ING Real Estate 2008 Annual Report - tcm95-112241

INVESTING
FINANCING
DEVELOPING
ANNUAL REPORT 2008

Who we are
We invest in, finance and develop quality real ING Real Estate B.V.
estate in all major global markets. P.O. Box 90463
2509 LL The Hague
We are part of ING Group, a global financial The Netherlands
services institution that offers banking, life T + 31 70 34 18418
insurance, investments and retirement services
to more than 85 million private, corporate and For more information
institutional clients in over 40 countries. ingre.info@ingrealestate.com
We work in partnership with other ING Commercial register of Haaglanden

businesses to develop, launch and distribute real The Hague no. 27096869
estate-based investment and finance solutions.
Our annual report is only available

online. Download the PDF from
www.ingrealestate.com
ING Group
ING Bank/
ING Wholesale Banking
Corporate ING Real Estate

Departments
Investing Financing Developing
We manage commingled real We are an international commercial We are a pan-European developer

estate funds, both listed and real estate lender with roots in the with a diversified portfolio across
non-listed, and separate accounts. Netherlands stretching back to the real estate asset types and
Our strategies span the risk/ 1960s. From our offices in key geographies. We participate in
return spectrum, from core to countries we provide real estate development activities worldwide
opportunistic. Operating across financing solutions to clients in through our investment funds.
four continents we provide major markets around the globe.
services to institutional, sovereign
and retail investors.
For more information For more information For more information

investing@ingrealestate.com financing@ingrealestate.com developing@ingrealestate.com
C — ING Real Estate Annual Report 2008

Contents
BUSINESS
OVERVIEW
MANAGEMENT
BOARD REPORT
FINANCIAL
STATEMENTS
Welcome to our Annual Report,
which aims to provide you with more
INSIDE FRONT COVER 6 CONSOLIDATED
Who we are Chief Executive’s FINANCIAL
information about our business, an
business review STATEMENTS understanding of our performance
2
Performance overview 12 35 and knowledge of our marketplace.
Financial review Consolidated balance
3 sheet
Key figures 15 In today’s markets where we face global
2008 strategy, targets 36
4 and performance Consolidated income uncertainty and economic turmoil,
Mission and values statement
16
we remain committed to providing our
5 Our marketplace 37 clients with the right solutions for their
Global presence Consolidated cash
18 flow statement real estate needs.
Our business
38
20 Consolidated Across the world, our experts’ objective
Our clients statement of changes
in equity is to provide clients with insight into
22
Risk and 39
real estate across a broad spectrum of
compliance report Accounting policies real estate activities: investing, financing
28 46 and developing.
Management Board Notes to the
consolidated financial
30 statements
Corporate
responsibility 73
Segment reporting
32
Corporate 77
governance Risk management
86
PARENT COMPANY
FINANCIAL
STATEMENTS
94
OTHER
INFORMATION
94
Auditor’s report
95
Proposed result
appropriation
96
GLOSSARY
2008 ING Real Estate Annual Report — 1

Performance overview
RESULT BEFORE TAX

It was a tough year for ING Real Estate. The real EUR –192 MILLION
estate markets were badly impacted by the
slowdown of the global economy and the financial –192
723
637
crisis. This had a negative impact on our financial
383
performance. 350
Substantial fair value losses on our direct real estate

investments and on our shares in listed and unlisted Fair value changes
funds were the main cause of an overall loss before Result before tax (excluding fair value changes)
tax of EUR 192 million. 2004 2005 2006 2007 2008
In spite of these market factors, and reflecting NUMBER OF EMPLOYEES

the good growth of our loan portfolio in the first 2,683
nine months of the year, our total business portfolio
declined only marginally to EUR 106.4 billion.
The growth in our financing activities offset lower
assets under management driven by falling real 2,683
2,549
estate valuations, adverse currency movements 2,100
and a strong drop in the value of real estate 1,778
1,523
listed securities. Our development portfolio
remained stable.
TOTAL BUSINESS PORTFOLIO

EUR 106.4 BILLION
107.2
106.4
90.7
69.8
49.6
Development
Finance
Investment Management
2004 2005 2006 2007 2008
2 — 2008 ING Real Estate Annual Report

Key figures BUSINESS OVERVIEW
(in millions of euros unless otherwise indicated) 2008 2007 2006 2005 2004
Income excluding fair value changes 1,128 1,057 970 625 553
Income from fair value changes –625 217 119 160 74
Risk costs (additions to loan loss provision) 82 – –1 –3 13

Other impairments 60 –8 16 50 19
Operating expenses (excluding risk costs and other impairments) 553 559 438 355 245
Result before tax –192 723 637 383 350
Taxes 19 188 219 154 103
Result after tax –211 535 418 229 247
Minority interests –123 53 9 – 7
Net result –88 481 409 229 239
RESULT BEFORE TAX

Investment Management –562 430 312 265 170
of which fee business 78 174 – – –
of which investment portfolio –640 256 – – –
Finance 293 250 226 215 153
Development 77 43 98 –99 40
Other – – – 2 –13
BALANCE SHEET FIGURES

Total assets 43,497 38,950 29,432 24,534 21,282
Total equity (including current year result) 3,201 3,613 3,068 1,958 1,722
PORTFOLIO INFORMATION (1) (in billions of euros)

Investment Management portfolio 66.5 72.1 65.6 47.1 30.9
Development portfolio 3.0 3.0 2.5 2.5 2.1
Total assets under management 69.5 75.1 68.1 49.5 33.0
Loan portfolio 37.0 32.1 22.5 20.3 16.6
Total ING Real Estate portfolio 106.4 107.2 90.7 69.8 49.6
KEY RATIOS
Return on equity (before tax) –6.0% 20.0% 20.7% 19.5% 20.3%
Result before tax, growth –126.5% 13.6% 66.3% 9.4% 38.9%
Solvency (equity/assets) 7.4% 9.3% 10.4% 8.0% 8.1%
Cost/income ratio 122% 43% 42% 52% 42%
NON-FINANCIALS
Number of employees (FTEs) 2,683 2,549 2,100 1,778 1,523
Reconciliation of profit before tax reported by

ING Real Estate B.V. and profit reported by ING Group
(in millions of euros) 2008 Investment 2007
Total Management Finance Development Total
ING Real Estate B.V. statutory profit before tax –192 –562 293 77 723
Entities managed by ING Real Estate but not in the
ING Real Estate B.V. consolidation group –31 –47 16 0 31
Adjustments to statutory financial statements –5 0 0 –5 –8
Capital charges and Group overhead –69 –6 –69 6 –82
ING Real Estate profit before tax reported by ING Group –297 –615 240 78 664
(1)
The ING Real Estate portfolio includes the portfolio of entities managed by ING Real Estate that are not in the ING Real Estate B.V. consolidation group.
This includes assets under management of Lion Industrial Trust, Lion Gables Apartment Trust and Lion Value fund (EUR 4.7 billion in total) and the
loan portfolio of ING Real Estate Finance Australia (EUR 1.7 billion).

Mission and values
Our mission
We aspire to be the leading provider
of innovative real estate-based solutions
and to exceed our clients’ expectations.
Our values
Our internal values capture the key
behaviours we want to see in our people.
It is what we expect from everyone in
their day-to-day activities. With a culturally
diverse workforce, our values provide
the four pillars which underpin our
culture and unite our people globally:
Integrity
We want to be recognised as a trusted
partner, acting in a way that inspires
confidence in our business and our real
estate activities.
Respect
We should always have respect for and
interest in each other. This is at the heart
of all our relationships and a prerequisite
for our global success.
Performance
Our commitment to improvement and
our focus on results for our clients lies at
the heart of our business.
Passion
We care deeply about what we do,
seeking to provide our clients with valued
insight into real estate. Our approach is
to be constructive and to be determined
to do better.

Global presence OPERATIONAL
BUSINESS OVERVIEW
REVIEW
04_BODY HEADING 04_BODY HEADING

04_Body copy (a) 04_Body copy (a)
NORTH AND SOUTH AMERICA EUROPE ASIA PACIFIC AWARDS

494 EMPLOYEES 1,882 EMPLOYEES 307 EMPLOYEES 18
Brazil Belgium Poland Australia Third-party awards provide

recognition of our activities and
Canada Czech Republic Romania China
the contribution we make to the
United States France Spain Hong Kong, SAR industry. These awards are an
endorsement of our global
Germany Sweden Japan
reputation.
Hungary United Kingdom Singapore
Italy South Korea
Netherlands Taiwan
From these countries we also serve Ireland, Malaysia, Mexico, New Zealand, the Philippines and Portugal.

Chief Executive’s IN THIS SECTION
Our results
business review The real estate markets
Impact on our strategy
Our business
Reducing capital and risk exposure
Cost reduction
Our people
Outlook
GEORGE JAUTZE, CHIEF EXECUTIVE OFFICER
RESULT BEFORE TAX The year 2008 was one of profound change, not just for ING Real Estate
but for many businesses, particularly those operating in the real estate
%
(In millions of euros) 2008 2007 change
and financial services sectors.
Investment Management –562 430 –231
After a decade of continued growth it was disappointing that we reported
of which fee business 78 174 an unsatisfactory result, mainly caused by significant fair value losses of
of which investment portfolio –640 256
EUR 625 million on ING Real Estate’s direct and indirect real estate
investments. This resulted in an overall loss before tax of EUR 192 million.
Finance 293 250 17
Development 77 43 79 Despite difficult market conditions, our total business portfolio

Result before tax (including fair value changes) –192 723 –127
declined only marginally to EUR 106.4 billion at year-end compared
with EUR 107.2 billion at year-end 2007.
Result before tax (excluding fair value changes) 433 506 –14
THE REAL ESTATE MARKETS

Between 2003 and 2007 we saw very strong growth in demand for
real estate investments driven by inexpensive and easily available capital,
mainly in the form of debt. This phenomenon created a strong rise in the
values of real estate. It was also a new phenomenon. In prior real estate
cycles value creation came mainly from strong underlying real estate
fundamentals, in particular from rental growth.

MANAGEMENT BOARD REPORT
By late 2007 we had concluded that this debt-driven era of real estate assume new reporting lines within ING Commercial Bank, as
investment would be curtailed by the emerging financial crisis and that ING Wholesale Banking will be known in the future. The Investment
future value generation would come from rental growth. The financial Management business will become part of a new ING-wide global
crisis did bring the debt-driven era to an end. However, in common with investment management business (part of the Insurer), once it has been
many, we did not foresee the profound effect that the crisis would have created, until which time it will remain a stand-alone entity. The proposal
on property values. Nor did we anticipate the speed and depth of the made by ING Group is subject to the approval of the relevant Works
deterioration, particularly in the latter half of 2008. With respect to rental Councils. While this changes the structure of our business, our specialist
growth, by September 2008, it too became fully apparent that we were client service models will remain intact and the strategic objectives for
entering a period of deep global economic recession, the impact of which each of our businesses will be the same, since these have been closely
will inevitably be felt on rental incomes. aligned to ING Group’s aim to manage risk, reduce capital exposure
and reduce costs.
The result of this is that the real estate value equation has been eroded
from both sides. On the one hand capital in the form of debt is no longer OUR BUSINESS
readily available, on the other it is unlikely that we will see rental growth Our activities cover a broad spectrum of the real estate sector – investing,
in many of our markets until this period of recession is over. financing and developing – and our competitive advantage comes from
the expertise and knowledge of real estate across the value chain. This
IMPACT ON OUR STRATEGY does not mean that we always get things right but we believe that
By the end of the first quarter in 2008 it became clear that we would have the research-led decision-making that pervades the culture of our
to halt the ambitious growth strategy that we had been pursuing for a organisation provides our clients with added value.
number of years. This was not an easy process. Until the end of 2007 we
were still expanding as a result of the net inflow of clients’ capital. Into INVESTING
early 2008 we were feeling the result of that phase of growth. Clients wishing to invest in real estate can do so through our Investment
Management business, which has a global reach. It provides access to
As the year progressed, it was apparent that for certain activities we real estate through a broad range of funds and separate accounts spread
would need to move swiftly from growth mode to sustaining our business across private equity, listed real estate equities and commercial real estate
portfolio. We would need to direct the business safely through the debt investments. We offer a number of investment strategies and
financial and economic turmoil by managing our existing portfolio in a provide access to both asset specific and diversified portfolios.
prudent way, to minimise the impact of market conditions both on our
business and on our clients. The severely impacted real estate markets of 2008, which saw
a strong correction in real estate values around the world, struck our
By the end of the year, this approach was in place across all our business investment business hard. This was for two reasons: fair value losses on
units, as were the following three strategic priorities: our direct and indirect real estate investments and declining fee income.
In terms of fee income, which comprises management fees, transaction
• To focus strongly on client relationships by putting client service at the
fees and performance fees, we saw much lower levels of transaction
centre of everything we do. Our clients, too, are adapting to a new
activity in 2008 and outperformance was harder to achieve. This had
reality. We need to make sure that we continue to provide them
a negative impact on fee income, which declined to EUR 419 million
service and information in a timely manner, even if this is less
(2007: EUR 467 million). In respect to real estate investment activities,
favourable news. We also have to ensure that we manage as expertly
these are undertaken to ensure alignment of interests with our clients
as possible the capital entrusted to us.
as co-investors in our funds, as well as to acquire new investment assets
• To reduce our capital invested in real estate and risk exposure to and portfolios to launch a new fund. These activities generated a fair
real estate. We are seeking to reduce our direct investment in real value loss of EUR 675 million, predominantly driven by our holdings
estate, while carefully managing our development activities and in Australia, Canada and the US. These losses were a major contributory
our loan portfolio. factor to our negative result in 2008 compared with 2007 when we
• To continue our cost reduction programme, aligning our costs to recorded fair value gains of EUR 204 million in our Investment
the current operating environment. Management business.
On 9 April 2009 as this document was being prepared, ING Group During the year we also saw a decline in assets under management,
announced the result of its own strategic review, which included action mainly caused by the falling values of our listed and unlisted real estate
to reduce complexity and risk. In order to reduce complexity it will be investments, which was exacerbated by adverse currency movements.
separating the Bank and Insurer, under one Group umbrella. As a result it This was partially mitigated by new client inflows. As a result assets
is proposed that in the course of 2009 ING Real Estate’s business will be under management only fell to EUR 66.5 billion, 8% lower than at
split. The intention is that our Finance and Development businesses will year-end 2007.

ASSETS UNDER MANAGEMENT Global businesses (indirect funds)
Our real estate securities business experienced good net inflows despite
(In billions of euros) 2008 2007
an environment where real estate stock prices were down by over 47% in
Regional businesses (direct funds) 2008. Assets under management were impacted by market declines but
US 20.9 20.3
our real estate securities activities showed good relative outperformance
compared with benchmarks and peers. This resulted in significant new
Clarion Capital 3.2
business wins. New mandates in 2008 represented EUR 2.1 billion of
Clarion Partners 17.7 assets under management and 22 new clients, the majority of which
Continental Europe 19.9 17.2
were global investment strategies. At year-end global assets under
management by mandate represented 89% of the total. Mutual fund
Australia 5.7 7.1
asset allocation platforms and defined contribution schemes were key
UK 3.7 6.9 to the success of retail mutual fund flows in 2008.
Canada 2.0 2.6
ING Real Estate Select is our multi-manager business. In the UK, across
Asia 2.9 2.5
this sector there were widespread fund freezes on investor redemptions
as many open-end funds struggled to maintain liquidity. However, our
Global businesses (indirect funds)
UK fund of fund, Osiris, dealt with all redemptions and remained open
ING Clarion Real Estate Securities 7.8 12.0 despite liquidity constraints in the underlying funds in which it invests
ING Real Estate Select (multi-manager) 3.6 3.5
and ended the year with positive inflows. This proved to be our most
challenging year since the introduction of the fund. Client communication
Total 66.5 72.1
was top priority.
As market conditions deteriorated, client communication and global Following the launch of Eurosiris in 2006, we launched our first global
intelligence were made higher priorities and we instigated a thorough fund of funds, Global Osiris.
strategic review of our new fund pipeline. We also augmented our risk
management activities and implemented a review of our business in New business flows continued throughout this business, with 19 new
order to reduce the profit volatility caused by our own direct and indirect investments secured. Of these, six were for global strategies reinforcing
investment in real estate. We believe that this will enable us to reduce over this trend.
time the capital, and therefore risk, exposure of ING Group. In particular
we are looking to bring our co-investment in funds into line with lower FINANCING
market norms as well as reduce the amount of capital directly invested Clients wishing to finance their real estate activities can do so through our
in real estate. real estate Finance business. This business is active across a broad range of
geographies and has a client base comprising international institutional
investors, local clients, private investors and developers.
Regional businesses (direct funds)
The vast majority of assets under management are managed for our The commercial real estate financing landscape changed dramatically in
clients in unlisted and listed direct funds. In total we manage over 80 2008 as a result of the crisis in the credit market and the disappearance of
funds for a wide range of clients, of which only ten are open-end and capital market products such as commercial mortgage-backed securities
open to redemption. A core focus of our teams has been to manage our (CMBS). With many financial institutions in difficulty, new loans became
banking covenants and carry out tactical sales either to deleverage our scarce and more expensive. Market risks increased and bank funding
portfolios or to reduce the capital exposure of ING and other investors. declined further as a result. Transaction volumes were lower than the
At the same time we have increased our efforts in maintaining cash flow previous year.
in the funds through pro-active asset and property management. The
average occupancy level of the portfolio is 93%, which demonstrates the In our domestic market, the Netherlands, market movements were less
underlying quality of the assets in the funds. Our funds are well-diversified volatile than those experienced in other markets. This was a result of
by geography and asset type but in a global crisis cannot remain immune the relatively stronger capital position of the Dutch lending banks, the
to market forces. Our investor base is predominantly institutional, the smaller size of transactions and the relatively high market share of private
majority of which are major pension funds. investors who have tended to rely less on capital market products than
institutional investors.
Although we launched no new commingled direct funds during the year,
we won several new separate account mandates for direct property and In the first three quarters of the year we benefited from the withdrawal
we successfully launched a distressed debt fund. of many lenders from the real estate markets. During this period we

increased our total loan portfolio to EUR 37 billion until capital constraints However, we are progressing with a number of regeneration and inner
curtailed our growth in the fourth quarter. The growth of the portfolio in city projects across Europe, projects which were already under way and
combination with some margin improvement resulted in a result before which have already passed our stringent risk criteria.
tax of EUR 293 million, 17% higher than 2007. This was despite higher
risk costs – up from nil to EUR 82 million – and increased funding costs, Retail
which were offset by higher volumes and margins. Retail schemes are our core business. In 2008 construction began on the
Überseequartier retail units, in Hamburg, Germany. We finalised the sale
Portfolio characteristics of the St. Stephen’s mixed-use scheme in Hull, UK, as well as the Alcalá
Our loan portfolio is well diversified across asset types and geographies. Magna shopping centre in Madrid.
The portfolio contains information on loan-to-value ratios, covenants and
the probability of default. The loan book consists of 84% mortgage- Retail refurbishment schemes
secured facilities. The unsecured facilities are only granted to major The restructuring and refurbishment of existing shopping centres is
institutional investors with strong financial covenants. becoming a major component of our retail portfolio, as properties
become outdated. In Belgium we progressed the refurbishment of
The Netherlands Galeries de la Toison d’Or in Brussels. Completion is scheduled for late
We retained our position as a major player in the Netherlands, solidifying 2010. In the Czech Republic we completed the three-year extensive
our home base. Our domestic portfolio grew to EUR 19.4 billion at refurbishment of the Nisa Liberec shopping centre, near Prague, which
year-end 2008 (2007: EUR 16.7 billion). The domestic portfolio accounts re-opened and was sold in 2008. In the Netherlands we are currently
for 52.5% of our total lending portfolio (2007: 52%). extending the Boven ‘t IJ shopping centre in Amsterdam.
International markets Residential

Our international business reflected solid growth despite the changed We completed new residential projects in Belgium (Stadsplein, Genk),
market dynamics. The international loan portfolio increased to the Czech Republic (Hansapaulka, Prague), the Netherlands (Mahler 4,
EUR 17.6 billion (2007: EUR 15.4 billion), which represents 47.5% of the Amsterdam) and Spain (BonaVall, Valencia).
total lending portfolio (2007: 48%).
Offices
DEVELOPING We completed the extensive refurbishment of the EuroAlsace office
In 2008 our development activities delivered a result before tax of building in Paris, France. The structure of the original building dating back
EUR 77 million, achieved mainly as a result of the sale of development to 1870 was maintained, its brick and metal façade restored and new
projects, positive fair value changes in Spain and savings on selling and office space created. The building houses a new underground car park.
letting costs. This result was 80% higher than in 2007. Assets under New apartments have been built above the offices.
management in our development portfolio remained stable at
EUR 3.0 billion. We sold Crane Track in Amsterdam, the Netherlands. A former industrial
remnant, the iconic building has brought life to a former brownfield site
The disruption of the underlying fundamentals of real estate impacted on the banks of the River IJ. Please also see page 31.
many developers, resulting in reduced investor appetite which hampered
the sales process of projects on the market. Weak economic performance In respect to our development activities outside Europe, these are limited
and reduced consumer confidence also eroded strong initial occupier to our investment products, to create new assets as well as the potential
demand for new products during the second half of the year. As the for enhanced returns across our funds.
new economic reality is expected to have a long-lasting effect on property
markets, many developers halted their expansion strategy and turned REDUCING CAPITAL AND RISK EXPOSURE
to reviewing the feasibility of maintaining their existing portfolios. ING Real Estate is part of ING Group. In 2008 steps were taken to
This is an ongoing process as new circumstances continue to unfold. strengthen ING Group’s capital position, including a capital support
facility of EUR 10 billion made available by the Dutch state.
We were no different. Following the expansion of our European
development activities in 2007, in 2008 we directed our efforts to In order to reduce capital invested in real estate and risk exposure we are
adapting our business operations to the deteriorating real estate markets. in the process of reviewing our business portfolio. This may well result
As a result we reassessed our development portfolio, which led us to in our withdrawing from certain activities and/or markets. Already we
withdraw from a number of projects, particularly in the UK, and to have decided not to proceed with a number of funds that we had in
renegotiate contracts or defer several projects in our pipeline.

our new business pipeline. Despite sound investment propositions, we The Management Board and I would like to thank all our colleagues for
have found that investor appetite for new products is limited now, as their efforts during the year.
investors themselves struggle with the impact of the markets on their
own portfolios and asset allocation strategies. At the same time we have In October 2008, Robert Houston joined the leadership team as CEO of
already halted or slowed down some of our development activities and our Investment Management business and Management Board member
are examining closely whether we should be focusing further on a smaller designate. Robert replaced David Blight, who resigned to return to his
number of core markets. In terms of our loan portfolio we have increased native Australia. He was involved with ING Real Estate and its predecessor
our efforts to preserve the quality of the loan portfolio, with a view to companies for 20 years and headed up our Investment Management
mitigating risk. activities from 2005.
During the year we further enhanced our risk management processes On 16 April 2009 Robert Houston announced that he would be stepping
across our business to ensure that we take an even more prudent down on 1 August 2009. We would like to thank Robert for the
approach to risk. We detail the steps taken to manage and mitigate the contribution he has made over 30 years to ING Real Estate and to the
risks of our business in the risk and compliance report on pages 22-27. Investment Management business, in particular for his help in navigating
this business through a difficult period over the last year.
COST REDUCTION
At the beginning of the year our business was still responding to the The coming period will present more challenges for our people as
substantial growth of prior years. And as a growth business our cost base we implement the split of the Real Estate business and the realignment
was still expanding. This changed. In March 2008 we implemented a cost of reporting lines within ING Group, subject to the approval of the Works
containment programme, which proved to be effective. We exceeded our Council. Over the past few years we have worked hard to create a strong
initial cost containment target substantially and by year-end had restricted culture, with high engagement levels. This is something that will help us
our full-year operational cost base (which excludes impairments and risk through the transition period and an attribute of which we can all be
costs) to the same level as 2007. proud. While the changes ahead will undoubtedly be testing, I know that
the professionalism, energy and dedication of our people will help smooth
In the fourth quarter of the year, however, as the full extent of the impact the transition process.
of market conditions became apparent on our business, we entered into a
phase of further cost reduction. This has been implemented in three ways. OUTLOOK
First, we substantially reduced budgets for discretionary out-of-pocket In my 40-year career in real estate, which has spanned the recessions of
spend across areas such as travel, marketing and information technology. the 1970s and 1990s, I have seen and managed substantial change across
Second, we implemented a headcount freeze and have been reducing a number of organisations. The result of the proposed organisational
external contract staff as much as possible. Third, and most regrettably, changes at ING Group and its impact on ING Real Estate presents a
in a number of our offices we have had to make redundancies. In 2008 number of different challenges and opportunities for us all.
these were mainly made in Australia, Canada, the UK and the US, but in
2009 this programme has expanded across all our operations. This makes Each of our businesses has developed enviable competencies in their
life extremely tough for our employees. respective activities and certain elements will remain unchanged. Real
estate markets remain difficult, which will keep loan loss provisions, fair
OUR PEOPLE value losses and impairments at elevated levels. We will continue to serve
It was not an easy year for our people, who responded well to the changes some of the most highly respected real estate investors across the world
in our strategy, our business and our marketplace. Not only have they while our own network of highly skilled real estate experts and our
had to implement a number of initiatives devised to improve our knowledge-base remains intact.
organisational efficiency, but they have also had to deal with the rapidly
changing market conditions, stringent cost containment measures and a
drive to improve our communication with clients. It is to their credit that
we succeeded on many fronts. In our Finance business we put in place
a new client service model and implemented significant process
improvements into our day-to-day operations. In Development a number
of programmes aimed at standardising processes and systems were
introduced, which yielded substantial efficiency gains. The redundancy GEORGE JAUTZE
programme had the greatest impact across the Investment Management CEO ING REAL ESTATE
teams, which also had to heighten their focus on client service.

The result of ING Group’s strategic review on ING Real Estate will be
profound. It is proposed that over the course of 2009 ING Real Estate
will be split(1), with its three businesses assuming new reporting lines
within ING Group.
(1)
Subject to approval from the
relevant Works Councils

Financial review IN THIS SECTION
Total business portfolio

Financial results and
breakdown by business
Total real estate
investment exposure
TOTAL BUSINESS PORTFOLIO Impairments increased by EUR 68 million (2008: EUR 60 million against
Our total business portfolio at year-end was marginally lower than the a release of EUR 8 million in 2007). This was largely due to impairments
previous year at EUR 106.4 billion (2007: EUR 107.2 billion). Our loan on projects in Spain and the UK.
portfolio increased by 15% or EUR 4.9 billion to EUR 37 billion but this
increase was offset by a decrease of EUR 5.6 billion in assets under As the real estate markets went into reverse, we put an expense
management in Investment Management to EUR 66.5 billion. containment programme in place at the end of the first quarter.
Development assets remained stable at EUR 3.0 billion. Despite net This resulted in full-year operating expenses of EUR 553 million
client inflows, the decline in assets under management occurred as (excluding impairments and additions to loan loss provisioning).
a result of net lower values in listed and unlisted funds as well as adverse This was around one percent lower compared to 2007 despite our
currency movements. increased business activities, an increase in FTEs and restructuring
costs booked in the fourth quarter.
FINANCIAL RESULTS
ING Real Estate posted a loss of EUR 88 million after tax in 2008 compared Although the number of FTEs increased by 5% in 2008, reflecting the
with a profit of EUR 481 million after tax in 2007. The loss before tax was growth of our business activities early in the year, a hiring freeze was
EUR 192 million compared with a profit before tax of EUR 723 million in imposed and a headcount reduction programme implemented later in
2007 and can be explained by the following: the year in response to the deteriorating market conditons. This resulted
in a headcount reduction of 108 FTEs at year-end 2008.
(In millions of euros) 2008
FINANCIAL RESULTS BY BUSINESS
Result (profit) before tax 2007 723
Lower fair value changes –842 INVESTING

Lower fee income Investment Management –48
It was a very difficult year for Investment Management as the real estate
markets impacted strongly on both fee income and the value of our
Higher interest income Finance 122
underlying real estate assets.
Higher development income Development 27 • Increased downward pressure on valuations and adverse currency
Other income –30 movements caused assets under management to fall by EUR 5.6
Lower income –771
billion or 8% to EUR 66.5 billion compared to year-end 2007.
Higher additions to loan loss provision (risk costs) –82
• Loss before tax of EUR 562 million (2007: profit before tax of EUR 430
million) which can largely be attributed to fair value losses. These
Higher impairments –68
totalled EUR 675 million and were incurred mainly in Australia,
Lower operating expenses 6 Canada and the US. These fair value losses represent a decline of
Higher expenses –144
EUR 879 million compared with 2007. Under IFRS unrealised gains
or losses are booked through the income statement even though
Result (loss) before tax 2008 –192
these are non-cash items.
• Income excluding fair value changes was EUR 85 million lower at
INCOME EUR 509 million (2007: EUR 594 million). This was primarily due to
Total income at EUR 503 million in 2008 was 61% lower than last year. the fall in net commission income (asset management fees) resulting
It can be concluded that the main driver for the EUR 915 million lower from the decrease in assets under management and much lower
result before tax is the EUR 842 lower fair value changes, consisting of transaction volumes.
EUR 879 million lower fair value changes in Investment Management • Expenses were slightly higher at EUR 373 million (2007: EUR 356
and EUR 37 million higher fair value changes in Development. million). This increase was mainly due to severance payments incurred
to achieve a reduction in headcount. The cessation of several fund
EXPENSES launches resulted in additional costs in 2008. Normally these costs
Finance risk costs totalled EUR 82 million in 2008 whereas no risk costs would have been incurred gradually over time.
were booked in 2007. These were mainly a result of provisions in Spain
and the US as well as smaller provisions in other countries.
• Impairments were higher on development projects in the US and
Australia.

