Real Estate Capital Partners USA Property Trust2011/09/26 · On 6 August 2010 the short-term loans for Bedford Woods, Pfingsten and Montgomery were refinanced by new loans from Commonwealth

Real Estate Capital Partners USA Property Trust

ARSN 114 494 503

Real Estate Capital Partners

USA Property Trust

Annual Report30 June 2011

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Real Estate Capital Partners USA Property TrustARSN 114 494 503

Annual Financial Report

for the year ended 30 June 2011

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Contents

Directors’ report 1

Lead auditor’s independence declaration 10

Consolidated statement of comprehensive income 11

Consolidated statement of changes in equity 13

Consolidated statement of financial position 14

Consolidated statement of cash flows 15

Notes to the consolidated financial statements 16

Directors’ declaration 50

Independent auditor’s report 51

Corporate governance statement 53

Additional information 58

Corporate directory Inside cover

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REAL ESTATE CAPITAL PARTNERS USA PROPERTY TRUST ARSN 114 494 503

1

Directors’ report

The Directors of Real Estate Capital Partners Managed Investments Limited (“Responsible Entity”),

the Responsible Entity for the Real Estate Capital Partners USA Property Trust (“Trust”) (ASX: RCU)

present their report together with the financial statements of the Consolidated Entity for the financial

year ended 30 June 2011 and the auditor’s report thereon.

The Consolidated Entity comprises the Trust and the entities it controlled during the financial year.

The Trust became a registered managed investment scheme under the Corporations Act 2001 on

26 May 2005.

Responsible entity and Investment Manager

The Responsible Entity is a wholly-owned subsidiary of The Trust Company Limited (ASX: TRU)

whose registered office and principal place of business is Level 15, 20 Bond Street, Sydney, NSW

2000.

Real Estate Capital Partners Management Pty Limited, a wholly-owned subsidiary of Real Estate

Capital Partners Pty Limited, is the Investment Manager (“Investment Manager”) of the Trust

resulting in a separation between the investment management and the corporate governance

functions in relation to the Trust.

Directors

The Directors of the Responsible Entity during or since the end of the financial year are:

John Atkin

David Grbin

Michael Britton

Sally Ascroft (Alternate Director for David Grbin for the period 24 June 2010 to 1 August 2010)

(Alternate Director for Michael Britton for the period 31 March 2011 to 24 June 2011)

Vicki Allen (Resigned 18 March 2011)

Principal activities

The Trust is a registered managed investment scheme domiciled in Australia.

The principal activities of the Consolidated Entity during the financial year were property investment in

the United States of America. There were no significant changes in the nature of the Consolidated

Entity’s activities during the year.

The Trust and the Consolidated Entity did not have any employees during the year.

Results

The Consolidated Entity incurred a loss from operations after tax for the current year of $17,273,000

(2010: $6,174,000 loss). This loss was principally due to a decline in the fair value of investment

properties owned by the Trust of $15,020,000 (2010: $7,135,000 loss) and the decline in the fair value

of the Montgomery, New York property which is held for sale by $2,682,000 (2010: $Nil).

Rental income from investment properties decreased during the year to $21,071,000

(2010: $28,196,000) and recoverable outgoings also decreased to $5,112,000 (2010: $5,533,000).

The reduction in revenue was largely attributable to the strong appreciation of the Australian Dollar

against the US Dollar and the sale of the Derry Meadows property during the financial year.

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Directors’ report (continued)

Distributions

Distributions paid or payable in respect of the financial year were:

2011 2010

$’000 Cents

per unit

$’000 Cents

per unit

Interim distributions paid - - 6,591 2.40

Final distribution payable - - 1,814 0.60

- - 8,405 3.00

The Investment Manager advised unitholders in September 2010 that it was aligning the Trust’s

distribution policy from quarterly to half-yearly distributions, and deferring distributions to preserve

capital pending completion of the Record Realty Holdings (US) Trust transaction (see below).

The Directors of the Responsible Entity do not recommend the payment of a distribution.

Review of operations

Continuing operations

The Trust holds a portfolio of 6 (2010: 7) properties in the United States through holding all the common stock (ordinary shares) in a private United States investment trust company, Mariner American Property Income REIT Limited (“US REIT”). The US REIT in turn holds 6 (2010: 7) special purpose entities which each hold a property. Note 24 to the consolidated financial statements sets out more fully this ownership structure.

Operationally, the Consolidated Entity entered into 5 lease renewals during the period, comprising a total of 21,800 square feet. Leasing highlights included significant renewal activity at both of the properties in Chicago, Illinois, resulting in a high tenant retention rate at those properties. Since the end of the financial year, a further 2 lease renewals have been executed for the Chicago, Illinois properties, comprising 8,403 square feet. Portfolio occupancy has remained steady over the period and was 88.8% as at 30 June 2011, with a weighted average lease expiry of 5.7 years. The Investment Manager continues to actively seek new tenants to increase portfolio occupancy and income, and is presently engaged in a range of lease negotiations across the portfolio.

The Investment Manager has re-commenced a sales program to dispose of the investment property at Montgomery, New York. The latest marketing campaign for this asset commenced in July 2011. If the sale of the property is concluded, proceeds will be applied to repay debt.

Sale of retail property

On 8 February 2011 the investment property at Derry Meadows was sold, with the net proceeds of $20.436 million used to repay the loan secured by the property.

Capital management

On 6 August 2010 the short-term loans for Bedford Woods, Pfingsten and Montgomery were refinanced by new loans from Commonwealth Bank of Australia Limited (“CBA”) and Pearlmark Real Estate Partners (formerly Transwestern Realty Partners) for a term expiring on 6 August 2012. The funds from these new facilities were used to repay part of the original CBA loans. The Investment Manager has already commenced work on refinancing this debt and has appointed specialist US debt advisors to assist with sourcing new loans.

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Review of operations (continued)

Capital management (continued)

The Parsippany loan of US$44.0 million expired on 11 January 2011 and is classified as a current

liability on the balance sheet as at 30 June 2011. Subsequent to the expiry, the Consolidated Entity

made a US$5.75 million principal repayment on the loan. The Investment Manager is working with the

lender to agree the terms of a forbearance agreement implementing an extension until 30 April 2012.

During the year to 30 June 2011, a total of A$40.2 million was successfully raised through an

A$3.2 million placement in December 2010 and a A$37.0 million unit entitlement offer in March 2011.

Subsequent to the capital raising, a 20-for-1 unit consolidation was completed in May 2011.

Record Realty Holdings (US) Trust (“RRT”) Investment

The Trust has an investment of 35% in the US portfolio of the formerly listed Record Realty (“RRT

portfolio”) which comprises 21 commercial properties primarily leased to the US Government via the

United States General Services Administration (“GSA”). The GSA portfolio is divided between Pool A

of 12 properties with a gross value of US$258.51 million and Pool B of 9 properties with a gross value

of US$238.53 million.

Prior to 30 June 2010, the Trust entered into a unit sale deed with the receivers of Record Realty to

acquire 100% of the units in the Record Realty Holdings (US) Trust, being the entity through which

the RRT portfolio was held, and a note purchase agreement with UBS in respect of the subordinated

debt which financed the RRT portfolio.

Prior to 30 June 2010, the Trust paid non-refundable deposits of A$3 million and US$7.5 million

(A$8.655 million) to the receivers of Record Realty and UBS in respect of the unit sale deed and note

purchase agreement respectively. Additionally, refundable deposits of A$0.464 million and

A$0.682 million of transaction costs were capitalised as at 30 June 2010. These amounts, totalling

A$12.801 million, were disclosed as non-current other assets as at 30 June 2010 (Refer to Note 11 to

the consolidated financial statements).

The Investment Manager intended to fund the acquisition in part by a capital raising involving a

placement to Saban Capital Group (“Saban”) and an underwritten rights issue. However, as a

consequence of potentially adverse United States taxation implications for Saban, the unit sale deed

was re-structured as set out in the ASX announcement dated 13 December 2010 and by

31 December 2010 the Trust had attained an underlying 14.5% interest in the transaction (being the

deposits paid to date), with an option to increase its interest to 35%.

During March 2011 A$37.0 million was raised by the Trust via a fully underwritten entitlements offer,

of which A$16.2 million was paid to exercise its option to increase its economic interest of the

underlying transaction to 35%.

Whilst the property transfers to SGSA II (being the joint venture entity in which the Trust will have a

35% interest) required to crystallise the ownership structure of the Pool A assets of the RRT portfolio

have not yet occurred, the Investment Manager believes that the transfers will occur before

26 November 2011, being the date by which the transfers are required to take place under the unit

sale deed.

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Review of operations (continued)

Record Realty Holdings (US) Trust (“RRT”) Investment (continued)

The Pool B assets do not contribute to the value of the RRT investment as the portfolio’s debt of

US$284.04 million exceeds its value of US$238.5 million, and there is no recourse on the debt.

An additional US$1.05M was paid in support of an indemnity granted to the receivers. This latter

amount is refundable to the Trust if no claim is made on the indemnity within 3 months of completion

of the agreement with the receivers of Record Realty.

The Trust’s investment in the RRT property portfolio is consistent with the Investment Manager’s

objective of providing stable distributions and achieving growth through capturing the recovery in the

USA property market combined with an active management programme.

Going concern

The consolidated financial report of the Trust has been prepared on a going concern basis which

contemplates continuity of normal business activities and the realisation of assets and settlement of

liabilities in the normal course of business.

Parsippany property loan

As at 30 June 2011 the Consolidated Entity had a deficiency of net current assets of $31,466,000

(2010: $114,070,000). The principal reason for the deficiency of net current assets is the classification

of the expired non-recourse Parsippany property loan of $35,674,000 as a current liability. Funds held

in escrow in respect of this loan as at 30 June 2011, and classified as a non-current asset (and not

offset against the current liability) amounted to $856,000. The fair value of the Parsippany property at

30 June 2011, also classified as a non-current asset, is $41,970,000 (2010: $65,176,000). The

Investment Manager is presently negotiating the terms of a forbearance agreement and loan

extension with the loan servicer. The Investment Manager is simultaneously seeking to re-finance the

Parsippany loan on a long-term basis together with loans in respect of the Bedford Woods, Pfingsten

and Montgomery properties which all mature in August 2012. Whilst there are no assurances that the

Trust will be able to obtain an extension to or re-finance the Parsippany property loan, the sale of the

property at fair value would be likely to realise sufficient funds to extinguish the loan. It is noted that

the loan is recourse only to the Parsippany property and does not impact upon the other continuing

operations of the Consolidated Entity.

If the Parsippany property is unable to be sold or re-financed in the ordinary course of business, and

the current financier sells the property under the limited recourse security arrangements, the property

may not realise the amounts included in the consolidated statement of financial position as at 30 June

2011.

Working capital

The Consolidated statement of cash flows for the year ended 30 June 2011 discloses that the

Consolidated Entity used $3,512,000 in operations (2010: $3,675,000 generated by operations).

Furthermore, as at 30 June 2011 the Consolidated Entity had a deficiency of working capital (being

the amount of payables in excess of cash and cash equivalents and trade and other receivables) of

$3,321,000 (2010: $3,061,000). Included in payables are amounts relating to tenant security deposits

of $137,000 (2010: $242,000), rent received in advance of $1,437,000 (2010: $2,079,000), accrued

real estate taxes of $1,331,000 (2010: $1,786,000) and accrued interest payable of $1,380,000 (2010:

$205,000). These amounts, which total $4,285,000 (2010: $4,312,000) are not immediately payable

or refundable to tenants, and accordingly, once excluded from the calculation, the Consolidated Entity

would have a surplus of working capital of $126,000 (2010: $729,000).

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Going concern (continued)

Working capital (continued)

The Investment Manager has prepared cashflow budgets through to December 2012 which indicates

that, upon normalisation of operating cashflow following completion of the RRT acquisition, the

Consolidated Entity will generate sufficient funds to meet its working capital and financing

requirements. The cashflow budgets have been prepared on a basis consistent with the Investment

Manager’s business plans for the Consolidated Entity.

Conclusion

The Directors of the Responsible Entity believe that, because:

• if the Parsippany property is unable to be sold or re-financed in the ordinary course of business,

and the current financier sells the property under the limited recourse security arrangements,

those arrangements do not impact upon the continuing operations of the Consolidated Entity;

• the cashflow budgets prepared by the Investment Manager indicate that the Consolidated

Entity will generate sufficient funds to meet its working capital and financing requirements; and

• good progress has been made and there are reasonable grounds to believe, all the transfers of

the RRT portfolio will be achieved;

there are reasonable grounds to consider that the Consolidated Entity will be able to pay its debts as

and when they fall due and have determined that the preparation of the financial report on a going

concern basis to be appropriate. However, if the Parsippany loan is unable to be re-negotiated or

operating cashflows do not remain in line with forecasts there is significant uncertainty surrounding

the Trust’s ability to meet its financial obligations as and when they fall due and as such the Trust

may be required to realise the Parsippany investment property at an amount lower than that stated

in the financial statements.

