeting and otherwise as required.
    financial risk management and internal compliance
                                                                        sustAinAbility
    and control which implements the policies adopted
    by the Board; and                                                   8.1 board sustainability committee
                                                                        the Board recognises that a sustainable future for its business
n   that the Fund’s financial risk management and internal              depends upon the environmental sustainability of the
    compliance and control systems are operating efficiently            communities, economies and societies in which it operates.
    and effectively in all material respects in relation to financial   as such the Board has established a Board sustainability
    reporting risks.                                                    Committee to address sustainability issues for the Funds.
7.2 board compliance committee                                          as at 30 June 2010 the members of the sustainability
the Board places a strong emphasis on compliance and has                Committee comprised paul scully (Chairman), richard Colless
established a Compliance Committee that operates under                  and danny agnoletto. three meetings were held during the
an approved charter. a copy of the charter is available in              year. the sustainability Committee reports to the Board after
the corporate governance section of the ING real estate                 each meeting and otherwise as required.
Investment management australia website.
                                                                        coRpoRAte goveRnAnce documents
under the managed investments regime, the responsible
                                                                        In accordance with the asX Corporate Governance
entity is required to register a Compliance plan with asIC
                                                                        Guidelines, the following documents are available in
on behalf of each fund. each Compliance plan outlines the
                                                                        the corporate governance section of the ING real estate
measures which are to be applied by the responsible entity
                                                                        Investment management australia website:
to ensure compliance with the Corporations act, the relevant
Fund’s Constitution and other regulatory requirements.                  n Board Charter
                                                                        n Board Compliance Committee Charter
                                                                        n Board audit Committee Charter
                                                                        n Code of Conduct
                                                                        n Investor Communications procedures
                                                                        n Iml Company Constitution




18       ING real estate eNtertaINmeNt FuNd aNNual report 2010
Financial & Associated Reports
Year ended 30 June 2010




directors’ report                                                                        20
Financial report
  Income statement                                                                       25
  statement of comprehensive income                                                      26
  Balance sheet                                                                          27
  Cash flow statement                                                                    28
  statement of changes in unitholders’ interest                                          29
    Note 1 summary of significant accounting policies                                    30
    Note 2 accounting estimates and judgements                                           37
    Note 3 distributions                                                                 38
    Note 4 earnings per unit                                                             38
    Note 5 Finance costs                                                                 38
    Note 6 discontinued operations                                                       39
    Note 7 Cash and cash equivalents                                                     40
    Note 8 trade and other receivables                                                   40
    Note 9 derivatives                                                                   42
    Note 10 property investments                                                         42
    Note 11 equity accounted investments                                                 45
    Note 12 payables                                                                     46
    Note 13 Borrowings                                                                   46
    Note 14 Issued units                                                                 47
    Note 15 reserves                                                                     48
    Note 16 retained earnings                                                            48
    Note 17 Commitments                                                                  48
    Note 18 Capital management                                                           48
    Note 19 Financial instruments                                                        50
    Note 20 auditor’s remuneration                                                       57
    Note 21 Contingencies                                                                57
    Note 22 related parties                                                              57
    Note 23 parent financial information                                                 61
    Note 24 subsidiaries                                                                 61
    Note 25 segment information                                                          61
    Note 26 Notes to the cash flow statement                                             62
    Note 27 subsequent events                                                            63
directors’ declaration                                                                   64
auditor’s report                                                                         65

the ING real estate entertainment Fund (arsN 108 982 627) is an australian registered scheme. ING management limited
(aBN 15 006 065 032; aFs licence number 237534), the responsible entity of the Fund, is incorporated and domiciled in australia.
a description of the nature of the Fund’s operations and its principal activities is included in the accompanying directors’ report.
the registered office and principal place of business of the responsible entity is located at level 6, 345 George street,
sydney, New south Wales.
the financial report was authorised for issue by the directors of the responsible entity on 30 august 2010. the Fund has
the power to amend and reissue the financial report.




                                                                                                        www.ingrealestate.com.au   19
directors’ Report




ING management limited, the responsible entity of the ING real estate entertainment Fund (the Fund), presents its report
together with the Fund’s financial report for the year ended 30 June 2010 and the auditor’s report thereon.
directors
the directors of the responsible entity at any time during or since the end of the financial year were:
richard Colless am        Chairman
philip Clark am
michael easson am
paul scully
Christophe tanghe         appointed 1 september 2009
George Jautze             appointed 1 september 2009; resigned 31 may 2010
philip redmond            resigned 12 april 2010
except as stated, these persons were directors of the responsible entity during the whole of the financial year and up to the
date of this report.
principal activity
the principal activity of the Fund is investment in real estate. there was no significant change in the nature of the Fund’s
activities during the financial year.
operating and financial review
a summary of the Fund’s result for the financial year is:
                                                                                                                Consolidated
                                                                                                            2010               2009

loss from continuing operations ($’000)                                                                   (50,681)         (54,309)
Net loss attributable to unitholders of the Fund ($’000)                                                  (52,729)         (54,129)
operating income from continuing operations ($’000)                                                         6,319            9,036
distributions per unit (cents)                                                                                 —                2.75
Basic and diluted earnings per unit from continuing operations (cents)                                      (28.8)             (31.6)
operating income from continuing operations per unit (cents)                                                  3.6                5.3
operating income per unit (cents)                                                                             5.4                7.3

the responsible entity uses the Fund’s operating income as an additional performance indicator. operating income does not
take into account certain items recognised in the income statement including unrealised gains or losses on the revaluation
of the Fund’s properties and derivatives.




20     ING real estate eNtertaINmeNt FuNd aNNual report 2010
operating income for the financial year has been calculated as follows:
                                                                                                                Consolidated
                                                                                                          2010                   2009
                                                                                                          $’000                  $’000

Net loss attributable to unitholders of the Fund                                                        (52,729)             (54,129)
adjusted for:
– straight line lease revenue recognition                                                                   145                  (2,594)
– Net loss on disposal of investment property                                                                —                      213
– Net loss on change in fair value of:
  – Investment properties                                                                               44,413               38,069
  – derivatives                                                                                          1,585               23,003
  – Investment properties included in share of net profit of equity accounted investments                2,772                   —
– amortisation of costs of issuing convertible loan securities                                             365                  352
– Write back of provision for aborted due diligence costs                                                 (299)                 790
– Impairment loss on:
  – trade receivables                                                                                     1,759                     —
  – loans                                                                                                 6,260                  3,623
– deferred income tax benefit                                                                                —                    (111)
– loss/(profit) from discontinued operations                                                              2,048                   (180)
operating income from continuing operations                                                               6,319                  9,036
operating income from discontinuing operations                                                            3,181                  3,418
operating income                                                                                          9,500              12,454


operating income from continuing operations for the               total assets decreased by $89,940,000 or 22% to
2010 financial year decreased by 30% to $6,319,000 from           $323,359,000 over the year primarily due to disposals
$9,036,000 for the 2009 financial year. the decrease is           of investment properties to reduce borrowings and
mainly due to lower rental income resulting from sales of         revaluations. Investment property revaluation decreases
investment properties, a reduction in rent from the Fund’s        and disposals contributed $44,413,000 and $38,950,000
major tenant and additional interest cost resulting from          respectively to the reduction in total assets. the basis of
higher margins upon refinancing of the Fund’s largest debt        the valuations is described in note 1 in the financial report.
facility. operating income per unit for the 2010 financial
                                                                  revaluations during the 2010 financial year reduced
year was lower by 26% to 5.4 cents, compared to 7.3 cents
                                                                  $47,185,000 (including share of revaluations of equity
per unit previously.
                                                                  accounted investments) contributing to the decrease in
the Fund has not paid a distribution for the current financial    net assets by 38% to $0.49.
year, compared with 2.75 cents per unit in 2009.
                                                                  No additional equity was raised during the year. Issued
earnings per unit from continuing operations as calculated        units remained at 175,748,000.
under applicable accounting standards for the year ended
30 June 2010 were up 8.9% to a loss of 28.8 cents,
compared to a loss of 31.6 cents per unit for the previous
financial year. revaluations from continuing operations
accounted for a loss of 27.8 cents per unit during the year,
compared to a loss of 35.6 cents per unit for 2009.




                                                                                                      www.ingrealestate.com.au      21
directors’ Report




management’s focus has centred on balance sheet                events subsequent to reporting date
improvement and expiring debt facilities in order to           on 15 July 2010, the Fund issued 26,362,000 units at a
stabilise the Fund’s capital position. substantial work has    price of nine cents each to new investors, raising a total of
been undertaken towards lowering debt levels, primarily        $2,373,000. on 16 July 2010, the Fund announced the issue
through the recently announced capital raising and sale        of 404,222,000 units at a price of nine cents each under an
of the New Zealand portfolio. these initiatives provide the    underwritten 2:1 renounceable rights issue, to raise a total
Fund with liquidity to repay debt and address near-term        of $36,380,000. the proceeds, net of issue costs, will be
financing obligations.                                         applied to repayment of the Cls and reduction of bank debt.
Because of these initiatives, weighted average debt            on 16 July 2010, the Group announced that it had
term is 3.9 years compared to 0.8 years twelve months          exchanged contracts on the sale of its New Zealand portfolio
ago. the Fund is compliant with all its covenants and          with expected sale proceeds of $26,305,000. In addition,
expects to have further headroom from the completion           the Group will be repaid the $5,262,000 loan owed by the
of contracted asset sales.                                     tenant of this portfolio, bringing the total gross proceeds
                                                               from this transaction to $31,567,000. this sale remains
property valuations were affected by overall sector risk
                                                               subject to approval and consent to release of mortgage
resulting in a net asset value per unit of 49 cents compared
                                                               security from the Facility 1 lender. settlement of the asset
to 79 cents at 30 June 2009. Following the capital raising
                                                               sales will be staged over a period of up to sixteen-months
and New Zealand asset sales in July 2010, pro-forma net
                                                               from august 2010. the net proceeds will be applied
asset value per unit is 20 cents.
                                                               to reducing the Group’s bank debt and termination of
significant progress has been made towards the                 New Zealand interest rate hedge contracts.
previously identified capital management challenges
                                                               If these initiatives had occurred on 30 June 2010, the
from december 2009. the Fund identified managing
                                                               Group’s Gearing ratio would have reduced to 53.3%.
subsequent conditions as key challenges.
                                                               Based on these capital initiatives, the Fund’s Facility 1
Operational Update
                                                               lender has agreed that distributions may be reinstated
Weighted average lease expiry is 10.6 years. the Fund
                                                               once the Facility 1 lVr is below 60% (formerly below 50%).
has a diversity of assets in regional and sub-regional
                                                               Whilst reinstatement of distributions remains a key focus
areas throughout australia and is currently considering
                                                               for the Fund, any decision regarding distributions will
ways to further diversify income from operators.
                                                               consider both the Fund’s need to retain conservative debt
trading conditions continue to be challenging, however         levels and expected future cash flow. the Fund does not
the Fund has proactively worked with key tenants to            expect to pay any distribution in the 2011 financial year.
stabilise and improve operating businesses.
                                                               on 26 July 2010, receivers and managers were appointed
distributions                                                  to allied Hospitality pty ltd (“allied”), which leases two
details of distributions are given in note 3 in the            of the Group’s hotels and provided 8% of the Group’s
financial report.                                              revenue for the 2010 financial year. arrears at the date
                                                               of appointment together with ongoing lease payments
significant changes in the state of affairs
                                                               have been received from the receivers and managers.
In the opinion of the directors of the responsible entity,
                                                               the Group has a bank guarantee of $750,000 that may
there were no significant changes in the state of affairs
                                                               be called to offset any future loss of revenue, to the
of the Fund that occurred during the financial year.
                                                               extent of the guarantee.




22     ING real estate eNtertaINmeNt FuNd aNNual report 2010
Icon Hospitality management pty limited and its subsidiaries      environmental regulation
(“Icon”) is the Group’s largest tenant by rental income.          the Fund’s operations are not subject to any particular
revenue from Icon was 46% of the Group’s revenue for              and significant environmental regulation under a law of
the 2010 financial year. on 16 august 2010, the Fund              the Commonwealth or of a state or territory.
announced that it had been advised that Icon has forecast
                                                                  Indemnities
short-term cash flow pressures in the second half of this
                                                                  the Fund has not indemnified, nor paid any insurance
calendar year, resulting from Icon’s directors failing to make
                                                                  premiums for, a person who is or has been an officer
a contracted payment of $1,500,000 to the Fund when
                                                                  of the responsible entity or an auditor of the Fund.
due on 31 July 2010. this payment, together with a second
payment of $1,500,000 due on 31 october 2010, has been            Interests of directors of the Responsible entity
deferred to 31 december 2010. these payments would in             units in the Fund held by directors of the responsible entity
turn have been provided to Icon to support their cash flow        as at 30 June 2010 were:
during the period in which refurbishment works are carried
                                                                                                                  Number of units
out on the hotels leased by Icon.
the Fund and Icon’s financiers are working with Icon and          paul scully                                                43,983
have agreed a $1,200,000 working capital assistance
package for Icon, which includes the Fund deferring rent
                                                                  the other directors of the responsible entity did not hold
of up to $600,000 and the financiers capitalising interest
                                                                  any units in the Fund at that date.
up to the next $600,000, both until 31 december 2010.
the Fund and Icon’s financiers have made no commitments           other information
past this date, when the working capital assistance package       Fees paid to the responsible entity and its associates, and
must be repaid by Icon. Whilst the Fund and Icon’s financiers     the number of units in the Fund held by the responsible
are providing a level of assistance, there is an increased risk   entity and its associates as at the end of the financial year;
of Icon defaulting under its obligations to the Fund.             are set out in note 22 in the financial report.
likely developments                                               Auditor’s independence declaration
Key activities over the next twelve months include a              a copy of the auditor’s independence declaration as
diversification of income flows to reduce concentration           required under section 307C of the Corporations act 2001
risk and a continuation of asset sales within the portfolio       is set out on page 24.
to reduce debt. the addition of new investors to the
                                                                  Rounding of amounts
register assists with access to capital to achieve medium
                                                                  the Fund is of a kind referred to in Class order 98/100, issued
to long term growth.
                                                                  by the australian securities and Investments Commission,
the Fund has undertaken a strategic review and                    relating to the ‘’rounding off’’ of amounts in this report
identified a variety of options to optimise structure,            and in the financial report. amounts in these reports have
including consideration of:                                       been rounded off in accordance with that Class order to
                                                                  the nearest thousand dollars, unless otherwise stated.
           a stapled entity: to create a corporate entity
n	 establish
  that could be stapled to the trust thus allowing the            signed in accordance with a resolution of the directors
  Fund to take on the operational exposure and earn               of the responsible entity.
  operating income, should this be required; and
n	 internalisation;provides an amended corporate
  and operating structure which is better suited to
  a stapled entity.
                                                                  philip clark Am
                                                                  director
                                                                  sydney
                                                                  30 august 2010




                                                                                                      www.ingrealestate.com.au     23
             Auditor’s Independence Declaration to the Directors of ING Management
             Limited as Responsible Entity for ING Real Estate Entertainment Fund

             In relation to our audit of the financial report of ING Real Estate Entertainment Fund for the financial year
             ended 30 June 2010, to the best of my knowledge and belief, there have been no contraventions of the
             auditor independence requirements of the Corporations Act 2001 or any applicable code of professional
             conduct.