FINANCING INVESTING
Finance continued to show good profitability due to the growth of
(In millions of euros) 2008 2007
the loan portfolio and improved margins despite substantially higher
risk costs. Interest result –144 –138
• Our total loan portfolio grew by 15% to EUR 37 billion Investment income –243 297
(2007: EUR 32.1 billion). This growth was realised in the first nine Net commission income 419 467
months of 2008 despite the difficult market conditions. Capital
Share of result from associates –193 128
constraints restricted growth in the fourth quarter of 2008.
Other income –4 44
• Profit before tax rose by 17% to EUR 293 million
(2007: EUR 250 million). The increase was mainly driven by Total income –166 798
the organic growth of our international and domestic business. Impairments 23 12
• Income was 40% higher at EUR 453 million (2007: EUR 325 million). Operating expenses 373 356
Higher revenues resulted from substantially higher interest income
Result before tax –562 430
due to the growth of our financing activities as well as somewhat
higher portfolio margins and somewhat higher net commission
income.
• Risk costs totalled EUR 82 million in 2008 (2007: nil) and mainly FINANCING
relate to loans in Spain and the US. (In millions of euros) 2008 2007
• Despite the 15% growth of our portfolio, operating expenses were Interest result 433 311
only up by 4% at EUR 78 million (2007: EUR 75 million) and therefore
improved the cost/income ratio for the Finance business. Net commission income 24 13
Other income –4 1
DEVELOPING Income 453 325
By its very nature, this business produces a volatile income component
year-on-year since we generate profit as development projects are Risk costs 82 –
completed and sold. Under IFRS profit can only be realised following Operating expenses 78 75
the delivery and sale of projects. Sales were high in early 2008 with Result before tax 293 250
sizeable projects sold. Income growth was supported by positive fair
value changes of EUR 50 million (2007: EUR 13 million) that are reported
under investment income, of which EUR 60 million was booked in the
fourth quarter.
DEVELOPING
• Assets under management in our development portfolio totalled
EUR 3.0 billion at year-end 2008 remaining on par with 2007. (In millions of euros) 2008 2007
• Profit before tax rose by 80% to EUR 77 million (2007: EUR 43 million). Interest result –29 –32
The increase was achieved mainly as a result of the sale of Investment income 93 63
development projects, positive fair value changes in Spain and savings
Net development income 115 82
on selling and letting costs.
Other income 38 38
• Income at EUR 217 million increased by 43% (2007: EUR 151 million).
Revenues were mainly higher due to the sale of development projects Income 217 151
and positive fair value changes in Spain. Impairments (reversals) 37 –20
• Impairment losses amounted to EUR 37 million, mainly on account of Operating expenses 103 128
the UK and Spain, compared to impairment releases of EUR 20 million
Result before tax 77 43
in 2007.
• Operating expenses (excluding impairments) decreased by 19% to
EUR 103 million (2007: EUR 128 million) mainly due to lower selling
and letting costs.

REAL ESTATE EXPOSURE BY SECTOR TOTAL REAL ESTATE INVESTMENT EXPOSURE
(AS AT 31 DECEMBER 2008)
Real estate investment exposure represents ING Real Estate’s exposure to
the fluctuation in real estate prices, affecting both the value of real estate
Retail 31%
assets and income derived from those assets.
Office 22%
Industrial 18%
Residential 16%
ING Real Estate’s total real estate investment exposure comprises
Other 13%
real estate investment properties, which we own either directly or
indirectly through our investments in funds. It also comprises real estate
development projects and real estate assets held for sale. The total
real estate investment exposure, including leverage, amounted to
EUR 6.9 billion as at 31 December 2008 (2007: EUR 7.0 billion). Total
invested equity amounted to EUR 3.1 billion. ING Real Estate’s exposure
REAL ESTATE INVESTMENT EXPOSURE BY REGION
(AS AT 31 DECEMBER 2008) is well-diversified by geography and real estate type. In 2008 the real
estate markets worldwide saw substantial decreases in value across all
Continental Europe 28% real estate types.
Netherlands 24%
Canada 16% Under IFRS fair value changes of real estate investment properties are
Australia 11% accounted for in the income statement and contribute directly or indirectly
Asia 9% to our overall result (through our share of profit/loss in associates). In 2008
US 7% fair value changes reflected a loss of EUR 625 million whereas in 2007 fair
UK 4% value changes totalling EUR 217 million made a positive contribution to
Other 1% profit before tax. The 2008 fair value loss comprises EUR 354 million
relating to investment properties directly owned by ING Real Estate,
FAIR VALUE CHANGES EUR 224 million reported by the real estate investment funds (associated
(IN MILLIONS OF EUROS) companies), EUR 32 million relating to real estate equity securities and
217 other fair value changes amounting to EUR 15 million.
119
160
74
Development projects and real estate assets held for sale are recognised at
cost less impairments. In 2008 impairment losses totalled EUR 60 million
compared with a gain of EUR 8 million in 2007.
The risk management note in the financial statements on page 82

contains more information on our real estate exposure and a
reconciliation to the balance sheet value.
–625
2004 2005 2006 2007 2008
INVESTMENT PROPERTIES OWNED BY ING REAL ESTATE

Gross Fair 2008 Gross rental
lettable area value revaluation income
PROPERTY PORTFOLIO Location (m2 x 1,000) (in EUR million) (in EUR million) (in EUR million)
Summit portfolio (100%) Canada 3,433 1,753 –354 147
Ocmador portfolio Asia 122 90 –27 12
RGD portfolio Netherlands 220 403 5 31
ING offices portfolio Netherlands 81 109 2 10
Torrejon Spain 0 96 61 0
Healthcare fund UK 0 55 –11 5
Dalton Park UK 14 35 –17 4
Shanghai Racket Club China 79 111 –9 14
IP Property Fund Asia Asia 45 36 0 3
Joondalup shopping centre Australia 130 94 1 8
Ivy Mall Asia 21 35 0 0
European fund properties Europe 57 93 –5 3
Directly held investment properties 2,910 –354 236

2008 strategy, targets and performance
INVESTING
TARGETS (SET IN JANUARY 2008) PERFORMANCE
• Tilt product offer towards value added and opportunistic funds. • Put on hold due to market conditions.
• Deliver consistent investment performance. • Commissioned global IPD performance measurement
to benchmark the entire fund portfolio.
• Of our funds that are benchmarked, 57% outperformed
based on new IPD analysis methodology.
• Increase cross-border investments. • We increased cross-border investments by 7%.
• Further develop alternative products. • Put on hold due to market developments.
• Enter new markets. • We opened an office in Brazil, South America.
• Strengthen our business in Asia • Our global multi-manager business appointed key personnel to head
up its new office in Asia and launched its first global fund of funds.
FINANCING
• Continue our geographic expansion. • We opened an office in Hong Kong, Asia.
• Expand our customer base by developing a new client model and • We put a new client service model in place and developed new
new products. finance products appropriate for the changed market environment.
• Further streamline our internal organisation (shorter time-to-market). • We implemented significant business process improvements into
our day-to-day operations and achieved faster time-to-market.
DEVELOPING
• Strengthen client relationships. • We established strategic client service teams and intensified
our dialogue with clients and external stakeholders.
• Introduce new product concepts. • We launched the community shopping centre concept.
• Expand across Europe through acquisitions. • Put on hold due to market conditions.
CORPORATE
• Improve our IT around the globe. • We are developing infrastructure for a global IT platform for our
operations worldwide.
• Enhance our management capabilities worldwide through a new • Six leadership development sessions were attended by
global leadership programme. 150 participants from across the organisation.
• Enhance the quality of management information by introducing • We introduced new business intelligence tools in Development and
new business intelligence tools. Investment Management.
• Further identify key risks and continue to enhance risk monitoring. • Risk awareness was intensified company-wide and detailed risk
exposure overviews and stress scenario implications were produced
and monitored.
• Include sustainability in our day-to-day business and product • We formulated a sustainability policy and developed objectives and
offerings. action plans for our business.
• Improve internal synergy through joint business initiatives. • Initiatives include knowledge-sharing sessions among our three
businesses.

Our marketplace
We have one of the highest quality, dedicated

in-house real estate research and strategy teams
in the world. Through this network we aim to
provide insight and expertise to inform our clients
and support real estate decision-making.
The events of 2008 defied all expectations. A seismic disruption to the As a result, core unleveraged real estate returns will likely be negative in
global financial system has triggered potentially the sharpest and longest many countries for 2008 and 2009. By 2010 we are likely to get back to
global economic recession that most people will have experienced. more-or-less a pure income return. Thereafter, on the assumption that
We have embarked on a period that is becoming known as the the global economy recovers, as real estate market fundamentals begin
great deleveraging. to stabilise, occupancy rates should begin to pick up and some rental
growth may start to re-emerge in some sectors leading to an income and
A widespread and sharp correction in real estate prices is underway capital growth return in 2011. This is approximately a year later than we
around the world and is likely to persist into 2009 and beyond. Public previously thought and the risk to this outlook probably remains skewed
equity real estate prices have corrected first and foremost firmly to the downside.
The deleveraging process will likely be painful. Most of the policy However, ‘the great deleveraging’ will likely evolve in unpredictable ways
measures taken so far have been designed to avoid catastrophic financial in the year ahead. On the one hand, the decline in capital values could last
system failure and to mitigate the inevitable economic slowdown. Yet the longer and the recovery could come later and be weaker than we currently
economic outlook has already deteriorated rapidly. The outlook for project. On the other hand, should long-term investors start to find that
developed economies as a group in 2009 is the weakest it has been since lower pricing offers an opportunity to acquire assets that were previously
World War II. Consequently, the outlook for developing economies is now tightly held, then confidence could return to real estate capital markets
also much weaker than it once appeared. In such turbulent times, we sooner. Markets will need to be monitored very closely in 2009.
believe that no country can be immune but rather, each country will likely
be affected to varying degrees. We publish a number of research publications on our website. The above extract is
the Executive Summary of Global Vision 2009, which we published in January 2009.
All asset classes have been impacted, including real estate, and all aspects For the full publication, please see our website www.ingrealestate.com
of real estate have been affected, including public and private, equity and
debt, residential and commercial. Public equity real estate prices have
corrected first and fastest. Private equity real estate prices are beginning
to follow. Two effects are at work here. First, capital values are falling as
investors reappraise their appetite for risk – there are few buyers and debt
is costly, if available. Second, the global recession will likely lead to much
weaker real estate market fundamentals in 2009 and 2010, much weaker
than we thought as little as three months ago. This will also likely affect
real estate values.
We believe there will likely be no quick return to the recent debt-driven

era of real estate returns. Real estate pricing will likely return to traditional
metrics – for institutional investors the main metric will likely be the risk
premium and, for certain strategies, the cash flow. We believe identifying
the point when unleveraged private real estate returns will again offer
investors a suitable risk premium over the local risk-free rate is key. This
will require investors to pay close attention to both current pricing and to
prospects. It will depend on the speed and degree to which real estate
price corrections arrive at a level where total returns (the income return
together with potential growth in capital value) provide the appropriate
property risk premium above long-term sovereign bond rates. In general
terms, the necessary property risk premium may be expected to be at
least at the top end of the historic range in each country.

The events of 2008 defied all expectations. A seismic disruption

to the global financial system has triggered potentially the sharpest
and longest global economic recession that most people will have
experienced. We have embarked on a period that is becoming
known as the great deleveraging.

Our business
Investing
Result before tax EUR –562 million OUR STRATEGIC PRIORITIES
(including fair value changes) • Transition to a new phase of globalisation.
• Invigorating client relationship management.
Result before tax EUR 113 million
(excluding fair value changes)
• Protecting fund performance in a traumatic climate.
• Realigning the business in the light of market change.
Assets under management • Reducing risks, capital exposure and costs.
EUR 66.5 billion
HOW WE ACHIEVED THESE PRIORITIES
BY REGION
(AS AT 31 DECEMBER 2008) • We are developing the global strategies of our direct and indirect fund businesses.
• We have established a global portfolio management team.
US 31%
Continental Europe 29%
• We have strengthened our global intelligence.
Securities 12% • We are intensifying client contact.
UK 11%
Australia 8%
• We have reviewed our fund launch pipeline.
Asia 5% • We have implemented a cost reduction programme, including reducing headcount.
Canada 4% • We have initiated a programme to reduce our risks and capital exposure
to real estate.
BY SECTOR PROGRESS 2008

(AS AT 31 DECEMBER 2008) • Over EUR 7 billion of new business was generated, primarily through new separate
account wins.
Retail 25%
Offices 21%
• Investment Property Databank (IPD) was appointed to measure the performance
Securities 17% of our global fund portfolio.
Industrial 15% • Of our funds that are benchmarked, 57% outperformed based on new IPD analysis
Diversified 12% methodology.
Residential 10%
• A new monthly real estate monitor was introduced.
ASSETS UNDER MANAGEMENT (IN EUR MILLION)

Americas 28,647 Asia 2,925

Retail 3,831 Retail 1,045
Industrial 3,979 Industrial 22
Office 4,730 Office 772
Residential 2,232 Residential 1,066
Other 13,875 Other 20
Canada 1,989 Australia and New Zealand 5,578

Retail 220 Retail 1,037
Industrial 1,769 Industrial 1,699
Office – Office 1,668
Residential – Residential 580
Other – Other 594
Europe 27,317
Retail 10,548
Industrial 2,618
Office 6,755
Residential 2,812
Other 4,584

Financing
Result before tax EUR 293 million OUR STRATEGIC PRIORITIES
Loan portfolio EUR 37 billion • Strengthening client relationships.
• Executing our transformation strategy.
LOAN PORTFOLIO BY REGION (AS AT 31 DECEMBER 2008) • Adapting to the changed market dynamics.
Netherlands 52%
• Portfolio management.
USA 13%
Spain 10% HOW WE ACHIEVED THESE PRIORITIES
France 7% • We remain committed to serving our clients while pursuing selective growth.
Australia 5%
Rest of Europe 5%
• We have created a global network of specialist real estate financiers to serve
UK 4%
local markets with local experts.
Italy 4% • We have integrated new business processes into our day-to-day operations.
• We have developed products appropriate for the current market environment.
LOAN PORTFOLIO BY REAL ESTATE TYPE • Through the hard work and dedication of our people.
Retail 34%
PROGRESS 2008
Offices 28% • We achieved solid performance despite the volatile market conditions.
Residential 16%
• We grew our loan portfolio.
Industrial 13%
Other 9% • We have maintained our position as a major player in the Netherlands.
• We have increased our international business.
• Our business processes have been enhanced.
Developing
Result before tax EUR 77 million OUR STRATEGIC PRIORITIES

Assets under management EUR 3.0 billion • Strengthening client relationships.
• Adapting our business rapidly to the changed market dynamics.
DEVELOPMENT PORTFOLIO BY REAL ESTATE TYPE • Achieving operational excellence.
• Intensifying our focus on sustainability in our core business.
Retail 39%
Offices 27% HOW WE ACHIEVED THESE PRIORITIES
Residential 22%
• Through outstanding client service.
Industrial 6%
Other 6% • Delivering quality projects and focusing on sales.
• Reassessing our portfolio and development pipeline to reflect our commercial
focus and risk appetite.
• Control exposure by prudently managing our portfolio.
TOTAL PROJECT VALUE BY REGION
• Observing a cost control programme.
(AS AT 31 DECEMBER 2008) • Transforming our business processes.
Netherlands 39%
• Establishing sustainability objectives and actions.
Other Europe 23%
Eastern Europe 15% PROGRESS IN 2008
Spain 14% • Assets under management stable.
UK 9%
• We achieved the majority of our sales targets and increased our profit.
• We reviewed our portfolio driven by the changed market conditions.
EUR 9.9 BILLION • We implemented cost reduction measures.
• We carried out business process improvements.
TOTAL PROJECT VALUE BY REAL ESTATE TYPE
(AS AT 31 DECEMBER 2008) • We created a sustainability framework for our business.
Residential 35%
Retail 27%
Offices 16%
Parking 16%
Other 4%
Industrial 2%

Our clients
We serve our clients by sharing our knowledge

and expertise to deliver sound real estate decisions
while remaining a trusted partner, committed
to open and transparent communication.
We report below on a number of actions implemented in 2008 in line DEVELOPING

with our renewed focus on clients. It is clear to us that one of the most We established strategic client service teams to serve our clients across the
important aspects of the way we manage relationships with our clients business and intensified our dialogue with investors, retailers, tenants and
is to make sure that they remain fully informed. Clear and transparent municipalities. Relationships with retail clients were strengthened through
communication has become central to our relationship management. our global retail platform with representatives from each of the ING Real
Estate businesses. Together, we share best practices and work in
For the fifth consecutive year we were ranked as the world’s largest partnership with retailers to develop shopping centres as destinations
real estate investment and finance company by leading US magazine of choice in markets around the world.
Pensions and Investments.
We intensified our relationship with external stakeholders. In 2008 we
INVESTING were one of the founding partners of the ULI European Urban Investment
As market conditions deteriorated, client communication and global Network (UIN) together with the City of Barcelona. UIN is a new
intelligence were made even higher priorities. partnership with city government leaders, institutional investors and
developers aimed at driving the rate of investment in Europe’s cities
We set up a new global portfolio management team. The team is seeking through public-private collaboration and innovation.
to create strong investment performance and to source new opportunities
to develop fee income for our business. The team’s analysts look at key Visit www.ingrealestate.com/publications to read the report ‘Closing the investment gap
performance measures, diversity, global reach, spectrum and risk profile; in Europe’s cities’.
with a focus on identifying trends and leveraging our platforms. This
supports the development of new global investment strategies to
complement our primarily regional and asset specific fund mix. TEN LARGEST FUNDS
Investment
We are developing our sector knowledge by strengthening our global (In billions of euros) style Region
platforms: retail, office and industrial. Diversified Core US
ING Industrial Fund Australia Core Australia

Reflecting our focus on client service, we developed our first client
extranet and increased our face-to-face client contact. Our regional Industrial Core US
investment seminars attracted high levels of attendance. More regular ING Dutch Office Fund Core plus Cont. Europe
market review meetings were introduced as well as more intensive market
ING Office Fund Australia Core Australia
reporting. This included a fortnightly real estate monitor to keep abreast
of the rapidly changing US market. ING Summit Industrial Fund Core plus Canada
ING Dutch Residential Fund Core Cont. Europe

FINANCING
ING Dutch Retail Fund Core Cont. Europe
We put a new client service model in place tailored to the needs of our
clients ranging from regional Dutch clients to global institutional investors. ING Retail Property Fund France Belgium CV Core Cont. Europe
For example, to cater for cross-border and global lending transactions, ING Retail Property Fund Ibérica LP Core Cont. Europe
specialist client service teams serve the local needs of our global clients.
The opening of our Hong Kong office in 2008 marks our presence in
eight key markets around the world. In countries where our business
does not have a presence, we leverage the international capabilities of
the ING Wholesale Banking network.
In response to client demand we set up a new real estate Structured

Products Group in London. The team has responsibility for developing
structured finance products focusing on debt advisory, cross business
line products and lending transaction support.

AWARDS WON INCLUDE: MANAGEMENT BOARD REPORT
Property Manager of the ICSC Shopping Centre

Year 2009 Award 2008
—Global Pensions Awards — New large development
category
European Fund Manager
Złote Tarasy, Warsaw, Poland
of the Year 2008
—Property Week Retail Developer of the Year,
Netherlands 2008
IPD Europroperty Award 2008
—Vastgoedmarkt
—ING Dutch Retail Fund for
consistent three-year investment Special High-Rise Sustainability
performance Award 2008
—WestendDuo, Frankfurt,
Investor of the Year 2008
Germany
asiacre.com
Excellence in Construction Award
Global Private Equity Real Estate
for the Eco-Awareness Category
(PERE) Award 2008
2008, Landscape Contractors
—Asia-Pacific Award for China
Association of Australia
Opportunity Fund
—Rosehill Industrial Estate, Sydney
ULI Global Award for Excellence Australia
2008
Cambridge Historical Commission
ULI Award for Excellence 2008 Preservation Award 2008
— One First Street, Cambridge
MIPIM Green Building Award 2008
MA, US
MIPIM Special Jury Award 2008
— Crane Track, Amsterdam
Netherlands

Risk and compliance report IN THIS SECTION
Integrated risk approach

Risk management function
Risk profile
Credit risk and real estate
investment exposure
Risk measurement
Operational risk
Compliance risk management
The composition of our total portfolio, which consists of a regionally The credit/investment risk management departments manage portfolio
diversified portfolio of assets under management, a low-geared lending risk for each business by setting specific risk policies and guidelines.
portfolio and (mainly pre-rented/pre-sold) development projects, reflects Transactional risk is mitigated by evaluating extensive transaction due
our prudent risk mentality. diligence for each new transaction, including detailed information about
the legal structure, funding strategy, typical real estate characteristics
With a strong risk management organisation and stringent risk controls and a transaction risk-adjusted return on capital (RAROC). In addition,
in place, we worked to heighten risk awareness across the organisation transaction-specific risk is reviewed on an annual basis – and where
in anticipation of the rapidly changing market conditions in 2008. During required, on a more frequent basis or as part of specific stress analysis.
the year we produced detailed risk exposure overviews and stress scenario
implications for our stakeholders and the regulators. We kept a tight The transactional evaluation, which is part of the Signatory Approval
watch on developments in real estate markets around the world, Process (SAP), is applied within each business. This process involves
amending risk limits and adapting policies, where necessary, in obtaining approval from dual signatories, one representing risk
anticipation of a downturn in specific markets. management and the other representing the relevant business. It also
defines clear roles and responsibilities which, among other things,
INTEGRATED RISK APPROACH depends on the transaction size. The outcome of extensive transaction
Taking risk is inherent in our business activities. To ensure prudent risk due diligence is presented in the SAP evaluation which, for example,
taking throughout the organisation, we operate within a comprehensive for finance would include the loan facility, the real estate specific
risk governance framework developed together with our businesses. characteristics of the transaction and RAROC. To the extent that
This is tightly embedded in our operational processes and ensures the a transaction falls outside the delegated authorities granted by
proper identification, measurement and control of risks across all levels the Executive Board of ING Group, it is processed through the
of the organisation. Fully integrating risk management into our strategic ING Group Investment Committee for our Investment Management
planning and daily business activities ensures that we have control over and Development businesses and through the ING Group Credit
our risk profile. The integrated framework is in line with ING Group Committee for our Finance business.
policies and complies with financial regulations.
A complete risk profile for ING Real Estate (determined on the basis of
RISK MANAGEMENT FUNCTION various scenarios) is prepared on a quarterly basis and monitored by the
The risk management function at ING Real Estate has the following Asset and Liability Committees and the Risk Committee. The risk profile,
departmental structure: of which our risk dashboard forms a key part, shows the various risk
• A separate credit/investment risk management department for elements (credit risk, market risk, transfer risk, operational risk and
each of our three businesses business risk) and the aggregated elements both on a diversified and an
undiversified basis. The two committees meet once a month to evaluate
• Market risk management the company’s overall risk profile and recent developments as well as
• Operational risk management providing advice on taking restrictive measures, where necessary.
• Compliance In 2008 this included pro-actively renegotiating projects and facilities
in the light of the deteriorating market conditions as well as providing
The risk departments have been set up independently from the risk-based market analysis to support the Management Board’s
businesses they support. They report directly to the Chief Risk Officer, decision-making on strategic reorientation.
who is a member of the Management Board.
ING Real Estate

Risk Management
ING Group
Chief Risk Officer
Credit risk Market risk Operational risk Compliance

FINANCE RISK MANAGEMENT PROCESS INVESTMENT MANAGEMENT RISK MANAGEMENT PROCESS
Credit risk Global Regional

Global
management Product Investment
Board
Committee Committee
Customer due
diligence process
approval approval approval
1. 2. 3. 4. 5. 6.
1. 2. 3. 4. 5.
Receive Customer Valuation Signatory Term sheet/ Review/
New fund If approved Proposal to If approved Monitoring
client due dilligence and credit approval documentation monitoring
initiative forward SAP launch fund phase
request process proposal process negotiation phase
Go-no-go decisions Risk

advice
RISK PROFILE When a new transaction is approved and accepted, it is added to our
In accordance with our business model, the two dominant sources of risk extensive credit data warehouse, which allows us to measure, monitor
at ING Real Estate are credit risk and market risk. and manage the loan book and the changing credit conditions of the
• Credit risk is the risk that ING Real Estate runs for unexpected losses as lending portfolio.
a result of client default. This form of risk relates mainly to the lending
facilities granted by finance activities. We have built up a high-quality lending portfolio based on the SAP
process which is supported by a governance and policy framework.
• Market risk includes the risk that ING Real Estate runs for unexpected As a result, the credit portfolio is well spread across the various asset
losses as a result of a change in the real estate market (real estate types and regions, with a natural concentration in the Netherlands.
pricing risk). Market risk relates mainly to the capital employed by Average loan-to-value of the secured portfolio amounts to 68.7%.
investment management funds and development projects. Only 12% of the portfolio consists of unsecured facilities.
With respect to other sources of risk (for instance liquidity risk, interest REAL ESTATE INVESTMENT EXPOSURE
rate risk, foreign currency risk, operational and business risk), the ING Real Estate carries three different categories of real estate investment
Management Board and the ING Group Executive Board have set clear exposure on its books:
targets to keep these risks to a minimum level.
1. Co-investment seed capital in its real estate funds (and related bridge
CREDIT RISK EXPOSURE capital exposure)
Credit risk is influenced by numerous factors, including lender specific 2. Exposure to development projects and assets held for sale
characteristics, real estate specific characteristics and general market
conditions. Our financing business concentrates on lending to 3. Buildings ING Real Estate owns and occupies
professional real estate investors secured by first or second lien
mortgages. Unsecured real estate lending is only permitted with The level of risk ensuing from the exposure described above is influenced
prime corporate clients based on balance sheet ratio requirements by the general state of the economy, inflation, occupancy, yield and the
and covenants. Furthermore our risk policy focuses on geographic state of the real estate market. Our policy for development projects is to
diversification, limiting unsecured financing and certain types of mitigate this risk through fixed-price construction contracts as well as
assets and maximising loan-to-value ratios per type of transaction. pre-lease and pre-sale agreements where possible. As a result, investment

DEVELOPMENT RISK MANAGEMENT PROCESS exposure is more or less directly vulnerable if the real estate prices of these
investments go down. Real estate price shocks will have a direct impact on
the reported net profit only for the first category (seed and bridge capital).
Purchase Write-off
proposal proposal In the short term, our Investment Management business will continue to
be confronted with challenging investment market conditions and the
risks we face will certainly increase. We take the management of those
Signatory approval process
risks very seriously to ensure that, at all times, they are mitigated to
the greatest extent possible. Our business is well diversified in style,
Research Development Construction Preliminary Final geography, product structure and sector and we have put additional
proposal proposal proposal calculation calculation
models in place to stress test our products and identify future fund risks.
Our overall real estate investment exposure amounted to EUR 6.9 billion in
1. 2. 3. 4. 5. 2008. Out of this, fair value changes of approximately EUR 4.4 billion go
Take Define Formalise Manage Provide
initiative concept design construction after sales through the ING Real Estate income statement, which in both flourishing
and deteriorating markets directly influences the income statement of
ING Group. To mitigate this risk we have built a portfolio of prime real
estate assets, diversified across real estate sectors and countries. But the
Go-no-go decisions most important risk mitigation action is carried out by actively managing
the portfolio. For example, in 2007 a sales programme was initiated for
specific parts of the portfolio based on the view (expected at that time)
that markets could deteriorate. Position limits were also set on parts of
the total exposure to limit the concentration in real estate.
RISK MEASUREMENT
We continuously enhance our risk management systems and believe we
are a leader in developing specific risk models for real estate risk as well
as assigning market risk managers specific to the real estate business.
We have designed risk models for all of the company’s investments,
projects and loan portfolios. In modelling real estate risk, specific models
exist for price risk which is particularly important for real estate investments.
Development projects have different risk drivers.
Project development risk is determined by evaluating the potential

deviation in expected project results. These are driven by the costs
(activated costs and committed expenditures) and benefits of a project.
We use a separate model to determine project development risk, taking
into account process elements such as ‘go’ or ‘no-go’ decisions and
specific development and construction elements, including the market
rent, investor yields, market sales prices, vacancy levels, construction
incidents and construction delays.
Portfolio risk, which is based on individual project risks, is determined

by taking into account regional and sector diversification. The model
we use enables us to evaluate risk and reward clearly and provides insight
into the quality and sustainability of income and earnings on an individual
project basis.

In 2008 we integrated market risk into our strategic decision-making LOAN PORTFOLIO BY RISK
process. Our efforts in this respect are directed at raising the level of
transparency and consistency of market risk measurement, reporting
Secured 84%
and management tools.
Unsecured 12%
Construction 4%
OPERATIONAL RISK
Operational risk is the risk of direct or indirect loss resulting from
inadequate or failed internal processes, people and/or systems and
external events. It includes crisis management, personal and physical
security as well as information management.
We developed risk maps for each of our businesses in 2008 to integrate

operational risk management into our business processes. Risk maps EUROPEAN PROJECT DEVELOPMENT RISK
detail the main risks and key internal controls for each business process
and/or area. They form an important focus point and are an essential Retail 38%
element of the system of internal controls. Risk maps are also used for Offices 25%
testing and monitoring. Residential 21%
Other 12%
An important development in the reporting year was the introduction of Industrial 4%
the non-financial risk dashboard. The dashboard provides insight into the
defined level of risk for each risk category and the actions to be taken.
These categories are:

• Control risk
• Unauthorised activity risk
• Processing risk
• Employment practice risk
• Personal and physical security risk
• Information (technology) risk
• Crisis management and business continuity planning/disaster
recovery planning risk
• Compliance risk
• Internal fraud-related risk
• External fraud-related risk
Apart from audit reports, incidents and management issues, integrated

risk assessments are used for both the risk maps and non-financial risk
dashboard. Integrated risk assessments have been and continue to be
executed to identify and measure the main risks and to define any
additional actions to be taken. Regarding information technology risks,
in-depth monitoring is executed to assess the actual level of information
technology-related risk and any follow-up actions to be taken. This is an
integral part of non-financial risk dashboard reporting.

To heighten awareness for operational risk management across the COMPLIANCE RISK MANAGEMENT
organisation, we held information sessions, discussed lessons learned ING Real Estate operates in the global real estate marketplace as part
and created and distributed an information booklet about operational of a major global financial institution and as such is subject to both
risk management to all our offices in 2008. national and international regulatory supervision. We are committed
to protecting ING’s reputation based on a long-standing culture of
CRISIS MANAGEMENT accountability, integrity and ethical business practice. Managing
We have measures in place to ensure the continuity of our business and to compliance risk and complying with applicable laws, regulations and
enable us to manage, evaluate and resolve crisis situations. Our business ethical standards in both personal and business conduct is a responsibility
contingency plans include an emergency response plan, business that individual ING Real Estate employees share, regardless of
continuity, disaster recovery and crisis communication plans. their position.
PERSONAL AND PHYSICAL SECURITY The integrity of our organisation and the reputation for professional and
The objectives of personal and physical security are to prevent or minimise ethical conduct that ING Group and ING Real Estate enjoy around the
exposure to, or the consequences of criminal and environmental threats world are among our most important assets. In order to preserve this
that may endanger the safety of, ING personnel or impact on ING Real reputation ING Real Estate recognises that it needs to maintain the
Estate. We carry out security risk analyses and tests and take action on confidence of its clients, shareholders, employees and other stakeholders
any weaknesses identified. by acting with professionalism and integrity.
INFORMATION RISK MANAGEMENT We strive to ensure that we have a good understanding of, and strictly
Information risk management governs the trust and confidence of comply with the applicable laws, regulations and standards in each of
our stakeholders and clients by establishing industry best practice the markets and jurisdictions where ING Real Estate operates. We are
and meeting regulatory requirements. This also relates to protecting also committed to the continued embedding of, and adherence to, the
all information against loss, misuse, damage or disclosure of company compliance risk management standards, policies and guidelines set by
information so that confidentiality and integrity is ensured and that ING Group. Regulatory compliance is essential because our long-term
the information is available when needed by those who need it. relationship with our clients depends on integrity and fairness.
The governance and control system in place at ING Real Estate and the ING BUSINESS PRINCIPLES
quantitative evaluation methodology are fully in line with the policies and ING Real Estate attaches paramount importance to upholding its
guidelines of ING Group. We implemented the following policies in 2008: reputation, and the ING Business Principles play an important role in this
respect. ING expects the highest levels of integrity from its employees,
• Anti-fraud policy
regardless of their position in the organisation. They are required to
• IT risk and control programme (Phase II) observe the ING Group Business Principles, which can be viewed on
• Non-financial risk dashboard – described above www.ingrealestate.com.
Risk management is discussed in more detail in note 39 to the financial COMPLIANCE RISK MANAGEMENT CHARTER
statements on pages 77-85. The ING Group Executive Board carries ultimate responsibility for
compliance of the ING businesses with applicable laws, regulations,
ethical standards and for managing ING’s compliance risks. The ING
Group compliance risk management charter and framework was
approved by the ING Group Executive Board in August 2008, and has
subsequently been adopted by the Management Board of ING Real
Estate. The revised charter and framework represents a major step
forward in clarifying the roles and responsibilities for managing
compliance risk at ING and comprises principles, processes and tools
that ING Real Estate management and compliance officers use to
manage compliance risk.

