MCCA ASSET MANAGEMENT LIMITED

Transcription

1 MCCA ASSET MANAGEMENT LIMITED ARSN MCCA PROPERTY FUND PROPERTY DESCRIPTION STATEMENT Kew East Luxury Home Development SUB SCHEME INVESTMENT 22 February 2017

2 TABLE OF CONTENTS Important Notice A- Summary of the Sub Scheme Investment Site Location and Profile Project Summary Project overview design and layout Acquisition of the Sub Scheme property The Sub Scheme Investment B- Sub Scheme Targeted Return Source of Funds to be raised The Investment Risks C- The Sub Scheme Management Fees The Sub Scheme Governance D- Consent to invest in the Sub Scheme APPENDIX A APPENDIX B

3 IMPORTANT NOTICE This Property Description Statement is an important document and must be read in its entirety. If you do not have a copy of the MCCA Property Fund Product Disclosure Statement (PDS) dated 22 August 2014 then you must immediately obtain a copy from MCCA Asset Management Limited (the Manager). You cannot invest in the MCCA Property Fund unless you have a copy of the MCCA Property Fund PDS. Both the application form in the Product Disclosure Statement and the consent form in this Property Description Statement must be completed and executed by you before your investment can be accepted. This document outlines the proposed Sub Scheme property investment. We recommend that you discuss this Property Description Statement with your accountant or your financial adviser should you not understand how this investment affects your personal financial objectives. There is a cooling-off period with this investment. You have 14 days to request in writing to the Manager the return of your investment monies from the time your investment is received. There may be fees or charges applicable in processing your cooling-off request. The cooling-off period does not apply once the settlement of the development site purchase is complete. A-SUMMARY OF THE SUB SCHEME INVESTMENT MCCA Asset Management Limited (the Manager) offers an opportunity to invest in a boutique property development project known as The Kew East Luxury Home Development Sub Scheme Investment (Sub Scheme). This Investment comprises: The development of three luxury boutique homes in the prestigious and tightly held Victorian suburb of Kew East in Melbourne s Inner East. The Sub Scheme Investment comprises the acquisition of the subject land with plans and permits from an unrelated third party for $2.65 million inclusive of costs. A further $1.919 million is required to develop the three luxury homes. The total resales for the homes are expected to total $5.90 million. It is expected that the Sub Scheme project will have a lifespan of 12 months from the time of acquisition of the subject land to final settlement of the development. Detailed feasibility costing in Appendix A. The Manager has signed a Contract of Sale for the purchase of the project site on 14 February 2017.

4 The target Sub Scheme Investment return to be delivered to investors is 15% per annum on an annualised basis. This return is contingent upon the actual return generated by the Sub Scheme Investment and no guarantee is offered with respect to this return. Investors should note that this investment is not liquid. Repayment of your investment monies plus any return on this investment is dependent on the sale of the three luxury homes forming part of this Sub Scheme Investment. This is expected to take 12 months from the acquisition of the subject site to final sale and settlement of the three luxury homes. SITE LOCATION AND PROFILE: The subject development is located at 1226 Old Burke Road Kew East. Existing site plan, site amenities and proposed site plan (approved), below:

5 PROJECT SUMMARY Kew East is located some 10 kilometres from the Melbourne CBD. It is a very well established, attractive and elevated area. The undulating streets are filled with history, heritage and prestige. The area is popular with established families raising children and older couples who are area-locals. - Substantial development site of m2 - Current approved permit for a fantastic residential project comprising three high-spec luxury homes - All architectural working drawings and engineering plans prepared, ready for build-permit and construction - Situated in the prestigious suburb of Kew East - Quick CBD access by tram (short walk 800m) or via the Eastern Freeway - Coles Shopping Centre and High Street North shopping strip 1-1.2km away. - 6km from Doncaster Westfield Shopping Centre, accessible by bus Quiet and leafy position adjacent to Musca Street Reserve, close to Yarra Trail and Hays Paddock - Kew High School just 500m away, Ivanhoe Primary East just 1.4km away. Balwyn High School 1.8km away. - Median House Price in Kew East in December 2016 was $1.920 Million according to RP Data Appendix B - Capital Growth Median Price (Houses) in 2016 in Kew East was 8.1% according to RP Data (Appendix B)