Significant changes in the state of affairs

In the opinion of the Directors of the Responsible Entity there have been no other significant changes

in the state of affairs of the Trust which occurred during the financial year not otherwise disclosed in

this Directors’ Report or the attached financial report.

Interest of the Responsible Entity

The Responsible Entity and its associates have not held any units in the Trust during the financial

year.

Responsible Entity fees, related party fees and other transactions

Except as disclosed in this report or in the notes to the consolidated financial statements, no Director

of the Responsible Entity has received or become entitled to receive any benefit because of a

contract made by the Responsible Entity or a related entity with a Director or with a firm of which a

Director is a member or with an entity of which a Director of the Responsible Entity has a substantial

interest.

All transactions with related parties are conducted on commercial terms and conditions. For

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Responsible Entity fees, related party fees and other transactions (continued)

2011

$

2010

$

Transactions with related parties - Consolidated

Responsible entity fees

- management fees 165,420 299,334

(see i below) 165,420 299,334

US Asset Manager management fees

- asset management fees 486,627 325,305

- administration fees 1,203,290 1,290,697

(see ii below) 1,689,917 1,616,002

Management expense recovery fees

- charged by the Responsible Entity (on

account of and paid to the Investment

Manager)

585,718 299,370

- charged by the US Asset Manager 277,852 -

(see iii below) 863,570 299,370

Management expense recovery fees in respect

of Record Realty (US) Trust acquisition

- charged by the Responsible Entity 375,000 698,140

- charged by the Investment Manager 1,642,087 -

(see iv below) 2,017,087 698,140


of $37,000,000 capital raising

- charged by the Responsible Entity 125,000 -

- charged by the Investment Manager 148,037 -

(see v below) 273,037 -

Debt arrangement fee


(see vi below) 450,000 -

Property sale fee

- charged by the US Asset Manager (a

related party of the Investment Manager)

212,279 -

- (see vii below) 212,279 -

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2011

$

2010

$

Balances outstanding with related parties - Consolidated

Included in payables:

- to the Responsible Entity

- Responsible Entity fees - 45,512

- Expense recovery fees 29,358 61,128

29,358 106,640

- to the US Asset Manager

- Asset management fees 38,815 54,217

- Administration fees 116,445 111,146

- Expense recovery fees 76,329 -

231,589 165,363

i Responsible entity management fees are calculated at 0.2% of the Trust’s average net assets

(paid on a monthly basis). A prepayment of $73,476 was paid to the Responsible Entity for

management fees bringing the total paid for the year to $238,896. The Responsible Entity fees

have been included in Responsible Entity fees in the consolidated statement of comprehensive

income. By agreement between the Investment Manager and the Responsible Entity, the

Responsible Entity retains a fee based on 0.08% of the gross assets (plus expenses properly

incurred) and the balance of the Responsible Entity fees, asset management fees and expense

recovery fees are paid to the Investment Manager).

ii Asset management and administration fees are calculated on 2.0% (1.0% of gross assets after

1 January 2011) of the net and 3.0% of the gross income of the USA REIT respectively, and are

included in asset management fees in the consolidated statement of comprehensive income.

iii Management expense recovery fees have been included in other operating costs in the

consolidated statement of comprehensive income.

iv Expenses paid in respect of the Record Realty (US) Trust acquisition are included in acquisition

costs; see Note 6 for further details.

v Capitalised to issue costs; refer Note 19.

vii This fee was paid for the management and co-ordination of the re-financing of 3 US properties

and was calculated in accordance with the Constitution at 0.5% of the amount re-financed.

These fees are included within borrowing costs in the consolidated statement of comprehensive

income.

vii This was paid to the US Asset Manager for the sale of the Derry Meadows property. The fee is

included in the determination of the loss on sale of investment property costs in the


Director of the Investment Manager transactions

During the financial year the Trust entered into and repaid a subordinated loan agreement with a

Director of Real Estate Capital Partners Management Pty Limited, the Investment Manager of the

Trust for $1,466,000 (US$1,500,000) at an interest rate of 12% per annum to assist in the closing of

the RRT transaction. An establishment fee of $293,000 (US$300,000) was paid upon repayment of

the loan. The establishment fee is equal to the Director’s costs of obtaining a loan which was on-lent

to the Trust and for which the Director provided a personal guarantee. The Director did not receive

any profit from the lending transaction, the expenses, interest and fees paid by the Trust equalling the

expenses, fees and interest paid by the Director.

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Likely developments

The focus of management is on leasing vacant space in the portfolio, with a number of active negotiations advanced. In addition, the refinancing of the debt that matures prior to August 2012 is in progress, with advisers appointed to place the debt. The management team is focussed on actively managing both the leasing and refinance processes.

Events subsequent to the end of the reporting period

There has not arisen in the interval between the end of the financial year and the date of this report

any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of

the Responsible Entity, to affect significantly the operations of the Consolidated Entity, the results of

those operations, or the state of affairs of the Consolidated Entity, in future financial years.

Indemnification and insurance of officers and auditors

Indemnification

Under the Trust’s Constitution, the Responsible Entity, including its officers and employees, is

indemnified out of the Trust’s assets for any loss, damage, expense or other liability incurred by it in

properly performing or exercising any of its powers, duties or rights in relation to the Trust.

The Trust has not indemnified or made a relevant agreement for indemnifying against a liability any

person who is or has been auditor of the Trust.

Insurance premiums

As part of its insurance arrangements, Real Estate Capital Partners Pty Limited paid insurance

premiums in respect of Directors’ and officers’ liability insurance contracts covering Directors and

officers of the Responsible Entity until 31 May 2010 when the sale of the Responsible Entity to The

Trust Company (RE Services) Limited was completed. From 1 June 2010, the Responsible Entity is

covered under The Trust Company Limited group insurance policy. In addition, the Directors and

officers of the Responsible Entity have runoff insurance cover in relation to the period prior to its

acquisition by The Trust Company Limited group.

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[INSERT LEAD AUDITOR’S INDEPENDENCE DECLARATION]

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Consolidated

Consolidated statement of comprehensive income Note 2011 2010

for the year ended 30 June 2011 $’000 $’000

Revenue and other income

Rental income from investment properties 21,071 28,196

Recoverable outgoings from investment properties 5,112 5,533

Interest income 4 702 261

Other income 305 166

Total revenue and other income 27,190 34,156

Expenses

Property expenses 8,697 9,909

Responsible Entity fees 25 165 290

Asset management fees 25 1,690 1,643

Custodian fees 39 42

Borrowing costs 14,615 13,836

Other operating expenses 4,871 2,972

Acquisition costs 6 5,040 2,616

Net loss on foreign exchange 2,045 1,530

Total expenses 37,162 32,838

Changes in fair value of asset held for sale 12 (2,682) -

Changes in fair value of investment properties 13 (15,020) (7,135)

Changes in fair value of financial assets at fair value through profit or loss 14 11,833 (357)

Loss on sale of investment property (1,432) -

Loss before income tax for the year (17,273) (6,174)

Income tax 7 - -

Loss for the year (17,273) (6,174)

Continued on page 12 The consolidated statement of comprehensive income should be read in conjunction with the

accompanying notes.

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Consolidated

Consolidated statement of comprehensive income Note 2011 2010

for the year ended 30 June 2011 $’000 $’000

Other comprehensive income

Foreign currency translation differences - foreign operations (17,112) (2,131)

Net change in fair value of cash flow hedges transferred to profit or loss 1,529 (4,735)

Effective portion of changes in fair value of cash flow hedges (50) 9,992

Total other comprehensive income/(loss) (15,633) 3,126

Total comprehensive loss for the year (32,906) (3,048)

Total comprehensive loss for the year attributable to unitholders (32,906) (3,048)

Earnings per unit

Cents Cents

Basic loss per unit 21 (71.07) (44.87)

Diluted loss per unit 21 (71.07) (44.87)

The consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

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Consolidated statement of changes in equity

for the year ended 30 June 2011

Consolidated Entity Note Issued

capital

Translation

reserve

Hedging

reserve

Accumul-

ated

losses

Total

equity

$’000 $’000 $’000 $’000 $’000

2010

Balance at 30 June 2009 188,173 (6,734) (7,041) (83,423) 90,975

Total comprehensive income for the year

Loss for the year - - - (6,174) (6,174)

Translation of foreign operations - (2,131) - - (2,131)

Net change in fair value of cash flow

hedges transferred to profit or loss - - (4,735) - (4,735)

Effective portion of changes in fair

value of cash flow hedges - - 9,992 - 9,992

Total comprehensive income for the

year - (2,131) 5,257 (6,174) (3,048)

Transactions with owners, recorded

directly in equity

Units issued 19 14,753 - - - 14,753

Capital raising fees 19 (1,268) - - - (1,268)

Distributions to unitholders 17 - - - (8,405) (8,405)

Total transactions with owners 13,485 - - (8,405) 5,080

Balance at 30 June 2010 201,658 (8,865) (1,784) (98,002) 93,007

2011

Balance at 30 June 2010 19 201,658 (8,865) (1,784) (98,002) 93,007

Total comprehensive income for the year

Loss for the year - - - (17,273) (17,273)

Translation of foreign operations - (17,112) - - (17,112)

Net change in fair value of cash flow

hedges transferred to profit or loss - - 1,529 - 1,529

Effective portion of changes in fair

value of cash flow hedges - - (50) - (50)

Total comprehensive income for the

year - (17,112) 1,479 (17,273) (32,906)

Transactions with owners, recorded

directly in equity

Units issued 19 40,173 - - - 40,173

Capital raising fees 19 (3,964) - - - (3,964)

Distributions to unitholders 17 - - - - -

Total transactions with owners 36,209 - - - 36,209

Balance at 30 June 2011 237,867 (25,977) (305) (115,275) 96,310

The consolidated statement of changes in equity should be read in conjunction with the

accompanying notes.

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Consolidated statement of financial position

as at 30 June 2011

Consolidated

Note 2011 2010

$'000 $'000

Assets

Current assets

Cash and cash equivalents 10(a) 2,135 3,350

Trade and other receivables 8 838 522

Other assets 11 229 235

Financial assets - derivatives 9 13 204

Assets held for sale - investment properties 12 20,984 55,126

Total current assets 24,199 59,437

Non-current assets

Investment properties 13 190,029 258,385

Other investments 14 39,413 -

Other assets 11 5,446 18,665

Deferred charges 925 1,082

Total non-current assets 235,813 278,132

Total assets 260,012 337,569

Liabilities

Current liabilities

Trade and other payables 15 6,294 6,933

Loans and borrowings 16 49,371 164,760

Distribution payable 17 - 1,814

Total current liabilities 55,665 173,507

Non-current liabilities

Loans and borrowings 16 108,037 69,271

Financial liabilities - derivatives 18 - 1,784

Total non-current liabilities 108,037 71,055

Total liabilities 163,702 244,562

Net assets 96,310 93,007

Equity

Issued capital 19 237,867 201,658

Reserves 19 (26,282) (10,649)

Accumulated losses (115,275) (98,002)

Total equity 96,310 93,007

The consolidated statement of financial position should be read in conjunction with the

accompanying notes.

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Consolidated statement of cash flows Consolidated

for the year ended 30 June 2011 Note 2011 2010

$'000 $'000

Cash flows from operating activities

Receipts in the course of operations 23,920 29,913

Payments in the course of operations (14,017) (12,958)

Realised gain on foreign exchange 25 470

Payments of interest and other borrowing costs (13,440) (13,750)

Net cash from/(used in) operating activities 10(b) (3,512) 3,675

Cash flows used in investing activities

Interest received 640 261

Payments for improvements to investment properties 13 (1,296) (535)

Payments for acquisition of RRT investment 14 (17,195) (13,933)

Acquisition costs in relation to RRT investment (6,399) -

Proceeds from sale of investment property 20,436 -

Net cash used in investing activities (3,814) (14,207)

Cash flows from in financing activities

Proceeds from units issued 19 40,173 14,753

Capital raising fees 19 (3,964) (1,268)

Distributions paid 17 (1,814) (9,013)

Loans to related party - (58)

Proceeds from borrowings 15,145 -

Repayment of borrowings (42,977) (14,202)

Release of security deposits - 14,130

Net cash from financing activities 6,563 4,342

Net decrease in cash and cash equivalents (763) (6,190)

Cash and cash equivalents at the beginning of the year 3,350 9,941

Effect of exchange rate fluctuations (452) (401)

Cash and cash equivalents at the end of the year 10(a) 2,135 3,350

The consolidated statement of cash flows should be read in conjunction with the accompanying notes.