             Ernst & Young




             Douglas Bain
             Partner
             30 August 2010




                                                                                       Liability limited by a scheme approved
                                                                                       under Professional Standards Legislation




24   ING real estate eNtertaINmeNt FuNd aNNual report 2010
income statement
Year ended 30 June 2010




                                                                                          Consolidated
                                                                                    2010                   2009
                                                                         Note       $’000                  $’000

Revenue
rental income                                                                     18,350               26,435
Interest income                                                                    6,309                6,621
                                                                                  24,659               33,056
other income
Net loss on disposal of investment properties                                           —                   (213)
Net loss on change in fair value of:
– Investment properties                                                          (44,413)              (38,069)
– derivatives                                                                      (1,585)             (23,003)
other                                                                                 299                   —
expenses
property expenses                                                                    (721)                 (493)
Finance costs                                                              5     (18,035)              (19,123)
responsible entity’s fees                                                 22       (1,619)               (1,000)
aborted due diligence costs                                                            —                   (790)
Impairment loss on:
– trade receivables                                                                (1,759)                 (2,903)
– loans                                                                            (6,260)                 (3,623)
other                                                                                (613)                   (335)
share of net profit/(loss) of equity accounted investments                11         (634)                 2,076
loss before income tax                                                           (50,681)              (54,420)
Income tax benefit                                                                    —                    111
loss from continuing operations                                                  (50,681)              (54,309)
profit/(loss) from discontinued operations                                 6       (2,048)                 180
Net loss attributable to unitholders of the Fund                                 (52,729)             (54,129)

distributions per unit                                                     3           —                     2.75
Basic and diluted earnings per unit from continuing operations (cents)     4        (28.8)                  (31.6)
Basic and diluted earning per unit (cents)                                 4        (30.0)                  (31.5)




                                                                                www.ingrealestate.com.au      25
statement of comprehensive income
Year ended 30 June 2010




                                                                                                       Consolidated
                                                                                                  2010            2009
                                                                                  Note            $’000           $’000

Net loss for the year                                                                           (52,729)        (54,129)
other comprehensive income:
exchange differences on translation of foreign operations                           15              (46)              (2)
total comprehensive income for the year                                                         (52,775)        (54,131)

the components of other comprehensive income shown above are presented net of related income tax effects.




26     ING real estate eNtertaINmeNt FuNd aNNual report 2010
balance sheet
as at 30 June 2010




                                                     Consolidated
                                               2010                   2009
                                    Note       $’000                  $’000

current assets
Cash and cash equivalents             7       1,696                   2,281
trade and other receivables           8       3,533                   1,965
assets of discontinued operations     6      31,397                      —
                                             36,626                   4,246

Non-current assets
trade and other receivables           8      62,002               71,611
Investment properties                10     199,350              307,898
equity accounted investments         11      24,986               26,398
derivatives                           9         395                2,684
other                                            —                   462
                                            286,733              409,053
total assets                                323,359              413,299

current liabilities
payables                             12       5,205                5,267
Borrowings                           13      39,441              200,896
derivatives                           9       3,346                6,391
                                             47,992              212,554

Non-current liabilities
payables                             12         675                  750
Borrowings                           13     179,874               54,805
derivatives                           9       8,910                6,507
                                            189,459               62,062
total liabilities                           237,451              274,616
Net assets                                   85,908              138,683

unitholders’ interest
Issued units                         14     182,425              182,425
reserves                             15         (237)                (191)
accumulated losses                   16      (96,280)             (43,551)
                                             85,908              138,683

Net asset value per unit                       $0.49                  $0.79




                                           www.ingrealestate.com.au     27
cash Flow statement
Year ended 30 June 2010




                                                                                                      Consolidated
                                                                                                 2010            2009
                                                                                        Note     $’000           $’000

cash flows from operating activities                                                     26
rental and other property income                                                                18,816          29,321
property and other expenses                                                                      (3,879)         (2,969)
distributions received from equity accounted investments                                          1,060           2,066
Interest received                                                                                 5,975           7,207
Borrowing costs paid                                                                           (16,495)        (19,498)
Goods and services and value added taxes paid from investing and financing activities            (1,714)         (1,417)
                                                                                                 3,763          14,710

cash flows from investing activities
additions to investment properties                                                              (5,903)          (8,878)
proceeds from sale of investment properties                                                    38,950           22,405
proceeds from sale of other assets                                                                 462               —
purchase of equity accounted investments                                                          (281)            (316)
loans repaid by lessees                                                                             —             8,057
other loans made                                                                                    —              (914)
                                                                                               33,228           20,354

cash flows from financing activities
unit issue costs                                                                                  (469)            (141)
distributions to unitholders                                                              3         —            (9,641)
proceeds from borrowings                                                                         1,068               —
repayment of borrowings                                                                        (38,718)        (25,918)
                                                                                               (38,119)        (35,700)

Net decrease in cash                                                                            (1,128)           (636)
Cash at the beginning of the year                                                                2,281           3,255
effects of exchange rate changes on cash                                                            (18)          (338)
cash at the end of the year                                                                      1,135           2,281




28     ING real estate eNtertaINmeNt FuNd aNNual report 2010
statements of changes in unitholders’ interest
Year ended 30 June 2010




                                                                         Consolidated
                                                   Issued                     retained
                                                  Capital    reserves         earnings                    total
                                          Note     $’000       $’000            $’000                    $’000

carrying amounts at 1 July 2008                  179,300        (189)           15,191              194,302
Net loss for the year                                 —           —            (54,129)              (54,129)
other comprehensive income                            —           (2)               —                      (2)
total comprehensive income for the year               —            (2)         (54,129)              (54,131)
transactions with unitholders in their
capacity as equity holders:
– Issue of units                           14      3,203          —                  —                    3,203
– distributions paid or payable             3          —          —              (4,691)                 (4,691)
– transfer to retained profits                        (78)                           78
                                                   3,125          —              (4,613)                 (1,488)
carrying amounts at 30 June 2009                 182,425        (191)          (43,551)             138,683

Net loss for the year                                 —           —            (52,729)              (52,729)
other comprehensive income                            —          (46)               —                     (46)
total comprehensive income for the year               —          (46)          (52,729)             (52,775)
carrying amounts at 30 June 2010                 182,425        (237)          (96,280)              85,908




                                                                              www.ingrealestate.com.au      29
notes to the Financial statements
Year ended 30 June 2010




1. summARy oF signiFicAnt Accounting policies                     the fair value of liabilities under related interest rate
a) the Fund                                                       derivative agreements at 30 June 2010 was $100,000.
the ING real estate entertainment Fund (the Fund or parent)       payments under these agreements extend to 23 may 2011,
was constituted on 20 april 2000. the responsible entity          but may be accelerated in the circumstances described below.
for the Fund is ING management limited. ING management            on 26 July 2010, receivers and managers were appointed to
limited is an australian domiciled company and is a               allied Hospitality pty ltd (“allied”), which leases two of the
wholly owned company within the ING Groep NV group                Group’s hotels and provided 8% of the Group’s revenue for
of companies.                                                     the 2010 financial year. arrears at the date of appointment
b) basis of preparation                                           together with ongoing lease payments have been received
the financial report is a general purpose financial report that   from the receivers and managers. the Group has a bank
has been prepared in accordance with australian accounting        guarantee of $750,000 that may be called to offset any
standards (aasB), australian Interpretations, other               future loss of revenue, to the extent of the guarantee.
authoritative pronouncements of the australian accounting         Icon Hospitality management pty limited and its subsidiaries
standards Board (the Board) and the Corporations act 2001.        (“Icon”) is the Group’s largest tenant by rental income.
the financial report complies with australian accounting          revenue from Icon was 46% of the Group’s revenue for the
standards as issued by the australian accounting standards        2010 financial year. the Fund has been advised that Icon has
Board and International Financial reporting standards (IFrs)      forecast short-term cash flow pressures in the second half
as issued by the International accounting standards Board.        of this calendar year, resulting from Icon’s directors failing
                                                                  to make a contracted payment of $1,500,000 to the Fund
the financial report is presented in australian dollars.          when due on 31 July 2010. this payment, together with a
the financial report is prepared on the historical cost basis,    second payment of $1,500,000 due on 31 october 2010,
except for investment properties and derivative financial         has been deferred to 31 december 2010. these payments
instruments, which are measured at fair value.                    would in turn have been provided to Icon to support their
                                                                  cash flow during the period in which refurbishment works
c) Going concern                                                  are carried out on the hotels leased by Icon.
at 30 June 2010, the drawn amount of the Fund’s main
secured bank debt was $182,802,000. this debt is due for          the Fund and Icon’s financiers are working with Icon and
repayment on 28 February 2013 and is secured by mortgages         have agreed a $1,200,000 working capital assistance
over some of the Fund’s investment properties and other           package for Icon, which includes the Fund deferring rent
assets, including its loan to panthers Investment Corporation     of up to $600,000 and the financiers capitalising interest
pty ltd and its investment in panthers property unit trust        up to the next $600,000, both until 31 december 2010.
(collectively “panthers”).                                        the Fund and Icon’s financiers have made no commitments
                                                                  past this date, when the working capital assistance package
the fair value of liabilities to that bank under interest rate    must be repaid by Icon. Whilst the Fund and Icon’s financiers
derivative agreements at 30 June 2010 was $12,156,000.            are providing a level of assistance, there is an increased risk
payments under these agreements extend to 22 august 2017,         of Icon defaulting under its obligations to the Fund or its
but may be accelerated in the circumstances described below.      financiers. a breach of either of those obligations could lead
at 30 June 2010, the drawn amount of the Fund’s other             to a breach of both of the Group’s bank facility agreements.
secured bank debt was $19,300,000. this debt is due               the Fund, the financiers and Icon are reviewing Icon’s
for repayment on 6 september 2010 and is secured by               operations and management structures and have implemented
mortgages over some of the Fund’s investment properties.          some reforms that are anticipated to improve Icon’s position.
the Fund is well advanced with a refinancing of this debt.




30     ING real estate eNtertaINmeNt FuNd aNNual report 2010
1. summARy oF signiFicAnt Accounting policies (continued)
However, continued compliance with the Group’s facility agreements is dependent on future market conditions including
fair values of investment properties and tenant trading results. If changes in future market conditions result in a breach of a
financial ratio covenant in either facility agreement, or if there is some other breach of either agreement, the breach could
be waived by the bank concerned or, in some cases, the breach may be prevented or rectified by a capital raising or by asset
sales. However, there can be no assurance that these could be achieved. If a breach occurred and was not waived or rectified,
the bank concerned would have the right to require immediate repayment of the debt and settlement of any derivatives
entered into with it. If the bank exercised that right, it is likely that assets would not be realised, and liabilities would not be
discharged, in the ordinary course of business.
despite these significant uncertainties, the directors have concluded that there are reasonable grounds to believe that the
going concern basis is appropriate.
d) Adoption of new and revised accounting standards
i) Presentation of financial statements
the Group has applied the revised accounting standard aasB 101 Presentation of Financial Statements that became effective
as of 1 July 2009. as a result, the Fund presents in the statement of changes in unitholders’ interest all owner changes in
unitholders’ interest, whilst all non-owner changes in unitholders’ interest are presented in the statement of comprehensive
income. previously, the statement of changes in unitholders’ interest included both owner and non-owner changes in unitholders’
interest. Comparative information in this report has been amended accordingly. there was no impact on amounts recognised
in the financial statements.
ii) Classification of derivatives
the Group has applied the amendments to accounting standard aasB 101 Presentation of Financial Statements made by
aasB 2009-5 Amendments to Australian Accounting Standards arising from the Annual Improvements Project. previously,
derivatives were classified as current assets or current liabilities. With retrospective effect from 30 June 2009, derivative assets
and liabilities are apportioned between current and non-current based on the contractual timing of expected cash flows.
amounts recognised in respect of cash flows that are contracted to occur up to twelve months after reporting date are
classified as current, whilst amounts recognised in respect of cash flows that are contracted to occur more than twelve months
after reporting date are classified as non-current.
the effect of this change is:
                                                                                                             2010                   2009
                                                                                                             $’000                  $’000

decrease in current assets & increase in non-current assets                                                    395                  2,684
decrease in current liabilities & increase in non-current liabilities                                        8,910                  6,507




                                                                                                         www.ingrealestate.com.au     31
notes to the Financial statements
Year ended 30 June 2010




