Information Memorandum for Insurance Broking And Risk Manage

Information Memorandum for Insurance Broking And Risk Management Services 2020 Kennards Self Storage Pty Ltd Kennards Storage Management Pty Ltd

• 74 Operating Storage Centre

(Excluding Managed Centres)

• $1.6 Billion Valuation

(Excluding Managed Centres)

• $148 Million Operating Income

(Excluding Managed Centres)

Keep it at Kennards The people who care ’ ’

www.kss.com.au www.kennards.co.nz

KENNARDS SELF STORAGE

Disclaimer

This Information Memorandum (“IM”) has been prepared by Kennards Self Storage Pty Limited (KSS) and Kennards Storage Management Pty Ltd (KSM), for a limited number of potential Insurance brokers considering participating in a review of our current insurance program. The IM has been provided for exclusive use by brokers on the express understanding that the contents will be regarded and treated as strictly confidential. This IM may not be reproduced or used in whole, or in part, for any purpose other than that for which it is intended. The information contained in this IM has been based on management information used in running the business. It is only intended as a summary to potential brokers/underwriters and should not necessarily be regarded as a complete assessment. This IM has been prepared without any actual, or implied, knowledge or consideration as to the risk appetite or other needs, or requirements of any potential broker/underwriter. Any broker who intends to participate in the tender should make their own independent assessment and investigation of KSS and KSM and its risk profile as it deems necessary, including, without limitation, seeking professional advice and must base any decision it may make and any determination as to the relevance of any information contained in this IM upon such assessment, investigation and / or advice. No information, disclaimer, statement of rights or obligations or other limitation or restriction contained in this Disclaimer is intended to inform, or should be read as informing, any person of their legal rights in respect of the information contained in this IM. All amounts referred to in this IM are in Australian dollars unless otherwise specified.

Information Memorandum Kennards Self Storage June 2020

KENNARDS SELF STORAGE

CONTENTS

• Business Overview

- About Self Storage - About Us - Background & History - Organisational Overview - Our Team

• Insurance Information

- Renewal Report 2019-20 - Insurance Manual 2019-20 - Schedule of Policies - Policy Wording - Kennards Risk Management

• Claims History - ISR

- Liability Programme - Motor - Travel - Crimes - Directors & Officers

• Underwriting Data

- Asset Schedule - Industry Special Risks & Business Interruption Calculation - Annual Turnover of Wages - Directors & Officers Proposal - Kennards Storage Agreement/Insurance Agreement - Kennards Motor Vehicle Schedule

• Contact Information

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Business Overview

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About Self Storage

Below is a summary of the Self Storage Industry provided by Colliers International.

A self-storage facility is a place where people pay a rental amount to store items at the facility. Self-storage facilities emerged in Australia in the late 1970s following the development of the self-storage industry in the US. Today, there are more than 1,800 facilities located throughout Australia and New Zealand combined. Self-storage customers generally sign a monthly agreement and are provided a space within the facility being either boxes, lockers, units, containers and covered/uncovered outdoor hardstand. The client mix typically comprises 70% individuals and 30% businesses. There are different types of self-storage facilities. The facilities vary from general hardstand with containers to multi-level with various on-site amenities that comprise CCTV video surveillance, on-site managers, exterior lighting, electronic gates, lifts, hire vehicles and individual unit alarms. A typical facility consists of an average NSA of approximately 4,000m² to 6,000m² and can be accessed 24/7.

According to the Self-Storage Association of Australasia (2013 Demand Study), 5.0% of the general population (Australia/New Zealand) are currently using self-storage.

The industry has undergone considerable growth since its establishment and is currently experiencing a buoyant period with continued high levels of acquisition activity forcing general yield compression.

There appears to be two key trends emerging over recent years. The first is the emergence of the major operators expanding their operations via acquisitions of other facilities or through an increased number of management/franchise structures. The second is the growth in population driving an increase in apartment living resulting in a greater need for self-storage. These two trends have influenced a buoyant period for the sector with higher than average levels of acquisition forcing general yield compression. However, the outbreak of the Novel Coronavirus (COVID-19), has impacted global financial markets and therefore market activity is being impacted in many sectors. As at the date of this valuation, we are faced with an unprecedented set of circumstances given the unknown future impact that COVID-19 might have on the real estate market.

Demand Drivers Demand for the self-storage sector is influenced by the key underlying trends are as follows:

Growing and Ageing Population – Australia’s population grew by 1.5% during the year ending in 30 September 2019. All states and territories recorded growth excluding the Northern Territory. Victoria recorded the highest growth. Natural increase and net overseas migration contributed 37.5% and 62.5% respectively to total population growth for the year ended 30 September 2019. Like most developed countries, Australia's population is ageing as a result of sustained low fertility and increasing life expectancy. This has resulted in proportionally fewer children (under 15 years of age) in the population and a proportionally larger increase in those aged 65 and over. As the population grows Australia becomes more densely populated resulting in the average household size falling and with the ageing population downsizing to smaller homes or retirement living complexes. The outcome reflects a reduction in storage space within the average household. Increase in Apartment Living – Over the past 25 years, the number of occupied apartments (including flats and units, excluding townhouses) in Australia has increased by 78% to 1,214,372 dwellings at the 2016 Census. This steady increase in apartment living is primarily due to the growing population, current economic climate, more affordable market segment, a shift in social acceptance of apartment living, appetite for living close to work and lifestyle amenities. This has delivered smaller household sizes with less storage space.

Life Events – People Moving/Renovations – The increase in homeowners either moving or undertaking renovations leading to an increase for storage space for the short term.

