AIMS PROPERTY FUND (ST KILDA RD) ARSN NOTICE OF MEETING & EXPLANATORY MEMORANDUM

Transcription

1 AIMS PROPERTY FUND (ST KILDA RD) ARSN NOTICE OF MEETING & EXPLANATORY MEMORANDUM This notice is issued to Unitholders of the AIMS Property Fund (St Kilda Rd) ARSN Important This Booklet contains important information and requires your immediate attention. It contains: 1. An offer to acquire your Units in the Fund made by the AIMS Property Securities Fund ARSN at $0.432 per Unit. 2. Information about a Resolution which concerns the proposed amendment of the Constitution of the Fund to facilitate the Offer and, for those wishing to remain in the Fund, the residential redevelopment of the Property of the Fund. It should be read in its entirety. If you do not understand the documents in this Booklet or are in doubt as to what you should do, it is recommended you consult your financial adviser immediately. If you wish to sell your Units, you must complete the accompanying Unit Sale Form. To sell your Units, you must complete and return the accompanying Unit Sale Form. If you do not complete the Unit Sale Form, you will remain in the Fund. If the Resolution is passed, the Fund will seek to undertake a residential redevelopment of the Property. In this case, you will be exposed to the risks associated with such redevelopment. Your vote is important. The Meeting of Unitholders is to be held at am (AEDT) on Friday, 14 November 2014 at AIMS office located at Level 16, 323 Castlereagh Street, Sydney. If you cannot attend in person, please complete and return the enclosed proxy form to Boardroom (Victoria) Pty Limited at the address stated on the proxy form as soon as possible and by the latest 11.00am (AEDT) on Wednesday, 12 November COR008_ _010.doc

2 CONTENTS Notice of Meeting for the AIMS Property Fund (St Kilda Rd) Page 3 Explanatory Memorandum Page 4 Voting procedure and eligibility Glossary Page 12 Page 14 Schedule 1 - Offer to acquire Units Page 16 Schedule 2 - Proposed Constitutional Amendments Page 18 Proxy Form Unit Sale Form Enclosed Enclosed KEY DATES Notice of Meeting issued 20 October 2014 Last date for return of Proxy Forms 11.00am (AEDT), Wednesday, 12 November 2014 Date of Meeting 11.00am (AEDT), Friday, 14 November 2014 Last date for return of Unit Sale Forms 5.00pm (AEDT), Friday, 14 November 2014 Distribution of proceeds under the APW Offer January 2015 The above dates are indicative only. AIMS may change the above dates at any time in its absolute discretion. A PROXY FORM IS ENCLOSED WITH THIS BOOKLET. TO HAVE YOUR SAY AND TO MAKE YOUR VOTE COUNT YOU SHOULD COMPLETE AND RETURN THE PROXY FORM AS SOON AS POSSIBLE. IMPORTANT INFORMATION The Booklet is dated 13 October 2014 and, with the exception of Schedule 1, has been prepared by, and is issued by, AIMS Fund Management Limited ABN AFSL as responsible entity of the AIMS Property Fund (St Kilda Rd) ARSN Schedule 1 of the Booklet has been prepared by, and is issued by, AIMS Fund Management Limited ABN AFSL as responsible entity of the AIMS Property Securities Fund ARSN The information contained in this Booklet does not constitute financial product advice and has been prepared without reference to your particular investment objectives, financial situation, taxation position and needs. It is important that you read the Booklet in its entirety before making any decision on how to vote on the Resolution or how to respond to the APW Offer. Capitalised terms used in the Booklet are defined in the Glossary on page 14. All times expressed in this document refer to Australian Eastern Daylight Time (AEDT). If you have any questions about your holding of Units, the Resolution or the APW Offer, please call AIMS on (02) If you are in any doubt on how to vote on the Resolution or the action to be taken, you should seek your own professional financial advice without delay. 2

3 NOTICE OF MEETING AIMS PROPERTY FUND (ST KILDA RD) TAKE NOTICE that pursuant to sections 252B and 601FM of the Corporations Act 2001 (Cth), a meeting of Unitholders of AIMS Property Fund (St Kilda Rd) ARSN (Meeting) will be held at the time, date and place detailed below, or such later time and date as notified to Unitholders, to consider and vote on the Resolution in this Notice of Meeting: Time: am (AEDT) Date: Friday, 14 November 2014 Place: Level 16, 323 Castlereagh Street, Sydney, NSW, 2000 BUSINESS The business of the Meeting will be to consider and, if thought fit, pass the following Resolution as a special resolution. Resolution Special Resolution to amend Constitution of the Fund "That, in accordance with Section 601GC(1)(a) of the Corporations Act 2001 (Cth), the Constitution of the AIMS Property Fund (St. Kilda Road) be modified as set out in the instrument tabled at the meeting and substantially in the form available to Unitholders in accordance with the Explanatory Memorandum accompanying this Notice of Meeting." Dated 13 October 2014 By order of the Board George Wang Executive Chairman AIMS Fund Management Limited as responsible entity of the AIMS Property Fund (St Kilda Rd) 3