1. summARy oF signiFicAnt Accounting                                  the Group has adopted certain amendments to aasB 7
policies (continued)                                                  Financial Instruments: Disclosures effective as of 1 July 2009.
iii) Discontinued operations                                          the amendments only affect certain of the disclosures given
the Group has classified certain components as discontinued           in note 19 Financial Instruments.
operations. a discontinued operation is a component of the            the Group has early adopted the amendments to accounting
entity that has been disposed of or is classified as held for         standard aasB 101 Presentation of Financial Statements
sale and that represents a separate major line of business            made by aasB 2010-4 Further Amendments to Australian
or geographical area of operations or is part of a single             Accounting Standards arising from the Annual Improvements
co-ordinated plan to dispose of such a line of business or            Project. this amendment classifies the Board’s intention that
area of operations. the results of discontinued operations are        details of each component of equity may be presented in the
presented separately on the face of the income statement.             notes to the financial statements rather than the statement
Components of the entity are classified as held for sale if           of changes in unitholders’ Interest. Without this amendment,
their carrying amount will be recovered principally through           details of each component of equity would have had to be
a sale transaction rather than through continuing use.                presented in that statement.
they are measured at the lower of their carrying amount               In the current year the Group has adopted all of the other
and fair value less costs to sell, except for assets such as          new and revised standards and interpretations issued by the
investment property carried at fair value.                            Board that are relevant to its operations and effective for
an impairment loss is recognised for any initial or subsequent        the current annual reporting period. there was no material
write-down of the asset (or disposal group) to fair value             effect on the financial statements.
less costs to sell. a gain is recognised for any subsequent           e) principles of consolidation
increases in fair value less costs to sell of an asset (or disposal   the Fund’s consolidated financial statements comprise the
group), but not in excess of any cumulative impairment                parent and its subsidiaries as at 30 June 2010 (the “Group”).
loss previously recognised. a gain or loss not previously             subsidiaries are all those entities (including special purpose
recognised by the date of the sale of the non-current asset           entities) whose financial and operating policies the Fund
(or disposal group) is recognised at the date of derecognition.       has the power to govern, which generally accompanies a
Non-current assets classified as held for sale and the assets         shareholding of more than one-half of the voting rights.
of a disposal group classified as held for sale are presented         the financial statements of the subsidiaries are prepared
separately from the other assets in the balance sheet. the            for the same reporting period as the parent, using consistent
liabilities of a disposal group classified as held for sale are       accounting policies. adjustments are made to bring into line
presented separately from other liabilities in the balance sheet.     dissimilar accounting policies. Inter-company balances and
details of discontinued operations and disposal groups                transactions including unrealised profits have been eliminated.
are given at note 6.                                                  subsidiaries are consolidated from the date on which control
iv) Other changes                                                     is transferred to the parent. they are de-consolidated from
the Group has applied aasB 8 operating segments                       the date that control ceases.
that is applicable from 1 July 2009. the new standard                 Investments in subsidiaries are carried at cost in the parent’s
requires a ‘management approach’, under which segment                 financial statements.
information is presented on the same basis as that used for
internal reporting purposes. aasB 8 only caused presentation          f) distributions
changes in the segment note. there was no significant                 a liability for distribution for any distribution declared
impact on amounts recognised in the financial statements.             on or before the end of the reporting period is recognised
                                                                      on the balance sheet in the reporting period to which
                                                                      the distribution pertains.




32     ING real estate eNtertaINmeNt FuNd aNNual report 2010
1. summARy oF signiFicAnt Accounting                               Incentives may be provided to tenants to enter into an
policies (continued)                                               operating lease. these incentives may be in the form
g) Foreign currency                                                of cash, rent free periods, lessee or lessor owned fit outs.
i) Functional and presentation currencies                          the incentive is amortised over the term of the lease as
the functional currency and presentation currency of               a reduction in rental income. the unamortised carrying
the Group (with the exception of its foreign subsidiaries)         amount of the incentive is reflected in the carrying value
is the australian dollar.                                          of the investment property.

ii) Translation of foreign currency transactions                   leasing fees that are directly associated with the negotiation
transactions in foreign currency are initially recorded in         and execution of a lease agreement (including commissions,
the functional currency at the exchange rate prevailing            legal fees and costs of preparing and processing
at the date of the transaction. monetary assets and                documentation) are capitalised as part of the carrying
liabilities denominated in foreign currency are retranslated       value of the property.
at the rate of exchange prevailing at the balance date.            leasing fees in relation to the initial leasing of the investment
all differences in the consolidated financial report are           property after a redevelopment are capitalised to the carrying
taken to the income statement with the exception of                value of the property as a cost of bringing the investment
differences on foreign currency borrowings that provide            property to completion and intended use.
a hedge against a net investment in a foreign entity.
these are taken directly to equity until the disposal              i) Financial assets and liabilities
of the net investment at which time they are recognised            Current and non-current financial assets and liabilities
in the income statement.                                           within the scope of aasB 139 Financial Instruments:
                                                                   Recognition and Measurement are classified as at fair value
a non-monetary item that is measured at fair value in              through profit or loss; loans and receivables; held-to-maturity
a foreign currency is translated using the exchange rates          investments; or as available-for-sale. the Group determines
at the date when the fair value was determined.                    the classification of its financial assets and liabilities at
iii) Translation of financial statements of foreign subsidiaries   initial recognition with the classification depending on the
the functional currency of certain subsidiaries is not the         purpose for which the asset or liability was acquired or
australian dollar. at reporting date, the assets and liabilities   issued. Financial assets and liabilities are initially recognised
of these entities are translated into the presentation currency    at fair value, plus directly attributable transaction costs unless
of the Group at the rate of exchange prevailing at balance         their classification is at fair value through profit or loss. they
date. Financial performance is translated at the average           are subsequently measured at fair value or amortised cost
exchange rate prevailing during the reporting period. the          using the effective interest method. Changes in fair value
exchange differences arising on translation are taken directly     of available-for-sale financial assets are recorded directly in
to the foreign currency translation reserve in equity.             equity. Changes in fair values of financial assets and liabilities
                                                                   classified as fair value through profit or loss are recorded in
on disposal of a foreign entity, the deferred cumulative           the income statement.
amount recognised in equity relating to that foreign
operation is recognised in the income statement.                   the fair values of financial instruments that are actively
                                                                   traded in organised financial markets are determined by
h) leases                                                          reference to quoted market bid prices at the close of business
leases where the lessor retains substantially all the risk and     on the balance sheet date. For those with no active market,
benefits of ownership are classified as operating leases.          fair values are determined using valuation techniques.
Initial direct costs incurred in negotiating an operating lease    such techniques include: using recent arm’s length market
are added to the carrying amount of the leased asset and           transactions; reference to the current market value of
recognised as an expense over the term of the lease on the         another instrument that is substantially the same; discounted
same basis as the lease income. operating lease payments           cash flow analysis and option pricing models making as
are recognised as an expense in the income statement on            much use of available and supportable market data as
a straight-line basis over the term of the lease.                  possible and keeping judgemental inputs to a minimum.




                                                                                                        www.ingrealestate.com.au   33
notes to the Financial statements
Year ended 30 June 2010




1. summARy oF signiFicAnt Accounting                               For hedge accounting, hedges are classified as fair value
policies (continued)                                               hedges when they hedge the exposure to changes in the
j) Impairment of non-financial assets                              fair value of a recognised asset or liability; cash flow hedges
assets other than investment property and financial assets         where they hedge exposure to variability in cash flows that
are tested for impairment whenever events or changes in            is attributable either to a particular risk associated with
circumstances indicate that the carrying amount may not be         a recognised asset or liability or to a forecast transaction;
recoverable. an impairment loss is recognised for the amount       or hedges of a net investment in a foreign operation.
by which the asset’s carrying amount exceeds its recoverable       any gain or loss arising from measuring fair value hedges
amount. the recoverable amount is the higher of an asset’s         that meet the conditions for hedge accounting is recognised
fair value less costs to sell and value in use. For the purposes   in the income statement. any gain or loss on the hedged
of assessing impairment, assets are grouped at the lowest          item attributable to the hedged risk is adjusted against the
levels for which there are separately identifiable cash inflows    carrying amount of the relevant financial instrument.
that are largely independent of the cash inflows from other
assets or groups of assets. Non-financial assets that have         any gain or loss arising on cash flow hedges which hedge
suffered impairment are reviewed for possible reversal of          firm commitments and which qualify for hedge accounting
the impairment at each reporting date.                             are recognised directly in equity. amounts accumulated in
                                                                   equity are recycled in the income statement in the periods
k) cash and cash equivalents                                       when the hedged item affects profit or loss.
Cash and cash equivalents in the balance sheet and cash
flow statement comprise cash at bank and in hand and               any gain or loss arising on hedges of a net investment in
short-term deposits that are readily convertible to known          a foreign operation, which qualify for hedge accounting,
amounts of cash and are subject to an insignificant risk           are recognised directly in equity in foreign currency
of changes in value.                                               translation reserve. on disposal of the foreign operation,
                                                                   the cumulative amount of any such gains and losses is
l) trade and other receivables                                     transferred to profit or loss.
trade and other receivables are recognised initially at
fair value and subsequently measured at amortised cost             For derivatives that do not meet the documentation
using the effective interest method, less any provision for        requirements to qualify for hedge accounting and for the
impairment. an allowance for impairment is made when               ineffective portion of qualifying hedges, any gains or losses
there is objective evidence that collection of the full amount     arising from changes in fair value are recognised in the
is no longer probable.                                             income statement.

m) derivative financial instruments                                Hedge accounting is discontinued when the hedge instrument
the Group uses derivative financial instruments such as            expires, is sold, exercised, terminated or no longer deemed
foreign currency contracts and interest rate swaps to hedge        effective. any cumulative gains or losses relating to the hedge
its risks associated with foreign currency and interest rate       that were previously recognised in equity are transferred to
fluctuations. the Group may also invest in derivatives             the income statement.
related to listed property equities and indices and may issue      other financial liabilities include convertible debt. Where
derivatives related to its own units. such derivative financial    there is a minimum distribution entitlement or the
instruments are initially recognised at fair value on the          redemption terms include settlement for cash on redemption,
date in which the derivative contract is entered into and          the instrument is classified as a liability with an embedded
are subsequently remeasured to fair value.                         derivative. the embedded derivative is initially recorded at
                                                                   fair value with the liability recorded as the residual of the
                                                                   fair value of the hybrid instrument.




34     ING real estate eNtertaINmeNt FuNd aNNual report 2010
1. summARy oF signiFicAnt Accounting                              the australian securities and Investments Commission
policies (continued)                                              (“asIC”) considers that the Group should amend this
n) Investment property                                            accounting policy in relation to the treatment of its liquor
land, buildings, liquor and gaming licences have the function     and gaming licences, which may result in the classification
of an investment and are regarded as composite assets.            of certain assets as separate intangible assets (where they
In accordance with applicable accounting standards, the           were previously treated as part of tangible investment
buildings, including plant & equipment, are not depreciated.      property). the Group does not agree with asIC’s opinion.
                                                                  asIC has referred this matter to the Financial reporting
It is the Group’s policy to have all investment properties        panel for adjudication. Notwithstanding any change in this
externally valued at intervals of not more than three years       accounting policy, the Group’s reported net asset value
and that such valuation be reflected in the financial reports     is not expected to be materially impacted.
of the Group. It is the policy of the responsible entity to
review the fair value of each investment property every           the Group estimates that adopting asIC’s proposal
six months and to cause investment properties to be revalued      would have the following impacts on its balance sheet
to fair values whenever their carrying value differs materially   at 30 June 2010:
to their fair values.                                             n	 areduction of less than two cents per unit
Fair value represents the amount at which an asset could be         in net asset value; and
exchanged between a knowledgeable, willing buyer and a            n	 areduction of approximately 23 cents per unit
knowledgeable, willing seller in an arm’s length transaction        in net tangible assets.
at the date of valuation. It is based on current prices in an
active market for similar property in the same location and       the Group estimates the impact of asIC’s proposal
condition and subject to similar lease and other contracts,       (including the additional equity referred to in note 27)
adjusted for any differences in the nature, location or           to be:
condition of the property, or in the contractual terms of         n	 areduction of less than one cent per unit
the leases and other contracts relating to the property.            in net asset value; and
In the absence of current prices in an active market, the         n	 areduction of approximately seven cents per unit
responsible entity considers information from a variety             in net tangible assets.
of sources, including current prices in an active market
for properties of different nature, condition or location,        the Group believes that its current accounting treatment
adjusted to reflect those differences, recent prices of similar   is correct and in accordance with the requirements of
properties on less active markets, with adjustments to reflect    australian accounting standards. It has received written
any changes in economic conditions since the date of the          advice from its auditors, ernst & Young, confirming its
transactions that occurred at those prices, and discounted        accounting treatment.
cash flow projections based on reliable estimates of future       Compliance with loan to value ratios under the Fund’s debt
cash flows, using discount rates that reflect current market      facilities, and compliance with the net worth to tangible
assessments of the uncertainty in the amount and timing           assets ratio under the Group’s main debt facility agreement,
of the cash flows.                                                would not be affected by asIC’s proposal, since those
In determining fair values, expected net cash flows are           documents specify the use of external valuations of the
discounted to their present value using a market determined       composite assets.
risk adjusted discount rate. the assessment of fair value
of investment properties does not take into account potential
capital gains tax assessable. Changes in the fair value of an
investment property are recorded in the income statement.