.

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REAL ESTATE CAPITAL PARTNERS USA PROPERTY TRUST ARSN 114 494 503 Notes to the consolidated financial statements for the year ended 30 June 2011

16

1. Reporting entity

Real Estate Capital Partners USA Property Trust (the “Trust”), is a registered managed investment

scheme under the Corporations Act 2001. The consolidated financial report of the Trust as at and for

the year ended 30 June 2011 comprises the Trust and its subsidiaries (together referred to as the

“Consolidated Entity” and individually as “Group entities”). The principal activities of the

Consolidated Entity during the financial year were the derivation of rental income from the following

investment properties located in the United States of America (“USA”):

• Derry Meadows Shoppes, Derry, New Hampshire (“Derry Meadows”);

• Route 10, Parsippany, New Jersey (“Parsippany”); • 191 Neelytown Rd, Montgomery, New York (“Montgomery”);

• Middlesex Turnpike, Bedford Woods, Massachusetts (“Bedford Woods”);

• Pfingsten Road, Deerfield, Illinois (“Pfingsten”);

• Centennial Avenue, Piscataway, New Jersey (“One Centennial”); and

• Higgins Road, Des Plains, Illinois (“Higgins”).

2. Basis of preparation (a) Statement of compliance The consolidated financial report is a general purpose financial report which has been prepared in

accordance with Australian Accounting Standards (“AASBs”) adopted by the Australian Accounting

Standards Board (“AASB”) and the Corporations Act 2001. The consolidated financial report also

complies with International Financial Reporting Standards (“IFRS”) adopted by the International

Accounting Standards Board (“IASB”).

The financial statements were authorised for issue Directors of the Responsible Entity on 31 August

2011.

(b) Going concern

The consolidated financial report of the Trust has been prepared on a going concern basis which

contemplates continuity of normal business activities and the realisation of assets and settlement of

liabilities in the normal course of business.

Parsippany property loan

As at 30 June 2011 the Consolidated Entity had a deficiency of net current assets of $31,466,000

(2010: $114,070,000). The principal reason for the deficiency of net current assets is the classification

of the expired non-recourse Parsippany property loan of $35,674,000 as a current liability. Funds held

in escrow in respect of this loan as at 30 June 2011, and classified as a non-current asset (and not

offset against the current liability) amounted to $856,000. The fair value of the Parsippany property at

30 June 2011, also classified as a non-current asset, is $41,970,000 (2010: $65,176,000). The

Investment Manager is presently negotiating the terms of a forebearance agreement and loan

extension with the loan servicer. The Investment Manager is simultaneously seeking to re-finance the

Parsippany loan on a long-term basis together with loans in respect of the Bedford Woods, Pfingsten

and Montgomery properties which all mature in August 2012. Whilst there are no assurances that the

Trust will be able to obtain an extension to or re-finance the Parsippany property loan, the sale of the

property at fair value would be likely to realise sufficient funds to extinguish the loan. It is noted that

the loan is recourse only to the Parsippany property and does not impact upon the other continuing

operations of the Consolidated Entity.

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Basis of preparation (continued)

(b) Going concern (continued)

If the Parsippany property is unable to be sold or re-financed in the ordinary course of business, and

the current financier sells the property under the limited recourse security arrangements, the property

may not realise the amounts included in the consolidated statement of financial position as at 30 June

2011.

Working capital

The Consolidated statement of cash flows for the year ended 30 June 2011 discloses that the

Consolidated Entity used $3,512,000 in operations (2010: $3,675,000 generated by operations).

Furthermore, as at 30 June 2011 the Consolidated Entity had a deficiency of working capital (being

the amount of payables in excess of cash and cash equivalents and trade and other receivables) of

$3,321,000 (2010: $3,061,000). Included in payables are amounts relating to tenant security deposits

of $137,000 (2010: $242,000), rent received in advance of $1,437,000 (2010: $2,079,000), accrued

real estate taxes of $1,331,000 (2010: $1,786,000) and accrued interest payable of $1,380,000 (2010:

$205,000). These amounts, which total $4,285,000 (2010: $4,312,000) are not immediately payable

or refundable to tenants, and accordingly, once excluded from the calculation, the Consolidated Entity

would have a surplus of working capital of $126,000 (2010: $729,000).

The Investment Manager has prepared cashflow budgets through to December 2012 which indicates

that, upon normalisation of operating cashflow following completion of the RRT acquisition, the

Consolidated Entity will generate sufficient funds to meet its working capital and financing

requirements. The cashflow budgets have been prepared on a basis consistent with the Investment

Manager’s business plans for the Consolidated Entity.

Conclusion

The Directors of the Responsible Entity believe that, because:

• if the Parsippany property is unable to be sold or re-financed in the ordinary course of business,

and the current financier sells the property under the limited recourse security arrangements,

those arrangements do not impact upon the continuing operations of the Consolidated Entity;

• the cashflow budgets prepared by the Investment Manager indicate that the Consolidated

Entity will generate sufficient funds to meet its working capital and financing requirements; and

• good progress has been made and there are reasonable grounds to believe, all the transfers of

the RRT portfolio will be achieved;

there are reasonable grounds to consider that the Consolidated Entity will be able to pay its debts as

and when they fall due and have determined that the preparation of the financial report on a going

concern basis to be appropriate. However, if the Parsippany loan is unable to be re-negotiated or

operating cashflows do not remain in line with forecasts there is significant uncertainty surrounding

the Trust’s ability to meet its financial obligations as and when they fall due and as such the Trust

may be required to realise the Parsippany investment property at an amount lower than that stated

in the financial statements.

(c) Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for the

following:

• derivative financial instruments are measured at fair value;

• investment properties are measured at fair value;

• financial assets at fair value through profit or loss are measured at fair value;

The methods used to measure fair values are discussed further in Notes 3(c), 3(h) and 3(j).

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2. Basis of preparation (continued)

(d) Functional and presentation currency

The consolidated financial statements are presented in Australian dollars (“A$”), which is the Trust’s

presentation currency. The Trust’s functional currency is Australian dollars; however, the

Consolidated Entity is predominantly comprised of operations located in the USA. The functional

currency of the controlled entities that hold these operations is United States dollars (“US$”).

The Trust and Consolidated Entity are of a kind referred to in ASIC Class Order 98/100 dated 10 July

1998 and in accordance with that Class Order, all financial information presented in Australian dollars

has been rounded to the nearest thousand dollars unless otherwise stated.

(e) Use of estimates and judgments

The preparation of the consolidated financial statements requires management to make judgements,

estimates and assumptions that affect the application of accounting policies and the reported

amounts of assets, liabilities, income and expenses.

Estimates and underlying assumptions are reviewed on an ongoing basis. Actual results may differ

from these estimates. Revisions to accounting estimates are recognised in the period in which the

estimate is revised and in any future periods affected.

Significant judgements, estimates and assumptions made by management in the preparation of

these consolidated financial statements are outlined below:

• Investment properties – Valuation

Investment properties are valued each reporting date to reflect their fair value according to the

Trust’s policy on valuing property.

• Other investments – Valuation

The Trust’s investment in the Record Realty Holdings (US) Trust (“RRT”) acquisition has been

valued by reference to the Trust’s underlying interest in the net assets of RRT. In determining

the net assets of RRT, the Trust has commissioned external valuations of RRT’s investment

properties consistent with the Trust’s own policy for valuing investment property.

• Financial instruments – Valuation

The fair value of derivative financial instruments is determined by reference to market values.

3. Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.

(a) Basis of consolidation

Subsidiaries

Subsidiaries are entities controlled by the Consolidated Entity. Control exists when the Consolidated

Entity has the power to govern the financial and operating policies of an entity so as to obtain benefits

from its activities. In assessing whether control exists, potential voting rights that are presently

exercisable are considered.

The financial statements of subsidiaries are included in the consolidated financial statements from the

date that control commences until the date that control ceases. A schedule of subsidiaries is set out in

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3. Significant accounting policies (continued)

(a) Basis of consolidation

Subsidiaries (continued)

Note 24 to these consolidated financial statements. The financial statements of subsidiaries are

prepared for the same reporting period as the Trust using consistent accounting policies. Adjustments

are made to align any dissimilar accounting policies which may exist.

In the Trust’s financial statements, investments in subsidiaries are carried at cost, less

impairment.

Transactions eliminated on consolidation

All inter-entity balances and transactions, including unrealised profits arising from intra-group

transactions, have been eliminated in the preparation of these consolidated financial

statements.

(b) Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated at the foreign currency exchange rate ruling at the

date of the transaction. Monetary assets and liabilities denominated in foreign currencies are

translated to Australian dollars at the foreign currency closing exchange rate ruling at the end of the

reporting period.

Foreign currency exchange differences arising on translation and realised gains and losses on

disposals or settlements of monetary assets and liabilities are recognised in profit or loss.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value

are translated to Australian dollars at the foreign currency closing exchange rates ruling at the dates

that the values were determined. Foreign currency exchange differences relating to investments at fair

value through profit or loss and derivative financial instruments are included in gains and losses on

investments and net gain/loss on derivatives, respectively. All other foreign currency exchange

differences relating to monetary items, including cash and cash equivalents, are presented separately

in the statement of comprehensive income.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising

on acquisition, are translated to Australian dollars at the exchange rate at reporting date. The income

and expenses of foreign operations are translated to Australian dollars at the average exchange rate

for the year.

Foreign currency differences are recognised in other comprehensive income, and presented in the

foreign currency translation reserve (“Translation reserve”) in equity. When a foreign operation is

disposed of such that control or significant influence is lost, the cumulative amount in the translation

reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on

disposal. When the Consolidated Entity disposes of only part of:

• its interest in a subsidiary that includes a foreign operation whilst retaining control, the relevant

proportion of the cumulative amount is reattributed to non-controlling interests; and

• its investment in an associate that includes a foreign operation whilst retaining significant

influence, the relevant proportion of the cumulative amount is re-classified to profit or loss.

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(c) Financial instruments

(i) Classification

The Consolidated Entity’s financial instruments comprise:

• the category of financial assets and financial liabilities at fair value through profit or loss

comprising of interest rate options and its investment in RRT;

• financial instruments that are classified as loans and receivables including trade and other

receivables and related party loans receivable;

• financial liabilities that are not at fair value through profit or loss including trade and other

payables and loans and borrowings; and

• cash and cash equivalents.

(ii) Recognition

The Consolidated Entity recognises financial assets and financial liabilities at fair value through profit

or loss on the date it becomes a party to the contractual provisions of the instrument. Other financial

assets and liabilities are recognised on the date they originated.

Financial liabilities are not recognised unless one of the parties has performed or the contract is a

derivative contract not exempted from the scope of AASB 139 Financial Instruments: Recognition and

Measurement.

(iii) Measurement

Financial instruments are measured initially at fair value (“transaction price”) plus, in the case of a

financial asset or financial liability not at fair value through profit or loss, transaction costs that are

directly attributable to the acquisition or issue of the financial asset or financial liability. Transaction

costs on financial assets and financial liabilities at fair value through profit or loss are expensed

immediately, while on other financial instruments they are amortised.

Subsequent to initial recognition, all instruments classified at fair value through profit or loss are

measured at fair value with changes in their fair value recognised in the statement of comprehensive

income.

Financial instruments classified as loans and receivables are carried at amortised cost using the

effective interest rate method, less impairment losses, if any.

Financial liabilities, other than those at fair value through profit or loss, are measured at amortised

cost using the effective interest rate.

(iv) Derecognition

The Trust derecognises a financial asset when the contractual rights to the cash flows from the

financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition in

accordance with AASB 139 Financial Instruments: Recognition and Measurement.

A financial liability is derecognised when the obligation specified in the contract is discharged,

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(c) Financial instruments (continued)

(v) Fair value measurement principles The fair value of financial instruments is based on valuation techniques. Where discounted cash flow

techniques are used, estimated future cash flows are based on management’s best estimates and the

discount rate used is a market rate at the end of the reporting period applicable for an instrument with

similar terms and conditions. Where other pricing models are used, inputs are based on market data

at the end of the reporting period.

