KSS Information Memorandum 2021

Information Memorandum 2021 Re-finance Kennards Self Storage

Preliminary Edition June 22, 2021

77 Operating Storage Centres $1.9 Billion Portfolio Valuation $152 Million Operating Income

DISCLAIMER

Disclaimer

This Information Memorandum (“IM”) has been prepared by Kennards Self Storage Pty Limited, for a limited number of potential Lenders in considering providing a Senior Secured Debt Facility (“the Facility”) to Kennards Self Storage Pty Ltd. The IM has been provided for exclusive use by Lenders 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 Lenders 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 investment objectives, financial situation, taxation position or other particular needs, or requirements of any potential Lender. Any Lender who intends to participate in the Facility should make its own independent assessment and investigation of the Facility as it deems necessary, including, without limitation, seeking professional advice and must base any investment and/or lending 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.

Belmont NSW

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CONTENTS • Executive Summary • Business Overview - Growth Timeline

• Properties

Assets Overview High Quality & Geographically Diverse Portfolio - Distribution by Market - Asset Grading Distribution - Location & Quality Advantages - Asset Valuation - Asset Summary with Valuations & Grading - P&L 2017 - 2022 (Actuals, Forecast & Budget) - Balance Sheet 2017 - 2022 (Actuals, Forecast & Budget) - New Development Rent Up Performance - Like-for-Like Performance Comparison - Revenue Management - Revenue & Customer Share by Market - Expense Analysis

- Background and History - Development and Growth 2021- 2025 - Business Plan and Strategy - Investment and Growth Strategy

Retailing and Merchandise - Merchandise Sales Marketing - Brand - Business Class - Customer Care Centre - Digital Marketing Operations

• Financial Analysis

- Commentary and Performance - Training and People Development - Organisational Culture

 Risk Management

• Organisational Overview

- Risk Management Schedule

- Organisational Chart (People) - Our Team

• Financing

• Market

- Hedging - Financing Structure - Proposed Term Sheet

- Self Storage Industry Overview

• Contact Information

Wellington NZ

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Executive Summary

Murarrie QLD

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Executive Summary

Invitation Kennards Self Storage (“KSS”) is looking to refinance $110 million of its existing debt facility. The existing debt will be secured by a strong portfolio of property assets with $1.9 billion value and consistently strong operating cash flows. The purpose of this Debt Information Memorandum (“IM”) is to: • provide an overview and description of the business and its operations; • provide an overview of the historical and forecast business performance; and • outline the key terms and structure of the debt finance being sought as well as existing debt. KSS is inviting a limited number of financial institutions as part of this process to consider providing part or all of the facility on terms consistent with those outlined in this IM and the Common Terms Agreement. The Kennards Self Storage business was founded in 1973 by Neville Kennard and has successfully operated for over 45 Years as a family owned business. From the humble beginnings of the business as “Mini Storage” units in Moorebank, NSW, the company has gradually and successfully grown to 95 centres operated in Australia and New Zealand. The growth of the business has come from organic means, strategic property acquisitions with development potential and business acquisitions. The business today is managed by Sam Kennard and a highly capable Management Team, supported by an independent Board. The operating centres of the business are managed by a dedicated team on location and against agreed financial and operational performance targets. A related company, Kennards Storage Management Pty Ltd provides operational oversight and management services to the KSS business under an arm’s length Management Agreement. The KSS business is focused on providing an outstanding customer experience and identifying opportunities to add value to the customers. KSS takes a long term view of its business and invests in operating assets to support this long term view. Portfolio Performance Highlights

• Valued at $1.90 billion (Going Concern) as at 30 June 2020 • 88% occupancy as at May 2021 • Forecast 2020-21 Revenue of $165 million; EBITDA $107 million • Budget 2021-22 Revenue of $175 million; EBITDA of $115 million Performance Summary

For the 2019-20 Financial Year the KSS Group reported a Total Income of $154m; EBITDA of $95m. (62% of Total Income). The financial performance of the Group has been consistent with strong cash flow, retained within the business to fund new acquisitions and capital expenditure. The value growth in property is derived from new acquisitions, developments, strong financial performance, and cap rate compression. The summary of the financial results reflects the continued consistent performance, increased development activity and resultant revenue growth.

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Highlights of the YTD May 2021 Results

The Self-Storage Industry in Australia has shown remarkable resilience during the pandemic since March 2020, and Kennards Self Storage Group has been no exception. After a downward trend in the initial two months, the business has been experiencing exceptional growth across all facets. A comparison of Like for Like centre performances (64 sites) Pre-COVID 19 and during COVID including the last 11 months to May 2021 across key business metrics is demonstrated in the following graphs.

