Investments. No 6 and No 7 Land Release. Sydney Land Reserve KSI Investment Pubic Fund

Transcription

1 K S I Investments No 6 and No 7 Land Release Sydney Land Reserve KSI Investment Pubic Fund

2 Important Disclosures & Disclaimer This document is not to be construed as a solicitation or an offer to buy any financial products or financial instruments. This document has been prepared without taking account of the objectives, financial situation (including the capacity to bear loss), knowledge, experience or needs of any specific person who may receive this document. All recipients should, before acting on the information in this report, consider the appropriateness and suitability of the information, having regard to their own objectives, financial situation and needs, and, if necessary seek the appropriate professional or financial advice regarding the content of this report. The information does not purport to be a complete statement or summary of a transaction. Financial markets products have an element of risk. The level of risk varies depending on the product s specific attributes and how it is used. Potential investors should note that the product discussed is a sophisticated financial product which involves acquisition of property assets using option contracts. Unless you are familiar with products of this type, this product may not be suitable for you. KSI Investments will enter into transactions on the understanding that the customer has: made his/her own independent decision to enter into the transaction; determined that the transaction is appropriate; ensured he/she has the knowledge to evaluate and capacity to accept the terms, conditions and risks; and is not relying on any communication from KSI Investments as advice. We believe that the information in this document is correct and any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of its compilation, but no representation or warranty, either expressed or implied, is made or provided as to accuracy, reliability or completeness of any statement made in this article. Any opinions, conclusions or recommendations set forth in this document are subject to change without notice and may differ or be contrary to the opinions, conclusions or recommendations expressed elsewhere by KSI Investment or the wider KSI Group of Companies. We are under no obligation to, and do not, update or keep current the information contained in this report. Neither KSI Investments nor any of its subsidiaries accept liability for any loss or damage arising out of the use of all or any part of this report. Any valuations, projections and forecasts contained are based on a number of assumptions and estimates and are subject to contingencies and uncertainties. Different assumptions and estimates could result in materially different results. KSI Investments does not represent or warrant that any of these valuations, projections or forecasts, or any of the underlying assumptions or estimates, will be met. Past performance is not a reliable indicator of future performance. All material presented in this report, unless specifically indicated otherwise, is under copyright to KSI Investments. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior written permission of KSI Investments. KSI Investments, its agents, associates and clients have or have had long or short positions in the financial products or other financial instruments referred to herein, and may at any time make purchases and/or sales in such interests or securities as principal or agent, including selling to or buying from clients on a principal basis and may engage in transactions in a manner inconsistent with this report. Unless agreed separately, we do not charge any fees for any information provided in this report. You may be charged fees in relation to the financial products or other services KSI Investments provides, these are set out in the relevant Special Product Disclosure Statements (SPDS). Our employees receive a salary and may hold an equitable interest in KSI Investments which entitles them to dividends based on a number of factors relating to their overall performance during the year. These factors include the level of revenue they generate, meeting client service standards and reaching individual sales portfolio targets. Our employees may also receive benefits such as tickets to sporting and cultural events, corporate promotional merchandise and other similar benefits. If you have a complaint, KSI Investments dispute resolution process can be accessed by calling

3 3 THE LAND

4 THE LAND No. 6 No. 7 4

5 DETAILS OF THE LAND Address 60 Devonshire Road, Rossmore 64 Devonshire Road, Rossmore Size 60 Devonshire Road, Rossmore 25,590m2 / 6.32acre / 2.5ha 64 Devonshire Road, Rossmore 21,170m2 / 5.23acre / 2.1ha Zoning TOTAL Price Total $7,560,000 Price $/m2 $162/m2 RU4 - Rural Small Holdings 46,760m2 / 11.55acre / 4.6ha 5

6 ABOUT THIS DOCUMENT The purpose of this document is to set out the details of the proposed land investment in the following three sections WHY DID WE CHOOSE THIS LAND? CURRENT MARKET PRICES FORECAST RETURNS 6

7 01 WHY DID WE CHOOSE THIS LAND? 7

8 AREA Located within the future growth area of Sydney 8

9 AREA 5km 10 mins 20k m 30 mins 40k m 60 mins 9

10 AREA The land located: 1. 5kms or 10 minutes drive from Western Sydney Airport at Badgerys Creek 2. 20kms or 30 minutes drive from key centers such as Penrith, Campbelltown, Liverpool 3. 40kms or 60 minutes drive from Sydney CBD Channel 7 coverage on the Badgerys Creek Airport 10

11 LOCATION Close proximity to key economic and social infrastructures 11

12 Schools 500m 2km 5 mins Medium density housing Local centres ROSSMOR E PLANNED CENTRE Planned railway station 4km 10 mins LEPPINGTO N CENTRE 12 Existing railway station