4 EXPLANATORY MEMORANDUM AIMS PROPERTY FUND (ST KILDA RD) 1. Background Since AIMS took over the management of the Fund, the following has been achieved: $6,517,710 additional capital was raised in December 2013 pursuant to an entitlement offer to all Unitholders. The capital raising facilitated the refinancing of the Fund s debt facility on more favourable terms; the Fund now has the benefit of a 3 year facility with Westpac which is on significantly more favourable terms than the previous loans with AXA and GE Real Estate Investments Australia Pty Limited; distributions have now recommenced; the LVR for the Fund has been reduced to 51.2%; the NTA of the Fund has increased to cents per Unit as at 31 August 2014; and AIMS has done significant work in identifying opportunities for adding value for Unitholders including engaging Urbis in April 2014 to conduct a highest and best use analysis. The Property has a current book value of $25.0 million and a WALE of 1.73 years. Details of the Property are set out in section 3. Having regard to the Urbis analysis, AIMS believes that the highest and best use of the Property is to redevelop the Property for residential use. AIMS has considered the opportunity for the Fund to develop the Property itself. However, AIMS is mindful that this would not necessarily meet the investment objectives of all Unitholders given that a development fund has a significantly higher risk profile, further capital may be required from existing Unitholders in order to carry out the development and there would be a significant delay in Unitholders receiving a return on their capital. In addition, AIMS has received a number of conditional and unsolicited offers to acquire the Property. Most of these offers involved the development of the Property for residential use. Such offers were in the range of $30.0 million to $35.5 million from a broad cross section of purchasers including Australian and offshore property developers, industry funds and private and institutional investors. Amongst the offers received, was an offer from AIMS Property Securities Fund (APW) to purchase from each Unitholder their Units at a price per Unit of $0.432 which implies a net Property sale price of $34.5 million (APW Offer). The APW Offer is conditional on the amendments being made to the Constitution as contemplated by the Resolution. Amongst other things, the Constitutional amendments will facilitate the Fund carrying out the redevelopment of the Property into residential apartments. APW is managed by AIMS Fund Management Limited. As such, the transaction is a related party transaction. Under the APW Offer, Unitholders can elect whether to sell their Units or remain invested in the Fund and, thereby, participate in the residential development of the Property. After considering the various offers and options available to Unitholders, AIMS has decided to proceed with the APW Offer for reasons which include the following: it provides Unitholders with the option of receiving cash for their Units or remaining invested in the Fund and participating in the redevelopment of the Property; the APW Offer is based on a net Property sale price of $34.5 million, representing a significant premium to the current book value of the Property and towards the higher end of the range of unsolicited offers received by AIMS; whilst AIMS has received unsolicited offers for as high as $35.5 million, there is no guarantee that the conditions associated with such offer would be satisfied or that the purchaser would proceed to completion. In addition, the net proceeds received by Unitholders would be reduced for the costs and expenses associated with the sale and winding up the Fund; the APW Offer provides Unitholders with certainty as to return (being $0.432 per Unit) and timing of return. 4

5 2. Details of the APW Offer As described in section 1 above, APW has indicated that it is willing to purchase from each Unitholder their Units at a price per Unit of $0.432, which implies a Property sale price of $34.5 million. The APW Offer of $0.432 per Unit, which implies a Property sale price of $34.5 million, represents: A 38.0% premium above the audited book value of the Property as at 30 June 2014; A 17.3% premium above the Independent Valuation prepared by Jones Lang LaSalle Advisory Services Pty Ltd (JLL) as at 8 August 2014; and A 65.2% premium above the NTA per Unit as at 31 August The APW Offer is conditional on the Resolution being passed by the required majority. The terms of the APW Offer are set out in Schedule 1 to this Booklet. Under the APW Offer, Unitholders can elect whether to sell their Units or remain invested in the Fund and, if the Resolution is passed, participate in the residential development of the Property. If Unitholders wish to sell their Units pursuant to the APW Offer, they must complete and return the Unit Sale Form which accompanies this Booklet by 5:00pm on 14 November If you do not complete the Unit Sale Form, you will remain in the Fund. If the Resolution is passed, the Fund will seek to undertake a residential redevelopment of the Property. In this case, you will be exposed to the risks associated with such redevelopment. 3. Details of the Property As you are aware, the Fund holds a sole property asset located at 492 St Kilda Road, Melbourne. The following table provides a summary of the key features of the Property. Property Ownership NLA (m2) Occupancy rate (%) WALE (years) 492 St. Kilda Rd, Melbourne 100% 8,812 88% 1.73 The key tenants are as follows: Tenant Gross Income Area (sqm) Lease expiry date Peet Limited $335, /04/2016 Headstart International $240, /10/2015 Profectus Australia $188, /08/2018 Avaya Australia $273, /03/2015 Vacant $367, N/A Balance $2,470,614 5,845 N/A Total $3,875,724 8,803 - In August 2014, AIMS engaged JLL to prepare a valuation report on the Property. According to the report, the Property has been ascribed a market value of $29,400,000. The market value is based on a going concern office building assuming a capitalisation rate of 8.25% and a passing yield of 7.95% on a net income of $2.814 million representing 92% occupancy. 5

