Investment Prospectus. Residential Development Capital Raising Summary Report.

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Griffin Jennings
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1 Investment Prospectus Residential Development Capital Raising Summary Report

2 Introduction Vision A market leader, developing iconic, design-led, adaptable, residential projects that embody a strong sense of community. Mission De-risk projects through advanced design, analytics and forward planning. Achieve superior sales and investor returns through integrated project delivery methods. Deliver quality homes close to public transport, schools and places of work. Develop a mix of product that caters for the changing family and age demographics. Create visually appealing structures that add to the positive impression of the Australian urban environment. Values A company founded on: Creating collaborative partnerships Trust through superior market and financial analytics Enhancing productivity through new and innovative project delivery methods Skelton Projects is seeking a capital investment partner to pursue the site acquisition and development of high and mediumdensity residential projects in Melbourne, Australia. This summary of the full prospectus document outlines the intent and means to deliver successful investments in partnership with leading designers and consultants. Every project will be underpinned by high quality, intelligent design and lifestyle factors. Investment returns to the capital partner are expected to be in the range of 20% to 30% IRR per project, predominantly influenced by the site acquisition price. An agreement is sought to provide financial contribution to future projects. Equity contributions will be secured against the land and the associated uplift from design and planning. The legal and tax structures are arranged to quarantine the land and development investment separately from other assets held by the equity partner or Skelton Projects. Skelton Projects is founded on thorough market intelligence, analytics, geospatial analysis and highly-detailed financial models. The purposeful detail in this approach sets out methods to mitigate risks and provide confidence in strong financial returns. We value loyalty and lasting relationships and look forward to establishing a strong partnership. Michael Skelton Managing Director Skelton Projects is seeking a capital investment partner to pursue the site acquisition and development of high and mediumdensity residential projects.

3 Investment Performance Only projects that achieve hurdle rates in excess of 20% return on development cost will be pursued. The combination of a highly favourable profit distribution and project hurdle rate provides greater confidence that the returns to the capital partner will exceed the typical benchmark rate typically offered by other property investment opportunities. Investment comparison Pre-tax investor return (p.a.) Capital raising Investment horizon James Fielding 18.0% $12.8m 4.5 years Investec Property Fund No % $35m 5 years Cromwell Property Trust % $76m 7 years PEET Greenvale Syndicate 17.0% $17m 7 years Australian Direct Property Investment Fund 9.5% S&P/ASX Accumulation Index (over past 5 years) 8.0% Skelton Projects 20-25% $5m-$30m 2-4 years Legal and Tax Structures In collaboration with one of Australia s leading law firms, we have devised multiple scenarios specific to Skelton Projects relationship with a capital investment partner. Each strategy is unique in it s structure, however, central to each is the intent to minimise tax obligations or unintentional tax penalties (that many others are unknowingly subjected to), reduce risk through quarantining of assets and ensure rigour in contractual terms between all parties associated with the funding, design, delivery and sales of the project. Project Feasibility Before any design or financial feasibility modelling is undertaken, an assessment of the surrounding area of the proposed site is reviewed in partnership with our preferred project marketing company. Our combined market knowledge provides a competitive advantage by assessing: Local supply pipeline Volume and type of purchaser enquiries in the area Mix and size of units selling in the area Overall sales rate for the particular location These factors inform a detailed investment Information Memorandum, inclusive of a full site due diligence, produced with input from the project architect, project marketers, town planner, quantity surveyor, accountant and legal team. Included in the Information Memorandum: Architectural massing model and area schedule Construction cost estimate Tax considerations for acquisition and disposal Thorough planning review and recommendations Proposed sales strategy Review of land titles and finally, considering all these factors, a detailed financial model including anticipated financial returns Reporting Skelton Projects is founded on superior analytics and financial modelling techniques that surpass the industry standard and available retail products. Selecting the right site is imperative to success. Our proprietary financial models allow for detailed feasibilities to be completed in a fraction of the time compared to alternative methods. Our model can assess in minutes: Projects costs Detailed realisation and hurdle rates Funding thresholds Comparison of alternative costs of capital Projected cash flow Investment returns (IRR and NPV) Funding structures Sensitivity analysis Residual land values Sequential distribution of revenue and profits Highly detailed, dynamically driven financial models provide greater certainty on investment outcomes, however, to ensure ease of communication all reports are delivered in an easy to understand format with a high-level summary. Example of high-level cost, revenue and profit summary $80m $70m $60m $50m $40m $30m $20m $10m $0m Acquisition Fees & Charges Construction Costs Request a sample financial model: info@skeltonprojects.com.au During the project delivery stage, monthly reports are provided in partnership with the project accountant to advise on financial draw-downs and progress against plan. This occurs throughout each stage of the project: Design and planning Pre-sales Construction Sell-out Marketing & Sales Skelton Projects is responsible for decision making throughout the project provided there is no significant deviation from the proposed plan. Any material changes will be advised in advance, where possible, or immediately upon notice. Funding Costs Selling Costs GST Profit Gross Realisable Value Only on agreement with the financial partner(s) will negotiations to acquire a site occur.