CONDUCT-RELATED INTEGRITY RISK AREAS FRAMEWORK

The management of our three businesses are responsible for The compliance risk management framework has three components:
implementing and ensuring adherence to the compliance risk • The compliance chart provides a roadmap that reflects the key
management charter and framework and related policies. They receive
activities performed by a business unit to understand and manage
support and advice from compliance officers.
its compliance risks.
The scope of compliance risk management covers four conduct-related • The scorecard is a tool that allows a business unit to understand and
integrity risk areas: manage its compliance risks.
• Client-related integrity risk, e.g. money laundering, terrorist financing,
• The advisory component is the mechanism that ensures that the
political or reputational exposed persons, client engagements or business receives specialised support and advice to help manage
transactions with sanctioned countries. its compliance risk more effectively.
• Integrity risk relating to the personal conduct of employees, FINANCIAL ECONOMIC CRIME POLICY (FEC)
e.g. market abuse and personal trading, violation of business In June 2008 the FEC policy and the related minimum standards were
principles or local codes of conduct, gifts or entertainment given approved by the ING Group Executive Board and subsequently adopted
or received and bribery. by ING Real Estate. It replaces the ING Group Financial Economic Crime
• Integrity risk relating to misconduct when providing financial services, Policy of June 2006.
e.g. marketing, sales and trading conduct, transparency of product
offerings, conduct of advisory business, complaint handling, data The FEC minimum standards form the basis for (local) procedures
protection and privacy. covering:
• Integrity risk relating to misconduct at organisational level, • Customer due diligence and know your customer.
e.g. organisational conflicts of interest, anti-trust regulation or • Anti-money laundering and anti-terrorist financing risks.
competition law, new product approval, sector/industry standards
and oversight of intermediaries. PROGRESS IN COMPLIANCE RISK MANAGEMENT
In 2008 the compliance e-learning course ‘Compliance, part of our
LINES OF DEFENCE business’ was rolled out as a mandatory course for every employee in
ING Real Estate has adopted a three-line defence model to manage the Netherlands.
compliance risks. This same model applies to all businesses across
ING Group. In 2008 senior managers at ING Real Estate completed the ‘Leading
1. Business management, the first line of defence, develops and carries compliance risk management in your business’ training programme,
out activities that reduce risk, such as business tracking and reporting which provides deeper insight into the strategic value of compliance risk
and bears the consequences of losses. management, how to apply the framework and tools, and effectively
embed the three lines of defence model.
2. Compliance risk management, the second line of defence, works
with our legal department to identify laws, regulations and standards
related to compliance risk. It then translates these into compliance
obligations and assists business management to identify its
compliance risks. It also helps find ways to reduce risk, advises,
and provides objective challenge and support on the design and
implementation of business procedures.
3. ING’s Corporate Audit Services (CAS), the third line of defence,
provides independent and objective assurance on how effectively
the first two lines of defence deal with the challenges of managing
compliance risk.

Management
Board
GEORGE JAUTZE RONALD NIJSEN WILLEM STEENHOVEN

CEO ING REAL ESTATE CHIEF FINANCIAL OFFICER CHIEF RISK OFFICER
“Disappointingly, we recorded “We had a difficult year in 2008. “The unprecedented and
our first ever loss in 2008 and, as a Our total result was affected worldwide turbulence in the
result of the turmoil in the global by unrealised losses on the financial markets put the spotlight
financial and economic markets, investment portfolio. We on risk management across the
revised our strategy and adjusted successfully implemented financial industry. For ING Real
our objectives to the new cost-reduction measures in order Estate it was no different.”
operating reality.” to align costs with the reduced
growth of our business.”
George Jautze (58), a Dutch Ronald Nijsen (55), a Dutch Willem Steenhoven (48), a Dutch
national, joined ING in 1991 as national, began his career at NMB national, began his career in 1984
manager of the Dutch Development Bank in 1981 where he held various at NMB Bank. He held various
Division of MBO, a real estate positions in asset and liability commercial and management
finance and development management. He became positions at ING Wholesale
company and predecessor to ING controller of the international Banking and moved to Risk
Real Estate. He became a member division of ING Bank in 1995. Management in 2001, taking up
of the Management Board in 2001, He worked as General Manager the position of Risk Manager for
with responsibility for Investment at ING Group with responsibility the Netherlands Division of ING
Management and was appointed for financial and management Wholesale Banking in 2004. He
CEO of ING Real Estate in 2005. accounting from 1999 to February joined ING Real Estate as Credit
Prior to joining ING, he worked for 2007. He became a member of the Risk Manager in March 2006
several large Dutch real estate Management Board and CFO in and was appointed to the
development companies. He holds March 2007. He holds a degree in Management Board as Chief
a Bachelor’s degree in Engineering Econometrics from the University Risk Officer on 1 March 2007.
from Hogere Technische School of Amsterdam.
(Institute of Technology) in
The Hague.

HEIN BRAND ROBERT HOUSTON MENNO MAAS

CEO FINANCE CEO INVESTMENT MANAGEMENT CEO DEVELOPMENT
“We achieved strong performance “As 2008 progressed, property “It has been a challenging year,
in 2008 despite volatile market values were hit hard across the but we continued to deliver
conditions. As a specialist real globe. We changed our strategy projects on schedule and we
estate lender we remain to protect fund performance and increased our profit. We focused
committed to our clients and to communicate to our investors on adapting our business to the
to supporting them in today’s the impact of unfolding rapidly changed real estate
difficult market environment circumstances.” landscape in 2008 in order to
focusing on portfolio secure a well-balanced portfolio
management.” for the years ahead.”
Hein Brand (54), a Dutch national, Robert Houston (59), a British Menno Maas (53), a Dutch
worked as Assistant to the national, joined the property national, joined ING Real Estate
Treasurer at Shell from 1980-1983, industry in 1973 and founded in July 2006 from Amvest, a real
Branch Manager at NMB Bank Baring, Houston & Saunders in estate developer and investment
from 1983-1989 and Branch 1980, which evolved to become management business, where he
Manager at ING Bank until ING Real Estate Investment was Managing Director. Prior to
1996. He was responsible for Management (UK) Limited. Robert joining Amvest in 1997, he held
restructuring large credit facilities was Chairman and Chief Executive various real estate investment
at ING Credit Risk Management until 2008 before taking up management positions at Dutch
Europe as Global Head of Credit the role of Chief Executive of pension provider PGGM. He
Restructuring from 1996 to 2001. Investment Management. He is a worked for ABN AMRO Project
He became a member of the Board member designate. He holds Development from 1985 to 1991.
Management Board in 2001, a degree in Urban Estate Surveying He holds a degree in Social
responsible for Finance. He holds from Nottingham Trent University Geography and Planning Sciences
a degree in Business Economics and is a chartered surveyor. from the University of Groningen.
from the University of Groningen.
Robert Houston will be stepping
down on 1 August 2009. His
responsibilities will be assumed
by George Jautze.

Corporate responsibility IN THIS SECTION
Responsible business practice

Sustainability
Charitable activities
We aim to pursue our business on the basis

of sound business ethics and respect for our
stakeholders because we recognise that they
expect this from us.
RESPONSIBLE BUSINESS PRACTICE SUSTAINABILITY THEMES AND PRINCIPLES

In pursuing sustainable growth and managing for value, we aim to We have identified a number of sustainability themes that are relevant
exceed the expectations of our clients, without compromising our to real estate. These are based on current and anticipated statutory
business principles. We comply with the ING Group Business Principles requirements, current knowledge about the impact of real estate, as
defining the standards of behaviour required by all ING employees and well as market demand for sustainability as experienced by our offices
our main commitments towards our stakeholders. around the globe.
• Energy use and climate change
We are committed to building long-term relationships with our clients
worldwide by providing outstanding service. Strengthening client
• Water use and management
relationships is one of our strategic objectives. Client trust is driven by • Waste reduction and management
many factors and, among other things, depends on how easy we are to • Functional adaptability and physical longevity
deal with, how responsive we are to clients’ needs, whether we fulfil our
promises and whether we treat our clients fairly.
• Location and accessibility
• Health and safety
SUSTAINABILITY • Appeal to occupants
In 2008 we formalised a policy that underlines our commitment to
sustainability. The policy defines our vision, ambition, themes and
• Sustainable urbanism
principles and is aligned with ING Group’s Corporate Social Responsibility
Policy. The policy serves as a sustainability framework for our business. The priority and relevance of these sustainability criteria for ING Real
Estate varies across our business, property sectors and regions according
We have adopted the ‘People, Planet and Profit’ principle to identify the to differences in stakeholder demands, business needs, real estate
key role of real estate in relation to sustainability. We believe that this characteristics as well as the degree of influence by decision makers.
captures the inextricable relationship between economic performance
(profit), environmental protection (planet) and social consciousness We have adopted the following sustainability principles:
(people). We are therefore committed to balancing and aligning all • We believe sustainable real estate will deliver above average returns.
three aspects when practising sustainability. • We gather proof and collect evidence of the value of sustainable
real estate.
PEOPLE
Real estate (a developed area comprising buildings and their immediate
• We aim for thought leadership on sustainability.
environment) is key to human well-being as well as cultural, economic and • We promote categorising real estate-based sustainability aspects.
social functioning. Sustainable real estate enhances both the physical and • We are open and clear on our sustainability achievements.
social well-being of occupants and communities.
• We incorporate sustainability in our core processes.
PLANET
Real estate is a major consumer of scarce natural resources (climate, INVESTING
energy, water and materials) and therefore there is great potential for We are committed to integrating sustainable property investment (SPI)
reducing the use of these resources. Sustainable real estate does not practices into our daily business routine. In addition to the mitigation of
consume natural and environmental resources beyond a sustainable our own environmental footprint, we recognise the need to invest in
level (in the sense that the availability of these resources to future properties that reduce the adverse effects on the environment. As we
generations is secured). are a global enterprise with operations across four continents, we have
clients with sustainability requirements that are as diverse as the local
PROFIT markets in which we operate. Ultimately, the guiding principle for our
Real estate has high economic value and is instrumental in sustainable SPI Policy is to actively engage our clients and other stakeholders in
economic development. Long-term rental growth, tenant retention, pursuing greater sustainability.
lower running costs and stakeholder demands are key factors that
increase the market value of sustainable buildings. We believe
sustainability will help to deliver above average returns.

Progress in 2008 Crane Track, winner of the 2008 MIPIM Green Building Award, embodies
In 2008 we took the following sustainability initiatives with respect to our vision of sustainable development. Designed by Trude Hooykaas,
fund and property management: Crane Track is the result of our efforts in redeveloping a disused shipyard
• We joined forces with three European real estate fund managers into a popular business centre for Amsterdam’s creative community. The
to develop a Global Green Rating (GGR) system to appraise the building’s sustainable qualities include energy efficiency, adaptability to
environmental performance of commercial properties throughout the needs of future users, and the use of durable and recyclable materials.
Europe. The audit methodology is being piloted in France, Germany,
Spain and the UK. Depending on the outcomes, the launch of an We have embraced sustainable urbanism as a core criterion, which sets
open scheme for the GGR system will be considered. us apart from other players in the European market. The focus here
extends beyond the characteristics of the individual building to incorporate
• Our operations in the UK achieved ISO 14001 accreditation for public space.
environmental management in 2008.
• In the US we established sustainability guidelines for new acquisitions, We are involved in a number of inner city urban transformation schemes
development projects and the asset management of our real estate across Europe. Stadsplein Genk is a mixed-used scheme in Belgium that
fund investments. This initiative is based in part on the Leadership in has revitalised the inner city of Genk, integrating retail and residential
Energy & Environmental Design Rating System (LEED) established by space with new city squares, parking facilities and cultural amenities.
the US Green Building Council. The second phase of the scheme opened in 2008.
• Our global multi-manager fund business operates in accordance with
the UN Principles for Responsible Investment. In future, all funds will In Australia we are developing new office and retail projects with the aim
also be rated against this criterion. of achieving a four or five-star rating in benchmarks for energy efficiency
and sustainability. The recently completed RAC Head office in Perth
• A smart metering system was installed in over ten ING Office Fund achieved a four-star Nabers Energy rating.
properties in Australia. The data collected will be used to implement
and manage improvements in energy efficiency. Sustainability initiatives
We initiate and actively participate in industry initiatives to create
FINANCING engagement, define standards and influence policy-making. In 2008
The impact of sustainability initiatives is greater for Development and we were involved in the following initiatives:
Investment Management than for Finance, where we can control only a
small share of the total real estate process, provide guidance and act as an • In France we were among the initiators of Gigaro. The platform
advisor. We recognise the added value of sustainability in this area and aim aims to bring together all the parties involved in sustainable urban
to define a sustainability framework for our financing activities in 2009. development to focus on determining the resources required to bring
to fruition better designs of towns, cities and urban development
DEVELOPING projects.
In 2008 we defined a comprehensive sustainability framework for our • We were one of the founding partners of the Dutch Green Building
development activities with the following objectives: Council and one of the major players in the real estate industry to
• To achieve recognition as a truly sustainable developer in all sign a letter of intent underlining our commitment to sustainable
local markets. construction in the Netherlands, an initiative praised by the Ministry
• To achieve a ranking among the top 25% of the peer group in each of Housing, Spatial Planning and the environment (VROM).
local market for sustainability performance.
CHARITABLE ACTIVITIES
• To incorporate at least two sustainable development projects in 2009 We support the Chances for Children programme run by ING Group
in the portfolio of each country of operation. together with UNICEF, which is designed to provide children in Brazil,
Ethiopia and India with access to primary education. We carried
We apply six sustainability criteria to our development projects: out several initiatives in 2008, including a lottery to raise funds for
sustainable urbanism, location and accessibility, energy and water, the programme.
adaptability, longevity and appeal to occupants.
The ING Microfinance Support programme is another programme
we support. Employees are encouraged to share their knowledge and
experience with individuals and new entrepreneurs in developing
countries.
In 2008 a variety of sponsorship activities were carried out to raise funds

for charitable causes in the countries where we operate.

Corporate governance IN THIS SECTION
Our governance structure

and policy
Management Board
External and internal auditor
Sarbanes-Oxley Act
GOVERNANCE STRUCTURE MANAGEMENT BOARD

ING Real Estate B.V. is a wholly-owned subsidiary of ING Bank N.V., which The Management Board is responsible for providing leadership to the
in turn is a wholly-owned subsidiary of ING Groep N.V., a listed financial company and for ensuring that the right strategy, policies and controls
services company (www.ing.com). ING Group ranks among the world’s are in place in order to deliver value, not only to ING but also to a wider
largest financial institutions. group of stakeholders which benefit from the company’s activities. This
responsibility includes the day-to-day management of the company as
ING Real Estate has three distinct businesses: Investment Management, well as financial control, risk management and regulatory compliance.
Finance and Development. The three businesses have their own regional
or functional structure and a management team, headed by a Chief The Management Board consists of the six members described earlier.
Executive Officer (CEO) and further consisting of a Chief Financial Officer They are appointed by the ING Group Executive Board for an indefinite
(CFO)/Chief Operating Officer (COO) and general managers. The CEO term of office. The CEO of ING Real Estate reports directly to the ING
and management team are responsible for the day-to-day business, Group Executive Board member responsible for Wholesale Banking.
strategy and financial results within the context of the company’s overall
strategy and financial targets. The Management Board meet on a weekly basis and hold a meeting in
the presence of key heads of corporate departments on a monthly basis.
The three business units are individually responsible for their own results
and wherever possible work together to achieve efficiencies that will REMUNERATION
benefit both our clients and the company. The remuneration received by the Management Board members is
based on ING Group remuneration directives and relates to individual
The company is managed by the Management Board which is headed responsibilities and performance. It comprises the following key elements:
by the CEO of ING Real Estate. The Board members consist of the three • Base salary.
business unit CEOs, a CFO and a Chief Risk Officer (CRO). Several
corporate departments support the Management Board and the business
• A short-term variable performance-related incentive, partly in cash
units, including Corporate Control & Reporting, Risk Management, and partly in ING Group stock:
Information Management, Legal, Compliance, Human Resources, – 15% of the short-term variable performance-related incentive
Corporate Communication, Treasury and Tax. depends on the annual result of ING Group.
In 2008 the Management Board established a Remuneration Committee – 55% on achieving the ING Real Estate and ING Real Estate business
to align decision-making on compensation issues relating to ING Real unit medium-term plan targets for the reporting year.
Estate and ensure that the compensation approval process throughout – The remaining 30% is based on individual targets for each
the company is transparent, comparable, equitable and efficient. The Management Board member.
Remuneration Committee consists of the CEO and the CFO as well as
the Global Head of HR, Global Head of Compensation and Benefits and
• Long-term incentives in stock options and/or performance shares
the Global Head of HR at ING Wholesale Banking. The Remuneration based on the ING Group Long-Term Equity Ownership (LEO)
Committee meets at least quarterly. option plan.
• Pension and other benefits in line with ING Group policy.
GOVERNANCE POLICY
ING Real Estate’s corporate governance policy is based on the The remuneration of the Management Board in 2008 compared with
following principles: 2007 is included in note 33 to the consolidated financial statements.
• Clear and concise management responsibilities with personal
accountability and empowerment. EXTERNAL AND INTERNAL AUDITOR
At ING Group’s Annual General Meeting on 22 April 2008, Ernst & Young
• Short reporting lines and focus on clarity and transparency. were appointed to audit the financial statements of ING Group and its
• Management Board members sharing overall responsibility for subsidiaries for the financial years 2008 to 2011. Ernst & Young have been
the company’s strategic goals and day-to-day operations. the auditor for ING Group and ING Insurance since the establishment of
ING Group in 1991 and KPMG Accountants was the auditor for ING Bank.
For that reason, KPMG performed the audit for ING Real Estate B.V. since
ING Real Estate is one of ING Bank’s subsidiaries.

The appointment of Ernst & Young as the sole external auditor meant
that Ernst & Young succeeded KPMG as the external auditor for ING Real
Estate from 2008 onwards. Ernst & Young were already responsible for
auditing the financial statements of all the investment funds managed
by ING Real Estate. Based on the ING Group policy relating to the
Independence of External Auditors, Ernst & Young – as the external
auditor – may only provide audit and non-audit services to ING Real Estate
with the permission of the ING Group Audit Committee. Services that
have not been generally pre-approved by the Audit Committee should
not be provided by Ernst & Young or should be specifically pre-approved
by the Audit Committee on the recommendation of ING Real Estate
management.
The internal audit department at ING Group, Corporate Audit Services

(CAS), is an independent assurance function that also covers ING Real
Estate. The responsibilities of CAS have been established by the ING
Group Executive Board under the responsibility of the ING Group
Supervisory Board. CAS’s scope of work includes coverage of all
significant risks that can have an influence on achieving strategic
goals and objectives. The department periodically assesses processes
procedures and operational risk.
SARBANES-OXLEY ACT
As a company listed on the New York Stock Exchange, ING Group and all
its subsidiaries are required to comply with the SEC regulations adopted
pursuant to Section 404 of the Sarbanes-Oxley Act (SOX), which took
effect in the 2006 reporting year. The legislation requires the ING Real
Estate CEO and CFO to report on, and annually certify, the effectiveness
of financial reporting and internal controls. The scope of this certification
is based on ING Group guidelines and materiality levels. In February 2009,
ING Real Estate’s CEO and CFO signed the 2008 SOX 404 statement
confirming compliance with the above. We are continually looking for
ways to improve the standardisation of processes and documentation
without compromising the overall effectiveness of the control framework.
The Hague, the Netherlands

20 April 2009
MANAGEMENT BOARD
ING REAL ESTATE

FINANCIAL STATEMENTS
CONSOLIDATED PARENT COMPANY

FINANCIAL FINANCIAL OTHER
STATEMENTS STATEMENTS INFORMATION
35 86 94
Consolidated balance Parent company Auditor’s report
sheet balance sheet
95
36 87 Proposed result
Consolidated income Parent company appropriation
statement income statement
37 87
Consolidated cash Parent company
flow statement statement of changes
in equity
38
Consolidated 88
statement of changes Accounting policies
in equity
89
39 Notes to the parent
Accounting policies company’s financial
statements
46
Notes to the
consolidated financial
statements
73
Segment reporting
76
Notes to the
consolidated cash
flow statement
77
Risk management

CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheet
As at 31 December (in thousands of euros) Notes 2008 2007
ASSETS
Cash and bank balances 1 555,635 337,475
Financial assets at fair value through profit or loss 2
non-trading derivatives 54,970 12,829
designated as at fair value through profit or loss 60,200 93,644
Loans and advances 3 34,587,966 29,528,020
Investments in associates 4 1,047,393 1,092,855
Real estate investments 5 2,909,697 3,561,354
Property and equipment 6 32,343 33,367
Intangible assets 7 65,022 40,456
Real estate development projects 8 3,029,188 2,921,380
Other assets 9 1,154,964 1,328,814
Total assets 43,497,378 38,950,194
EQUITY
Shareholders’ equity (parent) 10 2,668,420 2,768,299
Minority interests 532,993 844,066
Total equity 3,201,413 3,612,365
LIABILITIES
Loans 11 37,731,818 32,809,925
Financial liabilities at fair value through profit or loss 12
non-trading derivatives 36,011 8,796
Accrued interest and expenses 13 718,230 641,042
Other liabilities 14 1,809,906 1,878,066
Total liabilities 40,295,965 35,337,829
Total equity and liabilities 43,497,378 38,950,194
References relate to the notes starting on page 46 which form an integral part of the consolidated financial statements.

Consolidated income statement
For the years ended 31 December (in thousands of euros) Notes 2008 2008 2007 2007
Interest income 1,944,750 1,507,866

Interest expense 1,685,546 1,366,692
Interest result 25 259,204 141,174
Investment income 26 –150,135 360,177
Net gains/losses on disposals of group companies 4,690 45,302
Net commission income 27 443,196 479,120
Valuation results on non-trading derivatives 28 –38,444 –17,839
Net trading income 29 37,043 28,069
Share of result from associates 4 –190,338 129,253
Net development income 30 122,247 95,459
Other income 31 15,696 13,196
Total income 503,159 1,273,911
Addition to loan loss provisions 3 81,791 –314

Other impairments 32 60,064 –8,060
Staff expenses 33 393,222 370,185
Other operating expenses 34 159,678 189,189

Total expenses 694,755 551,000
Result before tax –191,596 722,911
Taxation 35 18,810 188,331

Net result (before minority interests) –210,406 534,580
ATTRIBUTABLE TO:
Shareholders of the parent –88,364 481,487
Minority interests –122,042 53,093
–210,406 534,580

Consolidated cash flow statement
For the years ended 31 December (in thousands of euros) Notes 2008 2007
RESULT BEFORE TAX –191,596 722,911

Adjusted for
depreciation and amortisation 16,165 8,873
addition to loan loss provisions 81,791 314
other impairments 60,064 –8,060
fair value changes 392,720 –85,864
share of result from associates 190,338 –129,253
additions to reorganisation and other provisions 7,319 29,538
foreign currency differences 9,903 –
Taxation paid –111,589 –47,482
Changes in
non-trading derivatives –20,916 –1,750
other assets –231,936 –945,455
other liabilities 104,752 608,447
other movements –36,338 43,760
Net cash flow from operating activities 270,677 195,979
Investments and advances

associates –387,783 –385,796
equity securities designated at fair value through profit or loss –14,432 –53,120
real estate investment property –313,417 –78,671
property and equipment –7,099 –17,692
intangible assets –43,279 –7,084
loans and advances –12,219,637 –15,599,373
Disposals and redemptions
associates 113,573 139,765
equity securities designated at fair value through profit or loss 9,065 103,241
real estate investment property 189,879 68,838
property and equipment 219 1,240
intangible assets 6,145 7
loans and advances 7,336,134 6,647,777
Dividends received from investments in associates 54,477 41,799
Net cash flow from investing activities –5,276,155 –9,139,069
Net proceeds from loans 5,232,456 8,779,859

Net cash flow from financing activities 5,232,456 8,779,859
Net cash flow 38 226,978 –163,231
Cash and bank balances at beginning of year 337,475 503,464

Effect of exchange rate changes on cash and bank balances –8,818 –2,758
Cash and bank balances at end of year 555,635 337,475

Consolidated statement of changes in equity
Total
shareholders’ Minority
For the year ended 31 December (in thousands of euros) Share capital Share premium Reserves equity (parent) interests Total equity
Balance as at 31 December 2006 227 1,447,131 873,323 2,320,681 747,213 3,067,894

Changes in hedge reserves – – –1,308 –1,308 – –1,308
Exchange differences – – –24,088 –24,088 – –24,088
Employee stock options and share plans – – 3,085 3,085 – 3,085
Other movements – – –11,558 –11,558 43,760 32,202
Total amount recognised directly in equity – – –33,869 –33,869 43,760 9,891
Net result – – 481,487 481,487 53,093 534,580

– – 447,618 447,618 96,853 544,471
Balance as at 31 December 2007 227 1,447,131 1,320,941 2,768,299 844,066 3,612,365
Changes in hedge reserves – – 66,433 66,433 – 66,433

Exchange differences – – –79,729 –79,729 –125,538 –205,267
Employee stock options and share plans – – 4,028 4,028 – 4,028
Other movements – – –2,247 –2,247 –63,493 –65,740
Total amount recognised directly in equity – – –11,515 –11,515 –189,031 –200,546
Net result – – –88,364 –88,364 –122,042 –210,406

– – –99,879 –99,879 –311,073 –410,952
Balance as at 31 December 2008 227 1,447,131 1,221,062 2,668,420 532,993 3,201,413
See note 10 on page 53 for the movements in reserves.

Accounting policies
AUTHORISATION OF • Amendment to IAS 39 ‘Financial investment property, the determination distressed sales and bargain purchases
FINANCIAL STATEMENTS Instruments: Recognition and of impairments on real estate projects, the with increased pricing volatility as a result.
The consolidated financial statements of Measurement’ – ‘Eligible Hedged determination of the fair values of financial The appraisers have recognised this level
ING Real Estate B.V. (‘ING Real Estate’) for Items’ (effective as of 2010); assets and liabilities and to the loan loss of uncertainty by carefully valuing our
the year ended 31 December 2008 were • IFRIC 13 ‘Customer Loyalty provision. In each case, the determination investment property not only by using
authorised for issue in accordance with a Programmes’; of these items is fundamental to the recent market transactions but also by
resolution of the Management Board on financial condition and results of using DCF methods and outcomes of other
20 April 2009. ING Real Estate B.V. is • IFRIC 15 ‘Agreements for the operations, and requires management valuation methods. On a quarterly basis
incorporated and domiciled in The Hague, Construction of Real Estate’; to make complex judgements based on we are closely monitoring the valuations
The Netherlands and is indirectly a 100% • IFRIC 16 ‘Hedges of a Net Investment information and financial data that may drawn up by our (external and internal)
subsidiary of ING Bank N.V. Its financial in a Foreign Operation’; change in future periods. As a result, appraisers. To illustrate the uncertainty
statements are filed with the Chamber determinations regarding these items of our investment property a sensitivity
of Commerce in The Hague. The principal
• 2008 Annual Improvements to IFRS; necessarily involve the use of assumptions analysis on changes in value of real estate is
activities of ING Real Estate are described • IFRIC 17 ‘Distributions of Non-cash and subjective judgements as to future provided in the risk management section
in the business overview section of Assets to Owners’ (effective as of 2010); events and are subject to change, as the of this report.
this report. • IFRIC 18 ‘Transfers of Assets from use of different assumptions or data could
Customers’ (effective as of 2010); produce materially different results. For a IMPAIRMENTS OF REAL ESTATE
BASIS OF PRESENTATION further discussion of the application of DEVELOPMENT PROJECTS
ING Real Estate applies International • Amendment to IFRS 7 these accounting policies, reference is If the carrying amount of a real estate
Financial Reporting Standards as adopted ‘Improving Disclosures about made to the applicable notes to the project exceeds its recoverable amount,
by the European Union (‘EU’). Financial Instruments’; consolidated financial statements and the an impairment loss is recognised. The
• Amendment to IFRIC 9 and IAS 39 – information below under ‘Principles of recoverable amount is the lower of cost
The following standards and ‘Embedded Derivatives’. valuation and determination of results’. and net realisable value, which is the
interpretations became effective in 2008: estimated selling price in the ordinary
International Financial Reporting ING Real Estate does not expect the FAIR VALUES OF INVESTMENT PROPERTY course of business less the estimated
Interpretation Committee (‘IFRIC’) 12 adoption of these new or revised standards Real estate investments are reported costs of completion and the estimated
‘Service Concession Arrangements’, and interpretations to have a significant at fair value. All changes in fair value costs necessary to make the sale.
IFRIC 14 ‘IAS 19 – The Limit of a Defined effect on the consolidated financial are recognised directly in the income
Benefit Asset, Minimum Funding statements. statement. The fair value of real estate The identification of impairment and the
Requirements and their Interaction’ and investments is based on regular appraisals determination of the recoverable amount
‘Reclassification of Financial Assets: International Financial Reporting Standards by independent qualified valuers. The fair is an inherently uncertain process involving
Amendments to IAS 39 Financial as adopted by the EU provide several values represent the estimated amount for various assumptions and factors, including
Instruments: Recognition and options in accounting policies. which the property could be exchanged on the financial condition of the counterparty,
Measurement and IFRS 7 Financial ING Real Estate’s accounting policies under the date of valuation between a willing expected future cash flows, observable
Instruments: Disclosures’. None of International Financial Reporting buyer and willing seller in an at-arm’s- market prices and expected net selling
these recently issued standards and Standards, as adopted by the EU and its length transaction after proper marketing prices. The use of different assumptions
interpretations have had a material decision on the options available, are set wherein the parties each acted could therefore produce materially
effect on equity or result for the year. out in the section ‘Principles of valuation knowledgeably, prudently and without different estimates of the recoverable
and determination of results’ below. compulsion. The valuations are based on amount and hence of the impairment
The following new and revised standards the assumption that the properties are let losses recognised.
and interpretations were issued by the In this document the term ‘IFRS-EU’ is used and sold to third parties based on the
IASB, which become effective for to refer to International Financial Reporting actual letting status. The valuations are FAIR VALUES OF FINANCIAL ASSETS
ING Real Estate as of 2009 (unless Standards as adopted by the EU, including based on discounted cash flow analysis of AND LIABILITIES
otherwise indicated): the decisions ING Real Estate made with each property. The discounted cash flow Fair values of financial assets and liabilities
• Amendment to IFRS 1 ‘First-time regard to the options available under analyses are based on calculations of the are determined using quoted market
adoption of IFRS’ (effective as of International Financial Reporting future rental income in accordance with prices, where available. Market prices
2010); Standards as adopted by the EU. the terms in existing leases and estimations are obtained from independent market
of the rental values when leases expire. vendors, brokers, or market makers. In
• Amendment to IFRS 2 ‘Share-based CHANGES IN ACCOUNTING POLICIES general, positions are valued taking the bid
Payments’ – ‘Vesting Conditions and AND PRESENTATION For each reporting period every property price for a long position and the offer price
Cancellations’; The presentation of, and terms used in, is valued either by an independent valuer for a short position. In some cases where
• IFRS 3 ‘Business Combinations’ (revised) the balance sheet, the income statement, or internally. Indexation is used when a positions are marked at mid-market prices,
and IAS 27 ‘Consolidated and cash flow statement, statement of changes property is valued internally. The index is a fair value adjustment is calculated.
Separate Financial Statements’ in equity and the majority of the notes based on the results of the independent Furthermore, additional fair value
(amended) (effective as of 2010); have been changed to provide additional valuations carried out in that period. adjustments may be necessary for liquidity
and more relevant information. Certain Market transactions and disposals are or outdated data because transactions in a
• IFRS 8 ‘Operating Segments’; monitored as part of the procedures to
comparative amounts have been particular financial instrument do not take
• IAS 1 ‘Presentation of Financial reclassified to conform with the current back test the indexation methodology. place on a regular basis.
Statements’; period presentation. Total net result, total Valuations performed earlier in the year are
• IAS 23 ‘Borrowing Costs’; equity and total assets and liabilities of the updated if necessary to reflect the situation For certain financial assets and liabilities
comparative period have remained at year end. The investment property of no quoted market prices are available.
• Amendments to IAS 32 ‘Financial unchanged. ING Real Estate Investment Management For these financial assets and liabilities
Instruments: Presentation’ and IAS 1 is externally valued at least every year. fair value is determined using valuation
‘Presentation of Financial Statements’ CRITICAL ACCOUNTING POLICIES techniques. These valuation techniques
– ‘Puttable Financial Instruments and ING Real Estate has identified the The valuation of real estate involves various range from discounting of cash flows to
Obligations Arising on Liquidation’; accounting policies that are most critical assumptions and techniques. The use of valuation models, where relevant pricing
• Amendments to IFRS 1 ‘First-time to its business operations and to the different assumptions and techniques could factors including the market price of
Adoption of IFRS’ and IAS 27 understanding of its results. These critical produce significantly different revaluations. underlying reference instruments, market
‘Consolidated and Separate Financial accounting policies are those which involve parameters (volatilities, correlations, credit
Statements’ – Determining the cost of the most complex or subjective decisions The crisis and the instability in the financial ratings) and customer behaviour are taken
an Investment in the Separate or assessments, and relate to the markets in 2008 have led to a reduced level into account. All valuation techniques used
Financial Statements’; determination of the fair values of of real estate transactions. Transactions are subject to internal review and approval.
which have occurred in 2008 include Most data used in these valuation
techniques are validated on a daily basis.