6 The key issues in relation to the Property are as follows: Strengths The Property is situated centrally within the St Kilda Road office precinct at the intersection with Hanna Street; The Property enjoys good natural light as a consequence of its corner location, low rise adjoining development and windows to all elevations; and The mid-rise and upper floors enjoy uninterrupted views to the north and south over Port Phillip. Weaknesses The outgoings are considered to be towards the upper end of the range for St Kilda Road office buildings; The quality of the accommodation varies throughout the building depending on the refurbishment history; Major items of plant including lifts and air conditioning are quite dated and may be in need of capital expenditure in the short to medium term; and The Property has a relatively short WALE of 1.73 years and therefore has a significant reletting risk. 4. Financial details of the Fund The table below shows the unaudited balance sheet as at 31 August Assets ($ 000) Cash and Receivables 231 Other Current Assets 625 Property 24,933 Total Assets 25,769 Liabilities Trade and Other Payables 341 Provisions 66 Secured Loans 12,792 Other liabilities 785 Total Liabilities 13,984 Net Assets 11,785 Units on Issue 45,072,896 NTA per Unit (cents) Performance Fee - Adjusted NTA per Unit (cents) The Fund has a debt facility with Westpac which has the following key terms: Commencement Date: 8 August 2014; Facility Limit: $13,100,000 (drawn to $12,792 million as at 31 August 2014); Base Rate: BBSY (current 2.74% p.a.); Bank Bill Type: Variable (90 days); Line Fee: 1.5% p.a.; Finance Term: 3 years; and Payment Type: Interest Only plus Fees. On the basis of the Property sale price implied by the APW Offer, the NTA of the Fund will increase to $0.432 per Unit and the LVR of the Fund will decrease to 36.2%. AIMS considers this LVR to be relatively low for a property fund and, as such, has approached Westpac for approval to increase the debt facility limit by a further $2,900,000 to $16,000,000 for the purposes of redeeming Units in the Fund. If the debt facility limit is increased prior to the transfer of Units pursuant to the APW Offer, Unitholders who wish to accept the APW Offer will have their investment realised either through the sale of Units to APW or through the redemption of their Units at the same price (i.e. $0.432 per Unit). To that extent, this Notice of Meeting constitutes an offer to all Unitholders to have their Units redeemed at $0.432 per Unit subject to completion of the Unit transfers 6

7 pursuant to the APW Offer. If $2.9 million was used to redeem Units, the LVR of the Fund would increase to 45.3% based on the implied net Property sale price of $34.5 million. 5. Information in relation to the proposed residential redevelopment of the Property In April 2014, AIMS engaged Urbis to prepare a Highest & Best Use Analysis Report. The report was prepared to assess potential value outcomes for the future use of the Property including: ongoing use on an as is basis for office; strata of the existing office improvements with sale of individual suites to the market; and redevelopment for residential apartment uses. Urbis also undertook a detailed planning analysis of the Property and found that, based on the proposed planning scheme amendments currently with the City of Port Phillip, the site is likely to have development height limit to 60 metres as a mandatory control. A development to this level will allow for a significant height increase above the existing building form subject to meeting satisfactory requirements of a planning permit application. It is envisaged that under a 60 metre height limit a residential development of 20 levels could be achieved. Based on the research analysis, Urbis recommended that the highest and best use of the Property in the medium to longer term is for residential apartment development. Urbis, together with the Responsible Entity have prepared a financial analysis for the potential residential redevelopment as shown in the table below. Average Apartment Price 750,000 No. of Apartments 270 Gross Sales 202,500,000 Less - Agents Commission 2.0% 4,050,000 - Legal Costs ,600 -GST Remittance Margin 9.09% 18,407,250 Net Sales Revenue 179,805,150 Development Costs -Development Costs 326,700 88,209,000 -Interest Cost 9.0% 10,072,172 -Promotion 3, ,000 -Project Management 3.0% 3,129,919 -Rates & Taxes (p/month) 2, ,606 -Professional Fees 35,640 9,622,800 -Demolition Fees 7,060 1,906,866 -Loan Establishment Fee 0.5% 630,000 -GST Input Credit Recovered 55% (9,286,797) -Stamp Duty 5.5% 1,375,000 -Due Diligence/Legal Fees 275,000 7