6 PROJECT OVERVIEW- DESIGN & LAYOUT

7 OLD BURKE RD Proposed site plan and elevations showing the layout of the development: 1i 1j HLW Obs. HLW HLW Obs. Obs. Obs. OLD BURKE RD BR1 4.3 x 4.0 ENS 2.4 x 2.2 WIR 2.4 x 1.7 Obs. WIR ENS BR1 2.6 X X 1.8 LOUNGE BR2 3.8 X 3.8 HLW 5.0 x 3.0 DN UNIT 1 STUDY UNIT X BATH 2.6 X 2.6 BR2 4.4 X 2.9 BR3 4.9 X 3.0 VOID BALC. RUMPUS 6.0 x 4.5 DN VOID BATH 4.9 x 1.8 HLW BR3 5.0 x 3.3 BR1 3.9 X 3.5 WIR 2.1 X 1.9 VOID BATH 2.7 X 2.2 UNIT LOUNGE 4.6 X 3.5 DN BR2 4.4 X 2.9 BR3 4.9 X 2.9 BALC. Obs. Obs. 1.7m height screen Obs. FIRST FLOOR PLAN 3 FALL 3 FALL 3 FALL 3 FALL 3 FALL 3 FALL ROOF PLAN t a square \ 8 SHELLEY ST, RICHMOND VIC 3121 \ \ \ ACN: ARCHITECTURE INTERIOR DESIGN PROJECT MANAGEMENT NO. \ REMARKS \ REVISION \ ISSUE DATE \ ISSUED BY \ 1. REVISED NORTHERN REAR BUILDING WALL 7M SETBACK TO UNIT 3; SOUTHERN BALCONIES OF UNIT 2 & 3 REMOVED A AT Copyright in this document and the concepts it represents are reserved to T-A SQUARE. No unauthorised use or copying permitted. All rights reserved. PROJECT \ RESIDENTIAL DEVELOPMENT ON 1226 OLD BURKE RD, KEW EAST CLIENT \ - DRAWING TITLE \ FIRST FLOOR & ROOF PLAN PROJECT NO. \ TA1421 ISSUE \ DRAWING NO. \ INFORMATION ONLY N SCALE \ DRAWN BY \ A1 BP A3 TP.05 REV \ C DATE \ DEC'15

8 Proposed site plan and elevations showing the layout of the development: 1228 OLD BURKE RD TITLE BOUNDARY TITLE BOUNDARY 1224 OLD BURKE RD 1224 OLD BURKE RD TITLE BOUNDARY TITLE BOUNDARY 1228 OLD BURKE RD TITLE BOUNDARY 1i 1j SOUTH WEST ELEVATION (OLD BURKE ROAD STREETSCAPE ELEVATION) FRONT FENCE DETAIL SCALE 1:50 NORTH EAST ELEVATION MUSCA ST RESERVE TITLE BOUNDARY TITLE BOUNDARY OLD BURKE ROAD OLD BURKE ROAD TITLE BOUNDARY TITLE BOUNDARY MUSCA ST RESERVE SOUTH EAST ELEVATION 1n NORTH WEST ELEVATION FC MC MF TB TIM1 FINISHES LEGEND BF BI FOLD DOOR CG CLEAR GLAZING FC FIBRE CEMENT CLADDING (LIGHT GREY) MC VERTICAL METAL CLADDING (GREY) MF METAL FINS (GREY) OG RW TB TIM 1 TIM 2 OBSCURED GLAZING RENDERED WALL (OFF WHITE) 60x60mm TIMBER BATTEN TIMBER WALL CLADDING TIMBER DECKING t a square \ 8 SHELLEY ST, RICHMOND VIC 3121 \ \ \ ACN: ARCHITECTURE INTERIOR DESIGN PROJECT MANAGEMENT NO. \ REMARKS \ REVISION \ ISSUE DATE \ ISSUED BY \ Copyright in this document and the concepts it represents are reserved to T-A SQUARE. No unauthorised use or copying permitted. All rights reserved. PROJECT \ RESIDENTIAL DEVELOPMENT ON 1226 OLD BURKE RD, KEW EAST CLIENT \ - DRAWING TITLE \ ELEVATION PROJECT NO. \ TA1421 ISSUE \ DRAWING NO. \ INFORMATION ONLY SCALE \ DRAWN BY \ A1 BP A3 TP.06 REV \ C DATE \ DEC'15 The re-development of this site will see a transformation from a humble single dwelling to three independent high spec luxury homes. Key features include: - Stunning modern architectural design - High spec luxury finish throughout the dwellings - Detached dwelling design - Double-storey layout across all homes - Generous land allotments for each luxury home - Generous open plan living throughout - Attractive landscaping to be planted throughout