                                                                                                     www.ingrealestate.com.au    35
notes to the Financial statements
Year ended 30 June 2010




1. summARy oF signiFicAnt Accounting                               r) Issued units
policies (continued)                                               Issued and paid up units are recognised at the fair value
o) equity accounted investments                                    of the consideration received by the Fund. any transaction
a jointly controlled entity is a joint venture that involves       costs arising on issue of ordinary units are recognised
the establishment of a corporation, partnership or other           directly in unitholders’ interest as a reduction of the units
entity in which each venturer has an interest. a contractual       proceeds received.
arrangement between the venturers establishes joint control        s) Revenue
over the economic activity of the entity. associates are those     revenue from rents, interest and distributions is recognised
entities over which the Group has significant influence,           to the extent that it is probable that the economic benefits
but not control. Jointly controlled entities and associates,       will flow to the entity and the revenue can be reliably
and investments in those entities, are referred to as “equity      measured. revenue brought to account but not received
accounted investments”. equity accounted investments are           at balance date is recognised as a receivable.
accounted for in the parent’s financial statements using the
cost method and in the consolidated financial statements           rental income from operating leases is recognised on a
using the equity method. the Group’s share of net profit           straight-line basis over the lease term. Contingent rentals
is recognised in the consolidated income statement and its         are recognised as income in the financial year that they
share of any movement in reserves is recognised in reserves        are earned. Fixed rental increases that do not represent
in the consolidated balance sheet. the accumulation of post-       direct compensation for underlying cost increases or capital
acquisition movements in the Group’s share of net assets           expenditures are recognised on a straight-line basis until
is adjusted against the carrying value of the investment.          the next market review date.
distributions received or receivable are recognised in the         Interest income is recognised as the interest accrues
parent’s income statement and reduce the carrying value            using the effective interest method.
of the investment in the consolidated financial statements.
                                                                   t) Income tax
p) payables                                                        i) Current income tax
trade and other payables are carried at amortised cost and         under the current tax legislation, the Fund is not liable to
due to their short-term nature are not discounted. they            pay australian income tax provided that its taxable income
represent liabilities for goods and services provided to the       (including any assessable capital gains) is fully distributed
Group prior to the end of the financial year that are unpaid       to unitholders each year. tax allowances for building and
and are recognised when the Group becomes obliged to               fixtures depreciation are distributed to unitholders in
make future payments in respect of the purchase of these           the form of the tax deferred component of distributions.
goods and services. the amounts are unsecured and are
usually paid within 60 days of recognition.                        the subsidiaries that hold the Group’s foreign properties
                                                                   may be subject to corporate income tax and withholding
q) borrowings                                                      tax in the countries in which they operate. under current
Borrowings are initially recorded at the fair value of the         australian income tax legislation, unitholders may be entitled
consideration received less directly attributable transaction      to receive a foreign tax credit for this withholding tax.
costs associated with the borrowings. after initial recognition,
borrowings are subsequently measured at amortised cost             ii) Deferred income tax
using the effective interest rate method. under this method        deferred income tax represents foreign tax (including
fees, costs, discounts and premiums that are yield related         withholding tax) expected to be payable or recoverable by
are included as part of the carrying amount of the borrowing       foreign taxable entities on the differences between the tax
and amortised over its expected life.                              bases of assets and liabilities and their carrying amounts for
                                                                   financial reporting purposes. deferred tax assets and liabilities
Borrowings are classified as current liabilities unless the        are measured at the tax rates that are expected to apply to
Group has an unconditional right to defer settlement of the        the year when the asset is realised through continuing use
liability for at least 12 months after the balance sheet date.     or the liability is settled, based on tax rates (and tax laws)
Borrowing costs are expensed as incurred except where they         that have been enacted or substantively enacted at reporting
are directly attributable to the acquisition, construction or      date. Income taxes related to items recognised directly in
production of a qualifying asset. When this is the case, they      equity are recognised in equity and not against income.
are capitalised as part of the acquisition cost of that asset.




36     ING real estate eNtertaINmeNt FuNd aNNual report 2010
1. summARy oF signiFicAnt Accounting                                2. Accounting estimAtes And judgements
policies (continued)                                                the preparation of financial statements requires the use
u) earnings per unit                                                of certain critical accounting estimates. It also requires the
Basic earnings per unit is calculated as net profit attributable    responsible entity to exercise its judgement in the process of
to unitholders of the Fund divided by the weighted average          applying the Group’s accounting policies. the areas involving
number of issued units. diluted earnings per unit is calculated     a higher degree of judgement or complexity, or areas where
as net profit attributable to ordinary unit holders, adjusted for   assumptions and estimates are significant to the financial
preference distributions and interest associated with dilutive      statements, are disclosed below.
potential ordinary units, divided by the weighted average
                                                                    estimates and judgements are continually evaluated and
number of ordinary units and dilutive potential ordinary units
                                                                    are based on historical experience and other factors,
outstanding during the financial year.
                                                                    including expectations of future events that are believed
v) Goods and services tax (“Gst”)                                   to be reasonable under the circumstances.
revenue, expenses and assets (with the exception of
                                                                    a) critical accounting estimates and assumptions
receivables) are recognised net of the amount of Gst to
                                                                    the Group makes estimates and assumptions concerning the
the extent that the Gst is recoverable from the taxation
                                                                    future. the resulting accounting estimates, by definition, will
authority. Where Gst is not recoverable, it is recognised
                                                                    seldom equal the related actual results. the estimates and
as part of the cost of the acquisition, or as an expense.
                                                                    assumptions that have a significant risk of causing a material
receivables and payables are stated inclusive of Gst.               adjustment to the carrying amounts of assets and liabilities
the net amount of Gst recoverable from or payable                   within the next financial year are discussed below.
to the tax authority is included in the balance sheet as
                                                                    the Group had investment properties with a carrying amount
an asset or liability.
                                                                    of $199,350,000 (2009: $307,898,000) (see note 10),
Cash flows are included in the cash flow statement on a             representing estimated fair value. In addition, the carrying
gross basis. the Gst components of cash flows arising from          amount of the Group’s equity accounted investments of
investing and financing activities, which are recoverable           $24,986,000 (2009: $26,398,000) (see note 11) also reflects
from or payable to the tax authorities, are classified as           investment properties carried at fair value. these carrying
operating cash flows.                                               amounts reflect certain assumptions about expected future
                                                                    rentals, rent-free periods, operating costs and appropriate
w) pending Accounting standards
                                                                    discount and capitalisation rates. In forming these
aasB 9 Financial Instruments and aasB 2009-11
                                                                    assumptions, the responsible entity considered information
Amendments to Australian Accounting Standards arising
                                                                    about current and recent sales activity, current market rents,
from AASB 9 address the classification and measurement of
                                                                    and discount and capitalisation rates, for properties similar
financial assets and are likely to affect the Group’s accounting
                                                                    to those owned by the Group, as well as independent
for its financial assets. the standards are not applicable until
                                                                    valuations of the Group’s property.
1 July 2013. the Group is yet to assess the full impact.
                                                                    b) critical judgements in applying the entity’s
other new accounting standards, amendments to accounting
                                                                    accounting policies
standards and interpretations have been published that are
                                                                    there were no judgements, apart from those involving
not mandatory for the current reporting period. these are
                                                                    estimations, that management has made in the process of
not expected to have any material impact on the Fund’s
                                                                    applying the entity’s accounting policies that had a significant
financial report in future reporting periods.
                                                                    effect on the amounts recognised in the financial report.




                                                                                                        www.ingrealestate.com.au   37
notes to the Financial statements
Year ended 30 June 2010




3. distRibutions
                                                                                                                                                        Consolidated
                                                                                                                                                   2010            2009
                                                                                                                                                   Cents           Cents

Rates and amounts of distributions
distributions have been paid or are payable in respect of the
following periods at the following rates (in cents per unit):
– Half-year ended 31 december                                                                                                                         —                2.75

                                                                                                                                                   $’000           $’000

the total amounts of these distributions were:
– Half-year ended 31 december                                                                                                                         —            4,691

4. eARnings peR unit
                                                                                                                                                        Consolidated
                                                                                                                                                   2010            2009

loss from continuing operations ($’000)                                                                                                       (50,681)           (54,309)
Weighted average number of units outstanding (thousands)                                                                                     175,749            171,699
Weighted average number of ordinary and dilutive
potential ordinary units outstanding (thousands) 1                                                                                           175,749            171,699
Basic and diluted earnings per unit from continuing operations (cents)                                                                             (28.8)          (31.6)
Basic and diluted earning per unit from discontinuing operations (cents)                                                                             (1.2)           0.1

1) the convertible loan securities were not dilutive in either financial year as the effect of the conversion would be to reduce loss per unit.


5. FinAnce costs
                                                                                                                                                        Consolidated
                                                                                                                                                   2010            2009
                                                                                                                                                   $’000           $’000

Interest paid or payable                                                                                                                          18,301          19,692
less interest capitalised                                                                                                                           (266)           (569)
                                                                                                                                                  18,035          19,123

the rate used to capitalise finance costs to qualifying assets was 4.0% (2009: 8.0%).




38       ING real estate eNtertaINmeNt FuNd aNNual report 2010
6. discontinued opeRAtions
a) details of discontinued operations
on 29 June 2010, the Group decided to sell its New Zealand portfolio consisting of ten properties. on 16 July 2010,
contracts were exchanged for this sale. settlement of the sales is expected to be staged over a twelve month period
commencing in august 2010.
b) Financial performance
the financial performance of this component of the Fund classified as discontinued operation at 30 June 2010 was:
                                                                                                                Consolidated
                                                                                                          2010                   2009
                                                                                                          $’000                  $’000

revenue                                                                                                   3,440                   3,504
Net loss on change in fair value of investment properties                                                (5,730)                 (3,807)
other income                                                                                                251                     494
expenses                                                                                                      (9)                    (11)
profit/(loss) from discontinued operations for the year                                                  (2,048)                   180

c) cash flows
the cash flows of this component of the Fund classified as a discontinued operation at 30 June 2010 were:
                                                                                                                Consolidated
                                                                                                          2010                   2009
                                                                                                          $’000                  $’000

Net cash flow from operating activities                                                                   2,632                  2,858
Net cash flow from investing activities                                                                      (49)                 (269)
Net cash flows from discontinued operations                                                               2,583                  2,589

d) Assets and liabilities
the assets and liabilities of this component of the Fund classified as a disposal group at each reporting date were:
                                                                                                                Consolidated
                                                                                                          2010                   2009
                                                                                                          $’000                  $’000

Assets
trade and other receivables                                                                              5,673                       —
Investment properties                                                                                   25,724                       —
total assets                                                                                            31,397                       —
Net assets of disposal groups                                                                           31,397                       —




                                                                                                      www.ingrealestate.com.au       39
notes to the Financial statements
Year ended 30 June 2010




7. cAsh And cAsh equivAlents
                                                                             Consolidated
                                                                         2010           2009
                                                                 Note    $’000          $’000

Cash at bank and in hand                                          19       496            279
short term deposits                                               19     1,200          2,002
                                                                         1,696          2,281

Reconciliation to statement of cash flows
For the purposes of the statement of cash flows, cash
and cash equivalents comprise the following at 30 June:
Cash at bank and in hand                                          19       496            279
short term deposits                                               19     1,200          2,002
Bank overdraft                                                    13      (561)            —
                                                                         1,135          2,281

8. tRAde And otheR ReceivAbles
                                                                             Consolidated
                                                                         2010           2009
                                                                         $’000          $’000

current                                                           19
rental and other amounts due 1                                           2,462          1,016
loans to lessees 2, 3                                                      550            878
accrued income, prepayments and deposits                                   521             71
                                                                         3,533          1,965

Non-current                                                       19
loans to lessees 2, 3                                                    1,320          8,520
loan to panthers Investment Corporation pty ltd 4, 5                    60,682         63,091
                                                                        62,002         71,611

1) rental and other amounts due are receivable within 30 days.




40     ING real estate eNtertaINmeNt FuNd aNNual report 2010
8. tRAde And otheR ReceivAbles (continued)
2) loans to lessees are secured and repayable as follows:
                                                                                                             Consolidated
                                                                                                       2010                   2009
                                                                                                       $’000                  $’000

Within one year                                                                                        1,000                  4,501
later than one year but not later than five years                                                     12,017                  8,520
                                                                                                      13,017              13,021
accumulated impairment 5                                                                             (11,147)              (3,623)
                                                                                                       1,870                  9,398

Current                                                                                                  550                    878
Non-current                                                                                            1,320                  8,520
                                                                                                       1,870                  9,398

3) the Group has made an impairment allowance of $11,147,000 (2009: $3,623,000) against loans to lessees representing
   the difference between loans of $13,017,000 and the recoverable value of these loans. the Fund holds security against
   these loans of $550,000 (2009: $878,000).
4) loan to panthers Investment Corporation pty ltd (“pIC”) is secured and repayable as follows:

                                                                                                             Consolidated
                                                                                                       2010                   2009
                                                                                                       $’000                  $’000

later than one year but not later than five years                                                     63,091              63,091
accumulated impairment 3                                                                               (2,409)                —
                                                                                                      60,682              63,091

other terms of the loan to pIC include:
i) the loan matures on 13 July 2011;
ii) the Group has an option to convert the outstanding balance into 49.9% of the issued shares in pIC at any time until the
    maturity date.
5) the Group has made an impairment allowance of $2,409,000 against the loan to pIC representing the difference between
   loan of $63,091,000 and the value of the security held against this loan of $60,682,000.




                                                                                                   www.ingrealestate.com.au     41
notes to the Financial statements
Year ended 30 June 2010




9. deRivAtives
                                                                                                                Consolidated
                                                                                                           2010              2009
                                                                                         Note              $’000             $’000

Non-current assets                                                                         19
option to convert loan to pIC into equity                                                                    395             2,684

current liabilities                                                                        19
Interest rate swap contracts                                                                               3,346             6,391

Non-current liabilities                                                                    19
Interest rate swap contracts                                                                               8,910             6,507

In addition, the Fund holds a warrant entitling it on exercise to acquire 49.9% of the issued shares of Icon Hospitality
management pty ltd. No fee is payable by the Fund on exercise of the warrant, which expires on 29 march 2015.
the carrying amount of the warrant in the Fund’s financial statements is $1.