13 LOCATION DETAILS WITHIN 4 KMS FROM THE LAND The land is located in close proximity to the future regional centre at Leppington Artist Impression of Leppington Town Centre In mid 2017 it was classified as a priority precinct by NSW Planning department to accelerate its development Leppington Centre Key Aspects: Operating train station Planned supermarket and department store of 60-80,000m2 (Top Ryde Shopping Centre 78,000m2, Rhodes - 55,000m2) Community Centre Cultural Centre Aquatic and Sport Centre A large Integrated Hospital Office towers and industrial area Employment for 13,000 people 13

14 14 WITHIN 2 KMS FROM THE LAND LOCATION DETAILS The land is located in the future Rossmore precinct with a future centre at Bringelly road (Employment, Shopping & Train station) Rossmore Precinct Description Future Plans Population Current: 1,500 Future: 25,000 Housing (Low, Medium and High densities) Industrial area Supermarkets Local shopping areas Current: 600 Future: 9,000 Size to be determined 1-2 (Coles, Woolworths) 7-8 (Shopping village) Retail floor space 20,000m2 25,000m2 Essential services Train station Source: Department of Planning NSW 15 General practitioners, 3 Child care centres, 3 Primary schools, 1 High school Location currently under Govt. planning

15 WITHIN 500Ms FROM THE LAND LOCATION DETAILS The land is located 500ms from the zoned area of Austral Several village centres with local shops and essential services to be located here Both primary and high schools are expected to be walking distance away Based on our analysis it is likely that the land will be zoned low density residential. If this is the case, the capacity of the land is expected to be between houses with people living there. 15

16 LAND A land that meets our stringent assessment criteria 16

17 17 THE LAND FROM ABOVE

18 THE LAND DIMENSIONS 365m 60m 180m 18

19 19 THE LAND TOPOGRAPHY

20 DESCRIPTION A clear flat land on flood free area THE LAND OVERVIEW The property has a slight ascent from East to West from 69meters it rises to 76meters Current properties on the land: House 1: Four bedroom brick home (Estimated rent : $620 per week) House 2: Four bedroom brick home with in-ground pool and Colorbond shed (Estimated rent: $550 per week) House 3: Three bedroom brick home with in-ground pool and outdoor entertaining area (Estimated rent: $500 per week) Unit 1: Two bedroom self contained with bathroom and kitchen (Estimated rent: $380 per week) Unit 2: One bedroom self contained with bathroom and kitchen (Estimated rent: $300 per week) Shed: 60x40 foot with large carport (Estimate rent: $400 per week) The land is irrigated as it was used for rose production in the past, however current owners are not operating the rose farm anymore 20

21 02 CURRENT MARKET PRICES 21

22 LAND PRICE EXAMPLES Examples showcasing the current market conditions 22

23 RECENT SALES ROSSMORE Address Sales Date Sales Price $/m2 90 Devonshire Road, Rossmore 30/06/2017 $ Bringelly Road, Rossmore 21/06/2017 $ Rossmore Crescent, Rossmore 05/06/2017 $ Graham Road, Rossmore 23/05/2017 $ Devonshire Road, Rossmore 16/12/2016 $ Devonshire Road, Rossmore 16/12/2016 $ Devonshire Road, Rossmore 20/09/2017 $162 The purchase price of our land at Devonshire Road, Rossmore was $162/m2 which is 10% - 25% lower than the comparable market prices displayed in the table above. 23

24 RECENT SALES SOUTH WEST GROWTH CENTRE We looked at the recent sales for comparable land in the suburbs of the SWGC that have gone through the rezoning process and development has commenced. Austral is the neighbouring suburb and is 500 meters from the land. Suburb Date of Rezoning Austral March 2013 Recent comparable sales examples from the above suburb: Address Sales Date Sales Price $/m2 Forecasted price with DA (+30%) 125 Tenth Avenue, Austral 22/03/2017 $380/m2 $ Sixteenth Avenue, Austral 07/02/2017 $354/m2 $ Craik Avenue, Austral 29/10/2016 $390/m2 $507 24

25 03 FORECASTED RETURNS 25

26 26 FORECASTED RETURNS

27 FORECASTED RETURNS In our forecasting methodology we conducted the followings: 1. RAW RURAL ZONED LAND COMPARED WITH RESIDENTIAL ZONED LAND WITH DA 2. PRICE GROWTH SCENARIOS Compare the 2017 price of the raw land we invested in to the estimated price of land that has a completed DA application. Based on our analysis across the rezoned areas of the North West Growth Centre and South West Growth Centre, we observed that DA approved land command 30% premium compared with land without it. Analyse three potential scenarios of where the future land prices might be heading in the next 10 years. 27