9 ACQUISITION OF THE SUB SCHEME PROPERTY The Manager has entered into a contract of sale on 14 February 2017 for the purchase of the development site with plans and permits for $2.5 Million. The terms of the agreement are set out below: Purchase price: $2.5 Million Initial deposit: $5,000 non-refundable for 30-day Due Diligence period commencing from date of Contract Purchase deposit: upon satisfactory completion of the 30-day Due Diligence period, balance of 10% of the purchase price is payable Settlement: 30 days Cooling-Off: You have 14 days to advise the Manager in writing from the date of receipt of your investment monies of your request to have your investment monies returned. Fees and charges may be applicable in processing your cooling-off request. There is no cooling-off if the property purchase contract has been settled. THE SUB SCHEME INVESTMENT INVESTMENT Investors are required to invest a minimum of $50,000 INVESTMENT TERM Funds are anticipated to be held in the Sub Scheme for a term of up to 12 months TARGET RETURN ON INVESTMENT The Manager aims to deliver a return to investors of 15% per annum on an annualised basis from this Sub Scheme Investment. The Manager does not guarantee this targeted return.

10 B - SUB SCHEME TARGETED RETURN A. Investment return: The targeted return is 15% per annum on an annualised basis. This assumes a project lifespan of 12 months. B. Performance fee: Investors will receive 50% of any surplus Sub Scheme Investment return above 15% per annum. The remaining 50% will be distributed evenly between MCCA Asset Management Limited and the Development Manager. SOURCE OF FUNDS TO BE RAISED A. Investor funding: Investors will contribute 67% of the total funding requirements for completion of the Sub Scheme development. Once this amount has been raised from investors, the Manager will not be able to accept any further investment in this Sub Scheme. B. Non investor funding: There will be no non Shariah Compliant development funding to acquire the property. However, the Manager s MCCA Income Fund will provide 33% of the total funding requirement as a Shariah Compliant development funding facility ( MCCA Income Fund Facility ) which will be charged at 8.50% per annum while the MCCA Income Fund Facility is unpaid. A mortgage over the subject land will be taken by MCCA Income Fund to secure its facility to the project. The investors will not be personally liable for the repayment of the MCCA Income Fund facility. C. Capital Raising Deadline: If the investment monies are not raised in full by 16 March 2017, the contract may not be settled and the Sub Scheme may not proceed. D. Underwriting: This investment can be underwritten. MCCA Limited (the entity owning shares in the Manager, MCCA Asset Management Limited), may be asked by the Manager to underwrite the investment raising if there is a shortfall in funds raised. A fee of up to 2.5% of investment funds provided by MCCA Limited may be charged as an underwriting fee. Should MCCA Limited choose to remain as an investor it will be an investor in the Sub Scheme on the same terms and conditions applicable to all other investors in the Sub Scheme. INVESTMENT RISKS A. SALES RISK (The risk that the actual sales value of the three luxury homes is less than estimated) i.the Manager has undertaken the following to assess whether the net sales anticipated for the total development can be achieved: 1. Real Estate of Melbourne (REoM) and Appleby Bayswater have independently assessed the value of the luxury homes on completion. They have considered the state of the market, demand for homes in Kew East and the most recent comparative sales. Their report has been provided to the Manager. Both agents have determined that a total sales estimate of $5.90 million is feasible. The Manager holds a copy of their reports. 2. The Manager has conducted a detailed due diligence on comparable sales evidence. The Manager believes that there is sufficient market evidence from the recent sales evidence noted on the RP data-base to consider the total sales estimate of $5.90 million is achievable. 3. Demographics for the area are conducive to the sale of the proposed luxury homes. Kew East has a strong demand for quality homes, and there is a shortage in supply of high spec homes to suit astute, mature buyers. The median sales price in Kew-East has consistently been trending upwards.