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Key Occupancy Statistics

FY 2017 FY 2018 FY2019 FY2020 PTD MAY 2021 470,355 494,297 516,542 523,411 535,050

Available SQM

Occupied SQM

396,383 405,541 418,192 428,654 458,998

Occupied %

84.27% 82.04% 80.96% 81.90% 85.79%

Net Price Per SQM Revpom

$26.42 $27.21 $27.40 $27.23 $27.15

Revpam

22.27

22.32

22.18

22.30

23.29

Key Financial Performance Metrics

FY 2017 FY 2018 FY2019 FY2020 PTD MAY 2021 $137.20 $143.60 $148.00 $154.51 $150.24

Income ($M)

Operating ($M) Expenses

$ 46.33 $ 52.04 $ 54.65 $ 58.86 $54.45

EBITDA ($M)

$ 90.87 $ 91.56 $ 93.35 $ 95.65 $95.79

Key Financial Position Metrics

FY 2017 FY 2018 FY2019 FY2020

Cash at Bank ($M)

$20.10 $30.36 $18.57 $26.69

Current Assets ($M) (Excluding Cash)

$20.44 $21.95 $33.13 $38.51

Property Assets ($M)*

$1,262 $1,435 $1,581 $1,776

Net Assets ($M)

$ 766 $ 906 $1,020 $1,157

* Property assets are reported at stand alone values for financial reporting purposes. Key Business Attributes The following attributes are some additional and important credit considerations about the KSS Group. • Market Leading Brand in Self Storage Industry with the strongest consumer recall • Asset portfolio with diverse geographic spread and size across Australia and New Zealand • A focussed self-storage specialist with strong systems and decades of consistent performance and experience • Ownership of properties • Primary focus as a Going Concern business where the Asset self-storage has counter cyclical demand attributes • Track record of income growth • Strong re-investment and growth performance

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Key Funding Parameters Lenders are invited to tender or re-tender to finance KSS under its existing Common Terms Agreement. Common Terms Agreement has bilateral arrangements with participating banks on pricing, volume allocation and term of funding. The bilateral agreement is non- negotiable between the Borrower and the participating lender(s). Borrower: Kennards Self Storage Pty Ltd (“KSS”) Facility & Limit: Facility Limit is currently $341 million. Debt of $110 million is to be rolled over. KSS Group Debt - Current Status

Debt Amount

Total Facility

Headroom Expiring on

$110,000,000 $110,000,000 30/09/2021 $128,000,000 $149,000,000 $21,000,000 07/04/2023 $ 50,000,000 $ 50,000,000 - 07/04/2025 $ 32,000,000 $ 32,000,000 - 30/09/2023 $320,000,000 $341,000,000 $21,000,000 -

Purpose of Facility:

The purpose of the rollover will be to re-finance the existing debt.

Term:

2 years, 3 years, 5 years and longer term debt

Covenants:

• •

LVR less than 60%

ICR 1.75x

Timetable:

Distribution of Information Memorandum 21 June - 30 June 2021 Lender - KSS Discussion 1 July - 16 July 2021 Indicative offer on Bilateral Terms 19 July 2021 Selection of Bank(s) 26 July - 30 July 2021 Lending Bank(s) to finalise Credit Approval 2 Aug - 6 Aug2021 Executive Bilateral Agreements 9 Aug - 20 Aug 2021 Draw down/ Renew/ Deliver 30 September 2021 or earlier

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Business Overview

Browns Plains QLD

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95 properties across NSW, VIC, QLD, SA

1972 1973 1981 1991 1995 2003 2004 2007 2008 2014 2020 2021

Today, Kennards Self Storage operates

and NZ. Still proudly a private family owned

and operated business.

Covid-19 lockdowns and disruptions impact globally

Kennards Self Storage

has 80 properties and

it’s market value surpasses $1 Billion

Buy out of

Partners (Valad)

in Joint Venture of orginial Portfolio

Kennards became the largest Self Storage operator in the country

Acquisition of 8

properties to enter New Zealand market

Successful acquisition of Millers Self

Storage in partnership with Valad Property Group.

doubling their size through the acquistion. Growing to 56 locations

Kennards Self Storage

now manage 30 properties

Kennards Self Storage opens its 20th property.