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Disruptors Key disruptors to the self-storage sector are as follows:

Spacer – A community self-storage marketplace that connects people in their local area looking to rent out storage space with people who own unused storage space i.e. a second garage not in use at a residence.

Implementation of more stringent regulations – A clamp down from the regulatory bodies to implement more stringent regulations relating to building approvals for new and existing facilities and what is potentially stored within a self-storage facility.

Increase of Strata Titled Storage Units – The growth in smaller industrial strata titled complexes providing storage spaces for purchase or lease.

COVID-19 – The global threat of COVID-19 has created recent volatility in financial markets and therefore the global economy. Further downturn would incur restrictive market conditions and therefore potentially influence the decrease in capital values.

Market Operators and Participants The vast majority of Self-Storage facilities within Australia and New Zealand are owned by private entities (either single or multiple facilities. These facilities are a mix of two business model types being an owner operator or a management/franchise structure.

A list of the major market operators is provided in the below graph:

Storage Choice Fort Knox (Vic) Wilson Storage All Secure National Mini Storage U Store It Number of Facilities

9

10

9

10 10 10 10

National Storage Storage King Kennards Storage Fort Knox (Qld) StoreLocal Safe n Sound Rent a space Frys Self Storage

13

14

18

26

90

165

180

0

20

40

60

80

100

120

140

160

180

200

Source: Colliers International

As depicted above, the facilities held by these operators comprises 574 facilities, accounting for approximately 32% of the total number of facilities within Australia and New Zealand.

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Currently there are three existing major market participants being the following:

National Storage REIT (NSR) are Australia’s largest owner operator. NSR are a Real Estate Investment Trust (REIT). As at 31 December 2019 the REIT has an estimated a value of approximately $2.286 billion and comprises a total of 180 self-storage facilities throughout Australia and New Zealand, an NSA of 930,000m² and an average portfolio occupancy of 81.4% and an average REVPAM of $207/m². Since its initial public offering in late 2013 NSR has grown considerably by aggressively acquiring various facilities/portfolios and continues to do so. In addition, a number of new developments are currently in the pipeline with 12 facilities under various stages of construction. Approximately 15 acquisitions for HY20 in total being $179 million and a further $120 million under active consideration.

Kennards Self Storage (KSS) are a privately-owned owner operator. KSS is estimated to have a value in excess of $1.6 billion and comprises a total of 75 self-storage facilities throughout Australia and New Zealand with an NSA of 522,000m² and an average portfolio occupancy of 80.0%. More recently, Kennards has focused on the establishment of new developments with a number of facilities being opened or currently in the pipeline.

Abacus Property Group (ABP) are a diversified REIT. The self-storage investment component of the group as at 31 December 2019 is estimated to have a value of approximately $1.058 billion and comprises a total of 80 self-storage facilities throughout Australia and New Zealand with an NSA of 366,927m², an average portfolio occupancy of 88.6% and an average rental rate of $287/m². Over the last 12 months Abacus has expanded the portfolio through acquiring existing facilities. Approximately $89 million (AUD) of acquisitions have settled to date during HY20 with a further $63 million exchanged post reporting date. The current development pipeline includes new developments and refurbishments over 47,500m² of NSA.

Other smaller tier participants include investment trusts. These trusts have emerged more recently and are actively pursuing acquisition and development opportunities across Australia. The two most active participants are the following:

StoreInvest are an unlisted property fund specialising in self-storage facilities. StoreInvest is estimated to have a value in excess of $85 million. The portfolio currently comprises 10 self-storage facilities, an NSA of 55,000m² and an average portfolio occupancy of 80.00%. They are currently actively seeking acquisition opportunities throughout Australia.

Universal Self Storage Funds Management (USSFM) are an unlisted property fund specialising in self-storage facilities. USSFM were established in 2014. The fund is currently actively seeking development opportunities throughout Australia with known partnerships with National Storage and Storage King.

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Investment Performance As discussed above market activity more recently has generally focussed around the REITs. Smaller owner operators, which comprise the majority of facility owners, are not as active. A key feature of the current market is that a number of transactions comprise ‘off-market’ purchases.

The below depicts the number of analysed sales and total sales volume within the sector over the past five years.

Measure

2015

2016

2017

2018

2019

Total Sales Volume

$132,135,000

$461,385,000

$155,023,000

$267,885,000

$280,725,000

Analysed Transactions

13

21

17

29

22

Self-Storage - Sales Analysis

$0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 $400,000,000 $450,000,000 $500,000,000

8.50%

8.00%

7.50%

7.00%

6.50%

6.00%

2015

2016

2017

2018

2019

Total Sales Volume

Average Adjusted Yield

Calendar Year

Source: Colliers International

The majority of transactions are “off market” purchasers and typically contain strict confidentiality agreements in place, further complicating the already difficult task of obtaining factual trading details of each transaction. Notwithstanding, our investigations reveal that yields have compressed over the last 12-18 months and yields currently generally range from 6.00% - 7.00%. Facilities with high occupancy levels, established trading history and which are well located in metropolitan areas, remain highly sought-after and attract stronger yields. COVID-19 Impact The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a “Global Pandemic” on 11 March 2020, has impacted global financial markets. Travel restrictions have been implemented by many countries. Market activity is being impacted in many sectors. At this point in time, we consider that we can attach less weight to previous market evidence for comparison purposes to inform opinions of value. Indeed, the current response to COVID- 19 means that we are faced with an unprecedented set of circumstances on which to base a judgement.