11 Sales Median Price Kew East B. CONSTRUCTION RISK (The risk of cost overruns and/or time delays and its impact on investor return) i. The Manager has engaged a qualified Development Manager to assess the construction budget and the adequacy of the building contract to complete the proposed development. ii. The construction of the three luxury homes will be delivered by a licensed builder suitably registered and with a track record in delivering projects of similar size and scope. iii. The building contract will be structured on a fixed time fixed price basis. The building contract will have penalties and liquidated damages for non-delivery of the completed town residences by the contract completion date. iv. The building construction budget will account for a contingency to allow for cost overruns. v. Progress claims will be signed off by an appropriate party as to design and value of works. C. Facility Risk (In such a case that the Sub Scheme is in default to the MCCA Income Fund) i. The facility provided by MCCA Income Fund (Shariah compliant investment fund issued by the Manager and registered with ASIC) is limited to 33% of the total development budget. The facility cost is fixed at 8.50% throughout the term of the project. MCCA Income Fund facility is repaid on the settlement of the sale of the completed town residences. Investors are not liable for the repayment of the MCCA Income Fund facility. D. Capital Raising Risk (In such a case that the Manager cannot raise the required monies) i. If the total development funds are not raised by 16 March 2017 or a later date if advised by the Manager, then the Sub Scheme may not go ahead. In such case that the Sub Scheme does not proceed, Investor monies held by the Custodian will be returned to investors within 28 days of cancellation of the Sub Scheme investment. ii. The due date for the capital raising is 16 March 2017, or a later date where extended by the Manager and advised to investors. The Manager will advise all investors when capital raising has been completed. Monies will be returned to investors if this has not been achieved or an extension to the contract has not been negotiated with the vendor of the land.

12 C - SUB SCHEME MANAGEMENT FEES THE MANAGER WILL CHARGE ITS MANAGEMENT FEES ONLY AT THE END OF THE PROJECT: FEE AMOUNT WHEN PAID MCCA SUB SCHEME MANAGEMENT 3.30% OF TOTAL SALES PROJECT COMPLETION SUB SCHEME GOVERNANCE A. Custodian: Sandhurst Trustees Limited will act as Custodian. The property title will be held in the name of the Custodian. Similarly, the Custodian will hold any mortgage to secure monies advanced by the MCCA Income Fund. The Custodian holds the title and cash from the project on behalf of the investors. The Custodian does not guarantee the performance of your investment. B. Reporting and disclosures to the investors: Investors will receive six-monthly status reports on the development progress. All reports will be available to investors via MCCA s website. At the conclusion of the development and final settlement of the three luxury homes, investors will receive a detailed statement that shows their initial investment and the total distributions made to them from the net profit of the development. Distributions made to the investors above their initial investment monies will be taxable. C. Investor Meetings: The Manager has a right to call investor meetings where required. If this is necessary, the Manager will provide all Sub Scheme investors written notice and agenda within the timelines detailed in the Constitution of the MCCA Property Fund. D. Taxation: The Sub Scheme does not pay tax. Similarly, the Manager does not pay tax on your share of the net profit distributed to you at the end of the development. Distribution of development profits will be detailed in the taxation statement sent to you at the end of the development, expected 12 months from commencement. There are different tax issues to consider for non-resident investors. All investors are urged to obtain their own taxation advice. E. Shariah compliant investment: The Shariah advisers engaged by the Manager have confirmed that this Sub Scheme investment as presented in this Property Description Statement is compliant with Islamic finance and Shariah principles.

13 D - CONSENT TO INVEST IN THE SUB SCHEME I/We having read the Product Disclosure Statement (PDS) dated 22 August 2014 for the MCCA Property Fund ARSN and this Property Description Statement for the KEW EAST LUXURY HOME DEVELOPMENT SUB SCHEME INVESTMENT dated 20 February 2017 consent to invest in the Sub Scheme as detailed in this Property Description Statement. I/We confirm that we will not interfere with the operation and/or management of the Sub Scheme and will abide by all lawful directions from MCCA Asset Management Limited as Manager during the time that I/We are an investor(s) in the Sub Scheme. I/We understand that any stated returns in this Property Description Statement are presented as a target return and are not guaranteed by the Manager. I/We understand that this Sub Scheme investment is not liquid and that repayment of my/our investment monies and any net profit from the Sub Scheme development will depend on the timing of the completion and sale of the properties comprising the Sub Scheme development. I/We have also completed and signed the application form contained within the Product Disclosure Statement dated 22 August 2014 for the MCCA Property Fund ARSN Applicant 1 signature Date Applicant 1 Name Applicant 2 signature Date Applicant 2 Name