28 1. RAW RURAL ZONED LAND COMPARED WITH RESIDENTIAL ZONED LAND WITH DA The price gap in $600 $500 $507 $494 $400 $300 Price difference of ~300% $200 $162 $100 $ Devonshire Road, Rossmore 20 Craik Avenue, Austral 125 Tenth Avenue, Austral 28

29 2. PRICE GROWTH SCENARIOS We have identified two relevant scenarios that can drive the prices and would result in two different outcomes for the land holding: A. LOW 13% pa Land prices grow with the average rate noted between in the NWGC and SWGC when the land was still zoned raw rural. The price growth in this period was the natural increase in land values as rezoning to residential only impacted prices from B. MID LEVEL 23% pa Prices continue to grow with the average rate of the past 5 years of the NWGC to account for the impact of the rezoning to residential and development of the area. During this period 90% of the NWGC has been rezoned from rural to residential. 29

30 A. LOW 13%pa If in 2027 the land is still zoned rural it can reasonably be expected that the historical trend of 13%pa growth rate continues from 2017 to 2027 and the land value is expected to rise accordingly. $600 $550 $500 $400 $300 $200 $162 $100 $ Devonshire Road, Rossmore - raw zoned rural A. LOW - 13%pa

31 B. MID LEVEL 23%pa If the land is rezoned to residential between 2017 and 2027 it can reasonably be expected that the historical trend of 23%pa growth rate noted in the NWGC eventuates and the land value is expected to rise accordingly. This coupled with obtaining a DA the value can be further enhanced. $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $1,669 $400 $200 $- $ Devonshire Road, Rossmore - raw zoned rural MID CASE - 23%pa WITH DA

32 CONCLUSION Based on our analysis we believe the followings might take place during the time to 2027 LAND PRICE GROWTH CONTINUES THE RURAL ZONING PRICE TREND LAND PRICE GROWTH FOLLOWS THE RESIDENTIAL ZONING PRICE TREND If land remains zoned rural, prices are expected to follow historical trends of 13% pa resulting in approximately 340% ($162/m2 to $550/m2) increase. If land zoning changes from rural to residential prices are expected to grow: a. 23%pa: Total increase would be approximately 1030% ($162/m2 to $1,669/m2) 32

33 Credit Preliminary Land Investment Budget Debit 1. TOTAL FUNDS TO BE RAISED: $8,650, Deduct Price of Land: $7,560, Deduct Land Stamp Duty : $469, Deduct Fund Management Fee ( 2% p.a. for 10 yrs., however may be less than 10 yrs.) $1,512, Add Rental Income ( 3 houses, 2 granny flats, 1 shed) $1,423, Add Rental Income ( Market gardens) TBC 7. Deduct Fund Raising Fee $378, Deduct Land buying Fee $75, Deduct $78,174 TOTAL $10,073,464 $10,073,464 (Finalised budget to be disclosed in the SPDS ) 33

34 Investment Return Calculation INVESTOR RETURN CALCULATION 1. Forecasted land price appreciation of 1030%: $7,560,000 x 1030% = $77,868, Deduct Total investment of $8,650,000: $77,868,000 - $8,650,000 = $69,218, Deduct 20 % KSI Performance Fee ($69,218,000X20%=$13,843,600) $69,218,000 - $13,843,600 = $55,374,400 Total Investor Return $55,374,400 UNIT HOLDERS RETURN CALCULATION C) Total Unit Investment x Investment return % = Total Investor Return = $8,650,000 x A% = $55,374,400 A%=Unit investment Return% = 640 % Unit Total Return (Profit + Principle) = 640%+100%=740% (7.4 fold) 34 (Finalised budget to be disclosed in the SPDS )

35 Unit Holder Investment Return WORKED EXAMPLE Investmen t amount in 2017 Forecasted Total Return % TOTAL INVESTMENT RETURN Principle Included, No Taxes (Estimated fund dissolution date between 2022 and 2027) Guarantor $10, % $74,000 Guarantor $50, % $370,000 Guarantor $100, % $740,000 Guarantor $200, % $1,480,000 Guarantor $500, % $3,700,000 Guarantor $1,000, % $7,400,000 35

36 36 Land Banking Time Line

37 Assumptions 1. The South West Growth Centre s rezoning speed is expected to match that of the North West Growth Centre Source: NSW Department of Planning and Environment 2. The South West Growth Centre s current rezoning timeline provides evidence on the speed of this rezoning process The process is currently being streamlined to provide for future 2 year rezoning period. Source: NSW Department of Planning and Environment 3. First Stage of Sydney s second airport at Badgerys Creek is expected to be completed by 2026, according to the Federal Government Timetable. Source: Federal Government Department of Infrastructure and Regional Development 37