8 Total Costs 107,460,567 Add: Adopted Land Value 34,500,000 Profit on Cost 37,844,275 Profit Margin 26.7% Based on the above financial analysis and assumptions, if the Fund redevelops the Property into residential apartments, the Fund has the prospect of making a development profit of $37.84 million or a profit margin on costs of 26.7%. These figures are projections only and do not take account of the time or risks involved in completing the development. However, the actual returns cannot be anticipated with any certainty and will be dependent on many factors outside of the control of AIMS. In addition, the development will be subject to various risks including those set out in section 6. The actual returns may differ significantly from those set out above. If Unitholders decide to remain in the Fund for the redevelopment of the Property into residential apartments it is important to note the following: a. Whilst it is intended that a large proportion of the redevelopment will be funded through debt finance, it may be necessary for additional equity capital to be raised. Unitholders may therefore be asked to contribute additional capital to fund the redevelopment of the Property; and b. The timing of the commencement and completion of the redevelopment of the Property depends on a number of factors including the following: obtaining all of the necessary approvals such as a planning permit; obtaining finance; sufficient pre-sales of apartments; and the state of the residential property market in general. AIMS is targeting the commencement of the redevelopment in or around 2016 and the finalisation of the substantial components of the building works in However, given the above uncertainty, it is difficult to estimate the targeted date for the potential return of capital. 6. Risks associated with the proposed residential redevelopment of the Property A property development such as the redevelopment of the Property in to residential apartments carries additional risks other than those traditionally associated with an investment in commercial real estate. These risks may have a negative impact on a Unitholder s return. AIMS considers the key risks in remaining invested in the Fund for the residential redevelopment of the Property include the following: risk of changes in rates of sale: a number of economic conditions may influence the demand for sales. In the event of adverse economic conditions the rates of sales may be lower than expected. As a result, the investment term may be extended and higher than forecast holding and interest costs may eventuate; risk of changes in sales price: the estimated sale price for residential units are subject to a number of economic conditions that are beyond the control of AIMS. There is a risk that units sold do not achieve forecast selling prices resulting in a reduced level of revenue flowing to the Fund. This would adversely affect returns to Unitholders; planning risks: approval of the redevelopment is withheld or approval required to change aspects of the redevelopment to improve profitability is withheld or delated; risk of change in construction and/or development costs: certain development costs may be subject to cost escalation or general price rises. Unforeseen increases in material or labour costs may increase the total costs for the development of the Property, which may impact the returns for Unitholders; interest rate risk: change in interest rates may impact debt service costs which may affect distribution timing and amounts; project delay: there is a risk that there may be a significant delay in completing the development or selling units. This may adversely impact the amount and timing of any returns; 8

9 risk of third party and contractor delay or default: there is a risk that the contractual parties are unable to carry out their obligations due to weather, other circumstances or contractor default. This may result in time delays and cost overruns which would adversely affect the return to Unitholders; rectification risk: the development may contain defects at completion, the rectification of which may be costly. The obligations of any rectification work lie with the builder, however, despite the direction of AIMS and/or the developer, the builder may not rectify all defects; risk of purchaser default on sales contracts: there is a risk that purchasers of units may default on their obligation to the Fund, which may lead to the loss of income to the Fund and increased costs as a result of enforcement action; construction debt facility risk: the Fund proposes to use debt finance as a significant source of funding for the development. Investment losses may be magnified by the use of construction debt finance, resulting in greater losses to Unitholders where debt has to be repaid from the forced sale of the Fund assets. Any construction debt facility will be subject to certain conditions precedent to drawdown such as pre-sales of units. It will also be subject to financial covenants, review events, reporting and security requirements which are usual for a facility of this nature. A breach of any of these conditions may result in the bank enforcing its security and among other things terminate the facility and sell the Fund's assets; requirement for further capital: if the Fund incurs additional construction costs and is unable to draw down further amounts pursuant to its construction debt facility, the Fund may be required to raise additional equity capital. If this situation occurred, Units may be issued at a discount to the prevailing NTA in order to ensure the funds are raised in a timely manner. If any Unitholder did not participate in the relevant capital raising, this would dilute their investment in the Fund; and general risk: there are a range of general investment risks that may adversely impact the performance of the Fund that are outside the control of AIMS. General risks are not specific to the Fund and include general economic conditions and regulatory risks (including changes in laws, policies and regulations, or the way in which these are applied or interpreted). Please note that the above is a summary only of the key risks AIMS believes are involved in the development of the Property. There are other risks which are not set out in this section. Unitholders are encouraged to obtain independent advice from their accountant or financial planner in relation to whether they should accept the AIMS Offer or remain in the Fund. 7. Other alternatives considered by AIMS AIMS considered other alternatives in respect of the Fund. These included: a) Retain the Property Based on the Urbis report and the offers received, current market conditions and the future prospects of the Property, AIMS believes that it is in the best interests of Unitholders for them to be given an opportunity to realise their investment in the Fund at a value which reflects the highest and best use of the Property. In order for the Fund to continue beyond 31 December 2015, a special resolution of Unitholders would be required. If the Property was retained, there can be no guarantee that a purchase price in excess of $34.5 million will be achieved when the Property is sold. In addition, continuing the Fund in its current state would not give Unitholders the opportunity to realise their investment or stay invested in the Fund and participate in any residential redevelopment. b) Sell the Property and wind up the Fund AIMS considered putting the Property to the open market. However, based on the offers received, the Urbis report and the recent JLL valuation, AIMS does not believe that the purchase price would significantly exceed the range of offers received to date. There is also a risk that any sale may ultimately be effected at a price below that implied by the APW Offer. The offers received to date have been conditional and there is no certainty that any would proceed to completion. In addition, the Fund would incur significant transaction costs in the nature of agents fees, advertising fees and fees associated with the winding up of the Fund. In addition, winding up the Fund would not give Unitholders the opportunity to stay invested in the Fund and participate in any residential redevelopment. 9