The fair value of derivatives that are not exchange-traded is estimated at the amount that the

Consolidated Entity would receive or pay to terminate the contract at the end of the reporting period

taking into account current market conditions (volatility, appropriate yield curve) and the current

creditworthiness of the counterparties. Specifically, the fair value of a forward contract is determined

as a net present value of estimated future cash flows, discounted at appropriate market rates on the

valuation date.

(vi) Impairment

Financial assets that are stated at cost or amortised cost are reviewed at the end of each reporting

period to determine whether there is objective evidence of impairment. If any such indication exists,

impairment testing is carried out and an impairment loss is recognised in profit or loss as the

difference between the assets’ carrying amount and the present value of estimated future cash flows

discounted at the financial assets’ original effective interest rate.

If in a subsequent period the amount of an impairment loss recognised on a financial asset carried at

amortised cost decreases and the decrease can be linked objectively to an event occurring after the

write-down, the write-down is reversed through profit or loss.

(vii) Specific instruments

Cash and cash equivalents

Cash comprises current deposits with banks. Cash equivalents are short-term highly liquid

investments that are readily convertible to known amounts of cash, are subject to an insignificant risk

of changes in value, and are held for the purpose of meeting short-term cash commitments rather

than for investment or other purposes.

Derivative financial instruments

The Trust and Consolidated Entity use derivative financial instruments to partially hedge their

exposure to interest rate risks arising from investment activities. In accordance with its investment

strategy, the Trust and Consolidated Entity do not hold or issue derivative financial instruments for

trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as

trading instruments.

Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit

or loss when incurred.

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3. Significant accounting policies (continued) (d) Interest income and expense Interest income and expense is recognised in the statement of comprehensive income as it accrues,

using the effective interest method of the instrument calculated at the acquisition or origination date.

Interest income and expense includes the amortisation of any discount or premium, transaction costs

or other differences between the initial carrying amount of an interest-bearing instrument and its

amount at maturity calculated on an effective interest rate basis.

(e) Expenses

All expenses, including Responsible Entity, Asset management fees and Custodian fees, are

recognised in profit or loss on an accruals basis.

(f) Distribution and taxation

Distributions from the US REIT

Distributions of earnings and profits made by the Trust’s subsidiary, Mariner American Property

Income REIT, Limited (the “US REIT”) for the financial year are not taxable. Distributions that are in

excess of its earnings and profits are treated as non-taxable returns of capital to the Trust to the

extent of the Trust’s adjusted tax basis in the units of the US REIT.

Distributions made by the US REIT which are attributable to capital gains from disposal of the US properties are subject to US tax at a special rate of 35%. The Consolidated Entity recognises a deferred tax liability at 35% on the difference between the fair value of the properties and their taxcost base under the US tax regulation. The deferred tax liability is adjusted to reflect the movement in the fair value of the properties and their tax cost base. To the extent that the fair value is lower than the tax cost base no deferred tax asset is recognised.

Distributions to unitholders

Distributions from the Trust to unitholders are from available cashflows and not directly related to the

accounting profit. Distributions can be a mixture of tax deferred distributions as well as taxable income

distributions. Under current legislation the Trust is not subject to income tax as its taxable income

(including assessable realised capital gains) is distributed in full to the unitholders. The Trust fully

distributes its distributable income, calculated in accordance with the Trust Constitution and

applicable taxation legislation, to the unitholders who are presently entitled to the income under the

Constitution.

Financial instruments held at fair value may include unrealised capital gains. Should such a gain be

realised, that portion of the gain that is subject to capital gains tax will be distributed so that the Trust

is not subject to capital gains tax.

Realised capital losses are not distributed to unitholders but are retained in the Trust to be offset

against any future realised capital gains. If realised capital gains exceed realised capital losses the

excess is distributed to the unitholders.

(g) Goods and services tax

Management fees, custody fees and other expenses are recognised net of the amount of goods and

services tax (“GST”) recoverable from the Australian Taxation Office (“ATO”) as a reduced input tax

credit (“RITC”).

Payables are stated with the amount of GST included. The net amount of GST recoverable from the

ATO is included in receivables in the statement of financial position. Cash flows are included in the

statements as cash flows on a gross basis.

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3. Significant accounting policies (continued) (h) Investment properties

Investment properties comprise investment interests in land and buildings (including integral plant and

equipment) held for the purpose of letting to produce rental income or for capital appreciation or for

both. Land and buildings comprising the investment properties are considered composite assets and

are disclosed as such in the accompanying notes to the consolidated financial statements.

Investment properties acquired are initially recorded at their cost of acquisition at the date of

acquisition, being the fair value of the consideration provided plus incidental costs directly attributable

to the acquisition. Where the contracts of purchase include a deferred payment arrangement,

amounts payable are recorded at their present value, discounted at the rate applicable to the Trust if a

similar borrowing were obtained from an independent financier under comparable terms and

conditions.

Investment properties are subsequently stated at fair value with any change therein recognised in

profit or loss. Fair values are based on market values, being the estimated amount for which a

property could be exchanged on the date of valuation between a willing buyer and a willing seller in

an arm’s length transaction after proper marketing wherein the parties had each acted

knowledgeably, prudently and without compulsion.

(i) Property valuations

Valuations are undertaken internally by knowledgeable property professionals of the Investment

Manager each reporting period and external, independent valuations are obtained annually or more

frequently if Directors of the Responsible Entity are of the opinion that the market has moved

materially.

The valuations are prepared by considering the aggregate of the net annual rents receivable from the

properties and where relevant, associated costs. A yield which reflects the specific risks inherent in

the net cash flows is then applied to the net annual rentals to arrive at the property valuation.

Valuations reflect, where appropriate; the type of tenants actually in occupation or responsible for

meeting lease commitments or likely to be in occupation after letting of vacant accommodation and

the market’s general perception of their credit-worthiness; the allocation of maintenance and

insurance responsibilities between lessor and lessee; and the remaining economic life of the property.

It has been assumed that whenever rent reviews or lease renewals are pending with anticipated

reversionary increases, all notices and where appropriate counter notices have been served validly

and within the appropriate time.

Any gain or loss arising from a change in fair value is recognised in profit or loss.

(j) Other investments

The Trust’s investment in other debt and equity securities is determined by reference to their quoted

closing bid price at the reporting date, or if unquoted determined using an appropriate valuation

technique. The fair value of the Trust’s investment in the Record Realty Holdings (US) Trust (“RRT”)

has been valued by reference to the Trust’s underlying interest in the net assets of RRT. In

determining the net assets of RRT, the Trust has commissioned external valuations of RRT’s

investment properties consistent with the Trust’s own policy for valuing investment property.

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(k) Rental income

Rental income from investment properties is recognised on a straight line basis over the lease

term. Rental income not received at reporting date is reflected in the statement of financial

position as a receivable or if paid in advance within payables, as rent in advance. Lease

incentives granted are recognised as an integral part of the total rental income, over the term of

the lease, on a straight-line basis, as a reduction of lease income.

Lease incentives provided by the Consolidated Entity to lessees, and rental guarantees which

may be received from third parties (arising on the acquisition of investment property) are

excluded from the measurement of fair value of investment property and are treated as

separate assets as presented in Note 13. Such assets are amortised over the respective

periods to which the lease incentives and rental guarantees apply, either using a straight line

basis, or a basis which is representative of the pattern of benefits.

Contingent rents based on the future amount of a factor that changes other than with the

passage of time including turnover rents and CPI linked rental increases are only recognised

when contractually due.

(l) Deferred leasing and tenancy costs

Expenditure on direct leasing and tenancy costs is capitalised and written off over the lease term in

proportion to the rental revenue recognised in each financial year.

(m) Assets held for sale

Assets that are expected to be recovered primarily through sale rather than through continuing use

are classified as held for sale. Immediately before applying the classification as held for sale, the

measurement of the assets is brought up to date in accordance with applicable accounting standards.

Investment properties which are classified as held for sale are carried at fair value as the

measurement provisions of AASB 5 Non–current Assets Held for Sale and Discontinuing Operations

do not apply to investment properties.

(n) Acquisition costs

Transaction costs relating to the Trust’s investment in the Record Realty Holdings (US) Trust (“RRT”) have been expensed to profit or loss as incurred (Refer Note 6). Non-refundable deposits paid in respect of the unit sale deed and note purchase agreement have been recorded as non-current assets on the statement of financial position (Refer Note 11).

(o) Operating segments

As of 1 July 2009 the Consolidated Entity determines and presents operating segments based on the

information provided to the Chief Executive Officer (CEO) of the Investment Manager, who is the

Consolidated Entity’s chief operating decision maker.

(p) New standards and interpretations not yet adopted There are a number of standards, amendments to standards and interpretations that are effective for

annual periods beginning on or after 1 July 2011 which may impact the consolidated entity in the

period of initial application. None of these are expected to have a significant financial effect on the

consolidated financial statements of the Trust. The Trust does not intend to early adopt these

standards and the extent of their impact has not been determined.

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4. Interest income

Consolidated

2011 2010

$’000 $’000

Interest income derived from:

Cash and cash equivalents 29 261

Financial assets at fair value through profit or loss 673 -

702 261

5. Auditor’s remuneration

Consolidated

2011 2010

$ $

Auditors of the Trust – KPMG Australia:

Audit and review of the financial reports 219,398 99,944

Other regulatory audit services 10,500 10,157

Taxation services 4,000 16,870

Other services – transaction services 827,136 367,112

1,061,034 494,083

Auditors of the subsidiaries – KPMG US:

Audit and review of the financial reports 135,798 56,395

Audit and review of the financial reports of

subsidiaries under US GAAP 128,998 135,987

Taxation services 30,289 117,716

295,085 310,098

1,356,119 804,181

6. Acquisition costs

Prior to 30 June 2010, the Trust entered into a unit sale deed with the receivers of Record Realty to acquire an interest in the Record Realty Holdings (US) Trust (“RRT”), being the entity through which the RRT portfolio was held, and a note purchase agreement with UBS in respect of the subordinated debt which financed the RRT portfolio. During the current financial year the Trust acquired a 35% interest in the transaction.

RRT is an unlisted Australian property trust that owns a portfolio of commercial properties leased primarily to the US Government via the United States General Services Administration (“GSA”).

Acquisition costs relating to the acquisition and re-structuring of the agreements have been expensed to the statement of comprehensive income as incurred.

Consolidated2011 2010

$’000 $’000

Acquisition costs expensed to profit or loss - charged by Responsible Entity (Refer to Note 25) 375 698- charged by Investment Manager (Refer to Note 25) 1,642 -- charged by other parties 3,023 1,918

5,040 2,616

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7. Taxation

The Trust is subject to 35% capital gains tax on the future disposal of its investment properties. In

previous years, the Trust recognised a deferred tax liability being 35% of the difference between

the fair value in US dollars compared to the tax cost base in US dollars, translated to Australian

dollars. However, due to the diminution in value of the investment properties, the fair value is now

less than the tax cost base and as a result, no capital gains tax liability would arise. As at the

reporting date, the fair value of the investment properties remains less than the tax cost base and

no capital gains tax liability subsists.

The Trust has not recognised a deferred tax asset of $1,883,000 (2010: $2,103,000) as it is not

probable that future taxable profits will be available against which the Trust can utilise the benefit.

8. Trade and other receivables

Consolidated

2011 2010

$’000 $’000

Current

Trade receivables 572 443

GST receivable 266 79

838 522

9. Financial assets - derivative

Consolidated

2011 2010

$'000 $'000

Currency option – at fair value through profit or loss - 204

Interest rate option – at fair value through profit or loss 13 -

13 204

The fair value of the interest rate option of $13,000 is based on an external bank valuation as at 30 June 2011.

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10. (a) Cash and cash equivalents Consolidated

2011 2010

$’000 $’000

Cash held at banks 2,135 3,350

2,135 3,350

10. (b) Reconciliation of cash flows from operating activities

Consolidated

2011 2010

$'000 $'000

Loss before tax (17,273) (6,174)

Adjustments for:

Amortisation of deferred loan charges and others (178) 147

Unrealised foreign exchange loss/(gain) 2,068 (361)

Realised foreign exchange loss - 2,361

Changes in fair value of financial assets through profit or loss (11,833) 357

Lease straight-lining (1,113) (529)

Impairment of accounts receivable - (175)

Acquisition costs 5,040 2,616

Changes in fair value of investment properties 15,020 7,135

Changes in fair value of assets held for sale 2,682 -

Loss on sale of investment property 1,432 -

Borrowing costs 14,615 -

10,460 5,377

Change in assets and liabilities during the financial year:

Change in trade and other receivables and other assets 107 (3,279)

Change in trade and other payables (639) 1,838

Borrowing costs paid (13,440) -

Net cash provided by operating activities (3,512) 3,936

11. Other assets

Consolidated

2011 2010

$'000 $'000

Current

Prepaid expenses 229 235

229 235

Non-current

Property related deposits* 5,446 5,864

Acquisition costs**

- Refundable deposits paid on proposed acquisition - 464

- Non-refundable deposits paid on proposed acquisition - 11,655

- Debt and equity costs - 682

- 12,801

5,446 18,665

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11. Other assets (continued)

* Property related deposits are comprised of tenant improvement reserves, capital replacement reserves,

insurance escrows and real estate taxes escrows held in the United States.