Valuation techniques are subjective in PRINCIPLES OF VALUATION AND All intercompany transactions, balances segments operating in other economic
nature and significant judgement is DETERMINATION OF RESULTS and unrealised surpluses and deficits on environments. The geographical analyses
involved in establishing fair values for CONSOLIDATION transactions between ING Real Estate are based on the location of the office
certain financial assets and liabilities. ING Real Estate comprises ING Real companies have been eliminated. Where from which the transactions are originated.
Valuation techniques involve various Estate B.V. and all its subsidiaries. The necessary, the accounting policies used by The business lines of ING Real Estate are
assumptions regarding the pricing factors. consolidated financial statements of ING subsidiaries have been changed to ensure the primary segment reporting format.
The use of different valuation techniques Real Estate comprise the accounts of ING consistency with ING Real Estate’s policies. The geographical segments are considered
and assumptions could produce materially Real Estate B.V. and each of those entities In general, the reporting dates of the secondary.
different estimates of fair value. in which it either owns, directly or subsidiaries are the same as the reporting
indirectly, more than half of the voting date of ING Real Estate B.V. There are no FOREIGN CURRENCY TRANSLATION
Price testing is performed to assess power or over which it has control of their material restrictions on subsidiaries to Functional and presentation currency
whether the process of valuation has led operating and financial policies, through transfer funds to ING Real Estate B.V. Items included in the financial statements
to an appropriate fair value of the position situations including, but not limited to: of each of ING Real Estate’s entities are
and to an appropriate reflection of these • Ability to appoint or dismiss the ING Real Estate’s interests in jointly measured using the currency of the primary
valuations in the income statement. Price majority of the board of directors; controlled entities are accounted for using economic environment in which the entity
testing is performed to minimise the proportionate consolidation. ING Real operates (‘the functional currency’).
potential risks for economic losses due to • Power to govern such policies under Estate proportionately consolidates its The consolidated financial statements
materially incorrect or misused models. statute or agreement; and share of the joint ventures’ individual are presented in euros, which is
• Power over more than half of income and expenses, assets and liabilities, ING Real Estate’s functional and
See Note 24 ‘Fair values of financial the voting rights through an and cash flows on a line-by-line basis with presentation currency.
assets and liabilities’ for the basis of the agreement with other investors. similar items in ING Real Estate’s financial
determination of the fair values of financial statements. ING Real Estate recognises Transactions and balances
instruments. A list of principal subsidiaries is included in the portion of gains or losses on the sale Foreign currency transactions are
Note 19 ‘Principal subsidiaries’. of assets to the joint venture that is translated into the functional currency
LOAN LOSS PROVISIONS attributable to the other venturers. using the exchange rates prevailing at the
Loan loss provisions are recognised based The existence and effect of potential voting ING Real Estate does not recognise its dates of the transactions. Exchange rate
on an incurred loss model. Considerable rights that are currently exercisable or share of profits or losses from the joint differences resulting from the settlement
judgement is exercised in determining the convertible are considered in assessing venture that result from the purchase of of such transactions and from the
extent of the loan loss provision (impairment) whether ING Real Estate controls another assets by ING Real Estate from the joint translation at year-end exchange rates
and is based on the management’s entity. For interests in investment vehicles venture until it resells the assets to an of monetary assets and liabilities
evaluation of the risk in the portfolio, the existence of control is determined independent party. However, if a loss on denominated in foreign currencies are
current economic conditions, loss taking into account both ING Real Estate’s the transaction provides evidence of a recognised in the income statement,
experience in recent years and credit, financial interests for own risk and its role reduction in the net realisable value of except when deferred in equity as part of
industry and geographical concentration as investment manager. current assets or an impairment loss, qualifying cash flow hedges or qualifying
trends. Changes in such judgements and the loss is recognised immediately. net investment hedges.
analyses may lead to changes in the loan ING Real Estate B.V. holds control over ING
loss provisions over time. Real Estate Finance (USA) LLC based on the USE OF ESTIMATES AND ASSUMPTIONS Translation differences on non-monetary
fact that ING Real Estate B.V. can replace The preparation of the consolidated items, measured at fair value through profit
The identification of impairment and the and dismiss members of the Board of financial statements necessitates the use or loss, are reported as part of the fair value
determination of the recoverable amount Directors of ING Real Estate Finance (USA) of estimates and assumptions. These gain or loss. Non-monetary items are
are an inherently uncertain process LLC. It is therefore consolidated in the estimates and assumptions affect the retranslated at the date the fair value is
involving various assumptions and factors financial statements of ING Real Estate. reported amounts of the assets and determined. Translation differences on
including the financial condition of the Furthermore ING Real Estate Finance N.V., liabilities and the amounts of the non-monetary items measured at fair
counterparty, expected future cash flows, a 100% subsidiary of ING Real Estate B.V., contingent liabilities at the balance sheet value through the revaluation reserve
observable market prices and expected has entered in a put and call agreement date, as well as reported income and are included in the revaluation reserve
net selling prices. with ING Financial Holdings Corporation, expenses for the year. The actual outcome in equity.
a 100% subsidiary of ING Bank N.V. This may differ from these estimates.
Future cash flows in a portfolio of financial agreement gives ING Financial Holdings Translation differences in the income
assets that are collectively evaluated for Corporation the right to put 100% of the The process of setting assumptions is statement are generally included in Net
impairment are estimated on the basis of shares of ING Real Estate Finance (USA) subject to internal control procedures and trading income. Refer to Note 29 ‘Net
the contractual cash flows of the assets in LLC and gives ING Real Estate Finance N.V. approvals, and takes into account internal trading income’, which discloses the
the portfolio and historical loss experience the right to call 100% of the shares of ING and external studies, industry statistics, amounts included in the income
for assets with credit risk characteristics Real Estate Finance (USA) LLC at any time at environmental factors and trends, and statement. Translation differences relating
similar to those in the portfolio. Historical a purchase price of 10 USD. Based on this regulatory requirements. to the disposal of Available-for-sale debt
loss experience is adjusted on the basis of put and call agreement no minority stake and equity securities are considered to be
current observable data to reflect the is recognised for ING Financial Holdings SEGMENTAL REPORTING an inherent part of the capital gains and
effects of current conditions that did not Corporation. A business segment is a distinguishable losses recognised in Investment income.
affect the period on which the historical component of ING Real Estate engaged
loss experience is based and to remove The results of the operations and the net in providing products or services that is
the effects of conditions in the historical assets of subsidiaries are included in the subject to risks and returns that are
period that do not exist currently. Current income statement and the balance sheet different from those of other business
observable data may include changes in from the date control is obtained until segments. A geographical segment is a
unemployment rates, property prices and the date control is lost. On disposal, the distinguishable component of ING Real
commodity prices. The methodology and difference between the sales proceeds, net Estate engaged in providing products or
assumptions used for estimating future of directly attributable transaction costs, services within a particular economic
cash flows are reviewed regularly to reduce and the net assets is included in net result. environment that are subject to risks and
any differences between loss estimates returns that are different from those of
and actual loss experience.

Group companies value. Fair values are obtained from quoted remains in equity and is recognised when CLASSIFICATION OF FINANCIAL
The results and financial position of all market prices in active markets, including the forecast transaction is ultimately INSTRUMENTS
Group companies that have a functional recent market transactions, and valuation recognised in the income statement. Financial assets at fair value through profit or
currency different from the presentation techniques, such as discounted cash flow When a forecast transaction is no longer loss
currency are translated into the models and option pricing models, as expected to occur, the cumulative gain Financial assets at fair value through profit
presentation currency as follows: appropriate. All derivatives are carried or loss that was reported in equity is or loss comprise two sub-categories:
• Assets and liabilities included in each as assets when their fair value is positive transferred immediately to the income financial assets held for trading and other
balance sheet are translated at the and as liabilities when their fair value statement. financial assets designated at fair value
closing rate at the date of that is negative. through profit or loss by management.
balance sheet; Net investment hedges A financial asset is classified as at fair value
The method of recognising the resulting Hedges of net investments in foreign through profit or loss if acquired principally
• Income and expenses included in fair value gain or loss depends on whether operations are accounted for similarly for the purpose of selling in the short term
each income statement are translated the derivative is designated as a hedging to cash flow hedges. Any gain or loss or if so designated by management.
at average exchange rates (unless instrument and, if so, the nature of the on the hedging instrument relating to Designation by management will only take
this average is not a reasonable item being hedged. ING Real Estate the effective portion of the hedge is place if this eliminates a measurement
approximation of the cumulative designates certain derivatives as hedges recognised in equity; the gain or loss inconsistency or if the related assets and
effect of the rates prevailing on the of highly probable future cash flows relating to the ineffective portion is liabilities are managed on a fair value basis.
transaction dates, in which case attributable to a recognised asset or recognised immediately in the income Transaction costs on initial recognition are
income and expenses are translated liability or a forecast transaction (cash flow statement. Gains and losses accumulated expensed as incurred. See also Non-trading
at the dates of the transactions); hedges), or hedges of a net investment of in equity are included in the income derivatives that do not qualify for hedge
• All resulting exchange rate differences a foreign operation. Hedge accounting is statement when the foreign operation accounting. Interest income from debt
are recognised in a separate used for derivatives designated in this way is disposed of. securities and loans and receivables
component of equity. provided certain criteria are met. classified as at fair value through profit or
Non-trading derivatives that do not qualify loss is recognised in Interest income in the
On consolidation exchange rate ING Real Estate documents at the for hedge accounting income statement using the effective
differences arising from the translation of inception of the transaction the Derivative instruments that are used by ING interest method. Dividend income from
a monetary item that forms part of the net relationship between hedging instruments Real Estate as part of its risk management equity instruments classified as at fair
investment in a foreign operation, and of and hedged items, as well as its risk strategies but do not qualify for hedge value through profit or loss is generally
borrowings and other instruments management objective and strategy for accounting under ING Real Estate’s recognised in Investment income in the
designated as hedges of such investments, undertaking various hedge transactions, accounting policies are presented as income statement when dividend has been
are taken to shareholders’ equity. When a together with the methods selected to non-trading derivatives. Non-trading declared. For all financial assets classified
foreign operation is sold these exchange assess hedge effectiveness. ING Real Estate derivatives are stated at fair value with as at fair value through profit or loss
rate differences are recognised in the also documents its assessment, both at changes in the fair value taken to the changes in fair value are recognised
income statement as part of the gain or hedge inception and on an ongoing basis, income statement. in Net trading income.
loss on sale. of whether the derivatives that are used in
hedging transactions are highly effective in FINANCIAL ASSETS Investments
Goodwill and fair value adjustments arising offsetting changes in fair values or cash Recognition of financial assets Investments (including loans quoted in
from the acquisition of a foreign operation flows of the hedged items. All purchases and sales of financial assets active markets) are classified either as
are treated as assets and liabilities of the classified as fair value through profit or held-to-maturity or available-for-sale and
foreign operation and translated at the Certain derivatives embedded in other loss, held-to-maturity and available-for- are initially recognised at fair value plus
rate ruling at the balance sheet date. contracts are measured as separate sale and trading that require delivery within transaction costs. Investment securities
derivatives when their economic the time frame established by regulation or and loans quoted in active markets with
FAIR VALUES OF FINANCIAL ASSETS characteristics and risks are not closely market convention (‘regular way’ fixed maturity where management has
AND LIABILITIES related to those of the host contract, the purchases and sales) are recognised at both the intent and the ability to hold to
The fair values of financial instruments host contract is not carried at fair value trade date, which is the date on which maturity are classified as held-to-maturity.
traded in active markets (such as publicly through profit or loss, and if a separate ING Real Estate commits to purchase or Investment securities and actively traded
traded derivatives and trading and instrument with the same terms as the sell the asset. Loans and receivables are loans intended to be held for an indefinite
available-for-sale securities) are based on embedded derivative would meet the recognised at settlement date, which is the period of time, which may be sold in
quoted market prices at the balance sheet definition of a derivative. These embedded date on which ING Real Estate receives or response to needs for liquidity or changes
date. The quoted market price used for derivatives are measured at fair value delivers the asset. in interest rates, exchange rates or equity
financial assets held by ING Real Estate is with changes in fair value recognised prices are classified as available-for-sale.
the current bid price; the quoted market in the income statement. An assessment De-recognition of financial assets
price used for financial liabilities is the is carried out when ING Real Estate Financial assets are derecognised when the Available-for-sale financial assets
current ask price. first becomes party to the contract. rights to receive cash flows from the financial Available-for-sale financial assets are
A subsequent reassessment is carried out assets have expired or when ING Real Estate initially recognised at fair value plus
The fair values of financial instruments only when there is a change in the terms has transferred substantially all risks and transaction costs. For available-for-sale
that are not traded in an active market are of the contract that significantly modifies rewards of ownership. If ING Real Estate debt securities, the difference between
determined using valuation techniques. the expected cash flows. neither transfers nor retains substantially cost and redemption value is amortised.
ING Real Estate uses a variety of methods all the risks and rewards of ownership of a Interest income is recognised using the
and makes assumptions that are based on Cash flow hedges financial asset, it derecognises the financial effective interest method. Available-for-
market conditions existing at each balance The effective portion of changes in the fair asset if it no longer has control over the asset. sale financial assets are measured at fair
sheet date. value of derivatives that are designated and In transfers where control over the asset is value. Interest income from debt securities
qualify as cash flow hedges are recognised retained, ING Real Estate continues to classified as available-for-sale is recognised
See Note 24 ’Fair value of financial in equity. The gain or loss relating to the recognise the asset to the extent of its in Interest income in the income statement
assets and liabilities’ for the basis of the ineffective portion is recognised continuing involvement. The extent of using the effective interest method.
determination of the fair value of financial immediately in the income statement. continuing involvement is determined Dividend income from equity instruments
instruments. Amounts accumulated in equity are by the extent to which ING Real Estate classified as available-for-sale is generally
recycled to the income statement in the is exposed to changes in the value of recognised in Investment income in
DERIVATIVES AND HEDGE ACCOUNTING periods in which the hedged item will the asset. the income statement when dividend has
Derivatives are initially recognised at fair affect net result. When a hedging been declared. Unrealised gains and losses
value on the date on which a derivative instrument expires or is sold, or when a arising from changes in the fair value are
contract is entered into and are hedge no longer meets the criteria for recognised in equity. When the securities
subsequently remeasured to their fair hedge accounting, any cumulative gain are disposed of, the related accumulated
or loss existing in equity at that time

fair value adjustments are included in the • The borrower has demonstrated amount and the present value of estimated security below its cost is considered in
income statement as investment income. significant financial difficulty, to the future cash flows (excluding future credit determining whether the assets are
For impairments of available-for-sale extent that it will have a negative losses that have not been incurred) impaired. If any objective evidence exists
financial assets reference is made to impact on the expected future cash discounted at the financial asset’s original for available-for-sale debt and equity
the section ‘Impairment of other flows of the financial asset. effective interest rate. The carrying amount investments, the cumulative loss –
financial assets’. • The credit obligation has been of the asset is reduced through the use of measured as the difference between the
restructured for non-commercial an allowance account (‘Loan loss acquisition cost and the current fair value,
Loans and receivables reasons. ING Real Estate has granted provision’) and the amount of the loss less any impairment loss on that financial
Loans and receivables are non-derivative concessions, for economic or legal is recognised in the income statement asset previously recognised in the net result
financial assets with fixed or determinable reasons relating to the borrower’s under ‘Addition to loan loss provisions’. – is removed from equity and recognised in
payments that are not quoted in an active financial difficulty, the effect of which If the asset has a variable interest rate, the income statement. Impairment losses
market. They are initially recognised at fair is a reduction in the expected future the discount rate for measuring any on equity instruments can never be
value plus transaction costs. Subsequently, cash flows of the financial asset. impairment loss is the current effective reversed. If, in a subsequent period, the
they are carried at amortised cost using the interest rate determined under fair value of a debt instrument classified
effective interest method less any impairment • Historical experience, updated for the contract. as available-for-sale increases and the
losses. Loans and receivables are included current events where necessary, increase can be objectively related to an
in the following balance sheet lines: Cash provides evidence that a proportion of For the purposes of a collective evaluation event occurring after the impairment loss
and bank balances, Loans and advances a group of assets is impaired although of impairment, financial assets are was recognised in the income statement,
and Other assets. Interest income from the related events that represent grouped on the basis of similar credit risk the impairment loss is reversed through
loans and receivables is recognised in impairment triggers are not yet characteristics. Those characteristics are the income statement.
Interest income in the income statement captured by ING Real Estate’s credit relevant to the estimation of future cash
using the effective interest method. risk systems. flows for groups of such assets by being INVESTMENTS IN ASSOCIATES
indicative of the debtors’ ability to pay all Associates are all entities over which ING
Realised gains and losses on investments ING Real Estate does not consider events amounts due according to the contractual Real Estate has significant influence but
Realised gains and losses on investments that may be expected to occur in the future terms of the assets being evaluated. not control. Significant influence generally
are determined as the difference between as objective evidence and, consequently, results from a shareholding of between
the sale proceeds and (amortised) cost. they are not used as a basis for concluding Future cash flows in a portfolio of financial 20% and 50% of the voting rights, but also
For equity securities the cost is determined that a financial asset or group of assets assets that are collectively evaluated for is the ability to participate in the financial and
using a weighted average per portfolio. is impaired. impairment are estimated on the basis of operating policies through situations
For debt securities the cost is determined the contractual cash flows of the assets in including, but not limited to, the following:
by specific identification. In determining the impairment, expected the portfolio and historical loss experience
future cash flows are estimated on the
• Representation on the board of
for assets with credit risk characteristics directors;
OFFSETTING OF FINANCIAL ASSETS basis of the contractual cash flows of the similar to those in the portfolio. Historical
AND FINANCIAL LIABILITIES assets in the portfolio and historical loss loss experience is adjusted on the basis of • Participation in the policymaking
Financial assets and financial liabilities are experience for assets with credit risk current observable data to reflect the process; and
offset, and the net amount reported in the characteristics similar to those in the effects of current conditions that did not • Interchange of managerial personnel.
balance sheet when ING Real Estate has a portfolio. Historical loss experience is affect the period on which the historical
legally enforceable right to set off the adjusted on the basis of current observable loss experience is based and to remove the Investments in associates are initially
recognised amounts and intends to either data to reflect the effects of current effects of conditions in the historical period recognised at cost and subsequently
settle on a net basis or to realise the asset conditions that did not affect the period that do not currently exist. accounted for using the equity method
and settle the liability simultaneously. on which the historical loss experience is of accounting.
based and to remove the effects of When a loan is uncollectible, it is written
LOAN LOSS PROVISIONS conditions in the historical period that do off against the related loan loss provision. ING Real Estate’s investment in associates
ING Real Estate assesses periodically not currently exist. Losses expected as a Such loans are written off after all the (net of any accumulated impairment loss)
and at each balance sheet date whether result of future events, no matter how necessary procedures have been includes goodwill identified on acquisition.
there is objective evidence that a financial likely, are not recognised. completed and the amount of the loss has Its share of its associates’ post-acquisition
asset or group of financial assets is been determined. Subsequent recoveries profits and losses is recognised in the
impaired. A financial asset or a group of ING Real Estate first assesses whether of amounts previously written off decrease income statement, and its share of
financial assets is impaired and impairment objective evidence of impairment exists the amount of the loan loss provision and post-acquisition changes in reserves is
losses are incurred if, and only if, there is individually for financial assets that are are recognised in the income statement. recognised in equity. The cumulative
objective evidence of impairment as a individually significant, and then post-acquisition changes are adjusted
result of one or more events that occurred individually or collectively for financial If, in a subsequent period, the amount against the carrying amount of the
after the initial recognition of the asset, but assets that are not individually significant. of the impairment loss decreases and the investment. When ING Real Estate’s share
before the balance sheet date, (a ‘loss If ING Real Estate determines that no decrease can be related objectively to an of losses in an associate equals or exceeds
event’) and that loss event (or events) has objective evidence of impairment exists event occurring after the impairment was its interest in the associate, including any
an impact on the estimated future cash for an individually assessed financial asset, recognised (such as an improvement in other unsecured receivables, the ING Real
flows of the financial asset or group of whether significant or not, it includes the the debtor’s credit rating), the previously Estate does not recognise further losses,
financial assets that can be reliably asset in a group of financial assets with recognised impairment loss is reversed unless it has incurred obligations or made
estimated. The following circumstances, similar credit risk characteristics and by adjusting the provision. The amount payments on behalf of the associate.
among others, are considered objective collectively assesses them for impairment. of the reversal is recognised in the
evidence that a financial asset or group Assets that are individually assessed for income statement. Unrealised gains on transactions between
of assets is impaired: impairment and for which an impairment ING Real Estate and its associates are
loss is or continues to be recognised are IMPAIRMENT OF OTHER eliminated to the extent of ING Real
• The borrower has sought or has been not included in a collective assessment
placed in bankruptcy or similar FINANCIAL ASSETS Estate’s interest in the associates.
of impairment. At each balance sheet date ING Real Unrealised losses are also eliminated unless
protection and this leads to the
avoidance or delays repayment of Estate assesses whether there is objective the transaction provides evidence of an
If there is objective evidence that an evidence that a financial asset or a group impairment of the asset transferred.
the financial asset. impairment loss on an asset carried at of financial assets is impaired. In the specific Accounting policies of associates have
• The borrower has failed in the amortised cost has been incurred, the case of equity investments classified been changed where necessary to ensure
repayment of principal, interest or fees amount of the loss is measured as the as available-for-sale, a significant or consistency with the policies adopted by
and the payment failure has remained difference between the asset’s carrying prolonged decline in the fair value of the ING Real Estate.
unsolved for a certain period.

The existence of significant influence in transaction after proper marketing wherein Equipment elements of the design of the real estate
investment funds is determined taking into the parties each acted knowledgeably, Equipment is stated at cost less before construction begins and/or the
account both ING Real Estate’s financial prudently and without compulsion. Market accumulated depreciation and any major structural changes once
interests for own risk and its role as values are based on appraisals using impairment losses. The cost of the assets is construction is in progress.
investment manager. valuation methods such as: comparable depreciated on a straight-line basis over
market transactions, capitalisation of their estimated useful lives, which are Property held for sale
An impairment of an associate is income methods or DCF calculations, generally as follows: for data processing Completed projects that have not yet been
recognised if the recoverable amount based on calculations of the future rental equipment two to five years and four sold are shown separately. They are carried
is lower than its carrying value. There must income and expenses in accordance with to ten years for fixtures and fittings. at the lower of cost and net realisable
be objective evidence that an associate is the terms in existing leases and estimations Expenditure incurred on maintenance and value. If the resulting carrying amount of
impaired such as significant changes in the of the rental values when leases expire. repairs is charged to the income statement the asset exceeds its recoverable amount,
market, economic or legal environment in Any gain or loss arising from a change in as incurred. Expenditure incurred on an impairment loss is recognised. The
which the associate operates indicating fair value is recognised in the income major improvements is capitalised recoverable amount is the lower of cost
that the cost of the investment in statement. and depreciated. and net realisable value, which is the
an associate may not be recovered. estimated selling price in the ordinary
A significant (>25%) or prolonged (> six Subsequent expenditures are charged to REAL ESTATE DEVELOPMENT PROJECTS course of business less the estimated
months) decline in the fair value of an the asset’s carrying amount only when Property under development costs necessary to make the sale.
associate below its cost is also objective it is probable that future economic benefits Property under development are land and
evidence of impairment. The recoverable associated with the item will flow to ING buildings under development for future The identification of impairment and the
amount of an associate is the higher of its Real Estate and the cost of an item can be sale in the ordinary course of business. determination of the recoverable amount
fair value (share price) less costs to sell or its measured reliably. All other repairs and Property under development where there are an inherently uncertain process
estimated value in use (net asset value). maintenance costs are charged to the is not yet a specifically negotiated contract involving various assumptions and factors,
income statement. (a contract by which the buyer is able to including the financial condition of the
REAL ESTATE INVESTMENTS specify major structural elements of the counterparty, expected future cash flows,
Investment properties are those that are Investment property is not reclassified design) is measured at direct construction observable market prices and expected net
held either to earn rental income or for during redevelopment, unless the existing cost incurred up to the balance sheet date. selling prices. The impairment amount is
capital appreciation or for both. Investment property is completely demolished to Costs that cannot directly be attributed to recorded in the income statement.
properties are initially recognised at cost, make way for a new property. Therefore, projects are expensed when incurred.
being the acquisition cost at the time of investment property under redevelopment These costs include research costs, selling If ING Real Estate holds the property until
purchase, and subsequently measured continues to be measured at fair value. costs and part of the paid interest costs. occupancy rates reach the level as intended
at fair value. ING Real Estate does not hold Investment property is reclassified as a real Borrowing costs are capitalised on the by management in developing the property,
property under operating leases as a lessee estate project, and measured as such, basis of the actual costs of the specific the project remains classified as property
which are classified and accounted for as when and only when there is a change borrowing attached to projects under held for sale.
investment property. Acquisition cost in use evidenced by commencement of construction. Direct attributable costs to
comprises directly attributable expenditure development with a view to sale. For a projects that form an integral part of the LEASES
(e.g. legal fees, taxes, transaction costs). transfer from investment property to real cost price include personnel expenses, ING Real Estate as the lessor
Changes in the carrying amount resulting estate projects, the property’s deemed construction materials and transport costs. When assets are held subject to a finance
from revaluations are recorded in the cost shall be its fair value at the date of Related borrowing costs are capitalised lease, the present value of the lease
income statement. On disposal the change in use. from the moment construction payments is recognised as a receivable. The
difference between the sale proceeds commences up to the completion date. difference between the gross receivable
and book value is recognised in the Property under development for future If the resulting carrying amount of the and the present value of the receivable is
income statement. use as investment property are measured asset exceeds its recoverable amount, unearned lease finance income. Lease
at cost (less impairments) but are an impairment loss is recognised. The income is recognised over the term of the
The fair value of real estate investments subsequently accounted for investment recoverable amount is the lower of cost lease using the net investment method
is based on regular appraisals by property at completion and measured at and net realisable value, which is the (before tax), which reflects a constant
independent qualified valuers. Each year fair value. The resulting gain or loss upon estimated selling price in the ordinary periodic rate of return. When assets
every property is valued, either by an transfer is recorded in the income course of business less the estimated are held subject to an operating lease,
independent valuer or internally. statement. costs of completion and the estimated the assets are included under real
Indexation is used when a property is costs necessary to make the sale. The estate investments.
valued internally. The index is based on Rent (or lease) incentives are discounts, impairment amount is recorded in the
the results of the independent valuations bonuses, rent free periods or other income statement. Profit is recognised ING Real Estate as the lessee
carried out in that period. Market contributions that ING Real Estate offers using the completed contract method The leases entered into by ING Real Estate
transactions, and disposals made by the to tenants as means of encouragement to (on completion date of the property). are primarily operating leases. When an
Group, are monitored as part of the enter into a lease agreement. Rent operating lease is terminated before the
procedures to back test the indexation incentives are initially recognised in the A project under construction is transferred lease period has expired, any payment
methodology. The investment property of balance sheet as accrued assets at their to property held for sale directly after required to be made to the lessor by way of
ING Real Estate Investment Management cost. They are subsequently recognised technical completion. Instalments received penalty is recognised as an expense in the
is externally valued at least every year. The in the income statement on a straight-line during construction are classified as period in which termination takes place.
valuations are based on the assumption basis over the entire period of the lease. current liabilities.
that the properties are let and sold to third In determining the fair value of investment PURCHASE ACCOUNTING, GOODWILL
parties based on the actual letting status. property rent incentives are considered The revenue of property under AND OTHER INTANGIBLE ASSETS
Valuations drawn up earlier in the year are to avoid double-counting. development where there is a specifically Goodwill
updated if necessary to reflect the situation negotiated construction contract with the ING Real Estate’s acquisitions are
at year end. PROPERTY AND EQUIPMENT buyer is recognised using the percentage accounted for under the purchase method
Property in own use of completion method (pro rata profit of accounting, whereby the cost of the
The fair values are based on market values, Property which is occupied by other ING recognition). A specifically negotiated acquisitions is allocated to the fair value
being the estimated amount for which the Group companies are not considered to be construction contract is an agreement for of the assets, liabilities and contingent
property could be exchanged on the date property in own use for the financial the construction of real estate when the liabilities acquired. Goodwill, being the
of valuation between a willing buyer statements of ING Real Estate. buyer is able to specify: the major structural
and willing seller in an at-arm’s-length

