Trust update

On 21 September 2010 we wrote to all investors extending the sales window for 44 Sydney Avenue, Canberra for 12 months to September 2011. This follows a recent sales campaign for the property. Neither the sales campaign nor the subsequent efforts of sales agents generated any offers. As we informed investors back in September, this result is a reflection of both the cautious outlook for the Canberra office market and the ongoing funding challenges facing prospective purchasers, particularly for properties over $40 million without a long term lease to a government tenant. There have been no sales of office buildings in Canberra this year, despite several being offered for sale. The relatively short average lease expiry at the property, three years, in a market accustomed to long-term leases to government tenants, adds to the perceived risk of a purchase in a market for which the outlook remains cautious.

The reduction in book value to $46 million is a reflection of the directors’ view that values in the Canberra market remain under pressure and is consistent with the lack of buyer interest during the sales campaign.

Distributions and redemptions

The trust’s annualised distribution rate remains 8.5 cents per unit and is funded from the rental income derived from the property.

Debt

Following the sales campaign, the trust’s debt facility with National Australia Bank (“NAB”) has been extended to 31 January 2011. The short term nature of the extension is to give NAB the opportunity to consider the implications of the recently announced sale of Becton’s Funds Management business.

Leasing

As previously advised, PricewaterhouseCoopers (“PwC”) merged with Walter Turnbull, the major tenant in the building, during the course of the recent sales campaign. PwC is in the process of moving employees from its office to 44 Sydney Avenue. Discussions with PwC continue about its longer term intentions and the prospects of an extended lease term at Sydney Avenue.

Sale of Funds Management business

On 6 October 2010, Becton announced the sale of its Funds Management business to 360 Capital Group. We are working on obtaining all the necessary approvals and settling the sale before the end of the calendar year. The sale is the culmination of more than two years’ work to achieve a longer term capital management solution for the funds. It will provide the funds with the backing of a debt-free specialist property funds manager which in turn will provide the funds with enhanced prospects of attracting capital where needed. For further information about the sale please refer to the CEO’s letter in this edition of Review and to the FAQs on the Becton Investment Management website: www.bim.com.au.