ESG Beyond financial performance

RESPONSIBLE INVESTMENT SERIES - 2016

At ISPT, our commitment to Environmental, Social and Governance initiatives enables us to deliver investment strategies adding value to the communities within which we live and work.

We recognise that ‘adding value’ extends beyond financial performanceWith more than 50% of Australians having their retirement savings invested in property through ISPT, creating value for our Investors is a priority. Our commitment to environmental, social and governance (ESG) best practice enables us to transform financial returns into long-term, sustainable value.

We recognise that ‘adding value’ extends beyond financial performance; through building an enduring legacy of positive social and environmental outcomes, for the benefit of our customers, our communities and Australia’s future generations.

Guided by the principles of responsible investment, we harness the acumen of our diverse team by being active owners through:

• Contributing to a better, sustainable built environment by enhancing the areas in which we operate through the provision of meaningful places for people to live, work and shop;

• Achieving market-leading sustainable performance through constant innovation by creating efficient buildings;

• Championing sustainable practices and promoting social responsibility;

• Recognising opportunities to continually improve our services by engaging with our key stakeholders.

OUR LONG-TERM COMMITMENT TO ESG

Daryl BrowningChief Executive Officer, ISPT

Alicia Maynard General Manager, Sustainability & Technical Services, ISPT

Our sustainability vision is to continually deliver superior investment performance through integrating

ESG principles throughout decision-making.

A HISTORY OF RESPONSIBLE INVESTING

3

1994-1995

ISPT ’s INCEPTIONISPT is established as a collective vehicle for industry superannuation funds to invest in direct property. The ISPT No 1. Fund makes its first acquisition in 1995 - an office building in NSW.

2001

C O M M U N I T Y P R O G R A MA community program is established to support our role as good corporate citizens. The ISPT Team are encouraged to nominate a charitable project of their choice.

1997

300% GROWTHThe Fund grows through acquisitions of several Government and corporate assets, including 500 Bourke St. and Casselden in Melbourne. ISPT No. 2 is created as a property income fund.

2002

S U S TA I N A B I L I T Y F E AT U R E S50 Lonsdale Street, Melbourne becomes one of the first Australian office buildings to specify an on-site sewage treatment plant in the planning/design stage.

1998

THE ISPT WAYThe ISPT Way is designed to create a culture for ISPT, to embody our values and account for the responsible management of ISPT’s growth in value and influence.

2003-2004

G R E E N L E A S E SISPT enters into Australia’s first green lease agreements with Federal Government tenants at 3-5 National Circuit and 1 National Circuit in Canberra, as well as 50 Lonsdale Street in Melbourne.

1999

I N V E S T M E N T M A N A G E M E N TInvestment Management is brought in-house to improve returns for Investors.

2005

E N V I R O N M E N TA L S U S TA I N A B I L I T Y C O M M I T T E EThe Environmental Sustainability Board Committee is formed in recognition of the growing impact of property on the natural environment.

ISPT No. 1 and No. 2 are stapled to form the ISPT Core Fund.

2000

C O M M U N I T Y S U P P O R T P R O J E C TIn partnership with the Australian Government, ISPT provides economic support for the rebuilding of East Timor after the conflict.

2006

6- S TA R G R E E N S TA R R AT E D B U I L D I N GISPT acquires Green Square North Tower QLD, ISPT’s first 6-Star Green Star office building (V2).

The Development and Opportunities Fund No. 1 is established to provide investors exposure to residential development.

KEY

ENVIRONMENT

SOCIAL

GOVERNANCE

3

4

2007

S U S TA I N A B I L I T Y B E C O M E S C O R EISPT becomes a foundation partner of the Green Building Council of Australia (GBCA).

Sustainability targets are incorporated into all outsourced property management contracts and national supplier agreements, aligning our delivery partners with our objectives.

2008 2009

N A B E R S TO O L S P I L O T E DA pilot study, with NAB, to assess NABERS Waste and Indoor Environment (IE) tools commenced in the refurbishment of 500 Bourke St, Melbourne.