difference between the cost of the TAXATION Financial liabilities at fair value through OTHER PROVISIONS
acquisition (including assumed debt) and Income tax on net result for the year profit or loss comprise two sub-categories: A provision involves a present obligation
ING Real Estate’s interest in the fair value comprises current and deferred tax. financial liabilities held for trading and arising from past events, the settlement of
of the acquired assets, liabilities and Income tax is recognised in the income other financial liabilities designated which is expected to result in an outflow
contingent liabilities as at the date of statement but it is charged or credited at fair value through profit or loss from the company of resources embodying
acquisition, is capitalised as an intangible directly to equity if the tax relates to items by management. Designation by economic benefits; however the timing or
asset. The results of the operations of the that are credited or charged directly management will take place only if this the amount is uncertain. Provisions are
acquired companies are included in the to equity. eliminates a measurement inconsistency discounted when the effect of the time
income statement from the date control or if the related assets and liabilities are value of money is material using a pre-tax
is obtained. Deferred income tax managed on a fair value basis. ING Real discount rate. The determination of
Deferred income tax is provided in full, Estate did not designate any financial provisions is an inherently uncertain
Goodwill is only capitalised on acquisitions using the liability method, on temporary liabilities at fair value through profit or loss. process involving estimates regarding
after the implementation date of IFRS-EU differences arising between the tax bases All other financial liabilities are measured amounts and timing of cash flows.
(1 January 2004). Accounting for of assets and liabilities and their carrying at amortised cost.
acquisitions before that date has not been amounts in the consolidated financial If real estate projects are sold and a rental
restated; goodwill and internally generated statements. Deferred income tax is Financial guarantee contracts are contracts guarantee is issued, reliable estimates of
intangibles on these acquisitions were determined using tax rates (and laws) that that require the issuer to make specified rental guarantees to be paid are recognised
charged directly to shareholders’ equity. have been enacted or substantially enacted payments to reimburse the holder for a loss as a provision.
Goodwill is allocated to cash-generating by the balance sheet date and are expected it incurs because a specified debtor fails to
units for the purpose of impairment to apply when the related deferred income make payments when due, in accordance Reorganisation provisions include
testing. These cash-generating units tax asset is realised or the deferred income with the terms of a debt instrument. Such employee termination benefits when ING
represent the lowest level at which tax liability is settled. Deferred tax assets financial guarantees are initially recognised Real Estate is demonstrably committed to
goodwill is monitored for internal and liabilities are not discounted. at fair value and are subsequently either terminating the employment of
management purposes. This test is measured at the higher of the discounted current employees according to a detailed
performed annually or more frequently if Deferred tax assets are recognised where best estimate of the obligation under the formal plan without possibility of
there are indicators of impairment. Under it is probable that future taxable profit will guarantee and the amount initially withdrawal; or providing termination
the impairment tests, the carrying value of be available against which the temporary recognised less, cumulative amortisation benefits as a result of an offer made to
the cash-generating units (including differences can be utilised. Deferred to reflect revenue recognition principles. encourage voluntary redundancy.
goodwill) is compared to its recoverable income tax is provided on temporary
amount which is the higher of its fair value differences arising from investments in OTHER LIABILITIES INCOME RECOGNITION
less costs to sell and its value in use. subsidiaries and associates, except where Employee benefits – pension obligations Interest
the timing of the reversal of the temporary ING Real Estate participates in a defined Interest income and expense are
Adjustments to the fair value as at the difference is controlled by ING Real Estate benefit retirement plan in The Netherlands recognised in the income statement using
date of acquisition of acquired assets and and it is probable that the difference will (the ING Pension Fund), which is sponsored the effective interest method. The effective
liabilities that are identified within one not reverse in the foreseeable future. The by ING Group. The pension schemes of interest method is a method of calculating
year after acquisition are recorded as an tax effects of income tax losses available most personel abroad are defined the amortised cost of a financial asset or a
adjustment to goodwill; any subsequent for carry forward are recognised as an contribution plans. financial liability and of allocating the
adjustment is recognised as income or asset where it is probable that future interest income or interest expense over
expense. However, recognition of deferred taxable profits will be available against A defined benefit plan is a pension plan the relevant period. The effective interest
tax assets after the acquisition date is which these losses can be utilised. that defines an amount of pension rate is the rate that exactly discounts
recorded as an adjustment to goodwill benefit that an employee will receive on estimated future cash payments or receipts
even after the first year. On disposal of Deferred tax related to fair value retirement, usually dependent on one or through the expected life of the financial
ING Real Estate companies, the difference remeasurement of available-for-sale more factors such as age, years of service instrument or, when appropriate, a shorter
between the sale proceeds and book value investments and cash flow hedges, which and compensation. period to the net carrying amount of the
(including goodwill) and the unrealised are charged or credited directly to equity, financial asset or financial liability. When
results (including the currency translation is also credited or charged directly to equity The ING Group pension plan shares the calculating the effective interest rate,
reserve in equity) is included in the and is subsequently recognised in the risks between individual companies within ING Real Estate estimates cash flows
income statement. income statement together with the the ING Group and consequently the considering all contractual terms of the
deferred gain or loss. liability specific to any one company within financial instrument (for example,
Negative goodwill that arises if the cost the ING Group cannot be determined. ING prepayment options) but does not consider
of the business combination is less than FINANCIAL LIABILITIES Group charges individual group entities future credit losses. The calculation
the acquired fair value of all assets and Borrowings are recognised initially at their with a portion of the total defined benefit includes all fees and points paid or received
liabilities is recognised in the income issue proceeds (fair value of consideration cost based upon the employees currently between parties to the contract that are an
statement. received) net of transaction costs incurred. in service at that entity. ING Real Estate integral part of the effective interest rate,
Borrowings are subsequently stated at includes this charge in the income transaction costs and all other premiums or
Computer software amortised cost; any difference between statement for the period. The information discounts. Once a financial asset or a group
Computer software that has been proceeds, net of transaction costs, and about the plan as a whole is disclosed in of similar financial assets has been written
purchased or generated internally for own the redemption value is recognised in the annual report of ING Personeels VOF. down as a result of an impairment, interest
use is stated at cost less amortisation and the income statement over the period income is recognised using the rate of
any impairment losses. Amortisation is of the borrowings using the effective interest used to discount the future cash
calculated on a straight-line basis over its interest method. flows for the purpose of measuring the
useful life. This period will generally not impairment loss.
exceed three years. Amortisation is If ING Real Estate purchases its own debt, it
included in Other operating expenses. is removed from the balance sheet, and the
difference between the carrying amount
Other intangible assets of the liability and the consideration paid is
Other intangible assets, such as included in the income statement.
management rights, are capitalised
and amortised over their expected
economic life.

All interest income and expenses from Development income ACCOUNTING POLICIES FOR THE
trading positions and non-trading Development income are revenues from CONSOLIDATED CASH FLOW STATEMENT
derivatives are classified as interest income the sale of property under development or The statement of cash flows has been
and interest expenses in the income held for sale in the ordinary course of drawn up in accordance with the indirect
statement. Changes in the ‘clean fair business. Revenues are recognised when method, classifying cash flows as cash
value’ are included in Valuation results the property is technically completed and flows from operating, investing and
on non-trading derivatives. substantially all risks and rewards are financing activities. In the net cash flow
transferred to the buyer. In general, this from operating activities, the result before
Fees and commissions occurs when the legal title is transferred. tax is adjusted for those items in the
Fees and commissions are generally Revenues are recognised only when they income statement, and changes in balance
recognised as the service is provided. can be measured reliably. Revenues sheet items, which do not result in actual
relating to constructions on behalf of third cash flows during the year.
Asset management fees related to real parties that have been specifically
estate investment funds are recognised on negotiated (when the buyer is able to For the purposes of the statement of cash
a pro-rata basis over the period the service specify major structural elements of flows, Cash and bank balances comprise
is provided. design) are accounted for using the balances with less than three months’
‘percentage of completion method’. If maturity from the date of acquisition,
Outperformance fees are paid from the a project is sold and a rental guarantee including cash and non-restricted balances
real estate investment funds managed by is issued, reliable estimates of rental with central banks, treasury bills and
ING Real Estate usually at the end of a guarantees to be paid are recognised other eligible bills, amounts due from
performance period. Outperformance as a provision. other banks and amounts due to banks.
fees are recognised, based on the actual Investments qualify as cash and bank
performance of the fund, when they can be EXPENSE RECOGNITION balances if they are readily convertible to a
reliably estimated, which is normally in the Expenses are recognised in the income known amount of cash and are subject to
last few years of the performance period. statement as incurred or when a decrease an insignificant risk of changes in value.
in future economic benefits related to a
Loan commitment fees for loans that are decrease in an asset or an increase in a liability Cash flows arising from foreign currency
likely to be drawn down are deferred has arisen that can be measured reliably. transactions are translated into the
(together with related direct costs) and functional currency using the exchange
recognised as an adjustment to the Share-based payments rates at the date of the cash flows.
effective interest rate on the loan. Loan Share-based payment expenses are
syndication fees are recognised as revenue recognised as the employees provide the The net cash flow shown in respect
when the syndication has been completed service. A corresponding increase in equity of Loans and advances relates only to
and ING Real Estate retained no part of the is recognised if the services are received transactions involving actual payments
loan package for itself or retained a part in an equity-settled share-based payment or receipts. The Addition to loan loss
at the same effective interest rate as the transaction. A liability is recognised if the provisions which is deducted from the item
other participants. services are acquired in a cash-settled Loans and advances in the balance sheet
share-based payment transaction. The cost has been adjusted accordingly from the
Commission and fees arising from of acquiring the services is expensed as a result before tax and is shown separately
negotiating, or participating in the staff expense. Share-based payments are in the statement of cash flows.
negotiation of, a transaction for a third payments in shares of ING Group N.V.
party are recognised on completion of and not in shares of ING Real Estate B.V. The difference between the net cash flow
the underlying transaction. because these are all, indirectly, held by in accordance with the statement of cash
ING Group N.V. flows and the change in Cash and bank
Lease income balances in the balance sheet is due to
The proceeds from leasing out assets The fair value of equity-settled share-based exchange rate differences and is accounted
under operating leases are recognised on payment transactions is measured at the separately for as part of the reconciliation
a straight-line basis over the life of the lease grant date and the fair value of cash-settled of the net cash flow and the balance sheet
agreement. Lease payments received in share-based payment transactions is change in Cash and bank balances.
respect of finance leases when ING Real measured at each balance sheet date.
Estate is the lessor are divided into an
interest component (recognised as interest FIDUCIARY ACTIVITIES
income) and a repayment component. ING Real Estate commonly acts as trustee
Lease incentives are recognised in the and in other fiduciary capacities that result
income statement on a straight-line basis. in the holding or placing of (real estate)
assets on behalf of third parties. These
Service costs paid to third parties and assets and income arising thereon are
subsequently billed to tenants are excluded from these financial statements,
netted only if ING Real Estate acts as as they are not assets of ING Real Estate.
a billing agent.

Notes to the consolidated financial statements
(amounts in thousands of euros, unless stated otherwise)
ASSETS
1 CASH AND BANK BALANCES
2008 2007
Amounts held at ING Bank 284,858 69,819

Cash and other bank balances 270,777 267,656
555,635 337,475
2 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

2008 2007
Non-trading derivatives 54,970 12,829

Equity securities designated as at fair value through profit or loss 60,200 93,644
115,170 106,473
Equity securities designated at fair value through profit or loss relate to investments in listed and non-listed real estate funds in which the
company has no significant influence nor control.
NON-TRADING DERIVATIVES BY TYPE

2008 2007
Derivatives used in cash flow hedges – 1,975

Other non-trading derivatives 54,970 10,854
54,970 12,829
3 LOANS AND ADVANCES

LOANS AND ADVANCES ANALYSED BY TYPE
Netherlands Netherlands International International Total Total
2008 2007 2008 2007 2008 2007
Loans to, or guaranteed by, public authorities 19,153 28,004 2,937 59 22,090 28,063
Loans to banks 319,886 192,712 – – 319,886 192,712
Loans secured by mortgages 20,086,831 17,945,530 9,807,370 7,168,300 29,894,201 25,113,830
Loans guaranteed by credit institutions – – – 16,429 – 16,429
Other personal lending – – 1,181 6,927 1,181 6,927
Other corporate loans 1,868,000 2,098,486 2,589,954 2,104,720 4,457,954 4,203,206
22,293,870 20,264,732 12,401,442 9,296,435 34,695,312 29,561,167
Loan loss provisions –91,500 –31,508 –15,846 –1,639 –107,346 –33,147
22,202,370 20,233,224 12,385,596 9,294,796 34,587,966 29,528,020
LOANS AND ADVANCES ANALYSED BY SUBORDINATION

2008 2007
Non-subordinated 34,587,966 29,525,243

Subordinated – 2,777
34,587,966 29,528,020
As at 31 December 2008, Loans to banks includes receivables with ING Bank amounting to EUR 316 million (2007: EUR 193 million).
No individual loan or advance has terms and conditions that materially affect the amount timing or certainty of the consolidated cash flows of
ING Real Estate. For detail on significant concentrations see note 39 ‘Risk management’ section.

3 LOANS AND ADVANCES CONTINUED

Loans and advances include finance lease receivables, analysed as follows:
FINANCE LEASE RECEIVABLES

2008 2007
Maturities of gross investment in finance lease receivables

within one year 50,843 102,593
more than one year but less than five years 270,467 227,792
more than five years 15,954 89,924
337,264 420,309
Unearned future finance income on finance leases –58,371 –129,986
Net investment in finance leases 278,893 290,323
Maturities of net investment in finance lease receivables

within one year 33,213 87,171
more than one year but less than five years 231,286 180,162
more than five years 14,394 22,990
278,893 290,323
The allowance for uncollectable finance lease receivables included in the loan loss provisions amounted to EUR 53 at 31 December 2008
(2007: EUR 32).
No individual finance lease receivable has terms and conditions that would materially affect the amount, timing or certainty of consolidated
cash flows of ING Real Estate.
LOAN LOSS PROVISIONS ANALYSED BY TYPE

2008 2007 2008 2007 2008 2007
Loans secured by mortgages –91,501 –31,509 –13,469 –1,327 –104,970 –32,836

Other corporate loans – – –2,377 –311 –2,377 –311
–91,501 –31,509 –15,846 –1,638 –107,347 –33,147
CHANGES IN THE LOAN LOSS PROVISIONS

2008 2007
Opening balance –33,147 –32,080

Write-offs 666 –394
Recoveries – 14,314
Increase in loan loss provisions –81,791 –14,000
Exchange rate differences –533 –44
Interest accrued on impaired loans and advances 7,458 –943
Closing balance –107,347 –33,147
Individual loan loss provision –78,079 –13,984

Collective loan loss provision (incurred but not reported) –29,268 –19,163
–107,347 –33,147

4 INVESTMENTS IN ASSOCIATES
Fair value
Interest of listed Balance sheet Total Total Total Total
held (%) associates value assets liabilities income expenses
2008
ING Industrial Fund Australia 18 13,833 163,824 2,376,568 1,033,067 166,272 147,024
Lion Properties Fund 5 124,573 4,135,399 1,757,135 313,337 771,104
ING Real Estate Asian Retail Fund Ltd 28 120,840 849,677 411,851 56,637 72,343
ING Retail Property Fund Australia 29 109,050 789,952 411,806 12,585 6,761
ING REI Investment DOF B.V. 3 71,375 2,679,082 383,040 196,524 212,176
ING European Infrastructure Fund 25 70,447 662,175 408,505 – 1,364
ING Office Fund Australia 4 25,164 42,699 1,749,779 607,393 191,442 69,736
ING REI Investment REOFN B.V. 32 40,761 768,479 610,856 43,015 95,489
ING Korea Property Investments 15 37,424 385,694 188,651 27,712 –39,234
ING RE Asia Value Fund LP 30 32,513 190,820 83,515 3,938 14,829
China Opportunity Fund LP 8 27,085 403,018 49,726 14,938 8,897
RE Italian Retail Fund 33 25,756 351,650 272,740 35,582 72,538
Other investments in associates 181,046
1,047,393
Other investments in associates represents 24 associates with an individual balance sheet value of less than EUR 25 million.
Accumulated impairments have been recognised of EUR 31 million (2007: EUR 20 million).
For the above associates in which the interest held is below 20%, significant influence exists based on the combination of ING Real Estate’s
financial interest for own risk and its role as investment manager. For associates in which the interest held is above 50%, control is held by other
parties through agreements. ING Real Estate can exercise significant influence over such investments.
The values presented in the table above could differ from the values presented in the individual financial statements of the associates, due to the
fact that the individual values have been brought in line with ING Real Estate’s accounting principles.

4 INVESTMENTS IN ASSOCIATES CONTINUED

The fair value of an associate can substantially differ from its carrying value on the balance sheet of ING Real Estate. The share price of the (listed)
associate is equal to its fair value, whereas the carrying value is based on the equity accounted amount less impairments. Impairments to the
carrying amount are recognised only if the recoverable amount is lower than its carrying value. The recoverable amount of an associate is the
higher of its fair value (share price) less costs to sell or its estimated value in use (net asset value).
In general the reporting dates of all material associates are consistent with the reporting date of ING Real Estate. However the reporting date of
some significant associates are not completely consistent with the reporting date of ING Real Estate, but, in any case, the difference between the
reporting date of the associates and that of ING Real Estate will not be more than three months.
INVESTMENTS IN ASSOCIATES
Fair value
Interest of listed Balance sheet Total Total Total Total
held (%) associates value assets liabilities income expenses
2007
ING Industrial Fund Australia 18 302,618 302,663 3,124,765 1,337,693 411,233 167,947
Lion Properties Fund 5 146,614 4,502,091 1,666,071 659,893 155,458
ING Retail Property Fund Australia 29 149,894 957,652 399,494 179,420 100,146
ING Office Fund Australia 6 69,384 82,534 2,133,578 763,066 442,814 155,458
ING Korea Property Investments 15 33,906 382,463 220,784 89,116 47,036
ING Real Estate Asia Retail Fund LP 46 188,633 790,963 389,941 29,146 2,204
Other investments in associates 188,611
1,092,855
CHANGES IN INVESTMENTS IN ASSOCIATES

2008 2007
Opening balance 1,092,855 723,444

Additions 365,049 257,507
Changes in the composition of the Group – 213,030
Transfers to and from Investments – 2,973
Share of results –172,675 150,002
Dividends received –51,477 –41,799
Disposals –113,573 –139,765
Impairments –17,664 –20,749
Exchange rate differences –74,857 –51,792
Other changes 19,735 4
Closing balance 1,047,393 1,092,855
In 2008, share of results of EUR –173 million (2007: EUR 150 million) less impairment of EUR 18 million (2007: EUR 21 million) are presented in
the income statement in Share of result from associates of EUR –190 million (2007: EUR 129 million). Share of results includes negative fair value
changes of EUR 224 million (2007: EUR 89 million positive).

5 REAL ESTATE INVESTMENTS

CHANGES IN REAL ESTATE INVESTMENTS
2008 2007
Opening balance 3,561,354 3,530,459

Additions 286,504 251,012
Changes in the composition of the Group – –450,246
Transfers to and from other assets –186 101,538
Fair value gains/(losses) –354,332 88,765
Disposals –189,879 –68,837
Other movements – –3
Exchange rate differences –393,764 108,666
Real estate investments includes EUR 109 million (2007: EUR 107 million) of assets leased by ING Bank.
The total amount of rental income recognised in the income statement for the year ended 31 December 2008 was EUR 286 million
(2007: EUR 308 million).
The total amount of direct operating expenses (including repairs and maintenance) arising from real estate investments that generated rental
income for the year ended 31 December 2008 was EUR 74 million (2007: EUR 58 million). The total amount of direct operating expenses
(including repairs and maintenance) arising from real estate investments that did not generate rental income for the year ended 31 December 2008
was EUR 6 million (2007: EUR 3 million).
APPRAISAL OF REAL ESTATE INVESTMENTS DURING THE LAST FIVE YEARS BY INDEPENDENTLY QUALIFIED VALUERS (IN PERCENTAGES)
Year of appraisal
2008 98
2007 1
2006 –
2005 1
2004 –
100
An analysis on the risks relating to changes in fair value of real estate investments is included in note 39 ‘Risk management’ section.

6 PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT BY TYPE
2008 2007
Data processing equipment 3,455 1,979

Fixtures and fittings and other equipment 28,888 31,388
32,343 33,367
CHANGES IN EQUIPMENT
Fixtures and Fixtures and
Data processing Data processing fittings and fittings and
equipment equipment other equipment other equipment Total Total
2008 2007 2008 2007 2008 2007
Opening balance 1,979 1,129 31,388 21,846 33,367 22,975

Additions 3,469 1,787 6,809 16,957 10,278 18,744
Changes in the composition of the Group – –62 – 105 – 43
Disposals –30 580 –518 –1,822 –548 –1,242
Depreciation –1,878 –1,462 –4,732 –4,760 –6,610 –6,222
Exchange rate differences –85 7 –1,085 –983 –1,170 –976
Other changes – – –2,974 45 –2,974 45
Closing balance 3,455 1,979 28,888 31,388 32,343 33,367
Gross carrying amount as at 31 December 5,582 3,246 34,717 33,692 40,299 36,938
Accumulated depreciation as at 31 December –2,127 –1,267 –5,829 –2,304 –7,956 –3,571
Net book value 3,455 1,979 28,888 31,388 32,343 33,367
7 INTANGIBLE ASSETS
CHANGES IN INTANGIBLE ASSETS
Goodwill Goodwill Software Software Other Other Total Total
2008 2007 2008 2007 2008 2007 2008 2007
Opening balance 16,130 10,444 5,786 3,172 18,540 16,688 40,456 30,304
Capitalised expenses – – 1,638 965 – – 1,638 965
Additions bought 9,427 16,459 9,798 2,422 28,968 2,643 48,193 21,524
Disposals –6,405 – – –7 – – –6,405 –7
Amortisation – – –4,482 –779 –5,157 –1,734 –9,639 –2,513
Impairments – –378 – – – – – –378
Changes in the
composition
of the Group – –10,114 – – – – – –10,114
Exchange rate
differences 840 –281 245 13 –3,389 943 –2,304 675
Other changes –8,408 – 1,491 – – – –6,917 –
Closing balance 11,584 16,130 14,476 5,786 38,962 18,540 65,022 40,456
Gross carrying
amount as at
31 December 11,584 16,500 25,573 12,420 45,853 20,274 83,010 49,194
Accumulated
amortisation as
at 31 December – – –11,097 –6,634 –6,891 –1,734 –17,988 –8,368
Accumulated
impairments as
at 31 December – –370 – – – – – –370
Net book value 11,584 16,130 14,476 5,786 38,962 18,540 65,022 40,456

7 INTANGIBLE ASSETS CONTINUED

Amortisation of intangible assets is included in the income statement in Other operating expenses.
Additions to Goodwill in 2008 include EUR 5 million related to an earn-out fee for a prior year acquisition. Other intangible assets relate to
management rights acquired in business combinations. The increase in 2008 mainly relates to acquired management rights of ‘Kantoren Fonds
Netherlands’. The remaining amortisation period of the management rights is nine years.
8 REAL ESTATE DEVELOPMENT PROJECTS

PROJECTS BY TYPE
2008 2007
Property held for sale 619,742 508,360

Property under development for third parties 2,409,446 2,413,020
3,029,188 2,921,380
CHANGES IN PROPERTY UNDER DEVELOPMENT FOR THIRD PARTIES

Property under Property under
Property held Property held development development
for sale for sale for third parties for third parties Total Total
2008 2007 2008 2007 2008 2007
Opening balance 508,360 333,552 2,413,020 2,223,898 2,921,380 2,557,450

Project investments 89,311 5,477 990,656 1,244,232 1,079,967 1,249,709
Disposals –24,707 –298,451 –679,193 –688,954 –703,900 –987,405
Exchange rate differences –84,881 17,507 –144,174 –41,905 –229,055 –24,398
Capitalised interest – – 91,860 72,647 91,860 72,647
Transfers 131,659 403,874 –201,197 –403,874 –69,538 –
Impairments – 46,401 –92,209 6,976 –92,209 53,377
Impairment reversals – – 30,683 – 30,683 –
Closing balance 619,742 508,360 2,409,446 2,413,020 3,029,188 2,921,380
Accumulated impairments have been recognised of EUR 148 million (2007: EUR 90 million).
Impairment reversal of property under development for third parties is mainly due to a revised expectation of the sales price of certain projects.
9 OTHER ASSETS
OTHER ASSETS BY TYPE
2008 2007
Deferred tax assets 220,743 142,762

Income tax receivable 52,285 26,703
Accrued interest and rents 301,139 264,624
Other accrued assets 48,954 72,123
Other receivables 531,843 822,602
1,154,964 1,328,814
Disclosures in respect of deferred tax assets are provided in note 14 ‘Other liabilities’.
Other receivables includes receivables property under development third party (EUR 200 million), receivables and current accounts with
ING Bank (EUR 62 million) and VAT receivable (EUR 53 million).

EQUITY
10 SHAREHOLDERS’ EQUITY (PARENT)
CAPITAL MANAGEMENT
ING Real Estate maintains an actively managed capital base to cover risks inherent in the business. The adequacy of ING Real Estate’s capital is
monitored using amongst others tailor-made models and measures which are in line with the policies of ING Group, but take into account the
particular real estate characteristics of ING Real Estate’s assets and liabilities. Being part of ING Group these measures and models also comply
with the rules, ratios and regulations established by the Basel Committee on Banking Supervision (‘BIS rules/ratios’) and adopted by the Central
Bank of the Netherlands in supervising the ING Group. The primary objectives of ING Real Estate’s capital management are to ensure compliance
with externally imposed capital requirements and to maintain a healthy capital ratio. ING Real Estate manages its capital structure and makes
adjustments to it in the light of change in economic conditions and the risk characteristics of its activities. No changes were made in the
objectives, policies and processes from the previous year.
ING Real Estate manages as capital:
SHAREHOLDERS’ EQUITY (PARENT)

2008 2007
Share capital 227 227

Share premium 1,447,131 1,447,131
Revaluation reserve 40,483 –25,950
Currency translation reserve –129,076 –49,347
Other reserves 1,309,655 1,396,238
Shareholders’ equity (parent) 2,668,420 2,768,299
SHARE CAPITAL
Ordinary shares (par value EUR 1,000)
Number x 1,000 Number x 1,000 Amount Amount

2008 2007 2008 2007
Authorised share capital 1,135 1,135 1,135 1,135

Unissued share capital 908 908 908 908
Issued share capital 227 227 227 227
No shares have been issued during 2008 or 2007.
DIVIDEND RESTRICTIONS
ING Real Estate B.V. and its Dutch Group companies are subject to legal restrictions regarding the amount of dividends they can pay to
their shareholders. The Dutch Civil Code contains the restriction that dividends can only be paid up to an amount equal to the excess of the
Company’s own funds over the sum of the paid-up capital, and reserves required by law. The Revaluation reserve, Share of associates reserve
(included in Other reserves) and Currency translation reserve cannot be freely distributed. Additionally, certain Group companies are subject to
restrictions on the amount of funds they may transfer in the form of dividends or otherwise to the parent company. Furthermore, in addition
to the restrictions in respect of minimum capital requirements that are imposed by industry regulators in the countries in which the subsidiaries
operate, other limitations exist in certain countries.
CHANGES IN REVALUATION RESERVE

Available-for- Net investment Cash flow
sale reserve hedge reserve hedge reserve Total
2008
Opening balance – – –25,950 –25,950
Changes in hedge reserves – 56,932 9,501 66,433
Closing balance – 56,932 –16,449 40,483

10 SHAREHOLDERS’ EQUITY (PARENT) CONTINUED

Available-for- Net Investment Cash flow
sale reserve hedge reserve hedge reserve Total
2007
Opening balance 7,398 – –65,161 –57,763
Changes in hedge reserve – – –7,017 –7,017
Net unrealised gains 7,949 – – 7,949
Realised gains –15,347 – – –15,347
Exchange differences – – 5,709 5,709
Other movements – – 40,519 40,519
Closing balance – – –25,950 –25,950
CHANGES IN CURRENCY TRANSLATION RESERVE

2008 2007
Opening balance –49,347 15,260

Exchange differences –79,729 –64,607
Closing balance –129,076 –49,347
CHANGES IN OTHER RESERVES

Share of Retained
associates earnings Total
2008
Opening balance 79,466 1,316,772 1,396,238
Employee stock options and share plans – 4,028 4,028
Result for the year – –88,364 –88,364
Dividend – – –
Other – –2,247 –2,247
Closing balance 79,466 1,230,189 1,309,655
CHANGES IN OTHER RESERVES

Share of Retained
associates earnings Total
2007
Opening balance – 915,826 915,826
Employee stock options and share plans – 3,085 3,085
Result for the year – 481,487 481,487
Dividend – – –
Other 79,466 –83,626 –4,160
Closing balance 79,466 1,316,772 1,396,238

LIABILITIES
11 LOANS
LOANS BY TYPE
2008 2007 2008 2007 2008 2007
Loans from ING Bank 31,708,666 28,250,197 4,447,945 2,864,591 36,156,611 31,114,788
Loans from other banks – – 1,043,506 1,240,825 1,043,506 1,240,825
Other loans 235,963 196,303 295,738 258,009 531,701 454,312
31,944,629 28,446,500 5,787,189 4,363,425 37,731,818 32,809,925
Other loans includes loans received from joint venture partners.
12 FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

2008 2007
Derivatives used in
cash flow hedges – 5,200
hedges of net investments in foreign operations 14,510 –
Other non-trading derivatives 21,501 3,596
36,011 8,796
13 ACCRUED INTEREST AND EXPENSES

2008 2007
Accrued interests and rents 404,468 318,114

Accrued expenses 313,762 322,928
718,230 641,042
Accrued interest and third-party expenses 338,063 332,860

Accrued interest and expenses ING Bank 380,167 308,182
718,230 641,042
14 OTHER LIABILITIES
OTHER LIABILITIES BY TYPE
2008 2007
Deferred tax liabilities 247,097 208,181

Income tax payable 266,499 261,435
Other taxation and social security contributions 41,898 59,067
Reorganisation and other provisions 43,273 52,181
Pre-payments property under development for third parties 485,002 567,265
Share-based payment plan liabilities – 412
Other 726,137 729,525
1,809,906 1,878,066
Deferred taxes are calculated on all temporary differences under the liability method using tax rates applicable to the jurisdictions in which
ING Real Estate is liable to taxation.
Other includes pre-payments on client loans (EUR 242 million), other staff related liabilities (EUR 55 million), VAT payable (EUR 33 million) and
current accounts with funds as well as regular accounts payables.