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We consider the potential for impact on the self-storage sector to be mixed. From an operational perspective, the most likely impact will be occupancy levels and therefore rental rate level. In the first instance, tenants may seek rental abatements (rent free periods) which, if offered, will result in a reduction in storage income for the affected period. Further, during times of economic uncertainty households look to eradicate surplus spending, meaning tenants who can no longer afford the service may elect to move out resulting in a decrease in occupancy. This more stringent household budgeting also flows onto a drop in overall retail expenditure nationally, which should lead to a drop in the need to store goods and therefore further impacting occupancy levels. However, we may see spikes in new enquiries from small business operators looking to store merchandise might have to close for the foreseeable future. In an effort to offset this, we anticipate self-storage operators will offer various discounting to monthly tariffs, which may include some sort of rent free period. This level of discounting will act as an incentive and would attract tenants to remain in place however noting such would have a negative impact on rental levels. Further, we envisage an increase in people looking to downsize in an effort to minimise spending and/or under financial hardship, which therefore would result in an uplift in the need for storage services. Operators could also look to reduce salary and wages to counterbalance any negative operational performance. We have considered this and on balance we consider the decrease in occupancy levels to be marginal for properties like the subject. Notwithstanding, our analysis over the period of March and April of part of a major market participants portfolio 24 properties revealed little impact from COVID-19. Facilities with an NSA of over 8,000m² had a slight drop in occupancy from 1% to 2% where facilities below that mark of NSA appeared to remain at sustainable levels. Further, we are aware of rental abatements being offered over this 2 month period. Our investigations revealed only 1.3% of existing customers which totalled approximately $97,000 received an abatement and with the abatements appearing to taper off moving into the month of May as social distancing restrictions eased. These results demonstrate the resilient nature of the self- storage asset class. From an investment perspective, purchaser activity in this sector is domestic and generally dominated by two major participants each with extensive portfolios capable of absorbing any adverse market conditions in the short term. These two market participants will look to acquire quality assets at attractive prices over the next 12 months. Notwithstanding, the market may be affected where access to financing is impacted. This coupled with a weaker global economy generally may affect investor demand. Where the virus peaks and eases within a reasonable timeframe and this impact on demand is short term we may well see a spike in activity in the latter period of 2020. Market Outlook The increasing population is making Australia become more densely populated within its major cities. This is proving to be a positive influence on the sector, supported by low interest rates offered from financial institutions and generally overall customer awareness of the sector. When COVID-19 peaks and eases, global markets will take some time to recover. As a result of this recovery period, we would anticipate little to no rental rate growth over the next 12-month period.

The market has recently experienced a relatively stable period with strong demand particularly from existing market participants. However, our short-term outlook is cautious for the sector given unknown implications of COVID-19.

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About Us

Having pioneered self storage in Australia with the opening of the first storage spaces in 1973, Kennards has grown to become a clear industry leader. Throughout the 1980’s and 1990’s we gradually developed the self storage portfolio in Sydney, Brisbane and Newcastle. In 2004 Kennards Self Storage acquired Millers Self Storage to become Australia’s largest owner of Self Storage properties. Our organisation has invested heavily in the processes, systems and behind the scenes infrastructure to support and maximise the performance of our existing 90 locations. With approximately 68,555 storage spaces and 630,000 square meters of space available, Kennards ranks in the15 largest storage groups in the world. Kennards Storage Management has attached a strong team of capable and experienced self storage people that focus on improvement and innovation. Kennards Self Storage is widely considered the industry benchmark in Australasia. We seek to develop a culture in the organisation that attracts and retains the best people. We cultivate innovation, employee participation and engagement to the customer experience, and Brand. It is through a high engagement that our customer service levels and property presentation are at superior levels, differentiating us from competitors.

Murarrie QLD

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Background and History

1972 1973 1981 1991 1995 2003 2004 2007 2008 2014 2019

Kennards Self Storage manages 93 properties in

NSW, VIC, SA, QLD & NZ. Kennards Self Storage is still Australia’s largest family owned Self Storage company.

Kennards Self Storage has 80 properties and it’s market value

surpasses $1 Billion

Kennards Self Storage

makes the bold decision and buys out Valad Property

Kennards Self Storage

enters the New Zealand market acquiring 8 properties

Kennards Self Storage acquires Millers Self

Storage in partnership with Valad Property Group. Kennards became the

largest Self Storage operator in the country doubling their size through the acquisition

Kennards Self Storage now manage 30 properties

Kennards Self Storage opens its 20th property. The same year Sam Kennard becomes Managing Director

Sam Kennard joins Kennards Self Storage Kennards Hire and Kennards Self Storage separate

A second storage centre is opened

in New South Wales

Neville Kennard

opens Australia’s

first Self Storage

site in Queensland

Kennards Self Storage History & Growth Timeline 46 Years of Experience

Neville Kennard discovers

Self Storage in the USA

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Organisational Overview Our Team

Our team are our greatest asset. Each individual brings a diverse set of skills knowledge and experience. As unique as we are individually our team share a mutual passion for the business and our customers. Our team are empowered to make decisions, share and implement new ideas. We pride ourselves on our values ensuring everyone we interact with is left a ‘Store With People Who Care’ experience.