ISPT begins a partnership with SecondBite, pledging to contribute $100,000 per year initially for 5 years.

C O N S I S T E N T R E S U LT S100 St Georges Terrace, Perth is completed and achieves a 4 Star Green Star Office Design rating (V2).

500 Bourke St’s refurbishment is completed and is recognised as one of the largest 5 Star Green Star rated base building office (V2) and interior (V1.1) refurbishment projects in Australia.

2010

R E S P O N S I B L E I N V E S T M E N TISPT becomes a signatory to the United Nations Principles for Responsible Investment (UNPRI), formalising our commitment to upholding ESG principles.

2011

PA R T I C I PAT I O N I N G R E S BISPT participates in the Global Real Estate Sustainability Benchmark (GRESB) for the first time, strengthening our commitment to incorporating ESG principles into our investment practices.

2012

4.5 S TA R AV E R A G E R AT I N GThe commercial assets within the ISPT Core Fund’s commercial portfolio achieve an average 4.5 Star NABERS Energy rating.

$500 million in funds is raised for ISPT Retail Australia Property Trust (IRAPT) and an alliance is formed with Coles to purchase 75% of 20 neighbourhood retail centres.

2013

N E W C O M M U N I T Y PA R T N E RISPT partners with Fitted for Work committing to contributing $110,000 per year for 6 years.

Commercial assets in the ISPT Core Fund achieve a weighted average 4.7 NABERS Energy base building rating.

2014

G R E S B S E C TO R L E A D E RISPT is ranked as the GRESB Sector Leader for diversified Funds (retail and office) in Australia and ranked 8th out of 637 property funds worldwide.

The ISPT Core Fund undertook 19 NABERS IE ratings, achieving an average of 4.5 Stars. This is the highest average rating and number of rated assets in Australia.

2015

A U S T R A L I A’ S F I R S T 6- S TA R R AT E D R E TA I L P R O P E R T YThe Ponds, Kellyville, NSW becomes the first retail property in Australia to receive a 6-Star Green Star - Retail Centre Design V1 rating.

THE FUTURE

W H I L E W E ’ R E V E R Y P R O U D O F O U R T R A C K R E C O R D, W E L O O K TO T H E F U T U R E A S A N O P P O R T U N I T Y TO C O N T I N U E I N N O VAT I N G .

4

ENVIRONMENTAL SNAPSHOT

4.8 Stars FY2016 NABERS ENERGY RATING (AVG)

$27M Saved IN UTILITY COSTS between 2006-2015

53% WATER INTENSITYISPT Core Fund assets - between 2006 - 2015

32% RECYCLING RATE ISPT Core Fund assets - FY2016

4.8 Stars FY2016 NABERS IE RATING (AVG)

20 IE RATED PROPERTIES ISPT Core Fund assets - FY2016

40% EMISSION INTENSITY ISPT Core Fund assets - between 2006 - 2015

Top 4% GRESB GLOBAL RANKING FY2015

5

Saving $27M in energy takes a combination of teamwork and technical excellenceISPT has a long history of improving the financial performance of our assets through the delivery of energy efficient measures. Our strategic and pro-active approach to reducing energy usage has resulted in significant savings of $27M over a 10 year period. This result can be credited to the strength of the partnership between the ISPT Asset Management team and our Property Management partners; who, as our eyes and ears on the ground, play an important part in achieving improved efficiencies for all our assets.

TWO WAYS WE MAKE SIGNIFICANT ENERGY SAVINGS

THROUGH PRO-ACTIVE OPERATIONAL EXCELLENCE We continually review where we can make efficiency and performance improvements with the current asset. We also ensure our teams are well trained in the best ways to manage efficiency through consumption benchmarking, scheduling pro-active maintenance, as well as identifying the root causes of complaints and breakdowns.

THROUGH STRATEGIC CAPITAL INVESTMENT When appropriate, we invest in upgrading, or replacing plant and equipment to enhance building systems, along with improving automatic controls, monitoring, alarming and reporting to ensure optimum asset performance.