The same year Sam Kennard becomes

Managing Director

and Kennards Self Storage amicably

Sam Kennard joins Kennards Self Storage

Kennards Hire

separate ownership. Neville takes 100% of self storage business

A second storage centre is opened

in Fortitude Valley QLD

Neville Kennard opens Austra lia’s

first Self Storage

Centre in Moore- bank NSW

Kennards Self Storage History & Growth Timeline 48 Years of Experience

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Neville Kennard discovers

Self Storage in the USA

Kennards Background and History In 1973 Neville Kennard, then Managing Director of Kennards Hire Service on a visit to the United States, first saw a “Mini Storage” - rows and rows of garages with roller doors at a facility in California. The idea clicked in Neville’s mind, so he came back and built six 20ft x 10ft storage units behind the Kennards Hire Centre at Newbridge Road, Moorebank - Australia’s first self storage! With a sign out the front saying “Kennards Mini Storage” and a small Yellow Pages ad, the spaces were rented and more were built progressively until the available land was full with about 100 units. The 1980’s Properties were gradually acquired and developed during the 1980’s. In 1981 a big old wool store in Fortitude Valley, Brisbane was on the market, so the decision was made to form a company to specialise in stand-alone self storage facilities. Thus Easi Stor Pty Limited was formed to acquire, develop and market a chain of self storage centres. During this time, 9 properties were opened. The 1990’s Even after the real estate boom of the late 80’s, the company continued to actively look to grow throughout the next decade. 1991 the decision to use the name Kennards Self Storage was made and the 9 properties were re-badged. The style of development was improved and individual door alarms were introduced to all developments from 1994. Sam Kennard became the Managing Director in 1995, and Neville continued to help with Acquisition and development. In 1997, the company began its Melbourne expansion with the acquisition of Huntingdale. The focus on particular investment criteria sharpened and properties were selectively acquired and developed. There were 14 new Self Storage Centres acquired and developed in the 1990’s.

Mt Eden N.Z.

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The Naughties The growth programme continued, and two properties were opened in Adelaide in 2000-2001. Wine Storage was developed and introduced to numerous locations. There are now 16 wine storage locations. Up to 2003, the company added another 2 new self storage centres. In 2004, Kennards Self Storage teamed up with Valad Property Group to successfully acquire 24 self storage properties operating under the Millers Self Storage brand. Valad was a Real Estate Investment Trust (R.E.I.T.) previously listed on the Australian Stock Exchange, with investments in office, industrial, bulky goods retail as well as self storage. The partnership was 50:50 in the acquisition of the Millers sites. Kennards retained independent ownership of its existing properties and managed the business for the joint venture. The 2004 acquisition grew the Kennards group to 56 locations in total. The Millers properties were re-branded to Kennards in 2005. In 2007, the Kennards and Valad Partnership acquired 8 locations in New Zealand. The properties are located in Auckland and other North Island provincial areas. By 2008, the Kennards brand had 69 locations open with 3 additional locations under construction or planning. It had in excess of 400 000 square metres of space available and employed over 200 people. In June 2008, Kennards acquired Valad’s interest in the partnership that commenced in 2004. The acquisition involved 38 properties. This was a significant step for Kennards which remains privately owned. The final separation with Valad was completed in 2010. The Tweenies At the beginning of the decade the company was operating 69 centres, with 48,631 storage units and 429,282 square metres available. Since 2010, the company has continued its expansion with growth of existing centres and addition of several new locations. The period began with the $27 million purchase of the Moore Park centre in 2011. The following year, sadly, the entrepreneurial founder of the company, Neville Kennard, passed away on June 3rd, 2012. Nev’s sons, Sam, Walter and Jim now own the business and proudly perpetuate the organisations great Brand and legacy in private family ownership. Life begins at 40! 2013 is a significant year as Kennards Self Storage celebrated 40 years of operations since its inception in 1973. Six new locations were also opened in 2013, including the $17 million acquisition of a four centre portfolio in South-East Queensland. Kennards had grown to 79 locations and 510,000 square metres of space at year-end. A very different business to the small experimental endeavour started by Neville 40 years earlier in Moorebank. In 2015, after more than 15 years’ operating Team Headquarters at the Sydney suburb of Homebush, the company relocated THQ to its new flagship location in Macquarie Park, in Sydney’s north. With space to grow, the relocation places KSS alongside many multi-national corporate headquarters. It was an opportunity to reset and reposition the company for the future with significant enhancements in systems and technology made in the transition. Steady progress of acquisition and development continued throughout all KSS markets, adding new centres and expanding existing centres every year. By 2019, the company has grown to 91 operating locations, with over 66,000 storage spaces and in excess of 610,000 square metres of rentable space.

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The Twenty Twenties 2020 added three new locations expanding our footprint in Victoria and Queensland, taking the group to 95 operating sites with over 70,000 storage spaces and 650,000 square metres of available space. 2020 also included a major acquisition of the Australia Post building in Adelaide’s CBD. In March 2020 came the COVID-19 pandemic, where we experienced significant disruption with lock downs, and significant business uncertainty. Self Storage continued to operate as an essential business supporting essential services, adapting quickly to the health requirements of social distancing and strict hygiene practices. This accelerated the digital signups know as contactless move in. Kennards was ahead of the curve with this technology. Acquisitions paused in 2020, waiting to see the effects of the pandemic. 2021 has seen investment and acquisitions return off the back of higher occupancy and returns stimulated by the effects of the pandemic. Kennards experienced great resilience in the storage industry with occupancy growth from June 2020 ongoing into 2021.

Castle Hill NSW

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Development and Growth 2021 - 2025 The company has a strong record of successful self storage development. The development program has 2 components: 1. Acquisition of property for development of new storage centres. 2. Expansion of existing locations. The period 2021 - 2025 is forecast to be extremely active years for investment in development. It is anticipated that the financial years of 2021 to 2025 will see the KSS Brand add 50,186 square metres through expansions and 75,942 square metres through new developments. These figures include known new projects and acquisitions that are certain. Future potential acquisitions are unknown and therefore excluded.

