Macquarie Goodman Asia establishes A$850 million Hong Kong Wholesale Fund

07 April 2006

Macquarie Goodman Asia is pleased to announce the establishment of the Macquarie Goodman Hong Kong Wholesale Fund (“MGHKF” or the “Fund”). MGHKF will initially invest in a portfolio of Hong Kong properties valued at A$850 million (HK$4.8 billion).

Following the successful launch of Macquarie Goodman’s Australian Wholesale fund, Macquarie Goodman Asia identified the opportunity to create a wholesale fund investing in prime Hong Kong industrial property. MGHKF will be Macquarie Goodman Asia’s primary investment partner in Hong Kong and Macquarie Goodman Asia is committed to further growing the Fund via future acquisition opportunities.

Commenting on the launch of the new Fund, Greg Goodman, Chief Executive Officer of Macquarie Goodman Group and Chairman of MGHKF said, “We are very excited about the launch of our first wholesale fund in Asia and are pleased with the strong response from investors. We are continuing to see repeat investment in our managed funds from global institutions with many MGHKF investors investing in multiple Macquarie Goodman funds.”

James Hodgkinson, joint head of Macquarie’s Property Investment Management division, added, “With Asia’s direct property investment market still in its infancy and strong levels of local and international investor demand for Asian real estate, we look forward to growing the Fund over time.”

Macquarie Goodman Hong Kong Wholesale Fund

MGHKF’s initial portfolio consists of seven warehouse/distribution and logistics properties located in key Hong Kong sub markets. The portfolio has been acquired from Macquarie Bank Limited (“Macquarie Bank”) and Macquarie Goodman Group (“Macquarie Goodman”) and is priced at independent valuation (the initial portfolio is detailed in the annexure attached). The Fund is forecast to produce an initial distribution yield of 6.4% for the 12 months to 31 March 2007.

In line with the strategy of creating partnerships with managed funds, MGHKF will have a first right of refusal over future Macquarie Goodman Asia sourced acquisitions and completed developments within Hong Kong.

Total commitments to invest in MGHKF from institutional investors exceeded A$590 million (HK$3.3 billion), with an initial cornerstone tranche of A$375 million (HK$2.1 billion). Initially Macquarie Goodman and Macquarie Bank will hold 38.9% and 13.1% respectively of the Fund. A further sell-down by Macquarie Goodman of its stake to institutions is expected to occur over the coming weeks, reducing its holding to ~13.5%. Macquarie Goodman has agreed to maintain a long-term cornerstone investment of not less than 20% (inclusive of any interest held by Macquarie Bank), which is consistent with Macquarie Goodman’s long term approach to partnering with investors across its managed fund platform.

MGHKF has been established as an open ended wholesale fund with 75% of the equity commitment payable on initial application and the remaining equity to be drawn down over the coming two years to fund further acquisitions. These commitments provide capacity to make acquisitions to expand the MGHKF portfolio to in excess of A$1.0 billion.

Macquarie Goodman Asia has appointed Damien Smith as Fund Manager of MGHKF. Damien has worked with Macquarie Goodman’s senior management team over the past 12 months and has a broad range of listed and unlisted property investment and fund management experience. Prior to joining Macquarie Goodman, Damien worked for Lend Lease Real Estate Investments as the Fund Manager of Lend Lease’s unlisted UK Property funds.

Macquarie Goodman Asia

Macquarie Goodman Asia is a joint venture between Macquarie Goodman and Macquarie Bank. Headquartered in Hong Kong with over 50 property executives and support staff and 120 building services staff, Macquarie Goodman Asia draws on the skills and expertise of its joint venture partners. The launch of this Fund is consistent with both Macquarie Goodman’s and Macquarie Bank’s strategy of identifying markets to create specialist property funds to satisfy the increasing demand for real estate investments.

In its role as manager of the Fund, Macquarie Goodman Asia will earn base fees and if certain performance hurdles are met, performance fees to be calculated broadly in line with Macquarie Goodman’s Australian Wholesale Fund fee structure.

The establishment of a management team in Hong Kong provides Macquarie Goodman Asia with an important capability to concentrate on growing the business across Asia including the rapidly developing Chinese market. Macquarie Goodman has already commenced its first investment into China with a development for Exel, one of the group’s largest customers. Following the success of the MGHKF, Macquarie Goodman Asia will be exploring the creation of a wholesale fund focussed on investing in industrial property in China.

Impact on Macquarie Goodman

Macquarie Goodman will receive net cash proceeds of approximately A$35.8 million initially with an additional A$149.0 million expected to be received in relation to the further sell down to a 13.5% holding. These amounts will initially be used by Macquarie Goodman to retire existing debt facilities.

Impact on Macquarie Bank Limited

The net impact of the transaction on MBL Tier 1 capital ratio and P&L is not material.

Macquarie Bank Limited acted as financial adviser and sole lead manager in relation to the establishment of MGHKF.

For more information please contact:

Greg Goodman
Chief Executive Officer
Macquarie Goodman
Tel: (612) 9230 7400

Erica Sibree
Investor Relations
Macquarie Bank Limited
Tel: (612) 8232 5008
Mobile: (614) 1302 6309

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