Sam Kennard - Chief Executive Officer

Darren Marshall - Chief Operating Officer

Anthony Rous - Chief Financial Controller Jeff Xanthos - Chief Information Officer H.K Tung - Director

Tony Vuong - General Manager of Operations

David van Aanholt - Board Director

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Left to Right Darryl Hodgson - NSW Operations Manager, Andrew Kirkham - NZ Operations Manager, Carolyn Coates - NSW Operations Manager, Nichola Goodwin - QLD Operations Manager, Wayne Birch- VIC Operations Manager, Sathish Rao - Financial Controller, Sally Bloomfield - VIC Operations Manager, Jelena Stricevic - NSW Operations Manager, Antone Boustani - NSW Operations Manager, Fiona Harding - Australian and New Zealand Business Development Manager, Michael Macheledt - Development & Construction, Craig Henery - Construction Project Manager

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Insurance Information

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Renewal Report 2019-20

Renewal Declaration Report (PDF attached)

Insurance Manual 2019-20

Insurance and Claims Manual (PDF attached)

Schedule of Policies

Schedule of Policies (PDF attached)

Policy Wordings

Industrial Special Risk Insurance Policy (PDF attached) Liability - First Excess Liability Policy Schedule (XL Insurance ) (PDF attached) Liability - Second Excess Liability Policy Schedule (AAI Limited) (PDF attached) Umbrella Liability (PDF attached)

Heavy Motor Vehicle (PDF attached) Professional Indemnity (PDF attached) Directors and Officers Policy Schedule (PDF attached) Primary Liability Policy (PDF attached) Comprehensive Crime Policy (PDF attached) Business Travel Policy (PDF attached)

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Kennards Risk Management

Campbelltown1 100% Low Low Nil Nil High N/A $16.50 Camperdown 100% High Low Nil Nil Low Wine Storage, Gun Storage, Deposit Boxes 36 $90.40 Caringbah 0% Low Low Medium Nil Medium OI* Managed Castle Hill 100% Low Low Nil Nil Medium 24 $44.15 Chatswood 100% High Nil Nil Nil Low Wine Storage 23 $30.30 Chullora 100% Low Medium Nil Nil Low 23 $20.45 Frenchs Forest 100% High Nil Nil Nil Low 23 $18.70 Gladesville 100% High Nil Nil Nil Low 21 $32.50 Guildford 100% Low Low Nil Nil High Forklift Hoists N/A $18.80 22 $24.30 Hornsby 100% High Nil Nil Nil Low 22 $19.65 Hoxton Park 100% High Nil Nil Nil Low Leased Property 25 $7.65 Kingsgrove 100% High Nil Nil Nil Low 20 $22.90

Homebush 100% High Low Nil Nil Low Hailstorm/Asbestos Roof Loss (roof replacement in 2019 Kirrawee 100% Medium Nil Nil Nil Low Hail Storm/Asbestos Roof Loss 20 $21.10 Macarthur 90% Undeveloped site Managed Macquarie Park 100% Medium Nil Nil Nil Low THQ 12 Macquarie Park 100% Medium Nil Nil Nil Low Storage 21 $33.0 Marrickville 100% High Nil Nil Nil Low 19 $12.10 Miranda 100% High Nil Nil Nil Low Wine Storage 24 $24.50 Mittagong 100% Low Low Nil Nil Low N/A $12.90 Mona Vale1 100% High Nil Medium Nil Low 18 $17.55 Moore Park 100% High Nil Nil Nil Low Deposit Boxes 36 $54.00 Parramatta 100% High Nil Nil Nil Low 26 $19.45

value

Individual Property Loss Risk Schedule Revised 1 st June 2020 Major Risk/Impact Business Interruption Cover (Months Earning) (million) Fire Flood Earth quake Tsunami Tropical Cyclone Break In Other Artarmon 100% High Low Nil Nil Low Wine Storage 36 $29.55 Artarmon2 40% Low Low Nil Nil Low Leased Property 36 Managed Auburn 100% Low Low Nil Nil Low 24 $23.80 Bankstown 100% Low Low Nil Nil High N/A $27.20 Brookvale 100% High Low Low Nil Low Wine Storage 36 $46.90 Bringelly Associate High Low Low Nil Low N/A Managed Campbelltown 100% Low Low Nil Nil High N/A $18.80 Kennards Individual Property Loss Schedule Owner- ship Interest % Market Sydney Area

Penrith Storage 100% Low Low? Nil Nil Nil N/A $26.90

Penrith Restaurant 100% High Low Nil Nil Nil N/A Petersham 100% High Nil Nil Nil Low 25 $24.80 Prospect Associate Low Nil Nil Nil Medium 16 Managed Pymble 100% High Low Nil Nil Low 20 $21.25

Rozelle 0% High Nil Nil Nil Low Wine Storage OI* Managed Rydalmere Associate Low Nil Nil Nil Medium 24 Managed St Marys 0% Low Low? Nil Nil Medium 24 Managed

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Fortitude Valley 100% V high Medium High Low Low Enhanced smoke detection being installed 48 $12.30 Kunda Park 100% High Low Nil Low Low N/A $4.15 Milton 100% Medium Medium Low Low Low Wine Storage 22 $20.30 Maroochydore 100% High Nil Nil Low Low 20 $9.20 Murarrie 100% High Low Nil Low Low 36 $18.30 Newstead 100% High Low High Low Low Wine Storage 20 $18.85 North Lakes 100% High Nil Nil Low Low 22 $7.5

Southport Associate Under development expected completion Sep 2020 Managed Virginia 100% Low Nil Nil Low Low N/A $14.50 Warana 100% Low Nil Low Low Low N/A $6.55 West End 100% High Medium Med Low Low Wine Storage 20 $24.90 Yeerongpilly 20% Low High Low Low Low 23 Managed Coorparoo 100% Medium High Nil Low Low 22 TBC Melbourne Abbotsford 0% High Nil Nil Nil Low Hail Storm/Asbestos Roof Loss 24 Managed Abbotsford1 100% High Nil Nil Nil Low Wine Storage 23 $34.50