10 c) Develop the Property AIMS considered developing the Property into residential apartments within the Fund. However, apart from requiring a special resolution of Unitholders, AIMS believed that this represented a significant departure from the Fund's original investment mandate and that Unitholders should not be forced into a situation where they must participate in any residential redevelopment. In addition, any residential redevelopment will carry substantial risks. The APW Offer has the benefit that Unitholders may elect whether they realise their investment or participate in the redevelopment of the Property. 8. What are the proposed amendments to the Constitution to be effected by the Resolution? The Resolution involves amending the Constitution to effect a number of changes. These changes are set out in Schedule 2 to this Booklet. The key changes are as follows: extending the term of the Fund from 31 December 2015 by 7 years to 31 December 2022 to facilitate the residential redevelopment of the Property; amendment to the responsible entity's fee structure including the crystallisation and resetting of the performance fee and the introduction of a finance arrangement fee; providing more flexibility around issuing and redeeming Units in the Fund going forward; and providing the ability for the Fund to list on the APX or other securities exchange at some point in the future. 9. Advantages and Disadvantages of passing the Resolution and the APW Offer AIMS believe the following are the key advantages and disadvantages of passing the Resolution and of the APW Offer. Advantages Disadvantages Unitholders will have the choice as to whether they realise their investment at a significant premium to the current NTA or remain invested in the Fund and participate in the redevelopment of the Property into residential apartments; The unit price under the APW Offer is certain. It is possible that the sale price achieved by the Fund in respect of the Property may be below the unit price offered by APW if it were sold; and The timing of when Unitholders receive the sale price from APW in respect of their Units is certain. It is uncertain as to when Unitholders would receive funds as a result of the sale of the Property. For Unitholders who wish to exit the Fund, the Fund may achieve a higher sale price for the Property if it were offered to the market; and For Unitholders who wish to participate in the residential redevelopment, there are significant additional risks which may adversely affect returns from the Fund. In addition, APW is likely to be a majority Unitholder and, therefore, in a position to substantially influence the ongoing management of the Fund. 10. What happens if the Resolution is passed? The Resolution is a special resolution which means that at least 75% of votes cast by Unitholders present in person or by proxy and entitled to vote must be in favour of the resolution in order for the resolution to be passed. If the Resolution is passed by the required majority: the Constitution will be amended in the manner summarised in this Booklet; the APW Offer will become unconditional and APW will acquire the Units of those Unitholders who accepted the APW Offer; and the Fund will commence the redevelopment of the Property for residential use. 11. What happens if the Resolution is not passed? 10

11 If the Resolution is not passed by the required majority, the Constitution will remain unchanged and the APW Offer will not become effective. AIMS will continue to manage the Fund in the best interests of Unitholders and will commence a program for the sale of the Property ahead of the Final Disposal Date of 31 December Should you accept the APW Offer? The decision as to whether Unitholders should accept the APW Offer is a personal one and will depend on a Unitholder's personal situation and investment objectives. If you accept the APW Offer, you will receive $0.432 per Unit. This is a premium over the current NTA (as at 31 August 2014) of 65.2%. For a Unitholder who took up their full entitlement to new Units under the Entitlement Offer, that Unitholder will receive a return of capital of approximately $0.790 for every dollar invested. For those who did not participate in the Entitlement Offer, those Unitholders will receive a return of capital of $0.432 per dollar invested. In both cases, this is a significant improvement on the position when AIMS took over the management of the Fund where, assuming the Property was sold at its then book value, Unitholders may have received around $0.305 for every dollar invested. If you do not elect to sell your Units, you will remain invested in the Fund and you will be exposed to the returns and the risks associated with the redevelopment of the Property (see sections 5 and 6 for further details). Accordingly, if you wish to exit the Fund at $0.432, it is important that you complete your Unit Sale Form and return it in accordance with the directions on that form before 5.00pm (AEDT) on Friday, 14 November If you do not complete the Unit Sale Form, you will remain in the Fund. If the Resolution is passed, the Fund will seek to undertake a residential redevelopment of the Property. In this case, you will be exposed to the risks associated with such redevelopment. 13. Management of conflicts APW and the Fund are both managed by AIMS Fund Management Limited. As such, the APW Offer represents a related party transaction. AIMS Fund Management Limited has put in place protocols in relation to the negotiation and consideration of the APW Offer to ensure that the APW Offer is on arms' length terms and that AIMS has acted at all times in the best interests of Fund unitholders. 11