14 APPENDIX A SUB SCHEME DEVELOPMENT PROJECT FEASIBILITY ASSESSMENT: LAND ACQUISITION COSTS PROPERTY: 1226 OLD BURKE RD. KEW EAST VIC COSTS & REVENUES $ TOTAL $ PER TOWNHOUSE Purchase Price Stamp Duty GST (input) Legal Fees + Holding Cost TOTAL ACQUISITION COSTS $ 2,500,000 $ 137,500 $ - $ 12,500 $ 2,650,000 $ 883,333 DEVELOPMENT COSTS Construction Contingency 8.00% Professional Fee (Doc, Demolishing, Manager Fee 1) Contributions & Charges Marketing Cost TOTAL DEVELOPMENT COST $ 1,454,545 $ 127,364 $ 182,500 $ 102,500 $ 20,000 $ 1,886,009 $ 484,848 $ 628,970 TOTAL PROJECT COSTS (Exl GST) $ 4,536,909 Total Sales (Inc GST) Legal Fees Selling Costs (RE Agent) 2.00% Manager Fee (2) Independent Audit & Admin Charge Custodian 0.25% PA of Funds/Management MCCA Fee 3.30% MCCA Project Level Gearing 33.00% Gearing Fees Profit on Gearing Total Gearing Cost GST on Sale TOTAL PROJECT REVENUE (after GST paid) Gross PROFIT Gross PROFIT (PA) Project Duration $ 5,900,182 $ 3,000 $ 118,004 $ 147,500 $ 10,000 $ 8,000 $194,706 $ 1,497,180 $31,944 $58,951 $90,895 $309,107 $ 5,018,970 $ 482, % 15.86% MONTHS INVESTOR FUNDS TO BE RAISED $ 3,039,729

15 APPENDIX B The size of Kew East is approximately 4 square kilometres. It has 12 parks covering nearly 40% of total area. The population of Kew East in 2006 was 6,141 people. By 2011 the population was 6,017 showing a population decline of 2% in the area during that time. The predominant age group in Kew East is 0-14 years. Households in Kew East are primarily couples with children and are likely to be repaying between over $4000 per month on mortgage repayments. In general, people in Kew East work in a Professional occupation. In 2006, 73.9% of the homes in Kew East were owner-occupied compared with 74.3% in Currently the median sales price of houses in the area is 1,920,000. MEDIAN SALE PRICE Year 2014 Year 2015 Year 2016 Period Median Price Median Price Median Price January $1,569,000 $1,300,500 $1,445,500 February $1,320,000 $1,352,500 $1,705,000 March $1,225,500 $1,565,000 $1,791,500 April $1,330,000 $1,670,000 $1,750,000 May $1,361,250 $1,750,000 $1,800,000 June $1,250,000 $1,804,501 $1,840,000 July $1,150,000 $1,635,000 $1,750,000 August $1,324,000 $1,589,000 $1,580,000 September $1,400,000 $1,620,000 $1,750,000 October $1,420,000 $1,815,000 $1,980,000 November $1,310,000 $1,600,000 $1,900,000 December $1,300,500 $1,680,000 $1,920,000

16 RECENT MEDIAN SALE PRICES RECENT MEDIAN HOUSE SALE PRICES Kew East Boroondara LGA Period Median Price Median Price December 2016 $1,920,000 $2,260,000 November 2016 $1,900,000 $1,937,500 October 2016 $1,980,000 $1,902,500 September 2016 $1,750,000 $1,830,000 August 2016 $1,580,000 $2,000,000 July 2016 $1,750,000 $1,715,000 June 2016 $1,840,000 $1,865,000 May 2016 $1,800,000 $1,975,000 April 2016 $1,750,000 $1,877,500 March 2016 $1,791,500 $1,900,000 February 2016 $1,705,000 $1,900,000 January 2016 $1,445,500 $1,760,000 RECENT MEDIAN HOUSE SALE PRICES

17 SALE BY PRICE HOUSE SALES BY PRICE (12 MONTHS) Price 0-100k k k k k k k k k m 2 > 1m m m+ 48 Kew East Number HOUSE SALES BY PRICE (12 MONTHS)

18 CAPITAL GROWTH MEDIAN PRICES CAPITAL GROWTH IN MEDIAN PRICES (HOUSES) Kew East Boroondara LGA Period % Change % Change % 2.7% % 19.4% % 14% % 13.3% % -4% % -4% % 17.3% % 8.8% % -1.4% % 31.8% CAPITAL GROWTH IN MEDIAN PRICES (HOUSES)