Newcastle Area Newcastle West 100% High Medium High Medium Nil Low Hail Storm/Asbestos Roof Loss/Gun Storage 16 $12.30 Sandgate 100% Low Nil Medium Nil Nil High N/A $9.10 Belmont 100% Low High Medium High Nil High N/A $14.60 Mayfield 0% High Medium Medium Nil Nil High 26 Managed Cardiff 0% High Nil Medium Nil Nil High 26 Managed Central Coast Erina Associate Low Low Low Nil Low N/A Managed South East QLD Managed Browns Plains 100% Low Low Nil Low Low N/A $10.70

Thornleigh 100% High Nil Nil Nil Low 20 $22.90 Ultimo 100% High Nil Nil Nil Low 36 $30.50

Ultimo2 100% High Nil Nil Nil Low 36 $20.90

Warrawong 100% Low Nil High Nil Low 20 $13.05

Warrawong Ind Units 100% Low Nil High Nil Low N/A Warriewood 100% Low Low Medium Nil Medium N/A $31.65

Waterloo 100% High Low Nil Nil Medium Wine Storage 48 $120.05 Wentworthville 100% Low Nil Nil Nil High N/A $22.15 Wetherill Park 100% Low Nil Nil Nil Medium N/A $27.45 Wollongong 100% Low High? Medium Nil Medium N/A $25.20 ACT

Baringa 50% Under development expected completion August 2020 Burleigh Junction 100% High Nil Nil Low Low 24 $21.50 Chermside 100% Low Nil Nil Low Low N/A $11.90

Fyshwick Associate High Nil Nil Nil Low Wine Storage 20 Managed

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Adelaide CBD 100% Low Low Nil Nil Nil Leased to Australia Post till Sep 2021 N/A TBC Klemzig 50% Low Nil Nil Nil Low 21 Managed Mile End 0% N/A Managed Panorama 0% Low Nil Nil Nil Medium 26 Managed Seaford Meadows 50% Low Nil Nil Nil Low 25 Managed Thebarton 50% Medium Low Nil Nil Low Wine Storage, Deposit Boxes 25 Managed New Zealand Hastings 100% Low Nil High Low Nil High GAS (LPG) Sub Station 30 NZD $9.55 Hastings Omahu Rd Low Nil High Low Nil Nil Tenanted. NZD $1.08 Mt Eden 100% High Nil Medium Nil Nil Low Wine Storage 30 NZD $23.35 Napier 100% Medium High High High Nil High 30 NZD $10.55 Onekawa 100% Low Medium High High Nil High 30 NZD $8.50

Craigieburn Associate Undeveloped site Managed 22 $18.75 Cranbourne West 100% Undeveloped site Flemington 100% Medium Nil Nil Nil Low Hail Storm/Asbestos Roof Loss (roof replacement 2019) Hawthorn 100% High Medium Nil Nil Low Wine Storage 36 $24.55 Huntingdale 100% Medium Medium Nil Nil Low Deposit Wine Storage Gun Storage 36 $26.85 Ivanhoe 100% High Medium Nil Nil Low Wine Storage 18 $10.65 Maribyrnong 100% High Nil Nil Nil Low Gun Storage 21 $20.90 North Melbourne 100% High Nil Nil Nil Low 18 $14.35 Port Melbourne 100% High Nil Nil Nil Low Wine Storage 30 $36.15 Springvale 0% High Low Nil Nil Low 23 Managed Preston 100% Medium Low Nil Nil Low 20 $24.80 Thomastown 0% Low Nil Nil Nil Low 24 Managed

Truganina 100% Under development expected completion June 2020 Vermont 100% Low Nil Nil Nil Low N/A $20.15 Adelaide Adelaide Airport 100% Low Nil Nil Nil Low Land leased from AAL N/A $11.50 Croydon Park 50% High Low Nil Nil Low 24

Wairau Valley 100% Medium Under development expected completion Feb 2021 NZD $3.70 Wellington 100% High Low High Low Nil Low Wine Storage. Wellington is in high seismic risk area 36 NZD $25.35 * Owners Insurance

Palmerston North 100% Low Nil Low Nil Nil High 30 NZD $11.75 Tauranga 100% Low High Low High Nil High Ground is reclaimed - subsidence 30 NZD $11.85 Three Kings 100% High Nil Medium Nil Nil Low 36 NZD $21.90

High = The risk of the event is high and the chance of impact on a large part or all of the property is significant. Medium = The risk of an event is moderate, and the chance it will impact only a modest part of the property/customers. Low = The risk of an event is low, and likely to impact a low number of customers/small section of property.