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Business Plan and Strategy

Every three years, the Leadership Management Team and a select group of Centre Managers have a workshop to assess the medium to long term strategy of the company. Off-site workshops are spent evaluating the performance and challenging ourselves about the opportunities for the business. The session is used to establish short term actions, toward long term objectives for the next three years or more. The time is largely devoted to understanding our values and culture; and how to execute our service through our people to become a Famous Household Name . The outcome of the 2016 workshop came up with the following objectives/goals.

Our Dream

 To become a Famous Household Name

Our Goal

 To achieve 90% occupancy at an average $30/m² by 2020

Our Strategy

 Deliver a multichannel “five star” customer experience  Distinguish and communicate Kennards value advantage  Attract, keep and develop the best people  Create a connected digital workplace  Unique through culture

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The Kennards business planning process identifies strengths and opportunities for the business to focus management attention. Management on a day to day basis, evaluate the opportunities that deliver value to the Group. The key strengths and opportunities identified in the most recent business planning session include:

STRATEGY

OBJECTIVES

1. Achieve 95% across all mystery shopping formats. (currently phone: 93%, In-store: 85%, Online 70%) 2. Implement Net Promoter Score measure by 2016 and by 2020 achieve 50% score. This has moved to a focus on Google Reviews, looking to achieve 22% of new customers leave a Review, 4.8 stars or better. 3. Achieve group occupancy 90% by 2020, while improving yield.

Deliver a multichannel “five star” customer experience

1. Increase online click through and conversions to 30% by 2021.

Distinguish and commu- nicate Kennards value advantage

2. Improve our total move in ratio for enquiry to move in from 50% (approx.) to 60%.

3. Increase website traffic from 750,000 to 1,000,000 by 2021.

1. Turn over reduced from 24% to 12% by 30 June 2021.

Attract, keep and develop the best people

2. To get five quality applicants per role by 1 January 2017.

3. LMS adoption to help build the most skilled workforce in the industry by 2020.

1. From zero mobility to anytime, anywhere access by 2018 (internal).

2. Digitise all paper forms to electronic workflow by 2018.

Create a connected digital workplace

3. Increase Team productivity and engagement by having the right tools and information in the one place by 2021.

1. OCI Blue Constructive Styles to exceed 80% line by 2021.

2. Tell the story (history/ culture/ family/ business/ video) created by the end of 2021.

Unique through culture

3. Recruit for cultural fit, as measured by the annual OCI results.

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Investment and Growth Strategy

Strong disciplines in investment activities have been the foundation for the company’s sustained success. Understanding the true risk and issues with self storage investment has enabled prudent and careful acquisitions. Kennards Self Storage has been discerning about location and devlopment quality. The preference being to acquire property and develop new self storage centres, over acquiring going concern centres. The development of new centres has the following benefits:  Build the quality of product that fits the Kennards Self Storage Brand.  Source superior locations to incumbent competitors.  Develop properties with potential scale for long term growth. The company identifies and accepts the risk of:  Acquisition and property related risks.  Development consent from local authorities.  Time and cost risk of construction of a new project.  Rent-up risk and lead time to reach mature occupancy. Future growth strategy is to fill identified market gaps in Kennards existing market areas in Australia and New Zealand. Asset Management services are provided to passive investors. However, this is not a principal strategy of growth. The company prefers to own and operate its Assets. Each of the owners, Sam and his brothers Walter and James, plan to continue to grow the business Kennards Assets Alternative Use It is recognised strong demand for residential development property has pushed property prices to very high levels in recent years, particularly in Sydney and Melbourne. Kennards Self Storage has a number of well located inner-urban properties that have proven to be attractive to residential developers. While alternate use re-development is not an active part of KSS investment strategy, the company is mindful of the demand and appeal many assets may hold for developers. This alternate use appeal further underpins the value of many of the assets.

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Retailing and Merchandise

Merchandise Sales

The Kennards Self Storage Retail presentation has evolved through years of trial and error. As a result, sales of merchandise exceed industry peers. The Kennards Box Shop range pays particular attention to presentation and price appeal. Striking iconic design on our Kennards Box Range further strengthens the branding and presentation of the range. The buy-back offer further enhances the marketability of the box range. The retail range is completed with a range of wrapping, plastic covers and bubble wrap. The buy-back offer has broad appeal due to the wide network of storage centres where customers can redeem a refund. 100% participation in all Kennards marketing efforts is another strength of the company. The in-store placement of sale items is carefully considered to maximise sales and enhance the overall brand presentation of our business. In store floor layouts and wall planials are considered to maximise sales and professional appeal. The Kennards merchandise sales strategies turn this otherwise incidental income to a reasonable contributor to profit. Kennards now enjoy sales volumes that greatly exceed industry peers.