10. investment pRopeRties
a) Individual valuations and carrying amounts
                                         date of         Cost        latest external            Carrying            Capitalisation
property                                purchase      to date           valuation               amount                 rate 3
                                                                            Valuation     2010       2009          2010       2009
                                                        $’000       date       $’000      $’000      $’000           %          %

Non-current
ambarvale tavern,
– ambarvale NsW                        05 sep 05      14,004 20 may 10        13,000    13,000      16,000      10.6%        8.5%
Bidwill Club Hotel,
– Bidwill NsW                                              —                      —          —       6,900           —       8.0%
Bourbon Hotel,
– Kings Cross NsW                       01 Jul 04     24,154    10 Jun 08     24,000    18,000      23,000      11.2%        8.8%
Bowral Hotel,
– Bowral NsW                           25 sep 06        6,688   30 Jun 09      6,100      6,400      6,100         8.7%      8.8%
Brisbane Hotel,
– perth Wa                             01 oct 07      13,720 05 may 10        14,700    14,700      13,700         7.0%      7.5%
CBd Hotel,
– Newcastle NsW                                            —                      —          —       2,900           —      12.1%
Central Hotel,
– Bundaberg Qld                       09 Nov 06         4,271   03 dec 09      3,350      3,350      4,000      10.7%        8.8%
Commodore Hotel
– North sydney NsW                      01 Jul 04     18,184 18 may 10        12,500    12,500      21,100         8.6%      8.3%
Courthouse Hotel,
– Cairns Qld                           11 sep 06      11,550    02 dec 09      6,100      6,100      6,300         9.3%      8.5%
dolphin Hotel,
– surry Hills NsW                     30 Nov 04         9,118 18 may 10       10,500    10,500      11,900         8.7%      7.5%




42     ING real estate eNtertaINmeNt FuNd aNNual report 2010
10. investment pRopeRties (continued)
                              date of                 Cost        latest external          Carrying             Capitalisation
property                     purchase              to date           valuation             amount                  rate 3
                                                                          Valuation    2010     2009          2010            2009
                                                    $’000         date       $’000     $’000    $’000           %               %

elephant & Wheelbarrow Hotel,
– Fortitude Valley Qld                                 —                        —         —    10,200             —          8.0%
el toro Hotel,
– Warwick Farm NsW                    25 may 05    17,624 20 may 10         15,500    15,500   16,500         8.3%           8.8%
empire Hotel,
– annandale NsW                                        —                        —         —     4,900             —          9.7%
exchange Hotel,
– Brisbane Qld                        19 aug 04    21,770    10 Jun 09      19,000    19,300   19,000         9.5%           9.5%
m.J. Finnegan’s Irish pub,
– Newcastle NsW                                        —                        —         —     4,400             —          6.4%
Five dock Hotel,
– Five dock NsW                        01 Jul 04   11,772 18 may 10         17,400    17,400   13,800         8.0%           7.5%
General Gordon Hotel,
– sydenham NsW                        18 Nov 05    13,241 05 may 10         11,500    11,500   14,900       11.0%            8.2%
Gpo Hotel,
– Fortitude Valley Qld                19 aug 04     2,728    10 dec 09       3,000     3,000    4,000         8.0%           6.1%
Hibernian Hotel,
– Goulburn NsW                        31 oct 07     4,539    05 Jun 10       2,000     2,000    3,100         7.5%           10.9%
Jewells tavern,
– Jewells NsW                                          —                        —         —     8,500             —          8.7%
lawson park Hotel 4
– mudgee NsW                          19 may 06     4,865 09 may 10          3,000     3,000    4,000         8.8%           9.9%
mattara Hotel,
– Charlestown NsW                                      —                        —         —     7,000             —          8.5%
premier Hotel,
– Broadmeadow NsW                     15 Jun 06     6,599 31 mar 09          3,800     3,800    3,800         7.5%           7.4%
sydney aussie rules Club,
– Kings Cross NsW                      01 Jul 04   29,220     16 Jul 09     13,100    11,500   13,100         9.5%           14.5%
three Weeds Hotel,
– rozelle NsW                          04 Jul 07    7,341 05 mar 10          6,100     6,100    6,600         9.0%           8.1%
uncle Buck’s Hotel & retail Centre,
– mount druitt NsW                     04 Jul 05   22,219 06 may 10         15,700    15,700   22,000         9.6%           8.5%
Woolwich pier Hotel,
– Woolwich NsW                         01 Jul 04    9,308 05 may 10          6,000     6,000    9,800         9.0%           8.5%
albert’s sports Bar 5
– palmerston North NZ                                  —                        —         —     2,506             —          9.2%
Cambridge Hotel 5
– Wellington NZ                                        —                        —         —     5,758             —          9.4%
empire Hotel 5
– palmerston North NZ                                  —                        —         —     3,123             —          10.0%
exchange Hotel 5
– lower Hutt NZ                                        —                        —         —     3,948             —          10.2%




                                                                                                  www.ingrealestate.com.au      43
notes to the Financial statements
Year ended 30 June 2010




10. investment pRopeRties (continued)
                              date of                                    Cost                 latest external                   Carrying                  Capitalisation
property                     purchase                                 to date                    valuation                      amount                       rate 3
                                                                                                     Valuation          2010            2009             2010             2009
                                                                        $’000                 date      $’000           $’000           $’000              %                %

murphy’s law Bar 5
– palmerston North NZ                                                        —                                —              —          1,449                —           11.0%
realm Hotel 5
– Hataitai NZ                                                                —                                —              —          2,675                —           9.9%
the office 5
– palmerston North NZ                                                        —                                —              —          1,834                —           11.9%
tote Hotel 5
– trentham NZ                                                                —                                —              —          2,699                —           10.1%
turks Bar 5
– Havelock North NZ                                                          —                                —              —          2,050                —           10.7%
Waikanae Hotel & super liquor 5
– Waikanae NZ                                                                —                                —              —          4,356                —           7.9%
                                                                     252,915                         206,350         199,350        307,898             9.2%             8.8%

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

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

3) Capitalisation rates have been assessed having regard to geographic location, annual rent, expected reversions to market rent, turnover rent and tenant quality.

4) lawson park Hotel capitalisation rate is reflective of the expected rental following market rent reviews on 31 december 2011 based off assessment of the maintainable
   trade. Current passing yield on the property is 4.9%.

5) these properties are now classified as part of a disposal group, see note 6 for details.


b) movements in carrying amounts
                                                                                                                                                      Consolidated
                                                                                                                                               2010                      2009
                                                                                                                                               $’000                     $’000

Carrying amount at beginning of year                                                                                                       307,898                  360,465
exchange rate fluctuations                                                                                                                       525                      239
additions to existing property                                                                                                                 5,681                    9,863
disposals                                                                                                                                   (38,950)                 (23,712)
transferred to discontinued operations                                                                                                      (25,724)                       —
amortisation of tenant incentives and leasing commissions                                                                                       (292)                    (244)
straight line lease revenue recognition                                                                                                         (145)                   2,594
straight line lease revenue recognition – discontinued operations                                                                                501                      569
Net change in fair value                                                                                                                    (44,413)                 (38,069)
Net change in fair value – discontinued operations                                                                                            (5,731)                  (3,807)
carrying amount at end of year                                                                                                             199,350                  307,898




44       ING real estate eNtertaINmeNt FuNd aNNual report 2010
10. investment pRopeRties (continued)
c) leasing arrangements
the investment properties are leased to tenants under long-term operating leases. lease terms vary between tenants.
Future minimum rentals receivable under these leases are:
                                                                                                            Consolidated
                                                                                                      2010                   2009
                                                                                                      $’000                  $’000

Within one year                                                                                     19,411               24,774
later than one year but not later than five years                                                   81,699              135,981
later than five years                                                                              123,800              191,761
                                                                                                   224,910              352,516

11. equity Accounted investments
a) details of investments
                                                                                                          ownership interest
Name                                                              principal activity                  2010                    2009

panthers property unit trust                            property investor                           49.9%                    49.9%
panthers property management pty limited                property investor                           49.9%                    49.9%

                                                                                                            Consolidated
                                                                                                      2010                   2009
                                                                                                      $’000                  $’000

b) share of assets and liabilities
total assets                                                                                        25,207               26,583
total liabilities                                                                                     (221)                (185)
Net assets                                                                                          24,986               26,398

c) share of results
revenue                                                                                               2,183                   7,567
loss on change in fair value of investment properties                                                (2,772)                     —
expenses                                                                                                 (45)                (5,491)
profit/(loss) before income tax                                                                        (634)                 2,076
Income tax expense                                                                                       —                      —
profit/(loss) for the year                                                                             (634)                 2,076




                                                                                                  www.ingrealestate.com.au      45
notes to the Financial statements
Year ended 30 June 2010




12. pAyAbles
                                                                                                            Consolidated
                                                                                                        2010             2009
                                                                                                        $’000            $’000

current liabilities
trade payables                                                                                          5,205            5,267
Non-current liabilities
unearned income                                                                                          675                  750

13. boRRowings
                                                                                                            Consolidated
                                                                                                        2010             2009
                                                                                       Note             $’000            $’000

current liabilities                                                                      19
Bank overdraft                                                                                            561              —
Bank debt                                                                                 (a)          19,280         200,896
other external debt                                                                       (b)          19,600              —
                                                                                                       39,441         200,896

Non-current liabilities
Bank debt                                                                                 (a)         179,874           35,571
other external debt                                                                       (b)              —            19,234
                                                                                                      179,874           54,805

a) bank debt
Bank debt comprises australian dollar denominated debt of $166,445,000 (2009: $201,846,000) and New Zealand dollar
denominated debt of $35,657,000 (2009: $35,052,000). debt is provided through two fully drawn facilities. these facilities
are repayable as to $155,372,000 on 28 February 2013 and $19,300,000 on 6 september 2010. the Fund at its option
may extend the repayment date for the first facility to 28 February 2015. the bank debt is secured by a first mortgage over
investment properties including those included as a discontinued operation, loan to pIC and equity accounted investments
with a carrying amount of $310,741,000 (2009: $397,386,000).
unamortised borrowing costs of $2,948,000 (2009: $431,000) reduce the amounts drawn to the carrying amount reported.
the facility agreements contain negative pledges that impose certain covenants including maintenance of the following
financial ratios:
Facility 1
i) ratio of net worth to total tangible assets of not less than 30%;
ii) minimum interest cover ratio of 1.4 times until 30 June 2011 and 1.5 times after that date; and
iii) maximum loan to value ratio (“lVr”) of 70% of the value of the secured investments until 29 June 2011 and 60%
     after that date.

Facility 2
i) minimum interest cover ratio of 1.5 times; and
ii) maximum lVr of 65.4% of the value of the secured investments.




46     ING real estate eNtertaINmeNt FuNd aNNual report 2010
13. boRRowings (continued)
the actual lVr at 30 June 2010 was 65.4% against a covenanted maximum of 65%. the covenanted maximum was increased
to 65.4% on 6 august 2010, reducing to 65% on 23 august 2010. the Group reduced the outstanding debt at that latter
date to comply with the maximum 65% lVr covenant.
under the first facility agreement, a distribution may only be made if the loan to valuation ratio is less than or equal to
50% or the distribution is made pursuant to a distribution reinvestment plan approved by the bank. Whilst reinstatement
of distributions remains a key focus for the Fund, any decision regarding distributions will consider the Funds need to retain
conservative debt levels and future cash flow requirements. as a result the Fund does not expect to pay a distribution in
the 2011 financial year.
subsequent to reporting date, bank debt will be reduced following the Group’s equity raising and sale of New Zealand
portfolio as detailed in note 27.
b) other external debt
Convertible loan securities are expected to be repaid by 31 august 2010 as detailed in note 27.

14. issued units
a) carrying amounts
                                                                                                                  Consolidated
                                                                                                            2010                   2009
                                                                                          Note              $’000                  $’000

at beginning of year                                                                                     182,425              179,300
Issued during the year:
– distribution reinvestment plan                                                                                —                  3,434
– unit issue costs                                                                                              —                   (231)
– transfer to retained profits                                                               (d)                —                     (78)
At end of year                                                                                           182,425              182,425

b) Number of issued units
                                                                                                                  Consolidated
                                                                                                           2010                 2009
                                                                                                       thousands            thousands

at beginning of year                                                                                     175,749              166,849
Issued during the year:
– distribution reinvestment plan                                                                                —                  8,900
At end of year                                                                                           175,749              175,749

c) terms of units
all units are fully paid and rank equally with each other for all purposes. each unit entitles the holder to one vote, in person
or by proxy, at a meeting of unitholders.
d) transfer to retained profits
the transfer to retained profits represents the portion of distributions paid to holders of new units for that part of the period
to which the distribution relates that occurred before the issue of the units.




                                                                                                        www.ingrealestate.com.au      47
notes to the Financial statements
Year ended 30 June 2010




15. ReseRves
                                                                                                                  Consolidated
                                                                                                            2010                2009
                                                                                                            $’000               $’000

Foreign currency translation
Balance at beginning of year                                                                                  (191)              (189)
translation differences arising during the year                                                                 (46)                (2)
balance at end of year                                                                                       (237)               (191)

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

16. RetAined eARnings
                                                                                                                  Consolidated
                                                                                                            2010                2009
                                                                                          Note              $’000               $’000

Balance at beginning of year                                                                              (43,551)            15,191
Net loss for the year                                                                                     (52,729)           (54,129)
transfer from issued units                                                                  14                 —                   78
distributions paid or payable                                                                3                 —               (4,691)
balance at end of year                                                                                    (96,280)           (43,551)


17. commitments                                                    In assessing this risk, the Group takes into account the
Commitments for capital expenditure on investment property         relative security of its income flows, the predictability of its
contracted but not provided for at reporting date amounted         expenses, its debt profile, the degree of hedging and the
to $4,571,000 (2009: $250,000), all payable within one year.       overall level of debt as measured by gearing.
                                                                   the actual capital structure at a point in time is the product
18. cApitAl mAnAgement                                             of a number of factors, many of which are market driven
the Group aims to meet its strategic objectives and                and to various degrees outside of the control of the Group,
operational needs and to maximise returns to unitholders           particularly the impact of revaluations on gearing levels,
through the appropriate use of debt and equity, while taking       the availability of new equity and the liquidity in real estate
account of the additional financial risks of higher debt levels.   markets. While the Group periodically determines the optimal
                                                                   capital structure, the ability to achieve the optimal structure
In determining the optimal capital structure, the Group            may be impacted by market conditions and the actual
takes into account a number of factors, including the views        position may often differ from the optimal position.
of investors and the market in general, the capital needs
of its portfolio, the relative cost of debt versus equity, the
execution risk of raising equity or debt, and the additional
financial risks of debt including increased volatility of
earnings due to exposure to interest rate movements, the
liquidity risk of maturing debt facilities and the potential
for acceleration prior to maturity.