** The acquisition of Record Realty Holdings (US) Trust by the Trust and the Saban Capital Group

became fully funded during the year ended 30 June 2011 and amounts recorded as deposits and costs

at 30 June 2010 have been transferred to Note 14: Other investments.

12. Assets held for sale – investment properties

Consolidated

2011 2010

$'000 $'000

Investment properties held for sale – at fair

value 20,984 55,126

20,984 55,126

The Investment Manager has re-commenced a sales program to dispose of the investment property at Montgomery, New York. The latest marketing campaign for this asset was commenced in July 2011 and the Investment Manager is currently negotiating to finalise the sale of this asset. If the sale of the property is concluded, proceeds will be applied to repay debt.

As at 30 June 2011

Property: N/A 191 Neelytown Rd, Montgomery,

New York

Current valuation: N/A $20,984,000

Valuation method at 30

June 2011: N/A Independent external valuation

An independent valuation of the Montgomery, New York property was conducted as at 30 June 2011

by Colliers International.

As at 30 June 2010

Property: Derry Meadows Shoppes, Derry,

New Hampshire

191 Neelytown Rd, Montgomery,

New York

Current valuation: $26,463,000 $28,663,000

Valuation method at 30

June 2010:

Letter of intent executed on 7

July 2010** Independent external valuation

** The Investment Manager based the fair value of the investment property at Derry Meadows on the

letter of intent received and executed on 7 July 2010 which was being negotiated at 30 June 2010,

but which was subsequently not taken up. The property was subsequently sold on 8 February 2011

for $20,722,450 (US$21,025,000).

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13. Investment properties

Consolidated

2011 2010

$’000 $’000

Investment properties – at fair value 190,029 258,385

190,029 258,385

A reconciliation of the carrying amount of investment properties is set out below:

Carrying amount at the beginning of the year 258,385 333,160

Lease straight-lining 1,051 529

Improvements to investment properties 1,296 535

(Loss)/gain due to foreign currency translation (55,683) (13,578)

Fair value decrement (15,020) (7,135)

Investment properties classified as held for sale* - (55,126)

Carrying amount at the end of the year 190,029 258,385

Comprising:

Deferred rental income 6,032 6,485

Fair value of properties (excluding straight-lining) 183,997 251,900

190,029 258,385

* Investment properties at Derry Meadows and Montgomery were classified as held for sale at 30

June 2010, as disclosed in Note 12.

The fair value of each property (excluding straight-lining) at 30 June 2011 is as set out in the following table. Amounts are presented in both A$ and US$ for comparative purposes.

2011 2010 2011 2010

US$’000 US$’000 A$’000 A$’000

Property

Bedford Woods 90,897 93,563 84,776 111,279

Pfingsten 16,587 17,164 15,470 20,414

Parsippany 45,000 54,800 41,970 65,176

One Centennial 28,672 30,894 26,741 36,744

Higgins 16,126 15,376 15,040 18,287

197,282 211,797 183,997 251,900

Determination of fair value

Investment properties are measured at fair value with any change therein recognised in profit or loss.

The Trust has an internal valuation process for determining the fair value at each reporting date. An

independent valuer, having an appropriate professional qualification and recent experience in the

location and category of the property being valued, values individual properties annually or more

regularly if considered appropriate and as determined by the Investment Manager in accordance with

the valuation policy approved by the Responsible Entity. These external valuations are taken into

consideration when determining the fair values, being the estimated amount for which a property could

be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length

transaction after proper marketing wherein the parties have each acted knowledgably, prudently and

without compulsion.

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13. Investment properties (continued)

Independent valuations

Independent valuations of the One Centennial and Bedford Woods properties were conducted as at 30

June 2011 by Integra Realty Resources and CB Richard Ellis respectively. All other properties were

valued as at 30 June 2011 by Colliers International.

The valuations were prepared by considering and utilising one or more of the following established valuation techniques: discounted cash flow analysis, income capitalisation such as EBITDA multiple analysis, direct comparison of valuation of similar investments, reference to recent sales transactions of the same or similar securities, and other methods as determined by the Investment Manager to arrive at the property valuation.

The key weighted average assumptions used in the independent valuations adopted by the Trust were

as follows:

30 June 2011 30 June 2010

Capitalisation rate 7.78% 7.87%

Terminal yield 7.5% - 8.5% 7.5% - 8.5%

Weighted average lease expiry 5.7 years 6.78 years

Valuations reflect, where appropriate, the type of tenants actually in occupation or responsible for

meeting lease commitments or likely to be in occupation after letting of vacant accommodation and

the market’s general perception of their credit worthiness, the allocation of maintenance and

insurance responsibilities between lessor and lessee, and the remaining economic life of the

property.

Leases as lessor

The Consolidated Entity leases out investment property under operating leases. The average lease

term across the investment properties is 5.7 years. The future minimum lease payments receivable

under non-cancellable leases are as follows:

Consolidated

2011 2010

Leases as lessor $’000 $’000

Less than one year 18,229 24,702

Between one and five years 71,711 104,114

More than five years 17,326 60,810

107,266 189,626

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14. Other investments

Consolidated

2011 2010

$’000 $’000

Non-current

Financial assets at fair value through profit or loss is represented by:

Investment in RRT 38,425 -

Preferred redeemable equity units in SGSA II 979 -

Investment in SGSA II 9

39,413 -

and the movement in carrying amount is reconciled as follows:

Carrying amount at beginning of year - -

Transferred from other assets (see Note 11) 12,801 -

Additional cost of investment 17,195 -

Acquisition costs written-off (722) -

Change in fair value of financial assets at fair value

through profit or loss 11,833 -

Loss due to foreign currency translation (1,694) -

39,413 -

RRT is an unlisted Australian property trust that owns a portfolio of commercial properties leased primarily to the US Government via the United States General Services Administration (“GSA”).

15. Trade and other payables

Consolidated

2011 2010

$’000 $’000

Current

Payable to the Responsible Entity 29 107

Payable to the Investment Manager 232 62

Trade payables 1,598 2,452

Tenants’ security deposits 137 242

Rent received in advance 1,437 2,079

Accrued real estate taxes 1,331 1,786

Accrued interest payable 1,380 205

Other accruals 150 -

6,294 6,933

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16. Loans and borrowings

Consolidated

2011 2010

$’000 $’000

Current

Bank loans – secured 49,371 164,760

49,371 164,760

Non-Current

Bank loans – secured 108,969 70,344

Deferred charges (932) (1,073)

108,037 69,271

Total loans and borrowings 157,408 234,031

Terms and conditions

Whilst not present in all of the current loans, there are loan to value ratios and interest cover ratios

covenants applicable to the Commonwealth Bank of Australia (“CBA”) facilities for the Bedford

Woods, Montgomery and Pfingsten properties.

The Bedford Woods, Pfingsten and Montgomery facilities are financed by loans from CBA and

Pearlmark Real Estate Partners (formerly Transwestern Realty Partners) which expire on 6 August

2012. The loans have a combined maximum loan to value ratio of 60% and minimum interest cover

ratios of 1.75 times; each ratio is tested across the Bedford Woods, Pfingsten and Montgomery

properties. In addition the three properties must maintain a weighted average lease expiry of 4.5

years or more, and are also cross-collateralised.

The debt maturity profile is as follows:

Property Loan maturity date Rate LVR $'000

Current liabilities

Parsippany 11 January 2011 Fixed 8.35% - 35,674

Montgomery 6 August 2012* Floating 4.7458% 54% 10,259

Mezzanine debt 6 August 2012* Fixed 13.00% - 3,438

49,371

Non-current liabilities

Bedford Woods 6 August 2012 Floating 4.7458% 54% 49,021

Pfingsten 6 August 2012 Floating 4.7458% 54% 8,804

Mezzanine debt 6 August 2012 Fixed 13.00% - 10,329

One Centennial 1 May 2015 Fixed 5.36% - 24,960

Higgins 1 March 2017 Fixed 6.25% - 15,855

108,969

The above facilities are fully drawn. 158,340

* - classified as current liability as related property held for sale and classified as current asset

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16. Loans and borrowings (continued)

Loan breaches and defaults

The Derry Meadows loan matured on 1 October 2010 and went into default. Although the loan term

was subsequently extended to 1 April 2011, the property was sold on 8 February 2011 and the loan

extinguished.

The Parsippany loan matured on 11 January 2011. The Investment Manager is presently negotiating

the terms of a forebearance agreement and loan extension with the loan servicer. The Investment

Manager is simultaneously seeking to re-finance the Parsippany loan on a long-term basis together

with loans in respect of the Bedford Woods, Pfingsten and Montgomery properties which all mature in

August 2012. Whilst there are no assurances that the Trust will be able to obtain an extension to or

re-finance the Parsippany property loan, the sale of the property at fair value would be likely to realise

sufficient funds to extinguish the loan. It is noted that the loan is recourse only to the Parsippany

property and does not impact upon other operations of the Trust.

During the financial year, the Consolidated Entity breached the interest cover ratio for the combined

CBA facilities (Bedford Woods, Pfingsten and Montgomery) for the reporting period to 31 December

2010 and the covenant to provide audited financial statements for the relevant entities. The

Consolidated Entity was granted a waiver from CBA in relation to these breaches.

Other than the breaches and defaults noted above, there have been no breaches of loan covenants.

17. Distributions paid and payable

2011 2010

$’000

Cents

per unit $’000

Cents per

unit

September distribution paid - - 2,209 0.95

December distribution paid - - 2,871 0.95

March distribution paid - - 1,511 0.50

June distribution payable (paid in July 2010) - - 1,814 0.60

- - 8,405 3.00

The Investment Manager advised unitholders in September 2010 that it was aligning the Trust’s

distribution policy from quarterly to half-yearly distributions, and deferring distributions to preserve

capital pending completion of the Record Realty Holdings (US) Trust transaction.

The Directors of the Responsible Entity do not recommend the payment of a distribution.

18. Financial liabilities - derivatives

Consolidated

2011 2010

$’000 $’000

Interest rate swaps - cash flow hedge - 1,784

- 1,784

The interest rate swaps expired during the financial year and have a value of $Nil.

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19. Capital and reserves Capital management

The objective of the Trust is to provide unitholders with returns in accordance with the Product

Disclosure Statement (“PDS”) and subsequent market announcements, including the announcement

made on 1 March 2011 in connection with the $37 million capital raising (“Subsequent

announcements”). The Investment Manager aims to deliver this objective mainly through investing

in a diversified portfolio in accordance with the limitations set by the PDS. The Investment Manager

will also use derivatives to partially hedge its exposure to interest rate and foreign currency risks (see

Note 20).

Funds have been raised in prior years via loans and equity in order to raise investible funds. The

Investment Manager strives to invest in products that meet the Trust’s investment objectives while

maintaining sufficient liquidity to meet unitholders’ obligations.

The Responsible Entity has focused on creating a stable platform that can restore working capital

and deliver future growth. As part of this stabilisation process, the Trust raised $3,173,000 via a

placement to institutional and sophisticated private investors in December 2010, and $37,000,000

through an entitlements offer in March 2011.

Issued capital

The movement in the Trust’s issued capital during the year is shown below:

2011 2010

No. of units $’000 No. of units $’000

Opening balance 302,256,791 201,658 203,530,545 188,173

Units issued – placement 45,328,570 3,173 28,974,997 4,346

Units issued – entitlements offer 672,727,273 37,000 - -

Units issued – unit purchase plan - - 69,751,249 10,407

Issue costs paid - (3,964) - (1,268)

20:1 consolidation (969,296,040) - - -

Closing balance 51,016,594 237,867 302,256,791 201,658

Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the

financial statements of foreign operations. The balance of the translation reserve at 30 June 2011

was ($25,977,000) (30 June 2010: ($8,865,000)).

Hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of

cash flow hedging instruments related to hedged interest rate risk. The balance of the hedging

reserve at 30 June 2011 was ($305,000) (30 June 2010: ($1,784,000)).