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Marketing Brand

Kennards Self Storage is becoming a famous household name . We have been in the storage business longer than any operator in Australia. The Kennards Self Storage name has a high recognition factor among consumers and in the most recent brand awareness study conducted by the Self Storage Association of Australia, Kennards Self Storage rated highest amongst all our competitors. All marketing material and promotion activity is designed to say we are a market leader. To ensure the integrity of our brand and reinforce the image as a market leader, all marketing material is provided for the facilities. The effectiveness of the media and our market position is highly tangible and can be easily seen in each of our properties. All our branding is Trademark protected. Kennards Business Class Kennards Business Class is a programe to attract and nurture the business of large corporations seeking a multiple site and unique solution. Business Class provides a single contact and invoice for their entire storage requirement, as well as other benefits. This has proven very effective in winning and retaining business. The Kennards geographic footprint also provides a compelling national solution for large storage users. This has assisted in winning and retaining commercial customers. Customer Care Centre The CCC facilitates better customer service and has provided noticeable increases in new rentals and occupancies in every location. The software used in the CCC has full visibility and functionality of every storage space, centre and customer in the company. This means we can convert enquiries to storers from missed calls and provide enhanced service to customers and callers. Digital Marketing Over 80% of consumers search online before making a purchasing decision. Annually there are circa 125K searches using the keywords “Storage”,“Self Storage” and “Storage near me” for Australia alone, and that number is growing by 25% annually, according to Google. The number of online shoppers continues to grow each year, with over half searching on mobile and all expecting to transact with a business at their own convenience. Competition is fierce in the online space and the ability to be seen evolves and changes daily. Kennards Self Storage has dedicated internal resources for all our online activities and we work closely with external technology partners to ensure all perspectives are covered to achieve results reflective of our industry leading position. The new generation web sste was launched in 2020. This has delivered a materail improvement in online reservations and new rentals.

Contemporary powerful lock symbol

Consistent Logo

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Operations Commentary and Performance

All management efforts, systems, initiatives and innovations are driven to bring value to the assets. This section explains some of Kennards operating characteristics and activities, and provides insight into operating performance. Key Performance Indicators Kennards has developed a unique set of KPI’s that apply to operations of the storage centre. Each KPI has performance benchmarks describing the expectations of the company. Every team member in the centres knows their KPI’s and how they are performing. In addition, their incentive remuneration is attached to them. The KPI’s are :  Occupancy of area rented.  Revenue against previous year or forecast. The support office provides administrative support and high level HR supervision; National Brand and Marketing execution; coordinated information systems for consolidated reporting and analysis; Accounts Payable and group purchasing. A call centre operates to capture overflow calls from the storage centres. The storage centres are overseen by an Operations Managers who supervise the quality, marketing, service and performance of the centre. An Operations Manager will oversee between 8 and 18 storage centres. The business adopts a decentralised approach to the day-to-day operations of the business. Each storage centre has a permanent team with a Manager responsible for the entire operation and success of their performance. The Manager and his/her team are accountable for the quality of the centre including repairs and maintenance; daily bank reconciliations and local market developments; customer service; sales; accounts receivable and any other property related matters.

 Asking price improvement.  Actual Price improvement  Delinquents customer ratio and amount owing ratio.  Merchandise sales benchmarks.  Ancillary income earned.  Insurance sale ratios.

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Training and People Development Upon joining the Kennards family, the staff in each storage centre are trained and trained and trained. Given the geographic isolation of centres, we believe training is crucial to profit maximisation, as well as to limiting legal liabilities involved in the self storage business. The team members are continuously coached, mentored and trained on self storage management. Our training includes:  New Employee Training (1 week classroom and 3 week on the job)  Effective Manager training (2 day programme to equip people promoted to manager)  Skillbuilder (twice annual training to update people of innovations and new practices)  Delinquent management (as required for people who have difficulty keeping delinquents low)  Phone Sales Excellence (as required to build and improve the skills of the team)  Personal Effectiveness Programme (a 2 day off site personal and professional development programme – attendance is optional)  Training Hubs (each market area has a “Trainer Hub” to provide cost effective on-the-job training) The hubs are our centres of excellence with our highest quality professional team members with additional skills and infrastructure for training new people. Our philosophy recognises that our people benefit from being regularly reminded of proper procedures and being kept up to date with new innovations. With a strong emphasis on sales we aim to see our team utilise the strongest skills and techniques to maintain high sales conversion rates.

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Organisational Culture Since 1998 Kennards has been committed to measuring Company Culture every year using the Organisational Cultural Inventory (OCI). Fostering a constructive culture enables our people to enjoy their work and perform at their best, by reducing Aggressive and Passive Defensive Behavioural Styles. Our latest OCI Results indicate a strong Constructive Style within Kennards Self Storage [See below chart]. Constructive Styles Being: Humanistic & Encouraging - where people are expected to help others learn and develop offer encouragement and resolve conflict constructively. Self-Actualising - where work is seen as enjoyable, ideas are communicated and people maintain their integrity. Affiliative - illustrated by people being open and warm, use good interpersonal skills and show concern. Achievement - style which has an expectation for people to achieve self set goals, pursue high standards and work for sense of accomplishment.