14 OTHER LIABILITIES CONTINUED

CHANGES IN DEFERRED TAX
Change through Change through Additions Exchange Net
Net liability equity net result (disposals) rate difference Other liabillity
2007 2008 2008 2008 2008 2008 2008
Investments 130,229 – –42,214 –5,141 –5,004 –42,782 35,088

Other provisions –4,859 – 3,950 – 12 –3,401 –4,298
Cash flow hedges 444 21,625 –1,165 – –10 –3,764 17,130
Unused tax losses carried forward –61,613 – 3,883 – 3,162 29,927 –24,641
Other 1,218 –491 5,295 3 3,112 –6,062 3,075
65,419 21,134 –30,251 –5,138 1,272 –26,082 26,354
COMPRISING
deferred tax liabilities 208,181 37,561 –6,489 –5,136 –5,634 18,614 247,097
deferred tax assets 142,762 16,427 23,762 2 –6,906 44,696 220,743
65,419 21,134 –30,251 –5,138 1,272 –26,082 26,354
DEFERRED TAX IN CONNECTION WITH UNUSED TAX LOSSES CARRIED FORWARD

2008 2007
Total unused tax losses carried forward 266,301 287,845

Unused tax losses carried forward not recognised as a deferred tax asset 178,290 86,711
Unused tax losses carried forward recognised as a deferred tax asset 88,011 201,134
Average tax rate 28.0% 30.6%

Deferred tax asset 24,641 61,613
Deferred income tax assets are recognised for tax loss carry forwards and unused tax credits only to the extent that realisation of the related tax
benefit is probable. The uncertainty of the recoverability of the tax losses and tax credits is taken into account in establishing the deferred tax
assets. The following tax loss carry forwards and tax credits will expire as follows at 31 December:
TOTAL UNUSED TAX LOSSES CARRIED FORWARD ANALYSED BY EXPIRY ITEM

No deferred tax No deferred tax Deferred tax Deferred tax
asset recognised asset recognised asset recognised asset recognised
2008 2007 2008 2007
Within one year – – 1,074 6,621

More than one year but less than five years 3,045 81,569 45,324 13,910
More than five years but less than ten years 7,959 – 18,477 –
More than ten years but less than twenty years 167,286 5,142 22,160 63,382
Unlimited – – 976 117,221
178,290 86,711 88,011 201,134
CHANGES IN REORGANISATION AND OTHER PROVISIONS

Remaining risks Remaining risks
Reorganisations Reorganisations on projects sold on projects sold Total Total
2008 2007 2008 2007 2008 2007
Opening balance 1,965 2,433 50,216 32,426 52,181 34,859

Additions 3,917 1,252 1,061 19,117 4,978 20,369
Charges –630 –1,463 –8,871 –13,069 –9,501 –14,532
Exchange rate differences – – –898 128 –898 128
Other changes –536 –257 –2,951 11,614 –3,487 11,357
Closing balance 4,716 1,965 38,557 50,216 43,273 52,181

14 OTHER LIABILITIES CONTINUED

The remaining term of the provision for reorganisations is generally not more than five years.
The amounts included in other provisions are based on best estimates with regard to amounts and timing of cash flows required to settle
the obligation.
PENSION AND POST-EMPLOYMENT BENEFITS

ING Real Estate participates in a defined benefit retirement plan in the Netherlands (the ING Pension Fund), which is sponsored by ING Group.
The plan shares the risks between individual companies within ING Group and consequently the liability specific to any one company within
ING Group cannot be determined. ING Group charges individual group entities with a portion of the total defined benefit cost based upon the
employees currently in service at that entity. ING Real Estate includes this charge in income statement for the period. For further disclosure of
the pension costs and obligation related to ING Pension Fund we refer to the annual report of ING Personeel VOF.
The pension schemes of most personnel abroad are defined contribution plans. The costs related to these plans are processed in the income
statement when they occur.
15 ASSETS AND LIABILITIES BY CONTRACTUAL MATURITY

Less than 1–3 3–12 1–5 Over Maturity
1 month months months years 5 years not applicable Total
2008
ASSETS
Cash and bank balances 555,635 – – – – – 555,635
Financial assets at fair value
through profit or loss
non-trading derivatives 54,916 54 – – – – 54,970
designated as at fair value
through profit or loss 27,070 129 2,116 25,037 5,848 – 60,200
Investments
Loans and advances 991,993 68,465 5,190,294 17,389,666 10,947,548 – 34,587,966
Intangible assets – – – – – 65,022 65,022
Other assets 100,193 533,958 1,130,625 1,980,155 439,221 – 4,184,152
Remaining assets (where
maturities are not applicable) (1) – – – – – 3,989,433 3,989,433
Total assets 1,729,807 602,606 6,323,035 19,394,858 11,392,617 4,054,455 43,497,378
LIABILITIES
Loans 822,998 1,685,805 4,637,415 19,593,615 10,991,985 – 37,731,818
Financial liabilities at fair value
non-trading derivatives 34,294 2 132 345 1,238 – 36,011
Other liabilities 500,364 427,183 987,237 521,310 92,042 – 2,528,136
Total liabilities 1,357,656 2,112,990 5,624,784 20,115,270 11,085,265 – 40,295,965
(1)
Included in remaining assets where maturities are not applicable are: Property and equipment, Real estate investments and Investments
in associates.
Note: Due to their nature, Remaining assets consists mainly of assets expected to be recovered after more than 12 months.

15 ASSETS AND LIABILITIES BY CONTRACTUAL MATURITY CONTINUED

Less than 1–3 3–12 1–5 Over Maturity
1 month months months years 5 years not applicable Total
2007
ASSETS
Cash and bank balances 337,475 – – – – – 337,475
Financial assets at fair value
non-trading derivatives 12,829 – – – – – 12,829
designated as at fair value
through profit or loss 1 655 1,129 80,320 11,539 – 93,644
Investments
Loans and advances –1,039,975 1,699,428 3,233,287 14,536,375 11,098,905 – 29,528,020
Intangible assets – – – – – 40,456 40,456
Other assets 276,078 423,118 1,351,006 1,443,071 756,921 – 4,250,194
Remaining assets (where
maturities are not applicable)(1) – – – – – 4,687,576 4,687,576
Total assets –413,592 2,123,201 4,585,422 16,059,766 11,867,365 4,728,032 38,950,194
LIABILITIES
Loans 1,623,234 2,834,926 3,694,376 13,891,250 10,766,139 – 32,809,925
Financial liabilities at fair value
non-trading derivatives 8,796 – – – – – 8,796
Other liabilities 311,876 525,332 981,641 600,264 99,995 – 2,519,108
Total liabilities 1,943,906 3,360,258 4,676,017 14,491,514 10,866,134 – 35,337,829
(1)
Included in remaining assets where maturities are not applicable are: Property and equipment, Real estate investments and Investments
in associates.
Note: Due to their nature, Remaining assets consists mainly of assets expected to be recovered after more than 12 months.
Amounts presented in the table by contractual maturity are on an undiscounted basis, excluding interest receivable/payable.

16 DERIVATIVES AND HEDGE ACCOUNTING

USE OF DERIVATIVES AND HEDGE ACCOUNTING
As described in note 39 ‘Risk management’ section, ING Real Estate uses derivatives (principally interest rate swaps and forward foreign
exchange contracts) for economic hedging purposes. The objective of economic hedging is to enter into positions with an opposite risk profile
to an identified exposure to reduce that exposure.
The accounting treatment of hedge transactions varies according to the nature of the instrument hedged and whether the hedge qualifies under
the IFRS-EU hedge accounting rules. Derivatives that qualify for hedge accounting under IFRS-EU are classified and accounted for according to
the nature of the instrument hedged and the type of IFRS-EU hedge model that is applicable. The three models applicable under IFRS-EU are: fair
value hedge accounting, cash flow hedge accounting and net investment hedge accounting. Fair value hedge accounting is not applied within
ING Real Estate. ING Real Estate’s accounting policies for hedge accounting are set out in section ‘Accounting policies for the consolidated
balance sheet and income statement’.
To qualify for hedge accounting under IFRS-EU, strict criteria must be met. Certain hedges that are economically effective from a risk
management perspective do not qualify for hedge accounting under IFRS-EU. The fair value changes of derivatives relating to such non
qualifying hedges are taken to the income statement. With respect to exchange rate and interest rate derivative contracts, the notional or
contractual amounts of these instruments is indicative of the nominal value of transactions outstanding at the balance sheet date; they do
however not represent amounts at risk. The exchange rate derivatives refer to forward contracts in various currencies, with majority durations
shorter than a year, and with a total nominal value of EUR 209 million long and EUR 557 million short. The fair value and carrying amount
of the derivative financial instruments is as follows:
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING

Assets Liabilities Assets Liabilities
2008 2008 2007 2007
Derivatives not held for hedge accounting 54,970 21,501 10,854 3,596
Derivatives held as cash flow hedge – – 1,975 5,200
Derivatives held as net investment hedge – 14,510 – –
Accrued interest on derivatives 433 251 2,883 2,767
Total 55,403 36,262 15,712 11,563
CASH FLOW HEDGE ACCOUNTING

ING Real Estate’s cash flow hedges principally consist of forward foreign exchange contracts. Forward foreign exchange contracts were used
until mid 2008 to hedge cash flows relating to future sales revenues of real estate properties denominated in Asian currencies less the
repayments of related loans in the same local currencies.
Gains and losses on the effective portions of derivatives designated under cash flow hedge accounting are recorded in Shareholders’ equity.
The gains and losses on ineffective portions of such derivatives are recognised immediately in the income statement.
At 31 December 2008 and 31 December 2007, there were no non-derivatives designated as hedging instruments for cash flow hedge
accounting purposes.
Certain Real Estate Investment funds in which ING Real Estate holds a minority interest apply cash flow hedge accounting. ING Real Estate
accounts for these investments in associates under the equity accounting method and subsequently reports its share in the cash flow hedge
reserve of these investments in equity.
The balance of the cash flow hedge reserve in equity at 31 December 2008 was EUR 16.4 million (2007: EUR 26.0 million) after deferred tax
of which EUR 7.1 million is related to cash flow hedge reserves of investments in associates. This cash flow hedge reserve will be reflected in
the income statement over the remaining term of the underlying hedged items. The cash flows are expected to occur within one year after
balance sheet date except for the hedges of investments in associates.
HEDGES OF NET INVESTMENTS IN FOREIGN OPERATIONS

ING Real Estate’s net investment hedges principally consist of derivative (currency forwards) and non-derivatives foreign currency denominated
borrowings that are used to protect against foreign currency exposures on foreign subsidiaries.
Gains and losses on the effective portions of derivatives designated under net investment hedge accounting are recorded in Shareholders’
equity. The balance in equity is recognised in the income statement when the related foreign subsidiary is disposed. The gains and losses on
ineffective portions are recognised immediately in the income statement.

16 DERIVATIVES AND HEDGE ACCOUNTING CONTINUED

As at 31 December 2008, the fair value of outstanding derivatives under net investment hedge accounting was EUR –14.5 million
(2007: EUR 0.0 million), presented in the balance sheet as negative fair values under liabilities.
As at 31 December 2008, the balance sheet value of non-derivatives (borrowings) designated under net investment hedge accounting was
EUR 945 million (2007: EUR 0 million), presented in the balance sheet as loans under liabilities.
Accounting ineffectiveness recognised in the income statement for the year ended 31 December 2008 on derivatives and non-derivatives
designated under net investments hedge accounting was EUR 0 million (2007: EUR 0 million).
17 ASSETS NOT FREELY DISPOSABLE

2008 2007
Loans and advances 501 7,561

Bank balances 53,104 25,819
Other assets 141,111 167,928
194,716 201,308
There are no terms and conditions relating to the collateral represented in the above table which are individually significant.
18 CONTINGENT LIABILITIES AND COMMITMENTS

In the normal course of business ING Real Estate is a party in activities whose risks are not reflected in whole or part in the consolidated balance
sheet. In response to the needs of its customers, ING Real Estate offers financial products related to loans. These products include traditional
off-balance sheet credit-related financial instruments.
CONTINGENT LIABILITIES AND COMMITMENTS

2008 2007
Obligations under development and construction contracts 1,200,270 1,318,826

Guarantees 826,936 656,530
Irrevocable facilities relating to Real Estate Finance 2,664,306 3,572,609
Equity commitments property funds 300,112 142,294
4,991,624 5,690,259
All irrevocable facilities relating to Real Estate Finance are granted to third parties.
FUTURE RENTAL COMMITMENTS FOR OPERATING LEASE CONTRACTS

2008 2007
Less than one year 29,342 24,874

One to five years 95,532 92,497
Over five years 144,789 110,844
269,663 228,215
The future rental and lease commitments mainly relate to a number of offices and cars leased by ING Real Estate.
FISCAL ENTITY
Together with its wholly-owned Dutch subsidiaries, ING Real Estate forms part of the fiscal entity of ING Bank N.V. for corporate income tax
purposes. On the grounds of this, ING Real Estate is jointly and severally liable for the tax indebtedness of the fiscal entity as a whole. For value
added tax, the Dutch subsidiaries conducting financing and investment management activities form part of the fiscal entity ING Groep N.V.
ING Real Estate and the Dutch subsidiaries conducting development activities are grouped in a separate fiscal entity called ING Vastgoed
Ontwikkeling B.V.

19 PRINCIPAL SUBSIDIARIES
The principal subsidiaries of ING Real Estate B.V. are as follows:
ING Bewaar Management B.V. The Netherlands

ING Insurance Investments Holding B.V. The Netherlands
ING Real Estate Bishop B.V. The Netherlands
ING Real Estate Development Holding B.V. The Netherlands
ING Real Estate Finance N.V. The Netherlands
ING Real Estate Investment Management Holding B.V. The Netherlands
20 COMPANIES ACQUIRED AND COMPANIES DISPOSED

During 2007 and 2008 no significant companies have been acquired or disposed.
21 LEGAL PROCEEDINGS
ING Real Estate companies are involved in litigation and arbitration proceedings in the Netherlands and in a number of foreign jurisdictions,
involving claims by and against them which arise in the ordinary course of their businesses, including in connection with their activities as lenders,
employers, investors and taxpayers. While it is not feasible to predict or determine the ultimate outcome of all pending or threatened legal and
regulatory proceedings, management does not believe that their outcome will have a material adverse effect on ING Real Estate’s financial position
or results of operations.
Because of the geographic spread of its business, ING Real Estate may be subject to tax audits in numerous jurisdictions at any point in time.
Although ING Real Estate believes that it has adequately provided for all its tax positions, the ultimate resolution of these audits may result in
liabilities which are different from the amounts recorded.
22 JOINT VENTURES
Joint ventures are included proportionally in the consolidated financial statements as follows:
MOST SIGNIFICANT JOINT VENTURES

Interest held
(%) Assets Liabilities Income Expenses
2008
3W Vastgoed B.V. 50.0 109,059 83,915 –3,479 6,703
Mahler 4 VOF 33.3 99,781 86,134 6,938 97
ING Real Estate Joondalup B.V. 50.0 96,298 52,326 4,367 1,261
Dolce Vita Tejo 40.0 83,375 76,991 –19 142
Ontwikkelings Maatschappij Overhoeks C.V. 70.0 72,941 79,603 –13 1,078
IP Property Fund Asia Ltd. 52.7 66,250 19,691 6,461 643
SCCV Docks Vauban 50.0 59,094 59,544 81 –
Belvédère Wijkontwikkelingsmaatschappij B.V. 33.3 47,314 42,313 –57 –
SCCV La Confluence llot C 50.0 45,833 45,655 81 124
King Kok Investments Ltd. 60.0 38,018 17,153 –4,794 597
Oakwood City Residence 85.0 37,560 1,483 –11,178 34
Others 572,055 403,614 34,282 13,470
1,327,578 968,422 32,670 24,149

22 JOINT VENTURES CONTINUED

MOST SIGNIFICANT JOINT VENTURES
Interest held
(%) Assets Liabilities Income Expenses
2007
3W Vastgoed B.V. 50.0 87,698 55,497 1,663 2,448
Mahler 4 VOF 33.3 33,296 26,490 236 921
Belvédère Wijkontwikkelingsmaatschappij B.V. 33.3 41,930 36,909 57 –
Überseequartier Holding GmbH 28.3 5,557 38 367 1
Dolce Vita Tejo 40.0 36,332 29,792 61 585
D.C.U. Lugo XXI 49.2 14,971 1,459 1,116 571
Premier Developments Ltd. 50.0 9,327 8,308 830 184
IP Property Fund Asia Ltd. 52.7 83,387 36,821 58,347 4,150
ING Real Estate Joondalup B.V. 50.2 49,560 39,501 8,531 –
Others 706,561 438,151 277,603 214,491
1,068,619 672,966 348,811 223,351
23 RELATED PARTIES
In the normal course of business, ING Real Estate enters into various transactions with related parties. Parties are considered to be related if one
party has the ability to control or exercise significant influence over the other party in making financial or operating decisions. Transactions have
taken place on an arm’s-length basis and include rendering or receiving of services, leases, transfers under finance arrangements and provisions
of guarantees or collateral.
ING Real Estate forms part of ING Group. The following types of transactions are carried out at market conditions with the constituent members
of ING Group:
• Lease of office buildings to ING entities (see note 5);
• Granting of interest-bearing loans by ING Bank N.V. and its subsidiaries (see note 11);
• Transactions with ING Bank N.V. relating to the payments of taxes, interest rate swaps and forward currency transactions because
ING Bank N.V. is the head of the Dutch fiscal entity within which ING Real Estate is included;
• Facility services provided by ING Group companies for a total amount of EUR 150 million including charges from ING Personeel VOF
(see note 33) and ING Pension Fund (see note 14).
As at 31 December ING Real Estate held the following related party positions with joint ventures and associates:
TRANSACTIONS WITH JOINT VENTURES AND ASSOCIATES

Joint ventures Joint ventures Associates Associates
2008 2007 2008 2007
Receivables 104,689 40,161 310,159 750,127

Liabilities 56,601 50,371 – 307
Income received 8,932 3,705 170,380 145,719

Expenses paid 233 1,177 – 1,271
There are no significant provisions for doubtful debts or individually significant bad debt expenses.

24 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

The following table presents the estimated fair values of ING Real Estate’s financial assets and liabilities. Certain balance sheet items are not
included in the table, as they do not meet the definition of a financial asset or liability. The aggregation of the fair values presented below does
not represent, and should not be construed as representing, the underlying value of ING Real Estate.
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Estimated Estimated Balance Balance
fair value fair value sheet value sheet value
2008 2007 2008 2007
FINANCIAL ASSETS
Cash and bank balances 555,635 337,475 555,635 337,475
Financial assets at fair value through profit or loss
non-trading derivatives 54,970 12,829 54,970 12,829
designated as at fair value through profit or loss 60,200 93,644 60,200 93,644
Loans and advances 35,278,652 29,845,526 34,587,966 29,528,020
Other assets (1) 531,843 822,603 531,843 822,603
36,481,300 31,112,077 35,790,614 30,794,571
FINANCIAL LIABILITIES
Loans 38,118,172 32,512,597 37,731,818 32,809,925
Financial liabilities at fair value through profit or loss
non-trading derivatives 36,011 8,796 36,011 8,796
(2)
Other liabilities 726,137 729,525 726,137 729,525
38,880,320 33,250,918 38,493,966 33,548,246
(1)
Other assets do not include (deferred) tax assets, accruals, property held for sale, property under development for third parties
and pension assets.
(2)
Other liabilities do not include (deferred) tax liabilities, accruals, pension liabilities, property under development for third parties,
share-based payment plans, other provisions and other taxation and social security contributions.
The estimated fair values correspond with the amounts at which the financial instruments at our best estimate could have been traded at the
balance sheet date between knowledgeable, willing parties in arm’s length transactions. The fair value of financial assets and liabilities is based
on quoted market prices, where available. Because substantial trading markets do not exist for all of these financial instruments, various
techniques have been developed to estimate their approximate fair values. These techniques are subjective in nature and involve various
assumptions about the relevant pricing factors. Changes in these assumptions could significantly affect the estimated fair values. Consequently,
the fair values presented may not be indicative of the net realisable value. In addition, the calculation of the estimated fair value is based on
market conditions at a specific point in time and may not be indicative of future fair values.
The following methods and assumptions were used by ING Real Estate to estimate the fair value of the financial instruments.
FINANCIAL ASSETS
CASH AND BANK BALANCES
The carrying amount of cash approximates its fair value.
NON-TRADING DERIVATIVES
The fair values of derivatives held for non-trading purposes are based on quoted market prices, where available. For those securities not actively
traded, fair values are estimated based on internal valuation techniques.
DESIGNATED AS AT FAIR VALUE THROUGH PROFIT OR LOSS

The fair values of securities in the trading portfolio and other assets at fair value through profit or loss are based on quoted market prices, where
available. For those securities not actively traded, fair values are estimated based on internal valuation techniques.
INVESTMENTS
The fair values of equity securities are based on quoted market prices or, if unquoted, on estimated market values generally based on quoted
prices for similar securities. Fair values for fixed interest securities are based on quoted market prices, where available. For those securities not
actively traded, fair values are estimated using values obtained from private pricing services or by discounting expected future cash flows using
a current market rate applicable to the yield, credit quality and maturity of the investment.

24 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES CONTINUED

LOANS AND ADVANCES
For loans and advances that are repriced frequently and have had no significant changes in credit risk, carrying amounts represent a reasonable
estimate of fair values. The fair values of other loans are estimated by discounting expected future cash flows using interest rates offered for
similar loans to borrowers with similar credit ratings. The fair values of mortgage loans are estimated by discounting future cash flows using
interest rates currently being offered for similar loans to borrowers with similar credit ratings.
OTHER ASSETS
The carrying amount of other assets is not materially different to their fair value.
FINANCIAL LIABILITIES
LOANS
The carrying values of loans that are repriced frequently approximate their fair values. The fair values of other loans are estimated by discounting
expected future cash flows using interest rates offered for similar loans to borrowers with similar credit ratings.
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

The fair values of securities in the trading portfolio and other liabilities at fair value through profit or loss are based on quoted market prices,
where available. For those securities not actively traded, fair values are estimated based on internal valuation techniques.
OTHER LIABILITIES
The carrying amount other liabilities are stated at their book value which is not materially different than fair value.

24 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES CONTINUED

The fair values of the financial instruments carried at fair value were determined as follows:
METHODS APPLIED IN DETERMINING FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

Valuation Valuation
Reference to technique technique not
published price supported by supported by
quotations market inputs market inputs Total
2008
ASSETS
Non-trading derivatives – 54,970 – 54,970
Financial assets designated at fair value through profit or loss 26,254 33,946 – 60,200
26,254 88,916 – 115,170
LIABILITIES
– 36,011 – 36,011
METHODS APPLIED IN DETERMINING FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

Valuation Valuation
Reference to technique technique not
published price supported by supported by
quotations market inputs market inputs Total
2007
ASSETS
Financial assets designated at fair value through profit or loss 58,193 35,451 – 93,644
58,193 48,280 – 106,473
LIABILITIES
– 8,796 – 8,796
REFERENCE TO PUBLISHED PRICE QUOTATIONS

This category includes financial instruments whose fair value is determined directly by reference to published quotes in an active market.
A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer,
broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on
an arm’s length basis.
VALUATION TECHNIQUE SUPPORTED BY MARKET INPUTS

This category includes financial instruments whose fair value is determined using a valuation technique (a model), where inputs in the model are
taken from an active market or are market observable. If certain inputs in the model are not market observable, but all significant inputs are, the
instrument is still classified in this category, provided that the impact of those elements on the overall valuation is insignificant. Included in this
category are items whose value is derived from quoted prices of similar instruments, but for which the prices are (more than insignificantly)
modified based on other market observable external data.
VALUATION TECHNIQUE NOT SUPPORTED BY MARKET INPUTS

This category includes financial assets/liabilities whose fair value is determined using a valuation technique (model) for which more than an
insignificant level of the input in terms of the overall valuation are not market observable.
SENSITIVITIES OF FAIR VALUES

Reasonably likely changes in the assumptions used in the valuation techniques not supported by recent market transactions would not have
a significant impact on equity and net result.

25 INTEREST RESULT
2008 2007
Interest income on loans 1,908,361 1,394,225

Interest income on impaired loans 7,777 539
Total interest income on loans 1,916,138 1,394,764
Interest income on non-trading derivatives 19,372 27,005
Other interest income 9,240 86,097
Total interest income 1,944,750 1,507,866
Interest expense on deposits by banks 1,615,502 1,167,242
Interest expense other loans –10,074 20,479
Interest on non-trading derivatives 16,982 23,320
Other interest expense 63,136 155,651
Total interest expense 1,685,546 1,366,692
Interest result 259,204 141,174
Interest expense on deposits by banks mainly relate to ING Bank.
26 INVESTMENT INCOME
2008 2007
Rental income 285,613 307,754

Operating expenses –80,197 –60,964
Income from real estate investments 205,416 246,790
Dividend income 347 8,153
205,763 254,943
Realised gains/losses on disposal of equity securities –1,552 7,702

Realised gains/losses on debt securities –70 8,767
Change in fair value of real estate investments –354,276 88,765

Investment income –150,135 360,177
Income received from ING Group companies 9,716 9,716

Income received from third parties –159,851 350,461
Investment income –150,135 360,177
Income from real estate investments includes gross rental income from directly held real estate investments that are leased out to third parties,
less direct operating expenses. ING Real Estate leases out its real estate investments under operating leases and defines a lease contact as a
signed contract between landlord and tenant whereby the right to possession and use of property is transferred for a certain period of time.
The period and conditions vary between regions and type of assets.

26 INVESTMENT INCOME CONTINUED

The future aggregate minimum lease receivables under non-cancellable operating leases are as follows:
FUTURE OPERATING LEASE INCOME

2008 2007
Less than one year 189,915 196,884

One to five years 533,305 606,894
Over five years 372,874 722,196
1,096,094 1,525,974
CHANGE IN THE FAIR VALUE OF REAL ESTATE INVESTMENTS

Positive Negative
revaluation revaluation 2008 2007
The Netherlands 15,132 8,862 6,270 1,112

Rest of Europe 78,999 16,951 62,048 45,976
North America – 387,790 –387,790 2,911
Asia – 35,646 –35,646 28,671
Australia 842 – 842 10,095
94,973 449,249 –354,276 88,765
An analysis on the risks relating to changes in fair value of real estate investments is included in note 39 ‘Risk management’ section.
27 NET COMMISSION INCOME

FEE AND COMMISSION INCOME
2008 2007
Asset management fees 435,117 471,225

Brokerage and advisory fees –3,480 –
Other 15,945 14,289
Fee and commission income 447,582 485,514
Management fees 1,783 4,842
Other 2,603 1,552
Fee and commission expenses 4,386 6,394
Net commission income 443,196 479,120
ASSET MANAGEMENT FEES

Asset management fees are fees earned by ING Real Estate in its role as fund manager of real estate investment funds.
ING REAL ESTATE AS FUND MANAGER AND INVESTOR

ING Real Estate sets up investment funds for which it acts as a fund manager and sole investor at the inception of the fund. Subsequently,
ING Real Estate will seek third-party investors to invest in the fund, thereby reducing the interest of ING Real Estate. In general, ING Real Estate
will maintain a small percentage of interest in these funds.
ING REAL ESTATE AS FUND MANAGER

ING Real Estate acts as fund manager for several funds. Fees related to these management activities are charged on at arm’s-length basis.
In general, ING Real Estate as fund manager will hold these funds in a fiduciary capacity. Therefore, these funds are generally not included
in the consolidated financial statement of ING Real Estate.
Asset management fees is including transaction fees of EUR 27 million (2007: EUR 59 million) and incentive and out-performance fees of
EUR 33 million (2007: EUR 44 million).
OTHER
Other fee and commission income mainly relates to issued bank guarantees and lendings.

28 VALUATION RESULTS ON NON-TRADING DERIVATIVES

2008 2007
Change in fair value of derivatives relating to

cash-flow hedges (ineffective portion) – –5,709
other non-trading derivatives –5,991 120
Net result on non-trading derivatives –5,991 –5,589
Valuation results on assets designated at fair value through profit or loss (equity securities) –32,453 –12,250
Net valuation results –38,444 –17,839
29 NET TRADING INCOME

2008 2007
Results from foreign exchange transactions –9,903 –870

Income from property held for sale 46,946 28,939
37,043 28,069
Results from foreign exchange transactions include gains and losses from spot and forward contracts, options, futures, and translated foreign
currency assets and liabilities.
Income from property held for sale relates to gains and losses recognised on the sale of real estate properties held for sale.
30 NET DEVELOPMENT INCOME

2008 2007
Project income 773,360 686,804

Project costs 651,113 591,345
Net development income 122,247 95,459
Net development income consists of income and costs related to development projects sold. Significant projects sold in 2008 were Alcalá de
Henares (Spain), Alsace (France), Kraanspoor (Netherlands), Genk Stadsplein (Belgium), Spuimarkt The Hague (Netherlands) and Hanspaulka
Prague (Czech Republic).
31 OTHER INCOME
2008 2007
Other income 15,696 13,196

15,696 13,196
Other income mainly consist of sale of shares and other income received for restructuring loans.

32 OTHER IMPAIRMENTS
OTHER IMPAIRMENT LOSSES AND REVERSALS OF IMPAIRMENTS RECOGNISED IN THE INCOME STATEMENT
Impairment Impairment Reversals of Reversals of
losses losses impairments impairments Total Total
2008 2007 2008 2007 2008 2007
Property and equipment –1,463 –1,463 – – –1,463 –1,463

Property under development for third parties 92,209 37,571 –30,682 –44,546 61,527 –6,975
Goodwill – 378 – – – 378
Other intangible assets – – – – – –
Other – – – – – –
90,746 36,486 –30,682 –44,546 60,064 –8,060
Impairments on Loans and advances are presented under Addition to loan loss provisions. Impairments on Associates are presented
under Associates.
Impairment reversal of property under development for third parties is mainly due to a revised expectation of the sales price of certain projects.
33 STAFF EXPENSES
2008 2007
Salaries 291,748 286,536

Pension and other staff-related benefit costs 12,812 10,984
Social security costs 27,655 22,227
Share-based compensation arrangements 3,900 3,585
Other staff costs 57,107 46,853
393,222 370,185
Share-based compensation arrangements includes an amount of EUR 2.4 million (2007: EUR 3.1 million) relating to equity-settled share-based
payment arrangements and EUR 1.4 million (2007: EUR 0.4 million) relating to cash-settled share-based payment arrangements.
Employees of Investment Management, Finance and corporate staff working in the Netherlands are employed by ING Personeel VOF, a joint
venture between ING Bank and ING Insurance. The direct remuneration costs of ING Personeel VOF employees working for ING Real Estate are
invoiced at costs by ING Personeel VOF.
AVERAGE NUMBER OF EMPLOYEES

The following table provides a breakdown of the average number of employees (FTEs) during the year by business:
AVERAGE NUMBER OF EMPLOYEES

2008 2007
Management Board 6 6
Staff departments 284 245
Investment management business 1,529 1,288
Finance business 308 253
Development business 594 534
2,721 2,326
As at 31 December 2008 ING Real Estate employed 2,683 FTEs (2007: 2,549 FTEs).