38 1. The South West Growth Centre s rezoning timeline is expected to match that of the North West Growth Centre Suburb Rezoning Announced by the NSW Government Rezoned Time taken to rezone 1. North Kellyville June 2006 December years 6 months 2. Riverstone West June 2006 August years 2 months 3. Riverstone January 2007 May years 4 months 4. Alex Avenue January 2007 May years 4 months 5. Marsden Park Industrial June 2008 November years 4 months 6. Area 20 Not available October 2011 Can t calculate 7. Schofields October 2009 May years 7 months 8. Box Hill & Box Hill Industrial October 2009 April years 6 months 9. Marsden Park July 2011 October years 3 months 10. Riverstone East August 2013 August years 11. Vineyard August 2013 TBA TBA 12. Marsden Park North June 2014 TBA TBA 13. West Schofields September 2016 TBA TBA 14. Shanes Park TBA TBA TBA Between 2006 and precinct or 80% of the total precincts were rezoned. On average one precinct per year was rezoned and the rezoning process took 3 years. 38

39 2. The South West Growth Centre s current rezoning timeline provides evidence on the speed of this rezoning process Suburb Rezoning Announced by the NSW Government Rezoned Time taken to rezone 1. Turner Road June 2006 Dec year 6 months 2. Oran Park June 2006 Dec year 6 months 3. Edmondson Park June 2006 May year 11 months 4. Austral and Leppington North December 2009 March years 3 months 5. Catherine Fields II. August 2011 March year 7 months 6. East Leppington November 2011 March 2013 & Aug year 7 months to 2 years 8 months 7. Leppington November 2011 November years 8. TBA TBA TBA TBA 9. TBA TBA TBA TBA 10. TBA TBA TBA TBA 11. TBA TBA TBA TBA 12. TBA TBA TBA TBA 13. TBA TBA TBA TBA 14. TBA TBA TBA TBA 15. TBA TBA TBA TBA 16. TBA TBA TBA TBA 17. TBA TBA TBA TBA 18. TBA TBA TBA TBA Rezoning was slower in SWGC as the Government was prioritising the NWGC. As the land is 80% rezoned in NWGC, the Government is expected to accelerate rezoning in the SWGC. Only 40% of total precincts is rezoned and on average the rezoning takes anywhere between 2 4 years. 39

40 3. First Stage of Sydney s second airport at Badgerys Creek is expected to be completed by 2026 We believe that this new airport will provide an additional boost to the speed of development in the proximity of the airport. Both the Federal and NSW Governments stated that they are looking to develop the area around the airport as an Aerotropolis (Airport city) to bring business, commercial activity close to the Airport. 40

41 1200% FORECASTED LAND ZONING SEQUENCE 1000% RURAL LAND GOVERNMENT ZONING PROCESS KSI INVESTMENTS DA PROCESS 1024% 800% 600% 510% 512% 400% 200% 159% 139% 320% 226% 314% 0% YEAR 0 YEAR 2 YEAR 5 YEAR 7 YEAR Guarantor - 23% p.a Preferred - 23% p.a

42 42 Reasoning for the forecast: FORECASTED LAND ZONING SEQUENCE Based on the evidence noted of rezoning sequence at the NWGC and SWGC, KSI Investments forecasts that the historical trends are expected to continue as population growth accelerates and Sydney s housing is still undersupplied. 1. It is expected that the NSW Government will accelerate the rezoning speed of the SWGC to match that of the NWGC s average 1 precinct per year and taking on average 3 years to complete rezoning 2. Given the NWGC is already 80% rezoned and currently 3 precincts are under the rezoning process it is expected that in the next 2-3 years 95% of land in the NWGC will be rezoned. This will leave the SWGC the next area of the Government s rezoning focus. This is expected to lead to accelerated rezoning of the SWGC and supports the expectation of 1 precinct per year and 3 years lead time to complete the rezoning of a precinct. 3. In the SWGC the last rezoning took place in The above evidence supports that in the next 2 years the Government is expected to start the rezoning of new precincts as it follows the historical pattern of 1 precinct per year. Therefore we forecasted that the rezoning process might commence in 2 years time and will take 3 years to complete. Based on our experience with DA, we forecast that this will take around 2 years. Therefore the total of this land to mature is expected to be 7 years. 4. The completion of stage 1 of the Badgerys Creek Airport in 2026 is expected to provide further pressure on the Government to accelerate rezoning around the airport to provide the necessary commercial and business opportunities and infrastructure necessary.

43 Apply today: Sydneylandbanking.com.au Or call us: Edmund Endre Robin Michael Welcome follow us on facebook: m.facebook.com/sydneylandbanking 43

44 Contact us At Our North Sydney Offices Suite 404, 53 Walker Street, North Sydney, NSW (2) Edmund , Endre Robin , Michael Sydneylandbanking.com.au Flow us on Facebook and Linkedin: Sydneylandbanking.com.au 44