20. Financial instruments The Consolidated Entity’s investing activities expose it to various types of risk that are associated

with the financial instruments and markets in which it invests. The most important types of financial

risks to which the Trust is exposed are market risk, credit risk and liquidity risk. Asset allocation is

determined by the Trust’s Investment Manager who manages the distribution of the assets to achieve

the investment objectives. Divergence from target asset allocations and the composition of the

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20. Financial instruments (continued)

portfolio is monitored by the Trust’s Investment Manager. The nature and extent of the financial

instruments outstanding at the end of the reporting period and the risk management policies

employed by the Consolidated Entity are discussed below.

Market risk

Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates

and equity prices will affect the Consolidated Entity’s income or value of its holdings of financial

instruments. The objective of market risk management is to manage and control market risk

exposures within acceptable parameters.

The strategy on the management of investment risk is driven by the Trust’s investment objective.

The market risk is managed on a daily basis by the Investment Manager in accordance with the

investment guidelines as outlined in the Trust’s PDS and subsequent announcements.

Currency risk

The Trust is exposed to exchange rate fluctuations on its investments in the United States, since its

US investment is denominated in AUD. The US REIT invests in properties in the US acquired with

USD loans which provide a natural hedge.

As at the reporting date, the Trust’s total gross exposure to financial assets and liabilities which are

held in foreign currency exchange rates at the end of the reporting period was as follows:

Consolidated 2011 2010

AUD USD* AUD USD*

Financial assets and liabilities $’000 $’000 $’000 $’000

Cash and cash equivalents 16 2,119 795 2,555

Receivables and other assets 661 46,190 3,113 16,309

Payables (1,237) (5,058) (625) (6,308)

Loans and borrowings - (157,408) - (234,031)

Interest rate swaps, at fair value - 13 - (1,784)

Distribution payable - - (1,814) -

Currency options - - 1,370 -

Gross statement of financial

position exposure (560) (114,144) 2,839 (223,259)

* These amounts are expressed in AUD but represent financial instruments that are denominated in

USD and converted to AUD on consolidation.

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Sensitivity analysis

A 10% strengthening of the AUD against the USD at 30 June 2011 would have increased/ (decreased)

equity and profit or loss by the amount shown below. This analysis assumes that all other variables, in

particular interest rates, remain constant. A similar analysis is performed on the same basis for 2010.

Consolidated

Equity

Profit or

loss

$’000 $’000

30 June 2011

USD (8,821) 1,487

30 June 2010

USD 20,353 502

A 10% weakening of the AUD against the USD at 30 June 2011 would have had the following effect

on the basis that all other variables remain constant.

Consolidated

Equity

Profit or

loss

$’000 $’000

30 June 2011

USD 10,782 (1,818)

30 June 2010

USD (24,895) (632)

Interest rate risk

The US REIT has floating rate mortgage loans of A$68,084,000 that mature in 2012. Of the balance

of the Trust’s total loans of $157,408,000, $89,324,000 are fixed interest rate loans.

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Interest rate risk (continued)

Exposures arise predominantly from assets and liabilities bearing variable interest rates. The

Consolidated Entity’s exposure to interest rate risk is set out in the following table. For interest rates

applicable to each class of asset or liability refer to individual notes to the financial statements.

As at the reporting date, the interest rate profile of the Consolidated Entity’s interest bearing

instruments was:

Consolidated

Carrying amount

2011 2010

$’000 $’000

Variable rate instruments

Cash and cash equivalents 2,135 3,350

Interest rate swaps, at fair value - (1,784)

Floating rate loans and borrowings (68,084) (104,977)

Interest rate option, at fair value 13 -

Interest rate swaps, notional amounts - 113,291

(65,936) 9,880

Fixed rate instruments

Loans and borrowings (89,324) (130,127)

Sensitivity analysis

Fair value sensitivity analysis for fixed rate instruments

The Consolidated Entity does not account for any fixed rate financial assets and liabilities at fair value

through profit or loss. Therefore a change in interest rates at the reporting date would have a nil

impact on profit or loss and equity.

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased/(decreased)

equity and profit or loss before tax by the amounts shown below.

Profit or loss Equity

100bp

increase

100bp

decrease

100bp

increase

100bp

decrease

$’000 $’000 $’000 $’000

2011

Variable rate financial instruments

Cash and cash equivalents 21 (21) - -

Loans and borrowings (681) 681 - -

Cash flows sensitivity (net) (660) 660 - -

2010

Variable rate financial instruments

Cash and cash equivalents 33 (33) - -

Loans and borrowings (1,050) 1,050 - -

Interest rate swaps, notional amounts 1,133 (1,133) 347 (438)

Cash flows sensitivity (net) 116 (116) 347 (438)

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20. Financial instruments (continued) Price risk

As the Consolidated Entity does not hold any openly marketed equity investments at the reporting

date, market price is not applicable.

Liquidity risk

Liquidity risk is the risk that the Consolidated Entity will not be able to meet its financial obligations as

they fall due. The Consolidated Entity’s approach to managing liquidity is to ensure, as far as

possible, that it will always have sufficient liquidity to meet its liabilities when due without incurring

unacceptable losses or risking damage to the Consolidated Entity’s reputation. The Consolidated

Entity’s liquidity risk is monitored on a monthly basis by the Investment Manager.

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20. Financial instruments (continued) Liquidity risk (continued)

The table below presents cash flows on financial liabilities payable by the Consolidated Entity by

remaining contractual maturities at the end of the reporting period. The amounts disclosed are the

contractual, undiscounted cash flows:

Maturity

Carrying

amount

Contractual

cashflow

6 months

or less

6-12

months

12-24

months

More

than 24

months

$'000 $'000 $'000 $'000 $'000 $'000

2011

Financial liabilities

Payables (6,294) (6,294) (6,294) - - -

Loans and

borrowings (157,408) (174,642) (39,379) (3,665) (84,689) (46,909)

(163,702) (180,936) (45,673) (3,665) (84,689) (46,909)

2010

Financial liabilities

Payables (6,933) (6,933) (6,933) - - -

Loans and

borrowings (234,031) (256,005) (168,828) (1,874) (21,712) (63,591)

Derivative liabilities (1,784) (2,054) (1,832) (222) - -

Distribution payable (1,814) (1,814) (1,814) - - -

(244,562) (266,806) (179,407) (2,096) (21,712) (63,591)

The tables below indicate the periods in which the cash flows associated with derivatives that are cash

flow hedges are expected to occur and to impact profit or loss:

Maturity

Carrying

amount

Contractual

cashflow

6 months or

less

6-12

months

12-24

months

More

than 24

months

$'000 $'000 $'000 $'000 $'000 $'000

2011

Derivative liabilities (net) - - - - - -

- - - - - -

2010

Derivative liabilities (net) (1,784) (2,054) (1,832) (222) - -

(1,784) (2,054) (1,832) (222) - -

Refer to Note 2(b) Going concern for further discussion on liquidity risk.

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or

commitment that it has entered into with the Consolidated Entity. The Consolidated Entity has a

credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The carrying

amounts of financial assets best represent the maximum credit risk exposure at the end of the

reporting period. There were no significant concentrations of credit risk to counterparties at 30 June

2011. There are no financial assets that are past due or impaired which are considered to have

significant credit risk.

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Credit risk (continued)

The exposure to credit risk is set out below:

Consolidated

Credit Rating 2011 2010

$’000 $’000

Cash and cash equivalents A-1 1,863 2,005

Cash and cash equivalents A-2 54 319

Cash and cash equivalents A-1+ 218 865

Cash and cash equivalents Not rated - 161

2,135 3,350

Receivables and other assets N/A 7,438 19,422

Derivatives A-1+ 13 204

9,586 22,976

Consolidated

2011 2010

Concentration of credit risk by geographical areas $’000 $’000

USA 8,910 18,863

Australia 676 4,113

9,586 22,976

Impairment losses

There is no impairment in the current financial year.

Gross Impairment Gross Impairment

2011 2011 2010 2010

$’000 $’000 $’000 $’000

Not past due - - 540 18

Past due 31-120 days - - 38 38

Past due 121 days to one year - - 88 88

More than one year - - 210 210

- - 876 354

The movement in the allowance for impairment in respect of trade receivables during the year was as

follows:

2011 2010

$’000 $’000

Balance at 1 July 354 529

Impairment reversal (354) (175)

Balance at 30 June - 354

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20. Financial instruments (continued) Specific Instruments

Derivatives

At 30 June 2011 and 2010, the Consolidated Entity’s holdings in derivatives translated into AUD were

as specified in the table below:

Type of contract Expiration Underlying Notional

amount of

contracts

outstanding

Fair

value

(assets)

Fair value

(liabilities)

$ ‘000 $ ‘000 $ ‘000

As at 30 June 2011

Other derivatives

Interest rate options 6 August 2012 Interest rates 13 13 -

13 13 -

The Trust has entered into an interest rate option to limit 3 month LIBOR floating interest rate

exposure. This option matures on 6 August 2012.

Type of contract Expiration Underlying Notional

amount of

contracts

outstanding

Fair

value

(assets)

Fair value

(liabilities)

$ ‘000 $ ‘000 $ ‘000

As at 30 June 2010

Cash flow hedge

derivatives

Interest rate swap –

REIT Bedford

30 September

2010 Interest rates 81,399 - 1,029


REIT Pfingsten 16 October 2010 Interest rates 13,772 - 171


REIT Montgomery 30 March 2011 Interest rates 18,120 - 584

113,291 - 1,784

Other derivatives

Foreign currency options 12 July 2010

Exchange

rates 1,370 204 -

114,661 204 1,784

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Estimation of fair value

The major methods and assumptions used in estimating the fair values of financial instruments are

disclosed in Note 3(c). The fair value of the following financial instruments determined using valuation

techniques are as follows:

Consolidated 2011 2010

Carrying amount Fair value Carrying

amount

Fair value

$'000 $'000 $'000 $'000

Derivative assets 13 13 204 204

Derivative liabilities - - (1,784) (1,784)

Fixed loans and

borrowing (89,324) (94,613) (130,127) (134,412)

(89,311) (94,600) (131,707) (135,992)

The carrying amount of all financial assets and liabilities as at 30 June 2011 and 30 June 2010 were

considered to approximate their fair value, except for fixed rate loans as shown above.

Interest rates used for determining fair value

The interest rates used to discount estimated cash flows are based on the government yield curve at

the reporting date plus an appropriate credit spread, and were as follows:

Consolidated

2011 2010

% %

Derivatives 0.25% 0.55%

Loans and borrowings 3.69% 3.76%

Fair value measurements recognised in the statement of financial position

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

• Level 1 fair value measurements are those instruments carried at fair value based on quoted prices in the active markets for identical assets or liabilities;

• Level 2 fair value measurements are those instruments valued based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

• Level 3 fair value measurements are those instruments valued based on inputs for the asset or liability that are not based on observable market data.

Consolidated Level 1 Level 2 Level 3 Total$’000 $’000 $’000 $’000

30 June 2011

Financial assets at fair value through profit or loss: - - 39,413 39,413Derivatives financial instruments - 13 - 13

- 13 39,413 39,426

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21. Earnings per unit

The calculation of basic loss per unit at 30 June 2011 was based on the loss attributable to

unitholders of the Trust of $17,273,000 (2010 loss: $6,174,000) and a weighted average number of

units outstanding of 24,303,850 (2010: 13,760.872), calculated as follows:

2011 2010

$ $

Net loss attributable to unitholders of the Trust (17,273,000) (6,174,000)

2011 2010

Weighted average number of units (basic)

In units

Issued units at 1 July 15,112,840 10,176,527

Effect of units issued 9,191,010 3,584,345

Weighted average number of units at 30 June 24,303,850 13,760,872

Diluted earnings per unit

As there are no diluting factors in the year and comparative years, the diluted loss per unit is equal to

the basic.

Comparative figures

Comparative figures on the consolidated statement of comprehensive income have been adjusted to

retrospectively apply the 20:1 consolidation on 10 May 2011 in accordance with the requirements of

AASB 133: Earnings per share.

22. Operating segments

The main business of the Consolidated Entity is investment in property which is leased to third parties.

The property investments are located in various states in the United States of America.

The Consolidated Entity has two reportable segments, based on the geographical location of each

segment. Information regarding the results of each reportable segment is included below.

Performance is measured based on segment profit or loss after income tax as included in the internal

management reports that are reviewed by the Chief Executive Officer (“CEO”) of the Investment

Manager. Segment profit is used to measure performance as management believes that such

information is the most relevant in evaluating the results of certain segments relative to other entities

that operate within these industries.

The amounts set out on the following page are expressed in AUD but represent amounts that are

denominated in USD and converted to AUD on consolidation.

