Certified products
1.  Investa Diversified Office Fund
2.  Investa Commercial Property Trust

Methodology used to select assets in the portfolio
Investa Funds Management Limited (IFML) creates quality property investment funds for investors wishing to directly invest in commercial and industrial property. Our aim is to optimise distribution returns and provide capital growth whilst enhancing unitholder returns by integrating long-term sustainability practices in the creation of our investment products.

Methodology
We work at improving the quality of the investment portfolio and we only acquire or redevelop assets after careful consideration. In selecting properties, our investment and risk guidelines include:
- Benchmarking the baseline environmental performance of the asset against the market using established ratings such as the Australian Building Greenhouse Rating (ABGR) and the National Australian Built Environment Rating Scheme
(NABERS);
- Identifying and quantifying opportunities to enhance environmental and social performance;
- Calculating the cost-benefit of enhancements, including the potential for repositioning the asset to appeal to a different category of tenants; and
- Determining the net value that enhancements could add to the underlying asset to inform the bid price calculation.

As a rule, all enhancements capable of producing a risk-adjusted return on investment that is marginally higher than the underlying asset’s yield are considered and budgeted for. Their risk-adjusted contribution to net operating income is taken into account when undertaking due diligence for acquisitions.

Property investment opportunities are disregarded where it is determined that they cannot be brought to portfolio-average environmental and social performance through application of Investa management expertise and appropriate capital investment.

However, below portfolio-average properties are considered for acquisition where opportunities to enhance performance to at least portfolio-average standard are identified.

Weighting System
We seek to acquire assets that can deliver enhanced investment returns to unitholders. Our priority is therefore to seek:
- Assets that are not meeting their full potential and offer the prospect of achieving above-average environmental and social performance through appropriate capital investment and by applying Investa management expertise; and
- Assets that have the potential to stand out from the market by showcasing superior environmental and social performance, particularly in the case of new developments.

The social, environmental and labour standards we apply help to improve tenant retention and leasing prospects by enhancing relationships with tenants.

Sustainability Management Expertise
IFML focuses on improving the quality and sustainability practices of properties held in the investment portfolio. In managing our properties, our guidelines include:

(a) Labour Standards
When managing and operating property assets the labour standards we apply are as follows.
- Properties must be maintained in a safe condition at all times and comply with Investa Property Group’s Safety, Health and Environmental Management System (SHEMS).
- Safety performance must be tracked. This must include man-hours worked, incidents and near misses for workers employed both directly and via contractors.
- All work performed on investment properties, either directly or via contractors, must comply with Australian Law which ensures equal remuneration, non-discrimination, freedom of association and protection against unfair dismissal.
- Contractors and suppliers must satisfactorily complete the safety component of Investa’s Preferred Supplier Checklist.

(b) Environmental Considerations
When managing and operating property assets the environmental standards we apply are as follows:
- Properties must be maintained in accordance with Investa Property Group’s SHEMS, in particular the ‘Environmental Aspects Procedure’;
- For each property, matters of environmental significance must be identified, assessed and controls determined. Performance targets must be set for electricity, gas, water, waste, and greenhouse gas emissions on a property by
property basis for commercial buildings and performance against these targets is reported by Investa to IFML quarterly;
- Relevant performance rating tools must be identified for each property and ratings kept up-to-date. Examples of relevant tools for commercial property are the Australian Building Greenhouse Rating (ABGR) and the National Australian Built Environment Rating Scheme (NABERS); and
- Contractors and suppliers must satisfactorily complete the environmental component of Investa’s Preferred Supplier Checklist.

The Code also incorporates a grievance handling procedure to ensure that any issues arising in relation to the code are satisfactorily resolved.

How often do you monitor adherance to the methodology?
Investa applies a variety of frameworks to monitor adherence to its methodology, as such each framework has its own reporting timetable. Please see the following answer for details regarding these frameworks

Procedures for monitoring adherence to the methodology
Investa uses a variety of reports, targets and timeframes that support our methodology. A few examples of these procedures are explained below and more information about Investa’s sustainable business expertise, policies and targets can be found at http://www.investa.com.au/Sustainability

Building Management
An asset management agreement is in place between IFML and Investa Asset Management Limited which incorporates Investa’s methodology. This agreement is reviewed annually and ensures the assets are managed in accordance with the methodology.

Ratings
- Investa conducts annual ratings for energy (ABGR) and water (NABERS);
- ABGR is the Australian Building Greenhouse Rating scheme and is a rating that measures energy use and greenhouse emissions and is the industry standard. In 2006 Investa’s target ABGR Rating was to reach at least 3.5 Stars for 50% of
the Group's Investment Portfolio. We achieved this with 75% of our properties achieving 3.5 stars or better. The aim is to improve this rating year on year; and
- NABERS is the National Australian Built Environment Rating System which rates a building on the basis of its measured operational impacts on the environment. Currently NABERS only rates water performance (and incorporates energy under the ABGR) and in 2006, the first year that NABERS Water came into effect, Investa’s average rating was 2.80 stars.

Reporting
Regular reporting is carried out on Investa buildings. For example, building scorecards (which include ratings on electricity, water, gas, CO2, waste) are completed quarterly on Investa office buildings. These scorecards ensure we are regularly monitoring our sustainability targets and performance.

Key Performance Indicators
Our sustainability targets are captured in the Key Performance Indicators (KPI’s) for key property managers i.e. property supervisors, building facilities managers, general managers and fund managers. For example, the KPI’s for the Fund Manager of the Investa Commercial Property Fund (ICPF) incorporates ABGR
targets for the ICPF portfolio.

Audits
- Safety Health and Environment Management Plans are revised annually; and
- Safety Audits are conducted regularly and an independent third-party safety audit is done annually.

Due Diligence
When purchasing a property the due diligence process takes social, ethical and environmental factors. For example under social factors disabled access is noted as a consideration in the pre-purchase guidelines.

If an asset no longer meets your methodology or criteria, what is the timeframe for divestment?
Investa’s methodology is to acquire and manage properties with the intent of improving the quality of the assets, and therefore the investment portfolio, through the application of sustainability expertise over the long term. If however, a property does fall below expectations, the divestment of that asset is based on economic imperatives and the asset will be sold in a manner and
timeframe that achieves the best outcome for investors.

Do you have any materiality thresholds for negative screens?
Investa may invest in a commercial property which currently underperforms environmentally and socially but does so according to the methodology outlined above and with the intent of improving its sustainability performance.

DISCLAIMER: This information has been prepared by RIAA based on material provided by Investa Funds Management. While it is provided to assist you in finding a fund manager, RIAA does not endorse or recommend any particular firm or fund manager to the public. Although RIAA attempts to provide accurate, complete and up-to-date information, it makes no warranties or representations, express or implied, as to whether the information provided is accurate, complete or up-to-date. The information provided in this report is general in nature and its brevity could lead to misrepresentation. It is not intended to be advice and could be subject to change. No responsibility can be accepted for those who act on its contents without obtaining specific advice from an adviser.

METHODOLOGY PROVIDED: May 2007