OUTSTANDING ACHIEVEMENT IN EFFICIENCY

B

2010 2015 2010 2015

2.5 4.5 3.0 3.5

4.0 5.5 3.5 4.0

3.5 5.5 2.5 3.5

345 George St, Sydney

Sydney Central 477 Pitt St, Sydney

up 2 Stars to 4.8 Stars ENERGY 2010 - Q4 2015 Commercial Portfolio

up 0.7 Stars to 3.8 Stars WATER 2010 - Q4 2015 Commercial Portfolio

NABERS RATINGS IMPROVEMENTS (AVG)

363 George St, Sydney

6

ENERGY RATINGIMPROVEMENT

WATER RATINGIMPROVEMENT

363 George St, Sydney

Steady improvement from 2.5 Stars to 5.5 StarsBuilt in 1991, Sydney Central, 477 Pitt Street is a CBD mixed-use building which was suffering from high energy consumption. With a focus on future-proofing the building, ISPT undertook major refurbishment work of the building’s systems, plant and equipment. Over three stages, between 2007 and 2014, ISPT upgraded the asset’s energy efficiency standards to that of an A Grade property.

The plan was to improve the NABERS Energy rating from a very low 2.5 Stars (in 2007) to a target minimum rating of 4.5 Stars. In 2010, through the first stage of works, the building achieved 3.5 Stars. After stages 2 and 3, in 2013/14, the energy rating reached 5.5 Stars - 1 whole star above the initial target. At a building level, this translates to the average daily electricity use being reduced by 60%.

This significant achievement in energy efficiency at Sydney Central was recognised at the Energy Productivity in Action 2015 event organised by the NSW Office of Environment and Heritage.

EFFICIENCY INITIATIVES INCLUDED:

• Motion sensor lighting installed in floor lift-lobbies and bathrooms;

• Replaced chillers and chilled water pumps and installation of new VSDs;

• Upgraded BMCS control strategy to both air and water side of mechanical plant;

• Installation of smart metering to plant and retail areas;

• Replacement of T8 lights with new motion sensor LED lights;

• Converted the electrical domestic hot water to solar/gas;

• Entered into a continuous review of plant operation, control strategy changes and fine tuning.

SYDNEY CENTRAL A JOURNEY OF ENERGY EFFICIENCY

SOCIAL SNAPSHOT

$406,797TOTAL COMMUNITY INVESTMENT in FY2015

2 StudentsACCEPTED INTO OUR WORK EXPERIENCE PROGRAM every year

60% of StaffPARTICIPATED IN LEADERSHIP DEVELOPMENT PROGRAM Since 2014

95% of StaffUNDERTOOK UNCONSCIOUS BIAS TRAINING in FY2015

8

100% of StaffOFFERED FLEXIBLE WORKING ARRANGEMENTS as at 30 June 2016 15% of staff have formal flexible arrangement in place

81% of StaffBELIEVE ISPT KEEPS FINDING WAYS TO IMPROVE THE WORKPLACE engagement survey 2016

71% of StaffPARTICIPATION IN CHARITABLE EVENTS approx as at 30 June 2016

51% to 49% FEMALE TO MALE STAFF RATIOas at 30 June 2016

16 weeksPAID PARENTAL LEAVEand up to 52 weeks of super contribution

Team ISPT believe in the Mother’s Day Classic ISPT has played an active role alongside many of our investors, supporting the Mother’s Day Classic (MDC) event which was created by Women in Super. As a Silver Sponsor, we contribute to the cause, aiding in the ongoing fight against breast cancer. In 2016, we looked for ways to extend the reach of the messaging via our properties.

SHOWING OUR SUPPORT AT MANY LEVELS

Across our offices, we asked our team to wear pink for the day to show their support and our very own bakers prepared an amazing MDC Morning Tea to raise additional funds. As a corporate, we communicated the MDC message through our networks by changing our email banner and posting on our LinkedIn page. Our properties extended exposure through their own Facebook pages, and via Instagram, as well as through circulating a newsletter explaining why they had turned pink and encouraging participation and support.