48     ING real estate eNtertaINmeNt FuNd aNNual report 2010
18. cApitAl mAnAgement (continued)
the Group’s capital position is primarily monitored through its ratio of total liabilities to total assets (“leverage ratio”), calculated
on a look-through basis, in which the Group’s interest in its joint ventures and associates are proportionately consolidated
based on the Group’s ownership interest. the Group’s medium term strategy is to maintain the Gearing ratio in the range
of 45%-55%. at 30 June 2010, the leverage ratio was 73.7%, compared to 66.5% at 30 June 2009, calculated as follows:
                                                                                                                     Consolidated
                                                                                                               2010                   2009
                                                                                                               $’000                  $’000

total consolidated liabilities                                                                              237,451              274,616
plus share of liabilities of equity accounted investments                                                       221                  185
total look-through liabilities                                                                              237,672              274,801
total consolidated assets                                                                                   323,359              413,299
less equity accounted investments                                                                            (24,986)             (26,398)
plus share of assets of equity accounted investments                                                          25,207               26,583
less elimination of receivables from and payables to equity accounted investments                              (1,068)                 —
total look-through assets                                                                                   322,512              413,484
leverage ratio                                                                                                73.7%                   66.5%

In addition, the Group monitors the ratio of debt to total assets (“Gearing ratio”), calculated on a look-through basis.
at 30 June 2010, the Gearing ratio was 67.8%, compared to 61.6% at 30 June 2009, calculated as follows:
                                                                                                                     Consolidated
                                                                                                               2010                   2009
                                                                                                               $’000                  $’000

total consolidated borrowings                                                                               219,315              255,701
less cash & cash equivalents                                                                                  (1,696)              (2,281)
Net look-through debt                                                                                       217,619              253,420
total consolidated assets                                                                                   323,359              413,299
less cash & cash equivalents                                                                                   (1,696)              (2,281)
less equity accounted investments                                                                            (24,986)             (26,398)
plus share of assets of equity accounted investments                                                          25,207               26,583
less elimination of receivables from and payables to equity accounted investments                              (1,068)                  —
total look-through assets                                                                                   320,816              411,203
Gearing ratio                                                                                                 67.8%                   61.6%

the Group’s leverage and Gearing ratios were reduced after reporting date because of the Fund’s capital raising – see note 27.




                                                                                                           www.ingrealestate.com.au     49
notes to the Financial statements
Year ended 30 June 2010




19. FinAnciAl instRuments                                            the Group’s exposure to the risk of changes in market
a) Introduction                                                      interest rates arises primarily from its use of borrowings.
the Group’s principal financial instruments comprise                 the main consequence of adverse changes in market interest
receivables, payables, interest bearing liabilities, other           rates is higher interest costs, reducing the Group’s profit. In
financial liabilities, cash and short-term deposits and              addition, one or more of the Group’s loan agreements may
derivative financial instruments.                                    include minimum interest cover covenants. Higher interest
                                                                     costs resulting from increases in market interest rates may
the main risks arising from the Group’s financial instruments        result in these covenants being breached, providing the
are interest rate risk, foreign exchange risk, credit risk and       lender the right to call in the loan or to increase the interest
liquidity risk. the Group manages its exposure to these risks        rate applied to the loan.
primarily through its treasury policy. the policy sets out
various targets aimed at restricting the financial risk taken        the Group manages the risk of changes in market interest
by the Group. management reviews actual positions of the             rates by maintaining an appropriate mix of fixed and floating
Group against these targets on a regular basis. If the target is     rate borrowings. Fixed rate debt is achieved either through
not achieved, or forecast not to be achieved, a plan of action       fixed rate debt funding or through derivative financial
is, where appropriate, put in place with the aim of meeting          instruments permitted under the treasury policy. the policy
the target within an agreed timeframe. depending on the              sets minimum and maximum levels of fixed rate exposure
circumstances of the Group at a point in time, it may be that        over a ten-year time horizon.
positions outside of the treasury policy are accepted and no         at 30 June 2010, after taking into account the effect of interest
plan of action is put in place to meet the treasury targets,         rate swaps, approximately 100% of the Group’s borrowings
because, for example, the risks associated with bringing the         are at a fixed rate of interest (30 June 2009: 100%).
Group into compliance outweigh the benefits. the adequacy
of the treasury policy in addressing the risks arising from the      exposure to changes in market interest rates also arises from
Group’s financial instruments is reviewed on a regular basis.        financial assets such as cash deposits and loan receivables
                                                                     subject to floating interest rate terms. Changes in market
While the Group aims to meet its treasury policy targets,            interest rates will also change the fair value of any interest
many factors influence its performance, and it is probable that      rate hedges.
at any one time it will not meet all its targets. For example,
the Group may be unable to negotiate the extension of bank
facilities sufficiently ahead of time, so that it fails to achieve
its liquidity target. When refinancing loans it may be unable
to achieve the desired maturity profile or the desired level of
flexibility of financial covenants, because of the cost of such
terms or their unavailability. Hedging instruments may not
be available, or their cost may outweigh the benefit of risk
reduction or they may introduce other risks such as mark
to market risk. Changes in market conditions may limit the
Group’s ability to raise capital through the issue of units
or sale of properties.




50     ING real estate eNtertaINmeNt FuNd aNNual report 2010
19. FinAnciAl instRuments (continued)
b) Interest rate risk exposure
the Group’s exposure to interest rate risk and the effective interest rates on financial instruments at reporting date was:
                                                                                          Consolidated
                                                                                 Fixed interest maturing in:
                                                                Floating      less than         1 to 5     more than
30 June 2010                                                interest rate        1 year          years       5 years                total

principal amounts $’000
Financial assets
Cash at bank                                                        496             —              —                 —             496
short term deposits                                               1,200             —              —                 —           1,200
loan to lessees                                                      —             550          1,320                —           1,870
loan to pIC                                                          —              —          60,682                —          60,682
Financial liabilities
Bank debt denominated in aud                                    164,058              —              —                —         164,058
Bank debt denominated in NZd                                     35,657              —              —                —          35,657
Interest rate swaps:
– denominated in aud; Fund pays fixed rate                     (208,900)        40,200        168,700              —                  —
– denominated in NZd; Fund pays fixed rate                       (32,991)           —              —           32,991                 —
weighted average interest rates
Financial assets
Cash at bank                                                       4.2%             —               —                —                na
short term deposits                                                4.4%             —               —                —                na
loan to lessees                                                       —          9.2%            8.0%                —                na
loan to pIC                                                           —             —            9.0%                —                na
Financial liabilities
Bank debt denominated in aud                                       6.7%              —              —                —                na
Bank debt denominated in NZd                                       4.9%              —              —                —                na
Interest rate swaps:
– denominated in aud; Fund pays fixed rate                         4.8%          5.6%            6.4%               —                 na
– denominated in NZd; Fund pays fixed rate                         4.9%             —               —            7.2%                 na

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




                                                                                                         www.ingrealestate.com.au     51
notes to the Financial statements
Year ended 30 June 2010




19. FinAnciAl instRuments (continued)
the Group’s exposure to interest rate risk and the effective interest rates on financial instruments at the end of the previous
financial year was:
                                                                                            Consolidated
                                                                                    Fixed interest maturing in:
                                                                   Floating     less than          1 to 5    more than
30 June 2009                                                   interest rate       1 year           years      5 years            total

principal amounts $’000
Financial assets
Cash at bank                                                           279             —             —                —           279
short term deposits                                                  2,002             —             —                —         2,002
loan to lessees                                                         —             878         8,520               —         9,398
loan to pIC                                                             —              —         63,091               —        63,091
Financial liabilities
Bank debt denominated in aud                                      201,415              —              —               —       201,415
Bank debt denominated in NZd                                       35,052              —              —               —        35,052
Interest rate swaps:
– denominated in aud; Fund pays fixed rate                        (214,900)         6,000       208,900               —                —
– denominated in NZd; Fund pays fixed rate                          (32,431)           —             —            32,431               —
weighted average interest rates
Financial assets
Cash at bank                                                         2.7%              —              —               —                na
short term deposits                                                  2.9%              —              —               —                na
loan to lessees                                                         —           9.2%           9.2%               —                na
loan to pIC                                                             —              —           9.0%               —                na
Financial liabilities
Bank debt denominated in aud                                         3.8%              —              —               —                na
Bank debt denominated in NZd                                         3.4%              —              —               —                na
Interest rate swaps:
– denominated in aud; Fund pays fixed rate                           3.2%           5.6%           6.3%               —                na
– denominated in NZd; Fund pays fixed rate                           2.8%              —              —            7.2%                na

c) Interest rate sensitivity analysis
the impact of an increase or decrease in average interest rates of 1% (100 basis points) at reporting date, with all other
variables held constant, is illustrated in the tables below. this analysis is based on the interest rate risk exposures in existence
at balance sheet date. as the Group has no derivatives that meet the documentation requirements to qualify for hedge
accounting, there would be no impact on unitholders’ interest (apart from the effect on profit).




52     ING real estate eNtertaINmeNt FuNd aNNual report 2010
19. FinAnciAl instRuments (continued)
i) Increase in average interest rates of 1%
the effect on net interest expense for one year would have been:
                                                                               Consolidated
                                                                         effect on profit after tax
                                                                              Higher/(lower)
                                                                         2010                   2009
                                                                         $’000                  $’000

Variable interest rate instruments denominated in:
– australian dollars                                                      (279)                   120
– New Zealand dollars                                                       28                     (25)
                                                                          (251)                    95

                                                                               Consolidated
                                                                         effect on profit after tax
                                                                              Higher/(lower)
                                                                         2010                   2009
                                                                         $’000                  $’000

Variable interest rate instruments denominated in:
– australian dollars                                                     4,805                  6,141
– New Zealand dollars                                                    1,687                  1,728
                                                                         6,492                  7,869

ii) Decrease in average interest rates of 1%
the effect on net interest expense for one year would have been:
                                                                               Consolidated
                                                                         effect on profit after tax
                                                                              Higher/(lower)
                                                                         2010                   2009
                                                                         $’000                  $’000

Variable interest rate instruments denominated in:
– australian dollars                                                       279                   (120)
– New Zealand dollars                                                       (28)                   25
                                                                           251                     (95)

the effect on change in fair value of derivatives would have been:
                                                                               Consolidated
                                                                         effect on profit after tax
                                                                              Higher/(lower)
                                                                         2010                   2009
                                                                         $’000                  $’000

Variable interest rate instruments denominated in:
– australian dollars                                                    (5,486)                 (6,757)
– New Zealand dollars                                                   (1,799)                 (1,855)
                                                                        (7,285)                 (8,612)



                                                                     www.ingrealestate.com.au      53
notes to the Financial statements
Year ended 30 June 2010




19. FinAnciAl instRuments (continued)                              the decision to accept the credit risk associated with leasing
d) Foreign exchange risk                                           space to a particular tenant is balanced against the risk of
By holding properties in offshore markets, the Group is            the potential financial loss of not leasing up vacant space.
exposed to the risk of movements in foreign exchange rates.        rent receivable balances are monitored on an ongoing
Foreign exchange rate movements may reduce the australian          basis and arrears actively followed up in order to reduce,
dollar equivalent of the carrying value of the Group’s offshore    where possible, the extent of any losses should the tenant
properties, and may result in lower australian dollar equivalent   subsequently default.
proceeds when an offshore property is sold. In addition,
foreign exchange rate movements may reduce the australian          at reporting date, the Group held $1,228,000 (30 June 2009:
dollar equivalent of the earnings from the offshore properties     $1,016,000) of receivables that were past due but not
while they are owned by the Group.                                 impaired. there are reasonable grounds to believe that these
                                                                   amounts are recoverable. the Group holds bank guarantees
the Group reduces its exposure to the foreign exchange             covering these receivables of $800,000. of these past due
risk inherent in the carrying value of its offshore properties     receivables, $374,000 was up to 30 days overdue, $478,000
and interests in offshore investments by partly or wholly          was between 30 and 60 days overdue and $376,000 was
funding their acquisition using borrowings denominated             more than 60 days overdue.
in the particular offshore currency, and by using derivatives.
the treasury policy sets a target for minimum and maximum          the responsible entity believes that the Group’s receivables
hedging of the carrying value of its offshore properties.          that are neither past due nor impaired do not give rise to
                                                                   any significant credit risk.
the Group’s exposure to the impact of exchange rate
movements on its earnings from its offshore properties             a significant concentration of credit risk arises because one
is partly mitigated by the foreign denominated interest            tenant, Icon, is the debtor in respect of $578,000 of rental
expense of its foreign denominated borrowings.                     and other amounts due and $550,000 of loans to lessees.
                                                                   Further information is given in note 1(c).
the Group had no net foreign currency monetary
exposure at reporting date.                                        Credit risk also arises from deposits placed with financial
                                                                   institutions and derivatives contracts that may have a positive
there were no forward exchange contracts, options or               value to the Group. the Group’s treasury policy sets target
foreign exchange swaps outstanding at reporting date.              limits for credit risk exposure with financial institutions and
e) credit risk                                                     minimum counterparty credit ratings. Counterparty exposure
Credit risk refers to the risk that a counterparty defaults        is measured as the aggregate of all obligations of any single
on its contractual obligations resulting in a financial loss       legal entity or economic entity to the Group, after allowing
to the Group.                                                      for appropriate set offs which are legally enforceable.

the major credit risk for the Group is default by tenants,         the Group’s maximum exposure to credit risk at reporting
resulting in a loss of rental income while a replacement           date in relation to each class of financial instrument is its
tenant is secured and further loss if the rent level agreed        carrying amount as reported in the balance sheet.
with the replacement tenant is below that previously paid          f) liquidity risk
by the defaulting tenant. In addition, a default of one the        the main objective of liquidity risk management is to reduce
Group’s major tenants may trigger the right for one or more        the risk that the Group does not have the resources available
of the lenders to the Group to review or call in its loan.         to meet its financial obligations and working capital and
the Group assesses the credit risk of prospective tenants, the     committed capital expenditure requirements. the Group’s
credit risk of in-place tenants when acquiring properties and      treasury policy sets a target for the level of cash and available
the credit risk of existing tenants renewing upon expiry of        undrawn debt facilities to cover future committed expenditure
their leases. Factors taken into account when assessing credit     in the next year, loan maturities within the next six months
risk include the aggregate exposure the Group may have to          and an allowance for unforeseen events such as tenant
the prospective tenant if the counterparty is already a tenant     default. at times, the Group has fallen below this target.
in the Group’s portfolio; the strength of the prospective
tenant’s business; the level of its commitment to locating in
the Group’s property; and any form of security, for example
a rental bond, to be provided.