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Revised 2 nd June 2020

This Risk Schedule attempts to identify major risks that KSS must manage in its strategy and operations. The intent is to enable decisions for the business to determine the appropriate appetite and price for Kennards Self Storage risks. The Schedule does not replace sound day-to-day commercial decision making and acumen expectations of people in the organisations. Identified Risk Comments Mitigation/ Management Tested/Reviewed Who is responsible Property Risk • Individual Property Loss • THQ Loss Risk • Environmental Risk • Development Risk (Planning & Construction Risk) We are exposed to risk of loss of a property in whole (or part) due to natural disaster or fire exists. Insurance taken to manage the risk. Business Interruption Cover included. Our largest Asset (Waterloo) represents 7% of our EBITDA. A separate table of each property is attached. This illustrates the particular Risk issues and importance for each critical risk. Entire loss of THQ would impact operations and the centres significantly. Asbestos: Asbestos exists in some Kennards Self Storage locations. Underground contamination: Some properties have industrial use history. Other in-situ latent environmental risks may exist in properties . Kennards Self Storage undertakes property acquisition and development in our growth strategy. Risks particular to this area: - Planning – not achieving a satisfactory approval from council. - Construction – project cost over runs, time delays workmanship, and quality. - Construction – Builder goes broke mid-project. - Construction of occupied/ operating property – work around customer spaces risks damage to their goods. Risk mitigation practices and actions: - Typical fire safety and management practices and training are in place to minimise this risk, including scheduled testing by reputable contractors. - Disaster Management Recovery Plan is documented for action, if needed. - Adequate insurance cover for building replacement and business interruption. Business Interruptions Insurance is on select properties where entire loss is more likely. - See Asset Risk Schedule Risk mitigation practices and actions: - An assessment of this has been undertaken and Disaster Recovery Plan and business continuity is documented. - Insurance cover. - Production environment now operates out of data centre with redundancy implemented at new THQ. Managed MPLS Network implemented with Macquarie telecom. With more workloads operating out of the Cloud the risk is diminishing progressively. - WFH capability established and implemented. - Telephony now cloud based. Risk mitigation practices and actions: - No current knowledge of friable asbestos in any location. - Asbestos has been identified and registered in on site Asbestos Registers as required. - Gradual replacement occurs when the material fails. (I.e. old asbestos roofs are replaced with new metal roofs). – Homebush, Flemington 2019 - Evidence of Friable asbestos can lead to closure of sections of buildings until it is resolved. - Acquisition Due Diligence Risk mitigation practices and actions: - Acquisition Due Diligence - Progress payment of work. - Careful selection of builder to have financial capacity and people capability. - Insurance cover and careful work plan - KSS is named as Principle on Builders Insurance Policy. Reviewed August 2019 Current Reviewing Sep – Dec 2018 In practice Revised Feb 2020 Unchanged September 2017 Available Unchanged September 2017 Ongoing Operations Board Sam Kennard /Darren Marshall/Jeff Xanthos Management Michael Macheledt Investment Risk Kennards Self Storage investment comes with risk of financial underperformance, these include: - Risk of overpaying for a property. - Risk of underperformance of the asset once operating. Occupancy growth could be slow and storage prices lower than forecast. - Latent environmental conditions of a property – particularly old industrial sites. - Risk of property value impairment in the future. - Development price escalation risk Risk Mitigation Practices: - Having a multi-site and multi-market portfolio. - Avoid acquisitions that are too big (i.e. don’t bet the farm). [The Board could establish financial or percentage based thresholds on acquisition size]. - Careful Due Diligence. - Integration and satisfaction of assumptions in feasibility and investment analysis. - Allowance for contingency. - Sound gearing ratio. - review and advice multiple levels Unchanged September 2017 Currently set at 5% Board Board/ Management Team Reputation Risk Mediums of Brand Risk: • Traditional Media (T.V./ Radio) Kennards Self Storage Brand is very important and valuable to the business. Risk of bad publicity from a customer experience exists. Most likely risk activities include: Mitigating Practices and Strategies: - Public Liability Insurance. - Disaster Recovery Action Plan. - Media Relations Plan: Only person permitted to speak to media is Renewal 1 st October 2019 – Level $200 M Review September 2020 Board Management Sam Kennard

Enterprise Risk Management Schedule

Kennards Enterprise Risk Management

Summary of risks to Kennards Self Storage and relevant considerations

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Operations

Management

Jeff Xanthos

Board Management/ Sam Kennard

Board

Board

Board

Operations

Management

Identification required to store Checked daily as per Atlas Page Daily CCTV Integrity Procedure

Cyber incident response in planning & development stage

Cyber education strategies implemented; effort ongoing. Vulnerability scans extended to cloud workloads

Unchanged September 2019

Reviewed September 2017 Brand Guidelines Set

Best Practice/ Skillbuilder training

Board Meeting Agenda item Board Meeting Agenda item

Board Meeting Agenda item Board Meeting Agenda item Board Meeting Agenda item

Board Meeting Agenda item

Reviewed 2019 – Update circulate by end of May 2019

- Continuous improvement and our own offering to differentiate and meet market. Risk Mitigation Practices and Strategies: - Hedging of interest rates with staggered expiry. - Debt reduction. Risk Mitigation Practices and Strategies: - Sound gearing ratio. - Some countercyclical customer types. - Broad geographic spread of assets. - Probability of refinance not being available is considered low. - Managing Covenants and future finance needs. - Refinance includes a 3 rd Lender and staggered Debt Tenor.

Sam Kennard. - Pursuit and adoption of ‘Best Practice’ for disposal of unpaid customer goods. - Execution of Brand look and feel. - Execution of customer service and reputation. - Social Media engagement

- Enforcing identification requirements of all customers deters criminal activity. - Comprehensive CCTV surveillance systems. - Training and development programs Risk mitigation and Actions:

- Recognition program to celebrate achievements of teams and team members. No action required.

Mitigating resilience factors: - Prime location selection of Kennards Self Storage Assets – high barriers to entry. - Multiple locations and multiple markets. - Strong employee engagement to customer service. - Capital intensive nature provides Barrier to Entry.

Risk mitigation practices and actions: - WH&S policies and practices in place and kept on our intranet. - Asbestos Registers kept on all properties with Asbestos. - Administrative nature of duties are low risk.