REACHING OUT THROUGH OUR PROPERTIES

ISPT is in a position to potentially reach thousands of people through our properties. The properties are high profile, highly visible, and visited by thousands every day. We decided to make the most of our properties by lighting some up in pink, adding eye catching banner installations, running morning teas for our customers and installing messaging in the lifts promoting involvement in the MDC.

The concept started out small, but with the enthusiastic support of our business partners; our property managers, JLL and CBRE, and media providers, Ooh! Media, we were able to gain momentum, as our cause became their own.

OUR COMMUNITY CONNECTION

ISPT Morning TeaCentral Plaza, Bris

Melbourne’s GPO

Casselden, Melb50 Lonsdale St, Melb

MOTHER’S DAY CLASSIC WALK OR RUN

Active involvement means more than simply providing funds. Each year, Team ISPT takes part in Mother’s Day Classic Walk or Run events around the nation. Our team joined more than 100,000 participants in showing their passion for the cause by actively taking part in these events.

WE LOOK FORWARD TO ‘GOING BIGGER’ THAN EVER IN 2017

We aim to achieve greater results for MDC, by possibly expanding Team ISPT’s role in future MDC events and getting even more of our properties to actively support the cause, resulting in reach and raising community awareness. More importantly, we aim to raise even more funds for breast cancer prevention and research – a cause we deeply believe in.

Learn more about the MDC www.mothersdayclassic.com.au

17 Participants IN ‘TEAM ISPT’ IN THE 2016 EVENTS

11 Properties ACTIVELY PROMOTED THE EVENT

$152,063 Raised FOR BREAST CANCER RESEARCH SINCE 2007

10

Team ISPT They’re off!

The anticipation builds

GOVERNANCE SNAPSHOT

Investor OwnedPROPERTY FUND MANAGEMENT BUSINESS

11

Low FeesAND NO PERFORMANCE FEES

70% INVESTOR

30% INDEPENDENT

BOARD REPRESENTATION

30% FEMALE BOARD MEMBERS

$12.1B FUNDS UNDER MANAGEMENTas at 30 June 2016

128 PROPERTIES

$5.3B COMMERCIAL ASSETS

$800M INDUSTRIAL ASSETS

$5.4B RETAIL ASSETS

$600M RESIDENTIAL & HOTEL ASSETS

ENVIRONMENTAL

• Reduction in our portfolio environmental impact;

• Resilience to the impacts of climate change;

• Improvement in investment performance through reduced operating expenses and increased asset values;

• Enhanced occupational enjoyment of our customers and employees by providing greener places to work;

• Education of partners, employees and customers as to the benefits of sustainable practices;

• Communication of our progress to our Investors, their members and our customers.

SOCIAL

• Proactive engagement with local communities;

• Ensuring that all of our operations and premises, office buildings, shopping centres, industrial facilities and building sites are safe for workers and visitors alike;

• Engaging with those companies that treat their workforce in compliance with Australian Laws and with accepted principles of equality and fairness;

• Specific provisions within our procurement process to ensure all award obligations and regulations are complied with.

GOVERNANCE

• Provision of an effective corporate governance framework and corporate systems;

• Setting and monitoring ISPT’s strategic direction;

• Ensuring adequate risk management systems are in place;

• Monitoring the integrity of ISPT’s accounting and corporate reporting systems;

• Independent audit of ISPT’s overall Governance, Risk and Compliance Framework.

RESPONSIBLE INVESTMENT AT ISPT

At ISPT, we have a responsibility to all our stakeholders to ensure ESG is central to our investment decision making and ownership practices. We maintain a ‘do no harm’ investment and operating philosophy.

12

ISPT’s overall approach to ESG is guided by our signatory commitment

to the United Nations Principles for Responsible

Investment (PRI).

OUR ESG PARTNERS

To ensure best practice, ISPT partners and collaborates with organisations that are leaders in ESG.

CONTACT For more information about ESG and ISPT please contact: esg@ispt.net.au or visit www.ispt.net.au

OUR CHARITY PARTNERS

13