33 STAFF EXPENSES CONTINUED
KEY MANAGEMENT PERSONNEL COMPENSATION
Management Management
Board Board
2008 2007
Base salary (1) 2,359 2,104

Short-term performance-related bonus (2) 750 3,739
Pension costs 133 175
Other (3) 600 298
3,842 6,316
Long-term incentives:
Number of ING options granted (4) 54,425 60,938
(4)
Number of ING shares granted 23,062 14,441
Fair market value of long-term incentives granted (5) 426 702
(1)
In August 2008 David Blight resigned from the Management Board. Ronald Nijsen and Willem Steenhoven joined the Board in March 2007.
Their remuneration is reported only for their period as a board member. The base salaries of the Management Board members were increased
as of January 2008 on average by 8%, following a detailed benchmark survey in the real estate industry in 2007. For 2009 the base salaries are
kept unchanged.
(2)
The short-term performance-related cash bonuses over 2008 were reduced compared with 2007 due to lower performance of our business
in 2008.
(3)
Other key management remuneration elements were higher in 2008, due to one-off benefit expenses.
(4)
For the reporting year 2008 the number of options and shares are reported that were granted in 2009 relating to performance in 2008.
This is a change in presentation compared with the Financial statements 2007. The 2007 comparative figures have been restated.
(5)
The fair market value of the long-term incentive award is calculated on the last trading day of the year for grants made to the Management
Board members for performance over the specified year and is not updated for current market values. The 2007 comparative figure has been
restated to conform with the 2008 presentation.
STOCK OPTION AND SHARE PLANS

ING Group has granted option rights on ING Groep N.V. shares and conditional rights on depositary receipts (share awards) for ING shares to a
number of senior executives and staff of ING Real Estate. The purpose of the option and share schemes, apart from promoting a lasting growth
of ING Group and its subsidiaries, is to attract, retain and motivate senior executives and staff. ING Group holds its own shares in order to fulfil
the obligations with regard to the existing stock option plan and to hedge the position risk of the options concerned (so-called delta hedge).
The option rights are valid for a period of five or ten years. Option rights that are not exercised within this period lapse. Option rights granted will
remain valid until expiry date, even if the option scheme is discontinued. The option rights are subject to certain conditions, including a certain
continuous period of service. The exercise prices of the options are the same as the quoted prices of ING Groep N.V. shares at the date on which
the options are granted.
The entitlement to the share awards for ING shares is granted conditionally. If the participant remains in the employment for an uninterrupted
period of three years from the grant date, the entitlement becomes unconditional. In 2008 124,744 shares (2007: 96,336) have been granted to
senior management and other employees remaining in the service of ING Real Estate.
Every year, the ING Group Executive Board will take a decision as to whether the option and share schemes are to be continued and, if so, to what extent.
CHANGES IN OPTION RIGHTS OUTSTANDING

Weighted Weighted
Options Options average average
outstanding outstanding exercise price exercise price
2008 2007 2008 2007
Opening balance 1,487,855 1,320,789 27.58 25.55

Granted 458,012 379,667 21.65 32.12
Exercised –9,731 –115,453 16.50 19.69
Forfeited –80,796 –40,113 30.13 27.01
Expired –623 –57,035 32.77 27.28
Closing balance 1,854,717 1,487,855 25.89 27.58
The weighted average share price at the date of exercise for options exercised in 2008 is EUR 24.07 (2007: EUR 32.48).
33 STAFF EXPENSES CONTINUED

CHANGES IN OPTION RIGHTS NON-VESTED
Weighted Weighted
Options Options average grant average grant
non-vested non-vested date fair value date fair value
2008 2007 2008 2007
Opening balance 758,376 638,598 6.63 6.05

Granted 458,012 379,167 5.29 6.45
Vested –135,515 –220,276 4.43 5.58
Forfeited –48,619 –39,113 4.40 6.49
Closing balance 1,032,254 758,376 4.87 6.63
SUMMARY OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE

Options Options
outstanding Weighted exercisable Weighted
as at average Weighted as at average Weighted
31 December remaining average 31 December remaining average
Range of exercise price in euros 2008 contractual life exercise price 2008 contractual life exercise price
2008
0.00 – 15.00 122,561 4.18 12.55 122,561 4.18 12.55
15.00 – 20.00 138,947 5.46 18.70 130,850 5.20 18.71
20.00 – 25.00 698,054 8.12 22.28 254,699 6.25 23.28
25.00 – 30.00 260,475 2.82 29.02 260,475 2.82 29.02
30.00 – 35.00 580,802 7.82 32.41 – 0.00 0.00
35.00 – 40.00 53,878 2.18 36.36 53,878 2.18 35.36
1,854,717 822,463
SUMMARY OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE

Options Options
outstanding Weighted exercisable Weighted
as at average Weighted as at average Weighted
31 December remaining average 31 December remaining average
Range of exercise price in euros 2007 contractual life exercise price 2007 contractual life exercise price
2007
0.00 – 15.00 114,846 5.19 12.50 114,846 5.19 12.50
15.00 – 20.00 128,195 6.20 18.70 128,195 6.20 18.70
20.00 – 25.00 256,400 5.62 23.28 143,850 4.34 23.28
25.00 – 30.00 288,449 3.81 28.98 284,710 3.76 29.02
30.00 – 35.00 642,087 8.82 32.43 – 0.00 0.00
35.00 – 40.00 57,878 3.19 35.35 57,878 3.19 35.35
1,487,855 729,479
The aggregate intrinsic value of options outstanding and exercisable at 31 December 2008 was EUR 0 million and EUR 0 million respectively.
As of 31 December 2008 there was EUR 2 million of total unrecognised compensation costs related to stock options (2007: EUR 2 million).
These costs are expected to be recognised over a weighted average period of 1.9 years (2007: 1.8 years).
The fair value of options granted is recognised as an expense under personnel expenses and is allocated over the vesting period of the options.
The fair values of the option awards have been determined by using a Monte Carlo Simulation. This model takes the risk- free interest rate into
account (3.55% to 4.92%), as well as the expected life of the options granted (five to eight years), the exercise price, the current share price
(EUR 18.70 to EUR 33.92), the expected volatility of the certificates of ING Group shares (25% to 39%) and the expected dividend yield (3.57%
to 8.99%). The source for implied volatilities used for the valuation of the stock options is ING’s trading system. The implied volatilities in this
system are determined by ING’s traders and are based on market data implied volatilities, not on historical volatilities.

34 OTHER OPERATING EXPENSES
2008 2007
Depreciation of property and equipment 6,742 6,280

Amortisation of intangible assets 9,423 2,593
Computer costs 16,776 17,347
Office expenses 28,830 30,451
Travel and accommodation expenses 8,409 7,334
Advertising and public relations 34,294 49,600
External advisory fees 32,078 36,670
Addition/(releases) of provision for reorganisations and relocations 3,917 1,252
Other 19,209 37,662
159,678 189,189
35 TAXATION
TAXATION BY TYPE
2008 2007 2008 2007 2008 2007
Current taxation 9,192 96,439 39,869 96,886 49,061 193,325

Deferred taxation –7,418 7,311 –22,833 –12,305 –30,251 –4,994
1,774 103,750 17,036 84,581 18,810 188,331
RECONCILIATION OF THE WEIGHTED AVERAGE STATUTORY INCOME TAX RATE TO ING REAL ESTATE’S EFFECTIVE INCOME TAX RATE
2008 2007
Result before taxation –191,596 722,911

Weighted average statutory tax rate 23.3% 30.6%
Weighted average statutory tax amount –44,727 221,477
Associates exemption 14,271 2,110
Other income not subject to tax 59,291 –37,526
Expenses not deductible for tax purposes 13,222 6,114
Impact on deferred tax from change in tax rates –79 –2,926
Deferred tax benefit from previously unrecognised amounts –30 83
Current tax benefit from previously unrecognised amounts –44 –37
Write down/reversal of deferred tax assets –16,804 –11,718
Other adjustment to prior periods –6,290 10,754
Effective tax amount 18,810 188,331
Effective tax rate –9.8% 26.1%
The change in the effective tax rate in 2008 compared to 2007 is to a large extent caused by negative fair value changes for which no deferred
tax asset is recognised.
Tax benefits from previously unrecognised amounts includes releases of tax provisions resulting from settlements with tax authorities.
Significant amounts included relate to closing of tax audits in the main tax jurisdictions of ING Real Estate.

Segment reporting
36 PRIMARY REPORTING FORMAT – BUSINESS SEGMENTS

ING Real Estate’s business segments relate to the internal segmentation by business lines. These include the business lines: Finance, Development
and Investment Management. Each business line is headed by a member of the Management Board. The Management Board sets the
performance targets and approves and monitors the budgets prepared by the business lines. Business lines formulate strategic, commercial
and financial policy in conformity with the strategy and performance targets set by the Management Board.
The accounting policies of the business segments are the same as those described under Accounting policies for the consolidated balance sheet
and income statement. Transfer prices for inter-segment transactions are set at arm’s length. Corporate expenses are allocated to business lines
based on time spent by head office personnel, the relative number of staff or on the basis of income and/or assets of the segment.
ING Real Estate evaluates the results of its business segments using financial performance measures called underlying result before taxation.
Underlying result before taxation is defined as result before taxation excluding the impact of divestments and special items.
BUSINESS SEGMENTS
Investment
Finance Development Management Total
2008
INCOME
external 453,028 216,500 –166,369 503,159
Total income 453,028 216,500 –166,369 503,159
Segment result before taxation 293,287 76,727 –561,610 –191,596

Divestments – – – –
Special items – – – –
Underlying result before taxation 293,287 76,727 –561,610 –191,596
Segment assets 34,863,714 3,789,802 4,843,862 43,497,378

Segment liabilities 32,738,385 3,434,393 4,123,187 40,295,965
Share of result from associates – 3,502 –193,840 –190,338
Book value of associates – 18,869 1,028,524 1,047,393
CAPITAL EXPENDITURES
ADDITIONS IN:
Investment property 436 62,365 223,703 286,504
Property and equipment 758 1,720 7,800 10,278
SIGNIFICANT NON-CASH EXPENSES

Depreciation and amortisation 541 2,127 13,497 16,165
Impairments – 58,501 32,822 91,323
Reversal of impairments – –21,726 –9,533 –31,259
Net addition to loan loss provisions 81,791 – – 81,791

36 PRIMARY REPORTING FORMAT – BUSINESS SEGMENTS CONTINUED
BUSINESS SEGMENTS
Investment
Finance Development Management Total
2007
INCOME
external 324,562 151,267 798,082 1,273,911
Total income 324,562 151,267 798,082 1,273,911
Segment result before taxation 250,111 42,617 430,183 722,911

Divestments – – – –
Special items – – – –
Underlying result before taxation 250,111 42,617 430,183 722,911
Segment assets 29,951,186 3,683,417 5,315,591 38,950,194

Segment liabilities 27,673,507 3,527,280 4,137,042 35,337,829
Share of result from associates – 780 128,473 129,253
Book value of associates – 16,446 1,076,409 1,092,855
ADDITIONS IN:
Investment property – 60,571 190,441 251,012
Property and equipment 11 3,339 15,437 18,787
SIGNIFICANT NON-CASH EXPENSES

Depreciation and amortisation –754 4,475 5,152 8,873
Impairments – –18,735 10,674 –8,061
Reversal of impairments – – – –
Net addition to loan loss provisions 314 – – 314

37 SECONDARY REPORTING FORMAT – GEOGRAPHICAL SEGMENTS

ING Real Estate’s three business lines operate in five main geographical areas: Netherlands, Rest of Europe, North America, Asia and Australia.
Geographical distribution of income is based on the origin of revenue.
GEOGRAPHICAL SEGMENTS
Netherlands Rest of Europe North America1 Asia Australia Total
2008
INCOME
external 470,796 272,199 –142,551 4,170 –101,455 503,159
Total income 470,796 272,199 –142,551 4,170 –101,455 503,159
Segment result before taxation 182,677 87,623 –315,253 –20,674 –125,969 –191,596
Segment assets 24,303,949 10,699,601 7,177,342 834,155 482,331 43,497,378
ADDITIONS IN:
Investment property 18,517 142,020 111,659 693 13,614 286,504
Property and equipment 3,314 4,746 1,805 390 23 10,278
(1)
North America includes the US and Canada
GEOGRAPHICAL SEGMENTS
Netherlands Rest of Europe North America1 Asia Australia Total
2007
INCOME
external 349,948 317,524 374,317 120,814 111,308 1,273,911
Total income 349,948 317,524 374,317 120,814 111,308 1,273,911
Segment result before taxation 157,860 172,031 209,777 97,348 85,895 722,911
Segment assets 22,120,686 9,345,646 6,141,420 1,028,644 313,798 38,950,194
ADDITIONS IN:
Investment property – 158,775 78,546 1,039 12,652 251,012
Property and equipment 1,105 7,158 8,794 1,453 277 18,787
(1)
North America includes the US and Canada

Note to the consolidated cash flow statement
38 INTEREST INCLUDED IN NET CASH FLOW

INTEREST RECEIVED AND PAID
2008 2007
Interest received 1,865,303 1,170,952

Interest paid 1,610,369 952,120
254,934 218,832

Risk management
39 RISK MANAGEMENT
ING Real Estate faces several risks such as credit, liquidity, interest rate, real estate, equity and foreign currency risk. This chapter presents
information about ING Real Estate’s exposure to each of the above risks and ING Real Estate’s objectives, risk policies and processes for
measuring and managing these risks. Beyond that there are also operational, information, security and compliance risks attached to doing
business. These types of risk are described in the operational review section of this report, not in this section.
The structure of this risk management section is as follows:

• Key developments risk management 2008
• Risk management governance
• Risk management policies
• Credit risk
• Liquidity risk
• Market risk (which also includes real estate risk)
KEY DEVELOPMENTS RISK MANAGEMENT 2008

Although the whole of 2008 was characterised by significant turmoil it was especially in the second half of the year, that volatility in the financial
markets intensified. Equity markets came down significantly and real estate prices were under pressure. Moreover credit spreads widened
materially both in the US and Europe. As a result of ongoing and unprecedented volatility in the global financial and real estate markets ING Real
Estate incurred negative revaluations on its investment portfolio.
In a turbulent year like 2008, where the spotlights were put on risk management across the financial industry it is difficult to single out particular
key developments. On a strategic level the foundations for refocus of our risk management departments were already laid well in 2007 upon the
early signs of the crisis – which were further accelerated during the course of 2008. Furthermore our increased conservative approach with
respect to lending standards and the tight monitoring over Swiss Francs, individual sellers of residential properties and the covenant system of
foreign unsecured loans paid of in 2008.
Other key achievements include the successful introduction of the Signature Approval Process (SAP) within Investment Management and
Development, which has decreased processing time of investment and lending proposals and improved co-operation between the business lines
and ING Real Estate staff departments. The risk awareness was increased throughout 2008 which has led to refocus the business attitude from
growth to portfolio management. A final key achievement was the introduction of the Risk Management Report, a concise overview of all risk
related figures and narrative of all risk departments.
RISK MANAGEMENT GOVERNANCE

Risk governance framework
ING Real Estate has a comprehensive risk management framework, consisting of a Central Risk Management Department (CRM), Business &
Operational Risk and Compliance Department for each individual business line and a centralised Market Risk Department. Each risk department
is set up independent from the business lines which they support and reports directly to the Chief Risk Officer (CRO) of ING Real Estate, who is
part of the Management Board of ING Real Estate.
The Central Risk Management Departments manage portfolio risk for each business line by way of specific risk policies and transactional risk
though the Signatory Approval Process. This SAP-process is in place for each business line and executed for each individual transaction. The
process itself consists of transaction approval by way of dual signatories, one representing risk management and the other representing business
line. In the evaluation the outcome of extensive transaction due diligence is presented, including transaction, funding and real estate typical
characteristics and a calculation of a risk adjusted return on capital (RAROC) with regard to the transaction. To the extent a transaction falls
outside of the delegated authorities granted by the Executive Board of ING Group, such transaction is processed at the highest credit risk
committees at ING Group level, the ING Group Investment Committee (GIC) for Investment Management and Development and the ING Group
Credit Committee – Transaction Approval (GCCTA) for Finance. The GIC meets on a monthly basis. The GCCTA meets two times a week.
The risk profile of ING Real Estate with respect to market risk is managed within limits set by and in accordance with policies of ING Group.
The overall risk profile is monitored by Asset and Liability Committees (ALCOs) and the Finance & Risk Committee. The ALCO and Finance & Risk
Committee Committee of ING Real estate both meet once a month to evaluate and advice on the overall risk profile of ING Real Estate.
RISK MANAGEMENT POLICIES

ING Real Estate’s risk management policies are captured in risk policy papers. As ING Real Estate focuses on investment management, lending
and development activities, policy papers are in place for each of these business lines, and where necessary differentiating for specific transaction
characteristics. The policy papers are designed to identify and analyse risks, to set appropriate risk limits and controls, and to monitor the risks
and adherence to limits. The policies and systems are regularly reviewed and updated to reflect changes in market conditions and ING Real
Estate’s activities.

39 RISK MANAGEMENT CONTINUED
ING Real Estate’s investment management activities, the core activity of Investment Management, are the management of real estate funds for
third party investors. The funds include listed and unlisted real estate funds, funds-of-funds, listed and unlisted real estate securities funds and
real estate debt investment funds. They cover the various real estate classes, including offices, shopping centres, residential areas, industrial
buildings and infrastructure. The Investment Risk Policy Paper describes the framework for assessing, monitoring, reporting and managing
the risks associated with the allocation of bridge and seed proprietary capital to each funds initiative. It indicates what the risk-adjusted return
requirements are as well as the allocation and exposure limits.
ING Real Estate’s lending activities, which are the main business of Finance, concentrates on lending to professional real estate investors
secured by first or second lien mortgages. Unsecured real estate lending is only allowed to prime corporate clients based on balance sheet
ratio requirements and covenants. Finance’s policy papers focus on geographical diversification and limiting unsecured financing and
certain types of assets. Sector risk is captured by maximising Loan-To-Value ratios per type of transaction.
ING Real Estate is actively developing real estate projects, the main business of Development, throughout Continental Europe and the UK in each
of the segments Retail, Residential en Offices. As such the policy of Development covers the main risks in these activities and prescribes how
these risks should be handled, both qualitatively and quantitatively. This includes amongst others avoiding large upfront commitments, limited
exposure to planning risk, thorough research and ensuring sufficient pre-sales and pre-lease before starting construction. While the real estate
investment risk purely depends on the characteristics of investment made, the project development risk is determined by evaluating the potential
deviation in expected project results. These are driven by the costs (activated costs and committed expenditures) and benefits of the project.
As such a separate model is in place to determine the project development risk, taking into account process elements like go-no-go decisions
and specific development and construction elements which include amongst others the market rent, investor yields, market sales prices, vacancy,
construction incidents and construction delays. An adequate risk/return balance should be applicable to all projects. Exposures are managed at
both project and portfolio level. At a portfolio level attention is paid to diversification across countries and segments.
To manage its traditional market risks ING Real Estate strictly adheres to the ING Group policies which have been endorsed by the asset and
liability committee (ALCO) of ING Bank. As a result the interest rate and foreign exchange risks in each business activity are minimised to
fractional positions only, supporting the business model of ING Real Estate which is focused on the development, financing and management
of real estate.
RISK METRICS
Credit risks, market risks, business risk and operational risks are evaluated quantitatively through various risk metrics. The quantitative evaluation
is harmonised with the risk evaluation of ING Group and includes:
• the Earnings at Risk (EaR): the potential reduction in accounting earnings over the next year relative to expected accounting earnings, during
a moderate (i.e. ‘1 in 10’) stress scenario.
• Capital at Risk (CaR): the potential reduction of the current net asset value (based on fair values) over the next year relative to the expected
value during a moderate (i.e. ‘1 in 10’) stress scenario.
• Economic Capital (ECAP): the amount of capital that is required to absorb unexpected losses in times of severe stress (i.e. a ‘1 in 2000’
scenario) given ING Group’s ‘AA‘ target rating.
• Value at Risk (VaR): the maximum one day marked-to-market value change of ING Real Estate’s assets and liabilities as a result of a ‘1 in 100’
change in financial market conditions (VaR 1d, 99%) with respect to foreign currency and interest rate risk.


The main differences and similarities between the risk metrics are illustrated below:
RISK METRICS
Earnings at risk Capital at risk Economic capital
Confidence interval 90% 90% 99.95%

Stressed metric Accounting earnings Value Value
Deviation from Expected accounting earnings Current net asset value based Current net asset value based
(over next year) on fair values (over next year) on fair values (over next year)
Interpretation Potential accounting earnings Potential value reduction of Potential value reduction
reduction against expectation net value during a moderate of net value during an
during a moderate stress stress scenario (i.e. 1 in 10) extreme stress scenario
scenario (i.e. 1 in 10) (i.e. 1 in 2000)
The risk measures mentioned above are measures to quantify and compare on a like-for-like basis the risks within ING Real Estate. Evaluation of
these risks and the total risk profile takes place by monitoring the relationship between return and risk, for instance by reviewing the ‘RAROC’,
the risk adjusted return on economic capital. Simultaneous evaluation of EaR and CaR takes place in the Risk Dashboard, a concept that is in place
for each individual business line of ING Group. It evaluates quantitatively the overall risk profile of ING Real Estate, and as such provides insight
into the sustainability of earnings and the financial strength, reviewed on a quarterly basis by the Management Board of ING Real Estate. The Risk
Dashboard of ING Real Estate forms an integral part of the Risk Dashboard of ING Group.
The total Economic Capital as at December 2008 amounted to EUR 2.0 billion (2007: EUR 1.4 billion).
The following paragraphs describe the various risk categories sub-divided by types of risk and the measurement techniques employed for each
risk type.
CREDIT RISK
Within ING Real Estate credit risk is the risk of potential loss due to default by ING Real Estate’s debtors. Within ING Real Estate this risk is
influenced by a multitude of factors, including lender specific characteristics, real estate specific characteristics and general market conditions.
Credit risk arises mainly in Finance’s lending activities.
Credit rating methodology

To determine the individual elements constituting credit risk in the lending portfolio (probability of default, loss given default and exposure at
default), Finance has developed its own models which are compliant with the New Basel Capital Accord (Basel II) and are based on M-KMV
methodology. In addition they are used to support the loan loss provisioning process and risk cost projections.
Risk management of the secured lending portfolio focuses on the credit risk of a lending facility, which is to a significant extent determined
by the rental income producing capacity of the underlying real estate asset. The probability of default of the facility is captured by the Income
Producing Real Estate (IPRE) rating model. The underlying asset value is managed by either internal appraisal, by international expert valuations
agencies or by a valuation model.
The credit risk of the unsecured lending portfolio is largely determined by the quality of the counterparty or the borrower. The rating of
a borrower is determined by ING Group-wide rating models other than the specific Finance IPRE rating model.
Restructuring policy
In the event of default or potential default of interest and/or amortisation repayments, re-assessment and monitoring of the counterparty’s
financial position and underlying assets is necessary. A special department at Finance has been tasked with problem loans management and
watch list file monitoring. This Credit Restructuring Department can employ a credit enhancement process to restructure the credit facility in
which the client relationship is maintained. This can be accomplished through many means available to the creditors, the most common of which
are (1) extending the repayment period, (2) selling assets, (3) selling business lines of the debtor, (4) forgiving part of the financial obligations and
(5) a combination of the above. The decision to enter into such a restructuring is made only after careful internal assessment and an internal
approval. If ING Real Estate wishes to end the client relationship, the objective is to obtain a recovery or full repayment of the loan and interest
payment. Borrowers who are not in default but who do have an increased risk profile are monitored by means of a watch list. The Credit
Restructuring Department is also responsible for the calculation of the loan loss provisions for individual problem loans and the collective
loan portfolio.

Collateral policy
It is Finance’s objective that 65% of the total portfolio consists of secured loans at minimum. Depending on the quality of the real estate asset,
the type of financing and the borrower and Loan-to-Value, collateral requirements have been defined in the various policy papers for secured
financing.
The major part of the portfolio is secured by mortgage on commercial property and sometimes enhanced by other collateral.
Past-due obligations
We continually measure our portfolio in terms of payment arrears. Generally, an obligation is considered ‘past-due’ if a payment of interest or
principal is more than one day late. In practice, the first 5-7 days after an obligation becomes past due are considered to constitute operational
risk. After this period, letters will be sent to the obligor reminding him of his (past due) payment obligations. If arrears still exist after 90 days, the
obligation is generally considered as impaired and transferred to the Credit Restructuring Department. In order to reduce the number of arrears,
we encourage our clients to authorise direct debiting from their accounts to ensure timely payments.
There is no significant concentration of a particular type of loan structure in the watch list or in the problem loan portfolio. Generally, all loans
with past-due financial obligations of more than 90 days past due are automatically reclassified as impaired. However, there can also be other
reasons for declaring a loan impaired. These include, but are not limited to, our assessment of the customer’s perceived inability to meet his
financial obligations, or the customer filing for bankruptcy or bankruptcy protection. In some cases, a material breach of financial covenants
will also trigger a reclassification of a loan to the impaired category.
Repossession policy
It is ING Real Estate’s general policy not to take repossession of assets of defaulted debtors. Rather Finance attempts to sell the assets from within
the legal entity that has pledged these assets to Finance, in accordance with the respective collateral or pledge agreements signed with the
obligors. In those cases where ING Finance does take possession of the collateral, ING Finance generally attempts to sell the asset as quickly
as possible to prospective buyers. Based on internal assessments to determine the highest and quickest return for Finance, the sale of the
repossessed assets could be the sale of the company as a whole (or at least all of its assets), or the assets could be sold over time.
Credit exposure
The following table presents the maximum exposure to credit risk of balance sheet and off balance sheet financial instruments.
ING’s Real Estate’s maximum credit exposure as at 31 December 2008 and 2007 is represented as follows:
MAXIMUM CREDIT EXPOSURE

2008 2007
Cash and bank balances 555,635 337,475

Non-trading derivatives 54,970 12,829
Designated as at fair value through profit or loss 60,200 93,644
Loans and advances
public authorities 22,090 28,063
loans to banks 319,886 192,712
secured by mortgages 29,789,232 25,080,994
guaranteed by credit institutions – 16,429
other personal lending 1,181 6,927
other corporate lending 4,455,577 4,202,895
Maximum credit exposure on balance sheet 35,842,889 30,821,273
Off-balance sheet credit commitments

guarantees 826,936 656,530
irrevocable facilities 2,664,306 3,572,609
Maximum credit exposure off balance sheet 3,491,242 4,229,139
Maximum credit exposure 39,334,141 35,050,412


The maximum credit exposure for relevant items on the balance sheet is the balance sheet carrying value for the relevant financial assets.
For the off-balance sheet items the maximum credit exposure is the maximum amount that could be required to be paid.
Concentrations of credit risk exist when a number of counterparties are engaged in similar activities, or operate in the same geographical areas
or industry sectors and have similar economic characteristics so that their ability to meet contractual obligations is similarly affected by changes
in economic, political or other conditions. The following tables present the credit risk exposure by geographical region, by industry and by
rating class.
LOANS AND ADVANCES BY GEOGRAPHICAL REGION

2008 2007
The Netherlands 55% 55%

Rest of Europe 32% 35%
North America 13% 10%
100% 100%
LOANS AND ADVANCES BY INDUSTRY

2008 2007
Real Estate companies 88% 70%

Non-bank financial institutions 4% 17%
Service companies 2% 5%
Builders and contractors 1% 3%
Other 5% 5%
100% 100%
The top 25 clients represent 29% of the total loan portfolio.
LOANS AND ADVANCES BY RATING CLASS

2008 2007
A 5% 8%
BBB 19% 23%
BB 66% 59%
B 7% 9%
Watch/problem grade 3% 1%
100% 100%
Collateral
Finance values the market value of the collateral on a annual basis. The loan portfolio is reviewed annually on a transactional level and quarterly
on a portfolio level to monitor Loan-To-Value ratios, covenants and the risk profile of the client. Appropriate actions are taken to improve a
deteriorated security position. In 2008 Finance obtained no assets (2007: none) by taking possession of collateral held as security.
Restructured loans
Restructuring activity is designed to manage customer relationships, maximise collection opportunities and, if possible, avoid foreclosure or
repossession. The total number of clients with renegotiated loans that would otherwise be past due or impaired is 69 as at 31 December 2008
(2007: 66). Total outstanding amount (inclusive overdue interest payments) of these loans amounts to EUR 899 million (2007: EUR 141 million).

Impairment losses
Finance assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired.
A financial asset or a group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence of
impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events)
has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Objective evidence that a financial asset or group of assets is impaired includes, but is not limited to:
• The borrower has sought or has been placed in bankruptcy or similar protection and this avoids or delays repayment of the financial asset;
• The borrower has failed in the repayment of principal, interest or fees and the payment failure has remained unsolved for a certain period;
• The borrower has evidenced significant financial difficulty, to the extent that it will have a negative impact on the future cash flows of the
financial asset.
Finance first assesses whether objective evidence of impairment exists for financial assets that are individually significant. If Finance determines
that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a
group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed
for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.
For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics. Those
characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability to pay
all amounts due according to the contractual terms of the assets being evaluated.
Financial assets that are past due at 31 December 2008 but not impaired amount to EUR 7.0 million (2007: EUR 6.5 million).
MARKET RISK
Market risk encompasses the risks that ING Real Estate runs unexpected losses as a result of market related incidents. This risk category includes
financial risks like interest rate risk, foreign currency risk and derivative exposure, but also real estate investment risk and real estate development
risk. Real estate price risk arises from the possibility that real estate prices will fluctuate affecting both the value of real estate assets and earnings
related to real estate activities.
Due to the fact that the Board of ING Group and ING Real Estate decided that risks relating to interest risk and foreign currency risk have to be
maintained at absolute frictional levels, the main source of market risk is related to the real estate exposure of ING Real Estate. This risk arises
mainly in the investment management activities and the development activities of ING Real Estate and is influenced by a multitude of factors,
including real estate specific characteristics, fund and/or project related characteristics and general market conditions.
MARKET RISK METHODOLOGY

To determine the individual elements constituting real estate market risk in ING Real Estate’s portfolio specific models have been developed for
investment risk (for which the price risk on real estate is the main driving risk factor) and project developing risk. Real estate price risk includes
both the market risks in the investment portfolio and the development risk of ING Real Estate. The real estate price risk for ING Real Estate is
calculated by stressing the underlying market variables. The stress scenario does at a portfolio level take into account all diversification effects
across regions and real estate sectors. Also, the leverage of participations in the real estate investment funds is taken into account. For the real
estate development process, in addition to price risk, the risk drivers of vacancy rate and construction delays are taken into account. Furthermore
the risk model differs for each development phase (e.g. research, development, construction) to appropriately reflect the risk taken in each
phase. Using correlations, all risk drivers, and stages are used to calculate a possible market value loss. The models have been developed by the
Risk Management department of ING Real Estate in close cooperation with the business lines and with risk management departments of ING
Group. These models compute Economic Capital, Capital at Risk and Earnings at Risk for all relevant real estate risks at ING Real Estate. The
models account for the diversification effects across projects, regions and real estate sectors. They use country specific stress scenarios, which
include market movements.
MARKET RISK EXPOSURES

Real estate risk exposure
ING Real Estate faces real estate risk with respect to the following asset classes:
• Investment property (directly held by ING Real Estate);
• Participations in real estate investment funds (associates and financial assets at fair value through profit or loss);
• Properties under development or held for sale.
ING Real Estate classifies property in use by other ING subsidiaries as investment property. ING Real Estate itself does not hold property in own use.