- Introduction of cyber security education programme and cyber incident response in progress. - New security foundation in Win10 and depreciation of legacy systems mitigates risk significantly.90% complete

- Forklifts do not require licence. Training provided to customers. Waiver required and utilised in centres. Risk mitigation practices and actions: - Fostering employee engagement and constructive culture. - pay higher industry wage levels to be an employer of choice. - Reward system that includes performance base bonuses.

- Annual Cyber Audits followed by remediation planning against evolving weaknesses and new exploits. - Asset Quality Maintenance. - Brand leadership position. - Strong operational team.

- Inner urban locations have highest Barriers to Entry due to land scarcity. - Sound investment metrics on returns - Remain aware of their benefits and features. - Market take-up/acceptance.

- Sale of delinquent’s goods, customer damage or theft. - Upset customers can activate negative media attention. - Customer property damage or loss (typically from water entry/ or break-in and theft) and resulting in upset customers. - Large scale break-ins and loss of goods (Wine cellars and safe

Kennards Self Storage significant borrowings mean the company is exposed to several finance risks; including: - Inability to secure refinance on maturity of debt facility. - Interest rate increases. - Asset Valuation impairment leading to debt covenant breach.

Kennards Self Storage is exposed to risk of economic slowdown. A widespread recession would see Kennards Self Storage income decline. - Self Storage has counter-cyclical attributes – with some customer types storing more in a slower economy.

deposits hold the highest concentration of values). Older ‘ranch style’ developments without door alarms are higher break-in risk, than ‘big box’ and enclosed storage centres. Non-alarmed spaces also higher risk. - Criminal activity on our properties (drugs, terrorist related). Breach of systems and/or customer data privacy

An enduring long term shift toward the “new minimalism” leading to reduction in demand for discretionary storage, could be a risk for our industry sector. Is this probable? Peer to peer and pickup and delivery (POD) type storage providers Aggregators storage compare websites

Technological innovation on leading to substitution of the service of self storage for an alternative is not considered likely.

Overbuilding and aggressive competition are a risk, and would be significantly detrimental if widespread. Oversupply would reduce occupancy, prices and income for Kennards Self Storage.

The Australian Finance culture is refinance on a 3 year cycle. Refusal by lenders to do this would damage both parties. Probability of this event is considered low.

Properties are a place that has visits by the public and employees. Kennards Self Storage undertakes general administrative duties. So risk is low. Use of forklift by customers/ staff represents highest risk activity.

High team turnover diminishes skill base. Recent turnover of people in 2019/20 circa 18.9%.

Kennards Self Storage customers pay in-advance so default credit and bad debt exposure is low.

Self Storage Market Risk • Competition Risk

• Substitution Risk

• Demand Reduction Risk • Disrupters

Operational Risk • WH & S

• Staff Turnover

• Consumer Credit Risk

• Internet & Social Media (You Tube, Twitter, Facebook, etc)

• Cyber Breach & Data Breach

Treasury/ Finance Risk

Economic Risk

Information Memorandum Kennards Self Storage June 2020 18

KENNARDS SELF STORAGE

Jeff Xanthos

CFO

Management

Jeff Xanthos

Jeff Xanthos

Jeff Xanthos

Board

Operations

Operations/ Finance

Operations/ Finance

Jeff Xanthos

Operations

Jeff Xanthos

Jeff Xanthos

Darren Marshall

Unchanged September 2017 Reviewed 30 th every month

DR strategy now consists of hybrid cloud on premis backup solution

Completed now scheduled for annual testing

Implementing 30% TBC 2020

Next audit May 2019

In progress/redeveloping

Tested April 2017

Tested 2020

Completed Dec 2019

Completed March 2020 March 2020

- Team adopted Microsoft Teams for conference calls and facilitating communication

Risk mitigation practices and actions: Websites run on multi availability infrastructure (auto redundant) Internal critical systems are backed up every 30 minutes and can be recovered or run from THQ as part of disaster recovery design - Multi site nature makes a system wide crash unlikely Risk mitigation practices and actions: - Tax services moved to PWC in 2017. - Watson and Erskine support FBT.

Risk mitigation practices and actions: - Centres have regular site audits by Operations Managers. - Exceptions alert sweeps through software finds anomalies. - Insurance cover - Continuous system upgrade - Segregation of duty - Whistle blowers are rewarded Risk mitigation practices and actions:

- Redesign network using SDWAN with multi redundant links Risk mitigation and Actions:

- Annual Cyber Audits followed by remediation planning against evolving weaknesses and new exploits. - Introduction of cyber security education programme and cyber incident response in progress. - Exploring Cyber Insurance Risk mitigation and Actions: - Redundancy plans are in place to run operations from THQ - Redeveloping DR design to run from cloud (hybrid) - Low cash holdings through frequent banking. - In-house procedures and training in place. - Duress alarms onsite Risk mitigation and Actions: - Risk framework being redeveloped to account for change in DR technologies Risk mitigation and Actions:

- Cash is reconciled daily with Statement. - Overnight system checks Team Member accounts for transfer. - Centres use a cash pick up service for banking. Risk mitigations:

- Float is counted and recorded twice a day, once in the digital LOG Book - Part of our annual audit practice is to check and confirm. - Multiple Team Members counting and recording float amount. Risk mitigation and Actions: - Transition to stored dan using Advam integration with Storman Risk mitigations: - Cards have a low limit of $5000.