12 VOTING PROCEDURES AND ELIGIBILITY These notes form part of the Notice of Meeting. Changing the time and date of the Meeting The Responsible Entity reserves the right to postpone or adjourn the Meeting to a later time or date. If such a determination is made, all Unitholders will be notified by an announcement on the following website The Responsible Entity will endeavour to notify Unitholders of any such postponement prior to the original date and time of the Meeting, however, the postponement of the Meeting will not be invalidated by the failure to do so. Quorum The quorum necessary for the Meeting is two Unitholders present in person or by proxy. Chairperson The Responsible Entity will be appointing an individual to chair the Meeting. Voting On a show of hands, each Unitholder has one vote on the Resolution. The number of votes each Unitholder has on a poll will be calculated in accordance with the Constitution and the Corporations Act 2001 (Cth) on the business day before the Meeting as being 1 vote for each dollar value of the total Units they hold in the Fund. Approvals required The Resolution is a special resolution which means that at least 75% of votes cast by Unitholders present in person or by proxy and entitled to vote must be in favour of the resolution in order for the resolution to be passed. As required by the Corporations Act 2001 (Cth) the Resolution will be decided on a poll. Corporations A Unitholder that is a corporation may appoint an individual to act as its representative at the Meeting in accordance with section 253B of the Corporations Act 2001 (Cth). The corporate representative must bring to the Meeting evidence of his or her appointment, including any authority under which the appointment is signed. Jointly held units If a Unit in the Fund is held jointly, and more than one Unitholder votes in respect of that Unit, only the vote of the Unitholder whose name appears first in the register of Unitholders counts. Appointment of proxy A Unitholder may vote in person at the Meeting or appoint a proxy to attend and vote for them. Each Unitholder has a right to appoint one or two proxies. A proxy need not be a Unitholder. If a Unitholder appoints two proxies, the Unitholder may specify the proportion or number of votes that each proxy is appointed to exercise. If a Unitholder appoints two proxies and the appointment does not specify the proportion or number of the Unitholder's votes each proxy may exercise, each proxy may exercise half of the votes. Voting directions to your proxy You can direct your proxy how to vote. If you do not direct your proxy how to vote, your proxy will vote as he or she chooses. If you mark more than one box relating to the Resolution any vote by your proxy on that item may be invalid. Signing instructions In the case of Unitholders who are individuals, the Proxy Form must be signed: (a) (b) if the units are held by one individual, by that Unitholder or that Unitholder's attorney; and if the units are held in joint names, by any one of them. 12

13 In the case of Unitholders who are companies, the Proxy Form must be signed: (a) (b) if it has a sole director who is also sole company secretary, by that director (and stating that fact next to, or under, the signature on the Proxy Form); and in the case of any other company, by either 2 directors or a director and company secretary. The use of the common seal of the company, in addition to those required signatures, is optional. Please note that in order for your Proxy Form to be effective, your original Proxy Form (and the original or a certified copy of the power of attorney or authority, if any, under which it is signed) must be completed and returned to Boardroom (Victoria) Pty Ltd no later than 48 hours before the Meeting (that is on or before 11am (AEDT) on 12 November Proxy Forms received after that time will not be valid for the Meeting. Postal address for return of proxies: Boardroom (Victoria) Pty Limited GPO Box 3993 SYDNEY NSW 2001 Hand delivery address: Boardroom (Victoria) Pty Limited Level Kent Street SYDNEY NSW 2000 Alternatively, the documents may be faxed to: Boardroom (Victoria) Pty Limited on Enquiries: (within Australia) (outside Australia) If the Meeting is adjourned, proxies received by 48 hours prior to the resumption of the Meeting are effective for the resumed part of the Meeting. 13