54     ING real estate eNtertaINmeNt FuNd aNNual report 2010
19. FinAnciAl instRuments (continued)
the Group may also be exposed to contingent liquidity risk under its term loan facilities, where term loan facilities include
covenants which if breached give the lender the right to call in the loan, thereby accelerating a cash flow which otherwise was
scheduled for the loan maturity. the Group monitors adherence to loan covenants on a regular basis, and the treasury policy
sets targets based on the ability to withstand adverse market movements and remain within loan covenant limits.
the Group monitors its debt expiry profile and aims to achieve staggered maturities, where possible, to reduce refinance risk
in any one year. at present, the Group has not achieved the desired level of staggered maturities.
the contractual maturities of the Group’s non-derivative financial liabilities at reporting date are reflected in the following
table. It shows the undiscounted contractual cash flows required to discharge the liabilities including interest at market rates.
Foreign currencies have been converted at rates of exchange ruling at reporting date.
                                                                                               Consolidated
                                                                   less than             1 to 5       more than
                                                                      1 year              years         5 years                    total
                                                                      $’000              $’000           $’000                    $’000

                                                                                                   2010
trade & other payables                                                5,205               300                 375              5,880
Borrowings                                                           51,940           224,001                  —             275,941
                                                                     57,145           224,301                 375            281,821

                                                                                                   2009
trade & other payables                                                5,267               300                 450              6,017
Borrowings                                                          208,021            55,306                  —             263,327
                                                                    213,288            55,606                 450            269,344

as of 1 July 2009, the Group has adopted the amendment to aasB 7 Financial Instruments: Disclosures, which requires
separate disclosure of the contractual maturities of the Group’s derivative liabilities and related derivative assets. these are
reflected in the following table. It shows the undiscounted contractual cash flows required to discharge the liabilities including
interest at market rates. Foreign currencies have been converted at rates of exchange ruling at reporting date. Comparative
information has not been provided as permitted by the transitional provisions of the new rules.
                                                                                               Consolidated
                                                                   less than             1 to 5       more than
                                                                      1 year              years         5 years                    total
                                                                      $’000              $’000           $’000                    $’000

                                                                                                   2010
Liabilities
derivative liabilities – net settled                                  3,775              7,808             1,326              12,909




                                                                                                       www.ingrealestate.com.au      55
notes to the Financial statements
Year ended 30 June 2010




19. FinAnciAl instRuments (continued)
g) Fair value of financial assets and liabilities
as of 1 July 2009, the Group has adopted the amendment to aasB 7 Financial Instruments: Disclosures, which requires
disclosure of fair value measurements by level of the following fair value measurement hierarchy:
level 1: fair value is calculated using quoted prices in active markets;
level 2: fair value is calculated using inputs other than quoted prices included in level 1 that are observable for the asset
         or liability, either directly (as prices) or indirectly (derived from prices); and
level 3: fair value is calculated using inputs for the asset or liability that are not based on observable market data.
Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date
without any deduction for transaction costs. the fair value of the listed equity investments are based on quoted market prices.
For financial instruments not quoted in active markets, the Group uses valuation techniques such as present value techniques,
comparison to similar instruments for which market observable prices exist and other relevant models used by market
participants. these valuation techniques use both observable and unobservable market inputs.
Financial instruments that use valuation techniques with only observable market inputs or unobservable inputs that are not
significant to the overall valuation include interest rate swaps denominated in both australian and New Zealand dollars.
the fair value of the option to convert the loan to pIC into equity is based on valuation techniques using market data that
is not observable, being the volatility of the price of pIC’s assets.
the fair value of an interest rate swap agreement is based on valuation techniques using market data that is not observable.
one valuation input is an adjustment for the credit risk of the Group.
the following tables present the Group’s financial instruments that were measured and recognised at fair value at 30 June 2010.
Comparative information has not been provided as permitted by the transitional provisions of the new rules.
                                                                                              Consolidated
                                                                       level 1           level 2          level 3                 total
                                                                        $’000             $’000            $’000                 $’000

                                                                                                   2010
Financial assets
derivatives                                                                —                  —                395                395

Financial liabilities
derivatives                                                                —             10,415             1,841               12,256

the following tables present the changes in level 3 instruments for the year ended 30 June 2010:
                                                                                                                 Consolidated
                                                                                                            assets       liabilities
                                                                                                            $’000           $’000

                                                                                                                      2010
Derivatives
opening balance                                                                                              2,684              (1,298)
Gains & losses recognised in profit or loss                                                                 (2,289)               (543)
closing balance                                                                                                395              (1,841)

Gains & losses for the year included in profit or loss that relate to assets held at the end of the year    (2,289)               (543)

the carrying amounts of the Group’s other financial instruments approximate their fair values.



56     ING real estate eNtertaINmeNt FuNd aNNual report 2010
20. AuditoR’s RemuneRAtion
                                                                                                                Consolidated
                                                                                                             2010                2009
                                                                                                                $                   $

amounts received or receivable by ernst & Young for:
– audit or review of financial reports of the Fund and any other entity in the consolidated entity     176,007               60,452
– other services – assurance related                                                                    45,114                4,902
                                                                                                       221,121               65,354

21. contingencies
on 29 march 2010, the Group granted Icon an option to require the Group to purchase the personal property, furniture, plant
and equipment, and other property owned by Icon and situated in the hotels leased by Icon from the Group (the “plant”).
the option becomes exercisable upon the occurrence of certain defined insolvency events in relation to Icon. the maximum
amount that the Fund may be required to pay is $7,500,000.
on the same day, Icon granted the Group an option to purchase the plant on similar terms.

22. RelAted pARties
a) Responsible entity
the responsible entity of the Fund is ING management limited (“Iml”), a member of the ING group of companies for which
the ultimate holding company is ING Groep NV, a company incorporated in the Netherlands.
b) Fees of the Responsible entity and its related parties
                                                                                                                Consolidated
                                                                                                             2010                2009
                                                                                                                $                   $

– asset management fees                                                                              1,618,620           1,000,000

Iml is entitled to a management fee of 0.6% per annum of total assets of the Group. However, the company has waived this
fee for the years ended 30 June 2005 and 2006, and partially waived fees for the years ended 30 June 2007, 2008 and 2009.
the fees waived would become immediately due and payable should Iml be removed as responsible entity of the Fund.
Iml is entitled to an acquisition fee of 0.5% of the total price paid by the Group for any new properties.
Iml is entitled to a performance fee of 15% of any performance of the Fund above a total return benchmark of 12% per annum
for the six years ending 30 June 2010.
ING property management pty limited is entitled to receive a property management fee of 1.5% of gross rent received.
However, it has waived this fee for the years ended 30 June 2005, 2006, 2007, 2008, 2009 and 2010, provided Iml is not
removed as the responsible entity of the Fund.




                                                                                                      www.ingrealestate.com.au    57
notes to the Financial statements
Year ended 30 June 2010




22. RelAted pARties (continued)
the estimated fees that have not been recognised but would become payable if Iml was removed as responsible entity
as at reporting date are:
                                                                                                              Consolidated
                                                                                                         2010               2009
                                                                                                            $                  $

asset management fees                                                                               6,312,272           6,306,495
property management and leasing fees                                                                1,730,438           1,273,938
                                                                                                    8,042,710           7,580,433

c) holdings of the Responsible entity and its related parties
Holdings of the responsible entity and its related parties (including managed investment schemes for which a related party
is the responsible entity) as at 30 June 2010, and distributions received or receivable for the year then ended, were:
                                                                                                                   distributions
                                                                                                                     receivable
                                                                                                                   Consolidated
                                                                                                   Number of               2010
Name                                                                                                units held                 $

ING real estate Co-Investment pty ltd                                                                668,383                  —
ING real estate International Investments III BV                                                  25,032,196                  —
                                                                                                  25,700,579                  —

Holdings of those parties as at 30 June 2009, and distributions received or receivable for the year then ended, were:
                                                                                                                   distributions
                                                                                                                     receivable
                                                                                                                   Consolidated
                                                                                                   Number of               2009
Name                                                                                                units held                 $

ING real estate Co-Investment pty ltd                                                                668,383              18,381
ING real estate International Investments III BV                                                  25,435,093             631,167
                                                                                                  26,103,476             649,548

d) other transactions with the Responsible entity and its related parties
ING real estate development australia pty ltd, a subsidiary of ING, received project management fees of $83,601 (2009: $50,697)
for the financial year for project management services for refurbishment of the Group’s properties.




58     ING real estate eNtertaINmeNt FuNd aNNual report 2010
22. RelAted pARties (continued)
e) Key management personnel
Key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly, including any director of the responsible entity.
the names of the directors of the responsible entity, and their dates of appointment or resignation if they were not directors
for all of the financial year, are:
richard Colless am       Chairman
philip Clark am
michael easson am
paul scully
Christophe tanghe        appointed 1 september 2009
George Jautze            appointed 1 september 2009; resigned 31 may 2010
philip redmond           resigned 12 april 2010
the names of other key management personnel, and their dates of appointment or resignation if they did not occupy their
position for all of the financial year, are:
denis Hickey             Iml Chief executive officer; appointed 1 september 2009
daniel Hargraves         Fund Chief executive officer
danny agnoletto          Iml Chief Financial officer; appointed 16 November 2009
Hugh thomson             Iml Chief executive officer; ceased 31 august 2009
david Hunt               Iml Chief Financial officer; ceased 15 November 2009
Key management personnel do not receive any remuneration directly from the Group. they receive remuneration from
the responsible entity in their capacity as directors or employees of the responsible entity or its related parties. Consequently,
the Group does not pay any compensation as defined in accounting standard aasB 124 Related Parties to its key
management personnel.
units held directly, indirectly or beneficially in the Fund by each key management person, including their related parties, were:
                                                                                                            2010                   2009

paul scully
– Held at the beginning of the financial year                                                             43,983               36,545
– acquisitions                                                                                            68,516                7,438
– Held at the end of the financial year                                                                  112,499               43,983
daniel Hargraves
– Held at the beginning of the financial year                                                            393,050              383,413
– acquisitions                                                                                                —                 9,637
– Held at the end of the financial year                                                                  393,050              393,050
Hugh thomson
– Held at the beginning of the financial year                                                            129,867              129,867
– Held at the date of cessation as a key management person or at the end of the financial year           129,867              129,867
david Hunt
– Held at the beginning of the financial year                                                            186,892              162,208
– acquisitions                                                                                                —                24,684
– disposals                                                                                             (120,520)                  —
– Held at the date of cessation as a key management person or at the end of the financial year            66,372              186,892




                                                                                                        www.ingrealestate.com.au    59
notes to the Financial statements
Year ended 30 June 2010




22. RelAted pARties (continued)
distributions received or receivable from the Fund by each key management person were:
                                                                                                               Consolidated
                                                                                                          2010                2009
                                                                                                             $                   $

paul scully                                                                                                  —               1,081
daniel Hargraves                                                                                             —              10,809
Hugh thomson                                                                                                 —               3,571
david Hunt                                                                                                   —               4,787
                                                                                                             —              20,248

In addition to the above persons, key management personnel as defined in the accounting standards includes the responsible
entity. details of the remuneration of the responsible entity are given at note (b) above. details of its holdings in the Fund
are given at note (c) above.

f) transactions with equity accounted investments
the Fund has lent to pIC; further details of this loan are given at notes 8 and 19. amounts recognised were:
                                                                                                               Consolidated
                                                                                                          2010                2009
                                                                                                             $                   $

amounts receivable at reporting date                                                                60,681,601           63,090,818
Interest income                                                                                      5,601,493            5,438,342

panthers property unit trust (“pput”) has lent to the Fund; further details of this loan are given at notes 12 and 19.
the loan will be offset against future distributions receivable from pput. amounts recognised were:
                                                                                                               Consolidated
                                                                                                          2010                2009
                                                                                                             $                   $

loan payable at reporting date                                                                       1,068,472                  —
Interest expense                                                                                            —                   —




60     ING real estate eNtertaINmeNt FuNd aNNual report 2010
23. pARent FinAnciAl inFoRmAtion
summary financial information about the parent is:
                                                                                                                ING real estate
                                                                                                              entertainment Fund
                                                                                                            2010                   2009
                                                                                                            $’000                  $’000

Current assets                                                                                             6,566               14,198
total assets                                                                                             235,813              310,873
Current liabilities                                                                                       26,402              152,206
total liabilities                                                                                        150,007              172,190
unitholders equity:
– Issued units                                                                                           182,425              182,425
– accumulated losses                                                                                      (96,619)             (43,742)
– total unitholders’ equity                                                                               85,806              138,683

Net loss attributable to unitholders of the Fund                                                         (52,877)              (54,131)
total comprehensive income                                                                               (52,877)             (54,131)

24. subsidiARies
a) Names of subsidiaries
the consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 1(e):
                                                                                                               ownership interest
                                                                                                            2010                   2009
Name                                                    Country of residence                                  %                      %

Bourbon unit trust                                                 australia                                  100                   100
ING real estate entertainment subsidiary trust                     australia                                  100                   100
IeF Victoria trust                                                 australia                                  100                   100
IeF NZ subsidiary trust                                         New Zealand                                   100                   100
IeF NZ trust                                                    New Zealand                                   100                   100

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

25. segment inFoRmAtion
a) description of segments
the Fund invests in hospitality and entertainment property located in australia and New Zealand, each of which leases
the properties it owns. the Fund has identified its operating segments as being each of these regions, based on internal
reporting to the chief operating decision maker. the Fund is organised around functions, but distinguishes these regions
in its internal reporting.
the New Zealand segment is now classified as a discontinued operation.
b) major customers
the Group receives revenue from Icon amounting to $11,332,000 (2009: $11,839,000).