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22. Operating segments (continued)

United States

of America

Australia Total

$’000 $’000 $’000

Consolidated Entity – 2011

External revenues 26,184 - 26,184


Net loss on foreign exchange - (2,045) (2,045)

Other income 305 - 305

Total income 26,491 (1,345) 25,146

Borrowing costs 13,078 1,537 14,615

Other operating expenses 13,402 7,101 20,503

Total expenses 26,480 8,638 35,118

Change in fair value of financial assets at fair

value through profit or loss 11,833 - 11,833

Changes in fair value of investment properties (17,702) - (17,702)

Loss on sale of investment property (1,432) - (1,432)

Loss before income tax (7,290) (9,983) (17,273)

Income tax - - -

Loss after income tax (7,290) (9,983) (17,273)

Segment assets 219,731 40,281 260,012

Segment liabilities 162,466 1,236 163,702

United States

of America

Australia Total

$’000 $’000 $’000

Consolidated Entity – 2010

External revenues 33,729 - 33,729


Net gain on foreign exchange - (1,530) (1,530)

Other income 166 - 166

Total income 33,902 (1,276) 32,626

Borrowing costs 13,809 27 13,836

Other operating expenses 13,730 4,099 17,829

Total expenses 27,539 4,126 31,665

Changes in fair value of investment properties (7,135) - (7,135)

Loss before income tax (772) (5,402) (6,174)

Income tax benefit - - -

Loss after income tax (772) (5,402) (6,174)

Segment assets 324,275 13,294 337,569

Segment liabilities 242,079 2,483 244,562

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23. Parent entity

As at, and throughout, the financial year ending 30 June 2011 the parent entity (“Parent Entity”) of

the Consolidated Entity was the Trust.

2011 2010

Results of the Parent Entity $‘000 $’000

Loss for the year (25,286) (1,121)

Other comprehensive income (7,619) 689

Total comprehensive loss for the year (32,905) (432)

Financial position of the Parent Entity at year end 2011 2010

$’000 $’000

Current assets 867 16,982

Total assets 97,545 99,178

Current liabilities 1,235 3,555

Total liabilities 1,235 3,555

Total equity of the Parent Entity comprising of: 2011 2010

$’000 $’000

Issued capital 237,867 201,658

Reserves (6,086) 1,534

Accumulated losses (135,471) (110,185)

Total equity 96,310 93,007

24. Group Entities

Consolidated Entity

Interest

Parent Entity

Class of units 30 June

2011

%

30 June

2010

%

Real Estate Capital Partners USA Property Trust

��

Mariner American Property Income REIT, Limited Ordinary 99.9 99.9

��

Mariner Parsippany 1515 LLC Ordinary 100 100

Mariner Derry Meadows LLC Ordinary 100 100

Mariner Bedford Woods LLC Ordinary 100 100

Mariner Montgomery Terminal LLC Ordinary 100 100

Mariner Higgins LLC Ordinary 100 100

Mariner One Centennial LLC Ordinary 100 100

Mariner 111 Pfingsten LLC Ordinary 100 100

�� Ordinary 100 -



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24. Group entities (continued)

The parent entity is incorporated in Australia whilst the controlled entities are incorporated in the USA.

Mariner American Property Income REIT Limited also has preferred units on issue held by external

parties. Overall, Real Estate Capital Partners USA Property Trust owns 99.9% of the issued capital of

Mariner American Property Income REIT Limited.

There are no significant restrictions which restrict the ability of the controlled entities to transfer funds

to the parent by way of cash distributions or loan repayments.

25. Related parties

Parties are considered to be related if one party has the ability to control the other party or exercise

significant influence over the other party in making financial or operational decisions or is part of the

key management of the Trust. Related party transactions are transfers of resources, services or

obligations between related parties and the Trust, regardless of whether a price has been charged.

Real Estate Capital Partners Managed Investments Limited (the “Responsible Entity”) and its related

parties (including The Trust Company Limited Group), Real Estate Capital Partners Management Pty

Limited (the “Investment Manager”) and RCU Services Inc (the “US Asset Manager”) are considered

to be related parties of the Trust. Real Estate Capital Partners Pty Limited (the parent company of

Real Estate Capital Partners Management Pty Limited and RCU Services Inc.) is also considered to

be a related party of the Trust.

Key management personnel

The Trust does not employ personnel in its own right. However it is required to have an incorporated

Responsible Entity to manage the activities of the Trust and this is considered the Key Management

Personnel (“KMP”). The Directors of the Responsible Entity at any time during the financial year were

as follows:

John Atkin Michael Britton

David Grbin Vicki Allen (Resigned 8 March 2011)

Sally Ascroft (Alternate Director for David Grbin for the period 24 June 2010 to 1 August 2010)

(Alternate Director for Michael Britton for the period 31 March 2011 to 24 June 2011)

Remuneration expenses of the Directors of the Responsible Entity are the responsibility of the

Responsible Entity and are not borne by the Trust.

The Trust has not made, guaranteed or secured, directly or indirectly, any loans to the Responsible

Entity or its key management personnel or their personally related entities at any time during the

reporting period.

Unit holdings of the Responsible Entity and its key management personnel

At 30 June 2011 neither the Responsible Entity or its key management personnel held units in the

Trust (2010: Nil).

Unit holding of Investment Manager

As at 30 June 2011 the parent company of the Investment Manager held 500,000 (2010: Nil) units in

the Trust.

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25. Related parties (continued)

��

As at 30 June 2011 the Trust held no investments in the Responsible Entity, the Investment Manager

or their associates.

Responsible Entity fees, related party fees and other transactions

Except as disclosed in these consolidated financial statements, no Director of the Responsible Entity

has received or become entitled to receive any benefit because of a contract made by the

Responsible Entity or a related entity with a Director or with a firm of which a Director is a member or

with an entity of which a Director of the Responsible Entity has a substantial interest.

All transactions with related parties are conducted on normal commercial terms and conditions.

2011

$

2010

$

Transactions with related parties - Consolidated

Responsible entity fees

- management fees 165,420 299,334

(see i below) 165,420 299,334

US Asset Manager management fees

- asset management fees 486,627 325,305

- administration fees 1,203,290 1,290,697

(see ii below) 1,689,917 1,616,002

Management expense recovery fees

- charged by the Responsible Entity (on

account of and paid to the Investment

Manager)

585,718 299,370

- charged by the US Asset Manager 277,852 -

(see iii below) 863,570 299,370


of Record Realty (US) Trust acquisition

- charged by the Responsible Entity 375,000 698,140

- charged by the Investment Manager 1,642,087 -

(see iv below) 2,017,087 698,140


of $37,000,000 capital raising

- charged by the Responsible Entity 125,000 -


(see v below) 273,037 -

Debt arrangement fee


(see vi below) 450,000 -

Property sale fee

- charged by the US Asset Manager (a

related party of the Investment Manager)

212,279 -

(see vii below) 212,279 -

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2011

$

2010

$

Balances outstanding with related parties - Consolidated

Included in payables:

- to the Responsible Entity

- Responsible Entity fees - 45,512

- Expense recovery fees 29,358 61,128

29,358 106,640

- to the US Asset Manager

- Asset management fees 38,815 54,217

- Administration fees 116,445 111,146

- Expense recovery fees 76,329 -

231,589 165,363

i Responsible entity management fees are calculated at 0.2% of the Trust’s average net assets

(paid on a monthly basis). A prepayment of $73,476 was paid to the Responsible Entity for

management fees bringing the total paid for the year to $238,896. The Responsible Entity fees

have been included in Responsible Entity fees in the consolidated statement of comprehensive

income. By agreement between the Investment Manager and the Responsible Entity, the

responsible Entity retains a fee based on 0.08% of the gross assets (plus expenses properly

incurred) and the balance of the Responsible Entity fees, asset management fees and expense

recovery fees are paid to the Investment Manager).

ii Asset management and administration fees are calculated on 2.0% (1.0% of gross assets after

1 January 2011) of the net and 3.0% of the gross income of the USA REIT respectively, and

are included in asset management fees in the consolidated statement of comprehensive

income.

iii Management expense recovery fees have been included in other operating costs in the


iv Expenses paid in respect of the Record Realty (US) Trust acquisition are included in acquisition

costs; see Note 6 for further details.

v Capitalised to issue costs; refer Note 19.

vii This fee was paid for the management and co-ordination of the re-financing of 3 US properties

and was calculated in accordance with the Constitution at 0.5% of the amount re-financed.

These fees are included within borrowing costs in the consolidated statement of comprehensive

income.

vii This was paid to the US Asset Manager for the sale of the Derry Meadows property. The fee is

included in the determination of the loss on sale of investment property costs in the


Director of Investment Manager transactions

During the financial year the Trust entered into and repaid a subordinated loan agreement with a

Director of Real Estate Capital Partners Management Pty Limited, the Investment Manager of the

Trust for $1,466,000 (US$1,500,000) at an interest rate of 12% per annum to assist in the closing of

the RRT transaction. An establishment fee of $293,000 (US$300,000) was paid upon repayment of

the loan.

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Changes to fee structure

The Investment Manager announced to the Australian Securities Exchange (“ASX”) on 16 June 2011

(and which became effective from 16 July 2011) changes to its fees for acting as Investment Manager

of the Trust

Unitholders should refer to the ASX announcement for details of the changes.

26. Capital commitments

As at 30 June 2011 the Consolidated Entity had outstanding capital commitments of $173,000 all due

within the next twelve months (30 June 2010: $1,651,000).

27. Contingencies

The Consolidated Entity and the Trust have no contingent assets or contingent liabilities at 30 June

2011 (30 June 2010: Nil).

28. Events subsequent to reporting date

There has not arisen in the interval between the end of the financial year and the date of this report

any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of

the Responsible Entity, to affect significantly the operations of the Consolidated Entity, the results of

those operations, or the state of affairs of the Consolidated Entity, in future financial years.

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Corporate governance statement

General principles The Directors of Real Estate Capital Partners Managed Investments Limited (“the Responsible Entity”) as Responsible Entity of Real Estate Capital Partners USA Property Trust ARSN 114 494 503 (“RCU” or “the Trust”) consider that good quality corporate governance practices provide the framework for effective systems and business operations to deliver utmost value to the Trust’s unitholders and other stakeholders. The Responsible Entity’s role is to act in the best interests of the unitholders of the Trust.

The Responsible Entity is wholly-owned by The Trust Company Limited (“The Trust Company”). The operations of the Trust are governed by the:

• The Constitution; • Corporations Act 2001;

• ASX Listing Rules ; • Compliance Plan; • Relevant services agreements; and • General law.

The Responsible Entity is responsible for the Trust’s overall operation and administrative functions including the:

• preparation of financial statements, notices and reports; and • monitoring of the Trust’s service providers including registry, asset management and

custody.

Structure

Pursuant to the Investment Management Agreement between the Responsible Entity and Real Estate Capital Partners Management Pty Limited (“the Investment Manager”), the Investment Manager is responsible for the performance of certain management services for the Responsible Entity in respect of the Trust including:

• Asset surveillance; • Monitoring of existing asset hedges of the Trust portfolio; • Execution of any Sale of Assets in accordance with the restriction outlined in restructure

documents; • Monthly net tangible assets (“NTA”) calculations; and • Reporting to the Responsible Entity.

ASX Corporate Governance Principles

As a listed entity and a managed investment scheme, the Trust is also required to comply with the ASX Listing Rules and provide a statement in its annual report disclosing the extent to which the Responsible Entity has complied with the ASX Corporate Governance Council recommendations.

Below, the Responsible Entity addresses each of the eight principles for the year to 30 June 2011.

Principle 1: Lay solid foundations for management and oversight Role of the board and management

The structure and role of the boards of the Responsible Entity and of any of the relevant appointed service providers are designed to provide maximum value to investors in terms of ensuring appropriate oversight of their relevant activities.

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Corporate governance statement (continued)Principle 1: Lay solid foundations for management and oversight (continued) Role of the board and management (continued)

The Responsible Entity has a constitution which sets out, amongst other things, the appointment and removal procedures for Directors, board meeting requirements and remuneration policies. Internal procedures have been developed for:

• monitoring business risk; • appropriate oversight of business units; • compliance with regulatory requirements, scheme compliance plan and constitution; and • monitoring of third party service providers.

The Responsible Entity’s Directors, along with management, have the role of ensuring that the Responsible Entity complies with its obligations as Responsible Entity for the Trust. The board (“Board”) meets monthly to consider client activities of the Responsible Entity and any relevant compliance matters. The Responsible Entity’s management elevates relevant compliance matters to its Audit, Risk & Compliance Committee (“ARCC”).