14 GLOSSARY The following terms are used in this Booklet: AIMS or the Responsible Entity AIMS Fund Management Limited ABN AFSL in its capacity as responsible entity of the Fund. APW AIMS Property Securities Fund ARSN APX Asia Pacific Stock Exchange. Booklet This Booklet, including the Notice of Meeting, dated 13 October Book Value Constitution Entitlement Offer The book value of the Property, being $25,125,000 according to the Financial Report as at 30 June The AIMS Property Fund (St Kilda Rd) Constitution as amended form time to time. Refers to the 15 for 10 non-renounceable entitlement offer of new Units in the Fund which was made to Unitholders in October Fund AIMS Property Fund (St Kilda Rd) ARSN Fund Assets IRR Fund Assets means all assets, cash, investments, property, rights and income of the Fund from time to time. Internal Rate of Return. This is the per annum pre-tax internal rate of return achieved, being the discount rate at which the present value of the cash flows is equal to the value of the investment. JLL Jones Lang LaSalle Advisory Services Pty Ltd ABN Meeting Notice of Meeting NTA per Unit Performance Fee Property Property Purchase Price Realised Gains The Meeting of the Unitholders of the Fund that is called by the Notice of Meeting contained in this Booklet. The Notice of Meeting contained on page 3 of this Booklet, together with the additional information in this Booklet. Net Tangible Asset per Unit. The current performance fee as described in clause 11.3 in the Constitution which will be amended if the Resolutions are passed as described in Schedule 2 of this Booklet. The property located at 492 St Kilda Road, Melbourne. The net sale price the Property is sold for in the future prior to the commencement of any redevelopment works. For the purposes of the Performance Fee calculation, Realised Gains means the pre-tax profit of the Fund determined using generally accepted accounting principles (modified if appropriate according to the Constitution), and: Any realised gains or losses are included in the profit determination (whether or not they have been distributed during the year); Any unrealised profits are not included in the profit determination; Any unrealised losses are not provided for in the profit determination; 14

15 Any franked dividends from investments included will be grossed up to include the amount of the related franking credits; and The Base Management Fee and other Fund costs are treated as expenses but performance fees are disregarded Resolution Unit Unitholder The resolution as set out in the Notice of Meeting and as described in section 8 of the Booklet. A unit, as defined in the Constitution, in the Fund. A registered holder of Units in the Fund. Urbis Urbis Valuations Pty Limited (ABN ). Urbis Report Highest & Best Use Analysis Report prepared by Urbis dated April

16 SCHEDULE 1 OPPORTUNITY TO SELL UNITS TO APW This Schedule 1 has been prepared by AIMS Fund Management Limited in its capacity as responsible entity of the AIMS Property Securities Fund (APW). The document is provided by AIMS as agent of AIMS Fund Management Limited in its capacity as responsible entity of APW. 1. Background 2. Offer APW currently owns 49.9% of the Units in the Fund. APW would like to participate in the residential redevelopment of the Fund outlined in the Booklet and, in order to do so, is welcoming the opportunity to acquire additional Units to increase its investment in the Fund from Unitholders who want to sell their Units. Subject to the passing of the Resolution by the required majority, APW is willing to acquire from Unitholders all of their Units in the Fund (APW Offer). APW cannot amend the terms of, or withdraw, the APW Offer. 3. Offer Price The APW Offer is being made at a price of $0.432 per Unit (Offer Price). This represents a premium of 65.2% over the NTA per Unit as at 31 August 2014 of $ Subject to the Resolution passing, if you participate in the APW Offer, the Offer Price will be paid to you in cash in early January This payment date has been elected in order to ensure that Unitholders participating in the APW Offer are eligible for, and receive, the full distribution for the 31 December 2014 quarter. 4. How to participate in the APW Offer Unitholders wishing to sell some or all of their Units pursuant to the APW Offer will need to complete the attached Unit Sale Form and return it no later than 5.00pm (AEDT) on Friday, 14 November 2014 to: AIMS Fund Management Limited PO Box K222 Haymarket NSW 1240 OR Fax (02) OR trust@aims.com.au On the Unit Sale Form, Unitholders should specify the number of Units they are offering to sell to APW. If a Unitholder does not specify a valid number of Units on the Unit Sale Form, if they apply to sell more Units than they currently hold or if they leave this part of the Unit Sale Form blank, it will be assumed they wish to sell all of their Units to APW under the APW Offer. 5. Transfer of your Units to APW If you offer to sell your Units to APW pursuant to the APW Offer, upon acceptance of your offer by APW, your Units will be transferred to APW and you will receive the Offer Price (refer section 3 above 16

17 for timing of payment). By completing the Unit Sale Form, you appoint AIMS as your agent and attorney to sign all relevant transfer documentation in order to effect the sale of your Units to APW. 17