                                                                                                        www.ingrealestate.com.au     61
notes to the Financial statements
Year ended 30 June 2010




26. notes to the cAsh Flow stAtement
a) Reconciliation of profit to net cash flows from operations
                                                                                                  Consolidated
                                                                                             2010            2009
                                                                                             $’000           $’000

Net loss for the year                                                                       (52,729)       (54,129)

adjustments for:
– straight line lease revenue recognition                                                       145         (2,594)
– straight line lease revenue recognition – discontinued operations                            (501)          (569)
– Net loss on disposal of investment properties                                                  —             213
– Net loss on change in fair value of:
  – Investment properties                                                                   44,413          38,069
  – Investment properties included in share of net profit of equity accounted investments    2,772              —
  – Investment properties – discontinued operations                                          5,730           3,807
  – derivatives                                                                              1,585          23,003
– amortisation of borrowing costs                                                              975              —
– amortisation of tenant incentives                                                            292             283
– Impairment loss on:
  – trade receivables                                                                           —            1,808
  – loans                                                                                    6,260           3,623
– excess of share of profits from equity accounted investments over distributions               —               (10)
– deferred income tax benefit                                                                   —             (111)
operating profit for the year before changes in working capital                              8,942          13,393
Changes in working capital:
– (Increase)/decrease in receivables                                                         (3,972)           225
– (Increase)/decrease in payables                                                            (1,207)         1,092
Net cash provided by operating activities                                                    3,763          14,710

b) Non-cash financing and investing activities
                                                                                                  Consolidated
                                                                                             2010            2009
                                                                                             $’000           $’000

re-investment of distributions pursuant to
distribution Investment plan                                                                     —           3,434




62     ING real estate eNtertaINmeNt FuNd aNNual report 2010
27. subsequent events
on 15 July 2010, the Fund issued 26,362,000 units at a price of nine cents each to new investors, raising a total of
$2,373,000. on 16 July 2010, the Fund announced the issue of 404,222,000 units at a price of nine cents each under a
underwritten 2:1 renounceable rights issue, to raise a total of $36,380,000. the proceeds, net of issue costs, will be applied
to repayment of the Cls and reduction of bank debt.
on 16 July 2010, the Group announced that it had exchanged contracts on the sale of its New Zealand portfolio with expected
sale proceeds of $26,305,000. In addition, the Group will be repaid the $5,262,000 loan owed by the tenant of this portfolio,
bringing the total gross proceeds from this transaction to $31,567,000. this sale remains subject to approval and consent
to release of mortgage security from the Facility 1 lender. settlement of the asset sales will be staged over a period of up
to sixteen-months from august 2010. the net proceeds will be applied to reducing the Group’s bank debt and termination
of New Zealand interest rate hedge contracts.
If these initiatives had occurred on 30 June 2010, the Group’s Gearing ratio would have reduced to 53.3% and the Group’s
leverage ratio would have reduced to 58.6%.
Based on these capital initiatives, the Fund’s Facility 1 lender has agreed that distributions may be reinstated once the Facility 1
lVr is below 60% (formerly below 50%). Whilst reinstatement of distributions remains a key focus for the Fund, any decision
regarding distributions will consider both the Fund’s need to retain conservative debt levels and expected future cash flow.
the Fund does not expect to pay any distribution in the 2011 financial year.
on 29 July 2010, the Group gave an update about a significant tenant, allied, details of which are given in note 1(c).
on 16 august 2010, the Group gave an update about its largest tenant, Icon, details of which are given in note 1(c).




                                                                                                         www.ingrealestate.com.au   63
directors’ declaration
Year ended 30 June 2010




In accordance with a resolution of the directors of ING management limited, I state that:
1. In the opinion of the directors:
     a) the financial statements and notes of ING real estate entertainment Fund are in accordance with the
        Corporations act 2001, including:
        i) giving a true and fair view of the Group’s financial position as at 30 June 2010 and of its performance
           for the year ended on that date; and
        ii) complying with accounting standards and Corporations regulations 2001; and
     b) there are reasonable grounds to believe that ING real estate entertainment Fund will be able to pay its
        debts as and when they become due and payable. In reaching this conclusion, the directors considered
        the matters discussed at note 1(c).
2. the notes to the financial statements include an explicit and unreserved statement of compliance with
   international financial reporting standards at note 1(b).
3. this declaration has been made after receiving the declarations required to be made by the chief executive
   officer and chief financial officer to the directors in accordance with section 295a of the Corporations act 2001
   for the financial year ending 30 June 2010.
on behalf of the directors




philip clark Am
director
sydney
30 august 2010




64      ING real estate eNtertaINmeNt FuNd aNNual report 2010
Independent auditor’s report to the unitholders of ING Real Estate
Entertainment Fund

Report on the Financial Report
We have audited the accompanying financial report of ING Real Estate Entertainment Fund, which
comprises the balance sheet as at 30 June 2010, and income statement, the statement of comprehensive
income, statement of changes in equity and statement of cash flows for the year ended on that date, a
summary of significant accounting policies, other explanatory notes and the directors’ declaration of ING
Management Limited, the Responsible Entity of ING Real Estate Entertainment Fund and the entities it
controlled at the year’s end or from time to time during the financial year.

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

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

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

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

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




                                                                          Liability limited by a scheme approved
                                                                          under Professional Standards Legislation




                                                                                            www.ingrealestate.com.au   65
            Auditor’s Opinion
            In our opinion:
             1.      the financial report of ING Real Estate Entertainment Fund is in accordance with the Corporations
            Act 2001, including:

                      i     giving a true and fair view of the financial position of ING Real Estate Entertainment Fund
                            and the consolidated entity at 30 June 2010 and of their performance for the year ended on
                            that date; and

                      ii    complying with Australian Accounting Standards (including the Australian Accounting
                            Interpretations) and the Corporations Regulations 2001.

            2.      the financial report also complies with International Financial Reporting Standards as issued by the
            International Accounting Standards Board as disclosed in Note 1(b).



            Significant Uncertainty as to Going Concern
            Without qualifying our opinion, we draw attention to Note 1 (c) in the financial report which
            indicates that there is an increased risk of a key tenant defaulting under its obligations to the
            Fund; and that a breach of those obligations, or of the key tenant’s obligations to its financiers,
            could lead to a breach of both of the Fund’s bank facility agreements. This may cast doubt over
            whether the Fund would be able to realise its assets and liabilities in the normal course of
            business and at the amounts stated in the financial report. The financial report does not include
            any adjustments relating to the recoverability and classification of recorded asset amounts nor
            to the amount and classification of liabilities that might be necessary should the fund not
            continue as a going concern.




            Ernst & Young




            Douglas Bain
            Partner
            Sydney
            30 August 2010




66   ING real estate eNtertaINmeNt FuNd aNNual report 2010
unitholder information




rank Name of unitholder                                                     Number of units held at 31 aug 2010                    %

1       aurora Funds management ltd <Borg Fund>                                                       121,205,903           19.99%
2       Galt Nominees & stephen lowe <Kerr Family trust>                                               90,889,269           14.99%
3       National Nominees limited                                                                      60,815,318           10.03%
4       HsBC Custody Nominees (australia) limited                                                      39,014,392            6.43%
5       J p morgan Nominees australia limited                                                          34,799,407            5.74%
6       logic Fund No1 ltd                                                                             26,905,561            4.44%
7       Custodial services limited <Beneficiaries Holding a/C>                                         25,149,740            4.15%
8       ING real estate International Investments III B V                                              25,032,196            4.13%
9       Citicorp Nominees pty limited <CFsIl Cwlth property 1 a/C>                                     24,762,371            4.08%
10      lothian partners Hotel Group (australia) pty limited                                           15,805,524            2.61%
11      Fat prophets australia Fund limited                                                             8,888,889            1.47%
12      australian equity partners pty limited                                                          7,333,333            1.21%
13      Icon Hospitality trading pty limited                                                            5,900,000            0.97%
14      rolyan pty ltd <Jasarash Investment a/C>                                                        4,400,000            0.73%
15      aNZ Nominees limited <Cash Income a/C>                                                          3,611,394            0.60%
16      australian exports & Industrialisation super pty <Buck Family super Fund a/C>                   3,065,679            0.51%
17      mr timothy edward Hudson & mrs Beth Frances Julian Campbell                                     2,850,000            0.47%
18      abacus Group Holdings limited                                                                   2,562,827            0.42%
19      mr mark Herdman & mrs Heather Fletcher Herdman <the Constantia a/C>                             2,100,000            0.35%
20      abacus Funds management ltd <abacus divers Inc Fd II a/C>                                       2,016,129            0.33%
total                                                                                             507,107,932.00            83.65%

RAnge oF unitholdeRs
range            Number of holders                                                                Number of units                  %

1 to 1000                              104                                                                 38,540            0.01%
1,001 to 5,000                         380                                                              1,338,719            0.22%
5,001 to 10,000                        465                                                              3,798,115            0.63%
10,001 to 100,000                    1,305                                                             42,287,968            6.97%
100,001 and over                       199                                                            558,869,342           92.17%
total                                2,453                                                            606,332,684                100%

substAntiAl holdeR notices
the table below gives details of the last notice for each substantial unitholder lodged with the australian securities exchange
to 31 august 2010.

effective date       Name                                                                         Number of units                  %

31-aug-10            renaissance property securities pty ltd                                           48,366,757            7.98%
27-aug-10            aurora Funds management ltd                                                      121,205,903           19.99%
20-aug-10            Borg Fund                                                                        121,205,903           19.99%
20-aug-10            Galt Nominees limited                                                             90,889,269           14.99%
16-Jul-10            orbis Group                                                                       33,413,872           16.53%




                                                                                                      www.ingrealestate.com.au     67
investor Relations




enquiries relating to ING real estate entertainment Fund can be
directed to the ING real estate Investor services line on 1300 653 497
(or from outside australia +61 2 8280 7057). this service is available
from 8.30am to 5.30pm (sydney time) on all business days.
www.ingReAlestAte.com.Au
You can visit the ING real estate website to find information on the Fund, its property portfolio and recent unit price.
While visiting the site unitholders can access their investment details including holding balance and payment history.
recent annual and Half Year reports along with all asX announcements are also available.

investoR beneFits
ING real estate is pleased to offer an Investor Benefits program offering investors the opportunity to purchase from
entertainment and lifestyle providers at special discount and promotional rates. to participate in this program you
need to go online to www.ingrealestate.com.au and access ‘my unitholding’ within the Investor Centre section.
Further details of how to log in to the benefits program can be found on this page.

distRibution pAyments And AnnuAl tAXAtion stAtement
the Fund did not pay a distribution during FY2010 and does not forecast paying a distribution during FY2011.
You can view your 2009/2010 annual taxation statement online by visiting www.ingrealestate.com.au
and accessing ‘my unitholding’ within the Investor Centre section.

distRibution Reinvestment plAn
the distribution reinvestment plan (drp) is currently switched on; however the Fund does not expect to pay a
distribution in FY2011, so the drp isn’t applicable at this time. participation is optional and unitholders can join, vary
their participation or withdraw from drp participation at any time. drp elections made will apply to future distribution
payments, unless notified otherwise. please visit our website to view a copy of the IeF drp Frequently asked Questions.

2010/2011 unitholdeR cAlendAR 1
annual unitholder meeting                                                                                  december 2010
2011 annual report                                                                                     30 september 2011

pRivAcy policy
ING management limited is committed to ensuring the confidentiality and security of your personal information.
the ING privacy policy, detailing our handling of personal information, is available on our website www.ingrealestate.com.au

complAints
any unitholder wishing to register a complaint should direct it to Investor services in the first instance, at the
responsible entity’s address listed previously in this report.
ING management limited is a member of an independent dispute resolution scheme, the Financial ombudsman
service (Fos). If a unitholder feels that a complaint remains unresolved or wishes it to be investigated further,
Fos can be contacted as below:
By telephone: 1300 780 808
In writing: Financial ombudsman service
Gpo Box 3 melbourne VIC 3007
By email: info@fos.org.au
Website: www.fos.org.au



1) these dates are indicative only and subject to change.

68       ING real estate eNtertaINmeNt FuNd aNNual report 2010
                                                                              corporate directory




disclAimeR                                                                    ing ReAl estAte enteRtAinment Fund
this report was prepared by ING management limited (aBN 15 006                arsN 108 982 627
065 032) (the “responsible entity”) in respect of ING real estate
entertainment Fund arsN 108 982 627 (“IeF”). Information contained
                                                                              Responsible entity
in this report is current as at 30 June 2010. this report is provided         ING management limited
for information purposes only and has been prepared without taking            aBN 15 006 065 032
account of any particular reader’s financial situation, objectives or
needs. Nothing contained in this report constitutes investment, legal,        aFs licence No: 237534
tax or other advice. accordingly, readers should, before acting on any
information in this report, consider its appropriateness, having regard to
                                                                              RegisteRed oFFice
their objectives, financial situation and needs, and seek the assistance of   level 6, 345 George street
their financial or other licensed professional adviser before making any      sydney NsW 2000
investment decision. this report does not constitute an offer, invitation,
solicitation or recommendation with respect to the subscription for,          telephone: +61 2 9033 1000
purchase or sale of any security, nor does it form the basis of any           Facsimile: +61 2 9033 1060
contract or commitment.
                                                                              email: realestate@ingrealestate.com
                                                                              Website: www.ingrealestate.com.au
                                                                              diRectoRs oF iml
                                                                              r Colless am (Chairman)
                                                                              p Clark am
                                                                              m easson am
                                                                              p scully
                                                                              C tanghe
                                                                              secRetARy
                                                                              m lamb
                                                                              s Wiesener
                                                                              unit RegistRy
                                                                              link market services limited
                                                                              level 12, 680 George street
                                                                              sydney NsW 2000
                                                                              locked Bag a14
                                                                              sydney south NsW 1235
                                                                              telephone: 1300 653 497 (local call cost)
                                                                              or from outside australia: +61 2 8280 7057
                                                                              Facsimile: +61 2 9287 0303
                                                                              email: ingrealestate@linkmarketservices.com.au
                                                                              AuditoRs
                                                                              ernst & young
                                                                              680 George street
                                                                              sydney NsW 2000




                                                                                                           www.ingrealestate.com.au   69
ing ReAl estAte investment mAnAgement AustRAliA

level 6, 345 geoRge stReet
sydney nsw 2000
t : + 61 2 9033 1000
F : + 61 2 9033 1060




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