Rubicon Europe Trust Group (REU) has been formed to provide investors with the opportunity to gain exposure, through an ASX listed vehicle, to stable income-producing commercial real estate located in Europe. REU’s objective is to provide stable Australian dollar income with the potential for capital appreciation. To achieve this, REU intends to acquire high quality European real estate with long term stable cash flows. To minimise income volatility REU will finance acquisitions with long-term fixed rate debt and will enter into foreign exchange hedges over forecast income. REU will also seek to partially protect investors from fluctuations in equity capital due to adverse movements in foreign exchange rates. REU intends to make further acquisitions which will diversify the portfolio.

In 2005 REU acquired a 95% interest in a portfolio of three high quality modern office properties located in Frankfurt and Berlin, Germany (the Initial Portfolio) for €344 million (A$556 million). The vendor of the Initial Portfolio, DB Real Estate Investment GmbH (DBREI), retained a 5% interest in the Initial Portfolio.

In 2006 REU acquired 100% of the shares in two real estate companies controlled by leading Belgian developer, Robelco. These real estate companies will develop, in stages, up to five new office assets located in Brussels, Belgium (the Hermes Plaza development) in a transaction worth up to approximately €145.0 million (A$234.3 million).

In 2006 REU acquired another asset, a 100% interest in a Class A office property leased to Nike, located in Hilversum, the Netherlands (Nike HQ) for €90.4 million (A$146.1 million). Nike HQ is a 31,539 square metre office property located in Hilversum, 30 kilometres south-east of Amsterdam. The property is leased by the Europe operations of Nike (NYSE:NKE) as its European Middle East and Africa headquarters.

In February 2007 REU launched Rubicon Finance Europe with the acquisition of a €207.0 million (A$334.5 million)⁽¹⁾ portfolio of commercial real estate loan assets and a successful A$245.5 million capital raising which closed on 22 March 2007.

In March 2007 REU acquired a portfolio of two Class A Austrian health and medical centre properties (Medicent), located in Innsbruck and Salzburg, Austria for €58.0 million (A$93.7million)⁽¹⁾ which is a 3.7% discount to valuation of €60.2 million (A$97.3 million)⁽¹⁾.

Medicent Innsbruck is 7,182 square metres and located approximately 1.5 km south west of Innsbruck city centre, near a major hospital. The property is 100% occupied with 21 tenants. Holmes Place is the anchor tenant with 3,769 square metres (sub-let to Alfa sports) with the remaining tenants being medical specialists, together with serviced operating theatres. The initial yield on acquisition is 6.4% and the weighted average remaining lease term is 17.3 years as at 30 June 2007. All leases are indexed to Austrian CPI and all operating costs are recoverable from tenants.

Medicent Salzburg is 8,357 square metres and located approximately 1.5 km west of Salzburg city centre, near a major hospital. The property is 89.3% occupied with 16 tenants. Holmes Place is the anchor tenant with 4,600 square metres with the remaining tenants being medical specialists, together with serviced operating theatres. The initial yield on acquisition is 6.4% and the weighted average remaining lease term is 17.2 years as at 30 June 2007. All leases are indexed to Austrian CPI and all operating costs are recoverable from tenants.

The Manager has entered into an exclusive long term agreement appointing DTZ to source real estate acquisitions for REU and provide asset and property management services. DTZ is one of Europe’s leading real estate advisory firms with approximately 3,500 staff operating from 94 offices located in 24 countries throughout Europe.