18 SCHEDULE 2 PROPOSED AMENDMENTS TO THE CONSTITUTION This Schedule 2 sets out the proposed amendments to the Constitution which will be effected if the Resolution is passed by the required majority. A copy of the existing Constitution, together with the proposed amendments thereto, may be obtained by calling AIMS on or Issue Existing Constitution provision Proposed amendment Fund term The Constitution currently provides that subject to certain limited exceptions, the Responsible Entity must sell the Property prior to 31 December In order to redevelop the Property, it will be necessary to extend the term of the Fund. As such, AIMS is proposing an extension to the term of the Fund by a period of 7 years to 31 December Performance Fee Under the Constitution, AIMS is entitled to receive a performance fee if the net sale price of the Property it obtains is greater than the current book value of $25,125,000 (Book Value) as follows: a. If the net sale price is more than $25,125,000 but less than $30,000,000 - the Manager would be entitled to a fee that is equal to 10% of the amount above $25,125,000; or b. If the net sale price is equal to or more than $30,000,000 - the Manager would be entitled to a fee that is equal to 20% of the amount above $25,125,000. Given the proposed change in nature of the Fund to a development fund, the Responsible Entity proposes to amend the performance fee provisions such that the performance fee crystallises and becomes payable to AIMS upon the Resolution being passed and then resets for the future operation of the Fund. The performance fee amount which will be paid to the Responsible Entity upon the Resolution being passed will be calculated using the current formula in the Constitution assuming a net sale price equal to the sale price implied by the APW Offer of $34.5 million. On this basis, AIMS will be paid a performance fee of ($34,500,000 - $25,125,000) x 20% = $1,875,000. The performance fee provisions going forward will be amended to deal with the situation where the Property is transferred prior to the redevelopment works commencing or where the Fund carries out the redevelopment. Where the Property is transferred prior to the redevelopment works commencing, the Responsible Entity will be entitled to a performance fee equal to: If the net sale price is more than $34,500,000 but less than $40,000,000 - the Responsible Entity will be entitled to a performance fee that is equal to 10% of the amount above $34,500,000; or If the net sale price is at least $40,000,000 but less than $45,000,000 - the Responsible Entity will be entitled to a performance fee that is equal to 15% of the amount above $34,500,000; or If the net sale price is equal to or more than $45,000,000 - the Responsible Entity will be entitled to a performance fee that is equal to 20% of the amount above $34,500,000. Where the redevelopment works have commenced, the responsible entity will be entitled to receive a performance fee equal to: 18

19 Finance Arrangement Fee Issue Price No comparable provision New Units may only be issued at an issue price of $1.00 per Unit. The minimum subscription is an amount of $10, % share of any Realised Gains of the Fund (after all fees (other than performance fees) and costs and assuming a purchase price of the Property of $34,500,000) after Unitholders achieve a pre-tax IRR hurdle of 12% per annum for the period commencing on the earlier of the date 3 years from the date of the Meeting and the date the development application is approved and concluding on the Property being sold. This fee will be payable (at the Responsible Entity's election) on the listing of the Fund, the termination of the Trust, any transaction involving the sale of 80% or more of the Units in the Fund or on the completion of the sale of the Property. The Responsible Entity believes that these amendments to the performance fee provisions are fair in the circumstances given: its active management approach to the Property has added significant value to the Property for Unitholders; its role going forward in relation to the Property will be more onerous given the transition of the Fund into a development fund. The Responsible Entity believes that arranging debt finance, in particular development or construction finance, requires specific skills and expertise in order to maximise the Fund s performance. Given the Responsible Entity possess such skills it is seeking to be appropriately rewarded through a finance arrangement fee of 0.6% of the finance limit in respect of any new finance arranged for the Fund. New Units will be able to be issued at an issue price calculated as: while the Fund is not listed, the NTA per Unit plus the responsible entity's provision for transaction costs; while the Fund is listed, the weighted average traded price for a Unit or a price determined by a book build. On an entitlement offer, the Responsible Entity will be able to issue new Units at an issue price it determines is in the best interests of Unitholders. This may be at a discount to the prevailing NTA of Units. This flexibility is subject to and in accordance with applicable ASIC policy. Furthermore, as any rights offer will be available to all Unitholders on a pro rata basis, the Responsible Entity does not believe that the additional flexibility in setting the issue price will adversely affect Unitholders' interests. The minimum subscription will be an amount of $10,000 or at the absolute discretion of the 19

20 Withdrawals from the Fund Listing amendments Unitholders have no redemption rights under the current Constitution. The current Constitution does not provide for the listing of the Fund. Responsible Entity. The Responsible Entity may make a redemption offer at any time it determines. Upon the making of a redemption offer by the Responsible Entity (on such terms and at such times as it determines in its absolute discretion), Unitholders may apply to redeem some or all of their Units in the Fund. For any redemption offer made in conjunction with or within 6 months following the transfers of Units pursuant to the APW Offer, the redemption price will be $0.432 per Unit. Otherwise, Units will be redeemed at a redemption price calculated as the NTA per Unit less the Responsible Entity's provision for transaction costs. The amendments include provisions which will facilitate the operation of the Fund as a listed entity. 20

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