The Responsible Entity is accountable to unitholders. In addition, The Responsible Entity is responsible for the Trust’s overall operation, its regulatory and compliance obligations, and its administrative functions.

The Responsible Entity regularly reviews and monitors the performance of the Trust’s affairs and activities so that they are conducted in the best interest of unitholders.

These functions include:

• maintaining high ethical and business standards; • ensuring the preparation, review and approval of annual and half yearly financial statements,

preparation of notices and reports to unitholders, ASX and other regulators; • consultation with the Investment Manager; • monitoring and responsibility for certain specialist external service providers to assist the

Responsible Entity from time to time in the proper, efficient and timely delivery of services; • compliance with a constitution that sets out amongst other things the appointment and removal

procedures for the Directors, meeting rules and requirements and disclosure procedures; • maintaining internal procedures for monitoring business risk and ensuring appropriate oversight

of the Trust’s compliance plan and constitution; • empowering management of the Responsible Entity to report compliance matters relating to the

Trust to the Board and ARCC; • The Trust Company as the parent of the Responsible Entity, providing Executive Directors,

responsible managers and company secretarial functions for the Responsible Entity. Those Directors along with internal management have the ongoing task of ensuring the Responsible Entity complies with its obligations as Responsible Entity for The Trust; and

• ensuring all available relevant information in connection with the Trust is discussed at meetings of the Board.

Principle 2: Structure the board to add value

Both the Responsible Entity and the Investment Manager add value through being completely independent of each other with no common Directors and no related party interests between the two entities. This ensures no conflicts of interest when discretionary decisions are required of either entity.

The Responsible Entity currently has three Executive Directors which meet monthly to consider the operational activities, and financial performance of the Responsible Entity’s business. The Directors are provided by the Responsible Entity’s ultimate parent, The Trust Company.

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Corporate governance statement (continued)Principle 2: Structure the board to add value (continued)

The procedures for selecting a Chairman, powers of the Board, appointment, removal and remuneration of Directors, Board meeting requirements and other related matters are set out in the Responsible Entity's constitution.

New Directors are fully briefed on the terms and conditions of their appointment by The Trust Company executives and undertake an induction program to familiarise themselves with the Responsible Entity and its business operations.

As each Director of the Responsible Entity is an executive of The Trust Company, the ARCC is comprised of a majority of external members (non-executives of The Trust Company) and has been established to meet the requirements of Chapter 5C of the Corporations Act 2001. In addition, the independence of the external members meets the requirements of section 601JA (2) of theCorporations Act 2001. The Trust Company has structured itself so that the Responsible Entity’s role as Responsible Entity for the Trust adds real value through its focus on compliance with the regulatory requirements and its overarching responsibility to act in the best interests of unitholders.

Principle 3: Promote ethical and responsible decision-making

The Responsible Entity is committed to maintaining the highest standards of integrity with respect to its role as the Responsible Entity and seeks to ensure all its activities in regard to the Trust are undertaken with efficiency, honesty and fairness. The Responsible Entity has various policies and procedures in addition to a Code of Conduct and Share Trading Policy that apply to all Directors and employees without exception. All codes and policies are designed to promote integrity, responsibility, accountability and adherence to relevant legislation. They apply to the Directors and officers of the Responsible Entity as a member of The Trust Company group and Responsible Entity for the Trust.

Principle 4: Safeguard integrity in financial reporting

The Responsible Entity has engaged the Investment Manager to assist in the preparation of the half year and annual financial statements for the Trust. These financial statements are audited or reviewed by an external auditor whose report is provided to the Responsible Entity’s Board. The current auditor is KPMG.

The Responsible Entity meets with the Investment Manager and the external auditor to discuss the audit plan and scope prior to each financial year end. The financial statements and audit report are tabled for the Board’s consideration and approval.

The Responsible Entity reviews the financial statements and provides formal statements to the Board confirming that the Trust’s financial reports present a true and fair view, in all material aspects, of the Trust’s financial condition, and that operational results are in accordance with the Trust’s constitution and relevant accounting standards. In addition, it confirms that the statements are founded on a sound system of risk management and internal compliance and control which implements policies adopted by the Board.

Principal 5: Make timely balanced disclosure

The Responsible Entity has continuous disclosure procedures to ensure the Trust’s compliance with ASX Listing Rules and the Corporations Act. Service providers to the Trust under outsourcing arrangements are required to adhere to the ASX Listing Rules in terms of continuous disclosure requirements and must report to the Responsible Entity instances where a disclosure obligation is required. The Responsible Entity has procedures in place to monitor the compliance of service providers with these requirements. The Company Secretary of the Responsible Entity is responsible for disclosures to the ASX in relation to the continuous disclosure obligations of the Trust.

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Corporate governance statement (continued) Principle 6: Respect the rights of unitholders

The Responsible Entity is committed to providing timely and accurate information concerning the Trust to its unitholders. The Trust’s compliance plan and constitution further set out the Responsible Entity’s obligations and the rights of unitholders in this regard.

The Annual Report of the Trust comprising the financial statements, Directors’ report, Directors’ declaration and independent auditor’s report is sent to unitholders each year. The Annual Report includes the ASX Listing Rule disclosure requirements and although registered schemes are not required to hold meetings of unitholders, the constitution of the Trust provides for such meetings if and when required.

Under the Investment Management Agreement, the Investment Manager is required to ensure any actions or decisions it makes does not breach the terms of the Trust’s constitution or any relevant law or transaction document in relation to the Trust which could adversely affect rights of unitholders.

Principle 7: Recognise and manage risk

Under the Investment Management Agreement the Investment Manager is required to:

• ensure that it regularly and adequately trains its representatives and agents so that they have the necessary competencies to deliver the services required;

• establish and maintain adequate risk management systems; • use its best endeavours to ensure that it complies with any legislative requirements directly

applicable to the Investment Manager and its activities; and • notify the Responsible Entity in writing immediately regarding any event which may trigger the

enhanced disclosure provisions of the Corporations Act.

The Responsible Entity values the importance of robust risk management systems and, in conjunction with its parent The Trust Company, has established an ARCC to support the compliance obligations of the Trust with respect to its corporate governance and risk responsibilities.

The ARCC is comprised of a majority of external members skilled in the areas of audit (financial reporting), risk and compliance. The ARCC is responsible for the oversight of risk management and internal control systems for the Responsible Entity. It reviews internal and external audit processes and monitors the Responsible Entity’s compliance with laws and regulations. The ARCC meets regularly with The Trust Company’s Executive Team, senior management and external advisers, and reports directly to The Trust Company and Responsible Entity’s Boards.

The Responsible Entity has a formal risk management program in place which has been adopted from its parent entity, The Trust Company. It is based on Standards Australia AS/NZS4360:2004-Risk Management Standard and includes policies and procedures to identify and address material financial and non-financial risks.

The Trust Company also maintains an independent internal audit function which reports directly to ARCC and the Responsible Entity’s Board if necessary.

Principle 8: Remunerate fairly and responsibly

Remuneration policies are in place to maintain and attract talented and motivated Directors and employees. The policies are designed to improve the performance of The Trust Company and its controlled entities. As The Trust Company is the ultimate parent of the Responsible Entity it provides Executive Directors and internal management to the Responsible Entity. Directors and internal management of the Responsible Entity are remunerated by The Trust Company and not by the Trust.

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Corporate governance statement (continued) Principle 8: Remunerate fairly and responsibly (continued)

The Responsible Entity’s fees are set out in the constitution of the Trust. Both the Responsible Entity and the Investment Manager monitor all fees and expenses paid from the Trust to ensure they are appropriate and allowable under the Trust’s documentation.

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Additional information

Real Estate Capital Partners USA Property Trust (the “Trust”) is a registered managed investment

scheme established and domiciled in Australia. The Trust is listed on the Australian Securities

Exchange (“ASX”) under the code: RCU. Real Estate Capital Partners Managed Investments

Limited, a wholly-owned subsidiary of The Trust Company Limited, is the Responsible Entity of the

Trust.

The following information in relation to unit holdings is provided as at 16 August 2011.

Substantial unitholders

The number of units held by the Trust’s substantial unitholders and the date on which the last notice

was lodged with the ASX are as follows:

Date of notice No. of securities

% of issued capital

Frost Holdings Pty Limited and Greg Woolley 19 May 2011 7,001,212 13.72

Acorn Capital Limited 26 May 2011 6,376,598 12.50

Intelligent Investor Funds Pty Limited 24 June 2011 3,745,514 7.34

Macquarie Group Limited and its controlled bodies corporate

4 April 2011 3,212,502 6.29

Voting rights

The provisions of the Corporations Act 2001 governing proxies and voting for meetings of members of

registered managed investment schemes apply to the Trust except that no objection may be made to

any vote cast at a meeting unless the objection is made at the meeting.

For so long as the Trust is listed on the ASX, the Responsible Entity and its associates are entitled to

vote their interest on resolutions to remove the Responsible Entity and choose a new Responsible

Entity.

Distribution of equity securities

Analysis of numbers of equity security holders by size of holdings:

Range No. of

unitholders No. of

securities% of issued

capital

1 to 1,000 1,829 921,408 1.811,001 to 5,000 1,921 4,696,143 9.215,001 to 10,000 428 3,093,420 6.0610,001 to 100,000 442 10,127,809 19.85100,001 and Over 30 32,177,814 63.07Total 4,650 51,016,594 100.00

The number of security investors holding less than a marketable parcel of 758 securities ($0.66 on

16 August 2011) is 1,487 and they hold 602,542 securities.

On-market buy back

There is no current on-market buy-back.

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Additional information (continued)

Twenty largest equity security holders

The 20 largest holders of quoted equity securities at 16 August 2011 are set out below:

No. of securities

% of issued capital

NATIONAL NOMINEES LIMITED 7,685,482 15.06

FROST HOLDINGS PTY LIMITED 6,705,013 13.14

BOND STREET CUSTODIANS LIMITED (MACQUARIE SMALLER COMPANIES ACCOUNT)

2,346,147 4.60

BOND STREET CUSTODIANS LIMITED (OFFICIUM SPECIAL SITUATIONS ACCOUNT)

2,311,729 4.53

CITICORP NOMINEES PTY LIMITED 2,095,781 4.11

UBS NOMINEES PTY LTD 1,448,254 2.84

AR MANAGEMENT CO. PTY LIMITED 1,243,447 2.44

JP MORGAN NOMINEES AUSTRALIA LIMITED 1,200,948 2.35

UBS NOMINEES PTY LTD (PB SEG ACCOUNT) 1,008,269 1.98

AUSTRALIAN EXECUTOR TRUSTEES LIMITED 750,983 1.47

BOND STREET CUSTODIANS LIMITED (MACQUARIE AUSTRALIAN MICROCAP FUND ACCOUNT)

704,357 1.38

FROST HOLDINGS PTY LIMITED (GREG WOOLLEY SUPER FUND ACCOUNT) 599,222 1.17

JP MORGAN NOMINEES AUSTRALIA LIMITED (CASH INCOME ACCOUNT) 504,288 0.99

REAL ESTATE CAPITAL PARTNERS PTY LIMITED 500,000 0.98

ABN AMRO CLEARING SYDNEY NOMINEES PTY LIMITED (CUSTODIAN ACCOUNT)

458,201 0.90

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 411,835 0.81

RUDIE PTY LIMITED (MATTANI SUPER FUND ACCOUNT) 327,427 0.64

LIMEBONO PTY LIMITED 255,000 0.50

SMARTWAY SOLUTIONS PPTY LIMITED 250,000 0.49

MRS YUN PAN 168,900 0.33

Total 30,975,283 60.72

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Corporate directory

Registered office Real Estate Capital Partners Managed Investments Limited

as responsible entity for Real Estate Capital Partners USA Property Trust

Level 15

20 Bond Street

Sydney NSW AUSTRALIA 2000

Phone: 1800 622 812

Company secretaries: Ms Sally Ascroft

Mr Alex Carrodus

Administration office Real Estate Capital Partners Management Pty Limited

as investment manager for Real Estate Capital Partners USA Property Trust

Level 9

51 Pitt Street


Phone: 02 9222 8100

Company secretary: Mr Andrew Saunders

Unit registry Link Market Services Limited

Level 12

680 George Street


Phone: 02 8280 7111

Auditor KPMG

10 Shelley Street


Website www.recap.com.au/rcu

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Documents

Real Estate Capital Partners USA Property Trust2011/09/26 · On 6 August 2010 the short-term loans for Bedford Woods, Pfingsten and Montgomery were refinanced by new loans from Commonwealth