- Card purchases are reconciled against receipts monthly for approval by the Ops Manager Risk mitigation and Actions: - Digitise and catalogue in cloud intranet (Sharepoint) Risk mitigation and Actions:

- Business operations easily implemented - with digital sign up platform - Back up plan in place to operate remotely with a nearby sister centre - Team Support Managers available to step in at short notice - Systems/access can be operated remotely - Call centre available to continue business - All the THQ Team are set up and home ready

Unplanned outages and infected systems (virus) Ransomware • Critical outages of primary systems: Storman, Great Plains, Citrix • Website crash for extended periods stopping online ecommerce. Timely and accurate payment of tax obligations. Fraud by internal employees in 2 categories: 1. THQ employees 2. Centre team employees

No reduncy means critical outages impacting teams and customers at site level Fraud by customers, suppliers and public. Breach of systems and data. Customer data privacy In the event a critical outage occurs

Reliance on key individuals such as Sam Kennard. In-store team members could be confronted with violent hold-up attempts (probability is low).

Team members collect cash payments from customers for storage rent, box sales and miscellaneous.

All centres hold a cash float between $300 - $700 for change when a customer transacts using cash. CHD stored in Storman present major risk if compromised

All centres have a corporate credit card for the purchase of operational incidentals in place of petty cash.

Risk associated with: Residual paper (contracts) storage and insurance, pre digital agreement platform

Based on 2020 COVID experience there is likely hood, a centre or number of centres could be forced to close temporarily for extended time. THQ could potentially be forced to close

- Pandemic

• Information Systems • Tax

• Internal Fraud

• Internet Outage (retail ops)

• External Fraud

• Cyber Breach

• Catastrophic Data Centre Outage (servers)

• Key Man Risk

• Armed Hold-up

• Cash Collection

• Cash Float

• CHDS

• Credit Card

• Paper Agreements

• Health Risk

Information Memorandum Kennards Self Storage June 2020 19

KENNARDS SELF STORAGE

Claims History

Information Memorandum Kennards Self Storage June 2020 20

KENNARDS SELF STORAGE

ISR

Year Inception Policy No Claim No Status Claimant Claim Description 2003 34 A017313 ISR 34 0094874 CLOSED KENNARDS SELF STORAGE PTY LTD WATER DAMAGE TO CUSTOMERS GOODS 8/05/2004 $0.00 $0.00 $0.00 Sub-total for Year Inception 2003 $0.00 $0.00 $0.00

15 0085373 CLOSED KENNARDS SELF STORAGE PTY LTD UNKNOWN PERSONS FORCED ENTRY TO PREMISES 9/09/2007 $0.00 $0.00 $0.00 Sub-total for Year Inception 2006 $29,728.81 $0.00 $29,728.81

2008 15 A017313 ISR 15 0091649 CLOSED KENNARDS SELF STORAGE PTY LTD HOSE IN AIR CONDITIONER FAILED, DAMAGED CUSTOMERS 4/12/2008 $0.00 $0.00 $0.00

15 0093377 CLOSED KENNARDS SELF STORAGE PTY LTD LOSS OF CUSTOMER'S GOODS DUE TO FIRE 19/09/2009 $0.00 $0.00 $0.00

2010 AN A017313 ISR AN 0002222 CLOSED KENNARDS SELF STORAGE PTY LTD FLOOD DAMAGE - MILTON 14/01/2011 $2,358,213.00 $0.00 $2,358,213.00 AN 0002221 CLOSED KENNARDS SELF STORAGE PTY LTD STORM/FLOOD FORTITUTE VALLEY 14/01/2011 $1,710.50 $0.00 $1,710.50 AN 0005252 CLOSED KENNARDS SELF STORAGE PTY LTD DAMAGE TO WINE AS A RESULT OF FLOODS 21/01/2011 $0.00 $0.00 $0.00 AN 0007721 CLOSED KENNARDS SELF STORAGE PTY LTD WATER DAMAGE TO CONTENTS 31/05/2011 $1,067.10 $0.00 $1,067.10

15 0088125 CLOSED KENNARDS SELF STORAGE PTY LTD WATER DAMAGE BELMONT 8/06/2007 $11,476.13 $0.00 $11,476.13 15 0085183 CLOSED KENNARDS SELF STORAGE PTY LTD FLOOD DAMAGE TO V GOLDIE-SCOT CONTENTS-CRAWFORDS 18/06/2007 $690.00 $0.00 $690.00

15 A017313 ISR 15 0088124 CLOSED KENNARDS SELF STORAGE PTY LTD VARIOUS WATER DAMAGE CLAIMS 4/10/2006 $8,267.34 $0.00 $8,267.34 15 0088128 CLOSED KENNARDS SELF STORAGE PTY LTD WATER DAMAGE WICKHAM/SANDGATE 8/06/2007 $7,886.94 $0.00 $7,886.94

2006 15 A017313 ISC 15 0088130 CLOSED KENNARDS SELF STORAGE PTY LTD BURGLARY CAMPBELLTOWN/BANKSTOWN 4/10/2006 $1,408.40 $0.00 $1,408.40

15 0090912 CLOSED KENNARDS SELF STORAGE PTY LTD SEVERE FIRE DAMAGE TO BUILDING 100 UNITS DAMAGED 19/09/2009 $1,173,881.06 $0.00 $1,173,881.06 Sub-total for Year Inception 2008 $1,173,881.06 $0.00 $1,173,881.06

Total Claim Incurred

Date Occurred Total Paid Balance OS

Claim

________________________________________________________________________________________________________________________________________________________________________

Insured: KENNARDS SELF STORAGE PTY LTD AND OTHERS AS LISTED - Claims Experience from 30/09/2002 to 24/05/2020 Report Selection Criteria: Current(and previous)Policy No: AN A017313 ISR,15 A017313 ISR,34 A017313 ISR,AN A017313 ISC,15 A017313 ISC

Information Memorandum Kennards Self Storage June 2020 21