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ORGANISATIONAL CULTURE (All Respondents)

Actual Culture All R spondents N=218

Overall, the strongest extensions are in the Constructive cluster. With respect to the specific cultural norms, the… 2019 OCI Result - All Company

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Organisational Overview

Rydalmere NSW

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Organisational Chart

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Our Team The KSS Group although family owned has introduced market standard Governance structure in the management of its business. The business is overseen by a Board of Directors with the composition of the Board being 1 independent non- executive director, 2 business representatives including the Owner. The Kennards Management Team executes on the directives from the Board and updates the Board formally through 6 meetings annually and also through the Chief Executive Officer when needed.

Board of Directors

The company is under the stewardship of Sam Kennard. Sam is the son of the founder, Neville Kennard. He has been working full-time with the company since 1991. Prior to this he studied and graduated from Hawkesbury Agriculture College with a Bachelor of Business (Land Ec.). He was initially managing storage centres and was soon offered expanded responsibilities, progressing to supervision and property development and acquisition. He became Managing Director in 1994. In his time in the business, the company has grown from 8 locations in 1991 to over 95 today. He has an intimate knowledge of the self storage business. Sam has been a member on the Self Storage Association of Australasia Board of Directors. He is a Board Member of the Centre For Indepedent Studies. He is also a Board Member of the Wenona School Foundation. David has close to 30 years experience in the property and funds management industry. Prior to establishing his own boutique property company he was the Chief Executive Officer (Asia Pacific) of the ASX listed Goodman Group. Prior to being the CEO (Asia Pacific), David was Goodman’s Groups Chief Operating Officer. David worked for Goodman for more than a decade and before joining them he was the Fund Manager of ASX listed Paladin Industrial Fund and an Associate Director of CDH Properties (acquired by KPMG). David has a proven track record at both executive and Board levels of the development and implementation of effective business strategy. He also has extensive and practical experience in change management. David is the Chairman and an Independent Director of the ASX listed 360 Capital Group Limited. In August 2016 David was appointed to the Council of the University of New England. He also sits on a number of advisory boards. David is a Fellow of the Australian Property Institute. David holds a Bachelor of Business (Land Economy) from the University of Western Sydney and a Post Graduate Diploma in Management and a Masters in Business Administration from the University of New England.

Sam Kennard (Chief Executive Officer)

David van Aanholt (Chairman)

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Director

H.K. Tung Director Joined KSS: 1984

Currently H.K. is an Executive Director with Kennards Self Storage. He joined the company working alongside Neville in 1984 and is currently one of the key management people in the Company. He brings strong financial management skills to the company.

Management

Darren Marshall Chief Operating Officer Joined KSS: 2003

Darren oversees Management across the Kennards Self Storage Group, including Learning & Development, Digital Marketing, Revenue Management, Business Class and leading the team of Operations Managers to optimise performance of the teams and the assets.

Jeff Xanthos Chief Information Officer Joined KSS: 1999

Jeff was previously with Millers Storage, which Kennards acquired in 2004. He commenced his storage industry career in Centre Management, but was elevated to I.T. He and his team are responsible for all hardware and software systems throughout the business in Australia and NZ.

Anthony Rous Chief Financial Officer Joined KSS: 2012 Anthony leads the Finance Team in the daily accounting requirements, Financial Reporting and support of the centres. He is responsible for Debt Finance, Compliance, reporting and lender relationships. Previously with Coca Cola Amatil for 15 years. Acts as the Company Public Officer.

Sathish Rao Financial Controller Joined KSS: 2007

Sathish joined Kennards as a Financial Accountant for the KVSI portfolio. In June 2013 he was promoted to Financial Controller, with overall responsibility for the Group Financial Reporting ,Debt Finance Administration and Compliance Reporting. Acts as the Company Secretary.

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Tony Vuong General Manager of Operations Joined KSS: 2011 Tony joined KSS after a career in multi-site retail/ hospitality. He is responsible for the operations Team.

Darryl Hodgson Operations Manager (NSW & SA) Joined KSS: 2005

Darryl’s previous experience was in the hospitality industry. Darryl has responsibility for a portfolio of 17 storage centres in Sydney and South Australia.

Jelena Stricevic Operations Manager (NSW) Joined KSS: 2017

Jelena joined the Kennards team in October 2017 as an Operations Manager for NSW. Jelena’s business background comes from the fashion retail and FCMG industry. Jelena is responsible for 13 storage centres in Sydney and Newcastle.

Carolyn Coates Operations Manager (NSW) Joined KSS: 2015

Carolyn brings over 15 years’ experience in Retail and Tourism Business Operations. Carolyn manages 13 NSW Storage centres.

Antone Boustani Operations Manager (NSW,ACT) Joined KSS: 2012 Antone’s previous experience was in management. Antone manages 14 storage centres in NSW, ACT and the Southern Highlands.

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Andrew Kirkham Operations Manager (NZ) Joined KSS: 2008

Andrew is our NZ based Operations Manager, responsible for 9 storage centres. He also handles small construction projects, and NZ procurement.