4 Market Intelligence Analytics has typically been confined to complicated dataprocessing methods. However, greater insight can now be gained through geospatial analytics. There are a growing number of datasets relating to statistical areas. Our custom built database provides new insights using visual analytics to better inform investment decisions. How does this improve property development decisions? 10 minute walk to train station 10 minute walk to tram stop Identify supply and demand imbalances in population and housing growth projections Focus effort on localities offering higher returns from optimal acquisition and disposal prices Identify neighbourhoods with projected growth in demand: i.e. access to public transport, places of education and favourable planning Geospatial analysis of high demand, high yield locations with consideration towards trends in: Building approvals Population trends and projections Household structure trends Median house and unit prices Median house and unit rental yields Median household incomes Median income based on location of work (employment hubs) Train, tram, bus and bike network Planning scheme overlays Metro open space Urban growth areas Primary, secondary and tertiary schools Site Selection The best developments are in the best locations. We have a stringent site selection criterion for our projects. Places with a great sense of community have good access to essential amenities. Desirable factors that lead to high demand Less than 10 mins walk to train station or tram stop Close proximity to places of education Close proximity to places of employment Vibrant local culture Melbourne, not unlike other Australian cities, has created a disparity between location of homes and places of work and education. With limitations on the boundaries of Melbourne, at Skelton Projects, we focus on inner and middle-ring locations with high serviceability by public transport. 60% 50% 40% 30% 20% 10% 0% 0-10km from CBD 10-20km from CBD 20+km from CBD Proportion of all job growth Proportion of all population growth Source: City Limits, Grattan Institute

5 Delivering engaging lifestyle developments, through intelligent design and investment Achieving the highest value requires identifying locations with close access to public transport, schools, and places of business. These locations create strong and vibrant communities

Planning Although the planning process represents one of the greatest project risks, mitigation strategies can be adopted to improve planning decisions and reduce or eliminate unplanned delays

6 Planning Although the planning process represents one of the greatest project risks, mitigation strategies can be adopted to improve planning decisions and reduce or eliminate unplanned delays through proactive and reasonable engagement. Clever, well articulated design with consideration of the local urban landscape results in favourable outcomes to exceed the planning provisions and achieve a higher yielding project. Our projects strive to be recognised as unique, high quality developments that achieve the highest potential for their location. Sales Driven Design Changing market dynamics in recent years has led to a shift in investor appetite towards higher quality developments. Tighter rental yields have moved investment returns towards capital growth. Given that capital growth requires future sale of an investment potentially to an owner occupier design elements of this era of apartments should be viewed with the home of an owner occupier in mind. Adaptive, cost effective strategies can meet the markets changing needs even during sales. Adaptive design strategies to increase sales Flexible floor plates: conversion of unit layouts to meet specific demand during the sales process Adaptive apartment floor plans to accommodate different occupants spatial desires without incurring addition cost Sales Strategy Our sales philosophy uses a project marketing approach to engage with the market. This allows us to reach a wider audience and a more varied buyer demographic with approximately 35% of the units selling via retail agents and the remainder via alternative sales channels. This approach allows for greater collaboration between the project marketers and architect during conceptual design. It ensures the development meets market demand for the location and expedites the sales process given the familiarity of the development to the project marketer. A review of past projects has indicated a 5%-10% higher sales price through the competitive buying nature of the alternative sales channels and faster achievement of the presales requirement. Tracking and reporting of sales is managed online, in real time and is interactive. Data including foreign investment compliance, cash positions for sales from deposit through to settlement or whether the purchaser is an investor or owner occupier is accessible via the sales platform. Development Finance The format of construction financing is dependent on the level of equity in the project. Skelton Projects has the capacity to assess alternative bridging facilities including mezzanine finance, venture capital and preferential equity. The financing strategy will be assessed during the feasibility stage with the project s equity partner. Collaborative Teams The teams selected to participate in developments with Skelton Projects are recognised leaders in their fields. However, attributes that extend beyond an individual s or organisation s technical capability were also pivotal in selecting the right team. Skelton Projects managing director has been an industry advocate and voice for enhanced collaboration and productivity in the industry, both in Australia and internationally. His exposure and study of methods that lead to better project outcomes has inspired our business to adopt innovative cost and risk mitigating strategies, including forms of integrated project delivery. Organisations that complement each others delivery methods and work ethos have been selected to lead the successful delivery of our projects.

Experienced Leadership Michael Skelton Managing Director Skelton Projects Michael is a specialist on improving investment and business performance through unique market intelligence, benchmarking,

His design and construction experience spans Australia, including Brisbane s most luxurious apartments, Perth s beachside townhouses and Melbourne s iconic and innovative public buildings.

Michael has led the development of market intelligence platforms considered world leading.