RECONCILIATION BETWEEN CARRYING AMOUNT AND REAL ESTATE EXPOSURE
Investment property 2,910
Participations in real estate investment funds 1,108
Properties under development or held for sale 3,029
Total 7,047
Minority stake on Canadian assets –880

Leverage of real estate funds 645
Other 88
Total real estate exposure 6,900
Revalued through the income statement 4,386

Not revalued through the income statement 2,514
ING Real Estate’s real estate exposure (i.e. including leverage and committed purchases and corrected for the minority stake on Canadian assets)
is EUR 6.9 billion of which EUR 4.4 billion is revalued through the income statement and EUR 2.5 billion is not revalued through the income
statement (except for impairments) but is booked at cost or lower net realisable value.
Note that total real estate exposure differs from the equity at stake since real estate exposure includes leverage, committed purchases and
is corrected for significant Canadian minority stake. As such while the total real estate exposure that is revalued through the income statement
amounts to EUR 4.4 billion the balance sheet value at stake is limited to EUR 3.1 billion (corrected for Canadian minority stake).
The real estate exposure of ING Real Estate is well diversified across real estate segments and regions. Please note that this exposure, which is at
risk for ING Real Estate, differs from the Real Estate exposure of ING Group due to the fact that within ING Group the insurance division also has
real estate exposure on its balance sheet. In addition it is important to also distinguish the real estate risk exposure of ING Real Estate from the
‘assets under management’ (AUM) of ING Real Estate due to the fact that these AUM are mainly managed for third parties. As a consequence
the risk embedded in the AUM class is related only to the fee income of ING Real Estate and no direct price risk is run on those assets.
Total real estate exposure of ING Real Estate is distributed as follows:
TOTAL REAL ESTATE EXPOSURE

Residential Retail Office Industrial Other Total
2008
Europe 645 1,307 1,213 214 457 3,836
US 151 48 96 46 123 464
Australia 25 348 94 126 180 773
Asia 244 277 99 7 19 646
Other 3 165 31 857 125 1,181
1,068 2,145 1,533 1,250 904 6,900
2007
Europe 660 1,193 988 95 226 3,162
US 202 54 120 42 84 502
Australia 77 510 81 276 35 979
Asia 226 409 95 9 3 742
Other 149 125 – 1,377 8 1,659
1,314 2,291 1,284 1,799 356 7,044

REAL ESTATE EXPOSURE REVALUED THROUGH THE INCOME STATEMENT (INVESTMENT PROPERTY AND PARTICIPATIONS IN REAL ESTATE
INVESTMENT FUNDS)
2008
Europe 1 454 1,002 133 98 1,688
US 73 41 96 46 99 355
Australia 3 261 93 126 33 516
Asia 244 277 99 7 19 646
Other 3 165 31 857 125 1,181
324 1,198 1,321 1,169 374 4,386
REAL ESTATE EXPOSURE NOT REVALUED THROUGH THE INCOME STATEMENT (AT COST OR LOWER NET REALISABLE VALUE, IMPAIRMENTS THROUGH
THE INCOME STATEMENT)
2008
Europe 644 853 211 81 359 2,148
US 78 7 – – 24 109
Australia 22 87 1 – 147 257
Asia – – – – – –
Other – – – – – –
744 947 212 81 530 2,514
The crisis in the financial markets could possibly have future various adverse economic implications, on the global credit market, and could
possibly lead to a further slowdown of the world economy in general. These global economic factors could possibly have future negative
consequences for the value of real estate assets and the results of the entity due to potential increases of real estate yields and therefore
decreases in value of investment properties, impairment of goodwill and investments in associated companies and decreases in fair value
or impairment of financial instruments and other assets.
The sensitivity of ING Real Estate’s real estate and the impact on income statement is shown in table below. The table shows an impact on the
income statement if the real estate prices decrease by 1%. An increase of 1% in real estate prices will result in a similar positive impact on result.
This table excludes the sensitivity of the portfolio of real estate assets not revalued through the income statement. Impairments on this portfolio
could also have a negative impact on the result. Impairments are recognised if the carrying amount of the property under development or held
for sale exceeds its net realisable value (estimated selling price minus costs to complete minus costs to sell).
SENSITIVITY ANALYSIS REAL ESTATE EXPOSURE

2008
Europe 0.0 –4.5 –10.0 –1.3 –1.0 –16.8
US –0.7 –0.4 –1.0 –0.5 –1.0 –3.6
Australia 0.0 –2.6 –0.9 –1.3 –0.3 –5.1
Asia –2.4 –2.8 –1.0 –0.1 –0.2 –6.5
Other 0.0 –1.7 –0.3 –8.6 –1.3 –11.9
–3.1 –12.0 –13.2 –11.8 –3.8 –43.9
The Economic Capital due to real estate market risk amounted to EUR 1.2 billion (2007: EUR 1.0 billion), which is 61% (2007: 70%) of the total
Economic Capital of ING Real Estate. The other risks include credit risk, non-financial risk, financial market risks and transfer risk.
84 —2008 ING Real Estate Annual Report


Interest rate and foreign exchange rate risk exposure
While the financial risks of ING Real Estate are maintained at frictional levels, ING Real Estate does employ a number of risk measures to monitor
these market risks. The most important measure in this respect is the Value-at-Risk (VaR).
VaR quantifies, based on a one-sided confidence level of 99%, the maximum overnight loss that could occur due to changes in risk factors
(e.g. interest rates and foreign exchange rates) if positions remain unchanged for a time interval of one day. The VaR of ING Real Estate amounted
to EUR 0.95 million at year end (2007: EUR 0.96 million).
LIQUIDITY RISK
Liquidity risk is the potential risk that ING Real Estate will be unable to meet its obligations as they come due because she cannot: liquidate assets
or obtain adequate funding (‘funding liquidity risk’); or easily unwind or offset specific exposures without significantly lowering market prices
because of inadequate market depth or market disruptions (‘market liquidity risk’).
LIQUIDITY RISK POLICY

ING Real Estate adheres to the ING Bank funding and liquidity risk policy in place. Consequently, structural non-frictional open liquidity positions
at ING Real Estate are prohibited. Temporarily open positions due to the specific nature of the real estate business can only exist after approval of
ALCO ING Bank.
The ALCO ING Real Estate maintains policies and procedures for all funding and liquidity risk related issues at ING Real Estate level and reviews
compliance to this policy. ALCO ING Real Estate reviews future balance sheet projections on liquidity and funding aspects and provides
information on local funding and liquidity problems to ensure timely and correct information to ING Bank.
On a daily basis the Treasury department of ING Real Estate manages and co-ordinates the funding activities of ING Real Estate within the
guidelines set by ALCO ING Real Estate. The Treasury of ING Real Estate is not allowed to breach the frictional liquidity risk limits in place.
On a periodic basis Market Risk Management at ING Real Estate monitors the liquidity position of ING Real Estate and the compliance to the
liquidity risk limit. In case of limit violations Market Risk Management of ING Real Estate proposes risk mitigating actions.
LIQUIDITY RISK EXPOSURE

Reference is made to note 15 where a table is provided summarising the maturity profile of ING Real Estate’s assets and liabilities at year-end.
40 SUBSEQUENT EVENTS
On 9 April 2009 ING Group announced a new strategy. The strategy includes decisive action to reduce complexity and risk. In order to reduce
complexity it will be separating the Bank and Insurer, under one Group umbrella. As a result of the changes announced by ING Group, a stand-
alone Real Estate company no longer fits into the refocused business. Therefore, the following organisational realignment is proposed:
• Real Estate Investment Management to become part of a new ING-wide global investment management business, once it has been created.
• Real Estate Finance and Real Estate Development to become part of ING Commercial Bank, as ING Wholesale Banking will be called in the
future.
By decoupling the three areas and aligning the businesses differently within the ING organisation we will maintain our specialist client models
while increasing our focus on reducing risk and capital exposure, particularly for Real Estate Development and Real Estate Investment
Management. These organisational changes are subject to Works Council approval and will occur in 2009 as soon as it is practical.
The proposed organisational realignment of ING Real Estate within ING Group does not impact the ability to continue business activities.
AUTHORISATION OF FINANCIAL STATEMENTS
The Hague, 20 April 2009
MANAGEMENT BOARD
ING Real Estate B.V.

Parent company balance sheet
For the years ended 31 December before result appropriation (in thousands of euros) Notes 2008 2007
ASSETS
Amounts due from ING Bank 43,426 –
Loans and advances to ING Real Estate Group companies 32,889,143 29,063,616
Investments in ING Real Estate Group companies 1 2,239,912 2,365,270
Intangible assets 2 4,061 3,015
Equipment 3 1,248 384
Other assets 4 523,533 685,415
Total assets 35,701,323 32,117,700
LIABILITIES
Amounts due to ING Bank 31,708,664 28,664,031
Loans and advances due to ING Real Estate Group companies 825,239 327,343
Other liabilities 5 499,000 358,027
Total liabilities 33,032,903 29,349,401
EQUITY
Share premium 1,447,131 1,447,131
Share of associates reserve 79,466 79,466
Other reserves 1,359,036 809,335
Unappropriated result –88,364 481,487
Total equity 6 2,668,420 2,768,299
Total liabilities and equity 35,701,323 32,117,700
References relate to the notes starting on page 89 which form an integral part of the parent financial statements.

PARENT
CONSOLIDATED
COMPANYFINANCIAL
FINANCIALSTATEMENTS
STATEMENTS
Parent company income statement
For the years ended 31 December (in thousands of euros) 2008 2007
Result of ING Real Estate Group companies after taxation –69,238 508,270
Other results after taxation –19,126 –26,783
Net result –88,364 481,487
Parent company statement

of changes in equity
Share of Currency
Share associates translation Other
For the years ended 31 December (in thousands of euros) Total Share capital premium reserve reserve reserves
Balance as at 31 December 2006 2,320,681 227 1,447,131 – 15,260 858,063
Changes in hedge reserves –1,308 – – – – –1,308

Employee stock options and share plans 3,085 – – – – 3,085
Exchange rate differences –24,088 – – – –64,607 40,519
Other –11,558 – – 79,466 – –91,024
Net result 481,487 – – – – 481,487
Dividend – – – – – –
Balance as at 31 December 2007 2,768,299 227 1,447,131 79,466 –49,347 1,290,822
Changes in hedge reserves 66,433 – – – – 66,433

Employee stock options and share plans 4,028 – – – – 4,028
Exchange rate differences –79,729 – – – –79,729 –
Other –2,247 – – – – –2,247
Net result –88,364 – – – – –88,364
Balance as at 31 December 2008 2,668,420 227 1,447,131 79,466 –129,076 1,270,672
Other reserves include Revaluation reserve, Retained earnings and Unappropriated result.

Accounting policies for the parent
company financial statements
BASIS OF PRESENTATION
The parent company accounts of ING Real Estate are prepared in accordance with the financial reporting requirements included in Part 9 of Book 2,
of the Dutch Civil Code. The accounting policies with regard to presentation and disclosures are in accordance with the financial reporting
requirements included in Part 9 of Book 2, of the Dutch Civil Code. The principles of valuation and determination of results stated in connection with
the consolidated balance sheet and income statement are also applicable to the parent company balance sheet and income statement. Investments in
Group companies and investments in associates are initially recognised at cost and subsequently accounted for by the equity method of accounting.
The income statement has been drawn up in accordance with Section 402, Book 2, of the Dutch Civil Code.
A list containing the information referred to in section 379 (1), Book 2, of the Dutch Civil Code has been filed with our office of the Commercial
Register of The Hague, in accordance with section 379 (5), Book 2, of the Dutch Civil Code.
Changes in balance sheet values due to changes in the Revaluation reserve of the associates are reflected in the Share of associates reserve, which
forms part of Shareholders’ equity. Changes in balance sheet values due to the results of these associates, accounted for in accordance with ING Real
Estate accounting policies, are included in the income statement. Other changes in the balance sheet value of these associates, other than those due to
changes in share capital, are included in Other reserves, which forms part of Shareholders’ equity.
A statutory reserve is carried at an amount equal to the share in the results of associates since their first inclusion at net asset value less the amount of
profit distributions to which rights have accrued in the interim. Profit distributions which can be repatriated to the Netherlands without restriction are
likewise deducted from the Share of associates reserve.

PARENT COMPANY FINANCIAL STATEMENTS
Notes to the parent company
financial statements
(in thousands of euros, unless stated otherwise)
ASSETS
1 INVESTMENTS GROUP COMPANIES
Balance sheet Balance sheet
Interest held value Interest held value
(%) 2008 (%) 2007
Name of investee
ING Real Estate Finance N.V. 100 1,754,979 100 1,582,713
ING Real Estate Investment Management Holding B.V. 100 263,207 100 223,457
ING Insurance Investments Holdings B.V. 100 –178,820 100 250,747
ING Real Estate Development Holding B.V. 100 314,907 100 250,887
ING Real Estate Finance (USA) LLC 100 84,945 100 58,386
ING Real Estate Bishop B.V. 100 –1,305 100 –1,413
Other 1,999 493
2,239,912 2,365,270
CHANGES IN INVESTMENTS IN GROUP COMPANIES

2008 2007
Opening balance 2,365,270 2,106,845

Results from Group companies –69,238 508,270
Dividends received –46,310 –210,026
Exchange rate differences –16,116 –25,396
Other changes 6,306 –14,423
2 INTANGIBLE ASSETS
CHANGES IN INTANGIBLE ASSETS
Software Software
2008 2007
Opening balance 3,015 2,395

Additions 1,016 947
Depreciation –493 –327
Other changes 523 –
Closing balance 4,061 3,015
3 EQUIPMENT
CHANGES IN EQUIPMENT
2008 2007
Opening balance 384 –

Additions 1,022 462
Depreciation –158 –78
Closing balance 1,248 384
Gross carrying amount as at 31 December 1,482 462

Accumulated depreciation as at 31 December –234 –78
Net book value 1,248 384

4 OTHER ASSETS
OTHER ASSETS BY TYPE
2008 2007
Derivatives 92,457 21,557

Income tax receivable 22,318 11,548
Accrued interests and rents 383,661 299,256
Other accrued assets 897 197
523,533 685,415
As at 31 December 2008, Other assets includes an amount of EUR 427 million (2007: EUR 533 million) from ING Real Estate Group companies
and an amount of EUR 50 million (2007: EUR 137 million) from ING Bank.
LIABILITIES AND EQUITY

5 OTHER LIABILITIES
2008 2007
Derivatives 92,833 21,003

Accrued interest 372,244 299,370
Other accrued costs 4,754 8,523
Deferred tax liabilities 4,490 –245
Income tax payable 11,345 11,582
Other taxation and social security contribution –1 –
Other amounts payable 13,335 17,794
499,000 358,027
As at 31 December 2008, Other liabilities includes an amount of EUR 403 million (2007: EUR 305 million) to ING Real Estate Group companies
and an amount of EUR 62 million (2007: EUR 16 million) to ING Bank.
6 EQUITY
CAPITAL AND RESERVES
2008 2007

Share premium 1,447,131 1,447,131
Share of associates reserve 79,466 79,466
Other reserves 1,359,036 809,335
Unappropriated result –88,364 481,487
2,668,420 2,768,299
Other reserves includes Revaluation reserves of EUR 195 million (2007: EUR 143 million) and Retained earnings of EUR 1,164 million
(2007: EUR 666 million).

6 EQUITY CONTINUED
SHARE CAPITAL
Ordinary shares Ordinary shares
Ordinary (par value Ordinary (par value
shares Eur 1,000) shares Eur 1,000)
Number x 1,000 Amount Number x 1,000 Amount
2008 2008 2007 2007
Authorised share capital 1,135 1,135 1,135 1,135

Unissued share capital 908 908 908 908
Issued share capital 227 227 227 227
No shares have been issued during 2007 and 2008.

Net Real estate
Available-for- investment Cash flow investment
sale reserve hedge reserve hedge reserve reserve Total
2008
Opening balance – – –25,950 169,356 143,406
Changes in hedge reserves – 56,932 9,501 – 66,433
Net unrealised gains – – – – –
Realised gains – – – – –
Exchanges differences – – – – –
Other movements – – – –14,547 –14,547
Closing balance – 56,932 –16,449 154,809 195,292

Net Real estate
Available-for- investment Cash flow investments
sale reserve hedge reserve hedge reserve reserve Total
2007
Opening balance 7,398 – –65,161 166,463 108,700
Changes in hedge reserves – – –7,017 – –7,017
Net unrealised gains 7,949 – – – 7,949
Realised gains –15,347 – – – –15,347
Exchanges differences – – 5,709 – 5,709
Other movements – – 40,519 2,893 43,412
Closing balance – – –25,950 169,356 143,406

6 EQUITY CONTINUED
RETAINED EARNINGS AND UNAPPROPRIATED RESULT
Retained Retained Unappropriated Unappropriated
earnings earnings result result Total Total
2008 2007 2008 2007 2008 2007
Opening balance 665,929 340,290 481,487 409,073 1,147,416 749,363

Transfer to retained earnings 481,487 409,073 –481,487 –409,073 – –
Employee stock options and share plans 4,028 3,085 – – 4,028 3,085
Other changes 12,300 –86,519 – – 12,300 –85,519
Result for the period – – –88,364 481,487 –88,364 481,487
Closing balance 1,163,744 665,929 -88,364 –481,487 1,075,380 1,147,416
The Revaluation reserve, Share of associates reserve and Currency translation reserve cannot be freely distributed. The reserve for cash flow
hedges is included in the revaluation reserve on a net basis. Retained earnings and other reserves can be freely distributed except for an amount
equal to the negative balance in each of the components of the currency translation reserve, share of associate reserve and real estate investment
reserve. Unrealised gains and losses on derivatives, other than cash flow hedges, are presented in the income statement and are thus part of
Retained earnings.
In consolidated financial statements the revaluations on real estate investments are included in the income statement. For the parent company
accounts however, Dutch law requires these revaluations to be included in a Revaluation reserve.
7 MATURITY OF CERTAIN ASSETS AND LIABILITIES

ANALYSIS OF CERTAIN ASSETS AND LIABILITIES BY MATURITY
Less than 1–3 3–12 1–5 Over Maturity not
1 month months months years 5 years applicable Total
2008
ASSETS
Amounts due from ING Bank 43,426 – – – – – –
Loans and advances to ING Real
Estate Group companies 135,799 826,235 6,704,597 15,586,607 9,635,905 – 32,889,143
LIABILITIES
Amounts due to ING Bank 1,867,138 1,197,508 3,529,561 17,966,170 7,148,287 – 31,708,664
Loans and advances due to ING
Real Estate Group companies 567,338 51,183 126,932 63,214 16,572 – 825,239
ANALYSIS OF CERTAIN ASSETS AND LIABILITIES BY MATURITY

Less than 1–3 3–12 1–5 Over Maturity not
1 month months months years 5 years applicable Total
2007
ASSETS
Amounts due from ING Bank – – – – – – –
Loans and advances to ING Real
Estate Group companies 162,834 1,450,866 7,384,279 10,257,895 9,807,742 – 29,063,616
LIABILITIES
Amounts due to ING Bank 3,657,545 1,652,750 3,283,957 10,247,546 9,822,233 – 28,664,031
Loans and advances due to ING
Real Estate Group companies 59,177 91,958 169,089 7,119 – – 327,343

GUARANTEES
ING Real Estate B.V. has issued statements of liabilities in connection with article 403 of the Dutch Civil Code and other guarantees for a number
of ING Group companies.
Together with its wholly-owned Dutch subsidiaries, ING Real Estate forms part of the fiscal entity of ING Bank N.V. for corporate income tax
purposes. On the grounds of this, ING Real Estate is jointly and severally liable for the tax indebtedness of the fiscal entity as a whole. For value
added tax, the Dutch subsidiaries conducting financing and investment management activities form part of the fiscal entity ING Groep N.V.
REMUNERATION
See Note 33 ‘staff expenses’ to the consolidated financial statements.
FEES FOR AUDIT SERVICES AND NON-AUDIT SERVICES

For a disclosure, as required in article 2:382a Dutch Civil Code, of the fees for audit services and non-audit services provided by ING Real Estate’s
auditors we refer to the consolidated financial statements of ING Groep N.V.
AUTHORISATION OF PARENT COMPANY FINANCIAL STATEMENTS
MANAGEMENT BOARD
ING Real Estate B.V.

Other information
AUDITOR’S REPORT
To the Shareholder and the Management Board of ING Real Estate B.V.
REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements 2008 of ING Real Estate B.V., The Hague. The financial statements consist of the consolidated
financial statements and the parent company financial statements. The consolidated financial statements comprise the consolidated balance sheet as
at 31 December 2008, the consolidated income statement, consolidated statement of changes in equity and consolidated statement of cash flows for
the year then ended, and a summary of significant accounting policies and other explanatory notes. The parent company financial statements
comprise the parent company balance sheet as at 31 December 2008, the parent company income statement and the parent company changes in
equity for the year then ended and the notes.
Management’s responsibility
Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting
Standards as adopted by the European Union and with Part 9 of Book 2 of the Netherlands Civil Code, and for the preparation of the report of the
Management Board in accordance with Part 9 of Book 2 of the Netherlands Civil Code. This responsibility includes: designing, implementing and
maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement,
whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the
circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with Dutch law.
This law requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due
to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of
the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion with respect to the consolidated financial statements

In our opinion, the consolidated financial statements give a true and fair view of the financial position of ING Real Estate B.V. as at 31 December 2008,
and of its result and its cash flow for the year then ended in accordance with International Financial Reporting Standards as adopted by the European
Union and with Part 9 of Book 2 of the Netherlands Civil Code.
Opinion with respect to the parent company financial statements

In our opinion, the parent company financial statements give a true and fair view of the financial position of ING Real Estate B.V. as at 31 December
2008, and of its result for the year then ended in accordance with Part 9 of Book 2 of the Netherlands Civil Code.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

Pursuant to the legal requirement under 2:393 sub 5 part e of the Netherlands Civil Code, we report, to the extent of our competence, that the
Management Board report is consistent with the financial statements as required by 2:391 sub 4 of the Netherlands Civil Code.
For Ernst & Young Accountants.
Signed by R.J.W. Lelieveld
94 — ING Real Estate Annual Report 2008

OTHER INFORMATION
PROPOSED RESULT APPROPRIATION

According to Article 13 of ING Real Estate’s articles of association, the net profit is distributed as follows:
1. The profit evidenced by the adopted financial statements shall be at the disposal of the General Meeting of Shareholders.
2. The General Meeting of Shareholders shall be authorised to make one or more interim dividends payable.
3. Distribution of profit shall take place after adoption of the financial statements that distribution is justified.
PROPOSED RESULT APPROPRIATION

Net result at the disposal of the General Meeting of Shareholders –88,364
Deduct from Other reserves 33,319
Deduct from Share of associates reserve 55,045
Cash dividend –

Glossary
ASSETS UNDER MANAGEMENT (AUM) FULL-TIME EQUIVALENTS (FTES) OPEN-END FUND

In general: The term used by investment The ratio of the total number of paid hours A commingled fund that does not have a
managers and advisors to define the size during a period (part time, full time, finite life and that continually (usually at
of their firms’ activities and commonly contracted) by the number of working the end of each calendar quarter) accepts
expressed as the total fair market value of hours in that period – Mondays through new investor capital and continually
all assets under the control of the manager, Fridays. consummates new property investments.
regardless of encumbering debt or other
financing structure. INVESTMENT PROPERTY DATABANK (IPD) OUTPERFORMANCE
A global information business dedicated to Fund outperformance has been measured
Specifically: At real estate Investment the supply of independent market indices, based on new IPD analysis methodology.
Management, assets under management benchmarks, performance analysis and This incorporates only funds with a
are the gross asset value of properties that training to the real estate industry. specified relative benchmark on a
the investment manager manages for itself See: www.ipd.com three-year annualised basis.
and its clients.
INVESTMENT PORTFOLIO RAROC
At real estate Development, assets under The investment portfolio held by our real Risk-adjusted return on capital.
management are the properties in the estate Investment Management business
development portfolio that are being comprises real estate, which is owned REAL ESTATE MARKET FUNDAMENTALS
developed, under construction or that either directly or indirectly through our The factors driving the value of real
have been completed. investment funds. property (i.e. the supply, demand and
pricing for land and/or developed space
CLOSED-END FUND LOAN-TO-VALUE RATIO in a given geographic or economic region
A commingled fund whereby entry and The ratio of the value of the loan principal or market).
withdrawal are closed to investors. All divided by the property’s appraised value.
participants are treated pro rata and RISK DASHBOARD
discretion usually resides with the sponsor MANDATE A tool which provides insight into the
or advisor. Such funds are finite with a Written authorisation and/or command by quality and sustainability of ING Real
typical life of five to ten years. a person, group or organisation to another Estate’s income and earnings. It forms
to take a certain course of action – in this an integral part of ING Group’s risk
COMMUNITY SHOPPING CENTRE case an investment. dashboard.
A medium-sized shopping centre. May
contain a small department store and MIXED-USE PROJECT SEPARATE ACCOUNT
coordinated small shops. Larger than a A project which incorporates two or more A non-commingled account under the
neighbourhood shopping centre and property uses, for example, an office control of an investment manager for the
smaller than a regional centre. building with retail space, an apartment purpose of acquiring, owning, managing
building with office space or a shopping and disposing of assets for the benefit of
COST/INCOME RATIO centre with leisure facilities such as a a single client.
Operating expenses, excluding additions to cinema or swimming pool.
the loan loss provision but including other TOTAL PROJECT VALUE
impairments, expressed as a percentage of MORTGAGE LIEN Total project value represents assets
total income. An encumbrance on a property used to under management in our Development
secure a loan. The holder of the lien has business and forecast project investments
FAIR VALUE CHANGES a claim to the property in case of loan at sales values.
Under IFRS – the International Financial default. The priority of the claim depends
Reporting Standards – fair value is the on the order of recording and any TOTAL REAL ESTATE INVESTMENT
amount for which an asset could be subordination agreements. Thus a first EXPOSURE
exchanged, or a liability settled, between mortgage generally has prior claim to all Real estate asset exposure represents
knowledgeable, willing parties in an arm’s other mortgage lien holders. ING Real Estate’s exposure to the
length transaction. Changes in the fair fluctuation in real estate prices, affecting
value of investment property have to both the value of real estate assets and
be reported in the income statement in income derived from those assets.
the reporting period in which the changes
occur. Fair value changes are only realised URBAN LAND INSTITUTE (ULI)
on the sale of property. See the accounting A non-profit education and research
policies included in the financial statements institute with focus on the use of land in
for details. order to enhance the total environment.
See: www.uli.org
96 — ING Real Estate Annual Report 2008

DISCLAIMER
Certain of the statements contained in this Annual
Report are statements of future expectations and other
forward-looking statements. These expectations are
based on management’s current views and assumptions
and involve known and unknown risks and uncertainties.
Actual results, performance or events may differ materially
from those in such statements due to, among other things:
(i) general economic conditions, in particular economic
conditions in ING’s core markets, (ii) performance of
financial markets, including emerging markets,
(iii) interest-rate levels, (iv) currency exchange rates,
(v) general competitive factors, (vi) changes in laws and
regulations and (vii) changes in the policies of governments
and/or regulatory authorities. ING Real Estate assumes no
obligation to update any forward-looking information Produced by ING Real Estate, The Hague, the Netherlands
contained in this document. Designed by sasdesign.co.uk

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INVESTING

ANNUAL REPORT 2008

We work in partnership with other ING Commercial register of Haaglanden

Our annual report is only available

Corporate ING Real Estate

Investing Financing Developing

We manage commingled real We are an international commercial We are a pan-European developer

For more information For more information For more information

C — ING Real Estate Annual Report 2008

2008 ING Real Estate Annual Report — 1

RESULT BEFORE TAX

Substantial fair value losses on our direct real estate

tax of EUR 192 million. 2004 2005 2006 2007 2008

In spite of these market factors, and reflecting NUMBER OF EMPLOYEES

TOTAL BUSINESS PORTFOLIO

2 — 2008 ING Real Estate Annual Report

Risk costs (additions to loan loss provision) 82 – –1 –3 13

RESULT BEFORE TAX

BALANCE SHEET FIGURES

PORTFOLIO INFORMATION (1) (in billions of euros)

Reconciliation of profit before tax reported by

2008 ING Real Estate Annual Report — 3

4 — 2008 ING Real Estate Annual Report

04_BODY HEADING 04_BODY HEADING

NORTH AND SOUTH AMERICA EUROPE ASIA PACIFIC AWARDS

Brazil Belgium Poland Australia Third-party awards provide

2008 ING Real Estate Annual Report — 5

GEORGE JAUTZE, CHIEF EXECUTIVE OFFICER

Development 77 43 79 Despite difficult market conditions, our total business portfolio

THE REAL ESTATE MARKETS

6 — 2008 ING Real Estate Annual Report

2008 ING Real Estate Annual Report — 7

8 — 2008 ING Real Estate Annual Report

International markets Residential

2008 ING Real Estate Annual Report — 9

10 — 2008 ING Real Estate Annual Report

2008 ING Real Estate Annual Report — 11

Total business portfolio

Lower fair value changes –842 INVESTING

12 — 2008 ING Real Estate Annual Report

2008 ING Real Estate Annual Report — 13

The risk management note in the financial statements on page 82

INVESTMENT PROPERTIES OWNED BY ING REAL ESTATE

Summit portfolio (100%) Canada 3,433 1,753 –354 147

Ocmador portfolio Asia 122 90 –27 12

RGD portfolio Netherlands 220 403 5 31

ING offices portfolio Netherlands 81 109 2 10

Healthcare fund UK 0 55 –11 5

Dalton Park UK 14 35 –17 4

Shanghai Racket Club China 79 111 –9 14

IP Property Fund Asia Asia 45 36 0 3

Joondalup shopping centre Australia 130 94 1 8

Ivy Mall Asia 21 35 0 0

European fund properties Europe 57 93 –5 3

Directly held investment properties 2,910 –354 236

14 — 2008 ING Real Estate Annual Report

2008 ING Real Estate Annual Report — 15

We have one of the highest quality, dedicated

We believe there will likely be no quick return to the recent debt-driven

16 — 2008 ING Real Estate Annual Report

The events of 2008 defied all expectations. A seismic disruption

2008 ING Real Estate Annual Report — 17