Wayne Birch Operations Manager (VIC) Joined KSS: 1997

Wayne was Kennards first Victorian employee when Kennards established its first centre. In 2004, Wayne was promoted to Operations Manager for the Victoria market. He has oversight of 13 storage centres and is based in Melbourne.

Tamie Haley Operations Manager (VIC) Joined KSS: 2021

Tamie grew up on the land with her family farming, so has a very solid grounding of business and the agriculture sector. Spending 25 years in the Banking Sector and KSS being her first real 9-5 job outside of the banking world. Tamie oversees 13 storage centres in Victoria alongside Wayne Birch.

Nichola Goodwin Operations Manager (QLD) Joined KSS: 2016

Nicky comes from a background of multi site retail management and hospitality. Responsible for 17 centres in the State of Queensland.

Michael Macheledt Development and Construction Manager Joined KSS: 2005

Michael joined KSS in 2005 as the Development and Construction Manager. He manages the design and construction of new storage centres and expansions of existing centres.

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Craig Henery Project Manager Joined KSS: 2015

Craig joined our KSS Construction Team to assist in the on-going task of overseeing our expanding building program. Craig brings 30 years of building experience to the role.

Javier Perez Revenue Manager Joined KSS: 2019

Javier is responsible for maximizing revenue and leading the pricing strategy. He joined the company in October 2019, bringing with him more than a decade of experience in business areas such as Revenue Management, Sales, and Marketing in the airline and cruise industries. Javier is an Industrial Engineer with a Bachelor of Science and earned an MBA in 2015.

Deepa Chirayath Digital Marketing Manager Joined KSS: 2019

Deepa is responsible for the implementation of digital strategy and online engagement to boost revenue. She joined the company in August 2019, bringing with her 7 years of experience in sales, marketing, and key account management in the FMCG sector. Deepa has a Master’s in Business with a specialisation in Marketing.

Fiona Harding Business Development Manager Joined KSS: 2005

Fiona Harding is a passionate and driven Business Development Manager specialising in National Accounts and Customer Relationship Management. She is committed to finding long term sustainable storage solutions for companies looking to decentralise their operations throughout Australia and New Zealand. Fiona completed studies in Interior Design and Decoration at RMIT and SWSI graduating in 2008.

Wayne Brown Training and Development Manager Joined KSS: 2019

Wayne is responsible for all the training programmes delivered by the Company in Australia and NZ. He develops and maintains course content as innovations and changes develop, as well as delivering the

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Market

Coorparoo QLD

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Self Storage Industry Overview

(Courtesy David Blackwell)

The Self Storage Industry in Australia emerged in the 1970’s with the development of properties to provide small areas of secure storage for domestic and commercial uses. Neville Kennard is credited with establishing the first storage centre in 1973, as an adjunct to a Kennards Hire Centre. Early development in the industry in the 1980’s and 1990’s involved a limited number of major, multi site owners such as Millers Self storage and Kennards Self Storage and a diverse group of single facility operators. Early self storage developments involved conversion of existing warehouse buildings. Whilst this remains a common practice, it is now also common for facilities to be purpose built. Contemporary self storage development falls into three types depending on property availability and feasibility. 1. Conversion of existing buildings - self storage can offer effective adaptive re-use of existing otherwise obsolete buildings. This mostly occurs in dense inner-urban areas. 2. Purpose-Built ‘Ranch’ style - large land areas are used with drive-up storage buildings with most spaces having immediate driveway access. 3. Purpose-Built Big Box - Large Purpose-Built multi storey buildings have emerged as a feasible way to utilise smaller expensive locations. The Self Storage Industry maintains high practice standards in a self-regulated, commercial environment. A standard form of storage agreement clearly establishing the rights and obligations of both facility operators and customers is promoted by the Self Storage Association of Australasia and adopted by most self storage facility operators. Development of the industry in New Zealand closely followed the development of the industry in Australia with major operators including National Mini Storage in Auckland. Kiwi Self Storage (Auckland and Wellington) and Storage One (now operated as Kennards Self Storage facilities). Over the last few years major Self Storage operators and institutional investors such as National Storage, Kennards Self Storage and Abacus pursuing aggressive acquisition programmes and building substantial and geographically diverse portfolios. This also saw Australian based operators taking a major presence in New Zealand self storage markets. Industry Asset Quality Commentary Self Storage is like any other industry or property sector, with a diverse range of asset quality. Self Storage assets can vary in quality due to their age; construction quality; maintenance and upkeep; operator strategy; size and location.

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A summary of the various qualities is provided below.

Class ‘A’ Facilities Class A facilities have excellent locations and access to attract customers willing to pay rents in the upper percentile in the market place. The facilities must be of superior construction and finish, relatively new or competitive with new facilities, and provides professional on-site and off-site management. Class ‘A’ facilities are typically located in markets with high barriers-to-entry. They are characterised by above average maintenance. Usually have above average security systems as well as 24 hour access. Class ‘B’ Facilities Class ‘B’ facilities have average locations, access and visibility. These facilities compete at the low end of Class A facilities and achieve rent rates below the Class A and above the Class C facilities. They receive average to good maintenance and have a full time on-site manager and competent off-site management. The quality of construction ranges from average to good. Security ranges from average to good. Class ‘C’ Facilities Class ‘C’ facilities generally have secondary, (less desirable) locations relative to the customers needs. Often these facilities have poor access and limited visibility. They are typically older facilities with growing functional and/or economic obsolescence. They achieve rents at the bottom of the range in the market place. These facilities are often owned and operated by individuals and may not have an on-site manager. The quality of construction and maintenance ranges from fair to average. Often these facilities have minimal or no security and receive below average maintenance.