His experience extends throughout the entire lifecycle of assets over his ten-year career in the property and construction industry.

Michael led the development of an un-paralleled global construction, design and cost-benchmarking platform that transformed project delivery for a world-leading project and cost management business.

Sample of Project Experience High-rise apartments Skyline, Brisbane, Queensland. 192 units across 42 storeys. High-rise luxury apartments Castlebar Cove, Kangaroo Point, Queensland.

Public buildings Melbourne Convention Centre and the State Library of Queensland Qualifications Master of Property and Construction Bachelor of Engineering Green Star accredited professional Boards

7 Experienced Leadership Michael Skelton Managing Director Skelton Projects Michael is a specialist on improving investment and business performance through unique market intelligence, benchmarking, financial modelling and analytics. His design and construction experience spans Australia, including Brisbane s most luxurious apartments, Perth s beachside townhouses and Melbourne s iconic and innovative public buildings. He is a former global department head for a Fortune 500 company specialising in architecture, planning, engineering, transaction advisory, cost consultancy and project management. Michael has led the development of market intelligence platforms considered world leading. Revised business strategies and investment in a $19 billion organisation were achieved through pairing of detailed market and business trends. His experience extends throughout the entire lifecycle of assets over his ten-year career in the property and construction industry. Recognised in 2012 by the Property Council of Australia as the recipient of the national future leader award for his extraordinary contributions to business and industry. Michael led the development of an un-paralleled global construction, design and cost-benchmarking platform that transformed project delivery for a world-leading project and cost management business. Skelton Projects has a highly experienced Board of Advisors supporting the business throughout each project to achieve the best project outcomes. Sample of Project Experience High-rise apartments Skyline, Brisbane, Queensland. 192 units across 42 storeys. High-rise luxury apartments Castlebar Cove, Kangaroo Point, Queensland. Townhouses The Beach townhouses, Scarborough, Western Australia. Warehouse conversion W4 Apartments, Newstead, Queensland. Mixed-use The Well, Camberwell, Victoria. Retail, office and residential. Public buildings Melbourne Convention Centre and the State Library of Queensland Qualifications Master of Property and Construction Bachelor of Engineering Green Star accredited professional Boards and Advisory Roles Reserve Bank of Australia, industry liaison advisor (since 2010) Property Council of Australia, Sustainable Development Committee ( ) Property Council of Australia, Future Directions Committee ( ) Pollinate Energy, Board of Advisors (since 2014) Engineers Without Borders, Pro-bono Committee ( ) Evans and Partners Industry Advisor ( ) Awards Property Council of Australia: Future Leader Award Build Sydney Live winner: 48-hour design competition for the Sydney convention centre Innovation Award, AECOM global Corporate Social Responsibility Award, AECOM global Board of Advisors Brian Kruger Business Management and Accounting Advisor Current Role: Chief Executive Officer, Toll Holdings Mark Beattie Feasibility, Cost and Project Management Advisor Former Role: Managing Director, Davis Langdon Australia New Zealand Travis Walton Planning and Design Advisor Current Role: Founder and Director, Travis Walton Architecture Nerida Conisbee Market Intelligence Advisor Current Role: National Research Director, Colliers International Geoff Gourley Capital Raising and Business Development Advisor Current Roles: Executive, Entrepreneur, Board Member, Non-Executive Director Adam Cook Finance and Legal Advisor Current Role: Business Strategy Manager at a leading Melbourne developer Would you like to be involved in this exciting investment opportunity? We are currently seeking equity partners for new development projects. Investment opportunities range from $5m to $30m with an estimated investment performance of 20% to 25% IRR. Please contact us if you would like to learn more about our business, potential projects or any financial or legal specifics of this investment opportunity. Contact Details Michael Skelton Managing Director Skelton Projects +61 (0) michael.skelton@skeltonprojects.com.au

Whilst every care has been taken in the preparation of this document, Skelton Projects makes no representation or warranty as to the accuracy or completeness of content in this

8 The material in this document is general commentary only and does not relate to a specific project. Skelton Projects has compiled the information in this document from a number of sources. Whilst every care has been taken in the preparation of this document, Skelton Projects makes no representation or warranty as to the accuracy or completeness of content in this document, including, without limitation, any forecasts. Skelton Projects accepts no responsibility to any person who acts or relies in any way on any of the material contained herein. Specific advice should be sought directly from Skelton Projects. Historical trends are not necessarily a reliable indicator for actual future performance. Skelton Projects 2015

1 FY2014 Financial Highlights. 2 Operational Overview. 3 Market Conditions. 4 Company Outlook

1 FY2014 Financial Highlights. 2 Operational Overview. 3 Market Conditions. 4 Company Outlook 1 FY2014 Financial Highlights 2 Operational Overview 3 Market Conditions 4 Company Outlook Record full year profit of $40.3m, up 10.9% on pcp Final fully franked dividend of 15.5 cents declared; record