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The Self Storage Industry and Market Participants

The Australian Self Storage sector is dominated by 3 players – • National Storage REIT (ASX”NSR) • Abacus Property Group (ASX”ABP) • Kennards Self Storage (Pty Ltd) These 3 major players account for 41% of the Australian and 23% of New Zealand total supply. This highlights the self storage market is still extremely fragmented. National Storage NSR owns and manages over 200 self storage facilities in Australia and 25 in New Zealand. The REIT was listed in 2013 and continues to expand significantly through acquisitions. Abacus Property Group Abacus are a property group with their portfolio value split between Office (46%), Self Storage (43%) and Retail, Industrial, Residential (11%) making up the balance. Self Storage has become a key focus as they have grown through acquisitions to 92 centres across Australia and New Zealand. Abacus recently acquired the Storage King management platform which has 181 sites in Australia and New Zealand under their banner. All the Abacus sites are operated under the Storage King brand. Summary of Major Owners and Operators December 2020

Value of Owned Centres ($B)

Average Centre Size (SQM)

Operating Centre

Revenue All Centres ($M)

Operator

NLA (SQM)

Kennards

96

659,000

$1.9

$183.4

6,870

NSR

204

1,066,000

$2.7

$194.6

5,225

Abacus

92

442,000

$1.5

$114.0

4,806

• Information from Dec 2020 Half Year Results and Grossed up for a full year. Disrupters We are commonly asked about the risk of disruption by tech-enabled innovations. Indeed, the sector has seen a number of start-ups get going and endevour to disrupt the self storage sector. The disrupters have been in two models. One is a mobile or valet storage concept. This operates with a storage unit or small plastic container is delivered to the customers to fill and be taken away to storage. The second model is a peer-to-peer storage concept. This operates where a person has a spare room or garage rents their space to someone else using a platform. It is akin to Airbnb fro storage. Neither of these models have proven to take a noticeable share of customers from the classical self stoarge offer for a range of reasons. The article addressed likely customer concerns and friction points of this apparent industry threat in an artcile in 2017 and can be found here https://www.kss.com.au/news-and-updates/ challenges-confront-self-storage-disrupters-7309. Principally the trust, peace-of-mind and convenience of professional storage operators has proven to be favoured by cutsomers. To learn more specifically on the storage disrupters please read the article by Sam Kennard.

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The remainder of the top 10 in Australia are FKS (QLD), Store Local, FKSS (VIC), Rent A Space, Storage Choice, U Store It and Wilson Storage. A further Summary of the Australian Self Storage Market provided by Cushmann & Wakefield for Australia and New Zealand.

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Properties

Wollongong NSW

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Assets Overview KSS Group owns 75 operating centres (excluding 2 leasehold properties mentioned below). The KSS Group Assets are overseen by Kennards Storage Management Pty Ltd (“KSM”) under a Management Agreement with the KSS Group. The KSS Group asset portfolio has 77 Operating assets and 7 Development Assets. Of the Operating Assets, the Hoxton Park (NSW) and Adelaide Airport (SA) assets are on a leasehold basis. The KSS Group financials also include 2 leasehold properties at Erina and Rydalmere, however these are excluded from the portfolio of assets considered part of the financing security pool. NSW has the majority of assets by value (64%), centres (52%) and Revenue (65%). This is followed by Victoria, Queensland, South Australia and New Zealand. Properties are valued on a three year cycle. These values are supported by market evidence and are determined by external professional valuers with sufficient experience with respect to both the location and the nature of the property. The 2020 external valuations were based on independent assessments made by Urbis Valuations and Colliers International.

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High Quality & Geographically Diverse Portfolio

Distribution by Market

Asset Grading Distribution

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Location & Quality Advantages

The superior quality of the Kennards Self Storage Portfolio is demonstrated when compared to peers. The following charts show key metric comparisons between the 3 leading operators. Kennards Self Storage assets are located in higher density markets with higher household income catchments. This means there is stronger pricing and operating performance.

AU Popula�on (2019) within 5km of all Storage Centres AU Population (2019) within 5km of all Storage Centres

250,000

199,300

200,000

150,000

124,941

116,576

100,000

50,000

-

KSS

NSR

SK

AU Average Household Income (2019) within 5km of all Storage Centres

$98,000 $100,000 $102,000 $104,000 $106,000 $108,000 $110,000 $112,000 $114,000 $116,000

$114,171

$106,185

$106,051

AU Average

KSS

NSR

SK

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